What changed in this filing

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Item 1. Financial Statements

2022-08-05 compared with 2022-02-03 · 327 added, 501 removed, 786 unchanged (51% of the section changed)

33 unchanged sentences

Accumulated deficit ( 504.7 ) ( 369.7 )

Accumulated other comprehensive loss ( 68.3 ) ( 83.3 )

Accumulated other comprehensive income 75.2 29.3

Total Lions Gate Entertainment Corp.

6 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Three Months Ended

(Amounts in millions, except per share amounts)

6 unchanged sentences

Total expenses 962.1 880.9

Operating income 9.3 37.1 59.4 156.3

Operating income (loss) ( 68.2 ) 20.3

Interest expense ( 46.1 ) ( 41.7 )

3 unchanged sentences

Gain (loss) on investments 1.8 ( 0.1 )

Equity interests loss ( 2.5 ) ( 0.7 ) ( 1.4 ) ( 5.1 )

Income (loss) before income taxes ( 39.4 ) ( 10.2 ) ( 75.8 ) 14.0

Equity interests income 0.9 0.7

Loss before income taxes ( 116.6 ) ( 45.2 )

Income tax provision ( 6.0 ) ( 6.5 )

Net income (loss) ( 48.9 ) ( 17.2 ) ( 97.4 ) 7.3

Net loss ( 122.6 ) ( 51.7 )

Net loss attributable to noncontrolling interests 3.6 6.3

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

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 119.0 ) $ ( 45.4 )

1 unchanged sentence

shareholders:

Basic net income (loss) per common share $ ( 0.20 ) $ ( 0.06 ) $ ( 0.37 ) $ 0.09

Diluted net income (loss) per common share $ ( 0.20 ) $ ( 0.06 ) $ ( 0.37 ) $ 0.09

Basic net loss per common share $ ( 0.53 ) $ ( 0.20 )

Diluted net loss per common share $ ( 0.53 ) $ ( 0.20 )

Weighted average number of common shares outstanding:

3 unchanged sentences

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

(Amounts in millions)

Net income (loss) $ ( 48.9 ) $ ( 17.2 ) $ ( 97.4 ) $ 7.3

Net loss $ ( 122.6 ) $ ( 51.7 )

Foreign currency translation adjustments, net of tax ( 3.0 ) 0.1

Net unrealized gain on cash flow hedges, net of tax 21.1 30.6 16.2 30.3

Comprehensive income (loss) ( 28.0 ) 18.2 ( 82.4 ) 43.2

Net unrealized gain (loss) on cash flow hedges, net of tax 48.9 ( 24.0 )

Comprehensive loss ( 76.7 ) ( 75.6 )

Comprehensive loss attributable to noncontrolling interests 3.6 6.3

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

Comprehensive loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 73.1 ) $ ( 69.3 )

3 unchanged sentences

Three Months Ended

Class A Voting Class B Non-Voting Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Lions Gate Entertainment Corp.

Shareholders' Equity Noncontrolling Interests (a) Total Equity

Common Shares Common Shares

Number Amount Number Amount

(Amounts in millions)

Balance at September 30, 2021 83.1 $ 665.9 141.6 $ 2,314.3 $ ( 143.0 ) $ ( 89.2 ) $ 2,748.0 $ 2.4 $ 2,750.4

Exercise of stock options — — 0.1 0.7 — — 0.7 — 0.7

Share-based compensation, net of share cancellations for taxes — 1.1 0.1 19.9 — — 21.0 — 21.0

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

Noncontrolling interests — — — — — — — ( 1.1 ) ( 1.1 )

Net income (loss) — — — — ( 45.6 ) — ( 45.6 ) 0.5 ( 45.1 )

Other comprehensive income — — — — — 20.9 20.9 — 20.9

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 11.6 ) — ( 11.6 ) — ( 11.6 )

Balance at December 31, 2021 83.1 $ 667.1 141.8 $ 2,335.0 $ ( 200.2 ) $ ( 68.3 ) $ 2,733.6 $ 1.8 $ 2,735.4

Balance at September 30, 2020 82.9 $ 660.8 137.6 $ 2,254.4 $ 2.4 $ ( 205.5 ) $ 2,712.1 $ 2.2 $ 2,714.3

Share-based compensation, net of share cancellations for taxes 0.1 1.2 0.3 17.5 — — 18.7 — 18.7

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

Noncontrolling interests — — — — — — — ( 0.2 ) ( 0.2 )

Net loss — — — — ( 13.9 ) — ( 13.9 ) ( 0.1 ) ( 14.0 )

Other comprehensive income — — — — — 35.4 35.4 — 35.4

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 7.3 ) — ( 7.3 ) — ( 7.3 )

Balance at December 31, 2020 83.0 $ 662.1 137.9 $ 2,272.0 $ ( 18.8 ) $ ( 170.1 ) $ 2,745.2 $ 1.9 $ 2,747.1

_____________________

(a) Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 8).

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Nine Months Ended

Class A Voting Class B Non-Voting Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Lions Gate Entertainment Corp.

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

Shareholders' Equity Noncontrolling Interests (a) Total Equity

10 unchanged sentences

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 16.0 ) — ( 16.0 ) — ( 16.0 )

Balance at December 31, 2021 83.1 $ 667.1 141.8 $ 2,335.0 $ ( 200.2 ) $ ( 68.3 ) $ 2,733.6 $ 1.8 $ 2,735.4

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

Balance at March 31, 2021 83.0 $ 663.2 138.2 $ 2,296.0 $ ( 82.9 ) $ ( 83.3 ) $ 2,793.0 $ 1.6 $ 2,794.6

Exercise of stock options — 0.4 0.2 1.9 — — 2.3 — 2.3

Share-based compensation, net of share cancellations for taxes — 1.2 1.2 20.6 — — 21.8 — 21.8

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

Repurchase of common shares ( 0.2 ) ( 1.0 ) — — — — ( 1.0 ) — ( 1.0 )

Noncontrolling interests — — — — — — — 0.7 0.7

Net income — — — — 18.8 — 18.8 — 18.8

Other comprehensive income — — — — — 35.9 35.9 — 35.9

Net loss — — — — ( 45.4 ) — ( 45.4 ) ( 0.1 ) ( 45.5 )

Other comprehensive loss — — — — — ( 23.9 ) ( 23.9 ) — ( 23.9 )

Redeemable noncontrolling interests adjustments to redemption value — — — — ( 10.8 ) — ( 10.8 ) — ( 10.8 )

Balance at December 31, 2020 83.0 $ 662.1 137.9 $ 2,272.0 $ ( 18.8 ) $ ( 170.1 ) $ 2,745.2 $ 1.9 $ 2,747.1

Balance at June 30, 2021 83.0 $ 664.9 139.6 $ 2,318.6 $ ( 139.1 ) $ ( 107.2 ) $ 2,737.2 $ 2.2 $ 2,739.4

_____________________

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

Three Months Ended

(Amounts in millions)

Operating Activities:

Net income (loss) $ ( 97.4 ) $ 7.3

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

Net loss $ ( 122.6 ) $ ( 51.7 )

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

Depreciation and amortization 42.4 43.3

4 unchanged sentences

Loss on extinguishment of debt 1.3 26.6

Equity interests loss 1.4 5.1

Gain on investments ( 1.2 ) ( 0.3 )

Equity interests income ( 0.9 ) ( 0.7 )

(Gain) loss on investments ( 1.8 ) 0.1

Deferred income taxes 0.2 0.9

Changes in operating assets and liabilities:

Proceeds from the termination of interest rate swaps 188.7 —

Accounts receivable, net and other assets 5.4 ( 149.6 )

4 unchanged sentences

Deferred revenue 13.7 8.6

Net Cash Flows Provided By (Used In) Operating Activities ( 489.8 ) 159.3

Net Cash Flows Used In Operating Activities ( 0.2 ) ( 348.7 )

Investing Activities:

2 unchanged sentences

Investment in equity method investees and other ( 7.5 ) ( 2.0 )

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

Increase in loans receivable ( 4.3 ) —

Distributions from equity method investees — 0.5

Capital expenditures ( 9.6 ) ( 6.4 )

Net Cash Flows Used In Investing Activities ( 75.1 ) ( 20.9 )

Net Cash Flows Provided By (Used In) Investing Activities ( 14.8 ) 115.7

Financing Activities:

1 unchanged sentence

Debt - repurchases and repayments ( 715.2 ) ( 1,373.9 )

Production and related loans - borrowings, net of debt issuance costs 742.4 219.2

Production and related loans - repayments ( 225.0 ) ( 51.9 )

IP Credit Facility and other financing advances, net of debt issuance costs 211.6 —

IP Credit Facility and other financing repayments ( 80.3 ) —

Interest rate swap settlement payments ( 21.5 ) ( 15.4 )

Repurchase of common shares — ( 2.2 )

Film related financing and other obligations - borrowings, net of debt issuance costs 522.9 309.2

Film related financing and other obligations - repayments ( 152.6 ) ( 146.0 )

Settlement of financing component of interest rate swaps ( 134.5 ) ( 6.9 )

Distributions to noncontrolling interest ( 1.7 ) —

1 unchanged sentence

Tax withholding required on equity awards ( 1.1 ) ( 13.1 )

Net Cash Flows Provided By Financing Activities 357.7 89.0

Net Cash Flows Provided By (Used In) Financing Activities 39.8 ( 28.3 )

Net Change In Cash, Cash Equivalents and Restricted Cash 24.8 ( 261.3 )

6 unchanged sentences

Nature of Operations

Combining the STARZ premium global subscription platform with world-class motion picture and television studio operations, Lions Gate Entertainment Corp.

(the “Company,” “Lionsgate,” "Lions Gate," “we,” “us” or “our”) brings a unique and varied portfolio of entertainment to consumers around the world.

Its film, television, subscription and location-based entertainment businesses are backed by a 17,000 -title library and one of the largest collections of film and television franchises in the independent media space.

Lionsgate Entertainment Corp.

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

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

Basis of Presentation

4 unchanged sentences

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

Operating results for the three and nine months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2022.

Operating results for the three months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2023.

The balance sheet at March 31, 2022 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S.

4 unchanged sentences

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

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

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

estimates of sales returns;

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

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

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

7 unchanged sentences

Accounting Guidance Adopted in Fiscal 2023

Reference Rate Reform:

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

GAAP to contract modifications, hedging relationships, and other transactions affected by the market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, if certain criteria are met.

Additionally, in January 2021, the FASB issued additional guidance, which allows entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates.

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

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

See Note 16 for further information.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accounting for Revenue Contracts Acquired in a Business Combination:

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

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

Accounting Guidance Not Yet Adopted

Government Assistance:

In November 2021, the FASB issued guidance which requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model.

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

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

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, therefore it will be effective beginning with the Company's financial statements issued for the year ended March 31, 2023.

While the adoption of this guidance will not have an impact on the Company's consolidated balance sheet or statement of operations, the adoption of this guidance may require additional annual disclosures in the Company's financial statements for the year ending March 31, 2023, which the Company is currently in the process of assessing.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisitions and Dispositions

1 unchanged sentence

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

The purchase price, including acquisition costs, of the Spyglass Library and preferred equity interest was $ 191.4 million, of which $ 171.4 million was paid at closing and $ 20.0 million will be paid over the next two years .

The purchase price, including acquisition costs, of the Spyglass Library and preferred equity interest was $ 191.4 million, of which $ 171.4 million was paid at closing, $ 10.0 million was paid in July 2022, and the remaining $ 10.0 million is to be paid in July 2023.

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

3 unchanged sentences

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

Pantaya was previously reflected in and represented substantially all of "Other Streaming Services" in the Company's Media Networks segment (see Note 14).

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Investment in Films and Television Programs and Licensed Program Rights

17 unchanged sentences

Investment in films and television programs and licensed program rights, net $ 3,148.8 $ 3,013.6

At December 31, 2021, acquired film and television libraries have remaining unamortized costs of $ 155.4 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 19.4 years (March 31, 2021 - unamortized costs of $ 18.3 million).

Amortization of investment in film and television programs and licensed program rights by predominant monetization strategy is as follows for the three and nine months ended December 31, 2021 and 2020, and was included in direct operating expense in the unaudited condensed consolidated statements of operations:

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

At June 30, 2022, acquired film and television libraries have remaining unamortized costs of $ 146.4 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 18.9 years (March 31, 2022 - unamortized costs of $ 149.9 million).

Amortization of investment in film and television programs and licensed program rights by predominant monetization strategy is as follows for the three months ended June 30, 2022 and 2021, and was included in direct operating expense in the unaudited condensed consolidated statements of operations:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

(Amounts in millions)

4 unchanged sentences

$ 472.0 $ 371.1

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, which are included in direct operating expense on the unaudited condensed consolidated statements of operations, and represented the following amounts by segment for the three and nine months ended December 31, 2021 and 2020:

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Three Months Ended

(Amounts in millions)

2 unchanged sentences

Television Production 1.2 25.0

Impairments not included in segment operating results (1)

$ 2.6 $ 18.9 $ 29.3 $ 38.0

________________________

(1) Impairments not included in segment operating results in the nine months ended December 31, 2020 represent a charge due to changes in performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

The Company's investments consisted of the following:

16 unchanged sentences

Great Point Opportunity Fund.

Great Point Opportunity Fund is a partnership to make investments in an operating company that will operate a studio facility in Yonkers, New York.

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

Spyglass is a global premium content company, focused on developing, producing, financing and acquiring motion pictures and television programming across all platforms for worldwide audiences.

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

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;

with offices in London and Los Angeles.

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

Summarized Financial Information.

6 unchanged sentences

Non-current liabilities $ 60.1 $ 59.8

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Three Months Ended

(Amounts in millions)

2 unchanged sentences

Net loss $ ( 2.0 ) $ ( 11.3 )

Gain (Loss) on Investments:

The following table summarizes the components of the gain (loss) on investments:

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

(Amounts in millions)

Unrealized gains (losses) on equity securities $ ( 0.9 ) $ 0.7 $ ( 1.7 ) $ 1.4

Impairments of equity method investments and other investments (1)

— ( 0.7 ) — ( 5.7 )

Gain on sale of other investments and other investment gains 0.7 — 2.9 4.6

$ ( 0.2 ) $ — $ 1.2 $ 0.3

________________________

(1) In the nine months ended December 31, 2020, amounts include impairments of $ 5.0 million on equity securities without readily determinable fair values that were written down to their estimated fair value.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total debt of the Company, excluding film related and other obligations, was as follows as of December 31, 2021 and March 31, 2021:

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

2022 March 31,

3 unchanged sentences

Term Loan A 444.9 638.5

2026 Term Loan A 444.9 —

Term Loan B 841.0 844.2

5.500 % Senior Notes

5.875 % Senior Notes

6.375 % Senior Notes

1,000.0 1,000.0

Total corporate debt 2,285.9 2,482.7

3 unchanged sentences

Non-current portion of debt $ 2,178.6 $ 2,202.1

Fiscal 2022 Debt Transactions:

Senior Notes Redemption and Issuance.

On April 1, 2021, the Company redeemed in full all $ 518.7 million outstanding principal amount of its 5.875 % Senior Notes due November 2024 (" 5.875 % Senior Notes") and all $ 545.6 million outstanding principal amount of its 6.375 % Senior Notes due February 2024 (" 6.375 % Senior Notes").

In connection with the early redemption of the 5.875 % Senior Notes and the 6.375 % Senior Notes, the Company paid a prepayment premium of $ 15.2 million and $ 17.4 million, respectively, plus accrued and unpaid interest to the date of redemption, pursuant to the terms of the indentures governing the 5.875 % Senior Notes and the 6.375 % Senior Notes, respectively.

In connection with the redemption of the 5.875 % Senior Notes and the 6.375 % Senior Notes, on April 1, 2021, the Company issued $ 1.0 billion aggregate principal amount of 5.500 % Senior Notes due April 15, 2029 (" 5.500 % Senior Notes").

Credit Agreement Amendment.

On April 6, 2021, the Company amended its credit and guarantee agreement dated December 8, 2016, as amended (the "Credit Agreement") to, among other things, extend the maturity (the "Extension") of a portion of its revolving credit commitments, amounting to $ 1.25 billion, and a portion of its outstanding term A loans, amounting to $ 444.9 million (the "2026 Term Loan A"), to April 6, 2026, and make certain other changes to the covenants and other provisions therein.

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

Termination of a Portion of Revolving Credit Facility Commitments.

On November 2, 2021, the Company terminated its revolving credit commitments with a maturity of March 22, 2023, amounting to $ 250.0 million remaining after giving effect to the Extension (the "Termination").

After giving effect to the Termination, the Company's remaining revolving credit commitments under its Credit Agreement amounted to $ 1.25 billion with a maturity of April 6, 2026 (the "Revolving Credit Facility").

Term Loan B Repurchases.

During the nine months ended December 31, 2021, the Company completed a series of repurchases of the term B loans due March 24, 2025 ("Term Loan B") and, in aggregate, paid $ 95.3 million to repurchase $ 96.0 million principal amount of the Term Loan B ( none in the three months ended December 31, 2021).

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Revolving Credit Facility Availability of Funds & Commitment Fee.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at December 31, 2021 there was $ 1.25 billion available.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at June 30, 2022 there was $ 1.25 billion available.

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

There were no letters of credit outstanding at December 31, 2021.

There were no letters of credit outstanding at June 30, 2022.

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 Agreement, on the total Revolving Credit Facility of $ 1.25 billion less the amount drawn.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Maturity Date:

• Revolving Credit Facility:

April 6, 2026.

• Term Loan A:

◦ 2023 Term Loan A:

March 22, 2023.

◦ 2026 Term Loan A:

April 6, 2026.

• Revolving Credit Facility & Term Loan A:

April 6, 2026 (see Debt Transactions section below for the April 2022 voluntary prepayment of the entire principal amount of the Term Loan A previously due March 22, 2023).

• Term Loan B:

2 unchanged sentences

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

The margin is subject to potential increases of up to 50 basis points ( two ( 2 ) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Credit Agreement (effective interest rate of 1.85 % as of December 31, 2021, before the impact of interest rate swaps).

The margin is subject to potential increases of up to 50 basis points ( two ( 2 ) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Credit Agreement (effective interest rate of 3.54 % as of June 30, 2022, before the impact of interest rate swaps).

• Term Loan B:

The Term Loan B bears interest at a rate per annum equal to LIBOR plus 2.25 % margin, with a LIBOR floor of zero (or an alternative base rate plus 1.25 % margin) (effective interest rate of 2.35 % as of December 31, 2021, before the impact of interest rate swaps).

The Term Loan B bears interest at a rate per annum equal to LIBOR plus 2.25 % margin, with a LIBOR floor of zero (or an alternative base rate plus 1.25 % margin) (effective interest rate of 4.04 % as of June 30, 2022, before the impact of interest rate swaps).

Required Principal Payments:

• Term Loan A:

◦ 2023 Term Loan A:

Quarterly principal payments, at quarterly rates of 1.25 % beginning June 30, 2019, 1.75 % beginning June 30, 2020, and 2.50 % beginning June 30, 2021 through December 31, 2022, with the balance payable at maturity.

◦ 2026 Term Loan A:

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

10 unchanged sentences

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

As of December 31, 2021, the Company was in compliance with all applicable covenants.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of June 30, 2022, the Company was in compliance with all applicable covenants.

Change in Control.

14 unchanged sentences

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

17 unchanged sentences

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

As of December 31, 2021, the Company was in compliance with all applicable covenants.

As of June 30, 2022, the Company was in compliance with all applicable covenants.

Change in Control.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

unpaid interest, if any, to the date of purchase.

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

Capacity to Pay Dividends

At December 31, 2021, the capacity to pay dividends under the Senior Credit Facilities and the 5.500 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 97.4 million and accumulated deficit of $ 200.2 million were deemed free of restrictions from paying dividends at December 31, 2021.

Loss on Extinguishment of Debt

Accounting for the Fiscal 2022 Debt Transactions Discussed Above:

Revolving Credit Facility.

• Unamortized debt issuance costs:

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

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

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

• Fees paid to creditors and third-party costs:

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

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

Accordingly, the associated costs were accounted for as follows:

• Unamortized debt issuance costs:

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

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

• Fees paid to creditors:

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

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

• Third-party costs:

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

Senior Notes.

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

At June 30, 2022, the capacity to pay dividends under the Senior Credit Facilities and the 5.500 % Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $ 122.6 million and accumulated deficit of $ 504.7 million were deemed free of restrictions from paying dividends at June 30, 2022.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

extinguishment, and a portion represented new issuances to new creditors, and the debt issuance costs were accounted for as follows:

• Unamortized debt issuance costs:

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

• Fees paid to creditors:

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

• Third-party costs:

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

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

In connection with the repurchases of the Term Loan B discussed above, during the three and nine months ended December 31, 2021, the Company recorded a loss on extinguishment of debt of nil and $ 0.2 million, respectively, related to the write-off of debt issuance costs.

Debt Transactions:

Term Loan A Prepayment.

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

Senior Notes Repurchases.

In July 2022, the Company repurchased $ 18.7 million principal amount of the 5.500 % Senior Notes for $ 14.6 million, together with accrued and unpaid interest.

See Note 18 - Subsequent Events.

Senior Notes Redemption and Issuance.

Credit Agreement Amendment.

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

Term Loan B Repurchases.

During the three months ended June 30, 2021, the Company completed a series of repurchases of the term B loans due March 24, 2025 ("Term Loan B") and, in aggregate, paid $ 51.1 million to repurchase $ 51.5 million principal amount of the Term Loan B.

Loss on Extinguishment of Debt:

During the three months ended December 31, 2021, the Company recorded a loss on extinguishment of debt of $ 1.1 million related to the write-off of debt issuance costs associated with the termination of its revolving credit commitments with maturities in March 2023.

During the nine months ended December 31, 2021, the Company recorded a loss on extinguishment of debt related to the transactions described above, as summarized in the table below (three and nine months ended December 31, 2020 - none ):

Nine Months Ended

December 31, 2021

Loss on Extinguishment of Debt Recorded as a Reduction of Outstanding Debt Balances & Amortized Over Life of New Issuances Total

(Amounts in millions)

Credit Agreement amendment (Revolving Credit Facility and Term Loan A) and Senior Notes redemption and issuance:

New debt issuance costs and call premiums $ 21.2 $ 31.0 $ 52.2

Previously incurred debt issuance costs 5.2 31.1 36.3

$ 26.4 $ 62.1 $ 88.5

Termination of a portion of Revolving Credit Facility commitments, Term Loan B repurchases and other 1.8

Total loss on extinguishment of debt $ 28.2

In accounting for the fiscal 2022 Senior Notes redemption and issuance transactions and credit agreement amendment discussed above, a portion of the refinancing transactions was considered a modification of terms, and a portion was considered a debt extinguishment.

During the three months ended June 30, 2022 and 2021, the Company recorded a loss on extinguishment of debt related to the transactions described above as summarized in the table below:

Three Months Ended

Loss on extinguishment of debt:

Term Loan A prepayment $ 1.3 $ —

Senior Notes redemption and issuance — 24.7

Credit Agreement amendment (Revolving Credit Facility and Term Loan A) — 1.7

Term Loan B repurchases and other — 0.2

LIONS GATE ENTERTAINMENT CORP.

4 unchanged sentences

Program rights and film obligations $ 327.8 $ 278.4

Production and related loans 1,014.6 493.5

Film related financing and other obligations:

Production Loans 1,135.0 966.3

Production Tax Credit Facility 233.7 224.0

Programming Notes 56.2 96.4

Backlog Financing Facility and Other 243.6 —

IP Credit Facility 114.0 123.5

Total film related and other obligations 1,389.0 708.1

Total film related financing and other obligations 1,782.5 1,410.2

Unamortized debt issuance costs ( 11.4 ) ( 8.5 )

Total film related and other obligations, net 1,381.6 703.5

Total film related financing and other obligations, net 1,771.1 1,401.7

Less current portion ( 1,090.3 ) ( 951.1 )

1 unchanged sentence

Program Rights and Film Obligations

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

Production and Related Loans

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

Individual Loans .

The majority of the Company's individual production and related loans have contractual repayment dates either at or near the expected completion date, with the exception of certain loans containing repayment dates on a longer term basis, and incur primarily LIBOR-based interest at a weighted average rate of 2.47 % (before the impact of interest rate swaps, see Note 16 for interest rate swaps).

Film Related Financing and Other Obligations

Film related financing and other obligations include production loans, programming notes, the Company's Production Tax Credit Facility, IP Credit Facility, Backlog Financing Facility and other.

Production Loans .

Production loans represent individual loans for the production of film and television programs that the Company produces.

The majority of the Company's production loans have contractual repayment dates either at or near the expected completion date, with the exception of certain loans containing repayment dates on a longer term basis, and incur primarily LIBOR and SOFR-based interest at a weighted average rate of 3.61 % (before the impact of interest rate swaps, see Note 16 for interest rate swaps).

Programming Notes .

Programming notes represent individual loans for the licensing of film and television programs that the Company licenses.

The Company's programming notes have contractual repayment dates in July 2022, and incur primarily LIBOR and SOFR-based interest at a weighted average rate of 4.57 % (before the impact of interest rate swaps, see Note 16 for interest rate swaps).

LIONS GATE ENTERTAINMENT CORP.

1 unchanged sentence

Production Tax Credit Facility.

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

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

The maximum principal amount of the Production Tax Credit Facility is $ 235.0 million, subject to the amount of collateral available, which is based on specified percentages of amounts payable to the Company by governmental authorities pursuant to the tax incentive laws of certain eligible jurisdictions that arise from the production or exploitation of motion pictures and television programming in such jurisdiction.

Advances under the Production Tax Credit Facility bear interest at a rate equal to, at the Company’s option, LIBOR plus 1.50 % per annum or the base rate plus 0.50 % per annum (effective interest rate of 1.60 % at December 31, 2021).

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 3.29 % at June 30, 2022).

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

As of December 31, 2021, there was $ 214.1 million outstanding under the Production Tax Credit Facility, and there were no material additional amounts available under the Production Tax Credit Facility (March 31, 2021 - $ 120.0 million outstanding).

IP Credit Facility

As of June 30, 2022, there was $ 233.7 million outstanding under the Production Tax Credit Facility, and there were no material amounts available under the Production Tax Credit Facility (March 31, 2022 - $ 224.0 million outstanding).

IP Credit Facility.

10 unchanged sentences

July 30, 2026 $ 140.0 July 30, 2026

Advances under the IP Credit Facility bear interest at a rate equal to, at the Company’s option, LIBOR plus 2.25 % per annum (with a LIBOR floor of 0.25 %) or the base rate plus 1.25 % per annum (effective interest rate of 2.50 % at December 31, 2021).

The IP Credit Facility matures on July 30, 2026.

As of December 31, 2021, there was $ 134.7 million outstanding under the IP Credit Facility.

Other Financing Obligations.

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

As of June 30, 2022, there was $ 114.0 million outstanding under the IP Credit Facility.

Backlog Financing Facility and Other:

Backlog Financing Facility.

In March 2022, as amended in August 2022, certain subsidiaries of the Company entered into a committed secured revolving credit facility (the "Backlog Financing Facility") based on collateral consisting of certain of the Company's fixed fee or minimum guarantee contracts where cash will be received in the future.

The maximum principal amount of the Backlog Financing Facility as of June 30, 2022 was $ 125.0 million, subject to the amount of eligible collateral contributed to the facility.

In August 2022, the Company amended its Backlog Financing Facility and increased the maximum principal amount of the Backlog Financing Facility from $ 125.0 million to $ 175.0 million (see Note 18 - Subsequent Events).

Advances under the Backlog Financing Facility bear interest at a rate equal to Term SOFR plus 0.10 % to 0.25 % depending on the SOFR term (i.e., one, three or six months), plus an applicable margin amounting to 1.15 % per annum at June 30, 2022.

The applicable margin is subject to a potential increase to either 1.25 % or 1.50 % based on the weighted average credit quality rating of the collateral contributed to the facility (effective interest rate of 2.94 % at June 30, 2022).

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

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

As of June 30, 2022, there was $ 125.0 million outstanding under the Backlog Financing Facility, and there were no amounts available under the Backlog Financing Facility (March 31, 2022 - no amounts outstanding).

On June 28, 2022, the Company borrowed $ 118.6 million under a loan agreement which is secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements (the "Distribution Loan Agreement").

The loan agreement matures on December 28, 2025.

Outstanding loan balances 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.

Borrowings bear interest at a rate equal to Term SOFR plus 0.11 %, plus an applicable margin amounting to 1.50 % per annum (effective interest rate of 3.30 % at June 30, 2022).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value Measurements

5 unchanged sentences

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;

2 unchanged sentences

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

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

December 31, 2021 March 31, 2021

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of June 30, 2022 and March 31, 2022:

June 30, 2022 March 31, 2022

Level 1 Level 2 Total Level 1 Level 2 Total

7 unchanged sentences

________________

(1) Amounts at December 31, 2021 and March 31, 2021 exclude $ 90.6 million and $ 98.2 million, respectively, of financing component of interest rate swaps presented in the table below.

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

December 31, 2021 March 31, 2021

(1) Amounts at March 31, 2022 exclude $ 88.1 million of financing component of interest rate swaps presented in the table below ( none at June 30, 2022).

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, film related financing and other obligations, and interest rate swaps at June 30, 2022 and March 31, 2022:

June 30, 2022 March 31, 2022

(Amounts in millions)

6 unchanged sentences

966.8 779.2 965.8 962.5

5.875 % Senior Notes

— — 506.7 533.9

6.375 % Senior Notes

— — 540.8 563.0

Production and related loans 1,010.3 1,014.6 489.0 493.5

Production Loans 1,131.6 1,135.0 963.7 966.3

Production Tax Credit Facility 230.6 233.7 221.1 224.0

Programming Notes 56.2 56.2 96.4 96.4

Backlog Financing Facility and Other 241.0 243.6 — —

IP Credit Facility 111.6 114.0 120.6 123.5

3 unchanged sentences

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

(2) Amounts at December 31, 2021 and March 31, 2021 include $ 90.6 million and $ 98.2 million, respectively, recorded as a reduction of assets under master netting arrangements.

(2) Amounts at March 31, 2022 include $ 88.1 million recorded as a reduction of assets under master netting arrangements ( none at June 30, 2022).

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

The carrying values of these financial instruments approximated the fair values at December 31, 2021 and March 31, 2021.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The carrying values of these financial instruments approximated the fair values at June 30, 2022 and March 31, 2022.

Noncontrolling Interests

1 unchanged sentence

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

Nine Months Ended

Three Months Ended

(Amounts in millions)

9 unchanged sentences

Beginning 30 days after the expiration of the exercise period for the put rights held by the noncontrolling interest holders, the Company has a right to call the noncontrolling interest of 3 Arts Entertainment, at fair value, for a 60 day period.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pilgrim Media Group.

1 unchanged sentence

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

In addition, the noncontrolling interest holder is the President and CEO of Pilgrim Media Group.

Pursuant to the original operating agreement of Pilgrim Media Group, if the employment of the noncontrolling interest holder was terminated, under certain circumstances as defined in the operating agreement, the Company could call and the noncontrolling interest holder could put the noncontrolling interest at a discount to fair value, which was being expensed over the call periods in the original operating agreement.

Pursuant to the amendment to the operating agreement on April 2, 2021, this discount was eliminated and therefore the remaining unamortized discount of $ 2.7 million was expensed in the quarter ended June 30, 2021.

The amortization of the discount through June 30, 2021 was included in general and administrative expense of Pilgrim Media Group for the nine months ended December 31, 2021, and reflected as an addition to redeemable noncontrolling interest.

Redeemable noncontrolling interests are measured at the greater of (i) the redemption amount that would be paid if settlement occurred at the balance sheet date less the amount attributed to unamortized noncontrolling interest discount if applicable, or (ii) the historical value resulting from the original acquisition date value plus or minus any earnings or loss attribution, plus the amount of amortized noncontrolling interest discount, less the amount of cash distributions that are not accounted for as compensation, if any.

2 unchanged sentences

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

1 unchanged sentence

Revenue by Segment, Market or Product Line

The table below presents revenues by segment, market or product line for the three and nine months ended December 31, 2021 and 2020:

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

The table below presents revenues by segment, market or product line for the three months ended June 30, 2022 and 2021:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

(Amounts in millions)

20 unchanged sentences

Media Networks - Programming Revenues

362.5 388.5 1,079.2 1,119.8

Domestic 349.6 358.2

International 31.6 24.1

388.9 406.2 1,155.9 1,161.7

Intersegment eliminations ( 198.4 ) ( 158.4 )

Total revenues $ 893.9 $ 901.2

___________________

(1) Media Networks domestic revenues for the three and nine months ended December 31, 2020 included revenue from the Company's former Other Streaming Services product line of $ 13.2 million and $ 38.0 million, respectively, substantially all of which related to the Company's former interest in Pantaya, which was sold on March 31, 2021 (see Note 2).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Remaining Performance Obligations

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

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at December 31, 2021 are as follows:

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2022 are as follows:

Rest of Year Ending March 31, 2023 Year Ending March 31,

4 unchanged sentences

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

Revenues of $ 45.8 million and $ 178.6 million, respectively, including variable and fixed fee arrangements, were recognized during the three and nine months ended December 31, 2021, from performance obligations satisfied prior to March 31, 2021.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenues of $ 39.8 million including variable and fixed fee arrangements, were recognized during the three months ended June 30, 2022, from performance obligations satisfied prior to March 31, 2022.

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.

At December 31, 2021 and March 31, 2021, accounts receivable, contract assets and deferred revenue are as follows.

Item Balance Sheet Location December 31,

At June 30, 2022 and March 31, 2022, accounts receivable, contract assets and deferred revenue are as follows.

Item Balance Sheet Location June 30,

2022 March 31,

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

9.0 10.3 ( 1.3 )

Deferred revenue - current Deferred revenue - current 184.2 174.9 9.3

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Uncollectible accounts written-off December 31, 2021

Uncollectible accounts written-off June 30, 2022

(Amounts in millions)

7 unchanged sentences

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

Revenues of $ 23.6 million and $ 130.6 million, respectively, were recognized during the three and nine months ended December 31, 2021 related to the balance of deferred revenue at March 31, 2021.

Net Income (Loss) Per Share

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

Basic net income (loss) per share for the three and nine months ended December 31, 2021 and 2020 is presented below:

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

(Amounts in millions, except per share amounts)

Basic Net Income (Loss) Per Common Share:

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

shareholders $ ( 45.6 ) $ ( 13.9 ) $ ( 83.5 ) $ 18.8

Weighted average common shares outstanding 225.0 220.8 223.7 220.3

Basic net income (loss) per common share $ ( 0.20 ) $ ( 0.06 ) $ ( 0.37 ) $ 0.09

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

Diluted net income (loss) per common share for the three and nine months ended December 31, 2021 and 2020 is presented below:

Revenues of $ 98.7 million were recognized during the three months ended June 30, 2022 related to the balance of deferred revenue at March 31, 2022.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Net Loss Per Share

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

Basic and diluted net loss per share for the three months ended June 30, 2022 and 2021 is presented below:

Three Months Ended

(Amounts in millions, except per share amounts)

Diluted Net Income (Loss) Per Common Share:

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

Basic and Diluted Net Loss Per Common Share:

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 119.0 ) $ ( 45.4 )

Weighted average common shares outstanding 225.6 221.8

Effect of dilutive securities:

Share purchase options — — — 0.1

Restricted share units and restricted stock — — — 1.0

Adjusted weighted average common shares outstanding 225.0 220.8 223.7 221.4

Diluted net income (loss) per common share $ ( 0.20 ) $ ( 0.06 ) $ ( 0.37 ) $ 0.09

As a result of the net loss in the three and nine months ended December 31, 2021 and the three months ended December 31, 2020, the dilutive effect of the share purchase options, restricted share units 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, 2021 totaled 4.5 million and 5.3 million, respectively (three months ended December 31, 2020 - 1.9 million).

Additionally, for the three and nine months ended December 31, 2021 and 2020, the outstanding common shares issuable presented below were excluded from diluted net income (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,

2021 2020 2021 2020

Basic and diluted net loss per common share $ ( 0.53 ) $ ( 0.20 )

As a result of the net loss in the three months ended June 30, 2022 and 2021, the dilutive effect of the share purchase options, restricted share units ("RSUs") and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the three months ended June 30, 2022 totaled 3.8 million (three months ended June 30, 2021 - 7.4 million).

Additionally, for the three months ended June 30, 2022 and 2021, the outstanding common shares issuable presented below were excluded from diluted net loss per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.

Three Months Ended

(Amounts in millions)

3 unchanged sentences

Other issuable shares 2.7 1.9

Total weighted average anti-dilutive shares issuable excluded from diluted net income (loss) per common share 18.3 27.9 18.7 31.9

Total weighted average anti-dilutive shares issuable excluded from diluted net loss per common share 22.4 15.3

LIONS GATE ENTERTAINMENT CORP.

2 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 December 31, 2021 and March 31, 2021.

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares at June 30, 2022 and March 31, 2022.

The table below outlines common shares reserved for future issuance:

1 unchanged sentence

(Amounts in millions)

Stock options and SARs outstanding 27.2 26.7

Stock options and share appreciation rights (SARs) outstanding 27.0 27.6

Restricted stock and restricted share units — unvested 11.3 7.9

2 unchanged sentences

(b) Share-based Compensation

On September 14, 2021, the Company’s shareholders approved an amendment to the Lions Gate Entertainment Corp.

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

The Company recognized the following share-based compensation expense during the three and nine months ended December 31, 2021 and 2020:

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

The Company recognized the following share-based compensation expense during the three months ended June 30, 2022 and 2021:

Three Months Ended

(Amounts in millions)

3 unchanged sentences

Share appreciation rights 0.3 2.3

22.6 20.0 77.5 57.2

Impact of accelerated vesting on equity awards (1)

9 unchanged sentences

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

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Three Months Ended

(Amounts in millions)

4 unchanged sentences

Restructuring and other 0.6 —

$ 22.6 $ 20.0 $ 77.5 $ 60.0

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the nine months ended December 31, 2021:

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the three months ended June 30, 2022:

Stock Options and SARs Restricted Stock and Restricted Share Units

6 unchanged sentences

$ 10.38 — — 3.7 $ 9.62

$ 13.16 4.7 $ 14.18

Options exercised or restricted stock or RSUs vested — (1)

$ 7.70 ( 0.4 ) $ 10.21 — — ( 0.1 ) $ 13.72

$ 12.05 ( 5.6 ) $ 9.05

Forfeited or expired — (1)

$ 15.42 ( 0.2 ) $ 42.66 — — ( 0.2 ) $ 11.88

Outstanding at December 31, 2021 5.5 $ 24.33 21.7 $ 15.55 — (1)

Outstanding at June 30, 2022 5.4 $ 24.38 21.6 $ 15.37 — (1)

$ 11.51 11.3 $ 11.10

2 unchanged sentences

During the three and nine months ended December 31, 2021 and the three months ended December 31, 2020, the Company did not repurchase any common shares.

During the nine months ended December 31, 2020, the Company repurchased 0.2 million of its Class A voting shares for an aggregate cost of $ 1.0 million, with an average repurchase price per share of $ 5.75 .

During the three months ended June 30, 2022 and 2021 the Company did not repurchase any common shares.

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

The income tax provision for the three and nine months ended December 31, 2021 and 2020 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 months ended June 30, 2022 and 2021 is calculated by estimating the Company's annual effective tax rate (estimated annual tax provision divided by estimated annual income before income taxes), and then applying the effective tax rate to income (loss) before income taxes for the period, plus or minus the tax effects of items that relate discretely to the period, if any.

The Company's income tax provision differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of the Company's pre-tax income (loss) generated across the various jurisdictions in which the Company operates, changes in the valuation allowance against the Company's deferred tax assets, and certain minimum taxes and foreign withholding taxes.

The Company's income tax provision for the three months ended June 30, 2022 and 2021 was also impacted by an interest accrual on uncertain tax benefits.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company's income tax provision for the three and nine months ended December 31, 2021 was also impacted by interest accrual on uncertain tax benefits, additional uncertain tax benefits related to state income taxes identified during state audits, and 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 nine months ended December 31, 2020 was also impacted by interest accrual on uncertain tax benefits, and release of uncertain tax benefits due to the expiration of statutory limitations and settlements with tax authorities.

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.

1 unchanged sentence

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

During the three and nine months ended December 31, 2021 and 2020, the Company also incurred certain other unusual charges related to the COVID-19 global pandemic.

The following table sets forth restructuring and other and COVID-19 related charges and the statement of operations line items they are included in for the three and nine months ended December 31, 2021 and 2020:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

During the three months ended June 30, 2022 and 2021, the Company also incurred certain other unusual charges, which are included in direct operating expense in the consolidated statements of operations as described below.

The following table sets forth restructuring and other and these other unusual charges and the statement of operations line items they are included in for the three months ended June 30, 2022 and 2021:

Three Months Ended

(Amounts in millions)

5 unchanged sentences

COVID-19 related charges included in restructuring and other (2)

0.2 0.8 0.9 1.6

Transaction and related costs (3)

0.3 0.7 2.5 2.9

Total Restructuring and Other 8.0 3.2

COVID-19 related charges (benefit) not included in restructuring and other, included in:

Other unusual charges not included in restructuring and other:

COVID-19 related charges (benefit) included in:

Direct operating expense (4)

( 2.8 ) 8.6 ( 2.3 ) 36.6

Distribution and marketing expense (4)

— 5.4 0.3 16.1

Total restructuring and other and COVID-19 related charges $ 7.0 $ 4.8

1 unchanged sentence

(1) Severance costs were primarily related to restructuring activities in connection with cost-saving initiatives.

(2) During the three and nine months ended December 31, 2021, the Company has incurred certain incremental general and administrative costs associated with the COVID-19 global pandemic.

In the three and nine months ended December 31, 2020, these costs were primarily related to transitioning the Company to a remote-work environment and other incremental general and administrative costs associated with the COVID-19 global pandemic.

(3) Transaction and related costs in the three and nine months ended December 31, 2021 and 2020 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

(2) Amounts represent certain incremental general and administrative costs associated with the COVID-19 global pandemic, such as costs related to transitioning the Company to a remote-work environment, costs associated with return-to-office safety protocols, and other incremental general and administrative costs associated with the COVID-19 global pandemic.

(3) Transaction and related costs in the three months ended June 30, 2022 and 2021 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

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

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

In the nine months ended December 31, 2020, these charges also included film impairment due to changes in performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

In the three and nine months ended December 31, 2021, insurance recoveries exceeded the incremental costs expensed in the periods, resulting in a net benefit included in direct operating expense.

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

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

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

2 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Changes in the restructuring and other severance liability were as follows for the nine months ended December 31, 2021 and 2020:

Nine Months Ended

Changes in the restructuring and other severance liability were as follows for the three months ended June 30, 2022 and 2021:

Three Months Ended

(Amounts in millions)

5 unchanged sentences

_______________________

(1) As of December 31, 2021, the remaining severance liability of approximately $ 1.5 million is expected to be paid in the next 12 months.

(1) As of June 30, 2022, the remaining severance liability of approximately $ 2.3 million is expected to be paid in the next 12 months.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Segment Information

2 unchanged sentences

(1) Motion Picture, (2) Television Production and (3) Media Networks.

We refer to our Motion Picture and Television Production segments collectively as our Studio Business.

Studio Business:

Motion Picture.

4 unchanged sentences

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

Media Networks Business:

Media Networks.

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

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

The Company sold its interest in Pantaya on March 31, 2021 (see Note 2).

In the ordinary course of business, the Company's reportable segments enter into transactions with one another.

4 unchanged sentences

Segment information is presented in the table below:

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Three Months Ended

(Amounts in millions)

Segment revenues

Studio Business:

Motion Picture $ 278.8 $ 291.2

Television Production 432.3 386.1

Total Studio Business 711.1 677.3

Media Networks 381.2 382.3

2 unchanged sentences

Intersegment revenues

Studio Business:

Motion Picture $ 3.5 $ 4.4

Television Production 194.9 154.0

Total Studio Business 198.4 158.4

Media Networks — —

1 unchanged sentence

Gross contribution

Studio Business:

Motion Picture $ 73.1 $ 68.7

Television Production 30.7 13.0

Total Studio Business 103.8 81.7

Media Networks ( 13.5 ) 109.3

2 unchanged sentences

Segment general and administration

Studio Business:

Motion Picture $ 22.6 $ 24.4

Television Production 11.1 10.0

Total Studio Business 33.7 34.4

Media Networks 23.5 21.1

1 unchanged sentence

Segment profit

Studio Business:

Motion Picture $ 50.5 $ 44.3

Television Production 19.6 3.0

Total Studio Business 70.1 47.3

Media Networks ( 37.0 ) 88.2

3 unchanged sentences

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

Segment profit excludes, when applicable, corporate general and administrative expense, restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and associated programming and content strategy, certain charges related to the COVID-19 global pandemic and purchase accounting and related adjustments.

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

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

costs, share-based compensation, certain programming and content charges as a result of changes in management and/or programming and content strategy, certain charges related to the COVID-19 global pandemic, charges related to Russia's invasion of Ukraine, and purchase accounting and related adjustments.

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

Three Months Ended

(Amounts in millions)

5 unchanged sentences

( 8.0 ) ( 3.2 )

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

2.8 ( 14.0 ) 2.0 ( 52.7 )

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

Adjusted share-based compensation expense (4)

2 unchanged sentences

( 48.3 ) ( 50.0 )

Operating income 9.3 37.1 59.4 156.3

Operating income (loss) ( 68.2 ) 20.3

Interest expense ( 46.1 ) ( 41.7 )

3 unchanged sentences

Gain (loss) on investments 1.8 ( 0.1 )

Equity interests loss ( 2.5 ) ( 0.7 ) ( 1.4 ) ( 5.1 )

Income (loss) before income taxes $ ( 39.4 ) $ ( 10.2 ) $ ( 75.8 ) $ 14.0

Equity interests income 0.9 0.7

Loss before income taxes $ ( 116.6 ) $ ( 45.2 )

___________________

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

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Three Months Ended

(Amounts in millions)

3 unchanged sentences

(2) Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable (see Note 13).

(3) In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, during the three and nine months ended December 31, 2021 the Company has incurred a benefit of $ 2.8 million and $ 2.0 million, respectively, net of insurance recoveries, in incremental direct operating and distribution and marketing expense (three and nine months ended December 31, 2020 - charges of $ 14.0 million and $ 52.7 million, respectively) (see Note 13).

(3) In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, during the three months ended June 30, 2022, the Company has incurred a benefit of $ 1.0 million, net of insurance recoveries, in incremental direct operating expense (three months ended June 30, 2021 - charges of $ 1.6 million) (see Note 13).

These charges are excluded from segment operating results.

2 unchanged sentences

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

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Three Months Ended

(Amounts in millions)

1 unchanged sentence

Amount included in restructuring and other (i)

— — — ( 2.8 )

Adjusted share-based compensation $ 7.8 $ 34.6

3 unchanged sentences

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

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Three Months Ended

(Amounts in millions)

4 unchanged sentences

$ 48.3 $ 50.0

See Note 9 for revenues by media or product line as broken down by segment for the three and nine months ended December 31, 2021 and 2020.

See Note 9 for revenues by media or product line as broken down by segment for the three months ended June 30, 2022 and 2021.

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

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

Three Months Ended

(Amounts in millions)

22 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.

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

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

As of June 30, 2022, the Company is not a party to any material pending claims or legal proceeding and is not aware of any other claims that it believes could, individually or in the aggregate, have a material adverse effect on the Company's financial position, results of operations or cash flows.

Insurance Litigation

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

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

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

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

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

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

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

During the nine months ended December 31, 2021, the Company settled with all of the insurers in both lawsuits, which resulted in a net settlement amount derived by the Company during the nine months ended December 31, 2021 of $ 22.7 million, which is included in the “interest and other income” line item on the unaudited condensed consolidated statement of operations.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the fiscal year ended March 31, 2022, the Company settled with all of the insurers in its previous lawsuits related to insurance reimbursements associated with its previous Starz shareholder litigation settlement, which resulted in a net settlement amount received by the Company of $ 22.7 million, of which $ 2.5 million is included in the “interest and other income” line item on the unaudited condensed consolidated statement of operations for the three months ended June 30, 2021.

Derivative Instruments and Hedging Activities

5 unchanged sentences

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

As of December 31, 2021, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 13 months from December 31, 2021):

December 31, 2021

As of June 30, 2022, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 27 months from June 30, 2022):

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

June 30, 2022

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

(Amounts in millions) (Amounts in millions)

British Pound Sterling £ 1.1 in exchange for $ 1.4 £ 0.76

British Pound Sterling 3.0 GBP in exchange for $ 4.0 0.74 GBP

Hungarian Forint 798.9 HUF in exchange for $ 2.7 300.22 HUF

Euro € 19.2 in exchange for $ 23.3 € 0.83

Canadian Dollar C$ 8.2 in exchange for $ 6.4 C$ 1.28

Euro 6.9 EUR in exchange for $ 5.1 1.35 EUR

Canadian Dollar 8.5 CAD in exchange for $ 6.7 1.26 CAD

Polish Zloty 1.8 PLN in exchange for $ 0.5 3.32 PLN

Bulgarian Lev 4.4 BGN in exchange for $ 2.7 1.66 BGN

Mexican Peso 61.1 MXN in exchange for $ 3.0 20.52 MXN

Interest Rate Swaps

6 unchanged sentences

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

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

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

May 2022 Transactions :

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

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

Simultaneously with the termination of the Terminated Swaps, the Company re-designated all other swaps previously not designated (i.e., swaps with effective dates of May 23, 2018, June 25, 2018, July 31, 2018 and December 24, 2018 (the "Re-designated Swaps")) as cash flow hedges of variable rate debt with an aggregate notional amount of $ 1.4 billion, as presented in the Designated Cash Flow Hedges table below.

In addition to the $ 1.4 billion Re-designated Swaps, the Company also has $ 300.0 million of other interest rate swaps designated as cash flow hedges as of June 30, 2022.

Accordingly, at June 30, 2022, the Company has a total of $ 1.7 billion of interest rate swaps designated as cash flow hedges (see Designated Cash Flow Hedges table below).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Designated Cash Flow Hedges.

As of December 31, 2021, the Company had the following designated cash flow hedge pay-fixed interest rate swaps outstanding (all related to the Company's LIBOR-based debt, see Note 5 and Note 6):

Terminated Swaps:

Designated Cash Flow Hedges at March 31, 2022:

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

2 unchanged sentences

May 19, 2020 $ 350.0 2.531 % March 23, 2027 (2)

June 15, 2020 $ 150.0 2.343 % March 23, 2027 (2)

3 unchanged sentences

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

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

Not Designated.

As of December 31, 2021, the Company had the following pay-fixed receive-variable and offsetting pay-variable receive-fixed interest rate swaps outstanding, which are not designated as cash flow hedges:

Pay-Fixed Receive-Variable (1)

Offsetting Pay-Variable Receive-Fixed (1)

Effective Date Notional Amount Fixed Rate Paid Effective Date Notional Amount Fixed Rate Received Maturity Date

(in millions) (in millions)

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

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

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

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

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

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

Total $ 1,400.0 Total $ 1,400.0

__________________

(1) During the fiscal year ended March 31, 2021, the Company completed a series of transactions to amend and extend certain interest rate swap agreements, and as part of these transactions, the $ 1.4 billion pay-fixed receive-variable interest rate swaps presented in the table above were de-designated, and the Company entered into $ 1.4 billion of pay-variable receive-fixed interest rate swaps, as presented in the table above, which are designed to offset the terms of the $ 1.4 billion of pay-fixed receive-variable swaps in the table above.

At the time of the de-designation of the above $ 1.4 billion in pay-fixed receive-variable interest rate swaps, there was approximately $ 163.0 million of unrealized losses recorded in accumulated other comprehensive income (loss).

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

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

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

Not Designated Cash Flow Hedges at March 31, 2022:

Effective Date Notional Amount Fixed Rate Received Maturity Date

(in millions)

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

August 14, 2020 $ 200.0 2.723 % March 23, 2025

May 19, 2020 $ 300.0 2.885 % March 23, 2025

May 19, 2020 $ 50.0 2.744 % March 23, 2025

June 15, 2020 $ 100.0 2.808 % March 23, 2025

June 15, 2020 $ 50.0 2.728 % March 23, 2025

Total $ 1,400.0

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

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

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

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Statement Effect of Derivatives

Unaudited condensed consolidated statements of operations and comprehensive income (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 income (loss) for the three and nine months ended December 31, 2021 and 2020:

Three Months Ended Nine Months Ended

December 31, December 31,

Designated Cash Flow Hedges.

As of June 30, 2022, the Company had the following designated cash flow hedge pay-fixed interest rate swaps outstanding (all related to the Company's LIBOR-based debt, see Note 5 and Note 6):

Effective Date Notional Amount Fixed Rate Paid Maturity Date

(in millions)

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

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

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

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

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

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

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

Total $ 1,700.0

__________________

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

Financial Statement Effect of Derivatives

Unaudited condensed consolidated statements of operations and comprehensive loss:

The following table presents the pre-tax effect of the Company's derivatives on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended June 30, 2022 and 2021:

Three Months Ended

(Amounts in millions)

1 unchanged sentence

Forward exchange contracts

Gain recognized in accumulated other comprehensive loss $ 1.0 $ 2.0 $ 1.2 $ 1.5

Gain reclassified from accumulated other comprehensive loss into direct operating expense $ 1.0 $ 0.3 $ 0.6 $ 0.3

Loss recognized in accumulated other comprehensive income $ ( 0.4 ) $ ( 0.2 )

Loss reclassified from accumulated other comprehensive income into direct operating expense $ ( 0.9 ) $ ( 0.3 )

Interest rate swaps

Gain (loss) recognized in accumulated other comprehensive loss $ 8.3 $ 16.7 $ ( 21.4 ) $ ( 7.2 )

Loss reclassified from accumulated other comprehensive loss into interest expense $ ( 4.2 ) $ ( 3.7 ) $ ( 11.5 ) $ ( 16.4 )

Gain (loss) recognized in accumulated other comprehensive income $ 36.7 $ ( 36.2 )

Loss reclassified from accumulated other comprehensive income into interest expense $ ( 6.1 ) $ ( 3.7 )

Derivatives not designated as cash flow hedges:

Forward exchange contracts

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

Interest rate swaps

Loss reclassified from accumulated other comprehensive loss into interest expense $ ( 8.5 ) $ ( 8.5 ) $ ( 25.5 ) $ ( 20.0 )

Loss reclassified from accumulated other comprehensive income into interest expense $ ( 5.6 ) $ ( 8.4 )

Total direct operating expense on consolidated statements of operations $ 596.5 $ 486.2

4 unchanged sentences

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

As of December 31, 2021, the gross amount of swaps in an asset and liability position that were subject to a master netting arrangement was $ 153.6 million and $ 195.2 million, respectively, resulting in an asset recorded in other assets - non current of $ 15.1 million and a liability recorded in other liabilities - non-current of $ 56.7 million.

As of March 31, 2021, the gross amount of swaps in an asset and liability position that were subject to a master netting arrangement was $ 211.2 million and $ 236.3 million, respectively, resulting in an asset recorded in other assets - non-current of $ 50.8 million and a liability recorded in other liabilities - non-current of $ 75.9 million.

As of June 30, 2022, there were no swaps outstanding that were subject to

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2021 and March 31, 2021, 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, 2021

a master netting arrangement.

As of March 31, 2022, the gross amount of swaps in an asset and liability position that were subject to a master netting arrangement was $ 169.6 million and $ 147.3 million, respectively, resulting in an asset recorded in other assets - non-current of $ 32.0 million and a liability recorded in other liabilities - non-current of $ 9.8 million.

As of June 30, 2022 and March 31, 2022, the Company had the following amounts recorded in the accompanying unaudited condensed consolidated balance sheets related to the Company's use of derivatives:

June 30, 2022

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

3 unchanged sentences

Interest rate swaps — 4.2 — —

Derivatives not designated as cash flow hedges:

Interest rate swaps (1)

— ( 39.5 ) — 97.1

Fair value of derivatives $ 6.3 $ 4.2 $ 5.1 $ —

________________

(1) Includes $ 90.6 million and $ 48.1 million included in other non-current assets and other non-current liabilities, respectively, representing the financing element of certain hybrid instruments, which is offset by the pay-variable receive-fixed interest rate swaps outstanding at December 31, 2021.

March 31, 2022

9 unchanged sentences

________________

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

As of December 31, 2021, based on the current release schedule, the Company estimates approximately $ 0.3 million of losses associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive loss will be reclassified into earnings during the one-year period ending December 31, 2022.

As of December 31, 2021, the Company estimates approximately $ 42.3 million of losses recorded in accumulated other comprehensive loss associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending December 31, 2022.

(1) Includes $ 88.1 million and $ 46.0 million included in other non-current assets and other non-current liabilities, respectively, representing the financing element of certain hybrid instruments, which was offset by the pay-variable receive-fixed interest rate swaps outstanding at March 31, 2022.

As of June 30, 2022, based on the current release schedule, the Company estimates approximately $ 0.7 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income will be reclassified into earnings during the one-year period ending June 30, 2023.

As of June 30, 2022, the Company estimates approximately $ 10.9 million of losses recorded in accumulated other comprehensive income associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending June 30, 2023.

Additional Financial Information

1 unchanged sentence

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the unaudited condensed consolidated balance sheet to the total amounts reported in the unaudited condensed consolidated statement of cash flows at December 31, 2021.

At December 31, 2021, restricted cash included in other current assets represents amounts related

At June 30, 2022 and March 31, 2022, restricted cash represents amounts related to required cash reserves for interest payments associated with the Production Tax Credit Facility, IP Credit Facility and Backlog Financing Facility.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

to required cash reserves for interest payments associated with the Production Tax Credit Facility and IP Credit Facility.

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

2022 March 31,

(Amounts in millions)

1 unchanged sentence

Restricted cash included in other current assets 15.4 13.4

Restricted cash included in other non-current assets 12.0 —

Total cash, cash equivalents and restricted cash $ 405.9 $ 384.6

The composition of the Company’s other assets is as follows as of December 31, 2021 and March 31, 2021:

The composition of the Company’s other assets is as follows as of June 30, 2022 and March 31, 2022:

2022 March 31,

2 unchanged sentences

Prepaid expenses and other $ 102.3 $ 102.3

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

Product inventory 13.9 14.1

14 unchanged sentences

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

The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the three and nine months ended December 31, 2021 and 2020.

The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the three months ended June 30, 2022 and 2021.

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 nine months ended December 31, 2021 and 2020:

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three months ended June 30, 2022 and 2021:

Three Months Ended

(Amounts in millions)

2 unchanged sentences

Loss recorded related to transfers of receivables 3.6 1.9

At December 31, 2021, 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 $ 463.7 million (March 31, 2021 - $ 562.8 million).

At June 30, 2022, 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 $ 448.7 million (March 31, 2022 - $ 460.5 million).

Pooled Monetization Agreement.

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

In December 2019, the Company entered into a revolving agreement, as amended in July 2021 and July 2022, to transfer up to $ 150.0 million of certain receivables to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred, which expires August 26, 2022.

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

The transferred receivables are fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company, which holds additional receivables in the amount of $ 52.0 million as of December 31, 2021 that are pledged as collateral under this agreement.

The transferred receivables are fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company, which holds additional receivables in the amount of $ 68.7 million as of June 30, 2022 that are pledged as collateral under this agreement.

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

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the three and nine months ended December 31, 2021 and 2020:

Three Months Ended Nine Months Ended

December 31, December 31,

2021 2020 2021 2020

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the three months ended June 30, 2022 and 2021:

Three Months Ended

(Amounts in millions)

3 unchanged sentences

Collections not reinvested and remitted or to be remitted ( 16.8 ) ( 12.4 )

Net cash proceeds paid or to be paid (1)

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

$ 19.9 $ ( 2.6 )

4 unchanged sentences

___________________

(1) In addition, during the three and nine months ended December 31, 2021, the Company repurchased $ 25.5 million of receivables previously transferred, as separately agreed upon with the third-party purchasers, in order to monetize such receivables under the individual monetization program discussed above without being subject to the collateral requirements under the pooled monetization program.

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

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

At December 31, 2021, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheet, but which the Company continues to service, related to the pooled monetization agreement was approximately $ 64.9 million (March 31, 2021 - $ 99.0 million).

At June 30, 2022, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheet, but which the Company continues to service, related to the pooled monetization agreement was approximately $ 78.5 million (March 31, 2022 - $ 79.5 million).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive Loss

The following table summarizes the changes in the components of accumulated other comprehensive loss, net of tax:

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

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the components of accumulated other comprehensive income (loss), net of tax:

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

(Amounts in millions)

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

Other comprehensive loss ( 1.2 ) ( 20.2 ) ( 21.4 )

Other comprehensive income (loss) ( 3.0 ) 36.3 33.3

Reclassifications to net loss (1)

December 31, 2021 $ ( 16.3 ) $ ( 52.0 ) $ ( 68.3 )

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

March 31, 2021 $ ( 15.1 ) $ ( 68.2 ) $ ( 83.3 )

Other comprehensive income (loss) 0.1 ( 36.4 ) ( 36.3 )

Reclassifications to net income (1)

December 31, 2020 $ ( 13.2 ) $ ( 156.9 ) $ ( 170.1 )

Reclassifications to net loss (1)

June 30, 2021 $ ( 15.0 ) $ ( 92.2 ) $ ( 107.2 )

___________________

(1) Represents a gain of $ 0.6 million included in direct operating expense and a loss of $ 37.0 million included in interest expense on the unaudited condensed consolidated statement of operations in the nine months ended December 31, 2021 (nine months ended December 31, 2020 - gain of $ 0.3 million included in direct operating expense and loss of $ 36.4 million included in interest expense) (see Note 16).

(1) Represents a loss of $ 0.9 million included in direct operating expense and a loss of $ 11.7 million included in interest expense on the unaudited condensed consolidated statement of operations in the three months ended June 30, 2022 (three months ended June 30, 2021 - loss of $ 0.3 million included in direct operating expense and loss of $ 12.1 million included in interest expense) (see Note 16).

Supplemental Cash Flow Information

Significant non-cash transactions during the nine months ended December 31, 2021 and 2020 include certain interest rate swap agreements, which are discussed in Note 16, "Derivative Instruments and Hedging Activities".

The supplemental schedule of non-cash investing and financing activities is presented below:

Nine Months Ended

(Amounts in millions)

Non-cash investing activities:

Accrued equity-method investment $ 19.0 $ —

Decrease in finance lease right-of-use asset due to a reassessment event (1)

$ — $ ( 42.0 )

Non-cash financing activities:

Decrease in finance lease liability due to a reassessment event (1)

$ — $ ( 48.6 )

______________

(1) During the nine months ended December 31, 2020, the Company reassessed the lease term of the Starz commercial building, which resulted in a change in classification of this lease from a finance lease to an operating lease.

Significant non-cash transactions during the three months ended June 30, 2022 and 2021 include certain interest rate swap agreements, which are discussed in Note 16, "Derivative Instruments and Hedging Activities".

There were no significant non-cash investing or financing activities for the three months ended June 30, 2022 and 2021.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Supplemental cash flow information related to leases was as follows:

Nine Months Ended

(Amounts in millions)

Right-of-use assets obtained in exchange for new lease obligations:

Operating leases $ 54.3 $ 14.2

Increase in right-of-use assets and lease liability due to a reassessment event (1) :

Operating leases - increase in right-of-use assets $ — $ 6.0

Operating leases - increase in lease liability $ — $ 12.6

______________

Subsequent Events

Senior Notes Repurchases.

In July 2022, the Company repurchased $ 18.7 million principal amount of the 5.500 % Senior Notes for $ 14.6 million, together with accrued and unpaid interest.

Backlog Financing Facility.

In August 2022, the Company amended its Backlog Financing Facility and increased the maximum principal amount of the Backlog Financing Facility from $ 125.0 million to $ 175.0 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