What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 389 added, 204 removed, 892 unchanged (40% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2021 March 31,

13 unchanged sentences

Participations and residuals 496.5 508.8

Film obligations 349.1 385.0

Film related and other obligations 546.4 385.0

Debt - short term portion 40.0 88.0

3 unchanged sentences

Participations and residuals 312.0 304.6

Film obligations 509.3 318.5

Film related and other obligations 712.2 318.5

Other liabilities 345.6 337.1

16 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions, except per share amounts)

14 unchanged sentences

Income (loss) before income taxes 8.7 ( 23.2 ) ( 36.4 ) 24.3

Income tax provision ( 6.5 ) ( 1.3 )

Income tax benefit (provision) ( 5.6 ) 1.5 ( 12.1 ) 0.2

Net income (loss) 3.1 ( 21.7 ) ( 48.5 ) 24.5

12 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

1 unchanged sentence

Foreign currency translation adjustments, net of tax ( 1.1 ) 0.5 ( 1.0 ) 0.8

Net unrealized loss on cash flow hedges, net of tax ( 24.0 ) ( 7.0 )

Net unrealized gain (loss) on cash flow hedges, net of tax 19.0 6.7 ( 4.9 ) ( 0.3 )

Comprehensive income (loss) 21.0 ( 14.5 ) ( 54.4 ) 25.0

11 unchanged sentences

(Amounts in millions)

Balance at June 30, 2021 83.0 $ 664.9 139.6 $ 2,318.6 $ ( 139.1 ) $ ( 107.2 ) $ 2,737.2 $ 2.2 $ 2,739.4

Exercise of stock options — — — 0.4 — — 0.4 — 0.4

Share-based compensation, net of share cancellations for taxes 0.1 1.0 2.0 ( 4.7 ) — — ( 3.7 ) — ( 3.7 )

Noncontrolling interests — — — — — — — 0.1 0.1

Net income — — — — 7.5 — 7.5 0.1 7.6

Other comprehensive income — — — — — 18.0 18.0 — 18.0

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 11.4 ) — ( 11.4 ) — ( 11.4 )

Balance at September 30, 2021 83.1 $ 665.9 141.6 $ 2,314.3 $ ( 143.0 ) $ ( 89.2 ) $ 2,748.0 $ 2.4 $ 2,750.4

Balance at June 30, 2020 82.9 $ 659.3 136.9 $ 2,232.4 $ 28.3 $ ( 212.6 ) $ 2,707.4 $ 2.1 $ 2,709.5

Share-based compensation, net of share cancellations for taxes — 1.5 0.7 22.0 — — 23.5 — 23.5

Net income (loss) — — — — ( 18.4 ) — ( 18.4 ) 0.1 ( 18.3 )

Other comprehensive income — — — — — 7.1 7.1 — 7.1

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 7.5 ) — ( 7.5 ) — ( 7.5 )

Balance at September 30, 2020 82.9 $ 660.8 137.6 $ 2,254.4 $ 2.4 $ ( 205.5 ) $ 2,712.1 $ 2.2 $ 2,714.3

_____________________

(a) Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 8).

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six Months Ended

Class A Voting Class B Non-Voting Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Lions Gate Entertainment Corp.

Shareholders' Equity Noncontrolling Interests (a) Total Equity

Common Shares Common Shares

Number Amount Number Amount

(Amounts in millions)

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

Exercise of stock options — 0.4 0.2 2.3 — — 2.7 — 2.7

Share-based compensation, net — 1.2 1.2 20.6 — — 21.8 — 21.8

Share-based compensation, net of share cancellations for taxes 0.1 2.2 3.2 15.9 — — 18.1 — 18.1

Issuance of common shares — 0.1 — 0.1 — — 0.2 — 0.2

3 unchanged sentences

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 22.2 ) — ( 22.2 ) — ( 22.2 )

Balance at June 30, 2021 83.0 $ 664.9 139.6 $ 2,318.6 $ ( 139.1 ) $ ( 107.2 ) $ 2,737.2 $ 2.2 $ 2,739.4

Balance at September 30, 2021 83.1 $ 665.9 141.6 $ 2,314.3 $ ( 143.0 ) $ ( 89.2 ) $ 2,748.0 $ 2.4 $ 2,750.4

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

Share-based compensation, net 0.1 1.0 0.5 10.6 — — 11.6 — 11.6

Share-based compensation, net of share cancellations for taxes 0.1 2.5 1.2 32.6 — — 35.1 — 35.1

Issuance of common shares — 0.1 — 0.1 — — 0.2 — 0.2

2 unchanged sentences

Net income — — — — 32.7 — 32.7 0.1 32.8

Other comprehensive loss — — — — — ( 6.6 ) ( 6.6 ) — ( 6.6 )

Other comprehensive income — — — — — 0.5 0.5 — 0.5

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 13.4 ) — ( 13.4 ) — ( 13.4 )

Balance at June 30, 2020 82.9 $ 659.3 136.9 $ 2,232.4 $ 28.3 $ ( 212.6 ) $ 2,707.4 $ 2.1 $ 2,709.5

Balance at September 30, 2020 82.9 $ 660.8 137.6 $ 2,254.4 $ 2.4 $ ( 205.5 ) $ 2,712.1 $ 2.2 $ 2,714.3

_____________________

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

September 30,

(Amounts in millions)

21 unchanged sentences

Proceeds from the sale of Pantaya 123.6 —

Proceeds from the sale of equity method and other investments — 5.1

Proceeds from the sale of other investments — 5.1

Investment in equity method investees and other ( 9.4 ) ( 0.2 )

Acquisition of assets (film library and related assets) ( 161.4 ) —

Capital expenditures ( 14.6 ) ( 17.1 )

Net Cash Flows Provided By (Used In) Investing Activities 115.7 ( 1.5 )

Net Cash Flows Used In Investing Activities ( 61.8 ) ( 12.2 )

Financing Activities:

1 unchanged sentence

Debt - repurchases and repayments ( 2,175.6 ) ( 109.1 )

Production loans - borrowings 214.3 46.1

Production loans - repayments ( 113.2 ) ( 44.1 )

Production tax credit facility advances, net of debt issuance costs 94.9 —

Production tax credit facility repayments ( 32.8 ) —

Production and related loans - borrowings, net of debt issuance costs 562.1 47.8

Production and related loans - repayments ( 186.6 ) ( 44.1 )

IP Credit Facility and other financing advances, net of debt issuance costs 213.6 —

Interest rate swap settlement payments ( 14.4 ) ( 8.5 )

3 unchanged sentences

Tax withholding required on equity awards ( 33.2 ) ( 5.4 )

Net Cash Flows Used In Financing Activities ( 28.3 ) ( 22.1 )

Net Cash Flows Provided By (Used In) Financing Activities 315.9 ( 48.5 )

Net Change In Cash, Cash Equivalents and Restricted Cash ( 78.4 ) 142.8

15 unchanged sentences

In the opinion of the Company’s management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these unaudited condensed consolidated financial statements.

Operating results for the three months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2022.

Operating results for the three and six months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2022.

The balance sheet at March 31, 2021 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S.

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Actual results could differ from such estimates.

Recent Accounting Pronouncements

Accounting Guidance Adopted in Fiscal 2022

Reference Rate Reform:

In March 2020, the Financial Accounting Standards Board ("FASB") issued guidance which provides optional expedients and exceptions for applying U.S.

GAAP to contract modifications, hedging relationships, and other transactions affected by the market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, if certain criteria are met.

Additionally, in January 2021, the FASB issued additional guidance, which allows entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates.

The guidance is applicable to contract modifications made and hedging relationships entered into between March 12, 2020 and December 31, 2022.

The Company adopted this guidance on July 1, 2021 and is applying its provisions prospectively through December 31, 2022, with no material impact to the Company’s consolidated financial statements.

See Note 16 for further information.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisitions and Dispositions

On July 15, 2021, the Company purchased approximately 200 feature film titles (the "Spyglass Library") from Spyglass Media Group, LLC ("Spyglass").

The Company also formed a strategic content partnership through an investment of a 18.9 % preferred equity interest in Spyglass, and entered into a multiyear first-look television arrangement with Spyglass.

The purchase price, including acquisition costs, of the Spyglass Library and preferred equity interest was $ 191.4 million, of which $ 171.4 million was paid at closing and $ 20.0 million will be paid over the next two years .

The Spyglass Library was accounted for as an asset acquisition and is included in investment in film and television programs on our unaudited condensed consolidated balance sheet.

The preferred equity interest was accounted for as an equity-method investment (see Note 4).

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.

6 unchanged sentences

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

September 30,

2021 March 31,

12 unchanged sentences

In development 22.9 28.2

1,007.5 725.7

Licensed program rights, net of accumulated amortization 399.2 510.4

Investment in films and television programs and licensed program rights, net $ 2,788.1 $ 2,222.7

At June 30, 2021, acquired film and television libraries have remaining unamortized costs of $ 16.0 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 19.25 years.

Amortization of investment in film and television programs and licensed program rights by predominant monetization strategy is as follows for the three months ended June 30, 2021 and 2020, and was included in direct operating expense in the unaudited condensed consolidated statements of operations:

At September 30, 2021, acquired film and television libraries have remaining unamortized costs of $ 157.5 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 19.7 years (March 31, 2021 - unamortized costs of $ 18.3 million).

Amortization of investment in film and television programs and licensed program rights by predominant monetization strategy is as follows for the three and six months ended September 30, 2021 and 2020, and was included in direct operating expense in the unaudited condensed consolidated statements of operations:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

4 unchanged sentences

$ 359.0 $ 250.2 $ 730.1 $ 531.4

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 unaudited condensed consolidated statements of operations, and represented the following amounts by segment for the three months ended June 30, 2021 and 2020:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

2 unchanged sentences

Television Production 1.6 2.8 26.6 2.8

Impairments not included in segment operating results (1)

— 15.4 — 15.4

$ 1.7 $ 18.5 $ 26.7 $ 19.1

________________________

(1) Impairments not included in segment operating results in the three and six months ended September 30, 2020 represent a charge due to changes in performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

The Company's investments consisted of the following:

September 30,

2021 March 31,

12 unchanged sentences

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Atom Tickets.

2 unchanged sentences

Great Point Opportunity Fund is a partnership to make investments in an operating company that will operate a studio facility in Yonkers, New York.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Spyglass is a global premium content company, focused on developing, producing, financing and acquiring motion pictures and television programming across all platforms for worldwide audiences.

In addition to the equity method investments discussed above, the Company holds ownership interests in other immaterial equity method investees.

1 unchanged sentence

Summarized financial information for the Company's equity method investees on an aggregate basis is set forth below:

September 30,

2021 March 31,

4 unchanged sentences

Non-current liabilities $ 59.8 $ 91.7

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

4 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

Unrealized gains (losses) on equity securities $ ( 0.2 ) $ 0.3 $ ( 0.7 ) $ 0.8

Impairments of other investments (1)

— ( 5.0 ) — ( 5.0 )

Gain on sale of other investments and other investment gains 1.7 — 2.2 4.6

$ 1.5 $ ( 4.7 ) $ 1.5 $ 0.4

________________________

(1) Impairments of other investments represents impairments of equity securities without readily determinable fair values that were written down to their estimated fair value.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total debt of the Company, excluding film obligations, was as follows as of June 30, 2021 and March 31, 2021:

Total debt of the Company, excluding film related and other obligations, was as follows as of September 30, 2021 and March 31, 2021:

September 30,

2021 March 31,

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On April 6, 2021, the Company amended its credit and guarantee agreement dated December 8, 2016, as amended (the "Credit Agreement") to, among other things, extend the maturity (the "Extension") of a portion of its revolving credit commitments, amounting to $ 1.25 billion (the "2026 Revolving Credit Facility"), and a portion of its outstanding term A loans, amounting to $ 444.9 million (the "2026 Term Loan A"), to April 6, 2026, 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 (the "2023 Revolving Credit Facility) and $ 215.1 million of term A loans (the "2023 Term Loan A", and together with the 2026 Term Loan A, the "Term Loan A") remained outstanding with a maturity of March 22, 2023.

After giving effect to the Extension, $ 250.0 million of revolving credit commitments (the "2023 Revolving Credit Facility and together with the 2026 Revolving Credit Facility, the "Revolving Credit Facility") and $ 215.1 million of term A loans (the "2023 Term Loan A", and together with the 2026 Term Loan A, the "Term Loan A") remained outstanding with a maturity of March 22, 2023.

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 $ 51.1 million to repurchase $ 51.5 million principal amount of the Term Loan B.

During the three months ended September 30, 2021, the Company completed a series of repurchases of the Term Loan B and, in aggregate, paid $ 44.2 million to repurchase $ 44.5 million principal amount of the Term Loan B (six months ended September 30, 2021 - in aggregate paid $ 95.3 million to repurchase $ 96.0 million principal amount of the Term Loan B).

See the Loss on Extinguishment of Debt section further below for a description of the accounting for these transactions.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Termination of a Portion of Revolving Credit Facility Commitments.

Subsequent to September 30, 2021, in November 2021, the Company terminated its revolving credit commitments under its 2023 Revolving Credit Facility, amounting to $ 250.0 million (the "Termination").

After giving effect to the Termination, the Company's remaining revolving credit commitments under its Credit Agreement amounted to $ 1.25 billion under the 2026 Revolving Credit Facility (see Note 18).

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

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 June 30, 2021 there was $ 1.5 billion available.

As of September 30, 2021, the Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.5 billion, and at September 30, 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 June 30, 2021.

The Company is required to pay a quarterly commitment fee on the Revolving Credit Facility of 0.250 % to

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

0.375 % per annum, depending on the achievement of certain leverage ratios, as defined in Credit Agreement, on the total Revolving Credit Facility of $ 1.5 billion less the amount drawn.

There were no letters of credit outstanding at September 30, 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 Agreement, on the total Revolving Credit Facility of $ 1.5 billion less the amount drawn.

Maturity Date:

• Revolving Credit Facility:

A portion of the revolving credit commitments, amounting to $ 1.25 billion, matures April 6, 2026, and a portion of the revolving credit commitments, amounting to $ 250.0 million, matures March 22, 2023.

As of September 30, 2021, a portion of the revolving credit commitments, amounting to $ 1.25 billion, matures April 6, 2026, and a portion of the revolving credit commitments, amounting to $ 250.0 million, matures March 22, 2023.

See Termination of a Portion of Revolving Credit Facility Commitments section above and Note 18 - Subsequent Events.

• Term Loan A:

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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 1.85 % as of June 30, 2021, before the impact of interest rate swaps).

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 1.83 % as of September 30, 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 2.35 % as of June 30, 2021, before the impact of interest rate swaps).

The Term Loan B bears interest at a rate per annum equal to LIBOR plus 2.25 % margin, with a LIBOR floor of zero (or an alternative base rate plus 1.25 % margin) (effective interest rate of 2.33 % as of September 30, 2021, before the impact of interest rate swaps).

Required Principal Payments:

13 unchanged sentences

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 June 30, 2021, the Company was in compliance with all applicable covenants.

As of September 30, 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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

Financial Conduct Authority (the “FCA”), which regulates the 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.

8 unchanged sentences

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.500 % Senior Notes

13 unchanged sentences

The 5.500 % Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations.

As of June 30, 2021, the Company was in compliance with all applicable covenants.

As of September 30, 2021, the Company was in compliance with all applicable covenants.

Change in Control.

2 unchanged sentences

Capacity to Pay Dividends

At June 30, 2021, the capacity to pay dividends under the Senior Credit Facilities and the 5.500 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 51.7 million and accumulated deficit of $ 139.1 million were deemed free of restrictions from paying dividends at June 30, 2021.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At September 30, 2021, the capacity to pay dividends under the Senior Credit Facilities and the 5.500 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 48.5 million and accumulated deficit of $ 143.0 million were deemed free of restrictions from paying dividends at September 30, 2021.

Loss on Extinguishment of Debt

2 unchanged sentences

• Unamortized debt issuance costs:

Where the borrowing capacity (measured as the amount available under the revolving credit facility multiplied by the remaining term) was less than it was prior to the amendment to the Revolving Credit Facility on a creditor-by-creditor basis, the unamortized debt issuance costs were written off as a loss on extinguishment of debt in proportion to the decrease in borrowing capacity.

Where the borrowing capacity (measured as the amount available under the revolving credit facility multiplied by the remaining term) was less than it was prior to the amendment to the Revolving Credit Facility on April 6, 2021, on a creditor-by-creditor basis, the unamortized debt issuance costs were written off as a loss on extinguishment of debt in proportion to the decrease in borrowing capacity.

The remaining unamortized debt issuance costs were allocated between the 2023 and 2026 Revolving Credit Facility in proportion to the borrowing capacity of each facility and are being amortized over the respective terms of the 2023 and 2026 Revolving Credit Facility, as applicable.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• Fees paid to creditors and third-party costs:

20 unchanged sentences

For all of the above transactions, debt issuance costs recorded as a reduction of outstanding debt are amortized using the effective interest method.

In connection with the repurchases of the Term Loan B discussed above, the Company recorded a loss on extinguishment of debt of $ 0.2 million related to the write-off of debt issuance costs.

In connection with the repurchases of the Term Loan B discussed above, during the three and six months ended September 30, 2021, the Company recorded a loss on extinguishment of debt of nil and $ 0.2 million, respectively, related to the write-off of debt issuance costs.

Loss on Extinguishment of Debt.

During the six months ended September 30, 2021, the Company recorded a loss on extinguishment of debt related to the transactions described above, as summarized in the table below (three months ended September 30, 2021 - loss on extinguishment of debt of $ 0.4 million;

three and six months ended September 30, 2020 - none ):

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Loss on Extinguishment of Debt.

The following table summarizes the loss on extinguishment of debt recorded related to the transactions described above in the three months ended June 30, 2021.

There was no loss on extinguishment of debt in the three months ended June 30, 2020.

Three Months Ended June 30, 2021

Six Months Ended

September 30, 2021

Loss on Extinguishment of Debt Recorded as a Reduction of Outstanding Debt Balances & Amortized Over Life of New Issuances Total

4 unchanged sentences

$ 26.4 $ 62.1 $ 88.5

Loss on Term Loan B repurchases 0.2

Loss on Term Loan B repurchases and other 0.7

Total loss on extinguishment of debt $ 27.1

Film Obligations

Film Related and Other Obligations

September 30,

2021 March 31,

(Amounts in millions)

Program rights and other film obligations $ 203.5 $ 214.6

Production loans 474.6 373.5

Production tax credit facility 184.5 120.0

Total film obligations 862.6 708.1

Program rights and film obligations $ 178.8 $ 214.6

Production and related loans 871.9 493.5

IP Credit Facility and other financing obligations 215.0 —

Total film related and other obligations 1,265.7 708.1

Unamortized debt issuance costs ( 7.1 ) ( 4.6 )

Total film obligations, net 858.4 703.5

Total film related and other obligations, net 1,258.6 703.5

Less current portion ( 546.4 ) ( 385.0 )

Total non-current film obligations $ 509.3 $ 318.5

Program Rights and Other Film Obligations

Program rights and other 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 2.22 % to 2.66 % (before the impact of interest rate swaps, see Note 16 for interest rate swaps).

Total non-current film related and other obligations $ 712.2 $ 318.5

Program Rights and Film Obligations

Program rights and 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 and Related Loans

Production and related loans include individual loans for the production or license of film and television programs that the Company produces or licenses and the Company's Production Tax Credit Facility (as defined below).

Individual Loans .

The majority of the Company's individual production and related 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 1.93 % to 3.11 % (before the impact of interest rate swaps, see Note 16 for interest rate swaps).

LIONS GATE ENTERTAINMENT CORP.

3 unchanged sentences

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 1.60 % at June 30, 2021).

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

As of June 30, 2021, there were no additional amounts available under the Production Tax Credit Facility.

As of September 30, 2021, there was $ 205.8 million outstanding under the Production Tax Credit Facility, and there were no additional amounts available under the Production Tax Credit Facility (March 31, 2021 - $ 120.0 million outstanding).

IP Credit Facility and Other Financing Obligations

IP Credit Facility.

In July 2021, as amended on September 30, 2021, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the "IP Credit Facility") based on the collateral consisting solely of certain of the Company’s rights in certain library titles, including the Spyglass and other recently acquired libraries.

The maximum principal amount of the IP Credit Facility is $ 140.0 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries.

The cash flows generated from the exploitation of the rights will be applied to repay the IP Credit Facility subject to cumulative minimum guaranteed payment amounts as set forth below:

Cumulative Period Through:

Cumulative Minimum Guaranteed Payment Amounts Payment Due Date

(in millions)

September 30, 2022 $ 26.3 November 14, 2022

September 30, 2023 $ 52.5 November 14, 2023

September 30, 2024 $ 78.8 November 14, 2024

September 30, 2025 $ 105.0 November 14, 2025

July 30, 2026 $ 140.0 July 30, 2026

Advances under the IP Credit Facility bear interest at a rate equal to, at the Company’s option, LIBOR plus 2.25 % per annum or the base rate plus 1.25 % per annum (effective interest rate of 2.50 % at September 30, 2021).

The IP Credit Facility matures on July 30, 2026.

As of September 30, 2021, there was $ 140.0 million outstanding under the IP Credit Facility.

Other Financing Obligations.

Other financing obligations include financing collateralized by certain contractual payments to be received in the future.

Fair Value Measurements

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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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• 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 June 30, 2021 and March 31, 2021:

June 30, 2021 March 31, 2021

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of September 30, 2021 and March 31, 2021:

September 30, 2021 March 31, 2021

Level 1 Level 2 Total Level 1 Level 2 Total

7 unchanged sentences

________________

(1) Amounts at June 30, 2021 and March 31, 2021 exclude $ 95.7 million and $ 98.2 million, respectively, of financing component of interest rate swaps presented in the table below.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the carrying values and fair values of the Company’s outstanding debt, production loans, Production Tax Credit Facility and interest rate swaps at June 30, 2021 and March 31, 2021:

June 30, 2021 March 31, 2021

(1) Amounts at September 30, 2021 and March 31, 2021 exclude $ 93.1 million and $ 98.2 million, respectively, 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 and related loans, IP Credit Facility and other financing obligations, and interest rate swaps at September 30, 2021 and March 31, 2021:

September 30, 2021 March 31, 2021

(Amounts in millions)

10 unchanged sentences

— — 540.8 563.0

Production loans 473.7 474.6 372.5 373.5

Production Tax Credit Facility 181.3 184.5 116.5 120.0

Production and related loans 867.5 871.9 489.0 493.5

IP Credit Facility and other financing obligations 212.3 215.0 — —

Financing component of interest rate swaps (2)

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(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 at June 30, 2021 and March 31, 2021 include $ 95.7 million and $ 98.2 million, respectively, recorded as a reduction of assets under master netting arrangements.

(2) Amounts at September 30, 2021 and March 31, 2021 include $ 93.1 million and $ 98.2 million, respectively, 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 June 30, 2021 and March 31, 2021.

The carrying values of these financial instruments approximated the fair values at September 30, 2021 and March 31, 2021.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Noncontrolling Interests

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

Three Months Ended

Six Months Ended

September 30,

(Amounts in millions)

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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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pilgrim Media Group.

3 unchanged sentences

Pursuant to the original operating agreement of Pilgrim Media Group, if the employment of the noncontrolling interest holder was terminated, under 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 the remaining unamortized discount of $ 2.7 million has been expensed in the three months ended June 30, 2021.

Pursuant to the amendment to the operating agreement on April 2, 2021, this discount was eliminated and therefore the remaining unamortized discount of $ 2.7 million was expensed in the quarter ended June 30, 2021.

The amortization of the discount through June 30, 2021 was included in general and administrative expense of Pilgrim Media Group and reflected as an addition to redeemable noncontrolling interest.

3 unchanged sentences

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

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company's Media Networks segment generates revenue primarily from the distribution of the Company's STARZ branded premium subscription video services.

Revenue by Segment, Market or Product Line

The table below presents revenues by segment, market or product line for the three months ended June 30, 2021 and 2020:

Three Months Ended

The table below presents revenues by segment, market or product line for the three and six months ended September 30, 2021 and 2020:

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

20 unchanged sentences

Media Networks - Programming Revenues

358.6 374.1 716.7 731.3

International 26.1 14.2 50.3 24.2

384.7 388.3 767.0 755.5

Intersegment eliminations ( 163.8 ) ( 98.1 ) ( 322.2 ) ( 128.0 )

1 unchanged sentence

___________________

(1) Media Networks domestic revenues for the three months ended June 30, 2020 included revenue from the Company's former Other Streaming Services product line of $ 11.5 million, 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 June 30, 2021 are as follows:

(1) Media Networks domestic revenues for the three and six months ended September 30, 2020 included revenue from the Company's former Other Streaming Services product line of $ 13.3 million and $ 24.8 million, respectively, substantially all of which related to the Company's former interest in Pantaya, which was sold on March 31, 2021 (see Note 2).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Remaining Performance Obligations

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at September 30, 2021 are as follows:

Rest of Year Ending March 31, 2022 Year Ending March 31,

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

Revenues of $ 72.8 million, including variable and fixed fee arrangements, were recognized during the three months ended June 30, 2021, from performance obligations satisfied prior to March 31, 2021.

Revenues of $ 60.0 million and $ 132.8 million, respectively, including variable and fixed fee arrangements, were recognized during the three and six months ended September 30, 2021, from performance obligations satisfied prior to March 31, 2021.

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.

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The timing of revenue recognition, billings and cash collections affects the recognition of accounts receivable, contract assets and deferred revenue.

At June 30, 2021 and March 31, 2021, accounts receivable, contract assets and deferred revenue are as follows.

Item Balance Sheet Location June 30,

At September 30, 2021 and March 31, 2021, accounts receivable, contract assets and deferred revenue are as follows.

Item Balance Sheet Location September 30,

2021 March 31,

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2021 (Benefit) provision for doubtful accounts (1)

Uncollectible accounts written-off June 30,

Uncollectible accounts written-off September 30, 2021

(Amounts in millions)

2 unchanged sentences

(1) Represents collections on accounts receivable previously reserved.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contract Assets.

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

Revenues of $ 64.1 million were recognized during the three months ended June 30, 2021 related to the balance of deferred revenue at March 31, 2021.

Revenues of $ 42.9 million and $ 107.0 million, respectively, were recognized during the three and six months ended September 30, 2021 related to the balance of deferred revenue at March 31, 2021.

Net Income (Loss) Per Share

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

Basic net income (loss) per share for the three months ended June 30, 2021 and 2020 is presented below:

Three Months Ended

Basic net income (loss) per share for the three and six months ended September 30, 2021 and 2020 is presented below:

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions, except per share amounts)

5 unchanged sentences

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

Diluted net income (loss) per common share for the three months ended June 30, 2021 and 2020 is presented below:

Three Months Ended

Diluted net income (loss) per common share for the three and six months ended September 30, 2021 and 2020 is presented below:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions, except per share amounts)

4 unchanged sentences

Effect of dilutive securities:

Share purchase options 1.8 — — —

Restricted share units and restricted stock 2.3 — — 0.6

1 unchanged sentence

Diluted net income (loss) per common share $ 0.03 $ ( 0.08 ) $ ( 0.17 ) $ 0.15

As a result of the net loss in the three months ended June 30, 2021, the dilutive effect of the share purchase options, restricted share units and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the three months ended June 30, 2021 totaled 7.4 million.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Additionally, for the three months ended June 30, 2021 and 2020, the outstanding common shares issuable presented below were excluded from diluted net income (loss) per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.

Three Months Ended

As a result of the net loss in the six months ended September 30, 2021 and the three months ended September 30, 2020, the dilutive effect of the share purchase options, restricted share units and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the six months ended September 30, 2021 totaled 5.7 million (three months ended September 30, 2020 - 0.9 million).

Additionally, for the three and six months ended September 30, 2021 and 2020, the outstanding common shares issuable presented below were excluded from diluted net income (loss) per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

4 unchanged sentences

Total weighted average anti-dilutive shares issuable excluded from diluted net income (loss) per common share 22.4 32.2 18.9 33.8

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 June 30, 2021 and March 31, 2021.

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares at September 30, 2021 and March 31, 2021.

The table below outlines common shares reserved for future issuance:

September 30,

2021 March 31,

5 unchanged sentences

(b) Share-based Compensation

The Company recognized the following share-based compensation expense during the three months ended June 30, 2021 and 2020:

Three Months Ended

On September 14, 2021, the Company’s shareholders approved an amendment to the Lions Gate Entertainment Corp.

2019 Performance Incentive Plan (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 5.0 million shares so that the new aggregate share limit under the 2019 Plan is 21.1 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).

The Company recognized the following share-based compensation expense during the three and six months ended September 30, 2021 and 2020:

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

3 unchanged sentences

Share appreciation rights 1.1 3.4 3.4 4.6

20.4 22.8 54.9 37.2

Impact of accelerated vesting on equity awards (1)

Total share-based compensation expense $ 20.4 $ 25.6 $ 54.9 $ 40.0

3 unchanged sentences

___________________

(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 unaudited condensed consolidated statements of operations for share-based compensation arrangements prior to the effects of changes in the valuation allowance.

2 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

3 unchanged sentences

General and administration 19.7 22.1 54.1 36.0

Restructuring and other — 2.8 — 2.8

$ 20.4 $ 25.6 $ 54.9 $ 40.0

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the three months ended June 30, 2021:

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the six months ended September 30, 2021:

Stock Options and SARs Restricted Stock and Restricted Share Units

6 unchanged sentences

$ 12.36 — (1)

$ 13.16 4.7 $ 14.19

Options exercised or restricted stock or RSUs vested — (1)

3 unchanged sentences

$ 23.07 ( 0.2 ) $ 24.64 — — ( 0.4 ) $ 8.65

Outstanding at June 30, 2021 5.5 $ 24.32 21.3 $ 15.73 — (1)

Outstanding at September 30, 2021 5.5 $ 24.32 21.8 $ 15.62 — (1)

$ 11.51 8.1 $ 11.88

2 unchanged sentences

During the three months ended June 30, 2021, the Company did not repurchase any common shares.

During the three months ended June 30, 2020, 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 three and six months ended September 30, 2021 and the three months ended September 30, 2020, the Company did not repurchase any common shares.

During the six months ended September 30, 2020, 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 .

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

The income tax provision for the three months ended June 30, 2021 and 2020 is calculated by estimating the Company's annual effective tax rate (estimated annual tax provision divided by estimated annual income before income taxes), and then applying the effective tax rate to income (loss) before income taxes for the period, plus or minus the tax effects of items that relate discretely to the period, if any.

The Company's income tax provision 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, changes in the valuation allowance against the Company's deferred tax assets, and certain minimum taxes and foreign withholding taxes.

The Company's income tax provision for the quarter ended June 30, 2021 was also impacted by the additional accrual of interest on uncertain tax benefits.

The Company's income tax provision for the quarter ended June 30, 2020 was also impacted by the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

The income tax benefit (provision) for the three months ended September 30, 2021 and 2020 is calculated by estimating the Company's annual effective tax rate (estimated annual tax provision divided by estimated annual income before income taxes), and then applying the effective tax rate to income (loss) before income taxes for the period, plus or minus the tax effects of items that relate discretely to the period, if any.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company's income tax provision 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.

The Company's income tax benefit (provision) 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, changes in the valuation allowance against the Company's deferred tax assets, and certain minimum taxes and foreign withholding taxes.

The Company's income tax provision for the quarter ended September 30, 2021 and 2020 was also impacted by interest accrual on uncertain tax benefits, and release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

The Company's income tax benefit (provision) 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.

Restructuring and Other

Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable.

During the three months ended June 30, 2021 and 2020, the Company also incurred certain other unusual charges related to the COVID-19 global pandemic.

The following table sets forth restructuring and other and COVID-19 related charges and the statement of operations line items they are included in for the three months ended June 30, 2021 and 2020:

Three Months Ended

During the three and six months ended September 30, 2021 and 2020, the Company also incurred certain other unusual charges related to the COVID-19 global pandemic.

The following table sets forth restructuring and other and COVID-19 related charges and the statement of operations line items they are included in for the three and six months ended September 30, 2021 and 2020:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

1 unchanged sentence

Severance (1)

Cash $ 1.3 $ 8.5 $ 3.8 $ 10.6

Accelerated vesting on equity awards (see Note 11) — 2.8 — 2.8

Total severance costs 1.3 11.3 $ 3.8 $ 13.4

COVID-19 related charges included in restructuring and other (2)

0.5 0.3 0.8 0.8

Transaction and related costs (3)

1.7 1.8 2.1 2.2

Total Restructuring and Other 3.5 13.4 6.7 16.4

COVID-19 related charges not included in restructuring and other, included in:

COVID-19 related charges (benefit) not included in restructuring and other, included in:

Direct operating expense (4)

( 1.0 ) 22.3 0.5 28.1

Distribution and marketing expense (4)

0.2 6.1 0.3 10.7

Total restructuring and other and COVID-19 related charges $ 2.7 $ 41.8 $ 7.5 $ 55.2

_______________________

(1) Severance costs in the three months ended June 30, 2021 and 2020 were primarily related to restructuring activities in connection with cost-saving initiatives and recent acquisitions.

(2) During the three months ended June 30, 2021, the Company has incurred certain costs primarily related to incremental costs required to adhere to health and safety protocols and other incremental costs associated with the COVID-19 global pandemic.

In the three months ended June 30 2020, these costs were 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 three months ended June 30, 2021 and 2020 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

(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, and the related economic disruption, including the worldwide closure of theaters, international travel restrictions and the pausing of motion picture and television productions, during the three months ended June 30, 2021 and 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 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, net of insurance recoveries.

(1) Severance costs in the three and six months ended September 30, 2021 and 2020 were primarily related to restructuring activities in connection with cost-saving initiatives and recent acquisitions.

(2) During the three and six months ended September 30, 2021, the Company has incurred certain costs primarily related to incremental costs required to adhere to health and safety protocols and other incremental costs associated with the COVID-19 global pandemic.

In the three and six months ended September 30, 2020, these costs were 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 three and six months ended September 30, 2021 and 2020 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

(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, and the related economic disruption, including the worldwide closure of theaters, international travel restrictions and the pausing of motion picture and television productions, during the three and six months ended September 30, 2021 and 2020 the Company incurred certain incremental costs which were expensed in the period.

The charges (benefit) included in direct operating expense includes incremental costs associated with 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, net of insurance recoveries, and in the three and six months ended September 30, 2020, these charges also included film impairment due to changes in performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

In the three months ended September 30, 2021, insurance recoveries exceeded the incremental costs expensed in the period, resulting in a net benefit included in direct operating expense.

In addition, the costs included in distribution and marketing expense primarily consist of contractual marketing spends for film releases and events that have been canceled or delayed and will provide no economic benefit.

1 unchanged sentence

The ultimate amount of insurance recovery cannot be estimated at this time.

Changes in the restructuring and other severance liability were as follows for the three months ended June 30, 2021 and 2020:

Changes in the restructuring and other severance liability were as follows for the six months ended September 30, 2021 and 2020:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

Six Months Ended

September 30,

(Amounts in millions)

5 unchanged sentences

_______________________

(1) As of June 30, 2021, the remaining severance liability of approximately $ 4.3 million is expected to be paid in the next 12 months.

(1) As of September 30, 2021, the remaining severance liability of approximately $ 3.0 million is expected to be paid in the next 12 months.

Segment Information

18 unchanged sentences

Segment information is presented in the table below:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

34 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

5 unchanged sentences

( 3.5 ) ( 13.4 ) ( 6.7 ) ( 16.4 )

COVID-19 related charges included in direct operating expense and distribution and marketing expense (3)

COVID-19 related (charges) benefit included in direct operating expense and distribution and marketing expense (3)

0.8 ( 28.4 ) ( 0.8 ) ( 38.8 )

13 unchanged sentences

(1) Adjusted depreciation and amortization represents depreciation and amortization as presented on our unaudited condensed 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:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

3 unchanged sentences

(2) Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable (see Note 13).

(3) In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, during the three months ended June 30, 2021 and 2020 the Company has incurred $ 1.6 million and $ 10.4 million, respectively, in incremental direct operating and distribution and marketing expense (see Note 13).

(3) In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, during the three and six months ended September 30, 2021 the Company has incurred a benefit of $( 0.8 ) million and charges of $ 0.8 million, respectively, net of insurance recoveries, in incremental direct operating and distribution and marketing expense (three and six months ended September 30, 2020 - $ 28.4 million and $ 38.8 million, respectively) (see Note 13).

These charges are excluded from segment operating results.

(4) Adjusted share-based compensation represents share-based compensation expense adjusted for amounts included in restructuring and other expenses, when applicable, reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

(4) The following table reconciles total share-based compensation expense to adjusted share-based compensation expense:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

Total share-based compensation expense $ 20.4 $ 25.6 $ 54.9 $ 40.0

Amount included in restructuring and other (i)

— ( 2.8 ) — ( 2.8 )

Adjusted share-based compensation $ 20.4 $ 22.8 $ 54.9 $ 37.2

(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.

(1) Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in recent acquisitions.

1 unchanged sentence

The following sets forth the amounts included in each line item in the financial statements:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

4 unchanged sentences

$ 44.5 $ 49.6 $ 94.5 $ 96.1

See Note 9 for revenues by media or product line as broken down by segment for the three months ended June 30, 2021 and 2020.

See Note 9 for revenues by media or product line as broken down by segment for the three and six months ended September 30, 2021 and 2020.

The following table reconciles segment general and administration expense to the Company's total consolidated general and administration expense:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

5 unchanged sentences

$ 110.0 $ 118.8 $ 240.6 $ 227.8

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The reconciliation of total segment assets to the Company’s total consolidated assets is as follows:

September 30,

2021 March 31,

10 unchanged sentences

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

time, as appropriate, in light of additional information.

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.

7 unchanged sentences

The Fiduciary Litigation settlement was approved by the Court of Chancery of the State of Delaware and the settlement amount and insurance reimbursement discussed above were paid during the quarter ended December 31, 2018.

The Company is continuing to seek additional insurance reimbursement, including pursuant to a lawsuit 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.

On November 7, 2018, in support of its effort to obtain additional insurance reimbursements, the Company filed a lawsuit against certain insurers.

Additionally, 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.

During the quarter ended September 30, 2021, the Company settled with all of the insurers in both lawsuits except one (with whom the Company had settled in the prior quarter).

The net settlement amount derived by the Company during the three months ended September 30, 2021 is $ 20.2 million, which is included in the “interest and other income” line item on the unaudited condensed consolidated statement of operations (six months ended September 30, 2021 - $ 22.7 million).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Derivative Instruments and Hedging Activities

5 unchanged sentences

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 June 30, 2021, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 19 months from June 30, 2021):

June 30, 2021

As of September 30, 2021, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 16 months from September 30, 2021):

September 30, 2021

Foreign Currency Foreign Currency Amount US Dollar Amount Weighted Average Exchange Rate Per $1 USD

5 unchanged sentences

Czech Koruna CZK 99.9 in exchange for $ 4.4 CZK 22.57

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Interest Rate Swaps

8 unchanged sentences

Designated Cash Flow Hedges.

As of June 30, 2021, the Company had the following designated cash flow hedge pay-fixed interest rate swaps outstanding (all related to the Company's LIBOR-based debt, see Note 5 and Note 6):

As of September 30, 2021, the Company had the following designated cash flow hedge pay-fixed interest rate swaps outstanding (all related to the Company's LIBOR-based debt, see Note 5 and Note 6):

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Effective Date Notional Amount Fixed Rate Paid Maturity Date (1)

10 unchanged sentences

Not Designated.

As of June 30, 2021, the Company had the following pay-fixed receive-variable and offsetting pay-variable receive-fixed interest rate swaps outstanding, which are not designated as cash flow hedges:

As of September 30, 2021, the Company had the following pay-fixed receive-variable and offsetting pay-variable receive-fixed interest rate swaps outstanding, which are not designated as cash flow hedges:

Pay-Fixed Receive-Variable (1)

12 unchanged sentences

At the time of the de-designation of the above $ 1.4 billion in pay-fixed receive-variable interest rate swaps, there was approximately $ 163.0 million of unrealized losses recorded in accumulated other comprehensive income (loss).

This amount is being amortized to interest expense through the remaining term of the de-designated swaps unless it becomes

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

This amount is being amortized to interest expense through the remaining term of the 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 pay-fixed receive-variable interest rate swaps de-designated as cash flow hedges and the $ 1.4 billion of offsetting pay-variable receive-fixed swaps are 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.

1 unchanged sentence

Unaudited condensed consolidated statements of operations and comprehensive income (loss):

The following table presents the pre-tax effect of the Company's derivatives on the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss) for the three months ended June 30, 2021 and 2020:

Three Months Ended

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

1 unchanged sentence

Forward exchange contracts

Loss recognized in accumulated other comprehensive loss $ ( 0.2 ) $ ( 0.1 )

Gain (loss) recognized in accumulated other comprehensive loss $ 0.3 $ ( 0.4 ) $ 0.2 $ ( 0.6 )

Loss reclassified from accumulated other comprehensive loss into direct operating expense $ ( 0.2 ) $ — $ ( 0.4 ) $ ( 0.1 )

Interest rate swaps

Loss recognized in accumulated other comprehensive loss $ ( 40.8 ) $ ( 17.7 )

Gain (loss) recognized in accumulated other comprehensive loss $ 1.9 $ ( 10.5 ) $ ( 38.9 ) $ ( 28.2 )

Loss reclassified from accumulated other comprehensive loss into interest expense $ ( 8.1 ) $ ( 9.6 ) $ ( 16.4 ) $ ( 17.0 )

10 unchanged sentences

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 unaudited condensed consolidated balance sheets.

As of June 30, 2021, the gross amount of swaps in an asset and liability position that were subject to a master netting arrangement was $ 174.0 million and $ 229.1 million, respectively, resulting in an asset recorded in other assets - non current of $ 24.1 million and a liability recorded in other liabilities - non-current of $ 79.2 million.

As of September 30, 2021, the gross amount of swaps in an asset and liability position that were subject to a master netting arrangement was $ 173.0 million and $ 218.3 million, respectively, resulting in an asset recorded in other assets - non current of $ 27.2 million and a liability recorded in other liabilities - non-current of $ 72.5 million.

As of March 31, 2021, 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 June 30, 2021 and March 31, 2021, the Company had the following amounts recorded in the accompanying unaudited condensed consolidated balance sheets related to the Company's use of derivatives:

As of September 30, 2021 and March 31, 2021, the Company had the following amounts recorded in the accompanying unaudited condensed consolidated balance sheets related to the Company's use of derivatives:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

June 30, 2021

September 30, 2021

Other Current Assets Other Non-Current Assets Accounts Payable and Accrued Liabilities Other Non-Current Liabilities

8 unchanged sentences

________________

(1) Includes $ 95.7 million and $ 52.2 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 pay-variable receive-fixed interest rate swaps outstanding at June 30, 2021.

(1) Includes $ 93.1 million and $ 50.2 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 pay-variable receive-fixed interest rate swaps outstanding at September 30, 2021.

March 31, 2021

10 unchanged sentences

(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 pay-variable receive-fixed interest rate swaps outstanding at March 31, 2021.

As of June 30, 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 June 30, 2022.

As of June 30, 2021, the Company estimates approximately $ 47.4 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 June 30, 2022.

As of September 30, 2021, based on the current release schedule, the Company estimates less than $ 0.1 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 September 30, 2022.

As of September 30, 2021, the Company estimates approximately $ 47.4 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 September 30, 2022.

Additional Financial Information

1 unchanged sentence

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the unaudited condensed consolidated balance sheet to the total amounts reported in the unaudited condensed consolidated statement of cash flows at June 30, 2021.

At June 30, 2021, restricted cash included in other current assets represents amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility.

At September 30, 2021, restricted cash included in other current assets represents amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility and IP Credit Facility.

There were no material amounts of restricted cash in the unaudited condensed consolidated balance sheet as of March 31, 2021.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

September 30,

(Amounts in millions)

2 unchanged sentences

Total cash, cash equivalents and restricted cash $ 447.8

The composition of the Company’s other assets is as follows as of June 30, 2021 and March 31, 2021:

The composition of the Company’s other assets is as follows as of September 30, 2021 and March 31, 2021:

September 30,

2021 March 31,

19 unchanged sentences

The loss is reflected in the "other expense" line item on the unaudited condensed 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 three months ended June 30, 2021 and 2020.

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 three and six months ended September 30, 2021 and 2020.

Individual Monetization Agreements.

1 unchanged sentence

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 three months ended June 30, 2021 and 2020:

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three and six months ended September 30, 2021 and 2020:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

2 unchanged sentences

Loss recorded related to transfers of receivables 2.3 0.6 4.2 2.1

At June 30, 2021, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheets, but which the Company continues to service, related to the Company's individual agreements to monetize trade accounts receivable was $ 509.2 million (March 31, 2021 - $ 562.8 million).

At September 30, 2021, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheets, but which the Company continues to service, related to the Company's individual agreements to monetize trade accounts receivable was $ 532.4 million (March 31, 2021 - $ 562.8 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.

In December 2019, the Company entered into a revolving agreement, as amended in July 2021, 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, which expires July 27, 2022.

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 $ 73.1 million as of June 30, 2021 that are pledged as collateral under this agreement.

The transferred receivables are fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company, which holds additional receivables in the amount of $ 60.8 million as of September 30, 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 three months ended June 30, 2021 and 2020:

Three Months Ended

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the three and six months ended September 30, 2021 and 2020:

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(Amounts in millions)

3 unchanged sentences

Collections not reinvested and remitted or to be remitted ( 21.2 ) ( 3.9 ) ( 33.5 ) ( 14.3 )

Net cash proceeds received $ ( 2.6 ) $ 0.6

Net cash proceeds paid or to be paid $ ( 3.5 ) $ ( 3.9 ) $ ( 6.0 ) $ ( 3.3 )

Carrying value of receivables transferred and derecognized (1)

1 unchanged sentence

Obligations recorded $ 1.0 $ 0.2 $ 0.9 $ 0.6

Loss (gain) recorded related to transfers of receivables $ ( 0.2 ) $ 0.1

Loss recorded related to transfers of receivables $ 0.4 $ — $ 0.2 $ 0.2

___________________

(1) Receivables net of unamortized discounts on long-term, non-interest bearing receivables.

At June 30, 2021, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheet, but which the Company continues to service, related to the pooled monetization agreement was approximately $ 96.4 million (March 31, 2021 - $ 99.0 million).

At September 30, 2021, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheet, but which the Company continues to service, related to the pooled monetization agreement was approximately $ 92.9 million (March 31, 2021 - $ 99.0 million).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive Loss

3 unchanged sentences

March 31, 2021 $ ( 15.1 ) $ ( 68.2 ) $ ( 83.3 )

Other comprehensive income 0.1 ( 24.0 ) ( 23.9 )

June 30, 2021 $ ( 15.0 ) $ ( 92.2 ) $ ( 107.2 )

Other comprehensive loss ( 1.0 ) ( 38.7 ) ( 39.7 )

Reclassifications to net loss (1)

September 30, 2021 $ ( 16.1 ) $ ( 73.1 ) $ ( 89.2 )

March 31, 2020 $ ( 18.8 ) $ ( 187.2 ) $ ( 206.0 )

Other comprehensive income (loss) 0.8 ( 28.8 ) ( 28.0 )

Reclassifications to net loss (1)

September 30, 2020 $ ( 18.0 ) $ ( 187.5 ) $ ( 205.5 )

___________________

(1) Represents $ 0.4 million included in direct operating expense and $ 33.4 million included in interest expense on the unaudited condensed consolidated statement of operations in the six months ended September 30, 2021 (six months ended September 30, 2020 - $ 0.1 million included in direct operating expense and $ 28.4 million included in interest expense) (see Note 16).

Supplemental Cash Flow Information

Significant non-cash transactions during the six months ended September 30, 2021 and 2020 include certain interest rate swap agreements, which are discussed in Note 16, "Derivative Instruments and Hedging Activities".

The supplemental schedule of non-cash investing and financing activities is presented below:

Six Months Ended

September 30,

(Amounts in millions)

Non-cash investing activities:

Accrued equity-method investment $ 19.0 $ —

Decrease in finance lease right-of-use asset due to a reassessment event (1)

$ — $ ( 42.0 )

Non-cash financing activities:

Decrease in finance lease liability due to a reassessment event (1)

$ — $ ( 48.6 )

______________

(1) During the three months ended September 30, 2020, 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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Supplemental Cash Flow Information

Significant non-cash transactions during the three months ended June 30, 2021 and 2020 include certain interest rate swap agreements, which are discussed in Note 16, "Derivative Instruments and Hedging Activities".

There were no significant non-cash financing activities for the three months ended June 30, 2021 and 2020.

Supplemental cash flow information related to leases was as follows:

Six Months Ended

September 30,

(Amounts in millions)

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

Operating leases $ 38.8 $ 10.4

Increase in right-of-use assets and lease liability due to a reassessment event (1) :

Operating leases - increase in right-of-use assets $ — $ 6.0

Operating leases - increase in lease liability $ — $ 12.6

______________

Subsequent Events

Film Library Acquisition.

On July 15, 2021, the Company acquired the majority of the Spyglass Media Group, LLC ("Spyglass") feature film library of approximately 200 titles.

In connection with the acquisition of the film library, the Company also formed a strategic content partnership (which provides for an investment of a 20 % minority ownership stake) and entered into a multiyear first-look television arrangement with Spyglass.

IP Credit Facility.

In July 2021, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the "IP Credit Facility") based on the collateral consisting solely of the Company’s rights in certain library titles, including the Spyglass and other recently acquired libraries and non-recourse to other assets of the Company.

The maximum principal amount of the IP Credit Facility is $ 100.0 million, subject to the amount of collateral available, which is based on the valuation amount of cash flows from the libraries.

The cash flows generated from the exploitation of the rights will be applied to repay the IP Credit Facility subject to a minimum guaranteed payment amount and are expected to be sufficient to fully repay the facility by the stated maturity date.

Advances under the IP Credit Facility bear interest at a rate equal to, at the Company’s option, LIBOR plus 2.25 % per annum or the base rate plus 1.25 % per annum.

The IP Credit Facility matures on July 30, 2026.

Term Loan B Repurchases.

In July and August 2021, the Company completed a series of repurchases of the Term Loan B, and in aggregate, paid $ 38.7 million to repurchase $ 38.9 million principal amount of the Term Loan B.

Termination of a Portion of Revolving Credit Facility Commitments.

In November 2021, the Company terminated its revolving credit commitments under its 2023 Revolving Credit Facility, amounting to $ 250.0 million (the "Termination").

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

What changed 10-Q

Item 1. Financial Statements