2014 ANNUAL REPORT Fellow Shareholders, Over the last 20 years, our company has had our share of both animated television content in over 80 countries through our partners, success and challenge. In each case, these moments have proven to including Netflix, Super RTL and Planeta Junior. Additionally, in be equally important as we continue to gain valuable insight. 2014 the second half of 2015, we expect to launch the first ever linear was a challenging year for DreamWorks Animation. The inconsistent DreamWorks TV channel which will initially be made available in 19 performance of our feature film business coupled with increases countries throughout Southeast Asia. in our overall cost structure related to investments in our growth initiatives resulted in financial performance below our expectations. Our investment in our consumer products business has also begun to bear fruit, delivering solid revenue and profits in 2014. Looking Our films have been most successful when we have started with an ahead, we plan to continue to build on the strength of our deep library original idea that has global appeal and then told a great story. In of branded intellectual property and characters, as well as capitalize order to recreate that success it became clear that we must refocus on the upcoming launch of new titles that have great potential. In our creative resources. addition, following the successful launch of our re-imagined holiday experience DreamPlace, we continue to invest in a number of In January 2015, we appointed two veteran producers, Bonnie Arnold location-based entertainment opportunities to further leverage the and Mireille Soria, as co-presidents of feature animation and made value of our IP for recurring revenue streams. the decision to re-size our feature film business to better focus our talent and resources on producing two films per year instead of three. AwesomenessTV, our new media company, has quickly proven to This choice unfortunately required the consolidation of our Northern be a leader with significant strategic value in a rapidly evolving and California studio onto our Glendale campus and an overall reduction growing market segment. In fact, in less than two years, this business of approximately 18% of our company-wide workforce. has begun generating meaningful revenue and profits for DWA and is now poised for even greater success with our partnership with Although it’s unfortunate to lose so many valued members of the Hearst. The AwesomenessTV team continues to monetize its unique DreamWorks Animation family, getting the feature film business back and differentiated content through advertising sales, licensing on track is my number one priority. Therefore, I’ve also refocused agreements, sponsorships and the creation of original programming. my time and efforts to work in close partnership with Bonnie and Case in point is the recent announcement of AwesomenessTV’s Mireille, and I can assure you that our entire feature film team is agreement to provide more than 200 hours of original content per highly engaged and determined to return to producing blockbuster year to Verizon, a long-time leader in video and one of the most films. innovative distributors in the space today. Feature animation is the core of our company and higher quality Finally, we continue working with our Chinese joint venture, Oriental films will not only improve our profitability, they will enable our DreamWorks, to build a world class family brand for what is soon newer initiatives and complementary businesses to achieve their full to be the largest entertainment marketplace in the world. And with potential so that the enterprise can deliver sustainable and profitable these efforts, Kung Fu Panda 3 recently received co-production status, growth over the long term. representing a significant milestone in our partnership in China. To that end, we believe we now have a winning slate of six films for All in all, I believe we’re making great strides in transitioning release over the next three years that will stand out from the pack. DreamWorks Animation into a global family entertainment company. While 2015 will be a reset year for us, I believe the fundamental • Kung Fu Panda 3 and Trolls in 2016 measure of our success will be the shareholder value we create over • Boss Baby and Croods 2 in 2017 the long term. • Larrikins and How to Train Your Dragon 3 in 2018 On behalf of our Board of Directors and management team, I’d like to We also have a unique film in Captain Underpants, which is being thank the entire DreamWorks Animation family. We are fortunate and produced outside our normal process at a significantly lower cost, honored to have some of the most talented people in the industry and is scheduled for release in 2017. fully committed to driving success. Their collective passion, focus and creativity are responsible for the unprecedented 17 consecutive While it is clear that there is heightened competition in the marketplace CG DreamWorks-branded hits we’ve enjoyed in the past. There is no for family audiences, when looking at the industry as a whole, we saw doubt in my mind that with the changes we are making, we will once a number of positive developments during 2014. World-wide box office again achieve consistent creative and financial success. levels reached record highs, with the international markets continuing Given the stage we’ve set over the last 20 years and the enormous to show solid growth helping to moderate the negative impacts of a potential we have on the horizon, I believe our best years are still strengthening U.S. Dollar. At the same time, in the Home Entertainment ahead of us. On behalf of all of us at DreamWorks Animation, thank market, digital delivery continues to grow and when coupled with you for your continued support. physical demand, allows us to delight audiences long after the theatrical window. These encouraging data points serve to reinforce the strength Sincerely, of our core feature animation business. In addition to improving the performance of our film business, we’re making good progress on our four growth initiatives: Our world class animated television production business has Jeffrey Katzenberg contractual commitments for over 1,200 episodes of original CEO, DreamWorks Animation SKG 2014 FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 001-32337 DREAMWORKS ANIMATION SKG, INC. (Exact name of registrant as specified in its charter) Delaware 68-0589190 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Campanile Building 1000 Flower Street Glendale, California 91201 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (818) 695-5000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Exchange on Which Registered Class A Common Stock, par value $0.01 per share Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘. Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ‘ No È. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘. Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes È No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. È. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È. The aggregate market value of Class A common stock held by non-affiliates as of June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $1,042,542,577 using the closing price of $23.26 as reported by the Nasdaq Global Select Market as of such date. As of such date, non-affiliates held no shares of Class B common stock. There is no active market for the Class B common stock.