Lions Gate Entertainment Corp (LGF.B)

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LIONSGATE REPORTS RESULTS FOR THIRD QUARTER 2015

Feb 05, 2015 16:00:00 (ET)

Canada NewsWire

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Feb. 5, 2015

Adjusted Net Income in the Quarter is Record $110.0 Million, or $0.79 Adjusted Basic Net Income per Share

Basic Net Income per Share Increases to $0.70 in the Quarter

Television Production Revenue Grows 96%

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Feb. 5, 2015 /PRNewswire/ -- Lionsgate (NYSE: LGF), a premier next generation global content leader, today reported revenue of $751.3 million, adjusted EBITDA of $146.8 million, adjusted net income of $110.0 million or $0.79 adjusted basic net income per share and net income of $98.2 million or $0.70 basic net income per share for the third quarter of fiscal 2015 (quarter ended December 31, 2014).

The worldwide theatrical release of The Hunger Games: Mockingjay-Part 1, robust domestic television series licensing, lower marketing costs, a reduction in the effective tax rate and increased earnings from our equity investments drove profitability and margins in the quarter.

"Our strong financial results in the quarter were driven by growing margins across our businesses," said Lionsgate Chief Executive Officer Jon Feltheimer. "Our television division had another stellar quarter as it continues to emerge as a leading supplier of premium scripted content, and our film business achieved strong profitability with a diverse portfolio of films. We're also pleased to see our digital initiatives beginning to deliver incremental revenue and profits, and we expect their contributions to continue to grow."

Adjusted EBITDA of $146.8 million for the quarter compared to record adjusted EBITDA of $161.6 million in the prior year quarter.

Record adjusted net income of $110.0 million or $0.79 adjusted basic net income per share for the quarter increased 6% from adjusted net income of $103.9 million or $0.75 adjusted basic net income per share in the prior year quarter. Adjusted net income for the quarter benefitted from a lower effective tax rate compared to the prior year quarter and higher equity interest income, primarily reflecting higher net income at the Company's EPIX pay television venture with Viacom and MGM.

Net income of $98.2 million or $0.70 basic net income per share on 140.0 million weighted average number of common shares outstanding increased 11% from $88.8 million or $0.64 basic net income per share on 137.9 million weighted average number of common shares outstanding in the prior year quarter.

Revenue of $751.3 million for the quarter declined 11% from $839.9 million in the prior year quarter as declines in motion picture revenue offset gains in television production revenue. Lionsgate had two wide release theatrical films in the quarter compared to four wide release theatrical films in the prior year quarter, and the theatrical slates underlying the Company's home entertainment and international operations were also smaller than in the prior year quarter.

The Company will pay its quarterly dividend of $0.07 per common share tomorrow, February 6, to shareholders of record as of December 31, 2014.

Overall Motion Picture segment revenue for the quarter was $590.1 million, a decline of 22% compared to the prior year quarter. Within the Motion Picture segment, theatrical revenue for the quarter was $186.4 million with only two wide theatrical releases, Mockingjay--Part 1 and John Wick, compared to a prior year quarter that included four wide theatrical releases, The Hunger Games: Catching Fire, A Madea Christmas, Ender's Game and Escape Plan.

Lionsgate's home entertainment revenue for the quarter was $183.1 million compared to $200.7 million in the prior year quarter, due primarily to the smaller slate of theatrical films discussed above. Mockingjay--Part 1 begins its home entertainment rollout on electronic sell-through on February 17(th) and debuts on packaged media and on demand platforms March 6(th) .

Television revenue included in the Motion Picture segment for the quarter was $82.9 million compared to $105.8 million in the prior year quarter with only one new wide release theatrical title, Divergent, reaching its pay television window compared to five wide release theatrical titles in the prior year quarter. The next film in the Divergent franchise, Insurgent, debuts in theatres worldwide on March 20(th) in IMAX and 3D.

International Motion Picture segment revenue (excluding Lionsgate U.K.) for the quarter was $79.4 million compared to $117.1 million in the prior year quarter due to fewer wide release titles in the quarter.

Lionsgate U.K. had another strong quarter as revenue increased 12% to $62.7 million driven by a theatrical slate that included Mockingjay--Part 1, The Expendables 3 and the third-party films The Railway Man and Postman Pat: The Movie.

Revenue for the Television Production segment rose to $161.2 million in the quarter, nearly doubling the $82.3 million in the prior year quarter, with a strong performance in domestic television licensing as well as gains in international television revenue and home entertainment revenue from television production.

A record 74 episodes and 58.5 hours of domestic television series were delivered to a broad spectrum of buyers in the quarter, including episodes of Anger Management, Orange is the New Black, Nashville, Ascension, Mad Men and Manhattan. The quarter also benefitted from significant domestic television revenue from the game and talk shows Celebrity Name Game, Family Feud and The Wendy Williams Show. International television revenue included licensing of Anger Management, Orange is the New Black, Nashville and Mad Men.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2015 third quarter financial results at 9:00 A.M. ET/6:00 A.M. PT tomorrow, Friday, February 6. 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 Friday morning, February 6, through Friday, February 13, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 348885.

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 and international distribution and sales. Lionsgate currently has more than 30 television shows on over 20 different networks spanning its primetime production, distribution and syndication businesses, including such critically-acclaimed hits as the multiple Emmy Award-winning Mad Men and Nurse Jackie, the comedy Anger Management, the broadcast network series Nashville, the syndication success The Wendy Williams Show and the critically-acclaimed hit series Orange is the New Black.

Its feature film business has been fueled by such recent successes as the blockbuster first three installments of The Hunger Games franchise, the first installment of the Divergent franchise, John Wick, Now You See Me, Roadside Attractions' A Most Wanted Man, Lionsgate/Codeblack Films' Addicted and Pantelion Films' Instructions Not Included, the highest-grossing Spanish-language film ever released in the U.S.

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

***

For further information, please contact:

Peter D. Wilkes

310-255-3726

[e-mail]

The matters discussed in this press release include forward-looking statements, including those regarding the performance of future fiscal years. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the substantial investment of capital required to produce and market films and television series, increased costs for producing and marketing feature films and television series, budget overruns, limitations imposed by our credit facility and notes, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, risks related to our acquisition strategy and integration of acquired businesses, the effects of disposition of businesses or assets, technological changes and other trends affecting the entertainment industry, and the risk factors as set forth in Lionsgate's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on May 29, 2014, as amended in Lionsgate's Quarterly Report on Form 10-Q filed with the SEC on February 5, 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

December 31, 2014 March 31,
2014
(Amounts in thousands,except share amounts)
ASSETS
Cash and cash
equivalents $ 28,886 $ 25,692
Restricted cash 7,508 8,925
Accounts receivable,
net of reserves for
returns and
allowances of $64,815
(March 31, 2014 -
$106,680)
and provision for
doubtful accounts of
$4,074 (March
31, 2014 - $4,876) 974,579 885,571
Investment in films and
television programs,
net 1,447,393 1,274,573
Property and equipment,
net 22,430 14,552
Equity method
investments 211,680 181,941
Goodwill 323,328 323,328
Other assets 71,372 71,067
Deferred tax assets 54,329 65,983
Total assets $ 3,141,505 $ 2,851,632
LIABILITIES
Senior revolving credit
facility $ 160,500 $ 97,619
5.25% Senior Notes 225,000 225,000
Term Loan 223,021 222,753
Accounts payable and
accrued liabilities 271,101 332,457
Participations and
residuals 463,093 469,390
Film obligations and
production loans 737,565 499,787
Convertible senior
subordinated notes 113,271 131,788
Deferred revenue 279,958 288,300
Total liabilities 2,473,509 2,267,094
Commitments and
contingencies
SHAREHOLDERS' EQUITY
Common shares, no par
value, 500,000,000
shares authorized,
140,259,641 shares
issued (March 31, 2014
- 141,007,461
shares) 668,492 743,788
Retained earnings
(accumulated deficit) 4,352 (157,875)
Accumulated other
comprehensive loss (4,848) (1,375)
Total shareholders'
equity 667,996 584,538
Total liabilities and
shareholders' equity $ 3,141,505 $ 2,851,632


LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Nine Months Ended
December 31, December 31,
2014 2013 2014 2013
(Amounts in thousands, except per share
amounts)
Revenues $751,299 $839,939 $1,753,558 $1,908,396
Expenses:
Direct
operating 400,576 397,513 945,840 965,756
Distribution
and marketing 171,439 233,535 421,637 550,497
General and
administration 61,407 65,577 186,975 186,120
Depreciation
and
amortization 1,708 1,530 4,685 4,766
Total expenses 635,130 698,155 1,559,137 1,707,139
Operating
income 116,169 141,784 194,421 201,257
Other expenses
(income):
Interest
expense
Cash interest 10,567 11,484 29,546 39,682
Amortization of
debt discount
and deferred
financing
costs 2,984 4,090 10,048 12,878
Total interest
expense 13,551 15,574 39,594 52,560
Interest and
other income (623) (1,771) (2,188) (4,750)
Loss on
extinguishment
of debt 690 -- 1,276 36,653
Total other
expenses, net 13,618 13,803 38,682 84,463
Income before
equity
interests and
income taxes 102,551 127,981 155,739 116,794
Equity
interests
income (loss) 10,898 (1,321) 37,353 13,158
Income before
income taxes 113,449 126,660 193,092 129,952
Income tax
provision 15,264 37,897 30,865 27,067
Net income $ 98,185 $ 88,763 $ 162,227 $ 102,885

Basic net
income per
common share $ 0.70 $ 0.64 $ 1.17 $ 0.75
Diluted net
income per
common share $ 0.65 $ 0.59 $ 1.10 $ 0.71

Weighted
average number
of common
shares
outstanding:
Basic 139,963 137,946 138,618 137,097
Diluted 151,713 155,137 151,716 154,197

Dividends
declared per
common share $ 0.07 $ 0.05 $ 0.19 $ 0.05


LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS

Three Months Ended Nine Months Ended
December 31, December 31,
2014 2013 2014 2013
(Amounts in thousands)
Operating
Activities:
Net income $ 98,185 $ 88,763 $ 162,227 $ 102,885
Adjustments to
reconcile net
income to net
cash provided
by (used in)
operating
activities:
Depreciation
and
amortization 1,708 1,530 4,685 4,766
Amortization of
films and
television
programs 280,380 260,318 639,472 636,818
Amortization of
debt discount
and deferred
financing
costs 2,984 4,090 10,048 12,878
Non-cash
share-based
compensation 15,142 12,862 48,691 41,044
Distribution
from equity
method
investee -- -- 7,788 9,849
Loss on
extinguishment
of debt 690 -- 1,276 36,653
Equity
interests
income (10,898) 1,321 (37,353) (13,158)
Deferred income
taxes 1,927 23,253 11,243 13,272
Changes in
operating
assets and
liabilities:
Restricted cash 27 (32,308) 1,417 (29,754)
Accounts
receivable,
net (178,397) (141,656) (94,803) (46,376)
Investment in
films and
television
programs (176,450) (354,647) (815,469) (692,943)
Other assets (520) 7,501 (1,416) (1,696)
Accounts
payable and
accrued
liabilities 26,290 81,698 (52,700) 4,205
Participations
and residuals (28,640) 34,878 (6,070) 38,236
Film
obligations 4,960 44,610 (33,953) 11,208
Deferred
revenue 7,508 3,050 (8,124) 17,947
Net Cash Flows
Provided By
(Used In)
Operating
Activities 44,896 35,263 (163,041) 145,834
Investing
Activities:
Proceeds from
the sale of
equity method
investees -- -- 14,575 9,000
Investment in
equity method
investees (2,100) (13,500) (14,750) (17,250)
Distributions
from equity
method
investee in
excess
of earnings -- -- -- 4,169
Other -- -- (2,000) --
investments
Repayment of
loans
receivable -- 1,275 -- 4,275
Purchases of
property and
equipment (6,798) (2,721) (11,293) (6,116)
Net Cash Flows
Used In
Investing
Activities (8,898) (14,946) (13,468) (5,922)
Financing
Activities:
Senior
revolving
credit
facility -
borrowings 314,000 354,119 681,500 782,219
Senior
revolving
credit
facility -
repayments (293,000) (445,474) (618,619) (926,574)
5.25% Senior
Notes and Term
Loan -
borrowings,
net
of deferred
financing
costs of
$2,166 and
$6,860 for
the three and
nine months
ended December
31, 2013,
respectively -- (2,166) -- 440,640
10.25% Senior
Notes -
repurchases
and
redemptions -- -- -- (470,584)
Convertible
senior
subordinated
notes -
borrowings -- -- -- 60,000
Convertible -- -- (16) --
senior
subordinated
notes -
repurchases
Production
loans -
borrowings 148,075 190,155 533,781 359,582
Production
loans -
repayments (196,433) (105,287) (261,868) (301,385)
Pennsylvania
Regional
Center credit
facility -
repayments -- -- -- (65,000)
Repurchase of
common shares (3,455) -- (129,859) --
Dividends paid (9,590) -- (23,536) --
Excess tax
benefits on
equity-based
compensation
awards 5,617 -- 6,767 --
Exercise of
stock options 2,741 1,749 4,404 10,869
Tax withholding
required on
equity awards (2,803) (3,119) (14,939) (14,376)
Net Cash Flows
Provided By
(Used In)
Financing
Activities (34,848) (10,023) 177,615 (124,609)
Net Change In
Cash And Cash
Equivalents 1,150 10,294 1,106 15,303
Foreign
Exchange
Effects on
Cash 1,467 (2,104) 2,088 (2,264)
Cash and Cash
Equivalents -
Beginning Of
Period 26,269 67,212 25,692 62,363
Cash and Cash
Equivalents -
End Of Period $ 28,886 $ 75,402 $ 28,886 $ 75,402


LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED
EBITDA

Three Months Ended Nine Months Ended
December 31, December 31,
2014 2013 2014 2013
(Amounts in thousands)
Net income $ 98,185 $ 88,763 $ 162,227 $102,885
Depreciation
and
amortization 1,708 1,530 4,685 4,766
Cash interest 10,567 11,484 29,546 39,682
Noncash
interest
expense 2,984 4,090 10,048 12,878
Interest and
other income (623) (1,771) (2,188) (4,750)
Income tax
provision 15,264 37,897 30,865 27,067
EBITDA $128,085 $141,993 $ 235,183 $182,528

Stock-based
compensation
(1) 15,132 12,064 48,875 52,199
Restructuring
charges 766 -- 7,008 --
Gain on sale of -- -- (11,355) --
equity method
investment
Loss on
extinguishment
of debt 690 -- 1,276 36,653
Backstopped
prints and
advertising
expense 2,100 -- 2,100 --
Administrative
proceeding -- 7,500 -- 7,500
Adjusted EBITDA $146,773 $161,557 $ 283,087 $278,880



(1) The three months ended December 31, 2014 and 2013
include cash settled SARs expense of $0.3 million
and benefit of $0.8 million, respectively. The nine
months ended December 31, 2014 and 2013 include cash
settled SARs expense of $1.7 million and $10.4 million
respectively.

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

Adjusted EBITDA represents EBITDA as defined above adjusted for stock-based compensation, restructuring charges, gain on sale of equity method investment, loss on extinguishment of debt, backstopped prints and advertising expense, and administrative proceeding. Stock-based compensation represents compensation expenses associated with stock options, restricted share units and cash and equity settled stock appreciation rights ("SARs"). Restructuring charges primarily consist of severance costs associated with the integration of the marketing operations of our Lionsgate and Summit film labels and costs related to the move of our international sales and distribution organization to the United Kingdom. Gain on sale of equity method investment represents the gain on sale of our interest in FEARnet. 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 income statement impact that would have been recorded had the P&A not been expensed under the arrangement (i.e. primarily treating the P&A as participation expense over the revenue streams). Administrative proceeding represents the settlement of an administrative order. Adjusted EBITDA is a non-GAAP financial measure.

Management believes 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. Presentation of 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 management considers EBITDA and Adjusted EBITDA to be important measures of comparative operating performance, they should be considered in addition to, but not as a substitute for, net income and other measures of financial performance reported in accordance with Generally Accepted Accounting Principles ("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 PROVIDED BY (USED IN) OPERATING ACTIVITIES

Three Months Ended Nine Months Ended
December 31, December 31,
2014 2013 2014 2013
(Amounts in thousands)
Net Cash
Flows
Provided By
(Used In)
Operating
Activities $ 44,896 $ 35,263 $(163,041) $145,834
Purchases of
property and
equipment (6,798) (2,721) (11,293) (6,116)
Net
borrowings
under and
(repayment)
of
production
loans (48,358) 84,868 271,913 58,197
Excess tax
benefits on
equity-based
compensation
awards 5,617 -- 6,767 --
Free Cash
Flow, as
defined $ (4,643) $117,410 $ 104,346 $197,915


Free cash flow is defined as net cash flows provided by (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. 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.

Management believes 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 Nine Months Ended
December 31, December 31,
2014 2013 2014 2013
(Amounts in thousands)
EBITDA $ 128,085 $ 141,993 $ 235,183 $ 182,528

Plus: Amortization of film
and television programs 280,380 260,318 639,472 636,818
Less: Cash paid for film
and television programs
(1) (219,848) (225,169) (577,509) (623,538)
Amortization of film and
television programs in
excess
of cash paid 60,532 35,149 61,963 13,280

Plus: Non-cash stock-based
compensation 15,142 12,862 48,691 41,044
Plus: Distributions from
equity method investee -- -- 7,788 9,849
Less: Equity interests
(income) loss (10,898) 1,321 (37,353) (13,158)
Plus: Loss on
extinguishment of debt 690 -- 1,276 36,653
EBITDA adjusted for items
above 193,551 191,325 317,548 270,196

Changes in other operating
assets and liabilities:
Restricted cash 27 (32,308) 1,417 (29,754)
Accounts receivable, net (178,397) (141,656) (94,803) (46,376)
Other assets (520) 7,501 (1,416) (1,696)
Accounts payable and
accrued liabilities 26,290 81,698 (52,700) 4,205
Participations and
residuals (28,640) 34,878 (6,070) 38,236
Deferred revenue 7,508 3,050 (8,124) 17,947
(173,732) (46,837) (161,696) (17,438)

Purchases of property and
equipment (6,798) (2,721) (11,293) (6,116)
Interest, taxes and other
(2) (17,664) (24,357) (40,213) (48,727)

Free Cash Flow, as defined $ (4,643) $ 117,410 $ 104,346 $ 197,915
_________________________
(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 $(176,450) $(354,647) $(815,469) $(692,943)
Change in film obligations 4,960 44,610 (33,953) 11,208
Production loans -
borrowings 148,075 190,155 533,781 359,582
Production loans -
repayments (196,433) (105,287) (261,868) (301,385)
Total cash paid for film
and television programs $(219,848) $(225,169) $(577,509) $(623,538)
_________________________
(2) Interest, taxes and other consists of the
following:
Cash interest $ (10,567) $ (11,484) $ (29,546) $ (39,682)
Interest and other income 623 1,771 2,188 4,750
Current income tax
provision (13,337) (14,644) (19,622) (13,795)
Excess tax benefits on
equity-based compensation
awards 5,617 -- 6,767 --
Total interest, taxes and
other $ (17,664) $ (24,357) $ (40,213) $ (48,727)


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 BEFORE INCOME TAXES, NET
INCOME, AND BASIC AND DILUTED EPS TO ADJUSTED INCOME
BEFORE
INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED BASIC
AND DILUTED EPS

Three Months Ended December 31, 2014
(Amounts in thousands, except per share
amounts)
Income Net Basic Diluted
before income EPS* EPS*
income
taxes
As reported $113,449 $ 98,185 $ 0.70 $ 0.65
Stock-based compensation
(1) 15,132 9,585 0.07 0.06
Restructuring charges (2) 766 485 -- --
Loss on extinguishment of
debt (3) 690 437 -- --
Backstopped prints and
advertising expense (4) 2,100 1,330 0.01 0.01
As adjusted for
stock-based compensation,
restructuring
charges, loss on
extinguishment of debt
and backstopped
prints and advertising
expense $132,137 $110,022 $ 0.79 $ 0.73

Three Months Ended December 31, 2013
(Amounts in thousands, except per share
amounts)
Income Net Basic Diluted
before income EPS* EPS*
income
taxes
As reported $126,660 $ 88,763 $ 0.64 $ 0.59
Stock-based compensation
(1) 12,064 7,600 0.06 0.05
Administrative proceeding
(5) 7,500 7,500 0.05 0.05
As adjusted for
stock-based compensation
and administrative
proceeding $146,224 $103,863 $ 0.75 $ 0.68

Nine Months Ended December 31, 2014
(Amounts in thousands, except per share
amounts)
Income Net Basic Diluted
before income EPS* EPS*
income
taxes
As reported $193,092 $162,227 $ 1.17 $ 1.10
Stock-based compensation
(1) 48,875 30,957 0.22 0.20
Restructuring charges (2) 7,008 4,439 0.03 0.03
Gain on sale of equity
method investment (6) (11,355) (7,192) (0.05) (0.05)
Loss on extinguishment of
debt (3) 1,276 808 0.01 0.01
Backstopped prints and
advertising expense (4) 2,100 1,330 0.01 0.01
As adjusted for
stock-based compensation,
restructuring
charges, gain on sale of
equity method investment,
loss on extinguishment of
debt and backstopped
prints
and advertising expense $240,996 $192,569 $ 1.39 $ 1.30

Nine Months Ended December 31, 2013
(Amounts in thousands, except per share
amounts)
Income Net Basic Diluted
before income EPS* EPS*
income
taxes
As reported $129,952 $102,885 $ 0.75 $ 0.71
Stock-based compensation
(1) 52,199 32,885 0.24 0.21
Loss on extinguishment of
debt (3) 36,653 23,091 0.17 0.15
Administrative proceeding
(5) 7,500 7,500 0.05 0.05
Tax valuation allowance
(7) -- (12,030) (0.09) (0.08)
As adjusted for
stock-based compensation,
loss on
extinguishment of debt,
administrative proceeding
and valuation allowance $226,304 $154,331 $ 1.13 $ 1.04
_________________________
* Basic and Diluted EPS amounts may not add precisely
due to rounding

Adjusted income before income taxes, adjusted net income and adjusted basic and diluted EPS are adjusted for the following items:

(1) Stock-based compensation: Adjustments for stock-based compensation represents compensation expenses associated with stock options, restricted share units, cash and equity settled SARs. The adjustment to net income is net of the tax impact calculated using the statutory tax rate applicable to each adjustment. (2) Restructuring charges: This adjusts income before income taxes and net income to eliminate the severance costs associated with the integration of the marketing operations of our Lionsgate and Summit film labels and costs related to the move of our international sales and distribution organization to the United Kingdom. The adjustment to net income is net of the tax impact calculated using the statutory tax rate applicable to each adjustment. (3) Loss on extinguishment of debt: This adjusts income before income taxes and net income to eliminate the loss on extinguishment of debt. The adjustment to net income is net of the tax impact calculated using the statutory tax rate applicable to each adjustment. (4) Backstopped prints and advertising expense: This adjusts income before income taxes and net income to eliminate the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a first dollar loss guarantee (subject to a cap) that such expense will be recouped from the performance of the film (which results in minimal risk of loss to the company). The amount represents the P&A expense incurred net of the income statement impact that would have been recorded had the P&A not been expensed under the arrangement (i.e. primarily treating the P&A as participation expense over the revenue streams). (5) Administrative proceeding: Adjustment for administrative proceeding represents the settlement of an administrative order. (6) Gain on sale of equity method investment: This adjusts income before income taxes and net income to eliminate the gain on sale of our interest in FEARnet. The adjustment to net income is net of the tax impact calculated using the statutory tax rate applicable to each adjustment. (7) Tax valuation allowance: This adjusts net income to eliminate the discrete tax benefit recognized for financial reporting purposes upon the reduction of the Company's valuation allowance on its net deferred tax assets in our Canadian tax jurisdiction that are expected to be realized in future tax returns.

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

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lionsgate-reports-results-for-third-quarter-2015-300031874.html

SOURCE Lionsgate

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(END) Dow Jones Newswires

February 05, 2015 16:00 ET (21:00 GMT)


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