DreamWorks Animation SKG, Inc. (Nasdaq: DWA) today announced financial results for its first quarter ended March 31, 2010. In the quarter, the Company reported total revenue of $162.1 million and net income of $21.7 million, or $0.24 per share on a fully diluted basis.
“2010 is off to a strong start, thanks in large part to the performance of How to Train Your Dragon, which – having grossed nearly $375 million to date in worldwide box office – has become DreamWorks Animation’s next franchise. We plan to release the sequel theatrically in 2013,” said Jeffrey Katzenberg, CEO of DreamWorks Animation. “3D continues to have a tremendous impact on the industry at large and we are now looking forward with great anticipation to bringing Shrek Forever After, the final chapter in our beloved Shrek series and the first in 3D, to audiences across the globe next month.”
How to Train Your Dragon, which was released on March 26, 2010, contributed $59.7 million of revenue to the quarter, driven primarily by merchandising and licensing activities. It has reached approximately $180 million in domestic box office and approximately $195 million in international box office to date.
The Company’s 2009 release, Monsters vs. Aliens, contributed $24.6 million of revenue to the quarter, driven primarily by domestic pay television. The film reached an estimated 7.5 million home entertainment units sold, net of actual and estimated future returns, by the end of the first quarter.
The Company’s 2008 releases, Madagascar: Escape 2 Africa and Kung Fu Panda, contributed $19.2 million and $5.7 million of revenue to the quarter, respectively, with the former driven by international pay television and home entertainment and the latter driven primarily by home entertainment. Through the end of the first quarter, Madagascar: Escape 2 Africa reached 13.7 million home entertainment units sold worldwide, net of actual and estimated future returns.
Library and other titles contributed approximately $52.9 million of revenue to the quarter.
Costs of revenue for the quarter equaled $106.2 million. Selling, general and administrative expenses totaled $23.5 million, including approximately $6.1 million of stock compensation expense.
Additionally, the Company recorded an expense of approximately $8.2 million, which includes a charge of approximately $2.1 million resulting from an adjustment to prior year taxes, related to a tax sharing agreement with a former stockholder. Combining the amount due to the former stockholder with the Company’s income tax provision of approximately $4.6 million results in an overall equivalent tax rate of 37.0% for the quarter.
The Company also provided an update to its share repurchase program. As of April 27, 2010, the Company has repurchased approximately 0.9 million shares for approximately $37 million. The Company has approximately $113 million remaining under its current authorization.
The Company’s second quarter results are expected to be driven primarily by the performance of Shrek Forever After. The Company expects its full year 2010 results, which will likely be heavily weighted toward the second half of the year, to be driven primarily by the continued performance of How to Train Your Dragon and the performance of Shrek Forever After, which is scheduled to be released on May 21, 2010.
Items related to the earnings press release for the first quarter of 2010 will be discussed in more detail on the Company’s first quarter 2010 earnings conference call later today.