25JUL201322550356 To Our Shareholders: In fiscal 2014, we continued to capitalize on our unique advantages as an agile and innovative content company and translated our increasing operating momentum into strong financial results. We reported revenue of $2.63 billion, record adjusted EBITDA of $370.8 million and adjusted net income of $217.9 million (also an all-time high) or $1.58 adjusted basic net income per share for the fiscal year ended March 31, 2014.1 Our strong free cash flow enabled us to continue to strengthen our balance sheet, reducing the principal amount outstanding on our $800 million revolving credit facility to $97.6 million as of March 31, 2014. Operating in a robust global environment for content, Lionsgate delivered its film, television and digital product to an expanding array of buyers during the fiscal year as a growing number of digital platforms with a strong appetite for content continued to emerge alongside our traditional customers. Franchises Continue To Drive Content Growth Nowhere was this vibrancy more evident than in our ability to assemble one of the strongest and most diverse portfolios of brands and franchises in the industry, as we developed several important new properties while expanding our existing franchises. During the year, we continued to grow The Hunger Games into a global phenomenon and extended the franchise into exciting new businesses, successfully launched the Divergent franchise, wrapped principal photography on Gods of Egypt in Australia, announced our partnership with Saban Brands for a series of live action films based on the universally recognized Power Rangers brand and readied Now You See Me 2 for production on three continents to maximize the emerging franchise’s global box office potential. The Hunger Games: Catching Fire set the world on fire last year, becoming the highest-grossing domestic box office release of 2013 and the 10th highest-grossing North American release of all time. With world premieres in London, Paris, Berlin, Madrid and Rome leading into the U.S. premiere in Los Angeles, we also transformed the franchise into a truly global phenomenon as Catching Fire’s international box office increased by 60% over the first Hunger Games film. We’re currently preparing an equally exciting and innovative global roll-out for The Hunger Games: Mockingjay -Part 1, which completed production this summer and launches in theaters around the world on November 21, 2014. In addition to its growth at the global box office, we extended The Hunger Games franchise into a mobile game in partnership with leading social and mobile game developer Kabam, started preparations for a Hunger Games travelling museum that will tour North America in 2015 and began exploring theme park attractions and other location-based entertainment opportunities around the world. 1 For reconciliation see Exhibit B to the Company’s Definitive Proxy Statement filed with Securities and Exchange Commission on July 29, 2014 (www.lionsgate.com/corporate/reports/sec-filings/). 1 Our Divergent franchise is off to a fast start as the first film grossed more than $150 million at the continue Lionsgate’s tradition of enduring programming such as Mad Men and Weeds that generates domestic box office and nearly $300 million worldwide. With strong holds domestically and long-term profitability from a lucrative, multiplatform back-end. internationally and book sales that have accelerated from 17 million when the film was released in March 2014 to more than 25 million today, we see tremendous growth potential for the next three films Shows like Orange is the New Black for Netflix and Deadbeat, already renewed for a second season on of the series. The eagerly-anticipated The Divergent Series: Insurgent, starring Shailene Woodley, Theo Hulu, underscore our status as one of the premier content providers for new digital platforms and James and Academy Award® winners Kate Winslet, Octavia Spencer and Naomi Watts, will open on reflect our leadership in innovating financial models that capitalize on new or accelerated windows to March 20, 2015. enhance the profitability of our shows. Even with 12 of our next 25 wide releases comprised of films that are franchises or potential franchises, Coming off one of the strongest television development slates in our history last year, we delivered the we remain focused on mitigating risk through a business model that emphasizes pre-licensing of our critically-acclaimed drama Manhattan to WGN America, the dark comedy The Royals to E!, the inspiring films in most international territories, typically limiting average “domestic gap” (production capital at Chasing Life, the first television series from our film and television partnership with Televisa, to ABC risk after international pre-licensing and before marketing spend) to less than $15 million per film. The Family, and the space travel thriller Ascension to SyFy. We also received an animated pilot order from archetype of this model is Gods of Egypt which, despite its epic visual scope and state-of-the-art effects, Adult Swim for Harold & Kumar and a new pilot order from HBO, giving us new shows for several buyers has a domestic gap of only $11 million after production subsidies for filming in Australia and with whom we’ve never previously done business. international licensing are incorporated into its cost structure. Harold & Kumar is based on our Mandate Pictures hit film and, along with Dirty Dancing, currently in Thanks to our franchises, Lionsgate enters fiscal 2015 with great visibility and our usual diversified film development as an ABC television mini-series, is one of the shows that reflect our commitment to portfolio that includes tentpoles, strong brands and star-driven event films with great commercial achieve synergies among our content businesses and demonstrate the ability of our brands and potential, a mix that has generated more than $2 billion at the global box office for Lionsgate for two franchises to create lasting and replicable value. straight years and vaulted the Company into the top six major studios in domestic box office market The day after Manhattan’s July 27 debut on WGN America, we announced the licensing of the series for share. a second and accelerated window on Hulu as we continue to work with our partners to create new We’re very excited about upcoming releases such as American Ultra, starring Jesse Eisenberg, Twilight’s windowing strategies to monetize our content earlier than ever before. Kristen Stewart and Nashville’s Connie Britton, and the next wave of properties that includes The Last Growing International Box Office and Emerging Digital Platforms are Creating New Opportunities for Witch Hunter, starring Vin Diesel and Michael Caine, and The Glass Castle, based on the poignant New Premium Content around the World York Times best-selling memoir and starring Jennifer Lawrence. We achieved record international revenue during fiscal 2014 as international theatrical box office Our Television Business Continues to Diversify and Generate Valuable New Brands continued to grow and emerging digital platforms reshaped our business models, created competition in During fiscal 2014, Lionsgate’s television business continued to evolve into one of the leading markets where little or no competition previously existed and increased the demand for our film and independent suppliers to traditional and digital platforms alike with a diversified content portfolio that television content around the world. spans more than 30 shows on over 20 different networks. Lionsgate’s television operations generated a The Company renewed and expanded its output deals with leading international distributors such as record $447.4 million in revenue during the fiscal year, continuing its double-digit historical Studiocanal and Tele Munchen Group in Germany, Roadshow Pictures in Australia, Belga Films in compounded annual growth rate, a trajectory that we expect to continue over the next three years with Benelux and Nordisk Film in Scandinavia, and we forged new agreements with fast-growing distributors steadily increasing profitability as our shows progress toward and through their syndication windows. like Leone Film Group in Italy. Lionsgate now has output agreements covering nearly 80% of the world’s The breadth and depth of our television slate was highlighted during the year by fresh accolades for movie-going population outside China and India, complemented by a highly successful self-distribution multiple Emmy Award winner Mad Men, now in its seventh season on AMC, Anger Management’s business in the UK that has achieved two consecutive banner years and our thriving IDC joint venture upcoming entry into syndication in fall 2014, the continued growth of Nashville, renewed for a third serving Latin America. season on ABC, and the widely-heralded emergence of Orange is the New Black as one of our most During the year, Lionsgate also capitalized on demand from digital platforms throughout the global important new brands. marketplace. We formed an innovative content partnership for our films and television series with the In its second season and already renewed for a third, Orange is the New Black earned 12 Emmy Alibaba Group in China, one of the most recognized brands among consumers in the world’s largest and nominations and was Netflix’s most watched show in the U.S. and around the world. It is poised to fastest-growing territory. The agreement complements several other Lionsgate distribution 2 3 partnerships in China where the Company released six films last year that generated $116 million at the innovative approach to windows in the pay television space and one of the top slates of blockbuster box office, including the action thriller Escape Plan, which generated $42 million at the Chinese box feature films in the world. As EPIX’s profitability continues to grow, we will also focus on creating more office, nearly doubling its North American performance. original programming to complement the channel’s world-class movie line-up.