ASSIGNMENT REPORT of Corporate Finance 1 FINANCIAL STATEMENTS ANALYSIS OF NETFIX, INC

NATIONAL ECONOMICS UNIVERSITY ASSIGNMENT REPORT of Corporate Finance FINANCIAL STATEMENTS ANALYSIS OF NETFIX, INC Hanoi, Mar 2020 Table of Contents I – Introduction – Purpose of the report 2 – Overview II – Analysis A Balance sheet Assets 2 Liabilities & Shareholders' Equity B Income Statement C Cash Flow D Financial Ratios Liquidity ratios 2 Solvency ratios Profitability ratios .2 Acivity ratios Valuation ratios E The DuPont system III – Conclusion IV – Reference Netflix, Inc 2 AMC Entertainment Holdings, Inc Lions Gate Entertainment Corp I – Introduction – Purpose of the report This report discusses and analyses Netflix’s financial performance over the past years (2017-2019), with the use of financial ratios The reason for choosing is that Netflix is well known to many as a major streaming platform and the company that changed traditional DVD players as the main source for movies and TV shows into the more equipped and reliable streaming services Finally, from this 3-year period performance, we can figure the points in which Netflix has excelled and the point in which they need some improvements – Overview a Entertainment Industry – Comunication Service Sector Throughout the beginning of the 21st century, as our world was experiencing a strong evolution in technology, new consumer trends were starting to expand in the industry Coming from an era were services in the television sector were very broad and limited, the latest implementation of online streaming services, has since permitted customers to benefit from a wide range of available commodities As the television industry faces new innovations, industry incumbents encounter new challenges, and already established competitors are displaced In consequence, the online video streaming service is considered a disruptive innovation to the conventional TV system b Netflix, Inc (NFLX) Founded 1997 HQ Los Gatos, California People Reed Hastings (co-CEO, founder), Ted Sarandos (coCEO, chief content officer), Greg Peters (COO, CPO) Company type Public (NASDAQ: NFLX) IPO date 29 May 2002  Netflix was originally created as an online DVD rental service, for then successfully establishing itself in the market for over-the-top (OTT) services A streaming service that provides movies and TV shows just with a touch of a button, operates today as the biggest streaming platform in the world with over 204 million paid memberships in over 190 countries  Netflix saw an opportunity in the 1990s of a change in the way people watch movies and TV shows, Netflix realized that the people don’t want to go to the store, look for a DVD player, and purchase it They knew that the people would rather sit at home and watch their movies from the comfort of their couch, something that Blockbuster did not agree with  Blockbuster was Netflix’s competition in the 1990s, they believed that Netflix’s theory is wrong and that people still preferred to go to the store and purchase their movies, which later lead to the bankruptcy of Blockbuster and their extinction (Grace, Darothee, & Holly, 2014) c Competitors Top companies by revenue for the "Motion Pictures", 2019 Rank Company Revenue ($ millions) #1 Netlix, Inc 20,156 #2 AMC Entertainment Holdings, Inc 5,471 #3 Lions Gate Entertainment Corp 3,859  AMC Entertainment Holdings, Inc Founded in 1920 and headquartered in Leawood, Kansas, for market-share context - AMC is not only America’s largest theater chain by locations in the US but the largest in the world The company owns, operates, or has interests in theatres As of March 12, 2021, it operated approximately 1000 theatres and 10,700 screens in the United States and internationally In 2019 it became the first theater to take a stab at home entertainment by launching on-demand movies and TV shows Much has already been written about the battle between Netflix and Movie Theaters In short, Netflix would like to premiere a movie in theaters and on its streaming platform simultaneously, known as a “day-and-date” release That would increase Netflix revenues while providing flexibility for consumers to see what they want, where they want, at a price they want Theaters have resisted because they feel, rightly so, that a concurrent theater and streaming launch will cut into their business As a safeguard, large theater chains (including AMC) demand a 90-day window for a film to be shown in theaters before it is available in the home They enforce this with boycotts Research studies suggest that between 13% to 28% of people prefer seeing a film the first time in theaters instead of streaming If we use 15% on the conservative end of this range, and apply it to 576 million people who streamed these films, it leaves us with an estimated 86.4 million people who might have preferred to watch these movies in theaters At an average ticket price of about $9.16 in 2019, that’s a box office of $791.4 millions  Lions Gate Entertainment Corp The company was founded in 1986 and is headquartered in Santa Monica, California Lions Gate Entertainment Corp engages in motion picture production and distribution, television programming and syndication, home entertainment, interactive ventures and games, and location-based entertainment operations in Canada, the United States, and internationally Lionsgate has large output and many subsidiaries It’s been known to have distributed some big titles like The Hunger Games, Saw, Kick-Ass, The Expendables, Ender’s Game, and John Wick With none of the Lionsgate catalog streaming on Netflix right now (at least in the US), It was a big deal at the time leading to Netflix putting out a blog post explaining why it was happening, said that the movies were widely available elsewhere beyond Netflix (when they were streaming on Netflix) and that’s a problem because Netflix tends to like exclusivity whether that’s with its Originals or third-party contracts Combining Starz, one of the leading premium global streaming platforms, with its motion picture and television studio operation, launched its independent direct to consumer over-the-top (OTT) app Lionsgate Play in India which takes on Netflix II – Analysis A Balance sheet Assets There was overall an increase in total assets from $25,974,400 in 2018 to $33,975,712 This significant increase shows the growth of assets within the company which will aid in future economic increases Total Assets 33,976 35,000.00 30,000.00 25,974 25,000.00 19,013 20,000.00 13,676 15,000.00 9,496 8,968 8,409 9,806 9,197 10,000.00 5,000.00 0.00 2019 2918 Netflix, Inc AMC 2017 Lions Gate The total current assets decreased significantly from 2018 to 2019 This is due to the reclassification of DVD content assets from current assets to non-current assets This explains the decrease in current assets in 2019 Look at these figure, we can say that Long-term asset has the biggest portion in total assets (about 81.8% in 2019) While, Cash on Hand was kept fluctuating at 14% range The above figures show that the company always ensures a certain amount of reserve money, including the amount of cash in the fund as well as bank deposits to meet the payment needs of customers and pay salaries for employees of the company 90.00% 81.80% 80.00% 70.00% 62.70% 60.00% 59.70% 50.00% 37.30% 40.00% 40.30% 30.00% 20.00% 18.20% 10.00% 0.00% 2019 2018 Total current assets 2017 0.00% 0.00% Long-tem assets Cash: Netflix ended 2017 with approximately 2.8 million in cash Over the next years, the company ballooned its cash position to approximately $5 billion This shows that the firm is holding excess cash as compared to investing the funds in short-term investments Unfortunately, this is not the best strategy for cash management Resources such as cash can lead to future economic benefit Accounts Receivable and Inventory: Because Netflix does not sell products or services through other entities, the organization has no, or very little, Accounts Receivable or inventory items Property plant and equipment: Netflix has steadily increased its property plant and equipment over the last five years The average growth rate is about 30% annually This indicates that the firm needs substantial property and equipment to support its growth needs From this assessment, investors should expect this line item to maintain its growth rate until revenue levels off C har t Ti tle 8,000.00 7445.2 7,000.00 6,000.00 5,000.00 5018.4 3794.5 4,000.00 3039.6 3,000.00 3116.5 2822.8 2097.5 2,000.00 1,000.00 647.2 454.4 265 184.3 160.3 946 155.3 378.1 362.7 313.3 183.2 908.1 418.3 161.7 0.00 321.9 310 204.3 Netflix,Inc AMC Lions Gate Liabilities & Shareholders' Equity Netflix continues to have high long-term debt that is relatively consistent 319.4165.5 Common-size (%) 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2019 2018 2017 The retained earnings increased in 2019 which is a positive as this can be reinvested into the business Finally, stockholder equity also increased in 2019 Total stockholder equity increased from $5,238,765 in 2018 to $7,582,157 in 2019 An increase in stockholder equity signifies an increase in assets B Income Statement Netflix, Inc AMC (USD million s) 2019 Sales COGS Gross profit 20,156.4 12,440.2 7,716 20 5,471.00 1,978 2018 15,794.3 9,967.50 5,826 80 5,460.80 2017 11,692.7 7,660.00 4,032 70 5,079.20 Sales Lions Gate Sales COGS Gross profit 3,493.00 3,680.5 2,028.20 1,652.30 1,981 3,479.80 4,129.1 2,309.60 1,819.50 1,856 3,223.20 3,201.5 1,903.80 1,297.70 COGS Gross profit 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00 2019 2018 2017 Revenue increased from 2018 to 2019 which positively impacted the gross profit Gross profit is a measure of how efficient the company is in using resources to deliver their service The gross profit of 2018 was $5,826,803 and increased to $7,716,234 in 2019 This increase in gross profit demonstrates that Netflix was able to produce their service more efficiently in 2019 which is good for the company financially As a percentage of revenues Netflix , Inc COGS Fiscal year Jan-Dec 2019 61.70% 2018 63.10% 2017 65.50% AMC COGS Lions Gate COGS 36.20% 55.10% 36.30% 55.90% Change 2019 vs 2018 2018 vs 2017 2,472.7 25% 2,307.5 30 % -3.00 -0.2% 125.00 7% -281.40 -12.2% 405.80 21 % 36.50% 59.50% Chart Title 40.00% 20.00% 0.00% -20.00% Ne ix tfl G ns Lio e at C AM st du In -40.00% r a yr t io s ( er Av ag e) -60.00% -80.00% -100.00% 2019 2018 2017 3.5 Return on Assets (ROA) 2019 2018 2017 Netflix 5.49% 4.66% 2.94% Lions Gate -3.56% 5.22% 0.16% AMC -1.09% 1.16% -4.97% Industry ratios (Median) -16.7% -33.8% -18.8% On general, although ROA of Entertainment Industry was quite low, Netflix still had a positive ROA and increased in the next year It may seem that the business was more profitable and efficient Chart Title 10.00% 5.00% 0.00% -5.00% ix tfl Ne -10.00% n Lio a sG te AM C st du n I r a yr t io s (M ia ed n) -15.00% -20.00% -25.00% -30.00% -35.00% -40.00% 2019 2018 2017 Acivity ratios 4.1 Fixed Assets Turnover (FAT) 2019 2018 2017 Netflix 6.12% 11.97% 12.03% Lions Gate 5.77% 5.01% 3.11% AMC 0.68% 1.53% 1.40% Even though Netflix’s FAT decreased overtime, it was still higher than Lions Gate and AMC A declining ratio may also suggest that the company is overinvesting in its fixed assets Chart Title 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Netflix Lions Gate 2019 2018 AMC 2017 4.2 Total Assets Turnover (TAT) 2019 2018 2017 Netflix 0.59% 0.61% 0.62% Lions Gate 0.44% 0.46% 0.35% AMC 0.40% 0.58% 0.52% The ratio measures the efficiency of how well a company uses assets to produce sales These numbers showed that Netflix operates more efficiently than both Lions Gate and AMC This reduction may be caused by the over-investing in Fixed Assets as we can see in the previous part However, it was having a greater TAT than its competitors Chart Title 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% Netflix Lions Gate 2019 2018 AMC 2017 Valuation ratios 5.1 P/E 2017 2018 2019 Netflix 188.12% 91.78% 78.35% Lions Gate 33.65% 15.54% 10.49% 14.10% AMC 12.42% 7.24% It can be seen as the P/E ratios of both companies are decreasing over time In detail, among companies, Netflix has the highest P/E ratios percentage, while Lions Gate decreases the PE ratios fastest after years (-220.8%) Decreasing in Netflix was caused by the dropping of the price per share and a slight increasing in EPS Lower or decreasing EPS gives poor indication about the health of the company and gives lower return to the shareholders It will make the investors no longer interest in investing the company in the long-run 5.2 P/CF 2017 2018 2019 Netflix 186.24% 256.08% 323.57% Lions Gate 10.59% 12.28% 6.701% AMC 14.10% 12.42% 7.24% Difference from P/E ratios, P/CF ratios table show an increasing in financial data of both companies although there’s a drop in 2019 of Lions Gate and AMC Netflix P/CF ratios keep growing during 2017- 2019 (186.24% -> 323.57%), which reveal its advance ability to generate additional revenues The same happens to Lions Gate and AMC, but in 2019, these ratios declined (Lions Gate: 12.28% -> 6.701%) A high P/CF ratio indicated that the firm is trading at a high price but is not generating enough cash flows to support the multiple This will somehow explain the decreasing in P/E When a firm is overvalued, analysts and other economic experts expect the price to drop eventually E The DuPont system Netflix is the only company among these three that offer a positive sign as its ratios raise regularly (15.61% -> 24.62%) Contrary to Netflix, Lions Gate and AMC seem to become less efficient at creating profits and increasing shareholder value as their ROE ratios remain insecure Lions Gate ratios increase from 0.58% to 14.54% then decrease to -9.31%, while the ratios of AMC increase 30.92% (-23.05% -> 7.87%) from 2017-2018 then fall down 20.14 % (6.27% -> -11.42%) in 2018-2019 period a ROA: - ROA ratio in 2018 of Netflix is higher than the 2017 ROA ratio (4.66%>2.94%), while in 2019, Netflix’s ROA ratio keeps developing up to 5.49% This is a sign of the strategy using the total assets of Netflix wisely + From these data, we understand that 2017 Net income over Total assets ratios is 2.94% meaning every 100$ from Total assets invest in business activities bring back 2.94$ profit after taxes, which show a quite high ROA ratio of Netflix Inc In 2018, this ratio is 4.66%, which increases 1.722% compared to 2017 In 2019, Netflix keeps the development in ROA ratios as it creases 0.833% compared to the previous year The 2019 ROA ratio is 5.495% meaning when invest 100$ of assets, Netflix gets back 5.495% profit after taxes, which is a good sign for the company The increase in ROA is a result of the expansion in “Net Income after Taxes” b ROE: - 2017 Net income over Total equity ratios is 15.60% meaning every 100$ invest in equity brings back 15.60$ profit after taxes, which also shown a high ROE ratio of Netflix Inc In 2018, this ratio is 23.11%, which increases 7.50% compared to 2017 Similar to ROA, the increase in ROE is a result of the expansion in “Net Income after Taxes” In 2019, Netflix’s ROE ratio keeps growing as it creases 1.50% compared to the previous year The 2019 ROE ratio is 24.62% meaning when invest 100$ of assets, Netflix gets back 24.62% profit after taxes Thus, it has shown that Netflix has used Total Equity effectively through the years and leads to the rise in Net Income after taxes and ROE ratios + In particular:  In each 100$ investment in business activities in 2017, there is 5$ create from equity, 5$ in 2018 and 4$ in 2019  Each 100$ from assets in 2017 bring back 2.94$ in net revenue, 4.66$ in 2018 and 5.49$ in 2019 III – Conclusion Netflix was established in 1997 and one of their most revolutionary ideas was realizing that people would much rather stay at home and watch whatever movie or tv show they’d like over physically going to the store and Purchasing the movie, this then turned reality where people can watch whatever they want with a touch of a button using a subscription fee All of this generated a lot of money for Netflix and their financial performance over the past years proves it Netflix pretty much had growth in all the financial ratios with significant growth in their return on assets and return on equity ratios, meanwhile they managed to reduce their debt ratio to reach its lowest amount in 2019 In addition, the cash and inventory ratios maintained a healthy growth rate between 2016 and 2019 However, the biggest downfall was in the return on equity ratio as Netflix had an unsteady return on equity ratio between 2017 and 2019 reaching a high 35.6% in 2018, but falling back down to 29.4% in 2019 their second worse number over the past years All and all Netflix had a financially successful period between 2016 and 2019 as they almost had a positive return in every ratio, and more impressively had constant growth in almost all ratios The ”battle” between Netflix and AMC movie theaters or Lions Gate, a new comer in the streaming platform may not make Netflix, Inc worried as, these company has a weaker financial position Suggest hat Netflix works to create more original content as this will continue to set them apart from the competition Netflix has stated the success of these originals and this success is needed for their continued growth Without this, subscribers will not keep this subscription and may choose other companies instead They should work on moving their cashflow towards a positive amount as this will allow them to be less reliant on the public and allow them to fund more of their needs on their own This will also help strengthen them as a company Netflix should also come up with a strategic plan in order to continue to generate revenue even if subscriptions slow or decrease They need to be prepared to make different financial decisions to continue the rebirth of the company The financials of an organization on their own mean very little with comparison to previous years, competition, and key performance indicators IV – Reference Netflix, Inc a Assets Fiscal year is Jan-Dec % 2018 % 2017 14.8% 3,794.5 14.6% 2,822.8 1.3% 362.7 1.4% 0.5% 178.8 0.7% 1.5% 5,358.1 20.6% 4,847.2 18.2% 9,694.1 37.3% 7,670 % 14.8% 25.5% 40.3% 2,097.5 6.2% 418.3 1.6% 319.4 1.7% - - - - - - - - - - - - 57.6% 3.5% 10,371.1 652.3 54.5% 3.4% 100.0 % Netlix, Inc (USD 2019 millions) Cash and Equivalents 5,018.4 Short-term Investments Acount Receivables, Net 454.4 Inventory Prepaid Expenses 181 Other Current Assets 524.7 Total current assets 6,178.5 Property, Plant and equipment, Net Real Estate Owned Capitalized/Purchased Software Long-term investments Goodwill Other Intangibles Other Long-term assets TOTAL ASSETS 14,703.4 43.3% 14,951.1 10,996.4 32.4% 910.8 33,975.6 100% 25,974 100.0% 19,013 b Liabilities & Equity Fiscal year is Jan-Dec Netlix, Inc (USD millions) Accounts Payable Accrued Expenses Short-term Borrowings 2019 674.3 652.4 - % 2.0% 1.9% - 2018 563 481.9 - % 2.2% 1.9% - 2017 359.6 315.1 - % 1.9% 1.7% - Current Portion of LT Debt Current Portion of 190.6 0.6% Capital Lease Obligations Other Current Liabilities 5,338.30 15.7% Total Current Liabilities 6,855.70 20.2% Long-term Debt 14,759.3 43.4% Capital Leases 1,422.60 4.2% Other Non-current 3,356.00 9.9% Liabilities Total Liabilities 26,393.6 77.7% Common Stock 2,793.90 8.2% Additonal paid in capital Retained earnings 4,811.70 14.2% Treasury Stock Other Common Equity -23.5 -0.1% Adj Total Common Equity 7,582.20 22.3% Total Preferred Equity Minority Interest, Total Other Equity 0.0% Total Equity 7,582.20 22.3% TOTAL LIABILITIES 33,976 100.0% & EQUITY - - - - - - - - 5,442.50 6,487.30 10,360.1 - 21.0% 25.0% 4,491.70 5,466.30 23.6% 28.8% 39.9% 6,499.40 34.2% - - - 15.0% 3,465.00 18.2% 3,888.30 8.9% 11.3% - 15,430.8 1,871.40 1,731.10 - -19.6 -0.1% -20.6 -0.1% 5,238.80 5,238.80 20.2% 0.0% 20.2% 100.0 % 3,582.00 3,582.00 18.8% 0.0% 18.8% 100.0 % 20,735.6 2,316.00 2,942.40 - 25,974 79.8% 19,013 81.2% 9.8% 9.1% - c Income statement Netlix, Inc (USD millions) Sales Cost of Goods Sold Gross Profit 2019 % 2018 % 2017 % 20,156.4 100.0 % 15,794.3 100.0 % 11,692.7 100.0 % 61.7% 9,967.50 63.1% 7,660.00 65.5% 38.3% 5,826.80 36.9% 4,032.70 34.5% 3,566.80 17.7% 2,999.80 19.0% 2,141.60 18.3% 1,545.10 7.7% 1,221.80 7.7% 1,052.70 9.0% 5,111.90 25.4% 4,221.60 26.7% 3,194.30 27.3% 12,440.2 7,716.20 Operating expenses Selling General & Admin Expenses R&D Expenses Total Operating Expenses Operating profit (EBIT) Net Non-operating interest incom expenses Earning before tax (EBT) Tax Net Income 2,604.30 12.9% 1,605.20 10.2% 838.4 7.2% -542.02 -2.7% -378.77 -2.4% -353.36 -3.0% 2,062.30 10.2% 1,226.40 7.8% 485.1 4.1% 195.3 1,867.00 1.0% 9.3% 15.2 1,211.20 0.1% 7.7% -73.6 558.7 -0.6% 4.8% 2019 1866.92 -2887.32 103.58 9216.25 -94.44 -14022.7 400.66 599.13 43.04 -387.06 -253.03 2018 1211.24 -2680.48 83.16 7573.3 -85.52 -11756.4 131.07 375.83 293.77 -339.12 -212.53 2017 558.93 -1785.95 71.91 6258.47 -208.69 -8525.55 113.59 213.31 58.98 34.33 -227.02 d Cash Flow Year Net Income/Starting Line Cash From Operating Activities Depreciation/Depletion Amortization Deferred Taxes Non-Cash Items Cash Receipts Cash Payments Cash Taxes Paid Cash Interest Paid Changes in Working Capital Cash From Investing Activities Capital Expenditures Other Investing Cash Flow Items, Total Cash From Financing Activities Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock, Net Issuance (Retirement) of Debt, Net Foreign Exchange Effects Net Change in Cash Beginning Cash Balance Ending Cash Balance Free Cash Flow -134.03 -126.59 261.35 4505.66 4048.53 3076.99 -36.13 -37.83 -31.9 72.49 124.5 88.38 4469.31 3961.85 3020.51 0.47 -39.68 29.85 1231.74 989.25 1355.22 3786.7 2805.23 1467.58 5018.44 3794.48 2822.8 -3140.35 -2893.01 -2012.97 AMC Entertainment Holdings, Inc a Assets AMC Entertainment Holdings, Inc (USD millions) Cash and Equivalents Fiscal year is Jan-Dec 2019 % 2018 % 313.3 265.0 1.9% 3.3% 2017 310.0 % 3.2% Short-term Investments 160.3 Acount Receivables, Net - 183.2 - 37.5 35.2 63.4 Prepaid Expenses 99.8 0.5% Other Current Assets Total current assets Property, Plant and equipment, Net Real Estate Owned Capitalized/Purchased Software Long-term investments 673.1 7,445.2 115.8 267.1 4,789.1 Goodwill Other Intangibles Other Long-term assets 311.1 74.4 149.8 1.1% 4.9% 781.3 1.6% 8.2% 54.4% 3,039.6 - 0.3% 114.1 1.1% 146.9 2.1% 34.0 0.4% 0.3% - 204.3 1.9% 1.2% Inventory - 1.2% 210.0 872.4 2.1% 8.9% 32.0% 3,116.5 31.8% - - - - 0.8% 104.3 1.1% 83.7 0.9% 2.0% 263.3 2.8% 324.5 3.3% 35.0% 4,788.7 50.4% 4,931.7 50.3% 4.8% 464.2 4.7% 62.2 0.7% 12.9 0.1% 9,496 100.0% 9,806 100.0% 456.4 2.3% 0.5% TOTAL ASSETS 13,676 100.0% b Liabilities & Equity AMC Entertainment Holdings, Inc 2019 (USD millions) Accounts Payable 543.3 Accrued Expenses 173.2 Short-term Borrowings Current Portion of LT Debt 20 Current Portion of Capital 596.1 Lease Obligations Other Current Liabilities 600.6 Total Current Liabilities 1,933.20 Long-term Debt 4,733.40 Capital Leases 5,003.40 Other Non-current 791.6 Liabilities Total Liabilities 12,461.60 Fiscal year is Jan-Dec % 2018 % 2017 % 4.0% 1.3% 0.1% 452.6 185.5 15.2 4.8% 2.0% 0.2% 569.6 164.3 15.2 5.8% 1.7% 0.2% 4.4% 67 0.7% 72.5 0.7% 4.4% 14.1% 34.6% 36.6% 607.8 1,328.10 4,707.80 493.2 6.4% 14.0% 49.6% 5.2% 587.8 1,409.40 4,220.10 578.9 6.0% 14.4% 43.0% 5.9% 5.8% 1,569.10 16.5% 1,485.10 15.1% 91.1% 8,098.20 85.3% 7,693.50 78.5% Common Stock Additonal paid in capital Retained earnings Treasury Stock Other Common Equity Adj Total Common Equity Total Preferred Equity Minority Interest, Total Other Equity Total Equity TOTAL LIABILITIES & EQUITY 2,001.90 -706.2 -56.4 -26.1 1,214.20 1,214.20 13,676 0.0% 0.0% 1.3 0.0% 14.6% 1,998.40 21.0% 2,241.60 22.9% -5.2% -550.9 -5.8% -207.9 -2.1% -0.4% -56.4 -0.6% -48.2 -0.5% -0.2% 5.5 0.1% 125.6 1.3% 8.9% 1,397.60 14.7% 2,112.40 21.5% 0.0% 0.0% 0.0% 8.9% 1,397.60 14.7% 2,112.40 21.5% 100.0 100.0 9,496 100.0% 9,806 % % c Income statement AMC Entertainment Holdings, Inc (USD millions) Sales Cost of Goods Sold Gross Profit Operating expenses Selling General & Admin Expenses Depreciation & Amortization Expense 2019 % 2018 % 2017 % 5,471.00 100% 5,460.80 100% 5,079.20 1,978 36.2% 1,981 36.3% 1,856 3,493.20 63.8% 3,479.70 63.7% 3,222.80 100% 36.5% 63.5% 1,120.80 20.5% 450 8.2% 977.1 17.9% 927.8 18.3% 537.8 9.8% 538.6 10.6% Other operating expenses 1,686.60 30.8% 1,654.70 30.3% 1,548.00 Total Operating Expenses 3,257.40 59.5% 3,169.60 58.0% 3,014.40 Operating profit (EBIT) 235.8 4.3% 310.1 5.7% 208.4 Net Non-operating interest -340.8 -6.2% -342.3 -6.3% -275 incom expenses Other Income Expenses -66.6 -1.2% 155.9 2.9% -266.5 Earning before tax (EBT) -171.6 -3.1% 123.7 2.3% -333.1 Tax -22.5 -0.4% 13.6 0.2% 154.1 Net Income -149.1 -2.7% 110.1 2.0% -487.2 d Cash Flow Net Income/Starting Line Cash From Operating Activities Depreciation/Depletion Amortization 2019 -149.1 579 450 - 2018 110.1 523.2 537.8 - 2017 -487.2 558.7 538.6 - 30.5% 59.3% 4.1% -5.4% -5.2% -6.6% 3.0% -9.6% Deferred Taxes Non-Cash Items Cash Receipts Cash Payments Cash Taxes Paid Cash Interest Paid Changes in Working Capital Cash From Investing Activities Capital Expenditures Other Investing Cash Flow Items, Total Cash From Financing Activities Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock, Net Issuance (Retirement) of Debt, Net Foreign Exchange Effects Net Change in Cash Beginning Cash Balance Ending Cash Balance Free Cash Flow -33.7 183.5 - -6.4 -94.5 - 157.8 354.5 - -1.7 284.5 128.3 -516.1 -518.1 19.5 278.3 -23.8 -317.2 -576.3 10.9 226.7 -5 -965.2 -626.8 -112.9 -29.1 -84.1 259.1 -194.8 -17.2 -258.1 -445.4 525.9 -5.5 5.7 307.6 313.3 -53.1 -338.4 492.3 576.7 -104.6 -34 54.2 17.1 102.9 207.1 310 -68.1 0.3 1.5 -48.5 313.5 265 60.9 Lions Gate Entertainment Corp a, Assets Lions Gate Entertainment Corp (USD millions) Fiscal year is Apr-Mar 2019 % 184.3 Cash and Equivalents Short-term Investments 647.2 Acount Receivables, Net 2.2% 7.7% 19.9 Inventory 0.2% 150.6 1.8% Prepaid Expenses 392.4 Other Current Assets 4.7% 1,394.4 16.6% Total current assets Property, Plant and equipment, Net Real Estate Owned Capitalized/Purchased 155.3 - 1.8% - 2018 378.1 946.0 20.3 34.1 394.6 1,773.1 161.7 - % 4.2% 10.5% 0.2% 0.4% 4.4% 19.8% 2017 321.9 908.1 23.9 26.1 410.4 1,690.4 % 3.5% 9.9% 0.3% 0.3% 4.5% 18.4% 1.8% 165.5 1.8% - - - Software 26.2 0.3% Long-term investments 2,833.5 Goodwill Other Intangibles 1,871.6 2,127.9 Other Long-term assets 8,409 TOTAL ASSETS Total Current Liabilities Long-term Debt Capital Leases Other Non-current Liabilities Total Liabilities Common Stock Additonal paid in capital Retained earnings Treasury Stock Other common equity Adj Total Common Equity Total Preferred Equity Minority Interest, Total Other Equity 2,740.8 33.7% 1.8% 371.5 4.0% 30.6% 2,700.5 29.4% 22.3% 1,937.7 21.6% 2,046.7 22.3% 25.3% 2,189.4 24.4% 2,222.3 24.2% 100.0% 8,968 100.0% 9,197 100.0% b, Liabilities & Shareholders' Equity Lions Gate Entertainment Corp 2019 (USD millions) Accounts Payable 530.6 Accrued Expenses Short-term Borrowings Current Portion of LT Debt 53.6 Current Portion of Capital Lease Obligations Other Current Liabilities 164.9 Fiscal year is Apr-Mar % 2018 % 2017 % 6.3% 0.6% 447.1 79.1 5.0% 0.9% 570 77.9 6.2% 0.8% - - - - - 1,068.20 12.7% 1,652.40 19.7% 3,012.10 35.8% 45.4 0.5% 1,886.2 2,412.4 2,649.6 - 649.5 7.7% 646.9 5,359.40 63.7% 2,790.30 33.2% 208.7 -80.3 2.5% -1.0% 2,918.70 34.7% 130.8 1.6% 0.0% 5,708.9 2,649.0 516.6 -9.7 3,155.9 102.8 21.0% 26.9% 29.5% 7.2% 63.7% 29.5% 5.8% -0.1% 35.2% 1.1% 0.0% 1,042.0 1,689.9 3,163.0 1,735.8 6,588.7 2,519.8 10.6 -16 2,514.4 93.8 11.3% 18.4% 34.4% 18.9% 71.6% 27.4% 0.1% -0.2% 27.3% 1.0% 0.0% Total Equity TOTAL LIABILITIES & EQUITY 3,049.50 36.3% 8,409 100.0% c, Income statement Lions Gate Entertainment Corp 2019 (USD millions) Sales 3,680.5 Cost of Goods Sold 2,028.2 Gross Profit 1,652.3 Operating expenses Selling General & 1,280.90 Admin Expenses Depreciation & 163.40 Amortization Expense Total Operating 1,444.3 Expenses Operating profit (EBIT) 208.0 Net Non-operating -186.9 interest incom expenses Other Income Expenses -329.2 Earning before tax -308.10 (EBT) Tax -8.5 Minority Interest 15.4 Net Income -284.2 3,258.7 8,968 36.3% 2,608.2 28.4% 100.0% 9,197 100.0% % 2018 % 2017 % 100% 55.1% 44.9% 4,129.1 2,309.6 1,819.5 100% 55.9% 44.1% 3,201.5 1,903.8 1,297.7 100.0% 59.5% 40.5% 34.8% 1,352.00 32.7% 1,162.20 36.3% 4.4% 159.00 3.9% 63.10 2.0% 39.2% 1,511.0 36.6% 1,225.3 38.3% 5.7% 308.5 7.5% 72.4 2.3% -5.1% -183.3 -4.4% -108.8 -3.4% -8.9% 23.5 0.6% -98.0 -3.1% -8.4% 148.70 3.6% -134.40 -4.2% -0.2% 0.4% -7.7% -319.4 5.5 473.6 -7.7% 0.1% 11.5% -148.9 0.3 14.8 -4.7% 0.0% 0.5% d, Cash flow Net Income/Starting Line Cash From Operating Activities Depreciation/Depletion Amortization Deferred Taxes Non-Cash Items Cash Receipts Cash Payments Cash Taxes Paid Cash Interest Paid Changes in Working Capital 2019 -299.6 427.5 163.4 1516.5 -23.6 170.9 - 2018 468.1 389.2 159 1641.7 -299.5 96 - 13.5 146.7 -1100.1 2017 14.5 558.6 63.1 1414 -163.4 132.9 - 20.3 119.7 -1676.1 14.3 79.8 -902.5 Cash From Investing Activities Capital Expenditures Other Investing Cash Flow Items, Total Cash From Financing Activities Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock, Net Issuance (Retirement) of Debt, Net Foreign Exchange Effects Net Change in Cash Beginning Cash Balance Ending Cash Balance Free Cash Flow -121.7 -43.8 292.6 -45.9 -1145.3 -25.2 -77.9 338.5 -499.3 -622.4 -811.1 -31.1 -57.4 44.9 361.2 -636.2 -0.3 -3.2 -193.8 56.2 378.1 321.9 184.3 378.1 383.7 343.3 -1120.1 850.1 -47.8 -26.8 25.4 899.3 0.8 264.2 57.7 321.9 533.4 ... Working Capital 2 019 -299.6 427.5 16 3.4 15 16.5 -23.6 17 0.9 - 2 018 468 .1 389.2 15 9 16 41. 7 -299.5 96 - 13 .5 14 6.7 -11 00 .1 2 017 14 .5 558.6 63 .1 1 414 -16 3.4 13 2.9 - 20.3 11 9.7 -16 76 .1 14.3 79.8 -902.5... - 1. 8% - 2 018 378 .1 946.0 20.3 34 .1 394.6 1, 773 .1 1 61. 7 - % 4.2% 10 .5% 0.2% 0.4% 4.4% 19 .8% 2 017 3 21. 9 908 .1 23.9 26 .1 410 .4 1, 690.4 % 3.5% 9.9% 0.3% 0.3% 4.5% 18 .4% 1. 8% 16 5.5 1. 8% - - - Software... 673 .1 7,445.2 11 5.8 267 .1 4,789 .1 Goodwill Other Intangibles Other Long-term assets 311 .1 74.4 14 9.8 1. 1% 4.9% 7 81. 3 1. 6% 8.2% 54.4% 3,039.6 - 0.3% 11 4 .1 1 .1% 14 6.9 2 .1% 34.0 0.4% 0.3% - 204.3 1. 9%