RLJ Entertainment Reports Financial Results for the First Quarter Ended March 31, 2013

  RLJ Entertainment Reports Financial Results for the First Quarter Ended
  March 31, 2013

Business Wire

SILVER SPRING, Md. -- May 15, 2013

RLJ Entertainment Inc., (NASDAQ: RLJE), today reported results for the first
quarter ended March 31, 2013. RLJ Entertainment is a leading creator, owner
and distributor of media content across digital, broadcast and physical
platforms, which leverages its branding expertise, access to content and
direct to consumer skills to optimize the value of its programs for distinct
audiences. RLJ Entertainment was formed in October 2012 through the business
combination of RLJ Acquisition, Inc., Image Entertainment, Inc. and Acorn
Media Group, Inc.

RLJ Entertainment is focused on driving growth through the development of
interest-based lifestyle entertainment services for targeted audiences in
niche genres including British drama and mystery, stand-up comedy, fitness,
faith and urban by using new technologies to deliver that content to
consumers.

Robert L. Johnson, Chairman of RLJ Entertainment stated, “I am pleased with
the direction of the business to date. We continue to work diligently to
integrate two very compelling entertainment businesses and to establish a
solid video entertainment platform and distribution strategy. Our recently
announced partnership with YouTube marks the beginning of our goal to become a
major player in producing targeted digital entertainment to audiences that are
underserved by existing outlets. We believe that this strategy will lead to
strong returns for investors over time.”

Miguel Penella, Chief Executive Officer of RLJ Entertainment, commented, “Our
financial performance in the first quarter was in-line with expectations and
we believe we are on track to deliver on our stated growth objectives. Our
results were moderately impacted by a smaller slate of films released in the
first quarter of 2013 compared to the same period last year as well as the
planned amortization of production costs associated with the U.K. broadcast
release of Foyle’s War 8. However, our current pipeline of feature films
remains strong, releases are expected to accelerate in the latter half of the
year, and full ownership of unique intellectual property rights for content is
a significant component of our long-term growth strategy.”

First Quarter 2013 Results

The Company is presenting financial information for the first quarter 2013 and
pro forma financial information for first quarter 2012 due to the closing of
the business combination among RLJ Entertainment, Image Entertainment and
Acorn Media on October 3, 2012.

For the first quarter ended March 31, 2013, RLJ Entertainment reported net
revenue of $40.3 million compared to pro forma net revenue of $41.4 million
for the three months ended March 31, 2012. Pro forma revenues include the
revenues of Image Entertainment and Acorn Media as if each were acquired as of
January 1, 2012. Revenue results for the first quarter were primarily
attributable to lower revenues at Image Entertainment which were due to a
smaller slate of film releases in Q1 2013 versus Q1 2012 and partially offset
by the revenues recognized from the release of Foyle’s War 8, an RLJ
Entertainment original production.

Net loss for the first quarter ended March 31, 2013 totaled $3.6 million
compared to a pro forma net loss of $2.1 million for the three months ended
March 31, 2012. The increase in loss was primarily attributable to unrealized,
noncash, foreign currency translation losses on intercompany loans ($1.4
million) and higher severance costs ($0.6 million).

EBITDA totaled $2.1 million for the first quarter ended March 31, 2013. EBITDA
results for the first quarter were driven by increased broadcast revenues
related to the initial release of Foyle’s War 8, an RLJ Entertainment original
production, as well as cost savings tied to Acorn’s U.S. manufacturing and
distribution activities in the quarter. For the first quarter ended March 31,
2013, Adjusted EBITDA, including integration savings, totaled $5.6 million and
includes approximately $1.2 million in savings from actions taken during the
first quarter or actions to be taken after March 31, 2013. Adjusted EBITDA,
not including integration savings, was approximately $4.4 million.

About RLJ Entertainment - RLJ Entertainment, Inc. (NASDAQ: RLJE) is a premier
independent licensee and distributor of entertainment content and programming
in North America, the United Kingdom and Australia with over 5,300 exclusive
titles. RLJE is a leader in numerous genres via its owned and distributed
brands such as Acorn (British TV), Image (stand-up comedy, feature films), One
Village (urban), Acacia (fitness), Slingshot (faith), Athena (educational),
Criterion (art films) and Madacy (gift sets). These titles are distributed in
multiple formats including DVD, Blu-Ray, digital download, digital streaming,
broadcast television (including satellite and cable), theatrical and
non-theatrical.

Via its majority-owned subsidiary Agatha Christie Limited (“ACL”), RLJE
manages the intellectual property and publishing rights to some of the
greatest works of mystery fiction, including stories of the iconic sleuths
Miss Marple and Poirot. And through its direct-to-consumer business, RLJE has
direct contacts and billing relationships with millions of consumers.

RLJE leverages its management experience to acquire, distribute, and monetize
existing and original content for its many distribution channels, including
its nascent branded digital subscription channels, and engages distinct
audiences with programming that appeals directly to their unique viewing
interests. RLJE has proprietary e-commerce web sites for the Acorn and Acacia
brands, and owns the recently launched Acorn TV digital subscription service.

Forward Looking Statements

This press release may include “forward looking statements” within the meaning
of the “safe harbor” provisions of the United Stated Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified by
the use of words such as “anticipate”, “believe”, “expect”, “estimate”,
“plan”, “outlook”, and “project” and other similar expressions that predict or
indicate future events or trends or that are not statements of historical
matters. Investors are cautioned that such forward looking statements with
respect to revenues, earnings, EBITDA, performance, strategies, prospects and
other aspects of the business of RLJ Entertainment is based on current
expectations that are subject to risks and uncertainties.

A number of factors could cause actual results or outcomes to differ
materially from those indicated by such forward looking statements. These
factors include, but are not limited to: (1) RLJ Entertainment’s ability to
integrate the businesses of Image Entertainment, Inc. and Acorn Media Group,
Inc.; (2) the inability of RLJ Entertainment to fully realize the anticipated
benefits of the business combination with Image Entertainment, Inc. and Acorn
Media Group, Inc. or such benefits taking longer to realize than expected; (3)
the ability of RLJ Entertainment’s officers and directors to generate a number
of potential investment opportunities; (4) RLJ Entertainment’s ability to
maintain relationships with customers, employees, suppliers and lessors; (5)
the loss of key personnel; (6) delays in the release of new titles or other
content; (7) the effects of disruptions in RLJ Entertainment’s supply chain;
(8) the limited liquidity and trading of RLJ Entertainment’s public
securities; (9) RLJ Entertainment’s financial performance, including the
ability of RLJ Entertainment to achieve revenue growth and EBITDA margins or
realize synergies; (10) the possibility that RLJ Entertainment may be
adversely affected by other economic, business, and/or competitive factors;
(11) the need for additional capital and the availability of financing; (12)
technological changes; (13) pricing and availability of products and services;
(14) demand for RLJ Entertainment’s products and services; (15) the ability to
leverage and monetize content; and (16) other risks and uncertainties
indicated from time to time in filings with the SEC by RLJ Entertainment.

Readers are referred to the most recent reports filed with the SEC by RLJ
Entertainment. Readers are cautioned not to place undue reliance upon any
forward-looking statements, which speak only as of the date made, and we
undertake no obligation to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise.


RLJ ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31, 2013 and December 31, 2012


ASSETS

                                       Successor
(In thousands)                            March 31, 2013   December 31, 2012
Current assets:
Cash and cash equivalents                 $    2,353         $     4,739
Accounts receivable, net of reserve
for returns, allowances and
provision for doubtful accounts
totaling $5,336 as of                          31,442              24,611
March 31, 2013 and $11,435 as of
December 31, 2012
Inventories, net                               21,742              23,029
Investment in film and television              86,988              89,797
programs
Property, equipment and                        1,341               1,800
improvements, net
Equity investment in ACL                       22,691              25,449
Other intangible assets                        22,643              23,883
Goodwill                                       47,382              47,382
Prepaid expenses and other assets             2,067              1,938
Total assets                              $    238,649       $     242,628



RLJ ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS, Continued
(unaudited)
March 31, 2013 and December 31, 2012


LIABILITIES AND STOCKHOLDERS' EQUITY

                                            Successor
(In thousands, except share data)              March 31, 2013   December 31,
                                                                  2012
                                                                  
Accounts payable and accrued liabilities       $  24,752          $   30,590
Accrued royalties and distribution fees           33,097              32,658
Deferred revenue                                  4,535               4,339
Revolving credit facility                         14,151              7,551
Senior term notes, less debt discount             50,488              51,225
Subordinated notes payable and other              23,277              23,547
debt
Deferred tax liability                            350                 350
Stock warrant liability                          4,120             4,324
Total liabilities                                154,770           154,584
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value, 250
million shares authorized,
13,377,546 shares issued and outstanding          13                  13
at March 31, 2013 and
December 31, 2012, respectively
Additional paid-in capital                        86,207              86,133
Retained earnings (deficit)                       (1,815   )          1,743
Accumulated other comprehensive gain             (526     )         155
(loss)
Net stockholders' equity                         83,879            88,044
Total liabilities and stockholders’            $  238,649        $   242,628
equity



RLJ ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

For the Three Months Ended March 31, 2013 and 2012


                                                 Successor    Predecessor
(In thousands, except per share data)               2013           2012
NET REVENUES                                        $ 40,306       $  19,585
COST OF SALES                                        27,736        10,065 
Gross profit                                         12,570        9,520  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Selling expenses                                      6,047           3,563
General and administrative expenses                   7,101           3,314
Transaction costs                                    —             1,664  
Total selling, general and administrative            13,148        8,541  
expenses
INCOME (LOSS) FROM OPERATIONS                         (578   )        979
OTHER INCOME (EXPENSE):
Interest in ACL’s net income                          649             24
Interest expense, net                                 (2,126 )        (157   )
Other income (expense)                               (1,077 )       183    
Total other income (expense)                         (2,554 )       50     
INCOME (LOSS) BEFORE PROVISION FOR INCOME             (3,132 )        1,029
TAXES
PROVISION FOR INCOME TAXES                           426           187    
NET INCOME (LOSS)                                     (3,558 )        842
Less net income attributable to                      —             (91    )
non-controlling interests
NET INCOME (LOSS) APPLICABLE TO COMMON              $ (3,558 )     $  751    
SHAREHOLDERS
NET INCOME (LOSS) PER COMMON SHARE:
UNRESTRICTED COMMON STOCK:
Basic                                               $ (0.27  )     $  0.73   
Diluted                                             $ (0.27  )     $  0.73   
RESTRICTED COMMON STOCK:
Basic                                               $ (0.27  )     $  —      
Diluted                                             $ (0.27  )     $  —      



RLJ ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
For the Three Months Ended March 31, 2013 and 2012


                                                 Successor    Predecessor
(In thousands)                                      2013           2012
NET INCOME (LOSS):
Net income (loss)                                   $ (3,558 )     $  842
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation gain (loss)             (681   )       201    
TOTAL COMPREHENSIVE INCOME (LOSS)                    (4,239 )       1,043  
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS:
Share of net income                                   —               (91    )
Share of foreign currency translation loss           —             2      
Comprehensive income attributable to                 —             (89    )
noncontrolling interest
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
COMMON                                              $ (4,239 )     $  954    
SHAREHOLDERS



RLJ ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months Ended March 31, 2013 and 2012


                                                    Successor    Predecessor
(In thousands)                                      2013           2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                   $ (3,558 )     $ 842
Adjustments to reconcile net income (loss) to net
cash provided by
(used in) operating activities:
Interest in ACL net income                            (649   )       (24     )
Amortization of film and television programs          7,179          766
Depreciation and other amortization                   140            108
Noncash interest expense                              584            —
Amortization of intangible assets                     1,287          23
Provision for doubtful accounts                       16             308
Provision for lower of cost or market inventory       264            —
Noncash foreign currency exchange loss (gain)         1,361          (164    )
Accelerated amortization and fair value write-down
of                                                    608            430
advance royalty and distribution fees
Change in fair values of stock warrant liability      (204   )       —
Stock-based compensation expense                      74             91
Changes in assets and liabilities associated with
operating activities:
Accounts receivable                                   (7,155 )       5,409
Inventories                                           955            489
Investment in film and television programs            (6,016 )       417
Prepaid expenses and other assets                     (206   )       (482    )
Accounts payable, accrued royalties, fees and         (4,743 )       (6,749  )
liabilities
Deferred revenue                                     196          —       
Net cash provided by (used in) operating activities  (9,867 )      1,464   
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                                  (23    )       (234    )
Acquisition of ACL                                    —              (21,871 )
Dividends received from ACL                          1,811        1,006   
Net cash provided by (used in) investing activities $ 1,788       $ (21,099 )



RLJ ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(unaudited)
For the Three Months Ended March 31, 2013 and 2012



                                                 Successor    Predecessor
(In thousands)                                      2013           2012
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility          $ 8,100        $  1,732
Repayments of borrowings under revolving              (1,500 )        —
credit facility
Proceeds from debt                                    —               18,000
Repayment of debt                                     (1,000 )        (796   )
Proceeds from issuance of subordinated notes          191             2,700
payable and other debt
Dividends paid to noncontrolling interest            —             (265   )
Net cash provided by financing activities            5,791         21,371 
                                                                   
EFFECT OF EXCHANGE RATE CHANGES ON CASH              (98    )       (113   )
NET INCREASE (DECREASE) IN CASH:                      (2,386 )        1,623
Cash at beginning of period                          4,739         1,625  
Cash at end of period                               $ 2,353       $  3,248  
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest                                            $ 1,332       $  124    
Income taxes                                        $ 218         $  233    


Unaudited pro forma financial information reflects the operating results of
RLJ Entertainment as if Image Entertainment and Acorn Media were acquired as
of the periods indicated. These combined results are not necessarily
indicative of the results that may have been achieved had the combined
companies been combined as of such dates or periods, or of RLJ Entertainment’s
future operating results.

Management believes EBITDA and Adjusted EBITDA to be meaningful indicators of
our performance that provide useful information to investors regarding our
financial condition and results of operations. The Company uses this measure
to assess operating results and performance of its business, perform
analytical comparisons, identify strategies to improve performance and
allocate resources to its business segments. The Company believes EBITDA and
Adjusted EBITDA is relevant to investors because it allows them to analyze the
operating performance of the business using the same metric management uses.
Presentation of EBITDA and Adjusted EBITDA are non-GAAP financial measures
commonly used in the entertainment industry and by financial analysts and
others who follow the industry to measure operating performance. While
management considers EBITDA and Adjusted EBITDA to be important measures of
comparative operating performance, they should be considered in addition to,
but not as a substitute for, net income and other measures of financial
performance reported in accordance with Generally Accepted Accounting
Principles. Not all companies calculate EBITDA or Adjusted EBITDA in the same
manner and the measures as presented may not be comparable to similarly-titled
measures presented by other companies.


RLJ Entertainment
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

                                                  Pro Forma   
                                                     Q1 2012        Q1 2013
                                                                    
Net Loss to Common                                   $ (2,115 )     $ (3,558 )
Preferred Dividends and Noncontrolling                 -              -
Interest
Amortization of film and television programs           4,117          1,659
(1)
Depreciation and other amortization                    1,412          1,427
Interest Expense, net                                  1,938          2,126
Income tax provision                                   (47    )       426
                                                                   
EBITDA                                               $ 5,305       $ 2,080  
                                                                    
Equity Earnings and Dividends (2)                      (528   )       (649   )
ACL EBITDA (3)                                         1,039          1,114
Amortization of Product Development (4)                (1,294 )       (87    )
Severance                                              54             639
Stock based compensation (5)                           387            74
Warrant Liability (6)                                  -              (204   )
Transaction Costs (7)                                  2,774          90
Senior management compensation savings (8)             650            -
Currency Exchange Loss Inter-company loans (9)         (164   )       1,361
Other Income (10)                                     (2,343 )      -      
EBITDA, as adjusted                                  $ 5,880       $ 4,418  



(1) Includes amortization of film library costs and intangible assets arising
at the date of the business combination
(2) Reflects the elimination of ACL equity earnings and dividends included in
net income
(3) Reflects the inclusion of RLJE 64% interest in ACL EBITDA
(4) Amortization of Product Development cost is considered a normal operating
business expense and not added back for Adjusted EBITDA or for our banking
covenant calculations
(5) Reflects noncash stock-based compensation costs
(6) Reflects elimination of gain in warrant liability
(7) Represents Acorn and Image transaction costs
(8) Eliminates the compensation paid to Acorn's Chairman and Vice Chairman in
the period January 1, 2012 through March 31, 2012. These positions were
eliminated as of October 2, 2012
(9) Reflects elimination of noncash, unrealized currency exchange gains and
losses related to inter-company activity
(10) Reflects the elimination of noncash gains recognized by Image
Entertainment with respect to its joint venture with Madacy


Reconciliation of adjusted EBITDA to adjusted EBITDA including integration
savings:

Management has identified (and previously disclosed) three specific
initiatives designed to improve near-term profitability performance, including
(i) personnel efficiencies, (ii) manufacturing savings, and (iii) operational
savings. Based on actions taken to date as well as planned initiatives in
April 2013, including the announced assumption of Acorn’s replication and
supply chain activities by Sony Pictures Home Entertainment, management
currently estimates annual savings for such initiatives, if included with
actual first quarter, 2013 and pro forma first quarter, 2012 results of
operations, as follows:

                                                  
                                      Pro Forma     Q1 2013
                                        Q1 2012
EBITDA, as adjusted                     $  5,880      $ 4,418
                                                      
Synergy - Personnel                        1,514        946
Synergy - Manufacturing                    325          -
Synergy - Operations                       275          275
                                                     
EBITDA, as adjusted with Synergies      $  7,994      $ 5,639
                                                      

Contact:

Sloane & Company
Josh Hochberg, 212-446-1892
Jhochberg@sloanepr.com
or
Erica Bartsch, 212-446-1875
ebartsch@sloanepr.com
or
The RLJ Companies
Traci Otey Blunt, 240-744-7858
press@rljcompanies.com