DREAMWORKSANIMATION PROFORMACONSOLIDATEDSTATEMENTOFOPERATIONS FortheYearEndedDecember31,2004 Historical Adjustments ProForma (In thousands except per share data) Operating revenue(1) ................................. $1,078,160 $(274,905) $ 803,255 Costs of revenue .................................... 566,209 (292,151)(2) 274,058 Gross profit (loss) ................................... 511,951 17,246 529,197 Selling, general and administrative expenses .............. 73,608 (12,160)(3) 61,448 Operating income (loss) .............................. 438,343 29,406 467,749 Interest income (expense), net ......................... (15,402) — (15,402) Other income (expense), net ........................... 385 — 385 Total income (loss) before income taxes ................. 423,326 29,406 452,732 Provision for income taxes ............................ (90,326) (21,053)(4) (111,379) Net income (loss) ................................... $ 333,000 $ 8,353 $ 341,353 Pro forma: Basic net income per share(5) ........................... $ 4.09 $ 3.32 Diluted net income per share(6) ......................... $ 4.05 $ 3.27 Shares used in computing pro forma: Basic net income per share(5) ........................... 81,432 102,810 Diluted net income per share(6) ......................... 82,151 104,520 (1) Reflects the reduction in operating revenue that would have occurred had the Distribution Agreement been in effect as of January 1, 2004. Under the terms of the Distribution Agreement, DreamWorks Studios would have been entitled to retain a distribution fee equal to 8.0% of revenue (without deduction for any distribution and marketing costs or third-party distribution and fulfillment services fees) with respect to our films, of approximately $43.1 million. DreamWorks Studios would also have been entitled to recoup distribution and marketing costs out of this revenue in the amount of approximately $231.8 million. (2) In addition to the other adjustments noted in the following paragraph, the pro forma adjustment reflects a reduction in distribution and marketing costs of approximately $233.5 million, as these costs are borne by DreamWorks Studios under the terms of the Distribution Agreement. This amount does not match the $231.8 million of marketing and distribution costs noted in footnote 1 above that DreamWorks Studios would have recouped under the Distribution Agreement. To the extent distribution and marketing costs were incurred during 2004 prior to October 1, 2004 (the effective date of the Distribution Agreement), but the related film will be released in 2005, the costs are deducted in our pro forma costs of revenue but there is no corresponding reduction to pro forma revenue. In addition, the pro forma adjustment to cost of revenues reflects the elimination of distribution and fulfillment services fees payable primarily to Universal Studios and CJ Entertainment, in the amount of approximately $21.5 million, as these costs are solely borne by DreamWorks Studios pursuant to the Distribution Agreement. The pro forma adjustment to cost of revenues also reflects a decrease in production costs amortization of approximately $37.2 million as, under the individual-film-forecast- computation-method, the revenue that we would have recognized in this period would have represented a lower proportion of the total revenue that we would have estimated our released films to ultimately produce. (3) Reflects the elimination of allocated overhead costs that are primarily related to the salaries and benefits of employees in DreamWorks Studios’ distribution and marketing departments, as these costs are solely borne by DreamWorks Studios pursuant to the Distribution Agreement. 45