DreamWorks Animation SKG Inc. announced financial results for its fourth quarter and full year ended December 31, 2004.
For the fourth quarter 2004, revenue totaled $495.7 million, costs of revenue were $171.7 million, and net income totaled $192.0 million or $1.99 per share on a fully diluted basis, using a weighted average share count of 96.3 million for the quarter. These results, reflecting the impact of a distribution agreement with DreamWorks Studios effective on Oct. 1, 2004, compared to the same period in 2003 when the company recorded revenue of $134.6 million, costs of revenue of $171.3 million, and a net loss of ($36.6) million, or $(0.48) net loss per diluted share.
For the year ended Dec. 31, 2004, revenue totaled $1.078 billion, costs of revenue were $566.2 million, and net income was $333 million or $4.05 per diluted share. These results incorporate the impact of the distribution agreement effective on Oct. 1, 2004.
"Our first quarter as a public company was a great success by any measure," said ceo Jeffrey Katzenberg. "With the tremendous performance of the SHARK TALE theatrical release and the blockbuster introduction of SHREK 2 into the worldwide home video markets, we had a strong quarter, established excellent momentum, and reinforced our brand."
Katzenberg noted that SHREK 2 generated more than $360 million in revenue for the fourth quarter and totaled more than $900 million in worldwide box office in 2004. In addition, SHARK TALE, released domestically on Oct. 1, 2004, generated $62 million of fourth quarter revenue and achieved worldwide box office of approximately $316 million through the end of 2004.
The company's next film, MADAGASCAR will be released on May 27, 2005. "We believe MADAGASCAR is not only a great story but it also features visual imagery that is really unique for CG animation," noted Katzenberg. "This is a release that we are very excited about and we think audiences will enjoy the same sophisticated humor and broad appeal that they have come to expect from DreamWorks Animation."
Pro forma results for the fourth quarter ended Dec. 31, 2004, which assume the company's distribution agreement with DreamWorks Studios had been in effect for the entire year, were as follows: revenue totaled $445.2 million, costs of revenues were $144.8 million and net income was $168.1 million or $1.61 per diluted share on a pro forma basis using the average weighted share count of 104.5 million shares. The difference between actual results and pro forma results is driven primarily by the recoupment of marketing and distribution costs for SHARK TALE incurred in the third quarter prior to the film's release.
Pro forma results for the year ended Dec. 31, 2004, were as follows: revenue totaled $804.4 million, costs of revenue were $275.4 million and net income was $340.4 million, or $3.26 per diluted share on a pro forma basis using an average weighted share count of 104.5 million shares.
Both actual and pro forma results reflect several items that generally relate to the company's separation and its Oct. 27, 2004, IPO including transaction costs, stock and compensation expense, and income tax related items. These include adjustments that reduced the company's tax provision in the fourth quarter on both an actual and pro forma basis due to a number of factors related to the separation and IPO. Going forward the company anticipates an effective tax rate of approximately 38%.
In addition, the company incurred incremental expenses related to the separation and IPO including the cost for issuing of fully vested stock and restricted shares issued at the time of the IPO of approximately $21.0 million, general costs related to the separation and IPO of approximately $5 million, as well as a special all employee bonus related to the company's IPO and strong performance in 2004 which totaled approximately $8 million. These items are included in the company's reported SG&A in both actual and pro forma results for the fourth quarter of 2004.
DreamWorks Animation is principally devoted to developing and producing computer generated, or CG, animated feature films.