Pixar Reports Record Results for 2005

Mar 07, 2006, 00:00 ET from Pixar Animation Studios

    EMERYVILLE, Calif., March 7 /PRNewswire-FirstCall/ -- 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, http://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(R)
 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.
 
     Note to Editors: Condensed Statements of Income and Balance Sheets to
 follow.
 
 
     Pixar Animation Studios
     Condensed Statements of Income
     (Unaudited, in thousands, except per share data)
 
                                Quarter Ended         Twelve Months Ended
                         December 31,   January 1,  December 31,  January 1,
                               2005         2005          2005        2005
     Revenue
     Film                  $  51,879    $ 105,610     $ 274,765    $ 260,831
     Software                  3,744        3,286        14,351       12,641
 
         Total revenue        55,623      108,896       289,116      273,472
 
     Cost of revenue           4,062       13,336        39,380       29,881
 
         Gross profit         51,561       95,560       249,736      243,591
 
     Operating expenses:
      Research and
       development             2,595        5,601        11,099       17,371
      Sales and marketing      2,152          740         5,126        2,484
      General and
       administrative          5,355        5,094        18,103       15,015
 
         Total operating
          expenses            10,102       11,435        34,328       34,870
 
     Income from operations   41,459       84,125       215,408      208,721
 
       Interest income and
        other                  8,244        3,946        26,198       12,419
 
     Income before income
      taxes                   49,703       88,071       241,606      221,140
 
       Income tax expense     18,762       32,897        88,668       79,418
 
     Net income            $  30,941    $  55,174     $ 152,938    $ 141,722
 
 
     Basic net income
      per share            $    0.26    $    0.48     $    1.29    $    1.25
 
     Diluted net income
      per share            $    0.25    $    0.45     $    1.24    $    1.19
 
     Shares used in
      computing basic net
      income per share       119,054      116,122       118,329      113,520
 
     Shares used in
      computing diluted
      net income per
      share                  124,414      121,492       123,396      119,090
 
 
 
     Pixar Animation Studios
     Condensed Balance Sheets
     (Unaudited, in thousands)
 
                                                 December 31,     January 1,
                                                         2005           2005
     ASSETS
 
     Cash and investments                        $  1,040,544   $    854,784
     Receivables, net                                  59,985         81,962
     Prepaid expenses and other assets                  3,601          2,227
     Deferred income taxes                             77,145         70,424
     Property and equipment, net                      125,394        125,602
 
     Capitalized film production costs, net           182,071        140,038
 
         Total assets                            $  1,488,740   $  1,275,037
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Liabilities:
      Accounts payable                           $      3,223   $      5,392
      Income taxes payable                             17,380         14,077
      Other accrued liabilities                        14,856         26,971
      Unearned revenue                                 11,319          8,502
 
         Total liabilities                             46,778         54,942
 
     Shareholders' equity:
      Common stock                                    758,053        687,387
      Accumulated other comprehensive loss            (3,948)        (2,211)
      Retained earnings                               687,857        534,919
 
         Total shareholders' equity                 1,441,962      1,220,095
 
     Total liabilities and shareholders' equity  $  1,488,740   $  1,275,037
 
 

SOURCE Pixar Animation Studios