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| 8-K - FORM 8-K - LIONS GATE ENTERTAINMENT CORP /CN/ | a8-kq4f2013earningsrelease.htm |
Exhibit 99.1
LIONSGATE REPORTS FISCAL 2013 REVENUE OF $2.71 BILLION, ADJUSTED EBITDA OF $329.7 MILLION, NET INCOME OF $232.1 MILLION OR $1.73 BASIC EPS AND ADJUSTED NET INCOME OF $190.1MILLION OR
$1.41 ADJUSTED BASIC EPS
Free Cash Flow Was $280.5 Million For Fiscal 2013
Fourth Quarter Revenue Was $785.7 Million with Adjusted EBITDA of $115.6 Million, Net Income of $163.0 Million or $1.20 Basic EPS, Adjusted Net Income of $89.6 Million or $0.66 Adjusted Basic EPS and Free Cash Flow of $123.3 Million
SANTA MONICA, CA, and VANCOUVER, BC, May 30, 2013 - Lionsgate (NYSE: LGF) today reported revenue of $2.71 billion, adjusted EBITDA of $329.7 million, net income of $232.1 million or $1.73 basic net income per share and adjusted net income of $190.1 million or $1.41 adjusted basic net income per share for Fiscal 2013 (fiscal year ended March 31, 2013).
Revenue of $2.71 billion for fiscal 2013 increased by 71% compared to $1.59 billion in the prior year, reflecting strong performances by the Company throughout its theatrical, home entertainment, international and Lionsgate U.K. operations driven by a successful slate of feature films led by the global blockbuster HUNGER GAMES and TWILIGHT franchises.
Adjusted EBITDA of $329.7 million for fiscal 2013 compared to adjusted EBITDA of $71.6 million in the prior year.
Net income for the fiscal year was $232.1 million or $1.73 basic net income per share on 134.5 million weighted average number of common shares outstanding compared to a $(39.1) million net loss or $(0.30) basic net loss per share on 132.2 million weighted average number of common shares outstanding during the prior year. Adjusted net income of $190.1 million or $1.41 adjusted basic net income per share compared to adjusted net loss of $(13.1) million or $(0.10) adjusted basic net loss per share in the prior year.
Free cash flow of $280.5 million for fiscal 2013 compared to negative free cash flow of $(86.9) million in the prior year.
Lionsgate's filmed entertainment backlog, or already contracted future revenue not yet recorded, was $1.1 billion at March 31, 2013.
“We completed a stellar fiscal 2013 with an outstanding fourth quarter that reflected strong contributions from our young adult franchises as well as the rest of our theatrical slate and our home entertainment and international businesses,” said Lionsgate Chief Executive Officer Jon Feltheimer. “We are performing ahead of plan for all of our metrics, and we're pleased with the financial strength of our diverse portfolio of businesses and our strong and growing momentum building Lionsgate into a next generation global content leader.”
Overall Motion Picture segment revenue for fiscal 2013 was $2.33 billion, an increase of 96% from the prior year reflecting strong gains in all categories. Within the Motion Picture segment, theatrical revenue in the fiscal year was $535.5 million compared to $208.9 million in the prior year, a 156% increase attributable to the box office
performance of a 2013 slate that included THE TWILIGHT SAGA: BREAKING DAWN - PART 2, WARM BODIES, THE EXPENDABLES 2 and MADEA'S WITNESS PROTECTION as well as THE HUNGER GAMES from the 2012 slate. The next HUNGER GAMES installment, THE HUNGER GAMES: CATCHING FIRE, will open worldwide on November 22, 2013.
Lionsgate's home entertainment revenue from both motion pictures and television was $964.1 million for the fiscal year, a 41% increase compared to $683.5 million in the prior year, driven by THE HUNGER GAMES, THE TWILIGHT SAGA: BREAKING DAWN -- PART 1 and THE TWILIGHT SAGA: BREAKING DAWN - PART 2, three of the biggest home entertainment titles of the year, as well as THE EXPENDABLES 2, MADEA'S WITNESS PROTECTION, CABIN IN THE WOODS and WHAT TO EXPECT WHEN YOU'RE EXPECTING. Digital media revenue increased by 46% to $276.6 million in fiscal 2013 compared to $190.1 million in the prior year.
Television revenue included in the Motion Picture segment was $277.9 million in fiscal 2013, more than doubling the $119.9 million generated in the prior year.
International Motion Picture segment revenue of $369.7 million (excluding Lionsgate U.K.) for fiscal 2013 more than tripled the prior year total, driven by the strong international theatrical performances of THE HUNGER GAMES, THE TWILIGHT SAGA: BREAKING DAWN - PART 2, THE TWILIGHT SAGA: BREAKING DAWN - PART 1, STEP UP REVOLUTION and WHAT TO EXPECT WHEN YOU'RE EXPECTING.
Lionsgate U.K. revenue was $147.7 million, an increase of 46% from the prior year, on the strength of a diversified theatrical slate including THE HUNGER GAMES and THE EXPENDABLES 2 from Lionsgate, Lionsgate U.K.'s SALMON FISHING IN THE YEMEN and third-party titles such as MAGIC MIKE.
Revenue in the Television Production segment in fiscal 2013 was $379.0 million compared to $397.3 million in the prior year. The decline was primarily attributable to a decrease in home entertainment revenue for television programming as the prior year included the licensing of four seasons of MAD MEN to Netflix. Domestic and international television posted gains over the prior year.
Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2013 results at 9:00 A.M. ET/6:00 A.M. PT on Friday, May 31, 2013. Interested parties may participate live in the conference call by calling 1-800-230-1092 (612-332-0107 outside the U.S. and Canada). A full digital replay will be available from Friday morning, May 31, through Friday, June 7, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 292007.
ABOUT LIONSGATE
Lionsgate is a leading global entertainment company with a strong and diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution, new channel platforms and international distribution and sales. Lionsgate currently has 28 television shows on 20 networks spanning its primetime production, distribution and syndication businesses, including such critically-acclaimed hits as the multiple Emmy Award-winning Mad Men and Nurse Jackie, the new comedy Anger Management, the network series Nashville, the syndication successes Tyler Perry's House of Payne, its spinoff Meet the Browns, For Better Or Worse, The Wendy Williams Show, Are We There Yet? and the upcoming Orange Is The New Black, an original series for Netflix.
Its feature film business has been fueled by such recent successes as the blockbuster first installment of The Hunger Games franchise, The Twilight Saga Breaking Dawn - Part 2, Tyler Perry's Temptation, Warm Bodies, Snitch, Texas Chainsaw 3D, The Expendables 2, The Possession, Sinister, The Cabin in the Woods and Arbitrage. Lionsgate's home entertainment business is an industry leader in box office-to-DVD and box office-to-VOD revenue conversion rate. Lionsgate handles a prestigious and prolific library of approximately 15,000 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 and Summit brands remain synonymous with original, daring, quality entertainment in markets around the world.
***
For further information, please contact:
Peter D. 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 facility and notes, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, risks related to our acquisition strategy and integration of acquired businesses, the effects of disposition of businesses or assets, 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 (the “SEC”) on May 30, 2013, 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.
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED BALANCE SHEETS
March 31, 2013 | March 31, 2012 | ||||||
(Amounts in thousands, except share amounts) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 62,363 | $ | 64,298 | |||
Restricted cash | 10,664 | 11,936 | |||||
Accounts receivable, net of reserves for returns and allowances of $103,418 (March 31, 2012 - $93,860) and provision for doubtful accounts of $4,494 (March 31, 2012 - $4,551) | 787,150 | 784,530 | |||||
Investment in films and television programs, net | 1,244,075 | 1,329,053 | |||||
Property and equipment, net | 8,530 | 9,772 | |||||
Equity method investments | 169,450 | 171,262 | |||||
Goodwill | 323,328 | 326,633 | |||||
Other assets | 72,619 | 90,511 | |||||
Deferred tax assets | 82,690 | — | |||||
Total assets | $ | 2,760,869 | $ | 2,787,995 | |||
LIABILITIES | |||||||
Senior revolving credit facility | $ | 338,474 | $ | 99,750 | |||
Senior secured second-priority notes | 432,277 | 431,510 | |||||
Term loan | — | 477,514 | |||||
Accounts payable and accrued liabilities | 313,620 | 371,092 | |||||
Participations and residuals | 409,763 | 420,325 | |||||
Film obligations and production loans | 569,019 | 561,150 | |||||
Convertible senior subordinated notes and other financing obligations | 87,167 | 108,276 | |||||
Deferred revenue | 254,023 | 228,593 | |||||
Total liabilities | 2,404,343 | 2,698,210 | |||||
Commitments and contingencies | |||||||
SHAREHOLDERS’ EQUITY | |||||||
Common shares, no par value, 500,000,000 shares authorized, 135,882,899 and 143,980,754 shares issued at March 31, 2013 and 2012, respectively | 672,915 | 712,623 | |||||
Accumulated deficit | (309,912 | ) | (542,039 | ) | |||
Accumulated other comprehensive loss | (6,477 | ) | (3,711 | ) | |||
356,526 | 166,873 | ||||||
Treasury shares, no par value, 11,040,493 shares at March 31, 2012 | — | (77,088 | ) | ||||
Total shareholders’ equity | 356,526 | 89,785 | |||||
Total liabilities and shareholders’ equity | $ | 2,760,869 | $ | 2,787,995 | |||
LIONS GATE ENTERTAINMENT CORP.
ANNUAL CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended | Year Ended | Year Ended | |||||||||
March 31, 2013 | March 31, 2012 | March 31, 2011 | |||||||||
(Amounts in thousands, except per share amounts) | |||||||||||
Revenues | $ | 2,708,141 | $ | 1,587,579 | $ | 1,582,720 | |||||
Expenses: | |||||||||||
Direct operating | 1,390,569 | 908,402 | 795,746 | ||||||||
Distribution and marketing | 817,862 | 483,513 | 547,226 | ||||||||
General and administration | 218,341 | 168,864 | 171,407 | ||||||||
Gain on sale of asset disposal group | — | (10,967 | ) | — | |||||||
Depreciation and amortization | 8,290 | 4,276 | 5,811 | ||||||||
Total expenses | 2,435,062 | 1,554,088 | 1,520,190 | ||||||||
Operating income | 273,079 | 33,491 | 62,530 | ||||||||
Other expenses (income): | |||||||||||
Interest expense | |||||||||||
Contractual cash based interest | 75,322 | 62,430 | 38,879 | ||||||||
Amortization of debt discount (premium) and deferred financing costs | 18,258 | 15,681 | 16,301 | ||||||||
Total interest expense | 93,580 | 78,111 | 55,180 | ||||||||
Interest and other income | (4,036 | ) | (2,752 | ) | (1,742 | ) | |||||
Loss on extinguishment of debt | 24,089 | 967 | 14,505 | ||||||||
Total other expenses, net | 113,633 | 76,326 | 67,943 | ||||||||
Income (loss) before equity interests and income taxes | 159,446 | (42,835 | ) | (5,413 | ) | ||||||
Equity interests income (loss) | (3,075 | ) | 8,412 | (20,712 | ) | ||||||
Income (loss) before income taxes | 156,371 | (34,423 | ) | (26,125 | ) | ||||||
Income tax provision (benefit) | (75,756 | ) | 4,695 | 4,256 | |||||||
Net income (loss) | $ | 232,127 | $ | (39,118 | ) | $ | (30,381 | ) | |||
Basic Net Income (Loss) Per Common Share | $ | 1.73 | $ | (0.30 | ) | $ | (0.23 | ) | |||
Diluted Net Income (Loss) Per Common Share | $ | 1.61 | $ | (0.30 | ) | $ | (0.23 | ) | |||
Weighted average number of common shares outstanding: | |||||||||||
Basic | 134,514 | 132,226 | 131,176 | ||||||||
Diluted | 149,370 | 132,226 | 131,176 | ||||||||
LIONS GATE ENTERTAINMENT CORP.
FOURTH QUARTER CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended | Three Months Ended | ||||||
March 31, 2013 | March 31, 2012 | ||||||
(Amounts in thousands, except per share amounts) | |||||||
Revenues | $ | 785,708 | $ | 645,213 | |||
Expenses: | |||||||
Direct operating | 419,187 | 360,743 | |||||
Distribution and marketing | 192,658 | 204,319 | |||||
General and administration | 75,067 | 75,713 | |||||
Gain on sale of asset disposal group | 2,050 | 1,673 | |||||
Depreciation and amortization | 688,962 | 642,448 | |||||
Total expenses | 96,746 | 2,765 | |||||
Operating income | |||||||
Other expenses (income): | |||||||
Interest expense | |||||||
Contractual cash based interest | 15,520 | 22,087 | |||||
Amortization of debt discount (premium) and deferred financing costs | 4,511 | 4,885 | |||||
Total interest expense | 20,031 | 26,972 | |||||
Interest and other income | (978 | ) | (892 | ) | |||
Loss on extinguishment of debt | 278 | — | |||||
Total other expenses, net | 19,331 | 26,080 | |||||
Income (loss) before equity interests and income taxes | 77,415 | (23,315 | ) | ||||
Equity interests income (loss) | (1,173 | ) | 2,407 | ||||
Income (loss) before income taxes | 76,242 | (20,908 | ) | ||||
Income tax provision (benefit) | (86,726 | ) | 1,838 | ||||
Net income (loss) | $ | 162,968 | $ | (22,746 | ) | ||
Basic Net Income (Loss) Per Common Share | $ | 1.20 | $ | (0.17 | ) | ||
Diluted Net Income (Loss) Per Common Share | $ | 1.10 | $ | (0.17 | ) | ||
Weighted average number of common shares outstanding: | |||||||
Basic | 135,406 | 131,735 | |||||
Diluted | 150,350 | 131,735 | |||||
LIONS GATE ENTERTAINMENT CORP.
ANNUAL CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended | Year Ended | Year Ended | |||||||||
March 31, 2013 | March 31, 2012 | March 31, 2011 | |||||||||
Operating Activities: | (Amounts in thousands) | ||||||||||
Net income (loss) | $ | 232,127 | $ | (39,118 | ) | $ | (30,381 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
Depreciation of property and equipment | 3,040 | 3,023 | 4,837 | ||||||||
Amortization of intangible assets | 5,250 | 1,253 | 974 | ||||||||
Amortization of films and television programs | 966,027 | 603,660 | 529,428 | ||||||||
Amortization of debt discount (premium) and deferred financing costs | 18,258 | 15,681 | 16,301 | ||||||||
Accreted interest payment from equity method investee TV Guide | — | — | 10,200 | ||||||||
Non-cash stock-based compensation | 35,838 | 9,957 | 29,204 | ||||||||
Gain on sale of asset disposal group | — | (10,967 | ) | — | |||||||
Loss on extinguishment of debt | 24,089 | 967 | 14,505 | ||||||||
Equity interests (income) loss | 3,075 | (8,412 | ) | 20,712 | |||||||
Deferred income taxes | (87,899 | ) | 1,256 | 689 | |||||||
Changes in operating assets and liabilities: | |||||||||||
Restricted cash | 1,241 | 37,636 | (43,067 | ) | |||||||
Accounts receivable, net | (4,948 | ) | (256,208 | ) | (64,203 | ) | |||||
Investment in films and television programs | (890,276 | ) | (690,304 | ) | (487,391 | ) | |||||
Other assets | (2,682 | ) | 1,298 | (298 | ) | ||||||
Accounts payable and accrued liabilities | (50,154 | ) | 28,302 | 3,180 | |||||||
Participations and residuals | (6,875 | ) | 19,813 | (1,369 | ) | ||||||
Film obligations | 1,920 | 37,081 | 19,154 | ||||||||
Deferred revenue | 28,088 | 30,969 | 19,852 | ||||||||
Net Cash Flows Provided By (Used In) Operating Activities | 276,119 | (214,113 | ) | 42,327 | |||||||
Investing Activities: | |||||||||||
Purchases of investments | (2,022 | ) | — | (13,993 | ) | ||||||
Proceeds from the sale of investments | 6,354 | — | 20,989 | ||||||||
Purchase of Summit, net of unrestricted cash acquired of $315,932 | — | (553,732 | ) | — | |||||||
Buy-out of the earn-out associated with the acquisition of Debmar-Mercury, LLC | — | — | (15,000 | ) | |||||||
Proceeds from the sale of asset disposal group, net of transaction costs, and cash disposed of $3,943 (see Note 13) | — | 9,119 | — | ||||||||
Investment in equity method investees | (1,530 | ) | (1,030 | ) | (24,677 | ) | |||||
Increase in loans receivable | — | (4,671 | ) | (1,042 | ) | ||||||
Repayment of loans receivable | 4,274 | — | 8,113 | ||||||||
Purchases of property and equipment | (2,581 | ) | (1,885 | ) | (2,756 | ) | |||||
Net Cash Flows Provided By (Used In) Investing Activities | 4,495 | (552,199 | ) | (28,366 | ) | ||||||
Financing Activities: | |||||||||||
Senior revolving credit facility - borrowings | 1,160,424 | 390,650 | 525,250 | ||||||||
Senior revolving credit facility - repayments | (921,700 | ) | (360,650 | ) | (472,500 | ) | |||||
Senior revolving credit facility - deferred financing costs | (15,804 | ) | — | — | |||||||
Senior secured second-priority notes - consent fee | (3,270 | ) | — | — | |||||||
Senior secured second-priority notes - borrowings, net of deferred financing costs | — | 201,955 | — | ||||||||
Senior secured second-priority notes - repurchases | — | (9,852 | ) | — | |||||||
Term Loan - borrowings associated with the acquisition of Summit, net of debt discount of $7,500 and deferred financing costs of $16,350 | — | 476,150 | — | ||||||||
Term Loan - repayments | (484,664 | ) | (15,066 | ) | — | ||||||
Convertible senior subordinated notes - borrowings | — | 45,000 | — | ||||||||
Convertible senior subordinated notes - repurchases | (7,639 | ) | (46,059 | ) | — | ||||||
Individual production loans - borrowings | 374,506 | 327,531 | 118,589 | ||||||||
Individual production loans - repayments | (323,124 | ) | (207,912 | ) | (147,102 | ) | |||||
Pennsylvania Regional Center credit facility - repayments | (500 | ) | — | — | |||||||
Film credit facility - borrowings | 4,004 | 54,325 | 19,456 | ||||||||
Film credit facility - repayments | (47,945 | ) | (30,813 | ) | (34,762 | ) | |||||
Change in restricted cash collateral associated with financing activities | — | — | 3,087 | ||||||||
Repurchase of common shares | — | (77,088 | ) | — | |||||||
Exercise of stock options | 2,897 | 3,520 | — | ||||||||
Tax withholding required on equity awards | (15,995 | ) | (4,320 | ) | (13,476 | ) | |||||
Other financing obligations - repayments | (3,710 | ) | — | — | |||||||
Net Cash Flows Provided By (Used In) Financing Activities | (282,520 | ) | 747,371 | (1,458 | ) | ||||||
Net Change In Cash And Cash Equivalents | (1,906 | ) | (18,941 | ) | 12,503 | ||||||
Foreign Exchange Effects on Cash | (29 | ) | (3,180 | ) | 4,674 | ||||||
Cash and Cash Equivalents - Beginning Of Period | 64,298 | 86,419 | 69,242 | ||||||||
Cash and Cash Equivalents - End Of Period | $ | 62,363 | $ | 64,298 | $ | 86,419 | |||||
LIONS GATE ENTERTAINMENT CORP.
FOURTH QUARTER CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended | Three Months Ended | ||||||
March 31, 2013 | March 31, 2012 | ||||||
Operating Activities: | (Amounts in thousands) | ||||||
Net income (loss) | $ | 162,968 | $ | (22,746 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation of property and equipment | 772 | 640 | |||||
Amortization of intangible assets | 1,278 | 1,033 | |||||
Amortization of films and television programs | 307,152 | 248,449 | |||||
Amortization of debt discount (premium) and deferred financing costs | 4,511 | 4,885 | |||||
Non-cash stock-based compensation | 18,954 | 2,358 | |||||
Loss on extinguishment of debt | 278 | — | |||||
Equity interests (income) loss | 1,173 | (2,407 | ) | ||||
Deferred income taxes | (87,899 | ) | 1,256 | ||||
Changes in operating assets and liabilities: | |||||||
Restricted cash | (6,883 | ) | 19,643 | ||||
Accounts receivable, net | (133,265 | ) | (199,280 | ) | |||
Investment in films and television programs | (186,401 | ) | (138,498 | ) | |||
Other assets | 5,268 | (400 | ) | ||||
Accounts payable and accrued liabilities | (11,163 | ) | 80,069 | ||||
Participations and residuals | 5,708 | 35,654 | |||||
Film obligations | 15,626 | (15,310 | ) | ||||
Deferred revenue | (40,217 | ) | (17,607 | ) | |||
Net Cash Flows Provided By (Used In) Operating Activities | 57,860 | (2,261 | ) | ||||
Investing Activities: | |||||||
Purchase of Summit, net of unrestricted cash acquired of $315,932 | — | (553,732 | ) | ||||
Investment in equity method investees | (1,530 | ) | — | ||||
Increase in loans receivable | — | (3,171 | ) | ||||
Purchases of property and equipment | (495 | ) | (336 | ) | |||
Net Cash Flows Provided By (Used In) Investing Activities | (2,025 | ) | (557,239 | ) | |||
Financing Activities: | |||||||
Senior revolving credit facility - borrowings | 55,500 | 127,000 | |||||
Senior revolving credit facility - repayments | (163,500 | ) | (121,750 | ) | |||
Term Loan - borrowings associated with the acquisition of Summit, net of debt discount of $7,500 and deferred financing costs of $16,350 | — | 476,150 | |||||
Term Loan - repayments | — | (15,066 | ) | ||||
Convertible senior subordinated notes - borrowings | — | 45,000 | |||||
Individual production loans - borrowings | 115,376 | 129,383 | |||||
Individual production loans - repayments | (40,576 | ) | (73,914 | ) | |||
Film credit facility - borrowings | 10 | 10,611 | |||||
Film credit facility - repayments | (8,890 | ) | (7,295 | ) | |||
Change in restricted cash collateral associated with financing activities | 12,769 | — | |||||
Exercise of stock options | — | 3,369 | |||||
Tax withholding required on equity awards | (11,056 | ) | (1,690 | ) | |||
Net Cash Flows Provided By (Used In) Financing Activities | (40,367 | ) | 571,798 | ||||
Net Change In Cash And Cash Equivalents | 15,468 | 12,298 | |||||
Foreign Exchange Effects on Cash | (1,293 | ) | (851 | ) | |||
Cash and Cash Equivalents - Beginning Of Period | 48,188 | 52,851 | |||||
Cash and Cash Equivalents - End Of Period | $ | 62,363 | $ | 64,298 | |||
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ANNUAL NET INCOME (LOSS) TO EBITDA AND EBITDA, AS ADJUSTED
Year Ended | Year Ended | Year Ended | |||||||||
March 31, 2013 | March 31, 2012 | March 31, 2011 | |||||||||
(Amounts in thousands) | |||||||||||
Net income (loss) | $ | 232,127 | $ | (39,118 | ) | $ | (30,381 | ) | |||
Depreciation and amortization | 8,290 | 4,276 | 5,811 | ||||||||
Contractual cash based interest | 75,322 | 62,430 | 38,879 | ||||||||
Noncash interest expense | 18,258 | 15,681 | 16,301 | ||||||||
Interest and other income | (4,036 | ) | (2,752 | ) | (1,742 | ) | |||||
Income tax provision | (75,756 | ) | 4,695 | 4,256 | |||||||
EBITDA | $ | 254,205 | $ | 45,212 | $ | 33,124 | |||||
Gain on sale of asset disposal group | — | (10,967 | ) | — | |||||||
Loss on extinguishment of debt | 24,089 | 967 | 14,505 | ||||||||
Stock-based compensation (1) | 47,665 | 25,014 | 32,505 | ||||||||
Acquisition related charges | 2,575 | 11,957 | — | ||||||||
Corporate defense charges (2) | — | (1,726 | ) | 22,865 | |||||||
Non-risk prints and advertising expense | 1,155 | 1,095 | (25,659 | ) | |||||||
EBITDA, as adjusted | $ | 329,689 | $ | 71,552 | $ | 77,340 | |||||
________________________________
(1) | The years ended March 31, 2013, 2012 and 2011 include cash settled SARs expense of $12.0 million, $15.3 million, and $3.8 million, respectively. |
(2) | The year ended March 31, 2012 includes a benefit for charges associated with a shareholder activist matter of $2.0 million related to a negotiated settlement with a vendor of costs incurred and recorded in fiscal year 2011, and insurance recoveries of related litigation offset by other costs. |
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER NET INCOME (LOSS) TO
EBITDA AND EBITDA, AS ADJUSTED
Three Months Ended | Three Months Ended | ||||||
March 31, 2013 | March 31, 2012 | ||||||
(Amounts in thousands) | |||||||
Net income (loss) | $ | 162,968 | $ | (22,746 | ) | ||
Depreciation and amortization | 2,050 | 1,673 | |||||
Contractual cash based interest | 15,520 | 22,087 | |||||
Noncash interest expense | 4,511 | 4,885 | |||||
Interest and other income | (978 | ) | (892 | ) | |||
Income tax provision | (86,726 | ) | 1,838 | ||||
EBITDA | $ | 97,345 | $ | 6,845 | |||
Loss on extinguishment of debt | 278 | — | |||||
Stock-based compensation (1) | 22,020 | 15,282 | |||||
Acquisition related charges | 548 | 9,632 | |||||
Corporate defense charges | — | (2,770 | ) | ||||
Non-risk prints and advertising expense | (4,554 | ) | 1,017 | ||||
EBITDA, as adjusted | $ | 115,637 | $ | 30,006 | |||
________________________________
(1) | The three months ended March 31, 2013 and 2012 include cash settled SARs expense of $9.7 million and $12.9 million, respectively. |
EBITDA is defined as earnings before interest, income tax provision or benefit, and depreciation and amortization. EBITDA is a non-GAAP financial measure.
EBITDA, as adjusted represents EBITDA as defined above adjusted for gain on sale of asset disposal group, loss on extinguishment of debt, stock-based compensation, acquisition related charges, 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 cash settled stock appreciation rights (“SARs”) and equity settled SARs. Acquisition related charges represent severance and transaction costs associated with the acquisition of Summit. 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 months ended March 31, 2013 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. EBITDA, as adjusted is a non-GAAP financial measure.
Management believes EBITDA 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 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 management considers EBITDA 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 Generally Accepted Accounting Principles. EBITDA and EBITDA, as adjusted do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA or EBITDA, as adjusted 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.
RECONCILIATION OF ANNUAL FREE CASH FLOW
TO NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Year Ended | Year Ended | Year Ended | |||||||||
March 31, 2013 | March 31, 2012 | March 31, 2011 | |||||||||
(Amounts in thousands) | |||||||||||
Net Cash Flows Provided By (Used In) Operating Activities | $ | 276,119 | $ | (214,113 | ) | $ | 42,327 | ||||
Purchases of property and equipment | (2,581 | ) | (1,885 | ) | (2,756 | ) | |||||
Net borrowings under and (repayment) of production loans | 6,941 | 143,131 | (43,819 | ) | |||||||
Restricted cash held in trust | — | (13,992 | ) | 13,992 | |||||||
Free Cash Flow, as defined | $ | 280,479 | $ | (86,859 | ) | $ | 9,744 | ||||
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER FREE CASH FLOW
TO NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Three Months Ended | Three Months Ended | ||||||
March 31, 2013 | March 31, 2012 | ||||||
(Amounts in thousands) | |||||||
Net Cash Flows Provided By (Used In) Operating Activities | 57,860 | (2,261 | ) | ||||
Purchases of property and equipment | (495 | ) | (336 | ) | |||
Net borrowings under and (repayment) of production loans | 65,920 | 58,785 | |||||
Restricted cash held in trust | — | (13,992 | ) | ||||
Free Cash Flow, as defined | $ | 123,285 | $ | 42,196 | |||
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 Company’s Film Credit Facility, plus the decrease in restricted cash held in a trust for certain obligations until December 31, 2011. 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 the Company actually pays for the film. 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.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ANNUAL EBITDA TO FREE CASH FLOW
Year Ended | Year Ended | Year Ended | |||||||||
March 31, 2013 | March 31, 2012 | March 31, 2011 | |||||||||
(Amounts in thousands) | |||||||||||
EBITDA | $ | 254,205 | $ | 45,212 | $ | 33,124 | |||||
Plus: Amortization of film and television programs | 966,027 | 603,660 | 529,428 | ||||||||
Less: Cash paid for film and television programs (1) | (881,415 | ) | (510,092 | ) | (512,056 | ) | |||||
Amortization of film and television programs in excess of cash paid | 84,612 | 93,568 | 17,372 | ||||||||
Plus: Non-cash stock-based compensation | 35,838 | 9,957 | 29,204 | ||||||||
Less: Gain on sale of asset disposal group | — | (10,967 | ) | — | |||||||
Plus: Equity interests (income) loss | 3,075 | (8,412 | ) | 20,712 | |||||||
Plus: Loss on extinguishment of debt | 24,089 | 967 | 14,505 | ||||||||
EBITDA adjusted for net investment in film and television programs, non-cash stock-based compensation, equity interests (income) loss, and loss on extinguishment of debt | 401,819 | 130,325 | 114,917 | ||||||||
Changes in other operating assets and liabilities: | |||||||||||
Restricted cash excluding funds held in trust | 1,241 | 23,644 | (29,075 | ) | |||||||
Accounts receivable, net | (4,948 | ) | (256,208 | ) | (64,203 | ) | |||||
Other assets | (2,682 | ) | 1,298 | (298 | ) | ||||||
Accounts payable and accrued liabilities | (50,154 | ) | 28,302 | 3,180 | |||||||
Participations and residuals | (6,875 | ) | 19,813 | (1,369 | ) | ||||||
Deferred revenue | 28,088 | 30,969 | 19,852 | ||||||||
Accreted interest payment from equity method investee TV Guide | — | — | 10,200 | ||||||||
(35,330 | ) | (152,182 | ) | (61,713 | ) | ||||||
Purchases of property and equipment | (2,581 | ) | (1,885 | ) | (2,756 | ) | |||||
Interest, taxes and other (2) | (83,429 | ) | (63,117 | ) | (40,704 | ) | |||||
Free Cash Flow, as defined | $ | 280,479 | $ | (86,859 | ) | $ | 9,744 | ||||
_________________________ | |||||||||||
(1) Cash paid for film and television programs is calculated using the following amounts as presented in our consolidated statement of cash flows: | |||||||||||
Change in investment in film and television programs | $ | (890,276 | ) | $ | (690,304 | ) | $ | (487,391 | ) | ||
Change in film obligations | 1,920 | 37,081 | 19,154 | ||||||||
Individual production loans - borrowings | 374,506 | 327,531 | 118,589 | ||||||||
Individual production loans - repayments | (323,124 | ) | (207,912 | ) | (147,102 | ) | |||||
Pennsylvania Regional Center credit facility - repayments | (500 | ) | — | — | |||||||
Film credit facility - borrowings | 4,004 | 54,325 | 19,456 | ||||||||
Film credit facility - repayments | (47,945 | ) | (30,813 | ) | (34,762 | ) | |||||
Total cash paid for film and television programs | $ | (881,415 | ) | $ | (510,092 | ) | $ | (512,056 | ) | ||
_________________________ | |||||||||||
(2) Interest, taxes and other consists of the following: | |||||||||||
Contractual cash based interest | $ | (75,322 | ) | $ | (62,430 | ) | $ | (38,879 | ) | ||
Interest and other income | 4,036 | 2,752 | 1,742 | ||||||||
Current income tax provision | (12,143 | ) | (3,439 | ) | (3,567 | ) | |||||
Total interest, taxes and other | $ | (83,429 | ) | $ | (63,117 | ) | $ | (40,704 | ) | ||
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER EBITDA TO FREE CASH FLOW
Three Months Ended | Three Months Ended | ||||||
March 31, 2013 | March 31, 2012 | ||||||
(Amounts in thousands) | |||||||
EBITDA | $ | 97,345 | $ | 6,845 | |||
Plus: Amortization of film and television programs | 307,152 | 248,449 | |||||
Less: Cash paid for film and television programs (1) | (104,855 | ) | (95,023 | ) | |||
Amortization of film and television programs in excess of cash paid | 202,297 | 153,426 | |||||
Plus: Non-cash stock-based compensation | 18,954 | 2,358 | |||||
Plus: Equity interests (income) loss | 1,173 | (2,407 | ) | ||||
Plus: Loss on extinguishment of debt | 278 | — | |||||
EBITDA adjusted for net investment in film and television programs, non-cash stock-based compensation, equity interests (income) loss, and loss on extinguishment of debt | 320,047 | 160,222 | |||||
Changes in other operating assets and liabilities: | |||||||
Restricted cash excluding funds held in trust | (6,883 | ) | 5,651 | ||||
Accounts receivable, net | (133,265 | ) | (199,280 | ) | |||
Other assets | 5,268 | (400 | ) | ||||
Accounts payable and accrued liabilities | (11,163 | ) | 80,069 | ||||
Participations and residuals | 5,708 | 35,654 | |||||
Deferred revenue | (40,217 | ) | (17,607 | ) | |||
(180,552 | ) | (95,913 | ) | ||||
Purchases of property and equipment | (495 | ) | (336 | ) | |||
Interest, taxes and other (2) | (15,715 | ) | (21,777 | ) | |||
Free Cash Flow, as defined | $ | 123,285 | $ | 42,196 | |||
_________________________ | |||||||
(1) Cash paid for film and television programs is calculated using the following amounts as presented in our consolidated statement of cash flows: | |||||||
Change in investment in film and television programs | $ | (186,401 | ) | $ | (138,498 | ) | |
Change in film obligations | 15,626 | (15,310 | ) | ||||
Individual production loans - borrowings | 115,376 | 129,383 | |||||
Individual production loans - repayments | (40,576 | ) | (73,914 | ) | |||
Film credit facility - borrowings | 10 | 10,611 | |||||
Film credit facility - repayments | (8,890 | ) | (7,295 | ) | |||
Total cash paid for film and television programs | $ | (104,855 | ) | $ | (95,023 | ) | |
_________________________ | |||||||
(2) Interest, taxes and other consists of the following: | |||||||
Contractual cash based interest | $ | (15,520 | ) | $ | (22,087 | ) | |
Interest and other income | 978 | 892 | |||||
Current income tax provision | (1,173 | ) | (582 | ) | |||
Total interest, taxes and other | $ | (15,715 | ) | $ | (21,777 | ) | |
This reconciliation is provided to illustrate the difference between our EBITDA and free cash flow which are both separately reconciled to their corresponding GAAP metrics.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ANNUAL INCOME (LOSS) BEFORE INCOME TAXES, NET
INCOME (LOSS), BASIC AND DILUTED EPS TO ADJUSTED INCOME (LOSS) BEFORE
INCOME TAXES, NET INCOME (LOSS), BASIC AND DILUTED EPS
Year Ended March 31, 2013 | |||||||||||||||
Income before income taxes | Net income | Basic EPS | Diluted EPS | ||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||||
As reported | $ | 156,371 | $ | 232,127 | $ | 1.73 | $ | 1.61 | |||||||
Tax valuation allowance (1) | — | (87,490 | ) | (0.65 | ) | (0.59 | ) | ||||||||
As adjusted for valuation allowance | $ | 156,371 | $ | 144,637 | $ | 1.08 | $ | 1.02 | |||||||
Loss on extinguishment of debt (2) | 24,089 | 15,255 | 0.11 | 0.10 | |||||||||||
Stock-based compensation (3) | 47,665 | 30,186 | 0.22 | 0.20 | |||||||||||
As adjusted for tax valuation allowance, loss on extinguishment of debt and stock-based compensation | $ | 228,125 | $ | 190,078 | $ | 1.41 | $ | 1.32 | |||||||
Year Ended March 31, 2012 | |||||||||||||||
Income (loss) before income taxes | Net income | Basic EPS | Diluted EPS | ||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||||
As reported | $ | (34,423 | ) | $ | (39,118 | ) | $ | (0.30 | ) | $ | (0.30 | ) | |||
Loss on extinguishment of debt (2) | 967 | 967 | 0.01 | 0.01 | |||||||||||
Stock-based compensation (3) | 25,014 | 25,014 | 0.19 | 0.19 | |||||||||||
As adjusted for loss on extinguishment of debt and stock-based compensation | $ | (8,442 | ) | $ | (13,137 | ) | $ | (0.10 | ) | $ | (0.10 | ) | |||
Year Ended March 31, 2011 | |||||||||||||||
Income (loss) before income taxes | Net income | Basic EPS | Diluted EPS | ||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||||
As reported | $ | (26,125 | ) | $ | (30,381 | ) | $ | (0.23 | ) | $ | (0.23 | ) | |||
Loss on extinguishment of debt (2) | 14,505 | 14,505 | 0.11 | 0.11 | |||||||||||
Stock-based compensation (3) | 32,505 | 32,505 | 0.25 | 0.25 | |||||||||||
As adjusted for loss on extinguishment of debt and stock-based compensation | $ | 20,885 | $ | 16,629 | $ | 0.13 | $ | 0.13 | |||||||
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER INCOME (LOSS) BEFORE INCOME TAXES, NET
INCOME (LOSS), BASIC AND DILUTED EPS TO ADJUSTED INCOME (LOSS) BEFORE
INCOME TAXES, NET INCOME (LOSS), BASIC AND DILUTED EPS
Three Months Ended March 31, 2013 | |||||||||||||||
Income before income taxes | Net income | Basic EPS | Diluted EPS | ||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||||
As reported | $ | 76,242 | $ | 162,968 | $ | 1.20 | $ | 1.10 | |||||||
Tax valuation allowance | — | (87,490 | ) | (0.64 | ) | (0.59 | ) | ||||||||
As adjusted for valuation allowance | $ | 76,242 | $ | 75,478 | $ | 0.56 | $ | 0.51 | |||||||
Loss on extinguishment of debt | 278 | 176 | — | 0.01 | |||||||||||
Stock-based compensation | 22,020 | 13,945 | 0.10 | 0.09 | |||||||||||
As adjusted for tax valuation allowance, loss on extinguishment of debt and stock-based compensation | $ | 98,540 | $ | 89,599 | $ | 0.66 | $ | 0.61 | |||||||
Three Months Ended March 31, 2012 | |||||||||||||||
Loss before income taxes | Net loss | Basic EPS | Diluted EPS | ||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||||
As reported | $ | (20,908 | ) | $ | (22,746 | ) | $ | (0.17 | ) | $ | (0.17 | ) | |||
Stock-based compensation | 15,282 | 15,282 | 0.11 | 0.11 | |||||||||||
As adjusted for stock-based compensation | $ | (5,626 | ) | $ | (7,464 | ) | $ | (0.06 | ) | $ | (0.06 | ) | |||
Income (loss) before income taxes, net income (loss) and basic and diluted EPS, as adjusted are adjusted for the following items:
(1) Tax valuation allowance: This adjusts net income to eliminate the discrete tax benefit recognized for financial reporting purposes upon the reduction of the Company's valuation allowance on its remaining net deferred tax assets (excluding certain deferred tax liabilities) as of March 31, 2013 that are expected to be realized in future tax returns. The adjustment presents net income for the year ended March 31, 2013 assuming the valuation allowance on these remaining deferred tax assets was not reversed, consistent with the prior period's presentations.
(2) Loss on early extinguishment of debt: This adjusts income (loss) before income taxes and net income (loss) to eliminate the loss on early extinguishment of debt. The adjustment to net income (loss) is net of the tax impact calculated using the tax rate applicable to each adjustment.
(3) Stock based compensation: Adjustments for stock-based compensation represents compensation expenses associated with stock options, restricted share units, cash settled SARs and equity settled SARs. The adjustment to net income is net of the tax impact calculated using the tax rate applicable to each adjustment.
Management believes that these non-GAAP measures provide useful information to investors regarding the Company's results as compared to historical periods. The Company uses these measures, among other measures, to evaluate the operating performance of the Company. The Company believes that the adjusted results provide relevant and useful information for investors because they clarify the Company's actual operating performance and allow investors to review our operating performance in the same way as our management. Since these measures are not calculated in accordance with generally accepted accounting principles, they should not be considered in isolation of, or as a substitute for income before income taxes, net income, basic and diluted EPS. Not all companies calculate income before income taxes, net income, basic and diluted EPS as adjusted in the same manner and the measures as presented may not be comparable to similarly titled measures presented by other companies.