United states securities and exchange commission



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Depreciation and amortization expense related to property and equipment was $4.5 million and $6.1 million for the years ended March 31, 2012 and 2011, respectively, including amortization of equipment under capital lease of $1.2 million in each year. Accumulated amortization of equipment under capital lease was $3.5 million and $2.4 million at March 31, 2012 and 2011, respectively. Unamortized capitalized software costs, net of accumulated depreciation, was $0.8 million and $0.9 million as of March 31, 2012 and 2011, respectively.



5. Programming Costs

Programming costs consist of the following (in thousands):



































































 

March 31

 

2012

 

2011

 

Current

Noncurrent

Total

 

Current

Noncurrent

Total

 

 

 

 

 

 

 

 

Acquired programming costs

$

11,789




$

16,245




$

28,034




 

$

10,105




$

30,547




$

40,652




In-house programming costs

381









381




 

373









373




 

$

12,170




$

16,245




$

28,415




 

$

10,478




$

30,547




$

41,025



14



5. Programming Costs (continued)

The acquired programming costs balance at March 31, 2012 reflects all delivered episodes available for broadcast. 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, 2012 and 2011 was $33.0 and $12.2 million, respectively, which includes impairment costs of $13.8 million and $1.3 million for the years ended March 31, 2012 and 2011, 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, 2012 and 2011.

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

2012

 

2011

 

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

7

2 - 8

$

66,340




$

(20,124

)

$

46,216




 

$

66,340




$

(13,559

)

$

52,781




Trademark/tradename

14

0 - 17

10,250




(2,810

)

7,440




 

10,250




(2,369

)

7,881




License agreements

1

0 - 3

1,510




(1,364

)

146




 

1,510




(1,314

)

196




 

 

 

$

78,100




$

(24,298

)

$

53,802




 

$

78,100




$

(17,242

)

$

60,858



The aggregate amount of amortization expense associated with the Company's intangible assets for the years ending March 31, 2012 and 2011 was approximately $7.1 and $9.3 million, respectively. The estimated aggregate amortization expense for each of the years ending March 31, 2013 through 2017 is approximately $7.1 million, $7.0 million, $6.8 million, $6.7 million, and $5.7 million, respectively.

15


7. Accounts Payable and Other Accrued Liabilities

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




























 

March 31

 

2012

2011

 

 

 

Payroll-related accruals

$

3,371




$

4,380




Accounts payable

3,207




5,104




Minimum audience guarantees

2,202




1,093




Advertising accruals

1,908




1,865




Unfavorable lease adjustment

823




1,043




Customer credits

665




3,306




Other

2,597




1,211




 

$

14,773




$

18,002





8. Long-Term Obligations

Accrued Programming Costs

Accrued programming costs at March 31, 2012 and 2011 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

 

2013

2014

2015

2016

2017

Thereafter

Total

 

 

 

 

 

 

 

 

Contractual commitments

$

11,660




$

6,427




$

6,223




$

1,509














$

25,819




Imputed interest

 

 

 

 

 

 

(999

)

Undelivered episodes

 

 

 

 

 

 

(3,223

)

 

 

 

 

 

 

 

$

21,597



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 on delivered episodes.


16


8. Long-Term Obligations (continued)

Lease Obligations

Future minimum lease payments under capital and noncancelable operating leases at March 31, 2012, are as follows (in thousands):




























 

Capital Lease

Operating Leases

Year ending March 31:

 

 

2013

$

1,600




$

3,445




2014

1,600




3,183




2015

1,600




2,023




2016

1,600




1,517




2017

1,600









Thereafter

3,866









Total future minimum lease payments

11,866




10,168




Less amount representing interest at 6.65%

(2,521

)






Net future minimum lease payments

$

9,345




$

10,168



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 for the years ended March 31, 2012 and 2011. This excludes rent of $0.5 million each year for studio production facilities, which is recorded as in-house production expense.





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