Revenue Increases 12% to $752
Million; Net Loss Attributable to Lionsgate Shareholders is
$31 Million or Basic Net Loss per
Common Share of $0.19
Adjusted Net Income Attributable to Lionsgate Shareholders is
$34 Million or Adjusted Basic EPS of
$0.21
Quarter Includes $52 Million in
Restructuring and Other Costs Primarily Related to Starz
Transaction, $28 Million Loss on
Extinguishment of Debt
TV Production and Motion Picture Segment Profits Increase
Sharply
SANTA MONICA, Calif. and
VANCOUVER, British Columbia,
Feb. 8, 2017 /CNW/ -- Lionsgate
(NYSE: LGF.A, LGF.B) today reported revenue of $752 million, net loss attributable to Lionsgate
shareholders of $(31) million or
basic net loss per common share of $(0.19), adjusted net income attributable to
Lionsgate shareholders of $34 million
or adjusted basic EPS of $0.21, and
adjusted OIBDA of $84 million for the
third quarter of fiscal 2017 (quarter ended December 31, 2016).
The quarter's reported results included 23 days of operations
from the combined entity following the December 8, 2016 close of Lionsgate's acquisition
of Starz.
"We're pleased to report increased profits across our film,
television and media networks divisions as well as another strong
revenue performance from our Television Group," said Lionsgate
Chief Executive Officer Jon
Feltheimer. "We've just completed one of our busiest and
most productive quarters ever as we continue to scale our global
content platform and integrate Starz into our operations. Our
strong film and television offerings are now complemented by our
Starz premium network that is becoming a "must-have" value
proposition for the digital age."
Revenue of $752 million for the
quarter grew 12% from the prior-year quarter driven by solid gains
in Television Production and the acquisition of Starz.
Segment profits at Motion Pictures increased 55% as reductions
in direct operating expenses and distribution and marketing costs
more than offset the decline in revenue from the prior year
quarter. Television Production segment profits increased 117%
due to strong revenue and lower distribution and marketing
costs.
The Company's wide release of the blockbuster La La Land,
which earned a record-tying 14 Academy Award nominations and has
grossed over $270 million to date at
the worldwide box office, occurred after the close of the
December 31 quarter. The
financial impact of the film's performance will be reflected in
future quarters.
Net loss attributable to Lionsgate shareholders for the quarter
of $(31) million or basic net loss
per common share of $(0.19) on 161.4
million weighted average number of common shares outstanding
compared to net income attributable to Lionsgate shareholders of
$41 million or basic EPS of
$0.27 on 149.5 million weighted
average number of common shares outstanding during the prior year
quarter.
Adjusted OIBDA of $84 million for
the quarter increased from adjusted OIBDA of $24 million in the prior year quarter.
Adjusted net income attributable to Lionsgate shareholders of
$34 million or adjusted basic EPS of
$0.21 for the quarter compared to
adjusted net income attributable to Lionsgate shareholders of
$55 million or adjusted basic EPS of
$0.37 in the prior year quarter.
Net loss and basic net loss per common share in the quarter was
largely attributable to $52 million
in restructuring and other costs in the quarter primarily
associated with Lionsgate's acquisition and integration of Starz,
including $22 million of severance
costs and $27 million of
transaction-related costs. The quarter also included a
$28 million loss on extinguishment of
debt in connection with the Starz transaction financing. In
addition, the quarter included a $20
million gain on Lionsgate's investment in Starz stock.
Motion Picture segment revenues of $440
million declined 13% despite strong box office performances
from Tyler Perry's Boo! A
Madea Halloween and Hacksaw
Ridge, compared to a prior year quarter that included
The Hunger Games: Mockingjay Part 2.
Additionally, Hacksaw Ridge was recorded on a net fee basis
rather than gross revenue based on the Company's distribution
agreement. Segment profit improved 55% driven by reductions
in direct operating expenses and distribution and marketing
expenses. Segment profit margins increased from 6.5% to 11.6% in
the quarter. Motion Picture segment profit on a combined pro
forma basis (reflecting the integration of Starz for all periods)
grew 67% in the quarter.
TV Production segment revenues increased 39% to $229 million, the second highest total ever,
driven primarily by an increase in television deliveries including
episodes of Orange is the New Black, the new series Dear
White People and the three-hour musical event Dirty
Dancing. Segment profit increased 117% to $26 million as higher revenues were further
bolstered by a decrease in distribution and marketing expenses.
Segment profit margins improved to 11.4% from 7.3% in the quarter.
TV Production segment profit on a combined pro forma basis
(reflecting the integration of Starz for all periods) grew 93% in
the quarter.
Media Networks reported revenues of $85
million and segment profit of $33
million, representing segment profit margins of 39%. Results
were not comparable due to the acquisition of Starz on December 8, 2016. On a combined pro
forma basis (reflecting the integration of Starz for all
periods) the segment grew revenues 3% in the quarter. Direct
operating expenses on a combined pro forma basis were down 21%
primarily related to original programming timing, driving combined
pro forma segment profit up 94%.
Lionsgate's backlog, or already contracted future revenue on the
licensing of film and television product not yet recorded, was
$1.4 billion at December 31, 2016.
Lionsgate senior management will hold its analyst and investor
conference call to discuss its third quarter fiscal 2017 financial
results at 5:00 PM ET/2:00 PM PT today, Wednesday, February 8.
Interested parties may listen to the live webcast by visiting the
events page on the Lionsgate corporate website or via
http://services.choruscall.com/links/lgf170208fsetOE9d.html. A full
replay will be available later this afternoon, February 8, through Wednesday, February 15, by clicking the same
link.
ABOUT LIONSGATE
Lionsgate (NYSE: LGF.A, LGF.B) is a vertically integrated next
generation global content leader with a diversified presence in
motion picture production and distribution, television programming
and syndication, premium pay television networks, home
entertainment, global distribution and sales, interactive ventures
and games and location-based entertainment.
With the acquisition of Starz, Lionsgate adds to its portfolio
of businesses the flagship STARZ premium pay network serving nearly
25 million subscribers and the STARZ
ENCORE platform with over 31 million
subscribers. The combined company will operate five
over-the-top (OTT) streaming services and the STARZ app delivering
content directly to consumers.
The Company's feature film business spans eight labels and
includes the blockbuster Hunger Games franchise,
the Now You See Me and John Wick series, the
critically-acclaimed box office hit La
La Land, which earned a record-tying 14 Academy
Award® nominations, Hacksaw Ridge, Tyler Perry's Boo! A Madea Halloween, CBS Films/Lionsgate's Hell
or High Water, Roadside Attractions' Manchester by the Sea, Codeblack
Films' breakout concert film Kevin
Hart: Let Me Explain and Pantelion
Films' Instructions Not Included, the highest-grossing
Spanish-language film ever released in the U.S.
One of the largest independent television businesses in the
world, Lionsgate's slate of premium quality series encompasses
nearly 90 shows on more than 40 different networks. These
include the ground-breaking Orange is the New Black,
the fan favorite Nashville, the syndication
success The Wendy Williams Show, the hit
drama The Royals, the acclaimed
Casual, the breakout
success Greenleaf and hit Starz series
including Outlander, Black
Sails, Survivor's Remorse and Power,
the second highest-rated premium pay television series of 2016.
Lionsgate's home entertainment business is an industry leader in
box office-to-DVD and box office-to-VOD revenue conversion rates.
Lionsgate handles a prestigious and prolific library of more
than 16,000 motion picture and television titles that is an
important source of recurring revenue and serves as a foundation
for the growth of the Company's core businesses. The Lionsgate,
Summit Entertainment and Starz brands are synonymous with original,
daring, quality entertainment in markets around the
world. www.lionsgate.com
For further information, Investors should contact:
James Marsh
310-255-3651
jmarsh@lionsgate.com
For Media inquiries, please contact:
Peter 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 facilities and notes; unpredictability of the commercial
success of our motion pictures and television programming; risks
related to acquisition and integration of acquired businesses; the
effects of dispositions of businesses or assets, including
individual films or libraries; the cost of defending our
intellectual property; technological changes and other trends
affecting the entertainment industry; potential adverse reactions
or changes to business or employee relationships, including those
resulting from the recent acquisition of Starz; competitive
responses to the transaction; the possibility that the anticipated
benefits of the transaction are not realized when expected or at
all, including as a result of the impact of, or problems arising
from, the integration of the two companies; diversion of
management's attention from ongoing business operations and
opportunities; our ability to complete the integration of Starz
successfully; litigation relating to the transaction; other trends
affecting the entertainment industry; and the other risk factors as
set forth in Lionsgate's Quarterly Reports on Form 10-Q filed with
the Securities and Exchange Commission, 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.
Additional Information Available on Website
The information in this press release should be read in
conjunction with the financial statements and footnotes contained
in the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 2016, which will
be posted on the Company's website at
www.lionsgate.com/corporate/reports/sec-filings/, when filed with
the Securities and Exchange Commission. Trending schedules
containing certain financial information will also be available at
www.lionsgate.com/corporate/reports.
LIONS GATE
ENTERTAINMENT CORP
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
December 31,
2016
|
|
March 31,
2016
|
|
(Amounts in
millions,
except share
amounts)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
595
|
|
|
$
|
58
|
|
Restricted
cash
|
3
|
|
|
3
|
|
Accounts receivable,
net
|
777
|
|
|
570
|
|
Program
rights
|
236
|
|
|
—
|
|
Other current
assets
|
259
|
|
|
237
|
|
Total current
assets
|
1,870
|
|
|
868
|
|
Investment in films
and television programs and program rights, net
|
1,816
|
|
|
1,458
|
|
Property and
equipment, net
|
168
|
|
|
43
|
|
Investments
|
357
|
|
|
464
|
|
Intangible
assets
|
2,024
|
|
|
11
|
|
Goodwill
|
2,734
|
|
|
535
|
|
Other
assets
|
405
|
|
|
321
|
|
Deferred tax
assets
|
6
|
|
|
134
|
|
Total
assets
|
$
|
9,380
|
|
|
$
|
3,834
|
|
LIABILITIES
|
|
|
|
Accounts payable and
accrued liabilities
|
531
|
|
|
355
|
|
Participations and
residuals
|
499
|
|
|
437
|
|
Film obligations and
production loans
|
257
|
|
|
663
|
|
Debt - short term
portion
|
118
|
|
|
40
|
|
Deferred
revenue
|
180
|
|
|
246
|
|
Total current
liabilities
|
1,585
|
|
|
1,741
|
|
Debt
|
3,457
|
|
|
825
|
|
Participations and
residuals
|
304
|
|
|
170
|
|
Film obligations and
production loans
|
162
|
|
|
52
|
|
Other
liabilities
|
33
|
|
|
23
|
|
Dissenting
shareholders' liability
|
886
|
|
|
—
|
|
Deferred
revenue
|
76
|
|
|
82
|
|
Deferred tax
liabilities
|
461
|
|
|
—
|
|
Redeemable
noncontrolling interest
|
94
|
|
|
91
|
|
Commitments and
contingencies
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Class A voting common
shares, no par value, 500,000,000 shares authorized, 78,811,162
shares issued (March 31, 2016 - no shares issued)
|
582
|
|
|
—
|
|
Class B non-voting
common shares, no par value, 500,000,000 shares authorized,
120,964,447 shares issued (March 31, 2016 - no shares
issued)
|
1,813
|
|
|
—
|
|
Common shares, no par
value, 500,000,000 shares authorized, no shares issued (March 31,
2016 - 146,785,940 shares issued)
|
—
|
|
|
886
|
|
Retained earnings
(accumulated deficit)
|
(52)
|
|
|
8
|
|
Accumulated other
comprehensive loss
|
(21)
|
|
|
(44)
|
|
Total shareholders'
equity
|
2,322
|
|
|
850
|
|
Total liabilities and
shareholders' equity
|
$
|
9,380
|
|
|
$
|
3,834
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions, except per share amounts)
|
Revenues
|
$
|
752
|
|
|
$
|
671
|
|
|
$
|
1,945
|
|
|
$
|
1,556
|
|
Expenses:
|
|
|
|
|
|
|
|
Direct
operating
|
430
|
|
|
404
|
|
|
1,183
|
|
|
927
|
|
Distribution and
marketing
|
175
|
|
|
203
|
|
|
522
|
|
|
428
|
|
General and
administration
|
89
|
|
|
57
|
|
|
235
|
|
|
180
|
|
Depreciation and
amortization
|
13
|
|
|
3
|
|
|
23
|
|
|
7
|
|
Restructuring and
other
|
52
|
|
|
13
|
|
|
70
|
|
|
18
|
|
Total
expenses
|
759
|
|
|
680
|
|
|
2,033
|
|
|
1,560
|
|
Operating
loss
|
(7)
|
|
|
(9)
|
|
|
(88)
|
|
|
(4)
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
Cash
interest
|
24
|
|
|
12
|
|
|
50
|
|
|
33
|
|
Discount and
financing costs amortization
|
3
|
|
|
2
|
|
|
8
|
|
|
7
|
|
Total interest
expense
|
27
|
|
|
14
|
|
|
58
|
|
|
40
|
|
Interest and other
income
|
(1)
|
|
|
—
|
|
|
(4)
|
|
|
(2)
|
|
Gain on Starz
investment
|
(20)
|
|
|
—
|
|
|
(20)
|
|
|
—
|
|
Loss on
extinguishment of debt
|
28
|
|
|
—
|
|
|
28
|
|
|
—
|
|
Total other expenses,
net
|
34
|
|
|
14
|
|
|
62
|
|
|
38
|
|
Loss before equity
interests and income taxes
|
(41)
|
|
|
(23)
|
|
|
(150)
|
|
|
(42)
|
|
Equity interests
income (loss)
|
(2)
|
|
|
11
|
|
|
11
|
|
|
29
|
|
Loss before income
taxes
|
(43)
|
|
|
(12)
|
|
|
(139)
|
|
|
(13)
|
|
Income tax
benefit
|
(12)
|
|
|
(45)
|
|
|
(92)
|
|
|
(44)
|
|
Net income
(loss)
|
(31)
|
|
|
33
|
|
|
(47)
|
|
|
31
|
|
Less: Net loss
attributable to noncontrolling interest
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
Net income (loss)
attributable to Lions Gate Entertainment Corp.
shareholders
|
$
|
(31)
|
|
|
$
|
41
|
|
|
$
|
(47)
|
|
|
$
|
39
|
|
|
|
|
|
|
|
|
|
Per share
information attributable to Lions Gate Entertainment Corp.
shareholders:
|
|
|
|
|
|
|
|
Basic net income
(loss) per common share
|
$
|
(0.19)
|
|
|
$
|
0.27
|
|
|
$
|
(0.31)
|
|
|
$
|
0.26
|
|
Diluted net income
(loss) per common share
|
$
|
(0.19)
|
|
|
$
|
0.26
|
|
|
$
|
(0.31)
|
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
161.4
|
|
|
149.5
|
|
|
152.2
|
|
|
148.5
|
|
Diluted
|
161.4
|
|
|
159.4
|
|
|
152.2
|
|
|
154.4
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.25
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Operating
Activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(31)
|
|
|
$
|
33
|
|
|
$
|
(47)
|
|
|
$
|
31
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
13
|
|
|
3
|
|
|
23
|
|
|
7
|
|
Amortization of films
and television programs and program rights
|
313
|
|
|
294
|
|
|
902
|
|
|
655
|
|
Discount and
financing costs amortization
|
3
|
|
|
2
|
|
|
8
|
|
|
7
|
|
Non-cash share-based
compensation
|
29
|
|
|
13
|
|
|
74
|
|
|
47
|
|
Other non-cash
items
|
1
|
|
|
1
|
|
|
4
|
|
|
1
|
|
Distribution from
equity method investee
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
Gain on Starz
investment
|
(20)
|
|
|
—
|
|
|
(20)
|
|
|
—
|
|
Loss on
extinguishment of debt
|
28
|
|
|
—
|
|
|
28
|
|
|
—
|
|
Equity interests
income
|
2
|
|
|
(11)
|
|
|
(11)
|
|
|
(29)
|
|
Deferred income
taxes
|
(22)
|
|
|
(52)
|
|
|
(109)
|
|
|
(55)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
(30)
|
|
|
(49)
|
|
|
59
|
|
|
(37)
|
|
Investment in films
and television programs and program rights, net
|
(213)
|
|
|
(236)
|
|
|
(660)
|
|
|
(771)
|
|
Other
assets
|
(2)
|
|
|
—
|
|
|
(6)
|
|
|
(2)
|
|
Accounts payable and
accrued liabilities
|
86
|
|
|
27
|
|
|
79
|
|
|
(8)
|
|
Participations and
residuals
|
81
|
|
|
32
|
|
|
126
|
|
|
77
|
|
Film
obligations
|
4
|
|
|
(19)
|
|
|
24
|
|
|
(30)
|
|
Deferred
revenue
|
(36)
|
|
|
20
|
|
|
(72)
|
|
|
(4)
|
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
220
|
|
|
58
|
|
|
416
|
|
|
(111)
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
Investment in equity
method investees and other
|
(8)
|
|
|
(1)
|
|
|
(13)
|
|
|
(4)
|
|
Distributions from
equity method investees
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
Purchase of Starz,
net of cash acquired of $73
|
(1,057)
|
|
|
—
|
|
|
(1,057)
|
|
|
—
|
|
Purchase of Pilgrim
Media Group, net of cash acquired of $16
|
—
|
|
|
(127)
|
|
|
—
|
|
|
(127)
|
|
Capital
expenditures
|
(10)
|
|
|
(7)
|
|
|
(16)
|
|
|
(14)
|
|
Net Cash Flows
Used In Investing Activities
|
(1,075)
|
|
|
(135)
|
|
|
(1,084)
|
|
|
(145)
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
Debt -
borrowings
|
3,507
|
|
|
190
|
|
|
3,961
|
|
|
262
|
|
Debt -
repayments
|
(1,988)
|
|
|
(190)
|
|
|
(2,302)
|
|
|
(238)
|
|
Production loans -
borrowings
|
79
|
|
|
139
|
|
|
231
|
|
|
510
|
|
Production loans -
repayments
|
(249)
|
|
|
(128)
|
|
|
(623)
|
|
|
(241)
|
|
Dividends
paid
|
—
|
|
|
(13)
|
|
|
(27)
|
|
|
(34)
|
|
Distributions to
noncontrolling interest
|
(3)
|
|
|
—
|
|
|
(6)
|
|
|
—
|
|
Exercise of stock
options
|
—
|
|
|
1
|
|
|
1
|
|
|
6
|
|
Tax withholding
required on equity awards
|
(5)
|
|
|
(4)
|
|
|
(32)
|
|
|
(23)
|
|
Net Cash Flows
Provided By (Used In) Financing Activities
|
1,341
|
|
|
(5)
|
|
|
1,203
|
|
|
242
|
|
Net Change In Cash
And Cash Equivalents
|
486
|
|
|
(82)
|
|
|
535
|
|
|
(14)
|
|
Foreign Exchange
Effects on Cash
|
—
|
|
|
—
|
|
|
2
|
|
|
(1)
|
|
Cash and Cash
Equivalents - Beginning Of Period
|
109
|
|
|
170
|
|
|
58
|
|
|
103
|
|
Cash and Cash
Equivalents - End Of Period
|
$
|
595
|
|
|
$
|
88
|
|
|
$
|
595
|
|
|
$
|
88
|
|
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED SUPPLEMENTAL FINANCIAL
INFORMATION
On December 8, 2016, pursuant to
the Agreement and Plan of Merger dated June
30, 2016, Lionsgate and Starz consummated the merger whereby
Lionsgate acquired Starz for a combination of cash and common stock
(the "Starz Merger"). Certain supplemental financial information
related to this transaction is presented below:
Restructuring and Other: Restructuring and other includes
restructuring and severance costs, certain transaction related
costs, and certain unusual items, when applicable, and were as
follows for the three and nine months ended December 31, 2016 and 2015:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Restructuring and
other:
|
|
|
|
|
|
|
|
Severance(1)
|
|
|
|
|
|
|
|
Cash
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
—
|
|
Accelerated vesting
on equity awards
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
Total severance
costs
|
22
|
|
|
—
|
|
|
26
|
|
|
—
|
|
Transaction related
costs(2)
|
27
|
|
|
12
|
|
|
39
|
|
|
14
|
|
Pension withdrawal
costs(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Other
|
3
|
|
|
1
|
|
|
5
|
|
|
1
|
|
|
$
|
52
|
|
|
$
|
13
|
|
|
$
|
70
|
|
|
$
|
18
|
|
_______________________
(1)
|
Severance costs were
primarily related to workforce reductions for redundancies in
connection with the Starz Merger. Of the severance costs, $21
million is recorded as a liability and is expected to be paid
within one-year from December 31, 2016.
|
(2)
|
Transaction related
costs in the three and nine months ended December 31, 2016
represented primarily legal and professional fees, and other
transaction related costs associated with the Starz Merger.
Transaction related costs in the three and nine months ended
December 31, 2015 represented professional fees associated with
certain strategic transactions including, among others, the
acquisition of a majority interest in Pilgrim Media Group and
certain shareholder transactions.
|
(3)
|
Pension withdrawal
costs in the nine months ended December 31, 2015 were related to an
underfunded multi-employer pension plan in which the Company is no
longer participating.
|
Gain on Starz Investment: Gain on Starz investment of
$20 million in the three and nine
months ended December 31, 2016 represents a gain recognized
for the difference between the fair value on the date of the Starz
Merger (December 8, 2016) of the
Starz available-for-sale securities already owned by Lionsgate and
the original cost of the Starz available-for-sale securities.
Loss on Extinguishment of Debt: Loss on extinguishment of
debt of $28 million in the three and
nine months ended December 31, 2016 related to the
extinguishment of debt in connection with the Starz Merger
financing.
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED SEGMENT INFORMATION
The Company's reportable segments have been determined based on
the distinct nature of their operations, the Company's internal
management structure, and the financial information that is
evaluated regularly by the Company's chief operating decision
maker. Following the Starz Merger, the Company has added a new
segment from the Starz business and realigned business operations
within Lionsgate and Starz under three reporting segments and made
some changes in what is included and excluded from segment
profit.
The Company previously had two reportable business segments,
consisting of the Motion Pictures and Television Production
segments. Beginning in the period ended December 31, 2016, the Company now manages and
reports its operating results in three reportable business
segments: (1) Motion Pictures, (2) Television Production and (3)
Media Networks.
As a result, the Company has presented prior period segment data
in a manner that conforms to the current period presentation (see
further discussion below).
Motion Pictures consists of the development and production of
feature films, acquisition of North American and worldwide
distribution rights, North American theatrical, home entertainment
and television distribution of feature films produced and acquired,
and worldwide licensing of distribution rights to feature films
produced and acquired. As a result of the Starz Merger, beginning
December 8, 2016, the Motion Pictures
segment includes Starz's third-party distribution business, which
is substantially the same as the Motion Pictures existing
business.
Television Production consists of the development, production
and worldwide distribution of television productions including
television series, television movies and mini-series, and
non-fiction programming.
Media Networks (which was previously not a reportable segment)
consists of the licensing of premium subscription video programming
to U.S. multichannel video programming distributors ("MVPDs")
including cable operators, satellite television providers,
telecommunication companies, and online video providers, and the
licensing of the Media Networks' original series programming to
subscription video-on-demand ("SVOD") services, international
television networks, home entertainment and other ancillary
markets. In connection with the Starz Merger, the Company moved its
start-up direct to consumer streaming services on its SVOD
platforms under the Media Networks segment.
Following the Starz Merger, beginning in the quarter ended
December 31, 2016, the Company has
revised what it will include and exclude from segment profit
(loss), the primary measure used by management to evaluate segment
performance. Segment profit (loss) continues to be defined as gross
contribution (segment revenues, less segment direct operating and
distribution and marketing expense) less segment general and
administration expenses. However, segment general and
administrative expenses will include annual bonuses whether granted
in stock or paid in cash, which were previously included in
corporate general and administrative expenses and stock-based
compensation, respectively. In addition, segment profit will no
longer exclude start-up costs of direct to consumer streaming
services on its SVOD platforms, non-cash imputed interest charge,
and backstopped prints and advertising ("P&A") expense. Segment
profit will continue to exclude purchase accounting and related
adjustments. As a result of the changes to the segments and
definition of segment profit, the Company has presented prior
period segment data in a manner that conforms to the current period
presentation.
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED SEGMENT INFORMATION
(Continued)
Segment information by business unit is presented in the table
below. The Media Networks segment reflects the Starz network
business from the date of acquisition (December 8, 2016), and the Lionsgate direct to
consumer streaming services on SVOD platforms for the historical
periods presented.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Segment
revenues
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
440
|
|
|
$
|
506
|
|
|
$
|
1,266
|
|
|
$
|
1,135
|
|
Television
Production
|
229
|
|
|
165
|
|
|
595
|
|
|
421
|
|
Media
Networks
|
85
|
|
|
—
|
|
|
86
|
|
|
—
|
|
Intersegment
eliminations
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
$
|
752
|
|
|
$
|
671
|
|
|
$
|
1,945
|
|
|
$
|
1,556
|
|
Gross
contribution
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
77
|
|
|
$
|
51
|
|
|
$
|
153
|
|
|
$
|
157
|
|
Television
Production
|
33
|
|
|
17
|
|
|
70
|
|
|
49
|
|
Media
Networks
|
41
|
|
|
(1)
|
|
|
29
|
|
|
(1)
|
|
Intersegment
eliminations
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
$
|
150
|
|
|
$
|
67
|
|
|
$
|
251
|
|
|
$
|
205
|
|
Segment general and
administration
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
26
|
|
|
$
|
18
|
|
|
$
|
74
|
|
|
$
|
60
|
|
Television
Production
|
7
|
|
|
5
|
|
|
23
|
|
|
15
|
|
Media
Networks
|
8
|
|
|
3
|
|
|
14
|
|
|
3
|
|
|
$
|
41
|
|
|
$
|
26
|
|
|
$
|
111
|
|
|
$
|
78
|
|
Segment profit
(loss)
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
51
|
|
|
$
|
33
|
|
|
$
|
79
|
|
|
$
|
97
|
|
Television
Production
|
26
|
|
|
12
|
|
|
47
|
|
|
34
|
|
Media
Networks
|
33
|
|
|
(4)
|
|
|
15
|
|
|
(4)
|
|
Intersegment
eliminations
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
$
|
109
|
|
|
$
|
41
|
|
|
$
|
140
|
|
|
$
|
127
|
|
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED SEGMENT INFORMATION
(Continued)
The reconciliation of total segment profit to Adjusted OIBDA
(defined under Use of Non-GAAP Measures section following) and
operating loss is as follows:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Company's total
segment profit
|
$
|
109
|
|
|
$
|
41
|
|
|
$
|
140
|
|
|
$
|
127
|
|
Corporate general and
administrative expenses
|
(25)
|
|
|
(17)
|
|
|
(68)
|
|
|
(54)
|
|
Adjusted
OIBDA
|
84
|
|
|
24
|
|
|
72
|
|
|
73
|
|
Adjusted depreciation
and amortization(1)
|
(4)
|
|
|
(3)
|
|
|
(13)
|
|
|
(7)
|
|
Restructuring and
other(2)
|
(52)
|
|
|
(13)
|
|
|
(70)
|
|
|
(18)
|
|
Adjusted share-based
compensation expense(3)
|
(22)
|
|
|
(13)
|
|
|
(52)
|
|
|
(48)
|
|
Purchase accounting
and related adjustments(4)
|
(13)
|
|
|
(4)
|
|
|
(25)
|
|
|
(4)
|
|
Operating
loss
|
$
|
(7)
|
|
|
$
|
(9)
|
|
|
$
|
(88)
|
|
|
$
|
(4)
|
|
___________________
(1)
|
Adjusted depreciation
and amortization represents depreciation and amortization as
presented on our unaudited condensed consolidated statement of
operations less the depreciation and amortization related to the
non-cash fair value adjustments to property and equipment and
intangible assets acquired in the acquisition of Starz and Pilgrim
Media Group which are included in the purchase accounting and
related adjustments line item above.
|
(2)
|
Restructuring and
other includes restructuring and severance costs, certain
transaction related costs, and certain unusual items, when
applicable.
|
(3)
|
Adjusted share-based
compensation expense represents share-based compensation excluding
(i) immediately vested stock awards granted as part of our annual
bonus program issued in lieu of cash bonuses, which are included in
segment and corporate general and administrative expenses, and (ii)
the impact of the acceleration of certain vesting schedules for
equity awards pursuant to certain severance arrangements, when
included in restructuring and other expenses.
|
(4)
|
Purchase accounting
and related adjustments represent the amortization of non-cash fair
value adjustments to the assets and liabilities acquired in the
acquisition of Starz and Pilgrim Media Group. The following sets
forth the amounts included in each line item in the financial
statements:
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Purchase accounting
and related adjustments:
|
|
|
|
|
|
|
|
Direct
operating
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
3
|
|
General and
administrative expense
|
1
|
|
|
1
|
|
|
4
|
|
|
1
|
|
Depreciation and
amortization
|
9
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
$
|
13
|
|
|
$
|
4
|
|
|
$
|
25
|
|
|
$
|
4
|
|
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED SEGMENT INFORMATION
(Continued)
The following table sets forth revenues and segment profit by
product line for the Media Networks segment for the three and nine
months ended December 31, 2016 and 2015:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Media Networks
Revenue:
|
|
|
|
|
|
|
|
Starz
Networks
|
$
|
83
|
|
|
$
|
—
|
|
|
$
|
83
|
|
|
$
|
—
|
|
Content and
Other
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Streaming
Services(1)
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
86
|
|
|
$
|
—
|
|
Media Networks
Segment Profit:
|
|
|
|
|
|
|
|
Starz
Networks
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
$
|
—
|
|
Content and
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Streaming
Services(1)
|
(5)
|
|
|
(4)
|
|
|
(23)
|
|
|
(4)
|
|
|
$
|
33
|
|
|
$
|
(4)
|
|
|
$
|
15
|
|
|
$
|
(4)
|
|
___________________
(1)
|
Streaming Services
represents the Lionsgate legacy start-up direct to consumer
streaming service initiatives on SVOD platforms which are now
included in the Media Networks segment.
|
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED COMBINED SEGMENT INFORMATION
The following table sets forth segment information on a combined
basis as if the Starz Merger and our segment reorganization
occurred on April 1, 2015:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Segment
revenues
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
473
|
|
|
$
|
583
|
|
|
$
|
1,386
|
|
|
$
|
1,333
|
|
Television
Production
|
231
|
|
|
167
|
|
|
601
|
|
|
426
|
|
Media
Networks
|
362
|
|
|
352
|
|
|
1,088
|
|
|
1,054
|
|
Intersegment
eliminations
|
(5)
|
|
|
(2)
|
|
|
(7)
|
|
|
(2)
|
|
|
$
|
1,061
|
|
|
$
|
1,100
|
|
|
$
|
3,068
|
|
|
$
|
2,811
|
|
Gross
contribution
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
83
|
|
|
$
|
57
|
|
|
$
|
166
|
|
|
$
|
175
|
|
Television
Production
|
35
|
|
|
20
|
|
|
76
|
|
|
55
|
|
Media
Networks
|
153
|
|
|
98
|
|
|
414
|
|
|
381
|
|
Intersegment
eliminations
|
(3)
|
|
|
(2)
|
|
|
(4)
|
|
|
(2)
|
|
|
$
|
268
|
|
|
$
|
173
|
|
|
$
|
652
|
|
|
$
|
609
|
|
Segment general and
administration
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
28
|
|
|
$
|
24
|
|
|
$
|
88
|
|
|
$
|
72
|
|
Television
Production
|
8
|
|
|
5
|
|
|
27
|
|
|
18
|
|
Media
Networks
|
31
|
|
|
35
|
|
|
92
|
|
|
87
|
|
|
$
|
67
|
|
|
$
|
64
|
|
|
$
|
207
|
|
|
$
|
177
|
|
Segment profit
(loss)
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
55
|
|
|
$
|
33
|
|
|
$
|
79
|
|
|
$
|
103
|
|
Television
Production
|
27
|
|
|
14
|
|
|
48
|
|
|
37
|
|
Media
Networks
|
122
|
|
|
63
|
|
|
323
|
|
|
294
|
|
Intersegment
eliminations
|
(3)
|
|
|
(2)
|
|
|
(4)
|
|
|
(2)
|
|
|
$
|
201
|
|
|
$
|
108
|
|
|
$
|
446
|
|
|
$
|
432
|
|
|
NOTE: The
amounts above were determined by combining the historical financial
information of Lionsgate and Starz for each respective period,
applying the new Lionsgate segment structure, and applying the
acquisition related accounting from December 8, 2016 through
December 31, 2016. However, the effects of purchase accounting are
not part of the definition of segment profit, and have been
excluded accordingly. In addition, the combined information does
not apply any operating costs synergies. The amounts are presented
for illustrative purposes and are not necessarily indicative of the
combined financial results that might have been achieved for the
periods had the acquisition taken place on April 1, 2015, nor are
they indicative of the future combined results of Lionsgate and
Starz.
|
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED COMBINED SEGMENT INFORMATION
(Continued)
The reconciliation of total combined segment profit to combined
Adjusted OIBDA (defined under Use of Non-GAAP Measures section
following) and combined operating income is as follows:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Company's total
segment profit
|
$
|
201
|
|
|
$
|
108
|
|
|
$
|
446
|
|
|
$
|
432
|
|
Corporate general and
administrative expenses
|
(25)
|
|
|
(17)
|
|
|
(68)
|
|
|
(54)
|
|
Adjusted
OIBDA
|
176
|
|
|
91
|
|
|
378
|
|
|
378
|
|
Adjusted depreciation
and amortization(1)
|
(8)
|
|
|
(8)
|
|
|
(27)
|
|
|
(22)
|
|
Restructuring and
other(2)
|
(75)
|
|
|
(13)
|
|
|
(104)
|
|
|
(18)
|
|
Adjusted share-based
compensation expense(3)
|
(27)
|
|
|
(21)
|
|
|
(69)
|
|
|
(71)
|
|
Purchase accounting
and related adjustments(4)
|
(13)
|
|
|
(4)
|
|
|
(25)
|
|
|
(4)
|
|
Operating
income
|
$
|
53
|
|
|
$
|
45
|
|
|
$
|
153
|
|
|
$
|
263
|
|
___________________
(1)
|
Adjusted depreciation
and amortization represents depreciation and amortization as
presented on our unaudited condensed consolidated statement of
operations less the depreciation and amortization related to the
non-cash fair value adjustments to property and equipment and
intangible assets acquired in the acquisition of Starz (for the
period from December 8, 2016 through December 31, 2016) and Pilgrim
Media Group which are included in the purchase accounting and
related adjustments line item above.
|
(2)
|
Restructuring and
other includes restructuring and severance costs, certain
transaction related costs, and certain unusual items, when
applicable.
|
(3)
|
Adjusted share-based
compensation expense represents share-based compensation excluding
(i) immediately vested stock awards granted as part of our annual
bonus program issued in lieu of cash bonuses, which are included in
segment and corporate general and administrative expenses, and (ii)
the impact of the acceleration of certain vesting schedules for
equity awards pursuant to certain severance arrangements, when
included in restructuring and other expenses.
|
(4)
|
Purchase accounting
and related adjustments represent the amortization of non-cash fair
value adjustments to the assets and liabilities acquired in the
acquisition of Starz (for the period from December 8, 2016 through
December 31, 2016) and Pilgrim Media Group. The following sets
forth the amounts included in each line item in the financial
statements:
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Purchase accounting
and related adjustments:
|
|
|
|
|
|
|
|
Direct
operating
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
3
|
|
General and
administrative expense
|
1
|
|
|
1
|
|
|
4
|
|
|
1
|
|
Depreciation and
amortization
|
9
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
$
|
13
|
|
|
$
|
4
|
|
|
$
|
25
|
|
|
$
|
4
|
|
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED COMBINED SEGMENT INFORMATION
(Continued)
The following table sets forth revenues by product line on a
combined basis for the Media Networks segment for the three and
nine months ended December 31, 2016 and 2015:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Media Networks
Revenue:
|
|
|
|
|
|
|
|
Starz
Networks
|
$
|
343
|
|
|
$
|
328
|
|
|
$
|
1,035
|
|
|
$
|
990
|
|
Content and
Other
|
18
|
|
|
24
|
|
|
52
|
|
|
63
|
|
Streaming
Services(1)
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
$
|
362
|
|
|
$
|
352
|
|
|
$
|
1,088
|
|
|
$
|
1,054
|
|
Media Networks
Segment Profit:
|
|
|
|
|
|
|
|
Starz
Networks
|
$
|
129
|
|
|
$
|
60
|
|
|
$
|
347
|
|
|
$
|
288
|
|
Content and
Other
|
(1)
|
|
|
7
|
|
|
—
|
|
|
10
|
|
Streaming
Services(1)
|
(6)
|
|
|
(4)
|
|
|
(24)
|
|
|
(4)
|
|
|
$
|
122
|
|
|
$
|
63
|
|
|
$
|
323
|
|
|
$
|
294
|
|
___________________
(1)
|
Streaming Services
represents the Lionsgate legacy start-up direct to consumer
streaming service initiatives on SVOD platforms which are now
included in the Media Networks segment.
|
LIONS GATE ENTERTAINMENT CORP.
USE OF NON-GAAP FINANCIAL MEASURES
This earnings release presents the following important
financial measures utilized by Lions Gate Entertainment Corp. (the
"Company," "we," "us" or "our") that are not all
financial measures defined by generally accepted accounting
principles ("GAAP"). The Company uses non-GAAP financial measures,
among other measures, to evaluate the operating performance of our
business. These non-GAAP financial measures are in addition to, not
a substitute for, or superior to, measures of financial performance
prepared in accordance with United States GAAP.
Adjusted OIBDA: Adjusted OIBDA is defined as operating
income (loss) before adjusted depreciation and amortization
("OIBDA"), adjusted for adjusted stock-based compensation
("adjusted SBC"), purchase accounting and related adjustments, and
restructuring and other costs.
- Adjusted depreciation and amortization represents depreciation
and amortization as presented on our unaudited condensed
consolidated statement of operations, less the depreciation and
amortization related to the amortization of purchase accounting and
related adjustments associated with the acquisition of Starz and
Pilgrim Media Group. This is for presentational purposes, such that
the full impact of the purchase accounting is included in the
adjustment for "purchase accounting and related adjustments",
described below.
- Adjusted stock-based compensation represents stock-based
compensation excluding immediately vested stock awards granted as
part of the Company's annual bonus program issued in lieu of cash
bonuses and the impact of the acceleration of certain vesting
schedules for equity awards pursuant to certain severance
arrangements, when included in restructuring and other
expenses.
- Restructuring and other costs would generally include
restructuring costs, such as severance, contract termination, or
asset impairments, transaction related costs, and unusual gains and
losses.
- Purchase accounting and related adjustments represent the
amortization of non-cash fair value adjustments to the assets and
liabilities acquired in the acquisition of Starz and Pilgrim Media
Group.
Adjusted OIBDA is calculated similar to how the Company defines
segment profit and manages and evaluates its segment operations.
Segment profit also excludes corporate general and administrative
expense.
Free Cash Flow: Free cash flow is defined as net
cash flows provided by (used in) operating activities, less capital
expenditures, plus or minus the net increase or decrease in
production loans, and plus or minus excess tax benefits on
stock-based compensation awards if applicable. 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.
Adjusted Net Income (Loss) Attributable to Lions Gate
Entertainment Corp. Shareholders: 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, loss on extinguishment of debt, and
unusual gains or losses, net of the tax effect of the adjustments
at the applicable statutory rate and net of the impact of the
adjustments on non-controlling interest.
Adjusted Basic and Diluted EPS: Adjusted basic earnings
(loss) per share is defined as adjusted net income (loss)
attributable to Lions Gate Entertainment Corp. shareholders divided
by the weighted average shares outstanding. Diluted EPS is similar
to basic EPS but is adjusted for the effects of securities that are
diluted based on the level of adjusted net income (loss), similar
to GAAP.
Legacy Adjusted EBITDA: Represents earnings before
interest, income tax provision or benefit, and depreciation and
amortization, adjusted for all stock-based
compensation, purchase accounting and related adjustments,
restructuring and other items, loss on extinguishment of debt,
non-cash imputed interest charge, start-up losses of new business
initiatives, loss on extinguishment of debt, and backstopped prints
and advertising expense. Legacy Adjusted EBITDA was a non-GAAP
measure used by the Company prior to the Starz Merger. This measure
is presented for historical reference and for comparison to the
Company's previous non-GAAP measure.
- 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. Certain of these initiatives are equity method investees,
while the others are consolidated entities.
- 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 and expensed 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).
- Non-cash imputed interest charge represents a charge associated
with the interest cost of long-term accounts receivable for
Television Production licensed product that become due beyond
one-year.
These measures are non-GAAP financial measures as defined in
Regulation G promulgated by the SEC and are in addition to, not a
substitute for, or superior to, measures of financial performance
prepared in accordance with United States GAAP.
We use these non-GAAP measures, among other measures, to
evaluate the operating performance of our business. We believe
these measures provide useful information to investors regarding
our results of operations and cash flows before non-operating
items. Adjusted OIBDA is considered an important measure of the
Company's performance because this measure eliminates amounts that,
in management's opinion, do not necessarily reflect the fundamental
performance of the Company's businesses, are infrequent in
occurrence, and in some cases are non-cash expenses. Free Cash Flow
is considered an important measure of the Company's liquidity
because it provides information about the ability of the Company to
reduce net corporate debt, make strategic investments, dividends
and share repurchases. Adjusted EPS is considered an important
measure of the Company's business operations as, similar to
Adjusted OIBDA, this measure eliminates amounts that, in
management's opinion, do not necessarily reflect the fundamental
performance of the Company's businesses. Adjusted EBITDA is the
Company's legacy non-GAAP financial measure and is similar to
Adjusted OIBDA , however, it includes income or loss from
equity method investees and adjusts for the additional items as
listed above and is helpful in making historical comparisons and
reflective of the performance of its equity method investees.
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 due to differences in the
methods of calculation and excluded items.
A general limitation of these non-GAAP financial measures is
that they are not prepared in accordance with U.S. generally
accepted accounting principle. 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 (loss), or earnings (loss) per share as determined in
accordance with GAAP. Reconciliations of the adjusted metrics
utilized to their corresponding GAAP metrics are provided
below.
LIONS GATE
ENTERTAINMENT CORP.
|
RECONCILIATION OF
ADJUSTED OIBDA (NEW MEASURE) TO
|
ADJUSTED EBITDA
(LEGACY MEASURE) AND NET INCOME (LOSS)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Adjusted
OIBDA
|
$
|
84
|
|
|
$
|
24
|
|
|
$
|
72
|
|
|
$
|
73
|
|
Bonus related
stock-based compensation(1)
|
7
|
|
|
—
|
|
|
20
|
|
|
—
|
|
Backstopped prints
and advertising expense
|
16
|
|
|
12
|
|
|
24
|
|
|
5
|
|
Start-up losses of
new business initiatives(2)
|
11
|
|
|
7
|
|
|
31
|
|
|
10
|
|
Non-cash imputed
interest charge
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
Gain on Starz
investment
|
20
|
|
|
—
|
|
|
20
|
|
|
—
|
|
Equity interest
income (loss)
|
(2)
|
|
|
11
|
|
|
11
|
|
|
29
|
|
Adjusted
EBITDA
|
138
|
|
|
54
|
|
|
181
|
|
|
117
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
(29)
|
|
|
(13)
|
|
|
(72)
|
|
|
(48)
|
|
Restructuring and
other
|
(52)
|
|
|
(13)
|
|
|
(70)
|
|
|
(18)
|
|
Purchase accounting
and related adjustments
|
(13)
|
|
|
(4)
|
|
|
(25)
|
|
|
(4)
|
|
Loss on
extinguishment of debt
|
(28)
|
|
|
—
|
|
|
(28)
|
|
|
—
|
|
Start-up losses of
new business initiatives(2)
|
(11)
|
|
|
(7)
|
|
|
(31)
|
|
|
(10)
|
|
Backstopped prints
and advertising expense
|
(16)
|
|
|
(12)
|
|
|
(24)
|
|
|
(5)
|
|
Non-cash imputed
interest charge
|
(2)
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
(13)
|
|
|
5
|
|
|
(72)
|
|
|
32
|
|
|
|
|
|
|
|
|
|
Adjusted depreciation
and amortization
|
(4)
|
|
|
(3)
|
|
|
(13)
|
|
|
(7)
|
|
Interest,
net
|
(26)
|
|
|
(14)
|
|
|
(54)
|
|
|
(38)
|
|
Income tax provision
(benefit)
|
12
|
|
|
45
|
|
|
92
|
|
|
44
|
|
Net income
(loss)
|
$
|
(31)
|
|
|
$
|
33
|
|
|
$
|
(47)
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
____________________
NOTE: See discussion
under Use of Non-GAAP Financial Measures section above for
definitions of the nature of the adjustments.
|
(1)
|
Bonus related
stock-based compensation represents stock-based compensation for
immediately vested stock awards granted as part of the Company's
annual bonus program issued in lieu of cash bonuses, which are
included in Adjusted OIBDA and segment and corporate general and
administrative expenses.
|
(2)
|
Start-up losses on
new business initiatives predominantly represent the Lionsgate
legacy start-up direct to consumer streaming initiatives on SVOD
platforms, and Atom Tickets, the first-of-its-kind theatrical
mobile ticketing platform and app, and Playco, a STARZ-branded
online SVOD service in the Middle East and North Africa, which are
both equity method investees.
|
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,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
$
|
220
|
|
|
$
|
58
|
|
|
$
|
416
|
|
|
$
|
(111)
|
|
Capital
expenditures
|
(10)
|
|
|
(7)
|
|
|
(16)
|
|
|
(14)
|
|
Net borrowings under
and (repayment) of production loans
|
(170)
|
|
|
11
|
|
|
(392)
|
|
|
269
|
|
Free Cash Flow, as
defined
|
$
|
40
|
|
|
$
|
62
|
|
|
$
|
8
|
|
|
$
|
144
|
|
|
|
|
|
|
|
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
RECONCILIATION OF
NET INCOME (LOSS) ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT
CORP. SHAREHOLDERS TO ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO
LIONS GATE
ENTERTAINMENT CORP. SHAREHOLDERS, AND ADJUSTED BASIC AND DILUTED
EPS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Amounts in
millions)
|
Reported Net
Income (Loss) Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
|
(31)
|
|
|
$
|
41
|
|
|
$
|
(47)
|
|
|
$
|
39
|
|
Adjusted share-based
compensation expense
|
22
|
|
|
13
|
|
|
52
|
|
|
48
|
|
Restructuring and
other
|
52
|
|
|
13
|
|
|
70
|
|
|
18
|
|
Purchase accounting
and related adjustments
|
13
|
|
|
4
|
|
|
25
|
|
|
4
|
|
Gain on Starz
investment
|
(20)
|
|
|
—
|
|
|
(20)
|
|
|
—
|
|
Loss on
extinguishment of debt
|
28
|
|
|
—
|
|
|
28
|
|
|
—
|
|
Tax impact of above
items(1)
|
(28)
|
|
|
(7)
|
|
|
(48)
|
|
|
(22)
|
|
Noncontrolling
interest impact of above items
|
(2)
|
|
|
(9)
|
|
|
(6)
|
|
|
(9)
|
|
Adjusted Net
Income Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
|
34
|
|
|
$
|
55
|
|
|
$
|
54
|
|
|
$
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Basic
EPS
|
$
|
(0.19)
|
|
|
$
|
0.27
|
|
|
$
|
(0.31)
|
|
|
$
|
0.26
|
|
Impact of adjustments
on basic earnings (loss) per share
|
0.40
|
|
|
0.10
|
|
|
0.66
|
|
|
0.27
|
|
Adjusted Basic
EPS
|
$
|
0.21
|
|
|
$
|
0.37
|
|
|
$
|
0.35
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Diluted
EPS
|
$
|
(0.19)
|
|
|
$
|
0.26
|
|
|
$
|
(0.31)
|
|
|
$
|
0.26
|
|
Impact of adjustments
on diluted earnings (loss) per share
|
0.39
|
|
|
0.09
|
|
|
0.64
|
|
|
0.25
|
|
Adjusted Diluted
EPS(2)
|
$
|
0.20
|
|
|
$
|
0.35
|
|
|
$
|
0.33
|
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
|
Adjusted weighted
average number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
161.4
|
|
|
149.5
|
|
|
152.2
|
|
|
148.5
|
|
Diluted
|
175.4
|
|
|
159.4
|
|
|
162.4
|
|
|
158.5
|
|
_________________________
(1)
|
Represents the tax
impact of the adjustments to net income (loss) attributable to
Lions Gate Entertainment Corp. shareholders, calculated using the
statutory tax rate applicable to each adjustment.
|
(2)
|
Adjusted diluted net
income attributable to Lions Gate Entertainment Corp. shareholders
for diluted EPS includes the add-back of interest expense on the
convertible notes, net of tax assuming conversion of the notes at
the beginning of each period presented when dilutive.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/lionsgate-reports-results-for-third-quarter-fiscal-2017-300404531.html
SOURCE Lionsgate