LIOS GATE August 9, 2023
LIONS GATE ENTERTAINMENT CORP.
TRENDING SCHEDULES
BASIS OF PRESENTATION
Purpose of Trending Schedules
The trending schedules summarize unaudited financial information to facilitate your review and understanding of Lions Gate Entertainment Corp.'s (the "Company," "Lionsgate," "we," "us," and "our") operating results. The trending schedules set forth important financial measures utilized by the Company 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 U.S. GAAP.
Financial Measures
Lionsgate utilizes the non-GAAP measures Adjusted OIBDA, Adjusted Free Cash Flow, and Adjusted Net Income (Loss) Attributable to Lions Gate Entertainment Corp. Shareholders and Adjusted EPS as important financial measures, among other measures, to evaluate the operating performance of our business (as defined below). The following schedules also provide additional financial measures the Company believes are useful in evaluating our operating performance. These measures include certain leverage ratios, U.S. theatrical prints and advertising (P&A) and premium video-on-demand ("Premium VOD") expense incurred, amount of investment in content, number of subscribers, and filmed entertainment backlog.
Definitions of the non-GAAP measures are provided below:
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, and certain programming and content charges as a result of management changes and/or changes in strategy, and unusual gains or losses (such as goodwill impairment and charges related to Russia's invasion of Ukraine), when applicable.
- Adjusted depreciation and amortization represents depreciation 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-19related 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: We present 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 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, payments on impaired content in territories to be exited, and payments on impaired content in territories 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 under the LIONSGATE+ international restructuring. The adjustment is made because these cash payments relate to content in territories the Company has exited, 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 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 of the 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.
Adjusted OIBDA Leverage Ratios: Adjusted OIBDA Leverage Ratio is defined as Net Corporate Debt, divided by Adjusted OIBDA for the trailing twelve months on a combined (Starz and Lionsgate) basis. Net Corporate Debt represents total Corporate debt minus cash and equivalents. Corporate Debt excludes capital leases, convertible notes and production loans.
Overall:These measures are non-GAAP financial measures as defined in Regulation G promulgated by the Securities and Exchange Commission and are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. 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. The Company utilizes these measures, among others, to evaluate the performance of its business relative to its peers and the broader market. 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.
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.
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LIONS GATE ENTERTAINMENT CORP. | ||||||||||||
TRENDING SCHEDULES | ||||||||||||
Fiscal Year | Three Months | |||||||||||
Three Months Ended | Ended | Ended | ||||||||||
(in millions) | 6/30/22 | 9/30/22 | 12/31/22 | 3/31/23 | 3/31/23 | 6/30/23 | ||||||
Studio Business(1): | ||||||||||||
Motion Picture | ||||||||||||
Revenue | $ | 279 | $ | 224 | $ | 289 | $ | 532 | $ | 1,324 | $ | 407 |
Gross Contribution | 73 | 79 | 97 | 137 | 386 | 99 | ||||||
Segment Profit | 51 | 56 | 77 | 94 | 277 | 69 | ||||||
Television Production | ||||||||||||
Revenue | 432 | 431 | 605 | 292 | 1,760 | 219 | ||||||
Gross Contribution | 31 | 24 | 82 | 49 | 185 | 36 | ||||||
Segment Profit | 20 | 14 | 72 | 29 | 133 | 23 | ||||||
Total Studio Business: | ||||||||||||
Revenue | 711 | 655 | 894 | 824 | 3,084 | 625 | ||||||
Gross Contribution | 104 | 103 | 179 | 186 | 572 | 134 | ||||||
Segment Profit | 70 | 69 | 148 | 123 | 410 | 92 | ||||||
Media Networks | ||||||||||||
Revenue | 381 | 396 | 380 | 389 | 1,547 | 381 | ||||||
Gross Contribution | (14) | 45 | 72 | 99 | 203 | 58 | ||||||
Segment Profit | (37) | 21 | 50 | 73 | 107 | 32 | ||||||
Eliminations | ||||||||||||
Revenue | (198) | (176) | (274) | (127) | (776) | (98) | ||||||
Gross Contribution | (5) | (18) | (8) | (4) | (36) | (8) | ||||||
Segment Profit | (5) | (18) | (8) | (4) | (36) | (8) | ||||||
Corporate and Other | ||||||||||||
Corporate G&A | (23) | (25) | (21) | (54) | (123) | (30) | ||||||
Adjusted OIBDA | $ | 5 | $ | 47 | $ | 168 | $ | 138 | $ | 358 | $ | 86 |
Goodwill impairment(2) | - | (1,475) | - | - | (1,475) | - | ||||||
Adjusted Depreciation & Amortization(3) | (10) | (10) | (10) | (11) | (40) | (10) | ||||||
Restructuring and Other(4) | (8) | (233) | (75) | (95) | (412) | (32) | ||||||
COVID-19 Related (Charges) Benefit(5) | 1 | 6 | 2 | 3 | 12 | (0) | ||||||
Programming and Content Charges(6) | - | (7) | - | 0 | (7) | - | ||||||
Adjusted Share-Based Compensation(7) | (8) | (27) | (23) | (40) | (98) | (16) | ||||||
Purchase Accounting and Related Adjustments(8) | (48) | (49) | (53) | (44) | (196) | (44) | ||||||
Operating Income (Loss) | $ | (68) | $ | (1,748) | $ | 8 | $ | (50) | $ | (1,858) | $ | (17) |
Operating Income (Loss) before Goodwill Impairment | ||||||||||||
and Media Networks Restructuring Charges | $ | (68) | $ | (54) | $ | 89 | $ | 36 | $ | 3 | $ | 11 |
Goodwill impairment(2) | - | (1,475) | - | - | (1,475) | - | ||||||
Media Networks restructuring charges(9) | - | (219) | (81) | (86) | (385) | (28) | ||||||
Operating Income (Loss) | $ | (68) | $ | (1,748) | $ | 8 | $ | (50) | $ | (1,858) | $ | (17) |
Adjusted OIBDA - trailing twelve months | $ | 287 | $ | 227 | $ | 303 | $ | 358 | $ | 439 |
Notes:
The unaudited financial results in the trending schedules are presented solely for informational purposes and are not necessarily indicative of the future financial results of Lionsgate.
- We refer to our Motion Picture and Television Production segments collectively as our Studio Business.
- During the quarter ended September 30, 2022, the Company recorded a goodwill impairment charge of $1.475 billion related to its Media Networks reporting unit goodwill.
- Adjusted Depreciation and Amortization represents depreciation and amortization as presented on our unaudited condensed consolidated statement of operations less the depreciation and amortization related to amortization of 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.
- Restructuring and other includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable.
-
Amounts represent the incremental costs included in direct operating expense and distribution and marketing expense resulting from circumstances associated with the COVID-19 global pandemic, net of insurance
recoveries. During the quarter ended June 30, 2023 and the fiscal year ended March 31, 2023, the Company has incurred a net benefit in direct operating expense due to insurance recoveries in excess of the incremental costs in the fiscal years. These charges (benefits) are excluded from segment operating results. - In the second quarter of fiscal 2023, 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 operating results and included in amortization of investment in film and television programs in direct operating expense in the consolidated statement of operations.
- 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.
- Primarily represents the amortization of non-cash fair value adjustments to certain assets acquired in recent acquisitions. These adjustments include the accretion of the noncontrolling interest discount related to
Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with the 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. - As a result of the Media Networks restructuring activities, the Company has incurred certain content impairment and severance charges. In the quarter ended September 30, 2022, Media Networks restructuring charges included above represent $213.0 million for content impairment and $5.9 million for severance charges related to the restructuring of the Company's LIONSGATE+ business. In the quarters ended December 31, 2022, March 31, 2023 and June 30, 2023, amounts represent $80.8 million, $85.5 million, and $28.0 million respectively, for content impairment charges.
* Amounts may not add precisely due to rounding
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LIONS GATE ENTERTAINMENT CORP. | ||||||||||||
TRENDING SCHEDULES | ||||||||||||
MEDIA NETWORKS SEGMENT DETAIL | ||||||||||||
Fiscal Year | Three Months | |||||||||||
Three Months Ended | Ended | Ended | ||||||||||
(in millions) | 6/30/22 | 9/30/22 | 12/31/22 | 3/31/23 | 3/31/23 | 6/30/23 | ||||||
Starz Domestic Networks | ||||||||||||
Revenue | $ | 350 | $ | 358 | $ | 342 | $ | 347 | $ | 1,396 | $ | 337 |
Gross Contribution | 29 | 83 | 75 | 102 | 288 | 59 | ||||||
Product Line Profit | 12 | 65 | 58 | 83 | 218 | 38 | ||||||
LIONSGATE+ | ||||||||||||
Revenue | 32 | 39 | 39 | 42 | 151 | 44 | ||||||
Gross Contribution | (42) | (38) | (2) | (3) | (85) | (1) | ||||||
Product Line Profit | (49) | (44) | (9) | (10) | (112) | (6) | ||||||
Total Media Networks Segment | ||||||||||||
Revenue | 381 | 396 | 380 | 389 | 1,547 | 381 | ||||||
Gross Contribution | (14) | 45 | 72 | 99 | 203 | 58 | ||||||
Segment Profit | $ | (37) | $ | 21 | $ | 50 | $ | 73 | $ | 107 | $ | 32 |
Subscriber Information excluding LIONSGATE+ subscribers in previously exited territories through June 30, 2023: | ||||||||||||
(units in millions at end of period) | As of | As of | ||||||||||
6/30/22 | 9/30/22 | 12/31/22 | 3/31/23 | 6/30/23 | ||||||||
Starz Domestic | ||||||||||||
Linear | 9.2 | 8.7 | 8.3 | 8.0 | 7.7 | |||||||
OTT | 12.2 | 12.3 | 11.6 | 12.3 | 11.8 | |||||||
Total | 21.4 | 21.0 | 19.9 | 20.3 | 19.5 | |||||||
LIONSGATE+ excluding territories exited | ||||||||||||
Linear | 1.8 | 1.8 | 1.9 | 1.9 | 1.8 | |||||||
OTT(1) | 4.2 | 4.6 | 4.8 | 5.0 | 5.3 | |||||||
Total | 6.0 | 6.4 | 6.7 | 6.9 | 7.1 | |||||||
Total Starz excluding territories exited | ||||||||||||
Linear | 11.0 | 10.5 | 10.2 | 9.9 | 9.5 | |||||||
OTT(1) | 16.4 | 16.9 | 16.4 | 17.3 | 17.1 | |||||||
Total Starz excluding territories exited | 27.4 | 27.4 | 26.6 | 27.2 | 26.6 | |||||||
Starz Play Arabia(2) | 1.9 | 2.0 | 2.1 | 2.5 | 2.8 | |||||||
Total (including Starz Play Arabia) excluding territories exited | 29.3 | 29.4 | 28.7 | 29.7 | 29.4 | |||||||
Subscribers by Platform excluding territories exited: | ||||||||||||
Linear Subscribers | 11.0 | 10.5 | 10.2 | 9.9 | 9.5 | |||||||
OTT Subscribers(1)(3) | 18.3 | 18.9 | 18.5 | 19.8 | 19.9 | |||||||
Total Global Subscribers excluding territories exited | 29.3 | 29.4 | 28.7 | 29.7 | 29.4 | |||||||
Notes: | ||||||||||||
(1) Excludes LIONSGATE+ subscribers in previously exited territories in Continental Europe and Japan as follows: | ||||||||||||
As of | As of | |||||||||||
6/30/22 | 9/30/22 | 12/31/22 | 3/31/23 | 6/30/23 | ||||||||
OTT Subscribers | 8.0 | 8.4 | 8.5 | 0.6 | - |
- Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.
- OTT Subscribers includes subscribers of STARZPLAY Arabia, as presented above.
* Amounts may not add precisely due to rounding
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LIONS GATE ENTERTAINMENT CORP. | ||||||||||||
TRENDING SCHEDULES | ||||||||||||
KEY PERFORMANCE INDICATORS (KPIs) | ||||||||||||
Fiscal Year | Three Months | |||||||||||
Three Months Ended | Ended | Ended | ||||||||||
(in millions, except per share data) | 6/30/22 | 9/30/22 | 12/31/22 | 3/31/23 | 3/31/23 | 6/30/23 | ||||||
Adjusted Free Cash Flow(1)(2) | $ | (62) | $ | 124 | $ | 30 | $ | (37) | $ | 55 | $ | 35 |
Basic EPS | $ | (0.53) | $ | (7.95) | $ | 0.07 | $ | (0.42) | $ | (8.82) | $ | (0.31) |
Basic WAS | 225.6 | 227.9 | 228.8 | 229.2 | 227.9 | 230.2 | ||||||
Diluted EPS | $ | (0.53) | $ | (7.95) | $ | 0.07 | $ | (0.42) | $ | (8.82) | $ | (0.31) |
Diluted WAS | 225.6 | 227.9 | 230.1 | 229.2 | 227.9 | 230.2 | ||||||
Adjusted Basic EPS(1) | $ | (0.31) | $ | (0.17) | $ | 0.30 | $ | 0.21 | $ | 0.04 | $ | (0.04) |
Adjusted Diluted EPS(1) | $ | (0.31) | $ | (0.17) | $ | 0.30 | $ | 0.21 | $ | 0.04 | $ | (0.04) |
Investment in Content | ||||||||||||
Motion Picture | $ | 101 | $ | 135 | $ | 155 | $ | 94 | 484 | $ | 123 | |
Television Production | 398 | 217 | 248 | 219 | 1,082 | 251 | ||||||
Media Networks | 286 | 335 | 342 | 210 | 1,173 | 162 | ||||||
Eliminations | (176) | (208) | (258) | (117) | (759) | (90) | ||||||
Total | $ | 608 | $ | 479 | $ | 486 | $ | 406 | $ | 1,979 | $ | 445 |
U.S. Theatrical P&A and Premium VOD expense | $ | 26 | $ | 23 | $ | 28 | $ | 73 | $ | 150 | $ | 84 |
As of | As of | |||||||||||
6/30/22 | 9/30/22 | 12/31/22 | 3/31/23 | 6/30/23 | ||||||||
Remaining Performance Obligations(3) | $ | 1,940 | $ | 2,072 | $ | 1,962 | $ | 1,885 | $ | 1,891 | ||
Adjusted OIBDA Leverage Ratio(4) | 6.6x | 7.5x | 5.6x | 5.0x | 3.7x | |||||||
Adjusted OIBDA Leverage Ratio excluding LIONSGATE+ territories exited(5) | n/a | 5.5x | 4.7x | 4.5x | 3.6x |
Notes:
- See appendix for reconciliation to the nearest GAAP measure. The prior quarters have been adjusted to reflect the changes described in footnotes (6) and (7) of Appendix 1.
- Adjusted Free Cash Flow amounts for the quarter ended June 30, 2023 includes a net use of cash of approximately ($30.9) million from the monetization of trade accounts receivable programs. Adjusted Free Cash Flow for the quarters ended March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022 includes a net benefit (use of cash) of approximately ($65.4) million, $87.9 million, ($24.7) million and $13.9 million, respectively, from the monetization of trade accounts receivable programs.
- In connection with the adoption of new revenue recognition rules, effective April 1, 2018, the Company is reporting remaining performance obligations in lieu of the legacy backlog metric. Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog). Remaining performance obligations do not include estimates of variable consideration for transactions involving sales or usage-based royalties (i.e., where our revenue is dependent upon the sales or usage by our customers) in exchange for licenses of intellectual property. For comparative purposes, the backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments at June 30, 2023 and March 31, 2023 was $1.5 billion and $1.5 billion, respectively.
- The leverage ratio represents net corporate debt divided by the trailing twelve months of Adjusted OIBDA as set forth below:
Net Corporate Debt | 6/30/22 | 9/30/22 | 12/31/22 | 3/31/23 | 6/30/23 | |||||
Corporate Debt | $ | 2,286 | $ | 2,259 | $ | 2,126 | $ | 2,060 | $ | 1,966 |
Less: Cash and equivalents | (379) | (557) | (425) | (272) | (323) | |||||
Net Corporate Debt | $ | 1,907 | $ | 1,702 | $ | 1,701 | $ | 1,788 | $ | 1,643 |
Corporate Debt excludes finance lease obligations | ||||||||||
Adjusted OIBDA Leverage Ratio | ||||||||||
Net Corporate Debt per above | $ | 1,907 | $ | 1,702 | $ | 1,701 | $ | 1,788 | $ | 1,643 |
Adjusted OIBDA for the trailing twelve months | 287 | 227 | 303 | 358 | 439 | |||||
Leverage Ratio | 6.6x | 7.5x | 5.6x | 5.0x | 3.7x |
- The leverage ratio represents net corporate debt divided by the trailing twelve months of Adjusted OIBDA excluding the Adjusted OIBDA of LIONSGATE+ territories exited. The below leverage calculation is for illustrative purposes and not necessarily indicative of the results had the territories been exited at the beginning of the period.
Adjusted OIBDA Leverage Ratio excluding LIONSGATE+ territories exited | ||||||||
Net Corporate Debt per above | $ | 1,702 | $ | 1,701 | $ | 1,788 | $ | 1,643 |
Adjusted OIBDA for the trailing twelve months | 227 | 303 | 358 | 439 | ||||
Less: Adjusted OIBDA of LIONSGATE+ territories exited | 83 | 63 | 42 | 23 | ||||
Adjusted OIBDA excluding LIONSGATE+ territories exited for the trailing twelve months | 309 | 365 | 400 | 462 | ||||
Leverage Ratio | 5.5x | 4.7x | 4.5x | 3.6x |
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APPENDIX 1
RECONCILIATION OF NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
(in millions)
Net Cash Flows Provided By (Used In) Operating Activities(1) Capital expenditures
Net borrowings under and (repayment) of production and related loans: Production loans and programming notes
Production tax credit facility
Proceeds from the termination of interest rate swaps(2) Payments on impaired content in territories exited(3)
Adjusted Free Cash Flow(2)
Fiscal Year | Three Months | ||||||||||
Three Months Ended | Ended | Ended | |||||||||
6/30/22 | 9/30/22 | 12/31/22 | 3/31/23 | 3/31/23 | 6/30/23 | ||||||
$ | (0) | $ | (139) | $ | 11 | $ | 14 | $ | (114) | $ | 29 |
(10) | (12) | (15) | (12) | (49) | (9) | ||||||
128 | 273 | 23 | (58) | 366 | 1 | ||||||
9 | 1 | (4) | 0 | 7 | 3 | ||||||
(189) | - | - | - | (189) | - | ||||||
- | - | 15 | 19 | 34 | 11 | ||||||
$ | (62) | $ | 124 | $ | 30 | $ | (37) | $ | 55 | $ | 35 |
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP. SHAREHOLDERS TO ADJUSTED
NET INCOME (LOSS) ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP. SHAREHOLDERS,
AND ADJUSTED BASIC AND DILUTED EPS
Fiscal Year | Three Months | |||||||||||
Three Months Ended | Ended | Ended | ||||||||||
(in millions) | 6/30/22 | 9/30/22 | 12/31/22 | 3/31/23 | 3/31/23 | 6/30/23 | ||||||
Reported Net Income (Loss) Attributable to | ||||||||||||
Lions Gate Entertainment Corp. Shareholders | $ | (119) | $ | (1,811) | $ | 17 | $ | (97) | $ | (2,010) | $ | (71) |
Adjusted share-based compensation expense | 8 | 27 | 23 | 40 | 98 | 16 | ||||||
Goodwill impairment | - | 1,475 | - | - | 1,475 | - | ||||||
Restructuring and other | 8 | 233 | 75 | 95 | 412 | 32 | ||||||
COVID-19 related charges (benefit) | (1) | (6) | (2) | (3) | (12) | 0 | ||||||
Programming and content charges | - | 7 | - | (0) | 7 | - | ||||||
Purchase accounting and related adjustments(4) | 48 | 49 | 53 | 44 | 196 | 44 | ||||||
Loss (gain) on extinguishment of debt | 1 | (3) | (38) | (17) | (57) | (21) | ||||||
Insurance recoveries on prior shareholder litigation and net (gain) loss on investments and other | (2) | 3 | (43) | (2) | (44) | - | ||||||
Tax impact of above items(5) | (0) | (3) | (1) | (1) | (5) | 0 | ||||||
Noncontrolling interest impact of above items | (14) | (11) | (15) | (11) | (51) | (11) | ||||||
Adjusted Net Income (Loss) Attributable to Lions Gate | ||||||||||||
Entertainment Corp. Shareholders | $ | (70) | $ | (40) | $ | 69 | $ | 49 | $ | 9 | $ | (10) |
Reported Basic EPS | $ | (0.53) | $ | (7.95) | $ | 0.07 | $ | (0.42) | $ | (8.82) | $ | (0.31) |
Impact of adjustments on basic earnings (loss) per share | 0.22 | 7.78 | 0.23 | 0.63 | 8.86 | 0.27 | ||||||
Adjusted Basic EPS | $ | (0.31) | $ | (0.17) | $ | 0.30 | $ | 0.21 | $ | 0.04 | $ | (0.04) |
Reported Diluted EPS | $ | (0.53) | $ | (7.95) | $ | 0.07 | $ | (0.42) | $ | (8.82) | $ | (0.31) |
Impact of adjustments on diluted earnings (loss) per share | 0.22 | 7.78 | 0.23 | 0.63 | 8.86 | 0.27 | ||||||
Adjusted Diluted EPS | $ | (0.31) | $ | (0.17) | $ | 0.30 | $ | 0.21 | $ | 0.04 | $ | (0.04) |
Adjusted Weighted Average number of common shares | ||||||||||||
outstanding: | ||||||||||||
Basic | 225.6 | 227.9 | 228.8 | 229.2 | 227.9 | 230.2 | ||||||
Diluted | 225.6 | 227.9 | 230.1 | 233.2 | 230.7 | 230.2 |
Notes:
- Cash flows provided by (used in) operating activities for the quarter ended June 30, 2023 includes a net use of cash of approximately ($30.9) million from the monetization of trade accounts receivable programs. Cash flows provided by (used in) operating activities for the quarters ended March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022 includes a net benefit (use of cash) of approximately ($65.4) million, $87.9 million, ($24.7) million and $13.9 million, respectively, from the monetization of trade accounts receivable programs.
- During the three months ended June 30, 2022, 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 unaudited condensed 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.
- Represents cash payments made on impaired content in territories exited under the LIONSGATE+ international restructuring.
- Represents the amounts included in Adjusted OIBDA net of interest income on the amortization of non-cash fair value adjustments to finance lease obligations acquired in the acquisition of Starz.
- Represents the tax impact of the adjustments to net income (loss) attributable to Lions Gate Entertainment Corp. shareholders, calculated using the applicable effective tax rate of the adjustment.
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Lions Gate Entertainment Corporation published this content on 09 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 August 2023 20:27:57 UTC.
