Dreamworks Animation Posts Loss In Q2, Results Miss View, SEC Probes Writedown

(RTTNews) - Shares of DreamWorks Animation SKG Inc. (DWA) tumbled more than 7 percent in extended trades Tuesday after the company reported a loss for the second quarter and the results missed analysts' estimates.

The company noted that its second quarter results were impacted by the reduction of the contingent consideration related to its prior acquisition of AwesomenessTV. The film studio also said in a conference call that the U.S. Securities and Exchange Commission was conducting an inquiry relating to the write-down of film inventory on 'Turbo', a film released by the company in 2013.

Glendale, California-based DreamWorks Animation reported net loss for the second quarter of $15.39 million or $0.18 per share, compared to net income of $22.53 million or $0.26 per share in the same period last year.

On average, 12 analysts polled by Thomson Reuters expected the company to report loss of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's results were impacted by the reduction of the contingent consideration related to its prior acquisition of AwesomenessTV. The estimated fair value of the contingent consideration was reduced by $7.2 million to $91.8 million, and resulted in a gain of $0.09 per share in the quarter.

DreamWorks, the studio behind 'Shrek', 'Kung Fu Panda' and 'How to Train Your Dragon,' said revenues for the quarter declined 43 percent to $122.28 million from $213.44 million last year. Analysts had a consensus revenue estimate of $137.86 million for the quarter.

The feature film segment contributed revenue of $69.7 million in the latest quarter.

'How to Train Your Dragon 2', which was released theatrically on June 13, 2014, has reached $166 million at the domestic box office and $262 million at the international box office for a worldwide gross of $428 million to date. The film contributed feature film revenue of $2.6 million to the second quarter and remains in an un-recouped position with the company's primary distributor.

Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation said, "How to Train Your Dragon 2 is the ninth highest-grossing film of the year so far on a worldwide basis and it has yet to be released in several significant international territories. It will be a highly profitable film for the Company and DreamWorks Dragons will remain a very valuable franchise for many years to come."

'Mr. Peabody & Sherman' contributed feature film revenue of $1.5 million to the second quarter and also remains in an un-recouped position with the company's distributor. The company's financial results for the preceding first quarter were hurt by hefty impairment charge due to the weak box office performance of 'Mr. Peabody & Sherman.'

The Television segment contributed revenue of $20.0 million in the latest quarter, while the Consumer Products segment contributed revenue of $18.5 million.

Looking ahead, the company said its third-quarter results are expected to be driven mainly by its feature film segment, including the continued performance of 'How to Train Your Dragon 2' at the worldwide box office.

DWA closed Tuesday's trading at $22.66, down $0.28 or 1.24 percent on a volume of 1.30 million shares. In after-hours, the stock further declined $0.28 or 1.24 percent to $20.95.