What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-09 · 342 added, 178 removed, 893 unchanged (37% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2023 March 31,

7 unchanged sentences

Investments 65.6 64.7

Intangible assets 1,265.6 1,300.1

Intangible assets, net 1,060.9 1,300.1

Goodwill 795.6 1,289.5

18 unchanged sentences

Redeemable noncontrolling interests 410.1 343.6

EQUITY (DEFICIT)

Class A voting common shares, no par value, 500.0 shares authorized, 83.5 shares issued (March 31, 2023 - 83.5 shares issued)

4 unchanged sentences

Total Lions Gate Entertainment Corp.

shareholders' equity 726.4 784.5

shareholders' equity (deficit) ( 221.1 ) 784.5

Noncontrolling interests 2.3 1.5

Total equity 728.2 786.0

Total liabilities, redeemable noncontrolling interests and equity $ 7,462.2 $ 7,426.2

Total equity (deficit) ( 218.8 ) 786.0

Total liabilities, redeemable noncontrolling interests and equity (deficit) $ 6,179.4 $ 7,426.2

See accompanying notes.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions, except per share amounts)

5 unchanged sentences

Restructuring and other 222.1 233.2 254.0 241.3

Goodwill and intangible asset impairment 663.9 1,475.0 663.9 1,475.0

Total expenses 1,833.0 2,622.8 2,758.4 3,585.0

3 unchanged sentences

Other expense ( 11.5 ) ( 5.4 ) ( 17.2 ) ( 10.4 )

Gain (loss) on extinguishment of debt 21.2 ( 1.3 )

Gain on investments — 1.8

Gain on extinguishment of debt — 3.4 21.2 2.1

Loss on investments, net ( 1.6 ) ( 3.1 ) ( 1.7 ) ( 1.3 )

Equity interests income (loss) 1.8 ( 0.1 ) 1.5 0.8

Loss before income taxes ( 889.9 ) ( 1,808.3 ) ( 951.6 ) ( 1,925.0 )

Income tax provision ( 9.8 ) ( 6.0 )

Income tax benefit (provision) 2.0 ( 5.0 ) ( 7.8 ) ( 11.0 )

Net loss ( 887.9 ) ( 1,813.3 ) ( 959.4 ) ( 1,936.0 )

12 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

8 unchanged sentences

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

Three Months Ended

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

Shareholders' Equity Noncontrolling Interests (a) Total Equity

Shareholders' Equity (Deficit) Noncontrolling Interests (a) Total Equity (Deficit)

Common Shares Common Shares

1 unchanged sentence

(Amounts in millions)

Balance at June 30, 2023 83.5 $ 672.9 148.0 $ 2,431.2 $ ( 2,516.3 ) $ 138.6 $ 726.4 $ 1.8 $ 728.2

Exercise of stock options — — — 0.3 — — 0.3 — 0.3

Share-based compensation, net of share cancellations for taxes — 0.1 3.4 5.5 — — 5.6 — 5.6

Net loss — — — — ( 886.2 ) — ( 886.2 ) 0.5 ( 885.7 )

Other comprehensive loss — — — — — ( 2.2 ) ( 2.2 ) — ( 2.2 )

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 65.0 ) — ( 65.0 ) — ( 65.0 )

Balance at September 30, 2023 83.5 $ 673.0 151.4 $ 2,437.0 $ ( 3,467.5 ) $ 136.4 $ ( 221.1 ) $ 2.3 $ ( 218.8 )

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

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

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

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

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

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

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

_____________________

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

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

Six Months Ended

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

Shareholders' Equity (Deficit) Noncontrolling Interests (a) Total Equity (Deficit)

Common Shares Common Shares

Number Amount Number Amount

(Amounts in millions)

Balance at March 31, 2023 83.5 $ 672.3 145.9 $ 2,430.9 $ ( 2,439.6 ) $ 120.9 $ 784.5 $ 1.5 $ 786.0

Exercise of stock options — — — 0.3 — — 0.3 — 0.3

Share-based compensation, net of share cancellations for taxes — 0.4 5.5 5.5 — — 5.9 — 5.9

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Redeemable noncontrolling interests adjustments to redemption value — — — — ( 71.0 ) — ( 71.0 ) — ( 71.0 )

Balance at June 30, 2023 83.5 $ 672.9 148.0 $ 2,431.2 $ ( 2,516.3 ) $ 138.6 $ 726.4 $ 1.8 $ 728.2

Balance at September 30, 2023 83.5 $ 673.0 151.4 $ 2,437.0 $ ( 3,467.5 ) $ 136.4 $ ( 221.1 ) $ 2.3 $ ( 218.8 )

Balance at March 31, 2022 83.3 $ 668.2 142.0 $ 2,353.8 $ ( 369.7 ) $ 29.3 $ 2,681.6 $ 1.8 $ 2,683.4

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

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

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

_____________________

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

September 30,

(Amounts in millions)

7 unchanged sentences

Other amortization 23.8 41.2

Content impairments 28.0 —

(Gain) loss on extinguishment of debt ( 21.2 ) 1.3

Equity interests (income) loss 0.3 ( 0.9 )

Gain on investments — ( 1.8 )

Goodwill and intangible asset impairment 663.9 1,475.0

Content and other impairments 239.5 218.9

Gain on extinguishment of debt ( 21.2 ) ( 2.1 )

Equity interests income ( 1.5 ) ( 0.8 )

Loss on investments, net 1.7 1.3

Deferred income taxes ( 8.8 ) ( 0.3 )

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Tax withholding required on equity awards ( 30.7 ) ( 16.2 )

Net Cash Flows Provided By Financing Activities 60.5 39.8

Net Cash Flows Provided By (Used In) Financing Activities ( 341.9 ) 395.9

Net Change In Cash, Cash Equivalents and Restricted Cash ( 43.1 ) 220.5

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Nature of Operations

Lionsgate Entertainment Corp.

Lions Gate Entertainment Corp.

(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.

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

Operating results for the three months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2024.

Operating results for the three and six months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2024.

The balance sheet at March 31, 2023 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S.

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Actual results could differ from such estimates.

On August 3, 2023, the Company and its subsidiaries, Lions Gate Entertainment Inc., a Delaware corporation (“LGEI”), and Lions Gate International Motion Pictures S.à.r.l., a Luxembourg société à responsabilité limitée (“LGIMP” and, with the Company and LGEI, collectively the “Buyers”), entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Hasbro, Inc., a Rhode Island corporation (“Hasbro”), pursuant to which (following a contemplated pre-closing reorganization), the Buyers will acquire from Hasbro, upon the closing of the transactions contemplated under the Purchase Agreement (the “Purchase”), all of the issued and outstanding equity interests of the companies constituting the Entertainment One television and film (“eOne”) business for an aggregate cash purchase price of $ 375.0 million, subject to certain purchase price adjustments, including for cash, debt, transaction expenses and working capital, and the assumption by the Buyers of certain production financing indebtedness.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Purchase Agreement contains customary representations and warranties by each party with respect to itself, as well as various customary covenants and indemnification provisions and other agreements, including, among others, to run the business in the ordinary course during the period between the execution of the Purchase Agreement and closing of the Purchase (the “Closing”).

The Closing is contingent on the delivery by Hasbro to the Company of certain financial statements with respect to the eOne business and other customary closing conditions.

The Purchase Agreement contains customary termination rights permitting each party to terminate the Purchase Agreement under certain specified circumstances, including if the Closing has not occurred on or before January 31, 2024.

Investment in Films and Television Programs and Licensed Program Rights

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

September 30,

2023 March 31,

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Investment in films and television programs and licensed program rights, net $ 2,597.2 $ 2,947.9

At June 30, 2023, acquired film and television libraries have remaining unamortized costs of $ 129.2 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 17.9 years (March 31, 2023 - unamortized costs of $ 132.8 million).

At September 30, 2023, acquired film and television libraries have remaining unamortized costs of $ 125.5 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 17.7 years (March 31, 2023 - unamortized costs of $ 132.8 million).

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 unaudited condensed consolidated statements of operations:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

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

The following table sets forth impairments by segment and the line item in our unaudited condensed consolidated statement of operations they are recorded in for the three months ended June 30, 2023 and 2022:

Three Months Ended

The following table sets forth impairments by segment and the line item in our unaudited condensed consolidated statement of operations they are recorded in for the three and six months ended September 30, 2023 and 2022:

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

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$ 243.8 $ 216.5 $ 271.9 $ 218.2

(1) Represents charges related to the Media Networks restructuring plan initiatives, including content impairment of programming in certain international territories exited.

________________

(1) Represents charges related to the Media Networks restructuring plan initiatives, including content impairment of programming removed from its platforms and in certain international territories exited or to be exited.

See Note 14 for further information.

The Company's investments consisted of the following:

September 30,

2023 March 31,

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

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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

September 30,

2023 March 31,

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Non-current liabilities $ 61.6 $ 65.0

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

2 unchanged sentences

Net loss $ ( 2.8 ) $ ( 10.2 ) $ ( 8.7 ) $ ( 12.6 )

Goodwill and Intangible Assets

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

Picture Television

Production Media Networks Total

(Amounts in millions)

Balance as of March 31, 2023 (1)

$ 393.7 $ 401.9 $ 493.9 $ 1,289.5

Impairment — — ( 493.9 ) ( 493.9 )

Balance as of September 30, 2023 (1)

$ 393.7 $ 401.9 $ — $ 795.6

________________

(1) As of March 31, 2023 and September 30, 2023, accumulated goodwill impairment losses totaled $ 1.475 billion and $ 1.969 billion, respectively, related to the Media Networks reporting unit, as further described below.

During the quarter ended September 30, 2023, due to the continuing difficult macro and microeconomic conditions, industry trends, and their impact on the performance and projected cash flows of the Media Networks segment, including its growth in subscribers and revenue worldwide, and the expanded restructuring activities discussed in Note 14, along with recent market valuation multiples, the Company updated its quantitative impairment assessment for its Media Networks reporting unit goodwill based on the most recent data and expected growth trends.

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

The Media Networks reporting unit goodwill was established in connection with the acquisition of Starz as of December 8, 2016.

Based on its quantitative impairment assessment, the Company determined that the fair value of our Media Networks reporting unit which was previously disclosed as a reporting unit "at risk" of impairment, was less than its carrying value (after

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the impairment write-down of its indefinite-lived intangible assets discussed below).

The analysis resulted in a goodwill impairment charge of $ 493.9 million, representing all of the remaining Media Networks reporting unit goodwill, which is recorded in the "goodwill and intangible asset impairment" line item in the unaudited condensed consolidated statement of operations.

During the quarter ended September 30, 2023, we performed a qualitative goodwill impairment assessment for all our other reporting units (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment).

Our qualitative assessment considered the market price of the Company’s common shares, the recent performance of these reporting units, and updated forecasts of performance and cash flows, as well as the current micro and macroeconomic environments in relation to the current and expected performance of these reporting units, and industry considerations, and determined that since the quantitative assessment performed in the quarter ended September 30, 2022 and our qualitative assessment performed for fiscal 2023, 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 for these reporting units.

In fiscal 2023, during the second quarter ended September 30, 2022, due to adverse macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began implementing a plan to restructure its LIONSGATE+ business, and the Company revised its subscriber growth and forecasted cash flow assumptions and implemented certain cost-saving measures.

Accordingly, for the second quarter ended September 30, 2022, the Company updated its quantitative impairment assessment for all of its reporting units, using a combination of DCF analyses and market-based valuation methodologies to estimate the fair value of the Company's reporting units, and 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 had been previously disclosed as a reporting unit "at risk" of impairment.

The analysis resulted in a goodwill impairment charge of $ 1.475 billion in the three months ended September 30, 2022, related to the Company's Media Networks reporting unit goodwill, which is recorded in the "goodwill and intangible asset impairment" line item in the unaudited condensed consolidated statement of operations.

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 continued to be considered "at risk" of impairment.

Indefinite-Lived Intangible Assets

Our indefinite-lived intangible assets have consisted of trade names representing the estimated fair value of the Starz brand name determined in connection with the acquisition of Starz as of December 8, 2016, amounting to $ 250.0 million related to the Media Networks reporting unit.

During the three months ended September 30, 2023, due to the events and their impact discussed above related to our Media Networks reporting unit, we performed a quantitative impairment assessment of our indefinite-lived trade names.

The fair value of the Company's indefinite-lived trade names was estimated based on the present value of the hypothetical cost savings that could be realized by the owner of the trade names as a result of not having to pay a stream of royalty payments to another party.

These cost savings were calculated based on a DCF analysis of the hypothetical royalty payment that a licensee would be required to pay in exchange for use of the trade names, reduced by the tax effect realized by the licensee on the royalty payments.

Based on the quantitative impairment assessment of our trade names, we recorded an impairment charge of $ 170.0 million related to the Company's Starz business, which is recorded in the "goodwill and intangible asset impairment" line item in the unaudited condensed consolidated statement of operations.

After the Company performed its quantitative impairment assessment, the Company then reassessed the estimated useful life of the trade names with a remaining carrying value of $ 80.0 million, net of the impairment charge discussed above.

The Company concluded that based upon the most recent factors, including current macro and microeconomic conditions, market competition and historical Company and industry trends, the trade names now have a finite estimated remaining useful life of 10 years.

Accordingly, beginning in the third quarter ending December 31, 2023, the trade names will be accounted for as finite-lived intangible assets and amortized over their estimated remaining useful life.

This is expected to result in an increase in amortization expense of approximately $ 4.0 million for the year ending March 31, 2024.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Finite-Lived Intangible Assets

Our finite-lived intangible assets primarily relate to customer relationships representing Starz affiliation agreements with distributors, related to the Media Networks reporting unit.

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.

During the quarter ended September 30, 2023, for the Company's finite-lived customer relationship intangible assets related to our Media Networks reporting unit, which represent $ 956.8 million as of September 30, 2023, the Company performed 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.

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

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

September 30,

2023 March 31,

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Revolving Credit Facility Availability of Funds & Commitment Fee.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at June 30, 2023 there was $ 1.25 billion available.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at September 30, 2023 there was $ 1.25 billion available.

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

There were no letters of credit outstanding at June 30, 2023.

There were no letters of credit outstanding at September 30, 2023.

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Maturity Date:

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March 24, 2025.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In June 2023, the Company amended its Credit Agreement to replace the benchmark interest rate, U.S.

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As amended on June 14, 2023, 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 SOFR plus 0.10 % plus 1.75 % margin (or an alternative base rate plus 0.75 %), with a SOFR floor of zero (prior to the amendment, bore interest at LIBOR plus 1.75 % 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 6.99 % as of June 30, 2023, before the impact of interest rate swaps).

The margin is subject to potential increases of up to 50 basis points ( two ( 2 ) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Credit Agreement (effective interest rate of 7.18 % as of September 30, 2023, before the impact of interest rate swaps, see Note 17 for interest rate swaps).

• Term Loan B:

As amended on June 14, 2023, the term loan B facility due March 2025 (the "Term Loan B") bears interest at a rate per annum equal to SOFR plus 0.10 % plus 2.25 % margin, with a SOFR floor of zero (or an alternative base rate plus 1.25 % margin) (prior to the amendment, bore interest at LIBOR plus 2.25 % margin with a LIBOR floor of zero ) (effective interest rate of 7.49 % as of June 30, 2023, before the impact of interest rate swaps).

As amended on June 14, 2023, the term loan B facility due March 2025 (the "Term Loan B") bears interest at a rate per annum equal to SOFR plus 0.10 % plus 2.25 % margin, with a SOFR floor of zero (or an alternative base rate plus 1.25 % margin) (prior to the amendment, bore interest at LIBOR plus 2.25 % margin with a LIBOR floor of zero ) (effective interest rate of 7.68 % as of September 30, 2023, before the impact of interest rate swaps).

Required Principal Payments:

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In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly.

As of June 30, 2023, the Company was in compliance with all applicable covenants.

As of September 30, 2023, the Company was in compliance with all applicable covenants.

Change in Control.

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

As of June 30, 2023, the Company was in compliance with all applicable covenants.

As of September 30, 2023, the Company was in compliance with all applicable covenants.

Change in Control.

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Capacity to Pay Dividends

At June 30, 2023, the capacity to pay dividends under the Senior Credit Facilities and the 5.500 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 71.5 million and accumulated deficit of $ 2,516.3 million were deemed free of restrictions from paying dividends at June 30, 2023.

At September 30, 2023, the capacity to pay dividends under the Senior Credit Facilities and the 5.500 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 959.4 million and accumulated deficit of $ 3,467.5 million were deemed free of restrictions from paying dividends at September 30, 2023.

Debt Transactions:

Senior Notes Repurchases.

In the three months ended June 30, 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.

In the six months ended September 30, 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 ( none in the three months ended September 30, 2023).

In the three and six months ended September 30, 2022, the Company repurchased $ 18.7 million principal amount of the 5.500 % Senior Notes for $ 14.6 million, together with accrued and unpaid interest.

Term Loan A Prepayment.

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Gain (Loss) on Extinguishment of Debt:

During the three months ended June 30, 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:

During the three and six months ended September 30, 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:

Three Months Ended

September 30, Six Months Ended

September 30,

2023 2022 2023 2022

(Amounts in millions)

Gain (Loss) on Extinguishment of Debt:

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Film Related Obligations

September 30,

2023 March 31,

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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 6.95 % (before the impact of interest rate swaps, see Note 15 for interest rate swaps).

The majority of the Company's production loans have contractual repayment dates either at or near the expected completion or release dates, with the exception of certain loans containing repayment dates on a longer term basis, and incur primarily SOFR-based interest at a weighted average rate of 7.10 % (before the impact of interest rate swaps, see Note 17 for interest rate swaps).

Production loans amounting to $ 1,070.8 million are secured by collateral which consists of the underlying rights related to the intellectual property (i.e.

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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 6.74 % at

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.,

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

June 30, 2023).

one, three or six months), plus 1.50 % per annum or the base rate plus 0.50 % per annum (effective interest rate of 6.93 % at September 30, 2023).

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

As of June 30, 2023, there were no amounts available under the Production Tax Credit Facility.

As of September 30, 2023, there was $ 0.7 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.

The Company's programming notes have contractual repayment dates in August 2023, and incur SOFR-based interest at a weighted average rate of 8.10 %.

The Company's programming notes have contractual repayment dates in October 2023 and November 2023, and incur SOFR-based interest at a weighted average rate of 8.05 %.

IP Credit Facility.

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July 30, 2027 $ 161.9 July 30, 2027

Advances under the IP Credit Facility bear interest at a rate equal to, at the Company’s option, SOFR plus 0.11 % to 0.26 % depending on the SOFR term (i.e., one or three months) plus 2.25 % per annum (with a SOFR floor of 0.25 %) or the base rate plus 1.25 % per annum (effective interest rate of 7.82 % at June 30, 2023).

The IP Credit Facility matures on July 30, 2027.

4 unchanged sentences

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 6.39 % at June 30, 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 June 30, 2023, there was $ 175.0 million outstanding under the Backlog Facility, and there were no amounts available under the Backlog Facility (March 31, 2023 - $ 175.0 million 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.

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 6.75 % at June 30, 2023).

As of June 30, 2023, $ 36.6 million remains outstanding under the September 2022 Distribution Loan.

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 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 7.35 % at June 30, 2023).

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

As of June 30, 2023, $ 11.4 million remains outstanding under the December 2022 Distribution Loan.

As of September 30, 2023, there was $ 175.0 million outstanding under the Backlog Facility, and there were no amounts available under the Backlog Facility (March 31, 2023 - $ 175.0 million outstanding).

The Company has other loans as described below, which are secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements.

Outstanding loan balances under these "other" 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 September 30, 2023, an aggregate of $ 11.6 million remains outstanding under the loans as discussed in the following paragraphs.

In June 2022, the Company borrowed $ 118.6 million under a loan agreement (the "June 2022 Distribution Loan"), which was fully repaid in the second and third quarter of fiscal 2023.

In September 2022, the Company borrowed $ 43.4 million under a loan agreement which was to mature on March 28, 2026 (the "September 2022 Distribution Loan") and bore interest at a rate equal to Term SOFR plus 0.11 %, plus an applicable margin amounting to 1.50 % per annum.

The remaining balance of the September 2022 Distribution Loan was fully repaid during the quarter ended September 30, 2023.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In June 2023, the Company borrowed an aggregate of $ 158.1 million under a loan agreement (the "June 2023 Distribution Loan", and together with the September 2022 Distribution Loan and December 2022 Distribution Loan, the "Distribution Loans"), of which $ 110.0 million matures on June 30, 2026 and bears interest at a rate equal to Term SOFR plus 1.50 % per annum (effective interest rate of 6.64 % at June 30, 2023), and $ 48.1 million matures on August 6, 2025 and bears interest at a rate equal to Term SOFR plus 1.40 % per annum (effective interest rate of 6.54 % at June 30, 2023).

As of June 30, 2023, $ 158.1 million remains outstanding under the June 2023 Distribution Loan.

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 June 30, 2023, an aggregate of $ 206.1 million remains outstanding under the Distribution Loans.

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

As of September 30, 2023, $ 11.6 million remains outstanding under the December 2022 Distribution Loan.

In June 2023, the Company borrowed an aggregate of $ 158.1 million under a loan agreement (the "June 2023 Distribution Loan"), of which $ 110.0 million was to mature on June 30, 2026 and bore interest at a rate equal to Term SOFR plus 1.50 % per annum and $ 48.1 million was to mature on August 6, 2025 and bore interest at a rate equal to Term SOFR plus 1.40 % per annum.

The June 2023 Distribution Loan was fully repaid during the quarter ended September 30, 2023.

Fair Value Measurements

9 unchanged sentences

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

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of June 30, 2023 and March 31, 2023:

June 30, 2023 March 31, 2023

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of September 30, 2023 and March 31, 2023:

September 30, 2023 March 31, 2023

Level 1 Level 2 Total Level 1 Level 2 Total

8 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the carrying values and fair values of the Company’s outstanding debt and film related obligations at June 30, 2023 and March 31, 2023:

June 30, 2023 March 31, 2023

The following table sets forth the carrying values and fair values of the Company’s outstanding debt and film related obligations at September 30, 2023 and March 31, 2023:

September 30, 2023 March 31, 2023

(Amounts in millions)

Value Fair Value (1)

Carrying Value Fair Value (1)

(Level 2) (Level 2)

11 unchanged sentences

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 June 30, 2023 and March 31, 2023.

The carrying values of these financial instruments approximated the fair values at September 30, 2023 and March 31, 2023.

Noncontrolling Interests

1 unchanged sentence

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

Three Months Ended

Six Months Ended

September 30,

(Amounts in millions)

9 unchanged sentences

The Company has a redeemable noncontrolling interest representing 49 % of 3 Arts Entertainment.

Pursuant to an amendment dated July 31, 2023, the put rights associated with the 3 Arts Entertainment noncontrolling interest were extended, such that the noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable beginning August 15, 2023, for a 60 day period.

Beginning 30 days after the expiration

Pursuant to an amendment dated September 14, 2023, the put rights associated with the 3 Arts Entertainment noncontrolling interest were extended, such that the noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable beginning November 15, 2023, for a 60 day period.

Beginning 30 days after the expiration of the exercise period for the put rights held by the noncontrolling interest holders, the Company has a right to call

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of the exercise period for the put rights held by the noncontrolling interest holders, the Company has a right to call the noncontrolling interest of 3 Arts Entertainment, at fair value, for a 60 day period.

the noncontrolling interest of 3 Arts Entertainment, at fair value, for a 60 day period.

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

3 unchanged sentences

Accordingly, earned distributions are accounted for as compensation and are being expensed within general and administrative expense as incurred.

Additionally, the amount of the put and call proceeds subject to the discount is also accounted for as compensation, and is being amortized over the vesting period within general and administrative expense and reflected as an addition to redeemable noncontrolling interest over the vesting period which ended in November 2022.

Additionally, the amount of the put and call proceeds subject to the discount was also accounted for as compensation, and was amortized over the vesting period within general and administrative expense and reflected as an addition to redeemable noncontrolling interest over the vesting period which ended in November 2022.

A portion of the purchase price of the controlling interest in 3 Arts Entertainment, up to $ 38.3 million, was recoupable for a five-year period commencing on the acquisition date of May 29, 2018, contingent upon the continued employment of certain employees, or the achievement of certain EBITDA targets, as defined in the 3 Arts Entertainment acquisition and related agreements.

12 unchanged sentences

Revenue by Segment, Market or Product Line

The table below presents revenues by segment, market or product line for the three months ended June 30, 2023 and 2022:

The table below presents revenues by segment, market or product line for the three and six months ended September 30, 2023 and 2022:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

22 unchanged sentences

International 76.7 38.6 120.4 70.2

416.5 396.1 797.6 777.3

Intersegment eliminations ( 190.8 ) ( 175.8 ) ( 288.4 ) ( 374.2 )

1 unchanged sentence

Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog).

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2023 are as follows:

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at September 30, 2023 are as follows:

Rest of Year Ending March 31, 2024 Year Ending March 31,

6 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenues of $ 106.9 million, including variable and fixed fee arrangements, were recognized during the three months ended June 30, 2023 from performance obligations satisfied prior to March 31, 2023.

Revenues of $ 65.1 million and $ 172.0 million, respectively, including variable and fixed fee arrangements, were recognized during the three and six months ended September 30, 2023 from performance obligations satisfied prior to March 31, 2023.

These revenues were primarily associated with the distribution of television and theatrical product in electronic sell-through and video-on-demand formats, and to a lesser extent, the distribution of theatrical product in the domestic and international markets related to films initially released in prior periods.

1 unchanged sentence

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

See the unaudited condensed consolidated balance sheets or Note 16 for accounts receivable, contract assets and deferred revenue balances at June 30, 2023 and March 31, 2023.

See the unaudited condensed consolidated balance sheets or Note 18 for accounts receivable, contract assets and deferred revenue balances at September 30, 2023 and March 31, 2023.

Accounts Receivable.

6 unchanged sentences

March 31, 2023 (Benefit) provision for doubtful accounts Uncollectible accounts written-off (1)

June 30, 2023

September 30, 2023

(Amounts in millions)

5 unchanged sentences

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

See Note 16 for contract assets at June 30, 2023 and March 31, 2023.

See Note 18 for contract assets at September 30, 2023 and March 31, 2023.

Deferred Revenue.

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

Revenues of $ 86.3 million were recognized during the three months ended June 30, 2023 related to the balance of deferred revenue at March 31, 2023.

Revenues of $ 23.5 million and $ 109.8 million, respectively, were recognized during the three and six months ended September 30, 2023 related to the balance of deferred revenue at March 31, 2023.

LIONS GATE ENTERTAINMENT CORP.

2 unchanged sentences

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

Basic and diluted net loss per share for the three months ended June 30, 2023 and 2022 is presented below:

Three Months Ended

Basic and diluted net loss per share for the three and six months ended September 30, 2023 and 2022 is presented below:

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions, except per share amounts)

4 unchanged sentences

Basic and diluted net loss per common share $ ( 3.79 ) $ ( 7.95 ) $ ( 4.12 ) $ ( 8.51 )

As a result of the net loss in the three months ended June 30, 2023 and 2022, the dilutive effect of the share purchase options, RSUs and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the three months ended June 30, 2023 totaled 5.6 million (three months ended June 30, 2022 - 3.8 million).

Additionally, for the three months ended June 30, 2023 and 2022, the outstanding common shares issuable presented below were excluded from diluted net loss per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.

Three Months Ended

As a result of the net loss in the three and six months ended September 30, 2023 and 2022, the dilutive effect of the share purchase options, RSUs and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the three and six months ended September 30, 2023 totaled 1.0 million and 3.3 million, respectively (three and six months ended September 30, 2022 - 2.4 million and 3.1 million, respectively).

Additionally, for the three and six months ended September 30, 2023 and 2022, the outstanding common shares issuable presented below were excluded from diluted net loss per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

8 unchanged sentences

(a) Common Shares

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares at June 30, 2023 and March 31, 2023.

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares at September 30, 2023 and March 31, 2023.

The table below outlines common shares reserved for future issuance:

September 30,

2023 March 31,

5 unchanged sentences

(b) Share-based Compensation

The Company recognized the following share-based compensation expense during the three months ended June 30, 2023 and 2022:

Three Months Ended

The Company recognized the following share-based compensation expense during the three and six months ended September 30, 2023 and 2022:

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

3 unchanged sentences

Share appreciation rights 0.5 1.1 1.2 1.5

26.0 26.6 41.9 34.4

Impact of accelerated vesting on equity awards (1)

1.1 — 1.6 0.6

Total share-based compensation expense $ 27.1 $ 26.6 $ 43.5 $ 35.0

2 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

4 unchanged sentences

Restructuring and other 1.1 — 1.6 0.6

$ 27.1 $ 26.6 $ 43.5 $ 35.0

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the three months ended June 30, 2023:

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the six months ended September 30, 2023:

Stock Options and SARs Restricted Stock and Restricted Share Units

7 unchanged sentences

( 0.1 ) $ 7.15 — (1)

10.89 ( 9.1 ) $ 9.33

Forfeited or expired ( 1.8 ) $ 30.79 ( 2.1 ) $ 29.19 — — ( 0.5 ) $ 8.77

Outstanding at June 30, 2023 2.7 $ 24.45 18.8 $ 14.12 — (1)

Outstanding at September 30, 2023 2.5 $ 22.99 18.3 $ 13.82 — (1)

$ 11.01 13.6 $ 8.73

2 unchanged sentences

During the three months ended June 30, 2023 and 2022, the Company did not repurchase any common shares.

During the three and six months ended September 30, 2023 and 2022, the Company did not repurchase any common shares.

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

The income tax provision for the three months ended June 30, 2023 and 2022 is calculated by estimating the Company's annual effective tax rate (estimated annual tax provision divided by estimated annual income before income taxes), and then applying the effective tax rate to income (loss) before income taxes for the period, plus or minus the tax effects of items that relate discretely to the period, if any.

The Company's income tax provision differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of the Company's pre-tax income (loss) generated across the various jurisdictions in which the Company operates, and the tax deductions generated by the Company's capital structure.

The Company's income tax provision for the three months ended June 30, 2023 and 2022 was impacted by changes in the valuation allowances against certain U.S.

The income tax benefit (provision) for the three and six months ended September 30, 2023 and 2022 is calculated by estimating the Company's annual effective tax rate (estimated annual tax provision divided by estimated annual income before income taxes), and then applying the effective tax rate to income (loss) before income taxes for the period, plus or minus the tax effects of items that relate discretely to the period, if any.

The Company's income tax benefit (provision) differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of the Company's pre-tax income (loss) generated across the various jurisdictions in which the Company operates, and the tax deductions generated by the Company's capital structure.

The Company's income tax benefit (provision) for the three and six months ended September 30, 2023 and 2022 was impacted by changes in the valuation allowances against certain U.S.

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

The Company's income tax provision for the three months ended June 30, 2023 and 2022 was also impacted by charges for interest on uncertain tax benefits, 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 can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.

Restructuring and Other

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

During the three months ended June 30, 2023 and 2022, the Company also incurred certain other unusual charges or benefits, which are included in direct operating 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 three months ended June 30, 2023 and 2022:

The Company's income tax benefit (provision) for the three and six months ended September 30, 2023 and 2022 was also impacted by charges for interest on uncertain tax benefits, 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 benefit (provision) can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

Restructuring and Other

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

During the three and six months ended September 30, 2023 and 2022, the Company also incurred certain other unusual charges or benefits, which are included in direct operating 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 three and six months ended September 30, 2023 and 2022:

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

Restructuring and other:

Content impairments (1)

Content and other impairments (1)

$ 211.6 $ 218.8 $ 239.5 $ 218.8

Severance (2)

Cash 4.7 9.6 9.0 12.4

Accelerated vesting on equity awards (see Note 12)

1.1 — 1.6 0.6

Total severance costs 5.8 9.6 10.6 13.0

COVID-19 related charges included in restructuring and other — — — 0.1

Transaction and other costs (benefits) (3)

Transaction and other costs (3)

4.7 4.8 3.9 9.4

Total Restructuring and Other 222.1 233.2 254.0 241.3

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

Content charges included in direct operating expense (4)

COVID-19 related charges (benefit) included in direct operating expense (5)

( 0.6 ) ( 6.1 ) ( 0.4 ) ( 7.1 )

Total restructuring and other and other unusual charges not included in restructuring and other $ 221.5 $ 234.3 $ 253.6 $ 241.4

1 unchanged sentence

(1) Media Networks Restructuring:

In fiscal 2023, the Company began a plan to restructure its LIONSGATE+ business, which included exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan), and identifying additional cost-saving initiatives.

In fiscal 2023, the Company began a plan to restructure its LIONSGATE+ business, which initially included exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan), and identifying additional cost-saving initiatives.

This plan 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 related to the Media Networks segment in the three months ended June 30, 2023 of $ 28.0 million.

The Company has incurred impairment charges from the inception of the plan through June 30, 2023 amounting to $ 407.3 million.

Under the current restructuring plan, the Company estimates it will incur additional charges ranging from approximately $ 5 million to $ 30 million related to certain contractual content commitments or programming content impairment charges, among other items, related to territories exited or to be exited.

The net future cash outlay is estimated to range from approximately $ 60 million to $ 90 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content previously written down.

As the Company continues to evaluate the Media Networks business and its current restructuring plan in relation to the current micro and macroeconomic environment and the announced plan to separate the Company's Starz business (i.e., Media Networks segment) and Studio Business (i.e., Motion Picture and Television Production segments), including further strategic review of content performance and its strategy on a territory-by-territory basis, the Company may decide to expand its restructuring plan and exit additional territories or remove certain content off its platform in the future.

In July 2023, in connection with a modification to shorten a long-term distribution contract, the Company decided to shut down the LIONSGATE+ service in Latin America.

While the modified contract covers the cost of the content during the shutdown period, there may be additional charges for remaining contractual commitments when the service is completely shut down in Latin America, which is expected toward the end of calendar 2023.

The Company may incur additional content impairment and other restructuring charges beyond the estimates above.

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

(3) Transaction and other costs in the three months ended June 30, 2023 and 2022 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters.

In the three months ended June 30, 2023, transaction and other costs also includes a benefit of $ 3.8 million associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the LIONSGATE+ international restructuring.

During the quarter ended September 30, 2023, the Company continued executing its restructuring plan, including its evaluation of the programming on Starz's domestic and international platforms.

In connection with this review, the Company cancelled certain ordered programming, and identified certain other programming with limited strategic purpose which was removed from the Starz platforms and abandoned by the Media Networks segment.

In addition, as a result of the continuing review of its international territories, in order to continue growing the profitability of STARZ and given the economic and industry challenges in the United Kingdom ("U.K."), the Company has made the strategic decision to shut down the LIONSGATE+ service in the U.K.

market, resulting in additional content impairment charges.

As a result of these restructuring initiatives, the Company recorded content impairment charges related to the Media Networks segment in the three and six months ended September 30, 2023 of $ 211.6 million and $ 239.5 million, respectively (three and six months ended September 30, 2022 - $ 213.0 million).

The Company has incurred impairment charges from the inception of the plan through September 30, 2023 amounting to $ 618.9 million.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(4) Amounts include incremental costs incurred due to circumstances associated with the COVID-19 global pandemic, net of immaterial insurance recoveries in the three months ended June 30, 2023 (three months ended June 30, 2022 - insurance recoveries of $ 1.0 million).

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

Under the current restructuring plan and ongoing strategic content review, the Company estimates it will incur additional charges ranging from approximately $ 80 million to $ 160 million related to certain contractual content commitments or programming content impairment charges, among other items, related to territories exited or to be exited and content to be removed from its services.

The net future cash outlay is estimated to range from approximately $ 130 million to $ 190 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content removed or that may be removed from its services.

The amounts above will depend on the results of its strategic content review and amounts recoverable from alternative distribution strategies, if any, on content in domestic and foreign markets.

Accordingly, the Company may incur additional content impairment and other restructuring charges beyond the estimates above.

Other Impairments:

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

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 were primarily related to restructuring activities and other cost-saving initiatives.

(3) Transaction and other costs in the three and six months ended September 30, 2023 and 2022 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters.

In the six months ended September 30, 2023, transaction and other costs also includes a benefit of $ 3.8 million associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the LIONSGATE+ international restructuring.

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

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

(5) Amounts include incremental costs incurred due to circumstances associated with the COVID-19 global pandemic, net of insurance recoveries of $ 0.6 million in the three and six months ended September 30, 2023, respectively (three and six months ended September 30, 2022 - insurance recoveries of $ 6.9 million and $ 7.9 million, respectively).

In the three and six months ended September 30, 2023 and 2022, insurance recoveries exceeded the incremental costs expensed in the period, resulting in a net benefit included in direct operating expense.

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

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

Changes in the restructuring and other severance liability were as follows for the three months ended June 30, 2023 and 2022:

Three Months Ended

Changes in the restructuring and other severance liability were as follows for the six months ended September 30, 2023 and 2022:

Six Months Ended

September 30,

(Amounts in millions)

5 unchanged sentences

_______________________

(1) As of June 30, 2023, the remaining severance liability of approximately $ 4.8 million is expected to be paid in the next 12 months.

(1) As of September 30, 2023, the remaining severance liability of approximately $ 8.0 million is expected to be paid in the next 12 months.

LIONS GATE ENTERTAINMENT CORP.

24 unchanged sentences

Segment information is presented in the table below:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

45 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

6 unchanged sentences

( 222.1 ) ( 233.2 ) ( 254.0 ) ( 241.3 )

Goodwill and intangible asset impairment (4)

( 663.9 ) ( 1,475.0 ) ( 663.9 ) ( 1,475.0 )

COVID-19 related benefit (charges) included in direct operating expense (5)

0.6 6.1 0.4 7.1

Content charges (6)

— ( 7.2 ) — ( 7.2 )

Adjusted share-based compensation expense (7)

6 unchanged sentences

Other expense ( 11.5 ) ( 5.4 ) ( 17.2 ) ( 10.4 )

Gain (loss) on extinguishment of debt 21.2 ( 1.3 )

Gain on investments — 1.8

Gain on extinguishment of debt — 3.4 21.2 2.1

Loss on investments, net ( 1.6 ) ( 3.1 ) ( 1.7 ) ( 1.3 )

Equity interests income (loss) 1.8 ( 0.1 ) 1.5 0.8

3 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

3 unchanged sentences

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

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

During the three months ended June 30, 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 12).

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(4) Goodwill and intangible asset impairment reflects the goodwill impairment charges recorded in the quarters ended September 30, 2023 and September 30, 2022 related to the Media Networks reporting unit, and three months ended September 30, 2023 also includes the impairment of the indefinite-lived trade names related to the Media Networks reporting unit (see Note 5).

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

During the three and six months ended September 30, 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 14).

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

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

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

7 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

Purchase accounting and related adjustments:

Direct operating $ — $ 0.7 $ — $ 0.7

General and administrative expense (i)

2 unchanged sentences

$ 36.9 $ 49.4 $ 81.3 $ 97.8

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED 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.

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

3 unchanged sentences

$ 2.2 $ 13.2 $ 12.2 $ 29.2

See Note 8 for revenues by media or product line as broken down by segment for the three months ended June 30, 2023 and 2022.

See Note 10 for revenues by media or product line as broken down by segment for the three and six months ended September 30, 2023 and 2022.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

6 unchanged sentences

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

September 30,

2023 March 31,

7 unchanged sentences

(1) Other unallocated assets primarily consist of cash, other assets and investments.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contingencies

3 unchanged sentences

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

As of June 30, 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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of September 30, 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.

Derivative Instruments and Hedging Activities

5 unchanged sentences

Gains and losses realized upon settlement of the foreign exchange contracts that are designated as hedges are amortized to direct operating expense on the same basis as the production expenses being hedged.

As of June 30, 2023, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 27 months from June 30, 2023):

June 30, 2023

As of September 30, 2023, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 23 months from September 30, 2023):

September 30, 2023

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

4 unchanged sentences

Canadian Dollar 16.3 CAD in exchange for $ 12.2 1.34 CAD

Polish Zloty 8.0 PLN in exchange for $ 1.9 4.24 PLN

Australian Dollar 0.1 AUD in exchange for $ 0.1 1.54 AUD

Hungarian Forint 0.7 HUF in exchange for $ — 367.20 HUF

Mexican Peso 51.6 MXN in exchange for $ 2.5 20.38 MXN

South African Rand 35.1 ZAR in exchange for $ 1.8 19.07 ZAR

Interest Rate Swaps

5 unchanged sentences

Changes in the fair value of interest rate swaps that are not designated as hedges are recorded in interest expense (see further explanation below).

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

However, due to a financing component (debt host) on a portion of our previously outstanding interest rate swaps, the cash flows related to these contracts are classified as financing activities through the date of termination.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Designated Cash Flow Hedges.

As of June 30, 2023 and 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 SOFR-based debt, see Note 4 and Note 5):

As of September 30, 2023 and 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 SOFR-based debt, see Note 6 and Note 7):

Effective Date Notional Amount Fixed Rate Paid Maturity Date

23 unchanged sentences

Unaudited condensed consolidated statements of operations and comprehensive loss:

The following table presents the pre-tax effect of the Company's derivatives on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended June 30, 2023 and 2022:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

1 unchanged sentence

Forward exchange contracts

Loss recognized in accumulated other comprehensive income (loss) $ ( 2.5 ) $ ( 0.4 )

Gain (loss) recognized in accumulated other comprehensive income (loss) $ ( 0.6 ) $ 2.1 $ ( 3.1 ) $ 1.7

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

11 unchanged sentences

Pursuant to the Company's accounting policy to offset the fair value amounts recognized for derivative instruments, the Company presents the asset or liability position of the swaps that are with the same counterparty under a master netting arrangement net as either an asset or liability in its unaudited condensed consolidated balance sheets.

As of June 30, 2023 and March 31, 2023, there were no swaps outstanding that were subject to a master netting arrangement.

As of September 30, 2023 and March 31, 2023, there were no swaps outstanding that were subject to a master netting arrangement.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of June 30, 2023 and March 31, 2023, the Company had the following amounts recorded in the accompanying unaudited condensed consolidated balance sheets related to the Company's use of derivatives:

June 30, 2023

As of September 30, 2023 and March 31, 2023, the Company had the following amounts recorded in the accompanying unaudited condensed consolidated balance sheets related to the Company's use of derivatives:

September 30, 2023

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

11 unchanged sentences

Fair value of derivatives $ 2.9 41.1 $ 0.1 —

As of June 30, 2023, based on the current release schedule, the Company estimates approximately $ 3.9 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income will be reclassified into earnings during the one-year period ending June 30, 2024.

As of June 30, 2023, the Company estimates approximately $ 34.1 million of gains recorded in accumulated other comprehensive income associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending June 30, 2024.

As of September 30, 2023, based on the current release schedule, the Company estimates approximately $ 0.5 million of losses associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income will be reclassified into earnings during the one-year period ending September 30, 2024.

As of September 30, 2023, the Company estimates approximately $ 35.8 million of gains recorded in accumulated other comprehensive income associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending September 30, 2024.

Additional Financial Information

1 unchanged sentence

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the unaudited condensed consolidated balance sheet to the total amounts reported in the unaudited condensed consolidated statement of cash flows at June 30, 2023 and March 31, 2023.

At June 30, 2023 and March 31, 2023, restricted cash represents primarily amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility, IP Credit Facility, Backlog Facility, and Distribution Loans.

At September 30, 2023 and March 31, 2023, restricted cash represents primarily amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility, IP Credit Facility, and Backlog Facility.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

September 30,

2023 March 31,

4 unchanged sentences

Total cash, cash equivalents and restricted cash $ 269.2 $ 313.0

The composition of the Company’s other assets is as follows as of June 30, 2023 and March 31, 2023:

The composition of the Company’s other assets is as follows as of September 30, 2023 and March 31, 2023:

September 30,

2023 March 31,

21 unchanged sentences

The loss is reflected in the "other expense" line item on the unaudited condensed consolidated statements of operations.

The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the three months ended June 30, 2023 and 2022.

The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the three and six months ended September 30, 2023 and 2022.

LIONS GATE ENTERTAINMENT CORP.

3 unchanged sentences

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

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three months ended June 30, 2023 and 2022:

Three Months Ended

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three and six months ended September 30, 2023 and 2022:

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

2 unchanged sentences

Loss recorded related to transfers of receivables 10.4 5.2 15.1 8.8

At June 30, 2023, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheets, but which the Company continues to service, related to the Company's individual agreements to monetize trade accounts receivable was $ 500.2 million (March 31, 2023 - $ 520.4 million).

At September 30, 2023, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheets, but which the Company continues to service, related to the Company's individual agreements to monetize trade accounts receivable was $ 586.5 million (March 31, 2023 - $ 520.4 million).

Pooled Monetization Agreement.

In December 2019, the Company entered into a revolving agreement, as amended in July 2023 to transfer up to $ 100.0 million of certain receivables to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred, which expires the earlier of October 1, 2023 or the date of the separation of the Company's Starz Business (i.e., Media Networks segment) and Studio Business (i.e., Motion Picture and Television Production segments).

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 $ 62.5 million as of June 30, 2023 that are pledged as collateral under this agreement.

In December 2019, the Company entered into a revolving agreement, as amended in July 2023, to transfer up to $ 100.0 million of certain receivables to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred, which matured on October 1, 2023.

As customers paid their balances, the Company would transfer additional receivables into the program.

The transferred receivables are fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company, which held additional receivables in the amount of $ 60.1 million as of September 30, 2023 that were pledged as collateral under this agreement.

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

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the three months ended June 30, 2023 and 2022:

Three Months Ended

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the three and six months ended September 30, 2023 and 2022:

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

(Amounts in millions)

4 unchanged sentences

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

$ 1.1 $ 4.9 $ ( 0.3 ) $ 24.8

Carrying value of receivables transferred and derecognized (2)

$ 16.3 $ 37.8 $ 22.1 $ 96.9

Obligations recorded $ 1.0 $ 0.4 $ 2.1 $ 3.4

1 unchanged sentence

___________________

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

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

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

At June 30, 2023, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheet, but which the Company continues to service, related to the pooled monetization agreement was approximately $ 45.3 million (March 31, 2023 - $ 52.3 million).

At September 30, 2023, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheet, but which the Company continues to service, related to the pooled monetization agreement was approximately $ 46.0 million (March 31, 2023 - $ 52.3 million).

On October 2, 2023, the Company voluntarily repurchased $ 46.0 million of receivables previously transferred.

LIONS GATE ENTERTAINMENT CORP.

3 unchanged sentences

Other Accrued Liabilities

Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $ 142.5 million and $ 128.7 million at June 30, 2023 and March 31, 2023, respectively.

Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $ 102.4 million and $ 128.7 million at September 30, 2023 and March 31, 2023, respectively.

Accumulated Other Comprehensive Income

The following table summarizes the changes in the components of accumulated other comprehensive income, net of tax.

During the three months ended June 30, 2023 and 2022, there was no income tax expense or benefit reflected in other comprehensive income due to the income tax impact being offset by changes in the Company’s deferred tax valuation allowance.

During the six months ended September 30, 2023 and 2022, there was no income tax expense or benefit reflected in other comprehensive income 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

1 unchanged sentence

March 31, 2023 $ ( 21.6 ) $ 142.5 $ 120.9

Other comprehensive income 0.8 24.5 25.3

Other comprehensive income (loss) ( 1.4 ) 33.3 31.9

Reclassifications to net loss (1)

— ( 16.4 ) ( 16.4 )

June 30, 2023 $ ( 20.8 ) $ 159.4 $ 138.6

September 30, 2023 $ ( 23.0 ) $ 159.4 $ 136.4

March 31, 2022 $ ( 19.7 ) $ 49.0 $ 29.3

1 unchanged sentence

Reclassifications to net loss (1)

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

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

___________________

(1) Represents a gain of $ 0.4 million included in direct operating expense and a gain of $ 7.2 million included in interest expense on the unaudited condensed consolidated statement of operations in the three months ended June 30, 2023 (three months ended June 30, 2022 - loss of $ 0.9 million included in direct operating expense and loss of $ 11.7 million included in interest expense) (see Note 15).

(1) Represents a gain of $ 0.1 million included in direct operating expense and a gain of $ 16.3 million included in interest expense on the unaudited condensed consolidated statement of operations in the six months ended September 30, 2023 (six months ended September 30, 2022 - loss of $ 0.1 million included in direct operating expense and loss of $ 17.0 million included in interest expense) (see Note 17).

Supplemental Cash Flow Information

Significant non-cash transactions during the three months ended June 30, 2023 and 2022 include certain interest rate swap agreements, which are discussed in Note 15, "Derivative Instruments and Hedging Activities".

There were no significant non-cash financing or investing activities for the three months ended June 30, 2023 and 2022.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Subsequent Events

On August 3, 2023, Lions Gate Entertainment Corp., a corporation organized and existing under the corporate laws of British Columbia (the “Company”), and the Company’s subsidiaries, Lions Gate Entertainment Inc., a Delaware corporation (“LGEI”), and Lions Gate International Motion Pictures S.à.r.l., a Luxembourg société à responsabilité limitée (“LGIMP” and, with the Company and LGEI, collectively the “Buyers”), entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Hasbro, Inc., a Rhode Island corporation (“Hasbro”), pursuant to which (following a contemplated pre-closing reorganization), the Buyers will acquire from Hasbro, upon the closing of the transactions contemplated under the Purchase Agreement (the “Purchase”), all of the issued and outstanding equity interests of the companies constituting the Entertainment One television and film (“eOne”) business for an aggregate cash purchase price of $ 375.0 million, subject to certain purchase price adjustments, including for cash, debt, transaction expenses and working capital, and the assumption by the Buyers of certain production financing indebtedness.

The Closing is contingent on expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval under the Competition Act (Canada), the delivery by Hasbro to the Company of certain financial statements with respect to the eOne business and other customary closing conditions.

Significant non-cash transactions during the six months ended September 30, 2023 and 2022 include certain interest rate swap agreements, which are discussed in Note 17, "Derivative Instruments and Hedging Activities".

There were no significant non-cash financing or investing activities for the six months ended September 30, 2023 and 2022.

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

What changed 10-Q

Item 1. Financial Statements