
9.	SEGMENT INFORMATION

The Company is comprised of four reportable segments: Phase I Deployment, Phase II Deployment, Services and Content & Entertainment. Our former Other segment and the operations of USM (formerly part of the Content & Entertainment segment) have been reclassified as discontinued operations (see Notes 1 and 3). The segments were determined based on the products and services provided by each segment and how management reviews and makes decisions regarding segment operations. Performance of the segments is evaluated on the segment’s income (loss) from continuing operations before interest, taxes, depreciation and amortization. All segment information has been restated to reflect the changes described above for all periods presented.

The Phase I Deployment and Phase II Deployment segments consist of the following:



Operations of:		Products and services provided:
Phase 1 DC		Financing vehicles and administrators for the Company’s 3,724 Systems installed nationwide in Phase 1 DC’s deployment to theatrical exhibitors. The Company retains ownership of the Systems and the residual cash flows related to the Systems after the repayment of all non-recourse debt and the Company retains at the expiration of exhibitor master license agreements.
Phase 2 DC		Financing vehicles and administrators for the Company’s second digital cinema deployment, through Phase 2 DC. The Company retains no ownership of the residual cash flows and digital cinema equipment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

The Services segment consists of the following:



Operations of:		Products and services provided:
Services		Provides monitoring, billing, collection, verification and other management services to the Company’s Phase I Deployment, Phase II Deployment as well as to exhibitors who purchase their own equipment. Collects and disburses VPFs from motion picture studios and distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors.
Software		Develops and licenses software to the theatrical distribution and exhibition industries, provides ASP Service, and provides software enhancements and consulting services.
DMS		Distributes digital content to movie theatres and other venues having digital cinema equipment and provides satellite-based broadband video, data and Internet transmission, encryption management services, video network origination and management services and a virtual booking center to outsource the booking and scheduling of satellite and fiber networks and provides forensic watermark detection services for motion picture studios and forensic recovery services for content owners.

The Content & Entertainment segment consists of the following:



Operations of:		Products and services provided:
CEG		Acquires, distributes and provides the marketing for programs of alternative content and feature films to movie exhibitors.

Information related to the segments of the Company and its subsidiaries is detailed below:



	As of September 30, 2011
	(Unaudited)
	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Total intangible assets, net	$	413	$	16	$	50	$	104	$	—	$	583
Total goodwill	$	—	$	—	$	4,306	$	1,568	$	—	$	5,874
Assets from continuing operations	$	180,057	$	77,423	$	22,578	$	3,045	$	24,640	$	307,743
Assets held for sale											—
Total assets											$	307,743
Notes payable, non-recourse	$	132,231	$	54,414	$	—	$	—	$	—	$	186,645
Notes payable	—		—		—		—		82,692		82,692
Capital leases (1)	—		8		9		—		5,508		5,525
Total debt	$	132,231	$	54,422	$	9	$	—	$	88,200	$	274,862

(1) The Company has remained the primary obligor on the Pavilion capital lease, and therefore, the capital lease obligation and related assets under the capital lease remain on the Company's consolidated financial statements as of September 30, 2011. The Company has, however, entered into a sub-lease agreement with the unrelated third party purchaser and as such, has no continuing involvement in the operation of the Pavilion Theatre. This capital lease was previously included in discontinued operations.



	As of March 31, 2011
	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Total intangible assets, net	$	435	$	—	$	72	$	223	$	1	$	731
Total goodwill	$	—	$	—	$	4,306	$	1,568	$	—	$	5,874
Assets from continuing operations	$	193,318	$	59,704	$	22,435	$	3,784	$	13,678	$	292,919
Assets held for sale											14,569
Total assets											$	307,488
Notes payable, non-recourse	$	147,413	$	45,141	$	—	$	—	$	—	$	192,554
Notes payable	—		—		148		—		78,169		78,317
Capital leases	—		14		16		—		—		30
Total debt	$	147,413	$	45,155	$	164	$	—	$	78,169	$	270,901



	Capital Expenditures
	For the Six Months Ended September 30,
	(Unaudited)
	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
2011	$	—	$	12,228	$	1,164	$	14	$	—	$	13,406
2010	$	—	$	5,292	$	391	$	63	$	—	$	5,746



	Statements of Operations
	For the Three Months Ended September 30, 2011
	(Unaudited)
	Phase I			Phase II		Services			Content & Entertainment			Corporate			Consolidated
Revenues from external customers	$	11,746		$	3,916	$	7,207		$	648		$	—		$	23,517
Intersegment revenues (1)	6			—		2,099			—			—			2,105
Total segment revenues	11,752			3,916		9,306			648			—			25,622
Less: Intersegment revenues	(6		)	—		(2,099		)	—			—			(2,105		)
Total consolidated revenues	$	11,746		$	3,916	$	7,207		$	648		$	—		$	23,517
Direct operating (exclusive of depreciation and amortization shown below) (2)	119			50		2,731			579			—			3,479
Selling, general and administrative	58			32		1,150			584			2,701			4,525
Plus: Allocation of Corporate overhead	—			—		1,624			89			(1,713		)	—
Provision for doubtful accounts	—			—		23			—			—			23
Research and development	—			39		(8		)	—			—			31
Depreciation and amortization of property and equipment	7,139			1,599		548			1			97			9,384
Amortization of intangible assets	13			2		4			67			—			86
Total operating expenses	7,329			1,722		6,072			1,320			1,085			17,528
Income (loss) from operations	$	4,417		$	2,194	$	1,135		$	(672	)	$	(1,085	)	$	5,989

(1) Included in intersegment revenues of the Services segment is $1,710 for service fees earned from the Phase I and Phase II Deployments.

(2) Included in direct operating of the Services segment is $212 for the amortization of capitalized software development costs.

The following employee stock-based compensation expense related to the Company’s stock-based awards is included in the above amounts as follows:



	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Direct operating	$	—	$	—	$	15	$	2	$	—	$	17
Selling, general and administrative	—		—		40		8		324		372
Research and development	—		—		31		—		—		31
Total stock-based compensation	$	—	$	—	$	86	$	10	$	324	$	420



	Statements of Operations
	For the Three Months Ended September 30, 2010
	(Unaudited)
	Phase I			Phase II		Services			Content & Entertainment			Corporate			Consolidated
Revenues from external customers	$	10,988		$	1,111	$	2,868		$	150		$	—		$	15,117
Intersegment revenues (1)	1			—		1,355			—			—			1,356
Total segment revenues	10,989			1,111		4,223			150			—			16,473
Less: Intersegment revenues	(1		)	—		(1,355		)	—			—			(1,356		)
Total consolidated revenues	$	10,988		$	1,111	$	2,868		$	150		$	—		$	15,117
Direct operating (exclusive of depreciation and amortization shown below) (2)	122			31		1,875			160			—			2,188
Selling, general and administrative (3)	5			15		938			320			2,390			3,668
Plus: Allocation of Corporate overhead	—			—		1,767			129			(1,896		)	—
Provision for doubtful accounts	97			11		5			9			—			122
Research and development	—			—		97			—			—			97
Depreciation and amortization of property and equipment	7,139			457		507			—			11			8,114
Amortization of intangible assets	11			—		5			68			—			84
Total operating expenses	7,374			514		5,194			686			505			14,273
Income (loss) from operations	$	3,614		$	597	$	(2,326	)	$	(536	)	$	(505	)	$	844

(1) Included in intersegment revenues of the Services segment is $1,270 for service fees earned from the Phase I and Phase II Deployments.

(2) Included in direct operating of the Services segment is $197 for the amortization of capitalized software development costs.

(3) Included in selling, general and administrative of the Corporate segment is $229 of one-time transition costs related to the retirement of our CEO.

The following employee stock-based compensation expense related to the Company’s stock-based awards is included in the above amounts as follows:



	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Direct operating	$	—	$	—	$	13	$	4	$	—	$	17
Selling, general and administrative	—		—		72		6		559		637
Research and development	—		—		15		—		—		15
Total stock-based compensation	$	—	$	—	$	100	$	10	$	559	$	669



	Statements of Operations
	For the Six Months Ended September 30, 2011
	(Unaudited)
	Phase I			Phase II		Services			Content & Entertainment			Corporate			Consolidated
Revenues from external customers	$	23,329		$	6,901	$	12,754		$	901		$	—		$	43,885
Intersegment revenues (1)	7			—		3,774			131			—			3,912
Total segment revenues	23,336			6,901		16,528			1,032			—			47,797
Less: Intersegment revenues	(7		)	—		(3,774		)	(131		)	—			(3,912		)
Total consolidated revenues	$	23,329		$	6,901	$	12,754		$	901		$	—		$	43,885
Direct operating (exclusive of depreciation and amortization shown below) (2)	228			124		6,057			968			—			7,377
Selling, general and administrative	175			90		2,488			1,009			4,617			8,379
Plus: Allocation of Corporate overhead	—			—		3,248			178			(3,426		)	—
Provision for doubtful accounts	—			—		23			—			—			23
Research and development	—			39		57			—			—			96
Depreciation and amortization of property and equipment	14,278			3,232		1,074			2			166			18,752
Amortization of intangible assets	24			3		13			134			—			174
Total operating expenses	14,705			3,488		12,960			2,291			1,357			34,801
Income (loss) from operations	$	8,624		$	3,413	$	(206	)	$	(1,390	)	$	(1,357	)	$	9,084

(1) Included in intersegment revenues of the Services segment is $3,077 for service fees earned from the Phase I and Phase II Deployments.

(2) Included in direct operating of the Services segment is $364 for the amortization of capitalized software development costs.



	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Direct operating	$	—	$	—	$	22	$	4	$	—	$	26
Selling, general and administrative	—		—		96		12		716		824
Research and development	—		—		48		—		—		48
Total stock-based compensation	$	—	$	—	$	166	$	16	$	716	$	898



	Statements of Operations
	For the Six Months Ended September 30, 2010
	(Unaudited)
	Phase I			Phase II		Services			Content & Entertainment			Corporate			Consolidated
Revenues from external customers	$	22,501		$	1,712	$	5,745		$	543		$	—		$	30,501
Intersegment revenues (1)	1			—		2,640			2			—			2,643
Total segment revenues	22,502			1,712		8,385			545			—			33,144
Less: Intersegment revenues	(1		)	—		(2,640		)	(2		)	—			(2,643		)
Total consolidated revenues	$	22,501		$	1,712	$	5,745		$	543		$	—		$	30,501
Direct operating (exclusive of depreciation and amortization shown below) (2)	160			46		4,097			766			—			5,069
Selling, general and administrative (3)	23			23		1,824			633			5,375			7,878
Plus: Allocation of Corporate overhead	—			—		2,951			215			(3,166		)	—
Provision for doubtful accounts	97			11		5			9			—			122
Research and development	—			—		162			—			—			162
Depreciation and amortization of property and equipment	14,278			783		1,002			1			21			16,085
Amortization of intangible assets	23			—		9			135			—			167
Total operating expenses	14,581			863		10,050			1,759			2,230			29,483
Income (loss) from operations	$	7,920		$	849	$	(4,305	)	$	(1,216	)	$	(2,230	)	$	1,018

(1) Included in intersegment revenues of the Services segment is $2,292 for service fees earned from the Phase I and Phase II Deployments.

(2) Included in direct operating of the Services segment is $372 for the amortization of capitalized software development costs.

(3) Included in selling, general and administrative of the Corporate segment is $1,141 of one-time transition costs related to the retirement of our CEO.



	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Direct operating	$	—	$	—	$	26	$	8	$	—	$	34
Selling, general and administrative	—		—		133		9		1,142		1,284
Research and development	—		—		27		—		—		27
Total stock-based compensation	$	—	$	—	$	186	$	17	$	1,142	$	1,345