DreamWorks Delivers Outstanding Fourth Quarter And Year-End 2015 Results Highlighted By Strong Growth Across Core Business Segments

 

DREAMWORKS ANIMATION SKG, INC.

SELLING AND MARKETING EXPENSES

(Unaudited)



Three Months Ended


Year Ended


December 31,


December 31,


2015


2014


2015


2014


(in thousands)

Selling and marketing

$

12,222



$

32,918



$

43,640



$

61,252


Less: allocation to segments

11,349



28,315



37,625



49,622


Unallocated selling and marketing

$

873



$

4,603



$

6,015



$

11,630


 

Non-GAAP Measures

In addition to the financial results reported in accordance with U.S. GAAP, we have provided the following non-GAAP measures: Adjusted Income/Loss Measures (which are further described and defined below) and Adjusted Operating Cash Flow (collectively, "non-GAAP measures"). Adjusted Income/Loss Measures and Adjusted Operating Cash Flow are not prepared in accordance with U.S. GAAP. Adjusted Income/Loss Measures and Adjusted Operating Cash Flow provide a supplemental presentation of our operating performance and generally reflect adjustments for unusual or non-operational activities. We may not calculate Adjusted Income/Loss Measures or Adjusted Operating Cash Flow in a manner consistent with the methodologies used by other companies. Adjusted Income/Loss Measures and Adjusted Operating Cash Flow (a) do not represent our operating income or cash flows from operating activities as defined by U.S. GAAP; (b) are not necessarily indicative of cash available to fund our cash flow needs; and (c) should not be considered alternatives to net income, operating income, cash provided by operating activities or our other financial information as determined under U.S. GAAP. Our presentation of Adjusted Income/Loss and Adjusted Operating Cash Flow measures should not be construed as an implication that our future results will be unaffected by unusual items. We believe the use of Adjusted Income/Loss and Adjusted Operating Cash Flow measures on a consolidated basis assists investors in comparing our ongoing operating performance between periods.

On January 22, 2015, the Company announced its restructuring initiatives (the "2015 Restructuring Plan") that are intended to refocus the Company's core feature animation business. In connection with the 2015 Restructuring Plan, the Company made changes in its senior leadership team and also made changes based on its reevaluation of the Company's feature film slate. The Company evaluates operating performance to exclude the effects of the charges related to the execution of the 2015 Restructuring Plan as it believes the restructuring-related charges do not correlate with the ongoing operating results of the Company's business and were charges that resulted from significant decisions that were made in order to refocus the Company. As a result, the Company believes that presenting the Company's Adjusted Operating Income/Loss, Adjusted Net Income/Loss Attributable to DreamWorks Animation SKG, Inc. and Adjusted Diluted Income/Loss per share (collectively, "Adjusted Income/Loss Measures") will aid investors in evaluating the performance of the Company. The Company defines Adjusted Income/Loss Measures as net earnings (loss) adjusted to exclude the items within its Consolidated Statements of Operations that relate to its 2015 Restructuring Plan (as discussed further in the footnotes to the tables below).

The Company uses these Adjusted Income/Loss Measures to, among other things, evaluate the Company's operating performance. These measures are among the primary measures used by management for planning and forecasting of future periods, and they are important indicators of the Company's operational strength and business performance because they provide a link between profitability and operating cash flow. The Company believes these measures are relevant and useful for investors because they allow investors to view performance in a manner similar to the method used by the Company's management and help improve investors' understanding of the Company's operating performance. In addition, the Company believes that these are among the primary measures used externally by the Company's investors, analysts and industry peers for purposes of valuation and for the comparison of the Company's operating performance to other companies in its industry. In addition to the Adjusted Income/Loss Measures, for the same reasons described above, the Company also uses Adjusted Operating Cash Flow, which is defined as cash flow provided by operating activities (as presented in the Company's Consolidated Statements of Cash Flows) adjusted to exclude cash payments made in connection with its 2015 Restructuring Plan.

The following is a reconciliation of each of the Company's GAAP measures (operating income/loss, net income/loss attributable to DreamWorks Animation SKG, Inc. and diluted earnings (or loss) per share) to the non-GAAP adjusted amounts. In addition, following this table are additional reconciliations for adjusted general and administrative, which is a component of the Adjusted Income/Loss Measures, and for adjusted operating cash flow.

 

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