What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-05-25 compared with 2022-05-26 · 587 added, 544 removed, 1851 unchanged (38% of the section changed)

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• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a materially effect on the financial statements.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Because of the inherent limitations, internal controls over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management has made an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2023.

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Their report is included below.

Inherent Limitation on Effectiveness of Controls and Procedures

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Because of the inherent limitations, internal controls over financial reporting may not prevent or detect misstatements.

Changes in Internal Control over Financial Reporting

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Opinion on Internal Control Over Financial Reporting

We have audited Lions Gate Entertainment Corp.’s (the Company) internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2022 consolidated financial statements and the related notes and schedule listed in the Index at Item 15(a) and our report dated May 26, 2022 expressed an unqualified opinion thereon.

We have audited Lions Gate Entertainment Corp.’s internal control over financial reporting as of March 31, 2023, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Lions Gate Entertainment Corp.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended March 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated May 25, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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OTHER INFORMATION.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this Item is incorporated by reference to our Proxy Statement for our 2023 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2023.

We have adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees.

The Code of Business Conduct and Ethics is available on our website at investors.lionsgate.com.

If we ever were to amend or waive any provision of our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or any person performing similar functions, we intend to satisfy our disclosure obligations, if any, with respect to any such waiver or amendment by posting such information on our website set forth above rather than by filing a Current Report on Form 8-K.

EXECUTIVE COMPENSATION.

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

Includes $ 2.5 million related to accounts receivable previously reserved for bad debt from customers in Russia, related to Russia's invasion of Ukraine.

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

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10.15* Employment Agreement between Lions Gate Entertainment Corp.

and Brian Goldsmith dated as of October 1, 2018

10-Q 10.39 12/31/2018

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

and Brian Goldsmith dated June 22, 2020

10-Q 10.36 8/6/2020

10.16* Employment Agreement between Lions Gate Entertainment Corp.

Berg dated as of May 16, 2018

10-Q 10.36 8/8/2019

10.16.1* Employment Agreement between Lions Gate Entertainment Corp.

Berg dated as of May 15, 2020

10-Q 10.37 8/6/2020

10.17* Employment Agreement between Lions Gate Entertainment Corp.

Barge dated November 1, 2019

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8-K 10.1 8/26/2020

10.16.1* First Amendment to Employment Agreement, dated August 12, 2022, between the Company and Jon Feltheimer

8-K 10.1 8/15/2022

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

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8-K 10.1 12/21/2020

Exhibit Number Exhibit Description Incorporated by Reference

Form Exhibit Filing Date/

Period End Date

10.18* Waiver and General Release Agreement dated February 15, 2023

8-K 10.1 2/17/2023

10.19x* Employment Agreement between Lions Gate Entertainment Corp.

and Brian Goldsmith dated as of October 1, 2022

10.20x* Employment Agreement between Lions Gate Entertainment Corp.

and Bruce Tobey dated as of March 27, 2023

21.1x Subsidiaries of the Company

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates so indicated.

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

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

Barge, severally and not jointly, to be his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in such person’s name, place and stead, in any and all capacities, to sign any amendments to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023;

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Audited Financial Statements

Report of Ernst & Young, LLP , I ndependent Registered Public Accounting Firm (PCAOB ID:

Report of Ernst & Young, LLP , Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets — March 31, 2023 and 2022

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

Critical Audit Matter

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

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

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

Critical Audit Matters

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

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

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

Pre-release Film Impairments

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

As disclosed in Note 3 to the consolidated financial statements “Investment in Films and Television Programs and Licensed Program Rights,” total impairment charges on investment in films and television programs related to theatrical films were $1.2 million for the year ended March 31, 2022 and the unamortized balance related to completed and not released and in progress theatrical films was $500.8 million at March 31, 2022.

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

Description of the Matter As disclosed in Note 1 to the consolidated financial statements, Investment in Films and Television Programs is stated at the lower of unamortized cost or estimated fair value.

As disclosed in Note 3 to the consolidated financial statements, total impairment charges on investment in films and television programs related to theatrical films were $6.2 million for the year ended March 31, 2023 and the unamortized balance related to completed and not released and in progress theatrical films was $561.5 million at March 31, 2023.

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

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

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

To test the assessment of unreleased theatrical films for impairment, our audit procedures included, among others, testing the completeness and accuracy of the underlying data as well as the significant assumptions mentioned above.

For example, we assessed management’s assumptions by comparing them to historical performance of comparable films and to current operating information, and we considered the historical accuracy of management’s estimates.

To test the assessment of unreleased theatrical films for impairment, our audit procedures included, among others, evaluating unreleased theatrical films for indicators of impairment and testing the completeness and accuracy of the underlying data as well as the significant assumptions mentioned above.

For example, we assessed management’s assumptions by comparing them to historical performance of comparable films and to current operating information, we evaluated test audience results when available, and we considered the historical accuracy of management’s estimates.

We also performed sensitivity analyses to evaluate the potential changes in the expected profitability of unreleased films resulting from reasonable changes in the assumptions.

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

As disclosed in Note 6 to the consolidated financial statements, the Company recorded a goodwill impairment charge of $1.475 billion during the year ended March 31, 2023 related to the Media Networks reporting unit, and the remaining goodwill balance was $1.3 billion at March 31, 2023.

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

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

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

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

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

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

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

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

/s/ Ernst & Young LLP

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Total assets $ 7,426.2 $ 8,991.2

Accounts payable and accrued liabilities $ 585.8 545.4

Accounts payable $ 368.1 352.1

Content related payables 184.1 199.6

Other accrued liabilities 273.4 233.7

Participations and residuals 549.3 468.5

Film related and other obligations 951.1 385.0

Film related obligations 1,007.2 751.5

Debt - short term portion 41.4 222.8

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Participations and residuals 329.6 265.1

Film related and other obligations 729.0 318.5

Film related obligations 1,016.4 650.3

Other liabilities 317.9 377.4

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Deferred tax liabilities 31.8 38.8

Redeemable noncontrolling interest 321.2 219.1

Total liabilities 6,296.6 5,986.6

Commitments and contingencies (Note 17)

Redeemable noncontrolling interest 343.6 321.2

Class A voting common shares, no par value, 500.0 shares authorized, 83.5 shares issued (March 31, 2022 - 83.3 shares issued)

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Accumulated deficit ( 2,439.6 ) ( 369.7 )

Accumulated other comprehensive income (loss) 29.3 ( 83.3 )

Accumulated other comprehensive income 120.9 29.3

Total Lions Gate Entertainment Corp.

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Total equity 786.0 2,683.4

Total liabilities and equity $ 8,991.2 $ 8,306.2

Total liabilities, redeemable noncontrolling interest and equity $ 7,426.2 $ 8,991.2

See accompanying notes.

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Restructuring and other 411.9 16.8 24.7

Goodwill impairment 1,475.0 — —

Gain on sale of Pantaya — — ( 44.1 )

Total expenses 5,712.5 3,595.3 3,100.9

Operating income 9.0 170.6 2.8

Operating income (loss) ( 1,857.7 ) 9.0 170.6

Interest expense ( 221.2 ) ( 176.0 ) ( 181.5 )

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Gain (loss) on extinguishment of debt 57.4 ( 28.2 ) —

Gain (loss) on investments 1.3 0.5 ( 0.5 )

Equity interests loss ( 3.0 ) ( 6.1 ) ( 17.2 )

Gain on investments 44.0 1.3 0.5

Equity interests income (loss) 0.5 ( 3.0 ) ( 6.1 )

Loss before income taxes ( 1,997.5 ) ( 177.0 ) ( 17.4 )

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Foreign currency translation adjustments, net of tax ( 1.9 ) ( 4.6 ) 3.7

Net unrealized gain (loss) on cash flow hedges, net of tax 117.2 119.0 ( 125.1 )

Net unrealized gain on cash flow hedges, net of tax 93.5 117.2 119.0

Comprehensive income (loss) ( 1,927.2 ) ( 92.8 ) 88.2

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See accompanying notes.

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF EQUITY

Class A Voting

Common Shares Class B Non-Voting

Common Shares Retained Earnings (Accumulated Deficit) Accumulated

Common Shares Accumulated Deficit Accumulated

Comprehensive

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Share-based compensation, net of share cancellations for taxes 0.2 4.7 1.6 72.8 — — 77.5 — 77.5

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

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

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

Noncontrolling interests — — — — — — — ( 0.6 ) ( 0.6 )

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

Other comprehensive loss — — — — — ( 125.7 ) ( 125.7 ) — ( 125.7 )

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

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

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

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

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

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

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

Net loss — — — — ( 188.2 ) — ( 188.2 ) 0.5 ( 187.7 )

Other comprehensive income — — — — — 112.6 112.6 — 112.6

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Noncontrolling interests — — — — — — — ( 0.9 ) ( 0.9 )

Net income (loss) — — — — ( 188.2 ) — ( 188.2 ) 0.5 ( 187.7 )

Net loss — — — — ( 2,010.2 ) — ( 2,010.2 ) 0.6 ( 2,009.6 )

Other comprehensive income — — — — — 91.6 91.6 — 91.6

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LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF EQUITY

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Net loss $ ( 2,018.8 ) $ ( 205.4 ) $ ( 34.5 )

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

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 180.3 177.9 188.5

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Other amortization 69.2 92.5 73.2

Goodwill impairment 1,475.0 — —

Content and other impairments 385.2 — —

Gain on sale of Pantaya — — ( 44.1 )

Loss (gain) on extinguishment of debt 28.2 — ( 5.4 )

Equity interests loss 3.0 6.1 17.2

(Gain) loss on investments ( 1.3 ) ( 0.5 ) 0.5

(Gain) loss on extinguishment of debt ( 57.4 ) 28.2 —

Equity interests income (loss) ( 0.5 ) 3.0 6.1

Gain on investments ( 44.0 ) ( 1.3 ) ( 0.5 )

Deferred income taxes ( 5.3 ) ( 1.7 ) 3.4

Changes in operating assets and liabilities:

Accounts receivable, net and other assets ( 256.9 ) 133.9 397.5

Proceeds from the termination of interest rate swaps 188.7 — —

Accounts receivable, net ( 140.6 ) ( 44.5 ) 137.9

Investment in films and television programs and program rights, net ( 1,979.2 ) ( 2,211.7 ) ( 1,616.7 )

Other assets ( 41.9 ) ( 212.4 ) ( 4.0 )

Accounts payable and accrued liabilities ( 2.9 ) 1.4 32.7

Participations and residuals 145.4 ( 71.3 ) ( 49.1 )

Program rights and other film obligations 64.9 ( 64.9 ) 6.8

Content related payables ( 35.1 ) 64.9 ( 64.9 )

Deferred revenue ( 25.4 ) 1.3 47.9

Net Cash Flows Provided By (Used In) Operating Activities ( 660.9 ) ( 0.5 ) 614.6

Net Cash Flows Used In Operating Activities ( 114.3 ) ( 660.9 ) ( 0.5 )

Investing Activities:

Proceeds from the sale of Pantaya — 123.6 —

Proceeds from the sale of other investments 1.5 4.1 —

Proceeds from the sale of equity method and other investments 46.3 1.5 4.1

Investment in equity method investees and other ( 17.5 ) ( 14.0 ) ( 0.2 )

Distributions from equity method investees 7.2 — —

Distributions from equity method investees and other 1.9 7.2 —

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

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Debt - repurchases and repayments ( 1,880.8 ) ( 2,693.9 ) ( 267.6 )

Production and related loans - borrowings, net of debt issuance costs 1,043.2 392.5 59.0

Production and related loans - repayments ( 256.1 ) ( 53.0 ) ( 293.8 )

IP Credit Facility and other financing advances, net of debt issuance costs 210.2 — —

IP Credit Facility and other financing repayments ( 91.5 ) — —

Interest rate swap settlement payments ( 28.5 ) ( 22.3 ) —

Film related obligations - borrowings 1,688.6 1,253.4 392.5

Film related obligations - repayments ( 1,073.0 ) ( 347.6 ) ( 53.0 )

Settlement of financing component of interest rate swaps ( 134.5 ) ( 28.5 ) ( 22.3 )

Repurchase of common shares — — ( 2.2 )

Purchase of noncontrolling interest ( 36.5 ) — —

Distributions to noncontrolling interest ( 7.6 ) ( 1.5 ) ( 3.4 )

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Tax withholding required on equity awards ( 19.2 ) ( 35.1 ) ( 7.7 )

Net Cash Flows Provided By (Used In) Financing Activities 599.4 237.9 ( 426.1 )

Net Cash Flows Provided By Financing Activities 63.8 599.4 237.9

Net Change In Cash, Cash Equivalents and Restricted Cash ( 68.8 ) ( 142.0 ) 206.3

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See accompanying notes.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Description of Business, Basis of Presentation and Significant Accounting Policies

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(the “Company,” “Lionsgate,” "Lions Gate," “we,” “us” or “our”) encompasses world-class motion picture and television studio operations aligned with the STARZ premium global subscription platform to bring a unique and varied portfolio of entertainment to consumers around the world.

The Company’s film, television, subscription and location-based entertainment businesses are backed by a 17,000 -title library and a valuable collection of iconic film and television franchises.

The Company’s film, television, subscription and location-based entertainment businesses are backed by an 18,000 -title library and a valuable collection of iconic film and television franchises.

Basis of Presentation

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The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions, including the potential impacts arising from the COVID-19 global pandemic and Russia's invasion of Ukraine, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

The most significant estimates made by management in the preparation of the financial statements relate to ultimate revenue and costs used for the amortization of investment in films and television programs;

estimates of future viewership used for the amortization of licensed program rights;

estimates of sales returns;

estimates related to the revenue recognition of sales or usage-based royalties;

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

The Company's Media Networks segment generates revenue primarily from the distribution of the Company's STARZ branded premium subscription video services, and through March 31, 2021, from the Company's formerly majority owned premium Spanish language streaming services business, Pantaya.

The Company's Media Networks segment generates revenue primarily from the distribution of the Company's STARZ premium subscription video services, and through March 31, 2021, from the Company's formerly majority owned premium Spanish language streaming services business, Pantaya.

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

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

While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.

Licensing Arrangements.

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As discussed above, revenues are recognized when the content has been delivered and the window for the exploitation right in that territory has begun.

◦ Packaged Media.

Packaged media revenues represent the sale of motion pictures and television shows (produced or acquired) on physical discs (DVD’s, Blu-ray, 4K Ultra HD, referred to as "Packaged Media") in

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

◦ Packaged Media.

Packaged media revenues represent the sale of motion pictures and television shows (produced or acquired) on physical discs (DVD’s, Blu-ray, 4K Ultra HD, referred to as "Packaged Media") in the retail market.

the retail market.

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

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International revenues are derived from (1) licensing of the Company's productions, acquired films, catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis;

(2) the direct distribution of our productions, acquired films, and our catalog product and libraries of acquired titles in the United Kingdom;

(2) the direct distribution of the Company's productions, acquired films, and the Company's catalog product and libraries of acquired titles in the United Kingdom;

and (3) licensing to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming.

License fees and minimum guarantee amounts associated with title, window, media or territory, are recognized when access to the feature film or television program has been granted or delivery has occurred, as required under the contract, and the right to exploit the feature film or television program in that window, media or territory has commenced.

Revenues are also generated from sales or usage based royalties received from international distributors based on their distribution performance pursuant to the terms of the contracts after the recoupment of certain costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by our customer generating a royalty due to us has occurred.

Revenues are also generated from sales or usage based royalties received from international distributors based on their distribution performance pursuant to the terms of the contracts after the recoupment of certain costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by the Company's customer generating a royalty due to the Company has occurred.

Other revenues are derived from the licensing of the Company's film and television and related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets and from commissions and executive producer fees earned related to talent management.

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• Media Networks - Programming Revenues.

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

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

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

Media Networks’ revenues are primarily derived from the domestic distribution of the Company's STARZ branded premium subscription video services through over-the-top ("OTT") streaming platforms and distributors, on a direct-to-consumer basis through the Starz App and through U.S.

multichannel video programming distributors (“MVPDs”), including cable operators, satellite television providers, and telecommunications companies (collectively "Distributors") (in the aggregate, the "Starz Domestic Platform").

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

The Starz Domestic platform together with the LIONSGATE+ platforms are referred to as the "Starz Platforms").

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

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

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

Programming revenue is recognized over the contract term based on the continuous delivery of the content to the distributor.

The variable distribution fee arrangements represent sales or usage based royalties and are recognized over the period of such sales or usage by the Company's distributor, which is the same period that the content is provided to the distributor.

Deferred Revenue.

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

Pursuant to the Company’s distribution agreements, revenues are primarily based on a fee based on the number of subscribers who receive the Company's services or based on other factors (variable fee arrangements), or to a lesser extent, may be based on a monthly fixed fee or minimum guarantee, subject to nominal annual escalations.

The Company also generates revenue through the distribution of its SVOD service directly to consumers through the Starz App.

The variable distribution fee arrangements represent sales or usage based royalties, which are recognized over the period of such sales or usage by the Company's distributor, which is the same period that the content is provided to the distributor.

Estimates of revenue generated, but not yet reported to the Company by its distribution partners, are made based on an estimated number of subscribers using historical trends and recent reporting.

Other fixed fee or minimum guarantee programming revenue is recognized over the contract term based on the continuous delivery of the content

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Payment terms vary by location and type of customer and the nature of the licensing arrangement, however, other than certain multi-year license arrangements;

to the distributor.

Subscribers through the Starz App are billed in advance of the start of their monthly or annual membership and revenues are recognized ratably over each applicable membership period.

Deferred Revenue.

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

Deferred revenue also relates to customer payments are made in advance of when the Company fulfills its performance obligation and recognizes revenue.

This primarily occurs under television production contracts, in which payments may be received as the production progresses, international motion picture contracts, where a portion of the payments are received prior to the completion of the movie and prior to license rights start dates, and pay television contracts with multiple windows with a portion of the revenues deferred until the subsequent exploitation windows commence.

These arrangements do not contain significant financing components because the reason for the payment structure is not for the provision of financing to the Company, but rather to mitigate the Company's risk of customer non-performance and incentivize the customer to exploit the Company's content.

See Note 12 for further information.

Accounts Receivable.

Payment terms vary by location and type of customer and the nature of the licensing arrangement.

However, other than certain multi-year license arrangements;

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

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

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

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

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

The significant financing component is recorded as a reduction to revenue and accounts receivable initially, with such accounts receivable discount amortized to interest income over the period to receipt of payment.

The Company does not assess contracts with deferred payments for significant financing components if, at contract inception, we expect the period between fulfillment of the performance obligation and subsequent payment to be one year or less.

In other cases, customer payments are made in advance of when the Company fulfills its performance obligation and recognizes revenue.

See Note 12 for further information.

The Company does not assess contracts with deferred payments for significant financing components if, at contract inception, the Company expects the period between fulfillment of the performance obligation and subsequent payment to be one year or less.

Cash and Cash Equivalents

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Restricted Cash

At March 31, 2022, we had restricted cash of $ 13.4 million, representing amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility and IP Credit Facility ( no material amounts at March 31, 2021).

Restricted cash is included within “other current assets” on the consolidated balance sheet (see Note 19).

At March 31, 2023, the Company had restricted cash of $ 40.9 million, primarily representing amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility, IP Credit Facility and Backlog Facility (March 31, 2022 - $ 13.4 million).

Restricted cash is included within “other current assets” and "other non-current assets" on the consolidated balance sheets (see Note 19).

Investment in Films and Television Programs and Licensed Program Rights

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

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

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

While not significant through March 31, 2023, certain license agreements and productions may include additional ancillary rights in addition to the rights for exploitation on the Starz Platforms.

A portion of the cost of these licenses and in some cases the cost of produced content, is allocated between the programming rights for exploitation on the Starz Platforms and investment in film and television programs for exploitation outside of the Starz Platforms in ancillary markets (e.g., home entertainment, digital platforms, television, etc.) based on the relative fair value of those markets.

The estimates of fair value for the allocation between windows of exploitation on the Starz Platforms and ancillary markets is based on historical experience of the values of similar titles licensed in subsequent windows and estimates of future revenues in ancillary markets.

Management believes these are reasonably reliable estimates of these values, however, these estimates involve uncertainty and management judgment.

Amortization.

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

The cost of licensed program rights for films and television programs (including original series) are generally amortized on a title-by-title or episode-by-episode basis using an accelerated or straight-line method based on the expected and historical viewership patterns or the current and anticipated number of exhibitions over the license period or estimated life for owned or produced programs.

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

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

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

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

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

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

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

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

The fair value is determined based on a

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

discounted cash flow analysis of the cash flows directly attributable to the title.

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

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

The Company's film groups are generally identified by territory (i.e., country) or groups of international territories, wherein content assets are shared across the various territories and therefore, the group of territories is the film group.

The Company's film groups are generally aligned with the Company's networks and digital content offerings domestically (i.e, Starz Networks) and internationally by territory or groups of territories, where content assets are shared across the various territories.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Content removed from the service and abandoned is written down to its fair value, if any, determined using a discounted cash flow approach.

Valuation Assumptions.

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

The fair value of any film costs associated with a film or television program that management plans to abandon is zero.

Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in management’s future revenue estimates.

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Operating Leases.

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

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

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

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

These short-term leases are not recorded on the Company's consolidated balance sheet.

These short-term leases are not recorded on the Company's consolidated balance sheets.

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

Finance Leases.

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

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

As of March 31, 2022, the Company does not have any outstanding finance leases.

The Company did not have any finance leases as of March 31, 2023 or 2022.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

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

The Company records its share of the net income or loss of most equity method investments on a one quarter lag and, accordingly, during the years ended March 31, 2023, 2022, and 2021, the Company recorded its share of the income or loss generated by these entities for the years ended December 31, 2022, 2021 and 2020, respectively.

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

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

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

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Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financing at an amount below the cost basis of the Company’s investment.

Finite-Lived Intangible Assets

At March 31, 2022, the carrying value of the Company's finite-lived intangible assets was approximately $ 1.19 billion.

The Company's finite-lived intangible assets primarily relate to customer relationships associated with U.S.

MVPDs, including cable operators, satellite television providers and telecommunications companies ("Traditional Affiliate"), which amounted to $ 1.18 billion.

The amount of the Company's customer relationship asset related to these Traditional Affiliate relationships reflects the estimated fair value of these customer relationships determined in connection with the acquisition of Starz on December 8, 2016, net of amortization recorded since the date of the Starz acquisition.

Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 16 years.

The Starz Traditional Affiliate customer relationship intangible asset is amortized in the proportion that current period revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset, which results in greater amortization in the earlier years of the estimated useful life of the asset than the latter years.

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

If a triggering event has occurred, an impairment analysis is required.

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

The impairment test is performed at the lowest level of cash flows associated with the asset.

If the carrying value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable.

Impairment would then be measured as the excess of the asset’s carrying value over its fair value.

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

For fiscal 2022 and fiscal 2021, due to changes in the industry related to the migration from linear to OTT and direct-to-

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

consumer consumption, and the economic uncertainty from the COVID-19 global pandemic, we performed an impairment analysis of our amortizable intangible assets.

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

Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was required.

Goodwill and Indefinite-Lived Intangible Assets

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Components are aggregated into a single reporting unit if they share similar economic characteristics.

Our reporting units for purposes of goodwill impairment testing at March 31, 2022 were Motion Picture, Media Networks, and our Television and Talent Management businesses, both of which are part of our Television Production segment.

Our reporting units for purposes of goodwill impairment testing at March 31,

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 were Motion Picture, Media Networks, and our Television and Talent Management businesses, both of which are part of our Television Production segment.

Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value.

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

Goodwill Impairment Assessment:

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

This assessment included consideration of, but not limited to, the results of our most recent quantitative impairment test, consideration of macroeconomic conditions, industry and market conditions, performance and current and projected cash flows of our reporting units, and changes in our share price.

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

For fiscal 2022, due to overall macroeconomic conditions, including the uncertainty of the longer-term economic impacts of the COVID-19 global pandemic, and the competitive environment for subscribers and its impact on subscriber growth rates, and our businesses, the Company performed a quantitative impairment assessment for all of its reporting units as of January 1, 2022.

The DCF analysis components of the fair value estimates were determined primarily by discounting estimated future cash flows, which included weighted average perpetual nominal growth rates ranging from 1.5 % to 3.5 %, at a weighted average cost of capital (discount rate) ranging from 10.5 % to 11.8 %, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.

Goodwill Impairment Assessments:

For the Company's annual goodwill impairment test for fiscal 2022, due to overall macroeconomic conditions, including the uncertainty of the longer-term economic impacts of the COVID-19 global pandemic, and the competitive environment for subscribers and its impact on subscriber growth rates, and our businesses, the Company performed a quantitative impairment assessment for all of its reporting units as of January 1, 2022.

Based on the Company's annual quantitative impairment assessment for fiscal 2022, the Company determined that one of its reporting units (Media Networks) was at risk for impairment due to relatively small changes in certain key assumptions that could cause an impairment of goodwill.

The fair value analysis of our Media Networks reporting unit indicated that the fair value exceeded the related carrying value by approximately 10 %.

In fiscal 2023, during 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 our 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 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 had declined significantly through September 30, 2022.

Accordingly, for the second quarter ended September 30, 2022, the Company updated its quantitative impairment assessment for all of its reporting units based on the most recent data and expected growth trends.

The DCF analysis components of the fair value estimates were determined primarily by discounting estimated future cash flows, which included weighted average perpetual nominal growth rates ranging from 1.5 % to 3.5 %, at a weighted average cost of capital (discount rate) ranging from 10.0 % to 14.0 %, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.

Based on 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 in the second quarter ended September 30, 2022, related to the Company's Media Networks reporting unit goodwill, which is recorded as a separate line item "goodwill impairment" in the consolidated statement of operations (see Note 6 to the consolidated financial statements).

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the Company's annual goodwill impairment test for fiscal 2023, the Company performed a qualitative goodwill impairment assessment for all its reporting units.

The Company's qualitative assessment considered the increase in the market price of the Company’s common shares from September 30, 2022, the recent performance of the Company’s reporting units, and updated forecasts of performance and cash flows, as well as the continuing micro and macroeconomic environment, and industry considerations, and determined that since the quantitative assessment performed in the quarter ended September 30, 2022, 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, a quantitative goodwill impairment analysis was not required.

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

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volatility in the equity and debt markets which could result in higher weighted-average cost of capital;

capital market transactions;

the commercial success of the Company's television programming and motion pictures;

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Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment:

For fiscal 2022, the Company performed a qualitative impairment assessment of its indefinite-lived trade names.

For fiscal 2023, during the second quarter ended September 30, 2022, due to the events and their impact discussed above related to the Company's Media Networks reporting unit, the Company performed a quantitative impairment assessment of its indefinite-lived trade names.

Based on the quantitative impairment assessment of its trade names, the Company concluded that the fair value of its trade names was more than its carrying amount, and therefore its trade names were not considered at risk of impairment.

During the fourth quarter ended March 31, 2023, for its annual impairment assessment, since the indefinite-lived intangible asset was not considered at risk for impairment when quantitatively tested at September 30, 2022, the Company performed a qualitative impairment assessment of its indefinite-lived trade names.

Based on the qualitative impairment assessment of its trade names, the Company concluded that it is more-likely-than-not that the fair value of its trade names was more than its carrying amount, and therefore its trade names were not considered at risk of impairment.

This qualitative analysis considered the relative impact of market-specific and macroeconomic factors.

Finite-Lived Intangible Assets

At March 31, 2023, the carrying value of the Company's finite-lived intangible assets was approximately $ 1.05 billion.

The Company's finite-lived intangible assets primarily relate to customer relationships associated with U.S.

MVPDs, including cable operators, satellite television providers and telecommunications companies ("Traditional Affiliate"), which amounted to $ 1.04 billion.

Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 16 years.

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

If a triggering event has occurred, an impairment analysis is required.

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

The impairment test is performed at the lowest level of cash flows associated with the asset.

If the carrying value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable.

Impairment would then be measured as the excess of the asset’s carrying value over its fair value.

For fiscal 2022 and fiscal 2023, due to changes in the industry related to the migration from linear to OTT and direct-to-consumer consumption, and the economic uncertainty from the COVID-19 global pandemic, we performed an impairment

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

analysis of our amortizable intangible assets.

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

Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was required.

Prints, Advertising and Marketing Expenses

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that are designed to promote film and television production in those states.

Tax credits earned with respect to expenditures on qualifying film and television productions are included as an offset to investment in films and television programs when the qualifying expenditures have been incurred provided that there is reasonable assurance that the credits will be realized (see Note 19).

Tax credits earned with respect to expenditures on qualifying film and television productions are recorded as a reduction to investment in films and television programs when the qualifying expenditures have been incurred provided that there is reasonable assurance that the credits will be realized (see Note 3 and Note 19).

Foreign Currency Translation

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Resulting unrealized and realized gains and losses are included in the consolidated statements of operations.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Foreign company assets and liabilities in foreign currencies are translated into U.S.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

All derivative financial instruments are recorded at fair value in the consolidated balance sheets (see Note 10).

The effective changes in fair values of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss and included in unrealized (losses) gains on cash flow hedges until the underlying hedged item is recognized in earnings.

The effective changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive loss to net income when the underlying hedged item is recognized in earnings.

The effective changes in fair values of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive income or loss and included in unrealized gains (losses) on cash flow hedges until the underlying hedged item is recognized in earnings.

The effective changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive income or loss to net income or net loss when the underlying hedged item is recognized in earnings.

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

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See Note 13 for further discussion of the Company’s share-based compensation.

Transfers of Financial Assets

The Company enters into arrangements to sell certain financial assets (i.e., monetize its trade accounts receivables).

For a transfer of financial assets to be considered a sale, the asset must be legally isolated from the Company and the purchaser must have control of the asset.

Determining whether all the requirements have been met includes an evaluation of legal considerations, the extent of the Company’s continuing involvement with the assets transferred and any other relevant considerations.

When the true sales criteria are met, the Company derecognizes the carrying value of the financial asset transferred and recognizes a net gain or loss on the sale.

The proceeds from these arrangements with third party purchasers are reflected as cash provided by operating activities in the combined statements of cash flows.

If the sales criteria are not met, the transfer is considered a secured borrowing and the financial asset remains on the consolidated balance sheets with proceeds from the sale recognized as debt and recorded as cash flows from financing activities in the consolidated statements of cash flows.

See Note 19 for discussion of the Company’s accounts receivable monetization.

Net Loss Per Share

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Accounting Guidance Adopted in Fiscal 2023

Government Assistance:

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 Company adopted this guidance on April 1, 2022 and is applying its provisions prospectively, with no material impact to the Company's financial statements.

See Note 3 and Note 19 for information related to production tax credits.

Accounting Guidance Adopted in Fiscal 2022

Reference Rate Reform:

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

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.

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

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

See Note 18 for further information.

Accounting for Revenue Contracts Acquired in a Business Combination:

In October 2021, the FASB issued guidance which requires entities to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination in accordance with Accounting Standards Codification Topic 606.

The Company adopted this guidance on October 1, 2021 and is applying its provisions prospectively, with no material impact to the Company's consolidated financial statements.

Accounting Guidance Not Yet Adopted

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.

This guidance is effective for the Company's fiscal year beginning April 1, 2022, with early adoption permitted.

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

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.

LIONS GATE ENTERTAINMENT CORP.

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

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

The purchase price, including acquisition costs, of the Spyglass Library and preferred equity interest was $ 191.4 million, of which $ 171.4 million was paid at closing and $ 20.0 million will be paid over two annual installments in July 2022 and July 2023.

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

The preferred equity interest was accounted for as an equity-method investment (see Note 5).

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 the Company's consolidated balance sheet.

The equity interest was accounted for as an equity-method investment (see Note 5).

On March 31, 2021, the Company sold its 75 % majority interest in Pantaya to Hemisphere Media Group for approximately $ 123.6 million in cash.

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

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

Pantaya was previously reflected in and represented substantially all of "Other Streaming Services" in the Company's Media Networks segment (see Note 16).

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

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

This gain amount was net of $ 69.0 million of goodwill allocated from the Media Networks segment as required under the applicable accounting guidance.

Investment in Films and Television Programs and Licensed Program Rights

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(1) At March 31, 2023, the unamortized balance related to completed and not released and in progress theatrical films was $ 561.5 million.

(2) Production tax credits reduced total investment in films and television programs by $ 181.2 million during the year ended March 31, 2023, which resulted in a reduction of direct operating expense related to the amortization of investment in films and television programs cost of approximately $ 84.3 million for the year ended March 31, 2023.

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

At March 31, 2023, acquired film and television libraries have remaining unamortized costs of $ 132.8 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 18.2 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 fiscal years ended March 31, 2022 and 2021, and was included in direct operating expense in the consolidated statement of operations:

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

2023 2022 2021

Amortization expense:

3 unchanged sentences

$ 1,665.3 $ 1,567.7 $ 1,189.8

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

The table below summarizes estimated future amortization expense for the Company's investment in film and television programs and licensed program rights as of March 31, 2023:

11 unchanged sentences

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Investment in films and television programs and licensed program rights includes write-downs to fair value, which are included in direct operating expense on the consolidated statements of operations, and represented the following amounts by segment for the fiscal years ended March 31, 2022, 2021 and 2020:

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 consolidated statement of operations they are recorded in for the fiscal years ended March 31, 2023, 2022 and 2021:

2023 2022 2021

1 unchanged sentence

Impairments by segment:

Included in direct operating expense:

Motion Picture $ 6.2 $ 1.2 $ 19.4

1 unchanged sentence

Impairments not included in segment operating results (1) :

36.9 15.4 91.6

Included in direct operating expense — 36.9 15.4

Included in restructuring and other 379.3 — —

$ 390.1 $ 73.0 $ 45.1

1 unchanged sentence

(1) Fiscal 2023:

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.

Represents impairment charges recorded as a result of a strategic review of original programming on the STARZ platform, which identified certain titles with limited viewership or strategic purpose which were removed from the STARZ service and abandoned by the Media Networks segment.

Represents impairment charges as a result of changes in performance expectations associated with the circumstances associated with the COVID-19 global pandemic.

Represents certain programming and content impairment charges of $ 76.5 million recorded as a result of changes to the Company's programming and broadcasting strategy in connection with changes in certain management at Starz Networks and impairment charges of $ 15.1 million due to changes in performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

Of the impairments not included in segment operating results, none , $ 15.4 million and $ 13.1 million for fiscal 2022, 2021 and 2020, respectively, related to motion picture titles.

See Note 15 and Note 16 for programming and content charges and COVID-19 related charges included in direct operating expense.

Of the impairments not included in segment operating results, none , none and $ 15.4 million for fiscal 2023, 2022 and 2021, respectively, related to motion picture titles.

See Note 15 and Note 16 for further information.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property and Equipment

8 unchanged sentences

During the year ended March 31, 2023, depreciation expense amounted to $ 40.1 million (2022 - $ 43.0 million;

2020 - $ 45.6 million, and amounts in fiscal 2021 and fiscal 2020 include the amortization of assets previously recorded under finance leases).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2021 - $ 44.0 million, and amounts in fiscal 2021 include the amortization of assets previously recorded under finance leases).

The Company's investments consisted of the following:

7 unchanged sentences

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 the Company's consolidated statement of operations.

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

Roadside Attractions .

6 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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

with offices in London and Los Angeles.

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

12 unchanged sentences

Net loss $ ( 39.0 ) $ ( 46.1 ) $ ( 62.6 )

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Goodwill and Intangible Assets

3 unchanged sentences

(Amounts in millions)

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

Sale of Pantaya (1)

Balance as of March 31, 2021 and March 31, 2022 $ 393.7 $ 401.9 $ 1,968.9 $ 2,764.5

Impairment (1)

— — ( 1,475.0 ) ( 1,475.0 )

Balance as of March 31, 2023 $ 393.7 $ 401.9 $ 493.9 $ 1,289.5

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

_______________

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

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

(1) See Note 1, Goodwill Impairment Assessments , for further information on the goodwill impairment recorded in fiscal 2023 related to the Media Networks segment.

Intangible Assets

1 unchanged sentence

Finite-lived intangible assets consisted of the following:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2023 March 31, 2022

22 unchanged sentences

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

2023 March 31,

3 unchanged sentences

Term Loan A 428.2 638.5

2026 Term Loan A 444.9 —

Term Loan B 831.7 844.2

5.500 % Senior Notes

5.875 % Senior Notes

6.375 % Senior Notes

800.0 1,000.0

Total corporate debt 2,059.9 2,482.7

3 unchanged sentences

Non-current portion of debt $ 1,978.2 $ 2,202.1

________________

(1) Subsequent to March 31, 2022, in April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the 2023 Term Loan A of $ 193.6 million, together with accrued and unpaid interest.

See Note 21 - Subsequent Events.

The following table sets forth future annual contractual principal payment commitments of debt as of March 31, 2023:

3 unchanged sentences

Revolving Credit Facility April 2026 $ — $ — $ — $ — $ — $ — $ —

2023 Term Loan A (1)

March 2023 193.6 — — — — — 193.6

Term Loan A April 2026 28.9 41.2 44.5 313.6 — — 428.2

4 unchanged sentences

Less aggregate unamortized debt issuance costs ( 40.3 )

________________

See Note 21 - Subsequent Events.

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

2 unchanged sentences

There were no letters of credit outstanding at March 31, 2023.

However, borrowing levels are subject to certain financial covenants as

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

discussed below.

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

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:

• Revolving Credit Facility:

April 6, 2026.

• Term Loan A:

◦ 2023 Term Loan A:

March 22, 2023 (voluntarily prepaid in April 2022, see Note 21 - Subsequent Events).

◦ 2026 Term Loan A:

• Revolving Credit Facility & Term Loan A:

April 6, 2026.

2 unchanged sentences

• Revolving Credit Facility & Term Loan A:

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

The 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 6.61 % as of March 31, 2023, before the impact of interest rate swaps).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• Term Loan B:

The Term Loan B bears interest at a rate per annum equal to LIBOR plus 2.25 % margin, with a LIBOR floor of zero (or an alternative base rate plus 1.25 % margin) (effective interest rate of 2.70 % as of March 31, 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 7.11 % as of March 31, 2023, before the impact of interest rate swaps).

Required Principal Payments:

• Term Loan A:

◦ 2023 Term Loan A:

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

◦ 2026 Term Loan A:

Quarterly principal payments, at quarterly rates of 1.25 % beginning September 30, 2022, 1.75 % beginning September 30, 2023, and 2.50 % beginning September 30, 2024 through March 31, 2026, with the balance payable at maturity.

3 unchanged sentences

Optional Prepayment:

• Revolving Credit Facility & Term Loan A:

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

• Term Loan B:

The Company may voluntarily prepay the Term Loan B at any time without premium or penalty.

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

• Revolving Credit Facility, Term Loan A & Term Loan B:

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

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

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

3 unchanged sentences

The Company may also be subject to an event of default upon a change in control (as defined in the Credit Agreement) which, among other things, includes a person or group acquiring ownership or control in excess of 50 % of the Company’s common shares.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Potential Impact of LIBOR Transition.

4 unchanged sentences

dollar LIBOR settings will no longer be representative.

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

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

It is also possible that U.S.

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

The Company is unable to predict whether or when an alternative reference rate will become a standard global benchmark and suitable replacement for LIBOR.

In July 2021, the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

1 unchanged sentence

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

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

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

The publication of SOFR began in April 2018, and, therefore, it has a very limited history and the effects of the phase out of LIBOR and the adoption of SOFR have not been fully determined.

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

1 unchanged sentence

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.500 % Senior Notes

16 unchanged sentences

The occurrence of a change of control will be a triggering event requiring the Company to offer to purchase from holders all of the 5.500 % Senior Notes, at a price equal to 101 % of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

In addition, certain asset dispositions will be triggering events that may require

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the Company to use the excess proceeds from such dispositions to make an offer to purchase the 5.500 % Senior Notes at 100 % of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

In addition, certain asset dispositions will be triggering events that may require the Company to use the excess proceeds from such dispositions to make an offer to purchase the 5.500 % Senior Notes at 100 % of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

Capacity to Pay Dividends

1 unchanged sentence

Debt Transactions:

Subsequent to March 31, 2022, in April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the 2023 Term Loan A of $ 193.6 million, together with accrued and unpaid interest.

See Note 21 - Subsequent Events.

Term Loan A Prepayment.

In April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the Term Loan A due March 22, 2023 of $ 193.6 million, together with accrued and unpaid interest.

Senior Notes Repurchases.

In the fiscal year ended March 31, 2023, the Company repurchased $ 200.0 million principal amount of the 5.500 % Senior Notes for $ 135.0 million, together with accrued and unpaid interest.

In May 2023, the Company repurchased $ 85.0 million principal amount of the 5.500 % Senior Notes for $ 61.4 million, together with accrued and unpaid interest.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Senior Notes Redemption and Issuance.

3 unchanged sentences

Credit Agreement Amendment.

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

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

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").

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.

After giving effect to the Extension, $ 250.0 million of the prior revolving credit commitments and $ 215.1 million of term A loans remained outstanding with a maturity of March 22, 2023.

The revolving credit commitments due in March of 2023 were terminated in November 2021 and the term A loans due in March of 2023 were repaid in full in April 2022 (see Fiscal 2023 discussion above).

See the Accounting for the Fiscal 2022 Senior Notes Redemption and Issuance and Credit Agreement Amendment section further below.

Term Loan B Repurchases.

During the year ended March 31, 2022, the Company completed a series of repurchases of the term B loans due March 24, 2025 ("Term Loan B") and, in aggregate, paid $ 95.3 million to repurchase $ 96.0 million principal amount of the Term Loan B.

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

Senior Notes Repurchases.

During the year ended March 31, 2020, the Company paid $ 1.0 million to repurchase $ 1.3 million principal amount of the 5.875 % Senior Notes, and the Company paid $ 3.5 million to repurchase $ 4.4 million principal amount of the 6.375 % Senior Notes.

Term Loan B Repurchases and Prepayments.

During the year ended March 31, 2020, the Company paid $ 22.0 million to repurchase $ 28.0 million principal amount of the Term Loan B.

In addition, during the year ended March 31, 2020, the Company made voluntary prepayments totaling $ 101.9 million in principal outstanding under the Term Loan B, together with accrued and unpaid interest.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Loss on Extinguishment of Debt

Accounting for the Fiscal 2022 Debt Transactions Discussed Above:

Revolving Credit Facility.

During the year ended March 31, 2022, 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.

Gain (Loss) on Extinguishment of Debt

During the fiscal years ended March 31, 2023 and 2022, the Company recorded a gain (loss) on extinguishment of debt related to the transactions described above as summarized in the table below.

There was no loss on extinguishment of debt in the year ended March 31, 2021.

Gain (Loss) on Extinguishment of Debt:

Term Loan A prepayment $ ( 1.3 ) $ —

Senior Notes repurchases in fiscal 2023;

Senior Notes redemption and issuance in fiscal 2022 (1)

58.7 ( 24.7 )

Credit Agreement amendment (Revolving Credit Facility and Term Loan A) (1)

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

Term Loan B repurchases and other — ( 0.7 )

$ 57.4 $ ( 28.2 )

________________________

(1) See Accounting for the Fiscal 2022 Senior Notes Redemption and Issuance and Credit Agreement Amendment section below.

Accounting for the Fiscal 2022 Senior Notes Redemption and Issuance and Credit Agreement Amendment:

Revolving Credit Facility Credit Agreement Amendment on April 6, 2021.

• Unamortized debt issuance costs:

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

The remaining unamortized debt issuance costs were allocated between the revolving credit commitments with maturities in 2023 and 2026 in proportion to the borrowing capacity of each facility and were being amortized over the respective terms of the revolving credit commitments with maturities in 2023 and 2026, as applicable.

During the three months ended December 31, 2021, in connection with the Company's termination of its revolving credit commitments with a maturity of March 22, 2023 as discussed above, the associated debt issuance costs were written off as a loss on extinguishment of debt.

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

• Fees paid to creditors and third-party costs:

In connection with the Company's credit agreement amendment on April 6, 2021 described above, all fees paid to creditors or third parties (i.e., new debt issuance costs) were recorded as a reduction of amounts outstanding under the 2026 Revolving Credit Facility and are being amortized over the term of the 2026 Revolving Credit Facility.

In connection with the Company's credit agreement amendment on April 6, 2021 described above, with respect to substantially all creditors participating in the Term Loan A, the amendment was considered a modification of terms since the present value of the cash flows after the amendment differed by less than a 10% change from the present value of the cash flows on a creditor-by-creditor basis prior to the amendment.

Accordingly, the associated costs were accounted for as follows:

• Unamortized debt issuance costs:

Previously incurred unamortized debt issuance costs and fees were allocated between the 2023 Term Loan A and the 2026 Term Loan A based on the relative balances outstanding after the amendment and are being amortized over the respective terms of the 2023 Term Loan A and 2026 Term Loan A.

To the extent there was a reduction of the outstanding balance on a creditor-by-creditor basis (i.e., a partial prepayment of debt), previously incurred unamortized debt issuance costs and fees were expensed as a loss on extinguishment of debt on the consolidated statement of operations.

• Fees paid to creditors:

Certain fees were paid to creditors based on their 2026 Term Loan A participation.

These fees paid to creditors were recorded as a reduction of amounts outstanding under the 2026 Term Loan A and are being amortized over the term of the 2026 Term Loan A.

• Third-party costs:

Substantially all third-party costs were expensed as a result of the modification and included in loss on extinguishment of debt in the consolidated statement of operations.

Senior Notes.

In accounting for the issuance and redemption of the 5.875 % and 6.375 % Senior Notes on April 1, 2021 as discussed above, a portion of the Senior Notes redemption and issuance was considered a modification of terms with creditors who participated in both the redeemed Senior Notes and new 5.500 % Senior Notes, a portion was considered a debt extinguishment, and a portion represented new issuances to new creditors, and the debt issuance costs were accounted for as follows:

• Unamortized debt issuance costs:

Previously incurred unamortized debt issuance costs and fees on the redeemed Senior Notes are being amortized over the term of the new Senior Notes, to the extent considered a modification of terms, and expensed as a loss on extinguishment of debt to the extent considered an extinguishment.

All fees paid to creditors or third parties (i.e., new debt issuance costs) are being amortized over the term of the Revolving Credit Facility due in 2026.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• Fees paid to creditors:

Fees paid to creditors or call premiums were recorded as a reduction of amounts outstanding under the new Senior Notes and are being amortized over the term of the new Senior Notes, to the extent considered a modification of terms or associated with new issuances to new creditors, and expensed as a loss on extinguishment of debt to the extent considered an extinguishment or a partial prepayment of debt.

• Third-party costs:

Costs incurred with third parties were recorded as a reduction of amounts outstanding under the new Senior Notes and will be amortized over the term of the new Senior Notes, to the extent considered an extinguishment or associated with new issuances to new creditors, and expensed as a loss on extinguishment of debt to the extent considered a modification of terms.

Term Loan A Credit Agreement Amendment on April 6, 2021 and Senior Notes Redemption and Issuance on April 1, 2021.

With respect to substantially all creditors participating in the Term Loan A and for the portion of the Senior Notes where the creditors participated in both the redeemed Senior Notes and the new Senior Notes, the amendment of the credit agreement and the Senior Notes redemption and issuance was considered a modification of terms since the present value of the cash flows after the amendment differed by less than a 10% change from the present value of the cash flows on a creditor-by-creditor basis prior to the amendment.

Where the cash flows differed by more than 10% on a creditor by creditor basis, that portion was considered a debt extinguishment.

For new participating creditors, their portion of the debt was treated as new issuances to new creditors.

Accordingly, the associated costs were accounted for as follows:

• Unamortized debt issuance costs, third-party costs and fees paid to creditors:

To the extent the refinancing was considered a modification of terms, the unamortized debt issuance costs and fees paid to creditors were recorded as a reduction of the applicable debt outstanding, and are being amortized over the applicable term of the debt and the third-party costs were expensed as a loss on extinguishment of debt.

To the extent the refinancing was considered an extinguishment, the unamortized debt issuance costs and fees paid to creditors were expensed as a loss on extinguishment of debt, and the third-party costs were recorded as a reduction of the applicable debt outstanding and are being amortized over the applicable term of the debt.

For both the Term Loan A and Senior Notes, to the extent there was a reduction of the outstanding balance on a creditor-by-creditor basis (i.e., a partial prepayment of debt), previously incurred unamortized debt issuance costs and fees were expensed as a loss on extinguishment of debt on the consolidated statement of operations.

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

In connection with the repurchases of the Term Loan B discussed above, during the year ended March 31, 2022, the Company recorded a loss on extinguishment of debt of $ 0.2 million related to the write-off of debt issuance costs.

Loss (Gain) on Extinguishment of Debt.

During the year ended March 31, 2022, the Company recorded a loss on extinguishment of debt related to the transactions described above, as summarized in the table below:

The following table summarizes the accounting for the fiscal 2022 Credit Agreement amendment and Senior Notes redemption and issuance transactions, as described above:

March 31, 2022

5 unchanged sentences

$ 26.4 $ 62.1 $ 88.5

Termination of a portion of Revolving Credit Facility commitments, Term Loan B repurchases and other (1)

Total loss on extinguishment of debt $ 28.2

________________

(1) During the year ended March 31, 2022, the Company recorded a loss on extinguishment of debt of $ 1.1 million related to the write-off of debt issuance costs associated with the termination of its revolving credit commitments with maturities in March 2023.

There was no loss on extinguishment of debt in the year ended March 31, 2021.

During the year ended March 31, 2020, the Company recorded an aggregate gain on extinguishment of debt of $ 5.4 million related to the fiscal 2020 transactions discussed above, which represented a gain of $ 1.1 million on the Senior Notes repurchases, a gain of $ 5.7 million on the Term Loan B repurchases, and a loss of $ 1.4 million on the Term Loan B prepayments.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Film Related and Other Obligations

Film Related Obligations

2023 March 31,

(Amounts in millions)

Program rights and film obligations $ 278.4 $ 214.6

Production and related loans 1,286.7 493.5

IP Credit Facility and other financing obligations (1)

Total film related and other obligations 1,688.6 708.1

Film related obligations:

Production Loans 1,349.9 966.3

Production Tax Credit Facility 231.8 224.0

Programming Notes 83.6 96.4

Backlog Facility and Other 226.0 —

IP Credit Facility 143.8 123.5

Total film related obligations 2,035.1 1,410.2

Unamortized debt issuance costs ( 11.5 ) ( 8.4 )

Total film related and other obligations, net 1,680.1 703.5

Total film related obligations, net 2,023.6 1,401.8

Less current portion ( 1,007.2 ) ( 751.5 )

Total non-current film related and other obligations $ 729.0 $ 318.5

________________________

(1) See further discussion under the "IP Credit Facility and Other Financing Obligations" section below and Note 21 - Subsequent Events for amounts received under the IGR Facility (as defined below) subsequent to March 31, 2022.

The following table sets forth future annual repayment of film related and other obligations as of March 31, 2022.

Total non-current film related obligations $ 1,016.4 $ 650.3

The following table sets forth future annual repayment of film related obligations as of March 31, 2023:

Year Ending March 31,

1 unchanged sentence

(Amounts in millions)

Program rights and film obligations $ 199.6 $ 46.7 $ 17.7 $ 4.6 $ 1.3 $ 8.5 $ 278.4

Production and related loans 732.9 190.1 363.7 — — — 1,286.7

IP Credit Facility and other financing obligations (1)

Production Loans $ 810.0 $ 539.9 $ — $ — $ — $ — $ 1,349.9

Production Tax Credit Facility (1)

— 231.8 — — — — 231.8

Programming Notes 83.6 — — — — — 83.6

Backlog Facility and Other (1)

77.5 — 29.4 — 119.1 — 226.0

IP Credit Facility (2)

36.1 24.6 30.4 30.4 22.3 — 143.8

$ 1,007.2 $ 796.3 $ 59.8 $ 30.4 $ 141.4 $ — $ 2,035.1

Less unamortized debt issuance costs ( 11.5 )

________________________

(1) IP Credit Facility amounts represent outstanding amounts under our IP Credit Facility at March 31, 2022, and repayment dates are based on the projected future cash flows generated from the exploitation of the rights, subject to a minimum guaranteed payment amount, as applicable (see further information below).

See further discussion under the "IP Credit Facility and Other Financing Obligations" section below and Note 21 - Subsequent Events for amounts received under the IGR Facility (as defined below) subsequent to March 31, 2022.

Program Rights and Film Obligations

Program rights and film obligations include minimum guarantees and accrued licensed program rights obligations, which represent amounts payable for film or television rights that the Company has acquired or licensed and certain theatrical marketing obligations for amounts received from third parties that are contractually committed for theatrical marketing expenditures associated with specific titles.

Production and Related Loans

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

Individual Loans .

The majority of the Company's individual production and related loans have contractual repayment dates either at or near the expected completion date, with the exception of certain loans containing repayment dates on a longer term basis, and incur primarily LIBOR and SOFR-based interest at a weighted average rate of 3.00 % (before the impact of interest rate swaps, see Note 18 for interest rate swaps).

(1) The repayment dates are based on the projected future amount of collateral available under these facilities.

Net advances and payments under these facilities can fluctuate depending on the amount of collateral available.

(2) Repayment dates are based on the projected future cash flows generated from the exploitation of the rights, subject to a minimum guaranteed payment amount, as applicable (see further information below).

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 SOFR and LIBOR-based interest at a weighted average rate of 6.74 % (before the impact of interest rate swaps, see Note 18 for interest rate swaps).

Production loans amounting to $ 1,277.8 million are secured by collateral which consists of the underlying rights related to the intellectual property (i.e.

film or television show), and $ 72.1 million are unsecured.

LIONS GATE ENTERTAINMENT CORP.

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Production Tax Credit Facility.

In January 2021, as amended on March 31, 2021 and March 29, 2022, the Company entered into a non-recourse senior secured revolving credit facility (the "Production Tax Credit Facility") based on collateral consisting of certain of the Company’s tax credit receivables.

In January 2021, as amended on March 29, 2022, the Company entered into a 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.

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

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 6.41 % at March 31, 2023).

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

As of March 31, 2022, there was $ 224.0 million outstanding under the Production Tax Credit Facility, and there was $ 10.5 million available under the Production Tax Credit Facility (March 31, 2021 - $ 120.0 million outstanding).

IP Credit Facility and Other Financing Obligations

As of March 31, 2023, there was $ 3.2 million available under the Production Tax Credit Facility.

Programming Notes .

Programming notes represent individual unsecured loans for the licensing of film and television programs that the Company licenses, related to the Company's Media Networks business.

The Company's programming notes had contractual repayment dates in April and May 2023, and incur SOFR and LIBOR-based interest at a weighted average rate of 8.14 %.

IP Credit Facility.

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

In July 2021, as amended in September 2022, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the "IP Credit Facility") based on and secured by the collateral consisting solely of certain of the Company’s rights in certain library titles, including the Spyglass and other recently acquired libraries.

The maximum principal amount of the IP Credit Facility is $ 161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries.

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

Cumulative Period Through:

Cumulative Period From September 29, 2022 Through:

Cumulative Minimum Guaranteed Payment Amounts Payment Due Date

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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, LIBOR plus 2.25 % per annum (with a LIBOR floor of 0.25 %) or the base rate plus 1.25 % per annum (effective interest rate of 2.70 % at March 31, 2022).

Advances under the IP Credit Facility bear interest at a rate equal to, at the Company’s option, SOFR plus 0.11 % to 0.26 % depending on the SOFR term (i.e., one or three months) plus 2.25 % per annum (with a SOFR floor of 0.25 %) or the base rate plus 1.25 % per annum (effective interest rate of 7.46 % at March 31, 2023).

The IP Credit Facility matures on July 30, 2027.

As of March 31, 2022, there was $ 123.5 million outstanding under the IP Credit Facility.

Other Financing Obligations.

During the third quarter ended December 31, 2021, the Company repaid its previously outstanding other financing obligations incurred in the second quarter ended September 30, 2021, which included financing collateralized by certain contractual payments to be received in the future.

On March 31, 2022 certain subsidiaries of the Company entered into a committed secured revolving credit facility (the "Investment Grade Receivables (IGR) Facility") based on collateral consisting of certain of the Company's fixed fee or minimum guarantee contracts where cash will be received in the future.

The maximum principal amount of the IGR Facility is $ 125.0 million, subject to the amount of eligible collateral contributed to the facility.

Advances under the IGR Facility bear interest at a rate equal to Term SOFR plus 0.10 % to 0.25 % depending on the SOFR term (i.e., one, three or six months), plus an applicable margin amounting to 1.15 % per annum at March 31, 2022.

The applicable margin is subject to a potential increase to either 1.25 % or 1.50 % based on the weighted average credit quality rating of the collateral contributed to the facility.

The IGR Facility revolving period finishes on March 31, 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 June 28, 2027.

As of March 31, 2022, there were no amounts outstanding under the IGR Facility, however, on April 1, 2022, the Company received $ 125.0 million under the IGR Facility.

See Note 21 - Subsequent Events.

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

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

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 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 6.06 % at March 31, 2023).

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 March 31, 2023, 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 fully repaid in the second and third quarter of fiscal 2023.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 6.42 % at March 31, 2023).

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, 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 7.02 % at March 31, 2023).

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 March 31, 2023, $ 51.0 million remains outstanding under the Distribution Loans.

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

The Company's leases have remaining lease terms of up to approximately 11.5 years.

The components of lease cost were as follows:

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Right-of-use assets Other assets - non-current $ 169.0 170.7

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

Lease liabilities (current) Other accrued liabilities $ 47.4 41.4

Lease liabilities (non-current) Other liabilities - non-current 159.2 159.3

$ 206.6 200.7

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 March 31,

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Operating leases 3.81 % 3.32 %

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The expected future payments relating to the Company's lease liabilities at March 31, 2023 are as follows:

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or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of March 31, 2022 and 2021:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of March 31, 2023 and 2022:

March 31, 2023 March 31, 2022

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________________

(1) Amounts at March 31, 2022 and 2021 exclude $ 88.1 million and $ 98.2 million, respectively, of financing component of interest rate swaps recorded as a reduction of assets under master netting arrangements which are presented in the table below.

The following table sets forth the carrying values and fair values of the Company’s outstanding debt, production and related loans, IP Credit Facility, and interest rate swaps at March 31, 2022 and 2021:

(1) Amounts at March 31, 2022 exclude $ 88.1 million of financing component of interest rate swaps presented in the table below ( none at March 31, 2023).

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 March 31, 2023 and 2022:

March 31, 2023 March 31, 2022

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Term Loan A $ 424.2 $ 415.4 $ 631.9 $ 625.7

$ 631.9 $ 625.7 $ 651.4 $ 647.6

Term Loan B 827.2 817.1 837.5 828.3

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776.0 510.0 965.8 962.5

5.875 % Senior Notes

— — 506.7 533.9

6.375 % Senior Notes

— — 540.8 563.0

Production and related loans 1,281.2 1,286.7 489.0 493.5

IP Credit Facility and other financing obligations (3)

120.6 123.5 — —

Production Loans 1,346.1 1,349.9 963.7 966.3

Production Tax Credit Facility 229.4 231.8 221.1 224.0

Programming Notes 83.6 83.6 96.4 96.4

Backlog Facility and Other 223.7 226.0 — —

IP Credit Facility 140.8 143.8 120.6 123.5

Financing component of interest rate swaps (2)

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

(2) Subsequent to March 31, 2022, in April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the 2023 Term Loan A of $ 193.6 million, together with accrued and unpaid interest.

See Note 21 - Subsequent Events.

(3) See Note 21 - Subsequent Events for amounts received under the IGR Facility subsequent to March 31, 2022.

(4) Amounts at March 31, 2022 and 2021 include $ 88.1 million and $ 98.2 million, respectively, recorded as a reduction of assets under master netting arrangements.

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

(2) Amounts at March 31, 2022 include $ 88.1 million recorded as a reduction of assets under master netting arrangements ( none at March 31, 2023).

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

The carrying values of these financial instruments approximated the fair values at March 31, 2023 and 2022.

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Adjustments to redemption value 78.4 98.6 47.1

Other 1.7 — —

Cash distributions ( 6.6 ) ( 1.5 ) ( 2.6 )

Purchase of noncontrolling interest ( 55.1 ) — —

Ending balance $ 343.6 $ 321.2 $ 219.1

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

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

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

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.

In February 2023, the Company paid $ 36.5 million as settlement of the exercised put option, and recorded a reduction to redeemable noncontrolling interest of $ 55.1 million representing the carrying value of the noncontrolling interest purchased, with the difference between the carrying value of the noncontrolling interest purchased and the cash paid for the settlement of the put recorded as an increase to accumulated deficit of $ 18.6 million.

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

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

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

The Company has other immaterial redeemable noncontrolling interests.

Other Noncontrolling Interests

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__________________

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

(1) Media Networks domestic revenues for the year ended March 31, 2021 includes revenue of $ 50.3 million from the Company's former Other Streaming Services product line, related to the Company's former interest in Pantaya, which was sold on March 31, 2021 (see Note 2).

Remaining Performance Obligations

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Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at March 31, 2023 are as follows:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ending March 31,

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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 Note 1).

At March 31, 2022 and 2021, accounts receivable, contract assets and deferred revenue are as follows:

Item Balance Sheet Location March 31,

2022 March 31,

2021 Addition (Reduction)

(Amounts in millions)

Accounts receivable, net - current Accounts receivable, net $ 442.2 $ 383.7 $ 58.5

Accounts receivable, net - non-current Other assets - non-current 39.0 49.4 ( 10.4 )

Contract asset - current Other assets - current (1)

40.5 25.6 14.9

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

9.3 10.3 ( 1.0 )

Deferred revenue - current Deferred revenue - current 174.9 165.7 9.2

Deferred revenue - non-current Deferred revenue - non-current 49.8 56.2 ( 6.4 )

__________________

(1) Included in prepaid expenses and other (see Note 19).

See the consolidated balance sheets or Note 19 for accounts receivable, contract assets and deferred revenue balances at March 31, 2023 and 2022.

Accounts Receivable.

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

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

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

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

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2021 Provision for doubtful accounts (1)

Uncollectible accounts written-off March 31,

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

Uncollectible accounts written-off (2)

(Amounts in millions)

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_______________________

(1) Represents a provision for doubtful accounts of $ 5.9 million for accounts receivable from customers in Russia related to Russia's invasion of Ukraine, offset by collections on accounts receivable previously reserved.

(1) Represents a provision for doubtful accounts offset by collections on accounts receivable previously reserved.

(2) Includes $ 2.5 million related to accounts receivable previously reserved for bad debt from customers in Russia, related to Russia's invasion of Ukraine.

Contract Assets.

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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.

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

See Note 19 for contract assets at March 31, 2023 and 2022.

Deferred Revenue.

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Revenues of $ 164.4 million were recognized during the year ended March 31, 2023, related to the balance of deferred revenue at March 31, 2022.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Capital Stock

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On February 2, 2016, the Company's Board of Directors authorized the Company to increase its previously announced share repurchase plan from a total authorization of $ 300 million to $ 468 million.

During the fiscal year ended March 31, 2022, the Company did not repurchase any common shares.

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

During the fiscal years ended March 31, 2023 and March 31, 2022, the Company did not repurchase any common shares.

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On September 10, 2019, the Company’s shareholders approved the Lions Gate Entertainment Corp.

2019 Performance Incentive Plan (the “2019 Plan”) previously adopted by the Board of Directors (the “Board”) of the Company.

The types of awards that may be granted under the 2019 Plan include stock options, share appreciation rights, restricted stock, restricted share units, stock bonuses and other forms of awards granted or denominated in the Company’s Class A voting shares and the Company’s Class B non-voting shares ("Common Shares") or units of Common Shares, as well as certain cash bonus awards.

The Company has a performance incentive plan (the “2019 Plan”), as amended, which provides for granting awards which include stock options, share appreciation rights, restricted stock, restricted share units, stock bonuses and other forms of awards granted or denominated in the Company’s Class A voting shares and the Company’s Class B non-voting shares ("Common Shares") or units of Common Shares, as well as certain cash bonus awards.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On September 14, 2021, the Company’s shareholders approved an amendment to the 2019 Plan previously adopted by the Board of Directors of the Company to increase the maximum number of the Company’s common shares that may be issued or transferred pursuant to awards under the 2019 Plan by an additional 5.0 million shares so that the new aggregate share limit under the 2019 Plan is 21.1 million common shares (not including shares that were originally approved for issuance under the Company’s prior stock incentive plans that have become available for issuance under the 2019 Plan pursuant to the terms of the 2019 Plan).

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

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

non-voting shares were exchanged for 0.8 million new stock options and share appreciation rights at an exercise price of $ 7.13 .

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

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___________________

(1) Represents the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

(1) Represents the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.

(2) Represents the income tax benefit recognized in the statements of operations for share-based compensation arrangements prior to the effects of changes in the valuation allowance.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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$ 102.0 $ 100.0 $ 89.0

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Options

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_____________________

(1) During the year ended March 31, 2022, the Company granted 0.3 million SARs.

(1) Represents less than 0.1 million shares.

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The following table presents the weighted average grant-date fair value of options granted in the years ended March 31, 2023, 2022 and 2021, and the weighted average applicable assumptions used in the Black-Scholes option-pricing model for stock options and share-appreciation rights granted during the years then ended:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended March 31,

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The total intrinsic value of options exercised during the year ended March 31, 2023 was $ 1.2 million (2022 — $ 2.3 million, 2021 — $ 1.7 million).

During the year ended March 31, 2022, less than 0.1 million shares (2021 — less than 0.1 million shares, 2020 — none ) were cancelled to fund withholding tax obligations upon exercise of options.

During the year ended March 31, 2023, less than 0.1 million shares (2022 — less than 0.1 million shares, 2021 — less than 0.1 million) were cancelled to fund withholding tax obligations upon exercise of options.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Restricted Share Units

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Restricted Share Units and Restricted Stock 59.1 1.1

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Under the Company’s stock option and long term incentive plans, the Company withholds shares to satisfy minimum statutory federal, state and local tax withholding obligations arising from the vesting of restricted share units and restricted stock.

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

The Company recognized excess tax benefits of $ 14.9 million associated with its equity awards in its tax provision for the year ended March 31, 2022 (2021 — deficiencies of $ 12.1 million, 2020 — deficiencies of $ 11.3 million).

The Company recognized excess tax deficiencies of $ 11.3 million associated with its equity awards in its tax provision for the year ended March 31, 2023 (2022 — benefits of $ 14.9 million, 2021 — deficiencies of $ 12.1 million).

Other Share-Based Compensation

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Pursuant to this arrangement, for the year ended March 31, 2023, the Company issued 0.3 million shares (2022 - 0.1 million shares, 2021 - 0.3 million shares), net of shares withheld to satisfy minimum tax withholding obligations.

In connection with an amendment of an affiliation agreement with a customer and effective upon the close of the Starz merger, the Company has issued to the customer three $ 16.67 million annual installments of equity.

The total value of the contract of $ 50 million was amortized as a reduction of revenue over the period from December 8, 2016 to August 31, 2019.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of pretax income (loss), net of intercompany eliminations, are as follows:

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

The Company's income tax provision for fiscal 2022 was also impacted by an interest accrual on uncertain tax benefits, additional uncertain tax benefits related to state income taxes identified during state audits, 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 fiscal 2021 and fiscal 2020 was also impacted by the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations and additional settlements with tax authorities.

The Company's income tax provision for fiscal 2023 and fiscal 2022 was also impacted by charges for interest on uncertain tax benefits and additional uncertain tax benefits related to state income taxes identified during state audits, and benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

The Company's income tax provision for fiscal 2021 included a benefit from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations and additional settlements with tax authorities.

LIONS GATE ENTERTAINMENT CORP.

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State income tax ( 0.5 ) 8.1 5.2

Nondeductible goodwill impairment 304.3 — —

Gain on sale of Pantaya — — 13.8

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Reserves 9.0 10.2

Accrued interest 10.6 33.1

Interest 104.6 10.6

Total deferred tax assets 831.3 724.5

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Intangible assets ( 317.0 ) ( 351.9 )

Fixed assets — ( 0.1 )

Accounts receivable — ( 40.5 )

Operating leases - assets ( 34.6 ) ( 34.5 )

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At March 31, 2023, the Company had U.S.

net operating loss carryforwards ("NOLs") of approximately $ 1,602.2 million available to reduce future federal income taxes which expire beginning in 2029 through 2042.

net operating loss carryforwards ("NOLs") of approximately $ 1,561.5 million available to reduce future federal income taxes, certain of which expire beginning in 2037 through 2042.

At March 31, 2023, the Company had state NOLs of approximately $ 988.2 million available to reduce future state income taxes which expire in varying amounts beginning in 2024.

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The following table summarizes the changes to the gross unrecognized tax benefits, exclusive of interest and penalties, for the years ended March 31, 2023, 2022, and 2021:

Gross unrecognized tax benefits at March 31, 2019 $ 16.8

Gross unrecognized tax benefits at March 31, 2020 (liability as of March 31, 2020) $ 11.5

Increases related to current year tax position 60.7

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Lapse in statute of limitations ( 5.4 )

Gross unrecognized tax benefits at March 31, 2020 11.5

Gross unrecognized tax benefits at March 31, 2021 (liability as of March 31, 2021) 68.0

Increases related to current year tax position —

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Lapse in statute of limitations ( 0.4 )

Gross unrecognized tax benefits at March 31, 2021 68.0

Gross unrecognized tax benefits at March 31, 2022 (liability as of March 31, 2022) 70.2

Increases related to current year tax position —

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Lapse in statute of limitations ( 1.2 )

Gross unrecognized tax benefits at March 31, 2022 $ 70.2

For the years ended March 31, 2022, 2021, and 2020, the Company recognized net interest and penalties related to uncertain tax positions of $ 6.0 million, $ 1.2 million, and $ 0.6 million, respectively.

The Company recorded liabilities for accrued interest of $ 13.2 million and $ 7.3 million as of March 31, 2022 and 2021, respectively.

Gross unrecognized tax benefits at March 31, 2023 (liability as of March 31, 2023) $ 64.9

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

The total amount of unrecognized tax benefits as of March 31, 2022 that, if realized, would affect the Company's tax provision are $ 80.2 million.

The Company estimates the liability for unrecognized tax benefits will decrease in the next twelve months by $ 79.9 million as a result of projected audit settlements in certain jurisdictions.

For the years ended March 31, 2023, 2022, and 2021, the Company recognized as a charge or (benefit) to the tax provision net interest and penalties related to uncertain tax positions of $ 5.0 million, $ 6.0 million, and $ 1.2 million, respectively.

The liability for accrued interest amounted to $ 16.7 million and $ 13.2 million as of March 31, 2023 and 2022, respectively.

The total amount of unrecognized tax benefits as of March 31, 2023 that, if recognized, would benefit the Company's tax provision are $ 81.6 million.

The Company estimates that it is reasonably possible that the liability for unrecognized tax benefits will decrease in the next twelve months by $ 79.7 million as a result of projected audit settlements in certain jurisdictions.

The Company is subject to taxation in the U.S.

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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 years ended March 31, 2022, 2021 and 2020, the Company also incurred certain other unusual charges, which are included in direct operating and distribution and marketing expense in the consolidated statements of operations and are 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 years ended March 31, 2022, 2021 and 2020:

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

During the years ended March 31, 2023, 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 and are 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 years ended March 31, 2023, 2022 and 2021:

LIONS GATE ENTERTAINMENT CORP.

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Restructuring and other:

Content and other impairments (1)

$ 385.2 $ — $ —

Severance (2)

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

Transaction and related costs (3)

11.1 3.4 11.1

Transaction and related costs (benefits) (4)

Total Restructuring and Other 411.9 16.8 24.7

Other unusual charges not included in restructuring and other:

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

Programming and content charges included in direct operating expense (5)

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_______________________

(1) Severance costs in the fiscal years ended March 31, 2022, 2021 and 2020 were primarily related to restructuring activities in connection with cost-saving initiatives.

(1) Media Networks Goodwill Impairment and 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).

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.

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 1.

During 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 fiscal year ended March 31, 2023 of $ 379.3 million.

The Company is substantially complete with executing its LIONSGATE+ restructuring plan including exiting the territories discussed above, negotiating certain content related contractual commitments and performing its strategic review of content performance for consideration of removal from the Company's various platforms.

As of March 31, 2023, a portion of the territories had been exited, with the remaining territories fully exited in May 2023.

The Company estimates it will incur additional charges ranging from approximately $ 20 million to $ 50 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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

range from approximately $ 20 million to $ 50 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 fiscal year ended March 31, 2023, approximately $ 90 million reflects the future cash to be paid for 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 these estimates.

The Company expects the restructuring plan to be substantially completed by June 30, 2023, however, certain settlements of contractual commitments could extend beyond that date.

Other Impairments:

Amounts in the fiscal year ended March 31, 2023 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.

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.

(2) Severance costs in the fiscal years ended March 31, 2023, 2022 and 2021 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.

(3) Transaction and related costs in the fiscal years ended March 31, 2022, 2021 and 2020 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

(4) Amounts represent certain unusual programming and content charges, see Note 3 for further information.

(5) In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, including the worldwide closure of theaters, international travel restrictions and the pausing of motion picture and television productions, certain incremental costs were incurred and expensed.

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

In fiscal 2021 and 2020, these charges also included film impairment due to changes in performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

In the fiscal year ended March 31, 2022, insurance recoveries exceeded the incremental costs expensed in the year, resulting in a net benefit included in direct operating expense.

(4) Transaction and other costs in the fiscal years ended March 31, 2023, 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 legal matters.

In the fiscal year ended March 31, 2023, these amounts include a benefit of $ 11.0 million for a settlement of a legal matter related to the Media Networks segment.

(5) Amounts represent certain unusual programming and content charges.

In the fiscal year ended March 31, 2023, the amounts represent development costs written off as a result of changes in strategy across the Company's theatrical slate in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment.

In the fiscal year ended March 31, 2022, the amounts represent impairment charges recorded as a result of a strategic review of original programming on the STARZ platform, which identified certain titles with limited viewership or strategic purpose which were removed from the STARZ service and abandoned by the Media Networks segment (see Note 3).

These charges are excluded from segment results and included in amortization of investment in film and television programs in direct operating expense on the 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 $ 14.1 million, $ 22.1 million and immaterial amounts in fiscal 2023, 2022 and 2021, respectively.

In fiscal 2021, these charges also included film impairment due to changes in performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

In the fiscal years ended March 31, 2023 and 2022, insurance recoveries exceeded the incremental costs expensed in the year, resulting in a net benefit included in direct operating expense.

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

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Television Production consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series, and non-fiction programming.

Television Production includes the licensing of Starz original series productions to Starz Networks and STARZPLAY International, and the ancillary market distribution of Starz original productions and licensed product.

Television Production includes the licensing of Starz original series productions to Starz Networks and LIONSGATE+, and the ancillary market distribution of Starz original productions and licensed product.

Additionally, the Television Production segment includes the results of operations of 3 Arts Entertainment.

1 unchanged sentence

Media Networks.

Media Networks consists of the following product lines (i) Starz Networks, which includes the domestic distribution of STARZ branded premium subscription video services through OTT platforms and Distributors and on a direct-to-consumer basis through the Starz App and (ii) STARZPLAY International, which represents revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services outside of the U.S.

Media Networks consists of the following product lines (i) Starz Networks, which includes the domestic distribution of STARZ branded premium subscription video services through OTT platforms, on a direct-to-consumer basis through the Starz App, and through Distributors (ii) LIONSGATE+, which represents revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services outside of the U.S.

Through March 31, 2021, Media Networks also included Other Streaming Services, which represented primarily the Company's formerly majority owned premium Spanish language streaming services business, Pantaya.

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The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company's management and enables them to understand the fundamental performance of the Company's businesses.

Media Networks gross contribution and segment profit for the fiscal year ended March 31, 2020 includes a benefit of $ 39.7 million in direct operating expenses associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates.

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

3 unchanged sentences

Corporate general and administrative expenses (1)

( 122.9 ) ( 97.1 ) ( 113.7 )

Gain on sale of Pantaya — — 44.1

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Restructuring and other ( 411.9 ) ( 16.8 ) ( 24.7 )

( 16.8 ) ( 24.7 ) ( 24.3 )

Goodwill impairment ( 1,475.0 ) — —

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

7 unchanged sentences

( 195.5 ) ( 194.0 ) ( 192.4 )

Operating income 9.0 170.6 2.8

Operating income (loss) ( 1,857.7 ) 9.0 170.6

Interest expense ( 221.2 ) ( 176.0 ) ( 181.5 )

2 unchanged sentences

Gain (loss) on extinguishment of debt 57.4 ( 28.2 ) —

Gain (loss) on investments 1.3 0.5 ( 0.5 )

Equity interests loss ( 3.0 ) ( 6.1 ) ( 17.2 )

Gain on investments 44.0 1.3 0.5

Equity interests income (loss) 0.5 ( 3.0 ) ( 6.1 )

Loss before income taxes $ ( 1,997.5 ) $ ( 177.0 ) $ ( 17.4 )

___________________

(1) Represents the gain before income taxes on the sale of the Company's majority interest in Pantaya on March 31, 2021.

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

Pantaya was previously reflected in the Company's Media Networks segment.

See Note 2 for further information.

(1) The types of amounts included in corporate general and administrative expenses include certain corporate executive expense (such as salaries and wages for the office of the Chief Executive Officer, Chief Financial Officer, General Counsel and other corporate officers), investor relations costs, costs of maintaining corporate facilities, and other unallocated common administrative support functions, including corporate accounting, finance and financial reporting, internal and external audit and tax costs, corporate and other legal support functions, and certain information technology and human resources expense.

(2) Adjusted depreciation and amortization represents depreciation and amortization as presented on our consolidated statements of operations less the depreciation and amortization related to the non-cash fair value adjustments to property and equipment and intangible assets acquired in recent acquisitions which are included in the purchase accounting and related adjustments line item above, as shown in the table below:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 2022 2021

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Adjusted depreciation and amortization $ 40.2 $ 43.0 $ 44.3

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(3) Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable (see Note 15).

(4) In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, during fiscal 2022, the Company has incurred a benefit of $ 3.4 million, net of insurance recoveries, in incremental direct operating and distribution and marketing expense (2021 - charges of $ 67.5 million;

2020 - charges of $ 50.2 million) (see Note 15).

These charges are excluded from segment operating results.

(3) Amounts represent the incremental costs included in direct operating expense and distribution and marketing expense resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries.

During the fiscal years ended March 31, 2023 and 2022, 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 15).

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

(4) Programming and content charges represent certain charges included in direct operating expense in the consolidated statements of operations, and excluded from segment operating results (see Note 3 and Note 15 for further information).

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Adjusted share-based compensation $ 97.8 $ 100.0 $ 85.5

(i) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

(i) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.

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

These adjustments include the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with the earned distributions related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense.

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

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Direct operating $ 0.7 $ 0.4 $ 1.0

General and administrative expense 58.7 47.2 52.6

General and administrative expense (i)

54.7 58.7 47.2

Depreciation and amortization 140.1 134.9 144.2

$ 195.5 $ 194.0 $ 192.4

See Note 12 for revenues by media or product line as broken down by segment for the fiscal years ended March 31, 2022, 2021, and 2020.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(i) These adjustments include the non-cash charge for the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the non-cash charge for the amortization of the recoupable portion of the purchase price and the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense, as presented in the table below.

The noncontrolling equity interest in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the consolidated statement of operations due to the relationship to continued employment.

2023 2022 2021

Amortization of recoupable portion of the purchase price $ 7.7 $ 7.7 $ 7.7

Noncontrolling interest discount amortization 13.2 22.7 22.7

Noncontrolling equity interest in distributable earnings 33.8 28.3 16.8

$ 54.7 $ 58.7 $ 47.2

See Note 12 for revenues by media or product line as broken down by segment for the fiscal years ended March 31, 2023, 2022, and 2021.

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

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____________________________

(1) Film related obligations commitments include distribution and marketing commitments, minimum guarantee commitments, program rights commitments, and production loan commitments not reflected on the consolidated balance sheets as they did not then meet the criteria for recognition, as described below:

(1) Film related obligations commitments are not reflected on the consolidated balance sheets as they did not then meet the criteria for recognition and include the following items:

(i) Distribution and marketing commitments represent contractual commitments for future expenditures associated with distribution and marketing of films which we will distribute.

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(iv) Production loan commitments represent amounts committed for future film production and development to be funded through production financing and recorded as a production loan liability when incurred.

Future payments under these commitments are based on anticipated delivery or release dates of the related film or contractual due

Future payments under these commitments are based on anticipated delivery or release dates of the related film or contractual due dates of the commitment.

The amounts include estimated future interest payments associated with the commitment.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

dates of the commitment.

The amounts include estimated future interest payments associated with the commitment.

(2) Includes cash interest payments on the Company's corporate debt, excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.

(3) Not included in the amounts above are $ 343.6 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments (see Note 11).

The Company is obligated to pay programming fees for all qualifying films that are released theatrically in the U.S.

by Sony’s Columbia Pictures, Screen Gems, Sony Pictures Classics and TriStar labels through 2021.

The Company does not license films produced by Sony Pictures Animation.

The programming fees to be paid by the Company to Sony are based on the quantity and domestic theatrical exhibition receipts of qualifying films.

The Company also has an exclusive multiyear post pay-one output licensing agreement with Universal for live-action films theatrically released in the U.S.

The Company has an exclusive multiyear post pay-one output licensing agreement with Universal for live-action films theatrically released in the U.S.

starting January 1, 2022.

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The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.

Due to the inherent difficulty of predicting the outcome of claims and legal proceedings, the Company often cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, if any, related to each pending matter may be.

Accordingly, at this time, the Company has determined a loss related to these matters in excess of accrued liabilities is reasonably possible, however a reasonable estimate of the possible loss or range of loss cannot be made at this time.

As of March 31, 2023, 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 fiscal year ended March 31, 2022, which is included in the “interest and other income” line item on the consolidated statement of operations.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Insurance Litigation

Between July 19, 2016 and August 30, 2016, seven putative class action complaints were filed by purported Starz stockholders in the Court of Chancery of the State of Delaware (the "Fiduciary Litigation").

On August 22, 2018, the parties to the Fiduciary Litigation reached an agreement in principle providing for the settlement of the Fiduciary Litigation on the terms and conditions set forth in an executed term sheet.

On October 9, 2018, the parties to the Litigation executed a stipulation of settlement, which was filed with the court (the "Stipulation").

The Stipulation provided for, among other things, the final dismissal of the Fiduciary Litigation in exchange for a settlement payment made in the amount of $ 92.5 million, of which $ 37.8 million was reimbursed by insurance.

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

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

Additionally, on November 5, 2018, an insurer that entered into an agreement and contributed $ 10.0 million to the Company's aggregate insurance reimbursement filed a lawsuit seeking declaratory judgment for reimbursement of its agreed upon payment.

During the fiscal year ended March 31, 2022, the Company settled with all of the insurers in both lawsuits, which resulted in a net settlement amount derived by the Company during the year ended March 31, 2022 of $ 22.7 million, which is included in the “interest and other income” line item on the consolidated statement of operations.

Financial Instruments

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As of March 31, 2023, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 30 months from March 31, 2023):

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2023

2 unchanged sentences

British Pound Sterling 3.1 GBP in exchange for $ 2.3 1.33 GBP

Hungarian Forint 4,089.2 HUF in exchange for $ 13.5 303.41 HUF

Czech Koruna 180.0 CZK in exchange for $ 8.6 20.88 CZK

Euro 11.0 EUR in exchange for $ 10.0 1.10 EUR

1 unchanged sentence

Polish Zloty 8.0 PLN in exchange for $ 1.8 4.33 PLN

Bulgarian Lev 5.5 BGN in exchange for $ 3.2 1.69 BGN

Mexican Peso 237.8 MXN in exchange for $ 12.6 18.86 MXN

7 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 an other-than-insignificant financing element on a portion of our interest rate swaps (see designated cash flow hedges table below), the cash flows related to these contracts are classified as financing activities.

Designated Cash Flow Hedges.

As of March 31, 2022, the Company had the following designated cash flow hedge pay-fixed interest rate swaps outstanding (all related to the Company's LIBOR-based debt, see Note 7 and Note 8):

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

Outstanding at March 31, 2022.

As of March 31, 2022, the Company had the following designated cash flow hedge pay-fixed interest rate swaps outstanding, and the following not designated pay-fixed receive-variable and offsetting pay-variable receive-fixed interest rate swaps outstanding (related to the Company's LIBOR-based debt, see Note 7 and Note 8).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Designated Cash Flow Hedges at March 31, 2022:

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

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

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

Not Designated.

As of March 31, 2022, the Company had the following pay-fixed receive-variable and offsetting pay-variable receive-fixed interest rate swaps outstanding, which are not designated as cash flow hedges:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(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.

(3) Terminated in May 2022, see May 2022 Transactions description below.

Not Designated Cash Flow Hedges at March 31, 2022:

Pay-Fixed Receive-Variable (1)

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(in millions) (in millions)

May 23, 2018 $ 700.0 2.915 % May 19, 2020 $ 700.0 2.915 % March 24, 2025

June 25, 2018 $ 200.0 2.723 % August 14, 2020 $ 200.0 2.723 % March 23, 2025

July 31, 2018 $ 300.0 2.885 % May 19, 2020 $ 300.0 2.885 % March 23, 2025

December 24, 2018 $ 50.0 2.744 % May 19, 2020 $ 50.0 2.744 % March 23, 2025

December 24, 2018 $ 100.0 2.808 % June 15, 2020 $ 100.0 2.808 % March 23, 2025

December 24, 2018 $ 50.0 2.728 % June 15, 2020 $ 50.0 2.728 % March 23, 2025

May 23, 2018 $ 700.0 2.915 % (3)

May 19, 2020 $ 700.0 2.915 % (2)

March 24, 2025

June 25, 2018 $ 200.0 2.723 % (3)

August 14, 2020 $ 200.0 2.723 % (2)

March 23, 2025

July 31, 2018 $ 300.0 2.885 % (3)

May 19, 2020 $ 300.0 2.885 % (2)

March 23, 2025

December 24, 2018 $ 50.0 2.744 % (3)

May 19, 2020 $ 50.0 2.744 % (2)

March 23, 2025

December 24, 2018 $ 100.0 2.808 % (3)

June 15, 2020 $ 100.0 2.808 % (2)

March 23, 2025

December 24, 2018 $ 50.0 2.728 % (3)

June 15, 2020 $ 50.0 2.728 % (2)

March 23, 2025

Total $ 1,400.0 Total $ 1,400.0

3 unchanged sentences

This amount is being amortized to interest expense through the remaining term of the de-designated swaps unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time.

The $ 1.4 billion of pay-fixed receive-variable interest rate swaps de-designated as cash flow hedges and the $ 1.4 billion of offsetting pay-variable receive-fixed swaps are marked to market with changes in fair value recognized, along with the fixed and variable payments on these swaps, in interest expense, which are expected to nearly offset each other.

The $ 1.4 billion of pay-fixed receive-variable interest rate swaps de-designated as cash flow hedges and the $ 1.4 billion of offsetting pay-variable receive-fixed swaps were marked to market with changes in fair value recognized, along with the fixed and variable payments on these swaps, in interest expense, which netted to an immaterial amount

(2) Terminated in May 2022, see May 2022 Transactions description below.

(3) Re-designated in May 2022, see May 2022 Transactions description below.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

May 2022 Transactions :

In May 2022, the Company terminated certain of its interest rate swap contracts with effective dates of May 19, 2020, June 15, 2020 and August 14, 2020, (the "Terminated Swaps"), as presented in the tables above.

As a result of the terminations, the Company received approximately $ 56.4 million.

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.

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 March 31, 2023.

Accordingly, at March 31, 2023, the Company has a total of $ 1.7 billion of interest rate swaps designated as cash flow hedges (see Designated Cash Flow Hedges at March 31, 2023 table below).

The receipt of approximately $ 56.4 million as a result of the termination was recorded as a reduction of the asset values of the derivatives amounting to $ 188.7 million and a reduction of the financing component (debt host) of the Terminated Swaps amounting to $ 131.3 million.

At the time of the termination of the Terminated Swaps, there was approximately $ 180.4 million of unrealized gains recorded in accumulated other comprehensive income (loss) related to these Terminated Swaps.

This amount will be amortized as a reduction of interest expense through the remaining term of the swaps unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the gain will be recorded as a reduction to interest expense at that time.

In addition, the liability amount of $ 6.8 million for the Re-designated Swaps (see Designated Cash Flow Hedges at March 31, 2023 table below) at the re-designation date will be amortized as a reduction of interest expense throughout the remaining term of the Re-designated Swaps, unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time.

The receipt of approximately $ 56.4 million was classified in the consolidated statement of cash flows as cash provided by operating activities of $ 188.7 million reflecting the amount received for the derivative portion of the termination of swaps, and a use of cash in financing activities of $ 134.5 million reflecting the pay down of the financing component of the Terminated Swaps (inclusive of payments made between April 1, 2022 and the termination date amounting to $ 3.2 million).

Outstanding at March 31, 2023.

As of March 31, 2023, 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 7 and Note 8):

Designated Cash Flow Hedges at March 31, 2023:

Effective Date Notional Amount Fixed Rate Paid Maturity Date

(in millions)

May 23, 2018 $ 300.0 2.915 % March 24, 2025

May 23, 2018 $ 700.0 2.915 % March 24, 2025 (1)

June 25, 2018 $ 200.0 2.723 % March 23, 2025 (1)

July 31, 2018 $ 300.0 2.885 % March 23, 2025 (1)

December 24, 2018 $ 50.0 2.744 % March 23, 2025 (1)

December 24, 2018 $ 100.0 2.808 % March 23, 2025 (1)

December 24, 2018 $ 50.0 2.728 % March 23, 2025 (1)

Total $ 1,700.0

__________________

(1) Represents the Re-designated Swaps as described in the May 2022 Transactions section above that were previously not designated cash flow hedges at March 31, 2022.

Financial Statement Effect of Derivatives

10 unchanged sentences

Interest rate swaps

Gain (loss) recognized in accumulated other comprehensive income (loss) $ 66.5 $ 72.0 $ ( 138.6 )

Loss reclassified from accumulated other comprehensive income (loss) into interest expense ( 15.0 ) ( 20.0 ) ( 14.3 )

Gain recognized in accumulated other comprehensive income (loss) $ 81.1 $ 66.5 $ 72.0

Gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense 1.4 ( 15.0 ) ( 20.0 )

Derivatives not designated as cash flow hedges:

Forward exchange contracts

Gain (loss) recognized in direct operating expense $ — $ 0.3 $ ( 0.4 )

Gain recognized in direct operating expense $ — $ — $ 0.3

Interest rate swaps

4 unchanged sentences

The Company classifies its forward foreign exchange contracts and interest rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (see Note 10).

The portion of the swaps reflecting the financing component of the hybrid instrument discussed above is recorded at amortized cost and reduced over time based on payments.

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 consolidated balance sheets.

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 March 31, 2023, there were no swaps outstanding that were subject to a master netting arrangement.

3 unchanged sentences

March 31, 2023

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

Other Current Assets Other Non-Current Assets Other Accrued Liabilities Other Non-Current Liabilities

(Amounts in millions)

2 unchanged sentences

Interest rate swaps — 41.1 — —

Derivatives not designated as cash flow hedges:

Interest rate swaps (1)

— ( 77.1 ) — 56.8

Fair value of derivatives $ 2.9 $ 41.1 $ 0.1 $ —

________________

(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 is offset by the pay-variable receive-fixed interest rate swaps outstanding at March 31, 2022.

March 31, 2022

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

Other Current Assets Other Non-Current Assets Other Accrued Liabilities Other Non-Current Liabilities

(Amounts in millions)

7 unchanged sentences

________________

(1) Includes $ 98.2 million and $ 54.3 million included in other non-current assets and other non-current liabilities, respectively, representing the financing element of certain hybrid instruments, which is offset by the pay-variable receive-fixed interest rate swaps outstanding at March 31, 2021.

(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 March 31, 2023, based on the current release schedule, the Company estimates approximately $ 2.9 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income (loss) will be reclassified into earnings during the one-year period ending March 31, 2024.

As of March 31, 2022, the Company estimates approximately $ 20.6 million of losses recorded in accumulated other comprehensive income (loss) associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending March 31, 2023.

As of March 31, 2023, the Company estimates approximately $ 23.5 million of gains recorded in accumulated other comprehensive income (loss) associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending March 31, 2024.

Additional Financial Information

4 unchanged sentences

The Company classifies its cash equivalents within Level 1 of the fair value hierarchy because the Company uses quoted market prices to measure the fair value of these investments (see Note 10).

The Company monitors concentrations of credit risk with respect to cash and cash equivalents by placing such balances with higher quality financial institutions or investing such amounts in liquid, short-term, highly-rated instruments or investment funds holding similar

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of March 31, 2023, the majority of the Company’s cash and cash equivalents were held in bank depository accounts.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheet to the total amounts reported in the consolidated statement of cash flows at March 31, 2023.

At March 31, 2022, restricted cash included in other current assets represents amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility and IP Credit Facility.

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

At March 31, 2023,

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

2023 March 31,

(Amounts in millions)

1 unchanged sentence

Restricted cash included in other current assets 27.9 13.4

Restricted cash included in other non-current assets 13.0 —

Total cash, cash equivalents and restricted cash $ 313.0 $ 384.6

17 unchanged sentences

Pooled Monetization Agreement.

In December 2019, the Company entered into a revolving agreement, as amended in July 2021, to transfer up to $ 150.0 million of certain receivables to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred, which expires July 27, 2022.

In December 2019, the Company entered into a revolving agreement, as amended in September 2022, to transfer up to $ 150.0 million of certain receivables to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred, which expires July 31, 2023.

As customers pay their balances, the Company transfers additional receivables into the program.

The transferred receivables are fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company, which holds additional receivables in the amount of $ 72.0 million as of March 31,

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 $ 61.8 million as of March 31, 2023 that are pledged as collateral under this agreement.

The third-party purchasers have no recourse to other assets of the Company in the event of non-payment by the customers.

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the years ended March 31, 2023, 2022 and 2021:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 2022 2021

4 unchanged sentences

Collections not reinvested and remitted or to be remitted ( 66.6 ) ( 46.8 ) ( 27.9 )

Net cash proceeds received (1)

Net cash proceeds received (paid or to be paid) (1)

$ 6.1 $ 6.0 $ 6.5

4 unchanged sentences

___________________

(1) In addition, during the year ended March 31, 2022, the Company repurchased $ 25.5 million of receivables previously transferred, as separately agreed upon with the third-party purchasers, in order to monetize such receivables under the individual monetization program discussed above without being subject to the collateral requirements under the pooled monetization program.

(1) In addition, during the years ended March 31, 2023 and 2022, the Company repurchased $ 27.4 million and $ 25.5 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.

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

1 unchanged sentence

The composition of the Company’s other assets is as follows as of March 31, 2023 and March 31, 2022:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 March 31,

2 unchanged sentences

Prepaid expenses and other (1)

Cash consideration receivable for sale of Pantaya (see Note 2) — 123.6

Product inventory (1)

$ 43.3 $ 62.5

Restricted cash 27.9 13.4

Contract assets 63.5 40.5

Tax credits receivable 129.5 128.3

2 unchanged sentences

Prepaid expenses and other $ 8.4 $ 10.5

$ 19.8 $ 25.8

Restricted cash 13.0 —

Accounts receivable (2)

Contract assets (2)

Tax credits receivable 341.7 316.1

3 unchanged sentences

_____________________

(1) Home entertainment product inventory consists of Packaged Media and is stated at the lower of cost or market value (first-in, first-out method).

(1) Includes home entertainment product inventory which consists of Packaged Media and is stated at the lower of cost or market value (first-in, first-out method).

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

(2) Unamortized discounts on contract assets included in prepaid expenses and other were $ 0.5 million and $ 0.5 million at March 31, 2022 and 2021, and unamortized discounts on long-term, non-interest bearing receivables were $ 1.8 million and $ 2.4 million at March 31, 2022 and 2021, respectively.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2) Unamortized discounts on long-term, non-interest bearing receivables were $ 3.5 million and $ 1.8 million at March 31, 2023 and 2022, respectively, and unamortized discounts on contract assets were $ 0.5 million and $ 0.5 million at March 31, 2023 and 2022.

Content related payables

Content related payables 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.

Other Accrued Liabilities

Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $ 128.7 million and $ 73.1 million at March 31, 2023 and 2022, respectively.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the components of accumulated other comprehensive income (loss), net of tax.

During the years ended March 31, 2023, 2022 and 2021, there was no income tax expense or benefit reflected in other comprehensive income (loss) due to the income tax impact being offset by changes in the Company’s deferred tax valuation allowance.

Foreign currency translation adjustments Net unrealized gain (loss) on cash flow hedges Total

11 unchanged sentences

___________________

(1) Represents a loss of $ 0.2 million included in direct operating expense and a loss of $ 48.8 million included in interest expense on the consolidated statement of operations in the year ended March 31, 2022 (2021 - gain of $ 0.2 million included in direct operating expense and loss of $ 48.3 million included in interest expense;

(1) Represents a loss of $ 0.3 million included in direct operating expense and a loss of $ 10.4 million included in interest expense on the consolidated statement of operations in the year ended March 31, 2023 (2022 - loss of $ 0.2 million included in direct operating expense and loss of $ 48.8 million included in interest expense;

2021 - gain of $ 0.2 million included in direct operating expense and loss of $ 48.3 million included in interest expense) (see Note 18).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Supplemental Cash Flow Information

1 unchanged sentence

2021 — $ 149.7 million).

Income taxes paid (refunded) during the fiscal year ended March 31, 2022 amounted to net tax paid of $ 16.9 million (2021 — net tax refunds received of $ 54.0 million;

Income taxes paid (refunded) during the fiscal year ended March 31, 2023 amounted to net tax paid of $ 29.1 million (2022 — net tax paid of $ 16.9 million;

2021 — net tax refunds received of $ 54.0 million).

Significant non-cash transactions during the fiscal years ended March 31, 2022 include certain interest rate swap agreements, which are discussed in Note 18, "Financial Instruments".

Significant non-cash transactions during the fiscal years ended March 31, 2023, 2022 and 2021 include certain interest rate swap agreements, which are discussed in Note 18, "Financial Instruments".

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

11 unchanged sentences

______________

(1) During the year ended March 31, 2021, the Company reassessed the lease term of the Starz commercial building, which resulted in a change in classification of this lease from a finance lease to an operating lease (see Note 9).

Supplemental cash flow information related to leases was as follows:

10 unchanged sentences

Operating leases - increase in lease liability $ 33.0 $ 27.5 $ 12.6

Related Party Transactions

In April 2004, a wholly-owned subsidiary of the Company entered into agreements (as amended) with Ignite, LLC (“Ignite”) for distribution rights to certain films.

Michael Burns, the Vice Chair and a director of the Company, owns a 65.45 % interest in Ignite, and Hardwick Simmons, a director of the Company, owns a 24.24 % interest in Ignite.

During the year ended March 31, 2023, $ 0.4 million was paid to Ignite under these agreements.

In the year ended March 31, 2021, the Company paid less than $ 0.1 million to MLC Strategies, LLC (“MLC Strategies”) for certain consulting services.

No amounts were paid in the years ended March 31, 2023 and 2022.

Mignon Clyburn, a director of the Company, is the President of MLC Strategies.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Related Party Transactions

In the year ended March 31, 2021, the Company paid less than $ 0.1 million to MLC Strategies, LLC (“MLC Strategies”) for certain consulting services (2020 - $ 0.1 million).

No amounts were paid in the year ended March 31, 2022.

Clyburn, a director of the Company, is the President of MLC Strategies.

In the year ended March 31, 2020, we incurred expenses on behalf of Mark H.

Rachesky, the Chairman of the Board of the Company and principal of MHR Fund Management, for reimbursement of certain litigation costs of less than $ 0.1 million, which are included in restructuring and other in the consolidated statements of operations (2022 and 2021 - none ).

MHR Fund Management holds approximately 23 % of the Company’s outstanding Class A voting shares and 11 % of the Company's outstanding Class B non-voting common stock as of May 20, 2022.

In the year ended March 31, 2020, we incurred expenses on behalf of John C.

Malone, a former director of the Company, for reimbursement of certain litigation costs of approximately $ 1.6 million, which are included in restructuring and other in the consolidated statements of operations.

Transactions with Equity Method Investees

8 unchanged sentences

Total due from related parties $ 68.5 $ 58.9

Accounts payable and accrued liabilities (1)(3)

Accounts payable (3)

$ 16.8 $ 17.0

Other accrued liabilities (1)

Participations and residuals, current 7.5 5.9

9 unchanged sentences

Distribution and marketing expense $ 0.4 $ 0.2 $ 0.2

General and administrative expense (4)

$ — $ — $ ( 1.1 )

Interest and other income $ 1.7 $ 3.1 $ 2.9

1 unchanged sentence

(1) During the year ended March 31, 2022, the Company entered into certain operating leases related to a studio facility owned by an equity-method investee.

Amounts related to these leases are included in investment in films and television programs, other assets - noncurrent, accounts payable and accrued liabilities and other liabilities in the consolidated balance sheet at March 31, 2022.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2) During the years ended March 31, 2022, 2021, and 2020, the Company made loans (including accrued interest) of $ 3.0 million, $ 2.9 million and $ 12.5 million, respectively, to certain of its equity method investees, of which no amounts, none and $ 3.3 million, respectively, are included in other assets, noncurrent in the Company's consolidated balance sheets (net of equity interests losses applied against such loans), and included in the table above.

Amounts related to these leases are included in investment in films and television programs, other assets - noncurrent, other accrued liabilities and other liabilities in the consolidated balance sheets at March 31, 2023 and 2022.

(2) During the years ended March 31, 2022, and 2021, the Company made loans (including accrued interest) of $ 3.0 million and $ 2.9 million, respectively, to certain of its equity method investees (2023 - none ).

As of March 31, 2023 and 2022, no amounts are included in other assets, noncurrent in the Company's consolidated balance sheets related to these loans (net of equity interests losses applied against such loans).

(3) Amounts primarily represent production related advances due to certain of its equity method investees.

(4) In the year ended March 31, 2020, amounts primarily represent reimbursement for certain shared services for equity method investees.

In addition, as of March 31, 2023, the Company has entered into certain leases that have not yet commenced primarily related to studio facilities owned by an equity-method investee, for which construction has not yet been completed.

See Note 9 for further information.

Subsequent Events

IGR Facility Funding.

On April 1, 2022, the Company received $ 125.0 million under the IGR Facility (see Note 8).

Term Loan A Prepayment.

In April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the 2023 Term Loan A of $ 193.6 million, together with accrued and unpaid interest (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-K

Item 9A. Controls and Procedures