Lionsgate Fourth Quarter
Revenue was $1.1 Billion; Operating Loss was
$60.9 Million
Net Loss Attributable to Lionsgate
Shareholders was $39.5
Million or $0.22 Diluted Net
Loss Per Share
Adjusted Net Income Attributable to Lionsgate
Shareholders was $63.4 Million or
$0.27 Adjusted Diluted Earnings Per
Share
Quarterly Adjusted OIBDA was $140.3
Million
Television Group Segment Profit Increased 83%
in the Quarter, Driven by Library Gains and Post-Strike Series
Deliveries
Film & Television
Library Achieved Record $339
Million Revenue Quarter with Trailing 12-Month Revenue of
$886 Million
$397 Million of
Net Cash Flow Provided by Operating Activities in the Full Year
with Adjusted Free Cash Flow of $230
Million
SANTA
MONICA, Calif. and VANCOUVER,
BC, May 23, 2024 /PRNewswire/ -- Lions Gate
Entertainment Corp. (NYSE: LGF.A, LGF.B) ("Lionsgate") and
Lionsgate Studios Corp. (Nasdaq: LION) ("Lionsgate Studios") today
reported fourth quarter results for the quarter ended March 31, 2024. Lionsgate Studios launched
as a separate publicly-traded company on May
14, 2024, with parent company Lionsgate continuing to hold
an approximately 87% stake in Lionsgate Studios. This press
release includes consolidated financial results for parent company
Lionsgate as well as operating results for Lionsgate Studios (also
referred to as the "Studio Business"), comprised of its Motion
Picture and Television Production segments.
Lionsgate reported fourth quarter revenue of $1.1 billion, operating loss of $60.9 million, and net loss attributable to
Lionsgate shareholders of $39.5
million or $0.22 diluted net
loss per share on 235.3 million diluted weighted average
common shares outstanding. Adjusted net income attributable to
Lionsgate shareholders in the quarter was $63.4 million or $0.27 adjusted diluted net earnings per share
on 238.9 million diluted weighted average common shares
outstanding. Adjusted OIBDA was $140.3
million in the quarter.
"We reported strong financial results in the fourth quarter to
wrap up a great year in which we completed four major transactions,
moved closer to a value-defining separation of our studio and STARZ
businesses, grossed over a billion dollars at the global box office
and grew our film and TV library to record levels," said Lionsgate
and Lionsgate Studios CEO Jon
Feltheimer. "With the launch of Lionsgate Studios as a
pure play, publicly-traded company earlier this month, we have an
opportunity to shine a light on the value of the content we are
creating, owning and delivering while taking an important step
forward in preparing for the anticipated full separation of our
studio and STARZ businesses by the end of the calendar
year."
Library revenue in the quarter was a record $339 million with trailing 12-month revenue of
$886 million, the second best total
in Lionsgate's history. Lionsgate reported $397 million of net cash flow provided by
operating activities and $230 million
in adjusted free cash flow in the full year, ending the quarter
with $314 million in unrestricted
cash. Backlog from the Motion Picture and Television
Production segments was $1.5 billion
at March 31, 2024.
Fourth Quarter Results
The Studio Business, comprised of the Motion Picture
and Television Production segments, reported revenue of
$879.9 million, an increase of 6.8%
from the prior year quarter. Segment profit of $134.8 million increased by nearly 10% from the
prior year quarter.
Motion Picture segment revenue declined by 23% to
$410.6 million and segment profit
declined by 12% to $82.2
million. Revenue and segment profit compared to a
prior year quarter in which John
Wick: Chapter Four was released theatrically.
However, Motion Picture Group segment profit of $319.6 million for the year was the highest in 10
years.
Television Production segment revenue increased 61%
to $469.3 million while segment
profit increased 83% to $52.6
million. Revenue and segment profit increases were
driven by strength in library sales and an increase in post-strike
content deliveries.
Media Networks segment domestic revenue grew on a
sequential basis for the third quarter in a row. Domestic OTT
subscribers were flat sequentially and overall North
American net subscribers decreased by 480K. Media Networks segment revenue
decreased by 7.1% year-over-year to $361.5 million.
Domestic streaming revenue growth was offset by declines in
domestic linear and LIONSGATE+
revenue. Segment profit declined by 28.4% to
$52.5 million, driven primarily by
higher domestic content amortization expense.
Lionsgate and Lionsgate Studios senior management will hold
their analyst and investor conference call to discuss fiscal 2024
fourth quarter results today, May
23rd, at 5:00 PM
ET/2:00 PM PT. The consolidated financial results
of Lionsgate and the operating results of Lionsgate Studios'
segments will be discussed on a single call. Interested
parties may listen to the live webcast by visiting the events page
on either the Lionsgate Investor Relations website or the
Lionsgate Studios Investor Relations website.
Alternatively, interested parties can join the webcast directly
via the following link. A full replay will become
available this evening by clicking the same link.
About Lionsgate
Lionsgate (NYSE: LGF.A, LGF.B) encompasses world-class motion
picture and television studio operations and the STARZ premium
global subscription platform, bringing a unique and varied
portfolio of entertainment to consumers around the world. The
Company's film, television, subscription and location-based
entertainment businesses are backed by a more than 20,000-title
library and a valuable collection of iconic film and television
franchises. A digital age company driven by its entrepreneurial
culture and commitment to innovation, the Lionsgate brand is
synonymous with bold, original, relatable entertainment for
audiences worldwide.
About Lionsgate Studios
Lionsgate Studios (NASDAQ: LION) is one of the world's
leading standalone, pure play, publicly-traded content
companies. It brings together diversified motion picture and
television production and distribution businesses, a world-class
portfolio of valuable brands and franchises, a talent management
and production powerhouse and a more than 20,000-title film and
television library, all driven by Lionsgate's bold and
entrepreneurial culture.
For further information, investors should contact:
Nilay Shah
310-255-3651
nshah@lionsgate.com
For media inquiries, 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, but not limited to: the benefits of
the business combination consummated on May
13, 2024; the outcome of any legal, regulatory or
governmental proceedings that may be instituted against the Company
or any investigation or inquiry in connection with the business
combination; unexpected costs related to the business combination;
changes in our business strategy including the plan to potentially
spin-off our studio business; the substantial investment of capital
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; potential
adverse reactions or changes to business or employee relationships;
the impact of global pandemics on our business; weakness in the
global economy and financial markets, including a recession and
past and future bank failures; wars, terrorism and multiple
international conflicts that could cause significant economic
disruption and political and social instability; labor disruptions
and strikes; and the other risk factors set forth in Lionsgate's
and Lionsgate Studios' public filings with the Securities and
Exchange Commission. The companies 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 Websites
The information in this press release should be read in
conjunction with the financial statements and footnotes contained
in Lionsgate's Annual Report on Form 10-K for the year ended
March 31, 2024, which will be posted
on Lionsgate's website
at http://investors.lionsgate.com/financial-reports/sec-filings,and
Lionsgate Studios' Current Report on Form 8-K/A, which will be
posted on Lionsgate Studios' website
at https://investors.lionsgatestudios.com/. Trending schedules
containing certain financial information will also be
available.
|
LIONS GATE
ENTERTAINMENT CORP.
CONSOLIDATED BALANCE
SHEETS
|
|
|
March 31,
2024
|
|
March 31,
2023
|
|
(Unaudited, amounts
in millions)
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
314.0
|
|
$
272.1
|
|
Accounts receivable,
net
|
753.0
|
|
582.1
|
|
Other current
assets
|
396.5
|
|
264.2
|
|
Total current
assets
|
1,463.5
|
|
1,118.4
|
|
Investment in films and
television programs and program rights, net
|
2,762.2
|
|
2,947.9
|
|
Property and equipment,
net
|
88.5
|
|
89.5
|
|
Investments
|
74.8
|
|
64.7
|
|
Intangible assets,
net
|
991.8
|
|
1,300.1
|
|
Goodwill
|
811.2
|
|
1,289.5
|
|
Other assets
|
900.7
|
|
616.1
|
|
Total
assets
|
$
7,092.7
|
|
$
7,426.2
|
|
LIABILITIES
|
|
|
|
|
Accounts
payable
|
$
327.6
|
|
$
368.1
|
|
Content related
payables
|
190.0
|
|
184.1
|
|
Other accrued
liabilities
|
355.1
|
|
273.4
|
|
Participations and
residuals
|
678.4
|
|
549.3
|
|
Film related
obligations
|
1,393.1
|
|
1,007.2
|
|
Debt - short term
portion
|
860.3
|
|
41.4
|
|
Deferred
revenue
|
187.6
|
|
147.2
|
|
Total current
liabilities
|
3,992.1
|
|
2,570.7
|
|
Debt
|
1,619.7
|
|
1,978.2
|
|
Participations and
residuals
|
435.1
|
|
329.6
|
|
Film related
obligations
|
544.9
|
|
1,016.4
|
|
Other
liabilities
|
556.4
|
|
317.9
|
|
Deferred
revenue
|
118.4
|
|
52.0
|
|
Deferred tax
liabilities
|
13.3
|
|
31.8
|
|
Total
liabilities
|
7,279.9
|
|
6,296.6
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
123.3
|
|
343.6
|
|
|
|
|
|
EQUITY
(DEFICIT)
|
|
|
|
|
Class A voting common
shares, no par value, 500.0 shares authorized, 83.6 shares issued
(March 31, 2023 - 83.5 shares issued)
|
673.6
|
|
672.3
|
|
Class B non-voting
common shares, no par value, 500.0 shares authorized, 151.7 shares
issued (March 31, 2023 - 145.9 shares issued)
|
2,474.4
|
|
2,430.9
|
|
Accumulated
deficit
|
(3,576.7)
|
|
(2,439.6)
|
|
Accumulated other
comprehensive income
|
116.0
|
|
120.9
|
|
Total Lions Gate
Entertainment Corp. shareholders' equity (deficit)
|
(312.7)
|
|
784.5
|
|
Noncontrolling
interests
|
2.2
|
|
1.5
|
|
Total equity
(deficit)
|
(310.5)
|
|
786.0
|
|
Total liabilities,
redeemable noncontrolling interest and equity (deficit)
|
$
7,092.7
|
|
$
7,426.2
|
|
LIONS GATE
ENTERTAINMENT CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions, except per share amounts)
|
|
Revenues
|
$
1,117.7
|
|
$
1,085.7
|
|
$
4,016.9
|
|
$
3,854.8
|
|
Expenses
|
|
|
|
|
|
|
|
|
Direct
operating
|
640.1
|
|
567.8
|
|
2,189.2
|
|
2,312.5
|
|
Distribution and
marketing
|
225.3
|
|
234.7
|
|
911.4
|
|
801.7
|
|
General and
administration
|
122.4
|
|
191.1
|
|
490.5
|
|
531.1
|
|
Depreciation and
amortization
|
53.3
|
|
46.3
|
|
192.2
|
|
180.3
|
|
Restructuring and
other
|
137.5
|
|
95.4
|
|
508.5
|
|
411.9
|
|
Goodwill and
intangible asset impairment
|
—
|
|
—
|
|
663.9
|
|
1,475.0
|
|
Total
expenses
|
1,178.6
|
|
1,135.3
|
|
4,955.7
|
|
5,712.5
|
|
Operating
loss
|
(60.9)
|
|
(49.6)
|
|
(938.8)
|
|
(1,857.7)
|
|
Interest
expense
|
(76.8)
|
|
(58.3)
|
|
(269.8)
|
|
(221.2)
|
|
Interest and other
income
|
15.6
|
|
1.7
|
|
22.1
|
|
6.4
|
|
Other
expense
|
(7.4)
|
|
(5.9)
|
|
(26.9)
|
|
(26.9)
|
|
Gain (loss) on
extinguishment of debt
|
(1.3)
|
|
17.1
|
|
19.9
|
|
57.4
|
|
Gain on investments,
net
|
0.8
|
|
1.9
|
|
3.5
|
|
44.0
|
|
Equity interests income
(loss)
|
3.0
|
|
(0.3)
|
|
8.7
|
|
0.5
|
|
Loss before income
taxes
|
(127.0)
|
|
(93.4)
|
|
(1,181.3)
|
|
(1,997.5)
|
|
Income tax benefit
(provision)
|
77.4
|
|
(4.7)
|
|
65.0
|
|
(21.3)
|
|
Net
loss
|
(49.6)
|
|
(98.1)
|
|
(1,116.3)
|
|
(2,018.8)
|
|
Less: Net loss
attributable to noncontrolling interests
|
10.1
|
|
1.3
|
|
13.4
|
|
8.6
|
|
Net loss
attributable to Lions Gate Entertainment Corp.
shareholders
|
$
(39.5)
|
|
$
(96.8)
|
|
$
(1,102.9)
|
|
$
(2,010.2)
|
|
|
|
|
|
|
|
|
|
Per share
information attributable to Lions Gate Entertainment Corp.
shareholders:
|
|
|
|
|
|
|
|
|
Basic net loss per
common share
|
$
(0.22)
|
|
$
(0.42)
|
|
$
(4.77)
|
|
$
(8.82)
|
|
Diluted net loss per
common share
|
$
(0.22)
|
|
$
(0.42)
|
|
$
(4.77)
|
|
$
(8.82)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
235.3
|
|
229.2
|
|
233.6
|
|
227.9
|
|
Diluted
|
235.3
|
|
229.2
|
|
233.6
|
|
227.9
|
|
LIONS GATE
ENTERTAINMENT CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
$
(49.6)
|
|
$
(98.1)
|
|
$ (1,116.3)
|
|
$ (2,018.8)
|
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
53.3
|
|
46.3
|
|
192.2
|
|
180.3
|
|
Amortization of films
and television programs and program rights
|
439.3
|
|
380.8
|
|
1,577.9
|
|
1,665.3
|
|
Amortization of debt
financing costs and other non-cash interest
|
6.2
|
|
5.6
|
|
28.3
|
|
25.7
|
|
Non-cash share-based
compensation
|
15.3
|
|
42.2
|
|
90.6
|
|
102.0
|
|
Other
amortization
|
18.5
|
|
13.4
|
|
53.4
|
|
69.2
|
|
Goodwill and
intangible asset impairment
|
—
|
|
—
|
|
663.9
|
|
1,475.0
|
|
Non-cash charge from
the modification of an equity award
|
49.2
|
|
—
|
|
49.2
|
|
—
|
|
Content and other
impairments
|
59.9
|
|
85.5
|
|
377.3
|
|
385.2
|
|
Gain on extinguishment
of debt
|
1.3
|
|
(17.1)
|
|
(19.9)
|
|
(57.4)
|
|
Equity interests
(income) loss
|
(3.0)
|
|
0.3
|
|
(8.7)
|
|
(0.5)
|
|
Gain on investments,
net
|
(0.8)
|
|
(1.9)
|
|
(3.5)
|
|
(44.0)
|
|
Deferred income
taxes
|
(5.2)
|
|
(4.8)
|
|
(18.5)
|
|
(5.3)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Proceeds from the
termination of interest rate swaps
|
—
|
|
—
|
|
—
|
|
188.7
|
|
Accounts receivable,
net
|
48.2
|
|
(114.2)
|
|
105.6
|
|
(140.6)
|
|
Investment in films
and television programs and program rights, net
|
(493.1)
|
|
(405.8)
|
|
(1,419.3)
|
|
(1,979.2)
|
|
Other
assets
|
22.6
|
|
6.3
|
|
(1.7)
|
|
(41.9)
|
|
Accounts payable and
accrued liabilities
|
(42.7)
|
|
43.2
|
|
(136.3)
|
|
(2.9)
|
|
Participations and
residuals
|
18.5
|
|
61.1
|
|
29.0
|
|
145.4
|
|
Content related
payables
|
(102.9)
|
|
(17.0)
|
|
(45.6)
|
|
(35.1)
|
|
Deferred
revenue
|
(39.6)
|
|
(12.2)
|
|
(0.8)
|
|
(25.4)
|
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
(4.6)
|
|
13.6
|
|
396.8
|
|
(114.3)
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
Purchase of eOne, net
of cash acquired
|
—
|
|
—
|
|
(331.1)
|
|
—
|
|
Proceeds from the sale
of equity method and other investments
|
—
|
|
—
|
|
5.2
|
|
46.3
|
|
Investment in equity
method investees and other
|
(2.0)
|
|
—
|
|
(13.3)
|
|
(17.5)
|
|
Distributions from
equity method investees and other
|
0.8
|
|
1.9
|
|
0.8
|
|
1.9
|
|
Increase in loans
receivable
|
(0.1)
|
|
—
|
|
(3.7)
|
|
—
|
|
Capital
expenditures
|
(10.0)
|
|
(12.3)
|
|
(34.7)
|
|
(49.0)
|
|
Net Cash Flows Used
In Investing Activities
|
(11.3)
|
|
(10.4)
|
|
(376.8)
|
|
(18.3)
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
Debt - borrowings, net
of debt issuance and redemption costs
|
874.5
|
|
285.0
|
|
3,145.0
|
|
1,523.0
|
|
Debt - repurchases and
repayments
|
(685.4)
|
|
(332.5)
|
|
(2,672.8)
|
|
(1,880.8)
|
|
Film related
obligations - borrowings
|
748.0
|
|
304.6
|
|
2,010.6
|
|
1,688.6
|
|
Film related
obligations - repayments
|
(685.1)
|
|
(378.2)
|
|
(2,215.4)
|
|
(1,073.0)
|
|
Settlement of financing
component of interest rate swaps
|
—
|
|
—
|
|
—
|
|
(134.5)
|
|
Purchase of
noncontrolling interest
|
(194.1)
|
|
(36.5)
|
|
(194.6)
|
|
(36.5)
|
|
Distributions to
noncontrolling interest
|
—
|
|
(2.8)
|
|
(1.7)
|
|
(7.6)
|
|
Exercise of stock
options
|
—
|
|
0.3
|
|
0.5
|
|
3.8
|
|
Tax withholding
required on equity awards
|
(0.9)
|
|
(1.8)
|
|
(32.0)
|
|
(19.2)
|
|
Net Cash Flows
Provided By (Used In) Financing Activities
|
57.0
|
|
(161.9)
|
|
39.6
|
|
63.8
|
|
Net Change In Cash,
Cash Equivalents and Restricted Cash
|
41.1
|
|
(158.7)
|
|
59.6
|
|
(68.8)
|
|
Foreign Exchange
Effects on Cash, Cash Equivalents and Restricted
Cash
|
(2.9)
|
|
0.7
|
|
(1.2)
|
|
(2.8)
|
|
Cash, Cash
Equivalents and Restricted Cash - Beginning Of
Period
|
333.2
|
|
471.0
|
|
313.0
|
|
384.6
|
|
Cash, Cash
Equivalents and Restricted Cash - End Of Period
|
$
371.4
|
|
$
313.0
|
|
$
371.4
|
|
$
313.0
|
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. We refer
to our Motion Picture and Television Production segments
collectively as our Studio Business.
Studio Business:
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 LIONSGATE+, and the ancillary
market distribution of Starz original productions and licensed
product. Additionally, the Television Production segment includes
the results of operations of 3 Arts Entertainment.
Media Networks Business:
Media Networks. Media Networks consists of the
following product lines (i) Starz Networks, which includes the
domestic distribution of STARZ branded premium subscription video
services through over-the-top ("OTT") platforms, on a
direct-to-consumer basis through the Starz App, and through U.S.
multichannel video programming distributors ("MVPDs") including
cable operators, satellite television providers and
telecommunication companies (collectively, "Distributors") (in the
aggregate, the "Starz Domestic Platform"); and (ii) LIONSGATE+,
which represents revenues primarily from the OTT distribution of
the Company's STARZ branded premium subscription video services
outside of the U.S. The Starz Domestic Platform together with the
LIONSGATE+ platforms are referred to as the "Starz 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 tables below. The Motion
Picture and Television Production segments include the results of
operations of eOne from the acquisition date of December 27, 2023.
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Segment
revenues
|
|
|
|
|
|
|
|
|
Studio
Business:
|
|
|
|
|
|
|
|
|
Motion
Picture
|
$
410.6
|
|
$
532.1
|
|
$
1,656.3
|
|
$
1,323.7
|
|
Television
Production
|
469.3
|
|
291.5
|
|
1,330.1
|
|
1,760.1
|
|
Total Studio
Business
|
879.9
|
|
823.6
|
|
2,986.4
|
|
3,083.8
|
|
Media
Networks
|
361.5
|
|
389.0
|
|
1,576.4
|
|
1,546.5
|
|
Intersegment
eliminations
|
(123.7)
|
|
(126.9)
|
|
(545.9)
|
|
(775.5)
|
|
$
1,117.7
|
|
$
1,085.7
|
|
$
4,016.9
|
|
$
3,854.8
|
|
Segment
profit
|
|
|
|
|
|
|
|
|
Studio
Business:
|
|
|
|
|
|
|
|
|
Motion
Picture
|
$
82.2
|
|
$
93.8
|
|
$
319.4
|
|
$
276.5
|
|
Television
Production
|
52.6
|
|
28.8
|
|
146.8
|
|
133.4
|
|
Total Studio
Business(1)
|
134.8
|
|
122.6
|
|
466.2
|
|
409.9
|
|
Media
Networks
|
52.5
|
|
73.3
|
|
236.4
|
|
106.8
|
|
Intersegment
eliminations
|
(5.1)
|
|
(4.4)
|
|
(48.9)
|
|
(35.7)
|
|
Total segment
profit(1)
|
$
182.2
|
|
$
191.5
|
|
$
653.7
|
|
$
481.0
|
|
Corporate general and
administrative expenses
|
(41.9)
|
|
(53.5)
|
|
(136.1)
|
|
(122.9)
|
|
Adjusted
OIBDA(1)
|
$
140.3
|
|
$
138.0
|
|
$
517.6
|
|
$
358.1
|
_______________
|
(1)
|
See "Use of Non-GAAP
Financial Measures" for the definition of Total Segment Profit,
Studio Business Segment Profit and 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 segment revenues, less segment
direct operating and segment distribution and marketing expense,
less segment general and administration expenses. Total segment
profit represents the sum of segment profit for our individual
segments, net of eliminations for intersegment transactions.
Segment profit and total segment profit excludes, when applicable,
corporate general and administrative expense, restructuring and
other costs, share-based compensation, certain programming and
content charges as a result of changes in management and/or
programming and content strategy, certain charges related to the
COVID-19 global pandemic, charges resulting from Russia's invasion of Ukraine, and purchase accounting and related
adjustments. Segment profit is a GAAP financial measure.
We also present above our total segment profit for all of our
segments and the sum of our Motion Picture and Television
Production segment profit as our "Studio Business" segment profit.
Total segment profit and Studio Business segment profit, when
presented outside of the segment information and reconciliations
included in the notes to our consolidated financial statements, is
considered a non-GAAP financial measure, and should be considered
in addition to, not as a substitute for, or superior to, measures
of financial performance prepared in accordance with United States
GAAP. We use this non-GAAP measure, among other measures, to
evaluate the aggregate operating performance of our business.
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 and
year ended March 31, 2024 and 2023:
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Media Networks
revenue:
|
|
|
|
|
|
|
|
|
Starz
Networks
|
$
345.4
|
|
$
347.1
|
|
$
1,365.4
|
|
$
1,395.8
|
|
LIONSGATE+
|
16.1
|
|
41.9
|
|
211.0
|
|
150.7
|
|
$
361.5
|
|
$
389.0
|
|
$
1,576.4
|
|
$
1,546.5
|
|
Media Networks
segment profit (loss):
|
|
|
|
|
|
|
|
|
Starz
Networks
|
$
57.8
|
|
$
82.9
|
|
$
206.1
|
|
$
218.3
|
|
LIONSGATE+
|
(5.3)
|
|
(9.6)
|
|
30.3
|
|
(111.5)
|
|
$
52.5
|
|
$
73.3
|
|
$
236.4
|
|
$
106.8
|
LIONS GATE ENTERTAINMENT CORP.
SEGMENT INFORMATION (Continued)
Subscriber Data. The number of period-end service
subscribers is a key metric which management uses to evaluate a
non-ad supported subscription video service. We believe this
key metric provides useful information to investors as a growing or
decreasing subscriber base is a key indicator of the health of the
overall business. Service subscribers may impact revenue
differently depending on specific distribution agreements we have
with our distributors which may include fixed fees, rates per basic
video household or a rate per STARZ subscriber. The following table
sets forth, for the periods presented, subscriptions to our Media
Networks and STARZPLAY Arabia services, excluding LIONSGATE+
subscribers in territories exited or to be exited:
|
|
As of
|
|
As of
|
|
|
6/30/22
|
|
9/30/22
|
|
12/31/22
|
|
3/31/23
|
|
6/30/23
|
|
9/30/23
|
|
12/31/23
|
|
3/31/24
|
|
|
(Amounts in
millions)
|
|
Starz
Domestic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTT
Subscribers
|
|
12.18
|
|
12.25
|
|
11.56
|
|
12.25
|
|
11.82
|
|
12.02
|
|
12.63
|
|
12.59
|
|
Linear
Subscribers
|
|
9.22
|
|
8.76
|
|
8.32
|
|
8.02
|
|
7.68
|
|
7.42
|
|
7.10
|
|
6.76
|
|
Total
|
|
21.40
|
|
21.01
|
|
19.88
|
|
20.27
|
|
19.50
|
|
19.44
|
|
19.73
|
|
19.35
|
|
LIONSGATE+ excluding
territories exited or to be exited(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTT
Subscribers(2)
|
|
2.29
|
|
2.76
|
|
3.17
|
|
3.47
|
|
3.72
|
|
3.77
|
|
3.25
|
|
3.31
|
|
Linear
Subscribers
|
|
1.81
|
|
1.81
|
|
1.83
|
|
1.81
|
|
1.80
|
|
1.79
|
|
1.75
|
|
1.66
|
|
Total
|
|
4.10
|
|
4.57
|
|
5.00
|
|
5.28
|
|
5.52
|
|
5.56
|
|
5.00
|
|
4.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Starz
excluding territories exited or to be exited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTT
Subscribers(2)
|
|
14.47
|
|
15.01
|
|
14.73
|
|
15.72
|
|
15.54
|
|
15.79
|
|
15.88
|
|
15.90
|
|
Linear
Subscribers
|
|
11.03
|
|
10.57
|
|
10.15
|
|
9.83
|
|
9.48
|
|
9.21
|
|
8.85
|
|
8.42
|
|
Total Starz
excluding territories exited or to be exited
|
|
25.50
|
|
25.58
|
|
24.88
|
|
25.55
|
|
25.02
|
|
25.00
|
|
24.73
|
|
24.32
|
|
STARZPLAY
Arabia(3)
|
|
1.94
|
|
2.00
|
|
2.10
|
|
2.55
|
|
2.80
|
|
3.04
|
|
3.19
|
|
3.22
|
|
Total Domestic and
International Subscribers
(including STARZPLAY Arabia) excluding territories
exited or to be exited(2)
|
|
27.44
|
|
27.58
|
|
26.98
|
|
28.10
|
|
27.82
|
|
28.04
|
|
27.92
|
|
27.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers by
Platform excluding territories exited or to be
exited:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTT
Subscribers(2)(4)
|
|
16.41
|
|
17.01
|
|
16.83
|
|
18.27
|
|
18.34
|
|
18.83
|
|
19.07
|
|
19.12
|
|
Linear
Subscribers
|
|
11.03
|
|
10.57
|
|
10.15
|
|
9.83
|
|
9.48
|
|
9.21
|
|
8.85
|
|
8.42
|
|
Total Global
Subscribers excluding territories exited or to be
exited(2)
|
|
27.44
|
|
27.58
|
|
26.98
|
|
28.10
|
|
27.82
|
|
28.04
|
|
27.92
|
|
27.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Subscriber Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Starz North
America(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTT
Subscribers
|
|
12.85
|
|
12.93
|
|
12.24
|
|
12.95
|
|
12.51
|
|
12.73
|
|
13.43
|
|
13.38
|
|
Linear
Subscribers
|
|
11.03
|
|
10.57
|
|
10.15
|
|
9.83
|
|
9.48
|
|
9.21
|
|
8.85
|
|
8.42
|
|
Total
|
|
23.88
|
|
23.50
|
|
22.39
|
|
22.78
|
|
21.99
|
|
21.94
|
|
22.28
|
|
21.80
|
___________________
|
(1)
|
LIONSGATE+ consists of
OTT and linear subscribers in Canada and OTT subscribers in
India.
|
|
(2)
|
Excludes LIONSGATE+
subscribers in territories exited or to be exited in Australia,
Continental Europe, Japan, Latin America and the U.K. as
follows:
|
|
|
As of
|
|
As of
|
|
|
6/30/22
|
|
9/30/22
|
|
12/31/22
|
|
3/31/2023
|
|
6/30/23
|
|
9/30/23
|
|
12/31/23
|
|
3/31/2024
|
|
|
(Amounts in
millions)
|
|
OTT
Subscribers
|
|
9.90
|
|
10.20
|
|
10.18
|
|
2.17
|
|
1.60
|
|
1.59
|
|
1.10
|
|
0.57
|
|
|
|
(3)
|
Represents subscribers
of STARZPLAY Arabia, a non-consolidated equity method
investee.
|
|
(4)
|
OTT subscribers
includes subscribers of STARZPLAY Arabia, as presented
above.
|
|
(5)
|
Starz North America
subscribers include subscribers in the U.S. (as presented in the
"Starz Domestic" line item) and Canada (included in the LIONSGATE+
subscriber amounts in the table above).
|
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF OPERATING LOSS
TO ADJUSTED OIBDA AND TOTAL SEGMENT
PROFIT
The following table reconciles the GAAP measure, operating loss
to the non-GAAP measures, Adjusted OIBDA and Total Segment
Profit:
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Operating
loss
|
$
(60.9)
|
|
$
(49.6)
|
|
$
(938.8)
|
|
$
(1,857.7)
|
|
Goodwill and
intangible asset impairment(1)
|
—
|
|
—
|
|
663.9
|
|
1,475.0
|
|
Adjusted depreciation
and amortization(2)
|
16.8
|
|
10.6
|
|
50.1
|
|
40.2
|
|
Restructuring and
other(3)
|
137.5
|
|
95.4
|
|
508.5
|
|
411.9
|
|
COVID-19 related
charges (benefit)(4)
|
(0.5)
|
|
(2.8)
|
|
(1.0)
|
|
(11.6)
|
|
Programming and
content charges(5)
|
—
|
|
(0.1)
|
|
—
|
|
7.0
|
|
Adjusted share-based
compensation expense(6)
|
14.3
|
|
40.1
|
|
81.2
|
|
97.8
|
|
Purchase accounting
and related adjustments(7)
|
33.1
|
|
44.4
|
|
153.7
|
|
195.5
|
|
Adjusted
OIBDA
|
$
140.3
|
|
$
138.0
|
|
$
517.6
|
|
$
358.1
|
|
Corporate general and
administrative expenses
|
41.9
|
|
53.5
|
|
136.1
|
|
122.9
|
|
Total Segment
Profit
|
$
182.2
|
|
$
191.5
|
|
$
653.7
|
|
$
481.0
|
___________________
|
(1)
|
In fiscal 2024, amounts
reflect the goodwill impairment charge of $493.9 million and $170.0
million for impairment of indefinite-lived trade names, both
related to the Media Networks reporting unit, recorded in the
second quarter ended September 30, 2023. In fiscal 2023, amounts
reflect the goodwill impairment charge of $1.475 billion related to
the Media Networks reporting unit, recorded in the second quarter
ended September 30, 2022.
|
|
(2)
|
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
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Depreciation and
amortization
|
$
53.3
|
|
$
46.3
|
|
$
192.2
|
|
$
180.3
|
|
Less: Amount included
in purchase accounting and related adjustments
|
(36.5)
|
|
(35.7)
|
|
(142.1)
|
|
(140.1)
|
|
Adjusted depreciation
and amortization
|
$
16.8
|
|
$
10.6
|
|
$
50.1
|
|
$
40.2
|
|
|
|
(3)
|
Restructuring and other
includes restructuring and severance costs, certain transaction and
other costs, and certain unusual items, when applicable, as shown
in the table below:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Restructuring and
other:
|
|
|
|
|
|
|
|
|
Content and other
impairments(a)
|
$
59.9
|
|
$
85.5
|
|
$
377.3
|
|
$
385.2
|
|
Severance(b)
|
|
|
|
|
|
|
|
|
Cash
|
4.3
|
|
3.2
|
|
37.2
|
|
18.0
|
|
Accelerated vesting on
equity awards
|
1.0
|
|
2.1
|
|
9.4
|
|
4.2
|
|
Total severance
costs
|
5.3
|
|
5.3
|
|
46.6
|
|
22.2
|
|
COVID-19 related
charges included in restructuring and other
|
—
|
|
—
|
|
—
|
|
0.1
|
|
Transaction and other
costs(c)
|
72.3
|
|
4.6
|
|
84.6
|
|
4.4
|
|
$
137.5
|
|
$
95.4
|
|
$
508.5
|
|
$
411.9
|
_______________________
|
|
|
|
(a)
|
Media Networks
Restructuring: In fiscal 2023, the Company began a plan
to restructure its LIONSGATE+ business, which initially included
exiting the business in seven international territories (France,
Germany, Italy, Spain, Benelux, the Nordics and Japan), and
identifying additional cost-saving initiatives. This plan included
a strategic review of content performance across Starz's domestic
and international platforms, resulting in certain programming being
removed from those platforms and written down to fair
value.
|
|
|
|
|
|
During the fiscal year
ended March 31, 2024, the Company continued executing its
restructuring plan, including its evaluation of the programming on
Starz's domestic and international platforms. In connection with
this review, the Company cancelled certain ordered programming, and
identified certain other programming with limited strategic purpose
which was removed from the Starz platforms and abandoned by the
Media Networks segment. In addition, as a result of the continuing
review of its international territories, the Company has made the
strategic decision to shut down the LIONSGATE+ service in Latin
America and the United Kingdom ("U.K.") with the only remaining
international operations being in Canada and India, resulting in
additional content impairment charges.
|
|
|
|
|
|
As a result of these
restructuring initiatives, the Company recorded content impairment
charges related to the Media Networks segment in the three months
and fiscal year ended March 31, 2024 of $47.1 million and $364.5
million, respectively (three months and fiscal year ended March 31,
2023 - $85.5 million and $379.3 million, respectively). The Company
has incurred impairment charges from the inception of the plan
through March 31, 2024 amounting to $743.8 million.
|
|
|
|
|
|
Under the current
restructuring plan and ongoing strategic content review, the net
future cash outlay is estimated to range from approximately $80
million to $90 million, which includes contractual commitments on
content in territories being exited or to be exited, and payments
on the remaining amounts payable for content removed or that may be
removed from its services. The amounts above will depend on the
results of its strategic content review and amounts recoverable
from alternative distribution strategies, if any, on content in
domestic and foreign markets.
|
|
|
|
|
|
As the Company
continues to evaluate the Media Networks business and its current
restructuring plan in relation to the current micro and
macroeconomic environment and the announced plan to separate the
Company's Starz business (i.e., Media Networks segment) and Studio
Business (i.e., Motion Picture and Television Production segments),
including further strategic review of content performance and its
strategy on a territory-by-territory basis, the Company may decide
to expand its restructuring plan and exit additional territories or
remove certain content off its platform in the future. Accordingly,
the Company may incur additional content impairment and other
restructuring charges beyond the estimates above.
|
|
|
|
|
|
Other
Impairments: Amounts in the three months and fiscal year
ended March 31, 2024 also include $12.8 million of development
costs written off in connection with changes in strategy in the
Television Production segment as a result of the acquisition of
eOne.
|
|
|
|
|
|
Amounts in the fiscal
year ended March 31, 2023 also include an impairment of an
operating lease right-of-use asset related to the Studio business
and corporate facilities amounting to $5.8 million associated with
a portion of a facility lease that will no longer be utilized by
the Company. The impairment reflects a decline in market conditions
since the inception of the lease impacting potential sublease
opportunities, and represents the difference between the estimated
fair value, which was determined based on the expected discounted
future cash flows of the lease asset, and the carrying
value.
|
|
(b)
|
Severance costs in the
fiscal years ended March 31, 2024 and 2023 were primarily related
to restructuring activities and other cost-saving initiatives. In
fiscal 2024, amounts were due to restructuring activities including
integration of the acquisition of eOne, LIONSGATE+ international
restructuring and our Motion Picture and Television Production
segment.
|
|
(c)
|
Amounts in the fiscal
years ended March 31, 2024 and 2023 reflect transaction,
integration and legal costs associated with certain strategic
transactions, and restructuring activities and also include costs
and benefits associated with legal and other matters. In fiscal
2024, these amounts include $49.2 million associated with the
acquisition of additional interest in 3 Arts Entertainment. Due to
the new arrangement representing a modification of terms of the
compensation element under the previous arrangement which resulted
in the reclassification of the equity award to a liability award,
the Company recognized incremental compensation expense of $49.2
million, representing the excess of the fair value of the modified
award over amounts previously expensed. In addition, transaction
and other costs in fiscal 2024 includes approximately $16.6 million
of a loss associated with a theft at a production of a 51% owned
consolidated entity. The Company expects to recover a portion of
this amount under its insurance coverage and from the
noncontrolling interest holders of this entity. Transaction and
other costs in fiscal 2024 also include a benefit of $5.4 million
associated with an arrangement to migrate subscribers in some of
the exited territories to a third-party in connection with the
LIONSGATE+ international restructuring. The remaining amounts in
fiscal 2024 primarily represent acquisition and integration costs
related to the acquisition of eOne, and costs associated with the
separation of the Starz Business from the Studio Business. In
fiscal 2023, transaction and other costs include a benefit of $11.0
million for a settlement of a legal matter related to the Media
Networks segment.
|
|
(4)
|
Amounts represent the
incremental costs, if any, included in direct operating expense
resulting from circumstances associated with the COVID-19 global
pandemic, net of insurance recoveries. During fiscal 2024 and 2023,
the Company has incurred a net benefit in direct operating expense
due to insurance recoveries in excess of the incremental costs
expensed in the period. These charges (benefits) are excluded from
segment operating results.
|
|
(5)
|
In the fiscal year
ended March 31, 2023, the amounts represent development costs
written off as a result of changes in strategy across the Company's
theatrical slate in connection with certain management changes and
changes in the theatrical marketplace in the Motion Picture
segment. These charges are excluded from segment results and
included in amortization of investment in film and television
programs in direct operating expense on the consolidated statement
of operations.
|
|
(6)
|
The following table
reconciles total share-based compensation expense to adjusted
share-based compensation expense:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Total share-based
compensation expense
|
$
15.3
|
|
$
42.2
|
|
$
90.6
|
|
$
102.0
|
|
Less: Amount included
in restructuring and other(a)
|
(1.0)
|
|
(2.1)
|
|
(9.4)
|
|
(4.2)
|
|
Adjusted share-based
compensation
|
$
14.3
|
|
$
40.1
|
|
$
81.2
|
|
$
97.8
|
|
|
|
|
(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.
|
|
(7)
|
Purchase accounting and
related adjustments primarily represent the amortization of
non-cash fair value adjustments to certain assets acquired in
recent acquisitions. The following sets forth the amounts included
in each line item in the financial statements:
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Purchase accounting and
related adjustments:
|
|
|
|
|
|
|
|
|
Direct
operating
|
$
—
|
|
$
—
|
|
$
—
|
|
$
0.7
|
|
General and
administrative expense(a)
|
(3.4)
|
|
8.7
|
|
11.6
|
|
54.7
|
|
Depreciation and
amortization
|
36.5
|
|
35.7
|
|
142.1
|
|
140.1
|
|
$
33.1
|
|
$
44.4
|
|
$
153.7
|
|
$
195.5
|
|
(a)
|
These adjustments
include the expense associated with the noncontrolling equity
interests in the distributable earnings related to 3 Arts
Entertainment, and the non-cash charges for the accretion of the
noncontrolling interest discount related to 3 Arts Entertainment
(through November 2022), and the amortization of the recoupable
portion of the purchase price (through May 2023) related to 3 Arts
Entertainment, all of which are accounted for as compensation and
are included in general and administrative expense, as presented in
the table below. The noncontrolling equity interests in the
distributable earnings of 3 Arts Entertainment are reflected as an
expense rather than noncontrolling interest in the consolidated
statement of operations due to the relationship to continued
employment.
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Amortization of
recoupable portion of the purchase price
|
$
—
|
|
$
1.9
|
|
$
1.3
|
|
$
7.7
|
|
Noncontrolling
interest discount amortization
|
—
|
|
—
|
|
—
|
|
13.2
|
|
Noncontrolling equity
interest in distributable earnings
|
(3.4)
|
|
6.8
|
|
10.3
|
|
33.8
|
|
$
(3.4)
|
|
$
8.7
|
|
$
11.6
|
|
$
54.7
|
|
LIONS GATE
ENTERTAINMENT CORP.
|
|
|
RECONCILIATION OF
NET LOSS ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP.
SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO LIONS GATE
ENTERTAINMENT CORP. SHAREHOLDERS, AND BASIC AND DILUTED EPS TO
ADJUSTED BASIC AND DILUTED EPS
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions, except per share amounts)
|
|
Reported Net Loss
Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
(39.5)
|
|
$
(96.8)
|
|
$
(1,102.9)
|
|
$
(2,010.2)
|
|
Adjusted share-based
compensation expense
|
14.3
|
|
40.1
|
|
81.2
|
|
97.8
|
|
Goodwill and
intangible asset impairment
|
—
|
|
—
|
|
663.9
|
|
1,475.0
|
|
Restructuring and
other
|
137.5
|
|
95.4
|
|
508.5
|
|
411.9
|
|
COVID-19 related
charges (benefit)
|
(0.5)
|
|
(2.8)
|
|
(1.0)
|
|
(11.6)
|
|
Programming and
content charges
|
—
|
|
(0.1)
|
|
—
|
|
7.0
|
|
Purchase accounting
and related adjustments
|
33.1
|
|
44.4
|
|
153.7
|
|
195.5
|
|
Gain on extinguishment
of debt
|
1.3
|
|
(17.1)
|
|
(19.9)
|
|
(57.4)
|
|
Gain on investments
and other, net(1)
|
(9.3)
|
|
(1.9)
|
|
(12.0)
|
|
(44.0)
|
|
Tax impact of above
items(2)
|
(65.0)
|
|
(0.9)
|
|
(74.9)
|
|
(4.7)
|
|
Noncontrolling
interest impact of above items(3)
|
(8.5)
|
|
(11.1)
|
|
(29.5)
|
|
(50.5)
|
|
Adjusted Net Income
Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
63.4
|
|
$
49.2
|
|
$
167.1
|
|
$
8.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Basic
EPS
|
$
(0.22)
|
|
$
(0.42)
|
|
$
(4.77)
|
|
$
(8.82)
|
|
Impact of adjustments
on basic earnings per share(4)
|
0.49
|
|
0.63
|
|
5.49
|
|
8.86
|
|
Adjusted Basic
EPS
|
$
0.27
|
|
$
0.21
|
|
$
0.72
|
|
$
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Diluted
EPS
|
$
(0.22)
|
|
$
(0.42)
|
|
$
(4.77)
|
|
$
(8.82)
|
|
Impact of adjustments
on diluted earnings per share(4)
|
0.49
|
|
0.63
|
|
5.48
|
|
8.86
|
|
Adjusted Diluted
EPS
|
$
0.27
|
|
$
0.21
|
|
$
0.71
|
|
$
0.04
|
|
|
|
|
|
|
|
|
|
Adjusted weighted
average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
235.3
|
|
229.2
|
|
233.6
|
|
227.9
|
|
Diluted
|
238.9
|
|
233.2
|
|
236.6
|
|
230.7
|
_________________________
|
(1)
|
In the three months and
fiscal year ended March 31, 2024, these amounts include certain
insurance proceeds reflected in interest and other income on the
consolidated statement of operations.
|
|
(2)
|
Represents the tax
impact of the adjustments to net income attributable to Lions Gate
Entertainment Corp. shareholders, calculated using the applicable
effective tax rate of the adjustment.
|
|
(3)
|
Represents the
noncontrolling interest impact of the adjustments related to
subsidiaries that are not wholly owned.
|
|
(4)
|
In the three months and
fiscal year ended March 31, 2024, these amounts include an
adjustment of $0.05 representing the per share impact of the
accretion of redeemable noncontrolling interest of $11.9 million
which is reflected in reported basic and diluted net loss per
share.
|
|
LIONS GATE
ENTERTAINMENT CORP.
RECONCILIATION OF
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES
TO ADJUSTED FREE
CASH FLOW
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
$
(4.6)
|
|
$
13.6
|
|
$
396.8
|
|
$
(114.3)
|
|
Capital
expenditures
|
(10.0)
|
|
(12.3)
|
|
(34.7)
|
|
(49.0)
|
|
Net borrowings under
and (repayment) of production and related
loans(1):
|
|
|
|
|
|
|
|
|
Production loans and
programming notes
|
(36.0)
|
|
(57.7)
|
|
(242.0)
|
|
365.7
|
|
Production tax credit
facility
|
9.8
|
|
0.4
|
|
27.7
|
|
7.1
|
|
Proceeds from the
termination of interest rate swaps(2)
|
—
|
|
—
|
|
—
|
|
(188.7)
|
|
Payments on impaired
content in territories exited or to be
exited(3)
|
38.1
|
|
19.3
|
|
81.7
|
|
34.2
|
|
Adjusted Free Cash
Flow
|
$
(2.7)
|
|
$
(36.7)
|
|
$
229.5
|
|
$
55.0
|
________________
|
(1)
|
See "Reconciliation for
Non-GAAP Adjustments for Net Borrowings Under and (Repayment) of
Production and Related Loans" for reconciliation to the most
directly comparable GAAP financial measure.
|
|
(2)
|
During the year ended
March 31, 2023, the Company terminated certain interest rate swaps
(a portion of which were considered hybrid instruments with a
financing component and an embedded at-market derivative) and in
exchange, received approximately $56.4 million. The $56.4 million
received was classified in the consolidated statement of cash flows
as cash provided by operating activities of $188.7 million
reflecting the amount received for the derivative portion of the
terminated swaps, and a use of cash in financing activities of
$134.5 million reflecting the pay down of the financing component
of the terminated swaps (inclusive of payments made between April
1, 2022 and the termination date amounting to $3.2 million). Since
the termination of the interest rate swaps was an unusual event,
the Company is excluding the $188.7 million reflected in cash
provided by operating activities from its adjusted free cash flow.
The Company continues to have $1.7 billion notional amount of
interest rate swaps as a cash flow hedge of its variable interest
rate debt.
|
|
(3)
|
Represents cash
payments made on impaired content in territories exited or to be
exited under the LIONSGATE+ international restructuring.
|
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NON-GAAP ADJUSTMENTS FOR NET
BORROWINGS UNDER AND REPAYMENT OF PRODUCTION AND RELATED
LOANS
The following tables reconcile the non-GAAP adjustments for net
borrowings under and (repayment) of production and related loans to
the changes in the related balance sheet amounts and the
consolidated statement of cash flows:
|
Three Months Ended
March 31, 2024
|
|
Non-GAAP Adjustments
to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet
and Statement of Cash Flows Amounts
|
|
Production Loans and
Programming Notes
|
|
Production Tax Credit
Facility
|
|
Other Film Related
Obligations
|
|
|
(Unaudited, amounts
in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
1,873.0
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$
608.6
|
|
$
28.1
|
|
$ 111.3
|
|
748.0
|
|
Repayments
|
(659.4)
|
|
(18.3)
|
|
(7.4)
|
|
(685.1)
|
|
Adjustment related to
net payments on loans outstanding prior to acquisition of
eOne
|
14.8
|
|
—
|
|
—
|
|
|
|
$
(36.0)
|
|
$
9.8
|
|
$ 103.9
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
1,938.0
|
|
Three Months Ended
March 31, 2023
|
|
Non-GAAP Adjustments
to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet
and Statement of Cash Flows Amounts
|
|
Production Loans and
Programming Notes
|
|
Production Tax Credit
Facility
|
|
Other Film Related
Obligations
|
|
|
(Unaudited, amounts
in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
2,095.1
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$
277.1
|
|
$
27.4
|
|
$
0.1
|
|
304.6
|
|
Repayments
|
(334.8)
|
|
(27.0)
|
|
(16.4)
|
|
(378.2)
|
|
$
(57.7)
|
|
$
0.4
|
|
$
(16.3)
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
2,023.6
|
|
Year Ended March 31,
2024
|
|
Non-GAAP Adjustments
to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet
and Statement of Cash Flows Amounts
|
|
Production Loans and
Programming Notes
|
|
Production Tax Credit
Facility
|
|
Other Film Related
Obligations
|
|
|
(Unaudited, amounts
in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
2,023.6
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$ 1,666.4
|
|
$
76.4
|
|
$ 267.8
|
|
2,010.6
|
|
Repayments
|
(1,923.2)
|
|
(48.7)
|
|
(243.5)
|
|
(2,215.4)
|
|
Adjustment related to
net payments on loans outstanding prior to acquisition of
eOne
|
14.8
|
|
—
|
|
—
|
|
|
|
$
(242.0)
|
|
$
27.7
|
|
$
24.3
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
13.4
|
|
|
|
|
|
|
|
|
|
Film related
obligations assumed from the acquisition of eOne
|
|
|
|
|
|
|
105.8
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
1,938.0
|
|
Year Ended March 31,
2023
|
|
Non-GAAP Adjustments
to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet
and Statement of Cash Flows Amounts
|
|
Production Loans and
Programming Notes
|
|
Production Tax Credit
Facility
|
|
Other Film Related
Obligations
|
|
|
(Unaudited, amounts
in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
1,401.8
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$ 1,187.4
|
|
$
84.4
|
|
$ 416.8
|
|
1,688.6
|
|
Repayments
|
(821.7)
|
|
(77.3)
|
|
(174.0)
|
|
(1,073.0)
|
|
$
365.7
|
|
$
7.1
|
|
$ 242.8
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
6.2
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
2,023.6
|
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, certain charges
(benefits) related to the COVID-19 global pandemic, certain
programming and content charges as a result of management changes
and/or changes in strategy, and unusual gains or losses (such as
goodwill and intangible asset impairment and charges related to
Russia's invasion of Ukraine), when applicable.
- 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 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 other costs, and certain unusual
items, when applicable.
- COVID-19 related charges or benefits include incremental costs
associated with the pausing and restarting of productions including
paying/hiring certain cast and crew, maintaining idle facilities
and equipment costs, and when applicable, certain motion picture
and television impairments and development charges associated with
changes in performance expectations or the feasibility of
completing the project resulting from circumstances associated with
the COVID-19 global pandemic, net of insurance recoveries, which
are included in direct operating expense, when applicable. In
addition, the costs include early or contractual marketing spends
for film releases and events that have been canceled or delayed and
will provide no economic benefit, which are included in
distribution and marketing expense, when applicable.
- Programming and content charges include certain charges as a
result of changes in management and/or changes in programming and
content strategy, 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 non-cash charge
for the amortization of the recoupable portion of the purchase
price and the expense associated with the noncontrolling equity
interests in the distributable earnings 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.
Total Segment Profit and Studio Business Segment Profit and
Studio Business Adjusted OIBDA: We present the sum of our
Motion Picture and Television Production segment profit as our
"Studio Business" segment profit, and we define our Studio Business
Adjusted OIBDA as Studio Business segment profit less corporate
general and administrative expenses. Total segment profit and
Studio Business segment profit and Studio Business Adjusted OIBDA,
when presented outside of the segment information and
reconciliations included in our consolidated financial statements,
is considered a non-GAAP financial measure, and should be
considered in addition to, not as a substitute for, or superior to,
measures of financial performance prepared in accordance with
United States GAAP. We use this non-GAAP measure, among other
measures, to evaluate the aggregate operating performance of our
business.
The Company believes the presentation of total segment profit
and Studio Business segment profit is relevant and useful for
investors because it allows investors to view total 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 before non-operating items.
Total segment profit and Studio Business segment profit is
considered an important measure of the Company's performance
because it reflects the aggregate profit contribution from the
Company's segments, both in total and for the Studio Business and
represents a measure, consistent with our segment profit, that
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. Not all companies calculate segment profit or
total segment profit in the same manner, and segment profit and
total segment profit as defined by the Company may not be
comparable to similarly titled measures presented by other
companies due to differences in the methods of calculation and
excluded items.
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 and related loans (which
includes our production tax credit facility), plus or minus certain
unusual or non-recurring items, such as insurance recoveries on
prior shareholder litigation, proceeds from the termination of
interest rate swaps, and payments on impaired content in
territories exited or to be exited.
The adjustment for the production and related loans, exclusive
of our production tax credit facility, 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 prior to
the time the Company pays for the film or television program
through the payment of the associated production or related loan
which occurs at or near completion of the production, or in some
cases, over the period revenues and cash receipts are being
generated, as more fully described below.
The cost of producing films and television programs, which is
reflected as a reduction of the GAAP based cash flows provided by
(used in) operating activities, is often financed through
production loans. The adjustment for production and related loans
is made in order to better align the timing of the cash flows
associated with producing films and television programs with the
timing of the repayment of the production loans, which is
consistent with how management views its production cash spend and
manages the Company's cash flows and working capital needs.
Borrowings on production loans offset the spend on investment in
films reflected in the GAAP based cash flows provided by (used in)
operating activities and thus increase the Adjusted Free Cash Flows
as compared to the GAAP based cash flows provided by (used in)
operating activities and subsequent payments on production loans
reflect the payment for the production of the film or TV program
and reduce Adjusted Free Cash Flows as compared to the GAAP based
cash flows provided by (used in) operating activities.
The adjustment for the production tax credit facility is made to
better reflect the timing of the cash requirements of the
production, since a portion of the amounts expended initially are
later refunded through the receipt of the tax credit, as more fully
described below. The production tax credit facility reduces the
timing difference between the payments for production cost and the
receipt of the tax credit and thus reflects the cash cost of the
film or television program at or near the time the film or
television program is produced and completed.
Part of the cost of a film or television program is effectively
funded through obtaining government incentives, however, the
incentives are not received until a future period which could be a
few years after the completion of the film. The tax credit facility
reflects borrowings collateralized by the tax credits to be
received in the future and thus by including these borrowings in
Adjusted Free Cash Flow it has the effect of better aligning the
receipt of the tax credits with the timing of the production and
completion of the film and television programs, which is consistent
with how management views its production cash spend and manages the
Company's cash flows and working capital needs. Borrowings under
the tax credit facility reduce the cash spend reflected in the GAAP
based cash flows provided by (used in) operating activities and
thus increase adjusted free cash flows and payments on the tax
credit facility offset the tax credit receivable collection
reflected in the GAAP based cash flows provided by (used in)
operating activities and reduce adjusted free cash flows as
compared to the GAAP based cash flows provided by (used in)
operating activities.
The Company believes that it is more meaningful to reflect the
impact of the payment for these films and television programs when
the payments are made under the production loans and the receipt of
the tax credit when the film is being produced in its Adjusted Free
Cash Flow.
The adjustment for the payments on impaired content represents
cash payments made on impaired content in territories exited or to
be exited under the LIONSGATE+ international restructuring. The
adjustment is made because these cash payments relate to content in
territories the Company has exited or is exiting, and therefore the
cash payments are not reflective of the ongoing operations of the
Company.
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, insurance recoveries on prior
shareholder litigation and net gains or losses on investments and
other, gain or loss on extinguishment of debt, certain programming
and content charges, COVID-19 related charges (benefit), and
unusual gains or losses (such as goodwill and intangible asset
impairment and charges related to Russia's invasion of Ukraine), when applicable, as described in the
Adjusted OIBDA definition, net of the tax effect of the adjustments
at the applicable effective tax rate for each adjustment and net of
the impact of the adjustments on noncontrolling 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.
Overall: 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.
LIONSGATE STUDIOS CORP.
(STUDIO BUSINESS OF LIONS GATE ENTERTAINMENT
CORP.)
FINANCIAL INFORMATION
|
LIONSGATE STUDIOS
CORP.
(STUDIO BUSINESS OF
LIONS GATE ENTERTAINMENT CORP.)
COMBINED BALANCE
SHEETS
|
|
|
March 31,
2024
|
|
March 31,
2023
|
|
(Unaudited, amounts
in millions)
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
277.0
|
|
$
210.9
|
|
Accounts receivable,
net
|
688.6
|
|
527.0
|
|
Due from Starz
Business
|
33.4
|
|
157.6
|
|
Other current
assets
|
373.1
|
|
256.5
|
|
Total current
assets
|
1,372.1
|
|
1,152.0
|
|
Investment in films and
television programs, net
|
1,929.0
|
|
1,786.7
|
|
Property and equipment,
net
|
37.3
|
|
23.8
|
|
Investments
|
74.8
|
|
64.7
|
|
Intangible assets,
net
|
25.7
|
|
26.9
|
|
Goodwill
|
811.2
|
|
795.6
|
|
Other assets
|
852.9
|
|
563.0
|
|
Total
assets
|
$
5,103.0
|
|
$
4,412.7
|
|
LIABILITIES
|
|
|
|
|
Accounts
payable
|
$
246.7
|
|
$
251.1
|
|
Content related
payables
|
41.4
|
|
26.6
|
|
Other accrued
liabilities
|
282.4
|
|
215.4
|
|
Participations and
residuals
|
647.8
|
|
524.4
|
|
Film related
obligations
|
1,393.1
|
|
923.7
|
|
Debt - short term
portion
|
860.3
|
|
41.4
|
|
Deferred
revenue
|
170.6
|
|
126.2
|
|
Total current
liabilities
|
3,642.3
|
|
2,108.8
|
|
Debt
|
923.0
|
|
1,202.2
|
|
Participations and
residuals
|
435.1
|
|
329.6
|
|
Film related
obligations
|
544.9
|
|
1,016.4
|
|
Other
liabilities
|
452.5
|
|
120.9
|
|
Deferred
revenue
|
118.4
|
|
52.0
|
|
Deferred tax
liabilities
|
13.7
|
|
18.1
|
|
Total
liabilities
|
6,129.9
|
|
4,848.0
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
123.3
|
|
343.6
|
|
|
|
|
|
EQUITY
(DEFICIT)
|
|
|
|
|
Parent net
investment
|
(1,249.1)
|
|
(881.9)
|
|
Accumulated other
comprehensive income
|
96.7
|
|
101.5
|
|
Total parent equity
(deficit)
|
(1,152.4)
|
|
(780.4)
|
|
Noncontrolling
interests
|
2.2
|
|
1.5
|
|
Total equity
(deficit)
|
(1,150.2)
|
|
(778.9)
|
|
Total liabilities,
redeemable noncontrolling interest and equity (deficit)
|
$
5,103.0
|
|
$
4,412.7
|
|
LIONSGATE STUDIOS
CORP.
(STUDIO BUSINESS OF
LIONS GATE ENTERTAINMENT CORP.)
COMBINED STATEMENTS
OF OPERATIONS
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Revenue
|
$
756.2
|
|
$
696.7
|
|
$
2,440.5
|
|
$
2,308.3
|
|
Revenue - Starz
Business
|
123.7
|
|
126.9
|
|
545.9
|
|
775.5
|
|
Total
revenues
|
879.9
|
|
823.6
|
|
2,986.4
|
|
3,083.8
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Direct
operating
|
580.7
|
|
520.1
|
|
1,886.7
|
|
2,207.9
|
|
Distribution and
marketing
|
116.3
|
|
115.2
|
|
462.3
|
|
304.2
|
|
General and
administration
|
87.6
|
|
144.6
|
|
349.2
|
|
387.0
|
|
Depreciation and
amortization
|
4.5
|
|
4.7
|
|
15.6
|
|
17.9
|
|
Restructuring and
other
|
71.4
|
|
6.6
|
|
132.9
|
|
27.2
|
|
Total
expenses
|
860.5
|
|
791.2
|
|
2,846.7
|
|
2,944.2
|
|
Operating
income
|
19.4
|
|
32.4
|
|
139.7
|
|
139.6
|
|
Interest
expense
|
(65.4)
|
|
(44.8)
|
|
(222.5)
|
|
(162.6)
|
|
Interest and other
income
|
12.5
|
|
1.6
|
|
19.2
|
|
6.4
|
|
Other
expense
|
(5.7)
|
|
(4.0)
|
|
(20.0)
|
|
(21.2)
|
|
Loss on extinguishment
of debt
|
(1.3)
|
|
—
|
|
(1.3)
|
|
(1.3)
|
|
Gain on investments,
net
|
0.8
|
|
1.9
|
|
3.5
|
|
44.0
|
|
Equity interests income
(loss)
|
3.0
|
|
(0.3)
|
|
8.7
|
|
0.5
|
|
Income (loss) before
income taxes
|
(36.7)
|
|
(13.2)
|
|
(72.7)
|
|
5.4
|
|
Income tax
provision
|
(17.5)
|
|
(9.1)
|
|
(34.2)
|
|
(14.3)
|
|
Net
loss
|
(54.2)
|
|
(22.3)
|
|
(106.9)
|
|
(8.9)
|
|
Less: Net loss
attributable to noncontrolling interests
|
7.2
|
|
1.3
|
|
13.4
|
|
8.6
|
|
Net loss
attributable to Parent
|
$
(47.0)
|
|
$
(21.0)
|
|
$
(93.5)
|
|
$
(0.3)
|
|
|
|
|
|
|
|
|
|
LIONSGATE STUDIOS
CORP.
(STUDIO BUSINESS OF
LIONS GATE ENTERTAINMENT CORP.)
COMBINED STATEMENTS
OF CASH FLOWS
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
$
(54.2)
|
|
$
(22.3)
|
|
$
(106.9)
|
|
$
(8.9)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
4.5
|
|
4.7
|
|
15.6
|
|
17.9
|
|
Amortization of films
and television programs
|
399.7
|
|
353.7
|
|
1,347.8
|
|
1,649.3
|
|
Non-cash charge from
the modification of an equity award
|
49.2
|
|
—
|
|
49.2
|
|
—
|
|
Content and other
impairments
|
12.8
|
|
—
|
|
12.8
|
|
5.9
|
|
Amortization of debt
financing costs and other non-cash interest
|
5.4
|
|
4.7
|
|
25.1
|
|
21.8
|
|
Non-cash share-based
compensation
|
9.0
|
|
31.2
|
|
62.5
|
|
73.4
|
|
Other
amortization
|
16.7
|
|
11.2
|
|
46.0
|
|
59.9
|
|
Loss on extinguishment
of debt
|
1.3
|
|
—
|
|
1.3
|
|
1.3
|
|
Equity interests
(income) loss
|
(3.0)
|
|
0.3
|
|
(8.7)
|
|
(0.5)
|
|
Gain on investments,
net
|
(0.8)
|
|
(1.9)
|
|
(3.5)
|
|
(44.0)
|
|
Deferred income
taxes
|
(5.1)
|
|
1.5
|
|
(4.4)
|
|
1.6
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Proceeds from the
termination of interest rate swaps
|
—
|
|
—
|
|
—
|
|
188.7
|
|
Accounts receivable,
net
|
26.6
|
|
(110.8)
|
|
84.9
|
|
(136.7)
|
|
Investment in films
and television programs, net
|
(429.6)
|
|
(313.4)
|
|
(1,130.5)
|
|
(1,568.4)
|
|
Other
assets
|
31.0
|
|
9.7
|
|
16.5
|
|
(44.9)
|
|
Accounts payable and
accrued liabilities
|
48.0
|
|
65.0
|
|
(38.8)
|
|
57.4
|
|
Participations and
residuals
|
16.7
|
|
60.2
|
|
26.8
|
|
138.3
|
|
Content related
payables
|
(26.2)
|
|
(17.1)
|
|
(24.5)
|
|
(10.7)
|
|
Deferred
revenue
|
(38.1)
|
|
(16.8)
|
|
3.2
|
|
(24.5)
|
|
Due from Starz
Business
|
23.4
|
|
(1.6)
|
|
114.5
|
|
(30.8)
|
|
Net Cash Flows
Provided By Operating Activities
|
87.3
|
|
58.3
|
|
488.9
|
|
346.1
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
Purchase of eOne, net
of cash acquired
|
—
|
|
—
|
|
(331.1)
|
|
—
|
|
Proceeds from the sale
of equity method and other investments
|
—
|
|
—
|
|
5.2
|
|
46.3
|
|
Investment in equity
method investees and other
|
(2.0)
|
|
—
|
|
(13.3)
|
|
(17.5)
|
|
Distributions from
equity method investees and other
|
0.8
|
|
1.9
|
|
0.8
|
|
1.9
|
|
Increase in loans
receivable
|
(0.1)
|
|
—
|
|
(3.7)
|
|
—
|
|
Purchases of accounts
receivables held for collateral
|
—
|
|
(48.3)
|
|
(85.5)
|
|
(183.7)
|
|
Receipts of accounts
receivables held for collateral
|
—
|
|
50.3
|
|
105.7
|
|
190.8
|
|
Capital
expenditures
|
(4.7)
|
|
(2.0)
|
|
(9.9)
|
|
(6.5)
|
|
Net Cash Flows
Provided By (Used In) Investing Activities
|
(6.0)
|
|
1.9
|
|
(331.8)
|
|
31.3
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
Debt - borrowings, net
of debt issuance and redemption costs
|
874.5
|
|
285.0
|
|
3,145.0
|
|
1,523.0
|
|
Debt - repurchases and
repayments
|
(685.4)
|
|
(293.7)
|
|
(2,611.4)
|
|
(1,745.8)
|
|
Film related
obligations - borrowings
|
748.0
|
|
254.5
|
|
1,820.8
|
|
1,584.7
|
|
Film related
obligations - repayments
|
(625.2)
|
|
(357.0)
|
|
(1,942.9)
|
|
(956.5)
|
|
Settlement of financing
component of interest rate swaps
|
—
|
|
—
|
|
—
|
|
(134.5)
|
|
Purchase of
noncontrolling interest
|
(194.1)
|
|
(36.5)
|
|
(194.6)
|
|
(36.5)
|
|
Distributions to
noncontrolling interest
|
—
|
|
(2.8)
|
|
(1.7)
|
|
(7.6)
|
|
Parent net
investment
|
(162.4)
|
|
(1.4)
|
|
(290.1)
|
|
(621.3)
|
|
Net Cash Flows Used
In Financing Activities
|
(44.6)
|
|
(151.9)
|
|
(74.9)
|
|
(394.5)
|
|
Net Change In Cash,
Cash Equivalents and Restricted Cash
|
36.7
|
|
(91.7)
|
|
82.2
|
|
(17.1)
|
|
Foreign Exchange
Effects on Cash, Cash Equivalents and Restricted
Cash
|
0.3
|
|
2.0
|
|
0.8
|
|
(1.8)
|
|
Cash, Cash
Equivalents and Restricted Cash - Beginning Of
Period
|
297.4
|
|
341.1
|
|
251.4
|
|
270.3
|
|
Cash, Cash
Equivalents and Restricted Cash - End Of Period
|
$
334.4
|
|
$
251.4
|
|
$
334.4
|
|
$
251.4
|
LIONSGATE STUDIOS CORP.
(STUDIO BUSINESS OF LIONS GATE ENTERTAINMENT
CORP.)
BASIS OF PRESENTATION
Description of Business. The Studio Business is
substantially reflected in the Lionsgate Entertainment Corp.
("Lionsgate," or "Parent") Motion Picture and Television Production
segments, together with substantially all of Lionsgate's corporate
general and administrative costs.
This combined financial information reflects the combination of
the assets, liabilities, operations and cash flows reflecting the
Studio Business which is referred to in this combined financial
information as the "Studio Business" or the "Company".
Basis of Presentation. This combined financial
information of the Studio Business has been prepared on a carve-out
basis and is derived from Lionsgate's consolidated financial
statements and accounting records. This combined financial
information reflects the Studio Business's combined historical
financial position, results of operations and cash flows as they
were historically managed in accordance with United States ("U.S.") generally accepted
accounting principles ("GAAP"). The combined financial information
may not be indicative of the Studio Business's future performance
and do not necessarily reflect what the financial position, results
of operations and cash flows would have been had the Studio
Business operated as an independent, publicly traded company during
the periods presented.
The Studio Business has historically operated as part of
Lionsgate and not as a standalone company. The Studio Business's
combined financial information, representing the historical assets,
liabilities, operations and cash flows of the combination of the
operations making up the worldwide Studio Business, has been
derived from the separate historical accounting records maintained
by Lionsgate, and is presented on a carve-out basis. This combined
financial information reflects the combined historical results of
operations, financial position, comprehensive income (loss) and
cash flows of the Studio Business for the periods presented as
historically managed within Lionsgate through the use of a
management approach in identifying the Studio Business's
operations. In using the management approach, considerations over
how the business operates were utilized to identify historical
operations that should be presented within the carve-out financial
information. This approach was taken due to the organizational
structure of certain legal entities comprising the Studio
Business.
All revenues and costs as well as assets and liabilities
directly associated with the business activity of the Studio
Business are included in the accompanying combined financial
information. Revenues and costs associated with the Studio Business
are specifically identifiable in the accounting records maintained
by Lionsgate and primarily represent the revenue and costs used for
the determination of segment profit of the Motion Picture and
Television Production segments of Lionsgate. In addition, the
Studio Business costs include an allocation of corporate
general and administrative expense (inclusive of share-based
compensation) which has been allocated to the Studio Business as
further discussed below. Other costs excluded from the Motion
Picture and Television Production segment profit but relating to
the Studio Business are generally specifically identifiable as
costs of the Studio Business in the accounting records of Lionsgate
and are included in the accompanying combined financial
information.
Lionsgate utilizes a centralized approach to cash management.
Cash generated by the Studio Business is managed by Lionsgate's
centralized treasury function and cash is routinely transferred to
the Studio Business or to Lionsgate's STARZ-branded premium global
subscription platforms (the "Starz Business") to fund operating
activities when needed. Cash and cash equivalents of the Studio
Business are reflected in the combined balance sheets. Payables to
and receivables from Lionsgate, primarily related to the Starz
Business, are often settled through movement to the intercompany
accounts between Lionsgate, the Starz Business and the Studio
Business. Other than certain specific balances related to unsettled
payables or receivables, the intercompany balances between the
Studio Business and Lionsgate have been accounted for as parent net
investment.
Lionsgate's corporate general and administrative functions and
costs have historically provided oversight over both the Starz
Business and the Studio Business. These functions and costs
include, but are not limited to, salaries and wages for certain
executives and other corporate officers related to executive
oversight, investor relations costs, costs for the maintenance of
corporate facilities, and other common administrative support
functions, including corporate accounting, finance and financial
reporting, audit and tax costs, corporate and other legal support
functions, and certain information technology and human resources
expense. Accordingly, the combined financial information of the
Studio Business, includes allocations of certain general and
administrative expenses (inclusive of share-based compensation)
from Lionsgate related to these corporate and shared service
functions historically provided by Lionsgate. These expenses have
been allocated to the Studio Business on the basis of direct usage
when identifiable, with the remainder allocated on a pro rata basis
of consolidated Lionsgate revenue, payroll expense or other
measures considered to be a reasonable reflection of the historical
utilization levels of these services. Accordingly, the Studio
Business combined financial information may not necessarily be
indicative of the conditions that would have existed or the results
of operations if the Studio Business had been operated as an
unaffiliated entity, and may not be indicative of the expenses that
the Studio Business will incur in the future.
Business Combination. On May 13,
2024, SEAC II Corp., a Cayman
Islands exempted company ("New SEAC"), consummated a
business combination (the "Business Combination") among New SEAC,
Screaming Eagle Acquisition Corp., a Cayman Islands exempted company and then
parent of New SEAC ("SEAC"), and LG Orion Holdings ULC, a
British Columbia unlimited
liability company ("StudioCo") and a wholly-owned subsidiary of
Lionsgate, pursuant to a Business Combination Agreement, dated as
of December 22, 2023, as amended, by
and among New SEAC, SEAC, Lionsgate, LG Sirius Holdings ULC, a
British Columbia unlimited
liability company and a wholly-owned subsidiary of Lionsgate
("Studio HoldCo"), StudioCo, SEAC MergerCo, a Cayman Islands exempted company and a
wholly-owned subsidiary of New SEAC ("MergerCo"), and 1455941 B.C. Unlimited Liability Company, a
British Columbia unlimited
liability company and a wholly-owned subsidiary of SEAC ("New BC
Sub"). In connection with the closing of the Business
Combination, SEAC II Corp. changed its name to "Lionsgate Studios
Corp." (referred to as "Lionsgate Studios"). Lionsgate Studios has
continued the existing business operations of StudioCo, which
consists of the Studio Business. Lionsgate Studios became a
separate publicly traded company and its common shares commenced
trading on Nasdaq under the symbol "LION" on May 14, 2024.
In connection with the Business Combination, on May 8, 2024, Lionsgate and StudioCo entered into
a separation agreement (the "Separation Agreement") and a shared
services and overhead sharing agreement (the "Shared Services
Agreement") which took effect upon the consummation of the Business
Combination. The Shared Services Agreement facilitates the
allocation to Lionsgate Studios of all corporate general and
administrative expenses of Lionsgate, except for an amount of
$10 million to be allocated annually
to Lionsgate or one of its subsidiaries (other than subsidiaries of
Lionsgate Studios), with reimbursements to be made by the parties
thereto as necessary in connection with such allocations.
In addition, the Separation Agreement and the Shared Services
Agreement provide that officers, employees and directors of
Lionsgate Studios will continue to receive awards of equity and
equity-based compensation pursuant to the existing plans of
Lionsgate. Such awards will be treated as a capital contribution by
Lionsgate to Lionsgate Studios, and the accounting expenses for
such awards will be allocated to Lionsgate Studios.
LIONSGATE STUDIOS CORP.
(STUDIO BUSINESS OF LIONS GATE ENTERTAINMENT
CORP.)
SEGMENT INFORMATION
The Studio Business's reportable segments have been determined
based on the distinct nature of their operations, the Studio
Business's internal management structure, and the financial
information that is evaluated regularly by the Studio Business's
chief operating decision maker.
The Studio Business has two reportable business segments: (1)
Motion Picture, (2) Television Production.
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 the Starz Business, and the ancillary market
distribution of Starz original productions and licensed product.
Additionally, the Television Production segment includes the
results of operations of 3 Arts Entertainment.
Segment information is presented in the tables below. The Motion
Picture and Television Production segments include the results of
operations of eOne from the acquisition date of December 27, 2023.
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Segment
revenues
|
|
|
|
|
|
|
|
|
Motion
Picture
|
$
410.6
|
|
$
532.1
|
|
$
1,656.3
|
|
$
1,323.7
|
|
Television
Production
|
469.3
|
|
291.5
|
|
1,330.1
|
|
1,760.1
|
|
Total
revenue
|
$
879.9
|
|
$
823.6
|
|
$
2,986.4
|
|
$
3,083.8
|
|
Segment
profit
|
|
|
|
|
|
|
|
|
Motion
Picture
|
$
82.2
|
|
$
93.8
|
|
$
319.4
|
|
$
276.5
|
|
Television
Production
|
52.6
|
|
28.8
|
|
146.8
|
|
133.4
|
|
Total segment
profit(1)
|
134.8
|
|
122.6
|
|
466.2
|
|
409.9
|
|
Corporate general and
administrative expenses(2)
|
(41.9)
|
|
(53.5)
|
|
(136.1)
|
|
(122.9)
|
|
Adjusted
OIBDA(1)
|
$
92.9
|
|
$
69.1
|
|
$
330.1
|
|
$
287.0
|
_______________
|
(1)
|
See "Use of Non-GAAP
Financial Measures" for the definition of Total Segment Profit, and
Adjusted OIBDA and further below for the reconciliation to the most
directly comparable GAAP financial measure.
|
|
(2)
|
Corporate general and
administrative expenses represent Lionsgate's total corporate
general and administrative expenses and functions which will remain
a cost of the Studio Business and consist of the historical amounts
of corporate general and administrative expense allocated to the
Studio Business, plus the historical amounts of corporate general
and administrative expense allocated to the Starz Business, as
presented below:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Corporate general and
administrative expense historically allocated to the Studio
Business
|
$
34.3
|
|
$
43.2
|
|
$
110.6
|
|
$
100.9
|
|
Corporate general and
administrative expense historically allocated to the Starz
Business
|
7.6
|
|
10.3
|
|
25.5
|
|
22.0
|
|
Corporate general and
administrative expenses
|
$
41.9
|
|
$
53.5
|
|
$
136.1
|
|
$
122.9
|
Note this adjustment excludes the reimbursement of general and
administrative expenses from Lionsgate pursuant to the Shared
Services Agreement which does not become effective until
May 13, 2024.
The following table reconciles corporate general and
administrative expense allocated to the Studio Business to the
Studio Business's total combined general and administration
expense:
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
General and
administrative expenses
|
|
|
|
|
|
|
|
|
Corporate general and
administrative expense historically allocated to the Studio
Business
|
$
34.3
|
|
$
43.2
|
|
$
110.6
|
|
$
100.9
|
|
Segment general and
administrative expenses
|
48.1
|
|
63.5
|
|
171.8
|
|
161.7
|
|
Share-based
compensation expense included in general and administrative
expense
|
8.6
|
|
29.1
|
|
54.8
|
|
69.2
|
|
Purchase accounting
and related adjustments
|
(3.4)
|
|
8.8
|
|
12.0
|
|
55.2
|
|
$
87.6
|
|
$
144.6
|
|
$
349.2
|
|
$
387.0
|
The Studio Business'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, when applicable, corporate and allocated general
and administrative expense, restructuring and other costs,
share-based compensation, certain charges related to the COVID-19
global pandemic, charges related to Russia's invasion of Ukraine, and purchase accounting and related
adjustments. The Studio Business 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 Studio Business's management and
enables them to understand the fundamental performance of the
Company's businesses. Segment profit is a GAAP financial
measure.
We also present above our total segment profit for all of our
segments. Total segment profit, when presented outside of the
segment information and reconciliations included in the notes to
our combined financial statements, is considered a non-GAAP
financial measure, and should be considered in addition to, not as
a substitute for, or superior to, measures of financial performance
prepared in accordance with United States GAAP. We use this
non-GAAP measure, among other measures, to evaluate the aggregate
operating performance of our business.
LIONSGATE STUDIOS CORP.
(STUDIO BUSINESS OF LIONS GATE ENTERTAINMENT
CORP.)
RECONCILIATION OF OPERATING INCOME
TO ADJUSTED OIBDA AND TOTAL SEGMENT
PROFIT
The following table reconciles the GAAP measure, operating
income to the non-GAAP measures, Total Segment Profit and Adjusted
OIBDA:
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Operating
income
|
$
19.4
|
|
$
32.4
|
|
$
139.7
|
|
$
139.6
|
|
Adjusted depreciation
and amortization(1)
|
3.5
|
|
3.3
|
|
10.5
|
|
12.2
|
|
Restructuring and
other(2)
|
71.4
|
|
6.6
|
|
132.9
|
|
27.2
|
|
COVID-19 related
charges (benefit)(3)
|
(0.4)
|
|
(2.6)
|
|
(0.9)
|
|
(8.9)
|
|
Content
charges(4)
|
0.4
|
|
0.4
|
|
1.5
|
|
8.1
|
|
Adjusted share-based
compensation expense(5)
|
8.6
|
|
29.1
|
|
54.8
|
|
69.2
|
|
Purchase accounting
and related adjustments(6)
|
(2.4)
|
|
10.2
|
|
17.1
|
|
61.6
|
|
Corporate general and
administrative expense historically allocated to the Studio
Business
|
34.3
|
|
43.2
|
|
110.6
|
|
100.9
|
|
Total Segment
Profit
|
$
134.8
|
|
$
122.6
|
|
$
466.2
|
|
$
409.9
|
|
Corporate general and
administrative expenses(7)
|
(41.9)
|
|
(53.5)
|
|
(136.1)
|
|
(122.9)
|
|
Adjusted
OIBDA(1)
|
$
92.9
|
|
$
69.1
|
|
$
330.1
|
|
$
287.0
|
___________________
|
(1)
|
Adjusted depreciation
and amortization represents depreciation and amortization as
presented on our combined 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
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Depreciation and
amortization
|
$
4.5
|
|
$
4.7
|
|
$
15.6
|
|
$
17.9
|
|
Less: Amount included
in purchase accounting and related adjustments
|
(1.0)
|
|
(1.4)
|
|
(5.1)
|
|
(5.7)
|
|
Adjusted depreciation
and amortization
|
$
3.5
|
|
$
3.3
|
|
$
10.5
|
|
$
12.2
|
|
(2)
|
Restructuring and other
includes restructuring and severance costs, certain transaction and
other costs, and certain unusual items, when applicable, as shown
in the table below:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Restructuring and
other:
|
|
|
|
|
|
|
|
|
Content and other
impairments(a)
|
$
12.8
|
|
$
—
|
|
$
12.8
|
|
$
5.9
|
|
Severance(b)
|
|
|
|
|
|
|
|
|
Cash
|
3.2
|
|
1.6
|
|
27.5
|
|
10.8
|
|
Accelerated vesting on
equity awards
|
0.4
|
|
2.1
|
|
7.7
|
|
4.2
|
|
Total severance
costs
|
3.6
|
|
3.7
|
|
35.2
|
|
15.0
|
|
COVID-19 related
charges included in restructuring and other
|
—
|
|
—
|
|
—
|
|
0.1
|
|
Transaction and other
costs(c)
|
55.0
|
|
2.9
|
|
84.9
|
|
6.2
|
|
$
71.4
|
|
$
6.6
|
|
$
132.9
|
|
$
27.2
|
_______________________
|
(a)
|
Amounts in the three
months and fiscal year ended March 31, 2024 include $12.8 million
of development costs written off in connection with changes in
strategy in the Television Production segment as a result of the
acquisition of eOne. Amounts in the fiscal year ended March 31,
2023 include an impairment of an operating lease right-of-use asset
related to the Studio Business and corporate facilities amounting
to $5.8 million associated with a portion of a facility lease that
will no longer be utilized by the Studio Business. The impairment
reflects a decline in market conditions since the inception of the
lease impacting potential sublease opportunities, and represents
the difference between the estimated fair value, which was
determined based on the expected discounted future cash flows of
the lease asset, and the carrying value.
|
|
(b)
|
Severance costs in the
three months and fiscal years ended March 31, 2024, 2023 and 2022
were primarily related to restructuring activities and other
cost-saving initiatives. In fiscal 2024, amounts were due to
restructuring activities including integration of the acquisition
of eOne and our Motion Picture and Television Production
segment.
|
|
(c)
|
Amounts in the fiscal
years ended March 31, 2024, 2023 and 2022 reflect transaction,
integration and legal costs associated with certain strategic
transactions, and restructuring activities and also include costs
and benefits associated with legal and other matters. In fiscal
2024, these amounts include $49.2 million associated with the
acquisition of additional interest in 3 Arts Entertainment. Due to
the new arrangement representing a modification of terms of the
compensation element under the previous arrangement which resulted
in the reclassification of the equity award to a liability award,
the Studio Business recognized incremental compensation expense of
$49.2 million, representing the excess of the fair value of the
modified award over amounts previously expensed. In addition,
transaction and other costs in fiscal 2024 includes approximately
$16.6 million of a loss associated with a theft at a production of
a 51% owned consolidated entity. The Studio Business expects to
recover a portion of this amount under its insurance coverage and
from the noncontrolling interest holders of this entity. The
remaining amounts in fiscal 2024 primarily represent acquisition
and integration costs related to the acquisition of eOne, and costs
associated with the separation of the Starz Business from the
Studio Business.
|
|
(3)
|
Amounts represent the
incremental costs, if any, included in direct operating expense
resulting from circumstances associated with the COVID-19 global
pandemic, net of insurance recoveries. During fiscal 2024 and 2023,
the Studio Business has incurred a net benefit in direct operating
expense due to insurance recoveries in excess of the incremental
costs expensed in the period. These charges (benefits) are excluded
from segment operating results.
|
|
(4)
|
Amounts represent
certain unusual content charges. In the fiscal year ended March 31,
2023, the amounts represent development costs written off as a
result of changes in strategy across the Studio Business's
theatrical slate in connection with certain management changes and
changes in the theatrical marketplace in the Motion Picture
segment. These charges are excluded from segment results and
included in amortization of investment in film and television
programs in direct operating expense on the combined statement of
operations.
|
|
(5)
|
The following table
reconciles total share-based compensation expense to adjusted
share-based compensation expense:
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Total share-based
compensation expense
|
$
9.0
|
|
$
31.2
|
|
$
62.5
|
|
$
73.4
|
|
Less: Amount included
in restructuring and other(a)
|
(0.4)
|
|
(2.1)
|
|
(7.7)
|
|
(4.2)
|
|
Adjusted share-based
compensation
|
$
8.6
|
|
$
29.1
|
|
$
54.8
|
|
$
69.2
|
|
|
|
|
(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.
|
|
(6)
|
Purchase accounting and
related adjustments primarily represent the amortization of
non-cash fair value adjustments to certain assets acquired in
recent acquisitions. The following sets forth the amounts included
in each line item in the financial statements:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Purchase accounting and
related adjustments:
|
|
|
|
|
|
|
|
|
Direct
operating
|
$
—
|
|
$
—
|
|
$
—
|
|
$
0.7
|
|
General and
administrative expense(a)
|
(3.4)
|
|
8.8
|
|
12.0
|
|
55.2
|
|
Depreciation and
amortization
|
1.0
|
|
1.4
|
|
5.1
|
|
5.7
|
|
$
(2.4)
|
|
$
10.2
|
|
$
17.1
|
|
$
61.6
|
|
|
|
|
(a)
|
These adjustments
include the expense associated with the noncontrolling equity
interests in the distributable earnings related to 3 Arts
Entertainment, the non-cash charges for the accretion of the
noncontrolling interest discount related to 3 Arts Entertainment
(through November 2022), and the amortization of the recoupable
portion of the purchase price (through May 2023) related to 3 Arts
Entertainment, all of which are accounted for as compensation and
are included in general and administrative expense, as presented in
the table below. The noncontrolling equity interests in the
distributable earnings of 3 Arts Entertainment are reflected
as an expense rather than noncontrolling interest in the
combined statements of operations due to the relationship to
continued employment.
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Amortization of
recoupable portion of the purchase price
|
$
—
|
|
$
1.9
|
|
$
1.3
|
|
$
7.7
|
|
Noncontrolling
interest discount amortization
|
—
|
|
—
|
|
—
|
|
13.2
|
|
Noncontrolling equity
interest in distributable earnings
|
(3.4)
|
|
6.9
|
|
10.7
|
|
34.3
|
|
$
(3.4)
|
|
$
8.8
|
|
$
12.0
|
|
$
55.2
|
|
(7)
|
Corporate general and
administrative expenses represent Lionsgate's total corporate
general and administrative expenses and functions which will remain
a cost of the Studio Business and consist of the historical amounts
of corporate general and administrative expense allocated to the
Studio Business, plus the historical amounts of corporate general
and administrative expense allocated to the Starz Business, see
footnote (2) in Segment Information above for further
detail.
|
|
LIONSGATE STUDIOS
CORP.
(STUDIO BUSINESS OF
LIONS GATE ENTERTAINMENT CORP.)
RECONCILIATION OF
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
TO ADJUSTED FREE
CASH FLOW
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(Unaudited, amounts
in millions)
|
|
Net Cash Flows
Provided By Operating Activities
|
$
87.3
|
|
$
58.3
|
|
$
488.9
|
|
$
346.1
|
|
Capital
expenditures
|
(4.7)
|
|
(2.0)
|
|
(9.9)
|
|
(6.5)
|
|
Net borrowings under
and (repayment) of production and related
loans(1):
|
|
|
|
|
|
|
|
|
Production
loans
|
24.0
|
|
(86.7)
|
|
(159.2)
|
|
378.3
|
|
Production tax credit
facility
|
9.8
|
|
0.4
|
|
27.7
|
|
7.1
|
|
Proceeds from the
termination of interest rate swaps(2)
|
—
|
|
—
|
|
—
|
|
(188.7)
|
|
Adjusted Free Cash
Flow
|
$
116.4
|
|
$
(30.0)
|
|
$
347.5
|
|
$
536.3
|
________________
|
(1)
|
See "Reconciliation for
Non-GAAP Adjustments for Net Borrowings Under and (Repayment) of
Production and Related Loans" for reconciliation to the most
directly comparable GAAP financial measure.
|
|
(2)
|
During the year ended
March 31, 2023, the Studio Business terminated certain interest
rate swaps (a portion of which were considered hybrid instruments
with a financing component and an embedded at-market derivative)
and in exchange, received approximately $56.4 million. The $56.4
million received was classified in the combined statement of cash
flows as cash provided by operating activities of $188.7 million
reflecting the amount received for the derivative portion of the
terminated swaps, and a use of cash in financing activities of
$134.5 million reflecting the pay down of the financing component
of the terminated swaps (inclusive of payments made between April
1, 2022 and the termination date amounting to $3.2 million). Since
the termination of the interest rate swaps was an unusual event,
the Studio Business is excluding the $188.7 million reflected in
cash provided by operating activities from its adjusted free cash
flow. The Studio Business continues to have $1.7 billion notional
amount of interest rate swaps as a cash flow hedge of its variable
interest rate debt.
|
LIONSGATE STUDIOS CORP.
(STUDIO BUSINESS OF LIONS GATE ENTERTAINMENT
CORP.)
RECONCILIATION OF NON-GAAP ADJUSTMENTS FOR NET
BORROWINGS UNDER AND REPAYMENT OF PRODUCTION AND RELATED
LOANS
The following tables reconcile the non-GAAP adjustments for net
borrowings under and (repayment) of production and related loans to
the changes in the related balance sheet amounts and the combined
statement of cash flows:
|
Three Months Ended
March 31, 2024
|
|
Non-GAAP
Adjustments
to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet and
Statement of Cash Flows
Amounts
|
|
Production
Loans
|
|
Production
Tax Credit Facility
|
|
Other Film
Related Obligations
|
|
|
(Unaudited, amounts
in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
1,812.6
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$
608.6
|
|
$
28.1
|
|
$ 111.3
|
|
748.0
|
|
Repayments
|
(599.4)
|
|
(18.3)
|
|
(7.5)
|
|
(625.2)
|
|
Adjustment related to
net payments on loans outstanding prior to acquisition of
eOne
|
14.8
|
|
—
|
|
—
|
|
|
|
$
24.0
|
|
$
9.8
|
|
$ 103.8
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
1,938.0
|
|
Three Months Ended
March 31, 2023
|
|
Non-GAAP
Adjustments
to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet and
Statement of Cash Flows Amounts
|
|
Production
Loans
|
|
Production
Tax Credit Facility
|
|
Other Film
Related Obligations
|
|
|
(Unaudited, amounts
in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
2,040.9
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$
227.0
|
|
$
27.4
|
|
$
0.1
|
|
254.5
|
|
Repayments
|
(313.7)
|
|
(27.0)
|
|
(16.3)
|
|
(357.0)
|
|
$
(86.7)
|
|
$
0.4
|
|
$
(16.2)
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
1,940.1
|
|
Year Ended March 31,
2024
|
|
Non-GAAP
Adjustments
to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet and
Statement of Cash Flows
Amounts
|
|
Production
Loans
|
|
Production
Tax Credit Facility
|
|
Other Film
Related Obligations
|
|
|
(Unaudited, amounts
in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
1,940.1
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$ 1,476.6
|
|
$
76.4
|
|
$ 267.8
|
|
1,820.8
|
|
Repayments
|
(1,650.6)
|
|
(48.7)
|
|
(243.6)
|
|
(1,942.9)
|
|
Adjustment related to
net payments on loans outstanding prior to acquisition of
eOne
|
14.8
|
|
|
|
|
|
|
|
$
(159.2)
|
|
$
27.7
|
|
$
24.2
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
14.2
|
|
|
|
|
|
|
|
|
|
Film related
obligations assumed from the acquisition of eOne
|
|
|
|
|
|
|
105.8
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
1,938.0
|
|
Year Ended March 31,
2023
|
|
Non-GAAP
Adjustments
to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet and
Statement of Cash Flows Amounts
|
|
Production
Loans
|
|
Production
Tax Credit Facility
|
|
Other Film
Related Obligations
|
|
|
(Unaudited, amounts
in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
1,305.4
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$ 1,083.5
|
|
$
84.4
|
|
$ 416.8
|
|
1,584.7
|
|
Repayments
|
(705.2)
|
|
(77.3)
|
|
(174.0)
|
|
(956.5)
|
|
$
378.3
|
|
$
7.1
|
|
$ 242.8
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
6.5
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
1,940.1
|
LIONSGATE STUDIOS CORP.
(STUDIO BUSINESS OF LIONS GATE ENTERTAINMENT
CORP.)
USE OF NON-GAAP FINANCIAL MEASURES
This earnings release presents the following important
financial measures utilized by the Studio Business of 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, certain charges
(benefits) related to the COVID-19 global pandemic, certain content
charges as a result of management changes and/or changes in
strategy, and unusual gains or losses (such as goodwill and
intangible asset impairment and charges related to Russia's invasion of Ukraine), when applicable.
- Adjusted depreciation and amortization represents depreciation
and amortization as presented on our combined 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 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 other costs, and certain unusual
items, when applicable.
- COVID-19 related charges or benefits include incremental costs
associated with the pausing and restarting of productions including
paying/hiring certain cast and crew, maintaining idle facilities
and equipment costs, and when applicable, certain motion picture
and television impairments and development charges associated with
changes in performance expectations or the feasibility of
completing the project resulting from circumstances associated with
the COVID-19 global pandemic, net of insurance recoveries, which
are included in direct operating expense, when applicable. In
addition, the costs include early or contractual marketing spends
for film releases and events that have been canceled or delayed and
will provide no economic benefit, which are included in
distribution and marketing expense, when applicable.
- Content charges include certain charges as a result of changes
in management and/or changes in content strategy, 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 non-cash charge
for the amortization of the recoupable portion of the purchase
price and the expense associated with the noncontrolling equity
interests in the distributable earnings 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.
Adjusted OIBDA is also adjusted to reflect Lionsgate's total
corporate general and administrative expenses and functions which
will remain a cost of the Studio Business and consists of the
historical amounts of corporate general and administrative expense
allocated to the Studio Business, plus the historical amounts of
corporate general and administrative expense allocated to the Starz
Business. Segment profit includes general and administrative
expenses directly related to the segment and excludes corporate
general and administrative expense.
Total Segment Profit: We present the sum of our
Motion Picture and Television Production segment profit as our
total segment profit. Total segment profit, when presented outside
of the segment information and reconciliations included in our
combined financial statements, is considered a non-GAAP financial
measure, and should be considered in addition to, not as a
substitute for, or superior to, measures of financial performance
prepared in accordance with United States GAAP. We use this
non-GAAP measure, among other measures, to evaluate the aggregate
operating performance of our business.
The Company believes the presentation of total segment profit is
relevant and useful for investors because it allows investors to
view total 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
before non-operating items. Total segment profit is considered an
important measure of the Company's performance because it reflects
the aggregate profit contribution from the Company's segments, and
represents a measure, consistent with our segment profit, that
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. Not all companies calculate segment profit or
total segment profit in the same manner, and segment profit and
total segment profit as defined by the Company may not be
comparable to similarly titled measures presented by other
companies due to differences in the methods of calculation and
excluded items.
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 and related loans (which
includes our production tax credit facility), plus or minus certain
unusual or non-recurring items, such as insurance recoveries on
prior shareholder litigation, proceeds from the termination of
interest rate swaps.
The adjustment for the production and related loans, exclusive
of our production tax credit facility, 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 prior to
the time the Company pays for the film or television program
through the payment of the associated production or related loan
which occurs at or near completion of the production, or in some
cases, over the period revenues and cash receipts are being
generated, as more fully described below.
The cost of producing films and television programs, which is
reflected as a reduction of the GAAP based cash flows provided by
(used in) operating activities, is often financed through
production loans. The adjustment for production and related loans
is made in order to better align the timing of the cash flows
associated with producing films and television programs with the
timing of the repayment of the production loans, which is
consistent with how management views its production cash spend and
manages the Company's cash flows and working capital needs.
Borrowings on production loans offset the spend on investment in
films reflected in the GAAP based cash flows provided by (used in)
operating activities and thus increase the Adjusted Free Cash Flows
as compared to the GAAP based cash flows provided by (used in)
operating activities and subsequent payments on production loans
reflect the payment for the production of the film or TV program
and reduce Adjusted Free Cash Flows as compared to the GAAP based
cash flows provided by (used in) operating activities.
The adjustment for the production tax credit facility is made to
better reflect the timing of the cash requirements of the
production, since a portion of the amounts expended initially are
later refunded through the receipt of the tax credit, as more fully
described below. The production tax credit facility reduces the
timing difference between the payments for production cost and the
receipt of the tax credit and thus reflects the cash cost of the
film or television program at or near the time the film or
television program is produced and completed.
Part of the cost of a film or television program is effectively
funded through obtaining government incentives, however, the
incentives are not received until a future period which could be a
few years after the completion of the film. The tax credit facility
reflects borrowings collateralized by the tax credits to be
received in the future and thus by including these borrowings in
Adjusted Free Cash Flow it has the effect of better aligning the
receipt of the tax credits with the timing of the production and
completion of the film and television programs, which is consistent
with how management views its production cash spend and manages the
Company's cash flows and working capital needs. Borrowings under
the tax credit facility reduce the cash spend reflected in the GAAP
based cash flows provided by (used in) operating activities and
thus increase adjusted free cash flows and payments on the tax
credit facility offset the tax credit receivable collection
reflected in the GAAP based cash flows provided by (used in)
operating activities and reduce adjusted free cash flows as
compared to the GAAP based cash flows provided by (used in)
operating activities.
The Company believes that it is more meaningful to reflect the
impact of the payment for these films and television programs when
the payments are made under the production loans and the receipt of
the tax credit when the film is being produced in its Adjusted Free
Cash Flow.
Overall: 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.
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 or cash
flow as determined in accordance with GAAP. Reconciliations of the
adjusted metrics utilized to their corresponding GAAP metrics are
provided above.
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SOURCE Lionsgate; Lionsgate Studios
