Unallocated SG&A expense was $90.1 million for the current year period as compared to $84.7 million in the prior year period. The rise in expense was driven by increases in salary and benefit costs of $3.5 million, consulting and professional fees of $3.0 million, marketing expenses of $1.1 million and talent development costs. The increases in these expenses were primarily to support the Company's content-related initiatives, including the potential launch of a WWE network. These items were partially offset by a $1.7 million year-over-year reduction in accrued management incentive compensation based on current expectations of the Company's 2013 financial performance, which were revised during the third quarter, and a $1.6 million reduction in bad debt expense.
Operating Income Before Depreciation and Amortization (OIBDA)
OIBDA was $35.9 million in the current year period as compared to $54.7 million in the prior year period. The decline in OIBDA was primarily due to a $12.4 million reduction in profits from the Pay-Per-View business reflecting increased production costs (and the timing of one less pay-per-view event, Over-the-Limit, which is scheduled for the fourth quarter 2013 vs. the second quarter 2012), a $10.9 million increase in film impairment charges primarily associated with the Company's 2010-2012 film slate and the current year release of Dead Man Down, a $9.5 million increase in compensation and benefit costs, and lower results from Home Entertainment. These items more than offset the growth in content licensing on broadcast and digital platforms and the strong performance of the Live Event business. Based on the impact of film impairments, increased investment and resulting changes in business mix, the Company's OIBDA margin was 9% in the first nine months of 2013 as compared to 15% in the prior year period. Excluding the impact of film impairments and video game transition, Adjusted OIBDA was $44.2 million in the period as compared to $55.5 million in the prior year period, and the Adjusted OIBDA margin was 11% in the current period as compared to 15% in the prior year period. (See Schedules of Adjustments in Supplemental Information).
Depreciation and amortization
Depreciation and amortization expense totaled $17.8 million for the current year period as compared to $14.0 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.
Investment Income, Interest and Other Expense, Net
Investment income, interest and other expense, net yielded an expense of $1.6 million compared to $0.4 million in the prior year period, reflecting lower interest income, incremental expenses associated with realized foreign exchange losses and losses associated with the disposal of property and equipment in the current year period as compared to the prior year period.
Effective tax rate
In the current year period, the effective tax rate was 36% as compared to 24% in the prior year period. The 24% rate in the prior year period was lower primarily due to the recognition of an approximate $4 million benefit related to previously unrecognized tax benefits.
Cash Flows & Liquidity
Net cash generated by operating activities was $12.2 million for the nine months ended September 30, 2013 as compared to $41.0 million in the prior year period. This $28.8 million decrease was primarily driven by changes in working capital including an $11.0 million increase in the annual payout of management incentive compensation related to the Company's previous year performance, increases in spending on television production assets, and timing differences in the collection of receivables that negatively impacted current year cash flow as compared to the prior year.
The Company completed the purchase of a corporate aircraft, and in conjunction with this transaction and related aircraft improvements, utilized debt financing of $29.7 million. Excluding the purchase of the corporate aircraft, purchases of property and equipment and other assets declined by $8.4 million from the prior year period, primarily due to lower investment in assets to support efforts to create and distribute new content, including through a potential network.
As of September 30, 2013, the Company held $114.8 million in cash and short-term investments and estimates debt capacity under the Company's revolving line of credit to be approximately $120 million.
Short URL: http://winc.cc/p9Gct1
Shane McMahon On Vince's Reaction To Steve Austin Quitting, Vince Being Furious Over Kurt Angle Bout
Shinsuke Nakamura To Make MSG Debut At RAW Event, Stephanie McMahon On Possibly Wrestling Again
Backstage News On Why WWE Is Staying Out Of Matt Hardy - Impact Wrestling Situation
Cedric Alexander On His Plans (Video), Alicia Fox And Noam Dar Celebrate Attack (Video), Fatal 5 Way
Baron Corbin On Attacking Sami Zayn (Video), Mojo Rawley Says He's Still Waiting, Naomi Video
WWE 205 Live Star Returns, The New Day Appears On Talking Smack (Video), SmackDown Commercial News
Matt Hardy Responds To Impact Wrestling President Leaking His Contract Details
Rusev Teases WWE SmackDown Appearance, New Video For Lana's Debut, The New Day's Return
WWE Monday Night RAW Results - Paul Heyman Returns, Elias Samson Debuts, Tag Team Main Event, More
Why New WWE Star Had To Change Finisher, CM Punk Gets Heated With Cast Member, Triple H
Goldberg On If He Would Return To WWE For Another Run, Which Current WWE Stars He Would Like To Face
Jinder Mahal On When He Found Out He Was Winning WWE Title, Vince McMahon's Reaction, Brock Lesnar
WWE SmackDown Results - Shinsuke Nakamura & AJ Styles Team, Jinder Mahal Celebrates, The Usos, More
Backstage News On Low Attendance At WWE Backlash
Jinder Mahal Talks WWE Release, Who He Rides With, Getting Offer From Impact Before Returning, 3MB
Possible WWE SmackDown Feud, The Singh Brothers Injury Note, WWE Backlash Slow Motion Video