Annual Reports

 
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  • 10-Q (Nov 10, 2014)
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  • 10-Q (Nov 12, 2013)
  • 10-Q (Aug 9, 2013)
  • 10-Q (May 10, 2013)

 
8-K

 
Other

Ascent Capital Group, Inc. 10-Q 2010

Documents found in this filing:

  1. 10-Q
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-32
  5. Ex-32
e10vq
Table of Contents

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 
 
     
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended June 30, 2010
OR
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from          to          
 
Commission File Number 001-34176
 
 
 
     
State of Delaware
  26-2735737
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
     
12300 Liberty Boulevard
Englewood, Colorado
(Address of principal executive offices)
  80112
(Zip Code)
 
 
Registrant’s telephone number, including area code:
(720) 875-5622
 
 
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o
 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o     No o
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
             
Large accelerated filer o
  Accelerated filer þ   Non-accelerated filer o   Smaller Reporting company o
    (Do not check if a smaller reporting company)
 
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ
 
The number of outstanding shares of Ascent Media Corporation’s common stock as of July 30, 2010 was:
 
Series A common stock 13,558,436 shares; and
Series B common stock 734,027 shares.
 
 


 


Table of Contents

ASCENT MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
 
                 
    June 30,
    December 31,
 
    2010     2009  
    (Unaudited)  
    Amounts in thousands  
 
ASSETS
Current assets:
               
Cash and cash equivalents
  $ 284,688       292,914  
Trade receivables, net
    83,254       91,414  
Prepaid expenses
    11,525       9,756  
Deferred income tax assets, net
    71       562  
Assets held for sale
          2,817  
Income taxes receivable
    13,906       17,793  
Other current assets
    1,824       1,635  
                 
Total current assets
    395,268       416,891  
Investments in marketable securities (note 2)
    95,629       56,197  
Property and equipment, net
    173,798       187,498  
Deferred income tax assets, net
          1,029  
Assets held for sale
          9,261  
Other assets, net
    11,015       11,607  
                 
Total assets
  $ 675,710       682,483  
                 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
               
Accounts payable
  $ 16,277       18,731  
Accrued payroll and related liabilities
    22,862       17,778  
Other accrued liabilities
    24,537       21,647  
Deferred revenue
    9,651       8,618  
Liabilities related to assets held for sale
          4,098  
                 
Total current liabilities
    73,327       70,872  
Deferred tax liabilities
    1,067        
Other liabilities
    26,992       29,015  
                 
Total liabilities
    101,386       99,887  
                 
Commitments and contingencies (note 7)
               
Stockholders’ equity:
               
Preferred stock, $.01 par value. Authorized 5,000,000 shares; no shares issued
           
Series A common stock, $.01 par value. Authorized 45,000,000 shares; issued and outstanding 13,558,436 shares at June 30, 2010
    135       134  
Series B common stock, $.01 par value. Authorized 5,000,000 shares; issued and outstanding 734,027 shares at June 30, 2010
    7       7  
Series C common stock, $.01 par value. Authorized 45,000,000 shares; no shares issued
           
Additional paid-in capital
    1,466,578       1,464,925  
Accumulated deficit
    (885,081 )     (878,853 )
Accumulated other comprehensive loss
    (7,315 )     (3,617 )
                 
Total stockholders’ equity
    574,324       582,596  
                 
Total liabilities and stockholders’ equity
  $ 675,710       682,483  
                 
 
See accompanying notes to condensed consolidated financial statements.


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ASCENT MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Earnings (Loss)
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
    (Unaudited)  
    Amounts in thousands, except per share amounts  
 
Net revenue
  $ 99,508       114,269       204,027       229,526  
                                 
Operating expenses:
                               
Cost of services
    74,448       83,755       148,573       166,763  
Selling, general, and administrative, including stock-based and long-term incentive compensation (note 5)
    28,829       27,955       56,464       57,164  
Restructuring and other charges (note 4)
    495       1,088       1,196       1,486  
Loss on sale of operating assets
          56       58       210  
Depreciation and amortization
    12,953       13,982       26,653       27,575  
                                 
      116,725       126,836       232,944       253,198  
                                 
Operating loss
    (17,217 )     (12,567 )     (28,917 )     (23,672 )
Other income:
                               
Interest income
    888       605       1,570       1,156  
Other expense, net
    (1,188 )     (450 )     (1,274 )     (716 )
                                 
      (300 )     155       296       440  
                                 
Loss from continuing operations before income taxes
    (17,517 )     (12,412 )     (28,621 )     (23,232 )
Income tax benefit from continuing operations
    1,171       3,945       1,811       7,242  
                                 
Net loss from continuing operations
    (16,346 )     (8,467 )     (26,810 )     (15,990 )
Discontinued operations (note 3):
                               
Earnings from discontinued operations
          1,843       27,098       3,373  
Income tax benefit (expense)
    208       (580 )     (6,516 )     (1,035 )
                                 
Earnings from discontinued operations, net of income tax
    208       1,263       20,582       2,338  
                                 
Net loss
    (16,138 )     (7,204 )     (6,228 )     (13,652 )
                                 
Other comprehensive earnings (loss):
                               
Foreign currency translation adjustments
    344       6,722       (1,508 )     5,426  
Unrealized holding gains (losses), net of income tax
    (2,563 )     1,317       (2,324 )     1,317  
Pension liability adjustment
    67       34       134       67  
                                 
Other comprehensive earnings (loss)
    (2,152 )     8,073       (3,698 )     6,810  
                                 
Comprehensive earnings (loss)
  $ (18,290 )     869       (9,926 )     (6,842 )
                                 
Basic and diluted earnings (loss) per share (note 6):
                               
Continuing operations
  $ (1.15 )     (0.60 )     (1.89 )     (1.14 )
Discontinued operations
    0.01       0.09       1.45       0.17  
                                 
Net loss
  $ (1.14 )     (0.51 )     (0.44 )     (0.97 )
                                 
 
See accompanying notes to condensed consolidated financial statements.


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ASCENT MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
 
                         
    Six Months Ended
 
    June 30,  
    2010           2009  
    (Unaudited)  
    Amounts in thousands  
 
Cash flows from operating activities:
                       
Net loss
  $ (6,228 )             (13,652 )
Adjustments to reconcile net loss to net cash provided by operating activities:
                       
Earnings from discontinued operations, net of income tax
    (20,582 )             (2,338 )
Depreciation and amortization
    26,653               27,575  
Stock based compensation
    1,793               1,262  
Deferred income tax expense
    2,587               2,500  
Other non-cash activity, net
    228               2,755  
Changes in assets and liabilities:
                       
Trade receivables
    8,160               11,395  
Prepaid expenses and other current assets
    2,419               (8,382 )
Payables and other liabilities
    5,785               (6,104 )
Operating activities from discontinued operations, net
    (6,380 )             2,698  
                         
Net cash provided by operating activities
    14,435               17,709  
                         
Cash flows from investing activities:
                       
Capital expenditures
    (13,818 )             (16,131 )
Proceeds from sale of discontinued operations
    34,828                
Purchases of marketable securities
    (41,756 )             (29,965 )
Cash paid for acquisitions
                  (2,702 )
Proceeds from sale of operating assets
                  618  
Equity investments
    (959 )             (971 )
Investing activities from discontinued operations, net
                  (274 )
                         
Net cash used in investing activities
    (21,705 )             (49,425 )
                         
Cash flows from financing activities:
                       
Payment of capital lease obligations
    (957 )             (888 )
Issuance of common stock
    1                
                         
Net cash used in financing activities
    (956 )             (888 )
                         
Net decrease in cash and cash equivalents
    (8,226 )             (32,604 )
Cash and cash equivalents at beginning of period
    292,914               341,517  
                         
Cash and cash equivalents at end of period
  $ 284,688               308,913  
                         
 
See accompanying notes to condensed consolidated financial statements.


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ASCENT MEDIA CORPORATION AND SUBSIDIARIES
 
Notes to Condensed Consolidated Financial Statements
 
(1)   Basis of Presentation
 
The accompanying Ascent Media Corporation (“Ascent Media” or the “Company”) condensed consolidated financial statements represent the financial position and results of operations of Ascent Media and its consolidated subsidiaries. The Company has two reportable segments: the Content Services group and the Creative Services group. The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies.
 
The accompanying interim condensed consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the Ascent Media Annual Report on Form 10-K for the year ended December 31, 2009.
 
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses for each reporting period. The significant estimates made in preparation of the Company’s condensed consolidated financial statements primarily relate to long-lived assets, deferred tax assets, and the amount of the allowance for doubtful accounts. Actual results could differ from the estimates upon which the carrying values were based.
 
(2)   Investments in Marketable Securities
 
Starting in the second quarter of 2009, Ascent Media purchased marketable securities consisting of diversified corporate bond funds for cash. The following table presents the activity of these investments, which have all been classified as available-for-sale securities:
 
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2010     2009     2010     2009  
    Amounts in thousands  
 
Beginning Balance
  $ 66,608             56,197        
Purchases
    31,757       29,965       41,756       29,965  
Unrealized gain (loss)
    (2,736 )     2,208       (2,324 )     2,208  
                                 
Ending Balance
  $ 95,629       32,173       95,629       32,173  
                                 
 
The following table presents the net after-tax unrealized gains (losses) on the investments in marketable securities that were recorded in accumulated other comprehensive income on the consolidated balance sheet and in other comprehensive income on the consolidated statements of operations and comprehensive earnings (loss):
 
                                 
    Three Months Ended
       
    June 30,     Six Months Ended June 30,  
    2010     2009     2010     2009  
    Amounts in thousands  
 
Accumulated other comprehensive income
                               
Beginning Balance
  $ 1,591             1,352        
Gains (losses), net of tax(1)
    (2,563 )     1,317       (2,324 )     1,317  
                                 
Ending Balance
  $ (972 )     1,317       (972 )     1,317  
                                 
 
 
(1) Amounts are net of tax expense (benefit) of $(173,000) and $891,000 for the three months ended June 30, 2010 and 2009, respectively, and $0 and $891,000 for the six months ended June 30, 2010 and 2009, respectively.


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ASCENT MEDIA CORPORATION AND SUBSIDIARIES
 
Notes to Condensed Consolidated Financial Statements — (Continued)
 
(3)   Discontinued Operations
 
In February 2010, the Company completed the sale of the assets and operations of the Chiswick Park facility in the United Kingdom, which was previously included in the Content Services group, to Discovery Communications, Inc. The net cash proceeds on the sale were $34.8 million. The Chiswick Park assets and liabilities were classified as held for sale at December 31, 2009, and the results of operations of the Chiswick Park facility have been treated as discontinued operations in the condensed consolidated financial statements for all periods presented. Ascent Media recorded a pre-tax gain on the sale of $25,498,000, subject to customary post-closing adjustments, and $6,131,000 of related income tax expense. The gain and related income tax expense are included in earnings from discontinued operations in the accompanying condensed consolidated statement of operations.
 
The following table presents the results of operations of the discontinued operations that are included in earnings from discontinued operations, net of income tax on the condensed consolidated statement of operations:
 
                                 
    Three Months Ended
  Six Months Ended
    June 30,   June 30,
    2010   2009   2010   2009
    Amounts in thousands
 
Revenue
  $      —     $ 4,408     $ 2,532     $ 8,418  
Earnings before income taxes
  $     $ 1,843     $ 27,098 (a)   $ 3,373  
 
 
(a) The 2010 amount includes a $25,498,000 gain on the sale of the Chiswick Park facility.
 
(4)   Restructuring Charges
 
The Company recorded restructuring charges of $495,000 and $1,088,000, during the three months ended June 30, 2010 and 2009, respectively, and $1,196,000 and $1,486,000 during the six months ended June 30, 2010 and 2009, respectively. These charges related to certain severance and facility costs in conjunction with ongoing structural changes commenced in late 2008 that were implemented to align our organization with our strategic goals and with how we operate, manage and sell our services. Such changes include the consolidation of certain facilities in the United Kingdom and further restructuring and labor cost mitigation measures undertaken across all of our businesses.
 
The following table provides the activity and balances of the restructuring reserve. At June 30, 2010, approximately $2.6 million of the ending liability balance is included in other accrued liabilities with the remaining amount recorded in other long-term liabilities.
 
                                 
    December 31,
                June 30,
 
    2008     Additions     Deductions(a)     2009  
    Amounts in thousands  
 
Severance
  $ 2,526       1,472       (3,265 )     733  
Excess facility costs
    3,294       14       (939 )     2,369  
                                 
Total
  $ 5,820       1,486       (4,204 )     3,102  
                                 
 
                                 
    December 31,
                June 30,
 
    2009     Additions     Deductions(a)     2010  
    Amounts in thousands  
 
Severance
  $ 699       645       (1,195 )     149 (b)
Excess facility costs
    4,375       551       (2,132 )     2,794 (c)
                                 
Total
  $ 5,074       1,196       (3,327 )     2,943  
                                 
 
 
(a) Primarily represents cash payments.
 
(b) Substantially all of this amount is expected to be paid in 2010.
 
(c) Substantially all of this amount is expected to be paid by 2012.


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ASCENT MEDIA CORPORATION AND SUBSIDIARIES
 
Notes to Condensed Consolidated Financial Statements — (Continued)
 
(5)   Stock-Based and Long-Term Incentive Compensation
 
During the first quarter of 2010, certain key employees were granted a total of 12,766 shares of restricted stock awards that vest quarterly over one year. The restricted stock had a fair value of $28.20 per share which was the closing price of the Ascent Media Series A common stock on the date of grant.
 
(6)   Basic and Diluted Earnings (Loss) Per Common Share — Series A and Series B
 
Basic earnings (loss) per common share (“EPS”) is computed by dividing net earnings (loss) by the weighted average number of Series A and Series B common shares outstanding for the period. Diluted EPS is computed by dividing net earnings (loss) by the sum of the weighted average number of Series A and Series B common shares outstanding and the effect of dilutive securities such as outstanding stock options and unvested restricted stock. However, since the Company recorded a loss from continuing operations for all periods presented, diluted EPS is computed the same as basic EPS.
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
 
Weighted average Series A and Series B shares
    14,195,044       14,076,073       14,189,124       14,073,341  
Dilutive effect of stock options and unvested restricted stock
    202,156       216,010       188,860       192,397  
                                 
Diluted shares
    14,397,200       14,292,083       14,377,984       14,265,738  
                                 
 
(7)   Commitments, Contingencies and Other Liabilities
 
The Company is involved in litigation and other claims incidental to the conduct of its business. In management’s opinion, none of the pending actions is likely to have a material adverse impact on the Company’s financial position or results of operations.
 
(8)   Fair Value Measurements
 
According to the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification, fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories:
 
  •  Level 1 — Quoted prices for identical instruments in active markets.
 
  •  Level 2 — Quoted prices for similar instruments in active or inactive markets and valuations derived from models where all significant inputs are observable in active markets.
 
  •  Level 3 — Valuations derived from valuation techniques in which one or more significant inputs are unobservable in any market.


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ASCENT MEDIA CORPORATION AND SUBSIDIARIES
 
Notes to Condensed Consolidated Financial Statements — (Continued)
 
 
The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at June 30, 2010 and December 31, 2009:
 
                                 
    Level 1     Level 2     Level 3     Total  
    Amounts in thousands  
 
December 31, 2009
                               
Money market funds(a)
  $ 272,143                   272,143  
Investments in marketable securities(b)
    56,197                   56,197  
Other liabilities
                (3,327 )     (3,327 )
                                 
Total
  $ 328,340             (3,327 )     325,013  
                                 
June 30, 2010
                               
Money market funds(a)
  $ 269,582                   269,582  
Investments in marketable securities(b)
    95,629                   95,629  
Other liabilities
                (3,603 )     (3,603 )
                                 
Total
  $ 365,211             (3,603 )     361,608  
                                 
 
 
(a) Included in cash and cash equivalents on the condensed consolidated balance sheet.
 
(b) Investments consist entirely of diversified corporate bond funds and are all classified as available-for-sale securities.
 
The Level 3 liabilities consist of contingent consideration and participating residual interests related to business acquisitions which were computed using discounted future cash flow models which use estimated discount rates. The following table presents the activity in the Level 3 balances:
 
                 
    Six Months Ended
 
    June 30,  
    2010     2009  
    Amounts in thousands  
 
Beginning balance
  $ (3,327 )     (4,226 )
Contingent consideration
          (3,162 )
Amounts expensed(a)
    (276 )      
                 
Ending balance(b)
  $ (3,603 )     (7,388 )
                 
 
 
(a) Amount consisted of a contingent consideration change in fair value expense of $276,000. This amount was recorded in SG&A on the consolidated statement of operations.
 
(b) The 2010 amount consists of contingent consideration of $3,469,000 and a participating residual interest of $134,000. The 2009 amount consists of contingent consideration of $3,162,000 and a participating residual interest of $4,226,000.
 
Ascent Media’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates their fair value because of their short-term maturity.
 
(9)   Information About Reportable Segments
 
Ascent Media evaluates the performance of its reportable segments based on financial measures such as revenue and adjusted operating income before depreciation and amortization (which is referred to as “adjusted OIBDA”). Ascent Media defines “adjusted OIBDA” as revenue less cost of services and selling, general and administrative expenses (excluding stock-based and long-term incentive compensation and accretion expense on


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ASCENT MEDIA CORPORATION AND SUBSIDIARIES
 
Notes to Condensed Consolidated Financial Statements — (Continued)
 
asset retirement obligations) and defines “segment adjusted OIBDA” as adjusted OIBDA as determined in each case for the indicated operating segment or segments only. Ascent Media believes that segment adjusted OIBDA is an important indicator of the operational strength and performance of its businesses, including the businesses’ ability to fund their ongoing capital expenditures and service any debt. In addition, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to improve performance.
 
Adjusted OIBDA excludes depreciation and amortization, stock-based and long-term incentive compensation, accretion expense on asset retirement obligations, restructuring and impairment charges, gains/losses on sale of operating assets and other income and expense that are included in the measurement of earnings (loss) before income taxes pursuant to GAAP. Accordingly, adjusted OIBDA and segment adjusted OIBDA should be considered in addition to, but not as a substitute for, earnings (loss) before income taxes, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Because segment adjusted OIBDA excludes corporate and other SG&A (as defined below), and does not include an allocation for corporate overhead, segment adjusted OIBDA should not be used as a measure of Ascent Media’s liquidity or as an indication of the operating results that could be expected if either operating segment were operated on a stand-alone basis. Adjusted OIBDA and segment adjusted OIBDA are non-GAAP financial measures. As companies often define non-GAAP financial measures differently, adjusted OIBDA and segment adjusted OIBDA as calculated by Ascent Media should not be compared to any similarly titled measures reported by other companies.
 
Summarized financial information concerning the Company’s reportable segments is presented in the following tables:
 
                                         
    Reportable Segments        
    Content
  Creative
           
    Services
  Services
          Consolidated
    Group   Group   Total   Other(a)   Total
    Amounts in thousands
 
Three months ended June 30, 2010
                                       
Revenue from external customers
  $ 60,346       39,162       99,508             99,508  
Adjusted OIBDA
  $ 4,528       1,122       5,650       (6,939 )     (1,289 )
Capital expenditures
  $ 4,874       1,810       6,684       1,672       8,356  
Six months ended June 30, 2010
                                       
Revenue from external customers
  $ 118,852       85,175       204,027             204,027  
Adjusted OIBDA
  $ 8,902       7,312       16,214       (13,902 )     2,312  
Capital expenditures
  $ 8,527       2,526       11,053       2,765       13,818  
Three months ended June 30, 2009
                                       
Revenue from external customers
  $ 73,837       40,432       114,269             114,269  
Adjusted OIBDA
  $ 7,390       2,473       9,863       (6,666 )     3,197  
Capital expenditures
  $ 4,223       3,269       7,492       1,764       9,256  
Six months ended June 30, 2009
                                       
Revenue from external customers
  $ 148,431       81,095       229,526             229,526  
Adjusted OIBDA
  $ 12,719       7,103       19,822       (12,862 )     6,960  
Capital expenditures
  $ 8,863       4,993       13,856       2,275       16,131  
 
 
 
(a) Amounts shown in Other provide a reconciliation of total reportable segments to the Company’s consolidated total. Included in Other is corporate SG&A expenses and capital expenditures incurred at a corporate level.


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ASCENT MEDIA CORPORATION AND SUBSIDIARIES
 
Notes to Condensed Consolidated Financial Statements — (Continued)
 
 
The following table provides a reconciliation of total adjusted OIBDA to loss from continuing operations before income taxes.
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
    Amounts in thousands  
 
Total adjusted OIBDA
  $ (1,289 )     3,197       2,312       6,960  
Stock-based and long-term incentive compensation
    (1,138 )     (585 )     (1,793 )     (1,262 )
Restructuring and other charges
    (495 )     (1,088 )     (1,196 )     (1,486 )
Depreciation and amortization
    (12,953 )     (13,982 )     (26,653 )     (27,575 )
Loss on sale of operating assets, net
          (56 )     (58 )     (210 )
Other income (expense), net
    (300 )     155       296       440  
Other(a)
    (1,342 )     (53 )     (1,529 )     (99 )
                                 
Loss from continuing operations before income taxes
  $ (17,517 )     (12,412 )     (28,621 )     (23,232 )
                                 
 
 
(a) The three and six months periods ended June 30, 2010, includes an expense of approximately $1.2 million for a lump-sum payment related to the death benefits of our chief operating officer under the terms of his employment contract.
 
Information as to the Company’s operations in different geographic areas is as follows:
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
    Amounts in thousands     Amounts in thousands  
 
Revenue
                               
United States
  $ 78,253       92,483       161,483       186,874  
United Kingdom
    16,000       16,134       32,502       31,340  
Singapore
    5,255       5,652       10,042       11,312  
                                 
    $ 99,508       114,269       204,027       229,526  
                                 
 
                 
    June 30,
    December 31,
 
 
  2010     2009  
    Amounts in thousands  
 
Property and equipment, net
               
United States
  $ 138,423       149,919  
United Kingdom
    20,795       22,914  
Singapore
    14,580       14,665  
                 
    $ 173,798       187,498  
                 


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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, marketing and operating strategies, integration of acquired businesses, new service offerings, financial prospects, and anticipated sources and uses of capital. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:
 
  •  lack of operating history as a stand-alone company;
 
  •  general economic and business conditions and industry trends including the timing of, and spending on, motion picture, television and television advertising;
 
  •  integration of acquired businesses;
 
  •  the regulatory and competitive environment of the industries in which we and our customers operate;
 
  •  retention of our largest customer accounts;
 
  •  availability of third-party satellite and terrestrial connectivity services relied on by us to provide our services;
 
  •  the possibility of an industry-wide strike or other job action affecting a major entertainment industry union, or the duration of any existing strike or job action;
 
  •  rapid technological changes;
 
  •  present and future financial conditions, including availability and terms of capital;
 
  •  the outcome of any pending or threatened litigation;
 
  •  availability of qualified personnel;
 
  •  changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission, and adverse outcomes from regulatory proceedings;
 
  •  competitor and overall market response to our products and services, including acceptance of the pricing of such products and services; and
 
  •  risk of loss from earthquakes and other catastrophic events.
 
For additional risk factors, please see our Annual Report on Form 10-K for the year ended December 31, 2009. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.
 
The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be read in conjunction with our accompanying condensed consolidated financial statements and the notes thereto included elsewhere herein and our Annual Report on Form 10-K for the year ended December 31, 2009.
 
 
We are a holding company and own 100% of our principal operating subsidiary, Ascent Media Group, LLC (“AMG”), as well as cash and cash equivalents.


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AMG provides creative services and content management and delivery services to the media and entertainment industries in the United States, the United Kingdom and Singapore. AMG’s clients include major motion picture studios, independent producers, broadcast networks, programming networks, advertising agencies and other companies that produce, own and/or distribute entertainment, news, sports, corporate, educational, industrial and advertising content. AMG’s operations are organized into the following two groups: the Content Services group and the Creative Services group.
 
In recent years, AMG has encountered increasingly challenging media, entertainment and advertising markets which have impacted our revenues. In addition, AMG has been challenged by increasing competition and resulting downward rate pressure for certain of its services. Such factors have caused margin compression and lower revenue and operating income. AMG is continuing to focus on leveraging its broad array of traditional media and file-based services to be a full service provider to new and existing customers within the feature film, television production and advertising industries. Its strategy focuses on providing a unified portfolio of business-to-business services intended to enable media companies to realize increasing benefits from digital distribution. With facilities in the United States, the United Kingdom and Singapore, AMG hopes to increase its services to multinational companies on a worldwide basis. The challenges that it faces include the continued development of end-to-end file-based solutions, increased competition in both its Creative Services and Content Services groups, the need to differentiate its products and services to help maintain or increase operating margins and financing capital expenditures for equipment and other items to meet customers’ requirements including their need for both integrated and file-based workflows.
 
 
We evaluate the performance of our operating segments based on financial measures such as revenue and adjusted operating income before depreciation and amortization (which we refer to as “adjusted OIBDA”). We define “adjusted OIBDA” as revenue less cost of services and selling, general and administrative expenses (excluding stock-based and long-term incentive compensation and accretion expense on asset retirement obligations) and define “segment adjusted OIBDA” as adjusted OIBDA as determined in each case for the indicated operating segment or segments only. We believe these non-GAAP financial measures are important indicators of the operational strength and performance of our businesses, including each business’s ability to fund its ongoing capital expenditures and service any debt. In addition, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to improve performance. Adjusted OIBDA excludes depreciation and amortization, stock-based and long-term incentive compensation, accretion expense on asset retirement obligations, restructuring and impairment charges, gains/losses on sale of operating assets and other income and expense that are included in the measurement of earnings (loss) before income taxes pursuant to GAAP. Accordingly, adjusted OIBDA and segment adjusted OIBDA should be considered in addition to, but not as a substitute for, earnings (loss) before income taxes, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Because segment adjusted OIBDA excludes corporate and other SG&A (as defined below), and does not include an allocation for corporate overhead, segment adjusted OIBDA should not be used as a measure of our liquidity or as an indication of the operating results that could be expected if either operating segment were operated on a stand-alone basis. Adjusted OIBDA and segment adjusted OIBDA are non-GAAP financial measures. As companies often define non-GAAP financial measures differently, adjusted OIBDA and segment adjusted OIBDA as calculated by Ascent Media should not be compared to any similarly titled measures reported by other companies.


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Our operations are organized into the following reportable segments: the Content Services group and the Creative Services group.
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
    Dollar amounts in thousands     Dollar amounts in thousands  
 
Consolidated Results of Operations
                               
Net revenue
  $ 99,508       114,269       204,027       229,526  
Loss from continuing operations before income taxes
  $ (17,517 )     (12,412 )     (28,621 )     (23,232 )
Net loss
  $ (16,138 )     (7,204 )     (6,228 )     (13,652 )
Segment Result of Operations
                               
Revenue
                               
Content Services group
  $ 60,346       73,837       118,852       148,431  
Creative Services group
  $ 39,162       40,432       85,175       81,095  
Adjusted OIBDA
                               
Content Services group
  $ 4,528       7,390       8,902       12,719  
Creative Services group
    1,122       2,473       7,312       7,103  
                                 
Total segment adjusted OIBDA
    5,650       9,863       16,214       19,822  
Corporate general and administrative expenses
    (6,939 )     (6,666 )     (13,902 )     (12,862 )
                                 
Total adjusted OIBDA(a)
  $ (1,289 )     3,197       2,312       6,960  
                                 
Adjusted OIBDA as a percentage of Revenue
                               
Content Services group
    7.5 %     10.0 %     7.5 %     8.6 %
Creative Services group
    2.9 %     6.1 %     8.6 %     8.8 %
 
 
(a) See reconciliation to loss from continuing operations before income taxes below.
 
Revenue.  Our consolidated revenue decreased $14,761,000 or 12.9% and $25,499,000 or 11.1% for the three months and six months ended June 30, 2010, respectively, as compared to the corresponding prior year periods. The Content Services group revenue decreased $13,491,000 or 18.3% and $29,579,000 or 19.9% for the three months and six months ended June 30, 2010, respectively, compared to the prior year periods. The Creative Services group revenue decreased $1,270,000 or 3.1% and increased $4,080,000 or 5.0% for such periods.
 
The decrease in the Content Services group revenue for the three month period was mainly due to (i) a decrease of $7,888,000 in system integration service revenues as customers reduced spending on system integration projects, with one customer, Motorola, accounting for $4.8 million of the decrease, (ii) a decrease of $2,416,000 due to a decline in traditional media services in the United States including mastering, tape, syndication and DVD services (iii) a decrease of $1,883,000 due to lower digital services revenues and (iv) a decrease of $1,152,000 due to lower revenues for content distribution and transport services. The decrease in the Content Services group revenue for the six month period was mainly due to (i) a decrease of $19,606,000 in system integration service revenues as customers reduced spending on system integration projects, with one customer, Motorola, accounting for $14.0 million of the decrease, (ii) a decrease of $6,153,000 due to a decline in traditional media services in the United States including mastering, tape, syndication and DVD services, (iii) a decrease of $3,090,000 due to lower revenues for content distribution and transport services and (iv) a decrease of $2,116,000 due to a decline in digital services revenues. These decreases were offset by favorable changes in foreign currency exchange rates of $1,177,000.
 
The decrease in Creative Services group revenue for the three month period was due to (i) a decrease of $3,264,000 due to a decline in large digital intermediate and telecine feature film projects compared to the prior year and (ii) a decrease of $1,170,000 in episodic television revenues due to the timing of television production and lower


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revenues earned per show. These decreases were partially offset by (i) an increase of $1,341,000 from visual effects projects in the United States and the United Kingdom, (ii) an increase of $1,055,000 from commercial digital intermediate and telecine services as commercial production levels increased in 2010 and (iii) an increase of $528,000 in editorial services in the United States. The increase in Creative Services group revenue for the six month period was due to (i) an increase of $7,105,000 in editorial services in the United States, (ii) an increase of $3,524,000 from commercial digital intermediate and telecine services as commercial production levels increased in 2010 and (iii) favorable changes in foreign currency exchange rates of $123,000. These increases were partially offset by (i) a decrease of $5,371,000 due to a decline in large digital intermediate and telecine feature film projects compared to the prior year and (ii) a decrease of $2,786,000 in episodic television revenues due to the timing of television production and lower revenues earned per show.
 
Cost of Services.  Cost of services decreased $9,307,000 or 11.1% and $18,190,000 or 10.9% for the three and six months ended June 30, 2010, respectively, as compared to the corresponding prior year periods. A significant portion of the decrease for both periods resulted from lower volumes of system integration services in the Content Services segment driving significant decreases in production material costs and, to a lesser extent, labor costs. In addition, we began a restructuring program at the end of 2008 across all of our businesses, which is still ongoing, that resulted in a reduction in labor and facility costs in the three and six months ended June 30, 2010, compared to the corresponding prior period. Also, cost of services was impacted by unfavorable changes in foreign currency exchange rates of $826,000 for the six months ended June 30, 2010.
 
As a percent of revenue, cost of services was 74.8% and 73.3% for the three month periods ended June 30, 2010 and 2009, respectively. As a percent of revenue, cost of services was 72.8% and 72.7% for the six month periods ended June 30, 2010 and 2009, respectively.
 
Selling, General and Administrative.  Our selling, general and administrative expenses (“SG&A”) are comprised of the following:
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
    Amounts in thousands     Amounts in thousands  
 
SG&A(a)
  $ 26,349       27,317       53,142       55,803  
Stock-based and long-term incentive compensation
    1,138       585       1,793       1,262  
Accretion expense on asset retirement obligations (AROs)
    50       53       102       99  
Other(b)
    1,292             1,427        
                                 
Total SG&A
  $ 28,829       27,955       56,464       57,164  
                                 
 
 
(a) SG&A includes corporate SG&A of $6,939,000 and $6,666,000 for the three months ended June 30, 2010 and 2009, respectively, and $13,902,000 and $12,862,000 for the six months ended June 30, 2010 and 2009, respectively, which are not included in total segment adjusted OIBDA.
 
(b) The three and six months periods ended June 30, 2010, includes an expense of approximately $1.2 million for a lump-sum payment related to the death benefits of our chief operating officer under the terms of his employment contract.
 
Our SG&A, excluding stock-based and long-term incentive compensation, accretion expense on AROs and other, decreased $968,000 or 3.5% and $2,661,000 or 4.8% for the three and six months ended June 30, 2010, respectively, compared to the corresponding prior year periods. The decrease for the three and six months periods was mainly driven by lower labor and other administrative costs which declined due to the implementation of restructuring and cost mitigation measures during 2009 and lower bad debt expense. These decreases were partially offset by higher professional fees.
 
Stock-based and Long-term Incentive Compensation.  Stock-based and long-term incentive compensation was $1,138,000 and $585,000 for the three months ended June 30, 2010 and 2009, respectively, and $1,793,000 and $1,262,000 for the six months ended June 30, 2010 and 2009, respectively. This expense was related to restricted


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stock and stock option awards granted to certain executives. The three months and six months ended June 30, 2010 also includes approximately $425,000 of accelerated vesting of restricted stock and stock options related to the death benefits of our chief operating officer pursuant to the terms of the Ascent Media Corporation 2008 Incentive Plan.
 
Restructuring Charges.  We recorded restructuring charges of $495,000 and $1,088,000, during the three months ended June 30, 2010 and 2009, respectively, and $1,196,000 and $1,486,000 during the six months ended June 30, 2010 and 2009, respectively. These charges related to certain severance and facility costs in conjunction with ongoing structural changes commenced in late 2008 that were implemented to align our organization with our strategic goals and with how we operate, manage and sell our services. Such changes include the consolidation of certain facilities in the United Kingdom and further restructuring and labor cost mitigation measures undertaken across all of our businesses.
 
The following table provides the activity and balances of the restructuring reserve (all amounts are in thousands).
 
                                 
    December 31,
                June 30,
 
    2008     Additions     Deductions(a)     2009  
Severance
  $ 2,526       1,472       (3,265 )     733  
Excess facility costs
    3,294       14       (939 )     2,369  
                                 
Total
  $ 5,820       1,486       (4,204 )     3,102  
                                 
 
                                 
    December 31,
                June 30,
 
    2009     Additions     Deductions(a)     2010  
Severance
  $ 699       645       (1,195 )     149 (b)
Excess facility costs
    4,375       551       (2,132 )     2,794 (c)
                                 
Total
  $ 5,074       1,196       (3,327 )     2,943  
                                 
 
 
(a) Primarily represents cash payments.
 
(b) Substantially all of this amount is expected to be paid in 2010.
 
(c) Substantially all of this amount is expected to be paid by 2012.
 
Depreciation and Amortization.  Depreciation and amortization expense decreased $1,029,000 or 7.4% and $922,000 or 3.3% for the three and six months ended June 30, 2010, respectively, compared to the corresponding prior year periods. The decrease for both periods is the result of a decrease in property and equipment as the amount of assets that were either sold or fully depreciated exceeded the depreciation on new assets that were placed into service during 2010.
 
Income Taxes from Continuing Operations.  For the three months ended June 30, 2010, we had a pre-tax loss from continuing operations of $17,517,000 and an income tax benefit from continuing operations of $1,171,000, for an effective tax benefit rate of 6.7%. For the six months ended June 30, 2010, we had a pre-tax loss from continuing operations of $28,621,000 and an income tax benefit from continuing operations of $1,811,000, for an effective tax benefit rate of 6.3%. For the three months ended June 30, 2009, we had a pre-tax loss from continuing operations of $12,412,000 and an income tax benefit from continuing operations of $3,945,000, for an effective tax benefit rate of 31.8%. For the six months ended June 30, 2009, we had a pre-tax loss from continuing operations of $23,232,000 and an income tax benefit from continuing operations of $7,242,000, for an effective tax benefit rate of 31.2%. For the three and six months ended June 30, 2010, we recorded a charge of approximately $7.3 million and $10.9 million, respectively, to increase the valuation allowance which reduced our net income tax benefit from continuing operations.
 
Earnings from Discontinued Operations, Net of Income Taxes.  We recorded earnings from discontinued operations, net of income taxes, of $208,000 and $1,263,000 for the three months ended June 30, 2010 and 2009, respectively, and $20,582,000 and $2,338,000 for the six months ended June 30, 2010 and 2009, respectively. These amounts included the earnings of the Chiswick Park facility which was sold in February 2010. The six months ended June 30, 2010 amount also includes the gain on sale of $25,498,000 and the related income tax expense of $6,131,000.


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Adjusted OIBDA.  The following table provides a reconciliation of total adjusted OIBDA to loss from continuing operations before income taxes.
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
    Amounts in thousands  
 
Total adjusted OIBDA
  $ (1,289 )     3,197       2,312       6,960  
Stock-based and long-term incentive compensation
    (1,138 )     (585 )     (1,793 )     (1,262 )
Restructuring and other charges
    (495 )     (1,088 )     (1,196 )     (1,486 )
Depreciation and amortization
    (12,953 )     (13,982 )     (26,653 )     (27,575 )
Loss on sale of operating assets, net
          (56 )     (58 )     (210 )
Other income, net
    (300 )     155       296       440  
Other(a)
    (1,342 )     (53 )     (1,529 )     (99 )
                                 
Loss from continuing operations before income taxes
  $ (17,517 )     (12,412 )     (28,621 )     (23,232 )
                                 
 
 
(a) The three and six months periods ended June 30, 2010, includes an expense of approximately $1.2 million for a lump-sum payment related to the death benefit of our chief operating officer under the terms of his employment contract.
 
Content Services group adjusted OIBDA as a percentage of revenue was 7.5% and 10.0% for the three months ended June 30, 2010 and 2009, respectively, and 7.5% and 8.6% for the six months ended June 30, 2010 and 2009, respectively. In 2009, the primary cost components for the Content Services group were labor and materials, with these costs comprising about 67% of the segment revenue. Due to the decline in revenue from the system integration business, which incurs high material costs, the primary cost components for the Content Services group in 2010 are labor and facilities costs. These costs comprise about 73% of the segment revenues in 2010. The other cost components for the Content Services group are production equipment and general and administrative expense.
 
Content Services group adjusted OIBDA decreased $2,862,000 or 38.7% for the three months ended June 30, 2010, compared to the prior year period. This decrease was due to (i) a $1,709,000 decrease in adjusted OIBDA resulting from lower revenues from digital services, (ii) a $1,042,000 decrease in adjusted OIBDA resulting from lower revenues for traditional media services in the United States including mastering, tape, syndication and DVD services and (iii) a decrease of $550,000 from lower system integration revenues. These decreases were partially offset by an adjusted OIBDA increase of $429,000 from the traditional media services business in the United Kingdom, which reduced operating costs while revenue remained constant. Content Services group adjusted OIBDA decreased $3,817,000 or 30.0% for the six months ended June 30, 2010, compared to the prior year period. This decrease was due to (i) a $2,148,000 decrease in adjusted OIBDA resulting from lower revenues for traditional media services in the United States including mastering, tape, syndication and DVD services, (ii) a $2,085,000 decrease in adjusted OIBDA resulting from lower revenues from digital services and (iii) $513,000 of startup costs relating to development efforts on new businesses. These decreases were partially offset by (i) an adjusted OIBDA increase of $686,000 in the content distribution business, which reduced operating costs more than its decline in revenues and (ii) an adjusted OIBDA increase of $629,000 from the traditional media services business in the United Kingdom, which reduced operating costs while revenue remained constant.
 
Creative Services group adjusted OIBDA as a percentage of revenue was 2.9% and 6.1% for the three months ended June 30, 2010 and 2009, respectively, and 8.6% and 8.8% for the six months ended June 30, 2010 and 2009, respectively. The services provided by the Creative Services group are labor intensive and they require high labor and facility costs, with these costs representing about 77% of the segment revenue. The Creative Services group’s other primary cost components are production equipment, materials cost and general and administrative expenses.
 
Creative Services group adjusted OIBDA decreased $1,351,000 or 54.6% for the three months ended June 30, 2010, compared to the prior period. This decrease was due to (i) a $2,246,000 decrease in adjusted OIBDA resulting from lower revenues from large digital intermediate and telecine feature film projects compared to the prior year and (ii) $599,000 of duplicative rental costs as a result of a business unit relocating to a new facility. These decreases


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were partially offset by (i) cost savings of $655,000 due to the consolidation of facilities in the episodic television business, (ii) a $500,000 increase in adjusted OIBDA due to higher revenues related to editorial services in the United States and (iii) a $318,000 increase in adjusted OIBDA resulting from higher revenues from visual effects projects in the United States and the United Kingdom. Creative Services group adjusted OIBDA increased $209,000 or 2.9% for the six months ended June 30, 2010, compared to the prior period. This increase was due to (i) a $2,020,000 increase in adjusted OIBDA resulting from higher revenues for editorial services in the United States, (ii) cost savings of $1,310,000 due to the consolidation of facilities in the episodic television business and (iii) $1,269,000 due to higher revenues from commercial digital intermediate and telecine services as commercial production levels increased in 2010. These increases were partially offset by (i) a $3,491,000 decrease in adjusted OIBDA resulting from lower revenues related to a decline in large digital intermediate and telecine feature film projects compared to the prior year and (ii) $798,000 of duplicative rental costs as a result of a business unit relocating to a new facility.
 
 
At June 30, 2010, we have $284,688,000 of cash and cash equivalents on a consolidated basis. In addition, we have investments in marketable securities of $95,629,000, which are generally liquid and available for sale. We may use a portion of these assets to fund potential strategic acquisitions or investment opportunities. The cash is invested in highly liquid, highly-rated short-term investments.
 
Additionally, our other source of funds is our cash flows from operating activities, which are currently generated entirely from the operations of AMG. During the six months ended June 30, 2010 and 2009, our cash from operating activities was $14,435,000 and $17,709,000, respectively. The primary driver of our cash flow from operating activities is segment adjusted OIBDA. Fluctuations in our segment adjusted OIBDA are discussed in “Results of Operations” above. In addition, our cash flow from operating activities is significantly impacted by changes in working capital, which are generally due to the timing of purchases and payments and the timing of billings and collections for revenue, as well as corporate general and administrative expenses which are not included in segment adjusted OIBDA.
 
During the six months ended June 30, 2010 and 2009, we used cash of $13,818,000 and $16,131,000, respectively, to fund our capital expenditures. These expenditures relate to the purchase of new equipment, the upgrade of facilities and the buildout of our existing facilities to meet specific customer contracts, which are capitalized as additions and remain our property, not that of the customer. We purchased marketable securities for cash of $41,756,000 during 2010 and $29,965,000 during 2009 in order to improve our investment rate of return.
 
On July 23, 2010, AMG entered into a $30 million secured revolving credit facility with Wells Fargo Capital Finance, LLC, as agent. Proceeds of the facility, which is not guaranteed by Ascent Media, may be used by AMG for general business purposes, including working capital and capital expenditures.
 
In considering our liquidity requirements for 2010 and subsequent periods, we evaluated our known future commitments and our expected capital expenditure requirements, as well as our cash flow from continuing operations for the fiscal year 2009 and the first two quarters of 2010 and our understanding of the variable factors driving such cash flow from continuing operations, and the new credit facility at AMG. We considered that currently we have less than $7 million of capital leases which will be paid over the next five years and we have no outstanding bank debt. In addition, we have approximately $4 million of other commitments most of which are expected to be paid in three to five years. Our annual capital expenditure requirements include expenditures required to maintain or enhance AMG’s existing business and discretionary expenditures that could be adjusted by management. We do not currently have any commitments for capital expenditures to be incurred following our 2010 fiscal year. Based on this analysis, we expect to have sufficient sources of liquidity, including available cash and cash equivalents, the new credit facility at AMG, and net cash from AMG’s operating activities to meet our working capital needs and capital expenditure requirements for 2010 and for the foreseeable future.
 
We may seek external equity or debt financing in the event of any new investment opportunities, additional capital expenditures or our operations requiring additional funds, but there can be no assurance that we will be able to obtain equity or debt financing on terms that would be acceptable to us. Our ability to seek additional sources of funding depends on our future financial position and results of operations, which are subject to general conditions in


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or affecting our industry and our customers and to general economic, political, financial, competitive, legislative and regulatory factors beyond our control.
 
Item 3.   Quantitative and Qualitative Disclosure about Market Risk
 
 
We continually monitor our economic exposure to changes in foreign exchange rates and may enter into foreign exchange agreements where and when appropriate. Substantially all of our foreign transactions are denominated in foreign currencies, including the liabilities of our foreign subsidiaries. Although our foreign transactions are not generally subject to significant foreign exchange transaction gains or losses, the financial statements of our foreign subsidiaries are translated into United States dollars as part of our consolidated financial reporting. As a result, fluctuations in exchange rates affect our financial position, results of operations and cash flows.
 
Item 4.   Controls and Procedures
 
In accordance with Exchange Act Rules 13a-15 and 15d-15, the Company carried out an evaluation, under the supervision and with the participation of management, including its chief executive officer and principal accounting officer (the “Executives”), of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Executives concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2010 to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
 
There has been no change in the Company’s internal controls over financial reporting that occurred during the three months ended June 30, 2010 that has materially affected, or is reasonably likely to materially affect, its internal controls over financial reporting.
 
ASCENT MEDIA CORPORATION AND SUBSIDIARIES
 
PART II — OTHER INFORMATION
 
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.
 
(c)  Purchases of Equity Securities by the Issuer
 
During the three months ended June 30, 2010, 2,519 shares of Series A common stock were surrendered by certain of our officers and employees to pay withholding taxes and other deductions in connection with the vesting of their restricted stock, as set forth in the table below.
 
                 
    Total Number
    Average
 
    of Shares
    Price Paid
 
Period
  Purchased     per Share  
 
04/01/10 – 04/30/10
           
05/01/10 – 05/31/10
           
06/01/10 – 06/30/10
    2,519 (a)   $ 26.26  
                 
Total
    2,519 (a)   $ 26.26  
                 
 
 
(a) Represents 1,836 shares withheld from Mr. Fitzgerald and 683 shares withheld from Mr. Orr.


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Item 6.   Exhibits
 
Listed below are the exhibits which are included as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):
 
         
  31 .1   Rule 13a-14(a)/15d-14(a) Certification*
  31 .2   Rule 13a-14(a)/15d-14(a) Certification*
  32     Section 1350 Certification**
 
 
* Filed herewith.
 
** Furnished herewith.


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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
ASCENT MEDIA CORPORATION
 
  By: 
/s/  William R. Fitzgerald
William R. Fitzgerald
Chairman and Chief Executive Officer
 
Date: August 6, 2010
 
  By: 
/s/  George C. Platisa
George C. Platisa
Executive Vice President and Chief
Financial Officer
 
Date: August 6, 2010


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Listed below are the exhibits which are included as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):
 
         
  31 .1   Rule 13a-14(a)/15d-14(a) Certification*
  31 .2   Rule 13a-14(a)/15d-14(a) Certification*
  32     Section 1350 Certification**
 
 
* Filed herewith.
 
** Furnished herewith.


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