EXHIBIT 99.1
[LIONS GATE FILMS LOGO]
LIONS GATE ENTERTAINMENT REPORTS SECOND QUARTER
REVENUES OF $231.1 MILLION, NET INCOME OF $8.3 MILLION
AND EBITDA OF $15.4 MILLION
2Q REVENUE INCREASES 148% FROM PRIOR-YEAR QUARTER
COMPANY REPORTS BASIC EARNINGS PER SHARE OF $0.09
(ALL AMOUNTS IN U.S. DOLLARS)
VANCOUVER, BC, and SANTA MONICA, CA, November 9, 2004 -- Lions Gate
Entertainment (NYSE and TSX: LGF), the premier independent producer and
distributor of filmed entertainment, reported revenues of $231.1 million and
EBITDA (earnings before interest, interest rate swap mark-to-market, income
taxes, depreciation and minority interests) of $15.4 million for the second
quarter of fiscal 2005.
Second quarter revenue of $231.1 million increased 148% compared to $93.1
million in the prior year second quarter. EBITDA of $15.4 million increased 711%
from $1.9 million in the second quarter of fiscal 2004. Net income for the
second quarter was $8.3 million, or basic earnings per share of $0.09 on 96.3
million weighted average common shares outstanding (diluted income per share of
$0.08), compared to a net loss of $0.3 million, or loss per share of $0.01 on
59.5 million weighted average common shares outstanding (after giving effect to
the Series A preferred share dividends and accretion on the Series A preferred
shares), in the prior year second quarter.
The nationwide theatrical releases of OPEN WATER and THE COOKOUT along with the
continued success of FAHRENHEIT 9/11 were leading revenue drivers for the
quarter. Video releases including THE PUNISHER, DIRTY DANCING HAVANA NIGHTS,
GODSEND, BARBIE AS THE PRINCESS AND THE PAUPER and the hit NBC comedy series
WILL & GRACE Season 3 were significant revenue contributors. Deliveries of Lions
Gate Television's product included one-hour series THE DEAD ZONE and MISSING,
plus movie of the week, BABY FOR SALE.
"This quarter is an excellent example of the Lions Gate model. We have
profitable revenue drivers in all our core businesses continuing to build the
deepest content library
in the independent space," said Lions Gate Chief
Executive Officer Jon Feltheimer. "We are also delighted with the recent results
of our hit film, SAW, which will be reflected in subsequent quarters and fiscal
2006."
Motion picture revenue of $202.8 million increased 205% from $66.5 million in
the prior year second quarter. Lions Gate Films scored with the box office hit
FAHRENHEIT 9/11 and OPEN WATER and with an exceptionally strong DVD performance
of THE PUNISHER, further increasing that film's franchise potential. BARBIE AS
THE PRINCESS AND THE PAUPER was also a successful video and DVD release, and the
diversification of Lions Gate's fast-growing home entertainment operations was
underscored by the strong performance of third-party product such as NBC's hit
comedy WILL & GRACE Season 3 and ALF.
Television production revenue of $26.9 million increased 8% from $24.9 million
in the prior year second quarter as Lions Gate Television demonstrated its
strength as a leading independent supplier of one-hour dramatic series and
nonfiction programming to top cable networks. During the quarter, the Company
delivered domestically a total of 18 hours of its two successful dramatic
series, THE DEAD ZONE for USA Networks and MISSING for Lifetime Networks.
Lions Gate senior management will hold its analyst and investor conference call
to discuss its second quarter financial results at 6:00 A.M. PT/ 9:00 A.M. ET
tomorrow, November 10, 2004. Interested parties may participate live in the
conference call by calling 1-888-428-4479 (1-651-224-7558 outside the U.S. and
Canada). A full digital replay will be available from tomorrow afternoon,
Wednesday, November 10, through Wednesday, November 17, by dialing
1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access
code #751607.
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 globe.
www.lgf.com
* * * * *
NYSE AND TSX: LGF
For further information, please contact:
Peter D. Wilkes Russell D. Nelson
310-255-3726 310-255-3858
pwilkes@lgf.com rnelson@lgf.com
The matters discussed in this press release include 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 our Form 8-K filed with the Securities
and Exchange Commission on September 28, 2004. 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, MARCH 31,
2004 2004
--------- ---------
(UNAUDITED) (AUDITED)
(ALL AMOUNTS IN THOUSANDS OF
U.S. DOLLARS, EXCEPT SHARE
AMOUNTS)
ASSETS
Cash and cash equivalents ......................... $ 5,535 $ 7,089
Accounts receivable, net of reserve for
video returns and other allowances of
$62,291(2004 -- $55,146) and provision
for doubtful accounts of $9,250 (2004 -- $11,702) 171,529 129,245
Investment in films and television programs ....... 368,875 406,170
Property and equipment ............................ 29,155 29,661
Goodwill .......................................... 171,031 166,804
Other assets ...................................... 21,733 23,714
--------- ---------
$ 767,858 $ 762,683
========= =========
LIABILITIES
Bank loans ........................................ $ 262,610 $ 326,174
Accounts payable and accrued liabilities .......... 148,107 129,724
Film obligations .................................. 156,752 114,068
Subordinated notes ................................ 65,000 65,000
Mortgages payable ................................. 18,903 19,041
Deferred revenue .................................. 36,222 38,932
Minority interests ................................ 163 135
--------- ---------
687,757 693,074
--------- ---------
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Common shares, no par value, 500,000,000 shares
authorized, 96,435,405 and 93,615,896 shares
issued and outstanding .......................... 292,048 279,576
Series B preferred shares (10 shares issued
and outstanding) ................................ -- --
Accumulated deficit ............................... (205,714) (202,582)
Accumulated other comprehensive loss .............. (6,233) (7,385)
--------- ---------
80,101 69,609
--------- ---------
$ 767,858 $ 762,683
========= =========
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE THREE
MONTHS MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
--------- --------- --------- ---------
(ALL AMOUNTS IN THOUSANDS OF U.S. DOLLARS,
EXCEPT PER SHARE AMOUNTS)
REVENUES ......................................... $ 231,064 $ 93,051 $ 419,788 $ 146,386
--------- --------- --------- ---------
EXPENSES:
Direct operating ............................... 94,262 48,140 175,072 70,596
Distribution and marketing ..................... 104,217 34,638 202,283 68,250
General and administration ..................... 17,850 8,039 34,977 14,347
Depreciation ................................... 714 488 1,389 1,030
--------- --------- --------- ---------
Total expenses ............................... 217,043 91,305 413,721 154,223
--------- --------- --------- ---------
OPERATING INCOME (LOSS) .......................... 14,021 1,746 6,067 (7,837)
--------- --------- --------- ---------
OTHER EXPENSES:
Interest ....................................... 5,652 2,149 11,076 4,209
Interest rate swaps mark-to-market ............. 71 (576) (1,989) (262)
Minority interests ............................. 144 -- 21 --
Other income ................................... (825) -- (825) --
--------- --------- --------- ---------
Total other expenses ......................... 5,042 1,573 8,283 3,947
--------- --------- --------- ---------
INCOME (LOSS) BEFORE EQUITY INTERESTS AND INCOME . 8,979 173 (2,216) (11,784)
TAXES
Equity interests ................................. (200) (356) (200) (1,011)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES ................ 8,779 (183) (2,416) (12,795)
Income tax provision ............................. (449) (91) (716) (231)
--------- --------- --------- ---------
NET INCOME (LOSS) ................................ 8,330 (274) (3,132) (13,026)
Dividends on Series A preferred shares ........... -- (127) -- (254)
Accretion and amortization on Series A preferred
shares ......................................... -- (147) -- (502)
--------- --------- --------- ---------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 8,330 $ (548) $ (3,132) $ (13,782)
========= ========= ========= =========
BASIC INCOME (LOSS) PER COMMON SHARE ............. $ 0.09 $ (0.01) $ (0.03) $ (0.26)
========= ========= ========= =========
DILUTED INCOME (LOSS) PER COMMON SHARE ........... $ 0.08 $ (0.01) $ (0.03) $ (0.26)
========= ========= ========= =========
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SERIES B ACCUMULATED
COMMON SHARES PREFERRED SHARES OTHER
------------------------ --------------- ACCUMULATED COMPREHENSIVE
NUMBER AMOUNT NUMBER AMOUNT DEFICIT LOSS TOTAL
---------- ---------- ------ ------ ----------- ------------- -----------
(ALL AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AMOUNTS)
Balance at March 31, 2003 .... 43,231,921 $ 159,549 10 $ -- $ (108,350) $ (7,567) $ 43,632
Issuance of common shares .... 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
Modification of stock options -- 815 815
Modification of warrants ..... -- 2,031 2,031
Redemption of Series A
preferred shares ............ -- 566 566
Conversion of Series A
preferred shares ............ 4,201,957 9,453 9,453
Net loss available to common
shareholders ................ (94,232) (94,232)
Foreign currency translation
adjustments ................. (440) (440)
Net unrealized gain on foreign
exchange contracts .......... 622 622
---------- ---------- --- ---- ---------- -------- ----------
Balance at March 31, 2004 .... 93,615,896 279,576 10 -- (202,582) (7,385) 69,609
Exercise of stock options .... 783,655 2,008 2,008
Exercise of warrants ......... 2,020,050 10,100 10,100
Issued to directors for
services .................... 15,804 137 137
Modification of stock options -- 227 227
Net loss available to common
shareholders ................ (3,132) (3,132)
Foreign currency translation
adjustments ................. 1,518 1,518
Net unrealized loss on foreign
exchange contracts .......... (366) (366)
---------- ---------- --- ---- ---------- -------- ----------
Balance at September 30, 2004 96,435,405 $ 292,048 10 $ -- $ (205,714) $ (6,233) $ 80,101
========== ========== === ==== ========== ======== ==========
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS SIX MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003
--------- ---------
(ALL AMOUNTS IN THOUSANDS OF U.S.
DOLLARS)
OPERATING ACTIVITIES:
Net income (loss) ................................ $ (3,132) $ (13,026)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation of property and equipment ......... 1,389 1,030
Amortization of deferred financing costs ....... 1,700 698
Amortization of films and television programs .. 124,370 55,770
Amortization of intangible asset ............... 1,096 --
Gain on disposition ............................ (666) --
Interest rate swaps mark-to-market ............. (1,989) (262)
Stock based compensation ....................... 364 186
Minority interests ............................. 21 --
Equity interests ............................... 200 1,011
Changes in operating assets and liabilities:
Accounts receivable, net ....................... (42,889) (20,041)
Increase in investment in films and television
programs ..................................... (83,830) (71,234)
Other assets ................................... (19) (1,861)
Future income taxes ............................ -- (232)
Accounts payable and accrued liabilities ....... 16,003 11,314
Film obligations ............................... 39,003 7,442
Deferred revenue ............................... (2,282) 2,453
--------- ---------
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES ..................................... 49,339 (26,752)
--------- ---------
FINANCING ACTIVITIES:
Issuance of common shares ........................ 12,108 30,765
Redemption of Series A preferred shares .......... -- (18,090)
Dividends paid on Series A preferred shares ...... -- (254)
Financing fees ................................... (1,221) --
Increase (decrease) in bank loans ................ (63,663) 20,181
Decrease in production loans ..................... -- (54)
Decrease in debt ................................. (840) (7,492)
--------- ---------
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES ..................................... (53,616) 25,056
--------- ---------
INVESTING ACTIVITIES:
Cash received from disposition, net .............. 882 --
Purchase of property and equipment ............... (175) (235)
--------- ---------
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES ..................................... 707 (235)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS .......... (3,570) (1,931)
FOREIGN EXCHANGE EFFECT ON CASH .................. 2,016 674
CASH AND CASH EQUIVALENTS -- BEGINNING OF PERIOD . 7,089 6,851
--------- ---------
CASH AND CASH EQUIVALENTS -- END OF PERIOD ....... $ 5,535 $ 5,594
========= =========
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET INCOME (LOSS) TO CANADIAN GAAP
NET INCOME (LOSS)
-------------------------------------------------------------
THREE THREE
MONTHS MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
(ALL AMOUNTS IN THOUSANDS OF U.S. DOLLARS)
AS REPORTED UNDER U.S.GAAP ................ $ 8,330 $ (274) $ (3,132) $(13,026)
Adjustment for capitalized pre-operating
costs ................................... -- (154) -- (308)
Adjustment for interest rate
swaps ................................... (158) (576) (316) (262)
Adjustment for accretion on subordinated
notes ................................... (618) -- (1,236) --
Adjustment for amortization of subordinated
notes issue costs ....................... 39 -- 75 --
Stock based compensation .................. 227 186 227 186
Adjustment for amortization of debt
financing costs ......................... 84 -- 168 --
-------- -------- -------- --------
NET INCOME (LOSS) UNDER CANADIAN GAAP ..... $ 7,904 $ (818) $ (4,214) $(13,410)
======== ======== ======== ========
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.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF EBITDA TO NET INCOME (LOSS)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
(ALL AMOUNTS IN THOUSANDS OF U.S. DOLLARS)
EBITDA, AS DEFINED ............... $ 15,360 $ 1,878 $ 8,081 $ (7,818)
Depreciation ..................... (714) (488) (1,389) (1,030)
Interest ......................... (5,652) (2,149) (11,076) (4,209)
Interest rate swaps mark-to-market (71) 576 1,989 262
Minority interests ............... (144) -- (21) --
Income tax provision ............. (449) (91) (716) (231)
-------- -------- -------- --------
NET INCOME (LOSS) ................ $ 8,330 $ (274) $ (3,132) $(13,026)
======== ======== ======== ========
EBITDA is defined as earnings before interest, interest rate swaps
mark-to-market, income tax provision, depreciation and minority interests.
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 (loss), net income (loss) 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.