United states securities and exchange commission



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As of March 31, 2012 , 2011 , and 2010 , 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.



 
































 

March 31,
2012


 

March 31,
2011


 

March 31,
2010


 

(Amounts in thousands)

Anti-dilutive shares issuable

 

 

 

 

 

Conversion of notes

14,029




 

13,741




 

21,802




Share purchase options

3,157




 

3,310




 

3,360




Restricted share units

1,467




 

1,484




 

2,383




Contingently issuable restricted share units

400




 

317




 

1,033




Total weighted average anti-dilutive shares issuable excluded from Diluted Net Loss Per Common Share

19,053




 

18,852




 

28,578





(s) Use of Estimates

The preparation of financial statements in conformity with U.S. 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 for investment in films and television programs; estimates of sales returns and other allowances and provisions for doubtful accounts; fair value of assets and liabilities for allocation of the purchase price of companies acquired; income taxes and accruals for contingent liabilities; and impairment assessments for investment in films and television programs, property and equipment, equity investments, goodwill and intangible assets. Actual results could differ from such estimates.



(t) Recent Accounting Pronouncements

The Company has adopted Accounting Standards Update ("ASU") No. 2011-08 “Testing Goodwill for Impairment” for the fiscal year ending March 31, 2012. ASU 2011-08 simplifies how entities test goodwill for impairment and permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The adoption of ASU 2011-08 did not have a significant impact on the Company’s consolidated financial statements.

In June 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update relating to the presentation of other comprehensive income. The accounting update eliminates the option to present components of other comprehensive income as part of the statement of stockholders’ equity. Instead, companies must report comprehensive income in either a single continuous statement of comprehensive income (which would contain the current income statement presentation followed by the components of other comprehensive income and a total amount for comprehensive income), or in two separate but consecutive statements. This guidance is effective for the Company’s fiscal year beginning April 1, 2012. The
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Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Company does not expect the guidance to have a material impact on its consolidated financial statements.


In May 2011, the FASB issued an accounting standards update related to fair value measurements and disclosures to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and International Financial Reporting Standards. This guidance includes amendments that clarify the intent about the application of existing fair value measurement requirements, while other amendments change a principle or requirement for measuring fair value or for disclosing information about fair value measurements. Specifically, the guidance requires additional disclosures for fair value measurements that are based on significant unobservable inputs. The updated guidance is to be applied prospectively and is effective for the Company’s interim and annual periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.


3. Restricted Cash

Restricted cash represents amounts held as collateral required under our revolving film credit facility, and amounts that are contractually designated for certain theatrical marketing obligations. Additionally, at March 31, 2011, restricted cash also included approximately $14.0 million held in a trust to fund the Company’s cash severance obligations that would have been due to certain executive officers should their employment have been terminated “without cause," in connection with a “change in control” of the Company (in each case, as defined in each of their respective employment contracts). For purposes of the employment agreements with such executive officers, a “change in control” occurred on June 30, 2010 when a certain shareholder became the beneficial owner of 33% or more of the Company’s common shares. Accordingly, the trust became irrevocable, and the Company could not withdraw any trust assets (other than once every six months in an amount that the trustee reasonably determines exceeds the remaining potential severance obligations), until any cash severance obligations that were payable to the executives had been paid or the employment agreements with the executives expired or terminated without those obligations becoming payable. The trust was terminated in December 2011 and the funds were returned to unrestricted cash.




4. Investment in Films and Television Programs

 





























 

March 31,
2012


 

March 31,
2011


 

(Amounts in thousands)

Motion Picture Segment - Theatrical and Non-Theatrical Films

 

 

 

Released, net of accumulated amortization

$

557,003




 

$

212,125




Acquired libraries, net of accumulated amortization

29,320




 

31,929




Completed and not released

53,258




 

47,347




In progress

512,712




 

170,372




In development

19,399




 

11,825




Product inventory

31,000




 

29,467




 

1,202,692




 

503,065




Television Segment - Direct-to-Television Programs

 

 

 

Released, net of accumulated amortization

93,499




 

92,290




In progress

30,781




 

10,206




In development

2,081




 

2,196




 

126,361




 

104,692




 

$

1,329,053




 

$

607,757




The following table sets forth acquired libraries that represent titles released three years prior to the date of acquisition. These libraries are being amortized over their expected revenue stream from the acquisition date over a period up to 20 years:
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Table of Contents



LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)























































 

 

 

 

Total

Amortization

Period

 

Remaining

Amortization

Period

 

Unamortized Costs

 

Unamortized Costs

Acquired Library

 

Acquisition Date

 




 




 

March 31, 2012

 

March 31, 2011

 

 

 

 

(In years)

 

(Amounts in thousands)

Trimark Holdings

October 2000

 

20.00




 

8.50




 

$

1,660




 

$

2,900




Artisan Entertainment

December 2003

 

20.00




 

11.75




 

22,112




 

28,348




Lionsgate UK

October 2005

 

20.00




 

13.50




 

532




 

681




Summit Entertainment

January 2012

 

20.00




 

19.75




 

5,016




 






Total Acquired Libraries

 

 

 

 

 

 

$

29,320




 

$

31,929




The Company expects approximately 46% of completed films and television programs, net of accumulated amortization, will be amortized during the one -year period ending March 31, 2013 . Additionally, the Company expects approximately 81% of completed and released films and television programs, net of accumulated amortization and excluding acquired libraries, will be amortized during the three -year period ending March 31, 2015 .




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