Peace Arch(R) Entertainment Provides Further Information Regarding the Filing of Its Annual Financial Statements
01 Dezembro 2008 - 11:45AM
Marketwired
Peace Arch� Entertainment Group Inc. (AMEX: PAE) (TSX: PAE), today
announced that it will be unable to timely file its annual
financial statements for the year ended August 31, 2008 in Canada
and related CEO and CFO certifications, management discussion and
analysis and Annual Information Form due to management's
re-evaluation of the Company's investment in ten movie titles and
its participation in their production during fiscal 2006 and
possible restatement of its consolidated financial statements for
fiscal 2006 and fiscal 2007.
As a result of this review, management has determined that ten
non-owned single-purpose production companies qualify as variable
interest entities and should be consolidated in the Company's
financial statements for the year ended August 31, 2008, and that
pending further review, consolidation in prior periods may also be
appropriate. This will require the Company's auditors to conduct an
audit of these ten non-owned production companies. Until such time
as the auditors have completed their audit of these non-owned
variable interest entities, management is not able to quantify the
adjustment that will be required to the consolidated financial
statements. There is no certainty as to when the Company will be in
a position to file the annual financial statements and the related
documentation.
In addition to the foregoing, as part of its ongoing review and
evaluation of the Company's investment in film and television
assets, management has concluded that a write-down of approximately
$21.0 million in the fourth quarter is appropriate. This is in
addition to a third quarter write-down of $4.0 million bringing the
total write-down to approximately $25.0 million for the year ended
August 31, 2008.
Furthermore, in fiscal 2007 and fiscal 2006 the Company entered
into sub-distribution agreements with unrelated companies for
certain territories in relation to several film titles on which the
Company owned international distribution rights. The Company
recognized approximately $3.8 million of distribution revenue
(approximately $0.9 million in net income) in fiscal 2007 and
approximately $2.9 million of distribution revenue (approximately
$1.1 million in net income) in fiscal 2006 in relation to these
sub-distribution agreements.
As a result of this information coming to the Board, a Special
Committee of the Board has been appointed to investigate the
Company's involvement with the non-owned production companies and
the nature of the sub-distribution agreements. The Board has
concerns that certain transactions in connection with the non-owned
production companies and the sub-distribution agreements may not
have been appropriate and may not have been accounted for
correctly. Subject to the results of that review, the Company may
need to reduce the associated revenue and net income that was
previously reported.
At this time, the Company is unable to estimate the final impact
of the potential adjustments and possible restatement of the
results for prior years, however it is possible that such
adjustments and possible restatement could have a material adverse
effect on the shareholder's equity of the Company once finalized.
The Company has made contact with the Ontario Securities Commission
about these matters.
All adjustments referred to herein are preliminary and unaudited
and reflect anticipated adjustments as of the issuance of this
press release. These results are subject to change arising from the
restatement process, subsequent events and the completion of the
audit of the Company's financial statements by the Company's
independent auditors.
Forward-Looking Statements
This press release includes statements that may constitute
forward-looking statements, usually containing the words "believe,"
"estimate," "project," "expect," or similar expressions. These
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements inherently involve risks and uncertainties that could
cause actual results to differ materially from the forward-looking
statements. Factors that would cause or contribute to such
differences include, but are not limited to, that the corresponding
restatement of the Company's financial statements may change based
upon the Audit Committee's ongoing analysis, that the Company's
ability to file required reports timely with the Securities and
Exchange Commission and Canadian securities regulators will be
impaired, that potential claims or proceedings may arise relating
to such matters, that the Audit Committee in consultation with the
Company's independent auditors will determine that the proper
accounting differs from the accounting treatment upon which the
assumptions and forward-looking statements in this release are
based and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission and with the
Canadian securities regulators. By making these forward-looking
statements, the Company undertakes no obligation to update these
statements for revisions or changes after the date of this
release.
Distributed by Filing Services Canada and retransmitted by
Marketwire
Contact: Gerry Noble Chief Executive Officer Peace Arch
Entertainment Group Inc. 416.783.8383 Email: Email Contact
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