LIONSGATE REPORTS SECOND QUARTER FISCAL 2014 REVENUE OF $498.7 MILLION, ADJUSTED EBITDA OF $56.5 MILLION AND ADJUSTED NET INCOME OF $25.4 MILLION OR $0.19 ADJUSTED BASIC EPS

Company Reports Second Quarter Free Cash Flow of $84.9 Million

Nov 08, 2013, 07:00 ET from Lionsgate

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Nov. 8, 2013 /PRNewswire/ -- Lionsgate (NYSE: LGF) today reported revenue of $498.7 million, adjusted EBITDA of $56.5 million, net income of $0.5 million or $0.00 basic net income per share, adjusted net income of $25.4 million or $0.19 adjusted basic net income per share and free cash flow of $84.9 million for the second quarter of Fiscal 2014 (fiscal quarter ended September 30, 2013).

(Logo: http://photos.prnewswire.com/prnh/20130919/LA83194LOGO)

Revenue of $498.7 million for the second quarter declined by 29% compared to $707.0 million in the prior year quarter, reflecting the comparison to a prior year second quarter that included the home entertainment release of The Hunger Games as well as timing of television deliveries.  The next three films in the blockbuster Hunger Games franchise, The Hunger Games: Catching Fire, The Hunger Games: Mockingjay I and The Hunger Games: Mockingjay II will be released worldwide on November 22, 2013, November 21, 2014 and November 20, 2015, respectively.

Adjusted EBITDA of $56.5 million in the quarter compared to adjusted EBITDA of $109.7 million in the prior year quarter.

Net income in the quarter was $0.5 million or $0.00 basic net income per share on 137.1 million weighted average number of common shares outstanding compared to $75.5 million or $0.56 basic net income per share on 134.4 million weighted average number of common shares outstanding during the prior year quarter.  This included, as previously disclosed, a $36.2 million charge on early extinguishment of debt.

Adjusted net income in the quarter of $25.4 million or $0.19 adjusted basic net income per share, excluding stock-based compensation, early extinguishment of debt and the discrete tax benefit recognized from the reversal of a Canadian tax valuation allowance, compared to adjusted net income of $83.4 million or $0.62 adjusted basic net income per share in the prior year quarter.

Net income in the quarter declined as inclusion of charges for early extinguishment of debt, the comparison to the prior year second quarter home entertainment release of The Hunger Games and the timing of television deliveries discussed above offset lower theatrical marketing costs and continued decline in interest expense.

The Company continues to strengthen its balance sheet and has reduced total debt over the last 12 months by $277.8 million.  Contractual cash-based interest expense in the second quarter was $11.9 million compared to $18.9 million in the prior year quarter.

Free cash flow of $84.9 million in the quarter increased more than fourfold from $18.9 million in the prior year quarter. 

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

"We completed a strong first six months of the year with a solid second quarter in which we generated robust free cash flow, continued to delever our balance sheet and lowered our interest expense," said Lionsgate Chief Executive Officer Jon Feltheimer.  "We're on track for another very good year and, with the worldwide launch of the next installment of our Hunger Games franchise on November 22, the ongoing diversification of our television business and a strong and growing presence on digital platforms, we are positioned to deliver growth for many years to come."

Overall Motion Picture segment revenue for the quarter was $434.4 million, a decline of 29% from the prior year quarter due to a theatrical slate that included only two wide releases in the quarter (Red 2 and You're Next) compared to three wide releases in the prior year quarter (The Expendables 2, The Possession, Step Up Revolution) as well as the home entertainment comparison discussed previously.

The quarter also included the platform releases of Codeblack Films' Kevin Hart: Let Me Explain and Pantelion Films' surprise hit Instructions Not Included, the highest-grossing Spanish-language film ever released in the U.S.

Lionsgate's home entertainment revenue from both motion pictures and television was $209.9 million for the quarter compared to $277.8 million for the prior year quarter.  Within home entertainment, revenue from the Managed Brands and Other product group, which consists of direct-to-DVD, acquired and licensed brands, third-party library product and specialty theatrical titles, was $92.9 million in the second quarter, a 79% increase from the prior year quarter driven by the independent hit Mud and the success of Duck Dynasty: Season 3, currently the biggest-selling TV show on DVD.  

Television revenue included in the Motion Picture segment was $34.6 million in the quarter compared to $35.5 million in the prior year quarter.

International Motion Picture segment revenue (excluding Lionsgate U.K.) of $88.7 million in the quarter declined from $108.0 million in the prior year quarter.

Lionsgate U.K. revenue of $27.1 million in the quarter declined from $48.4 million in the prior year quarter that included the U.K. theatrical release of Expendables 2 and the home entertainment release of The Hunger Games

Revenue in the Television Production segment was $64.3 million in the quarter compared to $99.0 million in the prior year quarter as declines due to timing of domestic television deliveries offset gains in international revenue driven by the hit series Orange is the New Black and Anger Management.

Lionsgate senior management will hold its analyst and investor conference call to discuss its second quarter fiscal 2014 results at 9:00 A.M. ET/6:00 A.M. PT today, Friday, November 8, 2013.  Interested parties may participate live in the conference call by calling 1-800-230-1951 (612-332-0228 outside the U.S. and Canada).  A full digital replay will be available from today through Friday, November 15, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 305585.

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 30 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 success The Wendy Williams Show and the critically-acclaimed 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, The Expendables 2, The Possession, Sinister, Arbitrage, Mud and Pantelion Films' breakout hit Instructions Not Included, the highest-grossing Spanish-language film ever released in the U.S.

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 November 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

September 30,

2013

March 31,

2013

(Amounts in thousands,

except share amounts)

ASSETS

Cash and cash equivalents

$

67,212

$

62,363

Restricted cash

8,122

10,664

Accounts receivable, net of reserves for returns and allowances of $76,142 (March 31, 2013 - $103,418) and provision for doubtful accounts of $5,575 (March 31, 2013 - $4,494)

696,584

787,150

Investment in films and television programs, net

1,208,239

1,244,075

Property and equipment, net

10,586

8,530

Equity method investments

164,662

169,450

Goodwill

323,328

323,328

Other assets

80,485

72,619

Deferred tax assets

92,657

82,690

Total assets

$

2,651,875

$

2,760,869

LIABILITIES

Senior revolving credit facility

$

285,474

$

338,474

Senior secured second-priority notes

225,000

432,277

July 2013 Term Loan

222,574

Accounts payable and accrued liabilities

217,680

313,620

Participations and residuals

413,368

409,763

Film obligations and production loans

444,161

569,019

Convertible senior subordinated notes

148,498

87,167

Deferred revenue

269,067

254,023

Total liabilities

2,225,822

2,404,343

Commitments and contingencies

SHAREHOLDERS' EQUITY

Common shares, no par value, 500,000,000 shares authorized, 137,860,591 shares issued (March 31, 2013 - 135,882,899 shares)

725,389

672,915

Accumulated deficit

(295,790)

(309,912)

Accumulated other comprehensive loss

(3,546)

(6,477)

Total shareholders' equity

426,053

356,526

Total liabilities and shareholders' equity

$

2,651,875

$

2,760,869

 

 

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Three Months Ended

Six Months Ended

Six Months Ended

September 30,

2013

September 30,

2012

September 30,

2013

September 30,

2012

(Amounts in thousands, except per share amounts)

Revenues

$

498,729

$

706,968

$

1,068,457

$

1,178,788

Expenses:

Direct operating

261,798

323,230

568,243

569,048

Distribution and marketing

145,502

236,442

316,962

415,151

General and administration

63,773

44,030

120,543

96,374

Depreciation and amortization

1,611

2,115

3,236

4,220

Total expenses

472,684

605,817

1,008,984

1,084,793

Operating income

26,045

101,151

59,473

93,995

Other expenses (income):

Interest expense

Contractual cash based interest

11,925

18,908

28,198

41,636

Amortization of debt discount (premium) and  deferred financing costs

4,247

4,377

8,788

9,139

Total interest expense

16,172

23,285

36,986

50,775

Interest and other income

(1,483)

(1,029)

(2,979)

(1,979)

Loss on extinguishment of debt

36,187

1,000

36,653

9,159

Total other expenses, net

50,876

23,256

70,660

57,955

Income (loss) before equity interests and income taxes

(24,831)

77,895

(11,187)

36,040

Equity interests income

6,502

1,755

14,479

1,610

Income (loss) before income taxes

(18,329)

79,650

3,292

37,650

Income tax provision (benefit)

(18,834)

4,121

(10,830)

6,321

Net income

$

505

$

75,529

$

14,122

$

31,329

Basic net income per common share

$

0.00

$

0.56

$

0.10

$

0.23

Diluted net income per common share

$

0.00

$

0.53

$

0.10

$

0.23

Weighted average number of common shares outstanding:

Basic

137,147

134,390

136,671

133,815

Diluted

140,681

148,696

139,870

134,610

 

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Three Months Ended

Six Months Ended

Six Months Ended

September 30,

2013

September 30,

2012

September 30,

2013

September 30,

2012

(Amounts in thousands)

Operating Activities:

Net income

$

505

$

75,529

$

14,122

$

31,329

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation of property and equipment

678

767

1,371

1,525

Amortization of intangible assets

933

1,348

1,865

2,695

Amortization of films and television programs

157,136

227,567

376,500

394,664

Amortization of debt discount (premium) and deferred financing costs

4,247

4,377

8,788

9,139

Non-cash share-based compensation

14,962

4,744

28,182

10,917

Dividend payment from equity method investee

9,849

Loss on extinguishment of debt

36,187

1,000

36,653

9,159

Equity interests income

(6,502)

(1,755)

(14,479)

(1,610)

Deferred income taxes

(12,044)

(9,981)

Changes in operating assets and liabilities:

Restricted cash

892

2,346

2,554

5,302

Accounts receivable, net

127,796

(112,108)

95,280

84,026

Investment in films and television programs

(177,363)

(262,115)

(338,296)

(423,120)

Other assets

(7,975)

(928)

(9,197)

(1,544)

Accounts payable and accrued liabilities

(43,909)

46,342

(77,493)

2,149

Participations and residuals

20,870

11,891

3,358

(1,015)

Film obligations

(12,032)

6,413

(33,402)

(13,820)

Deferred revenue

35,479

(14,298)

14,897

32,339

Net Cash Flows Provided By (Used In) Operating Activities

139,860

(8,880)

110,571

142,135

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

Repayment of loans receivable

3,000

4,274

3,000

4,274

Purchases of property and equipment

(1,967)

(590)

(3,395)

(976)

Net Cash Flows Provided By Investing Activities

1,033

3,684

9,024

3,298

Financing Activities:

Senior revolving credit facility - borrowings, net of deferred financing costs of $15,198 for the three and six months ended September 30, 2012

255,100

391,526

428,100

666,226

Senior revolving credit facility - repayments

(309,100)

(427,450)

(481,100)

(512,450)

Senior secured second-priority notes - borrowings, net of deferred financing costs of $407 for the three and six months ended September 30, 2013

224,593

224,593

Senior secured second-priority notes - repurchases and redemptions

(466,304)

(470,584)

July 2013 Term Loan - borrowings, net of deferred financing costs of $4,287 for the three and six months ended September 30, 2013

218,213

218,213

Summit Term Loan - repayments

(185,504)

Convertible senior subordinated notes - borrowings

60,000

Convertible senior subordinated notes - repurchases

(7,639)

(7,639)

Production loans - borrowings

60,822

75,876

169,427

112,845

Production loans - repayments

(113,806)

(47,466)

(196,098)

(221,985)

Pennsylvania Regional Center credit facility - repayments

(65,000)

Change in restricted cash collateral associated with financing activities

7,467

Exercise of stock options

8,577

9,120

52

Tax withholding required on equity awards

(2,238)

(1,260)

(11,257)

(4,005)

Other financing obligations - repayments

(3,710)

Net Cash Flows Used In Financing Activities

(124,143)

(8,946)

(114,586)

(156,170)

Net Change In Cash And Cash Equivalents

16,750

(14,142)

5,009

(10,737)

Foreign Exchange Effects on Cash

(557)

958

(160)

838

Cash and Cash Equivalents - Beginning Of Period

51,019

67,583

62,363

64,298

Cash and Cash Equivalents - End Of Period

$

67,212

$

54,399

$

67,212

$

54,399

 

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND EBITDA, AS ADJUSTED

Three Months Ended

Three Months Ended

Six Months Ended

Six Months Ended

September 30,

2013

September 30,

2012

September 30,

2013

September 30,

2012

(Amounts in thousands)

Net income

$

505

$

75,529

$

14,122

$

31,329

Depreciation and amortization

1,611

2,115

3,236

4,220

Contractual cash based interest

11,925

18,908

28,198

41,636

Noncash interest expense

4,247

4,377

8,788

9,139

Interest and other income

(1,483)

(1,029)

(2,979)

(1,979)

Income tax provision (benefit)

(18,834)

4,121

(10,830)

6,321

EBITDA

$

(2,029)

$

104,021

$

40,535

$

90,666

Loss on extinguishment of debt

36,187

1,000

36,653

9,159

Stock-based compensation (1)

22,388

6,899

40,135

16,648

Acquisition related charges

300

2,027

Non-risk prints and advertising expense

(2,516)

8,305

EBITDA, as adjusted

$

56,546

$

109,704

$

117,323

$

126,805

(1) The three months ended September 30, 2013 and 2012 include cash settled SARs expense of $7.4 million and $0.5 million, respectively.

The six months ended September 30, 2013 and 2012 include cash settled SARs expense of $11.2 million and $1.3 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, acquisition related charges and non-risk prints and advertising expense. Stock-based compensation represents compensation expenses associated with stock options, restricted share units and cash and equity settled stock appreciation rights ("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. The amount is subtracted from EBITDA in the three months ended September 30, 2012 because there was no non-risk prints and advertising expense incurred and the amount represents the estimated amortization of participation expense that would have been recorded if such prior period amounts 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 Ended

Three Months Ended

Six Months Ended

Six Months Ended

September 30,

2013

September 30,

2012

September 30,

2013

September 30,

2012

(Amounts in thousands)

Net Cash Flows Provided By (Used In) Operating Activities

$

139,860

$

(8,880)

$

110,571

$

142,135

Purchases of property and equipment

(1,967)

(590)

(3,395)

(976)

Net borrowings under and (repayment) of

production loans

(52,984)

28,410

(26,671)

(109,140)

Free Cash Flow, as defined

$

84,909

$

18,940

$

80,505

$

32,019

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 Ended

Three Months Ended

Six Months Ended

Six Months Ended

September 30,

2013

September 30,

2012

September 30,

2013

September 30,

2012

(Amounts in thousands)

EBITDA

$

(2,029)

$

104,021

$

40,535

$

90,666

Plus: Amortization of film and television programs

157,136

227,567

376,500

394,664

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

(242,379)

(227,292)

(398,369)

(546,080)

Amortization of (cash paid for) film and television programs in excess of cash paid (amortization)

(85,243)

275

(21,869)

(151,416)

Plus: Non-cash stock-based compensation

14,962

4,744

28,182

10,917

Plus: Dividend payment from equity method investee

9,849

Plus: Equity interests income

(6,502)

(1,755)

(14,479)

(1,610)

Plus: Loss on extinguishment of debt

36,187

1,000

36,653

9,159

EBITDA adjusted for net investment in film and television programs, non-cash stock-based compensation, dividend payment from equity method investee, equity interests income, and loss on extinguishment of debt

(42,625)

108,285

78,871

(42,284)

Changes in other operating assets and liabilities:

Restricted cash

892

2,346

2,554

5,302

Accounts receivable, net

127,796

(112,108)

95,280

84,026

Other assets

(7,975)

(928)

(9,197)

(1,544)

Accounts payable and accrued liabilities

(43,909)

46,342

(77,493)

2,149

Participations and residuals

20,870

11,891

3,358

(1,015)

Deferred revenue

35,479

(14,298)

14,897

32,339

133,153

(66,755)

29,399

121,257

Purchases of property and equipment

(1,967)

(590)

(3,395)

(976)

Interest, taxes and other (2)

(3,652)

(22,000)

(24,370)

(45,978)

Free Cash Flow, as defined

$

84,909

$

18,940

$

80,505

$

32,019

_________________________

(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

$

(177,363)

$

(262,115)

$

(338,296)

$

(423,120)

Change in film obligations

(12,032)

6,413

(33,402)

(13,820)

Production loans - borrowings

60,822

75,876

169,427

112,845

Production loans - repayments

(113,806)

(47,466)

(196,098)

(221,985)

Total cash paid for film and television programs

$

(242,379)

$

(227,292)

$

(398,369)

$

(546,080)

_________________________

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

Contractual cash based interest

$

(11,925)

$

(18,908)

$

(28,198)

$

(41,636)

Interest and other income

1,483

1,029

2,979

1,979

Current income tax benefit (provision)

6,790

(4,121)

849

(6,321)

Total interest, taxes and other

$

(3,652)

$

(22,000)

$

(24,370)

$

(45,978)

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

BEFORE INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED BASIC AND

DILUTED EPS

Three Months Ended September 30, 2013

(Amounts in thousands, except per share amounts)

Income (loss)

 before income

taxes

Net income

Basic EPS*

Diluted EPS*

As reported

$

(18,329)

$

505

$

0.00

$

0.00

Tax valuation allowance (1)

(12,030)

(0.09)

(0.08)

Loss on extinguishment of debt (2)

36,187

22,798

0.17

0.16

Stock-based compensation (3)

22,388

14,104

0.10

0.10

As adjusted for valuation allowance, loss on extinguishment of debt and stock-based compensation

$

40,246

$

25,377

$

0.19

$

0.18

Three Months Ended September 30, 2012

(Amounts in thousands, except per share amounts)

Income before

income taxes

Net income

Basic EPS*

Diluted EPS*

As reported

$

79,650

$

75,529

$

0.56

$

0.53

Loss on extinguishment of debt (2)

1,000

1,000

0.01

0.01

Stock-based compensation (3)

$

6,899

6,899

0.05

0.05

As adjusted for loss on extinguishment of debt and stock-based compensation

$

87,549

$

83,428

$

0.62

$

0.58

Six Months Ended September 30, 2013

(Amounts in thousands, except per share amounts)

Income before

income taxes

Net income

Basic EPS*

Diluted EPS*

As reported

$

3,292

$

14,122

$

0.10

$

0.10

Tax valuation allowance (1)

(12,030)

(0.09)

(0.08)

Loss on extinguishment of debt (2)

36,653

23,091

0.17

0.16

Stock-based compensation (3)

40,135

25,285

0.19

0.17

As adjusted for valuation allowance, loss on extinguishment of debt and stock-based compensation

$

80,080

$

50,468

$

0.37

$

0.36

Six Months Ended September 30, 2012

(Amounts in thousands, except per share amounts)

Income before

income taxes

Net income

Basic EPS*

Diluted EPS*

As reported

$

37,650

$

31,329

$

0.23

$

0.23

Loss on extinguishment of debt (2)

9,159

9,159

0.07

0.07

Stock-based compensation (3)

16,648

16,648

0.12

0.12

As adjusted for loss on extinguishment of debt and stock-based compensation

$

63,457

$

57,136

$

0.43

$

0.42

_________________________

* Basic and Diluted EPS amounts may not add precisely due to rounding

 

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

 (1) Tax valuation allowance: For the three and six months ended September 30, 2013, this adjusts net income to eliminate the discrete tax benefit recognized for financial reporting purposes upon the reduction of the Company's valuation allowance on its net deferred tax assets in its Canadian tax jurisdiction that are expected to be realized in future tax returns.

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

(3) Stock based compensation: Adjustments for stock-based compensation represents compensation expenses associated with stock options, restricted share units, cash and equity settled SARs. The adjustment to net income 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, basic and diluted EPS. Not all companies calculate adjusted income (loss) before income taxes, adjusted net income, and adjusted basic and diluted EPS 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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