DreamWorks Animation's CEO Discusses

Q3 2011 Results - Earnings Call

Transcript
DreamWorks Animation SKG, Inc. (DWA) Q3 2011 Earnings Call October 25, 2011 4:30 AM
ET
Operator
Welcome to the DreamWorks Animation Earnings Conference Call. At this time, all
participants are in a listen-only mode. Later, we will conduct a question-and-answer session.
(Operator Instructions) As a reminder this conference is being recorded.
I would now like to turn the conference over to host, Mr. Rich Sullivan. Please go ahead, sir.
Richard Sullivan
Thank you and good afternoon everyone. We apologize for a few minutes late. Welcome to
DreamWorks Animations Third Quarter 2011 Earnings Conference Call. With me today is our
Chief Executive Officer, Jeffrey Katzenberg and our President and Chief Financial Officer, Lew
Coleman.
This call will begin with a brief discussion of our quarterly financials disclosed in todays
press release followed by an opportunity for you to ask questions. Id like to remind
everyone that the press release is available on our website that web address
www.dreamworksanimation.com.
Before we begin, we need to remind you that certain statements made in this call may
constitute forward-looking statements. Forward-looking statements can vary materially from
actual results and are subject to a number of risks and uncertainty including those
contained in the Companys annual and quarterly reports as well as other filings with the
SEC. I would encourage all of you to review the risk factors listed in these documents. The
Company undertakes no obligation to update any of its forward-looking statements.
With that, let me turn the call over to DreamWorks Animations President and Chief Financial
Officer, Lew Coleman. Lew?
Lewis Coleman

Thanks, Rich and good afternoon everyone. For the third quarter, the Company reported
total revenue of approximately $161 million resulting in net income of $20 million or $0.23
per share on a fully diluted basis. As we have said in the past, both the timing of our feature
film releases and the number of our films in any given year cause our financial results to
fluctuate, which can make year-over-year comparisons less relevant.
In this case, the third quarter where our financial results reflect the earlier release of Kung
Fu Panda 2 in 2011 compared to Shrek Forever After in 2010 on a similar international box
office performance level.
Taking a closer look at key drivers of revenue for the quarter, Kung Fu Panda 2 contributed
revenue of approximately $39 million primarily from its performance at the international box
office.
Our fall 2010 release, Megamind contributed revenue of approximately $26 million primarily
from domestic pay-TV. Through the end of the quarter, the title reached an estimated 4.6
million net home entertainment unit sold worldwide.
Our other two 2010 movies Shrek Forever After and How to Train Your Dragon contributed
approximately $15 million and $9 million revenue to the quarter respectively, primarily from
international pay-TV and worldwide home video.
By the end of the third quarter, Shrek Forever After and How to Train Your Dragon had each
reached an estimated 9 million net home entertainment unit sold worldwide.
Our film catalog and other items contributed approximately $71 million of revenue to the
quarter, including $19 million in revenue from non-film businesses.
Moving on to the remainder of the income statement, cost to revenues for the quarter
equaled a $108 million, resulting in approximately $53 million in gross profit. Selling,
general and administrative expenses for the quarter totaled $27 million, including
approximately $6 million of stock-based compensation expense.
Turning to taxes, the Companys income tax expense for the third quarter was
approximately $8 million. Our combined effective tax rate, which is our actual tax rate
coupled with the effect of our tax sharing agreement with a former stockholder was
approximately 27% for the quarter. We expect our full year combined effective tax rate to
be slightly under 30%.
Moving onto the balance sheet, the Company ended the third quarter with a cash balance of
approximately $150 million. We expect our cash balance to decline over the next three
quarters due to production and development costs that are ramping up as we get ready for
another three film year in 2013 as well as up coming tax and other payments.

The Companys diluted share count for the quarter was approximately $85 million and our
remaining share repurchase authorization is $125 million.
Looking ahead to the fourth quarter, we expect financial results to be driven by three
events. First is a theatrical release of Puss In Boots, which opens domestically on Friday and
in a majority of its international territories by the end of December.
A few remaining markets are scheduled to open in the first quarter of 2012, including Japan,
Korea, Hong Kong and the Nordic Region.
Second is the home entertainment release of Kung Fu Panda 2, which enters the US market
on December 13th. And the third is the release of several of our television specials into the
home entertainment market.
With that Ill turn the call over to Jeffrey.
Jeffrey Katzenberg
Thank you and good afternoon everyone. As Lew mentioned, our third quarter results were
driven primarily by the blockbuster success of Kung Fu Panda 2, the number one animated
movie of the year. It has surpassed $664 million at the worldwide box office and is the
fourth highest grossing movie of 2011 on a global basis.
In total, 3D contributed approximately 53% of Kung Fu Panda 2s worldwide gross and this
was even without the benefit of IMAX. The next big event for the company is Puss In Boots,
which has been well received by critics and preview audience alike. We are very proud of the
film and were now looking forward to its opening weekend in just three days.
We recently made the strategic move to open a week earlier than our original November 4th
date, because we looked ahead at the fall release schedule and saw big opportunity to
lengthen the Puss In Boots theatrical run.
The biggest opening two day on a holiday weekend Halloween holiday weekend was $33.6
million and we believe we can exceed that benchmark. And weve seen in the past, as weve
seen in the past, its not where we start, but where we finish that is going to count. We
learned with How to Train Your Dragon that a strong movie can have a longer run at the box
office and we think we have another strong movie in Puss In Boots.
Our other big fourth quarter event is the home video release of Kung Fu Panda 2. While, we
think the strong and competitive title of the DVD marketplace will be crowded again for the
holiday season.

As weve done in the past, we are releasing premium configurations, double pack on DVD
and Blu-ray featuring a companion story called Kung Fu Panda: Secrets of the Masters. And
our new TV series Kung Fu Panda: Legends of Awesomeness premiers on Nickelodeon in two
weeks. So, we plan to maximize both of these franchise events to fuel one and another.
Aside from Kung Fu Panda 2, well have a number of TV specials in the home video market
place during the fourth quarter.
We recently put out our two Halloween theme specials together in a double pack Scared
Shrekless and Monsters vs. Aliens: Mutant Pumpkins from Outer Space. On November 15th,
we will release a new How to Train Your Dragon double pack on DVD and Blu-ray. It features
Gift of the Night Fury and Book of Dragons together with a new online video game.
In addition to being sold at retail, a number of our TV specials will also be available for
streaming on Netflix. Yet an another that provides us the significant value for our content.
As you know, we announced our new Netflix relationship last month. Its a historic deal for
DreamWorks Animation and for the industry as a whole. We believe that in the domestic
pay-TV window, our movies are now the most highly valued in all of Hollywood today. Aside
from our feature film releases and TV content, were also able to get substantial value from
Netflix for a number of our catalog titles. This is an arrangement that reaffirms the premium
nature of DreamWorks Animations branded content.
Now, before we get to your questions, I want to spend a few minutes addressing a topic
thats recently been covered in the media. There continues to be broad speculation about
how our films will get distributed when our current agreement expires at the end of 2012.
First, Id like reiterate what Ive said many times before, Paramount has done and continues
to do an excellent job distributing our movies on a worldwide basis. Having said that, we
intend to evaluate a wide range of options because we see this as an important and
significant strategic opportunity for the company, particularly given the size and the value of
our business today. Put that in context for you, since 2006 DreamWorks Animations 11
movies have generated $5.5 billion in worldwide box office.
When you add in the worldwide home video as well as free and pay television sales, we
estimate that DreamWorks Animation films have generated nearly $10 billion in total in that
timeframe. And over the life of our distribution agreement, we estimate that well have paid
roughly $700 million in distribution fees.
So, clearly we represent a very valuable and significant business and well be exploring all of
our distribution possibilities starting in the Spring of 2012. As we announced this morning,
weve hired Chuck Viane one of the best, most seasons distribution and marketing executive
in the business, as a consultant as we drive towards our decision.

As I said, this is among the biggest strategic opportunities for DreamWorks Animation and
for our shareholders. With that, we will be happy to take your questions. Thank you.
Richard Sullivan
Okay, operator. Were ready for the first question.
Question-and-Answer Session
Operator
Certainly. (Operator Instructions) And we go to the line of Ben Swinburne of Morgan
Stanley, please go ahead.
Benjamin Swinburne Morgan Stanley
Good afternoon, guys. Jeffrey, I dont know if you would comment on the decision to move
from HBO to Netflix further. But, one of the things that has been discussed in the press or
been rumored out there is that, DreamWorks paid HBO something to get out of their
contract early and go to Netflix. Im just wondering if you could walk us through your
thought process on the timing of the deal. Obviously, looking at Netflix results they may
have been extremely well timed. Im just curious as to why you guys decided to move now
rather than wait and maybe, theres always the chance that theres more bidders coming
into the market like an Amazon or somebody else, so that the numbers got even bigger. I
am just wondering if you could maybe spend a minute on your thought process on that
front?
Jeffery Katzenberg
Right. Well, first, let me say, weve had a 17 year history with HBO, they have been a
fantastic partner for DreamWorks on the outset and we very, very much valued our great
working relationship with them in the past and continue to.
Having said that, we have a deal that was approaching expiration within a reasonably short
window, two years. And that created an opportunity for us to see what the value of our
properties might be in the marketplace. We feel that that opportunity that Netflix has
presented to us, had a lot of great value in it. And, we think is the best for our product and
our brand in the long term. I dont want to get into the specifics of the actual financial terms
or the basis under which, we move from one platform to the next other than to say that
HBO could not be treated as more generously and been more supportive in helping us make
what was best for our movies and for our shareholders.
Benjamin Swinburne Morgan Stanley

And if I could just ask one follow up on that, I believe Croods is the first film to go new
film to go into the Netflix window, is there going to be any financial impact to DreamWorks
before that in the next couple of years?
Jeffery Katzenberg
Well, the financial impact will be from other that will be the first feature film that will move
onto the Netflix deal, but in the meantime we do have various catalog and other holiday
specials that we will begin to air sooner than that on Netflix. So yes, you will see the
benefits of that deal over the next two years.
Benjamin Swinburne Morgan Stanley
Thank you very much.
Jeffery Katzenberg
Thank you, Ben.
Operator
And next well go to the line of Vasily Karasyov of Susquehanna Financial, please go ahead.
Vasily Karasyov Susquehanna Financial
Thank you, good afternoon. Jeff, you mentioned that youre expecting, youre hoping to beat
the $33 million opening up for the Halloween weekend. You clearly have a range in mind,
would you mind commenting on what kind of opening for Puss would consider successful
and what you are hoping for?
Jeffery Katzenberg
We would consider anything that breaks the record for the weekend standing, which is
$33.6, yeah $33.6 or $33.7 million is the current biggest opening for any movie on a
Halloween weekend and so anything above and beyond that goes in the wind call.
Vasily Karasyov Susquehanna Financial
Okay. And then, you probably wont tell me the exact number, but how does your P&A
spending for Puss compared to previous films, is it inline, is it a little high because of
advertising pricing increases, can you please give us an idea?
Jeffery Katzenberg

No, its completely in the range of what has been our previous budget and also our guidance
to you. So, no change on that.
Vasily Karasyov Susquehanna Financial
All right, thank you very much.
Richard Sullivan
Thank you. Next question, please.
Operator
Well go to line of David Miller, Caris & Company, please go ahead.
David Miller - Caris & Company
Actually Jeffery, I just have a question on the possibility of you guys self distributing, if in
fact, through your consultation with Chuck Viane that the best avenue to approach in the
future is to self distribute. I just want to make sure, I have facts straight and forgive me if I
sound nave. But, I would assume that you would do it purely electronically and if you do,
do that or is every single worldwide theater that you would be interested in distributing to
equipped for electronic distribution or would you have to print some whats called an analog
print. And related to that would the economics be fairly similar to what DCIP has talked
about in the past, which is roughly $700 maybe $750 per virtual print. I appreciate your
assistance. Thanks a lot.
Jeffery Katzenberg
So David, I think youre sort of mixing apples and submarines here. So, the issue of self
distribution and what are the mechanics, the physical mechanics of distributing today
whether its analog or digital is one set of physical things and to that end its a relatively
easy achievable and not overly expensive mechanism to do self distribution.
The real issues about self distribution are not at the theatrical part of the business, they are
to the marketing side of it, they are to the home video, they are to the international
marketplace. We for instance dub our movies into 46 different languages, we are
distributing in over 100 countries. So, there are lot of very complex and challenging issues
to self distribution all of which I think are very clearly understood by us. I dont think there
is an aspect about it in which our eyes are not wide open and for which the facts are fairly
apparent to us and it is one of the things that we will take into consideration when we look
at what our alternatives are next spring. Thats the timing for this. So, Chuck is coming on

board here, there is an opportunity for him to get well acquainted with our product, our
oncoming productions and to help us assess what the different opportunities maybe.
David Miller - Caris & Company
Okay, thank you.
Jeffery Katzenberg
Thank you.
Richard Sullivan
Thanks David. Next question please.
Operator
We will go to the line of Ben Mogil with Stifel Nicolaus, please go ahead.
Benjamin Mogil Stifel Nicolaus & Company, Inc.
Thanks for taking the call. So, two questions, first one for Lew is on the 19 million of nonfilm revenue leverage, I just want to get a sense of what that was and how sort of
sustainable or lumpy that is and then for Jeffery, sort of a larger question on 3D, clearly we
have seen international 3D have much better tie-ratio as then in the US, now want you to
sort name names etcetera, but if you can talk a little bit about what you see working abroad
that is not sort of domestically and hope that eventually migrates over back home here?
Jeffery Katzenberg
I thought mine first. I think that there from the outset seem to be a lot more excitement
and just pure enthusiasm for 3D in the international market place particularly in emerging
markets, I think the experience of it, they may have been a bit more forgiving for some of
the movies that were disappointments here. The good news is that we are hearing a much
higher caliber of 3D films are coming into the marketplace and I think you will see with that
rise in quality, I think we will see a rise in viewership.
We have seen it time and time again here, which is when you really offer people a very, very
high end of real quality experience, they appreciate it, they value it and they think there is
good value from it. I will say that in our previews for Puss in Boot, the 3D version of the
movie, because we previewed it both in 2D and 3D, the 3D version of the film is highly
appreciated by the audience and they were verbal in expressing that they thought it was a
great value.

So, I am hoping with consistent good 3D experiences, we will re-earn the trust of the
audience and we will start to see of the percentage in conversion to 3D start to tick up
again.
Benjamin Mogil Stifel Nicolaus & Company, Inc.
And certainly the reviews itself for abroad and Hollywood report, both of the things sort of
highlighted how good the 3D was in the movie?
Jeffery Katzenberg
Well, its interesting, right now I would laugh, I look we are very, very high, were like a 89
on Rot Tomatoes which is extremely high and I think almost every review actually singled
out the quality of the 3D experience. So, it is meaningful, Lew.
Lewis Coleman
Ben, approximately two-thirds of the $19 million of other revenue in the catalog number
comes from Shrek on London Broadway at the moment. So, this is a revenue for the Shrek
show in London, you know, like most London theatre revenue, its going to be a little bit
more bias to the summer than to the winter, so you will see some fluctuation in there, but I
dont think you will see a huge amount.
Benjamin Mogil Stifel Nicolaus & Company, Inc.
And the rest of it was just sort of the other $9 million, which is sort of a whole bunch of
which is in the online stuff or
Lewis Coleman
Oh, it sort of mixed up. The next biggest category happens to be our TV specials.
Benjamin Mogil Stifel Nicolaus & Company, Inc.
Okay.
Lewis Coleman
So, between the TV specials and London Shrek, you probably have 75% of the number.
Benjamin Mogil Stifel Nicolaus & Company, Inc.
Okay. And for margin perspective Lew, should we assume that, that $19 million of revenue
comes at a relatively similar gross margins, what you reported in the quarter?

Lewis Coleman
No. I am just trying to think of a way to put that. I think, the safest thing to do is just to
assume reasonably lower margins on that revenue.
Benjamin Mogil Stifel Nicolaus & Company, Inc.
Okay, okay. Thats great, thats it from me. Thank you very much.
Richard Sullivan
Great, next question please.
Operator
Yes, we go to line of Barton Crockett of Lazard Capital Markets. Please go ahead.
Barton Crockett Lazard Capital Markets
Thanks for taking the question. You commented that in the fourth quarter one of the big
drivers is the TV specials on DVD and the home video market. Could you kind of compare
how you see your average this year relative to last year, is it about the same, more
ambitious, less ambitious, I appreciate some color there?
Lewis Coleman
Are you speaking specifically on the TV specials or the home video market in general?
Barton Crockett Lazard Capital Markets
Im talking about the TV specials.
Lewis Coleman
I think, as Jeffery alluded to in his script. We have plans to put our two TV specials into the
market this year, first is the Halloween pack and the second is going to be the holiday pack,
which is eventually dragon along with Madagascar will continue to be in the market. So, last
year we did not have an opportunity to release those titles into the DVD market, so this
year were going to be more aggressive with that.
Barton Crockett Lazard Capital Markets
Okay. So, we should see a nice lift on that line versus last year?

Lewis Coleman
Yes.
Barton Crockett Lazard Capital Markets
Okay, great. And then, you also commented that youll see a decline in cash in the quarter
within that or you are assuming that the cash receipts for the Kung Fu Panda DVD come in
the first quarter as opposed to the fourth quarter?
Jeffery Katzenberg
Yeah, I think, Barton, I think thats probably right.
Barton Crockett Lazard Capital Markets
Yes.
Jeffery Katzenberg
Also I was trying to make the comment over several quarters not just the fourth quarter.
Barton Crockett Lazard Capital Markets
Okay, all right, great, thank you.
Richard Sullivan
Thanks Barton. Next question please.
Operator
Next question comes from the line of Richard Greenfield of BTIG. Please go ahead.
Richard Greenfield BTIG
Kind of one follow up and two questions, first one follow up regarding the HBO versus
DreamWorks. Is it fair to say that as you look forward your benefit, because you struck a
good deal with Netflix, is it fair to say that you benefit more after your current deal with
HBO would have ended than you do initially from the Netflix transaction. Two, when you
look at the Q3 numbers, was there any impact from change and open that from the Netflix
agreement. And then three, in terms of the title that are made available, I think, two of
them actually went up today, on the Netflix service, I assume thats revenue that starts to

flow in immediately and just wondering if there was any way to quantify how significant that
could be in calendar Q4, thanks?
Lewis Coleman
Rich, I think, the answer was yes, yes and yes. Yeah. So, pretty accurate. So, Jeff I dont
know if you want to take the first one on HBO versus Netflix and whether we are in a
better
Jeffery Katzenberg
Yeah, we are in a better position at the end of term and Netflix deal. So, the answer to the
first is yes, the answer to the second was yes and even third was, if there is
Lewis Coleman
Yeah, Rich you are right, we actually started to air the Halloween special actually today on
Netflix and youll see a similar effect once the DVD for the holiday pack goes out, you will
also start to see that stuff on Netflix as well. I dont want to get into the financial terms of
that, but the way to look at that is similar how we recognize our other pay-TV with historical
deal, so we get via an upfront payment on availability and so you would expect to see that
in the fourth quarter when its made available.
Richard Greenfield BTIG
So, when you look at that library this quarter excluding the TV stuff or even the overall
library number 71 million, can you discuss how much of that was related to an adjustment
in ultimate from the Netflix deal?
Jeffery Katzenberg
I can, I mean, for the most part the big impact from the Netflix deal on ultimate is going to
be for films released in 2013 and beyond. We do have some really short form content
namely Father of the Bride and Joseph, which are also available on Netflix today and those
are reflecting that library number, but its relatively a material base relative to the overall
number itself.
Lewis Coleman
And then, Rich the two titles that which was just mentioned were third quarter titles.
Richard Greenfield BTIG
Got it.

Lewis Coleman
Its to answer your middle question.
Richard Greenfield BTIG
Well, like title like Shrek for, the title like, kind of think, a few years ago like Shark Tale,
even though thats going to come out at some point on Netflix you didnt adjust the ultimate
and actually change your numbers for Q3 in that library catalog number, that will happen
when Shark Tale becomes available?
Lewis Coleman
Yes.
Richard Greenfield BTIG
Okay. Thank you.
Operator
And now well go to line of Anthony Diclemente with Barclays Capital, please go ahead.
Chris Marvin Barclays Capital
Hi, this is actually Chris Marvin for Anthony. International obviously a big driver for Kung Fu
Panda 2, you know, I think, where we saw international too close to three times domestic
and I think, and historically it has been, close to two times for first time your films. So, I
wonder if Puss in Boots if you could help us in better think about the opportunity for
international relative to domestic on the theatrical side?
Lewis Coleman
Well, our expectations are that Puss in Boots will fall more inline with what our traditional
ratio have been between domestic and international. I think that we have a, we talked
about this on the last call. I think we have a unique experience on Kung Fu Panda 2 in which
we opened in the domestic marketplace and by the way it was only place in the world that
we did, Hangover 2 and somehow another Hangover 2 became a family-friendly movie in
the last minute and we found ourselves, I think really cut short on the domestic
marketplace.
So, we actually look at the film and believe that we underperformed domestically here
because of the competitive landscape and that ratio would have been more traditional if we
were not for that. And by the way, some of that was just in our thinking of our, when we

looked more granularly at the release of Puss In Boots and made the decision to move out
up a week and have opening weekend more to ourselves whereas the following week there
are couple of other very big comedies coming out. And so, were taking nothing for granted
around here.
So, we just think strategically this is a better opportunity for us and the combined of those
two weekends would be greater than how we just stayed on November 4th.
Chris Marvin Barclays Capital
Great, thank you.
Richard Sullivan
Thanks, Chris. Next question please.
Operator
And we go to the line of Tony Wible of Janney. Please go ahead.
Tony Wible Janney
Again a little bit to Kung Fu Panda 2. The film grossing well over $650 worldwide and you
guys have pulled in about $95 million in revenue since the release. I guess its a little bit
lighter than what I would have thought to, is there any higher international film rent thats
being paid or is there a higher P&A there? I guess just trying to put the disparity between
the over $650 worldwide and the $95 million of merchandize and theatrical receipts you
guys had so far?
Jeffrey Katzenberg
Yes, to answer to your question, I think, we are around $500 million international, we have
to remember that, some of that early box office almost a $100 million that came from China
and another $40 or so came from Russia. Those tend to have a little bit of less beneficial
settlement rate on those films in some of the traditional more mature markets.
Tony Wible Janney
Right. And what kind of international rents should we kind of be assuming on Puss In Boots?
Jeffrey Katzenberg
I think, its going to depend on how they perform in territory.

Tony Wible Janney

Okay, thank you.
Richard Sullivan
Next question please.
Operator
Sure. And we go to line of Marla Backer of Hudson Square. Please go ahead.
Marla Backer Hudson Square Research
Im wondering with the more aggressive stand upon the holiday titles in home
entertainment window, as you continue to build awareness of the different franchises, are
there further opportunities down the road even in the absence of a theatrical release. Are
there further opportunities to develop a licensing platform around the DVDs?
Jeffrey Katzenberg
We are always looking at new ways to packet the title and we do think thats the case and
next we have the Kung Fu Panda TV series coming into the market place in a few weeks.
And then the Dragons TV show next year and we believe they also will create opportunities
for us in home video.
Marla Backer Hudson Square Research
No, I may phrase my question a little too generally. I mean, the titles as they release in
home video, they firmly support and build awareness I would assume of the franchises. So,
are there opportunities for, I dont know toys and other merchandize that can ultimately
accompany some of the TV specials and
Lewis Coleman
Yes. The answer is, yes. And we do always look to build merchandizing support around DVD
releases of all our titles. So, the answer is yes.
Marla Backer Hudson Square Research
Okay. One house keeping, which is, whats the timeline on figuring out what your
distribution strategy is if you need to be in place for the movies for 2013. How far and
advanced you have to have determined what your strategy will be?

Lewis Coleman
We think by summer of next year, our first release is late spring of 2013, Croods which is
the end of March 2013. And so, we believe if we have our distribution arrangements in place
by summer of next year that would be more than enough time to make sure that we can
take care of the product well.
Richard Sullivan
Great, thanks Marla. Next question please.
Operator
Next comes from line of Tuna Amobi, Standard & Poors. Please go ahead.
Tuna Amobi Standard & Poors Equity Group
Yeah, thank you very much. I have got one question for Jeffery and one for Lew. So, for
Jeffery, I think you alluded earlier that the holiday season maybe crowded, I wasnt sure if
you were talking about the overall market in general or just the 3D films and along those
lines do you foresee any kind of major issues with the kind of crunch on the screen count
that was evident last holiday season. And, how do you plan to mitigate that also the idea
that the absolute amount of 3D is now more important than the percentage. I was
wondering if you subscribe to that, that would be helpful and then I have a question for
Lew.
Jeffery Katzenberg
All right, well let me try and do those. Again I think, youre mixing two different things
together here, what I was referring to is in the home video market place, the release of
Kung Fu Panda 2 in DVD, which is scheduled for December13th and because there was a
fairly robust, theatrical marketplace for family films this past summer, they all will be rolling
into that holiday release period. We think we have an excellent release date, we are the sort
of last major title somebody is ringing on the phone here for us, its probably technical
meltdown here this afternoon.
Anyway, we think weve got a very good release window on Kung Fu Panda 2 for the
holidays but again, its somewhat crowded marketplace. On the theatrical side, again I think,
we have by moving up a week put Puss in Boots in a very, very good competitive situation.
We dont have any real family competition coming in until the fourth week of our release,
which is when Happy Feet and Twilight come into the marketplace and then there are three
more titles for the Thanksgiving weekend.

So, weve got four solid weeks of playing time. We have as larger footprint as we ever had
in terms of IMAX theaters and we got them for a longer period then traditionally we have
got them for three weeks windows as opposed to two. Weve got great 3D screen count for
the movie, so I am not sure what your question was in terms of 3D.
Tuna Amobi Standard & Poors Equity Group
My question is answered that was nice clarification. So for Lew, so first of all congratulation
on your extension, I think that must mean you are doing a great job.
So, it appears to me that you elected and correct me if I am wrong, your participation in
equity incentive plan is significantly reduced. So, Im just kind of wondering what you would
say to investors who might be thinking of buying the stock in the context of alignment with
the shareholder incentive interest?
Lewis Coleman
Good question, Tuna and thank you for the congratulations. I think, what I would tell them
is that over a period of time I have collected lot of stock in DreamWorks Animation and not
sold very much and given my current age, which you will see in the approx is down 70 years
old, it is sort of become time to think a little bit about how to rearrange my financial affairs.
So, its the old guy option more than anything else.
Jeffery Katzenberg
And, we love having him here, old and beautiful.
Tuna Amobi Standard & Poors Equity Group
Fair enough. Thank you.
Jeffery Katzenberg
Old and beautiful and very good at his job, so we are thrilled to have him.
Tuna Amobi Standard & Poors Equity Group
Thanks.
Operator
There is no one else in queue, please continue.
Richard Sullivan

Great, well that concludes todays third quarter earnings conference call. I would like to
remind everyone that a replay of the call will be available shortly on the DreamWorks
Animation website that web address again www.dreamworksanimation.com, if you do have
any additional questions please contact the DreamWorks Animation Investor Relation
Department.
Thanks again for participating and have a great evening.

http://seekingalpha.com/article/302171-dreamworks-animation-s-ceo-discusses-q32011-results-earnings-call-transcript?part=qanda