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

February 11, 2013 | About:
10qk

10qk

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Lions Gate Entertainment Corp. (LGF) filed Quarterly Report for the period ended 2012-12-31.

Lions Gate Entertainment Corporation has a market cap of $2.89 billion; its shares were traded at around $19.78 with a P/E ratio of 369.9 and P/S ratio of 1.2. Lions Gate Entertainment Corporation had an annual average earning growth of 7.8% over the past 10 years. GuruFocus rated Lions Gate Entertainment Corporation the business predictability rank of 2.5-star.

Highlight of Business Operations:

Television revenue included in motion pictures revenue of $98.8 million increased $76.2 million, or 337.2%, in the three months ended December 31, 2012, as compared to the three months ended December 31, 2011. The increase in television revenue in the three months ended December 31, 2012 compared to the three months ended December 31, 2011, is mainly due to the contribution of revenue from Summit titles released theatrically pre-acquisition, with no comparable revenue in fiscal 2012, and additionally due to television revenue from The Hunger Games from our fiscal 2012 slate. The contribution of television revenue from the titles listed above was $57.3 million in the three months ended December 31, 2012, compared to $12.3 million in the three months ended December 31, 2011, and the contribution of television revenue from titles not listed above was $41.5 million in the three months ended December 31, 2012, compared to $10.3 million in the three months ended December 31, 2011.

Direct operating expenses of the television production segment of $64.8 million for the three months ended December 31, 2012 were 92.4% of television revenue, compared to $67.3 million, or 75.0%, of television revenue for the three months ended December 31, 2011. The increase in direct operating expenses as a percentage of television revenue in the three months ended December 31, 2012 is primarily due to the change in the mix of titles generating revenue as compared to the three months ended December 31, 2011 and the higher revenues generated in the three months ended December 31, 2011 as compared to the three months ended December 31, 2012. In the three months ended December 31, 2012, $7.1 million of charges for write-downs of television film costs were included in the amortization of television programs, compared to charges of $0.1 million in the three months ended December 31, 2011. There were two write-downs that individually exceeded $1.0 million for the three months ended December 31, 2012, totaling $6.2 million in the aggregate.

Television revenue included in motion pictures revenue of $171.4 million increased $77.3 million, or 82.1%, in the nine months ended December 31, 2012, as compared to the nine months ended December 31, 2011. The increase in television revenue in the nine months ended December 31, 2012 compared to the nine months ended December 31, 2011, is mainly due to the Summit titles released theatrically pre-acquisition, with no comparable revenue in fiscal 2012. The contribution of television revenue from the titles listed above was $59.6 million in the nine months ended December 31, 2012, compared to $62.9 million in the nine months ended December 31, 2011, and the contribution of television revenue from titles not listed above was $111.8 million in the nine months ended December 31, 2012, compared to $31.2 million in the nine months ended December 31, 2011.

Direct operating expenses of the motion pictures segment of $774.5 million for the nine months ended December 31, 2012 were 45.9% of motion pictures revenue, compared to $329.4 million, or 51.1% of motion pictures revenue for the nine months ended December 31, 2011. The decrease in direct operating expense of the motion pictures segment as a percentage of revenue in the nine months ended December 31, 2012 is primarily driven by the titles in our theatrical slates. The direct operating expense as a percentage of revenue in the nine months ended December 31, 2011 was primarily driven by the performance of the titles in our fiscal 2012 theatrical slate. The direct operating expense as a percentage of revenues in the nine months ended December 31, 2012 is driven by the performance of The Hunger Games and, to a lesser extent, the titles released in our fiscal 2013 theatrical slate offset by the generally higher direct operating expense as a percentage of revenue associated with the acquisition of the Summit titles as a result of the increase in film cost associated with valuing those titles at fair value on our balance sheet under purchase accounting rules. Investment in film write-downs of the motion pictures segment during the nine months ended December 31, 2012 totaled approximately $4.7 million, compared to $4.2 million for the nine months ended December 31, 2011. In the nine months ended December 31, 2012, there were two write-downs that individually exceeded $1.0 million, which totaled $3.0 million in the aggregate, and in the nine months ended December 31, 2011, there were no write-downs that individually exceeded $1.0 million. Due to the January 2012 acquisition of Summit, we currently expect that direct operating expenses of the motion pictures segment for fiscal 2013 will increase as compared to fiscal 2012.

Direct operating expenses of the television production segment of $196.9 million for the nine months ended December 31, 2012 were 84.0% of television revenue, compared to $218.3 million, or 73.4%, of television revenue for the nine months ended December 31, 2011. The increase in direct operating expenses as a percentage of television revenue is primarily due to the change in mix of titles generating revenue compared to the nine months ended December 31, 2011, in addition to higher charges for write-downs of television costs in the nine months ended December 31, 2012 as compared to the nine months ended December 31, 2011. In the nine months ended December 31, 2012, $12.3 million of charges for write-downs of television film costs were included in the amortization of television programs, compared to charges of $2.0 million in the nine months ended December 31, 2011. In the nine months ended December 31, 2012, there were write-downs on four television series that individually exceeded $1.0 million, totaling $10.5 million in the aggregate, and in the nine months ended December 31, 2011, there were no write-downs that individually exceeded $1.0 million.

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