Business Context and Reporting Period
This Form 8-K is filed by Lions Gate Entertainment Corp. on May 9, 2011. The report addresses the retrospective application of new accounting guidance regarding the consolidation of Variable Interest Entities (VIEs) on the Company's historical financial information for the fiscal year ended March 31, 2010. The filing clarifies that while the new standard was adopted for the fiscal year ending March 31, 2011, its effects are being applied retrospectively to prior periods.
Key Financial Metrics
The filing does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it details a change in accounting methodology. The primary financial impact described is the deconsolidation of TV Guide Network (including TV Guide Network On Demand and TV Guide Online) from the Company's financial statements. The Company explicitly states that the adoption of this consolidation accounting standard did not impact the net loss for the fiscal year ended March 31, 2010.
Material Changes Versus Prior Period
- Accounting Methodology: The Company shifted from consolidating TV Guide Network to accounting for it under the equity method of accounting.
- Reason for Change: Under the new VIE guidance, the Company determined it was no longer the primary beneficiary because the power to direct activities significantly impacting economic performance is shared with One Equity Partners (OEP), the 49% owner.
- Retrospective Application: The deconsolidation is applied retrospectively to May 28, 2009, the date the 49% interest was sold to OEP.
- Document Updates: This filing supersedes specific sections of the 2010 Form 10-K, including Risk Factors, Properties, Selected Financial Data, MD&A, Market Risk disclosures, Financial Statements, and Controls and Procedures.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, management commentary on future operations, or new risk factors beyond the accounting change. The document notes that the revised financial information is incorporated by reference in the exhibits and that the report does not reflect events occurring after June 1, 2010. Investors are advised to read this report in conjunction with the 2010 Form 10-K and subsequent filings.
Important Facts for Investor Verification
- Verify the specific line-item adjustments in the revised 2010 Form 10-K exhibits (99.1 through 99.8) to understand the full impact of deconsolidating TV Guide Network on assets and liabilities.
- Confirm that the net loss for the fiscal year ended March 31, 2010, remains unchanged despite the accounting shift.
- Review the equity method accounting treatment for TV Guide Network in subsequent quarterly reports (10-Q) to ensure consistency with the retrospective application.
- Note that this filing is not a restatement of the 2010 Form 10-K but rather a disclosure of the effects of the new standard on historical data.