Mood Media Corporation Announces Restatement of Financials in Connection with Private Placement Financing

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

TORONTO, Oct. 9, 2012 /CNW/ - Mood Media Corporation (ISIN: CA61534J1057)   (TSX:MM / LSE AIM:MM ("Mood Media" or the "Company"), the world's leading in-store media solution provider, announced today that it has restated its financial statements and Management's Discussion and Analysis of Financial Position and Results of Operation in connection with its intention to offer approximately US$350 million aggregate principal amount of senior unsecured notes by way of private placement (the "Notes"). Mood has provided pro forma financial data for the year ended December 31, 2011 and for the first two quarters of fiscal 2012, as well as the related Management's Discussion and Analysis of Financial Position and Results of Operations for each such period. The financial data reflects the discontinued operations of Mood Media Entertainment Ltd. effective March 31, 2012, which comprised Mood Media's "Retail Point-of-Purchase" division. Attached to this press release as Schedule A is a summary of historical, pro forma and supplemental condensed consolidated financial data.

The revised financial statements and Management's Discussion and Analysis of Financial Position and Results of Operations are available on the Company's website at www.moodmedia.com and www.sedar.com.

About Mood Media Corporation

Mood Media Corporation (TSX:MM/ LSE AIM:MM), named Canada's fastest growing company by PROFIT Magazine, is a leading in-store media specialist that uses a mix of music, visual and scent media to help its clients communicate with consumers with a view to driving incremental sales at the point-of-purchase.

Mood Media Corporation works with over 560,000 commercial locations in over 40 countries throughout North America, Europe, Asia and Australia.

Mood Media Corporation's products and services reach 100 million people every day in a broad client base including more than 850 U.S. and international brands in diverse market sectors that include: retail, from fashion to financial services; hospitality, from hotels to health spas; and food retail, including restaurants, bars, quick-serve and fast casual dining.

For further information about Mood Media, please visit www.moodmedia.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements. The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would" and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to important assumptions, including the following specific assumptions: the completion of the acquisition and the private placement in accordance with their respective terms; general industry and economic conditions; and changes in regulatory requirements affecting the businesses of Mood Media and the target companies the Company proposes to acquire. The acquisition and the private placement may not be completed or may not be completed on the same terms as previously announced. While Mood Media considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Historical performance may not be indicative of future performance.

Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: the impact of general market, industry, credit and economic conditions, currency fluctuations as well as the risk factors identified in the Risk Factors section of Mood Media's amended and restated management discussion and analysis dated October 9, 2012 and the risk factors identified in the annual information form of Mood Media dated March 30, 2012, both of which are available on www.sedar.com.

Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. All of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Mood Media.

Forward-looking statements are given only as at the date hereof and Mood Media disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.

Non-IFRS Financial Measures

In this press release, we use the non-IFRS financial measures of EBITDA and Adjusted EBITDA. We define "EBITDA" as net income (loss) before finance costs, income taxes, depreciation and amortization.  We define "Adjusted EBITDA" as EBITDA after removing amounts relating to share-based compensation, business combinations, restructuring, integration and merger related charges and non-recurring charges incurred in connection with our secondary listing on AIM. These financial measures are not defined by IFRS as issued by the International Accounting Standards Board and therefore are referred to as non-IFRS financial measures.  We believe that EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA are important supplemental measures for investors in evaluating our historical operating performance because they eliminate items that have less bearing on our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. However, as these measures are  not  recognized  earnings  measures  under  IFRS  and do  not  have  standardized meanings prescribed by IFRS, they have important limitations as analytical tools. These measures are defined differently by different companies in our industries and accordingly, such measures as used in this press release may not be comparable to similarly titled measures of other companies.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration and qualification under the securities laws of any such jurisdiction. The securities being offered have not been approved or disapproved by any regulatory authority nor has any such authority passed upon the accuracy or adequacy of the offering circular relating to the private placement.

SCHEDULE "A"
Summary Historical, Pro Forma and Supplemental Condensed Financial Data

The following table sets forth our summary historical, pro forma and supplemental condensed consolidated financial data as of and for the periods indicated. We have derived the summary historical financial data as of December 31, 2010 and 2011 and for the fiscal years ended December 31, 2010 and 2011 from our audited consolidated financial statements for such years which are filed on www.sedar.com. We have derived the summary historical financial data as of June 30, 2012 and 2011 and for the six months ended June 30, 2011 and 2012 from our unaudited interim consolidated financial statements for such periods, which are filed on www.sedar.com. Operating results for the six-month periods are not necessarily indicative of results for a full fiscal year or any other periods.

The summary unaudited supplemental financial data for the fiscal year ended December 31, 2010 gives effect to the acquisitions of Muzak and Mood Europe as if such transactions had occurred on January 1, 2010. The summary unaudited supplemental financial data should be read in conjunction with our audited consolidated financial statements for the fiscal year ended December 31, 2010, which are filed on www.sedar.com. The summary unaudited supplemental financial data is being provided to you for informational purposes only and does not purport to represent what our financial condition or our results of operations would have been had the acquisitions of Muzak and Mood Europe occurred on January 1, 2010, nor does such data purport to project the financial condition or the results of operations for any future date or period.

The summary unaudited pro forma financial data has been prepared by our management and has been developed by applying pro forma adjustments to our historical audited and unaudited consolidated financial statements appearing elsewhere in this offering circular. The summary unaudited pro forma financial data for the fiscal year ended December 31, 2011 gives effect to the acquisition of Muzak, the entering into the credit facilities following the acquisition of Muzak, the Note offering which is currently proposed (but subject to marketing and conditions) and the refinancing of our existing credit facilities in connection with that note offering as if such transactions had occurred on January 1, 2011. The unaudited pro forma financial data for the twelve months ended June 30, 2012 gives effect to the note offering and the refinancing or our credit facilities in connection with that note offering as if such transactions occurred on January 1, 2011 and has been derived by adding our summary unaudited pro forma financial data for the fiscal year ended December 31, 2011 and the six months ended June 30, 2012 and subtracting our summary unaudited pro forma financial data for the six months ended June 30, 2011.

The summary unaudited pro forma financial data is provided for informational purposes only and does not purport to represent what our financial condition or our results of operations would have been had the acquisitions of Muzak and Mood Europe, the entering into of the credit facilities following the acquisition of Muzak, the note offering which is currently proposed (but is subject to marketing and conditions) and the refinancing of our existing credit facilities in connection with such note offering occurred on or as of the dates noted above, nor does such data purport to project the financial condition or results of operations for any future date or period.

The summary historical, pro forma and supplemental condensed consolidated financial data presented below should be read in conjunction with our Management's Discussion and Analysis of Financial Condition and Results of Operations for the relevant periods (which are filed on www.sedar.com) and our audited and unaudited consolidated financial statements and the related notes thereto which are filed on www.sedar.com.

		Historical								Supplemental		Pro Forma
		Fiscal Year Ended December 31,				Six Months Ended June 30,				Twelve Months Ended
		2010^(1)		2011^(2)		2011^(2)		2012^(3)		December 31, 2010		December 31, 2011		June 30, 2012
						unaudited		unaudited		unaudited		unaudited		unaudited
		(dollars in thousands)
Results of Operations Data:
Revenue from continuing operations		$79,009		$274,771		$100,048		$191,926		$327,665		$342,185		$366,649
Expenses:
	Cost of sales (excludes depreciation and amortization)	24,220		95,091		34,470		72,413		118,889		120,663		133,034
	Operating expenses	32,642		96,967		39,024		67,881		121,630		117,316		125,824
	Depreciation and amortization	10,164		42,047		14,871		25,974		69,942		56,800		53,150
	Share-based compensation	732		3,175		801		1,829		732		3,175		4,203
	Other expenses	14,601		22,790		17,808		16,321		14,601		22,790		21,303
(Loss) income from continuing operations   before finance costs and income taxes		(3,350)		14,701		(6,926)		7,508		1,871		21,441		29,135
Finance costs (net)		20,328		66,417		27,946		30,872		N/A		68,920		78,385
Loss from continuing operations before income taxes		(23,678)		(51,716)		(34,872)		(23,364)		N/A		(47,479)		(49,250)
Income tax charge (credit)		(2,063)		545		(1,328)		(17,952)		N/A		545		(16,079)
Net loss from continuing operations		$(21,615)		$(52,261)		$(33,544)		$(5,412)		N/A		$(48,024)		$(33,171)

	Historical								Supplemental		Pro Forma
	Fiscal Year Ended December 31,				Six Months Ended June 30,				Twelve Months Ended
	2010^(1)		2011^(2)		2011^(2)		2012^(3)		December 31, 2010		December 31, 2011		June 30, 2012
	(dollars in thousands)
Other Financial Data and Ratios (excluding amounts relating to discontinued operations):
Net secured debt^(4),(6)	$126,388		$439,533		$438,956		$436,566		N/A		N/A		$102,148
Net total debt^(5),(6)	159,156		490,155		489,578		487,188		N/A		N/A		502,770
Cash interest costs^(7)	9,496		33,041		12,217		20,295		N/A		N/A		49,344
EBITDA^(8)	6,814		56,748		7,945		33,482		71,813		78,241		82,285
Adjusted EBITDA^(8)	22,147		82,713		26,554		51,632		87,146		104,206		107,791
Pro Forma Adjusted EBITDA^(8)													128,831
Ratio of net secured debt to Pro forma Adjusted EBITDA													0.8
Ratio of net total debt to Pro Forma Adjusted EBITDA													3.9
Ratio of Pro Forma Adjusted EBITDA to cash interest costs (net)													2.6
Operating Data:
ARPU (dollars)									$54.97		$59.28		$59.39
Total subscribers at end of period									421,533		428,132		560,000
Monthly churn									0.6%		0.7%		0.7%
Cash Flow Data (excluding amounts relating to discontinued operations):
Capital expenditures	$4,174		$16,682		$5,620		$16,312		$24,642		$21,441		$27,374
Changes in working capital^(9)	(5,130)		(16,150)		1,112		(21,762)		N/A		N/A		(39,024)
Cash flows provided from (used in) operating activities	(931)		45,190		14,156		9,658		N/A		N/A		40,692
Cash flows provided from (used in) investing activities	(61,499)		(25,298)		(14,236)		(90,298)		N/A		N/A		(101,360)
Cash flows provided from (used in) financing activities	$52,436		$(5,957)		$17,309		$89,847		N/A		N/A		$154,209

	Historical		Pro Forma
	Six Months Ended June 30, 2012^(3)		Twelve Months Ended June 30, 2012
	unaudited		unaudited
	(dollars in thousands)
Balance Sheet Data:
Cash	$14,884		$109,302
Current assets	186,601		281,019
Property and Equipment	59,173		59,173
Total assets	862,782		957,200
Current liabilities	123,236		121,801
Total equity	$185,112		$173,318

(1)	On June 4, 2010 we acquired Mood Media Group S.A. ("Mood Europe"). Our summary historical financial data as of December 31, 2010 and for the fiscal year ended December 31, 2010 reflects the acquisition of Mood Europe as of its acquisition date.
(2)	On February 16, 2011 we acquired Pelika Business Music ("Pelika") and on May 6, 2011 we acquired Muzak. Our summary historical financial data, as of June 30, 2011 and December 31, 2011 for the fiscal year ended December 31, 2011 and the six months ended June 30, 2011 reflects the acquisitions of Pelika and Muzak as of their respective acquisition dates.
(3)	On March 20, 2012, we acquired DMX and on May 31, 2012 we acquired BIS. Our summary historical financial data as of June 30, 2012 and for the six months ended June 30, 2012 reflects the acquisitions of DMX and BIS as of their respective acquisition dates.
(4)	Net secured debt is defined as the outstanding principal amount of the First Lien Facilities and Second Lien Facility (and for the fiscal year ended December 31, 2010, the previous finance facilities) less unrestricted cash.
(5)	Net total debt is defined as the outstanding principal amount of the First Lien Facilities and Second Lien Facility (and for the fiscal year ended December 31, 2010, the previous finance facilities), the outstanding principal amount of the notes issued pursuant to this offering and the outstanding principal amount of our convertible debentures less unrestricted cash.
(6)	Pro forma net secured debt and pro forma net total debt as at June 30, 2012 give effect to this offering and the Refinancing as if they had occurred on June 30, 2012.
(7)	Cash interest costs are in respect of our first lien credit facility, second lien credit facility, Second Lien Facility (and for the fiscal year ended December 31, 2010 and the period January 1, 2011 to May 6, 2011, the previous finance facilities), and the outstanding convertible debentures. Pro forma cash interest costs for the twelve months ended June 30, 2012 give effect to the refinancing of our credit facilities contemplated in connection with the note offering (which is subject to marketing and conditions).
(8)	We define EBITDA as net income (loss) before finance costs, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA after removing amounts relating to share-based compensation, transaction costs attributable to business combinations, restructuring and integration related charges and other events that are not in the normal course of operations. Pro Forma Adjusted EBITDA further adjusts Adjusted EBITDA to include the estimated Adjusted EBITDA of certain historical and proposed acquisition as if they had been acquired on July 1, 2011. Adjusted EBITDA for those entities were calculated by Management in a manner consistent with our calculation of Adjusted EBITDA utilizing management accounts. We believe that EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA are important measures in evaluating our historical performance. We have included EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA to provide investors with supplemental measures of our operating performance. We believe EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA are important supplemental measures of operating performance because they eliminate items that have less bearing on our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that analysts, investors and other interested parties frequently use EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA in the evaluation of issuers, many of which present similar metrics when reporting their results. Our management also uses EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our future debt service, capital expenditure and working capital requirements. However, these measures are not recognized earnings measures under IFRS, do not have standardized meanings prescribed by IFRS and have important limitations as analytical tools. You should not consider these measures in isolation or as a substitute for analysis of our results as reported under IFRS. These measures are defined differently by different companies in our industries and accordingly, such measures as used in this offering circular may not be comparable to similarly titled measures of other companies. The following table reconciles net loss from continuing operations to our EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA measures for the periods indicated:

	Historical								Supplemental		Pro Forma
	Fiscal Year Ended December 31,				Six Months Ended June 30,				Twelve Months Ended
	2010^(1)		2011^(2)		2011^(2)		2012^(3)		December 31, 2010		December 31, 2011		June 30, 2012
	(dollars in thousands)
Net loss from continuing operations	$(21,615)		$(52,261)		$(33,544)		$(5,412)		N/A		$(48,024)		$(33,171)
Finance costs (net)	20,328		66,417		27,946		30,872		N/A		68,920		78,385
Income tax charge (credit)	(2,063)		545		(1,328)		(17,952)		N/A		545		(16,079)
Income (loss) from continuing operations   before finance costs and income tax	(3,350)		14,701		(6,926)		7,508		1,871		21,441		29,135
Depreciation and amortization	10,164		42,047		14,871		25,974		69,942		56,800		53,150
EBITDA	6,814		56,748		7,945		33,482		71,813		78,241		82,285
Share-based compensation	732		3,175		801		1,829		732		3,175		4,203
Transaction costs^(a)	8,866		18,006		15,068		11,121		8,866		18,006		14,059
Restructuring, integration and merger related charges^(b)	4,170		4,784		2,740		5,200		4,170		4,784		7,244
Other^(c)	1,565		—		—		—		1,565		—		—
Adjusted EBITDA	22,147		82,713		26,554		51,632		87,146		104,206		107,791
DMX^(d)													11,218
BIS^(e)													5,596
Proposed Acquisition^(f)													4,226
Pro Forma Adjusted EBITDA													$128,831

					(a)	Transaction costs are amounts attributable to the acquisitions of Mood Europe, Pelika, Muzak, DMX and BIS. Transaction costs for the twelve months ended June 30, 2012 consist of legal and accounting expenses of $3,950, consultant expenses of $3,105, employee bonuses relating to the acquisitions of $2,636 and other transaction costs of $4,368.
					(b)	Restructuring, integration and merger related charges include severance expenses.
					(c)	Other expenses are non-recurring charges incurred in connection with the secondary listing on AIM.
					(d)	Represents estimated Adjusted EBITDA from DMX of $11,218 for the period July 1, 2011 to the acquisition date of March 19, 2012. Revenue for the same period was $60,047. Selected summary information for DMX is shown below:

	Twelve Months Ended
	December 31, 2010		December 31, 2011		June 30, 2012		July 1, 2011 to March 19, 2012		March 19, 2012 to June 30, 2012
Revenue	$86,106		$84,627		$83,601		$60,047		$23,554
Adjusted EBITDA	15,460		16,474		14,738		11,218		3,520
Capital expenditures	4,571		1,999		2,579		2,318		261

		(e)	Represents estimated Adjusted EBITDA from BIS of $5,596 for the period July 1, 2011 to the acquisition date of May 30, 2012. Revenue for the same period was $59,376.
		(f)	Represents estimated Adjusted EBITDA of $4,226 from the proposed acquisition for the period July 1, 2011 to June 30, 2012. Revenue for the same period was $19,512.
(9)	Working capital is defined as current assets less current liabilities and excludes cash and income tax liabilities.

 

SOURCE: Mood Media Corporation

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Mood Media Corporation
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Mood Media Corporation
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