DreamWorks Animation Reports Second Quarter 2008 Financial Results
For the quarter ended June 30, 2008, DreamWorks Animation reported total revenue of $140.8 million and net income of $27.5 million, a 37 percent drop from the same time period last year.
This equals a $0.30 per share on a fully diluted basis, compared to revenue of $222.5 million and net income of $61.8 million, or $0.60 per share on a fully diluted basis, for the same period in 2007.
"Last month, KUNG FU PANDA delivered DreamWorks Animation's best-ever domestic opening for an original film. Having recently crossed the $200 million mark at the domestic box office, it is now our most successful non-sequel since the company went public," said Jeffrey Katzenberg, CEO of DreamWorks Animation. "KUNG FU PANDA's performance has exceeded expectations not only domestically but also internationally, where it continues to achieve record-breaking openings across both Asia and Europe."
To date, KUNG FU PANDA has grossed approximately $210 million at the domestic box office, making it the fourth most successful film of the year. Internationally, the film has set box office records for animated openings in several key territories, including South Korea, Russia, Australia, Mexico and China, where it has become the most successful animated film in that country's history. In total, the film has reached more than $510 million in worldwide box office.
For the quarter, KUNG FU PANDA contributed $46.4 million of revenue. In addition to consumer products and revenue from the company's distributor, revenues included a non-recurring benefit from the completion of a strategic relationship, which accounted for slightly less than half of the film's contribution in the period.
SHREK THE THIRD, the company's 2007 summer blockbuster, contributed approximately $29.9 million of revenue to the quarter, primarily driven by a domestic pay television payment. Through the second quarter, the film reached an estimated 20.3 million home entertainment units shipped worldwide, net of actual and estimated future returns.
DreamWorks' 2007 fall release, BEE MOVIE, contributed approximately $25.5 million of revenue to the quarter, driven by international home entertainment performance. The film reached an estimated 7.1 million units shipped worldwide through the second quarter, net of actual and estimated future returns.
FLUSHED AWAY, their 2006 fall release, and OVER THE HEDGE, their 2006 summer release, delivered $7.3 million and $5.4 million of revenue, respectively, primarily from international pay television.
WALLACE & GROMIT: THE CURSE OF THE WERE-RABBIT, the company's fall 2005 release, contributed approximately $5.3 million of revenue to the quarter, primarily from international free television. Library and other titles contributed $21 million of revenue to the second quarter, driven by international free television and continued catalogue home entertainment performance.
Cost of revenue for the quarter equaled $75.2 million while selling, general and administrative expenses totaled $27.6 million, including $8.6 million of stock compensation expense.
Results for the quarter also included a tax benefit of approximately $9.4 million related to the company's tax sharing agreement with a stockholder, which resulted in a lower effective tax rate. This benefit was partially offset by a $8 million increase in cost for the income tax benefit payable to the stockholder (as shown on the consolidated statement of income before the line item, "income before income taxes"), resulting in an overall net increase to net income of $1.4 million, or approximately $0.02 per share on a fully diluted basis.
Looking ahead to the remainder of the year, the company's third quarter results are expected to be driven by KUNG FU PANDA's continued box office performance. To date, the film has been released in the majority of international territories, including Japan on July 26, 2008 and has generated approximately 60 percent of its box office receipts overseas. Because the company's distributor reports international results on a 30-day lag, a significant portion of the film's international performance is expected to be recognized in the third quarter.
This equals a $0.30 per share on a fully diluted basis, compared to revenue of $222.5 million and net income of $61.8 million, or $0.60 per share on a fully diluted basis, for the same period in 2007.
"Last month, KUNG FU PANDA delivered DreamWorks Animation's best-ever domestic opening for an original film. Having recently crossed the $200 million mark at the domestic box office, it is now our most successful non-sequel since the company went public," said Jeffrey Katzenberg, CEO of DreamWorks Animation. "KUNG FU PANDA's performance has exceeded expectations not only domestically but also internationally, where it continues to achieve record-breaking openings across both Asia and Europe."
To date, KUNG FU PANDA has grossed approximately $210 million at the domestic box office, making it the fourth most successful film of the year. Internationally, the film has set box office records for animated openings in several key territories, including South Korea, Russia, Australia, Mexico and China, where it has become the most successful animated film in that country's history. In total, the film has reached more than $510 million in worldwide box office.
For the quarter, KUNG FU PANDA contributed $46.4 million of revenue. In addition to consumer products and revenue from the company's distributor, revenues included a non-recurring benefit from the completion of a strategic relationship, which accounted for slightly less than half of the film's contribution in the period.
SHREK THE THIRD, the company's 2007 summer blockbuster, contributed approximately $29.9 million of revenue to the quarter, primarily driven by a domestic pay television payment. Through the second quarter, the film reached an estimated 20.3 million home entertainment units shipped worldwide, net of actual and estimated future returns.
DreamWorks' 2007 fall release, BEE MOVIE, contributed approximately $25.5 million of revenue to the quarter, driven by international home entertainment performance. The film reached an estimated 7.1 million units shipped worldwide through the second quarter, net of actual and estimated future returns.
FLUSHED AWAY, their 2006 fall release, and OVER THE HEDGE, their 2006 summer release, delivered $7.3 million and $5.4 million of revenue, respectively, primarily from international pay television.
WALLACE & GROMIT: THE CURSE OF THE WERE-RABBIT, the company's fall 2005 release, contributed approximately $5.3 million of revenue to the quarter, primarily from international free television. Library and other titles contributed $21 million of revenue to the second quarter, driven by international free television and continued catalogue home entertainment performance.
Cost of revenue for the quarter equaled $75.2 million while selling, general and administrative expenses totaled $27.6 million, including $8.6 million of stock compensation expense.
Results for the quarter also included a tax benefit of approximately $9.4 million related to the company's tax sharing agreement with a stockholder, which resulted in a lower effective tax rate. This benefit was partially offset by a $8 million increase in cost for the income tax benefit payable to the stockholder (as shown on the consolidated statement of income before the line item, "income before income taxes"), resulting in an overall net increase to net income of $1.4 million, or approximately $0.02 per share on a fully diluted basis.
Looking ahead to the remainder of the year, the company's third quarter results are expected to be driven by KUNG FU PANDA's continued box office performance. To date, the film has been released in the majority of international territories, including Japan on July 26, 2008 and has generated approximately 60 percent of its box office receipts overseas. Because the company's distributor reports international results on a 30-day lag, a significant portion of the film's international performance is expected to be recognized in the third quarter.
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