DreamWorks Animation Reports First Quarter 2013 Financial Results

DreamWorks Animation Reports First Quarter 2013 Financial Results

GLENDALE, Calif., April 30, 2013 /PRNewswire/ -- DreamWorks Animation SKG, Inc. (Nasdaq: DWA) today announced financial results for its first quarter ended March 31, 2013. For the quarter, the Company reported total revenue of $134.6 million and net income of $5.6 million, or $0.07 per share on a fully diluted basis.



"This year is off to an outstanding start for DreamWorks Animation. The Croods has reached a blockbuster level of nearly $480 million at the worldwide box office and is well on its way to becoming the number one movie released during the first four months of 2013," said Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. "I'd like to congratulate and thank our new distribution partners at Twentieth Century Fox for helping to propel The Croods to global success and we now look forward to launching our summer tentpole, Turbo, in theaters on July 17th."

"The strength of our worldwide box office results from The Croods and over-performance in home video from both of our 2012 titles demonstrate success in DreamWorks Animation's core business so far this year," added Ann Daly, Chief Operating Officer of DreamWorks Animation. "As importantly, we made great strides to advance a number of key growth initiatives in the areas of franchise-building, consumer products, television and location-based entertainment."

The Croods, released theatrically on March 22, 2013, has reached $163.5 million at the domestic box office and $315.5 million at the international box office for a worldwide gross of $479.0 million to date. The Croods contributed $4.0 million of revenue to the quarter.

Rise of the Guardians contributed $9.6 million of revenue to the quarter, primarily from home entertainment. The film reached an estimated 3.2 million home entertainment units sold worldwide through the end of the first quarter, net of actual and estimated future returns.

Madagascar 3: Europe's Most Wanted contributed $22.8 million of revenue to the quarter, primarily from home entertainment. The film reached an estimated 7.2 million home entertainment units sold worldwide through the end of the first quarter, net of actual and estimated future returns.

Puss In Boots contributed $7.5 million of revenue to the quarter, primarily from home entertainment. The film reached an estimated 6.8 million home entertainment units sold worldwide through the end of the first quarter, net of actual and estimated future returns.

Library contributed $41.4 million of revenue to the quarter. Other items, including television series and live theatrical properties, contributed $20.9 million of revenue to the quarter. Classic Media contributed $27.9 million of revenue to the quarter.

Costs of revenue for the quarter equaled $85.5 million. Selling, general and administrative expenses totaled $42.8 million, including $3.9 million of stock-based compensation expense.

The Company's income tax expense for the first quarter was $418 thousand. The Company's combined effective tax rate - its actual tax rate coupled with the effect of its tax sharing agreement with a former stockholder - was approximately 15% for the first quarter. The Company currently expects that its full-year 2013 combined effective tax rate will be in the mid-to-high 20% range.

The Company also provided an update to its share repurchase program. Year to date, the Company has repurchased 1.3 million shares for $25 million. The Company has $100 million remaining under its current authorization.

The Company's second quarter results are expected to be driven by the performance of The Croods at the worldwide box office. Television revenue from Madagascar 3: Europe's Most Wanted is also expected to contribute revenue to the Company's second quarter results.

Items related to the earnings press release for the first quarter of 2013 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, April 30, 2013, 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 Tuesday, April 30, 2013. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 287438 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 26 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.




DREAMWORKS ANIMATION SKG, INC.


CONSOLIDATED BALANCE SHEETS


(Unaudited)




March 31, December 31,

2013 2012
---- ----

(in thousands, except par value

and share amounts)

Assets

Cash and cash equivalents $76,235 $59,246

Trade accounts receivable, net of
allowance for doubtful accounts 99,951 109,102

Receivable from distributors, net of
allowance for doubtful accounts 213,955 266,185

Film and other inventory costs, net 880,575 820,482

Prepaid expenses 22,839 18,593

Other assets 24,442 24,651

Property, plant and equipment, net of
accumulated depreciation and
amortization 187,662 188,986

Deferred taxes, net 237,778 238,007

Intangible assets, net of accumulated
amortization 143,226 148,234

Goodwill 71,406 71,406
------ ------

Total assets $1,958,069 $1,944,892
========== ==========


Liabilities and Equity

Liabilities:

Accounts payable $9,383 $6,611

Accrued liabilities 127,888 123,886

Payable to former stockholder 251,932 277,632

Deferred revenue and other advances 62,128 25,517

Revolving credit facility 165,000 165,000
------- -------

Total liabilities 616,331 598,646

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, 102,740,847 and
102,687,323 shares issued, as of March
31, 2013 and December 31, 2012,
respectively 1,028 1,027

Class B common stock, par value $0.01
per share, 150,000,000 shares
authorized, 7,838,731 and 7,838,731
shares issued and outstanding, as of
March 31, 2013 and December 31, 2012,
respectively 78 78

Additional paid-in capital 1,065,818 1,057,452

Accumulated other comprehensive (loss)
income (2,179) 313

Retained earnings 1,022,891 1,017,314

Less: Class A Treasury common stock, at
cost, 26,538,509 and 25,661,817
shares, as of (747,065) (730,568)
March 31, 2013 and December 31, 2012, respectively


Total DreamWorks Animation SKG, Inc.
stockholders' equity 1,340,571 1,345,616

Non-controlling interests 1,167 630
----- ---

Total equity 1,341,738 1,346,246
--------- ---------

Total liabilities and equity $1,958,069 $1,944,892
========== ==========





DREAMWORKS ANIMATION SKG, INC.


CONSOLIDATED STATEMENTS OF INCOME


(Unaudited)




Three Months Ended

March 31,
---------

2013 2012
---- ----

(in thousands, except per
share amounts)

Revenues $134,648 $136,084

Costs of
revenues 85,521 96,500
------ ------

Gross
profit 49,127 39,584

Product
development 963 1,134

Selling,
general
and
administrative
expenses 42,789 27,465
------ ------

Operating
income 5,375 10,985

Interest
income,
net 863 568

Other
income,
net 992 2,516

(Increase)
decrease
in
income
tax
benefit
payable
to
former
stockholder (698) 109
---- ---

Income
before
income
taxes 6,532 14,178

Provision
for
income
taxes 418 5,104
--- -----

Net
income 6,114 9,074

Less:
Net
income
attributable
to non-
controlling
interests 537 -
--- ---

Net
income
attributable
to
DreamWorks
Animation
SKG,
Inc. $5,577 $9,074
====== ======


Net income per share of common stock
attributable to DreamWorks
Animation SKG, Inc.

Basic
net
income
per
share $0.07 $0.11

Diluted
net
income
per
share $0.07 $0.11

Shares used in computing net income
per share

Basic 84,671 83,953

Diluted 85,265 84,842





DREAMWORKS ANIMATION SKG, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)




Three Months Ended

March 31,
---------

2013 2012
---- ----

(in thousands)

Operating activities

Net income $6,114 $9,074

Adjustments to reconcile net income to net cash provided by (used in) operating
activities:

Amortization and write-off of film and other
inventory costs 60,042 81,593

Amortization of intangible assets 1,686 -

Stock-based compensation expense 4,075 5,136

Provision for doubtful accounts and returns reserves (8,175) (175)

Amortization of deferred financing costs - 85

Depreciation and amortization 983 842

Revenue earned against deferred revenue and other
advances (11,153) (2,320)

Deferred taxes, net 231 4,961

Changes in operating assets and liabilities:

Trade accounts receivable 12,294 5,574

Receivable from distributors 52,231 (12,397)

Film and other inventory costs (109,346) (116,711)

Intangible assets 1,015 -

Prepaid expenses and other assets (6,367) (12,357)

Accounts payable and accrued liabilities 6,590 (6,258)

Payable to former stockholder (25,700) (14,309)

Income taxes payable/receivable, net 2,521 502

Deferred revenue and other advances 54,641 42,110
------ ------

Net cash provided by (used in) operating activities 41,682 (14,650)
------ -------


Investing activities

Investment in unconsolidated affiliate (500) -

Purchases of property, plant and equipment (8,088) (11,823)
------ -------

Net cash used in investing activities (8,588) (11,823)
------ -------


Financing Activities

Purchase of treasury stock (16,552) (255)
------- ----

Net cash used in financing activities (16,552) (255)
------- ----

Effect of exchange rate changes on cash and cash
equivalents 447 73

Increase (decrease) in cash and cash equivalents 16,989 (26,655)

Cash and cash equivalents at beginning of period 59,246 116,093
------ -------

Cash and cash equivalents at end of period $76,235 $89,438
======= =======


Supplemental disclosure of cash flow information:

Cash (refunded) paid during the period for income
taxes, net $(2,278) $180
======= ====

Cash paid during the period for interest, net of
amounts capitalized $217 $278
==== ====


SOURCE DreamWorks Animation SKG, Inc.

DreamWorks Animation SKG, Inc.

CONTACT: Shannon Olivas, DreamWorks Animation Investor Relations, +1-818-695-3658, shannon.olivas@dreamworks.com

Web Site: http://www.dreamworksanimation.com


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