Edgar Filing: LIONS GATE ENTERTAINMENT CORP /CN/

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LGF 2012.6.30 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________

Form 10-Q

___________________________________________________________

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No.: 1-14880

___________________________________________________________

Lions Gate Entertainment Corp.

(Exact name of registrant as specified in its charter)

___________________________________________________________



British Columbia, Canada		N/A
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1055 West Hastings Street, Suite 2200

Vancouver, British Columbia V6E 2E9

and

2700 Colorado Avenue, Suite 200

Santa Monica, California 90404

(Address of principal executive offices)

___________________________________________________________

(877) 848-3866

(Registrant’s telephone number, including area code)

___________________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.



Title of Each Class		Outstanding at August 1, 2012
Common Shares, no par value per share		144,417,263 shares




Item	Page
PART I — FINANCIAL INFORMATION

1. Financial Statements	3
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
3. Quantitative and Qualitative Disclosures About Market Risk	73
4. Controls and Procedures	76

PART II — OTHER INFORMATION

1. Legal Proceedings	77
1A. Risk Factors	77
2. Unregistered Sales of Equity Securities and Use of Proceeds	78
3. Defaults Upon Senior Securities	78
4. Mine Safety Disclosures	78
5. Other Information	79
6. Exhibits	79

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FORWARD-LOOKING STATEMENTS

This report includes statements that are, or may deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “potential,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “forecasts,” “may,” “will,” “could,” “would” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those discussed under Part I, Item 1.A. “Risk Factors” found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on May 30, 2012, which risk factors are incorporated herein by reference, as updated by the risk factors found under Part II, Item 1A. Risk Factors herein. These factors should not be construed as exhaustive and should be read with the other cautionary statements and information in our Annual Report on Form 10-K and this report.

We caution you that forward-looking statements made in this report or anywhere else are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially and adversely from those made in or suggested by the forward-looking statements contained in this report as a result of various important factors, including, but not limited to, the substantial investment of capital required to produce and market films and television series, increased costs for producing and marketing feature films and television series, budget overruns, limitations imposed by our credit facilities and notes, unpredictability of the commercial success of our motion pictures and television programming, risks related to our acquisition strategy and integration of acquired businesses, the effects of dispositions of businesses or assets, including individual films or libraries, the cost of defending our intellectual property, difficulties in integrating acquired businesses, technological changes and other trends affecting the entertainment industry, and the other risks and uncertainties discussed under Part I, Item 1.A. “Risk Factors” found in our Annual Report on Form 10-K filed with the SEC on May 30, 2012, which risk factors are incorporated herein by reference, as updated by the risk factors found under Part II, Item 1A. Risk Factors herein. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.

Any forward-looking statements, which we make in this report, speak only as of the date of such statement, and we undertake no obligation to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

Unless otherwise indicated or the context requires, all references to the “Company,” “Lionsgate,” “we,” “us,” and “our” refer to Lions Gate Entertainment Corp., a corporation organized under the laws of the province of British Columbia, Canada, and its direct and indirect subsidiaries.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS



	June 30, 2012			March 31, 2012
	(Amounts in thousands, except share amounts)
ASSETS
Cash and cash equivalents	$	67,583		$	64,298
Restricted cash	16,447			11,936
Accounts receivable, net of reserves for returns and allowances of $81,382 (March 31, 2012 - $93,860) and provision for doubtful accounts of $3,872 (March 31, 2012 - $4,551)	587,359			784,530
Investment in films and television programs, net	1,312,049			1,329,053
Property and equipment, net	9,390			9,772
Equity method investments	171,119			171,262
Goodwill	326,361			326,633
Other assets	81,123			90,511
Total assets	$	2,571,431		$	2,787,995
LIABILITIES
Senior revolving credit facility	$	289,450		$	99,750
Senior secured second-priority notes	431,693			431,510
Term loan	294,698			477,514
Accounts payable and accrued liabilities	319,834			371,092
Participations and residuals	403,168			420,325
Film obligations and production loans	403,288			561,150
Convertible senior subordinated notes and other financing obligations	106,365			108,276
Deferred revenue	275,049			228,593
Total liabilities	2,523,545			2,698,210
Commitments and contingencies
SHAREHOLDERS’ EQUITY
Common shares, no par value, 500,000,000 shares authorized, 144,392,029 and 143,980,754 shares issued at June 30, 2012 and March 31, 2012, respectively	716,350			712,623
Accumulated deficit	(586,239		)	(542,039		)
Accumulated other comprehensive loss	(5,137		)	(3,711		)
	124,974			166,873
Treasury shares, no par value, 11,040,493 shares at June 30, 2012 and March 31, 2012	(77,088		)	(77,088		)
Total shareholders’ equity	47,886			89,785
Total liabilities and shareholders’ equity	$	2,571,431		$	2,787,995

See accompanying notes.

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LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
				As adjusted (Note 1)
	(Amounts in thousands, except per share amounts)
Revenues	$	471,820		$	261,259
Expenses:
Direct operating	245,818			139,358
Distribution and marketing	178,709			64,746
General and administration	52,344			27,922
Depreciation and amortization	2,105			1,234
Total expenses	478,976			233,260
Operating income (loss)	(7,156		)	27,999
Other expenses (income):
Interest expense
Contractual cash based interest	22,728			11,715
Amortization of debt discount (premium) and deferred financing costs	4,762			4,620
Total interest expense	27,490			16,335
Interest and other income	(950		)	(442		)
Loss on extinguishment of debt	8,159			531
Total other expenses, net	34,699			16,424
Income (loss) before equity interests and income taxes	(41,855		)	11,575
Equity interests loss	(145		)	(40		)
Income (loss) before income taxes	(42,000		)	11,535
Income tax provision	2,200			1,201
Net income (loss)	$	(44,200	)	$	10,334
Basic Net Income (Loss) Per Common Share	$	(0.33	)	$	0.08
Diluted Net Income (Loss) Per Common Share	$	(0.33	)	$	0.08
Weighted average number of common shares outstanding:
Basic	133,234			137,011
Diluted	133,234			137,357

See accompanying notes.

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LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
				As adjusted (Note 1)
	(Amounts in thousands)
Net income (loss)	$	(44,200	)	$	10,334
Foreign currency translation adjustments	(1,921		)	74
Net unrealized gain on foreign exchange contracts	495			36
Comprehensive income (loss)	$	(45,626	)	$	10,444

See accompanying notes.

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY



	Common Shares			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Treasury Shares
	Number	Amount		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Number	Amount			Total
	(Amounts in thousands, except share amounts)
Balance at March 31, 2012	143,980,754	$	712,623	$	(542,039	)	$	(3,711	)	11,040,493	$	(77,088	)	$	89,785
Exercise of stock options	10,000	52		—			—			—	—			52
Stock based compensation, net of withholding tax obligations of $2,745	383,660	3,425		—			—			—	—			3,425
Issuance of common shares to directors for services	17,615	250		—			—			—	—			250
Net loss	—	—		(44,200		)	—			—	—			(44,200		)
Foreign currency translation adjustments	—	—		—			(1,921		)	—	—			(1,921		)
Net unrealized gain on foreign exchange contracts	—	—		—			495			—	—			495
Balance at June 30, 2012	144,392,029	$	716,350	$	(586,239	)	$	(5,137	)	11,040,493	$	(77,088	)	$	47,886

See accompanying notes.

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LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
				As adjusted (Note 1)
	(Amounts in thousands)
Operating Activities:
Net income (loss)	$	(44,200	)	$	10,334
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property and equipment	758			1,154
Amortization of intangible assets	1,347			80
Amortization of films and television programs	167,097			84,983
Amortization of debt discount (premium) and deferred financing costs	4,762			4,620
Non-cash stock-based compensation	6,173			2,261
Loss on extinguishment of debt	8,159			531
Equity interests loss	145			40
Changes in operating assets and liabilities:
Restricted cash	2,956			23,680
Accounts receivable, net	196,134			86,383
Investment in films and television programs	(161,005		)	(201,776		)
Other assets	(616		)	2,283
Accounts payable and accrued liabilities	(44,193		)	(81,462		)
Participations and residuals	(12,906		)	(5,162		)
Film obligations	(20,233		)	2,260
Deferred revenue	46,637			25,332
Net Cash Flows Provided By (Used In) Operating Activities	151,015			(44,459		)
Investing Activities:
Investment in equity method investees	—			(475		)
Increase in loans receivable	—			(1,500		)
Purchases of property and equipment	(386		)	(411		)
Net Cash Flows Used In Investing Activities	(386		)	(2,386		)
Financing Activities:
Exercise of stock options	52			—
Tax withholding requirements on equity awards	(2,745		)	(918		)
Borrowings under senior revolving credit facility	274,700			95,400
Repayments of borrowings under senior revolving credit facility	(85,000		)	(165,150		)
Borrowings under individual production loans	33,911			48,466
Repayment of individual production loans	(163,944		)	(78,595		)
Production loan borrowings under film credit facility	3,058			7,711
Production loan repayments under film credit facility	(10,575		)	(8,536		)
Change in restricted cash collateral associated with financing activities	(7,467		)	—
Repayments of borrowings under Term Loan associated with the acquisition of Summit	(185,504		)	—
Proceeds from sale of senior secured second-priority notes, net of deferred financing costs	—			192,396
Repurchase of convertible senior subordinated notes	—			(19,476		)
Repayment of other financing obligations	(3,710		)	—
Net Cash Flows Provided By (Used In) Financing Activities	(147,224		)	71,298
Net Change In Cash And Cash Equivalents	3,405			24,453
Foreign Exchange Effects on Cash	(120		)	168
Cash and Cash Equivalents - Beginning Of Period	64,298			86,419
Cash and Cash Equivalents - End Of Period	$	67,583		$	111,040

See accompanying notes.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. General

Nature of Operations

Lions Gate Entertainment Corp. (the “Company,” “Lionsgate,” “we,” “us” or “our”) is a leading global entertainment company with a strong and diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution and new channel platforms.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Lionsgate and all of its majority-owned and controlled subsidiaries.

The unaudited condensed consolidated financial statements have been prepared in accordance with United States (the “U.S.”) accounting principles generally accepted (“GAAP”) for interim financial information and the instructions to quarterly report on Form 10-Q under the Exchange Act, and Article 10 of Regulation S-X under the Exchange Act. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these unaudited condensed consolidated financial statements. Operating results for the three months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2013. The balance sheet at March 31, 2012 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K and Amendment No. 1 to the Form 10-K for the fiscal year ended March 31, 2012 (collectively "Form 10-K").

Adjustments to prior period for elimination of lag in reporting of EPIX

As a result of the elimination of a one quarter lag in recording the Company's share of EPIX's results (discussed in Note 7 to the consolidated financial statements as included in the Company's Form 10-K) for the year ended March 31, 2012, prior year amounts presented for fiscal 2012 have been adjusted from amounts previously reported.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to ultimate revenue and costs for investment in films and television programs; estimates of sales returns and other allowances and provisions for doubtful accounts; fair value of assets and liabilities for allocation of the purchase price of companies acquired; income taxes and accruals for contingent liabilities; and impairment assessments for investment in films and television programs, property and equipment, equity investments, goodwill and intangible assets. Actual results could differ from such estimates.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Investment in Films and Television Programs



	June 30, 2012		March 31, 2012
	(Amounts in thousands)
Motion Picture Segment - Theatrical and Non-Theatrical Films
Released, net of accumulated amortization	$	547,947	$	557,003
Acquired libraries, net of accumulated amortization	26,980		29,320
Completed and not released	71,550		53,258
In progress	442,523		512,712
In development	17,506		19,399
Product inventory	33,263		31,000
	1,139,769		1,202,692
Television Segment - Direct-to-Television Programs
Released, net of accumulated amortization	96,828		93,499
In progress	72,602		30,781
In development	2,850		2,081
	172,280		126,361
	$	1,312,049	$	1,329,053

The following table sets forth acquired libraries that represent titles released three years prior to the date of acquisition. These libraries are being amortized over their expected revenue stream from the acquisition date over a period up to 20 years:



		Total Amortization Period	Remaining Amortization Period	Unamortized Costs
Acquired Library	Acquisition Date	Total Amortization Period	Remaining Amortization Period	June 30, 2012		March 31, 2012
		(In years)		(Amounts in thousands)
Trimark Holdings	October 2000	20.00	8.25	$	1,365	$	1,660
Artisan Entertainment	December 2003	20.00	11.50	20,742		22,112
Lionsgate UK	October 2005	20.00	13.25	509		532
Summit Entertainment	January 2012	20.00	19.50	4,364		5,016
Total Acquired Libraries				$	26,980	$	29,320

The Company expects approximately 42% of completed films and television programs, net of accumulated amortization, will be amortized during the one-year period ending June 30, 2013. Additionally, the Company expects approximately 81% of completed and released films and television programs, net of accumulated amortization and excluding acquired libraries, will be amortized during the three-year period ending June 30, 2015.

3. Equity Method Investments

The carrying amount of significant equity method investments at June 30, 2012 and March 31, 2012 were as follows:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	June 30, 2012
Equity Method Investee	Ownership Percentage	June 30, 2012		March 31, 2012
		(Amounts in thousands)
Horror Entertainment, LLC (“FEARnet”)	34.5%	$	2,933	$	2,880
NextPoint, Inc. (“Break Media”)	42.0%	6,822		8,477
Roadside Attractions, LLC (“Roadside”)	43.0%	3,002		3,118
Studio 3 Partners, LLC (“EPIX”)	31.2%	56,969		50,381
TV Guide Network	51.0%	101,393		106,406
		$	171,119	$	171,262

Equity interests in equity method investments in our consolidated statements of operations represent our portion of the income or loss of our equity method investees based on our percentage ownership and the elimination of profits on sales to equity method investees. Equity interests in equity method investments for the three months ended June 30, 2012, and 2011 were as follows (income (loss)):



	Three Months Ended			Three Months Ended
Equity Method Investee	June 30, 2012			June 30, 2011
				As adjusted
	(Amounts in thousands)
Horror Entertainment, LLC (“FEARnet”)	$	52		$	56
NextPoint, Inc. (“Break Media”)	(1,655		)	(1,316		)
Roadside Attractions, LLC (“Roadside”)	(116		)	(39		)
Studio 3 Partners, LLC (“EPIX”)	6,587			2,882
TV Guide Network	(5,013		)	(936		)
Tiger Gate Entertainment Limited (“Tiger Gate”)	—			(687		)
	$	(145	)	$	(40	)

Horror Entertainment, LLC. Horror Entertainment, LLC (“FEARnet”), is a multiplatform programming and content service provider of horror genre films operating under the branding of “FEARnet.” The Company licenses content to FEARnet for video-on-demand and broadband exhibition. The Company is recording its share of the FEARnet results on a one quarter lag and, accordingly, during the three months ended June 30, 2012, the Company recorded its share of the income generated by FEARnet for the three months ended March 31, 2012.

NextPoint, Inc. NextPoint, Inc. (“Break Media”), is an online home entertainment service provider operating under the branding of “Break Media.” The Company is recording its share of the Break Media results on a one quarter lag and, accordingly, during the three months ended June 30, 2012, the Company recorded its share of losses incurred by Break Media for the three months ended March 31, 2012.

Roadside Attractions, LLC. Roadside Attractions, LLC (“Roadside”), is an independent theatrical releasing company. The Company is recording its share of the Roadside results on a one quarter lag and, accordingly, during the three months ended June 30, 2012, the Company recorded its share of losses incurred by Roadside for the three months ended March 31, 2012.

Studio 3 Partners, LLC (“EPIX”). In April 2008, the Company formed a joint venture with Viacom Inc. (“Viacom”), its Paramount Pictures unit (“Paramount Pictures”) and Metro-Goldwyn-Mayer Studios Inc. (“MGM”) to create a premium television channel and subscription video-on-demand service named “EPIX”. The Company had invested $80.4 million through September 30, 2010, and no additional amounts have been funded since.

Transactions with EPIX:

The Company licenses certain of its theatrical releases and other films and television programs to EPIX. A portion of the profits of these licenses reflecting the Company’s ownership share in the venture are eliminated through an adjustment to the equity interest income (loss) of the venture. These profits are recognized as they are realized by EPIX through the amortization

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of the related asset, recorded on EPIX's balance sheet, over the license period. The table below sets forth the revenues and gross profits recognized by Lionsgate and the calculation of the amounts eliminated in the equity interest line item on the statement of operations:



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
	(Amounts in thousands)
Revenue recognized on sales to EPIX	$	16,516		$	35,154

Gross profit on sales to EPIX	$	6,982		$	21,059
Ownership interest in EPIX	31.15		%	31.15		%
Elimination of the Company's share of profits on sales to EPIX	$	2,175		$	6,560

EPIX Financial Information:

The following table presents summarized balance sheet data as of June 30, 2012 and March 31, 2012 for EPIX:



	June 30, 2012		March 31, 2012
	(Amounts in thousands)
Current assets	$	219,392	$	196,903
Non-current assets	$	146,055	$	140,532
Current liabilities	$	148,181	$	140,684
Non-current liabilities	$	3,949	$	4,723

The following table presents the summarized statement of operations for the three months ended June 30, 2012 and 2011 for EPIX and a reconciliation of the net income reported by EPIX to equity interest income recorded by the Company:



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
	(Amounts in thousands)
Revenues	$	87,764		$	79,404
Expenses:
Operating expenses	60,734			56,169
Selling, general and administrative expenses	5,742			5,921
Operating income	21,288			17,314
Interest income	—			2
Net income	$	21,288		$	17,316
Reconciliation of net income reported by EPIX to equity interest income:
Net income reported by EPIX	$	21,288		$	17,316
Ownership interest in EPIX	31.15		%	31.15		%
The Company's share of net income	6,631			5,394
Eliminations of the Company’s share of profits on sales to EPIX (1)	(2,175		)	(6,560		)
Realization of the Company’s share of profits on sales to EPIX (2)	2,131			4,048
Total equity interest income recorded	$	6,587		$	2,882

__________________


(1)	Represents the elimination of the gross profit recognized by Lionsgate on sales to EPIX in proportion to Lionsgate's ownership interest in EPIX. The amount of intra-entity profit is calculated as the total gross profit recognized on a title by title basis

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

multiplied by Lionsgate's percentage ownership of EPIX. The table above in the Transactions with EPIX section shows the calculation of the profit eliminated.

(2)

Represents the realization of a portion of the profits previously eliminated. This profit remains eliminated until realized by EPIX. EPIX initially records the license fee for the title as inventory on its balance sheet and amortizes the inventory over the license period. Accordingly, the profit is realized as the inventory on EPIX's books is amortized. The profit amount realized is calculated by multiplying the percentage of the EPIX inventory amortized in the period reported by EPIX, by the amount of profit initially eliminated, on a title by title basis.

TV Guide Network. The Company’s investment interest in TV Guide Network consists of an equity investment in its common stock units and mandatorily redeemable preferred stock units. On February 28, 2009, the Company purchased all of the issued and outstanding equity interests of TV Guide Network. The Company paid approximately $241.6 million for all of the equity interest of TV Guide Network. On May 28, 2009, the Company sold 49% of the Company’s interest in TV Guide Network for approximately $122.4 million in cash.

The February 28, 2009 acquisition was accounted for as a purchase, with the results of operations of TV Guide Network included in the Company’s consolidated results from February 28, 2009 through May 27, 2009. Subsequent to the sale of the 49% interest in TV Guide Network, the Company determined it is not the primary beneficiary of TV Guide Network because pursuant to the operating agreement of the entity, the power to direct the activities that most significantly impact the economic performance of TV Guide Network is shared with the 49% owner of TV Guide Network. Accordingly, the Company’s interest in TV Guide Network is being accounted for under the equity method of accounting.

Investment in Mandatorily Redeemable Preferred Stock Units. The mandatorily redeemable preferred stock carries a dividend rate of 10% compounded annually and is mandatorily redeemable in May 2019 at the stated value plus the dividend return and any additional capital contributions less previous distributions. The mandatorily redeemable preferred stock units were initially recorded based on their estimated fair value, as determined using an option pricing model. The mandatorily redeemable preferred stock units and the 10% dividend are being accreted up to their redemption amount over the ten-year period to the redemption date, which is recorded as income within equity interest.

Transactions with TV Guide Network:

The Company licenses certain films and/or television programs to TV Guide Network. A portion of the profits of these licenses reflecting the Company’s ownership share in the venture are eliminated through an adjustment to the equity interest loss of the venture. These profits are recognized as they are realized by TV Guide Network through the amortization of the related asset, recorded on TV Guide Network's balance sheet, over the license period. The table below sets forth the revenues and gross profits recognized by Lionsgate and the calculation of the amounts eliminated in the equity interest line item on the statement of operations:



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
	(Amounts in thousands)
Revenue recognized on sales to TV Guide Network	$	2,925		$	2,925

Gross profit on sales to TV Guide Network	$	956		$	949
Ownership interest in TV Guide Network	51		%	51		%
Elimination of the Company's share of profit on sales to TV Guide Network	$	488		$	484

TV Guide Network Financial Information:

The following table presents summarized balance sheet data as of June 30, 2012 and March 31, 2012 for TV Guide Network:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	June 30, 2012		March 31, 2012
	(Amounts in thousands)
Current assets	$	34,222	$	41,548
Non-current assets	$	233,234	$	236,855
Current liabilities	$	29,658	$	30,979
Non-current liabilities	$	33,656	$	33,407
Redeemable preferred stock	$	238,496	$	230,412

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the summarized statement of operations for the three months ended June 30, 2012 and 2011 for TV Guide Network and a reconciliation of the net loss reported by TV Guide Network to equity interest loss recorded by the Company:



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
	(Amounts in thousands)
Revenues	$	22,064		$	28,260
Expenses:
Cost of services	14,638			10,189
Selling, marketing, and general and administration	14,276			15,793
Depreciation and amortization	2,709			2,947
Operating loss	(9,559		)	(669		)
Interest expense, net	442			460
Accretion of redeemable preferred stock units (1)	8,084			7,042
Total interest expense, net	8,526			7,502
Net loss	$	(18,085	)	$	(8,171	)
Reconciliation of net loss reported by TV Guide Network to equity interest loss:
Net loss reported by TV Guide Network	$	(18,085	)	$	(8,171	)
Ownership interest in TV Guide Network	51		%	51		%
The Company's share of net loss	(9,223		)	(4,167		)
Accretion of dividend and interest income on redeemable preferred stock units (1)	4,123			3,592
Eliminations of the Company’s share of profit on sales to TV Guide Network (2)	(488		)	(484		)
Realization of the Company’s share of profits on sales to TV Guide Network (3)	575			123
Total equity interest loss recorded	$	(5,013	)	$	(936	)

___________________

(1)

Accretion of mandatorily redeemable preferred stock units represents TV Guide Network’s 10% dividend and the amortization of discount on its mandatorily redeemable preferred stock units held by the Company and the 49% interest holder. The Company records 51% of this expense as income from the accretion of dividend and discount on mandatorily redeemable preferred stock units within equity interest loss.

(2)

Represents the elimination of the gross profit recognized by Lionsgate on sales to TV Guide Network in proportion to Lionsgate's ownership interest in TV Guide Network. The amount of intra-entity profit is calculated as the total gross profit recognized on a title by title basis multiplied by Lionsgate's percentage ownership of TV Guide Network. The table above in the Transactions with TV Guide Network section shows the calculation of the profit eliminated.

(3)

Represents the realization of a portion of the profits previously eliminated. This profit remains eliminated until realized by TV Guide Network. TV Guide Network initially records the license fee for the title as inventory on its balance sheet and amortizes the inventory over the license period. Accordingly, the profit is realized as the inventory on TV Guide Network's books is amortized. The profit amount realized is calculated by multiplying the percentage of the TV Guide Network inventory amortized in the period reported by TV Guide Network by the amount of profit initially eliminated, on a title by title basis.

4. Other Assets

The composition of the Company’s other assets is as follows as of June 30, 2012 and March 31, 2012:

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	June 30, 2012		March 31, 2012
	(Amounts in thousands)
Deferred financing costs, net of accumulated amortization	$	31,008	$	39,130
Loans receivable	25,429		24,767
Prepaid expenses and other	14,056		14,637
Finite-lived intangible assets	10,630		11,977
	$	81,123	$	90,511

Deferred Financing Costs. Deferred financing costs primarily include costs incurred in connection with (1) an amended senior revolving credit facility, (2) the issuance of the Senior Secured Second-Priority Notes, (3) a new Term Loan associated with the acquisition of Summit and (4) the issuance of the April 2009 3.625% Notes and the January 2012 4.00% Notes (see Note 5) that are deferred and amortized to interest expense using the effective interest method.

Loans Receivable. The following table sets forth the Company’s loans receivable at June 30, 2012 and March 31, 2012:



	Interest Rate	June 30, 2012		March 31, 2012
	(Amounts in thousands)
Third-party producer	3.2%	$	9,117	$	9,049
NextPoint, Inc. (“Break Media”)	5.46% - 20.0%	16,312		15,718
		$	25,429	$	24,767

Prepaid Expenses and Other. Prepaid expenses and other primarily include prepaid expenses and security deposits.

Finite-lived Intangible Assets. Finite-lived intangibles consist primarily of sales agency relationships and trademarks. The composition of the Company's finite-lived intangible assets and the associated accumulated amortization is as follows as of June 30, 2012 and March 31, 2012:



			June 30, 2012						March 31, 2012
	Weighted Average Remaining Life	Range of Remaining Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in years)		(Amounts in thousands)
Finite-lived intangible assets:
Trademarks	5	1 - 5	$	8,200	$	2,270	$	5,930	$	8,200	$	1,623	$	6,577
Sales agency relationships	5	5	6,200		1,500		4,700		6,200		800		5,400
			$	14,400	$	3,770	$	10,630	$	14,400	$	2,423	$	11,977

The aggregate amount of amortization expense associated with the Company's intangible assets for three months ended June 30, 2012 and 2011 was approximately $1.3 million and $0.1 million, respectively. The estimated aggregate amortization expense for each of the years ending March 31, 2013 through 2017 is approximately $3.9 million, $3.7 million, $1.8 million, $0.8 million, and $0.4 million, respectively.

5. Corporate Debt

The total carrying values of corporate debt of the Company, excluding film obligations and production loans, were as follows as of June 30, 2012 and March 31, 2012:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	June 30, 2012		March 31, 2012
	(Amounts in thousands)
Senior revolving credit facility	$	289,450	$	99,750
Senior secured second-priority notes	431,693		431,510
Term loan	294,698		477,514
Convertible senior subordinated notes	106,296		104,498
Other financing obligations	69		3,778
	$	1,122,206	$	1,117,050

The following table sets forth future annual contractual principal payment commitments under corporate debt as of June 30, 2012:



	Maturity Date or	Year Ended March 31,
Debt Type	Next Holder Redemption Date (1)	2013		2014		2015		2016		2017		Thereafter		Total
		(Amounts in thousands)
Senior revolving credit facility	July 2013	$	—	$	289,450	$	—	$	—	$	—	$	—	$	289,450
Senior secured second-priority notes	November 2016	—		—		—		—		436,000		—		436,000
Term loan	September 2016 (2)	—		—		3,762		35,587		259,811		—		299,160
Principal amounts of convertible senior subordinated notes:
October 2004 2.9375% Notes (conversion price of $11.50 per share)	October 2014	—		—		348		—		—		—		348
February 2005 3.625% Notes (conversion price of $14.28 per share)	March 2015	—		—		23,464		—		—		—		23,464
April 2009 3.625% Notes (conversion price of $8.25 per share)	March 2015	—		—		66,581		—		—		—		66,581
January 2012 4.00% Notes (conversion price of $10.50 per share)	January 2017	—		—		—		—		45,000		—		45,000
Other financing obligations	June 2012	69		—		—		—		—		—		69
		$	69	$	289,450	$	94,155	$	35,587	$	740,811	$	—	1,160,072
Less aggregate unamortized (discount) premium, net														(37,866		)
														$	1,122,206

(1) The future repayment dates of the convertible senior subordinated notes represent the next redemption date by holders for each series of notes respectively, as described below.

(2) The Term Loan matures on September 7, 2016. The Term Loan is repayable in quarterly installments equal to $13.75 million, with the balance payable on the final maturity date. The Term Loan is also repayable periodically to the extent of the excess cash flow, as defined, generated by Summit and its subsidiaries (see below). Any voluntary prepayments reduces the remaining required quarterly installments on a pro-rata basis.

Senior Revolving Credit Facility

Outstanding Amount. At June 30, 2012, the Company had borrowings of $289.5 million outstanding (March 31, 2012 — $99.8 million).

Availability of Funds. At June 30, 2012, there was $40.8 million available (March 31, 2012 — $230.2 million). The senior revolving credit facility provides for borrowings and letters of credit up to an aggregate of $340 million. The availability of funds is limited by a borrowing base and also reduced by outstanding letters of credit which amounted to $9.7 million at

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

June 30, 2012 (March 31, 2012 — $10.0 million).

Maturity Date. The senior revolving credit facility expires July 25, 2013.

Interest. As of June 30, 2012, the senior revolving credit facility bore interest of 2.5% over the “Adjusted LIBOR” rate (effective interest rate of 2.74% and 2.74% as of June 30, 2012 and March 31, 2012, respectively).

Commitment Fee. The Company is required to pay a quarterly commitment fee based upon 0.5% per annum on the total senior revolving credit facility of $340 million less the amount drawn.

Security. Obligations under the senior revolving credit facility are secured by collateral (as defined in the credit agreement) granted by the Company and certain subsidiaries of the Company, as well as a pledge of equity interests in certain of the Company’s subsidiaries.

Covenants. The senior revolving credit facility contains a number of affirmative and negative covenants that, among other things, require the Company to satisfy certain financial covenants and restrict the ability of the Company to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, repurchase its stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of its business, enter into sale-leaseback transactions, transfer and sell material assets and merge or consolidate.

Change in Control. Under the senior revolving credit facility, the Company may also be subject to an event of default upon a change in control (as defined in the credit agreement) which, among other things, includes a person or group acquiring ownership or control in excess of 50% (amended from 20% on June 22, 2010) of the Company’s common shares.

Senior Secured Second-Priority Notes

On October 21, 2009, Lions Gate Entertainment Inc. (“LGEI”), the Company’s wholly-owned subsidiary, issued $236.0 million aggregate principal amount of senior secured second-priority notes due 2016 (the “October 2009 Senior Notes”) in a private offering conducted pursuant to Rule 144A and Regulation S under the Securities Act.

On May 13, 2011, LGEI issued approximately $200.0 million aggregate principal amount of senior secured second-priority notes due 2016 (the “May 2011 Senior Notes,” and collectively with the October 2009 Senior Notes, the “Senior Notes”) in a private offering conducted pursuant to Rule 144A and Regulation S under the Securities Act. The May 2011 Senior Notes have the same terms as the October 2009 Senior Notes, except for the issue date, issue price and first interest payment.

In August 2011, a subsidiary of LGEI paid $9.9 million to repurchase $10.0 million of aggregate principal amount (carrying value — $9.9 million) of the Senior Notes. The Company recorded a loss on extinguishment in the quarter ended September 30, 2011 of $0.4 million, which included $0.5 million of deferred financing costs written off. In September 2011, LGEI resold such Senior Notes at 99.0% of the $10.0 million face amount thereof, plus accrued interest thereon from May 1, 2011, resulting in gross proceeds of approximately $10.2 million.

Outstanding Amount. The outstanding amount is set forth in the table below:



	June 30, 2012			March 31, 2012
	(Amounts in thousands)
Principal amount of Senior Secured Second-Priority Notes	$	436,000		$	436,000
Unamortized Aggregate Premium/ (Discount), net	(4,307		)	(4,490		)
Net carrying amount of Senior Secured Second-Priority Notes	$	431,693		$	431,510

Maturity Date. The Senior Notes are due November 1, 2016.

Original Issue Discount/Premium. The October 2009 Senior Notes were issued by LGEI at an initial price of 95.222% (original issue discount —4.778%) of the principal amount. The May 2011 Senior Notes were issued by LGEI at an initial price of 102.219% (original issue premium — 2.219%) of the principal amount, plus accrued interest thereon from May 1, 2011, resulting in gross proceeds of approximately $204.4 million and net proceeds of approximately $192.4 million after fees and expenses, including $5.6 million paid in connection with the consent solicitation of holders of the October 2009 Senior Notes. The original issue discount/premium, interest and deferred financing costs are being amortized through November 1, 2016 using the effective interest method. As of June 30, 2012, the remaining amortization period was 4.3 years.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Interest. The Senior Notes pay interest semi-annually on May 1 and November 1 of each year at a rate of 10.25% per year.

Security. The Senior Notes are guaranteed on a senior secured basis by the Company, and certain wholly-owned subsidiaries of both the Company and LGEI. The Senior Notes are ranked junior in right of payment to the Company’s senior revolving credit facility, ranked equally in right of payment to the Company’s convertible senior subordinated notes, and ranked senior to any of the Company’s unsecured debt.

Covenants. The Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations.

Term Loan

In connection with the acquisition of Summit (see Note 9), the Company entered into a new $500.0 million principal amount term loan agreement (the "Term Loan") and received net proceeds of $476.2 million, after original issue discount and offering fees and expenses. The net proceeds were used in connection with the acquisition of Summit to pay off Summit's existing term loan.

During the three months ended June 30, 2012 , the Company made voluntary early repayments of the Term Loan of approximately $163.3 million, in addition to required repayments of $22.2 million. As a result, the Company wrote off a proportionate amount of the related deferred financing costs and unamortized discount in the aggregate of $8.2 million, which is reflected as a loss on extinguishment of debt in the consolidated statements of operations. Additionally, the early repayments reduced the remaining required quarterly installments on a pro-rata basis.

Outstanding Amount. The outstanding amount of the Term Loan is set forth in the table below:



	June 30, 2012			March 31, 2012
	(Amounts in thousands)
Principal amount	$	299,160		$	484,664
Unamortized discount	(4,462		)	(7,150		)
Net carrying amount	$	294,698		$	477,514

Maturity Date. The Term Loan matures on September 7, 2016. The Term Loan is repayable in quarterly installments equal to $13.75 million, with the balance payable on the final maturity date. Any voluntary prepayments reduces the remaining required quarterly installments on a pro-rata basis. The Term Loan is also repayable periodically to the extent of the excess cash flow, as defined, generated by Summit and its subsidiaries.

Interest. The Term Loan bears interest by reference to a base rate or the LIBOR rate (subject to a LIBOR floor of 1.25%), in either case plus an applicable margin of 4.50% in the case of base rate loans and 5.50% in the case of LIBOR loans (effective interest rate of 7.75% and 6.75%, respectively as of June 30, 2012).

Security. The Term Loan is secured by collateral of the Summit assets.

Covenants. The Term Loan contains a number of affirmative and negative covenants that, among other things, require Summit to satisfy certain financial covenants.

Convertible Senior Subordinated Notes

Outstanding Amount. The following table sets forth the convertible senior subordinated notes outstanding at June 30, 2012 and March 31, 2012:

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	June 30, 2012							March 31, 2012
	Principal		Unamortized Discount			Net Carrying Amount		Principal		Unamortized Discount			Net Carrying Amount
	(Amounts in thousands)
Convertible Senior Subordinated Notes
October 2004 2.9375% Notes (conversion price of $11.50 per share)	$	348	$	—		$	348	$	348	$	—		$	348
February 2005 3.625% Notes (conversion price of $14.28 per share)	23,464		—			23,464		23,464		—			23,464
April 2009 3.625% Notes (conversion price of $8.25 per share)	66,581		(19,729		)	46,852		66,581		(21,119		)	45,462
January 2012 4.00% Notes (conversion price of $10.50 per share)	45,000		(9,368		)	35,632		45,000		(9,776		)	35,224
	$	135,393	$	(29,097	)	$	106,296	$	135,393	$	(30,895	)	$	104,498

Interest Expense. The effective interest rate on the liability component and the amount of interest expense, which includes both the contractual interest coupon and amortization of the discount on the liability component, for the three months ended June 30, 2012 and 2011 are presented below.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended		Three Months Ended
	June 30, 2012		June 30, 2011
	(Amounts in thousands)
October 2004 2.9375% Convertible Senior Subordinated Notes:
Effective interest rate of liability component (9.65%)
Interest expense
Contractual interest coupon	$	5	$	266
Amortization of discount on liability component and debt issuance costs	—		616
	5		882
February 2005 3.625% Convertible Senior Subordinated Notes:
Effective interest rate of liability component (10.03%)
Interest expense
Contractual interest coupon	248		213
Amortization of discount on liability component and debt issuance costs	6		374
	254		587
April 2009 3.625% Convertible Senior Subordinated Notes:
Effective interest rate of liability component (17.26%)
Interest expense
Contractual interest coupon	603		603
Amortization of discount on liability component and debt issuance costs	1,398		1,175
	2,001		1,778
January 2012 4.00% Convertible Senior Subordinated Notes:
Effective interest rate of liability component (9.56%)
Interest expense
Contractual interest coupon	450		—
Amortization of discount on liability component and debt issuance costs	420		—
	870		—
Total
Contractual interest coupon	1,306		1,082
Amortization of discount on liability component and debt issuance costs	1,824		2,165
	$	3,130	$	3,247

Convertible Senior Subordinated Notes Terms

October 2004 2.9375% Notes. In October 2004, LGEI sold $150.0 million of the October 2004 2.9375% Notes, of which $50.1 million was allocated to the equity component.

Outstanding Amount: As of June 30, 2012, $0.3 million of aggregate principal amount (carrying value — $0.3 million) of the October 2004 2.9375% Notes remains outstanding.

Interest: Interest on the October 2004 2.9375% Notes is payable semi-annually on April 15 and October 15.

Maturity Date: The October 2004 2.9375% Notes mature on October 15, 2024.

Redeemable by LGEI: LGEI may redeem the October 2004 2.9375% Notes at 100%.

Redeemable by Holder: The holder may require LGEI to repurchase the October 2004 2.9375% Notes on October 15, 2014 and 2019 or upon a change in control at a price equal to 100% of the principal amount, together with accrued and unpaid interest through the date of repurchase.

Conversion Features: The holder may convert the October 2004 2.9375% Notes into the Company’s common shares prior to maturity only if the price of the Company’s common shares issuable upon conversion of a note reaches or falls below a certain specific threshold over a specified period, the notes have been called for redemption, a change in control occurs

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

or certain other corporate transactions occur. Before the close of business on or prior to the trading day immediately before the maturity date, the holder may convert the notes into the Company’s common shares at a conversion rate equal to 86.9565 shares per $1,000 principal amount of the October 2004 2.9375% Notes, subject to adjustment in certain circumstances, which represents a conversion price of approximately $11.50 per share. Upon conversion of the October 2004 2.9375% Notes, the Company has the option to deliver, in lieu of common shares, cash or a combination of cash and common shares of the Company.

Make Whole Premium: Under certain circumstances, if the holder requires LGEI to repurchase all or a portion of their notes or the holder converts the notes upon a change in control, they will be entitled to receive a make whole premium. The amount of the make whole premium, if any, will be based on the price of the Company’s common shares on the effective date of the change in control. No make whole premium will be paid if the price of the Company’s common shares at such time is less than $8.79 per share or exceeds $50.00 per share.

February 2005 3.625% Notes. In February 2005, LGEI sold $175.0 million of February 2005 3.625% Notes, of which $53.0 million was allocated to the equity component.

Outstanding Amount: As of June 30, 2012, $23.5 million of aggregate principal amount (carrying value — $23.5 million) of the February 2005 3.625% Notes remains outstanding. All of the outstanding February 2005 3.625% Notes were redeemed or converted into common shares in July 2012 (see Subsequent Events Note 18).

Interest: Interest on the February 2005 3.625% Notes is payable at 3.625% per annum semi-annually on March 15 and September 15 until March 15, 2012 and at 3.125% per annum thereafter until maturity.

Maturity Date: The February 2005 3.625% Notes will mature on March 15, 2025.

Redeemable by LGEI: LGEI may redeem the February 2005 3.625% Notes at 100%.

Redeemable by Holder: The holder may require LGEI to repurchase the February 2005 3.625% Notes on March 15, 2015 and 2020 or upon a change in control at a price equal to 100% of the principal amount, together with accrued and unpaid interest through the date of repurchase.

Conversion Features: The February 2005 3.625% Notes are convertible, at the option of the holder, at any time before the maturity date, if the notes have not been previously redeemed or repurchased, at a conversion rate equal to 70.0133 shares per $1,000 principal amount of the February 2005 3.625% Notes, subject to adjustment in certain circumstances, which represents a conversion price of approximately $14.28 per share. Upon conversion of the February 2005 3.625% Notes, the Company has the option to deliver, in lieu of common shares, cash or a combination of cash and common shares of the Company.

Make Whole Premium: Under certain circumstances, if the holder requires LGEI to repurchase all or a portion of their notes upon a change in control, they will be entitled to receive a make whole premium. The amount of the make whole premium, if any, will be based on the price of the Company’s common shares on the effective date of the change in control. No make whole premium will be paid if the price of the Company’s common shares at such time is less than $10.35 per share or exceeds $75.00 per share.

April 2009 3.625% Notes. In April 2009, LGEI issued approximately $66.6 million of 3.625% Convertible Senior Subordinated Notes (the “April 2009 3.625% Notes”), of which $16.2 million was allocated to the equity component.

Outstanding Amount: As of June 30, 2012, $66.6 million of aggregate principal amount (carrying value — $46.9 million) of the April 2009 3.625% Notes remains outstanding.

Interest: Interest on the April 2009 3.625% Notes is payable at 3.625% per annum semi-annually on March 15 and September 15 of each year.

Maturity Date: The April 2009 3.625% Notes will mature on March 15, 2025.

Redeemable by LGEI: On or after March 15, 2015, the Company may redeem the April 2009 3.625% Notes, in whole or in part, at a price equal to 100% of the principal amount of the April 2009 3.625% Notes to be redeemed, plus accrued and unpaid interest through the date of redemption.

Redeemable by Holder: The holder may require LGEI to repurchase the April 2009 3.625% Notes on March 15, 2015, 2018 and 2023 or upon a “designated event,” at a price equal to 100% of the principal amount of the April 2009 3.625% Notes to be repurchased plus accrued and unpaid interest.

Conversion Features: The April 2009 3.625% Notes may be converted into common shares of the Company at any time before maturity, redemption or repurchase. The initial conversion rate of the April 2009 3.625% Notes is 121.2121 common shares per $1,000 principal amount of the April 2009 3.625% Notes, subject to adjustment in certain circumstances,

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

which represents a conversion price of approximately $8.25 per share. Upon conversion of the April 2009 3.625% Notes, the Company has the option to deliver, in lieu of common shares, cash or a combination of cash and common shares of the Company.

January 2012 4.00% Notes. In January 2012, LGEI issued approximately $45.0 million of January 2012 4.00% Notes, of which $10.1 million was allocated to the equity component.

Outstanding Amount: As of June 30, 2012, $45.0 million of aggregate principal amount (carrying value — $35.6 million) of the January 2012 4.00% Notes remains outstanding.

Interest: Interest on the January 2012 4.00% Notes is payable at 4.00% per annum semi-annually on January 15 and July 15 of each year, commencing on July 15, 2012.

Maturity Date: The January 2012 4.00% Notes will mature on January 11, 2017.

Redeemable by Holder: The holder may require LGEI to repurchase the January 2012 4.00% Notes upon a “designated event” consisting of certain changes in control, change of management or termination of trading, at a price equal to 100% of the principal amount of the January 2012 4.00% Notes to be repurchased plus accrued and unpaid interest.

Conversion Features: The January 2012 4.00% Notes are convertible into common shares of the Company at any time prior to maturity or repurchase by the Company, at an initial conversion price of approximately $10.50 per share, subject to adjustment in certain circumstances as specified in the Indenture. Upon conversion of the January 2012 4.00% Notes, the Company has the option to deliver, in lieu of common shares, cash or a combination of cash and common shares of the Company.

Other Financing Obligations

On June 1, 2007, the Company entered into a bank financing agreement for $3.7 million to fund the acquisition of certain capital assets. Interest was payable in monthly payments totaling $0.3 million per year at an interest rate of 8.02%, with the entire principal due June 2012. In June 2012, the Company repaid this financing obligation.

6. Participations and Residuals

The Company expects approximately 68% of accrued participations and residuals will be paid during the one-year period ending June 30, 2013.

7. Film Obligations and Production Loans



	June 30, 2012		March 31, 2012
	(Amounts in thousands)
Film obligations	$	78,437	$	98,750
Production loans
Individual production loans	222,927		352,960
Pennsylvania Regional Center production loans	65,500		65,500
Film credit facility	36,424		43,940
Total film obligations and production loans	$	403,288	$	561,150

The following table sets forth future annual repayment of film obligations and production loans as of June 30, 2012:

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	Nine Months Ended
	March 31,		Year Ended March 31,
	2013		2014		2015		2016		2017		Thereafter		Total
	(Amounts in thousands)
Film obligations	$	30,478	$	19,409	$	15,993	$	11,662	$	2,000	$	3,000	$	82,542
Production loans
Individual production loans	136,857		86,070		—		—		—		—		222,927
Pennsylvania Regional Center production loans	—		65,500		—		—		—		—		65,500
Film credit facility	36,424		—		—		—		—		—		36,424
	$	203,759	$	170,979	$	15,993	$	11,662	$	2,000	$	3,000	407,393
Less imputed interest on film obligations													(4,105		)
													$	403,288

Film Obligations

Film obligations include minimum guarantees, which represent amounts payable for film rights that the Company has acquired and certain theatrical marketing obligations, which represent amounts received from third parties that are contractually committed for theatrical marketing expenditures associated with specific titles.

Individual Production Loans

Production loans represent individual loans for the production of film and television programs that the Company produces. Individual production loans have contractual repayment dates either at or near the expected completion date, with the exception of certain loans containing repayment dates on a longer term basis. Individual production loans of $207.9 million incur interest at rates ranging from 3.48% to 3.74%, and approximately $15.0 million of production loans are non-interest bearing.

Pennsylvania Regional Center

General. On April 9, 2008, the Company entered into a loan agreement with the Pennsylvania Regional Center, which provides for the availability of production loans up to $65.5 million on a five-year term for use in film and television productions in the State of Pennsylvania. The amount that was borrowed was limited to approximately one half of the qualified production costs incurred in the State of Pennsylvania through the two-year period ended April 2010, and is subject to certain other limitations. Under the terms of the loan, for every dollar borrowed, the Company’s production companies are required (within a two-year period) to either create a specified number of jobs, or spend a specified amount in certain geographic regions in the State of Pennsylvania.

Outstanding Amount. At June 30, 2012, the Company had borrowings of $65.5 million (March 31, 2012 — $65.5 million).

Availability of Funds. At June 30, 2012, there were no amounts available under this agreement (March 31, 2012 — nil).

Maturity Date. All amounts borrowed under this loan agreement with the Pennsylvania Regional Center are due April 11, 2013, five years from the date that the Company began to borrow under this agreement.

Interest. Amounts borrowed under the agreement carry an interest rate of 1.5%, which is payable semi-annually.

Security. The loan is secured by a first priority security interest in the Company’s film library pursuant to an intercreditor agreement with the Company’s senior lender under the Company’s senior revolving credit facility. Pursuant to the terms of the Company’s senior revolving credit facility, the Company is required to maintain certain collateral equal to the loans outstanding plus 5% under this facility. Such collateral can consist of cash, cash equivalents or debt securities, including the Company’s convertible senior subordinated notes repurchased. As of June 30, 2012, $72.8 million principal value (fair value — $84.5 million) of the Company’s convertible senior subordinated notes repurchased in December 2009 was held as collateral under the Company’s senior revolving credit facility (March 31, 2012 — $72.8 million principal value, $83.1 million fair value).

Film Credit Facility

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On October 6, 2009, the Company entered into a revolving film credit facility agreement, as amended effective December 31, 2009 and June 22, 2010 (the “Film Credit Facility”), which provides for borrowings for the acquisition or production of motion pictures.

Outstanding Amount. At June 30, 2012, the Company had borrowings of $36.4 million (March 31, 2012 — $43.9 million).

Availability of Funds. Currently, the Film Credit Facility provides for total borrowings up to $130 million, subject to a borrowing base, which can vary based on the amount of sales contracts in place on pictures financed under the facility. The Company reduced the borrowing commitment from $130 million to $60 million in July 2012.

Maturity Date. The Film Credit Facility has a maturity date of April 6, 2013. Borrowings under the Film Credit Facility are due the earlier of (a) nine months after delivery of each motion picture or (b) April 6, 2013.

Interest. As of June 30, 2012, the Film Credit Facility bore interest of 3.25% over the “LIBO” rate (as defined in the credit agreement). The weighted average interest rate on borrowings outstanding as of June 30, 2012 was 3.5% (March 31, 2012 — 3.49%).

Commitment Fee. The Company is required to pay a quarterly commitment fee of 0.75% per annum on the unused commitment under the Film Credit Facility.

Security. Borrowings under the Film Credit Facility are subject to a borrowing base calculation and are secured by interests in the related motion pictures, together with certain other receivables from other motion picture and television productions pledged by the Company, including a minimum pledge of such receivables of $25 million. Receivables pledged to the Film Credit Facility must be excluded from the borrowing base calculation under the Company’s senior revolving credit facility.

8. Fair Value Measurements

Fair Value

Accounting guidance and standards about fair value define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fair Value Hierarchy

Accounting guidance and standards about fair value establish a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The accounting guidance and standards establish three levels of inputs that may be used to measure fair value:


•	Level 1 — Quoted prices in active markets for identical assets or liabilities.

•

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 liabilities that are not required to be measured at fair value on a recurring basis include the Company’s convertible senior subordinated notes, individual production loans, Pennsylvania Regional Center Loan, Senior Notes, and Term Loan, which are priced using discounted cash flow techniques that use observable market inputs, such as LIBOR-based yield curves, three- and seven-year swap rates, and credit ratings.

•

Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. The Company measures the fair value of its investment in TV Guide Network's Mandatorily Redeemable Preferred Stock Units using primarily a discount cash flow analysis based on the expected cash flows of the investment. The analysis reflects the contractual terms of the investment, including the period to maturity, and uses a discount rate commensurate with the risk associated with the investment.

The following table sets forth the carrying values and fair values of the Company’s investment in TV Guide Network's mandatorily redeemable preferred stock units and outstanding debt at June 30, 2012 and March 31, 2012:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	June 30, 2012				March 31, 2012
	(Amounts in thousands)
	Carrying Value		Fair Value		Carrying Value		Fair Value
			(Level 3)				(Level 3)
Assets:
Investment in TV Guide Network's Mandatorily Redeemable Preferred Stock Units	$	101,393	$	147,357	$	106,406	$	145,029

	Carrying Value		Fair Value		Carrying Value		Fair Value
			(Level 2)				(Level 2)
Liabilities:
October 2004 2.9375% Convertible Senior Subordinated Notes	$	348	$	246	$	348	$	237
February 2005 3.625% Convertible Senior Subordinated Notes	23,464		23,464		23,464		19,295
April 2009 3.625% Convertible Senior Subordinated Notes	46,852		53,056		45,462		59,083
January 2012 4.00% Convertible Senior Subordinated Notes	35,632		36,477		35,224		35,619
Individual production loans	222,927		222,017		352,960		351,911
Pennsylvania Regional Center Loan	65,500		64,116		65,500		63,679
Senior Secured Second-Priority Notes	431,693		476,330		431,510		479,055
Term Loan	294,698		296,542		477,514		480,423
	$	1,121,114	$	1,172,248	$	1,431,982	$	1,489,302

9. Acquisitions and Divestitures

Summit

On January 13, 2012, the Company purchased all of the membership interests in Summit Entertainment, LLC (“Summit”), a worldwide independent film producer and distributor. The aggregate purchase price was approximately $412.1 million, which consisted of $361.9 million in cash and 5,837,781 in the Company's common shares (a part of which are included in escrow for indemnification purposes). Approximately $279.4 million of the purchase price and acquisition costs were funded with cash on the balance sheet of Summit. The value assigned to the shares for purposes of recording the acquisition was $50.2 million and was based on the closing price of the Company’s common shares on the date of closing of the acquisition. Additionally, the Company may be obligated to pay additional cash consideration of up to $7.5 million pursuant to the purchase agreement, should the domestic theatrical receipts from certain films meet certain target performance thresholds.

In addition, on the date of the close, Summit's existing term loan of $507.8 million was paid off with cash from Lionsgate and the net proceeds of $476.2 million, after fees and expenses, from a new term loan with a principal amount of $500.0 million, maturing on September 7, 2016 (see Note 5).

The acquisition was accounted for as a purchase, with the results of operations of Summit included in the Company's consolidated results from January 13, 2012. The Company made a provisional allocation of the estimated purchase price of Summit to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value. During the measurement period, the Company adjusted the provisional allocation of the estimated purchase price for new information obtained about facts and circumstances that existed as of the acquisition date, that if known, would have affected the measurements of the amounts recognized at that date. The measurement period adjustments were not considered significant to retrospectively adjust the provisional allocation as of January 13, 2012. The allocation of the purchase price is as follows:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



Preliminary purchase price consideration:	(Amounts in thousands)
Cash	$	361,914
Fair value of 5,837,781 of Lionsgate's shares issued	50,205
Estimated purchase price	412,119

Fair value of contingent consideration	5,900
Required repayment of Summit's existing Term Loan	507,775
Total estimated purchase consideration including debt repayment	$	925,794

Provisional allocation of the estimated total purchase consideration (1):
Cash and cash equivalents	$	315,932
Restricted cash	5,126
Accounts receivable, net	161,203
Investment in films and television programs, net	624,609
Other assets acquired	7,972
Finite-lived intangible assets:
Sales agency relationships	6,200
Tradenames	6,600
Other liabilities assumed	(295,008		)
Fair value of net assets acquired	832,634
Goodwill	93,160
	$	925,794

(1) Measurement period adjustments include a decrease to investment in films and television programs, net of $10.2 million and a decrease to other liabilities assumed of $10.5 million, resulting in a net increase of $0.3 million of the fair value of net assets acquired and a decrease of $0.3 million to goodwill.

Goodwill of $93.2 million represents the excess of the purchase price over the preliminary estimate of the fair value of the underlying tangible and identifiable intangible assets acquired and liabilities assumed. The acquisition goodwill arises from the opportunity for synergies of the combined companies, strengthening our global distribution infrastructure and building a stronger presence in the entertainment industry allowing for enhanced positioning for motion picture projects and selling opportunities. Although the goodwill will not be amortized for financial reporting purposes, it is anticipated that substantially all of the goodwill will be deductible for federal tax purposes over the statutory period of 15 years.

The following unaudited pro forma condensed consolidated statement of operations presented below illustrate the results of operations of the Company as if the acquisition of Summit as described above and the issuance of the $45.0 million Convertible Senior Subordinated Notes issued in connection with the acquisition occurred at the beginning of the prior period presented. The information below is based on the provisional estimate of the purchase price allocation to the assets and liabilities acquired as shown above. The statements of operations information below includes the statements of operations of Summit for the three months ended March 31, 2011 combined with the Company's statements of operations for the three months ended June 30, 2011.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended
	June 30, 2011

Revenues	$	412,228
Operating income	$	48,227
Net income	$	20,913
Basic Net Income Per Common Share	$	0.15
Diluted Net Income Per Common Share	$	0.15
Weighted average number of common shares outstanding - Basic	142,849
Weighted average number of common shares outstanding - Diluted	143,195

The unaudited pro forma condensed consolidated statement of operations does not include any adjustments for any restructuring activities, operating efficiencies or cost savings.

In connection with the Summit acquisition, the Company incurred severance charges of $8.7 million, which was included in general and administrative expenses on the consolidated statement of operations for the year ended March 31, 2012 as part of management's plan to integrate and restructure the combined companies. An additional $1.7 million of severance charges were incurred in the three months ended June 30, 2012. As of June 30, 2012, $0.9 million of the severance costs remained unpaid and are reflected in accounts payable and accrued liabilities on the consolidated balance sheet. All severance costs relate to the Motion Pictures segment.

Maple Pictures

On August 10, 2011, the Company sold its interest in Maple Pictures Corp. (“Maple Pictures”) to Alliance Films Holdings Inc. (“Alliance”), a leading Canadian producer and distributor of motion pictures, television programming and home entertainment. The sales price was approximately $35.3 million, net of a working capital adjustment.

Alliance is now responsible for all of Maple Pictures’ distribution, including Maple Pictures’ exclusive five-year output deal for Canadian distribution of the Company’s new motion picture (excluding Summit titles) and second window television product and Maple Pictures’ exclusive long-term arrangement for distribution of Canadian rights of the Company’s filmed entertainment library (i.e., distribution rights). The sales price was allocated between the fair value of the distribution rights and the fair value of Maple Pictures exclusive of the distribution rights. The fair value of the distribution rights of $17.8 million was recorded as deferred revenue and will be recognized as revenue by the Company as the revenues are earned pursuant to the distribution rights. The sales proceeds less the fair value of the distribution rights constitutes the proceeds allocated to the sale of Maple Pictures exclusive of the distribution rights. The fair value of the distribution rights was determined based on an estimate of the cash flows to be generated by Alliance pursuant to the distribution agreements, discounted at risk-adjusted discount rates of the film categories between 10% and 11%.

The sale was treated as the disposal of an asset group rather than a discontinued operation because, due to the distribution rights, the Company will have significant continuing involvement in the cash flows generated pursuant to the distribution rights.

Maple Pictures was included in the Company’s Motion Pictures reporting segment. A portion of Motion Pictures goodwill, amounting to $6.1 million was allocated to the asset group and included in the carrying value of the assets disposed for purposes of calculating the gain on sale. Subsequently, the Company tested for goodwill impairment using the adjusted carrying amount of the Motion Pictures reporting unit and no goodwill impairment was identified. The Company recognized a gain, net of transaction costs, on the sale of Maple Pictures of $11.0 million during the quarter ended September 30, 2011, as set forth in the table below:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Gain on Sale of
	Maple Pictures
	August 10, 2011
	(Amounts in thousands)
Total sales price for Maple Pictures				$	35,300
Less: Sales proceeds allocated to the fair value of the distribution rights				(17,800		)
Sales proceeds allocated to Maple Pictures, exclusive of the distribution rights				17,500
Less:
Cash	$	(3,943	)
Accounts receivable, net	(16,789		)
Investment in films and television programs, net	(13,536		)
Allocated goodwill	(6,053		)
Other assets	(1,564		)
Participations payable to Lionsgate (1)	23,683
Other liabilities	13,651
Total carrying value of Maple Pictures	$	(4,551	)	(4,551		)

Currency translation adjustment				1,298

Transaction and related costs				(3,280		)
Gain on sale of Maple Pictures				$	10,967

____________________________

(1)

Represents participation liabilities payable to the Company, which were assumed by Alliance and previously eliminated in the consolidated financial statements. The participations payable to Lionsgate represents amounts that Maple owed Lionsgate as of the date of sale from the distribution of Lionsgate's product in Canada pursuant to the distribution agreements. Subsequent to the sale, the amounts due from Alliance are reflected in accounts receivable on the Company's consolidated balance sheets, which will be paid pursant to the terms of the distribution arrangements.

10. Direct Operating Expenses



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
	(Amounts in thousands)
Amortization of films and television programs	$	167,097		$	84,983
Participations and residual expense	78,603			55,136
Other expenses:
Provision (benefit) for doubtful accounts	(687		)	(418		)
Foreign exchange losses (gains)	805			(343		)
	$	245,818		$	139,358

11. Net Income (Loss) Per Share

Basic net income (loss) per share is calculated based on the weighted average common shares outstanding for the period. Basic net income (loss) per share for the three months ended June 30, 2012, and 2011 is presented below:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
				As adjusted (Note 1)
	(Amounts in thousands)
Basic Net Income (Loss) Per Common Share:
Numerator:
Net income (loss)	$	(44,200	)	$	10,334
Denominator:
Weighted average common shares outstanding	133,234			137,011
Basic Net Income (Loss) Per Common Share	$	(0.33	)	$	0.08

Diluted net income (loss) per common share reflects the potential dilutive effect, if any, of the conversion of the October 2004 2.9375% Notes, the February 2005 3.625% Notes, the April 2009 3.625% Notes and the January 2012 4.00% Notes under the "if converted" method. Diluted net income (loss) per common share also reflects share purchase options and restricted share units using the treasury stock method when dilutive, and any contingently issuable shares when dilutive. Diluted net income (loss) per common share for the three months ended June 30, 2012 and 2011 is presented below:



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
				As adjusted (Note 1)
	(Amounts in thousands)
Diluted Net Income (Loss) Per Common Share:
Numerator:
Net income (loss)	$	(44,200	)	$	10,334
Denominator:
Weighted average common shares outstanding	133,234			137,011
Effect of dilutive securities:
Share purchase options	—			2
Restricted share units	—			344
Adjusted weighted average common shares outstanding	133,234			137,357
Diluted Net Income (Loss) Per Common Share	$	(0.33	)	$	0.08

As of June 30, 2012 and 2011, the outstanding common shares issuable presented below were excluded from diluted net income (loss) per common share because their inclusion would have had an anti-dilutive effect.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	June 30, 2012	June 30, 2011
	(Amounts in thousands)
Anti-dilutive shares issuable
Conversion of notes	14,029	12,055
Share purchase options	3,519	3,310
Restricted share units	1,539	1,402
Contingently issuable restricted share units	593	391
Total weighted average anti-dilutive shares issuable excluded from Diluted Net Loss Per Common Share	19,680	17,158

The Company had 500,000,000 authorized common shares at June 30, 2012 and March 31, 2012. The table below outlines common shares reserved for future issuance:



	June 30, 2012	March 31, 2012
	(Amounts in thousands)
Stock options outstanding, average exercise price $10.51 (March 31, 2012 - $10.20)	3,519	3,157
Restricted share units — unvested	2,132	1,867
Share purchase options and restricted share units available for future issuance	1,115	1,984
Shares issuable upon conversion of October 2004 2.9375% Notes at conversion price of $11.50 per share	30	30
Shares issuable upon conversion of February 2005 3.625% Notes at conversion price of $14.28 per share	1,643	1,643
Shares issuable upon conversion of April 2009 3.625% Notes at conversion price of $8.25 per share	8,070	8,070
Shares issuable upon conversion of January 2012 4.00% Notes at conversion price of $10.50 per share	4,286	4,286
Shares reserved for future issuance	20,795	21,037

12. Accounting for Share-Based Compensation

The Company recognized the following share-based compensation expense during the three months ended June 30, 2012, and 2011:



	Three Months Ended		Three Months Ended
	June 30, 2012		June 30, 2011
	(Amounts in thousands)
Compensation Expense:
Stock Options	$	299	$	31
Restricted Share Units and Other Share-based Compensation	7,224		2,230
Stock Appreciation Rights	2,226		345
Total	$	9,749	$	2,606

There was no income tax benefit recognized in the statements of operations for share-based compensation arrangements during the three months ended June 30, 2012 and 2011.

During the three months ended June 30, 2012, the Company granted 451,743 and 873,497 stock options and restricted share units, respectively, at a weighted-average grant-date fair value of $5.17 and $12.49, respectively.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total intrinsic value of options exercised as of each exercise date during the three months ended June 30, 2012 and 2011 was $0.1 million and nil, respectively.

Total unrecognized compensation cost related to unvested stock options and restricted share unit awards at June 30, 2012 are $2.5 million and $15.7 million, respectively, and are expected to be recognized over a weighted average period of 2.3 and 1.5 years, respectively.

Stock Appreciation Rights

The Company has the following stock appreciation rights (“SARs”) outstanding as of June 30, 2012:



Grant Date	SARs Outstanding	Vested and Exercisable	Exercise Price		Original Vesting Period (see below)	Expiration Date	Fair Value June 30, 2012		Liability June 30, 2012
									(in thousands)
July 14, 2008	750,000	750,000	$	9.56	3 years	July 14, 2013	$	5.69	$	4,269
February 5, 2009	150,000	150,000	$	5.45	3 years	February 5, 2014	$	9.40	$	1,410
April 6, 2009	75,000	75,000	$	5.17	4 years	April 6, 2014	$	9.68	$	726
March 17, 2010	500,000	500,000	$	5.95	4 years	March 17, 2015	$	9.07	$	4,537
February 15, 2011	1,000,000	1,000,000	$	6.13	3 years	February 15, 2016	$	9.14	$	9,135
January 19, 2012	2,400,000	—	$	9.48	3 years	January 19, 2017	$	7.13	$	2,546
February 9, 2012	350,000	—	$	11.01	3 years	February 9, 2017	$	6.36	$	289

At June 30, 2012, the Company has a stock-based compensation liability accrual in the amount of $22.9 million (March 31, 2012 — $32.4 million) included in accounts payable and accrued liabilities on the consolidated balance sheets relating to these SARs.

During the year ended March 31, 2012, certain individuals exercised 700,000 and 625,000 SARs granted on February 5, 2009 and April 6, 2009, respectively. Due to the exercise dates for these SARs occurring at the end of the fiscal year, $12.8 million relating to these SARs that was included in the Company's stock-based compensation liability accrual at March 31, 2012 was subsequently paid in April 2012.

SARs require that upon their exercise, the Company pay the holder the excess of the market value of the Company’s common stock at that time over the exercise price of the SAR multiplied by the number of SARs exercised. SARs can be exercised at any time subsequent to vesting and prior to expiration. The fair value of all unexercised SARs are determined at each reporting period under a Black-Scholes option pricing methodology based on the inputs in the table below and are recorded as a liability over the vesting period. With the exception of the SARs granted on July 14, 2008 and February 15, 2011, the fair value of the SARs is expensed on a pro rata basis over the vesting period or service period, if shorter. Changes in the fair value of vested SARs are expensed in the period of change. SARs granted on July 14, 2008 and February 15, 2011 were granted to a third-party producer and vest in 250,000 and 333,333 SAR increments, respectively, over a three-year period based on the commencement of principal photography of certain films. Accordingly, the pro rata portion of the fair value of SARs is recorded as part of the cost of the related films until commencement of principal photography of the motion picture (i.e., vesting) with subsequent changes in the fair value of SARs recorded to expense.

At June 30, 2012, the following assumptions were used in the Black-Scholes option-pricing model:

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



Grant Date	Risk-Free Interest Rate	Expected Option Lives (in years)	Expected Volatility for Options	Expected Dividend Yield
July 14, 2008	0.2%	1.0 year	45%	—%
February 5, 2009	0.3%	1.6 years	45%	—%
April 6, 2009	0.3%	1.8 years	45%	—%
March 17, 2010	0.4%	2.7 years	40%	—%
February 15, 2011	0.6%	3.6 years	40%	—%
January 19, 2012	0.7%	4.6 years	38%	—%
February 9, 2012	0.7%	4.6 years	38%	—%

13. Segment Information

Accounting guidance requires the Company to make certain disclosures about each reportable segment. The Company’s reportable segments are determined based on the distinct nature of their operations and each segment is a strategic business unit that offers different products and services and is managed separately. The Company has two reportable business segments as of June 30, 2012: Motion Pictures and Television Production.

Motion Pictures consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired.

Television Production consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series and non-fiction programming.

Segmented information by business unit is as follows:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended		Three Months Ended
	June 30, 2012		June 30, 2011
	(Amounts in thousands)
Segment revenues
Motion Pictures	$	406,534	$	192,517
Television Production	65,286		68,742
	$	471,820	$	261,259
Direct operating expenses
Motion Pictures	$	193,682	$	86,187
Television Production	52,136		53,171
	$	245,818	$	139,358
Distribution and marketing
Motion Pictures	$	172,900	$	59,099
Television Production	5,809		5,647
	$	178,709	$	64,746
Segment contribution before general and administration expenses
Motion Pictures	$	39,952	$	47,231
Television Production	7,341		9,924
	$	47,293	$	57,155
General and administration
Motion Pictures	$	16,835	$	12,185
Television Production	2,713		2,672
	$	19,548	$	14,857
Segment profit
Motion Pictures	$	23,117	$	35,046
Television Production	4,628		7,252
	$	27,745	$	42,298
Acquisition of investment in films and television programs
Motion Pictures	$	81,051	$	150,607
Television Production	79,954		51,169
	$	161,005	$	201,776

Segment contribution before general and administration expenses is defined as segment revenue less segment direct operating and distribution and marketing expenses.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Segment profit is defined as segment revenue less segment direct operating, distribution and marketing, and general and administration expenses. The reconciliation of total segment profit to the Company’s income (loss) before income taxes is as follows:



	Three Months Ended			Three Months Ended
	June 30, 2012			June 30, 2011
				As adjusted
	(Amounts in thousands)
Company’s total segment profit	$	27,745		$	42,298
Less:
Shared services and corporate expenses (1)	(32,796		)	(13,065		)
Depreciation and amortization	(2,105		)	(1,234		)
Interest expense	(27,490		)	(16,335		)
Interest and other income	950			442
Loss on extinguishment of debt	(8,159		)	(531		)
Equity interests loss	(145		)	(40		)
Income (loss) before income taxes	$	(42,000	)	$	11,535

(1)

Includes share-based compensation expense of $9.7 million and $2.6 million, for the three months ended June 30, 2012 and 2011, respectively. The three months ended June 30, 2012 also includes severance and transaction costs related to the acquisition of Summit of $1.7 million. The three months ended June 30, 2011 includes a benefit for charges associated with a shareholder activist matter of $3.9 million related to a negotiated settlement with a vendor of costs incurred and recorded in fiscal year 2011, and insurance recoveries of related litigation offset by other costs.

The following table sets forth significant assets as broken down by segment and other unallocated assets as of June 30, 2012 and March 31, 2012:



	June 30, 2012						March 31, 2012
	Motion Pictures		Television Production		Total		Motion Pictures		Television Production		Total
	(Amounts in thousands)
Significant assets by segment
Accounts receivable	$	386,444	$	200,915	$	587,359	$	577,463	$	207,067	$	784,530
Investment in films and television programs, net	1,139,769		172,280		1,312,049		1,202,692		126,361		1,329,053
Goodwill	297,400		28,961		326,361		297,672		28,961		326,633
	$	1,823,613	$	402,156	$	2,225,769	$	2,077,827	$	362,389	$	2,440,216
Other unallocated assets (primarily cash, other assets, and equity method investments)					345,662						347,779
Total assets					$	2,571,431					$	2,787,995

Purchases of property and equipment amounted to $0.4 million and $0.4 million for the three months ended June 30, 2012 and 2011, respectively.

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

14. Contingencies

From time to time, the Company is involved in certain claims and legal proceedings arising in the normal course of business. While the resolution of these matters cannot be predicted with certainty, the Company does not believe, based on current knowledge, that the outcome of any currently pending claims or legal proceedings in which the Company is currently involved will have a material adverse effect on the Company’s financial statements.

15. Consolidating Financial Information — Convertible Senior Subordinated Notes

The October 2004 2.9375% Notes, the February 2005 3.625% Notes, the April 2009 3.625% Notes, and the January 2012 4.00% by their terms, are fully and unconditionally guaranteed by the Company.

The following tables present condensed consolidating financial information as of June 30, 2012 and March 31, 2012, and for the three months ended June 30, 2012 and 2011 for (1) the Company, on a stand-alone basis, (2) LGEI, on a stand-alone basis, (3) the non-guarantor subsidiaries of the Company (including the subsidiaries of LGEI), on a combined basis (collectively, the “Non-guarantor Subsidiaries”) and (4) the Company, on a consolidated basis.



	As of
	June 30, 2012
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.			Non-guarantor Subsidiaries			Consolidating Adjustments			Lions Gate Consolidated
	(Amounts in thousands)
BALANCE SHEET
Assets
Cash and cash equivalents	$	1,054		$	7,029		$	59,500		$	—		$	67,583
Restricted cash	—			12,602			3,845			—			16,447
Accounts receivable, net	491			7,836			579,032			—			587,359
Investment in films and television programs, net	2			6,391			1,307,680			(2,024		)	1,312,049
Property and equipment, net	—			7,222			2,168			—			9,390
Equity method investments	—			9,827			162,265			(973		)	171,119
Goodwill	10,173			—			316,188			—			326,361
Other assets	49,194			44,575			36,354			(49,000		)	81,123
Subsidiary investments and advances	(12,309		)	233,556			(430,248		)	209,001			—
	$	48,605		$	329,038		$	2,036,784		$	157,004		$	2,571,431
Liabilities and Shareholders’ Equity (Deficiency)
Senior revolving credit facility	$	—		$	289,450		$	—		$	—		$	289,450
Senior secured second-priority notes	—			431,693			—			—			431,693
Term loan	—			—			294,698			—			294,698
Accounts payable and accrued liabilities	461			76,729			242,608			36			319,834
Participations and residuals	185			3,411			399,174			398			403,168
Film obligations and production loans	73			—			403,215			—			403,288
Convertible senior subordinated notes and other financing obligations	—			106,296			49,069			(49,000		)	106,365
Deferred revenue	—			17,779			258,388			(1,118		)	275,049
Shareholders’ equity (deficiency)	47,886			(596,320		)	389,632			206,688			47,886
	$	48,605		$	329,038		$	2,036,784		$	157,004		$	2,571,431

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended
	June 30, 2012
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.			Non-guarantor Subsidiaries			Consolidating Adjustments			Lions Gate Consolidated
				(Amounts in thousands)
STATEMENT OF OPERATIONS
Revenues	$	—		$	399		$	471,421		$	—		$	471,820
EXPENSES:
Direct operating	—			634			245,186			(2		)	245,818
Distribution and marketing	(1		)	529			178,181			—			178,709
General and administration	370			31,610			20,495			(131		)	52,344
Depreciation and amortization	—			373			1,732			—			2,105
Total expenses	369			33,146			445,594			(133		)	478,976
OPERATING INCOME (LOSS)	(369		)	(32,747		)	25,827			133			(7,156		)
Other expenses (income):
Interest expense	—			17,527			10,204			(241		)	27,490
Interest and other income	(2		)	(841		)	(348		)	241			(950		)
Loss on extinguishment of debt	—			—			8,159			—			8,159
Total other expenses (income)	(2		)	16,686			18,015			—			34,699
INCOME (LOSS) BEFORE EQUITY INTERESTS AND INCOME TAXES	(367		)	(49,433		)	7,812			133			(41,855		)
Equity interests income (loss)	(43,833		)	3,551			1,626			38,511			(145		)
INCOME (LOSS) BEFORE INCOME TAXES	(44,200		)	(45,882		)	9,438			38,644			(42,000		)
Income tax provision (benefit)	—			357			1,843			—			2,200
NET INCOME (LOSS)	(44,200		)	(46,239		)	7,595			38,644			(44,200		)
Foreign currency translation adjustments	(1,426		)	3,120			5,345			(8,960		)	(1,921		)
Net unrealized gain on foreign exchange contracts	—			—			495			—			495
COMPREHENSIVE INCOME (LOSS)	$	(45,626	)	$	(43,119	)	$	13,435		$	29,684		$	(45,626	)

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended
	June 30, 2012
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.			Non-guarantor Subsidiaries			Consolidating Adjustments		Lions Gate Consolidated
	(Amounts in thousands)
STATEMENT OF CASH FLOWS
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	3,317		$	(182,790	)	$	330,488		$	—	$	151,015
INVESTING ACTIVITIES:
Purchases of property and equipment	—			(358		)	(28		)	—		(386		)
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES	—			(358		)	(28		)	—		(386		)
FINANCING ACTIVITIES:
Exercise of stock options	52			—			—			—		52
Tax withholding requirements on equity awards	(2,745		)	—			—			—		(2,745		)
Borrowings under senior revolving credit facility	—			274,700			—			—		274,700
Repayments of borrowings under senior revolving credit facility	—			(85,000		)	—			—		(85,000		)
Borrowings under individual production loans	—			—			33,911			—		33,911
Repayment of individual production loans	—			—			(163,944		)	—		(163,944		)
Production loan borrowings under film credit facility	—			—			3,058			—		3,058
Production loan repayments under film credit facility	—			—			(10,575		)	—		(10,575		)
Change in restricted cash collateral associated with financing activities	—			—			(7,467		)	—		(7,467		)
Repayments of borrowings under Term Loan associated with the acquisition of Summit	—			—			(185,504		)	—		(185,504		)
Repayment of other financing obligations	—			—			(3,710		)	—		(3,710		)
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES	(2,693		)	189,700			(334,231		)	—		(147,224		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	624			6,552			(3,771		)	—		3,405
FOREIGN EXCHANGE EFFECTS ON CASH	(131		)	—			11			—		(120		)
CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD	561			477			63,260			—		64,298
CASH AND CASH EQUIVALENTS — END OF PERIOD	$	1,054		$	7,029		$	59,500		$	—	$	67,583

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	As of
	March 31, 2012
	Lions Gate Entertainment Corp.		Lions Gate Entertainment Inc.			Non-guarantor Subsidiaries			Consolidating Adjustments			Lions Gate Consolidated
	(Amounts in thousands)
BALANCE SHEET
Assets
Cash and cash equivalents	$	561	$	477		$	63,260		$	—		$	64,298
Restricted cash	—		7,169			4,767			—			11,936
Accounts receivable, net	498		11,046			772,986			—			784,530
Investment in films and television programs, net	2		6,391			1,325,337			(2,677		)	1,329,053
Property and equipment, net	—		7,236			2,536			—			9,772
Equity method investments	—		11,598			160,481			(817		)	171,262
Goodwill	10,173		—			316,460			—			326,633
Other assets	49,198		48,923			41,390			(49,000		)	90,511
Subsidiary investments and advances	30,136		98,990			(311,142		)	182,016			—
	$	90,568	$	191,830		$	2,376,075		$	129,522		$	2,787,995
Liabilities and Shareholders’ Equity (Deficiency)
Senior revolving credit facility	$	—	$	99,750		$	—		$	—		$	99,750
Senior secured second-priority notes	—		431,510			—			—			431,510
Term loan	—		—			477,514			—			477,514
Accounts payable and accrued liabilities	520		88,065			282,438			69			371,092
Participations and residuals	189		3,411			416,227			498			420,325
Film obligations and production loans	74		—			561,076			—			561,150
Convertible senior subordinated notes and other financing obligations	—		104,498			52,778			(49,000		)	108,276
Deferred revenue	—		17,798			210,795			—			228,593
Shareholders’ equity (deficiency)	89,785		(553,202		)	375,247			177,955			89,785
	$	90,568	$	191,830		$	2,376,075		$	129,522		$	2,787,995

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended
	June 30, 2011
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.			Non-guarantor Subsidiaries			Consolidating Adjustments			Lions Gate Consolidated
	(Amounts in thousands)
STATEMENT OF OPERATIONS
Revenues	$	—		$	11,239		$	250,397		$	(377	)	$	261,259
EXPENSES:
Direct operating	—			(85		)	137,333			2,110			139,358
Distribution and marketing	—			(94		)	64,895			(55		)	64,746
General and administration	1,116			11,872			14,971			(37		)	27,922
Depreciation and amortization	—			867			367			—			1,234
Total expenses	1,116			12,560			217,566			2,018			233,260
OPERATING INCOME (LOSS)	(1,116		)	(1,321		)	32,831			(2,395		)	27,999
Other expenses (income):
Interest expense	—			14,147			2,408			(220		)	16,335
Interest and other income	(39		)	(492		)	(131		)	220			(442		)
Loss on extinguishment of debt	—			531			—			—			531
Total other expenses (income)	(39		)	14,186			2,277			—			16,424
INCOME (LOSS) BEFORE EQUITY INTERESTS AND INCOME TAXES	(1,077		)	(15,507		)	30,554			(2,395		)	11,575
Equity interests income (loss)	11,364			26,509			(560		)	(37,353		)	(40		)
INCOME (LOSS) BEFORE INCOME TAXES	10,287			11,002			29,994			(39,748		)	11,535
Income tax provision (benefit)	(47		)	563			685			—			1,201
NET INCOME (LOSS)	10,334			10,439			29,309			(39,748		)	10,334
Foreign currency translation adjustments	110			(909		)	(1,269		)	2,142			74
Net unrealized gain on foreign exchange contracts	—			—			36			—			36
COMPREHENSIVE INCOME (LOSS)	$	10,444		$	9,530		$	28,076		$	(37,606	)	$	10,444

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended
	June 30, 2011
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.			Non-guarantor Subsidiaries			Consolidating Adjustments		Lions Gate Consolidated
	(Amounts in thousands)
STATEMENT OF CASH FLOWS
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	7,702		$	(77,679	)	$	25,518		$	—	$	(44,459	)
INVESTING ACTIVITIES:
Investment in equity method investees	(475		)	—			—			—		(475		)
Increase in loans receivable	—			(1,500		)	—			—		(1,500		)
Purchases of property and equipment	—			(272		)	(139		)	—		(411		)
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES	(475		)	(1,772		)	(139		)	—		(2,386		)
FINANCING ACTIVITIES:
Tax withholding requirements on equity awards	(918		)	—			—			—		(918		)
Borrowings under senior revolving credit facility	—			95,400			—			—		95,400
Repayments of borrowings under senior revolving credit facility	—			(165,150		)	—			—		(165,150		)
Borrowings under individual production loans	—			—			48,466			—		48,466
Repayment of individual production loans	—			—			(78,595		)	—		(78,595		)
Production loan borrowings under film credit facility	—			—			7,711			—		7,711
Production loan repayments under film credit facility	—			—			(8,536		)	—		(8,536		)
Proceeds from sale of senior secured second-priority notes, net of deferred financing costs	—			192,396			—			—		192,396
Repurchase of convertible senior subordinated notes	—			(19,476		)	—			—		(19,476		)
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES	(918		)	103,170			(30,954		)	—		71,298
NET CHANGE IN CASH AND CASH EQUIVALENTS	6,309			23,719			(5,575		)	—		24,453
FOREIGN EXCHANGE EFFECTS ON CASH	25			—			143			—		168
CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD	795			6,451			79,173			—		86,419
CASH AND CASH EQUIVALENTS — END OF PERIOD	$	7,129		$	30,170		$	73,741		$	—	$	111,040

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

16. Consolidating Financial Information — Senior Secured Second-Priority Notes

In October 2009, the Company issued $236.0 million aggregate principal amount of the Senior Notes, and in May 2011, the Company issued an additional $200.0 million aggregate principal amount of the Senior Notes, in a private offering conducted pursuant to Rule 144A and Regulation S under the Securities Act through LGEI.

The Company has agreed to make available to the trustee and the holders of the Senior Notes the following tables which present condensed consolidating financial information as of June 30, 2012 and March 31, 2012, and for the three months ended June 30, 2012, and 2011 for (1) the Company, on a stand-alone basis, (2) LGEI, on a stand-alone basis, (3) the guarantor subsidiaries of the Company (including the subsidiaries of LGEI), on a combined basis (4) the non-guarantor subsidiaries of the Company (including the subsidiaries of LGEI), on a combined basis and (5) the Company, on a consolidated basis.



	As of
	June 30, 2012
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.
							Other Subsidiaries						Consolidating Adjustments			Lions Gate Consolidated
							Guarantors			Non-guarantors			Consolidating Adjustments			Lions Gate Consolidated
	(Amounts in thousands)
BALANCE SHEET
Assets
Cash and cash equivalents	$	1,054		$	7,029		$	1,308		$	58,192		$	—		$	67,583
Restricted cash	—			12,602			—			3,845			—			16,447
Accounts receivable, net	491			7,836			399,059			179,973			—			587,359
Investment in films and television programs, net	2			6,391			756,654			552,229			(3,227		)	1,312,049
Property and equipment, net	—			7,222			116			2,052			—			9,390
Equity method investments	—			9,827			59,833			102,852			(1,393		)	171,119
Goodwill	10,173			—			192,830			123,358			—			326,361
Other assets	49,194			44,575			9,334			27,020			(49,000		)	81,123
Subsidiary investments and advances	(12,309		)	233,556			(230,312		)	(197,032		)	206,097			—
	$	48,605		$	329,038		$	1,188,822		$	852,489		$	152,477		$	2,571,431
Liabilities and Shareholders’ Equity (Deficiency)
Senior revolving credit facility	$	—		$	289,450		$	—		$	—		$	—		$	289,450
Senior secured second-priority notes	—			431,693			—			—			—			431,693
Term loan	—			—			—			294,698			—			294,698
Accounts payable and accrued liabilities	461			76,729			173,201			69,407			36			319,834
Participations and residuals	185			3,411			254,710			144,576			286			403,168
Film obligations and production loans	73			—			298,228			104,987			—			403,288
Convertible senior subordinated notes and other financing obligations	—			106,296			9			49,060			(49,000		)	106,365
Deferred revenue	—			17,779			179,667			78,721			(1,118		)	275,049
Shareholders’ equity (deficiency)	47,886			(596,320		)	283,007			111,040			202,273			47,886
	$	48,605		$	329,038		$	1,188,822		$	852,489		$	152,477		$	2,571,431

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended
	June 30, 2012
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.
							Other Subsidiaries						Consolidating Adjustments			Lions Gate Consolidated
							Guarantors			Non-guarantors
	(Amounts in thousands)
STATEMENT OF OPERATIONS
Revenues	$	—		$	399		$	399,037		$	104,320		$	(31,936	)	$	471,820
EXPENSES:
Direct operating	—			634			214,153			72,789			(41,758		)	245,818
Distribution and marketing	(1		)	529			156,492			21,689			—			178,709
General and administration	370			31,610			16,687			3,808			(131		)	52,344
Depreciation and amortization	—			373			83			1,649			—			2,105
Total expenses	369			33,146			387,415			99,935			(41,889		)	478,976
OPERATING INCOME (LOSS)	(369		)	(32,747		)	11,622			4,385			9,953			(7,156		)
Other expenses (income):
Interest expense	—			17,527			1,434			8,770			(241		)	27,490
Interest and other income	(2		)	(841		)	(233		)	(115		)	241			(950		)
Loss on extinguishment of debt	—			—			—			8,159			—			8,159
Total other expenses (income)	(2		)	16,686			1,201			16,814			—			34,699
INCOME (LOSS) BEFORE EQUITY INTERESTS AND INCOME TAXES	(367		)	(49,433		)	10,421			(12,429		)	9,953			(41,855		)
Equity interests income (loss)	(43,833		)	3,551			6,639			(5,100		)	38,598			(145		)
INCOME (LOSS) BEFORE INCOME TAXES	(44,200		)	(45,882		)	17,060			(17,529		)	48,551			(42,000		)
Income tax provision (benefit)	—			357			351			1,492			—			2,200
NET INCOME (LOSS)	(44,200		)	(46,239		)	16,709			(19,021		)	48,551			(44,200		)
Foreign currency translation adjustments	(1,426		)	3,120			5,807			(462		)	(8,960		)	(1,921		)
Net unrealized gain on foreign exchange contracts	—			—			178			317			—			495
COMPREHENSIVE INCOME (LOSS)	$	(45,626	)	$	(43,119	)	$	22,694		$	(19,166	)	$	39,591		$	(45,626	)

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended
	June 30, 2012
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.
							Other Subsidiaries						Consolidating Adjustments		Lions Gate Consolidated
							Guarantors			Non-guarantors
	(Amounts in thousands)
STATEMENT OF CASH FLOWS
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	3,317		$	(182,790	)	$	145,721		$	184,767		$	—	$	151,015
INVESTING ACTIVITIES:
Purchases of property and equipment	—			(358		)	(8		)	(20		)	—		(386		)
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES	—			(358		)	(8		)	(20		)	—		(386		)
FINANCING ACTIVITIES:
Exercise of stock options	52			—			—						—		52
Tax withholding requirements on equity awards	(2,745		)	—			—			—			—		(2,745		)
Repurchase of common shares	—														—
Borrowings under senior revolving credit facility	—			274,700			—			—			—		274,700
Repayments of borrowings under senior revolving credit facility	—			(85,000		)	—			—			—		(85,000		)
Borrowings under individual production loans	—			—			33,092			819			—		33,911
Repayment of individual production loans	—			—			(160,328		)	(3,616		)	—		(163,944		)
Production loan borrowings under film credit facility	—			—			3,058			—			—		3,058
Production loan repayments under film credit facility	—			—			(10,575		)	—			—		(10,575		)
Change in restricted cash collateral associated with financing activities	—			—			(7,467		)	—			—		(7,467		)
Repayments of borrowings under Term Loan associated with the acquisition of Summit	—			—			—			(185,504		)	—		(185,504		)
Repayment of other financing obligations	—			—			(3,710		)	—			—		(3,710		)
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES	(2,693		)	189,700			(145,930		)	(188,301		)	—		(147,224		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	624			6,552			(217		)	(3,554		)	—		3,405
FOREIGN EXCHANGE EFFECTS ON CASH	(131		)	—			—			11			—		(120		)
CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD	561			477			1,525			61,735			—		64,298
CASH AND CASH EQUIVALENTS — END OF PERIOD	$	1,054		$	7,029		$	1,308		$	58,192		$	—	$	67,583

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	As of
	March 31, 2012
	Lions Gate Entertainment Corp.		Lions Gate Entertainment Inc.
						Other Subsidiaries						Consolidating Adjustments			Lions Gate Consolidated
						Guarantors			Non-guarantors			Consolidating Adjustments			Lions Gate Consolidated
	(Amounts in thousands)
BALANCE SHEET
Assets
Cash and cash equivalents	$	561	$	477		$	1,525		$	61,735		$	—		$	64,298
Restricted cash	—		7,169			—			4,767			—			11,936
Accounts receivable, net	498		11,046			482,003			290,983			—			784,530
Investment in films and television programs, net	2		6,391			710,459			612,548			(347		)	1,329,053
Property and equipment, net	—		7,236			121			2,415			—			9,772
Equity method investments	—		11,598			52,889			108,255			(1,480		)	171,262
Goodwill	10,173		—			192,830			123,630			—			326,633
Other assets	49,198		48,923			6,414			34,976			(49,000		)	90,511
Subsidiary investments and advances	30,136		98,990			(7,532		)	(310,562		)	188,968			—
	$	90,568	$	191,830		$	1,438,709		$	928,747		$	138,141		$	2,787,995
Liabilities and Shareholders’ Equity (Deficiency)
Senior revolving credit facility	$	—	$	99,750		$	—		$	—		$	—		$	99,750
Senior secured second-priority notes	—		431,510			—			—			—			431,510
Term loan	—		—			—			477,514			—			477,514
Accounts payable and accrued liabilities	520		88,065			202,535			79,903			69			371,092
Participations and residuals	189		3,411			272,780			144,037			(92		)	420,325
Film obligations and production loans	74		—			481,359			79,717			—			561,150
Convertible senior subordinated notes and other financing obligations	—		104,498			3,718			49,060			(49,000		)	108,276
Deferred revenue	—		17,798			166,292			44,503			—			228,593
Shareholders’ equity (deficiency)	89,785		(553,202		)	312,025			54,013			187,164			89,785
	$	90,568	$	191,830		$	1,438,709		$	928,747		$	138,141		$	2,787,995

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended
	June 30, 2011
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.
							Other Subsidiaries						Consolidating Adjustments			Lions Gate Consolidated
							Guarantors			Non-guarantors
							(Amounts in thousands)
STATEMENT OF OPERATIONS
Revenues	$	—		$	11,239		$	234,357		$	29,727		$	(14,064	)	$	261,259
EXPENSES:
Direct operating	—			(85		)	132,226			12,238			(5,021		)	139,358
Distribution and marketing	—			(94		)	52,262			13,578			(1,000		)	64,746
General and administration	1,116			11,872			11,439			3,532			(37		)	27,922
Depreciation and amortization	—			867			237			130			—			1,234
Total expenses	1,116			12,560			196,164			29,478			(6,058		)	233,260
OPERATING INCOME (LOSS)	(1,116		)	(1,321		)	38,193			249			(8,006		)	27,999
Other expenses (income):
Interest expense	—			14,147			2,174			234			(220		)	16,335
Interest and other income	(39		)	(492		)	(69		)	(62		)	220			(442		)
Loss on extinguishment of debt	—			531			—			—			—			531
Total other expenses (income)	(39		)	14,186			2,105			172			—			16,424
INCOME (LOSS) BEFORE EQUITY INTERESTS AND INCOME TAXES	(1,077		)	(15,507		)	36,088			77			(8,006		)	11,575
Equity interests income (loss)	11,364			26,509			2,938			(575		)	(40,276		)	(40		)
INCOME (LOSS) BEFORE INCOME TAXES	10,287			11,002			39,026			(498		)	(48,282		)	11,535
Income tax provision (benefit)	(47		)	563			617			68			—			1,201
NET INCOME (LOSS)	10,334			10,439			38,409			(566		)	(48,282		)	10,334
Foreign currency translation adjustments	110			(909		)	(973		)	(296		)	2,142			74
Net unrealized gain on foreign exchange contracts	—			—			(107		)	143			—			36
COMPREHENSIVE INCOME (LOSS)	$	10,444		$	9,530		$	37,329		$	(719	)	$	(46,140	)	$	10,444

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	Three Months Ended
	June 30, 2011
	Lions Gate Entertainment Corp.			Lions Gate Entertainment Inc.
							Other Subsidiaries						Consolidating Adjustments		Lions Gate Consolidated
							Guarantors			Non-guarantors
							(Amounts in thousands)
STATEMENT OF CASH FLOWS
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	7,702		$	(77,679	)	$	30,630		$	(5,112	)	$	—	$	(44,459	)
INVESTING ACTIVITIES:
Investment in equity method investees	(475		)	—			—			—			—		(475		)
Increase in loans receivable	—			(1,500		)	—			—			—		(1,500		)
Repayment of loans receivable	—			—			—			—			—		—
Purchases of property and equipment	—			(272		)	(117		)	(22		)	—		(411		)
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES	(475		)	(1,772		)	(117		)	(22		)	—		(2,386		)
FINANCING ACTIVITIES:
Tax withholding requirements on equity awards	(918		)	—			—			—			—		(918		)
Borrowings under senior revolving credit facility	—			95,400			—			—			—		95,400
Repayments of borrowings under senior revolving credit facility	—			(165,150		)	—			—			—		(165,150		)
Borrowings under individual production loans	—			—			48,223			243			—		48,466
Repayment of individual production loans	—			—			(76,650		)	(1,945		)	—		(78,595		)
Production loan borrowings under film credit facility	—			—			7,711			—			—		7,711
Production loan repayments under film credit facility	—			—			(8,536		)	—			—		(8,536		)
Proceeds from sale of senior secured second-priority notes, net of deferred financing costs	—			192,396			—			—			—		192,396
Repurchase of convertible senior subordinated notes	—			(19,476		)	—			—			—		(19,476		)
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES	(918		)	103,170			(29,252		)	(1,702		)	—		71,298
NET CHANGE IN CASH AND CASH EQUIVALENTS	6,309			23,719			1,261			(6,836		)	—		24,453
FOREIGN EXCHANGE EFFECTS ON CASH	25			—			—			143			—		168
CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD	795			6,451			696			78,477			—		86,419
CASH AND CASH EQUIVALENTS — END OF PERIOD	$	7,129		$	30,170		$	1,957		$	71,784		$	—	$	111,040

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17. Derivative Instruments and Hedging Activities

The Company enters into forward foreign exchange contracts to hedge its foreign currency exposures on future production expenses denominated in various foreign currencies. As of June 30, 2012, the Company had outstanding forward foreign exchange contracts to sell British Pound Sterling £33.2 million in exchange for US$52.7 million over a period of six months at a weighted average exchange rate of one British Pound Sterling equals US$1.58. Additionally, the Company had outstanding forward foreign exchange contracts to buy Canadian $21.8 million in exchange for US$21.6 million over a period of eight months at a weighted average exchange rate of one Canadian dollar equals US$1.01.

Changes in the fair value representing a net unrealized fair value gain on foreign exchange contracts that qualified as effective hedge contracts outstanding during the three months ended June 30, 2012 and 2011 amounted to $0.5 million and nil, respectively, and are included in other comprehensive income (loss). The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions.

As of June 30, 2012, $0.8 million were included in other assets (March 31, 2012 - $0.2 million in accounts payable and accrued liabilities) in the accompanying consolidated balance sheets related to the Company's use of foreign currency derivatives.

18. Subsequent Events

On July 17, 2012, the Company completed the optional redemption of its February 2005 3.625% Notes. As of July 17, 2012, of the $63.4 million of the February 2005 3.625% Notes outstanding (of which $23.5 million were reflected as convertible senior subordinated notes outstanding on the Company's consolidated balance sheet (Note 5) and $39.9 million were held as collateral under the Company’s senior revolving credit facility (Note 7)) (i) $7.6 million were redeemed for cash at 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the redemption date, and (ii) $15.8 million were converted at a conversion rate of 70.0133 common shares per $1,000 in principal amount of the February 2005 3.625% Notes, or a conversion price of approximately $14.28 per share for an aggregate of 1,107,950 common shares (plus cash in lieu of fractional shares). Following the redemption, the February 2005 3.625% Notes are no longer outstanding.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

Lions Gate Entertainment Corp. (“Lionsgate,” the “Company,” “we,” “us” or “our”) is a leading global entertainment company with a strong and diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution, new channel platforms and international distribution and sales.

Revenues

Our revenues are derived from the Motion Pictures and Television Production segments, as described below. Our revenues are derived from the U.S., Canada, the U.K., Australia and other foreign countries. None of the non-U.S. countries individually comprised greater than 10% of total revenues for the three months ended June 30, 2012 and 2011.

Motion Pictures. Motion Pictures includes “Theatrical,” “Home Entertainment,” “Television,” “International,” “Lionsgate UK,” and “Mandate Pictures” revenue.

Theatrical revenues are derived from the theatrical release of motion pictures in the U.S. and Canada which are distributed to theatrical exhibitors on a picture-by-picture basis. The financial terms that we negotiate with our theatrical exhibitors generally provide that we receive a percentage of the box office results and are negotiated on a picture-by-picture basis.

Home Entertainment revenues includes revenues from our own film and television productions and acquired or licensed films, including theatrical and direct-to-video releases, generated from the sale to retail stores and through digital media platforms. In addition, we have revenue sharing arrangements with certain rental stores which generally provide that in exchange for a nominal or no upfront sales price, we share in the rental revenues generated by each such store on a title-by-title basis. We categorized our Home Entertainment revenue as follows:


•	Packaged media revenue: Packaged media revenue consists of the sale or rental of DVDs and Blu-ray discs.

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•	Digital media revenue (formerly referred to as electronic media revenue): Digital media revenue consists of revenues generated from pay-per-view and video-on-demand platforms, electronic sell-through or “EST,” and digital rental.

Television revenues are primarily derived from the licensing of our productions and acquired films to the domestic cable, satellite, and free and pay television markets.

International revenues include revenues from our international subsidiaries from the licensing and sale of our productions, acquired films, our catalog product or libraries of acquired titles and revenues from our distribution to international sub-distributors, on a territory-by-territory basis.

Lionsgate UK revenues include revenues from the licensing and sale of our productions, acquired films, our catalog product or libraries of acquired titles from our subsidiary located in the United Kingdom.

Mandate Pictures revenues include revenues from the sales and licensing of domestic and worldwide rights of titles developed or acquired by Mandate Pictures to third-party distributors and to international sub-distributors.

Television Production. Television Production includes the licensing and syndication to domestic and international markets of one-hour and half-hour drama series, television movies and mini-series and non-fiction programming, and home entertainment revenues consisting of television production movies or series.

Expenses

Our primary operating expenses include direct operating expenses, distribution and marketing expenses and general and administration expenses.

Direct operating expenses include amortization of film and television production or acquisition costs, participation and residual expenses, provision for doubtful accounts, and foreign exchange gains and losses. Participation costs represent contingent consideration payable based on the performance of the film to parties associated with the film, including producers, writers, directors or actors, etc. Residuals represent amounts payable to various unions or “guilds” such as the Screen Actors Guild, Directors Guild of America, and Writers Guild of America, based on the performance of the film in certain ancillary markets or based on the individual’s (i.e., actor, director, writer) salary level in the television market.

Distribution and marketing expenses primarily include the costs of theatrical “prints and advertising” (“P&A”) and of DVD/Blu-ray duplication and marketing. Theatrical P&A includes the costs of the theatrical prints delivered to theatrical exhibitors and the advertising and marketing cost associated with the theatrical release of the picture. DVD/Blu-ray duplication represents the cost of the DVD/Blu-ray product and the manufacturing costs associated with creating the physical products. DVD/Blu-ray marketing costs represent the cost of advertising the product at or near the time of its release or special promotional advertising.

General and administration expenses include salaries and other overhead.

Recent Developments

Redemption and Conversion of February 2005 3.625% Notes. On July 17, 2012, we completed the optional redemption of our February 2005 3.625% Notes. As of July 17, 2012, of the $63.4 million of the February 2005 3.625% Notes outstanding (of which $23.5 million were reflected as convertible senior subordinated notes outstanding on our consolidated balance sheet (Note 5) and $39.9 million were held as collateral under our senior revolving credit facility (Note 7 to our consolidated financial statements)) (i) $7.6 million were redeemed for cash at 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the redemption date, and (ii) $15.8 million were converted at a conversion rate of 70.0133 common shares per $1,000 in principal amount of the February 2005 3.625% Notes, or a conversion price of approximately $14.28 per share for an aggregate of 1,107,950 common shares (plus cash in lieu of fractional shares). Following the redemption, the February 2005 3.625% Notes are no longer outstanding.

CRITICAL ACCOUNTING POLICIES

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. 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. As described more fully below, these estimates bear the risk of change due to the inherent uncertainty attached to the estimate. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. For example, accounting for films and television programs requires us to

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estimate future revenue and expense amounts which, due to the inherent uncertainties involved in making such estimates, are likely to differ to some extent from actual results. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. For a summary of all of our accounting policies, including the accounting policies discussed below, see Note 2 to our audited consolidated financial statements.

Accounting for Films and Television Programs. We capitalize costs of production and acquisition, including financing costs and production overhead, to investment in films and television programs. These costs for an individual film or television program are amortized and participation and residual costs are accrued to direct operating expenses 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 20 years from the date of acquisition.

Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of our business, some films and titles are more successful than anticipated and some are less successful than anticipated. Our 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. Our management estimates the ultimate revenue based on experience with similar titles or title genre, the general public appeal of the cast, actual performance (when available) at the box office or in markets currently being exploited, and other factors such as the quality and acceptance of motion pictures or programs that our competitors release into the marketplace at or near the same time, critical reviews, general economic conditions and other tangible and intangible factors, many of which we do not control and which may change.

An increase in the estimate of ultimate revenue will generally result in a lower amortization rate and, therefore, less film and television program amortization expense, while a decrease in the estimate of ultimate revenue will generally result in a higher amortization rate and, therefore, higher film and television program amortization expense, and also periodically results in an impairment requiring a write-down of the film cost to the title’s fair value. These write-downs are included in amortization expense within direct operating expenses in our consolidated statements of operations. Investment in films and television programs is stated at the lower of amortized cost or estimated fair value. The valuation of investment in films and television programs is reviewed on a title-by-title basis, when an event or change in circumstances indicates that the fair value of a film or television program is less than its unamortized cost. In determining the fair value of its films and television programs, we employ a discounted cash flows ("DCF") methodology with assumptions for cash flows. Key inputs employed in the DCF methodology include estimates of a film's ultimate revenue and costs as well as a discount rate. The discount rate utilized in the DCF analysis is based on our weighted average cost of capital plus a risk premium representing the risk associated with producing a particular film or television program. The fair value of any film costs associated with a film or television program that we plan to abandon is zero. As the primary determination of fair value is determined using a DCF model, the resulting fair value is considered a Level 3 measurement. Additional amortization is recorded in the amount by which the unamortized costs exceed the estimated fair value of the film or television program. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in our future revenue estimates.

Revenue Recognition. Revenue from the theatrical release of feature films is recognized at the time of exhibition based on our participation in box office receipts. Revenue from the sale of DVDs/Blu-ray discs 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 we are 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 access to the feature film or television program has been granted or delivery has occurred, as required under the sales contract, and the right to exploit the feature film or television program has commenced. For multiple media rights contracts with a fee for a single film or television program where the contract provides for media holdbacks (defined as contractual media release restrictions), the fee is allocated to the various media based on our 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 our assessment of the relative fair value of each title. The primary estimate requiring the most subjectivity and judgment involving revenue recognition is the estimate of sales returns associated with our revenue from the sale of DVD’s/Blu-ray discs in the retail market which is discussed separately below under the caption “Sales

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Returns Allowance.”

Sales Returns Allowance. Revenues are recorded net of estimated returns and other allowances. We estimate reserves for DVD/Blu-ray returns based on previous returns experience, point-of-sale data available from certain retailers, current economic trends, and projected future sales of the title to the consumer based on the actual performance of similar titles on a title-by-title basis in each of the DVD/Blu-ray businesses. Factors affecting actual returns include, among other factors, limited retail shelf space at various times of the year, success of advertising or other sales promotions, and the near term release of competing titles. We believe that our estimates have been materially accurate in the past; however, due to the judgment involved in establishing reserves, we may have adjustments to our historical estimates in the future. Our estimate of future returns affects reported revenue and operating income. If we underestimate the impact of future returns in a particular period, then we may record less revenue in later periods when returns exceed the estimated amounts. If we overestimate the impact of future returns in a particular period, then we may record additional revenue in later periods when returns are less than estimated. An incremental change of 1% in our estimated sales returns rate (i.e., provisions for returns divided by gross sales of related product) for home entertainment products would have had an impact of approximately $1.4 million and $1.0 million on our total revenue in the three months ended June 30, 2012 and June 30, 2011 respectively.

Provisions for Accounts Receivable. We estimate provisions for accounts receivable based on historical experience and relevant facts and information regarding the collectability of the accounts receivable. In performing this evaluation, significant judgments and estimates are involved, including an analysis of specific risks on a customer-by-customer basis for our larger customers and an analysis of the length of time receivables have been past due. The financial condition of a given customer and its ability to pay may change over time or could be better or worse than anticipated and could result in an increase or decrease to our allowance for doubtful accounts, which, when the impact of such change is material, is disclosed in our discussion on direct operating expenses elsewhere in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Income Taxes. We are subject to federal and state income taxes in the U.S., and in several foreign jurisdictions. We record deferred tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences. We recognize a future tax benefit to the extent that realization of such benefit is more likely than not or a valuation allowance is applied. In order to realize the benefit of our deferred tax assets, we will need to generate sufficient taxable income in the future. Because of our historical operating losses, we have provided a full valuation allowance against our net deferred tax assets. However, the assessment as to whether there will be sufficient taxable income to realize our net deferred tax assets is an estimate which could change in the future depending primarily upon the actual performance of our Company. When we have a history of profitable operations sufficient to demonstrate that it is more likely than not that our deferred tax assets will be realized, the valuation allowance or a portion of the valuation allowance will be reversed and reflected as a benefit in the income tax provision. After that, we will be required to continually evaluate the more likely than not assessment that our net deferred tax assets will be realized, and if operating results deteriorate, we may need to reestablish all or a portion of the valuation allowance through a charge to our income tax provision.

Goodwill. Goodwill is reviewed annually for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. We perform our annual impairment test as of January 1 in each fiscal year. We performed our last annual impairment test on our goodwill as of January 1, 2012. No goodwill impairment was identified in any of our reporting units. Determining the fair value of reporting units requires various assumptions and estimates. The estimates of fair value include consideration of the future projected operating results and cash flows of the reporting unit. Such projections could be different than actual results. Should actual results be significantly less than estimates, the value of our goodwill could be impaired in the future.

Convertible Senior Subordinated Notes. We account for our convertible senior subordinated notes by separating the liability and equity components. The liability component is recorded at the date of issuance based on its fair value which is generally determined in a manner that will reflect an interest cost equal to our nonconvertible debt borrowing rate at the convertible senior subordinated notes issuance date. The amount of the proceeds, less the amount recorded as the liability component, is recorded as an addition to shareholders’ equity reflecting the equity component (i.e., conversion feature). The difference between the principal amount and the amount recorded as the liability component represents the debt discount. The carrying amount of the liability is accreted up to the principal amount through the amortization of the discount, using the effective interest method, to interest expense over the expected life of the note. The determination of the fair value of the liability component is an estimate dependent on a number of factors, including estimates of market rates for similar nonconvertible debt instruments at the date of issuance. A higher value attributable to the liability component results in a lower value attributed to the equity component and therefore a smaller discount amount and lower interest cost as a result of amortization of the smaller discount. A lower value attributable to the liability component results in a higher value attributed to the equity component and therefore a larger discount amount and higher interest cost as a result of amortization of the larger discount.

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Business Acquisitions. We account for 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. These estimates and assumptions are refined with adjustments recorded to goodwill as information is gathered and final appraisals are completed over a one-year allocation period. The changes in these estimates or different assumptions used in determining these estimates could impact the amount of assets, including goodwill and liabilities, ultimately recorded on our balance sheet and could impact our operating results subsequent to such acquisition. We believe that our assumptions and estimates have been materially accurate in the past.

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RESULTS OF OPERATIONS

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

Note: Due to the acquisition of Summit on January 13, 2012, the results of operations for the three months ended June 30, 2011 do not include the results of Summit.

The following table sets forth the components of consolidated revenue by segment for the three months ended June 30, 2012 and 2011:



	Three Months Ended		Three Months Ended		Increase (Decrease)
	June 30, 2012		June 30, 2011		Amount			Percent
			(Amounts in millions)
Consolidated Revenue
Motion Pictures	$	406.5	$	192.6	$	213.9		111.1	%
Television Production	65.3		68.7		(3.4		)	(4.9	)%
	$	471.8	$	261.3	$	210.5		80.6	%

Our largest component of revenue comes from home entertainment. The following table sets forth total home entertainment revenue for both the Motion Pictures and Television Production reporting segments for the three months ended June 30, 2012 and 2011:



	Three Months Ended		Three Months Ended		Increase (Decrease)
	June 30, 2012		June 30, 2011		Amount		Percent
			(Amounts in millions)
Home Entertainment Revenue
Motion Pictures	$	132.6	$	86.8	$	45.8	52.8	%
Television Production	12.9		6.1		6.8		111.5	%
	$	145.5	$	92.9	$	52.6	56.6	%

Motion Pictures Revenue

The table below sets forth the components of revenue and the changes in these components for the motion pictures reporting segment for the years ended June 30, 2012 and 2011. We currently expect our motion pictures segment revenue for fiscal 2013 will exceed our fiscal 2012 motion picture segment revenue. However, actual motion pictures revenue will depend on the performance of our film and home entertainment titles across all media and territories and can vary materially from expectations.



	Three Months Ended		Three Months Ended		Increase (Decrease)
	June 30, 2012		June 30, 2011		Amount			Percent
	(Amounts in millions)
Motion Pictures
Theatrical	$	137.6	$	27.1	$	110.5		407.7	%
Home Entertainment	132.6		86.8		45.8			52.8	%
Television	37.1		43.3		(6.2		)	(14.3	)%
International	48.6		11.6		37.0			319.0	%
Lionsgate UK	32.6		12.5		20.1			160.8	%
Mandate Pictures	12.8		9.8		3.0			30.6	%
Other	5.2		1.5		3.7			246.7	%
	$	406.5	$	192.6	$	213.9		111.1	%

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Motion Pictures — Theatrical Revenue

The following table sets forth the titles contributing approximately five percent or more of theatrical revenue by fiscal years theatrical slate and the month of their release for the three months ended June 30, 2012 and 2011:



Three Months Ended June 30,
2012		2011
	Theatrical Release Date		Theatrical Release Date
Fiscal 2013 Theatrical Slate:		Fiscal 2012 Theatrical Slate:
Madea's Witness Protection	June 2012	Madea's Big Happy Family	April 2011
What To Expect When You're Expecting	May 2012
Cabin In The Woods	April 2012
Fiscal 2012 Theatrical Slate:
The Hunger Games	March 2012

Theatrical revenue of $137.6 million increased $110.5 million, or 407.7%, in the three months ended June 30, 2012 as compared to the three months ended June 30, 2011. The increase in theatrical revenue in the three months ended June 30, 2012 as compared to the three months ended June 30, 2011 is due to the successful box office performance of The Hunger Games released in late March 2012 and four wide theatrical releases in the three months ended June 30, 2012, as compared to one theatrical release in the three months ended June 30, 2011.

Motion Pictures — Home Entertainment Revenue

The following table sets forth the titles contributing approximately two percent or more of motion pictures home entertainment revenue for the three months ended June 30, 2012 and 2011:



Three Months Ended June 30,
2012		2011
	DVD Release Date		DVD Release Date
Fiscal 2012 Theatrical Slate:		Fiscal 2011 Theatrical Slate:
Good Deeds	June 2012	Rabbit Hole	April 2011
Gone	May 2012	The Next Three Days	March 2011
Man On A Ledge	May 2012	Saw 3D	January 2011
One For The Money	May 2012	Alpha and Omega	January 2011
Abduction	January 2012	The Last Exorcism	January 2011
		The Expendables	November 2010
Summit Titles Released Theatrically Pre-Acquisition:		Managed Brands:
The Darkest Hour	April 2012	Biutiful	May 2011
The Three Musketeers	March 2012	I Love You Phillip Morris	April 2011
The Twilight Saga: Breaking Dawn - Part 1	February 2012	The Switch	March 2011
Managed Brands:
Haywire	May 2012
50/50	January 2012

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The following table sets forth the components of home entertainment revenue by product category for the three months ended June 30, 2012 and 2011:



	Three Months Ended June 30,
	2012						2011
	Packaged Media		Digital Media (1)		Total		Packaged Media		Digital Media (1)		Total
					(Amounts in millions)
Home entertainment revenues
Fiscal 2012 Theatrical Slate	$	34.3	$	7.7	$	42.0	$	—	$	—	$	—
Fiscal 2011 Theatrical Slate	1.1		0.3		1.4		8.1		17.3		25.4
Fiscal 2010 Theatrical Slate	1.1		0.3		1.4		1.0		0.2		1.2
Fiscal 2009 Theatrical Slate	0.7		0.2		0.9		0.4		0.4		0.8
Fiscal 2008 & Prior Theatrical Slate	1.0		0.8		1.8		4.1		0.7		4.8
Total Theatrical Slates	38.2		9.3		47.5		13.6		18.6		32.2
Summit Titles Released Theatrically Pre-Acquisition	8.9		22.1		31.0		—		—		—
Managed Brands (2)	43.2		9.9		53.1		43.0		8.8		51.8
Other	0.4		0.6		1.0		2.3		0.5		2.8
	$	90.7	$	41.9	$	132.6	$	58.9	$	27.9	$	86.8

___________________


(1)	Digital media revenue (formerly referred to as electronic media revenue) consists of revenues generated from pay-per-view and video-on-demand platforms, electronic sell-through or “EST,” and digital rental.


(2)	Managed Brands consists of Direct-to-DVD, acquired and licensed brands, acquired library and other product.

Home entertainment revenue of $132.6 million increased $45.8 million, or 52.8%, in the three months ended June 30, 2012 as compared to the three months ended June 30, 2011. The increase in home entertainment revenue is primarily due to an increase in the contribution of revenue from the theatrical slates as listed above and from Summit titles released theatrically pre-acquisition, with no comparable revenue in fiscal 2012. The increase in revenue contributed by the theatrical slates is primarily due to the performance in the period of the five titles released on DVD from our fiscal 2012 theatrical slate, as compared to the performance in the period of the six titles released on DVD from our fiscal 2011 theatrical slate.

Motion Pictures — Television Revenue

The following table sets forth the titles contributing significant motion pictures television revenue for the three months ended June 30, 2012 and 2011:



Three Months Ended June 30,
2012		2011
Fiscal 2012 Theatrical Slate:		Fiscal 2011 Theatrical Slate:
Abduction		Alpha & Omega
Conan the Barbarian		For Colored Girls
Warrior		Saw 3D
Fiscal 2010 Theatrical Slate:		The Expendables
Tyler Perry's I Can Do Bad All By Myself		Fiscal 2009 Theatrical Slate:
Summit Titles Released Theatrically Pre-Acquisition:		Transporter 3
Source Code

The following table sets forth the components of television revenue by product category for the three months ended June 30, 2012 and 2011:

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	Three Months Ended
	June 30,
	2012		2011
	(Amounts in millions)
Television revenues
Fiscal 2012 Theatrical Slate	$	15.0	$	—
Fiscal 2011 Theatrical Slate	0.1		35.3
Fiscal 2010 Theatrical Slate	7.1		—
Fiscal 2009 Theatrical Slate	0.2		3.2
Fiscal 2008 & Prior Theatrical Slate	2.2		1.7
Total Theatrical Slates	24.6		40.2
Summit Titles Released Theatrically Pre-Acquisition	7.4		—
Managed Brands	5.0		2.5
Other	0.1		0.6
	$	37.1	$	43.3

Television revenue included in motion pictures revenue of $37.1 million decreased $6.2 million, or 14.3%, in the three months ended June 30, 2012, as compared to the three months ended June 30, 2011. The decrease in television revenue in the three months ended June 30, 2012 compared to the three months ended June 30, 2011, is mainly due to the titles listed above. The contribution of television revenue from the titles listed above was $24.7 million in three months ended June 30, 2012, compared to $37.2 million in the three months ended June 30, 2011, and the contribution of television revenue from titles not listed above was $12.4 million in the three months ended June 30, 2012, compared to $6.1 million in the three months ended June 30, 2011.

Motion Pictures — International Revenue

The following table sets forth the titles contributing significant motion pictures international revenue for the three months ended June 30, 2012 and 2011:



Three Months Ended June 30,
2012		2011
Fiscal 2013 Theatrical Slate:		Fiscal 2011 Theatrical Slate:
Cabin In The Woods		Alpha and Omega
Cold Light of Day		Kick-Ass
What To Expect When You're Expecting		Saw 3D
Fiscal 2012 Theatrical Slate:		The Next Three Days
The Hunger Games
Man On A Ledge
Summit Titles Released Theatrically Pre-Acquisition:
Twilight
The Twilight Saga: Eclipse
The Twilight Saga: New Moon
The Twilight Saga: Breaking Dawn - Part 1

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The following table sets forth the components of international revenue by product category for the three months ended June 30, 2012 and 2011:



	Three Months Ended
	June 30,
	2012		2011
	(Amounts in millions)
International revenues
Fiscal 2013 Theatrical Slate	$	13.6	$	—
Fiscal 2012 Theatrical Slate	9.0		0.3
Fiscal 2011 Theatrical Slate	1.3		5.7
Fiscal 2010 Theatrical Slate	0.1		0.9
Fiscal 2009 Theatrical Slate	0.2		0.2
Fiscal 2008 & Prior Theatrical Slate	0.5		1.4
Total Theatrical Slates	24.7		8.5
Summit Titles Released Theatrically Pre-Acquisition	20.4		—
Managed Brands	3.2		2.9
Other	0.3		0.2
	$	48.6	$	11.6

International revenue included in motion pictures revenue of $48.6 million increased $37.0 million, or 319.0%, in the three months ended June 30, 2012, as compared to the three months ended June 30, 2011. The increase in international revenue in the three months ended June 30, 2012 compared to the three months ended June 30, 2011, is mainly due to the revenues generated by the titles and product categories listed above.

Motion Pictures — Lionsgate UK Revenue

The following table sets forth the titles contributing significant Lionsgate UK revenue for the three months ended June 30, 2012 and 2011:



Three Months Ended June 30,
2012		2011
Fiscal 2013 Theatrical Slate:		Fiscal 2011 Theatrical Slate:
Cabin In The Woods		The Expendables
What To Expect When You're Expecting		The Next Three Days
Fiscal 2012 Theatrical Slate:		Lionsgate UK and third party product:
Conan the Barbarian		Blitz
The Hunger Games
Lionsgate UK and third party product:
Drive
Horrid Henry
Salmon Fishing In The Yemen

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The following table sets forth the components of Lionsgate UK revenue by product category for the three months ended June 30, 2012 and 2011:



	Three Months Ended June 30,
	2012		2011
	(Amounts in millions)
Lionsgate UK revenues
Fiscal 2013 Theatrical Slate	$	4.0	$	—
Fiscal 2012 Theatrical Slate	12.1		—
Fiscal 2011 Theatrical Slate	0.7		4.4
Fiscal 2010 Theatrical Slate	0.6		0.3
Fiscal 2009 Theatrical Slate	—		—
Fiscal 2008 & Prior Theatrical Slate	0.1		0.3
Total Theatrical Slates	17.5		5.0
Summit Titles Released Theatrically Pre-Acquisition	0.5		—
Lionsgate UK and third party product	11.6		5.0
Managed Brands	3.0		2.0
Other	—		0.5
	$	32.6	$	12.5

Lionsgate UK revenue of $32.6 million increased $20.1 million, or 160.8%, in the three months ended June 30, 2012 as compared to the three months ended June 30, 2011. The increase in Lionsgate UK revenue in the three months ended June 30, 2012 compared to the three months ended June 30, 2011 is mainly due to the revenue generated by the titles and product categories listed above.

Motion Pictures — Mandate Pictures Revenue

The following table sets forth the titles contributing significant Mandate Pictures revenue for the three months ended June 30, 2012 and 2011:



Three Months Ended June 30,
2012		2011
LOL		50/50
Seeking A Friend For The End of The World		Juno
		Whip It

Mandate Pictures revenue includes revenue from the sales and licensing of domestic and worldwide rights of titles developed or acquired by Mandate Pictures to third-party distributors or international sub-distributors. Mandate Pictures revenue of $12.8 million increased $3.0 million, or 30.6%, in the three months ended June 30, 2012 as compared to the three months ended June 30, 2011.

Television Production Revenue

Television production revenue of $65.3 million decreased $3.4 million, or 4.9%, in the three months ended June 30, 2012 as compared to the three months ended June 30, 2011. The following table sets forth the components and the changes in the components of revenue that make up television production revenue for the three months ended June 30, 2012 and 2011:

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	Three Months Ended		Three Months Ended		Increase (Decrease)
	June 30, 2012		June 30, 2011		Amount			Percent
			(Amounts in millions)
Television Production
Domestic series licensing
Lionsgate Television	$	14.7	$	7.9	$	6.8		86.1	%
Debmar-Mercury	26.1		42.0		(15.9		)	(37.9	)%
Total domestic series licensing	40.8		49.9		(9.1		)	(18.2	)%
International	10.8		12.6		(1.8		)	(14.3	)%
Home entertainment releases of television production	12.9		6.1		6.8			111.5	%
Other	0.8		0.1		0.7			700.0	%
	$	65.3	$	68.7	$	(3.4	)	(4.9	)%

Revenues included in television production decreased in the three months ended June 30, 2012, mainly due to lower revenue generated from domestic series licensing, offset in part by higher revenue generated from the home entertainment category of television production in the three months ended June 30, 2012 as compared to the three months ended June 30, 2011.

The following table sets forth the number of television episodes and hours included in Lionsgate Television domestic series licensing revenue in the three months ended June 30, 2012 and 2011, respectively:



		Three Months Ended				Three Months Ended
		June 30, 2012				June 30, 2011
		Episodes	Hours			Episodes	Hours
Weeds Season 8	1/2hr	3	1.5	Weeds Season 7	1/2hr	2	1.0
Boss Season 2	1hr	2	2.0	Pilots	1hr	1	1.0
Anger Management	1/2hr	2	1.0			3	2.0
		7	4.5

Revenues included in domestic series licensing from Lionsgate Television increased in the three months ended June 30, 2012, due to an increase in the number of television episodes delivered as compared to the three months ended June 30, 2011. Revenues included in domestic series licensing from Debmar-Mercury decreased in the three months ended June 30, 2012, primarily because the three months ended June 30, 2011 included higher revenues generated from House of Payne as compared to the three months ended June 30, 2012.

International revenue decreased in the three months ended June 30, 2012 due to a decrease in episodes of programming delivered internationally. International revenue in the three months ended June 30, 2012 primarily included revenue from Boss Season 1 and Mad Men Seasons 4 and 5. International revenue in the three months ended June 30, 2011 included revenue from Blue Mountain State Season 2, Weeds Seasons 5 and 6, Mad Men Season 4, and Paris Hilton's My New BFF: Dubai.

The increase in revenue from home entertainment releases of television production is primarily driven by digital media revenue from Weeds Seasons 6 and 7 and Mad Men Season 5, as a result of a licensing contract in the three months ended June 30, 2012, as compared to packaged media revenue from Weeds Season 6 (released February 2011) and Mad Men Season 4 (released March 2011) in the three months ended June 30, 2011.

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Direct Operating Expenses

The following table sets forth direct operating expenses by segment for the three months ended June 30, 2012 and 2011:



	Three Months Ended									Three Months Ended
	June 30, 2012									June 30, 2011
	Motion Pictures			Television Production			Total			Motion Pictures			Television Production			Total
	(Amounts in millions)
Direct operating expenses
Amortization of films and television programs	$	133.3		$	33.8		$	167.1		$	57.8		$	27.2		$	85.0
Participation and residual expense	60.4			18.2			78.6			29.0			26.1			55.1
Other expenses	—			0.1			0.1			(0.6		)	(0.1		)	(0.7		)
	$	193.7		$	52.1		$	245.8		$	86.2		$	53.2		$	139.4
Direct operating expenses as a percentage of segment revenues	47.7		%	79.8		%	52.1		%	44.8		%	77.4		%	53.3		%

Direct operating expenses of the motion pictures segment of $193.7 million for the three months ended June 30, 2012 were 47.7% of motion pictures revenue, compared to $86.2 million, or 44.8% of motion pictures revenue for the three months ended June 30, 2011. The increase in direct operating expense of the motion pictures segment as a percent of revenue in the three months ended June 30, 2012 is primarily due to the aggregate increase in the film cost of the Summit film assets as a result of recording the film rights of Summit at their estimated fair values due to the application of purchase accounting under generally accepted accounting principles, which results in higher amortization cost in relation to revenue. Investment in film write-downs of the motion pictures segment during the three months ended June 30, 2012 totaled approximately $1.5 million, compared to $0.1 million for the three months ended June 30, 2011. In the three months ended June 30, 2012, there were no write-downs that individually exceeded $1.0 million. Due to the January 2012 acquisition of Summit, we currently expect that direct operating expenses of the motion pictures segment for fiscal 2013 will increase as compared to fiscal 2012.

Direct operating expenses of the television production segment of $52.1 million for the three months ended June 30, 2012 were 79.8% of television revenue, compared to $53.2 million, or 77.4%, of television revenue for the three months ended June 30, 2011. The direct operating expenses as a percent of television revenue were comparable to the three months ended June 30, 2011. In the three months ended June 30, 2012, $2.1 million of charges for write-downs of television film costs were included in the amortization of television programs, compared to charges of $1.6 million in the three months ended June 30, 2011. There were no write-downs that individually exceeded $1.0 million for the three months ended June 30, 2012 and 2011.

Distribution and Marketing Expenses

The following table sets forth distribution and marketing expenses by segment for the three months ended June 30, 2012 and 2011:



	Three Months Ended						Three Months Ended
	June 30, 2012						June 30, 2011
	Motion Pictures		Television Production		Total		Motion Pictures		Television Production		Total
	(Amounts in millions)
Distribution and marketing expenses
Theatrical	$	116.1	$	—	$	116.1	$	26.4	$	—	$	26.4
Home Entertainment	34.7		0.9		35.6		24.7		1.5		26.2
Television	1.4		3.3		4.7		—		2.7		2.7
International	2.3		1.4		3.7		0.9		1.1		2.0
Lionsgate UK	16.3		0.1		16.4		6.7		0.3		7.0
Other	2.1		0.1		2.2		0.4		—		0.4
	$	172.9	$	5.8	$	178.7	$	59.1	$	5.6	$	64.7

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The majority of distribution and marketing expenses relate to the motion pictures segment. Theatrical prints and advertising (“P&A”) in the motion pictures segment in the three months ended June 30, 2012 of $116.1 million increased $89.7 million, compared to $26.4 million in the three months ended June 30, 2011, largely due to four wide theatrical releases in the three months ended June 30, 2012, as compared to only one wide theatrical release in the three months ended June 30, 2011. Domestic theatrical P&A from the motion pictures segment in the three months ended June 30, 2012 included P&A incurred on the release of Cabin In The Woods, Madea's Witness Protection, Safe, The Hunger Games, and What to Expect When You're Expecting. Approximately $38.0 million of P&A was incurred on titles that generated less than 5% of theatrical revenue in the three months ended June 30, 2012, of which approximately $18.0 million was P&A incurred in advance for films to be released in subsequent quarters, such as Step Up Revolution, The Expendables 2 and The Twilight Saga: Breaking Dawn - Part 2. Domestic theatrical P&A from the motion pictures segment in the three months ended June 30, 2011 included P&A incurred on the release of Madea's Big Happy Family. In addition, approximately $13.1 million of P&A was incurred on titles that did not contribute significant revenue in the three months ended June 30, 2011, of which $11.0 million was P&A incurred in advance for films released subsequent to that quarter, such as Conan the Barbarian, Warrior, and Abduction. We currently expect that distribution and marketing expenses of the motion pictures segment for fiscal 2013 will increase as compared to fiscal 2012 due to an increase in the number of theatrical releases anticipated in our fiscal 2013 theatrical slate as compared to our fiscal 2012 slate.

Home entertainment distribution and marketing costs on motion pictures and television product in the three months ended June 30, 2012 of $35.6 million increased $9.4 million, or 35.9%, compared to $26.2 million in the three months ended June 30, 2011, primarily due to higher distribution and marketing costs associated with higher motion pictures home entertainment revenues. Home entertainment distribution and marketing costs as a percentage of home entertainment revenues was 24.5% and 28.2% in the three months ended June 30, 2012 and the three months ended June 30, 2011, respectively. The decrease in home entertainment distribution and marketing costs as a percentage of home entertainment revenues was primarily due to an increase in home entertainment revenue from digital media, which requires substantially lower distribution and marketing costs as compared to packaged media.

Lionsgate UK distribution and marketing expenses in the motion pictures segment in the three months ended June 30, 2012 of $16.3 million increased from $6.7 million in the three months ended June 30, 2011.

General and Administrative Expenses

The following table sets forth general and administrative expenses by segment for the three months ended June 30, 2012 and 2011:



	Three Months Ended			Three Months Ended			Increase (Decrease)
	June 30, 2012			June 30, 2011			Amount		Percent
	(Amounts in millions)
General and administrative expenses
Motion Pictures	$	16.8		$	12.2		$	4.6	37.7	%
Television Production	2.7			2.7			—		—	%
Shared services and corporate expenses, excluding items below	21.4			14.3			7.1		49.7	%
Total general and administrative expenses before share-based compensation expense, shareholder activist matter expenses, and acquisition related expenses	40.9			29.2			11.7		40.1	%
Share-based compensation expense	9.7			2.6			7.1		273.1	%
Shareholder activist matter	—			(3.9		)	3.9		(100.0	)%
Severance and transaction costs related to the acquisition of Summit Entertainment, LLC	1.7			—			1.7		100.0	%
	11.4			(1.3		)	12.7		(976.9	)%
Total general and administrative expenses	$	52.3		$	27.9		$	24.4	87.5	%
Total general and administrative expenses as a percentage of revenue	11.1		%	10.7		%
General and administrative expenses excluding share-based compensation expense, shareholder activist matter expenses, and acquisition related expenses, as a percentage of revenue	8.7		%	11.2		%

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Total General and Administrative Expenses

General and administrative expenses increased by $24.4 million, or 87.5%, as reflected in the table above and further discussed below.

Motion Pictures

General and administrative expenses of the motion pictures segment increased $4.6 million, or 37.7%. The increase in motion pictures general and administrative expenses is primarily due to increases in salaries and related expenses, rents and facilities expenses and professional fees. The increases are primarily due to increased personnel associated with the acquisition of Summit Entertainment on January 13, 2012. Included in the motion pictures segment in the three months ended June 30, 2011 is $1.5 million in general and administrative expenses associated with Maple Pictures, which was sold on August 10, 2011. In the three months ended June 30, 2012, $3.4 million of motion pictures production overhead was capitalized compared to $2.4 million in the three months ended June 30, 2011.

Television Production

General and administrative expenses of the television production segment in the three months ended June 30, 2012 were comparable to the three months ended June 30, 2011. In the three months ended June 30, 2012 and 2011, $1.4 million of television production overhead was capitalized in each period.

Shared Services and Corporate Expenses

Shared services and corporate expenses excluding share-based compensation expense, shareholder activist matter costs and severance and transaction costs related to the acquisition of Summit, increased $7.1 million, or 49.7%, mainly due to increases in salaries and related expenses, incentive related compensation and to a lesser extent legal and professional fees.

Shareholder activist matter costs were nil in the three months ended June 30, 2012. Shareholder activist matter costs in the three months ended June 30, 2011 include a $3.9 million benefit, recorded in the quarter ended June 30, 2011, related to a negotiated settlement with a vendor of costs incurred and recorded in the prior fiscal year, and insurance recoveries of related litigation offset by other costs incurred.

Share-Based Compensation Expense. The following table sets forth share-based compensation expense included in shared services and corporate expenses for the three months ended June 30, 2012 and 2011:



	Three Months Ended		Three Months Ended		Increase (Decrease)
	June 30, 2012		June 30, 2011		Amount		Percent
	(Amounts in millions)
Share-based compensation expense:
Stock options	$	0.3	$	—	$	0.3	100.0	%
Restricted share units and other share-based compensation	7.2		2.2		5.0		227.3	%
Stock appreciation rights	2.2		0.4		1.8		450.0	%
	$	9.7	$	2.6	$	7.1	273.1	%

Depreciation, Amortization and Other Expenses (Income)

Depreciation and amortization of $2.1 million for the three months ended June 30, 2012 increased $0.9 million from $1.2 million in the three months ended June 30, 2011, primarily due to the amortization of finite-lived intangible assets associated with the Summit acquisition in the three months ended June 30, 2012, with no comparable amortization in the three months ended June 30, 2011.

Interest expense of $27.5 million for the three months ended June 30, 2012 increased $11.2 million, or 68.7%, from $16.3 million in the three months ended June 30, 2011, primarily due to the addition of the Term Loan in connection with the Summit acquisition. The following table sets forth the components of interest expense for the three months ended June 30, 2012 and 2011:

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	Three Months Ended		Three Months Ended
	June 30, 2012		June 30, 2011
	(Amounts in millions)
Interest Expense
Cash Based:
Senior revolving credit facility	$	1.8	$	0.8
Convertible senior subordinated notes	1.3		1.1
Senior secured second-priority notes	11.2		8.8
Term loan	7.3		—
Other	1.1		1.0
	22.7		11.7
Non-Cash Based:
Amortization of discount (premium) on:
Liability component of convertible senior subordinated notes	1.8		2.1
Senior secured second-priority notes	0.2		0.2
Term loan	0.3		—
Amortization of deferred financing costs	2.5		2.3
	4.8		4.6
	$	27.5	$	16.3

Interest and other income was $1.0 million in the three months ended June 30, 2012, compared to $0.4 million in the three months ended June 30, 2011.

The following table represents our portion of the income or (loss) of our equity method investees based on our percentage ownership for the three months ended June 30, 2012 and 2011:



	June 30, 2012
	Ownership	Three Months Ended			Three Months Ended
	Percentage	June 30, 2012			June 30, 2011
					As adjusted (2)
		(Amounts in millions)
Horror Entertainment, LLC (“FEARnet”)	34.5%	$	0.1		$	0.1
NextPoint, Inc. (“Break Media”)	42.0%	(1.7		)	(1.3		)
Roadside Attractions, LLC	43.0%	(0.1		)	—
Studio 3 Partners, LLC (“EPIX”) (1)	31.2%	6.6			2.9
TV Guide Network (1)	51.0%	(5.0		)	(0.9		)
Tiger Gate Entertainment Limited ("Tiger Gate")	16.0%	—			(0.8		)
		$	(0.1	)	$	—

______________________

(1)

We license certain of our theatrical releases and other films and television programs to EPIX and TV Guide Network. A portion of the profits of these licenses reflecting our ownership share in the venture is eliminated through an adjustment to the equity interest income (loss) of the venture. These profits are recognized as they are realized by the venture (see Note 3 to our consolidated financial statements).


(2)	Due to the elimination of the one-quarter lag in reporting EPIX's results, equity interest income for EPIX for the three months ended June 30, 2012 has been adjusted as shown above.

Loss on Extinguishment of Debt

Loss on extinguishment of debt was $8.2 million for the three months ended June 30, 2012, resulting from voluntary early repayments of the Term Loan of approximately $163.3 million. The loss represents the write off of a portion of deferred financing costs and unamortized discount. For the three months ended June 30, 2011, the loss on extinguishment of debt was

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$0.5 million resulting from a $19.5 million repurchase of the October 2004 2.9375% Notes.

Income Tax Provision

We had an income tax expense of $2.2 million, or (5.2%), of loss before income taxes in the three months ended June 30, 2012, compared to an expense of $1.2 million, or 10.4%, of income before income taxes in the three months ended June 30, 2011. The tax expense reflected in the three months ended June 30, 2012 is primarily attributable to deferred U.S. income taxes and foreign withholding taxes. Our actual annual effective tax rate will differ from the statutory federal rate as a result of several factors, including changes in the valuation allowance against net deferred tax assets, non-temporary differences, foreign income taxed at different rates, and state and local income taxes. Income tax loss carryforwards, subject to certain limitations that may prevent us from fully utilizing them, amount to approximately $187.8 million for U.S. federal income tax purposes available to reduce income taxes over twenty years, $170.4 million for U.S. state income tax purposes available to reduce income taxes over future years with varying expirations, $28.4 million for Canadian income tax purposes available to reduce income taxes over 20 years with varying expirations, and $8.6 million for U.K. income tax purposes available indefinitely to reduce future income taxes.

Net Income (Loss)

Net loss for the three months ended June 30, 2012 was $44.2 million, or basic and diluted net loss per common share of $0.33 on 133.2 million weighted average common shares outstanding. This compares to net income for the three months ended June 30, 2011 of $10.3 million, or basic net income per common share of $0.08 on 137.0 million weighted average common shares outstanding and diluted net income per common share of $0.08 on 137.4 million weighted average common shares outstanding.

Liquidity and Capital Resources

Our liquidity and capital resources have been provided principally through cash generated from operations, our senior revolving credit facility, senior secured second-priority notes, term loan, issuance of convertible senior subordinated notes, the Film Credit Facility (as hereafter defined), borrowings under individual production loans, and our Pennsylvania Regional Center credit facility.

Senior Revolving Credit Facility

Outstanding Amount. At June 30, 2012, we had borrowings of $289.5 million (March 31, 2012 — $99.8 million).

Maturity Date. The senior revolving credit facility expires July 25, 2013.

Interest. As of June 30, 2012, the senior revolving credit facility bore interest of 2.5% over the “Adjusted LIBOR” rate (effective interest rate of 2.74% as of both June 30, 2012 and March 31, 2012).

Commitment Fee. We are required to pay a quarterly commitment fee based upon 0.5% per annum on the total senior revolving credit facility of $340 million less the amount drawn.

Security. Obligations under the senior revolving credit facility are secured by collateral (as defined in the credit agreement) granted by us and certain of our subsidiaries, as well as a pledge of equity interests in certain of our subsidiaries.

Covenants. The senior revolving credit facility contains a number of affirmative and negative covenants that, among other things, require us to satisfy certain financial covenants and restrict our ability to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, repurchase its stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets and merge or consolidate.

Change in Control. Under the senior revolving credit facility, we may also be subject to an event of default upon a change in control (as defined in the credit agreement) which, among other things, includes a person or group acquiring ownership or control in excess of 50% (amended from 20% on June 22, 2010) of our common shares.

Senior Secured Second-Priority Notes

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On October 21, 2009, LGEI, our wholly-owned subsidiary, issued $236.0 million aggregate principal amount of senior secured second-priority notes due 2016 (the “October 2009 Senior Notes”) in a private offering conducted pursuant to Rule 144A and Regulation S under the Securities Act.

On May 13, 2011, LGEI issued approximately $200.0 million aggregate principal amount of senior secured second-priority notes due 2016 (the “May 2011 Senior Notes”, and collectively with the October 2009 Senior Notes, the “Senior Notes”) in a private offering conducted pursuant to Rule 144A and Regulation S under the Securities Act. The May 2011 Senior Notes have the same terms as the October 2009 Senior Notes, except for the issue date, issue price and first interest payment.

Outstanding Amount. The outstanding amount is set forth in the table below:



	June 30, 2012
	Principal		Unamortized Premium/ (Discount)			Net Carrying Amount
	(Amounts in thousands)
Senior Secured Second-Priority Notes	$	436,000	$	(4,307	)	$	431,693

Maturity Date. The Senior Notes are due November 1, 2016.

Original Issue Discount/Premium. The October 2009 Senior Notes were issued by LGEI at an initial price of 95.222% (original issue discount — 4.778%) of the principal amount. The May 2011 Senior Notes were issued by LGEI at an initial price of 102.219% (original issue premium — 2.219%) of the principal amount, plus accrued interest thereon from May 1, 2011, resulting in gross proceeds of approximately $204.4 million and net proceeds of approximately $192.4 million after fees and expenses, including $5.6 million paid in connection with the consent solicitation of holders of the October 2009 Senior Notes. The original issue discount/premium, interest and deferred financing costs are being amortized through November 1, 2016 using the effective interest method. As of June 30, 2012, the remaining amortization period was 4.3 years.

Interest. The Senior Notes pay interest semi-annually on May 1 and November 1 of each year at a rate of 10.25% per year.

Security. The Senior Notes are guaranteed on a senior secured basis by us, and certain wholly-owned subsidiaries of both us and LGEI. The Senior Notes are ranked junior in right of payment to our senior revolving credit facility, ranked equally in right of payment to our subordinated notes, and ranked senior to any of our unsecured debt.

Covenants. The Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit our ability to incur additional indebtedness, pay dividends or repurchase our common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations.

Under the terms of the Senior Notes, there are certain covenants which restrict our ability to incur certain additional indebtedness, make certain “restricted payments” as defined, and other items. These covenants require certain ratios, such as the Secured Leverage Ratio and Consolidated Leverage Ratio (as defined in the indentures), to meet certain specified thresholds before such additional indebtedness, restricted payments or other items are permitted under the terms of the indenture. These ratios are partially based on the net borrowing base amount, as calculated pursuant to the indenture. The following table sets forth the total gross and net borrowing base and certain components of the borrowing base as prescribed by the indenture to the Senior Notes:

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Borrowing Base Definition Clause (2)	Category Name	June 30, 2012
		Gross (1)			Rate	Net (1)
		(Amounts in millions)
(i)	Eligible Major Domestic Receivables	$	186.1	@	100%	$	186.1
(ii)	Eligible Acceptable Domestic Receivables	188.7		@	90%	169.9
(iii)	Eligible Acceptable Foreign Receivables	30.2		@	85%	25.7
(iv)	Acceptable Tax Credits	64.8		@	85%/75%	52.4
(v)	Other Domestic Receivables	18.0		@	50%	9.0
(vi)	Other Foreign Receivables	12.9		@	50%	6.4
	Borrowing Base from Receivables	$	500.7			$	449.5
(vii)	Eligible Film Library	596.6		@	50%	298.3
(viii)	Eligible Video Cassette Inventory	34.4			lesser of 50% or $10 million	10.0
(ix)	Total Home Video, Pay Television, Free Television Credits	245.4			Misc.	245.4
(xiii)	Cash Collateral Accounts	3.7		@	100%	3.7
(xiv)	P&A Credit	8.6		@	50%	8.6
	Borrowing Base at June 30, 2012	$	1,389.4			$	1,015.5


(1)	Gross amount represents the amount as of each applicable category and the net amount represents the acceptable portion of that amount permitted to be counted in the Borrowing Base (as defined) under the indenture.


(2)	The following numbered clauses from the Borrowing Base definition were either not applicable or not material as of June 30, 2012: (x) Direct to Video Credit; (xi) Foreign Rights Credit; (xii) Eligible L/C Receivables.

Term Loan

In connection with the acquisition of Summit (see Note 9 to our consolidated financial statements), we entered into a new $500.0 million principal amount term loan agreement (the "Term Loan") and received net proceeds of $476.2 million, after original issue discount and offering fees and expenses. The net proceeds were used in connection with the acquisition of Summit to pay off Summit's existing term loan.

During the three months ended June 30, 2012 , we made voluntary early repayments of the Term Loan of approximately $163.3 million. As a result, we wrote off a proportionate amount of the related deferred financing costs and unamortized discount in the aggregate of $8.2 million, which is reflected as a loss of extinguishment of debt in the consolidated statements of operations.

Outstanding Amount. The outstanding amount of the Term Loan is set forth in the table below:



	June 30, 2012
	(Amounts in thousands)
Principal amount	$	299,160
Unamortized discount	(4,462		)
Net carrying amount	$	294,698

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Security. The Term Loan is secured by collateral of the Summit assets.

Covenants. The Term Loan contains a number of affirmative and negative covenants that, among other things, require Summit to satisfy certain financial covenants.

Convertible Senior Subordinated Notes

As of June 30, 2012, we have convertible senior subordinated notes outstanding of $135.4 million in aggregate principal amount (carrying value — $106.3 million). In October 2014, $0.3 million of these convertible senior subordinated notes are redeemable by the holder and beginning in March 2015, an additional $90.1 million of these convertible senior subordinated notes are redeemable by the holder.

Transactions:

January 2012 Convertible Senior Subordinated Notes Issuance. On January 11, 2012, LGEI sold $45.0 million in aggregate principal amount of 4.00% Convertible Senior Subordinated Notes with a maturity date of January 11, 2017. The proceeds were used to fund a portion of the acquisition of Summit discussed in Note 5 to our consolidated financial statements. Interest on the January 2012 4.00% Notes is payable semi-annually on January 15 and July 15 of each year, commencing on July 15, 2012. The January 2012 4.00% Notes are convertible into our common shares at any time prior to maturity or repurchase by us, at an initial conversion price of approximately $10.50 per share, subject to adjustment in certain circumstances as specified in the Indenture.

October 2011 Repurchase of the October 2004 2.9375% Notes. On October 15, 2011, certain holders of the October 2004 2.9375% Notes required LGEI to repurchase $26.6 million in aggregate principal amount (carrying value - $26.6 million) of the October 2004 2.9375% Notes, pursuant to the redemption terms of the October 2004 2.9375% Notes. LGEI paid approximately $27.0 million for the repurchase on October 17, 2011, representing a price equal to 100% of the principal amount, together with accrued and unpaid interest through October 17, 2011.

May 2011 Repurchase of a Portion of the October 2004 2.9375% Notes. In May 2011, LGEI paid $19.5 million to repurchase $19.4 million of aggregate principal amount (carrying value — $18.9 million) of the October 2004 2.9375% Notes.

Key Terms of Convertible Senior Subordinated Notes:

October 2004 2.9375% Notes. In October 2004, LGEI sold $150.0 million of the October 2004 2.9375% Notes.

Outstanding Amount: As of June 30, 2012, $0.3 million of aggregate principal amount (carrying value — $0.3 million) of the October 2004 2.9375% Notes remains outstanding.

Interest: Interest on the October 2004 2.9375% Notes is payable semi-annually on April 15 and October 15.

Maturity Date: The October 2004 2.9375% Notes mature on October 15, 2024.

Redeemable by LGEI: LGEI may redeem the October 2004 2.9375% Notes at 100% of the principal amount, together with accrued and unpaid interest up to, but excluding the date of redemption.

Repurchase Events: The holder may require LGEI to repurchase the October 2004 2.9375% Notes on October 15, 2014 and 2019 or upon a change in control or termination of trading at a price equal to 100% of the principal amount, together with accrued and unpaid interest up to, but excluding the date of repurchase. See above for further information on the October 2004 2.9375% Notes that were redeemed on October 17, 2011 due to the holders' exercise of their right to require LGEI to repurchase the October 2004 2.9375% Notes on October 15, 2011.

Conversion Features: The holder may convert the October 2004 2.9375% Notes into our common shares prior to maturity only if the price of our common shares issuable upon conversion of a note reaches or falls below a certain specific threshold over a specified period, the notes have been called for redemption, a change in control occurs or certain other corporate transactions occur. Before the close of business on or prior to the trading day immediately before the maturity date, the holder may convert the notes into our common shares. The conversion rate is equal to 86.9565 shares per $1,000 principal amount of the October 2004 2.9375% Notes, subject to adjustment in certain circumstances, which represents a conversion price of approximately $11.50 per share. Upon conversion of the October 2004 2.9375% Notes, we have the option to deliver, in lieu of common shares, cash or a combination of cash and our common shares.

Make Whole Premium: Under certain circumstances, if the holder requires LGEI to repurchase all or a portion of our notes or the holder converts the notes upon a change in control, they will be entitled to receive a make whole premium. The amount of the make whole premium, if any, will be based on the price of our common shares on the effective date of the change in control. No make whole premium will be paid if the price of our common shares at such time is less than $8.79 per share or

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exceeds $50.00 per share.

February 2005 3.625% Notes. In February 2005, LGEI sold $175.0 million of the February 2005 3.625% Notes.

Interest: Interest on the February 2005 3.625% Notes is payable at 3.625% per annum semi-annually on March 15 and September 15 until March 15, 2012 and at 3.125% per annum thereafter until maturity.

Maturity Date: The February 2005 3.625% Notes will mature on March 15, 2025.

Redeemable by LGEI: LGEI may redeem all or a portion of the February 2005 3.625% Notes at its option on or after March 15, 2012 at 100% of their principal amount, together with accrued and unpaid interest up to, but excluding the date of redemption.

Repurchase Events: The holder may require LGEI to repurchase the February 2005 3.625% Notes on March 15, 2015 and 2020 or upon a change in control or termination of trading at a price equal to 100% of the principal amount, together with accrued and unpaid interest up to, but excluding the date of repurchase.

Conversion Features: The February 2005 3.625% Notes are convertible, at the option of the holder, at any time before the maturity date, if the notes have not been previously redeemed or repurchased, at a conversion rate equal to 70.0133 shares per $1,000 principal amount of the February 2005 3.625% Notes, subject to adjustment in certain circumstances, which represents a conversion price of approximately $14.28 per share. Upon conversion of the February 2005 3.625% Notes, we have the option to deliver, in lieu of common shares, cash or a combination of cash and our common shares.

Make Whole Premium: Under certain circumstances, if the holder requires LGEI to repurchase all or a portion of their notes upon a change in control, they will be entitled to receive a make whole premium. The amount of the make whole premium, if any, will be based on the price of our common shares on the effective date of the change in control. No make whole premium will be paid if the price of our common shares at such time is less than $10.35 per share or exceeds $75.00 per share.

April 2009 3.625% Notes. In April 2009, LGEI issued approximately $66.6 million of 3.625% Convertible Senior Subordinated Notes (the “April 2009 3.625% Notes”).

Outstanding Amount: As of June 30, 2012, $66.6 million of aggregate principal amount (carrying value — $46.9 million) of the April 2009 3.625% Notes remains outstanding.

Interest: Interest on the April 2009 3.625% Notes is payable at 3.625% per annum semi-annually on March 15 and September 15 of each year.

Maturity Date: The April 2009 3.625% Notes will mature on March 15, 2025.

Redeemable by LGEI: On or after March 15, 2015, LGEI may redeem the April 2009 3.625% Notes, in whole or in part, at a price equal to 100% of the principal amount of the April 2009 3.625% Notes to be redeemed, plus accrued and unpaid interest up to, but excluding the date of redemption.

Repurchase Events: The holder may require LGEI to repurchase the April 2009 3.625% Notes on March 15, 2015, 2018 and 2023 or upon a change in control or termination of trading at a price equal to 100% of the principal amount of the April 2009 3.625% Notes to be repurchased plus accrued and unpaid interest up to, but excluding the date of repurchase.

Conversion Features: The April 2009 3.625% Notes may be converted into our common shares at any time before maturity, redemption or repurchase. The initial conversion rate of the April 2009 3.625% Notes is 121.2121 common shares per $1,000 principal amount of the April 2009 3.625% Notes, subject to adjustment in certain circumstances, which represents a conversion price of approximately $8.25 per share. Upon conversion of the April 2009 3.625% Notes, we have the option to deliver, in lieu of common shares, cash or a combination of cash and our common shares.

Make Whole Premium: Under certain circumstances, if the holder requires LGEI to repurchase all or a portion of their notes upon a change in control, they will be entitled to receive a make whole premium. The amount of the make whole premium, if any, will be based on the price of our common shares on the effective date of the change in control. No make whole premium will be paid if the price of our common shares at such time is less than $5.36 per share or exceeds $50.00 per share.

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January 2012 4.00% Notes. In January 2012, LGEI issued approximately $45.0 million of January 2012 4.00% Notes.

Outstanding Amount: As of June 30, 2012, $45.0 million of aggregate principal amount (carrying value — $35.6 million) of the January 2012 4.00% Notes remains outstanding.

Interest: Interest on the January 2012 4.00% Notes is payable at 4.00% per annum semi-annually on January 15 and July 15 of each year, commencing on July 15, 2012.

Maturity Date: The January 2012 4.00% Notes will mature on January 11, 2017.

Conversion Features: The January 2012 4.00% Notes are convertible into our common shares at any time prior to maturity or repurchase by us, at an initial conversion price of approximately $10.50 per share, subject to adjustment in certain circumstances as specified in the Indenture. Upon conversion of the January 2012 4.00% Notes, we have the option to deliver, in lieu of common shares, cash or a combination of cash and our common shares.

Repurchase Events: The holder may require LGEI to repurchase the January 2012 4.00% Notes upon a “designated event” consisting of certain changes in control, change of management or termination of trading, at a price equal to 100% of the principal amount of the January 2012 4.00% Notes to be repurchased, plus accrued and unpaid interest up to, but excluding the date of repurchase.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Production Loans and Participation Financing Arrangements

Individual Production Loans

As of June 30, 2012, amounts outstanding under individual production loans were $222.9 million. Individual productions loans represent individual loans for the production of film and television programs that we produce. Individual production loans have contractual repayment dates either at or near the expected completion date, with the exception of certain loans containing repayment dates on a longer term basis. Individual production loans of $207.9 million incur interest at rates ranging from 3.48% to 3.74%, and approximately $15.0 million of production loans are non-interest bearing.

Film Credit Facility

On October 6, 2009, we entered into a revolving film credit facility agreement, as amended effective December 31, 2009 and June 22, 2010 (the “Film Credit Facility”), which provides for borrowings for the acquisition or production of motion pictures.

Outstanding Amount. At June 30, 2012, we had borrowings of $36.4 million (March 31, 2012 — $43.9 million).

Availability of Funds. Currently, the Film Credit Facility provides for total borrowings up to $130 million, subject to a borrowing base, which can vary based on the amount of sales contracts in place on pictures financed under the facility. We reduced the borrowing commitment from $130 million to $60 million in July 2012.

Commitment Fee. We are required to pay a quarterly commitment fee of 0.75% per annum on the unused commitment under the Film Credit Facility.

Security. Borrowings under the Film Credit Facility are subject to a borrowing base calculation and are secured by interests in the related motion pictures, together with certain other receivables from other motion picture and television productions pledged by us, including a minimum pledge of such receivables of $25 million. Receivables pledged to the Film Credit Facility must be excluded from the borrowing base calculation under our senior revolving credit facility.

Pennsylvania Regional Center

General. On April 9, 2008, we entered into a loan agreement with the Pennsylvania Regional Center which provides for the availability of production loans up to $65.5 million on a five-year term for use in film and television productions in the State of Pennsylvania. The amount that was borrowed was limited to approximately one half of the qualified production costs

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incurred in the State of Pennsylvania through the two-year period ended April 2010, and is subject to certain other limitations. Under the terms of the loan, for every dollar borrowed, our production companies are required (within a two-year period) to either create a specified number of jobs, or spend a specified amount in certain geographic regions in the State of Pennsylvania.

Outstanding Amount. At June 30, 2012, we had borrowings of $65.5 million.

Availability of Funds. At June 30, 2012, there were no amounts available under this agreement.

Maturity Date. All amounts borrowed under this loan agreement with the Pennsylvania Regional Center are due April 11, 2013, five years from the date that we began to borrow under this agreement.

Interest. Amounts borrowed under the agreement carry an interest rate of 1.5%, which is payable semi-annually.

Security. The loan is secured by a first priority security interest in our film library pursuant to an intercreditor agreement with our senior lender under our senior revolving credit facility. Pursuant to the terms of our senior revolving credit facility, we are required to maintain certain collateral equal to the loans outstanding plus 5% under this facility. Such collateral can consist of cash, cash equivalents or debt securities, including our convertible senior subordinated notes repurchased. As of June 30, 2012, $72.8 million principal value (fair value — $84.5 million) of our convertible senior subordinated notes repurchased in December 2009 (see Note 7 to our consolidated financial statements) was held as collateral under our senior revolving credit facility.

Filmed Entertainment Backlog

Filmed Entertainment Backlog. Backlog represents the amount of future revenue not yet recorded from contracts for the licensing of films and television product for television exhibition and in international markets. Backlog at June 30, 2012 and March 31, 2012 was $992.2 million and $999.7 million, respectively.

Discussion of Operating, Investing, Financing Cash Flows

Cash Flows Provided by/Used in Operating Activities. Cash flows provided by operating activities for the three months ended June 30, 2012 were $151.0 million compared to cash flows used in operating activities for the three months ended June 30, 2011 of $44.5 million. The increase in cash provided by operating activities was primarily due to higher collections of accounts receivable, decreases in investment in films and television programs, a lower reduction in accounts payable and accrued liabilities, larger increases in deferred revenue, and higher amortization of films and television programs, offset by decreases in cash due to changes in restricted cash, participations and residuals, film obligations, and a net loss incurred for the three months ended June 30, 2012 as compared to net income generated for the three months ended June 30, 2011.

Cash Flows Used in Investing Activities. Cash flows used in investing activities of $0.4 million for the three months ended June 30, 2012 consisted of purchases of property and equipment. Cash flows used in investing activities of $2.4 million for the three months ended June 30, 2011 consisted of $0.4 million for purchases of property and equipment, $0.5 million of capital contributions to companies accounted as equity method investments, and $1.5 million for an increase in loans made to Break Media.

Cash Flows Provided by/Used in Financing Activities. Cash flows used in financing activities of $147.2 million for the three months ended June 30, 2012 consisted of $185.5 million of repayments under the Term Loan, $174.5 million repayment of production loans, $85.0 million repayment on the senior revolving credit facility, $3.7 million repayment of certain other financing obligations, $6.9 million increase in restricted cash collateral requirement associated with financing activities, and $2.7 million paid for tax withholding requirements associated with our equity awards, offset by borrowings of $274.7 million under the senior revolving credit facility and borrowings of $37.0 million under production loans. Cash flows provided by financing activities of $71.3 million for the three months ended June 30, 2011 resulted from the receipt of net proceeds of $192.4 million from the sale of the May 2011 Senior Notes, borrowings of $95.4 million under the senior revolving credit facility, $56.2 million under production loans, partially offset by $165.2 million repayment on the senior revolving credit facility, $87.1 million repayment of production loans, $19.5 million payment on the repurchase of convertible senior subordinated notes, and $0.9 million paid for tax withholding requirements associated with our equity awards.

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. We believe that cash flow from operations, cash on hand, senior revolving credit facility availability, tax-efficient financing, and available production financing will be adequate to meet known operational cash and debt service (i.e. principal and interest payments) requirements for the foreseeable future, including the funding of future film and television production, film rights acquisitions and theatrical and video release schedules, and future equity method investment funding requirements. 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

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credit worthiness.

Our current financing strategy is to fund operations and to leverage investment in films and television programs through our cash flow from operations, our senior revolving credit facility, single-purpose production financing, the Film Credit Facility, government incentive programs, film funds, and distribution commitments. In addition, we may acquire businesses or assets, including individual films or libraries that are complementary to our business. Any such transaction could be financed through our cash flow from operations, credit facilities, equity or debt financing. If additional financing beyond our existing cash flows from operations and credit facilities cannot fund such transactions, there is no assurance that such financing will be available on terms acceptable to us. We may also dispose of businesses or assets, including individual films or libraries, and use the net proceeds from such dispositions to fund operations or such acquisitions, or to repay debt.

Table of Debt and Other Financing Obligations and Contractual Commitments

The following table sets forth our future annual repayment of debt and other financing obligations outstanding, and our contractual commitments as of June 30, 2012:

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	Nine Months Ended March 31,		Year Ended March 31,
	2013		2014		2015		2016		2017		Thereafter		Total
Future annual repayment of debt and other financing obligations recorded as of June 30, 2012
Senior revolving credit facility	$	—	$	289,450	$	—	$	—	$	—	$	—	$	289,450
Principal amount of senior secured second-priority notes, due November 2016 (carrying value of $431.7 million at June 30, 2012)	—		—		—		—		436,000		—		436,000
Principal amount of Term loan (carrying value of $294.7 million at June 30, 2012)	—		—		3,762		35,587		259,811		—		299,160
Film obligations (1)	30,478		19,409		15,993		11,662		2,000		3,000		82,542
Production loans (1)
Individual production loans	136,857		86,070		—		—		—		—		222,927
Pennsylvania Regional Center production loans	—		65,500		—		—		—		—		65,500
Film Credit Facility	36,424		—		—		—		—		—		36,424
Principal amounts of convertible senior subordinated notes and other financing obligations (2)
October 2004 2.9375% Notes (carrying value of $0.3 million at June 30, 2012)	—		—		348		—		—		—		348
February 2005 3.625% Notes (carrying value of $23.5 million at June 30, 2012)	—		—		23,464		—		—		—		23,464
April 2009 3.625% Notes (carrying value of $46.9 million at June 30, 2012)	—		—		66,581		—		—		—		66,581
January 2012 4.00% Notes (carrying value of $35.6 million at June 30, 2012)	—		—		—		—		45,000		—		45,000
Other financing obligations	69		—		—		—		—		—		69
	203,828		460,429		110,148		47,249		742,811		3,000		1,567,465
Contractual commitments by expected repayment date
Distribution and marketing commitments (3)	96,614		51,986		—		—		—		—		148,600
Minimum guarantee commitments (4)	160,194		81,147		2,750		750		—		—		244,841
Production loan commitments (4)	10,244		1,861		—		—		—		—		12,105
Cash interest payments on subordinated notes and other financing obligations	5,094		5,074		5,074		1,800		1,800		—		18,842
Cash interest payments on senior secured second priority notes	44,690		44,690		44,690		44,690		44,690		—		223,450
Operating lease commitments	11,487		10,507		8,423		3,499		—		—		33,916
Other contractual obligations	1,416		1,525		1,525		—		—		—		4,466
Employment and consulting contracts	35,614		28,532		13,280		3,137		—		—		80,563
	365,353		225,322		75,742		53,876		46,490		—		766,783
Total future commitments under contractual obligations (5)	$	569,181	$	685,751	$	185,890	$	101,125	$	789,301	$	3,000	$	2,334,248

___________________


(1)	Film obligations include minimum guarantees and theatrical marketing obligations. Production loans represent loans for the production of film and television programs that we produce. Repayment dates are based on anticipated delivery or

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release date of the related film or contractual due dates of the obligation.


(2)	The future repayment dates of the convertible senior subordinated notes represent the next possible redemption date by the holder for each note respectively.


(3)	Distribution and marketing commitments represent contractual commitments for future expenditures associated with distribution and marketing of films which we will distribute. The payment dates of these amounts are primarily based on the anticipated release date of the film.

(4)

Minimum guarantee commitments represent contractual commitments related to the purchase of film rights for pictures to be delivered in the future. Production loan commitments represent amounts committed for future film production and development to be funded through production financing and recorded as a production loan liability when incurred. Future payments under these commitments are based on anticipated delivery or release dates of the related film or contractual due dates of the commitment. The amounts include future interest payments associated with the commitment.


(5)	Excludes the interest payments on the senior revolving credit facility and Term Loan as future amounts are not fixed or determinable due to fluctuating balances and interest rates.

Off-Balance Sheet Arrangements

We do not have any transactions, arrangements and other relationships with unconsolidated entities that will affect our liquidity or capital resources. We have no special purpose entities that provided off-balance sheet financing, liquidity or market or credit risk support, nor do we engage in leasing, hedging or research and development services, that could expose us to liability that is not reflected on the face of our consolidated financial statements. Our commitments to fund operating leases, minimum guarantees, production loans, equity method investment funding requirements and all other contractual commitments not reflected on the face of our audited consolidated financial statements are presented in the above table.

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Item 3. 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 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 enter into forward foreign exchange contracts to hedge our foreign currency exposures on future production expenses denominated in various foreign currencies. As of June 30, 2012, we had outstanding forward foreign exchange contracts to sell British Pound Sterling £33.2 million in exchange for US$52.7 million over a period of six months at a weighted average exchange rate of one British Pound Sterling equals US$1.58. Additionally, we had outstanding forward foreign exchange contracts to buy Canadian $21.8 million in exchange for US$21.6 million over a period of eight months at a weighted average exchange rate of one Canadian dollar equals US$1.01. Changes in the fair value representing a net unrealized fair value gain on foreign exchange contracts that qualified as effective hedge contracts outstanding during the three months ended June 30, 2012 amounted to $0.5 million and are included in accumulated other comprehensive loss, a separate component of shareholders’ equity. These contracts are entered into with a major financial institution as counterparty. We are 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. We do not require collateral or other security to support these contracts.

Interest Rate Risk. Certain of our borrowings, primarily borrowings under our senior revolving credit facility, Term Loan, certain production loans and the Film Credit Facility, are, and are expected to continue to be, at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net loss would increase. The applicable margin with respect to loans under the senior revolving credit facility is a percentage per annum equal to 2.50% plus an adjusted rate based on LIBOR. The applicable margin with respect to loans under the Term Loan is a percentage per annum equal to 4.50% plus an adjusted rate based on Alternative Base Rate Loans (as defined therein) and 5.50% plus an adjusted rate based on LIBOR loans (subject to a LIBOR floor of 1.25%). The applicable margin with respect to loans under the Film Credit Facility is a percentage per annum equal to 3.25% over the “LIBO” rate (as defined in the Film Credit Facility agreement). Assuming the senior revolving credit facility and the Film Credit Facility are fully drawn, based on the applicable LIBOR in effect as of June 30, 2012, each quarter point change in interest rates would result in a $0.9 million change in annual interest expense on the senior revolving credit facility and $0.3 million change in annual interest expense on the Film Credit Facility. Assuming the Term Loan outstanding balance and based on the applicable LIBOR in effect as of June 30, 2012, a quarter point change in interest rates would result in a $0.7 million change in annual interest expense. The variable interest production loans incur interest at rates ranging from approximately 3.48% to 3.74% and applicable margins ranging from 3.00% over the one, three, or six-month LIBOR to 3.25% over the one, three or six month LIBOR. A quarter point increase of the interest rates on the outstanding principal amount of our variable rate production loans would result in $0.8 million in additional costs capitalized to the respective film or television asset.

The following table presents our financial instruments that are sensitive to changes in interest rates. The table also presents the cash flows of the principal amounts of the financial instruments with the related weighted-average interest rates by expected maturity dates and the fair value of the instrument as of June 30, 2012:

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	Nine Months Ended March 31,			Year Ended March 31,																Fair Value
	2013			2014			2015			2016			2017			Thereafter		Total		June 30, 2012
Variable Rates:
Senior Revolving Credit Facility (1)	$	—		$	289,450		$	—		$	—		$	—		$	—	$	289,450	$	289,450
Average Interest Rate	—			2.75		%	—			—			—			—
Principal Amount of Senior Secured Second-Priority Notes (2)	—			—			—			—			436,000			—		436,000		476,330
Average Interest Rate	—			—			—			—			10.25		%	—
Term Loan (3)	—			—			3,762			35,587			259,811			—		299,160		296,542
Average Interest Rate	—			—			7.25		%	7.25		%	7.25		%	—
Production Loans (4):
Individual production loans	136,865			71,070			—			—			—			—		207,935		207,935
Average Interest Rate	3.63		%	3.73		%	—			—			—			—
Film Credit Facility	36,424			—			—			—			—			—		36,424		36,424
Average Interest Rate	3.50		%	—			—			—			—			—
Fixed Rates:
Production Loans (5):
Pennsylvania Regional Center production loans	—			65,500			—			—			—			—		65,500		64,116
Average Interest Rate	—			1.50		%	—			—			—			—
Principal Amounts of Convertible Senior Subordinated Notes (6):
October 2004 2.9375% Notes	—			—			348			—			—			—		348		246
Average Interest Rate	—			—			2.94		%	—			—			—
February 2005 3.625% Notes	—			—			23,464			—			—			—		23,464		23,464
Average Interest Rate	—			—			3.63		%	—			—			—
April 2009 3.625% Notes	—			—			66,581			—			—			—		66,581		53,056
Average Interest Rate	—			—			3.63		%	—			—			—
January 2012 4.00% Notes	—			—			—			—			45,000			—		45,000		36,477
Average Interest Rate	—			—			—			—			4.00		%	—
Other Financing Obligations (7)	69			—			—			—			—			—		69		69
Average Interest Rate	1.13		%	—			—			—			—			—
	$	173,358		$	426,020		$	94,155		$	35,587		$	740,811		$	—	$	1,469,931	$	1,484,109

____________________


(1)	Senior revolving credit facility, which expires July 25, 2013 bears interest of 2.50% over the Adjusted LIBOR rate.


(2)	Senior secured second-priority notes with a fixed interest rate equal to 10.25%.

(3)

The Term Loan matures on September 7, 2016. The Term Loan is repayable in quarterly installments equal to $13.75 million, with the balance payable on the final maturity date. The Term Loan is also repayable periodically to the extent of the excess cash flow, as defined, generated by Summit and its subsidiaries. Any voluntary prepayments reduces the remaining required quarterly installments on a pro-rata basis (see Note 5 to the consolidated financial statements). The

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Term Loan bears interest by reference to a base rate or the LIBOR rate (subject to a LIBOR floor of 1.25%), in either case plus an applicable margin of 4.50% in the case of base rate loans and 5.50% in the case of LIBOR loans.


(4)	Amounts owed to film production entities on anticipated delivery date or release date of the titles or the contractual due dates of the obligation. Production loans of $207.9 million incur interest at rates ranging from approximately 3.48% to 3.74%. Not included in the table above are approximately $15.0 million of production loans which are non-interest bearing.


(5)	Long term production loans with a fixed interest rate equal to 1.5%.


(6)	The future repayment dates of the convertible senior subordinated notes represent the next possible redemption date by the holder for each note respectively.


(7)	Other financing obligation with fixed interest rate equal to 1.13%.

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”). These rules refer to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within required time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of June 30, 2012, the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of our disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures were effective as of June 30, 2012.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d) of the Exchange Act, the Company, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, also evaluated whether any changes occurred to the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, such control. We have now implemented the same controls we apply for our other subsidiaries, for the classification of single picture production loans within Summit's statement of cash flows. Based on our evaluation, there have been no other changes that have materially affected, or are reasonable likely to materially affect, our internal controls over financial reporting during the period covered by this report.

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PART II

Item 1. Legal Proceedings.

From time to time, the Company is involved in certain claims and legal proceedings arising in the normal course of business. While the resolution of these matters cannot be predicted with certainty, we do not believe, based on current knowledge, that the outcome of any currently pending legal proceedings in which the Company is currently involved will have a material adverse effect on the Company's consolidated financial position, results of operations or cash flow.

Item 1A. Risk Factors.

Other than as set forth below, there were no other material changes to the risk factors previously reported in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.

An increase in the ownership of our common shares by certain shareholders could trigger a change in control under the agreements governing our long-term indebtedness.

The agreements governing certain of our long-term indebtedness contain change in control provisions that are triggered when any of our shareholders, directly or indirectly, acquires ownership or control in excess of a certain percentage of our common shares. As of July 25, 2012, three of our shareholders, Mark H. Rachesky, M.D., Capital Research Global Investors, and FMR LLC, and their respective affiliates, beneficially owned approximately 35.5%, 10.1% and 5.4%, respectively, of our outstanding common shares.

Under certain circumstances, including the acquisition of ownership or control by a person or group in excess of 50% of our common shares, the holders of our senior secured notes and our convertible senior subordinated notes may require us to repurchase all or a portion of such notes upon a change in control and the holders of our convertible senior subordinated notes may be entitled to receive a make whole premium based on the price of our common shares on the change in control date. We may not be able to repurchase these notes upon a change in control because we may not have sufficient funds. Further, we may be contractually restricted under the terms of our senior secured credit facility and our revolving film credit facility, from repurchasing all of the notes tendered by holders upon a change in control. Our failure to repurchase our senior secured notes upon a change in control would cause a default under the indentures governing the senior secured notes and the convertible senior subordinated notes and a cross-default under our senior secured credit facility and our revolving film credit facility.

Our senior secured credit facility and our revolving film credit facility also provide that a change in control, which includes a person or group acquiring ownership or control in excess of 50% of our outstanding common shares, will be an event of default that permits lenders to accelerate the maturity of borrowings thereunder and to enforce security interests in the collateral securing such debt, thereby limiting our ability to raise cash to purchase our outstanding senior secured notes and convertible senior subordinated notes. Summit's senior secured term loan facility also provides that a change of control, which includes a person or group acquiring ownership or control in excess of 90% of the membership interests in Summit, will be an event of default that permits lenders to accelerate the maturity of borrowings thereunder. Any of our future debt agreements may contain similar provisions.

Certain shareholders own a majority of our outstanding common shares.

As of July 25, 2012, three of our shareholders beneficially owned an aggregate of 73,697,437 of our common shares, or approximately 51.0% of the outstanding shares. In addition, one of these shareholders, Mark H. Rachesky, M.D., the beneficial owner of approximately 35.5% of our outstanding common shares, currently serves as the Chairman of our Board of Directors. Accordingly, these three shareholders, collectively, have the power to exercise substantial influence over us and on matters requiring approval by our shareholders, including the election of directors, the approval of mergers and other significant corporate transactions. This concentration of ownership may make it more difficult for other shareholders to effect substantial changes in our company and may also have the effect of delaying, preventing or expediting, as the case may be, a change in control of our company.

Sales of a substantial number of shares of our common shares, or the perception that such sales might occur, could have an adverse effect on the price of our common shares, and therefore our ability to raise additional capital to fund our operations.

As of July 25, 2012, over 51.0% of our common shares were held beneficially by certain individuals and institutional investors who each had ownership of greater than 5% of our common shares. We also recently filed a resale registration statement to enable

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certain shareholders who received our common shares in connection with our acquisition of Summit and certain holders of debt convertible into our common shares to resell our common shares. Sales by such individuals and institutional investors of a substantial number of shares of our common shares into the public market, or the perception that such sales might occur, could have an adverse effect on the price of our common shares, which could materially impair our ability to raise capital through the sale of common shares or debt that is convertible into our common shares.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Securities

On May 31, 2007, our Board of Directors authorized the repurchase of up to $50 million of our common shares. Thereafter, on each of May 29, 2008 and November 6, 2008, as part of its regularly scheduled meetings, our Board of Directors authorized the repurchase up to an additional $50 million of our common shares, subject to market conditions. The additional resolutions increased the total authorization to $150 million. The common shares may be purchased, from time to time, at the Company's discretion, including the quantity, timing and price thereof. Such purchases will be structured as permitted by securities laws and other legal requirements. During the period from the authorization date through December 31, 2011, 6,787,310 shares have been repurchased at a cost of approximately $65.2 million (including commission costs). The share repurchase program has no expiration date.

There were no purchases of shares of our common stock by us during the three months ended June 30, 2012.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not applicable.

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Item 5. Other Information.

None.

Item 6. Exhibits.



Exhibit
Number		Description of Documents
3.1(1)		Articles
3.2(2)		Notice of Articles
3.3(3)		Vertical Short Form Amalgamation Application
3.4(3)		Certificate of Amalgamation
31.1		Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
31.2		Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32.1		Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002
101(4)		The following materials from the Company's Annual Report on Form 10-K for the year ended March 31, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Shareholder's Equity, (iv) the Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements

__________________________


(1)	Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2005 as filed on June 29, 2005.


(2)	Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2010 as filed on February 9, 2011.


(3)	Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 as filed on May 30, 2007.

(4)

Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

______________________________

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




	LIONS GATE ENTERTAINMENT CORP.
	By:	/s/ James Keegan
		Name:	James Keegan
DATE: August 9, 2012		Title:	Duly Authorized Officer and Chief Financial Officer