EXHIBIT 99
LIONS GATE ENTERTAINMENT REPORTS RECORD REVENUE
OF $188.7 MILLION FOR FIRST QUARTER OF FISCAL 2005
LIONS GATE SENIOR MANAGEMENT UPS FISCAL 2005 REVENUE GUIDANCE TO
OVER $700 MILLION
GODSEND, THE PUNISHER AND FAHRENHEIT 9/11 ARE LEADING REVENUE
DRIVERS FOR THE QUARTER
COMPANY BEGINS TRADING ON NEW YORK STOCK EXCHANGE TODAY UNDER
TICKER SYMBOL LGF
VANCOUVER, BC, and SANTA MONICA, CA, August 9, 2004 -- Lions Gate Entertainment
(NYSE: LGF), the premier independent producer and distributor of filmed
entertainment, achieved revenue of $188.7 million during the first quarter of
fiscal 2005 (period ended June 30, 2004), the highest quarterly revenue in its
seven-year history. The total easily eclipsed Lions Gate's previous highest
quarterly revenue of $159 million for the fourth quarter of fiscal 2004.
THE PUNISHER, GODSEND and the first six days of nationwide release of FAHRENHEIT
9/11 along with library sales were leading revenue drivers for the quarter.
Video releases including THE COOLER, GIRL WITH A PEARL EARRING and STEP INTO
LIQUID as well as previously released titles such as CABIN FEVER, the cult
classic RESERVOIR DOGS, WONDERLAND and HOUSE OF THE DEAD were also significant
revenue contributors. In addition, international sales of THE PUNISHER, GODSEND
and Lions Gate's coproduction with Paramount Pictures, THE PRINCE AND ME, made
significant revenue contributions along with Lions Gate Television's delivery of
episodes of the dramatic series THE DEAD ZONE (now in its third season on USA
Network) and the television movies and miniseries 5 DAYS TO MIDNIGHT, BRAVE NEW
GIRL and INFIDELITY.
EBITDA (earnings before interest, interest rate swaps mark-to-market, income tax
provision, depreciation, and minority interests) was negative $7.3 million for
the first quarter compared to negative $9.7 million for the prior-year quarter.
Net loss for the first quarter was $11.5 million, or loss per share of $0.12 on
94.9 million weighted average common shares outstanding compared to a net loss
of $12.8 million, or loss per share of $0.28 on 46.9 million weighted average
common shares outstanding for the prior-year quarter.
EBITDA and net loss improved from the prior-year quarter but were influenced by
marketing and distribution costs during the first quarter of fiscal 2005. These
included $55 million in theatrical marketing and distribution costs, primarily
for the three wide releases THE PUNISHER, FAHRENHEIT 9/11 and GODSEND as
well as pre-release expenditures for OPEN WATER (which was platform released
this past weekend, achieving $1.1 million box office on 47 screens with a
$23,000 per screen average and will go nationwide August 20) and THE COOKOUT.
Most of FAHRENHEIT 9/11's theatrical revenues will be recorded in the second
quarter of fiscal 2005, along with theatrical revenue for OPEN WATER and THE
COOKOUT, and video/DVD revenue for THE PUNISHER, GODSEND, OPEN WATER and THE
COOKOUT will be recorded throughout fiscal 2005.
"This quarter is representative of revenue levels as well as the mix and
diversity of revenue sources anticipated from the consolidation of Lions Gate
and Artisan," said Lions Gate Chief Executive Officer Jon Feltheimer. "The
successful launch of our recent theatrical releases as well as home
entertainment sales from new and catalog product gives me great confidence in
reaffirming our previous guidance for the year."
Lions Gate senior management issued fiscal 2005 guidance on February 17, 2004
and June 29, 2004 of $80 million in free cash flow after debt service and $60
million in EBITDA.
Cash flows provided by operating activities (operating cash flow) in the first
quarter of fiscal 2005 were $39.4 million compared to cash flows used in
operating activities of $1.9 million in the prior-year quarter. The Company
noted a significant increase in liquidity, with combined cash and availability
under its credit facility at $82.1 million on June 30, 2004, an increase of
$49.7 million from cash and availability of $32.4 million at March 31, 2004.
Lions Gate's G&A to revenue ratio in the first quarter was approximately 9%, and
the Company projects that its G&A to revenue ratio will drop to about 71/2 % for
the full fiscal year.
Lions Gate stock began trading today on the New York Stock Exchange under the
ticker symbol LGF.
Lions Gate senior management will hold its analyst and investor conference call
to discuss its first quarter financial results at 5:30 A.M. PDT, 8:30 A.M. EDT
tomorrow, August 10, 2004. Interested parties may participate live in the
conference call by calling 1-888-423-3275 (1-612-332-0335 outside the U.S. and
Canada). A full digital replay will be available from tomorrow afternoon,
Tuesday, August 10, through Tuesday, August 17, by dialing 1-800-475-6701
(1-320-365-3844 outside the U.S. and Canada) and using access code #741593.
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.lionsgatefilms.com
* * * * *
NYSE 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,"
"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,with the Securities and Exchange Commission and
certain provincial securities commissions in Canada. 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
JUNE 30, 2004 March 31, 2004
------------- --------------
(UNAUDITED)
(ALL AMOUNTS IN THOUSANDS OF
U.S. DOLLARS, EXCEPT SHARE
AMOUNTS)
ASSETS
Cash and cash equivalents.................................................... $ 22,059 $ 7,089
Accounts receivable, net of reserve for video returns and other allowances of
$50,976 (2004 -- $55,146) and provision for doubtful accounts of $10,036
(2004 -- $11,702).......................................................... 103,517 129,245
Investment in films and television programs.................................. 394,510 406,170
Property and equipment....................................................... 28,582 29,661
Goodwill..................................................................... 166,320 166,804
Other assets................................................................. 22,626 23,714
------------ ------------
$ 737,614 $ 762,683
============ ============
LIABILITIES
Bank loans................................................................... $ 291,871 $ 326,174
Accounts payable and accrued liabilities..................................... 112,189 129,725
Film obligations............................................................. 137,481 114,068
Subordinated notes........................................................... 65,000 65,000
Mortgages payable............................................................ 18,473 19,041
Deferred revenue............................................................. 45,593 38,932
Minority interests........................................................... 8 135
------------ ------------
670,615 693,075
------------ ------------
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Common stock, no par value, 500,000,000 shares authorized, 96,074,442 and
93,615,896 shares issued and outstanding................................... 285,756 275,105
Accumulated paid in capital.................................................. 2,440 2,440
Accumulated deficit.......................................................... (212,015) (200,553)
Accumulated other comprehensive loss (9,182) (7,384)
------------ ------------
66,999 69,608
------------ ------------
$ 737,614 $ 762,683
============ ============
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS Three Months
ENDED Ended
JUNE 30, 2004 June 30, 2003
------------- -------------
(ALL AMOUNTS IN THOUSANDS OF U.S.
DOLLARS, EXCEPT PER SHARE AMOUNTS)
REVENUES....................................................................... $ 188,724 $ 53,335
EXPENSES:
Direct operating............................................................. 80,810 22,456
Distribution and marketing................................................... 98,066 33,612
General and administration................................................... 17,127 6,308
Depreciation................................................................. 675 542
---------- ----------
Total expenses.............................................................. 196,678 62,918
---------- ----------
OPERATING LOSS................................................................. (7,954) (9,583)
---------- ----------
OTHER EXPENSE (INCOME):
Interest .................................................................... 5,424 2,060
Interest rate swaps mark-to-market........................................... (2,060) 314
Minority interests........................................................... (123) -
---------- ----------
Total other expenses, net................................................. 3,241 2,374
---------- ----------
LOSS BEFORE EQUITY INTERESTS AND INCOME TAXES.................................. (11,195) (11,957)
Equity interests............................................................... - (655)
---------- ----------
LOSS BEFORE INCOME TAXES....................................................... (11,195) (12,612)
Income tax provision........................................................... (267) (140)
---------- ----------
NET LOSS....................................................................... (11,462) (12,752)
Dividends on Series A preferred shares......................................... - (127)
Accretion and amortization on Series A preferred shares........................ - (355)
---------- ----------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS...................................... $ (11,462) $ (13,234)
========== ==========
BASIC AND DILUTED LOSS PER COMMON SHARE........................................ $ (0.12) $ (0.28)
========== ==========
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SERIES B ACCUMULATED
COMMON STOCK PREFERRED SHARES ACCUMULATED OTHER
------------------------- -------------------- PAID IN ACCUMULATED COMPREHENSIVE
NUMBER AMOUNT NUMBER AMOUNT CAPITAL DEFICIT LOSS TOTAL
----------- ----------- --------- --------- ----------- ----------- ------------- -------
(ALL AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AMOUNTS)
Balance at March 31, 2003 ... 43,231,921 $ 157,675 10 $ -- $ 1,874 $ (108,347) $ (7,566) $43,636
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
Modification of stock
options .................... -- 815 815
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 ........ (92,206) (92,206)
Foreign currency
translation adjustments .... (440) (440)
Net unrealized gain on
foreign exchange
contracts .................. 622 622
----------- ----------- --------- --------- ----------- ----------- ----------- -------
Balance at March 31, 2004 ... 93,615,896 275,105 10 -- 2,440 (200,553) (7,384) 69,608
Exercise of stock options ... 673,496 1,726 1,726
Exercise of warrants ........ 1,785,050 8,925 8,925
Net loss available to
common shareholders ........ (11,462) (11,462)
Foreign currency
translation adjustments .... (1,153) (1,153)
Net unrealized loss on
foreign exchange
contracts .................. (645) (645)
----------- ----------- --------- --------- ----------- ----------- ----------- -------
Balance at June 30, 2004 .... 96,074,442 $ 285,756 10 $ -- $ 2,440 $ (212,015) $ (9,182) $66,999
=========== =========== ========= ========= =========== =========== =========== =======
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS Three Months
ENDED Ended
JUNE 30, 2004 June 30, 2003
(ALL AMOUNTS IN THOUSANDS OF U. S. DOLLARS)
OPERATING ACTIVITIES:
Net loss....................................................................... $ (11,462) $ (12,752)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation of property and equipment...................................... 675 542
Amortization of deferred financing costs.................................... 838 338
Amortization of films and television programs............................... 60,225 15,713
Amortization of intangible asset............................................ 548 -
Interest rate swap mark to market........................................... (2,060) 314
Minority interests.......................................................... (123) -
Equity interests............................................................ - 655
Changes in operating assets and liabilities:
Accounts receivable......................................................... 24,767 4,760
Increase in investment in films and television programs..................... (45,790) (37,365)
Other assets................................................................ 87 (1,063)
Future income taxes......................................................... - (232)
Accounts payable and accrued liabilities.................................... (17,372) 7,095
Film obligations............................................................ 22,412 10,803
Deferred revenue............................................................ 6,662 9,264
------------ ------------
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES...................... 39,407 (1,928)
------------ ------------
FINANCING ACTIVITIES:
Issuance of common stock....................................................... 10,651 30,219
Redemption of Series A preferred shares........................................ - (18,090)
Financing fees paid............................................................ (346) -
Decrease in bank loans......................................................... (34,285) (6,851)
Decrease in mortgages payable.................................................. (241) (241)
------------ ------------
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES...................... (24,221) 5,037
------------ ------------
INVESTING ACTIVITIES:
Purchase of property and equipment............................................. (45) (91)
------------ ------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES.................................... (45) (91)
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS........................................ 15,141 3,018
FOREIGN EXCHANGE EFFECT ON CASH................................................ (171) 1,157
CASH AND CASH EQUIVALENTS -- BEGINNING OF PERIOD............................... 7,089 6,851
------------ ------------
CASH AND CASH EQUIVALENTS -- END OF PERIOD $ 22,059 $ 11,026
============ ============
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET INCOME (LOSS) TO CANADIAN GAAP
NET LOSS
--------
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
2004 2003
------------ ------------
(ALL AMOUNTS IN THOUSANDS OF
U.S. DOLLARS)
AS REPORTED UNDER U.S. GAAP ......................................................... $(11,462) $(12,752)
Adjustment for capitalized pre-operating costs ...................................... -- (154)
Adjustment for interest rate swaps .................................................. (158) 314
Adjustment for accretion on subordinated notes ...................................... (618) --
Adjustment for amortization of subordinated notes issue costs ....................... 36 --
Adjustment for amortization of debt financing costs ................................. 84 --
-------- --------
NET LOSS UNDER CANADIAN GAAP ........................................................ $(12,118) $(12,592)
======== ========
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
ENDED ENDED
JUNE 30, JUNE 30,
2004 2003
-------- --------
(ALL AMOUNTS IN THOUSANDS OF
U.S. DOLLARS)
EBITDA, AS DEFINED ..................... $ (7,279) $ (9,696)
Depreciation ........................... (675) (542)
Interest ............................... (5,424) (2,060)
Interest rate swaps mark-to-market ..... 2,060 (314)
Minority interests ..................... 123 --
Income tax provision ................... (267) (140)
-------- --------
NET LOSS ............................... $(11,462) $(12,752)
======== ========
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.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FORECAST NET INCOME TO EBITDA AND FREE CASH FLOW
YEAR ENDED MARCH
31, 2005
(ALL AMOUNTS IN
THOUSANDS OF
U.S. DOLLARS)
FORECAST NET INCOME $ 20,000
Income tax provision 12,000
Interest 25,600
Depreciation 2,400
---------
FORECAST EBITDA, AS DEFINED $ 60,000
---------
Amortization of films and television programs 195,400
Net 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
---------
Free cash flow is defined as EBITDA plus amortization of films and television
programs, less net investment in films and television programs, changes in
other operating assets and liabilities, purchase of property and equipment
and interest paid.