DreamWorks Animation Reports Fourth Quarter and Year-End 2012 Financial Results
GLENDALE, Calif., Feb. 26, 2013 /PRNewswire/ -- DreamWorks Animation SKG, Inc. (Nasdaq: DWA) today announced financial results for its fourth quarter ended December 31, 2012. In the quarter, the Company reported total revenue of $264.7 million and a net loss of $82.7 million, or a loss of $0.98 per share. For the twelve months ended December 31, 2012, the Company reported total revenue of $749.8 million and a net loss of $36.4 million, or a loss of $0.43 per share.
Impacting DreamWorks Animation's fourth quarter and full-year 2012 results is a charge of approximately $165 million, which includes a write-down of film costs for Rise of the Guardians in the amount of $87 million, charges totaling $54 million related to the Company's decision to return Me & My Shadow back to development, a write-off of a number of other development projects in the amount of $20 million and a charge of $4.6 million related to restructuring activities.
"While Rise of the Guardians did not achieve the level of box office success that we have come to expect from a DreamWorks Animation film, we have made several changes to our future slate that we believe will position us well for the next two years," said Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. "We are now looking ahead to our next release – and our first under our new distribution agreement with Twentieth Century Fox – The Croods on March 22, 2013."
Rise of the Guardians, which has grossed $302.3 million at the worldwide box office, contributed revenue of $6.1 million to the quarter.
Madagascar 3: Europe's Most Wanted, which has grossed $746.6 million at the worldwide box office, contributed revenue of $95.2 million to the quarter, primarily from home entertainment and international box office. The film reached an estimated 6.0 million net home entertainment units sold worldwide through the end of the fourth quarter, net of actual and estimated future returns.
Puss In Boots contributed $10.5 million of revenue to the quarter, primarily from pay television and home entertainment. The film reached an estimated 6.2 million home entertainment units sold worldwide through the end of the fourth quarter, net of actual and estimated future returns.
Kung Fu Panda 2 contributed $4.8 million of revenue to the quarter, primarily from home entertainment. The film reached an estimated 6.5 million home entertainment units sold worldwide through the end of the fourth quarter, net of actual and estimated future returns.
Library, which now includes Megamind, contributed approximately $63.4 million of revenue to the quarter. Other items, including holiday television specials and live theatrical properties, contributed approximately $53.1 million of revenue to the quarter. Classic Media contributed approximately $31.6 million of revenue to the quarter.
Costs of revenue for the quarter equaled $354 million. Selling, general and administrative expenses totaled $36.5 million, including approximately $3.1 million of stock-based compensation expense.
The Company's income tax benefit for the fourth quarter was $42.4 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 34.3% for the fourth quarter.
The Company has $125 million remaining under its current share repurchase authorization.
The Company's full year 2013 results are expected to be driven primarily by the performance of The Croods, which is scheduled to be released on March 22, 2013 and Turbo, which is scheduled to be released on July 19, 2013.
Items related to the earnings press release for the fourth 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, February 26, 2013, at 4:30 p.m. (ET). Investors can access the call by dialing (800) 230-1074 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, February 26, 2013. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 279175 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 five consecutive years. In 2013, DreamWorks Animation ranks #12 on the list. All of DreamWorks Animation's feature films are produced in 3D. The Company has theatrically released a total of 25 animated feature films, including the franchise properties of Shrek, Madagascar, Kung Fu Panda, How to Train Your Dragon and Puss In Boots.
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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.
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DREAMWORKS ANIMATION SKG, INC. | ||
|
CONSOLIDATED BALANCE SHEETS | ||
|
(Unaudited) | ||
|
December 31, | ||
|
2012 |
2011 | |
|
(in thousands, except par value | ||
|
and share amounts) | ||
|
Assets |
||
|
Cash and cash equivalents |
$ 59,246 |
$ 116,093 |
|
Trade accounts receivable, net of allowance for doubtful accounts |
111,533 |
72,456 |
|
Income taxes receivable |
- |
3,960 |
|
Receivable from Paramount, net of allowance for doubtful accounts |
263,754 |
214,647 |
|
Film and other inventory costs, net |
820,482 |
882,646 |
|
Prepaid expenses |
18,593 |
20,842 |
|
Other assets |
24,651 |
13,023 |
|
Property, plant and equipment, net of accumulated depreciation and amortization |
188,986 |
172,511 |
|
Deferred taxes, net |
238,007 |
248,519 |
|
Intangible assets, net of accumulated amortization |
148,234 |
- |
|
Goodwill |
71,406 |
34,216 |
|
Total assets |
$ 1,944,892 |
$ 1,778,913 |
|
Liabilities and Equity |
||
|
Liabilities: |
||
|
Accounts payable |
$ 6,611 |
$ 3,283 |
|
Accrued liabilities |
123,886 |
105,505 |
|
Payable to former stockholder |
277,632 |
294,397 |
|
Deferred revenue and other advances |
25,517 |
19,032 |
|
Revolving credit facility |
165,000 |
- |
|
Total liabilities |
598,646 |
422,217 |
|
Commitments and contingencies |
||
|
Equity: |
||
|
DreamWorks Animation SKG, Inc. Stockholders' Equity: |
||
|
Class A common stock, par value $0.01 per share, 350,000,000 shares authorized, 102,687,323 and 98,333,454 shares issued, as of December 31, 2012 and 2011, respectively |
1,027 |
983 |
|
Class B common stock, par value $0.01 per share, 150,000,000 shares authorized, 7,838,731 and 10,838,731 shares issued and outstanding, as of December 31, 2012 and 2011, respectively |
78 |
108 |
|
Additional paid-in capital |
1,057,452 |
1,023,405 |
|
Accumulated other comprehensive income (loss) |
313 |
(1,041) |
|
Retained earnings |
1,017,314 |
1,053,736 |
|
Less: Class A Treasury common stock, at cost, 25,661,817 and 25,139,548 shares, as of December 31, 2012 and 2011, respectively |
(730,568) |
(720,495) |
|
Total DreamWorks Animation SKG, Inc. stockholders' equity |
1,345,616 |
1,356,696 |
|
Non-controlling interests |
630 |
- |
|
Total equity |
1,346,246 |
1,356,696 |
|
Total liabilities and equity |
$ 1,944,892 |
$ 1,778,913 |
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DREAMWORKS ANIMATION SKG, INC. | ||||
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CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
|
(Unaudited) | ||||
|
Three Months Ended |
Year Ended | |||
|
December 31, |
December 31, | |||
|
2012 |
2011 |
2012 |
2011 | |
|
(in thousands, except per share amounts) | ||||
|
Revenues |
$ 264,657 |
$ 218,969 |
$ 749,842 |
$ 706,023 |
|
Costs of revenues |
353,964 |
159,443 |
678,672 |
480,747 |
|
Gross (loss) profit |
(89,307) |
59,526 |
71,170 |
225,276 |
|
Product development |
1,159 |
1,716 |
4,891 |
2,864 |
|
Selling, general and administrative expenses |
36,464 |
26,021 |
131,242 |
112,554 |
|
Operating (loss) income |
(126,930) |
31,789 |
(64,963) |
109,858 |
|
Interest (expense) income, net |
(616) |
240 |
481 |
643 |
|
Other income, net |
1,607 |
1,757 |
8,280 |
7,150 |
|
Decrease in income tax benefit payable to former stockholder |
804 |
203 |
2,565 |
5,522 |
|
(Loss) income before income taxes |
(125,135) |
33,989 |
(53,637) |
123,173 |
|
(Benefit) provision for income taxes |
(42,427) |
9,709 |
(17,215) |
36,372 |
|
Net (loss) income |
$ (82,708) |
$ 24,280 |
$ (36,422) |
$ 86,801 |
|
Basic net (loss) income per share |
$ (0.98) |
$ 0.29 |
$ (0.43) |
$ 1.04 |
|
Diluted net (loss) income per share |
$ (0.98) |
$ 0.29 |
$ (0.43) |
$ 1.02 |
|
Shares used in computing net (loss) income per share: |
||||
|
Basic |
84,596 |
83,751 |
84,228 |
83,667 |
|
Diluted |
84,596 |
84,761 |
84,228 |
84,772 |
|
DREAMWORKS ANIMATION SKG, INC. | ||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
|
(Unaudited) | ||
|
Year Ended December 31, | ||
|
2012 |
2011 | |
|
(in thousands) | ||
|
Operating activities |
||
|
Net (loss) income |
$ (36,422) |
$ 86,801 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
||
|
Amortization and write-off of film and other inventory costs |
567,936 |
388,169 |
|
Amortization of intangible assets |
2,189 |
- |
|
Stock-based compensation expense |
17,044 |
28,301 |
|
Provision for doubtful accounts and returns reserves |
13,915 |
988 |
|
Amortization of deferred financing costs |
651 |
288 |
|
Depreciation and amortization |
4,158 |
3,304 |
|
Revenue earned against deferred revenue and other advances |
(74,197) |
(85,855) |
|
Deferred taxes, net |
(18,408) |
44,749 |
|
Changes in operating assets and liabilities, net of the effects of the acquisition of Classic Media: |
- | |
|
Trade accounts receivable |
(28,502) |
(26,360) |
|
Receivable from Paramount |
(49,020) |
26,994 |
|
Film and other inventory costs |
(449,974) |
(454,704) |
|
Prepaid expenses and other assets |
(3,305) |
(2,165) |
|
Accounts payable and accrued liabilities |
5,647 |
(38,724) |
|
Payable to former stockholder |
(16,765) |
(35,192) |
|
Income taxes payable/receivable, net |
111 |
(4,356) |
|
Deferred revenue and other advances |
93,339 |
101,264 |
|
Net cash provided by operating activities |
28,397 |
33,502 |
|
Investing activities |
||
|
Purchases of non-marketable securities |
(150) |
- |
|
Investment in unconsolidated affiliates |
(3,000) |
(5,000) |
|
Purchase of character rights |
(11,900) |
- |
|
Purchases of property, plant and equipment |
(61,584) |
(43,239) |
|
Purchase of Classic Media, net of cash acquired |
(157,550) |
- |
|
Net cash used in investing activities |
(234,184) |
(48,239) |
|
Financing Activities |
||
|
Receipts from exercise of stock options |
- |
8 |
|
Excess tax benefits from employee equity awards |
863 |
103 |
|
Deferred financing costs |
(5,297) |
(338) |
|
Purchase of treasury stock |
(10,035) |
(32,171) |
|
Borrowings from revolving credit facility |
200,000 |
- |
|
Repayments of borrowings under revolving credit facility |
(35,000) |
- |
|
Net cash provided by (used in) financing activities |
150,531 |
(32,398) |
|
Effect of exchange rate changes on cash and cash equivalents |
(1,591) |
(591) |
|
Decrease in cash and cash equivalents |
(56,847) |
(47,726) |
|
Cash and cash equivalents at beginning of year |
116,093 |
163,819 |
|
Cash and cash equivalents at end of year |
$ 59,246 |
$ 116,093 |
|
Non-cash investing activities: |
||
|
Intellectual property license to unconsolidated affiliate |
$ 1,780 |
$ - |
|
Supplemental disclosure of cash flow information: |
||
|
Cash refunded during the year for income taxes, net |
$ (27) |
$ (3,597) |
|
Cash paid during the year for interest, net of amounts capitalized |
$ 7,343 |
$ 679 |
SOURCE DreamWorks Animation SKG, Inc.
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