DreamWorks Animation Reports Third Quarter Earnings up by 17 percent

1020983-dreamworks-animation-reports-third-quarter-earningsDreamWorks Animation SKG, Inc. today announced financial results for its third quarter ended September 30, 2014. For the quarter, the Company reported total revenue of $180.9 million and net income attributable to the Company of $11.9 million, or $0.14 per diluted share. This compares to revenue of $154.5 million and net income attributable to the Company of $10.1 million, or $0.12 per diluted share in the third quarter of 2013.

“The third quarter of 2014 was strong for DreamWorks Animation, with both quarterly revenue and earnings per share up 17% in a year-over-year comparison,” commented Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. “Driving the Company’s third quarter results is the blockbuster performance of How to Train Your Dragon 2, which has reached over $615 million at the worldwide box office to become the highest-grossing animated film of the year.”

The feature film segment contributed revenue of $142.4 million and segment gross profit of $64.3 million to the third quarter.

How to Train Your Dragon 2 contributed feature film revenue of $74.2 million to the third quarter, primarily from its continued performance at the worldwide box office.

TurboThe Croods and Rise of the Guardians contributed feature film revenue of $12.7 million, $1.8 million and $3.5 million, respectively, to the third quarter and reached an estimated 5.3 million, 7.8 million and 5.8 million home entertainment units sold worldwide, respectively, through the end of the third quarter, net of actual and estimated future returns.

Library titles contributed feature film revenue of $50.2 million to the third quarter.

The Television segment contributed revenue of $14.3 million and segment gross profit of $2.3 million to the third quarter, primarily from Classic Media content, the Turbo F.A.S.T. series and DreamWorks Dragons: Riders of Berk on Cartoon Network.

The Consumer Products segment contributed revenue of $12.1 million and segment gross profit of $4.2 million to the third quarter.

The segment consisting of all other items contributed revenue of $12.1 million and segment gross profit of $1.2 million to the third quarter, primarily from AwesomenessTV. The Company reduced the estimated fair value of the contingent consideration related to its prior acquisition of AwesomenessTV resulting in a $4.9 million pretax gain in the third quarter.

Due to the Company’s continued focus on diversification and growth in the variety of business lines in which it now operates, it is now presenting all selling and marketing expenses as a single line item on its statements of operations. Certain selling and marketing expenses previously captured in costs of revenue and selling, general and administrative expenses will now be recorded in the selling and marketing expense line item.

Costs of revenue for the third quarter equaled $103.7 million. Selling and marketing expenses totaled $8.8 million for the third quarter. General and administrative expenses totaled $55.0 million.

The Company’s income tax expense for the third quarter was approximately $2.6 million. The Company’s combined effective tax rate, its actual tax rate coupled with the effect of a tax sharing agreement with a former stockholder, was approximately 30% for the third quarter.

The Company’s fourth quarter 2014 results are expected to be driven primarily by its feature film segment, including results from the theatrical release of Penguins of Madagascar and the home entertainment release of How to Train Your Dragon 2.