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): February 24, 2009

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 February 24, 2009, DreamWorks Animation SKG, Inc. issued an earnings release announcing its results for the year ended December 31, 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 February 24, 2009.

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: February 24, 2009	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 February 24, 2009.

EX-99.1

EXHIBIT 99.1

DREAMWORKS ANIMATION REPORTS

FOURTH QUARTER AND FULL YEAR 2008 FINANCIAL RESULTS

Glendale, California – February 24, 2009 – DreamWorks Animation SKG, Inc. (NYSE: DWA) today announced financial results for its fourth quarter and full year ended December 31, 2008. In the fourth quarter, the Company reported total revenue of $199.8 million and net income of $51.6 million, or $0.58 per share on a fully diluted basis. These results bring the full year reported revenue for 2008 to a total of $650.1 million and net income of $142.5 million, or $1.57 per share on a fully diluted basis.

“Box office receipts from Kung Fu Panda and Madagascar: Escape 2 Africa – the two highest-grossing family films of the year – together exceeded $1.2 billion, making 2008 one of DreamWorks Animation’s most successful years ever,” said Jeffrey Katzenberg, CEO of DreamWorks Animation.

Kung Fu Panda was the third highest-grossing film of the year, with over $630 million in worldwide box office. For the quarter, the title contributed $101.8 million of revenue, driven primarily by its release into the home video market. Through the end of 2008, Kung Fu Panda reached approximately 11.2 million units sold on a worldwide basis, net of actual and estimated future returns.

Madagascar: Escape 2 Africa was the seventh highest-grossing film of the year and has reached approximately $180 million in domestic box office and over $400 million internationally to date. The film contributed $24.0 million of revenue for the quarter, primarily from consumer products and revenue from the Company’s distributor.

The Company’s 2006 summer release, Over the Hedge, contributed $23.2 million of revenue for the quarter, primarily from domestic network and international free television.

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The Company’s 2007 releases, Bee Movie and Shrek the Third, delivered $9.7 million and $9.3 million, respectively, of revenue to the quarter, primarily from home entertainment. Through the end of 2008, the titles reached 8.4 and 21.4 million units, respectively, net of actual returns and estimated future returns.

Flushed Away contributed $2.8 million of revenue for the quarter, primarily from catalogue home video performance. Library and other revenue, including Shrek the Musical and Shrek the Halls, contributed $29.0 million to the quarter, driven by continued catalogue home entertainment performance. Through the end of 2008, Shrek the Halls reached approximately 1.8 million units sold on a worldwide basis, net of actual and estimated future returns.

Costs of revenue for the quarter equaled $117.4 million. Selling, general and administrative expenses totaled $27.8 million (including approximately $8.6 million of stock compensation expense) as compared to $26.5 million (including approximately $8.6 million of stock compensation expense) for the comparable period of 2007.

Results for the quarter also included a tax benefit of $0.12 per share on a fully diluted basis, attributable to the resolution of a prior year tax reserve related to FIN 48.

Looking to 2009, the Company expects full year results to be driven primarily by Madagascar: Escape 2 Africa and Monsters vs. Aliens, which opens domestically on March 27, 2009.

“We believe that Monsters vs. Aliens will reset the bar for what moviegoers should expect from a CG animated film and are confident that it will offer our audiences a premium viewing opportunity,” Katzenberg continued. “We look forward to sharing DreamWorks Animation’s first 3D release with the world on March 27th.”

The Company also provided an update to its share repurchase program. For the full year 2008, the Company purchased $185 million, or 6.8 million shares, and currently has approximately $50 million remaining under its current authorization.

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

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Conference Call Information

DreamWorks Animation will host a conference call and webcast to discuss the results on Tuesday, February 24, 2009, at 4:30 p.m. (ET). Investors can access the call by dialing (800) 230-1059 in the U.S. and (612) 288-0337 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, February 24, 2009. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 983068 as the conference ID number. Both the earnings 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 seventeen animated feature films, including Shrek, Shrek 2, Shark Tale, Madagascar, Over the Hedge, Shrek the Third, Bee Movie, Kung Fu Panda and Madagascar: Escape 2 Africa. Monsters vs. Aliens opens in theaters on March 27, 2009. All of the Company’s feature films are now being produced in stereoscopic 3D technology.

Contact:

DreamWorks Animation Investor Relations

(818) 695-3900

ir@dreamworksanimation.com

DreamWorks Animation Corporate Communications

(818) 695-3658

shannon.olivas@dreamworks.com

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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, 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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UNAUDITED CONSOLIDATED BALANCE SHEETS

	December 31,
	2008			2007
	(in thousands) (except par value and share amounts)
Assets
Cash and cash equivalents	$	262,644		$	292,489
Trade accounts receivable, net of allowance for doubtful accounts		4,550			3,470
Income taxes receivable		6,468			—
Receivable from Paramount, net of reserve for returns and allowance for doubtful accounts		186,522			272,647
Film costs, net		638,243			541,917
Prepaid expenses and other assets		31,453			47,609
Property, plant, and equipment, net of accumulated depreciation and amortization		114,913			86,772
Deferred taxes, net		27,049			48,664
Goodwill		34,216			34,216
Total assets	$	1,306,058		$	1,327,784
Liabilities and Stockholders’ Equity
Liabilities
Accounts payable	$	7,499		$	3,169
Accrued liabilities		115,158			108,457
Payable to former stockholder		54,192			68,371
Income taxes payable		—			31,651
Deferred revenue and other advances		38,857			24,561
Borrowings and other debt		70,059			70,059
Total liabilities		285,765			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, 95,381,143 and 93,547,321 shares issued, as of December 31, 2008 and 2007, respectively		954			935
Class B common stock, par value $.01 per share, 150,000,000 shares authorized, 11,419,461 and 12,984,462 shares issued and outstanding, as of December 31, 2008 and 2007, respectively		114			130
Additional paid-in capital		876,651			831,115
Retained earnings		645,261			502,763
Less: Class A Treasury common stock, at cost, 17,432,728 and 10,445,278 shares, as of December 31, 2008 and 2007, respectively		(505,628	)		(316,368	)
Total stockholders’ equity		1,017,352			1,018,575
Total liabilities and stockholders’ equity	$	1,306,058		$	1,327,784

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UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended					Year Ended December 31,
	2008		2007			2008			2007
	(in thousands) (except per share amounts)
Revenues	$	199,825	$	290,228		$	650,052		$	767,178
Costs of revenues		117,384		138,143			365,485			372,295
Gross profit		82,441		152,085			284,567			394,883
Product development		921		—			2,050			—
Selling, general and administrative expenses		27,776		26,507			110,690			103,569
Operating income (loss)		53,744		125,578			171,827			291,314
Interest income, net		1,536		5,299			9,305			24,523
Other income, net		1,870		1,204			5,171			5,565
Decrease (increase) in income tax benefit payable to stockholder		1,735		(41,959	)		(23,465	)		(93,653	)
Income before income taxes		58,885		90,122			162,838			227,749
Provision for income taxes		7,330		4,022			(20,340	)		(9,385	)
Net income	$	51,555	$	94,144		$	142,498		$	218,364
Basic net income per share	$	0.59	$	0.98		$	1.59		$	2.18
Diluted net income per share	$	0.58	$	0.98		$	1.57		$	2.17
Shares used in computing net income per share
Basic		87,530		95,578			89,880			100,083
Diluted		88,635		95,943			90,976			100,469

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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2008			2007
	(in thousands)
Operating activities
Net income	$	142,498		$	218,364
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and write off of film costs		324,691			351,600
Stock compensation expense		37,600			34,037
Depreciation and amortization		3,461			4,888
Revenue earned against deferred revenue and other advances		(75,201	)		(94,010	)
Deferred taxes, net		21,615			(40,930	)
Change in operating assets and liabilities:
Trade accounts receivable		(1,080	)		(2,261	)
Receivable from Paramount		86,125			(116,917	)
Film costs		(405,206	)		(399,456	)
Prepaid expenses and other assets		16,516			(8,325	)
Accounts payable and accrued liabilities		9,891			52,504
Payable to former stockholder		(14,179	)		66,098
Income taxes payable\receivable, net		(38,949	)		17,849
Deferred revenue and other advances		99,768			67,097
Net cash provided by operating activities		207,550			150,538
Investing activities
Purchases of property, plant, and equipment		(49,049	)		(10,327	)
Purchase of other intangible assets		—			(1,963	)
Net cash used in investing activities		(49,049	)		(12,290	)
Financing Activities
Receipts from exercise of stock options		1,479			1,630
Excess tax benefits from employee equity awards		357			870
Deferred debt costs		(922	)		—
Purchase of treasury stock		(189,260	)		(304,563	)
Paramount signing bonus deemed a contribution from controlling stockholders		—			—
Repayment of Universal Studios advance		—			—
Repayment of HBO debt		—			(50,000	)
Net cash used in financing activities		(188,346	)		(352,063	)
Increase (decrease) in cash and cash equivalents		(29,845	)		(213,815	)
Cash and cash equivalents at beginning of year		292,489			506,304
Cash and cash equivalents at end of year	$	262,644		$	292,489
Supplemental disclosure of cash flow information:
Cash paid (refunded) during the year for income taxes, net	$	37,318		$	31,598
Cash paid during the year for interest, net of amounts capitalized	$	869		$	123

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