Facing declining profits, DreamWorks Animation is shutting down their Redwood City office and cutting 500 jobs reports The Verge.

CEO Jeffrey Katzenberg wrote in a letter to investors earlier this week, "I am confident that this strategic plan will deliver great films, better box office results, and growing profitability across our complementary businesses." The animation studio, founded in 1994 by Katzenberg, Steven Spielberg, and David Geffen, will be also releasing only two movies per year going forward&emdash;one sequel and one original. Although last year's How To Train Your Dragon 2 was a box office and critical success (earning the studio a Golden Globe and Oscar nomination), the rest of the studio's recent output have been misses.

The closure of the PDI/DreamWorks studio in Redwood City will be a major loss, as it was where some of the studio's biggest successes came from, including Shrek and Madagascar. Some employees in the Northern California campus will be given the opportunity to relocate to the Glendale campus, according to Cartoon Brew.

DreamWorks hopes the one sequel/one original schedule will get them back on the right path. Sequels have traditionally been moneymakers for animation studios, and their future slate includes Kung Fu Panda, Croods, and How To Train Your Dragon followups.

This won't be the first time the studio has restructured after coming up short financially. At the end of 2012, DreamWorks cut 350 employees.