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): October 28, 2008

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 October 28, 2008, DreamWorks Animation SKG, Inc. issued an earnings release announcing its results for the quarter ended September 30, 2008, 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.

(d) Exhibits:

Exhibit No.	Description
99.1	Earnings release issued by DreamWorks Animation SKG, Inc. on October 28, 2008.

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 hereunto duly authorized.

	DreamWorks Animation SKG, Inc.
Date: October 28, 2008	By:	/s/ LEWIS W. COLEMAN
		Lewis W. Coleman
		President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Earnings release issued by DreamWorks Animation SKG, Inc. on October 28, 2008

EX-99.1

Exhibit 99.1

DREAMWORKS ANIMATION REPORTS

THIRD QUARTER 2008 FINANCIAL RESULTS

Glendale, California – October 28, 2008 – For the quarter ended September 30, 2008, DreamWorks Animation SKG, Inc. (NYSE:DWA) reported total revenue of $151.5 million and net income of $37.4 million, or $0.41 per share on a fully diluted basis. This compares to revenue of $160.8 million and net income of $47.0 million, or $0.47 per share on a fully diluted basis, for the same period in 2007.

To date, Kung Fu Panda has reached approximately $415 million in international box office and over $630 million worldwide, making it DreamWorks Animation’s most successful original film of all time.

“Driven by the film’s exceptional theatrical performance on a worldwide basis, the Company has found in Kung Fu Panda its third franchise,” said Jeffrey Katzenberg, CEO of DreamWorks Animation. “We look forward to continuing our 2008 success with our next theatrical release, Madagascar: Escape 2 Africa, which comes to theaters in the U.S. on November 7^th and across the globe this holiday season.”

For the quarter, Kung Fu Panda contributed approximately $63.3 million in revenue, primarily from international box office receipts in the period.

The Company’s 2007 summer blockbuster, Shrek the Third, contributed approximately $32.5 million of revenue to the quarter, driven primarily by international pay television. Through the third quarter, the film reached an estimated 20.5 million home entertainment units shipped worldwide, net of actual and estimated future returns.

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Bee Movie, the Company’s 2007 fall release, contributed approximately $27.3 million of revenue to the quarter, driven primarily by domestic pay television. The film reached an estimated 7.5 million units shipped worldwide through the third quarter, net of actual and estimated future returns.

Flushed Away, the Company’s 2006 fall release, and Over the Hedge, the Company’s 2006 summer release, delivered $2.6 million and $2.4 million of revenue, respectively, primarily from international pay and free television.

Library and other revenue contributed approximately $23.4 million of revenue to the third quarter, driven by continued catalogue home entertainment performance and international free television.

Cost of revenue for the quarter equaled $75.5 million. Selling, general and administrative expenses totaled $29.9 million (including approximately $10.0 million of stock compensation expense) as compared to $23.8 million (including $6.3 million of stock compensation expense) for the comparable period of 2007. Selling, general and administrative expenses were higher in the third quarter of 2008 as compared to the third quarter of 2007 due to the ongoing cost of new business initiatives and continued growth of the Company’s annual equity grant program. SG&A for the quarter also included non-cash items of approximately $2.0 million resulting from Roger Enrico’s transition to non-Executive Chairman and the acceleration of depreciation related to the remodeling of the Company’s Glendale campus.

Results for the quarter also included a benefit of $0.03 per share on a fully diluted basis, attributable to the combination of the Company’s tax sharing agreement with a stockholder and finalization of prior year tax returns.

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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 Kung Fu Panda, which will be released on DVD and Blu-ray domestically on November 9, 2008.

The Company’s next theatrical release, Madagascar: Escape 2 Africa, is scheduled to open domestically on November 7, 2008. The Company does not expect to generate significant revenue in the fourth quarter from the distribution of this title, as its distributor may not have recouped its upfront marketing and distribution costs.

In addition to results for the quarter, the Company provided an update to its share repurchase program. In the third quarter, the Company purchased approximately $89 million, or 2.9 million shares, at an average per-share price of approximately $30.80. Year to date, the Company has purchased approximately $185 million, or 6.8 million shares, at an average per-share price of approximately $27.20. The Company has approximately $53 million remaining under its current program.

Items related to the earnings press release for the third quarter of 2008 will be discussed in more detail on the Company’s third quarter 2008 earnings conference call later today.

Conference Call Information

DreamWorks Animation will host a conference call and webcast to discuss the results on Tuesday, October 28, 2008, at 4:30 p.m. (ET). Investors can access the call by dialing (800) 230-1093 in the U.S. and (612) 332-0228 internationally and identifying “DreamWorks Animation Earnings” to the operator. The call will also be available via live webcast at www.dreamworksanimation.com.

A replay of the conference call will be available shortly after the call ends on Tuesday, October 28, 2008. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 961531 as the conference ID number. Both the earnings

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press release and archived webcast will be available on the Company’s website at www.dreamworksanimation.com.

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 anticipates releasing its feature films into both conventional and IMAX^® theatres worldwide. The Company has theatrically released a total of sixteen animated feature films, including Shrek, Shrek 2, Shark Tale, Madagascar, Over the Hedge, Shrek the Third, Bee Movie and Kung Fu Panda. Madagascar: Escape 2 Africa opens in theaters on November 7, 2008 and Monsters vs. Aliens on March 27, 2009. Beginning in 2009, all of the Company’s feature films will be produced in stereoscopic 3D technology.

Contact:

DreamWorks Animation Investor Relations

(818) 695-3900

ir@dreamworksanimation.com

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company’s plans, prospects, strategies, proposals and our beliefs and expectations concerning performance of our current and future releases and anticipated talent, directors and storyline for our upcoming films and other projects, constitute forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industry in which we operate and management’s beliefs and assumptions. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. 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,

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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. In addition, due to the uncertainties and risks involved in the development and production of animated feature projects, the release dates for the projects described in this document may be delayed. For a further list and description of such risks and uncertainties, see the reports filed by us with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our most recent quarterly reports on Form 10-Q. 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.

** FINANCIAL TABLES ATTACHED**

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DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED BALANCE SHEETS

	September 30, 2008			December 31, 2007
	(unaudited)
	(in thousands, except par value and share amounts)
Assets
Cash and cash equivalents	$	337,905		$	292,489
Trade accounts receivable, net of allowance for doubtful accounts		14,967			3,470
Receivable from Paramount, net of reserve for returns and allowance for doubtful accounts		71,967			272,647
Film costs, net		622,970			541,917
Prepaid expenses and other assets		37,030			47,609
Property, plant, and equipment, net of accumulated depreciation and amortization		103,951			86,772
Deferred taxes, net		48,073			48,664
Goodwill		34,216			34,216
Total assets	$	1,271,079		$	1,327,784
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable	$	6,162		$	3,169
Accrued liabilities		108,496			108,457
Payable to stockholder		55,927			68,371
Income taxes payable		14,832			31,651
Deferred revenue and other advances		46,985			24,561
Borrowings and other debt		70,059			70,059
Total liabilities		302,461			306,268
Commitments and contingencies
Minority interest		2,941			2,941
Stockholders’ equity:
Class A common stock, par value $.01 per share, 350,000,000 shares authorized, 95,211,372 and 93,547,321 shares issued, as of September 30, 2008 and		952			935
December 31, 2007, respectively
Class B common stock, par value $.01 per share, 150,000,000 shares authorized, 11,419,461 and 12,984,461 shares issued and outstanding, as of September 30, 2008 and December 31, 2007, respectively		114			130
Additional paid-in capital		865,113			831,115
Retained earnings		593,706			502,763
Less: Class A Treasury common stock, at cost, 17,027,042 and 10,445,278 shares, as of September 30, 2008 and December 31, 2007, respectively		(494,208	)		(316,368	)
Total stockholders’ equity		965,677			1,018,575
Total liabilities and stockholders’ equity	$	1,271,079		$	1,327,784

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DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(in thousands, except per share amounts)
Revenues	$	151,525		$	160,751		$	450,227		$	476,950
Costs of revenues		75,518			70,028			248,101			234,152
Gross profit		76,007			90,723			202,126			242,798
Selling, general and administrative expenses		29,872			23,826			84,043			77,062
Operating income		46,135			66,897			118,083			165,736
Interest income, net		2,312			6,571			7,769			19,224
Other income, net		1,444			1,478			3,301			4,361
Increase in income tax benefit payable to stockholder		(7,760	)		(21,968	)		(25,200	)		(51,694	)
Income before income taxes		42,131			52,978			103,953			137,627
Provision for income taxes		4,780			5,936			13,010			13,407
Net income	$	37,351		$	47,042		$	90,943		$	124,220
Basic net income per share	$	0.42		$	0.47		$	1.00		$	1.22
Diluted net income per share	$	0.41		$	0.47		$	0.99		$	1.22
Shares used in computing net income per share
Basic		89,281			99,367			90,667			101,593
Diluted		90,665			99,891			91,755			102,043

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DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2008			2007
	(in thousands)
Operating activities
Net income	$	90,943		$	124,220
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and write off of film costs		225,884			219,949
Stock compensation expense		28,533			25,467
Depreciation and amortization		10,381			6,829
Revenue earned against deferred revenue and other advances		(58,419	)		(65,478	)
Deferred taxes, net		591			(26,953	)
Change in operating assets and liabilities:
Trade accounts receivable		(11,497	)		(3,049	)
Receivable from Paramount		200,680			105,307
Film costs		(303,704	)		(289,035	)
Prepaid expenses and other assets		11,120			(29,999	)
Accounts payable and accrued liabilities		2,910			52,714
Payable to stockholder		(12,444	)		29,852
Income taxes payable, net		(16,991	)		25,249
Deferred revenue and other advances		88,877			60,512
Net cash provided by operating activities		256,864			235,585
Investing activities
Purchases of property, plant and equipment		(34,088	)		(5,466	)
Net cash used in investing activities		(34,088	)		(5,466	)
Financing Activities
Purchase of treasury stock		(177,840	)		(194,356	)
Other		480			1,617
Net cash used in financing activities		(177,360	)		(192,739	)
Increase in cash and cash equivalents		45,416			37,380
Cash and cash equivalents at beginning of period		292,489			506,304
Cash and cash equivalents at end of period	$	337,905		$	543,684
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes, net	$	29,271		$	14,835
Cash paid during the period for interest, net of amounts capitalized	$	719		$	—

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