United states securities and exchange commission



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61


Table of Contents
Total General and Administrative Expenses

General and administrative expenses decreased by $2.6 million , or 1.5% , as reflected in the table above and further discussed below.



Motion Pictures

General and administrative expenses of the motion pictures segment increased $7.1 million , or 14.7% . The increase in motion pictures general and administrative expenses is primarily due to general and administrative expenses associated with Summit, acquired on January 13, 2012. Included in the motion pictures segment in fiscal 2012, is $2.4 million in general and administrative expenses associated with Maple Pictures. Due to the sale of Maple Pictures, the Company will no longer incur general and administrative expenses associated with Maple Pictures. In fiscal 2012 , $11.4 million of motion pictures production overhead was capitalized compared to $9.0 million in fiscal 2011 .



Television Production

General and administrative expenses of the television production segment decreased $0.6 million , or 5.2% . In fiscal 2012 , $5.8 million of television production overhead was capitalized compared to $4.3 million in fiscal 2011 .


Shared Services and Corporate Expenses

Shared services and corporate expenses excluding share-based compensation expense, shareholder activist matter costs and severance and transaction costs related to the acquisition of Summit, increased $10.9 million , or 19.4% , mainly due to increases in incentive related compensation and to a lesser extent, rent and facilities expenses, partially offset by decreases in legal and professional fees.


Shareholder activist matter costs decreased $24.6 million as a result of significantly less shareholder activist activity in fiscal 2012 , as compared to fiscal 2011 . Additionally, shareholder activist matter costs in fiscal 2012 include a $3.9 million benefit, recorded in the quarter ended June 30, 2011, related to a negotiated settlement with a vendor of costs incurred and recorded in the prior fiscal year, and insurance recoveries of related litigation offset by other costs incurred.
Share-Based Compensation Expense. The following table sets forth share-based compensation expense included in shared services and corporate expenses for the fiscal years ended March 31, 2012 and 2011 :

 


















































 

Year Ended

 

Year Ended

 

Increase (Decrease)

 

March 31, 2012




March 31, 2011




Amount

 

Percent

 

(Amounts in millions)

Share-Based Compensation Expense:

 

 

 

 

 

 

 

Stock options (1)

$

0.2




 

$

2.6




 

$

(2.4

)

 

(92.3

)%

Restricted share units and other share-based compensation (1)

9.5




 

26.0




 

(16.5

)

 

(63.5

)%

Stock appreciation rights (2)

15.3




 

3.8




 

11.5




 

302.6

 %

 

$

25.0




 

$

32.4




 

$

(7.4

)

 

(22.8

)%

______________________







(1)

The decrease in share-based compensation from stock options and restricted share units is due to $21.9 million of share-based compensation expense associated with the immediate vesting of equity awards of certain executive officers triggered by the “change in control” provisions in their respective employment agreements during the year ended March 31, 2011.







(2)

The increase in stock appreciation rights expense is primarily associated with the increase in the Company's stock price during the year ended March 31, 2012.

At March 31, 2012 , as disclosed in Note 14 to the consolidated financial statements, there were unrecognized compensation costs of approximately $12.0 million related to stock options and restricted share units previously granted, including annual installments of share grants that were subject to performance targets, which will be expensed over the remaining vesting periods. At March 31, 2012 , 381,698 shares of restricted share units have been awarded to two key executive officers, the vesting of which will be subject to performance targets to be set annually by the Compensation Committee of the Board of Directors. These restricted share units will vest in two annual installments assuming annual performance targets have been met. The fair value of the 381,698 shares, whose future annual performance targets have not been set, was $5.3 million, based on the market price of our common shares as of March 31, 2012 . The market value will be remeasured when the annual performance criteria are set and the value will be expensed over the remaining vesting periods once it becomes probable that the performance targets will be satisfied.
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Table of Contents
Depreciation, Amortization and Other Expenses (Income)

Depreciation and amortization of $4.3 million for fiscal 2012 decreased $1.5 million from $5.8 million in fiscal 2011 .

Interest expense of $78.1 million for fiscal 2012 increased $22.9 million , or 41.5% , from $55.2 million in fiscal 2011 . The following table sets forth the components of interest expense for the fiscal years ended March 31, 2012 and 2011 :

 





























 

Year Ended

 

Year Ended

 

March 31, 2012




March 31, 2011

 

(Amounts in millions)

Interest Expense

 

 

 

Cash Based:

 

 

 

Senior revolving credit facility

$

4.1




 

$

6.8




Convertible senior subordinated notes

4.1




 

5.6




Senior secured second-priority notes

42.2




 

24.2




Term loan

6.9




 






Other

5.1




 

2.3




 

62.4




 

38.9




Non-Cash Based:

 

 

 

Amortization of discount (premium) on:

 

 

 

Liability component of convertible senior subordinated notes

7.8




 

10.1




Senior secured second-priority notes

0.7




 

1.2




Term loan

0.4




 






Amortization of deferred financing costs

6.8




 

5.0




 

15.7




 

16.3




 

$

78.1




 

$

55.2




Interest and other income was $2.8 million in fiscal 2012 , compared to $1.7 million in fiscal 2011 .

The following table represents our portion of the income or (loss) of our equity method investees based on our percentage ownership for the fiscal years ended March 31, 2012 and 2011 :



 



































 

March 31, 2012

 

 

 

 

 

Ownership

 

Year Ended




Year Ended

 

Percentage

 

March 31, 2012




March 31, 2011

 

 

 

 

 

As adjusted (3)

 

 

 

(Amounts in millions)

Horror Entertainment, LLC (“FEARnet”)

34.5%

 

$

0.1




 

$

0.7




NextPoint, Inc. (“Break Media”)

42.0%

 

(5.9

)

 

(2.4

)

Roadside Attractions, LLC

43.0%

 

0.6




 

0.8




Studio 3 Partners, LLC (“EPIX”) (1)

31.2%

 

24.4




 

(15.0

)

TV Guide Network (2)

51.0%

 

(8.5

)

 

(3.0

)

Tiger Gate Entertainment Limited ("Tiger Gate") (4)

45.9%

 

(2.3

)

 

(1.8

)

 

 

 

$

8.4




 

$

(20.7

)

 ______________________







(1)

We license certain of our theatrical releases and other films and television programs to EPIX. A portion of the profits of these licenses reflecting our ownership share in the venture is eliminated through an adjustment to the equity interest income (loss) of the venture. These profits are recognized as they are realized by the venture (see Note 7 to our consolidated financial statements).







(2)

We license certain films and/or television programs to TV Guide Network. A portion of the profits of these licenses reflecting our ownership share in the venture is eliminated through an adjustment to the equity interest loss of the venture. These profits are recognized as they are realized by the venture (see Note 7 to our consolidated financial statements).







(3)

Due to the elimination of the one-quarter lag in reporting EPIX's results at March 31, 2012 , equity interest income (loss) for EPIX for the year ended March 31, 2011 has been adjusted as shown above (see Note 7 to our consolidated financial

63


Table of Contents
statements for further information).







(4)

Our former joint venture with Saban Capital Group, Inc. (“SCG”). In January 2012, the assets of Tiger Gate were contributed to Celestial Tiger Entertainment Limited (“Celestial Tiger Entertainment”), our joint venture with SCG and Celestial Pictures, a company wholly-owned by Astro Malaysia Holdings Sdn Bhd., of which we own a 16% interest. Accordingly, our interest in Celestial Tiger Entertainment will be accounted under the cost method.




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