8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 10, 2005

DreamWorks Animation SKG, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-32337	68-0589190
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1000 Flower Street, Glendale, California	91201
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 695-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On May 10, 2005, DreamWorks Animation SKG, Inc. (the “Company”) issued an earnings release announcing its results for the first quarter of 2005, which is furnished as Exhibit 99.1 hereto.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference to such filing.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

    (c) Exhibits:

Exhibit No.	Description
99.1	Earnings release issued by DreamWorks Animation SKG, Inc. on May 10, 2005.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DreamWorks Animation SKG, Inc.
Date: May 11, 2005	By:	/s/ Kristina M. Leslie
		Kristina M. Leslie
		Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Earnings release issued by DreamWorks Animation SKG, Inc. on May 10, 2005.

EX-99.1

Exhibit 99.1

DREAMWORKS ANIMATION REPORTS FIRST QUARTER 2005

FINANCIAL RESULTS

Glendale, California – May 10, 2005 — DreamWorks Animation SKG, Inc. (NYSE:DWA), today announced financial results for its first quarter ended March 31, 2005.

For the first quarter 2005, revenue totaled $167 million, costs of revenue were $80 million, and net income totaled $46 million or $0.44 per share on a fully diluted basis. This compares to revenue of $41 million, and a net loss of $25 million, or $0.33 net loss per diluted share for the same period in 2004.

The company also generated in the period cash from operations of $377 million, primarily driven by the success of its 2004 releases, and ended the period with $445 million in cash and cash equivalents.

The year over year improvement in both profit and revenue was driven primarily by Shark Tale. The film generated approximately $142 million of revenue in the quarter from its success in international theatrical and worldwide home video markets. To date, the film has reached over $204 million in international box office bringing its worldwide theatrical to over $365 million, ahead of the company’s previous estimate of $350 million.

Shrek 2, despite being on track to become one of the biggest selling home video releases of all time, did not meet the company’s retail sales expectations for the first quarter. This sales shortfall resulted in a higher level of returns than expected. As a result, DWA recorded no revenue from Shrek 2 in the quarter other than from licensing and merchandising.

“While we firmly believe that the Shrek franchise continues to be very strong, it is clear in retrospect that the unique blockbuster characteristics of Shrek 2 caused us to overestimate first

quarter retail sales,” said Jeffrey Katzenberg, DreamWorks Animation’s CEO. “I think it is also clear that when we deliver successful films, our business model, which is based on producing two CG animated movies per year, will generate significant returns for the company and its shareholders as evidenced by the profitability we have achieved with our 2004 releases.”

Commenting on the full year earnings outlook, the company now expects to achieve full year EPS of between $1.00 and $1.25. Substantially all of this total, less the EPS recognized in the first quarter, will come in the fourth quarter of 2005.

“Looking forward, we are especially excited about our next film, Madagascar, which comes out on Memorial Day weekend, the highest grossing box office weekend for two out of the last three years. Reaction to the movie so far has been very encouraging and we think there is something in it for the entire family to enjoy,” stated Katzenberg.

Madagascar opens May 27^th when it is released in over 3,700 theaters across the United States.

Items related to the first quarter, as well as certain estimates and the on-going business performance, will be discussed in more detail on the company’s first quarter 2005 earnings conference call later today.

Conference Call Information

DreamWorks Animation will host a conference call and webcast to discuss the results on Tuesday, May 10, 2005, at 5:30 p.m. (EDT). Investors can access the call by dialing 888-338-6461 in the U.S. and 973-935-8509 internationally or via live webcast at www.dreamworksanimation.com.

A replay of the conference call will also be available shortly after the call ends on May 10, 2005 through May 24, 2005. To access the replay, dial 877-519-4471 in the U.S. and 973-341-3080 internationally and enter 5958376 as the conference ID number. Both the earnings release and archived webcast will be available on the Company’s website at www.dreamworksanimation.com.

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About DreamWorks Animation SKG

DreamWorks Animation is principally devoted to developing and producing computer generated, or CG, animated feature films. With world-class creative talent, a strong and experienced management team and advanced CG filmmaking technology and techniques, DreamWorks Animation makes high quality CG animated films meant for a broad movie-going audience. The company has theatrically released a total of eight animated feature films, including Antz, Shrek, Shrek 2 and Shark Tale. DreamWorks Animation’s next release is Madagascar, scheduled to open on May 27, 2005.

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other risks and uncertainties affecting the operation of the business of DreamWorks Animation SKG, Inc. These risks and uncertainties include: audience acceptance of our films, our dependence on the success of a limited number of releases each year, the increasing cost of producing and marketing feature films, piracy of motion pictures, the effect of rapid technological change or alternative forms of entertainment and our need to protect our proprietary technology and enhance or develop new technology. For a further list and description of such risks and uncertainties, see the reports filed by us with the Securities and Exchange Commission (SEC), including our annual report on Form 10-K for fiscal year 2004. DreamWorks Animation is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

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DreamWorks Animation SKG, Inc.

Unaudited Condensed Consolidated Balance Sheets

	March 31, 2005		December 31, 2004
	In thousands
Assets
Cash and cash equivalents	$	445,003	$	63,134
Accounts receivable, net of allowance for doubtful accounts		5,578		14,015
Receivable from affiliate		77,143		385,449
Receivables from employees		1,449		1,634
Film inventories, net		532,760		519,926
Property, plant and equipment, net of accumulated depreciation and amortization		86,397		85,997
Deferred costs, net of amortization		3,435		3,741
Income taxes receivable		—		6,569
Deferred taxes, net		93,343		93,343
Goodwill		34,216		34,216
Other assets		27,008		11,881
Total assets	$	1,306,332	$	1,219,905
Liabilities and stockholder’s equity
Liabilities
Accounts payable	$	8,083	$	4,414
Payable to stockholder		70,643		70,643
Accrued liabilities		56,132		65,537
Income taxes payable		16,413		—
Other advances and unearned revenue		51,009		32,225
Obligations under capital leases		2,798		2,993
Universal Studios advance		75,000		75,000
Other debt		144,348		139,207
Total liabilities		424,426		390,019
Commitments and contingencies
Non-controlling minority interest		2,941		2,941
Stockholder’s equity		878,965		826,945
Total liabilities and stockholder’s equity	$	1,306,332	$	1,219,905

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DreamWorks Animation SKG, Inc.

Unaudited Condensed Consolidated Statements of Operations

	Three months ended March 31,
	2005			2004
	In thousands
Operating revenue	$	166,959		$	40,814
Costs of revenue		80,419			45,426
Gross profit (loss)		86,540			(4,612	)
Selling, general and administrative expenses		18,071			7,767
Operating income (loss)		68,469			(12,379	)
Interest income (expense), net		669			(3,541	)
Other expense net of other income		(287	)		(9,232	)
Income (loss) before income taxes		68,851			(25,152	)
Provision for income taxes		23,178			303
Net income (loss)	$	45,673		$	(25,455	)
Basic net income (loss) per share	$	0.44		$	(0.33	)
Diluted net income (loss) per share	$	0.44		$	(0.33	)
Shares used in computing net income (loss) per share
Basic		102,985			76,636
Diluted		104,616			76,636

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DreamWorks Animation SKG, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

	Three months ended March 31,
	2005			2004
	In thousands
Operating activities
Net income (loss)	$	45,673		$	(25,921	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization and write off of film inventories		77,269			14,945
Stock compensation expense		4,556			(1,149	)
Depreciation and amortization		1,947			1,387
Change in operating assets and liabilities:
Trade accounts receivable		8,437			86,139
Receivables from employees		185			220
Receivable from affiliate		308,306			—
Film inventories		(90,103	)		(67,718	)
Other assets		(15,154	)		(550	)
Accounts payable and accrued expenses		(5,645	)		(7,589	)
Income taxes, net		22,982			—
Unearned revenue		18,784			5,650
Net cash provided by operating activities		377,237			5,414
Investing activities
Purchases of property, plant, and equipment	$	(1,737	)	$	(179	)
Net cash used in investing activities		(1,737	)		(179	)
Financing activities
Net transfers to DreamWorks Studios		—			(20,659	)
Bank borrowings and other debt		4,837			5,072
Decrease in debt allocated from DreamWorks Studios		—			(38,317	)
Payments on capital leases		(195	)		(180	)
Receipts from exercise of stock options		1,769			—
Purchase of treasury stock		(42	)		—
Universal Studios and other advances		—			48,849
Net cash provided by (used in) financing activities		6,369			(5,235	)
Increase in cash and cash equivalents		381,869			—
Cash and cash equivalents at beginning of period		63,134			41
Cash and cash equivalents at end of period	$	445,003		$	41

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Contacts:

Investors	Media
Rich Sullivan	Jim Barron/Carrie Bloom
DreamWorks Animation Investor Relations	Citigate Sard Verbinnen
ir@dreamworksanimation.com	212-687-8080
	dwa@sardverb.com

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