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Lions Gate Entertainment Corp. Reports Operating Results (10-Q)

February 09, 2012 | About:
10qk

10qk

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Lions Gate Entertainment Corp. (LGF) filed Quarterly Report for the period ended 2011-12-31.

Lions Gate Entertainment has a market cap of $1.5 billion; its shares were traded at around $11 with a P/E ratio of 272.8 and P/S ratio of 1.

Highlight of Business Operations:

Television revenue included in motion pictures revenue of $22.6 million decreased $4.2 million, or 15.7%, in the quarter ended December 31, 2011, as compared to the quarter ended December 31, 2010. The decrease in television revenue in the quarter ended December 31, 2011 compared to the quarter ended December 31, 2010, is mainly due to the number and performance of titles in the theatrical slates listed above with television availability windows opening in the quarter ended December 31, 2011. The contribution of television revenue from the titles listed above was $12.3 million in the quarter ended December 31, 2011, compared to $18.9 million in the quarter ended December 31, 2010, and the contribution of television revenue from titles not listed above was $10.3 million in the quarter ended December 31, 2011, compared to $7.9 million in the quarter ended December 31, 2010.

Television revenue included in motion pictures revenue of $94.1 million decreased $2.3 million, or 2.4%, in the nine months ended December 31, 2011, as compared to the nine months ended December 31, 2010. The slight decrease in television revenue in the nine months ended December 31, 2011, compared to the nine months ended December 31, 2010, is mainly due to the revenues generated by the titles and product categories listed above. The contribution of television revenue from the titles listed above was $62.9 million in the nine months ended December 31, 2011, compared to $61.1 million in the nine months ended December 31, 2010, and the contribution of television revenue from titles not listed above was $31.2 million in the nine months ended December 31, 2011, compared to $35.3 million in the nine months ended December 31, 2010.

Direct operating expenses of the motion pictures segment of $329.4 million for the nine months ended December 31, 2011 were 51.1% of motion pictures revenue, compared to $401.1 million, or 42.6% of motion pictures revenue for the nine months ended December 31, 2010. The increase in direct operating expense of the motion pictures segment as a percent of revenue in the nine months ended December 31, 2011 is primarily due to the lower revenues generated by the titles in our fiscal 2012 theatrical slate in the nine months ended December 31, 2011, as compared to the revenues generated from our fiscal 2011 theatrical slate in the nine months ended December 31, 2010. Also contributing to the increase in direct operating expense of the motion pictures segment as a percent of revenue in the nine months ended December 31, 2011, was an increase in direct operating expenses as a percentage of revenue attributed to Mandate Pictures in the nine months ended December 31, 2011. Direct operating expenses of Mandate Pictures are higher in relation to revenue as compared to the rest of the motion pictures segment, however, Mandate Pictures does not incur significant distribution and marketing expenses. Investment in film write-downs of the motion pictures segment during the nine months ended December 31, 2011 totaled approximately $4.2 million, compared to $6.2 million for the nine months ended December 31, 2010. In the nine months ended December 31, 2011, there were no write-downs that individually exceeded $1.0 million. In the nine months ended December 31, 2010, there were two write-downs that individually exceeded $1.0 million, which totaled $2.1 million in the aggregate.

Direct operating expenses of the television production segment of $218.3 million for the nine months ended December 31, 2011 were 73.4% of television revenue, compared to $199.4 million, or 75.3%, of television revenue for the nine months ended December 31, 2010. The decrease in direct operating expenses as a percent of television revenue is primarily due to the continuing success of shows like Mad Men and Weeds, relative to total television revenue, and also due to lower charges for write-downs of television film costs in the nine months ended December 31, 2011, as compared to the nine months ended December 31, 2010. In the nine months ended December 31, 2011, $2.0 million of charges for write-downs of television film costs were included in the amortization of television programs, compared to $8.0 million in the nine months ended December 31, 2010. In the nine months ended December 31, 2011, there were no write-downs that individually exceeded $1.0 million, and in the nine months ended December 31, 2010, approximately $4.9 million of the write-down related to two television series.

The majority of distribution and marketing expenses relate to the motion pictures segment. Theatrical prints and advertising (“P&A”) in the motion pictures segment in the nine months ended December 31, 2011 of $116.9 million decreased $141.2 million, compared to $258.1 million in the nine months ended December 31, 2010. Domestic theatrical P&A from the motion pictures segment in this period included P&A incurred on the release of Abduction, Conan the Barbarian, Madea's Big Happy Family and Warrior. In addition, approximately $16.2 million of P&A was incurred on titles that did not contribute significant revenue in the nine-month period, of which $8.3 million was P&A incurred in advance for films to be released in subsequent quarters, such as Safe, and The Hunger Games. Domestic theatrical P&A from the motion pictures segment in the nine months ended December 31, 2010 included P&A incurred on the release of Alpha and Omega, Buried, For Colored Girls, Kick-Ass, Killers, The Expendables, Saw 3D, The Last Exorcism, The Next Three Days, and Why Did I Get Married Too?. Approximately $14.6 million of P&A was incurred on titles that did not contribute significant revenue in the nine months ended December 31, 2010, of which $4.6 million was P&A related to titles released subsequent to that period.

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