Restructuring Charges Expand DreamWorks Animation Q1 Loss30 Apr, 2015 By: Erik Gruenwedel
Beset with a $31.9 million pre-tax charge associated with previously-announced restructuring, DreamWorks Animation April 30 reported a first-quarter (ended March 31) net loss of $54.8 million — up 27.5% from a net loss of $42.9 million during the prior-year period.
Revenue spiked nearly 13% to $166.5 million, due in small part to the early box office return from Home, which has generated $308 million at the global box office since its March 27 debut.
"While 2015 is a transitional year for us, the … performance of Home serves as early evidence that the changes we're making in the core feature animation business are working," CEO Jeffrey Katzenberg said in a statement.
Movie revenue increased 16.2% to $128 million, with operating income at $41 million compared with a loss of $25.4 million in the same period a year ago. In the first quarter of 2014, DWA recorded an impairment charge of $57.1 million for the theatrical release of Mr. Peabody & Sherman.
Home contributed revenue of $2.9 million in the current quarter. As a result of the film's performance in the worldwide theatrical markets, DWA currently projects that 20th Century Fox will recoup its marketing and distribution costs and begin reporting revenue to DWA in the second quarter.
Penguins of Madagascar contributed revenue of $2 million in the current quarter, primarily from distribution outside of Fox territories. The film was released into the domestic home entertainment market on March 17 and through the end of the first quarter reached an estimated 2.2 million home entertainment units sold worldwide, net of actual and estimated future returns.
Fox did not report any revenue to DWA in the quarter for the film as it had not yet recouped its marketing and distribution costs. DWA currently anticipates that Fox will recoup those costs and begin reporting revenue to DWA in the second quarter.
How to Train Your Dragon 2 contributed revenue of $41.4 million in the quarter, primarily from the domestic and international pay-television windows as well as home entertainment. The film reached an estimated 8.4 million home entertainment units sold worldwide through the end of the first quarter, net of actual and estimated future returns.
Mr. Peabody & Sherman contributed revenue of $31.5 million in the quarter, primarily from the domestic and international pay-television windows as well as home entertainment. The film reached an estimated 3.8 million home entertainment units sold worldwide at the end of the first quarter, net of actual and estimated future returns.
Turbo contributed revenue of $12.3 million in the quarter, primarily from international home entertainment. The film reached an estimated 7.1 million home entertainment units sold worldwide at the end of the first quarter, net of actual and estimated future returns.
Library titles contributed revenue of $37.9 million to the quarter. Library revenue was driven by Rise of the Guardians, primarily from worldwide television markets, along with revenue generated in the home entertainment market by How to Train Your Dragon, which benefited from the home entertainment release of the sequel, How to Train Your Dragon 2 last November. In addition, in Q1, DWS benefitted from recoveries of $6.3 million from previously established home entertainment reserves related to sales through DWA's former primary theatrical distributor.
During the quarter, DWA amended its $400 million revolving credit facility to $450 million, extending the term through February 2020. DWA also entered into an agreement to sell its campus located in Glendale, Calif., for $185 million and concurrently leased it back from the purchaser. Proceeds from the sale were used to repay outstanding borrowings on the company’s revolving credit facility.
As of March 31, DWA had $370 million available on its revolving credit facility and $89.7 million of unrestricted cash and cash equivalents on hand, bringing its total available liquidity to nearly $460 million.