Digiplex Agrees to Be Acquired by Carmike Cinemas in an All-Stock Transaction

  Digiplex Agrees to Be Acquired by Carmike Cinemas in an All-Stock   Transaction               Fiscal 2014 Q3 Revenue Rises 14.7% to $10.1 Million             Theater Level Cash Flow Increases 30.4% to $1.5 Million  Business Wire  WESTFIELD, N.J. -- May 15, 2014  Digital Cinema Destinations Corp. (NasdaqCM:DCIN) (Digiplex), a fast-growing motion picture exhibitor dedicated to transforming movie theaters into digital entertainment centers, today reported its fiscal 2014 third quarter financial results for the three-month period ended March 31, 2014. Separately, the Boards of Directors of both companies have approved a definitive agreement for Carmike to acquire Digiplex. The agreement is a stock-for-stock transaction in which Carmike will acquire 100% of Digiplex’s 7.93 million shares outstanding. Each Digiplex share will be exchanged for 0.1775 shares (subject to certain potential reductions) of Carmike common stock.   [PLEASE NOTE THAT DIGIPLEX MANAGEMENT IS NOT HOSTING A CALL OR WEBCAST TODAY                                  AT 4:30 PM]                                                     SUMMARY AND SUPPLEMENTARY FINANCIAL DATA (unaudited)                                                                                      Three Months Ended        Nine Months Ended                               March 31,                 March 31, (in thousands)               2014        2013         2014        2013 Consolidated total           $ 10,054     $ 8,765      $ 32,719     $ 19,982 revenue Consolidated net loss          (1,194 )     (2,151 )     (3,928 )     (4,047 )                                                                      Consolidated theater           1,506        1,155        5,271        3,624 level cash flow (1) Adjusted EBITDA of Digital Cinema                 415          451          2,261        1,452 Destinations Corp. (1)                                                            Theaters (period end)          20           18           20           18 Average screens                188          172          186          113 Average attendance per         4,362        4,697        15,554       16,327 screen Average admission per        $ 8.31       $ 8.17       $ 7.92       $ 7.78 patron Average concessions          $ 3.59       $ 3.04       $ 3.27       $ 3.03 sales per patron Total attendance (in           822          810          2,893        1,845 thousands)                                                                                      Theater level cash flow and adjusted EBITDA are supplemental non-GAAP (1)  financial measures. Reconciliations of these metrics to the net loss for       the three and nine months ended March 31, 2014 and 2013 are included in       the supplementary tables accompanying this news announcement.  Digiplex Chairman, Chief Executive Officer and Founder Bud Mayo commented, “We view this transaction as a complementary win-win for both organizations. Digiplex holders will benefit by receiving stock in one of the industry-leading exhibitors. David Passman, his fellow senior executives and their customer-centric, theatre-level teams have together orchestrated a fantastic, multi-year turnaround – both operationally and financially.”                            (financial tables follow)                                                                  DIGITAL CINEMA DESTINATIONS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)                                                                                                                            March 31,     June 30,                                                        2014          2013                                                       (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents                             $  4,417      $ 3,607 Accounts receivable                                      842          697 Inventories                                              150          191 Deferred financing costs, current portion                357          357 Prepaid expenses and other current assets               895        1,444                                                                        Total current assets                                     6,661        6,296 Property and equipment, net                              29,786       29,171 Goodwill                                                 4,314        3,156 Intangible assets, net                                   5,401        6,186 Security deposit                                         189          205 Deferred financing costs, long term portion,             962          1,225 net Other assets                                            103        9                                                                            TOTAL ASSETS                                          $  47,416    $ 46,248                                                                       LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable                                      $  2,086      $ 2,478 Accrued expenses and other current liabilities           2,616        3,964 Notes payable, current portion                           1,718        1,373 Capital lease, current portion                           245          121 Earn out from theater acquisitions                       -            296 Deferred revenue                                        594        305                                                                          Total current liabilities                                7,259        8,537 NONCURRENT LIABILITIES Notes payable, long term portion                         7,693        8,615 Capital lease, net of current position                   575          239 Unfavorable leasehold liability, long term               132          159 portion Deferred rent expense                                    707          407 Deferred tax liability                                  210        199                                                                          TOTAL LIABILITIES                                       16,576     18,156                                                                       COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY Preferred Stock, $.01 par value: 10,000,000 shares authorized as of March 31, 2014 and June 30, 2013, 6 shares of Series B             -            - Preferred Stock issued and outstanding as of March 31, 2014 and June 30, 2013, respectively Class A Common stock, $.01 par value, 20,00,000 shares authorized; and 7,214,073 and 5,511,938 shares issued and                72           55 outstanding as of March 31, 2014 and June 30, 2013, respectively Class B Common stock, $.01 par value, 9,00,000 shares authorized; 849,000 and                           9            9 865,000 shares issued and outstanding as of March 31, 2014 and June 30, 2013, respectively Additional paid-in capital                               33,819       25,816 Accumulated deficit                                     (9,874 )    (7,049 )                                                                      TOTAL STOCKHOLDERS’ EQUITY OF DIGITAL CINEMA             24,026       18,831 DESTINATIONS CORP. Noncontrolling interest                                  8,618        9,261 Treasury stock, 361,599 shares                          (1,804 )    -                                                                            Total equity                                            30,840     28,092                                                                       TOTAL LIABILITIES AND EQUITY                          $  47,416    $ 46,248                                                                                                                                                   DIGITAL CINEMA DESTINATIONS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except share and per share data)                                                                                                Three Months Ended                  Nine Months Ended                        March 31,                           March 31,                                                                                                2014           2013              2014            2013 REVENUES Admissions            $ 6,662         $ 5,985           $ 22,009        $ 13,728 Concessions             2,951           2,461             9,455           5,586 Other                  441           319              1,255         668                                                                                 Total revenues         10,054        8,765           32,719        19,982                                                                              COSTS AND EXPENSES Cost of operations: Film rent               3,205           2,824             10,920          6,637 expense Cost of                 451             413               1,634           895 concessions Salaries and            1,239           1,155             3,986           2,378 wages Facility lease          1,523           1,514             4,653           2,847 expense Utilities and           2,227           1,868             6,501           3,794 other General and             1,509           1,365             4,175           3,311 administrative Change in fair value of                -               (79       )       54              (79       ) earnout Gain on sale of         (950      )     -                 (950      )     - theater Depreciation and                    1,565         1,439            4,279         3,385      amortization                                                                          Total costs and        10,769        10,499           35,252        23,168     expenses                                                                          OPERATING LOSS          (715      )     (1,734    )       (2,533    )     (3,186    ) OTHER EXPENSE Interest                (345      )     (326      )       (1,044    )     (620      ) expense Non-cash interest                (71       )     (75       )       (223      )     (153      ) expense Other expense          (41       )    (38       )       (88       )    (46       )                                                                          LOSS BEFORE             (1,172    )     (2,173    )       (3,888    )     (4,005    ) INCOME TAXES Income tax             22            (22       )       40            42         expense                                                                          NET LOSS              $ (1,194    )   $ (2,151    )     $ (3,928    )   $ (4,047    )                                                                          Net loss attributable to        419           620              1,078         713        non-controlling interest                                                                          Net loss attributable to Digital Cinema        $ (775      )   $ (1,531    )     $ (2,850    )   $ (3,334    ) Destinations Corp. Preferred stock        (5        )    (5        )       (15       )    (11       ) dividends                                                                          Net loss attributable to       $ (780      )   $ (1,536    )     $ (2,865    )   $ (3,345    ) common stockholders                                                                          Net loss per Class A and Class B common share – basic and                   $ (0.10     )   $ (0.25     )     $ (0.39     )   $ (0.59     ) diluted attributable to common stockholders Weighted average common          7,931,270       6,065,265         7,313,618       5,663,016 shares outstanding                                                                                                                                          SUPPLEMENTARY NON-GAAP RECONCILIATION OF THEATER LEVEL CASH FLOW (Unaudited) ($ in thousands)                                                                                      Three months ended        Nine months ended                              March 31,                 March 31,                              2014        2013         2014        2013 Net loss                     $ (1,194 )   $ (2,151 )   $ (3,928 )   $ (4,047 ) Add back: General and                    1,509        1,365        4,175        3,311 administrative (1) Depreciation and               1,565        1,439        4,279        3,385 amortization Income tax expense             22           (22    )     40           42 Interest expense               416          401          1,267        773 Other expense                  41           38           88           46 Deferred rent expense          97           85           300          114 (5) Less: Gain on sale of               (950   )    -          (950   )    -       theater Consolidated TLCF            $ 1,506     $ 1,155     $ 5,271     $ 3,264                                                                                                                            SUPPLEMENTARY NON-GAAP RECONCILIATION OF ADJUSTED EBITDA (Unaudited) ($ in thousands)                                                                                      Three months ended        Nine months ended                              March 31,                 March 31,                              2014        2013         2014        2013 Net loss                     $ (1,194 )   $ (2,151 )   $ (3,928 )   $ (4,047 ) Add back: Depreciation and               1,565        1,439        4,279        3,385 amortization Interest expense               416          401          1,267        773 Income tax expense             22           (22    )     40           42 Other expense                  41           38           88           46 Deferred rent expense          97           85           300          200 (5) Stock-based                    133          79           494          148 compensation (2) Non-recurring organizational and             104          315          110          552 M&A-related professional fees (3) Management fees (4)            245          203          805          255 Start Media's share of         (64    )     64           (244   )     98 Adjusted EBITDA Less: Gain on sale of               (950   )    -          (950   )    -       theater Adjusted EBITDA of Digital Cinema               $ 415       $ 451       $ 2,261     $ 1,452   Destinations Corp.                                                                       (1)  TLCF is intended to be a measure of theater profitability. Therefore,       our corporate general and administrative expenses have been excluded.       Represents the fair value of shares of Class A common stock and (2)   restricted stock awards issued to employees and non-employees for       services rendered. As these are non-cash charges, we believe that it is       appropriate to show Adjusted EBITDA excluding this item.       Primarily represents professional fees incurred in connection with       start-up activities, the creation of acquisition template documents that       will be used by us for future transactions, and certain other costs (3)   related to our acquisition strategy. Since we intend to acquire       additional theaters, we have laid the groundwork for our acquisition       program and we expect to incur reduced legal fees in connection with       future acquisitions. We therefore believe that it is appropriate to       exclude these items from Adjusted EBITDA. (4)   To add back management fees to Digiplex from JV.       Represents non-cash deferred rent expense which is included in our (5)   facility lease expense in the consolidated statements of operations. As       these are non-cash changes, we believe it is appropriate to show TLCF       and Adjusted EBITDA excluding this item.  Disclosure Regarding Forward-Looking Statements  This press release and other written or oral statements made by or on behalf of Digital Cinemas Destination Corp. may contain forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about our beliefs, expectations and future performance, are forward-looking statements. Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on beliefs and assumptions of management, which in turn are based on currently available information. The forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Risk factors are disclosed in our Form 10-K for the year ended June 30, 2013 under the caption “Risk Factors.” We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.  About Digital Cinema Destinations Corp.(www.digiplexdest.com)  Digital Cinema Destinations Corp. (NasdaqCM: DCIN) is Digiplex Destinations, a fast-growing theatrical exhibitor dedicated to transforming its movie theaters into interactive digital entertainment centers featuring ‘something for everyone.’ The Company provides consumers with uniquely satisfying experiences combining state-of-the-art technology with engaging, dynamic content that far transcends traditional cinematic fare. Digiplex customers enjoy live opera, ballet, Broadway shows, sports events, concerts and, on an ongoing basis, the very best major motion pictures. You can connect with Digiplex via Facebook, Twitter, YouTube and Blogger.  Additional Information and Where to Find it  In connection with the proposed transaction, Carmike will file a registration statement on Form S-4 with the Securities and Exchange Commission (the “SEC”).DIGIPLEX STOCKHOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, INCLUDING THE PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION.The final proxy statement/prospectus will be mailed to stockholders of Digiplex. Investors and security holders will be able to obtain the documents free of charge at the SEC’s web site, www.sec.gov, or by directing a request to Digiplex at 250 East Broad Street, Westfield, New Jersey, 07090 or (908) 396-1360.In addition, investors and security holders may access copies of the documents filed with the SEC by Carmike on its web site at www.carmike.com or Digiplex on its web site at http://digiplexdest.com, when they become available.  Participants in Solicitation  Carmike, Digiplex and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the transaction. Information concerning Carmike’s participants is set forth in the proxy statement dated April 18, 2014 for Carmike’s 2014 annual meeting of shareholders as filed with the SEC on Schedule 14A. Information concerning Digiplex’s participants is set forth in the proxy statement dated October 25, 2013 for Digiplex’s 2013 annual meeting of stockholders as filed with the SEC on Schedule 14A. Additional information regarding the interests of participants of Carmike and Digiplex in the solicitation of proxies in respect of the proposed transaction will be included in the registration statement and proxy statement/prospectus contained therein, to be filed with the SEC.  Contact:  Digital Cinema Destinations Corp. Bud Mayo, 908-396-1362 Chairman/CEO bmayo@digiplexdest.com or JCIR Robert Rinderman or Jennifer Neuman 212-835-8500 or DCIN@jcir.com  
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