Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 17, 2015 | |
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | DreamWorks Animation SKG, Inc. | |
Entity Central Index Key | 1297401 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Common Class A [Member] | ||
Entity Common Stock, Shares Outstanding | 77,895,892 | |
Common Class B [Member] | ||
Entity Common Stock, Shares Outstanding | 7,838,731 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Assets | ||
Cash and cash equivalents | $89,662 | $34,227 |
Restricted cash | 14,907 | 25,244 |
Trade accounts receivable, net of allowance for doubtful accounts (see Note 7 for related party amounts) | 173,267 | 160,379 |
Receivables from distributors, net of allowance for doubtful accounts (see Note 7 for related party amounts) | 214,672 | 271,256 |
Film and other inventory costs, net | 830,692 | 827,890 |
Prepaid expenses | 33,478 | 17,555 |
Other assets | 47,406 | 40,408 |
Investments in unconsolidated entities | 26,695 | 35,330 |
Property, plant and equipment, net of accumulated depreciation and amortization | 164,171 | 180,607 |
Intangible assets, net of accumulated amortization | 180,534 | 186,141 |
Goodwill | 190,668 | 190,668 |
Total assets | 1,966,152 | 1,969,705 |
Liabilities: | ||
Accounts payable | 9,781 | 9,031 |
Accrued liabilities | 164,093 | 190,217 |
Payable to former stockholder | 3,128 | 10,455 |
Deferred revenue and other advances | 51,052 | 33,895 |
Revolving credit facility | 80,000 | 215,000 |
Lease financing obligation | 183,816 | 0 |
Senior unsecured notes | 300,000 | 300,000 |
Deferred taxes, net | 17,388 | 16,709 |
Total liabilities | 809,258 | 775,307 |
Commitments and contingencies (Note 17) | ||
DreamWorks Animation SKG, Inc. Stockholders' Equity: | ||
Additional paid-in capital | 1,179,584 | 1,172,806 |
Accumulated other comprehensive loss | -2,637 | -1,827 |
Retained earnings | 708,007 | 762,784 |
Less: Class A Treasury common stock, at cost, 28,019,254 and 27,884,524 shares, as of March 31, 2015 and December 31, 2014, respectively | -780,554 | -778,541 |
Total DreamWorks Animation SKG, Inc. stockholders' equity | 1,105,537 | 1,156,357 |
Non-controlling interests | 51,357 | 38,041 |
Total equity | 1,156,894 | 1,194,398 |
Total liabilities and equity | 1,966,152 | 1,969,705 |
Common Class A [Member] | ||
DreamWorks Animation SKG, Inc. Stockholders' Equity: | ||
Common stock | 1,059 | 1,057 |
Common Class B [Member] | ||
DreamWorks Animation SKG, Inc. Stockholders' Equity: | ||
Common stock | $78 | $78 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 350,000,000 | 350,000,000 |
Common stock, shares issued | 105,915,146 | 105,718,014 |
Class A Treasury common stock, shares | 28,019,254 | 27,884,524 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 7,838,731 | 7,838,731 |
Common stock, shares outstanding | 7,838,731 | 7,838,731 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Revenues (see Note 7 for related party amounts) | $166,530 | $147,241 |
Costs of revenues | 106,165 | 156,398 |
Selling and marketing | 8,475 | 6,262 |
General and administrative | 89,142 | 47,708 |
Product development | 332 | 540 |
Other operating income (see Note 7 for related party amounts) | -2,281 | -1,672 |
Operating loss | -35,303 | -61,995 |
Non-operating income (expense): | ||
Interest expense, net | -6,334 | -1,773 |
Other (expense) income, net | -5,466 | 1,218 |
(Increase) decrease in income tax benefit payable to former stockholder | -25 | 927 |
Loss before loss from equity method investees and income taxes | -47,128 | -61,623 |
Loss from equity method investees | 6,362 | 3,260 |
Loss before income taxes | -53,490 | -64,883 |
Provision (benefit) for income taxes | 2,400 | -22,467 |
Net loss | -55,890 | -42,416 |
Less: Net (loss) income attributable to non-controlling interests | -1,113 | 520 |
Net loss attributable to DreamWorks Animation SKG, Inc. | ($54,777) | ($42,936) |
Net loss per share of common stock attributable to DreamWorks Animation SKG, Inc. | ||
Basic and diluted net loss per share (in dollars per share) | ($0.64) | ($0.51) |
Shares used in computing net loss per share | ||
Basic and diluted (in shares) | 85,615 | 84,484 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive (Loss) Income (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Statement of Comprehensive Income [Abstract] | ||
Net loss | ($55,890) | ($42,416) |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation (losses) gains | -810 | 132 |
Comprehensive loss | -56,700 | -42,284 |
Less: Comprehensive (loss) income attributable to non-controlling interests | -1,113 | 520 |
Comprehensive loss attributable to DreamWorks Animation SKG, Inc. | ($55,587) | ($42,804) |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating activities | ||
Net loss | ($55,890) | ($42,416) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization and write-off of film and other inventory costs | 93,352 | 145,412 |
Other impairments and write-offs | 5,064 | 0 |
Amortization of intangible assets | 3,977 | 3,154 |
Depreciation and amortization | 13,374 | 1,081 |
Amortization of deferred financing costs | 571 | 242 |
Stock-based compensation expense | 4,399 | 5,309 |
Revenue earned against deferred revenue and other advances | -16,469 | -16,188 |
Income related to investment contributions | -2,281 | -1,672 |
Loss from equity method investees | 6,362 | 3,260 |
Deferred taxes, net | 679 | -22,314 |
Changes in operating assets and liabilities: | ||
Restricted cash | 10,337 | 0 |
Trade accounts receivable | -16,704 | -19,091 |
Receivables from distributors | 54,648 | 79,267 |
Film and other inventory costs | -89,192 | -122,837 |
Prepaid expenses and other assets | -20,387 | -4,870 |
Accounts payable and accrued liabilities | -25,015 | -48,594 |
Payable to former stockholder | -7,328 | 1,080 |
Income taxes payable/receivable, net | 305 | -658 |
Deferred revenue and other advances | 41,760 | 27,348 |
Net cash provided by (used in) operating activities | 1,562 | -12,487 |
Investing activities | ||
Investments in unconsolidated entities | -510 | -7,000 |
Purchases of property, plant and equipment | -1,845 | -5,711 |
Net cash used in investing activities | -2,355 | -12,711 |
Financing activities | ||
Proceeds from stock option exercises | 0 | 261 |
Deferred financing costs | -5,729 | 0 |
Purchase of treasury stock | -2,013 | -1,278 |
Contingent consideration payment | -335 | 0 |
Borrowings from revolving credit facility | 340,405 | 0 |
Repayments of borrowings from revolving credit facility | -475,405 | 0 |
Proceeds from lease financing obligation | 185,000 | 0 |
Repayments of lease financing obligation | -1,184 | 0 |
Capital contribution from non-controlling interest holder | 15,000 | 0 |
Distributions to non-controlling interest holder | -571 | 0 |
Net cash provided by (used in) financing activities | 55,168 | -1,017 |
Effect of exchange rate changes on cash and cash equivalents | 1,060 | 396 |
Increase (decrease) in cash and cash equivalents | 55,435 | -25,819 |
Cash and cash equivalents at beginning of period | 34,227 | 95,467 |
Cash and cash equivalents at end of period | 89,662 | 69,648 |
Non-cash investing activities: | ||
Intellectual property and technology licenses granted in exchange for equity interest | 2,225 | 1,294 |
Services provided in exchange for equity interest | 55 | 383 |
Total non-cash investing activities | 2,280 | 1,677 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for income taxes, net of amounts refunded | 1,441 | 503 |
Cash paid during the period for interest, net of amounts capitalized | $12,132 | $7,515 |
Business_and_Basis_of_Presenta
Business and Basis of Presentation | 3 Months Ended | |
Mar. 31, 2015 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Business and Basis of Presentation | Business and Basis of Presentation | |
Business | ||
The business of DreamWorks Animation SKG, Inc. ("DreamWorks Animation" or the "Company") is primarily devoted to the development, production and exploitation of animated films (and other audiovisual programs) and their associated characters in the worldwide theatrical, home entertainment, digital, television, merchandising, licensing and other markets. The Company continues to expand its library and increase the value of its intellectual property assets by developing and producing new episodic series and other non-theatrical content based on characters from its feature films. In addition, the Company has an extensive library of other intellectual property rights through its acquisition of Classic Media, which can be exploited in various markets. The Company's activities also include technology initiatives as it explores opportunities to exploit its internally developed software. | ||
Distribution and Servicing Arrangements | ||
The Company derives revenue from Twentieth Century Fox Film Corporation's worldwide (excluding China and South Korea) exploitation of its films in the theatrical and post-theatrical markets. Pursuant to a binding term sheet (the "Fox Distribution Agreement") entered into with Twentieth Century Fox and Twentieth Century Fox Home Entertainment, LLC (collectively, "Fox"), the Company has agreed to license Fox certain exclusive distribution rights and exclusively engage Fox to render fulfillment services with respect to certain of the Company's animated feature films and other audiovisual programs theatrically released during the five-year period beginning on January 1, 2013. As of July 1, 2014, Fox has also been licensed and engaged to render fulfillment services for the Company’s feature films theatrically released prior to January 1, 2013 in theatrical, non-theatrical, home entertainment and digital media. The rights licensed to, and serviced by, Fox will terminate on the date that is one year after the initial home video release date in the United States ("U.S.") of the last film theatrically released by Fox during such five-year period, subject to licenses approved by the Company during such period that extend beyond such period. | ||
Also beginning in 2013, the Company's films are distributed in China and South Korea territories by separate distributors in each of these territories. The key terms of the Company's distribution arrangements with its Chinese and South Korean distributors are largely similar to those with Fox and Paramount such that the Company also recognizes revenues earned under these arrangements on a net basis. The Company's distribution partner in China is a subsidiary of Oriental DreamWorks Holding Limited ("ODW"), which is a related party. | ||
Lastly, the Company continues to derive revenues from the distribution by Paramount Pictures Corporation, a subsidiary of Viacom Inc., and its affiliates (collectively, "Paramount") of its feature films released prior to January 1, 2013 pursuant to a distribution agreement and a fulfillment services agreement (collectively, the "Paramount Agreements"). As of July 1, 2014, the Company reacquired certain distribution rights to its feature films from Paramount, which rights have been licensed to Fox (as noted above). The amount paid to reacquire these rights was recorded as a definite-lived intangible asset (see Note 6). Paramount will continue to exploit and render fulfillment services in television and related media for feature films released prior to January 1, 2013 until the date that is 16 years after such film's theatrical release, and will continue to exploit and service certain other agreements with Paramount's sublicensees that remain in place after July 1, 2014. | ||
The Company generally retains all other rights to exploit its films, including commercial tie-in and promotional rights with respect to each film, as well as merchandising, interactive, literary publishing, music publishing and soundtrack rights. The Company's activities associated with its Classic Media properties and AwesomenessTV ("ATV") business are not subject to the Company's distribution agreements with its theatrical distributors. | ||
Basis of Presentation | ||
The accompanying unaudited financial data as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 has been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information. Accordingly, certain information and footnote disclosures normally included in comprehensive financial statements have been condensed or omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2014 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 (the "2014 Form 10-K"). | ||
Except as described below, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of only normal recurring items, which in the opinion of management, are necessary for a fair statement for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for the full year, or for any future period, as fluctuations can occur based upon the timing of the Company's films' theatrical and home entertainment releases, and deliveries of episodic content. | ||
Reclassifications | ||
Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the Company's 2015 presentation. | ||
In addition, the Company has historically presented exploitation costs (e.g., advertising and marketing) that are directly attributable to its feature films, television series/specials or live performances as a component of costs of revenues. Due to the Company's continued business diversification efforts and the growth in the variety of business lines in which the Company now operates, the Company's advertising and marketing efforts have become less correlated with its various revenue streams. As a result, the Company has determined that it is more meaningful to present all marketing and distribution expenses incurred directly by the Company as a single line item in its statements of operations. Such selling and marketing expenses primarily consist of advertising and marketing costs, promotion costs, distribution fees and sales commissions to outside third parties. To conform to the new presentation, the Company's statements of operations now includes a line item entitled "selling and marketing expenses," which consist of certain (i) distribution expenses incurred directly by the Company that were previously classified in costs of revenues and (ii) general, non-direct advertising and marketing expenses previously classified in a line item entitled "selling, general and administrative expenses." Distribution and marketing expenses that are incurred by the Company's primary distributors (such as Fox and Paramount) are not included in this new line item because the Company records revenues from these distributors only after the distributors have recouped such costs (refer to the Company's significant accounting policies in Note 2 of the Company's 2014 Form 10-K for further information). | ||
Further, given the nature of the Company's business, the Company has determined that consolidated "gross profit" is no longer a meaningful metric. In order to align the financial statement presentation with the nature of the Company's business, the Company will no longer present this line item in its statements of operations. | ||
Revision | ||
As discussed in the immediately preceding section, the Company's statements of operations presentation historically included advertising and marketing expenses directly attributable to its feature films, television series/specials or live performances in costs of revenues to arrive at "gross profit." As a result, advertising and marketing expenses were incorrectly included in the computation of "gross profit." Accordingly, the Company has revised its prior presentation of advertising and marketing expenses appearing in the accompanying financial statements by decreasing costs of revenues (with a corresponding increase in the new line item entitled "selling and marketing expenses") for the three months ended March 31, 2014 in the amount of $2.5 million. The Company assessed the materiality of this revision on previously issued financial statements and concluded that the revision was not material to the consolidated financial statements because, among other things, there was no impact on previously reported operating income or net income, for any period presented. The Company will continue to revise the classification of previously reported advertising and marketing expenses as they are reported in future quarterly and annual filings. | ||
Segment Gross Profit | ||
The Company continues to believe that advertising and marketing expenses directly attributable to its feature films or television series/specials are an important component in the evaluation of segment profitability. Accordingly, the Company's segment gross profit continues to include the advertising and marketing expenses, as well as other selling and distribution expenses, previously included within costs of revenues. This does not change the amounts of the previously reported segment profitability metric used by the Company's chief operating decision makers to review segment profitability. See Note 14 for the Company's reportable segment disclosures. | ||
Consolidation | ||
The consolidated financial statements of the Company present the financial position, results of operations and cash flows of DreamWorks Animation and its wholly-owned and majority-owned subsidiaries. The Company consolidates less-than-wholly owned entities if the Company has a controlling financial interest in that entity. The Company uses the equity method of accounting for investments in companies in which it has a 50% or less ownership interest and has the ability to exercise significant influence. Such investments are presented as investments in unconsolidated entities on the Company's consolidated balance sheets (refer to Note 7 for further information of such investments). Prior to recording its share of net income or losses from equity method investees, investee financial statements are converted to U.S. GAAP. All significant intercompany accounts and transactions have been eliminated. Intra-entity profit related to transactions with equity method investees is eliminated until the amounts are ultimately realized. | ||
In addition, the Company reviews its relationships with other entities to identify whether they are variable interest entities ("VIE") as defined by the Financial Accounting Standards Board ("FASB"), and to assess whether the Company is the primary beneficiary of such entity. If the determination is made that the Company is the primary beneficiary, then the entity is consolidated. As of March 31, 2015, the Company determined that it continued to have a variable interest in ODW as ODW does not have sufficient equity at risk (i.e., cash on hand to fund its operations) as a result of the timing of capital contributions to the entity in accordance with the Transaction and Contribution Agreement (see Note 7). However, the Company concluded that it is not the primary beneficiary of ODW as it does not have the ability to control ODW. As a result, it does not consolidate ODW into its financial statements. Refer to Note 7 for further discussion of how the Company accounts for its investment in ODW, including the remaining contributions (which represent the maximum exposure to the Company). | ||
The Company also determined that the entity with which it entered into a lease financing obligation is a VIE (see Note 10). The Company concluded that it is not the primary beneficiary of this entity as it does not have the ability to influence or control the entity. As a result, this entity is not consolidated by the Company. The Company's maximum exposure is related to the Sharing Agreement (as further described in Note 10). | ||
Restricted Cash | ||
Restricted cash primarily represents cash accounts maintained by the ATV Joint Venture (refer to Note 3) in which the Company owns a 75% interest. Pursuant to the venture's operating agreement, $25.0 million of the initial cash contribution cannot be commingled with other corporate cash accounts and can only be used to fund the working capital of the ATV Joint Venture. As of March 31, 2015, the remaining balance of this restricted cash amount was $14.9 million. | ||
Other | ||
During the three months ended March 31, 2015, the Company and a third-party entered into agreements forming a new entity to commercialize one of the Company's technology initiatives. The new entity is majority-owned and controlled by the Company and, accordingly, is consolidated by the Company. The Company's consolidated financial statements include a cash contribution from the non-controlling interest holder in the amount of $15.0 million made at the time of formation of the new entity. | ||
Use of Estimates | ||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates made by management in the preparation of the financial statements relate to the following: | ||
• | ultimate revenues and ultimate costs of film and television product; | |
• | relative selling price of the Company's products for purposes of revenue allocation in multi-property licenses and other multiple deliverable arrangements; | |
• | determination of fair value of assets and liabilities for the allocation of the purchase price in an acquisition; | |
• | determination of the fair value of reporting units for purposes of testing goodwill for impairment; | |
• | determination of fair value of non-cash contributions to investments in unconsolidated entities; | |
• | useful lives of intangible assets; | |
• | product sales that will be returned and the amount of receivables that ultimately will be collected; | |
• | the potential outcome of future tax consequences of events that have been recognized in the Company's financial statements; | |
• | loss contingencies and contingent consideration arrangements; and | |
• | assumptions used in the determination of the fair value of equity-based awards for stock-based compensation or their probability of vesting. | |
Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company's financial condition or results of operations will be affected. Estimates are based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In April 2015, the FASB issued an accounting standards update relating to the presentation of debt issuance costs. The accounting update requires companies to present debt issuance costs related to a recognized debt liability presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The guidance is effective for the Company's fiscal year beginning January 1, 2016, with early adoption permitted. The Company plans to adopt the new guidance effective January 1, 2016. The adoption of this guidance is expected to have an immaterial impact on the Company's consolidated financial statements. | |
In February 2015, the FASB issued an accounting standards update to amend existing guidance relating to the evaluation of certain legal entities for potential consolidation. The amendments modify the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities. In addition, the amendments modify the guidance on evaluating whether a fee paid to a decision maker or a service provider represents a variable interest and whether it should be included in the evaluation of the economics criterion in determining which party is the primary beneficiary of a VIE. In accordance with the accounting standards update, companies are required to reevaluate all legal entities that are considered VIEs to determine whether there is a change in the conclusion as to whether the VIE should be consolidated. The guidance is effective for the Company's fiscal year beginning January 1, 2016, with early adoption permitted. The Company plans to adopt the new guidance effective January 1, 2016. The Company is currently evaluating the impact that the new standard will have on its consolidated financial statements. | |
In June 2014, the FASB issued an accounting standards update relating to the accounting for certain share-based awards. The accounting update states that, when the terms of an award provide that a performance target could be achieved after the requisite service period, the performance target should be treated as a performance condition that affects vesting and should not be reflected in the grant-date fair value. Companies are permitted to apply the guidance either prospectively to all awards granted or modified after the effective date or retrospectively to awards outstanding as of the beginning of the earliest annual period presented. The guidance is effective for the Company's fiscal year beginning January 1, 2016, with early adoption permitted. The Company adopted the new guidance upon issuance of the accounting standards update, which did not have an impact on its consolidated financial statements as the Company's existing accounting policy was already consistent with this guidance. | |
In May 2014, the FASB issued an accounting standards update to provide companies with a single model for use in accounting for revenue from contracts with customers. Once it becomes effective, the new guidance will replace most existing revenue recognition guidance in U.S. GAAP, including industry-specific guidance. The core principle of the model is to recognize revenue when control of goods or services transfers to the customer and in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services that have transferred. Under current U.S. GAAP, the Company recognizes revenue when the risks and rewards of ownership transfer to the customer. In addition, the new guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized and the related cash flows. The guidance is effective for the Company's fiscal year beginning January 1, 2017, including interim periods within that fiscal year. Early adoption is not permitted. However, on April 1, 2015, the FASB voted to propose a one-year deferral to the effective date, but to permit entities to adopt one year earlier if they choose (i.e., the original effective date). The proposal will be subject to the FASB's due process requirement, which includes a period for public comments. Companies are permitted to either apply the guidance retrospectively to all prior periods presented or, alternatively, apply the guidance in the year of adoption with the cumulative effect recognized at the date of initial application (referred to as the modified retrospective approach). The Company is in the process of determining the method of adoption, as well as evaluating the impact that the new standard will have on its consolidated financial statements. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions |
Recent Acquisitions | |
The Company entered into an Agreement and Plan of Merger and Reorganization (the "Big Frame Merger Agreement") pursuant to which, on April 7, 2014 (the "Big Frame Closing Date"), a wholly-owned subsidiary of the Company merged with and into Big Frame, Inc. ("Big Frame"). As a result of this transaction, Big Frame became a wholly-owned subsidiary of the Company. Big Frame is an online multi-channel network. The goodwill that resulted from the acquisition represents the potential synergies between Big Frame and the Company’s multi-channel network presence on the Internet and is not deductible for tax purposes. | |
On May 20, 2014, the Company acquired certain rights, properties and other items pertaining to Felix the Cat and related characters pursuant to an Asset Purchase Agreement. The acquisition was accounted for as a business combination due to the Company assuming certain licensing arrangements related to the rights. The goodwill that resulted from the acquisition represents potential synergies between the rights acquired and consumer product opportunities. The goodwill is deductible for tax purposes. | |
During the three months ended March 31, 2015, the Company identified measurement period adjustments to previous purchase accounting estimates for the acquisitions of Big Frame and Felix the Cat, which were primarily related to the finalization of net working capital adjustments. These adjustments were immaterial and applied retrospectively to the acquisition date. Accordingly, the Company's consolidated balance sheet as of December 31, 2014 has been adjusted to reflect the effects of the measurement period adjustments. As a result of the final purchase price allocations, the Company's total cash consideration for these two transactions totaled approximately $34.8 million and the primary assets acquired were identifiable intangible assets of $22.3 million and resulting goodwill of $11.4 million. The results of operations for these two acquisitions have been included in the Company's consolidated financial statements since their respective closing dates and had an immaterial impact for the three months ended March 31, 2015. | |
AwesomenessTV | |
On May 1, 2013, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which, on May 3, 2013 (the "ATV Closing Date"), a wholly-owned subsidiary of the Company ("the Merger Sub") merged with and into AwesomenessTV, Inc. As a result of this transaction, ATV became a wholly-owned subsidiary of the Company. ATV is a multi-media platform company that generates revenues primarily from the production and distribution of content across a variety of channels including theatrical, home entertainment, television and online video-on-demand. Through ATV's multi-channel network presence on the Internet, the Company will be able to gain access to new content distribution methods, as well as a broader audience. The goodwill acquired represents the potential synergies between ATV's filmed content, character portfolio and the Company's cross-platform expansion plans. The goodwill is allocated to a reporting unit that is a part of the New Media segment. | |
Contingent Consideration | |
Pursuant to the Merger Agreement, the Company was originally required to make future cash payments to ATV's former stockholders as part of the total purchase price to acquire ATV. The contingent consideration was to be based on whether ATV increased its adjusted earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") over an adjusted EBITDA threshold, over a two-year period (which commenced on January 1, 2014). Adjustments to EBITDA for purposes of determining the contingent consideration earned included, but were not limited to: ATV's employee bonus plan, non-cash gains and losses (such as those related to foreign currency accounting and reversals of prior year accruals) and changes in the fair value of contingent payment liabilities resulting from the acquisition of ATV. The Company estimated the fair value of contingent consideration using significant unobservable inputs in a Monte-Carlo simulation model and based the fair value on the estimated risk-adjusted cost of capital of ATV's adjusted EBITDA following integration into the Company (an income approach). The estimate of the liability fluctuated if there were changes in the forecast of ATV's future earnings or as a result of actual earnings levels achieved. Any changes in estimate of the contingent consideration liability were reflected in the Company's results of operations in the period that the change occurred. | |
The estimated fair value of the contingent consideration arrangement at the acquisition date was $95.0 million. The key assumptions in applying the income approach were as follows: an 8.5% discount rate, volatility of 32.6% and a probability-adjusted earnings measure for ATV of $25.0 million for 2014 and $41.0 million for 2015. Changes in one or more of the key assumptions could lead to a different fair value estimate of the contingent consideration. For example, using a discount rate of 15.0% or a volatility rate of 20.0% would change the estimated fair value of the contingent consideration to $90.5 million and $103.5 million, respectively. Under the original Merger Agreement, the maximum contingent consideration that may be earned was $117.0 million. The estimate of contingent consideration liability increased from $96.5 million as of December 31, 2013 to $99.0 million as of March 31, 2014, primarily due to the passage of time, changes in the forecast of cash flows and changes in the Company's credit risk adjusted rate used to discount obligations to present value. The change in estimate was recorded as a a component of general and administrative expenses in the consolidated statements of operations. | |
On December 11, 2014, the Company and the former ATV stockholders entered into an amendment to the Merger Agreement. The amendment provides for a fixed payment totaling $80.0 million to such stockholders in lieu of the contingent consideration specified in the Merger Agreement. As a result, the Company's contingent liability was reduced to zero and a gain in the amount of $6.8 million and $16.5 million for the three- and 12-month periods ended December 31, 2014, respectively, was recorded in the 2014 consolidated statements of operations as a change in fair value of contingent consideration. | |
Additionally, on December 11, 2014, the Company entered into a Unit Purchase Agreement (the "Unit Purchase Agreement") with an affiliate of Hearst Corporation ("Hearst"). Pursuant to the Unit Purchase Agreement, Hearst acquired a 25% equity interest in a newly formed joint venture ("ATV Joint Venture") conducting the ATV business for a purchase price of $81.25 million. The Company continues to retain control over ATV, and accordingly, the transaction (including the tax effect) was recorded within equity. The Company and Hearst plan to work together to support ATV's efforts to enter into new content channels, broaden its audience and expand its geographic reach. ATV will also gain access to Hearst's subscription video-on-demand technology. |
Financial_Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | Financial Instruments |
The fair value of cash and cash equivalents, restricted cash, accounts payable, advances and amounts outstanding under the revolving credit facility approximates carrying value due to the short-term maturity of such instruments and floating interest rates. As of March 31, 2015, the fair value of trade accounts receivable approximated carrying value due to the similarities in the initial and current discount rates. In addition, as of March 31, 2015, the fair value and the carrying value of the senior unsecured notes was $307.8 million and $300.0 million, respectively. As it relates to the Company's lease financing obligation, as of March 31, 2015, the fair value and the carrying value was $188.5 million and $183.8 million, respectively. The fair value of trade accounts receivable, the senior unsecured notes and the lease financing obligation was determined using significant unobservable inputs by performing a discounted cash flow analysis and using current discount rates as appropriate for each type of instrument. | |
The Company has short-term money market investments which are classified as cash and cash equivalents on the consolidated balance sheets. The fair value of these investments at March 31, 2015 and December 31, 2014 was measured based on quoted prices in active markets. |
Film_and_Other_Inventory_Costs
Film and Other Inventory Costs | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Film Costs [Abstract] | ||||||||
Film And Other Inventory Costs | Film and Other Inventory Costs | |||||||
Film, television and other inventory costs consist of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
In release, net of amortization: | ||||||||
Feature films | $ | 454,158 | $ | 392,186 | ||||
Television series and specials | 72,733 | 67,803 | ||||||
In production: | ||||||||
Feature films | 146,574 | 206,240 | ||||||
Television series and specials | 81,873 | 62,426 | ||||||
In development: | ||||||||
Feature films | 63,979 | 88,200 | ||||||
Television series and specials | 612 | 1,118 | ||||||
Product inventory and other(1) | 10,763 | 9,917 | ||||||
Total film, television and other inventory costs, net | $ | 830,692 | $ | 827,890 | ||||
____________________ | ||||||||
(1) | As of March 31, 2015 and December 31, 2014, this category includes $6.5 million and $6.7 million, respectively, of physical inventory of certain DreamWorks Animation and Classic Media titles for distribution primarily in the home entertainment market. | |||||||
The Company anticipates that approximately 46% and 79% of the above "in release" film and other inventory costs as of March 31, 2015 will be amortized over the next 12 months and three years, respectively. | ||||||||
During the three months ended March 31, 2015, impairment charges recorded on film and other inventory costs were immaterial. | ||||||||
For the three months ended March 31, 2014, as a result of the weaker-than-expected worldwide theatrical performance of Mr. Peabody and Sherman (released into the domestic theatrical market during March 2014), the Company performed an analysis as of March 31, 2014 to determine whether the unamortized film inventory costs exceeded fair value and was thus impaired. Key assumptions used in the fair value measurement were a discount rate of 7% and estimated remaining cash flows over a period of approximately 15 years. As a result of the analysis, the three-month period ended March 31, 2014 includes an impairment charge of $57.1 million. |
Intangible_Assets
Intangible Assets | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||
Intangible Assets | Intangible Assets | |||||||||||||||||
As of March 31, 2015 and December 31, 2014, intangible assets included $69.4 million of indefinite-lived intangible assets. In addition, intangible assets included definite-lived intangible assets as follows (in thousands, unless otherwise noted): | ||||||||||||||||||
Weighted Average Estimated Useful Life (in years) | Gross | Accumulated Amortization | Impact of Foreign Currency Translation | Net | ||||||||||||||
As of March 31, 2015: | ||||||||||||||||||
Character rights | 13.9 | $ | 99,000 | $ | (16,381 | ) | $ | (2,521 | ) | $ | 80,098 | |||||||
Distribution rights | 11.2 | 30,000 | (2,371 | ) | — | 27,629 | ||||||||||||
Programming content | 2 | 11,200 | (10,733 | ) | — | 467 | ||||||||||||
Trademarks and trade names | 10 | 1,410 | (251 | ) | — | 1,159 | ||||||||||||
Other intangibles | 4.4 | 2,700 | (919 | ) | — | 1,781 | ||||||||||||
Total | $ | 144,310 | $ | (30,655 | ) | $ | (2,521 | ) | $ | 111,134 | ||||||||
As of December 31, 2014: | ||||||||||||||||||
Character rights | 13.9 | $ | 99,000 | $ | (15,101 | ) | $ | (568 | ) | $ | 83,331 | |||||||
Distribution rights | 11.2 | 30,000 | (1,604 | ) | — | 28,396 | ||||||||||||
Programming content | 2 | 11,200 | (9,333 | ) | — | 1,867 | ||||||||||||
Trademarks and trade names | 10 | 1,410 | (216 | ) | — | 1,194 | ||||||||||||
Other intangibles | 4.4 | 2,700 | (747 | ) | — | 1,953 | ||||||||||||
Total | $ | 144,310 | $ | (27,001 | ) | $ | (568 | ) | $ | 116,741 | ||||||||
Investments_in_Unconsolidated_
Investments in Unconsolidated Entities | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Investments in Unconsolidated Entities [Abstract] | ||||||||||
Investments in Unconsolidated Entities | Investments in Unconsolidated Entities | |||||||||
The Company has made investments in entities which are accounted for under either the cost or equity method of accounting. These investments are classified as investments in unconsolidated entities in the consolidated balance sheets and consist of the following (in thousands, unless otherwise indicated): | ||||||||||
Ownership | ||||||||||
Percentage at | March 31, | December 31, | ||||||||
March 31, 2015 | 2015 | 2014 | ||||||||
Oriental DreamWorks Holding Limited | 45.45% | $ | 14,305 | $ | 17,422 | |||||
All Other(1) | 17.5%-50.0% | 11 | 6,029 | |||||||
Total equity method investments | 14,316 | 23,451 | ||||||||
Total cost method investments | 12,379 | 11,879 | ||||||||
Total investments in unconsolidated entities | $ | 26,695 | $ | 35,330 | ||||||
____________________ | ||||||||||
(1) | As of March 31, 2015, the Company determined that one of its equity method investments was impaired and that the carrying value would not be recoverable, primarily due to the Company's concerns related to the investee's financial condition. As a result, the Company determined that the fair value of the investment was zero and, accordingly, it recorded an impairment charge in the amount of $5.1 million related to such investment. Fair value was estimated using significant unobservable inputs. | |||||||||
Under the equity method of accounting, the carrying value of an investment is adjusted for the Company's proportionate share of the investees' earnings and losses (adjusted for the amortization of any differences in the Company's basis, with respect to the Company's investment in ODW, compared to the Company's share of venture-level equity), as well as contributions to and distributions from the investee. The Company classifies its share of income or loss from investments accounted for under the equity method as income/loss from equity method investees in its consolidated statements of operations. | ||||||||||
Loss from equity method investees consist of the following (in thousands): | ||||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
2015 | 2014 | |||||||||
Oriental DreamWorks Holding Limited(1) | $ | 5,398 | $ | 2,210 | ||||||
All Other | 964 | 1,050 | ||||||||
Loss from equity method investees | $ | 6,362 | $ | 3,260 | ||||||
____________________ | ||||||||||
(1) | The Company currently records its share of ODW results on a one-month lag. Accordingly, the Company's consolidated financial statements include its share of losses incurred by ODW from December 1, 2014 to February 28, 2015. | |||||||||
The following table presents summarized financial information for the Company's equity method investees presented in the table above (in thousands): | ||||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
2015 | 2014 | |||||||||
Revenues | $ | 2,618 | $ | 835 | ||||||
Costs of revenues | $ | 2,707 | $ | 687 | ||||||
Net loss | $ | 14,506 | $ | 6,774 | ||||||
Oriental DreamWorks Holding Limited | ||||||||||
On April 3, 2013 ("ODW Closing Date"), the Company formed a Chinese Joint Venture, ODW (or the "Chinese Joint Venture"), through the execution of a Transaction and Contribution Agreement, as amended, with its Chinese partners, China Media Capital (Shanghai) Center L.P. ("CMC"), Shanghai Media Group ("SMG") and Shanghai Alliance Investment Co., Ltd. ("SAIL", and together with CMC and SMG, the "CPE Holders"). In exchange for 45.45% of the equity of ODW, the Company has committed to making a total cash capital contribution to ODW of $50.0 million (of which $9.4 million had been funded as of March 31, 2015, with the balance to be funded over time) and non-cash contributions valued at approximately $100.0 million (of which approximately $38.7 million had been satisfied as of March 31, 2015). Such non-cash contributions include licenses of technology and certain other intellectual property of the Company, rights in certain trademarks of the Company, two in-development feature film projects developed by the Company and consulting and training services. During the three months ended March 31, 2015 and 2014, the Company's consolidated statements of operations included other operating income recognized in connection with non-cash contributions made to ODW of $2.3 million and $1.7 million, respectively. | ||||||||||
As of March 31, 2015, the Company's remaining contributions consisted of the following: (i) $40.6 million in cash (which is expected to be funded over the next three years), (ii) two of the Company's in-development film projects, (iii) remaining delivery requirements under the licenses of technology and certain other intellectual property of the Company and (iv) approximately $6.7 million in consulting and training services. Some of these remaining contribution commitments will require future cash outflows for which the Company is not currently able to estimate the timing of contributions as this will depend on, among other things, ODW's operations. | ||||||||||
Basis Differences. The Company's investment in ODW does not equal the venture-level equity (the amount recorded on the balance sheet of ODW) due to various basis differences. Basis differences related to definite-lived assets are being amortized based on the useful lives of the related assets. Basis differences related to indefinite-lived assets are not being amortized. The following are the differences between the Company's venture-level equity and the balance of its investment in ODW (in thousands): | ||||||||||
March 31, | December 31, | |||||||||
2015 | 2014 | |||||||||
Company's venture-level equity | $ | 40,403 | $ | 46,345 | ||||||
Technology and intellectual property licenses(1) | (10,489 | ) | (12,714 | ) | ||||||
Other(2) | (15,609 | ) | (16,209 | ) | ||||||
Total ODW investment recorded | $ | 14,305 | $ | 17,422 | ||||||
____________________ | ||||||||||
-1 | Represents differences between the Company's historical cost basis and the equity basis reflected at the venture-level (the amount recorded on the balance sheet of ODW) related to the Company's contributions of technology and intellectual property licenses. These basis differences arise because the contributed assets are recorded at fair value by ODW. | |||||||||
(2) | Represents the Company's net contribution commitment due to ODW. | |||||||||
Other Transactions with ODW. The Company has various other transactions with ODW, a related party. The Company has entered into a distribution agreement with ODW for the distribution of the Company's feature films in China (beginning with The Croods). In addition, from time to time, the Company may provide consulting and training services to ODW, the charges of which are based on the Company's actual cost of providing such services. The Company's consolidated statements of operations included revenues earned through ODW's distribution of its feature films of $0.4 million and $0.7 million during the three months ended March 31, 2015 and 2014, respectively. As of March 31, 2015 and December 31, 2014, the Company's consolidated balance sheets included receivables from ODW of $8.3 million and $7.1 million, respectively, which were classified as a component of trade accounts receivable, and $19.7 million and $19.0 million, respectively, which were classified as a component of receivables from distributors. |
Accrued_Liabilities
Accrued Liabilities | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Accrued Liabilities | Accrued Liabilities | |||||||
Accrued liabilities consist of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Employee compensation | $ | 64,281 | $ | 67,084 | ||||
Participations and residuals | 50,574 | 50,646 | ||||||
Interest payable | 2,715 | 7,951 | ||||||
Deferred rent | 10,639 | 11,049 | ||||||
Other accrued liabilities | 35,884 | 53,487 | ||||||
Total accrued liabilities | $ | 164,093 | $ | 190,217 | ||||
As of March 31, 2015, the Company estimates that over the next 12 months it will pay approximately $19.3 million of its accrued participation and residual costs. |
Deferred_Revenue_and_Other_Adv
Deferred Revenue and Other Advances | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Deferred Revenue Disclosure [Abstract] | ||||||||||||||||
Deferred Revenue and Other Advances | Deferred Revenue and Other Advances | |||||||||||||||
The following is a summary of deferred revenue and other advances included in the consolidated balance sheets as of March 31, 2015 and December 31, 2014 and the related amounts earned and recorded either as revenue in the consolidated statements of operations or recorded as an offset to other costs (as described below) for the three-month periods ended March 31, 2015 and 2014 (in thousands): | ||||||||||||||||
Amounts Earned | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014(3) | |||||||||||||
Deferred Revenue(1) | $ | 23,693 | $ | 1,074 | $ | 118 | $ | 5,908 | ||||||||
Strategic Alliance/Development Advances(2) | 417 | 1,667 | 7,684 | 7,138 | ||||||||||||
Other | 26,942 | 31,154 | 14,547 | 21,626 | ||||||||||||
Total deferred revenue and other advances | $ | 51,052 | $ | 33,895 | ||||||||||||
____________________ | ||||||||||||||||
(1) | Deferred revenue consists of those arrangements related to the licensing of content for distribution in the home entertainment, television and new media markets. | |||||||||||||||
(2) | Of the total amounts earned against the "Strategic Alliance/Development Advances," for the three months ended March 31, 2015 and 2014, $4.0 million and $2.4 million, respectively, were capitalized as an offset to property, plant and equipment. Additionally, during the three months ended March 31, 2015 and 2014, of the total amounts earned, $0.5 million and $1.0 million, respectively, were recorded as a reduction to other assets. During the three months ended March 31, 2015 and 2014, $0.9 million and $0.5 million, respectively, were recorded as a reduction to prepaid expenses. During the three months ended March 31, 2015 and 2014, of the total amounts earned, $0.6 million and $1.1 million, respectively, were recorded as a reduction to operating expenses. | |||||||||||||||
(3) | Of the total amounts earned in "Other," for the three months ended March 31, 2014, $14.0 million was recorded as a reduction to film and other inventory costs. |
Financing_Arrangements
Financing Arrangements | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||
Financing Arrangements | Financing Arrangements | |||||||||||||||||||
Senior Unsecured Notes. On August 14, 2013, the Company issued $300.0 million in aggregate principal amount of 6.875% Senior Notes due 2020 (the "Notes"). In connection with the issuance of the Notes, the Company entered into an indenture (the "Indenture") with The Bank of New York Mellon Trust Company, N.A., as trustee, specifying the terms of the Notes. The Notes were sold at a price to investors of 100% of their principal amount and were issued in a private placement pursuant to the exemptions under Rule 144A and Regulation S under the Securities Act of 1933, as amended. The net proceeds from the Notes amounted to $294.0 million and a portion was used to repay the outstanding borrowings under the Company's revolving credit facility. The Notes are effectively subordinated to indebtedness under the revolving credit facility. The Company is required to pay interest on the Notes semi-annually in arrears on February 15 and August 15 of each year. The principal amount is due upon maturity. The Notes are guaranteed by all of the Company's domestic subsidiaries that also guarantee its revolving credit facility. | ||||||||||||||||||||
The Indenture contains certain restrictions and covenants that, subject to certain exceptions, limit the Company's ability to incur additional indebtedness, pay dividends or repurchase the Company's common shares, make certain loans or investments, and sell or otherwise dispose of certain assets, among other limitations. The Indenture also contains customary events of default, which, if triggered, may accelerate payment of principal, premium, if any, and accrued but unpaid interest on the Notes. Such events of default include non-payment of principal and interest, non-performance of covenants and obligations, default on other material debt, failure to satisfy material judgments and bankruptcy or insolvency. If a change of control as described in the Indenture occurs, the Company may be required to offer to purchase the Notes from the holders thereof at a repurchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. | ||||||||||||||||||||
At any time prior to August 15, 2016, the Company may redeem all or part of the Notes at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a specified premium as of the date of redemption, plus (iii) accrued and unpaid interest to, but not including, the date of redemption, subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. On or after August 15, 2016, the Company may redeem all or a part of the Notes, at specified redemption prices plus accrued and unpaid interest thereon, to, but not including, the applicable redemption date, subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. In addition, at any time prior to August 15, 2016, the Company may redeem up to 35% of the Notes with the net proceeds of certain equity offerings at a redemption price equal to 106.875% of the principal amount thereof, in each case plus accrued and unpaid interest and additional interest, if any, thereon to, but not including, the redemption date. | ||||||||||||||||||||
Revolving Credit Facility. Prior to February 20, 2015, the Company had a revolving credit facility with a number of banks which allowed the Company to borrow up to a maximum of $400.0 million ("Prior Credit Agreement"). On February 20, 2015, the Company and the facility banks amended and restated the Prior Credit Agreement by entering into an Amended and Restated Credit Agreement (the "Restated Credit Agreement"). The Restated Credit Agreement allows the Company to have outstanding borrowings of up to $450.0 million at any one time, on a revolving basis. The Company and one or more of the lenders may from time to time, so long as no default or event of default has occurred under the Restated Credit Agreement, agree to increase the commitments under the Restated Credit Agreement by up to $50.0 million. | ||||||||||||||||||||
Under the Restated Credit Agreement, the Company is required to pay a commitment fee on undrawn amounts at an annual rate of 0.375%. Interest on borrowed amounts (per draw) is determined by reference to either (i) the lending banks' base rate plus 1.50% per annum or (ii) the London Interbank Offered Rate ("LIBOR") plus 2.50% per annum. The Restated Credit Agreement also contains a sublimit for letters of credit. The Company is required to pay to the lenders under the Restated Credit Agreement a letter of credit participation fee equal to the applicable margin for LIBOR-based borrowings on the average daily undrawn amount of outstanding letters of credit and pay to each issuer of letters of credit a letter of credit fronting fee equal to 0.125% per annum on the average daily undrawn amount of outstanding letters of credit issued by such letter of credit issuer. The Restated Credit Agreement requires the Company to maintain a specified ratio of total debt to total capitalization, and limits the outstanding credit exposure under the Restated Credit Agreement to a specified ratio of net remaining ultimates to the outstanding credit exposure under the Restated Credit Agreement, plus an additional amount based on the valuation of the Company's film library. Subject to specified exceptions, the Restated Credit Agreement also restricts the Company and its subsidiaries from taking certain actions, such as granting liens, entering into any merger or other significant transactions, making distributions (including dividends), entering into transactions with affiliates, agreeing to negative pledge clauses and restrictions on subsidiary distributions, and modifying organizational documents. The obligations of the Company under the Restated Credit Agreement are guaranteed by substantially all the subsidiaries of the Company organized under the laws of the United States of America, and substantially all the tangible and intangible assets of the Company and such subsidiaries are pledged as collateral against borrowings under the Restated Credit Agreement. | ||||||||||||||||||||
Lease Financing Obligation. On February 23, 2015, the Company, as seller, entered into a purchase agreement (the "Glendale Purchase Agreement") with a third party buyer ("Landlord") involving the Company’s headquarters facility located in Glendale, California (the "Property"). The Property is comprised of, among other things, 10 buildings on approximately 14.7 acres of land. Pursuant to the Glendale Purchase Agreement, the Company sold the Property to Landlord for a purchase price of $185.0 million. In addition, the Company entered into a sharing agreement (the "Sharing Agreement") with the Landlord whereby the Company will either pay or receive 50% of the net appreciation or depreciation in the sale price of the Property if the Landlord sells the property to a third-party prior to February 23, 2016. If the Property is not sold by February 23, 2016, then the fair market value of the Property as of such date will be used to determine the net appreciation or depreciation in which the Company and the Landlord will share (up to a maximum payment of $10.0 million by either party). | ||||||||||||||||||||
Concurrently with the sale of the Property, the Company and Landlord entered into a lease agreement (the "Lease"), pursuant to which Landlord leased the Property to the Company commencing immediately following the consummation of the sale. Annual rent during the initial term of the Lease starts at approximately $13.2 million, and increases one and one-half percent each year. The initial term of the Lease is 20 years, and the Company has four consecutive renewal options of five years each. The first two of such renewal terms are subject to fixed rent increasing by one and one-half percent each year, and the rent during each of such last two renewal terms will be the greater of (i) the rent in effect immediately preceding such renewal term or (ii) the then-current fair market value rent. The Lease is structured as a "triple net" lease, meaning that the Company is responsible for all expenses arising from the use or operation of the Property, including repairs, maintenance, insurance and taxes. The Lease also contains provisions regarding the obligations of the Company and Landlord in connection with a casualty or condemnation of the Property. Other than a sale by the initial Landlord party to the Lease, if any subsequent landlord decides to sell or otherwise convey title to the Property to a third party during the term of the Lease, the Company shall have a right of first refusal to purchase the Property on the same terms offered to such third party. | ||||||||||||||||||||
The Company accounted for the sale and lease arrangement (as described above) as a financing transaction as it did not qualify for sale-leaseback accounting treatment because of the Company's continuing involvement through the Sharing Agreement. Under the financing accounting method, the Property assets remain on the Company's consolidated balance sheets and proceeds received by the Company are recorded as a financing liability. Payments under the Lease are applied as payments of deemed principal and imputed interest on the underlying financing obligation. The Company currently anticipates that this transaction will be classified as a sale and leaseback of the property upon completion of the requirements under the Sharing Agreement. | ||||||||||||||||||||
As of March 31, 2015, payments required on the lease financing obligations were as follows (in thousands): | ||||||||||||||||||||
2015 | $ | 8,780 | ||||||||||||||||||
2016 | 13,335 | |||||||||||||||||||
2017 | 13,535 | |||||||||||||||||||
2018 | 13,738 | |||||||||||||||||||
2019 | 13,944 | |||||||||||||||||||
2020 and thereafter | 322,269 | |||||||||||||||||||
Total payments | 385,601 | |||||||||||||||||||
Less: interest implicit in obligation | (201,785 | ) | ||||||||||||||||||
Total lease financing obligation | $ | 183,816 | ||||||||||||||||||
The following table summarizes information associated with the Company's financing arrangements (in thousands, except percentages): | ||||||||||||||||||||
Interest Expense | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Balance Outstanding at | Maturity Date | March 31, | ||||||||||||||||||
31-Mar-15 | 31-Dec-14 | Interest Rate at | 2015 | 2014 | ||||||||||||||||
31-Mar-15 | ||||||||||||||||||||
Senior Unsecured Notes | $ | 300,000 | $ | 300,000 | Aug-20 | 6.88% | $ | 4,446 | $ | 2,234 | ||||||||||
Revolving Credit Facility | $ | 80,000 | $ | 215,000 | Feb-20 | 2.67% | $ | 1,340 | $ | 375 | ||||||||||
Lease Financing Obligation | $ | 183,816 | N/A | Feb-35 | 6.70% | $ | 1,141 | N/A | ||||||||||||
____________________ | ||||||||||||||||||||
N/A: Not applicable | ||||||||||||||||||||
Additional Financing Information | ||||||||||||||||||||
Interest Capitalized to Film Costs. Interest on borrowed funds that are invested in major projects with substantial development or construction phases is capitalized as part of the asset cost until the projects are released or construction projects are put into service. Thus, capitalized interest is amortized over future periods on a basis consistent with that of the asset to which it relates. During the three months ended March 31, 2015 and 2014, the Company incurred interest costs totaling $8.5 million and $6.1 million, respectively, of which $1.0 million and $3.2 million, respectively, were capitalized to film costs. | ||||||||||||||||||||
As of March 31, 2015, the Company was in compliance with all applicable financial debt covenants. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
The Company typically determines its interim income tax provision by using the estimated annual effective tax rate and applying that rate to income/loss on a current year-to-date basis, adjusted for the tax effects of items that relate discretely to the interim period, if any. However, if minor changes to forecasted annual pre-tax earnings have a significant effect on the estimated annual effective tax rate, the Company may determine that this method would not be appropriate and that a different method should be applied. Furthermore, as a result of a partial increase in the tax basis of the Company's tangible and intangible assets attributable to transactions entered into by affiliates controlled by a former stockholder at the time of the Company's 2004 initial public offering, the Company may pay reduced tax amounts to the extent it generates sufficient taxable income in the future (refer to the Company's 2014 Form 10-K for a more detailed description). The Company is obligated to remit to the affiliate of the former stockholder 85% of any realized cash savings in U.S. Federal income tax, California franchise tax and certain other related tax benefits. Due to the effect of this arrangement on the Company's provision for income taxes, the Company also combines the effect of the increase/decrease in income tax benefit payable to former stockholder (referred to as the combined effective tax rate). | |
The Company utilized the annual effective tax rate method (as described above) to calculate the income tax provision for the three months ended March 31, 2015. However, as it relates to the three months ended March 31, 2014, the Company determined that the annual effective tax rate method would not represent a reliable estimate of the interim income tax provision. As a result, the Company utilized a discrete period method to calculate taxes for the three months ended March 31, 2014. Under the discrete period method, the Company determines the income tax provision based upon actual results as if the interim period were an annual period. | |
For the three months ended March 31, 2015, the Company recorded a provision for income taxes of $2.4 million, or an effective tax rate of (4.5)%. For the three months ended March 31, 2015, the Company's combined effective tax rate was also (4.5)%. For the three months ended March 31, 2014, the Company recorded a benefit for income taxes of $22.5 million, or an effective tax rate of 34.1%. However, the combined effective tax rate for the three months ended March 31, 2014 was 35.5%. The effective tax rate and the combined effective tax rate for the three months ended March 31, 2015 was primarily attributable to foreign taxes, as well as the effect of a valuation allowance. The difference in the Company's effective tax rate and combined effective tax rate for the three months ended March 31, 2015 compared to the rates during the three months ended March 31, 2014 was primarily due to the valuation allowance established, during the three months ended December 31, 2014, against the Company's deferred tax assets. | |
The Company's federal income tax returns for the tax years ended December 31, 2007 through 2009 are currently under examination by the Internal Revenue Service, and all subsequent tax years remain open to audit. The Company's California state tax returns for all years subsequent to 2009 remain open to audit. The Company's India subsidiary's income tax returns are currently under examination for the tax years ended March 31, 2012 through 2013. |
Stockholders_Equity_and_Noncon
Stockholders' Equity and Non-controlling Interests | 3 Months Ended | |||||||||||
Mar. 31, 2015 | ||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||
Stockholders' Equity and Non-controlling Interests | Stockholders’ Equity and Non-controlling Interests | |||||||||||
Class A Common Stock | ||||||||||||
Stock Repurchase Program. In July 2010, the Company's Board of Directors authorized a stock repurchase program pursuant to which the Company may repurchase up to an aggregate of $150.0 million of its outstanding stock. During the three months ended March 31, 2015 and 2014, the Company did not repurchase any shares of its Class A Common Stock. As of March 31, 2015, the Company's remaining authorization under the current stock repurchase program was $100.0 million. | ||||||||||||
Non-Controlling Interests | ||||||||||||
The Company's consolidated balance sheets include non-controlling interests, which are presented as a separate component of equity. A non-controlling interest represents the other equity holder's interest in a joint venture that the Company consolidates. The net income or loss attributable to the non-controlling interests is presented in the Company’s consolidated statements of operations. There is no other comprehensive income or loss attributable to the non-controlling interests. | ||||||||||||
The following table presents the changes in equity for the three-month periods ended March 31, 2015 and 2014 (in thousands): | ||||||||||||
DreamWorks Animation SKG, Inc. Stockholders' Equity | Non-controlling Interests | Total Equity | ||||||||||
Balance as of December 31, 2014 | $ | 1,156,357 | $ | 38,041 | $ | 1,194,398 | ||||||
Stock-based compensation | 6,780 | — | 6,780 | |||||||||
Purchase of treasury shares | (2,013 | ) | — | (2,013 | ) | |||||||
Foreign currency translation adjustments | (810 | ) | — | (810 | ) | |||||||
Capital contribution from non-controlling interest holder | — | 15,000 | 15,000 | |||||||||
Distributions to non-controlling interest holder | — | (571 | ) | (571 | ) | |||||||
Net loss | (54,777 | ) | (1,113 | ) | (55,890 | ) | ||||||
Balance as of March 31, 2015 | $ | 1,105,537 | $ | 51,357 | $ | 1,156,894 | ||||||
Balance as of December 31, 2013 | $ | 1,404,795 | $ | 1,224 | $ | 1,406,019 | ||||||
Stock option exercises | 261 | — | 261 | |||||||||
Stock-based compensation | 9,068 | — | 9,068 | |||||||||
Purchase of treasury shares | (1,246 | ) | — | (1,246 | ) | |||||||
Foreign currency translation adjustments | 132 | — | 132 | |||||||||
Net (loss) income | (42,936 | ) | 520 | (42,416 | ) | |||||||
Balance as of March 31, 2014 | $ | 1,370,074 | $ | 1,744 | $ | 1,371,818 | ||||||
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Stock-Based Compensation | Stock-Based Compensation | |||||||
The Company recognizes compensation costs for equity awards granted to its employees based on each award's grant-date fair value. Most of the Company's equity awards contain vesting conditions dependent upon the completion of specified service periods or achievement of established sets of performance criteria. Compensation cost for service-based equity awards is recognized ratably over the requisite service period. Compensation cost for certain performance-based awards is recognized using a graded expense-attribution method and is adjusted to reflect the estimated probability of vesting. The Company has granted performance-based awards where the value of the award upon vesting will vary depending on the level of performance ultimately achieved (for example, during the year ended December 31, 2014, the Company granted awards that vest only if the Company achieves positive earnings before interest and taxes for the year ending December 31, 2015). The Company recognizes compensation cost for these awards based on the level of performance expected to be achieved. The Company will recognize the impact of any change in estimate in the period of the change. | ||||||||
Generally, equity awards are forfeited by employees who terminate prior to vesting. However, employment contracts for certain executive officers provide for the acceleration of vesting in the event of a change in control or specified termination events. The Company currently satisfies exercises of stock options and stock appreciation rights, the vesting of restricted stock and the delivery of shares upon the vesting of restricted stock units with the issuance of new shares. | ||||||||
The impact of stock options (including stock appreciation rights) and restricted stock awards on net income (excluding amounts capitalized) for the three-month periods ended March 31, 2015 and 2014, respectively, were as follows (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Total stock-based compensation | $ | 4,399 | $ | 5,309 | ||||
Tax impact(1) | 198 | (1,885 | ) | |||||
Reduction in net income, net of tax | $ | 4,597 | $ | 3,424 | ||||
____________________ | ||||||||
(1) | Tax impact is determined at the Company's combined effective tax rate, which includes the statements of operations line item "Increase/decrease in income tax benefit payable to former stockholder" (see Note 11). | |||||||
Stock-based compensation cost capitalized as a part of film costs was $2.3 million and $3.7 million for the three-month periods ended March 31, 2015 and 2014, respectively. | ||||||||
The following table sets forth the number and weighted average grant-date fair value of equity awards granted during the three-month periods ended March 31, 2015 and 2014: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
Number | Weighted | |||||||
Granted | Average | |||||||
Grant-Date | ||||||||
Fair Value | ||||||||
(in thousands) | ||||||||
2015 | ||||||||
Restricted stock units | 777 | $ | 21.41 | |||||
2014 | ||||||||
Restricted stock and restricted stock units | 224 | $ | 29.91 | |||||
As of March 31, 2015, the total compensation cost related to unvested equity awards granted to employees (excluding equity awards with performance objectives not probable of achievement) but not yet recognized was approximately $72.5 million and will be amortized on a straight-line basis, or using a graded-attribution method for certain performance-based awards, over a weighted average period of 1.9 years. |
Reportable_Segments
Reportable Segments | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||
Reportable Segments | Reportable Segments | |||||||||||||||||||
The Company's current reportable segments are the following: Feature Films, Television Series and Specials, Consumer Products and New Media. Each segment is a strategic business unit that offers different products and services and is managed separately. Feature Films consists of the development, production and exploitation of feature films in the theatrical, television, home entertainment and digital markets. Television Series and Specials consists of the development, production and exploitation of television, direct-to-video and other non-theatrical content in the television, home entertainment and digital markets. Consumer Products consists of the Company's merchandising and licensing activities related to the exploitation of its intellectual property rights. New Media consists of the Company's ATV and related businesses (which was previously not a reportable segment). This segment primarily generates revenues from the production and distribution of content across a variety of channels, including theatrical, home entertainment, television and online video-on-demand, and the exploitation of ancillary products and services, including marketing and consumer products. Operating segments that are not separately reportable are categorized in "All Other." | ||||||||||||||||||||
Segment performance is evaluated based on revenues and segment gross profit. The Company does not allocate assets to each of its operating segments, nor do the Company's chief operating decision makers evaluate operating segments using discrete asset information. Information on the reportable segments and a reconciliation of total segment revenues and segment gross profit to consolidated financial statements are presented below (in thousands): | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | ||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||
Revenues | ||||||||||||||||||||
Feature Films | $ | 128,020 | $ | 110,097 | ||||||||||||||||
Television Series and Specials | 18,013 | 17,969 | ||||||||||||||||||
Consumer Products | 15,116 | 12,067 | ||||||||||||||||||
New Media | 4,583 | 4,093 | ||||||||||||||||||
All Other | 798 | 3,015 | ||||||||||||||||||
Total consolidated revenues | $ | 166,530 | $ | 147,241 | ||||||||||||||||
Segment gross profit (loss)(1) | ||||||||||||||||||||
Feature Films | $ | 40,977 | $ | (25,388 | ) | |||||||||||||||
Television Series and Specials | 3,451 | 5,759 | ||||||||||||||||||
Consumer Products | 6,538 | 6,004 | ||||||||||||||||||
New Media | 2,115 | (80 | ) | |||||||||||||||||
All Other | 495 | 257 | ||||||||||||||||||
Total segment gross profit (loss) | $ | 53,576 | $ | (13,448 | ) | |||||||||||||||
Reconciliation to consolidated loss before income taxes: | ||||||||||||||||||||
Selling and marketing expenses(2) | 1,686 | 1,971 | ||||||||||||||||||
General and administrative expenses | 89,142 | 47,708 | ||||||||||||||||||
Product development expense | 332 | 540 | ||||||||||||||||||
Other operating income | (2,281 | ) | (1,672 | ) | ||||||||||||||||
Non-operating expenses (income) | 11,825 | (372 | ) | |||||||||||||||||
Loss from equity method investees | 6,362 | 3,260 | ||||||||||||||||||
Total consolidated loss before income taxes | $ | (53,490 | ) | $ | (64,883 | ) | ||||||||||||||
____________________ | ||||||||||||||||||||
(1) | 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). Refer to Note 1 for further information related to changes made to the Company's statement of operations presentation. | |||||||||||||||||||
(2) | 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 table presents goodwill for each of the Company's reportable segments (in thousands): | ||||||||||||||||||||
Feature Films | Television Series and Specials | Consumer Products | New Media | Total | ||||||||||||||||
Balance as of March 31, 2015 and December 31, 2014 | $ | 43,995 | $ | 6,111 | $ | 12,219 | $ | 128,343 | $ | 190,668 | ||||||||||
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions |
Transactions with ODW | |
During the three months ended March 31, 2015, the Company had various transactions with a related party, ODW. See Note 7 for further discussion related to these transactions. | |
Transactions with Universal Music Group | |
One of the Company's directors, Lucian Grainge, is the chief executive officer of Universal Music Group ("UMG"). From time to time, the Company and UMG (including its subsidiaries) make payments to each other in connection with the licensing of music that is owned by the other company. In addition, UMG serves as the Company's music publisher. Finally, UMG and ATV have formed joint ventures related to the music business. As it relates to these arrangements, for the three months ended March 31, 2015 and 2014, revenues recognized were not material. As of March 31, 2015 and December 31, 2014, the Company's deferred revenue and other advances (see Note 9) included a cash advance received of approximately $5.0 million, related to music licensing revenues. | |
Transactions with Vessel | |
One of the Company's directors, Jason Kilar, is the chief executive officer and a significant stockholder in Vessel, a start-up subscription Internet video service company. Vessel has entered into (and is expected to continue to enter into) content and referral agreements with clients of ATV. The agreements in effect provide for minimum payments during the next three years to ATV clients, with additional payments depending on applicable advertising and subscription revenues. Although ATV is not a party to these agreements, it will receive a percentage of the amounts paid to its clients under the terms of its arrangements with its individual clients. During the three months ended March 31, 2015, amounts received under these arrangements were immaterial. |
Concentrations_of_Credit_Risk
Concentrations of Credit Risk | 3 Months Ended |
Mar. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Credit Risk | Concentrations of Credit Risk |
A substantial portion of the Company's revenue is derived directly from the Company's primary third-party distributors, Fox and Paramount. Fox represented approximately 26% and 14% of total revenue for the three-month periods ended March 31, 2015 and 2014, respectively. Paramount represented approximately 11% and 28% of total revenue for the three-month periods ended March 31, 2015 and 2014, respectively. In addition, during the three months ended March 31, 2015 and 2014, 44% and 41%, respectively, of the Company's revenues were earned through license arrangements with Netflix, Inc. ("Netflix"). | |
As of March 31, 2015 and December 31, 2014, approximately 65% and 49%, respectively, of the Company's trade accounts receivable balance consisted of long-term receivables related to licensing arrangements with Netflix. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies |
Legal Proceedings | |
Shareholder Class Action and Derivative Lawsuits. In August 2014, two putative shareholder class action lawsuits alleging violations of federal securities laws were filed against the Company and several of its officers and directors in the U.S. District Court for the Central District of California. These lawsuits have been consolidated and generally assert that, between October 29, 2013 and July 29, 2014, the Company and certain of its officers and directors made alleged material misstatements and omissions regarding the financial performance of Turbo. In September 2014, a putative shareholder derivative action was filed in the U.S. District Court for the Central District of California against the Company (nominally and in a derivative capacity) and several of its officers and directors for alleged violations of fiduciary duties to the Company for, among other things, permitting the Company to issue alleged material misstatements and omissions regarding the financial performance of Turbo. This lawsuit generally asserts, purportedly on the Company's behalf, the same underlying factual allegations as those made in the class action lawsuits discussed above and has been deemed a related case. These lawsuits seek to recover damages on behalf of shareholders as well as other equitable and unspecified monetary relief. On April 1, 2015, the court granted the Company's motion to dismiss the consolidated securities class action lawsuit, with leave to amend. On April 16, 2015, the plantiffs informed the Company that they had elected not to amend their complaint, and the case was dismissed on April 24, 2015. The derivative class action has not been dismissed. The Company intends to vigorously defend against these lawsuits. At this time the Company is unable to reasonably predict the ultimate outcome of the lawsuits, nor can it reasonably estimate a range of possible loss. | |
Antitrust Class Action. In September and October 2014, three putative class action lawsuits alleging violations of federal and state antitrust laws were filed against the Company and various other companies in the U.S. District Court for the Northern District of California. These lawsuits have been consolidated and generally assert that the defendants agreed to restrict competition through non-solicitation agreements and agreements to fix wage and salary ranges. The lawsuits seek to recover damages on behalf of all persons who worked for the defendants at any time from 2004 to the present. The Company intends to vigorously defend against these lawsuits. At this time the Company is unable to reasonably predict the ultimate outcome of these lawsuits, nor can it reasonably estimate a range of possible loss. | |
Other Legal Matters. From time to time, the Company is involved in legal proceedings arising in the ordinary course of its business, typically intellectual property litigation and infringement claims related to the Company's feature films and other commercial activities, which could cause the Company to incur significant expenses or prevent the Company from releasing a film or other properties. The Company also has been the subject of patent and copyright claims relating to technology and ideas that it may use or feature in connection with the production, marketing or exploitation of the Company's feature films and other properties, which may affect the Company's ability to continue to do so. Furthermore, from time to time the Company may introduce new products or services, including in areas where it currently does not operate, which could increase its exposure to litigation and claims by competitors, consumers or other intellectual property owners. Defending intellectual property litigation is costly and can impose a significant burden on management and employees, and there can be no assurances that favorable final outcomes will be obtained in all cases. While the resolution of these matters cannot be predicted with certainty, the Company does not believe, based on current knowledge, that any existing legal proceedings or claims (other than those previously described) are likely to have a material effect on its financial position, results of operations or cash flows. | |
Other Commitments and Contingencies | |
Contributions to ODW. The Company has committed to making certain contributions in connection with the formation of ODW. Refer to Note 7 for further discussion related to these commitments. |
Earnings_Per_Share_Data
Earnings Per Share Data | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Earnings Per Share Data | Earnings Per Share Data | |||||||
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Numerator: | ||||||||
Net loss attributable to DreamWorks Animation SKG, Inc. | $ | (54,777 | ) | $ | (42,936 | ) | ||
Denominator: | ||||||||
Weighted average common shares and denominator for basic and diluted calculation: | ||||||||
Weighted average common shares outstanding | 85,734 | 84,588 | ||||||
Less: Unvested restricted stock | (119 | ) | (104 | ) | ||||
Denominator for basic and diluted calculation | 85,615 | 84,484 | ||||||
Net loss per share—basic and diluted | $ | (0.64 | ) | $ | (0.51 | ) | ||
The following table sets forth (in thousands) the weighted average number of options to purchase shares of common stock, stock appreciation rights, restricted stock awards and equity awards subject to performance conditions which were not included in the calculation of diluted per share amounts. Due to the Company's loss for each of the three-month periods ended March 31, 2015 and 2014, all potential common stock equivalents are anti-dilutive. | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Options to purchase shares of common stock and restricted stock awards | 1,135 | 344 | ||||||
Stock appreciation rights | — | 24 | ||||||
Total | 1,135 | 368 | ||||||
The following table sets forth (in thousands) the number of equity awards that are contingently issuable (assuming the required performance conditions had been satisfied as of the dates shown in the table) and that could potentially dilute earnings per share in future periods provided that the Company has net income: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Options to purchase shares of common stock and restricted stock awards | 1,372 | 941 | ||||||
Restructuring_and_Related_Char
Restructuring and Related Charges Restructuring and Related Charges | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Restructuring and Related Activities [Abstract] | |||||
Restructuring and Related Charges | Restructuring and Related Charges | ||||
2015 Restructuring Plan | |||||
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 2015 Restructuring Plan activities resulted, or will result, in charges related to employee-related costs resulting from headcount reductions, lease obligations and other costs associated with the closure of one of the Company's facilities, accelerated depreciation and amortization charges, write-offs related to the recoverability of capitalized costs for certain unreleased productions and other contractual obligations. Certain of these costs were incurred during the three months ended December 31, 2014. The Company expects that the remaining costs will be primarily incurred during the year ending December 31, 2015, primarily related to relocation and contractual obligations. The actions associated with the restructuring plan primarily impact the Feature Film segment and are expected to be substantially completed during 2015. | |||||
Impact to 2015 Financial Results | |||||
For the three months ended March 31, 2015, the Company incurred charges for the Company's 2015 Restructuring Plan as follows (in thousands): | |||||
Three Months Ended | |||||
31-Mar-15 | |||||
Employee termination costs | $ | 4,587 | |||
Relocation and other employee-related costs | 1,496 | ||||
Accelerated depreciation and amortization charges | 9,279 | ||||
Total restructuring and related charges | $ | 15,362 | |||
Employee termination costs consist of severance and benefits (including stock-based compensation) which are accounted for based on the type of employment arrangement between the Company and the employee. Certain of these arrangements include obligations that are accounted for as non-retirement postemployment benefits. The Company also employs individuals under employment contracts. Charges related to non-retirement postemployment benefits and amounts due under employment contracts for employees who will no longer provide services are accrued when probable and estimable. Severance and benefit costs related to all other employees are accounted for in accordance with accounting guidance on costs associated with exit or disposal activities. Such costs were recorded during the three months ended March 31, 2015 as this was the period in which the terms of the restructuring plan had been established, management with the appropriate authority committed to the plan and communication to employees had occurred. Such costs are classified in general and administrative expenses in the Company's consolidated statements of operations. During the three months ended March 31, 2015, employee termination costs included approximately 160 additional employees. As a result, cumulative employee termination costs related to the 2015 Restructuring Plan were attributable to approximately 500 employees. | |||||
Relocation and other employee-related costs primarily consist of costs to relocate employees from the Company's Northern California facility to its Southern California facility. Such costs are expensed as incurred and are classified within general and administrative expenses. | |||||
Accelerated depreciation and amortization charges for the 2015 Restructuring Plan were determined in accordance with FASB guidance on accounting for the impairment or disposal of long-lived assets. The estimated useful lives of certain property, plant and equipment changed as a result of the Company’s decision to exit its Northern California facility. Such costs are classified within general and administrative expenses. | |||||
Liability Rollforward | |||||
The following table represents a rollforward of the liability incurred for employee termination benefits (excluding stock-based compensation) in connection with the 2015 Restructuring Plan (in thousands): | |||||
Employee Termination Benefits | |||||
Balance at December 31, 2014 | $ | 36,808 | |||
Costs incurred | 10,286 | ||||
Changes in estimate | (5,036 | ) | |||
Payments and other | (6,568 | ) | |||
Balance at March 31, 2015 | $ | 35,490 | |||
Business_and_Basis_of_Presenta1
Business and Basis of Presentation (Policies) | 3 Months Ended | |
Mar. 31, 2015 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Consolidation | Consolidation | |
The consolidated financial statements of the Company present the financial position, results of operations and cash flows of DreamWorks Animation and its wholly-owned and majority-owned subsidiaries. The Company consolidates less-than-wholly owned entities if the Company has a controlling financial interest in that entity. The Company uses the equity method of accounting for investments in companies in which it has a 50% or less ownership interest and has the ability to exercise significant influence. Such investments are presented as investments in unconsolidated entities on the Company's consolidated balance sheets (refer to Note 7 for further information of such investments). Prior to recording its share of net income or losses from equity method investees, investee financial statements are converted to U.S. GAAP. All significant intercompany accounts and transactions have been eliminated. Intra-entity profit related to transactions with equity method investees is eliminated until the amounts are ultimately realized. | ||
Consolidation, Variable Interest Entity | In addition, the Company reviews its relationships with other entities to identify whether they are variable interest entities ("VIE") as defined by the Financial Accounting Standards Board ("FASB"), and to assess whether the Company is the primary beneficiary of such entity. If the determination is made that the Company is the primary beneficiary, then the entity is consolidated. | |
Use of Estimates | Use of Estimates | |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates made by management in the preparation of the financial statements relate to the following: | ||
• | ultimate revenues and ultimate costs of film and television product; | |
• | relative selling price of the Company's products for purposes of revenue allocation in multi-property licenses and other multiple deliverable arrangements; | |
• | determination of fair value of assets and liabilities for the allocation of the purchase price in an acquisition; | |
• | determination of the fair value of reporting units for purposes of testing goodwill for impairment; | |
• | determination of fair value of non-cash contributions to investments in unconsolidated entities; | |
• | useful lives of intangible assets; | |
• | product sales that will be returned and the amount of receivables that ultimately will be collected; | |
• | the potential outcome of future tax consequences of events that have been recognized in the Company's financial statements; | |
• | loss contingencies and contingent consideration arrangements; and | |
• | assumptions used in the determination of the fair value of equity-based awards for stock-based compensation or their probability of vesting. | |
Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company's financial condition or results of operations will be affected. Estimates are based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis. | ||
Recent accounting pronouncements | In April 2015, the FASB issued an accounting standards update relating to the presentation of debt issuance costs. The accounting update requires companies to present debt issuance costs related to a recognized debt liability presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The guidance is effective for the Company's fiscal year beginning January 1, 2016, with early adoption permitted. The Company plans to adopt the new guidance effective January 1, 2016. The adoption of this guidance is expected to have an immaterial impact on the Company's consolidated financial statements. | |
In February 2015, the FASB issued an accounting standards update to amend existing guidance relating to the evaluation of certain legal entities for potential consolidation. The amendments modify the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities. In addition, the amendments modify the guidance on evaluating whether a fee paid to a decision maker or a service provider represents a variable interest and whether it should be included in the evaluation of the economics criterion in determining which party is the primary beneficiary of a VIE. In accordance with the accounting standards update, companies are required to reevaluate all legal entities that are considered VIEs to determine whether there is a change in the conclusion as to whether the VIE should be consolidated. The guidance is effective for the Company's fiscal year beginning January 1, 2016, with early adoption permitted. The Company plans to adopt the new guidance effective January 1, 2016. The Company is currently evaluating the impact that the new standard will have on its consolidated financial statements. | ||
In June 2014, the FASB issued an accounting standards update relating to the accounting for certain share-based awards. The accounting update states that, when the terms of an award provide that a performance target could be achieved after the requisite service period, the performance target should be treated as a performance condition that affects vesting and should not be reflected in the grant-date fair value. Companies are permitted to apply the guidance either prospectively to all awards granted or modified after the effective date or retrospectively to awards outstanding as of the beginning of the earliest annual period presented. The guidance is effective for the Company's fiscal year beginning January 1, 2016, with early adoption permitted. The Company adopted the new guidance upon issuance of the accounting standards update, which did not have an impact on its consolidated financial statements as the Company's existing accounting policy was already consistent with this guidance. | ||
In May 2014, the FASB issued an accounting standards update to provide companies with a single model for use in accounting for revenue from contracts with customers. Once it becomes effective, the new guidance will replace most existing revenue recognition guidance in U.S. GAAP, including industry-specific guidance. The core principle of the model is to recognize revenue when control of goods or services transfers to the customer and in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services that have transferred. Under current U.S. GAAP, the Company recognizes revenue when the risks and rewards of ownership transfer to the customer. In addition, the new guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized and the related cash flows. The guidance is effective for the Company's fiscal year beginning January 1, 2017, including interim periods within that fiscal year. Early adoption is not permitted. However, on April 1, 2015, the FASB voted to propose a one-year deferral to the effective date, but to permit entities to adopt one year earlier if they choose (i.e., the original effective date). The proposal will be subject to the FASB's due process requirement, which includes a period for public comments. Companies are permitted to either apply the guidance retrospectively to all prior periods presented or, alternatively, apply the guidance in the year of adoption with the cumulative effect recognized at the date of initial application (referred to as the modified retrospective approach). The Company is in the process of determining the method of adoption, as well as evaluating the impact that the new standard will have on its consolidated financial statements. | ||
Fair Value of Financial Instruments | The fair value of cash and cash equivalents, restricted cash, accounts payable, advances and amounts outstanding under the revolving credit facility approximates carrying value due to the short-term maturity of such instruments and floating interest rates. As of March 31, 2015, the fair value of trade accounts receivable approximated carrying value due to the similarities in the initial and current discount rates. In addition, as of March 31, 2015, the fair value and the carrying value of the senior unsecured notes was $307.8 million and $300.0 million, respectively. As it relates to the Company's lease financing obligation, as of March 31, 2015, the fair value and the carrying value was $188.5 million and $183.8 million, respectively. The fair value of trade accounts receivable, the senior unsecured notes and the lease financing obligation was determined using significant unobservable inputs by performing a discounted cash flow analysis and using current discount rates as appropriate for each type of instrument. | |
The Company has short-term money market investments which are classified as cash and cash equivalents on the consolidated balance sheets. The fair value of these investments at March 31, 2015 and December 31, 2014 was measured based on quoted prices in active markets. |
Film_and_Other_Inventory_Costs1
Film and Other Inventory Costs (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Film Costs [Abstract] | ||||||||
Film, television and other inventory costs | Film, television and other inventory costs consist of the following (in thousands): | |||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
In release, net of amortization: | ||||||||
Feature films | $ | 454,158 | $ | 392,186 | ||||
Television series and specials | 72,733 | 67,803 | ||||||
In production: | ||||||||
Feature films | 146,574 | 206,240 | ||||||
Television series and specials | 81,873 | 62,426 | ||||||
In development: | ||||||||
Feature films | 63,979 | 88,200 | ||||||
Television series and specials | 612 | 1,118 | ||||||
Product inventory and other(1) | 10,763 | 9,917 | ||||||
Total film, television and other inventory costs, net | $ | 830,692 | $ | 827,890 | ||||
____________________ | ||||||||
(1) | As of March 31, 2015 and December 31, 2014, this category includes $6.5 million and $6.7 million, respectively, of physical inventory of certain DreamWorks Animation and Classic Media titles for distribution primarily in the home entertainment market. |
Intangible_Assets_Tables
Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||
Schedule of definite-lived assets | In addition, intangible assets included definite-lived intangible assets as follows (in thousands, unless otherwise noted): | |||||||||||||||||
Weighted Average Estimated Useful Life (in years) | Gross | Accumulated Amortization | Impact of Foreign Currency Translation | Net | ||||||||||||||
As of March 31, 2015: | ||||||||||||||||||
Character rights | 13.9 | $ | 99,000 | $ | (16,381 | ) | $ | (2,521 | ) | $ | 80,098 | |||||||
Distribution rights | 11.2 | 30,000 | (2,371 | ) | — | 27,629 | ||||||||||||
Programming content | 2 | 11,200 | (10,733 | ) | — | 467 | ||||||||||||
Trademarks and trade names | 10 | 1,410 | (251 | ) | — | 1,159 | ||||||||||||
Other intangibles | 4.4 | 2,700 | (919 | ) | — | 1,781 | ||||||||||||
Total | $ | 144,310 | $ | (30,655 | ) | $ | (2,521 | ) | $ | 111,134 | ||||||||
As of December 31, 2014: | ||||||||||||||||||
Character rights | 13.9 | $ | 99,000 | $ | (15,101 | ) | $ | (568 | ) | $ | 83,331 | |||||||
Distribution rights | 11.2 | 30,000 | (1,604 | ) | — | 28,396 | ||||||||||||
Programming content | 2 | 11,200 | (9,333 | ) | — | 1,867 | ||||||||||||
Trademarks and trade names | 10 | 1,410 | (216 | ) | — | 1,194 | ||||||||||||
Other intangibles | 4.4 | 2,700 | (747 | ) | — | 1,953 | ||||||||||||
Total | $ | 144,310 | $ | (27,001 | ) | $ | (568 | ) | $ | 116,741 | ||||||||
Investments_in_Unconsolidated_1
Investments in Unconsolidated Entities (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Investments in Unconsolidated Entities [Abstract] | ||||||||||
Schedule of cost and equity method investments | These investments are classified as investments in unconsolidated entities in the consolidated balance sheets and consist of the following (in thousands, unless otherwise indicated): | |||||||||
Ownership | ||||||||||
Percentage at | March 31, | December 31, | ||||||||
March 31, 2015 | 2015 | 2014 | ||||||||
Oriental DreamWorks Holding Limited | 45.45% | $ | 14,305 | $ | 17,422 | |||||
All Other(1) | 17.5%-50.0% | 11 | 6,029 | |||||||
Total equity method investments | 14,316 | 23,451 | ||||||||
Total cost method investments | 12,379 | 11,879 | ||||||||
Total investments in unconsolidated entities | $ | 26,695 | $ | 35,330 | ||||||
____________________ | ||||||||||
(1) | As of March 31, 2015, the Company determined that one of its equity method investments was impaired and that the carrying value would not be recoverable, primarily due to the Company's concerns related to the investee's financial condition. As a result, the Company determined that the fair value of the investment was zero and, accordingly, it recorded an impairment charge in the amount of $5.1 million related to such investment. Fair value was estimated using significant unobservable inputs. | |||||||||
Schedule of losses from equity method investments | Loss from equity method investees consist of the following (in thousands): | |||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
2015 | 2014 | |||||||||
Oriental DreamWorks Holding Limited(1) | $ | 5,398 | $ | 2,210 | ||||||
All Other | 964 | 1,050 | ||||||||
Loss from equity method investees | $ | 6,362 | $ | 3,260 | ||||||
____________________ | ||||||||||
(1) | The Company currently records its share of ODW results on a one-month lag. Accordingly, the Company's consolidated financial statements include its share of losses incurred by ODW from December 1, 2014 to February 28, 2015. | |||||||||
Schedule of equity method investment information | The following are the differences between the Company's venture-level equity and the balance of its investment in ODW (in thousands): | |||||||||
March 31, | December 31, | |||||||||
2015 | 2014 | |||||||||
Company's venture-level equity | $ | 40,403 | $ | 46,345 | ||||||
Technology and intellectual property licenses(1) | (10,489 | ) | (12,714 | ) | ||||||
Other(2) | (15,609 | ) | (16,209 | ) | ||||||
Total ODW investment recorded | $ | 14,305 | $ | 17,422 | ||||||
____________________ | ||||||||||
-1 | Represents differences between the Company's historical cost basis and the equity basis reflected at the venture-level (the amount recorded on the balance sheet of ODW) related to the Company's contributions of technology and intellectual property licenses. These basis differences arise because the contributed assets are recorded at fair value by ODW. | |||||||||
(2) | Represents the Company's net contribution commitment due to ODW. | |||||||||
The following table presents summarized financial information for the Company's equity method investees presented in the table above (in thousands): | ||||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
2015 | 2014 | |||||||||
Revenues | $ | 2,618 | $ | 835 | ||||||
Costs of revenues | $ | 2,707 | $ | 687 | ||||||
Net loss | $ | 14,506 | $ | 6,774 | ||||||
Accrued_Liabilities_Tables
Accrued Liabilities (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): | |||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Employee compensation | $ | 64,281 | $ | 67,084 | ||||
Participations and residuals | 50,574 | 50,646 | ||||||
Interest payable | 2,715 | 7,951 | ||||||
Deferred rent | 10,639 | 11,049 | ||||||
Other accrued liabilities | 35,884 | 53,487 | ||||||
Total accrued liabilities | $ | 164,093 | $ | 190,217 | ||||
Deferred_Revenue_and_Other_Adv1
Deferred Revenue and Other Advances (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Deferred Revenue Disclosure [Abstract] | ||||||||||||||||
Summary of deferred revenue and other advances included in the consolidated balance sheets | The following is a summary of deferred revenue and other advances included in the consolidated balance sheets as of March 31, 2015 and December 31, 2014 and the related amounts earned and recorded either as revenue in the consolidated statements of operations or recorded as an offset to other costs (as described below) for the three-month periods ended March 31, 2015 and 2014 (in thousands): | |||||||||||||||
Amounts Earned | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014(3) | |||||||||||||
Deferred Revenue(1) | $ | 23,693 | $ | 1,074 | $ | 118 | $ | 5,908 | ||||||||
Strategic Alliance/Development Advances(2) | 417 | 1,667 | 7,684 | 7,138 | ||||||||||||
Other | 26,942 | 31,154 | 14,547 | 21,626 | ||||||||||||
Total deferred revenue and other advances | $ | 51,052 | $ | 33,895 | ||||||||||||
____________________ | ||||||||||||||||
(1) | Deferred revenue consists of those arrangements related to the licensing of content for distribution in the home entertainment, television and new media markets. | |||||||||||||||
(2) | Of the total amounts earned against the "Strategic Alliance/Development Advances," for the three months ended March 31, 2015 and 2014, $4.0 million and $2.4 million, respectively, were capitalized as an offset to property, plant and equipment. Additionally, during the three months ended March 31, 2015 and 2014, of the total amounts earned, $0.5 million and $1.0 million, respectively, were recorded as a reduction to other assets. During the three months ended March 31, 2015 and 2014, $0.9 million and $0.5 million, respectively, were recorded as a reduction to prepaid expenses. During the three months ended March 31, 2015 and 2014, of the total amounts earned, $0.6 million and $1.1 million, respectively, were recorded as a reduction to operating expenses. | |||||||||||||||
(3) | Of the total amounts earned in "Other," for the three months ended March 31, 2014, $14.0 million was recorded as a reduction to film and other inventory costs. |
Financing_Arrangements_Tables
Financing Arrangements (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||
Schedule of payments under lease financing obligation | As of March 31, 2015, payments required on the lease financing obligations were as follows (in thousands): | |||||||||||||||||||
2015 | $ | 8,780 | ||||||||||||||||||
2016 | 13,335 | |||||||||||||||||||
2017 | 13,535 | |||||||||||||||||||
2018 | 13,738 | |||||||||||||||||||
2019 | 13,944 | |||||||||||||||||||
2020 and thereafter | 322,269 | |||||||||||||||||||
Total payments | 385,601 | |||||||||||||||||||
Less: interest implicit in obligation | (201,785 | ) | ||||||||||||||||||
Total lease financing obligation | $ | 183,816 | ||||||||||||||||||
Schedule of financing arrangements | The following table summarizes information associated with the Company's financing arrangements (in thousands, except percentages): | |||||||||||||||||||
Interest Expense | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Balance Outstanding at | Maturity Date | March 31, | ||||||||||||||||||
31-Mar-15 | 31-Dec-14 | Interest Rate at | 2015 | 2014 | ||||||||||||||||
31-Mar-15 | ||||||||||||||||||||
Senior Unsecured Notes | $ | 300,000 | $ | 300,000 | Aug-20 | 6.88% | $ | 4,446 | $ | 2,234 | ||||||||||
Revolving Credit Facility | $ | 80,000 | $ | 215,000 | Feb-20 | 2.67% | $ | 1,340 | $ | 375 | ||||||||||
Lease Financing Obligation | $ | 183,816 | N/A | Feb-35 | 6.70% | $ | 1,141 | N/A | ||||||||||||
____________________ | ||||||||||||||||||||
N/A: Not applicable |
Stockholders_Equity_and_Noncon1
Stockholders' Equity and Non-controlling Interests (Tables) | 3 Months Ended | |||||||||||
Mar. 31, 2015 | ||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||
Schedule of stockholders equity and non-controlling interest | The following table presents the changes in equity for the three-month periods ended March 31, 2015 and 2014 (in thousands): | |||||||||||
DreamWorks Animation SKG, Inc. Stockholders' Equity | Non-controlling Interests | Total Equity | ||||||||||
Balance as of December 31, 2014 | $ | 1,156,357 | $ | 38,041 | $ | 1,194,398 | ||||||
Stock-based compensation | 6,780 | — | 6,780 | |||||||||
Purchase of treasury shares | (2,013 | ) | — | (2,013 | ) | |||||||
Foreign currency translation adjustments | (810 | ) | — | (810 | ) | |||||||
Capital contribution from non-controlling interest holder | — | 15,000 | 15,000 | |||||||||
Distributions to non-controlling interest holder | — | (571 | ) | (571 | ) | |||||||
Net loss | (54,777 | ) | (1,113 | ) | (55,890 | ) | ||||||
Balance as of March 31, 2015 | $ | 1,105,537 | $ | 51,357 | $ | 1,156,894 | ||||||
Balance as of December 31, 2013 | $ | 1,404,795 | $ | 1,224 | $ | 1,406,019 | ||||||
Stock option exercises | 261 | — | 261 | |||||||||
Stock-based compensation | 9,068 | — | 9,068 | |||||||||
Purchase of treasury shares | (1,246 | ) | — | (1,246 | ) | |||||||
Foreign currency translation adjustments | 132 | — | 132 | |||||||||
Net (loss) income | (42,936 | ) | 520 | (42,416 | ) | |||||||
Balance as of March 31, 2014 | $ | 1,370,074 | $ | 1,744 | $ | 1,371,818 | ||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Schedule of impact of stock options and restricted stock awards on net income | The impact of stock options (including stock appreciation rights) and restricted stock awards on net income (excluding amounts capitalized) for the three-month periods ended March 31, 2015 and 2014, respectively, were as follows (in thousands): | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Total stock-based compensation | $ | 4,399 | $ | 5,309 | ||||
Tax impact(1) | 198 | (1,885 | ) | |||||
Reduction in net income, net of tax | $ | 4,597 | $ | 3,424 | ||||
____________________ | ||||||||
(1) | Tax impact is determined at the Company's combined effective tax rate, which includes the statements of operations line item "Increase/decrease in income tax benefit payable to former stockholder" (see Note 11). | |||||||
Schedule of number and weighted average grant date fair value of equity awards granted | The following table sets forth the number and weighted average grant-date fair value of equity awards granted during the three-month periods ended March 31, 2015 and 2014: | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
Number | Weighted | |||||||
Granted | Average | |||||||
Grant-Date | ||||||||
Fair Value | ||||||||
(in thousands) | ||||||||
2015 | ||||||||
Restricted stock units | 777 | $ | 21.41 | |||||
2014 | ||||||||
Restricted stock and restricted stock units | 224 | $ | 29.91 | |||||
Reportable_Segments_Tables
Reportable Segments (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||
Schedule of segment reporting information | Information on the reportable segments and a reconciliation of total segment revenues and segment gross profit to consolidated financial statements are presented below (in thousands): | |||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | ||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||
Revenues | ||||||||||||||||||||
Feature Films | $ | 128,020 | $ | 110,097 | ||||||||||||||||
Television Series and Specials | 18,013 | 17,969 | ||||||||||||||||||
Consumer Products | 15,116 | 12,067 | ||||||||||||||||||
New Media | 4,583 | 4,093 | ||||||||||||||||||
All Other | 798 | 3,015 | ||||||||||||||||||
Total consolidated revenues | $ | 166,530 | $ | 147,241 | ||||||||||||||||
Segment gross profit (loss)(1) | ||||||||||||||||||||
Feature Films | $ | 40,977 | $ | (25,388 | ) | |||||||||||||||
Television Series and Specials | 3,451 | 5,759 | ||||||||||||||||||
Consumer Products | 6,538 | 6,004 | ||||||||||||||||||
New Media | 2,115 | (80 | ) | |||||||||||||||||
All Other | 495 | 257 | ||||||||||||||||||
Total segment gross profit (loss) | $ | 53,576 | $ | (13,448 | ) | |||||||||||||||
Reconciliation to consolidated loss before income taxes: | ||||||||||||||||||||
Selling and marketing expenses(2) | 1,686 | 1,971 | ||||||||||||||||||
General and administrative expenses | 89,142 | 47,708 | ||||||||||||||||||
Product development expense | 332 | 540 | ||||||||||||||||||
Other operating income | (2,281 | ) | (1,672 | ) | ||||||||||||||||
Non-operating expenses (income) | 11,825 | (372 | ) | |||||||||||||||||
Loss from equity method investees | 6,362 | 3,260 | ||||||||||||||||||
Total consolidated loss before income taxes | $ | (53,490 | ) | $ | (64,883 | ) | ||||||||||||||
____________________ | ||||||||||||||||||||
(1) | 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). Refer to Note 1 for further information related to changes made to the Company's statement of operations presentation. | |||||||||||||||||||
(2) | 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. | |||||||||||||||||||
Schedule of goodwill | The following table presents goodwill for each of the Company's reportable segments (in thousands): | |||||||||||||||||||
Feature Films | Television Series and Specials | Consumer Products | New Media | Total | ||||||||||||||||
Balance as of March 31, 2015 and December 31, 2014 | $ | 43,995 | $ | 6,111 | $ | 12,219 | $ | 128,343 | $ | 190,668 | ||||||||||
Earnings_Per_Share_Data_Tables
Earnings Per Share Data (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Computation of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts): | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Numerator: | ||||||||
Net loss attributable to DreamWorks Animation SKG, Inc. | $ | (54,777 | ) | $ | (42,936 | ) | ||
Denominator: | ||||||||
Weighted average common shares and denominator for basic and diluted calculation: | ||||||||
Weighted average common shares outstanding | 85,734 | 84,588 | ||||||
Less: Unvested restricted stock | (119 | ) | (104 | ) | ||||
Denominator for basic and diluted calculation | 85,615 | 84,484 | ||||||
Net loss per share—basic and diluted | $ | (0.64 | ) | $ | (0.51 | ) | ||
Weighted average number of options used to purchase shares of common stock, stock appreciation rights, restricted stock awards and equity awards | The following table sets forth (in thousands) the weighted average number of options to purchase shares of common stock, stock appreciation rights, restricted stock awards and equity awards subject to performance conditions which were not included in the calculation of diluted per share amounts. Due to the Company's loss for each of the three-month periods ended March 31, 2015 and 2014, all potential common stock equivalents are anti-dilutive. | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Options to purchase shares of common stock and restricted stock awards | 1,135 | 344 | ||||||
Stock appreciation rights | — | 24 | ||||||
Total | 1,135 | 368 | ||||||
Number of equity awards that are contingently issuable | The following table sets forth (in thousands) the number of equity awards that are contingently issuable (assuming the required performance conditions had been satisfied as of the dates shown in the table) and that could potentially dilute earnings per share in future periods provided that the Company has net income: | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Options to purchase shares of common stock and restricted stock awards | 1,372 | 941 | ||||||
Restructuring_and_Related_Char1
Restructuring and Related Charges Restructuring and Related Charges (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Restructuring and Related Activities [Abstract] | |||||
Schedule of restructuring and related charges | For the three months ended March 31, 2015, the Company incurred charges for the Company's 2015 Restructuring Plan as follows (in thousands): | ||||
Three Months Ended | |||||
31-Mar-15 | |||||
Employee termination costs | $ | 4,587 | |||
Relocation and other employee-related costs | 1,496 | ||||
Accelerated depreciation and amortization charges | 9,279 | ||||
Total restructuring and related charges | $ | 15,362 | |||
The following table represents a rollforward of the liability incurred for employee termination benefits (excluding stock-based compensation) in connection with the 2015 Restructuring Plan (in thousands): | |||||
Employee Termination Benefits | |||||
Balance at December 31, 2014 | $ | 36,808 | |||
Costs incurred | 10,286 | ||||
Changes in estimate | (5,036 | ) | |||
Payments and other | (6,568 | ) | |||
Balance at March 31, 2015 | $ | 35,490 | |||
Business_and_Basis_of_Presenta2
Business and Basis of Presentation (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Prior Period Adjustment [Abstract] | |||
Decrease in cost of revenues | $2,500,000 | ||
Restricted cash | 14,907,000 | 25,244,000 | |
Capital contribution from non-controlling interest holder | 15,000,000 | 0 | |
ATV Joint Venture [Member] | |||
Prior Period Adjustment [Abstract] | |||
Joint venture ownership, percentage | 75.00% | ||
Joint venture, initial restricted cash contribution | 25,000,000 | ||
Restricted cash | $14,900,000 | ||
Fox [Member] | Distribution Arrangement [Member] | |||
Business and Basis Of Presentation [Line Items] | |||
Distribution arrangement, output term | 5 years | ||
Period after U.S. home video release that output term will terminate | 1 year | ||
Paramount [Member] | Distribution Arrangement [Member] | |||
Business and Basis Of Presentation [Line Items] | |||
Distribution arrangement, exploitation period | 16 years |
Acquisitions_Details
Acquisitions (Details) (USD $) | 1 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | |||
20-May-14 | Dec. 11, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2014 | 3-May-13 | Mar. 31, 2014 | Dec. 31, 2013 | |
business | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | 190,668,000 | $190,668,000 | $190,668,000 | |||||
Big Frame and Felix the Cat Rights [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of business acquired | 2 | |||||||
Total cash consideration transferred | 34,800,000 | |||||||
Identifiable intangible assets acquired | 22,300,000 | |||||||
Goodwill | 11,400,000 | |||||||
AwesomenessTV, Inc. [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Contingent consideration arrangement with former shareholders, term | 2 years | |||||||
Estimated contingent consideration | 0 | 95,000,000 | 99,000,000 | 96,500,000 | ||||
Maximum contingent consideration that may be earned | 117,000,000 | |||||||
Fixed payment amount in lieu of contingent consideration from Merger Agreement | 80,000,000 | |||||||
Gain related to contingent consideration liability | 6,800,000 | 16,500,000 | ||||||
Income Approach Valuation Technique [Member] | AwesomenessTV, Inc. [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Discount rate | 8.50% | |||||||
Volatility rate | 32.60% | |||||||
Probability adjusted earnings in 2014 | 25,000,000 | |||||||
Probability adjusted earnings in 2015 | 41,000,000 | |||||||
Sensitivity analysis, hypothetical discount rate | 15.00% | |||||||
Sensitivity analysis, hypothetical volatility rate | 20.00% | |||||||
Discount Rate [Member] | Income Approach Valuation Technique [Member] | AwesomenessTV, Inc. [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Change in fair value of contingent consideration after change in discount rate | 90,500,000 | |||||||
Volatility Rate [Member] | Income Approach Valuation Technique [Member] | AwesomenessTV, Inc. [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Change in fair value of contingent consideration after change in volatility rate | 103,500,000 | |||||||
Hearst Corporation [Member] | ATV Joint Venture [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Equity interest in joint venture | 25.00% | |||||||
Purchase price for equity interest in joint venture | $81,250,000 |
Financial_Instruments_Details
Financial Instruments (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior unsecured notes, fair value | $307,800,000 | |
Senior unsecured notes, carrying value | 300,000,000 | 300,000,000 |
Lease financing obligation, fair value | 188,500,000 | |
Lease financing obligation, carrying value | $183,816,000 | $0 |
Film_and_Other_Inventory_Costs2
Film and Other Inventory Costs (Details) (USD $) | 3 Months Ended | ||||
Mar. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | |||
Film Costs [Line Items] | |||||
In release, net of amortization, feature films | $454,158,000 | $392,186,000 | |||
In release, net of amortization, television series and specials | 72,733,000 | 67,803,000 | |||
In production, feature films | 146,574,000 | 206,240,000 | |||
In production, television series and specials | 81,873,000 | 62,426,000 | |||
In development, feature films | 63,979,000 | 88,200,000 | |||
In development, television series and specials | 612,000 | 1,118,000 | |||
Product inventory and other | 10,763,000 | [1] | 9,917,000 | [1] | |
Total film, television and other inventory costs, net | 830,692,000 | 827,890,000 | |||
Physical inventory | 6,500,000 | 6,700,000 | |||
Release costs expected to be amortized over the next 12 months | 46.00% | ||||
Release costs expected to be amortized over three years | 79.00% | ||||
Impairment charge of film costs | $57,100,000 | ||||
Impaired Film and Other Inventory Assets [Member] | |||||
Film Costs [Line Items] | |||||
Discount rate used in fair value measurement | 7.00% | ||||
Estimated remaining cash flow period | 15 years | ||||
[1] | As of MarchB 31, 2015 and DecemberB 31, 2014, this category includes $6.5 million and $6.7 million, respectively, of physical inventory of certain DreamWorks Animation and Classic Media titles for distribution primarily in the home entertainment market. |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $69,400,000 | $69,400,000 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross | 144,310,000 | 144,310,000 |
Accumulated amortization | -30,655,000 | -27,001,000 |
Impact of foreign currency translation | -2,521,000 | -568,000 |
Net | 111,134,000 | 116,741,000 |
Character Rights [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Weighted average estimated useful life | 13 years 10 months 24 days | 13 years 10 months 24 days |
Gross | 99,000,000 | 99,000,000 |
Accumulated amortization | -16,381,000 | -15,101,000 |
Impact of foreign currency translation | -2,521,000 | -568,000 |
Net | 80,098,000 | 83,331,000 |
Distribution Rights [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Weighted average estimated useful life | 11 years 2 months 12 days | 11 years 2 months 12 days |
Gross | 30,000,000 | 30,000,000 |
Accumulated amortization | -2,371,000 | -1,604,000 |
Impact of foreign currency translation | 0 | 0 |
Net | 27,629,000 | 28,396,000 |
Programming Content [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Weighted average estimated useful life | 2 years | 2 years |
Gross | 11,200,000 | 11,200,000 |
Accumulated amortization | -10,733,000 | -9,333,000 |
Impact of foreign currency translation | 0 | 0 |
Net | 467,000 | 1,867,000 |
Trademarks and Trade Names [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Weighted average estimated useful life | 10 years | 10 years |
Gross | 1,410,000 | 1,410,000 |
Accumulated amortization | -251,000 | -216,000 |
Impact of foreign currency translation | 0 | 0 |
Net | 1,159,000 | 1,194,000 |
Other Intangibles [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Weighted average estimated useful life | 4 years 4 months 24 days | 4 years 4 months 24 days |
Gross | 2,700,000 | 2,700,000 |
Accumulated amortization | -919,000 | -747,000 |
Impact of foreign currency translation | 0 | 0 |
Net | $1,781,000 | $1,953,000 |
Investments_in_Unconsolidated_2
Investments in Unconsolidated Entities (Details) (USD $) | 3 Months Ended | ||||
Mar. 31, 2015 | Dec. 31, 2014 | Apr. 03, 2013 | |||
Schedule of Cost and Equity Method Investments [Line Items] | |||||
Total equity method investments | $14,316,000 | $23,451,000 | |||
Total cost method investments | 12,379,000 | 11,879,000 | |||
Investments in unconsolidated entities | 26,695,000 | 35,330,000 | |||
ODW Holding Limited [Member] | |||||
Schedule of Cost and Equity Method Investments [Line Items] | |||||
Equity method investment, ownership percentage | 45.45% | 45.45% | |||
Total equity method investments | 14,305,000 | 17,422,000 | |||
All Other [Member] | |||||
Schedule of Cost and Equity Method Investments [Line Items] | |||||
Total equity method investments | 11,000 | [1] | 6,029,000 | [1] | |
All Other [Member] | Maximum [Member] | |||||
Schedule of Cost and Equity Method Investments [Line Items] | |||||
Equity method investment, ownership percentage | 50.00% | [1] | |||
All Other [Member] | Minimum [Member] | |||||
Schedule of Cost and Equity Method Investments [Line Items] | |||||
Equity method investment, ownership percentage | 17.50% | [1] | |||
Unidentified Equity Method Investee [Member] | |||||
Schedule of Cost and Equity Method Investments [Line Items] | |||||
Fair value of equity method investment | 0 | ||||
Recorded impairment charge on equity method investment | $5,100,000 | ||||
[1] | As of March 31, 2015, the Company determined that one of its equity method investments was impaired and that the carrying value would not be recoverable, primarily due to the Company's concerns related to the investee's financial condition. As a result, the Company determined that the fair value of the investment was zero and, accordingly, it recorded an impairment charge in the amount of $5.1 million related to such investment. Fair value was estimated using significant unobservable inputs. |
Investments_in_Unconsolidated_3
Investments in Unconsolidated Entities Loss From Equity Investments (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Schedule of Income (Loss) From Equity Method Investments [Line Items] | ||||
Loss from equity method investees | $6,362 | $3,260 | ||
ODW Holding Limited [Member] | ||||
Schedule of Income (Loss) From Equity Method Investments [Line Items] | ||||
Loss from equity method investees | 5,398 | [1] | 2,210 | [1] |
All Other [Member] | ||||
Schedule of Income (Loss) From Equity Method Investments [Line Items] | ||||
Loss from equity method investees | $964 | $1,050 | ||
[1] | The Company currently records its share of ODW results on a one-month lag. Accordingly, the Company's consolidated financial statements include its share of losses incurred by ODW from December 1, 2014 to February 28, 2015. |
Investments_in_Unconsolidated_4
Investments in Unconsolidated Entities Investments in Unconsolidated Entities Summarized Financial Information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Investments in Unconsolidated Entities [Abstract] | ||
Revenues | $2,618 | $835 |
Costs of revenues | 2,707 | 687 |
Net loss | $14,506 | $6,774 |
Investments_in_Unconsolidated_5
Investments in Unconsolidated Entities Basis Difference In Equity Investment (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Total investment recorded | $14,316 | $23,451 | ||
ODW Holding Limited [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Company's venture-level equity | 40,403 | 46,345 | ||
Total investment recorded | 14,305 | 17,422 | ||
ODW Holding Limited [Member] | Technology and Intellectual Property Licenses [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Basis differences | -10,489 | [1] | -12,714 | [1] |
ODW Holding Limited [Member] | Other [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Basis differences | ($15,609) | [2] | ($16,209) | [2] |
[1] | Represents differences between the Company's historical cost basis and the equity basis reflected at the venture-level (the amount recorded on the balance sheet of ODW) related to the Company's contributions of technology and intellectual property licenses. These basis differences arise because the contributed assets are recorded at fair value by ODW. | |||
[2] | Represents the Company's net contribution commitment due to ODW. |
Investments_in_Unconsolidated_6
Investments in Unconsolidated Entities Narrative (Details) (USD $) | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Apr. 03, 2013 | |
Investments in and Advances to Affiliates [Line Items] | ||||
Other operating income | $2,281,000 | $1,672,000 | ||
Revenues | 166,530,000 | 147,241,000 | ||
Trade accounts receivable, net of allowance for doubtful accounts | 173,267,000 | 160,379,000 | ||
Receivable from distributors, net of allowance for doubtful accounts | 214,672,000 | 271,256,000 | ||
ODW Holding Limited [Member] | ||||
Investments in and Advances to Affiliates [Line Items] | ||||
Trade accounts receivable, net of allowance for doubtful accounts | 8,300,000 | 7,100,000 | ||
Receivable from distributors, net of allowance for doubtful accounts | 19,700,000 | 19,000,000 | ||
Distribution Arrangement [Member] | ODW Holding Limited [Member] | ||||
Investments in and Advances to Affiliates [Line Items] | ||||
Revenues | 400,000 | 700,000 | ||
ODW Holding Limited [Member] | ||||
Investments in and Advances to Affiliates [Line Items] | ||||
Equity method investment, ownership percentage | 45.45% | 45.45% | ||
Equity method investment, cash contribution commitment | 50,000,000 | |||
Cash contributions satisfied | 9,400,000 | |||
Estimated aggregate value of non-cash contributions | 100,000,000 | |||
Value of non-cash contributions satisfied | 38,700,000 | |||
Remaining cash contribution commitment to be paid | 40,600,000 | |||
Payment period for remaining cash contribution commitment | 3 years | |||
Number of in-development film projects | 2 | |||
Value of consulting and training services rendered | 6,700,000 | |||
Non-Cash Contributions [Member] | ODW Holding Limited [Member] | ||||
Investments in and Advances to Affiliates [Line Items] | ||||
Other operating income | $2,300,000 | $1,700,000 |
Accrued_Liabilities_Details
Accrued Liabilities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Employee compensation | $64,281,000 | $67,084,000 |
Participations and residuals | 50,574,000 | 50,646,000 |
Interest payable | 2,715,000 | 7,951,000 |
Deferred rent | 10,639,000 | 11,049,000 |
Other accrued liabilities | 35,884,000 | 53,487,000 |
Total accrued liabilities | 164,093,000 | 190,217,000 |
Accrued participation and residual costs estimated to pay over the next 12 months | $19,300,000 |
Deferred_Revenue_and_Other_Adv2
Deferred Revenue and Other Advances (Details) (USD $) | 3 Months Ended | |||||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | ||||
Deferred Revenue And Other Advances By Category [Line Items] | ||||||
Total deferred revenue and other advances | $51,052,000 | $33,895,000 | ||||
Deferred Revenue [Member] | ||||||
Deferred Revenue And Other Advances By Category [Line Items] | ||||||
Total deferred revenue and other advances | 23,693,000 | [1] | 1,074,000 | [1] | ||
Deferred revenue and other advances, amounts earned | 118,000 | [1] | 5,908,000 | [1],[2] | ||
Strategic Alliance/Development Advances [Member] | ||||||
Deferred Revenue And Other Advances By Category [Line Items] | ||||||
Total deferred revenue and other advances | 417,000 | [3] | 1,667,000 | [3] | ||
Deferred revenue and other advances, amounts earned | 7,684,000 | [3] | 7,138,000 | [2],[3] | ||
Amount capitalized as offset to property, plant and equipment | 4,000,000 | 2,400,000 | ||||
Amount capitalized as offset to other assets | 500,000 | 1,000,000 | ||||
Amount capitalized as offset to prepaid expenses | 900,000 | 500,000 | ||||
Amount recorded as an offset to operating expenses | 600,000 | 1,100,000 | ||||
Other Advances [Member] | ||||||
Deferred Revenue And Other Advances By Category [Line Items] | ||||||
Total deferred revenue and other advances | 26,942,000 | 31,154,000 | ||||
Deferred revenue and other advances, amounts earned | 14,547,000 | 21,626,000 | [2] | |||
Amount recorded as an offset of film and other inventory costs | $14,000,000 | |||||
[1] | Deferred revenue consists of those arrangements related to the licensing of content for distribution in the home entertainment, television and new media markets. | |||||
[2] | Of the total amounts earned in "Other," for the three months ended MarchB 31, 2014, $14.0 million was recorded as a reduction to film and other inventory costs. | |||||
[3] | Of the total amounts earned against the "Strategic Alliance/Development Advances," for the three months ended MarchB 31, 2015 and 2014, $4.0 million and $2.4 million, respectively, were capitalized as an offset to property, plant and equipment. Additionally, during the three months ended MarchB 31, 2015 and 2014, of the total amounts earned, $0.5 million and $1.0 million, respectively, were recorded as a reduction to other assets. During the three months ended MarchB 31, 2015 and 2014, $0.9 million and $0.5 million, respectively, were recorded as a reduction to prepaid expenses. During the three months ended MarchB 31, 2015 and 2014, of the total amounts earned, $0.6 million and $1.1 million, respectively, were recorded as a reduction to operating expenses. |
Financing_Arrangements_Details
Financing Arrangements (Details) (USD $) | 3 Months Ended | 0 Months Ended | |||||
Mar. 31, 2015 | Mar. 31, 2014 | Aug. 14, 2013 | Feb. 23, 2015 | Feb. 20, 2015 | Dec. 31, 2014 | Feb. 19, 2015 | |
building | |||||||
acre | |||||||
Debt Instrument [Line Items] | |||||||
Proceeds from lease financing obligation | $185,000,000 | $0 | |||||
Minimum Lease Payments, Lease Financing Obligations, Fiscal Year Maturity [Abstract] | |||||||
2015 | 8,780,000 | ||||||
2016 | 13,335,000 | ||||||
2017 | 13,535,000 | ||||||
2018 | 13,738,000 | ||||||
2019 | 13,944,000 | ||||||
2020 and thereafter | 322,269,000 | ||||||
Total Payments | 385,601,000 | ||||||
Less: interest implicit in obligation | -201,785,000 | ||||||
Total lease financing obligation | 183,816,000 | 0 | |||||
Senior unsecured notes | 300,000,000 | 300,000,000 | |||||
Revolving credit facility, amount outstanding | 80,000,000 | 215,000,000 | |||||
Interest costs incurred | 8,500,000 | 6,100,000 | |||||
Interest costs capitalized | 1,000,000 | 3,200,000 | |||||
Revolving Credit Facility [Member] | |||||||
Minimum Lease Payments, Lease Financing Obligations, Fiscal Year Maturity [Abstract] | |||||||
Revolving credit facility, amount outstanding | 80,000,000 | 215,000,000 | |||||
Expiration date of revolving credit facility | 20-Feb-20 | ||||||
Interest rate | 2.67% | ||||||
Interest expense | 1,340,000 | 375,000 | |||||
Senior Unsecured Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | 300,000,000 | ||||||
Stated interest rate of debt | 6.88% | 6.88% | |||||
Debt sold to investors, percentage of principle amount sold | 100.00% | ||||||
Proceeds from issuance of long-term debt | 294,000,000 | ||||||
Redemption price of principal amount due to change in control, percentage | 101.00% | ||||||
Debt instrument, percent redeemable, certain equity offerings | 35.00% | ||||||
Percentage of redeemable principal amount by Company | 106.88% | ||||||
Minimum Lease Payments, Lease Financing Obligations, Fiscal Year Maturity [Abstract] | |||||||
Senior unsecured notes | 300,000,000 | 300,000,000 | |||||
Maturity date | 15-Aug-20 | ||||||
Interest expense | 4,446,000 | 2,234,000 | |||||
Line of Credit [Member] | Revolving Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | 400,000,000 | ||||||
Lease Financing Obligation [Member] | |||||||
Minimum Lease Payments, Lease Financing Obligations, Fiscal Year Maturity [Abstract] | |||||||
Senior unsecured notes | 183,816,000 | ||||||
Maturity date | 1-Feb-35 | ||||||
Implied interest rate | 6.70% | ||||||
Interest expense | 1,141,000 | ||||||
Glendale, California Property [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Number of buildings sold | 10 | ||||||
Number of acres sold | 14.7 | ||||||
Proceeds from lease financing obligation | 185,000,000 | ||||||
Lease financing obligation, potential maximum payment for appreciation or depreciation of property | 10,000,000 | ||||||
Glendale Lease Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Lease financing obligation, initial annual rental payments | 13,200,000 | ||||||
Lease financing obligation, percentage of increase to annual rental payments | 1.50% | ||||||
Lease financing obligation, lease term | 20 years | ||||||
Lease financing obligation, number of consecutive renewal options available | 4 | ||||||
Lease financing obligation, renewal option term | 5 years | ||||||
Lease financing obligation, number of renewal terms subject to fixed rent increases | 2 | ||||||
Lease financing obligation, number of renewal terms subject to lease agreement terms | 2 | ||||||
Restated Credit Agreement [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | 450,000,000 | ||||||
Line of credit, maximum borrowing capacity, potential increase | $50,000,000 | ||||||
Annual commitment fee on undrawn amounts of revolving credit facility | 0.38% | ||||||
Interest rate, rate spread over bank base rate | 1.50% | ||||||
Interest rate, rate spread over LIBOR | 2.50% | ||||||
Letter of credit, fronting fee | 0.13% |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Percentage the company is obligated to remit to an affiliate of the former significant stockholder | 85.00% | |
Provision (benefit) for income taxes | $2,400 | ($22,467) |
Effective tax rate | -4.50% | 34.10% |
Effective tax rate combined with increase/decrease in income tax (benefit) provision to former stockholder | -4.50% | 35.50% |
Stockholders_Equity_and_Noncon2
Stockholders' Equity and Non-controlling Interests (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Class of Stock [Line Items] | ||
Value of shares authorized to be repurchased | $150,000,000 | |
Stock repurchase program, remaining authorized repurchase amount | 100,000,000 | |
Increase (Decrease) in Equity [Roll Forward] | ||
Total DreamWorks Animation SKG, Inc. stockholdersb equity, beginning of period | 1,156,357,000 | 1,404,795,000 |
Non-controlling interests, beginning of period | 38,041,000 | 1,224,000 |
Total equity, beginning of period | 1,194,398,000 | 1,406,019,000 |
Stock option exercises | 261,000 | |
Stock-based compensation | 6,780,000 | 9,068,000 |
Purchase of treasury shares | -2,013,000 | -1,246,000 |
Foreign currency translation adjustments | -810,000 | 132,000 |
Capital contribution from non-controlling interest holder | 15,000,000 | |
Distributions to non-controlling interest holder | -571,000 | |
Net (loss) attributable to DreamWorks Animation SKG, Inc. | -54,777,000 | -42,936,000 |
Less: Net (loss) income attributable to non-controlling interests | -1,113,000 | 520,000 |
Net (loss) income | -55,890,000 | -42,416,000 |
Total DreamWorks Animation SKG, Inc. stockholdersb equity, end of period | 1,105,537,000 | 1,370,074,000 |
Non-controlling interests, end of period | 51,357,000 | 1,744,000 |
Total equity | $1,156,894,000 | $1,371,818,000 |
StockBased_Compensation_Narrat
Stock-Based Compensation Narrative (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock-based compensation, allocation of recognized period costs, capitalized amount | $2.30 | $3.70 |
Stock-based compensation, nonvested awards, total compensation cost not yet recognized | $72.50 | |
Stock-based compensation, nonvested awards, total compensation cost not yet recognized, period of recognition (in years) | 1 year 10 months 24 days |
Impact_of_Stock_Options_and_Re
Impact of Stock Options and Restricted Stock Awards on Net Income (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Total stock-based compensation | $4,399 | $5,309 | ||
Tax impact | 198 | [1] | -1,885 | [1] |
Reduction in net income, net of tax | $4,597 | $3,424 | ||
[1] | Tax impact is determined at the Company's combined effective tax rate, which includes the statements of operations line item "Increase/decrease in income tax benefit payable to former stockholder" (see Note 11). |
Number_and_Weighted_Average_Gr
Number and Weighted Average Grant Date Fair Value of Equity Awards Granted (Details) (Restricted Stock Units (RSUs) [Member], USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Restricted Stock Units (RSUs) [Member] | ||
Number of shares granted | 777 | 224 |
Weighted average grant date fair value (in dollars per share) | $21.41 | $29.91 |
Reportable_Segments_Details
Reportable Segments (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Segment Reporting Information [Line Items] | ||||
Revenues | $166,530 | $147,241 | ||
Total segment gross profit (loss) | 53,576 | [1] | -13,448 | [1] |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||
Selling and marketing | 1,686 | [2] | 1,971 | [2] |
General and administrative | 89,142 | 47,708 | ||
Product development | 332 | 540 | ||
Other operating income | -2,281 | -1,672 | ||
Non-operating expenses (income) | 11,825 | -372 | ||
Loss from equity method investees | 6,362 | 3,260 | ||
Loss before income taxes | -53,490 | -64,883 | ||
Feature Films [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 128,020 | 110,097 | ||
Total segment gross profit (loss) | 40,977 | [1] | -25,388 | [1] |
Television Series and Specials [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 18,013 | 17,969 | ||
Total segment gross profit (loss) | 3,451 | [1] | 5,759 | [1] |
Consumer Products [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 15,116 | 12,067 | ||
Total segment gross profit (loss) | 6,538 | [1] | 6,004 | [1] |
New Media [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 4,583 | 4,093 | ||
Total segment gross profit (loss) | 2,115 | [1] | -80 | [1] |
All Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 798 | 3,015 | ||
Total segment gross profit (loss) | $495 | [1] | $257 | [1] |
[1] | 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). Refer to Note 1 for further information related to changes made to the Company's statement of operations presentation. | |||
[2] | 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. |
Reportable_Segments_Schedule_o
Reportable Segments Schedule of goodwill by segment (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Segment Reporting Information [Line Items] | ||
Goodwill | $190,668 | $190,668 |
Feature Films [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill | 43,995 | 43,995 |
Television Series and Specials [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill | 6,111 | 6,111 |
Consumer Products [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill | 12,219 | 12,219 |
New Media [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill | $128,343 | $128,343 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (UMG [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
UMG [Member] | ||
Related Party Transaction [Line Items] | ||
Related party transaction, cash advance received | $5 | $5 |
Concentrations_of_Credit_Risk_
Concentrations of Credit Risk (Details) | 3 Months Ended | 12 Months Ended | 3 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | |
Accounts Receivable [Member] | Netflix [Member] | Credit Concentration Risk [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 65.00% | 49.00% | |
Fox [Member] | Revenues [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 26.00% | 14.00% | |
Paramount [Member] | Revenues [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | 28.00% | |
Netflix [Member] | Revenues [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 44.00% | 41.00% |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (Pending Litigation [Member], Unfavorable Regulatory Action [Member]) | 1 Months Ended | 2 Months Ended |
Aug. 31, 2014 | Oct. 31, 2014 | |
lawsuit | lawsuit | |
Shareholder Class Action and Derivative Lawsuits [Member] | ||
Loss Contingencies [Line Items] | ||
Loss Contingency, New Claims Filed, Number | 2 | |
Antitrust Class Action [Member] | ||
Loss Contingencies [Line Items] | ||
Loss Contingency, New Claims Filed, Number | 3 |
Computation_of_Basic_and_Dilut
Computation of Basic and Diluted Net Income Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share, Basic and Diluted [Line Items] | ||
Net (loss) attributable to DreamWorks Animation SKG, Inc. | ($54,777) | ($42,936) |
Weighted average common shares outstanding (in shares) | 85,734 | 84,588 |
Less: Unvested restricted stock (in shares) | -119 | -104 |
Denominator for basic and diluted calculation (in shares) | 85,615 | 84,484 |
Basic and diluted net loss per share (in dollars per share) | ($0.64) | ($0.51) |
Antidilutive_Securities_Detail
Antidilutive Securities (Details) (Stock Compensation Plan [Member]) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 1,135 | 368 |
Options to Purchase Shares of Common Stock and Restricted Stock Awards [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 1,135 | 344 |
Stock Appreciation Rights (SARs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 0 | 24 |
Contingently_Issuable_Equity_A
Contingently Issuable Equity Awards (Details) (Options to Purchase Shares of Common Stock and Restricted Stock Awards [Member], Contingently Issuable Shares [Member]) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Options to Purchase Shares of Common Stock and Restricted Stock Awards [Member] | Contingently Issuable Shares [Member] | ||
Contingently Issuable Equity Awards Excluded from Computation of Earnings Per Share [Line Items] | ||
Contingently issuable equity awards | 1,372 | 941 |
Restructuring_and_Related_Char2
Restructuring and Related Charges Narrative (Details) (2015 Restructuring Plan [Member]) | 0 Months Ended | 3 Months Ended |
Jan. 22, 2015 | Mar. 31, 2015 | |
employee | employee | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and Related Cost, Expected Number of Positions Eliminated | 500 | |
Employee Termination Benefits [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of positions eliminated | 160 |
Restructuring_and_Related_Char3
Restructuring and Related Charges Restructuring Costs (Details) (2015 Restructuring Plan [Member], USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
2015 Restructuring Plan [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Employee termination costs | $4,587 |
Relocation and other employee-related costs | 1,496 |
Accelerated depreciation and amortization charges | 9,279 |
Total restructuring and related charges | $15,362 |
Restructuring_and_Related_Char4
Restructuring and Related Charges Restructuring Reserve (Details) (2015 Restructuring Plan [Member], USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Restructuring Reserve [Roll Forward] | |
Employee termination costs | $4,587 |
Employee Termination Benefits [Member] | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning of period | 36,808 |
Employee termination costs | 10,286 |
Changes in estimate | -5,036 |
Payments and other | -6,568 |
Restructuring reserve, end of period | $35,490 |