DREAMWORKS ANIMATION SKG, INC.

ADJUSTED EBITDA RECONCILIATIONS

(Unaudited)

 Three Months Ended 

 Six Months Ended 

 June 30, 

 June 30, 

2015

2014

2015

2014

 (in thousands) 

Reconciliation of Net Loss to Adjusted EBITDA:

Net loss

$ (39,039)

$ (15,928)

$ (94,929)

$ (58,344)

Provision (benefit) for income taxes

1,762

2,601

4,162

(19,866)

Loss from equity method investees

2,775

3,467

9,137

6,727

Increase/decrease in income tax benefit payable to former stockholder

7,096

(1,695)

7,121

(2,622)

Other income/expense, net

(2,001)

(1,853)

3,465

(3,071)

Interest expense, net

7,564

2,484

13,898

4,257

Operating loss

(21,843)

(10,924)

(57,146)

(72,919)

Income related to investment contributions

(1,719)

(2,317)

(4,000)

(3,989)

Amounts included in amortization of film and other inventory costs ⁽¹⁾

9,655

5,245

22,133

14,066

Film impairments

-

-

933

57,074

Depreciation and amortization ⁽²⁾

10,655

4,450

28,006

8,685

Stock-based compensation expense

6,328

3,112

10,727

8,421

Adjusted EBITDA

$    3,076

$      (434)

$       653

$  11,338

Reconciliation of Adjusted EBITDA to exclude 2015 Restructuring Plan:

Reverse 2015 Restructuring Plan charges ⁽⁴⁾ :

Employee-related termination costs

$       560

$            -

$    5,147

$            -

Relocation and other employee-related costs

1,885

-

3,381

-

Accelerated depreciation and amortization charges

10,853

-

20,132

-

Additional labor and other excess costs

7,591

-

24,100

-

Total restructuring-related charges

20,889

-

52,760

-

Adjusted EBITDA (excluding 2015 Restructuring Plan)

$  23,965

$  53,413

$  11,338

Reconciliation of Adjusted EBITDA to Cash Provided by (Used in) Operating Activities:

Adjusted EBITDA

$    3,076

$      (434)

$       653

$  11,338

Amortization and write-off of film and other inventory costs ⁽³⁾

79,232

55,836

159,173

135,353

Revenue earned against deferred revenue and other advances

(19,139)

(16,396)

(35,608)

(32,584)

Change in fair value of contingent consideration

-

(7,220)

-

(4,720)

Other income/expense, net

2,001

1,853

(3,465)

3,071

Other impairments and write-offs

-

-

5,064

-

Interest expense, net

(7,564)

(2,484)

(13,898)

(4,257)

Net (payments of) refund from income taxes and stockholder payable

(1,448)

1,101

(10,241)

2,599

Changes in certain operating asset and liability accounts

(50,379)

(86,204)

(94,337)

(177,235)

Cash provided by (used in) operating activities

$    5,779

$ (53,948)

$    7,341

$ (66,435)

⁽¹⁾

Amortization and write-offs of film and other inventory costs in any period include depreciation and amortization, interest expense and stock-based compensation expense that were capitalized as part of film and other inventory costs in the period that those charges were incurred. For purposes of Adjusted EBITDA, we add back the portion of amortization and write-offs of film and other inventory costs that represents amounts previously capitalized as depreciation and amortization, interest expense and stock-based compensation expense.

⁽²⁾

Includes those amounts pertaining to the amortization of intangible assets that are classified within costs of revenues.

⁽³⁾

Represents the remaining portion of amortization and write-off of film and other inventory costs not already included in Adjusted EBITDA (refer to reconciliation of net income (or loss) to Adjusted EBITDA).

⁽⁴⁾

Refer to footnotes in the Adjusted Income/Loss Measures Reconciliation section for a description of these adjustments.