Lionsgate Reports Revenue of $371.8 Million and Net Loss of $65.3 Million for
Third Quarter of Fiscal 2010, Compared to Revenue of $324.0 Million and Net
Loss of $97.8 Million in Prior Year Third Quarter


    
    ADJUSTED EBITDA FOR THIRD QUARTER IS NEGATIVE $9.8 MILLION COMPARED TO
    NEGATIVE $90.9 MILLION IN PRIOR YEAR THIRD QUARTER

    Basic Net Loss Per Common Share Is $0.55 In Third Quarter Compared To
Basic
    Net Loss Per Common Share of $0.84 In Prior Year Third Quarter

    Company Reports Positive Free Cash Flow of $64.5 Million In Third Quarter
    Compared To Free Cash Flow of Negative $104.9 Million In Prior Year Third
    Quarter








    
</pre>
<p>SANTA MONICA, Calif., and <location>VANCOUVER</location>, British Columbia, <chron>Feb. 9</chron> /CNW/ -- Lionsgate (NYSE:   LGF), the leading next generation studio, continued to strengthen its financial performance for the quarter and nine months ended <chron>December 31, 2009</chron>, based on growing television production revenues, new revenue from TV Guide Network and TVGuide.com and reduced theatrical marketing and overhead costs, the Company announced today.</p>
<p/>
<p>The Company reported revenues of <money>$371.8 million</money> and net loss attributable to Lionsgate shareholders of <money>$65.3 million</money> for the fiscal 2010 third quarter ended <chron>December 31, 2009</chron>.  Revenues increased 15% from the prior year third quarter's <money>$324.0 million</money> due primarily to increases in television production revenues and new revenue of <money>$29.3 million</money> from TV Guide Network and TVGuide.com.</p>
<p/>
<p>The Company had a net loss of <money>$65.3 million</money> in the third quarter compared to a net loss of <money>$97.8 million</money> in the prior year third quarter.  Although including <money>$26 million</money> in marketing costs for films that will be released in the fourth or subsequent quarters, net loss in the quarter compared favorably to the prior year quarter.</p>
<p/>
<p>Basic net loss per common share in the third quarter was <money>$0.55</money> on 117.7 million weighted average common shares outstanding, compared to basic net loss of <money>$0.84</money> on 115.8 million weighted average common shares outstanding in the prior year's third quarter.</p>
<p/>
<p>The Company reported adjusted EBITDA of negative <money>$9.8 million</money> in the third quarter compared to adjusted EBITDA of negative <money>$90.9 million</money> for the prior year's third quarter.  Adjustments in the quarter were made for  non-cash stock options, stock appreciation rights and restricted stock units, certain non-recurring charges and non-risk prints and advertising expense, and the deduction of Lionsgate's partners' share of EBITDA attributed to TV Guide.  EBITDA is defined as earnings before interest, income tax provision, depreciation and amortization, equity interests and gains or loss on extinguishment of debt and the sale of equity securities.</p>
<p/>
<p>The Company reported <money>$64.5 million</money> in positive free cash flow, a non-GAAP metric, in the third quarter, compared to free cash flow of negative <money>$104.9 million</money> for the prior year's third quarter.  Free cash flow for the first nine months of the fiscal year was negative <money>$77.4 million</money> compared to free cash flow of negative <money>$141.3 million</money> in the prior year's first nine months.  Free cash flow is defined as net cash flows provided by (used in) operating activities, less purchases of property and equipment and plus or minus the net increase or decrease in production obligations.</p>
<p/>
<p>For the nine months ended <chron>December 31, 2009</chron>, Lionsgate reported revenues of <money>$1.15 billion</money>, net income attributable to Lionsgate shareholders of <money>$2.8 million</money> and adjusted EBITDA of <money>$97.9 million</money>.  This compared to revenues of <money>$1.00 billion</money>, net loss of <money>$146.1 million</money> and adjusted EBITDA of negative <money>$109.4 million</money> in the prior year's first nine months.  Basic net income per common share for the nine months ended <chron>December 31, 2009</chron> was <money>$0.02</money> on 117.4 million weighted average common shares outstanding compared to basic net loss of <money>$1.25</money> on 117.0 million weighted average common shares outstanding in the prior year's first nine months.</p>
<p/>
<p>"We had a solid quarter of revenue growth and strong free cash flow, and we remain on track to achieve our full year financial targets," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "We were particularly pleased to achieve record library revenues in a challenging home entertainment environment, a continuation of strong growth in all areas of our television business and significant progress in our channel investments.  Coupled with a film slate that we plan to expand and diversify next year, we believe that our core and newer businesses combine to give us excellent momentum."</p>
<p/>
<p>Overall motion picture revenue for the quarter of <money>$251.0 million</money> decreased <money>$3.9 million</money>, or 2%, compared to the prior year's third quarter.  Within the motion picture segment, theatrical revenue was <money>$49.4 million</money>, a decrease of 29% compared to the prior year third quarter, as the Company released Academy Award (R) Best Picture nominated PRECIOUS, BROTHERS and SAW VI in the quarter compared to five releases, four of them wide releases, in the prior year's third quarter.</p>
<p/>
<p>Lionsgate's home entertainment revenue from the motion picture segment was <money>$95.0 million</money> in the quarter, relatively unchanged compared to <money>$94.6 million</money> in the prior year's third quarter.  There were no significant new theatrical titles released on home entertainment in the quarter, and the majority of home entertainment revenue in the quarter came from the Company's filmed entertainment library, which had the best quarterly revenue performance in its history.</p>
<p/>
<p>Television included in motion pictures revenue rose to <money>$54.7 million</money> in the third quarter, an increase of 40% from the prior year's third quarter, with a slate of MADEA GOES TO JAIL, THE HAUNTING IN CONNECTICUT, MY BLOODY VALENTINE 3-D, NEW IN TOWN and THE SPIRIT comparing favorably to a slate of MEET THE BROWNS, RAMBO, THE BANK JOB and THE EYE in the prior year's third quarter.</p>
<p/>
<p>International revenues of <money>$37.5 million</money> in the third quarter declined 9% from the prior year's third quarter.  The principal revenue contributors in the quarter included BROTHERS, MY BLOODY VALENTINE 3-D and SAW VI compared to SAW V, THE EYE, CONAN THE BARBARIAN and PUNISHER: WAR ZONE in the prior year's third quarter.  International revenues in the quarter also included Lionsgate UK's distribution of the third-party film THE HURT LOCKER, also distributed by Lionsgate's affiliate company Maple Pictures in <location>Canada</location>.</p>
<p/>
<p>Mandate Pictures' revenue of <money>$12.9 million</money> in the third quarter increased 55% from the prior year's third quarter on the films JUNO, DRAG ME TO HELL and WHIP IT compared to the films JUNO, NICK AND NORAH'S INFINITE PLAYLIST and PASSENGERS in the prior year's third quarter.</p>
<p/>
<p>Television production revenue increased to <money>$91.5 million</money> in the third quarter, a gain of 32% from the prior year's third quarter, with a 23% increase in domestic series licensing from Lionsgate Television deliveries of  13 episodes of the new series "Blue Mountain State" (Spike TV), five episodes of "Mad Men Season 3" (AMC), eight episodes of "Crash Season 2" (Starz) and two episodes of "Nurse Jackie Season 2" (Showtime) along with a 108% increase in revenues from Debmar-Mercury, primarily due to the licensing of such shows as "Tyler Perry's House of Payne," its spinoff "Meet The Browns" and "The <person>Wendy Williams Show</person>," as well as a 76% increase in international television sales and a 75% increase in revenue from home entertainment releases of television production.</p>
<p/>
<p>Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal year 2010 third quarter financial results at <chron>9:00 A.M. ET</chron>/<chron>6:00 A.M. PT</chron> on <chron>Wednesday, February 10, 2010</chron>. Interested parties may participate live in the conference call by calling 1-800-288-8968 (612-332-0228 outside the U.S. and <location>Canada</location>).  A full digital replay will be available from Wednesday morning, <chron>February 10</chron>, through <chron>Wednesday, February 17</chron>, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and <location>Canada</location>) and using access code 143850.</p>
<pre>
    

    About Lionsgate
    
</pre>
<p>Lionsgate (NYSE:   LGF) is the leading next generation studio with a strong and diversified presence in the production and distribution of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered content. The Company has built a strong television presence in production of prime time cable and broadcast network series, distribution and syndication of programming through Debmar-Mercury and an array of channel assets.   Lionsgate currently has nearly 20 shows on 10 different networks spanning its prime time production, distribution and syndication businesses, including such critically-acclaimed hits as "Mad Men", "Weeds" and "Nurse Jackie" along with new series such as "Blue Mountain State" and the syndication successes "Tyler Perry's House Of Payne", its spinoff "Meet The Browns" and "The <person>Wendy Williams Show</person>".  Its feature film business has generated more than <money>$400 million</money> at the North American box office in the past year, including the recent critically-acclaimed hit PRECIOUS, which has garnered nearly <money>$50 million</money> at the North American box office and earned six Academy Award (R) nominations, including Best Picture.   The Company's home entertainment business has grown to more than 7% market share and is an industry leader in box office-to-DVD revenue conversion rate.  Lionsgate handles a prestigious and prolific library of approximately 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 remains synonymous with original, daring, quality entertainment in markets around the world.</p>
<pre>
    

    www.lionsgate.com

    
</pre>
<p> </p>
<p> </p>
<p>For further information, please contact:</p>
<p> </p>
<pre>
    
    Peter D. Wilkes
    310-255-3726
    pwilkes@lionsgate.com




    
</pre>
<p>The matters discussed in this press release include forward-looking statements, including those regarding the performance of our fiscal 2010.  Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the substantial investment of capital required to produce and market films and television series, increased costs for producing and marketing feature films, budget overruns, limitations imposed by our credit facilities, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, technological changes and other trends affecting the entertainment industry, and the risk factors as set forth in Lionsgate's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on <chron>June 1, 2009</chron>, and in Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on <chron>October 13, 2009</chron>, 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.</p>
<pre>
    




    
</pre>
<p> </p>
<p> </p>
<p>                LIONS GATE ENTERTAINMENT CORP.</p>
<p> </p>
<p>         UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET</p>
<p> </p>
<pre>
    
                                            December 31,   March 31, 
                                                2009         2009 
                                                ----         ---- 
                                                                   
                                             (Amounts in thousands,  
                                              except share amounts)  
                                 ASSETS                            
    Cash and cash equivalents                 $105,090    $138,475 
    Restricted cash                                706      10,056 
    Restricted investments                       6,995       6,987 
    Accounts receivable, net of reserve
     for returns and allowances 
     of $83,578 (March 31, 2009 -                                  
     $98,947) and provision for                                   
     doubtful accounts of $8,961 (March                          
     31, 2009 - $9,847)                        255,377     227,010 
    Investment in films and television                             
     programs, net                             731,289     702,767 
    Property and equipment, net                 35,359      42,415 
    Finite-lived intangible assets, net         74,412      78,904 
    Goodwill                                   376,853     379,402 
    Other assets                               113,026      81,234 
                                               -------      ------ 
      Total assets                          $1,699,107  $1,667,250 
                                            ==========  ========== 
                                                                   
                              LIABILITIES                          
    Senior revolving credit facility           $12,000    $255,000 
    Senior secured second-priority notes       225,488           - 
    Accounts payable and accrued                                   
     liabilities                               244,969     270,561 
    Participations and residuals               286,656     371,857 
    Film and production obligations            397,068     304,525 
    Subordinated notes and other                                   
     financing obligations                     200,064     281,521 
    Mandatorily redeemable preferred                               
     stock units held by noncontrolling                            
     interest                                   91,454           - 
    Deferred revenue                           136,977     142,093 
                                               -------     ------- 
      Total liabilities                      1,594,676   1,625,557 
                                             ---------   --------- 
                                                                   
    Commitments and contingencies                                  
                                                                   
              SHAREHOLDERS' EQUITY                                 
    Lions Gate Entertainment Corp. 
     shareholders' equity:           
      Common shares, no par value, 
       500,000,000 shares authorized,  
       117,834,653 and                                             
       116,950,512 shares issued at                               
       December 31, 2009 and March 31,                           
       2009, respectively                      515,728     494,724 
      Accumulated deficit                     (438,347)   (441,153)
      Accumulated other comprehensive                              
       loss                                     (5,091)    (11,878)
                                                ------     ------- 
        Total Lions Gate Entertainment                             
         Corp. shareholders' equity             72,290      41,693 
    Noncontrolling interest                     32,141           - 
                                                ------         --- 
      Total equity                             104,431      41,693 
                                               -------      ------ 
        Total liabilities and                                      
         shareholders' equity               $1,699,107  $1,667,250 
                                            ==========  ==========



    
</pre>
<p> </p>
<p> </p>
<pre>
    
                             LIONS GATE ENTERTAINMENT CORP.
     
               UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    
</pre>
<p> </p>
<pre>
    
                               Three      Three       Nine        Nine    
                               Months     Months      Months      Months   
                               Ended      Ended       Ended       Ended   
                              December   December    December    December  
                                 31,        31,         31,         31,    
                                2009       2008        2009        2008 
                                ----       ----        ----        ---- 
                                                                           
                                 (Amounts in thousands, except per share   
                                                 amounts)                  
                                                                           
                                                                           
    Revenues                   $371,783   $324,027  $1,153,167  $1,003,204 
    Expenses:                                                              
      Direct operating          208,907    218,451     620,013     565,761 
      Distribution and                                                     
       marketing                160,303    170,400     347,531     458,782 
      General and                                                          
       administration            39,571     27,472     123,142      96,380 
      Depreciation and                                                     
       amortization               6,685      1,575      21,087       4,376 
                                  -----      -----      ------       ----- 
        Total expenses          415,466    417,898   1,111,773   1,125,299 
                                -------    -------   ---------   --------- 
    Operating                                                              
     income (loss)              (43,683)   (93,871)     41,394    (122,095)
                                -------    -------      ------    -------- 
    Other expenses (income):                                               
      Interest expense                                                     
        Contractual cash                                                   
         based interest           7,655      3,497      18,040      10,406 
        Amortization of debt                                               
         discount, deferred                                                
         financing costs                                                   
         and accretion of                                                 
         redeemable preferred
         stock units              9,104      4,615      22,725      14,502 
                                  -----      -----      ------      ------ 
            Total interest                                                 
             expense             16,759      8,112      40,765      24,908 
      Interest and                                                         
       other income                (420)      (860)     (1,228)     (5,062)
      Loss (gain) on                                                       
       extinguishment of                                                   
       debt                       1,783     (3,023)     (5,675)     (3,023)
                                  -----     ------      ------      ------ 
        Total other expenses,
         net                     18,122      4,229      33,862      16,823 
                                 ------      -----      ------      ------ 
    Income (loss)                                                          
     before equity                                                         
     interests and                                                         
     income taxes               (61,805)   (98,100)      7,532    (138,918)
    Equity interests loss        (6,903)    (1,695)    (10,548)     (5,841)
                                 ------     ------     -------      ------ 
    Loss before income taxes    (68,708)   (99,795)     (3,016)   (144,759)
    Income tax provision                                                   
     (benefit)                   (1,752)    (2,039)        259       1,292 
                                 ------     ------         ---       ----- 
    Net loss                    (66,956)   (97,756)     (3,275)   (146,051)
      Add: Net loss                                                        
       attributable to                                                     
       noncontrolling                                                      
       interest                   1,697          -       6,081           - 
                                  -----        ---       -----         --- 
    Net income (loss)                                                      
     attributable to                                                       
     Lions Gate                                                           
     Entertainment                                                       
     Corp. Shareholders        $(65,259)  $(97,756)     $2,806   $(146,051)
                               ========   ========      ======   ========= 
                                                                           
    Basic Net Income (Loss)
     Per Common Share            $(0.55)    $(0.84)      $0.02      $(1.25)
                                 ======     ======       =====      ====== 
    Diluted Net Income (Loss)                                              
     Per Common Share            $(0.55)    $(0.84)      $0.02      $(1.25)
                                 ======     ======       =====      ====== 
    Weighted average number
     of common shares                                                      
     outstanding:                                                          
      Basic                     117,745    115,765     117,381     117,018 
      Diluted                   117,745    115,765     117,579     117,018



    
</pre>
<p> </p>
<p> </p>
<pre>
    
                      LIONS GATE ENTERTAINMENT CORP.
     
         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    
</pre>
<p> </p>
<pre>
    
                                     Three     Three      Nine       Nine   
                                     Months    Months     Months     Months  
                                     Ended     Ended      Ended      Ended   
                                    December  December   December   December 
                                      31,       31,        31,        31,    
                                     2009       2008       2009       2008   
                                     ----       ----       ----       ----   
                                             (Amounts in thousands)          
    Operating Activities:                                            
    Net income (loss)                                                
     attributable to Lions                                           
     Gate Entertainment                                              
     Corp. shareholders             $(65,259)  $(97,756)    $2,806  $(146,051)
    Net loss attributable                                            
     to noncontrolling                                                  
     interest                         (1,697)         -     (6,081)         - 
                                      ------        ---     ------        --- 
    Net loss                         (66,956)   (97,756)    (3,275)  (146,051)
    Adjustments to reconcile
     net loss to net cash provided 
     by (used in) operating 
     activities:                                       
      Depreciation of                                                
       property and equipment          3,222      1,374     11,174      3,616 
      Amortization of films and                                               
       television programs           142,171    128,871    429,474    315,614 
      Amortization of debt 
       discount, deferred 
       financing costs and 
       accretion of redeemable
       preferred stock units           9,104      4,615     22,725     14,502 
      Amortization of intangible
       assets                          3,463        201      9,913        760 
      Non-cash stock-based
       compensation                    4,055      4,511     11,741     12,027 
      Loss (gain) on extinguishment
       of debt                         1,783     (3,023)    (5,675)    (3,023)
      Equity interests loss            6,903      1,695     10,548      5,841 
    Changes in operating assets
     and liabilities:                     
      Restricted cash                  9,190      5,235      9,350     (6,700)
      Accounts receivable, net       (22,665)    16,278    (22,966)    72,945 
      Investment in films and                                                 
       television programs          (123,795)  (146,132)  (457,271)  (471,308)
      Other assets                     2,066     (2,753)    (2,315)   (12,191)
      Accounts payable and                                           
       accrued liabilities            65,942     23,749    (30,305)    26,826 
      Participations and residuals   (17,686)   (40,575)   (85,802)    24,696 
      Film obligations                16,882     63,036    (20,019)    58,711 
      Deferred revenue                 2,070    (15,511)    (5,399)     7,826 
                                       -----    -------     ------      ----- 
    Net Cash Flows Provided By                                                
     (Used In) Operating                                              
     Activities                       35,749    (56,185)  (128,102)   (95,909)
                                      ------    -------   --------    ------- 
    Investing Activities:                                            
    Purchases of restricted                                                   
     investments                           -          -    (13,994)         - 
    Proceeds from the sale of                                                 
     restricted investments                -          -     13,985          - 
    Purchases of investments -                                                
     auction rate securities          (6,995)         -          -          - 
    Proceeds from the sale of                                                 
     investments - auction                                            
     rate securities                   6,998       (125)         -          - 
    Investment in equity                                             
     method investees                (26,418)    (4,787)   (41,342)   (15,886)
    Increase in loans receivable      (8,695)      (340)      (362)   (28,767)
    Repayment of loans receivable      8,333          -      8,333          - 
    Purchases of property                                            
     and equipment                      (538)      (722)    (4,228)    (6,465)
                                        ----       ----     ------     ------ 
    Net Cash Flows Used In
     Investing Activities            (27,315)    (5,974)   (37,608)   (51,118)
                                     -------     ------    -------    ------- 
    Financing Activities:                                            
    Exercise of stock options              -          -          -      2,894 
    Tax withholding requirements
     on equity awards                   (390)      (193)    (1,733)    (3,134)
    Repurchase and cancellation
     of common shares                      -       (231)         -    (44,968)
    Proceeds from the sale of 49%                                             
     interest in TV Guide Network          -          -    122,355          - 
    Borrowings under senior                                                   
     revolving credit facility       100,000          -    170,000          - 
    Repayments of borrowings 
     under senior revolving                                                
     credit facility                (343,000)         -   (413,000)         - 
    Borrowings under individual                                               
     production obligations            6,493     12,276    134,587    117,662 
    Repayment of individual                                                   
     production obligations           (9,395)   (61,082)  (111,885)  (165,298)
    Production obligation                                            
     borrowings under                                                
     Pennsylvania Regional                                           
     Center credit facility           57,000        824     57,000      8,758 
    Production obligation                                            
     borrowings under film 
     credit facility                  32,217          -     32,217          - 
    Proceeds from sale of                                            
     senior secured second-                                                 
     priority notes                  216,232          -    216,232          - 
    Repurchase of                                                    
     subordinated notes              (75,185)    (5,310)   (75,185)    (5,310)
    Repayment of other                                               
     financing obligations              (209)         -       (615)         - 
                                        ----        ---       ----        --- 
    Net Cash Flows Provided By                                                
     (Used In) Financing                                             
     Activities                      (16,237)   (53,716)   129,973    (89,396)
                                     -------    -------    -------    ------- 
    Net Change In Cash                                               
     And Cash Equivalents             (7,803)  (115,875)   (35,737)  (236,423)
    Foreign Exchange Effects
     on Cash                             241     (2,317)     2,352     (4,453)
    Cash and Cash Equivalents -                                               
      Beginning Of Period            112,652    248,905    138,475    371,589 
                                     -------    -------    -------    ------- 
    Cash and Cash Equivalents -
     End Of Period                  $105,090   $130,713   $105,090   $130,713 
                                    ========   ========   ========   ========



    
</pre>
<p> </p>
<p> </p>
<p> </p>
<p>                       LIONS GATE ENTERTAINMENT CORP.</p>
<p> </p>
<p> RECONCILIATION OF NET LOSS TO EBITDA, AS DEFINED AND EBITDA, AS ADJUSTED</p>
<p> </p>
<pre>
    
                                    Three      Three      Nine       Nine    
                                    Months     Months     Months     Months  
                                    Ended      Ended      Ended      Ended   
                                   December   December   December   December  
                                      31,        31,        31,        31,    
                                     2009       2008       2009       2008 
                                     ----       ----       ----       ---- 
                                                                             
                                    (Amounts in thousands, except per share  
                                                    amounts)                 
                                                                             
                                                                             
    Net loss                       $(66,956)  $(97,756)   $(3,275) $(146,051)
      Depreciation and                                                       
       amortization                   6,685      1,575     21,087      4,376 
      Interest expense               16,759      8,112     40,765     24,908 
      Interest and other income        (420)      (860)    (1,228)    (5,062)
      Income tax provision                                                   
       (benefit)                     (1,752)    (2,039)       259      1,292 
      Equity interests loss           6,903      1,695     10,548      5,841 
      Loss (gain) on                                                         
       extinguishment of debt         1,783     (3,023)    (5,675)    (3,023)
                                      -----     ------     ------     ------ 
    EBITDA                         $(36,998)  $(92,296)   $62,481  $(117,719)
                                   ========   ========    =======  ========= 
      Stock-based compensation        4,277      1,411     12,565      8,281 
      EBITDA attributable to                                                 
       noncontrolling interest       (3,899)         -     (6,231)         - 
      Non-recurring corporate                                                
       defense charges                    -          -      1,012          - 
      Non-risk prints and                                                    
       advertising expense           26,798          -     28,048          - 
                                     ------        ---     ------        --- 
    EBITDA, as adjusted             $(9,822)  $(90,885)   $97,875  $(109,438)
                                    =======   ========    =======  =========



    
</pre>
<p>EBITDA is defined as earnings before interest, income tax provision, depreciation and amortization, equity interests, and gains or losses on extinguishment of debt and the sale of equity securities.  EBITDA as defined, is a non-GAAP financial measure.</p>
<p/>
<p>EBITDA as adjusted represents EBITDA as defined above adjusted for stock-based compensation, EBITDA attributable to noncontrolling interest, certain non-recurring 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. Non-recurring charges represent legal and other professional fees 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 had been recorded if such amount had not been expensed.</p>
<p/>
<p>Management believes EBITDA as defined, 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 as defined, 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 as defined, 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 as defined and EBITDA as adjusted, do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA as defined 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.</p>
<pre>
    



    
</pre>
<p> </p>
<p> </p>
<pre>
    
                           LIONS GATE ENTERTAINMENT CORP.
      
                    RECONCILIATION OF FREE CASH FLOW, AS DEFINED 
          TO NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
</pre>
<p> </p>
<pre>
    
                        Three        Three        Nine        Nine    
                        Months       Months       Months      Months  
                        Ended        Ended        Ended       Ended   
                       December     December     December    December 
                          31,          31,          31,         31,   
                          2009         2008         2009        2008 
                          ----         ----         ----        ---- 
                                                                      
                           (Amounts in thousands, except per share    
                                          amounts)                    
                                                                      
    Net Cash Flows                                                    
     Provided By                                                      
     (Used In)                                                        
     Operating                                                        
     Activities        $35,749     $(56,185)   $(128,102)    $(95,909)
      Purchases of                                                    
       property and                                                   
       equipment          (538)        (722)      (4,228)      (6,465)
      Net borrowings                                                  
       under and                                                      
       (repayment) of                                                 
       production                                                     
       obligations      29,315      (47,982)      54,919      (38,878)
                        ------      -------       ------      ------- 
    Free Cash Flow,                                                   
     as defined        $64,526    $(104,889)    $(77,411)   $(141,252)
                       =======    =========     ========    =========



    
</pre>
<p>Free cash flow is defined as net cash flows provided by (used in) 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 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.</p>
<p/>
<p>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.</p>
<p/>
<p>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.</p>
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For further information: For further information: Peter D. Wilkes of Lionsgate, +1-310-255-3726, pwilkes@lionsgate.com Web Site: http://www.lionsgate.com


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