2014

DreamWorks Animation Reports First Quarter 2012 Financial Results

GLENDALE, Calif., May 2, 2012 /PRNewswire/ -- DreamWorks Animation SKG, Inc. (NASDAQ: DWA) today announced financial results for its first quarter ended March 31, 2012. For the quarter, the Company reported total revenue of $136.1 million and net income of $9.1 million, or $0.11 per share on a fully diluted basis.

"DreamWorks Animation's first quarter of 2012 was driven primarily by Puss In Boots' continued success at the international box office and the solid performance from its home video release to date," said Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. "We look forward to releasing the third chapter of our blockbuster Madagascar franchise in theaters on June 8th."

Puss In Boots, which has grossed approximately $554 million in worldwide box office to date, contributed $73.6 million of revenue to the quarter, driven primarily by home entertainment and international box office. The film reached an estimated 3.8 million home entertainment units sold worldwide through the end of the first quarter, net of actual and estimated future returns.

Kung Fu Panda 2, the Company's summer 2011 release, contributed $14.1 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 first quarter, net of actual and estimated future returns.

Megamind, the Company's fall 2010 release, contributed $5.0 million of revenue to the quarter, driven primarily by international pay television and worldwide home entertainment. The film reached an estimated 5.3 million home entertainment units sold worldwide through the end of the first quarter, net of actual and estimated future returns.

Shrek Forever After, the Company's summer 2010 release, contributed $2.5 million of revenue to the quarter, driven primarily by home entertainment. The film reached an estimated 10.0 million home entertainment units sold worldwide through the end of the quarter, net of actual and estimated future returns.

Library, which now includes How to Train Your Dragon, contributed approximately $27.4 million of revenue to the quarter. Titles are added to the Company's Library during the quarter of the second anniversary of the domestic theatrical release. All other items, including non-feature film businesses, contributed $13.5 million of revenue to the quarter, of which Shrek The Musical was the single largest contributor.

Costs of revenue for the quarter equaled $96.5 million. Selling, general and administrative expenses totaled $27.5 million, including approximately $4.9 million of stock-based compensation expense.

The Company's income tax expense for the first quarter was $5.1 million. The Company's 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 35.5% for the first quarter.

The Company's second quarter and full year results are expected to be driven by Madagascar 3: Europe's Most Wanted, which is scheduled to be released on June 8, 2012. Television revenue for Kung Fu Panda 2 and home entertainment revenue for Puss In Boots are also expected to contribute to the Company's second quarter results.

Items related to the earnings press release for the first 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 Wednesday, May 2, 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 Wednesday, May 2, 2012. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 244157 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, live entertainment properties and online virtual worlds, 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 23 animated feature films, including the franchise properties of Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon.

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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**

CONSOLIDATED BALANCE SHEETS 

(Unaudited)





March 31, 2012

 December 31, 2011


(in thousands, except par value and share amounts)

Assets



Cash and cash equivalents 

$      89,438

$      116,093

Trade accounts receivable, net of allowance for doubtful accounts 

61,753

72,456

Income taxes receivable 

3,348

3,960

Receivable from Paramount, net of allowance for doubtful accounts 

227,218

214,647

Film and other inventory costs, net 

928,679

882,646

Prepaid expenses

33,179

20,842

Other assets

12,821

13,023

Property, plant and equipment, net of accumulated depreciation and amortization 

179,757

172,511

Deferred taxes, net 

243,558

248,519

Goodwill 

34,216

34,216

Total assets 

$ 1,813,967

$   1,778,913




Liabilities and Stockholders' Equity



Liabilities:



Accounts payable 

$        4,519

$          3,283

Accrued liabilities 

100,052

105,505

Payable to former stockholder 

280,088

294,397

Deferred revenue and other advances 

53,738

19,032

Total liabilities 

438,397

422,217

Commitments and contingencies



Stockholders' equity:



Class A common stock, par value $.01 per share, 350,000,000 shares authorized, 98,360,633 and 98,333,454 shares issued, as of March 31, 2012 and December 31, 2011, respectively 

983

983

Class B common stock, par value $.01 per share, 150,000,000 shares authorized, 10,838,731 and 10,838,731 and shares issued and outstanding, as of March 31, 2012 and December 31, 2011, respectively 

108

108

Additional paid-in capital 

1,032,959

1,023,405

Accumulated other comprehensive loss

(540)

(1,041)

Retained earnings 

1,062,810

1,053,736

Less: Class A Treasury common stock, at cost, 25,153,437 and 25,139,548 shares, as of March 31, 2012 and December 31, 2011, respectively 

(720,750)

(720,495)

Total stockholders' equity 

1,375,570

1,356,696

Total liabilities and stockholders' equity 

$ 1,813,967

$   1,778,913

 

 

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)





 Three Months Ended 

 March 31, 


2012

2011


 (in thousands, except per share

amounts) 

Revenues 

$ 136,084

$ 108,037

Costs of revenues 

96,500

72,027

Gross profit 

39,584

36,010

Product development 

1,134

168

Selling, general and administrative expenses 

27,465

30,129

Operating income 

10,985

5,713

Interest income, net 

568

216

Other income, net 

2,516

2,000

Decrease in income tax benefit payable to former stockholder 

109

4,589

Income before income taxes 

14,178

12,518

Provision for income taxes 

5,104

3,724

Net income 

$     9,074

$     8,794




Basic net income per share 

$       0.11

$       0.10

Diluted net income per share 

$       0.11

$       0.10

Shares used in computing net income per share



Basic 

83,953

84,138

Diluted 

84,842

85,157

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS   

(Unaudited)





 Three Months Ended 


 March 31, 


2012

2011


 (in thousands) 

Operating activities



Net income 

$    9,074

$    8,794

Adjustments to reconcile net income to net cash used in operating activities:



Amortization and write-off of film and other inventory costs 

81,593

54,911

Stock-based compensation expense 

5,136

7,021

Depreciation and amortization 

927

726

Revenue earned against deferred revenue and other advances  

(2,320)

(3,128)

Deferred taxes, net 

4,961

8,102

Changes in operating assets and liabilities:

-


Trade accounts receivable 

5,574

11,802

Receivable from Paramount 

(12,572)

6,523

Film and other inventory costs 

(116,711)

(111,810)

Prepaid expenses and other assets 

(12,357)

(8,489)

Accounts payable and accrued liabilities 

(6,258)

(39,934)

Payable to former stockholder 

(14,309)

(32,490)

Income taxes payable/receivable, net 

502

(4,136)

Deferred revenue and other advances 

42,110

57,941

Net cash used in operating activities 

(14,650)

(44,167)




Investing activities



Purchases of property, plant and equipment 

(11,823)

(8,075)

Net cash used in investing activities 

(11,823)

(8,075)




Financing Activities



Purchase of treasury stock 

(255)

(25,444)

Net cash used in financing activities 

(255)

(25,444)

Effect of exchange rate changes on cash and cash equivalents

73

(25)

Decrease in cash and cash equivalents 

(26,655)

(77,711)

Cash and cash equivalents at beginning of period

116,093

163,819

Cash and cash equivalents at end of period

$  89,438

$  86,108




Supplemental disclosure of cash flow information:



Cash paid during the period for income taxes, net of amounts refunded

$       180

$       455

Cash paid during the period for interest, net of amounts capitalized

$       278

$       120

 

SOURCE DreamWorks Animation SKG, Inc.



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http://www.dreamworksanimation.com

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