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Income Taxes | 12 Months Ended
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Mar. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of pretax income (loss), net of intercompany eliminations, are as follows:
| Year Ended March 31,
| 2022 |  | 2021 |  | 2020
| (Amounts in millions)
United States | $ | (359.2) |  |  | $ | (246.3) |  |  | $ | (453.3) |
International | 182.2 |  |  | 228.9 |  |  | 250.2 |
| $ | (177.0) |  |  | $ | (17.4) |  |  | $ | (203.1) |
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,
| 2022 |  | 2021 |  | 2020
Current provision (benefit): | (Amounts in millions)
Federal | $ | 11.0 |  |  | $ | 5.0 |  |  | $ | (0.6) |
States | 10.7 |  |  | 2.9 |  |  | 3.0 |
International | 8.4 |  |  | 5.8 |  |  | 1.8 |
Total current provision (benefit) | $ | 30.1 |  |  | $ | 13.7 |  |  | $ | 4.2 |
Deferred provision (benefit): |  |  |  |  |
Federal | $ | 0.9 |  |  | $ | 1.1 |  |  | $ | (18.5) |
States | (2.6) |  |  | 2.3 |  |  | (1.8) |
International | — |  |  | — |  |  | 19.4 |
Total deferred provision (benefit) | (1.7) |  |  | 3.4 |  |  | (0.9) |
Total provision for income taxes | $ | 28.4 |  |  | $ | 17.1 |  |  | $ | 3.3 |
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 fiscal years ended March 31, 2022, March 31, 2021 and March 31, 2020 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 fiscal 2022 was also impacted by an interest accrual on uncertain tax benefits, additional uncertain tax benefits related to state income taxes identified during state audits, 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 fiscal 2021 and fiscal 2020 was also impacted by the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations and additional settlements with tax authorities. The Company's income tax provision can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items. 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 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,
| 2022 |  | 2021 |  | 2020
| (Amounts in millions)
Income taxes computed at Federal statutory rate | $ | (37.2) |  |  | $ | (3.7) |  |  | $ | (42.6) |
Foreign affiliate dividends | (35.2) |  |  | (35.2) |  |  | (35.2) |
Foreign operations subject to different income tax rates | 50.0 |  |  | 47.4 |  |  | 51.4 |
State income tax | 8.1 |  |  | 5.2 |  |  | 1.2 |
Gain on sale of Pantaya | — |  |  | 13.8 |  |  | — |
Remeasurements of originating deferred tax assets and liabilities | (1.3) |  |  | 4.2 |  |  | (6.9) |
Permanent differences | 0.8 |  |  | 0.9 |  |  | 1.6 |
Nondeductible share based compensation | (3.3) |  |  | 27.1 |  |  | 15.0 |
Nondeductible officers compensation | 5.6 |  |  | 7.3 |  |  | 2.6 |
Non-controlling interest in partnerships | 3.7 |  |  | 3.3 |  |  | 3.8 |
Nondeductible interest expense | — |  |  | 3.5 |  |  | — |
Uncertain tax benefits | 3.6 |  |  | 0.6 |  |  | (3.2) |
Other | 1.2 |  |  | (0.3) |  |  | (2.4) |
Changes in valuation allowance | 32.4 |  |  | (57.0) |  |  | 18.0 |
Total provision for income taxes | $ | 28.4 |  |  | $ | 17.1 |  |  | $ | 3.3 |
For the fiscal years ended March 31, 2022, 2021 and 2020, our total provision for income taxes includes certain foreign affiliate dividends that can be received in our Canadian jurisdiction without being subject to tax under local tax law. As a result of an internal capital restructuring during the year ended March 31, 2019, the Company generated a net operating loss carryforward under local law in another foreign jurisdiction which was offset by a valuation allowance based on the Company’s assessment and which is being absorbed by taxable income annually. The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows:
| March 31, 2022 |  | March 31, 2021
| (Amounts in millions)
Deferred tax assets: |  |  |
Net operating losses | $ | 496.9 |  |  | $ | 451.2 |
Foreign tax credits | 76.8 |  |  | 77.3 |
Investment in film and television programs | 14.5 |  |  | 41.8 |
Accrued compensation | 56.7 |  |  | 65.0 |
Operating leases - liabilities | 39.2 |  |  | 29.0 |
Other assets | 19.6 |  |  | 47.8 |
Reserves | 10.2 |  |  | 16.5 |
Accrued interest | 10.6 |  |  | 33.1 |
Total deferred tax assets | 724.5 |  |  | 761.7 |
Valuation allowance | (362.8) |  |  | (350.9) |
Deferred tax assets, net of valuation allowance | 361.7 |  |  | 410.8 |
Deferred tax liabilities: |  |  |
Intangible assets | (351.9) |  |  | (385.6) |
Fixed assets | — |  |  | (0.1) |
Accounts receivable | — |  |  | (40.5) |
Operating leases - assets | (34.5) |  |  | (22.8) |
Other | (14.1) |  |  | (2.1) |
Total deferred tax liabilities | $ | (400.5) |  |  | $ | (451.1) |
Net deferred tax liabilities | $ | (38.8) |  |  | $ | (40.3) |
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, 2022, the Company had U.S. net operating loss carryforwards ("NOLs") of approximately $1,602.2 million available to reduce future federal income taxes which expire beginning in 2029 through 2042. At March 31, 2022, the Company had state NOLs of approximately $910.6 million available to reduce future state income taxes which expire in varying amounts beginning in 2023. At March 31, 2022, the Company had Canadian loss carryforwards of $3.9 million which will expire beginning in 2028. At March 31, 2022, the Company had Luxembourg loss carryforwards of $413.0 million which will expire beginning in 2036. At March 31, 2022, the Company had other foreign jurisdiction loss carryforwards of $12.8 million which will expire beginning in 2028. In addition, at March 31, 2022, the Company had U.S. credit carryforwards related to foreign taxes paid of approximately $76.8 million to offset future federal income taxes that will expire beginning in 2023. The following table summarizes the changes to the gross unrecognized tax benefits, exclusive of interest and penalties, for the years ended March 31, 2022, 2021, and 2020:
| Amounts in millions
Gross unrecognized tax benefits at March 31, 2019 | $ | 16.8 |
Increases related to current year tax position | — |
Increases related to prior year tax positions | — |
Decreases related to prior year tax positions | (4.0) |
Settlements | (0.5) |
Lapse in statute of limitations | (0.8) |
Gross unrecognized tax benefits at March 31, 2020 | 11.5 |
Increases related to current year tax position | 60.7 |
Increases related to prior year tax positions | 3.1 |
Decreases related to prior year tax positions | — |
Settlements | (1.9) |
Lapse in statute of limitations | (5.4) |
Gross unrecognized tax benefits at March 31, 2021 | 68.0 |
Increases related to current year tax position | — |
Increases related to prior year tax positions | 2.6 |
Decreases related to prior year tax positions | — |
Settlements | — |
Lapse in statute of limitations | (0.4) |
Gross unrecognized tax benefits at March 31, 2022 | $ | 70.2 |
For the years ended March 31, 2022, 2021, and 2020, the Company recognized net interest and penalties related to uncertain tax positions of $6.0 million, $1.2 million, and $0.6 million, respectively. The Company recorded liabilities for accrued interest of $13.2 million and $7.3 million as of March 31, 2022 and 2021, respectively. The Company records interest and penalties on unrecognized tax benefits as part of its income tax provision. The total amount of unrecognized tax benefits as of March 31, 2022 that, if realized, would affect the Company's tax provision are $80.2 million. The Company estimates the liability for unrecognized tax benefits will decrease in the next twelve months by $79.9 million as a result of projected audit settlements in certain jurisdictions. The Company is subject to taxation in the U.S. and various state, local, and foreign jurisdictions. 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 various state and local tax jurisdictions for tax years ended in 2012 through 2020. Additionally, positions taken by the Company in certain amended filings are subject to current review. The Company's Canadian tax returns are also under examination for the years ended March 31, 2018 through March 31, 2019.

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- 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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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