Lionsgate (NYSE: LGF), the leading independent filmed entertainment studio, reported revenues of $976.7 million, pretax income of $35.2 million and adjusted pretax income (a non-GAAP metric) of $43.9 million for its fiscal year ended March 31, 2007, the Company announced today. Adjusted pretax income in fiscal 2007 of $43.9 million compared to adjusted pretax income of $2.0 million in fiscal 2006. Adjusted pretax income is defined as income before income taxes adjusted to add back expenses associated with stock appreciation rights and non-cash charges for restricted stock units and stock options. The Company reported net income of $27.5 million for fiscal 2007 compared to net income of $6.1 million in the prior year.
Lionsgate reported diluted net income per common share of $0.25 on 111.2 million weighted average common shares outstanding compared to diluted net income per common share of $0.06 on 106.1 million weighted average common shares outstanding in the prior year. The Company reported free cash flow (a non-GAAP metric) of $114.2 million for fiscal 2007.
"We are pleased that our entire diversified portfolio of businesses contributed to our strong financial performance in fiscal 2007," said Lionsgate Chief Executive Officer Jon Feltheimer. "With a healthy cash position, strong free cash flow from our library, a large filmed entertainment backlog and a new theatrical slate financing agreement in place, we are well positioned to continue to build asset value for our shareholders."
Feltheimer noted that Lionsgate had total cash and auction rate securities of approximately $289 million on its balance sheet at the end of fiscal 2007 as well as a filmed entertainment backlog of $320.2 million (which includes the backlog of approximately $64.3 million from Lionsgate's recently-acquired television syndication company Debmar-Mercury). He also cited the strong performance of Lionsgate's 11,000-plus-title library, which generated record revenues of $256 million, a 21% increase from the prior year, as an important foundation for future growth.
Overall motion picture revenue for fiscal 2007 was $858.2 million, an increase of 6% as gains in television from motion pictures, international and continued strength in all segments of home entertainment more than offset a decline in theatrical revenue. Within this segment, theatrical revenue of $107.9 million during the fiscal year decreased 26% compared to $145.5 million in the prior year. Principal revenue contributors for the year were the theatrical releases SAW III, CRANK, EMPLOYEE OF THE MONTH, Tyler Perry's DADDY'S LITTLE GIRLS, THE DESCENT, SEE NO EVIL, HAPPILY N'EVER AFTER and AKEELAH AND THE BEE, which generated less at the theatrical box office than the prior year's slate which included SAW II, Tyler Perry's MADEA'S FAMILY REUNION, HOSTEL and CRASH.
However, television revenue included in motion pictures was $109.3 million in fiscal 2007, an increase of 50% compared to $72.9 million in fiscal 2006, driven by more theatrical titles with television windows opening in fiscal 2007 such as HOSTEL, SAW II, Tyler Perry's MADEA'S FAMILY REUNION, LORD OF WAR, LARRY THE CABLE GUY: HEALTH INSPECTOR and AKEELAH AND THE BEE.
International revenue was $105.2 million, an increase of 72% compared to $61.2 million in fiscal 2006, driven by revenue contributions of $45.0 million from Lionsgate U.K. (formerly Redbus Film Distribution), which distributed AN AMERICAN HAUNTING, DIRTY DANCING, HARD CANDY, REVOLVER, SAW III and WICKER MAN during fiscal 2007. Other international titles showing strength included CRANK, SAW, SAW II and THE LOST CITY.
Home video revenue of $528.3 million compared to $527.2 million in the prior year. Despite the slight decline in theatrical box office results, home entertainment revenues remained strong as Lionsgate's theatrical titles continued to outperform their theatrical revenues on DVD, with SAW III, CRANK, EMPLOYEE OF THE MONTH, Tyler Perry's MADEA'S FAMILY REUNION, MADEA GOES TO JAIL, Best Picture Academy Award ® winner CRASH, THE DESCENT, AKEELAH AND THE BEE, SEE NO EVIL and AN AMERICAN HAUNTING all making significant revenue contributions. Lionsgate achieved one of its best home entertainment revenue performances in the fourth quarter of fiscal 2007, with SAW III and CRANK debuting at number one on the North American DVD sales charts.
Television production revenue of $118.5 million declined by 11% compared to $132.9 million in the prior year as fewer episodes were delivered during fiscal 2007 due to timing. Prime time series contributing to revenues included THE DRESDEN FILES (SciFi Network), HIDDEN PALMS (CW), WILDFIRE Season 3 (ABC Family), the hit comedy WEEDS Season 2 (Showtime), DIRTY DANCING: THE REALITY SERIES (WE), LOVESPRING INTERNATIONAL (Lifetime) and I PITY THE FOOL (TV Land). Revenue from television movies and miniseries increased due to the success of THE LOST ROOM miniseries (SciFi) and THE STAIRCASE MURDERS television movie (Lifetime). Revenue from video releases of television production was $8.4 million in fiscal 2007 compared to $2.4 million in the prior year due primarily to the successful release of WEEDS Season One on DVD.
Lionsgate plans a strong slate of television programming scheduled to air in fiscal 2008, including MAD MEN, the first scripted series for AMC, THE KILL POINT (Spike TV), the third season of the Golden Globe®-winning WEEDS (Showtime), the fourth season of WILDFIRE (ABC Family) and the sixth broadcast season of THE DEAD ZONE (USA), currently shooting in Montreal.
During the fourth quarter of fiscal 2007 (period ended March 31, 2007), Lionsgate reported revenues of $331.6 million, an increase of 6% compared to revenues of $312.3 million in the prior year's fourth quarter. Pretax income of $33.9 million in this year's fourth quarter compared to pretax income of $34.3 million for the prior year's fourth quarter. Net income of $25.0 million in the fourth quarter of fiscal 2007 declined 36% compared to net income of $38.9 million in the previous year's fourth quarter. Diluted income per share of $0.19 on 144.9 million weighted average common shares outstanding compared to diluted income per share of $0.27 on 143.5 million weighted average common shares outstanding in the prior year's fourth quarter.
Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2007 financial results and provide fiscal 2008 guidance at 9:00 A.M. ET/6:00 A.M. PT, Thursday, May 31, 2007. Interested parties may participate live in the conference call by calling 1-888-428-4480 (1-612-234-9960 outside the U.S. and Canada). A full digital replay will be available from Thursday morning, May 31, through Thursday, June 7, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code 871581.
Lionsgate is the leading independent filmed entertainment studio, winning the 2006 Best Picture Academy Award® for CRASH, and the Company is a premier producer and distributor of motion pictures, television programming, home entertainment, family entertainment and video-on-demand content. Its prestigious and prolific library of more than 11,000 motion picture titles and television episodes is a valuable source of recurring revenue and a foundation for the growth of the Company's core businesses. The Lionsgate brand is synonymous with original, daring, quality entertainment in markets around the globe.
http://www.lionsgate.com/
For further information, contact:
Peter D. Wilkes
Lionsgate
310-255-3726
[email protected]
Kelli Easterling
Lionsgate
310-255-4929
[email protected]
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, the success of our fiscal 2008, and the timing of revenues expected from our upcoming television series. 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 Form 10-K filed with the Securities and Exchange Commission on May 30, 2007. 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.
This press release, and the accompanying tables, include both financial measures in accordance with accounting principles generally accepted in the United States of America, or GAAP, as well as non-GAAP financial measures. The tables attached to this press release include reconciliations of non-GAAP financial measures to GAAP financial measures.
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED BALANCE SHEETS
March 31, March 31,
2007 2006
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $51,497 $46,978
Restricted cash 4,915 820
Investments - auction rate securities 237,379 167,081
Investments - equity securities 125 14,921
Accounts receivable, net of reserve for
video returns and allowances of $77,691
(March 31, 2006 - $73,366) and provision
for doubtful accounts of $6,345
(March 31, 2006 - $10,934) 130,496 182,659
Investment in films and television
programs 493,140 417,750
Property and equipment 13,095 7,218
Goodwill 187,491 185,117
Other assets 18,957 30,705
$1,137,095 $1,053,249
LIABILITIES
Accounts payable and accrued liabilities $155,617 $188,793
Unpresented bank drafts - 14,772
Participation and residuals 171,156 164,326
Film obligations 167,884 120,661
Subordinated notes 325,000 385,000
Deferred revenue 69,548 30,427
889,205 903,979
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common shares, no par value, 500,000,000
shares authorized, 116,970,280 at
March 31, 2007 and 104,422,765 at
March 31, 2006 shares issued and
outstanding 398,836 328,771
Series B preferred shares (10 shares
issued and outstanding) - -
Restricted share units - 5,178
Unearned compensation - (4,032)
Accumulated deficit (149,651) (177,130)
Accumulated other comprehensive loss (1,295) (3,517)
247,890 149,270
$1,137,095 $1,053,249
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF INCOME
Year Ended Year Ended Year Ended
March 31, March 31, March 31,
2007 2006 2005
(Amounts in thousands, except
per share amounts)
Revenues $976,740 $945,385 $838,097
Expenses:
Direct operating 436,818 458,990 353,790
Distribution and marketing 404,410 399,299 364,281
General and administration 90,782 69,936 69,258
Depreciation 2,786 1,817 2,370
Total expenses 934,796 930,042 789,699
Operating income 41,944 15,343 48,398
Other expenses (income):
Interest expense 17,832 18,860 25,318
Interest rate swaps mark-to-market - 123 (2,453)
Interest and other income (11,930) (4,304) (3,440)
Gain on sale of equity securities (1,722) - -
Minority interests - - 107
Total other expenses, net 4,180 14,679 19,532
Income before equity interests and
income taxes 37,764 664 28,866
Equity interests (2,605) (74) (200)
Income before income taxes 35,159 590 28,666
Income tax provision (benefit) 7,680 (1,030) 8,747
Income before discontinued
operations 27,479 1,620 19,919
Income from discontinued operations
(including gain on sale in 2006 of
$4,872), net of tax of nil, $2,464
and $200 - 4,476 362
Net income $27,479 $6,096 $20,281
Basic Per Share Data:
Basic Income Per Common Share From
Continuing Operations $0.25 $0.02 $0.20
Basic Income Per Common Share From
Discontinued Operations - 0.04 0.01
Basic Net Income Per Common Share $0.25 $0.06 $0.21
Diluted Per Share Data:
Diluted Earnings Per Common Share From
Continuing Operations $0.25 $0.02 $0.19
Diluted Earnings Per Common Share From
Discontinued Operations - 0.04 0.01
Diluted Net Income Per Common Share $0.25 $0.06 $0.20
Weighted average number of common
shares outstanding:
Basic 108,398 103,066 97,610
Diluted 111,164 106,102 103,375
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Series B
Common Shares Preferred Shares
Number Amount Number Amount
(Amounts in thousands, except share amounts)
Balance at March 31, 2004 93,615,896 $280,501 10 $-
Exercise of stock options 4,991,141 13,871
Exercise of warrants 3,220,867 10,842
Issuance of common shares
to directors for services 15,804 137
Impact of previously modified
stock options - 311
Comprehensive income (loss)
Net income
Foreign currency translation
adjustments
Net unrealized loss on foreign
exchange contracts
Comprehensive income
Balance at March 31, 2005 101,843,708 305,662 10 -
Exercise of stock options 361,310 1,408
Issuance of common shares
to directors for services 20,408 203
Impact of previously modified
stock options - 27
Issuance of common shares in
connection with acquisition
of film assets 399,042 3,775
Issuance of common shares in
connection with acquisition
of common shares of Image
Entertainment 1,104,004 11,537
Issuance of common shares in
connection with acquisition
of Redbus 643,460 5,643
Issuance of restricted share units
Amortization of restricted
share units
Vesting of restricted share units 50,833 516
Comprehensive income (loss)
Net income
Foreign currency translation
adjustments
Net unrealized loss on
foreign exchange contracts
Unrealized loss on investments --
available for sale
Comprehensive income
Balance at March 31, 2006 104,422,765 328,771 10 -
Reclassification of unearned
compensation and restricted
share common units upon
adoption of SFAS No. 123(R ) 1,146
Exercise of stock options 1,297,144 4,277
Stock based compensation, net
of share units withholding
tax obligations of $504 113,695 6,517
Issuance of common shares
to directors for services 25,568 238
Conversion of 4.875% notes, net
of unamortized issuance costs 11,111,108 57,887
Comprehensive income (loss)
Net income
Foreign currency translation
adjustments
Net unrealized gain on foreign
exchange contracts
Unrealized gain on investments --
available for sale
Comprehensive income
Balance at March 31, 2007 116,970,280 $398,836 10 $-
Restricted
Share Unearned Accumulated
Units Compensation Deficit
(Amounts in thousands, except share amounts)
Balance at March 31, 2004 $- $- $(203,507)
Exercise of stock options
Exercise of warrants
Issuance of common shares
to directors for services
Impact of previously modified stock
options
Comprehensive income (loss)
Net income 20,281
Foreign currency translation
adjustments
Net unrealized loss on foreign
exchange contracts
Comprehensive income
Balance at March 31, 2005 - - (183,226)
Exercise of stock options
Issuance of common shares
to directors for services
Impact of previously modified stock
options
Issuance of common shares in
connection with acquisition of film
assets
Issuance of common shares in
connection with acquisition of
common shares of Image Entertainment
Issuance of common shares in
connection with acquisition of
Redbus
Issuance of restricted share units 5,694 (5,694)
Amortization of restricted share units 1,662
Vesting of restricted share units (516)
Comprehensive income (loss)
Net income 6,096
Foreign currency translation
adjustments
Net unrealized loss on foreign
exchange contracts
Unrealized loss on investments --
available for sale
Comprehensive income
Balance at March 31, 2006 5,178 (4,032) (177,130)
Reclassification of unearned
compensation and restricted share
common units upon adoption
of SFAS No. 123(R ) (5,178) 4,032
Exercise of stock options
Stock based compensation, net of share
units withholding tax obligations
of $504
Issuance of common shares
to directors for services
Conversion of 4.875% notes, net of
unamortized issuance costs
Comprehensive income (loss)
Net income 27,479
Foreign currency translation
adjustments
Net unrealized gain on foreign
exchange contracts
Unrealized gain on investments --
available for sale
Comprehensive income
Balance at March 31, 2007 $- $- $(149,651)
Accumulated
Comprehensive Other
Income Comprehensive
(Loss) Loss Total
(Amounts in thousands, except share amounts)
Balance at March 31, 2004 $(7,385) $69,609
Exercise of stock options 13,871
Exercise of warrants 10,842
Issuance of common shares
to directors for services 137
Impact of previously modified stock
options 311
Comprehensive income (loss)
Net income $20,281 20,281
Foreign currency translation
adjustments 2,374 2,374 2,374
Net unrealized loss on foreign
exchange contracts (286) (286) (286)
Comprehensive income $22,369 -
Balance at March 31, 2005 (5,297) 117,139
Exercise of stock options 1,408
Issuance of common shares
to directors for services 203
Impact of previously modified stock
options 27
Issuance of common shares in
connection with acquisition of film
assets 3,775
Issuance of common shares in
connection with acquisition of
common shares of Image Entertainment 11,537
Issuance of common shares in
connection with acquisition of
Redbus 5,643
Issuance of restricted share units -
Amortization of restricted share units 1,662
Vesting of restricted share units -
Comprehensive income (loss)
Net income $6,096 6,096
Foreign currency translation
adjustments 2,223 2,223 2,223
Net unrealized loss on foreign
exchange contracts (356) (356) (356)
Unrealized loss on investments --
available for sale (87) (87) (87)
Comprehensive income $7,876
Balance at March 31, 2006 (3,517) 149,270
Reclassification of unearned
compensation and restricted share
common units upon adoption
of SFAS No. 123(R ) -
Exercise of stock options 4,277
Stock based compensation, net of share
units withholding tax obligations
of $504 6,517
Issuance of common shares
to directors for services 238
Conversion of 4.875% notes, net of
unamortized issuance costs 57,887
Comprehensive income (loss)
Net income $27,479 27,479
Foreign currency translation
adjustments 1,876 1,876 1,876
Net unrealized gain on foreign
exchange contracts 259 259 259
Unrealized gain on investments --
available for sale 87 87 87
Comprehensive income $29,701 -
Balance at March 31, 2007 $(1,295) $247,890
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended Year Ended Year Ended
March 31, March 31, March 31,
2007 2006 2005
(Amounts in thousands)
Operating Activities:
Net income $27,479 $6,096 $20,281
Income from discontinued operations - 4,476 362
Income from continuing operations 27,479 1,620 19,919
Adjustments to reconcile income from
continuing operations to net cash
provided by operating activities
Depreciation of property and
equipment 2,786 1,817 2,370
Amortization and write-off of
deferred financing costs 3,756 3,804 6,945
Amortization of films and
television programs 241,640 253,279 213,346
Amortization of intangible assets 884 2,004 2,192
Non-cash stock-based compensation 7,259 1,881 448
Interest rate swaps mark-to-market - 123 (2,453)
Gain on disposition of assets - - (666)
Gain on sale of equity securities (1,722) - -
Deferred income taxes 6,780 297 6,283
Minority interests - - 107
Equity interests 2,605 74 200
Changes in operating assets and
liabilities:
Restricted cash (4,095) 2,093 (2,913)
Accounts receivable, net 79,704 (33,459) (21,077)
Investment in films and television
programs (297,149) (284,711) (171,272)
Other assets 7,448 (7,892) (2,149)
Accounts payable and accrued
liabilities (38,509) 49,155 4,043
Unpresented bank drafts (14,772) 14,772 -
Participation and residuals 3,261 68,676 18,718
Film obligations 42,011 78,542 (3,124)
Deferred revenue 38,451 (31,643) 23,888
Net Cash Flows Provided By Operating
Activities - continuing operations 107,817 120,432 94,805
Net Cash Flows Provided By Operating
Activities - discontinued operations - 2,580 691
Net Cash Flows Provided By Operating
Activities 107,817 123,012 95,496
Investing Activities:
Purchases of investments - auction
rate securities (865,750) (307,031) -
Sales of investments - auction rate
securities 795,448 139,950 -
Purchases of investments - equity
securities (122) (3,470) -
Sales of investments - equity
securities 390 - -
Funding of joint venture - FEARnet (5,116)
Cash received from sale of
investment - 2,945 -
Cash received from disposition of
assets, net - 34,860 1,172
Acquisition of Debmar, net of cash
acquired (24,119)
Acquisition of Redbus, net of cash
acquired - (27,138) -
Purchases of property and equipment (8,348) (5,555) (2,618)
Net Cash Flows Used In Investing
Activities - continuing operations (107,617) (165,439) (1,446)
Net Cash Flows Provided By Investing
Activities - discontinued
operations - 105 134
Net Cash Flows Used In Investing
Activities (107,617) (165,334) (1,312)
Financing Activities:
Exercise of stock options 4,277 1,408 24,713
Financing fees - (546) (1,612)
Increase in subordinated notes, net
of issue costs - - 314,822
Repayment of subordinated notes - (5,000) -
Repayment of bank loans - - (325,111)
Repayment of mortgages payable - (16,224) -
Net Cash Flows Provided By (Used In)
Financing Activities - continuing
operations 4,277 (20,362) 12,812
Net Cash Flows Used In Financing
Activities - discontinued operations - (2,703) (1,894)
Net Cash Flows Provided By (Used In)
Financing Activities 4,277 (23,065) 10,918
Net Change In Cash And Cash
Equivalents 4,477 (65,387) 105,102
Foreign Exchange Effects on Cash -
continuing operations 42 (628) 603
Foreign Exchange Effects on Cash -
discontinued operations - 154 45
Foreign Exchange Effects on Cash 42 (474) 648
Cash and Cash Equivalents -
Beginning Of Year 46,978 112,839 7,089
Cash and Cash Equivalents - End Of
Year $51,497 $46,978 $112,839
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES TO FREE CASH FLOW
Year Ended
March 31,
2007 2006
(Amounts in thousands)
Net Cash Flows Provided By Operating
Activities $107,817 $123,012
Purchases of property and equipment (8,348) (5,555)
Decrease in Unpresented Bank Drafts 14,772 (14,772)
Free Cash Flow, as defined $114,241 $102,685
Free cash flow is defined as net cash flows provided by or used in operating activities less purchases of property and equipment and unpresented bank drafts. Unpresented bank drafts represent checks issued and not yet presented for payment in excess of the cash balances at custodial banks. The applicable bank accountsare funded at the time the checks are presented for payment.
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 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.
LIONS GATE ENTERTAINMENT CORP.
ADJUSTED RECONCILIATION OF INCOME BEFORE INCOME TAXES
Year Ended
March 31,
2007 2006
(Amounts in thousands)
Income before income taxes $35,159 $590
Stock Appreciation Rights Expense 1,684 (274)
Non-Cash Restricted Stock and
Stock Option Expense 7,022 1,716
Adjusted income before income taxes $43,865 $2,032
Adjusted income before income taxes, is defined as income before income taxes adjusted to add back expenses associated with stock appreciation rights and non-cash charges for restricted stock units and stock options.
Adjusted income before income taxes 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 the financial performance of the business. Management separates these charges in its internal budgeting process and in reviewing the financial results of the Company's operations. Income before income taxes is a non-GAAP financial measure used by financial analysts and others who follow the industry. Not all companies calculate income before income taxes, as adjusted 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: [email protected]
SOURCE: Lions Gate Entertainment Corp.
CONTACT: Peter D. Wilkes, +1-310-255-3726, [email protected], or
Kelli Easterling, +1-310-255-4929, [email protected], both of Lions
Gate Entertainment Corp.
Web site: http://www.lionsgate.com/