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Part I—Item 1—Businessthe Company also operated a national touring production of the play. A separate production of theplay opened in London in May 2011 and completed its run in February 2013. During 2011, theCompany operated a live show in the United States (“U.S.”) based on the film Madagascar. FromJune 2012 until January 2013, we operated a live arena touring show based on our feature film Howto Train Your Dragon. See “Management’s Discussion and Analysis of Financial Condition andResults of Operations—Our Revenues and Costs—Revenues—Licensing, Merchandise and Other.”Joint Ventures and InvestmentsFrom time to time, the Company also considers entering into joint ventures or makinginvestments in various family entertainment and other entertainment-oriented businesses.Chinese Joint VentureOn August 7, 2012, we entered into a Transaction and Contribution Agreement (the “China JVAgreement”) with ODW Holdings Limited (“ODW”), China Media Capital (Shanghai) Center L.P.(“CMC”), Shanghai Media Group (“SMG”) and Shanghai Alliance Investment Co., Ltd. (“SAIL”,and together with CMC and SMG, the “CPE Holders”), providing for the launch of a joint venture(the “China Joint Venture”) with the CPE Holders. The purpose of the China Joint Venture, whichwill be operated through ODW, is to create a leading China-focused family entertainment companyengaged in the acquisition, production and distribution of original content originally produced,released or commercially exploited in the Chinese language.The China Joint Venture will encompass animated and live action motion pictures and televisionprogramming, an internet distribution platform, live shows, theme parks, animation parks, mobile,online, interactive games and related consumer products. The business of the China Joint Venturewill be conducted in the People’s Republic of China, with the potential for expansion into such othermarkets in the world as may be approved by the board of directors of the China Joint Venture.In exchange for 54.55% of the equity of the China Joint Venture, an entity controlled by CMC,SAIL and SMG will make a total cash capital commitment of $150 million (a portion of which isexpected to be funded at closing, with the balance to be funded over time) and non-cash contributionsvalued at $30 million. In exchange for 45.45% of the equity of the China Joint Venture, the Companywill make a total cash capital commitment of $50 million (a portion of which is expected to befunded at closing, with the balance to be funded over time) and non-cash contributions valued at$100 million (including contributions in the form of licenses of intellectual property).The China Joint Venture will be governed by a board of directors, which will initially consist ofseven directors, four of which will be appointed by the Chinese partners and three of which will beappointed by the Company. The China Joint Venture will be prohibited from taking certain actionswithout the affirmative vote of at least one director appointed by the Chinese partners and onedirector appointed by the Company.The closing (the “Closing”) of the initial contributions to the China Joint Venture and theissuance of equity by ODW to the Company and CPE is subject to certain closing conditions,including obtaining the requisite governmental approvals for the formation of CPE by the CPE4
Part I—Item 1—BusinessHolders. Upon the Closing, ODW will be renamed “Oriental DreamWorks Holding Limited.” TheChina JV Agreement is subject to termination by the Company or CMC (acting on behalf of CPE andthe CPE Holders) under certain circumstances.Distribution and Servicing ArrangementsOn January 31, 2006, Viacom Inc. and certain of its affiliates (collectively, “Viacom”)(including Paramount) acquired Old DreamWorks Studios. In connection with this transaction, weterminated our prior distribution agreement with Old DreamWorks Studios (the “Old DreamWorksStudios Distribution Agreement”). Effective January 31, 2006, the worldwide theatrical andtelevision distribution and home video fulfillment services for our films released after January 31,2006 (and on or prior to December 31, 2012) have been provided by Paramount. A detaileddiscussion of our distribution and fulfillment services agreements with Paramount is provided belowin “—How We Distribute, Promote and Market Our Films.”On August 18, 2012, we entered into a binding term sheet (the “Fox Distribution Agreement”) withFox, pursuant to which we have agreed to license Fox certain exclusive distribution rights and exclusivelyengage Fox to render fulfillment services with respect to certain of our animated feature films and otheraudiovisual programs released after December 31, 2012. A detailed discussion of the Fox DistributionAgreement is provided below in “—How We Distribute, Promote and Market Our Films.”How We Distribute, Promote and Market Our FilmsOverviewOn January 31, 2006, we entered into a distribution agreement with Paramount and its affiliates(the “Paramount Distribution Agreement”), and our wholly owned subsidiary, DreamWorksAnimation Home Entertainment, L.L.C. (“DreamWorks Animation Home Entertainment”), enteredinto a fulfillment services agreement (the “Paramount Fulfillment Services Agreement” and, with theParamount Distribution Agreement, the “Paramount Agreements”) with an affiliate of Paramount.Under the Paramount Distribution Agreement, subject to certain exceptions, Paramountadvertises, publicizes, promotes, distributes and exploits our animated feature films initially releasedtheatrically on or before December 31, 2012 in each territory and in each media designated by us.Under the Paramount Fulfillment Services Agreement, we have also engaged Paramount to renderworldwide home video fulfillment services and video-on-demand services in each territorydesignated by us for all films released on or before December 31, 2012 for home entertainmentexhibition and video-on-demand exhibition by us, and for every animated film licensed to Paramountpursuant to the Paramount Distribution Agreement with respect to which we own or control therequisite rights.Paramount Distribution AgreementThe following is a summary of the Paramount Distribution Agreement, which is filed as anexhibit to this Form 10-K. This summary is qualified in all respects by such reference. Investors inour common stock are encouraged to read the Paramount Distribution Agreement.5
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REPORT OF INDEPENDENT REGISTERED PU
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DREAMWORKS ANIMATION SKG, INC.CONSO
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