(Reuters) - DreamWorks Animation SKG Inc will cut about 500 jobs, more than a fifth of its workforce, and produce one fewer movie a year as part of a major restructuring after a string of box-office misses.
The company’s shares rose 3.2 percent to $22 after the bell.
DreamWorks Animation plans to produce two feature films a year, down from three, the company said on Thursday. The job cuts will span all divisions of the studio and result in a pre-tax charge of about $290 million.
Most of this charge will be incurred in the quarter ended Dec. 31 and the remainder by 2016. DreamWorks, which had about 2,200 employees as of Dec. 31, 2013, expects to complete most of the restructuring by the end of this year.
The maker of the “Shrek” and “Madagascar” franchises unveiled the restructuring after negotiations to find a buyer cooled. Early talks with SoftBank Corp and Hasbro Inc ended shortly after they were reported in the latter half of last year.
While rival studios have scored several box-office hits with animated features, recent DreamWorks movies such as “Mr Peabody & Sherman,” “Turbo” and “Rise of the Guardians” have fallen shy of expectations.
DreamWorks said in a regulatory filing that it anticipates an impairment charge of about $55 million for the quarter ended Dec. 31, related mainly to “Penguins of Madagascar” and “Mr. Peabody and Sherman”.
The company expects additional write-downs of about $25 million related to, among other things, capitalized costs, investments and a non-cash expense in the range of $80 million to $100 million.
DreamWorks said the restructuring would also include total cash payments of about $110 million, including $60 million related to severance, benefits and relocation costs.
The studio said it expects to save $30 million in pre-tax cost in 2015 and about $60 million by 2017.
DreamWorks Vice-Chairman Lewis Coleman and Chief Operating Officer Mark Zoradi would leave the company as part of the restructuring, the studio said in the filing.
Reporting By Lehar Maan in Bengaluru; Editing by Savio D'Souza