XML 19 R10.htm IDEA: XBRL DOCUMENT v2.4.0.8
INVESTMENT IN NON-CONSOLIDATED ENTITY
 6 Months Ended
Sep. 30, 2013
Equity Method Investments and Joint Ventures [Abstract]  
INVESTMENT IN NON-CONSOLIDATED ENTITY
INVESTMENT IN NON-CONSOLIDATED ENTITY
 
Investment in Holdings
 
As discussed in Note 2, Holdings, a subsidiary of Phase 2 DC, which is wholly owned by the Company, and its wholly owned limited liability company, Cinedigm Digital Funding 2, LLC, were created for the purpose of capitalizing on the conversion of the exhibition industry from film to digital technology. Holdings assists customers in procuring the necessary equipment in the conversion of their Systems by providing the necessary financing, equipment, installation and related ongoing services. Holdings is a VIE, as defined in ASC 810, indirectly wholly owned by the Company. ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE. To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, among other factors. Although Holdings is indirectly wholly owned by the Company, a third party, which also has a variable interest in Holdings, along with an independent third party manager and the Company must mutually approve all business activities and transactions that significantly impact Holdings' economic performance. The Company has thus assessed its variable interests in Holdings and determined that it is not the primary beneficiary of Holdings and therefore accounts for its investment in Holdings under the equity method of accounting. In completing our assessment, the Company identified the activities that it considers most significant to the economic performance of Holdings and determined that we do not have the power to direct those activities. As a result, Holdings' financial position and results of operations are not consolidated in the financial position and results of operations of the Company.

The Company's maximum exposure to loss as it relates to Holdings as of September 30, 2013 and March 31, 2013 includes:

•
The Company's investment in the equity of Holdings;
•
As a result of operating losses for the six months ended September 30, 2013, the investment in the equity of Holdings is $0 as of September 30, 2013. As of March 31, 2013, the investment in the equity of Holdings was $1,812; and
•
Accounts receivable due from Holdings for service fees under its master service agreement of $268 and $396, respectively, included within accounts receivable, net on the accompanying condensed consolidated balance sheets.

During the three months ended September 30, 2013 and 2012, the Company received $275 and $470 in aggregate revenues through digital cinema servicing fees from Holdings, respectively, included in revenues on the accompanying condensed consolidated statements of operations. During the six months ended September 30, 2013 and 2012, such amounts were $537 and $894, respectively. Digital cinema servicing fees earned from Holdings during the three and six months ended September 30, 2012 included one-time installation management fees of $461 and $920, respectively.

The change in the carrying amount of our investment in Holdings for the six months ended September 30, 2013 is as follows:
Balance at March 31, 2013
 
$
1,812

Equity in loss of Holdings
 
(1,812
)
Balance at September 30, 2013
 
$
—