Exhibit 99
LIONS GATE ENTERTAINMENT REPORTS FISCAL 2004
REVENUES OF $384.9 MILLION
COMPANY REPORTS NET LOSS OF $94.2 MILLION FOR YEAR DUE TO ARTISAN ACQUISITION-
RELATED COSTS, INCREASED MARKETING AND DISTRIBUTION EXPENSES AND
NON-RECURRING ITEMS
LIONS GATE SENIOR MANAGEMENT REVISES FISCAL 2005 REVENUE
GUIDANCE UPWARD TO $680 MILLION, REAFFIRMS FISCAL
2005 GUIDANCE OF $80 MILLION IN FREE CASH FLOW AND
EXPECTS $60 MILLION IN FISCAL 2005 EBITDA
(ALL RESULTS IN U.S. DOLLARS)
VANCOUVER, BC, and SANTA MONICA, CA, June 29, 2004 - Lions Gate
Entertainment (AMEX and TSX: LGF), the premier independent filmed entertainment
company, today reported revenues of $384.9 million for the fiscal year ended
March 31, 2004. The total includes consolidated revenue from the December 15,
2003 closing date of the Artisan acquisition onward, a period of slightly more
than one fiscal quarter. Revenues in the fiscal fourth quarter were $159
million.
The Company reported a net loss of $94.2 million for the fiscal year compared to
net income of $1.1 million in the previous fiscal year. This loss included a net
loss of $51 million in the fiscal fourth quarter. Fourth quarter financial
results included non-recurring items such as the $8.1 million provision for the
investment in and other receivables relating to Lions Gate's strategic animation
partner CineGroupe, currently in reorganization. Additionally, $36.6 million in
theatrical marketing and distribution costs were expensed from Lions Gate's
feature film releases THE PUNISHER, GODSEND, GIRL WITH A PEARL EARRING, THE
COOLER and DIRTY DANCING: HAVANA NIGHTS. Although P&A from all five films was
expensed in the fourth quarter, theatrical revenues from the release of THE
PUNISHER and GODSEND will not be reflected until the first quarter of fiscal
2005, and home video and pay TV revenues for all five releases will be reflected
throughout fiscal 2005.
Net loss per common share was $1.35 on 70.7 million weighted average common
shares outstanding (after giving effect to the Series A preferred share
dividends and accretion on the Series A preferred shares) compared to net loss
per common share of $0.06 on 43.2 million weighted average common shares
outstanding the previous year (after giving effect to the Series A preferred
share dividends and accretion on the Series A preferred shares).
"As we anticipated, the integration of the Lions Gate and Artisan theatrical
slates led to marketing expense for an unusually large number of wide releases
during the fourth quarter," said Lions Gate Chief Executive Officer Jon
Feltheimer. "The DVD, pay cable and other downstream revenues for these releases
will be reflected during fiscal 2005. Combined with our upcoming slate of filmed
entertainment product and significant cash flow from our catalog sales, these
additional revenues position us to meet our free cash flow and debt repayment
targets."
The Company noted that, as of March 31, 2004, its filmed entertainment backlog
had increased to $114.1 million, compared to $47.3 million as of March 31, 2003,
due to significant international contracts on titles including THE PUNISHER,
GODSEND and THE PRINCE AND ME as well as the addition of backlog from the
Artisan acquisition.
FISCAL 2005 GUIDANCE REAFFIRMED
Lions Gate senior management reaffirmed its February 17, 2004 guidance for
fiscal year 2005 (which began on April 1, 2004) of $80 million in free cash flow
after debt service. The Company has revised its fiscal 2005 revenue guidance
upward from $650 million to $680 million due to continued robust growth in
library and home entertainment revenues and anticipated increases in theatrical
revenues and has issued fiscal 2005 guidance of $60 million in EBITDA (defined
as earnings before interest, income tax benefit (provision), depreciation and
amortization and minority interests). (See attached table for reconciliation of
all non-GAAP numbers to U.S. GAAP.)
Principal revenue drivers during fiscal 2004 were the theatrical releases of
CABIN FEVER, HOUSE OF 1000 CORPSES, GIRL WITH A PEARL EARRING, THE COOLER and
CONFIDENCE, among others, and the home video releases of CABIN FEVER, HOUSE OF
1000 CORPSES, CONFIDENCE, SECRETARY, HOUSE OF THE DEAD and WILL AND GRACE:
SEASONS 1 and 2. Another key component of fiscal 2004 revenue was catalog sales,
with more than 500 titles of Lions Gate's 8000-title library contributing more
than $100,000 each in revenue during the past fiscal year. Lions Gate
Television's prime time cable series, THE DEAD ZONE, continued to generate
strong ratings as it entered its third season on USA Network, and the prime time
cable series MISSING will soon enter its second season on Lifetime Network.
As announced on May 28, Lions Gate senior management will hold its analyst and
investor conference call to discuss its full-year and fourth quarter financial
results at 8:00 A.M. PT/11:00 A.M. ET today, June 29, 2004. Interested parties
may participate live in the conference call by calling 1-800-553-0288
(1-612-332-0228 outside the U.S. and Canada). A full digital replay will be
available from this afternoon, Tuesday, June 29, through Tuesday, July 6, by
dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using
access code #733463.
Lions Gate is the premier independent producer and distributor of motion
pictures, television programming, home entertainment, family entertainment and
video-on-demand content. Its prestigious and prolific library of approximately
8000 titles is one of the largest in the entertainment industry. The Lions Gate
brand name is synonymous with original, daring, quality entertainment in markets
around the world.
www.lionsgatefilms.com
* * * * *
AMEX AND TSX: LGF
For further information, please contact:
Peter D. Wilkes
310-255-3726
pwilkes@lgecorp.com
The matters discussed in this press release include forward-looking statements.
In addition, when used in this press release, the words "will," "position,"
"anticipated," "guidance" 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 our Form 10-K, filed June 29, 2004, our Registration
Statement on Form 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.
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED BALANCE SHEETS
MARCH 31, MARCH 31,
2004 2003
---- ----
(ALL AMOUNTS IN THOUSANDS OF U.S.
DOLLARS, EXCEPT SHARE AMOUNTS)
ASSETS
Cash and cash equivalents ........................................ $ 6,961 $ 7,440
Accounts receivable, net of reserve for video returns and
other allowances of $55,146 (2003 -- $11,364) and provision
for doubtful accounts of $11,702 (2003 -- $7,677) .............. 125,075 88,272
Investment in films and television programs ...................... 400,933 206,275
Property and equipment ........................................... 29,478 32,390
Goodwill ......................................................... 166,049 31,684
Other assets ..................................................... 24,270 19,135
Future income taxes .............................................. -- 1,350
--------- ---------
$ 752,766 $ 386,546
========= =========
LIABILITIES
Bank loans ....................................................... $ 324,700 $ 130,921
Accounts payable and accrued liabilities ......................... 132,693 48,888
Accrued participations and residuals costs ....................... 77,759 26,158
Production loans ................................................. 8,141 20,339
Subordinated notes ............................................... 48,484 --
Debt ............................................................. 35,230 54,379
Deferred revenue ................................................. 38,932 22,116
Minority interests ............................................... -- 9,028
--------- ---------
665,939 311,829
--------- ---------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred shares, 200,000,000 shares authorized, issued in series,
including 1,000,000 series A (nil and 11,830 shares issued and
outstanding) and 10 series B (10 shares issued and outstanding)
(liquidation preference nil and $30,167) ....................... -- 32,519
Common stock, no par value, 500,000,000 shares authorized,
93,615,896 and 43,231,921 shares issued and outstanding ........ 275,569 157,675
Contributed surplus .............................................. 20,528 --
Accumulated deficit .............................................. (201,295) (107,942)
Cumulative translation adjustments ............................... (7,975) (7,535)
--------- ---------
86,827 74,717
--------- ---------
$ 752,766 $ 386,546
========= =========
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR YEAR YEAR
ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31,
2004 2003 2002
---- ---- ----
(ALL AMOUNTS IN THOUSANDS OF U.S. DOLLARS,
EXCEPT PER SHARE AMOUNTS)
REVENUES ............................................... $ 384,891 $ 293,073 $ 270,255
--------- --------- ---------
EXPENSES:
Direct operating ..................................... 191,849 155,369 160,733
Distribution and marketing ........................... 207,065 87,752 74,011
General and administration ........................... 43,706 32,252 34,668
Write-down of animation assets ....................... 18,071 -- --
Severance and relocation costs ....................... 5,575 -- --
Write-down of other assets ........................... 3,621 -- --
Depreciation and amortization ........................ 5,003 4,379 3,728
--------- --------- ---------
Total expenses ..................................... 474,890 279,752 273,140
--------- --------- ---------
OPERATING INCOME (LOSS) ................................ (89,999) 13,321 (2,885)
--------- --------- ---------
OTHER EXPENSES:
Interest on debt initially incurred for a term of more
than one year (net of interest income of $0.3
million (2003 - $0.1 million; 2002 - $0.3 million)) 15,758 10,239 9,828
Minority interests ................................... (9,794) 45 1,221
Unusual losses ....................................... -- -- 1,351
--------- --------- ---------
Total other expenses, net .......................... 5,964 10,284 12,400
--------- --------- ---------
INCOME (LOSS) BEFORE GAIN ON DILUTION OF INVESTMENT IN A
SUBSIDIARY, WRITE-DOWN AND EQUITY INTERESTS AND INCOME
TAXES ................................................ (95,963) 3,037 (15,285)
Gain on dilution of investment in a subsidiary ......... -- -- 2,186
Write-down in investments subject to significant
influence ............................................ -- -- (13,408)
Other equity interests ................................. (300) (1) (1,134)
--------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES ...................... (96,263) 3,036 (27,641)
Income tax benefit (provision) ......................... 2,091 (1,910) (321)
--------- --------- ---------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS ........... (94,172) 1,126 (27,962)
Loss from discontinued operations ...................... -- -- (18,997)
--------- --------- ---------
NET INCOME (LOSS) ...................................... (94,172) 1,126 (46,959)
Dividends on Series A preferred shares ................. (387) (1,584) (1,592)
Accretion and amortization on Series A preferred shares (1,127) (2,049) (2,089)
--------- --------- ---------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS .............. $ (95,686) $ (2,507) $ (50,640)
========= ========= =========
LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS ....... $ (1.35) $ (0.06) $ (0.74)
LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS ..... -- -- (0.44)
--------- --------- ---------
BASIC AND DILUTED LOSS PER COMMON SHARE ................ $ (1.35) $ (0.06) $ (1.18)
========= ========= =========
LIONS GATE ENTERTAINMENT CORP.
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, 2001... 42,296,838 $155,540 12,205 $ 29,936 10 $ -- $ -- $ (54,795) $(5,838) $ 124,843
Conversion of
Series A
preferred
shares........... 648,000 1,652 (648) (1,652) --
Exercise of
stock options.... 87,083 137 137
Issued pursuant
to share bonus
plan............. 200,000 346 346
Stock dividends... 273 696 696
Net loss
available to
common
shareholders..... (50,640) (50,640)
Accretion on
Series A
preferred
shares........... -- 1,771 1,771
Foreign
currency
translation
adjustments...... (1,759) (1,759)
-------- -------- ----- -------- -- ---- ------- --------- -------- ---------
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.... 955,562 2,609 2,609
Exercise of
warrants......... 275,400 1,377 1,377
Conversion
feature of
subordinated
note............. 16,269 16,269
Redemption of
Series A
preferred
shares........... (8,040) (22,349) 4,259 (18,090)
Conversion of
Series A
preferred
shares........... 4,201,957 10,732 (3,790) (10,732) --
Deconsolidation
of
CineGroupe's
net deficiency
in equity........ 2,333 2,333
Net loss
available to
common
shareholders..... (95,686) (95,686)
Accretion on
Series A
preferred
shares........... -- 562 562
Foreign
currency
translation
adjustments...... (440) (440)
-------- -------- ----- -------- -- ---- ------- --------- ------- ---------
Balance at
March 31, 2004... 93,615,896 $275,569 -- $ -- 10 $ -- $20,528 $(201,295) $(7,975) $ 86,827
========== ======== ===== ======== == ==== ======= ========== ======= =========
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR YEAR YEAR
ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31,
2004 2003 2002
---- ---- ----
(ALL AMOUNTS IN THOUSANDS OF U.S. DOLLARS)
OPERATING ACTIVITIES:
Net income (loss) ............................. $ (94,172) $ 1,126 $ (46,959)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation of property and equipment ...... 4,389 3,741 3,113
Amortization of pre-operating costs ......... 614 637 615
Amortization of deferred financing costs .... 3,927 1,572 1,177
Amortization of films and television programs 189,820 153,673 158,998
Severance and relocation costs .............. 2,131 -- --
Write-down of animation assets .............. 18,071 -- --
Write-down of other assets .................. 3,621 -- --
Gain on dilution of investment in a
subsidiary ................................ -- -- (2,186)
Unusual losses .............................. -- -- 1,351
Accretion on subordinated notes ............. 809 -- --
Minority interests .......................... (9,794) 45 1,221
Write-down in investments subject to
significant influence ..................... -- -- 13,408
Discontinued operation ...................... -- -- 18,997
Other equity interests ...................... 300 1 1,134
Changes in operating assets and liabilities,
excluding the effect of acquisitions:
Accounts receivable ......................... (6,953) 20,810 (3,394)
Increase in investment in films and
television programs ....................... (252,807) (176,813) (202,230)
Other assets ................................ 6,790 (8,281) 430
Future income taxes ......................... (2,563) -- (809)
Accounts payable and accrued liabilities .... 13,246 (1,057) 777
Accrued participations and residuals costs .. 8,008 9,125 (6,157)
Deferred revenue ............................ 7,981 7,912 (198)
--------- --------- ---------
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES .................................. (106,582) 12,491 (60,712)
--------- --------- ---------
FINANCING ACTIVITIES:
Issuance of common stock ...................... 107,162 -- 137
Redemption of Series A preferred shares ....... (18,090) -- --
Dividends paid on Series A preferred shares ... (387) (1,584) (883)
Financing fees paid ........................... (11,402) (166) (1,239)
Increase in subordinated notes, net of issue
costs ....................................... 56,347 -- --
Increase (decrease) in bank loans ............. 141,823 (14,775) 42,715
(Increase) decrease in restricted cash ........ -- 706 (719)
Proceeds from production loans ................ 18,235 21,421 28,251
Repayments of production loans ................ (18,586) (26,276) (19,292)
Proceeds from debt ............................ 24,268 10,565 9,017
Repayments of debt ............................ (42,849) (5,912) (3,152)
--------- --------- ---------
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES .................................. 256,521 (16,021) 54,835
--------- --------- ---------
INVESTING ACTIVITIES:
Minority investment in subsidiary ............. -- -- 9,200
Cash received from investment in Mandalay
Pictures, LLC ............................... -- 6,634 5,362
Acquisition of Eaton Entertainment LLC, net of
cash acquired ............................... -- -- 472
Acquisition of Artisan Entertainment Inc., net
of cash acquired ............................ (148,870) -- --
Purchase of property and equipment ............ (905) (2,171) (7,694)
--------- --------- ---------
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES .................................. (149,775) 4,463 7,340
--------- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS ....... 164 933 1,463
FOREIGN EXCHANGE EFFECT ON CASH ............... (643) (134) (1,474)
CASH AND CASH EQUIVALENTS -- BEGINNING OF YEAR 7,440 6,641 6,652
--------- --------- ---------
CASH AND CASH EQUIVALENTS -- END OF YEAR ...... $ 6,961 $ 7,440 $ 6,641
========= ========= =========
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET INCOME (LOSS) TO U.S. GAAP
NET INCOME (LOSS)
-----------------
YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31,
2004 2003 2002
---- ---- ----
(ALL AMOUNTS IN THOUSANDS OF U.S. DOLLARS)
AS REPORTED UNDER CANADIAN GAAP $(94,172) $ 1,126 $(46,959)
Accounting for capitalized pre-operating
costs - Mandalay -- -- 3,074
Adjustment for capitalized pre-operating
costs 614 614 614
Interest swaps mark-to-market 206 (3,163) --
Accounting for stock-based compensation (815) -- --
Adjustment for accretion on subordinated
notes 809 -- --
Adjustment for amortization of
subordinated note issue costs (48) -- --
Adjustment for amortization of debt
financing costs (98) -- --
-------- ------- --------
NET LOSS UNDER U.S. GAAP $(93,504) $(1,423) $(43,271)
-------- ------- --------
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF EBITDA TO NET INCOME (LOSS)
YEAR ENDED MARCH 31,
--------------------
2004 2003 2002
---- ---- ----
(AMOUNTS IN THOUSANDS OF U.S. DOLLARS)
EBITDA, AS DEFINED ......................... $(85,296) $ 17,699 $(15,050)
Depreciation and amortization .............. (5,003) (4,379) (3,728)
Interest ................................... (15,758) (10,239) (9,828)
Minority interests ......................... 9,794 (45) (1,221)
Gain on dilution of investment in subsidiary -- -- 2,186
Income tax benefit (provision) ............. 2,091 (1,910) (321)
Loss from discontinued operation ........... -- -- (18,997)
-------- -------- --------
NET INCOME (LOSS) .......................... $(94,172) $ 1,126 $(46,959)
======== ======== ========
EBITDA is defined as earnings before interest, income tax benefit (provision),
depreciation and amortization, minority interests, gain on dilution of
investment in subsidiary and discontinued operation.
EBITDA is a non-GAAP financial measure. Management believes EBITDA 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 is consistent with our past practice, and EBITDA 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 to be an important measure of
comparative operating performance, it should be considered in addition to, but
not as a substitute for, operating income, net income and other measures of
financial performance reported in accordance with GAAP. EBITDA does not reflect
cash available to fund cash requirements. Not all companies calculate EBITDA in
the same manner and the measure as presented may not be comparable to
similarly-titled measures presented by other companies.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FORECAST U.S. GAAP NET INCOME TO EBITDA AND FREE CASH FLOW
YEAR ENDED MARCH 31, 2005
-------------------------
(AMOUNTS IN THOUSANDS OF
U.S. DOLLARS)
FORECAST NET INCOME $ 20,000
Income tax benefit (provision) 12,000
Interest 25,600
Depreciation and amortization 2,400
---------
FORECAST EBITDA, AS DEFINED $ 60,000
---------
Amortization of films and television programs 195,400
Increase in investment in films and television programs (115,300)
Changes in other operating assets and liabilities (34,100)
Purchase of property and equipment (2,000)
Interest paid (24,000)
---------
FORECAST FREE CASH FLOW $ 80,000
=========
On March 29, 2004, the new British Columbia Business Corporations Act came into
force, which allows the Company to prepare its financial statements either under
Canadian or U.S. GAAP. The Company has elected to prepare financial statements
under U.S. GAAP commencing April 1, 2004.
Free cash flow is defined as EBITDA plus amortization of films and television
programs, less increase in investment in films and television programs, changes
in other operating assets and liabilities, less purchase of property and
equipment and less interest paid.