GLENDALE, Calif., Oct. 28 /PRNewswire-FirstCall/ -- For the quarter ended
September 30, 2008, DreamWorks Animation SKG, Inc. (NYSE: DWA) reported total
revenue of $151.5 million and net income of $37.4 million, or $0.41 per share
on a fully diluted basis. This compares to revenue of $160.8 million and net
income of $47.0 million, or $0.47 per share on a fully diluted basis, for the
same period in 2007.
To date, Kung Fu Panda has reached approximately $415 million in
international box office and over $630 million worldwide, making it DreamWorks
Animation's most successful original film of all time.
"Driven by the film's exceptional theatrical performance on a worldwide
basis, the Company has found in Kung Fu Panda its third franchise," said
Jeffrey Katzenberg, CEO of DreamWorks Animation. "We look forward to
continuing our 2008 success with our next theatrical release, Madagascar:
Escape 2 Africa, which comes to theaters in the U.S. on November 7th and
across the globe this holiday season."
For the quarter, Kung Fu Panda contributed approximately $63.3 million in
revenue, primarily from international box office receipts in the period.
The Company's 2007 summer blockbuster, Shrek the Third, contributed
approximately $32.5 million of revenue to the quarter, driven primarily by
international pay television. Through the third quarter, the film reached an
estimated 20.5 million home entertainment units shipped worldwide, net of
actual and estimated future returns.
Bee Movie, the Company's 2007 fall release, contributed approximately
$27.3 million of revenue to the quarter, driven primarily by domestic pay
television. The film reached an estimated 7.5 million units shipped worldwide
through the third quarter, net of actual and estimated future returns.
Flushed Away, the Company's 2006 fall release, and Over the Hedge, the
Company's 2006 summer release, delivered $2.6 million and $2.4 million of
revenue, respectively, primarily from international pay and free television.
Library and other revenue contributed approximately $23.4 million to the
third quarter, driven by continued catalogue home entertainment performance
and international free television.
Cost of revenue for the quarter equaled $75.5 million. Selling, general
and administrative expenses totaled $29.9 million (including approximately
$10.0 million of stock compensation expense) as compared to $23.8 million
(including $6.3 million of stock compensation expense) for the comparable
period of 2007. Selling, general and administrative expenses were higher in
the third quarter of 2008 as compared to the third quarter of 2007 due to the
ongoing cost of new business initiatives and continued growth of the Company's
annual equity grant program. SG&A for the quarter also included non-cash items
of approximately $2.0 million resulting from Roger Enrico's transition to
non-Executive Chairman and the acceleration of depreciation related to the
remodeling of the Company's Glendale campus.
Results for the quarter also included a tax benefit of $0.03 per share on
a fully diluted basis, attributable to the combination of the Company's tax
sharing agreement with a stockholder and finalization of prior year tax
returns.
Looking ahead to the remainder of the year, the Company's fourth quarter
results are expected to be driven primarily by the home entertainment
performance of Kung Fu Panda, which will be released on DVD and Blu-ray
domestically on November 9, 2008.
The Company's next theatrical release, Madagascar: Escape 2 Africa, is
scheduled to open domestically on November 7, 2008. The Company does not
expect to generate significant revenue in the fourth quarter from the
distribution of this title, as its distributor may 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 has purchased
approximately $185 million, or 6.8 million shares, at an average per-share
price of approximately $27.20. The Company has approximately $53 million
remaining under its current program.
Items related to the earnings press release for the third quarter of 2008
will be discussed in more detail on the Company's third 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, October 28, 2008, at 4:30 p.m. (ET). Investors can
access the call by dialing (800) 230-1093 in the U.S. and (612) 332-0228
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, October 28, 2008. To access the replay, dial (800) 475-6701
in the U.S. and (320) 365-3844 internationally and enter 961531 as the
conference ID number. Both the earnings press 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 anticipates
releasing its feature films into both conventional and IMAX(R) theatres
worldwide. The Company has theatrically released a total of sixteen animated
feature films, including Shrek, Shrek 2, Shark Tale, Madagascar, Over the
Hedge, Shrek the Third, Bee Movie and Kung Fu Panda. Madagascar: Escape 2
Africa opens in theaters on November 7, 2008 and Monsters vs. Aliens on
March 27, 2009. Beginning in 2009, all of the Company's feature films will be
produced in stereoscopic 3D technology.
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
September 30, December 31,
2008 2007
(unaudited)
(in thousands,
except par value and share
amounts)
Assets
Cash and cash equivalents $337,905 $292,489
Trade accounts receivable, net of
allowance for doubtful accounts 14,967 3,470
Receivable from Paramount, net of
reserve for returns and allowance for
doubtful accounts 71,967 272,647
Film costs, net 622,970 541,917
Prepaid expenses and other assets 37,030 47,609
Property, plant, and equipment, net of
accumulated depreciation and
amortization 103,951 86,772
Deferred taxes, net 48,073 48,664
Goodwill 34,216 34,216
Total assets $1,271,079 $1,327,784
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable $6,162 $3,169
Accrued liabilities 108,496 108,457
Payable to stockholder 55,927 68,371
Income taxes payable 14,832 31,651
Deferred revenue and other advances 46,985 24,561
Borrowings and other debt 70,059 70,059
Total liabilities 302,461 306,268
Commitments and contingencies
Minority interest 2,941 2,941
Stockholders' equity:
Class A common stock, par value $.01
per share, 350,000,000 shares
authorized, 95,211,372 and 93,547,321
shares issued, as of September 30, 2008
and December 31, 2007, respectively 952 935
Class B common stock, par value $.01
per share, 150,000,000 shares
authorized, 11,419,461 and 12,984,461
shares issued and outstanding, as of
September 30, 2008 and December 31, 2007,
respectively 114 130
Additional paid-in capital 865,113 831,115
Retained earnings 593,706 502,763
Less: Class A Treasury common stock,
at cost, 17,027,042 and 10,445,278
shares, as of September 30, 2008 and
December 31, 2007, respectively (494,208) (316,368)
Total stockholders' equity 965,677 1,018,575
Total liabilities and stockholders'
equity $1,271,079 $1,327,784
DREAMWORKS ANIMATION SKG, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
(in thousands, except per share amounts)
Revenues $151,525 $160,751 $450,227 $476,950
Costs of revenues 75,518 70,028 248,101 234,152
Gross profit 76,007 90,723 202,126 242,798
Selling, general and administrative
expenses 29,872 23,826 84,043 77,062
Operating income 46,135 66,897 118,083 165,736
Interest income, net 2,312 6,571 7,769 19,224
Other income, net 1,444 1,478 3,301 4,361
Increase in income tax benefit
payable to stockholder (7,760) (21,968) (25,200) (51,694)
Income before income taxes 42,131 52,978 103,953 137,627
Provision for income taxes 4,780 5,936 13,010 13,407
Net income $37,351 $47,042 $90,943 $124,220
Basic net income per share $0.42 $0.47 $1.00 $1.22
Diluted net income per share $0.41 $0.47 $0.99 $1.22
Shares used in computing net income
per share
Basic 89,281 99,367 90,667 101,593
Diluted 90,665 99,891 91,755 102,043
DREAMWORKS ANIMATION SKG, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
2008 2007
(in thousands)
Operating activities
Net income $90,943 $124,220
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization and write off of film costs 225,884 219,949
Stock compensation expense 28,533 25,467
Depreciation and amortization 10,381 6,829
Revenue earned against deferred revenue and
other advances (58,419) (65,478)
Deferred taxes, net 591 (26,953)
Change in operating assets and liabilities:
Trade accounts receivable (11,497) (3,049)
Receivable from Paramount 200,680 105,307
Film costs (303,704) (289,035)
Prepaid expenses and other assets 11,120 (29,999)
Accounts payable and accrued liabilities 2,910 52,714
Payable to stockholder (12,444) 29,852
Income taxes payable, net (16,991) 25,249
Deferred revenue and other advances 88,877 60,512
Net cash provided by operating activities 256,864 235,585
Investing activities
Purchases of property, plant and equipment (34,088) (5,466)
Net cash used in investing activities (34,088) (5,466)
Financing Activities
Purchase of treasury stock (177,840) (194,356)
Other 480 1,617
Net cash used in financing activities (177,360) (192,739)
Increase in cash and cash equivalents 45,416 37,380
Cash and cash equivalents at beginning of
period 292,489 506,304
Cash and cash equivalents at end of period $337,905 $543,684
Supplemental disclosure of cash flow
information:
Cash paid during the period for income taxes,
net $29,271 $14,835
Cash paid during the period for interest, net
of amounts capitalized $719 $-
SOURCE DreamWorks Animation SKG, Inc.
