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Lionsgate Reports Net Income of $31.7 Million and Adjusted EBITDA of $54.4 Million for Second Quarter of Fiscal 2010 Compared to Net Loss of $51.8 Million and Adjusted EBITDA of Negative $35.9 Million in Prior Year's Second Quarter

Basic Net Income Per Common Share Is $0.27 In Second Quarter Compared To Basic Net Loss of $0.44 In Prior Year's Second Quarter

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Nov. 9 /PRNewswire-FirstCall/ -- Lionsgate (NYSE: LGF), the leading next generation studio, continued its solid growth momentum and, bolstered by strong gains in its television production business, new revenue from TV Guide Network and TV Guide.com and reduced theatrical marketing costs, reported revenues of $393.7 million and net income attributable to Lionsgate shareholders of $31.7 million for the fiscal 2010 second quarter ended September 30, 2009, the Company announced today. Basic net income per common share was $0.27 on 117.3 million weighted average common shares outstanding, compared to basic net loss of $0.44 on 116.9 million weighted average common shares outstanding in the prior year's second quarter. Theatrical marketing costs in the quarter were $37.6 million, a 66% decline from $109.7 million in the prior year's second quarter.

The Company reported adjusted EBITDA of $54.4 million in the second quarter compared to adjusted EBITDA of negative $35.9 million for the prior year's second 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 on extinguishment of debt and the sale of equity securities.

Second quarter revenues were $393.7 million, an increase of 3% compared to $380.7 million in the prior year's second quarter, reflecting continued strong growth in television production revenues and new revenue of $27.7 million from TV Guide Network and TV Guide.com in the quarter.

For the six months ended September 30, 2009, Lionsgate reported revenues of $781.4 million, net income attributable to Lionsgate shareholders of $68.1 million and adjusted EBITDA of $107.7 million. This compared to revenues of $679.2 million, net loss of $48.3 million and adjusted EBITDA of negative $18.6 million in the prior year's first six months. Basic net income per common share for the six months ended September 30, 2009 was $0.58 on 117.2 million weighted average common shares outstanding compared to basic net loss of $0.41 on 117.6 million weighted average common shares outstanding in the prior year's first six months.

"As anticipated, we had another strong financial quarter, showing what we can achieve from our diversified portfolio of businesses as we benefited from strong contributions from our television production operations and new revenue from TV Guide Network and TV Guide.com," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer. "We are on track to meet our financial targets for the year, and we believe that the current performance of our businesses, coupled with growing returns we anticipate from our new investments and the ultimate profitability we expect to achieve from next year's film slate and beyond, positions us for strong financial results in the future."

Overall motion picture revenue for the quarter of $277.1 million decreased $35.1 million, or 11%, compared to $312.2 million in the prior year's second quarter. Within the motion picture segment, theatrical revenue was $30.3 million, a decrease of 11% compared to the prior year second quarter, as the Company released Tyler Perry's I Can Do Bad All By Myself and Gamer in the quarter, compared to four wide releases in the prior year's second quarter.

Lionsgate's home entertainment revenue from the motion picture segment was $123.4 million in the quarter, a decline of 25% from the prior year's second quarter. The home entertainment slate in the quarter included such titles as Crank: High Voltage, The Haunting In Connecticut, Horsemen and continued sales of New In Town and Tyler Perry's Madea Goes To Jail. Although titles such as Crank: High Voltage overconverted strongly, the underlying box office of new titles released in the quarter was lower than the underlying box office for the slate of The Forbidden Kingdom, Tyler Perry's Meet The Browns, The Bank Job and Rambo in the prior year's second quarter.

Television included in motion pictures revenue rose to $68.2 million in the second quarter, an increase of 10% from the prior year's second quarter, with a slate of Saw V, Tyler Perry's The Family That Preys, Transporter 3, Bangkok Dangerous, Disaster Movie, My Best Friend's Girl, Religulous and "W." comparing favorably to a slate of 3:10 To Yuma, Good Luck Chuck, Saw IV, War and Tyler Perry's Why Did I Get Married? in the prior year's second quarter.

International revenues of $27.5 million in the second quarter declined 4% from the prior year's second quarter. The principal revenue contributors in the quarter included My Bloody Valentine 3-D and Crank 2: High Voltage compared to 3:10 To Yuma, Employee of the Month, Saw IV and War in the prior year's second quarter.

Mandate Pictures' revenue of $25.7 million in the second quarter increased 21% from $21.2 million in the prior year's second quarter on a slate of Horsemen, Passengers and Whip It and a number of smaller titles compared to a slate of 30 Days of Night, Juno and Nick and Norah's Infinite Playlist in the prior year's second quarter.

Television production revenue increased to $88.9 million in the second quarter, a gain of 30% compared to $68.5 million in the prior year's second quarter, with a 14% increase in domestic series licensing from Lionsgate Television deliveries of seven episodes of Weeds Season 5 (Showtime), eight episodes of Mad Men Season 3 (AMC) and five episodes of Crash Season 2 (Starz) along with a 71% 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 Wendy Williams Show, as well as an 80% increase in international television sales and a 7% increase in revenue from home entertainment releases of television production.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2010 second quarter financial results at 9:00 A.M. ET/6:00 A.M. PT, Tuesday, November 10, 2009. Interested parties may participate live in the conference call by calling 1-800-401-8436 (612-332-0418 outside the U.S. and Canada). A full digital replay will be available from Tuesday morning, November 10, through Tuesday, November 17, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 120735.

About Lionsgate

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 platform assets, including TV Guide Network in partnership with JPMorgan's One Equity Partners, the Epix multiplatform channel with partners Viacom and MGM, the FEARnet branded horror channel with partners Comcast and Sony, and the KIX and Thrill branded action and horror channels in Asia. Its feature film business achieved a number one box office opening weekend in September 2009 with the eighth film in the Tyler Perry franchise, I CAN DO BAD ALL BY MYSELF, and achieved one of the highest per screen averages in history with the platform release of PRECIOUS in November 2009. The Company's home entertainment business has grown to more than 7% market share and is an industry leader in its 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.

www.lionsgate.com

    For further information, please contact:

    Peter D. Wilkes
    310-255-3726
    [email protected]

The matters discussed in this press release include forward-looking statements, including those regarding the timing of our upcoming film slate and 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 June 1, 2009, and in Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on October 13, 2009, 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 SHEET

                                                   September 30,   March 31,
                                                       2009           2009
                                                   -------------   ---------

                                                     (Amounts in thousands,
                                                     except share amounts)
                                      ASSETS
    Cash and cash equivalents                           $112,652    $138,475
    Restricted cash                                        9,896      10,056
    Restricted investments                                 6,999       6,987
    Accounts receivable, net of reserve for returns and
     allowances of $89,645 (March 31, 2009 -
      $98,947) and provision for doubtful
       accounts of $8,667 (March 31, 2009 -
       $9,847)                                           231,975     227,010
    Investment in films and television programs,
     net                                                 749,283     702,767
    Property and equipment, net                           38,034      42,415
    Finite-lived intangible assets, net                   75,368      78,904
    Goodwill                                             379,353     379,402
    Other assets                                          86,113      81,234
                                                      ----------  ----------
      Total assets                                    $1,689,673  $1,667,250
                                                      ==========  ==========

                                   LIABILITIES
    Borrowings under bank line of credit                $255,000    $255,000
    Accounts payable and accrued liabilities             176,268     270,561
    Participations and residuals                         304,271     371,857
    Film and production obligations                      293,714     304,525
    Subordinated notes and other financing
     obligations                                         266,358     281,521
    Mandatorily redeemable preferred stock units
     held by noncontrolling interest                      88,431           -
    Deferred revenue                                     134,911     142,093
                                                      ----------  ----------
      Total liabilities                                1,518,953   1,625,557
                                                      ----------  ----------

    Commitments and contingencies

                            SHAREHOLDERS' EQUITY
    Lions Gate Entertainment Corp. shareholders' equity:
      Common shares, no par value, 500,000,000 shares authorized,
       117,618,718 and
        116,950,512 shares issued at September
         30, 2009 and March 31, 2009, respectively       515,944     494,724
      Accumulated deficit                               (373,088)   (441,153)
      Accumulated other comprehensive loss                (5,974)    (11,878)
                                                      ----------  ----------
        Total Lions Gate Entertainment Corp.
         shareholders' equity                            136,882      41,693
    Noncontrolling interest                               33,838           -
                                                      ----------  ----------
      Total equity                                       170,720      41,693
                                                      ----------  ----------
        Total liabilities and equity                  $1,689,673  $1,667,250
                                                      ==========  ==========



                        LIONS GATE ENTERTAINMENT CORP.

             UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                   Three Months   Three Months    Six Months     Six Months
                       Ended          Ended          Ended          Ended
                   September 30,  September 30,  September 30,  September 30,
                       2009           2008           2009           2008
                   -------------  -------------  -------------  -------------
                       (Amounts in thousands, except per share amounts)

    Revenues            $393,677       $380,718       $781,384       $679,177
    Expenses:
      Direct
       operating         198,047        199,626        411,106        347,310
      Distribution
       and marketing     102,245        189,407        187,228        288,382
      General and
       administration     42,452         30,600         83,571         68,908
      Depreciation
       and
       amortization        6,207          1,415         14,402          2,801
                         -------       --------        -------       --------
        Total
         expenses        348,951        421,048        696,307        707,401
                         -------       --------        -------       --------
    Operating income
     (loss)               44,726        (40,330)        85,077        (28,224)
                         -------       --------        -------       --------
    Other expenses
     (income):
      Interest
       expense
        Contractual
         cash based
         interest          5,392          3,531         10,385          6,909
        Amortization
         of debt
         discount,
         deferred
         financing
         costs
         and
         accretion
         of
         redeemable
         preferred
         stock
         units             7,905          5,378         13,621          9,887
                         -------       --------        -------       --------
          Total
           interest
            expense       13,297          8,909         24,006         16,796
      Interest and
       other income         (382)        (2,047)          (808)        (4,202)
      Gain on
       extinguishment
        of debt                -              -         (7,458)             -
                         -------       --------        -------       --------
        Total other
         expenses,
         net              12,915          6,862         15,740         12,594
                         -------       --------        -------       --------
    Income (loss)
     before equity
     interests and
     income taxes         31,811        (47,192)        69,337        (40,818)
    Equity interests
     loss                 (1,928)        (1,960)        (3,645)        (4,146)
                         -------       --------        -------       --------
    Income (loss)
     before income
     taxes                29,883        (49,152)        65,692        (44,964)
    Income tax
     provision               674          2,662          2,011          3,331
                         -------       --------        -------       --------
    Net income (loss)     29,209        (51,814)        63,681        (48,295)
      Add: Net loss
       attributable
       to
       noncontrolling
       interest            2,507              -          4,384              -
                         -------       --------        -------       --------
    Net income (loss)
     attributable to
     Lions Gate
     Entertainment
     Corp.
     Shareholders        $31,716       $(51,814)       $68,065       $(48,295)
                         =======       ========        =======       ========

    Basic Net Income
     (Loss) Per
     Common Share          $0.27         $(0.44)         $0.58         $(0.41)
                         =======       ========        =======       ========
    Diluted Net
     Income (Loss)
     Per Common Share      $0.26         $(0.44)         $0.56         $(0.41)
                         =======       ========        =======       ========
    Weighted average
     number of common
     shares outstanding:
      Basic              117,322        116,861        117,199        117,647
      Diluted            138,732        116,861        137,671        117,647



                       LIONS GATE ENTERTAINMENT CORP.

             UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                   Six Months     Six Months
                                                     Ended          Ended
                                                 September 30,  September 30,
                                                      2009           2008
                                                 -------------  -------------
                                                     (Amounts in thousands)
    Operating Activities:
    Net income (loss) attributable to Lions Gate
     Entertainment Corp. shareholders                $68,065       $(48,295)
    Net loss attributable to noncontrolling
     interest                                         (4,384)             -
                                                    --------       --------
    Net income (loss)                                 63,681        (48,295)
    Adjustments to reconcile net income (loss) to
     net cash used in operating activities:
      Depreciation of property and equipment           7,952          2,242
      Amortization of films and television
       programs                                      287,303        186,743
      Amortization of debt discount, deferred
       financing costs and accretion of redeemable
       preferred stock units                          13,621          9,887
      Amortization of intangible assets                6,450            559
      Non-cash stock-based compensation                7,686          7,516
      Gain on extinguishment of debt                  (7,458)             -
      Equity interests loss                            3,645          4,146
    Changes in operating assets and liabilities:
      Restricted cash                                    160        (11,935)
      Accounts receivable, net                          (301)        56,667
      Investment in films and television programs   (333,476)      (325,176)
      Other assets                                    (4,381)        (9,438)
      Accounts payable and accrued liabilities       (96,247)         3,077
      Participations and residuals                   (68,116)        65,271
      Film obligations                               (36,901)        (4,325)
      Deferred revenue                                (7,469)        23,337
                                                    --------       --------
    Net Cash Flows Used In Operating Activities     (163,851)       (39,724)
                                                    --------       --------
    Investing Activities:
    Purchases of restricted investments               (6,999)             -
    Proceeds from the sale of restricted
     investments                                       6,987            125
    Investment in equity method investees            (14,924)       (11,099)
    (Increase) decrease in loans receivable            8,333        (28,427)
    Purchases of property and equipment               (3,690)        (5,743)
                                                     -------       --------
    Net Cash Flows Used In Investing Activities      (10,293)       (45,144)
                                                     -------       --------
    Financing Activities:
    Exercise of stock options                              -          2,894
    Tax withholding requirements on equity awards     (1,343)        (2,941)
    Repurchase and cancellation of common shares           -        (44,737)
    Proceeds from the sale of 49% interest in TV
     Guide                                           122,355              -
    Borrowings under bank line of credit              70,000              -
    Repayments of borrowings under bank line of
     credit                                          (70,000)             -
    Increase in production obligations               128,094        113,320
    Repayment of production obligations             (102,490)      (104,216)
    Repayment of other financing obligations            (406)             -
                                                    --------       --------
    Net Cash Flows Provided By (Used In)
     Financing Activities                            146,210        (35,680)
                                                    --------       --------
    Net Change In Cash And Cash Equivalents          (27,934)      (120,548)
    Foreign Exchange Effects on Cash                   2,111         (2,136)
    Cash and Cash Equivalents - Beginning Of
     Period                                          138,475        371,589
                                                    --------       --------
    Cash and Cash Equivalents - End Of Period       $112,652       $248,905
                                                    ========       ========



                       LIONS GATE ENTERTAINMENT CORP.

        RECONCILIATION OF NET INCOME TO EBITDA, AS DEFINED AND EBITDA, AS
                                     ADJUSTED

                   Three Months   Three Months    Six Months     Six Months
                      Ended          Ended          Ended          Ended
                   September 30,  September 30,  September 30,  September 30,
                       2009           2008           2009           2008
                   -------------  -------------  -------------  -------------
                    (Amounts in thousands, except per share amounts)

    Net income      $29,209       $(51,814)       $63,681       $(48,295)
      Depreciation
       and
       amortization   6,207          1,415         14,402          2,801
      Interest
       expense       13,297          8,909         24,006         16,796
      Interest
       and other
       income          (382)        (2,047)          (808)        (4,202)
      Income tax
       provision        674          2,662          2,011          3,331
      Equity
       interests
       loss           1,928          1,960          3,645          4,146
      Gain on
       extinguishment
       of debt            -              -         (7,458)             -
                    -------       --------       --------       --------
    EBITDA          $50,933       $(38,915)       $99,479       $(25,423)
      Stock based
       compensation   4,293          2,985          8,288          6,870
      EBITDA
       attributable
       to
       noncontrolling
       interest      (2,081)             -         (2,332)             -
      Non-recurring
       corporate
       defense
       charges            -              -          1,012              -
      Non-risk prints
       and advertising
       expense        1,253              -          1,253              -
                    -------       --------       --------       --------
    EBITDA, as
     adjusted       $54,398       $(35,930)      $107,700       $(18,553)
                    =======       ========       ========       ========

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

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.

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.

SOURCE Lionsgate

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