DreamWorks Delivers Outstanding Fourth Quarter And Year-End 2015 Results Highlighted By Strong Growth Across Core Business Segments

- DreamWorks reports full-year revenue growth of 34% to $916 million

(PRNewswire) — DreamWorks Animation SKG, Inc. (Nasdaq: DWA) today reported revenues for the quarter ended December 31, 2015 of $319.3 million, representing an increase of 36.3% from the same period in 2014. In addition, DWA reported adjusted(a) operating income of $56.5 million and adjusted(a) net income attributable to DWA of $48.1 million or $0.55 per diluted share for the quarter ended December 31, 2015. Adjusted financial results exclude a $6.1 million pre-tax charge associated with the Company's Restructuring Plan announced on January 22, 2015.

Including the impact of the previously announced Restructuring Plan, DWA reported operating income of $50.4 million and reported net income attributable to DWA of $42.1 million, or $0.48 per diluted share for the quarter ended December 31, 2015.

"Although 2015 was a transitional year for our company, I am exceptionally proud of what the DreamWorks team has accomplished this year and I'm pleased to report that we have met or exceeded our stated full year 2015 goals across all key financial metrics," said Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. "DWA delivered its best top line result in 11 years and highest revenue growth in eight years, accelerating 34% from 2014. In addition, our positive adjusted operating income and operating cash flow demonstrate our commitment to profitably grow our businesses while keeping a sharp eye on cost management and productivity improvements."

Katzenberg continued, "While there is still much work to be done before we cross the goal line on the objectives we shared a year ago, we enter 2016 with considerable momentum. Our continued focus on executing on our strategic goals will not only ensure sustainable and profitable growth over the long term, but create shareholder value for years to come."

Fourth Quarter Review:
DWA's fourth quarter revenues of $319.3 million increased 36.3% versus the prior-year period driven by performance across all core business segments.

Revenues for the quarter ended December 31, 2015 from the Feature Film segment increased to $146.4 million, up from $131.3 million in the prior-year period. Segment gross profit improved to $63.5 million compared to a loss of $(152.2) million in the same period of last year. Gross profit in the prior-year period included the impact of film and other inventory write-offs of $153.6 million stemming from the Company's 2015 Restructuring Plan, as well as total impairment charges of $39.7 million related to The Penguins of Madagascar and Mr. Peabody and Sherman.

Home contributed feature film segment revenue of $55.3 million in the quarter ended December 31, 2015, primarily from worldwide pay television and home entertainment. Through the end of the fourth quarter, the film reached an estimated 6.0 million home entertainment units sold worldwide, net of actual and estimated future returns.

The Penguins of Madagascar contributed feature film segment revenue of $13.8 million in the quarter ended December 31, 2015, primarily from international pay television. Through the end of the fourth quarter, the film reached an estimated 3.9 million home entertainment units sold worldwide, net of actual and estimated future returns.

How to Train Your Dragon 2 contributed feature film segment revenue of $4.0 million in the quarter ended December 31, 2015, primarily from worldwide home entertainment. The film reached an estimated 9.4 million home entertainment units sold worldwide through the end of the fourth quarter, net of actual and estimated future returns.

Mr. Peabody and Sherman contributed feature film segment revenue of $2.1 million in the quarter ended December 31, 2015, primarily from worldwide home entertainment. The film reached an estimated 4.5 million home entertainment units sold worldwide through the end of the fourth quarter, net of actual and estimated future returns.

Library titles contributed feature film segment revenue of $71.2 million in the quarter ended December 31, 2015, driven by an extension of existing licensing arrangements for the SVOD distribution of certain titles as well as worldwide television and home entertainment revenues for a number of titles including The Croods and Turbo.

Revenues for the quarter ended December 31, 2015 from the Television Series and Specials segment increased to $104.9 million, compared to $50.7 million during the prior-year period. The increase in revenues was attributable to a significantly higher number of episodes delivered under our episodic content licensing deals and an extension of existing licensing arrangements related to the SVOD distribution of our seasonal television specials. Segment gross profit increased to $46.6 million in the current quarter, from a loss of $(2.6) million in the same period of the prior year. The increase was primarily driven by higher revenues, favorable amortization rates associated with our episodic series and holiday specials and lower marketing spend compared with the prior-year period. Gross profit in the prior-year period was impacted by write-downs of capitalized film costs totaling $13.3 million, primarily due to revisions in estimated future revenues for certain television specials.

Revenues from the Consumer Products segment increased to $31.7 million in the quarter ended December 31, 2015, compared to $22.1 million in the same period last year. The increase was primarily driven by revenues earned from retail development and location based entertainment initiatives as well as merchandise licensing agreements related to our episodic television series.  Segment gross profit decreased to $5.7 million from $6.1 million in the prior-year period as higher revenues were offset by a one time expense of $7.0 million related to our retail development initiatives. Gross profit for the quarter ended December 31, 2014 was impacted by impairment charges totaling $2.4 million, primarily related to The Penguins of Madagascar.

Revenues for the quarter ended December 31, 2015 from the Company's New Media segment were $32.9 million compared to $24.9 million during the three months ended December 31, 2014. This increase was primarily attributable to revenue generated from licensing and distribution of content and, to a lesser extent, advertising, brand sponsorship and talent management arrangements. In the prior-year period, the Company reported certain advertising and talent management revenues in this segment on a "gross" basis rather than on a "net" basis.  For comparative purposes, if the New Media segment's revenues had been reported on a "net" basis during the quarter ended December 31, 2014, revenues for the quarter ended December 31, 2015 would reflect an increase of 41% compared with the prior-year period. Segment gross profit, which is not affected by this item, increased to $20.6 million from $13.2 million in the prior-year period, primarily due to higher revenue contributions from the licensing and distribution of content, as well as reduced amortization of intangible assets.

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