What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-02-09 · 295 added, 508 removed, 776 unchanged (51% of the section changed)

15 unchanged sentences

Total assets $ 7,462.2 $ 7,426.2

Accounts payable and accrued liabilities $ 588.0 $ 585.8

Accounts payable $ 350.3 $ 368.1

Content related payables 203.1 184.1

Other accrued liabilities 280.2 273.4

Participations and residuals 526.6 549.3

Film related and other obligations 1,261.2 951.1

Film related obligations 1,314.0 1,007.2

Debt - short term portion 43.6 41.4

3 unchanged sentences

Participations and residuals 347.4 329.6

Film related and other obligations 1,094.9 729.0

Film related obligations 858.8 1,016.4

Other liabilities 304.7 317.9

1 unchanged sentence

Deferred tax liabilities 32.0 31.8

Redeemable noncontrolling interests 357.1 321.2

Total liabilities 6,386.8 6,296.6

Commitments and contingencies (Note 14)

Redeemable noncontrolling interests 347.2 343.6

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

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Total equity 728.2 786.0

Total liabilities and equity $ 7,592.5 $ 8,991.2

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

See accompanying notes.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

Three Months Ended

(Amounts in millions, except per share amounts)

5 unchanged sentences

Restructuring and other 32.0 8.0

Goodwill impairment — — 1,475.0 —

Total expenses 925.4 962.1

Operating income (loss) 7.8 9.3 ( 1,808.1 ) 59.4

Operating loss ( 16.8 ) ( 68.2 )

Interest expense ( 62.0 ) ( 46.1 )

2 unchanged sentences

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

Gain (loss) on investments 43.4 ( 0.2 ) 42.1 1.2

Gain on investments — 1.8

Equity interests income (loss) ( 0.3 ) 0.9

Income (loss) before income taxes 20.8 ( 39.4 ) ( 1,904.2 ) ( 75.8 )

Loss before income taxes ( 61.7 ) ( 116.6 )

Income tax provision ( 9.8 ) ( 6.0 )

Net income (loss) 15.2 ( 48.9 ) ( 1,920.8 ) ( 97.4 )

Net loss ( 71.5 ) ( 122.6 )

Net loss attributable to noncontrolling interests 0.8 3.6

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

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 70.7 ) $ ( 119.0 )

1 unchanged sentence

shareholders:

Basic net income (loss) per common share $ 0.07 $ ( 0.20 ) $ ( 8.41 ) $ ( 0.37 )

Diluted net income (loss) per common share $ 0.07 $ ( 0.20 ) $ ( 8.41 ) $ ( 0.37 )

Basic net loss per common share $ ( 0.31 ) $ ( 0.53 )

Diluted net loss per common share $ ( 0.31 ) $ ( 0.53 )

Weighted average number of common shares outstanding:

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LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

(Amounts in millions)

Net income (loss) $ 15.2 $ ( 48.9 ) $ ( 1,920.8 ) $ ( 97.4 )

Net loss $ ( 71.5 ) $ ( 122.6 )

Foreign currency translation adjustments, net of tax 0.8 ( 3.0 )

Net unrealized gain on cash flow hedges, net of tax 16.9 48.9

Comprehensive income (loss) 27.2 ( 28.0 ) ( 1,815.7 ) ( 82.4 )

Comprehensive loss ( 53.8 ) ( 76.7 )

Comprehensive loss attributable to noncontrolling interests 0.8 3.6

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

Comprehensive loss attributable to Lions Gate Entertainment Corp.

shareholders $ ( 53.0 ) $ ( 73.1 )

3 unchanged sentences

Three Months Ended

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

Common Shares Common Shares

Number Amount Number Amount

(Amounts in millions)

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

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

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

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

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

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

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

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

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 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

_____________________

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

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Nine Months Ended

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

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

Shareholders' Equity Noncontrolling Interests (a) Total Equity

3 unchanged sentences

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

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

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

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

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

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

1 unchanged sentence

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

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

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

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

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

_____________________

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

Three Months Ended

(Amounts in millions)

1 unchanged sentence

Net loss $ ( 71.5 ) $ ( 122.6 )

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

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

Depreciation and amortization 44.4 42.4

3 unchanged sentences

Other amortization 11.8 23.1

Goodwill impairment 1,475.0 —

Content and other impairments 299.7 —

Content impairments 28.0 —

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

4 unchanged sentences

Proceeds from the termination of interest rate swaps — 188.7

Accounts receivable, net and other assets ( 74.5 ) ( 153.2 )

Accounts receivable, net 76.7 12.0

Investment in films and television programs and program rights, net ( 445.4 ) ( 608.4 )

Other assets ( 1.5 ) ( 6.6 )

Accounts payable and accrued liabilities ( 20.3 ) ( 51.8 )

Participations and residuals ( 7.4 ) ( 26.4 )

Program rights and other film obligations ( 18.1 ) 25.0

Content related payables 12.2 49.3

Deferred revenue 39.7 13.7

Net Cash Flows Used In Operating Activities ( 128.0 ) ( 489.8 )

Net Cash Flows Provided By (Used In) Operating Activities 29.2 ( 0.2 )

Investing Activities:

Proceeds from the sale of Pantaya — 123.6

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

Proceeds from the sale of other investments — 2.3

Investment in equity method investees and other — ( 7.5 )

Distributions from equity method investees — 3.2

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

Increase in loans receivable ( 0.9 ) —

4 unchanged sentences

Debt - repurchases and repayments ( 560.1 ) ( 715.2 )

Film related and other obligations - borrowings 1,384.0 954.0

Film related and other obligations - repayments ( 694.8 ) ( 305.3 )

Film related obligations - borrowings 569.9 522.9

Film related obligations - repayments ( 423.7 ) ( 152.6 )

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

Purchase of noncontrolling interest ( 0.6 ) —

Distributions to noncontrolling interest — ( 1.7 )

12 unchanged sentences

(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.

The Company’s film, television, subscription and location-based entertainment businesses are backed by an 18,000 -title library and a valuable collection of iconic film and television franchises.

Basis of Presentation

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

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

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

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

GAAP for complete financial statements.

The accompanying unaudited condensed consolidated financial statements should be read together with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

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

1 unchanged sentence

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 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.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

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

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Actual results could differ from such estimates.

Recent Accounting Pronouncements

Accounting Guidance Adopted in Fiscal 2023

Government Assistance:

In November 2021, the Financial Accounting Standards Board ("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.

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, and therefore will be effective beginning with the Company's financial statements issued for the year ending 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)

Accounting Guidance Adopted in Fiscal 2022

Reference Rate Reform:

In March 2020, the 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.

In December 2022, the FASB issued final guidance deferring the sunset date of the transition relief.

The guidance is applicable to contract modifications made between March 12, 2020 and December 31, 2024 and hedging relationships that exist as of the beginning of an interim period that includes March 12, 2020 and new eligible hedging relationships designated in subsequent periods.

The Company adopted this guidance on July 1, 2021 and is applying its provisions prospectively through December 31, 2024, with no material impact to the Company’s financial statements.

On July 15, 2021, the Company purchased approximately 200 feature film titles (the "Spyglass Library") from Spyglass Media Group, LLC ("Spyglass").

The Company also formed a strategic content partnership through an investment of a minority preferred equity interest in Spyglass.

The purchase price, including acquisition costs, of the Spyglass Library and preferred equity interest was $ 191.4 million, of which $ 171.4 million was paid at closing, $ 10.0 million was paid in July 2022, and the remaining $ 10.0 million 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 the Company's unaudited condensed consolidated balance sheet.

The equity interest was accounted for as an equity-method investment (see Note 4).

Investment in Films and Television Programs and Licensed Program Rights

17 unchanged sentences

Investment in films and television programs and licensed program rights, net $ 3,008.1 $ 2,947.9

At December 31, 2022, acquired film and television libraries have remaining unamortized costs of $ 138.4 million, which are monetized individually and are being amortized using the individual-film-forecast method over a remaining period of approximately 18.4 years (March 31, 2022 - unamortized costs of $ 149.9 million).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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, 2022 and 2021, 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,

2022 2021 2022 2021

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

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

Three Months Ended

(Amounts in millions)

4 unchanged sentences

$ 359.9 $ 472.0

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The following table sets forth impairments by segment and the line item in our unaudited condensed consolidated statement of operations they are recorded in for the three and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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

Three Months Ended

(Amounts in millions)

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Television Production — 1.2

Included in restructuring and other:

Impairments not included in segment operating results (1) :

80.8 — 293.8 —

$ 81.4 $ 2.6 $ 299.6 $ 29.3

Included in restructuring and other 28.0 —

________________

(1) Represents charges related to the Media Networks restructuring plan initiatives, including content impairment of programming in certain international territories associated with the restructuring of LIONSGATE+ (formerly STARPLAY International), and individual content charges pursuant to a strategic review of content performance across Starz's domestic and international platforms resulting in certain programming being removed from those platforms and written down to fair value.

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

See Note 12 for further information.

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$ 64.5 $ 64.7

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Equity Method Investments:

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STARZPLAY Arabia (Playco Holdings Limited) offers a STARZ-branded online subscription video-on-demand service in the Middle East and North Africa.

On October 17, 2022, the Company sold a portion of its ownership interest in STARZPLAY Arabia and received net proceeds of $ 43.4 million, and the Company recorded a gain of $ 43.4 million on the sale which is included in gain (loss) on investments in our unaudited condensed consolidated statement of operations.

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

Roadside Attractions .

8 unchanged sentences

with offices in London and Los Angeles.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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Non-current liabilities $ 65.9 $ 65.0

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

Three Months Ended

(Amounts in millions)

2 unchanged sentences

Net loss $ ( 5.9 ) $ ( 2.0 )

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Picture Television

Production Media Networks Total

(Amounts in millions)

Balance as of March 31, 2022 $ 393.7 $ 401.9 $ 1,968.9 $ 2,764.5

Impairments — — ( 1,475.0 ) ( 1,475.0 )

Balance as of December 31, 2022 $ 393.7 $ 401.9 $ 493.9 $ 1,289.5

For the second quarter ended September 30, 2022, due to continued adverse macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began implementing a plan to restructure its LIONSGATE+ business (formerly STARZPLAY International).

This restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan).

The Company's Starz domestic operations have also been impacted by these current market conditions, and the Company has revised its subscriber growth and forecasted cash flow assumptions and implemented certain cost-saving measures.

Additionally, companies in the media and entertainment industry, and particularly those with significant streaming platforms, have experienced a decline in market valuations, and reflecting this industry trend, as well as potential capital market transactions, and the factors discussed above, the market price of the Company's common shares had declined significantly through September 30, 2022.

Accordingly, for the second quarter ended September 30, 2022, the Company updated its quantitative impairment assessment for all of its reporting units.

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

Based on its quantitative impairment assessment, the Company determined that the fair value of its reporting units exceeded the carrying values for all of its reporting units, except the Media Networks reporting unit which was previously disclosed as a reporting unit "at risk" of impairment.

The analysis resulted in a goodwill impairment charge of $ 1.475 billion in the second quarter ended September 30, 2022 related to the Company's Media Networks reporting unit goodwill, which is recorded in the "goodwill impairment" line item in the unaudited condensed consolidated statement of operations in the nine months ended December 31, 2022.

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

During the third quarter ended December 31, 2022, the Company performed a qualitative goodwill impairment assessment for all reporting units which considered the continuing micro and macroeconomic environment, industry considerations, reporting unit performance and updated forecasts, and determined that since the prior quarter's quantitative assessment, there were no events or circumstances that rise to a level that would more-likely-than-not reduce the fair value of those reporting units below their carrying values;

therefore, no quantitative goodwill impairment analysis was performed.

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:

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

2023 March 31,

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5.500 % Senior Notes

857.6 1,000.0

Total corporate debt 1,966.1 2,059.9

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Revolving Credit Facility Availability of Funds & Commitment Fee.

The Revolving Credit Facility provides for borrowings and letters of credit up to an aggregate of $ 1.25 billion, and at December 31, 2022 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, 2023 there was $ 1.25 billion available.

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

There were no letters of credit outstanding at December 31, 2022.

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

The Company is required to pay a quarterly commitment fee on the Revolving Credit Facility of 0.250 % to 0.375 % per annum, depending on the achievement of certain leverage ratios, as defined in the credit and guarantee agreement dated December 8, 2016, as amended (the "Credit Agreement"), on the total Revolving Credit Facility of $ 1.25 billion less the amount drawn.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Maturity Date:

• 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).

April 6, 2026.

The outstanding amounts may become due on December 23, 2024 (i.e., 91 days prior to March 24, 2025) prior to its maturity on April 6, 2026 in the event that the aggregate principal amount of outstanding Term Loan B in excess of $ 250 million has not been repaid, refinanced or extended to have a maturity date on or after July 6, 2026.

The Company expects to refinance and extend the maturity date of the Term Loan B prior to December 23, 2024 such that the maturity of the revolving credit facility and Term Loan A are not accelerated.

• Term Loan B:

March 24, 2025.

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

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

• Revolving Credit Facility & Term Loan A:

The Revolving Credit Facility and term loan A facility due April 2026 (the "Term Loan A") bear interest at a rate per annum equal to 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 6.14 % as of December 31, 2022, before the impact of interest rate swaps).

As amended on June 14, 2023, the Revolving Credit Facility and term loan A facility due April 2026 (the "Term Loan A") bear interest at a rate per annum equal to SOFR plus 0.10 % plus 1.75 % margin (or an alternative base rate plus 0.75 %), with a SOFR floor of zero (prior to the amendment, bore interest at LIBOR plus 1.75 % margin, with a LIBOR floor of zero ).

The margin is subject to potential increases of up to 50 basis points ( two ( 2 ) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Credit Agreement (effective interest rate of 6.99 % as of June 30, 2023, before the impact of interest rate swaps).

• Term Loan B:

The term loan B facility due March 2025 (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 6.64 % as of December 31, 2022, before the impact of interest rate swaps).

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

Required Principal Payments:

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Optional Prepayment:

• Revolving Credit Facility & Term Loan A:

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

• Term Loan B:

The Company may voluntarily prepay the Term Loan B at any time without premium or penalty.

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

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

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

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

As of December 31, 2022, the Company was in compliance with all applicable covenants.

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

Change in Control.

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

Potential Impact of LIBOR Transition.

The Chief Executive of the U.K.

Financial Conduct Authority (the “FCA”), which regulates the LIBOR has announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after the end of 2021.

For U.S dollar LIBOR, publication of the one-week and two-month LIBOR settings ceased on December 31, 2021, and publication of the overnight and 12-month LIBOR settings will cease after June 30, 2023.

Immediately after June 30, 2023, the one-month, three-month and six-month U.S.

dollar LIBOR settings will no longer be representative.

Given these changes, the LIBOR administrator has advised that no new contracts using U.S.

dollar LIBOR should be entered into after December 31, 2021.

It is also possible that U.S.

LIBOR will be discontinued or modified prior to June 30, 2023.

The Company is unable to predict whether or when an alternative reference rate will become a standard global benchmark and suitable replacement for LIBOR.

In July 2021, the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions and other market participants, recommended replacing U.S.

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.

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

Under the terms of the Company's Credit Agreement, in the event of the discontinuance of LIBOR, a mutually agreed-upon alternate benchmark rate will be established to replace LIBOR.

The Company and Lenders (as defined in the Credit Agreement) shall, in good faith, endeavor to establish an alternate benchmark rate that gives due consideration to prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and which places the lenders under the Credit Agreement and the Company in the same economic position that existed immediately prior to the discontinuation of LIBOR.

The Company does not anticipate that the discontinuance or modification of LIBOR will materially impact its liquidity or financial position.

LIONS GATE ENTERTAINMENT CORP.

15 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, 2022, the Company was in compliance with all applicable covenants.

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

Change in Control.

2 unchanged sentences

Capacity to Pay Dividends

At December 31, 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 $ 1,920.8 million and accumulated deficit of $ 2,317.9 million were deemed free of restrictions from paying dividends at December 31, 2022.

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

Debt Transactions:

Senior Notes Repurchases.

In the three months ended June 30, 2023, the Company repurchased $ 85.0 million principal amount of the 5.500 % Senior Notes for $ 61.4 million, together with accrued and unpaid interest.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Senior Notes Redemption and Issuance.

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

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

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

Credit Agreement Amendment.

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

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 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).

Gain (Loss) on Extinguishment of Debt:

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 and nine months ended December 31, 2022 and 2021, the Company recorded a (gain) loss on extinguishment of debt related to the transactions described above as summarized in the table below:

During the three months ended June 30, 2023 and 2022, the Company recorded a gain (loss) on extinguishment of debt related to the transactions described above as summarized in the table below:

Three Months Ended

December 31, Nine Months Ended

2022 2021 2022 2021

Gain (Loss) on Extinguishment of Debt:

Senior Notes repurchases $ 21.2 $ —

Term Loan A prepayment — ( 1.3 )

Senior Notes repurchases in 2022;

Senior Notes redemption and issuance in 2021 ( 38.2 ) — ( 41.6 ) 24.7

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

Termination of a portion of Revolving Credit Facility commitments — 1.1 — 1.1

Term Loan B repurchases and other — — — 0.7

$ 21.2 $ ( 1.3 )

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Film Related and Other Obligations

Film Related Obligations

2023 March 31,

(Amounts in millions)

Program rights and film obligations $ 260.9 $ 278.4

Film related obligations:

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Less current portion ( 1,314.0 ) ( 1,007.2 )

Total non-current film related and other obligations $ 1,094.9 $ 729.0

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.

Film Related Obligations

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

Total non-current film related obligations $ 858.8 $ 1,016.4

Production Loans .

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film or television show), and $ 87.9 million are unsecured.

Programming Notes .

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

The Company's programming notes have contractual repayment dates in January and April 2023, and incur SOFR and LIBOR-based interest at a weighted average rate of 7.93 %.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Production Tax Credit Facility.

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

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

The maximum principal amount of the Production Tax Credit Facility is $ 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.

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

Advances under the Production Tax Credit Facility bear interest at a rate equal to SOFR plus 0.10 % to 0.25 % depending on the SOFR term (i.e., one, three or six months), plus 1.50 % per annum or the base rate plus 0.50 % per annum (effective interest rate of 5.96 % at December 31, 2022).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

June 30, 2023).

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

As of December 31, 2022, there were no material amounts available under the Production Tax Credit Facility.

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

Programming Notes .

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

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

IP Credit Facility.

In July 2021, as amended in September 2022, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the "IP Credit Facility") based on and secured by the collateral consisting solely of certain of the Company’s rights in certain library titles, including the Spyglass and other recently acquired libraries.

The maximum principal amount of the IP Credit Facility is $ 161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries.

9 unchanged sentences

July 30, 2027 $ 161.9 July 30, 2027

Advances under the IP Credit Facility bear interest at a rate equal to, at the Company’s option, SOFR plus 0.11 % to 0.26 % depending on the SOFR term (i.e., one or three months) plus 2.25 % per annum (with a SOFR floor of 0.25 %) or the base rate plus 1.25 % per annum (effective interest rate of 7.02 % at December 31, 2022).

The IP Credit Facility matures on July 30, 2027.

4 unchanged sentences

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

The applicable margin is subject to a potential increase to either 1.25 % or 1.50 % based on the weighted average credit quality rating of the collateral contributed to the facility (effective interest rate of 5.61 % at December 31, 2022).

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

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

As of December 31, 2022, there was $ 175.0 million outstanding under the Backlog Facility, and there were no amounts available under the Backlog Facility (March 31, 2022 - no amounts outstanding).

In June 2022, the Company borrowed $ 118.6 million under a loan agreement which was secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements (the "June 2022 Distribution Loan"), which was to mature on December 28, 2025.

The June 2022 Distribution Loan was fully repaid, with $ 18.6 million repaid during the quarter ended September 30, 2022, and the remaining outstanding amount of $ 100.0 million repaid on October 3, 2022.

In September 2022, the Company borrowed $ 43.4 million under a loan agreement which matures on March 28, 2026 (the "September 2022 Distribution Loan") and bears interest at a rate equal to Term SOFR plus 0.11 %, plus an applicable margin amounting to 1.50 % per annum (effective interest rate of 5.97 % at December 31, 2022).

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

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

In December 2022, the Company borrowed $ 16.2 million under a loan agreement which matures on November 1, 2025 (the "December 2022 Distribution Loan"), and bears interest at a rate equal to Term SOFR plus 0.11 %, plus an applicable margin amounting to 2.10 % per annum (effective interest rate of 7.35 % at June 30, 2023).

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In December 2022, the Company borrowed $ 16.2 million under a loan agreement which matures on November 1, 2025 (the "December 2022 Distribution Loan", and together with the September 2022 Distribution Loan and June 2022 Distribution Loan, the "Distribution Loans"), and bears interest at a rate equal to Term SOFR plus 0.11 %, plus an applicable margin amounting to 2.10 % per annum (effective interest rate of 6.57 % at December 31, 2022).

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

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

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

Outstanding loan balances under the Distribution Loans must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees.

As of December 31, 2022, $ 58.6 million remains outstanding under the Distribution Loans.

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

Fair Value Measurements

9 unchanged sentences

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

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

December 31, 2022 March 31, 2022

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

June 30, 2023 March 31, 2023

Level 1 Level 2 Total Level 1 Level 2 Total

(Amounts in millions)

Equity securities with a readily determinable fair value $ — $ — $ — $ 0.5 $ — $ 0.5

Forward exchange contracts (see Note 15)

4 unchanged sentences

— ( 0.4 ) ( 0.4 ) — ( 0.1 ) ( 0.1 )

Interest rate swaps (see Note 17)

— — — — 28.6 28.6

________________

(1) Amounts at March 31, 2022 exclude $ 88.1 million of financing component of interest rate swaps presented in the table below ( none at December 31, 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 obligations, and interest rate swaps at December 31, 2022 and March 31, 2022:

December 31, 2022 March 31, 2022

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

June 30, 2023 March 31, 2023

(Amounts in millions)

11 unchanged sentences

IP Credit Facility 130.4 133.1 140.8 143.8

Financing component of interest rate swaps (2)

________________

(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 March 31, 2022 include $ 88.1 million recorded as a reduction of assets under master netting arrangements ( none at December 31, 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, 2022 and March 31, 2022.

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

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

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

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)

4 unchanged sentences

Cash distributions ( 0.6 ) ( 1.7 )

Purchase of noncontrolling interest ( 0.6 ) —

Ending balance $ 347.2 $ 336.6

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

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

3 Arts Entertainment.

The noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable beginning May 29, 2023, for a 60 day period.

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

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

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

Beginning 30 days after the expiration

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

In addition, the noncontrolling interest holders have continued as employees of 3 Arts Entertainment.

Pursuant to the various 3 Arts Entertainment acquisition and related agreements, a portion of the noncontrolling interest holders' participation in the put and call proceeds is based on the noncontrolling interest holders' performance during the period.

Further, if the employment of a noncontrolling interest holder is terminated, under certain circumstances, their participation in distributions cease and the put and call value is discounted from the fair value of their equity ownership percentage.

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

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

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

Accordingly, $ 38.3 million was initially recorded as a deferred compensation arrangement within other current and non-current assets and was amortized in general and administrative expenses over the five-year period.

Pilgrim Media Group.

Pursuant to an amendment dated April 2, 2021, the put and call rights associated with the Pilgrim Media Group noncontrolling interest were extended and modified, such that the noncontrolling interest holder had a right to put and the Company had a right to call a portion of the noncontrolling interest, equal to 25 % of Pilgrim Media Group, at fair value, exercisable for thirty ( 30 ) days beginning November 12, 2022.

On November 14, 2022, the noncontrolling interest holder exercised the right to put a portion of the noncontrolling interest, equal to 25 % of Pilgrim Media Group.

As of December 31, 2022, the purchase of shares pursuant to the exercise of the put had not been completed.

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

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

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

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

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

The amount of the redemption value in excess of the historical values of the noncontrolling interest, if any, is recognized as an increase to redeemable noncontrolling interest and a charge to retained earnings or accumulated deficit.

The Company has other immaterial redeemable noncontrolling interests.

Other Noncontrolling Interests

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

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

The Company's Media Networks segment generates revenue primarily from the distribution of the Company's STARZ premium subscription video services.

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, 2022 and 2021:

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

Three Months Ended

(Amounts in millions)

22 unchanged sentences

International 43.7 31.6

380.3 388.9 1,157.5 1,155.9

Intersegment eliminations ( 97.5 ) ( 198.4 )

1 unchanged sentence

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

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at December 31, 2022 are as follows:

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

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

6 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenues of $ 34.4 million and $ 116.6 million, including variable and fixed fee arrangements, were recognized during the three and nine months ended December 31, 2022, respectively, from performance obligations satisfied prior to March 31, 2022.

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

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

1 unchanged sentence

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

See the unaudited condensed consolidated balance sheets or Note 18 for accounts receivable, contract assets and deferred revenue balances at December 31, 2022 and March 31, 2022.

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

Accounts Receivable.

5 unchanged sentences

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

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

Uncollectible accounts written-off December 31, 2022

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

June 30, 2023

(Amounts in millions)

Trade accounts receivable $ 11.5 $ ( 1.0 ) $ ( 0.4 ) $ 10.1

Provision for doubtful accounts $ 9.2 $ — $ ( 3.3 ) $ 5.9

_______________________

(1) Represents collections on accounts receivable previously reserved.

(1) Represents primarily accounts receivable previously reserved for bad debt from customers in Russia, related to Russia's invasion of Ukraine.

Contract Assets.

1 unchanged sentence

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

See Note 18 for contract assets at December 31, 2022 and March 31, 2022.

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

Deferred Revenue.

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

Revenues of $ 11.4 million and $ 141.8 million, respectively, were recognized during the three and nine months ended December 31, 2022 related to the balance of deferred revenue at March 31, 2022.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income (Loss) Per Share

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

Basic net income (loss) per share for the three and nine months ended December 31, 2022 and 2021 is presented below:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

(Amounts in millions, except per share amounts)

Basic Net Income (Loss) Per Common Share:

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

shareholders $ 16.6 $ ( 45.6 ) $ ( 1,913.5 ) $ ( 83.5 )

Weighted average common shares outstanding 228.8 225.0 227.4 223.7

Basic net income (loss) per common share $ 0.07 $ ( 0.20 ) $ ( 8.41 ) $ ( 0.37 )

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, 2022 and 2021 is presented below:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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, 2023 and 2022 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 $ ( 70.7 ) $ ( 119.0 )

Weighted average common shares outstanding 230.2 225.6

Effect of dilutive securities:

Share purchase options — — — —

Restricted share units and restricted stock 1.3 — — —

Adjusted weighted average common shares outstanding 230.1 225.0 227.4 223.7

Diluted net income (loss) per common share $ 0.07 $ ( 0.20 ) $ ( 8.41 ) $ ( 0.37 )

As a result of the net loss in the nine months ended December 31, 2022 and the three and nine months ended December 31, 2021, the dilutive effect of the share purchase options, RSUs and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share.

The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the nine months ended December 31, 2022 totaled 2.5 million (three and nine months ended December 31, 2021 - 4.5 million and 5.3 million, respectively).

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Additionally, for the three and nine months ended December 31, 2022 and 2021, 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,

2022 2021 2022 2021

Basic and diluted net loss per common share $ ( 0.31 ) $ ( 0.53 )

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

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

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

Three Months Ended

(Amounts in millions)

3 unchanged sentences

Other issuable shares 3.8 2.7

Total weighted average anti-dilutive shares issuable excluded from diluted net income (loss) per common share 35.1 18.3 28.5 18.7

Total weighted average anti-dilutive shares issuable excluded from diluted net loss per common share 21.0 22.4

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Capital Stock

(a) Common Shares

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

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

The table below outlines common shares reserved for future issuance:

2 unchanged sentences

Stock options and share appreciation rights (SARs) outstanding 21.5 24.8

Restricted stock and restricted share units — unvested 14.5 7.9

Restricted share units and restricted stock — unvested 10.4 14.0

Common shares available for future issuance 16.2 11.4

Shares reserved for future issuance 48.1 50.2

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(b) Share-based Compensation

The Company recognized the following share-based compensation expense during the three and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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

Three Months Ended

(Amounts in millions)

3 unchanged sentences

Share appreciation rights 0.7 0.3

23.3 22.6 57.7 77.5

Impact of accelerated vesting on equity awards (1)

Total share-based compensation expense $ 16.4 $ 8.4

Tax impact (2)

___________________

Increase in net loss or reduction in net income $ 20.7 $ 18.2 $ 49.4 $ 62.2

___________________

(1) Represents the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

(2) Represents the income tax benefit recognized in the unaudited condensed consolidated statements of operations for share-based compensation arrangements prior to the effects of changes in the valuation allowance.

(1) Represents the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.

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

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

Three Months Ended

(Amounts in millions)

4 unchanged sentences

Restructuring and other 0.5 0.6

$ 24.8 $ 22.6 $ 59.8 $ 77.5

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the nine months ended December 31, 2022:

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

Stock Options and SARs Restricted Stock and Restricted Share Units

5 unchanged sentences

Granted — — — — — — 0.1 $ 9.17

$ 10.27 11.9 $ 9.02

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

$ 7.15 — — ( 3.6 ) $ 9.60

$ 11.19 ( 5.0 ) $ 11.99

Forfeited or expired ( 1.6 ) $ 29.54 ( 1.7 ) $ 29.77 — — ( 0.1 ) $ 9.24

Outstanding at December 31, 2022 4.3 $ 26.31 20.6 $ 15.22 — (1)

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

$ 10.95 10.4 $ 9.43

2 unchanged sentences

During the three and nine months ended December 31, 2022 and 2021 the Company did not repurchase any common shares.

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

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

The income tax provision for the three and nine months ended December 31, 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 and nine months ended December 31, 2022 and 2021 was also impacted by an interest accrual on uncertain tax benefits, and the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

The Company's income tax provision for the three and nine months ended December 31, 2021 was also impacted by additional uncertain tax benefits related to state income taxes identified during state audits.

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

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

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

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

The Company's income tax provision for the three months ended June 30, 2023 and 2022 was also impacted by charges for interest on uncertain tax benefits, and benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Restructuring and Other

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

During the three and nine months ended December 31, 2022 and 2021, the Company also incurred certain other unusual charges or benefits, which are included in direct operating expense and distribution and marketing expense in the consolidated statements of operations as described below.

The following table sets forth restructuring and other and these other unusual charges or benefits and the statement of operations line items they are included in for the three and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

During the three months ended June 30, 2023 and 2022, the Company also incurred certain other unusual charges or benefits, which are included in direct operating expense in the consolidated statements of operations and are described below.

The following table sets forth restructuring and other and these other unusual charges or benefits and the statement of operations line items they are included in for the three months ended June 30, 2023 and 2022:

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

(Amounts in millions)

Restructuring and other:

Content and other impairments (1)

$ 80.8 $ — $ 299.7 $ —

Content impairments (1)

Severance (2)

Cash 2.4 — 14.8 3.8

Accelerated vesting on equity awards (see Note 10)

1 unchanged sentence

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

— 0.2 0.1 0.9

Transaction and other costs (benefits) (3)

( 9.4 ) 0.3 ( 0.2 ) 2.5

Total Restructuring and Other 32.0 8.0

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

Content charges included in direct operating expense (5)

COVID-19 related charges (benefit) included in:

Direct operating expense (6)

( 1.8 ) ( 2.8 ) ( 8.8 ) ( 2.3 )

Distribution and marketing expense — — — 0.3

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

Total restructuring and other and other unusual charges not included in restructuring and other $ 32.2 $ 7.0

_______________________

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) Media Networks Restructuring:

For the second quarter ended September 30, 2022, due to the macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began a plan to restructure its LIONSGATE+ business (formerly STARZPLAY International).

This restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan).

These changes in forecasted cash flow resulted in an impairment of $ 1.475 billion of goodwill related to the Media Networks segment in the second quarter ended September 30, 2022, as discussed in Note 5.

For the third quarter ended December 31, 2022, due to the continuing macro and microeconomic conditions which led to the LIONSGATE+ restructuring, the Company expanded its restructuring plan discussed above to identify additional cost-saving initiatives, which included a strategic review of content performance across Starz's domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value.

As a result of these restructuring initiatives, the Company recorded content impairment charges associated with impairment of programming related to the territories being exited and individual content abandonment upon removal of certain titles from the Starz platforms related to the Media Networks segment in the three and nine months ended December 31, 2022 of $ 80.8 million and $ 293.8 million, respectively.

The Company is in the process of executing its LIONSGATE+ restructuring plan including exiting the territories discussed above and its strategic review of content performance for consideration of removal from the Company's various platforms and estimates it will incur additional charges ranging from approximately $ 100 million to $ 125 million related to certain contractual content commitments or programming content impairment charges, among other items, as the Company fully implements the plan.

Of these total estimated future charges, the net future cash outlay is estimated to range from approximately $ 75 million to $ 100 million, which includes content commitments on content in territories being exited and estimates of payments on content that may be abandoned as part of the ongoing strategic review, as well as the incremental cost related to the restructuring.

Of the content impairment charges recorded in the nine months ended December 31, 2022, approximately $ 85 million reflects the remaining amounts payable for this content.

As the Company continues to fully implement the plan, including further strategic review of content performance, the Company may incur additional content impairment charges beyond the estimates provided.

The Company expects the restructuring plan to be substantially completed by March 31, 2023.

Other Impairments:

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

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

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

(3) 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.

(4) Transaction and other costs in the three and nine months ended December 31, 2022 and 2021 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters.

In the three and nine months ended December 31, 2022, these amounts include a benefit of $ 11.0 million for a settlement of a legal matter related to the Media Networks segment.

(5) In the nine months ended December 31, 2022, in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment, the Company wrote off approximately $ 7.2 million of development costs as a result of changes in strategy across its theatrical slate.

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

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

This plan included a strategic review of content performance across Starz's domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value.

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

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

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

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

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

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

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

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

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

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(6) Amounts reflected in direct operating expense include incremental costs associated with the pausing and restarting of productions including paying/hiring certain cast and crew, maintaining idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries of $ 2.8 million and $ 10.7 million, respectively, in the three and nine months ended December 31, 2022 (three and nine months ended December 31, 2021 - insurance recoveries of $ 5.0 million and $ 13.6 million, respectively).

In the three and nine months ended December 31, 2022 and 2021, insurance recoveries exceeded the incremental costs expensed in the period, resulting in a net benefit included in direct operating expense.

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

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

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

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

Changes in the restructuring and other severance liability were as follows for the nine months ended December 31, 2022 and 2021:

Nine Months Ended

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

Three Months Ended

(Amounts in millions)

5 unchanged sentences

_______________________

(1) As of December 31, 2022, the remaining severance liability of approximately $ 11.3 million is expected to be paid in the next 12 months.

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

LIONS GATE ENTERTAINMENT CORP.

14 unchanged sentences

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 over-the-top ("OTT") platforms and U.S.

multichannel video programming distributors ("MVPDs") including cable operators, satellite television providers and telecommunication companies (collectively, "Distributors") and on a direct-to-consumer basis through the Starz App and (ii) LIONSGATE+, which represents revenues primarily from the OTT distribution of the STARZ premium subscription video services outside of the U.S.

(formerly STARZPLAY International).

and (ii) LIONSGATE+, which represents revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services outside of the U.S.

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

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,

2022 2021 2022 2021

Three Months Ended

(Amounts in millions)

29 unchanged sentences

$ 67.9 $ 57.2

Segment profit

Segment profit (loss)

Studio Business:

12 unchanged sentences

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

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

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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

Three Months Ended

(Amounts in millions)

1 unchanged sentence

Corporate general and administrative expenses (1)

( 30.4 ) ( 23.0 )

Adjusted depreciation and amortization (2)

2 unchanged sentences

( 32.0 ) ( 8.0 )

Goodwill impairment (3)

— — ( 1,475.0 ) —

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

1.8 2.8 8.8 2.0

Content charges (5)

— — ( 7.2 ) —

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

Adjusted share-based compensation expense (5)

2 unchanged sentences

( 44.4 ) ( 48.3 )

Operating income (loss) 7.8 9.3 ( 1,808.1 ) 59.4

Operating loss ( 16.8 ) ( 68.2 )

Interest expense ( 62.0 ) ( 46.1 )

2 unchanged sentences

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

Gain (loss) on investments 43.4 ( 0.2 ) 42.1 1.2

Gain on investments — 1.8

Equity interests income (loss) ( 0.3 ) 0.9

Income (loss) before income taxes $ 20.8 $ ( 39.4 ) $ ( 1,904.2 ) $ ( 75.8 )

Loss before income taxes $ ( 61.7 ) $ ( 116.6 )

___________________

(1) Corporate general and administrative expenses include certain corporate executive expense (such as salaries and wages for the office of the Chief Executive Officer, Chief Financial Officer, General Counsel and other corporate officers), investor relations costs, costs of maintaining corporate facilities, and other unallocated common administrative support functions, including corporate accounting, finance and financial reporting, internal and external audit and tax costs, corporate and other legal support functions, and certain information technology and human resources expense.

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

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

Three Months Ended

(Amounts in millions)

3 unchanged sentences

(3) Restructuring and other includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable (see Note 12).

(3) Goodwill impairment reflects the impairment charge recorded in the nine months ended December 31, 2022 related to the Media Networks reporting unit (see Note 5).

(4) During the three and nine months ended December 31, 2022 and 2021, the Company has incurred a net benefit in direct operating expense due to insurance recoveries in excess of the incremental costs expensed in the period (see Note 14).

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

During the three months ended June 30, 2022, the Company has incurred a net benefit in direct operating expense due to insurance recoveries in excess of the incremental costs expensed in the period (see Note 12).

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

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

Three Months Ended

(Amounts in millions)

3 unchanged sentences

Adjusted share-based compensation $ 15.9 $ 7.8

(i) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

(i) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.

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

1 unchanged sentence

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,

2022 2021 2022 2021

Three Months Ended

(Amounts in millions)

Purchase accounting and related adjustments:

Direct operating $ — $ — $ 0.7 $ 0.5

General and administrative expense 16.9 15.7 46.0 42.9

General and administrative expense (i)

$ 10.0 $ 16.0

Depreciation and amortization 34.4 32.3

$ 44.4 $ 48.3

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

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

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

Three Months Ended

(Amounts in millions)

Amortization of recoupable portion of the purchase price $ 1.3 $ 1.9

Noncontrolling interest discount amortization — 4.9

Noncontrolling equity interest in distributable earnings 8.7 9.2

$ 10.0 $ 16.0

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

(Amounts in millions)

5 unchanged sentences

$ 123.6 $ 103.7

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

13 unchanged sentences

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

As of December 31, 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

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

As of June 30, 2023, the Company is not a party to any material pending claims or legal proceeding and is not aware of any other claims that it believes could, individually or in the aggregate, have a material adverse effect on the Company's financial position, results of operations or cash flows.

LIONS GATE ENTERTAINMENT CORP.

7 unchanged sentences

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

As of December 31, 2022, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 33 months from December 31, 2022):

December 31, 2022

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

June 30, 2023

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

5 unchanged sentences

Polish Zloty 8.0 PLN in exchange for $ 1.9 4.24 PLN

Hungarian Forint 41.2 HUF in exchange for $ 0.1 341.56 HUF

Mexican Peso 6.1 MXN in exchange for $ 0.2 19.77 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 a financing component (debt host) 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 December 31, 2022.

Accordingly, at December 31, 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).

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Terminated Swaps:

Designated Cash Flow Hedges at March 31, 2022:

Designated Cash Flow Hedges.

As of June 30, 2023 and March 31, 2023, the Company had the following pay-fixed interest rate swaps, which have been designated as cash flow hedges outstanding (all related to the Company's SOFR-based debt, see Note 4 and Note 5):

Effective Date Notional Amount Fixed Rate Paid Maturity Date

3 unchanged sentences

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

August 14, 2020 $ 200.0 1.840 % March 23, 2030 (2)

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

(2) These pay-fixed interest rate swaps were considered hybrid instruments with a financing component (debt host) 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

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

May 2022 Transactions :

In May 2022, the Company terminated certain of its previous interest rate swap contracts (the "Terminated Swaps").

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

Simultaneously with the termination of the Terminated Swaps, the Company re-designated all other swaps previously not designated as cash flow hedges of variable rate debt.

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

1 unchanged sentence

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.

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

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

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Designated Cash Flow Hedges.

As of December 31, 2022, the Company had the following pay-fixed interest rate swaps which have been designated as cash flow hedges outstanding (all related to the Company's LIBOR-based debt, see Note 6 and Note 7):

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 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, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

Unaudited condensed consolidated statements of operations and comprehensive loss:

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

Three Months Ended

(Amounts in millions)

1 unchanged sentence

Forward exchange contracts

Gain recognized in accumulated other comprehensive income (loss) $ 2.7 $ 1.0 $ 4.4 $ 1.2

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

Gain (loss) reclassified from accumulated other comprehensive income (loss) into direct operating expense $ 0.4 $ ( 0.9 )

Interest rate swaps

Gain (loss) recognized in accumulated other comprehensive income (loss) $ 6.5 $ 8.3 $ 87.8 $ ( 21.4 )

Gain recognized in accumulated other comprehensive income (loss) $ 27.1 $ 36.7

Gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense $ 9.1 $ ( 6.1 )

5 unchanged sentences

Unaudited condensed consolidated balance sheets:

The Company classifies its forward foreign exchange contracts and interest rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable data of

The Company classifies its forward foreign exchange contracts and interest rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (see Note 6).

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

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

similar instruments (see Note 8).

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

As of December 31, 2022, there were no swaps outstanding that were subject to 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 December 31, 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:

December 31, 2022

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

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

June 30, 2023

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

(Amounts in millions)

4 unchanged sentences

March 31, 2023

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

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

(Amounts in millions)

2 unchanged sentences

Interest rate swaps — 41.1 — —

Derivatives not designated as cash flow hedges:

Interest rate swaps (1)

— ( 77.1 ) — 56.8

Fair value of derivatives $ 2.9 41.1 $ 0.1 —

________________

(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 (debt host) of certain hybrid instruments, which was offset by the pay-variable receive-fixed interest rate swaps outstanding at March 31, 2022.

As of December 31, 2022, based on the current release schedule, the Company estimates approximately $ 3.3 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 December 31, 2023.

As of December 31, 2022, the Company estimates approximately $ 25.7 million of gains recorded in accumulated other comprehensive income associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending December 31, 2023.

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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, 2022 and March 31, 2022.

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 March 31,

4 unchanged sentences

Total cash, cash equivalents and restricted cash $ 394.1 $ 313.0

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

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

2023 March 31,

19 unchanged sentences

The Company accounts for the transfers of these receivables as a sale, removes (derecognizes) the carrying amount of the receivables from its balance sheets and classifies the proceeds received as cash flows from operating activities in the statements of cash flows.

The Company records a loss on the sale of these receivables reflecting

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

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the net proceeds received (net of any obligations incurred), less the carrying amount of the receivables transferred.

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

The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the three and nine months ended December 31, 2022 and 2021.

Individual Monetization Agreements.

1 unchanged sentence

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

The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three and nine months ended December 31, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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

Three Months Ended

(Amounts in millions)

2 unchanged sentences

Loss recorded related to transfers of receivables 4.7 3.6

At December 31, 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 $ 522.5 million (March 31, 2022 - $ 460.5 million).

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

Pooled Monetization Agreement.

In December 2019, the Company entered into a revolving agreement, as amended in September 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 July 31, 2023.

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

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

The transferred receivables are fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company, which holds additional receivables in the amount of $ 54.3 million as of December 31, 2022 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 $ 62.5 million as of June 30, 2023 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, 2022 and 2021:

Three Months Ended Nine Months Ended

December 31, December 31,

2022 2021 2022 2021

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

Three Months Ended

(Amounts in millions)

4 unchanged sentences

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

$ ( 0.2 ) $ ( 2.5 ) $ 24.7 $ ( 8.6 )

Carrying value of receivables transferred and derecognized (2)

$ 57.0 $ 20.3 $ 154.2 $ 110.9

Obligations recorded $ 1.1 $ 3.0

1 unchanged sentence

___________________

(1) In addition, during the three and nine months ended December 31, 2022, the Company repurchased $ 6.5 million and $ 27.4 million, respectively, of receivables previously transferred, as separately agreed upon with the third-party purchasers, in order to monetize such receivables under the individual monetization program discussed above without being subject to the collateral requirements under the pooled monetization program (three and nine months ended December 31, 2021 - the Company repurchased $ 25.5 million of receivables previously transferred).

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

At December 31, 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 $ 76.7 million (March 31, 2022 - $ 79.5 million).

Accumulated Other Comprehensive Income (Loss)

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

Content related payables

Content related payables include minimum guarantees and accrued licensed program rights obligations, which represent amounts payable for film or television rights that the Company has acquired or licensed.

Other Accrued Liabilities

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

Accumulated Other Comprehensive Income

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

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

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

1 unchanged sentence

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

Other comprehensive income (loss) ( 3.4 ) 92.2 88.8

Other comprehensive income 0.8 24.5 25.3

Reclassifications to net loss (1)

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

— ( 7.6 ) ( 7.6 )

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

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

___________________

(1) Represents a loss of $ 0.7 million included in direct operating expense and a loss of $ 15.6 million included in interest expense on the unaudited condensed consolidated statement of operations in the nine months ended December 31, 2022 (nine months ended December 31, 2021 - gain of $ 0.6 million included in direct operating expense and loss of $ 37.0 million included in interest expense) (see Note 17).

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

Supplemental Cash Flow Information

Significant non-cash transactions during the nine months ended December 31, 2022 and 2021 include certain interest rate swap agreements, which are discussed in Note 17, "Derivative Instruments and Hedging Activities".

There were no significant non-cash financing activities for the nine months ended December 31, 2022 and 2021.

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

Nine Months Ended

(Amounts in millions)

Non-cash investing activities:

Accrued equity-method investment $ — $ 19.0

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

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

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Subsequent Events

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

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

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

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

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