Sony Pictures Entertainment Information Technology Fiscal Year 2014 Q2 Forecast and 2013 Mid Range Plan August 26, 2013
Agenda Assumptions 4 2013 MRP Headcount 5 Page # Assumptions 4 2013 MRP Headcount 5 FY14 Q2 vs. FY14 Budget Overhead 6-7 Cause of Change Financial Comparison 2013 MRP (FY15 – FY17) 8-9 Cause of Change – Year over Year Financial Comparison – Year over Year 2013 MRP vs. 2012 MRP 10-11 Cause of Change - 2013 MRP vs. 2012 MRP Financial Comparison - 2013 MRP vs. 2012 MRP FY14 Q2 and 2013 MRP Capital Projects 12 Opportunities 13 Appendix 15-19 3rd Party Allocations, Major Projects, Depreciation Assets, Cost Saving Challenges & Future BU Benefits
Assumptions Headcount Flat to FY14 Budget Salary, Fringe and Bonus grow 4% Vacancy Factor of 4% (FY15 – FY17) Internal Labor Capitalization rate ~11% MRP Rate increases of ~3%, before incremental or transferred expenses External Labor, SaaS, M&R (plus $0.8M transfer from TV Networks), Telecom and Data Center Facilities Assumes no cost savings from Procurement, TCS and Telecom reviews Includes no Royalties or benefits from Spiritworld or C2 deals Change allocation of IT Services Corporate (eliminated ($1.2M) non-capitalizable allocations for Studio) – MRP YoY Production (reduced revenue ($0.3M) due to lower 3rd party rentals) Third Party Allocations No new JV revenue, continuation of Australia and Brazil and A&E ends July FY14 Depreciation 2013 MRP based on $57.4M of capital versus $43.2M in 2012 MRP Significant SAP depreciation roll off in FY16; offset by FY15 asset transfer from TV Networks – Harris/NetGain Includes favorable $0.5M impact from delayed project go-live dates and asset impairments Project Spend – Q2 Forecast $64.6M vs. FY14 Budget $50.0M Includes PARIS, EMEA, RPM and Interplan FYE 14 ($14.6M); Participations & Residuals ($8.4M), EMEA ($4.3M), RPM ($1.1M) and Interplan ($0.8M) FYE 15 ($8.1M); Participations & Residuals ($5.0M), EMEA ($1.8M), RPM ($0.9M) and Interplan ($0.4M) FYE 16 ($1.9M) and FYE 17 ($1.1M) for Participations & Residuals
2013 MRP Headcount
FY14 Q2 Forecast vs. FY14 Budget
Cause of Change – FY14 Q2 vs. FY14 Budget
MRP Comparison - 2013 MRP Year over Year
Cause of Change – 2013 MRP Year over Year
MRP Comparison – 2013 MRP vs. 2012 MRP
Cause of Change – 2013 MRP vs. 2012 MRP
FY14 Q2 and 2013 MRP Capital Spend
Opportunities Telecom Procurement Initiative Re-negotiated TCS Contract Asset Sale – SpiritWorld and C2 Joint Venture Opportunities Procurement Savings – Other Potential IT Cost Reductions from: Changes in Application Support costs – Non TCS Decrease Enhancement & Project Investment Ensure BU benefits are realized in MRP Plans
Appendix
Third Party Allocations
FY14 Major Projects
Depreciation – 2013 MRP (FY15 – 17)
Cost Savings Challenges
Future Projected Business Benefits