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| 8-K - FORM 8-K - LIONS GATE ENTERTAINMENT CORP /CN/ | t1700174_8k.htm |
Exhibit 99.1
LIONS GATE ENTERTAINMENT CORP.
TRENDING SCHEDULES
BASIS OF PRESENTATION
Purpose of Trending Schedules
The trending schedules summarize unaudited financial information to facilitate your review and understanding of the Company’s operating results. The trending schedules set forth important financial measures utilized by the Company that are not all financial measures defined by generally accepted accounting principles (“GAAP”). The Company uses non-GAAP financial measures, among other measures, to evaluate the operating performance of our business. These non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with United States GAAP.
On December 8, 2016, pursuant to the Agreement and Plan of Merger dated June 30, 2016, Lionsgate and Starz consummated the merger whereby Lionsgate acquired Starz for a combination of cash and common stock (the “Starz Merger”).
For the periods presented prior to December 31, 2016, the unaudited trending schedules have been prepared for illustrative purposes to present the Company’s new reporting segments and some of its key financial metrics on a combined basis. These amounts were calculated by combining the historical financial information of Lionsgate and Starz for each respective period presented. Among other items, the unaudited combined financial results do not include adjustments related to the application of purchase accounting as a result of the acquisition, the impact of the capital structure and related debt financing associated with the Starz Merger, operating cost synergies as a result of the acquisition, or the elimination of transactions between Lionsgate and Starz. The unaudited combined financial results in the trending schedules are presented solely for informational purposes and are not necessarily indicative of the combined financial results that might have been achieved for the periods or dates indicated, nor are they indicative of the future combined financial results of Lionsgate and Starz.
New Reporting Segments
Lionsgate will have three reporting segments: Motion Pictures, Television Production and Media Networks. The Motion Pictures segment will remain similar to the previously reported segment, and will also now include the Starz third-party distribution business. The Television Production segment will remain similar to the previously reported segment. The Media Networks segment will consist of the Starz Networks business, the licensing of Starz original series in ancillary markets, and the Company’s direct to consumer streaming services initiatives on its subscription video-on-demand platforms. The following schedules include a reconciliation of the historical (Legacy) segment presentations of Lionsgate and Starz to the expected new combined segment presentation for each of the four quarters in our fiscal year ended March 31, 2016, and the two quarters ended September 30, 2016.
New Financial Measures
Lionsgate previously used the non-GAAP measures Adjusted EBITDA, free cash flow, and adjusted earnings per share (“Adjusted EPS”) as important financial measures, among other measures, to evaluate the operating performance of our business. Adjusted EBITDA was defined as earnings before interest, income tax provision or benefit, and depreciation and amortization (“EBITDA”), adjusted for stock-based compensation, purchase accounting and related adjustments, restructuring and other items, non-cash imputed interest charge, start-up losses of new business initiatives, and backstopped prints and advertising expense. Free cash flow was 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, and plus or minus excess tax benefits on stock-based compensation awards if applicable. Adjusted EPS was defined as net income (loss) attributable to Lions Gate Entertainment Corp. shareholders, adjusted for the following items: stock-based compensation, purchase accounting and related adjustments, restructuring and other items, non-cash imputed interest charge net of related interest income, start-up losses of new business initiatives, and backstopped prints and advertising expense, net of taxes at the applicable statutory rate and net of the amounts attributable to noncontrolling interest, per weighted average shares outstanding.
Beginning with the period ending December 31, 2016, Lionsgate will utilize the non-GAAP measures Adjusted OIBDA, free cash flow, and Adjusted EPS (as defined below) as important financial measures, among other measures, to evaluate the operating performance of our business. The Company will also provide additional financial measures the Company believes are useful in evaluating our operating performance. These measures may include the amount of U.S. theatrical prints and advertising (P&A) expense incurred, amount of investment in content, number of subscribers, and filmed entertainment backlog.
Definitions of the new non-GAAP measures are provided below:
Adjusted OIBDA: Adjusted OIBDA is defined as operating income (loss) before depreciation and amortization ("OIBDA"), adjusted for adjusted stock-based compensation ("adjusted SBC"), purchase accounting and related adjustments, and restructuring, transaction and other costs. Adjusted stock-based compensation represents stock-based compensation excluding immediately vested stock awards granted as part of the Company’s annual bonus program issued in lieu of cash bonuses. Restructuring, transaction and other costs would generally include restructuring costs, transaction related costs, debt extinguishment losses and unusual gains and losses.
Free Cash Flow: 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, and plus or minus excess tax benefits on stock-based compensation awards if applicable. 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 and television programs associated with production loans prior to the time the Company actually pays for the film or television program. The Company believes that it is more meaningful to reflect the impact of the payment for these films and television programs in its free cash flow when the payments are actually made.
Adjusted EPS: Adjusted EPS is defined as basic earnings (loss) per share excluding the impact (net of tax) of adjusted stock-based compensation, purchase accounting and related adjustments, and restructuring, transaction and other costs.
These measures are non-GAAP financial measures as defined in Regulation G promulgated by the SEC and are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with United States GAAP.
We use these non-GAAP measures, among other measures, to evaluate the operating performance of our business. We believe these measures provide useful information to investors regarding our results of operations and cash flows before non-operating items. Adjusted OIBDA is considered an important measure of the Company’s performance because this measure eliminates amounts that, in management’s opinion, do not necessarily reflect the fundamental performance of the Company’s businesses, are infrequent in occurrence, and in some cases are non-cash expenses. Free Cash Flow is considered an important measure of the Company’s liquidity because it provides information about the ability of the Company to reduce net corporate debt, make strategic investments, dividends and share repurchases. Adjusted EPS is considered an important measure of the Company’s business operations as, similar to Adjusted OIBDA, this measure eliminates amounts that, in management’s opinion, do not necessarily reflect the fundamental performance of the Company’s businesses. The Company utilizes these measures, among others, to evaluate the performance of its business relative to its peers and the broader market. These non-GAAP measures are commonly used in the entertainment industry and by financial analysts and others who follow the industry to measure operating performance. However, not all companies calculate these measures in the same manner and the measures as presented may not be comparable to similarly titled measures presented by other companies.
These measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as alternative measures of operating income, cash flow, net income (loss), or earnings (loss) per share as determined in accordance with GAAP.
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LIONS GATE ENTERTAINMENT CORP.
TRENDING SCHEDULES
UNAUDITED HISTORICAL COMBINED FINANCIAL INFORMATION(1)
| Three Months Ended | Fiscal Year Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
| (in millions) | 6/30/15 | 9/30/15 | 12/31/15 | 3/31/16 | 3/31/16 | 6/30/16 | 9/30/16 | 9/30/16 | ||||||||||||||||||||||||
| Motion Pictures | ||||||||||||||||||||||||||||||||
| Revenue | $ | 340 | $ | 411 | $ | 583 | $ | 609 | $ | 1,942 | $ | 408 | $ | 505 | $ | 913 | ||||||||||||||||
| Gross Contribution | 90 | 29 | 57 | 39 | 214 | 60 | 23 | 83 | ||||||||||||||||||||||||
| Segment Profit | 66 | 4 | 33 | 3 | 106 | 30 | (6 | ) | 24 | |||||||||||||||||||||||
| Television Production(2) | ||||||||||||||||||||||||||||||||
| Revenue | 135 | 124 | 167 | 251 | 677 | 193 | 177 | 370 | ||||||||||||||||||||||||
| Gross Contribution | 25 | 10 | 20 | 51 | 106 | 19 | 22 | 41 | ||||||||||||||||||||||||
| Segment Profit | 18 | 4 | 14 | 42 | 79 | 10 | 12 | 21 | ||||||||||||||||||||||||
| Media Networks | ||||||||||||||||||||||||||||||||
| Revenue | 354 | 348 | 352 | 366 | 1,419 | 358 | 369 | 726 | ||||||||||||||||||||||||
| Gross Contribution | 145 | 138 | 98 | 149 | 529 | 149 | 112 | 261 | ||||||||||||||||||||||||
| Segment Profit | 120 | 111 | 63 | 113 | 406 | 119 | 82 | 201 | ||||||||||||||||||||||||
| Eliminations | ||||||||||||||||||||||||||||||||
| Revenue | (1 | ) | - | (2 | ) | (1 | ) | (3 | ) | (1 | ) | (2 | ) | (2 | ) | |||||||||||||||||
| Gross Contribution | - | - | (2 | ) | - | (2 | ) | - | (1 | ) | (1 | ) | ||||||||||||||||||||
| Segment Profit | - | - | (2 | ) | - | (2 | ) | - | (1 | ) | (1 | ) | ||||||||||||||||||||
| Corporate and Other | ||||||||||||||||||||||||||||||||
| Corporate G&A | (18 | ) | (20 | ) | (17 | ) | (29 | ) | (84 | ) | (20 | ) | (21 | ) | (41 | ) | ||||||||||||||||
| Adjusted OIBDA | $ | 186 | $ | 99 | $ | 92 | $ | 128 | $ | 505 | $ | 138 | $ | 66 | $ | 204 | ||||||||||||||||
| Adjusted Stock-Based Compensation(3) | (25 | ) | (25 | ) | (21 | ) | (17 | ) | (88 | ) | (21 | ) | (23 | ) | (44 | ) | ||||||||||||||||
| Restructuring, Transaction and Other Costs | - | (4 | ) | (13 | ) | (2 | ) | (20 | ) | (17 | ) | (12 | ) | (29 | ) | |||||||||||||||||
| Purchase Accounting and Related Adjustments(4) | - | - | (4 | ) | (4 | ) | (8 | ) | (6 | ) | (5 | ) | (10 | ) | ||||||||||||||||||
| Depreciation & Amortization | (7 | ) | (7 | ) | (8 | ) | (10 | ) | (32 | ) | (11 | ) | (10 | ) | (21 | ) | ||||||||||||||||
| Operating Income | $ | 154 | $ | 62 | $ | 45 | $ | 94 | $ | 356 | $ | 83 | $ | 16 | $ | 99 | ||||||||||||||||
Notes:
The unaudited combined financial results in the trending schedules through September 30, 2016 are presented solely for informational purposes and are not necessarily indicative of the combined financial results that might have been achieved for the periods or dates indicated, nor are they indicative of the future combined financial results of Lionsgate and Starz. See reconciliation of the new metric of Adjusted OIBDA to the historical metric of Adjusted EBITDA and the reconciliation of the legacy segment presentation to the new presentation on the following schedules.
(1) Combined financial results through September 30, 2016 do not include adjustments related to the application of purchase accounting as a result of the acquisition, the elimination of transactions between Lionsgate and Starz or any operating cost synergies as a result of the acquisition. These items will change significantly in the future as a result of the transaction.
(2) Historical results include the acquisition of Pilgrim Media Group from the date of acquisition of November 12, 2015 (F16 Q3).
(3) Adjusted Stock-Based Compensation represents stock-based compensation excluding immediately vested stock awards granted as part of our annual bonus program issued in lieu of cash bonuses. The immediately vested stock awards from the bonus program are included in Adjusted OIBDA at the segment and corporate level.
(4) Represents purchase accounting amortization associated with the acquisition of Pilgrim Media Group included in consolidated direct operating expense and purchase accounting related adjustments included in consolidated general and adminstrative expense.
* Amounts may not add precisely due to rounding
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LIONS GATE ENTERTAINMENT CORP.
TRENDING SCHEDULES
HISTORICAL COMBINED MEDIA NETWORK SEGMENT DETAIL ADJUSTED FOR CHANGES IN SEGMENT PRESENTATION(1)
| Three Months Ended | Fiscal Year Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
| (in millions) | 6/30/15 | 9/30/15 | 12/31/15 | 3/31/16 | 3/31/16 | 6/30/16 | 9/30/16 | 9/30/16 | ||||||||||||||||||||||||
| Starz Networks | ||||||||||||||||||||||||||||||||
| Revenue | $ | 333 | $ | 329 | $ | 328 | $ | 340 | $ | 1,330 | $ | 343 | $ | 349 | $ | 692 | ||||||||||||||||
| Gross Contribution | 144 | 136 | 93 | 147 | 519 | 155 | 117 | 272 | ||||||||||||||||||||||||
| Product Line Profit | 119 | 110 | 60 | 112 | 401 | 128 | 90 | 218 | ||||||||||||||||||||||||
| Content and Other(2) | ||||||||||||||||||||||||||||||||
| Revenue | 21 | 18 | 24 | 26 | 89 | 14 | 20 | 34 | ||||||||||||||||||||||||
| Gross Contribution | 1 | 2 | 7 | 6 | 15 | 1 | - | 1 | ||||||||||||||||||||||||
| Product Line Profit | 1 | 2 | 7 | 6 | 15 | 1 | - | 1 | ||||||||||||||||||||||||
| Streaming Services(3) | ||||||||||||||||||||||||||||||||
| Revenue | - | - | - | - | - | - | - | 1 | ||||||||||||||||||||||||
| Gross Contribution | - | - | (1 | ) | (4 | ) | (5 | ) | (7 | ) | (6 | ) | (12 | ) | ||||||||||||||||||
| Product Line Profit | - | - | (4 | ) | (5 | ) | (10 | ) | (10 | ) | (9 | ) | (18 | ) | ||||||||||||||||||
| Total Media Networks Segment | ||||||||||||||||||||||||||||||||
| Revenue | 354 | 348 | 352 | 366 | 1,419 | 358 | 369 | 726 | ||||||||||||||||||||||||
| Gross Contribution | 145 | 138 | 98 | 149 | 529 | 149 | 112 | 261 | ||||||||||||||||||||||||
| Segment Profit | $ | 120 | $ | 111 | $ | 63 | $ | 113 | $ | 406 | $ | 119 | $ | 82 | $ | 201 | ||||||||||||||||
Notes:
(1) Combined financial results through September 30, 2016 do not include adjustments related to the application of purchase accounting as a result of the acquisition or any operating cost synergies as a result of the Starz acquisition. These items will change significantly in the future as a result of the transaction.
(2) Includes the Starz Animation in F16 for presentational purposes due to its immateriality.
(3) Represents the Lionsgate legacy direct to consumer initiatives on its subscription video-on-demand platforms which are being moved into the Media Networks segment.
* Amounts may not add precisely due to rounding
| 3 of 8 |
LIONS GATE ENTERTAINMENT CORP.
TRENDING SCHEDULES
NEW KPIs
| Three Months Ended | Fiscal Year Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
| (in millions) | 6/30/15 | 9/30/15 | 12/31/15 | 3/31/16 | 3/31/16 | 6/30/16 | 9/30/16 | 9/30/16 | ||||||||||||||||||||||||
| Free Cash Flow(1) | nm | nm | nm | nm | nm | nm | nm | nm | ||||||||||||||||||||||||
| EPS | nm | nm | nm | nm | nm | nm | nm | nm | ||||||||||||||||||||||||
| Adjusted EPS(1) | nm | nm | nm | nm | nm | nm | nm | nm | ||||||||||||||||||||||||
| Investment in Content(2) | ||||||||||||||||||||||||||||||||
| Motion Picture | $ | 289 | $ | 132 | $ | 145 | $ | 149 | $ | 715 | $ | 157 | $ | 119 | $ | 275 | ||||||||||||||||
| Television Production | 81 | 90 | 96 | 160 | 427 | 91 | 99 | 189 | ||||||||||||||||||||||||
| Media Network | 189 | 145 | 117 | 210 | 661 | 157 | 136 | 294 | ||||||||||||||||||||||||
| Total | $ | 558 | $ | 368 | $ | 358 | $ | 518 | $ | 1,802 | $ | 405 | $ | 353 | $ | 758 | ||||||||||||||||
| U.S. Theatrical P&A | $ | 23 | $ | 89 | $ | 131 | $ | 150 | $ | 393 | $ | 72 | $ | 152 | $ | 224 | ||||||||||||||||
| As of | As of | |||||||||||||||||||||||||||||||
| 6/30/15 | 9/30/15 | 12/31/15 | 3/31/16 | 6/30/16 | 9/30/16 | |||||||||||||||||||||||||||
| Backlog(3) | $ | 1,349 | $ | 1,232 | $ | 1,288 | $ | 1,498 | $ | 1,522 | $ | 1,487 | ||||||||||||||||||||
| Subscribers (units in millions at end of period) | ||||||||||||||||||||||||||||||||
| Subscription units - STARZ | 23.5 | 23.3 | 23.6 | 24.0 | 24.2 | 24.5 | ||||||||||||||||||||||||||
| Subscription units - STARZ ENCORE | 33.3 | 32.5 | 32.2 | 32.4 | 31.8 | 31.5 | ||||||||||||||||||||||||||
| Total Subscription units | 56.8 | 55.8 | 55.8 | 56.4 | 56.0 | 56.0 | ||||||||||||||||||||||||||
Notes:
nm - Not meaningful historically
(1) - Reconciliation to the nearest GAAP measure will be provided in future periods.
(2) - Represents the investment in films and television programs and program rights payments as presented historically in the statement of cash flows.
(3) - Backlog represents the amount of future revenue not yet recorded from contracts for the licensing of films and television product for television exhibition and in international markets.
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LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ADJUSTED OIBDA (NEW MEASURE) TO ADJUSTED EBITDA (LEGACY MEASURE)
| Three Months Ended | Fiscal Year Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
| (in millions) | 6/30/15 | 9/30/15 | 12/31/15 | 3/31/16 | 3/31/16 | 6/30/16 | 9/30/16 | 9/30/16 | ||||||||||||||||||||||||
| Adjusted OIBDA(1) | $ | 186 | $ | 99 | $ | 92 | $ | 128 | $ | 505 | $ | 138 | $ | 66 | $ | 204 | ||||||||||||||||
| Stock-Based Compensation(2) | - | - | - | 22 | 22 | 8 | 7 | 15 | ||||||||||||||||||||||||
| Backstopped P&A Expense | (4 | ) | (3 | ) | 12 | (4 | ) | 1 | - | 8 | 8 | |||||||||||||||||||||
| Start-up Losses of New Business Initiatives | 1 | 3 | 7 | 7 | 17 | 10 | 10 | 20 | ||||||||||||||||||||||||
| Non-Cash Imputed Interest Charge | - | - | - | 5 | 5 | 1 | - | 1 | ||||||||||||||||||||||||
| Equity Interests Income | 11 | 7 | 11 | 15 | 44 | 11 | 2 | 13 | ||||||||||||||||||||||||
| Adjusted EBITDA(3) | $ | 194 | $ | 106 | $ | 121 | $ | 173 | $ | 595 | $ | 168 | $ | 92 | $ | 260 | ||||||||||||||||
Notes:
(1) Combined financial results through September 30, 2016 do not include adjustments related to the application of purchase accounting as a result of the acquisition, the elimination of transactions between Lionsgate and Starz or any operating cost synergies as a result of the Starz acquisition. These items will change significantly in the future as a result of the transaction.
(2) Represents stock based compensation for immediately vested stock awards granted as part of our annual bonus program and are included in Adjusted OIBDA and segment and corporate G&A expense.
(3) Represents the sum of Lionsgate's Adjusted EBITDA and Starz's Adjusted OIBDA as previously reported and as set forth below (see Appendix for GAAP reconciliation):
| Three Months Ended | Fiscal Year Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
| 6/30/15 | 9/30/15 | 12/31/15 | 3/31/16 | 3/31/16 | 6/30/16 | 9/30/16 | 9/30/16 | |||||||||||||||||||||||||
| Lionsgate Legacy Adjusted EBITDA | $ | 71 | $ | (8 | ) | $ | 54 | $ | 46 | $ | 162 | $ | 41 | $ | 3 | $ | 43 | |||||||||||||||
| Starz Legacy Adjusted OIBDA | 123 | 115 | 68 | 127 | 433 | 127 | 90 | 217 | ||||||||||||||||||||||||
| Total | $ | 194 | $ | 106 | $ | 121 | $ | 173 | $ | 595 | $ | 168 | $ | 92 | $ | 260 | ||||||||||||||||
* Amounts may not add precisely due to rounding
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LIONSGATE ENTERTAINMENT CORP.
RECONCILIATION OF HISTORICAL (LEGACY) SEGMENT PRESENTATIONS OF LIONSGATE AND STARZ TO THE EXPECTED NEW SEGMENT PRESENTATIONS
| (in millions) | Three Months Ended 6/30/15 | Three Months Ended 9/30/15 | Three Months Ended 12/31/15 | Three Months Ended 3/31/16 | Fiscal Year Ended 3/31/16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy (1) | Reclass (R) | Adj (A) | New | Legacy (1) | Reclass (R) | Adj (A) | New | Legacy (1) | Reclass (R) | Adj (A) | New | Legacy (1) | Reclass (R) | Adj (A) | New | Legacy (1) | Reclass (R) | Adj (A) | New | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Motion Pictures | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy Gross Contribution | $ | 80 | $ | - | $ | - | $ | 80 | $ | 18 | $ | - | $ | - | $ | 18 | $ | 63 | $ | - | $ | - | $ | 63 | $ | 24 | $ | - | $ | - | $ | 24 | $ | 184 | $ | - | $ | - | $ | 184 | ||||||||||||||||||||||||||||||||||||||||
| Legacy Starz Distribution | - | 6 | R1 | - | 6 | - | 8 | R1 | - | 8 | - | 6 | R1 | - | 6 | - | 11 | R1 | - | 11 | - | 31 | R1 | - | 31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Backstopped P&A | - | - | 4 | A1 | 4 | - | - | 3 | A1 | 3 | - | - | (12 | ) | A1 | (12 | ) | - | - | 4 | A1 | 4 | - | - | (1 | ) | A1 | (1 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Contribution | 80 | 6 | 4 | 90 | 18 | 8 | 3 | 29 | 63 | 6 | (12 | ) | 57 | 24 | 11 | 4 | 39 | 184 | 31 | (1 | ) | 214 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment G&A expense | (18 | ) | (3 | ) | R1 | - | (23 | ) | (19 | ) | (4 | ) | R1 | - | (25 | ) | (19 | ) | (5 | ) | R1 | - | (24 | ) | (25 | ) | (4 | ) | R1 | - | (36 | ) | (81 | ) | (16 | ) | R1 | - | (109 | ) | ||||||||||||||||||||||||||||||||||||||||
| (2 | ) | R2 | (2 | ) | R2 | (7 | ) | R2 | (12 | ) | R2 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Profit | $ | 61 | $ | 1 | $ | 4 | $ | 66 | $ | - | $ | 1 | $ | 3 | $ | 4 | $ | 44 | $ | 1 | $ | (12 | ) | $ | 33 | $ | (1 | ) | $ | - | $ | 4 | $ | 3 | $ | 103 | $ | 3 | $ | (1 | ) | $ | 106 | |||||||||||||||||||||||||||||||||||||
| Television Production | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy Gross Contribution | $ | 23 | $ | - | $ | - | $ | 23 | $ | 10 | $ | - | $ | - | $ | 10 | $ | 17 | $ | - | $ | - | $ | 17 | $ | 54 | $ | - | $ | - | $ | 54 | $ | 104 | $ | - | $ | - | $ | 104 | ||||||||||||||||||||||||||||||||||||||||
| Legacy Starz Distribution | - | 1 | R1 | - | 1 | - | 1 | R1 | - | 1 | - | 2 | R1 | - | 2 | - | 3 | R1 | - | 3 | - | 7 | R1 | - | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AR Discount | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (5 | ) | A2 | (5 | ) | - | - | (5 | ) | A2 | (5 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Contribution | 23 | 1 | - | 25 | 10 | 1 | - | 10 | 17 | 2 | - | 20 | 54 | 3 | (5 | ) | 51 | 104 | 7 | (5 | ) | 106 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment G&A expense | (4 | ) | (1 | ) | R1 | - | (6 | ) | (5 | ) | (1 | ) | R1 | - | (6 | ) | (4 | ) | (1 | ) | R1 | - | (5 | ) | (6 | ) | (1 | ) | R1 | - | (9 | ) | (20 | ) | (3 | ) | R1 | - | (27 | ) | ||||||||||||||||||||||||||||||||||||||||
| (1 | ) | R2 | (1 | ) | R2 | (2 | ) | R2 | (4 | ) | R2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Profit | $ | 19 | $ | - | $ | - | $ | 18 | $ | 5 | $ | (1 | ) | $ | - | $ | 4 | $ | 13 | $ | 1 | $ | - | $ | 14 | $ | 47 | $ | - | $ | (5 | ) | $ | 42 | $ | 84 | $ | - | $ | (5 | ) | $ | 79 | |||||||||||||||||||||||||||||||||||||
| Media Networks | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy Gross Contribution | $ | 144 | $ | - | $ | - | $ | 144 | $ | 136 | $ | - | $ | - | $ | 136 | $ | 92 | $ | - | $ | - | $ | 92 | $ | 147 | $ | - | $ | - | $ | 147 | $ | 519 | $ | - | $ | - | $ | 519 | ||||||||||||||||||||||||||||||||||||||||
| Legacy Starz Distribution | - | 2 | R1 | - | 2 | - | 2 | R1 | - | 2 | - | 7 | R1 | - | 7 | - | 6 | R1 | - | 6 | - | 16 | R1 | - | 16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SVOD Start-up losses | - | - | - | - | - | - | - | - | - | - | (1 | ) | A3 | (1 | ) | - | - | (4 | ) | A3 | (4 | ) | - | - | (5 | ) | A3 | (5 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Contribution | 144 | 2 | - | 145 | 136 | 2 | - | 138 | 92 | 7 | (1 | ) | 98 | 147 | 6 | (4 | ) | 149 | 519 | 16 | (5 | ) | 529 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment G&A expense | (22 | ) | (4 | ) | R1 | - | (26 | ) | (23 | ) | (3 | ) | R1 | - | (27 | ) | (29 | ) | (3 | ) | R1 | (3 | ) | A3 | (35 | ) | (30 | ) | (4 | ) | R1 | (2 | ) | A3 | (36 | ) | (104 | ) | (14 | ) | R1 | (5 | ) | A3 | (124 | ) | ||||||||||||||||||||||||||||||||||
| Segment Profit | $ | 122 | $ | (2 | ) | $ | - | $ | 120 | $ | 113 | $ | (2 | ) | $ | - | $ | 111 | $ | 64 | $ | 3 | $ | (4 | ) | $ | 63 | $ | 117 | $ | 1 | $ | (6 | ) | $ | 113 | $ | 415 | $ | 1 | $ | (10 | ) | $ | 406 | |||||||||||||||||||||||||||||||||||
| Starz Distribution | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy Gross Contribution | $ | 9 | $ | (9 | ) | R1 | $ | - | $ | - | $ | 10 | $ | (10 | ) | R1 | $ | - | $ | - | $ | 15 | $ | (15 | ) | R1 | $ | - | $ | - | $ | 20 | $ | (20 | ) | R1 | $ | - | $ | - | $ | 54 | $ | (54 | ) | R1 | $ | - | $ | - | ||||||||||||||||||||||||||||||
| Gross Contribution | 9 | (9 | ) | - | - | 10 | (10 | ) | - | - | 15 | (15 | ) | - | - | 20 | (20 | ) | - | - | 54 | (54 | ) | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment G&A expense | (7 | ) | 7 | R1 | - | - | (8 | ) | 8 | R1 | - | - | (9 | ) | 9 | R1 | - | - | (9 | ) | 9 | R1 | - | - | (34 | ) | 34 | R1 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Profit | $ | 2 | $ | (2 | ) | $ | - | $ | - | $ | 2 | $ | (2 | ) | $ | - | $ | - | $ | 6 | $ | (6 | ) | $ | - | $ | - | $ | 11 | $ | (11 | ) | $ | - | $ | - | $ | 20 | $ | (20 | ) | $ | - | $ | - | |||||||||||||||||||||||||||||||||||
| Intersegment Eliminations | - | - | - | - | - | - | - | - | (2 | ) | - | - | (2 | ) | - | - | - | - | (2 | ) | - | - | (2 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TOTAL SEGMENT PROFIT | $ | 204 | $ | (3 | ) | $ | 4 | $ | 205 | $ | 119 | $ | (3 | ) | $ | 2 | $ | 119 | $ | 125 | $ | - | $ | (16 | ) | $ | 109 | $ | 173 | $ | (9 | ) | $ | (7 | ) | $ | 157 | $ | 621 | $ | (16 | ) | $ | (16 | ) | $ | 589 | |||||||||||||||||||||||||||||||||
| Corporate G&A expense(2) | (22 | ) | 3 | R2 | - | (18 | ) | (22 | ) | 3 | R2 | - | (20 | ) | (17 | ) | - | - | (17 | ) | (16 | ) | (13 | ) | R2 | - | (29 | ) | (77 | ) | (7 | ) | R2 | - | (84 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted OIBDA | $ | 182 | $ | - | $ | 4 | $ | 186 | $ | 97 | $ | - | $ | 2 | $ | 99 | $ | 108 | $ | - | $ | (16 | ) | $ | 92 | $ | 157 | $ | (22 | ) | $ | (7 | ) | $ | 128 | $ | 544 | $ | (23 | ) | $ | (16 | ) | $ | 505 | |||||||||||||||||||||||||||||||||||
| Adjusted Stock-Based Compensation | (25 | ) | - | - | (25 | ) | (25 | ) | - | - | (25 | ) | (22 | ) | - | - | (21 | ) | (39 | ) | 22 | R2 | - | (17 | ) | (111 | ) | 22 | R2 | - | (88 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring, Transaction and Other Costs | - | - | - | - | (4 | ) | - | - | (4 | ) | (13 | ) | - | - | (13 | ) | (2 | ) | - | - | (2 | ) | (20 | ) | - | - | (20 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase Accounting and Related Adjustments | - | - | - | - | - | - | - | - | (4 | ) | - | - | (4 | ) | (4 | ) | - | - | (4 | ) | (8 | ) | - | - | (8 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation & Amortization | (7 | ) | - | - | (7 | ) | (7 | ) | - | - | (7 | ) | (8 | ) | - | - | (8 | ) | (10 | ) | - | - | (10 | ) | (32 | ) | - | - | (32 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Income | $ | 150 | $ | - | $ | 4 | $ | 154 | $ | 60 | $ | - | $ | 2 | $ | 62 | $ | 61 | $ | - | $ | (16 | ) | $ | 45 | $ | 101 | $ | - | $ | (7 | ) | $ | 94 | $ | 372 | $ | - | $ | (16 | ) | $ | 356 | |||||||||||||||||||||||||||||||||||||
Notes:
Reclassifications
| (R) | Reclass column represents the reclassifications of the various line items and the movement of certain business activity between segments under our new segment measures. |
R1 - Represents the reclass of the Legacy Starz Distribution business to the Media Networks, Motion Pictures and Television Production segments.
R2 - Represents the reclass of cash bonuses from corporate G&A expense to segment G&A expense and the reclass of stock-based compensation for immediately vested stock awards granted as part of our annual bonus program in lieu of cash bonuses.
Adjustments
| (A) | Adjustment column represents the changes to what was previously excluded from the segments and Adjusted EBITDA to include the item. |
A1 - Represents the adjustment to include the impact of backstopped prints and advertising expenses, which were previously excluded from segment profit and Adjusted EBITDA.
A2 - Represents the adjustment to include the non-cash imputed interest charges, which were previously excluded from segment profit and Adjusted EBITDA.
A3 - Represents the adjustment to include SVOD start-up losses, which were previously excluded from segment profit and Adjusted EBITDA.
Other Notes
(1) - Legacy amounts represent amounts previously reported or amounts derived from previously reported amounts in the case of Starz. The segment profit represents Adjusted OIBDA of the Legacy Starz Network and Legacy Distribution segments as previously reported.
(2) - Represents Lionsgate's legacy corporate and shared services G&A expense as previously reported.
* Amounts may not add precisely due to rounding
| 6 of 8 |
LIONSGATE ENTERTAINMENT CORP.
RECONCILIATION OF HISTORICAL (LEGACY) SEGMENT PRESENTATIONS OF LIONSGATE AND STARZ TO THE EXPECTED NEW SEGMENT PRESENTATIONS
| (in millions) | Three Months Ended 6/30/16 | Three Months Ended 9/30/16 | Six Months Ended 9/30/16 | |||||||||||||||||||||||||||||||||||||||||||||
| Legacy (1) | Reclass (R) | Adj (A) | New | Legacy (1) | Reclass (R) | Adj (A) | New | Legacy (1) | Reclass (R) | Adj (A) | New | |||||||||||||||||||||||||||||||||||||
| Motion Pictures | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy Gross Contribution | $ | 56 | $ | - | $ | - | $ | 56 | $ | 28 | $ | - | $ | - | $ | 28 | $ | 84 | $ | - | $ | - | $ | 84 | ||||||||||||||||||||||||
| Legacy Starz Distribution | - | 4 | R1 | - | 4 | - | 4 | R1 | - | 4 | - | 8 | R1 | - | 8 | |||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||
| Backstopped P&A | - | - | - | - | - | (8 | ) | A1 | (8 | ) | - | - | (8 | ) | A1 | (8 | ) | |||||||||||||||||||||||||||||||
| Gross Contribution | 56 | 4 | 60 | 28 | 4 | (8 | ) | 23 | 84 | 8 | (8 | ) | 83 | |||||||||||||||||||||||||||||||||||
| Segment G&A expense | (21 | ) | (6 | ) | R1 | - | (31 | ) | (21 | ) | (4 | ) | R1 | - | (29 | ) | (42 | ) | (10 | ) | R1 | - | (60 | ) | ||||||||||||||||||||||||
| (4 | ) | R2 | (4 | ) | R2 | - | (8 | ) | R2 | |||||||||||||||||||||||||||||||||||||||
| Segment Profit | $ | 35 | $ | (5 | ) | $ | - | $ | 30 | $ | 7 | $ | (4 | ) | $ | (8 | ) | $ | (6 | ) | $ | 42 | $ | (10 | ) | $ | (8 | ) | $ | 24 | ||||||||||||||||||
| Television Production | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy Gross Contribution | $ | 18 | $ | - | $ | - | $ | 18 | $ | 20 | $ | - | $ | - | $ | 20 | $ | 38 | $ | - | $ | - | $ | 38 | ||||||||||||||||||||||||
| Legacy Starz Distribution | - | 1 | R1 | - | 1 | - | 2 | R1 | - | 2 | - | 3 | R1 | - | 3 | |||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||
| AR Discount | - | - | (1 | ) | A2 | (1 | ) | - | - | - | - | - | - | (1 | ) | A2 | (1 | ) | ||||||||||||||||||||||||||||||
| Gross Contribution | 18 | 1 | (1 | ) | 19 | 20 | 2 | - | 22 | 38 | 3 | (1 | ) | 41 | ||||||||||||||||||||||||||||||||||
| Segment G&A expense | (7 | ) | (1 | ) | R1 | - | (9 | ) | (8 | ) | (1 | ) | R1 | - | (10 | ) | (15 | ) | (2 | ) | R1 | - | (20 | ) | ||||||||||||||||||||||||
| (1 | ) | R2 | (1 | ) | R2 | - | (3 | ) | R2 | |||||||||||||||||||||||||||||||||||||||
| Segment Profit | $ | 11 | $ | (1 | ) | $ | (1 | ) | $ | 10 | $ | 12 | $ | - | $ | - | $ | 12 | $ | 23 | $ | (1 | ) | $ | (1 | ) | $ | 21 | ||||||||||||||||||||
| Media Networks | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy Gross Contribution | $ | 155 | $ | - | $ | - | $ | 155 | $ | 117 | $ | - | $ | - | $ | 117 | $ | 273 | $ | - | $ | - | $ | 273 | ||||||||||||||||||||||||
| Legacy Starz Distribution | - | 1 | R1 | - | 1 | - | - | - | - | - | 1 | R1 | - | 1 | ||||||||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||
| SVOD Start-up losses | - | - | (7 | ) | A3 | (7 | ) | - | - | (6 | ) | A3 | (6 | ) | - | - | (12 | ) | A3 | (12 | ) | |||||||||||||||||||||||||||
| Gross Contribution | 155 | 1 | (7 | ) | 149 | 117 | - | (6 | ) | 112 | 273 | 1 | (12 | ) | 261 | |||||||||||||||||||||||||||||||||
| Segment G&A expense | (23 | ) | (4 | ) | R1 | (3 | ) | A3 | (30 | ) | (24 | ) | (3 | ) | R1 | (3 | ) | A3 | (30 | ) | (48 | ) | (7 | ) | R1 | (6 | ) | A3 | (60 | ) | ||||||||||||||||||
| Segment Profit | $ | 132 | $ | (4 | ) | $ | (10 | ) | $ | 119 | $ | 93 | $ | (2 | ) | $ | (9 | ) | $ | 82 | $ | 225 | $ | (6 | ) | $ | (18 | ) | $ | 201 | ||||||||||||||||||
| Starz Distribution | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legacy Gross Contribution | $ | 6 | $ | (6 | ) | R1 | $ | - | $ | - | $ | 6 | $ | (6 | ) | R1 | $ | - | $ | - | $ | 12 | $ | (12 | ) | R1 | $ | - | $ | - | ||||||||||||||||||
| Gross Contribution | 6 | (6 | ) | - | - | 6 | (6 | ) | - | - | 12 | (12 | ) | - | - | |||||||||||||||||||||||||||||||||
| Segment G&A expense | (11 | ) | 11 | R1 | - | - | (8 | ) | 8 | R1 | - | - | (19 | ) | 19 | R1 | - | - | ||||||||||||||||||||||||||||||
| Segment Profit | $ | (5 | ) | $ | 5 | $ | - | $ | - | $ | (2 | ) | $ | 2 | $ | - | $ | - | $ | (6 | ) | $ | 6 | $ | - | $ | - | |||||||||||||||||||||
| Intersegment Eliminations | - | - | - | - | (1 | ) | - | - | (1 | ) | (1 | ) | - | - | (1 | ) | ||||||||||||||||||||||||||||||||
| TOTAL SEGMENT PROFIT | $ | 174 | $ | (5 | ) | $ | (10 | ) | $ | 158 | $ | 109 | $ | (5 | ) | $ | (17 | ) | $ | 86 | $ | 282 | $ | (10 | ) | $ | (28 | ) | $ | 245 | ||||||||||||||||||
| Corporate G&A expense(2) | (17 | ) | (3 | ) | R2 | - | (20 | ) | (19 | ) | (2 | ) | R2 | - | (21 | ) | (36 | ) | (5 | ) | R2 | - | (41 | ) | ||||||||||||||||||||||||
| Adjusted OIBDA | $ | 157 | $ | (8 | ) | $ | (10 | ) | $ | 138 | $ | 90 | $ | (7 | ) | $ | (17 | ) | $ | 66 | $ | 246 | $ | (15 | ) | $ | (28 | ) | $ | 204 | ||||||||||||||||||
| Adjusted Stock-Based Compensation | (29 | ) | 8 | R2 | - | (21 | ) | (30 | ) | 7 | R2 | - | (23 | ) | (59 | ) | 15 | R2 | - | (44 | ) | |||||||||||||||||||||||||||
| Restructuring, Transaction and Other Costs | (17 | ) | - | - | (17 | ) | (12 | ) | - | - | (12 | ) | (29 | ) | - | - | (29 | ) | ||||||||||||||||||||||||||||||
| Purchase Accounting and Related Adjustments | (6 | ) | - | - | (6 | ) | (5 | ) | - | - | (5 | ) | (10 | ) | - | - | (10 | ) | ||||||||||||||||||||||||||||||
| Depreciation & Amortization | (11 | ) | - | - | (11 | ) | (10 | ) | - | - | (10 | ) | (21 | ) | - | - | (21 | ) | ||||||||||||||||||||||||||||||
| Operating Income | $ | 94 | $ | - | $ | (10 | ) | $ | 83 | $ | 33 | $ | - | $ | (17 | ) | $ | 16 | $ | 127 | $ | - | $ | (28 | ) | $ | 99 | |||||||||||||||||||||
Notes:
Reclassifications
| (R) | Reclass column represents the reclassifications of the various line items and the movement of certain business activity between segments under our new segment measures. |
R1 - Represents the reclass of the Legacy Starz Distribution business to the Media Networks, Motion Pictures and Television Production segments.
R2 - Represents the reclass of cash bonuses from corporate G&A expense to segment G&A expense and the reclass of stock-based compensation for immediately vested stock awards granted as part of our annual bonus program in lieu of cash bonuses.
Adjustments
| (A) | Adjustment column represents the changes to what was previously excluded from the segments and Adjusted EBITDA to include the item. |
A1 - Represents the adjustment to include the impact of backstopped prints and advertising expenses, which were previously excluded from segment profit and Adjusted EBITDA.
A2 - Represents the adjustment to include the non-cash imputed interest charges, which were previously excluded from segment profit and Adjusted EBITDA.
A3 - Represents the adjustment to include SVOD start-up losses, which were previously excluded from segment profit and Adjusted EBITDA.
Other Notes
(1) - Legacy amounts represent amounts previously reported or amounts derived from previously reported amounts in the case of Starz. The segment profit represents Adjusted OIBDA of the Legacy Starz Network and Legacy Distribution segments as previously reported.
(2) - Represents Lionsgate's legacy corporate and shared services G&A expense as previously reported
* Amounts may not add precisely due to rounding
| 7 of 8 |
APPENDIX
RECONCILIATION OF LIONSGATE'S NET INCOME
TO ADJUSTED EBITDA AND
STARZ'S OPERATING INCOME TO ADJUSTED OIBDA
| Three Months Ended | Fiscal Year Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
| (in millions) | 6/30/15 | 9/30/15 | 12/31/15 | 3/31/16 | 3/31/16 | 6/30/16 | 9/30/16 | 9/30/16 | ||||||||||||||||||||||||
| Lionsgate Legacy | ||||||||||||||||||||||||||||||||
| Net Income | $ | 41 | $ | (42 | ) | $ | 33 | $ | 11 | $ | 43 | $ | 1 | $ | (17 | ) | $ | (16 | ) | |||||||||||||
| Depreciation & Amortization | 2 | 3 | 3 | 6 | 13 | 6 | 4 | 10 | ||||||||||||||||||||||||
| Interest, Net | 12 | 12 | 14 | 15 | 53 | 14 | 15 | 29 | ||||||||||||||||||||||||
| Income Tax Provision | 3 | (2 | ) | (45 | ) | (32 | ) | (77 | ) | (26 | ) | (54 | ) | (80 | ) | |||||||||||||||||
| EBITDA | 57 | (30 | ) | 4 | 0 | 32 | (6 | ) | (52 | ) | (57 | ) | ||||||||||||||||||||
| Stock-Based Compensation | 17 | 17 | 13 | 31 | 78 | 22 | 22 | 44 | ||||||||||||||||||||||||
| Restructuring and Other Items | - | 4 | 13 | 2 | 20 | 7 | 10 | 18 | ||||||||||||||||||||||||
| Non-Cash Imputed Interest Charge | - | - | - | 5 | 5 | 1 | - | 1 | ||||||||||||||||||||||||
| Purchase Accounting and Related Adjustments | - | - | 4 | 4 | 8 | 6 | 5 | 10 | ||||||||||||||||||||||||
| Start-up Losses of New Business Initiatives | 1 | 3 | 7 | 7 | 17 | 10 | 10 | 20 | ||||||||||||||||||||||||
| Backstopped P&A Expense | (4 | ) | (3 | ) | 12 | (4 | ) | 1 | - | 8 | 8 | |||||||||||||||||||||
| Lionsgate Adjusted EBITDA | $ | 71 | $ | (8 | ) | $ | 54 | $ | 46 | $ | 162 | $ | 41 | $ | 3 | $ | 43 | |||||||||||||||
| Starz Legacy | ||||||||||||||||||||||||||||||||
| Operating Income | $ | 111 | $ | 102 | $ | 55 | $ | 114 | $ | 381 | $ | 105 | $ | 74 | $ | 179 | ||||||||||||||||
| Stock Based Compensation | 8 | 8 | 8 | 8 | 33 | 7 | 8 | 15 | ||||||||||||||||||||||||
| Depreciation & Amortization | 5 | 5 | 5 | 5 | 19 | 5 | 6 | 11 | ||||||||||||||||||||||||
| Merger Related | - | - | - | - | - | 10 | 2 | 12 | ||||||||||||||||||||||||
| Starz Adjusted OIBDA | $ | 123 | $ | 115 | $ | 68 | $ | 127 | $ | 433 | $ | 127 | $ | 90 | $ | 217 | ||||||||||||||||
Notes:
* Amounts may not add precisely due to rounding
| 8 of 8 |