Lionsgate Reports Record Revenues of $343.5 Million and Net Loss of $56.2 Million for Second Quarter of Fiscal 2008



    
    Company Reports Positive Free Cash Flow of $21.5 Million for the Second
    Quarter
    

    SANTA MONICA, Calif. and VANCOUVER, BC, Nov. 9 /CNW/ -- Lionsgate (NYSE:  
LGF), the leading independent filmed entertainment studio, reported record
high quarterly revenues of $343.5 million and a net loss of $56.2 million for
its fiscal quarter ended September 30, 2007, the Company announced today. The
Company noted that revenue growth was driven by strong theatrical box office
results and television production revenue gains in the quarter.
    Lionsgate reported basic and diluted net loss per common share of $0.47
on 119.2 million weighted average common shares outstanding.  The Company
noted that its loss in the quarter was driven by $122.5 million in theatrical
marketing spend expensed in the quarter.
    "This was a very strong quarter for all of our businesses, most notably
our theatrical business, whose positive contributions will be more fully
reflected in future quarters," said Lionsgate Co-Chairman and Chief Executive
Officer Jon Feltheimer. "We were pleased not only with our strong performance
at the North American box office, but with our robust library and home
entertainment revenues and continued momentum in our television production and
international businesses as well. Our record revenues for the quarter show
that we're doing exactly what we should be doing as a growth company."
    The Company's filmed entertainment backlog of $315.8 million exceeded
$300 million for the fifth consecutive quarter.
    Overall motion picture revenue for the quarter was $234.4 million. 
Within this segment, theatrical revenue was $42.4 million. Lionsgate had three
consecutive significant theatrical releases in the quarter with War, 3:10 To
Yuma and Good Luck, Chuck. The Company's successful releases continued with
Tyler Perry's Why Did I Get Married? and Saw 4 after the close of the quarter.
    Lionsgate's home entertainment revenue was $122.3 million in the second
quarter as several Lionsgate releases, including The Condemned and Delta
Farce, significantly overindexed their theatrical box office performance.
Other significant DVD releases in the quarter included Bug, continuing sales
of Pride, Bratz Kidz: Sleepover Adventure and Dr. Strange, the fourth release
in Lionsgate's direct-to-video partnership with Marvel.
    Television revenue included in the motion picture segment was $37.3
million in the second quarter, primarily attributable to several strong
theatrical titles with television windows opening recently, including Tyler
Perry's Diary of A Mad Black Woman, Crank, Saw 3 and Employee of The Month.
    International revenue was $31.1 million in the second quarter, driven by
strong foreign sales and overages of Saw 3, Saw 2 and War as well as strong
revenue performances by the Company's motion pictures and third-party product
distributed by Lionsgate U.K., including 3:10 To Yuma, Saw 3, Academy Award(R)
Best Foreign Language winner The Lives of Others and The Hamiltons.
    Television production revenue was $109.1 million in the second quarter,
driven by deliveries of episodes of the sixth broadcast season of The Dead
Zone (USA), the fourth season of Wildfire (ABC Family), the third season of
Weeds (Showtime), the first season of Mad Men (AMC) and domestic series
licensing of Tyler Perry's House of Payne, South Park and other television
programming from the Company's wholly-owned television syndication subsidiary
Debmar-Mercury LLC.
    Lionsgate senior management will hold its analyst and investor conference
call to discuss its fiscal 2008 second quarter financial results at 9:00 A.M.
ET/6:00 A.M. PT, Monday, November 12, 2007. Interested parties may participate
live in the conference call by calling 1-800-230-1059 (1-612-234-9959 outside
the U.S. and Canada). A full digital replay will be available from Monday
afternoon, November 12, through Monday, November 19, by dialing 1-800-475-6701
(1-320-365-3844 outside the U.S. and Canada) and using access code 891844.
    Lionsgate is the leading independent filmed entertainment studio, winning
the 2006 Best Picture Academy Award(R) for Crash, and the Company is a premier
producer and distributor of motion pictures, television programming, home
entertainment, family entertainment and video-on-demand content. Its
prestigious and prolific library of nearly 12,000 motion picture titles and
television episodes is a valuable source of recurring revenue and a foundation
for the growth of the Company's core businesses. The Lionsgate brand is
synonymous with original, daring, quality entertainment in markets around the
globe.
    www.lionsgate.com

    For further information, contact:

    
     Peter D. Wilkes
     Lionsgate
     310-255-3726
     pwilkes@lionsgate.com
    

    
     Kelli Easterling
     Lionsgate
     310-255-4929
     keasterling@lionsgate.com
    
    The matters discussed in this press release include forward-looking
statements, including those regarding the timing of our upcoming film slate,
the expansion of our television business and the success of our fiscal 2008.
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, budget overruns, limitations imposed by our credit
facilities, unpredictability of the commercial success of our motion pictures
and television programming, the cost of defending our intellectual property,
difficulties in integrating acquired businesses, technological changes and
other trends affecting the entertainment industry, and the risk factors as set
forth in Lionsgate's Quarterly Report on Form 10-Q, filed with the Securities
and Exchange Commission on November 9, 2007, and Lionsgate's Annual Report on
Form 10-K, filed with the Securities and Exchange Commission on May 30, 2007.
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.

    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

    
                                                September 30,        March 31,
                                                    2007               2007
                                                (Unaudited)
                                                     (Amounts in thousands,
                                                      except share amounts)
                                      ASSETS
    Cash and cash equivalents                     $158,865            $51,497
    Restricted cash                                 12,363              4,915
    Investments - auction rate securities           30,000            237,379
    Investments - equity securities                    104                125
    Accounts receivable, net of reserve
     for video returns and allowances of
     $70,017 (March 31, 2007 - $77,691) and
     provision for doubtful accounts of
     $5,757 (March 31, 2007 - $6,345)              209,457            130,496
    Investment in films and television programs    633,024            493,140
    Property and equipment                          14,120             13,095
    Goodwill                                       224,567            187,491
    Other assets                                    52,725             18,957
                                                $1,335,225         $1,137,095
    

    
                                   LIABILITIES
    Accounts payable and accrued liabilities       $253,368          $155,617
    Participation and residuals                     293,622           171,156
    Film obligations                                211,652           167,884
    Subordinated notes and other
     financing obligations                          328,718           325,000
    Deferred revenue                                 92,283            69,548
                                                  1,179,643           889,205
    

    Commitments and contingencies

    
                               SHAREHOLDERS' EQUITY
    Common shares, no par value, 500,000,000 shares
     authorized, 120,317,891 and 116,970,280 shares
     issued and outstanding at September 30, 2007
     and March 31, 2007, respectively              423,841            398,836
    Series B preferred shares (10 shares
     issued and outstanding)                           -                  -
    Accumulated deficit                           (258,983)          (149,651)
    Accumulated other comprehensive income (loss)    1,460             (1,295)
                                                   166,318            247,890
    Treasury shares, no par value,
     1,169,835 shares at September 30, 2007        (10,736)               -
                                                   155,582            247,890
                                                $1,335,225         $1,137,095
    



    LIONS GATE ENTERTAINMENT CORP.

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    
                                       Three     Three
                                       Months    Months  Six Months Six Months
                                       Ended     Ended      Ended     Ended
                                     September September  September September
                                        30,       30,        30,       30,
                                        2007      2006      2007       2006
                                          (Amounts in thousands, except
                                                per share amounts)
    

    
    Revenues                          $343,505  $218,169   $542,247  $390,625
    Expenses:
      Direct operating                 182,487    94,723    269,545   163,268
      Distribution and marketing       189,012   113,345    324,513   200,391
      General and administration        25,869    21,727     52,709    40,960
      Depreciation                         989       581      1,897     1,125
        Total expenses                 398,357   230,376    648,664   405,744
    Operating loss                     (54,852)  (12,207)  (106,417)  (15,119)
    Other expenses (income):
      Interest expense                   4,213     4,904      8,073     9,580
      Interest and other income         (2,646)   (2,286)    (6,449)   (4,847)
      Gain on sale on equity
       securities                       (2,785)      -       (2,785)      -
        Total other expenses
         (income), net                  (1,218)    2,618     (1,161)    4,733
    Loss before equity interests and
     income taxes                      (53,634)  (14,825)  (105,256)  (19,852)
    Equity interests loss               (1,187)     (435)    (1,994)     (377)
    Loss before income taxes           (54,821)  (15,260)  (107,250)  (20,229)
    Income tax provision (benefit)       1,393      (868)     2,082    (2,233)
    Net loss                          $(56,214) $(14,392) $(109,332) $(17,996)
    

    
    Basic and Diluted Net Loss Per
     Common Share                       $(0.47)   $(0.14)    $(0.93)   $(0.17)
    



    LIONS GATE ENTERTAINMENT CORP.

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    
                                               Six Months         Six Months
                                                 Ended               Ended
                                              September 30,      September 30,
                                                  2007               2006
                                                  (Amounts in thousands)
    Operating Activities:
    Net loss                                     $(109,332)          $(17,996)
    Adjustments to reconcile net loss
     to net cash provided by (used in)
     operating activities
      Depreciation of property and equipment         1,897              1,125
      Amortization of deferred financing costs       1,771              1,957
      Amortization of films and television
       programs                                    175,619             81,998
      Amortization of intangible assets                325                488
      Non-cash stock-based compensation              6,677              2,490
      Gain on sale of equity securities             (2,711)               -
      Equity interests loss                          1,994                377
    Changes in operating assets and liabilities:
      Restricted cash                                  359             (1,724)
      Accounts receivable, net                     (81,272)            99,804
      Investment in films and television programs (247,216)          (164,071)
      Other assets                                  (2,736)             5,543
      Accounts payable and accrued liabilities      69,164            (34,039)
      Unpresented bank drafts                          -              (14,772)
      Participation and residuals                  115,726            (16,075)
      Film obligations                              (6,846)            43,361
      Deferred revenue                              18,028             22,316
    Net Cash Flows Provided By (Used
     In) Operating Activities                      (58,553)            10,782
    Investing Activities:
    Purchases of investments - auction
     rate securities                              (207,266)          (296,043)
    Proceeds from the sale of
     investments - auction rate securities         414,641            316,375
    Purchases of investments - equity securities    (4,672)               -
    Proceeds from the sale of
     investments - equity securities                23,782                -
    Acquisition of Mandate, net of unrestricted
     cash acquired                                 (40,850)               -
    Acquisition of Debmar, net of unrestricted
     cash acquired                                     -              (24,112)
    Investment in equity method investees           (6,465)               -
    Loan to equity method investee                  (3,059)               -
    Purchases of property and equipment             (2,385)            (3,537)
    Net Cash Flows Provided By (Used
     In) Investing Activities                      173,726             (7,317)
    Financing Activities:
    Exercise of stock options                          745              2,429
    Repurchases of common shares                   (10,736)               -
    Borrowings under financing arrangements          3,718                -
    Net Cash Flows Provided By (Used
     In) Financing Activities                       (6,273)             2,429
    Net Change In Cash And Cash Equivalents        108,900              5,894
    Foreign Exchange Effects on Cash                (1,532)              (110)
    Cash and Cash Equivalents -
     Beginning Of Period                            51,497             46,978
    Cash and Cash Equivalents - End Of Period     $158,865            $52,762
    



    LIONS GATE ENTERTAINMENT CORP.

    
                   RECONCILIATION OF NET CASH FLOWS USED IN
                    OPERATING ACTIVITIES TO FREE CASH FLOW
    

    
                                         Three Months Ended  Six Months Ended
                                           September 30,      September 30,
                                           2007     2006      2007     2006
                                                (Amounts in thousands)
    Net Cash Flows Provided By (Used In)
     Operating Activities                 $21,818  $25,806  $(58,553) $10,782
      Purchases of property and equipment    (368)  (1,706)   (2,385)  (3,537)
      Decrease in Unpresented Bank Drafts     -        -         -     14,772
    Free Cash Flow, as defined            $21,450  $24,100  $(60,938) $22,017
    
    Free cash flow is defined as net cash flows provided by or used in
operating activities less purchases of property and equipment and unpresented
bank drafts. Unpresented bank drafts represent checks issued and not yet
presented for payment in excess of the cash balances at custodial banks. The
applicable bank accounts are funded at the time the checks are presented for
payment.
    Free cash flow is a non-GAAP financial measure as defined in Regulation G
promulgated by the Securities and Exchange Commission. This non-GAAP financial
measure is in addition to, not a substitute for, or superior to, measures of
financial performance prepared in accordance with Generally Accepted
Accounting Principles.
    Management believes this non-GAAP measure provides useful information to
investors regarding cash that our operating businesses generate 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.




For further information:

For further information: Peter D. Wilkes, +1-310-255-3726, 
pwilkes@lionsgate.com, or Kelli Easterling, +1-310-255-4929, 
keasterling@lionsgate.com, both of Lionsgate Web Site:
http://www.lionsgate.com/


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