DreamWorks Animation loses $38.6 million in Q2 due to restructuring

MUMBAI: Including the impact of the restructuring plan, DreamWorks Animation SKG, Inc reported net loss attributable of $38.6 million, or $0.45 per share for the quarter ended 30 June, 2015. The company’s operating loss stood at $21.8 million.

DreamWorks Animation’s revenues for the quarter ended 30 June, 2015 at $170.8 million, were up 39.7 per cent from the same period in 2014. In addition, the company reported an adjusted operating loss of $1 million and adjusted net loss attributable to DWA of $11.6 million.

Adjusted financial results exclude a $20.9 million pre-tax charge associated with company's restructuring plan announced in January 2015.

Of the restructuring-related charges totaling $20.9 million or a loss of $2.4 million was due to employee termination and other employee-related costs, $10.9 million was related to accelerated depreciation and amortization charges associated with the closure of its Redwood City facility, and $7.6 million was primarily related to excess staffing and other costs associated with previously announced changes in the feature film slate.

“Our second quarter financial results were solid, highlighted by the theatrical success of Home and the rapid expansion of our Television and New Media businesses. The appetite for premium content across platforms continues to grow both domestically and internationally, and it's clear DreamWorks Animation is well-positioned to capitalize on the growing demand,” said DreamWorks Animation CEO Jeffrey Katzenberg.

Home, which was released theatrically on 27 March, 2015 has reached $177 million at the US box office and $207 million at the international box office to date. 

Second Quarter Review:

DreamWorks Animation’s second quarter revenues of $170.8 million increased 39.7 per cent versus the prior-year period primarily driven by the performance of the feature film, television series and specials and new media segments.

Television Segment

Revenues for the quarter ended 30 June, 2015 from the Television series and specials segment increased to $54.5 million, compared to $20 million during the prior-year period. The increase in revenues was attributable to a significantly higher number of episodes delivered under episodic content licensing arrangements.

Segment gross profit increased to $19.2 million in the current quarter, from $1.2 million in the same period of the prior year. The increase was primarily driven by favorable amortization rates associated with episodic series, partially offset by higher up-front marketing costs associated with the release of its new television series.

In addition, for the three months ended 30 June, 2014 segment gross profit was negatively impacted by higher than expected returns of seasonal and newly-released home entertainment product, as well as increased selling costs, related to the company’s Classic Media properties.

Film Segment

Revenues for the quarter ended 30 June, 2015 from the Feature Film segment increased to $87.8 million, up from $69.7 million in the prior-year period. Segment gross profit also increased to $31.7 million compared to $23.9 million in the same period last year.

In the quarter, Home contributed revenue of $23.9 million, The Penguins of Madagascar contributed $8.3 million, How to Train Your Dragon 2 contributed $17.9 million, Mr. Peabody and Sherman contributed $8.4 million and Turbo contributed $1 million.

Library titles contributed feature film revenue of $28.3 million to the quarter.

Consumer Products Segment

Revenues from the Consumer Products segment decreased to $12.7 million in the second quarter, compared to $18.5 million in the same period last year. The prior year period benefitted from merchandise and licensing revenue associated with How to Train Your Dragon 2, which was released theatrically in June 2014. Segment revenues in the current quarter were primarily generated by licensing arrangements related to a variety of intellectual property rights associated with the characters from films.

Segment gross profit decreased to $1.8 million from $7.3 million in the prior year period, largely due to higher costs incurred across a variety of segment activities.

New Media Segment

Revenues for the quarter ended 30 June, 2015 from the company's New Media segment were $14.6 million compared to $11.5 million during the three months ended 30 June, 2014. This increase was primarily attributable to revenue generated under new licensing agreements and the delivery of newly-created content versus the prior-year period.

Segment gross profit increased to $7.5 million from $2.5 million in the prior-year period, primarily due to higher revenue contributions from newly licensed content. 

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