LIONSGATE REPORTS FIRST QUARTER FISCAL 2014 REVENUE OF $569.7 MILLION, ADJUSTED EBITDA OF $60.8 MILLION, NET INCOME OF $13.6 MILLION OR $0.10 BASIC EPS AND ADJUSTED NET INCOME OF $25.1 MILLION OR $0.18 ADJUSTED BASIC EPS

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Aug. 8, 2013 /PRNewswire/ -- Lionsgate (NYSE: LGF) today reported revenue of $569.7 million, adjusted EBITDA of $60.8 million, net income of $13.6 million or $0.10 basic net income per share and adjusted net income of $25.1 million or $0.18 adjusted basic net income per share for the first quarter of Fiscal 2014 (fiscal quarter ended June 30, 2013).

Revenue of $569.7 million for the first quarter increased by 21% compared to $471.8 million in the prior year quarter, reflecting strong performances in the Company's television production, home entertainment and international operations which more than offset a decline in theatrical revenue compared to the prior year quarter.  The prior year quarter included all but the first nine days of the domestic theatrical release of the first Hunger Games film.  The next film in the blockbuster Hunger Games franchise, The Hunger Games: Catching Fire, will be released worldwide on November 22, 2013.

Adjusted EBITDA of $60.8 million for the first quarter compared to adjusted EBITDA of $17.1 million in the prior year quarter.

Net income for the first quarter was $13.6 million or $0.10 basic net income per share on 136.2 million weighted average number of common shares outstanding compared to a $(44.2) million net loss or $(0.33) basic net loss per share on 133.2 million weighted average number of common shares outstanding during the prior year quarter.  Adjusted net income of $25.1 million or $0.18 adjusted basic net income per share, excluding stock-based compensation and early extinguishment of debt costs in the quarter, compared to adjusted net loss of $(26.3) million or $(0.20) adjusted basic net loss per share in the prior year quarter.

Growth in adjusted EBITDA, net income and adjusted net income in the quarter reflected increased digital revenue and the strong performances in the Company's television production, home entertainment and international operations noted above.  Net income and adjusted net income also benefited from lower interest expense.

Lionsgate's filmed entertainment backlog, or already contracted future revenue not yet recorded, was $1.1 billion at June 30, 2013.

"We're pleased with our first quarter results, with particularly strong contributions from our diversified television slate, packaged and digital media and our robust international performance," said Lionsgate Chief Executive Officer Jon Feltheimer.  "The fact that our quarter compared favorably to a first quarter last year that included most of the domestic release of the first Hunger Games film illustrates the diversity of our business.  The appetite for content is growing, domestically and internationally, across multiple platforms and, as a pure content company, we are well positioned to capitalize on this demand."

Overall Motion Picture segment revenue for the first quarter was $438.6 million, an increase of 8% from the prior year quarter as gains in home entertainment and international operations more than offset a decline in theatrical revenue.

Lionsgate's home entertainment revenue from both motion pictures and television was $169.4 million for the first quarter, a 16% increase compared to $145.5 million in the prior year quarter, driven by a diversified slate that included Warm Bodies, The Impossible and Texas Chainsaw 3D as well as continued revenue from The Twilight Saga: Breaking Dawn – Part 2, Sinister, The Perks Of Being A Wallflower and The Expendables 2.  Digital media revenue increased by 21% to $63.2 million in the quarter.  

Television revenue included in the Motion Picture segment was $36.8 million in the first quarter compared to $37.1 million in the prior year quarter.

International Motion Picture segment revenue (excluding Lionsgate U.K.) increased 63% to $79.1 million for the first quarter driven by the strong international performance of Now You See Me, one of the sleeper hits of the summer worldwide, The Twilight Saga: Breaking Dawn – Part 2, The Impossible, Warm Bodies and The Last Stand.

Lionsgate U.K. revenue was $32.4 million in the first quarter compared to $32.6 million in the prior year quarter. 

Revenue in the Television Production segment was $131.1 million in the first quarter, more than doubling revenue in the prior year quarter and reflecting strong gains in licensing of domestic television series and international sales.  Deliveries in the quarter included Anger Management, Season 6 of Mad Men, Season 1 of Nashville, the debut season of Orange Is The New Black and several shows in syndication, including Season 4 of The Wendy Williams Show, which has been renewed by the Fox station group for three more seasons.

Lionsgate senior management will hold its analyst and investor conference call to discuss its first quarter fiscal 2014 results at 9:00 A.M. ET/6:00 A.M. PT on Friday, August 9, 2013.  Interested parties may participate live in the conference call by calling 1-800-230-1059 (612-288-0329 outside the U.S. and Canada).  A full digital replay will be available from Friday morning, August 9, through Friday, August 16, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 298340.

ABOUT LIONSGATE

Lionsgate is a leading global entertainment company with a strong and diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution, new channel platforms and international distribution and sales. Lionsgate currently has 28 television shows on 20 networks spanning its primetime production, distribution and syndication businesses, including such critically-acclaimed hits as the multiple Emmy Award-winning Mad Men and Nurse Jackie, the comedy Anger Management, the network series Nashville, the syndication successes Tyler Perry's House of Payne, its spinoff Meet the Browns, The Wendy Williams Show, Are We There Yet? and the new series Orange Is The New Black.

Its feature film business has been fueled by such recent successes as the blockbuster first installment of The Hunger Games franchise, The Twilight Saga Breaking DawnPart 2, Now You See Me, Kevin Hart: Let Me Explain, Warm Bodies, Snitch, Texas Chainsaw 3D, The Expendables 2, The Possession, Sinister, The Cabin in the Woods and Arbitrage. Lionsgate's home entertainment business is an industry leader in box office-to-DVD and box office-to-VOD revenue conversion rate. Lionsgate handles a prestigious and prolific library of approximately 15,000 motion picture and television titles that is an important source of recurring revenue and serves as the foundation for the growth of the Company's core businesses. The Lionsgate and Summit brands remain synonymous with original, daring, quality entertainment in markets around the world.

For further information, please contact:
Peter D. Wilkes
310-255-3726
pwilkes@lionsgate.com

The matters discussed in this press release include forward-looking statements, including those regarding the performance of future fiscal years.  Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the substantial investment of capital required to produce and market films and television series, increased costs for producing and marketing feature films and television series, budget overruns, limitations imposed by our credit facility and notes, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, risks related to our acquisition strategy and integration of acquired businesses, the effects of disposition of businesses or assets, technological changes and other trends affecting the entertainment industry, and the risk factors as set forth in Lionsgate's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on May 30, 2013, as amended in Lionsgate's Quarterly Report on Form 10-Q filed with the SEC on August 8, 2013, which risk factors are incorporated herein by reference.  The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.

 

LIONS GATE ENTERTAINMENT CORP.


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
















June 30,


March 31,







2013


2013







(Amounts in thousands,







except share amounts)

ASSETS

Cash and cash equivalents



$                  51,019


$                62,363

Restricted cash



9,010


10,664

Accounts receivable, net of reserve for returns and allowances of $80,424 (March 31, 2013 -





$103,418) and provision for doubtful accounts of $4,358 (March 31, 2013 - $4,494)

819,438


787,150

Investment in films and television programs, net

1,185,650


1,244,075

Property and equipment, net


9,266


8,530

Equity method investments



158,161


169,450

Goodwill




323,328


323,328

Other assets




72,594


72,619

Deferred tax assets



80,626


82,690


Total assets



$        2,709,092


$        2,760,869










LIABILITIES

Senior revolving credit facility


$             339,474


$             338,474

Senior secured second-priority notes


428,517


432,277

Accounts payable and accrued liabilities


277,534


313,620

Participations and residuals



392,239


409,763

Film obligations and production loans


509,015


569,019

Convertible senior subordinated notes


149,080


87,167

Deferred revenue



233,440


254,023


Total liabilities



2,329,299


2,404,343










Commitments and contingencies



















SHAREHOLDERS' EQUITY













Common shares, no par value, 500,000,000 shares authorized, 136,365,493 shares 





issued (March 31, 2013 - 135,882,899 shares) 

682,352


672,915

Accumulated deficit



(296,295)


(309,912)

Accumulated other comprehensive loss


(6,264)


(6,477)

Total shareholders' equity



379,793


356,526


Total liabilities and shareholders' equity

$        2,709,092


$        2,760,869










 

LIONS GATE ENTERTAINMENT CORP.


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS














Three Months


Three Months






Ended


Ended






June 30,


June 30,






2013


2012














 (Amounts in thousands,
except per share amounts) 

















Revenues


$          569,728


$           471,820

Expenses:






Direct operating


306,445


245,818


Distribution and marketing


171,460


178,709


General and administration


56,770


52,344


Depreciation and amortization


1,625


2,105



Total expenses


536,300


478,976

Operating income (loss)


33,428


(7,156)

Other expenses (income):






Interest expense







Contractual cash based interest


16,273


22,728



Amortization of debt discount (premium) and deferred financing costs

4,541


4,762




Total interest expense


20,814


27,490


Interest and other income


(1,496)


(950)


Loss on extinguishment of debt


466


8,159



Total other expenses, net


19,784


34,699

Income (loss) before equity interests and income taxes


13,644


(41,855)

Equity interests income (loss)


7,977


(145)

Income (loss) before income taxes


21,621


(42,000)

Income tax provision


8,004


2,200

Net income (loss)


$               13,617


$           (44,200)

















Basic Net Income (Loss) Per Common Share


$                    0.10


$                 (0.33)









Diluted Net Income (Loss) Per Common Share


$                    0.10


$                 (0.33)









Weighted average number of common shares outstanding:






Basic


136,189


133,234


Diluted


140,745


133,234

 

LIONS GATE ENTERTAINMENT CORP.


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
















Three Months


Three Months







Ended


Ended







June 30,


June 30,







2013


2012

















Operating Activities:





Net income (loss)



$                         13,617


$                     (44,200)

Adjustments to reconcile net income (loss) to 




net cash provided  by (used in) operating activities:





Depreciation of property and equipment

693


758


Amortization of intangible assets

932


1,347


Amortization of films and television programs

219,364


167,097


Amortization of debt discount (premium) and deferred financing costs

4,541


4,762


Non-cash stock-based compensation

13,220


6,173


Dividend payment from equity method investee

9,849


-


Loss on extinguishment of debt

466


8,159


Equity interests (income) loss

(7,977)


145


Deferred income taxes


2,063


-

Changes in operating assets and liabilities:





Restricted cash


1,662


2,956


Accounts receivable, net


(32,516)


196,134


Investment in films and television programs

(160,933)


(161,005)


Other assets



(1,222)


(616)


Accounts payable and accrued liabilities

(33,584)


(44,193)


Participations and residuals

(17,512)


(12,906)


Film obligations


(21,370)


(20,233)


Deferred revenue


(20,582)


46,637

Net Cash Flows Provided By (Used In) Operating Activities

(29,289)


151,015

Investing Activities:





Proceeds from the sale of a portion of equity method investee

9,000


-

Investment in equity method investees

(3,750)


-

Dividends from equity method investee in excess of earnings

4,169


-

Purchases of property and equipment

(1,428)


(386)

Net Cash Flows Provided By (Used In) Investing Activities

7,991


(386)

Financing Activities:





Senior revolving credit facility - borrowings

173,000


274,700

Senior revolving credit facility - repayments

(172,000)


(85,000)

Senior secured second-priority notes - repurchases

(4,280)


-

Term Loan - repayments


-


(185,504)

Convertible senior subordinated notes - borrowings

60,000


-

Production loans - borrowings


108,605


36,969

Production loans - repayments


(82,292)


(174,519)

Pennsylvania Regional Center credit facility - repayments

(65,000)


-

Change in restricted cash collateral associated with financing activities

-


(7,467)

Exercise of stock options


543


52

Tax withholding required on equity awards

(9,019)


(2,745)

Other financing obligations - repayments

-


(3,710)

Net Cash Flows Provided By (Used In) Financing Activities

9,557


(147,224)

Net Change In Cash And Cash Equivalents

(11,741)


3,405

Foreign Exchange Effects on Cash

397


(120)

Cash and Cash Equivalents - Beginning Of Period

62,363


64,298

Cash and Cash Equivalents - End Of Period

$                         51,019


$                       67,583










 

LIONS GATE ENTERTAINMENT CORP.


RECONCILIATION OF NET INCOME (LOSS) TO

EBITDA AND EBITDA, AS ADJUSTED
















Three Months


Three Months







Ended


Ended







June 30,


June 30,







2013


2012
















 (Amounts in thousands) 



















Net income (loss)



$                 13,617


$             (44,200)


Depreciation and amortization


1,625


2,105


Contractual cash based interest


16,273


22,728


Noncash interest expense



4,541


4,762


Interest and other income



(1,496)


(950)


Income tax provision



8,004


2,200

EBITDA





$               42,564


$              (13,355)











Loss on extinguishment of debt


466


8,159


Stock-based compensation (1)


17,747


9,749


Acquisition related charges


-


1,727


Non-risk prints and advertising expense


-


10,821

EBITDA, as adjusted



$               60,777


$                  17,101



















(1)

The three months ended June 30, 2013 and 2012 include cash settled SARs expense


 of $3.3 million and $0.7 million, respectively.




EBITDA is defined as earnings before interest, income tax provision or benefit, and depreciation and amortization. EBITDA is a non-GAAP financial measure.

EBITDA, as adjusted represents EBITDA as defined above adjusted for loss on extinguishment of debt, stock-based compensation and acquisition related charges. Stock-based compensation represents compensation expenses associated with stock options, restricted share units and cash settled stock appreciation rights ("SARs") and equity settled SARs. Acquisition related charges represent severance and transaction costs associated with the acquisition of Summit. Non-risk prints and advertising expense represents the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a guarantee that such expense will be recouped from the performance of the film (i.e. there is no risk of loss to the company) net of an amount of the estimated amortization of participation expense that would have been recorded if such amount had not been expensed. EBITDA, as adjusted is a non-GAAP financial measure.

Management believes EBITDA and EBITDA, as adjusted to be a meaningful indicator of our performance that provides useful information to investors regarding our financial condition and results of operations. Presentation of EBITDA and EBITDA, as adjusted is a non-GAAP financial measure commonly used in the entertainment industry and by financial analysts and others who follow the industry to measure operating performance. While management considers EBITDA and EBITDA, as adjusted to be an important measure of comparative operating performance, it should be considered in addition to, but not as a substitute for, net income and other measures of financial performance reported in accordance with Generally Accepted Accounting Principles. EBITDA and EBITDA, as adjusted do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA and EBITDA, as adjusted in the same manner and the measure as presented may not be comparable to similarly-titled measures presented by other companies.

 

LIONS GATE ENTERTAINMENT CORP.


RECONCILIATION OF FREE CASH FLOW TO NET CASH

FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES


















Three Months


Three Months








Ended


Ended








June 30,


June 30,








2013


2012








 (Amounts in thousands) 











Net Cash Flows Provided By (Used In) Operating Activities


$              (29,289)


$                151,015


Purchases of property and equipment



(1,428)


(386)


Net borrowings under and (repayment) of production loans


26,313


(137,550)

Free Cash Flow, as defined



$                 (4,404)


$                 13,079











Free cash flow is defined as net cash flows provided by (used in) operating activities, less purchases of property and equipment, plus or minus the net increase or decrease in production loans. The adjustment for the production loans is made because the GAAP based cash flows from operations reflects a non-cash reduction of cash flows for the cost of films associated with production loans prior to the time the Company actually pays for the film. The Company believes that it is more meaningful to reflect the impact of the payment for these films in its free cash flow when the payments are actually made.

Free cash flow is a non-GAAP financial measure as defined in Regulation G promulgated by the Securities and Exchange Commission. This non-GAAP financial measure is in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with Generally Accepted Accounting Principles.

Management believes this non-GAAP measure provides useful information to investors regarding cash that our operating businesses generate whether classified as operating or financing activity (related to the production of our films) within our GAAP based statement of cash flows, before taking into account cash movements that are non-operational. Free cash flow is a non-GAAP financial measure commonly used in the entertainment industry and by financial analysts and others who follow the industry. Not all companies calculate free cash flow in the same manner and the measure as presented may not be comparable to similarly titled measures presented by other companies.  

 

LIONS GATE ENTERTAINMENT CORP.


RECONCILIATION OF EBITDA TO FREE CASH FLOW












Three Months


Three Months





Ended


Ended





June 30,


June 30,





2013


2012












(Amounts in thousands)








EBITDA


$                 42,564


$                (13,355)









Plus: Amortization of film and television programs

219,364


167,097


Less: Cash paid for film and television programs (1)

(155,990)


(318,788)


Amortization of (cash paid for) film and television programs






 in excess of cash paid (amortization)

63,374


(151,691)









Plus: Non-cash stock-based compensation

13,220


6,173


Plus: Dividend payment from equity method investee

9,849


-


Plus: Equity interests (income) loss

(7,977)


145


Plus: Loss on extinguishment of debt

466


8,159








EBITDA adjusted for net investment in film and television programs,





non-cash stock-based compensation, equity interests (income) loss, and




loss on extinguishment of debt

121,496


(150,569)








Changes in other operating assets and liabilities:





Restricted cash

1,662


2,956


Accounts receivable, net

(32,516)


196,134


Other assets

(1,222)


(616)


Accounts payable and accrued liabilities

(33,584)


(44,193)


Participations and residuals

(17,512)


(12,906)


Deferred revenue

(20,582)


46,637





(103,754)


188,012









Purchases of property and equipment

(1,428)


(386)


Interest, taxes and other (2)

(20,718)


(23,978)








Free Cash Flow, as defined

$                  (4,404)


$                  13,079






















(1) Cash paid for film and television programs is calculated using the following amounts 





as presented in our consolidated statement of cash flows:












Change in investment in film and television programs

$             (160,933)


$              (161,005)


Change in film obligations

(21,370)


(20,233)


Production loans - borrowings

108,605


36,969


Production loans - repayments

(82,292)


(174,519)



Total cash paid for film and television programs

$             (155,990)


$             (318,788)















(2 )Interest, taxes and other consists of the following:












Contractual cash based interest

$                (16,273)


$               (22,728)


Interest and other income

1,496


950


Current income tax provision

(5,941)


(2,200)



Total interest, taxes and other

$                (20,718)


$               (23,978)








This reconciliation is provided to illustrate the difference between our EBITDA and free cash flow which are both separately reconciled to their corresponding GAAP metrics. 

 

LIONS GATE ENTERTAINMENT CORP.


RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES, NET

INCOME (LOSS), BASIC AND DILUTED EPS TO ADJUSTED INCOME (LOSS) BEFORE

 INCOME TAXES, NET INCOME (LOSS), BASIC AND DILUTED EPS

































Three Months Ended June 30, 2013







 (Amounts in thousands, except per share amounts) 




















Income before













 income taxes 


 Net income 


Basic EPS


Diluted EPS














As reported




$                 21,621


$               13,617


$               0.10


$               0.10


Loss on extinguishment of debt (1)


466


294


-


-


Stock-based compensation (2)


17,747


11,181


0.08


0.08

As adjusted for loss on extinguishment of debt










and stock-based compensation


$               39,834


$              25,091


$               0.18


$               0.18

































Three Months Ended June 30, 2012







 (Amounts in thousands, except per share amounts) 




















Loss before













 income taxes 


 Net loss 


Basic EPS


Diluted EPS














As reported




$             (42,000)


$           (44,200)


$            (0.33)


$            (0.33)


Loss on extinguishment of debt (1)


8,159


8,159


0.06


0.06


Stock-based compensation (2)


9,749


9,749


0.07


0.07

As adjusted for loss on extinguishment of debt










and stock-based compensation


$             (24,092)


$           (26,292)


$            (0.20)


$            (0.20)














Income (loss) before income taxes, net income (loss) and basic and diluted EPS, as adjusted are adjusted for the following items:

(1) Loss on early extinguishment of debt: This adjusts income (loss) before income taxes and net income (loss) to eliminate the loss on early extinguishment of debt. The adjustment to net income (loss) is net of the tax impact calculated using the tax rate applicable to each adjustment.

(2) Stock based compensation: Adjustments for stock-based compensation represents compensation expenses associated with stock options, restricted share units, cash settled SARs and equity settled SARs. The adjustment to net income (loss) is net of the tax impact calculated using the tax rate applicable to each adjustment.

Management believes that these non-GAAP measures provide useful information to investors regarding the Company's results as compared to historical periods. The Company uses these measures, among other measures, to evaluate the operating performance of the Company. The Company believes that the adjusted results provide relevant and useful information for investors because they clarify the Company's actual operating performance and allow investors to review our operating performance in the same way as our management. Since these measures are not calculated in accordance with generally accepted accounting principles, they should not be considered in isolation of, or as a substitute for income (loss) before income taxes, net income (loss), basic and diluted EPS. Not all companies calculate income (loss) before income taxes, net income (loss), basic and diluted EPS as adjusted in the same manner and the measures as presented may not be comparable to similarly titled measures presented by other companies.

SOURCE Lionsgate



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