United states securities and exchange commission



Download 6.39 Mb.
Page104/105
Date31.05.2016
Size6.39 Mb.
1   ...   97   98   99   100   101   102   103   104   105

Goodwill

Goodwill represents the excess of acquisition costs over the fair value of the tangible and intangible assets acquired and liabilities assumed in the acquisition of the Company by Lions Gate on February 28, 2009. Goodwill is not amortized but is reviewed for impairment annually within each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. The impairment test follows a two-step approach. The first step determines if the goodwill is potentially impaired, and the second step measures the amount of the impairment loss, if necessary. Under the first step, goodwill is considered potentially impaired if the fair


10

2. Significant Accounting Policies (continued)

value of the reporting unit is less than the reporting unit’s carrying amount, including goodwill. Under the second step, the impairment loss is then measured as the excess of recorded goodwill over the fair value of the goodwill, as calculated. The fair value of goodwill is calculated by allocating the fair value of the reporting unit to all the assets and liabilities of the reporting unit as if the reporting unit was purchased in a business combination and the purchase price was the fair value of the reporting unit. The Company performs its annual impairment test as of January 1 in each fiscal year. The Company performed its annual impairment test on its goodwill as of January 1, 2011. No goodwill impairment was identified.



Other Assets

Other assets include prepaid expenses and security deposits.



Share-Based Compensation

Accounting rules require the measurement of all share-based awards using a fair value method and the recognition of the related share-based compensation expense in the consolidated financial statements over the requisite service period.



Income Taxes

The Company mainly operates as limited liability companies, so any federal and state tax exposure is minimal. For limited liability companies, federal and state income taxes are liabilities of the individual members. The Company’s tax returns and the amount of allocable profits or losses are subject to examination by federal and state taxing authorities. If such examinations result in changes to profits and losses, the income tax liability of the members may also change. As a result, only minimal federal and state income tax expense has been recorded in these consolidated financial statements for the year ending March 31, 2011. The provision is mainly derived from federal and state income taxes.

Tax expense in the year ended March 31, 2010 primarily represents the tax impact of net earnings prior to the Company’s conversion to a limited liability structure.
11


2. Significant Accounting Policies (continued)



Fair Value of Financial Instruments

Carrying amounts of certain of the Company’s financial instruments, including accounts receivable, accounts payable and accrued liabilities, approximate their fair value because of their short maturities.



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 consolidated financial statements relate to estimating the provision for doubtful accounts; estimating the number of program runs for acquired programming amortization; estimating the useful lives of property and equipment and amortizable intangible assets; and impairment assessments for programming cost, property and equipment, goodwill and amortizable intangible assets. Actual results could differ from such estimates.



Credit Risk and Significant Concentrations

Accounts that potentially subject the Company to a concentration of credit risk principally consist of trade receivables. For the years ended March 31, 2011 and 2010, there were no revenues from one single customer in excess of 10% of total revenues. As of March 31, 2011 and 2010, there was no single customer that accounted for 10% or more of the total accounts receivable balance. The Company does not require collateral and evaluates its outstanding accounts receivable each period for collectability. This evaluation involves assessing the aging of the amounts due and reviewing the creditworthiness of each customer. Based on this evaluation, the Company records an allowance for accounts receivable that are estimated to not be collectible.



Subsequent Events

The Company has evaluated all events and transactions subsequent to March 31, 2011 through the date of issuance, May 31, 2011. There were no material subsequent events that required recognition or additional disclosure in these consolidated financial statements.


12

2. Significant Accounting Policies (continued)

Recent Accounting Pronouncements

In October 2009, new guidance was issued related to the accounting for multiple-deliverable revenue arrangements. This new guidance amends the existing guidance for separating consideration in multiple-deliverable arrangements and establishes a hierarchy for determining the selling price of a deliverable. The pronouncement is effective for fiscal years beginning on or after June 15, 2010. The Company will adopt the provisions of this new guidance on April 1, 2011. The Company is currently determining the impact on its consolidated financial statements.



3. Accounts Receivable

Accounts receivable consists of the following (in thousands):




























 

March 31

 

2011

2010

 

 

 

Accounts receivable

$

22,874




$

21,523




Allowance for doubtful accounts

(1,706

)

(1,825

)

Accounts receivable, net

$

21,168




$

19,698





4 . Property and Equipment

Property and equipment consists of the following (in thousands):




























 

March 31

 

2011

2010

 

 

 

Equipment under capital lease

$

12,065




$

12,065




Furniture and fixtures

1,050




1,170




Computer equipment and software

8,539




8,632




Machinery and equipment

7,497




5,883




Leasehold improvements

3,588




3,917




 

32,739




31,667




Less accumulated depreciation and amortization

(15,744

)

(10,504

)

Property and equipment, net

$

16,995




$

21,163




13


4. Property and Equipment (continued)

Depreciation and amortization expense related to property and equipment was $6.1 million and $9.4 million for the years ended March 31, 2011 and 2010, respectively, including amortization of equipment under capital lease of $1.2 million in each year. Accumulated amortization of equipment under capital lease was $2.4 million and $1.2 million at March 31, 2011 and 2010, respectively.



5. Programming Costs

Programming costs consist of the following (in thousands):



































































 

March 31

 

2011

 

2010

 

Current

Noncurrent

Total

 

Current

Noncurrent

Total

 

 

 

 

 

 

 

 

Acquired programming costs

$

10,105




$

30,547




$

40,652




 

$

2,530




$

16,723




$

19,253




In-house programming costs

373









373




 

290









290




 

$

10,478




$

30,547




$

41,025




 

$

2,820




$

16,723




$

19,543






Share with your friends:
1   ...   97   98   99   100   101   102   103   104   105




The database is protected by copyright ©essaydocs.org 2020
send message

    Main page