LIONS GATE ENTERTAINMENT CORP. (USA) SANTA MONICA, Calif. and VANCOUVER, British Columbia, May 21, 2015 /PRNewswire/ -- Lionsgate (NYSE: LGF), a premier next generation global content leader, today reported revenue of $2.40 billion, adjusted EBITDA of $384.9 million, adjusted net income of $257.5 million or $1.85 adjusted basic net income per share and net income of $181.8 million or $1.31 basic net income per share for fiscal 2015 (fiscal year ended March 31, 2015).
Free cash flow in fiscal 2015 was $261.6 million, marking the third straight year in which the Company delivered over $250 million in free cash flow.
Strong domestic and international television performance, a film slate including The Hunger Games: Mockingjay -- Part 1, Insurgent and John Wick, increased earnings from the Company's investment in the EPIX channel, reduced interest expense and lower theatrical marketing costs all drove the Company's profitability in the fiscal year.
"We're pleased to report very strong financial results in fiscal 2015, bolstered by a stellar performance from our television business, complemented by a great year on the strategic front as well," said Lionsgate Chief Executive Officer Jon Feltheimer. "With the launch of new strategic initiatives ranging from location-based entertainment and OTT platforms to video games and virtual reality, exciting new partnerships in China, a robust portfolio of current and future film franchises and the strongest balance sheet in the Company's history, we're very well positioned to capitalize on opportunities throughout our global environment."
Adjusted EBITDA of $384.9 million in the fiscal year compared to adjusted EBITDA of $370.8 million in the prior year.
Adjusted net income of $257.5 million or $1.85 adjusted basic net income per share in the fiscal year increased 18% from adjusted net income of $217.9 million or $1.58 adjusted basic net income per share in the prior year.
Net income of $181.8 million or $1.31 basic net income per share on 139.0 million weighted average number of common shares outstanding increased 20% from $152.0 million or $1.11 basic net income per share on 137.5 million weighted average number of common shares outstanding in the prior year.
Free cash flow of $261.6 million in the fiscal year increased from $258.3 million in the prior year.
Revenue of $2.40 billion in the fiscal year declined 9% from $2.63 billion in the prior year due primarily to smaller theatrical and home entertainment slates of wide theatrical releases which offset gains in television production revenue. Lionsgate had 10 wide release theatrical films in the fiscal year compared to 13 wide release theatrical films in the prior year. The Company anticipates 14 wide release theatrical films in fiscal 2016.
The Company will pay its quarterly dividend of $0.07 per common share tomorrow, May 22, to shareholders of record as of March 31, 2015.
Lionsgate's filmed entertainment backlog, or already contracted future revenue not yet recorded, was $1.1 billion at March 31, 2015.
Overall Motion Picture segment revenue in the fiscal year was $1.82 billion, a decline of 17% compared to the prior year. Within the Motion Picture segment, theatrical revenue in the fiscal year was $354.0 million compared to $524.7 million in the prior year due to the smaller slate of wide release films noted above.
Lionsgate's home entertainment revenue in the fiscal year was $707.5 million compared to $863.9 million in the prior year as the smaller slate of wide theatrical releases offset home entertainment gains from television production.
Television revenue included in the Motion Picture segment in the fiscal year was $270.2 million, an increase of 20% compared to $225.3 million in the prior year as a strong slate of theatrical wide releases reaching their pay television windows included The Hunger Games: Catching Fire, Divergent, Red 2 and Ender's Game and compared favorably to the prior year slate.
International Motion Picture segment revenue in the fiscal year was $495.0 million compared to $543.4 million in the prior year. Within international revenue, Lionsgate UK revenue increased 8% to $158.5 million on a diversified mix of Lionsgate, third-party and in-house produced Lionsgate U.K. releases.
Revenue for the Television Production segment rose to a record $579.5 million in the fiscal year, an increase of 30% from $447.4 million in the prior year reflecting strong gains in all categories -- domestic television licensing and syndication, international television revenue and home entertainment revenue from television production.
A record 238 episodes and 168 hours of domestic television series were delivered in the fiscal year, including episodes of Anger Management, Orange is the New Black, Nashville, Mad Men, Manhattan, The Royals and Nurse Jackie. The fiscal year also benefitted from significant domestic television revenue from the talk and game shows The Wendy Williams Show and Family Feud.
Record international television revenue included licensing of Anger Management, Orange is the New Black, Nashville and Mad Men.
In the quarter ended March 31, 2015, the Company reported revenue of $646.1 million compared to $721.9 million in the prior year quarter, and adjusted EBITDA of $90.4 million compared to $92.0 million in the prior year quarter. Adjusted basic net income of $57.8 million or $0.41 adjusted basic net income per share in the quarter compared to $63.5 million or $0.46 adjusted basic net income per share in the prior year quarter, and net income of $19.6 million or $0.14 basic net income per share in the quarter compared to $49.2 million or $0.35 basic net income per share in the prior year quarter.
Free cash flow in the quarter of $157.2 million increased 161% from the $60.3 million in free cash flow in the prior year quarter.
During the quarter, the Company continued to strengthen its balance sheet by locking in favorable long-term fixed interest rates for its term loan, reducing borrowing to zero under its $800 million revolving credit facility and more than doubling free cash flow from the prior-year quarter.
Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2015 financial results at 9:00 A.M. ET/6:00 A.M. PT tomorrow, Friday, May 22. Interested parties may participate live in the conference call by calling 1-800-230-1092 (612-234-9960 outside the U.S. and Canada). A full digital replay will be available from Friday morning, May 22, through Friday, May 29, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 359323.
ABOUT LIONSGATE
Lionsgate is a premier next generation global content leader with a strong and diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, digital distribution, new channel platforms, video games and international distribution and sales. Lionsgate currently has more than 30 television shows on over 20 different 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 broadcast network series Nashville, the syndication success The Wendy Williams Show, the critically-acclaimed hit series Orange is the New Black and the breakout series The Royals.
Its feature film business has been fueled by such recent successes as the blockbuster first three installments of The Hunger Games franchise, the first two installments of the Divergent franchise, Age of Adaline, CBS/Lionsgate's The DUFF, John Wick, Now You See Me, Roadside Attractions' A Most Wanted Man, Lionsgate/Codeblack Films' Addicted and Pantelion Films' Instructions Not Included, the highest-grossing Spanish-language film ever released in the U.S.
Lionsgate's home entertainment business is an industry leader in box office-to-DVD and box office-to-VOD revenue conversion rates. Lionsgate handles a prestigious and prolific library of approximately 16,000 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. www.lionsgate.com
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 21, 2015, 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, March 31,
2015 2014
---- ----
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $102,697 $25,692
Restricted cash 2,508 8,925
Accounts receivable, net of
reserves for returns and
allowances of $64,362
(March 31, 2014 -
$106,680) and provision
for doubtful accounts of
$4,120 (March 31, 2014 -
$4,876) 891,880 885,571
Investment in films and
television programs, net 1,381,829 1,274,573
Property and equipment, net 26,651 14,552
Investments 438,298 181,941
Goodwill 323,328 323,328
Other assets 74,784 71,067
Deferred tax assets 50,114 65,983
------ ------
Total assets $3,292,089 $2,851,632
========== ==========
LIABILITIES
Senior revolving credit
facility $ - $97,619
5.25% Senior Notes 225,000 225,000
Term Loans 375,000 222,753
Accounts payable and
accrued liabilities 332,473 332,457
Participations and
residuals 471,661 469,390
Film obligations and
production loans 656,755 499,787
Convertible senior
subordinated notes 114,126 131,788
Deferred revenue 274,787 288,300
------- -------
Total liabilities 2,449,802 2,267,094
--------- ---------
Commitments and
contingencies
SHAREHOLDERS' EQUITY
Common shares, no par
value, 500,000,000 shares
authorized, 145,532,978
shares issued (March 31,
2014 -141,007,461 shares) 830,786 743,788
Retained earnings
(accumulated deficit) 13,720 (157,875)
Accumulated other
comprehensive loss (2,219) (1,375)
------ ------
Total shareholders' equity 842,287 584,538
------- -------
Total liabilities and
shareholders' equity $3,292,089 $2,851,632
========== ==========
LIONS GATE ENTERTAINMENT CORP.
ANNUAL CONSOLIDATED STATEMENTS OF INCOME
Year Ended March 31,
--------------------
2015 2014 2013
---- ---- ----
(Amounts in thousands, except per share amounts)
Revenues $2,399,640 $2,630,254 $2,708,141
Expenses:
Direct operating 1,315,775 1,369,381 1,390,569
Distribution and marketing 591,491 739,461 817,862
General and administration 263,507 254,925 218,341
Depreciation and amortization 6,586 6,539 8,290
----- ----- -----
Total expenses 2,177,359 2,370,306 2,435,062
--------- --------- ---------
Operating income 222,281 259,948 273,079
------- ------- -------
Other expenses (income):
Interest expense
Cash interest 39,657 48,960 75,322
Amortization of debt discount and deferred financing costs 12,819 17,210 18,258
------ ------ ------
Total interest expense 52,476 66,170 93,580
Interest and other income (2,790) (6,030) (4,036)
Loss on extinguishment of debt 11,664 39,572 24,089
------ ------ ------
Total other expenses, net 61,350 99,712 113,633
------ ------ -------
Income before equity interests and income taxes 160,931 160,236 159,446
Equity interests income (loss) 52,477 24,724 (3,075)
------ ------ ------
Income before income taxes 213,408 184,960 156,371
Income tax provision (benefit) 31,627 32,923 (75,756)
------ ------ -------
Net income $181,781 $152,037 $232,127
======== ======== ========
Basic net income per common share $1.31 $1.11 $1.73
===== ===== =====
Diluted net income per common share $1.23 $1.04 $1.61
===== ===== =====
Weighted average number of common shares outstanding:
Basic 139,048 137,468 134,514
Diluted 151,778 154,415 149,370
Dividends declared per common share $0.26 $0.10 $ -
LIONS GATE ENTERTAINMENT CORP.
FOURTH QUARTER CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
---------
2015 2014
---- ----
(Amounts in thousands,
except per share amounts)
Revenues $646,082 $721,858
Expenses:
Direct operating 369,935 403,625
Distribution and marketing 169,854 188,964
General and administration 76,532 68,805
Depreciation and amortization 1,901 1,773
----- -----
Total expenses 618,222 663,167
------- -------
Operating income 27,860 58,691
------ ------
Other expenses (income):
Interest expense
Cash interest 10,111 9,278
Amortization of debt discount and
deferred financing costs 2,771 4,332
----- -----
Total interest expense 12,882 13,610
Interest and other income (602) (1,280)
Loss on extinguishment of debt 10,388 2,919
------ -----
Total other expenses, net 22,668 15,249
------ ------
Income before equity interests and
income taxes 5,192 43,442
Equity interests income 15,124 11,566
------ ------
Income before income taxes 20,316 55,008
Income tax provision 762 5,856
--- -----
Net income $19,554 $49,152
======= =======
Basic net income per common share $0.14 $0.35
===== =====
Diluted net income per common share $0.14 $0.33
===== =====
Weighted average number of common shares outstanding:
Basic 140,364 138,599
Diluted 145,649 155,081
Dividends declared per common share $0.07 $0.05
LIONS GATE ENTERTAINMENT CORP.
ANNUAL CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended March 31,
--------------------
2015 2014 2013
---- ---- ----
Operating Activities: (Amounts in thousands)
Net income $181,781 $152,037 $232,127
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 6,586 6,539 8,290
Amortization of films and television programs 899,951 921,289 966,027
Amortization of debt discount and deferred financing costs 12,819 17,210 18,258
Non-cash share-based compensation 79,938 60,492 35,838
Distribution from equity method investee 7,788 16,079 -
Loss on extinguishment of debt 11,664 39,572 24,089
Equity interests (income) loss (52,477) (24,724) 3,075
Deferred income taxes (benefit) 13,934 15,913 (87,899)
Changes in operating assets and liabilities:
Restricted cash 6,417 1,775 1,241
Accounts receivable, net (13,968) (93,503) (4,948)
Investment in films and television programs (1,012,294) (948,082) (890,276)
Other assets (5,331) (3,768) (2,682)
Accounts payable and accrued liabilities (5,086) 17,628 (50,154)
Participations and residuals 2,704 59,207 (6,875)
Film obligations (24,977) (19,187) 1,920
Deferred revenue (12,940) 34,035 28,088
Net Cash Flows Provided By Operating Activities 96,509 252,512 276,119
------ ------- -------
Investing Activities:
Proceeds from the sale of equity method investees 14,575 9,000 -
Investment in equity method investees (22,730) (17,250) (1,530)
Distributions from equity method investee in excess of
earnings - 4,169 -
Purchases of other investments (30,000) - (2,022)
Proceeds from the sale of other investments - - 6,354
Repayment of loans receivable - 4,275 4,274
Purchases of property and equipment (17,013) (8,799) (2,581)
Net Cash Flows Provided By (Used In) Investing Activities (55,168) (8,605) 4,495
------- ------ -----
Financing Activities:
Senior revolving credit facility -borrowings, net of
deferred financing costs of $15,804 for the year ended
March 31, 2013 778,500 872,220 1,144,620
Senior revolving credit facility - repayments (876,119) (1,113,075) (921,700)
Term Loans and 5.25% Senior Notes -borrowings, net of
deferred financing costs of $4,315 and $6,860 for the
years ended March 31, 2015 and 2014, respectively 370,685 440,640 -
Term Loans - repayments (229,500) - (484,664)
10.25% Senior Notes -repurchases and redemptions in the
year ended March 31, 2014 and consent fee in the year
ended March 31, 2013 - (470,584) (3,270)
Convertible senior subordinated notes - borrowings - 60,000 -
Convertible senior subordinated notes - repurchases (16) - (7,639)
Production loans - borrowings 631,709 532,416 378,510
Production loans - repayments (449,648) (517,874) (371,069)
Pennsylvania Regional Center credit facility - repayments - (65,000) (500)
Repurchase of common shares (144,840) - -
Dividends paid (33,353) (6,900) -
Exercise of stock options 6,839 11,972 2,897
Tax withholding required on equity awards (20,062) (23,077) (15,995)
Other financing obligations - repayments - - (3,710)
Net Cash Flows Provided By (Used In) Financing Activities 34,195 (279,262) (282,520)
------ -------- --------
Net Change In Cash And Cash Equivalents 75,536 (35,355) (1,906)
Foreign Exchange Effects on Cash 1,469 (1,316) (29)
Cash and Cash Equivalents - Beginning Of Period 25,692 62,363 64,298
Cash and Cash Equivalents - End Of Period $102,697 $25,692 $62,363
======== ======= =======
LIONS GATE ENTERTAINMENT CORP.
FOURTH QUARTER CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
---------
2015 2014
---- ----
Operating
Activities: (Amounts in thousands)
Net income $19,554 $49,152
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation
and
amortization 1,901 1,773
Amortization
of films
and
television
programs 260,479 284,471
Amortization
of debt
discount
and
deferred
financing
costs 2,771 4,332
Non-cash
share-
based
compensation 31,247 19,448
Distribution
from
equity
method
investee - 6,230
Loss on
extinguishment
of debt 10,388 2,919
Equity
interests
income (15,124) (11,566)
Deferred
income
taxes 2,691 2,641
Changes in operating assets
and liabilities:
Restricted
cash 5,000 31,529
Accounts
receivable,
net 80,835 (47,127)
Investment
in films
and
television
programs (196,825) (255,139)
Other
assets (3,915) (2,072)
Accounts
payable
and
accrued
liabilities 47,614 13,423
Participations
and
residuals 8,774 20,971
Film
obligations 8,976 (30,395)
Deferred
revenue (4,816) 16,088
------ ------
Net Cash
Flows
Provided
By
Operating
Activities 259,550 106,678
------- -------
Investing Activities:
Investment
in equity
method
investees (7,980) -
Purchases
of other
investments (28,000) -
Purchases
of
property
and
equipment (5,720) (2,683)
------ ------
Net Cash
Flows Used
In
Investing
Activities (41,700) (2,683)
------- ------
Financing Activities:
Senior
revolving
credit
facility -
borrowings 97,000 90,001
Senior
revolving
credit
facility -
repayments (257,500) (186,501)
Term Loans
and 5.25%
Senior
Notes -
borrowings,
net of
deferred
financing
costs of
$4,315 370,685 -
Term Loans
-
repayments (229,500) -
Production
loans -
borrowings 97,928 172,834
Production
loans -
repayments (187,780) (216,489)
Repurchase
of common
shares (14,981) -
Dividends
paid (9,817) (6,900)
Excess tax
benefits
on equity-
based
compensation
awards (6,767) -
Exercise of
stock
options 2,435 1,103
Tax
withholding
required
on equity
awards (5,123) (8,701)
------ ------
Net Cash
Flows Used
In
Financing
Activities (143,420) (154,653)
-------- --------
Net Change
In Cash
And Cash
Equivalents 74,430 (50,658)
Foreign
Exchange
Effects on
Cash (619) 948
Cash and
Cash
Equivalents
-
Beginning
Of Period 28,886 75,402
Cash and
Cash
Equivalents
-End Of
Period $102,697 $25,692
======== =======
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ANNUAL NET INCOME TO EBITDA AND ADJUSTED EBITDA
Year Ended March 31,
--------------------
2015(1) 2014 2013
------ ---- ----
(Amounts in thousands)
Net income $181,781 $152,037 $232,127
Depreciation and amortization 6,586 6,539 8,290
Cash interest 39,657 48,960 75,322
Noncash interest expense 12,819 17,210 18,258
Interest and other income (2,790) (6,030) (4,036)
Income tax provision (benefit) 31,627 32,923 (75,756)
------ ------ -------
EBITDA $269,680 $251,639 $254,205
======== ======== ========
Stock-based compensation(2) 80,310 72,119 47,665
Restructuring and other items(3) 10,725 7,500 2,575
Loss on extinguishment of debt 11,664 39,572 24,089
Backstopped prints and advertising expense 12,509 - 1,155
------ --- -----
Adjusted EBITDA(1) $384,888 $370,830 $329,689
======== ======== ========
_______________________________
(1) The definition of Adjusted EBITDA
now includes the gains or losses
from the sale of equity method
investments. Accordingly,
Adjusted EBITDA for the fiscal
year ended March 31, 2015 has been
revised to include the $11.4
million gain on the sale of the
Company's interest in FEARnet
which occurred in the first
quarter ended June 30, 2014. This
change is consistent with the
Company's increasing investment
activity and practice of including
equity interest income and losses
from equity method investments in
Adjusted EBITDA. Prior to the sale
of FEARnet, the Company recognized
cumulative equity interest losses
before income taxes of
approximately $11.7 million from
its interest in FEARnet.
(2) The years ended March 31, 2015,
2014 and 2013 include cash settled
SARs expense of $1.9 million,
$10.9 million, and $12.0 million,
respectively.
(3) Restructuring and other items
includes certain unusual items,
such as severance and
restructuring charges, certain
transaction related costs, and the
settlement of an administrative
order, when applicable. Amounts
in the year ended March 31, 2015
primarily represent severance
costs associated with the
integration of the marketing
operations of the Company's
Lionsgate and Summit film labels
and costs related to the move of
our international sales and
distribution organization to the
United Kingdom amounting to an
aggregate of $9.1 million.
Approximately $1.2 million of
these costs are non-cash charges
resulting from the acceleration of
vesting of stock awards. In
addition, the remaining amount for
the year ended March 31, 2015
includes transaction costs related
to the registration and offering
of common shares by a shareholder,
for which the Company received no
proceeds, pursuant to a
preexisting registration rights
agreement dated October 22, 2009,
and costs related to the
previously disclosed Starz
Exchange transaction. Amounts in
the year ended March 31, 2014
represent the settlement of an
administrative order. Amounts in
the year ended March 31, 2013
represent severance and
transaction costs related to the
acquisition of Summit
Entertainment.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER NET INCOME TO
EBITDA AND ADJUSTED EBITDA
Three Months Ended
March 31,
---------
2015 2014
---- ----
(Amounts in thousands)
Net income $19,554 $49,152
Depreciation
and
amortization 1,901 1,773
Cash interest 10,111 9,278
Noncash
interest
expense 2,771 4,332
Interest and
other income (602) (1,280)
Income tax
provision 762 5,856
--- -----
EBITDA $34,497 $69,111
======= =======
Stock-based
compensation(1) 31,435 19,920
Restructuring
and other
items(2) 3,717 -
Loss on
extinguishment
of debt 10,388 2,919
Backstopped
prints and
advertising
expense 10,409 -
------ ---
Adjusted
EBITDA $90,446 $91,950
======= =======
________________________________
(1) The three months ended March 31,
2015 and 2014 include cash
settled SARs expense of $0.3
million and $0.5 million,
respectively.
(2) Restructuring and other items
includes certain unusual items,
such as severance and
restructuring charges, certain
transaction related costs, and
the settlement of an
administrative order, when
applicable. Amounts in the three
months ended March 31, 2015
primarily represent costs related
to the move of our international
sales and distribution
organization to the United
Kingdom amounting to an aggregate
of $2.0 million. In addition, the
three months ended March 31, 2015
includes transaction costs
related to the registration and
offering of common shares by a
shareholder, for which the
Company received no proceeds,
pursuant to a preexisting
registration rights agreement
dated October 22, 2009, and costs
related to the previously
disclosed Starz Exchange
transaction.
EBITDA is defined as earnings before interest, income tax provision or benefit, and depreciation and amortization. EBITDA is a non-GAAP financial measure.
Adjusted EBITDA represents EBITDA as defined above adjusted for stock-based compensation, restructuring and other items, loss on extinguishment of debt, and backstopped prints and advertising expense. Stock-based compensation represents compensation expenses associated with stock options, restricted share units and cash and equity settled stock appreciation rights ("SARs"). Restructuring and other items includes certain unusual items, such as severance and restructuring charges, certain transaction related costs, and the settlement of an administrative order (in fiscal 2014), when applicable. Backstopped prints and advertising expense ("P&A") represents the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a first dollar loss guarantee (subject to a cap) that such expense will be recouped from the performance of the film (which results in minimal risk of loss to the Company). The amount represents the P&A expense incurred net of the impact of expensing the P&A cost over the revenue streams similar to a participation expense (i.e. the P&A under these arrangements are being expensed similar to a participation cost for purposes of the adjusted measure). Adjusted EBITDA is a non-GAAP financial measure.
We believe EBITDA and Adjusted EBITDA to be meaningful indicators of our performance that provide useful information to investors regarding our financial condition and results of operations. EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in the entertainment industry and by financial analysts and others who follow the industry to measure operating performance. While we consider EBITDA and Adjusted EBITDA to be important measures of comparative operating performance, they 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 and Adjusted EBITDA do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA or Adjusted EBITDA in the same manner and the measures, 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 OPERATING ACTIVITIES
Year Ended March 31,
--------------------
2015 2014 2013
---- ---- ----
(Amounts in thousands)
Net Cash Flows Provided By Operating Activities $96,509 $252,512 $276,119
Purchases of property and equipment (17,013) (8,799) (2,581)
Net borrowings under and (repayment) of production
loans 182,061 14,542 6,941
Free Cash Flow, as defined $261,557 $258,255 $280,479
======== ======== ========
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER FREE CASH FLOW
TO NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Three Months Ended
March 31,
---------
2015 2014
---- ----
(Amounts in thousands)
Net Cash
Flows
Provided
By
Operating
Activities $259,550 $106,678
Purchases
of
property
and
equipment (5,720) (2,683)
Net
borrowings
under
and
(repayment)
of
production
loans (89,852) (43,655)
Excess
tax
benefits
on
equity-
based
compensation
awards (6,767) -
------ ---
Free Cash
Flow, as
defined $157,211 $60,340
======== =======
Free cash flow is defined as net cash flows provided by operating activities, less purchases of property and equipment, plus or minus the net increase or decrease in production loans, plus or minus excess tax benefits on equity-based compensation awards. 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.
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 GAAP.
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 and television programs) 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 March 31,
--------------------
2015 2014 2013
---- ---- ----
(Amounts in thousands)
EBITDA $269,680 $251,639 $254,205
Plus: Amortization of film and television programs 899,951 921,289 966,027
Less: Cash paid for film and television programs(1) (855,210) (952,727) (881,415)
-------- -------- --------
Amortization of (cash paid for) film and television programs in
excess of cash paid (amortization) 44,741 (31,438) 84,612
Plus: Non-cash stock-based compensation 79,938 60,492 35,838
Plus: Distributions from equity method investee 7,788 16,079 -
Less: Equity interests (income) loss (52,477) (24,724) 3,075
Plus: Loss on extinguishment of debt 11,664 39,572 24,089
------ ------ ------
EBITDA adjusted for items above 361,334 311,620 401,819
Changes in other operating assets and liabilities:
Restricted cash 6,417 1,775 1,241
Accounts receivable, net (13,968) (93,503) (4,948)
Other assets (5,331) (3,768) (2,682)
Accounts payable and accrued liabilities (5,086) 17,628 (50,154)
Participations and residuals 2,704 59,207 (6,875)
Deferred revenue (12,940) 34,035 28,088
------- ------ ------
(28,204) 15,374 (35,330)
Purchases of property and equipment (17,013) (8,799) (2,581)
Interest, taxes and other(2) (54,560) (59,940) (83,429)
Free Cash Flow, as defined $261,557 $258,255 $280,479
======== ======== ========
_________________________
(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 $(1,012,294) $(948,082) $(890,276)
Change in film obligations (24,977) (19,187) 1,920
Production loans - borrowings 631,709 532,416 378,510
Production loans - repayments (449,648) (517,874) (371,569)
Total cash paid for film and television programs $(855,210) $(952,727) $(881,415)
========= ========= =========
_________________________
(2) Interest, taxes and other consists of the following:
Cash interest $(39,657) $(48,960) $(75,322)
Interest and other income 2,790 6,030 4,036
Current income tax provision (17,693) (17,010) (12,143)
Total interest, taxes and other $(54,560) $(59,940) $(83,429)
======== ======== ========
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER EBITDA TO FREE CASH FLOW
Three Months Ended
March 31,
---------
2015 2014
---- ----
(Amounts in thousands)
EBITDA $34,497 $69,111
Plus: Amortization of film and television programs 260,479 284,471
Less: Cash paid for film and television programs(1) (277,701) (329,189)
-------- --------
Cash paid for film and television programs in excess of amortization (17,222) (44,718)
Plus: Non-cash stock-based compensation 31,247 19,448
Plus: Distributions from equity method investee - 6,230
Less: Equity interests income (15,124) (11,566)
Plus: Loss on extinguishment of debt 10,388 2,919
------ -----
EBITDA adjusted for items above 43,786 41,424
Changes in other operating assets and liabilities:
Restricted cash 5,000 31,529
Accounts receivable, net 80,835 (47,127)
Other assets (3,915) (2,072)
Accounts payable and accrued liabilities 47,614 13,423
Participations and residuals 8,774 20,971
Deferred revenue (4,816) 16,088
------ ------
133,492 32,812
Purchases of property and equipment (5,720) (2,683)
Interest, taxes and other(2) (14,347) (11,213)
Free Cash Flow, as defined $157,211 $60,340
======== =======
________________________
(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 $(196,825) $(255,139)
Change in film obligations 8,976 (30,395)
Production loans - borrowings 97,928 172,834
Production loans - repayments (187,780) (216,489)
Total cash paid for film and television programs $(277,701) $(329,189)
========= =========
_________________________
(2) Interest, taxes and other consists of the following:
Cash interest $(10,111) $(9,278)
Interest and other income 602 1,280
Current income tax benefit (provision) 1,929 (3,215)
Excess tax benefits on equity-based compensation awards (6,767) -
------ ---
Total interest, taxes and other $(14,347) $(11,213)
======== ========
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 BEFORE INCOME TAXES, NET
INCOME, BASIC AND DILUTED EPS TO ADJUSTED INCOME BEFORE
INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED BASIC AND DILUTED EPS
Year Ended March 31, 2015*
-------------------------
Income before
income taxes Net income Basic Diluted EPS*
EPS*
(Amounts in thousands, except per share amounts)
As reported $213,408 $181,781 $1.31 $1.23
Stock-based compensation(1) 80,310 51,398 0.37 0.34
Restructuring and other items(2) 10,725 7,437 0.05 0.05
Loss on extinguishment of debt(3) 11,664 8,889 0.06 0.06
Backstopped prints and advertising expense(4) 12,509 8,006 0.06 0.05
As adjusted for stock-based compensation, restructuring and
other items, loss on extinguishment of debt, and backstopped
prints and advertising expense * $328,616 $257,511 $1.85 $1.73
======== ======== ===== =====
_________________________
* The definition of adjusted income before income taxes, adjusted net income and adjusted earnings per share now includes the gains or losses from the sale of equity method investments. Accordingly, adjusted income before income taxes, and adjusted net
income has been revised to now include the gain on the April 2014 sale of the Company's interest in FEARnet of $11.4 million ($7.2 million after income taxes) and representing adjusted basic and diluted earnings per share of $0.05 for the year ended
March 31, 2015. This change is consistent with the Company's increasing investment activity and practice of including equity interest income and losses from equity method investments in adjusted income before income taxes, adjusted net income and
adjusted earnings per share. Prior to the sale of FEARnet, the Company recognized cumulative equity interest losses before income taxes of approximately $11.7 million from the Company's interest in FEARnet.
Year Ended March 31, 2014
-------------------------
Income before
income taxes Net income Basic Diluted EPS*
EPS*
(Amounts in thousands, except per share amounts)
As reported $184,960 $152,037 $1.11 $1.04
Stock-based compensation(1) 72,119 45,435 0.33 0.29
Restructuring and other items(2) 7,500 7,500 0.05 0.05
Loss on extinguishment of debt(3) 39,572 24,930 0.18 0.16
Tax valuation allowance(5) - (12,030) (0.09) (0.08)
As adjusted for stock-based compensation, restructuring and
other items, loss on extinguishment of debt and valuation
allowance $304,151 $217,872 $1.58 $1.47
======== ======== ===== =====
Year Ended March 31, 2013
-------------------------
Income before
income taxes Net income Basic Diluted EPS*
EPS*
(Amounts in thousands, except per share amounts)
As reported $156,371 $232,127 $1.73 $1.61
Stock-based compensation(1) 47,665 30,186 0.22 0.20
Loss on extinguishment of debt(3) 24,089 15,255 0.11 0.10
Tax valuation allowance(5) - (141,087) (1.05) (0.94)
--- -------- ----- -----
As adjusted for stock-based compensation, loss on
extinguishment of debt and valuation allowance $228,125 $136,481 $1.01 $0.96
======== ======== ===== =====
_________________________
* Basic and Diluted EPS amounts may not add precisely due to rounding
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FOURTH QUARTER INCOME BEFORE INCOME TAXES, NET
INCOME, BASIC AND DILUTED EPS TO ADJUSTED INCOME BEFORE
INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED BASIC AND DILUTED EPS
Three Months Ended March 31, 2015
---------------------------------
Income before
income taxes Net income Basic Diluted EPS*
EPS*
---
(Amounts in thousands, except per share amounts)
As reported $20,316 $19,554 $0.14 $0.14
Stock-based compensation(1) 31,435 20,441 0.15 0.14
Restructuring and other items(2) 3,717 2,998 0.02 0.02
Loss on extinguishment of debt(3) 10,388 8,081 0.06 0.05
Backstopped prints and advertising expense(4) 10,409 6,676 0.05 0.04
As adjusted for stock-based compensation, restructuring and
other items, loss on extinguishment of debt and backstopped
prints and advertising expense $76,265 $57,750 $0.41 $0.39
======= ======= ===== =====
Three Months Ended March 31, 2014
---------------------------------
Income before
income taxes Net income Basic Diluted EPS*
EPS*
---
(Amounts in thousands, except per share amounts)
As reported $55,008 $49,152 $0.35 $0.33
Stock-based compensation(1) 19,920 12,550 0.09 0.08
Loss on extinguishment of debt(3) 2,919 1,839 0.01 0.01
As adjusted for stock-based compensation and loss on
extinguishment of debt $77,847 $63,541 $0.46 $0.42
======= ======= ===== =====
_________________________
* Basic and Diluted EPS amounts may not add precisely due to rounding
Adjusted income before income taxes, adjusted net income and adjusted basic and diluted EPS are adjusted for the following items (The adjustment to net income is net of the tax impact calculated using the statutory tax rate applicable to each adjustment):
(1) Stock-based compensation:
Adjustments for stock-based
compensation represents
compensation expenses associated
with stock options, restricted
share units, cash and equity
settled SARs.
--------------------------------
(2) Restructuring and other items:
Adjustments for certain unusual
items, such as severance and
restructuring charges, certain
transaction related costs, and the
settlement of an administrative
order, when applicable. Amounts in
the year ended March 31, 2015
primarily represent severance costs
associated with the integration of
the marketing operations of the
Company's Lionsgate and Summit film
labels and costs related to the
move of our international sales and
distribution organization to the
United Kingdom. A portion of these
costs are non-cash charges
resulting from the acceleration of
vesting of stock awards. In
addition, the remaining amount for
the year ended March 31, 2015
includes transaction costs related
to the registration and offering of
common shares by a shareholder, for
which the Company received no
proceeds, pursuant to a preexisting
registration rights agreement dated
October 22, 2009, and costs related
to the previously disclosed Starz
Exchange transaction. Amounts in
the year ended March 31, 2014
represent the settlement of an
administrative order. Amounts in
the year ended March 31, 2013
represent severance and transaction
costs related to the acquisition of
Summit Entertainment.
-----------------------------------
(3) Loss on extinguishment of debt: This
adjusts income before income taxes
and net income to eliminate the
loss on extinguishment of debt.
------------------------------------
(4) Backstopped prints and advertising
expense: This adjusts income before
income taxes and net income to
eliminate the amount of theatrical
marketing expense for third party
titles that the Company funded and
expensed for which a third party
provides a first dollar loss
guarantee (subject to a cap) that
such expense will be recouped from
the performance of the film (which
results in minimal risk of loss to
the company). The amount represents
the P&A expense incurred net of the
impact of expensing the P&A cost
over the revenue streams similar to
a participation expense (i.e. the
P&A under these arrangements are
being expensed similar to a
participation cost for purposes of
the adjusted measure).
-----------------------------------
(5) 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 net
deferred tax assets in our various
tax jurisdictions. A substantial
portion of the Company's valuation
allowance was reversed in the year
ended March 31, 2013 due to the
expectation of the realization of
the related net deferred tax assets
in future tax returns. A further
reduction in the valuation
allowance related to the Company's
Canadian net deferred tax assets
was reversed in the year ended
March 31, 2014.
------------------------------------
We believe 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 adjusted income before income taxes, adjusted net income, and adjusted basic and diluted EPS in the same manner and the measures as presented may not be comparable to similarly titled measures presented by other companies.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lionsgate-reports-strong-financial-results-for-fiscal-2015-300087585.html
SOURCE Lions Gate Entertainment Corp.
