DreamWorks Animation SKG, Inc. (Nasdaq: DWA) today announced financial results for its first quarter ended March 31, 2011. For the quarter, the Company reported total revenue of $108.0 million and net income of $8.8 million, or $0.10 per share on a fully diluted basis.
“DreamWorks Animation’s first quarter of 2011 was driven primarily by our 2010 films, including Megamind, which had a solid performance following its February 25th release into the home entertainment market,” said Jeffrey Katzenberg, CEO of DreamWorks Animation. “We now look forward to kick-starting the summer movie-going season with Kung Fu Panda 2 on May 26th, as family entertainment – and CG animation in particular – has performed at the top of the box office charts so far this year.”
Megamind, which was released on November 5, 2010, contributed $18.1 million of revenue in the quarter, driven primarily by its domestic home video release. The film reached an estimated 2.9 million home entertainment units sold worldwide through the end of the quarter, net of actual and estimated future returns.
Shrek Forever After, which was released on May 21, 2010, contributed $19.9 million of revenue in the quarter, driven primarily by home entertainment. The film reached an estimated 8.2 million home entertainment units sold worldwide through the end of the quarter, net of actual and estimated future returns.
How to Train Your Dragon, which was released on March 26, 2010, contributed $8.7 million of revenue in the quarter, driven primarily by home entertainment. The film reached an estimated 8.3 million home entertainment units sold worldwide through the end of the quarter, net of actual and estimated future returns.
Kung Fu Panda contributed $12.1 million of revenue to the quarter, primarily from international free television, and Madagascar 2 contributed revenue of $19.1 million, primarily from domestic and international free television.
Library and other items, including non-film businesses, contributed approximately $30.1 million of revenue to the quarter.
Costs of revenue for the quarter equaled $72.0 million. Selling, general and administrative expenses totaled $30.1 million, including approximately $6.7 million of stock-based compensation expense.
The Company’s determination during the current quarter of its ability to claim certain tax deductions related to prior years resulted in a benefit of $4.6 million recorded in our first quarter income statement as a decrease in income tax benefit payable to former stockholder. Combining this benefit with the Company’s income tax provision of $3.7 million resulted in a first quarter net tax benefit of approximately $0.9 million. The Company currently expects that its 2011 combined effective tax rate (its actual tax rate coupled with the effect of our tax sharing agreement with a former stockholder) will be approximately 30%.
The Company also provided an update to its share repurchase program. Year to date, the Company has repurchased approximately 0.9 million shares for $25 million. The Company has $125 million remaining under its current authorization.
The Company’s second quarter and full year results are expected to be driven by Kung Fu Panda 2, which is scheduled to be released on May 26, 2011. Television revenue for Madagascar 2, How to Train Your Dragon and Shrek Forever After is also expected to contribute to the Company’s second quarter results.
Items related to the earnings press release for the first quarter of 2011 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 26, 2011, at 4:30 p.m. (ET). Investors can access the call by dialing (800) 230-1074 in the U.S. and (612) 288-0340 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 26, 2011. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 198739 as the conference ID number. Both the earnings release and archived webcast will be available on the Company’s website at www.dreamworksanimation.com.