EXHIBIT 99.1
LIONSGATE REPORTS REVENUES OF $324.0 MILLION FOR THIRD
QUARTER OF FISCAL 2009, UP 8% FROM PRIOR YEAR’S THIRD
QUARTER; NET LOSS OF $93.4 MILLION COMPARED TO NET INCOME
OF $7.3 MILLION IN PRIOR YEAR’S THIRD QUARTER
QUARTER OF FISCAL 2009, UP 8% FROM PRIOR YEAR’S THIRD
QUARTER; NET LOSS OF $93.4 MILLION COMPARED TO NET INCOME
OF $7.3 MILLION IN PRIOR YEAR’S THIRD QUARTER
Santa Monica, CA, and Vancouver, BC, February 9, 2009 -— Lionsgate (NYSE: LGF), the leading next generation studio, reported revenues of $324.0 million for the third fiscal quarter (period ended December 31, 2008), an 8.4% increase from $299.0 million for the prior year’s third quarter, the Company announced today. However, EBITDA for the third quarter was negative $88.9 million compared to EBITDA of positive $11.7 million in the prior year’s third quarter. EBITDA is defined as earnings before interest, income tax provision, depreciation and equity interests.
Net loss of $93.4 million in the third quarter translated into basic net loss per common share of $0.81, based on 115.8 million weighted average common shares outstanding, compared to net income of $7.3 million, or basic net income per common share of $0.06, based on 118.9 million weighted average common shares outstanding in the prior year’s third quarter. The loss was primarily attributable to the underperformance of theatrical wide releases in the quarter along with a reserve taken for the Company’s HIT Entertainment North American DVD distribution deal due to several factors, including softness in the preschool non-theatrical retail market and unusually high returns from the field when Lionsgate took over distribution of the line. These losses more than offset gains in Lionsgate’s television business.
“During the quarter, we were negatively impacted by some of the same broad economic factors reported by other companies in the media and entertainment sector,” said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. “However, the primary factor contributing to this quarter’s loss was the underperformance of our feature film slate. This will have a significant negative impact on our EBITDA and free cash flow for the whole year. Looking forward to fiscal 2010, with the solid performance of our television, home entertainment, international and library businesses, coupled with a smaller film slate and lower associated marketing costs, we anticipate significant positive EBITDA next year.”
The Company’s filmed entertainment backlog was $442.4 million at December 31, 2008. Filmed entertainment backlog represents the amount of future revenue contracted but 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 $254.9 million, a decrease of 2% from $261.0 million in the prior year’s third quarter, as declines in home entertainment, international and Mandate Pictures offset growth in theatrical and television from motion pictures.
Theatrical revenue of $69.3 million increased 9% from $63.8 million in the prior year’s third quarter.Saw Vcontinued the strength of theSawhorror franchise and the documentaryReligulous also performed well in platform release. The wide releasesThe Spirit,Punisher: War ZoneandTransporter 3compared unfavorably to releases in the prior year’s third quarter.
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Lionsgate’s home entertainment revenue from all segments was $101.5 million, an 11% decline compared to $114.6 million in the prior year’s third quarter. There were no high-profile new theatrical releases on DVD in the quarter. Significant home entertainment titles in the quarter wereBeer For My Horsesand continued sales ofRambo,The Bank Job, Forbidden KingdomandWar, which were released in previous quarters. The Company has slated the releases of such major theatrical titles asSaw V,Tyler Perry’s The Family That Preys,Bangkok Dangerous,My Best Friend’s GirlandTransporter 3for the fiscal fourth quarter to avoid the glut of major studio releases before the holidays, as it has done in the past.
Television revenue included in the motion picture segment was $39.0 million in the third quarter, a 25% increase from $31.3 million in the prior year third quarter, led by titles such as Tyler Perry’s Meet The Browns,Rambo,The Bank JobandThe Eye.
Lionsgate’s international revenue declined 8% to $41.1 million in the third quarter compared to $44.6 million in the third quarter of the prior year. Principal revenue contributors in the quarter wereSaw V,Punisher: War Zone,The EyeandConan The Barbarian.
Mandate Pictures reported third quarter revenues of $8.3 million, a decline of 34% from $12.5 million in the prior year third quarter. Significant titles in the quarter wereJuno,Nick and Norah’s Infinite PlaylistandPassengers.
Television production revenue in the quarter was $69.2 million, an increase of 82% from $38.0 million in the prior year’s third quarter due to increases in domestic television series episodes delivered, $14.5 million of revenue generated from the Company’s joint venture with Ish Entertainment LLC and revenue increases from the Company’s Debmar-Mercury television syndication business. Primary contributors were deliveries of the Emmy Award-winningMad Men Season 2(AMC) and deliveries ofCrash TV Series Season 1(Starz) andScream Queens(VH1). After the end of the quarter, Turner Broadcasting ordered a total of 80 episodes of theHouse of Paynespin-off,Tyler Perry’s Meet The Browns, to air on TBS this summer and in syndication in fall 2010. The television division remains on track to approach $250 million in revenues this year.
On January 5, 2009, Lionsgate announced the acquisition of TV Guide Network, the 19th most widely distributed cable network in the U.S., reaching 83 million homes, and leading online programming site TV Guide.com, for approximately $255 million. The TV Guide Network joins other Lionsgate channel platforms such as the FEARnet branded horror channel (in partnership with Sony and Comcast) and the premium channel EPIX, to be launched this fall (in partnership with Viacom and MGM).
Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2009 third quarter financial results at 9:00 A.M. ET/6:00 A.M. PT, Tuesday, February 10, 2009. Interested parties may participate live in the conference call by calling 1-888-428-4479 (651-291-5254 outside the U.S. and Canada). A full digital replay will be available from Tuesday morning, February 10, through Tuesday, February 17, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 982709.
Lionsgate is the leading next generation studio with a major presence in the production and distribution of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered content. The Company is leveraging its content leadership and marketing expertise through a series of partnerships that include the operation of the FEARNet branded VOD and Internet horror channel with Sony and Comcast, the expected fall 2009 launch of EPIX, a new premium entertainment channel with partners Viacom and MGM, investment in the leading young men’s digital distribution platform Break.com, ownership of the premier independent television syndication company Debmar-Mercury and an alliance with independent filmed
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entertainment production and distribution company Roadside Attractions. Lionsgate also has forged partnerships with leading content creators, owners and distributors in key territories around the world, including Televisa in the U.S. and Latin America, StudioCanal in the UK, Hoyts and Sony in Australia and Eros International in India.
The Company has generated more than $400 million at the North American theatrical box office in the past 12 months and has forged strong positions in television and home entertainment with the production of such critically-acclaimed television series asWeedsandMad Men, the distribution ofTyler Perry’s House of Payne, Family Feud, South ParkandThe Dead Zone, and nearly 7% market share and the industry’s leading box office-to-DVD conversion rate in home entertainment. 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 is synonymous with entrepreneurial innovation and 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
Kristin Robinson
Lionsgate
310-255-5114
krobinson@lionsgate.com
Peter D. Wilkes
Lionsgate
310-255-3726
pwilkes@lionsgate.com
Kristin Robinson
Lionsgate
310-255-5114
krobinson@lionsgate.com
The matters discussed in this press release include forward-looking statements, including those regarding the success of our upcoming film slate, the expansion of our television business and the performance of our fiscal 2009 and 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 Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on February 9, 2009. 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.
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LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, | March 31, | |||||||
2008 | 2008 | |||||||
(Unaudited) | ||||||||
(Amounts in thousands, | ||||||||
except share amounts) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 130,713 | $ | 371,589 | ||||
Restricted cash | 17,000 | 10,300 | ||||||
Restricted investments | 7,000 | 6,927 | ||||||
Accounts receivable, net of reserve for video returns and allowances of $79,581 (March 31, 2008 - $95,515) and provision for doubtful accounts of $9,966 (March 31, 2008 - $5,978) | 178,645 | 260,284 | ||||||
Investment in films and television programs | 758,644 | 608,942 | ||||||
Property and equipment | 16,567 | 13,613 | ||||||
Goodwill | 224,213 | 224,531 | ||||||
Other assets | 88,299 | 41,572 | ||||||
$ | 1,421,081 | $ | 1,537,758 | |||||
LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | 264,439 | $ | 245,430 | ||||
Participation and residuals | 409,419 | 385,846 | ||||||
Film and production obligations | 297,143 | 278,016 | ||||||
Subordinated notes and other financing obligations | 319,718 | 328,718 | ||||||
Deferred revenue | 118,843 | 111,510 | ||||||
1,409,562 | 1,349,520 | |||||||
Commitments and contingencies | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common shares, no par value, 500,000,000 shares authorized, 122,798,197 and 121,081,311 shares issued at December 31, 2008 and March 31, 2008, respectively | 447,965 | 434,650 | ||||||
Series B preferred shares (10 shares issued and outstanding) | — | — | ||||||
Accumulated deficit | (358,039 | ) | (223,619 | ) | ||||
Accumulated other comprehensive loss | (11,179 | ) | (533 | ) | ||||
78,747 | 210,498 | |||||||
Treasury shares, no par value, 6,999,174 and 2,410,499 shares at December 31, 2008 and March 31, 2008, respectively | (67,228 | ) | (22,260 | ) | ||||
11,519 | 188,238 | |||||||
$ | 1,421,081 | $ | 1,537,758 | |||||
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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, | |||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Amounts in thousands, except per share amounts) | ||||||||||||||||
Revenues | $ | 324,027 | $ | 299,008 | $ | 1,003,204 | $ | 849,494 | ||||||||
Expenses: | ||||||||||||||||
Direct operating | 218,652 | 140,051 | 566,521 | 411,444 | ||||||||||||
Distribution and marketing | 170,400 | 119,815 | 458,782 | 452,509 | ||||||||||||
General and administration | 27,472 | 27,506 | 96,380 | 80,717 | ||||||||||||
Depreciation | 1,374 | 954 | 3,616 | 2,900 | ||||||||||||
Total expenses | 417,898 | 288,326 | 1,125,299 | 947,570 | ||||||||||||
Operating income (loss) | (93,871 | ) | 10,682 | (122,095 | ) | (98,076 | ) | |||||||||
Other expenses (income): | ||||||||||||||||
Interest expense | 4,302 | 4,085 | 13,803 | 12,170 | ||||||||||||
Interest and other income | (860 | ) | (2,510 | ) | (5,062 | ) | (8,948 | ) | ||||||||
Gain on sale of equity securities | — | (83 | ) | — | (2,868 | ) | ||||||||||
Gain on extinguishment of debt | (3,549 | ) | — | (3,549 | ) | — | ||||||||||
Total other expenses (income), net | (107 | ) | 1,492 | 5,192 | 354 | |||||||||||
Income (loss) before equity interests and income taxes | (93,764 | ) | 9,190 | (127,287 | ) | (98,430 | ) | |||||||||
Equity interests loss | (1,695 | ) | (1,248 | ) | (5,841 | ) | (3,242 | ) | ||||||||
Income (loss) before income taxes | (95,459 | ) | 7,942 | (133,128 | ) | (101,672 | ) | |||||||||
Income tax provision (benefit) | (2,039 | ) | 628 | 1,292 | 2,135 | |||||||||||
Net income (loss) | $ | (93,420 | ) | $ | 7,314 | $ | (134,420 | ) | $ | (103,807 | ) | |||||
Basic Net Income (Loss) Per Common Share | $ | (0.81 | ) | $ | 0.06 | $ | (1.15 | ) | $ | (0.88 | ) | |||||
Diluted Net Income (Loss) Per Common Share | $ | (0.81 | ) | $ | 0.06 | $ | (1.15 | ) | $ | (0.88 | ) | |||||
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LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months | Nine Months | |||||||
Ended | Ended | |||||||
December 31, | December 31, | |||||||
. | 2008 | 2007 | ||||||
(Amounts in thousands) | ||||||||
Operating Activities: | ||||||||
Net loss | $ | (134,420 | ) | $ | (103,807 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation of property and equipment | 3,616 | 2,900 | ||||||
Amortization of deferred financing costs | 3,397 | 2,659 | ||||||
Amortization of films and television programs | 315,614 | 255,157 | ||||||
Amortization of intangible assets | 760 | 698 | ||||||
Non-cash stock-based compensation | 12,027 | 10,207 | ||||||
Gain on sale of equity securities | — | (2,794 | ) | |||||
Gain on extinguishment of debt | (3,549 | ) | — | |||||
Equity interests loss | 5,841 | 3,242 | ||||||
Changes in operating assets and liabilities: | ||||||||
Restricted cash | (6,700 | ) | (19,674 | ) | ||||
Accounts receivable, net | 72,945 | (38,620 | ) | |||||
Investment in films and television programs | (471,308 | ) | (397,773 | ) | ||||
Other assets | (12,191 | ) | (5,903 | ) | ||||
Accounts payable and accrued liabilities | 26,826 | 39,859 | ||||||
Participation and residuals | 24,696 | 112,644 | ||||||
Film obligations | 58,711 | 10,810 | ||||||
Deferred revenue | 7,826 | 39,182 | ||||||
Net Cash Flows Used In Operating Activities | (95,909 | ) | (91,213 | ) | ||||
Investing Activities: | ||||||||
Purchases of investments — auction rate securities | — | (207,262 | ) | |||||
Proceeds from the sale of investments — auction rate securities | — | 444,641 | ||||||
Purchases of investments — equity securities | — | (4,765 | ) | |||||
Proceeds from the sale of investments — equity securities | — | 24,035 | ||||||
Acquisition of Mandate Pictures, net of unrestricted cash acquired | — | (41,205 | ) | |||||
Acquisition of Maple Pictures, net of unrestricted cash acquired | — | 1,737 | ||||||
Investment in equity method investees | (15,886 | ) | (6,464 | ) | ||||
Increase in loan receivables | (28,767 | ) | (5,895 | ) | ||||
Purchases of property and equipment | (6,465 | ) | (2,742 | ) | ||||
Net Cash Flows Provided By (Used In) Investing Activities | (51,118 | ) | 202,080 | |||||
Financing Activities: | ||||||||
Exercise of stock options | 2,894 | 864 | ||||||
Tax withholding requirements on equity awards | (3,134 | ) | (4,723 | ) | ||||
Repurchases of common shares | (44,968 | ) | (20,337 | ) | ||||
Borrowings under financing arrangements | — | 3,718 | ||||||
Increase in production obligations | 126,420 | 131,318 | ||||||
Repayment of production obligations | (165,298 | ) | (91,339 | ) | ||||
Repayment of subordinated notes | (5,310 | ) | — | |||||
Net Cash Flows Provided By (Used In) Financing Activities | (89,396 | ) | 19,501 | |||||
Net Change In Cash And Cash Equivalents | (236,423 | ) | 130,368 | |||||
Foreign Exchange Effects on Cash | (4,453 | ) | 1,690 | |||||
Cash and Cash Equivalents — Beginning Of Period | 371,589 | 51,497 | ||||||
Cash and Cash Equivalents — End Of Period | $ | 130,713 | $ | 183,555 | ||||
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LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FREE CASH FLOW, AS DEFINED
TO NET CASH FLOWS USED IN OPERATING ACTIVITIES
TO NET CASH FLOWS USED IN OPERATING ACTIVITIES
Three Months | Three Months | Nine Months | Nine Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Amounts in thousands) | ||||||||||||||||
Net Cash Flows Used In Operating Activities | $ | (56,185 | ) | $ | (33,383 | ) | $ | (95,909 | ) | $ | (91,213 | ) | ||||
Purchases of property and equipment | (722 | ) | — | (6,465 | ) | (2,742 | ) | |||||||||
Net borrowings under and (repayment) of production obligations | (47,982 | ) | 38,549 | (38,878 | ) | 39,979 | ||||||||||
Free Cash Flow, as defined | $ | (104,889 | ) | $ | 5,166 | $ | (141,252 | ) | $ | (53,976 | ) | |||||
Free cash flow is defined as net cash flows used in operating activities, less purchases of property and equipment and plus or minus the net increase or decrease in production obligations. The adjustment for the production obligations is made because the GAAP based cash flows from operations reflects a non-cash reduction of cash flows for the cost of films associated with production obligations prior to the time the Company actually pays for the film. The Company believes that it is more meaningful to reflect the impact of the payment for these films in its free cash flow when the payments are actually made.
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 whether classified as operating or financing activity (related to the production of our films) within our GAAP based statement of cash flows, 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.
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LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF EBITDA, AS DEFINED TO NET INCOME (LOSS)
Three Months | Three Months | Nine Months | Nine Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Amounts in thousands) | ||||||||||||||||
EBITDA, as defined | $ | (88,948 | ) | $ | 11,719 | $ | (114,930 | ) | $ | (92,308 | ) | |||||
Depreciation | (1,374 | ) | (954 | ) | (3,616 | ) | (2,900 | ) | ||||||||
Interest expense | (4,302 | ) | (4,085 | ) | (13,803 | ) | (12,170 | ) | ||||||||
Interest and other income | 860 | 2,510 | 5,062 | 8,948 | ||||||||||||
Equity interests loss | (1,695 | ) | (1,248 | ) | (5,841 | ) | (3,242 | ) | ||||||||
Income tax benefit (provision) | 2,039 | (628 | ) | (1,292 | ) | (2,135 | ) | |||||||||
Net income (loss) | $ | (93,420 | ) | $ | 7,314 | $ | (134,420 | ) | $ | (103,807 | ) | |||||
EBITDA is defined as earnings before interest, income tax provision or benefit, depreciation and equity interests losses. EBITDA as defined, is a non-GAAP financial measure. EBITDA includes the gain on extinguishment of debt of $3.5 million for the three and nine months ended December 31, 2008. EBITDA for the three and nine months ended December 31, 2007 includes gains on the sale of equity securities of $0.1 million and $2.9 million, respectively. Management believes EBITDA as defined, 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, 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, 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, does not reflect cash available to fund cash requirements. Not all companies calculate EBITDA as defined, in the same manner and the measure as presented may not be comparable to similarly-titled measures presented by other companies.
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