GLENDALE, Calif., May 5, 2016 /PRNewswire/ -- DreamWorks
Animation SKG, Inc. (Nasdaq: DWA) today reported revenues for the
quarter ended March 31, 2016 of $190.4
million, representing an increase of 14.4% from the same
period in 2015. In addition, DWA reported operating income of
$13.8 million and net income
attributable to DWA of $13.8 million,
or $0.16 per diluted share for the
quarter ended March 31, 2016.
"I am happy to report another strong quarter of financial
results, which I believe reflect continued execution on our
strategy of transitioning DreamWorks Animation into a global
family entertainment company," said Jeffrey
Katzenberg, Chief Executive Officer of DreamWorks Animation.
"I'm excited to be passing the baton to Comcast, as I know they
will continue to build on the foundation we've established over the
past 22 years."
On April 28, 2016 NBCUniversal, a
division of Comcast Corporation, announced the acquisition of
DreamWorks Animation. Under the terms of the agreement, DreamWorks
Animation stockholders will receive $41.00 in cash for each share of DreamWorks
Animation common stock. The agreement has been approved by the
Board of Directors of DreamWorks Animation and Comcast, and the
controlling shareholder of DreamWorks Animation has approved the
agreement by written consent. The transaction is expected to close
by the end of 2016, subject to receipt of regulatory approvals in
the U.S. and abroad, as well as the satisfaction of other customary
closing conditions.
First Quarter Review:
DWA's first quarter revenues of $190.4
million increased 14.4% versus the prior-year period driven
by performance in the Television Series and Specials, Consumer
Products and New Media segments.
Beginning in the quarter ended March 31,
2016, DWA changed the method by which intellectual property
costs are charged to the Consumer Products segment to provide
better comparability to peers and to be similar to the method used
in the Television Series and Specials segment while minimizing
segment volatility. As a result, the Consumer Products segment no
longer bears amortization of capitalized production costs for the
use of Film and TV segment intellectual property. Instead, the
Consumer Products segment is charged a royalty fee which will
compensate the originating segment for the use of intellectual
property. There is no change to DWA's consolidated financials, as
DWA's ultimate revenues and the amortization of capitalized
production costs remain unchanged. This methodology impacts segment
reporting only. All prior-year period figures have been
updated to reflect this new methodology.
Revenues for the quarter ended March 31, 2016 from the
Feature Films segment were $94.3
million, compared to $128.7
million in the prior-year period. Revenues in the quarter
ended March 31, 2015 were favorably impacted by the worldwide
pay television distribution of How to Train Your Dragon 2
and Mr. Peabody and Sherman, higher home entertainment sales
and recoveries of $6.3 million from previously
established home entertainment reserves related to sales through
DWA's former primary theatrical distributor. Segment gross profit
for the quarter ended March 31, 2016 of $26.1 million compares to $38.1 million in the prior-year period, primarily
due to lower revenues.
Kung Fu Panda 3, which was
released domestically on January 29,
2016 has reached $514 million
at the worldwide box office to date. The film contributed
feature film revenue of $30.9 million
for the quarter ended March 31, 2016, primarily earned from
distribution outside of territories handled by the Company's
primary distributor, Twenty-First Century Fox ("Fox"). Fox
did not report any revenue to DWA in the quarter ended
March 31, 2016 for the film as it had not yet recouped its
marketing and distribution costs. DWA currently anticipates that
Fox will recoup its marketing and distribution costs and begin
reporting revenue to DWA during the quarter ending June 30, 2016.
Home contributed feature film revenue of $18.3 million in the quarter ended March 31,
2016, primarily from the international pay television window and
worldwide home entertainment market. The film reached an
estimated 6.9 million home entertainment units sold worldwide
through the end of the first quarter, net of actual and estimated
future returns.
The Penguins of Madagascar contributed feature film
revenue of $1.6 million in the
quarter ended March 31, 2016, primarily from worldwide home
entertainment. Through the end of the first quarter, the film
reached an estimated 4.6 million home entertainment units sold
worldwide, net of actual and estimated future returns.
How to Train Your Dragon 2 contributed feature film
revenue of $1.9 million in the
quarter ended March 31, 2016, primarily from worldwide home
entertainment. The film reached an estimated 9.7 million home
entertainment units sold worldwide through the end of the first
quarter, net of actual and estimated future returns.
Library titles contributed feature film revenue of $41.6 million in the quarter ended March 31,
2016, driven by licensing arrangements for the SVOD distribution of
certain titles as well as worldwide television and home
entertainment revenues for a number of titles including Mr.
Peabody and Sherman.
Revenues for the quarter ended March 31, 2016 from the
Television Series and Specials segment increased to $57.0 million, compared to $18.1 million during the prior-year period. The
increase in revenues was attributable to a significantly higher
number of episodes delivered under our episodic content licensing
arrangements. Segment gross profit increased to $21.1 million from $3.5
million in the prior-year period. The increase was primarily
driven by higher revenues and lower marketing expenses.
Revenues from the Consumer Products segment increased to
$21.4 million in the quarter ended
March 31, 2016, compared to $14.3
million in the same period last year. The increase was
primarily due to revenues earned from location-based entertainment
initiatives during the current quarter. Revenue for both the
current and prior year quarters also included contributions from
merchandise licensing arrangements. Segment gross profit increased
to $15.0 million from $9.4 million in the prior-year period, as
revenues earned from our location-based entertainment initiatives
have lower associated costs.
Revenues for the quarter ended March 31, 2016 from the
Company's New Media segment were $15.2 million compared
to $4.6 million during the three months ended March 31,
2015. This increase was primarily attributable to revenue generated
from licensing and distribution of content, and to a lesser extent,
brand sponsorship and talent management arrangements. Segment gross
profit for the quarter ended March 31, 2016 increased
to $6.5 million from $2.1 million in the prior-year
period, primarily due to higher revenues.
For the quarter ended March 31, 2016, DWA posted operating
income of $13.8 million, compared to
an adjusted(a) operating loss of $(3.4) million in the prior-year period,
primarily due to higher revenues and segment gross profit. General
and administrative costs in the current quarter of $60.3 million were relatively even with
adjusted(a) general and administrative costs in the
prior-year period as higher costs related to the growth and
expansion of the AwesomenessTV business were largely offset by a
decrease in salaries and benefits as a result of our 2015
Restructuring Plan. Lastly, for the quarter ended March 31,
2016, the amount of selling and marketing expenses not allocated to
the operating segments but included in operating income was
$0.5 million.
Net income attributable to DWA for the quarter ended
March 31, 2016 was $13.8
million, or income of $0.16
per diluted share. Net income in the current quarter included
income from equity method investees of $2.5
million driven by positive contributions from Oriental
DreamWorks. Also, during the quarter ended March 31,
2016, the Company recorded a provision for income taxes of
$1.1 million, or an effective rate of
8.5% for the quarter. Adjusted(a) net loss in the
prior-year period included a write-off of an equity method
investment in the amount of $5.1 million in other expense
(net).
For the three months ended March 31, 2016,
adjusted(a) operating cash flow was $(47.8) million, compared to
adjusted(a) operating cash flow of $30.7 million in the prior-year period. The main
sources of cash during the current quarter were Home's
domestic home entertainment revenues, The Penguins of
Madagascar's domestic home
entertainment and international television revenues, The
Croods' worldwide home entertainment and international
television revenues, How to Train Your Dragon 2's worldwide
home entertainment revenues, and to a lesser extent, the collection
of worldwide television and home entertainment revenues from our
other films. In addition, other sources of cash included those
related to revenues from licensing of our episodic content. Cash
used in operating activities for the three months ended
March 31, 2016 included $39.1 million related to incentive compensation
payments, which increased $32.3
million when compared to the amount paid during the three
months ended March 31, 2015 as these
cash payments primarily fluctuate based on our financial results.
During the three months ended March 31,
2016, we also made payments to an affiliate of a former
stockholder related to tax benefits realized in 2015 in the amount
of $16.4 million. Cash used in
operating activities also included production spending for our
films and television series, as well as participation and residual
payments. Including the impact of the 2015 Restructuring
Plan, DWA reported operating cash flow of $(52.9) million for the three months ended
March 31, 2016, compared to operating cash flow of
$1.6 million in the prior-year
period.
As of March 31, 2016, DWA had $349.0
million of availability on its revolving credit facility and
$91.6 million of cash and cash
equivalents on hand, bringing the Company's total available
liquidity to approximately $440
million.
Subsequent to the end of the quarter, on April 5, 2016, DWA entered into a Unit Purchase
Agreement with ATV, Hearst and Verizon. Pursuant to the Purchase
Agreement, upon closing Verizon will acquire from DWA and ATV a
24.5% equity interest in ATV for a purchase price of $159.0 million, and Hearst will acquire from ATV
additional equity interests in ATV to maintain a 24.5% equity
interest. Following this transaction, DWA's equity interest in ATV
will be reduced to 51.0%. DWA will continue to consolidate the
results of ATV as it will retain control over its operations. The
transaction is subject to a number of customary closing conditions.
DWA currently expects that the closing of the transaction will be
completed during the second or third quarters of 2016. Upon
closing, and before adjusting for direct transaction costs, the
Company expects that it will receive $168.0
million of aggregate gross proceeds from Verizon and Hearst,
of which approximately $49.0 million
will remain at the ATV joint venture.
Items related to the earnings press release for the first
quarter of 2016 will be discussed in more detail on the Company's
earnings conference call later today.
Conference Call Information
DreamWorks Animation will host a conference call and webcast to
discuss the results on Thursday, May 5,
2016 at 1:30pm (PT) /
4:30pm (ET). Investors can access the
call by dialing (800) 230-1059 in the U.S. and (612) 234-9960
internationally and identifying "DreamWorks Animation Earnings
Call" to the operator. The call will also be available via live
webcast at ir.dreamworksanimation.com.
A replay of the conference call will be available shortly after
the call ends on Thursday, May 5, 2016. To access the replay,
dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally
and enter 391182 as the conference ID number. Both the earnings
release and archived webcast will be available on the Company's
website at ir.dreamworksanimation.com.
About DreamWorks Animation
DreamWorks Animation (Nasdaq: DWA) is a global family
entertainment company with business interests that span feature
film and television production; licensing and consumer products;
location-based entertainment; and new media properties, including
the Company's controlling interest in AwesomenessTV. The
Company's feature film heritage includes many of the world's
most-beloved characters and franchises,
including Shrek, Madagascar, Kung Fu Panda and How to Train
Your Dragon, while its 32 feature film releases have amassed
more than $13 billion in global box
office receipts. DWA's television business has quickly become
one of the world's leading suppliers of high-quality family
programming, reaching consumers on linear and on-demand platforms
in more than 130 countries and winning a total of 30 Emmy™ Awards
to date. The Company's deep portfolio of intellectual
property is supported by a robust, worldwide consumer products
practice, which includes licensing, and location-based
entertainment venues around the world. The Company is also
the majority owner of AwesomenessTV, a leading video destination
for Generation Z and Millennial audiences, and also owns
45% of Oriental DreamWorks, a world-class animation studio in
China that produces family
entertainment for both Chinese and global audiences.
Caution Concerning Forward-Looking Statements
This document includes certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. The Company's plans, prospects, strategies, proposals and
our beliefs and expectations concerning performance of our current
and future releases and anticipated talent, directors and storyline
for our upcoming films and other projects, constitute
forward-looking statements. These statements are based on current
expectations, estimates, forecasts and projections about the
industry in which we operate and management's beliefs and
assumptions. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions which
are difficult to predict. Actual results may vary materially from
those expressed or implied by the statements herein due to changes
in economic, business, competitive, technological and/or regulatory
factors, and other risks and uncertainties affecting the operation
of the business of DreamWorks Animation SKG, Inc. These risks and
uncertainties include: receipt of regulatory approvals for our
pending merger with Comcast Corporation and for the investment in
AwesomenessTV by Verizon and Hearst, audience acceptance of our
films, our dependence on the success of a limited number of
releases each year, the increasing cost of producing and marketing
feature films, piracy of motion pictures, the effect of rapid
technological change or alternative forms of entertainment and our
need to protect our proprietary technology and enhance or develop
new technology. In addition, due to the uncertainties and risks
involved in the development and production of animated feature
projects, the release dates for the projects described in this
document may be delayed. For a further list and description of such
risks and uncertainties, see the reports filed by us with the
Securities and Exchange Commission, including our most recent
annual report on Form 10-K and our most recent quarterly reports on
Form 10-Q. DreamWorks Animation is under no obligation to, and
expressly disclaims any obligation to, update or alter its
forward-looking statements, whether as a result of new information,
future events, changes in assumptions or otherwise.
(a) Reconciliations of non-GAAP measures to
reported results are included at the end of this earnings
release.
|
DREAMWORKS
ANIMATION SKG, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
|
(in thousands,
except par value and share amounts)
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
91,610
|
|
|
$
|
110,814
|
|
|
Trade accounts
receivable, net of allowance for doubtful accounts
|
253,803
|
|
|
271,466
|
|
|
Receivables from
distributors, net of allowance for doubtful accounts
|
240,846
|
|
|
230,569
|
|
|
Film and other
inventory costs, net
|
832,418
|
|
|
820,454
|
|
|
Prepaid
expenses
|
30,943
|
|
|
29,133
|
|
|
Other
assets
|
70,842
|
|
|
69,098
|
|
|
Investments in
unconsolidated entities
|
39,409
|
|
|
32,814
|
|
|
Property, plant and
equipment, net of accumulated depreciation and
amortization
|
38,121
|
|
|
37,765
|
|
|
Intangible assets,
net of accumulated amortization
|
169,103
|
|
|
172,328
|
|
|
Goodwill
|
190,668
|
|
|
190,668
|
|
|
Total
assets
|
$
|
1,957,763
|
|
|
$
|
1,965,109
|
|
|
Liabilities and
Equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
15,374
|
|
|
$
|
10,847
|
|
|
Accrued
liabilities
|
150,929
|
|
|
199,665
|
|
|
Payable to former
stockholder
|
4,392
|
|
|
20,776
|
|
|
Deferred revenue and
other advances
|
72,608
|
|
|
74,659
|
|
|
Deferred gain on
sale-leaseback transaction
|
86,249
|
|
|
87,410
|
|
|
Revolving credit
facility
|
101,000
|
|
|
60,000
|
|
|
Senior unsecured
notes, net of deferred financing costs
|
295,399
|
|
|
295,134
|
|
|
Deferred taxes,
net
|
18,131
|
|
|
17,778
|
|
|
Total
liabilities
|
744,082
|
|
|
766,269
|
|
|
Commitments and
contingencies
|
|
|
|
|
Equity:
|
|
|
|
|
DreamWorks Animation
SKG, Inc. Stockholders' Equity:
|
|
|
|
|
Class A common
stock, par value $0.01 per share, 350,000,000 shares authorized,
107,249,322 and 106,907,772 shares issued, as of March 31, 2016 and
December 31, 2015, respectively
|
1,072
|
|
|
1,069
|
|
|
Class B common stock,
par value $0.01 per share, 150,000,000 shares authorized, 7,838,731
shares issued and outstanding, as of March 31, 2016 and
December 31, 2015
|
78
|
|
|
78
|
|
|
Additional paid-in
capital
|
1,234,549
|
|
|
1,227,220
|
|
|
Accumulated other
comprehensive loss
|
(4,465)
|
|
|
(3,642)
|
|
|
Retained
earnings
|
721,814
|
|
|
707,978
|
|
|
Less: Class A
Treasury common stock, at cost, 28,551,078 and 28,401,898 shares,
as of March 31, 2016 and December 31, 2015,
respectively
|
(792,789)
|
|
|
(789,186)
|
|
|
Total DreamWorks
Animation SKG, Inc. stockholders' equity
|
1,160,259
|
|
|
1,143,517
|
|
|
Non-controlling
interests
|
53,422
|
|
|
55,323
|
|
|
Total
equity
|
1,213,681
|
|
|
1,198,840
|
|
|
Total liabilities and
equity
|
$
|
1,957,763
|
|
|
$
|
1,965,109
|
|
|
DREAMWORKS
ANIMATION SKG, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2016
|
|
2015
|
|
(in thousands,
except per share amounts)
|
|
Revenues
|
$
|
190,442
|
|
|
$
|
166,530
|
|
|
|
|
|
|
Operating expenses
(income):
|
|
|
|
|
Costs of
revenues
|
114,624
|
|
|
106,165
|
|
|
Selling and
marketing
|
6,140
|
|
|
8,475
|
|
|
General and
administrative
|
60,250
|
|
|
89,142
|
|
|
Product
development
|
545
|
|
|
332
|
|
|
Other operating
income
|
(4,941)
|
|
|
(2,281)
|
|
|
Operating income
(loss)
|
13,824
|
|
|
(35,303)
|
|
|
|
|
|
|
Non-operating
income (expense):
|
|
|
|
|
Interest expense,
net
|
(4,987)
|
|
|
(6,334)
|
|
|
Other income
(expense), net
|
1,892
|
|
|
(5,466)
|
|
|
Increase in income
tax benefit payable to former stockholder
|
—
|
|
|
(25)
|
|
|
Income (loss)
before income from equity method investees and income
taxes
|
10,729
|
|
|
(47,128)
|
|
|
|
|
|
|
Income (loss) from
equity method investees
|
2,542
|
|
|
(6,362)
|
|
|
Income (loss)
before income taxes
|
13,271
|
|
|
(53,490)
|
|
|
Provision for income
taxes
|
1,130
|
|
|
2,400
|
|
|
Net income
(loss)
|
12,141
|
|
|
(55,890)
|
|
|
Less: Net loss
attributable to non-controlling interests
|
(1,695)
|
|
|
(1,113)
|
|
|
Net income (loss)
attributable to DreamWorks Animation SKG, Inc.
|
$
|
13,836
|
|
|
$
|
(54,777)
|
|
|
|
|
|
|
Net income (loss)
per share of common stock attributable to DreamWorks Animation SKG,
Inc.
|
|
|
|
|
Basic net income
(loss) per share
|
$
|
0.16
|
|
|
$
|
(0.64)
|
|
|
Diluted net income
(loss) per share
|
$
|
0.16
|
|
|
$
|
(0.64)
|
|
|
Shares used in
computing net income (loss) per share
|
|
|
|
|
Basic
|
86,398
|
|
|
85,615
|
|
|
Diluted
|
87,679
|
|
|
85,615
|
|
|
DREAMWORKS
ANIMATION SKG, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2016
|
|
2015
|
|
(in
thousands)
|
|
Operating
activities
|
|
|
|
|
Net income
(loss)
|
$
|
12,141
|
|
|
$
|
(55,890)
|
|
|
Adjustments to
reconcile net income (loss) to net cash (used in) provided by
operating activities:
|
|
|
|
|
Amortization and
write-off of film and other inventory costs
|
95,461
|
|
|
93,352
|
|
|
Other impairments and
write-offs
|
—
|
|
|
5,064
|
|
|
Amortization of
intangible and other assets
|
5,821
|
|
|
3,977
|
|
|
Depreciation and
amortization
|
1,492
|
|
|
13,374
|
|
|
Amortization of
deferred financing costs
|
632
|
|
|
571
|
|
|
Amortization of
deferred gain on sale-leaseback transaction
|
(1,161)
|
|
|
—
|
|
|
Stock-based
compensation expense
|
4,861
|
|
|
4,399
|
|
|
Revenue earned
against deferred revenue and other advances
|
(34,013)
|
|
|
(16,469)
|
|
|
Income related to
investment contributions
|
(4,053)
|
|
|
(2,281)
|
|
|
(Income) loss from
equity method investees
|
(2,542)
|
|
|
6,362
|
|
|
Deferred taxes,
net
|
353
|
|
|
679
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Restricted
cash
|
—
|
|
|
10,337
|
|
|
Trade accounts
receivable
|
18,568
|
|
|
(16,704)
|
|
|
Receivables from
distributors
|
(10,706)
|
|
|
54,648
|
|
|
Film and other
inventory costs
|
(102,957)
|
|
|
(89,192)
|
|
|
Prepaid expenses and
other assets
|
(8,166)
|
|
|
(20,387)
|
|
|
Accounts payable and
accrued liabilities
|
(44,318)
|
|
|
(25,015)
|
|
|
Payable to former
stockholder
|
(16,384)
|
|
|
(7,328)
|
|
|
Income taxes
payable/receivable, net
|
318
|
|
|
305
|
|
|
Deferred revenue and
other advances
|
31,760
|
|
|
41,760
|
|
|
Net cash (used in)
provided by operating activities
|
(52,893)
|
|
|
1,562
|
|
|
Investing
activities
|
|
|
|
|
Investments in
unconsolidated entities
|
—
|
|
|
(510)
|
|
|
Purchases of
property, plant and equipment
|
(3,709)
|
|
|
(1,845)
|
|
|
Net cash used in
investing activities
|
(3,709)
|
|
|
(2,355)
|
|
|
Financing
activities
|
|
|
|
|
Deferred financing
costs
|
—
|
|
|
(5,729)
|
|
|
Purchase of treasury
stock
|
(3,603)
|
|
|
(2,013)
|
|
|
Contingent
consideration payment
|
—
|
|
|
(335)
|
|
|
Borrowings from
revolving credit facility
|
71,000
|
|
|
340,405
|
|
|
Repayments of
borrowings from revolving credit facility
|
(30,000)
|
|
|
(475,405)
|
|
|
Proceeds from lease
financing obligation
|
—
|
|
|
185,000
|
|
|
Repayments of lease
financing obligation
|
—
|
|
|
(1,184)
|
|
|
Capital contribution
from non-controlling interest holder
|
—
|
|
|
15,000
|
|
|
Distributions to
non-controlling interest holder
|
(206)
|
|
|
(571)
|
|
|
Net cash provided by
financing activities
|
37,191
|
|
|
55,168
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
207
|
|
|
1,060
|
|
|
(Decrease) increase
in cash and cash equivalents
|
(19,204)
|
|
|
55,435
|
|
|
Cash and cash
equivalents at beginning of period
|
110,814
|
|
|
34,227
|
|
|
Cash and cash
equivalents at end of period
|
$
|
91,610
|
|
|
$
|
89,662
|
|
|
Non-cash investing
activities:
|
|
|
|
|
Intellectual property
and technology licenses granted in exchange for equity
interest
|
$
|
3,918
|
|
|
$
|
2,225
|
|
|
Services provided in
exchange for equity interest
|
135
|
|
|
55
|
|
|
Total non-cash
investing activities
|
$
|
4,053
|
|
|
$
|
2,280
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Cash paid during the
period for income taxes, net of amounts refunded
|
$
|
487
|
|
|
$
|
1,441
|
|
|
Cash paid during the
period for interest, net of amounts capitalized
|
$
|
10,092
|
|
|
$
|
12,132
|
|
|
DREAMWORKS
ANIMATION SKG, INC.
SEGMENT REVENUES AND GROSS PROFIT
RECONCILIATION
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2016
|
|
2015
(1)
|
|
|
(in
thousands)
|
|
Revenues
|
|
|
|
|
Feature
Films
|
|
|
|
|
Third
parties
|
$
|
94,058
|
|
|
$
|
128,020
|
|
|
Intersegment
|
255
|
|
|
669
|
|
|
Total Feature Films
segment revenues
|
94,313
|
|
|
128,689
|
|
|
|
|
|
|
|
Television Series and
Specials
|
|
|
|
|
Third
parties
|
56,880
|
|
|
18,013
|
|
|
Intersegment
|
110
|
|
|
110
|
|
|
Total Television
Series and Specials segment revenues
|
56,990
|
|
|
18,123
|
|
|
|
|
|
|
|
Consumer
Products
|
|
|
|
|
Third
parties
|
21,743
|
|
|
15,116
|
|
|
Intersegment
|
(365)
|
|
|
(779)
|
|
|
Total Consumer
Products segment revenues
|
21,378
|
|
|
14,337
|
|
|
|
|
|
|
|
New Media
|
15,228
|
|
|
4,583
|
|
|
All Other
|
2,533
|
|
|
798
|
|
|
Total consolidated
revenues
|
$
|
190,442
|
|
|
$
|
166,530
|
|
|
|
|
|
|
|
Segment gross
profit(2)
|
|
|
|
|
Feature
Films
|
$
|
26,112
|
|
|
$
|
38,092
|
|
|
Television Series and
Specials
|
21,066
|
|
|
3,461
|
|
|
Consumer
Products
|
14,992
|
|
|
9,413
|
|
|
New Media
|
6,513
|
|
|
2,115
|
|
|
All Other
|
1,485
|
|
|
495
|
|
|
Total segment gross
profit
|
$
|
70,168
|
|
|
$
|
53,576
|
|
|
|
|
|
|
|
Reconciliation to
consolidated income (loss) before income taxes:
|
|
|
|
|
Selling and marketing
expenses(3)
|
490
|
|
|
1,686
|
|
|
General and
administrative expenses
|
60,250
|
|
|
89,142
|
|
|
Product development
expenses
|
545
|
|
|
332
|
|
|
Other operating
income
|
(4,941)
|
|
|
(2,281)
|
|
|
Non-operating
expenses, net
|
3,095
|
|
|
11,825
|
|
|
(Income) loss from
equity method investees
|
(2,542)
|
|
|
6,362
|
|
|
Total consolidated
income (loss) before income taxes
|
$
|
13,271
|
|
|
$
|
(53,490)
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects
reclassifications between segments to conform to the current period
methodology in allocating costs to the Consumer Products
segment.
|
|
(2)
|
The Company defines
segment gross profit as segment revenues less segment costs of
revenues (which is comprised of costs of revenues and certain costs
classified as a component of "selling and marketing" in its
statements of operations).
|
|
(3)
|
Represents certain
selling and marketing expenses that are not included as a component
of segment gross profit due to the general nature of such
expenses.
|
The following tables present 2015 quarterly and annual segment
revenues, costs of revenues and gross profit to conform to the
current period methodology described above of allocating costs for
each of the impacted segments as if the changed methodology had
been implemented effective as of January 1,
2015.
|
Feature Films
Segment (including reclassifications)
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March 31,
2015
|
|
June 30,
2015
|
|
September 30,
2015
|
|
December 31,
2015
|
|
December 31,
2015
|
|
(in
millions)
|
|
Segment
revenues
|
|
|
|
|
|
|
|
|
|
|
Third
parties
|
$
|
128.0
|
|
|
$
|
87.8
|
|
|
$
|
157.9
|
|
|
$
|
146.4
|
|
|
$
|
520.1
|
|
|
Intersegment
|
0.7
|
|
|
0.4
|
|
|
0.7
|
|
|
0.4
|
|
|
2.2
|
|
|
128.7
|
|
|
88.3
|
|
|
158.6
|
|
|
146.8
|
|
|
522.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment costs of
revenues
|
90.6
|
|
|
59.0
|
|
|
107.8
|
|
|
85.4
|
|
|
342.7
|
|
|
Segment gross
profit
|
$
|
38.1
|
|
|
$
|
29.3
|
|
|
$
|
50.8
|
|
|
$
|
61.4
|
|
|
$
|
179.6
|
|
|
|
|
Television Series
and Specials Segment (including reclassifications)
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March 31,
2015
|
|
June 30,
2015
|
|
September 30,
2015
|
|
December 31,
2015
|
|
December 31,
2015
|
|
(in
millions)
|
|
Segment
revenues
|
|
|
|
|
|
|
|
|
|
|
Third
parties
|
$
|
18.0
|
|
|
$
|
54.5
|
|
|
$
|
50.7
|
|
|
$
|
104.9
|
|
|
$
|
228.1
|
|
|
Intersegment
|
0.1
|
|
|
0.2
|
|
|
0.3
|
|
|
1.0
|
|
|
1.6
|
|
|
18.1
|
|
|
54.8
|
|
|
51.0
|
|
|
105.9
|
|
|
229.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment costs of
revenues
|
14.7
|
|
|
35.6
|
|
|
36.3
|
|
|
62.0
|
|
|
148.5
|
|
|
Segment gross
profit
|
$
|
3.5
|
|
|
$
|
19.2
|
|
|
$
|
14.7
|
|
|
$
|
43.9
|
|
|
$
|
81.2
|
|
|
|
|
Consumer Products
Segment (including reclassifications)
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March 31,
2015
|
|
June 30,
2015
|
|
September 30,
2015
|
|
December 31,
2015
|
|
December 31,
2015
|
|
(in
millions)
|
|
Segment
revenues
|
|
|
|
|
|
|
|
|
|
|
Third
parties
|
$
|
15.1
|
|
|
$
|
12.7
|
|
|
$
|
27.0
|
|
|
$
|
31.7
|
|
|
$
|
86.5
|
|
|
Intersegment
|
(0.8)
|
|
|
(0.7)
|
|
|
(1.0)
|
|
|
(1.4)
|
|
|
(3.8)
|
|
|
14.3
|
|
|
12.0
|
|
|
26.0
|
|
|
30.4
|
|
|
82.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment costs of
revenues
|
4.9
|
|
|
7.8
|
|
|
6.1
|
|
|
19.8
|
|
|
38.7
|
|
|
Segment gross
profit
|
$
|
9.4
|
|
|
$
|
4.2
|
|
|
$
|
19.9
|
|
|
$
|
10.5
|
|
|
$
|
44.0
|
|
|
|
|
|
|
|
Note: Amounts may not
foot due to rounding.
|
|
DREAMWORKS
ANIMATION SKG, INC.
SELLING AND MARKETING
EXPENSES
(Unaudited)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2016
|
|
2015
|
|
(in
thousands)
|
|
Selling and
marketing
|
$
|
6,140
|
|
|
$
|
8,475
|
|
|
Less: allocation to
segments
|
5,650
|
|
|
6,789
|
|
|
Unallocated selling
and marketing
|
$
|
490
|
|
|
$
|
1,686
|
|
Non-GAAP Measures
In addition to the financial results reported in accordance with
U.S. GAAP, we have provided the following non-GAAP measures:
Adjusted Income/Loss Measures (which are further described and
defined below) and Adjusted Operating Cash Flow (collectively,
"non-GAAP measures"). Adjusted Income/Loss Measures and Adjusted
Operating Cash Flow are not prepared in accordance with U.S. GAAP.
Adjusted Income/Loss Measures and Adjusted Operating Cash Flow
provide a supplemental presentation of our operating performance
and generally reflect adjustments for unusual or non-operational
activities. We may not calculate Adjusted Income/Loss Measures or
Adjusted Operating Cash Flow in a manner consistent with the
methodologies used by other companies. Adjusted Income/Loss
Measures and Adjusted Operating Cash Flow (a) do not represent our
operating income or cash flows from operating activities as defined
by U.S. GAAP; (b) are not necessarily indicative of cash available
to fund our cash flow needs; and (c) should not be considered
alternatives to net income, operating income, cash provided by
operating activities or our other financial information as
determined under U.S. GAAP. Our presentation of Adjusted
Income/Loss and Adjusted Operating Cash Flow measures should not be
construed as an implication that our future results will be
unaffected by unusual items. We believe the use of Adjusted
Income/Loss and Adjusted Operating Cash Flow measures on a
consolidated basis assists investors in comparing our ongoing
operating performance between periods.
On January 22, 2015, the Company announced its
restructuring initiatives (the "2015 Restructuring Plan") that are
intended to refocus the Company's core feature animation business.
In connection with the 2015 Restructuring Plan, the Company made
changes in its senior leadership team and also made changes based
on its reevaluation of the Company's feature film slate. The
Company evaluates operating performance to exclude the effects of
the charges related to the execution of the 2015 Restructuring Plan
as it believes the restructuring-related charges do not correlate
with the ongoing operating results of the Company's business and
were charges that resulted from significant decisions that were
made in order to refocus the Company. As a result, the Company
believes that presenting the Company's Adjusted Operating
Income/Loss, Adjusted Net Income/Loss Attributable to DreamWorks
Animation SKG, Inc. and Adjusted Diluted Income/Loss per share
(collectively, "Adjusted Income/Loss Measures") will aid investors
in evaluating the performance of the Company. The Company defines
Adjusted Income/Loss Measures as net earnings (loss) adjusted to
exclude the items within its Consolidated Statements of Operations
that relate to its 2015 Restructuring Plan (as discussed further in
the footnotes to the tables below).
The Company uses these Adjusted Income/Loss Measures to, among
other things, evaluate the Company's operating performance. These
measures are among the primary measures used by management for
planning and forecasting of future periods, and they are important
indicators of the Company's operational strength and business
performance because they provide a link between profitability and
operating cash flow. The Company believes these measures are
relevant and useful for investors because they allow investors to
view performance in a manner similar to the method used by the
Company's management and help improve investors' understanding of
the Company's operating performance. In addition, the Company
believes that these are among the primary measures used externally
by the Company's investors, analysts and industry peers for
purposes of valuation and for the comparison of the Company's
operating performance to other companies in its industry. In
addition to the Adjusted Income/Loss Measures, for the same reasons
described above, the Company also uses Adjusted Operating Cash
Flow, which is defined as cash flow provided by operating
activities (as presented in the Company's Consolidated Statements
of Cash Flows) adjusted to exclude cash payments made in connection
with its 2015 Restructuring Plan.
The following is a reconciliation of each of the Company's GAAP
measures (operating income/loss, net income/loss attributable to
DreamWorks Animation SKG, Inc. and diluted earnings (or loss) per
share) to the non-GAAP adjusted amounts. In addition, following
this table are additional reconciliations for adjusted general and
administrative expense, which is a component of the Adjusted
Income/Loss Measures, and for adjusted operating cash flows.
|
DREAMWORKS
ANIMATION SKG, INC.
ADJUSTED INCOME/LOSS
RECONCILIATIONS
(Unaudited)
|
|
|
Three Months
Ended
|
|
March 31,
2015
|
|
(in thousands,
except
per share amounts)
|
|
Operating loss —
as reported
|
$
|
(35,303)
|
|
|
|
|
Reverse 2015
Restructuring Plan charges:
|
|
|
Employee-related
termination costs(1)
|
4,587
|
|
|
Relocation and other
employee-related costs(2)
|
1,496
|
|
|
Accelerated
depreciation and amortization charges(3)
|
9,279
|
|
|
Additional labor and
other excess costs(4)
|
16,509
|
|
|
Total
restructuring-related charges
|
31,871
|
|
|
|
|
Adjusted operating
loss
|
$
|
(3,432)
|
|
|
|
|
Net loss
attributable to DreamWorks Animation SKG, Inc. — as
reported
|
$
|
(54,777)
|
|
|
|
|
Reverse 2015
Restructuring Plan charges:
|
|
|
Employee-related
termination costs(1)
|
4,587
|
|
|
Relocation and other
employee-related costs(2)
|
1,496
|
|
|
Accelerated
depreciation and amortization charges(3)
|
9,279
|
|
|
Additional labor and
other excess costs(4)
|
16,509
|
|
|
Total
restructuring-related charges
|
31,871
|
|
|
|
|
Tax
impact(5)
|
1,434
|
|
|
|
|
Adjusted net loss
attributable to DreamWorks Animation SKG, Inc.
|
$
|
(21,472)
|
|
|
|
|
Loss per share —
as reported
|
$
|
(0.64)
|
|
|
|
|
Reverse 2015
Restructuring Plan charges:
|
|
|
Employee-related
termination costs(1)
|
0.05
|
|
|
Relocation and other
employee-related costs(2)
|
0.02
|
|
|
Accelerated
depreciation and amortization charges(3)
|
0.11
|
|
|
Additional labor and
other excess costs(4)
|
0.19
|
|
|
Total
restructuring-related charges
|
0.37
|
|
|
|
|
Tax
impact(5)
|
0.02
|
|
|
|
|
Adjusted loss per
share
|
$
|
(0.25)
|
|
|
DREAMWORKS
ANIMATION SKG, INC.
ADJUSTED EXPENSE
RECONCILIATION
(Unaudited)
|
|
|
Three Months
Ended
|
|
March 31,
2015
|
|
(in
thousands)
|
|
General and
administrative — as reported
|
$
|
89,142
|
|
|
|
|
Reverse 2015
Restructuring Plan charges:
|
|
|
Employee-related
termination costs(1)
|
4,587
|
|
|
Relocation and other
employee-related costs(2)
|
1,496
|
|
|
Accelerated
depreciation and amortization charges(3)
|
9,279
|
|
|
Additional labor and
other excess costs(4)
|
16,509
|
|
|
Total
restructuring-related charges
|
31,871
|
|
|
|
|
Adjusted general
and administrative
|
$
|
57,271
|
|
|
ADJUSTED OPERATING
CASH FLOW RECONCILIATION
(Unaudited)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2016
|
|
2015
|
|
(in
thousands)
|
|
Net cash (used in)
provided by operating activities — as reported
|
$
|
(52,893)
|
|
|
$
|
1,562
|
|
|
|
|
|
|
2015 Restructuring
Plan cash payments
|
5,082
|
|
|
29,156
|
|
|
|
|
|
|
Adjusted net cash
(used in) provided by operating activities
|
$
|
(47,811)
|
|
|
$
|
30,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Employee-related
termination costs. Employee-related
termination costs consist of severance and benefits (including
stock-based compensation) attributable to employees that were
terminated in connection with the 2015 Restructuring
Plan.
|
|
(2)
|
Relocation and
other employee-related costs. Relocation and
other employee-related costs primarily consist of costs to relocate
employees from our Northern California facility to our Southern
California facility.
|
|
(3)
|
Accelerated
depreciation and amortization charges.
Accelerated depreciation and amortization charges consist of the
incremental charges we incurred as a result of shortened estimated
useful lives of certain property, plant and equipment due to the
decision to exit our Northern California facility.
|
|
(4)
|
Additional labor
and other excess costs. Additional labor
consists of costs related to excess staffing in order to execute
the restructuring plans specifically related to changes in the
feature film slate. These additional labor costs are incremental to
our normal operating charges and are expensed as incurred. Other
excess costs are those due to the closure of our Northern
California facility which primarily relate to costs that we
incurred to continue to operate the facility until we begin to earn
amounts under sublease arrangements.
|
|
(5)
|
Tax
Impact. The tax impact of non-GAAP
adjustments was calculated at the Company's combined effective tax
rate.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/dreamworks-animation-reports-strong-first-quarter-2016-results-with-revenues-increasing-14-to-190-million-and-segment-gross-profit-improving-31-to-70-million-300263906.html
SOURCE DreamWorks Animation SKG, Inc.