Lionsgate Reports Revenue of $422.9 Million and Adjusted EBITDA of $28.9 Million for Third Quarter of Fiscal 2011

Lionsgate Reports Revenue of $422.9 Million and Adjusted EBITDA of $28.9 Million for Third Quarter of Fiscal 2011

NET LOSS IS $6.0 MILLION FOR THIRD QUARTER

Basic Net Loss Per Common Share Is $0.04 For Fiscal 2011 Third Quarter Compared To Basic Net Loss Per Common Share of $0.55 In Prior Year's Third Quarter

SANTA MONICA, Calif., and VANCOUVER, British Columbia, Feb. 9, 2011 /PRNewswire/ -- Lionsgate (NYSE: LGF) today reported revenue of $422.9 million and adjusted EBITDA of $28.9 million for the third quarter of fiscal year 2011 (quarter ended December 31, 2010).

Revenue increased 24% compared to the prior year's third quarter driven primarily by increases in home entertainment and international film and TV revenue as well as a slight increase in theatrical revenue.

The Company reported adjusted EBITDA of $28.9 million in the third quarter compared to negative $9.5 million for the prior year's third quarter. Net loss was $6.0 million in the quarter compared to net loss of $65.3 million in the prior year's third quarter. The gain in quarter-to-quarter comparisons was attributable primarily to strong gains in the Company's home entertainment operations, driven by the DVD and digital performance of THE EXPENDABLES, robust international performance, gains in television production and syndication and lower theatrical marketing costs in the quarter despite three wide release films.

Net loss of $6.0 million in the quarter included non-cash equity interest losses of $13.1 million ($11.1 million attributable to Lionsgate's interest in Epix) and $7.9 million in corporate defense and associated costs related to shareholder activist activities.

Basic net loss per common share for the quarter was $0.04 on 136.7 million weighted average common shares outstanding, compared to basic net loss per common share of $0.55 on 117.7 million weighted average common shares outstanding in the prior year's third quarter.

"We had a strong revenue and EBITDA performance in the quarter driven by contributions from our home entertainment, television and international film and TV businesses as well as our filmed entertainment library, despite a challenging environment for packaged media conversion," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "We continue to execute a long-term business plan designed to balance our key priorities - strengthening our balance sheet, maximizing EBITDA and free cash flow and creating long-term value."

Overall motion picture revenue for the third quarter of fiscal 2011 was $326.7 million, an increase of 30% from the third quarter of the prior year. Within the motion picture segment, theatrical revenue was $53.8 million, an increase of 9% from the prior year's third quarter, attributable to the box office performance of the films THE NEXT THREE DAYS, FOR COLORED GIRLS and SAW 3D.

Lionsgate's home entertainment revenue from both motion pictures and television was $174.4 million in the third quarter, a 63% increase from the third quarter of the prior year, driven by a strong performance from the theatrical title THE EXPENDABLES as well as contributions from a diversified slate including the stage play TYLER PERRY'S MADEA'S BIG HAPPY FAMILY, the theatrical titles KILLERS and KICK ASS, sister company Roadside Attractions' Academy Award-nominated WINTER'S BONE and the television series MAD MEN SEASON 3.

Television revenue included in motion picture revenue was $49.7 million in the third quarter, a decrease of 9% from the prior year's third quarter.

International motion picture revenue of $21.4 million (excluding Lionsgate U.K.) in the third quarter increased 31% from the prior year's third quarter as the slate of SAW 3D, THE NEXT THREE DAYS and ALPHA AND OMEGA compared favorably to the slate in the prior year's third quarter.

Lionsgate U.K. revenue also increased in the third quarter, growing 42% to $30.0 million, reflecting the continued strength of Lionsgate titles such as THE EXPENDABLES and KILLERS as well as SAW 3D, newly released in the quarter.

Mandate Pictures' revenue of $11.3 million in the third quarter declined 12% from the prior year's third quarter due to a smaller slate.

Television production revenue was $96.2 million in the third quarter, an increase of 5% from the prior year's third quarter. Domestic series licensing from Debmar-Mercury increased 52% in the third quarter due to increased revenue from deliveries of the television series "Tyler Perry's House of Payne," its spinoff "Meet The Browns," "Are We There Yet?," "The Wendy Williams Show" and "Weeds Seasons 3, 4 and 5" (into syndication on TV Guide Network). Domestic series licensing from Lionsgate Television decreased 32% in the third quarter due to timing of deliveries, which included 12 episodes of "Blue Mountain State Season 2" (Spike), nine episodes of "Running Wilde" (Fox), two episodes of "Mad Men Season 4" (AMC) and one episode of "Nurse Jackie Season 3" (Showtime).

Lionsgate's filmed entertainment backlog was $459.0 million at December 31, 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 $27.8 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 6.6% in the third quarter of fiscal year 2011 compared to 7.6% in the prior year third quarter.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal year 2011 third quarter financial results at 9:00 A.M. ET/6:00 A.M. PT on Thursday, February 10, 2011. Interested parties may participate live in the conference call by calling 1-800-230-1766 (612-332-0228 outside the U.S. and Canada). A full digital replay will be available from Thursday morning, February 10, through Thursday, February 17, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 191239.

About Lionsgate

Lionsgate (NYSE: LGF) is a leading global entertainment company with a strong and diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution and new channel platforms. 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 the popular comedy "Blue Mountain State" 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 more than half a billion dollars at the North American box office in the past year, fueled by such 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 13,000 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

December 31, March 31,
2010 2010
(Amounts in
thousands,
except share
amounts)
ASSETS
Cash and cash
equivalents $69,578 $69,242
Restricted cash 19,322 4,123
Restricted
investments - 6,995
Accounts
receivable, net of
reserve
for returns and
allowances
of $84,357 (March
31, 2010 -
$87,978) and provision for doubtful
accounts of $7,685
(March 31, 2010 -
$7,676) 400,001 292,924
Investment in films
and television
programs, net 682,775 661,105
Property and
equipment, net 10,020 12,414
Equity method
investments 159,212 179,071
Goodwill 239,254 239,254
Other assets 49,457 62,027
Total assets $1,629,619 $1,527,155

LIABILITIES
Senior revolving
credit facility $224,250 $17,000
Senior secured
second-priority
notes 226,005 225,155
Accounts payable
and accrued
liabilities 269,873 253,745
Participations and
residuals 281,605 302,677
Film obligations
and production
loans 278,347 351,769
Subordinated notes
and other
financing
obligations 108,740 192,036
Deferred revenue 164,180 130,851
Total liabilities 1,553,000 1,473,233

Commitments and
contingencies

SHAREHOLDERS'
EQUITY

Common shares, no
par value,
500,000,000 shares
authorized,
136,713,477 and
117,951,754 shares
issued at
December 31, 2010
and March 31,
2010, respectively 641,471 521,164
Accumulated deficit (560,375) (460,631)
Accumulated other
comprehensive
loss (4,477) (6,611)
Total shareholders'
equity 76,619 53,922
Total liabilities
and shareholders'
equity $1,629,619 $1,527,155

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Three
Months Months
Ended Ended
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands, except per share amounts)

Revenues $422,905 $342,584
Expenses:
Direct operating 204,691 200,265
Distribution and
marketing 158,978 156,371
General and
administration 35,938 30,215
Depreciation and
amortization 1,409 2,322
----- -----
Total expenses 401,016 389,173
------- -------
Operating income
(loss) 21,889 (46,589)
------ -------
Other expenses
(income):
Interest expense
Contractual cash
based interest 9,974 7,464
Amortization of
debt discount
and deferred
financing costs 3,389 6,081
----- -----
Total interest
expense 13,363 13,545
Interest and
other income (329) (413)
Loss (gain) on
extinguishment
of debt - 1,783
--- -----
Total other
expenses, net 13,034 14,915
------ ------
Income (loss)
before equity
interests and
income taxes 8,855 (61,504)
Equity interests
loss (13,144) (5,509)
------- ------
Income (loss)
before income
taxes (4,289) (67,013)
Income tax
provision
(benefit) 1,728 (1,754)
----- ------
Net income (loss) $(6,017) $(65,259)
======= ========

Basic Net Income
(Loss) Per
Common Share $(0.04) $(0.55)
====== ======
Diluted Net
Income (Loss)
Per Common Share $(0.04) $(0.55)
====== ======
Weighted average
number of common
shares
outstanding:
Basic 136,661 117,745
Diluted 136,661 117,745

Nine Months Nine Months
Ended Ended
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands, except per share amounts)

Revenues $1,205,805 $1,087,859
Expenses:
Direct operating 600,480 600,298
Distribution and
marketing 461,480 339,951
General and
administration 134,335 97,766
Depreciation and
amortization 4,485 10,616
----- ------
Total expenses 1,200,780 1,048,631
--------- ---------
Operating income
(loss) 5,025 39,228
----- ------
Other expenses
(income):
Interest expense
Contractual cash
based interest 29,679 17,588
Amortization of
debt discount
and deferred
financing costs 12,056 15,764
------ ------
Total interest
expense 41,735 33,352
Interest and
other income (1,082) (1,207)
Loss (gain) on
extinguishment
of debt 14,505 (5,675)
------ ------
Total other
expenses, net 55,158 26,470
------ ------
Income (loss)
before equity
interests and
income taxes (50,133) 12,758
Equity interests
loss (45,566) (9,701)
------- ------
Income (loss)
before income
taxes (95,699) 3,057
Income tax
provision
(benefit) 4,045 251
----- ---
Net income (loss) $(99,744) $2,806
======== ======

Basic Net Income
(Loss) Per
Common Share $(0.77) $0.02
====== =====
Diluted Net
Income (Loss)
Per Common Share $(0.77) $0.02
====== =====
Weighted average
number of common
shares
outstanding:
Basic 129,338 117,381
Diluted 129,338 117,579

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Three
Months Months
Ended Ended
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands)
Operating Activities:
Net income (loss) $(6,017) $(65,259)
Adjustments to reconcile
net income (loss) to
net cash provided by
(used in) operating
activities:
Depreciation of property
and equipment 1,201 1,229
Amortization of
intangible assets 208 1,093
Amortization of films and
television programs 138,095 133,910
Amortization of debt
discount and deferred
financing costs 3,389 6,082
Non-cash stock-based
compensation 2,039 4,055
Loss (gain) on
extinguishment of debt - 1,783
Equity interests loss 13,144 5,508
Changes in operating
assets and liabilities:
Restricted cash (1,716) 9,190
Accounts receivable, net (58,669) (21,217)
Investment in films and
television programs (107,485) (115,595)
Other assets (1,024) 1,841
Accounts payable and
accrued liabilities 2,471 67,537
Participations and
residuals (9,527) (17,686)
Film obligations (9,826) 16,882
Deferred revenue 12,866 1,906
------ -----
Net Cash Flows Provided
By (Used In) Operating
Activities (20,851) 31,259
------- ------
Investing Activities:
Purchases of restricted
investments (7,000) (6,995)
Proceeds from the sale of
restricted investments 13,994 6,998
Buy-out of the earn-out
associated with the
acquisition of Debmar-
Mercury, LLC - -
Investment in equity
method investees (2,000) (26,418)
Increase in loans
receivable - (362)
Repayment of loans
receivable 1,000 -
Purchases of property and
equipment (295) (371)
Net Cash Flows Provided
By (Used In Investing)
Activities 5,699 (27,148)
----- -------
Financing Activities:
Tax withholding
requirements on equity
awards (654) (390)
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,
net of unrestricted cash
deconsolidated - -
Borrowings under senior
revolving credit
facility 138,750 100,000
Repayments of borrowings
under senior revolving
credit facility (101,500) (343,000)
Borrowings under
individual production
loans 15,893 6,656
Repayment of individual
production loans (39,911) (9,558)
Production loan
borrowings under
Pennsylvania Regional
Center credit facility - 57,000
Production loan
borrowings under film
credit facility 12,462 32,217
Production loan
repayments under film
credit facility (29,883) -
Decrease in restricted
cash collateral
requirement under the
film credit facility 11,340 -
Proceeds from sale of
senior secured second-
priority notes - 216,232
Repurchase of
subordinated notes - (75,185)
Repayment of other
financing obligations - -
Net Cash Flows Provided
By (Used In) Financing
Activities 6,497 (16,028)
----- -------
Net Change In Cash And
Cash Equivalents (8,655) (11,917)
Foreign Exchange Effects
on Cash 87 241
Cash and Cash Equivalents
-Beginning Of Period 78,146 96,366
------ ------
Cash and Cash Equivalents
-End Of Period $69,578 $84,690
======= =======

Nine Nine
Months Months
Ended Ended
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands)
Operating Activities:
Net income (loss) $(99,744) $2,806
Adjustments to reconcile
net income (loss) to
net cash provided by
(used in) operating
activities:
Depreciation of property
and equipment 3,595 6,172
Amortization of
intangible assets 890 4,444
Amortization of films and
television programs 400,583 409,904
Amortization of debt
discount and deferred
financing costs 12,056 15,764
Non-cash stock-based
compensation 26,391 11,741
Loss (gain) on
extinguishment of debt 14,505 (5,675)
Equity interests loss 45,566 9,701
Changes in operating
assets and liabilities: - -
Restricted cash (18,699) 9,350
Accounts receivable, net (105,039) (23,605)
Investment in films and
television programs (421,148) (438,020)
Other assets (1,458) 2,411
Accounts payable and
accrued liabilities 32,375 (31,717)
Participations and
residuals (21,169) (85,802)
Film obligations (17,572) (20,019)
Deferred revenue 33,232 (5,513)
------ ------
Net Cash Flows Provided
By (Used In) Operating
Activities (115,636) (138,058)
-------- --------
Investing Activities:
Purchases of restricted
investments (13,993) (13,994)
Proceeds from the sale of
restricted investments 20,989 13,985
Buy-out of the earn-out
associated with the
acquisition of Debmar-
Mercury, LLC (15,000) -
Investment in equity
method investees (24,677) (41,342)
Increase in loans
receivable - (362)
Repayment of loans
receivable 8,113 8,333
Purchases of property and
equipment (1,187) (2,574)
Net Cash Flows Provided
By (Used In Investing)
Activities (25,755) (35,954)
------- -------
Financing Activities:
Tax withholding
requirements on equity
awards (12,919) (1,733)
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,
net of unrestricted cash
deconsolidated - 109,776
Borrowings under senior
revolving credit
facility 481,750 170,000
Repayments of borrowings
under senior revolving
credit facility (274,500) (413,000)
Borrowings under
individual production
loans 100,203 134,587
Repayment of individual
production loans (143,297) (111,885)
Production loan
borrowings under
Pennsylvania Regional
Center credit facility - 57,000
Production loan
borrowings under film
credit facility 17,721 32,217
Production loan
repayments under film
credit facility (31,507) -
Decrease in restricted
cash collateral
requirement under the
film credit facility 3,087 -
Proceeds from sale of
senior secured second-
priority notes - 216,232
Repurchase of
subordinated notes - (75,185)
Repayment of other
financing obligations - (134)
Net Cash Flows Provided
By (Used In) Financing
Activities 140,538 117,875
------- -------
Net Change In Cash And
Cash Equivalents (853) (56,137)
Foreign Exchange Effects
on Cash 1,189 2,352
Cash and Cash Equivalents
-Beginning Of Period 69,242 138,475
Cash and Cash Equivalents
-End Of Period $69,578 $84,690
======= =======

LIONS GATE ENTERTAINMENT CORP.

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

Three Three
Months Months
Ended Ended
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands)

Net income (loss) $(6,017) $(65,259)
Depreciation and
amortization 1,409 2,322
Contractual cash
paid interest
expense 9,974 7,464
Noncash interest
expense 3,389 6,081
Interest and other
income (329) (413)
Income tax
provision 1,728 (1,754)
Equity interests
loss 13,144 5,509
Loss (gain) on
extinguishment of
debt - 1,783
--- -----
EBITDA $23,298 $(44,267)
======= ========

Stock-based
compensation (1) 191 4,277
EBITDA attributable
to TV Guide
Network 2,064 3,708
Corporate defense
and related
charges 7,945 -
Non-risk prints
and advertising
expense (4,595) 26,798
------ ------
EBITDA, as adjusted $28,903 $(9,484)
======= =======

Nine Nine
Months Months
Ended Ended
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands)

Net income (loss) $(99,744) $2,806
Depreciation and
amortization 4,485 10,616
Contractual cash
paid interest
expense 29,679 17,588
Noncash interest
expense 12,056 15,764
Interest and other
income (1,082) (1,207)
Income tax
provision 4,045 251
Equity interests
loss 45,566 9,701
Loss (gain) on
extinguishment of
debt 14,505 (5,675)
------ ------
EBITDA $9,510 $49,844
====== =======

Stock-based
compensation (1) 29,975 12,565
EBITDA attributable
to TV Guide
Network 6,522 6,485
Corporate defense
and related
charges 20,449 1,012
Non-risk prints
and advertising
expense (25,654) 28,048
------- ------
EBITDA, as adjusted $40,802 $97,954
======= =======

(1) The nine months ended December 31, 2010 includes $21.9 million in
additional compensation expense associated with the immediate
vesting of certain equity awards held by certain executive officers
as a result of the triggering of "change in control" provisions in
their respective employment agreements, which occurred on June 30,
2010.

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 nine months ended December 31, 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 nine months ended December 31, 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 PROVIDED BY (USED IN) OPERATING ACTIVITIES

Three Three
Months Months
Ended Ended
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands)

Net Cash Flows
Provided By (Used
In) Operating
Activities $(20,851) $31,259
Purchases of
property and
equipment (295) (371)
Net borrowings under
and (repayment) of
production loans (41,439) 29,315
Restricted cash held
in trust (95) -
--- ---
Free Cash Flow $(62,680) $60,203
======== =======

Nine Nine
Months Months
Ended Ended
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands)

Net Cash Flows
Provided By (Used
In) Operating
Activities $(115,636) $(138,058)
Purchases of
property and
equipment (1,187) (2,574)
Net borrowings under
and (repayment) of
production loans (56,880) 54,919
Restricted cash held
in trust 15,815 -
------ ---
Free Cash Flow $(157,888) $(85,713)
========= ========

Free cash flow is defined as net cash flows provided by (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 a "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
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands)

EBITDA $23,298 $(44,267)

Plus: Amortization of
film and television
programs 138,095 133,910
Less: Cash paid for
film and television
programs (1) (158,750) (69,398)
-------- -------
Amortization of (cash
paid for) film and
television programs
in excess of cash paid
(amortization) (20,655) 64,512

Plus: Non-cash stock-
based compensation 2,039 4,055
----- -----

EBITDA adjusted for
net investment in
film and television
programs
and non-cash stock-
based compensation 4,682 24,300

Changes in other
operating assets and
liabilities:
Restricted cash
excluding funds held
in trust (1,811) 9,190
Accounts receivable,
net (58,669) (21,217)
Other assets (1,024) 1,841
Accounts payable and
accrued liabilities 2,471 67,537
Participations and
residuals (9,527) (17,686)
Deferred revenue 12,866 1,906
------ -----
(55,694) 41,571

Purchases of property
and equipment (295) (371)
Interest, taxes and
other (2) (11,373) (5,297)

Free Cash Flow $(62,680) $60,203
======== =======

(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 $(107,485) $(115,595)
Change in film
obligations (9,826) 16,882
Borrowings under
individual production
loans 15,893 6,656
Repayment of
individual production
loans (39,911) (9,558)
Production loan
borrowings under film
credit facility 12,462 32,217
Production loan
repayments under film
credit facility (29,883) -
------- ---
Total cash paid for
film and television
programs $(158,750) $(69,398)
========= ========

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

Contractual cash based
interest $(9,974) $(7,464)
Interest and other
income 329 413
Income tax provision (1,728) 1,754
------ -----
Total interest, taxes
and other $(11,373) $(5,297)
======== =======

Nine Nine
Months Months
Ended Ended
December December
31, 31,
2010 2009
---- ----
(Amounts in thousands)

EBITDA $9,510 $49,844

Plus: Amortization of
film and television
programs 400,583 409,904
Less: Cash paid for
film and television
programs (1) (495,600) (403,120)
-------- --------
Amortization of (cash
paid for) film and
television programs
in excess of cash paid
(amortization) (95,017) 6,784

Plus: Non-cash stock-
based compensation 26,391 11,741
------ ------

EBITDA adjusted for
net investment in
film and television
programs
and non-cash stock-
based compensation (59,116) 68,369

Changes in other
operating assets and
liabilities:
Restricted cash
excluding funds held
in trust (2,884) 9,350
Accounts receivable,
net (105,039) (23,605)
Other assets (1,458) 2,411
Accounts payable and
accrued liabilities 32,375 (31,717)
Participations and
residuals (21,169) (85,802)
Deferred revenue 33,232 (5,513)
------ ------
(64,943) (134,876)

Purchases of property
and equipment (1,187) (2,574)
Interest, taxes and
other (2) (32,642) (16,632)

Free Cash Flow $(157,888) $(85,713)
========= ========

(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 $(421,148) $(438,020)
Change in film
obligations (17,572) (20,019)
Borrowings under
individual production
loans 100,203 134,587
Repayment of
individual production
loans (143,297) (111,885)
Production loan
borrowings under film
credit facility 17,721 32,217
Production loan
repayments under film
credit facility (31,507) -
------- ---
Total cash paid for
film and television
programs $(495,600) $(403,120)
========= =========

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

Contractual cash based
interest $(29,679) $(17,588)
Interest and other
income 1,082 1,207
Income tax provision (4,045) (251)
------ ----
Total interest, taxes
and other $(32,642) $(16,632)
======== ========

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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