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Roy Disney To Receive Award

Roy E. Disney will receive the equivalent of a lifetime achievement award at the Cartoons on the Bay animated film festival in Positano, Italy in April. The festival will run from April 5 to April 9, with 40 films representing 13 countries vying for a prestigious Pulcinella Award.

Said Disney, "[this] is an event of worldwide importance where animated films and television have found an extraordinary showcase."

Disney co-executive-produced the Oscar®-nominated short film Lorenzo as well as producing Fantasia 2000, the followup film to Walt Disney's 1940 film Fantasia.

Press Release

Pixar Reports Record Results for 2005

EMERYVILLE, CA

Pixar Animation Studios (Nasdaq: PIXR) today reported financial results for its fourth quarter and fiscal year ended December 31, 2005. For the year, Pixar earned $152.9 million, or $1.24 per fully diluted share, on revenues of $289.1 million. This compares to earnings of $141.7 million, or $1.19 per fully diluted share, on revenues of $273.5 million for the year ended January 1, 2005.

For the fourth quarter of 2005, Pixar earned $30.9 million, or $0.25 per fully diluted share, on revenues of $55.6 million. This compares to earnings of $55.2 million, or $0.45 per fully diluted share on revenues of $108.9 million, achieved in the fourth quarter of 2004.

"2005 marks Pixar's tenth year as a public company and, I'm pleased to report, our most profitable year ever," said Pixar CEO Steve Jobs. "With the proposed merger of Pixar and Disney, this will likely be our last report as an independent public company, and I'd like to thank every Pixar shareholder for their support over the past decade in helping us build this amazing company."

Results for the fiscal year ended December 31, 2005, were driven by film revenue of $274.8 million, primarily from The Incredibles and Finding Nemo. This included $151.7 million from The Incredibles, largely from worldwide home video and consumer products licensing, and $58.3 million from Finding Nemo, mainly comprised of worldwide home video, worldwide television and consumer products licensing. The company's library titles contributed approximately 23% of its total film revenues, generating $63.0 million during the year, largely from worldwide home video sales, worldwide television and consumer products licensing. In addition to film revenue, software licensing contributed $14.4 million to full year 2005 revenue.

Results for the fourth quarter ended December 31, 2005, were driven by film revenue of $51.9 million, primarily from Finding Nemo and The Incredibles. This included $22.6 million from Finding Nemo, largely from worldwide television licensing and home video, and $10.2 million from The Incredibles, mainly comprised of consumer products revenue and worldwide home video sales. The company's library titles contributed approximately $19.1 million in the quarter, largely from continuing consumer products revenue and worldwide home video sales, including the domestic DVD re-release of Toy Story 2 and the international DVD re-releases of Toy Story and Toy Story 2. In addition to film revenue, software licensing contributed $3.7 million to fourth quarter 2005 revenue.

Cost of revenue was $39.4 million for fiscal year 2005 compared to $29.9 million in 2004, and primarily represents amortization of capitalized film costs. Gross profit margin for fiscal year 2005 was 86% compared to 89% in 2004. The decrease in gross profit margin from 2004 to 2005 is attributable to a higher proportion of revenues from The Incredibles, which had a higher amortization percentage as compared to Finding Nemo in the prior year. For the fourth quarter of 2005, cost of revenue was $4.1 million, representing a gross profit margin of 93%, compared to $13.3 million and 88%, respectively, for the comparable period in 2004. The increase in gross profit margin from the fourth quarter of 2004 to the fourth quarter of 2005 can be attributable to a higher proportion of revenues from Finding Nemo, which had a lower amortization percentage as compared to The Incredibles and relative to Finding Nemo's amortization rate in the prior year.

Total operating expenses decreased to $34.3 million in fiscal year 2005 from $34.9 million in 2004. For the fourth quarter of 2005, operating expenses decreased to $10.1 million from $11.4 million in the corresponding period last year. For both the full year and the fourth quarter, the decrease in operating expenses over the prior-year was due primarily to a reduction in research and development costs, partially offset by increases in sales and marketing and general and administrative expenses.

Interest and other income was $26.2 million in fiscal year 2005, up from $12.4 million in 2004, and consisted primarily of interest income on investments. For the fourth quarter of 2005, interest and other income was $8.2 million, up from $3.9 million in 2004. The increases in 2005 compared to 2004 were primarily due to higher average cash, cash equivalents, and investment balances earning interest at higher average rates.

The overall effective tax rate for fiscal year 2005 was 36.7%, which was lower than the statutory rate due to a number of factors including the tax benefit associated with certain income earned outside the U.S., a tax deduction related to income attributable to domestic production activities and certain tax-exempt investment income. Cash, cash equivalents, and investments were approximately $1.0 billion at the end of the year, representing an increase of $185.8 million over the company's 2004 year-end balance. This was mainly attributable to cash received from Disney for Pixar's share of film revenues, as well as proceeds from stock option exercises and interest income, offset by film production costs, taxes and capital expenditures.

Capitalized film costs at December 31, 2005 were $182.1 million versus $140.0 million at the end of 2004, reflecting production spending on current film projects, offset by amortization of capitalized film costs of $38.6 million.

Further information regarding these results will be available through the company's 2005 annual report on Form 10-K, accessible through Pixar's Web site at http://corporate.pixar.com/edgar.cfm.

About Pixar Animation Studios

Pixar Animation Studios (Nasdaq: PIXR, www.pixar.com) combines creative and technical artistry to create original stories in the medium of computer animation. Pixar has created six of the most successful and beloved animated films of all time: Toy Story, A Bug's Life, Toy Story 2, Monsters, Inc., Finding Nemo and The Incredibles. Pixar has won 20 Academy Awards® and its six films have grossed more than $3.2 billion at the worldwide box office to date. The Northern California studio's next two film releases are Cars (June 9, 2006) and Ratatouille (summer 2007).

This release contains forward-looking information regarding Pixar's targeted release dates for Pixar's next films and actual results may differ materially. Factors that could cause delays in the release of the films include, but are not limited to: (1) the uncertainties related to production delays; (2) financing requirements or other marketing or distribution factors; (3) personnel availability; (4) external socioeconomic and political events; and (5) the release dates of competitive films. Please refer to Pixar's 2005 Annual Report on Form 10-K, particularly the sections on risks, for important factors that could cause actual results to differ.

(source: Pixar Investor Relations)

ed note: the Disney acquisition of Pixar is expected to be completed in late April/early May of this year, according to Disney Chief Financial Officer Tom Staggs.
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