UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (date of earliest event reported): February 1, 2012
RealD Inc.
(Exact name of registrant as specified in its charter)
Delaware |
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001-34818 |
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77-0620426 |
(State or other |
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(Commission File Number) |
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(IRS Employer |
100 N. Crescent Drive, Suite 200 |
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90210 |
(Address of principal executive offices) |
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(Zip Code) |
(310) 385-4000
(Registrants telephone number, including area code)
NA
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On February 1, 2012, RealD Inc. (or the Company) issued a press release reporting its financial results for the three months ended December 23, 2011. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1.
The information contained in this report and the attached press release is furnished but not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
On February 1, 2012, the Company will conduct a properly noticed conference call to discuss its results of operations for the third quarter of fiscal 2012 and to answer any questions raised by the calls audience.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibit is attached to this Current Report on Form 8-K:
Exhibit No. |
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Description |
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99.1 |
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Press release, dated February 1, 2012, entitled RealD Inc. Reports Financial Results for Third Quarter of Fiscal 2012. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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RealD Inc. | |
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By: |
/s/ Craig Gatarz |
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Craig Gatarz |
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Date: February 1, 2012 |
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Exhibit 99.1
RealD Inc. Reports Financial Results for Third Quarter of Fiscal 2012
LOS ANGELES (February 1, 2012) - RealD Inc. (NYSE: RLD), a leading global licensor of 3D technologies, today announced financial results for its third quarter of fiscal 2012 ended December 23, 2011.
Third Quarter Financial Highlights
Revenue
· Revenue was $49.0 million, a decrease of 15% from $57.8 million in the third quarter of fiscal 2011.
· Net license revenue was $28.5 million, an increase of 51% from $18.8 million in the third quarter of fiscal 2011.
· Net license revenue for the prior-year quarter is net of $22.0 million in motion picture exhibitor stock option expense (a contra revenue item). All exhibitor stock options vested in fiscal 2011 and RealD does not expect to incur exhibitor stock option expense during the current fiscal year or in future years.
· Product and other revenue was $20.6 million, a decrease of 47% from $38.9 million in the third quarter of fiscal 2011. The decrease is partially attributable to an increasing number of international consumers returning to the cinema with RealD eyewear purchased at a previous RealD showing.
GAAP Results Profitability Measures and Balance Sheet
· GAAP net income attributable to common stockholders was $2.8 million, or $0.05 per diluted share, compared to a GAAP net loss attributable to common stockholders of $16.6 million, or $0.34 per share, for the third quarter of fiscal 2011.
· Gross margin increased to 49% from 11% in the third quarter of fiscal 2011.
· The Companys balance sheet at December 23, 2011 included total cash and cash equivalents of $29.2 million and total debt of $25.0 million. The Company had $25.0 million available on its line of credit as of December 23, 2011.
Non-GAAP Results Profitability Measures
· Adjusted EBITDA was $16.2 million, a decrease of 4% from $16.9 million in the third quarter of fiscal 2011.
· Adjusted EBITDA increased to 33% of net revenue from 29% of net revenue in the third quarter of fiscal 2011.
· Adjusted EBITDA is defined within the section of this press release entitled Use of Non-GAAP Financial Measures, which includes a reconciliation to its most comparable GAAP measure, net income (loss).
Prudent management of operating expenses enabled RealD to maintain profitability during the third fiscal quarter despite a relatively muted 3D film slate, said Michael V. Lewis, Chairman and Chief Executive
Officer of RealD. Looking forward, we are excited about the promising slate of 3D films in our fiscal 2013 that begins on March 24, 2012, as well as continued expansion within international markets.
Key Metrics and International Revenue Statistics
· International markets generated 60% of gross license revenue in the quarter compared to 58% of gross license revenue in the third quarter of fiscal 2011.
· As of December 23, 2011, the Company had deployed approximately 19,700 RealD-enabled screens, an increase of 74% from approximately 11,300 screens as of December 24, 2010, and an increase of 1,000 screens, or 5%, from approximately 18,700 screens as of September 23, 2011.
· As of December 23, 2011, the Company had approximately 11,500 domestic screens at approximately 2,500 domestic theater locations and approximately 8,200 international screens at approximately 2,400 international theater locations.
First Nine Months Fiscal 2012 Results
Revenue
· Revenue was $196.6 million, an increase of 5% from $187.6 million for the nine months ended December 24, 2010.
· Net license revenue was $116.1 million, an increase of 70% from $68.4 million for the nine months ended December 24, 2010.
· Net license revenue for the nine months ended December 24, 2010 is net of $34.0 million in motion picture exhibitor stock option expense (a contra revenue item).
· Product and other revenue was $80.4 million, a decrease of 33% from $119.2 million for the nine months ended December 24, 2010.
GAAP Results Profitability Measures
· GAAP net income attributable to common stockholders was $31.3 million, or $0.55 per diluted share, compared to a GAAP net loss attributable to common stockholders of $16.8 million, or $0.43 per share, for the nine months ended December 24, 2010.
· Gross margin increased to 52% from 20% for the nine months ended December 24, 2010.
Non-GAAP Results Profitability Measures
· Adjusted EBITDA was $86.6 million, an increase of 95% from $44.4 million for the nine months ended December 24, 2010.
· Adjusted EBITDA increased to 44% of net revenue from 24% of net revenue for the nine months ended December 24, 2010.
3D Theatrical Release Schedule for Second Half Fiscal 2012 and First Half Fiscal 2013
(As of February 1, 2012 Domestic)
Fiscal Q3 2012 |
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Film |
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Domestic Release Date |
(ended 12/23/11) |
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Three Musketeers |
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10/21/2011 |
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Puss in Boots |
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10/28/2011 |
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A Very Harold & Kumar 3D Christmas |
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11/4/2011 |
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Immortals |
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11/11/2011 |
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Happy Feet 2 |
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11/18/2011 |
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Arthur Christmas |
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11/23/2011 |
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Hugo |
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11/23/2011 |
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The Adventures of Tintin |
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12/21/2011 |
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Fiscal Q4 2012 |
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Film |
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Domestic Release Date |
(ending 3/23/12) |
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The Darkest Hour |
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12/25/2011 |
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Beauty and the Beast 3D (re-release) |
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1/13/2012 |
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Underworld 4: Awakening |
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1/20/2012 |
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Journey 2: The Mysterious Island |
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2/10/2012 |
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Star Wars: Episode 1: The Phantom Menace (re-release) |
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2/10/2012 |
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Ghost Rider: Spirit of Vengeance |
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2/17/2012 |
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Dr. Seuss The Lorax |
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3/2/2012 |
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John Carter |
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3/9/2012 |
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Fiscal Q1 2013 |
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Film |
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Domestic Release Date |
(ending 6/22/12) |
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Wrath of the Titans |
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3/30/2012 |
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The Pirates! Band of Misfits |
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3/30/2012 |
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Titanic (re-release) |
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4/6/2012 |
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The Avengers |
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5/4/2012 |
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Men in Black III |
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5/25/2012 |
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Madagascar 3 |
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6/8/2012 |
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Prometheus |
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6/8/2012 |
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Brave |
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6/22/2012 |
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Abraham Lincoln: Vampire Hunter |
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6/22/2012 |
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Fiscal Q2 2013 |
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Film |
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Domestic Release Date |
(ending 9/21/12) |
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Amazing Spiderman 4 |
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7/3/2012 |
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Ice Age: Continental Drift |
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7/13/2012 |
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Step Up 4Ever 3D |
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7/27/2012 |
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ParaNorman |
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8/17/2012 |
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Resident Evil 5: Retribution |
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9/14/2012 |
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Finding Nemo (re-release) |
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9/14/2012 |
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Dredd |
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9/21/2012 |
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Hotel Transylvania |
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9/21/2012 |
Sources: Rentrak and imdb.com.
Conference Call Information
Members of RealD management will host a conference call to discuss the Companys financial results for the third quarter ended December 23, 2011 beginning at 4:30 pm ET (1:30 pm PT), today, February 1, 2012. To access the call via telephone, interested parties should dial (877) 941-4774 (U.S.) or (480) 629-9760 (International) ten minutes prior to the start time and use conference ID 4507345.
The conference call will also be broadcast live over the Internet, hosted at the Investor Relations section of the Companys website at www.reald.com. An archived replay of the call will be available via webcast at www.reald.com or by dialing (877) 870-5176, or (858) 384-5517 for international callers. The conference ID for the telephone replay is 4507345.
Cautionary Note on Forward-Looking Statements
This press release includes forward-looking information and statements, including but not limited to: statements concerning anticipated future financial and operating performance; RealDs ability to continue to derive substantial revenue from the licensing of RealDs 3D technologies for use in the motion picture industry, as well as RealDs relationships with consumer electronics panel manufacturers and its ability to generate substantial revenue from the licensing of RealDs 3D technologies for use in the 3D consumer electronics market; 3D motion picture releases and conversions scheduled for fiscal 2012 ending March 23, 2012, their commercial success and consumer preferences; our ability to increase the number of RealD-enabled screens in domestic and international markets and market share; our ability to supply our solutions to our customers on a timely basis; RealDs relationships with its exhibitor and studio partners and the business model for 3D eyewear in North America; the progress, timing and amount of expenses associated with RealDs research and development activities; market and industry trends, including growth in 3D content; RealDs projected operating results; and competitive pressures in domestic and international markets. These statements are based on our managements current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside our managements control that could cause actual results to differ materially from the results discussed in the forward-looking statements. The Companys Quarterly Report on Form 10-Q for the three months ended December 23, 2011 and other documents filed with the SEC include a more detailed discussion of the risks and uncertainties that may cause actual results to differ materially from the results discussed in the forward-looking statements.
RealD undertakes no obligation to update publicly the information contained in this press release, or any forward-looking statements, to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.
Use of Non-GAAP Financial Measures
To supplement RealDs financial statements presented on a GAAP basis, RealD provides Adjusted EBITDA as a supplemental measure of its performance. The Company defines Adjusted EBITDA as net income (loss), plus net interest expense, income and other taxes, and depreciation and amortization, as further adjusted to eliminate the impact of share based compensation expense, exhibitor option expense and certain other items not considered by RealD management to be indicative of the companys core operating performance.
RealD presents Adjusted EBITDA in reporting its financial results to provide investors with additional tools to evaluate RealDs operating results in a manner that focuses on what RealDs management believes to be its ongoing business operations. RealDs management does not itself, nor does it suggest that investors should, consider any such Non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adjusted EBITDA is used by management for planning purposes, including: the preparation of internal budgets, forecasts and strategic plans; in analyzing the effectiveness of business strategies; to evaluate potential acquisitions; in making compensation decisions; in communications with its Board of Directors concerning financial performance; and as part of the Companys
credit agreement in which Adjusted EBITDA is used to measure compliance with certain covenants. Because not all companies use identical calculations, the Companys presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA is not intended to be a measure of free cash flow for managements discretionary use, as it does not consider certain cash requirements such as tax and debt service payments.
About RealD Inc.
RealD is a leading global licensor of 3D technologies. RealDs extensive intellectual property portfolio is used in applications that enable a premium 3D viewing experience in the theater, the home and elsewhere. RealD licenses its RealD Cinema Systems to motion picture exhibitors that show 3D motion pictures and alternative 3D content. RealD also provides its RealD Display, active and passive eyewear, and RealD Format technologies to consumer electronics manufacturers and content producers and distributors to enable the delivery and viewing of 3D content. RealDs cutting-edge 3D technologies have been used for applications such as piloting the Mars Rover.
RealD was founded in 2003 and has offices in Beverly Hills, California; Boulder, Colorado; London, United Kingdom; Shanghai, China; Hong Kong; and Tokyo, Japan. For more information, please visit our website at www.reald.com.
© 2012 RealD Inc. All Rights Reserved.
Investor Contact:
Erik Randerson, CFA
424-702-4317
eranderson@reald.com
Media Contact:
Rick Heineman
310-339-9347
rheineman@reald.com
RealD Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
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Three months ended |
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Nine months ended |
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December 23, |
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December 24, |
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December 23, |
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December 24, |
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2011 |
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2010 |
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2011 |
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2010 |
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Revenue: |
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License |
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$ |
28,454 |
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$ |
18,838 |
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$ |
116,146 |
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$ |
68,390 |
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Product and other |
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20,572 |
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38,942 |
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$ |
80,435 |
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$ |
119,232 |
| ||
Total revenue |
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49,026 |
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57,780 |
|
196,581 |
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187,622 |
| ||||
Cost of revenue: |
|
|
|
|
|
|
|
|
| ||||
License (1) |
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9,202 |
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5,301 |
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30,321 |
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11,660 |
| ||||
Product and other |
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15,870 |
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46,341 |
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64,465 |
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138,099 |
| ||||
Total cost of revenue |
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25,072 |
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51,642 |
|
94,786 |
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149,759 |
| ||||
Gross profit |
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23,954 |
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6,138 |
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101,795 |
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37,863 |
| ||||
Operating expenses: |
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|
|
|
|
|
|
|
| ||||
Research and development |
|
4,336 |
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4,347 |
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12,736 |
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10,751 |
| ||||
Selling and marketing |
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6,564 |
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5,813 |
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20,259 |
|
15,251 |
| ||||
General and administrative |
|
11,513 |
|
10,596 |
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29,735 |
|
25,195 |
| ||||
Total operating expenses |
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22,413 |
|
20,756 |
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62,730 |
|
51,197 |
| ||||
Operating income (loss) |
|
1,541 |
|
(14,618 |
) |
39,065 |
|
(13,334 |
) | ||||
Interest expense |
|
(227 |
) |
(71 |
) |
(710 |
) |
(873 |
) | ||||
Other income (loss) |
|
(792 |
) |
(431 |
) |
157 |
|
6,376 |
| ||||
Income (loss) before income taxes |
|
522 |
|
(15,120 |
) |
38,512 |
|
(7,831 |
) | ||||
Income tax expense (benefit) |
|
(2,241 |
) |
1,648 |
|
7,170 |
|
3,299 |
| ||||
Net income (loss) |
|
2,763 |
|
(16,768 |
) |
31,342 |
|
(11,130 |
) | ||||
Net (income) loss attributable to noncontrolling interest |
|
70 |
|
181 |
|
(9 |
) |
(692 |
) | ||||
Accretion of preferred stock |
|
|
|
|
|
|
|
(4,934 |
) | ||||
Net income (loss) attributable to RealD Inc. common stockholders |
|
$ |
2,833 |
|
$ |
(16,587 |
) |
$ |
31,333 |
|
$ |
(16,756 |
) |
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|
|
|
|
|
|
|
|
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Earnings (loss) per common share: |
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|
|
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|
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Basic |
|
$ |
0.05 |
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$ |
(0.34 |
) |
$ |
0.58 |
|
$ |
(0.43 |
) |
Diluted |
|
$ |
0.05 |
|
$ |
(0.34 |
) |
$ |
0.55 |
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$ |
(0.43 |
) |
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|
|
|
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|
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Shares used in computing earnings (loss) per common share: |
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Basic |
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54,524 |
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48,760 |
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54,274 |
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38,689 |
| ||||
Diluted |
|
56,385 |
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48,760 |
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56,985 |
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38,689 |
|
(1) The nine months ended December 23, 2011 include $6.8 million in impairment charged to cost of revenue for certain of the cinema systems.
RealD Inc.
Consolidated Balance Sheets
(In thousands)
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December 23, |
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March 25, |
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2011 |
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2011 |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
29,180 |
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$ |
16,936 |
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Accounts receivable, net |
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44,015 |
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50,676 |
| ||
Inventories |
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46,020 |
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54,971 |
| ||
Deferred costs eyewear |
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573 |
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49 |
| ||
Deferred income taxes |
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|
|
1,029 |
| ||
Income taxes receivable |
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|
|
139 |
| ||
Prepaid expenses and other current assets |
|
2,040 |
|
1,734 |
| ||
Total current assets |
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121,828 |
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125,534 |
| ||
Property and equipment, net |
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10,970 |
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7,889 |
| ||
Cinema systems, net |
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142,954 |
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122,226 |
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Digital projectors, net-held for sale |
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4,360 |
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10,475 |
| ||
Goodwill |
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10,657 |
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10,657 |
| ||
Other intangibles, net |
|
1,788 |
|
1,918 |
| ||
Deferred income taxes |
|
817 |
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|
| ||
Other assets |
|
4,906 |
|
1,448 |
| ||
Total assets |
|
$ |
298,280 |
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$ |
280,147 |
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|
|
|
|
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| ||
Liabilities and equity |
|
|
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Current liabilities: |
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|
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Accounts payable |
|
$ |
26,584 |
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$ |
58,713 |
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Accrued expenses and other liabilities |
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27,457 |
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40,118 |
| ||
Deferred revenue |
|
7,820 |
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14,176 |
| ||
Income taxes payable |
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3,885 |
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| ||
Deferred income taxes |
|
700 |
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|
| ||
Current portion of long-term debt |
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|
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2,291 |
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Total current liabilities |
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66,446 |
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115,298 |
| ||
Credit facility agreement |
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25,000 |
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|
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Deferred revenue, net of current portion |
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14,193 |
|
14,106 |
| ||
Other long-term liabilities, customer deposits and virtual print fee liability |
|
3,679 |
|
4,533 |
| ||
Long-term debt, net of current portion |
|
|
|
19 |
| ||
Deferred income taxes |
|
|
|
1,091 |
| ||
Commitments and contingencies |
|
|
|
|
| ||
Equity |
|
|
|
|
| ||
Common stock, $0.0001 par value, 200,000 shares authorized; 54,468 and 53,570 shares issued and outstanding at December 23, 2011 and March 25, 2011, respectively |
|
305,424 |
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292,904 |
| ||
Accumulated deficit |
|
(118,247 |
) |
(149,580 |
) | ||
Total RealD Inc. stockholders equity |
|
187,177 |
|
143,324 |
| ||
Noncontrolling interest |
|
1,785 |
|
1,776 |
| ||
Total equity |
|
188,962 |
|
145,100 |
| ||
Total liabilities and equity |
|
$ |
298,280 |
|
$ |
280,147 |
|
RealD Inc.
Schedule of Non-GAAP Reconciliations
(In thousands)
(Unaudited)
Reconciliation of Net Income (Loss) to Adjusted EBITDA
|
|
Three months ended |
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Nine months ended |
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|
|
December 23, |
|
December 24, |
|
December 23, |
|
December 24, |
| ||||
(in thousands) |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) |
|
$ |
2,763 |
|
$ |
(16,768 |
) |
$ |
31,342 |
|
$ |
(11,130 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
227 |
|
71 |
|
710 |
|
873 |
| ||||
Income tax expense (benefit) |
|
(2,241 |
) |
1,648 |
|
7,170 |
|
3,299 |
| ||||
Depreciation and amortization |
|
7,406 |
|
4,384 |
|
20,558 |
|
10,428 |
| ||||
Other (income) loss (1) |
|
792 |
|
431 |
|
(157 |
) |
(6,376 |
) | ||||
Share-based compensation expense (2) |
|
4,086 |
|
2,980 |
|
11,718 |
|
5,988 |
| ||||
Exhibitor option expense (3) |
|
|
|
21,960 |
|
|
|
34,008 |
| ||||
Impairment of assets and intangibles (4) |
|
1,196 |
|
519 |
|
9,024 |
|
814 |
| ||||
Sales and use tax (5) |
|
1,569 |
|
1,291 |
|
5,076 |
|
5,443 |
| ||||
Property tax (6) |
|
367 |
|
392 |
|
1,133 |
|
839 |
| ||||
Management fee (7) |
|
|
|
|
|
|
|
175 |
| ||||
Adjusted EBITDA |
|
$ |
16,165 |
|
$ |
16,908 |
|
$ |
86,574 |
|
$ |
44,361 |
|
(1) Includes amortization of debt issue costs, unrealized foreign currency exchange gains and losses and gains from the sale of digital projectors.
(2) Represents share-based compensation expense of nonstatutory and incentive stock options and restricted stock units to employees, officers and directors.
(3) Represents stock options granted to some of our motion picture exhibitor licensees. The amounts are recorded as motion picture exhibitor option expense/contra revenue in the consolidated financial statements.
(4) Represents impairment of long-lived assets, such as fixed assets, theatrical equipment and identifiable intangibles.
(5) Represents taxes incurred by us for cinema license and product revenue.
(6) Represents property taxes on RealD Cinema Systems and digital projectors.
(7) Represents payment of management fees to our Series C mandatorily redeemable convertible preferred stockholder (included in general and administrative expense, which was terminated upon the completion of our initial public offering).