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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