EXHIBIT 99.1
LIONSGATE REPORTS REVENUES OF $290.9 MILLION AND NET PROFIT OF
$2.0 MILLION FOR THIRD QUARTER OF FISCAL 2008
$2.0 MILLION FOR THIRD QUARTER OF FISCAL 2008
Company Reports Best Third Quarter Revenue In Its History
Santa Monica, CA, and Vancouver, BC, February 11, 2008 -— Lionsgate (NYSE: LGF), the leading independent filmed entertainment studio, continued its growth momentum, reporting revenues of $290.9 million and net income of $2.0 million for its fiscal quarter ended December 31, 2007, the Company announced today. The Company noted that revenue growth of 14% from the prior year third quarter was driven by strong theatrical box office, international revenue growth and continued strength in television production revenues. The Company achieved its best revenue performance ever for a fiscal third quarter.
Lionsgate reported net income for the three months ended December 31, 2007, of $2.0 million. Diluted net income per common share was $0.02 on 120.3 million adjusted weighted average common shares outstanding.
“Our theatrical, television, home entertainment, library, international and digital businesses all achieved continued solid performance in the quarter,” said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. “With an anticipated record-breaking revenue and free cash flow quarter ending March 31, we are on track to meet our full year guidance.”
The Company reported that its filmed entertainment backlog grew to a record $416.6 million in the quarter, fueled in part by numerous box office hits ready for exhibition in pay television. Filmed entertainment backlog represents the amount of future revenue not yet recorded from the licensing of films and television product for television exhibition and in international markets.
Overall motion picture revenue for the quarter was $254.1 million. Lionsgate had two hit theatrical releases in the quarter,Saw IVand Tyler Perry’sWhy Did I Get Married?,and the Company has now had seven hit releases in a row —The Eye,Rambo,Saw IV,Why Did I Get Married?, 3:10 To Yuma,Good Luck, ChuckandWar.
Lionsgate’s home entertainment revenue was $105.1 million in the third quarter, reflecting strong sales ofBratz, SkinwalkersandCaptivityand continued sales ofDelta Farce,Saw IIIandThe Condemned. After the close of the quarter, Lionsgate had the best DVD month in its history in January 2008 asWar,3:10 To Yuma,Good Luck, ChuckandSaw IVall debuted at #1 or #2 on the North American DVD and BluRay charts.
Television revenue included in the motion picture segment was $28.9 million in the third quarter, led by titles such asCrash,Daddy’s Little Girls,Happily N’Ever AfterandPride.
Lionsgate also had the strongest international revenue quarter in its history, reporting $53.8 million in international revenue in the third quarter from such titles asSaw IV,Saw III,Good Luck, Chuck,War,Catacombs, the special edition DVD release ofDirty Dancingby Lionsgate U.K. and Mandate International’s30 Days of Night. Lionsgate U.K. contributed $22.4 million in revenue in the quarter.
Television production revenue was $36.8 million in the third quarter, driven by deliveries of episodes of Golden Globe (R)-winning drama seriesMad Men(AMC),Weeds Season 3(Showtime) andWildfire Season 4(ABC Family), and domestic series licensing of Tyler Perry’sHouse of Payne,South ParkandFamily Feudfrom the Company’s Debmar-Mercury syndication arm.
Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2008 third quarter financial results at 9:00 A.M. ET/6:00 A.M. PT, Tuesday, February 12, 2008. Interested parties may participate live in the conference call by calling 1-888-639-6205 (1-703-925-2608 outside the U.S. and Canada). A full digital replay will be available from Tuesday afternoon, February 12, through Tuesday, February 19, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code 907460.
Lionsgate is the leading independent filmed entertainment studio and is a premier producer and distributor of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered 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 <blocked::mailto:pwilkes@lionsgate.com>
Peter D. Wilkes
Lionsgate
310-255-3726
pwilkes@lionsgate.com <blocked::mailto: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 and subsequent years. 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, 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
December 31, | March 31, | |||||||
2007 | 2007 | |||||||
(Unaudited) | ||||||||
(Amounts in thousands, | ||||||||
except share amounts) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 182,654 | $ | 51,497 | ||||
Restricted cash | 32,396 | 4,915 | ||||||
Investments — auction rate securities | — | 237,379 | ||||||
Investments — equity securities | — | 125 | ||||||
Accounts receivable, net of reserve for video returns and allowances of $69,978 (March 31, 2007 - $77,691) and provision for doubtful accounts of $5,448 (March 31, 2007 - $6,345) | 163,376 | 130,496 | ||||||
Investment in films and television programs | 710,680 | 493,140 | ||||||
Property and equipment | 13,877 | 13,095 | ||||||
Goodwill | 227,063 | 187,491 | ||||||
Other assets | 50,831 | 18,957 | ||||||
$ | 1,380,877 | $ | 1,137,095 | |||||
LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | 224,933 | $ | 155,617 | ||||
Participation and residuals | 286,494 | 171,156 | ||||||
Film obligations | 269,375 | 167,884 | ||||||
Subordinated notes and other financing obligations | 328,718 | 325,000 | ||||||
Deferred revenue | 120,841 | 69,548 | ||||||
1,230,361 | 889,205 | |||||||
Commitments and contingencies | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common shares, no par value, 500,000,000 shares authorized, 120,401,688 and 116,970,280 shares issued at December 31, 2007 and March 31, 2007, respectively | 427,069 | 398,836 | ||||||
Series B preferred shares (10 shares issued and outstanding) | — | — | ||||||
Accumulated deficit | (257,025 | ) | (149,651 | ) | ||||
Accumulated other comprehensive income (loss) | 809 | (1,295 | ) | |||||
170,853 | 247,890 | |||||||
Treasury shares, no par value, 2,196,899 shares at December 31, 2007 | (20,337 | ) | — | |||||
150,516 | 247,890 | |||||||
$ | 1,380,877 | $ | 1,137,095 | |||||
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months | Three Months | Nine Months | Nine Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(Amounts in thousands, except | ||||||||||||||||
per share amounts) | ||||||||||||||||
Revenues | $ | 290,866 | $ | 254,531 | $ | 833,113 | $ | 645,156 | ||||||||
Expenses: | ||||||||||||||||
Direct operating | 137,381 | 110,921 | 406,926 | 274,189 | ||||||||||||
Distribution and marketing | 120,429 | 95,803 | 444,942 | 296,194 | ||||||||||||
General and administration | 27,093 | 23,347 | 79,802 | 64,307 | ||||||||||||
Depreciation | 933 | 824 | 2,830 | 1,949 | ||||||||||||
Total expenses | 285,836 | 230,895 | 934,500 | 636,639 | ||||||||||||
Operating income (loss) | 5,030 | 23,636 | (101,387 | ) | 8,517 | |||||||||||
Other expenses (income): | ||||||||||||||||
Interest expense | 4,090 | 4,601 | 12,163 | 14,181 | ||||||||||||
Interest and other income | (2,511 | ) | (2,906 | ) | (8,960 | ) | (7,753 | ) | ||||||||
Gain on sale of equity securities | (83 | ) | — | (2,868 | ) | — | ||||||||||
Total other income, net | 1,496 | 1,695 | 335 | 6,428 | ||||||||||||
Income (loss) before equity interests and income taxes | 3,534 | 21,941 | (101,722 | ) | 2,089 | |||||||||||
Equity interests loss | (1,248 | ) | (425 | ) | (3,242 | ) | (802 | ) | ||||||||
Income (loss) before income taxes | 2,286 | 21,516 | (104,964 | ) | 1,287 | |||||||||||
Income tax provision (benefit) | 328 | 1,061 | 2,410 | (1,172 | ) | |||||||||||
Net income (loss) | $ | 1,958 | $ | 20,455 | $ | (107,374 | ) | $ | 2,459 | |||||||
Basic Net Income (Loss) Per Common Share | $ | 0.02 | $ | 0.19 | $ | (0.91 | ) | $ | 0.02 | |||||||
Diluted Net Income (Loss) Per Common Share | $ | 0.02 | $ | 0.17 | $ | (0.91 | ) | $ | 0.02 | |||||||
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 | Treasury Shares | |||||||||||||||||||||||||||||||||||||||||
Number | Amount | Number | Amount | Units | Compensation | Deficit | (Loss) | Income (Loss) | Number | Amount | 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 | 933,855 | (2,879 | ) | (2,879 | ) | |||||||||||||||||||||||||||||||||||||||||||
Stock based compensation, net of share units withholding tax obligations of $980 | 486,457 | 9,084 | 9,084 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares to directors for services | 25,970 | 277 | 277 | |||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common shares, no par value | (2,196,899 | ) | (20,337 | ) | (20,337 | ) | ||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | (107,374 | ) | $ | (107,374 | ) | (107,374 | ) | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | �� | 2,322 | 2,322 | 2,322 | ||||||||||||||||||||||||||||||||||||||||||||
Net unrealized loss on foreign exchange contracts | (218 | ) | (218 | ) | (218 | ) | ||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss | $ | (105,270 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2007 | 120,401,688 | $ | 427,069 | 10 | $ | — | $ | — | $ | — | $ | (257,025 | ) | $ | 809 | (2,196,899 | ) | $ | (20,337 | ) | $ | 150,516 | ||||||||||||||||||||||||||
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months | Nine Months | |||||||
Ended | Ended | |||||||
December 31, | December 31, | |||||||
2007 | 2006 | |||||||
(Amounts in thousands) | ||||||||
Operating Activities: | ||||||||
Net income (loss) | $ | (107,374 | ) | $ | 2,459 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | ||||||||
Depreciation of property and equipment | 2,830 | 1,949 | ||||||
Amortization of deferred financing costs | 2,659 | 2,915 | ||||||
Amortization of films and television programs | 252,907 | 142,982 | ||||||
Amortization of intangible assets | 698 | 702 | ||||||
Non-cash stock-based compensation | 10,207 | 4,795 | ||||||
Gain on sale of equity securities | (2,794 | ) | — | |||||
Equity interests loss | 3,242 | 802 | ||||||
Changes in operating assets and liabilities: | ||||||||
Restricted cash | (19,674 | ) | (9,150 | ) | ||||
Accounts receivable, net | (32,704 | ) | 76,829 | |||||
Investment in films and television programs | (397,844 | ) | (246,567 | ) | ||||
Other assets | (5,882 | ) | 5,079 | |||||
Accounts payable and accrued liabilities | 41,111 | (23,733 | ) | |||||
Unpresented bank drafts | — | (14,772 | ) | |||||
Participation and residuals | 110,397 | 1,048 | ||||||
Film obligations | 50,790 | 70,134 | ||||||
Deferred revenue | 39,568 | 50,233 | ||||||
Net Cash Flows Provided By (Used In) Operating Activities | (51,863 | ) | 65,705 | |||||
Investing Activities: | ||||||||
Purchases of investments — auction rate securities | (207,262 | ) | (575,789 | ) | ||||
Proceeds from the sale of investments — auction rate securities | 444,641 | 536,226 | ||||||
Purchases of investments — equity securities | (4,765 | ) | — | |||||
Proceeds from the sale of investments — equity securities | 24,035 | — | ||||||
Acquisition of Mandate, net of unrestricted cash acquired | (41,205 | ) | — | |||||
Loan to Mandate — preacquisition | (2,895 | ) | — | |||||
Acquisition of Maple, net of unrestricted cash acquired | 1,737 | — | ||||||
Acquisition of Debmar, net of unrestricted cash acquired | — | (24,137 | ) | |||||
Investment in equity method investees | (6,464 | ) | (5,000 | ) | ||||
Loan to equity method investee | (3,000 | ) | — | |||||
Purchases of property and equipment | (2,718 | ) | (7,737 | ) | ||||
Net Cash Flows Provided By (Used In) Investing Activities | 202,104 | (76,437 | ) | |||||
Financing Activities: | ||||||||
Exercise of stock options | 864 | 3,280 | ||||||
Amounts paid to satisfy tax withholding requirements on options exercised | (4,723 | ) | — | |||||
Repurchases of common shares | (20,337 | ) | — | |||||
Borrowings under financing arrangements | 3,718 | — | ||||||
Net Cash Flows Provided By (Used In) Financing Activities | (20,478 | ) | 3,280 | |||||
Net Change In Cash And Cash Equivalents | 129,763 | (7,452 | ) | |||||
Foreign Exchange Effects on Cash | 1,394 | (53 | ) | |||||
Cash and Cash Equivalents — Beginning Of Period | 51,497 | 46,978 | ||||||
Cash and Cash Equivalents — End Of Period | $ | 182,654 | $ | 39,473 | ||||
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 | Nine Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(Amounts in thousands) | ||||||||||||||||
Net Cash Flows Provided By (Used In) Operating Activities | $ | 6,690 | $ | 54,923 | $ | (51,863 | ) | $ | 65,705 | |||||||
Purchases of property and equipment | (333 | ) | (4,200 | ) | (2,718 | ) | (7,737 | ) | ||||||||
Decrease in Unpresented Bank Drafts | — | — | — | 14,772 | ||||||||||||
Free Cash Flow, as defined | $ | 6,357 | $ | 50,723 | $ | (54,581 | ) | $ | 72,740 | |||||||
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.