Investments in Unconsolidated Entities

The Company has made investments in entities which are accounted for under either the cost or equity method of accounting. These investments are classified as investments in unconsolidated entities in the consolidated balance sheets and consist of the following (in thousands, unless otherwise indicated):



	June 30, 2013 Ownership Percentage	June 30, 2013		December 31, 2012
Oriental DreamWorks Holding Limited	45.45%	$	15,464	$	—
All Other	30%-50%	2,260		—
Total equity method investments		17,724		—

Total cost method investments		16,281		9,782
Total investments in unconsolidated entities		$	34,005	$	9,782

Under the equity method of accounting, the carrying value of an investment is adjusted for the Company's proportionate share of the investees' earnings and losses (adjusted for the amortization of any differences in the basis of the Company's investment in ODW compared to the Company's share of venture-level equity), as well as contributions to and distributions from the investee. The Company classifies its share of income or loss from investments accounted for under the equity method as income/loss from equity method investees in its consolidated statements of income. Loss from equity method investees consist of the following (in thousands):



	Three and six months ended June 30, 2013
Oriental DreamWorks Holding Limited⁽¹⁾	$	957
All Other	372
Loss from equity method investees	$	1,329

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⁽¹⁾	The Company is recording its share of ODW results on a one-month lag. Accordingly, for the three months ended June 30, 2013, the Company's consolidated financial statements include its share of losses incurred by ODW for the period from April 3, 2013 (ODW Closing Date) to May 31, 2013.

Oriental DreamWorks Holding Limited

On April 3, 2013, the Company formed ODW, the Chinese Joint Venture (see Note 1 for further information). In exchange for 45.45% of the equity of ODW, the Company has committed to making a total cash capital contribution to ODW of $50.0 million (of which $5.7 million was funded at the ODW Closing Date, with the balance to be funded over time) and non-cash contributions valued at approximately $100.0 million (of which approximately $15.9 million had been satisfied as of June 30, 2013). Such non-cash contributions include licenses of technology and certain other intellectual property of the Company, rights in certain trademarks of the Company, two feature in-development film projects developed by the Company and consulting and training services. During the three months ended June 30, 2013, the Company's consolidated statements of income included $7.8 million of revenues and $2.9 million of other operating income recognized in connection with non-cash contributions made to ODW.

As of June 30, 2013, the Company's remaining contributions include the following: (i) $44.3 million in cash (which is expected to be funded over the next three years), (ii) two of the Company's in-development film projects (the specific projects of which have not yet been identified), (iii) licenses of technology and certain other intellectual property of the Company and (iv) approximately $9.9 million in consulting and training services. Some of these remaining contribution commitments will require future cash outflows for which the Company is not currently able to estimate the timing of contributions as this will depend on, among other things, ODW's operations.

Basis Differences. The Company's investment in ODW does not equal the venture-level equity (the amount recorded on the balance sheet of ODW) due to various basis differences. Basis differences related to definite-lived assets are being amortized based on the useful lives of the related assets. Basis differences related to indefinite-lived assets are not being amortized. The following are the differences between the Company's venture-level equity and the balance of its investment in ODW (in thousands):



	June 30, 2013
Company's venture-level equity	$	55,257
Technology and intellectual property licenses⁽¹⁾	(23,661		)
Other⁽²⁾	(16,132		)
Total ODW investment recorded	$	15,464

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⁽¹⁾	Represents differences between the Company's historical cost basis and the equity basis reflected at the venture-level (the amount recorded on the balance sheet of ODW) related to the Company's contributions of technology and intellectual property licenses. These basis differences arise because the contributed assets are recorded at fair value by ODW.


⁽²⁾	Represents the Company's net contribution commitment due to ODW.

Other Transactions with ODW. The Company has entered into various transactions with ODW, a related party. The Company has entered into a distribution agreement with ODW for the distribution of the Company's feature films in China. In addition, from time to time, the Company may provide consulting and training services to ODW, the charges of which are based on a pre-determined rate schedule which approximates the Company's actual cost of providing such services. During the three and six months ended June 30, 2013, the Company's consolidated statements of income included $13.0 million of revenues earned through ODW's distribution of the Company's feature film The Croods. As of June 30, 2013, the Company's consolidated balance sheets included the following receivables: $1.3 million classified as a component of trade accounts receivable and $13.3 million classified as a component of receivables from distributors.