Lions Gate Entertainment (LGF-A) 8-K Revenue Increases 13% From Previous Fiscal Year Driven By Strong Fourth Quarter Results

LIONSGATE REPORTS REVENUES OF $951.2 MILLION, FREE CASH
FLOW OF $102.8 MILLION AND NET INCOME OF $6.1 MILLION FOR
FISCAL YEAR 2006

Revenue Increases 13% From Previous Fiscal Year Driven By
Strong Fourth Quarter Results

Strong Growth In Television And Home Entertainment Results

Management To Provide Fiscal 2007 Guidance On Analyst Call
Thursday, June 15, 2006 At 9:00 AM EDT/6:00 A.M. PDT

SANTA MONICA, CA, and VANCOUVER, BC, June 14, 2006 – Lionsgate (NYSE: LGF), the leading independent filmed entertainment studio, today reported revenues of $951.2 million for fiscal 2006 (fiscal year ended March 31, 2006), an increase of 13% compared to $842.6 million in fiscal 2005. The Company posted free cash flow of $102.8 million for fiscal 2006 compared to $93.0 million in the prior fiscal year, an increase of 11%.

The Company reported pretax income of $7.5 million and net income of $6.1 million in fiscal 2006, or basic income per share of $0.06 on 103.1 million weighted average common shares outstanding, compared to pretax income of $29.2 million and net income of $20.3 million in fiscal 2005, or basic income per share of $0.21 on 97.6 million weighted average common shares outstanding.

Lionsgate also reported EBITDA (earnings before interest, interest rate swaps mark-to-market, income tax provision, depreciation, gain on sale of studio facility and minority interests) of $20.6 million for fiscal 2006 compared to EBITDA of $52.9 million for the year ended March 31, 2005.

“We achieved strong growth throughout our core businesses in fiscal 2006, generating more than $100 million in free cash flow and over $950 million in revenues while continuing to invest in our businesses, add value to our library and strengthen our balance sheet,” said Lionsgate Chief Executive Officer Jon Feltheimer. “We currently have the strongest cash position and one of the strongest filmed entertainment backlogs in our history. We plan to continue to invest in our business organically and through acquisitions while adding value to our content through exploitation of fresh distribution platforms and new and incremental digital revenue streams.”

The Company also noted that it has strengthened its internal controls and is no longer required to report material weaknesses in its financial reporting.

Lionsgate’s theatrical revenue of $145.5 million in fiscal 2006 increased 2% compared to $142.8 million in fiscal 2005, propelled by such number one box office hits asSaw II,Madea’s Family Reunion,Hostel, the Best Picture Academy Award^® -winningCrash,Lord of War,The Devil’s Rejects andWaiting.

Video revenue of $527.2 million in fiscal 2006 grew 13% from $465.3 million in fiscal 2005, driven by strong theatrical DVD titles such asSaw II,Crash, Diary of A Mad Black Woman,Lord of War,WaitingandThe Devil’s Rejectsand the family home entertainment titlesBarbie and the Magic of Pegasus,Barbie Mermaidiaand Marvel’s ™The Ultimate Avengers™.

International revenue of $61.2 million in fiscal 2006 decreased 23% compared to $79.5 million in fiscal 2005. International revenues were driven bySaw II, Saw, In The Mix,Happy Endings,Hotel RwandaandThe Devil’s Rejects. Television revenue (included in motion picture revenue and primarily derived from pay television license fees and pay-per-view) was $72.9 million in fiscal 2006, an 18% increase from $61.6 million in fiscal 2005. Significant television license fees in fiscal 2006 includedSaw, Diary of A Mad Black Woman,Crash,Open WaterandThe Cookout.

Television production revenue of $132.9 million in fiscal 2006 grew by 60% compared to $82.8 million in fiscal 2005, led by deliveries of 82 hours of one-hour drama series, 10 half-hours of half-hour drama series, international sales of one-hour series and television movies. Principal revenue drivers were domestic deliveries ofWildfire,The Dead Zone,Missing, The CutandWeeds. With nine prime time series (eight cable and one broadcast) scheduled to air in fiscal 2007 and a growing international sales business, Lionsgate’s television operations are poised for continued growth.

Lionsgate senior management will hold its analyst and investor conference call to discuss its fiscal 2006 full year financial results at 9:00 A.M. EDT/6:00 A.M. PDT on Thursday, June 15, 2006, and will also provide guidance for fiscal 2007 on the call.

Interested parties may participate live in the conference call by calling 1-800-230-1059 (1-612-288-0318 outside the U.S. and Canada). A full digital replay will be available from Thursday, June 15, through Thursday, June 22, by dialing 1-800-475-6701 (1-320-365-3844 outside the U.S. and Canada) and using access code #827835.

Lionsgate is the leading independent filmed entertainment studio, winning this year’s Best Picture Academy Award^® forCrash,generating two consecutive years of $300 million-plus domestic theatrical box office, operating a $500 million-plus home entertainment business and producing a broad slate of prime time television series for fiscal 2007. It 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 5,500 titles is a valuable source of stable, recurring revenue and a foundation for the growth of the Company’s core businesses. The Lionsgate brand name is 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
pwilkes@lionsgate.com

The matters discussed in this press release include forward-looking statements. 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 risk factors as set forth in Lionsgate’s Form 10-K filed with the Securities and Exchange Commission on June 14, 2006. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS

	March 31,			March 31,
	2006			2005
	(Amounts in thousands,
	except share amounts)
ASSETS
Cash and cash equivalents	$	46,978		$	112,839
Restricted cash		820			2,913
Investments — auction rate preferreds and municipal bonds		167,081			—
Investments — equity securities		14,921			—
Accounts receivable, net of reserve for video returns and allowances of $73,366 (March 31, 2005 — $58,449) and provision for doubtful accounts of $10,934 (March 31, 2005 — $6,102)		182,659			150,019
Investment in films and television programs		417,750			367,376
Property and equipment		7,218			30,842
Goodwill		185,117			161,182
Other assets		30,705			29,458
	$	1,053,249		$	854,629
LIABILITIES
Bank loans	$	—		$	1,162
Accounts payable and accrued liabilities		188,793			134,200
Unpresented bank drafts		14,772			—
Film obligations		284,987			130,770
Subordinated notes		385,000			390,000
Mortgages payable		—			18,640
Deferred revenue		30,427			62,459
Minority interests		—			259
		903,979			737,490
SHAREHOLDERS’ EQUITY
Common shares, no par value, 500,000,000 shares authorized, 104,422,765 at March 31, 2006 and 101,843,708 at March 31, 2005 issued and outstanding		328,771			305,662
Series B preferred shares (10 shares issued and outstanding)		—			—
Restricted common share units		5,178			—
Unearned compensation		(4,032	)		—
Accumulated deficit		(177,130	)		(183,226	)
Accumulated other comprehensive loss		(3,517	)		(5,297	)
		149,270			117,139
	$	1,053,249		$	854,629

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year			Year			Year
	Ended			Ended			Ended
	March 31,			March 31,			March 31,
	2006			2005			2004
Revenues	$	951,228		$	842,586		$	375,910
Expenses:
Direct operating		460,943			355,922			181,298
Distribution and marketing		399,299			364,281			207,045
General and administration		70,326			69,460			42,826
Severance and relocation costs		—			—			5,575
Write-down of other assets		—			—			11,686
Gain on sale of studio facility		(4,872	)		—			—
Depreciation		2,504			3,159			3,198
Total expenses		928,200			792,822			451,628
Operating Income (Loss)		23,028			49,764			(75,718	)
Other Expense (Income):
Interest expense		19,933			26,421			14,178
Interest rate swaps mark-to-market		(205	)		(2,752	)		(206	)
Interest and other income		(4,304	)		(3,440	)		(136	)
Minority interests		—			107			—
Total other expenses		15,424			20,336			13,836
Income (Loss) Before Equity Interests and Income Taxes		7,604			29,428			(89,554	)
Equity interests		(74	)		(200	)		(2,169	)
Income (Loss) Before Income Taxes		7,530			29,228			(91,723	)
Income tax provision		1,434			8,947			373
Net Income (Loss)	$	6,096		$	20,281		$	(92,096	)
Modification of warrants		—			—			(2,031	)
Dividends on Series A preferred shares		—			—			(387	)
Accretion and amortization on Series A preferred shares		—			—			(643	)
Net income (loss) available to common shareholders	$	6,096		$	20,281		$	(95,157	)
Basic Income (Loss) Per Common Share	$	0.06		$	0.21		$	(1.35	)
Diluted Income (Loss) Per Common Share	$	0.06		$	0.20		$	(1.35	)

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

									Restricted												Accumulated
					Series B				Common									Comprehensive			Other
	Common Shares				Preferred Shares				Share			Unearned			Accumulated			Income			Comprehensive
	Number		Amount		Number		Amount		Units			Compensation			Deficit			(Loss)			Loss			Total
	(Amounts in thousands, except share amounts)
Balance at March 31, 2004		93,615,896	$	280,501		10	$	—	$	—		$	—		$	(203,507	)				$	(7,385	)	$	69,609
Exercise of stock options		4,991,141		13,871																					13,871
Exercise of warrants		3,220,867		10,842																					10,842
Issuance to directors for services		15,804		137																					137
Impact of previously modified stock options		—		311																					311
Comprehensive income (loss):
Net income																20,281		$	20,281						20,281
Foreign currency translation adjustments																			2,374			2,374			2,374
Net unrealized loss on foreign exchange contracts																			(286	)		(286	)		(286	)
Comprehensive income																		$	22,369						—
Balance at March 31, 2005		101,843,708	$	305,662		10	$	—	$	—		$	—		$	(183,226	)				$	(5,297	)	$	117,139
Exercise of stock options		361,310		1,408																					1,408
Issuance to directors for services		20,408		203																					203
Impact of previously modified stock options		—		27																					27
Issuance of common shares in connection with acquisition of film assets		399,042		3,775																					3,775
Issuance of common shares in connection with acquisition of common shares of Image Entertainment.		1,104,004		11,537																					11,537
Issuance of common shares in connection with acquisition of Redbus		643,460		5,643																					5,643
Issuance of restricted share units										5,694			(5,694	)											—
Amortization of restricted share units													1,662												1,662
Vesting of restricted share units		50,833		516						(516	)														—
Comprehensive income (loss) Net income																6,096			6,096						6,096
Foreign currency translation adjustments																			2,223			2,223			2,223
Net unrealized loss on foreign exchange contracts																			(356	)		(356	)		(356	)
Unrealized loss on investments — available for sale.																			(87	)		(87	)		(87	)
Comprehensive income																		$	7,876
Balance at March 31, 2006		104,422,765	$	328,771		10	$	—	$	5,178		$	(4,032	)	$	(177,130	)				$	(3,517	)	$	149,270

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year			Year			Year
	Ended			Ended			Ended
	March 31,			March 31,			March 31,
	2006			2005			2004
	(Amounts in thousands)
Operating Activities:
Net income (loss)	$	6,096		$	20,281		$	(92,096	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property and equipment		2,504			3,159			3,198
Amortization and write-off of deferred financing costs		3,804			6,945			4,073
Amortization of films and television programs		253,279			213,346			136,082
Amortization of intangible assets		2,004			2,192
Non-cash stock-based compensation		1,881			448			1,740
Interest rate swaps mark-to-market		(205	)		(2,752	)		(206	)
Gain on disposition of assets		—			(666	)		—
Gain on sale of studio facility		(4,872	)		—			—
Deferred income taxes		297			6,283			—
Relocation costs		—			—			2,131
Write-down of other assets		—			—			11,686
Minority interests		—			107			—
Equity interests		74			200			2,169
Changes in operating assets and liabilities, excluding the effects of acquisitions:
(Increase) decrease in restricted cash		2,093			(2,913	)		—
Accounts receivable, net		(33,294	)		(21,284	)		(17,249	)
Increase in investment in films and television programs		(284,711	)		(171,272	)		(192,098	)
Other assets		(5,302	)		(2,395	)		6,913
Accounts payable and accrued liabilities		48,732			4,335			12,170
Unpresented bank drafts		14,772			—			—
Film obligations		147,218			15,594			1,818
Deferred revenue		(31,358	)		23,888			3,258
Net Cash Flows Provided By (Used In) Operating Activities		123,012			95,496			(116,411	)
Investing Activities:
Purchases of investments — auction rate preferreds and municipal bonds		(307,031	)		—			—
Purchases of investments — equity securities		(3,470	)		—			—
Sales of investments — auction rate preferreds and municipal bonds		139,950			—			—
Cash received from sale of investment		2,945			—			—
Cash received from disposition of assets, net		34,860			1,172			—
Acquisition of Redbus, net of cash acquired		(27,138	)		—			—
Acquisition of Artisan Entertainment Inc., net of cash acquired		—			—			(148,870	)
Purchases of property and equipment		(5,450	)		(2,484	)		(860	)
Net Cash Flows Used In Investing Activities		(165,334	)		(1,312	)		(149,730	)
Financing Activities:
Issuance of common shares		1,408			24,713			107,162
Redemption of Series A preferred shares		—			—			(18,090	)
Dividends paid on Series A preferred shares		—			—			(387	)
Financing fees		(546	)		(1,612	)		(11,402	)
Increase in subordinated notes, net of issue costs		—			314,822			56,347
Repayment of subordinated notes		(5,000	)		—			—
Increase (decrease) in bank loans		—			(325,111	)		143,033
Proceeds from production loans		—			—			505
Repayment of production loans		—			—			(1,778	)
Proceeds from mortgages payable		—			—			16,148
Repayment of mortgages payable		(18,927	)		(1,894	)		(24,367	)
Net Cash Flows Provided By (Used In) Financing Activities		(23,065	)		10,918			267,171
Net Change In Cash And Cash Equivalents		(65,387	)		105,102			1,030
Foreign Exchange Effects On Cash		(474	)		648			(792	)
Cash and Cash Equivalents — Beginning Of Year		112,839			7,089			6,851
Cash and Cash Equivalents — End Of Year	$	46,978		$	112,839		$	7,089

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF EBITDA TO NET INCOME (LOSS)

	Year			Year			Year
	Ended			Ended			Ended
	March 31,			March 31,			March 31,
	2006			2005			2004
EBITDA, as defined	$	20,586		$	52,882		$	(74,689	)
Depreciation		(2,504	)		(3,159	)		(3,198	)
Interest expense		(19,933	)		(26,421	)		(14,178	)
Interest rate swaps mark-to-market		205			2,752			206
Interest income		4,304			3,281			136
Gain on sale of studio facility		4,872			—			—
Minority interests		—			(107	)		—
Income tax provision		(1,434	)		(8,947	)		(373	)
Net income (loss)	$	6,096		$	20,281		$	(92,096	)

EBITDA is defined as earnings before interest expense, interest rate swaps mark-to-market, interest income, income tax provision, depreciation, gain on sale of studio facility and minority interests.

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE
CASH FLOW FROM OPERATIONS (AFTER DEBT SERVICE)

	Year			Year			Year
	Ended			Ended			Ended
	March 31,			March 31,			March 31,
	2006			2005			2004
Net Cash Flows Provided By (Used In) Operating Activities	$	123,012		$	95,496		$	(116,411	)
Purchases of property and equipment		(5,450	)		(2,484	)		(860	)
Unpresented bank drafts		(14,772	)		—			—
Free Cash Flow From Operations (after debt service), as defined	$	102,790		$	93,012		$	(117,271	)

Free cash flow is defined as net cash flows provided by operating activities less purchases of property and equipment and unpresented bank drafts.