##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from

to
 001-34102
 (Commission File Number)
 RHI ENTERTAINMENT, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    36-4614616(State or Other Jurisdiction 
of Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)
 1325 Avenue of Americas, 21st Floor
New York, NY 10019  (Address of principal executive offices)  Registrants telephone number: (212) 977-9001
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



RHI ENTERTAINMENT, INC.
INDEX
 PagePART 1. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Qualitative and Quantitative Disclosures about Risk
    
    
    25Item 4. Controls and Procedures
    
    
    25PART 2. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3. Defaults upon Senior Securities
    
    
    26Item 4. Submissions of Matters to a Vote on Security Holders
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    27Signatures
    
    
    28EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



Part 1. Financial Information
 
 RHI ENTERTAINMENT, INC.
Unaudited Condensed Consolidated Balance Sheets
 June 30,
    
    
    December 31,2009
    
    
    2008(In thousands, except per share data)ASSETSCash
    
    $
    1,856
    
    
    $
    22,373Accounts receivable, net of allowance for doubtful
accounts and discount to present value of $7,652 and
$11,933, respectively
    
    
    139,802
    
    
    
    180,125Film production costs, net
    
    
    793,903
    
    
    
    780,122Property and equipment, net
    
    
    340
    
    
    
    370Prepaid and other assets, net
    
    
    24,908
    
    
    
    28,928Intangible assets, net
    
    
    1,665
    
    
    
    2,264Total assets
    
    $
    962,474
    
    
    $
    1,014,182LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and accrued liabilities
    
    $
    47,005
    
    
    $
    51,477Accrued film production costs
    
    
    169,535
    
    
    
    195,328Debt
    
    
    583,789
    
    
    
    576,789Deferred revenue
    
    
    14,418
    
    
    
    13,530Total liabilities
    
    
    814,747
    
    
    
    837,124Stockholders equityCommon stock, par value $0.01 per share;125,000
shares authorized and 13,505 shares issued and
outstanding
    
    $
    135
    
    
    $
    135Additional paid-in capital
    
    
    150,140
    
    
    
    149,609Accumulated deficit
    
    
    (57,517
    )
    
    
    (36,195
    )Accumulated other comprehensive loss
    
    
    (7,521
    )
    
    
    (11,387
    )Total RHI Inc. stockholders equity
    
    
    85,237
    
    
    
    102,162Non-controlling interest in consolidated entity
    
    
    62,490
    
    
    
    74,896Total stockholders equity
    
    
    147,727
    
    
    
    177,058Total liabilities and stockholders equity
    
    $
    962,474
    
    
    $
    1,014,182
  3




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##### Table of Contents



RHI ENTERTAINMENT, INC.
Unaudited Condensed Consolidated Statements of Operations
 (Successor)
    
    
    (Predecessor)Three Months
    
    
    Six Months
    
    
    Period from
    
    
    Period from
    
    
    Period fromEnded
    
    
    Ended
    
    
    June 23, 2008 to
    
    
    April 1, 2008 to
    
    
    January 1, 2008 toJune 30, 2009
    
    
    June 30, 2009
    
    
    June 30, 2008
    
    
    June 22, 2008
    
    
    June 22, 2008(In thousands, except per share data)RevenueProduction revenue
    
    $
    11,832
    
    
    $
    11,832
    
    
    $
    932
    
    
    $
    1,661
    
    
    $
    6,602Library revenue
    
    
    10,851
    
    
    
    23,854
    
    
    
    1,489
    
    
    
    49,363
    
    
    
    66,643Total revenue
    
    
    22,683
    
    
    
    35,686
    
    
    
    2,421
    
    
    
    51,024
    
    
    
    73,245Cost of sales
    
    
    18,487
    
    
    
    31,925
    
    
    
    1,303
    
    
    
    31,818
    
    
    
    49,396Gross profit
    
    
    4,196
    
    
    
    3,761
    
    
    
    1,118
    
    
    
    19,206
    
    
    
    23,849Other costs and expenses:Selling, general and
administrative
    
    
    6,922
    
    
    
    17,888
    
    
    
    732
    
    
    
    12,913
    
    
    
    25,802Amortization of intangible
assets
    
    
    285
    
    
    
    599
    
    
    
    36
    
    
    
    314
    
    
    
    671Fees paid to related parties:Management fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    287Termination fee
    
    
    
    
    
    
    
    
    
    
    6,000
    
    
    
    
    
    
    
    (Loss) income from
operations
    
    
    (3,011
    )
    
    
    (14,726
    )
    
    
    (5,650
    )
    
    
    5,842
    
    
    
    (2,911
    )Other (expense) income:Interest expense, net
    
    
    (10,435
    )
    
    
    (20,067
    )
    
    
    (819
    )
    
    
    (9,805
    )
    
    
    (21,559
    )Interest income
    
    
    1
    
    
    
    4
    
    
    
    3
    
    
    
    15
    
    
    
    34Other income (expense), net
    
    
    (953
    )
    
    
    (1,647
    )
    
    
    67
    
    
    
    (181
    )
    
    
    706Loss before income taxes
and non-controlling
interest in loss of
consolidated entity
    
    
    (14,398
    )
    
    
    (36,436
    )
    
    
    (6,399
    )
    
    
    (4,129
    )
    
    
    (23,730
    )Income tax (provision) benefit
    
    
    (543
    )
    
    
    (518
    )
    
    
    (83
    )
    
    
    2,111
    
    
    
    1,518Loss before
non-controlling interest
in loss of consolidated
entity
    
    
    (14,941
    )
    
    
    (36,954
    )
    
    
    (6,482
    )
    
    
    (2,018
    )
    
    
    (22,212
    )Non-controlling interest in
loss of consolidated entity
    
    
    6,320
    
    
    
    15,632
    
    
    
    2,742
    
    
    
    
    
    
    
    Net loss
    
    $
    (8,621
    )
    
    $
    (21,322
    )
    
    $
    (3,740
    )
    
    $
    (2,018
    )
    
    $
    (22,212
    )Loss per Share:Basic
    
    $
    (0.64
    )
    
    $
    (1.58
    )
    
    $
    (0.28
    )
    
    
    N/A
    
    
    
    N/ADiluted
    
    $
    (0.64
    )
    
    $
    (1.58
    )
    
    $
    (0.28
    )
    
    
    N/A
    
    
    
    N/AWeighted Average Shares
Outstanding:Basic
    
    
    13,505
    
    
    
    13,505
    
    
    
    13,500
    
    
    
    N/A
    
    
    
    N/ADiluted
    
    
    13,505
    
    
    
    13,505
    
    
    
    13,500
    
    
    
    N/A
    
    
    
    N/A
  4




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RHI ENTERTAINMENT, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
 (Successor)
    
    
    (Predecessor)Six Months
    
    
    Period from
    
    
    Period fromEnded
    
    
    June 23, 2008 to
    
    
    January 1, 2008 toJune 30, 2009
    
    
    June 30, 2008
    
    
    June 22, 2008(In thousands)Cash flows from operating activitiesNet loss
    
    $
    (21,322
    )
    
    $
    (3,740
    )
    
    $
    (22,212
    )Adjustments to reconcile net loss to net cash used in
operating activities:Amortization of film production costs
    
    
    22,008
    
    
    
    1,034
    
    
    
    43,579Non-controlling interest in loss of consolidated entity
    
    
    (15,632
    )
    
    
    (2,742
    )
    
    
    (Decrease) increase of accounts receivable reserves
    
    
    (4,281
    )
    
    
    (224
    )
    
    
    4,370Amortization of interest rate swap value
    
    
    3,032
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    1,689
    
    
    
    99
    
    
    
    (1,558
    )Amortization of deferred debt financing cost
    
    
    1,689
    
    
    
    43
    
    
    
    549Realized loss on interest rate swaps
    
    
    1,267
    
    
    
    
    
    
    
    Share-based compensation
    
    
    921
    
    
    
    42
    
    
    
    926Amortization of intangible assets
    
    
    599
    
    
    
    36
    
    
    
    671Depreciation and amortization of fixed assets
    
    
    106
    
    
    
    4
    
    
    
    93Amortization of debt discount
    
    
    
    
    
    
    
    
    
    
    355Change in operating assets and liabilities:Decrease (increase) in accounts receivable
    
    
    44,604
    
    
    
    2,081
    
    
    
    (4,694
    )Decrease (increase) in prepaid and other assets
    
    
    643
    
    
    
    2,177
    
    
    
    (2,457
    )Additions to film production costs
    
    
    (35,789
    )
    
    
    (2,764
    )
    
    
    (54,909
    )(Decrease) increase in accounts payable and
accrued liabilities
    
    
    (2,069
    )
    
    
    (3,666
    )
    
    
    6,327Decrease in accrued film production costs
    
    
    (25,793
    )
    
    
    (3,832
    )
    
    
    (997
    )Increase (decrease) in deferred revenue
    
    
    888
    
    
    
    (452
    )
    
    
    (2,374
    )Net cash used in operating activities
    
    
    (27,440
    )
    
    
    (11,904
    )
    
    
    (32,331
    )Cash flows from investing activitiesPurchase of property and equipment
    
    
    (77
    )
    
    
    
    
    
    
    (81
    )Net cash used in investing activities
    
    
    (77
    )
    
    
    
    
    
    
    (81
    )Cash flows from financing activitiesSale of common stock
    
    
    
    
    
    
    189,000
    
    
    
    Payment of offering costs and fees
    
    
    
    
    
    
    (15,016
    )
    
    
    Borrowings from credit facilities
    
    
    8,000
    
    
    
    112,179
    
    
    
    80,093Repayments of credit facilities
    
    
    (1,000
    )
    
    
    (260,000
    )
    
    
    (44,708
    )Deferred debt financing costs
    
    
    
    
    
    
    (4,207
    )
    
    
    Second lien pre-payment penalty
    
    
    
    
    
    
    (2,600
    )
    
    
    Member capital contributions
    
    
    
    
    
    
    
    
    
    
    29,135Distribution to KRH
    
    
    
    
    
    
    (35,700
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    7,000
    
    
    
    (16,344
    )
    
    
    64,520Net (decrease) increase in cash
    
    
    (20,517
    )
    
    
    (28,248
    )
    
    
    32,108Cash, beginning of period
    
    
    22,373
    
    
    
    33,515
    
    
    
    1,407Cash, end of period
    
    $
    1,856
    
    
    $
    5,267
    
    
    $
    33,515Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    24,085
    
    
    $
    2,795
    
    
    $
    23,845Cash paid for income taxes
    
    
    747
    
    
    
    42
    
    
    
    1,968
  5




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RHI ENTERTAINMENT, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
 (1) Business and Organization
     (2) Basis of Presentation
    6




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(3) Summary of Significant Accounting Policies
  (a) Use of Estimates
  (b) Comprehensive (Loss) Income
  (c) Segment Information
  (d) New Accounting Pronouncements Adopted
    7




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(4) Loss Per Share, Basic and Diluted
  (5) Non-Controlling Interest
  8




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Total Holdings II members equity as of June 22, 2008
    
    $
    108,766RHI Inc. investment in Holdings II
    
    
    173,984Non-controlling interest associated with distribution to KRH
    
    
    (34,972
    )Total post-IPO Holdings II members equity
    
    
    247,778Non-controlling interest of KRH
    
    
    42.3
    %Initial allocation of non-controlling interest in consolidated entity
    
    
    104,810Non-controlling interest in share-based compensation
    
    
    473Non-controlling interest in unrealized loss on interest rate swaps
    
    
    (3,853
    )Non-controlling interest allocation for the period from June 23, 2008 to December 31, 2008
    
    
    (3,380
    )Non-controlling interest in loss of consolidated entity for the period from June 23, 2008 to December 31, 2008
    
    
    (26,534
    )Non-controlling interest in consolidated entity as of December 31, 2008
    
    $
    74,896Non-controlling interest in share-based compensation
    
    
    390Non-controlling interest in unrealized gain on interest rate swaps
    
    
    1,553Non-controlling interest in amortization of the fair market value of interest rate swaps de-designated as hedges
    
    
    1,283Non-controlling interest allocation for the six months ended June 30, 2009
    
    
    3,226Non-controlling interest in loss of consolidated entity for the six months ended June 30, 2009
    
    
    (15,632
    )Non-controlling interest in consolidated entity as of June 30, 2009
    
    $
    62,490
 (6) Film Production Costs, Net
  June 30,
    
    
    December 31,2009
    
    
    2008Completed films
    
    $
    1,018,881
    
    
    $
    984,805Crown Film Library
    
    
    145,357
    
    
    
    145,290Films in process and development
    
    
    18,190
    
    
    
    18,0121,182,428
    
    
    
    1,148,107Accumulated amortization
    
    
    (388,525
    )
    
    
    (367,985
    )$
    793,903
    
    
    $
    780,122
  (Successor)
    
    PredecessorThree Months
    
    Six Months
    
    Period from
    
    Period from
    
    Period fromEnded
    
    Ended
    
    June 23, 2008 to
    
    April 1, 2008 to
    
    January 1, 2008 toJune 30, 2009
    
    June 30, 2009
    
    June 30, 2008
    
    June 22, 2008
    
    June 22, 2008(In thousands)Overhead costs
capitalized
    
    $
    2,432
    
    
    $
    4,785
    
    
    $
    280
    
    
    $
    3,181
    
    
    $
    6,775Interest capitalized
    
    
    161
    
    
    
    256
    
    
    
    26
    
    
    
    172
    
    
    
    313Amortization of
completed films
    
    
    12,270
    
    
    
    19,930
    
    
    
    943
    
    
    
    29,029
    
    
    
    40,595Amortization of
Crown Film Library
    
    
    281
    
    
    
    611
    
    
    
    92
    
    
    
    1,333
    
    
    
    2,608
  9




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(7) Debt
  June 30,
    
    
    December 31,2009
    
    
    2008First Lien Term Loan
    
    $
    175,000
    
    
    $
    175,000Revolver
    
    
    333,789
    
    
    
    326,789Second Lien Term Loan
    
    
    75,000
    
    
    
    75,000$
    583,789
    
    
    $
    576,789
       Interest Rate Swaps
   10




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(8) Related Party Transactions
   (9) Share-based Compensation
 1 3
 11




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(10) Commitments and Contingencies
  (11) Subsequent Event
     12




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Item 2.
    
    Managements Discussion and analysis of Financial Condition and Results of Operations
   In this discussion, unless the context otherwise requires, the terms RHI Inc., the
Company, we, us and our refer to RHI Entertainment, Inc. and its subsidiaries including RHI
Entertainment Holdings II, LLC and RHI Entertainment, LLC.
 Overview
     13




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Discussion of consolidated financial information
 Revenue
   Cost of sales
   Selling, general and administrative expense
  Interest expense, net
  Income taxes
     14




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Results of operations
 Three months ended June 30, 2009 compared to the three months ended June 30, 2008
  (a)

    
    
    (b)
    

    
    (a) + (b)Successor
    
    
    Predecessor
    
    
    Combined (1)
    
    
    SuccessorPeriod from
    
    
    Period from
    
    
    Three Months
    
    
    Three MonthsJune 23, 2008
    
    
    April 1, 2008
    
    
    Ended
    
    
    Endedto June 30,
    
    
    to June 22,
    
    
    June 30,
    
    
    June 30,
    
    
    Increase/2008
    
    
    2008
    
    
    2008
    
    
    2009
    
    
    (Decrease)RevenueProduction revenue
    
    $
    932
    
    
    $
    1,661
    
    
    $
    2,593
    
    
    $
    11,832
    
    
    $
    9,239Library revenue
    
    
    1,489
    
    
    
    49,363
    
    
    
    50,852
    
    
    
    10,851
    
    
    
    (40,001
    )Total revenue
    
    
    2,421
    
    
    
    51,024
    
    
    
    53,445
    
    
    
    22,683
    
    
    
    (30,762
    )Cost of sales
    
    
    1,303
    
    
    
    31,818
    
    
    
    33,121
    
    
    
    18,487
    
    
    
    (14,634
    )Gross profit
    
    
    1,118
    
    
    
    19,206
    
    
    
    20,324
    
    
    
    4,196
    
    
    
    (16,128
    )Other costs and expenses:Selling, general and administrative
    
    
    732
    
    
    
    12,913
    
    
    
    13,645
    
    
    
    6,922
    
    
    
    (6,723
    )Amortization of intangible assets
    
    
    36
    
    
    
    314
    
    
    
    350
    
    
    
    285
    
    
    
    (65
    )Fees paid to related parties:Management fees
    
    
    
    
    
    
    137
    
    
    
    137
    
    
    
    
    
    
    
    (137
    )Termination fee
    
    
    6,000
    
    
    
    
    
    
    
    6,000
    
    
    
    
    
    
    
    (6,000
    )(Loss) income from operations
    
    
    (5,650
    )
    
    
    5,842
    
    
    
    192
    
    
    
    (3,011
    )
    
    
    (3,203
    )Other (expense) income:Interest expense, net
    
    
    (819
    )
    
    
    (9,805
    )
    
    
    (10,624
    )
    
    
    (10,435
    )
    
    
    189Interest income
    
    
    3
    
    
    
    15
    
    
    
    18
    
    
    
    1
    
    
    
    (17
    )Other income (expense), net
    
    
    67
    
    
    
    (181
    )
    
    
    (114
    )
    
    
    (953
    )
    
    
    (839
    )Loss before income taxes and non-controlling
interest in loss of consolidated entity
    
    
    (6,399
    )
    
    
    (4,129
    )
    
    
    (10,528
    )
    
    
    (14,398
    )
    
    
    (3,870
    )Income tax (provision) benefit
    
    
    (83
    )
    
    
    2,111
    
    
    
    2,028
    
    
    
    (543
    )
    
    
    (2,571
    )Loss before non-controlling interest in loss of
consolidated entity
    
    
    (6,482
    )
    
    
    (2,018
    )
    
    
    (8,500
    )
    
    
    (14,941
    )
    
    
    (6,441
    )Non-controlling interest in loss of consolidated entity
    
    
    2,742
    
    
    
    
    
    
    
    2,742
    
    
    
    6,320
    
    
    
    3,578Net loss
    
    $
    (3,740
    )
    
    $
    (2,018
    )
    
    $
    (5,758
    )
    
    $
    (8,621
    )
    
    $
    (2,863
    )Basic and diluted loss per share.
    
    $
    (0.28
    )
    
    
    N/A
    
    
    
    N/A
    
    
    $
    (0.64
    )
    
    
    N/A
 
 (1)
    
    Represents the combined results for the Predecessor and Successor period presented. The
combined results are non-GAAP financial measures and should not be used in isolation or
substitution of Predecessor and Successor results. We believe the combined results help to
provide a presentation of our results for comparability purposes to prior periods. These
combined results form the basis for the ensuing discussion of the results of our operations. 15




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##### Table of Contents



Revenue, cost of sales and gross profit
 Three Months Ended June 30,2009
    
    
    2008As a
    
    
    
    
    
    
    As aPercentage
    
    
    
    
    
    
    Percentage
    
    
    $ Increase/
    
    
    % Increase/Amount
    
    
    of Revenue
    
    
    Amount
    
    
    of Revenue
    
    
    (Decrease)
    
    
    (Decrease)(Dollars in thousands)Production revenue
    
    $
    11,832
    
    
    
    52
    %
    
    $
    2,593
    
    
    
    5
    %
    
    $
    9,239
    
    
    
    356
    %Library revenue
    
    
    10,851
    
    
    
    48
    %
    
    
    50,852
    
    
    
    95
    %
    
    
    (40,001
    )
    
    
    (79
    )%Total revenue
    
    
    22,683
    
    
    
    100
    %
    
    
    53,445
    
    
    
    100
    %
    
    
    (30,762
    )
    
    
    (58
    )%Cost of sales
    
    
    18,487
    
    
    
    82
    %
    
    
    33,121
    
    
    
    62
    %
    
    
    (14,634
    )
    
    
    (44
    )%Gross profit
    
    $
    4,196
    
    
    
    18
    %
    
    $
    20,324
    
    
    
    38
    %
    
    $
    (16,128
    )
    
    
    (79
    )%
       16




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##### Table of Contents



Other costs and expenses
 Three Months EndedJune 30,
    
    
    $ Increase/
    
    
    %Increase/2009
    
    
    2008
    
    
    (Decrease)
    
    
    (Decrease)(Dollars in thousands)Selling, general and administrative
    
    $
    6,922
    
    
    $
    13,645
    
    
    $
    (6,723
    )
    
    
    (49
    )%Amortization of intangible assets
    
    
    285
    
    
    
    350
    
    
    
    (65
    )
    
    
    (19
    )%Fees to related parties
    
    
    
    
    
    
    6,137
    
    
    
    (6,137
    )
    
    
    (100
    )%
   Interest expense, net
  Other income (expense), net
  Income
tax (provision) benefit
  17




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##### Table of Contents



Net loss
  Six months ended June 30, 2009 compared to the six months ended June 30, 2008
  (a)

    
    
    (b)

    
    
    (a) + (b)Successor
    
    
    Predecessor
    
    
    Combined (1)
    
    
    SuccessorPeriod from
    
    
    Period from
    
    
    Six Months
    
    
    Six MonthsJune 23, 2008 to
    
    
    January 1, 2008 to
    
    
    Ended
    
    
    EndedJune 30,
    
    
    June 22,
    
    
    June 30,
    
    
    June 30,
    
    
    Increase/2008
    
    
    2008
    
    
    2008
    
    
    2009
    
    
    (Decrease)RevenueProduction revenue
    
    $
    932
    
    
    $
    6,602
    
    
    $
    7,534
    
    
    $
    11,832
    
    
    $
    4,298Library revenue
    
    
    1,489
    
    
    
    66,643
    
    
    
    68,132
    
    
    
    23,854
    
    
    
    (44,278
    )Total revenue
    
    
    2,421
    
    
    
    73,245
    
    
    
    75,666
    
    
    
    35,686
    
    
    
    (39,980
    )Cost of sales
    
    
    1,303
    
    
    
    49,396
    
    
    
    50,699
    
    
    
    31,925
    
    
    
    (18,774
    )Gross profit
    
    
    1,118
    
    
    
    23,849
    
    
    
    24,967
    
    
    
    3,761
    
    
    
    (21,206
    )Other costs and expenses:Selling, general and administrative
    
    
    732
    
    
    
    25,802
    
    
    
    26,534
    
    
    
    17,888
    
    
    
    (8,646
    )Amortization of intangible assets
    
    
    36
    
    
    
    671
    
    
    
    707
    
    
    
    599
    
    
    
    (108
    )Fees paid to related parties:Management fees
    
    
    
    
    
    
    287
    
    
    
    287
    
    
    
    
    
    
    
    (287
    )Termination fee
    
    
    6,000
    
    
    
    
    
    
    
    6,000
    
    
    
    
    
    
    
    (6,000
    )Loss from operations
    
    
    (5,650
    )
    
    
    (2,911
    )
    
    
    (8,561
    )
    
    
    (14,726
    )
    
    
    (6,165
    )Other (expense) income:Interest expense, net
    
    
    (819
    )
    
    
    (21,559
    )
    
    
    (22,378
    )
    
    
    (20,067
    )
    
    
    2,311Interest income
    
    
    3
    
    
    
    34
    
    
    
    37
    
    
    
    4
    
    
    
    (33
    )Other income (expense), net
    
    
    67
    
    
    
    706
    
    
    
    773
    
    
    
    (1,647
    )
    
    
    (2,420
    )Loss before income taxes and non-controlling
interest in loss of consolidated entity
    
    
    (6,399
    )
    
    
    (23,730
    )
    
    
    (30,129
    )
    
    
    (36,436
    )
    
    
    (6,307
    )Income tax (provision) benefit
    
    
    (83
    )
    
    
    1,518
    
    
    
    1,435
    
    
    
    (518
    )
    
    
    (1,953
    )Loss before non-controlling interest in loss of
consolidated entity
    
    
    (6,482
    )
    
    
    (22,212
    )
    
    
    (28,694
    )
    
    
    (36,954
    )
    
    
    (8,260
    )Non-controlling interest in loss of consolidated entity
    
    
    2,742
    
    
    
    
    
    
    
    2,742
    
    
    
    15,632
    
    
    
    12,890Net loss
    
    $
    (3,740
    )
    
    $
    (22,212
    )
    
    $
    (25,952
    )
    
    $
    (21,322
    )
    
    $
    4,630Basic and diluted loss per share.
    
    $
    (0.28
    )
    
    
    N/A
    
    
    
    N/A
    
    
    $
    (1.58
    )
    
    
    N/A
 
 (1)
    
    Represents the combined results for the Predecessor and Successor period presented. The
combined results are non-GAAP financial measures and should not be used in isolation or
substitution of Predecessor and Successor results. We believe the combined results help to
provide a presentation of our results for comparability purposes to prior periods. These
combined results form the basis for the ensuing discussion of the results of our operations. 18




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##### Table of Contents



Revenue, cost of sales and
gross profit
 Six Months Ended June 30,2009
    
    
    2008As a
    
    
    
    
    
    
    As aPercentage
    
    
    
    
    
    
    Percentage
    
    
    $ Increase/
    
    
    % Increase/Amount
    
    
    of Revenue
    
    
    Amount
    
    
    of Revenue
    
    
    (Decrease)
    
    
    (Decrease)(Dollars in thousands)Production revenue
    
    $
    11,832
    
    
    
    33
    %
    
    $
    7,534
    
    
    
    10
    %
    
    $
    4,298
    
    
    
    57
    %Library revenue
    
    
    23,854
    
    
    
    67
    %
    
    
    68,132
    
    
    
    90
    %
    
    
    (44,278
    )
    
    
    (65
    )%Total revenue
    
    
    35,686
    
    
    
    100
    %
    
    
    75,666
    
    
    
    100
    %
    
    
    (39,980
    )
    
    
    (53
    )%Cost of sales
    
    
    31,925
    
    
    
    89
    %
    
    
    50,699
    
    
    
    67
    %
    
    
    (18,774
    )
    
    
    (37
    )%Gross profit
    
    $
    3,761
    
    
    
    11
    %
    
    $
    24,967
    
    
    
    33
    %
    
    $
    (21,206
    )
    
    
    (85
    )%
       19




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##### Table of Contents



Other costs and expenses
 Six Months EndedSeptember 30,
    
    
    $ Increase/
    
    
    % Increase/2009
    
    
    2008
    
    
    (Decrease)
    
    
    (Decrease)(Dollars in thousands)Selling, general and administrative
    
    $
    17,888
    
    
    $
    26,534
    
    
    $
    (8,646
    )
    
    
    33
    %Amortization of intangible assets
    
    
    599
    
    
    
    707
    
    
    
    (108
    )
    
    
    15
    %Fees to related parties
    
    
    
    
    
    
    6,287
    
    
    
    (6,287
    )
    
    
    (100
    )%
   Interest expense, net
  Other income (expense), net
  20




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##### Table of Contents



Income tax(provision) benefit
  Net loss
  Liquidity and capital resources
     21




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##### Table of Contents



(a)
    
    (b)
    
    (a) + (b)Successor
    
    Predecessor
    
    Combined
    
    PredecessorPeriod from
    
    Period from
    
    Six Months
    
    Six MonthsJune 23, 2008
    
    January 1,
    
    Ended
    
    Endedto June 30,
    
    2008 to June 22,
    
    June 30,
    
    June 30,2008
    
    2008
    
    2008
    
    2009(Dollars in thousands)Net cash used in operating activities
    
    $
    (11,904
    )
    
    $
    (32,331
    )
    
    $
    (44,235
    )
    
    $
    (27,440
    )Net cash used in investing activities
    
    
    
    
    
    
    (81
    )
    
    
    (81
    )
    
    
    (77
    )Net cash (used in) provided by financing activities
    
    
    (16,344
    )
    
    
    64,520
    
    
    
    48,176
    
    
    
    7,000Cash (end of period)
    
    
    5,267
    
    
    
    33,515
    
    
    
    5,267
    
    
    
    1,856
 Operating activities
   Investing activities
  Financing activities
   22




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##### Table of Contents



Contractual obligations
  Payments Due by PeriodLess Than
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    1 Year
    
    1-3 Years
    
    3-5 Years
    
    5 Years(Dollars in thousands)Off balance sheet arrangements:Operating lease commitments (1)
    
    $
    36,136
    
    
    $
    3,805
    
    
    $
    7,314
    
    
    $
    6,963
    
    
    $
    18,054Obligations pursuant to ION Agreement (2)
    
    
    25,450
    
    
    
    25,450
    
    
    
    
    
    
    
    
    
    
    
    Purchase obligations (3)
    
    
    14,126
    
    
    
    8,998
    
    
    
    5,128
    
    
    
    
    
    
    
    75,712
    
    
    
    38,253
    
    
    
    12,442
    
    
    
    6,963
    
    
    
    18,054Contractual obligations reflected on the balance sheet:Debt obligations (4)
    
    
    583,789
    
    
    
    
    
    
    
    52,500
    
    
    
    456,289
    
    
    
    75,000Accrued film production costs (5)
    
    
    67,391
    
    
    
    63,105
    
    
    
    4,286
    
    
    
    
    
    
    
    Other contractual obligations (6)
    
    
    10,365
    
    
    
    6,365
    
    
    
    2,000
    
    
    
    2,000
    
    
    
    661,545
    
    
    
    69,470
    
    
    
    58,786
    
    
    
    458,289
    
    
    
    75,000Total contractual obligations(7)
    
    $
    737,257
    
    
    $
    107,723
    
    
    $
    71,228
    
    
    $
    465,252
    
    
    $
    93,054
 
 (1)
    
    Operating lease commitments represent future minimum payment obligations on various long-term
noncancellable leases for office (primarily New York City headquarters) and storage space.(2)
    
    Obligations pursuant to the ION Agreement represent minimum guarantee payments and certain
promotional obligations associated with our arrangement to provide programming to ION for its
primetime weekend schedule. Included in the obligations above are $18.0 million related to a
third contract year that will be terminated in connection with the proposed Settlement
Agreement (see footnote 11 of our unaudited condensed consolidated financial statements).(3)
    
    Purchase obligation amounts represent a contractual commitment to exclusively license the
rights in and to a film that is not complete.(4)
    
    Debt obligations exclude interest payments and include future principal payments due on our
bank debt (see Note 7).(5)
    
    Accrued film production costs represent contractual amounts payable for the completed films
as well as costs incurred for the buy out of certain participations.(6)
    
    Other contractual obligations primarily represent commitments to settle various accrued
liabilities.(7)
    
    Excluded from the table are $1.6 million of unrecognized tax obligations associated with FIN
48 for which the timing of payment is not estimable. Off-balance sheet arrangements
  Critical accounting policies and estimates
  Recent accounting pronouncements
  23




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##### Table of Contents



Consolidation of Variable Interest Entities,
   24




---



##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures about Risk
 Interest rate risk
  Foreign currency risk
   Credit risk
  
 Item 4.
    
    Controls and Procedures
   25




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##### Table of Contents



Part 2. Other Information
 
 Item 1.
    
    Legal Proceedings
  Item 1a. Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults upon Senior Securities
  
 Item 4.
    
    Submissions of Matters to a Vote on Security Holders
  1.
    
    The election of Frank J. Loverro and Russel H. Givens, Jr. to serve on the Board of
Directors of the Company for a term of office expiring on the date of the Annual Meeting of
Stockholders in 2012.2.
    
    The approval of the Amended and Restated RHI Entertainment, Inc. 2008 Incentive Award
Plan, which adds 1,500,000 shares to the total shares reserved for issuance under the plan.3.
    
    Ratification of the appointment of KPMG LLP as the Companys independent registered
public accounting firm for the fiscal year ending December 31, 2009.* As previously disclosed in a current report on Form 8-K filed with the SEC on
June 18, 2009, the Board of Directors (the Board) of the Company elected Mr. Jeffrey
C. Bloomberg as a Director of the Company on June 12, 2009. Mr. Bloomberg has been
elected to serve on the Board for a term ending on the date of the 2012 annual meeting of
stockholders. On June 12, 2009, Mr. Frank J. Loverro tendered his resignation
as a member of the Board. Mr. Loverros resignation was not caused by any disagreement
with the Company on any matter related to the Companys operations, policies or
practices. With the resignation of Mr. Loverro, and the subsequent election of Mr.
Bloomberg, the Board is now comprised of a majority of independent directors and, thus,
has satisfied the applicable listing standards of the NASDAQ Stock Market.
 
 Item 5.
    
    Other Information
  26




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##### Table of Contents



Item 6.
    
    Exhibits
 ExhibitNumber
    
    Exhibit31.1
    
    Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 27




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##### Table of Contents



SIGNATURE
  Date: August 5, 2009
    By:
    Robert A. Halmi, JrRobert A. Halmi, Jr.President & Chief Executive Officer
(Principal Executive Officer)Date: August 5, 2009
    By:
    William J. AliberWilliam J. AliberChief Financial Officer
(Principal Accounting Officer) 28




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Exhibit31.1
    
    Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 29