Lionsgate Reports Revenues of $290.9 Million and Net Profit of $2.0 Million for Third Quarter of Fiscal 2008

Lionsgate Reports Revenues of $290.9 Million and Net Profit of $2.0 Million for Third Quarter of Fiscal 2008

Company Reports Best Third Quarter Revenue In Its History

SANTA MONICA, Calif., and VANCOUVER, British Columbia, Feb. 11 /PRNewswire-FirstCall/ -- Lionsgate (NYSE:LGF) , the leading independent filmed entertainment studio, continued its growth momentum, reporting revenues of $290.9 million and net income of $2.0 million for its fiscal quarter ended December 31, 2007, the Company announced today. The Company noted that revenue growth of 14% from the prior year third quarter was driven by strong theatrical box office, international revenue growth and continued strength in television production revenues. The Company achieved its best revenue performance ever for a fiscal third quarter.

Lionsgate reported net income for the three months ended December 31, 2007, of $2.0 million. Diluted net income per common share was $0.02 on 120.3 million adjusted weighted average common shares outstanding.

"Our theatrical, television, home entertainment, library, international and digital businesses all achieved continued solid performance in the quarter," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "With an anticipated record-breaking revenue and free cash flow quarter ending March 31, we are on track to meet our full year guidance."

The Company reported that its filmed entertainment backlog grew to a record $416.6 million in the quarter. Filmed entertainment backlog represents the amount of future revenue not yet recorded from the licensing of films and television product for television exhibition and in international markets.

Overall motion picture revenue for the quarter was $254.1 million. Lionsgate had two hit theatrical releases in the quarter, Saw IV and Tyler Perry's Why Did I Get Married?, and the Company has now had seven hit releases in a row -- The Eye, Rambo, Saw IV, Why Did I Get Married?, 3:10 To Yuma, Good Luck, Chuck and War.

Lionsgate's home entertainment revenue was $105.1 million in the third quarter, reflecting strong sales of Bratz, Skinwalkers and Captivity and continued sales of Delta Farce, Saw III and The Condemned. After the close of the quarter, Lionsgate had the best DVD month in its history in January 2008 as War, 3:10 To Yuma, Good Luck, Chuck and Saw IV all debuted at #1 or #2 on the North American DVD and BluRay charts.

Television revenue included in the motion picture segment was $28.9 million in the third quarter, led by titles such as Crash, Daddy's Little Girls, Happily N'Ever After and Pride.

Lionsgate also had the strongest international revenue quarter in its history, reporting $53.8 million in international revenue in the third quarter from such titles as Saw IV, Saw III, Good Luck, Chuck, War, Catacombs, the special edition DVD release of Dirty Dancing by Lionsgate U.K. and Mandate International's 30 Days of Night. Lionsgate U.K. contributed $22.4 million in revenue in the quarter.

Television production revenue was $36.8 million in the third quarter, driven by deliveries of episodes of Golden Globe (R)-winning drama series Mad Men (AMC), Weeds Season 3 (Showtime) and Wildfire Season 4 (ABC Family), and domestic series licensing of Tyler Perry's House of Payne, South Park and Family Feud from the Company's Debmar-Mercury syndication arm.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2008 third quarter financial results at 9:00 A.M. ET/6:00 A.M. PT, Tuesday, February 12, 2008. Interested parties may participate live in the conference call by calling 1-888-639-6205 (1-703-925-2608 outside the U.S. and Canada). A full digital replay will be available from Tuesday afternoon, February 12, through Tuesday, February 19, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code 907460.

Lionsgate is the leading independent filmed entertainment studio and is a premier producer and distributor of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered content. Its prestigious and prolific library of nearly 12,000 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 Annual Report on 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                                                December 31,         March 31,                                                   2007               2007                                               (Unaudited)                                                 (Amounts in thousands,                                                  except share amounts)                           ASSETS   Cash and cash equivalents                     $182,654            $51,497   Restricted cash                                 32,396              4,915   Investments - auction rate    securities                                          -            237,379   Investments - equity securities                      -                125   Accounts receivable, net of reserve    for video returns and allowances of    $69,978 (March 31, 2007 - $77,691)    and provision for doubtful accounts    of $5,448 (March 31, 2007 - $6,345)           163,376            130,496   Investment in films and television    programs                                      710,680            493,140   Property and equipment                          13,877             13,095   Goodwill                                       227,063            187,491   Other assets                                    50,831             18,957                                               $1,380,877         $1,137,095                          LIABILITIES   Accounts payable and accrued    liabilities                                  $224,933           $155,617   Participation and residuals                    286,494            171,156   Film obligations                               269,375            167,884   Subordinated notes and other    financing obligations                         328,718            325,000   Deferred revenue                               120,841             69,548                                                1,230,361            889,205    Commitments and contingencies                     SHAREHOLDERS' EQUITY   Common shares, no par value,    500,000,000 shares authorized,    120,401,688 and 116,970,280 shares    issued at December 31, 2007 and    March 31, 2007, respectively                  427,069            398,836   Series B preferred shares (10 shares    issued and outstanding)                             -                  -   Accumulated deficit                           (257,025)          (149,651)   Accumulated other comprehensive    income (loss)                                     809             (1,295)                                                  170,853            247,890   Treasury shares, no par value, 2,196,899    shares at December 31, 2007                   (20,337)                 -                                                  150,516            247,890                                               $1,380,877         $1,137,095                          LIONS GATE ENTERTAINMENT CORP.          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                     Three     Three       Nine       Nine                                    Months    Months     Months     Months                                    Ended     Ended      Ended      Ended                                   December  December   December   December                                  31, 2007   31, 2006   31, 2007   31, 2006                                       (Amounts in thousands, except                                             per share amounts)    Revenues                       $290,866   $254,531    $833,113   $645,156   Expenses:     Direct operating              137,381    110,921     406,926    274,189     Distribution and marketing    120,429     95,803     444,942    296,194     General and administration     27,093     23,347      79,802     64,307     Depreciation                      933        824       2,830      1,949       Total expenses              285,836    230,895     934,500    636,639   Operating income (loss)           5,030     23,636    (101,387)     8,517   Other expenses (income):     Interest expense                4,090      4,601      12,163     14,181     Interest and other income      (2,511)    (2,906)     (8,960)    (7,753)     Gain on sale of equity      securities                       (83)         -      (2,868)         -       Total other income, net       1,496      1,695         335      6,428   Income (loss) before equity    interests and income taxes       3,534     21,941    (101,722)     2,089   Equity interests loss            (1,248)      (425)     (3,242)      (802)   Income (loss) before income    taxes                            2,286     21,516    (104,964)     1,287   Income tax provision    (benefit)                          328      1,061       2,410     (1,172)   Net income (loss)                $1,958    $20,455   $(107,374)    $2,459    Basic Net Income (Loss) Per    Common Share                     $0.02      $0.19      $(0.91)     $0.02   Diluted Net Income (Loss) Per    Common Share                     $0.02      $0.17      $(0.91)     $0.02                          LIONS GATE ENTERTAINMENT CORP.     UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                                                  Series B    Restric-                           Common Shares    Preferred Shares   ted   Unearned                                                              Share  Compen-                          Number     Amount   Number  Amount  Units  sation                              (Amounts in thousands, except share amounts)   Balance at    March 31, 2006    104,422,765    $328,771     10     $-  $5,178  $(4,032)   Reclassification of    unearned    compensation    and restricted    share common units    upon adoption of    SFAS No. 123(R)                     1,146                (5,178)   4,032   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         933,855      (2,879)   Stock based    compensation, net    of share units    withholding tax    obligations of $980   486,457       9,084   Issuance of common    shares to directors    for services           25,970         277   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   Repurchase of common    shares, no par value   Comprehensive loss     Net loss     Foreign currency      translation      adjustments     Net unrealized loss      on foreign      exchange contracts     Comprehensive loss   Balance at December 31,    2007               120,401,688   $427,069     10     $-      $-       $-                                           Accumulated                                   Compre-  Other                                   hensive Compre-                      Accumulated  Income  hensive   Treasury Shares                         Deficit   (Loss)  Income     Number  Amount   Total                                           (Loss)                             (Amounts in thousands, except share amounts)    Balance at March 31,    2006                $(177,130)         $(3,517)       -      $- $149,270   Reclassification of    unearned    compensation and    restricted share    common units    upon adoption of SFAS    No. 123(R)                                                             -   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                                                           (2,879)   Stock based    compensation, net    of share units    withholding tax    obligations of $980                                                9,084   Issuance of common    shares to directors    for services                                                         277   Issuance of common    shares for investment    in NextPoint, Inc                                                 20,851   Issuance of common    shares related to    the Redbus acquisition                                               900   Repurchase of common    shares, no par value                         (2,196,899)(20,337) (20,337)   Comprehensive loss     Net loss           (107,374)$(107,374)                         (107,374)     Foreign currency      translation      adjustments                    2,322 2,322                       2,322     Net unrealized loss      on foreign      exchange contracts              (218) (218)                       (218)     Comprehensive loss          $(105,270)   Balance at December 31,    2007               $(257,025)           $809 (2,196,899)$(20,337)$150,516                          LIONS GATE ENTERTAINMENT CORP.          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                 Nine Months       Nine Months                                                  Ended              Ended                                                December 31,     December 31,                                                   2007             2006                                                  (Amounts in thousands)   Operating Activities:   Net income (loss)                            $(107,374)            $2,459   Adjustments to reconcile net income    (loss) to net cash  provided by    (used in) operating activities     Depreciation of property and      equipment                                     2,830              1,949     Amortization of deferred      financing costs                               2,659              2,915     Amortization of films and      television programs                         252,907            142,982     Amortization of intangible assets                698                702     Non-cash stock-based compensation             10,207              4,795     Gain on sale of equity securities             (2,794)               -     Equity interests loss                          3,242                802   Changes in operating assets and    liabilities:     Restricted cash                              (19,674)            (9,150)     Accounts receivable, net                     (32,704)            76,829     Investment in films and      television programs                        (397,844)          (246,567)     Other assets                                  (5,882)             5,079     Accounts payable and accrued      liabilities                                  41,111            (23,733)     Unpresented bank drafts                            -            (14,772)     Participation and residuals                  110,397              1,048     Film obligations                              50,790             70,134     Deferred revenue                              39,568             50,233   Net Cash Flows Provided By (Used    In) Operating Activities                      (51,863)            65,705   Investing Activities:   Purchases of investments - auction    rate securities                              (207,262)          (575,789)   Proceeds from the sale of    investments - auction rate    securities                                    444,641            536,226   Purchases of investments - equity    securities                                     (4,765)                 -   Proceeds from the sale of    investments - equity securities                24,035                  -   Acquisition of Mandate, net of    unrestricted cash acquired                    (41,205)                 -   Loan to Mandate - preacquisition                (2,895)                 -   Acquisition of Maple, net of    unrestricted cash acquired                      1,737                  -   Acquisition of Debmar, net of    unrestricted cash acquired                        -              (24,137)   Investment in equity method    investees                                      (6,464)            (5,000)   Loan to equity method investee                  (3,000)                 -   Purchases of property and equipment             (2,718)            (7,737)   Net Cash Flows Provided By (Used    In) Investing Activities                      202,104            (76,437)   Financing Activities:   Exercise of stock options                          864              3,280   Amounts paid to satisfy tax    withholding requirements on    options exercised                              (4,723)               -   Repurchases of common shares                   (20,337)               -   Borrowings under financing    arrangements                                    3,718                -   Net Cash Flows Provided By (Used    In) Financing Activities                      (20,478)             3,280   Net Change In Cash And Cash    Equivalents                                   129,763             (7,452)   Foreign Exchange Effects on Cash                 1,394                (53)   Cash and Cash Equivalents -    Beginning Of Period                            51,497             46,978   Cash and Cash Equivalents - End Of    Period                                       $182,654            $39,473                          LIONS GATE ENTERTAINMENT CORP.                   RECONCILIATION OF NET CASH FLOWS USED IN                   OPERATING ACTIVITIES TO FREE CASH FLOW                                         Three Months Ended  Nine Months Ended                                           December 31,      December 31,                                           2007    2006      2007     2006                                               (Amounts in thousands)   Net Cash Flows Provided By (Used In)    Operating Activities                  $6,690  $54,923  $(51,863) $65,705      Purchases of property and equipment   (333)  (4,200)   (2,718)  (7,737)      Decrease in Unpresented Bank Drafts      -        -         -   14,772   Free Cash Flow, as defined             $6,357  $50,723  $(54,581) $72,740   

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: keasterling@lionsgate.com

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