LIONSGATE REPORTS REVENUE OF $471.8 MILLION, ADJUSTED EBITDA OF $17.1 MILLION, EBITDA OF $(13.4) MILLION AND NET LOSS OF $(44.2) MILLION OR $(0.33) PER BASIC SHARE IN THE FIRST QUARTER OF FISCAL 2013

09 Aug, 2012, 16:00 ET from Lionsgate

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Aug. 9, 2012 /PRNewswire/ -- Lionsgate (NYSE: LGF) today reported revenue of $471.8 million, adjusted EBITDA of $17.1 million, EBITDA of $(13.4) million and net loss of $(44.2) million or $(0.33) per share for the first quarter of Fiscal 2013 (quarter ended June 30, 2012).

(Logo: http://photos.prnewswire.com/prnh/20110919/LA70620LOGO)

Revenue of $471.8 million in the first quarter increased by 81% compared to $261.3 million in the prior year quarter, driven by the North American theatrical revenue of the global blockbuster THE HUNGER GAMES and the films CABIN IN THE WOODS and WHAT TO EXPECT WHEN YOU'RE EXPECTING as well as strong revenue gains in the Company's home entertainment business.

Adjusted EBITDA of $17.1 million and EBITDA of $(13.4) million in the first quarter compared to EBITDA of $28.7 million and adjusted EBITDA of $27.5 million in the prior year quarter and net loss of $(44.2) million in the first quarter compared to net income of $10.3 million in the prior year quarter due in part to an increase of $90 million in theatrical marketing costs associated with five releases in the quarter (including four wide releases) compared to one release in the prior year quarter.  The Company noted that all five releases are anticipated to be profitable on an ultimate basis.

EBITDA and net loss in the quarter were also affected by increased G&A costs due primarily to increased stock-based compensation largely associated with the increase in the Company's stock price as well as increased costs associated with the integration of Summit Entertainment.  Profitability in the quarter was also impacted by increased interest expense, a noncash charge for early retirement of a significant portion of the Summit term loan debt and the application of purchase accounting required by GAAP.

Basic net loss per common share for the first quarter was $(0.33) on 133.2 million weighted average common shares outstanding, compared to basic net income per common share of $0.08 on 137.0 million weighted average common shares outstanding in the prior year quarter.

Lionsgate's filmed entertainment backlog was $992 million at June 30, 2012.  Filmed entertainment backlog represents the amount of future revenue not yet recorded from contracts for the licensing of films and television product for television exhibition and in international markets. 

"We completed our first quarter on target for our fiscal year and our three-year plan," said Lionsgate Chief Executive Officer Jon Feltheimer.  "Our financial results in the quarter were affected by marketing costs for a slate of five films, primarily noncash stock-based compensation and a noncash charge for paying down a significant portion of our Summit term loan debt early.  However, with two-thirds of the profitability of the first HUNGER GAMES film still ahead, we anticipate that the combined benefits of our Summit acquisition, the strength of our young adult franchises and the continued evolution of our television business will translate into significant and growing contributions for the balance of our three-year plan."     

Overall motion picture revenue for the first quarter was $406.5 million, an increase of 111% from the prior year quarter.  Within the motion picture segment, theatrical revenue was $137.6 million, a fivefold increase from the prior year first quarter, attributable to the box office performance of THE HUNGER GAMES, the 12th highest-grossing North American release of all time, and the other theatrical releases mentioned above.

Lionsgate's home entertainment revenue from both motion pictures and television was $145.5 million in the first quarter compared to $92.9 million in the prior year quarter driven by five major DVD and digital releases in the quarter.  

Television revenue included in motion picture revenue was $37.1 million in the first quarter, a decrease of 14% from the prior year quarter.

International motion picture revenue of $48.6 million (excluding Lionsgate U.K.) for the first quarter increased more than fourfold from the prior year quarter driven by the worldwide theatrical release of THE HUNGER GAMES as well as revenue contributions from THE TWILIGHT films, CABIN IN THE WOODS, WHAT TO EXPECT WHEN YOU'RE EXPECTING and MAN ON A LEDGE.

Lionsgate U.K. revenue was $32.6 million, a nearly threefold increase from the prior year quarter, on the strength of a theatrical slate driven by THE HUNGER GAMES and Lionsgate U.K.'s SALMON FISHING IN THE YEMEN. 

Television production revenue was $65.3 million in the first quarter, a decline of 5% compared to the prior year quarter due primarily to fewer deliveries from the Company's Debmar-Mercury syndication arm offset in part by increased digital media revenue from Weeds Seasons 6 and 7 and Mad Men Season 5 in their home entertainment windows.

Lionsgate senior management will hold its analyst and investor conference call to discuss its first quarter fiscal 2013 results at 9:00 A.M. ET/6:00 A.M. PT on Friday, August 10, 2012. Interested parties may participate live in the conference call by calling 1-800-230-1059 (612-234-9960 outside the U.S. and Canada).  A full digital replay will be available from Friday morning, August 10, through Friday, August 17, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 255773.

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. The Company has built a significant television presence in production of primetime cable and broadcast network series, distribution and syndication of programming and an array of channel assets. Lionsgate currently has 23 shows on 16 networks spanning its primetime production, distribution and syndication businesses, including the multiple Emmy Award-winning "Mad Men" and the critically-acclaimed series "Weeds," "Nurse Jackie" and "Boss," the new network series "Nashville" and "Next Caller," the Charlie Sheen sitcom "Anger Management," the syndication successes "Tyler Perry's House of Payne," its spinoff "Meet the Browns," "The Wendy Williams Show" and "Are We There Yet?" and the upcoming "Orange Is The New Black," an original series for Netflix.

Its feature film business has been fueled by such recent successes as the blockbuster first installment of "The Hunger Games" franchise, which has grossed nearly $700 million at the worldwide box office, "Cabin In The Woods," "Tyler Perry's Madea's Witness Protection" and "Margin Call." With the January 2012 acquisition of Summit Entertainment, the Company added the blockbuster "The Twilight Saga," which has grossed more than $2.5 billion at the worldwide box office, to a slate that already included its "The Hunger Games" franchise and now has the two premier young adult franchises in the world.  Recent Summit hits include "Red," "Letters to Juliet," "Knowing," and the Academy Award-winning Best Picture, "The Hurt Locker."

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 facilities 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, 2012, 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,

2012

2012

(Amounts in thousands,

except share amounts)

ASSETS

Cash and cash equivalents

$     67,583

$     64,298

Restricted cash

16,447

11,936

Accounts receivable, net of reserve for returns and

        allowances of $81,382 (March 31, 2012 -

$93,860) and provision for doubtful accounts of

$3,872 (March 31, 2012 - $4,551)

587,359

784,530

Investment in films and television programs, net

1,312,049

1,329,053

Property and equipment, net

9,390

9,772

Equity method investments

171,119

171,262

Goodwill

326,361

326,633

Other assets

81,123

90,511

Total assets

$  2,571,431

$ 2,787,995

LIABILITIES

Senior revolving credit facility

$    289,450

$     99,750

Senior secured second-priority notes

431,693

431,510

Term loan

294,698

477,514

Accounts payable and accrued liabilities

319,834

371,092

Participations and residuals

403,168

420,325

Film obligations and production loans

403,288

561,150

Convertible senior subordinated notes and other financing obligations

106,365

108,276

Deferred revenue

275,049

228,593

Total liabilities

2,523,545

2,698,210

Commitments and contingencies

SHAREHOLDERS' EQUITY

Common shares, no par value, 500,000,000

        shares authorized, 144,392,029 and

143,980,754 shares issued at June 30, 2012

and March 31, 2012, respectively

716,350

712,623

Accumulated deficit

(586,239)

(542,039)

Accumulated other comprehensive loss

(5,137)

(3,711)

124,974

166,873

Treasury shares, no par value, 11,040,493 shares at

        June 30, 2012 and March 31, 2012

(77,088)

(77,088)

Total shareholders' equity

47,886

89,785

Total liabilities and shareholders' equity

$  2,571,431

$ 2,787,995

 

 

 

 

LIONS GATE ENTERTAINMENT CORP.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months

Three Months

Ended

Ended

June 30,

June 30,

2012

2011

As adjusted (1)

 (Amounts in thousands,  

 except per share amounts) 

Revenues

$     471,820

$     261,259

Expenses:

Direct operating

245,818

139,358

Distribution and marketing

178,709

64,746

General and administration

52,344

27,922

Depreciation and amortization

2,105

1,234

Total expenses

478,976

233,260

Operating income (loss)

(7,156)

27,999

Other expenses (income):

Interest expense

Contractual cash based interest

22,728

11,715

Amortization of debt discount (premium) and deferred financing costs

4,762

4,620

Total interest expense

27,490

16,335

Interest and other income

(950)

(442)

Loss on extinguishment of debt

8,159

531

Total other expenses, net

34,699

16,424

Income (loss) before equity interests and income taxes

(41,855)

11,575

Equity interests loss

(145)

(40)

Income (loss) before income taxes

(42,000)

11,535

Income tax provision

2,200

1,201

Net income (loss)

$     (44,200)

$       10,334

Basic Net Income (Loss) Per Common Share

$        (0.33)

$          0.08

Diluted Net Income (Loss) Per Common Share

$        (0.33)

$          0.08

Weighted average number of common shares outstanding:

Basic

133,234

137,011

Diluted

133,234

137,357

______________________________________________________________________

(1)

In the quarter ended March 31, 2012, the Company eliminated the lag in recording its share of EPIX's results. Due to the elimination of the lag in recording the Company's share of EPIX's results, prior period amounts presented have been adjusted to eliminate the lag in reporting. The elimination of the lag in reporting of EPIX decreased net income for the three months ended June 30, 2011 by $1.9 million.

 

 

LIONS GATE ENTERTAINMENT CORP.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months

Three Months

Ended

Ended

June 30,

June 30,

2012

2011

As adjusted (1)

(Amounts in thousands)

Net income (loss)

$                (44,200)

$                      10,334

Foreign currency translation adjustments

(1,921)

74

Net unrealized gain on foreign exchange contracts

495

36

Comprehensive income (loss)

$                (45,626)

$                      10,444

______________________________________________________________________

(1)

See footnote on Unaudited Condensed Consolidated Statements of Operations table

 

LIONS GATE ENTERTAINMENT CORP.

 

UNAUDITED CONDENSED ANNUAL CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months

Three Months

Ended

Ended

June 30,

June 30,

2012

2011

As adjusted (1)

(Amounts in thousands)

Operating Activities:

Net income (loss)

$     (44,200)

$             10,334

Adjustments to reconcile net income (loss) to 

net cash provided  by (used in) operating activities:

Depreciation of property and equipment

758

1,154

Amortization of intangible assets

1,347

80

Amortization of films and television programs

167,097

84,983

Amortization of debt discount (premium) and deferred financing costs

4,762

4,620

Non-cash stock-based compensation

6,173

2,261

Loss on extinguishment of debt

8,159

531

Equity interests loss

145

40

Changes in operating assets and liabilities:

Restricted cash

2,956

23,680

Accounts receivable, net

196,134

86,383

Investment in films and television programs

(161,005)

(201,776)

Other assets

(616)

2,283

Accounts payable and accrued liabilities

(44,193)

(81,462)

Participations and residuals

(12,906)

(5,162)

Film obligations

(20,233)

2,260

Deferred revenue

46,637

25,332

Net Cash Flows Provided By (Used In) Operating Activities

151,015

(44,459)

Investing Activities:

Investment in equity method investees

-

(475)

Increase in loans receivable

-

(1,500)

Purchases of property and equipment

(386)

(411)

Net Cash Flows Used In Investing Activities

(386)

(2,386)

Financing Activities:

Exercise of stock options

52

-

Tax withholding requirements on equity awards

(2,745)

(918)

Borrowings under senior revolving credit facility

274,700

95,400

Repayments of borrowings under senior revolving credit facility

(85,000)

(165,150)

Borrowings under individual production loans

33,911

48,466

Repayment of individual production loans

(163,944)

(78,595)

Production loan borrowings under film credit facility

3,058

7,711

Production loan repayments under film credit facility

(10,575)

(8,536)

Change in restricted cash collateral associated with financing activities

(7,467)

-

Repayments of borrowings under Term Loan associated with the acquisition of Summit

(185,504)

-

Proceeds from sale of senior secured second-priority notes, net of deferred financing costs

-

192,396

Repurchase of convertible senior subordinated notes

-

(19,476)

Repayment of other financing obligations

(3,710)

-

Net Cash Flows Provided By (Used In) Financing Activities

(147,224)

71,298

Net Change In Cash And Cash Equivalents

3,405

24,453

Foreign Exchange Effects on Cash

(120)

168

Cash and Cash Equivalents - Beginning Of Period

64,298

86,419

Cash and Cash Equivalents - End Of Period

$      67,583

$        111,040

______________________________________________________________________

(1)

See footnote on Unaudited Condensed Consolidated Statements of Operations table

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,

2012

2011

As adjusted (1)

 (Amounts in thousands) 

Net income (loss)

$                (44,200)

$                 10,334

Depreciation and amortization

2,105

1,234

Contractual cash based interest

22,728

11,715

Noncash interest expense

4,762

4,620

Interest and other income

(950)

(442)

Income tax provision

2,200

1,201

EBITDA

$                (13,355)

$                 28,662

Loss on extinguishment of debt

8,159

531

Stock-based compensation

9,749

2,606

Acquisition related charges

1,727

-

Corporate defense charges (2)

-

(3,891)

Non-risk prints and advertising expense

10,821

(375)

EBITDA, as adjusted

$                 17,101

$                 27,533

(1)

See footnote on Unaudited Condensed Consolidated Statements of Operations table

(2)

For the three months ended June 30, 2011, no significant shareholder activist or related costs were

incurred and a benefit, which is a charge for Adjusted EBITDA, resulted from a negotiated settlement 

of costs incurred and recorded in the prior fiscal year.

EBITDA is defined as earnings before interest, income tax provision, 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, acquisition related charges, certain corporate defense and related charges, and non-risk prints and advertising expense. Stock-based compensation represents compensation expenses associated with stock options, restricted share units and stock appreciation rights. Acquisition related charges represent severance and transaction costs associated with the acquisition of Summit. Corporate defense and related charges represent legal fees, other professional fees, and certain other costs associated with a shareholder activist matter. 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.

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 or 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,

2012

2011

 (Amounts in thousands) 

Net Cash Flows Provided By (Used In) Operating Activities

$   151,015

$   (44,459)

Purchases of property and equipment

(386)

(411)

Net borrowings under and (repayment) of production loans

(137,550)

(30,954)

Free Cash Flow, as defined

$     13,079

$    (75,824)

 

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 including production loan activity under the Company's Film Credit Facility. 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,

2012

2011

As adjusted (1)

(Amounts in thousands)

EBITDA

$   (13,355)

$    28,662

Plus: Amortization of film and television programs

167,097

84,983

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

(318,788)

(230,470)

Amortization of film and television programs

 in excess of cash paid

(151,691)

(145,487)

Plus: Non-cash stock-based compensation

6,173

2,261

Plus: Equity interests loss

145

40

Plus: Loss on extinguishment of debt

8,159

531

EBITDA adjusted for net investment in film and television programs,

non-cash stock-based compensation, equity interests loss, and

loss on extinguishment of debt

(150,569)

(113,993)

Changes in other operating assets and liabilities:

Restricted cash

2,956

23,680

Accounts receivable, net

196,134

86,383

Other assets

(616)

2,283

Accounts payable and accrued liabilities

(44,193)

(81,462)

Participations and residuals

(12,906)

(5,162)

Deferred revenue

46,637

25,332

188,012

51,054

Purchases of property and equipment

(386)

(411)

Interest, taxes and other (2)

(23,978)

(12,474)

Free Cash Flow, as defined

$    13,079

$    (75,824)

(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

$  (161,005)

$   (201,776)

Change in film obligations

(20,233)

2,260

Borrowings under individual production loans

33,911

48,466

Repayment of individual production loans

(163,944)

(78,595)

Production loan borrowings under film credit facility

3,058

7,711

Production loan repayments under film credit facility

(10,575)

(8,536)

Total cash paid for film and television programs

$   (318,788)

$   (230,470)

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

Contractual cash based interest

$    (22,728)

$    (11,715)

Interest and other income

950

442

Income tax provision

(2,200)

(1,201)

Total interest, taxes and other

$   (23,978)

$    (12,474)

____________________________________________

(1)

See footnote on Unaudited Condensed Consolidated Statements of Operations table

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.

SOURCE Lionsgate



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