DEFA14A 1 ddefa14a.htm DEFA14A FOR GENIUS PRODUCTS, INC. DEFA14A for Genius Products, Inc.

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant x                            Filed by a Party other than the Registrant ¨

 

Check the appropriate box:

 

¨ Preliminary Proxy Statement

 

¨ Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

¨ Definitive Proxy Statement

 

¨ Definitive Additional Materials

 

x Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

 

 

 

GENIUS PRODUCTS, INC.

(Name of Registrant as Specified in Its Charter)

 

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

 

Payment of Filing Fee (Check the appropriate box):

 

x No fee required.

 

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  (1) Title of each class of securities to which transaction applies:

 

 
  (2) Aggregate number of securities to which transaction applies:

 

 
  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 
  (4) Proposed maximum aggregate value of transaction:

 

 
  (5) Total fee paid:

 

 

 

¨ Fee paid previously with preliminary materials.

 

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

 

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December 2005

2
SAFE HARBOR STATEMENT
Except
for
statements
relating
solely
to
historical
matters,
the
statements
contained
in
these
slides
are
forward-
looking
statements.
The
forward-looking
statements
reflect
assumptions
and
involve
risks
and
uncertainties
that
may
affect
Genius
Products’
business,
forecasts,
projections
and
prospects,
and
cause
actual
results
to
differ
materially
from
those
in
these
forward-looking
statements.
These
forward-looking
statements
include,
but
are
not
limited
to:
statements
relating
to
the
closing
of
the
transaction
with
The
Weinstein
Company,
including
the
anticipated
timing
of
the
closing;
statements
regarding
the
expected
benefits
of
the
transaction;
statements
relating
to
the
future
business
and
financial
performance
of
Genius
Products,
the
Distributor
and/or
The
Weinstein
Company,
including
statements
regarding
Genius
Products’
revenues
and
operating
income,
as
well
as
other
projections;
statements
regarding
future
theatrical
and
direct-to-video
releases,
including
the
anticipated
number
and
timing
of
such
releases;
and
statements
regarding
the
terms
of
the
transaction,
including
the
terms
of
the
distribution
agreement
with
The
Weinstein
Company
and
the
ability
to
achieve
the
related
performance
measures.
Other
such
risks
and
uncertainties
include
Genius
Products’
ability
to
grow
its
business,
to
obtain
additional
licenses
and
to
meet
anticipated
release
schedules,
as
well
as
other
matters
described
in
Genius
Products’
filings
with
the
Securities
and
Exchange
Commission.
Genius
Products
assumes
no
obligation
to
update
any
forward-looking
statements
to
reflect
events
or
circumstances
occurring
after
the
date
of
these
slides.
Additional
Important
Information
will
be
Filed
with
the
SEC
We
plan
to
file
with
the
Securities
and
Exchange
Commission,
or
SEC,
and
mail
to
our
stockholders
a
proxy
statement
in
connection
with
the
transaction
with
TWC.
Investors
are
urged
to
read
the
proxy
statement
and
any
other
relevant
documents
when
they
become
available
because
they
will
contain
important
information.
Investors
will
be
able
to
obtain
free
copies
of
the
proxy
statement
and
other
documents
that
we
file
with
the
SEC
through
the
Web
site
maintained
by
the
SEC
at
www.sec.gov.
In
addition,
investors
will
be
able
to
obtain
copies
of
the
proxy
statement
free
of
charge
from
us,
by
contacting
our
proxy
solicitor:
The
Altman
Group,
1200
Wall
Street
West,
Third
Floor,
Lyndhurst,
NJ,
07071
or
800-820-2416.
Our
directors,
executive
officers
and
certain
other
members
of
management
may
be
deemed
to
be
soliciting
proxies
in
favor
of
the
proposed
transaction
from
our
stockholders.
For
information
about
these
directors,
executive
officers
and
members
of
management,
please
refer
to
our
Annual
Report
on
Form
10-KSB
(as
amended)
for
the
fiscal
year
ended
December
31,
2004
and
our
other
filings
with
the
SEC,
which
are
available
at
the
SEC’S
website
(www.sec.gov)
and
from
us
at
the
address
provided
in
the
preceding
paragraph.

3
COMPANY OVERVIEW
•
Genius Products, Inc. (“GNPI”) (OTCBB: GNPI>OB) is a leading,
fully integrated supplier of branded entertainment content and
products to retailers in the U.S.
–
Four key content segments: Family, Cinema, Classics and Lifestyle
•
In December 2005, The Weinstein Company (TWC) and Genius Products
signed agreements to form a new venture to exploit the exclusive
U.S. home entertainment distribution rights of all content owned
or controlled by TWC as well as the existing GNPI business
•
GNPI has major studio marketing, merchandising expertise, and
access to the Top 10 U.S. retailers.
–
Strong relationships with all national and regional retailers
–
World class management team with significant industry experience
•
GNPI has a highly effective supply chain and a scalable operating
structure
•
Headquartered in Solana Beach, CA with offices in Santa Monica,
CA and NYC, NY

4
SENIOR MANAGEMENT
Name
Title
Background
Stephen K Bannon
Chairman
Bannon & Co., Goldman Sachs
Trevor Drinkwater
CEO
Take Two Interactive, Warner Home Video
Nestle
Christine Martinez
EVP/GM, Genius Products
Warner Home Video
Shawn Howie, CPA
EVP and CFO
Movielink, The Irvine Company
Rodney Satterwhite
EVP, Operations
Warner Home Video, Giant Food Inc.
David Snyder
EVP, Content & Acquisition
Walt Disney Television International
Michael Radiloff
EVP, Marketing
Warner Home Video
Mitch Budin
EVP, Sales
Dreamworks, Warner Home Video
Michel Urich
General Counsel
Nara Bancorp
•
Genius Products has assembled a world class management team
with significant industry experience

5
GENIUS PRODUCTS
The Genius Products Brand Strategy:
•
Develop highly recognizable and established consumer brands
•
Products are developed to meet consumer demands
–
Relevant content
–
Underserved niches
–
Price/Value proposition
–
New technologies
–
Trends
•
Brand partners support DVD releases with national advertising
and promotions
•
Create a brand portfolio by leveraging new releases and
expanding catalog breadth

6
BRAND PORTFOLIO
•
Genius’
portfolio consists of high-quality, consumer friendly
brands

7
CONTENT AND MARKETING STRATEGIES
•
Release movies or TV series with enduring appeal or strong cult following
•
Offer balanced segment portfolio –
multi disc sets and “best of”s
•
Schedule
releases
to
leverage
key
retail
resets,
holiday
periods
and
appropriate
tie-ins
•
Partner supported national advertising campaigns
•
Source “on-trend”
and unique content for DVD exploitation
•
Schedule releases to coincide with “peak”
awareness periods/promotions and
retail dates
•
Support
releases
with
relevant
in-program
advertising
and
third-party
cross
promotions
•
Develop added-value content to enhance consumer viewing experience beyond the
film
•
Time releases to coincide with heavy ‘film festival’
activity
•
Develop trade promotions that reward merchandising efforts at retail, leveraging
all Indie
brands
•
Support segment with targeted print advertising and aggressive PR
•
Establish core business with Big Brands and ‘the next Big thing’
•
Utilize production relationships to super serve underserved audiences with niche
and activity product
•
Generate trial and awareness via Value programs and through secondary in-store
placement programs
•
Refresh
proprietary
brands,
including
heavy
licensing
and
third-party
promotions
•
Direct
in-store
messaging
and
print
advertising
to
Mom,
focusing
on
brand-value
equation
Content & Marketing Strategies
Segment
•
Genius’
core business strategies are focused around delivering
unique content and consumer value through ‘retail-centric’
solutions

8
DIFFERENTIATED DISTRIBUTION STRATEGY
•
Genius Products utilizes a
specialized distribution
strategy to ensure appropriate
distribution for each brand,
securing both in-line
placement and promotional
space
•
Unique trade promotions and
retailer-sponsored advertising
stimulate consumer traffic
•
Brand partners support the
distribution strategy with
national media and cross
promotions
BRANDED
DISTRIBUTION
NETWORK

9
RETAILER/CHANNEL DISTRIBUTION
•
Genius distribution reaches a wide variety of retailers
relevant to our content partners across all channels
Mass
Electronics
Music
Rental
Internet
Wholesale Club
Toy
Wal*Mart
Best Buy
Transworld
Blockbuster
Amazon
Costco
Toys R Us
Target
Circuit City
Musicland
Hollywood Video
Buy.com
BJ's
KB Toys
Kmart
Radio Shack
Tower
Hastings
ShopNBC
Sams
Shopko
Fry's
Wherehouse
Movie Gallery
Infinity
Bi-mart
Pamida
Brandsmart
Virgin
Family Video
All Click & Mortar
Meijer
Nebraska Furn. Mart
Netflix
Fred Meyer
Zellers
Book
Distribution
Discount Mass
Military
Grocery
Drug
Convenience
Barnes & Noble
Ingram
Dollar General
Eurpac
Safeway
CVS
7-Eleven
Borders
VPD
99 Cent Store
AAFES
Kroger
Eckerds
Circle K
Ind. Book Stores
AEC
Dollar Tree
Albertsons
Rite Aid
Flying J
Baker & Taylor
Christmas Tree Stores
Ahold
Walgreens
Mobil
ERI
TJ Maxx
A&P
Sav-on
Exxon
ROI
Big Lots
Publix
Longs
Misc
Others
Navarre
HEB
Misc. Regionals
Office Channel
Department
Game Specialty
Christian Book Stores
Specialty
Direct Response
Other
Staples
Sears
Electronics Boutique
Family Christian
JR Music
Home Shopping Nework
Petco
Office Depot
Kohls
Game Stop
Lifeway
Newbery Comics
QVC
PetSmart
Office Max
Macy's
Christian Book
Columbia House
Cracker Barrel
CompUSA
Burlington Coat Fac.
Spring Arbor
Spencer Gifts
Mail Order
Sporting Good Stores
Lifestyle Retailers

10
AMERICAN VANTAGE MEDIA
•
Theatrical releasing began under the Wellspring banner in 1999
quickly earning the company a high profile reputation as an
art house distributor of highly acclaimed films by world-
renowned directors.
•
The core business comprises classic films, new foreign and
American independent films and wellness programs.
•
Genius Products acquired Wellspring Media in March,2005
•
The Wellspring film library boasts over 700 films many of
which are critically acclaimed art house films

11
RETAIL MARKETING
•
Utilize
historical
data
–
gross
ships,
returns,
POS
–
of
comparable titles to establish account volume objectives
•
Develop sales programs to leverage in-store events and
retailer’s go-to-market strategy 
•
Develop unique and value-added versions of releases to establish
point of differentiation for key retailers
•
Execute appropriate merchandising vehicles to optimize product
distribution
and
customer
touch
points
–
corrugate
merchandisers, pallets, long-boxes and custom fixtures
•
Design point of purchase materials that exploit each retailers
consumer experience
•
Build product configurations that ensure efficient distribution
and minimize returns
Genius will leverage its channel expertise and retail relationships
to deliver retailer specific in-store tactics:

12
OPERATIONS COMPETENCY
Our operations objective is to match or exceed execution, service,
and efficiency levels of the major studios by:
•
Building a responsive, flat organizational infrastructure with
scalability
•
Leveraging relationships and flexibility to source favorable
pricing
•
Integrated sales and analytics to support product planning to
retail execution
•
Incorporating superior systems, reporting and resource
management capabilities

13
WHY CONTENT OWNERS CHOOSE GENIUS PRODUCTS?
•
Strong management team with extensive home video and packaged
goods sales, marketing and distribution expertise
•
Open access to all levels of key management
•
Expertise in brand portfolio management
•
Nimble and flexible infrastructure that can respond quickly to
changing market dynamics and retailer needs
•
Direct access to a wide retail distribution network
•
Competitive operations and supply chain management
•
Transparent financial and sales information sharing

Strategic Transaction with
The Weinstein Company

15
THE WEINSTEIN TRANSACTION OVERVIEW
•
TWC is the new enterprise of Bob and Harvey Weinstein
–
Separated
from
Disney
in
March
2005,
officially
launched
October
1,
2005
–
First film “Derailed”
released in November 2005 has already grossed $35
million in box office revenues to date
•
TWC owns rights to:
–
Over 80 films and film projects
–
Produce, co-finance and co-distribute with Disney sequels to a number of
established film franchises
–
Twelve television projects, including future seasons of established
series
Project
Greenlight
and
Project
Runway
–
Preferential relationships with a number of well-known and highly-
successful writers, directors and producers
–
The well-known Dimension Films name
–
The Rainbow / IFC content library
Since March, TWC has acquired 25 additional projects
•
TWC is fully financed by Goldman Sachs and array of international
strategic and financial partners for approximately $1B ~ $490M
equity.

16
TRANSACTION SUMMARY
•
The current operating business of GNPI will be transferred to
Genius Products, LLC (30% owned by GNPI and 70% by TWC)
–
Genius Products, LLC will receive the U.S. DVD distribution rights for most
all TWC releases and future library. TWC will receive a 70% economic interest
in Genius Products, LLC and a 70% voting interest in GNPI via preferred
voting stock.
–
GNPI will contribute most all of its assets and operations to the LLC, and
will retain a 30% economic interest in the LLC
–
GNPI shareholders will retain 100% common equity in GNPI with 30% voting
rights (subject to TWC taking 70% of Common if it redeems its LLC interests)
•
GNPI will own exclusive U.S. DVD distribution rights to most all
content produced or controlled by TWC, including all theatrical
or DTV titles, as well as all Rainbow/IFC titles
–
Exclusive distribution rights for 5 years
–
Rights in perpetuity on any content released on DVD by GNPI during the term
•
Anticipated products to be distributed each year via the TWC
transaction will include:
–
An average of 2 theatrical releases per month
–
Approximately 20-30 direct-to-video releases per year
–
Co-produced content from Rainbow/IFC
–
Other Acquisitions

17
A PROVEN TRACK RECORD

18
IMMEDIATE PRODUCT FLOW

19
•
Summary of data discussed during the December 6, 2005 investor
conference call 
EXPECTED IMPACT OF TRANSACTION
•
2006
&
2007
–
70%
majority
interest
allocated
to
The
Weinstein
Company
•
2006
–
Expect
to
utilize
NOL
of
over
$30
million
to
reduce
the
effective
tax
rate
to
10%
-
15%
•
2007
–
Expect
to
utilize
NOL
to
reduce
the
effective
tax
rate
to
25%
-
30%
•
2006
&
2007
–
Approximate
60
million
common
shares
outstanding
after
the
recent
financing
Other
•
2006
&
2007
-
Estimate
operating
margin
of
approximately
4%
•
2006
&
2007
-
Gross
margin
should
improve
from
the
33%
to
approach
40%
target
•
2006
&
2007
–
G&A
expenses
of
$15
-
$20
million
annually
Operating Income
•
2006
&
2007
–
Expect
to
release
an
average
of
2
films
per
month
through
entire
agreement
•
2006
–
Estimated
an
average
$20-$25
million
net
revenue
per
release
•
2007
-
Per-title
net
revenue
will
likely
increase
by
20%
in
2007
over
2006
•
2006
&
2007
-
Anticipate
releasing
approximately
30
direct-to-video
titles
per
year
•
2007
-
Library
Sales
(>6
mos)
should
represent
an
additional
20%-
30%
of
total
net
revenue
•
2006
-
Net
revenue
expected
to
double
or
triple
over
2005
•
2007
-
Net
revenue
expected
to
increase
by
25%
over
2006
Revenue
Weinstein Division
Genius Division
Description
NOTE:
The
information
in
the
chart
include
estimates
derived
from
a
preliminary
analysis
completed
by
GNPI
management
and
do
not
constitute
financial
projections or
guidance
as
to
future
results

20
CAPITALIZATION
Transaction capitalization summary:
Total
Genius
Weinstein
Common
Products (MM)
Company (MM)
Shares Equv. (MM)
Common Shares Outstanding
59.8
0.0
59.8
Common Shares Issuable to TWC
(1)
0.0
139.5
139.5
Options and Warrants
(2)
34.3
0.0
34.3
(2) Weighted Average Exercise Price of $1.96
(1) Common Shares Issuable to TWC convert to common on a 1: 1 basis and will increase on pro rata
basis as options and warrants get excerised

21
ADDITIONAL GROWTH OPPORTUNITIES
•
Distribution of content from Rainbow IFC library
•
Content acquisition using proceeds from recent financing and
excess operating cash flow
•
Margin improvement through acquisition of higher quality content
•
Leverage The Weinstein Company titles to expand Genius Brand
content
•
Large distribution footprint and scalable platform for additional
content and products
•
Cash from warrants is retained by GNPI for use in operations
•
Potential international opportunities

THANK YOU