Lionsgate Reports Revenue of $371.8 Million and Net Loss of $65.3 Million for Third Quarter of Fiscal 2010, Compared to Revenue of $324.0 Million and Net Loss of $97.8 Million in Prior Year Third Quarter
ADJUSTED EBITDA FOR THIRD QUARTER IS NEGATIVE $9.8 MILLION COMPARED TO NEGATIVE $90.9 MILLION IN PRIOR YEAR THIRD QUARTER
Basic Net Loss Per Common Share Is $0.55 In Third Quarter Compared To Basic Net Loss Per Common Share of $0.84 In Prior Year Third Quarter
Company Reports Positive Free Cash Flow of $64.5 Million In Third Quarter Compared To Free Cash Flow of Negative $104.9 Million In Prior Year Third Quarter
SANTA MONICA, Calif., and VANCOUVER, British Columbia, Feb. 9 /PRNewswire-FirstCall/ -- Lionsgate (NYSE: LGF), the leading next generation studio, continued to strengthen its financial performance for the quarter and nine months ended December 31, 2009, based on growing television production revenues, new revenue from TV Guide Network and TVGuide.com and reduced theatrical marketing and overhead costs, the Company announced today.
The Company reported revenues of $371.8 million and net loss attributable to Lionsgate shareholders of $65.3 million for the fiscal 2010 third quarter ended December 31, 2009. Revenues increased 15% from the prior year third quarter's $324.0 million due primarily to increases in television production revenues and new revenue of $29.3 million from TV Guide Network and TVGuide.com.
The Company had a net loss of $65.3 million in the third quarter compared to a net loss of $97.8 million in the prior year third quarter. Although including $26 million in marketing costs for films that will be released in the fourth or subsequent quarters, net loss in the quarter compared favorably to the prior year quarter.
Basic net loss per common share in the third quarter was $0.55 on 117.7 million weighted average common shares outstanding, compared to basic net loss of $0.84 on 115.8 million weighted average common shares outstanding in the prior year's third quarter.
The Company reported adjusted EBITDA of negative $9.8 million in the third quarter compared to adjusted EBITDA of negative $90.9 million for the prior year's third 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 or loss on extinguishment of debt and the sale of equity securities.
The Company reported $64.5 million in positive free cash flow, a non-GAAP metric, in the third quarter, compared to free cash flow of negative $104.9 million for the prior year's third quarter. Free cash flow for the first nine months of the fiscal year was negative $77.4 million compared to free cash flow of negative $141.3 million in the prior year's first nine months. 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.
For the nine months ended December 31, 2009, Lionsgate reported revenues of $1.15 billion, net income attributable to Lionsgate shareholders of $2.8 million and adjusted EBITDA of $97.9 million. This compared to revenues of $1.00 billion, net loss of $146.1 million and adjusted EBITDA of negative $109.4 million in the prior year's first nine months. Basic net income per common share for the nine months ended December 31, 2009 was $0.02 on 117.4 million weighted average common shares outstanding compared to basic net loss of $1.25 on 117.0 million weighted average common shares outstanding in the prior year's first nine months.
"We had a solid quarter of revenue growth and strong free cash flow, and we remain on track to achieve our full year financial targets," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "We were particularly pleased to achieve record library revenues in a challenging home entertainment environment, a continuation of strong growth in all areas of our television business and significant progress in our channel investments. Coupled with a film slate that we plan to expand and diversify next year, we believe that our core and newer businesses combine to give us excellent momentum."
Overall motion picture revenue for the quarter of $251.0 million decreased $3.9 million, or 2%, compared to the prior year's third quarter. Within the motion picture segment, theatrical revenue was $49.4 million, a decrease of 29% compared to the prior year third quarter, as the Company released Academy Award (R) Best Picture nominated PRECIOUS, BROTHERS and SAW VI in the quarter compared to five releases, four of them wide releases, in the prior year's third quarter.
Lionsgate's home entertainment revenue from the motion picture segment was $95.0 million in the quarter, relatively unchanged compared to $94.6 million in the prior year's third quarter. There were no significant new theatrical titles released on home entertainment in the quarter, and the majority of home entertainment revenue in the quarter came from the Company's filmed entertainment library, which had the best quarterly revenue performance in its history.
Television included in motion pictures revenue rose to $54.7 million in the third quarter, an increase of 40% from the prior year's third quarter, with a slate of MADEA GOES TO JAIL, THE HAUNTING IN CONNECTICUT, MY BLOODY VALENTINE 3-D, NEW IN TOWN and THE SPIRIT comparing favorably to a slate of MEET THE BROWNS, RAMBO, THE BANK JOB and THE EYE in the prior year's third quarter.
International revenues of $37.5 million in the third quarter declined 9% from the prior year's third quarter. The principal revenue contributors in the quarter included BROTHERS, MY BLOODY VALENTINE 3-D and SAW VI compared to SAW V, THE EYE, CONAN THE BARBARIAN and PUNISHER: WAR ZONE in the prior year's third quarter. International revenues in the quarter also included Lionsgate UK's distribution of the third-party film THE HURT LOCKER, also distributed by Lionsgate's affiliate company Maple Pictures in Canada.
Mandate Pictures' revenue of $12.9 million in the third quarter increased 55% from the prior year's third quarter on the films JUNO, DRAG ME TO HELL and WHIP IT compared to the films JUNO, NICK AND NORAH'S INFINITE PLAYLIST and PASSENGERS in the prior year's third quarter.
Television production revenue increased to $91.5 million in the third quarter, a gain of 32% from the prior year's third quarter, with a 23% increase in domestic series licensing from Lionsgate Television deliveries of 13 episodes of the new series "Blue Mountain State" (Spike TV), five episodes of "Mad Men Season 3" (AMC), eight episodes of "Crash Season 2" (Starz) and two episodes of "Nurse Jackie Season 2" (Showtime) along with a 108% 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 a 76% increase in international television sales and a 75% 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 year 2010 third quarter financial results at 9:00 A.M. ET/6:00 A.M. PT on Wednesday, February 10, 2010. Interested parties may participate live in the conference call by calling 1-800-288-8968 (612-332-0228 outside the U.S. and Canada). A full digital replay will be available from Wednesday morning, February 10, through Wednesday, February 17, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 143850.
About Lionsgate
Lionsgate (NYSE: LGF) 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 assets. Lionsgate currently has nearly 20 shows on 10 different networks spanning its prime time production, distribution and syndication businesses, including such critically-acclaimed hits as "Mad Men", "Weeds" and "Nurse Jackie" along with new series such as "Blue Mountain State" and the syndication successes "Tyler Perry's House Of Payne", its spinoff "Meet The Browns" and "The Wendy Williams Show". Its feature film business has generated more than $400 million at the North American box office in the past year, including the recent critically-acclaimed hit PRECIOUS, which has garnered nearly $50 million at the North American box office and earned six Academy Award (R) nominations, including Best Picture. The Company's home entertainment business has grown to more than 7% market share and is an industry leader in 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.
For further information, please contact: |
|
Peter D. Wilkes |
|
310-255-3726 |
|
The matters discussed in this press release include forward-looking statements, including those regarding 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
December 31, March 31,
2009 2009
---- ----
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $105,090 $138,475
Restricted cash 706 10,056
Restricted investments 6,995 6,987
Accounts receivable, net of reserve
for returns and allowances
of $83,578 (March 31, 2009 -
$98,947) and provision for
doubtful accounts of $8,961 (March
31, 2009 - $9,847) 255,377 227,010
Investment in films and television
programs, net 731,289 702,767
Property and equipment, net 35,359 42,415
Finite-lived intangible assets, net 74,412 78,904
Goodwill 376,853 379,402
Other assets 113,026 81,234
------- ------
Total assets $1,699,107 $1,667,250
========== ==========
LIABILITIES
Senior revolving credit facility $12,000 $255,000
Senior secured second-priority notes 225,488 -
Accounts payable and accrued
liabilities 244,969 270,561
Participations and residuals 286,656 371,857
Film and production obligations 397,068 304,525
Subordinated notes and other
financing obligations 200,064 281,521
Mandatorily redeemable preferred
stock units held by noncontrolling
interest 91,454 -
Deferred revenue 136,977 142,093
------- -------
Total liabilities 1,594,676 1,625,557
--------- ---------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Lions Gate Entertainment Corp.
shareholders' equity:
Common shares, no par value,
500,000,000 shares authorized,
117,834,653 and
116,950,512 shares issued at
December 31, 2009 and March 31,
2009, respectively 515,728 494,724
Accumulated deficit (438,347) (441,153)
Accumulated other comprehensive
loss (5,091) (11,878)
------ -------
Total Lions Gate Entertainment
Corp. shareholders' equity 72,290 41,693
Noncontrolling interest 32,141 -
------ ---
Total equity 104,431 41,693
------- ------
Total liabilities and
shareholders' equity $1,699,107 $1,667,250
========== ==========
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
December December December December
31, 31, 31, 31,
2009 2008 2009 2008
---- ---- ---- ----
(Amounts in thousands, except per share
amounts)
Revenues $371,783 $324,027 $1,153,167 $1,003,204
Expenses:
Direct operating 208,907 218,451 620,013 565,761
Distribution and
marketing 160,303 170,400 347,531 458,782
General and
administration 39,571 27,472 123,142 96,380
Depreciation and
amortization 6,685 1,575 21,087 4,376
----- ----- ------ -----
Total expenses 415,466 417,898 1,111,773 1,125,299
------- ------- --------- ---------
Operating
income (loss) (43,683) (93,871) 41,394 (122,095)
------- ------- ------ --------
Other expenses (income):
Interest expense
Contractual cash
based interest 7,655 3,497 18,040 10,406
Amortization of debt
discount, deferred
financing costs
and accretion of
redeemable preferred
stock units 9,104 4,615 22,725 14,502
----- ----- ------ ------
Total interest
expense 16,759 8,112 40,765 24,908
Interest and
other income (420) (860) (1,228) (5,062)
Loss (gain) on
extinguishment of
debt 1,783 (3,023) (5,675) (3,023)
----- ------ ------ ------
Total other expenses,
net 18,122 4,229 33,862 16,823
------ ----- ------ ------
Income (loss)
before equity
interests and
income taxes (61,805) (98,100) 7,532 (138,918)
Equity interests loss (6,903) (1,695) (10,548) (5,841)
------ ------ ------- ------
Loss before income taxes (68,708) (99,795) (3,016) (144,759)
Income tax provision
(benefit) (1,752) (2,039) 259 1,292
------ ------ --- -----
Net loss (66,956) (97,756) (3,275) (146,051)
Add: Net loss
attributable to
noncontrolling
interest 1,697 - 6,081 -
----- --- ----- ---
Net income (loss)
attributable to
Lions Gate
Entertainment
Corp. Shareholders $(65,259) $(97,756) $2,806 $(146,051)
======== ======== ====== =========
Basic Net Income (Loss)
Per Common Share $(0.55) $(0.84) $0.02 $(1.25)
====== ====== ===== ======
Diluted Net Income (Loss)
Per Common Share $(0.55) $(0.84) $0.02 $(1.25)
====== ====== ===== ======
Weighted average number
of common shares
outstanding:
Basic 117,745 115,765 117,381 117,018
Diluted 117,745 115,765 117,579 117,018
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
December December December December
31, 31, 31, 31,
2009 2008 2009 2008
---- ---- ---- ----
(Amounts in thousands)
Operating Activities:
Net income (loss)
attributable to Lions
Gate Entertainment
Corp. shareholders $(65,259) $(97,756) $2,806 $(146,051)
Net loss attributable
to noncontrolling
interest (1,697) - (6,081) -
------ --- ------ ---
Net loss (66,956) (97,756) (3,275) (146,051)
Adjustments to reconcile
net loss to net cash provided
by (used in) operating
activities:
Depreciation of
property and equipment 3,222 1,374 11,174 3,616
Amortization of films and
television programs 142,171 128,871 429,474 315,614
Amortization of debt
discount, deferred
financing costs and
accretion of redeemable
preferred stock units 9,104 4,615 22,725 14,502
Amortization of intangible
assets 3,463 201 9,913 760
Non-cash stock-based
compensation 4,055 4,511 11,741 12,027
Loss (gain) on extinguishment
of debt 1,783 (3,023) (5,675) (3,023)
Equity interests loss 6,903 1,695 10,548 5,841
Changes in operating assets
and liabilities:
Restricted cash 9,190 5,235 9,350 (6,700)
Accounts receivable, net (22,665) 16,278 (22,966) 72,945
Investment in films and
television programs (123,795) (146,132) (457,271) (471,308)
Other assets 2,066 (2,753) (2,315) (12,191)
Accounts payable and
accrued liabilities 65,942 23,749 (30,305) 26,826
Participations and residuals (17,686) (40,575) (85,802) 24,696
Film obligations 16,882 63,036 (20,019) 58,711
Deferred revenue 2,070 (15,511) (5,399) 7,826
----- ------- ------ -----
Net Cash Flows Provided By
(Used In) Operating
Activities 35,749 (56,185) (128,102) (95,909)
------ ------- -------- -------
Investing Activities:
Purchases of restricted
investments - - (13,994) -
Proceeds from the sale of
restricted investments - - 13,985 -
Purchases of investments -
auction rate securities (6,995) - - -
Proceeds from the sale of
investments - auction
rate securities 6,998 (125) - -
Investment in equity
method investees (26,418) (4,787) (41,342) (15,886)
Increase in loans receivable (8,695) (340) (362) (28,767)
Repayment of loans receivable 8,333 - 8,333 -
Purchases of property
and equipment (538) (722) (4,228) (6,465)
---- ---- ------ ------
Net Cash Flows Used In
Investing Activities (27,315) (5,974) (37,608) (51,118)
------- ------ ------- -------
Financing Activities:
Exercise of stock options - - - 2,894
Tax withholding requirements
on equity awards (390) (193) (1,733) (3,134)
Repurchase and cancellation
of common shares - (231) - (44,968)
Proceeds from the sale of 49%
interest in TV Guide Network - - 122,355 -
Borrowings under senior
revolving credit facility 100,000 - 170,000 -
Repayments of borrowings
under senior revolving
credit facility (343,000) - (413,000) -
Borrowings under individual
production obligations 6,493 12,276 134,587 117,662
Repayment of individual
production obligations (9,395) (61,082) (111,885) (165,298)
Production obligation
borrowings under
Pennsylvania Regional
Center credit facility 57,000 824 57,000 8,758
Production obligation
borrowings under film
credit facility 32,217 - 32,217 -
Proceeds from sale of
senior secured second-
priority notes 216,232 - 216,232 -
Repurchase of
subordinated notes (75,185) (5,310) (75,185) (5,310)
Repayment of other
financing obligations (209) - (615) -
---- --- ---- ---
Net Cash Flows Provided By
(Used In) Financing
Activities (16,237) (53,716) 129,973 (89,396)
------- ------- ------- -------
Net Change In Cash
And Cash Equivalents (7,803) (115,875) (35,737) (236,423)
Foreign Exchange Effects
on Cash 241 (2,317) 2,352 (4,453)
Cash and Cash Equivalents -
Beginning Of Period 112,652 248,905 138,475 371,589
------- ------- ------- -------
Cash and Cash Equivalents -
End Of Period $105,090 $130,713 $105,090 $130,713
======== ======== ======== ========
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET LOSS TO EBITDA, AS DEFINED AND EBITDA, AS ADJUSTED
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
December December December December
31, 31, 31, 31,
2009 2008 2009 2008
---- ---- ---- ----
(Amounts in thousands, except per share
amounts)
Net loss $(66,956) $(97,756) $(3,275) $(146,051)
Depreciation and
amortization 6,685 1,575 21,087 4,376
Interest expense 16,759 8,112 40,765 24,908
Interest and other income (420) (860) (1,228) (5,062)
Income tax provision
(benefit) (1,752) (2,039) 259 1,292
Equity interests loss 6,903 1,695 10,548 5,841
Loss (gain) on
extinguishment of debt 1,783 (3,023) (5,675) (3,023)
----- ------ ------ ------
EBITDA $(36,998) $(92,296) $62,481 $(117,719)
======== ======== ======= =========
Stock-based compensation 4,277 1,411 12,565 8,281
EBITDA attributable to
noncontrolling interest (3,899) - (6,231) -
Non-recurring corporate
defense charges - - 1,012 -
Non-risk prints and
advertising expense 26,798 - 28,048 -
------ --- ------ ---
EBITDA, as adjusted $(9,822) $(90,885) $97,875 $(109,438)
======= ======== ======= =========
EBITDA is defined as earnings before interest, income tax provision, depreciation and amortization, equity interests, and gains or losses 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.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FREE CASH FLOW, AS DEFINED
TO NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
December December December December
31, 31, 31, 31,
2009 2008 2009 2008
---- ---- ---- ----
(Amounts in thousands, except per share
amounts)
Net Cash Flows
Provided By
(Used In)
Operating
Activities $35,749 $(56,185) $(128,102) $(95,909)
Purchases of
property and
equipment (538) (722) (4,228) (6,465)
Net borrowings
under and
(repayment) of
production
obligations 29,315 (47,982) 54,919 (38,878)
------ ------- ------ -------
Free Cash Flow,
as defined $64,526 $(104,889) $(77,411) $(141,252)
======= ========= ======== =========
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.
SOURCE Lionsgate
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