Exhibit 99.1
LIONSGATE REPORTS REVENUES OF $198.7 MILLION FOR FIRST
QUARTER OF FISCAL 2008, 15% INCREASE FROM PRIOR YEAR
QUARTER; NET LOSS OF $53.1 MILLION COMPARES TO NET LOSS OF
$3.6 MILLION IN PRIOR YEAR FIRST QUARTER
QUARTER OF FISCAL 2008, 15% INCREASE FROM PRIOR YEAR
QUARTER; NET LOSS OF $53.1 MILLION COMPARES TO NET LOSS OF
$3.6 MILLION IN PRIOR YEAR FIRST QUARTER
Santa Monica, CA, and Vancouver, BC, August 9, 2007 -— Lionsgate (NYSE: LGF), the leading independent filmed entertainment studio, reported revenues of $198.7 million and a net loss of $53.1 million for its fiscal 2008 first quarter ended June 30, 2007, the Company announced today.
Lionsgate reported basic and diluted net loss per common share of $0.45 on 117.1 million weighted average common shares outstanding compared to basic and diluted net loss per common share of $0.03 on 103.3 million weighted average common shares outstanding in the prior year first quarter.
The Company noted that the majority of its $53 million loss in the quarter was attributable to a $47 million increase in theatrical marketing expenses from the prior year quarter as a result of Lionsgate’s expanded motion picture slate.
“The first quarter reflects our usual frontloaded costs and is in line with our expectations,” said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. “Although we are disappointed in the weakness of the early part of our theatrical slate, this performance is offset by our diversification and the overperformance of our other businesses as well as the recognition that the strongest part of our slate is still ahead.”
The Company’s filmed entertainment backlog of $304.0 million exceeded $300 million for the fourth consecutive quarter and, at quarter end on June 30, 2007, Lionsgate had total cash and auction rate securities of approximately $225 million on its balance sheet.
Overall motion picture revenue for the quarter was $170.3 million, an increase of 3% compared to $165.2 million in the prior year’s first quarter. Within this segment, theatrical revenue of $19.0 million during the first quarter compared to $18.5 million in the prior year first quarter. Principal releases during the quarter were SLOW BURN, AWAY FROM HER, HOSTEL 2, THE CONDEMNED, DELTA FARCE and BUG.
Lionsgate’s home entertainment revenue of $103.8 million in the first quarter decreased 10% compared to $114.8 million in the prior year’s first quarter due to the comparative performance of theatrical titles while library revenues for the quarter remained steady at approximately $53 million. Major DVD releases included PRIDE, which substantially overperformed its box office results, DADDY’S LITTLE GIRLS, HAPPILY N’EVER AFTER and continued sales of the hits SAW 3 and EMPLOYEE OF THE MONTH.
Television revenue included in the motion picture segment was $22.4 million in the first quarter, a 51% increase compared to $14.8 million in the prior year’s first quarter. The gain was attributable to several strong theatrical titles with television windows opening in the first quarter, including THE DESCENT, CRANK, EMPLOYEE OF THE MONTH and SAW 3.
International revenue of $22.7 million in the first quarter increased 47% compared to $15.5 million in the prior year’s quarter, driven by strong foreign sales of SAW 3, THE PUNISHER ™, RIGHT AT YOUR DOOR and Lionsgate’s investment in the hit stage play DIRTY DANCING, which has sold out theatres in Germany and the U.K. en route to North America.
Television production revenue of $28.4 million in the first quarter increased 289% compared to $7.3 million in the prior year’s quarter, driven by deliveries of episodes of the sixth broadcast season of THE DEAD ZONE (USA), the fourth broadcast season of WILDFIRE (ABC Family), THE DRESDEN FILES (SciFi Network), revenue contributions from Lionsgate’s television syndication subsidiary Debmar-Mercury for Tyler Perry’s HOUSE OF PAYNE and SOUTH PARK and international television sales of the series HIDDEN PALMS, LOVESPRING INTERNATIONAL, THE DEAD ZONE and THE DRESDEN FILES.
Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2008 first quarter financial results at 9:00 A.M. ET/6:00 A.M. PT, Friday, August 10, 2007. Interested parties may participate live in the conference call by calling 1-888-428-4480 (1-651-291-5254 outside the U.S. and Canada). A full digital replay will be available from Friday morning, August 10, through Friday, August 17, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code 881870.
Lionsgate is the leading independent filmed entertainment studio, winning the 2006 Best Picture Academy Award® for CRASH,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 more than 11,000 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
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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’s 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
| June 30, | March 31, | |||||||
| 2007 | 2007 | |||||||
| (Unaudited) | ||||||||
| (Amounts in thousands, | ||||||||
| except share amounts) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 58,580 | $ | 51,497 | ||||
| Restricted cash | 4,644 | 4,915 | ||||||
| Investments — auction rate securities | 166,330 | 237,379 | ||||||
| Investments — equity securities | 4,916 | 125 | ||||||
| Accounts receivable, net of reserve for video returns and allowances of $64,908 (March 31, 2007 - $77,691) and provision for doubtful accounts of $5,931 (March 31, 2007 - $6,345) | 105,234 | 130,496 | ||||||
| Investment in films and television programs | 579,757 | 493,140 | ||||||
| Property and equipment | 14,207 | 13,095 | ||||||
| Goodwill | 187,491 | 187,491 | ||||||
| Other assets | 41,169 | 18,957 | ||||||
| $ | 1,162,328 | $ | 1,137,095 | |||||
| LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | 174,972 | $ | 155,617 | ||||
| Participation and residuals | 186,729 | 171,156 | ||||||
| Film obligations | 147,490 | 167,884 | ||||||
| Subordinated notes and other financing obligations | 328,718 | 325,000 | ||||||
| Deferred revenue | 101,066 | 69,548 | ||||||
| 938,975 | 889,205 | |||||||
| Commitments and contingencies | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Common shares, no par value, 500,000,000 shares authorized, 119,201,707 and 116,970,280 shares issued and outstanding at June 30, 2007 and March 31, 2007, respectively | 423,715 | 398,836 | ||||||
| Series B preferred shares (10 shares issued and outstanding) | — | — | ||||||
| Accumulated deficit | (202,769 | ) | (149,651 | ) | ||||
| Accumulated other comprehensive income (loss) | 2,407 | (1,295 | ) | |||||
| 223,353 | 247,890 | |||||||
| $ | 1,162,328 | $ | 1,137,095 | |||||
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months | Three Months | |||||||
| Ended | Ended | |||||||
| June 30, | June 30, | |||||||
| 2007 | 2006 | |||||||
| (Amounts in thousands, except | ||||||||
| per share amounts) | ||||||||
Revenues | $ | 198,742 | $ | 172,456 | ||||
Expenses: | ||||||||
| Direct operating | 87,058 | 68,545 | ||||||
| Distribution and marketing | 135,501 | 87,046 | ||||||
| General and administration | 26,840 | 19,233 | ||||||
| Depreciation | 908 | 544 | ||||||
| Total expenses | 250,307 | 175,368 | ||||||
Operating loss | (51,565 | ) | (2,912 | ) | ||||
Other expenses (income): | ||||||||
| Interest expense | 3,860 | 4,676 | ||||||
| Interest and other income | (3,803 | ) | (2,561 | ) | ||||
| Total other expenses, net | 57 | 2,115 | ||||||
Loss before equity interests and income taxes | (51,622 | ) | (5,027 | ) | ||||
| Equity interests income (loss) | (807 | ) | 58 | |||||
Loss before income taxes | (52,429 | ) | (4,969 | ) | ||||
| Income tax provision (benefit) | 689 | (1,365 | ) | |||||
Net loss | $ | (53,118 | ) | $ | (3,604 | ) | ||
Basic and Diluted Net Loss Per Common Share | $ | (0.45 | ) | $ | (0.03 | ) | ||
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Series B | Restricted | Comprehensive | Other | |||||||||||||||||||||||||||||||||||||
| Common Shares | Preferred Shares | Share | Unearned | Accumulated | Income | Comprehensive | ||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Units | Compensation | Deficit | (Loss) | Income (Loss) | Total | |||||||||||||||||||||||||||||||
| (Amounts in thousands, except share amounts) | ||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2006 | 104,422,765 | $ | 328,771 | 10 | $ | — | $ | 5,178 | $ | (4,032 | ) | $ | (177,130 | ) | $ | (3,517 | ) | $ | 149,270 | |||||||||||||||||||||
| Reclassification of unearned compensation and restricted share common units upon adoption of SFAS No. 123(R ) | 1,146 | (5,178 | ) | 4,032 | — | |||||||||||||||||||||||||||||||||||
| Exercise of stock options | 1,297,144 | 4,277 | 4,277 | |||||||||||||||||||||||||||||||||||||
| Stock based compensation, net of share units withholding tax obligations of $504 | 113,695 | 6,517 | 6,517 | |||||||||||||||||||||||||||||||||||||
| Issuance of common shares to directors for services | 25,568 | 238 | 238 | |||||||||||||||||||||||||||||||||||||
| Conversion of 4.875% notes, net of unamortized issuance costs | 11,111,108 | 57,887 | 57,887 | |||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||||||
| Net income | 27,479 | $ | 27,479 | 27,479 | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | 1,876 | 1,876 | 1,876 | |||||||||||||||||||||||||||||||||||||
| Net unrealized gain on foreign exchange contracts | 259 | 259 | 259 | |||||||||||||||||||||||||||||||||||||
| Unrealized gain on investments — available for sale | 87 | 87 | 87 | |||||||||||||||||||||||||||||||||||||
| Comprehensive income | $ | 29,701 | — | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2007 | 116,970,280 | 398,836 | 10 | — | — | — | (149,651 | ) | (1,295 | ) | 247,890 | |||||||||||||||||||||||||||||
| Exercise of stock options | 61,807 | 390 | 390 | |||||||||||||||||||||||||||||||||||||
| Stock based compensation, net of share units withholding tax obligations of $235 | 174,368 | 2,611 | 2,611 | |||||||||||||||||||||||||||||||||||||
| Issuance of common shares to directors for services | 10,126 | 127 | 127 | |||||||||||||||||||||||||||||||||||||
| Issuance of common shares for investment in NextPoint, Inc | 1,890,189 | 20,851 | 20,851 | |||||||||||||||||||||||||||||||||||||
| Issuance of common shares related to the Redbus acquisition | 94,937 | 900 | 900 | |||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | (53,118 | ) | $ | (53,118 | ) | (53,118 | ) | |||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | 2,434 | 2,434 | 2,434 | |||||||||||||||||||||||||||||||||||||
| Net unrealized loss on foreign exchange contracts | (12 | ) | (12 | ) | (12 | ) | ||||||||||||||||||||||||||||||||||
| Unrealized gain on investments — available for sale | 1,280 | 1,280 | 1,280 | |||||||||||||||||||||||||||||||||||||
| Comprehensive loss | $ | (49,416 | ) | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2007 | 119,201,707 | $ | 423,715 | 10 | $ | — | $ | — | $ | — | $ | (202,769 | ) | $ | 2,407 | $ | 223,353 | |||||||||||||||||||||||
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months | Three Months | |||||||
| Ended | Ended | |||||||
| June 30, | June 30, | |||||||
| 2007 | 2006 | |||||||
| (Amounts in thousands) | ||||||||
Operating Activities: | ||||||||
| Net loss | $ | (53,118 | ) | $ | (3,604 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||||||||
| Depreciation of property and equipment | 908 | 544 | ||||||
| Amortization of deferred financing costs | 884 | 975 | ||||||
| Amortization of films and television programs | 49,862 | 33,193 | ||||||
| Amortization of intangible assets | 162 | 244 | ||||||
| Non-cash stock-based compensation | 2,846 | 974 | ||||||
| Equity interests income (loss) | 807 | (58 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Restricted cash | 271 | 84 | ||||||
| Accounts receivable, net | 9,439 | 93,013 | ||||||
| Investment in films and television programs | (136,139 | ) | (60,439 | ) | ||||
| Other assets | (3,061 | ) | 4,717 | �� | ||||
| Accounts payable and accrued liabilities | 20,185 | (68,278 | ) | |||||
| Unpresented bank drafts | — | (14,772 | ) | |||||
| Participation and residuals | 15,527 | (7,587 | ) | |||||
| Film obligations | (20,430 | ) | (2,349 | ) | ||||
| Deferred revenue | 31,486 | 8,319 | ||||||
Net Cash Flows Used In Operating Activities | (80,371 | ) | (15,024 | ) | ||||
Investing Activities: | ||||||||
| Purchases of investments — auction rate securities | (172,442 | ) | (165,620 | ) | ||||
| Proceeds from the sale of investments — auction rate securities | 243,491 | 190,594 | ||||||
| Purchases of investments — equity securities | (3,432 | ) | — | |||||
| Proceeds from the sale of investments — equity securities | 16,343 | — | ||||||
| Purchases of property and equipment | (2,017 | ) | (1,831 | ) | ||||
Net Cash Flows Provided By Investing Activities | 81,943 | 23,143 | ||||||
Financing Activities: | ||||||||
| Exercise of stock options | 390 | 353 | ||||||
| Borrowings from financing obligation | 3,718 | — | ||||||
Net Cash Flows Provided By Financing Activities | 4,108 | 353 | ||||||
Net Change In Cash And Cash Equivalents | 5,680 | 8,472 | ||||||
Foreign Exchange Effects on Cash | 1,403 | (592 | ) | |||||
Cash and Cash Equivalents — Beginning Of Period | 51,497 | 46,978 | ||||||
Cash and Cash Equivalents — End Of Period | $ | 58,580 | $ | 54,858 | ||||
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 | ||||||||
| June 30, | ||||||||
| 2007 | 2006 | |||||||
| (Amounts in thousands) | ||||||||
Net Cash Flows Used In Operating Activities | $ | (80,371 | ) | $ | (15,024 | ) | ||
| Purchases of property and equipment | (2,017 | ) | (1,831 | ) | ||||
| Decrease in Unpresented Bank Drafts | — | 14,772 | ||||||
Free Cash Flow, as defined | $ | (82,388 | ) | $ | (2,083 | ) | ||
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.