What changed in this filing

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Item 1. Financial Statements

2023-02-09 compared with 2022-11-07 · 267 added, 251 removed, 1017 unchanged (34% 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 Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

31 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

2 unchanged sentences

Foreign currency translation adjustments, net of tax 3.6 ( 0.2 ) ( 3.4 ) ( 1.2 )

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

Net unrealized gain on cash flow hedges, net of tax 8.4 21.1 108.5 16.2

Comprehensive income (loss) 27.2 ( 28.0 ) ( 1,815.7 ) ( 82.4 )

11 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

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

Share-based compensation, net of share cancellations for taxes — 1.0 0.3 22.2 — — 23.2 — 23.2

1 unchanged sentence

Noncontrolling interests — — — — — — — ( 0.3 ) ( 0.3 )

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

Net income — — — — 16.6 — 16.6 ( 0.1 ) 16.5

Other comprehensive income — — — — — 12.1 12.1 — 12.1

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 14.1 ) — ( 14.1 ) — ( 14.1 )

Balance at December 31, 2022 83.4 $ 671.5 145.5 $ 2,395.8 $ ( 2,317.9 ) $ 134.4 $ 883.8 $ 1.2 $ 885.0

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, 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 — — 0.1 0.7 — — 0.7 — 0.7

Share-based compensation, net of share cancellations for taxes — 1.1 0.1 19.9 — — 21.0 — 21.0

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

Noncontrolling interests — — — — — — — ( 1.1 ) ( 1.1 )

Net income — — — — 7.5 — 7.5 0.1 7.6

Net loss — — — — ( 45.6 ) — ( 45.6 ) 0.5 ( 45.1 )

Other comprehensive income — — — — — 20.9 20.9 — 20.9

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 11.6 ) — ( 11.6 ) — ( 11.6 )

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 December 31, 2021 83.1 $ 667.1 141.8 $ 2,335.0 $ ( 200.2 ) $ ( 68.3 ) $ 2,733.6 $ 1.8 $ 2,735.4

_____________________

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six Months Ended

Nine Months Ended

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

11 unchanged sentences

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 34.7 ) — ( 34.7 ) — ( 34.7 )

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 December 31, 2022 83.4 $ 671.5 145.5 $ 2,395.8 $ ( 2,317.9 ) $ 134.4 $ 883.8 $ 1.2 $ 885.0

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

4 unchanged sentences

Net loss — — — — ( 83.5 ) — ( 83.5 ) 0.5 ( 83.0 )

Other comprehensive loss — — — — — ( 5.9 ) ( 5.9 ) — ( 5.9 )

Other comprehensive income — — — — — 15.0 15.0 — 15.0

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 33.8 ) — ( 33.8 ) — ( 33.8 )

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 December 31, 2021 83.1 $ 667.1 141.8 $ 2,335.0 $ ( 200.2 ) $ ( 68.3 ) $ 2,733.6 $ 1.8 $ 2,735.4

_____________________

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

September 30,

Nine Months Ended

(Amounts in millions)

10 unchanged sentences

(Gain) loss on extinguishment of debt ( 40.3 ) 28.2

Equity interests income ( 0.8 ) ( 1.1 )

(Gain) loss on investments 1.3 ( 1.5 )

Equity interests income (loss) ( 0.8 ) 1.4

Gain on investments ( 42.1 ) ( 1.2 )

Deferred income taxes ( 0.5 ) 2.6

10 unchanged sentences

Proceeds from the sale of Pantaya — 123.6

Proceeds from the sale of other investments 3.0 —

Proceeds from the sale of equity method and other investments 46.3 —

Investment in equity method investees and other ( 17.5 ) ( 14.0 )

1 unchanged sentence

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

Increase in loans receivable — ( 4.3 )

Capital expenditures ( 36.6 ) ( 22.2 )

3 unchanged sentences

Debt - repurchases and repayments ( 1,548.3 ) ( 2,375.4 )

Film related financing and other obligations - borrowings, net of debt issuance costs 1,137.9 775.7

Film related financing and other obligations - repayments ( 372.2 ) ( 186.6 )

Film related and other obligations - borrowings 1,384.0 954.0

Film related and other obligations - repayments ( 694.8 ) ( 305.3 )

Settlement of financing component of interest rate swaps ( 134.5 ) ( 21.5 )

20 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 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.

Operating results for the three and nine months ended December 31, 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.

17 unchanged sentences

Government Assistance:

In November 2021, the FASB issued guidance which requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model.

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, therefore it will be effective beginning with the Company's financial statements issued for the year ended March 31, 2023.

In November 2021, the Financial Accounting Standards Board ("FASB") issued guidance which requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model.

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, and therefore will be effective beginning with the Company's financial statements issued for the year ending March 31, 2023.

While the adoption of this guidance will not have an impact on the Company's consolidated balance sheet or statement of operations, the adoption of this guidance may require additional annual disclosures in the Company's financial statements for the year ending March 31, 2023, which the Company is currently in the process of assessing.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisitions and Dispositions

Accounting Guidance Adopted in Fiscal 2022

Reference Rate Reform:

In March 2020, the 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.

In December 2022, the FASB issued final guidance deferring the sunset date of the transition relief.

The guidance is applicable to contract modifications made between March 12, 2020 and December 31, 2024 and hedging relationships that exist as of the beginning of an interim period that includes March 12, 2020 and new eligible hedging relationships designated in subsequent periods.

The Company adopted this guidance on July 1, 2021 and is applying its provisions prospectively through December 31, 2024, with no material impact to the Company’s financial statements.

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 Company also formed a strategic content partnership through an investment of a minority preferred equity interest in 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, $ 10.0 million was paid in July 2022, and the remaining $ 10.0 million is to be paid in July 2023.

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).

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

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

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 $ 3,004.1 $ 3,013.6

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:

At December 31, 2022, acquired film and television libraries have remaining unamortized costs of $ 138.4 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 18.4 years (March 31, 2022 - unamortized costs of $ 149.9 million).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

September 30, September 30,

Amortization of investment in film and television programs and licensed program rights by predominant monetization strategy is as follows for the three and nine months ended December 31, 2022 and 2021, and was included in direct operating expense in the unaudited condensed consolidated statements of operations:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

5 unchanged sentences

$ 385.1 $ 388.6 $ 1,284.4 $ 1,118.7

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,

Investment in films and television programs and licensed program rights includes write-downs to fair value.

The following table sets forth impairments by segment and the line item in our unaudited condensed consolidated statement of operations they are recorded in for the three and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

1 unchanged sentence

Impairments by segment:

Included in direct operating expense:

Motion Picture $ 0.6 $ 1.1 $ 1.1 $ 1.2

Television Production — 1.5 4.7 28.1

Included in restructuring and other:

Impairments not included in segment operating results (1)

2 unchanged sentences

________________

(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.

(1) Represents charges related to the Media Networks restructuring plan initiatives, including content impairment of programming in certain international territories associated with the restructuring of LIONSGATE+ (formerly STARPLAY International), and individual content charges pursuant to a strategic review of content performance across Starz's domestic and international platforms resulting in certain programming being removed from those platforms and written down to fair value.

See Note 14 for further information.

The Company's investments consisted of the following:

September 30,

2022 March 31,

3 unchanged sentences

$ 65.0 $ 56.0

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Equity Method Investments:

1 unchanged sentence

These investments include:

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.

STARZPLAY Arabia.

STARZPLAY Arabia (Playco Holdings Limited) offers a STARZ-branded online subscription video-on-demand service in the Middle East and North Africa.

On October 17, 2022, the Company sold a portion of its ownership interest in STARZPLAY Arabia and received net proceeds of $ 43.4 million, and the Company recorded a gain of $ 43.4 million on the sale which is included in gain (loss) on investments in our unaudited condensed consolidated statement of operations.

Subsequent to the transaction, the Company continues to hold a minority ownership interest in STARZPLAY Arabia.

Roadside Attractions .

Roadside Attractions is an independent theatrical distribution company.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pantelion Films.

4 unchanged sentences

Great Point Opportunity Fund is an operating company that operates Lionsgate Studios Yonkers, a studio facility in Yonkers, New York.

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.

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 $ 61.9 $ 59.8

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

3 unchanged sentences

Net loss $ ( 12.7 ) $ ( 16.8 ) $ ( 24.6 ) $ ( 36.7 )

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

4 unchanged sentences

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).

Balance as of December 31, 2022 $ 393.7 $ 401.9 $ 493.9 $ 1,289.5

For the second 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.

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 flow assumptions and implemented certain cost-saving measures.

Accordingly, for the second quarter ended September 30, 2022, 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.

The analysis resulted in a goodwill impairment charge of $ 1.475 billion in the second quarter ended September 30, 2022 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 in the nine months ended December 31, 2022.

Since the impairment charge reduced the carrying value of the Media Networks reporting unit to its fair value, at September 30, 2022 the fair value and carrying value of the Media Networks reporting unit were equal and thus it continues to be considered "at risk" of impairment.

During the third quarter ended December 31, 2022, the Company performed a qualitative goodwill impairment assessment for all reporting units which considered the continuing micro and macroeconomic environment, industry considerations, reporting unit performance and updated forecasts, and determined that since the prior quarter's quantitative assessment, there were no events or circumstances that rise to a level that would more-likely-than-not reduce the fair value of those reporting units below their carrying values;

therefore, no quantitative goodwill impairment analysis was performed.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 September 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 December 31, 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 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.

There were no letters of credit outstanding at December 31, 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 and guarantee agreement dated December 8, 2016, as amended (the "Credit Agreement"), on the total Revolving Credit Facility of $ 1.25 billion less the amount drawn.

Maturity Date:

5 unchanged sentences

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)

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 6.14 % as of December 31, 2022, before the impact of interest rate swaps).

• Term Loan B:

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).

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 6.64 % as of December 31, 2022, before the impact of interest rate swaps).

Required Principal Payments:

4 unchanged sentences

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Optional Prepayment:

6 unchanged sentences

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

As of December 31, 2022, the Company was in compliance with all applicable covenants.

Change in Control.

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

As of December 31, 2022, the Company was in compliance with all applicable covenants.

Change in Control.

2 unchanged sentences

Capacity to Pay Dividends

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.

At December 31, 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 $ 1,920.8 million and accumulated deficit of $ 2,317.9 million were deemed free of restrictions from paying dividends at December 31, 2022.

Debt Transactions:

2 unchanged sentences

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.

In the three and nine months ended December 31, 2022, the Company repurchased $ 123.7 million and $ 142.4 million, respectively, principal amount of the 5.500 % Senior Notes for $ 81.6 million and $ 96.2 million, respectively, together with accrued and unpaid interest.

LIONS GATE ENTERTAINMENT CORP.

5 unchanged sentences

Credit Agreement Amendment.

On April 6, 2021, the Company amended its Credit Agreement to, among other things, extend the maturity of a portion of its revolving credit commitments, amounting to $ 1.25 billion, and a portion of its outstanding term A loans, amounting to $ 444.9 million to April 6, 2026, and make certain other changes to the covenants and other provisions therein.

On April 6, 2021, the Company amended its Credit Agreement to, among other things, extend the maturity (the "Extension") of a portion of its revolving credit commitments, amounting to $ 1.25 billion, and a portion of its outstanding term A loans, amounting to $ 444.9 million to April 6, 2026, and make certain other changes to the covenants and other provisions therein.

Termination of a Portion of Revolving Credit Facility Commitments.

On November 2, 2021, the Company terminated its revolving credit commitments with a maturity of March 22, 2023, amounting to $ 250.0 million remaining after giving effect to the Extension (the "Termination").

After giving effect to the Termination, the Company's remaining revolving credit commitments under its Credit Agreement amounted to $ 1.25 billion with a maturity of April 6, 2026 (the "Revolving Credit Facility").

Term Loan B Repurchases.

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).

During the nine months ended December 31, 2021, the Company completed a series of repurchases of the Term Loan B and, in aggregate, paid $ 95.3 million to repurchase $ 96.0 million principal amount of the Term Loan B ( none in the three months ended December 31, 2021).

(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 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,

During the three and nine months ended December 31, 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

December 31, Nine Months Ended

2022 2021 2022 2021

(Gain) Loss on Extinguishment of Debt:

Term Loan A prepayment $ — $ — $ 1.3 $ —

Senior Notes repurchases, redemption and issuance ( 3.4 ) 24.7

Senior Notes repurchases in 2022;

Senior Notes redemption and issuance in 2021 ( 38.2 ) — ( 41.6 ) 24.7

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

Termination of a portion of Revolving Credit Facility commitments — 1.1 — 1.1

Term Loan B repurchases and other — — — 0.7

3 unchanged sentences

Film Related and Other Obligations

September 30,

2022 March 31,

1 unchanged sentence

Program rights and film obligations $ 260.9 $ 278.4

Film related financing and other obligations:

Film related obligations:

Production Loans 1,435.7 966.3

1 unchanged sentence

Programming Notes 54.2 96.4

Backlog Financing Facility and Other 318.4 —

Backlog Facility and Other 233.6 —

IP Credit Facility 152.3 123.5

Total film related financing and other obligations 2,181.0 1,410.2

Total film related obligations 2,107.0 1,410.2

Unamortized debt issuance costs ( 11.8 ) ( 8.5 )

Total film related financing and other obligations, net 2,167.9 1,401.7

Total film related obligations, net 2,095.2 1,401.7

Less current portion ( 1,261.2 ) ( 951.1 )

2 unchanged sentences

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.

Film Related Financing and Other Obligations

Film related financing and other obligations include production loans, programming notes, the Company's Production Tax Credit Facility, IP Credit Facility, Backlog Financing Facility and other.

Film Related Obligations

Film related obligations include production loans, programming notes, the Company's Production Tax Credit Facility, IP Credit Facility, Backlog Facility and other.

Production Loans .

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).

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 SOFR and LIBOR-based interest at a weighted average rate of 6.43 % (before the impact of interest rate swaps, see Note 17 for interest rate swaps).

Production loans amounting to $ 1,344.5 million are secured by collateral which consists of the underlying rights related to the intellectual property (i.e.

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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 %.

The Company's programming notes have contractual repayment dates in January and April 2023, and incur SOFR and LIBOR-based interest at a weighted average rate of 7.93 %.

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

Production Tax Credit Facility.

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.

In January 2021, as amended on March 29, 2022, the Company entered into a non-recourse senior secured revolving credit facility (the "Production Tax Credit Facility") based on and secured by collateral consisting solely 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 4.64 % at September 30, 2022).

Cash collections from the underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility.

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

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

As of December 31, 2022, there were no material amounts available under the Production Tax Credit Facility.

IP Credit Facility.

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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, 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.

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 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.

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.

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 4.29 % at September 30, 2022).

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.

Backlog Facility and Other:

Backlog Facility.

In March 2022, as amended in August 2022, certain subsidiaries of the Company entered into a committed secured revolving credit facility (the "Backlog Facility") based on and secured by collateral consisting solely 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 Facility is $ 175.0 million, subject to the amount of eligible collateral contributed to the facility.

Advances under the Backlog 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.

The Backlog 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 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

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

In June 2022, the Company borrowed $ 118.6 million under a loan agreement which was secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements (the "June 2022 Distribution Loan"), which was to mature on December 28, 2025.

The June 2022 Distribution Loan was fully repaid, with $ 18.6 million repaid during the quarter ended September 30, 2022, and the remaining outstanding amount of $ 100.0 million repaid on October 3, 2022.

In September 2022, the Company borrowed $ 43.4 million under a loan agreement which matures on March 28, 2026 (the "September 2022 Distribution Loan") and bears 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 5.97 % at December 31, 2022).

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).

In December 2022, the Company borrowed $ 16.2 million under a loan agreement which matures on November 1, 2025 (the "December 2022 Distribution Loan", and together with the September 2022 Distribution Loan and June 2022 Distribution Loan, the "Distribution Loans"), and bears interest at a rate equal to Term SOFR plus 0.11 %, plus an applicable margin amounting to 2.10 % per annum (effective interest rate of 6.57 % at December 31, 2022).

The December 2022 Distribution Loan provides for total borrowings up to an aggregate of $ 18.7 million.

Outstanding loan balances under the Distribution Loans 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.

As of December 31, 2022, $ 58.6 million remains outstanding under the Distribution Loans.

Fair Value Measurements

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• 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 September 30, 2022 and March 31, 2022:

September 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 December 31, 2022 and March 31, 2022:

December 31, 2022 March 31, 2022

Level 1 Level 2 Total Level 1 Level 2 Total

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________________

(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).

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

September 30, 2022 March 31, 2022

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

December 31, 2022 March 31, 2022

(Amounts in millions)

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Programming Notes 54.2 54.2 96.4 96.4

Backlog Financing Facility and Other 316.1 318.4 — —

Backlog Facility and Other 231.2 233.6 — —

IP Credit Facility 149.1 152.3 120.6 123.5

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

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

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

Noncontrolling Interests

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

Six Months Ended

September 30,

Nine Months Ended

(Amounts in millions)

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Pilgrim Media Group.

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

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

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

On November 14, 2022, the noncontrolling interest holder exercised the right to put a portion of the noncontrolling interest, equal to 25 % of Pilgrim Media Group.

As of December 31, 2022, the purchase of shares pursuant to the exercise of the put had not been completed.

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

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

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Revenue by Segment, Market or Product Line

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

The table below presents revenues by segment, market or product line for the three and nine months ended December 31, 2022 and 2021:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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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 September 30, 2022 are as follows:

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at December 31, 2022 are as follows:

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

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

Revenues of $ 34.4 million and $ 116.6 million, including variable and fixed fee arrangements, were recognized during the three and nine months ended December 31, 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.

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

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.

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

Accounts Receivable.

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

Uncollectible accounts written-off September 30, 2022

Uncollectible accounts written-off December 31, 2022

(Amounts in millions)

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

See Note 18 for contract assets at December 31, 2022 and March 31, 2022.

Deferred Revenue.

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

Revenues of $ 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.

Revenues of $ 11.4 million and $ 141.8 million, respectively, were recognized during the three and nine months ended December 31, 2022 related to the balance of deferred revenue at March 31, 2022.

LIONS GATE ENTERTAINMENT CORP.

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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,

Basic net income (loss) per share for the three and nine months ended December 31, 2022 and 2021 is presented below:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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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,

Diluted net income (loss) per common share for the three and nine months ended December 31, 2022 and 2021 is presented below:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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Diluted net income (loss) per common share $ 0.07 $ ( 0.20 ) $ ( 8.41 ) $ ( 0.37 )

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).

As a result of the net loss in the nine months ended December 31, 2022 and the three and nine months ended December 31, 2021, the dilutive effect of the share purchase options, 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 nine months ended December 31, 2022 totaled 2.5 million (three and nine months ended December 31, 2021 - 4.5 million and 5.3 million, respectively).

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,

Additionally, for the three and nine months ended December 31, 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 Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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Other issuable shares 4.3 2.3 3.2 2.1

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

Total weighted average anti-dilutive shares issuable excluded from diluted net income (loss) per common share 35.1 18.3 28.5 18.7

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 September 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 December 31, 2022 and March 31, 2022.

The table below outlines common shares reserved for future issuance:

September 30,

2022 March 31,

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(b) Share-based Compensation

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,

The Company recognized the following share-based compensation expense during the three and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

8 unchanged sentences

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:

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the nine months ended December 31, 2022:

Stock Options and SARs Restricted Stock and Restricted Share Units

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Forfeited or expired ( 1.1 ) $ 16.58 ( 1.5 ) $ 17.21 — — ( 0.3 ) $ 10.59

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

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

Outstanding at December 31, 2022 4.3 $ 26.31 20.6 $ 15.22 — (1)

$ 10.95 14.5 $ 9.49

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

During the three and nine months ended December 31, 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 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 income tax provision for the three and nine months ended December 31, 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 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 for the three and nine months ended December 31, 2022 and 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 for the three and nine months ended December 31, 2021 was also impacted by additional uncertain tax benefits related to state income taxes identified during state audits.

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.

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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 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,

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

During the three and nine months ended December 31, 2022 and 2021, the Company also incurred certain other unusual charges or benefits, 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 or benefits and the statement of operations line items they are included in for the three and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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— 0.2 0.1 0.9

Transaction and related costs (4)

Transaction and other costs (benefits) (4)

( 9.4 ) 0.3 ( 0.2 ) 2.5

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_______________________

(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.

(1) Media Networks Restructuring:

For the second quarter 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).

These changes in forecasted cash flow resulted in an impairment of $ 1.475 billion of goodwill related to the Media Networks segment in the second quarter ended September 30, 2022, as discussed in Note 5.

For the third quarter ended December 31, 2022, due to the continuing macro and microeconomic conditions which led to the LIONSGATE+ restructuring, the Company expanded its restructuring plan discussed above to identify additional cost-saving initiatives, which included a strategic review of content performance across Starz's domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value.

As a result of these restructuring initiatives, the Company recorded content impairment charges associated with impairment of programming related to the territories being exited and individual content abandonment upon removal of certain titles from the Starz platforms related to the Media Networks segment in the three and nine months ended December 31, 2022 of $ 80.8 million and $ 293.8 million, respectively.

The Company is in the process of executing its LIONSGATE+ restructuring plan including exiting the territories discussed above and its strategic review of content performance for consideration of removal from the Company's various platforms and estimates it will incur additional charges ranging from approximately $ 100 million to $ 125 million related to certain contractual content commitments or programming content impairment charges, among other items, as the Company fully implements the plan.

Of these total estimated future charges, the net future cash outlay is estimated to range from approximately $ 75 million to $ 100 million, which includes content commitments on content in territories being exited and estimates of payments on content that may be abandoned as part of the ongoing strategic review, as well as the incremental cost related to the restructuring.

Of the content impairment charges recorded in the nine months ended December 31, 2022, approximately $ 85 million reflects the remaining amounts payable for this content.

As the Company continues to fully implement the plan, including further strategic review of content performance, the Company may incur additional content impairment charges beyond the estimates provided.

The Company expects the restructuring plan to be substantially completed by March 31, 2023.

Other Impairments:

Amounts in the nine months ended December 31, 2022 also include an impairment of an operating lease right-of-use asset related to the Studio business and corporate facilities amounting to $ 5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company.

(2) Severance costs were primarily related to the restructuring activities and other cost-saving initiatives.

(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.

(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.

(4) Transaction and other costs in the three and nine months ended December 31, 2022 and 2021 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters.

In the three and nine months ended December 31, 2022, these amounts include a benefit of $ 11.0 million for a settlement of a legal matter related to the Media Networks segment.

(5) In the nine months ended December 31, 2022, 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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(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 $ 2.8 million and $ 10.7 million, respectively, in the three and nine months ended December 31, 2022 (three and nine months ended December 31, 2021 - insurance recoveries of $ 5.0 million and $ 13.6 million, respectively).

In the three and nine months ended December 31, 2022 and 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.

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,

Changes in the restructuring and other severance liability were as follows for the nine months ended December 31, 2022 and 2021:

Nine Months Ended

(Amounts in millions)

5 unchanged sentences

_______________________

(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.

(1) As of December 31, 2022, the remaining severance liability of approximately $ 11.3 million is expected to be paid in the next 12 months.

LIONS GATE ENTERTAINMENT CORP.

23 unchanged sentences

Segment information is presented in the table below:

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

46 unchanged sentences

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,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

26 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 Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

3 unchanged sentences

Adjusted depreciation and amortization $ 9.8 $ 11.7 $ 29.5 $ 32.7

(2) Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable (see Note 14).

(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).

(2) Restructuring and other includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable (see Note 14).

(3) Goodwill impairment reflects the impairment charge recorded in the nine months ended December 31, 2022 related to the Media Networks reporting unit (see Note 5).

(4) During the three and nine months ended December 31, 2022 and 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.

3 unchanged sentences

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

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

8 unchanged sentences

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

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

5 unchanged sentences

$ 53.4 $ 50.3 $ 151.1 $ 144.8

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.

See Note 10 for revenues by media or product line as broken down by segment for the three and nine months ended December 31, 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 Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

9 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 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.

As of December 31, 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.

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.

During the nine months ended December 31, 2021, 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 in the nine months ended December 31, 2021, which is included in the “interest and other income” line item on the unaudited condensed consolidated statements of operations.

LIONS GATE ENTERTAINMENT CORP.

7 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 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

As of December 31, 2022, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 33 months from December 31, 2022):

December 31, 2022

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

5 unchanged sentences

Polish Zloty 8.0 PLN in exchange for $ 1.8 4.49 PLN

Mexican Peso 61.1 MXN in exchange for $ 3.0 20.11 MXN

Interest Rate Swaps

6 unchanged sentences

Cash settlements related to interest rate contracts are generally classified as operating activities on the consolidated statements of cash flows.

However, due to a financing component on a portion of our previously outstanding interest rate swaps (see Terminated Swaps, Designated Cash Flow Hedges at March 31, 2022 table below), the cash flows related to these contracts are classified as financing activities through the date of termination.

However, due to a financing component (debt host) on a portion of our previously outstanding interest rate swaps (see Terminated Swaps, Designated Cash Flow Hedges at March 31, 2022 table below), the cash flows related to these contracts are classified as financing activities through the date of termination.

May 2022 Transactions :

2 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 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).

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 December 31, 2022.

Accordingly, at December 31, 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.

11 unchanged sentences

(1) Subject to a mandatory early termination date of March 23, 2025.

(2) These pay-fixed interest rate swaps were considered hybrid instruments with a financing component and an embedded at-market derivative that was designated as a cash flow hedge.

(2) These pay-fixed interest rate swaps were considered hybrid instruments with a financing component (debt host) and an embedded at-market derivative that was designated as a cash flow hedge.

Not Designated Cash Flow Hedges at March 31, 2022:

16 unchanged sentences

Designated Cash Flow Hedges.

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):

As of December 31, 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

11 unchanged sentences

Financial Statement Effect of Derivatives

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 and six months ended September 30, 2022 and 2021:

Three Months Ended Six Months Ended

September 30, September 30,

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 and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

2 unchanged sentences

Forward exchange contracts

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 )

Gain recognized in accumulated other comprehensive income (loss) $ 2.7 $ 1.0 $ 4.4 $ 1.2

Gain (loss) reclassified from accumulated other comprehensive income (loss) into direct operating expense $ ( 0.6 ) $ 1.0 $ ( 0.7 ) $ 0.6

Interest rate swaps

Gain (loss) recognized in accumulated other comprehensive income $ 44.6 $ 6.5 $ 81.3 $ ( 29.7 )

Loss reclassified from accumulated other comprehensive income into interest expense $ ( 3.2 ) $ ( 3.5 ) $ ( 9.2 ) $ ( 7.2 )

Gain (loss) recognized in accumulated other comprehensive income (loss) $ 6.5 $ 8.3 $ 87.8 $ ( 21.4 )

Gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense $ 3.6 $ ( 4.2 ) $ ( 5.7 ) $ ( 11.5 )

Derivatives not designated as cash flow hedges:

Interest rate swaps

Loss reclassified from accumulated other comprehensive income into interest expense $ ( 2.2 ) $ ( 8.5 ) $ ( 7.8 ) $ ( 17.0 )

Loss reclassified from accumulated other comprehensive income (loss) into interest expense $ ( 2.1 ) $ ( 8.5 ) $ ( 9.9 ) $ ( 25.5 )

Total direct operating expense on consolidated statements of operations $ 584.7 $ 517.9 $ 1,744.7 $ 1,487.2

1 unchanged sentence

Unaudited condensed consolidated balance sheets:

The Company classifies its forward foreign exchange contracts and interest rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (see Note 8).

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

similar instruments (see Note 8).

The portion of the swaps reflecting the financing component (debt host) 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 September 30, 2022, there were no swaps outstanding that were subject to a master netting arrangement.

As of December 31, 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 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

As of December 31, 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:

December 31, 2022

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

15 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 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.

(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 (debt host) of certain hybrid instruments, which was offset by the pay-variable receive-fixed interest rate swaps outstanding at March 31, 2022.

As of December 31, 2022, based on the current release schedule, the Company estimates approximately $ 3.3 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 December 31, 2023.

As of December 31, 2022, the Company estimates approximately $ 25.7 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 December 31, 2023.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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,

At December 31, 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 Facility.

2022 March 31,

4 unchanged sentences

Total cash, cash equivalents and restricted cash $ 471.0 $ 384.6

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

September 30,

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

2022 March 31,

19 unchanged sentences

The Company accounts for the transfers of these receivables as a sale, removes (derecognizes) the carrying amount of the receivables from its balance sheets and classifies the proceeds received as cash flows from operating activities in the statements of cash flows.

The Company records a loss on the sale of these receivables reflecting the net proceeds received (net of any obligations incurred), less the carrying amount of the receivables transferred.

The loss is reflected in the "other expense" line item on the 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 and six months ended September 30, 2022 and 2021.

The Company records a loss on the sale of these receivables reflecting

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the net proceeds received (net of any obligations incurred), less the carrying amount of the receivables transferred.

The loss is reflected in the "other expense" line item on the 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 and nine months ended December 31, 2022 and 2021.

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 and six months ended September 30, 2022 and 2021:

Three Months Ended Six Months Ended

September 30, September 30,

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

3 unchanged sentences

Loss recorded related to transfers of receivables 10.0 2.1 18.8 6.2

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).

At December 31, 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 $ 522.5 million (March 31, 2022 - $ 460.5 million).

Pooled Monetization Agreement.

1 unchanged sentence

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 $ 78.1 million as of September 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 $ 54.3 million as of December 31, 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 and six months ended September 30, 2022 and 2021:

Three Months Ended Six Months Ended

September 30, September 30,

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the three and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

11 unchanged sentences

___________________

(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 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).

(1) In addition, during the three and nine months ended December 31, 2022, the Company repurchased $ 6.5 million and $ 27.4 million, respectively, 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 (three and nine months ended December 31, 2021 - the Company repurchased $ 25.5 million of receivables previously transferred).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

At December 31, 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 $ 76.7 million (March 31, 2022 - $ 79.5 million).

Accumulated Other Comprehensive Income (Loss)

5 unchanged sentences

Reclassifications to net loss (1)

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

December 31, 2022 $ ( 23.1 ) $ 157.5 $ 134.4

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

Other comprehensive income (loss) ( 1.0 ) ( 29.5 ) ( 30.5 )

Other comprehensive loss ( 1.2 ) ( 20.2 ) ( 21.4 )

Reclassifications to net loss (1)

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

December 31, 2021 $ ( 16.3 ) $ ( 52.0 ) $ ( 68.3 )

___________________

(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).

(1) Represents a loss of $ 0.7 million included in direct operating expense and a loss of $ 15.6 million included in interest expense on the unaudited condensed consolidated statement of operations in the nine months ended December 31, 2022 (nine months ended December 31, 2021 - gain of $ 0.6 million included in direct operating expense and loss of $ 37.0 million included in interest expense) (see Note 17).

Supplemental Cash Flow Information

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.

Significant non-cash transactions during the nine months ended December 31, 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 nine months ended December 31, 2022 and 2021.

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

Six Months Ended

September 30,

Nine Months Ended

(Amounts in millions)

1 unchanged sentence

Accrued equity-method investment $ — $ 19.0

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Subsequent Events

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