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DreamWorks Animation Posts Gains Over Q2 2005

For the second quarter of 2006, DreamWorks Animation SKG Inc. reported total revenue of $74.9 million and net income of $13.7 million, or $0.13 per share on a fully diluted basis. This compares to revenue of $35.4 million and a net loss of $3.7 million, or ($.04) per share on a fully diluted basis, for the same period in 2005. The company ended the period with $526.9 million of cash and cash equivalents.

"The second quarter's results were primarily driven by the availability of MADAGASCAR in the domestic pay television market and its performance in the worldwide home video market," commented Jeffrey Katzenberg, DreamWorks Animation's ceo. "Last summer, MADAGASCAR was our most successful theatrical release to date for an original film and has been one of the top selling domestic home video titles over the past eight months. With its sequel slotted for the fall of 2008, we have been pleased with the success of our next potential franchise."

For the period, MADAGASCAR contributed approximately $37.9 million of revenue. Since its home video release in the fourth quarter of 2005, the film has reached an estimated 18.9 million units shipped through the second quarter of 2006, net of actual returns and estimated future returns. OVER THE HEDGE, released on May 19, 2006, has reached approximately $153 million in domestic box office to date, making it one of the top seven domestic films of 2006. As is typical for a film in the quarter of its release, OVER THE HEDGE remains in an un-recouped position with the company's distribution partner, Paramount. However, the film did contribute a total of $10.7 million of revenue in the quarter, $4.6 million of which was associated with the annual cost reimbursement from Paramount.

"OVER THE HEDGE has achieved over $278 million in worldwide box office to date with several major territories still to come," stated Kris Leslie DreamWorks Animation cfo. "As indicated last quarter, we do not expect OVER THE HEDGE to contribute any significant revenue to the company until later in the year because of the upfront marketing and distribution costs associated with its theatrical release."

SHARK TALE contributed approximately $9.6 million of revenue driven primarily by international pay television in the quarter. WALLACE AND GROMIT: THE CURSE OF THE WERE-RABBIT recorded approximately $3.4 million in revenue in the quarter, mainly driven by home video revenues from the title. To date, the film has reached an estimated 4.4 million units shipped through the second quarter of 2006, net of actual returns and estimated future returns. Library and other films accounted for approximately $13.3 million of revenue. At the end of the second quarter the company remained in an un-recouped position of approximately $7 million for its 2004 release, SHREK 2.

Looking ahead, the company reiterated its expectation that without a new release in either the theatrical or home video market, the company is not likely to have any significant drivers of revenues or profits in the third quarter of 2006. Revenue for the remainder of the year is expected to be driven by the performance of OVER THE HEDGE. The company does not anticipate recognizing any significant amount of revenue from the film until it is released in home video in the fourth quarter of 2006. OVER THE HEDGE home video is scheduled for domestic release on October 17, 2006.

The company's next release, FLUSHED AWAY, opens in the U.S. Nov. 3, 2006.

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Rick DeMott
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