Loss due to writedowns, Mandalay investment
MONTREAL — Lions Gate Entertainment reported a loss of C$73.6 million ($47 million) for the past year due to significant writedowns, including $19 million on its investment in Mandalay Pictures.
Lions Gate, which intends to sell its 45% stake in the U.S. film company, is taking a $13 million writedown on its majority-owned CinemaNow video-on-demand business due to changed accounting procedures.
In spite of the major losses, execs stressed that the core businesses remain strong and they expect profits to improve next year. Lions Gate generated revenue of $272.5 million in fiscal 2002, up 45% from $187.6 million the previous year.
“In fiscal 2002, we completed the majority of our investment and restructuring initiatives and significantly expanded our film and television production, building on the strengths of our core operations,” said Lions Gate CEO Jon Feltheimer. “We also took the necessary writedowns that will enhance the visibility of our results and better highlight our core business strengths in the future. As a result, we expect to report free cash flow and profitability in fiscal 2003, as we benefit from product already in the pipeline and a continued disciplined approach to production and distribution.”
The company’s cash flow declined from $24.1 million in 2000 to $1.7 million last year, primarily due to its P&A cost increasing from $34.4 million to $76.3 million. The increase came as a result of the growth of company’s theatrical and video distribution activities.
Having a ‘Ball’
Motion picture revenue increased 39% to $160.5 million from $115.6 million, thanks to pics including Oscar-winning drama “Monster’s Ball” and Oscar-nominated Mexican pic “Amores Perros,” along with the video releases of “O” and “The Wash.”
Company has an ambitious release slate including Roger Avary’s “The Rules of Attraction”; James Foley’s “Confidence,” with Dustin Hoffman, Andy Garcia and Edward Burns; and “Shattered Glass,” toplining Hayden Christensen and Greg Kinnear.
Television revenue increased 49% to $70.7 million from $47.5 million a year earlier, due to increased delivery of programs, with one-hour drama series contributing revenue of $35.6 million and TV movies bringing in $20 million.