LIONSGATE REPORTS RESULTS FOR SECOND QUARTER 2016 Revenue is $476.8 Million; Net Loss is $42.1 Million or Net Loss per Share of $0.28; Adjusted EBITDA is Negative $8.1 Million

Mockingjay - Part 2, Allegiant, Orange is the New Black and Nashville Expected to Drive Film & Television Slates in Second Half of the Year

SANTA MONICA, Calif. and VANCOUVER, Nov. 9, 2015 /CNW/ -- Lionsgate (NYSE: LGF) today reported revenue of $476.8 million, adjusted EBITDA of negative $8.1 million, adjusted net loss of $28.4 million or adjusted net loss per share of $0.19, and net loss of $42.1 million or net loss per share of $0.28 for the fiscal 2016 second quarter ended September 30, 2015.

The Company's financial results in the quarter were affected by timing of episodic television deliveries and the shift of the wide release of the film Sicario into October.  Although the move contributed to the film's solid box office performance, it resulted in its marketing costs being recorded in the September quarter without significant offsetting revenue benefit.  In addition, the wide release American Ultra underperformed during the quarter.  The Company also recorded a write-down of $7.2 million on The Last Witch Hunter, a film released after the quarter.

"Although this quarter will be the lightest of the year due to timing and softer-than-anticipated performance of some of our recent film releases, our robust film and television pipelines position us for a very strong second half of the year," said Lionsgate Chief Executive Officer Jon Feltheimer.

Adjusted EBITDA of negative $8.1 million for the quarter compared to adjusted EBITDA of $59.0 million in the prior year quarter.  Adjusted net loss of $28.4 million or adjusted net loss per share of $0.19 for the quarter compared to adjusted net income of $33.0 million or adjusted EPS of $0.24 in the prior year quarter. 

Net loss for the quarter was $42.1 million or net loss per share of $0.28 on 148.3 million weighted average number of common shares outstanding compared to net income of $20.8 million or EPS of $0.15 on 137.4 million weighted average number of common shares outstanding during the prior year quarter.

Revenue of $476.8 million for the quarter compared to $552.9 million in the prior year quarter.

Lionsgate Increases Quarterly Cash Dividend

During the quarter, the Company increased its quarterly cash dividend by 29% from $0.07 to $0.09 per common share payable on November 10, 2015 to shareholders of record as of September 30, 2015.

Company Reports Combined Cash Balance and Availability of Over $970 Million and Filmed Entertainment Backlog of $1.2 Billion

The Company reported a combined cash balance and availability on its revolving credit facility of over $970 million at September 30, 2015.

Lionsgate's filmed entertainment backlog, or already contracted future revenue not yet recorded, was approximately $1.2 billion at September 30, 2015.

Overall Motion Picture segment revenue for the quarter was $354.0 million compared to $398.0 million in the prior year quarter.  Theatrical revenue declined to $26.3 million with only two wide releases in the quarter, American Ultra and Shaun the Sheep.

As noted above, the wide release of the critically-acclaimed revenge thriller Sicario was moved to October 2nd and its performance will be reflected in a third quarter that also includes the release of the eagerly-anticipated fourth installment of the Company's global blockbuster Hunger Games franchise, The Hunger Games: Mockingjay – Part 2Mockingjay 2 will roll out in 86 territories around the world on November 20th, the biggest simultaneous global launch in the Company's history.

Scheduled wide releases in the fourth quarter include the next film in the hit Divergent series, Allegiant, the visual effects-driven Gods of Egypt and the buddy comedy Dirty Grandpa, starring Robert De Niro and Zac Efron.

Lionsgate's home entertainment revenue from motion picture and television production for the quarter was $153.5 million compared to $164.4 million in the prior year quarter due to fewer wide release theatrical titles and product mix.  The hit film Insurgent performed well on packaged media, VOD and electronic sell-through during the quarter.

Television revenue included in the Motion Picture segment of $59.9 million in the quarter compared to $69.4 million in the prior year quarter.

International Motion Picture segment revenue for the quarter was $107.8 million compared to $112.9 million in the prior year quarter. 

Television production segment revenue was $122.8 million in the quarter compared to $154.9 million in the prior year quarter due to timing of episodic deliveriesDeliveries of the critically-acclaimed hit series Orange is the New Black, Nashville and The Royals are expected to drive revenue growth in the second half of the year.  The Company continues to deepen its pipeline of original new series including Casual and Freddie Wong/RocketJump for Hulu, Broke for AMC, Guilt for ABC Family and Graves for Epix.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2016 second quarter financial results at 9:00 A.M. ET/6:00 A.M. PT on Tuesday, November 10, 2015.  Interested parties may participate live in the conference call by calling 1-800-230-1059 (612-234-9959 outside the U.S. and Canada).  A full digital replay will be available from Tuesday morning, November 10, through Tuesday, November 17, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 371505.

ABOUT LIONSGATE

Lionsgate is a premier next generation global content leader with a strong and diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, digital distribution, new channel platforms, video games and international distribution and sales. The Company currently has over 30 television shows on more than 20 networks spanning its primetime production, distribution and syndication businesses, including such critically-acclaimed hits as Orange is the New Black, the multiple Emmy Award-winning drama Mad Men, the broadcast network series Nashville, the syndication success The Wendy Williams Show, the drama series Manhattan and the breakout comedy The Royals.

Its feature film business has been fueled by such successes as the blockbuster first three installments of The Hunger Games franchise, the first two installments of the Divergent franchise, Sicario, The Age of Adaline, John Wick, CBS Films/Lionsgate's The Duff, Now You See Me, Roadside Attractions' Love & Mercy and Mr. Holmes and Pantelion Films' Instructions Not Included, the highest-grossing Spanish-language film ever released in the U.S.

Lionsgate's home entertainment business is an industry leader in box office-to-DVD and box office-to-VOD revenue conversion rate. The Company handles a prestigious and prolific library of approximately 16,000 motion picture and television titles that is an important source of recurring revenue and serves as the foundation for the growth of the Company's core businesses. The Lionsgate and Summit brands remain synonymous with original, daring, quality entertainment in markets around the world.

For further information, please contact: Peter D. Wilkes 310-255-3726 pwilkes@lionsgate.com

The matters discussed in this press release include forward-looking statements, including those regarding the performance of future fiscal years.  Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the substantial investment of capital required to produce and market films and television series, increased costs for producing and marketing feature films and television series, budget overruns, limitations imposed by our credit facility and notes, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, risks related to our acquisition strategy and integration of acquired businesses, the effects of disposition of businesses or assets, technological changes and other trends affecting the entertainment industry, and the risk factors as set forth in Lionsgate's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (the "SEC") on November 9, 2015, which risk factors are incorporated herein by reference.  The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.

 

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2015

March 31, 2015

(Amounts in thousands,

except share amounts)

ASSETS

Cash and cash equivalents

$

170,417

$

102,697

Restricted cash

2,508

2,508

Accounts receivable, net of reserves for returns and allowances of $43,671 (March 31, 2015 - $64,362) and provision for doubtful accounts of $4,476 (March 31, 2015 - $4,120)

881,474

891,880

Investment in films and television programs, net

1,557,084

1,381,829

Property and equipment, net

30,094

26,651

Investments

474,290

438,298

Goodwill

323,328

323,328

Other assets

75,835

74,784

Deferred tax assets

50,196

50,114

Total assets

$

3,565,226

$

3,292,089

LIABILITIES

Senior revolving credit facility

$

$

5.25% Senior Notes

225,000

225,000

Term Loan

400,000

375,000

Accounts payable and accrued liabilities

282,412

332,473

Participations and residuals

516,673

471,661

Film obligations and production loans

904,091

656,755

Convertible senior subordinated notes

98,979

114,126

Deferred revenue

250,524

274,787

Total liabilities

2,677,679

2,449,802

Commitments and contingencies

SHAREHOLDERS' EQUITY

Common shares, no par value, 500,000,000 shares authorized, 148,504,591 shares issued (March 31, 2015 - 145,532,978 shares)

884,182

830,786

Retained earnings (accumulated deficit)

(11,405)

13,720

Accumulated other comprehensive income (loss)

14,770

(2,219)

Total shareholders' equity

887,547

842,287

Total liabilities and shareholders' equity

$

3,565,226

$

3,292,089

 

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Six Months Ended

September 30,

September 30,

2015

2014

2015

2014

(Amounts in thousands, except per share amounts)

Revenues

$

476,759

$

552,876

$

885,700

$

1,002,259

Expenses:

Direct operating

292,810

306,391

523,120

545,264

Distribution and marketing

153,140

152,877

225,064

250,198

General and administration

67,577

61,489

128,289

125,568

Depreciation and amortization

2,520

1,631

4,350

2,977

Total expenses

516,047

522,388

880,823

924,007

Operating income (loss)

(39,288)

30,488

4,877

78,252

Other expenses (income):

Interest expense

Cash interest

10,357

9,537

20,728

18,979

Amortization of debt discount and deferred financing costs

2,273

3,534

4,527

7,064

Total interest expense

12,630

13,071

25,255

26,043

Interest and other income

(555)

(547)

(1,155)

(1,565)

Loss on extinguishment of debt

586

586

Total other expenses, net

12,075

13,110

24,100

25,064

Income (loss) before equity interests and income taxes

(51,363)

17,378

(19,223)

53,188

Equity interests income

7,149

8,245

18,537

26,455

Income (loss) before income taxes

(44,214)

25,623

(686)

79,643

Income tax provision (benefit)

(2,145)

4,842

699

15,601

Net income (loss)

$

(42,069)

$

20,781

$

(1,385)

$

64,042

Basic net income (loss) per common share

$

(0.28)

$

0.15

$

(0.01)

$

0.46

Diluted net income (loss) per common share

$

(0.28)

$

0.15

$

(0.01)

$

0.44

Weighted average number of common shares outstanding:

Basic

148,345

137,380

147,984

137,942

Diluted

148,345

146,667

147,984

151,788

Dividends declared per common share

$

0.09

$

0.07

$

0.16

$

0.12

 

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

September 30,

September 30,

2015

2014

2015

2014

(Amounts in thousands)

Operating Activities:

Net income (loss)

$

(42,069)

$

20,781

$

(1,385)

$

64,042

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

2,520

1,631

4,350

2,977

Amortization of films and television programs

200,871

200,284

361,290

359,092

Amortization of debt discount and deferred financing costs

2,273

3,534

4,527

7,064

Non-cash share-based compensation

17,392

17,012

33,983

33,549

Distribution from equity method investee

1,558

7,788

Loss on extinguishment of debt

586

586

Equity interests income

(7,149)

(8,245)

(18,537)

(26,455)

Deferred income taxes

(3,403)

4,211

(2,612)

9,316

Changes in operating assets and liabilities:

Restricted cash

(1)

1,390

Accounts receivable, net

(122,166)

(85,920)

12,007

83,594

Investment in films and television programs

(219,609)

(375,168)

(535,470)

(639,019)

Other assets

686

(1,278)

(1,828)

(896)

Accounts payable and accrued liabilities

61,036

16,676

(34,300)

(78,990)

Participations and residuals

15,022

24,109

44,938

22,570

Film obligations

(1,930)

(4,324)

(11,148)

(38,913)

Deferred revenue

(41,199)

(10,749)

(24,423)

(15,632)

Net Cash Flows Used In Operating Activities

(137,725)

(195,303)

(168,608)

(207,937)

Investing Activities:

Proceeds from the sale of equity method investees

14,575

Investment in equity method investees

(2,859)

(3,000)

(3,659)

(12,650)

Purchases of other investments

(2,000)

(2,000)

Purchases of property and equipment

(3,632)

(3,068)

(6,880)

(4,495)

Net Cash Flows Used In Investing Activities

(6,491)

(8,068)

(10,539)

(4,570)

Financing Activities:

Senior revolving credit facility - borrowings

48,000

197,500

48,000

367,500

Senior revolving credit facility - repayments

(48,000)

(142,000)

(48,000)

(325,619)

Term Loan - borrowings, net of deferred financing costs of $964 for the six months ended September 30, 2015

(348)

24,036

Convertible senior subordinated notes - repurchases

(5)

(16)

Production loans - borrowings

167,858

177,753

370,945

385,706

Production loans - repayments

(38,198)

(28,576)

(112,474)

(65,435)

Repurchase of common shares

(16,875)

(126,404)

Dividends paid

(10,376)

(6,880)

(20,563)

(13,946)

Excess tax benefits on equity-based compensation awards

(45)

(1,621)

1,150

Exercise of stock options

1,335

1,257

4,453

1,663

Tax withholding required on equity awards

(2,901)

(1,889)

(18,983)

(12,136)

Net Cash Flows Provided By Financing Activities

117,325

178,669

247,409

212,463

Net Change In Cash And Cash Equivalents

(26,891)

(24,702)

68,262

(44)

Foreign Exchange Effects on Cash

758

599

(542)

621

Cash and Cash Equivalents - Beginning Of Period

196,550

50,372

102,697

25,692

Cash and Cash Equivalents - End Of Period

$

170,417

$

26,269

$

170,417

$

26,269

 

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

Three Months Ended

Six Months Ended

September 30,

September 30,

2015

2014

2015

2014(1)

(Amounts in thousands)

Net income (loss)

$

(42,069)

$

20,781

$

(1,385)

$

64,042

Depreciation and amortization

2,520

1,631

4,350

2,977

Cash interest

10,357

9,537

20,728

18,979

Noncash interest expense

2,273

3,534

4,527

7,064

Interest and other income

(555)

(547)

(1,155)

(1,565)

Income tax provision (benefit)

(2,145)

4,842

699

15,601

EBITDA

$

(29,619)

$

39,778

$

27,764

$

107,098

Stock-based compensation(2)

17,392

17,322

34,271

33,743

Restructuring and other items(3)

4,207

1,354

4,207

6,242

Start-up losses of new business initiatives(4)

2,764

3,478

Loss on extinguishment of debt

586

586

Backstopped prints and advertising expense(5)

(2,879)

(6,813)

Adjusted EBITDA(1)

$

(8,135)

$

59,040

$

62,907

$

147,669

(1)

The definition of Adjusted EBITDA now includes the gains or losses from the sale of equity method investments.  Accordingly, Adjusted EBITDA for the six months ended September 30, 2014 has been revised to include the $11.4 million gain on the sale of the Company's interest in FEARnet which occurred April 2014. Prior to the sale of FEARnet, the Company recognized cumulative equity interest losses before income taxes of approximately $11.7 million from its interest in FEARnet.

(2)

Stock-based compensation represents compensation expenses associated with stock options, restricted share units and cash and equity settled stock appreciation rights ("SARs").

(3)

Restructuring and other items includes restructuring and severance costs, certain unusual items, and certain transaction related costs, when applicable.  Amounts in the three and six months ended September 30, 2015 represent pension withdrawal costs of $2.7 million related to an underfunded multi-employer pension plan that the Company is no longer participating in and professional fees associated with certain strategic transactions. Amounts in the six months ended September 30, 2014 primarily represent severance costs associated with the integration of the marketing operations of the Company's Lionsgate and Summit film labels and costs related to the move of our international sales and distribution organization to the United Kingdom. Approximately $1.2 million of these costs are non-cash charges resulting from the acceleration of vesting of stock awards. 

(4)

Start-up losses of new business initiatives represent losses associated with the Company's direct to consumer initiatives including its subscription video-on-demand platforms and Atom Tickets, a theatrical movie discovery service. For the three months ended September 30, 2015, $0.4 million is included in the Company's consolidated general and administrative expenses and $2.3 million is included in equity interests income. For the six months ended September 30, 2015, $0.4 million is included in the Company's consolidated general and administrative expenses and $3.1 million is included in equity interests income.

(5)

Backstopped prints and advertising expense ("P&A") represents the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a first dollar loss guarantee (subject to a cap) that such expense will be recouped from the performance of the film (which results in minimal risk of loss to the Company). The amount represents the P&A expense incurred net of the impact of expensing the P&A cost over the revenue streams similar to a participation expense (i.e. the P&A under these arrangements are being expensed similar to a participation cost for purposes of the adjusted measure). The amount is subtracted from EBITDA in the three and six months ended September 30, 2015 because there was no additional backstopped P&A expense incurred in the period and the amount represents the estimated amortization of the amounts previously added back.

 

EBITDA is defined as earnings before interest, income tax provision or benefit, and depreciation and amortization. EBITDA is a non-GAAP financial measure.

Adjusted EBITDA represents EBITDA as defined above adjusted for stock-based compensation, restructuring and other items, start-up losses of new business initiatives, loss on extinguishment of debt, and backstopped prints and advertising expense. Adjusted EBITDA is a non-GAAP financial measure.

We believe EBITDA and Adjusted EBITDA to be meaningful indicators of our performance that provide useful information to investors regarding our financial condition and results of operations. EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in the entertainment industry and by financial analysts and others who follow the industry to measure operating performance. While we consider EBITDA and Adjusted EBITDA to be important measures of comparative operating performance, they should be considered in addition to, but not as a substitute for, net income (loss) and other measures of financial performance reported in accordance with GAAP. EBITDA and Adjusted EBITDA do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA or Adjusted EBITDA in the same manner and the measures, as presented, may not be comparable to similarly-titled measures presented by other companies.

 

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF FREE CASH FLOW TO

NET CASH FLOWS USED IN OPERATING ACTIVITIES

Three Months Ended

Six Months Ended

September 30,

September 30,

2015

2014

2015

2014

(Amounts in thousands)

Net Cash Flows Used In Operating Activities

$

(137,725)

$

(195,303)

$

(168,608)

$

(207,937)

Purchases of property and equipment

(3,632)

(3,068)

(6,880)

(4,495)

Net borrowings under and (repayment) of production loans

129,660

149,177

258,471

320,271

Excess tax benefits on equity-based compensation awards

(45)

(1,621)

1,150

Free Cash Flow, as defined

$

(11,742)

$

(50,815)

$

82,983

$

108,989

 

Free cash flow is defined as net cash flows used in operating activities, less purchases of property and equipment, plus or minus the net increase or decrease in production loans, plus or minus excess tax benefits on equity-based compensation awards if applicable. The adjustment for the production loans is made because the GAAP based cash flows from operations reflects a non-cash reduction of cash flows for the cost of films and television programs associated with production loans prior to the time the Company actually pays for the film or television program. The Company believes that it is more meaningful to reflect the impact of the payment for these films and television programs in its free cash flow when the payments are actually made.

Free cash flow is a non-GAAP financial measure as defined in Regulation G promulgated by the Securities and Exchange Commission. This non-GAAP financial measure is in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

We believe this non-GAAP measure provides useful information to investors regarding cash that our operating businesses generate whether classified as operating or financing activity (related to the production of our films and television programs) within our GAAP based statement of cash flows, before taking into account cash movements that are non-operational. Free cash flow is a non-GAAP financial measure commonly used in the entertainment industry and by financial analysts and others who follow the industry. Not all companies calculate free cash flow in the same manner and the measure as presented may not be comparable to similarly titled measures presented by other companies.

 

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF EBITDA TO FREE CASH FLOW

Three Months Ended

Six Months Ended

September 30,

September 30,

2015

2014

2015

2014

(Amounts in thousands)

EBITDA

$

(29,619)

$

39,778

$

27,764

$

107,098

Plus: Amortization of film and television programs

200,871

200,284

361,290

359,092

Less: Cash paid for film and television programs(1)

(91,879)

(230,315)

(288,147)

(357,661)

Amortization of (cash paid for) film and television programs in excess of cash paid (amortization)

108,992

(30,031)

73,143

1,431

Plus: Non-cash stock-based compensation

17,392

17,012

33,983

33,549

Plus: Distributions from equity method investee

1,558

7,788

Less: Equity interests income

(7,149)

(8,245)

(18,537)

(26,455)

Plus: Loss on extinguishment of debt

586

586

EBITDA adjusted for items above

89,616

20,658

116,353

123,997

Changes in other operating assets and liabilities:

Restricted cash

(1)

1,390

Accounts receivable, net

(122,166)

(85,920)

12,007

83,594

Other assets

686

(1,278)

(1,828)

(896)

Accounts payable and accrued liabilities

61,036

16,676

(34,300)

(78,990)

Participations and residuals

15,022

24,109

44,938

22,570

Deferred revenue

(41,199)

(10,749)

(24,423)

(15,632)

(86,621)

(57,163)

(3,606)

12,036

Purchases of property and equipment

(3,632)

(3,068)

(6,880)

(4,495)

Interest, taxes and other(2)

(11,105)

(11,242)

(22,884)

(22,549)

Free Cash Flow, as defined

$

(11,742)

$

(50,815)

$

82,983

$

108,989

_________________________

(1) Cash paid for film and television programs is calculated using the following amounts as presented in our consolidated statement of cash flows:

Change in investment in film and television programs

$

(219,609)

$

(375,168)

$

(535,470)

$

(639,019)

Change in film obligations

(1,930)

(4,324)

(11,148)

(38,913)

Production loans - borrowings

167,858

177,753

370,945

385,706

Production loans - repayments

(38,198)

(28,576)

(112,474)

(65,435)

Total cash paid for film and television programs

$

(91,879)

$

(230,315)

$

(288,147)

$

(357,661)

_________________________

(2) Interest, taxes and other consists of the following:

Cash interest

$

(10,357)

$

(9,537)

$

(20,728)

$

(18,979)

Interest and other income

555

547

1,155

1,565

Current income tax provision

(1,258)

(631)

(3,311)

(6,285)

Excess tax benefits on equity-based compensation awards

(45)

(1,621)

1,150

Total interest, taxes and other

$

(11,105)

$

(11,242)

$

(22,884)

$

(22,549)

 

This reconciliation is provided to illustrate the difference between our EBITDA and free cash flow which are both separately reconciled to their corresponding GAAP metrics.

 

LIONS GATE ENTERTAINMENT CORP.

 

RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES, NET

INCOME (LOSS), AND BASIC AND DILUTED EPS TO ADJUSTED INCOME (LOSS) BEFORE

 INCOME TAXES, ADJUSTED NET INCOME (LOSS), AND ADJUSTED BASIC AND DILUTED EPS

Three Months Ended September 30, 2015

(Amounts in thousands, except per share amounts)

Income (loss) before income taxes

Net income (loss)

Basic EPS*

Diluted EPS*

As reported

$

(44,214)

$

(42,069)

$

(0.28)

$

(0.28)

Stock-based compensation(1)

17,392

11,014

0.07

0.07

Restructuring and other items(2)

4,207

2,711

0.02

0.02

Start-up losses of new business initiatives(3)

2,764

1,781

0.01

0.01

Backstopped prints and advertising expense(4)

(2,879)

(1,823)

(0.01)

(0.01)

As adjusted for stock-based compensation, restructuring and other items, start-up losses of new business initiatives, and backstopped prints and advertising expense

$

(22,730)

$

(28,386)

$

(0.19)

$

(0.19)

Three Months Ended September 30, 2014

(Amounts in thousands, except per share amounts)

Income before income taxes

Net income

Basic EPS*

Diluted EPS*

As reported

$

25,623

$

20,781

$

0.15

$

0.15

Stock-based compensation(1)

17,322

10,972

0.08

0.07

Restructuring and other items(2)

1,354

858

0.01

0.01

Loss on extinguishment of debt(5)

586

371

As adjusted for stock-based compensation, restructuring and other items, and loss on extinguishment of debt

$

44,885

$

32,982

$

0.24

$

0.23

Six Months Ended September 30, 2015

(Amounts in thousands, except per share amounts)

Income (loss) before income taxes

Net income (loss)

Basic EPS*

Diluted EPS*

As reported

$

(686)

$

(1,385)

$

(0.01)

$

(0.01)

Stock-based compensation(1)

34,271

21,704

0.15

0.14

Restructuring and other items(2)

4,207

2,711

0.02

0.02

Start-up losses of new business initiatives(3)

3,478

2,241

0.02

0.01

Backstopped prints and advertising expense(4)

(6,813)

(4,315)

(0.03)

(0.03)

As adjusted for stock-based compensation, restructuring and other items, start-up losses of new business initiatives, and backstopped prints and advertising expense

$

34,457

$

20,956

$

0.14

$

0.14

Six Months Ended September 30, 2014**

(Amounts in thousands, except per share amounts)

Income before income taxes

Net income

Basic EPS*

Diluted EPS*

As reported

$

79,643

$

64,042

$

0.46

$

0.44

Stock-based compensation(1)

33,743

21,373

0.15

0.14

Restructuring and other items(2)

6,242

3,954

0.03

0.03

Loss on extinguishment of debt(5)

586

371

As adjusted for stock-based compensation, restructuring and other items, and loss on extinguishment of debt**

$

120,214

$

89,740

$

0.65

$

0.61

_________________________

* Basic and Diluted EPS amounts may not add precisely due to rounding

** The definition of adjusted income before income taxes, adjusted net income and adjusted earnings per share now includes the gains or losses from the sale of equity method investments. Accordingly, adjusted income before income taxes, and adjusted net income for the six months ended September 30, 2014 has been revised to include the gain on the April 2014 sale of the Company's interest in FEARnet of $11.4 million ($7.2 million after income taxes) and representing adjusted basic and diluted earnings per share of $0.05 for the six months ended September 30, 2014. Prior to the sale of FEARnet, the Company recognized cumulative equity interest losses before income taxes of approximately $11.7 million from the Company's interest in FEARnet.

 

Adjusted income (loss) before income taxes, adjusted net income (loss) and adjusted basic and diluted EPS are adjusted for the following items (the adjustment to net income (loss) is net of the tax impact calculated using the statutory tax rate applicable to each adjustment):

(1) Stock-based compensation: Adjustments for stock-based compensation represents compensation expenses associated with stock options, restricted share units, cash and equity settled SARs.

(2) Restructuring and other items:  Adjustments for restructuring and severance costs, certain unusual items, and certain transaction related costs, when applicable.  Amounts in the three and six months ended September 30, 2015 represent pension withdrawal costs of $2.7 million related to an underfunded multi-employer pension plan and professional fees associated with certain strategic transactions. Amounts in the six months ended September 30, 2014 primarily represent  severance costs associated with the integration of the marketing operations of the Company's Lionsgate and Summit film labels and costs related to the move of our international sales and distribution organization to the United Kingdom. A portion of these costs are non-cash charges resulting from the acceleration of vesting of stock awards.

(3) Start-up losses of new business initiatives:  Adjustments for losses associated with the Company's direct to consumer initiatives including subscription video-on-demand platforms and Atom Tickets, a theatrical movie discovery service.

(4) Backstopped prints and advertising expense: This adjusts income (loss) before income taxes and net income (loss) to eliminate the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a first dollar loss guarantee (subject to a cap) that such expense will be recouped from the performance of the film (which results in minimal risk of loss to the company). The amount represents the P&A expense incurred net of the impact of expensing the P&A cost over the revenue streams similar to a participation expense (i.e. the P&A under these arrangements are being expensed similar to a participation cost for purposes of the adjusted measure). The amount is subtracted in the three and six months ended September 30, 2015 because there was no additional backstopped P&A expense incurred in the period and the amount represents the estimated amortization of the amounts previously added back.

(5) Loss on extinguishment of debt: This adjusts income before income taxes and net income to eliminate the loss on extinguishment of debt.

We believe that these non-GAAP measures provide useful information to investors regarding the Company's results as compared to historical periods. The Company uses these measures, among other measures, to evaluate the operating performance of the Company. The Company believes that the adjusted results provide relevant and useful information for investors because they clarify the Company's actual operating performance and allow investors to review our operating performance in the same way as our management. Since these measures are not calculated in accordance with generally accepted accounting principles, they should not be considered in isolation of, or as a substitute for income (loss) before income taxes, net income (loss), basic and diluted EPS. Not all companies calculate adjusted income (loss) before income taxes, adjusted net income (loss), and adjusted basic and diluted EPS in the same manner and the measures as presented may not be comparable to similarly titled measures presented by other companies.

Logo - http://photos.prnewswire.com/prnh/20130919/LA83194LOGO

 

SOURCE Lionsgate


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