DreamWorks Animation Reports First Quarter 2010 Financial Results

GLENDALE, Calif., April 27 /PRNewswire-FirstCall/ -- DreamWorks Animation SKG, Inc. (Nasdaq: DWA) today announced financial results for its first quarter ended March 31, 2010. In the quarter, the Company reported total revenue of $162.1 million and net income of $21.7 million, or $0.24 per share on a fully diluted basis.

"2010 is off to a strong start, thanks in large part to the performance of How to Train Your Dragon, which – having grossed nearly $375 million to date in worldwide box office – has become DreamWorks Animation's next franchise. We plan to release the sequel theatrically in 2013," said Jeffrey Katzenberg, CEO of DreamWorks Animation. "3D continues to have a tremendous impact on the industry at large and we are now looking forward with great anticipation to bringing Shrek Forever After, the final chapter in our beloved Shrek series and the first in 3D, to audiences across the globe next month."

How to Train Your Dragon, which was released on March 26, 2010, contributed $59.7 million of revenue to the quarter, driven primarily by merchandising and licensing activities. It has reached approximately $180 million in domestic box office and approximately $195 million in international box office to date.

The Company's 2009 release, Monsters vs. Aliens, contributed $24.6 million of revenue to the quarter, driven primarily by domestic pay television. The film reached an estimated 7.5 million home entertainment units sold, net of actual and estimated future returns, by the end of the first quarter.

The Company's 2008 releases, Madagascar: Escape 2 Africa and Kung Fu Panda, contributed $19.2 million and $5.7 million of revenue to the quarter, respectively, with the former driven by international pay television and home entertainment and the latter driven primarily by home entertainment. Through the end of the first quarter, Madagascar: Escape 2 Africa reached 13.7 million home entertainment units sold worldwide, net of actual and estimated future returns.

Library and other titles contributed approximately $52.9 million of revenue to the quarter.  

Costs of revenue for the quarter equaled $106.2 million. Selling, general and administrative expenses totaled $23.5 million, including approximately $6.1 million of stock compensation expense.

Additionally, the Company recorded an expense of approximately $8.2 million, which includes a charge of approximately $2.1 million resulting from an adjustment to prior year taxes, related to a tax sharing agreement with a former stockholder. Combining the amount due to the former stockholder with the Company's income tax provision of approximately $4.6 million results in an overall equivalent tax rate of 37.0% for the quarter.

The Company also provided an update to its share repurchase program. As of April 27, 2010, the Company has repurchased approximately 0.9 million shares for approximately $37 million. The Company has approximately $113 million remaining under its current authorization.

The Company's second quarter results are expected to be driven primarily by the performance of Shrek Forever After. The Company expects its full year 2010 results, which will likely be heavily weighted toward the second half of the year, to be driven primarily by the continued performance of How to Train Your Dragon and the performance of Shrek Forever After, which is scheduled to be released on May 21, 2010.

Items related to the earnings press release for the first quarter of 2010 will be discussed in more detail on the Company's first quarter 2010 earnings conference call later today.

Conference Call Information

DreamWorks Animation will host a conference call and webcast to discuss the results on Tuesday, April 27, 2010, at 4:30 p.m. (ET). Investors can access the call by dialing (800) 230-1085 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, April 27, 2010. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 151491 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 SKG

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 two consecutive years. In 2010, DreamWorks Animation ranks #6 on the list. All of DreamWorks Animation's feature films are now being produced in 3D. The Company has theatrically released a total of 19 animated feature films, including the franchise properties of Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon. DreamWorks Animation's upcoming feature film releases for 2010 are Shrek Forever After and Megamind.

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.

SOURCE DreamWorks Animation SKG, Inc.