What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-05 compared with 2022-02-03 · 141 added, 134 removed, 641 unchanged (30% of the section changed)

7 unchanged sentences

Restricted cash 979 7,134

Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 0 as of December 31, 2021 and June 30, 2021, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 0 as of March 31, 2022 and June 30, 2021, respectively

92,694 74,197

3 unchanged sentences

Total current assets 264,069 185,246

Property and equipment, net of accumulated depreciation and amortization of $ 44,784 and $ 42,673 as of December 31, 2021 and June 30, 2021, respectively

Property and equipment, net of accumulated depreciation and amortization of $ 45,869 and $ 42,673 as of March 31, 2022 and June 30, 2021, respectively

33,490 35,716

18 unchanged sentences

Employee related costs 129,949 90,269

League-related accruals 87,008 39,276

Other accrued liabilities 26,929 16,442

6 unchanged sentences

Other employee related costs 45,119 57,740

Deferred tax liabilities, net 15,030 —

Deferred revenue, noncurrent 31,180 31,603

5 unchanged sentences

Class A Common stock, par value $ 0.01 , 120,000 shares authorized;

19,689 and 19,587 shares outstanding as of December 31, 2021 and June 30, 2021, respectively

19,697 and 19,587 shares outstanding as of March 31, 2022 and June 30, 2021, respectively

Class B Common stock, par value $ 0.01 , 30,000 shares authorized;

4,530 shares outstanding as of December 31, 2021 and June 30, 2021

4,530 shares outstanding as of March 31, 2022 and June 30, 2021

Preferred stock, par value $ 0.01 , 15,000 shares authorized;

none outstanding as of December 31, 2021 and June 30, 2021

none outstanding as of March 31, 2022 and June 30, 2021

Additional paid-in capital 12,862 23,102

Treasury stock, at cost, 759 and 861 shares as of December 31, 2021 and June 30, 2021, respectively

Treasury stock, at cost, 751 and 861 shares as of March 31, 2022 and June 30, 2021, respectively

( 128,026 ) ( 146,734 )

10 unchanged sentences

(in thousands, except per share data)

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2022 2021 2022 2021

23 unchanged sentences

_________________

(a) Includes revenues from related parties of $ 70,131 and $ 14,369 for the three months ended December 31, 2021 and 2020, respectively, and $ 77,378 and $ 23,430 for the six months ended December 31, 2021 and 2020, respectively.

(b) Includes net charges from related parties of $ 37,874 and $ 2,650 for the three months ended December 31, 2021 and 2020, respectively, and $ 40,032 and $ 3,264 for the six months ended December 31, 2021 and 2020, respectively.

(c) Includes net charges from related parties of $ 18,880 and $ 10,455 for the three months ended December 31, 2021 and 2020, respectively, and $ 31,127 and $ 24,202 for the six months ended December 31, 2021 and 2020, respectively.

(a) Includes revenues from related parties of $ 75,851 and $ 80,322 for the three months ended March 31, 2022 and 2021, respectively, and $ 153,229 and $ 103,752 for the nine months ended March 31, 2022 and 2021, respectively.

(b) Includes net charges from related parties of $ 40,796 and $ 24,855 for the three months ended March 31, 2022 and 2021, respectively, and $ 80,828 and $ 28,119 for the nine months ended March 31, 2022 and 2021, respectively.

(c) Includes net charges from related parties of $ 20,493 and $ 14,957 for the three months ended March 31, 2022 and 2021, respectively, and $ 51,620 and $ 39,214 for the nine months ended March 31, 2022 and 2021, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2022 2021 2022 2021

14 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

Net loss $ ( 1,687 ) $ ( 70,148 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Net income (loss) $ 22,232 $ ( 65,053 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization 3,847 4,840

Benefits from deferred income taxes ( 4,054 ) ( 328 )

Provision for (benefit from) deferred income taxes 30,939 ( 275 )

Share-based compensation expense 19,178 26,193

17 unchanged sentences

Taxes paid in lieu of shares issued for equity-based compensation ( 12,142 ) ( 13,891 )

Proceeds from share issuance — 808

Proceeds from revolving credit facilities — 30,000

Proceeds from NHL advance — 30,000

Repayment of revolving credit facility ( 70,000 ) —

11 unchanged sentences

(in thousands)

Three Months Ended December 31, 2021

Three Months Ended March 31, 2022

Issued Additional

6 unchanged sentences

Interests Total Equity

Balance as of September 30, 2021 $ 249 $ — $ ( 129,426 ) $ ( 103,235 ) $ ( 2,005 ) $ ( 234,417 ) $ 2,233 $ ( 232,184 )

Balance as of December 31, 2021 $ 249 $ 6,460 $ ( 129,426 ) $ ( 87,390 ) $ ( 1,983 ) $ ( 212,090 ) $ 2,480 $ ( 209,610 )

Net income (loss) — — — 24,503 — 24,503 ( 584 ) 23,919

3 unchanged sentences

— 6,973 — — — 6,973 — 6,973

Adjustments to noncontrolling interests — ( 894 ) — — — ( 894 ) 894 —

Balance as of December 31, 2021 $ 249 $ 6,460 $ ( 129,426 ) $ ( 87,390 ) $ ( 1,983 ) $ ( 212,090 ) $ 2,480 $ ( 209,610 )

Common stock issued under stock incentive plans

— ( 571 ) 1,400 — — 829 — 829

Balance as of March 31, 2022 $ 249 $ 12,862 $ ( 128,026 ) $ ( 62,887 ) $ ( 1,960 ) $ ( 179,762 ) $ 1,896 $ ( 177,866 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended December 31, 2020

Three Months Ended March 31, 2021

Common Stock Issued Additional

5 unchanged sentences

Interests Total Equity

Balance as of September 30, 2020 $ 249 $ — $ ( 147,605 ) $ ( 93,361 ) $ ( 2,129 ) $ ( 242,846 ) $ 2,953 $ ( 239,893 )

Net loss — — — ( 40,625 ) — ( 40,625 ) ( 508 ) ( 41,133 )

Balance as of December 31, 2020 $ 249 $ 15,432 $ ( 147,585 ) $ ( 133,986 ) $ ( 2,119 ) $ ( 268,009 ) $ 2,881 $ ( 265,128 )

Net income (loss) — — — 5,468 — 5,468 ( 373 ) 5,095

Other comprehensive income — — — — 57 57 — 57

Comprehensive loss — — — — — ( 40,615 ) ( 508 ) ( 41,123 )

Comprehensive income (loss) — — — — — 5,525 ( 373 ) 5,152

Share-based compensation

— 3,867 — — — 3,867 — 3,867

Tax withholding associated with shares issued for equity-based compensation

— ( 93 ) — — — ( 93 ) — ( 93 )

Common stock issued under stock incentive plans

1 unchanged sentence

Adjustments to noncontrolling interests — 71 — — — 71 ( 71 ) —

Balance as of December 31, 2020 $ 249 $ 15,432 $ ( 147,585 ) $ ( 133,986 ) $ ( 2,119 ) $ ( 268,009 ) $ 2,881 $ ( 265,128 )

Balance as of March 31, 2021 $ 249 $ 19,327 $ ( 146,734 ) $ ( 128,518 ) $ ( 2,062 ) $ ( 257,738 ) $ 2,437 $ ( 255,301 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended December 31, 2021

Nine Months Ended March 31, 2022

Issued Additional

7 unchanged sentences

Balance as of June 30, 2021 $ 249 $ 23,102 $ ( 146,734 ) $ ( 78,898 ) $ ( 2,027 ) $ ( 204,308 ) $ 2,442 $ ( 201,866 )

Net loss — — — ( 560 ) — ( 560 ) ( 1,127 ) ( 1,687 )

Net income (loss) — — — 23,943 — 23,943 ( 1,711 ) 22,232

Other comprehensive income — — — — 67 67 — 67

Comprehensive loss

— — — — — ( 516 ) ( 1,127 ) ( 1,643 )

Comprehensive income (loss) — — — — — 24,010 ( 1,711 ) 22,299

Share-based compensation

5 unchanged sentences

Adjustments to noncontrolling interests — ( 1,165 ) — — — ( 1,165 ) 1,165 —

Balance as of December 31, 2021 $ 249 $ 6,460 $ ( 129,426 ) $ ( 87,390 ) $ ( 1,983 ) $ ( 212,090 ) $ 2,480 $ ( 209,610 )

Balance as of March 31, 2022 $ 249 $ 12,862 $ ( 128,026 ) $ ( 62,887 ) $ ( 1,960 ) $ ( 179,762 ) $ 1,896 $ ( 177,866 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended December 31, 2020

Nine Months Ended March 31, 2021

Common Stock Issued Additional

16 unchanged sentences

Adjustments to noncontrolling interests — ( 365 ) — — — ( 365 ) 365 —

Balance as of December 31, 2020 $ 249 $ 15,432 $ ( 147,585 ) $ ( 133,986 ) $ ( 2,119 ) $ ( 268,009 ) $ 2,881 $ ( 265,128 )

Balance as of March 31, 2021 $ 249 $ 19,327 $ ( 146,734 ) $ ( 128,518 ) $ ( 2,062 ) $ ( 257,738 ) $ 2,437 $ ( 255,301 )

See accompanying notes to consolidated financial statements.

34 unchanged sentences

As a result, the Company recognized certain revenues that otherwise would have been recognized during the third and fourth quarter of fiscal year 2020 during the first quarter of fiscal year 2021.

Reclassifications

Certain reclassifications have been made in order to conform to the current period’s presentation and relate to the separation of League-related accruals, which was previously reported in Other accrued liabilities in the consolidated balance sheet as of June 30, 2021.

MADISON SQUARE GARDEN SPORTS CORP.

1 unchanged sentence

Impact of COVID-19

COVID-19 disruptions have materially impacted the Company’s revenues and the Company recognized materially less revenues, or in some cases no revenues, across a number of areas during the fiscal year 2021.

COVID-19 disruptions have materially impacted the Company’s operations and operating results, with the Company recognizing materially less revenues, or in some cases no revenues, across a number of areas during fiscal years 2020 and 2021.

The Company’s operations and operating results were also impacted by temporary declines in attendance in fiscal year 2022, due to ongoing reduced tourism levels as well as an increase in cases during certain months of the fiscal year due to a COVID-19 variant.

In March 2020, the NBA and NHL suspended their 2019-20 seasons due to COVID-19.

15 unchanged sentences

The Garden was not available for use between April 17, 2020 (the date of the MSGE Distribution) and the start of the NBA and NHL 2020-21 seasons in December 2020 and January 2021, respectively, due to the government-mandated suspension of events in response to COVID-19, and was available at reduced capacity through May 2021.

As a result, the Company was not required to pay license fees to MSG Entertainment under the Arena License Agreements until games resumed at The Garden, and the Company continued to pay substantially reduced fees while attendance was limited.

As a result, the Company was not required to pay license fees to MSG Entertainment under the Arena License Agreements until games resumed at The Garden, and the Company paid substantially reduced fees while attendance was limited.

Effective July 1, 2021, the Company began paying license fees to MSG Entertainment under the Arena License Agreements in their full contractual amounts.

During the fiscal year 2021, as a result of COVID-19, the Company implemented cost-reduction measures that included workforce reductions and limits on discretionary spending.

During fiscal year 2021, as a result of COVID-19, the Company implemented cost-reduction measures that included workforce reductions and limits on discretionary spending.

In addition, as a result of the disruptions caused by COVID-19, certain operating expenses were reduced, including, in addition to the reduced payments to MSG Entertainment under the Arena License Agreements described above, (i) NBA league assessments and day-of-game expenses for Knicks and Rangers games, and (ii) league revenue sharing, net of escrow and team personnel expense.

These expense reductions did not fully offset revenue losses.

As a result of New York City regulations effective August 17, 2021, indoor entertainment venues such as The Garden were permitted to host guests at full capacity, subject to certain restrictions, including that all guests 12 years of age and older were required to show proof they had received at least one dose of a COVID-19 vaccine.

Following updated New York City regulations, effective January 29, 2022, all guests five years of age and older and employees must provide proof that they have received either two doses of a two-shot COVID-19 vaccination, or one dose of a single-shot vaccine.

Children under age five can attend events with a vaccinated adult, but ages two to four need to wear a mask while inside venues such as The Garden.

At this time, the Company’s management is unable to predict if there will be any longer-term effects due to these COVID-19 related disruptions.

Fan attendance for the 2021-22 NBA and NHL seasons has been and may continue to be impacted by a resurgence in the COVID-19 pandemic, such as the Delta and Omicron variants, , reduced tourism, as well as general hesitancy among the public to return to pre-COVID-19 activity levels, and may also be impacted by new governmental and league restrictions on attendance of games at The Garden and vaccination requirements for fans.

The Company’s business is also particularly sensitive to discretionary business and consumer spending.

COVID-19 could impede economic activity in impacted regions or globally over the long-term, causing a global recession and leading to a further decline in discretionary spending on sporting events and other leisure activities, including declines in domestic and international tourism, which could result in long-term effects on the Company’s business.

As a result of New York City regulations effective August 17, 2021, indoor entertainment venues such as The Garden were permitted to host guests at full capacity, subject to certain restrictions, including that all guests 12 years of age and older show proof of at least one dose of a COVID-19 vaccine.

Following updated New York City regulations, effective January 29, 2022, all guests five years of age and older and all employees were required to provide proof that they have received either two doses of a two-shot COVID-19 vaccination, or one dose of a single-shot vaccine.

Children under age five could attend events with a vaccinated adult, but children ages two to four were required to wear a mask while inside venues such as The Garden.

Effective March 7, 2022, New York City lifted all COVID-19 vaccination requirements pertaining to guests in attendance at indoor entertainment venues, followed by a lifting of vaccination requirements applicable to professional athletes competing in such venues effective March 24, 2022.

Also, in April 2022, New York State terminated the last of its mandatory COVID-19 rules for indoor venues.

As a result, there are no capacity restrictions or vaccination requirements applicable to fan attendance at games at The Garden as of the date of this filing.

The Knicks and the Rangers each completed their full 82-game regular season schedules for the 2021-22 season in April 2022 and the Rangers are currently competing in the playoffs.

Fan attendance during the regular season was impacted by the COVID-19 pandemic including the emergence of certain variants and ongoing reduced tourism levels.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

It is unclear to what extent COVID-19 concerns, including with respect to new variants, could result in renewed governmental and league restrictions on attendance or otherwise impact attendance of games at The Garden.

The Company’s business is also particularly sensitive to discretionary business and consumer spending.

A pandemic such as COVID-19 could impede economic activity in impacted regions or globally over the long-term, causing a global recession and leading to a further decline in discretionary spending on sporting events and other leisure activities, including declines in domestic and international tourism, which could result in long-term effects on the Company’s business.

Accounting Policies

29 unchanged sentences

All revenue recognized in the consolidated statements of operations is considered to be revenue from contracts with customers.

For the three and six months ended December 31, 2021 and 2020, the Company did not have any material impairment losses on receivables or contract assets arising from contracts with customers.

For the three and nine months ended March 31, 2022 and 2021, the Company did not have any material impairment losses on receivables or contract assets arising from contracts with customers.

Disaggregation of Revenue

The following table disaggregates the Company’s revenues by type of goods or services in accordance with the required entity-wide disclosure requirements set forth in ASC Subtopic 280-10-50-38 to 40 and the disaggregation of revenue required disclosures in accordance with ASC Subtopic 606-10-50-5 for the three and six months ended December 31, 2021 and 2020:

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2022 2021 2022 2021

12 unchanged sentences

The timing of revenue recognition, billings and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheet.

The following table provides information about contract balances from the Company’s contracts with customers as of December 31, 2021 and June 30, 2021.

December 31, June 30,

The following table provides information about contract balances from the Company’s contracts with customers as of March 31, 2022 and June 30, 2021.

March 31, June 30,

Receivables from contracts with customers, net (a)

5 unchanged sentences

(a) Receivables from contracts with customers, net, which are reported in Accounts receivable, net and Net related party receivables in the Company’s accompanying consolidated balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers.

As of December 31, 2021 and June 30, 2021, the Company’s receivables reported above included $ 4,509 and $ 213 , respectively, related to various related parties associated with contracts with customers.

As of March 31, 2022 and June 30, 2021, the Company’s receivables reported above included $ 9,344 and $ 213 , respectively, related to various related parties associated with contracts with customers.

See Note 15 for further details on related party arrangements.

Receivables from contracts with customers, net, excludes amounts recorded in Accounts receivable, net, associated with amounts due from the NBA and NHL related to escrow and player compensation recoveries and luxury tax payments.

As of December 31, 2021, the Company had receivable balances related to escrow and player compensation recoveries of $ 30,190 and $ 8,462 , recorded in Accounts receivable, net and Other assets, respectively.

As of March 31, 2022, the Company had receivable balances related to escrow and player compensation recoveries of $ 23,790 and $ 7,511 , recorded in Accounts receivable, net and Other assets, respectively.

As of June 30, 2021, the Company had receivable balances related to escrow and player compensation recoveries of $ 36,525 and $ 10,700 , recorded in Accounts receivable, net and Other assets, respectively.

1 unchanged sentence

Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional.

The Company had contract asset balances related to local media rights of $ 21,238 and $ 0 as of March 31, 2022 and June 30, 2021, respectively.

See Note 15 for further details on these related party arrangements.

(c) Deferred revenue, including non-current portion primarily relates to the Company’s receipt of consideration from customers or billing customers in advance of the Company’s transfer of goods or services to those customers.

1 unchanged sentence

The non-current portion of deferred revenue primarily consists of a $ 30,000 receipt from the NBA in December 2020 of league distributions in advance of the Company’s recognition.

The Company’s deferred revenue related to local media rights was $ 8,702 and $ 260 as of December 31, 2021 and June 30, 2021, respectively.

The Company’s deferred revenue related to local media rights was $ 0 and $ 260 as of March 31, 2022 and June 30, 2021, respectively.

See Note 15 for further details on these related party arrangements.

(d) Revenue recognized for the six months ended December 31, 2021 relating to the deferred revenue balance as of June 30, 2021 was $ 62,758 .

(d) Revenue recognized for the nine months ended March 31, 2022 relating to the deferred revenue balance as of June 30, 2021 was $ 111,580 .

MADISON SQUARE GARDEN SPORTS CORP.

1 unchanged sentence

Transaction Price Allocated to the Remaining Performance Obligations

The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2021 and is based on current projections.

The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2022 and is based on current projections.

In developing the estimated revenue, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

8 unchanged sentences

The following table presents a reconciliation of weighted-average shares used in the calculations of basic and diluted earnings (loss) per common share attributable to the Company’s stockholders (“EPS”) and the number of shares excluded from diluted earnings (loss) per common share, as they were anti-dilutive.

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2022 2021 2022 2021

3 unchanged sentences

Dilutive effect of shares issuable under share-based compensation plans

119 188 142 —

Weighted-average shares for diluted EPS

3 unchanged sentences

Direct operating and selling, general and administrative expenses in the accompanying consolidated statements of operations include net provisions for transactions relating to the Company’s teams for waiver/contract termination costs, player trades and season-ending injuries (“Team personnel transactions”).

Team personnel transactions were a net credit of $ 302 and a net provision of $ 2,839 for the three months ended December 31, 2021 and 2020, respectively, and net provisions of $ 425 and $ 13,712 for the six months ended December 31, 2021 and 2020, respectively.

Team personnel transactions were net provisions of $ 304 (net of insurance recovery of $ 656 ), and $ 3,305 for the three months ended March 31, 2022 and 2021, respectively, and net provisions of $ 729 (net of insurance recovery of $ 656 ), and $ 17,003 for the nine months ended March 31, 2022 and 2021, respectively.

MADISON SQUARE GARDEN SPORTS CORP.

3 unchanged sentences

2022 June 30,

2021 December 31,

2021 March 31,

2021 June 30,

6 unchanged sentences

_________________

(a) Restricted cash as of December 31, 2021 and June 30, 2020 primarily included cash deposited in an escrow account (see Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for more information).

(a) Restricted cash as of March 31, 2022 and June 30, 2020 primarily included cash deposited in an escrow account (see Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for more information).

For all other periods, restricted cash relates to the Company’s revolving credit facilities (see Note 11 for more information).

5 unchanged sentences

The Company has accounted for this extension as a lease remeasurement and remeasured the right-of-use asset and operating lease liability utilizing the Company’s incremental borrowing rate as of the date of remeasurement.

As a result of the remeasurement, non-cash additions to the right-of-use asset and operating lease liability of $ 1,244 were recorded during the three and six months ended December 31, 2021.

As a result of the remeasurement, non-cash additions to the right-of-use asset and operating lease liability of $ 1,244 were recorded during the nine months ended March 31, 2022.

In accordance with the terms of the Sublease Agreement, the Company has committed to enter into a new sublease agreement with MSG Entertainment for a lease term equivalent to the New MSGE Lease Agreement term, which ends January 31, 2046.

In addition, in connection with the New MSGE Lease Agreement, the Company has entered into a commitment whereby if the New MSGE Lease Agreement were terminated under certain circumstances, the Company would be required to enter into a new lease for executive offices in Two Pennsylvania Plaza directly with the landlord, with a consistent lease term through January 31, 2046.

As the Company has not yet entered into a new sublease for or taken possession of the new executive office space at Two Pennsylvania Plaza, no additional right-of-use assets or operating lease liabilities have been recorded as of December 31, 2021 related to the commitments discussed above.

As the Company has not yet entered into a new sublease for or taken possession of the new executive office space at Two Pennsylvania Plaza, no additional right-of-use assets or operating lease liabilities have been recorded as of March 31, 2022 related to the commitments discussed above.

In connection with the MSGE Distribution, the Company entered into the Arena License Agreements with MSG Entertainment that end on June 30, 2055 and allow the Knicks and the Rangers to continue to play their home games at The Garden.

2 unchanged sentences

The Garden was not available for use between April 17, 2020 and the start of the NBA and NHL 2020-21 seasons in December 2020 and January 2021, respectively, due to the government-mandated suspension of events in response to COVID-19, and as a result the Company was not required to pay license fees to MSG Entertainment under the Arena License Agreements.

During the three and six months ended December 31, 2021, the Company recognized operating lease costs associated with the Arena License Agreements with respect to games played at The Garden.

During the three and six months ended December 31,

During the three and nine months ended March 31, 2022 and 2021, the Company recognized operating lease costs associated with the Arena License Agreements with respect to games played at The Garden.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2020, the Company recognized operating lease costs associated with the Knicks Arena License Agreement, but no operating lease costs associated with the Rangers Arena License Agreement as there were no Rangers events.

As of December 31, 2021, the Company’s existing operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 8 months to 34 years.

As of March 31, 2022, the Company’s existing operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 5 months to 33 years.

In certain instances, leases include options to renew, with varying option terms.

1 unchanged sentence

The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants.

The following table summarizes the ROU assets and lease liabilities recorded on the Company’s accompanying consolidated balance sheets as of December 31, 2021 and June 30, 2021:

Line Item in the Company’s Consolidated Balance Sheet December 31,

The following table summarizes the ROU assets and lease liabilities recorded on the Company’s accompanying consolidated balance sheets as of March 31, 2022 and June 30, 2021:

Line Item in the Company’s Consolidated Balance Sheet March 31,

2022 June 30,

9 unchanged sentences

_________________

(a) As of December 31, 2021, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 42,372 and $ 692,139 , respectively, that are payable to MSG Entertainment.

(a) As of March 31, 2022, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 42,713 and $ 703,269 , respectively, that are payable to MSG Entertainment.

As of June 30, 2021, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 41,541 and $ 690,792 , respectively, that are payable to MSG Entertainment.

The following table summarizes the activity recorded within the Company’s accompanying consolidated statements of operations for the three and six months ended December 31, 2021 and 2020:

Line Item in the Company’s Consolidated Statement of Operations Three Months Ended December 31, Six Months Ended December 31,

The following table summarizes the activity recorded within the Company’s accompanying consolidated statements of operations for the three and nine months ended March 31, 2022 and 2021:

Line Item in the Company’s Consolidated Statement of Operations Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

5 unchanged sentences

Supplemental Information

For the six months ended December 31, 2021 and 2020, cash paid for amounts included in the measurement of lease liabilities was $ 21,689 and $ 1,299 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of December 31, 2021 was 33.1 years.

The weighted average discount rate was 7.13 % as of December 31, 2021 and represented the Company’s estimated incremental borrowing rate, assuming a secured borrowing, based on the remaining lease term at the time of either (i) adoption of the standard or (ii) the period in which the lease term expectation commenced or was modified.

For the nine months ended March 31, 2022 and 2021, cash paid for amounts included in the measurement of lease liabilities was $ 32,580 and $ 2,717 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of March 31, 2022 was 32.9 years.

The weighted average discount rate was 7.13 % as of March 31, 2022 and represented the Company’s estimated incremental borrowing rate, assuming a secured borrowing, based on the remaining lease term at the time of either (i) adoption of the standard or (ii) the period in which the lease term expectation commenced or was modified.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Maturities of operating lease liabilities as of December 31, 2021 are as follows:

Maturities of operating lease liabilities as of March 31, 2022 are as follows:

Fiscal Year 2022 (remainder) $ 10,964

9 unchanged sentences

During the first quarter of fiscal year 2022, the Company performed its annual impairment test of goodwill and determined that there were no impairments identified as of the impairment test date.

The carrying amount of goodwill as of December 31, 2021 and June 30, 2021 is $ 226,955 .

The Company’s indefinite-lived intangible assets as of December 31, 2021 and June 30, 2021 are as follows:

The carrying amount of goodwill as of March 31, 2022 and June 30, 2021 is $ 226,955 .

The Company’s indefinite-lived intangible assets as of March 31, 2022 and June 30, 2021 are as follows:

Sports franchises $ 111,064

2 unchanged sentences

The Company’s intangible assets subject to amortization are as follows:

December 31, 2021 Gross Accumulated

March 31, 2022 Gross Accumulated

Amortization Net

9 unchanged sentences

$ 5,900 $ ( 4,205 ) $ 1,695

For the three months ended December 31, 2021 and 2020, amortization expense of intangible assets was $ 265 and $ 265 , respectively.

For the six months ended December 31, 2021 and 2020, amortization expense of intangible assets was $ 530 and $ 530 , respectively.

For the three months ended March 31, 2022 and 2021, amortization expense of intangible assets was $ 265 and $ 265 , respectively.

For the nine months ended March 31, 2022 and 2021, amortization expense of intangible assets was $ 795 and $ 795 , respectively.

MADISON SQUARE GARDEN SPORTS CORP.

2 unchanged sentences

The following table presents the Company’s assets that are measured at fair value on a recurring basis, which include cash equivalents:

Fair Value Hierarchy December 31,

Fair Value Hierarchy March 31,

2022 June 30,

5 unchanged sentences

The carrying value and fair value of the Company’s financial instruments reported in the accompanying consolidated balance sheets are as follows:

December 31, 2021 June 30, 2021

March 31, 2022 June 30, 2021

Value Carrying

31 unchanged sentences

Knicks LLC is required to pay a commitment fee ranging from 0.250 % to 0.300 % per annum in respect of the average daily unused commitments under the 2021 Knicks Revolving Credit Facility.

The outstanding balance under the 2021 Knicks Revolving Credit Facility was $ 220,000 as of December 31, 2021 which was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2021 Knicks Revolving Credit Facility as of December 31, 2021 was 1.40 %.

During the six months ended December 31, 2021 the Company made interest payments of $ 1,645 in respect of the 2021 Knicks Revolving Credit Facility (including in respect of obligations under the 2020 Knicks Credit Agreement prior to the amendment and restatement thereof).

The outstanding balance under the 2021 Knicks Revolving Credit Facility was $ 220,000 as of March 31, 2022, which was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2021 Knicks Revolving Credit Facility as of March 31, 2022 was 1.65 %.

During the nine months ended March 31, 2022 the Company made interest payments of $ 2,418 in respect of the 2021 Knicks Revolving Credit Facility (including in respect of obligations under the 2020 Knicks Credit Agreement prior to the amendment and restatement thereof).

All obligations under the 2021 Knicks Revolving Credit Facility are secured by a first lien security interest in certain of Knicks LLC’s assets, including, but not limited to, (i) the Knicks LLC’s membership rights in the NBA, (ii) revenues to be paid to the Knicks LLC by the NBA pursuant to certain U.S.

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The 2021 Knicks Revolving Credit Facility requires Knicks LLC to comply with a debt service ratio of at least 1.5 :1.0 over a trailing four quarter period.

As of December 31, 2021, Knicks LLC was in compliance with this financial covenant.

As of March 31, 2022, Knicks LLC was in compliance with this financial covenant.

Knicks Holdings Credit Facility

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Rangers LLC is required to pay a commitment fee ranging from 0.375 % to 0.625 % per annum in respect of the average daily unused commitments under the 2021 Rangers Revolving Credit Facility.

During the six months ended December 31, 2021, the Company made principal repayments of $ 25,000 and the outstanding balance under the 2021 Rangers Revolving Credit Facility was $ 110,000 as of December 31, 2021 which was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2021 Rangers Revolving Credit Facility as of December 31, 2021 was 1.90 %.

During the six months ended December 31, 2021 the Company made interest payments of $ 1,326 in respect of the 2021 Rangers Revolving Credit Facility (including in respect of obligations under the 2020 Rangers Credit Agreement prior to the amendment and restatement thereof).

In addition, on February 2, 2022, the Company made an additional principal repayment of $ 25,000 under the 2021 Rangers Revolving Credit Facility.

During the nine months ended March 31, 2022, the Company made principal repayments of $ 70,000 and the outstanding balance under the 2021 Rangers Revolving Credit Facility was $ 65,000 as of March 31, 2022, which was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2021 Rangers Revolving Credit Facility as of March 31, 2022 was 2.15 %.

During the nine months ended March 31, 2022 the Company made interest payments of $ 1,816 in respect of the 2021 Rangers Revolving Credit Facility (including in respect of obligations under the 2020 Rangers Credit Agreement prior to the amendment and restatement thereof).

In addition, on April 27, 2022, the Company made an additional principal repayment of $ 15,000 under the 2021 Rangers Revolving Credit Facility.

All obligations under the 2021 Rangers Revolving Credit Facility are, subject to the 2021 Rangers NHL Advance Agreement (as defined below), secured by a first lien security interest in certain of Rangers LLC’s assets, including, but not limited to, (i) Rangers LLC’s membership rights in the NHL, (ii) revenues to be paid to Rangers LLC by the NHL pursuant to certain U.S.

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The 2021 Rangers Revolving Credit Facility requires Rangers LLC to comply with a debt service ratio of at least 1.5 :1.0 over a trailing four quarter period.

As of December 31, 2021, Rangers LLC was in compliance with this financial covenant.

As of March 31, 2022, Rangers LLC was in compliance with this financial covenant.

2021 Rangers NHL Advance Agreement

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It is expected that the advanced amount will be set off against funds that would otherwise be paid, distributed or transferred by the NHL to Rangers LLC.

The outstanding balance under the 2021 Rangers NHL Advance Agreement was $ 30,000 as of December 31, 2021 and was recorded as Debt in the accompanying consolidated balance sheet.

During the six months ended December 31, 2021 the Company made interest payments of $ 450 .

The outstanding balance under the 2021 Rangers NHL Advance Agreement was $ 30,000 as of March 31, 2022 and was recorded as Debt in the accompanying consolidated balance sheet.

During the nine months ended March 31, 2022 the Company made interest payments of $ 675 .

MADISON SQUARE GARDEN SPORTS CORP.

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Other assets 4,240 2,345

(a) In connection with the 2021 Knicks Revolving Credit Facility and 2021 Rangers Revolving Credit Facility, the Company incurred $ 2,836 in deferred financing costs during the six months ended December 31, 2021.

Benefit Plans

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See Note 14 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for more information with regard to the liabilities retained by the Company from certain plans, which were transferred to the MSG Sports, LLC Excess Cash Balance Plan and MSG Sports, LLC Excess Retirement Plan, which the Company established in connection with the MSGE Distribution and are collectively referred to the “MSGS Pension Plans.”

The following table presents components of net periodic benefit cost for the MSGS Pension Plans included in the accompanying consolidated statements of operations for the three and six months ended December 31, 2021 and 2020.

Net periodic benefit cost is reported in Miscellaneous expense, net.

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2022 2021 2022 2021

Interest cost $ 31 $ 60 $ 62 $ 120

Interest cost (credit) $ 31 $ ( 11 ) $ 93 $ 109

Recognized actuarial loss 33 57 99 77

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Expenses related to the Savings Plans that are included in the accompanying consolidated statements of operations were $ 899 and $ 1,838 for the three and six months ended December 31, 2021, respectively, and $ 506 and $ 1,104 for the three and six months ended December 31, 2020, respectively.

Expenses related to the Savings Plans that are included in the accompanying consolidated statements of operations were $ 1,238 and $ 3,076 for the three and nine months ended March 31, 2022, respectively, and $ 426 and $ 1,530 for the three and nine months ended March 31, 2021, respectively.

MADISON SQUARE GARDEN SPORTS CORP.

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Share-based compensation expense was recognized in the consolidated statements of operations as a component of selling, general and administrative expenses.

Share-based compensation expense was $ 7,354 and $ 12,205 for the three and six months ended December 31, 2021, respectively, and $ 15,981 and $ 22,326 for the three and six months ended December 31, 2020, respectively.

There were no costs related to share-based compensation that were capitalized for the three and six months ended December 31, 2021 and 2020, respectively.

Share-based compensation expense was $ 6,973 and $ 19,178 for the three and nine months ended March 31, 2022, respectively, and $ 3,867 and $ 26,193 for the three and nine months ended March 31, 2021, respectively.

There were no costs related to share-based compensation that were capitalized for the three and nine months ended March 31, 2022 and 2021, respectively.

As a result of an agreement to settle an action (the “Settlement”) filed by a purported stockholder of the Company derivatively on behalf of the Company against certain directors of the Company who are members of the Dolan family and against the directors of the Company who were members of the Compensation Committee, Mr.

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32 target performance stock units and three grants of stock options to purchase an aggregate of 449 shares of Class A Common Stock, which were to vest over a 4 -year period.

The Settlement became effective October 8, 2020 and therefore, upon cancellation, the Company recorded previously unrecognized share-based compensation expense of approximately $ 7,400 related to this award during the three and six months ended December 31, 2020.

Restricted Stock Units Award Activity

The following table summarizes activity related to the Company’s restricted stock units and performance restricted stock units, collectively referred to as “RSUs,” held by the Company and MSG Entertainment employees, for the six months ended December 31, 2021:

Number of Weighted-Average

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Vested ( 140 ) ( 85 ) $ 254.96

Unvested award balance, December 31, 2021 196 178 $ 201.04

Forfeited / Cancelled — ( 2 ) $ 173.94

Unvested award balance, March 31, 2022 187 177 $ 200.10

_____________________

(a) Weighted-average fair value per share at date of grant does not reflect any adjustments to awards granted prior to the MSGE Distribution.

The fair value of RSUs that vested during the six months ended December 31, 2021 was $ 38,828 .

The fair value of RSUs that vested during the nine months ended March 31, 2022 was $ 40,490 .

Upon delivery, RSUs granted under the Employee Stock Plan were net share-settled to cover the required statutory tax withholding obligations.

To fulfill the Company’s and MSG Entertainment’s employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 101 of these RSUs, with an aggregate value of $ 18,306 , inclusive of $ 6,164 related to MSG Entertainment employees (who vested in the Company’s RSUs), were retained by the Company and the taxes paid are reflected as a financing activity in the accompanying consolidated statement of cash flows for the six months ended December 31, 2021.

The fair value of RSUs that vested during the six months ended December 31, 2020 was $ 34,668 .

The weighted-average fair value per share at grant date of RSUs granted during the six months ended December 31, 2020 was $ 162.22 .

To fulfill the Company’s and MSG Entertainment’s employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 105 of these RSUs, with an aggregate value of $ 18,945 , inclusive of $ 6,803 related to MSG Entertainment employees (who vested in the Company’s RSUs), were retained by the Company and the taxes paid are reflected as a financing activity in the accompanying consolidated statement of cash flows for the nine months ended March 31, 2022.

The fair value of RSUs that vested during the nine months ended March 31, 2021 was $ 36,099 .

The weighted-average fair value per share at grant date of RSUs granted during the nine months ended March 31, 2021 was $ 162.22 .

MADISON SQUARE GARDEN SPORTS CORP.

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Stock Options Award Activity

The following table summarizes activity related to the Company’s stock options for the six months ended December 31, 2021:

The following table summarizes activity related to the Company’s stock options for the nine months ended March 31, 2022:

Time Vesting Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value

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Cancelled — $ —

Balance as of December 31, 2021 94 $ 145.78 5.96 $ 2,622

Exercisable as of December 31, 2021 94 $ 145.78 5.96 $ 2,622

Balance as of March 31, 2022 94 $ 145.78 5.71 $ 3,151

Exercisable as of March 31, 2022 94 $ 145.78 5.71 $ 3,151

Stock Repurchase Program

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The timing and amount of purchases will depend on market conditions and other factors.

During the six months ended December 31, 2021 and 2020, the Company did no t engage in any share repurchase activities under its share repurchase program.

As of December 31, 2021, the Company had $ 259,639 of availability remaining under its stock repurchase authorization.

During the nine months ended March 31, 2022 and 2021, the Company did no t engage in any share repurchase activities under its share repurchase program.

As of March 31, 2022, the Company had $ 259,639 of availability remaining under its stock repurchase authorization.

Related Party Transactions

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Accordingly, agreements between the Company and MSG Networks are now effectively agreements with MSG Entertainment on a consolidated basis.

As of December 31, 2021, members of the Dolan family including trusts for members of the Dolan family (collectively, the “Dolan Family Group”), for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, collectively beneficially own 100 % of the Company’s outstanding Class B Common Stock and own approximately 3.1 % of the Company’s outstanding Class A Common Stock.

As of March 31, 2022, members of the Dolan family including trusts for members of the Dolan family (collectively, the “Dolan Family Group”), for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, collectively beneficially own 100 % of the Company’s outstanding Class B Common Stock and own approximately 3.1 % of the Company’s outstanding Class A Common Stock.

Such shares of the Company’s Class A Common Stock and Class B Common Stock, collectively, represent approximately 70.6 % of the aggregate voting power of the Company’s outstanding common stock.

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• Team sponsorship allocation agreement with MSG Entertainment, pursuant to which teams continue receiving an allocation of sponsorship and signage revenues associated with the sponsorship agreements that existed at the MSGE Distribution Date;

• Transition Services Agreement (the “TSA”) pursuant to which the Company receives certain services from MSG Entertainment, such as information technology, accounts payable, payroll, human resources, and other corporate functions, as well as the executive support services, in exchange for service fees.

As a result of the MSGE-MSGN Merger, the TSA is expected to be amended to provide for the provision of certain legal services by the Company to MSG Entertainment, including its wholly-owned subsidiary, MSG Networks;

• Transition Services Agreement (the “TSA”) pursuant to which the Company (i) receives certain services from MSG Entertainment, such as information technology, accounts payable, payroll, human resources, and other corporate functions, as well as the executive support services, in exchange for service fees and (ii) provides certain services to MSG Entertainment, such as certain communications, legal and ticketing services (including the provision of certain legal services the Company provided to MSG Networks prior to the MSGE-MSGN Merger), in exchange for service fees;

• Sublease agreement, pursuant to which the Company leases office space from MSG Entertainment;

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(i) the Company’s Executive Chairman with MSG Entertainment;

(ii) the Company’s Vice Chairman with AMC Networks and MSG Entertainment;

and (iii) the Company’s President and Chief Executive Officer with MSG Entertainment.

and (ii) the Company’s Vice Chairman with AMC Networks and MSG Entertainment.

The Company also previously shared such costs for the Company’s President and Chief Executive Officer with MSG Entertainment through March 31, 2022.

Additionally, the Company, MSG Entertainment, and AMC Networks allocate the costs of certain personal aircraft and helicopter use by their shared executives.

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The following table summarizes the composition and amounts of the transactions with the Company’s affiliates.

These amounts are reflected in revenues and operating expenses in the accompanying consolidated statements of operations for the three and six months ended December 31, 2021 and 2020:

Three Months Ended December 31, Six Months Ended December 31,

These amounts are reflected in revenues and operating expenses in the accompanying consolidated statements of operations for the three and nine months ended March 31, 2022 and 2021:

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

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Corporate general and administrative expenses, net

Corporate general and administrative expenses, net reflects net charges of $ 10,990 and $ 19,874 from MSG Entertainment pursuant to the TSA for certain business functions that were previously performed by internal resources for the three and six months ended December 31, 2021, respectively, and $ 7,913 and $ 18,949 for the three and six months ended December 31, 2020, respectively.

Corporate general and administrative expenses, net reflects net charges of $ 9,473 and $ 29,347 from MSG Entertainment pursuant to the TSA for certain business functions that were previously performed by internal resources for the three and nine months ended March 31, 2022, respectively, and $ 8,822 and $ 27,771 for the three and nine months ended March 31, 2021, respectively.

These services include information technology, accounting, accounts payable, payroll, tax, legal, human resources, insurance and risk management, investor relations, corporate communications, benefit plan administration and reporting, and internal audit.

In addition, Corporate general and administrative expenses, net reflects rent expense associated with the lease of office space from MSG Entertainment of $ 765 and $ 1,480 for the three and six months ended December 31, 2021, respectively, and $ 674 and $ 1,369 for the three and six months ended December 31, 2020, respectively.

In addition, Corporate general and administrative expenses, net reflects rent expense associated with the lease of office space from MSG Entertainment of $ 752 and $ 2,232 for the three and nine months ended March 31, 2022, respectively, and $ 678 and $ 2,047 for the three and nine months ended March 31, 2021, respectively.

See Note 7 for more information regarding the lease of office space from MSG Entertainment.

Corporate general and administrative expenses, net for the three and six months ended December 31, 2020 also reflects charges from the Company to MSG Networks for the period prior to the MSGE-MSGN Merger pursuant to a services agreement between the Company and MSG Networks.

Corporate general and administrative expenses, net for the three and nine months ended March 31, 2021 also reflects charges from the Company to MSG Networks for the period prior to the MSGE-MSGN Merger pursuant to a services agreement between the Company and MSG Networks.

Costs associated with the Sponsorship sales and service representation agreements

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Costs associated with the Arena License Agreements

For the three and six months ended December 31, 2021, costs associated with the Arena License Agreements include $ 27,686 and $ 28,997 , respectively, recorded as operating lease cost.

For the three and six months ended December 31, 2020, costs associated with the Knicks Arena License Agreement include $ 2,210 , recorded as operating lease cost.

For the three and six months ended December 31, 2020, no operating lease costs were recorded for the Rangers Arena License Agreement as there were no Rangers events.

For the three and nine months ended March 31, 2022, costs associated with the Arena License Agreements include $ 29,425 and $ 58,422 , respectively, recorded as operating lease cost.

For the three and nine months ended March 31, 2021, costs associated with the Arena License Agreements include $ 20,357 and $ 22,567 , respectively, recorded as operating lease cost.

See Note 7 for more information regarding Arena License Agreements.

Income tax expense for the three months ended December 31, 2021 of $ 17,115 reflects an effective tax rate of 53 %.

In general, the Company is required to use an estimated annual effective tax rate to measure the tax benefit or tax expense recognized in an interim period.

The estimated annual effective tax rate exceeds the statutory federal tax rate of 21 % primarily due to state taxes, nondeductible officers’ compensation, and disability insurance premiums expense.

In general, the Company is required to use an estimated annual effective tax rate to measure the tax benefit or expense recognized in an interim period.

The estimated annual effective tax rate exceeds the statutory federal tax rate of 21 % primarily due to state taxes, nondeductible officers’ compensation, and players’ disability insurance premiums expense.

The estimated annual effective tax rate is revised on a quarterly basis.

Income tax benefit for the six months ended December 31, 2021 of $ 4,054 reflects an effective tax rate of 71 %.

The effective tax rate for the six months ended December 31, 2021 is higher than the estimated annual effective tax rate primarily due to $ 752 of excess tax benefit on share-based payment awards that was recognized in the first quarter of the fiscal year.

Income tax expense for the three months ended December 31, 2020 of $ 170 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to tax expense of $ 9,842 related to an increase in the valuation allowance, tax expense of $ 1,558 resulting from the acceleration of share-based compensation expense in connection with the cancellation of certain awards and tax expense of $ 533 resulting from nondeductible officers’ compensation, partially offset by state income tax benefit of $ 3,427 .

Income tax benefit for the six months ended December 31, 2020 of $ 328 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to tax expense of $ 17,463 related to an increase in the valuation allowance, tax expense of $ 1,558 resulting from the acceleration of share-based compensation expense in connection with the cancellation of certain awards and tax expense of $ 1,393 resulting from nondeductible officers’ compensation, partially offset by state income tax benefit of $ 6,261 .

Income tax expense for the three and nine months ended March 31, 2022 of $ 34,993 and $ 30,939 , respectively, reflect an effective tax rate of 59 % and 58 %.

Income tax expense for the three months ended March 31, 2021 of $ 53 differs from income tax expense derived from applying the statutory federal rate of 21 % to pretax income primarily due to tax benefit of $ 4,295 related to a decrease in the valuation allowance, partially offset by state income tax expense of $ 1,507 and tax expense of $ 561 resulting from nondeductible officers’ compensation.

Income tax benefit for the nine months ended March 31, 2021 of $ 275 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to tax expense of $ 13,168 related to an increase in the valuation allowance, tax expense of $ 1,954 resulting from nondeductible officers’ compensation, and tax expense of $ 1,558 resulting from the acceleration of share-based compensation expense in connection with the cancellation of certain awards, partially offset by state income tax benefit of $ 4,754 .

The Company was notified in April 2020 that the City of New York was commencing an audit of the state income tax returns for the fiscal years ended June 30, 2016 and 2017.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements