Exhibit 99
LIONS GATE ENTERTAINMENT REPORTS REVENUES OF
$77.4 MILLION FOR THIRD QUARTER OF FISCAL 2004,
25% INCREASE FROM PRIOR-YEAR QUARTER
| • | Last Quarter of Financial Results Before Full Inclusion of Artisan Entertainment Financial Results |
| • | Company Achieving Rapid Integration of Artisan; Senior Management to Provide Fiscal 2005 Visibility (Fiscal Year Beginning April 1, 2004) on Conference Call This Morning |
| • | Write-Down of CinéGroupe’s Animation Assets And Costs Associated With Artisan Merger Impact Third Quarter’s EBITDA |
(all amounts in U.S. dollars)
VANCOUVER, BC, and SANTA MONICA, CA, February 17, 2004 – Lions Gate Entertainment (AMEX and TSX: LGF), the leading independent filmed entertainment production and distribution studio, reported revenues of $77.4 million for the three months ended December 31, 2003, a 25% increase from the prior year’s quarter.
The Company recorded a non-cash write-down of $10 million due to the restructuring of its Montreal-based animation partner CinéGroupe, an $8 million non-recurring expense related to the integration of Artisan and $7 million in additional marketing expenses associated with the positive performance of current theatrical and video releases, contributing to a decline in EBITDA (earnings before interest, income taxes, depreciation and amortization and minority interests) in the quarter.
Lions Gate reported EBITDA of negative $32.0 million in the quarter compared to positive $1.0 million in the prior year’s quarter. Net loss was $29.8 million for the quarter compared to a net loss of $2.3 million in the prior year’s quarter.
“We are ahead of schedule in achieving the successful integration of Artisan Entertainment,” said Lions Gate Chief Executive Officer Jon Feltheimer. “Our merger clearly positions us as the premier truly independent filmed entertainment studio in the industry. This was a highly accretive and deleveraging transaction, and we look forward to providing visibility for our fiscal 2005 financial results (fiscal year beginning April 1, 2004) on our analyst and investor call this morning. On that call, we plan to provide detail on cost savings, revenue and free cash flow as well as debt repayment going forward.”
The Company also noted that, with the completion of the Artisan merger, it expected continued strong organic growth in its expanded core businesses of motion picture production and distribution, television programming, home entertainment, family home entertainment and, over a longer-term horizon, delivery of video-on-demand content for emerging digital markets.
Motion Picture And Television Businesses Lead Revenue Growth
Motion picture revenues in the third quarter were $54.2 million, a 24% increase over $43.6 million in the prior year’s quarter. Revenue drivers were spread across a broad range of titles, including the home video performances of HOUSE OF 1000 CORPSES, the NBC comedy hit WILL & GRACE, the latest installments of NBC’s SATURDAY NIGHT LIVE franchise (SNL: WILL FERREL) and ABC’s Stephen King franchise (THE DIARY OF ELLEN RIMBAUER) and the international theatrical revenues of WONDERLAND, CONFIDENCE and SHATTERED GLASS.
Lions Gate earned four Academy Award® nominations for its critically-acclaimed box office successes THE COOLER and GIRL WITH A PEARL EARRING, which are currently in the midst of their theatrical runs. Theatrical revenues from these titles will be recorded primarily in the fiscal fourth quarter, along with video revenues for the theatrical hit CABIN FEVER, which debuted at #3 on the DVD sales charts three weeks ago.
Television revenues were $17.1 million in the third quarter, a 40% increase from $12.2 million in the prior year’s quarter, primarily due to deliveries of the prime time Lifetime cable series 1-800-MISSING and a steady supply of nonfiction programming from Termite Art to nine leading cable networks.
Lions Gate senior management will hold its analyst and investor conference call to discuss its third quarter results and provide guidance for the fourth quarter of fiscal 2004 as well as visibility for fiscal 2005 results (fiscal year beginning April 1, 2004) at 8:00 A.M. PT/11:00 A.M. ET today, February 17, 2004. Interested parties may participate live by calling 1-800-553-0351 (1-612-332-0335 outside the U.S. and Canada). A full digital replay will be available from this afternoon, February 17, through Tuesday, February 24, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code #719479.
Lions Gate is the premier diversified independent producer and distributor of motion pictures, television programming, home entertainment, family entertainment and video-on-demand content. Its prestigious and prolific library of more than 8000 titles is one of the largest in the industry and the biggest in indie history. The Lions Gate brand name is synonymous with original, daring, quality entertainment in markets around the world.
* * * * *
www.lionsgatefilms.com
AMEX and TSX: LGF
The matters discussed in this press release include forward-looking statements. In addition, when used in this press release, the words “expects,” “anticipates,” “is slated,” “should, “ “are scheduled” and similar expressions are intended to identify forward-looking statements. 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 risk factors as set forth in the Risk Factors sections of ourForm 10-K, filed June 30, 2003, our Registration Statement onForm S-3 filed September 25, 2003 and related Prospectus Supplement filed October 9, 2003, with the Securities and Exchange Commission and the Canadian Securities Commissions. 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.
For further information, contact:
Peter D. Wilkes
310-255-3726
pwilkes@lgecorp.com
LIONS GATE ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, | March 31, | |||||||
| 2003 | 2003 | |||||||
| (Unaudited) | ||||||||
| (All amounts in thousands of U.S. | ||||||||
| dollars, except share amounts) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 9,507 | $ | 7,440 | ||||
| Accounts receivable, net of reserve for video returns of $63,847 (March 31, 2003 — $11,364) and provision for doubtful accounts of $15,074 (March 31, 2003 — $7,677) | 123,973 | 94,908 | ||||||
| Investment in films and television programs | 451,765 | 206,275 | ||||||
| Property and equipment | 34,009 | 32,390 | ||||||
| Goodwill, net of accumulated amortization of $5,643 | 127,394 | 25,048 | ||||||
| Other assets | 27,042 | 19,135 | ||||||
| Future income taxes | 2,985 | 1,350 | ||||||
| $ | 776,675 | $ | 386,546 | |||||
| LIABILITIES | ||||||||
| Bank loans | $ | 269,068 | $ | 130,921 | ||||
| Accounts payable and accrued liabilities | 141,417 | 48,888 | ||||||
| Accrued participations and residuals costs | 79,667 | 26,158 | ||||||
| Production loans | 13,570 | 20,339 | ||||||
| Subordinated notes | 47,865 | — | ||||||
| Long-term debt | 42,091 | 54,379 | ||||||
| Deferred revenue | 48,256 | 22,116 | ||||||
| Minority interests | 702 | 9,028 | ||||||
| 642,636 | 311,829 | |||||||
| Commitments and contingencies | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Preferred shares, 200,000,000 shares authorized, issued in series, including 1,000,000 series A (1,986 and 11,830 shares issued and outstanding) and 10 series B (10 shares issued and outstanding) (liquidation preference $5,064 and $30,167) | 5,631 | 32,519 | ||||||
| Common stock, no par value, 500,000,000 shares authorized, 90,718,304 and 43,231,921 shares issued and outstanding | 267,336 | 157,675 | ||||||
| Contributed surplus | 20,620 | — | ||||||
| Accumulated deficit | (152,206 | ) | (107,942 | ) | ||||
| Cumulative translation adjustments | (7,342 | ) | (7,535 | ) | ||||
| 134,039 | 74,717 | |||||||
| $ | 776,675 | $ | 386,546 | |||||
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three | Three | |||||||||||||||||
| Months | Months | Nine Months | Nine Months | |||||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||||
| (All amounts in thousands of U.S. dollars, except per share amounts) | ||||||||||||||||||
Revenues | $ | 77,429 | $ | 61,867 | $ | 232,132 | $ | 233,924 | ||||||||||
Expenses: | ||||||||||||||||||
| Direct operating | 47,286 | 28,723 | 122,521 | 118,547 | ||||||||||||||
| Distribution and marketing | 36,913 | 23,230 | 109,152 | 77,611 | ||||||||||||||
| General and administration | 9,420 | 8,871 | 25,180 | 24,204 | ||||||||||||||
| Severance and relocation costs | 5,934 | — | 5,934 | — | ||||||||||||||
| Write-down of animation assets | 9,919 | — | 9,919 | — | ||||||||||||||
| Depreciation and amortization | 1,280 | 1,087 | 3,391 | 3,260 | ||||||||||||||
| Total expenses | 110,752 | 61,911 | 276,097 | 223,622 | ||||||||||||||
Operating Income (Loss) | (33,323 | ) | (44 | ) | (43,965 | ) | 10,302 | |||||||||||
Other Expenses: | ||||||||||||||||||
| Interest on debt initially incurred for a term of more than one year | 5,317 | 2,288 | 10,251 | 7,503 | ||||||||||||||
| Minority interests | (6,986 | ) | (51 | ) | (9,042 | ) | 580 | |||||||||||
| Total other expenses | (1,669 | ) | 2,237 | 1,209 | 8,083 | |||||||||||||
Income (Loss) Before Equity Interests and Income Taxes | (31,654 | ) | (2,281 | ) | (45,174 | ) | 2,219 | |||||||||||
| Equity interests | 30 | 16 | (127 | ) | 462 | |||||||||||||
Income (Loss) Before Income Taxes | (31,624 | ) | (2,265 | ) | (45,301 | ) | 2,681 | |||||||||||
| Income taxes | (1,861 | ) | (13 | ) | (2,128 | ) | 1,029 | |||||||||||
Net Income (Loss) | (29,763 | ) | (2,252 | ) | (43,173 | ) | 1,652 | |||||||||||
| Dividends on Series A preferred shares | (66 | ) | (396 | ) | (320 | ) | (1,188 | ) | ||||||||||
| Accretion on Series A preferred shares | (131 | ) | (512 | ) | (771 | ) | (1,535 | ) | ||||||||||
Net Loss Available to Common Shareholders | $ | (29,960 | ) | $ | (3,160 | ) | $ | (44,264 | ) | $ | (1,071 | ) | ||||||
Basic and Diluted Loss Per Common Share | $ | (0.36 | ) | $ | (0.07 | ) | $ | (0.70 | ) | $ | (0.02 | ) | ||||||
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
| Series A | Series B | |||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Shares | Preferred Shares | ||||||||||||||||||||||||||||||||||||||
| Cumulative | ||||||||||||||||||||||||||||||||||||||||
| Contributed | Accumulated | Translation | ||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Surplus | Deficit | Adjustments | Total | |||||||||||||||||||||||||||||||
| (All amounts in thousands of U.S. dollars, except share amounts) | ||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2002 | 43,231,921 | $ | 157,675 | 11,830 | $ | 30,751 | 10 | $ | — | $ | — | $ | (105,435 | ) | $ | (7,597 | ) | $ | 75,394 | |||||||||||||||||||||
| Net loss available to common shareholders | (2,507 | ) | (2,507 | ) | ||||||||||||||||||||||||||||||||||||
| Accretion on Series A preferred shares | — | 1,768 | 1,768 | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | 62 | 62 | ||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2003 | 43,231,921 | 157,675 | 11,830 | 32,519 | 10 | — | — | (107,942 | ) | (7,535 | ) | 74,717 | ||||||||||||||||||||||||||||
| Issuance of common stock | 44,951,056 | 103,176 | 103,176 | |||||||||||||||||||||||||||||||||||||
| Exercise of stock options | 535,240 | 1,414 | 1,414 | |||||||||||||||||||||||||||||||||||||
| Conversion feature of subordinated note | 16,361 | 16,361 | ||||||||||||||||||||||||||||||||||||||
| Redemption of Series A preferred shares | (8,040 | ) | (22,349 | ) | 4,259 | (18,090 | ) | |||||||||||||||||||||||||||||||||
| Conversion of Series A preferred shares | 2,000,087 | 5,071 | (1,804 | ) | (5,071 | ) | — | |||||||||||||||||||||||||||||||||
| Net loss available to common shareholders | (44,264 | ) | (44,264 | ) | ||||||||||||||||||||||||||||||||||||
| Accretion on Series A preferred shares | — | 532 | 532 | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | 193 | 193 | ||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2003 | 90,718,304 | $ | 267,336 | 1,986 | $ | 5,631 | 10 | $ | — | $ | 20,620 | $ | (152,206 | ) | $ | (7,342 | ) | $ | 134,039 | |||||||||||||||||||||
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three | Three | ||||||||||||||||
| Months | Months | Nine Months | Nine Months | ||||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||||
| December 31, | December 31, | December 31, | December 31, | ||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
| (All amounts in thousands of U.S. dollars) | |||||||||||||||||
Operating activities: | |||||||||||||||||
| Net income (loss) | $ | (29,763 | ) | $ | (2,252 | ) | $ | (43,173 | ) | $ | 1,652 | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||
| Amortization of property and equipment | 1,126 | 928 | 2,930 | 2,782 | |||||||||||||
| Write-off of projects in development | 177 | 128 | 1,180 | 658 | |||||||||||||
| Amortization of pre-operating costs | 154 | 159 | 461 | 478 | |||||||||||||
| Amortization of deferred financing costs | 2,586 | 342 | 3,284 | 1,045 | |||||||||||||
| Amortization of films and television programs | 47,794 | 28,191 | 121,021 | 116,664 | |||||||||||||
| Accretion on subordinated notes | 190 | — | 190 | — | |||||||||||||
| Minority interests | (6,986 | ) | (51 | ) | (9,042 | ) | 580 | ||||||||||
| Severance and relocation costs | 5,934 | — | 5,934 | — | |||||||||||||
| Write-down of animation assets | 9,919 | — | 9,919 | — | |||||||||||||
| Other equity interests | (30 | ) | (16 | ) | 127 | (462 | ) | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||
| Accounts receivable, net | 20,842 | 11,641 | 5,173 | 12,047 | |||||||||||||
| Increase in investment in films and television programs | (48,474 | ) | (43,620 | ) | (143,970 | ) | (143,145 | ) | |||||||||
| Other assets | 6,242 | (3,421 | ) | 5,375 | (6,076 | ) | |||||||||||
| Future income taxes | (2,246 | ) | — | (2,745 | ) | — | |||||||||||
| Accounts payable and accrued liabilities | (16,482 | ) | 5,569 | (1,231 | ) | 4,061 | |||||||||||
| Accrued participations and residuals costs | 2,797 | 1,152 | 5,627 | 7,043 | |||||||||||||
| Deferred revenue | (2,297 | ) | 4,880 | 4,797 | 6,327 | ||||||||||||
Net cash flows provided by (used in) operating activities | (8,517 | ) | 3,630 | (34,143 | ) | 3,654 | |||||||||||
Financing activities: | |||||||||||||||||
| Issuance of common stock, net of issue costs | 73,824 | — | 104,590 | — | |||||||||||||
| Redemption of Series A preferred shares | — | — | (18,090 | ) | — | ||||||||||||
| Dividends paid on Series A preferred shares | — | — | (254 | ) | (792 | ) | |||||||||||
| Financing fees paid | (11,287 | ) | — | (11,287 | ) | — | |||||||||||
| Increase (decrease) in bank loans | 60,974 | 4,095 | 81,308 | (13,058 | ) | ||||||||||||
| Decrease in restricted cash | — | 236 | — | 706 | |||||||||||||
| Decrease in production loans | (2,050 | ) | (11,044 | ) | (8,477 | ) | (404 | ) | |||||||||
| Increase in subordinated notes | 56,663 | — | 56,663 | — | |||||||||||||
| Increase (decrease) in long-term debt | (12,777 | ) | (3,492 | ) | (15,642 | ) | 5,922 | ||||||||||
Net cash flows provided by (used in) financing activities | 165,347 | (10,205 | ) | 188,811 | (7,626 | ) | |||||||||||
Investing activities: | |||||||||||||||||
| Cash received from discontinued operation | — | 4,394 | — | 6,634 | |||||||||||||
| Acquisition of Artisan Entertainment Inc., net of cash acquired | (149,559 | ) | — | (149,559 | ) | — | |||||||||||
| Purchase of property and equipment | (212 | ) | (309 | ) | (495 | ) | (1,958 | ) | |||||||||
Net cash flows provided by (used in) investing activities | (149,771 | ) | 4,085 | (150,054 | ) | 4,676 | |||||||||||
Net change in cash and cash equivalents | 7,059 | (2,490 | ) | 4,614 | 704 | ||||||||||||
Foreign exchange effect on cash | (3,264 | ) | (2,004 | ) | (2,547 | ) | (84 | ) | |||||||||
Cash and cash equivalents — beginning of period | 5,712 | 11,755 | 7,440 | 6,641 | |||||||||||||
Cash and cash equivalents — end of period | $ | 9,507 | $ | 7,261 | $ | 9,507 | $ | 7,261 | |||||||||
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF EBITDA TO NET INCOME (LOSS)
| Three Months | Three Months | Nine Months | Nine Months | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
| (amounts in thousands of U.S. dollars) | ||||||||||||||||
| EBITDA, as defined | $ | (32,013 | ) | $ | 1,059 | $ | (40,701 | ) | $ | 14,024 | ||||||
| Depreciation and Amortization | (1,280 | ) | (1,087 | ) | (3,391 | ) | (3,260 | ) | ||||||||
| Interest | (5,317 | ) | (2,288 | ) | (10,251 | ) | (7,503 | ) | ||||||||
| Minority interests | 6,986 | 51 | 9,042 | (580 | ) | |||||||||||
| Income taxes | 1,861 | 13 | 2,128 | (1,029 | ) | |||||||||||
| Net income (loss) | $ | (29,763 | ) | $ | (2,252 | ) | $ | (43,173 | ) | $ | 1,652 | |||||