Lions Gate Entertainment Corp. LGF.B

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS

December 31,
2023

March 31,
2023

(Unaudited, amounts in millions)

ASSETS

Cash and cash equivalents

$              283.0

$              272.1

Accounts receivable, net

810.2

582.1

Other current assets

432.4

264.2

Total current assets

1,525.6

1,118.4

Investment in films and television programs and program rights, net

2,772.7

2,947.9

Property and equipment, net

95.1

89.5

Investments

71.5

64.7

Intangible assets, net

1,028.5

1,300.1

Goodwill

801.4

1,289.5

Other assets

859.9

616.1

Total assets

$          7,154.7

$          7,426.2

LIABILITIES

Accounts payable

$              306.7

$              368.1

Content related payables

282.2

184.1

Other accrued liabilities

324.8

273.4

Participations and residuals

622.7

549.3

Film related obligations

1,318.6

1,007.2

Debt - short term portion

50.3

41.4

Deferred revenue

266.5

147.2

Total current liabilities

3,171.8

2,570.7

Debt

2,238.2

1,978.2

Participations and residuals

472.0

329.6

Film related obligations

554.4

1,016.4

Other liabilities

532.9

317.9

Deferred revenue

81.5

52.0

Deferred tax liabilities

18.5

31.8

Total liabilities

7,069.3

6,296.6

Commitments and contingencies

Redeemable noncontrolling interest

409.1

343.6

EQUITY (DEFICIT)

Class A voting common shares, no par value, 500.0 shares authorized, 83.6 shares issued

(March 31, 2023 - 83.5 shares issued)

673.4

672.3

Class B non-voting common shares, no par value, 500.0 shares authorized, 151.5 shares

issued (March 31, 2023 - 145.9 shares issued)

2,459.3

2,430.9

Accumulated deficit

(3,574.6)

(2,439.6)

Accumulated other comprehensive income

116.4

120.9

Total Lions Gate Entertainment Corp. shareholders' equity (deficit)

(325.5)

784.5

Noncontrolling interests

1.8

1.5

Total equity (deficit)

(323.7)

786.0

Total liabilities, redeemable noncontrolling interest and equity (deficit)

$          7,154.7

$          7,426.2

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions, except per share amounts)

Revenues

$              975.1

$          1,000.1

$          2,899.1

$          2,769.1

Expenses

Direct operating

510.8

584.7

1,549.1

1,744.7

Distribution and marketing

220.0

171.0

686.0

567.1

General and administration

121.0

115.0

368.1

340.0

Depreciation and amortization

49.9

46.3

138.9

133.9

Restructuring and other

116.9

75.3

371.0

316.5

Goodwill and intangible asset impairment

—

—

663.9

1,475.0

Total expenses

1,018.6

992.3

3,777.0

4,577.2

Operating income (loss)

(43.5)

7.8

(877.9)

(1,808.1)

Interest expense

(67.1)

(59.6)

(192.9)

(163.0)

Interest and other income

1.8

1.7

6.5

4.8

Other expense

(2.5)

(10.7)

(19.6)

(21.1)

Gain on extinguishment of debt

—

38.2

21.2

40.3

Gain on investments, net

4.4

43.4

2.7

42.1

Equity interests income

4.2

—

5.7

0.8

Income (loss) before income taxes

(102.7)

20.8

(1,054.3)

(1,904.2)

Income tax provision

(4.7)

(5.6)

(12.5)

(16.6)

Net income (loss)

(107.4)

15.2

(1,066.8)

(1,920.8)

Less: Net loss attributable to noncontrolling interests

0.8

1.4

3.3

7.3

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

$            (106.6)

$                16.6

$        (1,063.5)

$        (1,913.5)

Per share information attributable to Lions Gate Entertainment Corp. shareholders:

Basic net income (loss) per common share

$              (0.45)

$                0.07

$              (4.56)

$              (8.41)

Diluted net income (loss) per common share

$              (0.45)

$                0.07

$              (4.56)

$              (8.41)

Weighted average number of common shares outstanding:

Basic

235.1

228.8

233.1

227.4

Diluted

235.1

230.1

233.1

227.4

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Operating Activities:

Net income (loss)

$         (107.4)

$             15.2

$      (1,066.8)

$      (1,920.8)

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

Depreciation and amortization

49.9

46.3

138.9

133.9

Amortization of films and television programs and program rights

371.2

385.1

1,138.7

1,284.4

Amortization of debt financing costs and other non-cash interest

7.5

6.3

22.0

20.1

Non-cash share-based compensation

31.7

24.8

75.3

59.8

Other amortization

11.2

14.6

35.0

55.8

Goodwill and intangible asset impairment

—

—

663.9

1,475.0

Content and other impairments

77.8

80.8

317.4

299.7

Gain on extinguishment of debt

—

(38.2)

(21.2)

(40.3)

Equity interests income

(4.2)

—

(5.7)

(0.8)

Gain on investments, net

(4.4)

(43.4)

(2.7)

(42.1)

Deferred income taxes

(4.5)

(0.2)

(13.4)

(0.5)

Changes in operating assets and liabilities:

Proceeds from the termination of interest rate swaps

—

—

—

188.7

Accounts receivable, net

(74.8)

(36.3)

57.4

(26.3)

Investment in films and television programs and program rights, net

(259.7)

(486.2)

(926.2)

(1,573.4)

Other assets

(5.7)

1.2

(24.3)

(48.2)

Accounts payable and accrued liabilities

(1.4)

(36.1)

(93.4)

(46.0)

Participations and residuals

(26.5)

89.3

10.4

84.3

Content related payables

60.9

(30.1)

57.3

(18.1)

Deferred revenue

(50.5)

18.3

38.8

(13.2)

Net Cash Flows Provided By (Used In) Operating Activities

71.1

11.4

401.4

(128.0)

Investing Activities:

Purchase of eOne, net of cash acquired

(331.1)

—

(331.1)

—

Proceeds from the sale of equity method and other investments

5.0

43.4

5.2

46.3

Investment in equity method investees and other

—

—

(11.3)

(17.5)

Increase in loans receivable

(1.5)

—

(3.6)

—

Capital expenditures

(6.4)

(15.2)

(24.7)

(36.6)

Net Cash Flows Provided By (Used In) Investing Activities

(334.0)

28.2

(365.5)

(7.8)

Financing Activities:

Debt - borrowings

1,186.0

247.0

2,270.5

1,238.0

Debt - repurchases and repayments

(821.9)

(337.3)

(1,987.4)

(1,548.3)

Film related obligations - borrowings

318.9

246.0

1,262.6

1,384.0

Film related obligations - repayments

(357.4)

(322.6)

(1,530.3)

(694.8)

Settlement of financing component of interest rate swaps

—

—

—

(134.5)

Purchase of noncontrolling interest

—

—

(0.6)

—

Distributions to noncontrolling interest

(1.1)

(2.3)

(1.7)

(4.8)

Exercise of stock options

0.2

—

0.5

3.4

Tax withholding required on equity awards

(0.3)

(1.1)

(31.0)

(17.3)

Net Cash Flows Provided By (Used In) Financing Activities

324.4

(170.3)

(17.4)

225.7

Net Change In Cash, Cash Equivalents and Restricted Cash

61.5

(130.7)

18.5

89.9

Foreign Exchange Effects on Cash, Cash Equivalents and Restricted Cash

2.5

2.3

1.7

(3.5)

Cash, Cash Equivalents and Restricted Cash - Beginning Of Period

269.2

599.4

313.0

384.6

Cash, Cash Equivalents and Restricted Cash - End Of Period

$           333.2

$           471.0

$           333.2

$           471.0

LIONS GATE ENTERTAINMENT CORP.

SEGMENT INFORMATION (Continued)

Segment information is presented in the tables below:

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Segment revenues

Studio Business:

Motion Picture

$              443.2

$              288.8

$          1,245.6

$              791.6

Television Production

248.4

605.4

860.7

1,468.6

Total Studio Business

691.6

894.2

2,106.3

2,260.2

Media Networks

417.2

380.3

1,214.9

1,157.5

Intersegment eliminations

(133.7)

(274.4)

(422.1)

(648.6)

$              975.1

$          1,000.1

$          2,899.1

$          2,769.1

Segment profit

Studio Business:

Motion Picture

$              100.4

$                76.5

$              237.1

$              182.7

Television Production

8.1

71.5

94.1

104.6

Total Studio Business⁽¹⁾

108.5

148.0

331.2

287.3

Media Networks

85.5

49.5

184.1

33.5

Intersegment eliminations

(12.0)

(8.4)

(43.8)

(31.3)

Total segment profit⁽¹⁾

$              182.0

$              189.1

$              471.5

$              289.5

Corporate general and administrative expenses

(31.1)

(21.3)

(94.2)

(69.4)

Adjusted OIBDA⁽¹⁾

$              150.9

$              167.8

$              377.3

$              220.1

(1)

See "Use of Non-GAAP Financial Measures" for the definition of Total Segment Profit, Studio Business Segment Profit and Adjusted OIBDA and reconciliation to the most directly comparable GAAP financial measure.

LIONS GATE ENTERTAINMENT CORP.

SEGMENT INFORMATION (Continued)

The following table sets forth segment information by product line for the Media Networks segment for the three and nine months ended December 31, 2023 and 2022:

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Media Networks revenue:

Starz Networks

$              342.7

$              341.7

$          1,019.9

$          1,048.7

LIONSGATE+

74.5

38.6

195.0

108.8

$              417.2

$              380.3

$          1,214.9

$          1,157.5

Media Networks segment profit (loss):

Starz Networks

$                62.5

$                58.1

$              148.4

$              135.4

LIONSGATE+

23.0

(8.6)

35.7

(101.9)

$                85.5

$                49.5

$              184.1

$                33.5

As of

As of

6/30/22

9/30/22

12/31/22

3/31/23

6/30/23

9/30/23

12/31/23

(Amounts in millions)

Starz Domestic

OTT Subscribers

12.18

12.25

11.56

12.25

11.82

12.02

12.63

Linear Subscribers

9.22

8.76

8.32

8.02

7.68

7.42

7.10

Total

21.40

21.01

19.88

20.27

19.50

19.44

19.73

LIONSGATE+ excluding territories exited or to be exited⁽¹⁾

OTT Subscribers⁽²⁾

2.29

2.75

3.17

3.47

3.73

3.77

3.25

Linear Subscribers

1.80

1.81

1.83

1.81

1.80

1.79

1.75

Total

4.09

4.56

5.00

5.28

5.53

5.56

5.00

Total Starz excluding territories exited or to be exited

OTT Subscribers⁽²⁾

14.47

15.00

14.73

15.72

15.55

15.79

15.88

Linear Subscribers

11.02

10.57

10.15

9.83

9.48

9.21

8.85

Total Starz excluding territories exited or to be exited

25.49

25.57

24.88

25.55

25.03

25.00

24.73

STARZPLAY Arabia⁽³⁾

1.94

2.00

2.10

2.55

2.80

3.04

3.19

Total Domestic and International Subscribers (including STARZPLAY

 Arabia) excluding territories exited or to be exited⁽²⁾

27.43

27.57

26.98

28.10

27.83

28.04

27.92

Supplemental Subscriber Information:

Starz North America⁽⁵⁾

OTT Subscribers

12.85

12.93

12.24

12.95

12.51

12.73

13.43

Linear Subscribers

11.03

10.57

10.15

9.83

9.48

9.21

8.85

Total

23.88

23.50

22.39

22.78

21.99

21.94

22.28

Subscribers by Platform excluding territories exited or to be exited:

OTT Subscribers⁽²⁾⁽⁴⁾

16.41

17.00

16.83

18.27

18.35

18.83

19.07

Linear Subscribers

11.02

10.57

10.15

9.83

9.48

9.21

8.85

Total Global Subscribers excluding territories exited or to be exited⁽²⁾

27.43

27.57

26.98

28.10

27.83

28.04

27.92

(1)

LIONSGATE+ consists of OTT and linear subscribers in Canada and OTT subscribers in India.

(2)

Excludes LIONSGATE+ subscribers in territories exited or to be exited in Australia, Continental Europe, Japan, Latin America and the U.K. as follows:

As of

As of

6/30/22

9/30/22

12/31/22

3/31/2023

6/30/23

9/30/23

12/31/23

(Amounts in millions)

OTT Subscribers

9.91

10.21

10.18

2.17

1.59

1.59

1.10

(3)

Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.

(4)

OTT subscribers includes subscribers of STARZPLAY Arabia, as presented above.

(5)

Starz North America subscribers include subscribers in the U.S. (as presented in the "Starz Domestic" line item) and Canada (included in the LIONSGATE+ subscriber amounts in the table above).

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF OPERATING INCOME (LOSS)

TO ADJUSTED OIBDA AND TOTAL SEGMENT PROFIT

The following table reconciles the GAAP measure, operating income (loss) to the non-GAAP measures, Adjusted OIBDA and Total Segment Profit:

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Operating income (loss)

$              (43.5)

$                  7.8

$            (877.9)

$        (1,808.1)

Goodwill and intangible asset impairment⁽¹⁾

—

—

663.9

1,475.0

Adjusted depreciation and amortization⁽²⁾

13.5

9.8

33.4

29.5

Restructuring and other⁽³⁾

116.9

75.3

371.0

316.5

COVID-19 related charges (benefit)⁽⁴⁾

(0.1)

(1.8)

(0.5)

(8.8)

Content charges⁽⁵⁾

—

—

—

7.2

Adjusted share-based compensation expense⁽⁶⁾

24.9

23.3

66.9

57.7

Purchase accounting and related adjustments⁽⁷⁾

39.2

53.4

120.5

151.1

Adjusted OIBDA

$              150.9

$              167.8

$              377.3

$              220.1

Corporate general and administrative expenses

31.1

21.3

94.2

69.4

Total Segment Profit

$              182.0

$              189.1

$              471.5

$              289.5

(1)

In the nine months ended December 31, 2023, amounts reflect the goodwill impairment charge of $493.9 million and $170.0 million for impairment of indefinite-lived trade names, both related to the Media Networks reporting unit, recorded in the quarter ended September 30, 2023. In the nine months ended December 31, 2022, amounts reflect the goodwill impairment charge of $1.475 billion related to the Media Networks reporting unit, recorded in the quarter ended September 30, 2022.

(2)

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

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Depreciation and amortization

$                49.9

$                46.3

$              138.9

$              133.9

Less: Amount included in purchase accounting and related adjustments

(36.4)

(36.5)

(105.5)

(104.4)

Adjusted depreciation and amortization

$                13.5

$                  9.8

$                33.4

$                29.5

(3)

Restructuring and other includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable, as shown in the table below:

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Restructuring and other:

Content and other impairments^(a)

$                77.8

$                80.8

$              317.4

$              299.7

Severance^(b)

Cash

23.9

2.4

32.9

14.8

Accelerated vesting on equity awards

6.8

1.5

8.4

2.1

Total severance costs

30.7

3.9

41.3

16.9

COVID-19 related charges included in restructuring and other

—

—

—

0.1

Transaction and other costs^(c)

8.4

(9.4)

12.3

(0.2)

$              116.9

$                75.3

$              371.0

$              316.5

(a)

Media Networks Restructuring:  In fiscal 2023, the Company began a plan to restructure its LIONSGATE+ business, which initially included exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan), and identifying additional cost-saving initiatives. This plan included a strategic review of content performance across Starz's domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value.

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

During the nine months ended December 31, 2023, the Company continued executing its restructuring plan, including its evaluation of the programming on Starz's domestic and international platforms. In connection with this review, the Company cancelled certain ordered programming, and identified certain other programming with limited strategic purpose which was removed from the Starz platforms and abandoned by the Media Networks segment. In addition, as a result of the continuing review of its international territories, in order to continue growing the profitability of STARZ and given the economic and industry challenges in the United Kingdom ("U.K."), the Company has made the strategic decision to shut down the LIONSGATE+ service in the U.K. market, resulting in additional content impairment charges.

As a result of these restructuring initiatives, the Company recorded content impairment charges related to the Media Networks segment in the three and nine months ended December 31, 2023 of $77.8 million and $317.4 million, respectively (three and nine months ended December 31, 2022 - $80.8 million and $293.8 million, respectively). The Company has incurred impairment charges from the inception of the plan through December 31, 2023 amounting to $696.7 million.

Under the current restructuring plan and ongoing strategic content review, the Company estimates it will incur additional charges ranging from approximately $30 million to $55 million related to certain contractual content commitments or programming content impairment charges, among other items, related to territories exited or to be exited and content to be removed from its services. The net future cash outlay is estimated to range from approximately $145 million to $170 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content removed or that may be removed from its services. The amounts above will depend on the results of its strategic content review and amounts recoverable from alternative distribution strategies, if any, on content in domestic and foreign markets.

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

Other Impairments: Amounts in the 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.

(b)

Severance costs were primarily related to restructuring activities and other cost-saving initiatives. In the three and nine months ended December 31, 2023, amounts were due to restructuring activities including integration of the acquisition of eOne, LIONSGATE+ international restructuring and our Motion Picture and Television Production segments.

(c)

Transaction and other costs in the three and nine months ended December 31, 2023 and 2022 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters. In the nine months ended December 31, 2023, transaction and other costs also includes a benefit of $3.8 million associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the LIONSGATE+ international restructuring. In the three and nine months ended December 31, 2022, transaction and other costs includes a benefit of $11.0 million for a settlement of a legal matter related to the Media Networks segment.

(4)

Amounts represent the incremental costs, if any, included in direct operating expense resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries. During the three and nine months ended December 31, 2023 and 2022, the Company has incurred a net benefit in direct operating expense due to insurance recoveries in excess of the incremental costs expensed in the period. These charges (benefits) are excluded from segment operating results.

(5)

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

(6)

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

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Total share-based compensation expense

$                31.7

$                24.8

$                75.3

$                59.8

Less: Amount included in restructuring and other^(a)

(6.8)

(1.5)

(8.4)

(2.1)

Adjusted share-based compensation

$                24.9

$                23.3

$                66.9

$                57.7

(a)

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.

(7)

Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in recent acquisitions. The following sets forth the amounts included in each line item in the financial statements:

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Purchase accounting and related adjustments:

Direct operating

$                   —

$                   —

$                   —

$                  0.7

General and administrative expense^(a)

2.8

16.9

15.0

46.0

Depreciation and amortization

36.4

36.5

105.5

104.4

$                39.2

$                53.4

$              120.5

$              151.1

(a)

These adjustments include the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with the earned distributions related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense, as presented in the table below. The earned distributions related to 3 Arts Entertainment represent the 3 Arts Entertainment noncontrolling equity interest in the earnings of 3 Arts Entertainment and are reflected as an expense rather than noncontrolling interest in the consolidated statement of operations due to the relationship to continued employment.

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Amortization of recoupable portion of the purchase price

$                   —

$                  1.9

$                  1.3

$                  5.7

Noncontrolling interest discount amortization

—

3.3

—

13.3

Noncontrolling equity interest in distributable earnings

2.8

11.7

13.7

27.0

$                  2.8

$                16.9

$                15.0

$                46.0

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP.
SHAREHOLDERS TO ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT
CORP. SHAREHOLDERS, AND BASIC AND DILUTED EPS TO ADJUSTED BASIC AND DILUTED EPS

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions, except per share amounts)

Reported Net Income (Loss) Attributable to Lions Gate Entertainment Corp. Shareholders

$            (106.6)

$                16.6

$        (1,063.5)

$        (1,913.5)

Adjusted share-based compensation expense

24.9

23.3

66.9

57.7

Goodwill and intangible asset impairment

—

—

663.9

1,475.0

Restructuring and other

116.9

75.3

371.0

316.5

COVID-19 related charges (benefit)

(0.1)

(1.8)

(0.5)

(8.8)

Content charges

—

—

—

7.2

Purchase accounting and related adjustments

39.2

53.4

120.5

151.1

Gain on extinguishment of debt

—

(38.2)

(21.2)

(40.3)

Gain on investments, net

(4.4)

(43.4)

(2.7)

(42.1)

Tax impact of above items⁽¹⁾

0.1

(0.7)

(9.7)

(3.8)

Noncontrolling interest impact of above items⁽²⁾

(5.0)

(15.3)

(21.0)

(39.4)

Adjusted Net Income (Loss) Attributable to Lions Gate Entertainment Corp. Shareholders⁽³⁾

$                65.0

$                69.2

$              103.7

$              (40.4)

Reported Basic EPS

$              (0.45)

$                0.07

$              (4.56)

$              (8.41)

Impact of adjustments on basic earnings per share

0.73

0.23

5.01

8.23

Adjusted Basic EPS

$                0.28

$                0.30

$                0.45

$              (0.18)

Reported Diluted EPS

$              (0.45)

$                0.07

$              (4.56)

$              (8.41)

Impact of adjustments on diluted earnings per share

0.72

0.23

5.00

8.23

Adjusted Diluted EPS

$                0.27

$                0.30

$                0.44

$              (0.18)

Adjusted weighted average number of common shares outstanding:

Basic

235.1

228.8

233.1

227.4

Diluted

236.7

230.1

235.8

227.4

(1)

Represents the tax impact of the adjustments to net income attributable to Lions Gate Entertainment Corp. shareholders, calculated using the applicable effective tax rate of the adjustment. Beginning in the quarter ended March 31, 2023, we are no longer adjusting for changes in our valuation allowance and the three and nine months ended December 31, 2022 has been adjusted to reflect the current presentation.

(2)

Represents the noncontrolling interest impact of the adjustments related to subsidiaries that are not wholly owned. The three and nine months ended December 31, 2022 has been adjusted to reflect the noncontrolling interest impact consistent with the current year presentation.

(3)

The three and nine months ended December 31, 2022 has been adjusted to reflect the changes in footnotes (1) and (2) above.

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES

TO ADJUSTED FREE CASH FLOW

Three Months Ended

Nine Months Ended

December 31,

December 31,

2023

2022

2023

2022

(Unaudited, amounts in millions)

Net Cash Flows Provided By (Used In) Operating Activities⁽¹⁾

$                71.1

$                11.4

$              401.4

$            (128.0)

Capital expenditures

(6.4)

(15.2)

(24.7)

(36.6)

Net borrowings under and (repayment) of production and related loans⁽²⁾:

Production loans and programming notes

(34.6)

22.8

(205.9)

423.5

Production tax credit facility

15.4

(4.0)

17.8

6.6

Proceeds from the termination of interest rate swaps⁽³⁾

—

—

—

(188.7)

Payments on impaired content in territories exited or to be exited⁽⁴⁾

18.4

14.9

43.5

14.9

Adjusted Free Cash Flow

$                63.9

$                29.9

$              232.1

$                91.7

(1)

Cash flows provided by (used in) operating activities for the three and nine months ended December 31, 2023 includes a net use of cash of approximately ($3.8) million and net benefit of approximately $40.1 million, respectively, from the monetization of trade accounts receivable programs (three and nine months ended December 31, 2022 - net benefit of approximately $87.9 million and $77.0 million, respectively).

(2)

See "Reconciliation for Non-GAAP Adjustments for Net Borrowings Under and (Repayment) of Production and Related Loans" for reconciliation to the most directly comparable GAAP financial measure. 

(3)

During the nine months ended December 31, 2022, the Company terminated certain interest rate swaps (a portion of which were considered hybrid instruments with a financing component and an embedded at-market derivative) and in exchange, received approximately $56.4 million. The $56.4 million received was classified in the consolidated statement of cash flows as cash provided by operating activities of $188.7 million reflecting the amount received for the derivative portion of the terminated 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). Since the termination of the interest rate swaps was an unusual event, the Company is excluding the $188.7 million reflected in cash provided by operating activities from its adjusted free cash flow. The Company continues to have $1.7 billion notional amount of interest rate swaps as a cash flow hedge of its variable interest rate debt.

(4)

Represents cash payments made on impaired content in territories exited or to be exited under the LIONSGATE+ international restructuring.

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF NON-GAAP ADJUSTMENTS FOR NET BORROWINGS UNDER AND REPAYMENT OF
PRODUCTION AND RELATED LOANS

Three Months Ended December 31, 2023

Non-GAAP Adjustments
to Adjusted Free Cash
Flow

Total per
GAAP
Balance
Sheet and
Statement
of Cash
Flows
Amounts

Production
Loans and
Programming
Notes

Production
Tax Credit
Facility

Other Film
Related
Obligations

(Unaudited, amounts in millions)

Film related obligations at beginning of period (current and non-current)

$   1,801.8

Cash flows provided by (used in) financing activities:

Borrowings

$         298.2

$         20.9

$         (0.2)

318.9

Repayments

(332.8)

(5.5)

(19.1)

(357.4)

$         (34.6)

$         15.4

$       (19.3)

Cash flows provided by (used in) operating activities:

Included in cash flows provided by (used in) operating activities

3.9

Film related obligations assumed from the acquisition of eOne

105.8

Film related obligations at end of period (current and non-current)

$   1,873.0

Three Months Ended December 31, 2022

Non-GAAP Adjustments
to Adjusted Free Cash
Flow

Total per
GAAP
Balance
Sheet and
Statement
of Cash
Flows
Amounts

Production
Loans and
Programming
Notes

Production
Tax Credit
Facility

Other Film
Related
Obligations

(Unaudited, amounts in millions)

Film related obligations at beginning of period (current and non-current)

$   2,167.9

Cash flows provided by (used in) financing activities:

Borrowings

$         207.0

$         23.8

$         15.2

246.0

Repayments

(184.2)

(27.8)

(110.6)

(322.6)

$           22.8

$         (4.0)

$       (95.4)

Cash flows provided by (used in) operating activities:

Included in cash flows provided by (used in) operating activities

3.9

Film related obligations at end of period (current and non-current)

$   2,095.2

Nine Months Ended December 31, 2023

Non-GAAP Adjustments
to Adjusted Free Cash
Flow

Total per
GAAP
Balance
Sheet and
Statement
of Cash
Flows
Amounts

Production
Loans and
Programming
Notes

Production
Tax Credit
Facility

Other Film
Related
Obligations

(Unaudited, amounts in millions)

Film related obligations at beginning of period (current and non-current)

$   2,023.6

Cash flows provided by (used in) financing activities:

Borrowings

$     1,057.8

$         48.2

$      156.6

1,262.6

Repayments

(1,263.7)

(30.4)

(236.2)

(1,530.3)

$       (205.9)

$         17.8

$       (79.6)

Cash flows provided by (used in) operating activities:

Included in cash flows provided by (used in) operating activities

11.3

Film related obligations assumed from the acquisition of eOne

105.8

Film related obligations at end of period (current and non-current)

$   1,873.0

Nine Months Ended December 31, 2022

Non-GAAP Adjustments
to Adjusted Free Cash
Flow

Total per
GAAP
Balance
Sheet and
Statement
of Cash
Flows
Amounts

Production
Loans and
Programming Notes

Production
Tax Credit
Facility

Other Film
Related
Obligations

(Unaudited, amounts in millions)

Film related obligations at beginning of period (current and non-current)

$   1,401.8

Cash flows provided by (used in) financing activities:

Borrowings

$         910.3

$         56.9