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Item 1. Financial Statements

2024-08-08 compared with 2024-02-08 · 351 added, 490 removed, 842 unchanged (50% of the section changed)

46 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Three Months Ended

(Amounts in millions, except per share amounts)

5 unchanged sentences

Restructuring and other 22.5 32.0

Goodwill and intangible asset impairment — — 663.9 1,475.0

Total expenses 815.9 925.4

3 unchanged sentences

Other expense ( 3.1 ) ( 5.7 )

Gain on extinguishment of debt — 38.2 21.2 40.3

Gain on investments, net 4.4 43.4 2.7 42.1

Equity interests income 4.2 — 5.7 0.8

Income (loss) before income taxes ( 102.7 ) 20.8 ( 1,054.3 ) ( 1,904.2 )

Gain (loss) on extinguishment of debt ( 5.9 ) 21.2

Equity interests income (loss) 0.9 ( 0.3 )

Loss before income taxes ( 53.0 ) ( 61.7 )

Income tax provision ( 10.1 ) ( 9.8 )

Net income (loss) ( 107.4 ) 15.2 ( 1,066.8 ) ( 1,920.8 )

Net loss ( 63.1 ) ( 71.5 )

Net loss attributable to noncontrolling interests 3.7 0.8

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

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 59.4 ) $ ( 70.7 )

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shareholders:

Basic net income (loss) per common share $ ( 0.45 ) $ 0.07 $ ( 4.56 ) $ ( 8.41 )

Diluted net income (loss) per common share $ ( 0.45 ) $ 0.07 $ ( 4.56 ) $ ( 8.41 )

Basic net loss per common share $ ( 0.25 ) $ ( 0.31 )

Diluted net loss per common share $ ( 0.25 ) $ ( 0.31 )

Weighted average number of common shares outstanding:

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Three Months Ended

(Amounts in millions)

Net income (loss) $ ( 107.4 ) $ 15.2 $ ( 1,066.8 ) $ ( 1,920.8 )

Net loss $ ( 63.1 ) $ ( 71.5 )

Foreign currency translation adjustments, net of tax ( 2.9 ) 0.8

Net unrealized gain on cash flow hedges, net of tax ( 23.0 ) 8.4 ( 6.1 ) 108.5

Comprehensive income (loss) ( 127.4 ) 27.3 ( 1,071.3 ) ( 1,815.7 )

Net unrealized gain (loss) on cash flow hedges, net of tax ( 4.6 ) 16.9

Comprehensive loss ( 70.6 ) ( 53.8 )

Comprehensive loss attributable to noncontrolling interests 3.7 0.8

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

Comprehensive loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 66.9 ) $ ( 53.0 )

8 unchanged sentences

(Amounts in millions)

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

Exercise of stock options — — — 0.2 — — 0.2 — 0.2

Share-based compensation, net of share cancellations for taxes — 0.2 0.1 21.9 — — 22.1 — 22.1

Issuance of common shares 0.1 0.2 — 0.2 — — 0.4 — 0.4

Noncontrolling interests — — — — — — — ( 0.8 ) ( 0.8 )

Net loss — — — — ( 106.6 ) — ( 106.6 ) 0.3 ( 106.3 )

Other comprehensive loss — — — — — ( 20.0 ) ( 20.0 ) — ( 20.0 )

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 0.5 ) — ( 0.5 ) — ( 0.5 )

Balance at December 31, 2023 83.6 $ 673.4 151.5 $ 2,459.3 $ ( 3,574.6 ) $ 116.4 $ ( 325.5 ) $ 1.8 $ ( 323.7 )

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

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

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

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

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

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

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

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

_____________________

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

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

Nine Months Ended

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

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

Common Shares Common Shares

Number Amount Number Amount

(Amounts in millions)

Balance at March 31, 2024 83.6 $ 673.6 151.7 $ 2,474.4 $ ( 3,576.7 ) $ 116.0 $ ( 312.7 ) $ 2.2 $ ( 310.5 )

Exercise of stock options — — — 0.5 — — 0.5 — 0.5

Share-based compensation, net of share cancellations for taxes — 0.2 0.6 16.0 — — 16.2 — 16.2

Issuance of common shares 0.1 0.5 — 0.5 — — 1.0 — 1.0

Noncontrolling interests — — — — — — — ( 0.8 ) ( 0.8 )

Sale of noncontrolling interest in Lionsgate Studios Corp.

(see Note 2) — — — — 393.7 ( 15.4 ) 378.3 ( 95.6 ) 282.7

Noncontrolling interests (see Note 9) — — — — — — — 33.0 33.0

Net loss — — — — ( 59.4 ) — ( 59.4 ) ( 3.2 ) ( 62.6 )

Other comprehensive income — — — — — ( 4.5 ) ( 4.5 ) — ( 4.5 )

Other comprehensive loss — — — — — ( 7.5 ) ( 7.5 ) — ( 7.5 )

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 0.3 ) — ( 0.3 ) — ( 0.3 )

Balance at December 31, 2023 83.6 $ 673.4 151.5 $ 2,459.3 $ ( 3,574.6 ) $ 116.4 $ ( 325.5 ) $ 1.8 $ ( 323.7 )

Balance at June 30, 2024 83.6 $ 673.8 152.3 $ 2,490.4 $ ( 3,242.7 ) $ 93.1 $ 14.6 $ ( 63.6 ) $ ( 49.0 )

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

Exercise of stock options — — 0.3 3.5 — — 3.5 — 3.5

Share-based compensation, net of share cancellations for taxes — 0.3 2.1 — — — 0.3 — 0.3

Issuance of common shares — 0.3 — 0.3 — — 0.6 — 0.6

Noncontrolling interests — — — — — — — ( 0.7 ) ( 0.7 )

Net loss — — — — ( 70.7 ) — ( 70.7 ) 0.3 ( 70.4 )

1 unchanged sentence

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 6.0 ) — ( 6.0 ) — ( 6.0 )

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

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

_____________________

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

Three Months Ended

(Amounts in millions)

7 unchanged sentences

Other amortization 10.8 11.8

Goodwill and intangible asset impairment 663.9 1,475.0

Content and other impairments 19.9 28.0

Gain on extinguishment of debt ( 21.2 ) ( 40.3 )

Equity interests income ( 5.7 ) ( 0.8 )

Gain on investments, net ( 2.7 ) ( 42.1 )

(Gain) loss on extinguishment of debt 5.9 ( 21.2 )

Equity interests (income) loss ( 0.9 ) 0.3

Deferred income taxes 11.2 0.2

Changes in operating assets and liabilities:

Proceeds from the termination of interest rate swaps — 188.7

Accounts receivable, net 155.8 76.7

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Investing Activities:

Purchase of eOne, net of cash acquired (see Note 2) ( 331.1 ) —

Proceeds from the sale of equity method and other investments 5.2 46.3

Investment in equity method investees and other ( 2.0 ) —

Acquisition of assets (film library and related assets) ( 35.0 ) —

Increase in loans receivable — ( 0.9 )

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Financing Activities:

Debt - borrowings 2,270.5 1,238.0

Debt - borrowings, net of debt issuance and redemption costs 771.8 490.0

Debt - repurchases and repayments ( 1,065.4 ) ( 560.1 )

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Film related obligations - repayments ( 557.8 ) ( 423.7 )

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

Sale of noncontrolling interest in Lionsgate Studios Corp.

(see Note 2) 294.0 —

Purchase of noncontrolling interest — ( 0.6 )

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Tax withholding required on equity awards ( 3.0 ) ( 15.1 )

Net Cash Flows Provided By (Used In) Financing Activities ( 17.4 ) 225.7

Net Cash Flows Provided By Financing Activities 75.9 60.5

Net Change In Cash, Cash Equivalents and Restricted Cash ( 129.0 ) 79.9

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Lions Gate Entertainment Corp.

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

(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.

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

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

Operating results for the three months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2025.

The balance sheet at March 31, 2024 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S.

GAAP for complete financial statements.

The accompanying unaudited condensed consolidated financial statements should be read together with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023, as amended.

Certain amounts presented in prior periods have been reclassified to conform to the current period presentation.

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fair value of equity-based compensation;

fair value of assets and liabilities for allocation of the purchase price of companies acquired;

fair value of assets and liabilities for allocation of the purchase price of companies and assets acquired;

income taxes including the assessment of valuation allowances for deferred tax assets;

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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 annual audited consolidated financial statements for the fiscal year ending March 31, 2026 with early adoption permitted.

Additionally, this guidance requires all entities disaggregate disclosures by jurisdiction 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.

Acquired Library

On June 5, 2024, the Company invested approximately $ 35.0 million for a 51 % members' interest in a newly formed limited liability company, CP LG Library Holdings, LLC (“CP LG”), with the Company designated as the managing member of CP LG.

CP LG used the funds received from the Company, along with funds invested by the 49 % member, to acquire a library of 46 films for approximately $ 68.6 million.

Also on June 5, 2024, the Company entered into a distribution agreement with CP LG to distribute the titles in the acquired library.

The purchase included the film library (of which $ 48.3 million of the purchase price was allocated to investment in film and television programs for the film library), accounts receivable and certain liabilities associated with the film library, most notably participations and residuals liabilities.

The Company determined that CP LG is a variable interest entity (“VIE”) for which it is the primary beneficiary and is consolidated under the applicable accounting guidance as the Company has the power to direct the significant activities and the right to receive benefits and obligation to absorb losses of CP LG.

The Company concluded that the acquired library and related assets and liabilities was not a business and therefore, accounted for the acquisition as an initial consolidation of a VIE that is not a business under the applicable accounting guidance.

There was no gain or loss recognized upon initial consolidation of the VIE as the sum of the fair value of the consideration paid and noncontrolling interest equaled the fair value of the net assets on the acquisition date.

See Note 9 for the noncontrolling interest recorded related to CP LG.

As of June 30, 2024, the unaudited condensed consolidated balance sheet included assets and liabilities of CP LG totaling $ 79.8 million (which is primarily comprised of investment in film and television programs) and $ 11.2 million, respectively.

The assets and liabilities of CP LG primarily consist of accounts receivable, investment in film and television programs, and participations and residuals.

Business Combination Agreement

On May 13, 2024, the Company consummated the business combination agreement (the “Business Combination Agreement”) with Screaming Eagle Acquisition Corp., a Cayman Islands exempted company (“SEAC”), SEAC II Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of SEAC (“New SEAC”), LG Sirius Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of the Company (“Studio HoldCo”), LG Orion Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of the Company (“StudioCo”) and other affiliates of SEAC (the "Closing").

Pursuant to the terms and conditions of the Business Combination Agreement, the Studio Business was combined with SEAC through a series of transactions, including an amalgamation of StudioCo and New SEAC under a Canadian plan of arrangement (the “Business Combination”).

In connection with the closing of the Business Combination, New SEAC changed its name to “Lionsgate Studios Corp.” (referred to as “Lionsgate Studios”) and continues the existing business operations of StudioCo, which consists of the Studio Business of Lionsgate.

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.

Lionsgate Studios became a separate publicly traded company and its common shares commenced trading on Nasdaq under the symbol “LION” on May 14, 2024.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In connection with and prior to the Business Combination, the Company and StudioCo entered into a separation agreement pursuant to which the assets and liabilities of the Studio Business were transferred to StudioCo such that StudioCo held, directly or indirectly, all of the assets and liabilities of the Studio Business (the “Separation”).

Following the transaction, approximately 87.8 % 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 12.2 % of Lionsgate Studios.

In addition to establishing Lionsgate Studios as a standalone publicly-traded entity, the transaction resulted in approximately $ 330.0 million of gross proceeds to the Company, including $ 254.3 million in private investments in public equities ("PIPE") financing, which amount excludes an aggregate of approximately $ 20.0 million that remains due from a PIPE Investor that subscribed for common shares and which shares, as of June 30, 2024, are pending issuance subject to receipt of such amount.

The net proceeds were used to partially pay down amounts outstanding under the Term Loan A and Term Loan B pursuant to the Credit Agreement (see Note 6).

The Business Combination has been accounted for as a reverse recapitalization in accordance with U.S.

Under this method of accounting, SEAC was treated as the acquired company and the Studio Business was treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the financial statements of Lionsgate Studios 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 SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization of the Studio Business equity.

The historical net assets of SEAC were stated at fair value, which approximates historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Business Combination are those of the Studio Business.

The Studio Business continues to be a consolidated subsidiary of the Company.

In connection with the Business Combination, as described above, approximately 12.2 % of the Lionsgate Studios common shares were issued to the SEAC public shareholders and founders and other common equity financing investors in exchange for net proceeds of $ 282.7 million.

The following table reconciles the gross proceeds to the net proceeds reflected in the consolidated statement of cash flows and the consolidated statement of equity (deficit):

(Amounts in millions)

Total gross cash proceeds

SEAC warrant exchange payment (1)

Transaction costs ( 34.8 )

Net proceeds from the sale of noncontrolling interest in Lionsgate Studios Corp.

per the condensed consolidated statement of equity (deficit) 282.7

Transaction costs accrued and not paid, net of transaction costs previously paid 11.3

Net cash proceeds from the sale of noncontrolling interest in Lionsgate Studios per the condensed consolidated statement of cash flows $ 294.0

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(1) Prior to the Closing, each of the then issued and outstanding whole warrants of SEAC, sold as part of SEAC’s initial public offering (the “SEAC Public Warrants”) was automatically exchanged for $0.50 in cash pursuant to the terms of an amendment to the agreement governing the SEAC Public Warrants.

As of the Closing, no SEAC Public Warrants were outstanding.

The Company recorded a reduction of noncontrolling interest in shareholders' equity (deficit) of $ 95.6 million and a reduction of accumulated other comprehensive income of $ 15.4 million for the issuance of the Lionsgate Studios common shares, which was based upon the 12.2 % ownership interest in the carrying value of Lionsgate Studios.

The reduction in noncontrolling interest was due to the negative carrying value of Lionsgate Studios as of May 13, 2024, partially offset by an amount allocated to certain options described below.

The difference between the net cash proceeds and the amounts recorded as noncontrolling interest and accumulated other comprehensive income was reflected as a reduction of accumulated deficit in the consolidated statement of shareholders' equity (deficit).

In connection with the Business Combination, 2,200,000 options (the "Sponsor Options") to receive Lionsgate Studios common shares, were issued to certain noncontrolling interest holders, with an exercise price of $ 0.0001 per share.

The Sponsor Options will become exercisable (i) on or after the date on which the trading price of Lionsgate Studios common shares (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) equals or exceeds $ 16.05 per share or (ii) if a Change of Control (as defined in the sponsor option agreement) occurs, subject to certain conditions.

The Company has recorded the Sponsor Options as part of the noncontrolling interest recorded.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 $ 375.0 million, subject to certain purchase price adjustments, including for cash, debt, and working capital.

Upon closing, the Company paid $ 331.0 million, net of cash acquired of $ 54.1 million, which reflects the purchase price of $ 375.0 million adjusted for estimated cash, debt, transaction costs and working capital.

The preliminary purchase price is subject to further adjustments based on the final determination of the purchase price adjustments.

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 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, and was subject to further adjustment based on final determination of purchase price adjustments, including for cash, debt, and working capital.

Subsequent to June 30, 2024, the final purchase price was determined, resulting in a $ 12.0 million reduction of the purchase price.

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.

There was no material revenue or net income from eOne for the period from December 27, 2023 through December 31, 2023.

The Company incurred approximately $ 5.6 million and $ 8.8 million of acquisition-related costs that were expensed in restructuring and other during the three and nine months ended December 31, 2023, respectively.

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, and income taxes, in addition to ensuring all other assets and liabilities and contingencies have been identified and recorded.

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 has also conducted an initial review of, and is in the process of continuing to evaluate, the accounting policies and practices of eOne, to determine if differences in accounting policies and practices require reclassifications to conform to the Company's accounting policies and practices.

As a result of that review, the Company may identify additional differences between the accounting policies and practices of the companies that, when conformed, could have a material impact on the consolidated financial statements of the Company.

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.

A change in the fair value of the net assets may change the amount of the purchase price allocable to goodwill.

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 recorded was not significant and is reflected in the table below.

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:

The preliminary allocation of the purchase price to the assets acquired and liabilities assumed (including measurement period adjustments recorded through June 30, 2024, see Note 5), and a reconciliation to total consideration transferred is presented in the table below:

LIONS GATE ENTERTAINMENT CORP.

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Preliminary fair value of net assets acquired 368.5

Preliminary purchase price consideration $ 385.1

Goodwill 16.6

Preliminary purchase price consideration at June 30, 2024 (2)

______________

(1) Includes current and non-current amounts.

(2) The preliminary purchase price consideration excludes amounts related to the settlement of the final purchase price subsequent to June 30, 2024, as disclosed above.

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.

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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 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.

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 illustrate the results of operations of the Company as if the acquisition of eOne as described above occurred on April 1, 2022.

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, 2023.

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, 2023, nor is it indicative of future results.

The statement of operations information below for the nine month periods includes (i) the statement of operations of eOne for the nine months ended September 30, 2023 combined with the Company's statement of operations for the nine months ended December 31, 2023, and (ii) the statement of operations of

The statement of operations information below includes the

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eOne for the nine months ended September 30, 2022 combined with the Company's statement of operations for the nine months ended December 31, 2022.

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

statement of operations of eOne for the three months ended June 30, 2023 combined with the Company's statement of operations for the three months ended June 30, 2023.

Three Months Ended

(Amounts in millions)

Revenues $ 1,051.0

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

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 361.3 )

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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 nine months ended December 31, 2023 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 September 30, 2023.

In addition, the unaudited pro forma condensed consolidated financial information for the three months ended June 30, 2023 includes an impairment of goodwill and trade name of $ 296.2 million which was reflected in the statement of operations of eOne for the three months ended June 30, 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”).

Upon consummation of the Business Combination, approximately 87.3 % of the total shares of the Studio Business are expected to continue to be held by Lionsgate, while Screaming Eagle public shareholders and founders and common equity financing investors are expected to own an aggregate of approximately 12.7 % of the combined company.

In addition to establishing the Studio Business as a standalone publicly-traded entity, the transaction is expected to deliver approximately $ 350.0 million of gross proceeds to the Company, including $ 175.0 million in private investments in public equities (“PIPE”) financing.

The transaction is subject to certain closing conditions, including regulatory approvals and approval from the shareholders and public warrant holders of Screaming Eagle, and is expected to close in the spring of 2024.

The closing of the transaction is also subject to the gross proceeds to the Company being equal to a minimum of $ 350.0 million.

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.

Sloan recused himself from the decisions to approve the Business Combination made by both the board of directors of Screaming Eagle and Lionsgate.

The Business Combination is expected to be accounted for as a reverse recapitalization in accordance with U.S.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

Investment in Films and Television Programs and Licensed Program Rights

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Investment in films and television programs and licensed program rights, net $ 3,215.6 $ 2,762.2

At December 31, 2023, acquired film and television libraries have remaining unamortized costs of $ 233.5 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 13.0 years (March 31, 2023 - unamortized costs of $ 132.8 million).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At June 30, 2024, acquired film and television libraries have remaining unamortized costs of $ 266.4 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 13.0 years (March 31, 2024 - unamortized costs of $ 223.1 million).

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

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Three Months Ended

(Amounts in millions)

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$ 287.7 $ 359.9

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The following table sets forth impairments by segment and the line item in our unaudited condensed consolidated statement of operations they are recorded in for the three and nine months ended December 31, 2023 and 2022:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

The following table sets forth impairments by segment and the line item in our unaudited condensed consolidated statement of operations they are recorded in for the three months ended June 30, 2024 and 2023:

Three Months Ended

(Amounts in millions)

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Motion Picture $ 0.3 $ 0.2

Television Production 1.2 — 6.6 4.7

Impairments not included in segment operating results (2) :

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________________

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

(1) Impairments included in direct operating expense are included in the amortization expense amounts reflected in the table above which presents amortization of investment in film and television programs and licensed program rights by predominant monetization strategy.

(2) Represents charges related to the Media Networks restructuring plan initiatives.

See Note 14 for further information.

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$ 77.7 $ 74.8

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Equity Method Investments:

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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 unaudited condensed consolidated statement of operations for the three months ended December 31, 2022.

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

Roadside Attractions .

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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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

Goodwill and Intangible Assets

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

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$ 398.6 $ 412.6 $ — $ 811.2

Acquisition of eOne (see Note 2) 1.0 4.8 — 5.8

Impairment — — ( 493.9 ) ( 493.9 )

Balance as of December 31, 2023 (1)

Measurement period adjustments (2)

( 3.9 ) 4.8 — 0.9

Balance as of June 30, 2024 (1)

$ 394.7 $ 417.4 $ — $ 812.1

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

Impairment Assessments

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

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

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

Based on its quantitative impairment assessment, the Company determined that the fair value of our Media Networks reporting unit which was previously disclosed as a reporting unit "at risk" of impairment, was less than its carrying value (after 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 ended September 30, 2023, representing all of the remaining Media Networks reporting unit goodwill, which is recorded in the "goodwill and intangible asset impairment" line item in the unaudited condensed consolidated statement of operations in the nine months ended December 31, 2023.

During each quarter in the nine months ended December 31, 2023, we 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 quantitative assessment performed in the quarter ended September 30, 2022 and our qualitative assessment performed for fiscal 2023, there were no events or circumstances that rise to a level that would more-likely-than-not reduce the fair value of those reporting units below their carrying values;

therefore, a quantitative goodwill impairment analysis was not required for these reporting units.

In fiscal 2023, during the second quarter ended September 30, 2022, due to adverse macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began implementing a plan to

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

restructure its LIONSGATE+ business, and the Company revised its subscriber growth and forecasted cash flow assumptions and implemented certain cost-saving measures.

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

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

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

Indefinite-Lived Intangible Assets

Through September 30, 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 before the impairment charge recorded in the second quarter ended September 30, 2023 discussed below.

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

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

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

Based on the quantitative impairment assessment of our trade names, we recorded an impairment charge of $ 170.0 million in the second quarter ended September 30, 2023 related to the Company's Starz business, which was recorded in the "goodwill and intangible asset impairment" line item in the unaudited condensed consolidated statement of operations in the nine months ended December 31, 2023.

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 in the third quarter ended December 31, 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 $ 2.0 million for the three and nine months ended December 31, 2023 with a corresponding reduction of income before income taxes, net loss, and net loss attributable to Lions Gate Entertainment Corp.

shareholders.

This resulted in a decrease to basic and diluted net loss per share for the three months ended December 31, 2023 by $ 0.01 per share, and a decrease to basic and diluted net loss per share for the nine months ended December 31, 2023 by $ 0.01 per share.

There was no tax benefit from the change due to changes in the Company’s valuation allowance on deferred taxes.

________________

(1) As of June 30, 2024 and March 31, 2024, accumulated goodwill impairment losses totaled $ 1.969 billion related to the Media Networks reporting unit.

(2) Measurement period adjustments for the acquisition of eOne reflect an increase to goodwill of $ 0.9 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 a net decrease to accounts receivable of $ 4.2 million, net increases to content related payables of $ 3.4 million, and other liabilities of $ 0.4 million, partially offset by a net increase to other assets of $ 3.7 million, and decreases to accrued liabilities of $ 1.1 million and participations and residuals of $ 2.3 million.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Finite-Lived Intangible Assets

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

Beginning in the third quarter ended December 31, 2023, our finite-lived intangible assets also include the trade names previously accounted for as indefinite-lived intangible assets as discussed above.

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

During the third quarter ended December 31, 2023, there were no events or circumstances that would indicate that the carrying amount of our finite-lived intangible assets (which including the trade names discussed above amounted to $ 1,028.5 million at December 31, 2023) may not be recoverable.

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

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Revolving Credit Facility Availability of Funds & Commitment Fee.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at December 31, 2023 there was $ 875.0 million available.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at June 30, 2024 there was $ 665.0 million available.

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

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

There were no letters of credit outstanding at June 30, 2024.

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.

3 unchanged sentences

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.

The Company expects to repay and/or 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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

dollar LIBOR, with the Secured Overnight Financing Rate (“SOFR”), due to the discontinuance of LIBOR, as further described below.

• 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 %), with a SOFR floor of zero (prior to the amendment, bore interest at LIBOR plus 1.75 % margin, with a LIBOR floor of zero ).

The margin is subject to potential increases of up to 50 basis points ( two ( 2 ) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Credit Agreement (effective interest rate of 7.20 % as of December 31, 2023, before the impact of interest rate swaps, see Note 17 for interest rate swaps).

The Revolving Credit Facility and term loan A facility due April 2026 (the "Term Loan A") bear interest at a rate per annum equal to SOFR plus 0.10 % plus 1.75 % margin (or an alternative base rate plus 0.75 %), with a SOFR floor of zero .

The margin is subject to potential increases of up to 50 basis points ( two increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Credit Agreement (effective interest rate of 7.18 % as of June 30, 2024, before the impact of interest rate swaps, see Note 17 for interest rate swaps).

• Term Loan B:

As amended on June 14, 2023, the term loan B facility due March 2025 (the "Term Loan B") bears interest at a rate per annum equal to SOFR plus 0.10 % plus 2.25 % margin, with a SOFR floor of zero (or an alternative base rate plus 1.25 % margin) (prior to the amendment, bore interest at LIBOR plus 2.25 % margin with a LIBOR floor of zero ) (effective interest rate of 7.70 % as of December 31, 2023, before the impact of interest rate swaps).

The term loan B facility due March 2025 (the "Term Loan B") bears interest at a rate per annum equal to 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 7.68 % as of June 30, 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.

Quarterly principal payments, at quarterly rates of 1.75 % and increasing to 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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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

As of December 31, 2023, the Company was in compliance with all applicable covenants.

As of June 30, 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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.5 % Senior Notes

Bears interest at 5.5 % annually (payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021).

See Changes Upon Separation of the Starz Business from the Studio Business below for further information.

Maturity Date:

April 15, 2029.

See Changes Upon Separation of the Starz Business from the Studio Business below for further information.

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.

(i) On or after April 15, 2024, the Company may redeem the 5.5 % 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):

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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.

See Changes Upon Separation of the Starz Business from the Studio Business below for further information.

The 5.5 % Senior Notes are unsubordinated, unsecured obligations of the Company.

The 5.5 % 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 December 31, 2023, the Company was in compliance with all applicable covenants.

As of June 30, 2024, the Company was in compliance with all applicable covenants.

Change in Control.

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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 5.5 % Senior Notes at 100 % of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Changes Upon Separation of the Starz Business from the Studio Business.

As described below in the 5.5 % Senior Notes Exchange disclosure, effective upon completion of the separation of the Starz Business from the Studio Business, the interest rate will increase to 6.0 % and the maturity date will extend to April 15, 2030 for a portion of the 5.5 % Senior Notes (the Exchange Notes, as defined below) which amounted to $ 389.9 million at June 30, 2024.

The "Starz Business" consists of the business of Lionsgate's Media Networks segment.

On or after the Separation Closing Date, as defined in the indenture to Exchange Notes, the Company may redeem the Exchange 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 the Separation Closing Date until, but excluding, the one-year anniversary thereof - 103.0 %;

(ii) on or after the one-year anniversary of the Separation Closing Date until, but excluding the two-year anniversary thereof - 102.0 %;

(iii) on or after the two-year anniversary of the Separation Closing Date until, but excluding the three-year anniversary thereof - 101.0 % (iv) on or after the three-year anniversary of the Separation Closing Date and thereafter - 100 %.

The Exchange Notes will initially be guaranteed by all existing obligors under the Existing Notes (as defined below), and upon completion of the separation of the Studio Business and the Starz Business, the Exchange Notes will be guaranteed exclusively by entities which are part of the Studio Business.

Capacity to Pay Dividends

At December 31, 2023, the capacity to pay dividends under the Senior Credit Facilities and the 5.500 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 1,066.8 million and accumulated deficit of $ 3,574.6 million were deemed free of restrictions from paying dividends at December 31, 2023.

At June 30, 2024, the capacity to pay dividends under the Senior Credit Facilities and the 5.5 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 63.1 million and accumulated deficit of $ 3,242.7 million were deemed free of restrictions from paying dividends at June 30, 2024.

Debt Transactions:

Term Loan A and Term Loan B Prepayment.

In the quarter ended June 30, 2024, the Company used the proceeds from the Business Combination to prepay $ 84.9 million principal amount of the Term Loan A and $ 214.1 million of the Term Loan B, together with accrued and unpaid interest thereon.

5.5 % Senior Notes Exchange.

On May 8, 2024, an indirect, wholly-owned subsidiary of the Company issued $ 389.9 million aggregate principal amount of 5.5 % senior notes due 2029 (the "Exchange Notes") in exchange for an equivalent amount of the existing 5.5 % Senior Notes due 2029 (the "Existing Notes").

The Exchange Notes initially bear interest at 5.5 % annually and mature April 15, 2029, with the interest rate increasing to 6.0 % and the maturity date extending to April 15, 2030 effective upon completion of the separation of the Starz Business from the Studio Business, both of which are currently held in subsidiaries consolidated by the Company.

Senior Notes Repurchases.

In the nine months ended December 31, 2023, the Company repurchased $ 85.0 million principal amount of the 5.500 % Senior Notes for $ 61.4 million, together with accrued and unpaid interest ( none in the three months ended December 31, 2023).

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

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the three months ended June 30, 2023, the Company repurchased $ 85.0 million principal amount of the 5.5 % Senior Notes for $ 61.4 million, together with accrued and unpaid interest.

Gain (Loss) on Extinguishment of Debt:

During the three and nine months ended December 31, 2023 and 2022, the Company recorded a gain (loss) on extinguishment of debt related to the transactions described above as summarized in the table below:

During the three months ended June 30, 2024 and 2023, the Company recorded a gain (loss) on extinguishment of debt related to the transactions described above as summarized in the table below:

Three Months Ended

December 31, Nine Months Ended

2023 2022 2023 2022

(Amounts in millions)

Gain (Loss) on Extinguishment of Debt:

Senior Notes repurchases $ — $ 38.2 $ 21.2 $ 41.6

Term Loan A prepayment — — — ( 1.3 )

Senior Notes exchange and repurchases (1)

$ ( 4.9 ) $ 21.2

Term Loan A and B prepayments ( 1.0 ) —

$ ( 5.9 ) $ 21.2

________________

(1) The 5.5 % Senior Notes Exchange was considered a modification of terms since the present value of the cash flows after the amendment differed by less than a 10% change from the present value of the cash flows on a creditor-by-creditor basis prior to the amendment.

Accordingly, the unamortized debt issuance costs are being amortized over the applicable term of the debt and the third-party costs of $ 4.9 million were expensed as a loss on extinguishment of debt.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Film Related Obligations

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Total film related obligations 2,033.8 1,949.4

Unamortized debt issuance costs ( 8.9 ) ( 11.5 )

Unamortized issuance costs ( 11.4 ) ( 11.4 )

Total film related obligations, net 2,022.4 1,938.0

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Production Tax Credit Facility.

In January 2021, as amended in December 2023, 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.

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.

Advances under the Production Tax Credit Facility bear interest at a rate equal to SOFR plus 0.10 % to 0.25 % depending on the SOFR term (i.e.,

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

one, three or six months), plus 1.50 % per annum or the base rate plus 0.50 % per annum (effective interest rate of 6.95 % at December 31, 2023).

As of June 30, 2024, tax credit receivables amounting to $ 336.8 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 6.93 % at June 30, 2024).

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

As of December 31, 2023, there were no amounts available under the Production Tax Credit Facility.

As of June 30, 2024, there were no 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.

The Company's programming notes have contractual repayment dates in February 2024, and incur SOFR-based interest at a weighted average rate of 8.74 %.

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 have contractual repayment dates in August 2024, and incur SOFR-based interest at a weighted average rate of 8.73 %.

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 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:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Cumulative Period From

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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 7.78 % at December 31, 2023).

The IP Credit Facility matures on July 30, 2027.

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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 6.60 % at December 31, 2023).

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

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

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

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

As of June 30, 2024, there was $ 175.0 million outstanding under the Backlog Facility, and there were no amounts available under the Backlog Facility (March 31, 2024 - $ 175.0 million outstanding).

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.

The Company's "other" loans had no amounts outstanding as of December 31, 2023.

As of June 30, 2024, there was $ 138.0 million outstanding (March 31, 2024 - $ 112.3 million outstanding) under the "other" loans, incurring SOFR-based interest at a weighted average rate of 6.84 %, of which $ 67.9 million has a contractual repayment date in July 2025 and $ 70.1 million has a contractual repayment date in April 2027.

As of June 30, 2024, accounts receivable amounting to $ 84.8 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at June 30, 2024 amounting to $ 81.1 million represented collateral related to the "other" loans.

Fair Value Measurements

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Fair Value Hierarchy

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

December 31, 2023 March 31, 2023

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of June 30, 2024 and March 31, 2024:

June 30, 2024 March 31, 2024

Level 1 Level 2 Total Level 1 Level 2 Total

(Amounts in millions)

Forward exchange contracts (see Note 17)

$ — $ — $ — $ — $ 2.9 $ 2.9

Interest rate swaps (see Note 17)

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— ( 1.6 ) ( 1.6 ) — ( 2.8 ) ( 2.8 )

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

December 31, 2023 March 31, 2023

The following table sets forth the carrying values and fair values of the Company’s outstanding debt and film related obligations at June 30, 2024 and March 31, 2024:

June 30, 2024 March 31, 2024

(Amounts in millions)

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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 December 31, 2023 and March 31, 2023.

The carrying values of these financial instruments approximated the fair values at June 30, 2024 and March 31, 2024.

LIONS GATE ENTERTAINMENT CORP.

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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:

Nine Months Ended

Three Months Ended

(Amounts in millions)

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Net loss attributable to redeemable noncontrolling interests ( 0.5 ) ( 1.2 )

Noncontrolling interests discount accretion — 13.4

Adjustments to redemption value 0.3 6.0

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Ending balance $ 123.0 $ 347.2

Redeemable noncontrolling interests (included in temporary equity on the unaudited condensed consolidated balance sheets) primarily relate to the November 12, 2015 acquisition of a controlling interest in Pilgrim Media Group and the May 29, 2018 acquisition of a controlling interest in 3 Arts Entertainment.

3 Arts Entertainment.

As of December 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 quarter.

See below discussion of the January 2, 2024 purchase of a portion of the noncontrolling interest.

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

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 is 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 is discounted from the fair value of their equity ownership percentage.

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

Additionally, the amount of the put and call proceeds subject to the discount is accounted for as compensation, and is 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.

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 approximately $ 194 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.

Pilgrim Media Group.

The Company has a remaining redeemable noncontrolling interest representing 12.5 % of Pilgrim Media Group.

The noncontrolling interest holder has a right to put and the Company has a right to call the 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.

During the fourth quarter of the year ended March 31, 2024 (in January 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 under the previous arrangement 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.

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, during the fourth quarter of fiscal 2024, 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 and June 30, 2024.

The redeemable noncontrolling interest balance related to 3 Arts Entertainment reflects 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 is being 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 11).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

accounted for as compensation, if any.

The liability component of the noncontrolling interest is 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 statements 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 to the holders based on performance, and are being expensed within general and administrative expense as incurred.

Pilgrim Media Group.

As of June 30, 2024, the Company had a remaining redeemable noncontrolling interest representing 12.5 % of Pilgrim Media Group.

As of June 30, 2024, the noncontrolling interest holder had a right to put and the Company had a right to call the 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 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 is presented as redeemable noncontrolling interest outside of shareholders' equity on the Company's consolidated balance sheets.

The Company has other immaterial redeemable noncontrolling interests.

Other Noncontrolling Interests

The Company has other immaterial noncontrolling interests that are not redeemable.

The Company has other noncontrolling interests that are not redeemable, which are classified in shareholder's equity on the Company's consolidated balance sheets.

These noncontrolling interests include:

Lionsgate Studios.

In connection with the Business Combination discussed in Note 2, on May 13, 2024, the Company recorded a noncontrolling interest representing approximately 12.2 % of Lionsgate Studios amounting to a reduction of noncontrolling interest in shareholders' equity (deficit) of $ 95.6 million, due to the negative carrying value of Lionsgate Studios at May 13, 2024, partially offset by an amount allocated to certain options.

See Note 2 for further information.

In connection with the Company's investment in CP LG and acquisition of the acquired library and related assets and liabilities discussed in Note 2, on June 5, 2024, the Company recorded a noncontrolling interest representing approximately 49 % of CP LG amounting to $ 34.5 million.

See Note 2 for further information.

In addition, the Company has other immaterial noncontrolling interests that are not redeemable.

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 marketplaces.

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Revenue by Segment, Market or Product Line

The table below presents revenues by segment, market or product line for the three and nine months ended December 31, 2023 and 2022:

The table below presents revenues by segment, market or product line for the three months ended June 30, 2024 and 2023.

The Motion Picture and Television Production segments include the revenues of eOne from the acquisition date of December 27, 2023 (see Note 2).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Three Months Ended

(Amounts in millions)

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Media Networks - Programming Revenues

Domestic 342.7 341.7 1,019.9 1,048.7

International 4.8 39.5

417.2 380.3 1,214.9 1,157.5

Intersegment eliminations ( 103.8 ) ( 97.5 )

Total revenues $ 834.7 $ 908.6

(1) During the quarter ended June 30, 2024, the Company changed the presentation of Media Networks programming revenues to reflect revenues from Canada in the "Domestic" line item above in order to be consistent with how management is now reviewing the Media Networks segment.

Revenues from Canada of $ 4.2 million for the three months ended June 30, 2023 were reclassified to "Domestic" from "International" in the table above to conform to the current period presentation.

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 December 31, 2023 are as follows:

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2024 are as follows:

Rest of Year Ending March 31, 2025 Year Ending March 31,

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Remaining Performance Obligations $ 1,041.2 $ 661.2 $ 72.3 $ 57.1 $ 1,831.8

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenues of $ 64.2 million and $ 236.2 million, respectively, including variable and fixed fee arrangements, were recognized during the three and nine months ended December 31, 2023 from performance obligations satisfied prior to March 31, 2023.

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 $ 89.3 million including variable and fixed fee arrangements, were recognized during the three months ended June 30, 2024 from performance obligations satisfied prior to March 31, 2024.

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

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

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

See the unaudited condensed consolidated balance sheets or Note 18 for accounts receivable, contract assets and deferred revenue balances at June 30, 2024 and March 31, 2024.

Accounts Receivable.

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March 31, 2024 (Benefit) provision for doubtful accounts Other (1)

Uncollectible accounts written-off (2)

December 31, 2023

Uncollectible accounts written-off June 30, 2024

(Amounts in millions)

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______________________

(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.

(1) Represents a measurement period adjustment to the provision for doubtful accounts acquired in the acquisition of eOne (see Note 2).

Contract Assets.

Contract assets relate to the Company’s conditional right to consideration for completed performance under the contract.

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 18 for contract assets at December 31, 2023 and March 31, 2023.

See Note 18 for contract assets at June 30, 2024 and March 31, 2024.

Deferred Revenue.

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

Revenues of $ 14.7 million and $ 124.5 million, respectively, were recognized during the three and nine months ended December 31, 2023 related to the balance of deferred revenue at March 31, 2023.

Revenues of $ 97.1 million were recognized during the three months ended June 30, 2024 related to the balance of deferred revenue at March 31, 2024.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income (Loss) Per Share

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

Basic net income (loss) per share for the three and nine months ended December 31, 2023 and 2022 is presented below:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

(Amounts in millions, except per share amounts)

Basic Net Income (Loss) Per Common Share:

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

shareholders $ ( 106.6 ) $ 16.6 $ ( 1,063.5 ) $ ( 1,913.5 )

Weighted average common shares outstanding 235.1 228.8 233.1 227.4

Basic net income (loss) per common share $ ( 0.45 ) $ 0.07 $ ( 4.56 ) $ ( 8.41 )

Diluted net income (loss) per common share reflects share purchase options, including share appreciation rights ("SARs"), restricted share units ("RSUs") and restricted stock using the treasury stock method when dilutive, and any contingently issuable shares when dilutive.

Diluted net income (loss) per common share for the three and nine months ended December 31, 2023 and 2022 is presented below:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Net Loss Per Share

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

Basic and diluted net loss per share for the three months ended June 30, 2024 and 2023 is presented below:

Three Months Ended

(Amounts in millions, except per share amounts)

Diluted Net Income (Loss) Per Common Share:

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

Basic and Diluted Net Loss Per Common Share:

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 59.4 ) $ ( 70.7 )

Accretion of redeemable noncontrolling interest ( 0.3 ) —

Net loss attributable to Lions Gate Entertainment Corp.

shareholders after accretion of redeemable noncontrolling interest $ ( 59.7 ) $ ( 70.7 )

Weighted average common shares outstanding 235.6 230.2

Effect of dilutive securities:

Restricted share units and restricted stock — 1.3 — —

Adjusted weighted average common shares outstanding 235.1 230.1 233.1 227.4

Diluted net income (loss) per common share $ ( 0.45 ) $ 0.07 $ ( 4.56 ) $ ( 8.41 )

As a result of the net loss in the three and nine months ended December 31, 2023 and the nine months ended December 31, 2022, the dilutive effect of the share purchase options, RSUs and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the three and nine months ended December 31, 2023 totaled 1.6 million and 2.7 million, respectively (nine months ended December 31, 2022 - 2.5 million).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Additionally, for the three and nine months ended December 31, 2023 and 2022, the outstanding common shares issuable presented below were excluded from diluted net loss per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Basic and diluted net loss per common share $ ( 0.25 ) $ ( 0.31 )

As a result of the net loss in the three months ended June 30, 2024 and 2023, the dilutive effect of the share purchase options, RSUs and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the three months ended June 30, 2024 and 2023 totaled 4.8 million and 5.6 million, respectively.

Additionally, for the three months ended June 30, 2024 and 2023, the outstanding common shares issuable presented below were excluded from diluted net loss per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.

Three Months Ended

(Amounts in millions)

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Total weighted average anti-dilutive shares issuable excluded from diluted net income (loss) per common share 17.6 21.0

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Capital Stock

(a) Common Shares

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

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares at June 30, 2024 and March 31, 2024.

The table below outlines common shares reserved for future issuance:

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Shares reserved for future issuance 48.9 49.5

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(b) Share-based Compensation

The Company recognized the following share-based compensation expense during the three and nine months ended December 31, 2023 and 2022:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

The Company recognized the following share-based compensation expense during the three months ended June 30, 2024 and 2023:

Three Months Ended

(Amounts in millions)

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Share appreciation rights 0.2 0.7

24.9 23.3 66.9 57.7

Impact of accelerated vesting on equity awards (1)

6.8 1.5 8.4 2.1

Total share-based compensation expense $ 18.1 $ 16.4

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

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Three Months Ended

(Amounts in millions)

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the nine months ended December 31, 2023:

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the three months ended June 30, 2024:

Stock Options and SARs Restricted Stock and Restricted Share Units

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Outstanding at March 31, 2024 2.4 $ 22.96 18.3 $ 13.73 0.1 $ 9.27 13.3 $ 8.71

$ 10.95 14.0 $ 9.48

Granted — — — — — — 0.2 $ 7.95

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$ 7.13 — — ( 0.8 ) $ 9.11

10.89 ( 9.1 ) $ 9.32

Forfeited or expired — (1)

Outstanding at December 31, 2023 2.4 $ 22.96 18.4 $ 13.73 0.1 $ 9.27 13.6 $ 8.73

$ 11.71 ( 2.0 ) $ 14.55 — — ( 0.1 ) $ 8.46

Outstanding at June 30, 2024 2.4 $ 23.00 16.3 $ 13.64 0.1 $ 9.27 12.6 $ 8.68

__________________

(1) Represents less than 0.1 million shares.

During the three and nine months ended December 31, 2023 and 2022, the Company did not repurchase any common shares.

During the three months ended June 30, 2024 and 2023, the Company did not repurchase any common shares.

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

The income tax provision for the three and nine months ended December 31, 2023 and 2022 is calculated by estimating the Company's annual effective tax rate (estimated annual tax provision divided by estimated annual income before income taxes), and then applying the effective tax rate to income (loss) before income taxes for the period, plus or minus the tax effects of items that relate discretely to the period, if any.

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

The Company's income tax provision for the three and nine months ended December 31, 2023 and 2022 was impacted by changes in the valuation allowances against certain U.S.

The income tax provision for the three months ended June 30, 2024 and 2023 is calculated by estimating the Company's annual effective tax rate (estimated annual tax provision divided by estimated annual income before income taxes), and then applying the effective tax rate to income (loss) before income taxes for the period, plus or minus the tax effects of items that relate discretely to the period, if any.

The Company's income tax provision differs from the federal statutory 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 for the three months ended June 30, 2024 and 2023 was impacted by changes in the valuation allowances against certain U.S.

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

The Company's income tax provision for the three and nine months ended December 31, 2023 and 2022 was also impacted by charges for interest on uncertain tax benefits, and benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

The Company acquired all of the issued and outstanding equity interests of eOne on December 27, 2023 and is evaluating the tax impact on the preliminary purchase price allocation (see Note 2).

The Company's income tax provision for the three months ended June 30, 2024 and 2023 also benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

The Company's income tax provision for the three months ended June 30, 2024 was also impacted by additional deferred tax expense as a result of the Separation that occurred during the quarter.

The Company's income tax provision can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.

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

During the three and nine months ended December 31, 2023 and 2022, the Company also incurred certain other unusual charges or benefits, which are included in direct operating expense in the consolidated statements of operations and are described below.

The following table sets forth restructuring and other and these other unusual charges or benefits and the statement of operations line items they are included in for the three and nine months ended December 31, 2023 and 2022:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

During the three months ended June 30, 2024 and 2023, the Company also incurred certain other unusual charges or benefits, which are included in direct operating expense in the consolidated statements of operations and are described below.

The following table sets forth restructuring and other and these other unusual charges or benefits and the statement of operations line items they are included in for the three months ended June 30, 2024 and 2023:

Three Months Ended

(Amounts in millions)

3 unchanged sentences

Severance (2)

Cash 23.9 2.4 32.9 14.8

Accelerated vesting on equity awards (see Note 12)

6.8 1.5 8.4 2.1

Total severance costs 3.1 4.8

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

Transaction and other costs (3)

Transaction and other costs (benefits) (3)

( 0.5 ) ( 0.8 )

1 unchanged sentence

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

Content charges included in direct operating expense (4)

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

( 0.1 ) ( 1.8 ) ( 0.5 ) ( 8.8 )

Unallocated rent cost included in direct operating expense (5)

Total restructuring and other and other unusual charges not included in restructuring and other $ 24.6 $ 32.2

1 unchanged sentence

(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.

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

During the nine months ended December 31, 2023, the Company continued executing its restructuring plan, including its evaluation of the programming on Starz's domestic and international platforms.

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

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

market, resulting in additional content impairment charges.

As a result of these restructuring initiatives, the Company recorded content impairment charges related to the Media Networks segment in the three and nine months ended December 31, 2023 of $ 77.8 million and $ 317.4 million, respectively (three and nine months ended December 31, 2022 - $ 80.8 million and $ 293.8 million, respectively).

The Company has incurred impairment charges from the inception of the plan through December 31, 2023 amounting to $ 696.7 million.

Under the current restructuring plan and ongoing strategic content review, the Company estimates it will incur

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

additional charges ranging from approximately $ 30 million to $ 55 million related to certain contractual content commitments or programming content impairment charges, among other items, related to territories exited or to be exited and content to be removed from its services.

The net future cash outlay is estimated to range from approximately $ 145 million to $ 170 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content removed or that may be removed from its services.

During fiscal 2024, the Company continued executing its restructuring plan, which included exiting all international territories except for Canada and India, and included an evaluation of the programming on Starz's domestic and international platforms.

As a result of these restructuring initiatives, the Company recorded content impairment charges related to the Media Networks segment in the three months ended June 30, 2024 and 2023 of $ 1.9 million and $ 28.0 million, respectively.

The Company has incurred impairment charges from the inception of the plan through June 30, 2024 amounting to $ 745.7 million.

Under the current restructuring plan and ongoing strategic content review, the net future cash outlay is estimated to range from approximately $ 50 million to $ 55 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content removed or that may be removed from its services.

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

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Other Impairments:

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

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

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

In the three and nine months ended December 31, 2023, amounts were due to restructuring activities including integration of the acquisition of eOne, LIONSGATE+ international restructuring and our Motion Picture and Television Production segments.

(3) Transaction and other costs in the three and nine months ended December 31, 2023 and 2022 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters.

In the nine months ended December 31, 2023, transaction and other costs also includes a benefit of $ 3.8 million associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the LIONSGATE+ international restructuring.

In the three and nine months ended December 31, 2022, transaction and other costs includes a benefit of $ 11.0 million for a settlement of a legal matter related to the Media Networks segment.

(4) In the nine months ended December 31, 2022, the amounts represent development costs written off as a result of changes in strategy across the Company's theatrical slate in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment.

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

(5) Amounts include incremental costs incurred, if any, due to circumstances associated with the COVID-19 global pandemic, net of insurance recoveries of $ 0.1 million and $ 0.7 million in the three and nine months ended December 31, 2023, respectively (three and nine months ended December 31, 2022 - insurance recoveries of $ 2.8 million and $ 10.7 million, respectively).

In the three and nine months ended December 31, 2023 and 2022, insurance recoveries exceeded the incremental costs expensed in the period, resulting in a net benefit included in direct operating expense.

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

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

Amounts in the three months ended June 30, 2024 also include impairments of certain operating lease right-of-use and leasehold improvement assets related to the Television Production segment amounting to $ 18.0 million associated with facility leases that will no longer be utilized by the Company, primarily related to the integration of eOne.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Changes in the restructuring and other severance liability were as follows for the nine months ended December 31, 2023 and 2022:

Nine Months Ended

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

(3) Transaction and other costs in the three months ended June 30, 2024 and 2023 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 the three months ended June 30, 2024 and 2023, transaction and other costs also includes a benefit of $ 7.1 million and $ 3.8 million, respectively, associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the Starz international restructuring.

(4) Amounts include incremental costs incurred, if any, due to circumstances associated with the COVID-19 global pandemic, net of insurance recoveries of $ 3.2 million in the three months ended June 30, 2024 (three months ended June 30, 2023 - immaterial insurance recoveries).

In the three months ended June 30, 2024, insurance recoveries exceeded the incremental costs expensed in the period, resulting in a net benefit included in direct operating expense.

(5) Amounts represent rent cost for production facilities that were unutilized as a result of the industry strikes, and therefore such amounts are not allocated to the segments.

Changes in the restructuring and other severance liability were as follows for the three months ended June 30, 2024 and 2023:

Three Months Ended

(Amounts in millions)

5 unchanged sentences

_______________________

(1) As of December 31, 2023, the remaining severance liability of approximately $ 29.5 million is expected to be paid in the next 12 months.

(1) As of June 30, 2024, the remaining severance liability of approximately $ 16.7 million is expected to be paid in the next 12 months.

Segment Information

2 unchanged sentences

(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.

The Company refers to its Motion Picture and Television Production segments collectively as the Studio Business.

Studio Business:

5 unchanged sentences

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Media Networks Business:

1 unchanged sentence

Media Networks consists of the following product lines (i) Starz Networks, which includes the domestic distribution of STARZ branded premium subscription video services through over-the-top ("OTT") platforms, 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 telecommunication companies (collectively, "Distributors") (in the aggregate, the "Starz Domestic Platform");

and (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.

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

and Canada multichannel video programming distributors ("MVPDs") including cable operators, satellite television providers and telecommunication companies (collectively, "Distributors");

and (ii) Other, 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.

4 unchanged sentences

Segment information is presented in the table below.

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

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).

Three Months Ended

(Amounts in millions)

29 unchanged sentences

$ 66.9 $ 67.9

Segment profit (loss)

Segment profit

Studio Business:

6 unchanged sentences

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 expenses.

Segment profit excludes, when applicable, corporate general and administrative expense, restructuring and other

Segment profit is defined as gross contribution (revenues, less direct operating and distribution and marketing expense) less segment general and administration

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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, 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 income (loss) before income taxes is as follows:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

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

Three Months Ended

(Amounts in millions)

5 unchanged sentences

Restructuring and other ( 22.5 ) ( 32.0 )

( 116.9 ) ( 75.3 ) ( 371.0 ) ( 316.5 )

Goodwill and intangible asset impairment (4)

— — ( 663.9 ) ( 1,475.0 )

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

0.1 1.8 0.5 8.8

Content charges (6)

— — — ( 7.2 )

Unallocated rent cost included in direct operating expense (4)

Adjusted share-based compensation expense (5)

6 unchanged sentences

Other expense ( 3.1 ) ( 5.7 )

Gain on extinguishment of debt — 38.2 21.2 40.3

Gain on investments, net 4.4 43.4 2.7 42.1

Equity interests income 4.2 — 5.7 0.8

Income (loss) before income taxes $ ( 102.7 ) $ 20.8 $ ( 1,054.3 ) $ ( 1,904.2 )

Gain (loss) on extinguishment of debt ( 5.9 ) 21.2

Equity interests income (loss) 0.9 ( 0.3 )

Loss before income taxes $ ( 53.0 ) $ ( 61.7 )

___________________

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

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

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

Three Months Ended

(Amounts in millions)

2 unchanged sentences

Adjusted depreciation and amortization $ 8.5 $ 10.0

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

(3) Amounts represent the incremental costs, if any, included in direct operating expense resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries (see Note 14).

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

(4) Amounts represent rent cost for production facilities that were unutilized as a result of the industry strikes, and therefore such amounts are not allocated to the segments.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(4) Goodwill and intangible asset impairment reflects the goodwill impairment charges recorded in the nine months ended December 31, 2023 and December 31, 2022 related to the Media Networks reporting unit, and the nine months ended December 31, 2023 also includes the impairment of the indefinite-lived trade names related to the Media Networks reporting unit (see Note 5).

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

During the three and nine months ended December 31, 2023 and 2022, the Company has incurred a net benefit in direct operating expense due to insurance recoveries in excess of the incremental costs expensed in the period (see Note 14).

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

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

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

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Three Months Ended

(Amounts in millions)

1 unchanged sentence

Amount included in restructuring and other (i)

( 6.8 ) ( 1.5 ) ( 8.4 ) ( 2.1 )

Adjusted share-based compensation $ 18.1 $ 15.9

(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.

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

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

(6) 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:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Three Months Ended

(Amounts in millions)

Purchase accounting and related adjustments:

Direct operating $ — $ — $ — $ 0.7

General and administrative expense (i)

2.8 16.9 15.0 46.0

Depreciation and amortization 37.6 34.4

$ 39.7 $ 44.4

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

(i) These adjustments include the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, 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 interest in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the unaudited condensed consolidated statement of operations due to the relationship to continued employment.

Three Months Ended

(Amounts in millions)

Amortization of recoupable portion of the purchase price $ — $ 1.3

Noncontrolling interest discount amortization — 3.3 — 13.3

Noncontrolling equity interest in distributable earnings 2.1 8.7

$ 2.8 $ 16.9 $ 15.0 $ 46.0

See Note 10 for revenues by media or product line as broken down by segment for the three and nine months ended December 31, 2023 and 2022.

See Note 10 for revenues by media or product line as broken down by segment for the three months ended June 30, 2024 and 2023.

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

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

(Amounts in millions)

15 unchanged sentences

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contingencies

3 unchanged sentences

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

As of December 31, 2023, the Company is not a party to any material pending claims or legal proceeding and is not aware of any other claims that it believes could, individually or in the aggregate, have a material adverse effect on the Company's financial position, results of operations or cash flows.

As of June 30, 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.

Derivative Instruments and Hedging Activities

5 unchanged sentences

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

As of December 31, 2023, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 20 months from December 31, 2023):

December 31, 2023

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of June 30, 2024, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 22 months from June 30, 2024):

June 30, 2024

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

5 unchanged sentences

Mexican Peso 18.7 MXN in exchange for $ 0.9 20.70 MXN

South African Rand 53.2 ZAR in exchange for $ 2.9 18.95 ZAR

Hungarian Forint 4,571.3 HUF in exchange for $ 12.6 370.84 HUF

New Zealand Dollar 43.6 NZD in exchange for $ 26.7 1.64 NZD

Interest Rate Swaps

5 unchanged sentences

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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.

Designated Cash Flow Hedges.

As of December 31, 2023 and March 31, 2023, the Company had the following pay-fixed interest rate swaps, which have been designated as cash flow hedges outstanding (all related to the Company's SOFR-based debt, see Note 6 and Note 7):

As of June 30, 2024 and March 31, 2024, the Company had the following pay-fixed interest rate swaps, which have been designated as cash flow hedges outstanding (all related to the Company's SOFR-based debt, see Note 6 and Note 7):

Effective Date Notional Amount Fixed Rate Paid Maturity Date

8 unchanged sentences

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 unaudited condensed 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).

LIONS GATE ENTERTAINMENT CORP.

2 unchanged sentences

Unaudited condensed consolidated statements of operations and comprehensive loss:

The following table presents the pre-tax effect of the Company's derivatives on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the three and nine months ended December 31, 2023 and 2022:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

Three Months Ended

(Amounts in millions)

2 unchanged sentences

Gain (loss) recognized in accumulated other comprehensive income (loss) $ 0.2 $ ( 2.5 )

Loss reclassified from accumulated other comprehensive income (loss) into direct operating expense $ ( 2.6 ) $ ( 0.6 ) $ ( 2.5 ) $ ( 0.7 )

Gain (loss) reclassified from accumulated other comprehensive income (loss) into direct operating expense $ ( 1.0 ) $ 0.4

Interest rate swaps

8 unchanged sentences

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

The portion of the swaps, if any, reflecting the financing component (debt host) of the hybrid instrument discussed above is recorded at amortized cost and reduced over time based on payments.

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

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

As of June 30, 2024 and March 31, 2024, there were no swaps outstanding that were subject to a master netting arrangement.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

December 31, 2023

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

As of June 30, 2024 and March 31, 2024, the Company had the following amounts recorded in the accompanying unaudited condensed consolidated balance sheets related to the Company's use of derivatives:

June 30, 2024

Other Current Assets Other Accrued Liabilities

(Amounts in millions)

4 unchanged sentences

March 31, 2024

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

Other Current Assets Other Accrued Liabilities

(Amounts in millions)

3 unchanged sentences

Fair value of derivatives $ 35.6 $ 2.8

As of December 31, 2023, based on the current release schedule, the Company estimates approximately $ 2.0 million of losses associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income will be reclassified into earnings during the one-year period ending December 31, 2024.

As of December 31, 2023, the Company estimates approximately $ 25.4 million of gains recorded in accumulated other comprehensive income associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending December 31, 2024.

As of June 30, 2024, based on the current release schedule, the Company estimates approximately $ 4.1 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income (loss) will be reclassified into earnings during the one-year period ending June 30, 2025.

As of June 30, 2024, the Company estimates approximately $ 31.1 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 June 30, 2025.

Additional Financial Information

1 unchanged sentence

Cash, Cash Equivalents and Restricted Cash

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

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

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the unaudited condensed consolidated balance sheets to the total amounts reported in the unaudited condensed consolidated statements of cash flows at June 30, 2024 and March 31, 2024.

At June 30, 2024 and March 31, 2024, restricted cash represents primarily amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility, IP Credit Facility, and Backlog Facility.

LIONS GATE ENTERTAINMENT CORP.

6 unchanged sentences

Total cash, cash equivalents and restricted cash $ 241.9 $ 371.4

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

The composition of the Company’s other assets is as follows as of June 30, 2024 and March 31, 2024:

2024 March 31,

4 unchanged sentences

Contract assets 54.1 59.9

Interest rate swap assets 28.1 35.6

Tax credits receivable 218.4 199.1

7 unchanged sentences

Operating lease right-of-use assets 361.0 388.8

Interest rate swap assets 34.2 41.1

$ 833.6 $ 900.7

(1) During the three months ended December 31, 2023, the Company extended certain of its operating leases and entered into new operating leases.

The Company recorded an increase to operating lease right-of-use assets of $ 211.9 million which is included in "other non-current assets".

Additionally, the Company recorded a corresponding decrease to operating lease liability of $ 1.3 million and a corresponding increase of $ 213.2 million to "other accrued liabilities" and "other liabilities - non-current", respectively, at December 31, 2023 related to these leases.

In addition, in connection with the December 27, 2023 acquisition of eOne, the Company recorded operating lease right-of-use assets of $ 21.3 million included in "other non-current assets", and a corresponding operating lease liability of $ 6.9 million and $ 17.3 million included in "other accrued liabilities" and "other liabilities - non-current", respectively, as of December 31, 2023 (see Note 2).

Accounts Receivable Monetization

4 unchanged sentences

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

The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the three months ended June 30, 2024 and 2023.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the three and nine months ended December 31, 2023 and 2022.

Individual Monetization Agreements.

1 unchanged sentence

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

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three and nine months ended December 31, 2023 and 2022:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three months ended June 30, 2024 and 2023:

Three Months Ended

(Amounts in millions)

2 unchanged sentences

Loss recorded related to transfers of receivables 5.1 4.7

At December 31, 2023, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheets, but which the Company continues to service, related to the Company's individual agreements to monetize trade accounts receivable was $ 587.1 million (March 31, 2023 - $ 520.4 million).

At June 30, 2024, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheets, but which the Company continues to service, related to the Company's individual agreements to monetize trade accounts receivable was $ 557.4 million (March 31, 2024 - $ 613.4 million).

Pooled Monetization Agreement.

3 unchanged sentences

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 three and nine months ended December 31, 2023 and 2022:

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

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

Three Months Ended

(Amounts in millions)

4 unchanged sentences

Net cash proceeds received (paid or to be paid) $ 3.4

$ — $ ( 0.2 ) $ ( 0.3 ) $ 24.7

Carrying value of receivables transferred and derecognized (1)

$ — $ 57.0 $ 22.1 $ 154.2

Obligations recorded $ 1.1

1 unchanged sentence

___________________

(1) During the three and nine months ended December 31, 2023, the Company voluntarily repurchased $ 46.0 million of receivables previously transferred.

In addition, during the three and nine months ended December 31, 2022, the Company repurchased $ 6.5 million and $ 27.4 million, respectively, of receivables previously transferred, as separately agreed upon with the third-party purchasers, in order to monetize such receivables under the individual monetization program discussed above without being subject to the collateral requirements under the pooled monetization program.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 31, 2023, there were no outstanding receivables derecognized from the Company's unaudited condensed consolidated balance sheet, for which the Company continues to service, related to the pooled monetization agreement (March 31, 2023 - $ 52.3 million).

At June 30, 2024 and March 31, 2024, there were no outstanding receivables derecognized from the Company's unaudited condensed consolidated balance sheet, for which the Company continues to service, related to the pooled monetization agreement.

Content related payables

1 unchanged sentence

Other Accrued Liabilities

Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $ 135.9 million and $ 128.7 million at December 31, 2023 and March 31, 2023, respectively.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $ 139.6 million and $ 147.4 million at June 30, 2024 and March 31, 2024, respectively.

Accumulated Other Comprehensive Income

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

During the nine months ended December 31, 2023 and 2022, there was no income tax expense or benefit reflected in other comprehensive income due to the income tax impact being offset by changes in the Company’s deferred tax valuation allowance.

During the three months ended June 30, 2024 and 2023, there was no income tax expense or benefit reflected in other comprehensive income due to the income tax impact being offset by changes in the Company’s deferred tax valuation allowance.

Foreign currency translation adjustments Net unrealized gain (loss) on cash flow hedges Total

4 unchanged sentences

— ( 8.3 ) ( 8.3 )

December 31, 2023 $ ( 20.0 ) $ 136.4 $ 116.4

Reclassifications to noncontrolling interest (2)

3.6 ( 19.0 ) ( 15.4 )

June 30, 2024 $ ( 22.0 ) $ 115.1 $ 93.1

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

1 unchanged sentence

Reclassifications to net loss (1)

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

— ( 7.6 ) ( 7.6 )

(1) Represents a loss of $ 2.5 million included in direct operating expense and a gain of $ 26.0 million included in interest expense on the unaudited condensed consolidated statement of operations in the nine months ended December 31, 2023 (nine months ended December 31, 2022 - loss of $ 0.7 million included in direct operating expense and loss of $ 15.6 million included in interest expense) (see Note 17).

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

___________________

(1) Represents a loss of $ 1.0 million included in direct operating expense and a gain of $ 9.3 million included in interest expense on the unaudited condensed consolidated statement of operations in the three months ended June 30, 2024 (three months ended June 30, 2023 - gain of $ 0.4 million included in direct operating expense and a gain of $ 7.2 million included in interest expense) (see Note 17).

(2) Represents amounts reclassified in connection with the noncontrolling interest recorded for the proportionate ownership interest in the carrying value of Lionsgate Studios (see Note 2).

Supplemental Cash Flow Information

Significant non-cash transactions during the nine months ended December 31, 2023 and 2022 include certain interest rate swap agreements, which are discussed in Note 17, "Derivative Instruments and Hedging Activities".

There were no significant non-cash financing or investing activities for the nine months ended December 31, 2023 and 2022.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Significant non-cash transactions during the three months ended June 30, 2024 and 2023 include certain interest rate swap agreements, which are discussed in Note 17, "Derivative Instruments and Hedging Activities".

There were no significant non-cash financing or investing activities for the three months ended June 30, 2024 and 2023.

Subsequent Events

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 approximately $ 194 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 in Note 2 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, see Note 2.

eOne IP Credit Facility.

In July 2024, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the "eOne IP Credit Facility") based on and secured by the Company’s intellectual property rights primarily associated with certain titles acquired as part of the eOne acquisition.

The maximum principal amount of the eOne IP Credit Facility is $ 340.0 million, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries.

The Company borrowed $ 340.0 million under the eOne IP Credit Facility.

The cash flows generated from the rights will be applied to repay the eOne IP Credit Facility subject to quarterly required principal payments of $ 8.5 million, beginning September 30, 2024, with the balance payable at maturity.

Advances under the eOne IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25 % per annum.

The eOne IP Credit Facility matures on July 3, 2029.

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

What changed 10-Q

Item 1. Financial Statements