From the Wires
Lionsgate Reports Revenues of $380.7 Million for Second Quarter of Fiscal 2009, Up 8% From Prior Year's Second Quarter; Net Loss of $48.1 Million Compared to Net Loss of $58.0 Million in Prior Year's Second Quarter
Company Reports Free Cash Flow of $73.7 Million Compared To $23.2 Million In Prior Year's Second Quarter
Nov. 10, 2008 04:00 PM
SANTA MONICA, Calif. and VANCOUVER, British Columbia, Nov. 10
/PRNewswire-FirstCall/ -- Lionsgate (NYSE: LGF), the leading next generation
filmed entertainment studio, continued to demonstrate strong revenue growth
and to narrow its EBITDA loss from the previous year, reporting revenues of
$380.7 million and EBITDA of negative $39.2 million for the second fiscal
quarter (period ended September 30, 2008) compared to $351.7 million in
revenues and EBITDA of negative $56.2 million for the prior year's second
quarter, the Company announced today.
The Company noted that the 8% revenue gain in the quarter was driven
primarily by growth in its home entertainment and television from motion
picture businesses as well as fresh contributions from Mandate Pictures,
partially offset by a decline in theatrical revenues and a decline in
television production revenues due to the timing of series deliveries. The
Company also noted that, for the first six months of fiscal 2009, it narrowed
its EBITDA loss by $80.8 million, from negative $106.8 million to negative
$26.0 million. EBITDA is defined as earnings before interest, income tax
provision, depreciation and equity interests.
Net loss of $48.1 million in the second quarter translated into basic net
loss per common share of $0.41, based on 116.9 million weighted average common
shares outstanding, compared to a net loss of $58.0 million, or basic net loss
per common share of $0.49, based on 119.2 million weighted average common
shares outstanding in the prior year's second quarter. Despite the
underperformance of three films in the quarter, the net loss narrowed in the
quarter because theatrical marketing costs declined and home entertainment
performed strongly.
"We enter the second half of the year with continued robust top line
growth, a narrowing EBITDA loss, good momentum throughout our core businesses
and a strong balance sheet," said Lionsgate Co-Chairman and Chief Executive
Officer Jon Feltheimer. "We are also beginning to see the kind of performance
from many of our recent investments such as Mandate and Debmar-Mercury that
will help elevate us to the next level of financial results in the future.
Given the current environment, we are tasking our senior managers to be even
more disciplined in their operations and even more innovative in their
thinking."
The Company's filmed entertainment backlog grew to a record $456.5 million
at September 30, 2008. Filmed entertainment backlog represents the amount of
future revenue contracted but not yet recorded from the licensing of films and
television product for television exhibition and in international markets.
The Company also ended the second quarter with $249 million in cash and cash
equivalents and a new and undrawn $340 million JPMorgan credit facility that
closed in July.
Overall motion picture revenue for the quarter was $312.2 million, an
increase of 29% from $242.1 million in the prior year's second quarter, as
strong growth in home entertainment, television from motion pictures and
Mandate Pictures offset declines in theatrical and international.
Theatrical revenue of $34.0 million decreased 25% from $45.3 million in
the prior year's second quarter, as the disappointing box office performances
of BANGKOK DANGEROUS, DISASTER MOVIE and MY BEST FRIEND'S GIRL compared
unfavorably with the slate of 3:10 TO YUMA, GOOD LUCK CHUCK and WAR released
in the prior year's second quarter. TYLER PERRY'S THE FAMILY THAT PREYS, the
sixth film in the Tyler Perry franchise, performed solidly and in line with
expectations. Successful releases such as SAW V and RELIGULOUS were released
after the quarter close.
Lionsgate's home entertainment revenue from all segments grew to
$178.3 million in the quarter, the strongest second quarter performance in the
Company's history and a 32% increase from $135.2 million in the prior year's
second quarter. The results reflected strength throughout the Company's home
entertainment portfolio of packaged media, VOD and digital businesses,
including continued strong library revenues. Top home entertainment titles in
the quarter included THE BANK JOB, THE FORBIDDEN KINGDOM, MEET THE BROWNS and
RAMBO.
Television revenue included in the motion picture segment was
$61.9 million in the second quarter, a 65% increase from $37.6 million in the
prior year second quarter, led by titles such as 3:10 TO YUMA, GOOD LUCK
CHUCK, SAW IV, WAR and TYLER PERRY'S WHY DID I GET MARRIED?
Lionsgate's international revenue declined 8% to $28.5 million in the
second quarter compared to $31.0 million in the second quarter of the prior
year. Principal revenue contributors in the quarter were 3:10 TO YUMA,
EMPLOYEE OF THE MONTH, MY BEST FRIEND'S GIRL, SAW IV and WAR.
Mandate Pictures reported second quarter revenues of $21.2 million,
reflecting a strong slate of JUNO, 30 DAYS OF NIGHT and NICK AND NORAH'S
INFINITE PLAYLIST. Lionsgate acquired Mandate in September 2007, so it had no
significant contributions to the prior year's second quarter.
Television production revenue in the quarter was $68.5 million, a decline
of 38% from $109.6 million in the prior year's second quarter due to the
timing of series deliveries. Primary contributors were deliveries of the Emmy
Award-winning MAD MEN SEASON 2 (AMC) and deliveries of WEEDS SEASON 4
(Showtime), and FEAR ITSELF (NBC), along with Debmar-Mercury's TYLER PERRY'S
HOUSE OF PAYNE (TBS), FAMILY FEUD and SOUTH PARK. Continued strong sales
from the third season DVD of WEEDS and the first season DVD of MAD MEN also
contributed to the quarter. The television division remains on track to
approach $250 million in revenues this year.
Lionsgate senior management will hold its analyst and investor conference
call to discuss its fiscal 2009 second quarter financial results at 9:00 A.M.
ET/6:00 A.M. PT, Tuesday, November 11, 2008. Interested parties may
participate live in the conference call by calling 1-800-553-0272
(651-291-0900 outside the U.S. and Canada). A full digital replay will be
available from Tuesday morning, November 11, through Tuesday, November 18, by
dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using
access code 963256. Lionsgate will also premier new content exclusively for
its investors and other call participants at the beginning of Tuesday's call.
Please click on http://www.lionsgate.com/christmas at the beginning of the
call to view the exclusive content.
Lionsgate is the leading next generation filmed entertainment studio with
a major presence in the production and distribution of motion pictures,
television programming, home entertainment, family entertainment,
video-on-demand and digitally delivered content. The Company is leveraging its
content leadership and marketing expertise through a series of partnerships
that include the operation of the highly successful FEARNet branded VOD and
Internet horror channel with Sony and Comcast, the announcement of the fall
2009 launch of a new premium entertainment channel with partners Viacom,
Paramount Pictures and MGM, investment in the leading young men's digital
distribution platform Break.com, ownership of the premier independent
television syndication company Debmar-Mercury and an alliance with independent
filmed entertainment production and distribution company Roadside Attractions.
Lionsgate also has forged partnerships with leading content creators, owners
and distributors in key territories around the world, including Televisa in
the U.S. and Latin America, StudioCanal in the UK, Hoyts and Sony in Australia
and Eros International in India.
The Company has generated more than $450 million at the North American
theatrical box office in the past 12 months and has forged leadership
positions in television and home entertainment with the production of such
critically-acclaimed television series as Weeds and Mad Men, the distribution
of Tyler Perry's House of Payne, Family Feud, South Park, Trivial Pursuit and
The Dead Zone, and nearly 8% market share and the industry's leading box
office-to-DVD conversion rate in home entertainment. 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 is synonymous with entrepreneurial innovation and original,
daring, quality entertainment in markets around the globe.
http://www.lionsgate.com
For further information, contact:
Peter D. Wilkes
Lionsgate
310-255-3726
pwilkes@lionsgate.com
Kristin Robinson
Lionsgate
310-255-5114
krobinson@lionsgate.com
The matters discussed in this press release include forward-looking
statements, including those regarding the timing of our upcoming film slate,
the expansion of our television business and the success of our fiscal 2009
and 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 on May 30, 2008. 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, March 31,
2008 2008
(Unaudited)
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $248,905 $371,589
Restricted cash 22,235 10,300
Investments 6,875 6,927
Accounts receivable, net of reserve
for video returns and allowances of
$108,328 (March 31, 2008 --
$95,515) and provision for doubtful
accounts of $6,154 (March 31, 2008
-- $5,978) 201,370 260,284
Investment in films and television
programs 745,258 608,942
Property and equipment 17,095 13,613
Goodwill 224,213 224,531
Other assets 83,322 41,572
$1,549,273 $1,537,758
LIABILITIES
Accounts payable and accrued
liabilities $244,637 $245,430
Participation and residuals 450,760 385,846
Film and production obligations 282,519 278,016
Subordinated notes and other
financing obligations 328,718 328,718
Deferred revenue 134,693 111,510
1,441,327 1,349,520
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common shares, no par value,
500,000,000 shares authorized,
122,670,458 and 121,081,311 shares
issued at September 30, 2008 and
March 31, 2008, respectively 443,890 434,650
Series B preferred shares (10 shares
issued and outstanding) - -
Accumulated deficit (264,619) (223,619)
Accumulated other comprehensive loss (4,328) (533)
174,943 210,498
Treasury shares, no par value,
6,960,774 and 2,410,499 shares at
September 30, 2008 and March 31,
2008, respectively (66,997) (22,260)
107,946 188,238
$1,549,273 $1,537,758
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Three
Months Months Six Months Six Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
2008 2007 2008 2007
(Amounts in thousands, except per share
amounts)
Revenues $380,718 $351,744 $679,177 $550,486
Expenses:
Direct operating 199,861 184,335 347,869 271,393
Distribution and marketing 189,407 197,193 288,382 332,694
General and administration 30,600 26,371 68,908 53,211
Depreciation 1,180 1,038 2,242 1,946
Total expenses 421,048 408,937 707,401 659,244
Operating loss (40,330) (57,193) (28,224) (108,758)
Other expenses (income):
Interest expense 5,190 4,225 9,501 8,085
Interest and other income (2,047) (2,635) (4,202) (6,438)
Gain on sale of equity
securities - (2,785) - (2,785)
Total other expenses
(income), net 3,143 (1,195) 5,299 (1,138)
Loss before equity interests
and income taxes (43,473) (55,998) (33,523) (107,620)
Equity interests loss (1,960) (1,187) (4,146) (1,994)
Loss before income taxes (45,433) (57,185) (37,669) (109,614)
Income tax provision 2,662 818 3,331 1,507
Net loss $(48,095) $(58,003) $(41,000) $(111,121)
Basic Net Loss Per Common
Share $(0.41) $(0.49) $(0.35) $(0.94)
Diluted Net Loss Per Common
Share $(0.41) $(0.49) $(0.35) $(0.94)
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Six Months
Ended Ended
September 30, September 30,
2008 2007
(Amounts in thousands)
Operating Activities:
Net loss $(41,000) $(111,121)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation of property and
equipment 2,242 1,946
Amortization of deferred financing
costs 2,592 1,771
Amortization of films and television
programs 186,743 176,894
Amortization of intangible assets 559 325
Non-cash stock-based compensation 7,516 6,677
Gain on sale of equity securities - (2,711)
Equity interests loss 4,146 1,994
Changes in operating assets and
liabilities:
Restricted cash (11,935) 359
Accounts receivable, net 56,667 (86,069)
Investment in films and television
programs (325,176) (258,711)
Other assets (9,438) (898)
Accounts payable and accrued
liabilities 3,077 78,274
Participation and residuals 65,271 117,392
Film obligations (4,325) (8,276)
Deferred revenue 23,337 24,324
Net Cash Flows Used In Operating
Activities (39,724) (57,830)
Investing Activities:
Purchases of investments -- auction rate
securities - (207,266)
Proceeds from the sale of investments --
auction rate securities 125 414,641
Purchases of investments -- equity
securities - (4,672)
Proceeds from the sale of investments --
equity securities - 23,782
Acquisition of Mandate Pictures, net of
unrestricted cash acquired - (40,850)
Investment in equity method investees (11,099) (6,465)
Increase in loan receivables (28,427) (3,059)
Purchases of property and equipment (5,743) (2,742)
Net Cash Flows Provided By (Used In)
Investing Activities (45,144) 173,369
Financing Activities:
Exercise of stock options 2,894 745
Tax withholding requirements on equity
awards (2,941) -
Repurchases of common shares (44,737) (10,736)
Borrowings under financing arrangements - 3,718
Increase in production obligations 113,320 59,442
Payment of production obligations (104,216) (58,012)
Net Cash Flows Used In Financing
Activities (35,680) (4,843)
Net Change In Cash And Cash Equivalents (120,548) 110,696
Foreign Exchange Effects on Cash (2,136) (1,593)
Cash and Cash Equivalents -- Beginning
Of Period 371,589 51,497
Cash and Cash Equivalents -- End Of
Period $248,905 $160,600
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FREE CASH FLOW, AS DEFINED
TO NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Three
Three Months Months Six Months Six Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
2008 2007 2008 2007
(Amounts in thousands)
Net Cash Flows
Provided By (Used In)
Operating Activities $110,093 $(2,250) $(39,724) $(57,830)
Purchases of
property and
equipment (3,464) (725) (5,743) (2,742)
Net borrowings under
and (repayment) of
production
obligations (32,936) 26,221 9,104 1,430
Free Cash Flow, as
defined $73,693 $23,246 $(36,363) $(59,142)
Free cash flow is defined as net cash flows provided by (used in)
operating activities, less purchases of property and equipment and plus or
minus the net increase or decrease in production obligations. The adjustment
for the production obligations 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 obligations 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, AS DEFINED TO NET INCOME (LOSS)
Three Three
Months Months Six Months Six Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
2008 2007 2008 2007
(Amounts in thousands)
EBITDA, as defined $(39,150) $(56,155) $(25,982) $(106,812)
Depreciation (1,180) (1,038) (2,242) (1,946)
Interest expense (5,190) (4,225) (9,501) (8,085)
Interest and other income 2,047 2,635 4,202 6,438
Gain on sale of equity
securities - 2,785 - 2,785
Equity interests loss (1,960) (1,187) (4,146) (1,994)
Income tax provision (2,662) (818) (3,331) (1,507)
Net loss $(48,095) $(58,003) $(41,000) $(111,121)
EBITDA is defined as earnings before interest, income tax provision,
depreciation and equity interests losses. EBITDA as defined, is a non-GAAP
financial measure. Management believes EBITDA as defined, 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, 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, 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, does not reflect
cash available to fund cash requirements. Not all companies calculate EBITDA
as defined, in the same manner and the measure as presented may not be
comparable to similarly-titled measures presented by other companies.
SOURCE Lionsgate
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