DreamWorks Animation Slapped With Class-Action Lawsuit
DreamWorks Animation was hit yesterday with a class action lawsuit that alleges the company mislead investors about its financial solvency. According to an article in The Wrap, investor Charles Paddock filed the lawsuit on behalf of himself and other investors on Friday, August 1st in a U.S. District Court in California.
The lawsuit centers around DreamWorks' animated feature, Turbo, which performed poorly during its summer release last year. The company reported the film's under valuation of 13.5 million in its February 2014 report. The late write-down of the film's market value, according to the complaint, mislead investors about the company's financial status. Paddock's suit alleges that DreamWorks “made false and/or misleading financial statements, and failed to disclose material adverse facts about the company's business, operations, prospects and performance.” The film was the third write-down for DreamWorks since 2012 and also includes Rise of the Guardians and Mr. Peabody and Sherman, which also under-performed.
The class action suit comes only three days after DreamWorks released its financial reports, which showed a 15.4 million dollar loss for the second quarter. Overall, the company's revenue dropped 43% to $122.3 million, which was down from $213.4 million last year. However, DreamWorks' How to Train Your Dragon 2, continues to be a heavy generator of revenue with $428 million so far.
A day prior to its quarterly report, DreamWorks restructured its leadership. The executive change up included bringing former Disney exec Mark Zoradi on board as Chief Operating Officer. Zoradi's hopes of rejuvenating the studio's organizational and financial situation come only a month after the company executed a round of layoffs in late June. According to The Animation Guild the cutback affected between forty to fifty DreamWorks employees.