Lionsgate Reports Record Revenues of $1.36 Billion for Fiscal 2008, Up 39% From Previous Year; Net Loss Is $74.0 Million
Company Reports Best Revenue Quarter In Its History With $511.5 Million In Fourth Quarter Revenues
Company Reports Positive Free Cash Flow of $137 Million For Fiscal 2008
SANTA MONICA, Calif., and VANCOUVER, British Columbia, May 30 /PRNewswire-FirstCall/ -- Lionsgate (NYSE:LGF) , a leading next generation filmed entertainment studio, continued its growth momentum for fiscal 2008, reporting revenues of $1.36 billion and a net loss of $74.0 million for its fiscal year ended March 31, 2008, the Company announced today. The Company noted that revenue growth of 39% from the prior year was driven by strong theatrical box office, increased home entertainment sales, growth in library revenues, continued strength in television production revenues and burgeoning digital revenues. The Company reported $511.5 million in fourth quarter revenues, its best quarterly revenue performance.
Lionsgate reported a net loss for the fiscal year ended March 31, 2008 of $74.0 million. Diluted net loss per common share was $0.62 on 118.4 million adjusted weighted average common shares outstanding. The loss was primarily attributable to increased theatrical distribution and marketing expenses in association with the planned growth of the Company's motion picture slate. Theatrical distribution and marketing expenses of $326.3 million increased 118% from $149.7 million in the previous year.
"Every division of the Company made contributions to our tremendous revenue growth, and they have positioned us for continued double-digit revenue growth in fiscal 2009," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "We continue to leverage our vast array of content for large niche audiences into a fast-growing channel business, digital distribution platforms and emerging international opportunities that, in addition to the continued successful operation of our existing core businesses, all set the foundation for long-term profitability and enhanced global recognition of the Lionsgate brand."
The Company reported that cash and cash equivalents grew to $371.6 million at March 31, 2008, its strongest cash position ever after three consecutive years of positive free cash flow in excess of $100 million. The Company's filmed entertainment backlog also grew to a record $437.4 million at fiscal year-end. Filmed entertainment backlog represents the amount of future revenue not yet recorded from the licensing of films and television product for television exhibition and in international markets.
Overall motion picture revenue for the year was a record $1.15 billion, an increase of 34.1% from $858.2 million in fiscal 2007, including revenues generated by the September 2007 acquisition of Mandate Pictures. Within the motion picture segment, theatrical revenue was $191.7 million, an increase of 78% from $107.9 million the previous year, propelled by a string of hits including Saw 4, 3:10 To Yuma, Good Luck, Chuck, The Bank Job, Tyler Perry's Why Did I Get Married?, The Eye, Rambo, Tyler Perry's Meet The Browns and War.
Lionsgate's home entertainment revenue was a record $623.5 million in the fiscal year, an 18% increase from $528.3 million in fiscal 2007, reflecting strong sales of 3:10 To Yuma, Good Luck, Chuck, Tyler Perry's Why Did I Get Married?, Saw 4, War, The Condemned, Delta Farce, Bratz: The Movie, Daddy's Little Girls, Pride and Happily N'Ever After as well as the initial impact of strong BluRay high-definition disc sales. Another major catalyst for strong home entertainment revenue performance was continued strong library sales as Lionsgate reported record catalogue revenues of $263.7 million in fiscal 2008.
Television revenue included in the motion picture segment was $115.9 million in the fiscal year, a 6% increase from $109.3 million in fiscal 2007, led by titles such as Crank, Daddy's Little Girls, Employee of The Month, Saw III and The Descent.
Lionsgate also had the strongest international revenue performance in its history, reporting $158.7 million in international revenue in the fiscal year from such titles as 3:10 To Yuma, Saw IV, Saw III, Good Luck, Chuck, The Condemned, War and the special edition DVD release of Dirty Dancing by Lionsgate U.K. Lionsgate U.K. contributed $64.6 million in revenue in the fiscal year.
Television production revenue was $210.1 million in the fiscal year, an increase of 77% from $118.5 million in fiscal 2007, driven by a mix of deliveries of episodes of in-house productions such as the Golden Globe (R)- winning drama series Mad Men (AMC), Weeds Season 3 (Showtime), Wildfire Season 4 (ABC Family), and the Dead Zone Season 5 (USA Network) and domestic series licensing of Tyler Perry's House of Payne, South Park and Family Feud from the Company's television syndication subsidiary, Debmar-Mercury.
As more fully described in Note 2 to the consolidated financial statements in the Company's 2008 Annual Report on Form 10-K filed on May 30, 2008, the Company made a change in the presentation of certain components within its Statement of Cash Flows to conform the Statement of Cash Flows to be in accordance with technical requirements of the FASB's FIN 46R. The change in presentation of the Statement of Cash Flows reflects certain production obligations as a component of cash flows from financing activities rather than as a component of cash flows from operating activities. This change in the GAAP-based presentation had no impact on the Company's cash balances, overall cash flows or the changes in the balances of the Company's cash and cash equivalents.
The Company will continue to use the free cash flow metric and amounts presented as such will continue to reflect the same amounts as were previously reflected as free cash flow as presented in the attached free cash flow reconciliation.
The aforementioned changes do not affect Lionsgate's current, previous or anticipated free cash flow results.
Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2008 financial results at 9:00 A.M. ET/6:00 A.M. PT, Monday, June 2, 2008. Interested parties may participate live in the conference call by calling 1-800-230-1085 (1-612-234-9959 outside the U.S. and Canada). A full digital replay will be available from Monday afternoon, June 2, through Monday, June 9, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code 920448.
Lionsgate is a leading next generation filmed entertainment studio with a major presence in the production and distribution of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered content. The Company is leveraging its content leadership and marketing expertise through a series of partnerships that include the operation of the highly successful FEARNet branded VOD and Internet horror channel with Sony and Comcast, the recent announcement of the fall 2009 launch of a new premium entertainment channel with partners Viacom, Paramount Pictures and MGM, investment in the leading young men's digital distribution platform Break.com, ownership of the premier independent television syndication company Debmar-Mercury LLC and an alliance with independent filmed entertainment production and distribution company Roadside Attractions. Lionsgate also has forged partnerships with leading content creators, owners and distributors in key territories around the world, including Televisa in the U.S. and Latin America, StudioCanal in the UK, Hoyts and Sony in Australia and Eros International in India..
The Company generated approximately $450 million at the North American theatrical box office in the past year and has released a string of hits including The Forbidden Kingdom, Tyler Perry's Meet The Browns, The Bank Job, Rambo, The Eye, Saw IV, Tyler Perry's Why Did I Get Married?, Good Luck Chuck, 3:10 To Yuma and War, most of which have opened at #1 or #2 at the box office. The Company has also forged leadership positions in television and home entertainment with the production of such critically-acclaimed television series as Weeds and Mad Men, the distribution of Tyler Perry's House of Payne, Family Feud, South Park, Trivial Pursuit and The Dead Zone, among others, and approximately 9% market share and the industry's leading box office-to-DVD conversion rate in home entertainment. Lionsgate handles a prestigious and prolific library of approximately 12,000 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 brand is synonymous with entrepreneurial innovation and original, daring, quality entertainment in markets around the globe.
http://www.lionsgate.com/ For further information, contact: Peter D. Wilkes Lionsgate 310-255-3726 pwilkes@lionsgate.com
The matters discussed in this press release include forward-looking statements, including those regarding the timing of our upcoming film slate, the expansion of our television business and the success of our fiscal 2009. 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, budget overruns, limitations imposed by our credit facilities, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, technological changes and other trends affecting the entertainment industry, and the risk factors as set forth in Lionsgate's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on May 30, 2008. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances
LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED BALANCE SHEETS March 31, March 31, 2008 2007 (Amounts in thousands, except share amounts) ASSETS Cash and cash equivalents $371,589 $51,497 Restricted cash 10,300 4,915 Investments 6,927 237,504 Accounts receivable, net of reserve for video returns and allowances of $95,515 (March 31, 2007 - $77,691) and provision for doubtful accounts of $5,978 (March 31, 2007 - $6,345) 260,284 130,496 Investment in films and television programs 608,942 493,140 Property and equipment 13,613 13,095 Goodwill 224,531 187,491 Other assets 41,572 18,957 $1,537,758 $1,137,095 LIABILITIES Accounts payable and accrued liabilities $245,430 $155,617 Participation and residuals 385,846 171,156 Film and production obligations 278,016 167,884 Subordinated notes and other financing obligations 328,718 325,000 Deferred revenue 111,510 69,548 1,349,520 889,205 Commitments and contingencies SHAREHOLDERS' EQUITY Common shares, no par value, 500,000,000 shares authorized, 121,081,311 and 116,970,280 shares issued at March 31, 2008 and March 31, 2007, respectively 434,650 398,836 Series B preferred shares (10 shares issued and outstanding) - - Accumulated deficit (223,619) (149,651) Accumulated other comprehensive loss (533) (1,295) 210,498 247,890 Treasury shares, no par value, 2,410,499 shares at March 31, 2008 (22,260) - 188,238 247,890 $1,537,758 $1,137,095 LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF OPERATIONS Year Year Year Ended Ended Ended March 31, March 31, March 31, 2008 2007 2006 (Amounts in thousands, except per share amounts) Revenues $1,361,039 $976,740 $945,385 Expenses: Direct operating 662,450 436,818 458,990 Distribution and marketing 635,666 404,410 399,299 General and administration 119,080 90,782 69,936 Depreciation 3,974 2,786 1,817 Total expenses 1,421,170 934,796 930,042 Operating income (loss) (60,131) 41,944 15,343 Other expenses (income): Interest expense 16,432 17,832 18,860 Interest rate swaps mark-to-market - - 123 Interest and other income (11,276) (11,930) (4,304) Gain on sale of equity securities (2,909) (1,722) - Total other income, net 2,247 4,180 14,679 Income (loss) before equity interests and income taxes (62,378) 37,764 664 Equity interests loss (7,559) (2,605) (74) Income (loss) before income taxes (69,937) 35,159 590 Income tax provision (benefit) 4,031 7,680 (1,030) Income (loss) before discontinued operations (73,968) 27,479 1,620 Income (loss) from discontinued operations (including gain on sale in 2006 of $4,872), net of tax of $2,464 - - 4,476 Net income (loss) $(73,968) $27,479 $6,096 Basic Per Share Data: Basic Income (Loss) Per Common Share From Continuing Operations $(0.62) $0.25 $0.02 Basic Income (Loss) Per Common Share From Discontinued Operations - - 0.04 Basic Net Income (Loss) Per Common Share $(0.62) $0.25 $0.06 Diluted Per Share Data: Diluted Income (Loss) Per Common Share From Continuing Operations $(0.62) $0.25 $0.02 Diluted Income (Loss) Per Common Share From Discontinued Operations - - 0.04 Diluted Net Income (Loss) Per Common Share $(0.62) $0.25 $0.06 Weighted average number of common shares outstanding: Basic 118,427 108,398 103,066 Diluted 118,427 111,164 106,102 LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Year Year Ended Ended Ended March 31, March 31, March 31, 2008 2007 2006 (restated) (restated) (Amounts in thousands) Operating Activities: Net income (loss) $(73,968) $27,479 $6,096 Income (loss) from discontinued operations - - 4,476 Income (loss) from continuing operations (73,968) 27,479 1,620 Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities - continuing operations Depreciation of property and equipment 3,974 2,786 1,817 Amortization of deferred financing costs 3,581 3,756 3,804 Amortization of films and television programs 403,319 241,640 253,279 Amortization of intangible assets 1,526 884 2,004 Non-cash stock-based compensation 13,934 7,259 1,881 Interest rate swaps mark-to-market - - 123 Gain on sale of equity securities (2,909) (1,722) - Deferred income taxes (1,087) 6,780 297 Equity interests loss 7,559 2,605 74 Changes in operating assets and liabilities: Restricted cash (228) (4,095) 2,093 Accounts receivable, net (128,876) 79,704 (33,459) Investment in films and television programs (445,714) (297,149) (284,711) Other assets (2,985) 7,448 (7,892) Accounts payable and accrued liabilities 67,791 (38,509) 49,155 Unpresented bank drafts - (14,772) 14,772 Participation and residuals 209,806 3,261 68,676 Film obligations 1,387 (6,079) 10,762 Deferred revenue 32,040 38,451 (31,643) Net Cash Flows Provided By Operating Activities - continuing operations 89,150 59,727 52,652 Net Cash Flows Provided By Operating Activities - discontinued operations - - 2,580 Net Cash Flows Provided By Operating Activities 89,150 59,727 55,232 Investing Activities: Purchases of investments - auction rate securities (229,262) (865,750) (307,031) Proceeds from the sale of investments - auction rate securities 466,641 795,448 139,950 Purchases of investments - equity securities (4,836) (122) (3,470) Proceeds from the sale of investments - equity securities 24,155 390 2,945 Acquisition of Mandate, net of unrestricted cash acquired (41,205) - - Loan to Mandate - preacquisition (2,895) - - Acquisition of Maple, net of unrestricted cash acquired 1,753 - - Acquisition of Debmar, net of unrestricted cash acquired - (24,119) - Acquisition of Redbus, net of unrestricted cash acquired - - (27,138) Investment in equity method investees (6,460) (5,116) - Loan to equity method investee (3,000) - - Cash received from disposition of assets, net - - 34,860 Purchases of property and equipment (3,608) (8,348) (5,555) Net Cash Flows Provided By (Used In) Investing Activities - continuing operations 201,283 (107,617) (165,439) Net Cash Flows Provided By Investing Activities - discontinued operations - - 105 Net Cash Flows Provided By (Used In) Investing Activities 201,283 (107,617) (165,334) Financing Activities: Exercise of stock options 1,251 4,277 1,408 Amounts paid to satisfy tax withholding requirements on options exercised (5,319) - - Repurchases of common shares (22,260) - - Borrowings under financing arrangements 3,718 - - Financing fees - - (546) Borrowings under production obligations 162,400 97,083 92,605 Repayment of production obligations (111,357) (48,993) (24,825) Repayment of subordinated notes - - (5,000) Repayment of mortgages payable - - (16,224) Net Cash Flows Provided By Financing Activities - continuing operations 28,433 52,367 47,418 Net Cash Flows Used In Financing Activities - discontinued operations - - (2,703) Net Cash Flows Provided By Financing Activities 28,433 52,367 44,715 Net Change In Cash And Cash Equivalents 318,866 4,477 (65,387) Foreign Exchange Effects on Cash - continuing operations 1,226 42 (628) Foreign Exchange Effects on Cash - discontinued operations - - 154 Foreign Exchange Effects on Cash 1,226 42 (474) Cash and Cash Equivalents - Beginning Of Year 51,497 46,978 112,839 Cash and Cash Equivalents - End Of Year $371,589 $51,497 $46,978 LIONS GATE ENTERTAINMENT CORP. RECONCILIATION OF NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW Year Ended March 31, 2008 (Amounts in thousands) Net Cash Flows Provided By Operating Activities $89,150 Purchases of property and equipment (3,608) Net borrowings under and repayment of production obligations 51,043 Free Cash Flow, as defined $136,585
Free cash flow is defined as net cash flows provided by operating activities, less purchases of property and equipment and plus or minus the net increase or decrease in production obligations. The adjustment for the production obligations is made because the GAAP-based cash flows from operations reflects a non-cash reduction of cash flows for the cost of films associated with production obligations prior to the time the Company is obligated to acquire and pay for the films. The Company believes that it is more meaningful to reflect the impact of the payment for these films in its free cash flow when the payments are actually made.
Free cash flow is a non-GAAP financial measure as defined in Regulation G promulgated by the Securities and Exchange Commission. This non-GAAP financial measure is in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with Generally Accepted Accounting Principles.
Management believes this non-GAAP measure provides useful information to investors regarding cash that our operating businesses generate whether classified as operating or financing activity (related to the production of our films) within our GAAP based statement of cash flows, before taking into account cash movements that are non-operational. Free cash flow is a non-GAAP financial measure commonly used in the entertainment industry and by financial analysts and others who follow the industry. Not all companies calculate free cash flow in the same manner and the measure as presented may not be comparable to similarly titled measures presented by other companies.
First Call Analyst:
FCMN Contact: keasterling@lionsgate.com
Source: Lionsgate
CONTACT: Peter D. Wilkes of Lionsgate, +1-310-255-3726,
pwilkes@lionsgate.com
Web site: http://www.lionsgate.com/
Profile: International Entertainment
