EXHIBIT 99.2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

OVERVIEW

We are an independent producer and distributor of film and television
entertainment content. We release approximately 15 motion pictures theatrically
per year. Our theatrical releases include films we produce in-house and films we
acquire from third parties. We also have produced approximately 150 hours of
television programming on average each of the last four years. Our disciplined
approach to production, acquisition and distribution is designed to maximize our
profit by balancing our financial risks against the probability of commercial
success of each project. We distribute our library of approximately 6,200 motion
picture titles and 1,800 television episodes directly to retailers, video rental
stores, pay and free television channels and indirectly to international markets
through third parties. We also own an interest in CinemaNow, an internet
video-on-demand provider, and own and operate a film and television production
studio. On December 15, 2003, we completed our acquisition of Artisan
Entertainment Inc., or Artisan, which added a diversified motion picture, family
and home entertainment company to our company. The fully integrated distribution
network we acquired from Artisan includes direct-to-store distribution
capabilities and output agreements with pay television and pay-per-view
providers.

Our revenues are derived from the following business segments:

- Motion Pictures, which includes Theatrical, Home Entertainment,
Television and International Distribution. Theatrical revenues are
derived from the domestic theatrical release of motion pictures in
North America. Home entertainment revenues are derived from the sale
of video and DVD releases of our own productions and acquired films,
including theatrical releases and direct-to-video releases.
Television revenues are primarily derived from the licensing of our
productions and acquired films to the domestic cable, free and pay
television markets. International revenues are derived from the
licensing of our productions and acquired films to international
markets on a territory-by-territory basis.

- Television, which includes the licensing to domestic and
international markets of one-hour drama series, television movies
and mini-series and non-fiction programming.

- Studio Facilities, which includes Lions Gate Studios and the leased
facility Eagle Creek Studios, which derive revenue from rental of
sound stages, production offices, construction mills, storage
facilities and lighting equipment to film and television producers.

Our primary operating expenses include the following:

- Direct Operating Expenses, which include amortization of production
or acquisition costs, participation and residual expenses.

- Distribution and Marketing Expenses, which primarily include the
costs of theatrical "prints and advertising" and of video and DVD
duplication and marketing.

- General and Administration Expenses, which include salaries and
other overhead.

The functional currency of our business, based on the economic environment
in which we primarily generate and expend cash, is the Canadian dollar and the
U.S. dollar for the Canadian and U.S.-based businesses, respectively. Commencing
with the period beginning April 1, 2002, consolidated financial statements are
presented in U.S. dollars, as a substantial component of our operations are
domiciled in the U.S. and the principal market for trading of our common shares
is the American Stock Exchange. Selected consolidated financial statements in
this report have been restated in U.S. dollars for periods prior to April 1,
2002. In accordance with generally accepted accounting principles in both the
U.S and Canada, the financial statements of Canadian-based companies are
translated for consolidation purposes using current exchange rates in effect on
the balance sheet date and revenue and expenses translated at the average rate
of exchange for the relevant period. Any resulting foreign exchange translation
gains and losses are recorded as accumulated comprehensive income (loss), a
separate component of shareholders' equity.

RECENT DEVELOPMENTS

Sales of Common Shares. In June 2003, the Company sold 16,201,056 common
shares at a public offering price of $2.05 per share

and received $31.2 million of net proceeds, after deducting underwriting
discounts. The Company incurred offering expenses of $1.0 million. The Company
used $18.1 million of the net proceeds to repurchase 8,040 Series A Preferred
Shares at a per share purchase price of $2,250 and used the remaining net
proceeds for repayment of bank loans and general business purposes.

In October 2003, the Company sold 28,750,000 common shares at a public
offering price of $2.70 per share and received $73.5 million of net proceeds,
after deducting underwriting expenses. The Company incurred offering expenses of
$0.5 million. The Company used net proceeds to finance the acquisition of
Artisan, as referred to below, and for general business purposes.

Issuance of Convertible Senior Subordinated Notes. In December 2003, Lions
Gate Entertainment Inc., a wholly owned subsidiary of the Company, sold $60.0
million of 4.875% Convertible Senior Subordinated Notes ("4.875% Notes") with a
maturity date of December 15, 2010. In December 2003, the Company received $57
million of net proceeds, after paying placement agents' fees. The Company
incurred offering expenses of $0.7 million. The 4.875% Notes are convertible, at
the option of the holder, at any time prior to maturity into common shares of
Lions Gate Entertainment Corp. at a conversion rate of 185.0944 shares per
$1,000 principal amount of 4.875% Notes, which is equal to a conversion price of
approximately $5.40 per share.

Credit Facility. On December 15, 2003, the Company and JP Morgan Chase
Bank Inc. ("JP Morgan") entered into an Amended and Restated Credit, Security,
Guaranty and Pledge Agreement for a $350 million credit facility consisting of a
$135 million five-year term loan and a $215 million five-year revolving credit
facility. The credit facility was used to finance our acquisition of Artisan, as
referred to below, refinance indebtedness of the Company and for general
business purposes.

Merger. On December 15, 2003, the Company acquired Film Holdings Co., the
parent company of Artisan, an independent distributor and producer of film and
entertainment content. Under the terms of the merger agreement, the Company
acquired 100% of the shares of Film Holdings Co., by means of a merger of a
subsidiary of the Company with and into Film Holding Co., pursuant to which Film
Holdings Co. is the surviving corporation and a subsidiary of the Company. The
purchase price of $168.8 million consists of $160 million in cash and direct
transaction costs of $8.8 million. In addition, the Company assumed debt of
$59.9 million and other obligations (including accounts payable and accrued
liabilities, film obligations and other advances) of $140.6 million. The
purchase price of $168.8 million was allocated $34.3 million to net tangible and
intangible assets acquired and $134.5 million to goodwill based on an estimation
of the fair value of assets acquired and liabilities assumed. The consolidated
financial statements and the management's discussion and analysis of financial
conditions and results included in this report on Form 8-K include the results
of Artisan from December 16 onwards. Due to the merger, the Company's results of
operations for the year ended March 31, 2004 are not directly comparable to its
results in other reporting periods.

CineGroupe. We have a 29.4% ownership interest in CineGroupe Corporation
(together with its subsidiaries including Animation Cinepix Inc., "CineGroupe"),
a Canadian animation company. CineGroupe was unable to meet its financial
obligations in the ordinary course of business and, as a result, sought
protection from its creditors. Pursuant to a petition filed by CineGroupe, the
Superior Court of the District of Montreal issued on December 22, 2003, an
Initial Order pursuant to the Companies' Creditors Arrangement Act ("CCAA").
Pursuant to this order, all proceedings by CineGroupe's creditors are suspended.
This order was subsequently renewed and extended such that CineGroupe has until
July 31, 2005 to file a plan of arrangement with its creditors or to ask the
Court for another extension to do so. As a result of the CCAA filing, the
Company determined that it no longer has the ability to significantly influence
CineGroupe and therefore ceased accounting for CineGroupe under the equity
method of accounting. Effective January 1, 2004, the Company began accounting
for CineGroupe under the cost method of accounting. In addition, the Company
wrote off $8.1 million of convertible debentures and other receivables due from
CineGroupe which was recorded as write-down of other assets in the consolidated
statements of operations.

Conversion of Series A Preferred Shares. The Company exercised its right
to convert the remaining 1,986 preferred shares to common shares on February 27,
2004 at a conversion rate of 1,109 common shares per 1 Series A preferred share.
At March 31, 2004 there were no Series A preferred shares outstanding.

Exercise of warrants. From March 1, 2004, 2,443,750 warrants were
exercised and the Company issued 2,443,750 common shares and received proceeds
of $12.2 million. In December 2004, the Company amended the outstanding warrants
to allow the holders, at their option, to exercise by cashless exercise. During
December 2004, an additional 1,993,250 warrants were exercised by cashless
exercise resulting in the issuance of 1,052,517 common shares. Any remaining
warrants expired January 1, 2005 and therefore no warrants are outstanding.

Convertible Senior Subordinated Notes. On October 4, 2004, Lions Gate
Entertainment Inc., a wholly owned subsidiary of the Company, sold $150.0
million of 2.9375% Convertible Senior Subordinated Notes ("2.9375% Notes") with
a maturity date of October 15, 2024. The Company received $146.0 million of net
proceeds, after paying placement agents' fees. The Company estimated offering
expenses to be $0.5 million. The 2.9375% Notes are convertible, at the option of
the holder, at any time prior to maturity, upon satisfaction of one of the
conversion contingencies into common shares of Lions Gate Entertainment Corp. at
a conversion rate of 86.9565 shares per $1,000 principal amount of the 2.9375%
Notes, which is equal to a conversion price of approximately $11.50 per share.
The Company used the net proceeds for repayment of outstanding indebtedness
under the existing U.S. dollar revolving

credit facility and term loan, and may also use the net proceeds for other
general business purposes, which may include the financing of a portion of any
future acquisitions.

Credit Facility. The Company repaid $60 million of the term loan with the
revolving credit facility on September 30, 2004, thereby reducing the term loan
to $75 million. On December 31, 2004, the Company repaid the $75 million term
loan in full with the revolving credit facility. Therefore, at December 31, 2004
only the revolving credit facility remains.

CRITICAL ACCOUNTING POLICIES

The application of the following accounting policies, which are important
to our financial position and results of operations, requires significant
judgments and estimates on the part of management. For a summary of all of our
accounting policies, including the accounting policies discussed below, see note
2 to our audited consolidated financial statements.

Generally Accepted Accounting Principles. Our consolidated financial
statements have been prepared in accordance with United States generally
accepted accounting principles ("U.S. GAAP") which conforms, in all material
respects, with the accounting principles generally accepted in Canada ("Canadian
GAAP"), except as described in the notes to the consolidated financial
statements. The U.S. dollar and the Canadian dollar are the functional
currencies of the Company's Canadian and U.S. based businesses, respectively.
Commencing with the period beginning April 1, 2002, our consolidated financial
statements are presented in U.S. dollars as a substantial component of our
operations are domiciled in the U.S. and the primary market for trading volume
of our common shares was on the American Stock Exchange. Prior to April 1, 2002,
our consolidated financial statements were presented in Canadian dollars. Our
consolidated financial statements and those amounts previously reported in
Canadian dollars have been translated from Canadian dollars to United States
dollars by translating the assets and liabilities at the rate in effect at the
respective balance sheet dates and revenues and expenses at the average rate for
the reporting periods. Any resulting foreign exchange translation gains and
losses are recorded as accumulated other comprehensive income (loss) a separate
component of shareholders' equity. The functional currencies of each of the
Company's operations in the United States and Canada are unchanged.

On March 29, 2004, the new British Columbia Business Corporations Act came
into force, which allows the Company to prepare its financial statements either
under Canadian or U.S. GAAP. The Company elected to prepare financial statements
under U.S. GAAP commencing April 1, 2004. Prior to April 1, 2004, the Company's
consolidated financial statements were prepared under Canadian GAAP. The
consolidated financial statements presented in this Form 8-K, including amounts
presented in prior years, have been converted to U.S. GAAP. The Company must
disclose and quantify material differences with Canadian GAAP in its interim and
annual financial statements for the next two fiscal years from April 1, 2004.

Accounting for Films and Television Programs. In June 2000, the Accounting
Standards Executive Committee of the American Institute of Certified Public
Accountants issued Statement of Position 00-2 "Accounting by Producers or
Distributors of Films" ("SoP 00-2"). SoP 00-2 establishes new accounting
standards for producers or distributors of films, including changes in revenue
recognition, capitalization and amortization of costs of acquiring films and
television programs and accounting for exploitation costs, including advertising
and marketing expenses.

We capitalize costs of production and acquisition, including financing
costs and production overhead, to investment in films and television programs.
These costs are amortized to direct operating expenses in accordance with SoP
00-2. These costs are stated at the lower of unamortized films or television
program costs or estimated fair value. These costs for an individual film or
television program are amortized and participation and residual costs are
accrued in the proportion that current year's revenues bear to management's
estimates of the ultimate revenue at the beginning of the year expected to be
recognized from exploitation, exhibition or sale of such film or television
program over a period not to exceed ten years from the date of initial release.
For previously released film or television programs acquired as part of a
library, ultimate revenue includes estimates over a period not to exceed twenty
years from the date of acquisition. Management regularly reviews and revises
when necessary, its ultimate revenue and cost estimates, which may result in a
change in the rate of amortization of film costs and participations and
residuals and/or write-down of all or a portion of the unamortized costs of the
film or television program to its estimated fair value. No assurance can be
given that unfavorable changes to revenue and cost estimates will not occur,
which may result in significant write-downs affecting our results of operations
and financial condition.

Revenue Recognition. Revenue from the sale or licensing of films and
television programs is recognized upon meeting all recognition requirements of
SoP 00-2. Revenue from the theatrical release of feature films is recognized at
the time of exhibition based on the Company's participation in box office
receipts. Revenue from the sale of videocassettes and digital video disks
("DVDs") in the retail market, net of an allowance for estimated returns and
other allowances, is recognized on the later of receipt by the customer or
"street date" (when it is available for sale by the customer). Under revenue
sharing arrangements, rental revenue is recognized when the Company is entitled
to receipts and such receipts are determinable. Revenues from television
licensing are recognized when the feature film or television program is
available to the licensee for telecast. For television licenses that include
separate availability "windows" during the license period, revenue is allocated
over the "windows". Revenue from sales to international territories are
recognized when the feature film or television program is available to the
distributor for exploitation and

no conditions for delivery exist, which under most sales contracts requires that
full payment has been received from the distributor. For multiple media rights
contracts with a fee for a single film or television program where the contract
provides for media holdbacks, the fee is allocated to the various media based on
management's assessment of the relative fair value of the rights to exploit each
media and is recognized as each holdback is released. For multiple-title
contracts with a fee, the fee is allocated on a title-by-title basis, based on
management's assessment of the relative fair value of each title.

Rental revenue from short-term operating leases of studio facilities is
recognized over the term of the lease. Until fiscal 2002, the Company earned
fees from management services provided to Canadian limited partnerships, whose
purpose is to assist in the financing of films produced in Canada. These fees
were recognized as revenue when the financing was completed. We no longer
provide these management services due to the rescission of certain tax shelter
provisions by the Canadian government.

Cash payments received are recorded as deferred revenue until all the
conditions of revenue recognition have been met. Long-term, non-interest bearing
receivables are discounted to present value.

Reserves. Revenues are recorded net of estimated returns and other
allowances. We estimate accruals for video returns and other allowances in the
consolidated financial statements based on previous returns and our estimated
expected future returns related to current period sales and our allowances
history on a title-by-title basis in each of the video businesses. There may be
differences between actual returns and allowances and our historical experience.
We estimate provisions for accounts receivable based on historical experience
and relevant facts and information regarding the collectability of the accounts
receivable.

Income Taxes. The Company is subject to income taxes in the United States,
and in several states and foreign jurisdictions in which we operate. We account
for income taxes according to Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires the
recognition of deferred tax assets, net of applicable reserves, related to net
operating loss carryforwards and certain temporary differences. The standard
requires recognition of a future tax benefit to the extent that realization of
such benefit is more likely than not or a valuation allowance is applied.

Goodwill. On April 1, 2001, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets."
Goodwill is reviewed annually within each fiscal year, or more frequently if
impairment indicators arise, for impairment, unless certain criteria have been
met. At April 1, 2001, September 30, 2001, December 31, 2002 and December 31,
2003 the Company completed impairment tests required by comparing the fair value
of each of the reporting units to its carrying value including goodwill and
determined that an the recognition of impairment losses was not necessary.
Determining the fair value of reporting units requires various assumptions and
estimates.

Business Acquisitions. The Company accounts for its business acquisitions
as a purchase, whereby the purchase price is allocated to the assets acquired
and liabilities assumed based on their estimated fair value. The excess of the
purchase price over estimated fair value of the net identifiable assets is
allocated to goodwill. Determining the fair value of assets and liabilities
requires various assumptions and estimates.

RESULTS OF OPERATIONS

FISCAL 2004 COMPARED TO FISCAL 2003

Consolidated revenues in fiscal 2004 of $375.9 million increased $111.0
million, or 41.9%, compared to $264.9 million in fiscal 2003.

Motion pictures revenue of $308.9 million in fiscal 2004 increased $108.8
million, or 54.4%, compared to $200.1 million in fiscal 2003 due to significant
releases during fiscal 2004 and to the inclusion of Artisan revenues from the
date of acquisition. Theatrical revenue of $30.9 million in fiscal 2004
increased $18.2 million, or 143.3%, compared to $12.7 million in fiscal 2003.
Significant theatrical releases in fiscal 2004 included Dirty Dancing: Havana
Nights, The Cooler, Girl with a Pearl Earring, Cabin Fever, House of 1000
Corpses and Confidence. Significant theatrical releases in fiscal 2003 included
Frailty, Rules of Attraction, Lovely and Amazing and Secretary. Video revenue of
$223.4 million in fiscal 2004 increased $96.4 million, or 75.9%, compared to
$127.0 million in fiscal 2003. Significant video releases in fiscal 2004
included Cabin Fever, House of 1000 Corpses, Confidence, House of the Dead, Will
and Grace Season 1 and 2, Secretary and Saturday Night Live: Will Ferrel.
Significant video releases in fiscal 2003 included Monster's Ball, Frailty, Rose
Red, Rules of Attraction and State Property. International revenue of $34.0
million in fiscal 2004 increased $2.5 million, or 7.9%, compared to $31.5 in
fiscal 2003. Significant international sales in fiscal 2004 include Confidence,
Cabin Fever, Wonderland, The Wash, Shattered Glass, Rules of Attraction and
House of 1000 Corpses. Television revenue from motion pictures of $16.8 million
in fiscal 2004 decreased $4.3 million, or 20.4%, compared to $21.1 million in
fiscal 2003. Significant television license fees in fiscal 2004 included The
Boat Trip, House of 1000 Corpses and Confidence.

Television production revenue of $60.7 million in fiscal 2004 increased by
$1.3 million, or 2.2%, from $59.4 million in fiscal 2003. In fiscal 2004, 27
hours of one-hour drama series were delivered contributing revenue of $27.4
million and international and other revenue on one-hour drama series was $11.2
million. Also in fiscal 2004, television movies contributed revenue of $8.4
million, video releases of television product contributed revenue of $2.7
million and non-fiction programming contributed revenue of $9.6 million. In
fiscal 2003, 35 hours of one-hour drama series were delivered for revenue of
$41.3 million, television movies contributed revenue of $2.3 million, video
releases of television product contributed $3.7 million and non-fiction
programming contributed revenue of $10.4 million. Domestic deliveries of
one-hour drama series in fiscal 2004 included 18 hours of 1-800 Missing, 8 hours
of Dead Zone and 1 hour of The Coven. Video releases included Dead Zone and The
Pilot's Wife. 84.5 hours of non-fiction programming were delivered during fiscal
2004 compared to 71.5 hours in fiscal 2003.

Studio facilities revenue of $6.3 million in fiscal 2004 increased $0.9
million, or 16.7%, compared to $5.4 million in fiscal 2003 due primarily to an
increase in rental rates and stage space.

Direct operating expenses include amortization, participation and residual
expenses. Direct operating expenses of $181.3 million for fiscal 2004 were 48.2%
of revenue, compared to direct operating expenses of $133.9 million, which were
50.5% of revenue in fiscal 2003. Direct operating expenses as a percentage of
revenue for the motion pictures segment increased year over year due to
additional amortization recorded on acquired libraries. Direct operating
expenses as a percentage of revenue for the television segment decreased year
over year as fiscal 2003 included write-downs on Tracker.

Distribution and marketing expenses of $207.0 million, increased $119.6
million, or 136.8%, compared to $87.4 million in fiscal 2003 due to significant
releases during fiscal 2004 and to the inclusion of Artisan expenses from the
date of acquisition. Theatrical P&A in fiscal 2004 of $89.9 million, increased
$53.3 million, or 145.6%, compared to $36.6 million in fiscal 2003. Theatrical
P&A in fiscal 2004 included significant expenditures on the release of titles
such as Dirty Dancing: Havana Nights, Confidence, Cabin Fever, Girl With A Pearl
Earring, The Cooler and House of 1000 Corpses, as well as pre-release
expenditure on The Punisher and Godsend. Video distribution and marketing costs
on motion picture and television product in fiscal 2004 of $107.0 million
increased $64.3 million, or 150.6%, compared to $42.7 million in fiscal 2003 due
to an increase in marketing and duplication costs related to the increase in
video revenues generated during the year, primarily due to the release of Cabin
Fever, House of 1000 Corpses, Confidence, House of the Dead, Will and Grace
Season 1 and 2, Secretary and Saturday Night Live: Will Ferrel.

General and administration expenses of $42.8 million in fiscal 2004
increased $13.5 million, or 46.1%, compared to $29.3 million in fiscal 2003. In
the current year, $2.9 million of production overhead was capitalized. Due to
increased internal production spending on films and television programs, the
Company began to capitalize production overhead from the beginning of fiscal
2004. Without capitalized production overhead, general and administrative
expenses increased $16.4 million year-over-year, primarily due to the inclusion
of Artisan expenses from the date of acquisition, an increase in professional
fees and an increase in salaries and benefits, including stock-based
compensation expense.

Severance and relocation costs of $5.6 million represent costs incurred by
Lions Gate, associated with the acquisition of Artisan, which include property
and lease abandonment costs of $2.5 million, the write-off of capital assets no
longer in use of $2.1 million and severance of $1.0 million.

Write-down of other assets of $11.7 million consists of a provision of
$3.6 million against a convertible promissory note and a provision of $8.1
million against convertible debentures and other receivables due from
CineGroupe. On November 8, 2002, the Company sold its investment in Mandalay for
cash of $4.3 million and an interest bearing convertible promissory note
totaling $3.3 million. The note, bearing interest at 6%, is payable $1.3 million
on December 31, 2005, $1.0 million on December 31, 2006 and $1.0 million on
December 31, 2007. At March 31, 2004, it was determined that the $3.3 million
note and $0.3 million interest accrued on the note to March 31, 2004 may not be
collectible and accordingly a provision was recorded against the note. During
the year ended March 31, 2004, the Company evaluated it investment in CineGroupe
as CineGroupe was unable to meet its financial obligations in the ordinary
course of business and sought protection under the Companies Creditors
Arrangement Act ("CCAA") in December 2003. As a result of a CCAA filing, we
determined that we do not have the ability to significantly influence CineGroupe
and that amounts owing may not be collectible. We recorded a provision at
December 31, 2003 against convertible debentures and other receivables due from
CineGroupe, resulting in a write-down of amounts owing to nil.

Depreciation of $3.2 million in fiscal 2004 increased $1.4 million, or
77.8%, from $1.8 million in fiscal 2003 due primarily to the addition of $2.7
million of property and equipment as a result of the purchase of Artisan.

Fiscal 2004 interest expense of $14.0 million increased $5.1 million, or
57.3%, from $8.9 million in fiscal 2003 primarily due to an increase in the
credit facility balance to finance the acquisition of Artisan, the interest rate
swap which was effective from January

2003, interest and accretion on the 4.875% Notes from December 2003, interest on
promissory notes and advances acquired as part of the acquisition of Artisan and
increased deferred financing fees on the amended credit facility and the 4.875%
Notes. Interest expense was partially offset by interest capitalized to
production costs of $1.3 million in fiscal 2004 and $0.3 million in fiscal 2003.
Interest capitalized to production costs increased year over year due to an
increased in new production financed by the credit facility in fiscal 2004.

Interest rate swaps do not meet the criteria of effective hedges and
therefore a fair valuation gain of $0.2 million was recorded in fiscal 2004 and
a fair valuation loss of $3.2 million was recorded in fiscal 2003. Fiscal 2004
includes interest rate swaps with a notional amount of $100 million and CDN $20
million and fiscal 2003 includes only the interest rate swap with a notional
amount of $100 million.

Gain on sale of equity interests for the year ended March 31, 2003
includes a $2.1 million gain on the sale of Mandalay. On March 31, 2002, the
carrying value of the Company's investment in Mandalay was written down to its
estimated fair value of $10.0 million as it was expected to be sold by the end
of the fiscal year 2003. During fiscal 2003, the Company received distributions
of $2.4 million from Mandalay under a prior agreement and recorded equity losses
of $2.1 million against its remaining investment in Mandalay. On November 8,
2002, the Company sold its investment in Mandalay for cash of $4.3 million and
an interest bearing convertible promissory note totaling $3.3 million. A gain
was recorded on the sale as the sale price of $7.6 million exceeded the carrying
value of $5.5 million.

Other equity interests for the year ended March 31, 2004 include $1.9
million equity interest in the loss of CineGroupe which consists of 29.4% of the
net loss of CineGroupe; $0.1 million equity interest in the loss of Christal
Films Distribution Inc. ("Christal") which consists of 75% of the net loss of
Christal; and $0.2 million equity interest in the loss of CinemaNow which
consists of approximately 54% of the net loss of CinemaNow. Other equity
interests for the year ended March 31, 2003 includes $0.4 million equity
interest in Christal which consists of 75% of the net income of Christal; $0.4
million equity interest in the loss of CinemaNow which represents 57.4% of the
net loss of CinemaNow; an equity interest in Mandalay which consists of
operating losses of $2.1 million and an insignificant equity interest in the
income of CineGroupe which consists of 29.4% of the net income of CineGroupe.
During the quarter ending March 31, 2003, the Company purchased $0.4 million of
Series C Convertible Preferred Shares of CinemaNow as part of a round of
financing. The round of financing and conversion of a debenture decreased the
Company's voting and economic interests from approximately 63% to 54%. During
the year ended March 31, 2004, the Company recorded its share of the losses of
CinemaNow up to the $0.4 million investment. At March 31, 2004, the investment
in CinemaNow is nil. On November 8, 2002, we sold our investment in Mandalay for
cash of $4.3 million and an interest bearing convertible promissory note of $3.3
million.

The Company had income tax provision of $0.4 million in fiscal 2004,
compared to $1.8 million in fiscal 2003. The Company's actual income tax
provision differs from these amounts as a result of several factors, including
non-temporary differences, foreign income taxed at different rates, state and
local income taxes and capital losses. Income tax loss carry-forwards amount to
approximately $162.9 million for U.S. income tax purposes available to reduce
income taxes over twenty years and $21.5 million for Canadian income tax
purposes available to reduce income taxes over eight years.

Net loss for the year ended March 31, 2004 was $92.1 million, or loss per
share of $1.35, on 70.7 million weighted average common shares outstanding
(after giving effect to the modification of warrants, the Series A Preferred
Share dividends and accretion on the Series A Preferred Shares). This compares
to net loss for the year ended March 31, 2003 of $1.4 million, or loss per share
of $0.10, on 43.2 million weighted average common shares outstanding (after
giving effect to the Series A Preferred Share dividends and accretion on the
Series A Preferred Shares).

FISCAL 2003 COMPARED TO FISCAL 2002

Consolidated revenues in fiscal 2003 of $264.9 million increased $30.1
million, or 12.8%, compared to $234.8 million in fiscal 2002.

Motion pictures revenue of $200.1 million in fiscal 2003 increased $41.7
million, or 26.3%, compared to $158.4 million in fiscal 2002. Theatrical revenue
of $12.7 million decreased $15.2 million or 54.5% compared to $27.9 million in
fiscal 2002. Significant theatrical releases in fiscal 2003 included Frailty,
Rules of Attraction, Lovely and Amazing and Secretary. Significant theatrical
releases in fiscal 2002 included Monster's Ball, "O" and The Wash. Video revenue
of $127.0 million increased $30.5 million, or 31.6%, in fiscal 2003 compared to
$96.5 million in fiscal 2002. Significant video releases in fiscal 2003 included
Monster's Ball, Frailty, Rose Red, Rules of Attraction and State Property.
International revenue of $31.5 million increased $6.2 million, or 24.5% compared
to $25.3 million in fiscal 2002. Significant international sales in fiscal 2003
include Frailty, Rules of Attraction, Confidence, Cube 2, Liberty Stands Still
and Monster's Ball. Television revenue from motion pictures of $21.1 million
increased $13.0 million or

160.5%, compared to $8.1 million. Significant television license fees in fiscal
2003 included Monster's Ball, American Psycho, Frailty and The Wash.

Television production revenue of $59.4 million in fiscal 2003 decreased by
$11.3 million, or 16.0%, from $70.7 million in fiscal 2002, due primarily to the
delivery of fewer television movies. In fiscal 2003, 35 hours of one-hour drama
series were delivered, contributing revenue of $41.3 million, television movies
contributed revenue of $2.3 million and video releases of television product
contributed $3.7 million. In fiscal 2002, 48 hours of one-hour drama series were
delivered for revenue of $34.2 million and television movies contributed revenue
of $20.0 million. Domestic deliveries of one-hour drama series in fiscal 2003
included 22 hours of Dead Zone to USA, 8 hours of Tracker and 5 hours of No
Boundaries. Video releases included Dead Zone, Superfire, TheVoid and Tracker.
In fiscal 2003, Termite Art Productions contributed revenue of $10.4 million on
the delivery of 71.5 hours of non-fiction programming including: Unsolved
History and Amazing Animals 3. In fiscal 2002, Termite Art Productions delivered
78.5 hours of non-fiction programming for revenue of $15.0 million.

Studio facilities revenue of $5.4 million in fiscal 2003 increased $1.2
million, or 28.6%, compared to $4.2 million in fiscal 2002 due primarily to an
increase in rental rates and stage space.

CineGate ceased operations in fiscal 2002 upon the rescission of certain
tax shelter provisions by the Canadian government. Prior to ceasing operations
in fiscal 2002, CineGate arranged and received commission revenue on production
financings. In fiscal 2002, CineGate earned commission revenue of $1.5 million
on approximately $172.5 million of production financing.

Direct operating expenses include amortization, participation and residual
expenses. Direct operating expenses of $133.9 million for fiscal 2003 were 50.5%
of revenue, compared to direct operating expenses of $133.1 million, which were
56.7% of revenue in fiscal 2002. Direct operating expenses for television
decreased year over year due to a decrease in revenue. This decrease was offset
by an increase in motion picture expenses due to an increase in revenue.
However, motion pictures expenses as a percentage of revenue decreased,
primarily due to higher margins on titles which contributed significant revenue
in fiscal 2003.

Distribution and marketing expenses of $87.4 million, increased $13.6
million, or 18.4%, compared to $73.8 million in fiscal 2002. Theatrical P&A in
fiscal 2003 was $36.6 million, compared to $33.9 million in fiscal 2002.
Theatrical P&A in fiscal 2003 included significant expenditures on titles such
as Rules of Attraction and Frailty. Video distribution and marketing costs on
motion picture and television product in fiscal 2003 of $42.7 million, increased
$3.6 million or 9.2% compared to $39.1 million in fiscal 2002 due to an increase
in marketing and duplication costs related to the increase in video revenues
generated during the year, primarily due to the release of Monster's Ball. This
was offset by duplication credits of $4.6 million received from our primary
duplicator during fiscal 2003, based on volume targets and on terms of a new
agreement reached with the duplicator.

General and administrative expenses of $29.3 million in fiscal 2003
decreased $2.7 million, or 8.4%, compared to $32.0 million in fiscal 2002.
Television and studios general and administrative expenses remained relatively
constant year over year. Motion pictures and corporate expenses decreased
primarily because a subsidiary company whose results were consolidated with
Lions Gate in fiscal 2002 was equity accounted in fiscal 2003 and because the
operations of acquired companies were more fully integrated with Lions Gate.

Depreciation of $1.8 million in fiscal 2003 increased $0.3 million, or
20.0%, from $1.5 million in fiscal 2002 due primarily to increased amortization
for the new accounting system implemented in June 2002, as fiscal 2003 includes
a full year of amortization for the accounting system compared to a partial year
of amortization in fiscal 2002.

Fiscal 2003 interest expense of $8.9 million increased $0.5 million, or
6.0%, from $8.4 million in fiscal 2002 primarily due to $1.9 million decrease in
interest capitalized to production costs, resulting from a decline in new
production financed by the revolving credit facility in fiscal 2003, partially
offset by a $1.1 million decrease in interest expense due to a reduction in
total interest-bearing debt and a decrease in annual interest rates.

Interest rate swaps do not meet the criteria of effective hedges and
therefore a fair valuation loss of $3.2 million was recorded in fiscal 2003.
Fiscal 2003 includes an interest rate swap with a notional amount of $100
million.

Other expenses of $1.4 million recorded in fiscal 2002 related to a $0.8
million loss recorded on the acquisition of the remaining 50% of Eaton
Entertainment LLC, a $0.4 million loss on disposal related to the demolition of
an existing structure to provide room to build a new 20,500 square foot sound
stage at Lions Gate Studios and the write-off of capital assets relating to the
downsizing of our offices.

Write-down of equity interests of $24.1 million for the year ended March
31, 2002 consists of $10.6 million write-down of the

investment in Mandalay and a $13.4 million write-down of the investment in
CinemaNow. On March 31, 2002, the carrying value of the Company's investment in
Mandalay Pictures was written down by $10.6 million to its estimated fair value
at March 31, 2002 of $10.0 million as it was expected to be sold by the end of
fiscal year 2003. At March 31, 2002, the Company was required by U.S. and
Canadian GAAP to reassess the carrying value of its investment in CinemaNow as
CinemaNow had experienced recurring losses and could not demonstrate with
reasonable certainty that it had twelve months of cash to fund operations. The
resulting write-down of the investment by $13.4 million had no impact on fiscal
2002 cash flows.

Gain on dilution of equity interests for the year ended March 31, 2002
includes $2.2 million gain on dilution of our investment in a company subject to
significant influence upon the company's completion of an equity financing with
a third party for $9.2 million.

Other equity interests for the year ended March 31, 2003 includes $0.4
million equity interest in Christal which consists of 75% of the net income of
Christal; $0.4 million equity interest in the loss of CinemaNow which represents
57.4% of the net loss of CinemaNow; an equity interest in Mandalay which
consists of operating losses of $2.1 million and an insignificant equity
interest in the income of CineGroupe which consists of 29.4% of the net income
of CineGroupe. Other equity interests for the year ended March 31, 2002 includes
an equity interest in Mandalay which consists of operating losses of $5.3
million; $0.4 million equity interest in CineGroupe, which represents 29.4% of
the net income of CineGroupe and $1.1 million equity interest in the loss of
CinemaNow, representing 63% of the net loss of CinemaNow, prior to write-down of
the Company's investment in CinemaNow. During the quarter ending March 31, 2003,
the Company purchased $0.4 million of Series C Convertible Preferred Shares of
CinemaNow as part of a round of financing. The round of financing and conversion
of a debenture decreased the Company's voting and economic interests from
approximately 63% to 54%. As a result of the new investment in CinemaNow, the
Company recorded equity interest in the loss of CinemaNow from the date of the
new investment. At March 31, 2002, the Company was required by U.S. and Canadian
GAAP to reassess the carrying value of its investment in CinemaNow, resulting in
a write-down of the investment by $13.4 million. On November 8, 2002, we sold
our investment in Mandalay for cash of $4.3 million and an interest bearing
convertible promissory note of $3.3 million.

The Company had income tax provision of $1.8 million in fiscal 2003,
compared to income tax benefit of $0.1 million in fiscal 2003. The Company's
actual income tax provision (benefit) differs from these amounts as a result of
several factors, including non-temporary differences, foreign income taxed at
different rates, state and local income taxes and capital losses. Income tax
loss carry-forwards amount to approximately $66.4 million for U.S. income tax
purposes available to reduce income taxes over twenty years and $30.2 million
for Canadian income tax purposes available to reduce income taxes over eight
years.

Net loss for the year ended March 31, 2003 was $1.4 million or loss per
share of $0.10 on 43.2 million weighted average common shares outstanding (after
giving effect to the Series A Preferred Share dividends and accretion on the
Series A Preferred Shares). This compares to net loss for the year ended March
31, 2002 of $43.3 million or loss per share of $1.08 on 42.8 million weighted
average common shares outstanding (after giving effect to the Series A Preferred
Share dividends and accretion on the Series A Preferred Shares).

EBITDA

EBITDA, defined as earnings before interest, interest rate swaps
mark-to-market, income tax benefit (provision), depreciation and minority
interests of negative $74.7 million for the year ended March 31, 2004 decreased
$89.0 million compared to EBITDA of $14.3 million for the year ended March 31,
2003, which had increased $47.6 million compared to negative EBITDA of $33.3
million for the year ended March 31, 2002.

EBITDA is a non-GAAP financial measure. Management believes EBITDA 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 is consistent with our past practice, and EBITDA 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 to be an important measure of
comparative operating performance, it should be considered in addition to, but
not as a substitute for, operating income, net income and other measures of
financial performance reported in accordance with GAAP. EBITDA does not

reflect cash available to fund cash requirements. Not all companies calculate
EBITDA in the same manner and the measure as presented may not be comparable to
similarly-titled measures presented by other companies.

The following table reconciles EBITDA to net income (loss):

YEAR ENDED MARCH 31,
------------------------------------
2004 2003 2002
--------- --------- ---------
(AMOUNTS IN THOUSANDS)

EBITDA, as defined.............................................................. $(74,689) $ 14,341 $(33,314)
Depreciation.................................................................... (3,198) (1,846) (1,492)
Interest........................................................................ (14,042) (8,934) (8,435)
Interest rate swaps mark-to-market.............................................. 206 (3,163) --
Minority interests.............................................................. -- -- (91)
Income tax benefit (provision).................................................. (373) (1,821) 61
-------- -------- --------
Net loss........................................................................ $(92,096) $ (1,423) $(43,271)
======== ======== ========

Refer to note 20 of the consolidated financial statements for
reconciliation of net income (loss) reported under U.S. GAAP to net income
(loss) reported under Canadian GAAP.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are provided principally through cash
generated from operations and sale of common shares and debt instruments, a $350
million credit facility with JP Morgan, film obligations and mortgages payable.

Credit Facility. On December 15, 2003, the Company and JP Morgan entered
into an Amended and Restated Credit, Security, Guaranty and Pledge Agreement for
a $350 million five-year secured credit facility consisting of a $200 million
U.S. dollar-denominated revolving credit facility, a $15 million Canadian
dollar-denominated revolving credit facility and a $135 million U.S.
dollar-denominated term loan. The credit facility expires December 31, 2008 and
bears interest in the case of revolving credit facility loans at 2.75% over the
Adjusted LIBOR or the Canadian Bankers Acceptance rate, or 1.75% over the U.S.
or Canadian prime rates and in the case of the term loan at 3.25% over the
Adjusted LIBOR, or 2.25% over the U.S. prime rates. The principal amount of the
term loan was payable in four annual installments of $20 million commencing in
December 2004 and a fifth installment of $55 million payable December 2008. The
Company repaid $60 million of the term loan with the revolving credit facility
on September 30, 2004, thereby reducing the term loan to $75 million. On
December 31, 2004, the Company repaid the $75 million term loan in full with the
revolving credit facility. Therefore, at December 31, 2004 only the revolving
credit facility remains. The availability of funds under the credit facility is
limited by the borrowing base, which is calculated on a monthly basis. The
borrowing base assets at March 31, 2004 totaled $390.9 million (March 31, 2003
- -- $166.4 million). At March 31, 2004, the revolving credit facility had an
average variable interest rate of 4.28% on principal of $189.7 million under the
U.S. dollar credit facility, and an average variable interest rate of 4.36% on
principal of $135.0 million under the term loan. The Company had not drawn on
the Canadian dollar credit facility as of March 31, 2004. The Company is
required to pay a monthly commitment fee of 0.50% on the total credit facility
less the amount drawn. Right, title and interest in and to all personal property
of Lions Gate Entertainment Corp. and Lions Gate Entertainment Inc. is being
pledged as security for the credit facility. The credit facility is senior to
the Company's film obligations, subordinated notes and mortgages payable. The
credit facility restricts the Company from paying cash dividends on its common
shares. The Company entered into a $100 million interest rate swap at an
interest rate of 3.08%, commencing January 2003 and ending September 2005. The
swap is in effect as long as three month LIBOR is less than 5.0%. Fair market
value of the interest rate swap at March 31, 2004 is negative $2.3 million
(March 31, 2003 -- negative $3.2 million). The fair valuation gain for the year
ended March 31, 2004 is $0.8 million (2003 -- loss of $3.2 million). Our credit
facility contains various covenants, including limitations on indebtedness,
dividends, capital expenditures and overhead costs, and maintenance of certain
financial ratios. There can be no assurances that we will remain in compliance
with such covenants or other conditions under our credit facility in the future.

Filmed Entertainment Backlog. Backlog represents the amount of future
revenue not yet recorded from executed contracts for the licensing of films and
television product for television exhibition and in international markets.
Backlog at March 31, 2004 and at March 31, 2003 is approximately $114.1 million
and $47.3 million, respectively. The increase in backlog is due to significant
international contracts on titles including The Punisher, Godsend and The Prince
and Me and to the addition of backlog resulting from the purchase of Artisan.

Cash Flows Provided by (Used in) Operating Activities. Cash flows used in
operating activities in the year ended March 31, 2004 were $116.4 million
compared to cash flows provided by operating activities of $17.5 million in the
year ended March 31, 2003 and cash flows used in operating activities of $41.7
million in the year ended March 31, 2002. In fiscal 2004, the Company increased
expenditure on distribution and marketing costs and on investment in films and
television programs, compared to fiscal 2003 and 2002.

Cash Flows Provided by (Used in) Financing Activities. Cash flows provided
by financing activities of $267.2 million in the year ended March 31, 2004 were
primarily proceeds from the issuance of common shares and 4.875% Notes and an
increase in funds from the credit facility, offset by payment for the repurchase
of Series A preferred shares, payment of financing fees and net repayment of
production loans and debt. Cash flows used in financing activities of $22.8
million in the year ended March 31, 2003 were primarily net repayment of bank
loans and production loans. Cash flows provided by financing activities of $40.2
million in the year ended March 31, 2002 were primarily net proceeds from bank
loans.

Cash Flows Provided by (Used in) Investing Activities. Cash flows used in
investing activities of $149.7 million in the year ended March 31, 2004 were
primarily for the acquisition of Artisan consisting of $168.8 million purchase
price less cash acquired of $19.9 million. Cash flows provided by investing
activities of $4.8 million in the year ended March 31, 2003 were primarily due
to $2.4 million received from Mandalay Pictures as distributions under a prior
agreement and $4.2 million as proceeds from the sale of the Company's investment
in Mandalay Pictures. Cash flows from investing activities of $2.6 million in
the year ended March 31, 2002 were due to $5.4 million received from Mandalay
Pictures, partially offset by additions to studio property and equipment of $3.2
million.

Anticipated Cash Requirements. The nature of our business is such that
significant initial expenditures are required to produce, acquire, distribute
and market films and television programs, while revenues from these films and
television programs are earned over an extended period of time after their
completion or acquisition. As our operations grow, our financing requirements
are expected to grow and management projects the continued use of cash in
operating activities and, therefore, we are dependent on continued access to
external sources of financing. We believe that cash flow from operations, cash
on hand, credit facility availability, tax shelter and production financing
available will be adequate to meet known operational cash requirements for the
foreseeable future, including the funding of future film and television
production, film rights acquisitions and theatrical and video release schedules.
We monitor our cash flow liquidity, availability, fixed charge coverage, capital
base, film spending and leverage ratios with the long-term goal of maintaining
our creditworthiness.

Our current financing strategy is to fund operations and to leverage
investment in films and television programs through our credit facility,
single-purpose production financing, government incentive programs and foreign
distribution commitments. In addition, we may acquire businesses or assets,
including individual films or libraries, that are complementary to our business.
Such a transaction could be financed through our cash flow from operations,
credit facilities, equity or debt financing.

Future annual repayments on debt and other obligations, initially incurred
for a term of more than one year, as of March 31, 2004 are as follows:

YEAR ENDED MARCH 31,
-------------------------------------------------------------------------
2005 2006 2007 2008 2009 THEREAFTER TOTAL
-------- -------- --------- -------- --------- ---------- ---------
(AMOUNTS IN THOUSANDS)

Bank Loans.................................... $ 21,474 $ 20,000 $ 20,000 $ 20,000 $ 244,700 $ -- $ 326,174
Film obligations - Minimum guarantees
initially incurred for a term of more than
one year.................................... 2,556 5,513 8,120 -- -- -- 16,189
Subordinated Notes............................ -- 5,000 -- -- -- 60,000 65,000
Debt.......................................... 2,317 2,446 908 1,747 11,623 -- 19,041
-------- -------- --------- -------- --------- -------- ---------
$ 26,347 $ 32,959 $ 29,028 $ 21,747 $ 256,323 $ 60,000 $ 426,404
======== ======== ========= ======== ========= ======== =========

Principal debt repayments due during the year ending March 31, 2005 of
$34.5 million consist primarily of a $20 million term loan on the JP Morgan
credit facility due December 31, 2004, $2.6 million of minimum guarantees
initially incurred for a term of more than one year and $2.3 million of
mortgages on the studio facility. Principal repayments due are expected to be
paid through cash generated from operations or from the available borrowing
capacity from our revolving credit facility or remaining term loan with J.P.
Morgan.

Commitments. The table below presents future commitments under contractual
obligations at March 31, 2004 by expected maturity date.

YEAR ENDED MARCH 31,
---------------------------------------------------------------------
2005 2006 2007 2008 2009 THEREAFTER TOTAL
------- ------ ------ ------ ---- ---------- --------
(AMOUNTS IN THOUSANDS)

Operating leases ....................... $ 3,306 $2,564 $2,018 $2,010 $427 $ -- $ 10,325
Employment and consulting contracts .... 12,554 5,598 2,807 1,031 -- -- 21,990
Unconditional purchase obligations ..... 45,823 1,525 -- -- -- -- 47,348
Distribution and marketing commitments.. 33,149 -- -- -- -- -- 33,149
------- ------ ------ ------ ---- -------- --------
$94,832 $9,687 $4,825 $3,041 $427 $ -- $112,812
======= ====== ====== ====== ==== ======== ========

Unconditional purchase obligations relate to the purchase of film rights
for future delivery and advances to producers. Amounts due during the year ended
March 31, 2005 of $94.8 million are expected to be paid through cash generated
from operations or from the available borrowing capacity from our revolving
credit facility or remaining term loan with J.P. Morgan.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

CURRENCY AND INTEREST RATE RISK MANAGEMENT

Market risks relating to our operations result primarily from changes in
interest rates and changes in foreign currency exchange rates. Our exposure to
interest rate risk results from the financial debt instruments that arise from
transactions entered into during the normal course of business. As part of our
overall risk management program, we evaluate and manage our exposure to changes
in interest rates and currency exchange risks on an ongoing basis. Hedges and
derivative financial instruments will be used in the future, within guidelines
approved or to be approved by the board of directors for counterpart exposure,
limits and hedging practices, in order to manage our interest rate and currency
exposure. We have no intention of entering into financial derivative contracts,
other than to hedge a specific financial risk.

Currency Rate Risk. We incur certain operating and production costs in
foreign currencies and are subject to market risks resulting from fluctuations
in foreign currency exchange rates. Our principal currency exposure is between
Canadian and U.S. dollars, although this exposure has been significantly
mitigated through the structuring of the revolving credit facility as a $15
million Canadian dollar-denominated credit facility and $200 million U.S.
dollar-denominated credit facility. Each facility is borrowed and repaid in the
respective country of origin in local currency. We also enter into forward
foreign exchange contracts to hedge future production expenses denominated in
Canadian dollars. These forward exchange contracts do not subject us to risk
from exchange rate movements because gains and losses on the contracts offset
losses and gains on the transactions being hedged. Gains and losses on the
foreign exchange contracts are capitalized and recorded as production costs when
the gains and losses are realized. As at March 31, 2004, the Company had
contracts to sell US$25.8 million in exchange for CDN$34.5 million over a period
of twenty weeks at a weighted average exchange rate of CDN$1.3344. During the
year ended March 31, 2004, the Company completed foreign exchange contracts
denominated in Canadian dollars. The net gains resulting from the completed
contracts amounted to $1.1 million. These contracts are entered into with a
major financial institution as counterparty. The Company is exposed to credit
loss in the event of nonperformance by the counterparty, which is limited to the
cost of replacing the contracts, at current market rates. The Company does not
require collateral or other security to support these contracts. Unrealized
gains as at March 31, 2004 amounted to CDN$0.6 million. We currently intend to
continue to enter into such contracts to hedge against future material foreign
currency exchange rate risks.

Interest Rate Risk. We are exposed to cash flow risk due to changes in
market interest rates related to our outstanding debt. Our credit facilities and
other debt bears interest on borrowings outstanding at various time intervals
and at market rates based on either the Canadian prime rate or the U.S. prime
rate, plus a margin ranging from -- 0.16% to 3.5%. Our principal risk with
respect to our debt is interest rate risk, to the extent not mitigated by
interest rate swaps.

The Company entered into a $100 million interest rate swap at an interest
rate of 3.08%, commencing January 2003 and ending September 2005. The swap is in
effect as long as three month LIBOR is less than 5.0%. This contract is entered
into with a major financial institution as counterparty. The Company is exposed
to credit loss in the event of nonperformance by the counterparty, which is
limited to the cost of replacing the contract, at current market rates. The
Company does not require collateral or other security to support this contract.
During fiscal 2004, the Company recorded interest expense of $1.9 million (2003
- -- $0.4 million) associated with the interest swap agreement. Fair market value
of the interest rate swap at March 31, 2004 is negative $2.3 million (March 31,
2003 -- negative $3.2 million). Fair valuation gains during the year ended March
31, 2004 amount to $0.8 million (2003 -- loss of $3.2 million). A subsidiary of
the Company entered into a CDN$20 million interest rate swap at a fixed interest
rate of 5.62%, commencing September 2003 and ending September 2008. This
contract is entered into with a major financial institution as counterparty. The
subsidiary is exposed to credit loss in the event of nonperformance by the
counterparty, which is limited to the cost of replacing the contract, at current
market rates. The subsidiary does not require collateral or other security to
support this contract. The subsidiary entered into the interest rate swap as a
condition of its loan which states the interest rates under the facility are to
be fixed either by way of a fixed rate term loan or by way of an interest rate
swap. During fiscal 2004, the subsidiary recorded interest expense of $1.0
million, including amounts incurred under the interest rate swap, that
approximates the amount they would have paid if they had entered into a fixed
rate loan agreement. Fair market value of the interest rate swap at March 31,
2004 is negative $0.6 million. Fair valuation losses during the year ended March
31, 2004 amount to $0.6 million.

The table below presents repayments and related weighted average interest
rates for our interest-bearing debt and other obligations at March 31, 2004.

YEAR ENDED MARCH 31,
-----------------------------------------------------------------------------------
2005 2006 2007 2008 2009 THEREAFTER TOTAL
------- ------- ------- -------- -------- ---------- --------
(AMOUNTS IN THOUSANDS)

BANK LOANS:
Variable(1).............................. $20,000 $20,000 $20,000 $ 20,000 $244,700 $ -- $324,700
Variable(2) ............................. 1,474 -- -- -- -- -- 1,474
SUBORDINATED NOTES:
Fixed(3) ................................ -- -- -- -- -- 60,000 60,000
Fixed(4) ................................ -- 5,000 -- -- -- -- 5,000
DEBT:
Fixed(5) ................................ 2,317 2,446 908 1,747 11,623 -- 19,041
------- ------- ------- -------- -------- -------- --------
$23,791 $27,446 $20,908 $ 21,747 $256,323 $ 60,000 $410,215
======= ======= ======= ======== ======== ======== ========

(1) Term loan and revolving credit facility, which expires December 31, 2008.
Average variable interest rate on principal of $189.7 million equal to
U.S. prime plus 0.28% and average variable interest rate on principal of
$135.0 million equal to U.S. prime plus 0.36%.

(2) Operating line of credit available to a variable interest entity. Average
variable interest rate of Canadian prime plus 0.50%.

(3) 4.875% Notes with fixed interest rate equal to 4.875%.

(4) Promissory notes with fixed interest rate equal to 7.5%.

(5) Mortgages payable on studio facility. Average fixed interest rate equal to
5.86%.