Lions Gate Entertainment Reports Revenues of $842.6 Million, Free Cash Flow of $93.0 Million and Adjusted EBITDA of $60.8 Million for Fiscal Year 2005

Lions Gate Entertainment Reports Revenues of $842.6 Million, Free Cash Flow of $93.0 Million and Adjusted EBITDA of $60.8 Million for Fiscal Year 2005

Company Reports Net Income of $20.3 Million and Adjusted Net Income of $37.8 Million

Management to Provide Fiscal 2006 Guidance on Analyst Call Thursday, June 30, 2005 at 9:00 AM EDT/6:00 A.M. PDT

SANTA MONICA, Calif., and NORTH VANCOUVER, B.C., June 29
/PRNewswire-FirstCall/ -- Lions Gate Entertainment (NYSE:LGF)(NYSE:Toronto) today reported revenues of $842.6 million for fiscal 2005 (fiscal year ended March 31, 2005), an increase of 124.2% compared to $375.9 million in fiscal 2004. The Company posted free cash flow of $93.0 million for fiscal 2005 compared to negative $117.3 million in the prior fiscal year.

Lions Gate also reported adjusted EBITDA (earnings before interest, interest rate swaps mark-to-market, income tax provisions, depreciation, minority interests, and adjusted for stock appreciation rights expense and write-down of other assets) of $60.8 million for fiscal 2005 compared to adjusted negative EBITDA of $62.1 million in fiscal 2004.

Adjusted EBITDA in fiscal 2005 excluded $7.9 million in stock appreciation rights expense (SARS). Adjusted EBITDA in fiscal 2004 excluded $0.9 million in SARS and $11.7 million in write-down of other assets.

The Company reported net income of $20.3 million in fiscal 2005, or basic net income per share of $0.21 on 97.6 million weighted average common shares outstanding, compared to a net loss of $92.1 million in fiscal 2004, or basic net loss per share of $1.35 on 70.7 million weighted average common shares outstanding. The Company reported adjusted net income of $37.8 million in fiscal 2005, or adjusted basic net income per share of $0.38 on 97.6 million weighted average common shares outstanding. This compared to an adjusted net loss of $77.5 million for the prior fiscal year, or adjusted basic net loss per share of $1.14 on 70.7 million weighted average common shares outstanding.

Adjusted net income in fiscal 2005 excluded $7.9 million in SARS, $3.4 million in non-cash write-off of deferred financing fees on the term loan repaid and $6.3 million in pre-acquisition non-cash tax charges due to the use of pre-acquisition NOL carryforwards. Adjusted net income in fiscal 2004 excluded $0.9 million in SARS, $11.7 million in write-down of other assets and $2.0 million in non-cash write-off of deferred financing fees on the credit facility repaid.

"As anticipated, we had a strong fiscal 2005," said Lions Gate Chief Executive Officer Jon Feltheimer. "We exceeded our beginning of the year goals for revenue, free cash flow and adjusted net income, and continued to strengthen our balance sheet, ending the year in a strong cash position. We have built a foundation for sustainable growth through the creation and exploitation of new franchises, new businesses, new markets and new platforms. The consistent and predictable nature of our current operations gives us the confidence and visibility that we will continue to throw off significant and sustainable free cash flow through fiscal 2007 and beyond."

Lions Gate achieved significant increases throughout all of its major core businesses. Driven by a string of theatrical hit films including SAW, THE PUNISHER, DIARY OF A MAD BLACK WOMAN, OPEN WATER and FAHRENHEIT 9/11, theatrical revenue of $142.8 million in fiscal 2005 increased 362.1% compared to $30.9 million in fiscal 2004 as the Company achieved domestic box office gross of more than $300 million on its feature film releases.

Propelled by key titles such as SAW, THE PUNISHER, BARBIE AS THE PRINCESS AND THE PAUPER, OPEN WATER, GODSEND, DIRTY DANCING: HAVANA NIGHTS, BARBIE FAIRYTOPIA, THE COOKOUT, THE COOLER and GIRL WITH A PEARL EARRING, home entertainment revenue increased 108.3% to $465.3 million in fiscal 2005 from $223.4 million in fiscal 2004.

Television production revenue of $82.8 million in fiscal 2005 increased by 36.4% from $60.7 million in fiscal 2004, led by deliveries of the one-hour drama series THE DEAD ZONE and MISSING, the television miniseries FIVE DAYS TO MIDNIGHT and television movies FRANKENSTEIN, WIDOW ON THE HILL, BABY FOR SALE, INFIDELITY and BRAVE NEW GIRL. THE DEAD ZONE (USA Network) and MISSING (Lifetime) have debuted with strong ratings in their fourth and third seasons, respectively, and Lions Gate Television is launching three additional new television series, including THE CUT for CBS, the half-hour comedy WEEDS for Showtime and WILDFIRE for ABC Family.

Lions Gate created three new franchises during the year. The Company is preparing a sequel for THE PUNISHER, produced in conjunction with Marvel Entertainment(TM) and based on the popular Marvel character. Lions Gate intends to establish SAW as a Halloween fixture with the planned October 2005 release of SAW 2. The Company also continues to build on its Tyler Perry relationship, launching the theatrical hit DIARY OF A MAD BLACK WOMAN and several DVD's of his popular stage plays to the video retail market on June 28th and planning the February 24, 2006 release of Perry's next feature film, TYLER PERRY'S MADEA'S FAMILY REUNION.

The Company also noted that it enters fiscal 2006 with a solid filmed entertainment backlog of $100.3 million and kicked off the new fiscal year with the theatrical box office hit CRASH.

Lions Gate senior management will hold its analyst and investor conference call to discuss its fiscal 2005 full year and fourth quarter financial results at 9:00 A.M. EDT/6:00 A.M. PDT Thursday, June 30, and will also provide guidance for fiscal 2006 at that time.

Interested parties may participate live in the conference call by calling 1-888-428-4478 (1-612-332-0228 outside the U.S. and Canada). A full digital replay will be available from Thursday morning, June 30, through Friday, July 8, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code #781830.

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 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.lgf.com

For further information, please contact:
Peter D. Wilkes
310-255-3726
pwilkes@lgf.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 Form 8-K filed with the Securities and Exchange Commission on June 29, 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.
CONSOLIDATED BALANCE SHEETS

March 31, March 31,
2005 2004
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $112,839 $7,089
Restricted cash 2,913 --
Accounts receivable, net of
reserve for video returns
of $58,449 (March 31, 2004
-- $46,985) and provision for
doubtful accounts of $6,102
(March 31, 2004 -- $11,702) 150,019 129,245
Investment in films and television programs 367,376 406,170
Property and equipment 30,842 29,661
Goodwill 161,182 166,804
Other assets 29,458 23,714
$854,629 $762,683

LIABILITIES
Bank loans $1,162 $326,174
Accounts payable and accrued liabilities 134,200 129,724
Film obligations 130,770 114,068
Subordinated notes 390,000 65,000
Mortgages payable 18,640 19,041
Deferred revenue 62,459 38,932
Minority interests 259 135
737,490 693,074
Commitments and Contingencies

SHAREHOLDERS' EQUITY
Common shares, no par value,
500,000,000 shares authorized,
101,843,708 at March 31, 2005
and 93,615,896 at March 31, 2004
shares issued and outstanding 305,662 280,501
Series B preferred shares (10 shares
issued and outstanding) -- --
Accumulated deficit (183,226) (203,507)
Accumulated other comprehensive loss (5,297) (7,385)
117,139 69,609
$854,629 $762,683

LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended Year Ended Year Ended
March 31, March 31, March 31,
2005 2004 2003
(Amounts in thousands,
except per share amounts)

Revenues $842,586 $375,910 $264,914
Expenses:
Direct operating 355,922 181,298 133,922
Distribution and
marketing 364,281 207,045 87,403
General and administration 69,460 42,826 29,267
Severance and relocation
costs -- 5,575 --
Write-down of other assets -- 11,686 --
Depreciation 3,159 3,198 1,846
Total expenses 792,822 451,628 252,438
Operating income (loss) 49,764 (75,718) 12,476
Other expenses (income):
Interest 23,140 14,042 8,934
Interest rate swaps
mark-to-market (2,752) (206) 3,163
Other income (159) -- --
Minority interests 107 -- --
Total other expenses, net 20,336 13,836 12,097
Income (loss) before items
related to equity method
investees and income taxes 29,428 (89,554) 379
Gain on sale of equity
interests -- -- (2,131)
Equity interests 200 2,169 2,112
Income (loss) before
income taxes 29,228 (91,723) 398
Income tax provision 8,947 373 1,821
Net income (loss) 20,281 (92,096) (1,423)
Modification of warrants -- (2,031) --
Dividends on Series A
preferred shares - (387) (1,584)
Accretion and amortization
on Series A preferred shares -- (643) (1,383)
Net income (loss) available
to common shareholders $20,281 $(95,157) $(4,390)

Income (loss) per common share:
Basic income (loss) per
common share $0.21 $(1.35) $(0.10)
Diluted income (loss) per
common share $0.20 $(1.35) $(0.10)

Weighted average number of
common shares outstanding:
Basic 97,610 70,656 43,232
Diluted 103,375 70,656 43,232

LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

Balance at
March 31, 2002 43,231,921 $159,549 10 $--
Net loss available
to common shareholders
Foreign currency
translation adjustments
Net unrealized gain
on foreign exchange
contracts
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 4,991,141 13,871
Exercise of warrants 3,220,867 10,842
Issued to directors
for services 15,804 137
Modification of stock
options -- 311
Net income available
to common shareholders
Foreign currency
translation adjustments
Net unrealized loss
on foreign exchange
contracts
Balance at
March 31, 2005 101,843,708 $305,662 10 --

LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Accumulated
Other
Accumulated Comprehensive
Deficit Loss Total

(Amounts in thousands,
except share amounts)

Balance at March 31, 2002 $(103,960) $(7,856) $47,733
Net loss available to common
shareholders (4,390) (4,390)
Foreign currency translation
adjustments 62 62
Net unrealized gain on foreign
exchange contracts 227 227
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 13,871
Exercise of warrants 10,842
Issued to directors for services 137
Modification of stock options 311
Net income available to common
shareholders 20,281 20,281
Foreign currency translation
adjustments 2,374 2,374
Net unrealized loss on foreign
exchange contracts (286) (286)
Balance at March 31, 2005 $(183,226) $(5,297) $117,139

LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended Year Ended Year Ended
March 31, March 31, March 31,
2005 2004 2003
(Amounts in thousands)
OPERATING ACTIVITIES:
Net income (loss) $20,281 $(92,096) $(1,423)
Adjustments to reconcile
net income (loss) to net
cash provided by (used in)
operating activities:
Depreciation of property
and equipment 3,159 3,198 1,846
Amortization and
write-off of deferred
financing costs 6,945 4,073 1,572
Amortization of films
and television programs 213,346 136,082 106,435
Amortization of intangible
assets 2,192 -- --
Non-cash stock-based
compensation 448 1,740 --
Deferred income taxes 6,283 -- --
Relocation costs -- 2,131 --
Write-down of other assets -- 11,686 --
Interest rate swaps
mark-to-market (2,752) (206) 3,163
Gain on disposition
of assets (666) -- --
Minority interests 107 -- --
Gain on sale of equity
interests -- -- (2,131)
Equity interests 200 2,169 2,112
Changes in operating
assets and liabilities,
excluding the effects
of acquisitions:
Increase in restricted cash (2,913) -- --
Accounts receivable, net (21,284) (17,249) 19,465
Increase in investment
in films and television
programs (171,272) (192,098) (128,640)
Other assets (2,395) 6,913 (7,765)
Accounts payable and
accrued liabilities 4,335 12,170 (7,297)
Film obligations 15,594 1,818 26,015
Deferred revenue 23,888 3,258 4,138
NET CASH FLOWS PROVIDED
BY (USED IN) OPERATING
ACTIVITIES 95,496 (116,411) 17,490
INVESTING ACTIVITIES:
Cash received from
disposition of assets, net 1,172 -- --
Cash received from investment
in Mandalay Pictures, LLC -- -- 6,634
Acquisition of Artisan
Entertainment Inc., net of
cash acquired -- (148,870) --
Purchases of property
and equipment (2,484) (860) (1,794)
NET CASH FLOWS PROVIDED
BY (USED IN) INVESTING
ACTIVITIES (1,312) (149,730) 4,840
FINANCING ACTIVITIES:
Issuance of common shares 24,713 107,162 --
Redemption of Series A
preferred shares -- (18,090) --
Dividends paid on Series A
preferred shares -- (387) (1,584)
Financing fees (1,612) (11,402) (166)
Increase in subordinated
notes, net of issue costs 314,822 56,347 --
Increase (decrease) in
bank loans (325,111) 143,033 (16,069)
Proceeds from production
loans -- 505 9,564
Repayment of production
loans -- (1,778) (13,782)
Proceeds from mortgages
payable -- 16,148 3,742
Repayment of mortgages
payable (1,894) (24,367) (4,553)
NET CASH FLOWS PROVIDED BY
(USED IN) FINANCING
ACTIVITIES 10,918 267,171 (22,848)
NET CHANGE IN CASH AND
CASH EQUIVALENTS 105,102 1,030 (518)
FOREIGN EXCHANGE EFFECT
ON CASH 648 (792) 859
CASH AND CASH EQUIVALENTS
-- BEGINNING OF YEAR 7,089 6,851 6,510
CASH AND CASH EQUIVALENTS
-- END OF YEAR $112,839 $7,089 $6,851

LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF EBITDA TO NET INCOME (LOSS)

Year Ended Year Ended Year Ended
March 31, March 31, March 31,
2005 2004 2003
(Amounts in thousands)

EBITDA, as defined $52,882 $(74,689) $14,341
Depreciation (3,159) (3,198) (1,846)
Interest (23,140) (14,042) (8,934)
Interest rate swaps
mark-to-market 2,752 206 (3,163)
Minority interests (107) -- --
Income tax provision (8,947) (373) (1,821)
Net Income (Loss) $20,281 $(92,096) $(1,423)

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)

Year Ended Year Ended
March 31, March 31,
2005 2004
(Amounts in thousands)

Net Income (Loss) $20,281 $(92,096)
Stock appreciation rights expense 7,927 938
Write-down of other assets -- 11,686
Write-off of deferred financing costs 3,354 2,017
Non-cash tax charge for the use of
pre-acquisition net operating losses 6,283 --
Adjusted Net Income (Loss), as defined $37,845 $(77,455)

Adjusted net income (loss) is defined as net income (loss) before stock
appreciation rights expense, write-down of other assets, write-off of
deferred financing costs and non-cash tax charges for the use of pre-
acquisition net operating losses.

LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF BASIC INCOME (LOSS) PER COMMON SHARE TO ADJUSTED BASIC
INCOME (LOSS) PER COMMON SHARE

Year Ended Year Ended
March 31, March 31,
2005 2004

Basic Income (Loss) Per Common Share $0.21 $(1.35)
Stock appreciation rights expense
per share 0.08 0.01
Write-down of other assets per share -- 0.17
Write-off of deferred financing costs
per share 0.03 0.03
Non-cash tax charges for the use of
pre-acquisition net operating
losses per share 0.06 --
Adjusted Basic Income (Loss) Per
Common Share, as defined $0.38 $(1.14)

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, write-down of other assets per share, write-off of deferred
financing costs per share and non-cash tax charges for the use of pre-
acquisition net operating losses per share.

LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS)

Year Ended Year Ended
March 31, March 31,
2005 2004
(Amounts in thousands)

Adjusted EBITDA, as defined $60,809 $(62,065)
Depreciation (3,159) (3,198)
Interest (23,140) (14,042)
Interest rate swaps mark-to-market 2,752 206
Minority interests (107) --
Income tax provision (8,947) (373)
Stock appreciation rights expense (7,927) (938)
Write-down of other assets -- (11,686)
Net Income (Loss) $20,281 $(92,096)

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

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

Year Ended Year Ended
March 31, March 31,
2005 2004
(Amounts in thousands)

Net Cash Flows Provided By
(Used In) Operating Activities $95,496 $(116,411)
Purchases of property and equipment (2,484) (860)
Free Cash Flow From Operations
(after debt service), as defined $93,012 $(117,271)

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 of Lions Gate Entertainment, +1-310-255-3726,
pwilkes@lgf.com

Web site: http://www.lgf.com/

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