EXHIBIT 99.1
LIONSGATE REPORTS RECORD REVENUES OF $343.5 MILLION
AND NET LOSS OF $56.2 MILLION FOR SECOND QUARTER OF
FISCAL 2008
AND NET LOSS OF $56.2 MILLION FOR SECOND QUARTER OF
FISCAL 2008
Company Reports Positive Free Cash Flow of $21.5 Million For The Second Quarter
Santa Monica, CA, and Vancouver, BC, November 9, 2007 -— Lionsgate (NYSE: LGF), the leading independent filmed entertainment studio, reported record high quarterly revenues of $343.5 million and a net loss of $56.2 million for its fiscal quarter ended September 30, 2007, the Company announced today. The Company noted that revenue growth was driven by strong theatrical box office results and television production revenue gains in the quarter.
Lionsgate reported basic and diluted net loss per common share of $0.47 on 119.2 million weighted average common shares outstanding. The Company noted that its loss in the quarter was driven by $122.5 million in theatrical marketing spend expensed in the quarter.
“This was a very strong quarter for all of our businesses, most notably our theatrical business, whose positive contributions will be more fully reflected in future quarters,” said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. “We were pleased not only with our strong performance at the North American box office, but with our robust library and home entertainment revenues and continued momentum in our television production and international businesses as well. Our record revenues for the quarter show that we’re doing exactly what we should be doing as a growth company.”
The Company’s filmed entertainment backlog of $315.8 million exceeded $300 million for the fifth consecutive quarter.
Overall motion picture revenue for the quarter was $234.4 million. Within this segment, theatrical revenue was $42.4 million. Lionsgate had three consecutive significant theatrical releases in the quarter withWar,3:10 To YumaandGood Luck, Chuck.The Company’s successful releases continued with Tyler Perry’sWhy Did I Get Married?andSaw 4after the close of the quarter.
Lionsgate’s home entertainment revenue was $122.3 million in the second quarter as several Lionsgate releases, includingThe CondemnedandDelta Farce, significantly overindexed their theatrical box office performance. Other significant DVD releases in the quarter includedBug, continuing sales ofPride,Bratz Kidz: Sleepover AdventureandDr. Strange, the fourth release in Lionsgate’s direct-to-video partnership with Marvel.
Television revenue included in the motion picture segment was $37.3 million in the second quarter, primarily attributable to several strong theatrical titles with television windows opening recently, including Tyler Perry’sDiary of A Mad Black Woman,Crank,Saw 3andEmployee of The Month.
International revenue was $31.1 million in the second quarter, driven by strong foreign sales and overages ofSaw 3, Saw 2andWaras well as strong revenue performances by the Company’s motion pictures and third-party product distributed by Lionsgate U.K., including3:10 To Yuma,Saw 3, Academy Award® Best Foreign Language winnerThe Lives of OthersandThe Hamiltons.
Television production revenue was $109.1 million in the second quarter, driven by deliveries of episodes of the sixth broadcast season ofThe Dead Zone(USA), the fourth season ofWildfire(ABC Family), the third season ofWeeds(Showtime), the first season ofMad Men(AMC) and domestic series licensing of Tyler Perry’sHouse of Payne,South Parkand other television programming from the Company’s wholly-owned television syndication subsidiary Debmar-Mercury LLC.
Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2008 second quarter financial results at 9:00 A.M. ET/6:00 A.M. PT, Monday, November 12, 2007. Interested parties may participate live in the conference call by calling 1-800-230-1059 (1-612-234-9959 outside the U.S. and Canada). A full digital replay will be available from Monday afternoon, November 12, through Monday, November 19, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code 891844.
Lionsgate is the leading independent filmed entertainment studio, winning the 2006 Best Picture Academy Award® forCrash,and the Company is a premier producer and distributor of motion pictures, television programming, home entertainment, family entertainment and video-on-demand content. Its prestigious and prolific library of nearly 12,000 motion picture titles and television episodes is a valuable source of recurring revenue and a foundation for the growth of the Company’s core businesses. The Lionsgate brand is synonymous with original, daring, quality entertainment in markets around the globe.
www.lionsgate.com
* * * * *
For further information, contact:
Peter D. Wilkes
Lionsgate
310-255-3726
pwilkes@lionsgate.com
Lionsgate
310-255-3726
pwilkes@lionsgate.com
Kelli Easterling
Lionsgate
310-255-4929
keasterling@lionsgate.com
Lionsgate
310-255-4929
keasterling@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 2008. 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’sQuarterlyReport on Form 10-Q, filed with the Securities and Exchange Commission on November 9, 2007, andLionsgate’sAnnual Report on Form 10-K, filed with the Securities and Exchange Commission on May 30, 2007. 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, | |||||||
| 2007 | 2007 | |||||||
| (Unaudited) | ||||||||
| (Amounts in thousands, | ||||||||
| except share amounts) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 158,865 | $ | 51,497 | ||||
| Restricted cash | 12,363 | 4,915 | ||||||
| Investments — auction rate securities | 30,000 | 237,379 | ||||||
| Investments — equity securities | 104 | 125 | ||||||
| Accounts receivable, net of reserve for video returns and allowances of $70,017 (March 31, 2007 - $77,691) and provision for doubtful accounts of $5,757 (March 31, 2007 - $6,345) | 209,457 | 130,496 | ||||||
| Investment in films and television programs | 633,024 | 493,140 | ||||||
| Property and equipment | 14,120 | 13,095 | ||||||
| Goodwill | 224,567 | 187,491 | ||||||
| Other assets | 52,725 | 18,957 | ||||||
| $ | 1,335,225 | $ | 1,137,095 | |||||
| LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | 253,368 | $ | 155,617 | ||||
| Participation and residuals | 293,622 | 171,156 | ||||||
| Film obligations | 211,652 | 167,884 | ||||||
| Subordinated notes and other financing obligations | 328,718 | 325,000 | ||||||
| Deferred revenue | 92,283 | 69,548 | ||||||
| 1,179,643 | 889,205 | |||||||
| Commitments and contingencies | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Common shares, no par value, 500,000,000 shares authorized, 120,317,891 and 116,970,280 shares issued and outstanding at September 30, 2007 and March 31, 2007, respectively | 423,841 | 398,836 | ||||||
| Series B preferred shares (10 shares issued and outstanding) | — | — | ||||||
| Accumulated deficit | (258,983 | ) | (149,651 | ) | ||||
| Accumulated other comprehensive income (loss) | 1,460 | (1,295 | ) | |||||
| 166,318 | 247,890 | |||||||
| Treasury shares, no par value, 1,169,835 shares at September 30, 2007 | (10,736 | ) | — | |||||
| 155,582 | 247,890 | |||||||
| $ | 1,335,225 | $ | 1,137,095 | |||||
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, | |||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| (Amounts in thousands, except | ||||||||||||||||
| per share amounts) | ||||||||||||||||
Revenues | $ | 343,505 | $ | 218,169 | $ | 542,247 | $ | 390,625 | ||||||||
Expenses: | ||||||||||||||||
| Direct operating | 182,487 | 94,723 | 269,545 | 163,268 | ||||||||||||
| Distribution and marketing | 189,012 | 113,345 | 324,513 | 200,391 | ||||||||||||
| General and administration | 25,869 | 21,727 | 52,709 | 40,960 | ||||||||||||
| Depreciation | 989 | 581 | 1,897 | 1,125 | ||||||||||||
| Total expenses | 398,357 | 230,376 | 648,664 | 405,744 | ||||||||||||
Operating loss | (54,852 | ) | (12,207 | ) | (106,417 | ) | (15,119 | ) | ||||||||
Other expenses (income): | ||||||||||||||||
| Interest expense | 4,213 | 4,904 | 8,073 | 9,580 | ||||||||||||
| Interest and other income | (2,646 | ) | (2,286 | ) | (6,449 | ) | (4,847 | ) | ||||||||
| Gain on sale on equity securities | (2,785 | ) | — | (2,785 | ) | — | ||||||||||
| Total other expenses (income), net | (1,218 | ) | 2,618 | (1,161 | ) | 4,733 | ||||||||||
Loss before equity interests and income taxes | (53,634 | ) | (14,825 | ) | (105,256 | ) | (19,852 | ) | ||||||||
| Equity interests loss | (1,187 | ) | (435 | ) | (1,994 | ) | (377 | ) | ||||||||
Loss before income taxes | (54,821 | ) | (15,260 | ) | (107,250 | ) | (20,229 | ) | ||||||||
| Income tax provision (benefit) | 1,393 | (868 | ) | 2,082 | (2,233 | ) | ||||||||||
Net loss | $ | (56,214 | ) | $ | (14,392 | ) | $ | (109,332 | ) | $ | (17,996 | ) | ||||
Basic and Diluted Net Loss Per Common Share | $ | (0.47 | ) | $ | (0.14 | ) | $ | (0.93 | ) | $ | (0.17 | ) | ||||
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months | Six Months | |||||||
| Ended | Ended | |||||||
| September 30, | September 30, | |||||||
| 2007 | 2006 | |||||||
| (Amounts in thousands) | ||||||||
Operating Activities: | ||||||||
| Net loss | $ | (109,332 | ) | $ | (17,996 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||||||||
| Depreciation of property and equipment | 1,897 | 1,125 | ||||||
| Amortization of deferred financing costs | 1,771 | 1,957 | ||||||
| Amortization of films and television programs | 175,619 | 81,998 | ||||||
| Amortization of intangible assets | 325 | 488 | ||||||
| Non-cash stock-based compensation | 6,677 | 2,490 | ||||||
| Gain on sale of equity securities | (2,711 | ) | — | |||||
| Equity interests loss | 1,994 | 377 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Restricted cash | 359 | (1,724 | ) | |||||
| Accounts receivable, net | (81,272 | ) | 99,804 | |||||
| Investment in films and television programs | (247,216 | ) | (164,071 | ) | ||||
| Other assets | (2,736 | ) | 5,543 | |||||
| Accounts payable and accrued liabilities | 69,164 | (34,039 | ) | |||||
| Unpresented bank drafts | — | (14,772 | ) | |||||
| Participation and residuals | 115,726 | (16,075 | ) | |||||
| Film obligations | (6,846 | ) | 43,361 | |||||
| Deferred revenue | 18,028 | 22,316 | ||||||
Net Cash Flows Provided By (Used In) Operating Activities | (58,553 | ) | 10,782 | |||||
Investing Activities: | ||||||||
| Purchases of investments — auction rate securities | (207,266 | ) | (296,043 | ) | ||||
| Proceeds from the sale of investments — auction rate securities | 414,641 | 316,375 | ||||||
| Purchases of investments — equity securities | (4,672 | ) | — | |||||
| Proceeds from the sale of investments — equity securities | 23,782 | — | ||||||
| Acquisition of Mandate, net of unrestricted cash acquired | (40,850 | ) | — | |||||
| Acquisition of Debmar, net of unrestricted cash acquired | — | (24,112 | ) | |||||
| Investment in equity method investees | (6,465 | ) | — | |||||
| Loan to equity method investee | (3,059 | ) | — | |||||
| Purchases of property and equipment | (2,385 | ) | (3,537 | ) | ||||
Net Cash Flows Provided By (Used In) Investing Activities | 173,726 | (7,317 | ) | |||||
Financing Activities: | ||||||||
| Exercise of stock options | 745 | 2,429 | ||||||
| Repurchases of common shares | (10,736 | ) | — | |||||
| Borrowings under financing arrangements | 3,718 | — | ||||||
Net Cash Flows Provided By (Used In) Financing Activities | (6,273 | ) | 2,429 | |||||
Net Change In Cash And Cash Equivalents | 108,900 | 5,894 | ||||||
Foreign Exchange Effects on Cash | (1,532 | ) | (110 | ) | ||||
Cash and Cash Equivalents — Beginning Of Period | 51,497 | 46,978 | ||||||
Cash and Cash Equivalents — End Of Period | $ | 158,865 | $ | 52,762 | ||||
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET CASH FLOWS USED IN
OPERATING ACTIVITIES TO FREE CASH FLOW
OPERATING ACTIVITIES TO FREE CASH FLOW
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| (Amounts in thousands) | ||||||||||||||||
Net Cash Flows Provided By (Used In) Operating Activities | $ | 21,818 | $ | 25,806 | $ | (58,553 | ) | $ | 10,782 | |||||||
| Purchases of property and equipment | (368 | ) | (1,706 | ) | (2,385 | ) | (3,537 | ) | ||||||||
| Decrease in Unpresented Bank Drafts | — | — | — | 14,772 | ||||||||||||
Free Cash Flow, as defined | $ | 21,450 | $ | 24,100 | $ | (60,938 | ) | $ | 22,017 | |||||||
Free cash flow is defined as net cash flows provided by or used in operating activities less purchases of property and equipment and unpresented bank drafts. Unpresented bank drafts represent checks issued and not yet presented for payment in excess of the cash balances at custodial banks. The applicable bank accounts are funded at the time the checks are presented for payment.
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 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.