What changed in this filing

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Item 1. Financial Statements

2022-11-07 compared with 2022-08-05 · 367 added, 212 removed, 901 unchanged (39% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2022 March 31,

38 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions, except per share amounts)

5 unchanged sentences

Restructuring and other 233.2 3.5 241.3 6.7

Goodwill impairment 1,475.0 — 1,475.0 —

Total expenses 2,622.8 858.0 3,585.0 1,738.9

3 unchanged sentences

Other expense ( 5.4 ) ( 2.7 ) ( 10.4 ) ( 4.3 )

Loss on extinguishment of debt ( 1.3 ) ( 26.6 )

Gain (loss) on extinguishment of debt 3.4 ( 0.4 ) 2.1 ( 27.1 )

Gain (loss) on investments ( 3.1 ) 1.5 ( 1.3 ) 1.5

Equity interests income 0.9 0.7

Loss before income taxes ( 116.6 ) ( 45.2 )

Equity interests income (loss) ( 0.1 ) 0.4 0.8 1.1

Income (loss) before income taxes ( 1,808.3 ) 8.7 ( 1,925.0 ) ( 36.4 )

Income tax provision ( 5.0 ) ( 5.6 ) ( 11.0 ) ( 12.1 )

Net loss ( 122.6 ) ( 51.7 )

Net income (loss) ( 1,813.3 ) 3.1 ( 1,936.0 ) ( 48.5 )

Net loss attributable to noncontrolling interests 2.2 4.4 5.9 10.6

Net loss attributable to Lions Gate Entertainment Corp.

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

shareholders $ ( 1,811.1 ) $ 7.5 $ ( 1,930.1 ) $ ( 37.9 )

1 unchanged sentence

shareholders:

Basic net loss per common share $ ( 0.53 ) $ ( 0.20 )

Diluted net loss per common share $ ( 0.53 ) $ ( 0.20 )

Basic net income (loss) per common share $ ( 7.95 ) $ 0.03 $ ( 8.51 ) $ ( 0.17 )

Diluted net income (loss) per common share $ ( 7.95 ) $ 0.03 $ ( 8.51 ) $ ( 0.17 )

Weighted average number of common shares outstanding:

3 unchanged sentences

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

Net loss $ ( 122.6 ) $ ( 51.7 )

Net income (loss) $ ( 1,813.3 ) $ 3.1 $ ( 1,936.0 ) $ ( 48.5 )

Foreign currency translation adjustments, net of tax ( 4.1 ) ( 1.1 ) ( 7.1 ) ( 1.0 )

Net unrealized gain (loss) on cash flow hedges, net of tax 51.2 19.0 100.1 ( 4.9 )

Comprehensive loss ( 76.7 ) ( 75.6 )

Comprehensive income (loss) ( 1,766.2 ) 21.0 ( 1,843.0 ) ( 54.4 )

Comprehensive loss attributable to noncontrolling interests 2.2 4.4 5.9 10.6

Comprehensive loss attributable to Lions Gate Entertainment Corp.

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

shareholders $ ( 1,764.0 ) $ 25.4 $ ( 1,837.1 ) $ ( 43.8 )

8 unchanged sentences

(Amounts in millions)

Balance at June 30, 2022 83.3 $ 669.4 142.5 $ 2,363.2 $ ( 504.7 ) $ 75.2 $ 2,603.1 $ 1.6 $ 2,604.7

Share-based compensation, net of share cancellations for taxes 0.1 0.9 2.7 10.3 — — 11.2 — 11.2

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

Noncontrolling interests — — — — — — — — —

Net loss — — — — ( 1,811.1 ) — ( 1,811.1 ) — ( 1,811.1 )

Other comprehensive income — — — — — 47.1 47.1 — 47.1

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 4.6 ) — ( 4.6 ) — ( 4.6 )

Balance at September 30, 2022 83.4 $ 670.4 145.2 $ 2,373.5 $ ( 2,320.4 ) $ 122.3 $ 845.8 $ 1.6 $ 847.4

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

_____________________

(a) Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 9).

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six Months Ended

Class A Voting Class B Non-Voting Accumulated Deficit Accumulated Other Comprehensive Income (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, 2022 83.3 $ 668.2 142.0 $ 2,353.8 $ ( 369.7 ) $ 29.3 $ 2,681.6 $ 1.8 $ 2,683.4

3 unchanged sentences

Noncontrolling interests — — — — — — — ( 0.4 ) ( 0.4 )

Net income (loss) — — — — ( 119.0 ) — ( 119.0 ) 0.2 ( 118.8 )

Net loss — — — — ( 1,930.1 ) — ( 1,930.1 ) 0.2 ( 1,929.9 )

Other comprehensive income — — — — — 93.0 93.0 — 93.0

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 20.6 ) — ( 20.6 ) — ( 20.6 )

Balance at June 30, 2022 83.3 $ 669.4 142.5 $ 2,363.2 $ ( 504.7 ) $ 75.2 $ 2,603.1 $ 1.6 $ 2,604.7

Balance at September 30, 2022 83.4 $ 670.4 145.2 $ 2,373.5 $ ( 2,320.4 ) $ 122.3 $ 845.8 $ 1.6 $ 847.4

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

6 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

_____________________

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

September 30,

(Amounts in millions)

7 unchanged sentences

Other amortization 41.2 50.5

Loss on extinguishment of debt 1.3 26.6

Goodwill impairment 1,475.0 —

Content and other impairments 218.9 —

(Gain) loss on extinguishment of debt ( 2.1 ) 27.1

Equity interests income ( 0.8 ) ( 1.1 )

15 unchanged sentences

Distributions from equity method investees — 2.6

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

Capital expenditures ( 21.5 ) ( 14.6 )

Net Cash Flows Provided By (Used In) Investing Activities ( 14.8 ) 115.7

Net Cash Flows Used In Investing Activities ( 36.0 ) ( 61.8 )

Financing Activities:

7 unchanged sentences

Tax withholding required on equity awards ( 16.2 ) ( 33.2 )

Net Cash Flows Provided By (Used In) Financing Activities 39.8 ( 28.3 )

Net Cash Flows Provided By Financing Activities 395.9 315.9

Net Change In Cash, Cash Equivalents and Restricted Cash 220.5 ( 78.4 )

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, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2023.

Operating results for the three and six months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2023.

The balance sheet at March 31, 2022 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S.

28 unchanged sentences

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.

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 was included in other current assets as of March 31, 2021.

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:

September 30,

2022 March 31,

15 unchanged sentences

Investment in films and television programs and licensed program rights, net $ 2,986.1 $ 3,013.6

At June 30, 2022, acquired film and television libraries have remaining unamortized costs of $ 146.4 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 18.9 years (March 31, 2022 - unamortized costs of $ 149.9 million).

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, 2022 and 2021, and was included in direct operating expense in the unaudited condensed consolidated statements of operations:

At September 30, 2022, acquired film and television libraries have remaining unamortized costs of $ 141.9 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 18.7 years (March 31, 2022 - unamortized costs of $ 149.9 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, 2022 and 2021, 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,

2022 2021 2022 2021

(Amounts in millions)

4 unchanged sentences

$ 427.4 $ 359.0 $ 899.3 $ 730.1

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, 2022 and 2021:

Three Months Ended

Investment in films and television programs and licensed program rights includes write-downs to fair value, which are generally included in direct operating expense on the unaudited condensed consolidated statements of operations.

In addition, due to the restructuring of the international operations of Starz as discussed in Note 14, for the quarter ended September 30, 2022, the Company incurred certain content impairments of its film group assets in certain international territories which are reflected in restructuring and other on the unaudited condensed consolidated statements of operations.

The following table sets forth impairments by segment for the three and six months ended September 30, 2022 and 2021:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

2 unchanged sentences

Television Production 3.5 1.6 4.7 26.6

Impairments not included in segment operating results (1)

213.0 — 213.0 —

$ 216.5 $ 1.7 $ 218.2 $ 26.7

________________

(1) Represents charges of $ 213.0 million for content impairment of the Company's film group assets in certain international territories related to the Media Networks segment, due to the restructuring of the international operations of Starz, which are included in restructuring and other on the unaudited condensed consolidated statements of operations.

The Company's investments consisted of the following:

September 30,

2022 March 31,

10 unchanged sentences

Roadside Attractions is an independent theatrical distribution company.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pantelion Films.

5 unchanged sentences

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

42 is a fully integrated management and production company, producing film, television and content, representing actors, writers, directors, comedians, presenters, producers, casting directors and media book rights;

3 unchanged sentences

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

September 30,

2022 March 31,

4 unchanged sentences

Non-current liabilities $ 61.8 $ 59.8

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

2 unchanged sentences

Net loss $ ( 10.2 ) $ ( 8.7 ) $ ( 12.6 ) $ ( 19.9 )

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

Picture Television

Production Media Networks Total

(Amounts in millions)

Balance as of March 31, 2022 $ 393.7 $ 401.9 $ 1,968.9 $ 2,764.5

Impairments — — ( 1,475.0 ) ( 1,475.0 )

Balance as of September 30, 2022 $ 393.7 $ 401.9 $ 493.9 $ 1,289.5

For the quarter ended September 30, 2022, due to continued adverse macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began implementing a plan to restructure its LIONSGATE+ business (formerly STARZPLAY International).

This restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan).

The Company's Starz domestic operations have also been impacted by these current market conditions, and the Company has revised its subscriber growth and forecasted cash

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

flow assumptions and implemented certain cost-saving measures.

Additionally, companies in the media and entertainment industry, and particularly those with significant streaming platforms, have experienced a decline in market valuations, and reflecting this industry trend, as well as potential capital market transactions, and the factors discussed above, the market price of the Company's common shares has continued to decline since June 30, 2022.

Accordingly, the Company updated its quantitative impairment assessment for all of its reporting units.

In performing its quantitative impairment assessment, the fair value of the Company's reporting units was estimated by using a combination of discounted cash flow ("DCF") analyses and market-based valuation methodologies.

Based on its quantitative impairment assessment, the Company determined that the fair value of its reporting units exceeded the carrying values for all of its reporting units, except the Media Networks reporting unit which was previously disclosed as a reporting unit "at risk" of impairment.

The analysis resulted in a goodwill impairment charge of $ 1.475 billion related to the Company's Media Networks reporting unit goodwill, which is recorded in the "goodwill impairment" line item in the unaudited condensed consolidated statement of operations.

Total debt of the Company, excluding film related and other obligations, was as follows:

September 30,

2022 March 31,

13 unchanged sentences

Revolving Credit Facility Availability of Funds & Commitment Fee.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at June 30, 2022 there was $ 1.25 billion available.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at September 30, 2022 there was $ 1.25 billion available.

However, borrowing levels are subject to certain financial covenants as discussed below.

There were no letters of credit outstanding at June 30, 2022.

There were no letters of credit outstanding at September 30, 2022.

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 $ 1.25 billion less the amount drawn.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Maturity Date:

4 unchanged sentences

• 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 3.54 % as of June 30, 2022, before the impact of interest rate swaps).

The Revolving Credit Facility and term loan A facility due April 2026 (the "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 4.89 % as of September 30, 2022, before the impact of interest rate swaps).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• 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 4.04 % as of June 30, 2022, before the impact of interest rate swaps).

The term loan B facility due March 2025 (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 5.39 % as of September 30, 2022, before the impact of interest rate swaps).

Required Principal Payments:

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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, 2022, the Company was in compliance with all applicable covenants.

As of September 30, 2022, the Company was in compliance with all applicable covenants.

Change in Control.

14 unchanged sentences

dollar LIBOR with the Secured Overnight Financing Rate (“SOFR”), a new index based on transactions in the market for short-term treasury securities.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

publication of SOFR began in April 2018, and, therefore, it has a very limited history.

The publication of SOFR began in April 2018, and, therefore, it has a very limited history.

Whether SOFR attains market traction as a LIBOR replacement tool remains in question.

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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

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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, 2022, the Company was in compliance with all applicable covenants.

As of September 30, 2022, the Company was in compliance with all applicable covenants.

Change in Control.

2 unchanged sentences

Capacity to Pay Dividends

At June 30, 2022, 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 $ 122.6 million and accumulated deficit of $ 504.7 million were deemed free of restrictions from paying dividends at June 30, 2022.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At September 30, 2022, 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 $ 1,936.0 million and accumulated deficit of $ 2,320.4 million were deemed free of restrictions from paying dividends at September 30, 2022.

Debt Transactions:

3 unchanged sentences

In July 2022, the Company repurchased $ 18.7 million principal amount of the 5.500 % Senior Notes for $ 14.6 million, together with accrued and unpaid interest.

See Note 18 - Subsequent Events.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Senior Notes Redemption and Issuance.

5 unchanged sentences

Term Loan B Repurchases.

During the three months ended June 30, 2021, the Company completed a series of repurchases of the term B loans due March 24, 2025 ("Term Loan B") and, in aggregate, paid $ 51.1 million to repurchase $ 51.5 million principal amount of the Term Loan B.

Loss on Extinguishment of Debt:

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).

(Gain) Loss on Extinguishment of Debt:

In accounting for the fiscal 2022 Senior Notes redemption and issuance transactions and credit agreement amendment discussed above, a portion of the refinancing transactions was considered a modification of terms, and a portion was considered a debt extinguishment.

During the three months ended June 30, 2022 and 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

Loss on extinguishment of debt:

During the six months ended September 30, 2022 and 2021, the Company recorded a (gain) loss on extinguishment of debt related to the transactions described above as summarized in the table below (three months ended September 30, 2022 and 2021 - gain of $ 3.4 million and loss of $ 0.4 million, respectively):

Six Months Ended

September 30,

(Gain) Loss on Extinguishment of Debt:

Term Loan A prepayment $ 1.3 $ —

Senior Notes redemption and issuance — 24.7

Senior Notes repurchases, redemption and issuance ( 3.4 ) 24.7

Credit Agreement amendment (Revolving Credit Facility and Term Loan A) — 1.7

Term Loan B repurchases and other — 0.7

$ ( 2.1 ) $ 27.1

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

Film Related and Other Obligations

September 30,

2022 March 31,

17 unchanged sentences

Production Loans .

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

The majority of the Company's 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 primarily LIBOR and SOFR-based interest at a weighted average rate of 3.61 % (before the impact of interest rate swaps, see Note 16 for interest rate swaps).

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

The majority of the Company's production loans have contractual repayment dates either at or near the expected completion or release dates, with the exception of certain loans containing repayment dates on a longer term basis, and incur primarily LIBOR and SOFR-based interest at a weighted average rate of 5.47 % (before the impact of interest rate swaps, see Note 17 for interest rate swaps).

Production loans amounting to $ 1,249.4 million are secured by collateral which consists of the underlying rights related to the intellectual property (i.e.

film or television show), and $ 195.2 million are unsecured.

Programming Notes .

Programming notes represent individual loans for the licensing of film and television programs that the Company licenses.

The Company's programming notes have contractual repayment dates in July 2022, and incur primarily LIBOR and SOFR-based interest at a weighted average rate of 4.57 % (before the impact of interest rate swaps, see Note 16 for interest rate swaps).

Programming notes represent individual unsecured loans for the licensing of film and television programs that the Company licenses.

The Company's programming notes have contractual repayment dates in January 2023, and incur LIBOR-based interest at a weighted average rate of 7.25 %.

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

Production Tax Credit Facility.

In January 2021, as amended on March 31, 2021 and March 29, 2022, 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.

In January 2021, as amended on March 29, 2022, the Company entered into a limited-recourse senior secured revolving credit facility (the "Production Tax Credit Facility") based on and secured by collateral consisting of certain of the Company’s tax credit receivables.

The maximum principal amount of the Production Tax Credit Facility is $ 235.0 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 SOFR plus 0.10 % to 0.25 % depending on the SOFR term (i.e., one, three or six months), plus 1.50 % per annum or the base rate plus 0.50 % per annum (effective interest rate of 3.29 % at June 30, 2022).

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

As of June 30, 2022, there was $ 233.7 million outstanding under the Production Tax Credit Facility, and there were no material amounts available under the Production Tax Credit Facility (March 31, 2022 - $ 224.0 million outstanding).

As of September 30, 2022, there were no amounts available under the Production Tax Credit Facility.

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.

In July 2021, as amended in September 2022, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the "IP Credit Facility") based on and secured by 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 $ 161.9 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 Period From

September 29, 2022 Through:

Cumulative Minimum Guaranteed Payment Amounts Payment Due Date

5 unchanged sentences

July 30, 2027 $ 161.9 July 30, 2027

Advances under the IP Credit Facility bear interest at a rate equal to, at the Company’s option, LIBOR plus 2.25 % per annum (with a LIBOR floor of 0.25 %) or the base rate plus 1.25 % per annum (effective interest rate of 4.04 % at June 30, 2022).

Advances under the IP Credit Facility bear interest at a rate equal to, at the Company’s option, SOFR plus 0.11 % to 0.26 % depending on the SOFR term (i.e., one or three months) plus 2.25 % per annum (with a SOFR floor of 0.25 %) or the base rate plus 1.25 % per annum (effective interest rate of 5.89 % at September 30, 2022).

The IP Credit Facility matures on July 30, 2027.

As of June 30, 2022, there was $ 114.0 million outstanding under the IP Credit Facility.

Backlog Financing Facility and Other:

Backlog Financing Facility.

In March 2022, as amended in August 2022, certain subsidiaries of the Company entered into a committed secured revolving credit facility (the "Backlog Financing Facility") based on collateral consisting of certain of the Company's fixed fee or minimum guarantee contracts where cash will be received in the future.

The maximum principal amount of the Backlog Financing Facility as of June 30, 2022 was $ 125.0 million, subject to the amount of eligible collateral contributed to the facility.

In August 2022, the Company amended its Backlog Financing Facility and increased the maximum principal amount of the Backlog Financing Facility from $ 125.0 million to $ 175.0 million (see Note 18 - Subsequent Events).

Advances under the Backlog Financing Facility bear interest at a rate equal to Term SOFR plus 0.10 % to 0.25 % depending on the SOFR term (i.e., one, three or six months), plus an applicable margin amounting to 1.15 % per annum at June 30, 2022.

The applicable margin is subject to a potential increase to either 1.25 % or 1.50 % based on the weighted average credit quality rating of the collateral contributed to the facility (effective interest rate of 2.94 % at June 30, 2022).

The Backlog Financing Facility revolving period finishes on May 16, 2025, at which point cash collections from the underlying collateral is used to repay the facility.

In March 2022, as amended in August 2022, certain subsidiaries of the Company entered into a committed secured revolving credit facility (the "Backlog Financing Facility") based on and secured by collateral consisting of certain of the Company's fixed fee or minimum guarantee contracts where cash will be received in the future.

The maximum principal amount of the Backlog Financing Facility is $ 175.0 million, subject to the amount of eligible collateral contributed to the facility.

The Backlog Financing Facility revolving period ends on May 16, 2025, at which point cash collections from the underlying collateral is used to repay the facility.

The facility maturity date is up to 2 years, 90 days after the revolving period ends, currently August 14, 2027.

As of June 30, 2022, there was $ 125.0 million outstanding under the Backlog Financing Facility, and there were no amounts available under the Backlog Financing Facility (March 31, 2022 - no amounts outstanding).

On June 28, 2022, the Company borrowed $ 118.6 million under a loan agreement which is secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements (the "Distribution Loan Agreement").

The loan agreement matures on December 28, 2025.

Outstanding loan balances must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees.

Borrowings bear interest at a rate equal to Term SOFR plus 0.11 %, plus an applicable margin amounting to 1.50 % per annum (effective interest rate of 3.30 % at June 30, 2022).

As of September 30, 2022, there was $ 175.0 million outstanding under the Backlog Financing Facility, and there were no amounts available under the Backlog Financing Facility (March 31, 2022 - no amounts outstanding).

In June 2022, the Company borrowed $ 118.6 million under a loan agreement which is secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements (the "June 2022 Distribution Loan Agreement"), which was to mature on December 28, 2025, of which $ 18.6 million was repaid during the quarter ended September 30, 2022, and the remaining outstanding amount of $ 100.0 million was repaid on October 3, 2022 (see Note 19 - Subsequent Events).

In September 2022, the Company borrowed $ 43.4 million under a loan agreement which matures on March 28, 2026 (the "September 2022 Distribution Loan Agreement", and together with the June 2022 Distribution Loan Agreement, the "Distribution Loan Agreements").

Outstanding loan balances under the Distribution Loan Agreements must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees.

Borrowings under the Distribution Loan Agreements bear interest at a rate

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

equal to Term SOFR plus 0.11 %, plus an applicable margin amounting to 1.50 % per annum (effective interest rate of 4.65 % at September 30, 2022).

Fair Value Measurements

9 unchanged sentences

• 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, 2022 and March 31, 2022:

June 30, 2022 March 31, 2022

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of September 30, 2022 and March 31, 2022:

September 30, 2022 March 31, 2022

Level 1 Level 2 Total Level 1 Level 2 Total

2 unchanged sentences

Forward exchange contracts (see Note 17)

— 7.9 7.9 — 3.5 3.5

Interest rate swaps (see Note 17) (1)

1 unchanged sentence

Forward exchange contracts (see Note 17)

— ( 5.3 ) ( 5.3 ) — ( 2.8 ) ( 2.8 )

Interest rate swaps (see Note 17)

— — — — 28.6 28.6

(1) Amounts at March 31, 2022 exclude $ 88.1 million of financing component of interest rate swaps presented in the table below ( none at June 30, 2022).

________________

(1) Amounts at March 31, 2022 exclude $ 88.1 million of financing component of interest rate swaps presented in the table below ( none at September 30, 2022).

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, film related financing and other obligations, and interest rate swaps at June 30, 2022 and March 31, 2022:

June 30, 2022 March 31, 2022

The following table sets forth the carrying values and fair values of the Company’s outstanding debt, film related financing and other obligations, and interest rate swaps at September 30, 2022 and March 31, 2022:

September 30, 2022 March 31, 2022

(Amounts in millions)

15 unchanged sentences

(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 March 31, 2022 include $ 88.1 million recorded as a reduction of assets under master netting arrangements ( none at June 30, 2022).

(2) Amounts at March 31, 2022 include $ 88.1 million recorded as a reduction of assets under master netting arrangements ( none at September 30, 2022).

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, 2022 and March 31, 2022.

The carrying values of these financial instruments approximated the fair values at September 30, 2022 and March 31, 2022.

Noncontrolling Interests

1 unchanged sentence

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

Three Months Ended

Six Months Ended

September 30,

(Amounts in millions)

7 unchanged sentences

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.

The noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable beginning May 29, 2023, 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.

9 unchanged sentences

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.

The Company's Media Networks segment generates revenue primarily from the distribution of the Company's STARZ 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, 2022 and 2021:

The table below presents revenues by segment, market or product line for the three and six months ended September 30, 2022 and 2021:

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,

2022 2021 2022 2021

(Amounts in millions)

22 unchanged sentences

International 38.6 26.1 70.2 50.3

396.1 384.7 777.3 767.0

Intersegment eliminations ( 175.8 ) ( 163.8 ) ( 374.2 ) ( 322.2 )

1 unchanged sentence

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, 2022 are as follows:

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at September 30, 2022 are as follows:

Rest of Year Ending March 31, 2023 Year Ending March 31,

6 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenues of $ 39.8 million including variable and fixed fee arrangements, were recognized during the three months ended June 30, 2022, from performance obligations satisfied prior to March 31, 2022.

Revenues of $ 42.4 million and $ 82.2 million, including variable and fixed fee arrangements, were recognized during the three and six months ended September 30, 2022, respectively, from performance obligations satisfied prior to March 31, 2022.

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.

1 unchanged sentence

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

At June 30, 2022 and March 31, 2022, accounts receivable, contract assets and deferred revenue are as follows.

Item Balance Sheet Location June 30,

2022 March 31,

2022 Addition (Reduction)

(Amounts in millions)

Accounts receivable, net - current Accounts receivable, net $ 428.0 $ 442.2 $ ( 14.2 )

Accounts receivable, net - non-current Other assets - non-current 48.9 39.0 9.9

Contract asset - current Other assets - current (1)

44.4 40.5 3.9

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

Deferred revenue - current Deferred revenue - current 184.2 174.9 9.3

Deferred revenue - non-current Deferred revenue - non-current 53.9 49.8 4.1

__________________

(1) Included in prepaid expenses and other (see Note 17) .

See the unaudited condensed consolidated balance sheets or Note 18 for accounts receivable, contract assets and deferred revenue balances at September 30, 2022 and March 31, 2022.

Accounts Receivable.

1 unchanged sentence

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.

To assess collectability, 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 generally does not require collateral for its trade accounts receivable.

1 unchanged sentence

March 31, 2022 (Benefit) provision for doubtful accounts (1)

Uncollectible accounts written-off June 30, 2022

Uncollectible accounts written-off September 30, 2022

(Amounts in millions)

7 unchanged sentences

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

Revenues of $ 98.7 million were recognized during the three months ended June 30, 2022 related to the balance of deferred revenue at March 31, 2022.

Revenues of $ 31.7 million and $ 130.4 million, respectively, were recognized during the three and six months ended September 30, 2022 related to the balance of deferred revenue at March 31, 2022.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 three months ended June 30, 2022 and 2021 is presented below:

Three Months Ended

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 and six months ended September 30, 2022 and 2021 is presented below:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions, except per share amounts)

Basic and Diluted Net Loss Per Common Share:

Net loss attributable to Lions Gate Entertainment Corp.

Basic Net Income (Loss) Per Common Share:

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

shareholders $ ( 1,811.1 ) $ 7.5 $ ( 1,930.1 ) $ ( 37.9 )

Weighted average common shares outstanding 227.9 224.4 226.8 223.1

Basic and diluted net loss per common share $ ( 0.53 ) $ ( 0.20 )

As a result of the net loss in the three months ended June 30, 2022 and 2021, 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 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, 2022 totaled 3.8 million (three months ended June 30, 2021 - 7.4 million).

Additionally, for the three months ended June 30, 2022 and 2021, 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.

Three Months Ended

Basic net income (loss) per common share $ ( 7.95 ) $ 0.03 $ ( 8.51 ) $ ( 0.17 )

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 and six months ended September 30, 2022 and 2021 is presented below:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions, except per share amounts)

Diluted Net Income (Loss) Per Common Share:

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

shareholders $ ( 1,811.1 ) $ 7.5 $ ( 1,930.1 ) $ ( 37.9 )

Weighted average common shares outstanding 227.9 224.4 226.8 223.1

Effect of dilutive securities:

Share purchase options — 1.8 — —

Restricted share units and restricted stock — 2.3 — —

Adjusted weighted average common shares outstanding 227.9 228.5 226.8 223.1

Diluted net income (loss) per common share $ ( 7.95 ) $ 0.03 $ ( 8.51 ) $ ( 0.17 )

As a result of the net loss in the three and six months ended September 30, 2022, and the six months ended September 30, 2021, 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 net loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the three and six months ended September 30, 2022 totaled 2.4 million and 3.1 million, respectively (six months ended September 30, 2021 - 5.7 million).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Additionally, for the three and six months ended September 30, 2022 and 2021, 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,

2022 2021 2022 2021

(Amounts in millions)

4 unchanged sentences

Total weighted average anti-dilutive shares issuable excluded from diluted net loss per common share 28.1 22.4 25.4 18.9

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, 2022 and March 31, 2022.

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares at September 30, 2022 and March 31, 2022.

The table below outlines common shares reserved for future issuance:

September 30,

2022 March 31,

4 unchanged sentences

Shares reserved for future issuance 49.9 53.9

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(b) Share-based Compensation

The Company recognized the following share-based compensation expense during the three months ended June 30, 2022 and 2021:

Three Months Ended

The Company recognized the following share-based compensation expense during the three and six months ended September 30, 2022 and 2021:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

3 unchanged sentences

Share appreciation rights 1.1 1.1 1.5 3.4

26.6 20.4 34.4 54.9

Impact of accelerated vesting on equity awards (1)

2 unchanged sentences

( 4.7 ) ( 4.3 ) ( 6.3 ) ( 10.9 )

Reduction in net income $ 6.9 $ 28.0

Increase in net loss or reduction in net income $ 21.9 $ 16.1 $ 28.7 $ 44.0

___________________

1 unchanged sentence

(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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

4 unchanged sentences

Restructuring and other — — 0.6 —

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the three months ended June 30, 2022:

$ 26.6 $ 20.4 $ 35.0 $ 54.9

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the six months ended September 30, 2022:

Stock Options and SARs Restricted Stock and Restricted Share Units

8 unchanged sentences

$ 7.70 ( 0.4 ) $ 10.17 — (1)

11.19 ( 4.7 ) $ 12.22

Forfeited or expired — (1)

$ 15.50 ( 0.3 ) $ 21.10 — — ( 0.2 ) $ 10.96

Outstanding at June 30, 2022 5.4 $ 24.38 21.6 $ 15.37 — (1)

Outstanding at September 30, 2022 5.4 $ 24.40 21.8 $ 15.28 — (1)

$ 10.95 14.0 $ 9.54

2 unchanged sentences

During the three months ended June 30, 2022 and 2021 the Company did not repurchase any common shares.

During the three and six months ended September 30, 2022 and 2021 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.

The income tax provision for the three months ended June 30, 2022 and 2021 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 income tax provision for the three months ended September 30, 2022 and 2021 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 three months ended June 30, 2022 and 2021 was also impacted by an interest accrual on uncertain tax benefits.

The Company's income tax provision for the three months ended September 30, 2022 was also impacted by an interest accrual on uncertain tax benefits.

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

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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, 2022 and 2021, the Company also incurred certain other unusual charges, which are included in direct operating expense in the consolidated statements of operations as described below.

The following table sets forth restructuring and other and these other unusual charges and the statement of operations line items they are included in for the three months ended June 30, 2022 and 2021:

Three Months Ended

During the three and six months ended September 30, 2022 and 2021, the Company also incurred certain other unusual charges, which are included in direct operating expense and distribution and marketing expense in the consolidated statements of operations as described below.

The following table sets forth restructuring and other and these other unusual charges and the statement of operations line items they are included in for the three and six months ended September 30, 2022 and 2021:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

Restructuring and other:

Content and other impairments (1)

$ 218.8 $ — $ 218.8 $ —

Severance (2)

3 unchanged sentences

COVID-19 related charges included in restructuring and other (3)

— 0.5 0.1 0.8

Transaction and related costs (4)

4.8 1.7 9.4 2.1

Total Restructuring and Other 233.2 3.5 241.3 6.7

Other unusual charges not included in restructuring and other:

Other unusual charges not included in restructuring and other or the Company's operating segments:

Content charges included in direct operating expense (5)

COVID-19 related charges (benefit) included in:

Direct operating expense (6)

Total restructuring and other and COVID-19 related charges $ 7.0 $ 4.8

( 6.1 ) ( 1.0 ) ( 7.1 ) 0.5

(1) Severance costs were primarily related to restructuring activities in connection with cost-saving initiatives.

Distribution and marketing expense — 0.2 — 0.3

Total restructuring and other and other unusual charges not included in restructuring and other $ 234.3 $ 2.7 $ 241.4 $ 7.5

_______________________

(1) For the three months ended September 30, 2022, due to the macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began a plan to restructure its LIONSGATE+ business (formerly STARZPLAY International).

This restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan).

As a result of this restructuring, the Company has recorded charges of $ 213.0 million in the three months ended September 30, 2022 for content impairment of its film group assets in certain international territories.

These charges are excluded from segment results and included in restructuring and other in the unaudited condensed consolidated statement of operations.

The Company expects to incur additional charges ranging from approximately $ 75 million to $ 100 million in the next six months primarily related to certain contractual content commitments and other items as we fully implement the plan.

These amounts also reflect the estimated net future cash expenditures for these charges.

In addition, the Company expects future cash expenditures of approximately $ 75 million related to the content charges recorded in the three months ended September 30, 2022.

Amounts in the three and six months ended September 30, 2022 also include an impairment of an operating lease right-of-use asset amounting to $ 5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company.

The impairment reflects a decline in market conditions since the inception of the lease impacting potential sublease opportunities, and represents the difference between the estimated fair value, which was determined based on the expected discounted future cash flows of the lease asset, and the carrying value.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2) In connection with the international restructuring described above, the Company has implemented certain cost-saving initiatives both domestically and internationally, and has recorded severance charges of $ 5.9 million in the three months ended September 30, 2022 related to the Media Networks segment.

In addition, due to the changes in the marketplace and certain management, and the implementation of certain cost-saving initiatives and the streamlining of operations, the Company recorded additional severance charges of $ 3.7 million primarily related to the Motion Picture segment.

(3) Amounts represent certain incremental general and administrative costs associated with the COVID-19 global pandemic, such as costs related to transitioning the Company to a remote-work environment, costs associated with return-to-office safety protocols, and other incremental general and administrative costs associated with the COVID-19 global pandemic.

(3) Transaction and related costs in the three months ended June 30, 2022 and 2021 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, certain incremental costs were incurred and expensed.

The charges (benefit) included in direct operating expense includes incremental costs associated with the pausing and restarting of productions including paying/hiring certain cast and crew, maintaining idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries of $ 1.0 million in the three months ended June 30, 2022 (three months ended June 30, 2021 - $ 5.9 million).

In the three months ended June 30, 2022, insurance recoveries exceeded the incremental costs expensed in the period, resulting in a net benefit included in direct operating expense.

(4) Transaction and related costs in the three and six months ended September 30, 2022 and 2021 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

(5) In connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment, the Company wrote off approximately $ 7.2 million of development costs as a result of changes in strategy across its theatrical slate.

These charges are excluded from segment results and included in amortization of investment in film and television programs in direct operating expense on the unaudited condensed consolidated statement of operations.

(6) Amounts reflected in direct operating expense include incremental costs associated with the pausing and restarting of productions including paying/hiring certain cast and crew, maintaining idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries of $ 6.9 million and $ 7.9 million, respectively, in the three and six months ended September 30, 2022 (three and six months ended September 30, 2021 - insurance recoveries of $ 2.8 million and $ 8.7 million, respectively).

In the three and six months ended September 30, 2022, and 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.

The Company is in the process of seeking additional insurance recovery for some of these costs.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Changes in the restructuring and other severance liability were as follows for the three months ended June 30, 2022 and 2021:

Three Months Ended

Changes in the restructuring and other severance liability were as follows for the six months ended September 30, 2022 and 2021:

Six Months Ended

September 30,

(Amounts in millions)

5 unchanged sentences

_______________________

(1) As of June 30, 2022, the remaining severance liability of approximately $ 2.3 million is expected to be paid in the next 12 months.

(1) As of September 30, 2022, the remaining severance liability of approximately $ 10.1 million is expected to be paid in the next 12 months.

LIONS GATE ENTERTAINMENT CORP.

10 unchanged sentences

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.

Television Production includes the licensing of Starz original series productions to Starz Networks and LIONSGATE+, 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.

1 unchanged sentence

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 and (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.

multichannel video programming distributors ("MVPDs") including cable operators, satellite television providers and telecommunication companies (collectively, "Distributors") and on a direct-to-consumer basis through the Starz App and (ii) LIONSGATE+, which represents revenues primarily from the OTT distribution of the STARZ premium subscription video services outside of the U.S.

(formerly STARZPLAY International).

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

4 unchanged sentences

Segment information is presented in the table below:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

44 unchanged sentences

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.

The reconciliation of total segment profit to the Company’s loss before income taxes is as follows:

Three Months Ended

The reconciliation of total segment profit to the Company’s income (loss) before income taxes is as follows:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

5 unchanged sentences

( 233.2 ) ( 3.5 ) ( 241.3 ) ( 6.7 )

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

Goodwill impairment (3)

( 1,475.0 ) — ( 1,475.0 ) —

COVID-19 related benefit (charges) included in direct operating expense and distribution and marketing expense (4)

6.1 0.8 7.1 ( 0.8 )

Content charges (5)

( 7.2 ) — ( 7.2 ) —

Adjusted share-based compensation expense (6)

6 unchanged sentences

Other expense ( 5.4 ) ( 2.7 ) ( 10.4 ) ( 4.3 )

Loss on extinguishment of debt ( 1.3 ) ( 26.6 )

Gain (loss) on extinguishment of debt 3.4 ( 0.4 ) 2.1 ( 27.1 )

Gain (loss) on investments ( 3.1 ) 1.5 ( 1.3 ) 1.5

Equity interests income 0.9 0.7

Loss before income taxes $ ( 116.6 ) $ ( 45.2 )

Equity interests income (loss) ( 0.1 ) 0.4 0.8 1.1

Income (loss) before income taxes $ ( 1,808.3 ) $ 8.7 $ ( 1,925.0 ) $ ( 36.4 )

___________________

(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,

2022 2021 2022 2021

(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 14).

(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, 2022, the Company has incurred a benefit of $ 1.0 million, net of insurance recoveries, in incremental direct operating expense (three months ended June 30, 2021 - charges of $ 1.6 million) (see Note 13).

These charges are excluded from segment operating results.

(3) Goodwill impairment reflects the impairment charge recorded in the current quarter related to the Media Networks reporting unit (see Note 5).

(4) During the three and six months ended September 30, 2022 and the three months ended September 30, 2021, the Company has incurred a net benefit in direct operating expense due to insurance recoveries in excess of the incremental costs expensed in the period (see Note 14).

These charges (benefits) are excluded from segment operating results.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(5) Content charges represent certain charges included in direct operating expense in the consolidated statements of operations, and excluded from segment operating results (see Note 14 for further information).

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

1 unchanged sentence

Amount included in restructuring and other (i)

— — ( 0.6 ) —

Adjusted share-based compensation $ 26.6 $ 20.4 $ 34.4 $ 54.9

3 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

4 unchanged sentences

$ 49.4 $ 44.5 $ 97.8 $ 94.5

See Note 9 for revenues by media or product line as broken down by segment for the three months ended June 30, 2022 and 2021.

See Note 10 for revenues by media or product line as broken down by segment for the three and six months ended September 30, 2022 and 2021.

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,

2022 2021 2022 2021

(Amounts in millions)

8 unchanged sentences

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

September 30,

2022 March 31,

12 unchanged sentences

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.

As of June 30, 2022, the Company is not a party to any material pending claims or legal proceeding and is not aware of any other claims that it believes could, individually or in the aggregate, have a material adverse effect on the Company's financial position, results of operations or cash flows.

As of September 30, 2022, the Company is not a party to any material pending claims or legal proceeding and is not aware of any other claims that it believes could, individually or in the aggregate, have a material adverse effect on the Company's financial position, results of operations or cash flows.

Insurance Litigation

During the fiscal year ended March 31, 2022, the Company settled with all of the insurers in its previous lawsuits related to insurance reimbursements associated with its previous Starz shareholder litigation settlement, which resulted in a net settlement amount received by the Company of $ 22.7 million, of which $ 2.5 million is included in the “interest and other income” line item on the unaudited condensed consolidated statement of operations for the three months ended June 30, 2021.

In the three and six months ended September 30, 2021, $ 20.2 million and $ 22.7 million, respectively, of the net settlement amount is included in the “interest and other income” line item on the unaudited condensed consolidated statements of operations.

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, 2022, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 27 months from June 30, 2022):

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

June 30, 2022

As of September 30, 2022, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 24 months from September 30, 2022):

September 30, 2022

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

1 unchanged sentence

British Pound Sterling 0.9 GBP in exchange for $ 1.2 0.76 GBP

Hungarian Forint 798.9 HUF in exchange for $ 2.7 300.22 HUF

Czech Koruna 414.8 CZK in exchange for $ 17.2 24.16 CZK

Euro 4.9 EUR in exchange for $ 6.8 0.72 EUR

1 unchanged sentence

Polish Zloty 8.0 PLN in exchange for $ 1.8 4.49 PLN

Bulgarian Lev 4.4 BGN in exchange for $ 2.7 1.66 BGN

Mexican Peso 61.1 MXN in exchange for $ 3.0 20.11 MXN

12 unchanged sentences

Simultaneously with the termination of the Terminated Swaps, the Company re-designated all other swaps previously not designated (i.e., swaps with effective dates of May 23, 2018, June 25, 2018, July 31, 2018 and December 24, 2018 (the "Re-designated Swaps")) as cash flow hedges of variable rate debt with an aggregate notional amount of $ 1.4 billion, as presented in the Designated Cash Flow Hedges table below.

In addition to the $ 1.4 billion Re-designated Swaps, the Company also has $ 300.0 million of other interest rate swaps designated as cash flow hedges as of June 30, 2022.

Accordingly, at June 30, 2022, the Company has a total of $ 1.7 billion of interest rate swaps designated as cash flow hedges (see Designated Cash Flow Hedges table below).

In addition to the $ 1.4 billion Re-designated Swaps, the Company also has $ 300.0 million of other interest rate swaps designated as cash flow hedges as of September 30, 2022.

Accordingly, at September 30, 2022, the Company has a total of $ 1.7 billion of interest rate swaps designated as cash flow hedges (see Designated Cash Flow Hedges table below).

LIONS GATE ENTERTAINMENT CORP.

30 unchanged sentences

Designated Cash Flow Hedges.

As of June 30, 2022, 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, 2022, the Company had the following pay-fixed interest rate swaps which have been designated as cash flow hedges outstanding (all related to the Company's LIBOR-based debt, see Note 6 and Note 7):

Effective Date Notional Amount Fixed Rate Paid Maturity Date

12 unchanged sentences

Unaudited condensed consolidated statements of operations and comprehensive 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 loss for the three months ended June 30, 2022 and 2021:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

1 unchanged sentence

Forward exchange contracts

Loss recognized in accumulated other comprehensive income $ ( 0.4 ) $ ( 0.2 )

Loss reclassified from accumulated other comprehensive income into direct operating expense $ ( 0.9 ) $ ( 0.3 )

Gain recognized in accumulated other comprehensive income $ 2.1 $ 0.3 $ 1.7 $ 0.2

Gain (loss) reclassified from accumulated other comprehensive income into direct operating expense $ 0.8 $ ( 0.2 ) $ ( 0.1 ) $ ( 0.4 )

Interest rate swaps

8 unchanged sentences

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 8).

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 unaudited condensed consolidated balance sheets.

As of June 30, 2022, there were no swaps outstanding that were subject to

The portion of the swaps reflecting the financing component of the hybrid instrument

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

a master netting arrangement.

discussed above is recorded at amortized cost and reduced over time based on payments.

As of September 30, 2022, there were no swaps outstanding that were subject to a master netting arrangement.

As of March 31, 2022, the gross amount of swaps in an asset and liability position that were subject to a master netting arrangement was $ 169.6 million and $ 147.3 million, respectively, resulting in an asset recorded in other assets - non-current of $ 32.0 million and a liability recorded in other liabilities - non-current of $ 9.8 million.

As of June 30, 2022 and March 31, 2022, the Company had the following amounts recorded in the accompanying unaudited condensed consolidated balance sheets related to the Company's use of derivatives:

June 30, 2022

As of September 30, 2022 and March 31, 2022, the Company had the following amounts recorded in the accompanying unaudited condensed consolidated balance sheets related to the Company's use of derivatives:

September 30, 2022

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

16 unchanged sentences

(1) Includes $ 88.1 million and $ 46.0 million included in other non-current assets and other non-current liabilities, respectively, representing the financing element of certain hybrid instruments, which was offset by the pay-variable receive-fixed interest rate swaps outstanding at March 31, 2022.

As of June 30, 2022, based on the current release schedule, the Company estimates approximately $ 0.7 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income will be reclassified into earnings during the one-year period ending June 30, 2023.

As of June 30, 2022, the Company estimates approximately $ 10.9 million of losses recorded in accumulated other comprehensive income associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending June 30, 2023.

As of September 30, 2022, based on the current release schedule, the Company estimates approximately less than $ 0.1 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income will be reclassified into earnings during the one-year period ending September 30, 2023.

As of September 30, 2022, the Company estimates approximately $ 10.1 million of gains recorded in accumulated other comprehensive income associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending September 30, 2023.

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, 2022 and March 31, 2022.

At June 30, 2022 and March 31, 2022, restricted cash represents amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility, IP Credit Facility and Backlog Financing Facility.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

flows at September 30, 2022 and March 31, 2022.

At September 30, 2022 and March 31, 2022, restricted cash represents primarily amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility, IP Credit Facility and Backlog Financing Facility.

September 30,

2022 March 31,

4 unchanged sentences

Total cash, cash equivalents and restricted cash $ 599.4 $ 384.6

The composition of the Company’s other assets is as follows as of June 30, 2022 and March 31, 2022:

The composition of the Company’s other assets is as follows as of September 30, 2022 and March 31, 2022:

September 30,

2022 March 31,

2 unchanged sentences

Prepaid expenses and other $ 58.3 $ 62.5

Product inventory 13.9 14.1

Restricted cash 26.0 13.4

Contract assets 57.5 40.5

Tax credits receivable 103.1 128.3

2 unchanged sentences

Prepaid expenses and other $ 7.5 $ 10.5

Restricted cash 16.3 —

Accounts receivable 35.1 39.0

Contract assets 11.5 9.3

Tax credits receivable 371.5 316.1

8 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, 2022 and 2021.

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, 2022 and 2021.

LIONS GATE ENTERTAINMENT CORP.

3 unchanged sentences

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, 2022 and 2021:

Three Months Ended

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, 2022 and 2021:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

2 unchanged sentences

Loss recorded related to transfers of receivables 5.2 2.3 8.8 4.2

At June 30, 2022, 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 $ 448.7 million (March 31, 2022 - $ 460.5 million).

At September 30, 2022, 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 $ 434.8 million (March 31, 2022 - $ 460.5 million).

Pooled Monetization Agreement.

In December 2019, the Company entered into a revolving agreement, as amended in July 2021 and July 2022, 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 August 26, 2022.

In December 2019, the Company entered into a revolving agreement, as amended in September 2022, 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 31, 2023.

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 $ 68.7 million as of June 30, 2022 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 $ 78.1 million as of September 30, 2022 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, 2022 and 2021:

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, 2022 and 2021:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

(Amounts in millions)

8 unchanged sentences

Obligations recorded $ 0.4 $ 1.0 $ 3.4 $ 0.9

Loss (gain) recorded related to transfers of receivables $ 1.3 $ ( 0.2 )

Loss recorded related to transfers of receivables $ 0.3 $ 0.4 $ 1.6 $ 0.2

___________________

(1) In addition, during the three months ended June 30, 2022, the Company repurchased $ 20.9 million of receivables previously transferred, as separately agreed upon with the third-party purchasers, in order to monetize such receivables under the individual monetization program discussed above without being subject to the collateral requirements under the pooled monetization program.

(1) In addition, during the six months ended September 30, 2022, the Company repurchased $ 20.9 million of receivables previously transferred, as separately agreed upon with the third-party purchasers, in order to monetize such receivables under the individual monetization program discussed above without being subject to the collateral requirements under the pooled monetization program.

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

At June 30, 2022, 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 $ 78.5 million (March 31, 2022 - $ 79.5 million).

At September 30, 2022, 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 $ 83.4 million (March 31, 2022 - $ 79.5 million).

LIONS GATE ENTERTAINMENT CORP.

7 unchanged sentences

Reclassifications to net loss (1)

June 30, 2022 $ ( 22.7 ) $ 97.9 $ 75.2

September 30, 2022 $ ( 26.8 ) $ 149.1 $ 122.3

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

1 unchanged sentence

Reclassifications to net loss (1)

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

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

___________________

(1) Represents a loss of $ 0.9 million included in direct operating expense and a loss of $ 11.7 million included in interest expense on the unaudited condensed consolidated statement of operations in the three months ended June 30, 2022 (three months ended June 30, 2021 - loss of $ 0.3 million included in direct operating expense and loss of $ 12.1 million included in interest expense) (see Note 16).

(1) Represents a loss of $ 0.1 million included in direct operating expense and a loss of $ 17.0 million included in interest expense on the unaudited condensed consolidated statement of operations in the six months ended September 30, 2022 (six months ended September 30, 2021 - loss of $ 0.4 million included in direct operating expense and loss of $ 24.2 million included in interest expense) (see Note 17).

Supplemental Cash Flow Information

Significant non-cash transactions during the three months ended June 30, 2022 and 2021 include certain interest rate swap agreements, which are discussed in Note 16, "Derivative Instruments and Hedging Activities".

There were no significant non-cash investing or financing activities for the three months ended June 30, 2022 and 2021.

Significant non-cash transactions during the six months ended September 30, 2022 and 2021 include certain interest rate swap agreements, which are discussed in Note 17, "Derivative Instruments and Hedging Activities".

There were no significant non-cash financing activities for the six months ended September 30, 2022 and 2021.

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

Six Months Ended

September 30,

(Amounts in millions)

Non-cash investing activities:

Accrued equity-method investment $ — $ 19.0

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

Subsequent Events

Senior Notes Repurchases.

In July 2022, the Company repurchased $ 18.7 million principal amount of the 5.500 % Senior Notes for $ 14.6 million, together with accrued and unpaid interest.

Backlog Financing Facility.

In August 2022, the Company amended its Backlog Financing Facility and increased the maximum principal amount of the Backlog Financing Facility from $ 125.0 million to $ 175.0 million.

On October 3, 2022, the Company repaid the remaining outstanding amount of $ 100.0 million under the June 2022 Distribution Loan Agreement, which was to mature on December 28, 2025 (see Note 7).

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