GLENDALE, Calif., July 28 /PRNewswire-FirstCall/ -- DreamWorks
Animation SKG, Inc. (NASDAQ:DWA) today announced financial results
for its second quarter ended June 30, 2009. In the quarter, the
Company reported total revenue of $132.0 million and net income of
$25.6 million, or $0.30 per share on a fully diluted basis. This
compares to revenue of $141.5 million and net income of $27.5
million, or $0.30 per share on a fully diluted basis, for the same
period in 2008. "Our solid second quarter results were driven
primarily by the continued performance of our 2008 films, Kung Fu
Panda and Madagascar: Escape 2 Africa," said Jeffrey Katzenberg,
CEO of DreamWorks Animation. "Our third consecutive hit, Monsters
vs. Aliens, has also reached blockbuster status in the U.S. at
nearly $200 million. Additionally, we continue to make great
progress on a number of our growth initiatives at DreamWorks
Animation." Kung Fu Panda, the Company's 2008 summer release,
contributed approximately $32.7 million of revenue to the quarter,
primarily driven by domestic pay television. Through the end of the
second quarter, it reached an estimated 15.2 million home
entertainment units sold worldwide, net of actual and estimated
future returns. The Company's fall 2008 release, Madagascar: Escape
2 Africa, contributed $26.1 million of revenue to the quarter,
primarily driven by international home entertainment. Through the
end of the second quarter, it reached an estimated 10.2 million
home entertainment units sold worldwide, net of actual and
estimated future returns. During the second quarter the Company
amended its video game agreement with Activision, which resulted in
a financial impact to the quarter of $24.0 million of revenue and
approximately $0.10 of net income per share on a fully diluted
basis. Among other things, the amendment led to the recognition of
certain guaranteed payments for several of the Company's previously
released video game titles, including Monsters vs. Aliens. Monsters
vs. Aliens, which was released on March 27, 2009, contributed $10.3
million of revenue to the quarter, primarily as a result of the
aforementioned amendment to the Company's video game agreement.
Monsters vs. Aliens has grossed approximately $198 million at the
domestic box office, bringing its worldwide box office total to
over $377 million to date. The Company's 2007 releases, Bee Movie
and Shrek the Third, delivered $9.7 million and $2.4 million of
revenue to the quarter, respectively, primarily from consumer
products and home entertainment. Through the end of the second
quarter, the titles reached an estimated 9.5 and 22.4 million home
entertainment units sold worldwide, respectively, net of actual and
estimated future returns. Library and other titles contributed
$50.8 million of revenue to the quarter, including $10.1 million of
revenue from Shrek The Musical as well as continued catalogue home
entertainment performance and international free television for
feature films. Costs of revenue for the quarter equaled $74.0
million. Selling, general and administrative expenses totaled $24.8
million (including approximately $8.4 million of stock compensation
expense) as compared to $27.0 million (including approximately $8.3
million of stock compensation expense) for the comparable period of
2008. Looking ahead, the Company's third quarter results are
expected to be driven primarily by the home entertainment
performance of Monsters vs. Aliens, which will be released on DVD
and Blu-ray domestically on September 29, 2009, as well as
Madagascar: Escape 2 Africa's domestic pay television. The Company
also provided an update to its share repurchase program. Year to
date, the Company has purchased approximately $46.0 million, or 2.3
million shares, at an average per-share price of approximately
$20.15. The Company has $150.0 million remaining under its current
program. Items related to the earnings press release for the second
quarter of 2009 will be discussed in more detail on the Company's
second quarter 2009 earnings conference call later today.
Conference Call Information DreamWorks Animation will host a
conference call and webcast to discuss the results on Tuesday, July
28, 2009, 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
http://www.dreamworksanimation.com/. A replay of the conference
call will be available shortly after the call ends on Tuesday, July
28, 2009. To access the replay, dial (800) 475-6701 in the U.S. and
(320) 365-3844 internationally and enter 105561 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 anticipates releasing its
feature films into both conventional and IMAX theatres worldwide.
The Company has theatrically released a total of eighteen animated
feature films, including Shrek, Shrek 2, Shark Tale, Madagascar,
Over the Hedge, Shrek the Third, Bee Movie, Kung Fu Panda,
Madagascar: Escape 2 Africa and Monsters vs. Aliens. All of the
Company's feature films are now being 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** UNAUDITED CONSOLIDATED
BALANCE SHEETS June December 30, 31, 2009 2008 ---- ---- (in
thousands, except par value and share amounts) Assets Cash and cash
equivalents $348,796 $262,644 Trade accounts receivable, net of
allowance for doubtful accounts 2,123 4,550 Income taxes receivable
14,469 6,468 Receivable from Paramount, net of reserve for returns
and allowance for doubtful accounts 113,988 186,522 Film costs, net
640,752 638,243 Prepaid expenses and other assets 47,358 31,453
Property, plant and equipment, net of accumulated depreciation and
amortization 132,917 114,913 Deferred taxes, net 14,719 27,049
Goodwill 34,216 34,216 ------ ------ Total assets $1,349,338
$1,306,058 ========== ========== Liabilities and Equity
Liabilities: Accounts payable $2,249 $7,499 Accrued liabilities
92,244 115,158 Payable to former stockholder 52,726 54,192 Deferred
revenue and other advances 56,942 38,857 Borrowings and other debt
70,059 70,059 ------ ------ Total liabilities 274,220 285,765
Commitments and contingencies Equity: Stockholders' equity: Class A
common stock, par value $.01 per share, 350,000,000 shares
authorized, 95,420,728 and 95,381,143 shares issued, as of June 30,
2009 and December 31, 2008, respectively 954 954 Class B common
stock, par value $.01 per share, 150,000,000 shares authorized,
11,419,461 shares issued and outstanding, as of June 30, 2009 and
December 31, 2008 114 114 Additional paid-in capital 895,735
876,651 Retained earnings 733,127 645,261 Less: Class A Treasury
common stock, at cost, 20,127,485 and 17,432,728 shares, as of June
30, 2009 and December 31, 2008, respectively (557,753) (505,628)
-------- -------- Total stockholders' equity 1,072,177 1,017,352
Minority interest 2,941 2,941 ----- ----- Total equity 1,075,118
1,020,293 --------- --------- Total liabilities and equity
$1,349,338 $1,306,058 ========== ========== UNAUDITED CONSOLIDATED
STATEMENTS OF INCOME Three Months Six Months Ended Ended June 30,
June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ----
(in thousands, except per share amounts) Revenues $131,990 $141,530
$395,514 $298,702 Costs of revenues 74,022 76,092 230,428 172,583
------ ------ ------- ------- Gross profit 57,968 65,438 165,086
126,119 Product development 93 437 2,461 437 Selling, general and
administrative expenses 24,831 27,012 45,522 53,734 ------ ------
------ ------ Operating income 33,044 37,989 117,103 71,948
Interest income, net 979 2,474 1,518 5,457 Other income, net 1,613
1,080 3,065 1,857 Increase in income tax benefit payable to former
stockholder (11,020) (8,010) (27,030) (17,440) ------- ------
------- ------- Income before income taxes 24,616 33,533 94,656
61,822 Provision (benefit) for income taxes (940) 6,040 6,790 8,230
---- ----- ----- ----- Net income $25,556 $27,493 $87,866 $53,592
======= ======= ======= ======= Basic net income per share $0.30
$0.30 $1.01 $0.59 ----- ----- ----- ----- Diluted net income per
share $0.30 $0.30 $1.01 $0.58 ----- ----- ----- ----- Shares used
in computing net income per share Basic 85,890 90,370 86,673 91,366
Diluted 86,382 90,788 87,390 91,615 UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS Six Months Ended June 30, ---------- 2009
2008 ---- ---- (in thousands) Operating activities Net income
$87,866 $53,592 Adjustments to reconcile net income to net cash
provided by operating activities: Amortization and write off of
film costs 192,183 158,931 Stock compensation expense 14,695 18,277
Depreciation and amortization 1,831 1,139 Revenue earned against
deferred revenue and other advances (51,667) (42,084) Deferred
taxes, net 12,330 (1,375) Change in operating assets and
liabilities: Trade accounts receivable 2,427 (10,702) Receivable
from Paramount 72,534 188,381 Film costs (183,574) (192,811)
Prepaid expenses and other assets (16,242) 14,304 Accounts payable
and accrued liabilities (27,749) (15,428) Payable to former
stockholder (1,466) (20,205) Income taxes payable/receivable, net
(8,001) (11,538) Deferred revenue and other advances 74,515 75,553
------ ------ Net cash provided by operating activities 169,682
216,034 Investing activities Purchases of property, plant and
equipment (31,495) (18,765) ------- ------- Net cash used in
investing activities (31,495) (18,765) Financing Activities
Purchase of treasury stock (52,125) (88,661) Receipts from exercise
of stock options and excess tax benefits from employee equity
awards 90 520 --- --- Net cash used in financing activities
(52,035) (88,141) ------- ------- Increase in cash and cash
equivalents 86,152 109,128 Cash and cash equivalents at beginning
of period 262,644 292,489 ------- ------- Cash and cash equivalents
at end of period $348,796 $401,617 ======== ======== Supplemental
disclosure of cash flow information: Cash paid during the period
for income taxes, net $2,373 $21,076 ====== ======= Cash paid
during the period for interest, net of amounts capitalized $355
$567 ==== ==== DATASOURCE: DreamWorks Animation SKG, Inc. CONTACT:
Investor Relations, +1-818-695-3900, , or Corporate Communications,
+1-818-695-3658, , both of DreamWorks Animation SKG, Inc. Web Site:
http://www.dreamworksanimation.com/
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