Lionsgate Reports Record Revenues of $1.36 Billion for Fiscal 2008, Up 39% From Previous Year; Net Loss Is $74.0 Million

Lionsgate Reports Record Revenues of $1.36 Billion for Fiscal 2008, Up 39% From Previous Year; Net Loss Is $74.0 Million

Company Reports Best Revenue Quarter In Its History With $511.5 Million In Fourth Quarter Revenues

Company Reports Positive Free Cash Flow of $137 Million For Fiscal 2008

SANTA MONICA, Calif., and VANCOUVER, British Columbia, May 30 /PRNewswire-FirstCall/ -- Lionsgate (NYSE:LGF) , a leading next generation filmed entertainment studio, continued its growth momentum for fiscal 2008, reporting revenues of $1.36 billion and a net loss of $74.0 million for its fiscal year ended March 31, 2008, the Company announced today. The Company noted that revenue growth of 39% from the prior year was driven by strong theatrical box office, increased home entertainment sales, growth in library revenues, continued strength in television production revenues and burgeoning digital revenues. The Company reported $511.5 million in fourth quarter revenues, its best quarterly revenue performance.

Lionsgate reported a net loss for the fiscal year ended March 31, 2008 of $74.0 million. Diluted net loss per common share was $0.62 on 118.4 million adjusted weighted average common shares outstanding. The loss was primarily attributable to increased theatrical distribution and marketing expenses in association with the planned growth of the Company's motion picture slate. Theatrical distribution and marketing expenses of $326.3 million increased 118% from $149.7 million in the previous year.

"Every division of the Company made contributions to our tremendous revenue growth, and they have positioned us for continued double-digit revenue growth in fiscal 2009," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "We continue to leverage our vast array of content for large niche audiences into a fast-growing channel business, digital distribution platforms and emerging international opportunities that, in addition to the continued successful operation of our existing core businesses, all set the foundation for long-term profitability and enhanced global recognition of the Lionsgate brand."

The Company reported that cash and cash equivalents grew to $371.6 million at March 31, 2008, its strongest cash position ever after three consecutive years of positive free cash flow in excess of $100 million. The Company's filmed entertainment backlog also grew to a record $437.4 million at fiscal year-end. 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 year was a record $1.15 billion, an increase of 34.1% from $858.2 million in fiscal 2007, including revenues generated by the September 2007 acquisition of Mandate Pictures. Within the motion picture segment, theatrical revenue was $191.7 million, an increase of 78% from $107.9 million the previous year, propelled by a string of hits including Saw 4, 3:10 To Yuma, Good Luck, Chuck, The Bank Job, Tyler Perry's Why Did I Get Married?, The Eye, Rambo, Tyler Perry's Meet The Browns and War.

Lionsgate's home entertainment revenue was a record $623.5 million in the fiscal year, an 18% increase from $528.3 million in fiscal 2007, reflecting strong sales of 3:10 To Yuma, Good Luck, Chuck, Tyler Perry's Why Did I Get Married?, Saw 4, War, The Condemned, Delta Farce, Bratz: The Movie, Daddy's Little Girls, Pride and Happily N'Ever After as well as the initial impact of strong BluRay high-definition disc sales. Another major catalyst for strong home entertainment revenue performance was continued strong library sales as Lionsgate reported record catalogue revenues of $263.7 million in fiscal 2008.

Television revenue included in the motion picture segment was $115.9 million in the fiscal year, a 6% increase from $109.3 million in fiscal 2007, led by titles such as Crank, Daddy's Little Girls, Employee of The Month, Saw III and The Descent.

Lionsgate also had the strongest international revenue performance in its history, reporting $158.7 million in international revenue in the fiscal year from such titles as 3:10 To Yuma, Saw IV, Saw III, Good Luck, Chuck, The Condemned, War and the special edition DVD release of Dirty Dancing by Lionsgate U.K. Lionsgate U.K. contributed $64.6 million in revenue in the fiscal year.

Television production revenue was $210.1 million in the fiscal year, an increase of 77% from $118.5 million in fiscal 2007, driven by a mix of deliveries of episodes of in-house productions such as the Golden Globe (R)- winning drama series Mad Men (AMC), Weeds Season 3 (Showtime), Wildfire Season 4 (ABC Family), and the Dead Zone Season 5 (USA Network) and domestic series licensing of Tyler Perry's House of Payne, South Park and Family Feud from the Company's television syndication subsidiary, Debmar-Mercury.

As more fully described in Note 2 to the consolidated financial statements in the Company's 2008 Annual Report on Form 10-K filed on May 30, 2008, the Company made a change in the presentation of certain components within its Statement of Cash Flows to conform the Statement of Cash Flows to be in accordance with technical requirements of the FASB's FIN 46R. The change in presentation of the Statement of Cash Flows reflects certain production obligations as a component of cash flows from financing activities rather than as a component of cash flows from operating activities. This change in the GAAP-based presentation had no impact on the Company's cash balances, overall cash flows or the changes in the balances of the Company's cash and cash equivalents.

The Company will continue to use the free cash flow metric and amounts presented as such will continue to reflect the same amounts as were previously reflected as free cash flow as presented in the attached free cash flow reconciliation.

The aforementioned changes do not affect Lionsgate's current, previous or anticipated free cash flow results.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2008 financial results at 9:00 A.M. ET/6:00 A.M. PT, Monday, June 2, 2008. Interested parties may participate live in the conference call by calling 1-800-230-1085 (1-612-234-9959 outside the U.S. and Canada). A full digital replay will be available from Monday afternoon, June 2, through Monday, June 9, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code 920448.

Lionsgate is a leading next generation filmed entertainment studio with a major presence in the production and distribution of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered content. The Company is leveraging its content leadership and marketing expertise through a series of partnerships that include the operation of the highly successful FEARNet branded VOD and Internet horror channel with Sony and Comcast, the recent announcement of the fall 2009 launch of a new premium entertainment channel with partners Viacom, Paramount Pictures and MGM, investment in the leading young men's digital distribution platform Break.com, ownership of the premier independent television syndication company Debmar-Mercury LLC and an alliance with independent filmed entertainment production and distribution company Roadside Attractions. Lionsgate also has forged partnerships with leading content creators, owners and distributors in key territories around the world, including Televisa in the U.S. and Latin America, StudioCanal in the UK, Hoyts and Sony in Australia and Eros International in India..

The Company generated approximately $450 million at the North American theatrical box office in the past year and has released a string of hits including The Forbidden Kingdom, Tyler Perry's Meet The Browns, The Bank Job, Rambo, The Eye, Saw IV, Tyler Perry's Why Did I Get Married?, Good Luck Chuck, 3:10 To Yuma and War, most of which have opened at #1 or #2 at the box office. The Company has also forged leadership positions in television and home entertainment with the production of such critically-acclaimed television series as Weeds and Mad Men, the distribution of Tyler Perry's House of Payne, Family Feud, South Park, Trivial Pursuit and The Dead Zone, among others, and approximately 9% market share and the industry's leading box office-to-DVD conversion rate in home entertainment. 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 is synonymous with entrepreneurial innovation and 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    

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 2009. 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, 2008. 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.                         CONSOLIDATED BALANCE SHEETS                                                  March 31,         March 31,                                                   2008              2007                                                   (Amounts in thousands,                                                    except share amounts)                      ASSETS   Cash and cash equivalents                     $371,589           $51,497   Restricted cash                                 10,300             4,915   Investments                                      6,927           237,504   Accounts receivable, net of reserve    for video returns and allowances of    $95,515 (March 31, 2007 - $77,691) and    provision for doubtful accounts of    $5,978 (March 31, 2007 - $6,345)              260,284           130,496   Investment in films and television    programs                                      608,942           493,140   Property and equipment                          13,613            13,095   Goodwill                                       224,531           187,491   Other assets                                    41,572            18,957                                               $1,537,758        $1,137,095                 LIABILITIES   Accounts payable and accrued liabilities      $245,430          $155,617   Participation and residuals                    385,846           171,156   Film and production obligations                278,016           167,884   Subordinated notes and other    financing obligations                         328,718           325,000   Deferred revenue                               111,510            69,548                                                1,349,520           889,205    Commitments and contingencies            SHAREHOLDERS' EQUITY   Common shares, no par value, 500,000,000    shares authorized, 121,081,311 and    116,970,280 shares issued at March    31, 2008 and March 31, 2007,    respectively                                  434,650           398,836   Series B preferred shares (10 shares    issued and outstanding)                           -                 -   Accumulated deficit                           (223,619)         (149,651)   Accumulated other comprehensive loss              (533)           (1,295)                                                  210,498           247,890   Treasury shares, no par value,    2,410,499 shares at March 31, 2008            (22,260)              -                                                  188,238           247,890                                               $1,537,758        $1,137,095                          LIONS GATE ENTERTAINMENT CORP.                    CONSOLIDATED STATEMENTS OF OPERATIONS                                            Year         Year        Year                                           Ended        Ended       Ended                                          March 31,    March 31,   March 31,                                            2008         2007        2006                                            (Amounts in thousands, except                                                  per share amounts)    Revenues                              $1,361,039    $976,740    $945,385   Expenses:     Direct operating                       662,450     436,818     458,990     Distribution and marketing             635,666     404,410     399,299     General and administration             119,080      90,782      69,936     Depreciation                             3,974       2,786       1,817       Total expenses                     1,421,170     934,796     930,042   Operating income (loss)                  (60,131)     41,944      15,343   Other expenses (income):     Interest expense                        16,432      17,832      18,860     Interest rate swaps mark-to-market         -           -           123     Interest and other income              (11,276)    (11,930)     (4,304)     Gain on sale of equity securities       (2,909)     (1,722)        -       Total other income, net                2,247       4,180      14,679   Income (loss) before equity    interests and income taxes              (62,378)     37,764         664   Equity interests loss                     (7,559)     (2,605)        (74)   Income (loss) before income taxes        (69,937)     35,159         590   Income tax provision (benefit)             4,031       7,680      (1,030)   Income (loss) before discontinued    operations                              (73,968)     27,479       1,620   Income (loss) from discontinued    operations (including gain on sale    in 2006 of $4,872), net of tax    of $2,464                                   -           -         4,476   Net income (loss)                       $(73,968)    $27,479      $6,096   Basic Per Share Data:   Basic Income (Loss) Per Common    Share From Continuing Operations         $(0.62)      $0.25       $0.02   Basic Income (Loss) Per Common    Share From Discontinued Operations          -           -          0.04   Basic Net Income (Loss) Per Common    Share                                    $(0.62)      $0.25       $0.06    Diluted Per Share Data:   Diluted Income (Loss) Per Common    Share From Continuing Operations         $(0.62)      $0.25       $0.02   Diluted Income (Loss) Per Common    Share From Discontinued Operations          -           -          0.04   Diluted Net Income (Loss) Per    Common Share                             $(0.62)      $0.25       $0.06    Weighted average number of common    shares outstanding:     Basic                                  118,427     108,398     103,066     Diluted                                118,427     111,164     106,102                          LIONS GATE ENTERTAINMENT CORP.                    CONSOLIDATED STATEMENTS OF CASH FLOWS                                            Year        Year        Year                                           Ended       Ended       Ended                                          March 31,   March 31,   March 31,                                            2008        2007        2006                                                    (restated)  (restated)                                              (Amounts in thousands)   Operating Activities:   Net income (loss)                      $(73,968)    $27,479      $6,096   Income (loss) from discontinued    operations                                 -           -         4,476   Income (loss) from continuing    operations                             (73,968)     27,479       1,620   Adjustments to reconcile income    (loss) from continuing operations    to net cash  provided by operating    activities - continuing operations     Depreciation of property and      equipment                              3,974       2,786       1,817     Amortization of deferred financing      costs                                  3,581       3,756       3,804     Amortization of films and      television programs                  403,319     241,640     253,279     Amortization of intangible assets       1,526         884       2,004     Non-cash stock-based compensation      13,934       7,259       1,881     Interest rate swaps mark-to-market        -           -           123     Gain on sale of equity securities      (2,909)     (1,722)        -     Deferred income taxes                  (1,087)      6,780         297     Equity interests loss                   7,559       2,605          74   Changes in operating assets and    liabilities:     Restricted cash                          (228)     (4,095)      2,093     Accounts receivable, net             (128,876)     79,704     (33,459)     Investment in films and television      programs                            (445,714)   (297,149)   (284,711)     Other assets                           (2,985)      7,448      (7,892)     Accounts payable and accrued      liabilities                           67,791     (38,509)     49,155     Unpresented bank drafts                   -       (14,772)     14,772     Participation and residuals           209,806       3,261      68,676     Film obligations                        1,387      (6,079)     10,762     Deferred revenue                       32,040      38,451     (31,643)   Net Cash Flows Provided By Operating    Activities - continuing operations      89,150      59,727      52,652   Net Cash Flows Provided By Operating    Activities - discontinued    operations                                 -           -         2,580   Net Cash Flows Provided By Operating    Activities                              89,150      59,727      55,232   Investing Activities:   Purchases of investments - auction    rate securities                       (229,262)   (865,750)   (307,031)   Proceeds from the sale of    investments - auction rate    securities                             466,641     795,448     139,950   Purchases of investments - equity    securities                              (4,836)       (122)     (3,470)   Proceeds from the sale of    investments - equity securities         24,155         390       2,945   Acquisition of Mandate, net of    unrestricted cash acquired             (41,205)        -           -   Loan to Mandate - preacquisition         (2,895)        -           -   Acquisition of Maple, net of    unrestricted cash acquired               1,753         -           -   Acquisition of Debmar, net of    unrestricted cash acquired                 -       (24,119)        -   Acquisition of Redbus, net of    unrestricted cash acquired                 -           -       (27,138)   Investment in equity method    investees                               (6,460)     (5,116)        -   Loan to equity method investee           (3,000)        -           -   Cash received from disposition of    assets, net                                -           -        34,860   Purchases of property and equipment      (3,608)     (8,348)     (5,555)   Net Cash Flows Provided By (Used In)    Investing Activities - continuing    operations                             201,283    (107,617)   (165,439)   Net Cash Flows Provided By Investing    Activities - discontinued    operations                                 -           -           105   Net Cash Flows Provided By (Used In)    Investing Activities                   201,283    (107,617)   (165,334)   Financing Activities:   Exercise of stock options                 1,251       4,277       1,408   Amounts paid to satisfy tax    withholding requirements on options    exercised                               (5,319)        -           -   Repurchases of common shares            (22,260)        -           -   Borrowings under financing    arrangements                             3,718         -           -   Financing fees                              -           -          (546)   Borrowings under production    obligations                            162,400      97,083      92,605   Repayment of production obligations    (111,357)    (48,993)    (24,825)   Repayment of subordinated notes             -           -        (5,000)   Repayment of mortgages payable              -           -       (16,224)   Net Cash Flows Provided By Financing    Activities - continuing operations      28,433      52,367      47,418   Net Cash Flows Used In Financing    Activities - discontinued    operations                                 -           -        (2,703)   Net Cash Flows Provided By Financing    Activities                              28,433      52,367      44,715   Net Change In Cash And Cash    Equivalents                            318,866       4,477     (65,387)   Foreign Exchange Effects on Cash -    continuing operations                    1,226          42        (628)   Foreign Exchange Effects on Cash -    discontinued operations                    -           -           154   Foreign Exchange Effects on Cash          1,226          42        (474)   Cash and Cash Equivalents -    Beginning Of Year                       51,497      46,978     112,839   Cash and Cash Equivalents - End Of    Year                                  $371,589     $51,497     $46,978                          LIONS GATE ENTERTAINMENT CORP.                 RECONCILIATION OF NET CASH FLOWS PROVIDED BY                   OPERATING ACTIVITIES TO FREE CASH FLOW                                                           Year Ended                                                           March 31,                                                             2008                                                     (Amounts in thousands)   Net Cash Flows Provided By Operating Activities            $89,150      Purchases of property and equipment                      (3,608)      Net borrowings under and repayment of       production obligations                                  51,043   Free Cash Flow, as defined                                $136,585     

Free cash flow is defined as net cash flows provided by operating activities, less purchases of property and equipment and plus or minus the net increase or decrease in production obligations. The adjustment for the production obligations 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 obligations prior to the time the Company is obligated to acquire and pay for the films. 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.

First Call Analyst:
FCMN Contact: keasterling@lionsgate.com

Source: Lionsgate

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

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

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Profile: International Entertainment