DreamWorks Animation Reports Second Quarter 2013 Financial Results

      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.

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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          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, shannon.olivas@dreamworks.com
 
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