GLENDALE, Calif., April 29 /PRNewswire-FirstCall/ -- For the quarter ended
March 31, 2008, DreamWorks Animation SKG, Inc. (NYSE: DWA) reported total
revenue of $156.6 million and net income of $26.1 million, or $0.28 per share
on a fully diluted basis. This compares to revenue of $93.7 million and net
income of $15.4 million, or $0.15 per share on a fully diluted basis, for the
same period in 2007.
"After a solid quarter for many DreamWorks Animation titles, we are now
looking forward to our next theatrical release, Kung Fu Panda, which opens
domestically on June 6th," stated Jeffrey Katzenberg, CEO of DreamWorks
Animation. "This marks the start of an important 12-month period for the
Company, in which we will release three feature films, including our first in
3D, and launch our first live entertainment show, Shrek the Musical, on
Broadway this December."
For the quarter, the Company's latest release, Bee Movie, contributed
$48.9 million of revenue, driven by its release into the home entertainment
market and additional international box office receipts. Through the first
quarter, Bee Movie had reached approximately $287 million in worldwide box
office and an estimated 4.8 million home entertainment units shipped, net of
actual returns and estimated future returns.
Shrek the Third, the Company's 2007 summer blockbuster, contributed
approximately $48.3 million of revenue during the first quarter of 2008,
primarily from international home entertainment. Through the end of the first
quarter, Shrek the Third had reached an estimated 19.8 million units shipped
worldwide, net of actual returns and estimated future returns.
Additional revenue for the quarter was driven by the Company's 2005 hit,
Madagascar, which contributed approximately $15.9 million, primarily from
international free television and continued catalogue home video performance.
Flushed Away, the Company's 2006 fall release, delivered $12.6 million of
revenue driven by international pay television and catalogue home video
performance. Through the first quarter, Flushed Away had reached an estimated
7.3 million units shipped worldwide, net of actual returns and estimated
future returns.
Wallace & Gromit: The Curse of the Were-Rabbit, contributed approximately
$8.1 million of revenue primarily from domestic network television. Over the
Hedge delivered $4.1 million of revenue, primarily from continued catalogue
home entertainment performance. Library and other titles contributed
$18.7 million of revenue to the Company in the first quarter.
Cost of revenue for the quarter equaled $95.8 million while selling,
general and administrative expenses (SG&A) totaled $26.9 million, including
$9.7 million of stock compensation expense.
Results for the quarter also included a tax benefit of approximately
$11.0 million related to the Company's tax sharing agreement with a
stockholder, which resulted in a lower effective tax rate. This benefit was
partially offset by a $9.4 million increase in cost for the income tax benefit
payable to the stockholder (as shown on the consolidated statement of income
before the line item, "income before income taxes"), resulting in an overall
net increase to net income of $1.6 million, or an estimated $0.02 per share on
a fully diluted basis.
Looking ahead to the remainder of the year, the Company reiterated its
expectation that results will primarily be driven by the performance of Kung
Fu Panda, which opens domestically on June 6, 2008. Because its distributor
must first recoup upfront marketing and distribution costs, the Company
expects the majority of the film's revenue to be recognized in the second half
of the year.
The Company's fall release, Madagascar: Escape 2 Africa, is scheduled to
open domestically on November 7, 2008. As is typical in the quarter of a
film's theatrical release, the Company does not anticipate generating
significant revenue in the fourth quarter from the title, as its distributor
likely will not have recouped its upfront marketing and distribution costs.
In addition to results for the quarter, the Company provided an update to
its share repurchase program. Year to date, the Company purchased
approximately $88.0 million, or 3.7 million shares, at an average per-share
price of approximately $24.00 and has approximately $62.0 million remaining
under its current program.
Items related to the earnings release for the first quarter of 2008 will
be discussed in more detail on the Company's first quarter 2008 earnings
conference call later today.
Conference Call Information
DreamWorks Animation will host a conference call and webcast to discuss
the results on Tuesday, April 29, 2008, at 4:30 p.m. (ET). Investors can
access the call by dialing (800) 288-8968 in the U.S. and (612) 332-0107
internationally and identifying "DreamWorks Animation Earnings" to the
operator. The call will also be available via live webcast at
http://www.dreamworksanimation.com.
A replay of the conference call will be available shortly after the call
ends on Tuesday, April 29, 2008. To access the replay, dial (800) 475-6701 in
the U.S. and (320) 365-3844 internationally and enter 918122 as the conference
ID number. Both the earnings release and archived webcast will be available on
the Company's website at http://www.dreamworksanimation.com.
About DreamWorks Animation SKG
DreamWorks Animation is principally devoted to developing and producing
computer generated, or CG, animated feature films. With world-class creative
talent, a strong and experienced management team and advanced CG filmmaking
technology and techniques, DreamWorks Animation makes high quality CG animated
films meant for a broad movie-going audience. The Company has theatrically
released a total of fifteen animated feature films, including Shrek, Shrek 2,
Shark Tale, Madagascar, Over the Hedge, Shrek the Third and Bee Movie.
DreamWorks Animation's 2008 feature film releases include Kung Fu Panda, in
theaters on June 6 and Madagascar: Escape 2 Africa, in theaters on November 7.
Monsters vs. Aliens, the Company's first film produced in 3D, is slated for a
domestic release date of March 27, 2009.
Contact:
DreamWorks Animation Investor Relations
(818) 695-3900
ir@dreamworksanimation.com
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.
Condensed Consolidated Balance Sheets
March 31, December 31,
2008 2007
(unaudited)
(in thousands,
except par value and share
amounts)
Assets
Cash and cash equivalents $309,439 $292,489
Trade accounts receivable, net of
allowance for doubtful accounts 15,562 3,470
Receivable from Paramount, net of
reserve for returns and allowance
for doubtful accounts 155,629 272,647
Film costs, net 549,856 541,917
Prepaid expenses and other assets 36,987 47,609
Property, plant, and equipment, net
of accumulated depreciation and
amortization 90,065 86,772
Deferred taxes, net 46,020 48,664
Goodwill 34,216 34,216
Total assets $1,237,774 $1,327,784
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable 6,699 3,169
Accrued liabilities 71,409 107,969
Payable to stockholder 44,055 68,371
Income taxes payable 11,337 31,651
Deferred revenue and other advances 59,014 24,561
Obligations under capital leases 165 488
Borrowings and other debt 70,059 70,059
Total liabilities 262,738 306,268
Commitments and contingencies
Minority interest 2,941 2,941
Total stockholders' equity 972,095 1,018,575
Total liabilities and stockholders' equity $1,237,774 $1,327,784
DreamWorks Animation SKG, Inc.
Unaudited Condensed Consolidated Statements of Income
Three Months Ended
March 31,
2008 2007
(in thousands, except
per share amounts)
Revenues $156,567 $93,728
Costs of revenues 95,750 53,479
Gross profit 60,817 40,249
Selling, general and administrative expenses 26,858 25,770
Operating income 33,959 14,479
Interest income, net 2,983 6,271
Other income, net 777 1,444
Increase in income tax benefit payable to
stockholder (9,430) (5,817)
Income before income taxes 28,289 16,377
Provision for income taxes 2,190 977
Net income $26,099 $15,400
Basic net income per share $0.28 $0.15
Diluted net income per share $0.28 $0.15
Shares used in computing net income per share
Basic 92,314 103,367
Diluted 92,416 103,687
DreamWorks Animation SKG, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
Three Months Ended
March 31,
2008 2007
(in thousands)
Operating activities
Net income $26,099 $15,400
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization and write off of film costs 92,511 51,159
Stock compensation expense 9,695 9,554
Depreciation and amortization 2,424 1,937
Revenue earned against deferred
revenue and other advances (2,552) (3,730)
Deferred taxes, net 2,644 (581)
Change in operating assets and liabilities:
Trade accounts receivable (12,092) 578
Receivable from Paramount 117,018 79,088
Film costs (99,246) (86,456)
Prepaid expenses and other assets 10,499 (48)
Accounts payable and accrued
liabilities (33,074) 7,272
Payable to stockholder (24,316) (16,178)
Income taxes payable, net (20,369) 1,010
Deferred revenue and other advances 38,473 29,020
Net cash provided by operating activities 107,714 88,025
Investing activities
Purchases of property, plant and equipment (6,775) (650)
Net cash used in investing activities (6,775) (650)
Financing Activities
Payments on capital leases (323) (225)
Receipts from exercise of stock options 120 235
Excess tax benefits from employee equity awards 51 349
Purchase of treasury stock (83,837) (35,152)
Net cash used in financing activities (83,989) (34,793)
Increase in cash and cash equivalents 16,950 52,582
Cash and cash equivalents at beginning of period 292,489 506,304
Cash and cash equivalents at end of period $309,439 $558,886
Supplemental disclosure of cash flow information:
Cash paid during the period for income
taxes, net $19,864 $199
Cash paid during the period for
interest, net of amounts capitalized $342 $53
SOURCE DreamWorks Animation SKG, Inc.
