Subsequent Events (Unaudited)

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 "January 2012 Notes"). The proceeds were used to fund a portion of the acquisition of Summit Entertainment, LLC discussed below. Interest on the January 2012 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on July 15, 2012. The January 2012 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.

Acquisition of Summit Entertainment, LLC. 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 $413.7 million, which consisted of $343.5 million in cash paid at closing, 5,837,781 in the Company's common shares paid at closing (a part of which are included in escrow for indemnification purposes), and an additional $20.0 million of cash or the Company's common shares (based on a common share price of $8.39 per share) to be paid or issued, at the Company's option, within 60 days of the date of the transaction. Of the cash portion of the purchase price, approximately $284.4 million was 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 $508.0 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 to Summit with a principal amount of $500.0 million, maturing on September 7, 2016 (the "Term Loan"). The Term Loan is secured by collateral of the Summit assets. 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. The Term Loan bears interest by reference to a base rate or the LIBOR rate, in either case plus an applicable margin of 5.00% in the case of base rate loans and 6.00% in the case of LIBOR loans.

The acquisition will be accounted for as a purchase, with the results of operations of Summit included in the Company's consolidated results from January 13, 2012. The following unaudited pro forma condensed consolidated statements 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 occurred on April 1, 2010. The information below is based on a preliminary estimate of the purchase price allocation to the assets and liabilities acquired. The purchase price allocation is subject to revision, as more detailed analysis of investment in films and intangible assets is completed and additional information on the fair value of assets and liabilities becomes available, including receipts of final appraisals of the net assets acquired. A change in the fair value of the net assets of Summit may change the amount of the purchase price allocable to goodwill, and could impact the amounts of amortization expense included in the pro forma statement of operations information shown below. The statement of operations information below includes the statement of operations of Summit for the nine months ended September 30, 2011 and 2010 combined with the Company's statement of operations for the nine months ended December 31, 2011 and 2010.



	Nine Months Ended			Nine Months Ended
	December 31, 2011			December 31, 2010
	(Amounts in thousands, except per share amounts)
Revenues	$	1,273,655		$	2,011,114
Operating income	$	41,975		$	202,544
Net income (loss)	$	(27,558	)	$	83,266
Basic Net Income (Loss) Per Common Share	$	(0.20	)	$	0.62
Diluted Net Income (Loss) Per Common Share	$	(0.20	)	$	0.61
Weighted average number of common shares outstanding - Basic	138,227			135,176
Weighted average number of common shares outstanding - Diluted	138,227			148,396

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