Press Releases
EDCI Holdings, Inc. Announces 4Q2009 And FY2009 Results
NEW YORK, March 5 /PRNewswire-FirstCall/ -- EDCI Holdings, Inc. (Nasdaq: EDCI) ("EDCI"), today reported 4Q2009 and FY2009 financial results. As of January 2010, EDCI is engaged in a final Plan of Complete Liquidation and Dissolution ("Plan of Dissolution") that was approved by EDCI's shareholders at a Special Meeting held on January 7, 2010. EDCI is the majority shareholder of Entertainment Distribution Company, LLC ("EDC"), a European provider of supply chain services to the optical disc market. The Plan of Dissolution does not directly involve the operating business, assets, liabilities or corporate existence of EDC and its subsidiaries, however, EDCI's equity investment in EDC is an asset that is part of the Plan of Dissolution, and during EDCI's minimum three-year dissolution period, EDCI will continue to seek value for its investment in EDC by exploring strategic alternatives and seeking, as appropriate, cash distributions, subject to applicable legal requirements.
Significant Developments Related to EDCI's Plan of Dissolution and 4Q2009 and FY2009 Highlights- EDCI Shareholders Approve Plan of Dissolution: EDCI Plan of Dissolution approved at a special shareholder meeting held January 7, 2010. As of January 2010, EDCI has adopted the liquidation basis of accounting and, as such, EDCI will report its net assets, including those related to EDC, at fair value for financial statement presentation purposes for all future reporting periods beginning with its March 31, 2010 Form 10-Q.
- EDCI Cash and Cash Equivalents: $50.6 million at December 31, 2009. This compares to $50.9 million at September 30, 2009. Approximately $21.0 million, or $3.12/share outstanding, was distributed by EDCI to its shareholders on February 1, 2010 pursuant to the EDCI Plan of Dissolution. Of the remaining $29.6 million of EDCI cash, $10.0 million is reserved for a contemplated tender offer / subsequent dissolution distribution (discussed further below) and, in accordance with the Plan of Dissolution, the remaining $19.6 million is subject to a range of further reserved amounts for operating costs during the required wind down period and known and unknown contingent liabilities of between $3.5 million and an amount approximating that remaining cash balance. Additional information in regards to these reserves can be found in EDCI's proxy statement filed with the Securities and Exchange Commission ("SEC") on November 16, 2009.
- EDCI Cash Burn Rate: Based on current estimates, EDCI targets the annual 2010 cash burn rate at $1.0 million (net of inter-company repayments). This estimated annual 2010 cash burn rate assumes that EDCI will be successful in its petition to obtain certain reporting relief from the SEC during mid to late 2010 and that EDCI continues to recoup certain shared service expenses from EDC.
- EDC Debt Declines 80% in 4Q2009: $9.4 million in debt at 3Q2009 declines to $1.9 million at December 31, 2009.
- EDC International 4Q2009 Revenue Remained Steady Y/Y: Favorable exchange rate fluctuations offset Disc volume declines of 7% Y/Y and deteriorating pricing resulting in a slight increase in Y/Y revenues. FY2009 revenue down (21%) Y/Y to $187.9 million.
4Q2009 and FY2009 Financial Summary
-----------------------------------
All amounts below
represent continuing
operations unless
noted
($000's) 4Q2009 4Q2008 Change FY2009 FY2008 Change
----------------- ------ ------ ------ ------ ------ ------
Total revenue $66,427 $65,820 1% $187,876 $238,428 (21%)
----------------- ------- ------- - -------- -------- ---
Gross profit 17,729 16,612 7% 36,015 47,949 (25%)
Gross margin % 26.7% 25.2% +150 bp. 19.2% 20.1% (90 bp.)
------------------ ---- ---- -------- ---- ---- --------
SG&A expense 6,639 5,131 29% 27,856 32,180 (13%)
SG&A % 10.0% 7.8% +220 bp. 14.8% 13.5% +130 bp.
------------------ ---- --- ------- ---- ---- --------
Severance costs
for UK facility
closure (42) - 7,110 -
Severance costs
for UK facility
closure as % of
revenue -0.1% 0.0% 3.8% 0.0%
------------------ ---- --- --- ---
Impairment of
long-lived
assets - 26,354 - 26,354
Impairment of long-
lived assets as %
of revenue 0.0% 40.0% 0.0% 11.1%
------------------ --- ---- --- ----
Operating income
(loss) 11,132 (16,272) 1,049 (16,827)
Operating margin % 16.8% -24.7% 0.6% -7.1%
------------------ ---- ----- --- ----
Adjusted EBITDA 12,539 13,001 (4%) 14,482 23,623 (39%)
Income (loss)
from continuing
operations 7,987 (11,472) (139) (13,173)
Income (loss)
from
discontinued
operations (635) 146 (2,642) (9,048)
Net income (loss)
attributable to
noncontrolling
interest in
subsidiary
company 160 (363) 66 (566)
Net income (loss)
attributable to
common
stockholders* 7,192 (10,963) (2,847) (21,655)
---------------- ----- ------- ------ -------
Common shares
outstanding 6,686,137 6,694,642 6,686,137 6,694,642
--------------- --------- --------- --------- ---------
Diluted EPS from
continuing
operations $1.18 $(1.65) $(0.02) $(1.86)
Diluted EPS from
discontinued
operations $(0.11) $(0.02) $(0.40) $(1.31)
---------------- ------ ------ ------ ------
* Includes both continuing and discontinued operations
4Q2009 and FY2009 Operating Results
-
Revenue:
- 4Q2009 Revenue remained steady Y/Y: Favorable exchange rate fluctuations offset Disc volume declines of (7%) Y/Y and deteriorating pricing resulting in a slight increase in Y/Y revenues.
- FY2009 Revenue down (21%) Y/Y: The (21%) Y/Y decline was attributable to Disc volume declines of (14%) Y/Y, business mix pressures on revenues per unit and 5 bp. of the decline related to the U.S. dollar strengthening against the Euro and British Pound.
-
Gross Margin:
- 4Q2009 Gross Margin Percentage up 150 bp. Y/Y: 4Q2009 gross margin was 26.7%. The increase from 4Q2008 was due to 18% Y/Y volume increase for our EDC Hannover Distribution operations as well as the impact of certain cost savings measures related to our manufacturing operations.
- FY2009 Gross Margin Percentage down (90 bp.) Y/Y: FY2009 gross margin was 19.2%. The decrease from FY2008 was due to (14%) Y/Y volume declines, lower revenue per unit and the U.S. dollar strengthening against the Euro and British Pound.
-
EBITDA:
- 4Q2009 EBITDA remained steady Y/Y: Favorable exchange rate fluctuations offset Disc volume declines of (7%) Y/Y, deteriorating pricing and higher SG&A costs resulting in consistent EBITDA when excluding one-time charges.
- FY2009 EBITDA down (39%) Y/Y: The decrease from FY2008 was due to (14%) Y/Y volume declines and lower revenue per unit offset in part by lower SG&A costs and favorable exchange rate fluctuations.
Balance Sheet Information
-------------------------
% Change
from
($000,000's) 12/31/2009 9/30/2009 12/31/2008 9/30/2009
------------ ---------- --------- ---------- ---------
(unaudited)
-----------
EDCI Cash & S/T Investments $50.6 $50.9 $52.6 (0.6%)
EDC Unrestricted Cash 27.5 27.5 22.5 0.0%
EDC Accounts Receivable 16.4 14.5 19.1 13.1%
EDC Credit Facility &
UMG Debt 1.9 9.4 10.3 (79.8%)
-
EDCI Cash:
- EDCI cash and cash equivalents were $50.6 million at December 31, 2009. This compares to $50.9 million at September 30, 2009. Approximately $21.0 million, or $3.12/share outstanding, was distributed by EDCI to its shareholders on February 1, 2010 pursuant to EDCI's Plan of Dissolution. Of the remaining $29.6 million of EDCI cash, $10.0 million is reserved for a contemplated tender offer / subsequent dissolution distribution (discussed further below) and, in accordance with the Plan of Dissolution, the remaining $19.6 million is subject to a range of further reserved amounts for operating costs during the required wind down period and known and unknown contingent liabilities of between $3.5 million and an amount approximating that remaining cash balance. Additional information in regards to these reserves can be found in EDCI's proxy statement filed with the SEC on November 16, 2009. Based on current estimates, EDCI targets the annual 2010 cash burn rate at $1.0 million. This estimated annual 2010 cash burn rate assumes that EDCI will be successful in its petition to obtain certain reporting relief from the SEC during mid to late 2010 and that EDCI continues to recoup certain shared service expenses from EDC.
-
EDC Credit Facility & UMG Debt:
- EDC began 4Q2009 with $9.4 million but ended with $1.9 million in debt. EDC paid off all remaining debt balances outstanding related to its Senior Secured Credit Facility during 4Q2009.
EDCI HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2009 2008
------------ ------------
ASSETS (In thousands, except share data)
Current Assets:
Cash and cash equivalents $78,093 $75,112
Restricted cash 23,492 7,258
Accounts receivable, net of
allowances for doubtful
accounts of $2,853 and $3,008
for December 31, 2009 and 2008,
respectively 16,446 19,129
Current portion of long-term
receivable 770 599
Inventories, net 3,668 4,845
Prepaid expenses and other
current assets 7,941 12,513
Deferred income taxes 27 105
Assets held for sale 6,400 7,154
Current assets, discontinued
operations 208 8,691
--- -----
Total Current Assets 137,045 135,406
Restricted cash 3,314 25,439
Property, plant and equipment, net 16,429 21,186
Long-term receivable 1,670 3,066
Long term investments 870 1,020
Deferred income taxes 1,895 1,694
Other assets 3,011 4,739
----- -----
TOTAL ASSETS $164,234 $192,550
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $13,447 $15,930
Accrued expenses and other
liabilities 22,496 24,435
Income taxes payable 553 -
Loans from employees 976 1,142
Current portion of long-term debt 437 2,281
Current liabilities,
discontinued operations 1,584 10,226
----- ------
Total Current Liabilities 39,493 54,014
Other non-current liabilities 3,592 8,353
Loans from employees 1,610 2,490
Long-term debt 1,488 7,996
Pension and other defined
benefit obligations 34,096 35,052
Deferred income taxes 287 -
Non-current liabilities,
discontinued operations - 41
- --
Total Liabilities 80,566 107,946
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par
value; authorized: 1,000,000
shares, no shares issued and
outstanding - -
Common stock, $.02 par value;
authorized: 15,000,000 shares
7,019,436 shares issued 2009 and 2008 140 140
Additional paid in capital 371,373 371,091
Accumulated deficit (297,835) (294,988)
Accumulated other comprehensive
income 6,376 4,583
Treasury stock at cost:
2009 -- 333,299 shares; 2008 --
324,794 shares (1,657) (1,427)
------ ------
Total EDCI Holdings, Inc.
Stockholders' Equity 78,397 79,399
Noncontrolling interest in
subsidiary company 5,271 5,205
----- -----
Total Stockholders' Equity 83,668 84,604
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $164,234 $192,550
======== ========
EDCI HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended December 31,
2009 2008
---- ----
(In thousands, except per share amounts)
REVENUES:
Product revenues $46,514 $52,684
Service revenues 19,913 13,136
------ ------
Total Revenues 66,427 65,820
------ ------
COST OF REVENUES:
Cost of product revenues 35,931 40,454
Cost of service revenues 12,767 8,754
------ -----
Total Cost of Revenues 48,698 49,208
------ ------
GROSS PROFIT 17,729 16,612
OPERATING EXPENSES:
Selling, general and
administrative expense 6,639 5,131
Severance costs for UK facility
closure (42) -
Impairment of long-lived assets - 26,354
Amortization of intangible
assets - 1,399
- -----
Total Operating Expenses 6,597 32,884
----- ------
OPERATING INCOME (LOSS) 11,132 (16,272)
------ -------
OTHER INCOME (EXPENSE):
Interest income 212 554
Interest expense (222) (466)
Gain on currency swap, net - 581
Loss on currency
transactions, net (68) (1,268)
Other income (expense), net 666 (96)
--- ---
Total Other Income (Expense) 588 (695)
--- ----
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 11,720 (16,967)
Income tax provision (benefit) 3,733 (5,495)
----- ------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 7,987 (11,472)
DISCONTINUED OPERATIONS, NET OF TAX:
LOSS FROM DISCONTINUED OPERATIONS (25) (2,566)
GAIN (LOSS) ON SALE OF EDC U.S.
OPERATIONS (610) 2,712
---- -----
NET INCOME (LOSS) $7,352 $(11,326)
Net income (loss) attributable
to noncontrolling interest in
subsidiary company 160 (363)
--- ----
NET INCOME (LOSS)
ATTRIBUTABLE TO COMMON
SHAREHOLDERS $7,192 $(10,963)
====== ========
INCOME (LOSS) PER WEIGHTED AVERAGE
COMMON SHARE (1):
Income (loss) from continuing
operations attributable to
common stockholders $1.18 $(1.65)
Discontinued operations
attributable to common
stockholders:
Loss from discontinued
operations attributable to
common stockholders (0.02) (0.39)
Gain (loss) on sale of
EDC U.S. Operations (0.09) 0.41
----- ----
Net income (loss) per weighted
average common share $1.07 $(1.64)
===== ======
INCOME (LOSS) PER WEIGHTED
AVERAGE DILUTED COMMON SHARE (1):
Income (loss) from continuing
operations attributable to
common stockholders $1.18 $(1.65)
Discontinued operations
attributable to common
stockholders:
Loss from discontinued
operations attributable to
common stockholders (0.02) (0.39)
Gain (loss) on sale of
EDC U.S. Operations (0.09) 0.41
----- ----
Net income (loss) per weighted
average common share $1.07 $(1.64)
===== ======
AMOUNTS ATTRIBUTABLE TO EDCI HOLDINGS, INC.
COMMON STOCKHOLDERS
Income (loss) from
continuing operations $7,937 $(11,049)
Loss from discontinued operations (135) (2,626)
Gain (loss) on sale of
EDC U.S. Operations (610) 2,712
---- -----
Net income (loss) $7,192 $(10,963)
====== ========
(1) Income (loss) per weighted average common share amounts are rounded
to the nearest $.01; therefore, such rounding may impact individual
amounts presented.
EDCI HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
2009 2008
---- ----
(In thousands, except per share amounts)
REVENUES:
Product revenues $135,715 $181,159
Service revenues 52,161 57,269
------ ------
Total Revenues 187,876 238,428
------- -------
COST OF REVENUES:
Cost of product revenues 115,306 151,722
Cost of service revenues 36,555 38,757
------ ------
Total Cost of Revenues 151,861 190,479
------- -------
GROSS PROFIT 36,015 47,949
OPERATING EXPENSES:
Selling, general and administrative expense 27,856 32,180
Severance costs for UK facility closure 7,110 -
Impairment of long-lived assets - 26,354
Amortization of intangible assets - 6,242
- -----
Total Operating Expenses 34,966 64,776
------ ------
OPERATING INCOME (LOSS) 1,049 (16,827)
----- -------
OTHER INCOME (EXPENSE):
Interest income 522 3,447
Interest expense (791) (2,225)
Gain on currency swap, net 2,111 1,462
Gain (loss) on currency transactions, net 469 (3,233)
Other income (expense), net 648 (440)
--- ----
Total Other Income (Expense) 2,959 (989)
----- ----
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 4,008 (17,816)
Income tax provision (benefit) 4,147 (4,643)
----- ------
LOSS FROM CONTINUING OPERATIONS (139) (13,173)
DISCONTINUED OPERATIONS, NET OF TAX:
LOSS FROM DISCONTINUED OPERATIONS (2,621) (11,760)
GAIN (LOSS) ON SALE OF EDC U.S. OPERATIONS (21) 2,712
--- -----
NET LOSS $(2,781) $(22,221)
Net income (loss) attributable to
noncontrolling interest in subsidiary company 66 (566)
-- ----
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $(2,847) $(21,655)
======= ========
LOSS PER WEIGHTED AVERAGE COMMON SHARE (1):
Loss from continuing operations
attributable to common stockholders $(0.02) $(1.86)
Discontinued operations attributable
to common stockholders:
Loss from discontinued operations
attributable to common stockholders (0.40) (1.71)
Gain on sale of EDC U.S. Operations - 0.40
- ----
Net loss per weighted average common share $(0.42) $(3.17)
====== ======
LOSS PER WEIGHTED AVERAGE
DILUTED COMMON SHARE (1):
Loss from continuing operations
attributable to common stockholders $(0.02) $(1.86)
Discontinued operations attributable
to common stockholders:
Loss from discontinued operations
attributable to common stockholders (0.40) (1.71)
Gain on sale of EDC U.S. Operations - 0.40
- ----
Net loss per weighted average common share $(0.42) $(3.17)
====== ======
AMOUNTS ATTRIBUTABLE TO EDCI HOLDINGS,
INC. COMMON STOCKHOLDERS
Loss from continuing operations $(141) $(12,690)
Loss from discontinued operations (2,685) (11,677)
Gain (loss) on sale of EDC U.S. Operations (21) 2,712
--- -----
Net Loss $(2,847) $(21,655)
======= ========
(1) Income (loss) per weighted average common share amounts are rounded
to the nearest $.01; therefore, such rounding may impact individual
amounts presented.
EDCI Holdings, Inc.
Summary Schedule of Non-GAAP Financial Data
(In thousands) Unaudited
The following summary of financial data shows the reconciliation of loss
from continuing operations, as determined in accordance with accounting
principles generally accepted in the United States (GAAP), to income
(loss) from continuing operations and earnings before interest, taxes, and
depreciation and amortization from continuing operations.
EBITDA is income (loss) from continuing operations before interest expense
(income), net, income taxes, and depreciation and amortization and is
presented because the Company believes that such information is commonly
used in the entertainment industry as one measure of a company’s operating
performance. EBITDA from continuing operations is not determined in
accordance with generally accepted accounting principles, it is not
indicative of cash provided by operating activities, should not be used as
a measure of operating income and cash flows from operations as determined
under GAAP, and should not be considered in isolation or as an alternative
to, or to be more meaningful than, measures of performance determined in
accordance with GAAP. EBITDA, as calculated by the Company, may not be
comparable to similarly titled measures reported by other companies and
could be misleading unless all companies and analysts calculated EBITDA in
the same manner. For analysis purposes, we have added back the severance
cost
4Q2009 4Q2008 FY2009 FY2008
------ ------ ------ ------
Income (loss) from continuing
operations $7,987 $(11,472) $(139) $(13,173)
Income tax (provision) benefit 3,733 (5,495) 4,147 (4,643)
Gain on currency swap, net - (581) (2,111) (1,462)
(Gain) loss on currency
transaction, net 68 1,268 (469) 3,233
Interest (income) expense, net 10 (88) 269 (1,222)
Depreciation and amortization 1,449 2,919 6,323 14,096
Other expense, net (666) 96 (648) 440
---- -- ---- ---
EBITDA from continuing operations 12,581 (13,353) 7,372 (2,731)
Impairment - 26,354 - 26,354
Severance costs for UK facility
closure (42) - 7,110 -
--- - ----- -
Adjusted EBITDA from continuing
operations $12,539 $13,001 $14,482 $23,623
======= ======= ======= =======
SOURCE EDCI Holdings, Inc.
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