Lions Gate Reports Fiscal 2006 Second Quarter Revenue of $212.6 Million, Net Loss of $14.1 Million and Free Cash Flow of $6.1 Million

Lions Gate Reports Fiscal 2006 Second Quarter Revenue of $212.6 Million, Net Loss of $14.1 Million and Free Cash Flow of $6.1 Million

Timing of Marketing and Distribution Costs for Wide Release Films is Primary Contributor to Negative EBITDA in the Quarter

Television Business Generates Another $42.7 Million in Production Revenues, With Six-Month Total of $88.6 Million, Up Nearly 60% from Prior Year's Six-Month Period

SANTA MONICA, Calif., and VANCOUVER, British Columbia, Nov. 9
/PRNewswire-FirstCall/ -- Lions Gate Entertainment (NYSE:LGF) Toronto, the premier independent filmed entertainment production and distribution studio, today reported $212.6 million in revenues, net loss of $14.1 million, EBITDA (earnings before interest expense, interest rate swaps mark-to-market, interest income, income tax provision, depreciation and minority interests) of negative $9.3 million and free cash flow of $6.1 million for its fiscal 2006 second quarter ended September 30, 2005.

Revenue of $212.6 million decreased $18.5 million, or 8.0%, compared to $231.1 million in the prior year's quarter. Net loss of $14.1 million, or loss per share of $0.14 on 102.4 million weighted average common shares outstanding, compared to net income of $8.3 million, or basic income per share of $0.09, on 96.3 million weighted average common shares outstanding, in the prior year's quarter. EBITDA of negative $9.3 million compared to EBITDA of $15.4 million for the three months ended September 30, 2004, and free cash flow of positive $6.1 million compared to free cash flow of $9.8 million in the prior year's quarter.

The Company noted that it spent approximately $35 million to market and distribute two wide release films, Lord of War and The Devil's Rejects, contributing to a $26 million loss on those films in the quarter. Lions Gate expects that both Lord of War and The Devil's Rejects will be profitable after release in their DVD and pay television windows.

Principal revenue drivers during the second quarter were the theatrical releases Lord of War and The Devil's Rejects, the DVD titles Crash, Barbie(TM) And The Magic of Pegasus and State Property 2 along with continuing sales of Diary of A Mad Black Woman, released late in the first quarter, international sales of The Final Cut and The Devil's Rejects and domestic deliveries of the one-hour drama series Wildfire (ABC Family), Missing (Lifetime) and The Dead Zone (USA) as well as the critically-acclaimed half-hour drama series Weeds (Showtime).

"As usual, our fiscal year will be heavily backloaded, especially with the powerful theatrical box office performance and anticipated strong DVD sales of Saw II," said Lions Gate Chief Executive Officer Jon Feltheimer. "The second half of our year will be driven by a very exciting theatrical slate, coupled with an expected increase in library sales, forecasted strong seasonal home entertainment DVD revenues in the third quarter and ongoing growth of our television operations."

Saw II has grossed approximately $62 million at the domestic box office in its first 12 days of release, achieving the biggest-grossing opening weekend in Lions Gate's history, and already eclipsing the $55.2 million domestic box office total of the original Saw. The Company also noted that it anticipates that five of its seven wide release theatrical films fiscal year-to-date will ultimately be profitable -- Crash, The Devil's Rejects, Lord of War, Waiting and Saw II. Remaining wide releases on Lions Gate's fiscal 2006 slate include the Usher film In The Mix, the horror film Hostel, directed by Eli Roth and presented by Quentin Tarantino, and the next film in the Company's Tyler Perry franchise, Tyler Perry's Madea's Family Reunion.

Lions Gate also reported that its filmed entertainment backlog at September 30, 2005 was $129.4 million, which represents future revenue not yet recorded from executed contracts for the television exhibition and international sales of titles such as Diary of A Mad Black Woman, Saw II, Crash, In The Mix and the television series Missing.

For the six months ended September 30, 2005, Lions Gate reported revenues of $406.8 million, down 3.1% compared to $419.8 million for the first six months of fiscal 2005. Net loss for the six months was $35.9 million, or loss per share of $0.35 on 102.1 million weighted average common shares outstanding, compared to net loss of $3.1 million for the prior year's first six months or loss per share of $0.03 on 95.6 million weighted average common shares outstanding. EBITDA of negative $26.1 million for the first six months of fiscal 2006 compared to EBITDA of $8.1 million for the first six months of fiscal 2005. Six-month free cash flow of $35.6 million compared to free cash flow of $49.2 million in the prior year's first six months.

Lions Gate senior management will hold its analyst and investor conference call to discuss its fiscal 2006 second quarter financial results at 9:00 AM ET/6:00 AM PT tomorrow, Thursday, November 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, November 10, through Thursday, November 17, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code #799775.

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 a valuable source of stable, recurring revenue and is a foundation for the growth of the Company's core businesses. The Lions Gate brand name is synonymous with original, daring, quality entertainment in markets around the globe. www.lgf.com

For further information, contact:

Peter D. Wilkes
310-255-3726
pwilkes@lgf.com

The matters discussed in this press release include forward-looking statements. In some cases, forward-looking statements can be identified by terms such as "will," "may," "anticipate," "assuming," "expected," "forecasted" and the negative of these terms. 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 but not limited to the possibility of budget overruns, the uncertainty of commercial success of the motion pictures and television programming we distribute, high costs associated with negotiating acquisitions and integrating new businesses, substantial competition and the other risk factors 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.
CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, March 31,
2005 2005
(Unaudited)
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $51,347 $112,839
Restricted cash 997 2,913
Investments - auction rate preferreds 90,326 --
Investments - equity securities* 14,509 --
Accounts receivable, net of reserve for
video returns of $50,498
(March 31, 2005 - $58,449) and
provision for doubtful accounts
of $6,592 (March 31, 2005 - $6,102) 129,590 150,019
Investment in films and television programs 387,718 367,376
Property and equipment 32,487 30,842
Goodwill 161,182 161,182
Other assets 31,714 29,458
$899,870 $854,629
LIABILITIES
Bank loans $-- $1,162
Accounts payable and accrued liabilities 151,299 134,200
Film obligations 205,601 130,770
Subordinated notes 385,000 390,000
Mortgages payable 17,066 18,640
Deferred revenue 41,916 62,459
Minority interests -- 259
800,882 737,490
Commitments and Contingencies

SHAREHOLDERS' EQUITY

Common shares, no par value, 500,000,000
shares authorized, 103,384,036 at
September 30, 2005 and 101,843,708 at
March 31, 2005 shares issued and
outstanding 320,128 305,662
Series B preferred shares (10 shares
issued and outstanding) -- --
Restricted common share units 3,268 --
Unearned compensation (2,966) --
Accumulated deficit (219,151) (183,226)
Accumulated other comprehensive loss (2,291) (5,297)
98,988 117,139
$899,870 $854,629

*Image Entertainment, Inc. common shares

LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
(Amounts in thousands, except per share amounts)

Revenues $212,588 $231,064 $406,817 $419,788
Expenses:
Direct operating 109,015 94,262 209,279 175,072
Distribution and
marketing 97,688 104,217 191,169 202,283
General and
administration 15,133 17,850 32,462 34,977
Depreciation 597 714 1,345 1,389
Total expenses 222,433 217,043 434,255 413,721
Operating Income (Loss) (9,845) 14,021 (27,438) 6,067
Other Expense (Income):
Interest expense 4,905 5,652 9,789 11,113
Interest rate swaps
mark-to-market (238) 71 99 (1,989)
Interest income (851) -- (1,916) (37)
Minority interests -- 144 -- 21
Other income -- (825) -- (825)
Total other expenses 3,816 5,042 7,972 8,283
Income (Loss) Before
Equity Interests and
Income Taxes (13,661) 8,979 (35,410) (2,216)
Equity interests (54) (200) (54) (200)
Income (Loss) Before
Income Taxes (13,715) 8,779 (35,464) (2,416)
Income tax provision (391) (449) (461) (716)
Net Income (Loss) $(14,106) $8,330 $(35,925) $(3,132)
Basic Income (Loss)
Income Per Common Share $(0.14) $0.09 $(0.35) $(0.03)
Diluted Income (Loss)
Per Common Share $(0.14) $0.08 $(0.35) $(0.03)

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED 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, 2004 93,615,896 $280,501 10 $--
Exercise of
stock options 4,991,141 13,871
Exercise of warrants 3,220,867 10,842
Issuance to directors
for services 15,804 137
Impact of previously
modified stock options -- 311
Comprehensive income
(loss):
Net income
Foreign currency
translation
adjustments
Net unrealized loss
on foreign exchange
contracts
Comprehensive income

Balance at
March 31, 2005 101,843,708 $305,662 10 $--
Exercise of stock
options 205,612 681
Issuance to directors
for services 6,250 62
Impact of previously
modified stock options -- 27
Issuance of common
shares in connection
with acquisition
of film assets 399,042 4,000
Issuance of common
shares in connection
with acquisition of
common shares of Image
Entertainment 885,258 9,251
Issuance of restricted
share units
Amortization of
restricted share units
Vesting of restricted
share units 44,166 445
Comprehensive income
(loss):
Net loss
Foreign currency
translation adjustments
Net unrealized gain on
foreign exchange
contracts
Unrealized gain on
investments
- available for sale
Comprehensive loss
Balance at
September 30, 2005 103,384,036 $320,128 10 $--

Restricted
Common
Share Unearned Accumulated
Units Compensation Deficit
(Amounts in thousands, except share amounts)

Balance at March 31, 2004 $(203,507)
Exercise of stock options
Exercise of warrants
Issuance to directors
for services
Impact of previously modified
stock options
Comprehensive income (loss):
Net income 20,281
Foreign currency
translation adjustments
Net unrealized loss on
foreign exchange contracts
Comprehensive income

Balance at March 31, 2005 $(183,226)
Exercise of stock options
Issuance to directors for
services
Impact of previously modified
stock options
Issuance of common shares
in connection with acquisition
of film assets
Issuance of common shares
in connection with acquisition
of common shares of
Image Entertainment
Issuance of restricted
share units $3,713 $(3,713)
Amortization of restricted
share units 747
Vesting of restricted share units (445)
Comprehensive income (loss):
Net loss (35,925)
Foreign currency translation
adjustments
Net unrealized gain on
foreign exchange contracts
Unrealized gain on
investments - available
for sale
Comprehensive loss
Balance at September 30, 2005 $3,268 $(2,966) $(219,151)

Accumulated
Comprehensive Other
Income Comprehensive
(Loss) (Loss) Total
(Amounts in thousands, except share amounts)

Balance at March 31, 2004 $(7,385) $69,609
Exercise of stock options 13,871
Exercise of warrants 10,842
Issuance to directors
for services 137
Impact of previously
modified stock options 311
Comprehensive income (loss):
Net income $20,281 20,281
Foreign currency
translation adjustments 2,374 2,374 2,374
Net unrealized loss on
foreign exchange contracts (286) (286) (286)
Comprehensive income $22,369 --

Balance at March 31, 2005 $(5,297) $117,139
Exercise of stock options 681
Issuance to directors for
services 62
Impact of previously modified
stock options 27
Issuance of common shares
in connection with
acquisition of film assets 4,000
Issuance of common shares
in connection with
acquisition of common
shares of Image Entertainment 9,251
Issuance of restricted
share units --
Amortization of restricted
share units 747
Vesting of restricted
share units --
Comprehensive income (loss):
Net loss (35,925) (35,925)
Foreign currency translation
adjustments 1,248 1,248 1,248
Net unrealized gain on foreign
exchange contracts (29) (29) (29)
Unrealized gain on
investments - available
for sale 1,787 1,787 1,787
Comprehensive loss $(32,919) --
Balance at
September 30, 2005 $(2,291) $98,988

LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Six Months
Ended Ended
September 30, September 30,
2005 2004
(Amounts in thousands)
Operating Activities:
Net loss $(35,925) $(3,132)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation of property and equipment 1,345 1,389
Amortization of deferred financing costs 1,849 1,700
Amortization of films and television
programs 134,409 124,370
Amortization of intangible assets 1,240 1,096
Non-cash stock-based compensation 836 364
Interest rate swaps mark-to-market 99 (1,989)
Gain on disposition of assets -- (666)
Minority interests -- 21
Equity interests 54 200
Changes in operating assets and liabilities:
Decrease in restricted cash 1,916 --
Accounts receivable, net 14,929 (42,889)
Increase in investment in films and
television programs (157,411) (83,830)
Other assets (2,916) (19)
Accounts payable and accrued liabilities 20,823 16,003
Film obligations 76,632 39,003
Deferred revenue (20,152) (2,282)

Net Cash Flows Provided By Operating
Activities 37,728 49,339

Investing Activities:
Purchases of investments - auction rate
preferreds (137,827) --
Purchases of investments - equity securities (3,470) --
Sales of investments - auction rate
preferreds 47,500 --
Cash received from sale of investment 2,945 --
Cash received from disposition of assets, net -- 882
Purchases of property and equipment (2,092) (175)

Net Cash Flows Provided By (Used In)
Investing Activities (92,944) 707

Financing Activities:
Issuance of common shares 681 12,108
Financing fees (260) (1,221)
Repayment of subordinated notes (5,000) --
Decrease in bank loans -- (63,663)
Repayment of mortgages payable (2,211) (840)

Net Cash Flows Used In Financing Activities (6,790) (53,616)

Net Change In Cash And Cash Equivalents (62,006) (3,570)
Foreign Exchange Effects On Cash 514 2,016
Cash and Cash Equivalents - Beginning
Of Period 112,839 7,089
Cash and Cash Equivalents - End Of Period $51,347 $5,535

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

Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
(Amounts in thousands)

EBITDA, as defined $(9,302) $15,360 $(26,147) $8,081
Depreciation (597) (714) (1,345) (1,389)
Interest expense (4,905) (5,652) (9,789) (11,113)
Interest rate swaps
mark-to-market 238 (71) (99) 1,989
Interest income 851 -- 1,916 37
Minority interests -- (144) -- (21)
Income tax provision (391) (449) (461) (716)
Net income (loss) $(14,106) $8,330 $(35,925) $(3,132)

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

LIONS GATE ENTERTAINMENT CORP. RECONCILIATION OF NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES TO FREE CASH

FLOW FROM OPERATIONS (AFTER DEBT SERVICE)

Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
(Amounts in thousands)

Net Cash Flows
Provided By Operating
Activities $7,561 $9,932 $37,728 $49,339
Purchases of property
and equipment (1,463) (130) (2,092) (175)
Free Cash Flow From
Operations (after debt
service), as defined $6,098 $9,802 $35,636 $49,164

Free cash flow is defined as net cash flows provided by 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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