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EX-99.1 - EX-99.1 - LIONS GATE ENTERTAINMENT CORP /CN/ | v58624exv99w1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 9, 2011
Lions Gate Entertainment Corp.
(Exact name of registrant as specified in charter)
British Columbia, Canada
(State or Other Jurisdiction of Incorporation)
(State or Other Jurisdiction of Incorporation)
(Commission File Number) 1-14880 | (IRS Employer Identification No.) N/A |
(Address of principal executive offices)
1055 West Hastings Street, Suite 2200
Vancouver, British Columbia V6E 2E9
and
2700 Colorado Avenue, Suite 200
Santa Monica, California 90404
1055 West Hastings Street, Suite 2200
Vancouver, British Columbia V6E 2E9
and
2700 Colorado Avenue, Suite 200
Santa Monica, California 90404
Registrants telephone number, including area code: (877) 848-3866
No Change
(Former name or former address, if changed since last report)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 | Results of Operations and Financial Condition. |
On February 9, 2011, Lions Gate Entertainment Corp. (the Company, we, us or our) issued a
press release announcing our results of operations for the third quarter of fiscal 2011. The press
release issued by us in connection with the announcement is furnished as Exhibit 99.1 and is
incorporated herein by reference.
EBITDA
In our press release, we disclosed EBITDA, as adjusted, of $28.9 million for the quarter ended
December 31, 2010. EBITDA, as defined, is a non-GAAP financial measure, as defined in Regulation G
promulgated by the Securities and Exchange Commission (the SEC). A reconciliation of both EBITDA
and EBITDA, as adjusted, as defined to net income (loss), is included in Exhibit 99.1.
The non-GAAP financial measures, EBITDA and EBITDA, as adjusted, are in addition to, not a
substitute for, or superior to, measures of financial performance prepared in accordance with U.S.
Generally Accepted Accounting Principles (GAAP).
EBITDA is defined as earnings before interest, income tax provision, depreciation and amortization,
equity interests, and gains or losses on extinguishment of debt and the sale of equity securities.
EBITDA, as adjusted, represents EBITDA as defined above adjusted for stock-based compensation,
EBITDA attributable to TV Guide Network, certain corporate defense and related charges, and
non-risk prints and advertising expense. Stock-based compensation represents compensation expenses
associated with stock options, restricted share units and stock appreciation rights. EBITDA
attributable to TV Guide Network represents the Companys 51% share of TV Guide Networks EBITDA
for the three and nine months ended December 31, 2010 and 2009. Corporate defense and related
charges represent legal fees, other professional fees, and certain other costs associated with a
shareholder activist matter. Non-risk prints and advertising expense represents the amount of
theatrical marketing expense for third party titles that the Company funded and expensed for which
a third party provides a guarantee that such expense will be recouped from the performance of the
film (i.e., there is no risk of loss to the Company) net of an amount of the estimated amortization
of participation expense that would have been recorded if such amount had not been expensed. The
amount is subtracted from EBITDA in the three and nine months ended December 31, 2010 because there
was no non-risk prints and advertising expense incurred and the amount represents the estimated
amortization of participation expense that would have been recorded if such prior period amounts
had not been expensed.
We believe EBITDA, as defined, and EBITDA, as adjusted, 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, as defined, and EBITDA, as adjusted, 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 we consider EBITDA, as defined, and
EBITDA, as adjusted, to be an important measure of comparative operating performance, it should be
considered in addition to, but not as a substitute for, net income and other measures of financial
performance reported in accordance with GAAP. EBITDA, as defined, and EBITDA, as adjusted, do not
reflect cash available to fund cash requirements. Not all companies calculate EBITDA, as defined,
or EBITA, as adjusted, in the same manner and the measure, as presented, may not be comparable to
similarly-titled measures presented by other companies.
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Free Cash Flow
In our press release, we disclosed free cash flow of negative $62.7 million for the quarter ended
December 31, 2010. Free cash flow is a non-GAAP financial measure, as defined in Regulation G
promulgated by the SEC. Net cash flows used in operating activities were negative $20.9 million for
the quarter ended December 31, 2010. A reconciliation of free cash flow to net cash flows used in
operating activities is included in Exhibit 99.1.
The non-GAAP financial measure, free cash flow, is in addition to, not a substitute for, or
superior to, measures of financial performance prepared in accordance with GAAP.
Free cash flow is defined as net cash flows provided by (used in) operating activities, less
purchases of property and equipment, plus or minus the net increase or decrease in production loans
including production loan activity under the Companys film credit facility, plus or minus the net
increase or decrease in restricted cash held in a trust to fund the Companys cash severance
obligations that would be due to certain executive officers should their employment be terminated
without cause, (as defined), in connection with a change in control of the Company (as defined
in each of their respective employment contracts). For purposes of the employment agreements with
such executive officers, a change in control occurred on June 30, 2010 when a certain shareholder
became the beneficial owner of 33% or more of the Companys common shares. 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 associated with production loans prior to the time we
actually pay for the film.
We believe that it is more meaningful to reflect the impact of the payment for these films in our
free cash flow when the payments are actually made. We believe 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.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit No. | Description | |||||
99.1 | Press Release dated February 9, 2011 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 9, 2011 | LIONS GATE ENTERTAINMENT CORP. |
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/s/ James Keegan | ||||
James Keegan | ||||
Chief Financial Officer | ||||
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