STARZ ENTERTAINMENT CORP /CN/ 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We periodically review the design and effectiveness of our disclosure controls and internal control over financial reporting. We make modifications to improve the design and effectiveness of our disclosure controls and internal control structure, and may take other corrective action, if our reviews identify a need for such modifications or actions. As of March 31, 2024, the end of the period covered by this report, the Company's management had carried out an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures were effective as of March 31, 2024. Internal Control Over Financial Reporting Management's Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; • provide reasonable assurance that (a) transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and (b) that our receipts and expenditures are being recorded and made only in accordance with authorizations of management and directors of the Company; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a materially effect on the financial statements. Our management has made an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2024. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). On December 27, 2023, we acquired eOne and, as a result, we have begun integrating the processes, systems and controls relating to eOne into our existing system of internal control over financial reporting in accordance with our integration plans. Our evaluation and conclusion on the effectiveness of internal control over financial reporting as of March 31, 2024 did not include the internal controls of eOne because of the timing of this acquisition. eOne represented approximately $858.5 million of total assets and $319.7 million of 82 Table of Contents total net assets as of March 31, 2024, and $113.8 million of revenues and $4.9 million of loss before income taxes for the year then ended. Based on this assessment, our management has concluded that, as of March 31, 2024, the Company maintained effective internal control over financial reporting. The effectiveness of the Company's internal control over financial reporting has been audited by Ernst & Young LLP, an independent registered public accounting firm. Their report is included below. Inherent Limitation on Effectiveness of Controls and Procedures A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Changes in Internal Control over Financial Reporting We acquired eOne on December 27, 2023, and the addition of eOne's financial systems and processes represent a change in our internal controls over financial reporting. There were no other changes in internal control over financial reporting during the fiscal fourth quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 83 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Lions Gate Entertainment Corp. Opinion on Internal Control Over Financial Reporting We have audited Lions Gate Entertainment Corp.’s internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Lions Gate Entertainment Corp. (the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2024, based on the COSO criteria. As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the companies constituting the Entertainment One television and film (“eOne”) business, which is included in the 2024 consolidated financial statements of the Company and constituted $858.5 million and $319.7 million of total and net assets, respectively, as of March 31, 2024 and $113.8 million and $4.9 million of revenues and loss before income taxes, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of eOne. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, equity (deficit) and cash flows for each of the three years in the period ended March 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated May 30, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 84 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Los Angeles, California May 30, 2024 85 Table of Contents ITEM 9B. OTHER INFORMATION. None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required by this Item is incorporated by reference to our Proxy Statement for our 2024 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2024. We have adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees. The Code of Business Conduct and Ethics is available on our website at investors.lionsgate.com. If we ever were to amend or waive any provision of our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or any person performing similar functions, we intend to satisfy our disclosure obligations, if any, with respect to any such waiver or amendment by posting such information on our website set forth above rather than by filing a Current Report on Form 8-K. ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item is incorporated by reference to our Proxy Statement for our 2024 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2024. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS. The information required by this Item is incorporated by reference to our Proxy Statement for our 2024 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2024. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required by this Item is incorporated by reference to our Proxy Statement for our 2024 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2024. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required by this Item is incorporated by reference to our Proxy Statement for our 2024 Annual General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2024. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. (a) The following documents are filed as part of this report: (1) Financial Statements 86 Table of Contents The financial statements listed on the accompanying Index to Financial Statements are filed as part of this report at pages F-1 to F-71. (2) Financial Statement Schedules Schedule II. Valuation and Qualifying Accounts All other Schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule. (3) and (b) Exhibits The exhibits listed on the accompanying Index to Exhibits are filed as part of this report. 87 Table of Contents Item 15(a). Schedule II. Valuation and Qualifying Accounts Lions Gate Entertainment Corp. March 31, 2024 (In Millions) Additions Description Balance at Beginning of Period Charged to Costs and Expenses (1) Charged to Other Accounts Deductions Balance at End of Period Year Ended March 31, 2024: Reserves: Returns and allowances $ 17.6 $ 33.1 $ — $ ( 32.8 ) (3) $ 17.9 Provision for doubtful accounts $ 9.2 $ 0.5 $ 1.3 (2) $ ( 3.8 ) (4) $ 7.2 Deferred tax valuation allowance $ 455.7 $ 164.7 $ 187.9 (5) $ — $ 808.3 Year Ended March 31, 2023: Reserves: Returns and allowances $ 19.3 $ 40.6 $ — $ ( 42.3 ) (3) $ 17.6 Provision for doubtful accounts $ 11.5 $ 1.1 $ — $ ( 3.4 ) (4) $ 9.2 Deferred tax valuation allowance $ 362.8 $ 115.9 $ ( 23.0 ) (5) $ — $ 455.7 Year Ended March 31, 2022: Reserves: Returns and allowances $ 26.1 $ 44.4 $ — $ ( 51.2 ) (3) $ 19.3 Provision for doubtful accounts $ 6.5 $ 5.3 $ — $ ( 0.3 ) (4) $ 11.5 Deferred tax valuation allowance $ 350.9 $ 40.4 $ ( 28.5 ) (5) $ — $ 362.8 ____________________________ (1) Charges for returns and allowances are charges against revenue. (2) Opening balances due to the acquisition of eOne on December 27, 2023. (3) Actual returns and fluctuations in foreign currency exchange rates. (4) Uncollectible accounts written off and fluctuations in foreign currency exchange rates. Amounts for the year ended March 31, 2023 include $ 2.5 million related to accounts receivable previously reserved for bad debt from customers in Russia, related to Russia's invasion of Ukraine. (5) Valuation allowance adjustments recorded in other comprehensive income and primarily associated with hedging activity. Amounts for the year ended March 31, 2024 also include an opening balance of $ 187.0 million due to the acquisition of eOne on December 27, 2023. 88 Table of Contents Item 15(b). INDEX TO EXHIBITS Exhibit Number Exhibit Description Incorporated by Reference Form Exhibit Filing Date/ Period End Date 2.1 Agreement and Plan of Merger, dated as of June 30, 2016, by and among Lions Gate, Starz, and Orion Arm Acquisition Inc. 8-K 2.1 7/1/2016 2.2+ Equity Purchase Agreement, dated as of August 3, 2023, by and among Lions Gate Entertainment Corp., Lions Gate Entertainment Inc., Lions Gate International Motion Pictures S.à.r.l and Hasbro, Inc. 8-K 2.1 8/7/2023 2.3+ Business Combination Agreement, dated as of December 22, 2023, by and among Lions Gate Entertainment Corp., Screaming Eagle Acquisition Corp., SEAC II Corp., SEAC MergerCo, 1455941 B.C. Unlimited Liability Company, LG Sirius Holdings ULC and LG Orion Holdings ULC 8-K 2.1 12/26/2023 2.3.1+ Amendment No. 1 to Business Combination Agreement, dated as of April 11, 2024, by and among Screaming Eagle Acquisition Corp., SEAC II Corp., SEAC MergerCo, 1455941 B.C. Unlimited Liability Company, Lions Gate Entertainment Corp., LG Sirius Holdings ULC and LG Orion Holdings ULC 8-K 2.1 4/12/2024 2.3.2+ Amendment No. 2 to the Business Combination Agreement, dated as of May 9, 2024, by and among Lions Gate Entertainment Corp., Screaming Eagle Acquisition Corp., SEAC II Corp., SEAC MergerCo, 1455941 B.C. Unlimited Liability Company, LG Sirius Holdings ULC and LG Orion Holdings ULC. 8-K 2.1 5/15/2024 3.1 Articles 8-K 3.1 12/8/2016 3.2 Notice of Articles 10-K 3.2 5/28/2021 4.1 Indenture, dated as of April 1, 2021, by and among Lions Gate Capital Holdings, LLC the Guarantors named therein, and Deutsche Bank Trust Company, as Trustee 8-K 4.1 4/1/2021 4.1.1x Supplemental Indenture No. 1 dated as of June 29, 2021 4.1.2x Supplemental Indenture No. 2 dated as of October 31, 2021 4.1.3x Supplemental Indenture No. 3 dated as of March 15, 2022 4.1.4x Supplemental Indenture No. 4 dated as of July 21, 2022 4.1.5x Supplemental Indenture No. 5 dated as of January 12, 2023 4.1.6x Supplemental Indenture No. 6 dated as of June 21, 2023 4.1.7x Supplemental Indenture No. 7 dated as of February 23, 2024 4.1.8x Supplemental Indenture No. 8 dated as of March 29, 2024 4.1.9x Supplemental Indenture No. 9 dated as of April 23, 2024 4.1.10 Supplemental Indenture No. 10 dated as of May 8, 2024 8-K 4.1 5/8/2024 4.1.11x Supplemental Indenture No. 11 dated as of May 13, 2024 4.2 Indenture, dated as of May 8, 2024, among Lions Gate Capital Holdings 1, Inc., the guarantors party thereto, and U.S. Bank Trust Company, National Association, as Trustee 8-K 4.2 5/8/2024 4.2.1x Supplemental Indenture No. 1 dated as of May 13, 2024 4.3 Description of Class A voting shares, no par value per share S-4 — 8/1/2016 4.4 Description of Class B non-voting shares, no par value per share S-4 — 8/1/2016 10.1*x Director Compensation Summary 10.2 Form of Director Indemnity Agreement 10-Q 10.62 12/31/2008 10.3 Letter Agreement between Mark H. Rachesky and Lions Gate Entertainment Corp. dated July 9, 2009 8-K 10.65 7/10/2009 10.4 Registration Rights Agreement, dated as of October 22, 2009, by and among Lions Gate Entertainment Corp. and the persons listed on the signature pages thereto 8-K 10.68 10/23/2009 10.5 Stock Exchange Agreement, dated as of February 10, 2015, by and between Lions Gate Entertainment Corp., LG Leopard Canada LP and the stockholders listed on Schedule 1 thereto 8-K 10.1 2/11/2015 89 Table of Contents Exhibit Number Exhibit Description Incorporated by Reference Form Exhibit Filing Date/ Period End Date 10.6 Investor Rights Agreement, dated as of November 10, 2015, by and among Lions Gate Entertainment Corp., Liberty Global plc, Discovery Communications, Inc., Liberty Global Incorporated Limited, Discovery Lightning Investments Ltd. and affiliates of MHR Fund Management, LLC 8-K 10.1 11/10/2015 10.6.1 Amendment No. 1 to Investor Rights Agreement, dated as of June 30, 2016, by and among Lions Gate, Mammoth, Liberty, Discovery, Liberty Global plc, Discovery Communications, Inc., and the affiliated funds of Mammoth party thereto 8-K 10.8 7/1/2016 10.7 Voting and Standstill Agreement, dated as of November 10, 2015, by and among Lions Gate Entertainment Corp., Liberty Global plc, Discovery Communications, Inc., Liberty Global Incorporated Limited, Discovery Lightning Investments Ltd., Dr. John C. Malone and affiliates of MHR Fund Management, LLC 8-K 10.2 11/10/2015 10.7.1 Amendment to Voting and Standstill Agreement, dated as of June 30, 2016, by and among Lions Gate, Liberty Global plc, Discovery, Dr. John C. Malone, MHR Fund Management, LLC, Liberty, Discovery Communications, Inc. and the Mammoth Funds (as defined therein) 8-K 10.7 7/1/2016 10.7.2 Amendment to the Voting and Standstill Agreement, dated as of May 13, 2024, by and among Lions Gate Entertainment Corp., Lionsgate Studios Corp., Liberty Global plc, Discovery Communications, Inc., Liberty Global Incorporated Limited, Discovery Lightning Investments Ltd., Dr. John C. Malone and affiliates of MHR Fund Management, LLC. 8-K 10.4 5/15/2024 10.8 Registration Rights Agreement, dated as of November 10, 2015, by and among Lions Gate Entertainment Corp. and Liberty Global Incorporated Limited 8-K 10.3 11/10/2015 10.9 Registration Rights Agreement, dated as of November 10, 2015, by and among Lions Gate Entertainment Corp. and Discovery Lightning Investments Ltd. 8-K 10.4 11/10/2015 10.10 Amendment No. 1, dated as of February 3, 2016, to Registration Rights Agreement, dated as of October 22, 2009, by and among Lions Gate Entertainment Corp. and the persons listed on the signatures pages thereto 10-Q 10.116 2/4/2016 10.11 Stock Exchange Agreement, dated as of June 30, 2016, by and among Lions Gate, Orion Arm Acquisition Inc., and the stockholders listed on Schedule 1 thereto 8-K 10.1 7/1/2016 10.12 Credit and Guarantee Agreement, dated as of December 8, 2016, among Lions Gate, as borrower, the guarantors party thereto, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as Administrative Agent 8-K 10.1 12/8/2016 10.12.1 Amendment No. 1, dated as of December 11, 2017, to the Credit and Guarantee Agreement dated as of December 8, 2016, among Lions Gate Entertainment Corp., as borrower, each guarantor party thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto 8-K 10.1 12/11/2017 10.12.2 Amendment No. 2, dated as of March 22, 2018, to the Credit and Guarantee Agreement dated as of December 8, 2016, among Lions Gate Entertainment Corp., as borrower, each guarantor party thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto (as previously amended by that certain Amendment No. 1 dated as of December 11, 2017). 8-K 10.1 3/22/2018 10.12.3 Amendment No. 3 dated as of March 11, 2019, to the Credit and Guarantee Agreement dated as of December 8, 2016, as amended and restated as of March 22, 2018 (as further amended, supplemented, amended and restated or otherwise modified from time to time) among Lions Gate Entertainment Corp., Lions Gate Capital Holdings LLC, as borrower, each guarantor party thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto. 10-K 10.34 5/23/2019 10.12.4 Amendment No. 4, dated as of April 6, 2021, to the Credit and Guarantee Agreement dated as of December 8, 2016, among Lions Gate Entertainment Corp., as borrower, each guarantor party thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto. 8-K 10.1 4/6/2021 10.12.5 Amendment No. 5, dated as of June 14, 2023, to the Credit and Guarantee Agreement dated as of December 8, 2016, among Lions Gate Entertainment Corp., as borrower, each guarantor party thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto 10-K/A 10.12.5 7/20/2023 90 Table of Contents Exhibit Number Exhibit Description Incorporated by Reference Form Exhibit Filing Date/ Period End Date 10.13* Deferred Compensation Plan 10-Q 10.41 2/4/2021 10.14* Employment Agreement among Jon Feltheimer and Lions Gate Entertainment Corp. dated as of August 21, 2020 8-K 10.1 8/26/2020 10.14.1* First Amendment to Employment Agreement, dated August 12, 2022, between the Company and Jon Feltheimer 8-K 10.1 8/15/2022 10.15* Employment Agreement among Michael Burns and Lions Gate Entertainment Corp. dated as of December 18, 2020 8-K 10.1 12/21/2020 10.16* Waiver and General Release Agreement dated February 15, 2023 8-K 10.1 2/17/2023 10.17* Employment Agreement between Lions Gate Entertainment Corp. and Brian Goldsmith dated as of October 1, 2022 10-K 10.19 5/25/2023 10.18* Employment Agreement between Lions Gate Entertainment Corp. and Bruce Tobey dated as of March 27, 2023 10-K 10.20 5/25/2023 10.19* Lions Gate Entertainment Corp. 2023 Performance Incentive Plan 8-K 10.1 11/29/2023 10.19.1* Form of Restricted Share Unit Award Agreement 10-Q 10.22.1 2/8/2024 10.19.2* Form of Nonqualified Stock Option Agreement 10-Q 10.22.2 2/8/2024 10.19.3* Form of Share Appreciation Rights Award Agreement 10-Q 10.22.3 2/8/2024 10.20 Sponsor Support Agreement 8-K 10.1 12/26/2023 10.21 Form of Subscription Agreement 8-K 10.2 12/26/2023 10.22 Form of Warrantholder Support Agreement 8-K 10.3 12/26/2023 10.23 Form of Lock-Up Agreement 8-K 10.4 12/26/2023 10.24 Form of Sponsor Option Agreement 8-K 10.5 12/26/2023 10.25 Form of Amended and Restated Registration Rights Agreement 8-K 10.6 12/26/2023 10.26 Exchange Agreement by and among Lions Gate Entertainment Corp., Lions Gate Capital Holdings 1, Inc., Lions Gate Capital Holdings LLC, and the Noteholder Parties Party thereto, dated May 2, 2024 8-K 10.1 12/26/2023 10.27x* Employment Agreement between Lions Gate Entertainment Corp. and James W. Barge dated as of March 21, 2024 19.1x Insider Trading Policy of the Company 21.1x Subsidiaries of the Company 23.1x Consent of Ernst & Young LLP 24.1x Power of Attorney (Contained on Signature Page) 31.1x Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002 31.2x Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002 32.1xx Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002 97x Policy Regarding the Recoupment of Certain Compensation Payments, effective October 2, 2023 101x The following financial statements from the Company's Annual Report on Form 10-K for the year ended March 31, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Loss, (iv) Consolidated Statements of Equity (Deficit), (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. 104x The cover page from the Company’s Annual Report on Form 10-K for the year ended March 31, 2024 (formatted as Inline XBRL and contained in Exhibit 101). _____________________________ * Management contract or compensatory plan or arrangement. x Filed herewith xx Furnished herewith and not deemed to be "filed" for purposes of Section 18 of the Exchange Act and shall not be deemed to be incorporated by reference into any filing under the Securities Act, or the Exchange Act, irrespective of any general incorporation language contained in such filing + Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. 91 Table of Contents ITEM 16. FORM 10-K SUMMARY. None. 92 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 30, 2024. LIONS GATE ENTERTAINMENT CORP. By: /s/ James W. Barge James W. Barge Chief Financial Officer DATE: May 30, 2024 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates so indicated. Each person whose signature appears below authorizes each of Jon Feltheimer, Michael Burns, Bruce Tobey and James W. Barge, severally and not jointly, to be his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in such person’s name, place and stead, in any and all capacities, to sign any amendments to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024; granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, shall lawfully do or cause to be done by virtue hereof. 93 Table of Contents Signature Title Date /s/ JAMES W. BARGE Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) May 30, 2024 James W. Barge /s/ MICHAEL BURNS Vice Chairman, Director May 30, 2024 Michael Burns /s/ MIGNON CLYBURN Director May 30, 2024 Mignon Clyburn /s/ GORDON CRAWFORD Director May 30, 2024 Gordon Crawford /s/ JON FELTHEIMER Chief Executive Officer (Principal Executive Officer) and Director May 30, 2024 Jon Feltheimer /s/ EMILY FINE Director May 30, 2024 Emily Fine /s/ MICHAEL T. FRIES Director May 30, 2024 Michael T. Fries /s/ JOHN D. HARKEY, JR. Director May 30, 2024 John D. Harkey, Jr. /s/ SUSAN MCCAW Director May 30, 2024 Susan McCaw /s/ YVETTE OSTOLAZA Director May 30, 2024 Yvette Ostolaza /s/ MARK H. RACHESKY, M.D. Chairman of the Board of Directors May 30, 2024 Mark H. Rachesky, M.D. /s/ DARYL SIMM Director May 30, 2024 Daryl Simm /s/ HARDWICK SIMMONS Director May 30, 2024 Hardwick Simmons /s/ HARRY SLOAN Director May 30, 2024 Harry Sloan 94 Table of Contents INDEX TO FINANCIAL STATEMENTS Page Number Audited Consolidated Financial Statements Report of Ernst & Young, LLP , Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F-2 Consolidated Balance Sheets — March 31, 2024 and 2023 F-4 Consolidated Statements of Operations — Years Ended March 31, 2024, 2023 and 2022 F-5 Consolidated Statements of Comprehensive Loss — Years Ended March 31, 2024, 2023 and 2022 F-6 Consolidated Statements of Equity (Deficit) — Years Ended March 31, 2024, 2023 and 2022 F-7 Consolidated Statements of Cash Flows — Years Ended March 31, 2024, 2023 and 2022 F-8 Notes to Audited Consolidated Financial Statements F-9 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Lions Gate Entertainment Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Lions Gate Entertainment Corp. (the Company) as of March 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, equity (deficit) and cash flows for each of the three years in the period ended March 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 30, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F-2 Table of Contents Pre-release Film Impairments Description of the Matter As disclosed in Note 1 to the consolidated financial statements, Investment in Films and Television Programs is stated at the lower of unamortized cost or estimated fair value. As disclosed in Note 3 to the consolidated financial statements, total impairment charges on investment in films and television programs related to theatrical films were $34.6 million for the year ended March 31, 2024 and the unamortized balance related to completed and not released and in progress theatrical films was $532.5 million at March 31, 2024. Auditing the Company’s impairment evaluation for theatrical films prior to release is challenging and subjective as the key assumptions in the analysis include estimates of future anticipated revenues and box office performance, which may differ from future actual results. These estimates are based in part on the historical performance of similar films, test audience results when available, information regarding competing film releases, and critic reviews. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s theatrical impairment review process. For example, we tested controls over management’s review of unreleased theatrical films for indicators of impairment and management’s determination of the significant assumptions mentioned above. To test the assessment of unreleased theatrical films for impairment, our audit procedures included, among others, evaluating unreleased theatrical films for indicators of impairment and testing the completeness and accuracy of the underlying data as well as the significant assumptions mentioned above. For example, we assessed management’s assumptions by comparing them to historical performance of comparable films and to current operating information, we evaluated test audience results when available, and we considered the historical accuracy of management’s estimates. We also performed sensitivity analyses to evaluate the potential changes in the expected profitability of unreleased films resulting from reasonable changes in the assumptions. Goodwill related to the Media Networks Reporting Unit Description of the Matter As disclosed in Note 1 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level, and between annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. As disclosed in Note 6 to the consolidated financial statements, the Company recorded a goodwill impairment charge of $493.9 million during the year ended March 31, 2024 related to the Media Networks reporting unit, resulting in no remaining goodwill balance for this reporting unit at March 31, 2024. Auditing management’s evaluation of goodwill for impairment is complex and requires significant judgment due to the estimation required in determining the fair value of the Media Networks reporting unit. The fair value estimate of this reporting unit is affected by significant assumptions such as projected annual revenue growth rate, EBITA margin, and market multiples, which are affected by expectations about future market or economic conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s assessment of the significant assumptions used in the fair value measurement described above. To test the estimated fair value of the Company’s Media Networks reporting unit, we performed audit procedures that included, among others, assessing the methodologies used and testing the significant assumptions discussed above and the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to current industry and economic trends, changes to the Company’s business model, historical financial performance, and other relevant factors. We assessed the historical accuracy of management’s forecasts and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions. We also involved our specialists to evaluate the reasonableness of certain significant assumptions and the valuation methodologies used. /s/ Ernst & Young LLP We have served as the Company's auditor since 2001. Los Angeles, California May 30, 2024 F-3 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED BALANCE SHEETS March 31, 2024 March 31, 2023 (Amounts in millions) ASSETS Cash and cash equivalents $ 314.0 $ 272.1 Accounts receivable, net 753.0 582.1 Other current assets 396.5 264.2 Total current assets 1,463.5 1,118.4 Investment in films and television programs and program rights, net 2,762.2 2,947.9 Property and equipment, net 88.5 89.5 Investments 74.8 64.7 Intangible assets, net 991.8 1,300.1 Goodwill 811.2 1,289.5 Other assets 900.7 616.1 Total assets $ 7,092.7 $ 7,426.2 LIABILITIES Accounts payable $ 327.6 368.1 Content related payables 190.0 184.1 Other accrued liabilities 355.1 273.4 Participations and residuals 678.4 549.3 Film related obligations 1,393.1 1,007.2 Debt - short term portion 860.3 41.4 Deferred revenue 187.6 147.2 Total current liabilities 3,992.1 2,570.7 Debt 1,619.7 1,978.2 Participations and residuals 435.1 329.6 Film related obligations 544.9 1,016.4 Other liabilities 556.4 317.9 Deferred revenue 118.4 52.0 Deferred tax liabilities 13.3 31.8 Total liabilities 7,279.9 6,296.6 Commitments and contingencies (Note 17) Redeemable noncontrolling interest 123.3 343.6 EQUITY (DEFICIT) Class A voting common shares, no par value, 500.0 shares authorized, 83.6 shares issued (March 31, 2023 - 83.5 shares issued) 673.6 672.3 Class B non-voting common shares, no par value, 500.0 shares authorized, 151.7 shares issued (March 31, 2023 - 145.9 shares issued) 2,474.4 2,430.9 Accumulated deficit ( 3,576.7 ) ( 2,439.6 ) Accumulated other comprehensive income 116.0 120.9 Total Lions Gate Entertainment Corp. shareholders' equity (deficit) ( 312.7 ) 784.5 Noncontrolling interests 2.2 1.5 Total equity (deficit) ( 310.5 ) 786.0 Total liabilities, redeemable noncontrolling interest and equity (deficit) $ 7,092.7 $ 7,426.2 See accompanying notes. F-4 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended March 31, 2024 2023 2022 (Amounts in millions, except per share amounts) Revenues $ 4,016.9 $ 3,854.8 $ 3,604.3 Expenses: Direct operating 2,189.2 2,312.5 2,064.2 Distribution and marketing 911.4 801.7 861.0 General and administration 490.5 531.1 475.4 Depreciation and amortization 192.2 180.3 177.9 Restructuring and other 508.5 411.9 16.8 Goodwill and intangible asset impairment 663.9 1,475.0 — Total expenses 4,955.7 5,712.5 3,595.3 Operating income (loss) ( 938.8 ) ( 1,857.7 ) 9.0 Interest expense ( 269.8 ) ( 221.2 ) ( 176.0 ) Interest and other income 22.1 6.4 30.8 Other expense ( 26.9 ) ( 26.9 ) ( 10.9 ) Gain (loss) on extinguishment of debt 19.9 57.4 ( 28.2 ) Gain on investments, net 3.5 44.0 1.3 Equity interests income (loss) 8.7 0.5 ( 3.0 ) Loss before income taxes ( 1,181.3 ) ( 1,997.5 ) ( 177.0 ) Income tax benefit (provision) 65.0 ( 21.3 ) ( 28.4 ) Net loss ( 1,116.3 ) ( 2,018.8 ) ( 205.4 ) Less: Net loss attributable to noncontrolling interests 13.4 8.6 17.2 Net loss attributable to Lions Gate Entertainment Corp. shareholders $ ( 1,102.9 ) $ ( 2,010.2 ) $ ( 188.2 ) Per share information attributable to Lions Gate Entertainment Corp. shareholders: Basic net loss per common share $ ( 4.77 ) $ ( 8.82 ) $ ( 0.84 ) Diluted net loss per common share $ ( 4.77 ) $ ( 8.82 ) $ ( 0.84 ) Weighted average number of common shares outstanding: Basic 233.6 227.9 224.1 Diluted 233.6 227.9 224.1 See accompanying notes. F-5 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Year Ended March 31, 2024 2023 2022 (Amounts in millions) Net loss $ ( 1,116.3 ) $ ( 2,018.8 ) $ ( 205.4 ) Foreign currency translation adjustments, net of tax ( 1.1 ) ( 1.9 ) ( 4.6 ) Net unrealized gain (loss) on cash flow hedges, net of tax ( 3.8 ) 93.5 117.2 Comprehensive loss ( 1,121.2 ) ( 1,927.2 ) ( 92.8 ) Less: Comprehensive loss attributable to noncontrolling interest 13.4 8.6 17.2 Comprehensive loss attributable to Lions Gate Entertainment Corp. shareholders $ ( 1,107.8 ) $ ( 1,918.6 ) $ ( 75.6 ) See accompanying notes. F-6 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) Class A Voting Common Shares Class B Non-Voting Common Shares Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total LGEC Shareholders' Equity (Deficit) Non-controlling Interests (a) Total Equity (Deficit) Number Amount Number Amount (Amounts in millions) Balance at March 31, 2021 83.0 $ 663.2 138.2 $ 2,296.0 $ ( 82.9 ) $ ( 83.3 ) $ 2,793.0 $ 1.6 $ 2,794.6 Exercise of stock options — 0.5 0.3 3.7 — — 4.2 — 4.2 Share-based compensation, net of share cancellations for taxes 0.3 4.3 3.5 53.9 — — 58.2 — 58.2 Issuance of common shares — 0.2 — 0.2 — — 0.4 — 0.4 Noncontrolling interests — — — — — — — ( 0.3 ) ( 0.3 ) Net loss — — — — ( 188.2 ) — ( 188.2 ) 0.5 ( 187.7 ) Other comprehensive income — — — — — 112.6 112.6 — 112.6 Redeemable noncontrolling interests adjustments to redemption value — — — — ( 98.6 ) — ( 98.6 ) — ( 98.6 ) 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 Exercise of stock options — — 0.4 3.8 — — 3.8 — 3.8 Share-based compensation, net of share cancellations for taxes 0.2 3.8 3.5 73.1 — — 76.9 — 76.9 Issuance of common shares — 0.3 — 0.2 — — 0.5 — 0.5 Noncontrolling interests — — — — — — — ( 0.9 ) ( 0.9 ) Net loss — — — — ( 2,010.2 ) — ( 2,010.2 ) 0.6 ( 2,009.6 ) Other comprehensive income — — — — — 91.6 91.6 — 91.6 Redeemable noncontrolling interests adjustments to redemption value — — — — ( 59.7 ) — ( 59.7 ) — ( 59.7 ) 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 — — — 0.5 — — 0.5 — 0.5 Share-based compensation, net of share cancellations for taxes — 0.8 5.8 42.5 — — 43.3 — 43.3 Issuance of common shares 0.1 0.5 — 0.5 — — 1.0 — 1.0 Noncontrolling interests — — — — — — — ( 0.8 ) ( 0.8 ) Net loss — — — — ( 1,102.9 ) — ( 1,102.9 ) 1.5 ( 1,101.4 ) Other comprehensive loss — — — — — ( 4.9 ) ( 4.9 ) — ( 4.9 ) Redeemable noncontrolling interests adjustments to redemption value — — — — ( 34.2 ) — ( 34.2 ) — ( 34.2 ) Balance at March 31, 2024 83.6 $ 673.6 151.7 $ 2,474.4 $ ( 3,576.7 ) $ 116.0 $ ( 312.7 ) $ 2.2 $ ( 310.5 ) _________________________ (a) Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 11 ). See accompanying notes. F-7 Table of Contents LIONS GATE ENTERTAINMENT CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended March 31, 2024 2023 2022 (Amounts in millions) Operating Activities: Net loss $ ( 1,116.3 ) $ ( 2,018.8 ) $ ( 205.4 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 192.2 180.3 177.9 Amortization of films and television programs and program rights 1,577.9 1,665.3 1,567.7 Amortization of debt financing costs and other non-cash interest 28.3 25.7 50.5 Non-cash share-based compensation 90.6 102.0 100.0 Other amortization 53.4 69.2 92.5 Goodwill and intangible asset impairment 663.9 1,475.0 — Non-cash charge from the modification of an equity award (see Note 11) 49.2 — — Content and other impairments 377.3 385.2 — (Gain) loss on extinguishment of debt ( 19.9 ) ( 57.4 ) 28.2 Equity interests (income) loss ( 8.7 ) ( 0.5 ) 3.0 Gain on investments, net ( 3.5 ) ( 44.0 ) ( 1.3 ) Deferred income taxes ( 18.5 ) ( 5.3 ) ( 1.7 ) Changes in operating assets and liabilities: Proceeds from the termination of interest rate swaps — 188.7 — Accounts receivable, net 95.6 ( 140.6 ) ( 44.5 ) Investment in films and television programs and program rights, net ( 1,409.3 ) ( 1,979.2 ) ( 2,211.7 ) Other assets ( 1.7 ) ( 41.9 ) ( 212.4 ) Accounts payable and accrued liabilities ( 136.3 ) ( 2.9 ) 1.4 Participations and residuals 29.0 145.4 ( 71.3 ) Content related payables ( 45.6 ) ( 35.1 ) 64.9 Deferred revenue ( 0.8 ) ( 25.4 ) 1.3 Net Cash Flows Provided By (Used In) Operating Activities 396.8 ( 114.3 ) ( 660.9 ) Investing Activities: Purchase of eOne, net of cash acquired (see Note 2) ( 331.1 ) — — Proceeds from the sale of Pantaya — — 123.6 Proceeds from the sale of equity method and other investments 5.2 46.3 1.5 Investment in equity method investees and other ( 13.3 ) ( 17.5 ) ( 14.0 ) Distributions from equity method investees and other 0.8 1.9 7.2 Acquisition of assets (film library and related assets) — — ( 161.4 ) Increase in loans receivable ( 3.7 ) — ( 4.3 ) Capital expenditures ( 34.7 ) ( 49.0 ) ( 33.1 ) Net Cash Flows Used In Investing Activities ( 376.8 ) ( 18.3 ) ( 80.5 ) Financing Activities: Debt - borrowings, net of debt issuance and redemption costs 3,145.0 1,523.0 2,448.4 Debt - repurchases and repayments ( 2,672.8 ) ( 1,880.8 ) ( 2,693.9 ) Film related obligations - borrowings 2,010.6 1,688.6 1,253.4 Film related obligations - repayments ( 2,215.4 ) ( 1,073.0 ) ( 347.6 ) Settlement of financing component of interest rate swaps — ( 134.5 ) ( 28.5 ) Purchase of noncontrolling interest ( 194.6 ) ( 36.5 ) — Distributions to noncontrolling interest ( 1.7 ) ( 7.6 ) ( 1.5 ) Exercise of stock options 0.5 3.8 4.2 Tax withholding required on equity awards ( 32.0 ) ( 19.2 ) ( 35.1 ) Net Cash Flows Provided By Financing Activities 39.6 63.8 599.4 Net Change In Cash, Cash Equivalents and Restricted Cash 59.6 ( 68.8 ) ( 142.0 ) Foreign Exchange Effects on Cash, Cash Equivalents and Restricted Cash ( 1.2 ) ( 2.8 ) ( 2.1 ) Cash, Cash Equivalents and Restricted Cash - Beginning Of Period 313.0 384.6 528.7 Cash, Cash Equivalents and Restricted Cash - End Of Period $ 371.4 $ 313.0 $ 384.6 See accompanying notes. F-8 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Business, Basis of Presentation and Significant Accounting Policies Description of Business 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. The Company’s film, television, subscription and location-based entertainment businesses are backed by a more than 20,000 -title library and a valuable collection of iconic film and television franchises. Basis of Presentation Generally Accepted Accounting Principles These consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). Principles of Consolidation The accompanying consolidated financial statements of the Company include the accounts of Lionsgate and its majority-owned and controlled subsidiaries. The Company reviews its relationships with other entities to identify whether it is the primary beneficiary of a variable interest entity (“VIE”). If the determination is made that the Company is the primary beneficiary, then the entity is consolidated. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to ultimate revenue and costs used for the amortization of investment in films and television programs; estimates of future viewership used for the amortization of licensed program rights; estimates related to the revenue recognition of sales or usage-based royalties; fair value of equity-based compensation; fair value of assets and liabilities for allocation of the purchase price of companies acquired; income taxes including the assessment of valuation allowances for deferred tax assets; accruals for contingent liabilities; and impairment assessments for investment in films and television programs and licensed program rights, property and equipment, equity investments, goodwill and intangible assets. Actual results could differ from such estimates. Reclassifications Certain amounts presented in prior years have been reclassified to conform to the current year’s presentation. Significant Accounting Policies Revenue Recognition The Company's Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places. The Company's Media Networks segment generates revenue primarily from the distribution of the Company's STARZ premium subscription video services. Revenue is recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services or goods. Revenues do not include taxes collected from customers on behalf of taxing authorities such as sales tax and value-added tax. In the ordinary course of business, the Company's reportable segments enter into transactions with one another. The most common types of intersegment transactions include licensing motion pictures or television programming (including Starz original productions) from the Motion Picture and Television Production segments to the Media Networks segment. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results. F-9 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Licensing Arrangements. The Company's content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage based royalties. Fixed Fee or Minimum Guarantees: The Company's fixed fee or minimum guarantee licensing arrangements may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content. Sales or Usage Based Royalties: Sales or usage based royalties represent amounts due to the Company based on the “sale” or “usage” of the Company's content by the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated and has been satisfied (or partially satisfied). Generally, when the Company licenses completed content with standalone functionality (such as a movie, or television show), its performance obligation will be satisfied prior to the sale or usage. When the Company licenses intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), its performance obligation is generally satisfied in the same period as the sale or usage. The actual amounts due to the Company under these arrangements are generally not reported to the Company until after the close of the reporting period. The Company records revenue under these arrangements for the amounts due and not yet reported to the Company based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are based on information from the Company's customers, historical experience with similar titles in that market or territory, the performance of the title in other markets, and/or data available in the industry. Revenues by Market or Product Line. The following describes the revenues generated by market or product line. Theatrical revenues are included in the Motion Picture segment; home entertainment, television, international and other revenues are applicable to both the Motion Picture and Television Production segments; Media Networks programming revenues are included in the Media Networks segment. • Theatrical. Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis (distributed by the Company directly in the United States and through a sub-distributor in Canada). Revenue from the theatrical release of feature films are treated as sales or usage- based royalties, are recognized as revenue starting at the exhibition date and are based on the Company's participation in box office receipts of the theatrical exhibitor . • Home Entertainment. Home entertainment consists of Digital Media and Packaged Media. ◦ Digital Media. Digital media includes digital transaction revenue sharing arrangements (pay-per-view and video-on-demand platforms, electronic sell through ("EST"), and digital rental) and licenses of content to digital platforms for a fixed fee. Digital Transaction Revenue Sharing Arrangements: Primarily represents revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, the Company shares in the rental or sales revenues generated by the platform on a title-by-title basis. These digital media platforms generate revenue from rental and EST arrangements, such as download-to-own, download-to-rent, and video-on-demand. These revenue sharing arrangements are recognized as sales or usage based royalties based on the performance of these platforms and pursuant to the terms of the contract, as discussed above. Licenses of Content to Digital Platforms: Primarily represents the licensing of content to subscription-video-on-demand ("SVOD") or other digital platforms for a fixed fee. As discussed above, revenues are recognized when the content has been delivered and the window for the exploitation right in that territory has begun. ◦ Packaged Media. Packaged media revenues represent the sale of motion pictures and television shows (produced or acquired) on physical discs (DVD’s, Blu-ray, 4K Ultra HD, referred to as "Packaged Media") in the retail market. Revenues are recognized, net of an allowance for estimated returns and other allowances, on the later of receipt by the customer or “street date” (when it is available for sale by the customer). F-10 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) • Television . Television revenues are derived from the licensing to domestic markets (linear pay, basic cable, free television markets, syndication) of motion pictures (including theatrical productions and acquired films) and scripted and unscripted television series, television movies, mini-series, and non-fiction programming. Television revenues include fixed fee arrangements as well as arrangements in which the Company earns advertising revenue from the exploitation of certain content on television networks. Television also includes revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform or the traditional pay window for a motion picture is licensed to an SVOD platform. Revenues associated with a title, right, or window from television licensing arrangements are recognized when the feature film or television program is delivered (on an episodic basis for television product) and the window for the exploitation right has begun. • International. International revenues are derived from (1) licensing of the Company's productions, acquired films, catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis; (2) the direct distribution of the Company's productions, acquired films, and the Company's catalog product and libraries of acquired titles in the United Kingdom; and (3) licensing to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming. License fees and minimum guarantee amounts associated with title, window, media or territory, are recognized when access to the feature film or television program has been granted or delivery has occurred, as required under the contract, and the right to exploit the feature film or television program in that window, media or territory has commenced. Revenues are also generated from sales or usage based royalties received from international distributors based on their distribution performance pursuant to the terms of the contracts after the recoupment of certain costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by the Company's customer generating a royalty due to the Company has occurred. • Other. Other revenues are derived from the licensing of the Company's film and television and related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets and from commissions and executive producer fees earned related to talent management. Revenues from the licensing of film and television content and the sales and licensing of music are recognized when the content has been delivered and the license period has begun, as discussed above. Revenues from the licensing of symbolic intellectual property (i.e., licenses of motion pictures or television characters, brands, storylines, themes or logos) is recognized over the corresponding license term. Commissions are recognized as such services are provided. • Media Networks - Programming Revenues. Media Networks’ revenues are primarily derived from the domestic distribution of the Company's STARZ branded premium subscription video services through over-the-top ("OTT") streaming platforms and distributors, on a direct-to-consumer basis through the Starz App and through U.S. multichannel video programming distributors (“MVPDs”), including cable operators, satellite television providers, and telecommunications companies (collectively "Distributors") (in the aggregate, the "Starz Domestic Platform"). Media Networks revenues also include revenue from LIONSGATE+, which represents international revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services outside the United States. The Starz Domestic platform together with the LIONSGATE+ platforms are referred to as the "Starz Platforms". Pursuant to the Company’s distribution agreements, revenues are primarily based on a fee based on the number of subscribers who receive the Company's services or based on other factors (variable fee arrangements), or to a lesser extent, may be based on a monthly fixed fee or minimum guarantee, subject to nominal annual escalations. The Company also generates revenue through the distribution of its SVOD service directly to consumers through the Starz App. The variable distribution fee arrangements represent sales or usage based royalties, which are recognized over the period of such sales or usage by the Company's distributor, which is the same period that the content is provided to the distributor. Estimates of revenue generated, but not yet reported to the Company by its distribution partners, are made based on an estimated number of subscribers using historical trends and recent reporting. Other fixed fee or minimum guarantee programming revenue is recognized over the contract term based on the continuous delivery of the content to the distributor. Subscribers through the Starz App are billed in advance of the start of their monthly or annual membership and revenues are recognized ratably over each applicable membership period. F-11 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Deferred Revenue. Deferred revenue relates primarily to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation. Deferred revenue also relates to customer payments are made in advance of when the Company fulfills its performance obligation and recognizes revenue. This primarily occurs under television production contracts, in which payments may be received as the production progresses, international motion picture contracts, where a portion of the payments are received prior to the completion of the movie and prior to license rights start dates, and pay television contracts with multiple windows with a portion of the revenues deferred until the subsequent exploitation windows commence. These arrangements do not contain significant financing components because the reason for the payment structure is not for the provision of financing to the Company, but rather to mitigate the Company's risk of customer non-performance and incentivize the customer to exploit the Company's content. See Note 12 for further information. Accounts Receivable. Payment terms vary by location and type of customer and the nature of the licensing arrangement. However, other than certain multi-year license arrangements; payments are generally due within 60 days after revenue is recognized. For certain multi-year licensing arrangements, primarily in the television, digital media, and international markets, payments may be due over a longer period. When the Company expects the period between fulfillment of its performance obligation and the receipt of payment to be greater than a year, a significant financing component is present. In these cases, such payments are discounted to present value based on a discount rate reflective of a separate financing transaction between the customer and the Company, at contract inception. The significant financing component is recorded as a reduction to revenue and accounts receivable initially, with such accounts receivable discount amortized to interest income over the period to receipt of payment. The Company does not assess contracts with deferred payments for significant financing components if, at contract inception, the Company expects the period between fulfillment of the performance obligation and subsequent payment to be one year or less. Cash and Cash Equivalents Cash and cash equivalents consist of cash deposits at financial institutions and investments in money market mutual funds. Restricted Cash At March 31, 2024, the Company had restricted cash of $ 57.4 million, primarily representing amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility, IP Credit Facility and Backlog Facility (March 31, 2023 - $ 40.9 million). Restricted cash is included within “other current assets” and "other non-current assets" on the consolidated balance sheets (see Note 19). Investment in Films and Television Programs and Licensed Program Rights Investment in Films and Television Programs: General. Investment in films and television programs includes the unamortized costs of films and television programs, a portion of which are monetized individually (i.e., through domestic theatrical, home entertainment, television, international or other ancillary-market distribution), and a portion of which are monetized as part of a film group (i.e., primarily content internally produced by our Television Production segment for our Media Networks segment). Recording Cost. Costs of acquiring and producing films and television programs and of acquired libraries are capitalized when incurred. For films and television programs produced by the Company, capitalized costs include all direct production and financing costs, capitalized interest and production overhead. For the years ended March 31, 2024, 2023, and 2022, total capitalized interest was $ 21.0 million, $ 28.1 million, and $ 12.8 million, respectively. For acquired films and television programs, capitalized costs consist of minimum guarantee payments to acquire the distribution rights. Amortization. Costs of acquiring and producing films and television programs and of acquired libraries that are monetized individually are amortized using the individual-film-forecast method, whereby these costs are amortized and participations and residuals costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the films or television programs. For investment in films and television programs monetized as a group, see further discussion below under Licensed Program Rights for a description of amortization of costs monetized as a group. F-12 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Ultimate Revenue. Ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release of the motion picture. For an episodic television series, the period over which ultimate revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of acquisition. Development. Films and television programs in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects. Such costs are capitalized and, upon commencement of production, are transferred to production costs. Projects in development are written off at the earlier of the date they are determined not to be recoverable or when abandoned, or three years from the date of the initial investment unless the fair value of the project exceeds its carrying cost. Licensed Program Rights: General. Licensed program rights include content licensed from third parties that is monetized as part of a film group for distribution on Media Networks distribution platforms. Licensed content is comprised of films or series that have been previously produced by third parties and the Company retains specified airing rights over a contractual term. Program licenses typically have fixed terms and require payments during the term of the license. Recording Cost. The cost of licensed content is capitalized when the cost is known or reasonably determinable, the license period for programs has commenced, the program materials have been accepted by the Company in accordance with the license agreements, and the programs are available for the first showing. Licensed programming rights may include rights to more than one exploitation window under the Company's output and library agreements. For films with multiple windows, the license fee is allocated between the windows based upon the proportionate estimated fair value of each window which generally results in the majority of the cost allocated to the first window on newer releases. Certain license agreements and productions may include additional ancillary rights in addition to the rights for exploitation on the Starz Platforms. A portion of the cost of these licenses and the cost of produced content, is allocated between the programming rights for exploitation on the Starz Platforms and investment in film and television programs for exploitation outside of the Starz Platforms in ancillary markets (e.g., home entertainment, digital platforms, television, etc.) based on the relative fair value of those markets. The estimates of fair value for the allocation between windows of exploitation on the Starz Platforms and ancillary markets is based on historical experience of the values of similar titles licensed in subsequent windows and estimates of future revenues in ancillary markets. Amortization. The cost of licensed program rights for films and television programs (including original series) are generally amortized on a title-by-title or episode-by-episode basis using an accelerated or straight-line method based on the expected and historical viewership patterns or the current and anticipated number of exhibitions over the license period or estimated life for owned or produced programs. The number of exhibitions is estimated based on the number of exhibitions allowed in the agreement (if specified) and the expected usage of the content. Participations and residuals are expensed in line with the amortization of production costs. Changes in management’s estimate of the anticipated exhibitions and viewership patterns of films and original series on our platforms could result in the earlier recognition of our programming costs than anticipated. Impairment Assessment for Investment in Films and Television Programs and Licensed Program Rights: General. A film group or individual film or television program is evaluated for impairment when an event or change in circumstances indicates that the fair value of an individual film or film group is less than its unamortized cost. A film group represents the unit of account for impairment testing for a film or license agreement for program material when the film or license agreement is expected to be predominantly monetized with other films and/or license agreements instead of being predominantly monetized on its own. A film group is defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements. Content Monetized Individually. For content that is predominantly monetized individually (primarily investment in film and television programs related to the Motion Picture and Television Production segments), whenever events or changes in circumstances indicate that the fair value of the individual film may be less than its unamortized costs, the unamortized costs of the individual film are compared to the estimated fair value of the individual film. The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title. To the extent the unamortized costs exceed the fair value, an impairment charge is recorded for the excess. Content Monetized as a Group. For content that is predominantly monetized as a group (primarily licensed program rights in the Media Networks segment and internally produced programming, as discussed above), whenever events or changes in circumstances indicate that the fair value of the film group may be less than its unamortized costs, the aggregate unamortized F-13 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) costs of the group are compared to the present value of the discounted cash flows of the group using the lowest level for which identifiable cash flows are independent of other produced and licensed content. The Company's film groups are generally aligned with the Company's networks and digital content offerings domestically (i.e, Starz Networks) and internationally by territory or groups of territories, where content assets are shared across the various territories. If the unamortized costs of the film group exceed the present value of discounted cash flows, an impairment charge is recorded for the excess and allocated to individual titles based on the relative carrying value of each title in the group. Content removed from the service and abandoned is written down to its fair value, if any, determined using a discounted cash flow approach. Valuation Assumptions. The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 10). The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program or film group. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in management’s future revenue estimates. Property and Equipment, net Property and equipment is carried at cost less accumulated depreciation. Depreciation is provided for on a straight line basis over the following useful lives: Distribution equipment 3 — 7 years Computer equipment and software 3 — 5 years Furniture and equipment 5 — 7 years Leasehold improvements Lease term or the useful life, whichever is shorter Land Not depreciated The Company periodically reviews and evaluates the recoverability of property and equipment. Where applicable, estimates of net future cash flows, on an undiscounted basis, are calculated based on future revenue estimates. If appropriate and where deemed necessary, a reduction in the carrying amount is recorded based on the difference between the carrying amount and the fair value based on discounted cash flows. Leases The Company determines if an arrangement is a lease at its inception. The expected term of the lease used for computing the lease liability and right-of-use ("ROU") asset and determining the classification of the lease as operating or financing may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company also elected to not separate lease components from non-lease components across all lease categories. Instead, each separate lease component and non-lease component are accounted for as a single lease component. Operating Leases. Operating lease ROU assets, representing the Company's right to use the underlying asset for the lease term, are included in the "Other assets - non-current" line item in the Company's consolidated balance sheets. Operating lease liabilities, representing the present value of the Company's obligation to make payments over the lease term, are included in the “Other accrued liabilities” and “Other liabilities - non-current” line items in the Company's consolidated balance sheets. The Company has entered into various short-term operating leases which have an initial term of 12 months or less. These short-term leases are not recorded on the Company's consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Finance Leases. The Company did not have any finance leases during the years ended March 31, 2024, 2023 or 2022. The present value of the lease payments is calculated using a rate implicit in the lease, when readily determinable. However, as most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of the lease payments for the majority of its leases. Variable lease payments that are based on an index or rate are included in the measurement of ROU assets and lease liabilities at lease inception. All other variable lease payments are expensed as incurred and are not included in the measurement of ROU assets and lease liabilities. Investments Investments include investments accounted for under the equity method of accounting, and equity investments with and without readily determinable fair value. F-14 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Equity Method Investments: The Company uses the equity method of accounting for investments in companies in which it has a minority equity interest and the ability to exert significant influence over operating decisions of the companies. Significant influence is generally presumed to exist when the Company owns between 20% and 50% of the voting interests in the investee, holds substantial management rights or holds an interest of less than 20% in an investee that is a limited liability partnership or limited liability corporation that is treated as a flow-through entity. Under the equity method of accounting, the Company's share of the investee's earnings (losses) are included in the "equity interests income (loss)" line item in the consolidated statements of operations. The Company records its share of the net income or loss of most equity method investments on a one quarter lag and, accordingly, during the years ended March 31, 2024, 2023, and 2022, the Company recorded its share of the income or loss generated by these entities for the years ended December 31, 2023, 2022 and 2021, respectively. Dividends and other distributions from equity method investees are recorded as a reduction of the Company's investment. Distributions received up to the Company's interest in the investee's retained earnings are considered returns on investments and are classified within cash flows from operating activities in the consolidated statements of cash flows. Distributions from equity method investments in excess of the Company's interest in the investee's retained earnings are considered returns of investments and are classified within cash flows provided by investing activities in the statements of cash flows. Other Equity Investments: Investments in nonconsolidated affiliates in which the Company owns less than 20% of the voting common stock, or does not exercise significant influence over operating and financial policies, are recorded at fair value using quoted market prices if the investment has a readily determinable fair value. If an equity investment's fair value is not readily determinable, the Company will recognize it at cost less any impairment, adjusted for observable price changes in orderly transactions in the investees' securities that are identical or similar to the Company's investments in the investee. The unrealized gains and losses and the adjustments related to the observable price changes are recognized in net income (loss). Impairments of Investments: The Company regularly reviews its investments for impairment, including when the carrying value of an investment exceeds its market value. If the Company determines that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair value by a charge to earnings. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include (i) the market value of the security in relation to its cost basis, (ii) the financial condition of the investee, and (iii) the Company’s intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment. For investments accounted for using the equity method of accounting or equity investments without a readily determinable fair value, the Company evaluates information available (e.g., budgets, business plans, financial statements, etc.) in addition to quoted market prices, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financing at an amount below the cost basis of the Company’s investment. Goodwill and Indefinite-Lived Intangible Assets At March 31, 2024, the carrying value of goodwill and indefinite-lived intangible assets was $ 811.2 million and nil , respectively, net of impairment charges recorded and reflecting the reassessment of the estimated useful life of the Company's indefinite-lived intangible assets in the second quarter of fiscal 2024, as further discussed below. Through September 30, 2023, the Company's indefinite-lived intangible assets 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 (see further discussion under Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment below). Goodwill is allocated to the Company's reporting units, which are its operating segments or one level below its operating segments (component level). Reporting units are determined by the discrete financial information available for the component and whether that information is regularly reviewed by segment management. Components are aggregated into a single reporting unit if they share similar economic characteristics. Our reporting units for purposes of goodwill impairment testing at March 31, 2024 were Motion Picture, Media Networks, and our Television and Talent Management businesses, both of which are part of our Television Production segment. Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value. The Company performs its annual impairment test as of January 1 in each fiscal year. A goodwill or indefinite-lived intangible asset impairment loss would be recognized for the amount that the carrying amount of a reporting unit, including goodwill or an indefinite-lived intangible asset, exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill or indefinite-lived intangible asset impairment. The qualitative assessment is an evaluation, based on all identified events and F-15 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) circumstances which impact the fair value of the reporting unit or indefinite-lived intangible asset, of whether or not it is more-likely-than-not that the fair value is less than the carrying value of the reporting unit or indefinite-lived intangible asset. If the Company believes that as a result of its qualitative assessment it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is greater than its carrying amount, a quantitative impairment test is not required but may be performed at the option of the Company. A quantitative assessment requires determining the fair value of our reporting units or indefinite-lived intangible assets. The determination of the fair value of each reporting unit or indefinite-lived intangible asset utilizes discounted cash flows ("DCF") analyses and market-based valuation methodologies, which represent Level 3 fair value measurements. Fair value determinations require considerable judgment and requires assumptions and estimates of many factors, including revenue and market growth, operating margins and cash flows, market multiples and discount rates, and are sensitive to changes in these underlying assumptions and factors. Goodwill Impairment Assessments: Fiscal 2024. In the second quarter of fiscal 2024, 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 15, 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. 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 the impairment write-down of its indefinite-lived intangible assets discussed below). The analysis resulted in a goodwill impairment charge of $ 493.9 million in the second quarter of fiscal 2024, representing all of the remaining Media Networks reporting unit goodwill, which is recorded in the "goodwill and intangible asset impairment" line item in the consolidated statement of operations. For the Company's annual goodwill impairment test for fiscal 2024, the Company performed qualitative goodwill impairment assessments 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 date of the most recent quantitative assessment performed over these reporting units, 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. See Note 6 for further information. Fiscal 2023. In the second quarter of fiscal 2023, 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 second quarter of fiscal 2023, related to the Company's Media Networks reporting unit goodwill, which is recorded in the "goodwill and intangible asset impairment" line item in the 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. Management will continue to monitor all of its reporting units for changes in the business environment that could impact the recoverability of goodwill in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from the Company's business activities. Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of the Company's reporting units may include the global economy; consumer consumption levels of the Company's content; adverse macroeconomic conditions related to higher inflation and interest rates and currency rate fluctuations, and the impact on the global economy from wars, terrorism and multiple international conflicts, and future bank failures; volatility in the equity and debt markets which could result in higher weighted-average cost of capital; capital market transactions; the duration and potential impact of strikes of unions on our ability to produce, acquire and distribute our content; the commercial success of the Company's television programming and motion pictures; the Company's continual contractual relationships with its customers; and changes in consumer behavior. While historical performance and current expectations F-16 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) have resulted in fair values of our reporting units in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future. Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment: Through September 30, 2023, the Company's indefinite-lived intangible assets 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 before the impairment charge recorded in the second quarter of fiscal 2024 discussed below. During the second quarter of fiscal 2024, 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 in the second quarter of fiscal 2024 related to the Company's Starz business, which was recorded in the " goodwill and intangible asset impairment " line item in the consolidated statement of operations. After the Company performed its quantitative impairment assessment, during the second quarter ended September 30, 2023, 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 October 1, 2023, the trade names are being accounted for as finite-lived intangible assets and amortized over their estimated remaining useful life. This resulted in an increase to amortization expense of $ 4.0 million for the fiscal year ended March 31, 2024 with a corresponding reduction of income before income taxes, net loss, and net loss attributable to Lions Gate Entertainment Corp. shareholders. This resulted in an increase to basic and diluted net loss per share for the fiscal year ended March 31, 2024 by $ 0.02 per share. There was no tax benefit from the change due to changes in the Company’s valuation allowance on deferred taxes. As of March 31, 2024, the Company did not have any indefinite-lived intangible assets. Finite-Lived Intangible Assets At March 31, 2024, the carrying value of the Company's finite-lived intangible assets was $ 991.8 million. The Company's finite-lived intangible assets primarily relate to customer relationships associated with U.S. MVPDs, including cable operators, satellite television providers and telecommunications companies ("Traditional Affiliate"), which amounted to $ 909.1 million. The amount of the Company's customer relationship asset related to these Traditional Affiliate relationships reflects the estimated fair value of these customer relationships determined in connection with the acquisition of Starz on December 8, 2016, net of amortization recorded since the date of the Starz acquisition. Beginning October 1, 2023, our finite-lived intangible assets also include the trade names previously accounted for as indefinite-lived intangible assets as discussed above. Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 16 years. The Starz Traditional Affiliate customer relationship intangible asset is amortized in the proportion that current period revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset, which results in greater amortization in the earlier years of the estimated useful life of the asset than the latter years. Amortizable intangible assets are tested for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of the asset may not be recoverable. If a triggering event has occurred, an impairment analysis is required. The impairment test first requires a comparison of undiscounted future cash flows expected to be generated over the remaining useful life of an asset to the carrying value of the asset. The impairment test is performed at the lowest level of cash flows associated with the asset. If the carrying value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable. Impairment would then be measured as the excess of the asset’s carrying value over its fair value. The Company monitors its finite-lived intangible assets and changes in the underlying circumstances each reporting period for indicators of possible impairments or a change in the useful life or method of amortization of our finite-lived intangible assets. For fiscal 2023 and fiscal 2024, due to changes in the industry related to the migration from linear to OTT and direct-to- F-17 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) consumer consumption, and continuing difficult macro and microeconomic conditions, we performed an impairment analysis of our amortizable intangible assets. The impairment analysis requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset. Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was required. Prints, Advertising and Marketing Expenses The costs of prints, advertising and marketing expenses are expensed as incurred. Certain of Starz’s affiliation agreements require Starz to provide marketing support to the distributor based upon certain criteria as stipulated in the agreements. Marketing support includes cooperative advertising and marketing efforts between Starz and its distributors such as cross channel, direct mail and point of sale incentives. Marketing support is recorded as an expense and not a reduction of revenue when Starz has received a direct benefit and the fair value of such benefit is determinable. Advertising expenses for the year ended March 31, 2024 were $ 692.6 million (2023 — $ 610.7 million, 2022 — $ 662.4 million) which were recorded as distribution and marketing expenses. Income Taxes Income taxes are accounted for using an asset and liability approach for financial accounting and reporting for income taxes and recognition and measurement of deferred assets are based upon the likelihood of realization of tax benefits in future years. Under this method, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are established when management determines that it is more likely than not that some portion or all of the net deferred tax asset, on a jurisdiction-by-jurisdiction basis, will not be realized. The financial effect of changes in tax laws or rates is accounted for in the period of enactment. From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty and judgment is required in assessing and estimating the tax consequences of these transactions. In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination, based on their technical merits. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. Government Assistance The Company has access to government programs that are designed to promote film and television production and distribution in certain foreign countries. The Company also has access to similar programs in certain states within the U.S. that are designed to promote film and television production in those states. Tax credits earned with respect to expenditures on qualifying film and television productions are recorded as a reduction to investment in films and television programs when the qualifying expenditures have been incurred provided that there is reasonable assurance that the credits will be realized (see Note 3 and Note 19). Foreign Currency Translation Monetary assets and liabilities denominated in currencies other than the functional currency are translated at exchange rates in effect at the balance sheet date. Resulting unrealized and realized gains and losses are included in the consolidated statements of operations. Foreign company assets and liabilities in foreign currencies are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Foreign company revenue and expense items are translated at the average rate of exchange for the fiscal year. Gains or losses arising on the translation of the accounts of foreign companies are included in accumulated other comprehensive income or loss, a separate component of shareholders’ equity. Derivative Instruments and Hedging Activities Derivative financial instruments are used by the Company in the management of its foreign currency and interest rate exposures. The Company’s policy is not to use derivative financial instruments for trading or speculative purposes. F-18 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company uses derivative financial instruments to hedge its exposures to foreign currency exchange rate and interest rate risks. All derivative financial instruments are recorded at fair value in the consolidated balance sheets (see Note 10). The effective changes in fair values of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive income or loss and included in unrealized gains (losses) on cash flow hedges until the underlying hedged item is recognized in earnings. The effective changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive income or loss to net income or net loss when the underlying hedged item is recognized in earnings. If the derivative is not designated as a hedge, changes in the fair value of the derivative are recognized in earnings. See Note 18 for further discussion of the Company's derivative financial instruments. Share-Based Compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The fair value is recognized in earnings over the period during which an employee is required to provide service. See Note 13 for further discussion of the Company’s share-based compensation. Transfers of Financial Assets The Company enters into arrangements to sell certain financial assets (i.e., monetize its trade accounts receivables). For a transfer of financial assets to be considered a sale, the asset must be legally isolated from the Company and the purchaser must have control of the asset. Determining whether all the requirements have been met includes an evaluation of legal considerations, the extent of the Company’s continuing involvement with the assets transferred and any other relevant considerations. When the true sales criteria are met, the Company derecognizes the carrying value of the financial asset transferred and recognizes a net gain or loss on the sale. The proceeds from these arrangements with third party purchasers are reflected as cash provided by operating activities in the consolidated statements of cash flows. If the sales criteria are not met, the transfer is considered a secured borrowing and the financial asset remains on the consolidated balance sheets with proceeds from the sale recognized as debt and recorded as cash flows from financing activities in the consolidated statements of cash flows. See Note 19 for discussion of the Company’s accounts receivable monetization. Net Loss Per Share 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 years ended March 31, 2024, 2023 and 2022 is presented below: Year Ended March 31, 2024 2023 2022 (Amounts in millions, except per share amounts) Basic and Diluted Net Loss Per Common Share: Numerator: Net loss attributable to Lions Gate Entertainment Corp. shareholders $ ( 1,102.9 ) $ ( 2,010.2 ) $ ( 188.2 ) Accretion of redeemable noncontrolling interest ( 11.9 ) — — Net loss attributable to Lions Gate Entertainment Corp. shareholders after accretion of redeemable noncontrolling interest $ ( 1,114.8 ) $ ( 2,010.2 ) $ ( 188.2 ) Denominator: Weighted average common shares outstanding 233.6 227.9 224.1 Basic and diluted net loss per common share $ ( 4.77 ) $ ( 8.82 ) $ ( 0.84 ) As a result of the net loss in the fiscal years ended March 31, 2024, 2023 and 2022, the dilutive effect of the share purchase options, restricted share units ("RSUs") and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share. The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the fiscal years ended March 31, 2024, 2023 and 2022 totaled 2.9 million, 2.9 million and 5.3 million, respectively. F-19 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Additionally, for the years ended March 31, 2024, 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. Year Ended March 31, 2024 2023 2022 (Amounts in millions) Anti-dilutive shares issuable Share purchase options 17.1 23.0 16.0 Restricted share units 1.9 2.2 0.4 Other issuable shares 4.2 3.5 2.2 Total weighted average anti-dilutive shares issuable excluded from diluted net loss per common share 23.2 28.7 18.6 Recent Accounting Pronouncements Segment Reporting: In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance which expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal year ending March 31, 2025 and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures. Income Taxes: In December 2023, the FASB issued guidance which expands income tax disclosures by requiring public business entities, on an annual basis, to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Additionally, this guidance requires all entities disaggregate disclosures on the amount of income taxes paid (net of refunds received), income or loss from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) from continuing operations. This guidance is effective for fiscal years beginning after December 15, 2024, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal year ending March 31, 2026, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures. F-20 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 2. Acquisitions eOne Acquisition On December 27, 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”), completed the previously announced acquisition of all of the issued and outstanding equity interests of the companies constituting the Entertainment One television and film (“eOne”) business from Hasbro, Inc., a Rhode Island corporation (“Hasbro”), pursuant to that certain Equity Purchase Agreement (the “Purchase Agreement”) dated August 3, 2023. The aggregate cash purchase price was approximately $ 385.1 million, inclusive of certain purchase price adjustments, including for cash, debt, and working capital. The preliminary purchase price is subject to further adjustments based on the final determination of the purchase price adjustments. The acquisition of eOne, a film and television production and distribution company, builds the Company's film and television library, strengthens the Company's scripted and unscripted television business, and continues to expand the Company's presence in Canada and the U.K. The acquisition was accounted for under the acquisition method of accounting, with the financial results of eOne included in the Company's consolidated results from December 27, 2023. Revenues and loss before income taxes from eOne for the period from December 27, 2023 through March 31, 2024 amounted to approximately $ 113.8 million and $ 4.9 million, respectively. The Company incurred approximately $ 9.4 million of acquisition-related costs that were expensed in restructuring and other during the fiscal year ended March 31, 2024. Allocation of Purchase Consideration. The Company has made a preliminary estimate of the allocation of the preliminary purchase price of eOne to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value. The Company is still evaluating the fair value of film and television programs and libraries, projects in development, intangible assets, participations and residuals liabilities, and income taxes, in addition to ensuring all other assets and liabilities have been identified and recorded. The Company has estimated the preliminary fair value of assets acquired and liabilities assumed based on information currently available and will continue to adjust those estimates as additional information pertaining to events or circumstances present at December 27, 2023 becomes available and final appraisals and analysis are completed. The Company will reflect measurement period adjustments, in the period in which the adjustments occur, and the Company will finalize its accounting for the acquisition within one year from December 27, 2023 (see Note 6 for measurement period adjustments recorded through March 31, 2024). A change in the fair value of the net assets may change the amount recognized to goodwill. If the final fair value estimates and tax adjustments related to the net assets acquired decrease from their preliminary estimates, the amount of goodwill will increase and if the final fair value estimates and tax adjustments related to the net assets acquired increase from their preliminary estimates, the amount of goodwill will decrease and may result in a gain on purchase. In addition, the final fair value estimates related to the net assets acquired could impact the amount of amortization expense recorded associated with amounts allocated to film and television programs and other intangible assets. The preliminary goodwill amount is reflected in the table below, and arises from the opportunity for strengthening our global distribution infrastructure and enhanced positioning for motion picture and television projects and selling opportunities. The goodwill will not be amortized for financial reporting purposes, and will not be deductible for federal tax purposes. The fair value measurements were primarily based on significant inputs that are not observable in the market, such as discounted cash flow (DCF) analyses, and thus represent Level 3 fair value measurements. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed, and a reconciliation to total consideration transferred is presented in the table below: F-21 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (Amounts in millions) Cash and cash equivalents $ 54.1 Accounts receivable 298.8 Investment in films and television programs 371.8 Property and equipment 14.0 Intangible assets 4.0 Other assets (1) 168.2 Accounts payable and accrued liabilities ( 67.8 ) Content related payable ( 35.4 ) Participations and residuals (1) ( 201.9 ) Film related obligations (1) ( 105.8 ) Other liabilities and deferred revenue (1) ( 130.5 ) Preliminary fair value of net assets acquired 369.5 Goodwill 15.6 Preliminary purchase price consideration $ 385.1 ______________ (1) Includes current and non-current amounts. Investment in films and television programs includes the preliminary fair value of completed films and television programs which have been produced by eOne or for which eOne has acquired distribution rights, as well as the preliminary fair value of films and television programs in production, pre-production and development. For investment in films and television programs, the fair value was preliminarily estimated based on forecasted cash flows discounted to present value at a rate commensurate with the risk of the assets. Titles that were released less than three years prior to the acquisition date (December 27, 2023) were valued individually and will be amortized using the individual film forecast method, based on the ratio of current period revenues to management’s estimated remaining total gross revenues to be earned ("ultimate revenue"). Titles released more than three years prior to the acquisition date were valued as part of a library and will be amortized on a straight-line basis over the estimated useful life of 5 years to 10 years. The intangible assets acquired include trade names with a weighted average estimated useful life of 5 years. The fair value of the trade names was preliminarily 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. Other preliminary fair value adjustments were made to property and equipment and right-of-use lease assets to reflect the fair value of certain assets upon acquisition. Deferred taxes, net of any required valuation allowance, were preliminarily adjusted to record the deferred tax impact of acquisition accounting adjustments primarily related to amounts allocated to film and television programs, other intangible assets, and certain property and equipment, right-of-use lease assets, and other liabilities. The fair value of eOne's cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, participations and residuals, film related obligations and other liabilities were estimated to approximate their book values. Pro Forma Statement of Operations Information. The following unaudited pro forma condensed consolidated statement of operations information presented below illustrates the results of operations of the Company as if the acquisition of eOne as described above occurred on April 1, 2022. The unaudited pro forma condensed consolidated financial information is presented for informational purposes and is not indicative of the results of operations that would have been achieved if the acquisition had occurred on April 1, 2022, nor is it indicative of future results. The statement of operations information below includes (i) the statement of operations of eOne for the nine months ended December 27, 2023 combined with the Company's statement of operations for the fiscal year ended March 31, 2024 (which includes the operations of eOne since the December 27, 2023 F-22 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) acquisition date), and (ii) the statement of operations of eOne for the fiscal year ended December 25, 2022 combined with the Company's statement of operations for the fiscal year ended March 31, 2023. Year Ended March 31, 2024 2023 Revenues $ 4,410.5 $ 4,682.6 Net loss attributable to Lions Gate Entertainment Corp. shareholders $ ( 1,385.9 ) $ ( 1,946.6 ) The unaudited pro forma condensed consolidated financial information includes, where applicable, adjustments for (i) reductions in amortization expense from the fair value adjustments to investment in films and television programs, (ii) reduction in amortization expense related to acquired intangible assets, (iii) reduction in depreciation expense from the fair value of property and equipment, (iv) transaction costs and other one-time non-recurring costs, (v) increase in interest expense resulting from financing the acquisition with borrowings under the Company's revolving credit facility, (vi) elimination of intercompany activity between eOne and the Company, and (vii) associated tax-related impacts of adjustments. These pro forma adjustments are based on available information as of the date hereof and upon assumptions that the Company believes are reasonable to reflect the impact of the acquisition of eOne on the Company's historical financial information on a supplemental pro forma basis. The unaudited pro forma condensed consolidated statement of operations information does not include adjustments related to integration activities, operating efficiencies or cost savings. In addition, the unaudited pro forma condensed consolidated financial information for the year ended March 31, 2024 includes an impairment of goodwill and trade name of $ 296.2 million which was reflected in the statement of operations of eOne for the nine months ended December 27, 2023. The results of operations of eOne were reflected beginning December 27, 2023, in the Motion Picture and Television Production reportable segments of the Company. Business Combination Agreement On December 22, 2023, the Company entered into a business combination agreement (the “Business Combination Agreement”), with Screaming Eagle Acquisition Corp., a Cayman Islands exempted company (“Screaming Eagle”), SEAC II Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of Screaming Eagle (“New SEAC”), SEAC MergerCo, a Cayman Islands exempted company and a wholly-owned subsidiary of Screaming Eagle, 1455941 B.C. Unlimited Liability Company, a British Columbia unlimited liability company and a wholly-owned subsidiary of Screaming Eagle, LG Sirius Holdings ULC, a British Columbia unlimited liability company and wholly-owned subsidiary of Lionsgate and LG Orion Holdings ULC, a British Columbia unlimited liability company and wholly-owned subsidiary of Lionsgate (“StudioCo”). Pursuant to the terms and conditions of the Business Combination Agreement, the Studio Business will be combined with Screaming Eagle through a series of transactions, including an amalgamation of StudioCo and New SEAC under a Canadian plan of arrangement (the “Business Combination”). The "Studio Business" consists of the businesses of Lionsgate's Motion Picture and Television Production segments, together with substantially all of Lionsgate's corporate general and administrative functions and costs. On May 13, 2024, the Company closed the Business Combination Agreement. See Note 21 for further information. Spyglass On July 15, 2021, the Company purchased approximately 200 feature film titles (the "Spyglass Library") from Spyglass Media Group, LLC ("Spyglass"). The Company also formed a strategic content partnership through an investment of a minority preferred equity interest in Spyglass. The purchase price, including acquisition costs, of the Spyglass Library and preferred equity interest was $ 191.4 million, of which $ 171.4 million was paid at closing, $ 10.0 million was paid in July 2022, and the remaining $ 10.0 million was paid in July 2023. The Spyglass Library was accounted for as an asset acquisition and is included in investment in film and television programs on the Company's consolidated balance sheet. The equity interest was accounted for as an equity-method investment (see Note 5). F-23 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 3. 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: March 31, 2024 March 31, 2023 (Amounts in millions) Investment in Films and Television Programs: Individual Monetization (1)(2) Released, net of accumulated amortization $ 878.3 $ 611.7 Completed and not released 225.4 278.7 In progress 469.2 457.0 In development 65.7 64.1 1,638.6 1,411.5 Film Group Monetization Released, net of accumulated amortization $ 497.1 657.8 Completed and not released 170.1 281.7 In progress 179.0 303.0 In development 4.3 8.2 850.5 1,250.7 Licensed program rights, net of accumulated amortization 273.1 285.7 Investment in films and television programs and program rights, net $ 2,762.2 $ 2,947.9 ________________________ (1) At March 31, 2024, the unamortized balance related to completed and not released and in progress theatrical films was $ 532.5 million. (2) Production tax credits reduced total investment in films and television programs by $ 112.2 million and $ 181.2 million during the years ended March 31, 2024 and 2023, respectively, which resulted in a reduction of direct operating expense related to the amortization of investment in films and television programs cost of approximately $ 70.6 million and $ 84.3 million for the years ended March 31, 2024 and 2023, respectively. At March 31, 2024, acquired film and television libraries have remaining unamortized costs of $ 223.1 million, which are monetized individually and are being amortized on a straight-line basis or the individual-film-forecast method over a weighted average remaining period of approximately 12.8 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 consolidated statement of operations: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Amortization expense: Individual monetization $ 907.1 $ 951.2 $ 887.3 Film group monetization 382.0 330.0 303.0 Licensed program rights 288.8 384.1 377.4 $ 1,577.9 $ 1,665.3 $ 1,567.7 F-24 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The table below summarizes estimated future amortization expense for the Company's investment in film and television programs and licensed program rights as of March 31, 2024: Year Ending March 31, 2025 2026 2027 (Amounts in millions) Estimated future amortization expense: Released investment in films and television programs: Individual monetization $ 348.8 $ 166.0 $ 138.9 Film group monetization $ 225.9 $ 102.2 $ 70.3 Licensed program rights $ 161.8 $ 32.4 $ 16.0 Completed and not released investment in films and television programs: Individual monetization $ 139.6 n/a n/a Film group monetization $ 138.0 n/a n/a Impairments. Investment in films and television programs and licensed program rights includes write-downs to fair value. The following table sets forth impairments by segment and the line item in our consolidated statement of operations they are recorded in for the fiscal years ended March 31, 2024, 2023 and 2022: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Impairments by segment: Included in direct operating expense (1) : Motion Picture $ 34.6 $ 6.2 $ 1.2 Television Production 8.4 4.6 34.9 Impairments not included in segment operating results (2) : Included in direct operating expense — — 36.9 Included in restructuring and other 377.3 379.3 — $ 420.3 $ 390.1 $ 73.0 ________________________ (1) Impairments included in direct operating expense are included in the amortization expense amounts reflected in the table further above which presents amortization of investment in film and television programs and licensed program rights by predominant monetization strategy. (2) Fiscal 2024 and 2023: Represents primarily 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. Amounts in fiscal 2024 also include $ 12.8 million of development costs written off in connection with changes in strategy in the Television Production segment as a result of the acquisition of eOne. Fiscal 2022: Represents impairment charges recorded as a result of a strategic review of original programming on the STARZ platform, which identified certain titles with limited viewership or strategic purpose which were removed from the STARZ service and abandoned by the Media Networks segment. See Note 15 and Note 16 for further information. F-25 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 4. Property and Equipment March 31, 2024 March 31, 2023 (Amounts in millions) Distribution equipment $ 19.3 $ 19.1 Leasehold improvements 66.1 58.7 Property and equipment 26.0 23.8 Computer equipment and software 236.1 241.6 347.5 343.2 Less accumulated depreciation and amortization ( 260.2 ) ( 254.9 ) 87.3 88.3 Land 1.2 1.2 $ 88.5 $ 89.5 During the year ended March 31, 2024, depreciation expense amounted to $ 49.9 million (2023 - $ 40.1 million; 2022 - $ 43.0 million). 5. Investments The Company's investments consisted of the following: March 31, 2024 March 31, 2023 (Amounts in millions) Investments in equity method investees $ 68.4 $ 63.1 Other investments 6.4 1.6 $ 74.8 $ 64.7 Equity Method Investments: The Company has investments in various equity method investees with ownership percentages ranging from approximately 6 % to 49 %. These investments include: Spyglass. Spyglass is a global premium content company, focused on developing, producing, financing and acquiring motion pictures and television programming across all platforms for worldwide audiences. STARZPLAY Arabia. STARZPLAY Arabia (Playco Holdings Limited) offers a STARZ-branded online subscription video-on-demand service in the Middle East and North Africa. On October 17, 2022, the Company sold a portion of its ownership interest in STARZPLAY Arabia and received net proceeds of $ 43.4 million, and the Company recorded a gain of $ 43.4 million on the sale which is included in gain (loss) on investments in the Company's consolidated statement of operations. Subsequent to the transaction, the Company continues to hold a minority ownership interest in STARZPLAY Arabia. Roadside Attractions . Roadside Attractions is an independent theatrical distribution company. Pantelion Films. Pantelion Films is a joint venture with Videocine, an affiliate of Televisa, which produces, acquires and distributes a slate of English and Spanish language feature films that target Hispanic moviegoers in the U.S. Atom Tickets. Atom Tickets is the first-of-its-kind theatrical mobile ticketing platform and app. 42. 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. Other. In addition to the equity method investments discussed above, the Company holds ownership interests in other immaterial equity method investees. F-26 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 6. Goodwill and Intangible Assets Goodwill Changes in the carrying value of goodwill by reporting segment were as follows: Motion Picture Television Production Media Networks Total (Amounts in millions) Balance as of March 31, 2022 $ 393.7 $ 401.9 $ 1,968.9 $ 2,764.5 Impairment (1) — — ( 1,475.0 ) ( 1,475.0 ) Balance as of March 31, 2023 $ 393.7 $ 401.9 $ 493.9 $ 1,289.5 Acquisition of eOne (see Note 2) 1.0 4.8 — 5.8 Impairment (1) — — ( 493.9 ) ( 493.9 ) Measurement period adjustments (2) 3.9 5.9 — 9.8 Balance as of March 31, 2024 $ 398.6 $ 412.6 $ — $ 811.2 _______________ (1) See Note 1, Goodwill Impairment Assessments , for further information on the goodwill impairments recorded in fiscal 2024 and 2023 related to the Media Networks segment. As of March 31, 2024 and March 31, 2023, accumulated goodwill impairment losses totaled $ 1.969 billion and $ 1.475 billion, respectively, related to the Media Networks reporting unit. (2) Measurement period adjustments for the acquisition of eOne reflect an increase to goodwill of $ 9.8 million resulting from a net decrease in estimated fair value of the net assets acquired. The decrease in the estimated fair value of the net assets acquired consisted of net decreases to accounts receivable and other assets of $ 11.4 million and $ 12.4 million, respectively, partially offset by a net increase to investment in films and television programs of $ 4.0 million, and net decreases to content related payables of $ 1.9 million, accrued liabilities of $ 3.8 million, participations and residuals of $ 1.9 million, and deferred revenue of $ 2.4 million. Intangible Assets Finite-Lived Intangible Assets. Finite-lived intangible assets consisted of the following: March 31, 2024 March 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (Amounts in millions) Finite-lived intangible assets subject to amortization: Customer relationships (1) $ 1,852.0 $ 942.9 $ 909.1 $ 1,852.0 $ 807.8 $ 1,044.2 Trademarks and trade names (2) 87.6 7.1 80.5 3.6 2.6 1.0 Other 23.9 21.7 2.2 23.9 19.0 4.9 $ 1,963.5 $ 971.7 $ 991.8 $ 1,879.5 $ 829.4 $ 1,050.1 _______________ (1) Customer relationships primarily represent Starz affiliation agreements with distributors. (2) Amounts as of March 31, 2024 include the Starz trade names previously accounted for as indefinite-lived intangible assets, see below and Note 1, Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment, for further information. Amortization expense associated with the Company's intangible assets for the years ended March 31, 2024, 2023 and 2022 was approximately $ 142.3 million, $ 140.2 million, and $ 134.9 million, respectively. Amortization expense remaining relating to intangible assets for each of the years ending March 31, 2025 through 2029 is estimated to be approximately $ 138.3 million, $ 127.6 million, $ 120.6 million, $ 115.6 million, and $ 110.1 million, respectively. F-27 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Indefinite-Lived Intangible Assets. As of March 31, 2023, our indefinite-lived intangible assets 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. See Note 1, Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment, for further information on the trade name impairment charge of $ 170.0 million recorded in the second quarter of fiscal 2024 related to the Media Networks segment, and the reassessment of the estimated useful life of the trade names with a remaining carrying value of $ 80.0 million. Beginning October 1, 2023, the trade names are being accounted for as finite-lived intangible assets and amortized over their estimated useful life. As of March 31, 2024, the Company did not have any indefinite-lived intangible assets. 7. Debt Total debt of the Company, excluding film related obligations, was as follows: March 31, 2024 March 31, 2023 (Amounts in millions) Corporate debt: Revolving Credit Facility $ 575.0 $ — Term Loan A 399.3 428.2 Term Loan B 819.2 831.7 5.500 % Senior Notes 715.0 800.0 Total corporate debt 2,508.5 2,059.9 Unamortized debt issuance costs ( 28.5 ) ( 40.3 ) Total debt, net 2,480.0 2,019.6 Less current portion ( 860.3 ) ( 41.4 ) Non-current portion of debt $ 1,619.7 $ 1,978.2 The following table sets forth future annual contractual principal payment commitments of debt as of March 31, 2024: Maturity Date Year Ending March 31, Debt Type 2025 2026 2027 2028 2029 Thereafter Total (Amounts in millions) Revolving Credit Facility April 2026 $ — $ — $ 575.0 $ — $ — $ — $ 575.0 Term Loan A April 2026 41.1 44.5 313.7 — — — 399.3 Term Loan B March 2025 819.2 — — — — — 819.2 5.500 % Senior Notes April 2029 — — — — — 715.0 715.0 $ 860.3 $ 44.5 $ 888.7 $ — $ — $ 715.0 2,508.5 Less aggregate unamortized debt issuance costs ( 28.5 ) $ 2,480.0 Senior Credit Facilities (Revolving Credit Facility, Term Loan A and Term Loan B) Revolving Credit Facility Availability of Funds & Commitment Fee. The revolving credit facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at March 31, 2024 there was $ 675.0 million available. There were no letters of credit outstanding at March 31, 2024. However, borrowing levels are subject to certain financial covenants as discussed below. The Company is required to pay a quarterly commitment fee on the revolving credit facility of 0.250 % to 0.375 % per annum, depending on the achievement of certain leverage ratios, as defined in the credit and guarantee agreement dated December 8, 2016, as amended (the "Credit Agreement"), on the total revolving credit facility of $ 1.25 billion less the amount drawn. F-28 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Maturity Date: • Revolving Credit Facility & Term Loan A: April 6, 2026. The outstanding amounts may become due on December 23, 2024 (i.e., 91 days prior to March 24, 2025) prior to its maturity on April 6, 2026 in the event that the aggregate principal amount of outstanding Term Loan B in excess of $ 250 million has not been repaid, refinanced or extended to have a maturity date on or after July 6, 2026. The Company expects to refinance and extend the maturity date of the Term Loan B prior to December 23, 2024 such that the maturity of the revolving credit facility and Term Loan A are not accelerated. • Term Loan B: March 24, 2025. Interest: • Revolving Credit Facility & Term Loan A: 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 %) margin, with a SOFR 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 7.17 % as of March 31, 2024, before the impact of 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) (effective interest rate of 7.67 % as of March 31, 2024, before the impact of interest rate swaps). Required Principal Payments: • Term Loan A: Quarterly principal payments, at quarterly rates of 1.25 % beginning September 30, 2022, 1.75 % beginning September 30, 2023, and 2.50 % beginning September 30, 2024 through March 31, 2026, with the balance payable at maturity. • Term Loan B: Quarterly principal payments, at a quarterly rate of 0.25 %, with the balance payable at maturity. The Term Loan A and Term Loan B also require mandatory prepayments in connection with certain asset sales, subject to certain significant exceptions, and the Term Loan B is subject to additional mandatory repayment from specified percentages of excess cash flow, as defined in the Credit Agreement. Optional Prepayment: • Revolving Credit Facility, Term Loan A & Term Loan B: The Company may voluntarily prepay the Revolving Credit Facility, Term Loan A and Term Loan B at any time without premium or penalty. Security. The Senior Credit Facilities are guaranteed by the guarantors named in the Credit Agreement and are secured by a security interest in substantially all of the assets of Lionsgate and the Guarantors (as defined in the Credit Agreement), subject to certain exceptions. Covenants. The Senior Credit Facilities contain representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings and which include, among other things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly. As of March 31, 2024, the Company was in compliance with all applicable covenants. Change in Control. The Company may also be subject to an event of default upon a change in control (as defined in the Credit Agreement) which, among other things, includes a person or group acquiring ownership or control in excess of 50 % of the Company’s common shares. F-29 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 5.500 % Senior Notes Interest: Bears interest at 5.500 % annually (payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021). Maturity Date: April 15, 2029. Optional Redemption: (i) Prior to April 15, 2024, the Company may redeem the 5.500 % Senior Notes in whole at any time, or in part from time to time, at a price equal to 100 % of the principal amount of the notes to be redeemed plus a "make-whole" premium, plus accrued and unpaid interest, if any, to, but not including, the redemption date. The make-whole premium is the greater of (i) 1.0 % of the principal amount redeemed and (ii) the excess, if any, of the present value at such redemption date of the redemption price at April 15, 2024 (see redemption prices below) plus interest through April 15, 2024 (discounted to the redemption date at the treasury rate plus 50 basis points) over the principal amount of the notes redeemed on the redemption date. (ii) On or after April 15, 2024, the Company may redeem the 5.500 % Senior Notes in whole at any time, or in part from time to time, at certain specified redemption prices, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Such redemption prices are as follows (as a percentage of the principal amount redeemed): (i) on or after April 15, 2024 - 102.750 %; (ii) on or after April 15, 2025 - 101.375 %; and (iii) on or after April 15, 2026 - 100 %. In addition, the Company may redeem up to 40 % of the aggregate principal amount of the notes at any time and from time to time prior to April 15, 2024 with the net proceeds of certain equity offerings at a price of 105.500 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Security. The 5.500 % Senior Notes are unsubordinated, unsecured obligations of the Company. Covenants. 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 March 31, 2024, the Company was in compliance with all applicable covenants. Change in Control. The occurrence of a change of control will be a triggering event requiring the Company to offer to purchase from holders all of the 5.500 % Senior Notes, at a price equal to 101 % of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. In addition, certain asset dispositions will be triggering events that may require the Company to use the excess proceeds from such dispositions to make an offer to purchase the 5.500 % Senior Notes at 100 % of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. Capacity to Pay Dividends At March 31, 2024, the capacity to pay dividends under the Senior Credit Facilities, and the 5.500 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 1,116.3 million and accumulated deficit of $ 3,576.7 million were deemed free of restrictions from paying dividends at March 31, 2024. Debt Transactions: See Note 21 for the 5.500 % Senior Notes exchanged in May 2024. Fiscal 2024: Senior Notes Repurchases. In the fiscal year ended March 31, 2024, the Company repurchased $ 85.0 million principal amount of the 5.500 % Senior Notes for $ 61.4 million, together with accrued and unpaid interest. Fiscal 2023: Senior Notes Repurchases. In the fiscal year ended March 31, 2023, the Company repurchased $ 200.0 million principal amount of the 5.500 % Senior Notes for $ 135.0 million, together with accrued and unpaid interest. Term Loan A Prepayment. In April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the Term Loan A due March 22, 2023 of $ 193.6 million, together with accrued and unpaid interest. F-30 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Fiscal 2022: Term Loan B Repurchases. During the year ended March 31, 2022, the Company completed a series of repurchases of the Term Loan B and, in aggregate, paid $ 95.3 million to repurchase $ 96.0 million principal amount of the Term Loan B. Senior Notes Redemption and Issuance. On April 1, 2021, the Company redeemed in full all $ 518.7 million outstanding principal amount of its 5.875 % Senior Notes due November 2024 (" 5.875 % Senior Notes") and all $ 545.6 million outstanding principal amount of its 6.375 % Senior Notes due February 2024 (" 6.375 % Senior Notes"). In connection with the early redemption of the 5.875 % Senior Notes and the 6.375 % Senior Notes, the Company paid a prepayment premium of $ 15.2 million and $ 17.4 million, respectively, plus accrued and unpaid interest to the date of redemption, pursuant to the terms of the indentures governing the 5.875 % Senior Notes and the 6.375 % Senior Notes, respectively. In connection with the redemption of the 5.875 % Senior Notes and the 6.375 % Senior Notes, on April 1, 2021, the Company issued $ 1.0 billion aggregate principal amount of 5.500 % Senior Notes due April 15, 2029 (" 5.500 % Senior Notes"). Credit Agreement Amendment. On April 6, 2021, the Company amended its Credit Agreement to, among other things, extend the maturity (the "Extension") of a portion of its revolving credit commitments, amounting to $ 1.25 billion, and a portion of its outstanding term A loans, amounting to $ 444.9 million to April 6, 2026, and make certain other changes to the covenants and other provisions therein. After giving effect to the Extension, $ 250.0 million of the prior revolving credit commitments and $ 215.1 million of term A loans remained outstanding with a maturity of March 22, 2023. The revolving credit commitments due in March of 2023 were terminated in November 2021 and the term A loans due in March of 2023 were repaid in full in April 2022 (see Fiscal 2023 discussion above). See the Accounting for the Fiscal 2022 Senior Notes Redemption and Issuance and Credit Agreement Amendment section further below. Gain (Loss) on Extinguishment of Debt During the fiscal years ended March 31, 2024, 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. Year Ended March 31, 2024 2023 2022 (Amounts in millions) Gain (Loss) on Extinguishment of Debt: Term Loan A prepayment $ — $ ( 1.3 ) $ — Senior Notes repurchases in fiscal 2024 and 2023; Senior Notes redemption and issuance in fiscal 2022 (1) 21.2 58.7 ( 24.7 ) Credit Agreement amendment (Revolving Credit Facility and Term Loan A) (1) — — ( 1.7 ) Termination of a portion of Revolving Credit Facility commitments — — ( 1.1 ) Term Loan B repurchases and other — — ( 0.7 ) Production loan prepayment (2) ( 1.3 ) — — $ 19.9 $ 57.4 $ ( 28.2 ) ________________________ (1) See Accounting for the Fiscal 2022 Senior Notes Redemption and Issuance and Credit Agreement Amendment section below. (2) Represents issuance costs written off in connection with the early prepayment of certain production loans (see Note 8). F-31 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Accounting for the Fiscal 2022 Senior Notes Redemption and Issuance and Credit Agreement Amendment: Revolving Credit Facility Credit Agreement Amendment on April 6, 2021. • Unamortized debt issuance costs: Where the borrowing capacity (measured as the amount available under the revolving credit facility multiplied by the remaining term) was less than it was prior to the amendment measured on a creditor-by-creditor basis, the unamortized debt issuance costs were written off as a loss on extinguishment of debt in proportion to the decrease in borrowing capacity. • Fees paid to creditors and third-party costs: All fees paid to creditors or third parties (i.e., new debt issuance costs) are being amortized over the term of the Revolving Credit Facility due in 2026. Term Loan A Credit Agreement Amendment on April 6, 2021 and Senior Notes Redemption and Issuance on April 1, 2021. With respect to substantially all creditors participating in the Term Loan A and for the portion of the Senior Notes where the creditors participated in both the redeemed Senior Notes and the new Senior Notes, the amendment of the credit agreement and the Senior Notes redemption and issuance was considered a modification of terms since the present value of the cash flows after the amendment differed by less than a 10% change from the present value of the cash flows on a creditor-by-creditor basis prior to the amendment. Where the cash flows differed by more than 10% on a creditor by creditor basis, that portion was considered a debt extinguishment. For new participating creditors, their portion of the debt was treated as new issuances to new creditors. Accordingly, the associated costs were accounted for as follows: • Unamortized debt issuance costs, third-party costs and fees paid to creditors: To the extent the refinancing was considered a modification of terms, the unamortized debt issuance costs and fees paid to creditors were recorded as a reduction of the applicable debt outstanding, and are being amortized over the applicable term of the debt and the third-party costs were expensed as a loss on extinguishment of debt. To the extent the refinancing was considered an extinguishment, the unamortized debt issuance costs and fees paid to creditors were expensed as a loss on extinguishment of debt, and the third-party costs were recorded as a reduction of the applicable debt outstanding and are being amortized over the applicable term of the debt. For both the Term Loan A and Senior Notes, to the extent there was a reduction of the outstanding balance on a creditor-by-creditor basis (i.e., a partial prepayment of debt), previously incurred unamortized debt issuance costs and fees were expensed as a loss on extinguishment of debt on the consolidated statement of operations. For all of the above transactions, debt issuance costs recorded as a reduction of outstanding debt are amortized using the effective interest method. The following table summarizes the accounting for the fiscal 2022 Credit Agreement amendment and Senior Notes redemption and issuance transactions, as described above: Year Ended March 31, 2022 Loss on Extinguishment of Debt Recorded as a Reduction of Outstanding Debt Balances & Amortized Over Life of New Issuances Total (Amounts in millions) Credit Agreement amendment (Revolving Credit Facility and Term Loan A) and Senior Notes redemption and issuance: New debt issuance costs and call premiums $ 21.2 $ 31.0 $ 52.2 Previously incurred debt issuance costs 5.2 31.1 36.3 $ 26.4 $ 62.1 $ 88.5 F-32 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 8. Film Related Obligations March 31, 2024 March 31, 2023 (Amounts in millions) Film related obligations: Production Loans $ 1,292.2 $ 1,349.9 Production Tax Credit Facility 260.0 231.8 Programming Notes — 83.6 Backlog Facility and Other 287.3 226.0 IP Credit Facility 109.9 143.8 Total film related obligations 1,949.4 2,035.1 Unamortized issuance costs ( 11.4 ) ( 11.5 ) Total film related obligations, net 1,938.0 2,023.6 Less current portion ( 1,393.1 ) ( 1,007.2 ) Total non-current film related obligations $ 544.9 $ 1,016.4 The following table sets forth future annual repayment of film related obligations as of March 31, 2024: Year Ending March 31, 2025 2026 2027 2028 2029 Thereafter Total (Amounts in millions) Production Loans $ 973.3 $ 318.9 $ — $ — $ — $ — $ 1,292.2 Production Tax Credit Facility (1) 260.0 — — — — — 260.0 Backlog Facility and Other (1) 118.8 24.1 — 144.4 — — 287.3 IP Credit Facility (2) 41.0 50.1 18.8 — — — 109.9 $ 1,393.1 $ 393.1 $ 18.8 $ 144.4 $ — $ — $ 1,949.4 Less unamortized issuance costs ( 11.4 ) $ 1,938.0 ________________________ (1) The repayment dates are based on the projected future amount of collateral available under these facilities. Net advances and payments under these facilities can fluctuate depending on the amount of collateral available. (2) Repayment dates are based on the projected future cash flows generated from the exploitation of the rights, subject to a minimum guaranteed payment amount, as applicable (see further information below). Production Loans. Production loans represent individual and multi-title loans for the production of film and television programs that the Company produces. The majority of the Company's production loans have contractual repayment dates either at or near the expected completion or release dates, with the exception of certain loans containing repayment dates on a longer term basis, and incur primarily SOFR-based interest at a weighted average rate of 6.96 % (before the impact of interest rate swaps, see Note 18 for interest rate swaps). Production loans amounting to $ 1,028.9 million are secured by collateral which consists of the underlying rights related to the intellectual property (i.e. film or television show), and $ 263.3 million are unsecured. F-33 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Production Tax Credit Facility. In January 2021, as amended in March 2024, the Company entered into a non-recourse senior secured revolving credit facility (the "Production Tax Credit Facility") based on and secured by collateral consisting solely of certain of the Company’s tax credit receivables. The maximum principal amount of the Production Tax Credit Facility is $ 260.0 million, subject to the amount of collateral available, which is based on specified percentages of amounts payable to the Company by governmental authorities pursuant to the tax incentive laws of certain eligible jurisdictions that arise from the production or exploitation of motion pictures and television programming in such jurisdiction. Cash collections from the underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility. As of March 31, 2024, tax credit receivables amounting to $ 341.4 million represented collateral related to 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 6.92 % at March 31, 2024). The Production Tax Credit Facility matures on January 27, 2025. As of March 31, 2024, there were no material amounts available under the Production Tax Credit Facility. Programming Notes . Programming notes represent individual unsecured loans for the licensing of film and television programs that the Company licenses, related to the Company's Media Networks business. The Company's programming notes outstanding were fully repaid in fiscal 2024. IP Credit Facility. In July 2021, as amended in September 2022, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the "IP Credit Facility") based on and secured by the collateral consisting solely of certain of the Company’s rights in certain acquired library titles. The maximum principal amount of the IP Credit Facility is $ 161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries. The cash flows generated from the exploitation of the rights will be applied to repay the IP Credit Facility subject to cumulative minimum guaranteed payment amounts as set forth below: Cumulative Period From September 29, 2022 Through: Cumulative Minimum Guaranteed Payment Amounts Payment Due Date (in millions) September 30, 2023 $ 30.4 November 14, 2023 September 30, 2024 $ 60.7 November 14, 2024 September 30, 2025 $ 91.1 November 14, 2025 September 30, 2026 $ 121.4 November 14, 2026 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 7.75 % at March 31, 2024). The IP Credit Facility matures on July 30, 2027. Backlog Facility and Other: Backlog Facility. In March 2022, as amended in August 2022, certain subsidiaries of the Company entered into a committed secured revolving credit facility (the "Backlog Facility") based on and secured by collateral consisting solely of certain of the Company's fixed fee or minimum guarantee contracts where cash will be received in the future. The maximum principal amount of the Backlog Facility is $ 175.0 million, subject to the amount of eligible collateral contributed to the facility. Advances under the Backlog Facility bear interest at a rate equal to Term SOFR plus 0.10 % to 0.25 % depending on the SOFR term (i.e., one, three or six months), plus an applicable margin amounting to 1.15 % per annum. The applicable margin is subject to a potential increase to either 1.25 % or 1.50 % based on the weighted average credit quality rating of the collateral contributed to the facility (effective interest rate of 6.57 % at March 31, 2024). The Backlog Facility revolving period ends on May 16, 2025, at which point cash collections from the underlying collateral is used to repay the facility. The facility maturity date is up to 2 years, 90 days after the revolving period ends, currently August 14, 2027. As of March 31, 2024, 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). F-34 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Other. The Company has other loans, which are secured by accounts receivable and 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 March 31, 2024, there was $ 112.3 million outstanding under the "other" loans, incurring SOFR-based interest at a weighted average rate of 6.89 %, of which $ 24.1 million has a contractual repayment date in July 2025 and $ 88.2 million has a contractual repayment date in April 2027. As of March 31, 2024, accounts receivable amounting to $ 47.8 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at March 31, 2024 amounting to $ 84.5 million represented collateral related to the "other" loans. 9. Leases The Company has operating leases primarily for office space, studio facilities, and other equipment. The Company's leases have remaining lease terms of up to approximately 12.25 years. The components of lease cost were as follows: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Operating lease cost (1) $ 61.4 $ 48.4 $ 54.9 Short-term lease cost (2) 96.2 145.0 233.1 Variable lease cost (3) 3.4 3.1 1.4 Total lease cost $ 161.0 $ 196.5 $ 289.4 ___________________ (1) Operating lease cost amounts primarily represent the amortization of right-of-use assets and are included in the “other amortization” line of the consolidated statements of cash flows. Amounts include costs capitalized during the period for leased assets used in the production of film and television programs. (2) Short-term lease cost primarily consists of leases of facilities and equipment associated with film and television productions and are capitalized when incurred. (3) Variable lease cost primarily consists of insurance, taxes, maintenance and other operating costs. Supplemental balance sheet information related to leases was as follows: Category Balance Sheet Location March 31, 2024 March 31, 2023 Operating Leases (Amounts in millions) Right-of-use assets Other assets - non-current $ 388.8 169.0 Lease liabilities (current) Other accrued liabilities $ 53.4 47.4 Lease liabilities (non-current) Other liabilities - non-current 385.1 159.2 $ 438.5 206.6 March 31, 2024 March 31, 2023 Weighted average remaining lease term (in years): Operating leases 9.0 5.6 Weighted average discount rate: Operating leases 5.24 % 3.81 % F-35 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The expected future payments relating to the Company's lease liabilities at March 31, 2024 are as follows: Operating Leases (Amounts in millions) Year ending March 31, 2025 $ 74.1 2026 67.9 2027 61.7 2028 61.6 2029 51.5 Thereafter 240.8 Total lease payments 557.6 Less imputed interest ( 119.1 ) Total $ 438.5 As of March 31, 2024, the Company has entered into certain leases that have not yet commenced primarily related to studio facilities, for which construction related to those leases has not yet been completed. The leases are for terms up to 12.25 years, commencing upon completion of construction (currently expected to be ranging from calendar years 2025 to 2026). The leases include an option to extend the initial term for an additional 10 years to 12 years. The total minimum lease payments under these leases in aggregate are approximately $ 250.9 million. 10. Fair Value Measurements Fair Value Accounting guidance and standards about fair value define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair Value Hierarchy Fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The accounting guidance and standards establish three levels of inputs that may be used to measure fair value: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of March 31, 2024 and 2023: F-36 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) March 31, 2024 March 31, 2023 Level 1 Level 2 Total Level 1 Level 2 Total Assets: (Amounts in millions) Forward exchange contracts (see Note 18) $ — $ — $ — $ — $ 2.9 $ 2.9 Interest rate swaps (see Note 18) — 35.6 35.6 — 41.1 41.1 Liabilities: Forward exchange contracts (see Note 18) — ( 2.8 ) ( 2.8 ) — ( 0.1 ) ( 0.1 ) The following table sets forth the carrying values and fair values of the Company’s outstanding debt, film related obligations, and interest rate swaps at March 31, 2024 and 2023: March 31, 2024 March 31, 2023 (Amounts in millions) Carrying Value Fair Value (1) Carrying Value Fair Value (1) (Level 2) (Level 2) Term Loan A $ 396.6 $ 397.3 $ 424.2 $ 415.4 Term Loan B 816.9 818.1 827.2 817.1 5.500 % Senior Notes 696.6 536.2 776.0 510.0 Production Loans 1,286.2 1,292.2 1,346.1 1,349.9 Production Tax Credit Facility 258.7 260.0 229.4 231.8 Programming Notes — — 83.6 83.6 Backlog Facility and Other 285.4 287.3 223.7 226.0 IP Credit Facility 107.6 109.9 140.8 143.8 ________________ (1) The Company measures the fair value of its outstanding debt and interest rate swaps using discounted cash flow techniques that use observable market inputs, such as SOFR-based yield curves, swap rates, and credit ratings (Level 2 measurements). The Company’s financial instruments also include cash and cash equivalents, accounts receivable, accounts payable, content related payables, other accrued liabilities, other liabilities, and borrowings under the Revolving Credit Facility, if any. The carrying values of these financial instruments approximated the fair values at March 31, 2024 and 2023. F-37 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 11. Noncontrolling Interests Redeemable Noncontrolling Interests Redeemable noncontrolling interests (included in temporary equity on the consolidated balance sheets) primarily relate to 3 Arts Entertainment and Pilgrim Media Group, as further described below. Redeemable noncontrolling interests are measured at the greater of (i) the redemption amount that would be paid if settlement occurred at the balance sheet date less the amount attributed to unamortized noncontrolling interest discount if applicable, or (ii) the historical value resulting from the original acquisition date value plus or minus any earnings or loss attribution, plus the amount of amortized noncontrolling interest discount, less the amount of cash distributions that are not accounted for as compensation, if any. The amount of the redemption value in excess of the historical values of the noncontrolling interest, if any, is recognized as an increase to redeemable noncontrolling interest and a charge to retained earnings or accumulated deficit. The table below presents the reconciliation of changes in redeemable noncontrolling interests: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Beginning balance $ 343.6 $ 321.2 $ 219.1 Net loss attributable to redeemable noncontrolling interests ( 14.9 ) ( 9.2 ) ( 17.7 ) Noncontrolling interests discount accretion — 13.2 22.7 Adjustments to redemption value 83.4 78.4 98.6 Other (1) ( 93.2 ) 1.7 — Cash distributions ( 1.0 ) ( 6.6 ) ( 1.5 ) Purchase of noncontrolling interest ( 194.6 ) ( 55.1 ) — Ending balance $ 123.3 $ 343.6 $ 321.2 _______________ (1) In fiscal 2024, amounts represent the reclassification of a portion of the 3 Arts Entertainment redeemable noncontrolling interest from mezzanine equity to a liability, as further described below. 3 Arts Entertainment: Accounting Prior to Acquisition of Additional Interest on January 2, 2024. As of March 31, 2023, the Company had a redeemable noncontrolling interest representing 49 % of 3 Arts Entertainment. The noncontrolling interest was subject to put and call options at fair value that were exercisable during the year ended March 31, 2024. The put and call options were determined to be embedded in the noncontrolling interest, and because the put rights were outside the control of the Company, the noncontrolling interest holder's interest prior to the modification discussed below was included in redeemable noncontrolling interest outside of shareholders' equity on the Company's consolidated balance sheets. The noncontrolling interest holders are employees of 3 Arts Entertainment. Pursuant to the various 3 Arts Entertainment acquisition and related agreements, a portion of the noncontrolling interest holders' participation in the put and call proceeds was based on the noncontrolling interest holders' performance during the period. Further, if the employment of a noncontrolling interest holder is terminated, under certain circumstances, their participation in distributions cease and the put and call value was discounted from the fair value of their equity ownership percentage. Accordingly, earned distributions were accounted for as compensation and were being expensed within general and administrative expense as incurred. Additionally, the amount of the put and call proceeds subject to the discount was accounted for as compensation, and 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 F-38 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) agreements. Accordingly, $ 38.3 million was initially recorded as a deferred compensation arrangement within other current and non-current assets and was amortized in general and administrative expenses over the five-year period ended May 29, 2023. Acquisition of Additional Interest. On January 2, 2024, the Company closed on the acquisition of an additional 25 % of 3 Arts Entertainment representing approximately half of the noncontrolling interest for $ 194.1 million. In addition, the Company purchased certain profit interests held by certain managers and entered into certain option rights agreements, which replaced the put and call rights discussed above by providing noncontrolling interest holders the right to sell to the Company and the Company the right to purchase their remaining ( 24 %) interest beginning in January 2027. The purchase of the additional 25 % interest in 3 Arts Entertainment for $ 194.1 million was recorded as a reduction of noncontrolling interest which had previously been adjusted to its redemption value, which equaled fair value. At the completion of the purchase, a portion of the noncontrolling interest continued to be considered compensatory, as it was subject to forfeiture provisions upon termination of employment under certain circumstances, and the remaining portion represented the noncontrolling interest holders' fully vested equity interest. Under the new arrangement, the holders' right to sell their interest to the Company, and the Company's right to purchase the noncontrolling interest, are based on a formula-based amount (i.e., a fixed EBITDA multiple), subject to a minimum purchase price, rather than being based on fair value. Since the redemption features described above were based on a formula using a fixed multiple, the compensatory portion of the noncontrolling interest is now considered a liability award, and as a result, approximately $ 93.2 million was reclassified from mezzanine equity to a liability, and is reflected in "other liabilities - non-current" in the consolidated balance sheet at March 31, 2024. In addition, because the new arrangement represented a modification of terms of the compensation element under the previous arrangement which resulted in the reclassification of the equity award to a liability award, the Company recognized incremental compensation expense of $ 49.2 million in the quarter ended March 31, 2024, representing the excess of the fair value of the modified award over amounts previously expensed. This incremental expense was reflected in "restructuring and other" in the consolidated statement of operations, and as a reduction of accumulated deficit in shareholders' equity, reflected in the "redeemable noncontrolling interests adjustments to redemption value" line item in the consolidated statements of equity (deficit). As of March 31, 2024, the Company had a remaining redeemable noncontrolling interest balance related to 3 Arts Entertainment of $ 93.2 million, reflecting the fully vested equity portion of the noncontrolling interest, which remains classified as redeemable noncontrolling interest outside of shareholders' equity on the Company's consolidated balance sheets due to the purchase and sale rights beginning in 2027 which were determined to be embedded in the noncontrolling interest, and are outside the control of the Company. The redeemable noncontrolling interest will be adjusted to its redemption value through accumulated deficit through the sale or purchase right date in January 2027. Subsequent to the January 2024 transactions noted above, changes in the carrying value of the redeemable noncontrolling interest are reflected in the calculation of basic and diluted net income or loss per common share attributable to Lions Gate Entertainment Corp. shareholders, if dilutive, or to the extent the adjustments represent recoveries of amounts previously reflected in the computation of basic and diluted net income or loss per common share attributable to Lions Gate Entertainment Corp. shareholders (see Note 1). The liability component of the noncontrolling interest, amounting to $ 93.2 million at March 31, 2024, will be reflected at its estimated redemption value, with any changes in estimated redemption value recognized as a charge or benefit in general and administrative expense in the consolidated statement of operations over the vesting period (i.e., the period from January 2, 2024 to the sale or purchase right date in January 2027). Earned distributions continue to be accounted for as compensation since such amounts are allocated based on performance, and are being expensed within general and administrative expense as incurred. F-39 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Pilgrim Media Group: In connection with the acquisition of a controlling interest in Pilgrim Media Group on November 12, 2015, the Company recorded a redeemable noncontrolling interest of $ 90.1 million, representing 37.5 % of Pilgrim Media Group. Pursuant to an amendment dated April 2, 2021, the put and call rights associated with the Pilgrim Media Group noncontrolling interest were extended and modified, such that the noncontrolling interest holder had a right to put and the Company had a right to call a portion of the noncontrolling interest, equal to 25 % of Pilgrim Media Group, at fair value, exercisable for thirty ( 30 ) days beginning November 12, 2022. On November 14, 2022 the noncontrolling interest holder exercised the right to put a portion of the noncontrolling interest, equal to 25 % of Pilgrim Media Group. In February 2023, the Company paid $ 36.5 million as settlement of the exercised put option, and recorded a reduction to redeemable noncontrolling interest of $ 55.1 million representing the carrying value of the noncontrolling interest purchased, with the difference between the carrying value of the noncontrolling interest purchased and the cash paid for the settlement of the put recorded as an increase to accumulated deficit of $ 18.6 million. The noncontrolling interest holder has a right to put and the Company has a right to call the remaining amount of noncontrolling interest at fair value, subject to a cap, exercisable for thirty ( 30 ) days beginning November 12, 2024, as amended. The put and call options have been determined to be embedded in the noncontrolling interest, and because the put rights are outside the control of the Company and require partial cash settlement, the noncontrolling interest holder's interest is presented as redeemable noncontrolling interest outside of shareholders' equity on the Company's consolidated balance sheets. Other: The Company has other immaterial redeemable noncontrolling interests. Other Noncontrolling Interests The Company has other immaterial noncontrolling interests that are not redeemable. F-40 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 12. Revenue Revenue by Segment, Market or Product Line The table below presents revenues by segment, market or product line for the fiscal years ended March 31, 2024, 2023 and 2022. The Motion Picture and Television Production segments include the revenues of eOne from the acquisition date of December 27, 2023 (see Note 2). Year Ended March 31, 2024 2023 2022 (Amounts in millions) Revenue by Type: Motion Picture Theatrical $ 226.5 $ 120.7 $ 65.3 Home Entertainment Digital Media 652.3 527.5 497.1 Packaged Media 84.0 70.5 115.0 Total Home Entertainment 736.3 598.0 612.1 Television 274.4 217.8 257.9 International 391.0 365.0 234.4 Other 28.1 22.2 15.6 Total Motion Picture revenues 1,656.3 1,323.7 1,185.3 Television Production Television 788.5 1,144.3 1,094.5 International 228.8 277.7 256.5 Home Entertainment Digital Media 240.6 241.7 85.1 Packaged Media 2.0 3.3 6.9 Total Home Entertainment 242.6 245.0 92.0 Other 70.2 93.1 88.0 Total Television Production revenues 1,330.1 1,760.1 1,531.0 Media Networks - Programming Revenues Domestic 1,365.4 1,395.8 1,428.9 International 211.0 150.7 107.3 1,576.4 1,546.5 1,536.2 Intersegment eliminations ( 545.9 ) ( 775.5 ) ( 648.2 ) Total revenues $ 4,016.9 $ 3,854.8 $ 3,604.3 Remaining Performance Obligations Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog). Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at March 31, 2024 are as follows: F-41 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ending March 31, 2025 2026 2027 Thereafter Total (Amounts in millions) Remaining Performance Obligations $ 1,208.3 $ 486.3 $ 48.5 $ 51.0 $ 1,794.1 The above table does not include estimates of variable consideration for transactions involving sales or usage-based royalties in exchange for licenses of intellectual property. The revenues included in the above table include all fixed fee contracts regardless of duration. Revenues of $ 290.6 million, including variable and fixed fee arrangements, were recognized during the year ended March 31, 2024 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. Accounts Receivable, Contract Assets and Deferred Revenue The timing of revenue recognition, billings and cash collections affects the recognition of accounts receivable, contract assets and deferred revenue (see Note 1). See the consolidated balance sheets or Note 19 for accounts receivable, contract assets and deferred revenue balances at March 31, 2024 and 2023. Accounts Receivable. Accounts receivable are presented net of a provision for doubtful accounts. The Company estimates provisions for accounts receivable based on historical experience for the respective risk categories and current and future expected economic conditions. To assess collectability, the Company analyzes market trends, economic conditions, the aging of receivables and customer specific risks, and records a provision for estimated credit losses expected over the lifetime of the receivables in direct operating expense. The Company performs ongoing credit evaluations and monitors its credit exposure through active review of customers' financial condition, aging of receivable balances, historical collection trends, and expectations about relevant future events that may significantly affect collectability. The Company generally does not require collateral for its trade accounts receivable. Changes in the provision for doubtful accounts consisted of the following: March 31, 2023 (Benefit) provision for doubtful accounts Other (1) Uncollectible accounts written-off (2) March 31, 2024 (Amounts in millions) Trade accounts receivable $ 9.2 $ 0.5 $ 1.3 $ ( 3.8 ) $ 7.2 _______________________ (1) Represents the provision for doubtful accounts acquired in the acquisition of eOne (see Note 2). (2) Represents primarily accounts receivable previously reserved for bad debt from customers in Russia, related to Russia's invasion of Ukraine. Contract Assets. Contract assets relate to the Company’s conditional right to consideration for completed performance under the contract (e.g., unbilled receivables). 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 19 for contract assets at March 31, 2024 and 2023. Deferred Revenue. Deferred revenue relates primarily to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation. At March 31, 2024, the current portion of deferred revenue includes $ 65.6 million from the acquisition of eOne (see Note 2). Revenues of $ 134.7 million were recognized during the year ended March 31, 2024, related to the balance of deferred revenue at March 31, 2023. F-42 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 13. Capital Stock (a) Common Shares The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares, at March 31, 2024 and March 31, 2023. The table below outlines common shares reserved for future issuance: March 31, 2024 March 31, 2023 (Amounts in millions) Stock options and share appreciation rights (SARs) outstanding 20.7 24.8 Restricted share units and restricted stock — unvested 13.4 14.0 Common shares available for future issuance 15.4 11.4 Shares reserved for future issuance 49.5 50.2 (b) Share Repurchases On February 2, 2016, the Company's Board of Directors authorized the Company to increase its previously announced share repurchase plan from a total authorization of $ 300 million to $ 468 million. During the fiscal years ended March 31, 2024, 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. (c) Share-based Compensation General. The Company has a performance incentive plan (the “2019 Plan”), as amended, which provides for granting awards which include stock options, share appreciation rights, restricted stock, restricted share units, stock bonuses and other forms of awards granted or denominated in the Company’s Class A voting shares and the Company’s Class B non-voting shares ("Common Shares") or units of Common Shares, as well as certain cash bonus awards. Persons eligible to receive awards under the 2019 Plan include directors of the Company, officers or employees of the Company or any of its subsidiaries, and certain consultants and advisors to the Company or any of its subsidiaries. Stock options are generally granted at exercise prices equal to or exceeding the market price of the Company's Common Shares at the date of grant. Substantially all stock options vest ratably over one to five years from the grant date based on continuous service and expire seven to ten years from the date of grant. Restricted stock and restricted share units generally vest ratably over one to three years based on continuous service. The Company satisfies stock option exercises and vesting of restricted stock and restricted share units with newly issued shares. The measurement of all share-based awards uses a fair value method and the recognition of the related share-based compensation expense in the consolidated financial statements is recorded over the requisite service period. Further, the Company estimates forfeitures for share-based awards that are not expected to vest. As share-based compensation expense recognized in the Company’s consolidated financial statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. F-43 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Share-Based Compensation Expense. The Company recognized the following share-based compensation expense during the years ended March 31, 2024, 2023 and 2022: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Compensation Expense: Stock options $ 2.2 $ 7.0 $ 19.2 Restricted share units and other share-based compensation 77.5 86.8 73.4 Share appreciation rights 1.5 4.0 7.4 81.2 97.8 100.0 Impact of accelerated vesting on equity awards (1) 9.4 4.2 — Total share-based compensation expense $ 90.6 $ 102.0 $ 100.0 Tax impact (2) ( 18.6 ) ( 18.4 ) ( 19.7 ) Reduction in net income $ 72.0 $ 83.6 $ 80.3 ___________________ (1) Represents the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements. (2) Represents the income tax benefit recognized in the statements of operations for share-based compensation arrangements prior to the effects of changes in the valuation allowance. Share-based compensation expense, by expense category, consisted of the following: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Share-Based Compensation Expense: Direct operating $ 2.8 $ 1.7 $ 1.2 Distribution and marketing 0.8 0.7 0.5 General and administration 77.6 95.4 98.3 Restructuring and other 9.4 4.2 — $ 90.6 $ 102.0 $ 100.0 F-44 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Stock Options The following table sets forth the stock option, and share appreciation rights ("SARs") activity during the year ended March 31, 2024: Stock Options and SARs Class A Voting Shares Class B Non-Voting Shares Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value (Amounts in millions, except for weighted-average exercise price and years) Outstanding at March 31, 2023 4.3 $ 26.35 20.5 $ 15.23 Granted — — 0.3 $ 8.88 Exercised — (1) $ 7.70 ( 0.1 ) $ 7.11 Forfeited or expired ( 1.9 ) $ 30.81 ( 2.4 ) $ 26.32 Outstanding at March 31, 2024 2.4 $ 22.96 2.51 $ 0.1 18.3 $ 13.73 5.10 $ 6.4 Vested or expected to vest at March 31, 2024 2.4 $ 22.96 2.51 $ 0.1 18.3 $ 13.75 5.09 $ 6.3 Exercisable at March 31, 2024 2.4 $ 22.96 2.51 $ 0.1 17.6 $ 13.95 4.95 $ 6.1 _____________________ (1) Represents less than 0.1 million shares. The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes). The following table presents the weighted average grant-date fair value of options granted in the years ended March 31, 2024, 2023 and 2022, and the weighted average applicable assumptions used in the Black-Scholes option-pricing model for stock options and share-appreciation rights granted during the years then ended: Year Ended March 31, 2024 2023 2022 Weighted average fair value of grants $ 4.63 $ 4.56 $ 6.27 Weighted average assumptions: Risk-free interest rate (1) 4.3 % - 4.5 % 2.8 % - 3.7 % 0.8 % - 2.5 % Expected option lives (in years) (2) 3.3 - 7 years 3.5 - 7 years 3.3 - 7 years Expected volatility for options (3) 46 % - 47 % 44 % 42 % - 44 % Expected dividend yield (4) 0 % 0 % 0 % ____________________________ (1) The risk-free rate assumed in valuing the options is based on the U.S. Treasury Yield curve in effect applied against the expected term of the option at the time of the grant. (2) The expected term of options granted represents the period of time that options granted are expected to be outstanding. (3) Expected volatilities are based on implied volatilities from traded options on the Company’s shares, historical volatility of the Company’s shares and other factors. (4) The expected dividend yield is estimated by dividing the expected annual dividend by the market price of the Company's shares at the date of grant. The total intrinsic value of options exercised during the year ended March 31, 2024 was $ 0.2 million (2023 — $ 1.2 million, 2022 — $ 2.3 million). During the year ended March 31, 2024, less than 0.1 million shares (2023 — less than 0.1 million shares, 2022 — less than 0.1 million) were cancelled to fund withholding tax obligations upon exercise of options. F-45 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Restricted Share Units The following table sets forth the restricted share unit and restricted stock activity during the year ended March 31, 2024: Restricted Share Units and Restricted Stock Class A Voting Shares Weighted-Average Grant-Date Fair Value Class B Non-Voting Shares Weighted-Average Grant-Date Fair Value (Amounts in millions, except for weighted-average grant date fair value) Outstanding at March 31, 2023 — (1) $ 10.95 14.0 $ 9.48 Granted 0.1 $ 8.87 9.5 $ 8.20 Vested — (1) $ 10.89 ( 9.4 ) $ 9.34 Forfeited — — ( 0.8 ) $ 8.55 Outstanding at March 31, 2024 0.1 $ 9.27 13.3 $ 8.71 __________________ (1) Represents less than 0.1 million shares. The fair values of restricted share units and restricted stock are determined based on the market value of the shares on the date of grant. The total fair value of restricted share units and restricted stock vested during the year ended March 31, 2024 was $ 89.6 million (2023 - $ 54.9 million, 2022 - $ 67.8 million). The following table summarizes the total remaining unrecognized compensation cost as of March 31, 2024 related to non-vested stock options and restricted stock and restricted share units and the weighted average remaining years over which the cost will be recognized: Total Unrecognized Compensation Cost Weighted Average Remaining Years (Amounts in millions) Stock Options $ 2.3 1.5 Restricted Share Units and Restricted Stock 54.5 1.5 Total $ 56.8 Under the Company’s stock option and long term incentive plans, the Company withholds shares to satisfy minimum statutory federal, state and local tax withholding obligations arising from the vesting of restricted share units and restricted stock. During the year ended March 31, 2024, 3.9 million shares (2023 — 2.2 million shares, 2022 — 2.3 million shares) were withheld upon the vesting of restricted share units and restricted stock. The Company becomes entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the stock options and restricted share units when vesting or exercise occurs, the restrictions are released and the shares are issued. Restricted share units are forfeited if the employees are terminated prior to vesting. The Company recognized excess tax deficiencies of $ 12.0 million associated with its equity awards in its tax provision for the year ended March 31, 2024 (2023 — deficiencies of $ 11.3 million, 2022 — benefits of $ 14.9 million). Other Share-Based Compensation Pursuant to the terms of certain employment agreements, during the year ended March 31, 2024, the Company granted the equivalent of $ 2.3 million (2023 - $ 2.3 million, 2022 - $ 2.3 million) in shares to certain employees through the term of their employment contracts, which were recorded as compensation expense in the applicable period. Pursuant to this arrangement, for the year ended March 31, 2024, the Company issued 0.2 million shares (2023 - 0.3 million shares, 2022 - 0.1 million shares), net of shares withheld to satisfy minimum tax withholding obligations. F-46 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 14. Income Taxes The components of pretax income (loss), net of intercompany eliminations, are as follows: Year Ended March 31, 2024 2023 2022 (Amounts in millions) United States $ ( 1,389.9 ) $ ( 2,218.6 ) $ ( 359.2 ) International 208.6 221.1 182.2 $ ( 1,181.3 ) $ ( 1,997.5 ) $ ( 177.0 ) The Company's U.S. pre-tax losses and international pre-tax income are primarily driven by non-operating, intercompany items resulting from the Company's internal capital structure. The Company's capital structure generally provides foreign affiliate dividends to its Canadian parent company (i.e., Lionsgate) and interest-related tax deductions to its U.S. companies. The Company's international pre-tax income may be significantly impacted by these foreign affiliate dividends related to its internal capital structure. The Company’s current and deferred income tax provision (benefits) are as follows: Year Ended March 31, 2024 2023 2022 Current provision (benefit): (Amounts in millions) Federal $ ( 62.5 ) $ 11.9 $ 11.0 States 1.7 ( 0.4 ) 10.7 International 14.3 15.1 8.4 Total current provision (benefit) $ ( 46.5 ) $ 26.6 $ 30.1 Deferred provision (benefit): Federal $ ( 6.6 ) $ ( 7.7 ) $ 0.9 States ( 11.9 ) ( 0.1 ) ( 2.6 ) International — 2.5 — Total deferred provision (benefit) ( 18.5 ) ( 5.3 ) ( 1.7 ) Total provision (benefit) for income taxes $ ( 65.0 ) $ 21.3 $ 28.4 Although the Company is incorporated under Canadian law, the majority of its global operations are currently subject to tax in the U.S. As a result, the Company believes it is more appropriate to use the U.S. federal statutory income tax rate of 21% in its reconciliation of the statutory rate to its reported income tax provision (benefit). The Company's income tax provision (benefit) differs from the 21% U.S. federal statutory income tax rate applied to income (loss) before taxes due to the mix of earnings generated across the various jurisdictions in which operations are conducted, in addition to the tax deductions generated through the Company's capital structure. The Company's income tax provision (benefit) 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. F-47 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The differences between income taxes expected at U.S. statutory income tax rates and the income tax provision are as set forth below: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Income taxes computed at Federal statutory rate $ ( 248.1 ) $ ( 419.5 ) $ ( 37.2 ) Foreign affiliate dividends ( 27.3 ) ( 35.4 ) ( 35.2 ) Foreign operations subject to different income tax rates 41.2 48.2 50.0 State income tax ( 9.6 ) ( 0.5 ) 8.1 Nondeductible goodwill impairment 101.9 304.3 — Remeasurements of originating deferred tax assets and liabilities ( 78.3 ) 13.6 ( 1.3 ) Permanent differences 1.0 2.3 0.8 Nondeductible share based compensation 2.5 2.3 ( 3.3 ) Nondeductible officers compensation 7.7 9.8 5.6 Non-controlling interest in partnerships 18.6 1.8 3.7 Uncertain tax benefits ( 70.0 ) 5.3 3.6 Other ( 0.9 ) 1.9 1.2 Changes in valuation allowance 196.3 87.2 32.4 Total provision for income taxes $ ( 65.0 ) $ 21.3 $ 28.4 For the fiscal years ended March 31, 2024, 2023 and 2022, our income tax provision (benefit) includes certain foreign affiliate dividends that can be received in our Canadian jurisdiction without being subject to income tax under local law. As a result of an internal capital restructuring during a prior fiscal year, the Company generated a net operating loss carryforward under local income tax law in another foreign jurisdiction which was offset by a valuation allowance based on the Company’s assessment, and which is being absorbed by taxable income annually. F-48 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows: March 31, 2024 March 31, 2023 (Amounts in millions) Deferred tax assets: Net operating losses $ 624.4 $ 450.4 Foreign tax credits 64.9 73.0 Investment in film and television programs 34.2 67.1 Accrued compensation 54.3 63.2 Operating leases - liabilities 99.0 41.4 Other assets 57.7 22.6 Reserves 22.9 9.0 Interest 201.0 104.6 Total deferred tax assets 1,158.4 831.3 Valuation allowance ( 808.3 ) ( 455.7 ) Deferred tax assets, net of valuation allowance 350.1 375.6 Deferred tax liabilities: Intangible assets ( 222.4 ) ( 317.0 ) Operating leases - assets ( 88.9 ) ( 34.6 ) Other ( 52.1 ) ( 55.8 ) Total deferred tax liabilities $ ( 363.4 ) $ ( 407.4 ) Net deferred tax liabilities $ ( 13.3 ) $ ( 31.8 ) The Company has recorded valuation allowances for certain deferred tax assets, which are primarily related to U.S. and foreign net operating loss carryforwards, U.S. foreign tax credit carryforwards, and carryforwards of U.S. interest expenses limited in their deduction under the Internal Revenue Code and similar state and local statutes. In its assessment, the Company has concluded there to be sufficient uncertainty regarding the future realization of these deferred tax assets. At March 31, 2024, the Company had U.S. net operating loss carryforwards ("NOLs") of approximately $ 1,330.6 million available to reduce future federal income taxes, certain of which expire beginning in 2037 through 2042. At March 31, 2024, the Company had state NOLs of approximately $ 1,203.9 million available to reduce future state income taxes which expire in varying amounts beginning in 2025. At March 31, 2024, the Company had Canadian loss carryforwards of $ 361.6 million which will expire beginning in 2030. At March 31, 2024, the Company had Luxembourg loss carryforwards of $ 504.3 million which will expire beginning in 2036, U.K. loss carryforwards of $ 95.1 million with no expiration, and Spanish loss carryforwards of $ 96.1 million which will expire beginning in 2036. At March 31, 2024, the Company had other foreign jurisdiction loss carryforwards of $ 24.6 million which will expire beginning in 2028. In addition, at March 31, 2024, the Company had U.S. credit carryforwards related to foreign taxes paid of approximately $ 64.9 million to offset future federal income taxes that will expire beginning in 2025. F-49 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as "other liabilities" in the consolidated balance sheets. As of March 31, 2024 and 2023, the total amount of gross unrecognized tax benefits, exclusive of interest and penalties, was $ 12.1 million and $ 64.9 million, respectively, which, if recognized, would favorably impact the Company's effective tax rate. The aggregate changes in the Company's gross amount of unrecognized tax benefits, exclusive of interest and penalties, are summarized as follows: Amounts in millions Gross unrecognized tax benefits at March 31, 2021 (liability as of March 31, 2021) $ 68.0 Increases related to current year tax position — Increases related to prior year tax positions 2.6 Decreases related to prior year tax positions — Settlements — Lapse in statute of limitations ( 0.4 ) Gross unrecognized tax benefits at March 31, 2022 (liability as of March 31, 2022) 70.2 Increases related to current year tax position — Increases related to prior year tax positions 0.2 Decreases related to prior year tax positions — Settlements ( 4.3 ) Lapse in statute of limitations ( 1.2 ) Gross unrecognized tax benefits at March 31, 2023 (liability as of March 31, 2023) 64.9 Increases related to current year tax position — Increases related to prior year tax positions 8.9 Decreases related to prior year tax positions — Settlements ( 60.7 ) Lapse in statute of limitations ( 1.0 ) Gross unrecognized tax benefits at March 31, 2024 (liability as of March 31, 2024) $ 12.1 The Company records interest and penalties on unrecognized tax benefits as part of its income tax provision (benefit). For the years ended March 31, 2024, 2023, and 2022, the Company recognized as a charge or (benefit) to the tax provision (benefit) for interest and penalties related to uncertain tax positions of $( 8.9 ) million, $ 5.0 million, and $ 6.0 million, respectively. The liability for accrued interest amounted to $ 7.0 million and $ 16.7 million as of March 31, 2024 and 2023, respectively. During the year ended March 31, 2024, the Company settled a prior year refund claim and recognized a corresponding income tax benefit of $ 70 million, which was inclusive of accrued interest and penalties of approximately $ 10 million. The Company estimates that it is reasonably possible that the liability for unrecognized tax benefits will further decrease in the next twelve months by $ 8.1 million, inclusive of interest and penalties, as a result of projected audit settlements in certain jurisdictions. The Company is subject to taxation in the U.S. and various state, local, and foreign jurisdictions. To the extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs were generated and carried forward and make adjustments up to the amount of the NOLs. Currently, audits are occurring in various state and local tax jurisdictions for tax years ended in 2012 through 2020. Additionally, positions taken by the Company in certain amended filings are subject to current review. The Company's Canadian tax returns are also under examination for the years ended March 31, 2018 through March 31, 2019. F-50 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 15. Restructuring and Other Restructuring and other includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable. During the years ended March 31, 2024, 2023 and 2022, the Company also incurred certain other unusual charges or benefits, which are included in direct operating expense and distribution and marketing expense in the consolidated statements of operations and are described below. The following table sets forth restructuring and other and these other unusual charges or benefits and the statement of operations line items they are included in for the years ended March 31, 2024, 2023 and 2022: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Restructuring and other: Content and other impairments (1) $ 377.3 $ 385.2 $ — Severance (2) Cash 37.2 18.0 4.6 Accelerated vesting on equity awards (see Note 13) 9.4 4.2 — Total severance costs 46.6 22.2 4.6 COVID-19 related charges included in restructuring and other — 0.1 1.1 Transaction and other costs (benefits) (3) 84.6 4.4 11.1 Total Restructuring and Other 508.5 411.9 16.8 Other unusual charges not included in restructuring and other or the Company's operating segments: Programming and content charges included in direct operating expense (4) — 7.0 36.9 COVID-19 related charges (benefit) included in: Direct operating expense (5) ( 1.0 ) ( 11.6 ) ( 3.6 ) Distribution and marketing expense — — 0.2 Charges related to Russia's invasion of Ukraine included in direct operating expense (6) — — 5.9 Total restructuring and other and other unusual charges not included in restructuring and other $ 507.5 $ 407.3 $ 56.2 _______________________ (1) Media Networks Restructuring: 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. During the fiscal year ended March 31, 2024, 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, the Company has made the strategic decision to shut down the LIONSGATE+ service in Latin America and the United Kingdom ("U.K.") with the only remaining international operations being in Canada and India, 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 fiscal years ended March 31, 2024 and 2023 of $ 364.5 million and $ 379.3 million, respectively. The Company has incurred impairment charges from the inception of the plan through March 31, 2024 amounting to $ 743.8 million. Under the current restructuring plan and ongoing strategic content review, the net future cash outlay is estimated to range from approximately $ 80 million to $ 90 million, which includes contractual commitments on content in F-51 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. 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. Accordingly, the Company may incur additional content impairment and other restructuring charges beyond the estimates above. Other Impairments: Amounts in the fiscal year ended March 31, 2024 also include $ 12.8 million of development costs written off in connection with changes in strategy in the Television Production segment as a result of the acquisition of eOne. Amounts in the fiscal year ended March 31, 2023 also include an impairment of an operating lease right-of-use asset related to the Studio business and corporate facilities amounting to $ 5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company. The impairment reflects a decline in market conditions since the inception of the lease impacting potential sublease opportunities, and represents the difference between the estimated fair value, which was determined based on the expected discounted future cash flows of the lease asset, and the carrying value. (2) Severance costs in the fiscal years ended March 31, 2024, 2023 and 2022 were primarily related to restructuring activities and other cost-saving initiatives. In fiscal 2024, amounts were due to restructuring activities including integration of the acquisition of eOne, LIONSGATE+ international restructuring and our Motion Picture and Television Production segment. (3) Amounts in the fiscal years ended March 31, 2024, 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 legal and other matters. In fiscal 2024, these amounts include $ 49.2 million associated with the acquisition of additional interest in 3 Arts Entertainment. Due to the new arrangement representing a modification of terms of the compensation element under the previous arrangement which resulted in the reclassification of the equity award to a liability award, the Company recognized incremental compensation expense of $ 49.2 million, representing the excess of the fair value of the modified award over amounts previously expensed. See Note 11 for further information. In addition, transaction and other costs in fiscal 2024 includes approximately $ 16.6 million of a loss associated with a theft at a production of a 51 % owned consolidated entity. The Company expects to recover a portion of this amount under its insurance coverage and from the noncontrolling interest holders of this entity. Transaction and other costs in fiscal 2024 also include a benefit of $ 5.4 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. The remaining amounts in fiscal 2024 primarily represent acquisition and integration costs related to the acquisition of eOne, and costs associated with the separation of the Starz Business from the Studio Business. In fiscal 2023, transaction and other costs include a benefit of $ 11.0 million for a settlement of a legal matter related to the Media Networks segment. (4) Amounts represent certain unusual programming and content charges. In the fiscal year ended March 31, 2023, the amounts represent development costs written off as a result of changes in strategy across the Company's theatrical slate in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment. In the fiscal year ended March 31, 2022, the amounts represent impairment charges recorded as a result of a strategic review of original programming on the STARZ platform, which identified certain titles with limited viewership or strategic purpose which were removed from the STARZ service and abandoned by the Media Networks segment (see Note 3). These charges are excluded from segment results and included in amortization of investment in film and television programs in direct operating expense on the consolidated statement of operations. (5) Amounts reflected in direct operating expense include incremental costs associated with the pausing and restarting of productions including paying/hiring certain cast and crew, maintaining idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries of $ 1.2 million, $ 14.1 million and $ 22.1 million in fiscal 2024, 2023 and 2022, respectively. In the fiscal years ended March 31, 2024, 2023 and 2022, insurance recoveries exceeded the incremental costs expensed in the year, 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. F-52 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (6) Amounts represent charges related to Russia's invasion of Ukraine, primarily related to bad debt reserves for accounts receivable from customers in Russia, included in direct operating expense in the consolidated statements of operations. Changes in the restructuring and other severance liability were as follows for the years ended March 31, 2024, 2023 and 2022: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Severance liability Beginning balance $ 8.7 $ 1.5 $ 5.7 Accruals 37.2 18.0 4.6 Severance payments ( 22.3 ) ( 10.8 ) ( 8.8 ) Ending balance (1) $ 23.6 $ 8.7 $ 1.5 _______________________ (1) As of March 31, 2024, the remaining severance liability of approximately $ 23.6 million is expected to be paid in the next 12 months. 16. Segment Information The Company’s reportable segments have been determined based on the distinct nature of their operations, the Company's internal management structure, and the financial information that is evaluated regularly by the Company's chief operating decision maker. The Company has three reportable business segments: (1) Motion Picture, (2) Television Production and (3) Media Networks. We refer to our Motion Picture and Television Production segments collectively as our Studio Business. Studio Business: Motion Picture. Motion Picture consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired. Television Production. Television Production consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series, and non-fiction programming. Television Production includes the licensing of Starz original series productions to Starz Networks and LIONSGATE+, and the ancillary market distribution of Starz original productions and licensed product. Additionally, the Television Production segment includes the results of operations of 3 Arts Entertainment. Media Networks Business: Media Networks. Media Networks consists of the following product lines (i) Starz Networks, which includes the domestic distribution of STARZ branded premium subscription video services through OTT platforms, on a direct-to-consumer basis through the Starz App, and through Distributors (ii) LIONSGATE+, which represents revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services outside of the U.S. In the ordinary course of business, the Company's reportable segments enter into transactions with one another. The most common types of intersegment transactions include licensing motion pictures or television programming (including Starz original productions) from the Motion Picture and Television Production segments to the Media Networks segment. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results. F-53 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Segment information is presented in the table below. The Motion Picture and Television Production segments include the results of operations of eOne from the acquisition date of December 27, 2023 (see Note 2). Year Ended March 31, 2024 2023 2022 (Amounts in millions) Segment revenues Studio Business: Motion Picture $ 1,656.3 $ 1,323.7 $ 1,185.3 Television Production 1,330.1 1,760.1 1,531.0 Total Studio Business 2,986.4 3,083.8 2,716.3 Media Networks 1,576.4 1,546.5 1,536.2 Intersegment eliminations ( 545.9 ) ( 775.5 ) ( 648.2 ) $ 4,016.9 $ 3,854.8 $ 3,604.3 Intersegment revenues Studio Business: Motion Picture $ 128.2 $ 44.2 $ 38.0 Television Production 417.7 731.3 610.2 Total Studio Business 545.9 775.5 648.2 Media Networks — — — $ 545.9 $ 775.5 $ 648.2 Gross contribution Studio Business: Motion Picture $ 433.3 $ 386.3 $ 356.0 Television Production 204.7 185.3 124.1 Total Studio Business 638.0 571.6 480.1 Media Networks 329.8 203.2 243.2 Intersegment eliminations ( 48.9 ) ( 35.7 ) ( 2.7 ) $ 918.9 $ 739.1 $ 720.6 Segment general and administration Studio Business: Motion Picture $ 113.9 $ 109.8 $ 93.1 Television Production 57.9 51.9 40.2 Total Studio Business 171.8 161.7 133.3 Media Networks 93.4 96.4 88.0 $ 265.2 $ 258.1 $ 221.3 Segment profit Studio Business: Motion Picture $ 319.4 $ 276.5 $ 262.9 Television Production 146.8 133.4 83.9 Total Studio Business 466.2 409.9 346.8 Media Networks 236.4 106.8 155.2 Intersegment eliminations ( 48.9 ) ( 35.7 ) ( 2.7 ) $ 653.7 $ 481.0 $ 499.3 The Company's primary measure of segment performance is segment profit. Segment profit is defined as gross contribution (revenues, less direct operating and distribution and marketing expense) less segment general and administration F-54 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) expenses. Segment profit excludes, when applicable, corporate general and administrative expense, restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and/or programming and content strategy, certain charges related to the COVID-19 global pandemic, charges related to Russia's invasion of Ukraine, and purchase accounting and related adjustments. The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company's management and enables them to understand the fundamental performance of the Company's businesses. The reconciliation of total segment profit to the Company’s loss before income taxes is as follows: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Company’s total segment profit $ 653.7 $ 481.0 $ 499.3 Corporate general and administrative expenses (1) ( 136.1 ) ( 122.9 ) ( 97.1 ) Adjusted depreciation and amortization (2) ( 50.1 ) ( 40.2 ) ( 43.0 ) Restructuring and other ( 508.5 ) ( 411.9 ) ( 16.8 ) Goodwill and intangible asset impairment ( 663.9 ) ( 1,475.0 ) — COVID-19 related benefit (charges) included in direct operating expense and distribution and marketing expense (3) 1.0 11.6 3.4 Programming and content charges (4) — ( 7.0 ) ( 36.9 ) Charges related to Russia's invasion of Ukraine (5) — — ( 5.9 ) Adjusted share-based compensation expense (6) ( 81.2 ) ( 97.8 ) ( 100.0 ) Purchase accounting and related adjustments (7) ( 153.7 ) ( 195.5 ) ( 194.0 ) Operating income (loss) ( 938.8 ) ( 1,857.7 ) 9.0 Interest expense ( 269.8 ) ( 221.2 ) ( 176.0 ) Interest and other income 22.1 6.4 30.8 Other expense ( 26.9 ) ( 26.9 ) ( 10.9 ) Gain (loss) on extinguishment of debt 19.9 57.4 ( 28.2 ) Gain on investments, net 3.5 44.0 1.3 Equity interests income (loss) 8.7 0.5 ( 3.0 ) Loss before income taxes $ ( 1,181.3 ) $ ( 1,997.5 ) $ ( 177.0 ) ___________________ (1) Corporate general and administrative expenses include certain corporate executive expense (such as salaries and wages for the office of the Chief Executive Officer, Chief Financial Officer, General Counsel and other corporate officers), investor relations costs, costs of maintaining corporate facilities, and other unallocated common administrative support functions, including corporate accounting, finance and financial reporting, internal and external audit and tax costs, corporate and other legal support functions, and certain information technology and human resources expense. (2) Adjusted depreciation and amortization represents depreciation and amortization as presented on our consolidated statements of operations less the depreciation and amortization related to the non-cash fair value adjustments to property and equipment and intangible assets acquired in acquisitions which are included in the purchase accounting and related adjustments line item above, as shown in the table below: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Depreciation and amortization $ 192.2 $ 180.3 $ 177.9 Less: Amount included in purchase accounting and related adjustments ( 142.1 ) ( 140.1 ) ( 134.9 ) Adjusted depreciation and amortization $ 50.1 $ 40.2 $ 43.0 F-55 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (3) Amounts represent the incremental costs, if any, included in direct operating expense and distribution and marketing expense resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries. During the fiscal years ended March 31, 2024, 2023 and 2022, the Company has incurred a net benefit in direct operating expense due to insurance recoveries in excess of the incremental costs expensed in the period (see Note 15). These benefits (charges) are excluded from segment operating results. (4) Programming and content charges represent certain charges included in direct operating expense in the consolidated statements of operations, and excluded from segment operating results (see Note 3 and Note 15 for further information). (5) Amounts represent charges related to Russia's invasion of Ukraine, primarily related to bad debt reserves for accounts receivable from customers in Russia, included in direct operating expense in the consolidated statements of operations, and excluded from segment operating results. (6) The following table reconciles total share-based compensation expense to adjusted share-based compensation expense: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Total share-based compensation expense $ 90.6 $ 102.0 $ 100.0 Less: Amount included in restructuring and other (i) ( 9.4 ) ( 4.2 ) — Adjusted share-based compensation $ 81.2 $ 97.8 $ 100.0 (i) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements. (7) Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in acquisitions. The following sets forth the amounts included in each line item in the financial statements: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Purchase accounting and related adjustments: Direct operating $ — $ 0.7 $ 0.4 General and administrative expense (i) 11.6 54.7 58.7 Depreciation and amortization 142.1 140.1 134.9 $ 153.7 $ 195.5 $ 194.0 (i) These adjustments include the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, and the non-cash charges for the accretion of the noncontrolling interest discount related to Pilgrim Media Group (through June 2021) and 3 Arts Entertainment (through November 2022), and the amortization of the recoupable portion of the purchase price (through May 2023) 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 interests 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. Year Ended March 31, 2024 2023 2022 (Amounts in millions) Amortization of recoupable portion of the purchase price $ 1.3 $ 7.7 $ 7.7 Noncontrolling interest discount amortization — 13.2 22.7 Noncontrolling equity interest in distributable earnings 10.3 33.8 28.3 $ 11.6 $ 54.7 $ 58.7 F-56 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) See Note 12 for revenues by media or product line as broken down by segment for the fiscal years ended March 31, 2024, 2023, and 2022. The following table reconciles segment general and administration to the Company’s total consolidated general and administration expense: Year Ended March 31, 2024 2023 2022 (Amounts in millions) General and administration Segment general and administrative expenses $ 265.2 $ 258.1 $ 221.3 Corporate general and administrative expenses 136.1 122.9 97.1 Share-based compensation expense included in general and administrative expense 77.6 95.4 98.3 Purchase accounting and related adjustments 11.6 54.7 58.7 $ 490.5 $ 531.1 $ 475.4 The reconciliation of total segment assets to the Company’s total consolidated assets is as follows: March 31, 2024 March 31, 2023 (Amounts in millions) Assets Motion Picture $ 1,851.4 $ 1,759.4 Television Production 2,347.8 1,949.1 Media Networks 2,036.7 3,120.8 Other unallocated assets (1) 856.8 596.9 $ 7,092.7 $ 7,426.2 _____________________ (1) Other unallocated assets primarily consist of cash, other assets and investments. F-57 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table sets forth acquisition of investment in films and television programs and program rights, as broken down by segment for the years ended March 31, 2024, 2023 and 2022: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Acquisition of investment in films and television programs and program rights Motion Picture $ 416.6 $ 483.6 $ 465.0 Television Production 712.8 1,082.0 1,287.0 Media Networks 852.8 1,173.0 1,134.6 Intersegment eliminations ( 572.9 ) ( 759.4 ) ( 674.9 ) $ 1,409.3 $ 1,979.2 $ 2,211.7 The following table sets forth capital expenditures, as broken down by segment for the years ended March 31, 2024, 2023 and 2022: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Capital expenditures Motion Picture $ — $ — $ — Television Production 0.3 0.3 0.4 Media Networks 24.8 42.5 27.0 Corporate (1) 9.6 6.2 5.7 $ 34.7 $ 49.0 $ 33.1 _____________________ (1) Represents unallocated capital expenditures primarily related to the Company's corporate headquarters. Revenue by geographic location, based on the location of the customers, with no other foreign country individually comprising greater than 10% of total revenue, is as follows: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Revenue Canada $ 76.9 $ 63.1 $ 56.8 United States 3,140.1 3,129.8 3,016.8 Other foreign 799.9 661.9 530.7 $ 4,016.9 $ 3,854.8 $ 3,604.3 F-58 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Long-lived assets by geographic location are as follows: March 31, 2024 March 31, 2023 (Amounts in millions) Long-lived assets (1) United States $ 3,063.2 $ 3,023.5 Other foreign 176.3 182.9 $ 3,239.5 $ 3,206.4 _____________ (1) Long-lived assets represents total assets less the following: current assets, investments, long-term receivables, interest rate swaps, intangible assets, goodwill and deferred tax assets. For the year ended March 31, 2024, the Company had revenue from one individual customer which represented greater than 10 % of consolidated revenues, amounting to $ 831.0 million, primarily related to the Company's Media Networks and Motion Picture segments (2023 - revenue from one individual customer which represented greater than 10 % of consolidated revenues, amounting to $ 766.6 million, primarily related to the Company's Media Networks and Motion Picture segments; 2022 - revenue from one individual customer which represented greater than 10 % of consolidated revenues, amounting to $ 639.2 million, primarily related to the Company's Media Networks and Motion Picture segments). As of March 31, 2024, the Company had accounts receivable due from one customer which individually represented greater than 10% of combined accounts receivable, and amounted to 11.6 % of total combined accounts receivable (current and non-current) at March 31, 2024, or gross accounts receivable of approximately $ 100.9 million. As of March 31, 2023, the Company did not have any accounts receivable due from customers which individually represented greater than 10% of total consolidated accounts receivable. 17. Commitments and Contingencies Commitments The following table sets forth our future annual repayment of contractual commitments as of March 31, 2024: Year Ending March 31, 2025 2026 2027 2028 2029 Thereafter Total (Amounts in millions) Contractual commitments by expected repayment date (off-balance sheet arrangements) Film related obligations commitments (1) $ 452.8 $ 125.8 $ 34.1 $ 6.9 $ — $ — $ 619.6 Interest payments (2) 165.6 78.9 49.2 42.5 39.3 4.9 380.4 Other contractual obligations 157.7 78.8 55.5 35.8 32.4 178.4 538.6 Total future commitments under contractual obligations (3) $ 776.1 $ 283.5 $ 138.8 $ 85.2 $ 71.7 $ 183.3 $ 1,538.6 ____________________________ (1) Film related obligations commitments are not reflected on the consolidated balance sheets as they did not then meet the criteria for recognition and include the following items: (i) Distribution and marketing commitments represent contractual commitments for future expenditures associated with distribution and marketing of films which we will distribute. The payment dates of these amounts are primarily based on the anticipated release date of the film. (ii) Minimum guarantee commitments represent contractual commitments related to the purchase of film rights for pictures to be delivered in the future. (iii) Program rights commitments represent contractual commitments under programming license agreements related to films that are not available for exhibition until some future date (see below for further details). (iv) Production loan commitments represent amounts committed for future film production and development to be funded through production financing and recorded as a production loan liability when incurred. Future payments F-59 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) under these commitments are based on anticipated delivery or release dates of the related film or contractual due dates of the commitment. The amounts include estimated future interest payments associated with the commitment. (2) Includes cash interest payments on the Company's corporate debt and film related obligations, based on the applicable SOFR interest rates at March 31, 2024, net of payments and receipts from the Company's interest rate swaps, and excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates. (3) Not included in the amounts above are $ 123.3 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments (see Note 11). The Company has an exclusive multiyear post pay-one output licensing agreement with Universal for live-action films theatrically released in the U.S. starting January 1, 2022. The Universal agreement provides the Company with rights to exhibit these films immediately following their pay-one windows. The Company is unable to estimate the amounts to be paid under the Universal agreement for films that have not yet been released in theaters, however, such amounts are expected to be significant. Multiemployer Benefit Plans. The Company contributes to various multiemployer pension plans under the terms of collective bargaining agreements that cover its union-represented employees. The Company makes periodic contributions to these plans in accordance with the terms of applicable collective bargaining agreements and laws but does not sponsor or administer these plans. The risks of participating in these multiemployer pension plans are different from single-employer pension plans such that (i) contributions made by the Company to the multiemployer pension plans may be used to provide benefits to employees of other participating employers; (ii) if the Company chooses to stop participating in certain of these multiemployer pension plans, it may be required to pay those plans an amount based on the underfunded status of the plan, which is referred to as a withdrawal liability; and (iii) actions taken by a participating employer that lead to a deterioration of the financial health of a multiemployer pension plan may result in the unfunded obligations of the multiemployer pension plan to be borne by its remaining participating employers. The Company does not participate in any multiemployer benefit plans that are considered to be individually significant to the Company, and as of March 31, 2024, all except two of the largest plans in which the Company participates were funded at a level of 80% or greater. The other two plans, the Motion Picture Industry Pension Plan and the Screen Actors Guild - Producers Pension Plan were funded at 71.20 % and 79.06 %, respectively for the 2023 plan year, but neither of these plans were considered to be in endangered, critical, or critical and declining status in the 2023 plan year. Total contributions made by the Company to multiemployer pension and other benefit plans for the years ended March 31, 2024, 2023 and 2022 were $ 59.9 million, $ 102.0 million, and $ 98.3 million, respectively. Contingencies From time to time, the Company is involved in certain claims and legal proceedings arising in the normal course of business. The Company establishes an accrued liability for claims and legal proceedings when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. As of March 31, 2024, the Company is not a party to any material pending claims or legal proceeding and is not aware of any other claims that it believes could, individually or in the aggregate, have a material adverse effect on the Company's financial position, results of operations or cash flows. Insurance Litigation During the fiscal year ended March 31, 2022, the Company settled with all of the insurers in its previous lawsuits related to insurance reimbursements associated with its previous Starz shareholder litigation settlement, which resulted in a net settlement amount received by the Company of $ 22.7 million in the fiscal year ended March 31, 2022, which is included in the “interest and other income” line item on the consolidated statement of operations. F-60 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 18. Financial Instruments (a) Credit Risk Concentration of credit risk with the Company’s customers is limited due to the Company’s customer base and the diversity of its sales throughout the world. The Company performs ongoing credit evaluations and maintains a provision for potential credit losses. The Company generally does not require collateral for its trade accounts receivable. (b) Derivative Instruments and Hedging Activities Forward Foreign Exchange Contracts The Company enters into forward foreign exchange contracts to hedge its foreign currency exposures on future production expenses and tax credit receivables denominated in various foreign currencies (i.e., cash flow hedges). The Company also enters into forward foreign exchange contracts that economically hedge certain of its foreign currency risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions. Changes in the fair value of the foreign exchange contracts that are designated as hedges are reflected in accumulated other comprehensive income (loss), and changes in the fair value of foreign exchange contracts that are not designated as hedges and do not qualify for hedge accounting are recorded in direct operating expense. 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 March 31, 2024, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 25 months from March 31, 2024): March 31, 2024 Foreign Currency Foreign Currency Amount US Dollar Amount Weighted Average Exchange Rate Per $1 USD (Amounts in millions) (Amounts in millions) British Pound Sterling 0.5 GBP in exchange for $ 0.6 0.79 GBP Czech Koruna 180.0 CZK in exchange for $ 7.7 23.29 CZK Euro 0.6 EUR in exchange for $ 0.5 0.91 EUR Canadian Dollar 21.4 CAD in exchange for $ 15.9 1.34 CAD Mexican Peso 56.7 MXN in exchange for $ 3.0 18.95 MXN Hungarian Forint 1,450.0 HUF in exchange for $ 4.0 360.17 HUF New Zealand Dollar $ 73.9 NZD in exchange for $ 45.3 1.64 NZD Interest Rate Swaps The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows. The Company primarily uses pay-fixed interest rate swaps to facilitate its interest rate risk management activities, which the Company generally designates as cash flow hedges of interest payments on floating-rate borrowings. Pay-fixed swaps effectively convert floating-rate borrowings to fixed-rate borrowings. The unrealized gains or losses from these designated cash flow hedges are deferred in accumulated other comprehensive income (loss) and recognized in interest expense as the interest payments occur. 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. F-61 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Designated Cash Flow Hedges. As of March 31, 2024 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 7 and Note 8): Effective Date Notional Amount Fixed Rate Paid Maturity Date (in millions) May 23, 2018 $ 300.0 2.915 % March 24, 2025 May 23, 2018 $ 700.0 2.915 % March 24, 2025 (1) June 25, 2018 $ 200.0 2.723 % March 23, 2025 (1) July 31, 2018 $ 300.0 2.885 % March 23, 2025 (1) December 24, 2018 $ 50.0 2.744 % March 23, 2025 (1) December 24, 2018 $ 100.0 2.808 % March 23, 2025 (1) December 24, 2018 $ 50.0 2.728 % March 23, 2025 (1) Total $ 1,700.0 __________________ (1) Represents the re-designated swaps as described in the May 2022 Transactions section below that were previously not designated cash flow hedges at March 31, 2022. May 2022 Transactions : In May 2022, the Company terminated certain of its previous interest rate swap contracts (the "Terminated Swaps"). As a result of the terminations, the Company received approximately $ 56.4 million. Simultaneously with the termination of the Terminated Swaps, the Company re-designated all other swaps previously not designated as cash flow hedges of variable rate debt. The receipt of approximately $ 56.4 million as a result of the termination was recorded as a reduction of the asset values of the derivatives amounting to $ 188.7 million and a reduction of the financing component (debt host) of the Terminated Swaps amounting to $ 131.3 million. At the time of the termination of the Terminated Swaps, there was approximately $ 180.4 million of unrealized gains recorded in accumulated other comprehensive income (loss) related to these Terminated Swaps. This amount will be amortized as a reduction of interest expense through the remaining term of the swaps unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the gain will be recorded as a reduction to interest expense at that time. In addition, the liability amount of $ 6.8 million for the Re-designated Swaps at the re-designation date will be amortized as a reduction of interest expense throughout the remaining term of the Re-designated Swaps, unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time. The receipt of approximately $ 56.4 million was classified in the consolidated statement of cash flows as cash provided by operating activities of $ 188.7 million reflecting the amount received for the derivative portion of the termination of swaps, and a use of cash in financing activities of $ 134.5 million reflecting the pay down of the financing component of the Terminated Swaps (inclusive of payments made between April 1, 2022 and the termination date amounting to $ 3.2 million). Financial Statement Effect of Derivatives Consolidated statement of operations and comprehensive income (loss): The following table presents the pre-tax effect of the Company's derivatives on the accompanying consolidated statements of operations and comprehensive income (loss) for the years ended March 31, 2024, 2023 and 2022: F-62 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2024 2023 2022 (Amounts in millions) Derivatives designated as cash flow hedges: Forward exchange contracts Gain (loss) recognized in accumulated other comprehensive income (loss) $ ( 5.8 ) $ 1.7 $ 1.7 Gain (loss) reclassified from accumulated other comprehensive income (loss) into direct operating expense ( 0.3 ) ( 0.3 ) ( 0.2 ) Interest rate swaps Gain recognized in accumulated other comprehensive income (loss) $ 36.3 $ 81.1 $ 66.5 Gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense 41.8 1.4 ( 15.0 ) Derivatives not designated as cash flow hedges: Interest rate swaps Loss reclassified from accumulated other comprehensive income (loss) into interest expense $ ( 7.2 ) $ ( 11.8 ) $ ( 33.8 ) Total direct operating expense on consolidated statements of operations $ 2,189.2 $ 2,312.5 $ 2,064.2 Total interest expense on consolidated statements of operations $ 269.8 $ 221.2 $ 176.0 Consolidated balance sheets: The Company classifies its forward foreign exchange contracts and interest rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (see Note 10). Pursuant to the Company's accounting policy to offset the fair value amounts recognized for derivative instruments, the Company presents the asset or liability position of the swaps that are with the same counterparty under a master netting arrangement net as either an asset or liability in its consolidated balance sheets. As of March 31, 2024 and 2023, there were no swaps outstanding that were subject to a master netting arrangement. As of March 31, 2024 and 2023, the Company had the following amounts recorded in the accompanying consolidated balance sheets related to the Company's use of derivatives: F-63 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) March 31, 2024 Other Current Assets Other Non-Current Assets Other Accrued Liabilities (Amounts in millions) Derivatives designated as cash flow hedges: Forward exchange contracts $ — $ — $ 2.8 Interest rate swaps 35.6 — — Fair value of derivatives $ 35.6 $ — $ 2.8 March 31, 2023 Other Current Assets Other Non-Current Assets Other Accrued Liabilities (Amounts in millions) Derivatives designated as cash flow hedges: Forward exchange contracts $ 2.9 $ — $ 0.1 Interest rate swaps — 41.1 — Fair value of derivatives $ 2.9 $ 41.1 $ 0.1 As of March 31, 2024, based on the current release schedule, the Company estimates approximately $ 1.5 million of losses associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income (loss) will be reclassified into earnings during the one-year period ending March 31, 2025. As of March 31, 2024, the Company estimates approximately $ 30.4 million of gains recorded in accumulated other comprehensive income (loss) associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending March 31, 2025. 19. Additional Financial Information The following tables present supplemental information related to the consolidated financial statements. Cash, Cash Equivalents and Restricted Cash Cash equivalents consist of investments that are readily convertible into cash. Cash equivalents are carried at cost, which approximates fair value. The Company classifies its cash equivalents within Level 1 of the fair value hierarchy because the Company uses quoted market prices to measure the fair value of these investments (see Note 10). The Company monitors concentrations of credit risk with respect to cash and cash equivalents by placing such balances with higher quality financial institutions or investing such amounts in liquid, short-term, highly-rated instruments or investment funds holding similar instruments. As of March 31, 2024, the Company’s cash and cash equivalents were held in bank depository accounts. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheet to the total amounts reported in the consolidated statement of cash flows at March 31, 2024 and 2023. At March 31, 2024 and 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. F-64 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) March 31, 2024 March 31, 2023 (Amounts in millions) Cash and cash equivalents $ 314.0 $ 272.1 Restricted cash included in other current assets 43.7 27.9 Restricted cash included in other non-current assets 13.7 13.0 Total cash, cash equivalents and restricted cash $ 371.4 $ 313.0 Accounts Receivable Monetization Under the Company's accounts receivable monetization programs, the Company has entered into (1) individual agreements to monetize certain of its trade accounts receivable directly with third-party purchasers and (2) a revolving agreement to monetize designated pools of trade accounts receivable with various financial institutions, as further described below. Under these programs, the Company transfers receivables to purchasers in exchange for cash proceeds, and the Company continues to service the receivables for the purchasers. The Company accounts for the transfers of these receivables as a sale, removes (derecognizes) the carrying amount of the receivables from its balance sheets and classifies the proceeds received as cash flows from operating activities in the statements of cash flows. The Company records a loss on the sale of these receivables reflecting the net proceeds received (net of any obligations incurred), less the carrying amount of the receivables transferred. The loss is reflected in the "other expense" line item on the 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 years ended March 31, 2024, 2023 and 2022. Individual Monetization Agreements. The Company enters into individual agreements to monetize trade accounts receivable. 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 years ended March 31, 2024, 2023 and 2022: Year Ended March 31, 2024 2023 2022 (Amounts in millions) Carrying value of receivables transferred and derecognized $ 1,413.2 $ 1,405.9 $ 1,400.2 Net cash proceeds received 1,385.9 1,382.7 1,391.2 Loss recorded related to transfers of receivables 27.3 23.2 9.0 At March 31, 2024, the outstanding amount of receivables derecognized from the Company's consolidated balance sheets, but which the Company continues to service, related to the Company's individual agreements to monetize trade accounts receivable was $ 613.4 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 matured on October 1, 2023. As customers paid their balances, the Company would transfer additional receivables into the program. The transferred receivables were fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company. The third-party purchasers had no recourse to other assets of the Company in the event of non-payment by the customers. The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the years ended March 31, 2024, 2023 and 2022: F-65 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2024 2023 2022 (Amounts in millions) Gross cash proceeds received for receivables transferred and derecognized $ 22.2 $ 167.0 $ 155.5 Less amounts from collections reinvested under revolving agreement ( 9.1 ) ( 94.3 ) ( 102.7 ) Proceeds from new transfers 13.1 72.7 52.8 Collections not reinvested and remitted or to be remitted ( 13.4 ) ( 66.6 ) ( 46.8 ) Net cash proceeds received (paid or to be paid) (1) $ ( 0.3 ) $ 6.1 $ 6.0 Carrying value of receivables transferred and derecognized (2) $ 22.1 $ 164.8 $ 154.5 Obligations recorded $ 2.1 $ 5.9 $ 2.9 Loss recorded related to transfers of receivables $ 2.0 $ 3.7 $ 1.9 ___________________ (1) During the year ended March 31, 2024, the Company voluntarily repurchased $ 46.0 million of receivables previously transferred. In addition, during the years ended March 31, 2023 and 2022, the Company repurchased $ 27.4 million and $ 25.5 million, respectively, of receivables previously transferred, as separately agreed upon with the third-party purchasers, in order to monetize such receivables under the individual monetization program discussed above without being subject to the collateral requirements under the pooled monetization program. (2) Receivables net of unamortized discounts on long-term, non-interest bearing receivables. At March 31, 2024, there were no outstanding receivables derecognized from the Company's consolidated balance sheet, for which the Company continues to service, related to the pooled monetization agreement (March 31, 2023 - $ 52.3 million). Other Assets The composition of the Company’s other assets is as follows as of March 31, 2024 and March 31, 2023: F-66 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) March 31, 2024 March 31, 2023 (Amounts in millions) Other current assets Prepaid expenses and other (1) $ 58.2 $ 43.3 Restricted cash 43.7 27.9 Contract assets (2) 59.9 63.5 Interest rate swap assets 35.6 — Tax credits receivable 199.1 129.5 $ 396.5 $ 264.2 Other non-current assets Prepaid expenses and other $ 21.6 $ 8.4 Restricted cash 13.7 13.0 Accounts receivable (3) 111.7 37.8 Contract assets (3) 3.2 5.1 Tax credits receivable 361.7 341.7 Operating lease right-of-use assets 388.8 169.0 Interest rate swap assets — 41.1 $ 900.7 $ 616.1 _____________________ (1) Includes home entertainment product inventory which consists of Packaged Media and is stated at the lower of cost or market value (first-in, first-out method). Costs of Packaged Media sales, including shipping and handling costs, are included in distribution and marketing expenses. (2) At March 31, 2024, the current portion of contract assets includes $ 14.9 million from the acquisition of eOne (see Note 2). (3) Unamortized discounts on long-term, non-interest bearing receivables were $ 6.2 million and $ 3.5 million at March 31, 2024 and 2023, respectively, and unamortized discounts on contract assets were $ 0.3 million and $ 0.5 million at March 31, 2024 and 2023, respectively. Content related payables Content related payables include minimum guarantees and accrued licensed program rights obligations, which represent amounts payable for film or television rights that the Company has acquired or licensed. Other Accrued Liabilities Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $ 147.4 million and $ 128.7 million at March 31, 2024 and 2023, respectively. F-67 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in the components of accumulated other comprehensive income (loss), net of tax. During the years ended March 31, 2024, 2023 and 2022, there was no income tax expense or benefit reflected in other comprehensive income (loss) due to the income tax impact being offset by changes in the Company’s deferred tax valuation allowance. Foreign currency translation adjustments Net unrealized gain (loss) on cash flow hedges Total (Amounts in millions) March 31, 2021 $ ( 15.1 ) $ ( 68.2 ) $ ( 83.3 ) Other comprehensive loss ( 4.6 ) 68.2 63.6 Reclassifications to net loss (1) — 49.0 49.0 March 31, 2022 ( 19.7 ) 49.0 29.3 Other comprehensive income ( 1.9 ) 82.8 80.9 Reclassifications to net loss (1) — 10.7 10.7 March 31, 2023 ( 21.6 ) 142.5 120.9 Other comprehensive income (loss) ( 1.1 ) 30.5 29.4 Reclassifications to net loss (1) — ( 34.3 ) ( 34.3 ) March 31, 2024 $ ( 22.7 ) $ 138.7 $ 116.0 ___________________ (1) Represents a loss of $ 0.3 million included in direct operating expense and a gain of $ 34.6 million included in interest expense on the consolidated statement of operations in the year ended March 31, 2024 (2023 - loss of $ 0.3 million included in direct operating expense and loss of $ 10.4 million included in interest expense; 2022 - loss of $ 0.2 million included in direct operating expense and loss of $ 48.8 million included in interest expense) (see Note 18). Supplemental Cash Flow Information Interest paid during the fiscal year ended March 31, 2024 amounted to $ 242.5 million (2023 — $ 196.7 million; 2022 — $ 135.0 million). Income taxes paid during the fiscal year ended March 31, 2024 amounted to net tax paid of $ 25.8 million (2023 — net tax paid of $ 29.1 million; 2022 — net tax paid of $ 16.9 million). Significant non-cash transactions during the fiscal years ended March 31, 2024, 2023 and 2022 include certain interest rate swap agreements, which are discussed in Note 18, "Financial Instruments". The supplemental schedule of non-cash investing activities is presented below. There were no significant non-cash financing activities for the fiscal years ended March 31, 2024, 2023 and 2022. Year Ended March 31, 2024 2023 2022 (Amounts in millions) Non-cash investing activities: Accrued equity method investment $ — $ — $ 19.0 Supplemental cash flow information related to leases was as follows: F-68 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended March 31, 2024 2023 2022 (Amounts in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 55.5 $ 42.3 $ 57.0 Right-of-use assets obtained in exchange for new lease obligations: Operating leases $ 172.1 $ 12.4 $ 67.8 Increase in right-of-use assets and lease liability due to a reassessment event: Operating leases - increase in right-of-use assets $ 103.6 $ 33.0 $ 27.5 Operating leases - increase in lease liability $ 103.6 $ 33.0 $ 27.5 20. Related Party Transactions Ignite, LLC In April 2004, a wholly-owned subsidiary of the Company entered into agreements (as amended) with Ignite, LLC (“Ignite”) for distribution rights to certain films. Michael Burns, the Vice Chair and a director of the Company, owns a 65.45 % interest in Ignite, and Hardwick Simmons, a director of the Company, owns a 24.24 % interest in Ignite. During the year ended March 31, 2024, $ 0.3 million was paid to Ignite under these agreements (2023 - $ 0.4 million). Business Combination See Note 2 and Note 21 for a description of the Business Combination Agreement with Screaming Eagle. Harry E. Sloan, a member of the Company’s Board of Directors, is also the Chairman of Screaming Eagle, and owns, directly or indirectly, a material interest in Eagle Equity Partners V, LLC, a Delaware limited liability company, the Screaming Eagle sponsor. Mr. Sloan recused himself from the decisions to approve the Business Combination made by both the board of directors of Screaming Eagle and Lionsgate. Voting and Standstill Agreement As previously disclosed, on November 10, 2015, the Company entered into a voting and standstill agreement with Liberty Global plc (“Liberty Global”), Discovery Communications, Inc. (“Discovery”), Liberty Global Incorporated Limited, Discovery Lightning Investments Ltd. (“Discovery Lightning”), Dr. John C. Malone and affiliates of MHR Fund Management, LLC (“MHR Fund Management”) (as amended from time to time, the “Voting and Standstill Agreement”). In connection with the business combination described in Note 2 and Note 21, on the closing date, the Company, Lionsgate Studios, MHR Fund Management, Liberty Global Ventures Limited (f/k/a Liberty Global Incorporated Limited), Liberty Global Ventures Limited (f/k/a Liberty Global Incorporated Limited), Discovery Lightning Investments Ltd., Warner Bros. Discovery, Inc. and funds affiliated with MHR Fund Management entered into an amendment to the Voting and Standstill Agreement (the “Amendment to the Voting and Standstill Agreement”) to add Lionsgate Studios as a party thereto such that, among other items, certain provisions of the Voting and Standstill Agreement apply to Lionsgate Studios as if it were the Company. Additionally, under the Amendment to the Voting and Standstill Agreement, the Company agreed to vote its common shares in favor of designees of Liberty Global, Discovery and MHR Fund Management to the board of directors of Lionsgate Studios. F-69 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Transactions with Equity Method Investees Equity Method Investees. In the ordinary course of business, we are involved in related party transactions with equity method investees. These related party transactions primarily relate to the licensing and distribution of the Company's films and television programs and the lease of a studio facility owned by a former equity-method investee, for which the impact on the Company's consolidated balance sheets and consolidated statements of operations is as follows (see Note 1 and Note 5): March 31, 2024 2023 (Amounts in millions) Consolidated Balance Sheets Accounts receivable $ 11.1 $ 14.8 Investment in films and television programs (1) 2.2 7.9 Other assets, noncurrent (1) — 45.8 Total due from related parties $ 13.3 $ 68.5 Accounts payable (2) $ 16.8 $ 16.8 Other accrued liabilities (1) — 6.7 Participations and residuals, current 5.5 7.5 Participations and residuals, noncurrent 1.3 2.0 Deferred revenue, current 0.1 — Other liabilities (1) — 41.4 Total due to related parties $ 23.7 $ 74.4 Year Ended March 31, 2024 2023 2022 (Amounts in millions) Consolidated Statements of Operations Revenues $ 4.2 $ 6.1 $ 4.1 Direct operating expense $ 5.0 $ 8.3 $ 6.5 Distribution and marketing expense $ 0.8 $ 0.4 $ 0.2 Interest and other income $ — $ 1.7 $ 3.1 __________________________________ (1) As of March 31, 2023, the Company had certain operating leases related to a studio facility owned by an equity-method investee which was sold during the year ended March 31, 2024. Amounts related to these leases as of March 31, 2023 are included in the table above in investment in films and television programs, other assets - noncurrent, other accrued liabilities and other liabilities. (2) Amounts primarily represent production related advances due to certain of its equity method investees. F-70 Table of Contents LIONS GATE ENTERTAINMENT CORP. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 21. Subsequent Events 5.500 % Senior Notes Exchange. On May 8, 2024, an indirect, wholly-owned subsidiary of the Company issued $ 389.9 million aggregate principal amount of new 5.500 % senior notes due 2029 (the "New 5.500 % Senior Notes"). The New 5.500 % Senior Notes were exchanged by the Company for $ 389.9 million of the existing 5.500 % Senior Notes. The New 5.500 % Senior Notes initially bear interest at 5.500 % annually and mature April 15, 2029, with the interest rate increasing to 6.000 % and the maturity date extending to April 15, 2030 effective upon completion of the separation of the Starz Business from the Studio Business. The Company may redeem the New 5.500 % Senior Notes, in whole at any time, or in part from time to time, prior to or on and after the Separation Closing Date, as defined in the indenture to the New 5.500 % Senior Notes, at certain specified redemption prices set forth in the indenture to the New 5.500 % Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Business Combination Agreement. On May 13, 2024, the Company consummated the Business Combination referred to in Note 2. In connection with the closing of the Business Combination, SEAC II Corp. changed its name to “Lionsgate Studios Corp.” (referred to as “Lionsgate Studios”). Lionsgate Studios has continued the existing business operations of StudioCo, which consists of the Studio Business of Lionsgate. Lionsgate Studios became a separate publicly traded company and its common shares commenced trading on Nasdaq under the symbol “LION” on May 14, 2024. In connection with the business combination, the Company and StudioCo entered into a separation agreement pursuant to which (i) the assets and liabilities of the Company’s Studio Business (including certain subsidiaries of the Company engaged in the Studio Business) were separated from the assets and liabilities of the Company’s Starz Business (meaning substantially all of the assets and liabilities constituting the Media Networks segment, and including certain subsidiaries of the Company engaged in the Company’s Starz Business) and transferred to StudioCo such that StudioCo holds, directly or indirectly, all of the assets and liabilities of the Studio Business, and (ii) all of the Company’s equity interests in StudioCo were transferred to Studio HoldCo. As a result, approximately 87.2 % of the total shares of Lionsgate Studios continue to be held by the Company, while former SEAC public shareholders and founders and common equity financing investors own approximately 12.8 % of Lionsgate Studios. In addition to establishing Lionsgate Studios as a standalone publicly-traded entity, the transaction resulted in approximately $ 350.0 million of gross proceeds to the Company, including $ 274.3 million in PIPE financing. Of the total gross proceeds, approximately $ 330.0 million was received at or shortly after the closing of the Business Combination, with the remaining $ 20.0 million expected to be received shortly. The net proceeds will be used to pay down amounts outstanding under the Term Loan A and Term Loan B pursuant to the Credit Agreement. The Business Combination will be accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Screaming Eagle will be treated as the acquired company and the Studio Business will be treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of New SEAC will represent a continuation of the financial statements of the Studio Business, with the Business Combination treated as the equivalent of the Studio Business issuing stock for the historical net assets of Screaming Eagle, accompanied by a recapitalization. The net assets of Screaming Eagle will be stated at fair value, which approximates historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of the Studio Business. The Studio Business will continue to be a consolidated subsidiary of the Company. See Note 2. F-71