Annual report pursuant to Section 13 and 15(d)

Other Information

v3.3.1.900
Other Information
 12 Months Ended
Dec. 31, 2015
Other Information [Abstract]  
Other Information
Other Information

Supplemental Disclosure of Cash Flow Information

Supplemental disclosure of cash flow information was as follows (in millions):
 
Years ended December 31,
 
2015
 
2014
 
2013
Cash paid for interest, net of amounts capitalized
$
43.7

 
$
44.0

 
$
43.4

Cash paid for income taxes
$
124.7

 
$
107.9

 
$
184.4

Distribution of corporate office building to Old LMC
$
—

 
$
—

 
$
45.7

Capital lease with subsidiary of Liberty Media
$
—

 
$
—

 
$
44.8

Tax attributes related to LMC Spin-Off
$
—

 
$
—

 
$
11.5



Allowance for Trade Receivables
Changes in the allowance for trade receivables were as follows (in millions):
Description
 
Balance at
beginning of
period
 
Charged to
costs and
expenses(1)
 
Charged to
other accounts(1)
 
Deductions(2)
 
Balance at
end of
period
Year ended December 31, 2015:
 
 
 
 
 
 
 
 
 
Reserves:
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
$
1.1

 
$
(0.4
)
 
$
—

 
$
(0.1
)
 
$
0.6

Allowance for sales returns
40.8

 
—

 
99.4

 
(105.6
)
 
34.6

 
$
41.9

 
$
(0.4
)
 
$
99.4

 
$
(105.7
)
 
$
35.2

Year ended December 31, 2014:
 
 
 
 
 
 
 
 
 
Reserves:
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
$
1.1

 
$
3.4

 
$
—

 
$
(3.4
)
 
$
1.1

Allowance for sales returns
31.7

 
—

 
126.5

 
(117.4
)
 
40.8

 
$
32.8

 
$
3.4

 
$
126.5

 
$
(120.8
)
 
$
41.9

Year ended December 31, 2013:
 
 
 
 
 
 
 
 
 
Reserves:
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
$
0.3

 
$
0.8

 
$
—

 
$
—

 
$
1.1

Allowance for sales returns
34.7

 
—

 
141.4

 
(144.4
)
 
31.7

 
$
35.0

 
$
0.8

 
$
141.4

 
$
(144.4
)
 
$
32.8

(1)
Charges for doubtful accounts are included in selling, general and administrative expense and charges for sales returns are recorded against revenue. During the year ended December 31, 2015, an account receivable previously written off was collected and resulted in a credit balance for amounts charged to costs and expenses.
(2)
Actual home video returns, uncollectible accounts written off and foreign currency exchange rate changes.

Other Current Assets

Other current assets consisted of the following (in millions):
 
December 31,
 
2015
 
2014
Income tax receivable
$
44.1

 
$
29.8

Other
46.0

 
40.3

 
$
90.1

 
$
70.1


Condensed Financial Information of Registrant

The restricted net assets of Starz exceeds 25% of its consolidated net assets due to restrictions under the 2015 Credit Agreement and Senior Notes. As mentioned in Note 10, Starz is a holding company with no assets or liabilities of its own or operations other than those of Starz, LLC. Accordingly, the financial position, results of operations, comprehensive income and cash flows of Starz and Starz, LLC are identical. As such, condensed financial information for the Starz parent legal entity is not presented as it is not meaningful.
Net Income Attributable to Common Stockholders

Basic net income per common share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented.
The reconciliation between basic and diluted weighted average shares outstanding was as follows (in millions):
 
Years Ended December 31,
 
2015
 
2014
 
2013
Basic weighted average shares outstanding
101.2

 
105.5

 
115.9

Effect of dilution:
 
 
 
 
 
Stock options
4.9

 
5.3

 
3.8

Restricted shares
0.2

 
0.7

 
1.4

Diluted weighted average shares outstanding
106.3

 
111.5

 
121.1


For the years ended December 31, 2015, 2014 and 2013, approximately 0.4 million, 1.4 million and no shares, respectively, have been excluded from the diluted weighted average shares outstanding since the shares would have been anti-dilutive.
Investment in Equity Affiliate

During the year ended December 31, 2014, Starz invested $19.1 million for an approximate 40% interest in Playco Holdings Limited (“Playco”) and during the year ended December 31, 2015, made advances to Playco totaling $6.3 million. Playco began offering a STARZ-branded online SVOD service in the Middle East and North Africa during 2015. Starz accounts for its investment in Playco using the equity method of accounting. Such investment is included in other assets, net in the accompanying consolidated balance sheets.

Goodwill

There were no changes in the carrying amount of goodwill, all of which relates to Starz Networks, during the years ended December 31, 2015 and 2014. As of December 31, 2015, the accumulated impairment loss was $1,718.9 million, of which $1,396.7 million relates to Starz Networks and $322.2 million to Starz Distribution.

Advertising and Marketing

Starz’s total advertising costs were $116.1 million, $110.4 million and $113.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. Total marketing costs were $41.1 million, $33.9 million and $35.0 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Major Customers and Suppliers

Two Starz Networks’ Distributors each accounted for more than 10% of Starz’s total revenue and together accounted for 41%, 36% and 34% of Starz’s total revenue for the years ended December 31, 2015, 2014 and 2013, respectively. There were no other Distributors or other customers that accounted for more than 10% of revenue in any year. Starz’s premium networks and services are provided to these Distributors pursuant to affiliation agreements with varying terms.

As discussed in Note 11, Starz has entered into agreements to license theatrically released films from studios owned by Sony (through 2021) and Disney (through 2015). Films are available to Starz for exhibition generally 8-13 months after their theatrical release.

Anchor Bay Entertainment outsources substantially all of its home video distribution services, including DVD manufacturing and distribution to Twentieth Century Fox Home Entertainment LLC. The agreement expires on June 30, 2020.

Foreign Operations

Revenue generated outside of the U.S. represented 5%, 4% and 5% of consolidated revenue for each of the years ended December 31, 2015, 2014 and 2013, respectively.  Net long-lived assets outside the U.S. were less than 1% of consolidated net long-lived assets as of December 31, 2015 and 2014.