Lionsgate Reports Strong Financial Results For Fiscal 2015

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS

March 31,

 2015

March 31,

 2014

(Amounts in thousands,

except share amounts)

ASSETS

Cash and cash equivalents

$

102,697

$

25,692

Restricted cash

2,508

8,925

Accounts receivable, net of reserves for returns and allowances of $64,362 (March 31, 2014 - $106,680) and provision for doubtful accounts of $4,120 (March 31, 2014 - $4,876)

891,880

885,571

Investment in films and television programs, net

1,381,829

1,274,573

Property and equipment, net

26,651

14,552

Investments

438,298

181,941

Goodwill

323,328

323,328

Other assets

74,784

71,067

Deferred tax assets

50,114

65,983

Total assets

$

3,292,089

$

2,851,632

LIABILITIES

Senior revolving credit facility

$

—

$

97,619

5.25% Senior Notes

225,000

225,000

Term Loans

375,000

222,753

Accounts payable and accrued liabilities

332,473

332,457

Participations and residuals

471,661

469,390

Film obligations and production loans

656,755

499,787

Convertible senior subordinated notes

114,126

131,788

Deferred revenue

274,787

288,300

Total liabilities

2,449,802

2,267,094

Commitments and contingencies

SHAREHOLDERS' EQUITY

Common shares, no par value, 500,000,000 shares authorized, 145,532,978 shares issued (March 31, 2014 - 141,007,461 shares)

830,786

743,788

Retained earnings (accumulated deficit)

13,720

(157,875)

Accumulated other comprehensive loss

(2,219)

(1,375)

Total shareholders' equity

842,287

584,538

Total liabilities and shareholders' equity

$

3,292,089

$

2,851,632

LIONS GATE ENTERTAINMENT CORP.

ANNUAL CONSOLIDATED STATEMENTS OF INCOME

Year Ended March 31,

2015

2014

2013

(Amounts in thousands, except per share amounts)

Revenues

$

2,399,640

$

2,630,254

$

2,708,141

Expenses:

Direct operating

1,315,775

1,369,381

1,390,569

Distribution and marketing

591,491

739,461

817,862

General and administration

263,507

254,925

218,341

Depreciation and amortization

6,586

6,539

8,290

Total expenses

2,177,359

2,370,306

2,435,062

Operating income

222,281

259,948

273,079

Other expenses (income):

Interest expense

Cash interest

39,657

48,960

75,322

Amortization of debt discount and deferred financing costs

12,819

17,210

18,258

Total interest expense

52,476

66,170

93,580

Interest and other income

(2,790)

(6,030)

(4,036)

Loss on extinguishment of debt

11,664

39,572

24,089

Total other expenses, net

61,350

99,712

113,633

Income before equity interests and income taxes

160,931

160,236

159,446

Equity interests income (loss)

52,477

24,724

(3,075)

Income before income taxes

213,408

184,960

156,371

Income tax provision (benefit)

31,627

32,923

(75,756)

Net income

$

181,781

$

152,037

$

232,127

Basic net income per common share

$

1.31

$

1.11

$

1.73

Diluted net income per common share

$

1.23

$

1.04

$

1.61

Weighted average number of common shares outstanding:

Basic

139,048

137,468

134,514

Diluted

151,778

154,415

149,370

Dividends declared per common share

$

0.26

$

0.10

$

—

LIONS GATE ENTERTAINMENT CORP.

FOURTH QUARTER CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

March 31,

2015

2014

(Amounts in thousands,

except per share amounts)

Revenues

$

646,082

$

721,858

Expenses:

Direct operating

369,935

403,625

Distribution and marketing

169,854

188,964

General and administration

76,532

68,805

Depreciation and amortization

1,901

1,773

Total expenses

618,222

663,167

Operating income

27,860

58,691

Other expenses (income):

Interest expense

Cash interest

10,111

9,278

Amortization of debt discount and deferred financing costs

2,771

4,332

Total interest expense

12,882

13,610

Interest and other income

(602)

(1,280)

Loss on extinguishment of debt

10,388

2,919

Total other expenses, net

22,668

15,249

Income before equity interests and income taxes

5,192

43,442

Equity interests income

15,124

11,566

Income before income taxes

20,316

55,008

Income tax provision

762

5,856

Net income

$

19,554

$

49,152

Basic net income per common share

$

0.14

$

0.35

Diluted net income per common share

$

0.14

$

0.33

Weighted average number of common shares outstanding:

Basic

140,364

138,599

Diluted

145,649

155,081

Dividends declared per common share

$

0.07

$

0.05

LIONS GATE ENTERTAINMENT CORP.

ANNUAL CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended March 31,

2015

2014

2013

Operating Activities:

(Amounts in thousands)

Net income

$

181,781

$

152,037

$

232,127

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

6,586

6,539

8,290

Amortization of films and television programs

899,951

921,289

966,027

Amortization of debt discount and deferred financing costs

12,819

17,210

18,258

Non-cash share-based compensation

79,938

60,492

35,838

Distribution from equity method investee

7,788

16,079

—

Loss on extinguishment of debt

11,664

39,572

24,089

Equity interests (income) loss

(52,477)

(24,724)

3,075

Deferred income taxes (benefit)

13,934

15,913

(87,899)

Changes in operating assets and liabilities:

Restricted cash

6,417

1,775

1,241

Accounts receivable, net

(13,968)

(93,503)

(4,948)

Investment in films and television programs

(1,012,294)

(948,082)

(890,276)

Other assets

(5,331)

(3,768)

(2,682)

Accounts payable and accrued liabilities

(5,086)

17,628

(50,154)

Participations and residuals

2,704

59,207

(6,875)

Film obligations

(24,977)

(19,187)

1,920

Deferred revenue

(12,940)

34,035

28,088

Net Cash Flows Provided By Operating Activities

96,509

252,512

276,119

Investing Activities:

Proceeds from the sale of equity method investees

14,575

9,000

—

Investment in equity method investees

(22,730)

(17,250)

(1,530)

Distributions from equity method investee in excess of earnings

—

4,169

—

Purchases of other investments

(30,000)

—

(2,022)

Proceeds from the sale of other investments

—

—

6,354

Repayment of loans receivable

—

4,275

4,274

Purchases of property and equipment

(17,013)

(8,799)

(2,581)

Net Cash Flows Provided By (Used In) Investing Activities

(8,605)

4,495

Financing Activities:

Senior revolving credit facility - borrowings, net of deferred financing costs of $15,804 for the year ended March 31, 2013

778,500

872,220

1,144,620

Senior revolving credit facility - repayments

(876,119)

(1,113,075)

(921,700)

Term Loans and 5.25% Senior Notes - borrowings, net of deferred financing costs of $4,315 and $6,860 for the years ended March 31, 2015 and 2014, respectively

370,685

440,640

—

Term Loans - repayments

(229,500)

—

(484,664)

10.25% Senior Notes - repurchases and redemptions in the year ended March 31, 2014 and consent fee in the year ended March 31, 2013

—

(470,584)

(3,270)

Convertible senior subordinated notes - borrowings

—

60,000

—

Convertible senior subordinated notes - repurchases

(16)

—

(7,639)

Production loans - borrowings

631,709

532,416

378,510

Production loans - repayments

(449,648)

(517,874)

(371,069)

Pennsylvania Regional Center credit facility - repayments

—

(65,000)

(500)

Repurchase of common shares

(144,840)

—

—

Dividends paid

(33,353)

(6,900)

—

Exercise of stock options

6,839

11,972

2,897

Tax withholding required on equity awards

(20,062)

(23,077)

(15,995)

Other financing obligations - repayments

—

—

(3,710)

Net Cash Flows Provided By (Used In) Financing Activities

34,195

(279,262)

(282,520)

Net Change In Cash And Cash Equivalents

75,536

(35,355)

(1,906)

Foreign Exchange Effects on Cash

1,469

(1,316)

(29)

Cash and Cash Equivalents - Beginning Of Period

25,692

62,363

64,298

Cash and Cash Equivalents - End Of Period

$

102,697

$

25,692

$

62,363

LIONS GATE ENTERTAINMENT CORP.

FOURTH QUARTER CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

March 31,

2015

2014

(Amounts in thousands)

Net income

$

19,554

$

49,152

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

1,901

1,773

Amortization of films and television programs

260,479

284,471

Amortization of debt discount and deferred financing costs

2,771

4,332

Non-cash share-based compensation

31,247

19,448

Distribution from equity method investee

—

6,230

Loss on extinguishment of debt

10,388

2,919

Equity interests income

(15,124)

(11,566)

Deferred income taxes

2,691

2,641

Changes in operating assets and liabilities:

Restricted cash

5,000

31,529

Accounts receivable, net

80,835

(47,127)

Investment in films and television programs

(196,825)

(255,139)

Other assets

(3,915)

(2,072)

Accounts payable and accrued liabilities

47,614

13,423

Participations and residuals

8,774

20,971

Film obligations

8,976

(30,395)

Deferred revenue

(4,816)

16,088

Net Cash Flows Provided By Operating Activities

259,550

106,678

Investing Activities:

Investment in equity method investees

(7,980)

—

Purchases of other investments

(28,000)

—

Purchases of property and equipment

(5,720)

(2,683)

Net Cash Flows Used In Investing Activities

(41,700)

(2,683)

Financing Activities:

Senior revolving credit facility - borrowings

97,000

90,001

Senior revolving credit facility - repayments

(257,500)

(186,501)

Term Loans and 5.25% Senior Notes - borrowings, net of deferred financing costs of $4,315

370,685

—

Term Loans - repayments

(229,500)

—

Production loans - borrowings

97,928

172,834

Production loans - repayments

(187,780)

(216,489)

Repurchase of common shares

(14,981)

—

Dividends paid

(9,817)

(6,900)

Excess tax benefits on equity-based compensation awards

(6,767)

—

Exercise of stock options

2,435

1,103

Tax withholding required on equity awards

(5,123)

(8,701)

Net Cash Flows Used In Financing Activities

(143,420)

(154,653)

Net Change In Cash And Cash Equivalents

74,430

(50,658)

Foreign Exchange Effects on Cash

(619)

948

Cash and Cash Equivalents - Beginning Of Period

28,886

75,402

Cash and Cash Equivalents - End Of Period

$

102,697

$

25,692

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF ANNUAL NET INCOME TO EBITDA AND ADJUSTED EBITDA

Year Ended March 31,

2015(1)

2014

2013

(Amounts in thousands)

Net income

$

181,781

$

152,037

$

232,127

Depreciation and amortization

6,586

6,539

8,290

Cash interest

39,657

48,960

75,322

Noncash interest expense

12,819

17,210

18,258

Interest and other income

(2,790)

(6,030)

(4,036)

Income tax provision (benefit)

31,627

32,923

(75,756)

EBITDA

$

269,680

$

251,639

$

254,205

Stock-based compensation(2)

80,310

72,119

47,665

Restructuring and other items(3)

10,725

7,500

2,575

Loss on extinguishment of debt

11,664

39,572

24,089

Backstopped prints and advertising expense

12,509

—

1,155

Adjusted EBITDA(1)

$

384,888

$

370,830

$

329,689

(1)

The definition of Adjusted EBITDA now includes the gains or losses from the sale of equity method investments.  Accordingly, Adjusted EBITDA for the fiscal year ended March 31, 2015 has been revised to include the $11.4 million gain on the sale of the Company's interest in FEARnet which occurred in the first quarter ended June 30, 2014.  This change is consistent with the Company's increasing investment activity and practice of including equity interest income and losses from equity method investments in Adjusted EBITDA. Prior to the sale of FEARnet, the Company recognized cumulative equity interest losses before income taxes of approximately $11.7 million from its interest in FEARnet.

(2)

The years ended March 31, 2015, 2014 and 2013 include cash settled SARs expense of $1.9 million, $10.9 million, and $12.0 million, respectively.

(3)

Restructuring and other items includes certain unusual items, such as severance and restructuring charges, certain transaction related costs, and the settlement of an administrative order, when applicable.  Amounts in the year ended March 31, 2015 primarily represent severance costs associated with the integration of the marketing operations of the Company's Lionsgate and Summit film labels and costs related to the move of our international sales and distribution organization to the United Kingdom amounting to an aggregate of $9.1 million. Approximately $1.2 million of these costs are non-cash charges resulting from the acceleration of vesting of stock awards. In addition, the remaining amount for the year ended March 31, 2015 includes transaction costs related to the registration and offering of common shares by a shareholder, for which the Company received no proceeds, pursuant to a preexisting registration rights agreement dated October 22, 2009, and costs related to the previously disclosed Starz Exchange transaction. Amounts in the year ended March 31, 2014 represent the settlement of an administrative order. Amounts in the year ended March 31, 2013 represent severance and transaction costs related to the acquisition of Summit Entertainment.

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF FOURTH QUARTER NET INCOME TO

EBITDA AND ADJUSTED EBITDA

Three Months Ended

March 31,

2015

2014

(Amounts in thousands)

Net income

$

19,554

$

49,152

Depreciation and amortization

1,901

1,773

Cash interest

10,111

9,278

Noncash interest expense

2,771

4,332

Interest and other income

(602)

(1,280)

Income tax provision

762

5,856

EBITDA

$

34,497

$

69,111

Stock-based compensation(1)

31,435

19,920

Restructuring and other items(2)

3,717

—

Loss on extinguishment of debt

10,388

2,919

Backstopped prints and advertising expense

10,409

—

Adjusted EBITDA

$

90,446

$

91,950

(1)

The three months ended March 31, 2015 and 2014 include cash settled SARs expense of $0.3 million and $0.5 million, respectively.

(2)

Restructuring and other items includes certain unusual items, such as severance and restructuring charges, certain transaction related costs, and the settlement of an administrative order, when applicable.  Amounts in the three months ended March 31, 2015 primarily represent costs related to the move of our international sales and distribution organization to the United Kingdom amounting to an aggregate of $2.0 million. In addition, the three months ended March 31, 2015 includes transaction costs related to the registration and offering of common shares by a shareholder, for which the Company received no proceeds, pursuant to a preexisting registration rights agreement dated October 22, 2009, and costs related to the previously disclosed Starz Exchange transaction.

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF ANNUAL FREE CASH FLOW

TO NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

Year Ended March 31,

2015

2014

2013

(Amounts in thousands)

Net Cash Flows Provided By Operating Activities

$

96,509

$

252,512

$

276,119

Purchases of property and equipment

(17,013)

(8,799)

(2,581)

Net borrowings under and (repayment) of production loans

182,061

14,542

6,941

Free Cash Flow, as defined

$

261,557

$

258,255

$

280,479

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF FOURTH QUARTER FREE CASH FLOW

TO NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

Three Months Ended

March 31,

2015

2014

(Amounts in thousands)

Net Cash Flows Provided By Operating Activities

$

259,550

$

106,678

Purchases of property and equipment

(5,720)

(2,683)

Net borrowings under and (repayment) of production loans

(89,852)

(43,655)

Excess tax benefits on equity-based compensation awards

(6,767)

—

Free Cash Flow, as defined

$

157,211

$

60,340

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF ANNUAL EBITDA TO FREE CASH FLOW

Year Ended March 31,

2015

2014

2013

(Amounts in thousands)

EBITDA

$

269,680

$

251,639

$

254,205

Plus: Amortization of film and television programs

899,951

921,289

966,027

Less: Cash paid for film and television programs(1)

(855,210)

(952,727)

(881,415)

Amortization of (cash paid for) film and television programs in excess of cash paid (amortization)

44,741

(31,438)

84,612

Plus: Non-cash stock-based compensation

79,938

60,492

35,838

Plus: Distributions from equity method investee

7,788

16,079

—

Less: Equity interests (income) loss

(52,477)

(24,724)

3,075

Plus: Loss on extinguishment of debt

11,664

39,572

24,089

EBITDA adjusted for items above

361,334

311,620

401,819

Changes in other operating assets and liabilities:

Restricted cash

6,417

1,775

1,241

Accounts receivable, net

(13,968)

(93,503)

(4,948)

Other assets

(5,331)

(3,768)

(2,682)

Accounts payable and accrued liabilities

(5,086)

17,628

(50,154)

Participations and residuals

2,704

59,207

(6,875)

Deferred revenue

(12,940)

34,035

28,088

(28,204)

15,374

(35,330)

Purchases of property and equipment

(17,013)

(8,799)

(2,581)

Interest, taxes and other(2)

(54,560)

(59,940)

(83,429)

Free Cash Flow, as defined

$

261,557

$

258,255

$

280,479

_________________________

(1) Cash paid for film and television programs is calculated using the following amounts as presented in our consolidated statement of cash flows:

Change in investment in film and television programs

$

(1,012,294)

$

(948,082)

$

(890,276)

Change in film obligations

(24,977)

(19,187)

1,920

Production loans - borrowings

631,709

532,416

378,510

Production loans - repayments

(449,648)

(517,874)

(371,569)

Total cash paid for film and television programs

$

(855,210)

$

(952,727)

$

(881,415)

_________________________

(2) Interest, taxes and other consists of the following:

Cash interest

$

(39,657)

$

(48,960)

$

(75,322)

Interest and other income

2,790

6,030

4,036

Current income tax provision

(17,693)

(17,010)

(12,143)

Total interest, taxes and other

$

(54,560)

$

(59,940)

$

(83,429)

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF FOURTH QUARTER EBITDA TO FREE CASH FLOW

Three Months Ended

March 31,

2015

2014

(Amounts in thousands)

EBITDA

$

34,497

$

69,111

Plus: Amortization of film and television programs

260,479

284,471

Less: Cash paid for film and television programs(1)

(277,701)

(329,189)

Cash paid for film and television programs in excess of amortization

(17,222)

(44,718)

Plus: Non-cash stock-based compensation

31,247

19,448

Plus: Distributions from equity method investee

—

6,230

Less: Equity interests income

(15,124)

(11,566)

Plus: Loss on extinguishment of debt

10,388

2,919

EBITDA adjusted for items above

43,786

41,424

Changes in other operating assets and liabilities:

Restricted cash

5,000

31,529

Accounts receivable, net

80,835

(47,127)

Other assets

(3,915)

(2,072)

Accounts payable and accrued liabilities

47,614

13,423

Participations and residuals

8,774

20,971

Deferred revenue

(4,816)

16,088

133,492

32,812

Purchases of property and equipment

(5,720)

(2,683)

Interest, taxes and other(2)

(14,347)

(11,213)

Free Cash Flow, as defined

$

157,211

$

60,340

________________________

(1) Cash paid for film and television programs is calculated using the following amounts as presented in our consolidated statement of cash flows:

Change in investment in film and television programs

$

(196,825)

$

(255,139)

Change in film obligations

8,976

(30,395)

Production loans - borrowings

97,928

172,834

Production loans - repayments

(187,780)

(216,489)

Total cash paid for film and television programs

$

(277,701)

$

(329,189)

_________________________

(2) Interest, taxes and other consists of the following:

Cash interest

$

(10,111)

$

(9,278)

Interest and other income

602

1,280

Current income tax benefit (provision)

1,929

(3,215)

Excess tax benefits on equity-based compensation awards

(6,767)

—

Total interest, taxes and other

$

(14,347)

$

(11,213)

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF ANNUAL INCOME BEFORE INCOME TAXES, NET

INCOME, BASIC AND DILUTED EPS TO ADJUSTED INCOME BEFORE

INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED BASIC AND DILUTED EPS

Year Ended March 31, 2015*

Income before income taxes

Net income

Basic

EPS*

Diluted EPS*

(Amounts in thousands, except per share amounts)

As reported

$

213,408

$

181,781

$

1.31

$

1.23

Stock-based compensation(1)

80,310

51,398

0.37

0.34

Restructuring and other items(2)

10,725

7,437

0.05

0.05

Loss on extinguishment of debt(3)

11,664

8,889

0.06

0.06

Backstopped prints and advertising expense(4)

12,509

8,006

0.06

0.05

As adjusted for stock-based compensation, restructuring and other items, loss on extinguishment of debt, and backstopped prints and advertising expense *

$

328,616

$

257,511

$

1.85

$

1.73

_________________________

* The definition of adjusted income before income taxes, adjusted net income and adjusted earnings per share now includes the gains or losses from the sale of equity method investments. Accordingly, adjusted income before income taxes, and adjusted net income has been revised to now include the gain on the April 2014 sale of the Company's interest in FEARnet of $11.4 million ($7.2 million after income taxes) and representing adjusted basic and diluted earnings per share of $0.05 for the year ended March 31, 2015. This change is consistent with the Company's increasing investment activity and practice of including equity interest income and losses from equity method investments in adjusted income before income taxes, adjusted net income and adjusted earnings per share. Prior to the sale of FEARnet, the Company recognized cumulative equity interest losses before income taxes of approximately $11.7 million from the Company's interest in FEARnet.

Year Ended March 31, 2014

Income before income taxes

Net income

BasicEPS*

Diluted EPS*

(Amounts in thousands, except per share amounts)

As reported

$

184,960

$

152,037

$

1.11

$

1.04

Stock-based compensation(1)

72,119

45,435

0.33

0.29

Restructuring and other items(2)

7,500

7,500

0.05

0.05

Loss on extinguishment of debt(3)

39,572

24,930

0.18

0.16

Tax valuation allowance(5)

—

(12,030)

(0.09)

(0.08)

As adjusted for stock-based compensation, restructuring and other items, loss on extinguishment of debt and valuation allowance

$

304,151

$

217,872

$

1.58

$

1.47

Year Ended March 31, 2013

Income before income taxes

Net income

BasicEPS*

Diluted EPS*

(Amounts in thousands, except per share amounts)

As reported

$

156,371

$

232,127

$

1.73

$

1.61

Stock-based compensation(1)

47,665

30,186

0.22

0.20

Loss on extinguishment of debt(3)

24,089

15,255

0.11

0.10

Tax valuation allowance(5)

—

(141,087)

(1.05)

(0.94)

As adjusted for stock-based compensation, loss on extinguishment of debt and valuation allowance

$

228,125

$

136,481

$

1.01

$

0.96

_________________________

* Basic and Diluted EPS amounts may not add precisely due to rounding

LIONS GATE ENTERTAINMENT CORP.

RECONCILIATION OF FOURTH QUARTER INCOME BEFORE INCOME TAXES, NET

INCOME, BASIC AND DILUTED EPS TO ADJUSTED INCOME BEFORE

 INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED BASIC AND DILUTED EPS

Three Months Ended March 31, 2015

Income before income taxes

Net income

Basic

EPS*

Diluted EPS*

(Amounts in thousands, except per share amounts)

As reported

$

20,316

$

19,554

$

0.14

$

0.14

Stock-based compensation(1)

31,435

20,441

0.15

0.14

Restructuring and other items(2)

3,717

2,998

0.02

0.02

Loss on extinguishment of debt(3)

10,388

8,081

0.06

0.05

Backstopped prints and advertising expense(4)

10,409

6,676

0.05

0.04

As adjusted for stock-based compensation, restructuring and other items, loss on extinguishment of debt and backstopped prints and advertising expense

$

76,265

$

57,750

$

0.41

$

0.39

Three Months Ended March 31, 2014

Income before income taxes

Net income

BasicEPS*

Diluted EPS*

(Amounts in thousands, except per share amounts)

As reported

$

55,008

$

49,152

$

0.35

$

0.33

Stock-based compensation(1)

19,920

12,550

0.09

0.08

Loss on extinguishment of debt(3)

2,919

1,839

0.01

0.01

As adjusted for stock-based compensation and loss on extinguishment of debt

$

77,847

$

63,541

$

0.46

$

0.42

_________________________

* Basic and Diluted EPS amounts may not add precisely due to rounding

(1)

Stock-based compensation: Adjustments for stock-based compensation represents compensation expenses associated with stock options, restricted share units, cash and equity settled SARs.

(2)

Restructuring and other items:  Adjustments for certain unusual items, such as severance and restructuring charges, certain transaction related costs, and the settlement of an administrative order, when applicable.  Amounts in the year ended March 31, 2015 primarily represent severance costs associated with the integration of the marketing operations of the Company's Lionsgate and Summit film labels and costs related to the move of our international sales and distribution organization to the United Kingdom. A portion of these costs are non-cash charges resulting from the acceleration of vesting of stock awards. In addition,  the remaining amount for the year ended March 31, 2015 includes transaction costs related to the registration and offering of common shares by a shareholder, for which the Company received no proceeds, pursuant to a preexisting registration rights agreement dated October 22, 2009, and costs related to the previously disclosed Starz Exchange transaction. Amounts in the year ended March 31, 2014 represent the settlement of an administrative order. Amounts in the year ended March 31, 2013 represent severance and transaction costs related to the acquisition of Summit Entertainment.

(3)

Loss on extinguishment of debt: This adjusts income before income taxes and net income to eliminate the loss on extinguishment of debt.

(4)

Backstopped prints and advertising expense: This adjusts income before income taxes and net income to eliminate the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a first dollar loss guarantee (subject to a cap) that such expense will be recouped from the performance of the film (which results in minimal risk of loss to the company). The amount represents the P&A expense incurred net of the impact of expensing the P&A cost over the revenue streams similar to a participation expense (i.e. the P&A under these arrangements are being expensed similar to a participation cost for purposes of the adjusted measure).

(5)

Tax valuation allowance: This adjusts net income to eliminate the discrete tax benefit recognized for financial reporting purposes upon the reduction of the Company's valuation allowance on its net deferred tax assets in our various tax jurisdictions. A substantial portion of the Company's valuation allowance was reversed in the year ended March 31, 2013 due to the expectation of the realization of the related net deferred tax assets in future tax returns. A further reduction in the valuation allowance related to the Company's Canadian net deferred tax assets was reversed in the year ended March 31, 2014.