| Lionsgate Reports Net Income of $31.7 Million and Adjusted EBITDA of $54.4 Million for Second Quarte |
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Lionsgate
, the leading next generation studio, continued its solid growth momentum and, bolstered by strong gains in its television production business, new revenue from TV Guide Network and TV Guide.com and reduced theatrical marketing costs, reported revenues of $393.7 million and net income attributable to Lionsgate shareholders of $31.7 million for the fiscal 2010 second quarter ended September 30, 2009, the Company announced today. Basic net income per common share was $0.27 on 117.3 million weighted average common shares outstanding, compared to basic net loss of $0.44 on 116.9 million weighted average common shares outstanding in the prior year's second quarter. Theatrical marketing costs in the quarter were $37.6 million, a 66% decline from $109.7 million in the prior year's second quarter. The Company reported adjusted EBITDA of $54.4 million in the second quarter compared to adjusted EBITDA of negative $35.9 million for the prior year's second quarter. Adjustments in the quarter were made for non-cash stock options, stock appreciation rights and restricted stock units, certain non-recurring charges and non-risk prints and advertising expense, and the deduction of Lionsgate's partners' share of EBITDA attributed to TV Guide. EBITDA is defined as earnings before interest, income tax provision, depreciation and amortization, equity interests and gains on extinguishment of debt and the sale of equity securities. Second quarter revenues were $393.7 million, an increase of 3% compared to $380.7 million in the prior year's second quarter, reflecting continued strong growth in television production revenues and new revenue of $27.7 million from TV Guide Network and TV Guide.com in the quarter. For the six months ended September 30, 2009, Lionsgate reported revenues of $781.4 million, net income attributable to Lionsgate shareholders of $68.1 million and adjusted EBITDA of $107.7 million. This compared to revenues of $679.2 million, net loss of $48.3 million and adjusted EBITDA of negative $18.6 million in the prior year's first six months. Basic net income per common share for the six months ended September 30, 2009 was $0.58 on 117.2 million weighted average common shares outstanding compared to basic net loss of $0.41 on 117.6 million weighted average common shares outstanding in the prior year's first six months. "As anticipated, we had another strong financial quarter, showing what we can achieve from our diversified portfolio of businesses as we benefited from strong contributions from our television production operations and new revenue from TV Guide Network and TV Guide.com," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "We are on track to meet our financial targets for the year, and we believe that the current performance of our businesses, coupled with growing returns we anticipate from our new investments and the ultimate profitability we expect to achieve from next year's film slate and beyond, positions us for strong financial results in the future." Overall motion picture revenue for the quarter of $277.1 million decreased $35.1 million, or 11%, compared to $312.2 million in the prior year's second quarter. Within the motion picture segment, theatrical revenue was $30.3 million, a decrease of 11% compared to the prior year second quarter, as the Company released Tyler Perry's I Can Do Bad All By Myself and Gamer in the quarter, compared to four wide releases in the prior year's second quarter. Lionsgate's home entertainment revenue from the motion picture segment was $123.4 million in the quarter, a decline of 25% from the prior year's second quarter. The home entertainment slate in the quarter included such titles as Crank: High Voltage, The Haunting In Connecticut, Horsemen and continued sales of New In Town and Tyler Perry's Madea Goes To Jail. Although titles such as Crank: High Voltage overconverted strongly, the underlying box office of new titles released in the quarter was lower than the underlying box office for the slate of The Forbidden Kingdom, Tyler Perry's Meet The Browns, The Bank Job and Rambo in the prior year's second quarter. Television included in motion pictures revenue rose to $68.2 million in the second quarter, an increase of 10% from the prior year's second quarter, with a slate of Saw V, Tyler Perry's The Family That Preys, Transporter 3, Bangkok Dangerous, Disaster Movie, My Best Friend's Girl, Religulous and "W." comparing favorably to a slate of 3:10 To Yuma, Good Luck Chuck, Saw IV, War and Tyler Perry's Why Did I Get Married? in the prior year's second quarter. International revenues of $27.5 million in the second quarter declined 4% from the prior year's second quarter. The principal revenue contributors in the quarter included My Bloody Valentine 3-D and Crank 2: High Voltage compared to 3:10 To Yuma, Employee of the Month, Saw IV and War in the prior year's second quarter. Mandate Pictures' revenue of $25.7 million in the second quarter increased 21% from $21.2 million in the prior year's second quarter on a slate of Horsemen, Passengers and Whip It and a number of smaller titles compared to a slate of 30 Days of Night, Juno and Nick and Norah's Infinite Playlist in the prior year's second quarter. Television production revenue increased to $88.9 million in the second quarter, a gain of 30% compared to $68.5 million in the prior year's second quarter, with a 14% increase in domestic series licensing from Lionsgate Television deliveries of seven episodes of Weeds Season 5 (Showtime), eight episodes of Mad Men Season 3 (AMC) and five episodes of Crash Season 2 (Starz) along with a 71% increase in revenues from Debmar-Mercury, primarily due to the licensing of such shows as Tyler Perry's House of Payne, its spinoff Meet The Browns and The Wendy Williams Show, as well as an 80% increase in international television sales and a 7% increase in revenue from home entertainment releases of television production. Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2010 second quarter financial results at 9:00 A.M. ET/6:00 A.M. PT, Tuesday, November 10, 2009. Interested parties may participate live in the conference call by calling 1-800-401-8436 (612-332-0418 outside the U.S. and Canada). A full digital replay will be available from Tuesday morning, November 10, through Tuesday, November 17, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 120735. About Lionsgate Lionsgate
is the leading next generation studio with a strong and diversified presence in the production and distribution of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered content. The Company has built a strong television presence in production of prime time cable and broadcast network series, distribution and syndication of programming through Debmar-Mercury and an array of channel platform assets, including TV Guide Network in partnership with JPMorgan's One Equity Partners, the Epix multiplatform channel with partners Viacom and MGM, the FEARnet branded horror channel with partners Comcast and Sony, and the KIX and Thrill branded action and horror channels in Asia. Its feature film business achieved a number one box office opening weekend in September 2009 with the eighth film in the Tyler Perry franchise, I CAN DO BAD ALL BY MYSELF, and achieved one of the highest per screen averages in history with the platform release of PRECIOUS in November 2009. The Company's home entertainment business has grown to more than 7% market share and is an industry leader in its box office-to-DVD revenue conversion rate. Lionsgate handles a prestigious and prolific library of approximately 12,000 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 brand remains synonymous with original, daring, quality entertainment in markets around the world. www.lionsgate.com For further information, please contact: Peter D. Wilkes 310-255-3726 This e-mail address is being protected from spam bots, you need JavaScript enabled to view it The matters discussed in this press release include forward-looking statements, including those regarding the timing of our upcoming film slate and the performance of our fiscal 2010. 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, budget overruns, limitations imposed by our credit facilities, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, 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 June 1, 2009, and in Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on October 13, 2009, 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 SHEET
September 30, March 31,
2009 2009
------------- ---------
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $112,652 $138,475
Restricted cash 9,896 10,056
Restricted investments 6,999 6,987
Accounts receivable, net of reserve for returns and
allowances of $89,645 (March 31, 2009 -
$98,947) and provision for doubtful
accounts of $8,667 (March 31, 2009 -
$9,847) 231,975 227,010
Investment in films and television programs,
net 749,283 702,767
Property and equipment, net 38,034 42,415
Finite-lived intangible assets, net 75,368 78,904
Goodwill 379,353 379,402
Other assets 86,113 81,234
---------- ----------
Total assets $1,689,673 $1,667,250
========== ==========
LIABILITIES
Borrowings under bank line of credit $255,000 $255,000
Accounts payable and accrued liabilities 176,268 270,561
Participations and residuals 304,271 371,857
Film and production obligations 293,714 304,525
Subordinated notes and other financing
obligations 266,358 281,521
Mandatorily redeemable preferred stock units
held by noncontrolling interest 88,431 -
Deferred revenue 134,911 142,093
---------- ----------
Total liabilities 1,518,953 1,625,557
---------- ----------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Lions Gate Entertainment Corp. shareholders' equity:
Common shares, no par value, 500,000,000 shares authorized,
117,618,718 and
116,950,512 shares issued at September
30, 2009 and March 31, 2009, respectively 515,944 494,724
Accumulated deficit (373,088) (441,153)
Accumulated other comprehensive loss (5,974) (11,878)
---------- ----------
Total Lions Gate Entertainment Corp.
shareholders' equity 136,882 41,693
Noncontrolling interest 33,838 -
---------- ----------
Total equity 170,720 41,693
---------- ----------
Total liabilities and equity $1,689,673 $1,667,250
========== ==========
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
------------- ------------- ------------- -------------
(Amounts in thousands, except per share amounts)
Revenues $393,677 $380,718 $781,384 $679,177
Expenses:
Direct
operating 198,047 199,626 411,106 347,310
Distribution
and marketing 102,245 189,407 187,228 288,382
General and
administration 42,452 30,600 83,571 68,908
Depreciation
and
amortization 6,207 1,415 14,402 2,801
------- -------- ------- --------
Total
expenses 348,951 421,048 696,307 707,401
------- -------- ------- --------
Operating income
(loss) 44,726 (40,330) 85,077 (28,224)
------- -------- ------- --------
Other expenses
(income):
Interest
expense
Contractual
cash based
interest 5,392 3,531 10,385 6,909
Amortization
of debt
discount,
deferred
financing
costs
and
accretion
of
redeemable
preferred
stock
units 7,905 5,378 13,621 9,887
------- -------- ------- --------
Total
interest
expense 13,297 8,909 24,006 16,796
Interest and
other income (382) (2,047) (808) (4,202)
Gain on
extinguishment
of debt - - (7,458) -
------- -------- ------- --------
Total other
expenses,
net 12,915 6,862 15,740 12,594
------- -------- ------- --------
Income (loss)
before equity
interests and
income taxes 31,811 (47,192) 69,337 (40,818)
Equity interests
loss (1,928) (1,960) (3,645) (4,146)
------- -------- ------- --------
Income (loss)
before income
taxes 29,883 (49,152) 65,692 (44,964)
Income tax
provision 674 2,662 2,011 3,331
------- -------- ------- --------
Net income (loss) 29,209 (51,814) 63,681 (48,295)
Add: Net loss
attributable
to
noncontrolling
interest 2,507 - 4,384 -
------- -------- ------- --------
Net income (loss)
attributable to
Lions Gate
Entertainment
Corp.
Shareholders $31,716 $(51,814) $68,065 $(48,295)
======= ======== ======= ========
Basic Net Income
(Loss) Per
Common Share $0.27 $(0.44) $0.58 $(0.41)
======= ======== ======= ========
Diluted Net
Income (Loss)
Per Common Share $0.26 $(0.44) $0.56 $(0.41)
======= ======== ======= ========
Weighted average
number of common
shares outstanding:
Basic 117,322 116,861 117,199 117,647
Diluted 138,732 116,861 137,671 117,647
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Six Months
Ended Ended
September 30, September 30,
2009 2008
------------- -------------
(Amounts in thousands)
Operating Activities:
Net income (loss) attributable to Lions Gate
Entertainment Corp. shareholders $68,065 $(48,295)
Net loss attributable to noncontrolling
interest (4,384) -
-------- --------
Net income (loss) 63,681 (48,295)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation of property and equipment 7,952 2,242
Amortization of films and television
programs 287,303 186,743
Amortization of debt discount, deferred
financing costs and accretion of redeemable
preferred stock units 13,621 9,887
Amortization of intangible assets 6,450 559
Non-cash stock-based compensation 7,686 7,516
Gain on extinguishment of debt (7,458) -
Equity interests loss 3,645 4,146
Changes in operating assets and liabilities:
Restricted cash 160 (11,935)
Accounts receivable, net (301) 56,667
Investment in films and television programs (333,476) (325,176)
Other assets (4,381) (9,438)
Accounts payable and accrued liabilities (96,247) 3,077
Participations and residuals (68,116) 65,271
Film obligations (36,901) (4,325)
Deferred revenue (7,469) 23,337
-------- --------
Net Cash Flows Used In Operating Activities (163,851) (39,724)
-------- --------
Investing Activities:
Purchases of restricted investments (6,999) -
Proceeds from the sale of restricted
investments 6,987 125
Investment in equity method investees (14,924) (11,099)
(Increase) decrease in loans receivable 8,333 (28,427)
Purchases of property and equipment (3,690) (5,743)
------- --------
Net Cash Flows Used In Investing Activities (10,293) (45,144)
------- --------
Financing Activities:
Exercise of stock options - 2,894
Tax withholding requirements on equity awards (1,343) (2,941)
Repurchase and cancellation of common shares - (44,737)
Proceeds from the sale of 49% interest in TV
Guide 122,355 -
Borrowings under bank line of credit 70,000 -
Repayments of borrowings under bank line of
credit (70,000) -
Increase in production obligations 128,094 113,320
Repayment of production obligations (102,490) (104,216)
Repayment of other financing obligations (406) -
-------- --------
Net Cash Flows Provided By (Used In)
Financing Activities 146,210 (35,680)
-------- --------
Net Change In Cash And Cash Equivalents (27,934) (120,548)
Foreign Exchange Effects on Cash 2,111 (2,136)
Cash and Cash Equivalents - Beginning Of
Period 138,475 371,589
-------- --------
Cash and Cash Equivalents - End Of Period $112,652 $248,905
======== ========
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET INCOME TO EBITDA, AS DEFINED AND EBITDA, AS
ADJUSTED
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
------------- ------------- ------------- -------------
(Amounts in thousands, except per share amounts)
Net income $29,209 $(51,814) $63,681 $(48,295)
Depreciation
and
amortization 6,207 1,415 14,402 2,801
Interest
expense 13,297 8,909 24,006 16,796
Interest
and other
income (382) (2,047) (808) (4,202)
Income tax
provision 674 2,662 2,011 3,331
Equity
interests
loss 1,928 1,960 3,645 4,146
Gain on
extinguishment
of debt - - (7,458) -
------- -------- -------- --------
EBITDA $50,933 $(38,915) $99,479 $(25,423)
Stock based
compensation 4,293 2,985 8,288 6,870
EBITDA
attributable
to
noncontrolling
interest (2,081) - (2,332) -
Non-recurring
corporate
defense
charges - - 1,012 -
Non-risk prints
and advertising
expense 1,253 - 1,253 -
------- -------- -------- --------
EBITDA, as
adjusted $54,398 $(35,930) $107,700 $(18,553)
======= ======== ======== ========
EBITDA is defined as earnings before interest, income tax provision, depreciation and amortization, equity interests, and gains on extinguishment of debt and the sale of equity securities. EBITDA as defined, is a non-GAAP financial measure. EBITDA as adjusted represents EBITDA as defined above adjusted for stock based compensation, EBITDA attributable to noncontrolling interest, certain non-recurring 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. Non-recurring charges represent legal and other professional fees 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 had been recorded if such amount had not been expensed. Management believes EBITDA as defined, 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 as defined, 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 as defined, 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 as defined and EBITDA as adjusted, do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA as defined 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. Source: Lionsgate |
