Quantcast
Last updated on April 24, 2014 at 17:35 EDT

DreamWorks Animation Reports Second Quarter 2012 Financial Results

July 31, 2012

GLENDALE, Calif., July 31, 2012 /PRNewswire/ — DreamWorks Animation SKG, Inc. (NASDAQ: DWA) today announced financial results for its second quarter ended June 30, 2012. For the quarter, the Company reported total revenue of $162.8 million and net income of $12.8 million, or $0.15 per share on a fully diluted basis.

“DreamWorks Animation’s second quarter of 2012 was driven primarily by the box office performance of Madagascar 3: Europe’s Most Wanted, the seventh highest-grossing film of the year,” said Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. “The third and biggest film in our blockbuster Madagascar franchise has surpassed $500 million at the worldwide box office to date, with a large number of key international territories yet to come.”

Madagascar 3: Europe’s Most Wanted contributed approximately $54.8 million of revenue to the quarter, driven primarily by its performance at the worldwide box office. The film was released on June 8, 2012 and has grossed approximately $210 million at the domestic box office and $293 million at the international box office to date.

Puss In Boots contributed $22.8 million of revenue to the quarter, driven primarily by home entertainment. The film reached an estimated 5.2 million home entertainment units sold worldwide through the end of the second quarter, net of actual and estimated future returns.

Kung Fu Panda 2 contributed $46.4 million of revenue to the quarter, driven primarily by domestic pay television. The film reached an estimated 5.7 million home entertainment units sold worldwide through the end of the second quarter, net of actual and estimated future returns.

Megamind contributed $1.4 million of revenue to the quarter, driven primarily by home entertainment. The film reached an estimated 5.5 million home entertainment units sold worldwide through the end of the second quarter, net of actual and estimated future returns.

Library, which now includes Shrek Forever After, contributed approximately $27.4 million of revenue to the quarter. All Other items, including non-feature film businesses, contributed $10.0 million of revenue to the quarter, of which Shrek The Musical in London was the single largest contributor.

Costs of revenue for the quarter equaled $114.2 million. Selling, general and administrative expenses totaled $30.8 million, including approximately $5.2 million of stock-based compensation expense.

The Company’s income tax expense for the second quarter was $5.9 million. Its combined effective tax rate – the actual tax rate coupled with the effect of the Company’s tax sharing agreement with a former stockholder – was approximately 30% for the second quarter.

DreamWorks Animation’s third quarter results are expected to be driven primarily by the continued theatrical performance of Madagascar 3: Europe’s Most Wanted. Television revenue for Puss In Boots is also expected to contribute to the Company’s third quarter results.

Items related to the earnings press release for the second quarter of 2012 will be discussed in more detail on the Company’s earnings conference call later today.

Conference Call Information

DreamWorks Animation will host a conference call and webcast to discuss the results on Tuesday, July 31, 2012, at 4:30 p.m. (ET). Investors can access the call by dialing (800) 230-1059 in the U.S. and (612) 234-9959 internationally and identifying “DreamWorks Animation Earnings” to the operator. The call will also be available via live webcast at www.dreamworksanimation.com.

A replay of the conference call will be available shortly after the call ends on Tuesday, July 31, 2012. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 251569 as the conference ID number. Both the earnings release and archived webcast will be available on the Company’s website at www.dreamworksanimation.com.

About DreamWorks Animation

DreamWorks Animation creates high-quality entertainment, including CG animated feature films, television specials and series and live entertainment properties, meant for audiences around the world. The Company has world-class creative talent, a strong and experienced management team and advanced filmmaking technology and techniques. DreamWorks Animation has been named one of the “100 Best Companies to Work For” by FORTUNE(®) Magazine for four consecutive years. In 2012, DreamWorks Animation ranks #14 on the list. All of DreamWorks Animation’s feature films are now being produced in 3D. The Company has theatrically released a total of 24 animated feature films, including the franchise properties of Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon. The Company’s theatrical releases for the current year are Madagascar 3: Europe’s Most Wanted on June 8, 2012 and Rise of the Guardians on November 21, 2012.

dwa-e

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company’s plans, prospects, strategies, proposals and our beliefs and expectations concerning performance of our current and future releases and anticipated talent, directors and storyline for our upcoming films and other projects, constitute forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industry in which we operate and management’s beliefs and assumptions. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other risks and uncertainties affecting the operation of the business of DreamWorks Animation SKG, Inc. These risks and uncertainties include: audience acceptance of our films, our dependence on the success of a limited number of releases each year, the increasing cost of producing and marketing feature films, piracy of motion pictures, the effect of rapid technological change or alternative forms of entertainment and our need to protect our proprietary technology and enhance or develop new technology. In addition, due to the uncertainties and risks involved in the development and production of animated feature projects, the release dates for the projects described in this document may be delayed. For a further list and description of such risks and uncertainties, see the reports filed by us with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our most recent quarterly reports on Form 10-Q. DreamWorks Animation is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

** FINANCIAL TABLES ATTACHED**

                                       DREAMWORKS ANIMATION SKG, INC.
                                         CONSOLIDATED BALANCE SHEETS
                                                 (Unaudited)

                                                     June 30,              December 31,
                                                                     2012                     2011
                                                                     ----                     ----
                                             (in thousands, except par
                                             value and share amounts)
    Assets
    Cash and cash equivalents                                     $81,176                 $116,093
    Trade accounts receivable, net of
     allowance for doubtful accounts                               69,977                   72,456
    Income taxes receivable                                         4,471                    3,960
    Receivable from Paramount, net of
     allowance for doubtful accounts                              203,869                  214,647
    Film and other inventory costs,
     net                                                          960,505                  882,646
    Prepaid expenses                                               30,941                   20,842
    Other assets                                                   12,052                   13,023
    Property, plant and equipment, net
     of accumulated depreciation and
     amortization                                                 193,209                  172,511
    Deferred taxes, net                                           237,266                  248,519
    Goodwill                                                       34,216                   34,216
                                                                   ------                   ------
    Total assets                                               $1,827,682               $1,778,913
                                                               ==========               ==========

    Liabilities and Stockholders'
     Equity
    Liabilities:
    Accounts payable                                               $5,557                   $3,283
    Accrued liabilities                                           112,996                  105,505
    Payable to former stockholder                                 279,804                  294,397
    Deferred revenue and other
     advances                                                      35,333                   19,032
                                                                   ------                   ------
    Total liabilities                                             433,690                  422,217
    Commitments and contingencies
    Stockholders' equity:
    Class A common stock, par value
     $.01 per share, 350,000,000
     shares authorized, 98,841,174 and
     98,333,454 shares issued, as of
     June 30, 2012 and December 31,
     2011, respectively                                               988                      983
    Class B common stock, par value
     $.01 per share, 150,000,000
     shares authorized, 10,838,731 and
     10,838,731 shares issued and
     outstanding, as of June 30, 2012
     and December 31, 2011,
     respectively                                                     108                      108
    Additional paid-in capital                                  1,042,938                1,023,405
    Accumulated other comprehensive
     loss                                                            (918)                  (1,041)
    Retained earnings                                           1,075,582                1,053,736
    Less: Class A Treasury common
     stock, at cost, 25,369,756 and
     25,139,548 shares, as of June 30,
     2012 and December 31, 2011,
     respectively                                                (724,706)                (720,495)
                                                                 --------                 --------
    Total stockholders' equity                                  1,393,992                1,356,696
                                                                ---------                ---------
    Total liabilities and
     stockholders' equity                                      $1,827,682               $1,778,913
                                                               ==========               ==========

                                                  DREAMWORKS ANIMATION SKG, INC.
                                                CONSOLIDATED STATEMENTS OF INCOME
                                                           (Unaudited)

                                       Three Months Ended                   Six Months Ended
                                            June 30,                            June 30,
                                           --------                            --------
                                                               2012                          2011     2012     2011
                                                               ----                          ----     ----     ----
                           (in thousands, except per share amounts)
    Revenues                                               $162,803                      $218,255 $298,887 $326,292
    Costs of revenues                                       114,247                       141,311  210,747  213,338
                                                            -------                       -------  -------  -------
    Gross profit                                             48,556                        76,944   88,140  112,954
    Product development                                       1,340                           255    2,474      423
    Selling, general and
     administrative
     expenses                                                30,816                        29,554   58,281   59,683
                                                             ------                        ------   ------   ------
    Operating income                                         16,400                        47,135   27,385   52,848
    Interest income, net                                        616                            44    1,184      260
    Other income, net                                         1,326                         2,060    3,842    4,060
    Decrease in income tax
     benefit payable to
     former stockholder                                         283                           175      392    4,764
                                                                ---                           ---      ---    -----
    Income before income
     taxes                                                   18,625                        49,414   32,803   61,932
    Provision for income
     taxes                                                    5,853                        15,341   10,957   19,065
                                                              -----                        ------   ------   ------
    Net income                                              $12,772                       $34,073  $21,846  $42,867
                                                            =======                       =======  =======  =======

    Basic net income per
     share                                                    $0.15                         $0.41    $0.26    $0.51
    Diluted net income per
     share                                                    $0.15                         $0.40    $0.26    $0.51
    Shares used in
     computing net income
     per share
    Basic                                                    84,125                        83,384   84,031   83,759
    Diluted                                                  84,893                        84,565   84,807   84,854

                                                          DREAMWORKS ANIMATION SKG, INC.
                                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                   (Unaudited)

                                                                               Six Months Ended
                                                                                   June 30,
                                                                                   --------
                                                                                                2012      2011
                                                                                                ----      ----
                                                                                (in thousands)
    Operating activities
    Net income                                                                               $21,846   $42,867
    Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
    Amortization and write-off of film and other
     inventory costs                                                                         176,990   172,568
    Stock-based compensation expense                                                          10,515    15,546
    Depreciation and amortization                                                              2,054     1,689
    Revenue earned against deferred revenue and other
     advances                                                                                (32,544)  (49,360)
    Deferred taxes, net                                                                       11,253    26,702
    Changes in operating assets and liabilities:
    Trade accounts receivable                                                                  3,571    15,524
    Receivable from Paramount                                                                 10,790    12,449
    Film and other inventory costs                                                          (233,496) (233,897)
    Prepaid expenses and other assets                                                        (10,749)   (1,374)
    Accounts payable and accrued liabilities                                                   4,805   (35,455)
    Payable to former stockholder                                                            (14,593)  (32,665)
    Income taxes payable/receivable, net                                                        (276)   (8,739)
    Deferred revenue and other advances                                                       58,501    71,166
                                                                                              ------    ------
    Net cash provided by (used in) operating activities                                        8,667    (2,979)
                                                                                               -----    ------

    Investing activities
    Purchases of non-marketable securities                                                      (150)        -
    Purchases of property, plant and equipment                                               (39,348)  (21,347)
                                                                                             -------   -------
    Net cash used in investing activities                                                    (39,498)  (21,347)
                                                                                             -------   -------

    Financing Activities
    Deferred financing costs                                                                       -      (338)
    Purchase of treasury stock                                                                (4,165)  (25,660)
                                                                                              ------   -------
    Net cash used in financing activities                                                     (4,165)  (25,998)
                                                                                              ------   -------
    Effect of exchange rate changes on cash and cash
     equivalents                                                                                  79      (331)
    Decrease in cash and cash equivalents                                                    (34,917)  (50,655)
    Cash and cash equivalents at beginning of period                                         116,093   163,819
                                                                                             -------   -------
    Cash and cash equivalents at end of period                                               $81,176  $113,164
                                                                                             =======  ========

    Supplemental disclosure of cash flow information:
    Cash paid during the period for income taxes, net of
     amounts refunded                                                                           $610    $1,384
                                                                                                ====    ======
    Cash paid during the period for interest, net of
     amounts capitalized                                                                        $395      $290
                                                                                                ====      ====

SOURCE DreamWorks Animation SKG, Inc.


Source: PR Newswire