Lions Gate Entertainment (NYSE and TSX: LGF), the premier independent producer and distributor of filmed entertainment, reported revenues of $231.1 million and EBITDA (earnings before interest, interest rate swap mark-to-market, income taxes, depreciation and minority interests) of $15.4 million for the second quarter of fiscal 2005.
Second quarter revenue of $231.1 million increased 148% compared to $93.1 million in the prior year second quarter. EBITDA of $15.4 million increased 711% from $1.9 million in the second quarter of fiscal 2004. Net income for the second quarter was $8.3 million, or basic earnings per share of $0.09 on 96.3 million weighted average common shares outstanding (diluted income per share of $0.08), compared to a net loss of $0.3 million, or loss per share of $0.01 on 59.5 million weighted average common shares outstanding (after giving effect to the Series A preferred share dividends and accretion on the Series A preferred shares), in the prior year second quarter.
The nationwide theatrical releases of OPEN WATER and THE COOKOUT along with the continued success of FAHRENHEIT 9/11 were leading revenue drivers for the quarter. Video releases including THE PUNISHER, DIRTY DANCING HAVANA NIGHTS, GODSEND, BARBIE AS THE PRINCESS AND THE PAUPER and the hit NBC comedy series WILL & GRACE Season 3 were significant revenue contributors. Deliveries of Lions Gate Television's product included one-hour series THE DEAD ZONE and MISSING, plus movie of the week, BABY FOR SALE.
"This quarter is an excellent example of the Lions Gate model. We have profitable revenue drivers in all our core businesses continuing to build the deepest content library in the independent space," said Lions Gate Chief Executive Officer Jon Feltheimer. "We are also delighted with the recent results of our hit film, SAW, which will be reflected in subsequent quarters and fiscal 2006."
Motion picture revenue of $202.8 million increased 205% from $66.5 million in the prior year second quarter. Lions Gate Films scored with the box office hit FAHRENHEIT 9/11 and OPEN WATER and with an exceptionally strong DVD performance of THE PUNISHER, further increasing that film's franchise potential. BARBIE AS THE PRINCESS AND THE PAUPER was also a successful video and DVD release, and the diversification of Lions Gate's fast-growing home entertainment operations was underscored by the strong performance of third-party product such as NBC's hit comedy WILL & GRACE Season 3 and ALF.
Television production revenue of $26.9 million increased 8% from $24.9 million in the prior year second quarter as Lions Gate Television demonstrated its strength as a leading independent supplier of one-hour dramatic series and nonfiction programming to top cable networks. During the quarter, the Company delivered domestically a total of 18 hours of its two successful dramatic series, THE DEAD ZONE for USA Networks and MISSING for Lifetime Networks.
Lions Gate senior management will hold its analyst and investor conference call to discuss its second quarter financial results at 6:00 A.M. PT/9:00 A.M. ET tomorrow, November 10, 2004. Interested parties may participate live in the conference call by calling 1-888-428-4479 (1-651-224-7558 outside the U.S. and Canada). A full digital replay will be available from tomorrow afternoon, Wednesday, November 10, through Wednesday, November 17, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code #751607.
Lions Gate is the premier independent producer and distributor of motion pictures, television programming, home entertainment, family entertainment and video-on-demand content. Its prestigious and prolific library of approximately 8000 titles is one of the largest in the entertainment industry. The Lions Gate brand name is synonymous with original, daring, quality entertainment in markets around the globe.
www.lgf.com
NYSE and TSX: LGF
For further information, please contact:
Peter D. Wilkes Russell D. Nelson
310-255-3726 310-255-3858
[email protected] [email protected]
The matters discussed in this press release include forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including risk factors as set forth in our Form 8-K filed with the Securities and Exchange Commission on September 28, 2004. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.
LIONS GATE ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 30, March 31,
2004 2004
(Unaudited) (Audited)
(All amounts in thousands of
U.S. dollars, except share
amounts)
ASSETS
Cash and cash equivalents $5,535 $7,089
Accounts receivable, net of reserve for
video returns and other allowances of
$62,291 (2004 - $55,146) and provision
for doubtful accounts of $9,250
(2004 - $11,702) 171,529 129,245
Investment in films and television
programs 368,875 406,170
Property and equipment 29,155 29,661
Goodwill 171,031 166,804
Other assets 21,733 23,714
$767,858 $762,683
LIABILITIES
Bank loans $262,610 $326,174
Accounts payable and accrued
liabilities 148,107 129,724
Film obligations 156,752 114,068
Subordinated notes 65,000 65,000
Mortgages payable 18,903 19,041
Deferred revenue 36,222 38,932
Minority interests 163 135
687,757 693,074
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Common shares, no par value,
500,000,000 shares authorized, 96,435,405
and 93,615,896 shares issued and outstanding 292,048 279,576
Series B preferred shares (10 shares
issued and outstanding) -- --
Accumulated deficit (205,714) (202,582)
Accumulated other comprehensive loss (6,233) (7,385)
80,101 69,609
$767,858 $762,683
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
(All amounts in thousands of U.S.
dollars, except per share amounts)
Revenues $231,064 $93,051 $419,788 $146,386
Expenses:
Direct operating 94,262 48,140 175,072 70,596
Distribution and marketing 104,217 34,638 202,283 68,250
General and administration 17,850 8,039 34,977 14,347
Depreciation 714 488 1,389 1,030
Total expenses 217,043 91,305 413,721 154,223
Operating Income (Loss) 14,021 1,746 6,067 (7,837)
Other Expenses:
Interest 5,652 2,149 11,076 4,209
Interest rate swaps
mark-to-market 71 (576) (1,989) (262)
Minority interests 144 -- 21 --
Other income (825) -- (825) --
Total other expenses 5,042 1,573 8,283 3,947
Income (Loss) Before Equity
Interests and Income Taxes 8,979 173 (2,216) (11,784)
Equity interests (200) (356) (200) (1,011)
Income (Loss) Before Income
Taxes 8,779 (183) (2,416) (12,795)
Income tax provision (449) (91) (716) (231)
Net Income (Loss) 8,330 (274) (3,132) (13,026)
Dividends on Series A
preferred shares -- (127) -- (254)
Accretion and amortization on
Series A preferred shares -- (147) -- (502)
Net Income (Loss) Available
to Common Shareholders $8,330 $(548) $(3,132) $(13,782)
Basic Income (Loss) Per
Common Share $0.09 $(0.01) $(0.03) $(0.26)
Diluted Income (Loss) Per
Common Share $0.08 $(0.01) $(0.03) $(0.26)
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Series B
Common Shares Preferred Shares
Number Amount Number Amount
(All amounts in thousands of U.S. dollars,
except share amounts)
Balance at March 31,2003 43,231,921 $159,549 10 $--
Issuance of common shares 44,951,056 103,176
Exercise of stock options 955,562 2,609
Exercise of warrants 275,400 1,377
Modification of stock
options -- 815
Modification of warrants -- 2,031
Redemption of Series A
preferred shares -- 566
Conversion of Series A
preferred shares 4,201,957 9,453
Net loss available to
common shareholders
Foreign currency
translation adjustments
Net unrealized gain on
foreign exchange contracts
Balance at March 31, 2004 93,615,896 279,576 10 --
Exercise of stock options 783,655 2,008
Exercise of warrants 2,020,050 10,100
Issued to directors for
services 15,804 137
Modification of stock
options -- 227
Net loss available to
common shareholders
Foreign currency
translation adjustments
Net unrealized loss on
foreign exchange
contracts
Balance at September 30,
2004 96,435,405 $292,048 10 $--
Accumulated
Other
Accumulated Comprehensive
Deficit Loss Total
(All amounts in thousands of U.S. dollars,
except share amounts)
Balance at March 31, 2003 $(108,350) $(7,567) $43,632
Issuance of common shares 103,176
Exercise of stock options 2,609
Exercise of warrants 1,377
Modification of stock
options 815
Modification of warrants 2,031
Redemption of Series A
preferred shares 566
Conversion of Series A
preferred shares 9,453
Net loss available to
common shareholders (94,232) (94,232)
Foreign currency
translation adjustments (440) (440)
Net unrealized gain on
foreign exchange contracts 622 622
Balance at March 31, 2004 (202,582) (7,385) 69,609
Exercise of stock options 2,008
Exercise of warrants 10,100
Issued to directors for
services 137
Modification of stock
options 227
Net loss available
to common shareholders (3,132) (3,132)
Foreign currency
translation adjustments 1,518 1,518
Net unrealized loss on
foreign exchange contracts (366) (366)
Balance at September 30,
2004 $(205,714) $(6,233) $80,101
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Six Months
Ended Ended
Sept. 30, Sept. 30,
2004 2003
(All amounts in thousands
of U.S. dollars)
Operating activities:
Net income (loss) $(3,132) $(13,026)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation of property and equipment 1,389 1,030
Amortization of deferred financing costs 1,700 698
Amortization of films and television
programs 124,370 55,770
Amortization of intangible asset 1,096 --
Gain on disposition (666) --
Interest rate swaps mark-to-market (1,989) (262)
Stock based compensation 364 186
Minority interests 21 --
Equity interests 200 1,011
Changes in operating assets and liabilities:
Accounts receivable, net (42,889) (20,041)
Increase in investment in films and
television programs (83,830) (71,234)
Other assets (19) (1,861)
Future income taxes -- (232)
Accounts payable and accrued liabilities 16,003 11,314
Film obligations 39,003 7,442
Deferred revenue (2,282) 2,453
Net cash flows provided by (used in)
operating activities 49,339 (26,752)
Financing activities:
Issuance of common shares 12,108 30,765
Redemption of Series A preferred shares -- (18,090)
Dividends paid on Series A preferred shares -- (254)
Financing fees (1,221) --
Increase (decrease) in bank loans (63,663) 20,181
Decrease in production loans -- (54)
Decrease in debt (840) (7,492)
Net cash flows provided by (used in)
financing activities (53,616) 25,056
Investing activities:
Cash received from disposition, net 882 --
Purchase of property and equipment (175) (235)
Net cash flows provided by (used in)
investing activities 707 (235)
Net change in cash and cash equivalents (3,570) (1,931)
Foreign exchange effect on cash 2,016 674
Cash and cash equivalents -- beginning of
period 7,089 6,851
Cash and cash equivalents -- end of period $5,535 $5,594
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET INCOME (LOSS) TO CANADIAN GAAP
Net Income (Loss)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
(All amounts in thousands of U.S. dollars)
As reported under U.S. GAAP $8,330 $(274) $(3,132) $(13,026)
Adjustment for capitalized
pre-operating costs -- (154) -- (308)
Adjustment for interest
rate swaps (158) (576) (316) (262)
Adjustment for accretion on
subordinated notes (618) -- (1,236) --
Adjustment for amortization of
subordinated notes issue costs 39 -- 75 --
Stock based compensation 227 186 227 186
Adjustment for amortization of
debt financing costs 84 -- 168 --
Net Income (Loss) under
Canadian GAAP $7,904 $(818) $(4,214) $(13,410)
On March 29, 2004, the new British Columbia Business Corporations Act
came into force, which allows the Company to prepare its financial
statements either under Canadian or U.S. GAAP. The Company has elected
to prepare financial statements under U.S. GAAP commencing April 1, 2004.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF EBITDA TO NET INCOME (LOSS)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
(All amounts in thousands of U.S. dollars)
EBITDA, as defined $15,360 $1,878 $8,081 $(7,818)
Depreciation (714) (488) (1,389) (1,030)
Interest (5,652) (2,149) (11,076) (4,209)
Interest rate swaps
mark-to-market (71) 576 1,989 262
Minority interests (144) -- (21) --
Income tax provision (449) (91) (716) (231)
Net income (loss) $8,330 $(274) $(3,132) $(13,026)
EBITDA is defined as earnings before interest, interest rate swaps
mark-to-market, income tax provision, depreciation and minority
interests.
EBITDA is a non-GAAP financial measure. Management believes EBITDA to be
a meaningful indicator of our performance that provides useful
information to investors regarding our financial condition and results of
operations. Presentation of EBITDA is consistent with our past practice,
and EBITDA is a non-GAAP financial measure commonly used in the
entertainment industry and by financial analysts and others who follow
the industry to measure operating performance. While management
considers EBITDA to be an important measure of comparative operating
performance, it should be considered in addition to, but not as a
substitute for, operating income (loss), net income (loss) and other
measures of financial performance reported in accordance with GAAP.
EBITDA does not reflect cash available to fund cash requirements. Not
all companies calculate EBITDA in the same manner and the measure as
presented may not be comparable to similarly titled measures presented by
other companies.
SOURCE: Lions Gate Entertainment
CONTACT: Peter D. Wilkes, +1-310-255-3726, [email protected], or Russell
D. Nelson, +1-310-255-3858, [email protected], both of Lions Gate Entertainment
Web site: http://www.lgf.com/