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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Profile: International Entertainment