XML 42 R23.htm IDEA: XBRL DOCUMENT
v3.19.1

Income Taxes | 12 Months Ended
--- | ---
Mar. 31, 2019
Income Tax Disclosure [Abstract] |
Income Tax Disclosure | Income Taxes On December 22, 2017, Tax Act was signed into law, making significant changes to the taxation of U.S. business entities. The Tax Act reduced the U.S. corporate income tax rate from 35% to 21%, imposed a one-time transition tax in connection with the move from a worldwide tax system to a territorial tax system, provided for accelerated deductions for certain U.S. film production costs, imposed limitations on certain tax deductions such as executive compensation in future periods, and included numerous other provisions. As the Company has a March 31 fiscal year-end, the lower corporate income tax rate was phased in, resulting in a U.S. statutory federal rate of approximately 31.5% for the fiscal year ended March 31, 2018, and 21% for subsequent fiscal years. The Company's U.S. tax provision consists primarily of deferred tax benefits calculated at the 21% tax rate. In connection with the Tax Act, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to provide guidance to companies that have not completed their accounting for the income tax effects of the Tax Act. Under SAB 118, provisional amounts can be recorded to the extent a reasonable estimate can be made. Additional tax effects and adjustments to previously recorded provisional amounts can be recorded upon obtaining, preparing, or analyzing additional information (including computations) within one year from the enactment date of the Tax Act. The Company previously made provisional estimates of the effects of the Tax Act, such as the measurement of deferred tax assets and liabilities, the tax effects of executive compensation, the one-time transition tax, net operating loss carryovers, foreign tax credits, and accelerated deductions for U.S. film costs. The estimated impact of the Tax Act was based on a preliminary review of the new law, subject to revision based upon further analysis and interpretation of the Tax Act. During the quarter ended December 31, 2018, the Company completed its analysis and its accounting for the Tax Act, and there were no material adjustments to its provisional estimates. The Company's income tax provision (benefit) 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. However, the Company's income tax benefit for the fiscal year ended March 31, 2019 was offset by valuation allowances against certain U.S. and foreign deferred tax assets, certain minimum taxes imposed by the Tax Act, and the nondeductible portion of shareholder litigation settlements. The Company's income tax provision (benefit) 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, further interpretation and legislative guidance regarding the new Tax Act, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items. The components of pretax income, net of intercompany eliminations, are as follows:
| Year Ended March 31,
| 2019 |  | 2018 |  | 2017
| (Amounts in millions)
United States | $ | (505.7 | ) |  | $ | (824.1 | ) |  | $ | (409.2 | )
International | 197.6 |  |  | 972.8 |  |  | 274.8 |
| $ | (308.1 | ) |  | $ | 148.7 |  |  | $ | (134.4 | )
The Company's U.S. pre-tax losses and international pre-tax income are primarily driven by non-operating, intercompany items resulting from the Company's internal capital structure. The Company's capital structure generally provides foreign affiliate dividends to its Canadian parent company (i.e., Lionsgate) and interest-related tax deductions to its U.S. companies. The Company's international pre-tax income may be significantly impacted by these foreign affiliate dividends related to its internal capital structure. The Company’s current and deferred income tax provision (benefits) are as follows:
| Year Ended March 31,
| 2019 |  | 2018 |  | 2017
Current provision (benefit): | (Amounts in millions)
Federal | $ | 9.1 |  |  | $ | (17.6 | ) |  | $ | 7.8 |
States | (0.7 | ) |  | (4.3 | ) |  | 2.2 |
International | 6.7 |  |  | 2.0 |  |  | 4.5 |
Total current provision (benefit) | $ | 15.1 |  |  | $ | (19.9 | ) |  | $ | 14.5 |
Deferred benefit: |  |  |  |  |
Federal | $ | (48.2 | ) |  | $ | (269.0 | ) |  | $ | (143.3 | )
States | 5.8 |  |  | (18.5 | ) |  | (9.9 | )
International | 18.8 |  |  | (12.0 | ) |  | (10.2 | )
Total deferred benefit | (23.6 | ) |  | (299.5 | ) |  | (163.4 | )
Total benefit for income taxes | $ | (8.5 | ) |  | $ | (319.4 | ) |  | $ | (148.9 | )
The differences between income taxes expected at U.S. statutory income tax rates and the income tax provision are as set forth below:
| Year Ended March 31,
| 2019 |  | 2018 |  | 2017
| (Amounts in millions)
Income taxes computed at Federal statutory rate | $ | (64.7 | ) |  | $ | 46.8 |  |  | $ | (47.1 | )
Foreign affiliate dividends | (37.5 | ) |  | (329.1 | ) |  | (84.2 | )
Foreign operations subject to different income tax rates | (235.7 | ) |  | 7.1 |  |  | (14.6 | )
State income tax | (8.5 | ) |  | (21.2 | ) |  | (6.0 | )
Remeasurement of opening U.S. deferred tax liabilities due to the Tax Act | — |  |  | (165.0 | ) |  | — |
Additional remeasurements of originating deferred tax assets and liabilities | — |  |  | 75.6 |  |  | — |
Transaction costs | — |  |  | — |  |  | 7.3 |
Permanent differences | 6.8 |  |  | 3.5 |  |  | (0.5 | )
Nondeductible settlement costs | 16.9 |  |  | — |  |  | — |
Other | 0.3 |  |  | (5.3 | ) |  | (2.3 | )
Increase (decrease) in valuation allowance | 313.9 |  |  | 68.2 |  |  | (1.5 | )
Total benefit for income taxes | $ | (8.5 | ) |  | $ | (319.4 | ) |  | $ | (148.9 | )
For the years ended March 31, 2019, 2018, and 2017, the tax provision includes certain foreign affiliate dividends in our Canadian jurisdiction that can be received without being subject to tax under Canadian tax law. Additionally, as a result of an internal capital restructuring during the year ended March 31, 2019, the Company generated a foreign net operating loss carryforward under local tax law which was offset by a valuation allowance based on the Company's assessment. Although the Company is incorporated under Canadian law, the majority of its global operations are currently subject to tax in the U.S. As a result, the Company believes it is more appropriate to use the U.S. Federal statutory rate in its reconciliation of the statutory rate to its reported income tax rate. The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows:
| March 31, 2019 |  | March 31, 2018
| (Amounts in millions)
Deferred tax assets: |  |  |
Net operating losses | $ | 609.5 |  |  | $ | 336.7 |
Foreign tax credits | 74.2 |  |  | 68.3 |
Investment in film and television obligations | 79.0 |  |  | 101.5 |
Accounts payable | 78.9 |  |  | 96.4 |
Other assets | 71.7 |  |  | 59.0 |
Reserves | 13.9 |  |  | 21.4 |
Total deferred tax assets | 927.2 |  |  | 683.3 |
Valuation allowance | (401.1 | ) |  | (73.2 | )
Deferred tax assets, net of valuation allowance | 526.1 |  |  | 610.1 |
Deferred tax liabilities: |  |  |
Intangible assets | (438.4 | ) |  | (475.5 | )
Fixed assets | (8.6 | ) |  | (19.5 | )
Accounts receivable | (110.6 | ) |  | (150.7 | )
Other | (5.2 | ) |  | (17.5 | )
Total deferred tax liabilities | $ | (562.8 | ) |  | $ | (663.2 | )
Net deferred tax liabilities | $ | (36.7 | ) |  | $ | (53.1 | )
The Company has recorded valuation allowances for certain deferred tax assets, which are primarily related to U.S. and foreign net operating loss carryforwards and U.S. foreign tax credit carryforwards as sufficient uncertainty exists regarding the future realization of these assets. At March 31, 2019, the Company had U.S. net operating loss carryforwards ("NOLs") of approximately $1,367.9 million available to reduce future federal income taxes which expire beginning in 2029 through 2038. At March 31, 2019, the Company had state NOLs of approximately $791.3 million available to reduce future state income taxes which expire in varying amounts beginning 2021. At March 31, 2019, the Company had Canadian loss carryforwards of $106.9 million which will expire beginning in 2034. At March 31, 2019, the Company had Luxembourg loss carryforwards of $947.0 million which will expire beginning in 2036. In addition, at March 31, 2019, the Company had U.S. credit carryforwards related to foreign taxes paid of approximately $74.2 million to offset future federal income taxes that will expire beginning in 2021. The following table summarizes the changes to the gross unrecognized tax benefits for the years ended March 31, 2019, 2018, and 2017:
| Amounts in millions
Gross unrecognized tax benefits at March 31, 2016 | $ | 4.5 |
Increases related to prior year tax positions | 14.2 |
Decreases related to prior year tax positions | (4.5 | )
Settlements | — |
Lapse in statute of limitations | — |
Gross unrecognized tax benefits at March 31, 2017 | 14.2 |
Increases related to current year tax position | 0.1 |
Increases related to prior year tax positions | 11.5 |
Decreases related to prior year tax positions | (8.2 | )
Settlements | — |
Lapse in statute of limitations | — |
Gross unrecognized tax benefits at March 31, 2018 | 17.6 |
Increases related to current year tax position | 0.3 |
Increases related to prior year tax positions | 2.5 |
Decreases related to prior year tax positions | (1.0 | )
Settlements | (1.8 | )
Lapse in statute of limitations | (0.8 | )
Gross unrecognized tax benefits at March 31, 2019 | $ | 16.8 |
For the years ended March 31, 2019, 2018, and 2017, interest and penalties were not significant. The Company records interest and penalties on unrecognized tax benefits as part of income tax provision. The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. With a few exceptions, the Company is subject to income tax examination by U.S. and state tax authorities for the fiscal years ended March 31, 2008 and forward. However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs were generated and carried forward, and make adjustments up to the amount of the NOLs. Currently, audits are occurring in federal and various state and local tax jurisdictions. In addition, the Company's Canadian tax returns are under examination for the years ended March 31, 2014 and March 31, 2015. The total amount of unrecognized tax benefits as of March 31, 2019 that, if realized, would affect the Company's tax benefit (provision) are $17.6 million. The Company estimates that approximately $3.8 million in unrecognized tax benefits may be realized in the next 12 months.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration