What changed in this filing

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Item 1. Financial Statements

2025-02-10 compared with 2024-11-12 · 289 added, 278 removed, 1050 unchanged (35% of the section changed)

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2024 March 31,

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

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Total expenses 934.7 1,018.6 2,787.9 3,777.0

Operating loss ( 88.6 ) ( 817.5 ) ( 69.8 ) ( 834.3 )

Operating income (loss) 35.8 ( 43.5 ) ( 34.1 ) ( 877.9 )

Interest expense ( 69.1 ) ( 67.1 ) ( 212.2 ) ( 192.9 )

Interest and other income 3.1 1.8 11.6 6.5

Other expense ( 15.7 ) ( 11.5 ) ( 18.9 ) ( 17.2 )

Other gains (losses), net 8.4 ( 2.5 ) ( 10.6 ) ( 19.6 )

Gain (loss) on extinguishment of debt ( 0.3 ) — ( 6.7 ) 21.2

Loss on investments, net — ( 1.6 ) — ( 1.7 )

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

Gain on investments, net — 4.4 — 2.7

Equity interests income 7.6 4.2 8.5 5.7

Loss before income taxes ( 14.5 ) ( 102.7 ) ( 243.5 ) ( 1,054.3 )

Income tax benefit (provision) ( 1.9 ) 2.0 ( 12.0 ) ( 7.8 )

Income tax provision ( 4.0 ) ( 4.7 ) ( 16.0 ) ( 12.5 )

Net loss ( 18.5 ) ( 107.4 ) ( 259.5 ) ( 1,066.8 )

Net loss attributable to noncontrolling interests 14.5 1.7 18.2 2.5

Net loss (income) attributable to noncontrolling interests ( 3.4 ) 0.8 14.8 3.3

Net loss attributable to Lions Gate Entertainment Corp.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

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(Amounts in millions)

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 September 30, 2024 83.6 $ 674.0 156.4 $ 2,483.7 $ ( 3,396.4 ) $ 96.6 $ ( 142.1 ) $ ( 82.5 ) $ ( 224.6 )

Exercise of stock options — — — 0.4 — — 0.4 — 0.4

Share-based compensation, net of share cancellations for taxes 0.1 0.3 0.2 19.2 — — 19.5 — 19.5

Noncontrolling interest reclassification — — — — — 4.1 4.1 ( 5.2 ) ( 1.1 )

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

Sale of noncontrolling interest in Lionsgate Studios Corp.

(see Note 2) — — — — ( 4.0 ) — ( 4.0 ) 0.6 ( 3.4 )

Distributions to noncontrolling interests — — — — — — — ( 6.1 ) ( 6.1 )

Net loss — — — — ( 21.9 ) — ( 21.9 ) 3.7 ( 18.2 )

Other comprehensive loss — — — — — ( 20.2 ) ( 20.2 ) ( 3.5 ) ( 23.7 )

Redeemable noncontrolling interests adjustments to redemption value — — — — 9.6 — 9.6 — 9.6

Redeemable noncontrolling interests adjustments — — — — ( 0.4 ) — ( 0.4 ) — ( 0.4 )

Balance at December 31, 2024 83.7 $ 674.5 156.6 $ 2,503.5 $ ( 3,422.7 ) $ 76.4 $ ( 168.3 ) $ ( 87.8 ) $ ( 256.1 )

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

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

Exercise of stock options — — — 0.2 — — 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

Distributions to 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 — — — — ( 65.0 ) — ( 65.0 ) — ( 65.0 )

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

Redeemable noncontrolling interests adjustments — — — — ( 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 )

_____________________

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

Six Months Ended

Nine Months Ended

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

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Share-based compensation, net of share cancellations for taxes 0.1 0.7 4.8 28.2 — — 28.9 — 28.9

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

Sale of noncontrolling interest in Lionsgate Studios Corp.

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Noncontrolling interests (see Note 9) — — — — — — — 33.6 33.6

Distributions to noncontrolling interests — — — — — — — ( 6.7 ) ( 6.7 )

Net loss — — — — ( 244.7 ) — ( 244.7 ) ( 13.2 ) ( 257.9 )

Other comprehensive loss — — — — — ( 28.3 ) ( 28.3 ) ( 3.5 ) ( 31.8 )

Redeemable noncontrolling interests adjustments to redemption value — — — — 9.3 — 9.3 — 9.3

Balance at September 30, 2024 83.6 $ 674.0 156.4 $ 2,483.7 $ ( 3,396.4 ) $ 96.6 $ ( 142.1 ) $ ( 82.5 ) $ ( 224.6 )

Redeemable noncontrolling interests adjustments — — — — 9.0 — 9.0 — 9.0

Balance at December 31, 2024 83.7 $ 674.5 156.6 $ 2,503.5 $ ( 3,422.7 ) $ 76.4 $ ( 168.3 ) $ ( 87.8 ) $ ( 256.1 )

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

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

Distributions to noncontrolling interests — — — — — — — ( 0.8 ) ( 0.8 )

Net loss — — — — ( 1,063.5 ) — ( 1,063.5 ) 1.1 ( 1,062.4 )

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

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

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

Redeemable noncontrolling interests adjustments — — — — ( 71.5 ) — ( 71.5 ) — ( 71.5 )

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 )

_____________________

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

September 30,

Nine Months Ended

(Amounts in millions)

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Non-cash share-based compensation 59.0 75.3

Other amortization 32.1 23.8

Other non-cash items 31.1 35.0

Goodwill and intangible asset impairment — 663.9

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Equity interests income ( 8.5 ) ( 5.7 )

Loss on investments, net — 1.7

Gain on investments, net — ( 2.7 )

Deferred income taxes 11.8 ( 13.4 )

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Net proceeds from purchase price adjustments for eOne acquisition (see Note 2) 12.0 —

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

Proceeds from the sale of other investments 1.5 5.2

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Increase in loans receivable — ( 3.6 )

Repayment of loans receivable 0.8 —

Capital expenditures ( 23.6 ) ( 24.7 )

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

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

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accruals for contingent liabilities;

and impairment assessments for investment in films and television programs and licensed program rights, property and equipment, equity investments, goodwill and intangible assets.

and impairment assessments for investment in films and television programs and licensed program rights, goodwill and intangible assets.

Actual results could differ from such estimates.

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

As of September 30, 2024, the unaudited condensed consolidated balance sheet included assets and liabilities of CP LG totaling $ 85.1 million (which is primarily comprised of investment in film and television programs) and $ 16.6 million, respectively.

As of December 31, 2024, the unaudited condensed consolidated balance sheet included assets and liabilities of CP LG totaling $ 72.6 million (which is primarily comprised of investment in film and television programs) and $ 12.3 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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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").

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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 September 30, 2024, are pending issuance subject to receipt of such amount.

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 December 31, 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).

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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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 $ 100.2 million and a reduction of accumulated other comprehensive income of $ 11.3 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.

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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 initially approximately $ 385.1 million and subsequently adjusted to $ 373.1 million upon the settlement of certain working capital items pursuant to the Purchase Agreement.

The final purchase price is subject to further adjustment based on the settlement of certain amounts held back pursuant to the Purchase Agreement.

The aggregate cash purchase price was approximately $ 373.1 million.

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.

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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, accounts receivable, participations and residuals liabilities and income taxes, in addition to ensuring all other assets and liabilities have been identified and recorded.

The Company has estimated the preliminary fair value of assets acquired and liabilities assumed based on information currently available and will continue to adjust those estimates as additional information pertaining to events or circumstances present at December 27, 2023 becomes available and final appraisals and analysis are completed.

The Company will reflect measurement period adjustments, in the period in which the adjustments occur, and the Company will finalize its accounting for the acquisition within one year from December 27, 2023 (see Note 5 for measurement period adjustments recorded through September 30, 2024).

A change in the fair value of the net assets may change the amount recognized to goodwill.

If the final fair value estimates and tax adjustments related to the net assets acquired decrease from their preliminary estimates, the amount of goodwill will increase and if the final fair value estimates and tax adjustments related to the net assets acquired increase from their preliminary estimates, the amount of goodwill will decrease and may result in a gain on purchase.

In addition, the final fair value estimates related to the net assets acquired could impact the amount of amortization expense recorded associated with amounts allocated to film and television programs and other intangible assets.

The preliminary goodwill amount is reflected in the table below, and arises from the opportunity for strengthening our global distribution infrastructure and enhanced positioning for motion picture and television projects and selling opportunities.

The goodwill will not be amortized for financial reporting purposes, and will not be deductible for federal tax purposes.

The fair value measurements were primarily based on significant inputs that are not observable in the market, such as discounted cash flow (DCF) analyses, and thus represent Level 3 fair value measurements.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company has made an allocation of the purchase price of eOne to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as follows:

(Amounts in millions)

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Accounts payable and accrued liabilities ( 69.3 )

Content related payable ( 38.8 )

Content related payables ( 38.8 )

Participations and residuals (1)

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Other liabilities and deferred revenue (1)

Preliminary fair value of net assets acquired 362.2

Fair value of net assets acquired 360.2

Goodwill 12.9

Preliminary purchase price consideration at September 30, 2024

Purchase price consideration at December 31, 2024

______________

(1) Includes current and non-current amounts.

Investment in films and television programs includes the preliminary fair value of completed films and television programs which have been produced by eOne or for which eOne has acquired distribution rights, as well as the preliminary fair value of films and television programs in production, pre-production and development.

For investment in films and television programs, the fair value was preliminarily estimated based on forecasted cash flows discounted to present value at a rate commensurate with the risk of the assets.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The goodwill amount reflected in the table above arises from the opportunity for strengthening the Company's 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.

Investment in films and television programs includes the 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 fair value of films and television programs in production, pre-production and development.

For investment in films and television programs, the fair value was estimated based on forecasted cash flows discounted to present value at a rate commensurate with the risk of the assets.

Titles that were released less than three years prior to the acquisition date (December 27, 2023) were valued individually and will be amortized using the individual film forecast method, based on the ratio of current period revenues to management’s estimated remaining total gross revenues to be earned ("ultimate revenue").

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The intangible assets acquired include trade names with a weighted average estimated useful life of 5 years.

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

The fair value of the 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.

Other preliminary fair value adjustments were made to property and equipment and right-of-use lease assets to reflect the fair value of certain assets upon acquisition.

Deferred taxes, net of any required valuation allowance, were preliminarily adjusted to record the deferred tax impact of acquisition accounting adjustments primarily related to amounts allocated to film and television programs, other intangible assets, and certain property and equipment, right-of-use lease assets, and other liabilities.

Other fair value adjustments were made to property and equipment and right-of-use lease assets to reflect the fair value of certain assets upon acquisition.

Deferred taxes, net of any required valuation allowance, were 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.

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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 includes the

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

statement of operations of eOne for the three and six months ended September 30, 2023 combined with the Company's statement of operations for the three and six months ended September 30, 2023, respectively.

Three Months Ended Six Months Ended

September 30, September 30,

The statement of operations information below includes 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, respectively.

Three Months Ended Nine Months Ended

December 31, December 31,

(Amounts in millions)

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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 six months ended September 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 six months ended September 30, 2023.

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The results of operations of eOne were reflected beginning December 27, 2023, in the Motion Picture and Television Production reportable segments of the Company.

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

September 30,

2024 March 31,

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Investment in films and television programs and licensed program rights, net $ 3,376.3 $ 2,762.2

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At September 30, 2024, acquired film and television libraries have remaining unamortized costs of $ 258.3 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 13.6 years (March 31, 2024 - unamortized costs of $ 223.1 million).

At December 31, 2024, acquired film and television libraries have remaining unamortized costs of $ 245.0 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 13.5 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 Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

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$ 431.7 $ 371.2 $ 1,205.9 $ 1,138.7

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 six months ended September 30, 2024 and 2023:

Three Months Ended Six Months Ended

September 30, September 30,

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, 2024 and 2023:

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

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

In addition, amounts in the three and nine months ended December 31, 2024 also include content impairments of $ 7.3 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories.

See Note 14 for further information.

The Company's investments consisted of the following:

September 30,

2024 March 31,

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$ 79.4 $ 74.8

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

________________

(1) Other investments represents equity investments without readily determinable fair values.

Equity Method Investments:

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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.

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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( 1.7 ) ( 1.0 ) — ( 2.7 )

Balance as of September 30, 2024 (1)

Balance as of December 31, 2024 (1)

$ 396.9 $ 411.6 $ — $ 808.5

________________

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

(1) As of December 31, 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 a decrease to goodwill of $ 2.7 million resulting from an adjustment to the purchase price related to a settlement of certain working capital items of $ 12.0 million partially offset by a net decrease in the estimated fair value of the net assets acquired.

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

Based on its quantitative impairment assessment, the Company determined that the fair value of its Media Networks reporting unit was less than its

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 three months ended September 30, 2023, representing all of the then 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.

Based on its quantitative impairment assessment, the Company determined that the fair value of its Media Networks reporting unit 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 then 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.

Intangible Asset Impairment.

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

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

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

After performing its quantitative impairment assessment, the Company then reassessed the estimated useful life of its trade names with a remaining carrying value of $ 80.0 million at September 30, 2023 (net of the impairment charge discussed above), and beginning October 1, 2023, the trade names are being accounted for as finite-lived intangible assets and amortized over their estimated useful life.

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

After performing its quantitative

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

impairment assessment, the Company then reassessed the estimated useful life of its trade names with a remaining carrying value of $ 80.0 million at September 30, 2023 (net of the impairment charge discussed above), and beginning October 1, 2023, the trade names are being accounted for as finite-lived intangible assets and amortized over their estimated useful life.

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

September 30,

2024 March 31,

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Revolving Credit Facility Availability of Funds & Commitment Fee.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at September 30, 2024 there was $ 828.5 million available.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at December 31, 2024 there was $ 860.0 million available.

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

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

There were no letters of credit outstanding at December 31, 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

• Term Loan B:

March 24, 2025.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In November 2024, the Company paid in full the term loan B facility due March 24, 2025 (the "Term Loan B").

See the "Other Debt Transactions" section below.

• Revolving Credit Facility & Term Loan A:

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 6.70 % as of September 30, 2024, before the impact of interest rate swaps, see Note 17 for interest rate swaps).

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 6.18 % as of December 31, 2024, before the impact of interest rate swaps, see Note 17 for interest rate swaps).

• Term Loan B:

The term loan B facility due March 2025 (the "Term Loan B") bears interest at a rate per annum equal to 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 7.20 % as of September 30, 2024, before the impact of interest rate swaps).

The Term Loan B bore 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).

Required Principal Payments:

1 unchanged sentence

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.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Term Loan A also requires mandatory prepayments in connection with certain asset sales, subject to certain significant exceptions, as defined in the Credit Agreement.

Optional Prepayment:

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

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

• Revolving Credit Facility & Term Loan A:

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

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

1 unchanged sentence

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

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

As of December 31, 2024, the Company was in compliance with all applicable covenants.

Change in Control.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.5 % Senior Notes and Exchange Notes

13 unchanged sentences

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

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

As of December 31, 2024, the Company was in compliance with all applicable covenants.

Change in Control.

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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.

On or after the Separation Closing Date, as defined in the indenture to the

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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):

8 unchanged sentences

The eOne IP Credit Facility is subject to quarterly required principal payments of $ 8.5 million, beginning November 14, 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 (effective interest rate of 7.10 % as of September 30, 2024, before the impact of interest rate swaps, see Note 17 for interest rate swaps).

Advances under the eOne IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25 % per annum (effective interest rate of 6.58 % as of December 31, 2024, before the impact of interest rate swaps, see Note 17 for interest rate swaps).

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

LG IP Credit Facility.

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

The maximum principal amount of the LG IP Credit Facility is $ 455.0 million, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries.

In September 2024, certain subsidiaries of the Company entered into a $ 455.0 million senior secured amortizing term credit facility (the "LG IP Credit Facility") based on and secured by the Company’s intellectual property rights primarily associated with certain titles.

In November 2024 and December 2024, the Company closed amendments which increased the maximum principal amount of the LG IP Credit Facility to $ 850.0 million as of December 31, 2024, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries.

The LG IP Credit Facility is subject to quarterly required principal payments of $ 21.25 million, beginning February 14, 2025, with the balance payable at maturity.

Advances under the LG IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25 % per annum (effective interest rate of 7.10 % as of September 30, 2024, before the impact of interest rate swaps, see Note 17 for interest rate swaps).

Advances under the LG IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25 % per annum (effective interest rate of 6.58 % as of December 31, 2024, before the impact of interest rate swaps, see Note 17 for interest rate swaps).

The LG IP Credit Facility matures on September 30, 2029.

See Note 19 - Subsequent Events for the November 2024 increase in maximum principal amount of the LG IP Credit Facility and subsequent borrowings.

Capacity to Pay Dividends

At September 30, 2024, the capacity to pay dividends under the Senior Credit Facilities and the 5.5 % Senior Notes and Exchange Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 240.9 million and accumulated deficit of $ 3,396.4 million were deemed free of restrictions from paying dividends at September 30, 2024.

At December 31, 2024, the capacity to pay dividends under the Senior Credit Facilities and the 5.5 % Senior Notes and Exchange Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 259.5 million and accumulated deficit of $ 3,422.7 million were deemed free of restrictions from paying dividends at December 31, 2024.

Other Debt Transactions:

Term Loan A and Term Loan B Prepayment.

In May 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.

In May 2024, the Company used the proceeds from the equity issuance associated with the Business Combination (Note 2) 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.

In September 2024, the Company used the proceeds from the LG IP Credit Facility to prepay $ 355.1 million principal amount of the Term Loan B, together with accrued and unpaid interest thereon.

See Note 19 - Subsequent Events for the November 2024 repayment in full of the remaining principal amount of the Term Loan B.

In November 2024, the Company used the proceeds from the increase in the LG IP Credit Facility to pay in full the remaining $ 250.0 million principal amount of the Term Loan B, together with accrued and unpaid interest thereon.

Senior Notes Repurchases.

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

In the nine months ended December 31, 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 ( none in the three months ended December 31, 2023).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Gain (Loss) on Extinguishment of Debt:

During the three and six months ended September 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:

During the three and nine months ended December 31, 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

September 30, Six Months Ended

September 30,

December 31, Nine Months Ended

2024 2023 2024 2023

7 unchanged sentences

(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 in the six months ended September 30, 2024.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Film Related Obligations

September 30,

2024 March 31,

17 unchanged sentences

Production Tax Credit Facility.

In January 2021, as amended in March 2024, the Company entered into a non-recourse senior secured revolving credit facility (the "Production Tax Credit Facility") based on and secured by collateral consisting solely of certain of the Company’s tax credit receivables.

The maximum principal amount of the Production Tax Credit Facility is $ 260.0 million, subject to the amount of collateral available, which is based on specified percentages of amounts payable to the Company by governmental authorities pursuant to the tax incentive laws of certain eligible jurisdictions that arise from the production or exploitation of motion pictures and television programming in such jurisdiction.

In January 2021, as amended in March 2024, the Company entered into a non-recourse

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

As of December 31, 2024, the maximum principal amount of the Production Tax Credit Facility was $ 260.0 million, subject to the amount of collateral available, which is based on specified percentages of amounts payable to the Company by governmental authorities pursuant to the tax incentive laws of certain eligible jurisdictions that arise from the production or exploitation of motion pictures and television programming in such jurisdiction.

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

As of September 30, 2024, tax credit receivables amounting to $ 344.2 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 6.45 % at September 30, 2024).

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

As of September 30, 2024, there were no amounts available under the Production Tax Credit Facility.

As of December 31, 2024, tax credit receivables amounting to $ 353.1 million represented collateral related to the Production Tax Credit Facility.

As of December 31, 2024, there was $ 2.2 million available under the Production Tax Credit Facility.

The Production Tax Credit Facility was to mature on January 27, 2025, however in January and February 2025, the Company entered into amendments to the Production Tax Credit Facility which extended the maturity to January 27, 2028 and increased the maximum principal amount to $ 280.0 million, see Note 19.

Programming Notes .

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

The Company's programming notes have contractual repayment dates in November 2024, and incur SOFR-based interest at a weighted average rate of 7.89 %.

The Company's programming notes have contractual repayment dates in January 2025, and incur SOFR-based interest at a weighted average rate of 7.33 %.

Film Library Facility.

2 unchanged sentences

The cash flows generated from the exploitation of the rights will be applied to repay the Film Library 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

4 unchanged sentences

September 30, 2026 $ 121.4 November 14, 2026

July 30, 2027 $ 161.9 July 30, 2027

Advances under the Film Library 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 7.17 % at September 30, 2024).

The Film Library Facility matures on July 30, 2027.

4 unchanged sentences

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

The applicable margin is subject to a potential increase to either 1.25 % or 1.50 % based on the weighted average credit quality rating of the collateral contributed to the facility (effective interest rate of 6.10 % at September 30, 2024).

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

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

As of September 30, 2024, there was $ 160.2 million outstanding under the Backlog Facility, and there were no amounts available under the Backlog Facility (March 31, 2024 - $ 175.0 million outstanding).

As of December 31, 2024, there was $ 151.9 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.

As of September 30, 2024, there was $ 113.0 million outstanding (March 31, 2024 - $ 112.3 million outstanding) under the "other" loans, incurring SOFR-based interest at a weighted average rate of 6.18 %, of which $ 55.1 million has a contractual repayment date in July 2025 and $ 57.9 million has a contractual repayment date in April 2027.

As of September 30, 2024, accounts receivable amounting to $ 72.7 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at September 30, 2024 amounting to $ 65.6 million represented collateral related to the "other" loans.

As of December 31, 2024, there was $ 27.1 million outstanding (March 31,

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2024 - $ 112.3 million outstanding) under the "other" loans, incurring SOFR-based interest at a weighted average rate of 5.76 %, with a contractual repayment date in July 2025.

As of December 31, 2024, accounts receivable amounting to $ 20.8 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at December 31, 2024 amounting to $ 11.0 million represented collateral related to the "other" loans.

Fair Value Measurements

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quoted prices in markets with insufficient volume or infrequent transactions (less active markets);

or model-derived valuations

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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

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

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

September 30, 2024 March 31, 2024

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

December 31, 2024 March 31, 2024

Level 1 Level 2 Total Level 1 Level 2 Total

(Amounts in millions)

Forward exchange contracts (see Note 17)

$ — $ 1.9 $ 1.9 $ — $ — $ —

Interest rate swaps (see Note 17)

3 unchanged sentences

Interest rate swaps (see Note 17)

— ( 1.7 ) ( 1.7 ) — — —

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

September 30, 2024 March 31, 2024

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

December 31, 2024 March 31, 2024

(Amounts in millions)

5 unchanged sentences

Term Loan B — — 816.9 818.1

5.5 % Senior Notes

5.5 % Senior Notes and Exchange Notes

699.1 604.9 696.6 536.2

9 unchanged sentences

The Company’s financial instruments also include cash and cash equivalents, accounts receivable, accounts payable, content related payables, other accrued liabilities, and other liabilities.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Noncontrolling Interests

3 unchanged sentences

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.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Six Months Ended

September 30,

Nine Months Ended

(Amounts in millions)

2 unchanged sentences

Adjustments to redemption value 0.9 71.5

Cash distributions 0.5 ( 0.6 )

Cash contributions (distributions) 0.5 ( 1.0 )

Purchase of noncontrolling interest ( 23.4 ) ( 0.6 )

5 unchanged sentences

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 September 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.

3 unchanged sentences

shareholders (see Note 11).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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).

3 unchanged sentences

Prior to the Company's acquisition of the remaining interest, the noncontrolling interest was presented as a redeemable noncontrolling interest outside of shareholders' equity on the Company's consolidated balance sheets, due to put and call options which were determined to be embedded in the noncontrolling interest, and because the put rights were outside the control of the Company.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company has other immaterial redeemable noncontrolling interests.

5 unchanged sentences

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 $ 33.6 million.

See Note 2 for further information.

3 unchanged sentences

Revenue by Segment, Market or Product Line

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

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

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

27 unchanged sentences

(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 and $ 8.4 million, respectively, for the three and six months ended September 30, 2023 were reclassified to "Domestic" from "International" in the table above to conform to the current period presentation.

Revenues from Canada of $ 4.2 million and $ 12.7 million, respectively, for the three and nine months ended December 31, 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 September 30, 2024 are as follows:

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at December 31, 2024 are as follows:

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

6 unchanged sentences

The revenues included in the above table include all fixed fee contracts regardless of duration.

Revenues of $ 68.6 million and $ 157.9 million, respectively, including variable and fixed fee arrangements, were recognized during the three and six months ended September 30, 2024 from performance obligations satisfied prior to March 31, 2024.

Revenues of $ 46.3 million and $ 204.2 million, respectively, including variable and fixed fee arrangements, were recognized during the three and nine months ended December 31, 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.

1 unchanged sentence

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

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

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

Uncollectible accounts written-off December 31, 2024

(Amounts in millions)

5 unchanged sentences

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

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

See Note 18 for contract assets at December 31, 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 $ 38.7 million and $ 135.8 million, respectively, were recognized during the three and six months ended September 30, 2024 related to the balance of deferred revenue at March 31, 2024.

Deferred revenue as of December 31, 2024 increased as compared to March 31, 2024 due to the receipt of customers’ payments for certain television programs and motion pictures prior to the Company satisfying the corresponding performance obligation (i.e., completion and delivery of the television programs and motion pictures, and the start of the customers' exploitation rights).

The change in deferred revenue was also impacted by the industry strikes which has affected the timing of content deliveries.

Revenues of $ 13.0 million and $ 148.8 million, respectively, were recognized during the three and nine months ended December 31, 2024 related to the balance of deferred revenue at March 31, 2024.

LIONS GATE ENTERTAINMENT CORP.

2 unchanged sentences

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

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

Three Months Ended Six Months Ended

September 30, September 30,

Basic and diluted net loss per share for the three and nine months ended December 31, 2024 and 2023 is presented below:

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

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Basic and diluted net loss per common share $ ( 0.09 ) $ ( 0.45 ) $ ( 1.03 ) $ ( 4.56 )

As a result of the net loss in the three and six months ended September 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 and six months ended September 30, 2024 totaled 1.7 million and 3.2 million, respectively, (three and six months ended September 30, 2023 - 1.0 million and 3.3 million, respectively).

Additionally, for the three and six months ended September 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 Six Months Ended

September 30, September 30,

As a result of the net loss in the three and nine months ended December 31, 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 and nine months ended December 31, 2024 totaled 1.1 million and 2.5 million, respectively, (three and nine months ended December 31, 2023 - 1.6 million and 2.7 million, respectively).

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

December 31, December 31,

2024 2023 2024 2023

9 unchanged sentences

(a) Common Shares

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

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

The table below outlines common shares reserved for future issuance:

September 30,

2024 March 31,

5 unchanged sentences

(b) Share-based Compensation

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

Three Months Ended Six Months Ended

September 30, September 30,

The Company recognized the following share-based compensation expense during the three and nine months ended December 31, 2024 and 2023:

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

11 unchanged sentences

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

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

8 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the nine months ended December 31, 2024:

Stock Options and SARs Restricted Stock and Restricted Share Units

4 unchanged sentences

Granted — — — (1)

Options exercised or restricted stock or RSUs vested — — ( 0.1 ) $ 6.61 — (1)

$ 7.12 0.1 $ 8.24 10.3 $ 7.98

Options exercised or restricted stock or RSUs vested — — ( 0.1 ) $ 5.86 ( 0.1 ) $ 9.20 ( 8.0 ) $ 8.76

Forfeited or expired ( 0.1 ) $ 20.26 ( 2.2 ) $ 14.71 — — ( 0.7 ) $ 8.47

Outstanding at September 30, 2024 2.3 $ 23.09 16.1 $ 13.61 0.1 $ 8.98 15.1 $ 8.20

Outstanding at December 31, 2024 2.3 $ 23.09 16.0 $ 13.66 0.1 $ 8.39 14.9 $ 8.19

__________________

1 unchanged sentence

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

During the three and nine months ended December 31, 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 six months ended September 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 income tax provision for the three and nine months ended December 31, 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 and six months ended September 30, 2024 and 2023 was impacted by changes in the valuation allowances against certain U.S.

The Company's income tax provision for the three and nine months ended December 31, 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 six months ended September 30, 2024 and 2023 was also impacted by charges for interest on uncertain tax benefits, and benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

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

The Company's income tax provision for the three and nine months ended December 31, 2024 and 2023 was also impacted by charges for interest on uncertain tax benefits, and benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

The Company's income tax provision for the nine months ended December 31, 2024 was also impacted by additional deferred tax expense as a result of the Separation that occurred during the quarter ended June 30, 2024.

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.

3 unchanged sentences

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

During the three and six months ended September 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 and six months ended September 30, 2024 and 2023:

Three Months Ended Six Months Ended

September 30, September 30,

During the three and nine months ended December 31, 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.

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

5 unchanged sentences

21.3 30.7 26.2 41.3

Transaction and other costs (benefits) (3)

Transaction and other costs (3)

21.1 8.4 28.6 12.3

8 unchanged sentences

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.

The Company has incurred impairment charges from the inception of the plan through September 30, 2024 amounting to $ 741.4 million.

During the three and six months ended September 30, 2024, the Company recorded net recoveries of content impairment charges related to the Media Networks segment of $ 4.3 million and $ 2.4 million, respectively (three and six months ended September 30, 2023 - content impairment charges of $ 211.6 million and $ 239.5 million, respectively).

The Company has incurred impairment charges from the inception of the plan through December 31, 2024 amounting to $ 735.1 million.

During the three and nine months ended December 31, 2024, the Company recorded net recoveries of content impairment charges related to the Media Networks segment of $ 6.4 million and $ 8.8 million, respectively (three and nine months ended December 31, 2023 - the Company recorded content impairment charges related to the Media Networks segment of $ 77.8 million and $ 317.4 million, respectively).

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

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

Other Impairments:

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

Subsequent to December 31, 2024, the Company removed programming on Starz's domestic platform which had a carrying value of approximately $ 77.4 million, which charge, measured as the excess of the carrying value over the fair value of the titles removed, will be recorded during the fourth quarter ending March 31, 2025.

The Company may incur additional content impairment and other restructuring charges as it continues to execute its restructuring plan.

Content and Other Impairments:

Amounts in the three and nine months ended December 31, 2024 also include content impairments of $ 7.3 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories.

Amounts in the nine months ended December 31, 2024 also include impairments of certain operating lease right-of-use and leasehold improvement assets related to the Television Production segment associated with facility leases that will no longer be utilized by the Company, primarily related to the integration of eOne.

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

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

(3) Transaction and other costs in the three and six months ended September 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 six months ended September 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 nil and $ 3.1 million in the three and six months ended September 30, 2024, respectively (three and six months ended September 30, 2023 - insurance recoveries of $ 0.6 million).

In the six months ended September 30, 2024 and the three and six months ended September 30, 2023, insurance recoveries exceeded the incremental costs expensed in the period, resulting in a net benefit included in direct operating expense.

During the quarter ended December 31, 2024, in connection with the Company's current restructuring plan, approximately 8 % of its eligible U.S.

employees elected to take advantage of voluntary severance and early retirement packages.

A total of approximately $ 26.1 million in severance expense is expected to be incurred under the voluntary severance program, of which $ 14.6 million of severance expense was recognized in restructuring and other in the three and nine months ended December 31, 2024, and the remaining amount is expected to be recognized in the fourth quarter ended March 31, 2025.

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

(3) Transaction and other costs in the three and nine months ended December 31, 2024 and 2023 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs associated with legal and other matters.

In the nine months ended December 31, 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 nil and $ 3.1 million in the three and nine months ended December 31, 2024, respectively (three and nine months ended December 31, 2023 - insurance recoveries of $ 0.1 million and $ 0.7 million, respectively).

In the nine months ended December 31, 2024 and the three and nine months ended December 31, 2023, 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 six months ended September 30, 2024 and 2023:

Six Months Ended

September 30,

Changes in the restructuring and other severance liability were as follows for the nine months ended December 31, 2024 and 2023:

Nine Months Ended

(Amounts in millions)

4 unchanged sentences

$ 24.8 $ 29.5

(1) As of September 30, 2024, the remaining severance liability of approximately $ 8.2 million is expected to be paid in the next 12 months.

(2) Excludes $ 4.9 million and $ 1.6 million in the six months ended September 30, 2024 and 2023, respectively, of accelerated vesting on equity awards.

_______________________

(1) As of December 31, 2024, the remaining severance liability of approximately $ 24.8 million is expected to be paid in the next 12 months.

(2) Excludes $ 4.9 million and $ 8.4 million in the nine months ended December 31, 2024 and 2023, respectively, of accelerated vesting on equity awards.

Segment Information

6 unchanged sentences

Motion Picture consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Television Production.

3 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:

10 unchanged sentences

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 Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

45 unchanged sentences

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

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

15 unchanged sentences

( 38.3 ) ( 39.2 ) ( 117.1 ) ( 120.5 )

Operating loss ( 88.6 ) ( 817.5 ) ( 69.8 ) ( 834.3 )

Operating income (loss) 35.8 ( 43.5 ) ( 34.1 ) ( 877.9 )

Interest expense ( 69.1 ) ( 67.1 ) ( 212.2 ) ( 192.9 )

Interest and other income 3.1 1.8 11.6 6.5

Other expense ( 15.7 ) ( 11.5 ) ( 18.9 ) ( 17.2 )

Other gains (losses), net 8.4 ( 2.5 ) ( 10.6 ) ( 19.6 )

Gain (loss) on extinguishment of debt ( 0.3 ) — ( 6.7 ) 21.2

Loss on investments, net — ( 1.6 ) — ( 1.7 )

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

Gain on investments, net — 4.4 — 2.7

Equity interests income 7.6 4.2 8.5 5.7

Loss before income taxes $ ( 14.5 ) $ ( 102.7 ) $ ( 243.5 ) $ ( 1,054.3 )

2 unchanged sentences

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

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

9 unchanged sentences

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

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

7 unchanged sentences

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

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

7 unchanged sentences

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 statements of operations due to the relationship to continued employment.

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

See Note 10 for revenues by media or product line as broken down by segment for the three and nine months ended December 31, 2024 and 2023.

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

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

7 unchanged sentences

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

September 30,

2024 March 31,

12 unchanged sentences

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

As of September 30, 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.

As of December 31, 2024, the Company is not a party to any material pending claims or legal proceeding and is not aware of any other claims that it believes could, individually or in the aggregate, have a material adverse effect on the Company's financial position, results of operations or cash flows.

LIONS GATE ENTERTAINMENT CORP.

7 unchanged sentences

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

As of September 30, 2024, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 19 months from September 30, 2024):

September 30, 2024

As of December 31, 2024, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 16 months from December 31, 2024):

December 31, 2024

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

(Amounts in millions) (Amounts in millions)

British Pound Sterling 0.2 GBP in exchange for $ 0.3 0.77 GBP

Czech Koruna 180.0 CZK in exchange for $ 7.7 23.29 CZK

15 unchanged sentences

Designated Cash Flow Hedges.

As of September 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).

As of March 31, 2024, the Company had the following pay-fixed interest rate swaps, which were designated as cash flow hedges outstanding (all related to the Company's SOFR-based debt, see Note 6 and Note 7), and were terminated in December 2024, as further described below.

Designated Cash Flow Hedges at March 31, 2024:

Effective Date

8 unchanged sentences

December 24, 2018 $ 50.0 2.728 % March 23, 2025

August 15, 2024 (1)

$ 65.0 4.045 % September 15, 2026

August 15, 2024 (1)

$ 77.5 3.803 % August 15, 2026

August 15, 2024 (1)

$ 77.5 3.810 % September 15, 2026

Total $ 1,700.0

___________________

(1) Entered into during the three months ended September 30, 2024.

In December 2024, the Company terminated all of its pay-fixed interest rate swaps which were outstanding at March 31, 2024, as shown in the table above.

As a result of the termination, the Company received approximately $ 9.4 million, which was recorded as a reduction of the interest rate swap asset values, and represents the amount of unrealized gains recorded in accumulated other comprehensive income related to the terminated interest rate swaps which will be amortized as a reduction of interest expense through the remaining term of the terminated 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 to interest expense at that time.

The receipt of approximately $ 9.4 million was classified in the consolidated statement of cash flows as cash provided by operating activities.

During the nine months ended December 31, 2024, the Company entered into 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).

Designated Cash Flow Hedges at December 31, 2024:

Effective Date

Notional Amount Fixed Rate Paid Maturity Date

(in millions)

August 15, 2024 $ 65.0 4.045 % September 15, 2026

August 15, 2024 $ 77.5 3.803 % August 15, 2026

August 15, 2024 $ 77.5 3.810 % September 15, 2026

December 15, 2024 $ 125.0 3.970 % December 15, 2026

Total $ 345.0

Financial Statement Effect of Derivatives

Unaudited condensed consolidated statements of operations and comprehensive loss:

The following table presents the pre-tax effect of the Company's derivatives on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the three and six months ended September 30, 2024 and 2023:

Three Months Ended Six Months Ended

September 30, September 30,

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

3 unchanged sentences

Gain (loss) recognized in accumulated other comprehensive income (loss) $ 2.4 $ ( 4.3 ) $ 3.5 $ ( 7.3 )

Gain (loss) reclassified from accumulated other comprehensive income (loss) into direct operating expense $ ( 0.2 ) $ ( 0.4 ) $ ( 1.2 ) $ 0.1

Loss reclassified from accumulated other comprehensive income (loss) into direct operating expense $ ( 0.1 ) $ ( 2.6 ) $ ( 1.2 ) $ ( 2.5 )

Interest rate swaps

3 unchanged sentences

Interest rate swaps

Loss reclassified from accumulated other comprehensive income (loss) into interest expense $ ( 1.5 ) $ ( 1.8 ) $ ( 3.1 ) $ ( 3.8 )

Gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense $ 1.4 $ ( 1.8 ) $ ( 1.7 ) $ ( 5.5 )

Total direct operating expense on consolidated statements of operations $ 567.3 $ 510.8 $ 1,639.7 $ 1,549.1

Total interest expense on consolidated statements of operations $ 69.1 $ 67.1 $ 212.2 $ 192.9

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Unaudited condensed consolidated balance sheets:

1 unchanged sentence

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

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

As of September 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:

September 30, 2024

Other Current Assets Other Accrued Liabilities (current) Other Liabilities (non-current)

As of December 31, 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, 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:

December 31, 2024

Other Current Assets Other Non-Current Assets Other Accrued Liabilities (current)

(Amounts in millions)

10 unchanged sentences

Fair value of derivatives $ 35.6 $ 2.8

As of September 30, 2024, based on the current release schedule, the Company estimates approximately $ 1.2 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 September 30, 2025.

As of September 30, 2024, the Company estimates approximately $ 23.4 million of gains recorded in accumulated other comprehensive income (loss) associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending September 30, 2025.

As of December 31, 2024, based on the current release schedule, the Company estimates approximately $ 1.3 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 December 31, 2025.

As of December 31, 2024, the Company estimates approximately $ 26.7 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 December 31, 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 sheets to the total amounts reported in the unaudited condensed consolidated statements of cash flows at September 30, 2024 and March 31, 2024.

At September 30, 2024 and March 31, 2024, restricted cash represents primarily amounts related to required cash reserves for interest payments associated with certain corporate debt and film related obligations.

At December 31, 2024 and March 31, 2024, restricted cash represents primarily amounts related to required cash reserves for interest payments associated with certain corporate debt and film related obligations.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

September 30,

2024 March 31,

4 unchanged sentences

Total cash, cash equivalents and restricted cash $ 254.1 $ 371.4

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

September 30,

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

2024 March 31,

14 unchanged sentences

Operating lease right-of-use assets 338.6 388.8

Interest rate swap assets 0.7 —

$ 867.6 $ 900.7

4 unchanged sentences

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

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

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

The loss is reflected in the "other gains (losses), net" line item on the unaudited condensed consolidated statements of operations.

The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the three and nine months ended December 31, 2024 and 2023.

LIONS GATE ENTERTAINMENT CORP.

3 unchanged sentences

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

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

Three Months Ended Six Months Ended

September 30, September 30,

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three and nine months ended December 31, 2024 and 2023:

Three Months Ended Nine Months Ended

December 31, December 31,

2024 2023 2024 2023

3 unchanged sentences

Loss recorded related to transfers of receivables 3.5 5.2 15.2 20.3

At September 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 $ 626.8 million (March 31, 2024 - $ 613.4 million).

At December 31, 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 $ 534.4 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 six months ended September 30, 2023:

Three Months Ended Six Months Ended

September 30, September 30,

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the nine months ended December 31, 2023:

Nine Months Ended

(Amounts in millions)

5 unchanged sentences

Carrying value of receivables transferred and derecognized (2)

$ 16.3 $ 22.1

Obligations recorded $ 2.1

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.

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

At September 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.

At December 31, 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

3 unchanged sentences

Other Accrued Liabilities

Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $ 37.8 million and $ 147.4 million at September 30, 2024 and March 31, 2024, respectively.

Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $ 55.8 million and $ 147.4 million at December 31, 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 six months ended September 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.

During the nine months ended December 31, 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

6 unchanged sentences

5.3 ( 16.6 ) ( 11.3 )

September 30, 2024 $ ( 5.8 ) $ 102.4 $ 96.6

December 31, 2024 $ ( 28.7 ) $ 105.1 $ 76.4

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

2 unchanged sentences

— ( 23.5 ) ( 23.5 )

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

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

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(1) Represents a loss of $ 1.2 million included in direct operating expense and a gain of $ 19.2 million included in interest expense on the unaudited condensed consolidated statement of operations in the six months ended September 30, 2024 (six months ended September 30, 2023 - gain of $ 0.1 million included in direct operating expense and a gain of $ 16.3 million included in interest expense) (see Note 17).

(1) Represents a loss of $ 1.2 million included in direct operating expense and a gain of $ 22.6 million included in interest expense on the unaudited condensed consolidated statement of operations in the nine months ended December 31, 2024 (nine months ended December 31, 2023 - loss of $ 2.5 million included in direct operating expense and a gain of $ 26.0 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 six months ended September 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 six months ended September 30, 2024 and 2023.

Significant non-cash transactions during the nine months ended December 31, 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 nine months ended December 31, 2024 and 2023.

Subsequent Events

On November 6, 2024, the Company closed an amendment to its LG IP Credit Facility which increased the maximum principal amount of the LG IP Credit Facility to $ 720.0 million.

The Company borrowed $ 265.0 million under the LG IP Credit Facility, and used the net proceeds to pay in full the remaining $ 250.0 million principal amount of the Term Loan B, together with accrued and unpaid interest thereon.

In January 2025, the Company entered into a $ 100.0 million notional, pay-fixed interest rate swap with a fixed rate of 4.060 % and maturity date of January 2027.

The Company expects to designate this interest rate swap as a cash flow hedge (all related to the Company’s SOFR-based debt, see Note 6 and Note 7).

In January and February 2025, the Company entered into amendments to the Production Tax Credit Facility which extended the maturity to January 27, 2028 and increased the maximum principal amount to $ 280.0 million.

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