DREAMWORKS ANIMATION SKG 2008 ANNUAL REPORT ANNUAL 2008 SKG ANIMATION DREAMWORKS 2008 ANNUAL REPORT 1000 Flower Street, Glendale, CA 91201 Dear Fellow Shareholders, At DreamWorks Animation, we set a number of creative and performance benchmarks in 2008, resulting in the second best year of box office results in the Company’s history. This Board of Directors Executive Officers year was of particular significance because it saw the realization of two strategic goals: the Harry (Skip) Brittenham Jeffrey Katzenberg attainment of a high level of box office consistency and the solidification of our franchise Partner, Ziffren Brittenham LLP Chief Executive Officer strategy, which will provide the underpinning of future performance. Lewis Coleman Lewis Coleman Combined box office receipts from Kung Fu Panda and Madagascar: Escape 2 Africa—which were the third- and seventh-best President and Chief Financial Officer President and Chief Financial Officer performing films of 2008, respectively—have exceeded $1.2 billion. Kung Fu Panda became our most successful original film ever of DreamWorks Animation SKG, Inc. and the number-one animated film of 2008 at the worldwide box office, earning over $215 million domestically and $415 million Ann Daly internationally for a total of over $630 million. It garnered widespread critical acclaim and became the animation industry’s Roger A. Enrico Chief Operating Officer Annie Awards’ all-time highest-nominated film, winning 11 awards. Madagascar: Escape 2 Africa has surpassed $585 million Chairman of DreamWorks Philip Cross worldwide: over $180 million domestically and $405 million overseas so far. These results led to solid performances in a difficult Animation SKG, Inc. home video market, where our titles both performed well. Chief Accounting Officer Thomas E. Freston While we are very pleased with the Company’s achievements, 2008 was a very difficult year for the overall economy by nearly Principal, Firefly3 LLC Katherine Kendrick every measure. The economic downturn has left no public company unaffected, which is reflected in DreamWorks Animation’s General Counsel and Corporate Secretary stock performance. Amid this environment of uncertainty, we are optimistic about our future. The strength of our product in Judson C. Green the marketplace and a solid balance sheet should position us well to meet the challenges that may lie ahead. And we believe that President and Chief Executive Officer John Batter continuing to execute on our mission of delivering quality family entertainment can create shareholder value over the long term. of NAVTEQ Co-President of Production So while our operational accomplishments over the past year did not translate into stock price gains, we believe that 2008 has William Damaschke meaningfully improved the future prospects for DreamWorks Animation. Mellody Hobson President of Ariel Capital Management, LLC Co-President of Production and We believe our franchise-building strategy can lead to dependable future performance, as our properties continue to differentiate President of Live Theatrical us from our peers, provide new business opportunities and build shareholder value. With the addition of Kung Fu Panda to our Jeffrey Katzenberg stable of franchises and continued success from our Madagascar enterprise, we are in a position to release a sequel in each of the Chief Executive Officer of DreamWorks Anne Globe next three years. Animation SKG, Inc. Head of Worldwide Marketing and Consumer Products We are extending our franchises beyond our core business in meaningful ways. In December 2008, debuted on Shrek The Musical Michael Montgomery Broadway, where it continues to delight audiences of all ages. This year, we are bringing our brands to new audiences on television ©2009 DreamWorks Animation SKG, Inc. All rights reserved. President of Montgomery & Co. LLC with the Nickelodeon-produced The Penguins of Madagascar, which became the most-watched series premiere ever on DreamWorks Animation and the DreamWorks Animation logo are registered trademarks of DreamWorks Animation SKG, Nickelodeon, and four DreamWorks Animation-produced specials. Also, later this year we will make our foray into online virtual Nathan Myhrvold Inc. All other names are trademarks of their respective owners. worlds with the launch of Kung Fu Panda World. Chief Executive Officer of This year, DreamWorks Animation becomes the first studio to produce all feature films in 3D from inception, beginning Intellectual Ventures with Monsters vs. Aliens, the widest-ever theatrical 3D release. Over its debut weekend, Monsters vs. Aliens had the second-best opening for an original DreamWorks Animation film and the best opening by far for a 3D film. It succeeds in delivering a new Richard Sherman and exciting in-theater experience that resets the bar for what to expect from a CG-animated film. 3D provides moviegoers Chief Executive Officer of with a unique, exciting, immersive entertainment experience, and we are among those at the forefront of this transformative The David Geffen Company technology. We look forward to a higher level of 3D screen penetration in 2010, when we plan to release three films, including Karl M. von der Heyden Shrek Goes Fourth. Former Vice Chairman and Chief Financial Our leadership team remains committed to fostering a haven of creativity that allows imagination and innovation to ascend to Officer of PepsiCo, Inc. new heights. I believe you will continue to see an escalating level of creative and technical achievement throughout our projects. The Company’s efforts have been recognized in a remarkable way this year, as we have been named one of Fortune magazine’s 100 Best Companies to Work For in 2009. On behalf of our Board of Directors and management team, I’d like to extend gratitude to the Company’s over 1,700 employees. THIS IS A GREENER ANNUAL REPORT. Our world-class, widely diverse talent base is among the most creative in the world, and our success this year is due to their DreamWorks Animation is committed to reducing its impact on the environment. By producing our report this way, we lessened the impact on the environment in the following ways: combined efforts. Thanks to our team for the tireless commitment, talent and passion they bring to DreamWorks Animation every day. 26 trees preserved for the future 76 lbs. waterborne waste not created And thank you for your support during another gratifying year. We will continue working to enhance shareholder value by 11,279 gal. wastewater flow saved 1,248 lbs. solid waste not generated delivering high-quality, consistent and innovative family content. Sincerely, 2,457 lbs. net greenhouse gases prevented 18,808,800 BTUs of energy not consumed Environmental impact estimates for savings pertaining to the use of post consumer recycled fiber share the same common reference data as the Environmental Defense Fund paper calculator, which is based on research done by the Paper Task Force, a peer-reviewed study of the lifecycle environmental impacts of paper production and disposal. Jeffrey Katzenberg CEO, DreamWorks Animation 2008 FINANCIAL RESULTS 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, 2008 ‘ 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 New York Stock Exchange 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 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. ‘. 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, 2008, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $2,318,398,045 using the closing price of $29.81 as reported by the New York Stock Exchange as of such date.