RLJ Entertainment Reports Financial Results for the Second Quarter Ended June 30, 2013

RLJ Entertainment Reports Financial Results for the Second Quarter Ended June
30, 2013

SILVER SPRING, Md., Aug. 5, 2013 (GLOBE NEWSWIRE) -- RLJ Entertainment Inc.,
("RLJ Entertainment" or "the Company") (Nasdaq:RLJE), today reported results
for the second quarter ended June 30, 2013. Full detail of the financial
results as well as Management Discussion and Analysis, or MD&A, can be found
in the Company's Form 10-Q filed with the SEC.

RLJ Entertainment is a leading creator, owner and distributor of media content
across digital, broadcast and physical platforms. The company 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 entertainment services for targeted audiences in niche genres
including British drama and mystery, urban, action/thriller, fitness and
faith, by using new technologies to deliver that content to consumers.

Robert L. Johnson, Chairman of RLJ Entertainment stated, "We continue to make
solid progress integrating the Acorn and Image businesses and I am pleased
with management's hard work to date to refine the growth strategy and its
content investment approach. The team is highly focused on positioning RLJ
Entertainment for growth over the long-term, which includes investing in a
targeted portfolio of content offerings and leveraging a strong set of
traditional and digital distribution channels, particularly in the US and UK.
To support these efforts, Miguel Penella and I have made several key
appointments over the last few months, including Drew Wilson, our CFO, and
Nina Henderson Moore, President of our Urban Digital Channel, 'OnCue'. I
firmly believe we now have the right executive team in place to build an
exciting content company that satisfies increasing consumer demand for unique,
quality content across multiple platforms."

GAAP Financial Results

The financial results for the three and six months ended June 30, 2013 reflect
the operating activities of RLJ Entertainment and its subsidiaries (referred
to as the "successor" period). The results for the three and six months ended
June 30, 2012 reflect the operations of only the Acorn Media and its
subsidiaries businesses (referred to as the "predecessor" period). The
comparative discussion below for these periods is based on Generally Accepted
Accounting Principles (or GAAP) and the results for the 2012 predecessor
periods are not indicative of, or comparable to, results for the 2013
successor periods.

The Company has included in this release an extensive discussion and
presentation of pro forma information in order to assist investors'
understanding of the company's ability to generate cash and grow and meet its
financial commitments. The Company will not necessarily present this same
level of disclosure on an ongoing basis.

GAAP Financial Results

Based on the consolidated financial statements as presented in the Company's
Form 10-Q for the three months ended June 30, 2013, net revenue increased
$17.0 million to $34.3 million. Net revenue for the six months ended June 30,
2013 increased $37.7 million to $74.6 million.

Net loss for the three months ended June 30, 2013 totaled $16.9 million,
compared to net loss of $554,000 in three months ended June 30, 2012. For the
six months ended June 30, 2013 net loss totaled $20.5 million, compared to net
income of $288,000 in the six months ended June 30, 2012.

Miguel Penella, Chief Executive Officer of RLJ Entertainment, commented:

"Our results during the second quarter reflect the continued successful
execution of our business strategy and the progress we have made bringing
together Acorn and Image. We remain highly focused on identifying synergies
derived from the merger of the two companies, securing additional cost
savings, refining and strengthening our content investment strategy through
capital reallocation, and improving our balance sheet. While these efforts
have impacted our financial results in the quarter, we are confident that the
steps we are taking will solidify further growth opportunities, clarify the
RLJ Entertainment investment thesis, and enable us to achieve our long-term
financial targets."

Proforma Financial Results

The Company is presenting financial information for the three and six month's
ended June 30, 2013 and pro forma financial information for three and six
months ended June 30, 2012 due to the closing of the business combination
among RLJ Entertainment, Image Entertainment and Acorn Media on October 3,
2012. 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.

For the three months ended June 30, 2013, RLJ Entertainment net revenue
declined $6.3 million to $34.3 million compared to pro forma net revenue of
$40.6 million in the three months ended June 30, 2012. The decline in net
revenue is primarily attributable to the timing of certain title releases
between quarters and a significant one-time transaction related to
management's planned execution of synergies to consolidate fulfillment
partners. Management believes that the consolidation will position the Company
for future costs savings by combining, at scale, all of its operations under a
single distribution and fulfillment partner. In addition, Image gross sales
increased by 4.0% but were offset by increased price rebate and return
reserves for the three months ended June 30, 2013 compared to the three months
ended 2012. Image's 2012 revenues included a significant reduction in rebates
and sales returns reserves that did not repeat in the three months ended June
30, 2013.

For the six months ended June 30, 2013, RLJ Entertainment net revenue declined
$7.4 million to $74.6 million compared to pro forma net revenue of $82.0
million for the six months ended June 30, 2012. Results were primarily
attributable to the timing of certain title releases between quarters and a
significant one-time transaction related to the planned execution of synergies
to consolidate fulfillment partners in the second quarter of 2013, as
explained above. Acorn revenue increased 12% in the six months ended June 30,
2013 versus the prior year primarily due to the release of "Foyle's War 8"
offset by the Image revenue decline resulting from the timing of three
high-profile titles in 2012, "The Double," "All Things Fall Apart" and
"Beneath the Darkness" that performed at or above expectations compared to two
high-profile titles, "The Numbers Station" and "Day of the Falcon in 2013."

Adjusted EBITDA decreased $12.1 million for the three months ended June 30,
2013, compared to the same period in 2012. The decline in Adjusted EBITDA was
primarily attributable to significant charges the company recorded in COGS and
SG&A related to (a) finished goods inventory impairment charge ($3.2 million)
from the early termination of a content output agreement, (b) finished goods
inventory write-down ($1.5 million) associated with the Madacy line and other
obsolete hard goods inventory and (c) the recording of minor asserted legal
claims of $0.5 million. Additionally, the decrease in Adjusted EBITDA was
partly driven by (i) the decline in revenue for the quarter versus prior year
resulting from the timing of key title releases ($4 million) and (ii) the
impact of a single wholesale return transaction in the quarter resulting from
management's consolidation of a fulfillment partner. The sales return had a
$1.1 million in Adjusted EBITDA negative impact. We expect the returned
inventory to be resold at normal pricing in upcoming quarters.

Adjusted EBITDA decreased $13.6 million for the six months ended June 30,
2013, as compared to the prior year. The decline in Adjusted EBITDA for the
six months ended June 30, 2013 primarily relates to items discussed above in
the three months ended June 30, 2013 Adjusted EBITDA variance along with the
impact of increased foreign currency loss of $1.4 million during the six
months ended June 30, 2013.

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 relationship with Agatha Christie Limited, a company that RLJE owns
64% of, 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)
June 30, 2013 and December 31, 2012

ASSETS                                         Successor
(In thousands, except share data)              June 30, 2013 December 31, 2012
Current assets:                                             
Cash and cash equivalents                      $3,693       $4,739
Accounts receivable, net                       19,395        20,484
Inventories, net                               15,165        23,029
Investment in content, net                     26,507        30,981
Prepaid expenses and other assets              1,759         1,938
Total current assets                           66,519        81,171
Noncurrent portion of accounts receivable      3,361         4,127
Noncurrent portion of investment in content    55,112        58,816
Property, equipment and improvements, net      1,448         1,800
Equity investment in ACL                       21,470        25,449
Other intangible assets                        21,334        23,883
Goodwill                                       47,382        47,382
Total assets                                   $216,626     $242,628
LIABILITIES                                                 
Current liabilities:                                        
Accounts payable and accrued liabilities       $28,151      $30,590
Accrued royalties and distribution fees        34,091        32,658
Deferred revenue                               3,787         4,339
Current portion of long term debt              11,449        4,000
Total current liabilities                      77,478        71,587
Long-term portion of debt, less debt discount  68,158        78,323
Deferred tax liability                         350           350
Stock warrant liability                        3,522         4,324
Total liabilities                              149,508       154,584
Stockholders' equity:                                       
Common stock, $0.001 par value, 250 million
shares authorized, 13,430,177 and 13,377,546   13            13
shares issued and outstanding at June 30, 2013
and December 31, 2012, respectively
Additional paid-in capital                     86,284        86,133
Retained earnings (deficit)                    (18,759)      1,743
Accumulated other comprehensive gain (loss)    (420)         155
Net stockholders' equity                       67,118        88,044
Total liabilities and stockholders' equity     $216,626     $242,628



RLJ ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three and Six Months Ended June 30, 2013 and 2012

                          Successor                   Predecessor
                           Three Months  Six Months    Three Months Six Months
(In thousands, except per  Ended         Ended         Ended        Ended
share data)                June 30, 2013 June 30, 2013 June 30,     June 30,
                                                       2012         2012
                                                                
Revenue                    $34,286      $74,592      $17,294     $36,879
Cost of sales              36,144        63,880        9,419        19,484
Gross profit (loss)        (1,858)       10,712        7,875        17,395
                                                                
Selling expenses           5,602         11,649        3,112        6,675
General and administrative 6,592         12,267        4,805        9,652
expenses
Depreciation and           1,494         2,920         130          261
amortization
Total selling, general and 13,688        26,836        8,047        16,588
administrative expenses
INCOME (LOSS) FROM         (15,546)      (16,124)      (172)        807
OPERATIONS
                                                                
Equity earnings of         911           1,560         497          521
affiliates
Interest expense, net      (1,882)       (4,008)       (420)        (577)
Other income (expense)     158           (919)         (566)        (383)
Total other income         (813)         (3,367)       (489)        (439)
(expense)
INCOME (LOSS) BEFORE       (16,359)      (19,491)      (661)        368
PROVISION FOR INCOME TAXES
Provision (benefit) for    585           1,011         (107)        80
income taxes
NET INCOME (LOSS)          (16,944)      (20,502)      (554)        288
Less net income (loss)
attributable to            —             —             (35)         56
noncontrolling interests
NET INCOME (LOSS)
APPLICABLE TO COMMON       $(16,944)    $(20,502)    $(519)      $232
SHAREHOLDERS
                                                                
Net income (loss) per                                            
common share:
                                                                
Unrestricted common stock:                                       
Basic                      $(1.27)      $(1.53)      $(0.51)     $0.23
Diluted                    $(1.27)      $(1.53)      $(0.51)     $0.23
Restricted common stock:                                         
Basic                      $(1.27)      $(1.53)      $—          $—
Diluted                    $(1.27)      $(1.53)      $—          $—
                                                                
Unrestricted weighted
average shares                                                   
outstanding:
Basic                      13,340        13,340        1,023        1,023
Diluted                    13,340        13,340        1,023        1,031
Restricted weighted
average shares                                                   
outstanding:
Basic and diluted          49            43            —            —





RLJ ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
For the Three and Six Months Ended June 30, 2013 and 2012

                              Successor                   Predecessor
                                                           Three    Six Months
                               Three Months  Six Months    Months   Ended
(In thousands)                 Ended         Ended         Ended    June 30,
                               June 30, 2013 June 30, 2013 June 30, 2012
                                                           2012
                                                                
NET INCOME (LOSS):                                               
Net income (loss)              $(16,944)    $(20,502)    $(554)  $288
Other comprehensive income                                       
(loss):
Foreign currency translation   106           (575)         (57)     144
gain (loss)
Total comprehensive income     (16,838)      (21,077)      (611)    432
(loss)
Less: comprehensive income
(loss) attributable to                                           
noncontrolling interests:
Share of net income (loss)     —             —             (35)     56
Share of foreign currency      —             —             (3)      (5)
translation loss
Comprehensive income (loss)
attributable to noncontrolling —             —             (38)     51
interest
Comprehensive income (loss)
attributable to common         $(16,838)    $(21,077)    $(573)  $381
shareholders



RLJ ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
                                                                                         
For the Six Months Ended June 30, 2013 (Successor)
             Common Stock                              Accumulated                          
(In                 Par   Additional Stockholder Retained Other         Treasury Non-controlling Total
thousands)    Shares Value Paid-in    Notes       Earnings Comprehensive Stock    Interests       Stockholders'
                           Capital    Receivable           Loss                                   Equity
Balance at
January 1,    13,378 $ 13  $ 86,133   $ —         $ 1,743  $ 155         $ —      $ —             $ 88,044
2013
Issuance of
restricted    52     —     —          —           —        —             —        —               —
common stock
for services
Stock-based   —      —     151        —           —        —             —        —               151
compensation
Foreign
Currency      —      —     —          —           —        (575)         —        —               (575)
Translation
Net loss      —      —     —          —           (20,502) —             —        —               (20,502)
Balance at    13,430 $ 13  $ 86,284   $ —         $        $ (420)       $ —      $ —             $ 67,118
June 30, 2013                                     (18,759)
                                                                                         

For the Six Months Ended June 30, 2012 (Predecessor)
             Common Stock                              Accumulated                          
(In                  Par   Additional Stockholder Retained Other         Treasury Non-controlling Total
thousands)    Shares Value Paid-in    Notes       Earnings Comprehensive Stock    Interests       Stockholders'
                           Capital    Receivable           Loss                                   Equity
Balance at
January 1,    1,023  $ 10  $ 4,451    $ (684)     $ 26,295 $ (421)       $ (583)  $ 759           $ 29,827
2012
Stock-based   —      —     231        —           —        —             —        —               231
compensation
Net income    —      —     —          —           232      —             —        56              288
Foreign
Currency      —      —     —          —           —        149           —        (5)             144
Translation
Stockholders' —      —     —          —           (3,737)  —             —        (265)           (4,002)
Distributions
Balance at    1,023  $ 10 $ 4,682    $ (684)     $ 22,790 $ (272)       $ (583)  $ 545           $ 26,488
June 30, 2012



RLJ ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Six Months Ended June 30, 2013 and 2012

                                                       Successor  Predecessor
(In thousands)                                          2013       2012
CASH FLOWS FROM OPERATING ACTIVITIES:                             
Net income (loss)                                       $(20,502) $288
Adjustments to reconcile net income (loss) to net cash            
used in operating activities:
Equity earnings in affiliates                           (1,560)    (521)
Amortization of content, including impairments          36,588     8,149
Depreciation and amortization                           370        221
Amortization of intangible assets                       2,550      40
Foreign currency exchange loss                          1,774      376
Fair value of stock warrant liability                   (802)      —
Noncash interest expense                                584        —
Stock-based compensation expense                        151        231
Changes in assets and liabilities associated with                 
operating activities:
Accounts receivable, net                                1,669      4,365
Inventories, net                                        7,793      592
Investment in content, net                              (27,930)   (8,802)
Prepaid expenses and other assets                       183        (626)
Accounts payable and accrued liabilities                (1,946)    (4,828)
Deferred revenue                                        (552)      —
Net cash used in operating activities                   (1,630)    (515)
CASH FLOWS FROM INVESTING ACTIVITIES:                             
Capital expenditures                                    (28)       (402)
Acquisition of ACL                                      —          (21,871)
Dividends received from ACL                             4,005      1,105
Net cash provided by (used in) investing activities     $3,977    $(21,168)
CASH FLOWS FROM FINANCING ACTIVITIES:                             
Borrowings under revolving credit facility              $10,398   $5,901
Repayments of borrowings under revolving credit         (3,000)    —
facility
Proceeds from debt                                      191        20,700
Repayment of debt                                       (10,452)   (1,334)
Distributions to stockholders                           —          (4,002)
Net cash provided by (used in) financing activities     (2,863)    21,265
Effect of exchange rate changes on cash                 (530)      (219)
NET DECREASE IN CASH:                                   (1,046)    (637)
Cash at beginning of period                             4,739      1,625
Cash at end of period                                   $3,693    $988
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                
Cash paid during the period for:                                  
Interest                                                $2,608    $462
Income taxes                                            $253      $546
                                                                 

                           RLJ ENTERTAINMENT, INC.

Unaudited pro forma financial information reflects the operating results of
RLJE as if Image 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 our future operating results.

Management believes Adjusted EBITDA to be a meaningful indicator of our
performance that provides useful information to investors regarding our
financial condition and results of operations because it removes material
noncash items that allows investors to analyze the operating performance of
the business using the same metric management uses. The exclusion of noncash
items better reflects our ability to make investments in the business and meet
obligations. Presentation of Adjusted EBITDA is a non-GAAP financial measure
commonly used in the entertainment industry and by financial analysts and
others who follow the industry to measure operating performance. 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. While management considers
Adjusted EBITDA to be important measures of comparative operating performance,
it should be considered in addition to, but not as a substitute for, net
income and other measures of financial performance reported in accordance with
GAAP. Not all companies calculate Adjusted EBITDA in the same manner and the
measure as presented may not be comparable to similarly-titled measures
presented by other companies.

The following unaudited pro forma financial information for the three and six
months ended June 30, 2013 and 2012 reflects the operating results of RLJE as
if Image and Acorn Media were acquired as of January 1, 2012. The unaudited
pro forma financial information does not include adjustments for Business
Combination transaction costs and severance incurred and other one-time
expenses, nor does it include adjustments for synergies. These combined
results are not necessarily indicative of the results that may have been
achieved had the companies been combined as of such historical dates or
periods, or of RLJE's future operating results.


PROFORMA INCOME STATEMENT
(unaudited)

For the Three and Six Months Ended June 30, 2013 and 2012

                        Three Months Ended June 30, Six Months Ended June 30,
(in thousands)           2013         2012           2013        2012
                         Actual       Proforma (1)   Actual      Proforma (1)
Revenues                 $34,286     $40,563       $74,592    $82,009
Costs of sales           36,144       29,341         63,880      58,199
Gross profit             (1,858)      11,222         10,712      23,810
Selling, general and     13,688       13,895         26,836      29,759
administrative expenses
Income (loss) from       (15,546)     (2,673)        (16,124)    (5,949)
operations
Equity earnings of       911          496            1,560       1,024
affiliates
Interest expense, net    (1,882)      (1,938)        (4,008)     (3,876)
Other income (expense)   158          (751)          (919)       1,775
Provision (benefit) for  585          30             1,011       77
income taxes
Net income (loss)        $(16,944)   $(4,836)      $(20,502)  $(6,949)
                                                             
Adjusted EBITDA          $(6,274)    $5,801        $(2,538)   $11,050

*Notes to the Proforma Income Statement Table:
(1)An adjustment for interest expense has been made to the prior year three
and six month ended June 30, 2012 as if the existing debt was in place
throughout the period.

The following table includes the reconciliation of our consolidated Adjusted
EBITDA to consolidated GAAP net loss:

                        Three Months Ended June 30, Six Months Ended June 30,
(in thousands)           2013           2012         2013          2012
                         Actual         Proforma     Actual        Proforma
Net income (loss)        $(16,944)     $(4,836)    $(20,502)    $(6,949)
                                                               
Amortization of content  19,319         18,382       36,588        33,995
Cash investment in       (13,468)       (13,588)     (27,930)      (28,407)
content
Depreciation and         1,494          1,422        2,920         2,833
amortization
Interest expense         1,882          1,938        4,008         3.876
Provision (benefit) for  585            (30)         1,011         (77)
income tax
Transactions costs and   1,379          2,058        2,018         4,885
severance
Warrant liability        (598)          —            (802)         —
Stock-based compensation 77             455          151           894
Adjusted EBITDA          $(6,274)      $5,801      $(2,538)     $11,050

The above Adjusted EBITDA presentation differs from the Adjusted EBITDA
presentation for the period ended March 31, 2013 and 2012.The amounts
excluded from the current presentation of Adjusted EBITDA are ACL EBITDA,
foreign currency exchange gain (loss) and other income related to Madacy.

CONTACT: Sloane & Company
         Erica Bartsch, 212-446-1875
         ebartsch@sloanepr.com
        
         Traci Otey Blunt, 240-744-7858
         The RLJ Companies
         press@rljcompanies.com
 
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