United states securities and exchange commission



Download 6.39 Mb.
Page105/105
Date31.05.2016
Size6.39 Mb.
1   ...   97   98   99   100   101   102   103   104   105

The acquired programming costs balance at March 31, 2011 reflects all delivered episodes. There are additional episodes contractually committed under the license agreements that will be delivered in future periods. Amortization expense related to acquired programming costs for the years ended March 31, 2011 and 2010 was $12.2 million and $2.6 million, respectively.

The in-house programming costs balance consists of all capitalized costs for episodes in production or completed but not aired as of March 31, 2011 and 2010.
14


6. Amortizable Intangible Assets



Amortizable intangible assets consist primarily of customer relationships and trademarks. The composition of the Company’s amortizable intangible assets and the associated accumulated amortization (in thousands) is as follows:







































































 

Weighted-

 

March 31

 

Average

Range of

2011

 

2010

 

Remaining

Life in

Years

Remaining

Life in

Years

Gross

Carrying

Amount

Accumulated

Amortization

Net

Carrying

Amount

 

Gross

Carrying

Amount

Accumulated

Amortization

Net

Carrying

Amount

 

 

 

 

 

 

 

 

 

 

Customer relationships

8

3 – 9

$

66,340




$

(13,559

)

$

52,781




 

$

66,340




$

(6,993

)

$

59,347




Trademark/tradename

15

0 – 18

10,250




(2,369

)

7,881




 

10,250




(1,263

)

8,987




License agreements

1

0 – 4

1,510




(1,314

)

196




 

1,510




(710

)

800




Internal use software

0

0

2,200




(2,200

)






 

2,200




(1,197

)

1,003




 

 

 

$

80,300




$

(19,442

)

$

60,858




 

$

80,300




$

(10,163

)

$

70,137



The aggregate amount of amortization expense associated with the Company’s intangible assets for the years ending March 31, 2011 and 2010 was approximately $9.3 million and $9.4 million, respectively. The estimated aggregate amortization expense for each of the years ending March 31, 2012 through 2016 is approximately $7.1 million, $7.1 million, $7.0 million, $6.8 million, and $6.7 million, respectively.



7. Accounts Payable and Other Accrued Liabilities

Accounts payable and other accrued liabilities consist of the following (in thousands):




























 

March 31

 

2011

2010

 

 

 

Accounts payable

$

5,104




$

3,646




Payroll-related accruals

4,380




4,262




Customer credits

3,306




2,755




Advertising accruals

1,865




901




Unfavorable lease adjustment

1,043




1,262




Other

2,304




4,137




 

$

18,002




$

16,963




15


8. Long-Term Obligations

Accrued Programming Costs

Accrued programming costs at March 31, 2011 and 2010 represent the present value of payments remaining on delivered episodes using a discount rate of 3.25%.



Future payments of programming costs (in thousands) are as follows:

































































 

Year Ended March 31

 

2012

2013

2014

2015

2016

Thereafter

Total

 

 

 

 

 

 

 

 

Contractual commitments

$

7,943




$

6,585




$

5,629




$

5,954




$

1,509




$ –

$

27,620




Imputed interest

 

 

 

 

 

 

(1,651

)

Undelivered episodes

 

 

 

 

 

 

(746

)

 

 

 

 

 

 

 

$

25,223



Commitments represent future minimum payments as required by contracted license agreements, relating to the purchase of programming. Future payments under these obligations are based on contractual due dates. The amounts include imputed interest payments associated with the obligations.



Lease Obligations

Future minimum lease payments under capital and noncancelable operating leases at March 31, 2011, are as follows (in thousands):




























 

Capital Lease

Operating Leases

Year ending March 31:

 

 

2012

$

1,600




$

3,209




2013

1,600




3,580




2014

1,600




3,183




2015

1,600




2,023




2016

1,600




1,517




Thereafter

5,467









Total future minimum lease payments

13,467




13,512




Less amount representing interest at 6.65%

3,178









Net future minimum lease payments

$

10,289




$

13,512



16


8. Long-Term Obligations (continued)

The Company leases office premises and equipment. Certain of the Company’s operating leases have renewal options upon expiration of current terms. The Company’s primary facilities are located in Hollywood, California, Tulsa, Oklahoma, and New York, New York. Rent expense recorded to general and administrative expense was $3.2 million and $3.1 million for the years ended March 31, 2011 and 2010, respectively. This excludes rent of $0.5 million each year for studio production facilities, which is recorded as in-house production expense.



Other Long-Term Obligations

Other contractual commitments for the years ending March 31, 2012 through 2016 and thereafter are approximately $3.1 million, $2.6 million, $2.5 million, $2.5 million, $1.4 million, and $1.5 million, respectively, relating to service and data license agreements. The Company also has contractual commitments of $3.5 million, $3.5 million, $3.5 million, $3.5 million, $3.5 million and $1.2 million, for the years ending March 31, 2012 through 2016 and thereafter, respectively, to be paid to a related party, as discussed in Note 11.



9. Mandatorily Redeemable Preferred Units, Members’ Equity and Share-Based Compensation

The Company had 100,000 mandatorily redeemable Preferred Units and 100,000 B-1 Common Units outstanding at March 31, 2011. The Preferred Units carry a 10% dividend compounded annually and are payable at maturity. The carrying value of the Preferred Units was $200.7 million as of March 31, 2011, and $193.0 million as of March 31, 2010, including accretion through March 31, 2011 of its redemption value at maturity and the 10% dividend, less a $20.0 million dividend to the Preferred Unit Holders discussed below. The accretion is calculated using the effective interest method and recorded as interest expense. The Preferred Units and Series B-1 Common Units are non-voting units; however, only the Preferred Unit holders can elect the board of managers. The Preferred Units are redeemable in May 2019 at the stated value plus the dividend return and any additional capital contributions less previous distributions. On March 8, 2011, the Company paid a dividend of $20.0 million of the accreted interest to the Preferred Unit Holders. Assuming no additional distributions, dividends or additional capital contributions, the redemption amount would be $618.6 million at May 2019. The redemption value as of March 31, 2011, based on the stated value and the dividend earned through that date, would be $284.1 million.


17


9. Mandatorily Redeemable Preferred Units, Members’ Equity and Share-Based Compensation (continued)

The board of managers has authorized the issuance of up to 8,889 Series B-2 Common Units (“B-2 Common Units”) that vest over five years and 2,223 B-2 Common Units that may be granted through a junior unit that only vests if there is an exit event, as defined, with a return to Members upon exit of between 350% and 500% or more of the Members’ investment. During the year ended March 31, 2010, the Company granted 3,556 B-2 Common Units for services rendered by an employee. These units granted were valued at fair value at grant date and are being expensed as earned over the five-year vesting period. Total compensation expense recorded for these units amounted to $0.5 million and $0.4 million during the years ended March 31, 2011 and 2010, respectively. The fair values of the units were determined based on the value of the Company’s May 28, 2009, sale of Lions Gate’s 49% interest to OEP. The fair value per unit was $706 at the time of grant. Unrecognized compensation expense as of March 31, 2011 is $1.6 million.

10. Interest Expense

Interest expense, net (in thousands) consists of the following:




























 

Year Ended March 31

 

2011

2010

Interest expense:

 

 

Preferred Units and dividend accretion

$

27,704




$

20,587




Equipment under capital lease

717




774




Acquired programming

1,173




169




 

29,594




21,530




Interest income

(38

)

(27

)

 

$

29,556




$

21,503




18


11. Related Party Transactions

Amounts due to related parties total approximately $12.7 million and $1.0 million at March 31, 2011 and 2010, respectively, including $11.9 million and $0.5 million due to Lions Gate for accrued programming costs at March 31, 2011 and 2010, respectively. The Company is subject to various advertising and other media agreements with Lions Gate. For the years ended March 31, 2011 and 2010, under the agreements, the Company recognized approximately $2.1 million and $2.5 million in advertising revenue, respectively.

The Company entered into various acquired programming agreements with Lions Gate. Under the agreements, the Company recognized approximately $1.6 million and $1.2 million in programming expenses for the years ended March 31, 2011 and 2010, respectively.

In addition, the Company is charged a shared service fee by Lions Gate for human resource, payroll management, corporate finance, information technology support, and general management services. The shared service fee for the years ended March 31, 2011 and 2010 was $1.3 million and $1.1 million, respectively.



12. Litigation and Other Contingencies

The Company is, from time to time, involved in various claims, legal proceedings and complaints arising in the ordinary course of business. The Company does not believe that adverse decisions in any such pending or threatened proceedings, or any amount which the Company might be required to pay by reason thereof, would have a material adverse effect on the financial condition or future operating results of the Company.



13. Employee Benefit Plan

The Company has a defined contribution plan under Internal Revenue Code Section 401(k) covering all eligible employees. The plan includes a discretionary match provision, matching employees’ voluntary contributions up to $1,000 per employee. The Company incurred charges of $0.2 million and $0.4 million for employer matching contributions to the plan for the years ended March 31, 2011 and 2010, respectively.



14. Supplemental Cash Flow Information

The Company paid $0.1 million in taxes for each of the years ended March 31, 2011 and 2010.


19


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