Exhibit 99.1
LIONSGATE REPORTS NET INCOME OF $31.7 MILLION AND ADJUSTED EBITDA
OF $54.4 MILLION FOR SECOND QUARTER OF FISCAL 2010 COMPARED TO NET
LOSS OF $51.8 MILLION AND ADJUSTED EBITDA OF NEGATIVE $35.9
MILLION IN PRIOR YEAR’S SECOND QUARTER
OF $54.4 MILLION FOR SECOND QUARTER OF FISCAL 2010 COMPARED TO NET
LOSS OF $51.8 MILLION AND ADJUSTED EBITDA OF NEGATIVE $35.9
MILLION IN PRIOR YEAR’S SECOND QUARTER
Basic Net Income Per Common Share Is $0.27 In Second Quarter Compared To Basic Net
Loss of $0.44 In Prior Year’s Second Quarter
Loss of $0.44 In Prior Year’s Second Quarter
Company Reports Revenues of $781.4 Million, Net Income of $68.1 Million And Adjusted EBITDA of $107.7 Million For First Six Months of Fiscal 2010 Compared to Revenues of $679.2 Million, Net Loss of $48.3 Million And Adjusted EBITDA of Negative $18.6 Million In Prior Year’s First Six Months
Santa Monica, CA, and Vancouver, BC (November 9, 2009) — Lionsgate (NYSE: LGF), 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 releasedTyler Perry’s I Can Do Bad All By MyselfandGamerin 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 asCrank: High Voltage,The Haunting In Connecticut,Horsemenand continued sales ofNew In TownandTyler Perry’s Madea Goes To Jail. Although titles such asCrank: High Voltageoverconverted strongly, the underlying box office of new titles released in the quarter was lower than the underlying box office for the slate ofThe Forbidden Kingdom,Tyler Perry’s Meet The Browns,The Bank JobandRamboin 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 ofSaw V, Tyler Perry’s The Family That Preys, Transporter 3, Bangkok Dangerous,Disaster Movie,My Best Friend’s Girl,Religulousand“W.”comparing favorably to a slate of3:10 To Yuma,Good Luck Chuck,Saw IV, WarandTyler 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 includedMy Bloody Valentine 3-D and Crank 2: High Voltagecompared to3:10 To Yuma,Employee of the Month,Saw IVandWarin 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 ofHorsemen,PassengersandWhip Itand a number of smaller titles compared to a slate of30 Days of Night,JunoandNick and Norah’s Infinite Playlistin 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 ofWeeds Season 5 (Showtime), eight episodes ofMad Men Season 3(AMC) and five episodes ofCrash Season 2(Starz) along with a 71% increase in revenues from Debmar-Mercury, primarily due to the licensing of such shows asTyler Perry’s House of Payne, its spinoffMeet The BrownsandThe Wendy Williams Show, as well as an 80% increase in international televsion 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 (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 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
www.lionsgate.com
For further information, please contact:
Peter D. Wilkes
310-255-3726
pwilkes@lionsgate.com
Peter D. Wilkes
310-255-3726
pwilkes@lionsgate.com
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.