Lions Gate Entertainment Reports Third Quarter Fiscal 2005 Revenues of $190.4 Million and Adjusted EBITDA of $15.3 Million

Lions Gate Entertainment Reports Third Quarter Fiscal 2005 Revenues of $190.4 Million and Adjusted EBITDA of $15.3 Million

Company Reports Third Quarter Net Income of $3.4 Million and Adjusted Net Income of $9.9 Million; 3Q Free Cash Flow From Operations Generates $32.0 Million

(all amounts in U.S. dollars)

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Feb. 9
/PRNewswire-FirstCall/ -- Lions Gate Entertainment (NYSE:LGF) Toronto, the premier independent producer and distributor of filmed entertainment, reported revenues of $190.4 million, adjusted EBITDA (earnings before interest, interest rate swap mark-to-market, taxes, depreciation and minority interests, adjusted for stock appreciation rights accrual) of $15.3 million and adjusted net income of $9.9 million, or adjusted basic earnings per share of $0.10, for the third quarter of fiscal 2005 (quarter ended December 31, 2004).

Adjusted net income is prior to a $3.4 million non-cash charge for write-off of deferred financing costs on Lions Gate's term loan repaid at December 31, 2004, and prior to a $3.2 million charge for stock appreciation rights (SARS). Adjusted EBITDA is prior to the charge for SARS. After inclusion of those charges, net income was $3.4 million and basic earnings per share was $0.03.

Third quarter revenue of $190.4 million increased 170% compared to $70.6 million in the prior year's third quarter, reflecting Lions Gate's acquisition and integration of Artisan Entertainment as well as continued growth of the Company's core businesses. Adjusted EBITDA of $15.3 million compared to EBITDA of negative $30.8 million in the third quarter of fiscal 2004. Adjusted net income of $9.9 million, or adjusted basic earnings per share of $0.10 on 98.1 million weighted average shares outstanding, compared to the prior year third quarter's adjusted net loss of $33.7 million, or loss per share of $0.43 on 84.4 million weighted average common shares outstanding (after giving effect to modification of warrants and dividends and accretion on the Series A Preferred Shares). There were no charges for SARS and there was a $2.0 million write-off of deferred financing costs included in the prior year's third quarter. Free cash flow from operations (after debt service) for the current third quarter of $32.0 million compared to negative $25.0 million for the prior year's third quarter.

The Company continued to achieve growth in all of its core businesses. The nationwide theatrical success of the hit horror film SAW, video releases including OPEN WATER, THE PUNISHER, BARBIE IN THE PRINCE AND THE PAUPER, CARE BEARS: JOURNEY TO JOKE-A-LOT, IT'S A WONDERFUL LIFE, GODSEND and SNL: WILL FERREL were major revenue drivers in the quarter along with evergreen library sales.

Lions Gate's nine-month revenues of $610.2 million increased 181% compared to $217.0 million for the nine months ended December 31, 2003, again reflecting the Artisan acquisition as well as continued organic growth of Lions Gate's core businesses. Adjusted EBITDA of $27.1 million for the nine-month period compared to EBITDA of negative $38.6 million for the previous nine-month period. Adjusted net income of $10.5 million compared to adjusted net loss of $46.8 million for the prior year's first nine months. Adjusted net income for the 2004 period was prior to the $3.4 million charge for write-off of deferred financing costs on Lions Gate's term loan repaid at December 31, 2004, and prior to a $7.0 million charge for SARS during the nine-month period. There were no charges for SARS and there was a $2.0 million write-off of deferred financing costs included in the prior year's nine-month period. Free cash flow (after debt service) for the nine-month period was $81.2 million.

"Our initial five-year business plan, culminating in last year's integration of Artisan Entertainment, is achieving the strong financial results that we anticipated," said Lions Gate Chief Executive Officer Jon Feltheimer. "We are entering the next phase of our growth with a full pipeline of product in our core businesses, an eye on accretive strategic acquisitions and a strong platform for expansion into complementary businesses that leverage our key strengths."

Lions Gate's upcoming theatrical release slate for the balance of fiscal '05 and fiscal '06 includes DIARY OF A MAD BLACK WOMAN from Tyler Perry, slated for February 25 release, HOUSE OF D, starring Robin Williams, Anton Yelchin, David Duchovny and Tea Leoni, CRASH, starring Sandra Bullock, Brendan Fraser, Matt Dillon, Don Cheadle and Thandie Newton, this year's Sundance Film Festival opener HAPPY ENDINGS, starring Maggie Gyllenhaal, Lisa Kudrow and Tom Arnold, recording star Usher's DYING FOR DOLLY, UNDISCOVERED, starring Pell James, Steven Strait, Kip Pardue and Ashlee Simpson, the recent Sundance acquisitions RIZE and HARD CANDY, and a slate of genre/horror films including SAW 2, Rob Zombie's THE DEVIL'S REJECTS, HIGH TENSION and UNDEAD.

Upcoming video releases for the rest of fiscal '05 and fiscal '06 reflect a diversified slate that includes the highly-anticipated DVD release of the theatrical film SAW, the next Barbie title, FAIRYTOPIA, the first of eight titles from Lions Gate's direct-to-video partnership with Marvel, THE AVENGERS, and the hit television comedy series MOONLIGHTING, among numerous other television-to-video titles. Lions Gate Television continues to build its leadership in original programming for cable networks, with the hit series THE DEAD ZONE (USA) and MISSING (Lifetime) in their fourth and second seasons, respectively, and the new comedy series WEEDS slated to debut on Showtime this summer. In addition, Lions Gate Television is producing the reality show THE CUT, hosted by fashion guru Tommy Hilfiger, to debut on CBS in the spring.

Lions Gate senior management will hold its analyst and investor conference call to discuss its third quarter results at 9:00 A.M. EST/6:00 A.M. PST tomorrow, February 10, 2005. Interested parties may participate live in the conference call by calling 1-888-428-4480 (1-612-288-0318 outside the U.S. and Canada). A full digital replay will be available from Thursday morning, February 10, through Thursday, February 17, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code #765349.

Lions Gate is the premier independent producer and distributor of motion pictures, television programming, home entertainment, family entertainment and video-on-demand content. Its prestigious and prolific library of approximately 8000 titles is one of the largest in the entertainment industry. The Lions Gate brand name is synonymous with original, daring, quality entertainment in markets around the world.

www.lionsgatefilms.com

The matters discussed in this press release include forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including risk factors as set forth in Lions Gate's 8-K filed with the Securities and Exchange Commission on February 9, 2005. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.

LIONS GATE ENTERTAINMENT CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, March 31,
2004 2004
(Unaudited)
(All amounts in thousands,
except share
amounts)
ASSETS
Cash and cash equivalents $5,139 $7,089
Restricted cash 20,000 --
Accounts receivable, net of reserve for
video returns of $54,932 (March 31, 2004 --
$46,985) and provision for doubtful accounts
of $7,482 (March 31, 2004 -- $11,702) 110,649 129,245
Investment in films and television programs 366,465 406,170
Property and equipment 31,426 29,661
Goodwill 168,705 166,804
Other assets 22,868 23,714
$725,252 $762,683
LIABILITIES
Bank loans $75,102 $326,174
Accounts payable and accrued liabilities 112,359 129,724
Film obligations 168,806 114,068
Subordinated notes 215,000 65,000
Mortgages payable 19,063 19,041
Deferred revenue 39,014 38,932
Minority interests 150 135
629,494 693,074
Commitments and Contingencies

SHAREHOLDERS' EQUITY
Common shares, no par value, 500,000,000
shares authorized, 100,944,357 at
December 31, 2004 and 93,615,896 at
March 31, 2004 shares issued and outstanding 302,856 280,501
Series B preferred shares
(10 shares issued and outstanding) -- --
Accumulated deficit (203,286) (203,507)
Accumulated other comprehensive loss (3,812) (7,385)
95,758 69,609
$725,252 $762,683



LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
2004 2003 2004 2003
(All amounts in thousands, except per share amounts)

Revenues $190,398 $70,619 $610,186 $217,005
Expenses:
Direct operating 82,461 42,535 258,610 113,131
Distribution and
marketing 80,263 34,660 282,546 102,910
General and
administration 15,582 9,300 49,482 23,647
Severance and
relocation costs -- 5,934 -- 5,934
Write-down of other
assets -- 8,064 -- 8,064
Depreciation 835 718 2,224 1,748
Total expenses 179,141 101,211 592,862 255,434
Operating Income (Loss) 11,257 (30,592) 17,324 (38,429)
Other Expenses (Income):
Interest 8,201 4,808 19,277 9,017
Interest rate swaps
mark-to-market (419) (688) (2,408) (950)
Minority interests (19) -- 2 --
Other income -- -- (825) --
Equity interests -- 948 200 1,959
Total other
expenses, net 7,763 5,068 16,246 10,026
Income (Loss) Before
Income Taxes 3,494 (35,660) 1,078 (48,455)
Income tax provision 141 84 857 315
Net Income (Loss) 3,353 (35,744) 221 (48,770)
Modification of warrants -- (2,031) -- (2,031)
Dividends on Series A
preferred shares -- (66) -- (320)
Accretion and
amortization on
Series A preferred shares -- (73) -- (575)
Net Income (Loss)
Available to Common
Shareholders $3,353 $(37,914) $221 $(51,696)
Basic and Diluted
Income (Loss) Per
Common Share $0.03 $(0.45) $0.00 $(0.81)



LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Series B
Common Shares Preferred Shares
Number Amount Number Amount
(All amounts in thousands, except share amounts)

Balance at
March 31, 2003 43,231,921 $159,549 10 $--
Issuance of common
shares 44,951,056 103,176
Exercise of stock
options 955,562 2,609
Exercise of warrants 275,400 1,377
Modification of stock
options -- 1,740
Modification of warrants -- 2,031
Redemption of Series A
preferred shares -- 566
Conversion of Series A
preferred shares 4,201,957 9,453
Net loss available to
common shareholders
Foreign currency
translation adjustments
Net unrealized gain on
foreign exchange
contracts
Balance at
March 31, 2004 93,615,896 280,501 10 --
Exercise of stock
options 4,091,790 11,149
Exercise of warrants 3,220,867 10,842
Issued to directors
for services 15,804 137
Modification of stock
options -- 227
Net income available
to common shareholders
Foreign currency
translation adjustments
Net unrealized gain on
foreign exchange
contracts
Balance at
December 31, 2004 100,944,357 $302,856 10 $--


Accumulated
Other
Accumulated Comprehensive
Deficit Loss Total
(All amounts in thousands, except share amounts)
Balance at
March 31, 2003 $(108,350) $(7,567) $43,632
Issuance of common
shares 103,176
Exercise of stock
options 2,609
Exercise of warrants 1,377
Modification of
stock options 1,740
Modification of
warrants 2,031
Redemption of Series A
preferred shares 566
Conversion of Series A
preferred shares 9,453
Net loss available to
common shareholders (95,157) (95,157)
Foreign currency
translation adjustments (440) (440)
Net unrealized gain on
foreign exchange
contracts 622 622
Balance at
March 31, 2004 (203,507) (7,385) 69,609
Exercise of stock
options 11,149
Exercise of warrants 10,842
Issued to directors for
services 137
Modification of stock
options 227
Net income available to
common shareholders 221 221
Foreign currency
translation adjustments 3,497 3,497
Net unrealized gain on
foreign exchange
contracts 76 76
Balance at
December 31, 2004 $(203,286) $(3,812) $95,758



LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Nine Months
Ended Ended
December 31, December 31,
2004 2003
(All amounts in thousands)

Operating activities:
Net income (loss) $221 $(48,770)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation of property and equipment 2,224 1,748
Amortization and write-off of deferred
financing costs 5,998 3,284
Amortization of films and television
programs 169,163 87,188
Amortization of intangible assets 1,644 --
Relocation costs -- 2,131
Write-down of other assets -- 8,064
Gain on disposition of assets (666) --
Interest rate swaps mark-to-market (2,408) (950)
Non-cash stock-based compensation 364 1,064
Minority interests 2 --
Equity interests 200 1,959
Changes in operating assets and liabilities:
Increase in restricted cash (20,000) --
Accounts receivable, net 17,137 (5,034)
Increase in investment in films and
television programs (125,387) (100,976)
Other assets (1,263) 3,968
Future income taxes -- (2,214)
Accounts payable and accrued liabilities (16,157) 8,334
Film obligations 51,555 (11,453)
Deferred revenue 507 116

Net cash flows provided by (used in)
operating activities 83,134 (51,541)
Financing activities:
Issuance of common shares 21,991 104,589
Redemption of Series A preferred shares -- (18,090)
Dividends paid on Series A preferred shares -- (254)
Financing fees (1,077) (11,287)
Increase (decrease) in bank loans (251,212) 82,507
Increase in subordinated notes, net of
issue costs 145,390 56,663
Decrease in production loans -- (1,273)
Decrease in debt (1,585) (7,912)
Net cash flows provided by (used in)
financing activities (86,493) 204,943
Investing activities:
Cash received from disposition of assets, net 1,172 --
Acquisition of Artisan Entertainment Inc,
net of cash acquired -- (149,559)
Purchase of property and equipment (1,952) (445)
Net cash flows used in investing activities (780) (150,004)
Net change in cash and cash equivalents (4,139) 3,398
Foreign exchange effect on cash 2,189 (835)
Cash and cash equivalents - beginning of
period 7,089 6,851
Cash and cash equivalents - end of period $5,139 $9,414



LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET INCOME (LOSS) TO CANADIAN GAAP

Net Income (Loss)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
(All amounts in thousands)
As reported under U.S. GAAP $3,353 $(35,744) $221 $(48,770)
Adjustment for capitalized
pre-operating cost -- (154) -- (462)
Stock-based compensation (529) 138 (1,391) (478)
Adjustment for accretion
on subordinated notes (1,946) (190) (3,182) (190)
Adjustment for amortization
of subordinated notes
issue costs 47 -- 122 --
Adjustment for amortization
and write-off of deferred
debt financing costs (266) -- (98) --
Provision for debentures
and other receivables
due from CineGroupe -- 8,064 -- 8,064
Adjustment for consolidation
of CineGroupe -- (2,333) -- (2,333)
Adjustment for interest
rate swaps mark-to-market (158) (688) (474) (950)
Net income (Loss)
under Canadian GAAP $501 $(30,907) $(4,802) $(45,119)



LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF EBITDA TO NET INCOME (LOSS)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
(All amounts in thousands)

EBITDA, as defined $12,092 $(30,822) $20,173 $(38,640)
Depreciation (835) (718) (2,224) (1,748)
Interest (8,201) (4,808) (19,277) (9,017)
Interest rate swaps
mark-to-market 419 688 2,408 950
Minority interests 19 -- (2) --
Income tax provision (141) (84) (857) (315)
Net Income (Loss) $3,353 $(35,744) $221 $(48,770)

EBITDA is defined as earnings before interest, interest rate swaps
mark-to-market, income tax provision, depreciation and minority interests.



LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
(All amounts in thousands)

Net Income (Loss) $3,353 $(35,744) $221 $(48,770)
Stock appreciation rights
expense 3,180 -- 6,950 --
Write-off of deferred
financing costs 3,354 2,017 3,354 2,017
Adjusted Net Income
(Loss), as defined $9,887 $(33,727) $10,525 $(46,753)

Adjusted net income (loss) is defined as net income (loss) before stock
appreciation rights expense and write-off of deferred financing costs.



LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF BASIC INCOME (LOSS) PER COMMON SHARE TO ADJUSTED BASIC
INCOME (LOSS) PER COMMON SHARE

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
(All amounts in thousands)

Basic Income (Loss) Per
Common Share $0.03 $(0.45) $0.00 $(0.81)
Stock appreciation rights
expense per share 0.03 -- 0.07 --
Write-off of deferred
financing costs per share 0.04 0.02 0.04 0.03
Adjusted Basic Income (Loss)
Per Common Share, as defined $0.10 $(0.43) $0.11 $(0.78)

Adjusted basic net income (loss) per common share is defined as basic net
income (loss) per common share before stock appreciation rights expense
per share and write-off of deferred financing costs per share.



LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
(All amounts in thousands)
Adjusted EBITDA, as defined $15,272 $(30,822) $27,123 $(38,640)
Depreciation (835) (718) (2,224) (1,748)

Interest (8,201) (4,808) (19,277) (9,017)
Interest rate swaps
mark-to-market 419 688 2,408 950
Minority interests 19 -- (2) --
Income tax provision (141) (84) (857) (315)
Stock appreciation rights
expense (3,180) -- ( 6,950) --
Net Income (Loss) $3,353 $(35,744) $221 $(48,770)

Adjusted EBITDA is defined as earnings before interest, interest rate
swaps mark-to-market, income tax provision, depreciation and minority
interests, adjusted for stock appreciation rights expense.



LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES TO FREE CASH FLOW FROM OPERATIONS (AFTER DEBT SERVICE)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
(All amounts in thousands)
Net Cash Flows Provided By
(Used In) Operating
Activities $33,795 $(24,789) $83,134 $(51,541)
Purchase of property
and equipment (1,777) (210) (1,952) (445)
Free Cash Flow From
Operations (after debt
service), as defined $32,018 $(24,999) $81,182 $(51,986)

Free cash flow is defined as cash flows provided by (used in) operating
activities less purchases of property and equipment.



Source: Lions Gate Entertainment

CONTACT: Peter D. Wilkes, +1-310-255-3726, pwilkes@lgf.com, or Russell
Nelson, +1-310-255-3858, rnelson@lgf.com, both of Lions Gate Entertainment

Web site: http://www.lionsgate-ent.com/


-------
Profile: intent