Third Quarter Revenue is $1.14 Billion, Net Income
Attributable to Lionsgate Shareholders is $193 Million or
Basic EPS of $0.92; Adjusted OIBDA is $178
Million
Company Reports $140 Million in
Free Cash Flow in the Quarter
Company Resumes Quarterly Cash Dividend of $0.09 per Common Share
SANTA MONICA, Calif. and VANCOUVER, British Columbia, Feb.
8, 2018 /PRNewswire/ -- Global content leader Lionsgate
(NYSE: LGF.A, LGF.B) today reported revenue of $1.14 billion,
net income attributable to Lionsgate shareholders of $193
million, or basic EPS of $0.92 on 208.8 million weighted
average common shares outstanding, and adjusted net income
attributable to Lionsgate shareholders of $107 million, or
adjusted basic EPS of $0.51, for the third quarter of fiscal
2018 (quarter ended December 31,
2017). The Company also reported operating income of $80
million, adjusted OIBDA of $178 million, and free cash
flow of $140 million in the quarter,
while paying down $113 million of
corporate debt.
Net income and basic EPS include a one-time income tax benefit
of $165 million reflecting the impact
of the lower U.S. income tax rate under the new tax laws on our net
deferred tax liabilities.
"Our strong performance in the quarter, with robust
contributions from our Motion Picture Group and Starz, keeps us on
track for our fiscal year expectations," said Lionsgate Chief
Executive Officer Jon
Feltheimer. "With this financial strength, we're
pleased to announce that our Board has approved the resumption of
our quarterly cash dividend, returning value to our shareholders as
we continue to grow our Company. Despite a disruptive
operating environment, the quarter shows our success in creating
premium content that cuts through the clutter of a crowded
marketplace and our ability to supply it to a diverse array of
media companies."
Revenue in the quarter of $1.14
billion increased 52% from $752
million in the prior year quarter. Net income
attributable to Lionsgate shareholders of $193 million, or basic EPS of $0.92 per share, compared to a net loss of
$31 million, or basic loss of
$0.19 per share, in the prior year
quarter. Adjusted OIBDA of $178
million and operating income of $80
million in the quarter compared to adjusted OIBDA of
$86 million and operating loss of
$7 million in the prior year quarter,
respectively.
The Company announced that it has resumed its quarterly cash
dividend of $0.09 per each class of
common shares payable on May 1, 2018,
to shareholders of record as of March 31,
2018.
Third Quarter Results
With Lionsgate's acquisition of Starz, fiscal 2018 third quarter
results are not directly comparable to prior reporting periods, so
the following quarterly segment results will be discussed as
compared to the prior year quarter on a combined pro forma
basis.
The Media Networks segment revenues increased 6% to $382.9
million driven by higher over-the-top (OTT) revenue growth and
revenues from worldwide digital media licensing arrangements,
offset in part by subscriber losses at certain MVPD's.
Ratings for Starz original series grew for the third year in a
row. Segment profits increased 6% in the quarter to
$128.3 million.
Motion Picture segment revenues increased 14% to $539.1 million due to the strong domestic
theatrical box office performance of the breakout hit Wonder
and the continued strong international performances of La La
Land and American Assassin. Segment profits of
$54.3 million compared to
$55.9 million in the prior year
quarter.
Television Production segment revenues of $227.3 million compared to $231.0 million in the prior year
quarter. Television production revenue was
comparable to the prior year quarter as increased revenues from
deliveries of television series were partially offset by a decrease
in syndicated licensing revenues. Segment profits of
$22.7 million compared to
$27.5 million in the prior year
quarter.
Lionsgate's backlog, or already contracted future revenue on the
licensing of film and television product not yet recorded, was
$1.2 billion at December 31, 2017.
Lionsgate senior management will hold its analyst and investor
conference call to discuss its fiscal 2018 third quarter financial
results at 5:00 PM ET/2:00 PM PT this
afternoon, February 8. Interested parties may listen to the
live webcast by visiting the events page on the Lionsgate
corporate website or via
https://services.choruscall.com/links/lgf180208ldOgQ2Fz.html. A
full replay will become available this afternoon, February 8,
by clicking the same link.
ABOUT LIONSGATE
The first major new studio in decades, Lionsgate is a global
content platform whose films, television series, digital products
and linear and over-the-top platforms reach next generation
audiences around the world. In addition to its filmed
entertainment leadership, Lionsgate content drives a growing
presence in interactive and location-based entertainment, gaming,
virtual reality and other new entertainment technologies.
Lionsgate's content initiatives are backed by a 16,000-title film
and television library and delivered through a global licensing
infrastructure. The Lionsgate brand is synonymous with
original, daring and ground-breaking content created with special
emphasis on the evolving patterns and diverse composition of the
Company's worldwide consumer base.
For further information, investors should contact:
James Marsh
310-255-3651
jmarsh@lionsgate.com
For media inquiries, please contact:
Peter 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 facilities and notes; unpredictability of the commercial
success of our motion pictures and television programming; risks
related to acquisition and integration of acquired businesses; the
effects of dispositions of businesses or assets, including
individual films or libraries; the cost of defending our
intellectual property; technological changes and other trends
affecting the entertainment industry; litigation relating to the
acquisition of Starz; impact of the Tax Cuts and Jobs Act; other
trends affecting the entertainment industry; and the other risk
factors as set forth in Lionsgate's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on May 25, 2017, as amended in Lionsgate's Quarterly
Report on Form 10-Q filed with the Securities and Exchange
Commission on February 8, 2018, 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.
Additional Information Available on Website
The information in this press release should be read in
conjunction with the financial statements and footnotes contained
in the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 2017, which will
be posted on the Company's website at
www.lionsgate.com/corporate/reports/sec-filings, when filed with
the Securities and Exchange Commission. Trending schedules
containing certain financial information will also be available at
www.lionsgate.com/corporate/reports.
LIONS GATE
ENTERTAINMENT CORP.
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
December 31,
2017
|
|
March 31,
2017
|
|
(Amounts in
millions)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
216.7
|
|
|
$
|
321.9
|
|
Restricted
cash
|
—
|
|
|
2.8
|
|
Accounts receivable,
net
|
905.1
|
|
|
908.1
|
|
Program
rights
|
215.6
|
|
|
261.7
|
|
Other current
assets
|
216.2
|
|
|
195.9
|
|
Total current
assets
|
1,553.6
|
|
|
1,690.4
|
|
Investment in films
and television programs and program rights, net
|
1,685.9
|
|
|
1,729.5
|
|
Property and
equipment, net
|
156.5
|
|
|
165.5
|
|
Investments
|
176.6
|
|
|
371.5
|
|
Intangible
assets
|
1,964.9
|
|
|
2,046.7
|
|
Goodwill
|
2,740.8
|
|
|
2,700.5
|
|
Other
assets
|
420.2
|
|
|
472.8
|
|
Deferred tax
assets
|
44.2
|
|
|
20.0
|
|
Total
assets
|
$
|
8,742.7
|
|
|
$
|
9,196.9
|
|
LIABILITIES
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
373.7
|
|
|
$
|
573.0
|
|
Participations and
residuals
|
534.6
|
|
|
514.9
|
|
Film obligations and
production loans
|
331.2
|
|
|
367.2
|
|
Debt - short term
portion
|
57.3
|
|
|
77.9
|
|
Deferred
revenue
|
231.8
|
|
|
156.9
|
|
Total current
liabilities
|
1,528.6
|
|
|
1,689.9
|
|
Debt
|
2,283.0
|
|
|
3,047.0
|
|
Participations and
residuals
|
385.8
|
|
|
359.7
|
|
Film obligations and
production loans
|
196.7
|
|
|
116.0
|
|
Other
liabilities
|
49.0
|
|
|
50.3
|
|
Dissenting
shareholders' liability
|
854.5
|
|
|
812.9
|
|
Deferred
revenue
|
76.5
|
|
|
72.7
|
|
Deferred tax
liabilities
|
209.4
|
|
|
440.2
|
|
Redeemable
noncontrolling interest
|
98.5
|
|
|
93.8
|
|
Commitments and
contingencies
|
|
|
|
EQUITY
|
|
|
|
Class A voting common
shares, no par value, 500.0 shares authorized, 81.8 shares issued
(March 31, 2017 - 81.1 shares issued)
|
631.6
|
|
|
605.7
|
|
Class B non-voting
common shares, no par value, 500.0 shares authorized, 128.2 shares
issued (March 31, 2017 - 126.4 shares issued)
|
1,993.9
|
|
|
1,914.1
|
|
Retained
earnings
|
448.3
|
|
|
10.6
|
|
Accumulated other
comprehensive loss
|
(13.7)
|
|
|
(16.0)
|
|
Total Lions Gate
Entertainment Corp. shareholders' equity
|
3,060.1
|
|
|
2,514.4
|
|
Noncontrolling
interests
|
0.6
|
|
|
—
|
|
Total
equity
|
3,060.7
|
|
|
2,514.4
|
|
Total liabilities and
equity
|
$
|
8,742.7
|
|
|
$
|
9,196.9
|
|
LIONS GATE
ENTERTAINMENT CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Amounts in
millions, except per share amounts)
|
Revenues
|
$
|
1,142.7
|
|
|
$
|
752.3
|
|
|
$
|
3,088.8
|
|
|
$
|
1,945.4
|
|
Expenses
|
|
|
|
|
|
|
|
Direct
operating
|
650.1
|
|
|
429.1
|
|
|
1,726.6
|
|
|
1,182.3
|
|
Distribution and
marketing
|
237.1
|
|
|
174.8
|
|
|
669.7
|
|
|
521.8
|
|
General and
administration
|
114.2
|
|
|
88.6
|
|
|
337.4
|
|
|
233.4
|
|
Depreciation and
amortization
|
39.7
|
|
|
13.2
|
|
|
119.0
|
|
|
23.1
|
|
Restructuring and
other
|
21.4
|
|
|
54.0
|
|
|
35.8
|
|
|
72.4
|
|
Total
expenses
|
1,062.5
|
|
|
759.7
|
|
|
2,888.5
|
|
|
2,033.0
|
|
Operating income
(loss)
|
80.2
|
|
|
(7.4)
|
|
|
200.3
|
|
|
(87.6)
|
|
Interest
expense
|
|
|
|
|
|
|
|
Interest
expense
|
(31.9)
|
|
|
(27.4)
|
|
|
(105.7)
|
|
|
(58.5)
|
|
Interest on
dissenting shareholders' liability
|
(14.4)
|
|
|
—
|
|
|
(41.6)
|
|
|
—
|
|
Total interest
expense
|
(46.3)
|
|
|
(27.4)
|
|
|
(147.3)
|
|
|
(58.5)
|
|
Interest and other
income
|
2.2
|
|
|
1.5
|
|
|
7.7
|
|
|
3.6
|
|
Loss on
extinguishment of debt
|
(6.2)
|
|
|
(28.3)
|
|
|
(24.2)
|
|
|
(28.3)
|
|
Gain on sale of
equity interest in EPIX
|
—
|
|
|
—
|
|
|
201.0
|
|
|
—
|
|
Gain on Starz
investment
|
—
|
|
|
20.4
|
|
|
—
|
|
|
20.4
|
|
Impairment of
long-term investments and other assets
|
(29.2)
|
|
|
—
|
|
|
(29.2)
|
|
|
—
|
|
Equity interests
income (loss)
|
(13.8)
|
|
|
(1.5)
|
|
|
(34.8)
|
|
|
11.2
|
|
Income (loss)
before income taxes
|
(13.1)
|
|
|
(42.7)
|
|
|
173.5
|
|
|
(139.2)
|
|
Income tax
benefit
|
204.2
|
|
|
12.2
|
|
|
205.0
|
|
|
92.2
|
|
Net income
(loss)
|
191.1
|
|
|
(30.5)
|
|
|
378.5
|
|
|
(47.0)
|
|
Less: Net (income)
loss attributable to noncontrolling interest
|
1.9
|
|
|
(0.1)
|
|
|
3.8
|
|
|
0.2
|
|
Net income (loss)
attributable to Lions Gate Entertainment Corp.
shareholders
|
$
|
193.0
|
|
|
$
|
(30.6)
|
|
|
$
|
382.3
|
|
|
$
|
(46.8)
|
|
|
|
|
|
|
|
|
|
Per share
information attributable to Lions Gate Entertainment Corp.
shareholders:
|
|
|
|
|
|
|
|
Basic net income
(loss) per common share
|
$
|
0.92
|
|
|
$
|
(0.19)
|
|
|
$
|
1.84
|
|
|
$
|
(0.31)
|
|
Diluted net income
(loss) per common share
|
$
|
0.87
|
|
|
$
|
(0.19)
|
|
|
$
|
1.74
|
|
|
$
|
(0.31)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
208.8
|
|
|
161.4
|
|
|
207.8
|
|
|
152.2
|
|
Diluted
|
221.6
|
|
|
161.4
|
|
|
219.7
|
|
|
152.2
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.09
|
|
LIONS GATE
ENTERTAINMENT CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Amounts in
millions)
|
Operating
Activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
191.1
|
|
|
$
|
(30.5)
|
|
|
$
|
378.5
|
|
|
$
|
(47.0)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
39.7
|
|
|
13.2
|
|
|
119.0
|
|
|
23.1
|
|
Amortization of films
and television programs and program rights
|
468.2
|
|
|
313.4
|
|
|
1,232.8
|
|
|
901.9
|
|
Interest on
dissenting shareholders' liability
|
14.4
|
|
|
—
|
|
|
41.6
|
|
|
—
|
|
Amortization of debt
discount and financing costs
|
3.6
|
|
|
3.4
|
|
|
11.0
|
|
|
8.1
|
|
Non-cash share-based
compensation
|
27.1
|
|
|
28.2
|
|
|
74.5
|
|
|
74.4
|
|
Other non-cash
items
|
1.8
|
|
|
1.3
|
|
|
5.7
|
|
|
3.8
|
|
Distribution from
equity method investee
|
—
|
|
|
14.0
|
|
|
—
|
|
|
14.0
|
|
Gain on Starz
investment
|
—
|
|
|
(20.4)
|
|
|
—
|
|
|
(20.4)
|
|
Loss on
extinguishment of debt
|
6.2
|
|
|
28.3
|
|
|
24.2
|
|
|
28.3
|
|
Equity interests loss
(income)
|
13.8
|
|
|
1.5
|
|
|
34.8
|
|
|
(11.2)
|
|
Gain on sale of
equity interest in EPIX
|
—
|
|
|
—
|
|
|
(201.0)
|
|
|
—
|
|
Impairment of
long-term investments and other assets
|
29.2
|
|
|
—
|
|
|
29.2
|
|
|
—
|
|
Deferred income tax
benefit
|
(205.5)
|
|
|
(22.5)
|
|
|
(189.3)
|
|
|
(109.3)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Restricted
cash
|
—
|
|
|
0.1
|
|
|
2.8
|
|
|
0.1
|
|
Accounts receivable,
net and other assets
|
(83.1)
|
|
|
(32.2)
|
|
|
48.6
|
|
|
52.9
|
|
Investment in films
and television programs and program rights, net
|
(407.3)
|
|
|
(213.1)
|
|
|
(1,088.0)
|
|
|
(659.8)
|
|
Accounts payable and
accrued liabilities
|
(22.6)
|
|
|
87.9
|
|
|
(220.4)
|
|
|
79.4
|
|
Participations and
residuals
|
17.4
|
|
|
81.1
|
|
|
38.3
|
|
|
125.7
|
|
Film
obligations
|
(20.3)
|
|
|
4.2
|
|
|
5.3
|
|
|
24.1
|
|
Deferred
revenue
|
(41.0)
|
|
|
(36.6)
|
|
|
24.5
|
|
|
(72.4)
|
|
Net Cash Flows
Provided By Operating Activities
|
32.7
|
|
|
221.3
|
|
|
372.1
|
|
|
415.7
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
Proceeds from the
sale of equity method investee, net of transaction costs
|
—
|
|
|
—
|
|
|
393.7
|
|
|
—
|
|
Investment in equity
method investees
|
(18.3)
|
|
|
(7.8)
|
|
|
(47.6)
|
|
|
(13.2)
|
|
Distributions from
equity method investee
|
—
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
Business
acquisitions, net of cash acquired of $18.7 and $73.5,
respectively
|
(1.8)
|
|
|
(1,057.5)
|
|
|
(1.8)
|
|
|
(1,057.5)
|
|
Capital
expenditures
|
(7.1)
|
|
|
(9.5)
|
|
|
(28.4)
|
|
|
(15.8)
|
|
Net Cash Flows
Provided By (Used In) Investing Activities
|
(27.2)
|
|
|
(1,074.8)
|
|
|
315.9
|
|
|
(1,084.2)
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
Debt -
borrowings
|
46.6
|
|
|
3,456.8
|
|
|
161.6
|
|
|
3,910.8
|
|
Debt -
repayments
|
(174.2)
|
|
|
(1,938.0)
|
|
|
(992.1)
|
|
|
(2,252.0)
|
|
Production loans -
borrowings
|
129.9
|
|
|
78.4
|
|
|
299.5
|
|
|
230.7
|
|
Production loans -
repayments
|
(15.6)
|
|
|
(249.6)
|
|
|
(267.2)
|
|
|
(623.4)
|
|
Dividends
paid
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.8)
|
|
Distributions to
noncontrolling interest
|
(1.4)
|
|
|
(2.6)
|
|
|
(6.0)
|
|
|
(5.9)
|
|
Exercise of stock
options
|
9.2
|
|
|
0.4
|
|
|
31.6
|
|
|
1.0
|
|
Tax withholding
required on equity awards
|
(8.5)
|
|
|
(4.3)
|
|
|
(17.0)
|
|
|
(31.6)
|
|
Net Cash Flows
Used In Financing Activities
|
(14.0)
|
|
|
1,341.1
|
|
|
(789.6)
|
|
|
1,202.8
|
|
Net Change In Cash
And Cash Equivalents
|
(8.5)
|
|
|
487.6
|
|
|
(101.6)
|
|
|
534.3
|
|
Foreign Exchange
Effects on Cash
|
(0.7)
|
|
|
1.1
|
|
|
(3.6)
|
|
|
2.7
|
|
Cash and Cash
Equivalents - Beginning Of Period
|
225.9
|
|
|
106.0
|
|
|
321.9
|
|
|
57.7
|
|
Cash and Cash
Equivalents - End Of Period
|
$
|
216.7
|
|
|
$
|
594.7
|
|
|
$
|
216.7
|
|
|
$
|
594.7
|
|
LIONS GATE ENTERTAINMENT CORP.
SEGMENT INFORMATION
The Company's reportable segments have been determined based on
the distinct nature of their operations, the Company's internal
management structure, and the financial information that is
evaluated regularly by the Company's chief operating decision
maker.
The Company has three reportable business segments: (1) Motion
Pictures, (2) Television Production and (3) Media Networks (which
was not a reportable segment prior to the quarter ended
December 31, 2016).
Motion Pictures consists of the development and production of
feature films, acquisition of North American and worldwide
distribution rights, North American theatrical, home entertainment
and television distribution of feature films produced and acquired,
and worldwide licensing of distribution rights to feature films
produced and acquired. As a result of the Starz Merger, beginning
December 8, 2016, the Motion Pictures
segment includes Starz's third-party distribution business.
Television Production consists of the development, production
and worldwide distribution of television productions including
television series, television movies and mini-series, and
non-fiction programming.
Media Networks (which was not a reportable segment prior to the
quarter ended December 31, 2016)
consists of (i) Starz Networks, which includes the licensing of
premium subscription video programming to U.S. multichannel video
programming distributors ("MVPDs") including cable operators,
satellite television providers and telecommunication companies, and
online video providers, and on an over-the-top ("OTT") basis (ii)
Content and Other, which includes the licensing of the Media
Networks' original series programming to digital media platforms,
international television networks, home entertainment and other
ancillary markets and (iii) Streaming Services, which represents
the Lionsgate legacy start-up direct to consumer streaming services
on its subscription video-on-demand ("SVOD") platforms which were
moved under the Media Networks segment in connection with the Starz
Merger.
In the ordinary course of business, the Company's reportable
segments enter into transactions with one another. The most common
types of intersegment transactions include licensing motion
pictures or television programming from the Motion Pictures and
Television Production segments to the Media Networks segment. In
addition, intersegment transactions include distribution fees
charged to the Media Networks segment by the Television Production
segment for the distribution of Media Networks' original series
programming in ancillary markets. While intersegment transactions
are treated like third-party transactions to determine segment
performance, the revenues (and corresponding expenses or assets
recognized by the segment that is the counterparty to the
transaction) are eliminated in consolidation and, therefore, do not
affect consolidated results.
LIONS GATE ENTERTAINMENT CORP.
SEGMENT INFORMATION (Continued)
Segment information by business unit is presented in the table
below. The Media Networks segment was not previously a reportable
segment prior to the quarter ended December
31, 2016, and reflects Starz Networks and Content and Other
from the date of acquisition of Starz (December 8, 2016), and the Lionsgate direct to
consumer streaming services on SVOD platforms for the historical
periods presented.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited,
amounts in millions)
|
Segment
revenues
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
539.1
|
|
|
$
|
440.4
|
|
|
$
|
1,397.0
|
|
|
$
|
1,266.5
|
|
Television
Production
|
227.3
|
|
|
228.6
|
|
|
552.8
|
|
|
595.0
|
|
Media
Networks
|
382.9
|
|
|
85.2
|
|
|
1,166.8
|
|
|
85.8
|
|
Intersegment
eliminations
|
(6.6)
|
|
|
(1.9)
|
|
|
(27.8)
|
|
|
(1.9)
|
|
|
$
|
1,142.7
|
|
|
$
|
752.3
|
|
|
$
|
3,088.8
|
|
|
$
|
1,945.4
|
|
Gross
contribution
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
82.1
|
|
|
$
|
79.2
|
|
|
$
|
230.9
|
|
|
$
|
154.8
|
|
Television
Production
|
31.3
|
|
|
32.3
|
|
|
72.4
|
|
|
69.6
|
|
Media
Networks
|
153.7
|
|
|
40.5
|
|
|
429.7
|
|
|
28.2
|
|
Intersegment
eliminations
|
(0.3)
|
|
|
(0.4)
|
|
|
(2.3)
|
|
|
(0.4)
|
|
|
$
|
266.8
|
|
|
$
|
151.6
|
|
|
$
|
730.7
|
|
|
$
|
252.2
|
|
Segment general
and administration
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
27.8
|
|
|
$
|
25.4
|
|
|
$
|
81.1
|
|
|
$
|
74.5
|
|
Television
Production
|
8.6
|
|
|
6.7
|
|
|
28.3
|
|
|
22.7
|
|
Media
Networks
|
25.4
|
|
|
8.4
|
|
|
75.5
|
|
|
14.3
|
|
|
$
|
61.8
|
|
|
$
|
40.5
|
|
|
$
|
184.9
|
|
|
$
|
111.5
|
|
Segment
profit
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
54.3
|
|
|
$
|
53.8
|
|
|
$
|
149.8
|
|
|
$
|
80.3
|
|
Television
Production
|
22.7
|
|
|
25.6
|
|
|
44.1
|
|
|
46.9
|
|
Media
Networks
|
128.3
|
|
|
32.1
|
|
|
354.2
|
|
|
13.9
|
|
Intersegment
eliminations
|
(0.3)
|
|
|
(0.4)
|
|
|
(2.3)
|
|
|
(0.4)
|
|
Total segment
profit
|
$
|
205.0
|
|
|
$
|
111.1
|
|
|
$
|
545.8
|
|
|
$
|
140.7
|
|
Corporate general and
administrative expenses
|
(27.4)
|
|
|
(25.3)
|
|
|
(78.1)
|
|
|
(68.1)
|
|
Adjusted
OIBDA(1)
|
$
|
177.6
|
|
|
$
|
85.8
|
|
|
$
|
467.7
|
|
|
$
|
72.6
|
|
|
|
____________
|
(1)
|
See "Use of Non-GAAP
Financial Measures" for the definition of Adjusted OIBDA and
reconciliation to the most directly comparable GAAP financial
measure.
|
LIONS GATE ENTERTAINMENT CORP.
SEGMENT INFORMATION (Continued)
The following table sets forth revenues and segment profit by
product line for the Media Networks segment for the three and nine
months ended December 31, 2017 and 2016:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited,
amounts in millions)
|
Media Networks
Revenue:
|
|
|
|
|
|
|
|
Starz
Networks
|
$
|
351.8
|
|
|
$
|
82.8
|
|
|
$
|
1,053.7
|
|
|
$
|
82.8
|
|
Content and
Other
|
29.4
|
|
|
1.4
|
|
|
109.0
|
|
|
1.4
|
|
Streaming
Services(1)
|
1.7
|
|
|
1.0
|
|
|
4.1
|
|
|
1.6
|
|
|
$
|
382.9
|
|
|
$
|
85.2
|
|
|
$
|
1,166.8
|
|
|
$
|
85.8
|
|
Media Networks
Segment Profit:
|
|
|
|
|
|
|
|
Starz
Networks
|
$
|
134.3
|
|
|
$
|
38.5
|
|
|
$
|
345.6
|
|
|
$
|
38.5
|
|
Content and
Other
|
5.9
|
|
|
0.2
|
|
|
39.7
|
|
|
0.2
|
|
Streaming
Services(1)
|
(11.9)
|
|
|
(6.6)
|
|
|
(31.1)
|
|
|
(24.8)
|
|
|
$
|
128.3
|
|
|
$
|
32.1
|
|
|
$
|
354.2
|
|
|
$
|
13.9
|
|
|
|
__________________
|
(1)
|
Streaming Services
represents the Lionsgate legacy start-up direct to consumer
streaming service initiatives on SVOD platforms which are now
included in the Media Networks segment.
|
LIONS GATE ENTERTAINMENT CORP.
PRO FORMA COMBINED SEGMENT INFORMATION
The following table sets forth segment information on a pro
forma combined basis as if the Starz Merger and our segment
reorganization occurred on April 1, 2016:
|
PRO FORMA
COMBINED
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited,
amounts in millions)
|
Segment
revenues
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
539.1
|
|
|
$
|
473.0
|
|
|
$
|
1,397.0
|
|
|
$
|
1,386.2
|
|
Television
Production
|
227.3
|
|
|
231.0
|
|
|
552.8
|
|
|
600.6
|
|
Media
Networks
|
382.9
|
|
|
361.9
|
|
|
1,166.8
|
|
|
1,088.2
|
|
Intersegment
eliminations
|
(6.6)
|
|
|
(5.0)
|
|
|
(27.8)
|
|
|
(7.3)
|
|
|
$
|
1,142.7
|
|
|
$
|
1,060.9
|
|
|
$
|
3,088.8
|
|
|
$
|
3,067.7
|
|
Gross
contribution
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
82.1
|
|
|
$
|
84.0
|
|
|
$
|
230.9
|
|
|
$
|
167.5
|
|
Television
Production
|
31.3
|
|
|
35.0
|
|
|
72.4
|
|
|
75.5
|
|
Media
Networks
|
153.7
|
|
|
152.8
|
|
|
429.7
|
|
|
414.2
|
|
Intersegment
eliminations
|
(0.3)
|
|
|
(3.0)
|
|
|
(2.3)
|
|
|
(4.1)
|
|
|
$
|
266.8
|
|
|
$
|
268.8
|
|
|
$
|
730.7
|
|
|
$
|
653.1
|
|
Segment general
and administration
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
27.8
|
|
|
$
|
28.1
|
|
|
$
|
81.1
|
|
|
$
|
87.7
|
|
Television
Production
|
8.6
|
|
|
7.5
|
|
|
28.3
|
|
|
25.4
|
|
Media
Networks
|
25.4
|
|
|
31.3
|
|
|
75.5
|
|
|
91.8
|
|
|
$
|
61.8
|
|
|
$
|
66.9
|
|
|
$
|
184.9
|
|
|
$
|
204.9
|
|
Segment
profit
|
|
|
|
|
|
|
|
Motion
Pictures
|
$
|
54.3
|
|
|
$
|
55.9
|
|
|
$
|
149.8
|
|
|
$
|
79.8
|
|
Television
Production
|
22.7
|
|
|
27.5
|
|
|
44.1
|
|
|
50.1
|
|
Media
Networks
|
128.3
|
|
|
121.5
|
|
|
354.2
|
|
|
322.4
|
|
Intersegment
eliminations
|
(0.3)
|
|
|
(3.0)
|
|
|
(2.3)
|
|
|
(4.1)
|
|
Total segment
profit
|
$
|
205.0
|
|
|
$
|
201.9
|
|
|
$
|
545.8
|
|
|
$
|
448.2
|
|
Corporate general and
administrative expenses
|
(27.4)
|
|
|
(24.4)
|
|
|
(78.1)
|
|
|
(68.0)
|
|
Adjusted
OIBDA(1)
|
$
|
177.6
|
|
|
$
|
177.5
|
|
|
$
|
467.7
|
|
|
$
|
380.2
|
|
|
|
_____________
|
(1)
|
See "Use of Non-GAAP
Financial Measures" for the definition of Adjusted OIBDA and
reconciliation to the most directly comparable GAAP financial
measure.
|
NOTE: The amounts above were determined by combining
the historical financial information of Lionsgate and Starz for
each respective period, applying the new Lionsgate segment
structure, and applying the acquisition related accounting.
However, the effects of purchase accounting are not part of the
definition of segment profit, and have been excluded accordingly.
In addition, the combined information does not apply any operating
costs synergies. The amounts are presented for illustrative
purposes and are not necessarily indicative of the combined
financial results that might have been achieved for the periods had
the acquisition taken place on April 1,
2016, nor are they indicative of the future combined results
of Lionsgate and Starz.
LIONS GATE ENTERTAINMENT CORP.
PRO FORMA COMBINED SEGMENT INFORMATION
(Continued)
The following table sets forth revenues by product line on a pro
forma combined basis for the Media Networks segment for the three
and nine months ended December 31, 2017 and 2016:
|
PRO FORMA
COMBINED
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited,
amounts in millions)
|
Media Networks
Revenue:
|
|
|
|
|
|
|
|
Starz
Networks
|
$
|
351.8
|
|
|
$
|
342.5
|
|
|
$
|
1,053.7
|
|
|
$
|
1,034.2
|
|
Content and
Other
|
29.4
|
|
|
18.4
|
|
|
109.0
|
|
|
52.4
|
|
Streaming
Services(1)
|
1.7
|
|
|
1.0
|
|
|
4.1
|
|
|
1.6
|
|
|
$
|
382.9
|
|
|
$
|
361.9
|
|
|
$
|
1,166.8
|
|
|
$
|
1,088.2
|
|
Media Networks
Segment Profit:
|
|
|
|
|
|
|
|
Starz
Networks
|
$
|
134.3
|
|
|
$
|
128.6
|
|
|
$
|
345.6
|
|
|
$
|
346.4
|
|
Content and
Other
|
5.9
|
|
|
(0.5)
|
|
|
39.7
|
|
|
0.9
|
|
Streaming
Services(1)
|
(11.9)
|
|
|
(6.6)
|
|
|
(31.1)
|
|
|
(24.9)
|
|
|
$
|
128.3
|
|
|
$
|
121.5
|
|
|
$
|
354.2
|
|
|
$
|
322.4
|
|
|
|
__________________
|
(1)
|
Streaming Services
represents the Lionsgate legacy start-up direct to consumer
streaming service initiatives on SVOD platforms which are now
included in the Media Networks segment.
|
LIONS GATE ENTERTAINMENT CORP.
USE OF NON-GAAP FINANCIAL MEASURES
This earnings release presents the following important
financial measures utilized by Lions Gate Entertainment Corp. (the
"Company," "we," "us" or "our") 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.
Adjusted OIBDA: Adjusted OIBDA is defined as operating
income (loss) before adjusted depreciation and amortization
("OIBDA"), adjusted for adjusted share-based compensation
("adjusted SBC"), purchase accounting and related adjustments, and
restructuring and other costs.
- Adjusted depreciation and amortization represents depreciation
and amortization as presented on our consolidated statement of
operations, less the depreciation and amortization related to the
amortization of purchase accounting and related adjustments
associated with the acquisition of Starz and Pilgrim Media Group.
Accordingly, the full impact of the purchase accounting is included
in the adjustment for "purchase accounting and related
adjustments", described below.
- Adjusted share-based compensation represents share-based
compensation excluding immediately vested stock awards granted as
part of the Company's annual bonus program issued in lieu of cash
bonuses (which are, when granted, included in segment or corporate
general and administrative expense), and excluding the impact of
the acceleration of certain vesting schedules for equity awards
pursuant to certain severance arrangements, which are included in
restructuring and other expenses, when applicable.
- Restructuring and other includes restructuring and severance
costs, certain transaction and related costs, and certain unusual
items, when applicable.
- Purchase accounting and related adjustments represent the
amortization of non-cash fair value adjustments to certain assets
acquired in the acquisition of Starz, Pilgrim Media Group and Good
Universe.
Adjusted OIBDA is calculated similar to how the Company defines
segment profit and manages and evaluates its segment operations.
Segment profit also excludes corporate general and administrative
expense.
Free Cash Flow: Free cash flow is defined as net cash
flows provided by (used in) operating activities, less capital
expenditures, plus or minus the net increase or decrease in
production loans. 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 Net Income (Loss) Attributable to Lions Gate
Entertainment Corp. Shareholders: Adjusted net income (loss)
attributable to Lions Gate Entertainment Corp. shareholders is
defined as net income (loss) attributable to Lions Gate
Entertainment Corp. shareholders, adjusted for share-based
compensation, purchase accounting and related adjustments,
restructuring and other items, loss on extinguishment of debt, and
unusual gains or losses, net of the tax effect of the adjustments
at the applicable blended statutory rate and net of the
impact of the adjustments on non-controlling interest.
Adjusted Basic and Diluted EPS: Adjusted basic earnings
(loss) per share is defined as adjusted net income (loss)
attributable to Lions Gate Entertainment Corp. shareholders divided
by the weighted average shares outstanding. Diluted EPS is similar
to basic EPS but is adjusted for the effects of securities that are
diluted based on the level of adjusted net income (loss), similar
to GAAP.
LIONS GATE ENTERTAINMENT CORP.
USE OF NON-GAAP FINANCIAL MEASURES
(Continued)
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 Net Income (Loss) Attributable to
Lions Gate Entertainment Corp. Shareholders and Adjusted EPS are
considered important measures of the Company's business operations
as, similar to Adjusted OIBDA, these measures eliminate amounts
that, in management's opinion, do not necessarily reflect the
fundamental performance of the Company's businesses.
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 due to differences in the
methods of calculation and excluded items.
A general limitation of these non-GAAP financial measures is
that they are not prepared in accordance with U.S. generally
accepted accounting principles. 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. Reconciliations of the adjusted metrics
utilized to their corresponding GAAP metrics are provided
below.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF OPERATING INCOME
(LOSS)
TO ADJUSTED OIBDA
The following table reconciles the GAAP measure, operating
income (loss) to the non-GAAP measure, Adjusted OIBDA:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Amounts in
millions)
|
Operating income
(loss)
|
$
|
80.2
|
|
|
$
|
(7.4)
|
|
|
$
|
200.3
|
|
|
$
|
(87.6)
|
|
Adjusted depreciation
and amortization(1)
|
9.8
|
|
|
4.8
|
|
|
29.2
|
|
|
13.1
|
|
Restructuring and
other(2)
|
21.4
|
|
|
54.0
|
|
|
35.8
|
|
|
72.4
|
|
Adjusted share-based
compensation expense(3)
|
24.2
|
|
|
21.5
|
|
|
71.6
|
|
|
50.0
|
|
Purchase accounting
and related adjustments(4)
|
42.0
|
|
|
12.9
|
|
|
130.8
|
|
|
24.7
|
|
Adjusted
OIBDA
|
$
|
177.6
|
|
|
$
|
85.8
|
|
|
$
|
467.7
|
|
|
$
|
72.6
|
|
|
|
______________
|
(1)
|
Adjusted depreciation
and amortization represents depreciation and amortization as
presented on our consolidated statements of income less the
depreciation and amortization related to the non-cash fair value
adjustments to property and equipment and intangible assets
acquired in the acquisition of Starz and Pilgrim Media Group which
are included in the purchase accounting and related adjustments
line item above, as shown in the table below:
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Amounts in
millions)
|
Depreciation and
amortization
|
$
|
39.7
|
|
|
$
|
13.2
|
|
|
$
|
119.0
|
|
|
$
|
23.1
|
|
Less: Amount included
in purchase accounting and related adjustments
|
(29.9)
|
|
|
(8.4)
|
|
|
(89.8)
|
|
|
(10.0)
|
|
Adjusted depreciation
and amortization
|
$
|
9.8
|
|
|
$
|
4.8
|
|
|
$
|
29.2
|
|
|
$
|
13.1
|
|
|
|
|
(2)
|
Restructuring and
other includes restructuring and severance costs, certain
transaction and related costs, and certain unusual items, when
applicable, as shown in the table below:
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Amounts in
millions)
|
Restructuring and
other:
|
|
|
|
|
|
|
|
Severance(a)
|
|
|
|
|
|
|
|
Cash
|
$
|
9.1
|
|
|
$
|
21.6
|
|
|
$
|
10.1
|
|
|
$
|
23.6
|
|
Accelerated vesting
on equity awards
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
2.4
|
|
Total severance
costs
|
12.0
|
|
|
21.6
|
|
|
13.0
|
|
|
26.0
|
|
Transaction and
related costs(b)
|
1.0
|
|
|
32.4
|
|
|
14.4
|
|
|
46.4
|
|
Development
expense(c)
|
8.4
|
|
|
—
|
|
|
8.4
|
|
|
—
|
|
|
$
|
21.4
|
|
|
$
|
54.0
|
|
|
$
|
35.8
|
|
|
$
|
72.4
|
|
|
|
|
|
__________________
|
|
(a)
|
Severance costs in
the three and nine months ended December 31, 2017 were primarily
related to the restructuring of the Motion Pictures business in
connection with the acquisition of Good Universe and additional
workforce reductions in connection with the Starz Merger.
Severance costs in the three and nine months ended December 31,
2016 were primarily related to workforce reductions for
redundancies in connection with the Starz Merger.
|
|
(b)
|
Transaction and
related costs in the three and nine months ended December 31, 2017
and 2016 reflect transaction, integration and legal costs
associated with certain strategic transactions, including the Starz
Merger and the sale of EPIX. These costs include the legal fees
associated with the class action lawsuits and certain other legal
matters.
|
|
(c)
|
Development expense
in the three and nine months ended December 31, 2017 represents
write-downs resulting from the restructuring of the Motion Pictures
business in connection with the acquisition of Good Universe and
new management's decisions around the creative direction on certain
development projects which were abandoned in the
quarter.
|
(3)
|
Adjusted share-based
compensation represents share-based compensation excluding amounts
related to immediately vested stock awards granted as part of the
Company's annual bonus program (which are, when granted, included
in segment and corporate general and administrative expense) and
excludes share-based compensation included in restructuring and
other. The following table reconciles total share-based
compensation expense to adjusted share-based compensation
expense:
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Amounts in
millions)
|
Share-based
compensation
|
$
|
27.1
|
|
|
$
|
28.2
|
|
|
$
|
74.5
|
|
|
$
|
74.4
|
|
Less:
|
|
|
|
|
|
|
|
Bonus related
share-based compensation included in segment and corporate general
and administrative expense(a)
|
—
|
|
|
(6.7)
|
|
|
—
|
|
|
(22.0)
|
|
Amount included in
restructuring and other(b)
|
(2.9)
|
|
|
—
|
|
|
(2.9)
|
|
|
(2.4)
|
|
Adjusted share-based
compensation
|
$
|
24.2
|
|
|
$
|
21.5
|
|
|
$
|
71.6
|
|
|
$
|
50.0
|
|
|
|
|
|
|
|
(a)
|
Adjusted OIBDA is
reduced by bonus expense whether such amounts are cash-based
bonuses or immediately vested stock awards granted as part of our
annual bonus program.
|
|
(b)
|
Represents
share-based compensation expense included in restructuring and
other expenses reflecting the impact of the acceleration of certain
vesting schedules for equity awards pursuant to certain severance
arrangements.
|
(4)
|
Purchase accounting
and related adjustments represent the amortization of non-cash fair
value adjustments to certain assets acquired in the acquisition of
Starz, Pilgrim Media Group and Good Universe. The following sets
forth the amounts included in each line item in the financial
statements:
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Amounts in
millions)
|
Purchase accounting
and related adjustments:
|
|
|
|
|
|
|
|
Direct
operating
|
$
|
10.4
|
|
|
$
|
3.2
|
|
|
$
|
36.5
|
|
|
$
|
10.9
|
|
General and
administrative expense
|
1.7
|
|
|
1.3
|
|
|
4.5
|
|
|
3.8
|
|
Depreciation and
amortization
|
29.9
|
|
|
8.4
|
|
|
89.8
|
|
|
10.0
|
|
|
$
|
42.0
|
|
|
$
|
12.9
|
|
|
$
|
130.8
|
|
|
$
|
24.7
|
|
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF PRO FORMA COMBINED OPERATING
INCOME
TO PRO FORMA COMBINED ADJUSTED OIBDA
The reconciliation of pro forma combined operating income to pro
forma combined Adjusted OIBDA is as follows:
|
PRO FORMA
COMBINED
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited,
amounts in millions)
|
Operating
income
|
$
|
80.2
|
|
|
$
|
52.7
|
|
|
$
|
200.3
|
|
|
$
|
152.5
|
|
Adjusted depreciation
and amortization(1)
|
9.8
|
|
|
8.1
|
|
|
29.2
|
|
|
27.3
|
|
Restructuring and
other(2)
|
21.4
|
|
|
76.9
|
|
|
35.8
|
|
|
106.8
|
|
Adjusted share-based
compensation expense(3)
|
24.2
|
|
|
26.9
|
|
|
71.6
|
|
|
68.9
|
|
Purchase accounting
and related adjustments(4)
|
42.0
|
|
|
12.9
|
|
|
130.8
|
|
|
24.7
|
|
Adjusted
OIBDA
|
$
|
177.6
|
|
|
$
|
177.5
|
|
|
$
|
467.7
|
|
|
$
|
380.2
|
|
|
|
_____________
|
(1)
|
Adjusted depreciation
and amortization represents depreciation and amortization as
presented on our condensed consolidated statements of income less
the depreciation and amortization related to the non-cash fair
value adjustments to property and equipment and intangible assets
acquired in the acquisition of Starz and Pilgrim Media Group which
are included in the purchase accounting and related adjustments
line item above.
|
|
PRO FORMA
COMBINED
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited,
amounts in millions)
|
Depreciation and
amortization
|
$
|
39.7
|
|
|
$
|
16.5
|
|
|
$
|
119.0
|
|
|
$
|
37.3
|
|
Less: Amount included
in purchase accounting and related adjustments
|
(29.9)
|
|
|
(8.4)
|
|
|
(89.8)
|
|
|
(10.0)
|
|
Adjusted depreciation
and amortization
|
$
|
9.8
|
|
|
$
|
8.1
|
|
|
$
|
29.2
|
|
|
$
|
27.3
|
|
|
|
(2)
|
Restructuring and
other includes restructuring and severance costs, certain
transaction and related costs, and certain unusual items, when
applicable.
|
(3)
|
Adjusted share-based
compensation represents share-based compensation excluding amounts
related to immediately vested stock awards granted as part of the
Company's annual bonus program (which are, when granted, included
in segment and corporate general and administrative expense) and
excludes share-based compensation included in restructuring and
other. The following table reconciles share-based compensation
expense to adjusted share-based compensation expense:
|
|
PRO FORMA
COMBINED
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited,
amounts in millions)
|
Share-based
compensation
|
$
|
27.1
|
|
|
$
|
33.6
|
|
|
$
|
74.5
|
|
|
$
|
93.3
|
|
Less:
|
|
|
|
|
|
|
|
Bonus related
share-based compensation included in segment and corporate general
and administrative expense(a)
|
—
|
|
|
(6.7)
|
|
|
—
|
|
|
(22.0)
|
|
Amount included in
restructuring and other(b)
|
(2.9)
|
|
|
—
|
|
|
(2.9)
|
|
|
(2.4)
|
|
Adjusted share-based
compensation
|
$
|
24.2
|
|
|
$
|
26.9
|
|
|
$
|
71.6
|
|
|
$
|
68.9
|
|
|
|
|
|
(a)
|
Adjusted OIBDA is
reduced by bonus expense whether such amounts are cash-based
bonuses or immediately vested stock awards granted as part of our
annual bonus program.
|
|
(b)
|
Represents
share-based compensation expense included in restructuring and
other expenses reflecting the impact of the acceleration of certain
vesting schedules for equity awards pursuant to certain severance
arrangements.
|
(4)
|
Purchase accounting
and related adjustments represent the amortization of non-cash fair
value adjustments to certain assets acquired in the acquisition of
Starz, Pilgrim Media Group and Good Universe. The following sets
forth the amounts included in each line item in the financial
statements:
|
|
PRO FORMA
COMBINED
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited,
amounts in millions)
|
Purchase accounting
and related adjustments:
|
|
|
|
|
|
|
|
Direct
operating
|
$
|
10.4
|
|
|
$
|
3.2
|
|
|
$
|
36.5
|
|
|
$
|
10.9
|
|
General and
administrative expense
|
1.7
|
|
|
1.3
|
|
|
4.5
|
|
|
3.8
|
|
Depreciation and
amortization
|
29.9
|
|
|
8.4
|
|
|
89.8
|
|
|
10.0
|
|
|
$
|
42.0
|
|
|
$
|
12.9
|
|
|
$
|
130.8
|
|
|
$
|
24.7
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
RECONCILIATION OF
NET INCOME (LOSS) ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP.
SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO LIONS GATE
ENTERTAINMENT CORP. SHAREHOLDERS, AND ADJUSTED BASIC AND DILUTED
EPS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Amounts in
millions)
|
Reported Net
Income (Loss) Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
|
193.0
|
|
|
$
|
(30.6)
|
|
|
$
|
382.3
|
|
|
$
|
(46.8)
|
|
Adjusted share-based
compensation expense(1)
|
24.2
|
|
|
21.5
|
|
|
71.6
|
|
|
50.0
|
|
Restructuring and
other
|
21.4
|
|
|
54.0
|
|
|
35.8
|
|
|
72.4
|
|
Purchase accounting
and related adjustments(2)
|
41.5
|
|
|
12.9
|
|
|
129.3
|
|
|
24.7
|
|
Loss on
extinguishment of debt
|
6.2
|
|
|
28.3
|
|
|
24.2
|
|
|
28.3
|
|
Gain on sale of
equity interest in EPIX
|
—
|
|
|
—
|
|
|
(201.0)
|
|
|
—
|
|
Gain on Starz
investment
|
—
|
|
|
(20.4)
|
|
|
—
|
|
|
(20.4)
|
|
Impairment of
long-term investments and other assets
|
29.2
|
|
|
—
|
|
|
29.2
|
|
|
—
|
|
Tax impact of above
items(3)
|
(41.6)
|
|
|
(29.0)
|
|
|
(23.1)
|
|
|
(48.0)
|
|
Impact of corporate
tax rate change on net deferred tax
liabilities(4)
|
(165.0)
|
|
|
—
|
|
|
(165.0)
|
|
|
—
|
|
Noncontrolling
interest impact of above items
|
(2.0)
|
|
|
(2.0)
|
|
|
(6.4)
|
|
|
(6.4)
|
|
Adjusted Net
Income Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
|
106.9
|
|
|
$
|
34.7
|
|
|
$
|
276.9
|
|
|
$
|
53.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Basic
EPS
|
$
|
0.92
|
|
|
$
|
(0.19)
|
|
|
$
|
1.84
|
|
|
$
|
(0.31)
|
|
Impact of adjustments
on basic earnings per share
|
(0.41)
|
|
|
0.41
|
|
|
(0.51)
|
|
|
0.66
|
|
Adjusted Basic
EPS
|
$
|
0.51
|
|
|
$
|
0.22
|
|
|
$
|
1.33
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Diluted
EPS
|
$
|
0.87
|
|
|
$
|
(0.19)
|
|
|
$
|
1.74
|
|
|
$
|
(0.31)
|
|
Impact of adjustments
on diluted earnings per share
|
(0.39)
|
|
|
0.39
|
|
|
(0.48)
|
|
|
0.65
|
|
Adjusted Diluted
EPS(5)
|
$
|
0.48
|
|
|
$
|
0.20
|
|
|
$
|
1.26
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
Adjusted weighted
average number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
208.8
|
|
|
161.4
|
|
|
207.8
|
|
|
152.2
|
|
Diluted
|
221.6
|
|
|
175.4
|
|
|
219.6
|
|
|
158.3
|
|
|
|
_________________
|
(1)
|
Represents
share-based compensation expense excluding amounts attributable to
bonus awards (which are, when granted, included in segment and
corporate general and administrative expense) and excluding amounts
related to severance awards included in restructuring and other.
See the table under footnote (3) to the reconciliation of operating
income to Adjusted OIBDA for a reconciliation of share-based
compensation expense to adjusted share-based compensation
expense.
|
(2)
|
Represents the
amounts included in Adjusted OIBDA net of interest income on the
amortization of non-cash fair value adjustments to capital lease
obligations acquired in the acquisition of Starz.
|
(3)
|
Represents the tax
impact of the adjustments to net income (loss) attributable to
Lions Gate Entertainment Corp. shareholders, calculated using the
blended statutory tax rate applicable to each
adjustment.
|
(4)
|
Represents a deferred
tax benefit resulting from the impact of the change in the U.S.
federal corporate income tax rate from 35% to 21% under the Tax
Cuts and Jobs Act on our net deferred tax liabilities.
|
(5)
|
Adjusted diluted net
income attributable to Lions Gate Entertainment Corp. shareholders
for diluted EPS includes the add-back of interest expense on the
convertible notes, net of tax assuming conversion of the notes at
the beginning of each period presented when dilutive.
|
LIONS GATE
ENTERTAINMENT CORP.
RECONCILIATION OF
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
TO FREE CASH
FLOW
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Amounts in
millions)
|
Net Cash Flows
Provided By Operating Activities
|
$
|
32.7
|
|
|
$
|
221.3
|
|
|
$
|
372.1
|
|
|
$
|
415.7
|
|
Capital
expenditures
|
(7.1)
|
|
|
(9.5)
|
|
|
(28.4)
|
|
|
(15.8)
|
|
Net borrowings under
and (repayment) of production loans
|
114.3
|
|
|
(171.2)
|
|
|
32.3
|
|
|
(392.7)
|
|
Free Cash Flow, as
defined
|
$
|
139.9
|
|
|
$
|
40.6
|
|
|
$
|
376.0
|
|
|
$
|
7.2
|
|
|
|
|
|
|
|
|
|
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SOURCE Lionsgate