Lionsgate posts net loss of $29.7 million in Q2 2011

MUMBAI: Lionsgate reported net loss was $29.7 million in Q2 2011 as compared to net income of $31.7 million in the prior year’s second quarter.

The decline in quarter-to-quarter comparisons was attributable primarily to an increase of $59.7 million in theatrical marketing costs as the company distributed four theatrical releases in the quarter including the The Expendables, The Last Exorcism and Alpha & Omega as compared to two releases in the prior year’s second quarter.

The company posted revenue of $456.3 million and adjusted EBITDA of $24.3 million for the second quarter of fiscal year 2011.

Revenue increased 25% compared to the prior year’s second quarter driven by increases in theatrical box office, international and television production revenue.

The company reported adjusted EBITDA of $24.3 million in the second quarter compared to $53.9 million for the prior year’s second quarter.

Net loss also included equity interest losses of $20.7 million and a $14.5 million non cash charge related to the extinguishment of debt in connection with the July 20 deleveraging transaction. The quarter also included $4 million in corporate defense and associated costs related to shareholder activist activities.

Basic net loss per common share for the quarter was $0.22 on 133.0 million weighted average common shares outstanding, compared to basic net income per common share of $0.27 on 117.3 million weighted average common shares outstanding in the prior year’s second quarter. Free cash flow in the second quarter of fiscal year 2011 was positive $18.0 million compared to negative $4.9 million in the prior year’s second quarter.

"We had a strong quarter with adjusted EBITDA and free cash flow trending positive and on track for our full year numbers, although higher theatrical marketing costs associated with our larger slate of films impacted quarter-to-quarter comparisons. We continued to generate strong momentum across our diverse slate of businesses, especially in television and channels, and hit films such as The Expendables and The Last Exorcism underscored the diversity of our film slate and the strength of our financial model," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer.

Overall motion picture revenue for the second quarter of fiscal 2011 was $341.0 million, an increase of 23% from the second quarter of the prior year. Within the motion picture segment, theatrical revenue was $76.0 million, an increase of 151% from the prior year’s second quarter, driven by the box office performance of the hit films The Expendables, which grossed $102 million at the North American box office and is expected to become one of the most profitable films in the Company’s history, as well as The Last Exorcism.

Lionsgate’s home entertainment revenue from both motion pictures and television was $132.1 million in the second quarter, a 5% decline from the second quarter of the prior year. Home entertainment revenue from theatrical titles such as Killers, Kick Ass, Why Did I Get Married Too? and From Paris With Love increased, offset by declines in home entertainment revenue from direct to video titles and television production due to timing as there were no significant new TV-to-DVD releases in the quarter. Bolstered by its distribution agreement with Redbox, Lionsgate maintained its strong leadership in DVD-to-box office conversion during the quarter.

Television included in motion picture revenue (primarily pay television) was $78.3 million in the second quarter, an increase of 15% from the prior year’s second quarter, driven by a slate that included Precious, Brothers, Gamer, Tyler Perry’s I Can Do Bad All By Myself and Saw VI, among others.

International motion picture revenue of $37.5 million (excluding Lionsgate U.K.) in the second quarter increased 166% from the prior year’s second quarter as the slate of Kick Ass, Killers and Alpha & Omega, among others, compared favorably to the slate in the prior year’s second quarter. Lionsgate U.K. revenue also increased, growing 16% to $15.6 million.

Lionsgate’s filmed entertainment backlog was $426.0 million at September 30, 2010. Filmed entertainment backlog represents the amount of future revenue not yet recorded from contracts for the licensing of films and television product for television exhibition and in international markets.

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