NEW YORK, Oct. 30 /PRNewswire-FirstCall/ -- EDCI Holdings, Inc.
(NASDAQ: EDCI) ("EDCI"), the holding company for Entertainment
Distribution Company, Inc., the majority shareholder of
Entertainment Distribution Company, LLC ("EDC"), a European
provider of supply chain services to the optical disc market, today
reported 3Q2009 and YTD 3Q2009 financial results. 3Q2009 and YTD
3Q2009 Highlights -- EDCI Board of Directors Has Recommended a Plan
of Dissolution: Special shareholder meeting to be held in the
beginning of January 2010. -- EDCI Cash and Cash Equivalents: $50.9
million or $7.62/share outstanding at 09/30/2009. This compares to
$51.4 million or $7.66/share outstanding at 06/30/2009. -- EDCI
Cash Burn Rate: At current run rates, due to aggressive cost
cutting, EDCI targets the annual 2009 cash burn rate at $2.5
million, or $0.37/share outstanding at 09/30/2009. -- EDC
International 3Q2009 Revenue Down (27%) Y/Y: 17% Y/Y Disc volume
decline and deteriorating pricing drove 3Q2009 revenue decline of
(27%) Y/Y to $42.8 million. YTD 3Q2009 revenue down (30%) Y/Y to
$121.4 million. -- EDCI 3Q2009 EBITDA Down (76%): 3Q2009 EBITDA was
$1.1 million compared to $4.6 million in 3Q2008. Although revenues
declined $15.4 million for the quarter, EBITDA only declined $3.5
million due to continuing cost saving efforts by the Company. --
EDCI YTD 3Q2009 EBITDA Down (149%): YTD 3Q2009 EBITDA of ($5.2)
million includes $7.2 million of severance costs for UK facility
closure. Had this charge not been incurred, EBITDA would have been
$1.9 million. "The mid-teen Disc volume decline that EDC's
operations experienced in the 1H2009 continued in the 3Q2009 and
further highlighted the difficult environment under which EDC's
Disc manufacturing and distribution business is operating," said
Clarke H. Bailey, Chief Executive Officer. "Negative operating
leverage from rapid Disc volume declines continues to hamper EDC's
high fixed cost, moderate gross margin businesses. As Disc volume
declines remain largely out of EDC's control, management's focus
remains on controlling costs and right-sizing our operations to
ensure we are maximizing cash flows." 3Q2009 and YTD 3Q2009
Financial Summary All amounts below represent continuing operations
unless noted ($000's) YTD YTD 3Q2009 3Q2008 Change 3Q2009 3Q2008
Change ------- ------- ------ -------- -------- ------ Total
revenue $42,782 $58,217 (27%) $121,449 $172,608 (30%) Gross profit
6,975 10,771 (35%) 18,286 31,337 (42%) Gross margin % 16.3% 18.5%
(220 bp.) 15.1% 18.2% (310 bp.) SG&A expense 7,526 8,243 (9%)
21,217 27,049 (22%) SG&A % 17.6% 14.2% +340 bp. 17.5% 15.7%
+180 bp. Severance costs for UK facility closure - - 0% 7,152 -
100% Severance costs for UK facility closure as % of revenue 0.0%
0.0% 0 bp. 5.9% 0.0% +590 bp. Operating income (loss) (551) 930
(159%) (10,083) (555) (1,717%) Operating margin % -1.3% 1.6% (290
bp.) -8.3% -0.3% (800 bp.) EBITDA 1,119 4,598 (76%) (5,209) 10,621
(149%) Income (loss) from continuing operations (1,369) 2,542
(8,126) (1,701) Income (loss) from discontinued operations 56
(1,491) (2,596) (9,194) Net income (loss) attributable to common
stockholders* (900) 1,012 (10,039) (10,692) Common shares
outstanding 6,686,137 6,694,640 6,686,137 6,694,640 Diluted EPS
$(0.20) $0.37 $(1.20) $(0.24) Diluted EPS from discontinued
operations $0.01 $(0.22) $(0.38) $(1.31) * Includes both continuing
and discontinued operations EDCI & EDC 3Q2009 and YTD 3Q2009
Operating Results -- EDC (& EDCI) Revenue: -- EDC 3Q2009
Revenue down (27%) Y/Y: The (27%) Y/Y decline was attributable to
Disc volume declines of (17%) 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. -- EDC YTD
3Q2009 Revenue down (30%) Y/Y: The (30%) Y/Y decline was
attributable to Disc volume declines of (17%) Y/Y, business mix
pressures on revenues per unit and 10 bp. of the decline related to
the U.S. dollar strengthening against the Euro and British Pound.
Volume Revenue ------ ------- 3Q2009 YTD 3Q2009 3Q2009 YTD 3Q2009
vs. vs. vs. vs. 3Q2008 YTD 3Q2008 3Q2008 YTD 3Q2008 -------
----------- ------- ----------- EDC Hannover Manufacturing (2%)
(5%) (14%) (21%) EDC Hannover Distribution (12%) (17%) (18%) (27%)
EDC Blackburn Manufacturing (46%)** (33%)** (56%) (47%) ** EDC
Blackburn volume declines include the impact of the closure of the
Blackburn facility and our decision to forgo certain customer
accounts due to uneconomical pricing and excessive credit risk. --
EDC (& EDCI) Gross Margin: -- EDC 3Q2009 Gross Margin
Percentage down (220 bp.) Y/Y: 3Q2009 gross margin was 16.3%. The
decrease from 3Q2008 was due to (17%) Y/Y volume declines and
business mix resulting in lower revenues per unit. -- EDC YTD
3Q2009 Gross Margin Percentage down (310 bp.) Y/Y: YTD 3Q2009 gross
margin was 15.1%. The decrease from YTD 3Q2008 was due to (17%) Y/Y
volume declines, redundancy costs, lower revenue per unit and the
U.S. dollar strengthening against the Euro and British Pound. --
EDCI EBITDA: -- 3Q2009 EBITDA down (76%) Y/Y: The decrease from
3Q2008 was due to (17%) Y/Y volume declines and changes in business
mix. -- YTD 3Q2009 EBITDA down (149%) Y/Y: The decrease from YTD
3Q2008 was due to $7.2 million in restructuring charges incurred
related to the EDC Blackburn - Hannover Consolidation. Had these
charges not been incurred, EBITDA would have been down (82%) due to
(17%) Y/Y volume declines. Balance Sheet Information % Change
--------- from ($000,000's) 9/30/2009 6/30/2009 12/31/2008
6/30/2009 ------------ --------- --------- ---------- ---------
(unaudited) (unaudited) ----------- ----------- EDCI-H Cash &
S/T Investments $50.9 $51.4 $52.6 (1.0%) EDCI-H Working Capital
50.5 50.9 52.2 (0.8%) EDC Working Capital 17.0 14.8 29.2 14.9% EDC
Unrestricted Cash 27.5 27.6 22.5 (0.4%) EDC Accounts Receivable
14.5 12.6 19.1 15.1% EDC Credit Facility & UMG Debt 9.4 9.3
10.3 1.1% -- EDCI Cash: -- EDCI cash and cash equivalents were
$50.9 million or $7.62/share outstanding at 09/30/2009. This
compares to $51.4 million or $7.66/share outstanding at 06/30/2009.
At current run rates, due to aggressive cost cutting, EDCI targets
the annual 2009 cash burn rate at $2.5 million, or $0.37/share
outstanding at 09/30/2009. The salaries of EDCI employees were
reduced 19% beginning July 1, 2009. -- EDC Working Capital: -- EDC
working capital was $17.0 million at 09/30/2009, approximately 15%
higher than working capital of $14.8 million at 06/30/2009. The
increase was primarily due to higher accounts receivable, which
were driven by the timing of invoicing and payments received from
our largest customer. -- EDC Accounts Receivable / DSO: -- EDC
09/30/2009 accounts receivable was $14.5 million, up approximately
15% from 06/30/2009. Days Sales Outstanding (DSO) was approximately
31 days at 09/30/2009 and 06/30/2009. Plan of Liquidation and
Dissolution On September 9, 2009, the Company announced that its
Board of Directors unanimously approved recommending a dissolution
process to EDCI's stockholders. In this regard, on October 14,
2009, the Board of Directors unanimously approved a Plan of
Complete Liquidation and Dissolution (the "Plan of Dissolution"),
subject to stockholder approval. The ultimate goal is to effect a
distribution of the maximum available cash of EDCI to its
stockholders while retaining sufficient reserves to maximize the
value of any remaining assets and manage down both known and
unknown liabilities in accordance with state law requirements. The
Plan of Dissolution provides for an orderly wind down of EDCI's
business and operations during a three-year statutory period under
Delaware law. If the dissolution is approved by the stockholders,
EDCI expects to make an aggregate initial distribution of cash to
its stockholders of up to $30.0 million. EDCI's indirect ownership
of 97.99% of the membership units of EDC will be an asset of EDCI
that is subject to the Plan of Dissolution. The Plan of Dissolution
does not directly involve the operating business, assets,
liabilities or corporate existence of EDC and its subsidiaries,
however, subsequent to the stockholder ratification of the Plan of
Dissolution, EDCI's consolidated financials will be required to
reflect the value of EDC's assets and liabilities under liquidation
accounting. During EDCI's 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 repayment of EDC's bank debt and other
legal requirements. If EDCI continues to own any interest in EDC at
the end of the three year dissolution period, EDCI anticipates
transferring such interests to a liquidating trust, for the benefit
of the Company's stockholders. EDC Blackburn - Hannover
Consolidation Update As previously announced on March 20, 2009, the
Board of Directors of EDC approved a plan to consolidate EDC's
Blackburn, UK and Hannover, Germany manufacturing volumes within
the Hannover facility (the "Consolidation"). During the 3Q2009, EDC
continued to take certain steps towards execution of the
Consolidation and the Consolidation is proceeding according to
plan. Current estimates of costs associated with the closure of the
Blackburn facility are in line with those previously announced.
Consummation of the Consolidation transaction requires the consent
of the lenders pursuant to EDC's credit facility. EDC is currently
in negotiations to obtain the consent of the lenders to proceed
with the Consolidation transaction but have yet to reach an
agreement. Share Buyback Program EDCI announced on May 26, 2009
that the EDCI Board of Directors approved a twelve month extension
of EDCI's common stock repurchase program and also added a
provision to the program which allows EDCI to repurchase shares of
its common stock under a 10b5-1 plan. During the third quarter of
2009, EDCI repurchased a total of 28,887 shares. Since the original
implementation of the plan, EDCI has purchased a total of 220,610
shares for an aggregate purchase price of $982,000. Conference Call
EDCI will host a conference call to discuss the 3Q2009 financial
results on Monday, November 2, 2009 at 9:00 a.m. ET. This press
release, the financial tables, as well as other supplemental
information including the reconciliation of certain non-GAAP
measures to their nearest comparable GAAP measures, are also
available on EDCI's corporate website located at
http://www.edcih.com/. To access the conference call, please dial
(800) 642-1740 or (706) 634-7533 (international callers) and
reference conference code 35710995. A live webcast of the
conference call will also be available on EDCI's corporate website.
A replay of the conference call will be available through midnight
ET on Friday, November 13, 2009. The replay can be accessed by
dialing (800) 642-1687 or (706) 645-9291 (international callers).
The conference code for the replay is 35710995. About EDCI
Holdings, Inc. EDCI Holdings, Inc. (NASDAQ:EDCI) is a
multi-national company, headquartered in New York, that is seeking
to enhance shareholder value by pursuing acquisition opportunities.
EDCI is the holding company of Entertainment Distribution Company,
Inc., which is the majority shareholder of Entertainment
Distribution Company, LLC ("EDC"), a European provider of supply
chain services to the optical Disc market. EDC serves every aspect
of the manufacturing and distribution process and is one of the
largest providers in the industry. EDC's clients include some of
the world's best-known music, movie and gaming companies. EDC's
operations include manufacturing and distribution facilities in
Hannover, Germany, and a manufacturing facility in Blackburn, UK.
For more information, please visit http://www.edcih.com/. Safe
Harbor Statement This news release contains statements that may be
forward looking within the meaning of applicable securities laws.
The statements may include projections regarding future revenues
and earnings results, and are based upon EDCI's current forecasts,
expectations and assumptions, which are subject to a number of
risks and uncertainties that could cause the actual outcomes and
results to differ materially. Some of these results and
uncertainties are discussed in EDCI's most recently filed Annual
Report on Form 10-K. These factors include, but are not limited to
the current global and economic downturn; declining nature of CD
and DVD industries; potential intellectual property infringement
claims; variability of quarterly results and dependence on key
customers; increased costs or shortages of raw materials or energy;
international business risks; foreign currency translation and
transaction risks; limitations on NOLs resulting from ownership
changes; environmental laws and regulations; ability to attract and
retain key personnel; competition; and volatility of stock price;
EDCI assumes no obligation to update any forward-looking statements
and does not intend to do so except where legally required. ABOUT
NON-GAAP FINANCIAL MEASURES To supplement its consolidated
financial statements, which statements are prepared and presented
in accordance with GAAP, EDCI uses the following non-GAAP financial
measures: EBITDA. The presentation of this financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information prepared and presented in
accordance with GAAP. For more information on these non-GAAP
financial measures, please see the tables captioned "Summary
Schedule of non-GAAP Financial Data" included at the end of this
release. EDCI HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS September 30, December 31, 2009 2008 (unaudited) -----------
----------- (In thousands, ASSETS except share data) Current
Assets: Cash and cash equivalents $78,357 $75,112 Restricted cash
2,452 7,258 Accounts receivable, net of allowances for doubtful
accounts of $2,913 and $3,008 for September 30, 2009 and December
31, 2008, respectively 14,541 19,129 Current portion of long-term
receivable 1,256 599 Inventories, net 6,424 4,845 Prepaid expenses
and other current assets 13,065 12,513 Deferred income taxes 108
105 Assets held for sale 7,000 7,154 Current assets, discontinued
operations 203 8,691 --- ----- Total Current Assets 123,406 135,406
Restricted cash 25,396 25,439 Property, plant and equipment, net
17,763 21,186 Long-term receivable 2,276 3,066 Long-term
investments 870 1,020 Deferred income taxes 1,507 1,694 Other
assets 3,954 4,739 ----- ----- TOTAL ASSETS $175,172 $192,550
======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities: Accounts payable $13,174 $15,930 Accrued expenses and
other liabilities 32,139 24,435 Loans from employees 1,021 1,142
Current portion of long-term debt 7,467 2,281 Current liabilities,
discontinued operations 2,049 10,226 ----- ------ Total Current
Liabilities 55,850 54,014 Other non-current liabilities 3,936 8,353
Loans from employees 1,526 2,490 Long-term debt 1,928 7,996 Pension
and other defined benefit obligations 35,677 35,052 Non-current
liabilities, discontinued operations - 41 -- -- Total Liabilities
98,917 107,946 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 September 30, 2009 -- 7,019,436
shares issued; December 31, 2008 -- 7,019,436 shares issued 140 140
Additional paid in capital 371,338 371,091 Accumulated deficit
(305,027) (294,988) Accumulated other comprehensive income 6,350
4,583 Treasury stock at cost: September 30, 2009 -- 333,299 shares;
December 31, 2008 -- 324,794 shares (1,657) (1,427) ------ ------
Total EDCI Holdings, Inc. Stockholders' Equity 71,144 79,399
Noncontrolling interest in subsidiary company $5,111 $5,205 ------
------ Total Stockholders' Equity 76,255 84,604 ------ ------ TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY 175,172 192,550 =======
======= EDCI HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September
30, 2009 2008 ---- ---- (In thousands, except per share amounts)
REVENUES: Product revenues $30,849 $43,634 Service revenues 11,933
14,583 ------ ------ Total Revenues 42,782 58,217 ------ ------
COST OF REVENUES: Cost of product revenues 27,467 37,888 Cost of
service revenues 8,340 9,558 ----- ----- Total Cost of Revenues
35,807 47,446 ------ ------ GROSS PROFIT 6,975 10,771 OPERATING
EXPENSES: Selling, general and administrative expense 7,526 8,243
Amortization of intangible assets - 1,598 ----- ----- Total
Operating Expenses 7,526 9,841 ----- ----- OPERATING INCOME (LOSS)
(551) 930 ---- --- OTHER INCOME (EXPENSE): Interest income 47 846
Interest expense (161) (501) Gain on currency swap, net - 3,474
Gain (loss) on currency transaction, net 50 (1,371) Other expense,
net (32) (351) --- ---- Total Other Income (Expense) (96) 2,097 ---
----- INCOME (LOSS) FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES
(647) 3,027 Income tax provision 722 485 --- --- INCOME (LOSS) FROM
CONTINUING OPERATIONS (1,369) 2,542 DISCONTINUED OPERATIONS, NET OF
TAX: INCOME (LOSS) FROM DISCONTINUED OPERATIONS 56 (1,491) GAIN ON
SALE OF EDC U.S. OPERATIONS 409 - --- - NET INCOME (LOSS) $(904)
$1,051 Noncontrolling interest in subsidiary company (4) 39 -- --
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $(900) $1,012
===== ====== INCOME (LOSS) PER WEIGHTED AVERAGE COMMON SHARE (1):
Income (loss) from continuing operations attributable to common
stockholders $(0.20) $0.37 Discontinued operations attributable to
common stockholders: Income (loss) from discontinued operations
attributable to common stockholders 0.01 (0.22) Gain on sale of EDC
U.S. Operations 0.06 - ---- ----- Net income (loss) per weighted
average common share $(0.13) $0.15 ====== ===== INCOME (LOSS) PER
WEIGHTED AVERAGE DILUTED COMMON SHARE (1): - - Income (loss) from
continuing operations attributable to common stockholders $(0.20)
$0.37 Discontinued operations attributable to common stockholders:
Income (loss) from discontinued operations attributable to common
stockholders 0.01 (0.22) Gain on sale of EDC U.S. Operations 0.06 -
---- ----- Net income (loss) per weighted average common share
$(0.13) $0.15 ====== ===== AMOUNTS ATTRIBUTABLE TO EDCI HOLDINGS,
INC. COMMON STOCKHOLDERS Income (loss) from continuing operations
$(1,359) $2,536 Income (loss) from discontinued operations 50
(1,524) Gain on sale of EDC U.S. Operations 409 - --- ----- Net
Income (Loss) $(900) $1,012 ===== ====== (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 (Unaudited) Nine Months Ended September
30, 2009 2008 ---- ---- (In thousands, except per share amounts)
REVENUES: Product revenues $89,201 $128,475 Service revenues 32,248
44,133 ------ ------ Total Revenues 121,449 172,608 ------- -------
COST OF REVENUES: Cost of product revenues 79,375 111,268 Cost of
service revenues 23,788 30,003 ------ ------ Total Cost of Revenues
103,163 141,271 ------- ------- GROSS PROFIT 18,286 31,337
OPERATING EXPENSES: Selling, general and administrative expense
21,217 27,049 Severance costs for UK facility closure 7,152 -
Amortization of intangible assets - 4,843 ------ ----- Total
Operating Expenses 28,369 31,892 ------ ------ OPERATING LOSS
(10,083) (555) ------- ---- OTHER INCOME (EXPENSE): Interest income
310 2,893 Interest expense (569) (1,759) Gain on currency swap, net
2,111 881 Gain (loss) on currency transaction, net 537 (1,965)
Other expense, net (18) (343) --- ---- Total Other Income (Expense)
2,371 (293) ----- ---- LOSS FROM CONTINUING OPERATIONS, BEFORE
INCOME TAXES (7,712) (848) Income tax provision 414 853 --- ---
LOSS FROM CONTINUING OPERATIONS (8,126) (1,701) DISCONTINUED
OPERATIONS, NET OF TAX: LOSS FROM DISCONTINUED OPERATIONS (2,596)
(9,194) GAIN ON SALE OF EDC U.S. OPERATIONS 589 - --- ----- NET
LOSS $(10,133) $(10,895) Noncontrolling interest in subsidiary
company (94) (203) --- ---- NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(10,039) $(10,692) ======== ======== LOSS PER
WEIGHTED AVERAGE COMMON SHARE (1): Loss from continuing operations
attributable to common stockholders $(1.20) $(0.24) Discontinued
operations attributable to common stockholders: Loss from
discontinued operations attributable to common stockholders (0.38)
(1.31) Gain on sale of EDC U.S. Operations 0.08 - ---- ----- Net
loss per weighted average common share $(1.50) $(1.55) ======
====== LOSS PER WEIGHTED AVERAGE DILUTED COMMON SHARE (1): - - Loss
from continuing operations attributable to common stockholders
$(1.20) $(0.24) Discontinued operations attributable to common
stockholders: Loss from discontinued operations attributable to
common stockholders (0.38) (1.31) Gain on sale of EDC U.S.
Operations 0.08 - ---- ----- Net loss per weighted average common
share $(1.50) $(1.55) ====== ====== AMOUNTS ATTRIBUTABLE TO EDCI
HOLDINGS, INC. COMMON STOCKHOLDERS Loss from continuing operations
$(8,078) $(1,641) Loss from discontinued operations (2,550) (9,051)
Gain on sale of EDC U.S. Operations 589 - --- ----- Net Loss
$(10,039) $(10,692) ======== ======== (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. YTD YTD 3Q2009 3Q2008 3Q2009
3Q2008 ------ ------ ------ ------ Income (loss) from continuing
operations (1,369) 2,542 (8,126) (1,701) Income tax provision 722
485 414 853 Gain on currency swap, net - (3,474) (2,111) (881)
(Gain) loss on currency transaction, net (50) 1,371 (537) 1,965
Interest (income) expense, net 114 (345) 259 (1,134) Depreciation
and amortization 1,670 3,668 4,874 11,176 Other expense, net 32 351
18 343 -- --- -- --- EBITDA from continuing operations 1,119 4,598
(5,209) 10,621 ===== ===== ====== ====== DATASOURCE: EDCI Holdings,
Inc. CONTACT: Kyle Blue, +1-317-348-1940 Web Site:
http://www.edcih.com/
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