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DreamWorks Animation SKG, Inc. (NASDAQ:DWA)

Q4 2013 Earnings Conference Call

February 25, 2014 04:30 p.m. ET

Executives

Rich Sullivan - Deputy Chief Financial Officer

Jeffrey Katzenberg - Chief Executive Officer

Ann Daly - Chief Operating Officer

Lewis Coleman - President, Chief Financial Officer

Analysts

Benjamin Swinburne - Morgan Stanley

James Marsh - Piper Jaffray

Vasily Karasyov - Sterne, Agee

Tuna Amobi - S&P Capital IQ

David Miller - Topeka Capital Markets

Operator

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter earnings call. [Operator Instructions] As a reminder this call is being recorded and will be available for replay starting today at 4 o’clock p.m. through March 11 at midnight. You may access the AT&T replay service at any time by dialing 1-800-475- 6701 and entering the access code 316153. International participants may dial 1-320-365-3844.

And I would now like to turn the conference over to your host, from DreamWorks Animation, Rich Sullivan, please go ahead.

Rich Sullivan

Thank you, good afternoon everybody. Welcome to DreamWorks Animation’s fourth quarter and year-end 2013 earnings conference call. With me today is our Chief Executive Officer Jeffrey Katzenberg, our Chief Operating Officer Ann Daly and our President and Chief Financial Officer Lew Coleman.

This call will begin with a brief discussion of the quarterly financials disclosed in today's press release, followed by an opportunity for you to ask questions. I'd 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 on 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 uncertainties, including those contained in the company's annual and quarterly reports, as well as in 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.

And with that, I'd like to now turn the call over to DreamWorks Animation’s Chief Executive Officer, Jeffrey Katzenberg. Jeffrey?

Jeffrey Katzenberg

Thanks, Rich and good afternoon everyone and thank you for joining the call today. 2013 was a very transformational year for DreamWorks Animation. We entered in a new distribution agreement with Fox and our first release with them The Croods was one of the biggest hits for the year and one of our best performing originals ever.

We closed our Chinese joint venture and are now fully engaged in establishing Oriental DreamWorks to produce and distribute family content and what is poised to be the largest entertainment market in the world. We launched our own television production unit and have signed multiyear agreements to deliver over 1500 F hours [ph] of programming to Netflix, super RTL and Planeta Jr [ph].

We acquired AwesomenessTV, premier digital content creator and distributor that has seen some incredible growth since the acquisition and we continue to build the foundation for a world-class consumer product business to unlock the potential of our content library.

Through each of these developments we are delivering on our goal to become a diversified world-class family entertainment company. Of course, 2013 also had its challenges. Our second film of the year Turbo faced one of the most competitive feature film environments we have seen. While it performed fairly well during the fourth quarter at the international box office and its home-video release it still fell short of our expectations. As a result of events in the fourth quarter we've taken a modest impairment charge related to the Turbo feature film which Lew will discuss in a few minutes.

Despite a write-down on the film assets we believe that the overall Turbo franchise which includes the Turbo Fast series will be a successful and profitable feature business for the company for years to come. In fact, Netflix has said that our Turbo Fast series which launched in December is on track to become one of the most popular kids series ever on their platform.

Looking ahead, we have three great feature film releases slated for this year. Leading off Mr. Peabody and Sherman has already been released in the UK, France and Argentina, to advantage of school holidays. Directed by Rob Minkoff, the incredibly talented director of the Lion King, initial reviews for the film have been strong and it currently has a Rotten Tomato score of 91%. The film releases domestically on March 7.

Historically March has been a great release window for our original films, including the Croods and How To Train Your Dragon as well as Fox’s Ince Age. We’re thrilled to bring our time traveling duo to theaters worldwide over the next several weeks.

On June 13 we will release How To Train Your Dragon 2. Early awareness for the sequel has been very strong. The entire A list casts from the first film is returning along with exciting new additions, Cate Blanchette, Djimon Hounsou and Kate Harrington. Finally on November 26 we will release Home which has an incredible voice cast Including Rihanna, Jim Parsons, Steve Martin and Jennifer Lopez. In addition to her starring role, Rihanna will record the score for the movie and releasing original concept album with songs from the film.

Throughout 2014 we will continue to make investments in key growth areas and broaden our reach beyond the feature film business into television, consumer products, digital content and location-based entertainment. We believe these initiatives combined with our continued focus on execution across all areas of our business will allow us to more fully monetize our vast library of intellectual property and drive long-term success for DreamWorks Animation.

With that, I will hand the call over to Ann.

Ann Daly

Thank you. As Jeffrey mentioned, we started 2013 under our new distribution agreement with Fox and our first release of The Croods reaching nearly $590 million in worldwide box office, and has been nominated for Academy Award for Best Animated Feature.

Turning to home video, we released both The Croods and Turbo during the fourth quarter. The Croods debuted number one and sold 6.7 million physical units worldwide through the end of this quarter. Through the end of the quarter, Turbo sold 3.3 million physical units worldwide, though Turbo did not have its own entertainment release in many international territories until the first quarter of this quarter.

Throughout 2013, we also made substantial progress in television and consumer product businesses which we aim to significantly grow over the next few years. In television, we now have output agreements in place for DreamWorks television content in nearly 60 territories around the world. Over the past several months we have hired close to 100 people as part of our television production ramp up and we are well into producing the series committed for this year and next.

As Jeffrey mentioned, our newest series, Turbo Fast debut on Netflix at the end of 2013 and the show has been incredibly well received. We will continue to deliver episodes to Netflix in 2014 with next release scheduled for early April to coincide with school holidays. Additionally later in the fourth quarter of 2014 we will deliver initial episodes for several new series to premier on Netflix. We do not expect the launch of this new series to have a significant impact on this year’s revenue given the timing of the release.

Moving on to consumer products. Over the next – last 14 months, we have recruited and built one of the strongest teams in the industry with key hires in nearly every category. Michael Francis and his team have rapidly positioned consumer products and licensing to be a significant and growing part of our business going forward. Excitement around our Dragon franchise continues to build as we look towards the theatrical release of How To Train Your Dragon 2 this summer. We expect consumer products revenue generated from the Dragon television show and feature film sequel combined to surpass that of the original movie which totalled approximately $60 million.

Beyond Dragon, the consumer products team is continuing to build out plans for many of our other franchises and partnering with retailers to deliver programs that will be key drivers of the consumer products segment growth 2015 and ’16.

Additionally we now have consumer products agreements in place with some of our [indiscernible] television distributors which will help drive international growth in that segment.

Two weeks ago, we announced the launch of DreamWorks Press to take full advantage of our intellectual property in both the physical and digital publishing. Publishing is a crucial component of any successful franchise, bringing this capability in house allows us to leverage the creative talent at the studio, to create great content based on our vast library of well known characters. We are partnering with the Perseus Books Group, a leading independent publisher to distribute the content that we create.

Turning to recent developments in our digital business, early January we announced with Fuhu, the number one maker of kids’ tablets in the US and the creator of the award winning Nabi tablet, the launch of Dream Tab, a state-of the art new tablet designs from the ground up just for kids. Fuhu and DreamWorks Animation have teamed up to co-develop the Dream Tab and transform the way kids learn, play and grow through technology. The device will include original and exclusive DreamWorks content and will continually be updated with new content upgrades and enhancements.

The Dream Tab creates another valuable point of daily engagement with kids and families and will be available in the US this spring with a planned rollout in China later this year. At AwesomenessTV we remain pleased with their impressive growth in both video views and subscribers. 10 months since our acquisition, the network’s video views have grown nearly 300% from 800 million to 3.2 billion and subscribers have increased over 160% from 14 million to 37 million.

Moving on to location based entertainment. This line of business represents another long term growth opportunities for the company. Just yesterday we announced an agreement with Merlin Entertainments to open a number of Shrek-themed live entertainment attractions over the next several years, first in London next summer. Merlin is a leader in the location-based family entertainment with its demonstrated track record success, along with the strong line up of feature film releases, we expect this year to include ongoing investments and continued focus on execution in our targeted growth areas of television, video content, consumer products and location based entertainment.

With that, I will hand the call over to Lew.

Lewis Coleman

Thanks, Ann. For the fourth quarter DreamWorks Animation reported total revenue of $204 million and net income of $17 million or $0.20 of earnings per share on a fully diluted basis. For the full year, revenues were $707 million and net income of $55 million, or $0.65 of earnings-per-share on a fully diluted basis.

As Jeffrey mentioned, we ended the fourth quarter, we revised our estimates of Turbo’s ultimate revenues and future net cash flows and recorded a film related impairment charge of approximately $14 million or $0.12 of earnings-per-share on a fully diluted basis. A revised ultimate took into account lower than previously expected performance in international theatrical markets and worldwide home entertainment markets.

In addition to the impairment, we recorded approximately $4 million of amortization expense in the quarter related to Turbo, primarily due to a change in our review strategy, we recorded an impairment charge of approximately $7 million or $0.06 of earnings-per-share on a fully diluted basis, related to the Rocky and Bullwinkle short which we had previously planned to release theatrically in front of Mr. Peabody and Sherman.

Fourth quarter results also include other operating income of approximately $6 million or $0.05 per share on a fully diluted basis related to our sale of a consumer social app that was in development.

Turning to the primary drivers of revenue, our feature film segment contributed quarterly revenue of $128 million, gross profit $63 million resulting in a gross margin of approximately 42%. Annual revenue for the segment totalled $500 million and gross profit was $203 million, resulting in a gross margin of approximately 41%. Key driver of this segment’s performance of the fourth quarter was The Croods which contributed $60 million of revenue to the quarter primarily from home entertainment.

Turbo contributed approximately $2 million of revenue to the quarter from territories where it was not theatrically distributed by Fox. We expect that Fox will recoup their costs related to Turbo after the first quarter 2014. With the Turbo’s high amortization we expect it to have an immaterial impact on 2014 operating income. The library, which now includes Push in Boots contributed revenue of $47 million, primarily driven by Kungfu Panda 2 and Push in Boots in international free television markets.

We expect our 2014 feature film segment and driven by the performance of Mr. Peabody and Sherman and How to Train Your Dragon 2. Given the timing of its November release we do not expect Home to have a material impact on 2014 results.

Our television segment contributed $47 million of revenue to the quarter. Our quarterly gross profit for the segment was $7 million resulting in a gross margin of 16%. Attributing to the fourth quarter TV revenues are classic video [ph] holiday programming, DreamWorks holiday special and the Dragon series.

Segment’s quarterly gross margin was impacted by the impairment of Rocky and Bullwinkle short as well as upfront marketing costs related to Turbo Fast. Annual revenues for the segment totalled $106 million and gross profit was $23 million resulting in a gross margin of 22%. Annual revenue result slightly exceeded our guidance of $100 million of television segment revenue.

Reiterating Ann’s earlier comments, we do not expect to deliver additional series beyond Turbo Fast to Netflix until the fourth quarter of 2014. Additionally we will incur upfront marketing costs related to this series later in the year to coincide with their initial release which will reduce segment profitability. Overall we expect 2014 television revenues and gross profit to be relatively flat compared to the full-year 2013 results.

However based on our anticipated delivery schedule of new programming, we are increasing our television segment revenue guidance for 2015 from more than $200 million to more than $250 million.

Turning to consumer products, segment contributed revenue of $12 million and gross profit of $2 million to the quarter resulting in the gross margin of approximately 6%. Quarterly results were impacted by approximately $2 million related to the Turbo impairment charge. Annual consumer product revenue totaled $67 million and gross profit was $28 million resulting in a 42% gross margin.

Approximately $14 million of annual consumer product revenue was related to specific items. Namely the sale of Batman IP to Fox and the licensing of Kungfu Panda IP and DreamWorks brand, Oriental DreamWorks. Despite these items in 2013 we still expect year-over-year growth to our annual consumer products segment revenues in 2014.

All other revenue for the fourth quarter totalled $17 million and gross profit was $2 million. This included approximately $11 million related to streaming rights for Shrek the Musical. For the full-year of 2013 the other segment contributed revenue of $34 million and gross profit of $2 million.

Moving on to the remainder of the income statement. Cost of revenues for the quarter were approximately $139 million resulting in gross profit of $65 million or approximately 32% gross margin. Selling, general and administrative expenses for the fourth quarter totalled $52 million, including $4 million of stock compensation expense. We expect SG&A to remain near fourth quarter levels throughout 2014.

And into taxes – company’s income tax expense for the fourth quarter of $1.7 million. Our combined effective tax rate, including the impact of our tax sharing agreement with a former stockholder was approximately 5.7%. Tax rate for the quarter was affected by the release of previously established reserves to cover potential state taxes. We expect our combined effective tax rate for 2014 to increase in the 30% range largely due to expiring several tax credits.

Moving on to the balance sheet, the company ended the fourth quarter with cash balances of $95.5 million. During 2013 we used $25 million to repurchase 1.3 million shares. Our diluted share count for the fourth quarter was 86.4 million shares and the remaining share repurchase authorization to $100 million.

Looking ahead, significant events for the first quarter of 2014 include the theatrical release of Mr. Peabody and Sherman and the domestic pay television release of both The Croods and Turbo. Similar to other feature films, we do not expect Peabody to have a meaningful contribution to revenue in its quarter of release.

Finally, a note on AwesomenessTV contingent consideration. As you know, we acquired AwesomenessTV for $33 million in cash with an additional contingent consideration of up to $117 million based on adjusted EBITDA targets for 2014 and 2015. We currently estimate the fair value of the contingent consideration to be $96.5 million. This value will fluctuate based on the passage of time as well as other changes such as adjustment to forecasted performance.

Changes in the fair value estimate will be reflected in our income statement. During the fourth quarter our estimated fair value increased by $1.5 million which resulted in a charge of the same amount.

With that, we’d be happy to take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) And our first question comes from the line of Ben Swinburne with Morgan Stanley.

Benjamin Swinburne - Morgan Stanley

There's a lot going on. I'll try to focus, I guess, on the television side of the equation. Jeffrey, you mentioned that you're sort of up and running to produce the 1,500 30-minute episodes, 60 territories, you listed three big customers. Can you just give us a sense for how much more opportunity there is out there? And when you look at the guidance that Lew laid out for 2015 on TV, are you baking in additional territories, or a material number of additional territories, or is there additional upside beyond the $250 million?

Jeffrey Katzenberg

I am going to let Ann really talk about where we’re at on our TV distribution in terms of where we are sold and where we are still pursuing.

Ann Daly

So in the area of that TV distribution again, we have a number of significant territories covered through output deals with Netflix, Super RTL and Planeta Jr. There are several additional large territories that are still – we expect to have those pop in later this year but I would say in general there are additional opportunities for new territories to come under the output deals, additional windows within those territories that will continue to be exploited with the first, second, third windows that the team is pursuing. So we are optimistic that there is an upside in the distribution plan that we are pursuing right now.

Benjamin Swinburne - Morgan Stanley

And Ann, you've mentioned flat -- or Lew mentioned flat TV segment revenues in 2014. Is that just -- I thought you recognized revenue on delivery with Netflix. Is that just a timing issue or is the accounting off from what I was assuming?

Ann Daly

It’s really a timing issue. We started some a cold start last year, and so we are ramping up. Our focus is on delivery – and also we know that the quality of these shows just have to be hectic. So the first we will be delivering Turbo. The first, even with [ph] Turbo throughout 2014 and then we will not be delivering any new series until very end of the fourth quarter, which really means that this series won’t be debut until December.

Operator

Question comes from the line of James Marsh with Piper Jaffray.

James Marsh - Piper Jaffray

Two quick questions. First to follow-up on the additional payment or accrual for Awesomeness. So as we think about that right now being roughly $120 million acquisition? Is that the way we should think about it? And then secondly, on Turbo FAST, I think it's going to be interesting here that typically, you would've expect you would monetize a very popular theatrical property and here is an example where something didn't work so well in theatre is actually being monetized pretty well through television. Is this something that you guys continue to expect or do you think it's a situation where really you need it to work theatrically in order to monetize in some of these ancillary revenue streams?

Jeffrey Katzenberg

So James, I will start with the second question first and I think that we believe that if you have good characters, good story there is going to be meaningful value for them as we establish these non-theatrical platforms, and TV is certainly one of them. We are also seeing it in a number of other places whether it’s publishing, location-based entertainment, consumer products, it is our goal to try and establish as many revenue sources outside of the traditional movie, DVD digital, television of the single linear movie. And so that we can create meaningful incremental revenue for these movies but just as importantly to ensure profitability for them not dependent on blockbuster success every single time out.

Lewis Coleman

On ATV, I think [inaudible] considered a full purchase price to be a total possible amount, the contingent compensation i.e. $117 million plus the $33 million. The value on the balance sheet is essentially sort of black shole [ph] model. And it has been about discount rate, volatility, it’s likely to slowly increase to the 117 number over time. The one only thing that would change that would be of our thought about the business eventually change generally to the worse. Because –

James Marsh - Piper Jaffray

Just a quick follow-up on that, Lew. That's all very helpful. Should we think about that doing dramatically better from a revenue standpoint but also from a profitability standpoint to throw that contingent payment?

Lewis Coleman

Yeah, because the contingent payment is totally based upon EBITDA. So to the extent that you can consider EBTDA as representation of pre-tax profitability, that’s what you got.

Operator

Our next question comes from the line of Ben Mogil with Stifel Nicolaus.

Ben Mogil - Stifel Nicolaus

Thanks for taking my question. Just one quick clarification. The year number for ‘13 for TV was $100 million? Was that the right number for ‘13?

Lewis Coleman

I guess I believe.

Ben Mogil - Stifel Nicolaus

$106 million? And what was the gross profit?

Lewis Coleman

Give me one second, Ben I will give it to you.

Ben Mogil - Stifel Nicolaus

For sure. I'll ask another question in the meantime. The Shrek the Musical streaming license, is that sort of a one-time item and how long does it last? How long is that license period for?

Ann Daly

I think it’s the S-spot, Ben and that – several years. [inaudible]

Ben Mogil - Stifel Nicolaus

And like standard S-spot, all the revenue was accounted for in the quarter?

Lewis Coleman

Yes.

Ben Mogil - Stifel Nicolaus

And then just maybe sort of following up when Rich gets the gross margin. Are you sort of comfortable -- like for example, on the CP side, are the numbers that you've seen from margin perspective in 2013, are those good numbers for us to be thinking about going forward? Or is there anything particularly margin accretive or dilutive in the quarter?

Jeffrey Katzenberg

On the consumer products, we reported a margin about 42%. You have to remember that, that margin also include a portion of the Turbo impairment, roughly around $2 million. So there is an impairment charge that was allocated to the consumer products portion of Turbo’s revenue which is negatively impacting that margin. On the TV series and special side 106 came in at a margin of about 22% or roughly about 23.5 million of operating income – I am sorry gross profit. What’s affecting that margin is clearly upfront marketing cost associated with the launch of the Turbo series. So as we launch this series we will be expensing marketing expense associated with those launches. We expect to see that margin improve over time as you get through that marketing period.

Operator

Our next question comes from the line of Vasily Karasyov with Sterne, Agee.

Vasily Karasyov - Sterne, Agee

Good afternoon. Rich, to follow-up on what you just said about the margin on the Netflix contract. Did you say that it will improve and do you still expect on an ultimate basis for it to be around one-third?

Rich Sullivan

So just to be clear, I also need to talk anything specifically about the Netflix margin contract, I think we are talking about the television series and special as a whole. So included in that is the episode that Jeffrey alluded to before, partially part of that will on Netflix in the US and other territories but it also includes other territories outside Netflix regions. So margin I was referring to the total segment, not specific to Netflix.

Vasily Karasyov - Sterne, Agee

And what -- your commentary about marketing spending, you're saying that you will spend on marketing the Turbo series, right? And then it goes away, but then when a new series comes up, will there be another spending push on that?

Rich Sullivan

I think that’s correct. I think what Lew alluded to in his comments, whether we are going to be releasing some – delivering some new series to our Netflix and other providers in December ’14, we will clearly get the revenue for those episodes when they are delivered. However – the spending marketing associated with it, which is why we gave guidance that we gave.

Vasily Karasyov - Sterne, Agee

Last one. Can you compare, please, consumer product revenue for Classic Media for ‘13 versus ‘12 on an apples-to-apples basis?

Rich Sullivan

We actually don't break that out anymore by segment. We’ve since broken classic media up into the segments that we have, so we don’t track it at that way any more unfortunately. So the best way to look at that is to take profit media and assume a split between the television segment and consumer products and look at that as a year-over-year basis which we provided in our Q going back to 2011.

Operator

That would be from Tuna Amobi with S&P Capital IQ.

Tuna Amobi - S&P Capital IQ

I think, Ann, you talked about the lift you're getting on the digital box office to digital conversion ratio, so now that you've got Croods and now Turbo experience to go with, would you say that you're getting some kind of -- would you say that this is impacting your home video, your DVD sales, for worse or for better from this kind of early EST release?

Ann Daly

That has been positive, Tuna. The percentage of our digital transaction as part of the total sell-through business on any title is increasing, it’s still in a single percentages but we are seeing some momentum in that area which we would expect to continue as we focus on buying for renting a movie in a digital format, get that focus with that early release window.

Tuna Amobi - S&P Capital IQ

Okay, and then for Jeffrey, I think it seems to me that the AwesomenessTV, the stats is really accelerating, the video views, subscribers, etc. It appears to us that the monetization is actually lagging a little bit. I was trying to get your sense on where you see upside on that over the long term, or even the near term, to kind of monetize the traction that you're seeing. And then Lew, separately, you talked about the sale of a social app. Can you provide some light on that? And is this indicative of perhaps how you approach the apps pace? And any kind of initiatives you have ongoing overall in the apps would be helpful. Thank you.

Jeffrey Katzenberg

So I am not sure I actually understand your question on – if I took February 13, February 14 we've gone from on our MCN [ph] 8000 channels to 85,000 channels. We've gone from 80 million views to 3.2 billion views, we've gone from 3.3 million subs to 37 million subs, 118,000 videos, 2.5 million and average monthly viewership in February of 2013 was 11.2 million and this month in February ‘14 it’s 374 million. I am not sure understand where –

Tuna Amobi - S&P Capital IQ

Actually, those are awesome numbers, and no pun intended, that's exactly what I was getting at. I was trying to relate all of that to the monetization that you're generating from AwesomenessTV. I don't know that you've ever broken the revenues out, but I'm trying to get a sense, an asset like that as you think about that over the next year?

Jeffrey Katzenberg

One, we don't bring – break the revenue out on it but number two is, we are building maybe one of the fastest growing genuine scripted entertainment platforms and brands on the – in the YouTube world today. There in fact isn’t any other scripted branded channel that is anywhere near the business that this is doing. And so we are seeing I think many new opportunities coming by simply being able to have 12 to 24-year-old women and access to them in a way that actually doesn't exist on almost any other channel anywhere, linear or digital for that matter. So I think this is more analogous to what maybe a team [ph] from a Silicon Valley point of view than from a Hollywood point of view. And that we’re building a platform, we are aggregating eyeballs here and the ability for us to monetize this is full of -- a number of opportunities. So I think stay tuned more to come.

Lewis Coleman

Tuna, one other comment on awesomeness, because the earn out is EBITDA, i.e. the monetization, and because we actually increased the value this quarter slightly of the contingent compensation, you should assume we are thinking better about monetization, not worse about monetization between the third quarter and the fourth quarter.

On the social app, we put some of the technology we have inside the shop and developed the social app, because of the with the new business for us, we expensed – we round up selling and – we had high margin revenues. We are always looking for things to do with our technology but you should not consider necessarily a line of business at this point.

Operator

So that is from the line of David Miller with Topeka Capital Markets.

David Miller - Topeka Capital Markets

Yes, hi guys. One question for Lew. Lew, the write down on Turbo was pretty thin. I'm actually somewhat surprised you took it at all. I don't want to say it's a rounding error, but I mean $14 million is just pretty thin overall, especially just getting kind of the little boost in box office we saw at the beginning of the quarter. Is it possible you take a write up here some time in the future as the film sort of cycles through? Maybe you get a longer tail on DVD or maybe the film performs better on international pay TV or the free TV windows, or was all that factored into the current ultimate? Thanks a lot.

Jeffrey Katzenberg

This is Jeffrey, I am going to pre-empt on this one and just say what we are doing is based on the information that we have today and the experience that we have this is what we believe to be the case. And yes, maybe it’s a small number but it is the fact as we know them today and it's not a rounding error for us. And I don't think we should treat this thing as rounding errors. We frankly rather be a bit more conservative and totally transparent about this.

Operator

And I have no further questions. Please continue.

Rich Sullivan

Well, that concludes today's fourth quarter earnings conference call. I'd like to remind everyone that a replay of this call is available shortly on our website. That web address again, www.dreamworksanimation.com.

If you have any additional questions, please feel free to call Investor Relations Department. Thanks again for participating. Have a great day.

Operator

And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive TeleConference service. You may now disconnect.

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