WWE Q4 AND FULL YEAR 2017 RESULTS FEBRUARY 8, 2018/media/Files/W/WWE/... · change in cash from...
Transcript of WWE Q4 AND FULL YEAR 2017 RESULTS FEBRUARY 8, 2018/media/Files/W/WWE/... · change in cash from...
W W E Q 4 A N D F U L L Y E A R 2 0 1 7 R E S U LT S – F E B R U A R Y 8 , 2 0 1 8
This presentation contains forward-looking statements pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995, which are subject to
various risks and uncertainties. These risks and uncertainties include, without limitation, risks relating to: WWE Network (including the risk that we are unable to
attract, retain and renew subscribers); major distribution agreements; our need to continue to develop creative and entertaining programs and events; the
possibility of a decline in the popularity of our brand of sports entertainment; the continued importance of key performers and the services of Vincent K. McMahon;
possible adverse changes in the regulatory atmosphere and related private sector initiatives; the highly competitive, rapidly changing and increasingly fragmented
nature of the markets in which we operate and greater financial resources or marketplace presence of many of our competitors; uncertainties associated with
international markets; our difficulty or inability to promote and conduct our live events and/or other businesses if we do not comply with applicable regulations; our
dependence on our intellectual property rights, our need to protect those rights, and the risks of our infringement of others’ intellectual property rights; the
complexity of our rights agreements across distribution mechanisms and geographical areas; potential substantial liability in the event of accidents or injuries
occurring during our physically demanding events including, without limitation, claims relating to CTE; large public events as well as travel to and from such events;
our feature film business; our expansion into new or complementary businesses and/or strategic investments; our computer systems and online operations; privacy
norms and regulations; a possible decline in general economic conditions and disruption in financial markets; our accounts receivable; our indebtedness; litigation;
our potential failure to meet market expectations for our financial performance, which could adversely affect our stock; Vincent K. McMahon exercises control over
our affairs, and his interests may conflict with the holders of our Class A common stock; a substantial number of shares are eligible for sale by the McMahons and
the sale, or the perception of possible sales, of those shares could lower our stock price; and the relatively small public “float” of our Class A common stock. In
addition, our dividend is dependent on a number of factors, including, among other things, our liquidity and historical and projected cash flow, strategic plan
(including alternative uses of capital), our financial results and condition, contractual and legal restrictions on the payment of dividends (including under our
revolving credit facility), general economic and competitive conditions and such other factors as our Board of Directors may consider relevant. Forward-looking
statements made by the Company speak only as of the date made and are subject to change without any obligation on the part of the Company to update or revise
them. Undue reliance should not be placed on these statements. For more information about risks and uncertainties associated with the Company’s business,
please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s SEC
filings, including, but not limited to, our annual report on Form 10-K and quarterly reports on Form 10-Q.
This presentation contains non-GAAP financial information, including OIBDA. We define OIBDA as operating income before depreciation and amortization,
excluding feature film and television production amortization and related impairments. OIBDA is a non-GAAP financial measure and may be different than similarly-
titled non-GAAP financial measures used by other companies. A limitation of OIBDA is that it excludes depreciation and amortization, which represents the periodic
charge for certain fixed assets and intangible assets used in generating revenues for the Company's business. OIBDA should not be regarded as an alternative to
operating income or net income as an indicator of operating performance, or to the statement of cash flows as a measure of liquidity, nor should it be considered in
isolation or as a substitute for financial measures prepared in accordance with GAAP. We believe that operating income is the most directly comparable GAAP
financial measure to OIBDA. Reconciliations of OIBDA to operating income can be found in the Company’s earnings release dated February 8, 2018.
Forward-Looking Statements
2
2017: Another Year of Record Achievements
▪ For the year, achieved record revenue of $801M and record Adjusted OIBDA of $112M, which wasat the high-end of our guidance
▪ For the year, WWE Network’s average paid subscribers increased 8% to 1.53M
▪ On social and digital platforms, WWE content reached a record 20B video views (up 32% from2016); social media engagements increased 4% to 1.2B
▪ WWE’s YouTube channel remained the #1 most viewed Sports Channel and the 2nd most viewedchannel on YouTube with 20B lifetime views
▪ Formed partnerships to create content across multiple platforms including:
- Mixed Match Challenge, a live in-ring series that launched on Facebook Watch on Jan 16;Facilitates mobile consumption and social interaction
- Miz & Mrs., a reality program that will air on USA Network
- Virtual reality experiences, partnered with NextVR to produce content from select 2018 specialevents for the NextVR app
▪ This January, we celebrated the 25th anniversary of Raw, which ranked #1 on cable and #3 on all ofTV; Best ratings in 3 years for the Jan 22 event
▪ Recently, held first women’s Royal Rumble, which was highlighted by appearance of Ronda Rousey
▪ Pleased with performance. Looking forward to 2018 and expect to achieve record revenue, recordAdjusted OIBDA and record subscribers
3
▪ 2018 financial results reflected the successful execution of WWE’s content strategy: to increase themonetization of video content by creating compelling original programming, leveraging a large socialand digital footprint to increase engagement, and utilizing data analytics to optimize performance
▪ Operating income increased 36% with a 10% increase in revenue to over $800M. WWE achieved thehighest annual revenue and Adjusted OIBDA in the Company’s history and exceeded the financialobjectives that were established at the start of 2017
WWE Financial Highlights 2017($ in millions)
4
$801.0$729.2
2017
+10%
2016 2017
$75.6
2016
+36%
$55.7 $80.1
+40%
2017
$111.9
2016
Revenue Operating Income Adjusted OIBDA1
1 A definition of Adjusted OIBDA and a reconciliation to Operating Income can be found in the Company’s Q4 and Full Year 2017 earnings materials and in the appendix to this presentation
Q4 2017: Financial Highlights ($ in millions)
125.0 135.2
38.635.2
30.027.8
1.12.49.6 1.6194.9
+9%211.6
MediaLive EventsConsumer ProductsWWE StudiosCorporate & Other
Revenue Adjusted OIBDA1
5
(49.0) (53.3)
63.548.1
11.1
+94%27.0
5.4
0.313.9
6.29.7
(1.1)
(45.5) (49.9)
66.451.2
11.1
9.76.2
(1.1)
34.8
20.5
+70%
1.8
5.4
Operating Income
Q4 2016 Q4 2016Q4 2016Q4 2017 Q4 2017 Q4 2017
1 A definition of Adjusted OIBDA and a reconciliation to Operating Income can be found in the Company’s Q4 and Full Year 2017 earnings materials and in the appendix to this presentation
Q4 2017: Media Division ($ in millions)
68.6 75.3
43.7 46.2
12.8 4.2
125.0
8.5
+8%135.2
0.9
TelevisionNetworkDigital MediaHome Entertainment
Revenue Adjusted OIBDA1
6
13.7
39.330.6
19.1
5.8
+32% 63.5
(0.7)
48.1
1.91.9
15.5
40.331.9
21.0
5.9
+30% 66.4
(0.8)
51.2
1.9 1.9
Operating Income
Q4 2016 Q4 2016Q4 2016Q4 2017 Q4 2017Q4 2017
1 A definition of Adjusted OIBDA and a reconciliation to Operating Income can be found in the Company’s Q4 and Full Year 2017 earnings materials and in the appendix to this presentation
Q4 2017: Live Events($ in millions)
Revenue Adjusted OIBDA1
7
35.2
38.6-9%
Q4 2016 Q4 2017
5.4
6.2
Q4 2016
-13%
Q4 2017
5.4
6.2 -13%
Q4 2016 Q4 2017
Operating Income
1 A definition of Adjusted OIBDA and a reconciliation to Operating Income can be found in the Company’s Q4 and Full Year 2017 earnings materials and in the appendix to this presentation
Q4 2017: Consumer Products($ in millions)
Revenue Adjusted OIBDA1
8
10.1 11.3
12.814.3
4.9
4.4
+8%
Q4 2017
30.0
Q4 2016
27.8
4.6
6.5
3.0
2.82.1
1.8
+14%
Q4 2017
11.1
Q4 2016
9.7
4.6
6.5
3.0
2.82.1
1.8
+14%
Q4 2017
11.1
Q4 2016
9.7
Operating Income
WWEShopVenue Merchandise Licensing
1 A definition of Adjusted OIBDA and a reconciliation to Operating Income can be found in the Company’s Q4 and Full Year 2017 earnings materials and in the appendix to this presentation
Capital Structure ($ in millions)
▪ As of Dec. 31, 2017, WWE held ~$297M in cash and short-term investments and had ~$100M indebt capacity under the Company’s revolving credit facility
▪ Free Cash Flow year-to-date increased ~$40M over the prior year period to ~$72M reflecting the change in cash from operating activities and $4.9 million paid towards the purchase of a building and underlying real property in the prior year period
9
Cash & ST Investments Free Cash Flow
$297.4
$267.1
$71.9
$32.2
+$39.7
+$30.3
2016 20162017 2017
WWE Operational Highlights 2017
▪ Made meaningful progress creating new content thatreflects the evolving preferences of fans, particularly asit relates to mobile consumption and social interaction
− Developed a new in-ring series, Mixed MatchChallenge, that premiered live on Facebook Watch
− Announced a new docuseries, Miz & Mrs., that willair on USA network
− Marked milestone in women’s evolution with firstRoyal Rumble match featuring female superstarsand surprise appearance of Ronda Rousey
▪ Continued to deliver strong viewership: Raw andSmackdown remained the #1 and #2 programs onUSA; WWE Network continued to be a leader in direct-to-consumer video; Digital consumption increased 32%to 20B video views
▪ Global sponsorship revenue across platformsincreased 30% in 2017
▪ Innovation across WWE: strengthened talent base,launched new mobile games, delivered #1 actionfigure, applied data analytics to enhance marketing…
10
Planned financial reporting changesEffective starting with Q1 2018 results
▪ Segment Reporting (Including Allocation of Business Support Costs)
▪ Adjusted OIBDA Definition
▪ Revenue Recognition
11
Revised Business Segment Reporting Effective starting with Q1 2018 results
12
Prior 10 Segments
Network
Television
Home Entertainment
Digital Media
WWE Studios
Live Events
Licensing
Venue Merchandise
WWE Shop
Corporate & Other
1
▪ WWE has executed a successful business transformation,with an increasing share of revenue coming from themonetization of video content
▪ Given this ongoing transformation, management hascontinued to evolve the way it analyzes results and allocatesresources
▪ To reflect its revised perspective, the Company isimplementing changes in the structure of its reportedsegments, reducing the number of reported segments from10 to 3 (WWE Studios to be included in Media)
▪ The Company plans to allocate certain “Business support”costs, such as talent development/training, marketing,business strategy and data analytics, to the revisedsegments
▪ Plan to provide greater visibility into WWE’s revenuestreams, such as entertainment rights fees, advertising andsponsorship revenue
▪ The Company believes the revised presentation of results willbe more informative for users of the financial statements andthat the revised structure and allocation of costs will be moreconsistent with that of its media peers
2
3
4
5
6
7
8
10
Revised Segments
Media
Live Events
Consumer
Products
Corporate
1
2
3
9
* Note: We also plan to evaluate and revise the
disclosure of key operating metrics
The revised business segments expected to reflect WWE’s operations as described below
13
Prior 10 Segments
Network
Television
Home Entertainment
Digital Media
WWE Studios
Live Events
Licensing
Venue Merchandise
WWE Shop
Corporate & Other
1
2
3
4
5
6
7
8
910
Revised Segments Key Drivers of Revenue and Performance
Media Production and monetization of content across platforms, including:
− Subscription and rights fees, advertising and sponsorship
− Long-form and short-form programs
− Distribution across WWE Network, pay television, digital/social media
and filmed entertainment outlets
Live Events Ticket sales of the Company's global live events, including primary and
secondary distribution
Consumer
Products
Licensing royalties and direct sales of branded merchandise, including:
− Video and mobile games, toys, apparel and other products
− Sold at retail, online and at WWE venues
Corporate Expect to reflect traditional "G&A" expenses such as finance, human
resources, information technology, facilities and legal
Expect to be treated as a reconciling item, not a separate segment
(See following page)
1
2
3
9
WWE plans to allocate certain business support costs (previously in “Corporate & Other”) to revised segments
14
Revised: Allocated or Kept as Reconciling ItemPrior Segment: Corporate & Other
Allocated to Revised Business Segments
(Media, Live Events, Consumer Products, Other)
Based primarily on segment share of total revenue
Business Support (Examples)
Talent Development
Performance Center
Sales & marketing
Business Strategy
Data Analytics
"Traditional” G&A
• Plan to allocate certain business support costs to the revised segments. These costs are more directly related to
producing and distributing WWE’s content and products, and therefore, more directly tied to generating revenue
• The remainder of the Company’s prior Corporate & Other expenses, such as costs associated with finance, human
resources, information technology, facilities and legal functions are expected to be reported as “Corporate”
expenses, which in aggregate are treated as a reconciling item rather than as a reported segment
Prior Segments: 2017 Revenue ($M)
❶ Network $198
- Subscriptions 184
- Pay-per-view 14
❷ Television 270
❸ Home Entertainment 9
❹ Digital Media 34
❺ WWE Studios 19
❻ Live Events 152
- North America 115
- International 34
- Travel Packages 4
❼ Licensing 52
❽ Venue Merchandise 24
❾ WWE Shop 38
❿ Corporate & Other 6
$801
Expect to provide enhanced visibility of revenue, such as rights, advertising and sponsorship
15
Revised Segments: 2017 Revenue ($M)
❶ Media $536
- Network Subscriptions 176
- Core entertainment rights fees 244
- Other content rights fees (1) 49
- Advertising and sponsorship 52
- Pay-per-view 14
❷ Live Events $152
- North America ticket sales 113
- International ticket sales 32
- Advertising and sponsorship 2
- Travel packages 4
❸ Consumer Products $114
- Consumer product licensing 52
- eCommerce 38
- Venue merchandise 24
$801
1 Includes Studios revenue
New primary measure of performance: Adjusted OIBDA … modified to exclude stock compensation
16
The Company plans to change its primary measure ofperformance from OIBDA to Adjusted OIBDA, and tomodify its definition of Adjusted OIBDA to excludestock-based compensation expense (a non-cashexpense that may vary from period to period withlimited correlation to operating performance)
The Company will continue to exclude certainimpairment charges and other non-recurring materialitems from its definition of Adjusted OIBDA as theseitems also impact the comparability of results betweenperiods
The Company believes Adjusted OIBDA is relevantbecause it provides a meaningful representation ofoperating cash flows and is a primary measure used bymedia investors, analysts and peers for purposes ofvaluation
The Company’s previously stated 2018 AdjustedOIBDA target of $115M equates to a target ofapproximately $140M based on the revised definition
Adjusted OIBDA (Revised definition)
Adjusted OIBDA is defined as operating income excluding
depreciation and amortization, stock-based compensation
expense, certain impairment charges and other non-recurring
materials items that otherwise would impact the comparability of
results between periods. Adjusted OIBDA includes amortization
expenses directly related to the Company’s revenue generating
activities including the amortization of feature film, television
production and WWE Network programming assets
Note: Adjusted OIBDA is a non-GAAP financial measure and may be different
than similarly-titled non-GAAP financial measures used by other companies.
WWE views operating income as the most directly comparable GAAP
measure. Adjusted OIBDA should not be considered in isolation of, or as a
substitute for operating income or other GAAP measures, such as net income
or operating cash flow, as an indicator of operating performance or liquidity
16
Reconciliation to Adjusted OIBDA (revised; $M)
2017 2018 Target
Operating Income (1) $75.6 -
Depreciation & amortization (1) 26.0 -
OIBDA (1) 101.6 -
Adjustments (2) 10.3 -
Adjusted OIBDA (Prior) 111.9 115.0
Stock Compensation 24.1 ~25.0
Adjusted OIBDA (Revised) $136.1 ~$140.0
1 At this time, WWE is unable to reconcile to GAAP measures for 2018, as the Company is unable to determine all of the adjustments that would be required2 2017 adjustments include $4.7 million in film impairment charges and non-recurring expenses of $5.6 million primarily related to certain legal matters and other contractual obligations
Revenue recognition: adoption of new FASB standard (Effective 1/1/18)
17
Existing Licensing
Accounting
• Royalties from the sale of licensed products recorded upon receipt of statements from individual licensees
• Unearned minimum guarantees are recorded as revenue after the end of the licensing contract
▪ In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customer (Topic 606)"
▪ Adoption of guidance requires WWE to record revenue
based on current period estimates rather than wait forstatements that show actual results
▪ The revised approach expected to have the mostsignificant impact on WWE’s licensing and filmedentertainment businesses, where it shifts the timing ofrevenue
▪ The Company anticipates changes in the quarterlytiming of revenue, but does not expect a material impact
on full-year results
▪ Specifically, the Company estimates an $11M to $13M
decline in licensing revenue from the first quarter 2017to the first quarter 2018
▪ WWE adopted the new standard January 1, 2018
New Licensing
Accounting
• Product royalties estimated during the period of sale(lagged reporting no longer acceptable)
• Fixed MG payments will not be deferred until the end of the contract.
Existing WWE Studios
Accounting
• In arrangements with distribution partners, revenue is recorded on a net basis after partners recoup distribution fees and expenses
• Participation statements are reported on a lag and not during the period of film sale/ exhibition
New WWE Studios
Accounting
• Feature film distribution revenue recorded in the period of film sales/ exhibition (based on estimates)
• For co-distributed films, where WWE receives a revenue share, revenue recorded in the period of film exhibition (not on a lag)
Note: As part of its implementation, the cumulativeeffect of initially applying the guidance - primarily
estimated Q4 2017 licensing royalties - will be
reflected as an adjustment to beginning retainedearnings
Adoption of the FASB guideline accelerates the timing
of licensing revenue as demonstrated below …
Basis of Revenue Recognition
Q1 2018 Q2 2018 Q3 2018 Q4 2018
2017 Accounting
Methodology
(If continued)
Statement of
Q4 2017
sales/ royalties
Statement of
Q1 2018
sales/ royalties
Statement of
Q2 2018
sales/ royalties
Statement of
Q3 2018
sales/ royalties
2018 Accounting
Methodology
(New Standard)
Estimate of
Q1 2018
sales/ royalties
Estimate of
Q2 2018
sales/ royalties
Estimate of
Q3 2018
sales/ royalties
Estimate of
Q4 2018
sales/ royalties
Statement of
Q4 2017
sales/ royalties
Q4 2017 product sales/ royalties which would be previously have been recorded in Q1 2018,
is recorded in the beginning balance of Q1 2018 retained earnings (and will not impact the
income statement)
Note:
18
18
Q1 2018 Business Outlook
19
▪ Estimate first quarter 2018 Adjusted OIBDA1 of$23M to $27M, excluding stock-basedcompensation expense
▪ As compared to the first quarter 2017, thisrange represents higher profits from theincreased monetization of content, which arepartially offset by the timing of lower licensingrevenue associated with the new FASBstandard for revenue recognition
▪ As shown (at right), on a pro-forma basis,reflecting 2017 revenue on a comparable basisto 2018, the range of first quarter 2018 AdjustedOIBDA represents growth of approximately $8Mto $12M
▪ WWE also projects Q1 2018 average paidsubscribers to WWE Network of approximately1.53 million
1 At this time, WWE is unable to reconcile to GAAP measures for 2018, as the Company is unable to determine all of the adjustments that would be required2 For Q1 2017, Adjustments include $2.1 million in film impairment charges and $5.6 million primarily related to certain legal matters and other contractual obligations3 Impact to Q1 2017 Adjusted OIBDA represents an approximate estimate of the effect due to the timing shift in our licensing business
Pro Forma Impact of New FASB standard on
Adjusted OIBDA (revised, $M)
2018 Q1 2017 Q1
Operating Income(1) - $4.0
Depreciation & amortization(1) - 6.9
OIBDA(1) - 10.9
Adjustments (2) - 7.7
Adjusted OIBDA (Prior) (1) 16 – 20 18.6
Stock Compensation 7 6.6
Adjusted OIBDA (Revised) 23 - 27 25.2
Estimated Impact Due to Changes in
Revenue Recognition Guidance (3) - ~(10)
Pro Forma Adjusted OIBDA $23 - $27 ~$15.2
▪ In 2018, expect to achieve another year of record revenueand previously targeted Adjusted OIBDA1 of at least$115M. Based on revised definition (excluding stockcompensation), this equates to an approximate 2018Adjusted OIBDA target of at least $140M
▪ Given significant long-term growth potential, our targetbalances near-term results with strategic investments
▪ For 2018, expect capital expenditures of $50M to $70Mreflecting, in part, the shift from 2017 (In 2017, plannedcapex to expand overall production capacity was largelydelayed)
▪ Expect long-term benefit from new tax law as the reducedcorporate rate more than offsets eliminations of deductionsfor domestic production and certain executivecompensation. Effective tax rate to decrease from ~36% to25-27% (ex discrete items)
▪ Key 2018 initiatives include delivering a wide range ofcontent across platforms, continuing to develop data andtechnology infrastructure and investing in markets with thegreatest long-term potential. Integral goal is finalizingdistribution in US, UK and India
2018 Full Year Outlook*
1 A definition of Adjusted OIBDA and a reconciliation to Operating Income can be found in the Company’s Q4 and Full Year 2017 earnings materials and in the appendix to this presentation* The Company’s business model and expected results will continue to be subject to significant execution risks, including those risks outlined in the Company’s Form 10-K filing with the SEC. See
additional notes on page 26 of this presentation
20
21
U.S.
U.K.
India
May - Sept. 2018
Second Half of 2018
First Half of 2019
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Q2
2018
K e y 2 0 1 8 I n i t i a t i v e s
Announce Future Distribution: U.S., U.K., India1
Expected Announcement of Future Distribution Plan
Expiration of Current Licensing Agreements
1 Future distribution is subject to negotiations, which are expected to begin next year. Although these announcements could occur either before or after these dates, management believes that these
ranges represent the most likely periods for such communication.
End of
Quarter
A P P E N D I X
Reconciliation of Non-GAAP Measures
23
Reconciliation of Adjusted OIBDA(1) to Operating Income
1 A definition of OIBDA and Adjusted OIBDA can be found on page 26 of this presentation. Source: WWE Q4 and Full Year 2017 Earnings 02/08/2018 (corporate.wwe.com/investors) 2 Adjustments to Q4 2017 and FY 2017 OIBDA reflects film impairment charges of $1.5 million and $4.7 million, respectively, considered to be material in the period in which they occurred, and
may differ from total film impairments 3 Adjustments to FY 2017 OIBDA of $5.6 million of non-recurring expenses primarily related to certain legal matters and other contractual obligations
Reconciliation of Net Cash to Free Cash Flow
$mm Q4 2016 Q4 2017 FY 2016 FY 2017
Net cash provided by operating activities 36.9$ 55.6$ 62.1$ 96.6$
Less cash used for capital expenditures:
Purchase of property and equipment and other assets (6.0) (7.0) (29.9) (24.7)
Free Cash Flow 30.9$ 48.6$ 32.2$ 71.9$
$mm Q4 2016 Q4 2017 FY 2016 FY 2017
Adjusted OIBDA $20.5 34.8$ 80.1$ 111.9$
Depreciation & amortization (6.6) (6.3) (24.4) (26.0)
Film Impairments (2) - (1.5) - (4.7)
Asset Impairments - - - -
Gain (loss) on operating assets - - - -
Restructuring charges - - - -
Other operating income items (3) - - - (5.6)
Operating Income (U.S. GAAP Basis) 13.9$ 27.0$ 55.7$ 75.6$
Reconciliation of Non-GAAP Measures
24
Reconciliation of Adjusted OIBDA (1)
1 A definition of OIBDA and Adjusted OIBDA can be found on page 26 of this presentation. Source: WWE Q4 and Full Year 2017 Earnings 02/08/2018 (corporate.wwe.com/investors)2 Adjustments to Q4 2017 OIBDA reflects film impairment charges of $1.5 million, considered to be material in the quarter in which they occurred
$mm
Operating
Income Depreciation OIBDA
Adjustments
to OIBDA
Adjusted
OIBDA
Network 13.7$ 1.8$ 15.5$ -$ 15.5$
Television 30.6 1.3 31.9 - 31.9
Home Entertainment 1.9 - 1.9 - 1.9
Digital Media 1.9 - 1.9 - 1.9
Live Events 6.2 - 6.2 - 6.2
Licensing 4.6 - 4.6 - 4.6
Venue Merchandise 2.1 - 2.1 - 2.1
WWEShop 3.0 - 3.0 - 3.0
WWE Studios (1.1) - (1.1) - (1.1)
Corporate & Other (49.0) 3.5 (45.5) - (45.5)
Total Operating Income 13.9$ 6.6$ 20.5$ -$ 20.5$
Three Months Ended December 31, 2016
$mm
Operating
Income Depreciation OIBDA
Adjustments
to OIBDA
Adjusted
OIBDA
Network 19.1$ 1.9$ 21.0$ -$ 21.0$
Television 39.3 1.0 40.3 - 40.3
Home Entertainment (0.7) (0.1) (0.8) - (0.8)
Digital Media 5.8 0.1 5.9 - 5.9
Live Events 5.4 - 5.4 - 5.4
Licensing 6.5 - 6.5 - 6.5
Venue Merchandise 1.8 - 1.8 - 1.8
WWEShop 2.8 - 2.8 - 2.8
WWE Studios (2) 0.3 - 0.3 1.5 1.8
Corporate & Other (53.3) 3.4 (49.9) - (49.9)
Total Operating Income 27.0$ 6.3$ 33.3$ 1.5$ 34.8$
Three Months Ended December 31, 2017
Reconciliation of Non-GAAP Measures
25
Reconciliation of Adjusted OIBDA (1)
1 A definition of OIBDA and Adjusted OIBDA can be found on page 26 of this presentation. Source: WWE Q4 and Full Year 2017 Earnings 02/08/2018 (corporate.wwe.com/investors)2 Adjustments to Full Year 2017 OIBDA reflects film impairment charges of $4.7 million, considered to be material in the quarter in which they occurred, and may differ from total film impairments3 Adjustments to OIBDA of $5.6 million of non-recurring expenses primarily related to certain legal matters and other contractual obligations
$mm
Operating
Income Depreciation OIBDA
Adjustments
to OIBDA
Adjusted
OIBDA
Network 57.3$ 6.9$ 64.2$ -$ 64.2$
Television 134.7 4.7 139.4 - 139.4
Home Entertainment 1.6 - 1.6 - 1.6
Digital Media 10.0 0.2 10.2 - 10.2
Live Events 42.3 - 42.3 - 42.3
Licensing 31.1 - 31.1 - 31.1
Venue Merchandise 9.1 - 9.1 - 9.1
WWEShop 8.3 - 8.3 - 8.3
WWE Studios (2) (3.6) - (3.6) 4.7 1.1
Corporate & Other (3)(215.2) 14.2 (201.0) 5.6 (195.4)
Total Operating Income 75.6$ 26.0$ 101.6$ 10.3$ 111.9$
Year Ended December 31, 2017
$mm
Operating
Income Depreciation OIBDA
Adjustments
to OIBDA
Adjusted
OIBDA
Network 36.9$ 6.1$ 43.0$ -$ 43.0$
Television 114.8 5.0 119.8 - 119.8
Home Entertainment 5.3 - 5.3 - 5.3
Digital Media 4.3 0.3 4.6 - 4.6
Live Events 41.8 - 41.8 - 41.8
Licensing 27.4 - 27.4 - 27.4
Venue Merchandise 9.8 - 9.8 - 9.8
WWEShop 7.3 - 7.3 - 7.3
WWE Studios (0.2) - (0.2) - (0.2)
Corporate & Other (191.7) 13.0 (178.7) - (178.7)
Total Operating Income 55.7$ 24.4$ 80.1$ -$ 80.1$
Year Ended December 31, 2016
Notes: Non-GAAP Measures
▪ The Company defines OIBDA as operating income before depreciation and amortization, excluding feature film and television
production asset amortization and related impairments, as well as the amortization of costs related to content delivery and
technology assets utilized for our WWE Network. OIBDA is a non-GAAP financial measure and may be different than similarly-titled
non-GAAP financial measures used by other companies. A limitation of OIBDA is that it excludes depreciation and amortization,
which represents the periodic charge for certain fixed assets and intangible assets used in generating revenues for the Company's
business. OIBDA should not be regarded as an alternative to operating income or net income as an indicator of operating
performance, or to the statement of cash flows as a measure of liquidity, nor should it be considered in isolation or as a substitute for
financial measures prepared in accordance with GAAP. We believe that operating income is the most directly comparable GAAP
financial measure to OIBDA
▪ Adjusted OIBDA, Adjusted Operating income, Adjusted Net income and Adjusted Earnings per share exclude certain material items,
which otherwise would impact the comparability of results between periods. These should not be considered as an alternative to net
income, cash flows from operations or any other indicator of WWE's performance or liquidity, determined in accordance with U.S.
GAAP
▪ The Company defines Free Cash Flow as net cash provided by operating activities less cash used for capital expenditures. Although
it is not a recognized measure of liquidity under U.S. GAAP, Free Cash Flow provides useful information regarding the amount of
cash our continuing business is generating after capital expenditures, available for reinvesting in the business, debt service, and
payment of dividends
26