Quantcast

Lionsgate Reports Revenues of $380.7 Million for Second Quarter of Fiscal 2009, Up 8% From Prior Year’s Second Quarter

November 10, 2008

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Nov. 10 /PRNewswire-FirstCall/ — Lionsgate , 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.

Lionsgate

CONTACT: Peter D. Wilkes, +1-310-255-3726, pwilkes@lionsgate.com, orKristin Robinson, +1-310-255-5114, krobinson@lionsgate.com, both of Lionsgate

Web site: http://www.lionsgate.com/

 




comments powered by Disqus