Lionsgate Reports Revenues of $951.2 Million, Free Cash Flow of $102.8 Million and Net Income of $6.1 Million for Fiscal Year 2006

Lionsgate Reports Revenues of $951.2 Million, Free Cash Flow of $102.8 Million and Net Income of $6.1 Million for Fiscal Year 2006

Revenue Increases 13% From Previous Fiscal Year Driven by Strong Fourth Quarter Results

Strong Growth in Television and Home Entertainment Results

Management to Provide Fiscal 2007 Guidance on Analyst Call Thursday, June 15, 2006 at 9:00 AM EDT/6:00 A.M. PDT

SANTA MONICA, Calif. and VANCOUVER, British Columbia, June 14
/PRNewswire-FirstCall/ -- Lionsgate (NYSE:LGF), the leading independent filmed entertainment studio, today reported revenues of $951.2 million for fiscal 2006 (fiscal year ended March 31, 2006), an increase of 13% compared to $842.6 million in fiscal 2005. The Company posted free cash flow of $102.8 million for fiscal 2006 compared to $93.0 million in the prior fiscal year, an increase of 11%.

The Company reported pretax income of $7.5 million and net income of $6.1 million in fiscal 2006, or basic income per share of $0.06 on 103.1 million weighted average common shares outstanding, compared to pretax income of $29.2 million and net income of $20.3 million in fiscal 2005, or basic income per share of $0.21 on 97.6 million weighted average common shares outstanding.

Lionsgate also reported EBITDA (earnings before interest, interest rate swaps mark-to-market, income tax provision, depreciation, gain on sale of studio facility and minority interests) of $20.6 million for fiscal 2006 compared to EBITDA of $52.9 million for the year ended March 31, 2005.

"We achieved strong growth throughout our core businesses in fiscal 2006, generating more than $100 million in free cash flow and over $950 million in revenues while continuing to invest in our businesses, add value to our library and strengthen our balance sheet," said Lionsgate Chief Executive Officer Jon Feltheimer. "We currently have the strongest cash position and one of the strongest filmed entertainment backlogs in our history. We plan to continue to invest in our business organically and through acquisitions while adding value to our content through exploitation of fresh distribution platforms and new and incremental digital revenue streams."

The Company also noted that it has strengthened its internal controls and is no longer required to report material weaknesses in its financial reporting.

Lionsgate's theatrical revenue of $145.5 million in fiscal 2006 increased 2% compared to $142.8 million in fiscal 2005, propelled by such number one box office hits as SAW II, MADEA'S FAMILY REUNION, HOSTEL, the Best Picture Academy Award(R)-winning CRASH, LORD OF WAR, THE DEVIL'S REJECTS and WAITING.

Video revenue of $527.2 million in fiscal 2006 grew 13% from $465.3 million in fiscal 2005, driven by strong theatrical DVD titles such as SAW II, CRASH, DIARY OF A MAD BLACK WOMAN, LORD OF WAR, WAITING and THE DEVIL'S REJECTS and the family home entertainment titles BARBIE AND THE MAGIC OF PEGASUS, BARBIE MERMAIDIA and Marvel's(TM) THE ULTIMATE AVENGERS(TM).

International revenue of $61.2 million in fiscal 2006 decreased 23% compared to $79.5 million in fiscal 2005. International revenues were driven by SAW II, SAW, IN THE MIX, HAPPY ENDINGS, HOTEL RWANDA and THE DEVIL'S REJECTS. Television revenue (included in motion picture revenue and primarily derived from pay television license fees and pay-per-view) was $72.9 million in fiscal 2006, an 18% increase from $61.6 million in fiscal 2005. Significant television license fees in fiscal 2006 included SAW, DIARY OF A MAD BLACK WOMAN, CRASH, OPEN WATER and THE COOKOUT.

Television production revenue of $132.9 million in fiscal 2006 grew by 60% compared to $82.8 million in fiscal 2005, led by deliveries of 82 hours of one-hour drama series, 10 half-hours of half-hour drama series, international sales of one-hour series and television movies. Principal revenue drivers were domestic deliveries of WILDFIRE, THE DEAD ZONE, MISSING, THE CUT and WEEDS. With nine prime time series (eight cable and one broadcast) scheduled to air in fiscal 2007 and a growing international sales business, Lionsgate's television operations are poised for continued growth.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2006 full year financial results at 9:00 A.M. EDT/6:00 A.M. PDT on Thursday, June 15, 2006, and will also provide guidance for fiscal 2007 on the call.

Interested parties may participate live in the conference call by calling 1-800-230-1059 (1-612-288-0318 outside the U.S. and Canada). A full digital replay will be available from Thursday, June 15, through Thursday, June 22, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code #827835.

Lionsgate is the leading independent filmed entertainment studio, winning this year's Best Picture Academy Award(R) for CRASH, generating two consecutive years of $300 million-plus domestic theatrical box office, operating a $500 million-plus home entertainment business and producing a broad slate of prime time television series for fiscal 2007. It is a premier producer and distributor of motion pictures, television programming, home entertainment, family entertainment and video-on-demand content. Its prestigious and prolific library of more than 5,500 titles is a valuable source of stable, recurring revenue and a foundation for the growth of the Company's core businesses. The Lionsgate brand name is synonymous with original, daring, quality entertainment in markets around the world.

www.lionsgate.com

* * * * *

For further information, please contact:

Peter D. Wilkes
310-255-3726
pwilkes@lionsgate.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 Lionsgate's Form 10-K filed with the Securities and Exchange Commission on June 14, 2006. 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,
2006 2005
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $46,978 $112,839
Restricted cash 820 2,913
Investments - auction rate preferreds
and municipal bonds 167,081 --
Investments - equity securities 14,921 --
Accounts receivable, net of reserve
for video returns and allowances
of $73,366 (March 31, 2005 - $58,449) and
provision for doubtful accounts
of $10,934 (March 31, 2005 - $6,102) 182,659 150,019
Investment in films and television programs 417,750 367,376
Property and equipment 7,218 30,842
Goodwill 185,117 161,182
Other assets 30,705 29,458
$1,053,249 $854,629
LIABILITIES
Bank loans $-- $1,162
Accounts payable and accrued liabilities 188,793 134,200
Unpresented bank drafts 14,772 --
Film obligations 284,987 130,770
Subordinated notes 385,000 390,000
Mortgages payable -- 18,640
Deferred revenue 30,427 62,459
Minority interests -- 259
903,979 737,490

SHAREHOLDERS' EQUITY
Common shares, no par value, 500,000,000
shares authorized, 104,422,765 at
March 31, 2006 and 101,843,708 at
March 31, 2005 issued and outstanding 328,771 305,662
Series B preferred shares
(10 shares issued and outstanding) -- --
Restricted common share units 5,178 --
Unearned compensation (4,032) --
Accumulated deficit (177,130) (183,226)
Accumulated other comprehensive loss (3,517) (5,297)
149,270 117,139
$1,053,249 $854,629

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Year Year
Ended Ended Ended
March 31, March 31, March 31,
2006 2005 2004

Revenues $951,228 $842,586 $375,910
Expenses:
Direct operating 460,943 355,922 181,298
Distribution and marketing 399,299 364,281 207,045
General and administration 70,326 69,460 42,826
Severance and relocation costs -- -- 5,575
Write-down of other assets -- -- 11,686
Gain on sale of studio
facility (4,872) -- --
Depreciation 2,504 3,159 3,198
Total expenses 928,200 792,822 451,628
Operating Income (Loss) 23,028 49,764 (75,718)
Other Expense (Income):
Interest expense 19,933 26,421 14,178
Interest rate swaps
mark-to-market (205) (2,752) (206)
Interest and other income (4,304) (3,440) (136)
Minority interests -- 107 --
Total other expenses 15,424 20,336 13,836
Income (Loss) Before Equity
Interests and Income Taxes 7,604 29,428 (89,554)
Equity interests (74) (200) (2,169)
Income (Loss) Before
Income Taxes 7,530 29,228 (91,723)
Income tax provision 1,434 8,947 373
Net Income (Loss) $6,096 $20,281 $(92,096)
Modification of warrants -- -- (2,031)
Dividends on Series
A preferred shares -- -- (387)
Accretion and amortization
on Series A preferred shares -- -- (643)
Net income (loss) available
to common shareholders $6,096 $20,281 $(95,157)
Basic Income (Loss) Per
Common Share $0.06 $0.21 $(1.35)
Diluted Income (Loss) Per
Common Share $0.06 $0.20 $(1.35)

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, 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 361,310 1,408
Issuance to
directors for
services 20,408 203
Impact of
previously modified
stock options -- 27
Issuance of common
shares in connection
with acquisition of
film assets 399,042 3,775
Issuance of common
shares in connection
with acquisition of
common shares of
Image Entertainment 1,104,004 11,537
Issuance of common
shares in
connection with
acquisition of
Redbus 643,460 5,643
Issuance of
restricted share
units
Amortization of
restricted share
units
Vesting of
restricted share
units 50,833 516
Comprehensive
income (loss)
Net income
Foreign currency
translation adjustments
Net unrealized loss
on foreign exchange
contracts
Unrealized loss on
investments -
available for sale
Comprehensive income

Balance at
March 31, 2006 104,422,765 $328,771 10 $--

Restricted Accumulated
Com- Compre- Other
mon Unearned Accumu- hensive Compre-
Share Compen- lated Income hensive
Units sation Deficit (Loss) Loss Total

(Amounts in thousands, except share amounts)

Balance at
March 31, 2004 $-- $-- $(203,507) $(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 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 $-- $-- $(183,226) $(5,297) $117,139
Exercise
of stock
options 1,408
Issuance
to directors
for services 203
Impact of
previously
modified
stock options 27
Issuance of
common shares
in connection
with acquisition
of film assets 3,775
Issuance of
common shares
in connection
with acquisition
of common shares
of Image Entertainment 11,537
Issuance of
common shares
in connection
with acquisition
of Redbus 5,643
Issuance
of restricted
share units 5,694 (5,694) --
Amortization
of restricted
share units 1,662 1,662
Vesting of
restricted
share units (516) --
Comprehensive
income (loss)
Net income 6,096 6,096 6,096
Foreign currency
translation
adjustments 2,223 2,223 2,223
Net unrealized
loss on foreign
exchange
contracts (356) (356) (356)
Unrealized
loss on
investments -
available for
sale (87) (87) (87)
Comprehensive
income $7,876

Balance
at March
31, 2006 $5,178 $(4,032) $(177,130) $(3,517) $149,270

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Year Year
Ended Ended Ended
March 31, March 31, March 31,
2006 2005 2004
(Amounts in thousands)
Operating Activities:
Net income (loss) $6,096 $20,281 $(92,096)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation of property
and equipment 2,504 3,159 3,198
Amortization and write-off
of deferred financing costs 3,804 6,945 4,073
Amortization of films and
television programs 253,279 213,346 136,082
Amortization of intangible
assets 2,004 2,192 --
Non-cash stock-based
compensation 1,881 448 1,740
Interest rate swaps
mark-to-market (205) (2,752) (206)
Gain on disposition of assets -- (666) --
Gain on sale of studio
facility (4,872) -- --
Deferred income taxes 297 6,283 --
Relocation costs -- -- 2,131
Write-down of other assets -- -- 11,686
Minority interests -- 107 -
Equity interests 74 200 2,169
Changes in operating assets
and liabilities, excluding
the effects of acquisitions:
(Increase) decrease in
restricted cash 2,093 (2,913) --
Accounts receivable, net (33,294) (21,284) (17,249)
Increase in investment
in films and television
programs (284,711) (171,272) (192,098)
Other assets (5,302) (2,395) 6,913
Accounts payable and
accrued liabilities 48,732 4,335 12,170
Unpresented bank drafts 14,772 -- --
Film obligations 147,218 15,594 1,818
Deferred revenue (31,358) 23,888 3,258
Net Cash Flows Provided By
(Used In) Operating
Activities 123,012 95,496 (116,411)
Investing Activities:
Purchases of investments -
auction rate preferreds and
municipal bonds (307,031) -- --
Purchases of investments
- equity securities (3,470) -- --
Sales of investments -
auction rate preferreds and
municipal bonds 139,950 -- --
Cash received from sale
of investment 2,945 -- --
Cash received from disposition
of assets, net 34,860 1,172 --
Acquisition of Redbus, net of
cash acquired (27,138) -- --
Acquisition of Artisan
Entertainment Inc., net of
cash acquired -- -- (148,870)
Purchases of property
and equipment (5,450) (2,484) (860)
Net Cash Flows Used In
Investing Activities (165,334) (1,312) (149,730)
Financing Activities:
Issuance of common shares 1,408 24,713 107,162
Redemption of Series A
preferred shares -- -- (18,090)
Dividends paid on Series A
preferred shares -- -- (387)
Financing fees (546) (1,612) (11,402)
Increase in subordinated
notes, net of issue costs -- 314,822 56,347
Repayment of subordinated
notes (5,000) -- --
Increase (decrease) in
bank loans -- (325,111) 143,033
Proceeds from production loans -- -- 505
Repayment of production loans -- -- (1,778)
Proceeds from mortgages payable -- -- 16,148
Repayment of mortgages
payable (18,927) (1,894) (24,367)
Net Cash Flows Provided By
(Used In) Financing
Activities (23,065) 10,918 267,171
Net Change In Cash And Cash
Equivalents (65,387) 105,102 1,030
Foreign Exchange Effects
On Cash (474) 648 (792)
Cash and Cash Equivalents
- Beginning Of Year 112,839 7,089 6,851
Cash and Cash Equivalents
- End Of Year $46,978 $112,839 $7,089

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF EBITDA TO NET INCOME (LOSS)

Year Year Year
Ended Ended Ended
March 31, March 31, March 31,
2006 2005 2004

EBITDA, as defined $20,586 $52,882 $(74,689)
Depreciation (2,504) (3,159) (3,198)
Interest expense (19,933) (26,421) (14,178)
Interest rate swaps
mark-to-market 205 2,752 206
Interest income 4,304 3,281 136
Gain on sale of studio facility 4,872 -- --
Minority interests -- (107) --
Income tax provision (1,434) (8,947) (373)
Net income (loss) $6,096 $20,281 $(92,096)

EBITDA is defined as earnings before interest expense, interest rate swaps
mark-to-market, interest income, income tax provision, depreciation, gain
on sale of studio facility and minority interests.

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 Year Year
Ended Ended Ended
March 31, March 31, March 31,
2006 2005 2004

Net Cash Flows Provided By
(Used In) Operating
Activities $123,012 $95,496 $(116,411)
Purchases of property
and equipment (5,450) (2,484) (860)
Unpresented bank drafts (14,772) -- --
Free Cash Flow From
Operations (after debt
service), as defined $102,790 $93,012 $(117,271)

Free cash flow is defined as net cash flows provided by operating
activities less purchases of property and equipment and unpresented bank
drafts.

Source: Lionsgate

CONTACT: Peter D. Wilkes of Lionsgate, +1-310-255-3726,
pwilkes@lionsgate.com

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

-------
Profile: intent