Transcript RealD The new 3D About RealD The company licenses 3D technologies to various clients Largest 3D theater company Makes the projectors and glasses Founded in.

RealD
The new 3D
About RealD
The company licenses 3D technologies to various clients
Largest 3D theater company
Makes the projectors and glasses
Founded in 2003
Market Cap: $1 Billion
NYSE
IPO
Went Public July 16th 2010
Issued stock to pay off some debt
Raised more money then expected
Shares priced at $16/share
Opened at $19.55/share
Quarterly release due today Nov. 2nd
3D Industry
“3D theatrical releases have been the single largest driver for
theaters who have installed digital screens over the past year,
with 80% growth rate” (Galas)
“3D is the future of movies” (Time Magazine)
Attendance in 3D movies is up and 2D movies is down
More theaters switching to 3D
Avatar earned over $2.7 billion
Avatar 2 and 3 are in the making
Jackass 3D earned $50 million opening weekend
http://www.filmofilia.com/wp-content/uploads/2010/03/international-3d.jpg
Market Saturation
RealD has 1,972 theaters in U.S.
Roughly 3,000 theaters in U.S.
Only a few screens at each theater
Only 219 theaters in Asia
A lot of room for growth
Product Segments
Cinema
Projectors
Exclusive agreement with Sony
Glasses
Professional
NASA
Helped pilot the Mars Rover
Design/Architecture
Government/Defense
Movie making tools
Residential
Coming 2012
Predicted Growth of 3D TVs
3D-Display-Info.com
Competitors
IMAX (IMAX)
3D equipment is more expensive
3D screens are generally larger and do not fit into more theater
screens
Dolby (DLB)
Company focuses on sound technology not 3D
Does not have the history or experience that RealD does
As Reported Annual Income
Statement
Report Date
Scale
03/26/2010
Thousands
03/27/2009
Thousands
03/31/2008
Thousands
Total revenue
149,846
39,675
23,378
Total cost of revenue
140,603
27,107
13,500
Gross margin
9,243
12,568
9,878
Total operating expenses
43,470
27,864
26,483
Operating income (loss)
(34,227)
(15,296)
(16,605)
Interest expense
1,730
949
1,257
Other income (loss)
Income (loss) before income taxes domestic
Income (loss) before income taxes foreign
Loss from continuing operations
before income taxes
(1,112)
100
(7)
(41,405)
(15,795)
(17,869)
4,336
(350)
-
(37,069)
(16,145)
(17,869)
Current state income taxes
78
50
20
Current foreign income taxes
2,538
143
-
Total current income taxes
2,616
193
20
Deferred federal income taxes
-
26
-
Deferred foreign income taxes
64
-
-
Income tax expense
Income (loss) from continuing
operations
2,680
219
20
(39,749)
(16,364)
(17,889)
Loss from operations, net of tax
Loss on sale of discontinued
operations, net of tax
-
-
(508)
-
-
(11,288)
Discontinued operations, net of tax
-
-
(11,796)
Net income (loss)
(39,749)
(16,364)
(29,685)
As Reported Quarterly Income
Statement
Report Date
06/25/2010
1st Quarter
06/26/2009
1st Quarter
Currency
USD
USD
Scale
Thousands
Thousands
Total revenue
64,520
25,564
Total cost of revenue
46,618
22,701
Gross margin
17,902
2,863
Total operating expenses
13,314
9,033
Operating income (loss)
4,588
(6,170)
Interest expense
519
282
Other income (loss)
Loss from continuing operations
before income taxes
6,610
(10)
10,679
(6,462)
Income tax expense
827
527
Net income (loss)
9,852
(6,989)
Valuation
June 30th, 2010
EBIT
$4,588
Growth Rate
174%
Stock Price
$22.09
Stock Price*Growth Rate
$38.44
WACC
Growth Rate Discounted
8 Months
20%
$33.67
June 30th, 2009
-$6,170
Conclusion
We own no stocks like this
A lot of room for growth in RealD
Home Televisions
Asian Theaters
U.S. Theaters
Stock is undervalued
Suggestion= 225 shares @ Market
Roughly $4,700