DreamWorks Animation Reports Second Quarter 2013 Financial Results PR Newswire GLENDALE, Calif., July 31, 2013 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 continuesto diversify and evolveinto 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, at4:30 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 onWednesday, 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. dwa-e 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 93,841 109,102 allowance for doubtful accounts Receivables from distributors, net of 285,118 266,185 allowance for doubtful accounts 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 188,432 188,986 accumulated depreciation and amortization Deferred taxes, net 232,561 238,007 Intangible assets, net of accumulated 153,514 148,234 amortization 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: ClassA common stock, par value $0.01 per share, 350,000,000 shares authorized, 102,855,343 and 102,687,323 shares issued, 1,029 1,027 as of June 30, 2013 and December31, 2012, respectively Class B common stock, par value $0.01 per share, 150,000,000 shares authorized, 78 78 7,838,731 shares issued and outstanding, as of June 30, 2013 and December31, 2012 Additional paid-in capital 1,075,638 1,057,452 Accumulated other comprehensive (2,283) 313 (loss) income Retained earnings 1,045,144 1,017,314 Less: ClassA Treasury common stock, at cost, 27,029,526 and 25,661,817 shares, (756,217) (730,568) as of June 30, 2013 and December31, 2012, respectively Total DreamWorks Animation SKG, Inc. 1,363,389 1,345,616 stockholders' equity 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 49,711 30,816 92,500 58,281 administrative expenses Other operating income related to Oriental (2,859) - (2,859) - DreamWorks contributions 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 (371) 283 (1,069) 392 stockholder Income before loss from equity method investees and 33,695 18,625 40,227 32,803 income taxes Loss from equity method 1,329 - 1,329 - investees 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 (5) - 532 - non-controlling interests Net income attributable to DreamWorks Animation SKG, $ 22,253 $ 12,772 $ 27,830 $ 21,846 Inc. 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 178,023 176,990 inventory costs 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 (39,061) (32,544) other advances Income related to Oriental DreamWorks (10,700) - contributions 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 3,694 4,805 liabilities 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 (10,000) - facility Net cash provided by (used in) financing 9,146 (4,165) activities Effect of exchange rate changes on cash and cash 428 79 equivalents 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 $ 10,129 $ - granted in exchange for equity interest Services provided in exchange for equity 571 - interest Total non-cash investing activities $ 10,700 $ - Supplemental disclosure of cash flow information: Cash (refunded) paid during the period for $ (1,529) $ 610 income taxes, net Cash paid during the period for interest, net $ 690 $ 395 of amounts capitalized SOURCE DreamWorks Animation SKG, Inc. Website: http://www.dreamworksanimation.com Contact: Shannon Olivas, DreamWorks Animation Investor Relations, (818) 695-3658, email@example.com
DreamWorks Animation Reports Second Quarter 2013 Financial Results
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