SANTA MONICA, Calif.,
and VANCOUVER, British
Columbia, Aug. 8, 2019
/PRNewswire/ -- Global content leader Lionsgate (NYSE: LGF.A,
LGF.B) today reported revenue of $963.6 million and net loss
attributable to Lionsgate shareholders of $54.0 million, or
fully diluted net loss per share of $0.25, on 216.1 million
diluted weighted average common shares outstanding for the quarter
ended June 30, 2019. Adjusted net
loss attributable to Lionsgate shareholders was $3.3 million, or adjusted diluted net loss per
share of $0.02, operating loss was
$3.2 million, and adjusted OIBDA was
$67.3 million. The Company
generated cash flow from operations of $37.3
million and adjusted free cash flow of $24.0 million in the quarter.
Starz ended the quarter with 26.5 million total global
subscribers, up 2.6 million from the prior year quarter, and 24.4
million total domestic subscribers. Starz domestic OTT subscribers
grew 400,000 sequentially to 4.4 million, its third best subscriber
growth quarter ever.
"We're pleased to report strong financial results in the quarter
and a great start to the fiscal year," said Lionsgate Chief
Executive Officer Jon
Feltheimer. "All of our businesses are performing
well. Our Television Group had its best development season
ever, John Wick: Chapter 3
reaffirmed our thesis that mid-priced action films have a valuable
place in the market, and STARZ achieved strong growth in its
domestic OTT business while continuing to expand its premium SVOD
platform around the world."
Segment Results
Media Networks segment revenues increased by 4.9% to
$372.4 million driven by strong OTT
subscriber growth. Segment profits for our domestic Starz Networks
business increased by 3.4% to $103.7
million which was offset by our continued investment in our
premium international OTT service, STARZPLAY. As a result of this
investment in STARZPLAY, overall segment profit declined from the
prior year quarter to $60.6 million.
Starz ended the quarter with 26.5 million total global subscribers
and 24.4 million total domestic subscribers. Starz domestic OTT
subscribers were up 400,000 sequentially.
Motion Picture segment revenues increased by 8.9% to
$397.8 million in the quarter due to
the strong theatrical performance of John Wick: Chapter 3 -- Parabellum, which
has grossed over $320 million at the
worldwide box office to date. Segment profits declined from
the prior year quarter to $7.6
million reflecting an increase in P&A spend associated
with a greater number of theatrical releases during the quarter
relative to the prior year.
Television Production segment revenues of $279.8 million were largely in line with the
prior year quarter while segment profits increased 60.3% to
$25.0 million driven by the timing of
episodic deliveries for certain series.
Lionsgate senior management will hold its analyst and investor
conference call to discuss its fiscal 2020 first quarter results at
5:00 PM ET/2:00 PM PT this
afternoon, August 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/lgf190808ZOzQ61Jo.html. A
full replay will become available later this afternoon 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 nearly 17,000-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
and increased costs required to produce and market 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; other trends affecting the
entertainment industry; and the other risk factors as set forth in
Lionsgate's Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission on August 8,
2019. 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 June 30, 2019, which will be
posted on the Company's website at
http://investors.lionsgate.com/financial-reports/sec-filings, when
filed with the Securities and Exchange Commission. Trending
schedules containing certain financial information will also be
available at
http://investors.lionsgate.com/governance/governance-documents.
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
(Unaudited,
amounts in millions)
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
|
196.0
|
|
|
$
|
184.3
|
|
|
Accounts receivable,
net
|
710.6
|
|
|
647.2
|
|
|
Program
rights
|
274.3
|
|
|
295.7
|
|
|
Other current
assets
|
178.6
|
|
|
267.2
|
|
|
Total current
assets
|
1,359.5
|
|
|
1,394.4
|
|
|
Investment in films
and television programs and program rights, net
|
1,619.5
|
|
|
1,672.0
|
|
|
Property and
equipment, net
|
152.0
|
|
|
155.3
|
|
|
Investments
|
28.6
|
|
|
26.2
|
|
|
Intangible
assets
|
1,843.3
|
|
|
1,871.6
|
|
|
Goodwill
|
2,833.5
|
|
|
2,833.5
|
|
|
Other
assets
|
600.9
|
|
|
436.1
|
|
|
Deferred tax
assets
|
—
|
|
|
19.8
|
|
|
Total
assets
|
$
|
8,437.3
|
|
|
$
|
8,408.9
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
539.8
|
|
|
$
|
531.2
|
|
|
Participations and
residuals
|
488.0
|
|
|
408.5
|
|
|
Film obligations and
production loans
|
469.3
|
|
|
512.6
|
|
|
Debt - short term
portion
|
57.4
|
|
|
53.6
|
|
|
Deferred
revenue
|
144.8
|
|
|
146.5
|
|
|
Total current
liabilities
|
1,699.3
|
|
|
1,652.4
|
|
|
Debt
|
2,837.6
|
|
|
2,850.8
|
|
|
Participations and
residuals
|
378.2
|
|
|
479.8
|
|
|
Film obligations and
production loans
|
145.6
|
|
|
143.1
|
|
|
Other
liabilities
|
282.2
|
|
|
114.0
|
|
|
Deferred
revenue
|
67.6
|
|
|
62.8
|
|
|
Deferred tax
liabilities
|
36.9
|
|
|
56.5
|
|
|
Redeemable
noncontrolling interest
|
134.9
|
|
|
127.6
|
|
|
Commitments and
contingencies
|
|
|
|
|
EQUITY
|
|
|
|
|
Class A voting common
shares, no par value, 500.0 shares authorized, 82.6 shares issued
(March 31, 2019 - 82.5 shares issued)
|
651.2
|
|
|
649.7
|
|
|
Class B non-voting
common shares, no par value, 500.0 shares authorized, 135.0 shares
issued (March 31, 2019 - 133.5 shares issued)
|
2,176.9
|
|
|
2,140.6
|
|
|
Retained
earnings
|
149.2
|
|
|
208.7
|
|
|
Accumulated other
comprehensive loss
|
(125.3)
|
|
|
(80.3)
|
|
|
Total Lions Gate
Entertainment Corp. shareholders' equity
|
2,852.0
|
|
|
2,918.7
|
|
|
Noncontrolling
interests
|
3.0
|
|
|
3.2
|
|
|
Total
equity
|
2,855.0
|
|
|
2,921.9
|
|
|
Total liabilities and
equity
|
$
|
8,437.3
|
|
|
$
|
8,408.9
|
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions,
except per share amounts)
|
|
Revenues
|
$
|
963.6
|
|
|
$
|
932.7
|
|
|
Expenses
|
|
|
|
|
Direct
operating
|
568.0
|
|
|
530.0
|
|
|
Distribution and
marketing
|
250.5
|
|
|
203.5
|
|
|
General and
administration
|
102.6
|
|
|
110.2
|
|
|
Depreciation and
amortization
|
40.1
|
|
|
40.3
|
|
|
Restructuring and
other
|
5.6
|
|
|
10.5
|
|
|
Total
expenses
|
966.8
|
|
|
894.5
|
|
|
Operating income
(loss)
|
(3.2)
|
|
|
38.2
|
|
|
Interest
expense
|
|
|
|
|
Interest
expense
|
(49.0)
|
|
|
(35.4)
|
|
|
Interest on
dissenting shareholders' liability
|
—
|
|
|
(15.9)
|
|
|
Total interest
expense
|
(49.0)
|
|
|
(51.3)
|
|
|
Interest and other
income
|
2.8
|
|
|
3.0
|
|
|
Other
expense
|
(2.3)
|
|
|
—
|
|
|
Gain (loss) on
investments
|
0.1
|
|
|
(0.9)
|
|
|
Equity interests
loss
|
(7.9)
|
|
|
(6.2)
|
|
|
Loss before income
taxes
|
(59.5)
|
|
|
(17.2)
|
|
|
Income tax
benefit
|
1.1
|
|
|
5.8
|
|
|
Net
loss
|
(58.4)
|
|
|
(11.4)
|
|
|
Less: Net loss
attributable to noncontrolling interests
|
4.4
|
|
|
3.5
|
|
|
Net loss
attributable to Lions Gate Entertainment Corp.
shareholders
|
$
|
(54.0)
|
|
|
$
|
(7.9)
|
|
|
|
|
|
|
Per share
information attributable to Lions Gate Entertainment Corp.
shareholders:
|
|
|
|
|
Basic net loss per
common share
|
$
|
(0.25)
|
|
|
$
|
(0.04)
|
|
|
Diluted net loss
per common share
|
$
|
(0.25)
|
|
|
$
|
(0.04)
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
Basic
|
216.1
|
|
|
211.8
|
|
|
Diluted
|
216.1
|
|
|
211.8
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
—
|
|
|
$
|
0.09
|
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions)
|
|
Operating
Activities:
|
|
|
|
|
Net loss
|
$
|
(58.4)
|
|
|
$
|
(11.4)
|
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
40.1
|
|
|
40.3
|
|
|
Amortization of films
and television programs and program rights
|
436.6
|
|
|
385.5
|
|
|
Interest on
dissenting shareholders' liability
|
—
|
|
|
15.9
|
|
|
Amortization of debt
financing costs
|
4.0
|
|
|
2.9
|
|
|
Non-cash share-based
compensation
|
9.6
|
|
|
15.1
|
|
|
Other non-cash
items
|
8.3
|
|
|
3.7
|
|
|
Equity interests
loss
|
7.9
|
|
|
6.2
|
|
|
Loss (gain) on
investments
|
(0.1)
|
|
|
0.9
|
|
|
Deferred income taxes
(benefit)
|
0.2
|
|
|
(13.0)
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net and other assets
|
4.1
|
|
|
126.3
|
|
|
Investment in films
and television programs and program rights, net
|
(364.5)
|
|
|
(358.0)
|
|
|
Accounts payable and
accrued liabilities
|
3.0
|
|
|
(70.2)
|
|
|
Participations and
residuals
|
(21.9)
|
|
|
(29.4)
|
|
|
Film
obligations
|
(34.8)
|
|
|
(11.3)
|
|
|
Deferred
revenue
|
3.2
|
|
|
9.8
|
|
|
Net Cash Flows
Provided By Operating Activities
|
37.3
|
|
|
113.3
|
|
|
Investing
Activities:
|
|
|
|
|
Investment in equity
method investees
|
(0.9)
|
|
|
(2.8)
|
|
|
Business
acquisitions, net of cash acquired
|
—
|
|
|
(77.3)
|
|
|
Increase in loans
receivable
|
—
|
|
|
(4.0)
|
|
|
Capital
expenditures
|
(8.6)
|
|
|
(9.2)
|
|
|
Net Cash Flows
Used In Investing Activities
|
(9.5)
|
|
|
(93.3)
|
|
|
Financing
Activities:
|
|
|
|
|
Debt -
borrowings
|
115.0
|
|
|
2,069.5
|
|
|
Debt -
repayments
|
(128.2)
|
|
|
(2,139.7)
|
|
|
Production loans -
borrowings
|
29.9
|
|
|
100.1
|
|
|
Production loans -
repayments
|
(34.6)
|
|
|
(90.7)
|
|
|
Dividends
paid
|
—
|
|
|
(19.0)
|
|
|
Distributions to
noncontrolling interest
|
(0.3)
|
|
|
(0.8)
|
|
|
Exercise of stock
options
|
0.5
|
|
|
2.2
|
|
|
Tax withholding
required on equity awards
|
(0.3)
|
|
|
(2.5)
|
|
|
Net Cash Flows
Used In Financing Activities
|
(18.0)
|
|
|
(80.9)
|
|
|
Net Change In
Cash, Cash Equivalents and Restricted Cash
|
9.8
|
|
|
(60.9)
|
|
|
Foreign Exchange
Effects on Cash, Cash Equivalents and Restricted
Cash
|
1.9
|
|
|
(1.6)
|
|
|
Cash, Cash
Equivalents and Restricted Cash - Beginning Of
Period
|
184.3
|
|
|
378.1
|
|
|
Cash and Cash
Equivalents - End Of Period
|
$
|
196.0
|
|
|
$
|
315.6
|
|
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
Picture, (2) Television Production and (3) Media Networks.
Motion Picture. Motion Picture 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.
Television Production. 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. Television
Production includes the licensing of Starz original series
productions to Starz Networks and STARZPLAY International, and the
ancillary market distribution of Starz original productions and
licensed product. Additionally, the results of operations of 3 Arts
Entertainment is included in the Television Production segment from
the acquisition date of May 29,
2018.
Media Networks. Media Networks consists of the following
product lines (i) Starz Networks, which includes the domestic
licensing of premium subscription video programming to
distributors, and on a direct-to-consumer basis (ii) STARZPLAY
International, which represents revenues primarily from the OTT
distribution of the Company's STARZ branded premium subscription
video services internationally and (iii) Streaming Services, which
represents the Lionsgate legacy start-up direct to consumer
streaming services on its SVOD platforms.
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 (including Starz original
productions) from the Motion Picture and Television Production
segments to the Media Networks segment. While intersegment
transactions are treated like third-party transactions to determine
segment performance, the revenues (and corresponding expenses,
assets, or liabilities 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
is presented in the table below:
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions)
|
|
Segment
revenues
|
|
|
|
|
Motion
Picture
|
$
|
397.8
|
|
|
$
|
365.3
|
|
|
Television
Production
|
279.8
|
|
|
279.4
|
|
|
Media
Networks
|
372.4
|
|
|
354.9
|
|
|
Intersegment
eliminations
|
(86.4)
|
|
|
(66.9)
|
|
|
$
|
963.6
|
|
|
$
|
932.7
|
|
|
Gross
contribution
|
|
|
|
|
Motion
Picture
|
$
|
32.9
|
|
|
$
|
78.5
|
|
|
Television
Production
|
34.7
|
|
|
26.0
|
|
|
Media
Networks
|
80.9
|
|
|
114.1
|
|
|
Intersegment
eliminations
|
(1.7)
|
|
|
(11.2)
|
|
|
$
|
146.8
|
|
|
$
|
207.4
|
|
|
Segment general
and administration
|
|
|
|
|
Motion
Picture
|
$
|
25.3
|
|
|
$
|
26.9
|
|
|
Television
Production
|
9.7
|
|
|
10.4
|
|
|
Media
Networks
|
20.3
|
|
|
25.6
|
|
|
$
|
55.3
|
|
|
$
|
62.9
|
|
|
Segment
profit
|
|
|
|
|
Motion
Picture
|
$
|
7.6
|
|
|
$
|
51.6
|
|
|
Television
Production
|
25.0
|
|
|
15.6
|
|
|
Media
Networks
|
60.6
|
|
|
88.5
|
|
|
Intersegment
eliminations
|
(1.7)
|
|
|
(11.2)
|
|
|
Total segment
profit
|
$
|
91.5
|
|
|
$
|
144.5
|
|
|
Corporate general and
administrative expenses
|
(24.2)
|
|
|
(27.6)
|
|
|
Adjusted
OIBDA(1)
|
$
|
67.3
|
|
|
$
|
116.9
|
|
|
_______________
|
|
(1)
|
See "Use of Non-GAAP
Financial Measures" for the definition of Adjusted OIBDA and
reconciliation to the most directly comparable GAAP financial
measure.
|
|
|
The Company's primary
measure of segment performance is segment profit. Segment profit is
defined as gross contribution (revenues, less direct operating and
distribution and marketing expense) less segment general and
administration expenses. Segment profit excludes corporate general
and administrative expense, restructuring and other costs,
share-based compensation, other than annual bonuses granted in
immediately vested stock awards when applicable, certain
programming and content charges as a result of management changes
and associated changes in strategy, when applicable, and purchase
accounting and related adjustments, when applicable. The Company
believes the presentation of segment profit is relevant and useful
for investors because it allows investors to view segment
performance in a manner similar to the primary method used by the
Company's management and enables them to understand the fundamental
performance of the Company's businesses.
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
SEGMENT
INFORMATION (Continued)
|
|
|
The following table
sets forth segment information by product line for the Media
Networks segment for the three months ended June 30, 2019 and
2018:
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions)
|
|
Media Networks
revenue:
|
|
|
|
|
Starz
Networks
|
$
|
362.9
|
|
|
$
|
351.1
|
|
|
STARZPLAY
International
|
3.1
|
|
|
0.1
|
|
|
Streaming
Services
|
6.4
|
|
|
3.7
|
|
|
$
|
372.4
|
|
|
$
|
354.9
|
|
|
Media Networks
gross contribution:
|
|
|
|
|
Starz
Networks
|
$
|
119.4
|
|
|
$
|
123.4
|
|
|
STARZPLAY
International
|
(39.1)
|
|
|
(4.9)
|
|
|
Streaming
Services
|
0.6
|
|
|
(4.4)
|
|
|
$
|
80.9
|
|
|
$
|
114.1
|
|
|
Media Networks
general and administration:
|
|
|
|
|
Starz
Networks
|
$
|
15.7
|
|
|
$
|
23.1
|
|
|
STARZPLAY
International
|
3.1
|
|
|
1.1
|
|
|
Streaming
Services
|
1.5
|
|
|
1.4
|
|
|
$
|
20.3
|
|
|
$
|
25.6
|
|
|
Media Networks
segment profit:
|
|
|
|
|
Starz
Networks
|
$
|
103.7
|
|
|
$
|
100.3
|
|
|
STARZPLAY
International
|
(42.2)
|
|
|
(6.0)
|
|
|
Streaming
Services
|
(0.9)
|
|
|
(5.8)
|
|
|
$
|
60.6
|
|
|
$
|
88.5
|
|
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,
restructuring and other costs, and certain programming and content
charges as a result of management changes and associated changes in
strategy.
- 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 recent acquisitions. 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 the following items, when applicable: (i)
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 (ii) 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.
- Programming and content charges include charges resulting from
the implementation of changes to the Company's programming strategy
in connection with recent management changes, which are included in
direct operating expenses, when applicable.
- Purchase accounting and related adjustments primarily represent
the amortization of non-cash fair value adjustments to certain
assets acquired in recent acquisitions. These adjustments include
the accretion of the noncontrolling interest discount related to
Pilgrim Media Group and 3 Arts Entertainment, the amortization of
the recoupable portion of the purchase price and the expense
associated with the earned distributions related to 3 Arts
Entertainment, all of which are accounted for as compensation and
are included in general and administrative expense.
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.
Adjusted Free Cash Flow: Free cash flow is typically
defined as net cash flows provided by (used in) operating
activities, less capital expenditures. The Company defines Adjusted
Free Cash Flow as net cash flows provided by (used in) operating
activities, less capital expenditures, plus or minus the net
increase or decrease in production loans, plus shareholder
litigation settlement charges and interest paid. 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 Adjusted Free Cash Flow when the payments are
actually made. The adjustment for shareholder litigation settlement
and interest charges paid is to exclude the non-recurring, one-time
payment included in cash flows from operating activities that is
associated with litigation matters arising from the Starz
merger.
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. Adjusted 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
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions)
|
|
Operating income
(loss)
|
$
|
(3.2)
|
|
|
$
|
38.2
|
|
|
Adjusted depreciation
and amortization(1)
|
10.7
|
|
|
10.3
|
|
|
Restructuring and
other(2)
|
5.6
|
|
|
10.5
|
|
|
Adjusted share-based
compensation expense(3)
|
9.2
|
|
|
15.1
|
|
|
Purchase accounting
and related adjustments(4)
|
45.0
|
|
|
42.8
|
|
|
Adjusted
OIBDA
|
$
|
67.3
|
|
|
$
|
116.9
|
|
|
___________________
|
|
(1)
|
Adjusted depreciation
and amortization represents depreciation and amortization as
presented on our consolidated statements of operations less the
depreciation and amortization related to the non-cash fair value
adjustments to property and equipment and intangible assets
acquired in recent acquisitions which are included in the purchase
accounting and related adjustments line item above, as shown in the
table below:
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions)
|
|
Depreciation and
amortization
|
$
|
40.1
|
|
|
$
|
40.3
|
|
|
Less: Amount included
in purchase accounting and related adjustments
|
(29.4)
|
|
|
(30.0)
|
|
|
Adjusted depreciation
and amortization
|
$
|
10.7
|
|
|
$
|
10.3
|
|
|
|
|
(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
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions)
|
|
Restructuring and
other:
|
|
|
|
|
Severance(a)
|
|
|
|
|
Cash
|
$
|
3.8
|
|
|
$
|
0.8
|
|
|
Accelerated vesting
on equity awards
|
0.3
|
|
|
—
|
|
|
Total severance
costs
|
4.1
|
|
|
0.8
|
|
|
Transaction and
related costs(b)
|
1.5
|
|
|
9.7
|
|
|
$
|
5.6
|
|
|
$
|
10.5
|
|
|
_______________________
|
|
(a)
|
Severance costs in
the three months ended June 30, 2019 and 2018 were primarily
related to restructuring activities in connection with recent
acquisitions, and other cost-saving initiatives.
|
|
(b)
|
Transaction and
related costs in the three months ended June 30, 2019 and 2018
reflect transaction, integration and legal costs associated with
certain strategic transactions, restructuring activities and legal
matters. In the three months ended June 30, 2018, these costs
were primarily related to the legal fees associated with the Starz
class action lawsuits and other matters, and the acquisition of 3
Arts Entertainment.
|
|
(3)
|
The following table
reconciles total share-based compensation expense to adjusted
share-based compensation expense:
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions)
|
|
Total share-based
compensation expense
|
$
|
9.5
|
|
|
$
|
15.1
|
|
|
Less: Amount included
in restructuring and other(a)
|
(0.3)
|
|
|
—
|
|
|
Adjusted share-based
compensation
|
$
|
9.2
|
|
|
$
|
15.1
|
|
|
|
|
|
(a)
|
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 primarily represent the amortization of
non-cash fair value adjustments to certain assets acquired in
recent acquisitions. These adjustments include the accretion of the
noncontrolling interest discount related to Pilgrim Media Group and
3 Arts Entertainment, the amortization of the recoupable portion of
the purchase price and the expense associated with the earned
distributions related to 3 Arts Entertainment, all of which are
accounted for as compensation and are included in general and
administrative expense. The following sets forth the amounts
included in each line item in the financial statements:
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions)
|
|
Purchase accounting
and related adjustments:
|
|
|
|
|
Direct
operating
|
$
|
1.5
|
|
|
$
|
8.0
|
|
|
General and
administrative expense
|
14.1
|
|
|
4.8
|
|
|
Depreciation and
amortization
|
29.4
|
|
|
30.0
|
|
|
$
|
45.0
|
|
|
$
|
42.8
|
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
RECONCILIATION OF
NET LOSS ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP.
SHAREHOLDERS TO ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO LIONS
GATE ENTERTAINMENT CORP. SHAREHOLDERS, AND BASIC AND DILUTED EPS TO
ADJUSTED BASIC AND DILUTED EPS
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions, except
per share amounts)
|
|
Reported Net Loss
Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
|
(54.0)
|
|
|
$
|
(7.9)
|
|
|
Adjusted share-based
compensation expense(1)
|
9.2
|
|
|
15.1
|
|
|
Restructuring and
other
|
5.6
|
|
|
10.5
|
|
|
Purchase accounting
and related adjustments(2)
|
44.9
|
|
|
42.4
|
|
|
Loss (gain) on
investments
|
(0.1)
|
|
|
0.9
|
|
|
Tax impact of above
items(3)
|
(12.5)
|
|
|
(16.2)
|
|
|
Deferred tax
valuation allowance(4)
|
11.1
|
|
|
—
|
|
|
Noncontrolling
interest impact of above items
|
(7.5)
|
|
|
(4.3)
|
|
|
Adjusted Net
Income (Loss) Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
|
(3.3)
|
|
|
$
|
40.5
|
|
|
|
|
|
|
|
|
|
|
Reported Basic
EPS
|
$
|
(0.25)
|
|
|
$
|
(0.04)
|
|
|
Impact of adjustments
on basic earnings per share
|
0.23
|
|
|
0.23
|
|
|
Adjusted Basic
EPS
|
$
|
(0.02)
|
|
|
$
|
0.19
|
|
|
|
|
|
|
|
|
|
|
Reported Diluted
EPS
|
$
|
(0.25)
|
|
|
$
|
(0.04)
|
|
|
Impact of adjustments
on diluted earnings per share
|
0.23
|
|
|
0.22
|
|
|
Adjusted Diluted
EPS
|
$
|
(0.02)
|
|
|
$
|
0.18
|
|
|
|
|
|
|
Adjusted weighted
average number of common shares outstanding:
|
|
|
|
|
Basic
|
216.1
|
|
|
211.8
|
|
|
Diluted
|
216.1
|
|
|
219.7
|
|
|
_________________________
|
|
(1)
|
Represents
share-based compensation expense excluding amounts related to
severance awards included in restructuring and other. See the table
under footnote (4) to the reconciliation of operating income (loss)
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 finance lease
obligations acquired in the acquisition of Starz.
|
|
(3)
|
Represents the tax
impact of the adjustments to net income attributable to Lions Gate
Entertainment Corp. shareholders, calculated using the blended
statutory tax rate applicable to each adjustment.
|
|
(4)
|
In the three months
ended June 30, 2019, represents a charge from an increase in the
valuation allowance for certain of the Company's deferred tax
assets.
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
RECONCILIATION OF
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
|
|
|
TO ADJUSTED FREE
CASH FLOW
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
|
(Unaudited,
amounts in millions)
|
|
Net Cash Flows
Provided By Operating Activities(1)
|
$
|
37.3
|
|
|
$
|
113.3
|
|
|
Capital
expenditures
|
(8.6)
|
|
|
(9.2)
|
|
|
Net borrowings under
and (repayment) of production loans
|
(4.7)
|
|
|
9.5
|
|
|
Adjusted Free Cash
Flow
|
$
|
24.0
|
|
|
$
|
113.6
|
|
|
|
|
|
|
________________
|
|
(1)
|
Cash flows provided
by operating activities for the three months ended June 30, 2019
includes the net proceeds of approximately $41.1 million from the
monetization of trade accounts receivable program.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/lionsgate-reports-results-for-first-quarter-fiscal-2020-300899115.html
SOURCE Lionsgate