DreamWorks Animation Reports Second Quarter 2013 Financial Results

DreamWorks Animation Reports Second Quarter 2013 Financial Results

GLENDALE, Calif., July 31, 2013 /PRNewswire/ -- DreamWorks Animation SKG, Inc. (Nasdaq: DWA) today announced financial results for its second quarter ended June 30, 2013. For the quarter, the Company reported total revenue of $213.4 million, net income of $22.2 million, and earnings per share of $0.26 on a fully diluted basis. This compares to revenue of $162.8 million and net income of $12.8 million, or $0.15 per share on a fully diluted basis, for the same period in 2012.

"DreamWorks Animation significantly outperformed in the second quarter, thanks primarily to The Croods' incredibly successful box office run, where it has amassed $584 million worldwide to become the fifth highest grossing movie of the year," said Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. "We also have a great deal of momentum within our television, consumer products and location-based entertainment businesses today, as DreamWorks Animation continues to diversify and evolve into a branded family entertainment company."

The Croods, released theatrically on March 22, 2013, has reached $186.4 million at the domestic box office and $397.5 million at the international box office for a worldwide gross of $583.9 million to date. The Croods contributed $71.8 million of revenue to the quarter.

Rise of the Guardians contributed $16.7 million of revenue to the quarter, primarily from home entertainment. The film reached an estimated 4.1 million home entertainment units sold worldwide through the end of the second quarter, net of actual and estimated future returns.

Madagascar 3: Europe's Most Wanted contributed $48.9 million of revenue to the quarter, primarily from worldwide pay television. The film reached an estimated 7.7 million home entertainment units sold worldwide through the end of the second quarter, net of actual and estimated future returns.

Puss In Boots contributed $1.4 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 second quarter, net of actual and estimated future returns.

Library contributed $41.3 million of revenue to the quarter. Other items, including results from AwesomenessTV and Oriental DreamWorks, contributed $24.3 million of revenue to the quarter. Classic Media contributed $9.0 million of revenue to the quarter.

Costs of revenue for the quarter equaled $133.3 million. Selling, general and administrative expenses totaled $49.7 million, including $5.6 million of stock-based compensation expense.

The Company's income tax expense for the second quarter was $10.1 million. 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 32% for the second quarter. The Company currently expects that its full-year 2013 combined effective tax rate will be approximately 30%.

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 third quarter results are expected to be driven by worldwide pay television revenue for Rise of the Guardians and international free television for Kung Fu Panda 2.

Items related to the earnings press release for the second 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 Wednesday, July 31, 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 ir.dreamworksanimation.com.

A replay of the conference call will be available shortly after the call ends on Wednesday, July 31, 2013. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 296687 as the conference ID number. Both the earnings release and archived webcast will be available on the Company's website at ir.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 27 animated feature films, including the franchise properties of Shrek, Madagascar, Kung Fu Panda, How to Train Your Dragon, Puss In Boots, and The Croods.

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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)



June 30, December 31,

2013 2012
---- ----

(in thousands, except
par value

and share amounts)

Assets

Cash and
cash
equivalents $28,845 $59,246

Trade
accounts
receivable,
net of
allowance
for
doubtful
accounts 93,841 109,102

Receivables
from
distributors,
net of
allowance
for
doubtful
accounts 285,118 266,185

Film and
other
inventory
costs, net 875,070 820,482

Prepaid
expenses 24,280 18,593

Other assets 14,241 14,869

Investments
in
unconsolidated
entities 34,005 9,782

Property,
plant and
equipment,
net of
accumulated
depreciation
and
amortization 188,432 188,986

Deferred
taxes, net 232,561 238,007

Intangible
assets, net
of
accumulated
amortization 153,514 148,234

Goodwill 181,983 71,406
------- ------

Total assets $2,111,890 $1,944,892
========== ==========


Liabilities and Equity

Liabilities:

Accounts
payable $4,341 $6,611

Accrued
liabilities 227,706 123,886

Payable to
former
stockholder 262,703 277,632

Deferred
revenue and
other
advances 52,634 25,517

Revolving
credit
facility 200,000 165,000
------- -------

Total
liabilities 747,384 598,646

Commitments and contingencies

Equity:

DreamWorks Animation SKG, Inc.
Stockholders' Equity:

Class A
common shares
stock, par issued, as
value $0.01 of June 30,
per share, 2013 and
350,000,000 December
shares 31, 2012,
authorized, respectively
102,855,343
and
102,687,323 1,029 1,027

Class B
common outstanding,
stock, par as of June
value $0.01 30, 2013
per share, and
150,000,000 December
shares 31, 2012
authorized,
7,838,731
shares
issued and 78 78

Additional
paid-in
capital 1,075,638 1,057,452

Accumulated
other
comprehensive
(loss)
income (2,283) 313

Retained
earnings 1,045,144 1,017,314

Less: Class
A Treasury December
common 31, 2012,
stock, at respectively
cost,
27,029,526
and
25,661,817
shares, as
of June 30,
2013 and (756,217) (730,568)
-------- --------

Total
DreamWorks
Animation
SKG, Inc.
stockholders'
equity 1,363,389 1,345,616

Non-
controlling
interests 1,117 630
----- ---

Total equity 1,364,506 1,346,246
--------- ---------

Total
liabilities
and equity $2,111,890 $1,944,892
========== ==========



DREAMWORKS ANIMATION SKG, INC.


CONSOLIDATED STATEMENTS OF INCOME


(Unaudited)



Three Months
Ended Six Months Ended

June 30, June 30,
-------- --------

2013 2012 2013 2012
---- ---- ---- ----

(in thousands, except per share
amounts)

Revenues $213,436 $162,803 $348,084 $298,887

Costs
of
revenues 133,276 114,247 218,797 210,747
------- ------- ------- -------

Gross
profit 80,160 48,556 129,287 88,140

Product
development 1,069 1,340 2,032 2,474

Selling,
general
and
administrative
expenses 49,711 30,816 92,500 58,281

Other
operating
income
related
to
Oriental
DreamWorks
contributions (2,859) - (2,859) -
------ --- ------ ---

Operating
income 32,239 16,400 37,614 27,385


Non-operating income
(expense):

Interest
income,
net 777 616 1,640 1,184

Other
income,
net 1,050 1,326 2,042 3,842

(Increase)
decrease
in
income
tax
benefit
payable
to
former
stockholder (371) 283 (1,069) 392
---- --- ------ ---

Income
before
loss
from
equity
method
investees
and
income
taxes 33,695 18,625 40,227 32,803


Loss
from
equity
method
investees 1,329 - 1,329 -
----- --- ----- ---

Income
before
income
taxes 32,366 18,625 38,898 32,803

Provision
for
income
taxes 10,118 5,853 10,536 10,957
------ ----- ------ ------

Net
income 22,248 12,772 28,362 21,846

Less:
Net
(loss)
income
attributable
to
non-
controlling
interests (5) - 532 -
--- --- --- ---

Net
income
attributable
to
DreamWorks
Animation
SKG,
Inc. $22,253 $12,772 $27,830 $21,846
======= ======= ======= =======


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

Basic
net
income
per
share $0.27 $0.15 $0.33 $0.26

Diluted
net
income
per
share $0.26 $0.15 $0.33 $0.26

Shares used in
computing net income
per share

Basic 83,524 84,125 84,094 84,031

Diluted 84,533 84,893 84,898 84,807



DREAMWORKS ANIMATION SKG, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)



Six Months Ended

June 30,
--------

2013 2012
---- ----

(in thousands)

Operating activities

Net income $28,362 $21,846

Adjustments to reconcile net income to
net cash provided by operating
activities:

Amortization and
write-off of film
and other
inventory costs 178,023 176,990

Amortization of
intangible assets 4,408 -

Stock-based
compensation
expense 9,837 10,515

Amortization of
deferred financing
costs - 170

Depreciation and
amortization 2,351 1,884

Revenue earned
against deferred
revenue and other
advances (39,061) (32,544)

Income related to
Oriental
DreamWorks
contributions (10,700) -

Loss from equity
method investees 1,329 -

Deferred taxes, net 9,576 11,253

Changes in operating assets and
liabilities, net of the effects of the
acquisition of AwesomenessTV:

Trade accounts
receivable 7,208 3,571

Receivables from
distributors (18,933) 10,790

Film and other
inventory costs (210,984) (233,496)

Intangible assets 1,015 -

Prepaid expenses
and other assets (8,537) (10,749)

Accounts payable
and accrued
liabilities 3,694 4,805

Payable to former
stockholder (14,929) (14,593)

Income taxes
payable/
receivable, net 2,212 (276)

Deferred revenue
and other advances 74,825 58,501
------ ------

Net cash provided
by operating
activities 19,696 8,667
------ -----


Investing activities

Purchase of non-
marketable
securities - (150)

Investments in
unconsolidated
entities (14,720) -

Purchases of
property, plant
and equipment (14,858) (39,348)

Purchase of
AwesomenessTV, net
of cash acquired (30,093) -
------- ---

Net cash used in
investing
activities (59,671) (39,498)
------- -------


Financing Activities

Purchase of
treasury stock (25,854) (4,165)

Borrowings from
revolving credit
facility 45,000 -

Repayments of
borrowings from
revolving credit
facility (10,000) -
------- ---

Net cash provided
by (used in)
financing
activities 9,146 (4,165)
----- ------

Effect of exchange
rate changes on
cash and cash
equivalents 428 79

Decrease in cash
and cash
equivalents (30,401) (34,917)

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

Cash and cash
equivalents at end
of period $28,845 $81,176
======= =======


Non-cash investing activities:

Intellectual
property and
technology
licenses granted
in exchange for
equity interest $10,129 $ -

Services provided
in exchange for
equity interest 571 -

Total non-cash
investing
activities $10,700 $ -
======= ==============


Supplemental disclosure of cash flow
information:

Cash (refunded)
paid during the
period for income
taxes, net $(1,529) $610
======= ====

Cash paid during
the period for
interest, net of
amounts
capitalized $690 $395
==== ====
SOURCE DreamWorks Animation SKG, Inc.

DreamWorks Animation SKG, Inc.

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

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


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