Deferred Recognition of Home Video Sales
Leads to Modest Q4 during a Record 2015 for Hannover House
SPRINGDALE,
AR - Hannover House, Inc. (OTC PINK: HHSE), a leading independent distributor of films, books and
entertainment products, reported that revenues for the fourth quarter ending December
31, 2015 were comparable to the same quarter’s results in 2014 – due primarily
to the company’s decision to defer the recognition of home video sales until
retail sell-through rates are determined. Home video sales for five releases,
including “The Algerian”, “Bonobos: Back to the Wild” and “Dancin’ It’s On”
will be posted by Hannover House during the first quarter of 2016. Despite the company’s
decision to defer certain Q4 home video revenues, calendar year 2015 was still
the best year ever for Hannover House since becoming publicly traded in
2010.
Revenues
that were recognized by Hannover House during the last quarter of 2015 were
$707,416, with pre-tax profits of $197,562 after deducting all overhead,
cost-of-goods, a 25% returns reserve for mass merchant sales and all other
customary income statement deductions and adjustments. Hannover House and Medallion Releasing’s annual
revenues for the year ending 12-31-2015 were $6,519,409, as compared to
$2,802,392 for 2014 year and $2,677,061 for all of 2013. The company attributes the significant
revenue growth to an enhanced focus on releasing films to theatres prior to
home video distribution, which has proven to be a viable strategy to increase
the ancillary values of the physical home video release and digital streaming
revenues.
Here's a quick recap of HHSE gross revenues for 2015:
Q1, 2015 $1,732,208
Q2, 2015 $1,281,011
Q3, 2015 $2,798,208
Q4, 2015 $707,415
(Note: Sales figures for Q1, Q2 and Q3 are the gross revenues for those quarters before application of a voluntary hold-back for potential product returns. HHSE reconciles these "Reserves" at year-end against actual unit-sell through rates and reorders to liquidate these holdbacks as needed; Reserves for Q4 still apply until proven unnecessary). Customarily, voluntary "Reserves" and Hold-backs are held for 90 to 120-days, or until such time that actual retail depletions of units prove that such reserves are no longer merited. HHSE always "carries forward" a Q4 reserve into the following calendar year, for reconcilliation later (Q1 or Q2), in which case held back amounts are finally recognized as receivables. Such practice is industry standard and does not cause a delay in filing year-end results.
Principal
sales and marketing activities for Hannover House during the fourth quarter of
2015 were: Theatrical Release duties for
“Dancin’ It’s On” (opened in theatres on Oct. 30); theatrical expansion of “The
Algerian” and “Bonobos: Back to the Wild” and solicitation and fulfillment of catalog,
seasonal home video and Video-On-Demand releases. Principal issues impacting
the Company during the last quarter included a temporary disruption of DVD and
BluRay products flowing into U.S. Walmart Stores (as a result of the
acquisition of wholesaler Anderson Merchandisers by Alchemy Entertainment), and
a change in ownership of FreeStyle Releasing / FreeStyle Digital Media, a major
streaming-media consolidator and placement agency for HHSE titles. Neither of these changes in customer status
are expected to negatively impact ongoing activities or 2016 revenue results
for Hannover House, Inc. and its supplier studios under the Medallion Releasing
labels.
The Q4 revenue
results were posted on the Hannover House blog site, and will be included in a
full annual report filing to be released prior to the March publication
deadline as required under the OTC Markets Guidelines for Current Reporting.
Hannover House was established in 1993 as a book publisher. The company added
DVD products in 2002 and has since grown its library of film and television
properties to more than 250 titles. Principal executives of Hannover House are
Eric Parkinson, C.E.O. (a 30-year veteran of the film distribution industry and
former C.E.O. of multi-Oscar winning studio Hemdale), D. Frederick Shefte,
President (a former attorney and banker), and Tom Sims, V.P. Sales (a former Walmart
Video Buyer for Anderson Merchandisers and executive for Vivendi-Universal
Music Group). Other key employees
include: Jayson Blocksidge (Exhibitor Relations), Caitlin McKenzie (Director of
Sales), Katherine Mills (Production Manager), Desiree Garnier (Director of
Promotions) and Taylor Wyatt (Technical Services).
Hannover
House is headquartered in N.W. Arkansas, in close proximity to the world's
largest video retailer, Walmart Stores, Inc. Other key customers for Hannover
House and Medallion video products include Best Buy, Target, Netflix, Redbox,
Barnes & Noble, Family Video, dozens of Internet sites and thousands of
independent video retailers, schools and libraries. Theatrical customers for
Hannover House include direct distribution relationships with (listed
alphabetically) AMC Theatres, Bow Tie Cinemas, Carmike Theatres,
Cinemark-Century, Harkins, Laemmle, Malco, Marcus, National Amusements, Regal
Entertainment Group, Santikos and Wehrenberg Theatres.
SAFE
HARBOR STATEMENT
This
press release may contain certain forward-looking statements within the meaning
of Sections 27A & 21E of the amended Securities and Exchange Acts of
1933-34, which are intended to be covered by the safe harbors created thereby.
Although the company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, there can be no
assurance that these statements included in this press release will prove
accurate.
