updated 10/12/2004 12:20:27 PM ET 2004-10-12T16:20:27

Underwriters for DreamWorks Animation SKG Inc., producer of the blockbuster “Shrek” movies, Tuesday set the terms of the company’s pending initial public offering at 29 million common shares, with an estimated price range of $23 to $25 a share.

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DreamWorks Animation, based in Glendale, Calif., is being spun off by its parent, DreamWorks LLC, the studio controlled by Hollywood moguls Jeffery Katzenberg, David Geffen and Steven Spielberg.

On July 21, DreamWorks filed for an IPO of up to $650 million in common stock, but didn’t detail the terms of the offering.

According to an amended filing with the Securities and Exchange Commission, the company will offer roughly 25 million common shares. Selling holders are offering about 4 million.

DreamWorks Class A common stock, Class B common stock and Class C common stock will vote as a single class on all matters, the filing said, with each share of Class A stock entitling its holder to one vote, each share of Class B stock getting fifteen votes, and each share of Class C stock getting one vote.

DreamWorks plans to grant fully vested stock to some of its and DreamWorks Studios’ employees and advisers upon the completion of the offering, and expects to record a charge of about $19 million to its statement of operations immediately upon the grant of these awards, the filing said.

The company said it currently believes that its annual compensation expense would likely range from $20 million to $30 million.

For the three months ended Sept. 30, the company expects revenue of between $230 million and $240 million and operating income of between $25 million and $30 million, according to the filing.

DreamWorks said its revenue in the quarter was primarily derived from “Shrek 2,” and from continuing revenue from its library of films.

The company said it plans to retain about $175 million of the net proceeds from the IPO for general corporate purposes, including working capital, and will use the remaining net proceeds to repay all or a portion of the debt that it intends to assume from DreamWorks Studios in connection with its separation.

The company won’t receive any of the proceeds from the sale of the shares being sold by the selling holders, the filing said.

DreamWorks listed 12 underwriters in the filing including Goldman Sachs, J.P. Morgan Securities and Banc of America Securities.

The company said it plans to list is common stock on the New York Stock Exchange under the symbol DWA.

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