Lionsgate Reports Revenue of $456.3 Million and Adjusted EBITDA of $24.3 Million for Second Quarter of Fiscal 2011

Lionsgate Reports Revenue of $456.3 Million and Adjusted EBITDA of $24.3 Million for Second Quarter of Fiscal 2011

NET LOSS IS $29.7 MILLION FOR SECOND QUARTER; FREE CASH FLOW IS $18.0 MILLION FOR THE QUARTER

Basic Net Loss Per Common Share Is $0.22 For Fiscal 2011 Second Quarter Compared To Basic Net Income Per Common Share of $0.27 In Prior Year's Second Quarter

SANTA MONICA, Calif, and VANCOUVER, British Columbia, Nov. 9, 2010 /PRNewswire-FirstCall/ -- Lionsgate (NYSE: LGF) today reported revenue of $456.3 million and adjusted EBITDA of $24.3 million for the second quarter of fiscal year 2011 (quarter ended September 30, 2010).

Revenue increased 25% compared to the prior year's second quarter driven by increases in theatrical box office, international and television production revenue.

The Company reported adjusted EBITDA of $24.3 million in the second quarter compared to $53.9 million for the prior year's second quarter. Net loss was $29.7 million in the quarter compared to net income of $31.7 million in the prior year's second quarter. The decline in quarter-to-quarter comparisons was attributable primarily to an increase of $59.7 million in theatrical marketing costs as the Company distributed four theatrical releases in the quarter -- including the wide releases THE EXPENDABLES, THE LAST EXORCISM and ALPHA & OMEGA -- compared to two releases in the prior year's second quarter.

Net loss also included equity interest losses of $20.7 million and a $14.5 million non cash charge related to the extinguishment of debt in connection with the July 20 deleveraging transaction. The quarter also included $4.0 million in corporate defense and associated costs related to shareholder activist activities.

Basic net loss per common share for the quarter was $0.22 on 133.0 million weighted average common shares outstanding, compared to basic net income per common share of $0.27 on 117.3 million weighted average common shares outstanding in the prior year's second quarter. Free cash flow in the second quarter of fiscal year 2011 was positive $18.0 million compared to negative $4.9 million in the prior year's second quarter.

"We had a strong quarter with adjusted EBITDA and free cash flow trending positive and on track for our full year numbers, although higher theatrical marketing costs associated with our larger slate of films impacted quarter-to-quarter comparisons," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "We continued to generate strong momentum across our diverse slate of businesses, especially in television and channels, and hit films such as THE EXPENDABLES and THE LAST EXORCISM underscored the diversity of our film slate and the strength of our financial model."

Overall motion picture revenue for the second quarter of fiscal 2011 was $341.0 million, an increase of 23% from the second quarter of the prior year. Within the motion picture segment, theatrical revenue was $76.0 million, an increase of 151% from the prior year's second quarter, driven by the box office performance of the hit films THE EXPENDABLES, which grossed $102 million at the North American box office and is expected to become one of the most profitable films in the Company's history, as well as THE LAST EXORCISM.

Lionsgate's home entertainment revenue from both motion pictures and television was $132.1 million in the second quarter, a 5% decline from the second quarter of the prior year. Home entertainment revenue from theatrical titles such as KILLERS, KICK ASS, WHY DID I GET MARRIED TOO? and FROM PARIS WITH LOVE increased, offset by declines in home entertainment revenue from direct to video titles and television production due to timing as there were no significant new TV-to-DVD releases in the quarter. Bolstered by its distribution agreement with Redbox, Lionsgate maintained its strong leadership in DVD-to-box office conversion during the quarter.

Television included in motion picture revenue (primarily pay television) was $78.3 million in the second quarter, an increase of 15% from the prior year's second quarter, driven by a slate that included PRECIOUS, BROTHERS, GAMER, Tyler Perry's I CAN DO BAD ALL BY MYSELF and SAW VI, among others.

International motion picture revenue of $37.5 million (excluding Lionsgate U.K.) in the second quarter increased 166% from the prior year's second quarter as the slate of KICK ASS, KILLERS and ALPHA & OMEGA, among others, compared favorably to the slate in the prior year's second quarter.

Lionsgate U.K. revenue also increased, growing 16% to $15.6 million, reflecting the strength of Lionsgate titles such as THE EXPENDABLES and third-party titles such as the Academy Award(R)-winning THE HURT LOCKER along with the direct-to-DVD title BAD LIEUTENANT: PORT OF CALL NEW ORLEANS distributed through Lionsgate U.K.'s joint venture with StudioCanal .

Mandate Pictures' revenue of $8.5 million in the second quarter declined 67% from the prior year's second quarter due to a smaller slate this year.

Television production revenue was $115.3 million in the second quarter, an increase of 30% from the prior year's second quarter. Domestic series licensing from Lionsgate Television increased 60% and included deliveries of 13 episodes of "Weeds Season 6" (Showtime), 10 episodes of Emmy Award-winning "Mad Men Season 4" (AMC), two episodes of "Running Wilde" (Fox) and one episode of "Blue Mountain State Season 2" (Spike) along with three pilots. Debmar-Mercury revenue increased 65% in the second quarter due to increased revenue from the deliveries of "Tyler Perry's Meet The Browns" and "The Wendy Williams Show," among others.

Lionsgate's filmed entertainment backlog was $426.0 million at September 30, 2010. Filmed entertainment backlog represents the amount of future revenue not yet recorded from contracts for the licensing of films and television product for television exhibition and in international markets.

Lionsgate G&A expenses in the quarter were $27.2 million, excluding stock-based compensation and corporate defense costs related to shareholder activist activities. G&A as a percentage of revenue, excluding stock-based compensation and corporate defense costs, declined to 6.0% in the second quarter of fiscal year 2011 compared to 7.3% in the prior year second quarter.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal year 2011 second quarter financial results at 9:00 A.M. ET/6:00 A.M. PT on Wednesday, November 10, 2010. Interested parties may participate live in the conference call by calling 1-800-288-8975 (612-332-0345 outside the U.S. and Canada). A full digital replay will be available from Wednesday morning, November 10, through Wednesday, November 17, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 178231.

About Lionsgate

Lionsgate (NYSE: LGF) is the leading next generation studio with a strong and diversified presence in the production and distribution of motion pictures, television programming, home entertainment, worldwide channels, video-on-demand and digitally delivered content. The Company has built a strong television presence in production of prime time cable and broadcast network series, distribution and syndication of programming through Debmar-Mercury and an array of channel assets. Lionsgate currently has 15 shows on more than 10 networks spanning its prime time production, distribution and syndication businesses, including such critically-acclaimed hits as "Mad Men", "Weeds" and "Nurse Jackie" along with newer series such as "Blue Mountain State" and "Running Wilde" and the syndication successes "Tyler Perry's House Of Payne", its spinoff "Meet The Browns," "The Wendy Williams Show" and "Are We There Yet?".

Its feature film business has generated such recent hits as THE EXPENDABLES, SAW 3D, THE LAST EXORCISM, TYLER PERRY'S WHY DID I GET MARRIED TOO?, KICK ASS and the critically-acclaimed PRECIOUS, which won two Academy Awards(R) last year. The Company's home entertainment business has grown to more than 7% market share and is an industry leader in box office-to-DVD revenue conversion rate. Lionsgate handles a prestigious and prolific library of approximately 12,000 motion picture and television titles that is an important source of recurring revenue and serves as the foundation for the growth of the Company's core businesses. The Lionsgate brand remains 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, including those regarding the performance of future fiscal years. 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 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on June 1, 2010, which risk factors are incorporated herein by reference. 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

September
30, March 31,
2010 2010
---- ----
(Amounts in thousands,
except share amounts)
ASSETS
Cash and
cash
equivalents $78,146 $69,242
Restricted cash 29,053 4,123
Restricted
investments 6,993 6,995
Accounts receivable,
net of reserve for
returns and allowances
of $82,905 (March 31,
2010 -
$87,978) and provision for doubtful accounts
of $7,277 (March 31, 2010 - $7,676) 339,833 292,924
Investment
in films
and
television
programs,
net 713,160 661,105
Property and
equipment,
net 10,918 12,414
Equity method
investments 170,381 179,071
Goodwill 239,254 239,254
Other assets 50,212 62,027
------
Total assets $1,637,950 $1,527,155
========== ==========

LIABILITIES
Senior
revolving
credit
facility $187,000 $17,000
Senior
secured
second-
priority
notes 225,764 225,155
Accounts
payable and
accrued
liabilities 267,730 253,745
Participations
and
residuals 291,286 302,677
Film
obligations
and
production
loans 329,014 351,769
Subordinated
notes and
other
financing
obligations 106,616 192,036
Deferred revenue 151,344 130,851
------- -------
Total liabilities 1,558,754 1,473,233
--------- ---------

Commitments
and
contingencies

SHAREHOLDERS' EQUITY

Common shares, no par
value, 500,000,000
shares authorized,
136,511,482 and
117,951,754
shares
issued at
September
30, 2010
and March
31, 2010,
respectively 639,566 521,164
Accumulated deficit (554,358) (460,631)
Accumulated
other
comprehensive
loss (6,012) (6,611)
------ ------
Total shareholders'
equity 79,196 53,922
------ ------
Total
liabilities
and
shareholders'
equity $1,637,950 $1,527,155
========== ==========

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Three
Months Months
Ended Ended
September September
30, 30,
2010 2009
---- ----
(Amounts in thousands, except per share amounts)

Revenues $456,316 $366,051
Expenses:
Direct
operating 238,208 189,504
Distribution
and marketing 162,443 99,605
General and
administration 33,678 30,944
Depreciation
and
amortization 1,473 1,638
----- -----
Total expenses 435,802 321,691
------- -------
Operating
income (loss) 20,514 44,360
------ ------
Other expenses
(income):
Interest
expense
Contractual
cash based
interest 9,614 5,197
Amortization of
debt discount and
deferred
financing costs 4,215 4,982
----- -----
Total interest
expense 13,829 10,179
Interest and
other income (366) (371)
Loss (gain) on
extinguishment
of debt 14,505 -
------ ---
Total other
expenses, net 27,968 9,808
------ -----
Income (loss)
before equity
interests and
income taxes (7,454) 34,552
Equity
interests loss (20,715) (2,166)
------- ------
Income (loss)
before income
taxes (28,169) 32,386
Income tax
provision 1,490 670
----- ---
Net income
(loss) $(29,659) $31,716
======== =======

Basic Net
Income (Loss)
Per Common
Share $(0.22) $0.27
====== =====
Diluted Net
Income (Loss)
Per Common
Share $(0.22) $0.26
====== =====
Weighted average
number of common
shares
outstanding:
Basic 133,001 117,322
Diluted 133,001 138,732

Six Months Six Months
Ended Ended
September September
30, 30,
2010 2009
---- ----
(Amounts in thousands, except per share amounts)

Revenues $782,900 $745,275
Expenses:
Direct
operating 395,789 400,033
Distribution
and marketing 302,502 183,580
General and
administration 98,397 67,550
Depreciation
and
amortization 3,076 8,294
----- -----
Total expenses 799,764 659,457
------- -------
Operating
income (loss) (16,864) 85,818
------- ------
Other expenses
(income):
Interest
expense
Contractual
cash based
interest 19,705 10,124
Amortization of
debt discount
and deferred
financing costs 8,667 9,683
----- -----
Total interest
expense 28,372 19,807
Interest and
other income (753) (794)
Loss (gain) on
extinguishment
of debt 14,505 (7,458)
------ ------
Total other
expenses, net 42,124 11,555
------ ------
Income (loss)
before equity
interests and
income taxes (58,988) 74,263
Equity
interests
loss (32,422) (4,193)
------- ------
Income (loss)
before income
taxes (91,410) 70,070
Income tax
provision 2,317 2,005
----- -----
Net income
(loss) $(93,727) $68,065
======== =======

Basic Net
Income (Loss)
Per Common
Share $(0.75) $0.58
====== =====
Diluted Net
Income (Loss)
Per Common
Share $(0.75) $0.56
====== =====
Weighted average
number of common
shares
outstanding:
Basic 125,654 117,199
Diluted 125,654 137,671

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Three Months
Ended Ended
September
30, September 30,
2010 2009
---- ----
(Amounts in thousands)
Operating Activities:
Net income (loss) $(29,659) $31,716
Adjustments to reconcile net income
(loss) to
net cash used in operating
activities:
Depreciation of property and
equipment 1,202 1,370
Amortization of intangible assets 271 268
Amortization of films and television
programs 161,277 124,831
Amortization of debt discount and
deferred financing costs 4,215 4,982
Non-cash stock-based compensation 2,156 3,957
Loss (gain) on extinguishment of debt 14,505 -
Equity interests loss 20,715 2,166
Changes in operating assets and
liabilities:
Restricted cash 88 (1)
Accounts receivable, net (78,733) (29,315)
Investment in films and television
programs (147,758) (108,850)
Other assets (2,871) (657)
Accounts payable and accrued
liabilities 31,441 134
Participations and residuals 4,719 (33,147)
Film obligations (8,382) (17,771)
Deferred revenue (5,043) 5,367
------ -----
Net Cash Flows Used In Operating
Activities (31,857) (14,950)
------- -------
Investing Activities:
Purchases of restricted investments - (6,999)
Proceeds from the sale of restricted
investments - 6,987
Buy-out of the earn-out associated
with the acquisition of Debmar-
Mercury, LLC - -
Investment in equity method investees (647) -
Repayment of loans receivable 7,113 -
Purchases of property and equipment (487) (410)
---- ----
Net Cash Flows Provided By (Used In
Investing) Activities 5,979 (422)
----- ----
Financing Activities:
Tax withholding requirements on
equity awards (10,768) (926)
Proceeds from the issuance of
mandatorily redeemable preferred
stock units and common stock units
related to the sale of 49% interest
in TV Guide Network - -
Borrowings under senior revolving
credit facility 100,000 70,000
Repayments of borrowings under senior
revolving credit facility (112,000) (70,000)
Borrowings under individual
production loans 70,573 44,814
Repayment of individual production
loans (20,240) (34,350)
Production loan borrowings under
Pennsylvania Regional Center credit
facility 251 54
Production loan repayments under
Pennsylvania Regional Center credit
facility (494) (109)
Production loan borrowings under film
credit facility 2,141 -
Production loan repayments under film
credit facility (1,205) -
Restricted cash collateral
requirement under the film credit
facility (4,587) -
Repayment of other financing
obligations - -
--- ---
Net Cash Flows Provided By Financing
Activities 23,671 9,483
------ -----
Net Change In Cash And Cash
Equivalents (2,207) (5,889)
Foreign Exchange Effects on Cash 1,785 411
Cash and Cash Equivalents -Beginning
Of Period 78,568 101,844
------ -------
Cash and Cash Equivalents -End Of
Period $78,146 $96,366
======= =======

Six Months Six Months
Ended Ended
September 30, September 30,
2010 2009
---- ----
(Amounts in thousands)
Operating Activities:
Net income (loss) $(93,727) $68,065
Adjustments to reconcile net income
(loss) to
net cash used in operating
activities:
Depreciation of property and
equipment 2,394 4,943
Amortization of intangible assets 682 3,351
Amortization of films and television
programs 262,488 275,994
Amortization of debt discount and
deferred financing costs 8,667 9,683
Non-cash stock-based compensation 24,352 7,686
Loss (gain) on extinguishment of
debt 14,505 (7,458)
Equity interests loss 32,422 4,193
Changes in operating assets and
liabilities:
Restricted cash (16,983) 160
Accounts receivable, net (46,370) (2,388)
Investment in films and television
programs (313,663) (322,425)
Other assets (434) 570
Accounts payable and accrued
liabilities 29,899 (99,255)
Participations and residuals (11,642) (68,116)
Film obligations (7,746) (36,901)
Deferred revenue 20,366 (7,419)
------ ------
Net Cash Flows Used In Operating
Activities (94,790) (169,317)
------- --------
Investing Activities:
Purchases of restricted investments (6,993) (6,999)
Proceeds from the sale of restricted
investments 6,995 6,987
Buy-out of the earn-out associated
with the acquisition of Debmar-
Mercury, LLC (15,000) -
Investment in equity method
investees (22,677) (14,924)
Repayment of loans receivable 7,113 8,333
Purchases of property and equipment (892) (2,203)
Net Cash Flows Provided By (Used In
Investing) Activities (31,454) (8,806)
------- ------
Financing Activities:
Tax withholding requirements on
equity awards (12,265) (1,343)
Proceeds from the issuance of
mandatorily redeemable preferred
stock units and common stock units
related to the sale of 49% interest
in TV Guide Network - 113,372
Borrowings under senior revolving
credit facility 343,000 70,000
Repayments of borrowings under
senior revolving credit facility (173,000) (70,000)
Borrowings under individual
production loans 84,310 127,931
Repayment of individual production
loans (103,386) (102,327)
Production loan borrowings under
Pennsylvania Regional Center credit
facility 745 163
Production loan repayments under
Pennsylvania Regional Center credit
facility (740) (163)
Production loan borrowings under
film credit facility 5,259 -
Production loan repayments under
film credit facility (1,624) -
Restricted cash collateral
requirement under the film credit
facility (8,253) -
Repayment of other financing
obligations - (134)
Net Cash Flows Provided By Financing
Activities 134,046 137,499
------- -------
Net Change In Cash And Cash
Equivalents 7,802 (40,624)
Foreign Exchange Effects on Cash 1,102 2,111
Cash and Cash Equivalents -
Beginning Of Period 69,242 134,879
------
Cash and Cash Equivalents -End Of
Period $78,146 $96,366
======= =======

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND EBITDA, AS ADJUSTED

Three Three
Months Months
Ended Ended
September September
30, 30,
2010 2009
---- ----
(Amounts in thousands)

Net income (loss) $(29,659) $31,716
Depreciation and amortization 1,473 1,638
Contractual cash paid interest
expense 9,614 5,197
Noncash interest expense 4,215 4,982
Interest and other income (366) (371)
Income tax provision 1,490 670
Equity interests loss 20,715 2,166
Loss (gain) on extinguishment
of debt 14,505 -
------ ---
EBITDA $21,987 $45,998
======= =======
Stock-based compensation 2,526 4,293
EBITDA attributable to TV Guide
Network 2,201 2,166
Corporate defense and related
charges 3,951 165
Non-risk prints and
advertising expense (6,401) 1,253
------ -----
EBITDA, as adjusted $24,264 $53,875
======= =======

Six Months Six Months
Ended Ended
September September
30, 30,
2010 2009
---- ----
(Amounts in thousands)

Net income (loss) $(93,727) $68,065
Depreciation and amortization 3,076 8,294
Contractual cash paid interest
expense 19,705 10,124
Noncash interest expense 8,667 9,683
Interest and other income (753) (794)
Income tax provision 2,317 2,005
Equity interests loss 32,422 4,193
Loss (gain) on extinguishment
of debt 14,505 (7,458)
------ ------
EBITDA $(13,788) $94,112
======== =======
Stock-based compensation 29,784 8,288
EBITDA attributable to TV Guide
Network 4,457 2,427
Corporate defense and related
charges 12,504 1,273
Non-risk prints and
advertising expense (21,059) 1,253
------- -----
EBITDA, as adjusted $11,898 $107,353
======= ========

EBITDA is defined as earnings before interest, income tax provision, depreciation and amortization, equity interests, and gains or losses on extinguishment of debt and the sale of equity securities. EBITDA is a non-GAAP financial measure.

EBITDA, as adjusted represents EBITDA as defined above adjusted for stock-based compensation, EBITDA attributable to TV Guide Network, certain corporate defense and related charges, and non-risk prints and advertising expense. Stock-based compensation represents compensation expenses associated with stock options, restricted share units and stock appreciation rights. EBITDA attributable to TV Guide Network represents the Company's 51% share of TV Guide Network's EBITDA for the three and six months ended September 30, 2010 and 2009. Corporate defense and related charges represent legal fees, other professional fees, and certain other costs associated with a shareholder activist matter. Non-risk prints and advertising expense represents the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a guarantee that such expense will be recouped from the performance of the film (i.e. there is no risk of loss to the company) net of an amount of the estimated amortization of participation expense that would have been recorded if such amount had not been expensed. The amount is subtracted from EBITDA in the three and six months ended September 30, 2010 because there was no non-risk prints and advertising expense incurred and the amount represents the estimated amortization of participation expense that would have been recorded if such prior period amounts had not been expensed.

Management believes EBITDA and EBITDA, as adjusted to be a meaningful indicator of our performance that provides useful information to investors regarding our financial condition and results of operations. Presentation of EBITDA and EBITDA, as adjusted is a non-GAAP financial measure commonly used in the entertainment industry and by financial analysts and others who follow the industry to measure operating performance. While management considers EBITDA and EBITDA, as adjusted to be an important measure of comparative operating performance, it should be considered in addition to, but not as a substitute for, net income and other measures of financial performance reported in accordance with Generally Accepted Accounting Principles. EBITDA and EBITDA, as adjusted do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA or EBITDA, as adjusted in the same manner and the measure as presented may not be comparable to similarly-titled measures presented by other companies.

LIONS GATE ENTERTAINMENT CORP.

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

Three
Three Months Months
Ended Ended
September September
30, 30,
2010 2009
---- ----
(Amounts in thousands)

Net Cash Flows Used In Operating
Activities $(31,857) $(14,950)
Purchases of property and equipment (487) (410)
Net borrowings under and (repayment) of
production loans 51,269 10,464
Restricted cash held in trust (890) -
---- ---
Free Cash Flow $18,035 $(4,896)
======= =======

Six Months Six Months
Ended Ended
September September
30, 30,
2010 2009
---- ----
(Amounts in thousands)

Net Cash Flows Used In Operating
Activities $(94,790) $(169,317)
Purchases of property and equipment (892) (2,203)
Net borrowings under and (repayment) of
production loans (15,441) 25,604
Restricted cash held in trust 15,910 -
------ ---
Free Cash Flow $(95,213) $(145,916)
======== =========

Free cash flow is defined as net cash flows used in operating activities, less purchases of property and equipment, plus or minus the net increase or decrease in production loans including production loan activity under the Company's Film Credit Facility, plus or minus the net increase or decrease in restricted cash held in a trust to fund the Company's cash severance obligations that would be due to certain executive officers should their employment be terminated "without cause," (as defined), in connection with "change in control" of the Company, (as defined in each of their respective employment contracts). For purposes of the employment agreements with such executive officers, a "change in control" occurred on June 30, 2010 when a certain shareholder became the beneficial owner of 33% or more of the Company's common shares. The adjustment for the production loans is made because the GAAP based cash flows from operations reflects a non-cash reduction of cash flows for the cost of films associated with production loans prior to the time the Company actually pays for the film. The Company believes that it is more meaningful to reflect the impact of the payment for these films in its free cash flow when the payments are actually made.

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 whether classified as operating or financing activity (related to the production of our films) within our GAAP based statement of cash flows, 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.

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF EBITDA
TO FREE CASH FLOW

Three
Three Months Months
Ended Ended
September September
30, 30,
2010 2009
---- ----
(Amounts in thousands)

EBITDA $21,987 $45,998

Plus: Amortization of film and
television programs 161,277 124,831
Less: Cash paid for film and
television programs (1) (104,871) (116,157)
-------- --------
Amortization of (cash paid for) film
and television programs
in excess of cash paid (amortization) 56,406 8,674

Plus: Non-cash stock-based
compensation 2,156 3,957
----- -----

EBITDA adjusted for net investment in
film and television programs
and non-cash stock-based
compensation 80,549 58,629

Changes in other operating assets and
liabilities:
Restricted cash excluding funds held
in trust (802) (1)
Accounts receivable, net (78,733) (29,315)
Other assets (2,871) (657)
Accounts payable and accrued
liabilities 31,441 134
Participations and residuals 4,719 (33,147)
Deferred revenue (5,043) 5,367
------ -----
(51,289) (57,619)

Purchases of property and equipment (487) (410)
Interest, taxes and other (2) (10,738) (5,496)

Free Cash Flow $18,035 $(4,896)
======= =======

(1) Cash paid for film and television
programs is calculated using the
following amounts
as presented in our consolidated
statement of cash flows:

Change in investment in film and
television programs $(147,758) $(108,850)
Change in film obligations (8,382) (17,771)
Borrowings under individual
production loans 70,573 44,814
Repayment of individual production
loans (20,240) (34,350)
Production loan borrowings under film
credit facility 2,141 -
Production loan repayments under film
credit facility (1,205) -
------ ---
Total cash paid for film and
television programs $(104,871) $(116,157)
========= =========

(2) Interest, taxes and other
consists of the following:

Contractual cash based interest $(9,614) $(5,197)
Interest and other income 366 371
Income tax provision (1,490) (670)
------ ----
Total interest, taxes and other $(10,738) $(5,496)
======== =======

Six Months Six Months
Ended Ended
September September
30, 30,
2010 2009
---- ----
(Amounts in thousands)

EBITDA $(13,788) $94,112

Plus: Amortization of film and
television programs 262,488 275,994
Less: Cash paid for film and
television programs (1) (336,850) (333,722)
-------- --------
Amortization of (cash paid for) film
and television programs
in excess of cash paid (amortization) (74,362) (57,728)

Plus: Non-cash stock-based
compensation 24,352 7,686
------ -----

EBITDA adjusted for net investment in
film and television programs
and non-cash stock-based
compensation (63,798) 44,070

Changes in other operating assets and
liabilities:
Restricted cash excluding funds held
in trust (1,073) 160
Accounts receivable, net (46,370) (2,388)
Other assets (434) 570
Accounts payable and accrued
liabilities 29,899 (99,255)
Participations and residuals (11,642) (68,116)
Deferred revenue 20,366 (7,419)
------ ------
(9,254) (176,448)

Purchases of property and equipment (892) (2,203)
Interest, taxes and other (2) (21,269) (11,335)

Free Cash Flow $(95,213) $(145,916)
======== =========

(1) Cash paid for film and television
programs is calculated using the
following amounts
as presented in our consolidated
statement of cash flows:

Change in investment in film and
television programs $(313,663) $(322,425)
Change in film obligations (7,746) (36,901)
Borrowings under individual production
loans 84,310 127,931
Repayment of individual production
loans (103,386) (102,327)
Production loan borrowings under film
credit facility 5,259 -
Production loan repayments under film
credit facility (1,624) -
------ ---
Total cash paid for film and
television programs $(336,850) $(333,722)
========= =========

(2) Interest, taxes and other consists
of the following:

Contractual cash based interest $(19,705) $(10,124)
Interest and other income 753 794
Income tax provision (2,317) (2,005)
------ ------
Total interest, taxes and other $(21,269) $(11,335)
======== ========

This reconciliation is provided to illustrate the difference between our EBITDA and free cash flow which are both separately reconciled to their corresponding GAAP metrics.

SOURCE Lionsgate

Lionsgate

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

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

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