DWA 2008 Q4 Earnings Call Transcript.docx

7/23/2019 DWA 2008 Q4 Earnings Call Transcript.docx

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DreamWorks Animation SKG, Inc. (DWA) Q4 2008 Earnings Ca !e"r#ar$ 24, 200% 4&'0 m

E

Operator

*a+ies an+ gentemen, tank $o# -or stan+ing "$ an+ ecome to te DreamWorks

Animation earnings con-erence ca. (/erator Instr#ctions) I o#+ no ike to t#rn te

con-erence oer to o#r ost, 1r. ic S#ian it Inestor eations -or DreamWorks. 3ease

go aea+, sir.

Rich Sullivan

ank $o#. Goo+ a-ternoon, eer$one an+ ecome to DreamWorks Animations -o#rt

5#arter 2008 earnings con-erence ca. Wit me to+a$ is o#r Cie- E6ec#tie /7cer, e9re$

Kat:en"erg, an+ o#r 3resi+ent an+ Cie- !inancia /7cer, *e Coeman. is ca i "eginit a "rie- +isc#ssion o- te 5#arter$ ;nancias +iscose+ in to+a$s ress reease, -ooe+

"$ an oort#nit$ -or $o# to ask 5#estions. I o#+ ike to remin+ eer$one tat te ress

reease is aaia"e on o#r e"site, .+reamorksanimation.com.

<e-ore e "egin, e nee+ to remin+ $o# tat certain statements ma+e on tis ca ma$

constit#te -orar+=ooking statements. !orar+=ooking statements ma$ ar$ -rom act#a

res#ts an+ are s#">ect to a n#m"er o- risks an+ #ncertainties, inc#+ing tose containe+ in

te coman$s ann#a an+ 5#arter$ reorts, as e as oter ;ings it te SEC. I o#+

enco#rage a o- $o# to reie te risk -actors iste+ in tese +oc#ments. e coman$

#n+ertakes no o"igation to #+ate an$ o- its -orar+=ooking statements.

An+ it tat, I o#+ ike to no t#rn te ca oer to DreamWorks Animation 3resi+ent an+

Cie- !inancia /7cer, *e Coeman. *e.

Lewis W. Coleman

ank $o#, ic an+ goo+ a-ternoon, eer$one. I o#+ ike to igigt a -e items "e-ore

an+ing it oer to e9re$. In te -o#rt 5#arter, te coman$ reorte+ ?200 miion o- tota

reen#e res#ting in net income o- ?@2 miion, or ?0.@8 er sare on a -#$ +i#te+ "asis.

is "rings te coman$s 2008 reen#e to ?@0 miion an+ net income to ?B42 miion, or

?B.@ er sare. Wie te "ock"#ster s#ccess o- Srek te ir+ in 200 makes te $ear=oer=$ear comarison +i7c#t, its imortant to note tat 2008 as o#r most s#ccess-# non=

Srek $ear as a #"ic coman$. In -act, "o6 o7ce receits -rom K#ng !# 3an+a an+

1a+agascar& Escae to A-rica togeter e6cee+e+ ?B.2 "iion, a B2 increase oer o#r 200

tota.

http://seekingalpha.com/symbol/dwa

http://seekingalpha.com/symbol/dwa



/- te ?200 miion o- reen#e in te 5#arter, K#ng !# 3an+a contri"#te+ ?B02 miion, or

a"o#t a-, rimari$ -rom its reease in te ome i+eo market. ro#g te en+ o- 2008, e

so+ aro6imate$ BB.2 miion #nits o- 3an+a or+i+e, e6cee+ing te g#i+ance e gae

on o#r Decem"er ana$st +a$. is n#m"er e6c#+es aro6imate$ 0.@ miion #nits sie+

to to c#stomers tat s#"se5#ent$ +ecare+ "ankr#tc$. Seera ke$ territories, inc#+ing

Ita$, te or+ic region, A#straia, aan an+ !rance ere not reease+ rior to Decem"er an+

i "e reFecte+ in te ;rst 5#arter o- 200%.

/#r secon+ teatrica reease o- 2008, 1a+agascar 2, as no reace+ oer ?@80 miion o-

or+i+e "o6 o7ce. e reen#e e9ect o- aro6imate$ ?2@0 miion o- tis "o6 o7ce as

recogni:e+ in te -o#rt 5#arter. As a res#t, te tite as reco#e+ an+ contri"#te+ ?24

miion o- reen#e, inc#+ing cons#mer ro+#cts an+ te norma cost reim"#rsement -rom

o#r +istri"#tor.

/er e e+ge, te coman$s 200 s#mmer reease, contri"#te+ aro6imate$ ?2'

miion o- reen#e -or te 5#arter, rimari$ -rom +omestic netork an+ internationa -reeteeision.

e coman$s remaining ;ms contri"#te+ ?4' miion o- reen#e, arge$ +rien "$ strong

cataog ome i+eo er-ormance.

A++itiona$, Srek e 1#sica an+ Srek e as contri"#te+ aro6imate$ ?8 miion o-

reen#e to te 5#arter. ro#g te en+ o- 2008, Srek e as saes aro6imate B.8

miion #nits on a or+i+e "asis net o- ret#rns.

Costs o- reen#es -or te 5#arter e5#ae+ ?BB miion an+ its imortant to note tat man$

o- te ne "#siness initiaties e +isc#sse+ are aing an+ i contin#e to ae an imact

on o#r ;nancias. In -act, amost 20 o- tis 5#arters cost o- reen#e is #nreate+ to ;m

amorti:ation an+ reresents costs associate+ it initiaties ike <roa+a$ an+ In+ia, as e

as ongoing ;m +eeoment e6enses.

In a++ition, ro+#ct +eeoment, rimari$ associate+ it te start=# o- o#r irt#a or+,

is no imacting o#r costs, totaing aro6imate$ ?B miion -or te 5#arter.

*ast$, "eca#se o- te +ramatic cange in market con+itions +#e to te econom$, e

#+ate+ o#r K#ng !# 3an+a #timate accor+ing$. Wie o#r #timates are contin#o#s$

#+ate+ as te norma co#rse o- "#siness, te seerit$ o- te market canges ma+e tis

5#arters cange arger tan is t$ica, so ie te tite er-orme+ er$ e reatie to

oters in te market, te economic con+itions o- te ast -e monts ere not anticiate+

en e amorti:e+ te costs -or te ;m earier in te $ear. is res#te+ in a one=time

amorti:ation catc=# o- aro6imate$ ?8 miion reFecte+ in tis 5#arters cost o- reen#e.



1oing on to te remain+er o- te income statement, seing, genera an+ a+ministratie

e6enses -or te 5#arter totae+ ?28 miion, inc#+ing aro6imate$ ?% miion o- stock

comensation. An+ interest income as ?2 miion, "ringing te tota interest income -or te

$ear to ?% miion.

a6es -or te 5#arter inc#+e+ a "ene;t o- aro6imate$ ?BB miion reating to te

reso#tion o- a rior $ears !I=48 ta6 resere, an+ res#te+ in an E3S "ene;t o-

aro6imate$ ?0.B2.

ota +i#te+ sares o#tstan+ing -or te $ear ere aro6imate$ ?%B miion an+ tere ere

no a++itiona re#rcases in te -o#rt 5#arter.

!or te -# $ear 2008, e re#rcase+ .8 miion sares -or ?B8@ miion an+ e ae

aro6imate$ ?@0 miion remaining #n+er o#r c#rrent "oar+ a#tori:ation.

#rning to te "aance seet, te coman$ en+e+ 2008 it ?2' miion in cas an+ case5#iaents. In te $ear, e sent aro6imate$ ?20 miion on o#r cam#s e6ansion an+

an to sen+ "eteen 0 an+ 80 o- te remaining ?@@ miion in 200%.

*ooking aea+, te ;rst 5#arter o- 200% i "e +rien rimari$ "$ 1a+agascar 2s

internationa "o6 o7ce an+ +omestic ome i+eo. e tite as reease+ on ome i+eo in

te H.S. on !e"r#ar$ t an+ res#ts -or te ;rst tree eeken+s ere er$ strong. In -act,

te tite so+ aro6imate$ @ miion #nits in te +omestic market tro#g ast eeken+,

making it te argest reease o- te $ear "$ -ar.

<eca#se o- its "o6 o7ce ee an+ te -act tat its a se5#e, e o#+ e6ect tis tites

initia reease to track "eo tat o- K#ng !# 3an+a.

oeer, its s#ccess to +ate is a cear in+ication tat te ome i+eo market -or o#r ro+#ct

remains enco#raging. Its aso imortant to note tat +#e to te tites ome i+eo reease

sce+#e, te ma>orit$ o- te internationa initia reease i "e recogni:e+ in te secon+

5#arter. I am a$ to sa$ to#g tat te on$ internationa territor$ tat -as in te ;rst

5#arter, 1e6ico, as er-orme+ 5#ite e. e remain+er o- te $ear i arge$ "e

+etermine+ "$ te er-ormance o- 1onsters ers#s Aiens ic oens in te H.S. on 1arc

2t.

As $o# kno, te ;m is te coman$s ;rst 'D teatrica reease an+ e "eiee tere are

s#7cient screens aaia"e or+i+e to reac te atten+ance ees necessar$ to make a

goo+ ret#rn on o#r inestment. 1oreoer, ere otimistic a"o#t te ;ms er-ormance in

tra+itiona CG as e.



In cosing, 1a+agascar 2s s#ccess as ositione+ te coman$ e ea+e+ into 200%, an+

co#e+ it a strong er-ormance -rom 1onsters ers#s Aiens, its ossi"e -or #s to

aciee $ear=oer=$ear grot in earnings.

Wit tat, I i t#rn it oer to e9re$.

Jefrey Katzenberg

anks, *e. Goo+ a-ternoon, eer$one. I ae a -e a++itiona remarks an+ ten e get

rigt to $o#r 5#estions. As *e ointe+ o#t, 2008 as a er$ s#ccess-# $ear -or

DreamWorks Animation. In -act, it as te secon+ "est $ear in "o6 o7ce er-ormance in te

coman$s istor$ -ooing er$ cose$ "ein+ 2004 en e reease+ Srek 2, te igest

grossing animate+ moie o- a time an+ te tir+ igest grossing moie o- a time.

o me, o#r greatest accomisment in 2008 as te consistenc$ in o#r ;m er-ormance, a

goa ee "een striing er$ ar+ to aciee. K#ng !# 3an+a an+ 1a+agascar 2 ;nise+ inte tir+ an+ seent "est == as te tir+ an+ seent "est er-orming ;ms -or te $ear.

K#ng !# 3an+a, o#r most s#ccess-# origina ;m eer, s#rasse+ ?'0 miion, ?4B@ miion

o- ic came -rom oerseas.

Critica accaim as aso oereming -or te tite == it "roke recor+s as te animation

in+#str$s Ani Aar+s a=time igest=nominate+ ;m an+ ten on BB categories, inc#+ing

"est ict#re, "est +irecting, an+ "est igting.

/n oem"er %t, e reease+ K#ng !# 3an+a into te ome i+eo market, ere it "ecame

te tir+ "est=seing tite "ein+ on$ e Dark Knigt an+ Iron 1an, giing it one o- te

$ears er$ "est "o6 o7ce to DD conersion ratios. We "eiee its strong er-ormance is an

in+ication o- a -e tings.

!irst, cons#mers #ni5#e$ areciate an+ ig$ a#e o#r tites an+ recogni:e tem as

m#st=on #rcases. An+ secon+, CG ro+#ct contin#es to er-orm e +esite c$cica

-actors tat ae eige+ on te ome i+eo market as a oe.

/#r secon+ "o6 o7ce "ock"#ster o- 2008 as 1a+agascar 2, ic to +ate as reace+

aro6imate$ ?B80 miion +omestica$ an+ oer ?400 miion internationa$. Its or+i+e

gross i contin#e to gro en its reease+ in aan on 1arc B4t.

/n !e"r#ar$ t, e reease+ te tite into te +omestic ome i+eo market an+ it as "een

te $ears "iggest reease so -ar an+ e e6ect it to remain among te to seing tites o-

200%.

So +esite te eakene+ economic enironment, o#r ro+#ct contin#es to er-orm e at

te "o6 o7ce an+ in ome i+eo. /#r er-ormance in 2008 as ositione+ #s nice$ -or



-#t#re strengt an+ as aso soi+i;e+ o#r -rancise strateg$ -or $ears to come. Wit te

a++ition o- te K#ng !# 3an+a -rancise, e are no in a osition to reease se5#es in 20B0,

BB, an+ B2.

We take+ at engt a"o#t o o#r -rancise "#i+ing strateg$ can +eier a great +ea o-

a#e to te coman$ an+ e sa e6ames o- tis tro#go#t 2008. 1ost recent$, Srek

e 1#sica oene+ in Decem"er in e Jork Cit$. We are ease+ it its er-ormance to

+ate, artic#ar$ oer te ast -e eeks, as ticket saes ae contin#e+ to gro. We aso

sa great s#ccess in o#r secias "#siness, it te netork re=airing o- Srek te a

an+ its strong er-ormance in te DD market. In 200%, e are orking to e6ten+ te reac

o- o#r oter -rancises on teeision.

In a++ition to o#r 1a+agascar 3eng#ins series ro+#ce+ -or ickeo+eon, ic airs ne6t

mont, e e6ect to air -o#r secias tis $ear == Secrets o- te !#rio#s !ie in to +a$s

-rom no a 1onsters ers#s Aiens aoeen secia a 1a+agascar Cristmas secia an+

ten te ret#rn o- Srek e as.

As $o# can see, e are e on o#r a$ it man$ o- te ne "#siness initiaties e

resente+ to $o# at o#r ana$st +a$ tis ast Decem"er. We tink tat eac an+ eer$ one

o- tese ne initiaties ae te otentia to +rie "ot meaning-# reen#e an+ earnings

grot.

As *e ointe+ o#t, e ae area+$ "eg#n sen+ing on a n#m"er o- tese ne areas ic

as a+ an imact on cost in te -o#rt 5#arter. An+ ie tese a++itiona costs i

contin#e -or te ne6t seera 5#arters, e e6ect tat as ear$ as te -o#rt 5#arter o- tis

$ear, 200%, e i "egin to see incrementa reen#e an+ ro;t -rom seera o- tese

inestments. We are con;+ent tat te -#t#re #si+e an+ grot oort#nities -rom tese

initiaties i res#t in a signi;cant ret#rn on te inestments e are making to+a$.

*ooking aea+ to o#r ne6t "ig eent, 1onsters ers#s Aiens oens +omestica$ on 1arc

2t in "ot 'D an+ tra+itiona CG, +eiers te c#tting e+ge animation, s#"ersie come+$

an+ a=star oice taent tat DreamWorks Animation a#+iences ae come to kno an+

oe. It o9ers moiegoers a "ran+ ne, er$ e6citing in=teater e6erience ic e "eiee

i reset te "ar -or at to e6ect -rom a CG animate+ ;m.

1onsters ers#s Aiens is te er$ ;rst -eat#re ;m e are reeasing in 'D an+ te ;rst ;m

tat as "een entire$ a#tore+ in 'D -rom its incetion. /- te more tan ,000 screens on

ic it i a$. We anticiate in e6cess o- 2,000 'D screens to "e aaia"e "$ 1arc 2t,

inc#+ing B4 in Ima6. We "eiee tis n#m"er i "e more tan eno#g to ao o#r ;m to

sere as a roo- o- concet an+ to roe te ne -ormat -orar+.

So -ar, 200% is o9 to a great start -or DreamWorks Animation == e are ;ring on a c$in+ers

an+ ooking -orar+ to a "#s$ an+ ro+#ctie rest o- te $ear.



Wit tat, e i oen tis # -or 5#estions. ic.

Rich Sullivan

Great. /erator, ease roi+e te instr#ctions -or aoing a 5#estion an+ e i take o#r

;rst 5#estion.

uestion!an"!#nswer Session

Operator

(/erator Instr#ctions) !irst e go to te ine o- Dre Cr#m it Sti-e icoa#s.

$rew Crum ! Sti%el &icolaus

anks. Goo+ a-ternoon, eer$one. #st a 5#estion on 1onsters ers#s Aiens == e9re$, an$

#+ate on res#me+ ticket remi#ms -or te ;m, an+ >#st gie #s a sense as to $o#r

e6ectations -or 3LA sen+ == is it going to "e consistent it te notiona mo+eM

Secon+ 5#estion, I >#st ant to get a sense as to te cataog saes on 1a+agascar, gien te

se5#e reease in te -o#rt 5#arter. An+ ten ;na$, >#st a o#sekeeing item ==

e6ectations -or DLA in 200%M anks.

Jefrey Katzenberg

/ka$, so et me see ere == 3LA sen+ in ine it reio#s reeases, so no cange on tat.

In terms o- ricing on 'D, e sti anticiate tat in most o- te market, not >#st +omestica$

"#t aso internationa$, tere i "e a meaning-# #=carge. We e6ect it to "e in te ?@

-or te +omestic market.

An+ ten Ann, +o $o# ant to tak a"o#t te 1a+ cataog saesM

#nn $aly

1a+agascar B cataog saes ere er$ strong -or #s, rimari$ in te -o#rt 5#arter aro#n+

te teatrica reease. ere ere rograms tat ere in ace in te ;rst 5#arter "#t most

o- te o#me came ast $ear it te teatrica reease.


ae $o# seen an$ ick=# since $o# reease+ te se5#eM

#nn $aly



/n te cataogM


Jes.

#nn $aly

Jes, e ae.

Jefrey Katzenberg

Goo+, an+ ten te ast one ere == some"o+$ as scram"ing.

Rich Sullivan

Dre, $o# aske+ a 5#estion a"o#t ==


Dereciation an+ amorti:ation -or 200%.

Rich Sullivan

Jea, I ass#me tat en $o# aske+ tat 5#estion, $o#re not taking a"o#t ;m

amorti:ation, $o#re taking a"o#t non=;m amorti:ationM


Correct.

Rich Sullivan

1ost$ its >#st te "#i+ing an+ te caita e6en+it#res. o#g ie e are +oing some

cam#s e6ansion, ic i start to it, it so#+ "e -air$ consistent $ear oer $ear.


/ka$. anks, g#$s.

Operator

e6t e t#rn to te ine o- 1icae 1orris it H<S. 3ease go aea+.



'ichael 'orris ! ()S

ank $o#. Jo# re-erence+ te DD saes o- 1a+agascar 2 at a"o#t @ miion #nits tro#g

ast eeken+. Can $o# sare o tat comares it anoter ;m, sa$ K#ng !# 3an+a,

tro#g te same erio+M

An+ ten aso it te ?8 miion amorti:ation catc=# $o# re-erence+, at kin+ o- imact

+oes tat ae on te margin -or K#ng !# 3an+a an+ o so#+ e "e tinking a"o#t

margins going -orar+ kin+ o- reatie to istorica titesM Is it == so#+ e "e taking seera

#n+re+ "asis oints o#t o- o#r ass#me+ margins -or tese ;ms in te -#t#reM anks.

Jefrey Katzenberg

/ka$, so 1icae, at I tink e +o is ae Ann Da$ ;rst tak to te 1a+agascar 2 DD

reease an+ ten *e i tak a"o#t te margins, so ==

#nn $aly

e 1a+agascar 2 reease initia saes tro#g te ;rst B0 +a$s o- reease ere amost on

art it at aene+ it K#ng !# 3an+a. e saes tat e are seeing no, te @

miion, ro"a"$ i reresent ma$"e an$ere -rom @ to @ o- te tota o#me tat

e see, rimari$ "eca#se it is a se5#e, ic is == K#ng !# 3an+a as not, an+ aso

"eca#se K#ng !# 3an+a a+ te a+antage o- "eing in te oi+a$ seing erio+. <#t a in

a, e -ee er$, er$ strong o#t o- te gate.

Jefrey Katzenberg

I mean, 1icae, again >#st to #t it in ersectie, te -act tat in its ;rst tree eeks o-

saes o#+ "e on ar it K#ng !# 3an+a, gien tat its a se5#e, ic are tra+itiona$ a

ste +on, in a more +i7c#t seing erio+ in a more +i7c#t market e to#g as er$,

er$ strong.

An+ *e, +o $o# ant to tak a"o#t ==

Lewis W. Coleman

1icae, te ?8 miion a+>#stment in te -o#rt 5#arter as essentia$ a catc=# o- tesecon+ an+ tir+ 5#arter oer amorti:ation, so i- $o# ook at it in te -o#rt 5#arter, te

amorti:ation res#te+ in a sort o- catc=# margin. I- $o# ook at it -or te oe $ear, $o#

can sort o- get an i+ea a"o#t at te margin as going to "e. We +ont +iscose margins

"#t cear$ te re+#ction in DD o#me as res#te+ in a +ecine in margins in o#r ;m

#timates.




/ka$, so tats == on a go -orar+ "asis ==

Lewis W. Coleman

So at Im sa$ing is +ont take a r#n=rate o9 te -o#rt 5#arter "eca#se tat o#+ "e

incorrect, "eca#se a goo+ c#nk o- it as catc=# in te secon+ an+ tir+ 5#arter. An+ to

te oera 5#estion, so#+ $o# "e ass#ming sigt$ oer margins in tis DD market -or

o#r ;ms in genera, te anser is $es.


Can $o# te me aro6imate$, sa$ o m#c te margin came +on on a normai:e+ "asis

== not te -o#rt 5#arter, "#t >#st as $o# ook "ack to te secon+ an+ tir+ 5#artersM

Lewis W. Coleman

Jo# kno, e rea$ +ont +iscose margins an+ art o- it is tat e +ont necessari$ aocate

e6enses among in+ii+#a ro+#cts, so its sometimes misea+ing to +iscose te margins. I

tink its sa-e to sa$ tat margins are coming +on, most$ +#e to te ome i+eo "#siness

an+ aso a "it oera "eca#se as e sing into more internationa saes o- settement rates

-or te "o6 o7ce are a "it oer tere, so as te mi6 canges in o#r "#siness as e

+escri"e+ in Decem"er, $o#re "eginning to see some +ecine in margins.


/ka$. ank $o#.

Operator

e6t e t#rn to te ine o- icar+ Green;e+ it 3ai Caita.

Richar" *reen+el" ! ,ali Capital

/ne o#sekeeing oint == >#st on te ?8 miion, o +o e tink a"o#t at te roer

e9ectie ta6 rate is, >#st to tink a"o#t at tat one=time non=cas carge meant to $o#r

n#m"ersM An+ ten to, >#st a more -#n+amenta 5#estion == $o#r stock as o"io#s$ "een

#n+er 5#ite a "it o- ress#re. Jo# stoe+ "#$ing "ack, or $o# +i+ not "#$ "ack stock, I"eiee, *e sai+ in te 5#arter. Wats $o#r to#gt rocess on sare "#$="ack. I kno

$o#e "een concerne+ a"o#t te Foat istorica$. Was it #re$ te enironment tat e+

$o# "ack -rom "#$ing "ack te stockM Wat o#+ make $o# tink a"o#t it gien ere te

stock is going, an+ ten a arger str#ct#ra 5#estion o- as inestors +o not seem to "e

terri"$ e6cite+ a"o#t ;m "#sinesses in te c#rrent enironment -or te DD or+, at

are $o#r otions or at are $o# tinking a"o#t in terms o- a++ressing te kin+ o- a#ation

o- $o#r stockM



Jefrey Katzenberg

/ka$, so *e, I et $o# +o te ta6 one an+ ==

Lewis W. Coleman

/ka$. ic, te ta6 iss#e is a itte "it +i7c#t to caracteri:e "eca#se on te one an+, e

ae cear$ sort o- a+ a -air$ conseratie ta6 osition it reseres "eca#se $o#e seen

some ta6 resere canges -or te ast tree or -o#r 5#arters. is one I tink I o#+ tink o-

as "igger tan most, an+ in tat resect, in terms o- its si:e, its ro"a"$ not 5#ite as

reeata"e.

In terms o- te sare re#rcase st#9, it t#rns o#t, artic#ar$ gien te a$ e sce+#e+

te inestor con-erence, tat e rea$ +i+nt ae a cean time ere e -et com-orta"e

"ase+ #on at e kne an+ at e a+ +iscose+ to rea$ get a "#nc o- sare

re#rcasing +one in te -o#rt 5#arter. /#r attit#+e toar+ sare re#rcases remains#ncange+. We tink its sti a goo+ a$ to ret#rn mone$ to te sareo+ers an+ e +o

tink te rice o- te stock is artic#ar$ attractie to+a$.

Jefrey Katzenberg

So on m$ si+e, ic, an+ >#st in terms o- te oera iss#e o- a#ation, as $o# e kno, e

sent a -air amo#nt o- time o#t it te "#$ si+e te en+ o- ast $ear an+ again te

"eginning o- tis $ear. I tink tat tere as "een a tremen+o#s amo#nt o- esitation #nti

tere is greater carit$ as to tren+s in o#r "#siness.

Wat e ae seen no in te ast eigt to B0 eeks since e met it on o#r ana$st +a$,

ae "een sort o- to tings. !irst I take te teatrica in+o an+ sa$ == an+ >#st

caracteri:e te "#siness -rom Cristmas time to +ate as someting aro#n+ sectac#ar. e

in+#str$ as a oe is # oer 2@ oer tese ast eigt eeks. <#siness co#+ not "e

stronger, an+ its not # >#st in gross "#t its aso # in a+missions, someting tat I +ont

tink te moie "#siness as seen -or some time. An+ I "eiee tat is a reFection o- te

marketace an+ is te moie "#siness "eaing co#nter=c$cica$, ic it as +one

istorica$. So te "o6 o7ce is er$, er$ strong an+ I tink is going to en+ # "eing er$

oort#ne -or te reease o- 1onsters ers#s Aiens an+ -or te 'D at-orm.

1oing to te DD market, ere te greatest stress an+ te greatest an6iet$ as "een

e6resse+, e ae no a+ to test oints tat ae occ#rre+, one o- ic e are

+iscosing -or te ;rst time to+a$ == or act#a$, "ot o- ic e are +iscosing -or te ;rst

time to+a$, ic is tat en e ere it te "ot se an+ "#$ si+e in Decem"er, e

ro>ecte+ B0 miion #nits, oer B0 miion #nits -or K#ng !# 3an+a an+ in -act ae come in

oer BB miion #nits, ic again in tis marketace, e to#gt soe+ a er$, er$ goo+

strengt -or o#r ro+#ct. An+ no secon+$, ere e are to+a$ it anoter test ace -or



#s, er$ seci;ca$ -or te 1a+agascar 2 DD, an+ == ic as to "e caracteri:e+ as er$

strong. An+ so tese are te to kin+ o- ke$ comonents I tink tat te "#$ si+e ae "een

ooking -or. I am oing tat te$ i ae te same con;+ence o#t o- tis tat e +o an+

e certain$ ook at o#r stock to+a$ an+ tink tat its #n+er=a#e+.

Richar" *reen+el" ! ,ali Capital

Is tere an$ oint ere i- $o# +ont get te ret#rn -rom sareo+ers tat $o# o#+ more

actie$ tink a"o#t strategic aternatiesM

Jefrey Katzenberg

I +ont tink tats a == tats too i+e oen a conersation, ic, an+ Ie got too man$

eoe aing at me in te room N+ont anser tatOP.

Rich Sullivan

/n tat note, tanks, ic. e6t 5#estion.

Operator

e6t e t#rn to te ine o- a Scackart it Wiiam <air. 3ease go aea+.

Ralph Schac-art ! William )lair

Goo+ a-ternoon. A co#e o- 5#estions, i- I co#+ ;rst, e9re$, >#st sort o- -rom a "ig ict#re

macro stan+oint, o is sort o- te in+#str$ ooking at 'D ticket ricing, "aancing sort o-

te recession an+ te #n-ort#nate eents tat are going on it some #ge "ock"#sters

tat are coming o#t, arge$ starting it 1A in 1arcM

Jefrey Katzenberg

We $o# kno, I tink, a, tat again >#st ook at te marketace to+a$ == te

er-ormance o- Coraine tis ast eeken+, 80 o- its ?BB miion gross came -rom its 'D

screens, ic reresente+ ess tan a- o- its screen. Its gross to +ate I tink as == as it

0 o- its tota gross as o#t o- its 'D screensM Jo# ook at te er-ormance o- I1A ==

eoe itin tis "argain, ic going to te moies is te singe greatest "argain tate6ists -or a +iersion -or recreationa #roses kin+ o- in te or+ rigt no to+a$ itin

tat coice, o9ering eoe a remi#m e6erience, $o# kno, is someting tat te$ ae

reson+e+ er$ aggressie$ too. We "eiee tat it tese reeases o- ne6t ro#n+ o-

"ock"#ster moies, e+ "$ 1onsters ers#s Aiens, ic e tink raises te "ar -or at it

means to see a 'D ;m, tat tere i "e a i+e +eman+ at a ?@ remi#m -or o#r ro+#ct

tro#go#t te co#ntr$ an+ te rest o- te or+.




Great, tats e-#. An+ ten >#st in terms o- te DD en+ market, more on a macro

ict#re, o"io#s$ $o#r tites, "ot ne reease an+ cataog, are o+ing # rett$ e in a

to#g market, "#t can $o# gie a itte more gran#arit$ on at as aene+ in te market

since te ana$st +a$, i- its -air to ook at oi+a$ ers#s QB an+ "ot toar+ ne reeases

as e as cataogM Im >#st tr$ing to getR

Jefrey Katzenberg

Again, i- I >#st tink == e +ont ant to oine on te rest o- te in+#str$. I tink $o#e ear+

-rom oter comanies in terms o- teir "#siness tere. e$e "een rett$ +on on it,

taking a"o#t it "ot sec#ar$ an+ c$cica$ an+ tat as not "een o#r e6erience. We are

not ;n+ing te same resistance or +eterioration in te marketace tat $o# ae ear+

-rom oter comanies tat are +eaing it m#c arger o#mes, more +iersit$ o- ro+#ct,

+i9erent t$es o- cataog. Wee a+ er$ goo+ er-ormance o- o#r cataog in te -o#rt5#arter. We contin#e to see goo+ er-ormance -rom o#r cataog so -ar tis $ear, an+ o#r to

tites, o#r to rimar$ tites, 3an+a an+ 1a+agascar, te$e >#st er-orme+ er$, er$ e.


Great, an+ ten one ast one an+ I t#rn it oer == o- te BB miion #s o- te K#ng !# 3an+a

DDs, o man$ ere <#=a$ an+ is <#=a$ at tis oint meaning-# to sort o- te

remi#m ricing to e o9set sort o- te stan+ar+ +e;nition +ecineM

Jefrey Katzenberg

Its a er$ sma art o- o#r "#siness to +ate. emem"er, o#r moies are rimari$ a

mom-ami$ #rcase an+ e ike te <#=a$ at-orm in it "#t its not a meaning-#

ercentage o- o#r "#siness. e ace ere e see m#c, m#c more imact on o#r

"#siness are it te to acks tat ee a+ to o9er, so eter its te to=ack o-

K#ng !# 3an+a it te Secrets o- te !#rio#s !ie, or te 1a+agascar to=ack it te

e6tra 1a+agascar 3eng#ins o9er in it, tese ro+#cts ic e +i+ ae remi#m o9ers

ae so+ e6treme$ e an+ te$ ae "een a er$ meaning-# art o- o#r o#me.


Great. anks, e9re$.

Operator

e6t e t#rn to te ine o- Ingri+ C#ng it Go+man Sacs.

ngri" Chung ! *ol"man Sachs



S#re, tanks. Goo+ a-ternoon. So m$ ;rst 5#estion is on K#ng !# 3an+a reen#e == I as

on+ering i- tere as signi;cant cons#mer ro+#cts reen#e in te K!3 n#m"er. An+ aso I

kno its cac#ate on gross reen#e "#t I as on+ering i- $o# co#+ gie #s some coor in

terms o- DD AS3s.

An+ ten m$ secon+ 5#estion is aro#n+ te 3eng#ins so == e kno it +e"#ts a-ter te

Ki+s Coice Aar+s on 1arc 28t an+ it ooks ike te sneak eek "ro#gt in "ock"#ster

n#m"ers oer anksgiing. We ere >#st on+ering i- tere as some a$ tat $o# can

moneti:e te +e"#t o- te so. We kno ick gets te a+ reen#e "#t at kin+ o-

mercan+ising are $o# going to ae aro#n+ tatM

Jefrey Katzenberg

!irst one, ic.

Rich Sullivan

Ingri+, te ?B00 miion #s o- K#ng !# 3an+a reen#e tis 5#arter as re+ominant$

+rien "$ ome i+eo. oeer, tere as some resi+#a I</ reen#e in tere as e, so I

mean == ee gien $o# te #nits o- BB.2. I tink ro#g$ a"o#t 8@ o- te tota reen#e

as ome i+eo, so $o# so#+ "e a"e to ;g#re o#t at te AS3 is -rom tere.

Jefrey Katzenberg

An+ on te 3eng#ins so, te mercan+ising oort#nities o- tat i -oo an+ i

ro"a"$ "e in te == te$ i start to ram # in te -o#rt 5#arter an+ ten e ro o#t

oer a B8=mont erio+ o- time, so tere i not "e an$ imme+iate imact or "ene;t to #s in

te secon+ 5#arter.

ngri" Chung ! *ol"man Sachs

/ka$, great. ank $o#.

Operator

e6t e t#rn to te ine o- ake in+eong it 1onness, Cresi, ar+t.

Ja-e /in"elong ! 'onness0 Crespi0 /ar"t 1 Co.

Great. Goo+ a-ternoon. #st to -oo=# ;rst on te ast 5#estion it te AS3s can $o#

a++ress >#st te romotiona actiit$ in te -o#rt 5#arter, an+ ten ricing on 1a+agascar 2

DD ers#s te K#ng !# 3an+aM

#nn $aly



In te -o#rt 5#arter, e sa some oer retai ricing, ic as te res#t o- te

cometitie enironment tat $o# norma$ see in te -o#rt 5#arter "eteen retaiers, so I

"eiee te aerage seing rice at retai in te -o#rt 5#arter as aro#n+ == ro"a"$ in te

ig ?B range -or te ro+#ct. In te ;rst 5#arter, e are seeing a iger rice oint on o#r

1a+agascar ro+#ct. Were seeing te singe "eing rice+ aro#n+ ?B8 an+ as e9re$

mentione+ earier, e sa o#r remi#m ro+#ct, ic as +oing er$, er$ e, "eing

rice+ oer ?20, an+ tat reresente+ a iger ercentage o- saes tan e ae eer seen

on an$ reease # #nti tis time, so er$ a$ it tat.


/ka$, tank $o#. An+ ten searate$, >#st on te #coming reease o- 1onsters ers#s

Aiens, en +o $o# tink te ;rst oort#nit$ is going to "e -or te #"ic to see more o-

te ;m, see te entire ;m an+ -or inestors to get a -# reieM

Rich Sullivan

Were going to "e +oing an inestor screening, as is t$ica -or o#r ;ms, most ike$ te

1arc 2Bst eeken+ -or $o# g#$s in e Jork an+ a simiar one in *.A., so $o# "e a"e to

see te -# ;m ten.


ank $o#.

Operator

e6t e t#rn to te ine o- Dai+ 1ier it Caris L Coman$.

$avi" 'iller ! Caris 1 Company

*e, a 5#estion -or $o# == in terms o- te reen#e recognition sce+#e -or 1a+agascar 2

teatrica$, not on DD "#t teatrica$, is most o- tat >#ice -rom te internationa

territories going to in -act -a in te c#rrent 5#arter, or +o $o# see sort o- a onger tai

aening, ma$"e a itte "it o- tat reen#e "ee+ing into te secon+ 5#arter "eca#se te

aanese oening occ#rs m#c ater in te 5#arterM anks er$ m#c.

Lewis W. Coleman

Dai+, I tink te "#k o- it is going to "e in tis 5#arter. Een to#g aan is in te ne6t

5#arter, its te ast territor$ I tink tat i oen in te ne6t 5#arter an+ as $o# kno, o#r

e6ectations in aan ae not "een #ge.

$avi" 'iller ! Caris 1 Company



ank $o#.

Operator

e6t e t#rn to te ine o- Do#g Cre#t: -rom Coen L Coman$.

$oug Creutz ! Cowen 1 Company

anks. I tink $o# mentione+ in $o#r reare+ remarks tat ro#g$ 20 o- $o#r C/GS in

te 5#arter ere +#e to non=teatrica reease so#rces == co#+ $o# gie a itte more coor on

at te comosition o- te C/GS ere an+ ere tere associate+ reen#es it tose

C/GSM anks.

Lewis W. Coleman

I trie+ in m$ remarks to "e -air$ care-# a"o#t giing $o# an o#tine o- at a goo+ c#nk o-tose n#m"ers ere an+ Im a itte "it == its a itte "it +i7c#t to caracteri:e tem ito#t

caracteri:ing tem it non=GAA3 n#m"ers. So I tink at $o# o#gt to +o is take a ook

at tose n#m"ers. I can te $o# istorica$ te$ are r#nning at east +o#"e at te$ ae

in te ast, te non=cost o- goo+s amorti:e+ n#m"ers, so it as a -air$ "ig ick=#. e$ are

at a oint ere te "#k o- tose are not associate+ it reen#e no an+ ro"a"$ ont

"e -or te ne6t to 5#arters, "#t ro"a"$ i "e in te -o#rt 5#arter. I tink tat sort o-

com"ines art$ at I sai+ an+ art$ at e9re$ sai+. I oe tats a "it o- a e to $o#.

$oug Creutz ! Cowen 1 Company

Jea, tanks.

Rich Sullivan

e6t 5#estion, ease.

Operator

e6t e t#rn to te ine o- asi$ Karas$o it .3. 1organ.

2asily Karasyov ! J.,. 'organ

ank $o#. I ae a 5#estion a"o#t margins again, i- $o# +ont min+. 3LA, o#+ $o# eer

consi+er re=ea#ating te 3LA "#+gets i- te caenges in te ome entertainment markets

ersistM An+ not on$ +omestica$ "#t aso internationa$M An+ i- so, o m#c more +o $o#

tink $o# can c#t o#t o- it ito#t #rting te oening eeken+ an+ tite er-ormanceM

ank $o#.



Jefrey Katzenberg

/ka$, so I o#+ == I tink tere are == in terms o- o#r 3LA sen+, e are I tink seeing

+i9erent F#ct#ations tat are occ#rring in +i9erent a$s ere, an+ it itera$ is mont=to=

mont. So e can ae a c#rrenc$ conersation an+ tings are F#ct#ating one a$. We can

ook at o#r a"iit$ to make "etter "#$s an+ get more -or o#r mone$. We are aggressie a"o#t

tat an+ a"o#t managing tese costs, an+ I tink at e +ont ant to sa$ $et to+a$ is

tere a seci;c target n#m"er tat e ae in min+, oter tan to sa$ it is to o- min+ an+

e are ooking to take eer$ singe a+antage e can as a ma>or "#$er o- me+ia, "ot to

s#ort te teatrica an+ te ome i+eo in+o.

<#t again, I ae to sa$ $o# caracteri:e+ te conersation at te "eginning "$ sa$ing it

te +i7c#ties in te ome i+eo market, an+ I >#st ae to sa$ again, e are an o9ensie

a$er in tis arena rigt no, not a +e-ensie one, an+ e are seeing goo+ res#ts -rom

"eing an o9ensie a$er.


/ka$, tank $o#. So $o# are "#$ing more a#+ience -or te same +oar a#eM

Jefrey Katzenberg

Jes.


/ka$. ank $o#.

Jefrey Katzenberg

An+ seeing goo+ imact on it.

Operator

e6t e t#rn to te ine o- <arton Crockett -rom *a:ar+ Caita 1arkets.

)arton Croc-ett ! Lazar" Capital 'ar-ets

/ka$, great. anks -or taking te 5#estion == I as on+ering i- $o# co#+ tak a itte "it

a"o#t Srek e 1#sica in terms o- $o# +escri"e+ tat $o# are ease+ it te

er-ormance at tis oint, I tink artic#ar$ into tis $ear. <#t I tink some o- te tra+e

resses +escri"e+ it at as ma$"e a itte "it so-ter tan at east te tra+e ress o#+ ae

e6ecte+ -or a ro+#ction o- tis magnit#+e.



Wat kin+ o- eek$ "o6 ta$ == can $o# gie #s an$ sense o- at nee+s to aen to te

eek$ "o6 ta$ oer te ne6t co#e o- 5#arters to #t tis ting on a track to rea$ san

a co#e o- te to#ring sos, ic is I tink ere $o# rea$ ae te oort#nit$ to

make mone$ i- it orks.

Jefrey Katzenberg

We, tank $o#. Again, I tink its ar+ -or #s to ant to "e re+ictie o- te too=-ar=o#t on

te ori:on. Wat e ae seen is increasing er-ormance eek oer eek oer eek ere

no -or -o#r eeks in a ro. is ast eek en+ing on te 22n+ is act#a$ te tir+ "iggest

eek tat ee a+ on te so since e oene+, inc#+ing te to oi+a$ eeks o-

Cristmas. An+ so e ae seen er$ goo+ tren+s on te "o6 o7ce to te so.

Jo# kno, I tink tere as -air amo#nt o- concern on eer$"o+$s art. We a+ a er$ eak

eek te ast eek o- an#ar$, ic is tra+itiona$ te orst eek == $o# kno, -or 40

$ears its te orst eek o- te $ear -or te entire in+#str$ an+ most o- o#r cometitorsere +oing ea$, ea$ +isco#nting an+ to=-or=one o9ers an+ a n#m"er o- tings tat

roe+ teir "o6 o7ce gross #. We +i+ not tink tat as te rigt strateg$ -or #s an+ so

e sa a rett$ stee +i in o#r n#m"er tat eek an+ I tink it ma+e eer$"o+$ an6io#s,

#s inc#+e+, "$ te a$. <#t e ae itera$ seen #s go -rom @00,000 to ',000 to

@,000 an+ 8@0,000 tis ast eek -or #s. /"io#s$ tis is a strong tren+. We no ea+

into == $o# kno, en e get to mi+=1arc an+ te Easter "reaks "egin, it starts te "etter

season -or a o- te <roa+a$ teater "#siness. So e tink te orst is "ein+ #s. *oe te

tren+ tat e are seeing an+ as e sai+ to $o# at o#r ana$st con-erence, e "e

com-orta"e roing o#t at o#r -#t#re ans are en ee got a goo+ si6 monts #n+er

o#r "et, ic i "e mi+=s#mmer.


/ka$, e, i- it is == i- te eek$ "o6 sta$s in tis range, is tat on a tren+ ere $o# o#+

-ee com-orta"e +oing te roa+ sos, or +oes it nee+ to gro a "it -rom ereM

Jefrey Katzenberg

ese are rea$ goo+ n#m"ers. We oe te$ i go # -rom ere "#t to anser $o#r

5#estion, tese are soi+ n#m"ers -or a so.


/ka$, great. ank $o#.

Operator



e6t e t#rn to te ine o- #na Amo"i it Stan+ar+ L 3oors.

3una #mobi ! Stan"ar" 1 ,oor4s

ank $o# er$ m#c. So >#st a iosoica 5#estion, e9re$, on te remi#m ca"e

in+o, artic#ar$ it te Tina#+i"eU a#nc coming # ater tis $ear. So as $o# tink

a"o#t tat in+o, +o $o# see == at to#gts +o $o# ae on te caacit$ o- te

marketace to an+e anoter remi#m ca"e canne an+ +oes tat -actor at a into $o#r

strateg$, reease strateg$ into remi#m ca"e, artic#ar$ it 3aramo#nt "eing one o- te

a#ncers o- Tina#+i"eUM

Jefrey Katzenberg

#na, again, I am not B00 s#re o- at te 5#estion is. We ae a er$ strong o#t#t +ea

it </ in ic o#r ro+#ct is gien a er$ strong remi#m. I- $o# are taking a"o#t +a$=

an+=+ate /D, tat is, in terms o- o#r c#stomers an+ o#r rimar$ "#$ers o #se tese -orm#tie, m#tie a$s in it, its a er$ sma art o- o#r "#siness. Its not == $o# kno, I

tink tis is more o- an iss#e -or eoe o are in te renta "#siness rimari$, or at east

tat is a er$ "ig art o- teir "#siness. So I oe Ie ansere+ $o#r 5#estion.


Jea, tats e-#. Searate$ on te == >#st ma$"e a 5#estion -or *e, on te #timate

reisions -or 3an+a, ere tere aso an$ reisions -or 1a+agascar or is tat sti a itte "it

ear$M ae $o# reise+ $o#r #timates -or 1a+agascar t#s -ar "ase+ on te comment tat

$o# ma+e a"o#t 3an+aM

Lewis W. Coleman

Jo# kno, #na, e ook at o#r #timates o"io#s$ eer$ mont an+ e sort o- ook at tem

er$ care-#$ eer$ 5#arter as a art o- te a$ e cose o#r ;nancia "ooks. An+ e

ro"a"$ make a+>#stments in 0 or 0 o- o#r ;ms eer$ 5#arter. Some o- it as to +o

it en in+os oen, some o- it as to +o it sort o- at e see "#t teres

aa$s a+>#stments. er$ se+om$ +o e a+>#st more tan ?B miion or so in a 5#arter, so

te a+>#stment e cae+ o#t -or $o# as #n#s#a an+ +oesnt aen er$ o-ten. e rest o-

tem are er$ sma an+ te$ are as ike$ to "e # as te$ are +on.


/ka$, tats e-# an+ >#st ast$, a o#sekeeing 5#estion == a cari;cation, act#a$, on

te ercentage o- te non=teatrica C/GS. So te ?B miion er 5#arter ro+#ct

+eeoment, as tat -actore+ into te 20 tat $o# mentione+ or is tat a++itionaM



Lewis W. Coleman

ats a++itiona. I mean, essentia$ on te ?B miion, cear$ some eoe o#+ caitai:e

tat against a ro+#ct an+ ten amorti:e it en its reease+. At tis oint, ere e6ensing

tat.


ank $o#. ank $o# er$ m#c.

Rich Sullivan

e6t 5#estion, ease.

Operator

e6t e t#rn to te ine o- o"ert !isman it <anc o- America.

Robert 5ishman ! )anc o% #merica

ank $o#. Im caing on "ea- o- essica == one 5#estion, >#st to cari-$ an earier comment

== on te @ miion #nits reresenting te @ to 0 o- te tota 1a+ 2 #nits to +ate, as

tat >#st -or +omestic #nits or as tat on a or+i+e "asisM An+ ten, i- I ma$, can $o# >#st

+isc#ss i- $o# are seeing an$ +i9erent tren+s on te oesae DD ricing in te

internationa markets ers#s te +omestic market, an+ i- $o# can 5#anti-$ te "reak+on in

saes o- te +o#"e ack -or K#ng !# an+ te #=i-t in ricingM anks.

#nn $aly

/n te == >#st to cari-$, te @ miion #nits as +omestic an+ te range as rea$ @ to

@ o- te initia reease erio+. Jo#r secon+ 5#estion a+ to +o it te oesae rice in

internationa an+ e are seeing tat, at east in o#r "#siness, to "e reatie$ sta"e. We

+i+nt see a materia cange in te -o#rt 5#arter -rom te reio#s 5#arter, so e are

a$ it tat res#t. An+ ten I tink $o# ere asking a"o#t te to=acks. !or K#ng !#

3an+a, I tink in o#r ana$st resentation in Decem"er, e mentione+ tat e ere seeing

te initia saes >#st #n+er '0 o- te mi6 an+ in 1a+agascar, tat ercentage as

increase+. In te initia reease +a$s, e ere seeing near$ @0 o- te o#me +one intose remi#m acks. An+ again, tose remi#m acks ere seing -or == in te ?22 to

sometimes ?2@ range, een in tis market. We to#gt tat as er$, er$ strong.

Jefrey Katzenberg

So again, tis rea$ goes "ack to ic Green;e+s earier 5#estion ere, in terms o- at e

are seeing in o#r "#siness an+ o tis sort o- +i9erentiates #s -rom ats going on in te



sector as a oe. I >#st ae to sa$ again, not on$ are e seeing strong er-ormance -rom

te tite "#t o#r c#stomers in an #ne6ecte+ a$ are tra+ing # -or te remi#m ro+#ct.

e -act tat cose to @0 o- o#r o#me on te 1a+ 2 ere te remi#m to=ack is

someting tat is == $o# kno, $o# o#+ tink is co#nter to at migt "e going on in a

er$ +i7c#t economic enironment. <#t o#r cons#mers are seeing tis as a great a++e+

a#e an+ ort te e6tra carge, so its act#a$ "een er$ rear+ing -or #s.

Rich Sullivan

anks, o"ert. e6t 5#estion, ease.

Operator

e6t e t#rn to te ine o- <rian Siman it e9eries.

)rian Shipman ! Jeferies 1 Company

anks. Goo+ eening. A co#e o- 5#estions ;rst, can $o# tak a"o#t at $o#r

ass#mtions are on 1onsters ers#s Aiens in terms o- te #=se to 'D in te 2,000 #s

teaters it i "e aaia"eM An+ ten secon+, $o# take+ at te ana$st +a$ in Decem"er

a"o#t e6ecting ,000 to ,@00 'D screens in te market "$ te time Srek 4 its teaters

in 1a$ o- 20B0. Are $o# sti at tat same e6ectation ee or as tat cange+ at aM

anks.

Jefrey Katzenberg

So I tink tat to te ;rst 5#estion, I tink at Im com-orta"e sa$ing is tat at B@

enetration at a ?@ remi#m, e "egin to see a ret#rn on o#r inestment -or te 'D roo#t

o- 1A an+ Im more tan con;+ent tat e i see a er-ormance tat is signi;cant$

iger tan tat.

At tis oint, a o- tese tings are ne an+ e are te ;rst, an+ so I tink to+a$ to sit ere

an+ tr$ an+ sec#ate or cac#ate eter o#r a+missions are going to "e at 20 or '0 or

40, e >#st +ont kno. We ae er$ soi+ caacit$ o#t tere == $o# kno, 2,000 screens

ae got a ot o- seats in tem an+ at e are seeing rigt no is te cons#mers are er$

m#c making tat e6tra e9ort to get to a 'D screen.

e oter ting tats aene+, ic is == an+ ten te tir+ ting, ic is +o I tink e

get te roo#t to te ,000 screens "$ te time Srek is reease+, te anser is $es. eres

"een a tremen+o#s rogress tat as "een ma+e on te DCI3 -ront, as e as oter

;nancing oort#nities tat are no starting to resent temsees -or e6i"ition an+ -or te

+istri"#tors, an+ I tink $o# i see "eginning in te secon+ 5#arter a er$, er$ strong ick=

# to te ace o- 'D roing o#t.



e ast ting tat as aene+ in tis, ic is act#a$ anoter rea easant s#rrise -or

#s, is te -act tat internationa$, te ace as icke+ # er$ +ramatica$. An+ rigt no

to+a$, o#r +istri"#tor is ro>ecting tat tere i "e cose to B,00 'D screens in te

internationa market an+ e o#+ e6ect to "e a"e to a$ on someere "eteen 0

an+ 80 o- tose screens as te moie ros o#t internationa$. ats tice at e a+

to#gt en e met it $o# in Decem"er.

)rian Shipman ! Jeferies 1 Company

/ka$. ank $o#.

Rich Sullivan

anks, <rian. e6t 5#estion, ease.

Operator

(/erator Instr#ctions) We +o ae a 5#estion -rom te ine o- *a#ren Sc#ker it e Wa

Street o#rna. 3ease go aea+.

Rich Sullivan

*a#ren, I tink ere going to take tat == I tink e ae a meeting it $o# a-terar+s to

take tat oVine, so tis ca is -or ana$sts an+ inestors. We an+e te me+ia cas rigt

a-ter tis.

Operator

An+ it tat, e ae no -#rter 5#estions in 5#e#e.

Rich Sullivan

We, tank $o#, ten. at conc#+es to+a$s -o#rt 5#arter earnings con-erence ca. I

o#+ ike to remin+ eer$one tat a rea$ o- tis ca i "e aaia"e sort$ on o#r

DreamWorks Animation e"site == tat a++ress again, .+reamorksanimation.com. I-

$o# ae an$ a++itiona 5#estions, ease contact DreamWorks Animation Inestor eations

+eartment. anks again -or articiating an+ ae a great eening.

Operator

*a+ies an+ gentemen, tat +oes conc#+e o#r con-erence -or to+a$. ank $o# -or $o#r

articiation an+ -or #sing AL e6ec#tie teecon-erence serice. Jo# ma$ no +isconnect.

DWA 2008 Q4 Earnings Call Transcript.docx

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