Shrek Forever After drives profit for DreamWorks Animation in Q3

MUMBAI: DreamWorks Animation SKG’s highest-ever grossing international film release Shrek Forever After has propelled the company’s profit in Q3.

DreamWorks Animation reported third-quarter net income of $39.8 million, or 47 cents a share, compared with $19.6 million, or 23 cents a share in the period a year ago. The company’s revenue was $188.9 million, up from $135.4 million a year earlier.

"Our strong third quarter was driven primarily by the international box office success of Shrek Forever After, which has become DreamWorks Animation’s highest grossing international release of all time. 2010 has already been a historic year for the Company and we are still looking forward to the theatrical release of Megamind on November 5th as well as home entertainment results from both How to Train Your Dragon and Shrek Forever After yet to come this year," said DreamWorks Animation CEO Jeffrey Katzenberg.

Shrek Forever After, which was released on 21 May, 2010, contributed $120.4 million of revenue in the quarter, driven by its continued performance at the worldwide box office. The film has reached $238 million in domestic box office and $497 million in international box office for a worldwide total of $735 million to date.

How to Train Your Dragon, which was released on 26 March, 2010, contributed $0.8 million of revenue to the quarter. It has reached approximately $493 million in worldwide box office and was released into the home entertainment market on 15 October, 2010.

The company’s 2009 release, Monsters vs. Aliens, contributed $11 million of revenue to the quarter, driven by international pay television and home entertainment. Through the end of the third quarter, it reached an estimated 8.4 million home entertainment units sold, net of actual and estimated future returns.

The company’s 2008 releases, Madagascar: Escape 2 Africa and Kung Fu Panda, contributed $2.6 million and $9.8 million of revenue to the quarter, respectively. Library and other items contributed approximately $44.3 million of revenue to the quarter.

Costs of revenue for the quarter equaled $107.7 million. Selling, general and administrative expenses totaled $26.5 million, including approximately $6.4 million of stock compensation expense.

Additionally, the company recorded an expense of approximately $18 million related to its tax sharing agreement with a former stockholder. Combining the amount due to the former stockholder with the Company’s income tax benefit of approximately $2.0 million resulted in an overall equivalent tax rate of 28.8% for the third quarter.

Looking ahead to the remainder of the year, the company’s fourth quarter results are expected to be driven primarily by the home entertainment performance of How To Train Your Dragon and Shrek Forever After. Shrek Forever After and Shrek: The Whole Story will be released into the home entertainment market on December 7, 2010. Consumer product revenue associated with the theatrical release of Megamind and domestic network television revenue for Kung Fu Panda are also expected to contribute revenue to the company in the fourth quarter.