Corporate and Other
Corporate and Other expenses increased $13.2 million to $79.9 million from the prior year period. As defined, these expenses include corporate overhead and certain expenses related to sales, marketing, and talent development costs, which have not been allocated to specific segments. The increase in Corporate and Other expense was driven by a $5.0 million increase in professional fees, a $4.0 million increase in salary and benefit costs, and increased marketing expenses to support key content and brand initiatives, including the expansion of the Company's international infrastructure, talent development and brand marketing.
Operating Income Before Depreciation and Amortization (OIBDA)
OIBDA was a negative $21.8 million in the current year period as compared to positive $26.2 million in the prior year period. The decline in OIBDA was primarily due to current year increases in staff-related, programming, customer service, and marketing expense due, in part, to the launch of WWE Network and a prior year benefit related to the transition to Take-Two from THQ. These factors were partially offset by improved film performance and the recognition of a minimum guarantee from our home entertainment partner. Based on the impact increased investment and resulting changes in business mix, the Company's OIBDA margin was (8)% in the first six months of 2014 as compared to 9% in the prior year period. Excluding the impact of film impairments and video game transition, Adjusted OIBDA was a negative $21.8 million in the period as compared to positive $27.5 million in the prior year period, and the Adjusted OIBDA margin was (8)% in the current period as compared to 10% in the prior year period. (See Schedules of Adjustments in Supplemental Information).
Depreciation and amortization
Depreciation and amortization expense totaled $12.9 million for the current year period as compared to $11.3 million in the prior year period. The increase in depreciation and amortization expense derives from investment in assets to support the Company's content-related initiatives. The current year expense includes an adjustment of $1.6 million to adjust the carrying value of the old Corporate Aircraft to our estimate of its fair value, in conjunction with the anticipated sale of this asset.
Investment Income, Interest and Other Expense, Net
Investment income, interest and other expense, net yielded an expense of $0.6 million compared to an expense of $1.7 million in the prior year period, reflecting lower realized foreign exchange losses as compared to the prior year period.
Effective tax rate
In the current year period, the effective tax rate was 36% as compared to 38% in the prior year period. The current year period effective tax rate approximates the Company's expected effective tax rate. The current year includes a tax benefit associated with the Company's operating loss. The Company believes it will be able to utilize these benefits in future periods.
Cash Flows & Liquidity
Cash flows used in operating activities were $4.7 million in the current year first half of 2014. The use of cash was driven by the Company's operating loss, including expenditures to launch WWE Network and associated content development, as well as spending to produce feature films.
Purchases of property and equipment and other assets declined by $6.9 million from the prior year period.
As of June 30, 2014, the Company held $79.0 million in cash and short-term investments and currently estimates debt capacity under the Company's revolving line of credit to be approximately $120 million
Read more at http://www.wrestlinginc.com/wi/news/2014/0731/579544/wwe-reports-2014-second-quarter-results/#UddezfsQpEy383p2.99
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