Investor Presentation NASDAQ: DCIN www.digiplexdest.com Forward - - PowerPoint PPT Presentation

Investor Presentation

NASDAQ: DCIN

www.digiplexdest.com

Forward Looking Statements

Certain statements and estimates in this presentation are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements about: expected benefits from the conversion to digital cinema; and the Company’s ability to successfully pursue its strategies. These forward-looking statements are not guarantees

• f future performance. They are based on management's expectations that involve a number of

business risks and uncertainties, including the risks set forth under the heading “Risk Factors” in

• ur prospectus dated April 18, 2012, any of which could cause actual results to differ materially

from those expressed in or implied by the forward-looking statements. Any estimates or other forward-looking statements provided in this presentation speak only as of the date they were made, and, except to the extent required by law, we undertake no obligation to update or review any estimate and/or forward-looking statement because of new information, future events or

• ther factors.

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• Digiplex (NASDAQ: DCIN) is a fast-growing U.S. motion picture exhibitor dedicated to

transforming movie theatres into digital entertainment centers

• Founded in 2010, DCIN operates 8 theatres and 73 screens in 3 states; HQ is Westfield, NJ
• Strategy is to acquire existing cash flow positive theatres in strategic markets, and increase

profitability by converting to digital format and benefiting from operational synergies, incremental revenue opportunities and cost reductions

• DCIN closed its initial public offering (IPO) of 2.2 million shares of Class A common stock at

$6.10 per share on April 20, 2012

• Joint book running managers / co-lead underwriters of DCIN’s IPO exercised the
• verallotment option on May 4, purchasing an additional 323,900 shares of Class A

common stock at the public offering price

• Aggregate net proceeds from the IPO and overallotment were approximately $13.2 million

Digiplex Overview

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Digiplex Investment Highlights

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Led By Industry Veterans Demonstrated Track Record Organic Growth / Acquisition Strategy Transform Movie Theatres To Entertainment Centers Acquisition Opportunities

• BUD MAYO, Chairman and CEO (Board Member): Industry veteran with over two decades of experience. Founder

and former leader of Cinedigm Digital Cinema Corp. (NasdaqGM:CIDM) and Clearview Cinemas

• BRIAN PFLUG, CFO (Board Member): Former Controller at Clearview Cinemas and former SVP of Accounting and

Finance at Cinedigm Digital Cinema Corp

• JEFF BUTKOVSKY, Chief Technology Officer: Former Senior Vice President and Chief Technology Officer from October

2000 to July 2010 for Cinedigm Digital Cinema Corp

Management

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• CHUCK GOLDWATER, Consultant – Cinedigm Digital Cinema Corp.: Has worked in senior management positions

within the industry for over 20 years (Clearview Cinemas, Loews, Mann Theatres); former CEO of Digital Cinema Initiatives, the major studio consortium that set digital standards; currently a consultant for Cinedigm for their digital cinema deployment

• NEIL ANDERSON, Partner / Of Counsel – Sullivan & Cromwell: Experienced veteran in M&A transactions across the

globe, formerly Sr. M&A Partner at Sullivan & Cromwell; frequent speaker and faculty member on professional seminars and programs dealing with M&A

• RICHARD CASEY, Software Entrepreneur / Founder – The Casey Group: Operating since 1989, IT consulting firm that

helps clients leverage technology to gain strategic advantages; Board Member of Affinity Federal Credit Union

• MARTIN O’CONNOR, II, Managing Partner – O’Connor, Morss & O’Connor P.C.: Law Firm focused on advising clients
• f strategic planning, wealth management and family offices; specializes in entertainment law. Board Member of

Cinedigm and Rentrak

Digiplex Management Team Digiplex Independent Board Members

Case Study: Clearview Cinemas

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• Sep. 1994: Co-founded

by Bud Mayo with 4 theatres and 8 screens

• Dec. 1994: Received

equity from CMNY Capital and added 3 screens 1995: Acquired 3 theatres and 11 screens May 1996: Received equity investment of $4.5M from MidMark Capital 1996: Acquired 9 theatres and 39 screens

• Aug. 1997: IPO – Sold

1.15M shares for $9.2M gross

• Jan. – Sep. 1998: Acquired 11

theatres and the right to

• perate one theatre for a total
• f 54 screens

1997: Acquired 14 theatres with 79 screens, added 6 screens to acquired theatres and constructed a 5 screen theatre

• Dec. 1998: Sale to Cablevision

(NYSE: CVC) for $160M and acquired 35 screens including New York City’s Ziegfeld Theatre

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS: The above information is presented solely for informational purposes, and no representation, warranty or guarantee is being made relative to the future performance of the Company or the trading price of its Class A common stock whatsoever. An investment in our Class A common stock involves significant risks. You should consider carefully all of the information in our preliminary prospectus dated April 9, 2012, including the risks and uncertainties described therein and the financial statements and related notes included therein, before making an investment in our Class A common stock. There is a substantial risk of loss.

Share Price Aug-21-1997 (market open): $ 8.00 Sold for Share Price Dec-8-1998 (on or about 12/8): $24.25 Hold Time (# of days): ~ 474 Return on Investment (approximate): 233% 1994

Clearview Cinemas Corporate Timeline

1995 1996 1997 1998

Clearview Cinemas: Attractive exit return for IPO Investors when sold to Cablevision

Industry Overview

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Sources: Box Office Mojo, Box Office Magazine

U.S. Annual Box Office Performance (billions $US)

$0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11 $12

VCR Internet DVD Commercial Penetration of New Media Forms “Competing” With Box Office: Cable

5% Box Office CAGR* (1970-2011)

2011 $10.2

• Box office growth over the long term

(1970-2011) despite new media

• utlets and alternative distribution

methods

• Q1’12 domestic box office revenues

grew +23.7% Y/Y and attendance grew +22.7% Y/Y1 3rd Consecutive Year Of $10B+ U.S. Box Office

1Source: BoxOfficeMojo

Box Office Results

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Sources: Box Office Mojo, Box Office Magazine

U.S. Box Office Performance

9 Recession Period Box Office Revenues (billions $US) Attendance (billions) Average Ticket Price ($US)

• $1.00

$1.00 $3.00 $5.00 $7.00 $9.00 2 4 6 8 10 12

Box Office Revenues Tickets Sold

• Avg. Ticket Price
• Stable

industry with long-term growth trends and consistent pricing power

• As a fairly inexpensive entertainment
• ption, the movie industry is resilient

to economic pressures

• Industry growth in five of the last

seven recessions Industry has Performed Well Long-term

Industry Growth Through All Economic Cycles

Source: MPAA, NATO, Sports Leagues, International Theme Park Services

1NBA and NHL data is for the last complete season.

Movie ticket costs for a family of four in North America are significantly lower when compared to theme parks and major U.S. sports

Out of Home Entertainment Options

2011 Average Ticket Price for a Family of Four ($US)

$31.72 $107.64 $193.92 $199.00 $228.40 $309.44

$- $50 $100 $150 $200 $250 $300 $350 Cinemas MLB NBA Theme Parks NHL NFL

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Digital Cinema as the New Industry Paradigm

Expanded content offerings New revenue streams Incremental concession sales Sharper image, improved patron experience Pricing: Premium 3D Improved seat utilization Operating efficiencies Flexibility and faster delivery

Motion Picture Exhibitor Benefits Motion Picture Studio Benefits

Distribution cost savings Visually higher-quality films Pricing benefits from 3D format Improved security against piracy Ability to tap archives for re-releases

Director / Producer Benefits

Sharper image and advanced effects Enhanced creative platform Reduced post-production time Immersive viewer experience

Digital cinema benefits both the exhibitors and industry partners. DCIN is successfully implementing innovative programming strategies to further maximize the value of this new industry paradigm

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Source: MPAA 2011

1Total screens figures are forecasts as of February 2012. IHS Screen Digest revised the estimates

for China and India significantly downward from 2010 levels, affecting the Asia Pacific and global totals.

• Over half of the worldwide cinema screens have

already converted to digital format

• Approximately 30% of worldwide cinema

screens are 3-D capable

• Digital

drives incremental admissions, concessions and advertising revenues by enabling theatres to show alternative content (i.e. Opera, Sports, Concerts, etc.) at off-peak times in addition to Hollywood films; DCIN utilizes preshow advertising supplied by National CineMedia (NasdaqGS: NCMI)

• Alternative content represented 7% of DCIN’s

admissions revenues in 1H’F12; 10% December quarter

Strong Growth of Digital Screens and 3D

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Worldwide Digital Screens (thousands)1

• 10

20 30 40 50 60 70 2007 2008 2009 2010 2011 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 2006 2007 2008 2009 2010 2011 Digital 3-D Digital non-3D Analog

U.S. Screens by Type (thousands)1

Business Overview

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Our Locations

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Connecticut New Jersey Pennsylvania Current Total Target

(within 4-months

• f closing IPO)

Theatres (#) 1 2 5 8 8 Screens (#) 8 11 54 73 73 Seats (#) 1,119 1,588 10,420 13,127 13,127 3D (#) 5 6 6 17 40% Digital (%) 100% 100% 11%* 34% 100%

*Expect to be 100% digital by July 4, 2012

Digiplex Model – “Cinema Reinvented”

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• Cash flow positive theatres
• Focus on top locations
• Seek attractive multiples
• Convert all analog screens to digital
• Integrate into DCIN’s platform
• Add screens where feasible /

profitable

• Transform theatres to

entertainment destinations

• Use innovative programming /

marketing strategies to increase seat utilization

ACQUIRE CONVERT & INVEST TRANSFORM

• Software systems provide flexibility

/ reduce costs

• Virtual print fees (VPF) benefit

theatre level cash flows

• Capitalize on membership in

National CineMedia’s network of pre-show advertising

• Attendance gains, concession

revenue increases

• 3D / premium films and alternative

content

• Ad-revenues of 17¢ per patron

minimum guarantee

COST REDUCTION ADVERTISING INCREMENTAL REVENUES

Acquisitions of High Quality Assets

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Acquisition activity within the industry has gained momentum as the digital- conversion deadline for theatres is fast-approaching

Recent DCIN Acquisitions

• DCIN completed the acquisition of Cinema Centers on April

20, 2012

• Purchase added 5 theatres and 54 screens throughout

Pennsylvania to DCIN’s footprint

• Purchase price: $14.3 million, or 4.9x theatre level cash

flow DCIN’s Acquisition Strategy

• Purchase theaters at approximately 5x theatre level cash

flow

• Targeting about 100 locations throughout the U.S., which

may approximate 1,000 screens

Innovative Programming Strategy

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Programming

• We estimate that average weekly seating utilization

for theaters is only 10%-15% of capacity, falling below 5% from Monday-Thursday

• Digital conversion expands film exhibitors’ content

choices to include 3D films, alternative programming, live events and corporate meetings Marketing

• Our integrated marketing strategy goes hand-in-

hand with our innovative programming

• We effectively utilize social media and other low-

cost, highly targeted advertising

Digital conversion provides new revenue opportunities

Ballet, Broadway, Opera

Classical and Pop Concerts Sports Children’s Programming Independent Films VIP-Only Sponsored Events Corporate & Other Functions Fashion Shows

Customer Demand for Alternative Content

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Sample Alternative Content and Event Grosses Alternative content has outperformed the lowest grossing movie on that day

Day of the Week Event Offered Event Gross that Day Highest Grossing Movie that Day Lowest Grossing Movie that Day Event Ticket Price (1 adult) Monday Concert: Lang Lang Encore $50.94 $77.82 $0.00 $18.00 Tuesday Ballet: Nutcracker Live $1,345.26 $125.40 $0.00 $20.00 Concert: Rolling Stones Live in 1978 $672.03 $89.60 $9.43 $12.50 Goat Rodeo Sessions: Yo-Yo Ma $509.40 $132.00 $19.80 $15.00 Wednesday Broadway: West Side Story $2,425.00 $73.36 $56.07 $12.50 Thursday Philharmonic Renee Fleming/Israel $778.14 $231.53 $28.29 $20.00 Saturday Met Live: Don Giovanni $7,073.02 $529.97 $21.24 $25.00 Sports: Mayweather vs. Ortiz $1,816.86 $2,037.05 $44.34 $18.00 Sunday Opera: Phantom of the Opera Live $1,103.70 $281.50 $28.32 $18.00