IPO catalyst.

So much has been written about DreamWorks' founders, Steven Spielberg, Jeffrey Katzenberg and David Geffen, but potential investors in the animation spin-off have largely been left in the dark about details of the offering. In a filing last week with the Securities and Exchange Commission, the company didn't say how many shares it plans to offer or what the estimated price range would be for its stock. It doesn't even provide a breakdown of current ownership.

The prospectus shows the animation unit posting pro forma earnings of $119.4 million for the six months ended June 30, reversing a $115.5 million pro forma loss in the second half of 2003. In 2003, the company lost $188.7 million compared with a loss of $25.4 million in 2002, according to the prospectus.

DreamWorks executives refuse to discuss the IPO, citing the "quiet period" of regulatory oversight. Because the sale of the animation unit represents 20 percent of DreamWorks SKG, information is being closely guarded because it will set a market capitalization for the studio, which intends to stay private.

But it's no secret that one of the main catalysts for the offering is Microsoft co-founder Paul Allen, who is DreamWorks' largest shareholder and founding investor.

Allen retains the right to be bought out of his $660 million investment in DreamWorks when the company hits its 10th anniversary next year. To accomplish this, DreamWorks Animation has agreed to complete two additional secondary offerings of insider shares--a red flag for potential investors.

At least one of the secondary offerings must occur by May of 2006, or Allen's private investment company, Vulcan Ventures, has the right to initiate a follow-on offering, according to the prospectus.

Speilberg, Katzenberg and Geffen can sell their own shares a year after the IPO. Katzenberg, Geffen and Allen each retain the right to a board seat, while Spielberg remains largely absent, acting only as a "consultant" to the animation company.

Though DreamWorks Animation plans to raise $650 million, it will keep just $175 million for working capital and other general purposes. The bulk of the proceeds will be used to repay debt to DreamWorks Studio.

Staff reporter Kate Berry can be reached at [phone], ext. 228, or at [e-mail].