Lionsgate Reports Revenues of $198.7 Million for First Quarter of Fiscal 2008, 15% Increase From Prior Year Quarter; Net Loss of $53.1 Million Compares to Net Loss of $3.6 Million in Prior Year First Quarter

Lionsgate Reports Revenues of $198.7 Million for First Quarter of Fiscal 2008, 15% Increase From Prior Year Quarter; Net Loss of $53.1 Million Compares to Net Loss of $3.6 Million in Prior Year First Quarter

SANTA MONICA, Calif. and VANCOUVER, B.C., Aug. 9 /PRNewswire-FirstCall/ -- Lionsgate (NYSE:LGF), the leading independent filmed entertainment studio, reported revenues of $198.7 million and a net loss of $53.1 million for its fiscal 2008 first quarter ended June 30, 2007, the Company announced today.

Lionsgate reported basic and diluted net loss per common share of $0.45 on 117.1 million weighted average common shares outstanding compared to basic and diluted net loss per common share of $0.03 on 103.3 million weighted average common shares outstanding in the prior year first quarter.

The Company noted that the majority of its $53 million loss in the quarter was attributable to a $47 million increase in theatrical marketing expenses from the prior year quarter as a result of Lionsgate's expanded motion picture slate.

"The first quarter reflects our usual frontloaded costs and is in line with our expectations," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "Although we are disappointed in the weakness of the early part of our theatrical slate, this performance is offset by our diversification and the overperformance of our other businesses as well as the recognition that the strongest part of our slate is still ahead."

The Company's filmed entertainment backlog of $304.0 million exceeded $300 million for the fourth consecutive quarter and, at quarter end on June 30, 2007, Lionsgate had total cash and auction rate securities of approximately $225 million on its balance sheet.

Overall motion picture revenue for the quarter was $170.3 million, an increase of 3% compared to $165.2 million in the prior year's first quarter. Within this segment, theatrical revenue of $19.0 million during the first quarter compared to $18.5 million in the prior year first quarter. Principal releases during the quarter were SLOW BURN, AWAY FROM HER, HOSTEL 2, THE CONDEMNED, DELTA FARCE and BUG.

Lionsgate's home entertainment revenue of $103.8 million in the first quarter decreased 10% compared to $114.8 million in the prior year's first quarter due to the comparative performance of theatrical titles while library revenues for the quarter remained steady at approximately $53 million. Major DVD releases included PRIDE, which substantially overperformed its box office results, DADDY'S LITTLE GIRLS, HAPPILY N'EVER AFTER and continued sales of the hits SAW 3 and EMPLOYEE OF THE MONTH.

Television revenue included in the motion picture segment was $22.4 million in the first quarter, a 51% increase compared to $14.8 million in the prior year's first quarter. The gain was attributable to several strong theatrical titles with television windows opening in the first quarter, including THE DESCENT, CRANK, EMPLOYEE OF THE MONTH and SAW 3.

International revenue of $22.7 million in the first quarter increased 47% compared to $15.5 million in the prior year's quarter, driven by strong foreign sales of SAW 3, THE PUNISHER (TM), RIGHT AT YOUR DOOR and Lionsgate's investment in the hit stage play DIRTY DANCING, which has sold out theatres in Germany and the U.K. en route to North America.

Television production revenue of $28.4 million in the first quarter increased 289% compared to $7.3 million in the prior year's quarter, driven by deliveries of episodes of the sixth broadcast season of THE DEAD ZONE (USA), the fourth broadcast season of WILDFIRE (ABC Family), THE DRESDEN FILES (SciFi Network), revenue contributions from Lionsgate's television syndication subsidiary Debmar-Mercury for Tyler Perry's HOUSE OF PAYNE and SOUTH PARK and international television sales of the series HIDDEN PALMS, LOVESPRING INTERNATIONAL, THE DEAD ZONE and THE DRESDEN FILES.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2008 first quarter financial results at 9:00 A.M. ET/6:00 A.M. PT, Friday, August 10, 2007. Interested parties may participate live in the conference call by calling 1-888-428-4480 (1-651-291-5254 outside the U.S. and Canada). A full digital replay will be available from Friday morning, August 10, through Friday, August 17, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code 881870.

Lionsgate is the leading independent filmed entertainment studio, winning the 2006 Best Picture Academy Award (R) for CRASH, and the Company 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 11,000 motion picture titles and television episodes is a valuable source of recurring revenue and a foundation for the growth of the Company's core businesses. The Lionsgate brand is synonymous with original, daring, quality entertainment in markets around the globe.

http://www.lionsgate.com/

For further information, contact:

Peter D. Wilkes
Lionsgate
310-255-3726
pwilkes@lionsgate.com

Kelli Easterling
Lionsgate
310-255-4929
keasterling@lionsgate.com

The matters discussed in this press release include forward-looking statements, including those regarding the timing of our upcoming film slate, the expansion of our television business and the success of our fiscal 2008. 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 the substantial investment of capital required to produce and market films and television series, increased costs for producing and marketing feature films, budget overruns, limitations imposed by our credit facilities, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, technological changes and other trends affecting the entertainment industry, and the risk factors as set forth in Lionsgate's Form 10-K filed with the Securities and Exchange Commission on May 30, 2007. 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.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, March 31,
2007 2007
(Unaudited)
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $58,580 $51,497
Restricted cash 4,644 4,915
Investments - auction rate securities 166,330 237,379
Investments - equity securities 4,916 125
Accounts receivable, net of reserve
for video returns and allowances of
$64,908 (March 31, 2007 - 77,691) and
provision for doubtful accounts of $5,931
(March 31, 2007 - $6,345) 105,234 130,496
Investment in films and television programs 579,757 493,140
Property and equipment 14,207 13,095
Goodwill 187,491 187,491
Other assets 41,169 18,957
$1,162,328 $1,137,095

LIABILITIES
Accounts payable and accrued liabilities $174,972 $155,617
Participation and residuals 186,729 171,156
Film obligations 147,490 167,884
Subordinated notes and other financing
obligations 328,718 325,000
Deferred revenue 101,066 69,548
938,975 889,205

Commitments and contingencies

SHAREHOLDERS' EQUITY
Common shares, no par value,
500,000,000 shares authorized,
119,201,707 and 116,970,280 shares issued
and outstanding at June 30, 2007 and
March 31, 2007, respectively 423,715 398,836
Series B preferred shares (10 shares
issued and outstanding) -- --
Accumulated deficit (202,769) (149,651)
Accumulated other comprehensive income (loss) 2,407 (1,295)
223,353 247,890
$1,162,328 $1,137,095

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Three Months
Ended Ended
June 30, June 30,
2007 2006
(Amounts in thousands, except
per share amounts)

Revenues $198,742 $172,456
Expenses:
Direct operating 87,058 68,545
Distribution and marketing 135,501 87,046
General and administration 26,840 19,233
Depreciation 908 544
Total expenses 250,307 175,368
Operating loss (51,565) (2,912)
Other expenses (income):
Interest expense 3,860 4,676
Interest and other income (3,803) (2,561)
Total other expenses, net 57 2,115
Loss before equity interests and income taxes (51,622) (5,027)
Equity interests income (loss) (807) 58
Loss before income taxes (52,429) (4,969)
Income tax provision (benefit) 689 (1,365)
Net loss $(53,118) $(3,604)

Basic and Diluted Net Loss Per Common Share $(0.45) $(0.03)

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Series B Restricted
Common Shares Preferred Shares Share
Number Amount Number Amount Units

(Amounts in thousands, except share amounts)
Balance at March 31,
2006 104,422,765 $328,771 10 $ -- $5,178
Reclassification of
unearned compensation
and restricted share
common units upon adoption
of SFAS No. 123(R ) 1,146 (5,178)
Exercise of stock options 1,297,144 4,277
Stock based compensation,
net of share units
withholding tax obligations
of $504 113,695 6,517
Issuance of common shares
to directors for services 25,568 238
Conversion of 4.875% notes,
net of unamortized issuance
costs 11,111,108 57,887
Comprehensive income (loss)
Net income
Foreign currency
translation adjustments
Net unrealized gain on
foreign exchange contracts
Unrealized gain on
investments --
available for sale
Comprehensive income
Balance at March 31, 2007 116,970,280 398,836 10 -- --
Exercise of stock options 61,807 390
Stock based compensation,
net of share units
withholding tax obligations
of $235 174,368 2,611
Issuance of common shares
to directors for services 10,126 127
Issuance of common shares
for investment in
NextPoint, Inc 1,890,189 20,851
Issuance of common shares
related to the Redbus
acquisition 94,937 900
Comprehensive income (loss)
Net loss
Foreign currency
translation adjustments
Net unrealized loss on
foreign exchange contracts
Unrealized gain on
investments --
available for sale
Comprehensive loss
Balance at June 30, 2007 119,201,707 $423,715 10 $ -- $ --

Accumulated
Comprehensive Other
Unearned Accumulated Income Comprehensive
Compensation Deficit (Loss) Income(loss) Total

(Amounts in thousands, except share amounts)
Balance at March 31,
2006 $(4,032) $(177,130) $(3,517) $149,270
Reclassification of
unearned compensation
and restricted share
common units upon
adoption of SFAS
No. 123(R ) 4,032 --
Exercise of stock
options 4,277
Stock based
compensation, net of
share units withholding
tax obligations of $504 6,517
Issuance of common
shares to directors for
services 238
Conversion of 4.875%
notes, net of
unamortized issuance
costs 57,887
Comprehensive income(loss)
Net income 27,479 $27,479 27,479
Foreign currency
translation adjustments 1,876 1,876 1,876
Net unrealized gain on
foreign exchange contracts 259 259 259
Unrealized gain on
investments --
available for sale 87 87 87
Comprehensive income $29,701 --
Balance at March 31, 2007 -- (149,651) (1,295) 247,890
Exercise of stock options 390
Stock based compensation,
net of share units
withholding tax
obligations of $235 2,611
Issuance of common
shares to directors for
services 127
Issuance of common
shares for investment in
NextPoint, Inc 20,851
Issuance of common
shares related to the
Redbus acquisition 900
Comprehensive income(loss)
Net loss (53,118) $(53,118) (53,118)
Foreign currency
translation adjustments 2,434 2,434 2,434
Net unrealized loss on
foreign exchange
contracts (12) (12) (12)
Unrealized gain on
investments --
available for sale 1,280 1,280 1,280
Comprehensive loss $(49,416)
Balance at June 30, 2007 $ -- $(202,769) $2,407 $223,353

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Three Months
Ended Ended
June 30, June 30,
2007 2006
(Amounts in thousands)
Operating Activities:
Net loss $(53,118) $(3,604)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities
Depreciation of property and equipment 908 544
Amortization of deferred financing costs 884 975
Amortization of films and television
programs 49,862 33,193
Amortization of intangible assets 162 244
Non-cash stock-based compensation 2,846 974
Equity interests income (loss) 807 (58)
Changes in operating assets and liabilities:
Restricted cash 271 84
Accounts receivable, net 9,439 93,013
Investment in films and television
programs (136,139) (60,439)
Other assets (3,061) 4,717
Accounts payable and accrued
liabilities 20,185 (68,278)
Unpresented bank drafts -- (14,772)
Participation and residuals 15,527 (7,587)
Film obligations (20,430) (2,349)
Deferred revenue 31,486 8,319
Net Cash Flows Used In Operating Activities (80,371) (15,024)
Investing Activities:
Purchases of investments - auction
rate securities (172,442) (165,620)
Proceeds from the sale of
investments - auction rate securities 243,491 190,594
Purchases of investments - equity securities (3,432) --
Proceeds from the sale of
investments - equity securities 16,343 --
Purchases of property and equipment (2,017) (1,831)
Net Cash Flows Provided By Investing Activities 81,943 23,143
Financing Activities:
Exercise of stock options 390 353
Borrowings from financing obligation 3,718 --
Net Cash Flows Provided By
Financing Activities 4,108 353
Net Change In Cash And Cash
Equivalents 5,680 8,472
Foreign Exchange Effects on Cash 1,403 (592)
Cash and Cash Equivalents -
Beginning Of Period 51,497 46,978
Cash and Cash Equivalents - End Of Period $58,580 $54,858

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET CASH FLOWS USED IN
OPERATING ACTIVITIES TO FREE CASH FLOW

Three Months Ended
June 30,
2007 2006
(Amounts in thousands)
Net Cash Flows Used In Operating Activities $(80,371) $(15,024)
Purchases of property and equipment (2,017) (1,831)
Decrease in Unpresented Bank Drafts -- 14,772
Free Cash Flow, as defined $(82,388) $(2,083)

Free cash flow is defined as net cash flows provided by or used in operating activities less purchases of property and equipment and unpresented bank drafts. Unpresented bank drafts represent checks issued and not yet presented for payment in excess of the cash balances at custodial banks. The applicable bank accounts are funded at the time the checks are presented for payment.

Free cash flow is a non-GAAP financial measure as defined in Regulation G promulgated by the Securities and Exchange Commission. This non-GAAP financial measure is in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with Generally Accepted Accounting Principles.

Management believes this non-GAAP measure provides useful information to investors regarding cash that our operating businesses generate before taking into account cash movements that are non-operational. Free cash flow is a non-GAAP financial measure commonly used in the entertainment industry and by financial analysts and others who follow the industry. Not all companies calculate free cash flow in the same manner and the measure as presented may not be comparable to similarly titled measures presented by other companies.

First Call Analyst:
FCMN Contact:

Source: Lionsgate

CONTACT: Peter D. Wilkes, +1-310-255-3726, pwilkes@lionsgate.com, or
Kelli Easterling, +1-310-255-4929, keasterling@lionsgate.com, both of
Lionsgate

Web site:

http://www.lionsgate.com/

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