Revenue is $670.5 Million; Net
Income Attributable to Lionsgate Shareholders is $40.7 Million or EPS of $0.27; Adjusted EBITDA is $53.6 Million
Free Cash Flow Increases to $73.9
Million
Company Pays Quarterly Cash Dividend of $0.09 per Common Share
SANTA MONICA, Calif. and
VANCOUVER, British Columbia,
Feb. 4, 2016 /PRNewswire/ --
Lionsgate (NYSE: LGF) today reported revenue of $670.5 million, adjusted EBITDA of $53.6 million, adjusted net income attributable
to Lionsgate shareholders of $66.8
million or adjusted EPS of $0.45, and net income attributable to Lionsgate
shareholders of $40.7 million or EPS
of $0.27 for the fiscal 2016 third
quarter ended December 31,
2015. Free cash flow in the quarter rose to $73.9 million.
"While the performance of our theatrical film slate resulted in
softer than anticipated results, our other businesses performed
strongly in the quarter," said Lionsgate Chief Executive Officer
Jon Feltheimer. "With our
television business continuing its robust topline and margin
growth, a deeper and more diversified film slate with lower costs
and contributions anticipated from recently launched businesses, we
have a clear path to resume our strong and sustainable financial
trajectory in fiscal 2017."
Adjusted net income attributable to Lionsgate shareholders of
$66.8 million or $0.45 adjusted EPS for the quarter compared to
adjusted net income attributable to Lionsgate shareholders of
$110.0 million or adjusted EPS of
$0.79 in the prior year
quarter. Adjusted EBITDA of $53.6
million compared to adjusted EBITDA of $146.8 million in the prior year
quarter.
Net income attributable to Lionsgate shareholders for the
quarter was $40.7 million or EPS of
$0.27 on 149.5 million weighted
average number of common shares outstanding compared to net income
attributable to Lionsgate shareholders of $98.2 million or EPS of $0.70 on 140.0 million weighted average number of
common shares outstanding during the prior year quarter.
Free cash flow of $73.9 million in
the quarter increased from negative free cash flow of $4.6 million in the prior year quarter.
Revenue of $670.5 million for the
quarter compared to revenue of $751.3
million in the prior year quarter.
Revenue, adjusted EBITDA and EPS in the quarter declined from
the prior year quarter due to the performance of the theatrical
film slate. Although The Hunger Games: Mockingjay 2
grossed over $650 million at the
global box office, ranking it among the highest-grossing films of
the year, its box office performance declined from Mockingjay
1 with higher Mockingjay 2 production costs also
impacting its profitability.
During the quarter, the Company declared a quarterly cash
dividend of $0.09 per common share
payable on February 5, 2016 to
shareholders of record as of December 31,
2015.
Lionsgate's filmed entertainment backlog, or already contracted
future revenue not yet recorded, was approximately $1.3 billion at December
31, 2015, increasing from $1.2
billion at September 30,
2015.
Overall Motion Picture segment revenue for the quarter was
$505.8 million compared to
$590.1 million in the prior year
quarter. Although theatrical revenue of $183.1 million was comparable to $186.4 million in the prior year quarter, margins
were lower due in part to theatrical P&A expenses associated
with four wide film releases in the quarter compared to two wide
film releases in the prior year quarter.
Lionsgate's home entertainment revenue from motion picture
and television production for the quarter was $142.0 compared to $183.1
million in the prior year quarter, reflecting the
composition and timing of the slate of wide release theatrical
titles. This offset increased home entertainment revenue from
television production in the quarter.
Television revenue included in the Motion Picture segment
of $48.6 million in the quarter
compared to $82.9 million in the
prior year quarter due to timing of titles with television windows
opening in the period. The Hunger Games opened in its
network television window in the prior year quarter.
International Motion Picture segment revenue of
$140.1 million for the quarter
compared to $142.1 million in the
prior year quarter.
Television production segment revenue of $164.7 million increased from $161.2 million in the prior year quarter.
Margins in the Company's television business continued their growth
trajectory in the quarter. Domestic television revenues were
affected by timing of deliveries in the quarter. Deliveries
of the critically-acclaimed hit series Orange is the New
Black, Nashville and
The Royals are expected to drive strong growth in the fourth
quarter along with the first full quarter of results from Pilgrim
Studios, in which Lionsgate acquired a majority stake in
November 2015.
Lionsgate senior management will hold its analyst and investor
conference call to discuss its fiscal 2016 third quarter financial
results at 9:00 A.M. ET/6:00 A.M. PT tomorrow, Friday, February 5.
Interested parties may participate live in the conference
call by calling 1-800-288-8974 (612-332-1213 outside the U.S. and
Canada). A full digital
replay will be available from Friday morning, February 5, through Friday, February 12, by dialing 1-800-475-6701
(320-365-3844 outside the U.S. and Canada) and using access code 383600.
ABOUT LIONSGATE
Lionsgate is a premier next generation global content leader
with a strong and diversified presence in motion picture production
and distribution, television programming and syndication, home
entertainment, digital distribution, new channel platforms, video
games and international distribution and sales. The Company
currently has 80 television shows on 40 different networks spanning
its primetime production, distribution and syndication businesses,
including such critically-acclaimed hits as Orange is the New
Black, the broadcast network series Nashville, the syndication success The
Wendy Williams Show, the breakout comedy The Royals and
the Golden Globe-nominated dramedy Casual.
Its feature film business has been fueled by such successes as
the blockbuster Hunger Games franchise, the first two
installments of the Divergent franchise, Sicario,
John Wick, Now You See
Me, CBS Films/Lionsgate's The Duff, Roadside
Attractions' Love & Mercy and Mr. Holmes and Pantelion Films'
Instructions Not Included, the highest-grossing
Spanish-language film ever released in the U.S.
Lionsgate's home entertainment business is an industry leader in
box office-to-DVD and box office-to-VOD revenue conversion rate.
The Company handles a prestigious and prolific library of
approximately 16,000 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 and Summit brands remain synonymous with original,
daring, quality entertainment in markets around the world.
For further information, please contact:
Peter D. Wilkes
310-255-3726
pwilkes@lionsgate.com
The matters discussed in this press release include
forward-looking statements, including those regarding the
performance of future fiscal 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 and
television series, budget overruns, limitations imposed by our
credit facility and notes, unpredictability of the commercial
success of our motion pictures and television programming, the cost
of defending our intellectual property, difficulties in integrating
acquired businesses, risks related to our acquisition strategy and
integration of acquired businesses, the effects of disposition of
businesses or assets, 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 (the "SEC") on February 4, 2016, which risk factors are
incorporated herein by reference. 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,
2015
|
|
March 31,
2015
|
|
(Amounts in
thousands,
except share
amounts)
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
|
88,292
|
|
|
$
|
102,697
|
|
|
Restricted
cash
|
2,650
|
|
|
2,508
|
|
|
Accounts receivable,
net of reserves for returns and allowances of $52,613 (March 31,
2015 - $64,362) and provision for doubtful accounts of $5,245
(March 31, 2015 - $4,120)
|
943,998
|
|
|
891,880
|
|
|
Investment in films
and television programs, net
|
1,561,968
|
|
|
1,381,829
|
|
|
Property and
equipment, net
|
41,914
|
|
|
26,651
|
|
|
Investments
|
475,109
|
|
|
438,298
|
|
|
Goodwill
|
534,143
|
|
|
323,328
|
|
|
Other
assets
|
84,822
|
|
|
74,784
|
|
|
Deferred tax
assets
|
105,503
|
|
|
50,114
|
|
|
Total
assets
|
$
|
3,838,399
|
|
|
$
|
3,292,089
|
|
|
LIABILITIES
|
|
|
|
|
Senior revolving
credit facility
|
$
|
—
|
|
|
$
|
—
|
|
|
5.25% Senior
Notes
|
225,000
|
|
|
225,000
|
|
|
Term Loan
|
400,000
|
|
|
375,000
|
|
|
Accounts payable and
accrued liabilities
|
327,828
|
|
|
332,473
|
|
|
Participations and
residuals
|
549,985
|
|
|
471,661
|
|
|
Film obligations and
production loans
|
895,558
|
|
|
656,755
|
|
|
Convertible senior
subordinated notes
|
99,508
|
|
|
114,126
|
|
|
Deferred
revenue
|
295,971
|
|
|
274,787
|
|
|
Total
liabilities
|
2,793,850
|
|
|
2,449,802
|
|
|
Commitments and
contingencies
|
|
|
|
|
Redeemable
noncontrolling interest
|
89,175
|
|
|
—
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Common shares, no par
value, 500,000,000 shares authorized, 150,252,445 shares issued
(March 31, 2015 - 145,532,978 shares)
|
951,360
|
|
|
830,786
|
|
|
Retained
earnings
|
7,673
|
|
|
13,720
|
|
|
Accumulated other
comprehensive loss
|
(3,659)
|
|
|
(2,219)
|
|
|
Total shareholders'
equity
|
955,374
|
|
|
842,287
|
|
|
Total liabilities and
shareholders' equity
|
$
|
3,838,399
|
|
|
$
|
3,292,089
|
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Amounts in
thousands, except per share amounts)
|
|
Revenues
|
$
|
670,522
|
|
|
$
|
751,299
|
|
|
$
|
1,556,222
|
|
|
$
|
1,753,558
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Direct
operating
|
404,068
|
|
|
400,576
|
|
|
927,188
|
|
|
945,840
|
|
|
Distribution and
marketing
|
203,121
|
|
|
171,439
|
|
|
428,185
|
|
|
421,637
|
|
|
General and
administration
|
70,083
|
|
|
61,407
|
|
|
198,372
|
|
|
186,975
|
|
|
Depreciation and
amortization
|
2,970
|
|
|
1,708
|
|
|
7,320
|
|
|
4,685
|
|
|
Total
expenses
|
680,242
|
|
|
635,130
|
|
|
1,561,065
|
|
|
1,559,137
|
|
|
Operating income
(loss)
|
(9,720)
|
|
|
116,169
|
|
|
(4,843)
|
|
|
194,421
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
Cash
interest
|
11,833
|
|
|
10,567
|
|
|
32,561
|
|
|
29,546
|
|
|
Amortization of debt
discount and deferred financing costs
|
2,336
|
|
|
2,984
|
|
|
6,863
|
|
|
10,048
|
|
|
Total interest
expense
|
14,169
|
|
|
13,551
|
|
|
39,424
|
|
|
39,594
|
|
|
Interest and other
income
|
(521)
|
|
|
(623)
|
|
|
(1,676)
|
|
|
(2,188)
|
|
|
Loss on
extinguishment of debt
|
—
|
|
|
690
|
|
|
—
|
|
|
1,276
|
|
|
Total other expenses,
net
|
13,648
|
|
|
13,618
|
|
|
37,748
|
|
|
38,682
|
|
|
Income (loss)
before equity interests and income taxes
|
(23,368)
|
|
|
102,551
|
|
|
(42,591)
|
|
|
155,739
|
|
|
Equity interests
income
|
10,826
|
|
|
10,898
|
|
|
29,363
|
|
|
37,353
|
|
|
Income (loss)
before income taxes
|
(12,542)
|
|
|
113,449
|
|
|
(13,228)
|
|
|
193,092
|
|
|
Income tax provision
(benefit)
|
(45,140)
|
|
|
15,264
|
|
|
(44,441)
|
|
|
30,865
|
|
|
Net
income
|
32,598
|
|
|
98,185
|
|
|
31,213
|
|
|
162,227
|
|
|
Less: Net loss
attributable to noncontrolling interest
|
8,119
|
|
|
—
|
|
|
8,119
|
|
|
—
|
|
|
Net income
attributable to Lions Gate Entertainment Corp.
shareholders
|
$
|
40,717
|
|
|
$
|
98,185
|
|
|
$
|
39,332
|
|
|
$
|
162,227
|
|
|
|
|
|
|
|
|
|
|
Per share
information attributable to Lions Gate Entertainment Corp.
shareholders:
|
|
|
|
|
|
|
|
|
Basic net income
per common share
|
$
|
0.27
|
|
|
$
|
0.70
|
|
|
$
|
0.26
|
|
|
$
|
1.17
|
|
|
Diluted net income
per common share
|
$
|
0.26
|
|
|
$
|
0.65
|
|
|
$
|
0.26
|
|
|
$
|
1.10
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
149,480
|
|
|
139,963
|
|
|
148,484
|
|
|
138,618
|
|
|
Diluted
|
159,412
|
|
|
151,713
|
|
|
154,412
|
|
|
151,716
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.09
|
|
|
$
|
0.07
|
|
|
$
|
0.25
|
|
|
$
|
0.19
|
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Amounts in
thousands)
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net income
|
$
|
32,598
|
|
|
$
|
98,185
|
|
|
$
|
31,213
|
|
|
$
|
162,227
|
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
2,970
|
|
|
1,708
|
|
|
7,320
|
|
|
4,685
|
|
|
Amortization of films
and television programs
|
293,998
|
|
|
280,380
|
|
|
655,288
|
|
|
639,472
|
|
|
Amortization of debt
discount and deferred financing costs
|
2,336
|
|
|
2,984
|
|
|
6,863
|
|
|
10,048
|
|
|
Non-cash share-based
compensation
|
13,416
|
|
|
15,142
|
|
|
47,399
|
|
|
48,691
|
|
|
Other non-cash
items
|
681
|
|
|
—
|
|
|
681
|
|
|
—
|
|
|
Distribution from
equity method investee
|
—
|
|
|
—
|
|
|
—
|
|
|
7,788
|
|
|
Loss on
extinguishment of debt
|
—
|
|
|
690
|
|
|
—
|
|
|
1,276
|
|
|
Equity interests
income
|
(10,826)
|
|
|
(10,898)
|
|
|
(29,363)
|
|
|
(37,353)
|
|
|
Deferred income
taxes
|
(52,121)
|
|
|
1,927
|
|
|
(54,733)
|
|
|
11,243
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Restricted
cash
|
(142)
|
|
|
27
|
|
|
(142)
|
|
|
1,417
|
|
|
Accounts receivable,
net
|
(48,670)
|
|
|
(178,397)
|
|
|
(36,663)
|
|
|
(94,803)
|
|
|
Investment in films
and television programs
|
(235,785)
|
|
|
(176,450)
|
|
|
(771,255)
|
|
|
(815,469)
|
|
|
Other
assets
|
(426)
|
|
|
(520)
|
|
|
(2,254)
|
|
|
(1,416)
|
|
|
Accounts payable and
accrued liabilities
|
26,282
|
|
|
26,290
|
|
|
(8,018)
|
|
|
(52,700)
|
|
|
Participations and
residuals
|
32,490
|
|
|
(28,640)
|
|
|
77,428
|
|
|
(6,070)
|
|
|
Film
obligations
|
(19,028)
|
|
|
4,960
|
|
|
(30,176)
|
|
|
(33,953)
|
|
|
Deferred
revenue
|
20,284
|
|
|
7,508
|
|
|
(4,139)
|
|
|
(8,124)
|
|
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
58,057
|
|
|
44,896
|
|
|
(110,551)
|
|
|
(163,041)
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
Proceeds from the
sale of equity method investees
|
—
|
|
|
—
|
|
|
—
|
|
|
14,575
|
|
|
Investment in equity
method investees
|
(295)
|
|
|
(2,100)
|
|
|
(3,954)
|
|
|
(14,750)
|
|
|
Purchase of Pilgrim
Studios, net of cash acquired of $15,816
|
(126,892)
|
|
|
—
|
|
|
(126,892)
|
|
|
—
|
|
|
Purchases of other
investments
|
(750)
|
|
|
—
|
|
|
(750)
|
|
|
(2,000)
|
|
|
Purchases of property
and equipment
|
(6,800)
|
|
|
(6,798)
|
|
|
(13,680)
|
|
|
(11,293)
|
|
|
Net Cash Flows
Used In Investing Activities
|
(134,737)
|
|
|
(8,898)
|
|
|
(145,276)
|
|
|
(13,468)
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
Senior revolving
credit facility - borrowings
|
190,000
|
|
|
314,000
|
|
|
238,000
|
|
|
681,500
|
|
|
Senior revolving
credit facility - repayments
|
(190,000)
|
|
|
(293,000)
|
|
|
(238,000)
|
|
|
(618,619)
|
|
|
Term Loan -
borrowings, net of deferred financing costs of $964
|
—
|
|
|
—
|
|
|
24,036
|
|
|
—
|
|
|
Convertible senior
subordinated notes - repurchases
|
—
|
|
|
—
|
|
|
(5)
|
|
|
(16)
|
|
|
Production loans -
borrowings
|
138,624
|
|
|
148,075
|
|
|
509,569
|
|
|
533,781
|
|
|
Production loans -
repayments
|
(128,091)
|
|
|
(196,433)
|
|
|
(240,565)
|
|
|
(261,868)
|
|
|
Repurchase of common
shares
|
—
|
|
|
(3,455)
|
|
|
—
|
|
|
(129,859)
|
|
|
Dividends
paid
|
(13,364)
|
|
|
(9,590)
|
|
|
(33,927)
|
|
|
(23,536)
|
|
|
Excess tax benefits
on equity-based compensation awards
|
—
|
|
|
5,617
|
|
|
—
|
|
|
6,767
|
|
|
Exercise of stock
options
|
1,554
|
|
|
2,741
|
|
|
6,007
|
|
|
4,404
|
|
|
Tax withholding
required on equity awards
|
(3,888)
|
|
|
(2,803)
|
|
|
(22,871)
|
|
|
(14,939)
|
|
|
Net Cash Flows
Provided By (Used In) Financing Activities
|
(5,165)
|
|
|
(34,848)
|
|
|
242,244
|
|
|
177,615
|
|
|
Net Change In Cash
And Cash Equivalents
|
(81,845)
|
|
|
1,150
|
|
|
(13,583)
|
|
|
1,106
|
|
|
Foreign Exchange
Effects on Cash
|
(280)
|
|
|
1,467
|
|
|
(822)
|
|
|
2,088
|
|
|
Cash and Cash
Equivalents - Beginning Of Period
|
170,417
|
|
|
26,269
|
|
|
102,697
|
|
|
25,692
|
|
|
Cash and Cash
Equivalents - End Of Period
|
$
|
88,292
|
|
|
$
|
28,886
|
|
|
$
|
88,292
|
|
|
$
|
28,886
|
|
LIONS GATE ENTERTAINMENT CORP.
USE OF NON-GAAP FINANCIAL MEASURES
This earnings release presents EBITDA, Adjusted EBITDA, free
cash flow, adjusted net income (loss) attributable to Lions Gate
Entertainment Corp. (the "Company," "we," "us" or "our")
shareholders, and adjusted earnings (loss) per share, all of which
are important financial measures for the Company but are not
financial measures defined by GAAP.
These measures are non-GAAP financial measures as defined in
Regulation G promulgated by the Securities and Exchange Commission
(the "SEC") and are in addition to, not a substitute for, or
superior to, measures of financial performance prepared in
accordance with United States
("U.S.") generally accepted accounting principles ("GAAP").
We believe these non-GAAP measures to be meaningful indicators
of our performance that provide useful information to investors
regarding our financial condition and results of operations and
cash flows before non-operating items. These non-GAAP
measures are commonly used in the entertainment industry and by
financial analysts and others who follow the industry to measure
operating performance. However, not all companies calculate these
measures in the same manner and the measures as presented may not
be comparable to similarly titled measures presented by other
companies.
These measures should be reviewed in conjunction with the
relevant GAAP financial measures and are not presented as
alternative measures of operating income, cash flow, net income, or
earnings (loss) per share as determined in accordance with GAAP.
Definitions and reconciliations of the adjusted metrics utilized to
their corresponding GAAP metrics are provided below.
EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before interest, income tax
provision or benefit, and depreciation and amortization.
Adjusted EBITDA represents EBITDA as defined above adjusted for
stock-based compensation, purchase accounting and related
adjustments, restructuring and other items, start-up losses of new
business initiatives, loss on extinguishment of debt, and
backstopped prints and advertising expense.
Free Cash Flow
Free cash flow is defined as net cash flows provided by (used
in) operating activities, less purchases of property and equipment,
plus or minus the net increase or decrease in production loans,
plus or minus excess tax benefits on equity-based compensation
awards if applicable and excluding the cash used by our new
business initiatives and the one-time transactional costs of
Pilgrim Studios attributable to the noncontrolling shareholder. The
adjustment for the production loans is made because the GAAP based
cash flows from operations reflects a non-cash reduction of cash
flows for the cost of films and television programs associated with
production loans prior to the time the Company actually pays for
the film or television program. The Company believes that it is
more meaningful to reflect the impact of the payment for these
films and television programs in its free cash flow when the
payments are actually made. Cash used by our new business
initiatives includes the cash used in operating activities plus the
cash used in the purchase of property and equipment related to our
consolidated subscription video-on-demand platforms.
Adjusted Net Income (Loss) Attributable to Lions Gate
Entertainment Corp. Shareholders, and Adjusted Earnings (Loss) Per
Share
Adjusted net income (loss) attributable to Lions Gate
Entertainment Corp. shareholders is defined as net income (loss)
attributable to Lions Gate Entertainment Corp. shareholders,
adjusted for stock-based compensation, purchase accounting and
related adjustments, restructuring and other items, start-up losses
of new business initiatives, loss on extinguishment of debt, and
backstopped prints and advertising expense, net of taxes at the
applicable statutory rate and net of the amounts attributable to
noncontrolling interest.
Adjusted earnings (loss) per share is defined as adjusted net
income (loss) attributable to Lions Gate Entertainment Corp.
shareholders per weighted average shares outstanding.
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
RECONCILIATION OF
NET INCOME TO EBITDA AND ADJUSTED EBITDA
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014**
|
|
(Amounts in
thousands)
|
|
Net
income
|
$
|
32,598
|
|
|
$
|
98,185
|
|
|
$
|
31,213
|
|
|
$
|
162,227
|
|
|
Depreciation and
amortization
|
2,970
|
|
|
1,708
|
|
|
7,320
|
|
|
4,685
|
|
|
Cash
interest
|
11,833
|
|
|
10,567
|
|
|
32,561
|
|
|
29,546
|
|
|
Noncash interest
expense
|
2,336
|
|
|
2,984
|
|
|
6,863
|
|
|
10,048
|
|
|
Interest and other
income
|
(521)
|
|
|
(623)
|
|
|
(1,676)
|
|
|
(2,188)
|
|
|
Income tax provision
(benefit)
|
(45,140)
|
|
|
15,264
|
|
|
(44,441)
|
|
|
30,865
|
|
|
EBITDA
|
$
|
4,076
|
|
|
$
|
128,085
|
|
|
$
|
31,840
|
|
|
$
|
235,183
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation(1)
|
13,235
|
|
|
15,132
|
|
|
47,506
|
|
|
48,875
|
|
|
Restructuring and
other items(2)
|
13,398
|
|
|
766
|
|
|
17,605
|
|
|
7,008
|
|
|
Purchase accounting
and related adjustments(3)
|
4,241
|
|
|
—
|
|
|
4,241
|
|
|
—
|
|
|
Start-up losses of
new business initiatives(4)
|
6,909
|
|
|
—
|
|
|
10,387
|
|
|
—
|
|
|
Loss on
extinguishment of debt
|
—
|
|
|
690
|
|
|
—
|
|
|
1,276
|
|
|
Backstopped prints
and advertising expense(5)
|
11,755
|
|
|
2,100
|
|
|
4,942
|
|
|
2,100
|
|
|
Adjusted
EBITDA
|
$
|
53,614
|
|
|
$
|
146,773
|
|
|
$
|
116,521
|
|
|
$
|
294,442
|
|
|
|
|
|
|
|
|
|
|
|
** In the quarter
ended March 31, 2015, the definition of Adjusted EBITDA was revised
to include the gains or losses from the sale of equity method
investments. Accordingly, Adjusted EBITDA for the nine months ended
December 31, 2014 has been revised to include the $11.4 million
gain on the sale of the Company's interest in FEARnet which
occurred April 2014. Prior to the sale of FEARnet, the Company
recognized cumulative equity interest losses before income taxes of
approximately $11.7 million from its interest in
FEARnet.
|
|
|
(1)
|
Represents
stock-based compensation expenses for the applicable
periods.
|
|
|
|
(2)
|
Restructuring and
other items includes restructuring and severance costs, certain
transaction related costs, and certain unusual items, when
applicable. Amounts in the three and nine months ended
December 31, 2015 represent professional fees associated with
certain strategic transactions including, among others, the
acquisition of a majority interest in Pilgrim Media Group, LLC
("Pilgrim Studios") and certain shareholder transactions, the costs
related to the move of our international sales and distribution
organization to the United Kingdom, and certain transactional costs
of $7.7 million of Pilgrim Studios attributable to the
noncontrolling shareholder. Pursuant to the profit sharing
provisions in the Pilgrim Studios operating agreement, the
transactional costs of $7.7 million are included in net loss
attributable to noncontrolling interest in the unaudited condensed
consolidated statement of income and thus does not impact earnings
per share attributable to Lions Gate Entertainment Corp.
shareholders. In addition, amounts in the nine months ended
December 31, 2015 include pension withdrawal costs of $2.7 million
related to an underfunded multi-employer pension plan in which the
Company is no longer participating.
|
|
|
|
Amounts in the three
and nine months ended December 31, 2014 primarily represent costs
related to the move of our international sales and distribution
organization to the United Kingdom. In addition, amounts in the
nine months ended December 31, 2014 include severance costs
associated with the integration of the marketing operations of the
Company's Lionsgate and Summit film labels, of which approximately
$1.2 million are non-cash charges resulting from the acceleration
of vesting of stock awards.
|
|
|
|
(3)
|
Purchase accounting
and related adjustments represent the incremental amortization
expense associated with the non-cash fair value adjustments on
television assets of $3.6 million included in direct operating
expense resulting from the application of purchase accounting and
the charge of $0.7 million included in general and administrative
expense related to the accretion of the noncontrolling interest
discount.
|
|
|
|
(4)
|
Start-up losses of
new business initiatives represent losses associated with the
Company's direct to consumer initiatives including its subscription
video-on-demand platforms and Atom Tickets, the first-of-its-kind
theatrical mobile ticketing platform and app. For the three and
nine months ended December 31, 2015, $1.3 million represents the
gross contribution (i.e., revenue less direct operating and
distribution and marketing expenses) of the consolidated business,
$2.6 million and $3.0 million, respectively, is included in the
Company's consolidated general and administrative expense and $3.0
million and $6.1 million, respectively, is included in equity
interests income.
|
|
|
|
(5)
|
Backstopped prints
and advertising expense ("P&A") represents the amount of
theatrical marketing expense for third party titles that the
Company funded and expensed for which a third party provides a
first dollar loss guarantee (subject to a cap) that such expense
will be recouped from the performance of the film (which results in
minimal risk of loss to the Company). The amount represents the
P&A expense incurred net of the impact of expensing the P&A
cost over the revenue streams similar to a participation expense
(i.e., the P&A under these arrangements are being expensed
similar to a participation cost for purposes of the adjusted
measure).
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
RECONCILIATION OF
FREE CASH FLOW TO
|
|
NET CASH FLOWS
PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Amounts in
thousands)
|
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
$
|
58,057
|
|
|
$
|
44,896
|
|
|
$
|
(110,551)
|
|
|
$
|
(163,041)
|
|
|
Purchases of property
and equipment
|
(6,800)
|
|
|
(6,798)
|
|
|
(13,680)
|
|
|
(11,293)
|
|
|
Net borrowings under
and (repayment) of production loans
|
10,533
|
|
|
(48,358)
|
|
|
269,004
|
|
|
271,913
|
|
|
Cash used by new
business initiatives
|
4,377
|
|
|
—
|
|
|
4,614
|
|
|
—
|
|
|
One-time
transactional costs of Pilgrim Studios attributable to the
noncontrolling shareholder
|
7,689
|
|
|
—
|
|
|
7,689
|
|
|
—
|
|
|
Excess tax benefits
on equity-based compensation awards
|
—
|
|
|
5,617
|
|
|
—
|
|
|
6,767
|
|
|
Free Cash Flow, as
defined
|
$
|
73,856
|
|
|
$
|
(4,643)
|
|
|
$
|
157,076
|
|
|
$
|
104,346
|
|
|
|
|
|
|
|
|
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
RECONCILIATION OF
EBITDA TO FREE CASH FLOW
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Amounts in
thousands)
|
|
EBITDA
|
$
|
4,076
|
|
|
$
|
128,085
|
|
|
$
|
31,840
|
|
|
$
|
235,183
|
|
|
|
|
|
|
|
|
|
|
Plus: Amortization of
film and television programs
|
293,998
|
|
|
280,380
|
|
|
655,288
|
|
|
639,472
|
|
|
Less: Cash paid for
film and television programs(1)
|
(244,280)
|
|
|
(219,848)
|
|
|
(532,427)
|
|
|
(577,509)
|
|
|
Amortization of film
and television programs in excess of cash paid
|
49,718
|
|
|
60,532
|
|
|
122,861
|
|
|
61,963
|
|
|
|
|
|
|
|
|
|
|
Plus: Non-cash
stock-based compensation
|
13,416
|
|
|
15,142
|
|
|
47,399
|
|
|
48,691
|
|
|
Plus: Other non-cash
items
|
681
|
|
|
—
|
|
|
681
|
|
|
—
|
|
|
Plus: Distribution
from equity method investee
|
—
|
|
|
—
|
|
|
—
|
|
|
7,788
|
|
|
Less: Equity
interests income
|
(10,826)
|
|
|
(10,898)
|
|
|
(29,363)
|
|
|
(37,353)
|
|
|
Plus: Loss on
extinguishment of debt
|
—
|
|
|
690
|
|
|
—
|
|
|
1,276
|
|
|
Plus: Cash used by
new business initiatives
|
4,377
|
|
|
—
|
|
|
4,614
|
|
|
—
|
|
|
Plus: One-time
transactional costs of Pilgrim Studios attributable to the
noncontrolling shareholder
|
7,689
|
|
|
—
|
|
|
7,689
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
EBITDA adjusted
for items above
|
69,131
|
|
|
193,551
|
|
|
185,721
|
|
|
317,548
|
|
|
|
|
|
|
|
|
|
|
Changes in other
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Restricted
cash
|
(142)
|
|
|
27
|
|
|
(142)
|
|
|
1,417
|
|
|
Accounts receivable,
net
|
(48,670)
|
|
|
(178,397)
|
|
|
(36,663)
|
|
|
(94,803)
|
|
|
Other
assets
|
(426)
|
|
|
(520)
|
|
|
(2,254)
|
|
|
(1,416)
|
|
|
Accounts payable and
accrued liabilities
|
26,282
|
|
|
26,290
|
|
|
(8,018)
|
|
|
(52,700)
|
|
|
Participations and
residuals
|
32,490
|
|
|
(28,640)
|
|
|
77,428
|
|
|
(6,070)
|
|
|
Deferred
revenue
|
20,284
|
|
|
7,508
|
|
|
(4,139)
|
|
|
(8,124)
|
|
|
29,818
|
|
|
(173,732)
|
|
|
26,212
|
|
|
(161,696)
|
|
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(6,800)
|
|
|
(6,798)
|
|
|
(13,680)
|
|
|
(11,293)
|
|
|
Interest, taxes and
other(2)
|
(18,293)
|
|
|
(17,664)
|
|
|
(41,177)
|
|
|
(40,213)
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow, as
defined
|
$
|
73,856
|
|
|
$
|
(4,643)
|
|
|
$
|
157,076
|
|
|
$
|
104,346
|
|
|
|
|
|
|
|
|
|
|
(1) Cash paid for
film and television programs is calculated using the following
amounts as presented in our consolidated statement of cash
flows:
|
|
Change in investment
in film and television programs
|
$
|
(235,785)
|
|
|
$
|
(176,450)
|
|
|
$
|
(771,255)
|
|
|
$
|
(815,469)
|
|
|
Change in film
obligations
|
(19,028)
|
|
|
4,960
|
|
|
(30,176)
|
|
|
(33,953)
|
|
|
Production loans -
borrowings
|
138,624
|
|
|
148,075
|
|
|
509,569
|
|
|
533,781
|
|
|
Production loans -
repayments
|
(128,091)
|
|
|
(196,433)
|
|
|
(240,565)
|
|
|
(261,868)
|
|
|
Total cash paid for
film and television programs
|
$
|
(244,280)
|
|
|
$
|
(219,848)
|
|
|
$
|
(532,427)
|
|
|
$
|
(577,509)
|
|
|
|
|
|
|
|
|
|
|
(2) Interest, taxes
and other consists of the following:
|
|
|
|
|
|
|
|
|
Cash
interest
|
$
|
(11,833)
|
|
|
$
|
(10,567)
|
|
|
$
|
(32,561)
|
|
|
$
|
(29,546)
|
|
|
Interest and other
income
|
521
|
|
|
623
|
|
|
1,676
|
|
|
2,188
|
|
|
Current income tax
provision
|
(6,981)
|
|
|
(13,337)
|
|
|
(10,292)
|
|
|
(19,622)
|
|
|
Excess tax benefits
on equity-based compensation awards
|
—
|
|
|
5,617
|
|
|
—
|
|
|
6,767
|
|
|
Total interest, taxes
and other
|
$
|
(18,293)
|
|
|
$
|
(17,664)
|
|
|
$
|
(41,177)
|
|
|
$
|
(40,213)
|
|
|
|
|
|
|
|
|
|
This reconciliation is provided to illustrate the difference
between our EBITDA and free cash flow which are both separately
reconciled to their corresponding GAAP metrics.
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
RECONCILIATION OF
NET INCOME ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP.
SHAREHOLDERS, AND BASIC AND DILUTED EPS TO ADJUSTED NET INCOME
ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP. SHAREHOLDERS, AND
ADJUSTED BASIC AND DILUTED EPS
|
|
|
Three Months Ended
December 31, 2015
|
|
(Amounts in
thousands, except per share amounts)
|
|
Income (loss)
before income taxes
|
|
Net income
(1)
|
|
Net income
attributable to Lions Gate Entertainment Corp. shareholders
(2)
|
|
Basic
EPS*
|
|
Diluted
EPS*
|
|
As
reported
|
$
|
(12,542)
|
|
|
$
|
32,598
|
|
|
$
|
40,717
|
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
Stock-based
compensation
|
13,235
|
|
|
8,382
|
|
|
8,382
|
|
|
0.06
|
|
|
0.05
|
|
|
Purchase accounting
and related adjustments(3)
|
4,604
|
|
|
3,549
|
|
|
1,823
|
|
|
0.01
|
|
|
0.01
|
|
|
Restructuring and
other items(4)
|
13,398
|
|
|
11,672
|
|
|
3,983
|
|
|
0.03
|
|
|
0.02
|
|
|
Start-up losses of
new business initiatives(5)
|
7,049
|
|
|
4,464
|
|
|
4,464
|
|
|
0.03
|
|
|
0.03
|
|
|
Backstopped prints
and advertising expense
|
11,755
|
|
|
7,444
|
|
|
7,444
|
|
|
0.05
|
|
|
0.05
|
|
|
As adjusted for
items above
|
$
|
37,499
|
|
|
$
|
68,109
|
|
|
$
|
66,813
|
|
|
$
|
0.45
|
|
|
$
|
0.42
|
|
|
|
Three Months Ended
December 31, 2014
|
|
(Amounts in
thousands, except per share amounts)
|
|
Income before
income taxes
|
|
Net
income(1)
|
|
Net income
attributable to Lions Gate Entertainment Corp. shareholders
(2)
|
|
Basic
EPS*
|
|
Diluted
EPS*
|
|
As
reported
|
$
|
113,449
|
|
|
$
|
98,185
|
|
|
$
|
98,185
|
|
|
$
|
0.70
|
|
|
$
|
0.65
|
|
|
Stock-based
compensation
|
15,132
|
|
|
9,585
|
|
|
9,585
|
|
|
0.07
|
|
|
0.06
|
|
|
Restructuring and
other items(4)
|
766
|
|
|
485
|
|
|
485
|
|
|
—
|
|
|
—
|
|
|
Loss on
extinguishment of debt
|
690
|
|
|
437
|
|
|
437
|
|
|
—
|
|
|
—
|
|
|
Backstopped prints
and advertising expense
|
2,100
|
|
|
1,330
|
|
|
1,330
|
|
|
0.01
|
|
|
0.01
|
|
|
As adjusted for
items above
|
$
|
132,137
|
|
|
$
|
110,022
|
|
|
$
|
110,022
|
|
|
$
|
0.79
|
|
|
$
|
0.73
|
|
|
|
Nine Months Ended
December 31, 2015
|
|
(Amounts in
thousands, except per share amounts)
|
|
Income (loss)
before income taxes
|
|
Net income
(1)
|
|
Net income
attributable to Lions Gate Entertainment Corp. shareholders
(2)
|
|
Basic
EPS*
|
|
Diluted
EPS*
|
|
As
reported
|
$
|
(13,228)
|
|
|
$
|
31,213
|
|
|
$
|
39,332
|
|
|
$
|
0.26
|
|
|
$
|
0.26
|
|
|
Stock-based
compensation
|
47,506
|
|
|
30,086
|
|
|
30,086
|
|
|
0.20
|
|
|
0.20
|
|
|
Purchase accounting
and related adjustments(3)
|
4,604
|
|
|
3,549
|
|
|
1,823
|
|
|
0.01
|
|
|
0.01
|
|
|
Restructuring and
other items(4)
|
17,605
|
|
|
14,422
|
|
|
6,733
|
|
|
0.05
|
|
|
0.04
|
|
|
Start-up losses of
new business initiatives(5)
|
10,527
|
|
|
6,667
|
|
|
6,667
|
|
|
0.04
|
|
|
0.04
|
|
|
Backstopped prints
and advertising expense
|
4,942
|
|
|
3,130
|
|
|
3,130
|
|
|
0.02
|
|
|
0.02
|
|
|
As adjusted for
items above
|
$
|
71,956
|
|
|
$
|
89,067
|
|
|
$
|
87,771
|
|
|
$
|
0.59
|
|
|
$
|
0.57
|
|
|
|
Nine Months Ended
December 31, 2014**
|
|
(Amounts in
thousands, except per share amounts)
|
|
Income before
income taxes
|
|
Net income
(1)
|
|
Net income
attributable to Lions Gate Entertainment Corp. shareholders
(2)
|
|
Basic
EPS*
|
|
Diluted
EPS*
|
|
As
reported
|
$
|
193,092
|
|
|
$
|
162,227
|
|
|
$
|
162,227
|
|
|
$
|
1.17
|
|
|
$
|
1.10
|
|
|
Stock-based
compensation
|
48,875
|
|
|
30,957
|
|
|
30,957
|
|
|
0.22
|
|
|
0.20
|
|
|
Restructuring and
other items(4)
|
7,008
|
|
|
4,439
|
|
|
4,439
|
|
|
0.03
|
|
|
0.03
|
|
|
Loss on
extinguishment of debt
|
1,276
|
|
|
808
|
|
|
808
|
|
|
0.01
|
|
|
0.01
|
|
|
Backstopped prints
and advertising expense
|
2,100
|
|
|
1,330
|
|
|
1,330
|
|
|
0.01
|
|
|
0.01
|
|
|
As adjusted for
items above
|
$
|
252,351
|
|
|
$
|
199,761
|
|
|
$
|
199,761
|
|
|
$
|
1.44
|
|
|
$
|
1.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
______________________________________
|
|
* Basic and Diluted
EPS amounts may not add precisely due to rounding
|
|
|
** In the quarter
ended March 31, 2015, the definition of adjusted net income
attributable to Lions Gate Entertainment Corp. shareholders and
adjusted earnings per share was revised to include the gains or
losses from the sale of equity method investments. Accordingly,
adjusted net income attributable to Lions Gate Entertainment Corp.
shareholders for the nine months ended December 31, 2014 has been
revised to include the gain on the April 2014 sale of the Company's
interest in FEARnet of $11.4 million ($7.2 million after income
taxes) and representing adjusted basic and diluted earnings per
share of $0.05 for the nine months ended December 31, 2014. Prior
to the sale of FEARnet, the Company recognized cumulative equity
interest losses before income taxes of approximately $11.7 million
from the Company's interest in FEARnet.
|
|
|
|
(1)
|
Represents amounts
net of the tax impact calculated using the statutory tax rate
applicable to each adjustment.
|
|
|
|
(2)
|
Represents the net
income amount adjusted for the portion attributable to
noncontrolling interest, if any.
|
|
|
|
(3)
|
Purchase accounting
and related adjustments include amounts presented in Adjusted
EBITDA, plus $0.4 million of incremental depreciation and
amortization expense associated with the non-cash fair value
adjustments to property and equipment and intangible assets
resulting from the application of purchase accounting related to
the acquisition of Pilgrim Studios.
|
|
|
|
(4)
|
Restructuring and
other items include amounts presented in Adjusted EBITDA. Pursuant
to the profit sharing provisions in the Pilgrim Studios operating
agreement, the transactional costs of $7.7 million of Pilgrim
Studios, are included in net loss attributable to noncontrolling
interest in the unaudited condensed consolidated statement of
income and thus do not impact earnings per share attributable to
Lions Gate Entertainment Corp. shareholders.
|
|
|
|
(5)
|
Start-up losses of
new business initiatives include amounts presented in Adjusted
EBITDA, plus $0.1 million for the depreciation expense associated
with these entities.
|
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SOURCE Lionsgate