What changed in this filing

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Item 9A. Controls and Procedures

2021-05-28 compared with 2020-05-27 · 951 added, 795 removed, 1455 unchanged (55% of the section changed)

26 unchanged sentences

There were no changes in internal control over financial reporting during the fiscal fourth quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 global pandemic, but we are continually monitoring and assessing the COVID-19 situation on our internal controls.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to disruptions related to the COVID-19 global pandemic, but we are continually monitoring and assessing the COVID-19 situation on our internal controls.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following documents are filed as part of this report:

(a) The following documents are filed as part of this report:

(1) Financial Statements

9 unchanged sentences

(In Millions)

Beginning of Period

Charged to Costs

Description Balance at

Beginning of Period Charged to Costs

and Expenses (1)

Charged to Other

Accounts Deductions Balance at

End of Period

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(3) Uncollectible accounts written off and fluctuations in foreign currency exchange rates.

Valuation allowance addition recorded in other comprehensive income and primarily associated with hedging losses.

(4) Valuation allowance adjustments recorded in other comprehensive income and primarily associated with hedging activity.

INDEX TO EXHIBITS

Exhibit Number

Exhibit Description

Incorporated by Reference

Exhibit Number Exhibit Description Incorporated by Reference

Form Exhibit Filing Date/

Period End Date

2.1 Agreement and Plan of Merger, dated as of June 30, 2016, by and among Lions Gate, Starz, and Orion Arm Acquisition Inc.

Notice of Articles

Supplemental Indenture, dated as of December 8, 2016, among Lions Gate Entertainment Corp., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee

Indenture, dated as of October 27, 2016, by and between LG FinanceCo Corp.

and Deutsche Bank Trust Company Americas, as trustee

Indenture, dated as of March 28, 2018, by and between Lions Gate Capital Holdings LLC, as issuer, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee

Indenture, dated as of February 4, 2019, by and among Lions Gate Capital Holdings, LLC the Guarantors named therein, and Deutsche Bank Trust Company, as Trustee

8-K 2.1 7/1/2016

8-K 3.1 12/8/2016

3.2x Notice of Articles

4.1 Indenture, dated as of April 1, 2021, by and among Lions Gate Capital Holdings, LLC the Guarantors named therein, and Deutsche Bank Trust Company, as Trustee

8-K 4.1 4/1/2021

4.2 Description of Class A voting shares, no par value per share

S-4 — 8/1/2016

4.3 Description of Class B non-voting shares, no par value per share

Director Compensation Summary

S-4 — 8/1/2016

10.1*x Director Compensation Summary

10.2 Form of Director Indemnity Agreement

10-Q 10.62 12/31/2008

10.3 Letter Agreement between Mark H.

1 unchanged sentence

dated July 9, 2009

8-K 10.65 7/10/2009

10.4 Registration Rights Agreement, dated as of October 22, 2009, by and among Lions Gate Entertainment Corp.

and the persons listed on the signature pages thereto

Membership Interest Purchase Agreement, dated as of January 13, 2012, among Lions Gate Entertainment Corp., LGAC 1, LLC, LGAC 3, LLC, Summit Entertainment, LLC, S Representative, LLC and the several sellers party thereto

Employment Agreement, dated May 30, 2013, between the Company and Jon Feltheimer

8-K 10.68 10/23/2009

10.5 Stock Exchange Agreement, dated as of February 10, 2015, by and between Lions Gate Entertainment Corp., LG Leopard Canada LP and the stockholders listed on Schedule 1 thereto

Underwriting Agreement dated April 8, 2015, by and among Lions Gate Entertainment Corp., MHR Capital Partners Master Account LP, MHR Capital Partners (100) LP, MHR Institutional Partners II LP, MHR Institutional Partners IIA LP, MHR Institutional Partners III LP and J.P.

Morgan Securities LLC

8-K 10.1 2/11/2015

10.6 Investor Rights Agreement, dated as of November 10, 2015, by and among Lions Gate Entertainment Corp., Liberty Global plc, Discovery Communications, Inc., Liberty Global Incorporated Limited, Discovery Lightning Investments Ltd.

and affiliates of MHR Fund Management, LLC

8-K 10.1 11/10/2015

10.6.1 Amendment No.

1 to Investor Rights Agreement, dated as of June 30, 2016, by and among Lions Gate, Mammoth, Liberty, Discovery, Liberty Global plc, Discovery Communications, Inc., and the affiliated funds of Mammoth party thereto

8-K 10.8 7/1/2016

10.7 Voting and Standstill Agreement, dated as of November 10, 2015, by and among Lions Gate Entertainment Corp., Liberty Global plc, Discovery Communications, Inc., Liberty Global Incorporated Limited, Discovery Lightning Investments Ltd., Dr.

Malone and affiliates of MHR Fund Management, LLC

8-K 10.2 11/10/2015

10.7.1 Amendment to Voting and Standstill Agreement, dated as of June 30, 2016, by and among Lions Gate, Liberty Global plc, Discovery, Dr.

Malone, MHR Fund Management, LLC, Liberty, Discovery Communications, Inc.

and the Mammoth Funds (as defined therein)

8-K 10.7 7/1/2016

10.8 Registration Rights Agreement, dated as of November 10, 2015, by and among Lions Gate Entertainment Corp.

and Liberty Global Incorporated Limited

8-K 10.3 11/10/2015

10.9 Registration Rights Agreement, dated as of November 10, 2015, by and among Lions Gate Entertainment Corp.

and Discovery Lightning Investments Ltd.

Exhibit Number

Exhibit Description

Incorporated by Reference

Period End Date

Underwriting Agreement, dated November 12, 2015, by and among Lions Gate Entertainment Corp., J.P.

Morgan Securities LLC, Liberty Global Incorporated Limited, Discovery Lightning Investments Ltd.

And Bank of America, N.A.

8-K 10.4 11/10/2015

10.10 Amendment No.

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and the persons listed on the signatures pages thereto

10-Q 10.116 2/4/2016

10.11 Stock Exchange Agreement, dated as of June 30, 2016, by and among Lions Gate, Orion Arm Acquisition Inc., and the stockholders listed on Schedule 1 thereto

Amendment to Voting and Standstill Agreement, dated as of June 30, 2016, by and among Lions Gate, Liberty Global plc, Discovery, Dr.

Malone, MHR Fund Management, LLC, Liberty, Discovery Communications, Inc.

and the Mammoth Funds (as defined therein)

Amendment No.

Commitment Letter, dated as of June 27, 2016, among Lions Gate, and JPMorgan Chase Bank, N.A., Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch, and Deutsche Bank Securities Inc.

Amendment to Employment Agreement, dated October 11, 2016, between the Company and Jon Feltheimer

Amendment to Employment Agreement, dated November 3, 2016, between Lions Gate Entertainment Corp.

and Michael Burns

8-K 10.1 7/1/2016

10.12 Credit and Guarantee Agreement, dated as of December 8, 2016, among Lions Gate, as borrower, the guarantors party thereto, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as Administrative Agent

Executive Annual Bonus Program

Form of Restricted Share Unit Award Agreement

8-K 10.1 12/8/2016

10.12.1 Amendment No.

1, dated as of December 11, 2017, to the Credit and Guarantee Agreement dated as of December 8, 2016, among Lions Gate Entertainment Corp., as borrower, each guarantor party thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto

8-K 10.1 12/11/2017

Exhibit Number Exhibit Description Incorporated by Reference

Form Exhibit Filing Date/

Period End Date

10.12.2 Amendment No.

1 unchanged sentence

1 dated as of December 11, 2017).

Employment Agreement between Lions Gate Entertainment Corp.

and Brian Goldsmith dated as of October 1, 2018

8-K 10.1 3/22/2018

10.12.3 Amendment No.

3 dated as of March 11, 2019, to the Credit and Guarantee Agreement dated as of December 8, 2016, as amended and restated as of March 22, 2018 (as further amended, supplemented, amended and restated or otherwise modified from time to time) among Lions Gate Entertainment Corp., Lions Gate Capital Holdings LLC, as borrower, each guarantor party thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto.

Lions Gate Entertainment Inc.

Deferred Compensation Plan

10-K 10.34 5/23/2019

10.12.4 Amendment No.

4, dated as of April 6, 2021, to the Credit and Guarantee Agreement dated as of December 8, 2016, among Lions Gate Entertainment Corp., as borrower, each guarantor party thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto.

8-K 10.1 4/6/2021

10.13* Lions Gate Entertainment Corp.

2019 Performance Incentive Plan.

Employment Agreement between Lions Gate Entertainment Corp.

Barge dated November 1, 2019

8-K 10.1 9/15/2020

10.13.1* Form of Restricted Share Unit Award Agreement

10-Q 10.39 11/7/2019

10.13.2* Form of Nonqualified Stock Option Agreement

10-Q 10.40 11/7/2019

10.13.3* Form of Share Appreciation Rights Award Agreement

Exhibit Number

Exhibit Description

Incorporated by Reference

Period End Date

10-Q 10.41 11/7/2019

10.14* Deferred Compensation Plan

10-Q 10.41 2/4/2021

10.15* Employment Agreement between Lions Gate Entertainment Corp.

and Brian Goldsmith dated as of October 1, 2018

10-Q 10.39 12/31/2018

10.15.1* Amendment to Employment Agreement between Lions Gate Entertainment Corp.

and Brian Goldsmith dated June 22, 2020

10-Q 10.36 8/6/2020

10.16* Employment Agreement between Lions Gate Entertainment Corp.

Berg dated as of May 16, 2018

Subsidiaries of the Company

Consent of Ernst & Young LLP

Power of Attorney (Contained on Signature Page)

Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002

Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002

Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002

The following financial statements from the Company's Annual Report on Form 10-K for the year ended March 31, 2020, formatted in Inline XBRL:

10-Q 10.36 8/8/2019

10.16.1* Employment Agreement between Lions Gate Entertainment Corp.

Berg dated as of May 15, 2020

10-Q 10.37 8/6/2020

10.17* Employment Agreement between Lions Gate Entertainment Corp.

Barge dated November 1, 2019

10-Q 10.38 11/7/2019

10.17.1* Amendment to Employment Agreement between Lions Gate Entertainment Corp.

Barge dated June 22, 2020

10-Q 10.35 8/6/2020

10.18* Employment Agreement among Jon Feltheimer and Lions Gate Entertainment Corp.

dated as of August 21, 2020

8-K 10.1 8/26/2020

10.19* Employment Agreement among Michael Burns and Lions Gate Entertainment Corp.

dated as of December 18, 2020

8-K 10.1 12/21/2020

21.1x Subsidiaries of the Company

23.1x Consent of Ernst & Young LLP

24.1x Power of Attorney (Contained on Signature Page)

31.1x Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2x Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1x Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002

101x The following financial statements from the Company's Annual Report on Form 10-K for the year ended March 31, 2021 , formatted in Inline XBRL:

(i) Consolidated Balance Sheets (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

The cover page from the Company’s Annual Report on Form 10-K for the year ended March 31, 2020 (formatted as Inline XBRL and contained in Exhibit 101).

104x The cover page from the Company’s Annual Report on Form 10-K for the year ended March 31, 2021 (formatted as Inline XBRL and contained in Exhibit 101).

_____________________________

* Management contract or compensatory plan or arrangement.

Filed herewith

x Filed herewith

FORM 10-K SUMMARY.

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Each person whose signature appears below authorizes each of Jon Feltheimer, Michael Burns, Corii Berg and James W.

Barge, severally and not jointly, to be his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in such person’s name, place and stead, in any and all capacities, to sign any amendments to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020;

granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, shall lawfully do or cause to be done by virtue hereof.

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Barge, severally and not jointly, to be his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in such person’s name, place and stead, in any and all capacities, to sign any amendments to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021;

granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, shall lawfully do or cause to be done by virtue hereof.

Signature Title Date

BARGE Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

/s/ MICHAEL BURNS

Vice Chairman, Director May 28, 2021

Michael Burns

/s/ GORDON CRAWFORD

/s/ MIGNON CLYBURN Director May 28, 2021

Mignon Clyburn

/s/ GORDON CRAWFORD Director May 28, 2021

Gordon Crawford

/s/ ARTHUR EVRENSEL

Arthur Evrensel

/s/ JON FELTHEIMER

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Jon Feltheimer

/s/ EMILY FINE

/s/ EMILY FINE Director May 28, 2021

/s/ MICHAEL T.

/s/ SIR LUCIAN GRAINGE

Sir Lucian Grainge

/s/ SUSAN MCCAW

/s/ YVETTE OSTOLAZA

FRIES Director May 28, 2021

/s/ SUSAN MCCAW Director May 28, 2021

/s/ YVETTE OSTOLAZA Director May 28, 2021

Yvette Ostolaza

RACHESKY, M.D.

Chairman of the Board of Directors

Chairman of the Board of Directors May 28, 2021

Rachesky, M.D.

/s/ DANIEL SANCHEZ

Daniel Sanchez

/s/ DARYL SIMM

Director May 28, 2021

/s/ HARDWICK SIMMONS

Director May 28, 2021

Hardwick Simmons

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill

Description of the Matter

At March 31, 2020, the Company’s goodwill was $2.8 billion.

As disclosed in Note 1 to the consolidated financial statements “Description of Business, Basis of Presentation and Significant Accounting Policies,” goodwill is tested for impairment at least annually at the reporting unit level, and between annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value.

Auditing management’s evaluation of goodwill for impairment is complex and requires significant judgment due to the estimation required in determining the fair value of the reporting units.

These fair value estimates are affected by significant assumptions such as the discount rate, projected annual revenue growth rate and EBITDA margin, terminal growth rate, and market multiples, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s assessment of the significant assumptions used in the fair value measurements described above.

To test the estimated fair values of the Company’s reporting units, we performed audit procedures that included, among others, assessing the methodologies used and testing the significant assumptions discussed above and the underlying data used by the Company in its analyses.

We compared the significant assumptions used by management to current industry and economic trends, changes to the Company’s business model, historical financial performance, and other relevant factors.

We assessed the historical accuracy of management’s forecasts and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions.

In addition, we tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company.

We also involved our specialists to help evaluate the reasonableness of certain significant assumptions and the valuation methodologies used.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Pre-release Film Impairments

Description of the Matter

As disclosed in Note 1 to the consolidated financial statements “Description of Business, Basis of Presentation and Significant Accounting Policies,” “Investment in Films and Television Programs” is stated at the lower of amortized cost or estimated fair value.

As disclosed in Note 3 to the consolidated financial statements “Investment in Films and Television Programs and Program Rights,” total impairment charges on investment in films and television programs related to theatrical films were $55.2 million for the year ended March 31, 2020 and the unamortized balance related to completed and not released and in progress theatrical films was $150.8 million at March 31, 2020.

Description of the Matter As disclosed in Note 1 to the consolidated financial statements “Description of Business, Basis of Presentation and Significant Accounting Policies,” “Investment in Films and Television Programs” is stated at the lower of amortized cost or estimated fair value.

As disclosed in Note 3 to the consolidated financial statements “Investment in Films and Television Programs and Licensed Program Rights,” total impairment charges on investment in films and television programs related to theatrical films were $34.8 million for the year ended March 31, 2021 and the unamortized balance related to completed and not released and in progress theatrical films was $253.1 million at March 31, 2021.

Auditing the Company’s impairment evaluation for theatrical films prior to release is challenging and subjective as the key inputs into the analysis include estimates of future anticipated revenues and box office performance, which may differ from future actual results.

These estimates are based in part on the historical performance of similar films, test audience results when available, information regarding competing film releases, and critic reviews.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s theatrical impairment review process.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s theatrical impairment review process.

For example, we tested controls over management’s review of unreleased theatrical films for indicators of impairment and management’s determination of the significant assumptions mentioned above.

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CONSOLIDATED BALANCE SHEETS

2021 March 31,

(Amounts in millions)

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Property and equipment, net 91.1 140.9

Investments 31.9 40.3

Intangible assets 1,575.1 1,719.6

Deferred tax assets

Goodwill 2,764.5 2,833.5

Other assets 434.2 391.5

Total assets $ 8,306.2 $ 7,951.2

Accounts payable and accrued liabilities $ 545.4 526.9

Participations and residuals 508.8 441.9

Film obligations and production loans

Film obligations, production loans and production tax credit facility 385.0 353.7

Debt - short term portion 88.0 68.6

1 unchanged sentence

Total current liabilities 1,692.9 1,507.7

Debt 2,542.9 2,664.4

Participations and residuals 304.6 421.6

Film obligations and production loans

Film obligations, production loans and production tax credit facility 318.5 96.9

Other liabilities 337.1 334.9

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Class B non-voting common shares, no par value, 500.0 shares authorized, 138.2 shares issued (March 31, 2020 - 136.4 shares issued)

Retained earnings (accumulated deficit)

2,296.0 2,221.7

Accumulated deficit ( 82.9 ) ( 16.9 )

Accumulated other comprehensive loss ( 83.3 ) ( 206.0 )

2 unchanged sentences

Noncontrolling interests 1.6 2.0

Total equity 2,794.6 2,660.0

Total liabilities and equity $ 8,306.2 $ 7,951.2

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

2021 2020 2019

(Amounts in millions, except per share amounts)

Revenues $ 3,271.5 $ 3,890.0 $ 3,680.5

Direct operating 1,725.9 2,226.1 2,028.2

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Restructuring and other 24.7 24.3 78.0

Gain on sale of Pantaya ( 44.1 ) — —

Total expenses 3,100.9 3,887.2 3,550.5

3 unchanged sentences

Interest on dissenting shareholders' liability — — ( 35.3 )

Total interest expense

Interest expense ( 181.5 ) ( 191.3 ) ( 198.9 )

Shareholder litigation settlements — — ( 114.1 )

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Equity interests loss ( 6.1 ) ( 17.2 ) ( 42.9 )

Income (loss) before income taxes

Loss before income taxes ( 17.4 ) ( 203.1 ) ( 308.1 )

Income tax (provision) benefit ( 17.1 ) ( 3.3 ) 8.5

Net income (loss)

Net loss ( 34.5 ) ( 206.4 ) ( 299.6 )

Net loss attributable to noncontrolling interests 15.6 18.0 15.4

Net income (loss) attributable to Lions Gate Entertainment Corp.

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 18.9 ) $ ( 188.4 ) $ ( 284.2 )

Per share information attributable to Lions Gate Entertainment Corp.

shareholders:

Basic net income (loss) per common share

Diluted net income (loss) per common share

Basic net loss per common share $ ( 0.09 ) $ ( 0.86 ) $ ( 1.33 )

Diluted net loss per common share $ ( 0.09 ) $ ( 0.86 ) $ ( 1.33 )

Weighted average number of common shares outstanding:

Basic 220.5 217.9 213.7

Diluted 220.5 217.9 213.7

Dividends declared per common share $ — $ — $ 0.18

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

2021 2020 2019

(Amounts in millions)

Net income (loss)

Net loss $ ( 34.5 ) $ ( 206.4 ) $ ( 299.6 )

Foreign currency translation adjustments, net of tax 3.7 ( 0.6 ) ( 5.8 )

Net unrealized loss on available-for-sale securities, net of tax

Net unrealized loss on cash flow hedges, net of tax benefit of nil, $0.3 million, and $0.1 million in 2020, 2019 and 2018, respectively

Net unrealized gain (loss) on cash flow hedges, net of tax benefit of nil , nil and $ 0.3 million in 2021, 2020 and 2019, respectively

119.0 ( 125.1 ) ( 62.2 )

Comprehensive income (loss) 88.2 ( 332.1 ) ( 367.6 )

1 unchanged sentence

Comprehensive income (loss) attributable to Lions Gate Entertainment Corp.

shareholders $ 103.8 $ ( 314.1 ) $ ( 352.2 )

See accompanying notes.

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Class A Voting

Common Shares

Class B Non-Voting

Common Shares

Retained Earnings (Accumulated Deficit)

Common Shares Class B Non-Voting

Common Shares Retained Earnings (Accumulated Deficit) Accumulated

Comprehensive

Income (Loss)

Total LGEC Shareholders' Equity

Non-controlling Interests (a)

Income (Loss) Total LGEC Shareholders' Equity Non-controlling Interests (a) Total Equity

Number Amount Number Amount

(Amounts in millions)

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Share-based compensation, net 0.3 11.9 0.5 47.0 — — 58.9 — 58.9

Issuance of common shares

Issuance of common shares related to acquisitions and other 0.4 8.5 3.1 67.5 — — 76.0 — 76.0

Noncontrolling interests — — — — — — — 1.4 1.4

Dividends declared — — — — ( 38.5 ) — ( 38.5 ) — ( 38.5 )

Other comprehensive income

Net income (loss) — — — — ( 284.2 ) — ( 284.2 ) 0.8 ( 283.4 )

Other comprehensive loss — — — — — ( 68.0 ) ( 68.0 ) — ( 68.0 )

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 6.5 ) — ( 6.5 ) — ( 6.5 )

Balance at March 31, 2019 82.5 $ 649.7 133.5 $ 2,140.6 $ 208.7 $ ( 80.3 ) $ 2,918.7 $ 3.2 $ 2,921.9

Cumulative effect of accounting changes

Exercise of stock options — — 0.2 1.7 — — 1.7 — 1.7

1 unchanged sentence

Issuance of common shares related to acquisitions and other 0.9 8.5 2.1 36.7 — — 45.2 — 45.2

Repurchase of common shares, no par value ( 0.7 ) ( 3.8 ) — — — — ( 3.8 ) — ( 3.8 )

Noncontrolling interests — — — — — — — ( 1.4 ) ( 1.4 )

Dividends declared

Net income (loss) — — — — ( 188.4 ) — ( 188.4 ) 0.2 ( 188.2 )

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Share-based compensation, net 0.2 4.7 1.6 72.8 — — 77.5 — 77.5

Issuance of common shares related to acquisitions and other

Issuance of common shares — 0.2 — 0.2 — — 0.4 — 0.4

Repurchase of common shares, no par value ( 0.2 ) ( 1.0 ) — — — — ( 1.0 ) — ( 1.0 )

1 unchanged sentence

Net income (loss) — — — — ( 18.9 ) — ( 18.9 ) 0.2 ( 18.7 )

Other comprehensive loss

Other comprehensive income — — — — — 122.7 122.7 — 122.7

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 47.1 ) — ( 47.1 ) — ( 47.1 )

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_________________________

Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 12 ).

(a) Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 12 ).

See accompanying notes.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

2021 2020 2019

(Amounts in millions)

Operating Activities:

Net income (loss)

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

Net loss $ ( 34.5 ) $ ( 206.4 ) $ ( 299.6 )

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

Depreciation and amortization 188.5 197.7 163.4

1 unchanged sentence

Interest on dissenting shareholders' liability — — ( 72.0 )

Amortization of debt financing costs

Amortization of debt financing costs and other non-cash interest 44.8 14.9 11.6

Non-cash share-based compensation 89.0 50.5 68.1

1 unchanged sentence

Distributions from equity method investee — — 1.8

Gain on sale of Pantaya ( 44.1 ) — —

Loss (gain) on extinguishment of debt — ( 5.4 ) 1.9

1 unchanged sentence

Loss (gain) on investments ( 0.5 ) 0.5 87.6

Deferred income taxes (benefit)

Deferred income taxes 3.4 ( 0.9 ) ( 23.6 )

Changes in operating assets and liabilities:

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Deferred revenue 47.9 ( 31.4 ) ( 44.4 )

Net Cash Flows Provided By Operating Activities

Net Cash Flows Provided By (Used In) Operating Activities ( 0.5 ) 614.6 427.5

Investing Activities:

Proceeds from the sale of equity method investee, net of transaction costs

Proceeds from the sale of equity method and other investments 4.1 — 48.0

Investment in equity method investees and other ( 0.2 ) ( 20.6 ) ( 48.6 )

Business acquisitions, net of cash acquired of $5.5 and $18.7 in 2019 and 2018, respectively

Business acquisitions, net of cash acquired of $ 5.5 in 2019

Capital expenditures ( 35.0 ) ( 31.1 ) ( 43.8 )

Net Cash Flows Provided By (Used In) Investing Activities

Net Cash Flows Used In Investing Activities ( 31.1 ) ( 51.7 ) ( 121.7 )

Financing Activities:

Debt - borrowings 200.0 852.1 3,541.2

Debt - repurchases and repayments

Debt - repayments ( 267.6 ) ( 1,033.4 ) ( 3,212.7 )

Production loans - borrowings 273.7 59.0 338.1

Production loans - repayments ( 53.0 ) ( 293.8 ) ( 305.4 )

Production tax credit facility advances 118.8 — —

Interest rate swap settlement payments ( 22.3 ) — —

Payment of dissenter liability accrued at acquisition — — ( 797.3 )

4 unchanged sentences

Tax withholding required on equity awards ( 7.7 ) ( 3.4 ) ( 10.1 )

Net Cash Flows Used In Financing Activities

Net Cash Flows Provided By (Used In) Financing Activities 237.9 ( 426.1 ) ( 499.3 )

Net Change In Cash and Cash Equivalents 206.3 136.8 ( 193.5 )

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Description of Business

Lions Gate Entertainment Corp.

(the “Company,” “Lionsgate,” "Lions Gate," “we,” “us” or “our”) is a global content leader whose films, television series, digital products and linear and over-the-top platforms reach next generation audiences around the world.

Lionsgate’s film and television properties support location-based entertainment venues and other branded attractions, as well as a video game business.

Lionsgate's content initiatives are backed by a nearly 17,000 -title film and television library and delivered through a global sales and licensing infrastructure.

Combining the STARZ premium global subscription platform with world-class motion picture and television studio operations, Lions Gate Entertainment Corp.

(the “Company,” “Lionsgate,” "Lions Gate," “we,” “us” or “our”) brings a unique and varied portfolio of entertainment to consumers around the world.

Its film, television, subscription and location-based entertainment businesses are backed by a 17,000-title library and one of the largest collections of film and television franchises in the independent media space.

Basis of Presentation

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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 used for the amortization of investment in films and television programs;

GAAP requires management to make estimates and assumptions, including the potential impacts arising from the COVID-19 global pandemic, 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.

estimates of sales returns and other allowances and provisions for doubtful accounts;

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The Company's Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places.

The Company's Media Networks segment generates revenue primarily from the distribution of the Company's STARZ branded premium subscription video services and from the Company's majority owned premium Spanish language streaming services business, Pantaya.

The Company's Media Networks segment generates revenue primarily from the distribution of the Company's STARZ branded premium subscription video services and from the Company's formerly majority owned premium Spanish language streaming services business, Pantaya.

The Company sold its interest in Pantaya on March 31, 2021, see Note 2 for further information.

Revenue is recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services or goods.

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In the ordinary course of business, the Company's reportable segments enter into transactions with one another.

The most common types of intersegment transactions include licensing motion pictures or television programming (including Starz

The most common types of intersegment transactions include licensing motion pictures or television programming (including Starz original productions) from the Motion Picture and Television Production segments to the Media Networks segment.

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original productions) from the Motion Picture and Television Production segments to the Media Networks segment.

While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.

intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.

Licensing Arrangements.

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Media Networks programming revenues are included in the Media Networks segment.

• Theatrical.

Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis (distributed by the Company directly in the United States and through a sub-distributor in Canada).

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Revenues are recognized, net of an allowance for estimated returns and other allowances, on the later of receipt by the customer or “street date” (when it is available for sale by the customer).

• Television .

Television revenues are derived from the licensing to domestic markets (linear pay, basic cable, free television markets, syndication) of motion pictures (including theatrical productions and acquired films) and scripted and unscripted television series, television movies, mini-series, and non-fiction programming.

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• Media Networks - Programming Revenues.

Media Networks’ revenues are primarily derived from the distribution of the Company's STARZ branded premium subscription video services pursuant to affiliation agreements with U.S.

multichannel video programming distributors (“MVPDs”), including cable operators, satellite television providers and telecommunications companies, and over-the-top (“OTT”) (collectively, “Distributors”) and on a direct-to-consumer basis.

Media Networks’ revenues are primarily derived from the distribution of the Company's STARZ branded premium subscription video services through over-the-top ("OTT") platforms and U.S.

multichannel video programming distributors (“MVPDs”), including cable operators, satellite television providers and telecommunications companies (collectively, “Distributors”) and on a direct-to-consumer basis through the Starz App.

Media Networks revenues also include international revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services outside the United States.

Media Networks' revenues also include revenues from the Company's majority owned premium Spanish language streaming services business, Pantaya.

Through March 31, 2021, Media Networks' revenues also include revenues from the Company's formerly majority owned premium Spanish language streaming services business, Pantaya.

The Company sold its interest in Pantaya on March 31, 2021, see Note 2 for further information.

Pursuant to the Company’s distribution agreements, revenues may be based on a fixed fee, subject to nominal annual escalations, or a variable fee (i.e., a fee based on number of subscribers who receive the Company's networks or other factors).

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payments are generally due within 60 days after revenue is recognized.

For certain multi-year licensing arrangements, primarily in the television, digital media, and international markets, payments may be due over a longer period.

When we expect the period between fulfillment of our performance obligation and the receipt of payment

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to be greater than a year, a significant financing component is present.

multi-year licensing arrangements, primarily in the television, digital media, and international markets, payments may be due over a longer period.

When we expect the period between fulfillment of our performance obligation and the receipt of payment to be greater than a year, a significant financing component is present.

In these cases, such payments are discounted to present value based on a discount rate reflective of a separate financing transaction between the customer and the Company, at contract inception.

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Cash and cash equivalents consist of cash deposits at financial institutions and investments in money market mutual funds.

Investment in Films and Television Programs and Program Rights

Investment in Films and Television Programs and Licensed Program Rights

Investment in Films and Television Programs:

Investment in films and television programs includes the unamortized costs of completed films and television programs which have been produced by the Company or for which the Company has acquired distribution rights, libraries acquired as part of acquisitions of companies, films and television programs in progress and in development and home entertainment product inventory.

Investment in films and television programs includes the unamortized costs of films and television programs, a portion of which are monetized individually (i.e., through domestic theatrical, home entertainment, television, international or other ancillary-market distribution), and a portion of which are monetized as part of a film group (i.e., primarily content internally produced by our Television Production segment for our Media Networks segment).

Recording Cost.

Costs of acquiring and producing films and television programs and of acquired libraries are capitalized when incurred.

For films and television programs produced by the Company, capitalized costs include all direct production and financing costs, capitalized interest and production overhead.

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For acquired films and television programs, capitalized costs consist of minimum guarantee payments to acquire the distribution rights.

Costs of acquiring and producing films and television programs and of acquired libraries are amortized using the individual-film-forecast method, whereby these costs are amortized and participations and residuals costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the films or television programs.

Amortization.

Costs of acquiring and producing films and television programs and of acquired libraries that are monetized individually are amortized using the individual-film-forecast method, whereby these costs are amortized and participations and residuals costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the films or television programs.

For investment in films and television programs monetized as a group, see further discussion below under Licensed Program Rights for a description of amortization of costs monetized as a group.

Ultimate Revenue.

Ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release of the motion picture.

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For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of acquisition.

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, whether released or unreleased, 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, the Company generally employs a discounted cash flows ("DCF") methodology that includes cash flows estimates of a film's ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 11 ).

The discount rate utilized in the DCF analysis is based on the weighted average cost of capital of the Company 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 management plans to abandon is zero.

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 management’s future revenue estimates.

Films and television programs in progress include the accumulated costs of productions which have not yet been completed.

Films and television programs in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects.

Such costs are capitalized and, upon commencement of production, are transferred

Such costs are capitalized and, upon commencement of production, are transferred to production costs.

Projects in development are written off at the earlier of the date they are determined not to be recoverable or when abandoned, or three years from the date of the initial investment unless the fair value of the project exceeds its carrying cost.

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to production costs.

Home entertainment product inventory consists of Packaged Media and is stated at the lower of cost or market value (first-in, first-out method), and are included within other current assets on the consolidated balance sheet (see Note 20 ).

Costs of Packaged Media sales, including shipping and handling costs, are included in distribution and marketing expenses.

Program Rights:

Program rights include content licensed from third parties and content produced by and licensed from the Television Production segment.

The cost of program rights for films and television programs (including original series) exhibited by the Media Networks segment are generally amortized on a title-by-title or episode-by-episode basis over the anticipated number of exhibitions or license period.

The number of exhibitions is estimated based on the number of exhibitions allowed in the agreement (if specified) and the expected usage of the content.

Certain other program rights are amortized to expense on a straight-line basis over the respective lives of the agreements.

Programming rights may include rights to more than one exploitation window under its output and library agreements.

Licensed Program Rights:

Licensed program rights include content licensed from third parties that is monetized as part of a film group for distribution on Media Networks distribution platforms.

Licensed content is comprised of films or series that have been previously produced by third parties and the Company retains specified airing rights over a contractual term.

Program licenses typically have fixed terms and require payments during the term of the license.

Recording Cost.

The cost of licensed content is capitalized when the cost is known or reasonably determinable, the license period for programs has commenced, the program materials have been accepted by the Company in accordance with the license agreements, and the programs are available for the first showing.

Licensed programming rights may include rights to more than one exploitation window under the Company's output and library agreements.

For films with multiple windows, the license fee is allocated between the windows based upon the proportionate estimated fair value of each window which generally results in the majority of the cost allocated to the first window on newer releases.

The cost of the Media Networks' segments produced original content generally represents the license fees charged from the Television Production segment which is eliminated in consolidation.

The amount associated with the pay television market is reclassified from investment in film and television programs to program rights when the program is aired and the portion attributable to the ancillary markets remains in investment in films and television programs.

The cost of the Media Networks’ third-party licensed content is allocated between the pay television market distributed by the Media Networks’ segment and the ancillary revenue markets (e.g., home video, digital platforms, international television, etc.) distributed by the Television Production segment based on the estimated relative fair values of these markets.

Estimates of fair value for the pay television and ancillary markets involve uncertainty as well as estimates of ultimate revenue.

All the costs of programming produced by the Television Production segment are included in investment in films and television programs and program rights, net and are classified as long term.

Amounts included in program rights, other than internally produced programming, that are expected to be amortized within a year from the balance sheet date are classified as short-term.

Licensed content is stated at the lower of amortized cost or net realizable value, and produced original content is stated at the lower of amortized cost or estimated fair value, as discussed above.

Changes in management’s estimate of the anticipated exhibitions of films and original series on our networks could result in the earlier recognition of our programming costs than anticipated.

Conversely, scheduled exhibitions may not capture the appropriate usage of the program rights in current periods which would lead to the write-off of additional program rights in future periods and may have a significant impact on our future results of operations and our financial position.

Certain license agreements and productions may include additional ancillary rights in addition to the pay television rights.

The cost of the Media Networks’ third-party licensed content and produced content is allocated between the pay television market distributed by the Media Networks’ segment and the ancillary revenue markets (e.g., home video, digital platforms, international television, etc.) distributed by the Television Production segment based on the estimated relative fair values of these markets.

Our estimates of fair value for the pay television and ancillary markets and windows of exploitation involve uncertainty and management judgment.

Amortization.

The cost of program rights for films and television programs (including original series) exhibited by the Media Networks segment are generally amortized on an accelerated or straight-line basis based on the anticipated number of exhibitions or expected and historical viewership patterns or the license period on a title-by-title or episode-by-episode basis.

The number of exhibitions is estimated based on the number of exhibitions allowed in the agreement (if specified) and the expected usage of the content.

Participations and residuals are expensed in line with the amortization of production costs.

Changes in management’s estimate of the anticipated exhibitions and viewership patterns of films and original series on our networks could result in the earlier recognition of our programming costs than anticipated.

Conversely, scheduled exhibitions and expected viewership patterns may not capture the appropriate usage of the program rights in current periods which would lead to the write-off of additional program rights in future periods and may have a significant impact on our future results of operations and our financial position.

Impairment Assessment for Investment in Films and Television Programs and Licensed Program Rights:

A film group or individual film or television program is evaluated for impairment when an event or change in circumstances indicates that the fair value of an individual film or film group is less than its unamortized cost.

A film group represents the unit of account for impairment testing for a film or license agreement for program material when the film or license agreement is expected to be predominantly monetized with other films and/or license agreements instead of being predominantly monetized on its own.

A film group is defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements.

Content Monetized Individually.

For content that is predominantly monetized individually (primarily investment in film and television programs related to the Motion Picture and Television Production segments), whenever events or changes in circumstances indicate that the fair value of the individual film may be less than its unamortized costs, the unamortized costs of the individual film are compared to the estimated fair value of the individual film.

The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title.

To the extent the unamortized costs exceed the fair value, an impairment charge is recorded for the excess.

Content Monetized as a Group.

For content that is predominantly monetized as a group (primarily licensed program rights in the Media Networks segment and internally produced programming, as discussed above), whenever events or changes in circumstances indicate that the fair value of the film group may be less than its unamortized costs, the aggregate unamortized costs of the group are compared to the present value of the discounted cash flows of the group using the lowest level for which identifiable cash flows are independent of other produced and licensed content.

The Company's film groups are generally aligned along the Company's networks and digital content offerings domestically (i.e., Starz Networks and Other Streaming Services) and by territory or groups of territories internationally, wherein content assets are shared across the various territories and therefore, the territory or group of territories is the film group.

If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess and allocated to individual titles based on the relative carrying value of each title in the group.

Valuation Assumptions.

The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 11).

The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program or film group.

The fair value of any film costs associated with a film or

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television program that management plans to abandon is zero.

Property and Equipment, net

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Depreciation is provided for on a straight line basis over the following useful lives:

Distribution equipment

Computer equipment and software

Furniture and equipment

Leasehold improvements

Lease term or the useful life, whichever is shorter

Not depreciated

Distribution equipment 3 — 7 years

Computer equipment and software 3 — 5 years

Furniture and equipment 3 — 7 years

Leasehold improvements Lease term or the useful life, whichever is shorter

Land Not depreciated

The Company periodically reviews and evaluates the recoverability of property and equipment.

Where applicable, estimates of net future cash flows, on an undiscounted basis, are calculated based on future revenue estimates.

If appropriate and where deemed necessary, a reduction in the carrying amount is recorded.

The Company adopted the new guidance for accounting for leases on April 1, 2019, utilizing the modified retrospective approach, and therefore, results for reporting periods beginning after April 1, 2019 are presented under the new guidance, while prior periods have not been adjusted (see further description in the Recent Accounting Pronouncements section below).

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If appropriate and where deemed necessary, a reduction in the carrying amount is recorded based on the difference between the carrying amount and the fair value based on discounted cash flows.

The Company determines if an arrangement is a lease at its inception.

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Operating Leases.

Operating lease ROU assets, representing the Company's right to use the underlying asset for the lease term, are included in the "Other assets - non-current" line item in the Company's March 31, 2020 consolidated balance sheet.

Operating lease liabilities, representing the present value of the Company's obligation to make payments over the lease term, are included in the “Accounts payable and accrued liabilities” and “Other liabilities - non-current” line items in the Company's March 31, 2020 consolidated balance sheet.

The Company has entered into various short-term operating leases which have an initial term of 12 months or less.

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Finance Leases.

Finance lease ROU assets are included in "Property and equipment, net" and finance lease liabilities are included in the “Debt - short-term portion” and “Debt - non-current” line items in the Company's March 31, 2020 consolidated balance sheet.

For finance leases, the Company recognizes interest expense on lease liabilities using the effective interest method and amortization of ROU assets on a straight-line basis over the lease term.

As of March 31, 2021, the Company does not have any outstanding finance leases.

The present value of the lease payments is calculated using a rate implicit in the lease, when readily determinable.

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The Company uses the equity method of accounting for investments in companies in which it has a minority equity interest and the ability to exert significant influence over operating decisions of the companies.

Significant influence is generally presumed to exist when the Company owns between 20% and 50% of the voting interests in the investee, holds substantial management rights or holds an interest of less than 20% in an investee that is a limited liability partnership or limited liability corporation that is treated as a flow-through entity.

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influence is generally presumed to exist when the Company owns between 20% and 50% of the voting interests in the investee, holds substantial management rights or holds an interest of less than 20% in an investee that is a limited liability partnership or limited liability corporation that is treated as a flow-through entity.

Under the equity method of accounting, the Company's share of the investee's earnings (losses), net of intercompany eliminations, are included in the "equity interest income (loss)" line item in the consolidated statement of operations.

The Company records its share of the net income or loss of most equity method investments on a one quarter lag and, accordingly, during the years ended March 31, 2021, 2020, and 2019, the Company recorded its share of the income or loss generated by these entities for the years ended December 31, 2020, 2019 and 2018, respectively.

Profit Eliminations.

The Company licenses theatrical releases and other films and television programs to certain equity method investments.

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 the equity method investee through the amortization of the related asset, recorded on the equity method investee's balance sheet, over the license period.

Dividends and Other Distributions.

Dividends and other distributions from equity method investees are recorded as a reduction of the Company's investment.

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Investments in nonconsolidated affiliates in which the Company owns less than 20% of the voting common stock, or does not exercise significant influence over operating and financial policies, are recorded at fair value using quoted market prices if the investment has a readily determinable fair value.

If an equity investment's fair value is not readily determinable, the Company will recognize it at cost less any impairment, adjusted for observable price changes in

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orderly transactions in the investees' securities that are identical or similar to our investments in the investee.

If an equity investment's fair value is not readily determinable, the Company will recognize it at cost less any impairment, adjusted for observable price changes in orderly transactions in the investees' securities that are identical or similar to our investments in the investee.

The unrealized gains and losses and the adjustments related to the observable price changes are recognized in net income (loss).

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Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 17 years.

Through the first quarter of the fiscal year ended March 31, 2020, the Company amortized the Starz Traditional Affiliate customer relationships discussed above on a straight-line basis over 17 years.

Through the first quarter of fiscal 2020 (see below), the Company amortized the Starz Traditional Affiliate customer relationships discussed above on a straight-line basis over 17 years.

Amortizable intangible assets are tested for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of the asset may not be recoverable.

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The Company monitors its finite-lived intangible assets and changes in the underlying circumstances each reporting period for indicators of possible impairments or a change in the useful life or method of amortization of our finite-lived intangible assets.

Due to changes in the industry related to the migration from linear to OTT and direct-to-consumer consumption, in the second quarter of its fiscal year ended March 31, 2020, the Company changed its pattern of amortization of its Traditional Affiliate customer relationship intangible assets from the straight line method over 17 years to an accelerated amortization method which reflects amortization in the proportion that current period revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset.

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Affiliate customer relationship intangible assets from the straight line method over 17 years to an accelerated amortization method which reflects amortization in the proportion that current period revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset.

This method results in greater amortization in the earlier years of the estimated useful life of the asset than the latter years.

This change in amortization method resulted in an increase to amortization expense of $ 38.7 million during the year ended March 31, 2020, with a corresponding increase in loss before income taxes, net loss, and net loss attributable to Lions Gate Entertainment Corp.

shareholders.

This change in amortization method increased basic and diluted net loss per share for the year ended March 31, 2020 by $ 0.17 per share and $ 0.17 per share, respectively.

There was no tax benefit from the change due to changes in the Company’s valuation allowance on deferred taxes.

During the fiscal year ended March 31, 2020, due to the industry factors discussed above and the economic uncertainty from the COVID-19 global pandemic, we performed an impairment analysis of our amortizable intangible assets.

For fiscal 2021 and fiscal 2020, due to the industry factors discussed above and the economic uncertainty from the COVID-19 global pandemic, we performed an impairment analysis of our amortizable intangible assets.

The impairment analysis requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset.

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The Company's indefinite-lived intangible assets consist of trade names primarily representing the estimated fair value of the Starz brand name determined in connection with the acquisition of Starz as of December 8, 2016.

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Goodwill represents the excess of acquisition costs over the tangible and intangible assets acquired and liabilities assumed in various business acquisitions by the Company.

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A quantitative assessment requires determining the fair value of our reporting units or indefinite-lived intangible assets.

The determination of the fair value of each reporting or indefinite-lived intangible asset unit utilizes discounted cash flows ("DCF") analyses and market-based valuation methodologies, which represent Level 3 fair value measurements.

The determination of the fair value of each reporting unit or indefinite-lived intangible asset utilizes discounted cash flows ("DCF") analyses and market-based valuation methodologies, which represent Level 3 fair value measurements.

Fair value determinations require considerable judgment and requires assumptions and estimates of many factors, including revenue and market growth, operating margins and cash flows, market multiples and discount rates, and are sensitive to changes in these underlying assumptions and factors.

For the second quarter of fiscal 2020, due primarily to the sustained decline in the market price of our common shares, the Company updated its quantitative impairment assessment for three (Television, Media Networks and Motion Picture) of its reporting units.

The DCF analysis of fair values were determined primarily by discounting estimated future cash flows, which included perpetual nominal growth rates ranging from 1.5 % to 4.0 % , at a weighted average cost of capital (discount rate) ranging from 10 % to 14 % , which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.

Based on the Company's quantitative impairment assessment for the second quarter of fiscal 2020, the Company determined that there were no goodwill impairments;

however, two of its reporting units (Television and Media Networks) were at risk for impairment.

For fiscal 2020, due to the decline in the market price of our common shares in the quarter ended March 31, 2020, which was significantly impacted by the economic uncertainty and market volatility resulting from the COVID-19 global pandemic, the Company updated its quantitative impairment assessment for all of its reporting units as of March 31, 2020.

For fiscal 2020, due to the decline in the market price of our common shares in the quarter ended March 31, 2020, which was significantly impacted by the economic uncertainty and market volatility resulting from the COVID-19 global pandemic, the Company performed a quantitative impairment assessment for all of its reporting units as of March 31, 2020.

The DCF analysis of fair values were determined primarily by discounting estimated future cash flows, which included perpetual nominal growth rates ranging from 1.5 % to 4.0 %, at a weighted average cost of capital (discount rate) ranging from 11.5 % to 15 %, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.

Based on the Company's annual quantitative impairment assessment for fiscal 2020, the Company determined that two of its reporting units (Television and Media Networks) were at risk for impairment due to relatively small changes in certain key assumptions that could cause an impairment of goodwill.

Management will continue to monitor the reporting units for changes in the business environment that could impact the recoverability in future periods.

As a result, during fiscal 2021, we monitored all of our reporting units for changes in the business environment that could impact recoverability.

For our annual goodwill impairment test for fiscal 2021, due to the increase in the market price of our common shares since our most recent quantitative impairment assessment at March 31, 2020, the performance of the Television and Media Networks reporting units in fiscal 2021, and the improvement of overall economic conditions associated with the COVID-19 pandemic, we performed a qualitative assessment for all reporting units.

This assessment included consideration of, but not limited to, the results of our most recent quantitative impairment test, consideration of macroeconomic conditions, industry and market

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conditions, performance and current and projected cash flows of our reporting units, and changes in our share price.

Based upon our qualitative assessment, we concluded that it was more-likely-than-not that the fair value of our reporting units was greater than their carrying value.

Management will continue to monitor all of its reporting units for changes in the business environment that could impact the recoverability of goodwill in future periods.

The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from the Company's business activities.

Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of the Company's reporting units may include the duration of the COVID-19 global pandemic, its impact on the global economy and the creation and consumption of the Company's content, and the timing of when production can resume and theaters can re-open;

adverse macroeconomic conditions;

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the Company's subscriber growth rates domestically and internationally across its traditional and OTT platforms and changes in consumer behavior.

While historical performance and current expectations have resulted in fair values of our

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reporting units in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.

While historical performance and current expectations have resulted in fair values of our reporting units in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.

For fiscal 2021, the Company performed a qualitative impairment assessment of its indefinite-lived trade names.

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Tax credits earned with respect to expenditures on qualifying film and television productions are included as an offset to investment in films and television programs when the qualifying expenditures have been incurred provided that there is reasonable assurance that the credits will be realized (see Note 20).

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Foreign Currency Translation

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The Company’s policy is not to use derivative financial instruments for trading or speculative purposes.

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The Company uses derivative financial instruments to hedge its exposures to foreign currency exchange rate and interest rate risks.

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If the derivative is not designated as a hedge, changes in the fair value of the derivative are recognized in earnings.

See Note 19 for further discussion of the Company's derivative financial instruments.

Share-Based Compensation

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See Note 14 for further discussion of the Company’s share-based compensation.

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 years ended March 31, 2020 , 2019 and 2018 is presented below:

Net Loss Per Share

Basic net loss per share is calculated based on the weighted average common shares outstanding for the period.

Basic and diluted net loss per share for the years ended March 31, 2021, 2020 and 2019 is presented below:

Year Ended March 31,

2021 2020 2019

(Amounts in millions, except per share amounts)

Basic Net Income (Loss) Per Common Share:

Net income (loss) attributable to Lions Gate Entertainment Corp.

Basic and Diluted Net Loss Per Common Share:

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 18.9 ) $ ( 188.4 ) $ ( 284.2 )

Weighted average common shares outstanding 220.5 217.9 213.7

Basic net income (loss) per common share

Diluted net income (loss) per common share reflects the potential dilutive effect, if any, of the conversion of convertible senior subordinated notes under the "if converted" method.

Diluted net income (loss) per common share also reflects share purchase options, including equity-settled share appreciation rights ("SARs"), restricted share units ("RSUs") and restricted stock using the treasury stock method when dilutive, and any contingently issuable shares when dilutive.

Diluted net income (loss) per common share for the years ended March 31, 2020 , 2019 and 2018 is presented below:

Basic and diluted net loss per common share $ ( 0.09 ) $ ( 0.86 ) $ ( 1.33 )

As a result of the net loss in the fiscal years ended March 31, 2021, 2020 and 2019, the dilutive effect of the share purchase options, restricted share units ("RSUs") and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the fiscal years ended March 31, 2021, 2020 and 2019 totaled 2.2 million, 2.2 million and 7.1 million, respectively.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended March 31,

(Amounts in millions, except per share amounts)

Diluted Net Income (Loss) Per Common Share:

Net income (loss) attributable to Lions Gate Entertainment Corp.

Interest on convertible notes, net of tax

Numerator for diluted net income (loss) per common share

Weighted average common shares outstanding

Effect of dilutive securities:

Conversion of notes

Share purchase options

Restricted share units and restricted stock

Contingently issuable shares

Adjusted weighted average common shares outstanding

Diluted net income (loss) per common share

As a result of the net loss in the fiscal years ended March 31, 2020 and 2019, the dilutive effect of the share purchase options, restricted share units and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the fiscal years ended March 31, 2020 and 2019 totaled 2.2 million and 7.1 million , respectively.

Additionally, for the years ended March 31, 2020 , 2019 and 2018 , 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 regardless of net income or loss in the period.

Additionally, for the years ended March 31, 2021, 2020 and 2019, the outstanding common shares issuable presented below were excluded from diluted net loss per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.

2021 2020 2019

(Amounts in millions)

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Other issuable shares 3.1 4.0 1.4

Total weighted average anti-dilutive shares issuable excluded from diluted net income (loss) per common share

Total weighted average anti-dilutive shares issuable excluded from diluted net loss per common share 29.1 37.8 23.7

Recent Accounting Pronouncements

Accounting Guidance Adopted in Fiscal 2021

Accounting for Leases :

In February 2016, the Financial Accounting Standards Board ("FASB") issued guidance on accounting for leases which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases.

The new guidance also requires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases.

The Company adopted the new standard on April 1, 2019 utilizing the modified retrospective approach, and therefore, results for reporting periods beginning after April 1, 2019 are presented under the new guidance, while prior periods have not been adjusted.

Additionally, the Company elected to apply practical expedients

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

allowing it to not reassess (1) whether any expired or existing contracts previously assessed as not containing leases are, or contain, leases;

(2) the lease classification for any expired or existing leases;

and (3) initial direct costs for any existing leases.

The Company also elected to not separate lease components from non-lease components across all lease categories.

Instead, each separate lease component and non-lease component are accounted for as a single lease component.

Upon adoption of the new guidance, the Company recognized lease liabilities on the Company's consolidated balance sheet for its operating leases of approximately $ 187.2 million , with a corresponding right-of-use assets balance of $ 157.4 million , net of existing lease incentives of $ 29.8 million previously classified in accounts payable and accrued liabilities and other liabilities.

The adoption had no material impact on the Company's consolidated statement of operations.

See Note 8 for further information regarding the impact of the adoption of the new guidance on accounting for leases on the Company's financial statements.

Accounting Guidance Not Yet Adopted

Fair Value Measurement - Changes to Disclosure Requirements :

In August 2018, the FASB issued guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements.

In August 2018, the Financial Accounting Standards Board ("FASB") issued guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements.

This guidance eliminates the requirement that entities disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but requires public companies to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements, among other changes.

This guidance is effective for the Company's fiscal year beginning April 1, 2020.

The Company does not expect that the adoption of this guidance will have a material effect on its consolidated financial statements.

The Company adopted this guidance on April 1, 2020, with no material impact to its consolidated financial statements.

Improvements to Accounting for Costs of Films and License Agreements for Program Materials :

In March 2019, the FASB issued guidance that aligns the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization.

Accordingly, the capitalization of production costs for episodic television series is no longer constrained until persuasive evidence of secondary market revenues exists.

The updated guidance also updates certain presentation and disclosure requirements for capitalized film and television costs and requires impairment testing to be performed at a group level for capitalized film and television costs when the content is predominantly monetized with other owned or licensed content.

On April 1, 2020, the Company adopted, on a prospective basis, FASB guidance on the accounting for costs of films and episodic television series which aligns the accounting for capitalizing production costs of episodic television series with guidance for films.

The following reflects some of the more significant changes under the new guidance:

• Classification in balance sheet:

Allows for the classification of licensed program rights as long-term assets.

Previously, the Company reported a portion of these rights in current assets.

After adoption, the Company now classifies licensed program rights as long-term assets.

Accordingly, as of April 1, 2020, the Company has classified $ 310.5 million of these rights as non-current assets in the balance sheet.

• Removes capitalization constraint for episodic television:

The capitalization of production costs for episodic television series is no longer constrained until persuasive evidence of secondary market revenues exists.

Previously, theatrical content production costs could be fully capitalized while episodic television production costs were generally limited to the amount of contracted revenues.

• Monetization strategy:

Requires the determination of a titles' monetization strategy for purposes of testing impairment as follows:

◦ Monetized individually - lifetime value is predominantly derived from third-party revenues that are directly attributable to the specific film or television title (e.g., theatrical revenues or sales to third-party television programmers).

◦ Monetized as a film group - lifetime value is predominantly derived from third-party revenues that are attributable only to a bundle of titles, which is referred to as a "film group" in the updated guidance.

A film group is defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements.

In addition, under previous guidance, film and television programs accounted for under the broadcasting accounting standard were carried on the balance sheet at the lower of cost or net realizable value.

The new guidance requires that an entity test a film or television program for impairment, when impairment indicators are present, at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements.

The impairment would be measured as the difference between the carrying value of the film group and its fair value rather than its net realizable value.

This guidance requires that an entity provide new disclosures about content that is either produced or licensed, and classify cash flows for licensed content as cash flows from operating activities in the statement of cash flows.

This guidance is effective for the Company's fiscal year beginning April 1, 2020, and is required to be adopted on a prospective basis.

The Company does not expect that the adoption of this guidance will have a material impact on its consolidated results of operations or financial position.

Furthermore, following adoption, we will present all films and television costs, including capitalized costs of acquired programming rights, as non-current assets in the consolidated balance sheet.

The determination of the monetization strategy is made at commencement of production on a consolidated basis.

Because the new accounting guidance is applied prospectively, the predominant monetization strategy for content released prior to the beginning of fiscal 2021 is determined based on the expected means of monetization over the remaining life of the content.

The classification of content as individually monetized or monetized as part of a film group only changes if there is a significant change to the title's monetization strategy relative to its initial assessment.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For these accounting purposes, the Company generally classifies content that is initially intended for use on the Company's Media Networks services (including its linear television networks, OTT services and direct-to-consumer services) as content monetized as a film group.

Content initially intended for theatrical release, home entertainment distribution, or for license to third parties, is generally classified as content monetized individually.

• Impairment testing:

An impairment results when the fair value of the film or film group is less than its carrying value.

Under previous guidance, film and television programs accounted for under the broadcasting accounting standard (i.e., licensed product in the Company's Media Networks segment) were carried on the balance sheet at the lower of cost or net realizable value rather than fair value.

Financial Instruments - Credit Losses:

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GAAP to a new, forward-looking current expected credit loss model that would generally result in the earlier recognition of credit losses.

This guidance is effective for the Company’s fiscal year beginning April 1, 2020.

Adoption of the standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align its credit loss methodology with the new standard.

The Company does not expect the adoption of this guidance will have a material impact on its consolidated financial statements.

The Company adopted this guidance on April 1, 2020 using a modified retrospective approach, with no material impact to its consolidated financial statements.

Simplifying the Accounting for Income Taxes:

2 unchanged sentences

It also reduces complexity in certain areas, including the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group.

The guidance is effective for the Company's fiscal year beginning April 1, 2021, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company early adopted this guidance on January 1, 2021 and applied its provisions beginning April 1, 2020, with no material impact to the Company's consolidated financial statements.

Dispositions and Acquisitions

On March 31, 2021, the Company sold its 75 % majority interest in Pantaya to Hemisphere Media Group for approximately $ 123.6 million in cash, subject to certain customary adjustments pursuant to the terms of the agreement.

Under the terms of the purchase agreement, control of Pantaya transferred to Hemisphere Media Group on March 31, 2021, with the cash consideration transferred on April 1, 2021.

The receivable for the cash purchase consideration is included in other current assets as of March 31, 2021.

Pantaya was previously reflected in and represented substantially all of "Other Streaming Services" in the Company's Media Networks segment (see Note 17).

The Company recorded a gain before income taxes of approximately $ 44.1 million, which is reflected in the gain on sale of Pantaya line item in the consolidated statement of operations in the year ended March 31, 2021.

This gain amount is net of $ 69.0 million of goodwill allocated from the Media Networks segment as required under the applicable accounting guidance (see Note 6).

3 Arts Entertainment.

On May 29, 2018, the Company purchased a 51 % membership interest in 3 Arts Entertainment LLC, a talent management and television/film production company.

On May 29, 2018, the Company purchased a 51 % controlling membership interest in 3 Arts Entertainment LLC, a talent management and television/film production company.

The purchase price was approximately $ 166.6 million, of which 50 % was paid in cash at closing, 32.5 % was paid in the Company's Class B non-voting common shares at closing, and 17.5 % was paid in the Company's Class B non-voting common shares on the one-year anniversary of closing.

The number of shares issued was determined by dividing the dollar value of the portion of the purchase price to be paid by the daily weighted average closing price of the Company's Class B non-voting common shares on the New York Stock Exchange for the twenty ( 20 ) consecutive trading days immediately preceding the closing date.

A portion of the purchase price, up to $ 38.3 million, may be recoupable for a five-year period commencing on the acquisition date of May 29, 2018, contingent upon the continued employment of certain employees, or the achievement of certain EBITDA targets, as defined in the 3 Arts Entertainment acquisition and related agreements.

Accordingly, $ 38.3 million was initially recorded as a deferred compensation arrangement within other current and non-current assets and is being amortized in general and administrative expenses over a five-year period.

The acquisition was accounted for as a purchase, with the results of operations of 3 Arts Entertainment included in the Company's consolidated results from May 29, 2018.

Based on the purchase price allocation, $ 92.7 million was allocated to goodwill, $ 47.0 million was allocated to the fair value of finite-lived intangible assets and $ 38.3 million was allocated to deferred compensation arrangements, as discussed above.

The remainder of the purchase price was primarily allocated to cash and cash equivalents, accounts receivable, other assets, and accounts payable and accrued liabilities, and $ 15.8 million was recorded as a redeemable noncontrolling interest, representing the noncontrolling interest holders' 49 % equity interest in 3 Arts Entertainment (see Note 12 ).

The acquired finite-lived intangible assets primarily represent customer relationships and are being amortized over a weighted average estimated useful life of 12 years.

The Company incurred approximately $ 1.3 million of acquisition-related costs that were expensed in restructuring and other expenses during the fiscal year ended March 31, 2019.

The Company used discounted cash flows ("DCF") analyses, which represent Level 3 fair value measurements, to assess certain components of its purchase price allocation, including acquired intangible assets and the redeemable noncontrolling interest.

The acquisition goodwill arises from the opportunity for synergies of the combined companies to grow and strengthen the Company's television operations by expanding the Company's talent relationships, and improving the Company's television production capabilities.

The goodwill recorded as part of this acquisition is included in the Television Production segment.

The goodwill is not amortized for financial reporting purposes, but is deductible for federal tax purposes.

See Note 12 for the non-controlling interest holders' equity interest in 3 Arts Entertainment.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Investment in Films and Television Programs and Program Rights

Investment in Films and Television Programs and Licensed Program Rights

Total investment in films and television programs and licensed program rights by predominant monetization strategy is as follows:

(Amounts in millions)

Motion Picture Segment - Theatrical and Non-Theatrical Films

Investment in Films and Television Programs:

Individual Monetization (1)

Released, net of accumulated amortization $ 414.7

Acquired libraries, net of accumulated amortization

Completed and not released 60.3

In progress 418.7

In development 92.9

Television Production Segment - Direct-to-Television Programs

Film Group Monetization

Released, net of accumulated amortization $ 200.4

In development

Media Networks Segment

Released program rights, net of accumulated amortization

Completed and not released —

In progress 497.1

In development 28.2

Intersegment eliminations

Licensed program rights, net of accumulated amortization $ 510.4

Investment in films and television programs and program rights, net $ 2,222.7

Less current portion of program rights

Non-current portion

Investment in films and television programs and program rights includes write-downs to fair value or net realizable value of $ 135.5 million , $ 66.0 million and $ 36.3 million in the years ended March 31, 2020 , 2019 , and 2018, respectively, which are included in direct operating expense on the consolidated statements of operations, and of which $ 55.2 million , $ 27.2 million and $ 33.6 million , respectively, related to motion pictures.

These charges include certain programming and content charges in fiscal 2020 and fiscal 2019, and COVID-19 related costs in fiscal 2020, which are excluded from segment operating results (see Note 16 and Note 17 ).

The Company expects approximately 46.7 % of completed films and television programs, excluding licensed program rights, will be amortized during the one-year period ending March 31, 2021 .

Additionally, the Company expects approximately 85.9 % of completed and released films and television programs, excluding licensed program rights and acquired libraries, will be amortized during the three-year period ending March 31, 2023 .

________________________

(1) At March 31, 2021, the unamortized balance related to completed and not released and in progress theatrical films was $ 253.1 million.

At March 31, 2021, acquired film and television libraries have remaining unamortized costs of $ 18.3 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 19.5 years.

Amortization of investment in film and television programs and licensed program rights by predominant monetization strategy is as follows for the fiscal year ended March 31, 2021, and was included in direct operating expense in the consolidated statement of operations:

Amortization expense:

Individual monetization $ 539.3

Film group monetization 229.0

Licensed program rights 421.5

Amortization of investment in film and television programs and licensed program rights for the fiscal years ended March 31, 2020 and 2019 was $ 1,706.7 million and $ 1,516.5 million, respectively.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The table below summarizes estimated future amortization expense for the Company's investment in film and television programs and licensed program rights as of March 31, 2021:

2022 2023 2024

(Amounts in millions)

Estimated future amortization expense:

Released investment in films and television programs:

Individual monetization $ 174.2 $ 77.3 $ 64.1

Film group monetization $ 87.9 $ 58.2 $ 18.4

Licensed program rights $ 219.8 $ 90.7 $ 55.2

Completed and not released investment in films and television programs:

Individual monetization $ 30.4 n/a n/a

Film group monetization $ — n/a n/a

Investment in films and television programs and licensed program rights includes write-downs to fair value, which are included in direct operating expense on the consolidated statements of operations, and represented the following amounts by segment for the fiscal years ended March 31, 2021, 2020 and 2019:

2021 2020 2019

(Amounts in millions)

Impairments by segment:

Motion Picture $ 19.4 $ 42.1 $ 22.9

Television Production 10.3 1.8 8.0

Impairments not included in segment operating results (1)

15.4 91.6 35.1

$ 45.1 $ 135.5 $ 66.0

________________________

(1) Impairments not included in segment operating results in the years ended March 31, 2021 and 2020 include charges due to changes in performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

In fiscal 2020 and fiscal 2019, these amounts also include certain programming and content charges recorded as a result of changes to the Company's programming and broadcasting strategy in connection with management changes (see Note 16 and Note 17).

Of these amounts, $ 15.4 million, $ 13.1 million and $ 4.3 million for fiscal 2021, 2020 and 2019, respectively, related to motion picture titles.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property and Equipment

March 31, 2020

March 31, 2019

March 31, 2021 March 31, 2020

(Amounts in millions)

Distribution equipment (1)

$ 15.2 $ 29.7

Leasehold improvements 42.9 43.4

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$ 91.1 $ 140.9

This category includes the cost of satellite transponders accounted for as finance leases, which was $ 9.5 million as of March 31, 2020, and accumulated depreciation for these transponders was $ 7.7 million (2019 - cost of $ 9.5 million , accumulated depreciation of $ 6.2 million ).

Represents the cost of Starz's building in Englewood, Colorado which is accounted for as a finance lease.

Accumulated depreciation for the building totaled $ 4.9 million at March 31, 2020 (2019 - $ 3.5 million ).

During the year ended March 31, 2020, depreciation expense amounted to $ 45.6 million and includes the amortization of assets recorded under finance leases (2019 - $ 50.8 million ;

_______________

(1) As of March 31, 2020, amounts included the cost of satellite transponders previously accounted for as a finance lease, which as of March 31, 2021 are now accounted for as an operating lease (March 31, 2020 - cost of $ 9.5 million, accumulated depreciation of $ 7.7 million).

(2) As of March 31, 2020, represented the cost of Starz's building in Englewood, Colorado which was previously accounted for as a finance lease.

During the year ended March 31, 2021, the Company reassessed the lease term of the Starz commercial building, which resulted in a change in classification of this lease from a finance lease to an operating lease (see Note 8 for further information).

Accumulated depreciation for the building totaled $ 4.9 million at March 31, 2020.

During the year ended March 31, 2021, depreciation expense amounted to $ 44.0 million and includes the amortization of assets previously recorded under finance leases (2020 - $ 45.6 million;

2019 - $ 50.8 million).

The Company's investments consisted of the following:

2021 March 31,

(Amounts in millions)

2 unchanged sentences

$ 31.9 $ 40.3

Includes investments in equity securities without readily determinable fair values of $ 5.4 million and $ 1.9 million at March 31, 2020 and 2019, respectively.

________________

(1) Includes investments in equity securities without readily determinable fair values of nil and $ 5.4 million at March 31, 2021 and 2020, respectively.

Equity Method Investments:

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Pantelion Films is a joint venture with Videocine, an affiliate of Televisa, which produces, acquires and distributes a slate of English and Spanish language feature films that target Hispanic moviegoers in the U.S.

Atom Tickets.

Atom Tickets is the first-of-its-kind theatrical mobile ticketing platform and app.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Atom Tickets.

Atom Tickets is the first-of-its-kind theatrical mobile ticketing platform and app.

Great Point Opportunity Fund.

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Summarized Financial Information.

Summarized financial information for the Company's equity method investees on an aggregate basis is set forth below (excluding the Company's former equity method investees, Pop and EPIX, which are separately presented further below):

Summarized financial information for the Company's equity method investees on an aggregate basis is set forth below (excluding the Company's former equity method investee, Pop, which is separately presented further below):

2021 March 31,

(Amounts in millions)

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Non-current liabilities $ 91.7 $ 102.2

2021 2020 2019

(Amounts in millions)

Revenues $ 84.6 $ 131.9 $ 107.5

Gross profit $ 32.0 $ 51.1 $ 36.9

Net loss $ ( 62.6 ) $ ( 64.4 ) $ ( 102.6 )

On March 15, 2019, the Company sold its 50.0 % interest in Pop, resulting in net proceeds of $ 48.0 million (net of transaction costs).

4 unchanged sentences

Pop Financial Information:

The following table presents the summarized statements of operations for Pop for the period from April 1, 2018 through the date of sale of March 15, 2019, and for the year ended March 31, 2018 , and a reconciliation of the net loss reported by Pop to the equity interest loss recorded by the Company:

The following table presents the summarized statement of operations for Pop for the period from April 1, 2018 through the date of sale of March 15, 2019, and a reconciliation of the net loss reported by Pop to the equity interest loss recorded by the Company:

Period from April 1, 2018 to March 15, 2019 (date of sale)

Year Ended March 31, 2018

Revenues $ 96.9

Cost of services 55.0

5 unchanged sentences

Total interest expense, net 91.6

Net loss $ ( 107.0 )

Reconciliation of net loss reported by Pop to equity interest loss:

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The Company recorded its share of this expense as income from the accretion of dividend and discount on mandatorily redeemable preferred stock units within equity interest loss.

In May 2017, the Company sold all of its 31.15 % equity interest in EPIX.

The Company recorded a gain before income taxes of approximately $ 201.0 million which is reflected in the gain (loss) on investments line item in the consolidated statement of operations in the year ended March 31, 2018.

Prior to the sale of its interest in EPIX, the Company had accounted for such interest as an equity method investment.

EPIX Financial Information:

The following table presents the summarized statements of income for EPIX for the period from April 1, 2017 through the date of sale of May 11, 2017, and a reconciliation of the net income reported by EPIX to equity interest income recorded by the Company:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

April 1, 2017 to May 11, 2017

(date of sale)

(Amounts in millions)

Operating expenses

Selling, general and administrative expenses

Operating income

Reconciliation of net income reported by EPIX to equity interest income:

Net income reported by EPIX

Ownership interest in EPIX

The Company's share of net income

Eliminations of the Company’s share of profits on licensing sales to EPIX (1)

Realization of the Company’s share of profits on licensing sales to EPIX (2)

Total equity interest income recorded

_________________________

Represents the elimination of the gross profit recognized by the Company on licensing sales to EPIX in proportion to the Company's ownership interest in EPIX.

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.

Gain (Loss) on Investments:

The following table summarizes the components of the gain (loss) on investments:

2021 2020 2019

(Amounts in millions)

Impairments of investments (1)

Unrealized losses on equity securities held as of March 31, 2020 and 2019, respectively (2)

Gain (loss) on sale of equity method investees (3)

$ ( 5.7 ) $ — $ ( 36.8 )

Included in impairments of investments in fiscal 2019 and fiscal 2018 were $ 34.2 million and $ 10.0 million , respectively, of impairments on investments in equity securities without readily determinable fair values, with the remainder representing charges for other-than-temporary impairments on equity method investees.

As a result of the adoption of new accounting guidance for Recognition and Measurement of Financial Instruments, effective April 1, 2018 changes in the fair value of the Company's equity securities with a readily determinable fair market value are recognized in net income.

In the fiscal year ended March 31, 2019, represents the loss before income taxes recorded in connection with the March 2019 sale of the Company's 50.0 % equity interest in Pop.

In the fiscal year ended March 31, 2018, represents the gain before income taxes recorded in connection with the May 2017 sale of the Company's 31.15 % equity interest in EPIX.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Unrealized gains (losses) on equity securities 1.6 ( 0.5 ) ( 6.2 )

Gain (loss) on sale of equity method investees and other investments (2)

4.6 — ( 44.6 )

$ 0.5 $ ( 0.5 ) $ ( 87.6 )

_________________

(1) In fiscal 2021 and fiscal 2019, amounts include impairments of $ 5.0 million and $ 34.2 million, respectively, on equity securities without readily determinable fair values that were written down to their estimated fair value, with the remainder representing charges for other-than-temporary impairments on equity method investees.

(2) In the fiscal year ended March 31, 2019, represents the loss on the sale of the Company's 50.0 % equity interest in Pop in March 2019.

Goodwill and Intangible Assets

Changes in the carrying value of goodwill by reporting segment were as follows:

Media Networks

Picture Television

Production Media Networks Total

(Amounts in millions)

Balance as of March 31, 2019 $ 393.7 $ 401.9 $ 2,037.9 $ 2,833.5

Business acquisitions (1)

Measurement period adjustments (1)

Balance as of March 31, 2020 $ 393.7 $ 401.9 $ 2,037.9 $ 2,833.5

Sale of Pantaya (1)

— — ( 69.0 ) ( 69.0 )

Balance as of March 31, 2021 $ 393.7 $ 401.9 $ 1,968.9 $ 2,764.5

______________________

In fiscal 2019, represents the goodwill resulting from the acquisition of 3 Arts Entertainment (see Note 2 ), and related measurement period adjustments, consisting of a decrease to the fair value of finite-lived intangible assets and a corresponding increase to goodwill.

(1) On March 31, 2021, the Company sold its majority interest in Pantaya (see Note 2).

In connection with the sale, the Company allocated $ 69.0 million of goodwill from its Media Networks segment to Pantaya as required under the applicable accounting guidance, which was included in the net assets disposed.

Intangible Assets

Finite-lived intangible assets consisted of the following as of March 31, 2021 and March 31, 2020:

March 31, 2020

March 31, 2019

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

March 31, 2021 March 31, 2020

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

(Amounts in millions)

1 unchanged sentence

Customer relationships (1)

$ 1,852.0 $ 540.1 $ 1,311.9 $ 1,852.0 $ 399.2 $ 1,452.8

Trademarks and trade names 3.6 1.8 1.8 3.6 1.4 2.2

Other 23.9 12.5 11.4 23.9 9.3 14.6

$ 1,879.5 $ 554.4 $ 1,325.1 $ 1,879.5 $ 409.9 $ 1,469.6

Customer relationships primarily represent affiliation agreements with distributors acquired in the Starz Merger.

_______________

(1) Customer relationships primarily represent Starz affiliation agreements with distributors.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Indefinite-lived intangible assets not subject to amortization consisted of the following:

March 31, 2020

March 31, 2019

March 31, 2021 March 31, 2020

(Amounts in millions)

2 unchanged sentences

$ 250.0 $ 250.0

_______________

(1) Tradenames are related to the Starz brand name, which have an indefinite useful life and are not amortized, but rather are assessed for impairment at least annually or more frequently whenever events or circumstances indicate that the rights might be impaired.

1 unchanged sentence

Amortization expense remaining relating to intangible assets for each of the years ending March 31, 2022 through 2026 is estimated to be approximately $ 127.2 million, $ 118.7 million, $ 117.6 million, $ 118.3 million, and $ 115.1 million, respectively.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total debt of the Company, excluding film obligations and production loans, was as follows as of March 31, 2021 and March 31, 2020:

2021 March 31,

(Amounts in millions)

1 unchanged sentence

Revolving credit facility (1)

Term Loan A (1)

Term Loan B (1)

5.875 % Senior Notes (2)

2 unchanged sentences

Finance lease obligations (3)

Total debt 2,676.9 2,784.3

Unamortized debt issuance costs, net of fair value adjustment on finance lease obligations ( 46.0 ) ( 51.3 )

2 unchanged sentences

Non-current portion of debt $ 2,542.9 $ 2,664.4

________________________

(1) On April 6, 2021, the Company amended its Credit Agreement, as defined below, to extend the maturity of a portion of its revolving credit commitments, amounting to $ 1.25 billion, and a portion of its outstanding term A loans, amounting to $ 444.9 million to April 6, 2026.

Additionally, in April and May 2021, the Company completed a series of repurchases of the Term Loan B and, in aggregate, paid $ 60.1 million to repurchase $ 60.5 million principal amount of the Term Loan B.

See Note 22 - Subsequent Events.

(2) On April 1, 2021, the 5.875 % Senior Notes and 6.375 % Senior Notes were redeemed in full and $ 1.0 billion aggregate principal amount of 5.500 % Senior Notes due April 2029 were issued.

See Note 22 - Subsequent Events.

(3) As of March 31, 2020, these obligations included a finance lease for Starz's transponder capacity that expired in February 2021, and a finance lease for Starz's commercial building.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth future annual contractual principal payment commitments of debt as of March 31, 2021:

Maturity Date

Year Ending March 31,

Maturity Date Year Ending March 31,

Debt Type 2022 2023 2024 2025 2026 Thereafter Total

(Amounts in millions)

Revolving Credit Facility

Revolving Credit Facility March 2023 (1)

$ — $ — $ — $ — $ — $ — $ —

Term Loan A March 2023 (1)

75.0 585.0 — — — — 660.0

Term Loan B March 2025 (1)

12.5 12.5 12.5 915.1 — — 952.6

5.875 % Senior Notes

November 2024 (2)

— — — 518.7 — — 518.7

6.375 % Senior Notes

February 2024 (2)

Finance lease obligations

Less aggregate unamortized debt issuance costs, net of fair value adjustment on finance lease obligations

— — 545.6 — — — 545.6

$ 87.5 $ 597.5 $ 558.1 $ 1,433.8 $ — $ — 2,676.9

Less aggregate unamortized debt issuance costs ( 46.0 )

________________________

See Note 22 - Subsequent Events.

(2) On April 1, 2021, the 5.875 % Senior Notes and 6.375 % Senior Notes were redeemed in full and $ 1.0 billion aggregate principal amount of 5.500 % Senior Notes due April 2029 were issued.

See Note 22 - Subsequent Events.

Senior Credit Facilities (Revolving Credit Facility, Term Loan A and Term Loan B)

On April 6, 2021, the Company amended its Credit Agreement, as defined below, to extend the maturity of a portion of its revolving credit commitments, amounting to $ 1.25 billion, and a portion of its outstanding term A loans, amounting to $ 444.9 million to April 6, 2026.

See Note 22 - Subsequent Events for further information.

Revolving Credit Facility Availability of Funds & Commitment Fee.

2 unchanged sentences

There were no letters of credit outstanding at March 31, 2021.

The Company is required to pay a quarterly commitment fee on the revolving credit facility of 0.250 % to 0.375 % per annum, depending on the achievement of certain leverage ratios, as defined in the credit and guarantee agreement dated December 8, 2016, as amended (the "Amended Credit Agreement"), on the total revolving credit facility of $ 1.5 billion less the amount drawn.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company is required to pay a quarterly commitment fee on the revolving credit facility of 0.250 % to 0.375 % per annum, depending on the achievement of certain leverage ratios, as defined in the credit and guarantee agreement dated December 8, 2016, as amended (the "Credit Agreement"), on the total revolving credit facility of $ 1.5 billion less the amount drawn.

Maturity Date:

• Revolving Credit Facility & Term Loan A:

March 22, 2023.

March 22, 2023 (see discussion above and Note 22 - Subsequent Events).

• Term Loan B:

2 unchanged sentences

The Revolving Credit Facility and Term Loan A bear interest at a rate per annum equal to LIBOR plus 1.75 % (or an alternative base rate plus 0.75 %) margin, with a LIBOR floor of zero .

The margin is subject to potential increases of up to 50 basis points ( two ( 2 ) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Amended Credit Agreement (effective interest rate of 2.74 % as of March 31, 2020 , before the impact of interest rate swaps, see Note 19 for interest rate swaps).

The Term Loan B bears interest at a rate per annum equal to LIBOR plus 2.25 % margin, with a LIBOR floor of zero (or an alternative base rate plus 1.25 % margin) (effective interest rate of 3.24 % as of March 31, 2020 , before the impact of interest rate swaps, see Note 19 for interest rate swaps).

Potential Impact of LIBOR Transition

The Chief Executive of the U.K.

Financial Conduct Authority (the “FCA”), which regulates the London Interbank Offered Rate, or LIBOR, has announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021.

That announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021.

Moreover, it is possible that LIBOR will be discontinued or modified prior to 2021.

Under the terms of the Company's Amended Credit Agreement, in the event of the discontinuance of the LIBOR Rate, a mutually agreed-upon alternate benchmark rate will be established to replace the LIBOR Rate.

The Company and Lenders (as defined in the Amended Credit Agreement) shall, in good faith, endeavor to establish an alternate benchmark rate that gives due consideration to prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and which places the Lenders and the Company in the same economic position that existed immediately prior to the discontinuation of the LIBOR Rate.

The Company does not anticipate that the discontinuance or modification of the LIBOR Rate will materially impact its liquidity or financial position.

The margin is subject to potential increases of up to 50 basis points ( two ( 2 ) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Credit Agreement (effective interest rate of 1.86 % as of March 31, 2021, before the impact of interest rate swaps).

• Term Loan B:

The Term Loan B bears interest at a rate per annum equal to LIBOR plus 2.25 % margin, with a LIBOR floor of zero (or an alternative base rate plus 1.25 % margin) (effective interest rate of 2.36 % as of March 31, 2021, before the impact of interest rate swaps).

Required Principal Payments:

Quarterly principal payments, at quarterly rates of 1.25 % beginning June 30, 2019, 1.75 % beginning June 30, 2020, and 2.50 % beginning June 30, 2021 through December 31, 2022, with the balance payable at maturity.

• Term Loan A:

Quarterly principal payments, at quarterly rates of 1.25 % beginning June 30, 2019, 1.75 % beginning June 30, 2020, and 2.50 % beginning June 30, 2021, with the balance payable at maturity.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• Term Loan B:

Quarterly principal payments, at a quarterly rate of 0.25 %, with the balance payable at maturity.

The Term Loan A and Term Loan B also require mandatory prepayments in connection with certain asset sales, subject to certain significant exceptions, and the Term Loan B is subject to additional mandatory repayment from specified percentages of excess cash flow, as defined in the Amended Credit Agreement.

Optional Prepayment:

1 unchanged sentence

The Company may voluntarily prepay the Revolving Credit Facility and Term Loan A at any time without premium or penalty.

• Term Loan B:

The Company may voluntarily prepay the Term Loan B at any time.

The Senior Credit Facilities are guaranteed by the Guarantors (as defined in the Amended Credit Agreement) and are secured by a security interest in substantially all of the assets of Lionsgate and the Guarantors (as defined in the Amended Credit Agreement), subject to certain exceptions.

The Senior Credit Facilities are guaranteed by the Guarantors (as defined in the Credit Agreement) and are secured by a security interest in substantially all of the assets of Lionsgate and the Guarantors (as defined in the Credit Agreement), subject to certain exceptions.

The Senior Credit Facilities contain representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings and which include, among other things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person.

1 unchanged sentence

As of March 31, 2021, the Company was in compliance with all applicable covenants.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Change in Control.

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 % of the Company’s common shares.

Potential Impact of LIBOR Transition.

The Chief Executive of the U.K.

For U.S dollar LIBOR, publication of the one-week and two-month LIBOR settings will cease after December 31, 2021, and publication of the overnight and 12-month LIBOR settings will cease after June 30, 2023.

Immediately after June 30, 2023, the one-month, three-month and six-month U.S.

dollar LIBOR settings will no longer be representative.

Given these changes, the LIBOR administrator has advised that no new contracts using U.S.

dollar LIBOR should be entered into after December 31, 2021.

It is also possible that U.S.

LIBOR will be discontinued or modified prior to June 30, 2023.

Under the terms of the Company's Credit Agreement, in the event of the discontinuance of the LIBOR Rate, a mutually agreed-upon alternate benchmark rate will be established to replace the LIBOR Rate.

The Company and Lenders (as defined in the Credit Agreement) shall, in good faith, endeavor to establish an alternate benchmark rate that gives due consideration to prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and which places the Lenders and the Company in the same economic position that existed immediately prior to the discontinuation of the LIBOR Rate.

The Company does not anticipate that the discontinuance or modification of the LIBOR Rate will materially impact its liquidity or financial position.

5.875 % Senior Notes and 6.375 % Senior Notes

On April 1, 2021, the 5.875 % Senior Notes and 6.375 % Senior Notes were redeemed in full and $ 1.0 billion aggregate principal amount of 5.500 % Senior Notes due April 2029 were issued.

See Note 22 - Subsequent Events.

• 5.875 % Senior Notes:

Bears interest at 5.875 % annually (payable semi-annually on May and November 1 of each year).

Bore interest at 5.875 % annually (payable semi-annually on May and November 1 of each year).

• 6.375 % Senior Notes:

Bears interest at 6.375 % annually (payable semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2019).

Bore interest at 6.375 % annually (payable semi-annually in arrears on February 1 and August 1 of each year).

Maturity Date:

4 unchanged sentences

Optional Redemption:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• 5.875 % Senior Notes:

Redeemable by the Company, in whole or in part, at the redemption prices set forth as follows (as a percentage of the principal amount redeemed), plus accrued and unpaid interest to the redemption date:

(i) Was redeemable by the Company, in whole or in part, at the redemption prices set forth as follows (as a percentage of the principal amount redeemed), plus accrued and unpaid interest to the redemption date:

(i) on or after November 1, 2020 - 102.938 %;

(ii) on or after November 1, 2021 - 101.439 %;

(iii) on or after November 1, 2021 - 101.439 % ;

and (iv) on or after November 1, 2022 - 100 % .

and (iii) on or after November 1, 2022 - 100 %.

• 6.375 % Senior Notes:

Prior to February 1, 2021, the 6.375 % Senior Notes are redeemable under certain circumstances (as defined in the indenture governing the 6.375 % Senior Notes), in whole at any time, or in part from time to time, at a price equal to 100 % of the principal amount of the Notes to be redeemed plus the Applicable Premium.

The Applicable Premium is the greater of (i) 1.0 % of the principal amount redeemed and (ii) the excess of the present value of the redemption amount at February 1, 2021 (see redemption prices below) of the notes redeemed plus interest through February 1, 2021 (discounted at the treasury rate on the redemption date plus 50 basis points) over the principal amount of the notes redeemed on the redemption date.

On and after February 1, 2021, redeemable by the Company, in whole or in part, at the redemption prices set forth as follows (as a percentage of the principal amount redeemed), plus accrued and unpaid interest to the redemption date:

(i) on or after February 1, 2021 - 103.188 %;

1 unchanged sentence

(iii) on or after February 1, 2023 - 100 %.

The 5.875 % Senior Notes and 6.375 % Senior Notes are unsubordinated, unsecured obligations of the Company.

The 5.875 % Senior Notes and 6.375 % 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.

The 5.875 % Senior Notes and 6.375 % Senior Notes were unsubordinated, unsecured obligations of the Company.

The 5.875 % Senior Notes and 6.375 % Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limited 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.

As of March 31, 2021, the Company was in compliance with all applicable covenants.

Change in Control.

The occurrence of a change of control will be a triggering event requiring the Company to offer to purchase from holders all of the 5.875 % Senior Notes and 6.375 % Senior Notes, at a price equal to 101 % of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

The occurrence of a change of control was a triggering event requiring the Company to offer to purchase from holders all of the 5.875 % Senior Notes and 6.375 % Senior Notes, at a price equal to 101 % of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

In addition, certain asset dispositions will be triggering events that may require the Company to use the excess proceeds from such dispositions to make an offer to purchase the 5.875 % Senior Notes and 6.375 % Senior Notes at 100 % of their principal amount, plus accrued and unpaid interest, if any to the date of purchase.

Capacity to Pay Dividends

At March 31, 2020 , the capacity to pay dividends under the Senior Credit Facilities, the 5.875 % Senior Notes and the 6.375 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 206.4 million and accumulated deficit of $ 16.9 million were deemed free of restrictions at March 31, 2020 .

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At March 31, 2021, the capacity to pay dividends under the Senior Credit Facilities, and the 5.875 % Senior Notes and the 6.375 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 34.5 million and accumulated deficit of $ 82.9 million were deemed free of restrictions from paying dividends at March 31, 2021.

Debt Transactions

9 unchanged sentences

Convertible Senior Subordinated Notes Repayment.

On April 15, 2018, the 1.25 % convertible senior subordinated notes due April 2018 (the "April 2013 1.25 % Notes") matured, and upon maturity, the Company repaid the outstanding principal amount, together with accrued and unpaid interest.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Term Loan Prepayments.

During the year ended March 31, 2019, the Company made voluntary prepayments totaling $ 130.0 million in principal outstanding under the Term Loan B, together with accrued and unpaid interest.

March 2018 Senior Credit Facilities Refinancing.

On March 22, 2018, the Company entered into an amendment to the credit and guarantee agreement dated December 8, 2016 to refinance its revolving credit facility, Term Loan A and Term Loan B.

In connection with the amendment, the Company repaid in full the then outstanding principal amounts of $ 950.0 million under the previous Term Loan A and $ 825.0 million under the previous Term Loan B, and terminated all commitments under the previous revolving credit facility, and the Company incurred a new five -year Term Loan A in aggregate principal amount of $ 750.0 million , incurred a new seven -year Term Loan B in aggregate principal amount of $ 1,250.0 million , and obtained a new $ 1.5 billion five -year revolving credit facility (together with the Term Loan A and Term Loan B, the "Senior Credit Facilities").

December 2017 Term Loan B Refinancing.

On December 11, 2017, the Company entered into an amendment to the credit and guarantee agreement dated December 8, 2016 to reduce the interest rate on the Term Loan B and prepaid $ 25.0 million of principal outstanding under the previous Term Loan B.

Term Loan Prepayments.

In addition to the prepayments in connection with the amendments described above, during the year ended March 31, 2018, the Company made other voluntary prepayments totaling $ 740.0 million in principal outstanding under the previous Term Loan B, together with accrued and unpaid interest.

Gain (Loss) on Extinguishment of Debt

During the years ended March 31, 2020 and 2019, the Company recorded a gain (loss) on extinguishment of debt related to the transactions discussed above, as presented below:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the years ended March 31, 2020 and 2019, the Company recorded a gain (loss) on extinguishment of debt related to the transactions discussed above, as presented below ( none in the year ended March 31, 2021):

Year Ended March 31,

3 unchanged sentences

Term Loan B prepayments ( 1.4 ) ( 1.9 )

During the year ended March 31, 2018, the Company recorded a loss on extinguishment of debt associated with the debt refinancing transactions in fiscal 2018, as discussed above.

The following table summarizes the accounting for the debt issuance costs incurred and the related loss on extinguishment of debt recorded:

Year Ended March 31, 2018

Loss on Extinguishment of Debt

Capitalized & Amortized Over Life of New Issuances

(Amounts in millions)

New debt issuance costs

Previously incurred debt issuance costs or unamortized discount

Finance Lease Obligations

Finance lease obligations represent lease agreements acquired in the Starz Merger.

As of March 31, 2020, these obligations include a ten -year commercial lease for a building, with four successive five -year renewal periods at the Company's option, with an imputed annual interest rate of 6.39 % , and a finance lease obligation for Starz's transponder capacity that expires in February 2021 and has an imputed annual interest rate of 7.0 % .

See Note 8 for further information.

$ 5.4 $ ( 1.9 )

The Company has operating leases primarily for office space, studio facilities, and other equipment.

The Company also has finance leases for a satellite transponder and the Starz commercial building.

Through the first quarter of fiscal 2021, the Company had classified its lease for the Starz commercial building as a finance lease.

During the second quarter ended September 30, 2020, due to a change in the expected lease term of the Starz commercial building, the Company reassessed the lease classification of the Starz commercial building, which resulted in a change in classification of this lease from a finance lease to an operating lease.

As a result, the right-of-use assets and lease liabilities (including the fair value adjustment) under finance leases decreased by $ 42.0 million and $ 48.6 million, respectively, and the right-of-use assets and lease liabilities under operating leases increased by $ 6.0 million and $ 12.6 million, respectively in the fiscal year ended March 31, 2021.

The Company's leases have remaining lease terms of up to approximately 10 years, and the Starz commercial building lease includes four successive five-year renewal periods at the Company's option.

Most leases are not cancelable prior to their expiration.

The components of lease cost were as follows:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Amounts in millions)

Operating lease cost (1)

$ 45.1 $ 35.3

Finance lease cost

3 unchanged sentences

Short-term lease cost (1)(2)

Variable lease cost (3)

Total lease cost $ 181.4 $ 137.5

2 unchanged sentences

Operating lease cost amounts primarily represent the amortization of right-of-use assets and are included in the “other amortization” line of the consolidated statement of cash flows.

Short-term lease cost primarily consists of leases of facilities and equipment associated with film and television productions.

Supplemental cash flow information related to leases was as follows:

(Amounts in millions)

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

Operating cash flows for finance leases

Financing cash flows for finance leases

Right-of-use assets obtained in exchange for new lease obligations:

Operating leases

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2) Short-term lease cost primarily consists of leases of facilities and equipment associated with film and television productions.

(3) Variable lease cost primarily consists of insurance, taxes, maintenance and other operating costs.

Supplemental balance sheet information related to leases was as follows:

Balance Sheet Location

Operating Leases

(Amounts in millions)

Right-of-use assets

Other assets - non-current

Lease liabilities (current)

Accounts payable and accrued liabilities

Lease liabilities (non-current)

Other liabilities - non-current

Category Balance Sheet Location March 31,

2021 March 31,

Operating Leases (Amounts in millions)

Right-of-use assets Other assets - non-current $ 127.0 136.9

Lease liabilities (current) Accounts payable and accrued liabilities $ 41.4 35.3

Lease liabilities (non-current) Other liabilities - non-current 119.9 129.6

$ 161.3 164.9

Finance Leases

Right-of-use assets

Property and equipment, net

Lease liabilities (current)

Debt - short-term portion

Lease liabilities (non-current)

Debt - non-current

Right-of-use assets Property and equipment, net $ — 46.4

Lease liabilities (current) Debt - short-term portion $ — 3.0

Lease liabilities (non-current) Debt - non-current — 39.4

2021 March 31,

Weighted average remaining lease term (in years):

4 unchanged sentences

Finance leases — 6.40 %

The expected future payments relating to the Company's operating and finance lease liabilities at March 31, 2020 are as follows:

Operating Leases

The expected future payments relating to the Company's operating lease liabilities at March 31, 2021 are as follows (no finance lease liabilities outstanding at March 31, 2021):

(Amounts in millions)

Year ending March 31,

Thereafter 34.0

Total lease payments 178.9

Less imputed interest ( 17.6 )

As of March 31, 2020, the Company has entered into a lease that has not yet commenced related to a studio facility owned by an equity-method investee, for which construction has not yet been completed.

The lease is for a term of 10.5 years , commencing upon completion of construction of the studio facility (currently expected to be in calendar year 2021), and

Total $ 161.3

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

includes an option to extend the term for an additional 5 years .

As of March 31, 2021, the Company has entered into a lease that has not yet commenced related to a studio facility owned by an equity-method investee, for which construction has not yet been completed.

The lease is for a term of 10.5 years, commencing upon completion of construction of the studio facility (currently expected to be in calendar year 2021), and includes an option to extend the term for an additional 5 years.

The total minimum lease payments under this lease, as amended, are approximately $ 72.8 million.

Additionally, as of March 31, 2021, the Company has entered into a lease that has not yet commenced for office space for which construction has not yet been completed, also related to the studio facility described above.

The lease is for a term of 10.5 years commencing upon completion of construction of the studio facility.

The total minimum lease payments under this lease are approximately $ 11.7 million.

Under the accounting guidance in effect prior to April 1, 2019, the Company incurred rent expense of $ 27.0 million and $ 20.7 million in the years ended March 31, 2019 and 2018, respectively.

Under the accounting guidance in effect prior to April 1, 2019, the Company incurred rent expense of $ 27.0 million in the year ended March 31, 2019.

Participations and Residuals

7 unchanged sentences

The difference between the ultimate participation expected to be paid to TIK Films and the amount provided by TIK Films is amortized as a charge to or a reduction of participation expense under the individual-film-forecast method.

Film Obligations and Production Loans

Film Obligations, Production Loans and Production Tax Credit Facility

2021 March 31,

(Amounts in millions)

1 unchanged sentence

Production loans 373.5 151.4

Total film obligations and production loans

Production tax credit facility 120.0 —

Total film obligations, production loans and production tax credit facility 708.1 450.7

Unamortized debt issuance costs ( 4.6 ) ( 0.1 )

Total film obligations and production loans, net

Total film obligations, production loans, and production tax credit facility, net 703.5 450.6

Less current portion ( 385.0 ) ( 353.7 )

Total non-current film obligations and production loans

The following table sets forth future annual repayment of film obligations and production loans as of March 31, 2020 :

Total non-current film obligations, production loans and production tax credit facility $ 318.5 $ 96.9

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth future annual repayment of film obligations, production loans and the Production Tax Credit Facility (as defined and discussed below) as of March 31, 2021:

Year Ended March 31,

2022 2023 2024 2025 2026 Thereafter Total

(Amounts in millions)

1 unchanged sentence

Production loans 238.7 102.1 32.7 — — — 373.5

Less imputed interest on film obligations and debt issuance costs on production loans

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Production tax credit facility (1)

— — — 120.0 — — 120.0

$ 385.0 $ 140.2 $ 45.8 $ 125.7 $ 4.5 $ 6.6 $ 707.8

Less imputed interest on film obligations and issuance costs on production loans and production tax credit facility ( 4.3 )

________________________

(1) The repayment amount for the Production Tax Credit Facility represents the amount outstanding at March 31, 2021, and the repayment date represents the maturity date of the Production Tax Credit Facility (January 27, 2025), however net advances and payments under the Production Tax Credit Facility can fluctuate depending on the amount of collateral available.

Film Obligations

2 unchanged sentences

Production loans represent individual loans for the production of film and television programs that the Company produces.

The production loans are LIBOR-based, and incur interest at rates ranging from 3.24 % to 3.74 % (before the impact of interest rate swaps, see Note 19 for interest rate swaps).

The majority of 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, and incur LIBOR-based interest at rates ranging from 2.25 % to 2.92 % (before the impact of interest rate swaps, see Note 19 for interest rate swaps).

Production Tax Credit Facility

In January 2021, as amended on March 31, 2021, the Company entered into a non-recourse senior secured revolving credit facility (the "Production Tax Credit Facility") based on collateral consisting of certain of the Company’s tax credit receivables.

The maximum principal amount of the Production Tax Credit Facility is $ 220.0 million, subject to the amount of collateral available, which is based on specified percentages of amounts payable to the Company by governmental authorities pursuant to the tax incentive laws of certain eligible jurisdictions that arise from the production or exploitation of motion pictures and television programming in such jurisdiction.

Advances under the Production Tax Credit Facility bear interest at a rate equal to, at the Company’s option, LIBOR plus 1.50 % per annum or the base rate plus 0.50 % per annum (effective interest rate of 1.61 % at March 31, 2021).

The Production Tax Credit Facility matures on January 27, 2025.

As of March 31, 2021, there was $ 79.2 million available under the Production Tax Credit Facility.

Fair Value Measurements

2 unchanged sentences

Fair value hierarchy 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.

A financial instrument’s categorization within the fair value hierarchy is based upon the

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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:

5 unchanged sentences

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of March 31, 2021 and 2020:

March 31, 2020

March 31, 2019

March 31, 2021 March 31, 2020

Level 1 Level 2 Total Level 1 Level 2 Total

(Amounts in millions)

1 unchanged sentence

Forward exchange contracts (see Note 19) — 1.5 1.5 — 0.6 0.6

Interest rate swaps (see Note 19) (1)

— 149.0 149.0 — — —

Forward exchange contracts (see Note 19) — ( 2.6 ) ( 2.6 ) — ( 0.9 ) ( 0.9 )

Interest rate swaps (see Note 19) — ( 78.4 ) ( 78.4 ) — ( 187.9 ) ( 187.9 )

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the carrying values and fair values of the Company’s outstanding debt at March 31, 2020 and March 31, 2019 :

March 31, 2020

March 31, 2019

________________

(1) Amounts exclude $ 98.2 million of financing component of interest rate swaps presented in the table below.

The following table sets forth the carrying values and fair values of the Company’s outstanding debt, Production Tax Credit Facility and interest rate swaps at March 31, 2021 and 2020:

March 31, 2021 March 31, 2020

(Amounts in millions)

Carrying Value

Liabilities (1) :

Value Fair Value (1)

Carrying Value Fair Value (1)

(Level 2) (Level 2)

Term Loan A $ 651.4 $ 647.6 $ 699.8 $ 637.7

Term Loan B 942.8 936.0 952.9 845.7

5.875 % Senior Notes

506.7 533.9 504.0 430.5

6.375 % Senior Notes

540.8 563.0 539.2 452.9

Production loans 372.5 373.5 151.3 151.3

Production tax credit facility 116.5 120.0 — —

Financing component of interest rate swaps (2)

152.5 144.7 — —

The Company measures the fair value of its outstanding debt using discounted cash flow techniques that use observable market inputs, such as LIBOR-based yield curves, swap rates, and credit ratings (Level 2 measurements).

The Company’s financial instruments also include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, borrowings under the Revolving Credit Facility, if any, and finance lease obligations.

________________

(1) The Company measures the fair value of its outstanding debt and interest rate swaps using discounted cash flow techniques that use observable market inputs, such as LIBOR-based yield curves, swap rates, and credit ratings (Level 2 measurements).

(2) Amounts include $ 98.2 million recorded as a reduction of assets under master netting arrangements.

The Company’s financial instruments also include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, other liabilities, and borrowings under the Revolving Credit Facility, if any.

The carrying values of these financial instruments approximated the fair values at March 31, 2021 and 2020.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Noncontrolling Interests

1 unchanged sentence

The table below presents the reconciliation of changes in redeemable noncontrolling interests:

2021 2020 2019

(Amounts in millions)

1 unchanged sentence

Initial fair value of redeemable noncontrolling interests — — 15.8

Net income (loss) attributable to noncontrolling interests

Noncontrolling interest discount accretion

Net loss attributable to redeemable noncontrolling interests ( 15.9 ) ( 18.2 ) ( 16.2 )

Noncontrolling interests discount accretion 22.7 25.4 22.1

Adjustments to redemption value 47.1 37.2 6.5

1 unchanged sentence

Ending balance $ 219.1 $ 167.8 $ 127.6

Redeemable noncontrolling interests (included in temporary equity on the consolidated balance sheets) relate to the May 29, 2018 acquisition of a controlling interest in 3 Arts Entertainment and the November 12, 2015 acquisition of a controlling interest in Pilgrim Media Group.

Redeemable noncontrolling interests are measured at the greater of (i) the redemption amount that would be paid if settlement occurred at the balance sheet date less the amount attributed to unamortized noncontrolling interest discount if applicable, or (ii) the historical value resulting from the original acquisition date value plus or minus any earnings or loss attribution, plus the amount of amortized noncontrolling interest discount, less the amount of cash distributions that are not accounted for as compensation, if any.

The amount of the redemption value in excess of the historical values of the noncontrolling interest, if any, is recognized as an increase to redeemable noncontrolling interest and a charge to retained earnings.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Redeemable noncontrolling interests (included in temporary equity on the consolidated balance sheets) relate to the November 12, 2015 acquisition of a controlling interest in Pilgrim Media Group and the May 29, 2018 acquisition of a controlling interest in 3 Arts Entertainment.

3 Arts Entertainment.

In connection with the acquisition of a controlling interest in 3 Arts Entertainment on May 29, 2018, the Company recorded a non-compensatory (see below) redeemable noncontrolling interest of $ 15.8 million , representing the noncontrolling interest holders 49 % equity interest in 3 Arts Entertainment (see Note 2 ).

In connection with the acquisition of a controlling interest in 3 Arts Entertainment on May 29, 2018, the Company recorded a non-compensatory (see below) redeemable noncontrolling interest of $ 15.8 million, representing the noncontrolling interest holders' 49 % equity interest in 3 Arts Entertainment.

The noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable at five years after the acquisition date of May 29, 2018, for a 60 day period.

8 unchanged sentences

In connection with the acquisition of a controlling interest in Pilgrim Media Group on November 12, 2015, the Company recorded a redeemable noncontrolling interest of $ 90.1 million, representing 37.5 % of Pilgrim Media Group.

The noncontrolling interest holder has a right to put and the Company has a right to call a portion of the noncontrolling interest, equal to 17.5 % of Pilgrim Media Group, at fair value, exercisable at five years after the acquisition date of November 12, 2015.

In addition, the noncontrolling interest holder has a right to put and the Company has a right to call the remaining amount of noncontrolling interest at fair value, subject to a cap, exercisable at seven years after the acquisition date of November 12, 2015.

Pursuant to an amendment dated April 2, 2021, the put and call rights associated with the noncontrolling interest were extended and modified, such that the noncontrolling interest holder has a right to put and the Company has a right to call a portion of the noncontrolling interest, equal to 25 % of Pilgrim Media Group, at fair value, exercisable for thirty ( 30 ) days beginning November 12, 2022.

In addition, the noncontrolling interest holder has a right to put and the Company has a right to call the remaining amount of noncontrolling interest at fair value, subject to a cap, exercisable for thirty ( 30 ) days beginning November 12, 2024, as amended.

The put and call options have been determined to be embedded in the noncontrolling interest, and because the put rights are outside the control of the Company and require partial cash settlement, the noncontrolling interest holder's interest is presented as redeemable noncontrolling interest outside of shareholders' equity on the Company's consolidated balance sheets.

In addition, the noncontrolling interest holder is the President and CEO of Pilgrim Media Group.

Pursuant to the operating agreement of Pilgrim Media Group, if the employment of the noncontrolling interest holder is terminated, under certain circumstances as defined in the operating agreement, the Company can call and the noncontrolling interest holder can put the noncontrolling interest at a discount to fair value.

The amount of the discount related to the 17.5 % noncontrolling interest is being expensed through the five -year call period, and the portion of the discount related to the remaining noncontrolling interest is being expensed over the seven -year call period.

The amounts are included in general and administrative expense of Pilgrim Media Group and reflected as an addition to redeemable noncontrolling interest.

Pursuant to the original operating agreement of Pilgrim Media Group, if the employment of the noncontrolling interest holder was terminated, under

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

certain circumstances as defined in the operating agreement, the Company could call and the noncontrolling interest holder could put the noncontrolling interest at a discount to fair value, which was being expensed over the call periods in the original operating agreement.

Pursuant to the amendment to the operating agreement on April 2, 2021, this discount was eliminated and therefore any remaining unamortized discount will be expensed in the quarter ended June 30, 2021.

The amortization of the discount through March 31, 2021 is included in general and administrative expense of Pilgrim Media Group and reflected as an addition to redeemable noncontrolling interest.

Other Noncontrolling Interests

The Company has other noncontrolling interests that are not redeemable.

These noncontrolling interests primarily relate to Pantaya (a joint venture between the Company and Hemisphere Media Group), a premium Spanish-language streaming service in which the Company owns a controlling interest.

The Pantaya service was launched in the three months ended September 30, 2017.

The Company has other immaterial noncontrolling interests that are not redeemable.

Revenue by Segment, Market or Product Line

The table below presents revenues by segment, market or product line for the fiscal years ended March 31, 2021, 2020 and 2019:

The fiscal 2018 information in the below table has not been adjusted under the modified retrospective method of adoption of the new revenue recognition guidance adopted in fiscal 2019.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2021 2020 2019

(Amounts in millions)

1 unchanged sentence

Motion Picture

Theatrical $ 12.0 $ 355.6 $ 215.8

Home Entertainment

2 unchanged sentences

Total Home Entertainment 601.0 704.8 592.2

Television 230.2 247.1 274.4

International 217.0 341.0 341.1

Other 20.9 22.4 40.9

Total Motion Picture revenues 1,081.1 1,670.9 1,464.4

Television Production

Television 474.0 715.7 655.8

International 164.5 152.7 136.0

3 unchanged sentences

Total Home Entertainment 132.8 60.8 74.5

Other 60.5 72.1 54.6

Total Television Production revenues 831.8 1,001.3 920.9

Media Networks - Programming Revenues

1,497.2 1,463.9 1,458.9

International 65.5 22.9 2.1

1,562.7 1,486.8 1,461.0

Intersegment eliminations ( 204.1 ) ( 269.0 ) ( 165.8 )

1 unchanged sentence

__________________

Media Networks domestic revenues include revenue from the Company's Other Streaming Services product line of $ 33.8 million , $ 18.0 million and $ 7.1 million in the years ended March 31, 2020, 2019 and 2018, respectively.

(1) Media Networks domestic revenues include revenue from the Company's Other Streaming Services product line of $ 50.3 million, $ 33.8 million and $ 18.0 million in the years ended March 31, 2021, 2020 and 2019, respectively, substantially all of which related to the Company's former interest in Pantaya, which was sold on March 31, 2021 (see Note 2).

Remaining Performance Obligations

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Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at March 31, 2021 are as follows:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ending March 31,

2022 2023 2024 Thereafter Total

(Amounts in millions)

Remaining Performance Obligations $ 1,086.8 $ 299.8 $ 92.0 $ 135.1 $ 1,613.7

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The above table does not include estimates of variable consideration for transactions involving sales or usage-based royalties in exchange for licenses of intellectual property.

The revenues included in the above table include all fixed fee contracts regardless of duration.

Revenues of $ 196.5 million , including variable and fixed fee arrangements, were recognized during the year ended March 31, 2020 , respectively, from performance obligations satisfied prior to March 31, 2019.

Revenues of $ 275.9 million, including variable and fixed fee arrangements, were recognized during the year ended March 31, 2021 from performance obligations satisfied prior to March 31, 2020.

These revenues were primarily associated with the distribution of television and theatrical product in electronic sell-through and video-on-demand formats, and to a lesser extent, the distribution of theatrical product in the domestic and international markets related to films initially released in prior periods.

Contract Assets and Deferred Revenue

Accounts Receivable, Contract Assets and Deferred Revenue

The timing of revenue recognition, billings and cash collections affects the recognition of accounts receivable, contract assets and deferred revenue (see Note 1).

At March 31, 2020 and March 31, 2019 , accounts receivable, contract assets and deferred revenue are as follows:

Balance Sheet Location

At March 31, 2021 and 2020, accounts receivable, contract assets and deferred revenue are as follows:

Item Balance Sheet Location March 31,

2021 March 31,

2020 Addition (Reduction)

(Amounts in millions)

Accounts receivable, net - current

Accounts receivable, net

Accounts receivable, net - non-current

Other assets - non-current

Contract asset - current

Other assets - current (1)

Contract asset - non-current

Other assets - non-current (1)

Deferred revenue - current

Deferred revenue - non-current

Accounts receivable, net - current Accounts receivable, net $ 383.7 $ 522.0 $ ( 138.3 )

Accounts receivable, net - non-current Other assets - non-current 49.4 53.6 ( 4.2 )

Contract asset - current Other assets - current (1)

25.6 18.8 6.8

Included in prepaid expenses and other.

Contract asset - non-current Other assets - non-current (1)

10.3 10.5 ( 0.2 )

Deferred revenue - current Deferred revenue - current 165.7 116.6 49.1

Deferred revenue - non-current Deferred revenue - non-current 56.2 61.3 ( 5.1 )

__________________

(1) Included in prepaid expenses and other (see Note 20).

Accounts Receivable.

Accounts receivable are presented net of a provision for doubtful accounts.

The Company estimates provisions for accounts receivable based on historical experience for the respective risk categories and current and future expected economic conditions.

To assess collectibility, the Company analyzes market trends, economic conditions, the aging of receivables and customer specific risks, and records a provision for estimated credit losses expected over the lifetime of the receivables in direct operating expense.

The Company performs ongoing credit evaluations and monitors its credit exposure through active review of customers' financial condition, aging of receivable balances, historical collection trends, and expectations about relevant future events that may significantly affect collectibility.

The Company generally does not require collateral for its trade accounts receivable.

Changes in the provision for doubtful accounts consisted of the following:

March 31, 2020 (Benefit) provision for doubtful accounts (1)

Uncollectible accounts written-off March 31,

(Amounts in millions)

Trade accounts receivable $ 9.3 $ ( 2.5 ) $ ( 0.3 ) $ 6.5

_______________________

(1) Represents collections on accounts receivable previously reserved.

Contract Assets.

Contract assets relate to the Company’s conditional right to consideration for completed performance under the contract (e.g., unbilled receivables).

Amounts relate primarily to contractual payment holdbacks in cases in which the Company is required to deliver additional episodes or seasons of television content in order to receive payment, complete certain administrative activities, such as guild filings, or allow the Company's customers' audit rights to expire.

Amounts relate primarily to contractual payment holdbacks in cases in which the

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company is required to deliver additional episodes or seasons of television content in order to receive payment, complete certain administrative activities, such as guild filings, or allow the Company's customers' audit rights to expire.

The change in balance of contract assets is primarily due to the satisfaction of the condition related to payment holdbacks.

Deferred Revenue.

Deferred revenue relates primarily to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation.

3 unchanged sentences

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares, at March 31, 2021 and March 31, 2020.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The table below outlines common shares reserved for future issuance:

2021 March 31,

(Amounts in millions)

Stock options and equity-settled SARs outstanding

Stock options and SARs outstanding 26.7 35.7

Restricted stock and restricted share units — unvested 9.1 3.7

4 unchanged sentences

During the fiscal year ended March 31, 2021, the Company repurchased 0.2 million of its Class A voting shares for an aggregate cost of $ 1.0 million, with an average repurchase price per share of $ 5.75 .

During the years ended March 31, 2019 and 2018 the Company did not repurchase any common shares.

To date, including repurchases subsequent to March 31, 2020 of approximately $ 1.0 million , approximately $ 288.1 million common shares have been repurchased, leaving approximately $ 179.9 million of authorized potential purchases.

During the fiscal year ended March 31, 2020, the Company repurchased 0.7 million of its Class A voting shares for an aggregate cost of $ 3.8 million, with an average repurchase price per share of $ 5.43 .

During the year ended March 31, 2019 the Company did not repurchase any common shares.

To date, approximately $ 288.1 million common shares have been repurchased, leaving approximately $ 179.9 million of authorized potential repurchases.

1 unchanged sentence

In November 2018, the Company's Board of Directors suspended the Company's quarterly cash dividend to focus on driving long-term shareholder value by investing in global growth opportunities for Starz, while also strengthening its balance sheet.

During the fiscal years ended March 31, 2019 and 2018 , the Company's Board of Directors declared the following quarterly cash dividends:

Dividends Declared Per Common Share

During the fiscal year ended March 31, 2019, the Company's Board of Directors declared the following quarterly cash dividends:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Dividends Declared Per Common Share Total Amount Payment Date

(in millions)

Fiscal Year 2019:

Second quarter ended September 30, 2018

November 8, 2018

First quarter ended June 30, 2018

August 9, 2018

Second quarter ended September 30, 2018 $ 0.09 $ 19.3 November 8, 2018

First quarter ended June 30, 2018 $ 0.09 19.2 August 9, 2018

Total cash dividends declared in fiscal year 2019 $ 0.18 $ 38.5

Fiscal Year 2018:

Fourth quarter ended March 31, 2018

As of March 31, 2021, the Company was not limited in its capacity to pay dividends under the Senior Credit Facilities Amended Credit Agreement and the indentures governing the 5.875 % Senior Notes and the 6.375 % Senior Notes (see Note 7).

4 unchanged sentences

Persons eligible to receive awards under the 2019 Plan include directors of the Company, officers or employees of the Company or any of its subsidiaries, and certain consultants and advisors to the Company or any of its subsidiaries.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On September 15, 2020, the Company’s shareholders approved an amendment to the 2019 Plan previously adopted by the Board of Directors of the Company to increase the maximum number of the Company’s common shares that may be issued or transferred pursuant to awards under the 2019 Plan by an additional 10.0 million shares so that the new aggregate share limit under the 2019 Plan is 16.1 million common shares (not including shares that were originally approved for issuance under the Company’s prior stock incentive plans that have become available for issuance under the 2019 Plan pursuant to the terms of the 2019 Plan).

Stock options are generally granted at exercise prices equal to or exceeding the market price of the Company's Common Shares at the date of grant.

5 unchanged sentences

As share-based compensation expense recognized in the Company’s consolidated financial statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

Exchange Program.

On January 10, 2020, the Company’s Board of Directors authorized, and on April 2, 2020, the Company’s shareholders approved, a stock option and share appreciation rights exchange program (the “Exchange Program”) that permitted certain current employees to exchange certain outstanding stock options and share appreciation rights with exercise prices substantially above the current market price of the Company’s Class A voting shares and the Company’s Class B non-voting shares for a lesser number of stock options and share appreciation rights that have a fair value that is lower than the fair value of the “out of the money” stock options and share appreciation rights.

The program began on April 9, 2020 and was completed on May 7, 2020.

As a result of this program 1.1 million outstanding eligible stock options and share appreciation rights of Class A voting shares were exchanged for 0.1 million new stock options and share appreciation rights at an exercise price of $ 7.70 per share and 4.3 million outstanding eligible stock options and share appreciation rights of Class B non-voting shares were exchanged for 0.8 million new stock options and share appreciation rights at an exercise price of $ 7.13 .

There was no incremental compensation expense recorded by the Company as a result of the Exchange Program.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Share-Based Compensation Expense.

The Company recognized the following share-based compensation expense during the years ended March 31, 2021, 2020 and 2019:

2021 2020 2019

(Amounts in millions)

3 unchanged sentences

Share appreciation rights 8.0 3.1 4.4

85.5 50.0 52.1

Impact of accelerated vesting on equity awards (1)

1 unchanged sentence

Tax impact (2)

( 17.8 ) ( 10.7 ) ( 15.7 )

Reduction in net income $ 71.2 $ 39.9 $ 52.4

3 unchanged sentences

Share-based compensation expense, by expense category, consisted of the following:

2021 2020 2019

(Amounts in millions)

4 unchanged sentences

Restructuring and other 3.5 0.6 16.0

$ 89.0 $ 50.6 $ 68.1

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

Stock Options

The following table sets forth the stock option, equity-settled and cash-settled share appreciation rights activity during the year ended March 31, 2020 :

Stock Options, Equity-Settled and Cash-Settled SARs

Class A Voting Shares

Class B Non-Voting Shares

Number of Shares

Weighted-Average Exercise Price

Weighted-Average Remaining Contractual Term (years)

Aggregate Intrinsic Value

Number of Shares

Weighted-Average Exercise Price

Weighted-Average Remaining Contractual Term (years)

Aggregate Intrinsic Value

The following table sets forth the stock option, and share appreciation rights ("SARs") activity during the year ended March 31, 2021:

Stock Options and SARs

Class A Voting Shares Class B Non-Voting Shares

Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value

(Amounts in millions, except for weighted-average exercise price and years)

Outstanding at March 31, 2020 7.2 $ 26.21 28.5 $ 19.03

Granted — — 5.4 (1) $ 8.74

Exercised — (2) 6.20 ( 0.4 ) $ 8.96

Awards canceled in exchange program ( 1.1 ) $ 31.56 ( 4.3 ) $ 26.49

Awards issued in exchange program 0.1 $ 7.70 0.8 $ 7.13

Forfeited or expired ( 0.7 ) $ 31.28 ( 8.8 ) $ 16.49

3 unchanged sentences

_____________________

During the year ended March 31, 2020 , the Company granted 3.3 million cash-settled share-appreciation rights ("CSARs").

The CSARs are revalued each reporting period until settlement using a closed-form option pricing model (Black Scholes).

(1) During the year ended March 31, 2021, the Company granted 3.8 million SARs.

(2) Represents less than 0.1 million shares.

The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes).

1 unchanged sentence

Year Ended March 31,

2021 2020 2019

Weighted average fair value of grants $ 3.10 $ 2.08 $ 5.48

1 unchanged sentence

Risk-free interest rate (1)

0.2 % - 0.9 %

0.2 % - 2.5 %

2.2 % - 3.1 %

Expected option lives (in years) (2)

2.5 - 7 years

0.4 - 7 years

Expected volatility for options (3)

1 unchanged sentence

0 % 0 % 0.0 % - 1.7 %

____________________________

(1) The risk-free rate assumed in valuing the options is based on the U.S.

4 unchanged sentences

The total intrinsic value of options exercised during the year ended March 31, 2021 was $ 1.7 million (2020 — $ 0.3 million, 2019 — $ 5.3 million).

During the year ended March 31, 2020 , no shares ( 2019 — less than 0.1 million shares, 2018 — 0.1 million shares) were cancelled to fund withholding tax obligations upon exercise of options.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the year ended March 31, 2021, less than 0.1 million shares (2020 — none , 2019 — less than 0.1 million shares) were cancelled to fund withholding tax obligations upon exercise of options.

Restricted Share Units

The following table sets forth the restricted share unit and restricted stock activity during the year ended March 31, 2021:

Restricted Share Units

Restricted Stock

Class A Voting Shares

Weighted-Average Grant-Date Fair Value

Class B Non-Voting Shares

Weighted-Average Grant-Date Fair Value

Class B Non-Voting Shares

Weighted-Average Grant-Date Fair Value

Restricted Share Units Restricted Stock

Class A Voting Shares Weighted-Average Grant-Date Fair Value Class B Non-Voting Shares Weighted-Average Grant-Date Fair Value Class B Non-Voting Shares Weighted-Average Grant-Date Fair Value

(Amounts in millions, except for weighted-average grant date fair value)

Outstanding at March 31, 2020 — (1)

$ 14.89 3.7 $ 14.46 0.1 $ 25.70

Granted — (1)

$ 9.87 8.2 $ 7.82 — —

$ 16.57 ( 2.4 ) $ 14.42 ( 0.1 ) $ 25.70

Forfeited — (1)

$ 30.56 ( 0.4 ) $ 8.79 — —

Outstanding at March 31, 2021 — (1)

$ 11.10 9.1 $ 8.71 — (1)

__________________

(1) Represents less than 0.1 million shares.

2 unchanged sentences

The following table summarizes the total remaining unrecognized compensation cost as of March 31, 2021 related to non-vested stock options and restricted stock and restricted share units and the weighted average remaining years over which the cost will be recognized:

Cost Weighted

(Amounts in millions)

5 unchanged sentences

Restricted share units are forfeited if the employees are terminated prior to vesting.

The Company recognized excess tax deficiencies of $ 11.3 million associated with its equity awards in its tax benefit for the year ended March 31, 2020 ( 2019 — $ 14.9 million , 2018 — benefit of $ 5.2 million ).

The Company recognized excess tax deficiencies of $ 12.1 million associated with its equity awards in its tax benefit for the year ended March 31, 2021 (2020 — $ 11.3 million, 2019 — $ 14.9 million).

Other Share-Based Compensation

Pursuant to the terms of certain employment agreements, during the year ended March 31, 2021, the Company granted the equivalent of $ 2.3 million (2020 - $ 2.3 million, 2019 - $ 2.3 million) in shares to certain employees through the term of their employment contracts, which were recorded as compensation expense in the applicable period.

Pursuant to this arrangement, for the year ended March 31, 2020 , the Company issued 0.2 million shares ( 2019 - 0.1 million shares, 2018 - less than 0.1 million shares), net of shares withheld to satisfy minimum tax withholding obligations.

Pursuant to this arrangement, for the year ended March 31, 2021, the Company issued 0.3 million shares (2020 - 0.2 million shares, 2019 - 0.1 million shares), net of shares withheld to satisfy minimum tax withholding obligations.

LIONS GATE ENTERTAINMENT CORP.

4 unchanged sentences

Year Ended March 31,

2021 2020 2019

(Amounts in millions)

1 unchanged sentence

International 228.9 250.2 197.6

$ ( 17.4 ) $ ( 203.1 ) $ ( 308.1 )

The Company's U.S.

2 unchanged sentences

The Company's international pre-tax income may be significantly impacted by these foreign affiliate dividends related to its internal capital structure.

On December 22, 2017, the Tax Act was signed into law, making significant changes to the taxation of U.S.

business entities.

The Tax Act reduced the U.S.

corporate income tax rate from 35 % to 21 % , imposed a one-time transition tax in connection with the move from a worldwide tax system to a territorial tax system, provided for accelerated deductions for certain U.S.

film production costs, imposed limitations on certain tax deductions such as executive compensation in future periods, and included numerous other provisions.

As the Company has a March 31 fiscal year-end, the lower corporate income tax rate was phased in, resulting in a U.S.

statutory federal rate of approximately 31.5 % for the fiscal year ended March 31, 2018, and 21 % for subsequent fiscal years.

Staff Accounting Bulletin No.

118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, provided a measurement period of one year from the date of enactment for which provisional amounts could be recorded.

During the quarter ended December 31, 2018, the Company completed its analysis and its accounting for the Tax Act, and there were no material adjustments to its provisional estimates.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, and has resulted in significant changes to the U.S.

federal corporate tax law.

Additionally, several state jurisdictions have enacted legislations to comply with federal changes and some foreign jurisdictions have enacted similar tax incentive legislations.

As the enactment dates of these laws are before the end of the reporting period, the Company has considered the applicable tax law changes to its current and deferred income tax expense as of March 31, 2020 and concluded that the impact was immaterial.

The Company is continuing to analyze the impact of these tax law changes to future periods.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s current and deferred income tax provision (benefits) are as follows:

Year Ended March 31,

2021 2020 2019

Current provision (benefit):

(Amounts in millions)

Federal $ 5.0 $ ( 0.6 ) $ 9.1

States 2.9 3.0 ( 0.7 )

International 5.8 1.8 6.7

1 unchanged sentence

Deferred provision (benefit):

Federal $ 1.1 $ ( 18.5 ) $ ( 48.2 )

States 2.3 ( 1.8 ) 5.8

International — 19.4 18.8

Total deferred benefit

Total deferred provision (benefit) 3.4 ( 0.9 ) ( 23.6 )

Total provision (benefit) for income taxes $ 17.1 $ 3.3 $ ( 8.5 )

The Company's income tax provision (benefit) differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of the Company's pre-tax income (loss) generated across the various jurisdictions in which the Company operates and the tax deductions generated by the Company's capital structure.

The Company's income tax provision for the fiscal year ended March 31, 2020 was impacted by changes in the valuation allowances against certain U.S.

The Company's income tax provision for the fiscal years ended March 31, 2021, March 31, 2020 and March 31, 2019 was impacted by changes in the valuation allowances against certain U.S.

and foreign deferred tax assets, certain minimum taxes and foreign withholding taxes.

The Company's income tax provision for fiscal 2020 was also impacted by the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

The Company's income tax provision for fiscal 2021 and fiscal 2020 was also impacted by the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations and additional settlements with tax authorities.

The Company's income tax benefit for the fiscal year ended March 31, 2019 was offset by valuation allowances against certain U.S.

and foreign deferred tax assets, certain minimum taxes imposed by the Tax Act, and the nondeductible portion of shareholder litigation settlements.

The Company's income tax benefit for the fiscal year ended March 31, 2018 included a benefit from the impact of the change in U.S.

federal tax rates imposed by the Tax Act on the Company's beginning net deferred tax liability balances, and a benefit from foreign affiliate dividends resulting from an internal capital restructuring in connection with our third party debt refinancing, which were offset by charges from increases in our valuation allowance associated with certain U.S.

and foreign deferred tax assets.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company's income tax provision (benefit) can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, further interpretation and legislative guidance regarding the new CARES Act, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.

The Company's income tax provision (benefit) can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.

Although the Company is incorporated under Canadian law, the majority of its global operations are currently subject to tax in the U.S.

As a result, the Company believes it is more appropriate to use the U.S.

Federal statutory rate in its reconciliation of the statutory rate to its reported income tax rate.

The differences between income taxes expected at U.S.

1 unchanged sentence

Year Ended March 31,

2021 2020 (1)

(Amounts in millions)

3 unchanged sentences

State income tax 5.2 1.2 ( 8.5 )

Remeasurement of opening U.S.

deferred tax liabilities due to the Tax Act

Additional remeasurements of originating deferred tax assets and liabilities

Gain on sale of Pantaya 13.8 — —

Remeasurements of originating deferred tax assets and liabilities 4.2 ( 6.9 ) ( 7.4 )

Permanent differences 0.9 1.6 1.2

Nondeductible settlement costs — — 16.9

Increase in valuation allowance

Nondeductible share based compensation 27.1 15.0 4.1

Nondeductible officers compensation 7.3 2.6 2.4

Non-controlling interest in partnerships 3.3 3.8 3.2

Nondeductible interest expense 3.5 — —

Examination settlements 0.6 ( 3.2 ) 1.7

Other ( 0.3 ) ( 2.4 ) 1.9

Changes in valuation allowance ( 57.0 ) 18.0 313.9

Total provision (benefit) for income taxes $ 17.1 $ 3.3 $ ( 8.5 )

For the years ended March 31, 2020, 2019 and 2018, our total provision (benefit) for income taxes includes certain foreign affiliate dividends that can be received in our Canadian jurisdiction without being subject to tax under local tax law.

As a result of an internal capital restructuring during the year ended March 31, 2019, the Company generated a net operating loss carryforward under local law in another foreign jurisdiction which was offset by a valuation allowance based on the Company’s assessment.

During the fiscal year ended March 31, 2020, the Company utilized a portion of the net operating loss carryforward to offset certain interest expenses disallowed under local tax law.

The Company’s utilization of net operating losses in the local foreign jurisdiction was fully offset by a change in the valuation allowance.

Although the Company is incorporated under Canadian law, the majority of its global operations are currently subject to tax in the U.S.

As a result, the Company believes it is more appropriate to use the U.S.

Federal statutory rate in its reconciliation of the statutory rate to its reported income tax rate.

__________________

(1) Certain amounts presented in fiscal 2020 and fiscal 2019 have been reclassified from "permanent differences" and "other" in order to conform to the current year presentation.

For the fiscal years ended March 31, 2021, 2020 and 2019, our total provision (benefit) for income taxes includes certain foreign affiliate dividends that can be received in our Canadian jurisdiction without being subject to tax under local tax law.

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows:

March 31, 2020

March 31, 2019

March 31, 2021 March 31, 2020

(Amounts in millions)

3 unchanged sentences

Investment in film and television obligations 41.8 35.1

Accounts payable

Accrued compensation 65.0 72.1

Operating leases - liabilities 29.0 30.0

Other assets 47.8 86.9

Reserves 16.5 14.6

Accrued interest 33.1 —

Total deferred tax assets 761.7 923.5

3 unchanged sentences

Intangible assets ( 385.6 ) ( 413.3 )

Fixed assets ( 0.1 ) ( 4.4 )

Accounts receivable ( 40.5 ) ( 79.9 )

Operating leases - assets ( 22.8 ) ( 24.8 )

Other ( 2.1 ) ( 1.9 )

Total deferred tax liabilities $ ( 451.1 ) $ ( 524.3 )

12 unchanged sentences

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the changes to the gross unrecognized tax benefits for the years ended March 31, 2020 , 2019, and 2018:

The following table summarizes the changes to the gross unrecognized tax benefits, exclusive of interest and penalties, for the years ended March 31, 2021, 2020, and 2019:

Gross unrecognized tax benefits at March 31, 2018 $ 17.6

2 unchanged sentences

Decreases related to prior year tax positions ( 1.0 )

Settlements ( 1.8 )

Lapse in statute of limitations ( 0.8 )

3 unchanged sentences

Decreases related to prior year tax positions ( 4.0 )

Settlements ( 0.5 )

Lapse in statute of limitations ( 0.8 )

3 unchanged sentences

Decreases related to prior year tax positions —

Settlements ( 1.9 )

Lapse in statute of limitations ( 5.4 )

Gross unrecognized tax benefits at March 31, 2021 $ 68.0

For the years ended March 31, 2020 , 2019, and 2018, interest and penalties were not significant.

For the years ended March 31, 2021, 2020, and 2019, the Company recognized net interest and penalties related to uncertain tax positions of $ 1.2 million, $ 0.6 million, and $ 1.0 million, respectively.

The Company recorded liabilities for accrued interest of $ 7.3 million and $ 3.3 million as of March 31, 2021 and 2020, respectively.

The Company records interest and penalties on unrecognized tax benefits as part of its income tax provision.

The Company is subject to taxation in the U.S.

and various state and foreign jurisdictions.

With a few exceptions, the Company is and can be subject to income tax examination by U.S.

and state tax authorities.

Currently, the Company is subject to an income tax examination by a certain state for the fiscal years ended March 31, 2008 and forward.

However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs were generated and carried forward, and make adjustments up to the amount of the NOLs.

Currently, audits are occurring in various state and local tax jurisdictions.

In addition, the Company's Canadian tax returns are under examination for the years ended March 31, 2014 through March 31, 2017.

The total amount of unrecognized tax benefits as of March 31, 2021 that, if realized, would affect the Company's tax benefit (provision) are $ 74.1 million.

The Company estimates that approximately $ 4.9 million in unrecognized tax benefits may be realized in the next 12 months.

The Company estimates the liability for unrecognized tax benefits will decrease in the next twelve months by $ 5.8 million as a result of projected audit settlements in certain jurisdictions.

The Company is subject to taxation in the U.S.

and various state, local, and foreign jurisdictions.

To the extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs were generated and carried forward and make adjustments up to the amount of the NOLs.

Currently, audits are occurring in various state and local tax jurisdictions for tax years ended in 2012 through 2019.

Additionally, positions taken by the Company in certain amended filings are subject to current review.

The Company's Canadian tax returns are also under examination for the years ended March 31, 2014 through March 31, 2019.

Restructuring and Other

Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable.

During the years ended March 31, 2020 and 2019, the Company also incurred certain other unusual charges related to programming write-downs, and during the year ended March 31, 2020, the COVID-19 global pandemic, which are included in direct operating and distribution and marketing expense in the consolidated statements of operations.

The following table sets forth restructuring and other and these unusual programming and COVID-19 related charges and the statement of operations line items they are included in for the years ended March 31, 2020 , 2019 and 2018 :

During the years ended March 31, 2021 and 2020, the Company also incurred certain other unusual charges related to the COVID-19 global pandemic, which are included in direct operating and distribution and marketing expense in the consolidated statements of operations.

In addition, during the years ended March 31, 2020 and 2019, the Company incurred certain other unusual charges related to programming write-downs, which are included in direct operating expense in the consolidated statements of operations.

The following table sets forth restructuring and other and these unusual COVID-19 related and programming charges and the statement of operations line items they are included in for the years ended March 31, 2021, 2020 and 2019:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2021 2020 2019

(Amounts in millions)

1 unchanged sentence

Severance (1)

Cash $ 14.8 $ 12.3 $ 31.5

Accelerated vesting on equity awards (see Note 14) 3.5 0.6 16.0

Total severance costs 18.3 12.9 47.5

COVID-19 related costs included in restructuring and other (2)

COVID-19 related charges included in restructuring and other (2)

Transaction and related costs (3)

Development expense (4)

3.4 11.1 30.5

Total Restructuring and Other 24.7 24.3 78.0

Programming and content charges and COVID-19 related charges not included in restructuring and other:

COVID-19 related charges and programming and content charges not included in restructuring and other:

Programming and content charges included in direct operating expense (4)

COVID-19 related costs included in:

COVID-19 related charges included in:

Direct operating expense (5)

Distribution and marketing expense (5)

Total restructuring and other, programming and content charges, and COVID-19 related costs

Total restructuring and other, COVID-19 related charges, and programming and content charges $ 92.2 $ 151.0 $ 113.1

_______________________

Severance costs in the fiscal years ended March 31, 2020, 2019 and 2018 were primarily related to restructuring activities in connection with recent acquisitions, and other cost-saving initiatives.

During the year ended March 31, 2020, the Company has incurred certain costs including costs primarily related to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic.

(1) Severance costs in the fiscal years ended March 31, 2021, 2020 and 2019 were primarily related to restructuring activities in connection with cost-saving initiatives and recent acquisitions.

(2) During the years ended March 31, 2021 and 2020, the Company has incurred certain costs including costs primarily related to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic.

(3) Transaction and related costs in the fiscal years ended March 31, 2021, 2020 and 2019 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

In fiscal 2019, these costs were primarily related to the legal fees associated with the Starz class action lawsuits and other matters and, to a lesser extent, costs related to the acquisition of 3 Arts Entertainment and other strategic transactions.

In fiscal 2018, these costs were primarily related to the sale of EPIX (see Note 5 ), the legal fees associated with the Starz class action lawsuits and other matters, and the integration of Starz.

Development expense in the fiscal year ended March 31, 2018 represents write-downs resulting from the restructuring of the Motion Picture business in connection with the acquisition of Good Universe and new management's decisions around the creative direction on certain development projects which were abandoned in the fiscal year ended March 31, 2018.

In the fiscal years ended March 31, 2020 and 2019, in connection with recent management changes, the Company implemented changes to its programming strategy and broadcasting strategy including programming acquired or produced under prior management.

As a result, the Company recorded certain programming and content charges of $ 76.5 million and $ 35.1 million in fiscal 2020 and 2019, respectively.

In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, including the worldwide closure of most theaters, international travel restrictions and the pausing of motion picture and television productions, during the fourth quarter of fiscal 2020 the Company incurred certain incremental costs which were expensed in the period.

The costs included in direct operating expense primarily represent certain motion picture and television impairments and development charges associated with changes in performance expectations or the feasibility of completing the project, and costs associated with the pausing of productions, including certain cast and crew costs and incremental costs associated with bad debt reserves.

In addition, the costs included in distribution and

(4) In the fiscal years ended March 31, 2020 and 2019, in connection with management changes, the Company implemented changes to its programming and broadcasting strategy including programming acquired or produced under prior management.

As a result, the Company recorded certain programming and content charges of $ 76.5 million and $ 35.1 million in fiscal 2020 and 2019, respectively, which are included in direct operating expense in the consolidated statement of operations.

(5) In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, including the worldwide closure of theaters, international travel restrictions and the pausing of motion picture and television productions, during fiscal 2021 and fiscal 2020, the Company incurred certain incremental costs which were expensed in the period.

The costs included in direct operating expense primarily represent incremental costs associated with film impairment due to changes in performance expectations, the pausing and restarting of productions including certain cast and crew, idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic.

In addition, the costs included in distribution and marketing expense primarily consist of contractual marketing spends for film releases and events that were canceled or delayed and will provide no economic benefit.

The Company is in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore no material amounts of insurance proceeds have been recorded in the consolidated financial statements.

Changes in the restructuring and other severance liability were as follows for the years ended March 31, 2021, 2020 and 2019:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

marketing expense primarily consist of early marketing spends for film releases and events that have been canceled or delayed and will provide no economic benefit.

The majority of the COVID-19 related costs relate to the Motion Picture segment.

The Company is in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in the consolidated financial statements.

Changes in the restructuring and other severance liability were as follows for the years ended March 31, 2020 , 2019 and 2018 :

2021 2020 2019

(Amounts in millions)

1 unchanged sentence

Beginning balance $ 11.1 $ 21.2 $ 14.7

Accruals 14.8 12.3 31.5

Severance payments ( 20.2 ) ( 22.4 ) ( 25.0 )

1 unchanged sentence

$ 5.7 $ 11.1 $ 21.2

In the year ended March 31, 2018, other represents noncash reductions related to the settlement of certain liabilities relating to employee compensation with equity instruments.

As of March 31, 2020 , the remaining severance liability of approximately $ 11.1 million is expected to be paid by March 31, 2021.

_______________________

(1) As of March 31, 2021, the remaining severance liability of approximately $ 5.7 million is expected to be paid in the next 12 months.

Segment Information

7 unchanged sentences

Television Production includes the licensing of Starz original series productions to Starz Networks and STARZPLAY International, and the ancillary market distribution of Starz original productions and licensed product.

Additionally, the results of operations of 3 Arts Entertainment is included in the Television Production segment from the acquisition date of May 29, 2018 (see Note 2 ).

Additionally, the Television Production segment includes the results of operations of 3 Arts Entertainment from the acquisition date of May 29, 2018.

Media Networks.

Media Networks consists of the following product lines (i) Starz Networks, which includes the domestic licensing of premium subscription video programming to Distributors, and on a direct-to-consumer basis (ii) STARZPLAY International, which represents revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services internationally and (iii) Other Streaming Services, which represents primarily our majority owned premium Spanish language streaming services business, Pantaya.

Media Networks consists of the following product lines (i) Starz Networks, which includes the domestic distribution of STARZ branded premium subscription video services through OTT platforms and Distributors and on a direct-to-consumer basis through the Starz App (ii) STARZPLAY International, which represents revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services outside of the U.S.

and (iii) Other Streaming Services, which represents primarily the Company's formerly majority owned premium Spanish language streaming services business, Pantaya.

The Company sold its interest in Pantaya on March 31, 2021, see Note 2 for further information.

In the ordinary course of business, the Company's reportable segments enter into transactions with one another.

While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.

Segment information is presented in the table below:

2021 2020 2019

(Amounts in millions)

4 unchanged sentences

Intersegment eliminations ( 204.1 ) ( 269.0 ) ( 165.8 )

$ 3,271.5 $ 3,890.0 $ 3,680.5

Intersegment revenues

2 unchanged sentences

Media Networks — 2.4 0.1

$ 204.1 $ 269.0 $ 165.8

Gross contribution

3 unchanged sentences

Intersegment eliminations ( 14.1 ) 6.8 ( 6.3 )

$ 897.4 $ 791.5 $ 871.4

Segment general and administration

2 unchanged sentences

Media Networks 93.9 87.5 97.7

$ 242.8 $ 229.6 $ 246.8

Segment profit

3 unchanged sentences

Intersegment eliminations ( 14.1 ) 6.8 ( 6.3 )

$ 654.6 $ 561.9 $ 624.6

The Company's primary measure of segment performance is segment profit.

Segment profit is defined as gross contribution (revenues, less direct operating and distribution and marketing expense) less segment general and administration expenses.

Segment profit excludes corporate general and administrative expense, restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and associated programming and content strategy, and, when applicable, certain costs related to the COVID-19 global pandemic and purchase accounting and related adjustments.

Segment profit excludes corporate general and administrative expense, restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and associated programming and content strategy, and, when applicable, certain charges related to the COVID-19 global pandemic and purchase accounting and related adjustments.

The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company's management and enables them to understand the fundamental performance of the Company's businesses.

Media Networks gross contribution and segment profit for the fiscal year ended March 31, 2020 includes a benefit of $ 39.7 million in direct operating expenses associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates.

The reconciliation of total segment profit to the Company’s loss before income taxes is as follows:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The reconciliation of total segment profit to the Company’s income (loss) before income taxes is as follows:

2021 2020 2019

(Amounts in millions)

1 unchanged sentence

Corporate general and administrative expenses ( 113.7 ) ( 99.7 ) ( 104.2 )

Gain on sale of Pantaya (1)

Adjusted depreciation and amortization (2)

( 44.3 ) ( 41.8 ) ( 41.1 )

Restructuring and other (3)

COVID-19 related costs included in direct operating expense and distribution and marketing expense (3)

( 24.7 ) ( 24.3 ) ( 78.0 )

COVID-19 related charges included in direct operating expense and distribution and marketing expense (4)

( 67.5 ) ( 50.2 ) —

Programming and content charges (5)

— ( 76.5 ) ( 35.1 )

Adjusted share-based compensation expense (6)

( 85.5 ) ( 50.0 ) ( 52.1 )

Purchase accounting and related adjustments (7)

( 192.4 ) ( 216.6 ) ( 184.1 )

Operating income 170.6 2.8 130.0

1 unchanged sentence

Shareholder litigation settlements (8)

— — ( 114.1 )

Interest and other income 5.8 8.8 12.0

3 unchanged sentences

Equity interests loss ( 6.1 ) ( 17.2 ) ( 42.9 )

Income (loss) before income taxes

Loss before income taxes $ ( 17.4 ) $ ( 203.1 ) $ ( 308.1 )

___________________

(1) Represents the gain before income taxes on the sale of the Company's majority interest in Pantaya on March 31, 2021.

This gain amount is net of $ 69.0 million of goodwill allocated from the Media Networks segment as required under the applicable accounting guidance.

Pantaya was previously reflected in the Company's Media Networks segment.

See Note 2 for further information.

(2) Adjusted depreciation and amortization represents depreciation and amortization as presented on our consolidated statements of operations less the depreciation and amortization related to the non-cash fair value adjustments to property and equipment and intangible assets acquired in recent acquisitions which are included in the purchase accounting and related adjustments line item above, as shown in the table below:

2021 2020 2019

(Amounts in millions)

3 unchanged sentences

(3) Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable (see Note 16).

In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, during the fourth quarter of fiscal 2020 we have incurred $ 50.2 million in incremental direct operating and distribution and marketing expense (see Note 16 ).

These charges are excluded from segment operating results and a majority of these costs relate to the Motion Picture segment.

(4) In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, during fiscal 2021 and fiscal 2020, the Company has incurred $ 67.5 million and $ 50.2 million, respectively, in incremental direct operating and distribution and marketing expense (see Note 16).

These charges are excluded from segment operating results.

(5) In the fiscal years ended March 31, 2020 and 2019, in connection with management changes, the Company implemented changes to its programming and broadcasting strategy including programming acquired or produced under prior management.

As a result, the Company recorded certain programming and content charges of $ 76.5 million and $ 35.1

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

million in fiscal 2020 and 2019, respectively, which are included in direct operating expense in the consolidated statements of operations.

(6) The following table reconciles total share-based compensation expense to adjusted share-based compensation expense:

2021 2020 2019

(Amounts in millions)

1 unchanged sentence

Amount included in restructuring and other (i)

( 3.5 ) ( 0.6 ) ( 16.0 )

Adjusted share-based compensation $ 85.5 $ 50.0 $ 52.1

3 unchanged sentences

The following sets forth the amounts included in each line item in the financial statements:

2021 2020 2019

(Amounts in millions)

3 unchanged sentences

Depreciation and amortization 144.2 155.9 122.3

$ 192.4 $ 216.6 $ 184.1

(8) Shareholder litigation settlements of $ 114.1 million in the year ended March 31, 2019 was related to previous shareholder litigation in connection with the Starz merger and includes the following:

5 unchanged sentences

The following table reconciles segment general and administration to the Company’s total consolidated general and administration expense:

2021 2020 2019

(Amounts in millions)

4 unchanged sentences

Purchase accounting and related adjustments 47.2 52.6 43.8

$ 486.6 $ 430.4 $ 445.4

The reconciliation of total segment assets to the Company’s total consolidated assets is as follows:

2021 March 31,

(Amounts in millions)

4 unchanged sentences

$ 8,306.2 $ 7,951.2

_____________________

(1) Other unallocated assets primarily consist of cash, other assets and investments.

2 unchanged sentences

The following table sets forth acquisition of investment in films and television programs and program rights, as broken down by segment for the years ended March 31, 2021, 2020 and 2019:

2021 2020 2019

(Amounts in millions)

4 unchanged sentences

Intersegment eliminations ( 204.3 ) ( 188.5 ) ( 217.2 )

$ 1,616.7 $ 1,545.3 $ 1,469.9

The following table sets forth capital expenditures, as broken down by segment for the years ended March 31, 2021, 2020 and 2019:

2021 2020 2019

(Amounts in millions)

5 unchanged sentences

$ 35.0 $ 31.1 $ 43.8

_____________________

(1) Represents unallocated capital expenditures primarily related to the Company's corporate headquarters.

Revenue by geographic location, based on the location of the customers, with no other foreign country individually comprising greater than 10% of total revenue, is as follows:

2021 2020 2019

(Amounts in millions)

Canada $ 43.3 $ 43.9 $ 47.9

United States 2,863.3 3,321.9 3,124.6

Other foreign 364.9 524.2 508.0

$ 3,271.5 $ 3,890.0 $ 3,680.5

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

Long-lived assets by geographic location are as follows:

March 31, 2020

March 31, 2019

March 31, 2021 March 31, 2020

(Amounts in millions)

Long-lived assets (1)

Canada $ — $ —

United States 2,279.7 1,684.7

1 unchanged sentence

$ 2,441.9 $ 1,797.5

_____________

(1) Long-lived assets represents total assets less the following:

current assets, investments, long-term receivables, intangible assets, goodwill and deferred tax assets.

For the year ended March 31, 2020, the Company had revenue from one individual customer which represented greater than 10% of consolidated revenues, amounting to $ 438.6 million , primarily related to the Company's Media Networks and Motion Picture segments (2019 - revenue from one individual customer which represented greater than 10% of consolidated revenues, amounting to $ 401.9 million , primarily related to the Company's Media Networks segment;

current assets, investments, long-term receivables, interest rate swaps, intangible assets, goodwill and deferred tax assets.

For the year ended March 31, 2021, the Company had revenue from one individual customer which represented greater than 10% of consolidated revenues, amounting to $ 638.8 million, primarily related to the Company's Media Networks and Motion Picture segments (2020 - revenue from one individual customer which represented greater than 10% of consolidated revenues, amounting to $ 438.6 million, primarily related to the Company's Media Networks and Motion Picture segments;

2019 - revenue from one individual customer which represented greater than 10% of consolidated revenues, amounting to $ 401.9 million, primarily related to the Company's Media Networks segment).

As of March 31, 2020, the Company had accounts receivable due from one customer which individually represented greater than 10% of total consolidated accounts receivable.

Accounts receivable due from this one customer amounted to 11 % of consolidated gross accounts receivable (current and non-current) at March 31, 2020, or gross accounts receivable of approximately $ 82.0 million (2019 - two individual customers represented 31 % of consolidated gross accounts receivable, or gross accounts receivable of approximately $ 269.9 million ).

As of March 31, 2021, the Company did not have any accounts receivable due from customers which individually represented greater than 10% of total consolidated accounts receivable.

As of March 31, 2020, the Company had accounts receivable due from one individual customer which represented 11 % of consolidated gross accounts receivable (current and non-current), or gross accounts receivable of approximately $ 82.0 million.

Commitments and Contingencies

1 unchanged sentence

Year Ended March 31,

2022 2023 2024 2025 2026 Thereafter Total

(Amounts in millions)

1 unchanged sentence

Film obligation and production loan commitments (1)

$ 365.5 $ 304.7 $ 112.0 $ 33.0 $ 33.0 $ 1.0 $ 849.2

Interest payments (2)

135.6 131.0 105.9 59.8 — — 432.3

Other contractual obligations 135.5 58.4 21.9 9.7 7.9 50.4 283.8

1 unchanged sentence

$ 636.6 $ 494.1 $ 239.8 $ 102.5 $ 40.9 $ 51.4 $ 1,565.3

____________________________

(1) Film obligation commitments include distribution and marketing commitments, minimum guarantee commitments and program rights commitments.

4 unchanged sentences

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

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 estimated future interest payments associated with the commitment.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

release dates of the related film or contractual due dates of the commitment.

The amounts include estimated future interest payments associated with the commitment.

Includes cash interest payments on the Company's debt (including interest on finance lease obligations), excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.

(2) Includes cash interest payments on the Company's debt outstanding at March 31, 2021, excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.

Subsequent to March 31, 2021, the Company amended its Credit Agreement to, among other things, extend the maturity of a portion of its outstanding term A loans, amounting to $ 444.9 million, to April 6, 2026.

Additionally, subsequent to March 31, 2021, the Company redeemed in full the 5.875 % Senior Notes and 6.375 % Senior Notes, and $ 1.0 billion aggregate principal amount of 5.500 % Senior Notes due April 2029 were issued.

See Note 22 - Subsequent Events.

(3) Not included in the amounts above are $ 219.1 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments (see Note 12).

32 unchanged sentences

The Fiduciary Litigation settlement was approved by the Court of Chancery of the State of Delaware and the settlement amount and insurance reimbursement discussed above were paid during the quarter ended December 31, 2018.

The Company is continuing to seek additional insurance reimbursement, including pursuant to a lawsuit submitted by the Company on November 7, 2018 against certain insurers.

The Company is continuing to seek additional insurance reimbursement, including pursuant to a lawsuit filed by the Company on November 7, 2018 against certain insurers.

On November 5, 2018, an insurer that entered into an agreement and contributed $ 10.0 million to the Company's aggregate insurance reimbursement filed a lawsuit seeking declaratory judgment for reimbursement of its agreed upon payment.

14 unchanged sentences

March 31, 2021

Foreign Currency

Foreign Currency Amount

US Dollar Amount

Weighted Average Exchange Rate Per $1 USD

(Amounts in millions)

British Pound Sterling

in exchange for

Canadian Dollar

in exchange for

Australian Dollar

in exchange for

Foreign Currency Foreign Currency Amount US Dollar Amount Weighted Average Exchange Rate Per $1 USD

(Amounts in millions) (Amounts in millions)

British Pound Sterling £ 2.3 in exchange for $ 2.9 £ 0.77

Hungarian Forint HUF 4,807.0 in exchange for $ 16.1 HUF 298.87

Euro € 18.5 in exchange for $ 22.2 € 0.83

Canadian Dollar C$ 13.9 in exchange for $ 10.8 C$ 1.29

Czech Koruna CZK 482.0 in exchange for $ 21.9 CZK 21.97

LIONS GATE ENTERTAINMENT CORP.

3 unchanged sentences

The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows.

The Company primarily uses pay-fixed interest rate swaps to facilitate its interest rate risk management activities, which the Company designates as cash flow hedges of interest payments on floating-rate borrowings.

The Company primarily uses pay-fixed interest rate swaps to facilitate its interest rate risk management activities, which the Company generally designates as cash flow hedges of interest payments on floating-rate borrowings.

Pay-fixed swaps effectively convert floating-rate borrowings to fixed-rate borrowings.

The unrealized gains or losses from these cash flow hedges are deferred in accumulated other comprehensive income (loss) and recognized in interest expense as the interest payments occur.

As of March 31, 2020 and March 31, 2019, the total notional amount of the Company’s pay-fixed interest rate swaps was $ 1.7 billion .

The major terms of the Company's interest rate swap agreements as of March 31, 2020 are as follows (all related to the Company's LIBOR-based debt, see Note 7 and Note 10 ):

Effective Date

Notional Amount (in millions)

Fixed Rate Paid

Maturity Date

March 24, 2025

June 25, 2018

March 23, 2025

July 31, 2018

March 23, 2025

December 24, 2018

March 23, 2025

December 24, 2018

March 23, 2025

December 24, 2018

March 23, 2025

The unrealized gains or losses from these designated cash flow hedges are deferred in accumulated other comprehensive income (loss) and recognized in interest expense as the interest payments occur.

Changes in the fair value of interest rate swaps that are not designated as hedges are recorded in interest expense (see further explanation below).

As of March 31, 2020, the Company had the following pay-fixed interest rate swaps outstanding (all related to the Company's LIBOR-based debt, see Note 7 and Note 10):

Effective Date Notional Amount (in millions) Fixed Rate Paid Maturity Date

May 23, 2018 $ 1,000.0 2.915 % March 24, 2025

June 25, 2018 $ 200.0 2.723 % March 23, 2025

July 31, 2018 $ 300.0 2.885 % March 23, 2025

December 24, 2018 $ 50.0 2.744 % March 23, 2025

December 24, 2018 $ 100.0 2.808 % March 23, 2025

December 24, 2018 $ 50.0 2.728 % March 23, 2025

Total $ 1,700.0

During the fiscal year ended March 31, 2021, the Company completed a series of transactions to amend and extend certain interest rate swap agreements.

These transactions effectively replaced $ 1.4 billion of the interest rate swaps presented in the table above, and resulted in an extension of the maturity date on an aggregate of $ 1.4 billion of the Company's interest rate swaps by an additional 2 to 5 years, subject to mandatory early termination dates, and a decrease of the weighted average fixed pay rate from 2.870 % to 2.250 % per annum.

These interest rate swap transactions consisted of the following in the fiscal year ended March 31, 2021:

(i) $ 1.4 billion of the interest rate swaps presented in the table above were de-designated as cash flow hedges, (ii) the Company entered into $ 1.4 billion of pay-variable receive-fixed interest rate swaps which are designed to offset the terms of the $ 1.4 billion of swaps in (i) and which are not designated as cash flow hedges, and (iii) the Company entered into $ 1.4 billion of new pay-fixed interest rate swaps with extended maturities.

These new pay-fixed interest rate swaps are considered hybrid instruments with a financing component and an embedded at-market derivative that was designated as a cash flows hedge (see discussion of cash flow presentation below).

Key terms of the new offsetting pay-variable receive-fixed interest rate swaps outstanding at March 31, 2021 are presented below (not designated as hedges):

Effective Date Notional Amount (in millions) Fixed Rate Received Maturity Date

May 19, 2020 $ 700.0 2.915 % March 24, 2025

May 19, 2020 $ 300.0 2.885 % March 23, 2025

May 19, 2020 $ 50.0 2.744 % March 23, 2025

June 15, 2020 $ 100.0 2.808 % March 23, 2025

June 15, 2020 $ 50.0 2.728 % March 23, 2025

August 14, 2020 $ 200.0 2.723 % March 23, 2025

Total $ 1,400.0

Key terms of the new designated cash flow hedge pay-fixed interest rate swaps outstanding at March 31, 2021 are presented below:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Effective Date Notional Amount (in millions) Fixed Rate Paid Maturity Date (1)

May 19, 2020 $ 700.0 1.923 % March 23, 2030

May 19, 2020 $ 350.0 2.531 % March 23, 2027

June 15, 2020 $ 150.0 2.343 % March 23, 2027

August 14, 2020 $ 200.0 1.840 % March 23, 2030

Total $ 1,400.0

__________________

(1) Subject to a mandatory early termination date of March 23, 2025.

At the time of the de-designation of the above $ 1.4 billion in interest rate swaps, there was approximately $ 163.0 million of unrealized losses recorded in accumulated other comprehensive income (loss).

This amount will be amortized to interest expense through the remaining term of the original de-designated swaps unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time.

The $ 1.4 billion of interest rate swaps de-designated as cash flow hedges and the $ 1.4 billion of offsetting swaps will be marked to market with changes in fair value recognized, along with the fixed and variable payments on these swaps, in interest expense, which are expected to nearly offset each other.

Cash settlements related to interest rate contracts are generally classified as operating activities on the consolidated statements of cash flows.

However, due to an other-than-insignificant financing element on a portion of our interest rate swaps (see table above for new designated cash flow hedge pay-fixed interest rate swaps), the cash flows related to these contracts are classified as financing activities.

Financial Statement Effect of Derivatives

Consolidated statement of operations and comprehensive loss:

The following table presents the pre-tax effect of the Company's derivatives on the accompanying consolidated statements of operations and comprehensive income (loss) for the years ended March 31, 2021, 2020 and 2019:

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NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2021 2020 2019

(Amounts in millions)

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Gain (loss) recognized in accumulated other comprehensive income (loss) $ ( 1.0 ) $ 0.8 $ 1.1

Gain (loss) reclassified from accumulated other comprehensive income (loss) into direct operating expense

Interest rate swap agreements

Loss recognized in accumulated other comprehensive income (loss)

Gain reclassified from accumulated other comprehensive income (loss) into direct operating expense 0.2 1.6 —

Interest rate swaps

Gain (loss) recognized in accumulated other comprehensive income (loss) $ 58.7 $ ( 138.6 ) $ ( 71.3 )

Loss reclassified from accumulated other comprehensive income (loss) into interest expense ( 33.3 ) ( 14.3 ) ( 7.7 )

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Gain (loss) recognized in direct operating expense $ 0.3 $ ( 0.4 ) $ —

Interest rate swaps

Loss reclassified from accumulated other comprehensive loss into interest expense $ ( 28.3 ) $ — $ —

Total direct operating expense on consolidated statements of operations $ 1,725.9 $ 2,226.1 $ 2,028.2

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$ 181.5 $ 191.3 $ 163.6

________________

(1) Represents interest expense before interest on dissenting shareholders' liability.

The Company classifies its forward foreign exchange contracts and interest rate contracts within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (see Note 11 ).

As of March 31, 2020 and March 31, 2019 , the Company had the following amounts recorded in the accompanying consolidated balance sheets related to the Company's use of derivatives:

Consolidated balance sheets:

The Company classifies its forward foreign exchange contracts and interest rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (see Note 11).

The portion of the swaps reflecting the financing component of the hybrid instrument discussed above is recorded at amortized cost and reduced over time based on payments.

Pursuant to the Company's accounting policy to offset the fair value amounts recognized for derivative instruments, the Company presents the asset or liability position of the swaps that are with the same counterparty under a master netting arrangement net as either an asset or liability in its consolidated balance sheets.

The gross amount of swaps in an asset and liability position that were subject to a master netting arrangement was $ 211.2 million and $ 236.3 million, respectively, resulting in an asset recorded in other assets - non-current of $ 50.8 million and a liability recorded in other liabilities - non-current of $ 75.9 million as of March 31, 2021.

As of March 31, 2021 and 2020, the Company had the following amounts recorded in the accompanying consolidated balance sheets related to the Company's use of derivatives:

LIONS GATE ENTERTAINMENT CORP.

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March 31, 2021

Other Current Assets

Accounts Payable and Accrued Liabilities

Other Non-Current Liabilities

Other Current Assets Other Non-Current Assets Accounts Payable and Accrued Liabilities Other Non-Current Liabilities

(Amounts in millions)

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Forward exchange contracts $ 1.5 $ — $ 2.6 $ —

Interest rate swap agreements

Interest rate swaps — 72.7 — 5.6

Derivatives not designated as cash flow hedges:

Forward exchange contracts

Interest rate swaps (1)

— ( 21.9 ) — 127.1

Fair value of derivatives $ 1.5 $ 50.8 $ 2.6 $ 132.7

________________

(1) Includes $ 98.2 million and $ 54.3 million included in other non-current assets and other non-current liabilities, respectively, representing the financing element of certain hybrid instruments, which is offset by the new pay-variable receive-fixed interest rate swaps outstanding at March 31, 2021.

March 31, 2020

Other Current Assets

Accounts Payable and Accrued Liabilities

Other Non-Current Liabilities

Other Current Assets Accounts Payable and Accrued Liabilities Other Non-Current Liabilities

(Amounts in millions)

1 unchanged sentence

Forward exchange contracts $ 0.6 $ 0.5 $ —

Interest rate swap agreements

Interest rate swaps — — 187.9

Derivatives not designated as cash flow hedges:

Forward exchange contracts — 0.4 —

Fair value of derivatives $ 0.6 $ 0.9 $ 187.9

As of March 31, 2020 , based on the current release schedule, the Company estimates approximately $ 0.7 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive loss to be reclassified into earnings during the one-year period ending March 31, 2021.

As of March 31, 2021, based on the current release schedule, the Company estimates approximately $ 0.3 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive loss will be reclassified into earnings during the one-year period ending March 31, 2022.

As of March 31, 2021, the Company estimates approximately $ 47.2 million of losses recorded in accumulated other comprehensive loss associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending March 31, 2022.

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As of March 31, 2021, the majority of the Company’s cash and cash equivalents were held in bank depository accounts.

There was no restricted cash in the consolidated balance sheets as of March 31, 2020 or 2019.

Accounts Receivable, net

Accounts receivable are presented net of a provision for doubtful accounts of $ 9.3 million ( March 31, 2019 - $ 5.4 million ).

There were no material amounts of restricted cash in the consolidated balance sheets as of March 31, 2021 or 2020.

LIONS GATE ENTERTAINMENT CORP.

6 unchanged sentences

The loss is reflected in the "other expense" line item on the consolidated statements of operations.

The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the years ended March 31, 2020 and 2019 (2018 - none).

Individual Monetization Agreements.

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The third-party purchasers have no recourse to other assets of the Company in the event of non-payment by the customers.

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the years ended March 31, 2020 and 2019 (2018 - none):

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the years ended March 31, 2021, 2020 and 2019:

2021 2020 2019

Carrying value of receivables transferred and derecognized $ 1,377.2 $ 1,603.2 $ 473.9

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The third-party purchasers have no recourse to other assets of the Company in the event of non-payment by the customers.

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the year ended March 31, 2020 (2019 and 2018 - none):

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the years ended March 31, 2021 and 2020 (2019 - none):

LIONS GATE ENTERTAINMENT CORP.

6 unchanged sentences

Carrying value of receivables transferred and derecognized (1)

$ 172.0 $ 191.9

Obligations recorded $ 1.9 $ 2.5

2 unchanged sentences

(1) Receivables net of unamortized discounts on long-term, non-interest bearing receivables.

At March 31, 2020 , the outstanding amount of receivables derecognized from the Company's consolidated balance sheet, but which the Company continues to service, related to the pooled monetization agreement was approximately $ 92.5 million .

At March 31, 2021, the outstanding amount of receivables derecognized from the Company's consolidated balance sheet, but which the Company continues to service, related to the pooled monetization agreement was approximately $ 99.0 million (March 31, 2020 - $ 92.5 million).

The composition of the Company’s other assets is as follows as of March 31, 2021 and March 31, 2020:

2021 March 31,

(Amounts in millions)

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Prepaid expenses and other $ 68.0 $ 65.7

Cash consideration receivable for sale of Pantaya (see Note 2) 123.6 —

Product inventory (1)

Tax credits receivable 68.4 78.3

$ 274.3 $ 157.4

Other non-current assets

Prepaid expenses and other (2)

$ 25.8 $ 34.3

Accounts receivable (2)

1 unchanged sentence

Operating lease right-of-use assets 127.0 136.9

Interest rate swap assets 50.8 —

$ 434.2 $ 391.5

Unamortized discounts on contract assets included in prepaid expenses and other were $ 0.7 million and $ 3.9 million at March 31, 2020 and 2019, respectively, and unamortized discounts on long-term, non-interest bearing receivables were $ 3.3 million and $ 9.7 million at March 31, 2020 and 2019, respectively.

_____________________

(1) Home entertainment product inventory consists of Packaged Media and is stated at the lower of cost or market value (first-in, first-out method).

Costs of Packaged Media sales, including shipping and handling costs, are included in distribution and marketing expenses.

(2) Unamortized discounts on contract assets included in prepaid expenses and other were $ 0.5 million and $ 0.7 million at March 31, 2021 and 2020, and unamortized discounts on long-term, non-interest bearing receivables were $ 2.4 million and $ 3.3 million at March 31, 2021 and 2020, respectively.

LIONS GATE ENTERTAINMENT CORP.

2 unchanged sentences

The following table summarizes the changes in the components of accumulated other comprehensive loss, net of tax:

Foreign currency translation adjustments

Net unrealized gain (loss) on available-for-sale securities

Net unrealized gain (loss) on cash flow hedges

Foreign currency translation adjustments Net unrealized gain (loss) on available-for-sale securities Net unrealized gain (loss) on cash flow hedges Total

(Amounts in millions)

March 31, 2018 $ ( 12.4 ) $ 2.6 $ 0.1 $ ( 9.7 )

Other comprehensive income (loss)

March 31, 2018

Cumulative effect of accounting changes — ( 2.6 ) — ( 2.6 )

1 unchanged sentence

March 31, 2019 ( 18.2 ) — ( 62.1 ) ( 80.3 )

Other comprehensive income (loss)

Other comprehensive loss ( 0.6 ) — ( 125.1 ) ( 125.7 )

March 31, 2020 ( 18.8 ) — ( 187.2 ) ( 206.0 )

Other comprehensive income 3.7 — 119.0 122.7

March 31, 2021 $ ( 15.1 ) $ — $ ( 68.2 ) $ ( 83.3 )

Supplemental Cash Flow Information

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2019 — $ 146.7 million).

Income taxes paid (refunded) during the fiscal year ended March 31, 2020 amounted to net tax refunds received of $ 5.3 million ( 2019 — net tax paid of $ 13.5 million ;

2018 — net tax refunds received of $ 20.3 million ).

Income taxes paid (refunded) during the fiscal year ended March 31, 2021 amounted to net tax refunds received of $ 54.0 million (2020 — net tax refunds received of $ 5.3 million;

2019 — net tax paid of $ 13.5 million).

Significant non-cash transactions during the fiscal year ended March 31, 2021 include certain interest rate swap agreements, which are discussed in Note 19, "Financial Instruments".

The supplemental schedule of non-cash investing and financing activities is presented below:

Year Ended March 31,

2021 2020 2019

(Amounts in millions)

Non-cash investing activities:

Cash consideration receivable for sale of Pantaya (see Note 2) $ 123.6 $ — $ —

Decrease in finance lease right-of-use asset due to a reassessment event $ ( 42.0 ) $ — n/a

Issuance of common shares related to business acquisitions $ — $ — $ 83.7

Non-cash financing activities:

Accrued dividends (see Note 14)

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Quarterly Financial Data (Unaudited)

Certain quarterly information is presented below:

(Amounts in millions, except per share amounts)

Operating income (loss) (1)

Net loss (1)(2)

Net income (loss) attributable to Lions Gate Entertainment Corp.

Per share information attributable to Lions Gate Entertainment Corp.

shareholders:

Basic net income (loss) per common share

Diluted net income (loss) per common share

(Amounts in millions, except per share amounts)

Operating income (loss) (3)

Net income (loss) (3)(4)

Net income (loss) attributable to Lions Gate Entertainment Corp.

Per share information attributable to Lions Gate Entertainment Corp.

shareholders:

Basic net income (loss) per common share

Diluted net income (loss) per common share

________________________________________

During fiscal 2020, operating income (loss) and net loss included the following items:

Restructuring and Other.

The first, second, third and fourth quarter of fiscal 2020 included restructuring and other items of $ 5.6 million , $ 7.6 million , $ 3.7 million and $ 7.5 million , respectively (after tax $ 4.3 million , $ 5.7 million , $ 2.7 million , and $ 5.7 million , respectively) (see Note 16 ).

COVID-19 Related Costs.

As a direct result of the COVID-19 global pandemic, during the fourth quarter of fiscal 2020 the Company incurred $ 50.2 million in incremental direct operating and distribution and marketing expense (after tax $ 38.1 million ) (see Note 16 ).

Programming and Content Charges.

During the third quarter and fourth of fiscal 2020, in connection with recent management changes, the Company implemented changes to its programming and broadcasting strategy including programming acquired or produced under prior management.

As a result, the Company recorded certain programming and content charges in the third and fourth quarter of fiscal 2020 of $ 74.0 million and $ 2.5 million , respectively (after tax $ 56.1 million and $ 1.9 million , respectively), which are included in direct operating expense in the consolidated statement of operations (see Note 16 ).

During fiscal 2020, net loss also included the following items:

Gain (Loss) on Extinguishment of Debt.

The third and fourth quarter of fiscal 2020 included a loss on extinguishment of debt of $ 1.4 million and a gain on extinguishment of debt of $ 6.7 million , respectively (after tax loss of $ 1.0 million and gain of $ 5.1 million , respectively) (see Note 7 ).

Decrease in finance lease liability due to a reassessment event $ ( 48.6 ) $ — n/a

Supplemental cash flow information related to leases was as follows:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Deferred Tax Valuation Allowance.

The first, third and fourth quarters of fiscal 2020 included a charge of $ 11.1 million , $ 11.5 million , and $ 5.5 million , respectively, from a net increase in the valuation allowance for certain of the Company's deferred tax assets.

The second quarter of fiscal 2020 included a benefit of $ 6.6 million representing the benefit realized for the net decrease in the valuation allowance for certain of the Company's deferred tax assets (see Note 15 ).

During fiscal 2019, operating income (loss) and net income (loss) included the following items:

Restructuring and Other.

The first, second, third and fourth quarter of fiscal 2019 included restructuring and other items of $ 10.5 million , $ 15.0 million , $ 16.6 million , and $ 35.9 million , respectively (after tax $ 7.8 million , $ 11.5 million , $ 12.6 million , and $ 27.3 million , respectively) (see Note 16 ).

Programming and Content Charges.

During the fourth quarter of fiscal 2019, in connection with recent management changes, the Company implemented changes to its programming strategy including programming that will no longer be broadcast on Starz networks.

As a result, the Company recorded certain programming and content charges of $ 35.1 million (after tax $ 26.7 million ), which are included in direct operating expense in the consolidated statement of operations in the fourth quarter of fiscal 2019 (see Note 16 ).

During fiscal 2019, net income also included the following items:

Shareholder Litigation Settlements .

The second quarter of fiscal 2019 included shareholder litigation settlements of $ 114.1 million (after tax $ 104.7 million ).

Loss on Extinguishment of Debt.

The fourth quarter of fiscal 2019 included a loss on extinguishment of debt of $ 1.9 million (after tax $ 1.4 million ) (see Note 7 ).

Loss on Investments.

The first, second, third and fourth quarter of fiscal 2019 included a loss on investments of $ 0.9 million , $ 36.1 million , $ 6.2 million , and $ 44.4 million , respectively (after tax $ 0.7 million , $ 32.4 million , $ 4.7 million , and $ 33.7 million , respectively) (see Note 5 ).

Deferred Tax Valuation Allowance.

The fourth quarter of fiscal 2019 included a charge of $ 53.7 million from an increase in the valuation allowance for certain of the Company's deferred tax assets (see Note 15 ).

(Amounts in millions)

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases $ 48.8 $ 37.1

Operating cash flows for finance leases $ 1.6 $ 3.4

Financing cash flows for finance leases $ 2.6 $ 3.0

Right-of-use assets obtained in exchange for new lease obligations:

Operating leases $ 25.0 $ 8.3

Increase in right-of-use assets and lease liability due to a reassessment event:

Operating leases - increase in right-of-use assets $ 6.0 $ —

Operating leases - increase in lease liability $ 12.6 $ —

Related Party Transactions

In the year ended March 31, 2020, we have incurred expenses on behalf of John C.

Malone, a former director of the Company, for reimbursement of certain litigation costs of approximately $ 1.6 million (2019 - $ 2.4 million ;

2018 - $ 4.4 million ), which are included in restructuring and other in the consolidated statements of operations.

In the year ended March 31, 2020, we have incurred expenses on behalf of Mark H.

Rachesky, the Chairman of the Board of the Company and principal of MHR Fund Management, for reimbursement of certain litigation costs of less than $ 0.1 million (2019 - $ 0.8 million ;

2018 - $ 1.2 million ), which are included in restructuring and other in the consolidated statements of operations.

In the year ended March 31, 2021, the Company paid less than $ 0.1 million to MLC Strategies, LLC (“MLC Strategies”) for certain consulting services (2020 - $ 0.1 million).

Clyburn, a director of the Company, is the President of MLC Strategies.

In the years ended March 31, 2020 and 2019, we incurred expenses on behalf of Mark H.

Rachesky, the Chairman of the Board of the Company and principal of MHR Fund Management, for reimbursement of certain litigation costs of less than $ 0.1 million and $ 0.8 million, respectively, which are included in restructuring and other in the consolidated statements of operations (2021 - none ).

MHR Fund Management holds approximately 23 % of the Company’s outstanding Class A voting shares and 11 % of the Company's outstanding Class B non-voting common stock as of May 24, 2021.

During the year ended March 31, 2018, the Company participated in an equity offering of its equity method investee, Atom Tickets, and subscribed for an additional $ 10.0 million in equity interests.

Gordon Crawford, a director of the Company, is a director of and an investor in Atom Tickets.

In April 2008, Lions Gate Films, Inc., a wholly-owned subsidiary of the Company (“LGF”), entered into a sales agency agreement (as amended) with Shrink, LLC for distribution rights to the film Shrink.

Michael Burns, the Vice Chairman and a director of the Company, owns a 100 % interest in Shrink, LLC.

During the year ended March 31, 2020, no amounts were paid to Shrink, LLC under this agreement (2019 - less than $ 0.1 million , 2018 - $ 0.1 million ).

In the years ended March 31, 2020 and 2019, we incurred expenses on behalf of John C.

Malone, a former director of the Company, for reimbursement of certain litigation costs of approximately $ 1.6 million and $ 2.4 million, respectively, which are included in restructuring and other in the consolidated statements of operations.

LIONS GATE ENTERTAINMENT CORP.

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Total due from related parties $ 11.8 $ 9.2

Accounts payable and accrued liabilities (2)

$ 15.4 $ 14.7

Participations and residuals, current 7.6 12.3

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Year Ended March 31,

2021 2020 2019

(Amounts in millions)

Consolidated Statements of Operations

Revenues $ 7.2 $ 4.6 $ 4.7

Direct operating expense $ 10.8 $ 13.8 $ 32.2

1 unchanged sentence

General and administrative expense (3)

$ — $ ( 1.1 ) $ 0.7

Interest and other income $ 2.9 $ 1.7 $ 0.4

__________________________________

During the years ended March 31, 2020 and 2019, the Company made loans of $ 12.5 million and $ 20.7 million , respectively, to certain of its equity method investees, of which $ 3.3 million and $ 7.3 million , respectively, are included in other assets, noncurrent in the Company's consolidated balance sheets (net of equity interests losses applied against such loans), and included in the table above.

(1) During the years ended March 31, 2021, 2020 and 2019, the Company made loans (including accrued interest) of $ 2.9 million, $ 12.5 million and $ 20.7 million, respectively, to certain of its equity method investees, of which no amounts, $ 3.3 million and $ 7.3 million, respectively, are included in other assets, noncurrent in the Company's consolidated balance sheets (net of equity interests losses applied against such loans), and included in the table above.

(2) Amounts primarily represent production related advances due to certain of its equity method investees.

(3) Amounts primarily represent reimbursement for certain shared services for equity method investees.

In addition, as of March 31, 2020, the Company has entered into a lease that has not yet commenced related to a studio facility owned by an equity-method investee, for which construction has not yet been completed.

In addition, as of March 31, 2021, the Company has entered into certain leases that have not yet commenced related to a studio facility owned by an equity-method investee, for which construction has not yet been completed.

See Note 8 for further information.

Subsequent Events

Exchange Program

The program began on April 9, 2020 and was completed on May 7, 2020.

Senior Notes Redemption and Issuance.

On April 1, 2021, the Company redeemed in full all $ 518.7 million outstanding principal amount of its 5.875 % Senior Notes due November 2024 and all $ 545.6 million outstanding principal amount of its 6.375 % Senior Notes due February 2024.

In connection with the early redemption of the 5.875 % Senior Notes and the 6.375 % Senior Notes, the Company paid a prepayment premium of $ 15.2 million and $ 17.4 million, respectively, plus accrued and unpaid interest to the date of redemption, pursuant to the terms of the indentures governing the 5.875 % Senior Notes and the 6.375 % Senior Notes, respectively.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and 4.3 million outstanding eligible stock options and share appreciation rights of Class B non-voting shares were exchanged for 0.8 million new stock options and share appreciation rights at an exercise price of $ 7.13 .

Interest Rate Swaps

On May 15, 2020, the Company entered into certain transactions which effectively extended the maturity date on an aggregate of $ 1.05 billion of interest rate swaps by an additional 2 to 5 years , subject to Mandatory Early Termination Dates of March 23, 2025.

This resulted in a decrease of the weighted average fixed pay rate from 2.87028 % to 2.39293 % per annum representing an annual cash interest savings of approximately $ 8.1 million compared to the prior swaps (see Note 19 ).

In connection with the redemption of the 5.875 % Senior Notes and the 6.375 % Senior Notes, on April 1, 2021, the Company issued $ 1.0 billion aggregate principal amount of 5.500 % Senior Notes due April 15, 2029.

The 5.500 % Senior Notes are unsubordinated, unsecured obligations of the Company.

Interest is payable on the 5.500 % Senior Notes semiannually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021.

The Company may redeem the 5.500 % Senior Notes in whole at any time, or in part from time to time, prior to April 15, 2024 at a price equal to 100 % of the principal amount of the notes to be redeemed plus a "make-whole" premium, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

The make-whole premium is the greater of (i) 1.0 % of the principal amount redeemed and (ii) the excess, if any, of the present value at such redemption date of the redemption price at April 15, 2024 (see redemption prices below) plus interest through April 15, 2024 (discounted to the redemption date at the treasury rate plus 50 basis points) over the principal amount of the notes redeemed on the redemption date.

The Company may redeem the 5.500 % Senior Notes in whole at any time, or in part from time to time, on or after April 15, 2024 at certain specified redemption prices, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

Such redemption prices are as follows (as a percentage of the principal amount redeemed):

(i) on or after April 15, 2024 - 102.750 %;

(ii) on or after April 15, 2025 - 101.375 %;

and (iii) on or after April 15, 2026 - 100 %.

In addition, the Company may redeem up to 40 % of the aggregate principal amount of the notes at any time and from time to time prior to April 15, 2024 with the net proceeds of certain equity offerings at a price of 105.500 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

Credit Agreement Amendment.

On April 6, 2021, the Company amended its Credit Agreement to, among other things, extend the maturity (the "Extension") of a portion of its revolving credit commitments, amounting to $ 1.25 billion, and a portion of its outstanding term A loans, amounting to $ 444.9 million, to April 6, 2026 (the "2026 Term Loan A"), and make certain other changes to the covenants and other provisions therein.

After giving effect to the Extension, $ 250.0 million of revolving credit commitments and $ 215.1 million of term A loans remained outstanding with a maturity of March 22, 2023 (the "2023 Term Loan A").

The 2026 Term Loan A requires mandatory quarterly principal payments beginning September 30, 2022 at a quarterly rate of 1.25 %, then at quarterly rates of 1.75 % beginning September 30, 2023, and 2.50 % beginning September 30, 2024 through March 31, 2026, with the balance payable at maturity.

The 2023 Term Loan A will continue to require mandatory quarterly principal payments under the original repayment schedule, at quarterly rates of 2.50 % beginning June 30, 2021, with the balance payable at maturity (see Note 7).

Term Loan B Repurchases.

In April and May 2021, the Company completed a series of repurchases of the Term Loan B and, in aggregate, paid $ 60.1 million to repurchase $ 60.5 million principal amount of the Term Loan B.

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What changed 10-K

Item 9A. Controls and Procedures