Business Context and Reporting Period
Company: National CineMedia, Inc.
Filing Type: Form 8-K (Current Report)
Date of Filing: November 5, 2009
Reporting Period: The filing primarily addresses the restatement of financial statements for the fiscal year ended January 1, 2009, and the quarters ended April 2, 2009, and July 2, 2009. It also references the issuance of financial results for the quarter and nine months ended October 1, 2009, via a press release (Exhibit 99.1).
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity for the current period. The document focuses on accounting restatements rather than operational performance metrics.
Restatement Adjustments Identified:
- 2008 Fiscal Year: A $14.9 million adjustment was made to include distributions to noncontrolling interests in excess of their proportionate share of earnings, with a corresponding credit to additional paid-in capital (deficit).
- Non-Cash Charges (2008 Q4): The filing notes a $16.3 million pre-tax non-cash charge related to an ineffective hedging instrument and an $11.5 million pre-tax non-cash charge related to an investment in an affiliate. These charges influenced the application of EITF No. 95-7.
- 2009 Quarters: Restatements corrected the noncontrolling interest balance at January 1, 2009, from a deficit to zero, impacting retained earnings and additional paid-in capital. There was no change to Total Equity/(Deficit) or the Statements of Operations.
Material Changes Versus Prior Period
The primary material change is the non-reliance on previously issued financial statements for the periods ending January 1, 2009, April 2, 2009, and July 2, 2009. The Audit Committee concluded these statements contained errors regarding the presentation of minority/noncontrolling interest.
- Accounting Standard Application: The company determined that EITF No. 95-7 was applicable to the 2008 fiscal year, requiring the minority interest charge to be the greater of the minority interest holders' share of earnings or distributions. This resulted in the $14.9 million restatement.
- Retrospective Application Error: For 2009 periods, the company incorrectly applied the measurement provisions of SFAS No. 160 retrospectively. The balance for noncontrolling interest should have been zero prior to the adoption of SFAS No. 160 on January 2, 2009.
Guidance, Outlook, Risks, and Unusual Items
Unusual Items: The filing details significant accounting corrections related to noncontrolling interest calculations and the application of EITF No. 95-7 and SFAS No. 160.
Risks and Contingencies: The filing explicitly states that the information, including the press release, shall not be deemed "filed" for purposes of Section 18 of the Exchange Act and is not subject to the liability of that section. It also notes that the restatement has no effect on cash distributions paid to members of NCM LLC.
Outlook: The filing does not contain forward-looking guidance or management commentary regarding future operational performance. It notes that beginning with the adoption of SFAS No. 160, the company returned to recording all distributions through equity.
Important Facts for Investor Verification
- Verify the amended Form 10-K for the fiscal year ended January 1, 2009, and amended Form 10-Qs for the periods ended April 2, 2009, and July 2, 2009, to review the corrected financial statements.
- Confirm the impact of the $14.9 million restatement on the company's equity structure and retained earnings.
- Review the press release (Exhibit 99.1) for actual revenue and profit figures for the quarter and nine months ended October 1, 2009, as these are not detailed in the 8-K text.
- Note that the restatements were discussed with the independent registered public accounting firm, Deloitte & Touche LLP.