DreamWorks Animation Reports Second Quarter 2008 Financial Results
Due to its strong performance, the company believes that KUNG FU PANDA is on track to become DreamWorks Animation's most successful original film of all time worldwide. That said, the title's international box office performance has benefited from favorable foreign exchange rates. While this generally increases the company's revenues as expressed in dollars, it also results in higher international theatrical marketing costs for the film. As a result, the company anticipates that the worldwide theatrical marketing expense will be meaningfully higher than it has observed historically. This change will increase the amount that the company's distributor needs to recoup and, consequently, lower the company's revenue in the third quarter. Given the current foreign exchange rate environment, the company expects that its worldwide theatrical marketing expense will remain at a higher level than it has previously experienced.
KUNG FU PANDA will be released into the domestic home entertainment market this November and will likely be the primary contributor of revenue in the fourth quarter. The company's fall release, MADAGASCAR: ESCAPE 2 AFRICA, is scheduled to open domestically on November 7, 2008. The company does not anticipate generating significant revenue in the fourth quarter from the title, as its distributor may not have recouped its upfront marketing and distribution costs.
In addition to results for the quarter, the company announced an authorization for future repurchases of up to $150 million of its outstanding Class A common stock. These repurchases may be made in the open market, in block trades, or in privately negotiated transactions. Year to date, the company has repurchased approximately $88 million, or 3.7 million shares, at an average per-share price of approximately $24.
The company also announced plans to spend approximately $85 million over the next two years to expand and improve its animation studio in Glendale, California in order to accommodate general business growth, including 3-D expansion. The project began during the second quarter of 2008.