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Pixar Reports Incredible Profits in 2005

Pixar Animation Studios reported 2005 was the companys most profitable year ever. For the fiscal year ended Dec. 31, 2005, Pixar earned $152.9 million, or $1.24 per fully diluted share, on revenues of $289.1 million. Topping earnings of $141.7 million on revenues of $273.5 million for the year ended Jan. 1, 2005.

While the year showed an increase, the fourth quarter of 2005 showed a decrease as 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 10th 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."

THE INCREDIBLES and FINDING NEMO drove the results for 2005. 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. Pixar'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, as well as software licensing contributing $14.4 million to full year 2005 revenue.

The fourth quarter results were driven by film revenue of $51.9 million, primarily from FINDING NEMO and THE INCREDIBLES while its 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. Software licensing contributed another $3.7 million to fourth quarter 2005 revenue.

Cost of revenue increased for fiscal year 2005, gross profit margin decreased and total operating expenses decreased slightly primarily to a reduction in research and development costs which were offset by increases in sales and marketing and general and administrative expenses.

Interest and other income more than doubled in fiscal year and the fourth quarter of 2005, 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 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, representing an increase of $185.8 million over its 2004 year-end balances, which 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 in 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 are available through the company's 2005 annual report on Form 10-K, accessible through Pixar's website at http://corporate.pixar.com/edgar.cfm.

Pixar Animation (www.pixar.com) 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).

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