DreamWorks Animation Investors File Class-Action Suit4 Aug, 2014 By: Chris Tribbey
Investors in DreamWorks Animation have filed a class-action lawsuit, accusing the studio of making misleading statements about the health of the company and failing a timely write-down of the 2013 film Turbo.
The suit, filed in U.S. District Court for the Central District of California, represents DreamWorks Animation investors who purchased shares between Oct. 29, 2013, and July 29, 2014.
“The complaint alleges that throughout the class period, defendants made false and/or misleading statements, and failed to disclose material adverse facts about the company's business, operations, prospects and performance,” a statement from Los Angeles law firm Pomerantz LLP reads.
Specifically, the suit alleges: DreamWorks Animation failed to take a timely write-down for Turbo; The company's net income for 2013 was overstated; The company lacked adequate control over financial reporting; The company's financial statements were false and misleading.
On July 29, while reporting its second-quarter financial results, DreamWorks Animation shared that it had learned the Securities Exchange Commission was conducting an investigation related to the Turbo write-down. The studio reported the $13.5 million write-down in February.
After DreamWorks Animation reported its second-quarter 2014 results July 29 (which saw the company post a $15.4 million loss, with revenue of $122.3 million, compared with a profit of $22.2 million and revenue of $213.4 million a year ago), the studio’s shares fell nearly 12%, or $2.68 per share, closing at $19.98 on July 30.