STARZ ENTERTAINMENT CORP /CN/ 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We periodically review the design and effectiveness of our disclosure controls and internal control over financial reporting. We make modifications to improve the design and effectiveness of our disclosure controls and internal control structure, and may take other corrective action, if our reviews identify a need for such modifications or actions. As of March 31, 2021, the end of the period covered by this report, the Company's management had carried out an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures were effective as of March 31, 2021. Internal Control Over Financial Reporting Management's Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; • provide reasonable assurance that (a) transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and (b) that our receipts and expenditures are being recorded and made only in accordance with authorizations of management and directors of the Company; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a materially effect on the financial statements. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 70 Table of Contents Our management has made an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2021. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on this assessment, our management has concluded that, as of March 31, 2021, the Company maintained effective internal control over financial reporting. The effectiveness of the Company's internal control over financial reporting has been audited by Ernst & Young LLP, an independent registered public accounting firm. Their report is included below. Changes in Internal Control over Financial Reporting 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 disruptions related to the COVID-19 global pandemic, but we are continually monitoring and assessing the COVID-19 situation on our internal controls. 71 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Lions Gate Entertainment Corp. Opinion on Internal Control Over Financial Reporting We have audited Lions Gate Entertainment Corp.’s (the Company) internal control over financial reporting as of March 31, 2021, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2021 consolidated financial statements and the related notes and schedule listed in the Index at Item 15(a) and our report dated May 28, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Los Angeles, California May 28, 2021 72 Table of Contents ITEM 9B. OTHER INFORMATION. None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required by this Item is incorporated by reference to our Proxy Statement for our 2021 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2021. ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item is incorporated by reference to our Proxy Statement for our 2021 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2021. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS. The information required by this Item is incorporated by reference to our Proxy Statement for our 2021 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2021. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required by this Item is incorporated by reference to our Proxy Statement for our 2021 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2021. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required by this Item is incorporated by reference to our Proxy Statement for our 2021 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2021. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. (a) The following documents are filed as part of this report: (1) Financial Statements The financial statements listed on the accompanying Index to Financial Statements are filed as part of this report at pages F-1 to F-68. (2) Financial Statement Schedules Schedule II. Valuation and Qualifying Accounts All other Schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule. (3) and (b) Exhibits The exhibits listed on the accompanying Index to Exhibits are filed as part of this report. 73 Table of Contents Item 15(a). Schedule II. Valuation and Qualifying Accounts Lions Gate Entertainment Corp. March 31, 2021 (In Millions) Additions Description Balance at Beginning of Period Charged to Costs and Expenses (1) Charged to Other Accounts Deductions Balance at End of Period Year Ended March 31, 2021: Reserves: Returns and allowances $ 33.7 $ 53.3 $ — $ ( 60.9 ) (2) $ 26.1 Provision for doubtful accounts $ 9.3 $ ( 2.5 ) $ — $ ( 0.3 ) (3) $ 6.5 Deferred tax valuation allowance $ 435.8 $ ( 56.3 ) $ ( 28.6 ) (4) $ — $ 350.9 Year Ended March 31, 2020: Reserves: Returns and allowances $ 35.0 $ 81.2 $ — $ ( 82.5 ) (2) $ 33.7 Provision for doubtful accounts $ 5.4 $ 5.7 $ — $ ( 1.8 ) (3) $ 9.3 Deferred tax valuation allowance $ 401.1 $ 4.5 $ 30.2 (4) $ — $ 435.8 Year Ended March 31, 2019: Reserves: Returns and allowances $ 56.2 $ 126.0 $ — $ ( 147.2 ) (2) $ 35.0 Provision for doubtful accounts $ 7.5 $ ( 2.0 ) $ — $ ( 0.1 ) (3) $ 5.4 Deferred tax valuation allowance $ 73.2 $ 313.9 $ 14.0 (4) $ — $ 401.1 ____________________________ (1) Charges for returns and allowances are charges against revenue. (2) Actual returns and fluctuations in foreign currency exchange rates. (3) Uncollectible accounts written off and fluctuations in foreign currency exchange rates. (4) Valuation allowance adjustments recorded in other comprehensive income and primarily associated with hedging activity. 74 Table of Contents Item 15(b). INDEX TO EXHIBITS 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. 8-K 2.1 7/1/2016 3.1 Articles 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 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. Rachesky and Lions Gate Entertainment Corp. 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 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 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. John C. 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. John C. 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. 8-K 10.4 11/10/2015 10.10 Amendment No. 1, dated as of February 3, 2016, to Registration Rights Agreement, dated as of October 22, 2009, by and among Lions Gate Entertainment Corp. 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 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 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 75 Table of Contents Exhibit Number Exhibit Description Incorporated by Reference Form Exhibit Filing Date/ Period End Date 10.12.2 Amendment No. 2, dated as of March 22, 2018, 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 (as previously amended by that certain Amendment No. 1 dated as of December 11, 2017). 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. 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. 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 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. and Corii D. Berg dated as of May 16, 2018 10-Q 10.36 8/8/2019 10.16.1* Employment Agreement between Lions Gate Entertainment Corp. and Corii D. Berg dated as of May 15, 2020 10-Q 10.37 8/6/2020 10.17* Employment Agreement between Lions Gate Entertainment Corp. and James W. Barge dated November 1, 2019 10-Q 10.38 11/7/2019 10.17.1* Amendment to Employment Agreement between Lions Gate Entertainment Corp. and James W. 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. 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). 76 Table of Contents _____________________________ * Management contract or compensatory plan or arrangement. x Filed herewith ITEM 16. FORM 10-K SUMMARY. None. 77 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 28, 2021. LIONS GATE ENTERTAINMENT CORP. By: /s/ James W. Barge James W. Barge Chief Financial Officer DATE: May 28, 2021 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates so indicated. 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 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. 78 Table of Contents Signature Title Date /s/ JAMES W. BARGE Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) May 28, 2021 James W. Barge /s/ MICHAEL BURNS Vice Chairman, Director May 28, 2021 Michael Burns /s/ MIGNON CLYBURN Director May 28, 2021 Mignon Clyburn /s/ GORDON CRAWFORD Director May 28, 2021 Gordon Crawford /s/ JON FELTHEIMER Chief Executive Officer (Principal Executive Officer) and Director May 28, 2021 Jon Feltheimer /s/ EMILY FINE Director May 28, 2021 Emily Fine /s/ MICHAEL T. FRIES Director May 28, 2021 Michael T. Fries /s/ SUSAN MCCAW Director May 28, 2021 Susan McCaw /s/ YVETTE OSTOLAZA Director May 28, 2021 Yvette Ostolaza /s/ MARK H. RACHESKY, M.D. Chairman of the Board of Directors May 28, 2021 Mark H. Rachesky, M.D. /s/ DARYL SIMM Director May 28, 2021 Daryl Simm /s/ HARDWICK SIMMONS Director May 28, 2021 Hardwick Simmons 79 Table of Contents INDEX TO FINANCIAL STATEMENTS Page Number Audited Financial Statements Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets — March 31, 2021 and 2020 F-4 Consolidated Statements of Operations — Years Ended March 31, 2021, 2020 and 2019 F-5 Consolidated Statements of Comprehensive Income (Loss) — Years Ended March 31, 2021, 2020 and 2019 F-6 Consolidated Statements of Equity — Years Ended March 31, 2021, 2020 and 2019 F-7 Consolidated Statements of Cash Flows — Years Ended March 31, 2021, 2020 and 2019 F-8 Notes to Audited Consolidated Financial Statements F-9 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Lions Gate Entertainment Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Lions Gate Entertainment Corp. (the Company) as of March 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended March 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2021, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 28, 2021 expressed an unqualified opinion thereon. Adoption of ASU No. 2016-02 As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in fiscal 2020 due to the adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), and the related amendments. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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. F-2 Table of Contents 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 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. 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. To test the assessment of unreleased theatrical films for impairment, our audit procedures included, among others, testing the completeness and accuracy of the underlying data as well as the significant assumptions mentioned above. For example, we assessed management’s assumptions by comparing them to historical performance of comparable films and to current operating information, and we considered the historical accuracy of management’s estimates. We also performed sensitivity analyses to evaluate the potential changes in the expected profitability of unreleased films resulting from reasonable changes in the assumptions. /s/ Ernst & Young LLP We have served as the Company's auditor since 2001. Los Angeles, California May 28, 2021 F-3 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED BALANCE SHEETS March 31, 2021 March 31, 2020 (Amounts in millions) ASSETS Cash and cash equivalents $ 528.7 $ 318.2 Accounts receivable, net 383.7 522.0 Program rights — 310.5 Other current assets 274.3 157.4 Total current assets 1,186.7 1,308.1 Investment in films and television programs and program rights, net 2,222.7 1,517.3 Property and equipment, net 91.1 140.9 Investments 31.9 40.3 Intangible assets 1,575.1 1,719.6 Goodwill 2,764.5 2,833.5 Other assets 434.2 391.5 Total assets $ 8,306.2 $ 7,951.2 LIABILITIES Accounts payable and accrued liabilities $ 545.4 526.9 Participations and residuals 508.8 441.9 Film obligations, production loans and production tax credit facility 385.0 353.7 Debt - short term portion 88.0 68.6 Deferred revenue 165.7 116.6 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, production loans and production tax credit facility 318.5 96.9 Other liabilities 337.1 334.9 Deferred revenue 56.2 61.3 Deferred tax liabilities 40.3 36.6 Redeemable noncontrolling interest 219.1 167.8 Commitments and contingencies (Note 18) EQUITY Class A voting common shares, no par value, 500.0 shares authorized, 83.0 shares issued (March 31, 2020 - 83.0 shares issued) 663.2 659.2 Class B non-voting common shares, no par value, 500.0 shares authorized, 138.2 shares issued (March 31, 2020 - 136.4 shares issued) 2,296.0 2,221.7 Accumulated deficit ( 82.9 ) ( 16.9 ) Accumulated other comprehensive loss ( 83.3 ) ( 206.0 ) Total Lions Gate Entertainment Corp. shareholders' equity 2,793.0 2,658.0 Noncontrolling interests 1.6 2.0 Total equity 2,794.6 2,660.0 Total liabilities and equity $ 8,306.2 $ 7,951.2 See accompanying notes. F-4 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended March 31, 2021 2020 2019 (Amounts in millions, except per share amounts) Revenues $ 3,271.5 $ 3,890.0 $ 3,680.5 Expenses: Direct operating 1,725.9 2,226.1 2,028.2 Distribution and marketing 719.3 1,008.7 835.5 General and administration 486.6 430.4 445.4 Depreciation and amortization 188.5 197.7 163.4 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 Operating income 170.6 2.8 130.0 Interest expense Interest expense ( 181.5 ) ( 191.3 ) ( 163.6 ) Interest on dissenting shareholders' liability — — ( 35.3 ) Interest expense ( 181.5 ) ( 191.3 ) ( 198.9 ) Shareholder litigation settlements — — ( 114.1 ) Interest and other income 5.8 8.8 12.0 Other expense ( 6.7 ) ( 11.1 ) ( 4.7 ) Gain (loss) on extinguishment of debt — 5.4 ( 1.9 ) Gain (loss) on investments 0.5 ( 0.5 ) ( 87.6 ) Equity interests loss ( 6.1 ) ( 17.2 ) ( 42.9 ) Loss before income taxes ( 17.4 ) ( 203.1 ) ( 308.1 ) Income tax (provision) benefit ( 17.1 ) ( 3.3 ) 8.5 Net loss ( 34.5 ) ( 206.4 ) ( 299.6 ) Less: Net loss attributable to noncontrolling interests 15.6 18.0 15.4 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 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 See accompanying notes. F-5 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended March 31, 2021 2020 2019 (Amounts in millions) Net loss $ ( 34.5 ) $ ( 206.4 ) $ ( 299.6 ) Foreign currency translation adjustments, net of tax 3.7 ( 0.6 ) ( 5.8 ) 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 ) Less: Comprehensive loss attributable to noncontrolling interest 15.6 18.0 15.4 Comprehensive income (loss) attributable to Lions Gate Entertainment Corp. shareholders $ 103.8 $ ( 314.1 ) $ ( 352.2 ) See accompanying notes. F-6 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF EQUITY Class A Voting Common Shares Class B Non-Voting Common Shares Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Total LGEC Shareholders' Equity Non-controlling Interests (a) Total Equity Number Amount Number Amount (Amounts in millions) Balance at March 31, 2018 81.8 $ 628.7 129.3 $ 2,020.3 $ 516.6 $ ( 9.7 ) $ 3,155.9 $ 1.0 $ 3,156.9 Cumulative effect of accounting changes — — — — 21.3 ( 2.6 ) 18.7 — 18.7 Exercise of stock options — 0.6 0.6 5.8 — — 6.4 — 6.4 Share-based compensation, net 0.3 11.9 0.5 47.0 — — 58.9 — 58.9 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 ) 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 Exercise of stock options — — 0.2 1.7 — — 1.7 — 1.7 Share-based compensation, net 0.3 4.8 0.6 42.7 — — 47.5 — 47.5 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 ) Net income (loss) — — — — ( 188.4 ) — ( 188.4 ) 0.2 ( 188.2 ) Other comprehensive loss — — — — — ( 125.7 ) ( 125.7 ) — ( 125.7 ) Redeemable noncontrolling interests adjustments to redemption value — — — — ( 37.2 ) — ( 37.2 ) — ( 37.2 ) Balance at March 31, 2020 83.0 $ 659.2 136.4 $ 2,221.7 $ ( 16.9 ) $ ( 206.0 ) $ 2,658.0 $ 2.0 $ 2,660.0 Exercise of stock options — 0.1 0.2 1.3 — — 1.4 — 1.4 Share-based compensation, net 0.2 4.7 1.6 72.8 — — 77.5 — 77.5 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 ) Noncontrolling interests — — — — — — — ( 0.6 ) ( 0.6 ) Net income (loss) — — — — ( 18.9 ) — ( 18.9 ) 0.2 ( 18.7 ) Other comprehensive income — — — — — 122.7 122.7 — 122.7 Redeemable noncontrolling interests adjustments to redemption value — — — — ( 47.1 ) — ( 47.1 ) — ( 47.1 ) Balance at March 31, 2021 83.0 $ 663.2 138.2 $ 2,296.0 $ ( 82.9 ) $ ( 83.3 ) $ 2,793.0 $ 1.6 $ 2,794.6 _________________________ (a) Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 12 ). See accompanying notes. F-7 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended March 31, 2021 2020 2019 (Amounts in millions) 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 Amortization of films and television programs and program rights 1,189.8 1,706.7 1,516.5 Interest on dissenting shareholders' liability — — ( 72.0 ) 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 Other amortization 73.2 68.5 29.0 Distributions from equity method investee — — 1.8 Gain on sale of Pantaya ( 44.1 ) — — Loss (gain) on extinguishment of debt — ( 5.4 ) 1.9 Equity interests loss 6.1 17.2 42.9 Loss (gain) on investments ( 0.5 ) 0.5 87.6 Deferred income taxes 3.4 ( 0.9 ) ( 23.6 ) Changes in operating assets and liabilities: Accounts receivable, net and other assets 133.9 397.5 470.8 Investment in films and television programs and program rights, net ( 1,616.7 ) ( 1,545.3 ) ( 1,469.9 ) Accounts payable and accrued liabilities 32.7 ( 31.8 ) 41.0 Participations and residuals ( 49.1 ) ( 24.5 ) ( 85.8 ) Film obligations ( 64.9 ) 6.8 ( 11.8 ) Deferred revenue 47.9 ( 31.4 ) ( 44.4 ) Net Cash Flows Provided By (Used In) Operating Activities ( 0.5 ) 614.6 427.5 Investing Activities: 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 in 2019 — — ( 77.3 ) Capital expenditures ( 35.0 ) ( 31.1 ) ( 43.8 ) 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 - 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 ) Repurchase of common shares ( 2.2 ) ( 2.6 ) — Dividends paid — — ( 57.4 ) Distributions to noncontrolling interest ( 3.4 ) ( 5.7 ) ( 3.7 ) Exercise of stock options 1.6 1.7 8.0 Tax withholding required on equity awards ( 7.7 ) ( 3.4 ) ( 10.1 ) 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 ) Foreign Exchange Effects on Cash and Cash Equivalents 4.2 ( 2.9 ) ( 0.3 ) Cash and Cash Equivalents - Beginning Of Period 318.2 184.3 378.1 Cash and Cash Equivalents - End Of Period $ 528.7 $ 318.2 $ 184.3 See accompanying notes. F-8 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Business, Basis of Presentation and Significant Accounting Policies Description of Business 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 Generally Accepted Accounting Principles These consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). Principles of Consolidation The accompanying consolidated financial statements of the Company include the accounts of Lionsgate and its majority-owned and controlled subsidiaries. The Company reviews its relationships with other entities to identify whether it is the primary beneficiary of a variable interest entity (“VIE”). If the determination is made that the Company is the primary beneficiary, then the entity is consolidated. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. 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. 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 and program rights; estimates of sales returns and other allowances and provisions for doubtful accounts; estimates related to the revenue recognition of sales or usage-based royalties; fair value of equity-based compensation; fair value of assets and liabilities for allocation of the purchase price of companies acquired; income taxes including the assessment of valuation allowances for deferred tax assets; accruals for contingent liabilities; and impairment assessments for investment in films and television programs, property and equipment, equity investments, goodwill and intangible assets. Actual results could differ from such estimates. Reclassifications Certain amounts presented in prior years have been reclassified to conform to the current year’s presentation. Significant Accounting Policies Revenue Recognition 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 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. Revenues do not include taxes collected from customers on behalf of taxing authorities such as sales tax and value-added tax. 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 original productions) from the Motion Picture and Television Production segments to the Media Networks segment. While F-9 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. The Company's content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage based royalties. Fixed Fee or Minimum Guarantees: The Company's fixed fee or minimum guarantee licensing arrangements may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content. Sales or Usage Based Royalties: Sales or usage based royalties represent amounts due to the Company based on the “sale” or “usage” of the Company's content by the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated and has been satisfied (or partially satisfied). Generally, when the Company licenses completed content (with standalone functionality, such as a movie, or television show) its performance obligation will be satisfied prior to the sale or usage. When the Company licenses intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), its performance obligation is generally satisfied in the same period as the sale or usage. The actual amounts due to the Company under these arrangements are generally not reported to the Company until after the close of the reporting period. The Company records revenue under these arrangements for the amounts due and not yet reported to the Company based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are based on information from the Company's customers, historical experience with similar titles in that market or territory, the performance of the title in other markets, and/or data available in the industry. Revenues by Market or Product Line. The following describes the revenues generated by market or product line. Theatrical revenues are included in the Motion Picture segment; home entertainment, television, international and other revenues are applicable to both the Motion Picture and Television Production segments; 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). Revenue from the theatrical release of feature films are treated as sales or usage- based royalties, are recognized as revenue starting at the exhibition date and are based on the Company's participation in box office receipts of the theatrical exhibitor . • Home Entertainment. Home entertainment consists of Digital Media and Packaged Media. ◦ Digital Media. Digital media includes digital transaction revenue sharing arrangements (pay-per-view and video-on-demand platforms, electronic sell through ("EST"), and digital rental) and licenses of content to digital platforms for a fixed fee. Digital Transaction Revenue Sharing Arrangements: Primarily represents revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, the Company shares in the rental or sales revenues generated by the platform on a title-by-title basis. These digital media platforms generate revenue from rental and EST arrangements, such as download-to-own, download-to-rent, and video-on-demand. These revenue sharing arrangements are recognized as sales or usage based royalties based on the performance of these platforms and pursuant to the terms of the contract, as discussed above. Licenses of Content to Digital Platforms: Primarily represents the licensing of content to subscription-video-on-demand ("SVOD") or other digital platforms for a fixed fee. As discussed above, revenues are recognized when the content has been delivered and the window for the exploitation right in that territory has begun. F-10 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ◦ Packaged Media. Packaged media revenues represent the sale of motion pictures and television shows (produced or acquired) on physical discs (DVD’s, Blu-ray, 4K Ultra HD, referred to as "Packaged Media") in the retail market. 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. Television revenues include fixed fee arrangements as well as arrangements in which the Company earns advertising revenue from the exploitation of certain content on television networks. Television also includes revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform. Revenues associated with a title, right, or window from television licensing arrangements are recognized when the feature film or television program is delivered (on an episodic basis for television product) and the window for the exploitation right has begun. • International. International revenues are derived from (1) licensing of the Company's productions, acquired films, catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis; (2) the direct distribution of our productions, acquired films, and our catalog product and libraries of acquired titles in the United Kingdom; and (3) licensing to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming. License fees and minimum guarantee amounts associated with title, window, media or territory, are recognized when access to the feature film or television program has been granted or delivery has occurred, as required under the contract, and the right to exploit the feature film or television program in that window, media or territory has commenced. Revenues are also generated from sales or usage based royalties received from international distributors based on their distribution performance pursuant to the terms of the contracts after the recoupment of certain costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by our customer generating a royalty due to us has occurred. • Other. Other revenues are derived from the licensing of the Company's film and television and related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets and from commissions earned and executive producer fees related to talent management. Revenues from the licensing of film and television content and the sales and licensing of music are recognized when the content has been delivered and the license period has begun, as discussed above. Revenues from the licensing of symbolic intellectual property (i.e., licenses of motion pictures or television characters, brands, storylines, themes or logos) is recognized over the corresponding license term. Commissions are recognized as such services are provided. • Media Networks - Programming Revenues. 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. 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). Programming revenue is recognized over the contract term based on the continuous delivery of the content to the distributor. The variable distribution fee arrangements represent sales or usage based royalties and are recognized over the period of such sales or usage by the Company's distributor, which is the same period that the content is provided to the distributor. Deferred Revenue. Deferred revenue relates primarily to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation. Payment terms vary by location and type of customer and the nature of the licensing arrangement, however, other than certain multi-year license arrangements; payments are generally due within 60 days after revenue is recognized. For certain F-11 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. The significant financing component is recorded as a reduction to revenue and accounts receivable initially, with such accounts receivable discount amortized to interest income over the period to receipt of payment. The Company does not assess contracts with deferred payments for significant financing components if, at contract inception, we expect the period between fulfillment of the performance obligation and subsequent payment to be one year or less. In other cases, customer payments are made in advance of when the Company fulfills its performance obligation and recognizes revenue. This primarily occurs under television production contracts, in which payments may be received as the production progresses, international motion picture contracts, where a portion of the payments are received prior to the completion of the movie and prior to license rights start dates, and pay television contracts with multiple windows with a portion of the revenues deferred until the subsequent exploitation windows commence. These arrangements do not contain significant financing components because the reason for the payment structure is not for the provision of financing to the Company, but rather to mitigate the Company's risk of customer non-performance and incentivize the customer to exploit the Company's content. See Note 13 for further information. Cash and Cash Equivalents 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 Licensed Program Rights Investment in Films and Television Programs: General. 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. For the years ended March 31, 2021, 2020, and 2019, total capitalized interest was $ 2.8 million, $ 3.8 million, and $ 10.8 million, respectively. For acquired films and television programs, capitalized costs consist of minimum guarantee payments to acquire the distribution rights. 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. For an episodic television series, the period over which ultimate revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of acquisition. Development. 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 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. F-12 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Licensed Program Rights: General. 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. 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: General. 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 F-13 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) television program that management plans to abandon is zero. 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. Property and Equipment, net Property and equipment is carried at cost less accumulated depreciation. Depreciation is provided for on a straight line basis over the following useful lives: 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 based on the difference between the carrying amount and the fair value based on discounted cash flows. Leases 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. The Company determines if an arrangement is a lease at its inception. The expected term of the lease used for computing the lease liability and right-of-use ("ROU") asset and determining the classification of the lease as operating or financing may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. 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. 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 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 consolidated balance sheet. The Company has entered into various short-term operating leases which have an initial term of 12 months or less. These short-term leases are not recorded on the Company's consolidated balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term. 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 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. However, as most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of the lease payments for the majority of its leases. Variable lease payments that are based on an index or rate are included in the measurement of ROU assets and lease liabilities at lease inception. All other variable lease payments are expensed as incurred and are not included in the measurement of ROU assets and lease liabilities. Investments Investments include investments accounted for under the equity method of accounting, and equity investments with and without readily determinable fair value. Equity Method Investments: 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 F-14 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. Dividends and other distributions from equity method investees are recorded as a reduction of the Company's investment. Distributions received up to the Company's interest in the investee's retained earnings are considered returns on investments and are classified within cash flows from operating activities in the consolidated statement of cash flows. Distributions from equity method investments in excess of the Company's interest in the investee's retained earnings are considered returns of investments and are classified within cash flows provided by investing activities in the statement of cash flows. Other Equity Investments: 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 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). Impairments of Investments: The Company regularly reviews its investments for impairment, including when the carrying value of an investment exceeds its market value. If the Company determines that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair value by a charge to earnings. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include (i) the market value of the security in relation to its cost basis, (ii) the financial condition of the investee, and (iii) the Company’s intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment. For investments accounted for using the equity method of accounting or equity investments without a readily determinable fair value, the Company evaluates information available (e.g., budgets, business plans, financial statements, etc.) in addition to quoted market prices, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financing at an amount below the cost basis of the Company’s investment. Finite-Lived Intangible Assets At March 31, 2021, the carrying value of the Company's finite-lived intangible assets was approximately $ 1.33 billion. The Company's finite-lived intangible assets primarily relate to customer relationships associated with U.S. MVPDs, including cable operators, satellite television providers and telecommunications companies ("Traditional Affiliate"), which amounted to $ 1.31 billion. The amount of the Company's customer relationship asset related to these Traditional Affiliate relationships reflects the estimated fair value of these customer relationships determined in connection with the acquisition of Starz on December 8, 2016, net of amortization recorded since the date of the Starz acquisition. 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 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. If a triggering event has occurred, an impairment analysis is required. The impairment test first 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. The impairment test is performed at the lowest level of cash flows associated with the asset. If the carrying value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable. Impairment would then be measured as the excess of the asset’s carrying value over its fair value. 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 F-15 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. 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. Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was required. Goodwill and Indefinite-Lived Intangible Assets At March 31, 2021, the carrying value of goodwill and indefinite-lived intangible assets was $ 2.8 billion and $ 250.0 million, respectively. 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. Goodwill represents the excess of acquisition costs over the tangible and intangible assets acquired and liabilities assumed in various business acquisitions by the Company. Goodwill is allocated to the Company's reporting units, which are its operating segments or one level below its operating segments (component level). Reporting units are determined by the discrete financial information available for the component and whether that information is regularly reviewed by segment management. Components are aggregated into a single reporting unit if they share similar economic characteristics. Our reporting units for purposes of goodwill impairment testing at March 31, 2021 were Motion Picture, Media Networks, and our Television and Talent Management businesses, both of which are part of our Television Production segment. Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed for impairment each fiscal year or between the 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 or indefinite-lived intangible asset is less than its carrying value. The Company performs its annual impairment test as of January 1 in each fiscal year. A goodwill or indefinite-lived intangible asset impairment loss would be recognized for the amount that the carrying amount of a reporting unit, including goodwill or an indefinite-lived intangible asset, exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill or indefinite-lived intangible asset impairment. The qualitative assessment is an evaluation, based on all identified events and circumstances which impact the fair value of the reporting unit or indefinite-lived intangible asset, of whether or not it is more-likely-than-not that the fair value is less than the carrying value of the reporting unit or indefinite-lived intangible asset. If the Company believes that as a result of its qualitative assessment it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is greater than its carrying amount, a quantitative impairment test is not required but may be performed at the option of the Company. 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 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 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. 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 F-16 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 remaining production can resume and remaining theaters can re-open; adverse macroeconomic conditions; volatility in the equity and debt markets which could result in higher weighted-average cost of capital; the commercial success of the Company's television programming and motion pictures; the Company's continual contractual relationships with its customers; including its affiliate agreements of its Media Networks business; 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 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. Based on the qualitative impairment assessment of its trade names, the Company concluded that it is more-likely-than-not that the fair value of its trade names was more than its carrying amount, and therefore its trade names were not considered at risk of impairment. This qualitative analysis considered the relative impact of market-specific and macroeconomic factors. Prints, Advertising and Marketing Expenses The costs of prints, advertising and marketing expenses are expensed as incurred. Certain of Starz’s affiliation agreements require Starz to provide marketing support to the distributor based upon certain criteria as stipulated in the agreements. Marketing support includes cooperative advertising and marketing efforts between Starz and its distributors such as cross channel, direct mail and point of sale incentives. Marketing support is recorded as an expense and not a reduction of revenue when Starz has received a direct benefit and the fair value of such benefit is determinable. Advertising expenses for the year ended March 31, 2021 were $ 532.6 million (2020 — $ 782.4 million, 2019 — $ 640.1 million) which were recorded as distribution and marketing expenses. Income Taxes Income taxes are accounted for using an asset and liability approach for financial accounting and reporting for income taxes and recognition and measurement of deferred assets are based upon the likelihood of realization of tax benefits in future years. Under this method, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are established when management determines that it is more likely than not that some portion or all of the net deferred tax asset, on a jurisdiction by jurisdiction basis, will not be realized. The financial effect of changes in tax laws or rates is accounted for in the period of enactment. From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these transactions. In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination, based on their technical merits. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. Government Assistance The Company has access to government programs that are designed to promote film and television production and distribution in certain foreign countries. The Company also has access to similar programs in certain states within the U.S. that are designed to promote film and television production in those states. 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). F-17 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Foreign Currency Translation Monetary assets and liabilities denominated in currencies other than the functional currency are translated at exchange rates in effect at the balance sheet date. Resulting unrealized and realized gains and losses are included in the consolidated statements of operations. Foreign company assets and liabilities in foreign currencies are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Foreign company revenue and expense items are translated at the average rate of exchange for the fiscal year. Gains or losses arising on the translation of the accounts of foreign companies are included in accumulated other comprehensive income or loss, a separate component of shareholders’ equity. Derivative Instruments and Hedging Activities Derivative financial instruments are used by the Company in the management of its foreign currency and interest rate exposures. The Company’s policy is not to use derivative financial instruments for trading or speculative purposes. The Company uses derivative financial instruments to hedge its exposures to foreign currency exchange rate and interest rate risks. All derivative financial instruments are recorded at fair value in the consolidated balance sheets (see Note 11). The effective changes in fair values of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss and included in unrealized (losses) gains on cash flow hedges until the underlying hedged item is recognized in earnings. The effective changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive loss to net income when the underlying hedged item is recognized in earnings. 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 The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The fair value is recognized in earnings over the period during which an employee is required to provide service. See Note 14 for further discussion of the Company’s share-based compensation. 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 and Diluted Net Loss Per Common Share: Numerator: Net loss attributable to Lions Gate Entertainment Corp. shareholders $ ( 18.9 ) $ ( 188.4 ) $ ( 284.2 ) Denominator: Weighted average common shares outstanding 220.5 217.9 213.7 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. F-18 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. Year Ended March 31, 2021 2020 2019 (Amounts in millions) Anti-dilutive shares issuable Share purchase options 24.6 31.4 21.3 Restricted share units 1.4 2.4 1.0 Other issuable shares 3.1 4.0 1.4 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 Fair Value Measurement - Changes to Disclosure Requirements : 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. 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 : 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. 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. F-19 Table of Contents 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: 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 or individually for titles monetized individually. 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: In June 2016, the FASB issued guidance, as amended, that changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, from the incurred loss methodology under current U.S. GAAP to a new, forward-looking current expected credit loss model that would generally result in the earlier recognition of credit losses. 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: In December 2019, the FASB issued guidance that simplifies the accounting for income taxes. The guidance amends the rules for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. 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 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. 2. Dispositions and Acquisitions Disposition Pantaya. 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). Acquisition 3 Arts Entertainment. 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. 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. See Note 12 for the non-controlling interest holders' equity interest in 3 Arts Entertainment. F-20 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 3. 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: March 31, 2021 (Amounts in millions) Investment in Films and Television Programs: Individual Monetization (1) Released, net of accumulated amortization $ 414.7 Completed and not released 60.3 In progress 418.7 In development 92.9 986.6 Film Group Monetization Released, net of accumulated amortization $ 200.4 Completed and not released — In progress 497.1 In development 28.2 725.7 Licensed program rights, net of accumulated amortization $ 510.4 Investment in films and television programs and program rights, net $ 2,222.7 ________________________ (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: Year Ended March 31, 2021 Amortization expense: Individual monetization $ 539.3 Film group monetization 229.0 Licensed program rights 421.5 $ 1,189.8 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. F-21 Table of Contents 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: Year Ended March 31, 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: Year Ended March 31, 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. F-22 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 4. Property and Equipment March 31, 2021 March 31, 2020 (Amounts in millions) Distribution equipment (1) $ 15.2 $ 29.7 Building (2) — 50.4 Leasehold improvements 42.9 43.4 Property and equipment 16.7 25.9 Computer equipment and software 197.0 162.4 271.8 311.8 Less accumulated depreciation and amortization ( 181.9 ) ( 172.1 ) 89.9 139.7 Land 1.2 1.2 $ 91.1 $ 140.9 _______________ (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). 5. Investments The Company's investments consisted of the following: March 31, 2021 March 31, 2020 (Amounts in millions) Investments in equity method investees $ 30.1 $ 34.3 Other investments (1) 1.8 6.0 $ 31.9 $ 40.3 ________________ (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: The Company has investments in various equity method investees with ownership percentages ranging from approximately 9 % to 49 %. These investments include: STARZPLAY Arabia. STARZPLAY Arabia (Playco Holdings Limited) offers a STARZ-branded online subscription video-on-demand service in the Middle East and North Africa. Roadside Attractions . Roadside Attractions is an independent theatrical distribution company. Pantelion Films. 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. F-23 Table of Contents 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. Great Point Opportunity Fund is a partnership to make investments in an operating company that will operate a studio facility in Yonkers, New York. Other. In addition to the equity method investments discussed above, the Company holds ownership interests in other immaterial equity method investees. 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 investee, Pop, which is separately presented further below): March 31, 2021 March 31, 2020 (Amounts in millions) Current assets $ 135.2 $ 138.3 Non-current assets $ 177.7 $ 162.0 Current liabilities $ 201.1 $ 167.3 Non-current liabilities $ 91.7 $ 102.2 Year Ended March 31, 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 ) Pop. 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). The Company recorded a loss before income taxes on the sale of approximately $ 44.6 million, which is reflected in the gain (loss) on investments line item in the consolidated statement of operations for the year ended March 31, 2019. Prior to the sale of its interest in Pop, the Company had accounted for such interest as an equity method investment. F-24 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Pop Financial Information: 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) Revenues $ 96.9 Expenses: Cost of services 55.0 Selling, marketing, and general and administration 49.9 Depreciation and amortization 7.4 Operating loss ( 15.4 ) Interest expense, net 2.2 Accretion of redeemable preferred stock units (1) 89.4 Total interest expense, net 91.6 Net loss $ ( 107.0 ) Reconciliation of net loss reported by Pop to equity interest loss: Net loss reported by Pop $ ( 107.0 ) Ownership interest in Pop 50 % The Company's share of net loss ( 53.5 ) Accretion of dividend and interest income on redeemable preferred stock units (1) 44.7 Elimination of the Company's share of profits on licensing sales to Pop ( 0.2 ) Realization of the Company’s share of profits on licensing sales to Pop 0.6 Total equity interest loss recorded $ ( 8.4 ) ___________________ (1) Accretion of mandatorily redeemable preferred stock units represents Pop's 10 % dividend and the amortization of discount on its mandatorily redeemable preferred stock units previously held by the Company and the other interest holder. 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. F-25 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Gain (Loss) on Investments: The following table summarizes the components of the gain (loss) on investments: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Impairments of investments (1) $ ( 5.7 ) $ — $ ( 36.8 ) 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. 6. Goodwill and Intangible Assets Goodwill Changes in the carrying value of goodwill by reporting segment were as follows: Motion 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 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 ______________________ (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, 2021 March 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (Amounts in millions) Finite-lived intangible assets subject to amortization: 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 _______________ (1) Customer relationships primarily represent Starz affiliation agreements with distributors. F-26 Table of Contents 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, 2021 March 31, 2020 (Amounts in millions) Indefinite-lived intangible assets not subject to amortization: Tradenames (1) $ 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. Amortization expense associated with the Company's intangible assets for the years ended March 31, 2021, 2020 and 2019 was approximately $ 144.5 million, $ 152.1 million, and $ 112.6 million, respectively. 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. 7. Debt Total debt of the Company, excluding film obligations and production loans, was as follows as of March 31, 2021 and March 31, 2020: March 31, 2021 March 31, 2020 (Amounts in millions) Corporate debt: Revolving credit facility (1) $ — $ — Term Loan A (1) 660.0 712.5 Term Loan B (1) 952.6 965.1 5.875 % Senior Notes (2) 518.7 518.7 6.375 % Senior Notes (2) 545.6 545.6 Total corporate debt 2,676.9 2,741.9 Finance lease obligations (3) — 42.4 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 ) Total debt, net 2,630.9 2,733.0 Less current portion ( 88.0 ) ( 68.6 ) 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. 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). F-27 Table of Contents 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, Debt Type 2022 2023 2024 2025 2026 Thereafter Total (Amounts in millions) 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) — — 545.6 — — — 545.6 $ 87.5 $ 597.5 $ 558.1 $ 1,433.8 $ — $ — 2,676.9 Less aggregate unamortized debt issuance costs ( 46.0 ) $ 2,630.9 ________________________ (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. 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. The revolving credit facility provides for borrowings and letters of credit up to an aggregate of $ 1.5 billion, and at March 31, 2021 there was $ 1.5 billion available. However, borrowing levels are subject to certain financial covenants as discussed below. 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 "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 (see discussion above and Note 22 - Subsequent Events). • Term Loan B: March 24, 2025. Interest: • Revolving Credit Facility & Term Loan A: 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 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: • 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. F-28 Table of Contents 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 Credit Agreement. Optional Prepayment: • Revolving Credit Facility & Term Loan A: 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. Security. 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. Covenants. 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. In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly. As of March 31, 2021, the Company was in compliance with all applicable covenants. 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. 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 the end of 2021. 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. Interest: • 5.875 % Senior Notes: Bore interest at 5.875 % annually (payable semi-annually on May and November 1 of each year). • 6.375 % Senior Notes: Bore interest at 6.375 % annually (payable semi-annually in arrears on February 1 and August 1 of each year). Maturity Date: • 5.875 % Senior Notes: November 1, 2024. • 6.375 % Senior Notes: February 1, 2024. Optional Redemption: F-29 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) • 5.875 % Senior Notes: (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 %; and (iii) on or after November 1, 2022 - 100 %. • 6.375 % Senior Notes: (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 February 1, 2021 - 103.188 %; (ii) on or after February 1, 2022 - 101.594 %; (iii) on or after February 1, 2023 - 100 %. Security. The 5.875 % Senior Notes and 6.375 % Senior Notes were unsubordinated, unsecured obligations of the Company. Covenants. 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 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, 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 Fiscal 2020: Senior Notes Repurchases. During the year ended March 31, 2020, the Company paid $ 1.0 million to repurchase $ 1.3 million principal amount of the 5.875 % Senior Notes, and the Company paid $ 3.5 million to repurchase $ 4.4 million principal amount of the 6.375 % Senior Notes. Term Loan B Repurchases. During the year ended March 31, 2020, the Company paid $ 22.0 million to repurchase $ 28.0 million principal amount of the Term Loan B. Term Loan Prepayments. During the year ended March 31, 2020, the Company made voluntary prepayments totaling $ 101.9 million in principal outstanding under the Term Loan B, together with accrued and unpaid interest. Fiscal 2019: 6.375 % Senior Notes Issuance. On February 4, 2019, the Company issued $ 550.0 million aggregate principal amount of 6.375 % Senior Notes. The Company used the proceeds of the 6.375 % Senior Notes to pay down outstanding amounts under its Revolving Credit Facility and for working capital purposes. 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 of $ 60.0 million, together with accrued and unpaid interest. F-30 Table of Contents 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. 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 ( none in the year ended March 31, 2021): Year Ended March 31, 2020 2019 Gain (loss) on extinguishment of debt: Senior Notes repurchases $ 1.1 $ — Term Loan B repurchases 5.7 — Term Loan B prepayments ( 1.4 ) ( 1.9 ) $ 5.4 $ ( 1.9 ) 8. Leases The Company has operating leases primarily for office space, studio facilities, and other equipment. 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. The components of lease cost were as follows: Year Ended March 31, 2021 2020 (Amounts in millions) Operating lease cost (1) $ 45.1 $ 35.3 Finance lease cost Amortization of right-of-use assets 2.6 3.0 Interest on lease liabilities 1.6 3.4 Total finance lease cost 4.2 6.4 Short-term lease cost (1)(2) 129.5 93.3 Variable lease cost (3) 2.6 2.5 Total lease cost $ 181.4 $ 137.5 ___________________ (1) Amounts include costs capitalized during the period for leased assets used in the production of film and television programs. 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. F-31 Table of Contents 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: Category Balance Sheet Location March 31, 2021 March 31, 2020 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 $ — 46.4 Lease liabilities (current) Debt - short-term portion $ — 3.0 Lease liabilities (non-current) Debt - non-current — 39.4 $ — 42.4 March 31, 2021 March 31, 2020 Weighted average remaining lease term (in years): Operating leases 5.1 6.1 Finance leases — 21.6 Weighted average discount rate: Operating leases 3.88 % 4.10 % Finance leases — 6.40 % 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): Operating Leases (Amounts in millions) Year ending March 31, 2022 $ 47.6 2023 41.1 2024 25.8 2025 15.0 2026 15.4 Thereafter 34.0 Total lease payments 178.9 Less imputed interest ( 17.6 ) Total $ 161.3 F-32 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 in the year ended March 31, 2019. 9. Participations and Residuals Theatrical Slate Participation On March 10, 2015, the Company entered into a theatrical slate participation arrangement with TIK Films (U.S.), Inc. and TIK Films (Hong Kong) Limited (collectively, "TIK Films"), both wholly owned subsidiaries of Hunan TV & Broadcast Intermediary Co. Ltd. Under the arrangement, TIK Films, in general and subject to certain limitations including per picture and annual caps, contributed a minority share of 25 % of the Company’s production or acquisition costs of “qualifying” theatrical feature films, released generally during the three-year period ended January 23, 2018, and participated in a pro-rata portion of the pictures’ net profits or losses similar to a co-production arrangement based on the portion of costs funded. The arrangement excluded, among others, any theatrical feature film incorporating any elements from the Twilight, Hunger Games or Divergent franchises. The percentage of the contribution could vary on certain pictures. Amounts provided from TIK Films are reflected as a participation liability in the Company's consolidated balance sheets and amounted to $ 35.9 million at March 31, 2021 (March 31, 2020 - $ 32.8 million). 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. 10. Film Obligations, Production Loans and Production Tax Credit Facility March 31, 2021 March 31, 2020 (Amounts in millions) Film obligations $ 214.6 $ 299.3 Production loans 373.5 151.4 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, production loans, and production tax credit facility, net 703.5 450.6 Less current portion ( 385.0 ) ( 353.7 ) Total non-current film obligations, production loans and production tax credit facility $ 318.5 $ 96.9 F-33 Table of Contents 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) Film obligations $ 146.3 $ 38.1 $ 13.1 $ 5.7 $ 4.5 $ 6.6 $ 214.3 Production loans 238.7 102.1 32.7 — — — 373.5 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 ) $ 703.5 ________________________ (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 Film obligations include minimum guarantees and accrued licensed program rights obligations, which represent amounts payable for film or television rights that the Company has acquired or licensed and certain theatrical marketing obligations for amounts received from third parties that are contractually committed for theatrical marketing expenditures associated with specific titles. Production Loans Production loans represent individual loans for the production of film and television programs that the Company produces. 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. 11. Fair Value Measurements Fair Value Accounting guidance and standards about fair value define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair Value Hierarchy 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 F-34 Table of Contents 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: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. 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, 2021 March 31, 2020 Level 1 Level 2 Total Level 1 Level 2 Total Assets: (Amounts in millions) Available-for-sale equity securities $ 1.8 $ — $ 1.8 $ 0.6 $ — $ 0.6 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 — — — Liabilities: 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 ) ________________ (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 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 — — ________________ (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. F-35 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 12. Noncontrolling Interests Redeemable Noncontrolling Interests The table below presents the reconciliation of changes in redeemable noncontrolling interests: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Beginning balance $ 167.8 $ 127.6 $ 101.8 Initial fair value of redeemable noncontrolling interests — — 15.8 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 Cash distributions ( 2.6 ) ( 4.2 ) ( 2.4 ) Ending balance $ 219.1 $ 167.8 $ 127.6 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. 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. Beginning 30 days after the expiration of the exercise period for the put rights held by the noncontrolling interest holders, the Company has a right to call the noncontrolling interest of 3 Arts Entertainment, at fair value, for a 60 day period. 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, 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 holders have continued as employees of 3 Arts Entertainment. Pursuant to the various 3 Arts Entertainment acquisition and related agreements, a portion of the noncontrolling interest holders' participation in the put and call proceeds is based on the noncontrolling interest holders' performance during the period. Further, if the employment of a noncontrolling interest holder is terminated, under certain circumstances, their participations in distributions cease and the put and call value is discounted from the fair value of their equity ownership percentage. Accordingly, earned distributions are accounted for as compensation and are being expensed within general and administrative expense as incurred. Additionally, the amount of the put and call proceeds subject to the discount is also accounted for as compensation, and is being amortized over the vesting period within general and administrative expense and reflected as an addition to redeemable noncontrolling interest. Pilgrim Media Group. 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. 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 original operating agreement of Pilgrim Media Group, if the employment of the noncontrolling interest holder was terminated, under F-36 Table of Contents 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. 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 or accumulated deficit. Other Noncontrolling Interests The Company has other immaterial noncontrolling interests that are not redeemable. 13. Revenue 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: F-37 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2021 2020 2019 (Amounts in millions) Revenue by Type: Motion Picture Theatrical $ 12.0 $ 355.6 $ 215.8 Home Entertainment Digital Media 461.5 447.9 334.7 Packaged Media 139.5 256.9 257.5 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 Home Entertainment Digital Media 127.1 57.4 66.9 Packaged Media 5.7 3.4 7.6 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 Domestic (1) 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 ) Total revenues $ 3,271.5 $ 3,890.0 $ 3,680.5 __________________ (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 Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog). Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at March 31, 2021 are as follows: F-38 Table of Contents 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 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 $ 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. 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, 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 $ 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 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, 2021 (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 F-39 Table of Contents 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. Revenues of $ 88.3 million were recognized during the year ended March 31, 2021, related to the balance of deferred revenue at March 31, 2020. 14. Capital Stock (a) Common Shares 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. The table below outlines common shares reserved for future issuance: March 31, 2021 March 31, 2020 (Amounts in millions) Stock options and SARs outstanding 26.7 35.7 Restricted stock and restricted share units — unvested 9.1 3.7 Common shares available for future issuance 15.6 11.5 Shares reserved for future issuance 51.4 50.9 (b) Share Repurchases On February 2, 2016, the Company's Board of Directors authorized the Company to increase its previously announced share repurchase plan from a total authorization of $ 300 million to $ 468 million. 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 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. (c) Dividends The amount of dividends, if any, that the Company pays to its shareholders is determined by its Board of Directors, at its discretion, and is dependent on a number of factors, including our financial position, results of operations, cash flows, capital requirements and restrictions under its credit agreements, and shall be in compliance with applicable law. 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 year ended March 31, 2019, the Company's Board of Directors declared the following quarterly cash dividends: F-40 Table of Contents 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 $ 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 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). (d) Share-based Compensation General. On September 10, 2019, the Company’s shareholders approved the Lions Gate Entertainment Corp. 2019 Performance Incentive Plan (the “2019 Plan”) previously adopted by the Board of Directors (the “Board”) of the Company. The types of awards that may be granted under the 2019 Plan include stock options, share appreciation rights, restricted stock, restricted share units, stock bonuses and other forms of awards granted or denominated in the Company’s Class A voting shares and the Company’s Class B non-voting shares ("Common Shares") or units of Common Shares, as well as certain cash bonus awards. 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. 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. Substantially all stock options vest ratably over one to five years from the grant date based on continuous service and expire five to ten years from the date of grant. Restricted stock and restricted share units generally vest ratably over one to four years based on continuous service. The Company satisfies stock option exercises and vesting of restricted stock and restricted share units with newly issued shares. The measurement of all share-based awards uses a fair value method and the recognition of the related share-based compensation expense in the consolidated financial statements is recorded over the requisite service period. Further, the Company estimates forfeitures for share-based awards that are not expected to vest. 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. F-41 Table of Contents 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: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Compensation Expense: Stock options $ 18.7 $ 17.8 $ 23.0 Restricted share units and other share-based compensation 58.8 29.1 24.7 Share appreciation rights 8.0 3.1 4.4 85.5 50.0 52.1 Impact of accelerated vesting on equity awards (1) 3.5 0.6 16.0 Total share-based compensation expense $ 89.0 $ 50.6 $ 68.1 Tax impact (2) ( 17.8 ) ( 10.7 ) ( 15.7 ) Reduction in net income $ 71.2 $ 39.9 $ 52.4 ___________________ (1) Represents the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements. (2) Represents the income tax benefit recognized in the statements of operations for share-based compensation arrangements. Share-based compensation expense, by expense category, consisted of the following: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Compensation Expense: Direct operating $ 2.0 $ 1.0 $ 1.1 Distribution and marketing 0.6 0.5 0.4 General and administration 82.9 48.5 50.6 Restructuring and other 3.5 0.6 16.0 $ 89.0 $ 50.6 $ 68.1 F-42 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Stock Options 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 Outstanding at March 31, 2021 5.5 $ 24.23 3.59 $ 0.8 21.2 $ 15.85 6.45 $ 29.8 Vested or expected to vest at March 31, 2021 5.5 $ 24.25 3.59 $ 0.7 21.0 $ 15.93 6.42 $ 28.9 Exercisable at March 31, 2021 4.4 $ 25.07 3.30 $ — 11.0 $ 20.39 4.66 $ 2.0 _____________________ (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). The following table presents the weighted average grant-date fair value of options granted in the years ended March 31, 2021, 2020 and 2019, and the weighted average applicable assumptions used in the Black-Scholes option-pricing model for stock options and share-appreciation rights granted during the years then ended: Year Ended March 31, 2021 2020 2019 Weighted average fair value of grants $ 3.10 $ 2.08 $ 5.48 Weighted average assumptions: 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 1 - 7 years Expected volatility for options (3) 37 % - 42 % 34 % - 40 % 34 % Expected dividend yield (4) 0 % 0 % 0.0 % - 1.7 % ____________________________ (1) The risk-free rate assumed in valuing the options is based on the U.S. Treasury Yield curve in effect applied against the expected term of the option at the time of the grant. (2) The expected term of options granted represents the period of time that options granted are expected to be outstanding. (3) Expected volatilities are based on implied volatilities from traded options on the Company’s shares, historical volatility of the Company’s shares and other factors. (4) The expected dividend yield is estimated by dividing the expected annual dividend by the market price of the Company's shares at the date of grant. 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). F-43 Table of Contents 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 (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 — — Vested — (1) $ 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) $ 25.70 __________________ (1) Represents less than 0.1 million shares. The fair values of restricted stock and restricted share units are determined based on the market value of the shares on the date of grant. The total fair value of restricted share units and restricted stock vested during the year ended March 31, 2021 was $ 35.3 million (2020 - $ 18.7 million, 2019 - $ 33.7 million). 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: Total Unrecognized Compensation Cost Weighted Average Remaining Years (Amounts in millions) Stock Options $ 31.2 1.7 Restricted Stock and Restricted Share Units 41.1 1.4 Total $ 72.3 Under the Company’s stock option and long term incentive plans, the Company withholds shares to satisfy minimum statutory federal, state and local tax withholding obligations arising from the vesting of restricted stock and restricted share units. During the year ended March 31, 2021, 0.9 million shares (2020 — 0.4 million shares, 2019 — 0.5 million shares) were withheld upon the vesting of restricted stock and restricted share units. The Company becomes entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the stock options and restricted share units when vesting or exercise occurs, the restrictions are released and the shares are issued. Restricted share units are forfeited if the employees are terminated prior to vesting. 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, 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. F-44 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (e) Other In connection with an amendment of an affiliation agreement with a customer and effective upon the close of the Starz merger, the Company has issued to the customer three $ 16.67 million annual installments of equity. The total value of the contract of $ 50 million was amortized as a reduction of revenue over the period from December 8, 2016 to August 31, 2019. 15. Income Taxes The components of pretax income (loss), net of intercompany eliminations, are as follows: Year Ended March 31, 2021 2020 2019 (Amounts in millions) United States $ ( 246.3 ) $ ( 453.3 ) $ ( 505.7 ) International 228.9 250.2 197.6 $ ( 17.4 ) $ ( 203.1 ) $ ( 308.1 ) The Company's U.S. pre-tax losses and international pre-tax income are primarily driven by non-operating, intercompany items resulting from the Company's internal capital structure. The Company's capital structure generally provides foreign affiliate dividends to its Canadian parent company (i.e., Lionsgate) and interest-related tax deductions to its U.S. companies. The Company's international pre-tax income may be significantly impacted by these foreign affiliate dividends related to its internal capital structure. 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 Total current provision (benefit) $ 13.7 $ 4.2 $ 15.1 Deferred provision (benefit): Federal $ 1.1 $ ( 18.5 ) $ ( 48.2 ) States 2.3 ( 1.8 ) 5.8 International — 19.4 18.8 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 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 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. F-45 Table of Contents 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, 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. statutory income tax rates and the income tax provision are as set forth below: Year Ended March 31, 2021 2020 (1) 2019 (1) (Amounts in millions) Income taxes computed at Federal statutory rate $ ( 3.7 ) $ ( 42.6 ) $ ( 64.7 ) Foreign affiliate dividends ( 35.2 ) ( 35.2 ) ( 37.5 ) Foreign operations subject to different income tax rates 47.4 51.4 ( 235.7 ) State income tax 5.2 1.2 ( 8.5 ) 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 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 ) __________________ (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. 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 and which is being absorbed by taxable income annually. F-46 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows: March 31, 2021 March 31, 2020 (Amounts in millions) Deferred tax assets: Net operating losses $ 451.2 $ 608.6 Foreign tax credits 77.3 76.2 Investment in film and television obligations 41.8 35.1 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 Valuation allowance ( 350.9 ) ( 435.8 ) Deferred tax assets, net of valuation allowance 410.8 487.7 Deferred tax liabilities: 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 ) Net deferred tax liabilities $ ( 40.3 ) $ ( 36.6 ) The Company has recorded valuation allowances for certain deferred tax assets, which are primarily related to U.S. and foreign net operating loss carryforwards and U.S. foreign tax credit carryforwards as sufficient uncertainty exists regarding the future realization of these assets. At March 31, 2021, the Company had U.S. net operating loss carryforwards ("NOLs") of approximately $ 1,225.7 million available to reduce future federal income taxes which expire beginning in 2029 through 2039. At March 31, 2021, the Company had state NOLs of approximately $ 740.1 million available to reduce future state income taxes which expire in varying amounts beginning 2022. At March 31, 2021, the Company had Canadian loss carryforwards of $ 7.4 million which will expire beginning in 2028. At March 31, 2021, the Company had Luxembourg loss carryforwards of $ 591.0 million which will expire beginning in 2036. In addition, at March 31, 2021, the Company had U.S. credit carryforwards related to foreign taxes paid of approximately $ 77.3 million to offset future federal income taxes that will expire beginning in 2022. F-47 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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: Amounts in millions Gross unrecognized tax benefits at March 31, 2018 $ 17.6 Increases related to current year tax position 0.3 Increases related to prior year tax positions 2.5 Decreases related to prior year tax positions ( 1.0 ) Settlements ( 1.8 ) Lapse in statute of limitations ( 0.8 ) Gross unrecognized tax benefits at March 31, 2019 16.8 Increases related to current year tax position — Increases related to prior year tax positions — Decreases related to prior year tax positions ( 4.0 ) Settlements ( 0.5 ) Lapse in statute of limitations ( 0.8 ) Gross unrecognized tax benefits at March 31, 2020 11.5 Increases related to current year tax position 60.7 Increases related to prior year tax positions 3.1 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, 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 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 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. 16. 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, 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: F-48 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2021 2020 2019 (Amounts in millions) Restructuring and other: 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 charges included in restructuring and other (2) 3.0 0.3 — Transaction and related costs (3) 3.4 11.1 30.5 Total Restructuring and Other 24.7 24.3 78.0 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) — 76.5 35.1 COVID-19 related charges included in: Direct operating expense (5) 50.6 46.0 — Distribution and marketing expense (5) 16.9 4.2 — Total restructuring and other, COVID-19 related charges, and programming and content charges $ 92.2 $ 151.0 $ 113.1 _______________________ (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. (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: F-49 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2021 2020 2019 (Amounts in millions) Severance liability Beginning balance $ 11.1 $ 21.2 $ 14.7 Accruals 14.8 12.3 31.5 Severance payments ( 20.2 ) ( 22.4 ) ( 25.0 ) Ending balance (1) $ 5.7 $ 11.1 $ 21.2 _______________________ (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. 17. Segment Information The Company’s reportable segments have been determined based on the distinct nature of their operations, the Company's internal management structure, and the financial information that is evaluated regularly by the Company's chief operating decision maker. The Company has three reportable business segments: (1) Motion Picture, (2) Television Production and (3) Media Networks. Motion Picture. Motion Picture consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired. Television Production. Television Production consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series, and non-fiction programming. 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 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 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. 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. 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. F-50 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Segment information is presented in the table below: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Segment revenues Motion Picture $ 1,081.1 $ 1,670.9 $ 1,464.4 Television Production 831.8 1,001.3 920.9 Media Networks 1,562.7 1,486.8 1,461.0 Intersegment eliminations ( 204.1 ) ( 269.0 ) ( 165.8 ) $ 3,271.5 $ 3,890.0 $ 3,680.5 Intersegment revenues Motion Picture $ 19.8 $ 17.7 $ 10.9 Television Production 184.3 248.9 154.8 Media Networks — 2.4 0.1 $ 204.1 $ 269.0 $ 165.8 Gross contribution Motion Picture $ 401.8 $ 313.5 $ 234.1 Television Production 126.3 90.7 109.6 Media Networks 383.4 380.5 534.0 Intersegment eliminations ( 14.1 ) 6.8 ( 6.3 ) $ 897.4 $ 791.5 $ 871.4 Segment general and administration Motion Picture $ 106.2 $ 104.8 $ 105.6 Television Production 42.7 37.3 43.5 Media Networks 93.9 87.5 97.7 $ 242.8 $ 229.6 $ 246.8 Segment profit Motion Picture $ 295.6 $ 208.7 $ 128.5 Television Production 83.6 53.4 66.1 Media Networks 289.5 293.0 436.3 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 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: F-51 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2021 2020 2019 (Amounts in millions) Company’s total segment profit $ 654.6 $ 561.9 $ 624.6 Corporate general and administrative expenses ( 113.7 ) ( 99.7 ) ( 104.2 ) Gain on sale of Pantaya (1) 44.1 — — Adjusted depreciation and amortization (2) ( 44.3 ) ( 41.8 ) ( 41.1 ) Restructuring and other (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 Interest expense ( 181.5 ) ( 191.3 ) ( 198.9 ) Shareholder litigation settlements (8) — — ( 114.1 ) Interest and other income 5.8 8.8 12.0 Other expense ( 6.7 ) ( 11.1 ) ( 4.7 ) Gain (loss) on extinguishment of debt — 5.4 ( 1.9 ) Gain (loss) on investments 0.5 ( 0.5 ) ( 87.6 ) Equity interests loss ( 6.1 ) ( 17.2 ) ( 42.9 ) 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: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Depreciation and amortization $ 188.5 $ 197.7 $ 163.4 Less: Amount included in purchase accounting and related adjustments ( 144.2 ) ( 155.9 ) ( 122.3 ) Adjusted depreciation and amortization $ 44.3 $ 41.8 $ 41.1 (3) Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable (see Note 16). (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 F-52 Table of Contents 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: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Total share-based compensation expense $ 89.0 $ 50.6 $ 68.1 Less: Amount included in restructuring and other (i) ( 3.5 ) ( 0.6 ) ( 16.0 ) Adjusted share-based compensation $ 85.5 $ 50.0 $ 52.1 (i) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements. (7) Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in recent acquisitions. These adjustments include the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with the earned distributions related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense. The following sets forth the amounts included in each line item in the financial statements: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Purchase accounting and related adjustments: Direct operating $ 1.0 $ 8.1 $ 18.0 General and administrative expense 47.2 52.6 43.8 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: (i) $ 54.8 million for the net expense recorded for the settlement of the fiduciary litigation (representing the settlement amount of $ 92.5 million, net of aggregate insurance reimbursement of $ 37.8 million and (ii) $ 59.3 million related to the appraisal litigation, representing the amount by which the settlement amount of approximately $ 964 million exceeded the previously accrued (at date of acquisition) dissenting shareholders' liability plus interest through the date agreed in the settlement. The portion of the settlement payment representing the $ 797.3 million value of the original merger consideration attributable to the dissenting shareholders that was accrued at the time of acquisition is reflected within cash flows from financing activities in the statement of cash flows, with the remainder of the settlement payment reflected within cash flows from operating activities in the statement of cash flows. See Note 13 for revenues by media or product line as broken down by segment for the fiscal years ended March 31, 2021, 2020, and 2019. F-53 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table reconciles segment general and administration to the Company’s total consolidated general and administration expense: Year Ended March 31, 2021 2020 2019 (Amounts in millions) General and administration Segment general and administrative expenses $ 242.8 $ 229.6 $ 246.8 Corporate general and administrative expenses 113.7 99.7 104.2 Share-based compensation expense included in general and administrative expense 82.9 48.5 50.6 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: March 31, 2021 March 31, 2020 (Amounts in millions) Assets Motion Picture $ 1,212.4 $ 1,266.9 Television Production 1,757.9 1,414.8 Media Networks 4,399.3 4,671.4 Other unallocated assets (1) 936.6 598.1 $ 8,306.2 $ 7,951.2 _____________________ (1) Other unallocated assets primarily consist of cash, other assets and investments. F-54 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Acquisition of investment in films and television programs and program rights Motion Picture $ 339.8 $ 349.8 $ 388.4 Television Production 856.1 743.3 743.2 Media Networks 625.1 640.7 555.5 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: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Capital expenditures Motion Picture $ — $ — $ — Television Production 0.4 1.2 3.2 Media Networks 24.9 22.4 30.0 Corporate (1) 9.7 7.5 10.6 $ 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: Year Ended March 31, 2021 2020 2019 (Amounts in millions) Revenue 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 F-55 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Long-lived assets by geographic location are as follows: March 31, 2021 March 31, 2020 (Amounts in millions) Long-lived assets (1) Canada $ — $ — United States 2,279.7 1,684.7 Other foreign 162.2 112.8 $ 2,441.9 $ 1,797.5 _____________ (1) Long-lived assets represents total assets less the following: 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, 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. 18. Commitments and Contingencies Commitments The following table sets forth our future annual repayment of contractual commitments as of March 31, 2021: Year Ended March 31, 2022 2023 2024 2025 2026 Thereafter Total (Amounts in millions) Contractual commitments by expected repayment date (off-balance sheet arrangements) 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 Total future commitments under contractual obligations (3) $ 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. Distribution and marketing commitments represent contractual commitments for future expenditures associated with distribution and marketing of films which we will distribute. The payment dates of these amounts are primarily based on the anticipated release date of the film. Minimum guarantee commitments represent contractual commitments related to the purchase of film rights for pictures to be delivered in the future. Program rights commitments represent contractual commitments under programming license agreements related to films that are not available for exhibition until some future date (see below for further details). Production loan commitments represent amounts committed for future film production and development to be funded through production financing and recorded as a production loan liability when incurred. Future payments under these commitments are based on anticipated delivery or release dates of the related film or contractual due dates of the commitment. The amounts include estimated future interest payments associated with the commitment. F-56 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (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). The Company is obligated to pay programming fees for all qualifying films that are released theatrically in the U.S. by Sony’s Columbia Pictures, Screen Gems, Sony Pictures Classics and TriStar labels through 2021. The Company does not license films produced by Sony Pictures Animation. The programming fees to be paid by the Company to Sony are based on the quantity and domestic theatrical exhibition receipts of qualifying films. Since the term of the output programming agreement with Sony applies to all films released theatrically through December 31, 2021, the Company is obligated to pay fees for films that have not yet been released in theaters. The Company is unable to estimate the amounts to be paid under these agreements for films that have not yet been released in theaters, however, such amounts are expected to be significant. The Company has also entered into agreements with a number of other motion picture producers and is obligated to pay fees for the rights to exhibit certain films that are released by these producers. Multiemployer Benefit Plans. The Company contributes to various multiemployer pension plans under the terms of collective bargaining agreements that cover its union-represented employees. The Company makes periodic contributions to these plans in accordance with the terms of applicable collective bargaining agreements and laws but does not sponsor or administer these plans. The risks of participating in these multiemployer pension plans are different from single-employer pension plans such that (i) contributions made by the Company to the multiemployer pension plans may be used to provide benefits to employees of other participating employers; (ii) if the Company chooses to stop participating in certain of these multiemployer pension plans, it may be required to pay those plans an amount based on the underfunded status of the plan, which is referred to as a withdrawal liability; and (iii) actions taken by a participating employer that lead to a deterioration of the financial health of a multiemployer pension plan may result in the unfunded obligations of the multiemployer pension plan to be borne by its remaining participating employers. The Company does not participate in any multiemployer benefit plans that are considered to be individually significant to the Company, and as of March 31, 2021, all except two of the largest plans in which the Company participates were funded at a level of 80% or greater. The other two plans, the Motion Picture Industry Pension Plan and the Screen Actors Guild - Producers Pension Plan were funded at 67.50 % and 74.90 %, respectively for the 2020 plan year, but neither of these plans were considered to be in endangered, critical, or critical and declining status in the 2020 plan year. Total contributions made by the Company to multiemployer pension and other benefit plans for the years ended March 31, 2021, 2020 and 2019 were $ 73.8 million, $ 55.5 million, and $ 56.9 million, respectively. If the Company ceases to be obligated to make contributions or otherwise withdraws from participation in any of these plans, applicable law requires the Company to fund its allocable share of the unfunded vested benefits, which is known as a withdrawal liability. In addition, actions taken by other participating employers may lead to adverse changes in the financial condition of one of these plans, which could result in an increase in the Company's withdrawal liability. Contingencies From time to time, the Company is involved in certain claims and legal proceedings arising in the normal course of business. The Company establishes an accrued liability for claims and legal proceedings when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. Due to the inherent difficulty of predicting the outcome of claims and legal proceedings, the Company often cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, if any, related to each pending matter may be. Accordingly, at this time, the Company has determined a loss related to these matters in excess of accrued liabilities is reasonably possible, however a reasonable estimate of the possible loss or range of loss cannot be made at this time. F-57 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Insurance Litigation Between July 19, 2016 and August 30, 2016, seven putative class action complaints were filed by purported Starz stockholders in the Court of Chancery of the State of Delaware (the "Fiduciary Litigation"). On August 22, 2018, the parties to the Fiduciary Litigation reached an agreement in principle providing for the settlement of the Fiduciary Litigation on the terms and conditions set forth in an executed term sheet. On October 9, 2018, the parties to the Litigation executed a stipulation of settlement, which was filed with the court (the "Stipulation"). The Stipulation provided for, among other things, the final dismissal of the Fiduciary Litigation in exchange for a settlement payment made in the amount of $ 92.5 million, of which $ 37.8 million was reimbursed by insurance. 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 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. The Company believes the lawsuit to be without merit and intends to vigorously defend it. 19. Financial Instruments (a) Credit Risk Concentration of credit risk with the Company’s customers is limited due to the Company’s customer base and the diversity of its sales throughout the world. The Company performs ongoing credit evaluations and maintains a provision for potential credit losses. The Company generally does not require collateral for its trade accounts receivable. (b) Derivative Instruments and Hedging Activities Forward Foreign Exchange Contracts The Company enters into forward foreign exchange contracts to hedge its foreign currency exposures on future production expenses and tax credit receivables denominated in various foreign currencies (i.e., cash flow hedges). The Company also enters into forward foreign exchange contracts that economically hedge certain of its foreign currency risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions. Changes in the fair value of the foreign exchange contracts that are designated as hedges are reflected in accumulated other comprehensive income (loss), and changes in the fair value of foreign exchange contracts that are not designated as hedges and do not qualify for hedge accounting are recorded in direct operating expense. Gains and losses realized upon settlement of the foreign exchange contracts that are designated as hedges are amortized to direct operating expense on the same basis as the production expenses being hedged. As of March 31, 2021, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 18 months from March 31, 2021): March 31, 2021 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 F-58 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Interest Rate Swaps The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. 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 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 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: F-59 Table of Contents 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: F-60 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2021 2020 2019 (Amounts in millions) Derivatives designated as cash flow hedges: Forward exchange contracts Gain (loss) recognized in accumulated other comprehensive income (loss) $ ( 1.0 ) $ 0.8 $ 1.1 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 ) Derivatives not designated as cash flow hedges: Forward exchange contracts 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 Total interest expense on consolidated statements of operations (1) $ 181.5 $ 191.3 $ 163.6 ________________ (1) Represents interest expense before interest on dissenting shareholders' liability. 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: F-61 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) March 31, 2021 Other Current Assets Other Non-Current Assets Accounts Payable and Accrued Liabilities Other Non-Current Liabilities (Amounts in millions) Derivatives designated as cash flow hedges: Forward exchange contracts $ 1.5 $ — $ 2.6 $ — Interest rate swaps — 72.7 — 5.6 Derivatives not designated as cash flow hedges: 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 (Amounts in millions) Derivatives designated as cash flow hedges: Forward exchange contracts $ 0.6 $ 0.5 $ — 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, 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. 20. Additional Financial Information The following tables present supplemental information related to the consolidated financial statements. Cash, Cash Equivalents and Restricted Cash Cash equivalents consist of investments that are readily convertible into cash. Cash equivalents are carried at cost, which approximates fair value. The Company classifies its cash equivalents within Level 1 of the fair value hierarchy because the Company uses quoted market prices to measure the fair value of these investments (see Note 11). The Company monitors concentrations of credit risk with respect to cash and cash equivalents by placing such balances with higher quality financial institutions or investing such amounts in liquid, short-term, highly-rated instruments or investment funds holding similar instruments. As of March 31, 2021, the majority of the Company’s cash and cash equivalents were held in bank depository accounts. There were no material amounts of restricted cash in the consolidated balance sheets as of March 31, 2021 or 2020. F-62 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Accounts Receivable Monetization Under the Company's accounts receivable monetization programs, the Company has entered into (1) individual agreements to monetize certain of its trade accounts receivable directly with third-party purchasers and (2) a revolving agreement to monetize designated pools of trade accounts receivable with various financial institutions, as further described below. Under these programs, the Company transfers receivables to purchasers in exchange for cash proceeds, and the Company continues to service the receivables for the purchasers. The Company accounts for the transfers of these receivables as a sale, removes (derecognizes) the carrying amount of the receivables from its balance sheets and classifies the proceeds received as cash flows from operating activities in the statements of cash flows. The Company records a loss on the sale of these receivables reflecting the net proceeds received (net of any obligations incurred), less the carrying amount of the receivables transferred. 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, 2021, 2020 and 2019. Individual Monetization Agreements. The Company enters into individual agreements to monetize trade accounts receivable. 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, 2021, 2020 and 2019: Year Ended March 31, 2021 2020 2019 Carrying value of receivables transferred and derecognized $ 1,377.2 $ 1,603.2 $ 473.9 Net cash proceeds received 1,371.3 1,593.9 469.2 Loss recorded related to transfers of receivables 5.9 9.3 4.7 At March 31, 2021, the outstanding amount of receivables derecognized from the Company's consolidated balance sheets, but which the Company continues to service, related to the Company's individual agreements to monetize trade accounts receivable was $ 562.8 million (March 31, 2020 - $ 529.8 million). Pooled Monetization Agreement. In December 2019, the Company entered into a revolving agreement to transfer up to $ 150.0 million of certain receivables to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. As customers pay their balances, the Company transfers additional receivables into the program. The transferred receivables are fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company, which holds additional receivables in the amount of $ 48.1 million as of March 31, 2021 that are pledged as collateral under this agreement. 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 years ended March 31, 2021 and 2020 (2019 - none): F-63 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2021 2020 Gross cash proceeds received for receivables transferred and derecognized $ 173.1 $ 192.6 Less amounts from collections reinvested under revolving agreement ( 138.7 ) ( 84.5 ) Proceeds from new transfers 34.4 108.1 Collections not reinvested and remitted or to be remitted ( 27.9 ) ( 15.6 ) Net cash proceeds received $ 6.5 $ 92.5 Carrying value of receivables transferred and derecognized (1) $ 172.0 $ 191.9 Obligations recorded $ 1.9 $ 2.5 Loss recorded related to transfers of receivables $ 0.8 $ 1.7 ___________________ (1) Receivables net of unamortized discounts on long-term, non-interest bearing receivables. 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). Other Assets The composition of the Company’s other assets is as follows as of March 31, 2021 and March 31, 2020: March 31, 2021 March 31, 2020 (Amounts in millions) Other current assets Prepaid expenses and other $ 68.0 $ 65.7 Cash consideration receivable for sale of Pantaya (see Note 2) 123.6 — Product inventory (1) 14.3 13.4 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) 49.4 53.6 Tax credits receivable 181.2 166.7 Operating lease right-of-use assets 127.0 136.9 Interest rate swap assets 50.8 — $ 434.2 $ 391.5 _____________________ (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. F-64 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Accumulated Other Comprehensive Loss 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 Total (Amounts in millions) March 31, 2018 $ ( 12.4 ) $ 2.6 $ 0.1 $ ( 9.7 ) Cumulative effect of accounting changes — ( 2.6 ) — ( 2.6 ) Other comprehensive loss ( 5.8 ) — ( 62.2 ) ( 68.0 ) March 31, 2019 ( 18.2 ) — ( 62.1 ) ( 80.3 ) 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 Interest paid during the fiscal year ended March 31, 2021 amounted to $ 149.7 million (2020 — $ 173.8 million; 2019 — $ 146.7 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: Decrease in finance lease liability due to a reassessment event $ ( 48.6 ) $ — n/a Supplemental cash flow information related to leases was as follows: F-65 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2021 2020 (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 $ — 21. Related Party Transactions 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). Ms. 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. 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. F-66 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Transactions with Equity Method Investees In the ordinary course of business, we are involved in related party transactions with equity method investees. These related party transactions primarily relate to the licensing and distribution of the Company's films and television programs, for which the impact on the Company's consolidated balance sheets and consolidated statements of operations is as follows (see Note 1 and Note 5): March 31, 2021 2020 (Amounts in millions) Consolidated Balance Sheets Accounts receivable $ 9.4 $ 5.9 Other assets, noncurrent (1) 2.4 3.3 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 Participations and residuals, noncurrent 1.2 1.4 Total due to related parties $ 24.2 $ 28.4 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 Distribution and marketing expense $ 0.2 $ — $ 3.0 General and administrative expense (3) $ — $ ( 1.1 ) $ 0.7 Interest and other income $ 2.9 $ 1.7 $ 0.4 __________________________________ (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, 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. 22. Subsequent Events 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. F-67 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. F-68