LIONSGATE REPORTS REVENUE OF $358.1 MILLION AND EBITDA OF NEGATIVE $19.3 MILLION FOR SECOND QUARTER OF FISCAL YEAR 2012; NET LOSS IS $24.6 MILLION OR ($0.18) PER BASIC SHARE

    <<


    >>

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Nov. 9, 2011 /CNW/ -- Lionsgate (NYSE: LGF) today reported revenue of $358.1 million, EBITDA of negative $19.3 million and net loss of $24.6 million or $(0.18) per basic common share for the second quarter of fiscal year 2012 (quarter ended September 30, 2011).

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    (Logo: http://photos.prnewswire.com/prnh/20110919/LA70620LOGO)

    >>

EBITDA of negative $19.3 million for the second quarter compared to EBITDA of $22.0 million in the prior year's second quarter, primarily attributable to underperformance of theatrical films in the quarter and timing of DVD releases which offset gains in the Company's television and digital businesses. There were only two major theatrical titles released on DVD in the quarter compared to three theatrical titles on DVD in the prior year's second quarter. The prior year's quarter also included the theatrical release of one of the Company's highest-grossing films, The Expendables.

EBITDA was approximately $25 million higher than estimated by the Company in September due to timing variances within the year, an uptick in digitally delivered content and VOD and higher than expected packaged media revenue from last year's theatrical slate. The Company also saw savings in distribution and manufacturing expenses that had a direct impact on the quarter's results.

Net loss of $24.6 million for the second quarter compared to net loss of $29.7 million in the prior year's second quarter. The improvement was attributable in part to the gain on the sale of Maple Pictures of $11.0 million and a significant increase in equity interest income as the Company's share in EPIX contributed net profit of $6.1 million in the quarter compared to a net loss of $19.8 million in the prior year's second quarter.

Basic net loss per common share for the second quarter was $0.18 on 133.8 million weighted average common shares outstanding, compared to basic net loss per common share of $0.22 on 133.0 million weighted average common shares outstanding in the prior year's second quarter.

Revenue in the second quarter decreased by $98.2 million from the prior year's second quarter, attributable primarily to underperformance of films in the quarter in comparison to a prior year quarter that included the strong theatrical performance of The Expendables, timing of wide release theatrical titles on DVD and decreased Canadian revenue due to the sale of Maple Pictures.

"Although we were disappointed by the performance of our films in the quarter, we were pleased with the strong and growing contributions of all of our other core businesses," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "We believe that our film performance will improve significantly and become more consistent as we release some of the potential franchise films on our upcoming slate, and our television and digital businesses and EPIX channel partnership will continue their strong and profitable growth trajectory."

Overall motion picture revenue for the second quarter was $218.9 million, a decline of 36% from the prior year's second quarter. Within the motion picture segment, theatrical revenue was $22.3 million in the quarter, a 71% decrease from the prior year's second quarter.

Lionsgate's home entertainment revenue from both motion pictures and television was $175.0 million in the quarter, a 15% increase from the prior year's second quarter as the Company's syndication of the first four seasons of "Mad Men" on the Netflix digital platform more than offset the timing of theatrical titles on the home entertainment release slate discussed previously.

Television revenue included in motion picture revenue was $28.2 million in the quarter, a decline from the prior year's second quarter due to timing as the slate of two new wide release theatrical titles licensed to pay TV in the quarter compared to five new wide release theatrical titles licensed to pay TV in the prior year's second quarter.

International motion picture revenue of $22.4 million (excluding Lionsgate U.K.) for the quarter decreased from the prior year's second quarter due to the number and composition of releases compared to the prior year's second quarter.

Lionsgate U.K. revenue of $22.0 million increased 41% from the prior year's second quarter due to strong revenue contributions from the Lionsgate U.K.-produced film Blitz and a favorable comparison to the prior year second quarter slate.

Mandate Pictures' revenue of $2.4 million in the quarter declined from the prior year's second quarter due to a smaller slate as most of Mandate's major titles are being released in the third quarter.

Television production revenue was a record $139.2 million in the second quarter, an increase of 21% from the prior year's second quarter. Domestic series licensing from the Company's television production and syndication business decreased 27% to $71.7 million in the quarter, with revenue from deliveries of the television series "Weeds" (Season 7), "Blue Mountain State" (Season 3), the first season of "Boss," "Meet The Browns" and "The Wendy Williams Show."

Home entertainment releases of television production reached a record $54.6 million, driven by electronic media revenue from the syndication of "Mad Men" and the distribution of Debmar-Mercury's "Hell's Kitchen" as well as packaged media revenue from the release of "Weeds" Season 6 on DVD. International television revenue increased 51% from the prior year's second quarter, led by deliveries of "Mad Men" (Seasons 1, 2, 3 and 4) and "Weeds" (Seasons 6 and 7).

Revenue from Lionsgate's digital business increased 123% in the quarter to a record $65 million.

Lionsgate's filmed entertainment backlog reached a record $550.1 million at September 30, 2011. 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 second quarter were $29.5 million, a 12% reduction from the prior year's second quarter due to reductions in costs related to shareholder activism as well as a 7% decline in other G&A expenses.

Lionsgate senior management will hold its analyst and investor conference call to discuss its second quarter financial results at 9:00 A.M. ET/6:00 A.M. PT on Thursday, November 10, 2011. Interested parties may participate live in the conference call by calling 1-800-230-1093 (612-288-0337 outside the U.S. and Canada). A full digital replay will be available from Thursday morning, November 10, through Thursday, November 17, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 221713.

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    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 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 critically-acclaimed "Boss" as well as 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 been fueled by such hits as THE EXPENDABLES, THE LINCOLN LAWYER, TYLER PERRY'S MADEA'S BIG HAPPY FAMILY, SAW 3D, THE LAST EXORCISM, KICK ASS and PRECIOUS. The Company's home entertainment business has grown to more than 8% market share and is an industry leader in box office-to-DVD and box office-to-VOD revenue conversion rates. 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.

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    www.lionsgate.com




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For further information, please contact:Peter D. Wilkes310-255-3726pwilkes@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 and television series, budget overruns, limitations imposed by our credit facilities and notes, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, risks related to our acquisition strategy and integration of acquired businesses, the effects of disposition of businesses or assets, 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 May 31, 2011, which risk factors are incorporated herein by reference. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

    <<
                                                                              
September
                                                                              
30,         March 31,
                                                                              
2011            2011
                                                                              
----            ----
                                                                              
(Amounts in thousands,
                                                                              
except share amounts)
                                                ASSETS
    Cash and cash equivalents                                                 
$29,526         $86,419
    Restricted cash                                                           
22,478          43,458
    Accounts receivable, net of reserve for returns and
     allowances of $69,605 (March 31, 2011 -
      $90,715) and provision for doubtful accounts of $2,052 (March 31, 2011 -
$2,427)    389,923         330,624
    Investment in films and television programs, net                          
820,728         607,757
    Property and equipment, net                                               
8,682           9,089
    Equity method investments                                                 
155,987         150,585
    Goodwill                                                                  
233,201         239,254
    Other assets                                                              
54,910          46,322
    Assets held for sale                                                      
-          44,336
                                                                              
---          ------
      Total assets                                                            
$1,715,435      $1,557,844
                                                                              
==========      ==========
    >>

    <<
                                              LIABILITIES
    Senior revolving credit facility                                          
$23,000         $69,750
    Senior secured second-priority notes                                      
431,161         226,331
    Accounts payable and accrued liabilities                                  
249,841         230,989
    Participations and residuals                                              
308,535         297,482
    Film obligations and production loans                                     
373,362         326,440
    Convertible senior subordinated notes and other
     financing obligations                                                    
96,241         110,973
    Deferred revenue                                                          
195,808         150,937
    Liabilities held for sale                                                 
-          17,396
                                                                              
---          ------
      Total liabilities                                                       
1,677,948       1,430,298
                                                                              
---------       ---------
    >>

Commitments and contingencies

SHAREHOLDERS' EQUITY

    <<
    Common shares, no par value, 500,000,000 shares
     authorized, 137,362,130 and
      136,839,445 shares issued at September 30, 2011 and
       March 31, 2011, respectively                                           
646,243         643,200
    Accumulated deficit                                                       
(526,547)       (514,230)
    Accumulated other comprehensive loss                                      
(5,121)         (1,424)
                                                                              
------          ------
                                                                              
114,575         127,546
    Treasury shares, no par value, 11,040,493 shares at
     September 30, 2011 (March 31, 2011 -nil)                                 
(77,088)              -
    Total shareholders' equity                                                
37,487         127,546
                                                                              
------         -------
      Total liabilities and shareholders' equity                              
$1,715,435      $1,557,844
                                                                              
==========      ==========


    >>

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    <<
                                                                  Three       
Three
                                                                  Months      
Months       Six Months  Six Months
                                                                  Ended       
Ended           Ended       Ended
                                                                September     
September       September   September
                                                                   30,        
30,             30,         30,
                                                                     2011     
2010            2011        2010
                                                                     ----     
----            ----        ----
                                                                             
(Amounts in thousands,
                                                                            
Except per share amounts)
    >>

Revenues $358,081 $456,316 $619,340 $782,900

    <<
    Expenses:
      Direct operating                                            206,344     
238,208         345,702     395,789
    >>

Distribution and marketing 141,642 162,443 206,388 302,502

General and administration 29,428 33,678 57,350 98,397

Gain on sale of asset disposal group (10,967) - (10,967) -

    <<
      Depreciation and amortization                                   681     
1,473           1,915       3,076
                                                                      ---     
-----           -----       -----
        Total expenses                                            367,128     
435,802         600,388     799,764
                                                                  -------     
-------         -------     -------
    Operating income (loss)                                        (9,047)    
20,514          18,952     (16,864)
                                                                   ------     
------          ------     -------
    Other expenses (income):
      Interest expense
        Contractual cash based interest                            14,160     
9,614          25,875      19,705
        Amortization of debt discount
         (premium) and deferred financing
         costs                                                      3,409     
4,215           8,029       8,667
                                                                    -----     
-----           -----       -----
            Total interest expense                                 17,569     
13,829          33,904      28,372
      Interest and other income                                      (928)    
(366)         (1,370)       (753)
      Loss on extinguishment of debt                                  436     
14,505             967      14,505
                                                                      ---     
------             ---      ------
        Total other expenses, net                                  17,077     
27,968          33,501      42,124
                                                                   ------     
------          ------      ------
    Loss before equity interests and
     income taxes                                                 (26,124)    
(7,454)        (14,549)    (58,988)
    Equity interests income (loss)                                  2,630     
(20,715)          4,504     (32,422)
                                                                    -----     
-------           -----     -------
    Loss before income taxes                                      (23,494)    
(28,169)        (10,045)    (91,410)
    Income tax provision                                            1,071     
1,490           2,272       2,317
    Net loss                                                     $(24,565)    
$(29,659)       $(12,317)   $(93,727)
                                                                 ========     
========        ========    ========
    >>

    <<
    Basic and Diluted Net Loss Per Common
     Share                                                         $(0.18)    
$(0.22)         $(0.09)     $(0.75)
                                                                   ======     
======          ======      ======
    >>

    <<
    Weighted average number of common
     shares outstanding:
      Basic and Diluted                                           133,755     
133,001         135,374     125,654


    >>

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    <<
                                                                            
Three            Three
                                                                           
Months           Months        Six Months   Six Months
                                                                           
Ended            Ended            Ended        Ended
                                                                         
September        September        September    September
                                                                             
30,              30,              30,          30,
                                                                              
2011             2010             2011         2010
                                                                              
----             ----             ----         ----
                                                                              
(Amounts in thousands)
    Operating Activities:
    Net loss                                                               
$(24,565)        $(29,659)        $(12,317)    $(93,727)
    Adjustments to reconcile net loss to
    net cash used in operating activities:
      Depreciation of property and equipment                                  
611            1,202            1,765        2,394
      Amortization of intangible assets                                       
70              271              150          682
      Amortization of films and television programs                         
134,231          161,277          219,214      262,488
      Amortization of debt discount (premium) and deferred
       financing costs                                                        
3,409            4,215            8,029        8,667
      Non-cash stock-based compensation                                       
2,541            2,156            4,802       24,352
      Gain on sale of asset disposal group                                  
(10,967)               -          (10,967)           -
      Loss on extinguishment of debt                                          
436           14,505              967       14,505
      Equity interests (income) loss                                         
(2,630)          20,715           (4,504)      32,422
    Changes in operating assets and liabilities:
      Restricted cash                                                         
316               88           23,996      (16,983)
      Accounts receivable, net                                             
(109,764)         (78,733)         (23,381)     (46,370)
      Investment in films and television programs                          
(231,608)        (147,758)        (433,384)    (313,663)
      Other assets                                                            
(761)          (2,871)           1,522         (434)
      Accounts payable and accrued liabilities                               
96,887           31,441           15,425       29,899
      Participations and residuals                                           
17,493            4,719           12,331      (11,642)
      Film obligations                                                        
8,738           (8,382)          10,998       (7,746)
      Deferred revenue                                                       
19,460           (5,043)          44,792       20,366
                                                                             
------           ------           ------       ------
    Net Cash Flows Used In Operating Activities                             
(96,103)         (31,857)        (140,562)     (94,790)
                                                                            
-------          -------         --------      -------
    Investing Activities:
    Purchases of restricted investments                                       
-                -                -       (6,993)
    Proceeds from the sale of restricted investments                          
-                -                -        6,995
    Buy-out of the earn-out associated with the
     acquisition of Debmar-Mercury, LLC                                       
-                -                -      (15,000)
    Proceeds from the sale of asset disposal group, net
     of transaction costs and cash disposed of $3,943                         
9,119                -            9,119            -
    Investment in equity method investees                                     
(353)            (647)            (828)     (22,677)
    Increase in loans receivable                                              
-                -           (1,500)           -
    Repayment of loans receivable                                             
-            7,113                -        7,113
    Purchases of property and equipment                                       
(842)            (487)          (1,253)        (892)
    Net Cash Flows Provided By (Used In) Investing
     Activities                                                               
7,924            5,979            5,538      (31,454)
                                                                              
-----            -----            -----      -------
    Financing Activities:
    Tax withholding requirements on equity awards                            
(1,014)         (10,768)          (1,932)     (12,265)
    Repurchase of common shares                                             
(77,088)               -          (77,088)           -
    Borrowings under senior revolving credit facility                        
58,250          100,000          153,650      343,000
    Repayments of borrowings under senior revolving
     credit facility                                                        
(35,250)        (112,000)        (200,400)    (173,000)
    Borrowings under individual production loans                             
86,404           70,573          134,870       84,310
    Repayment of individual production loans                                
(44,291)         (20,240)        (122,886)    (103,386)
    Production loan borrowings under Pennsylvania
     Regional Center credit facility                                          
-              251                -          745
    Production loan repayments under Pennsylvania
     Regional Center credit facility                                          
-             (494)               -         (740)
    Production loan borrowings under film credit
     facility                                                                
25,291            2,141           33,002        5,259
    Production loan repayments under film credit
     facility                                                                 
(651)          (1,205)          (9,187)      (1,624)
    Change in restricted cash collateral associated with
     financing activities                                                    
(3,043)          (4,587)          (3,043)      (8,253)
    Proceeds from sale of senior secured second-
     priority notes, net of deferred financing costs                          
9,559                -          201,955            -
    Repurchase of senior secured second-priority notes                       
(9,852)               -           (9,852)           -
    Repurchase of convertible senior subordinated notes                       
-                -          (19,476)           -
    Net Cash Flows Provided By Financing Activities                           
8,315           23,671           79,613      134,046
                                                                              
-----           ------           ------      -------
    Net Change In Cash And Cash Equivalents                                 
(79,864)          (2,207)         (55,411)       7,802
    Foreign Exchange Effects on Cash                                         
(1,650)           1,785           (1,482)       1,102
    Cash and Cash Equivalents - Beginning Of Period                         
111,040           78,568           86,419       69,242
                                                                              
------       ------
    Cash and Cash Equivalents - End Of Period                               
$29,526          $78,146          $29,526      $78,146
                                                                            
=======          =======          =======      =======



    >>

LIONS GATE ENTERTAINMENT CORP.

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

    <<
                                        Three           Three
                                        Months          Months       Six
Months     Six Months
                                        Ended           Ended           Ended 
Ended
                                      September       September      
September      September
                                         30,             30,             30,  
30,
                                           2011            2010           
2011           2010
                                           ----            ----           
----           ----
                                                    (Amounts in thousands)
    >>

    <<
    Net
     loss                              $(24,565)       $(29,659)      
$(12,317)      $(93,727)
       Depreciation
       and
       amortization                         681           1,473          
1,915          3,076
       Gain
       on
       sale
       of
       asset
       disposal
       group                        (10,967)           -      (10,967)        
-
       Contractual
       cash
       paid
       interest
       expense                       14,160        9,614       25,875      
19,705
       Noncash
       interest
       expense                            3,409           4,215          
8,029          8,667
       Interest
       and
       other
       income                              (928)           (366)        
(1,370)          (753)
       Income
       tax
       provision                          1,071           1,490          
2,272          2,317
       Equity
       interests
       (income)
       loss                              (2,630)         20,715         
(4,504)        32,422
       Loss
       on
       extinguishment
       of
       debt                             436       14,505          967      
14,505
                                            ---          ------            
---         ------
    EBITDA                             $(19,333)        $21,987         
$9,900       $(13,788)
                                       ========         =======         
======       ========
       Stock-
       based
       compensation
       (1)                                2,381           2,526          
4,987         29,784
       EBITDA
       attributable
       to
       TV
       Guide
       Network                         (758)       2,201          405       
4,457
       Corporate
       defense
       charges
       (2)                                1,762           3,951         
(2,047)        12,504
       Non-
       risk
       prints
       and
       advertising
       expense                         (116)      (6,401)        (491)    
(21,059)
                                           ----          ------           
----        -------
     EBITDA,
     as
     adjusted                          $(16,064)        $24,264        
$12,754        $11,898
                                       ========         =======        
=======        =======


    >>

    <<
        The six months ended September 30, 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
    (1) occurred on June 30, 2010.
        For the six months ended September 30, 2011, a benefit, which is a
charge for
        Adjusted EBITDA, resulted from a negotiated settlement of costs
incurred and
        recorded in the prior fiscal year and is net of $2.0 million in
shareholder
        activist or related costs incurred during the six months ended
September 30,
    (2) 2011.


    >>

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

EBITDA, as adjusted represents EBITDA as defined above adjusted for stock-based compensation, EBITDA attributable to TV Guide Network, certain corporate defense and related charges, and non-risk prints and advertising expense. Stock-based compensation represents compensation expenses associated with stock options, restricted share units and stock appreciation rights. EBITDA attributable to TV Guide Network represents the Company's 51% share of TV Guide Network's EBITDA for the three and six months ended September 30, 2011 and 2010. Corporate defense and related charges represent legal fees, other professional fees, and certain other costs associated with a shareholder activist matter. Non-risk prints and advertising expense represents the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a guarantee that such expense will be recouped from the performance of the film (i.e. there is no risk of loss to the company) net of an amount of the estimated amortization of participation expense that would have been recorded if such amount had not been expensed. The amount is subtracted from EBITDA in the three and six months ended September 30, 2011 and 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, AS DEFINED
                   TO NET CASH FLOWS USED IN OPERATING ACTIVITIES
    >>

    <<
                                      Three           Three
                                      Months          Months       Six Months 
Six Months
                                      Ended           Ended           Ended   
Ended
                                    September       September       September 
September
                                       30,             30,             30,    
30,
                                         2011            2010            2011 
2010
                                         ----            ----            ---- 
----
    >>

(Amounts in thousands)

    <<
    Net Cash
     Flows Used
     In
     Operating
     Activities                      $(96,103)    $(31,857)   $(140,562)   
$(94,790)
      Purchases of
       property
       and
       equipment                         (842)           (487)         (1,253)
(892)
      Net
       borrowings
       under and
       (repayment)
       of
       production
       loans                           66,753       51,269       35,799     
(15,441)
      Restricted
       cash held
       in trust                             -            (890)              - 
15,910
                                          ---            ----             --- 
------
    Free Cash
     Flow, as
     defined                         $(30,192)        $18,035       $(106,016)
$(95,213)
                                     ========         =======       ========= 
========


    >>

Free cash flow is defined as net cash flows used in operating activities, less purchases of property and equipment, plus or minus the net increase or decrease in production loans including production loan activity under the Company's Film Credit Facility, plus the net increase (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, AS DEFINED
                                                                TO FREE CASH
FLOW, AS DEFINED
    >>

    <<
                                                                         Three
Months          Three Months           Six Months     Six Months
                                                                            
Ended                 Ended                 Ended          Ended
                                                                        
September 30,         September 30,         September 30,  September 30,
                                                                              
2011                  2010                  2011           2010
                                                                              
----                  ----                  ----           ----
                                                                              
(Amounts in thousands)
    >>

EBITDA $(19,333) $21,987 $9,900 $(13,788)

    <<
      Plus: Amortization of film and television
       programs                                                              
134,231               161,277               219,214        262,488
      Less: Cash paid for film and television
       programs (1)                                                         
(156,117)             (104,871)             (386,587)      (336,850)
                                                                            
--------              --------              --------       --------
      Amortization of (cash paid for) film and
       television programs
         in excess of cash paid (amortization)                               
(21,886)               56,406              (167,373)       (74,362)
    >>

    <<
      Plus: Non-cash stock-based compensation                                 
2,541                 2,156                 4,802         24,352
                                                                              
-----                 -----                 -----         ------
    >>

    <<
    EBITDA adjusted for net investment in film and
     television programs
      and non-cash stock-based compensation                                  
(38,678)               80,549              (152,671)       (63,798)
    >>

    <<
    Changes in other operating assets and
     liabilities:
      Restricted cash excluding funds held in trust                           
316                  (802)               23,996         (1,073)
      Accounts receivable, net                                              
(109,764)              (78,733)              (23,381)       (46,370)
      Other assets                                                            
(761)               (2,871)                1,522           (434)
      Accounts payable and accrued liabilities                                
96,887                31,441                15,425         29,899
      Participations and residuals                                            
17,493                 4,719                12,331        (11,642)
      Deferred revenue                                                        
19,460                (5,043)               44,792         20,366
                                                                              
------                ------                ------         ------
                                                                              
23,631               (51,289)               74,685         (9,254)
    >>

    <<
      Purchases of property and equipment                                     
(842)                 (487)               (1,253)          (892)
      Interest, taxes and other (2)                                          
(14,303)              (10,738)              (26,777)       (21,269)
    >>

    <<
    Free Cash Flow, as defined                                              
$(30,192)              $18,035             $(106,016)      $(95,213)
                                                                            
========               =======             =========       ========
    >>

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

    <<
      Change in investment in film and television
       programs                                                             
(231,608)             (147,758)             (433,384)      (313,663)
      Change in film obligations                                              
8,738                (8,382)               10,998         (7,746)
      Borrowings under individual production loans                            
86,404                70,573               134,870         84,310
      Repayment of individual production loans                               
(44,291)              (20,240)             (122,886)      (103,386)
      Production loan borrowings under film credit
       facility                                                               
25,291                 2,141                33,002          5,259
      Production loan repayments under film credit
       facility                                                               
(651)               (1,205)               (9,187)        (1,624)
                                                                              
----                ------                ------         ------
        Total cash paid for film and television
         programs                                                           
(156,117)             (104,871)             (386,587)      (336,850)
                                                                            
========              ========              ========       ========
    >>

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

    <<
      Contractual cash based interest                                        
(14,160)               (9,614)              (25,875)       (19,705)
      Interest and other income                                               
928                   366                 1,370            753
      Income tax provision                                                    
(1,071)               (1,490)               (2,272)        (2,317)
                                                                              
------                ------                ------         ------
        Total interest, taxes and other                                      
(14,303)              (10,738)              (26,777)       (21,269)
                                                                             
=======               =======               =======        =======


    >>

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

For further information: Web Site: http://www.lionsgate.com


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