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Pixar Animation Studios
Pixar Reports Record Results for 2005
EMERYVILLE, CA - (March 7, 2006) 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
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
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.