Corporate and Other
Corporate and Other expenses increased $5.3 million to $37.7 million from the prior year quarter. 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 during the quarter was driven by a $2.5 million increase in professional fees and increased staff-related expenses to support key business initiatives.
Operating Income Before Depreciation and Amortization (OIBDA)
OIBDA results declined to a loss of $7.2 million from income of $11.3 million in the prior year period. The $18.5 million decline was driven an $11.0 million decline in licensing profits stemming from the transition to a new video game partner, including contractual changes in the Company's video game licensing agreement and a $3.4 million benefit in the prior year quarter associated with the termination of our former video game licensing agreement with THQ. Additionally, the OIBDA decline reflected $8.6 million associated with WWE Network launch costs (customer service, programming and marketing), as well as a $5.3 million increase in Corporate & Other expenses to support key business objectives. The resulting decline in operating profits for the quarter was partially offset by improved performance from our WWE Studios and Home Entertainment businesses as described above. Based on the changes in the Company’s overall results and business mix, the Company's OIBDA margin was (6)% in the current year quarter as compared to 9% in the prior year quarter.
On an adjusted basis, excluding the prior year quarter impact of film impairments and the video game transition, the OIBDA loss of $7.2 million compared to income of $12.6 million in the prior year quarter, and the current year quarter’s (6)% OIBDA margin compared to 10% in the prior year quarter. (See Schedules of Adjustments in Supplemental Information).
Depreciation and Amortization
Depreciation and amortization expense totaled $5.0 million for the current year quarter as compared to $5.2 million in the prior year quarter. Depreciation and amortization expense in both the current and prior year periods derived from investment in assets to support the Company's content initiatives, including efforts to launch WWE Network.
Investment Income, Interest and Other Expense, Net
Investment income, interest and other expense, net yielded $0.3 million compared to $1.3 million in the prior year quarter reflecting lower expenses related to state excise taxes and a reduction in losses incurred with the disposal of property and equipment as compared to the prior year quarter.
Effective tax rate
In the current year quarter, the effective tax rate was 36% as compared to 37% in the prior year quarter.
Cash Flows & Liquidity
Cash flows used in operating activities were $9.4 million in the current year quarter. 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 $0.7 million from the prior year period.
As of March 31, 2014, the Company held $87.3 million in cash and short-term investments and currently estimates debt capacity under the Company’s revolving line of credit to be approximately $90 million.
Additional Information
Additional business metrics are made available to investors on a monthly basis on the corporate website – corporate.wwe.com. Note: As previously announced, WWE will host a conference call on May 1, 2014 at 11:00 a.m. ET to discuss the Company's earnings results for the first quarter of 2014. All interested parties are welcome to listen to a live web cast that will be hosted through the Company’s web site at ir.corporate.wwe.com. Participants can access the conference call by dialing 1-800-697-5978 (US Toll Free) or 1-630-691-2750 using the passcode 7849998. Please reserve a line 10-15 minutes prior to the start time of the conference call.
The earnings release and presentation to be referenced during the call will be available at corporate.wwe.com . A replay of the call will be available approximately two hours after the conference call concludes and can be accessed on the Company's web site.
