DreamWorks Animation, LLC - FORM 8-K - EX-99.1 - PRESS RELEASE - July 31, 2012

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Exhibit 99.1



DREAMWORKS ANIMATION REPORTS SECOND QUARTER 2012 FINANCIAL RESULTS
________________________________________________________________________

Glendale, California - July 31, 2012 - DreamWorks Animation SKG, Inc. (NASDAQ: DWA) today announced financial results for its second quarter ended June 30, 2012. For the quarter, the Company reported total revenue of $162.8 million and net income of $12.8 million, or $0.15 per share on a fully diluted basis.

“DreamWorks Animation's second quarter of 2012 was driven primarily by the box office performance of Madagascar 3: Europe's Most Wanted, the seventh highest-grossing film of the year,” said Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. “The third and biggest film in our blockbuster Madagascar franchise has surpassed $500 million at the worldwide box office to date, with a large number of key international territories yet to come.”

Madagascar 3: Europe's Most Wanted contributed approximately $54.8 million of revenue to the quarter, driven primarily by its performance at the worldwide box office. The film was released on June 8, 2012 and has grossed approximately $210 million at the domestic box office and $293 million at the international box office to date.

Puss In Boots contributed $22.8 million of revenue to the quarter, driven primarily by home entertainment. The film reached an estimated 5.2 million home entertainment units sold worldwide through the end of the second quarter, net of actual and estimated future returns.

Kung Fu Panda 2 contributed $46.4 million of revenue to the quarter, driven primarily by domestic pay television. The film reached an estimated 5.7 million home entertainment units sold worldwide through the end of the second quarter, net of actual and estimated future returns.

Megamind contributed $1.4 million of revenue to the quarter, driven primarily by home entertainment. The film reached an estimated 5.5 million home entertainment units sold worldwide through the end of the second quarter, net of actual and estimated future returns.

Library, which now includes Shrek Forever After, contributed approximately $27.4 million of revenue to the quarter. All Other items, including non-feature film businesses, contributed $10.0 million of revenue to the quarter, of which Shrek The Musical in London was the single largest contributor.

Costs of revenue for the quarter equaled $114.2 million. Selling, general and administrative expenses totaled $30.8 million, including approximately $5.2 million of stock-based compensation expense.

The Company's income tax expense for the second quarter was $5.9 million. Its combined effective tax rate - the actual tax rate coupled with the effect of the Company's tax sharing agreement with a former stockholder - was approximately 30% for the second




quarter.

DreamWorks Animation's third quarter results are expected to be driven primarily by the continued theatrical performance of Madagascar 3: Europe's Most Wanted. Television revenue for Puss In Boots is also expected to contribute to the Company's third quarter results.

Items related to the earnings press release for the second quarter of 2012 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, July 31, 2012, 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, July 31, 2012. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 251569 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 four consecutive years. In 2012, DreamWorks Animation ranks #14 on the list. All of DreamWorks Animation's feature films are now being produced in 3D. The Company has theatrically released a total of 24 animated feature films, including the franchise properties of Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon. The Company's theatrical releases for the current year are Madagascar 3: Europe's Most Wanted on June 8, 2012 and Rise of the Guardians on November 21, 2012.

Contact:
DreamWorks Animation Investor Relations
(818) 695-3900
ir@dreamworksanimation.com

DreamWorks Animation Corporate Communications
(818) 695-3658
shannon.olivas@dreamworks.com

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.

** FINANCIAL TABLES ATTACHED**








DREAMWORKS ANIMATION SKG, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2012
 
December 31,
2011
 
(in thousands,
except par value and share
amounts)
Assets
 
 
 
Cash and cash equivalents
$
81,176

 
$
116,093

Trade accounts receivable, net of allowance for doubtful accounts
69,977

 
72,456

Income taxes receivable
4,471

 
3,960

Receivable from Paramount, net of allowance for doubtful accounts
203,869

 
214,647

Film and other inventory costs, net
960,505

 
882,646

Prepaid expenses
30,941

 
20,842

Other assets
12,052

 
13,023

Property, plant and equipment, net of accumulated depreciation and amortization
193,209

 
172,511

Deferred taxes, net
237,266

 
248,519

Goodwill
34,216

 
34,216

Total assets
$
1,827,682

 
$
1,778,913

Liabilities and Stockholders' Equity
 
 
 
Liabilities:
 
 
 
Accounts payable
$
5,557

 
$
3,283

Accrued liabilities
112,996

 
105,505

Payable to former stockholder
279,804

 
294,397

Deferred revenue and other advances
35,333

 
19,032

Total liabilities
433,690

 
422,217

Commitments and contingencies


 


Stockholders’ equity:
 
 
 
Class A common stock, par value $.01 per share, 350,000,000 shares authorized, 98,841,174 and 98,333,454 shares issued, as of June 30, 2012 and December 31, 2011, respectively
988

 
983

Class B common stock, par value $.01 per share, 150,000,000 shares authorized, 10,838,731 and 10,838,731 shares issued and outstanding, as of June 30, 2012 and December 31, 2011, respectively
108

 
108

Additional paid-in capital
1,042,938

 
1,023,405

Accumulated other comprehensive loss
(918
)
 
(1,041
)
Retained earnings
1,075,582

 
1,053,736

Less: Class A Treasury common stock, at cost, 25,369,756 and 25,139,548 shares, as of June 30, 2012 and December 31, 2011, respectively
(724,706
)
 
(720,495
)
Total stockholders’ equity
1,393,992

 
1,356,696

Total liabilities and stockholders’ equity
$
1,827,682

 
$
1,778,913







DREAMWORKS ANIMATION SKG, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
 
(in thousands, except per share amounts)
Revenues
$
162,803

 
$
218,255

 
$
298,887

 
$
326,292

Costs of revenues
114,247

 
141,311

 
210,747

 
213,338

Gross profit
48,556

 
76,944

 
88,140

 
112,954

Product development
1,340

 
255

 
2,474

 
423

Selling, general and administrative expenses
30,816

 
29,554

 
58,281

 
59,683

Operating income
16,400

 
47,135

 
27,385

 
52,848

Interest income, net
616

 
44

 
1,184

 
260

Other income, net
1,326

 
2,060

 
3,842

 
4,060

Decrease in income tax benefit payable to former stockholder
283

 
175

 
392

 
4,764

Income before income taxes
18,625

 
49,414

 
32,803

 
61,932

Provision for income taxes
5,853

 
15,341

 
10,957

 
19,065

Net income
$
12,772

 
$
34,073

 
$
21,846

 
$
42,867

Basic net income per share
$
0.15

 
$
0.41

 
$
0.26

 
$
0.51

Diluted net income per share
$
0.15

 
$
0.40

 
$
0.26

 
$
0.51

Shares used in computing net income per share
 
 
 
 
 
 
 
Basic
84,125

 
83,384

 
84,031

 
83,759

Diluted
84,893

 
84,565

 
84,807

 
84,854








DREAMWORKS ANIMATION SKG, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Six Months Ended
 
June 30,
 
2012
 
2011
 
(in thousands)
Operating activities
 
 
 
Net income
$
21,846

 
$
42,867

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Amortization and write-off of film and other inventory costs
176,990

 
172,568

Stock-based compensation expense
10,515

 
15,546

Depreciation and amortization
2,054

 
1,689

Revenue earned against deferred revenue and other advances
(32,544
)
 
(49,360
)
Deferred taxes, net
11,253

 
26,702

Changes in operating assets and liabilities:
 
 
 
Trade accounts receivable
3,571

 
15,524

Receivable from Paramount
10,790

 
12,449

Film and other inventory costs
(233,496
)
 
(233,897
)
Prepaid expenses and other assets
(10,749
)
 
(1,374
)
Accounts payable and accrued liabilities
4,805

 
(35,455
)
Payable to former stockholder
(14,593
)
 
(32,665
)
Income taxes payable/receivable, net
(276
)
 
(8,739
)
Deferred revenue and other advances
58,501

 
71,166

Net cash provided by (used in) operating activities
8,667

 
(2,979
)
Investing activities
 
 
 
Purchases of non-marketable securities
(150
)
 
—

Purchases of property, plant and equipment
(39,348
)
 
(21,347
)
Net cash used in investing activities
(39,498
)
 
(21,347
)
Financing activities
 
 
 
Deferred financing costs
—

 
(338
)
Purchase of treasury stock
(4,165
)
 
(25,660
)
Net cash used in financing activities
(4,165
)
 
(25,998
)
Effect of exchange rate changes on cash and cash equivalents
79

 
(331
)
Decrease in cash and cash equivalents
(34,917
)
 
(50,655
)
Cash and cash equivalents at beginning of period
116,093

 
163,819

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

 
$
113,164

Supplemental disclosure of cash flow information:
 
 
 
Cash paid during the period for income taxes, net of amounts refunded
$
610

 
$
1,384

Cash paid during the period for interest, net of amounts capitalized
$
395

 
$
290




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