DWA sold and will lease back its Glendale, Calif. campus for $185 million
DreamWorks Animation posted a massive fourth quarter loss of $247.7 million due to the company’s recent restructuring plans, which resulted in layoffs, the closure of its Northern California studio and changes in its film release strategy.
The company posted sales of $234.2 million, a gain of 14.7% over the rear-earlier quarter that wrapped Dec. 31. The company’s adjusted operating loss came in at $37.6 million, while its net loss was $64.1 million.
The adjusted financial results exclude a $210.1 million pre-tax charge associated with the company’s restructuring plan announced on Jan. 22, 2015.
As part of the reorg, which resulted in over 500 layoffs, DWA also said it’s selling its Glendale, Calif., campus for $185 million and will lease back the space.
It also amended its $400 million revolving credit facility and increased it to $450 million, extending the term through February 2020.
No matter how you look at the results, DWA took a major hit during the final three months of 2014, capping off a more than disappointing year. Its sole release this year is “Home,” on March 27. The film cost $135 million to produce. It has six films set for release between 2016 and 2018.
The quarter included impairment charges of $57.1 million from the performance of “The Penguins of Madagascar” and “Mr. Peabody and Sherman.”
Around $54.6 million of the loss was related to employee termination costs and other contractual obligations, while $155.5 million was primarily related to film writeoffs for unreleased projects that include “B.O.O.: Bureau of Otherworldly Operations” and “Monkeys of Mumbai.”
For the full year, DWA’s 2014 revenues decreased 3.2% to $684.6 million, while it posted an operating loss of $300 million. When adjusted, the loss was $90 million.
“Although 2014 was a challenging year for our company, I am confident that our recent announcement to restructure our feature film business will enable us to deliver great films and better box office results, while improving the overall financial performance of our business,” said DWA CEO Jeffrey Katzenberg. “And while 2015 will be a transitional year for us, I couldn’t be more confident for the future. We have a set of strategic imperatives in place designed to ensure sustainable and profitable growth over the long term.”
During a call with Wall Street analysts, Katzenberg called 2015 “a reset year for us,” and the period of the restructuring process “the most difficult eight weeks in the company’s 20-year history.”
During the quarter, films generated $131.3 million. Writeoffs, however, forced the studio to post a $152.2 million loss.
Twentieth Century Fox, which distributes DWA’s films, did not report any revenue to DWA in the quarter for the film since it has not yet recouped its marketing and distribution costs, the studio said. That’s expected to happen during the second quarter, DWA said.
“How to Train Your Dragon 2,” which was nominated in the best animated feature category at the Academy Awards but lost to Disney’s “Big Hero 6,” contributed $66 million to DWA’s coffers during the quarter, on the back of its homevideo sales. The film’s sold an estimated 7.5 million units worldwide.
“Mr. Peabody & Sherman” has moved 3.4 million units on homevideo. The film became another title on which Fox has yet to recoup its marketing and distribution costs. Those are also expected to be paid back sometime in the second quarter.
“Turbo” generated $5.8 million in the quarter, primarily from home entertainment. It’s sold around 6.3 million home entertainment units sold worldwide.
Meanwhile, “The Croods” generated $6.5 million in the quarter from homevideo platforms.
Overall, DWA’s library contributed feature film revenue of $46.1 million to the quarter.
DWA’s TV operations saw revenue gains of 7.7% to $50.7 million, however, profits swung from $7.3 million to a loss of $2.6 million, due to film costs, revisions in estimated future revenues for TV specials and marketing costs.
Consumer products was a bright spot, with sales up 77.5% to $22.1 million, and gross profits coming in at $6.1 million, driven by merchandise, location-based entertainment and retail development businesses.
New media, fueled by AwesomenessTV, posted $24.9 million in revenue and gross profits of $13.2 million.
During the quarter, DWA sold a 25% stake in AwesomenessTV to Hearst Corp. for $81.25 million. The company also paid out $80 million to the digital network, as part of a earn-out consideration.
All other segments saw declines of $5.2 million, primarily because DWA is no longer self-producing any live performance productions.
Wall Street didn’t react well to the results. Shares in DWA lost nearly 10% shortly after the results were released, or more than $2 in after-hours trading, after closing up nearly 2.5% to close at $21.13 on Tuesday.