Lionsgate Reports Revenues of $198.7 Million for First Quarter of Fiscal Compares to Net Loss of $3.6 Million in Prior Year First Quarter



    SANTA MONICA, Calif. and VANCOUVER, B.C., Aug. 9 /CNW/ -- Lionsgate
(NYSE:   LGF), the leading independent filmed entertainment studio, reported
revenues of $198.7 million and a net loss of $53.1 million for its fiscal 2008
first quarter ended June 30, 2007, the Company announced today.
    Lionsgate reported basic and diluted net loss per common share of $0.45
on 117.1 million weighted average common shares outstanding compared to basic
and diluted net loss per common share of $0.03 on 103.3 million weighted
average common shares outstanding in the prior year first quarter.
    The Company noted that the majority of its $53 million loss in the
quarter was attributable to a $47 million increase in theatrical marketing
expenses from the prior year quarter as a result of Lionsgate's expanded
motion picture slate.
    "The first quarter reflects our usual frontloaded costs and is in line
with our expectations," said Lionsgate Co-Chairman and Chief Executive Officer
Jon Feltheimer.  "Although we are disappointed in the weakness of the early
part of our theatrical slate, this performance is offset by our
diversification and the overperformance of our other businesses as well as the
recognition that the strongest part of our slate is still ahead."
    The Company's filmed entertainment backlog of $304.0 million exceeded
$300 million for the fourth consecutive quarter and, at quarter end on June
30, 2007, Lionsgate had total cash and auction rate securities of
approximately $225 million on its balance sheet.
    Overall motion picture revenue for the quarter was $170.3 million, an
increase of 3% compared to $165.2 million in the prior year's first quarter.
Within this segment, theatrical revenue of $19.0 million during the first
quarter compared to $18.5 million in the prior year first quarter.  Principal
releases during the quarter were SLOW BURN, AWAY FROM HER, HOSTEL 2, THE
CONDEMNED, DELTA FARCE and BUG.
    Lionsgate's home entertainment revenue of $103.8 million in the first
quarter decreased 10% compared to $114.8 million in the prior year's first
quarter due to the comparative performance of theatrical titles while library
revenues for the quarter remained steady at approximately $53 million.  Major
DVD releases included PRIDE, which substantially overperformed its box office
results, DADDY'S LITTLE GIRLS, HAPPILY N'EVER AFTER and continued sales of the
hits SAW 3 and EMPLOYEE OF THE MONTH.
    Television revenue included in the motion picture segment was $22.4
million in the first quarter, a 51% increase compared to $14.8 million in the
prior year's first quarter.  The gain was attributable to several strong
theatrical titles with television windows opening in the first quarter,
including THE DESCENT, CRANK, EMPLOYEE OF THE MONTH and SAW 3.
    International revenue of $22.7 million in the first quarter increased 47%
compared to $15.5 million in the prior year's quarter, driven by strong
foreign sales of SAW 3, THE PUNISHER (TM), RIGHT AT YOUR DOOR and Lionsgate's
investment in the hit stage play DIRTY DANCING, which has sold out theatres in
Germany and the U.K. en route to North America.
    Television production revenue of $28.4 million in the first quarter
increased 289% compared to $7.3 million in the prior year's quarter, driven by
deliveries of episodes of the sixth broadcast season of THE DEAD ZONE (USA),
the fourth broadcast season of WILDFIRE (ABC Family), THE DRESDEN FILES (SciFi
Network), revenue contributions from Lionsgate's television syndication
subsidiary Debmar-Mercury for Tyler Perry's HOUSE OF PAYNE and SOUTH PARK and
international television sales of the series HIDDEN PALMS, LOVESPRING
INTERNATIONAL, THE DEAD ZONE and THE DRESDEN FILES.
    Lionsgate senior management will hold its analyst and investor conference
call to discuss its fiscal 2008 first quarter financial results at 9:00 A.M.
ET/6:00 A.M. PT, Friday, August 10, 2007.   Interested parties may participate
live in the conference call by calling 1-888-428-4480 (1-651-291-5254 outside
the U.S. and Canada).  A full digital replay will be available from Friday
morning, August 10, through Friday, August 17, by dialing 1-800-475-6701
(1-320-365-3844 outside the U.S. and Canada) and using access code 881870.
    Lionsgate is the leading independent filmed entertainment studio, winning
the 2006 Best Picture Academy Award (R) for CRASH, and the Company is a
premier producer and distributor of motion pictures, television programming,
home entertainment, family entertainment and video-on-demand content.  Its
prestigious and prolific library of more than 11,000 motion picture titles and
television episodes is a valuable source of recurring revenue and a foundation
for the growth of the Company's core businesses.  The Lionsgate brand is
synonymous with original, daring, quality entertainment in markets around the
globe.

    http://www.lionsgate.com

    For further information, contact:

    
    Peter D. Wilkes
    Lionsgate
    310-255-3726
    pwilkes@lionsgate.com
    

    
    Kelli Easterling
    Lionsgate
    310-255-4929
    keasterling@lionsgate.com
    
    The matters discussed in this press release include forward-looking
statements, including those regarding the timing of our upcoming film slate,
the expansion of our television business and the success of our fiscal 2008.
Such statements are subject to a number of risks and uncertainties. Actual
results in the future could differ materially and adversely from those
described in the forward-looking statements as a result of various important
factors, including the substantial investment of capital required to produce
and market films and television series, increased costs for producing and
marketing feature films, budget overruns, limitations imposed by our credit
facilities, unpredictability of the commercial success of our motion pictures
and television programming, the cost of defending our intellectual property,
difficulties in integrating acquired businesses, technological changes and
other trends affecting the entertainment industry, and the risk factors as set
forth in Lionsgate's Form 10-K filed with the Securities and Exchange
Commission on May 30, 2007.  The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements that
may be made to reflect any future events or circumstances.



    LIONS GATE ENTERTAINMENT CORP.

    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

    
                                                   June 30,          March 31,
                                                     2007              2007
                                                  (Unaudited)
                                                      (Amounts in thousands,
                                                       except share amounts)
                             ASSETS
    Cash and cash equivalents                       $58,580           $51,497
    Restricted cash                                   4,644             4,915
    Investments - auction rate securities           166,330           237,379
    Investments - equity securities                   4,916               125
    Accounts receivable, net of reserve
     for video returns and allowances of
     $64,908 (March 31, 2007 - 77,691) and
     provision for doubtful accounts of $5,931
     (March 31, 2007 - $6,345)                      105,234           130,496
    Investment in films and television programs     579,757           493,140
    Property and equipment                           14,207            13,095
    Goodwill                                        187,491           187,491
    Other assets                                     41,169            18,957
                                                 $1,162,328        $1,137,095
    

    
                             LIABILITIES
    Accounts payable and accrued liabilities       $174,972          $155,617
    Participation and residuals                     186,729           171,156
    Film obligations                                147,490           167,884
    Subordinated notes and other financing
     obligations                                    328,718           325,000
    Deferred revenue                                101,066            69,548
                                                    938,975           889,205
    

    Commitments and contingencies

    
                             SHAREHOLDERS' EQUITY
    Common shares, no par value,
     500,000,000 shares authorized,
     119,201,707 and 116,970,280 shares issued
     and outstanding at June 30, 2007 and
     March 31, 2007, respectively                   423,715           398,836
    Series B preferred shares (10 shares
     issued and outstanding)                             --                --
    Accumulated deficit                            (202,769)         (149,651)
    Accumulated other comprehensive income (loss)     2,407            (1,295)
                                                    223,353           247,890
                                                 $1,162,328        $1,137,095
    



    LIONS GATE ENTERTAINMENT CORP.

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    
                                                Three Months      Three Months
                                                    Ended             Ended
                                                   June 30,          June 30,
                                                     2007              2006
                                                 (Amounts in thousands, except
                                                       per share amounts)
    

    
    Revenues                                       $198,742          $172,456
    Expenses:
      Direct operating                               87,058            68,545
      Distribution and marketing                    135,501            87,046
      General and administration                     26,840            19,233
      Depreciation                                      908               544
        Total expenses                              250,307           175,368
    Operating loss                                  (51,565)           (2,912)
    Other expenses (income):
      Interest expense                                3,860             4,676
      Interest and other income                      (3,803)           (2,561)
        Total other expenses, net                        57             2,115
    Loss before equity interests and income taxes   (51,622)           (5,027)
    Equity interests income (loss)                     (807)               58
    Loss before income taxes                        (52,429)           (4,969)
    Income tax provision (benefit)                      689            (1,365)
    Net loss                                       $(53,118)          $(3,604)
    

    Basic and Diluted Net Loss Per Common Share      $(0.45)          
$(0.03)



    LIONS GATE ENTERTAINMENT CORP.

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

    
                                                         Series B   Restricted
                                     Common Shares   Preferred Shares  Share
                                   Number     Amount  Number  Amount   Units
    

    
                                  (Amounts in thousands, except share amounts)
    Balance at March 31,
     2006                       104,422,765  $328,771   10     $ --    $5,178
    Reclassification of
     unearned compensation
     and restricted share
     common units upon adoption
     of SFAS No. 123(R )                        1,146                  (5,178)
    Exercise of stock options     1,297,144     4,277
    Stock based compensation,
     net of share units
     withholding tax obligations
     of $504                        113,695     6,517
    Issuance of common shares
     to directors for services       25,568       238
    Conversion of 4.875% notes,
     net of unamortized issuance
     costs                       11,111,108    57,887
    Comprehensive income (loss)
       Net income
       Foreign currency
        translation adjustments
       Net unrealized gain on
        foreign exchange contracts
      Unrealized gain on
       investments --
       available for sale
      Comprehensive income
    Balance at March 31, 2007   116,970,280   398,836   10       --        --
    Exercise of stock options        61,807       390
    Stock based compensation,
     net of share units
     withholding tax obligations
     of $235                        174,368     2,611
    Issuance of common shares
     to directors for services       10,126       127
    Issuance of common shares
     for investment in
     NextPoint, Inc               1,890,189    20,851
    Issuance of common shares
     related to the Redbus
     acquisition                     94,937       900
    Comprehensive income (loss)
       Net loss
       Foreign currency
        translation adjustments
       Net unrealized loss on
        foreign exchange contracts
      Unrealized gain on
       investments --
       available for sale
      Comprehensive loss
    Balance at June 30, 2007    119,201,707  $423,715   10     $ --      $ --
    


    
                                                           Accumulated
                                              Comprehensive   Other
                          Unearned  Accumulated  Income   Comprehensive
                        Compensation  Deficit    (Loss)    Income(loss) Total
    

    
                               (Amounts in thousands, except share amounts)
    Balance at March 31,
     2006                   $(4,032) $(177,130)             $(3,517) $149,270
    Reclassification of
     unearned compensation
     and restricted share
     common units upon
     adoption of SFAS
     No. 123(R )              4,032                                        --
    Exercise of stock
     options                                                            4,277
    Stock based
     compensation, net of
     share units withholding
     tax obligations of $504                                            6,517
    Issuance of common
     shares to directors for
     services                                                             238
    Conversion of 4.875%
     notes, net of
     unamortized issuance
     costs                                                             57,887
    Comprehensive income(loss)
       Net income                       27,479   $27,479               27,479
       Foreign currency
        translation adjustments                    1,876      1,876     1,876
       Net unrealized gain on
        foreign exchange contracts                   259        259       259
       Unrealized gain on
        investments --
        available for sale                            87         87        87
       Comprehensive income                      $29,701                   --
    Balance at March 31, 2007    --   (149,651)              (1,295)  247,890
    Exercise of stock options                                             390
    Stock based compensation,
     net of share units
     withholding tax
     obligations of $235                                                2,611
    Issuance of common
     shares to directors for
     services                                                             127
    Issuance of common
     shares for investment in
     NextPoint, Inc                                                    20,851
    Issuance of common
     shares related to the
     Redbus acquisition                                                   900
    Comprehensive income(loss)
       Net loss                        (53,118) $(53,118)             (53,118)
       Foreign currency
        translation adjustments                    2,434      2,434     2,434
       Net unrealized loss on
        foreign exchange
        contracts                          (12)      (12)       (12)
       Unrealized gain on
        investments --
        available for sale                         1,280      1,280     1,280
       Comprehensive loss                       $(49,416)
    Balance at June 30, 2007   $ --  $(202,769)              $2,407  $223,353
    



    LIONS GATE ENTERTAINMENT CORP.

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    
                                                 Three Months     Three Months
                                                    Ended            Ended
                                                   June 30,         June 30,
                                                     2007             2006
                                                    (Amounts in thousands)
    Operating Activities:
    Net loss                                      $(53,118)         $(3,604)
    Adjustments to reconcile net loss
     to net cash provided by (used in)
     operating activities
       Depreciation of property and equipment          908              544
       Amortization of deferred financing costs        884              975
       Amortization of films and television
        programs                                    49,862           33,193
       Amortization of intangible assets               162              244
       Non-cash stock-based compensation             2,846              974
       Equity interests income (loss)                  807              (58)
    Changes in operating assets and liabilities:
       Restricted cash                                 271               84
       Accounts receivable, net                      9,439           93,013
       Investment in films and television
        programs                                  (136,139)         (60,439)
       Other assets                                 (3,061)           4,717
       Accounts payable and accrued
        liabilities                                 20,185          (68,278)
       Unpresented bank drafts                          --          (14,772)
       Participation and residuals                  15,527           (7,587)
       Film obligations                            (20,430)          (2,349)
       Deferred revenue                             31,486            8,319
    Net Cash Flows Used In Operating Activities    (80,371)         (15,024)
    Investing Activities:
    Purchases of investments - auction
     rate securities                              (172,442)        (165,620)
    Proceeds from the sale of
     investments - auction rate securities         243,491          190,594
    Purchases of investments - equity securities    (3,432)              --
    Proceeds from the sale of
     investments - equity securities                16,343               --
    Purchases of property and equipment             (2,017)          (1,831)
    Net Cash Flows Provided By Investing Activities 81,943           23,143
    Financing Activities:
    Exercise of stock options                          390              353
    Borrowings from financing obligation             3,718               --
    Net Cash Flows Provided By
     Financing Activities                            4,108              353
    Net Change In Cash And Cash
     Equivalents                                     5,680            8,472
    Foreign Exchange Effects on Cash                 1,403             (592)
    Cash and Cash Equivalents -
     Beginning Of Period                            51,497           46,978
    Cash and Cash Equivalents - End Of Period      $58,580          $54,858
    



    LIONS GATE ENTERTAINMENT CORP.

    
                   RECONCILIATION OF NET CASH FLOWS USED IN
                    OPERATING ACTIVITIES TO FREE CASH FLOW
    

    
                                                         Three Months Ended
                                                              June 30,
                                                      2007              2006
                                                       (Amounts in thousands)
    Net Cash Flows Used In Operating Activities    $(80,371)         $(15,024)
       Purchases of property and equipment           (2,017)           (1,831)
       Decrease in Unpresented Bank Drafts               --            14,772
    Free Cash Flow, as defined                     $(82,388)          $(2,083)
    
    Free cash flow is defined as net cash flows provided by or used in
operating activities less purchases of property and equipment and unpresented
bank drafts. Unpresented bank drafts represent checks issued and not yet
presented for payment in excess of the cash balances at custodial banks. The
applicable bank accounts are funded at the time the checks are presented for
payment.
    Free cash flow is a non-GAAP financial measure as defined in Regulation G
promulgated by the Securities and Exchange Commission. This non-GAAP financial
measure is in addition to, not a substitute for, or superior to, measures of
financial performance prepared in accordance with Generally Accepted
Accounting Principles.
    Management believes this non-GAAP measure provides useful information to
investors regarding cash that our operating businesses generate before taking
into account cash movements that are non-operational. Free cash flow is a
non-GAAP financial measure commonly used in the entertainment industry and by
financial analysts and others who follow the industry. Not all companies
calculate free cash flow in the same manner and the measure as presented may
not be comparable to similarly titled measures presented by other companies.




For further information:

For further information: Peter D. Wilkes, +1-310-255-3726, 
pwilkes@lionsgate.com, or Kelli Easterling, +1-310-255-4929, 
keasterling@lionsgate.com, both of Lionsgate Web Site:
http://www.lionsgate.com


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