DREAMWORKS ANIMATION SKG, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)22. Quarterly Financial Information (Unaudited)The unaudited quarterly financial statements have been prepared on substantially the same basisas the audited financial statements, and, in the opinion of management, include all adjustments,consisting of only normal and recurring adjustments, necessary for a fair statement of the results ofoperations for such periods (in thousands, except per share data):Quarter EndedMarch 31 June 30 September 30 December 31(unaudited)2012Revenues ................................ $136,084 $162,803 $186,298 $ 264,657Gross profit (loss) ......................... 39,584 48,556 72,337 (89,307) (1)Income (loss) before provision for incometaxes .................................. 14,178 18,625 38,695 (125,135)Net income (loss) .......................... 9,074 12,772 24,440 (82,708) (1)Basic net income (loss) per share ............. $ 0.11 $ 0.15 $ 0.29 $ (0.98)Diluted net income (loss) per share ............ $ 0.11 $ 0.15 $ 0.29 $ (0.98)2011Revenues ................................ $108,037 $218,255 $160,762 $ 218,969Gross profit .............................. 36,010 76,944 52,796 59,526Income before provision for income taxes ...... 12,518 49,414 27,252 33,989Net income ............................... 8,794 34,073 19,654 24,280Basic net income per share .................. $ 0.10 $ 0.41 $ 0.24 $ 0.29Diluted net income per share ................. $ 0.10 $ 0.40 $ 0.23 $ 0.29(1) During the quarter ended December 31, 2012, the Company recorded impairment charges andwrite-downs of film costs totaling $157.2 million (See Note 6).In connection with the preparation of the Annual Report on Form 10-K for the year endedDecember 31, 2012, the Company identified certain errors in the preparation of its consolidatedstatement of cash flows for the nine months ended September 30, 2012. The errors related to thecalculation of an adjustment for the amount of acquired property, plant and equipment that remainedin accrued liabilities as of September 30, 2012. The Company has assessed the errors and hasconcluded that they are not material to the previously issued financial statements. The Company willrevise its consolidated statement of cash flows for the nine months ended September 30, 2012 thatwill be included in the Company’s Quarterly Report on Form 10-Q for the quarter endingSeptember 30, 2013. The impact of such revision will be to increase each of the line items entitled“Changes in operating assets and liabilities: Accounts payable and accrued liabilities” and “Purchasesof property, plant and equipment” by approximately $10.6 million. As a result, each of the line itemsentitled “Net cash provided by operating activities” and “Net cash used in investing activities” willbe increased by approximately $10.6 million. Net cash provided by operating activities for the ninemonths ended September 30, 2012 will increase from $28.5 million to $39.1 million. Net cash usedF-52
DREAMWORKS ANIMATION SKG, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)in investing activities for the nine months ended September 30, 2012 will increase from $203.3million to $213.9 million. The Company’s previously issued consolidated balance sheet as ofSeptember 30, 2012 and consolidated statements of income for the three and nine months endedSeptember 30, 2012 remain unchanged.23. Valuation and Qualifying Accounts and ReservesThe following is a summary of the valuation and qualifying accounts included in theconsolidated balance sheets as of December 31, 2012, 2011 and 2010 (in thousands):Balance atBeginningof YearCharged toBalance atOperations (1) Deductions (2) End of YearTrade accounts receivable and Receivable fromParamountAllowance for doubtful accounts2012 ............................ $2,518 $ 63 $ — $ 2,5812011 ............................ $3,003 $ 831 $(1,316) $ 2,5182010 ............................ $2,811 $ 595 $ (403) $ 3,003Sales returns reserves2012 ............................ $ — $13,896 $ (832) $13,064Balance atBeginningof YearIncreases(Decreases) toValuationAllowanceCharged toOperationsBalance atEnd of YearDeferred tax assetsValuation allowance2012 (3) .......................... $ 2,142 $24,948 $ 1,659 $28,7492011 ............................ $ 2,055 $ (2,055) $ 2,142 $ 2,1422010 ............................ $350,109 $ — $(348,054) $ 2,055(1) Sales returns reserves are charged against revenues and are related to Classic Media’soperations. Information presented reflects activity from August 29, 2012 (the date of theacquisition), through December 31, 2012.(2) For Allowance for doubtful accounts, represents reductions to the allowance for bad debt writeoffs.For Sales returns reserves, represents reductions to the reserve for actual returns.(3) The increase in the valuation allowance was primarily related to foreign deferred tax assetsassumed in connection with the Classic Media acquisition, which closed on August 29, 2012.24. Restructuring ChargesDuring the quarter ended December 31, 2012, the Company made a strategic business decisionto change the production and release slates for some of its animated feature films. In connection withF-53
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