DreamWorks 4Q Profit Down but Tops Views

DreamWorks 4Q Profit Down but Tops Views

By GARY GENTILE, AP Business Writer 12 minutes ago

LOS ANGELES - Fourth quarter profits fell by more than half at DreamWorks Animation SKG Inc. as DVD sales of "Madagascar" failed to match last year's box office receipts from the blockbuster "Shrek 2."
The company reported net income of $63.2 million, or 61 cents per share in the quarter ended Dec. 31, 2005, compared with net income of $192 million, of $1.99 per share in the same period last year.

Revenue fell to $172.9 million from $495.7 million in the same period last year.

The fourth-quarter results included a one-time gain of 27 cents per share from a tax benefit resulting from two discontinued film projects written off in 2003.

Analysts surveyed by Thomson Financial had expected earnings of 42 cents per share.

Results were driven mainly by home video revenue from the film "Madagascar," which contributed $152.3 million worth of revenue during the quarter.

Last year's quarter included home video revenue from the company's huge hit "Shrek 2" and box office revenue from "Shark Tale."

Despite winning an Oscar for the film "Wallace & Gromit: the Curse of the Were-Rabbit," DreamWorks Animation took a charge of $25.1 million for the film, which did not perform well at the box office and has not been doing exceptionally well in home video release. The write off reduced fourth-quarter earnings by 15 cents per share.

The loss was in addition to a previous writedown of $3.9 million on the film taken in the third quarter.

The Glendale, Calif., company did not give earnings guidance for 2006. DreamWorks Animation said its next film, "Over the Hedge," will be released in May and may not generate profits for the company until its release on home video in the fourth quarter.

The film "Flushed Away" will be released in November and will not generate significant returns until 2007.

DreamWorks Animation Chief Executive Jeffrey Katzenberg said the company is in early stages of discussions with Viacom Inc.'s Nickelodeon network on possible TGV projects.

DreamWorks Animation's former parent, DreamWorks SKG Inc., announced a $1.6 billion deal in December for its sale to Paramount Pictures, a division of Viacom. As part of the deal, Paramount now distributes DreamWorks Animation's films.

For the full year — the first for DreamWorks Animation as a public company — the company reported net income of $104.6 million, or $1.01 per share, compared with $333 million, or $4.05 per share in 2004.

Revenue fell to $462.3 million compared to $1.08 billion in 2004.

Ahead of the income report, DreamWorks shares rose 23 cents to close at $26.86
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