UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF CALIFORNIA

BEVERLY GRABELL, Individually and On Behalfof All Others Similarly Situated, CIVIL ACTION NO .

Plaintiff,

vs . CLASS ACTION COMPLAINT

PIXAR , STEVEN P . JOBS, EDWIN E . CATMULLAND SIMON T . . BAX,

DefendantsJURY TRIAL DEMANDED

Plaintiff, Beverly Grabell, ("Plaintiff ') alleges the following based upon the investigation o f

Plaintiff's counsel, which included, among other things, a review of the defendants' publi c

documents, conference calls and announcements made by defendants, United States Securities an d

Exchange Commission ("SEC") filings, wire and press releases published by and regarding by Pixa r

(the "Company"), securities analysts' reports and advisories about the Company, and informatio n

readily obtainable on the Internet .

NATURE OF THE ACTION AND OVERVIE W

1 . This is a federal class action on behalf of persons who purchased the securities o f

Pixar between January 18, 2005 and June 30, 2005, inclusive (the "Class Period") seeking to pursu e

remedies under the Securities Exchange Act of 1934 (the "Exchange Act") .

2 . Pixar engages in the creation, development, and production of animated films and

related products worldwide . It produces various animated products, such as video products, toys ,

interactive games, and other merchandise .

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3 . The complaint alleges that defendants' Class Period representations regarding Barrie r

were materially false and misleading when made for the following reasons : (1) that defendants, in

an effort to demonstrate positive earnings and inflate the Company's sales figures, shipped millions

of excess copies of The Incredibles home videos to the market ; (2) that defendants' were aware that

the video shipments significantly exceeded the levels of consumer demand, and as a result wer e

eventually forced to increase the reserve for video returns ; (3) that the Company lacked adequate

internal controls; and (4) that as a consequence of the foregoing defendants' statements with respect

to the forecasted sale of The Incredibles home video units lacked in any reasonable basis .

4. On June 30, 2005, Pixar announced an update to its fiscal second quarter 200 5

guidance. Pixar stated that following a review of the most current domestic and international home

video sales data for The Incredibles, the Company updated its second quarter home video projections

to increase its reserves for returns. On this news, shares of Pixar fell $6 .99 per share, or 13 .97

percent, on July 1, 2005, to close at $43 .06 per share . On August 26, 2005, Pixar revealed that it wa s

under an SEC investigation .

JURISDICTION AND VENUE

5. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) o f

the Exchange Act, (15 U .S.C. §§ 78j(b) and 78t(a)), and Rule lOb-5 promulgated thereunder (1 7

C.F.R. §240. 10b-5) .

6. This Court has jurisdiction over the subject matter of this action pursuant to §27 of

the Exchange Act (15 U.S.C. §78aa) and 28 U .S.C. § 1331 .

7. Venue is proper in this Judicial District pursuant to §27 of the Exchange Act, 1 5

U.S .C. § 78aa and 28 U .S .C. § 1391(b) . Many of the acts and transactions alleged herein , including

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the preparation and dissemination of materially false and misleading information, occurred i n

substantial part in this Judicial District . Additionally, the Company maintains a principal executiv e

office in this Judicial District .

8. In connection with the acts, conduct and other wrongs alleged in this complaint ,

defendants, directly or indirectly, used the means and instrumentalities of interstate commerce,

including but not limited to, the United States mails, interstate telephone communications and the

facilities of the national securities exchange .

PARTIES

9. Plaintiff, Beverly Grabell, as set forth in the accompanying certification, incorporate d

by reference herein, purchased Pixar securities at artificially inflated prices during the Class Period

and has been damaged thereby.

10. Defendant Pixar is a California corporation with its p rincipal executive office s

located at 1200 Park Avenue, Emeryville, California 94608 .

It . Defendant Steven P . Jobs ("Jobs") was, at all relevant times, the Company' s

Chairman and Chief Executive Officer.

12. Defendant Edwin E . Catmull ("Catmull") was, at all relevant times, the Company' s

President .

13 . Defendant Simon T. Bax (`Bax") was, at all relevant times, the Company's Chie f

Financial Officer and Executive Vice President .

14. Defendants Jobs, Catmull , and Bax are collectively referred to hereinafter as the

"Individual Defendants ." The Individual Defendants , because of their positions with the Company ,

possessed the power and authority to control the contents of Pixar's quarterly reports, press releases

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and presentations to securities analysts, money and portfolio managers and institutional investors ,

i .e ., the market . Each defendant was provided with copies of the Company's reports and press

releases alleged herein to be misleading prior to or shortly after their issuance and had the ability and

opportunity to prevent their issuance or cause them to be corrected . Because of their positions an d

access to material non-public information available to them but not to the public, each of these

defendants knew that the adverse facts specified herein had not been disclosed to and were bein g

concealed from the public and that the positive representations which were being made were the n

materially false and misleading . The Individual Defendants are liable for the false statement s

pleaded herein, as those statements were each "group-published" information, the result of th e

collective actions of the Individual Defendants .

SUBSTANTIVE ALLEGATIONS

Background

15 . Pixar engages in the creation, development, and production of animated films an d

related products worldwide . It produces various animated products, such as video products, toys ,

interactive games, and other merchandise . The Company has a co -production agreement with The

Walt Disney Company for the development and production of animated feature length theatrical

motion pictures to be marketed and distributed by Disney. As of January 1, 2005, it created and

produced six full-length computer-animated feature films . Pixar was incorporated in 1985 and is

headquartered in Emeryville, Californi a

Materially False And MisleadingStatements Issued During The Class Period

16. On January 18, 2005, Pixar issued a press release entitled "Smash Box-Office Succes s

Comes Home March 15! ." Therein, the Company, in relevant part, stated :

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The world's greatest superhero family is coming to DVD! Box-officesmash hit, THE INCREDIBLES, a Walt Disney Pictures presentationof a Pixar Animation Studios film, becomes even more incredible,arriving in a special two-disc Collector's Edition DVD March 15,2005 from Buena Vista Home Entertainment and Pixar AnimationStudios (Nasdaq : PIXR). This hilarious, action-packed andheart-warming cinema sensation from the Oscar-winning creatorsof Finding Nemo*, THE INCREDIBLES took moviegoers by storm .Now the Collector's Edition DVD takes viewers even further into thethrilling superhero world with an exclusive, all-new,never-before-seen animated short "Jack-Jack Attack," which uncoversJack-Jack's previously unknown super powers and reveals whathappened while Jack-Jack was alone for one truly outrageous nightof babysitting. A continuing hit with audiences of all ages in theatres,the exciting DVD release is loaded with explosive extras including anever-before-seen alternate opening, plus more deleted scenes,behind-the-scenes features on the film and its creators at PixarAnimation Studios, hilarious Incredi-blunders, bonus programs on theart and technology of the film, Pixar's charming short film "Boundin,"which premiered with the movie in theatres, top-secret files on all thefilm's superheroes, hysterical character interviews, feature filmmakercommentary with Pixar director Brad Bird and his fellow filmmakers,and much more .

This heroic tale of laughs, adventure and heartfelt emotion deliversthe most 'incredible' computer animated DVD experience ever and isavailable on DVD for $29 .99 (S.R.P.) and on VHS for $29 .99(S .R.P.) .

17. On February 10, 2005, Pixar issued a press release entitled "Pixar Reports Record

Results for 2004." Therein, the Company, in relevant part, stated :

Pixar Animation Studios (Nasdaq : PIXR) today announced financialresults for its fourth quarter and fiscal year ended January 1, 2005 .For the year, Pixar earned $141 .7 million, or $2 .38 per fully dilutedshare, on revenues of $273 .5 million . This compares to earnings of$124.8 million, or $2 .17 per fully diluted share, on revenues of$262.5 million for the year ended January 3, 2004 .

For the quarter, Pixar earned $55 .2 million, or $0.91 per fully dilutedshare, on revenues of $108 .9 million . This compares to earnings of$83.9 million, or $1 .44 per fully diluted share on revenues of $164 .8million, achieved in the fourth quarter of 2003 .

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"The stellar box office performance of The Incredibles, combinedwith the continuing success of Finding Nemo on home video, hasresulted in our most profitable year to date," said Pixar CEO SteveJobs. "Looking ahead, The Incredibles' DVD will be the one to ownwhen it hits shelves on March 15 ."

18. Additionally, on February 10, 2005, defendants held an investor conference call t o

discuss the Pixar's financial results . During the all, defendants represented :

I would now like to address the events that are to reflected in ourresults for the first quarter of 2005, as well as introduce our initialthoughts on the full year. We anticipate our earnings for the firstquarter to be driven by the continuing success of The Incredibles,particularly its home video release which is slated for March 15th,2005 in the U .S . . This is the first time since A Bug's Life in April of1999 that we have released one of our films on home video outsidethe holiday period. But preorders of The Incredibles home videoindicate that its domestic release will be equally as successful as thatof Monsters, Inc .

During the initial quarter of that film's domestic home video release,we recognized sales of approximately 15 .5 million net units. We alsoexpect initial international home video revenues in the first quarter,most notably from the UK, Italy, Spain and Mexico where TheIncredibles home video is scheduled for a release throughout lateMarch. We anticipate that a portion of these international home videorevenues will be offset by certain marketing and release costs inmarkets where it will be released in subsequent quarters .

Our box office projections assume The Incredibles will achieve aworldwide growth of more than 625 million, making it our secondmost successful film at the box office after Finding Nemo with theremaining worldwide box office receipts being recognized almostentirely by the end of the first quarter. In addition, we expect torecognize continuing revenues from consumer product licensing,international television and worldwide home video sales . Takentogether, we expect to report diluted earnings per share for the firstquarter of 2005 of between 85 cents and 95 cents .

Looking ahead we expect continuing international home videorevenues from The Incredibles to drive our results for the secondquarter, particularly from its release in Japan, France, Germany andAustralia . Revenues from domestic pay TV licensing of the The

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Incredibles are expected in the third quarter, domestic free TVlicensing of Finding Nemo in the fourth . Worldwide consumerproduct licensing and home video sales from our film library arelikely to continue throughout 2005 .

In conclusion, 2004 stands out as our most successful year thus far .We posted record results that highlight a number of significantachievements. First, The Incredibles, our studio's sixth film, wasreleased during a highly competitive holiday season and is expectedto generate over 625 million at the worldwide box office . Second, thecontinuing success of Finding Memo illustrates the value of our filmson DVD, the most profitable segment of the film business . And third,the solid performance of our library titles which delivered one-quarterof our revenues this year demonstrates the evergreen value of our filmproperties. We expect this momentum to carry us into 2005 with theupcoming release of The Incredibles on home video and in 2006 withthe release of Pixar's next film, Cars .

19. On March 16, 2005, Pixar issued a press release entitled "Walt Disney Picture s

Presentation of a Pixar Animation Studios Film, THE INCREDIBLES, Sells Five Million Units on

DVD and Video in First Day." Therein, the Company, in relevant part, stated :

On its first day of availability, Walt Disney Pictures presentation ofa Pixar Animation Studios film, THE INCREDIBLES, soldfivemillion units on DVD and video in North America, it wasannounced today by Steve Jobs, chairman and chief executive officerof Pixar Animation Studios (Nasdaq : PD(R) and Bob Chapek,president of Buena Vista Home Entertainment (NYSE : DIS) . Freshoff the heels of winning two Academy Awards® [Best AnimatedFeature Film, Achievement in Sound Editing] the five million unitssold to date has THE INCREDIBLES on track to be the best-sellingDVD and video of 2005 .

"The superheroes at Pixar who created THE INCREDIBLES havemade it even more thrilling in this extraordinary DVD release," saidPixar CEO Steve Jobs . "We are gratified that millions of fans haverushed to add Pixar's latest film to their home entertainmentcollections . "

President of Buena Vista Home Entertainment, Bob Chapek added,"We're thrilled that the public has embraced the THE INCREDIBLESDVD and video in this wonderful way. We are working with our

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duplication facilities to keep up with consumer demand across NorthAmerica ." Commenting on the first day sales, Chapek added, "Withthe tremendous momentum from theatrical release and awards seasonit is no surprise that audiences are continuing in their admiration forthis wonderful film . "

20. On March 17, 2005, Pixar filed its annual report with the SEC on Form 10-K . The

Company's Form 10-K was signed by Individual Defendants and reaffirmed the Company's

previously announced financial results . Additionally, the Company made the following statements

with respect to revenue recognition :

Revenue Recognitio n

We recognize film revenue from the distribution of all our animatedfeature films and related products when earned and reasonablyestimable in accordance with Statement of Position 00-2 -"Accounting by Producers or Distributors of Films" (SOP 00-2) . Thefollowing are the conditions that must be met in order to recognizerevenue in accordance with SOP 00-2 :

• persuasive evidence of a sale or licensing arrangement with acustomer exists;• the film is complete and, in accordance with the terms of thearrangement, has been delivered or is available for immediate andunconditional delivery;• the license period of the arrangement has begun and the customercan begin its exploitation, exhibition or sale;• the arrangement fee is fixed or determinable; and• collection of the arrangement fee is reasonably assured.

Under the Co-Production Agreement, we share equally with Disneyin the profits of The Incredibles, Finding Nemo, Monsters, Inc ., ToyStory 2 and A Bug's Life after Disney recovers its marketing,distribution and other predefined costs and fees. Our revenues for ToyStory are governed by the terms of the Feature Film Agreement underwhich Disney fully financed the production costs and shares aspecified percentage of by Story profits with Pixar after certainagreed upon costs and fees are deducted . We recognize revenue fromour films net of distribution fees, reserves for returns, and marketingand distribution expenses . Disney provides us with gross receiptinformation, return reserve information, marketing and distributio n

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costs and any other fees and expenses . We utilize this information todetermine our portion of the revenue by applying the contractualprovisions included in our arrangements with Disney . We may alsoadjust certain of Disney's estimates, such as home video returns anddistribution expenses, based on Pixar's historical experience andother industry information . The amount of revenue recognized in anygiven quarter or quarters from all of our films depends on the timing,accuracy, and sufficiency of information we receive from Disney todetermine revenues and associated gross profits . Although Disneyprovides us with the most current information available to enable usto recognize our share of revenue and determine our film. gross profit,in the past we have made revisions, and we are likely to makerevisions in the future, to that information based on our estimates andjudgments . Such information includes theatrical bad debt reserves andexpenses, home video return reserves and expenses, merchandiseexpenses, and estimates for both revenues and related expensesresulting from differences between Disney's fiscal reporting periodand ours .

For example, in the past, our theatrical revenues have been adjustedfor our estimated reserves on potential uncollectible amounts to bereceived from theatrical exhibitors . Estimated reserves foruncollectible amounts are established based on a review of theindustry, discussions with Disney, and our historical experience . Todate we have not experienced significant losses, and therefore wehave not had significant reserves for uncollectible receivables . Thetotal allowance against our revenue for theatrical exhibitoruncollectible amounts approximated $2 .2 million and $1 .0 million atJanuary 3, 2004 and January 1, 2005, respectively .

We have also made adjustments to our home video revenues forestimates on return reserves that may differ from those reported byDisney. In determining our home video reserves for a particular title,we review information such as Disney's current return reserves, thehistorical return reserves for our previous titles, actual rates ofreturns, inventory levels in the distribution channel and other businessand industry trend information that is available. Disney has providedand may continue to provide us with reserve information that maydiffer substantially from our historical experience with our previoustitles. Unless Disney provides a sufficient rationale as to why themarket and sales performance are substantially different for aparticular title, we have and may continue to record reserves moreconsistent with our historical experience . Our home video return

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reserves exceeded Disney's estimates by $27 .8 million and $2 .5million at January 3, 2004 and January 1, 2005, respectively . . . . .

We have utilized margin normalization, such as with merchandise orhome video expenses, in accordance with the provisions of SOP 00-2 .This may result in the utilization of budgeted or forecastedinformation to calculate an ultimate lifetime expense margin, ratherthan actual costs incurred if it is deemed to be a more accuratereflection of our participation. Similar to return reserves, theseexpense estimates are reviewed and may be adjusted periodically toensure that the most accurate depiction of our participation isreflected .

21 . On May 5, 2005, Pixar issued a press release entitled "Pixar Reports First Quarte r

Financial Results." Therein, the Company, in relevant part, stated :

Pixar Animation Studios (Nasdaq : PIXR) today announced financialresults for its fiscal first quarter ended April 2, 2005 . For the quarter,Pixar reported revenues of $161 .2 million and earnings of $81 .9million, or $0 .67 per diluted share. These results compare to revenuesof $53 .8 million and earnings of $26 .7 million, or $0.23 per dilutedshare, achieved in the year-ago quarter . These earnings per sharecalculations reflect the adjusted share count resulting from a 2-for-1stock split, which took effect April 19, 2005 .

"We're off to a terrific start with The Incredibles shaping up to be thebest selling DVD of 2005," said Pixar CEO Steve Jobs . "Cars islooking great, and we're also very excited about the ten yearanniversary re-release of Toy Story on DVD this Fall ."

22. Additionally, on May 5, 2005, defendants held an investor conference call to discus s

the Pixar's financial results . During the conference call, defendants represented :

Our earnings of $0.67 per diluted share exceeded our split adjustedguidance of between $0.43 and $0 .48. The main reason for thevariance was higher than expected initial sales of the IncrediblesDVD in the U .S. which resulted in $0.11 of EPS upside . A further$0.04 related to revenues from Finding Nemo and the remaining$0.04 were from our library titles, particularly international televisionsales of Monsters Inc .

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At the end of the quarter our shareholders equity was over 1 .3 billion .Our cash and investments totaled 876 million and our accountsreceivable had increased to 193 million . The majority of whichreflects cash due from Disney for our share of film revenues primarilyfrom sales of The Incredibles home video .

Looking ahead to the second quarter we expect to report earnings perdiluted share of approximately $0 .15 . The primary driver of theseresults will be international home video revenues from TheIncredibles due to its release in a number of territories includingFrance, Germany, and Japan. We are not anticipating any materialdomestic shipments of the title over the next two quarters . However,we expect The Incredibles home video to sell a similar number ofunits to Monsters Inc. over its life time .

23. On May 12, 2005, Pixar filed its quarterly report with the SEC on Form 10-Q . The

Company's Form 10-Q was signed by defendant Bax and reaffirmed the Company's previously

announced financial results . Additionally, in its Form 10-Q, the Company made the followin g

representations :

Basis of Presentation

The accompanying unaudited financial statements have been preparedin conformity with U.S . generally accepted accounting principles forinterim financial information and pursuant to the rules and regulationsof the Securities and Exchange Commission. In the opinion ofmanagement, the accompanying unaudited financial statements reflectall adjustments, consisting only of normal recurring adjustments,considered necessary for a fair presentation ofthe financial condition,results of operations, and cash flows of Pixar for the periodspresented. These financial statements should be read in conjunctionwith the audited financial statements as of January 1, 2005, and foreach of the years in the three-year period ended January 1, 2005,including notes thereto . These audited financial statements areincluded in Pixar's Annual Report on Form 10-K filed with theSecurities and Exchange Commission on March 17, 2005 .

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Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures . Our managementevaluated, with the participation of our Chief Executive Officer andour Chief Financial Officer, the effectiveness of our disclosurecontrols and procedures as of the end of the period covered by thisQuarterly Report on Form 10-Q. Based on this evaluation, our ChiefExecutive Officer and our Chief Financial Officer have concludedthat our disclosure controls and procedures are effective to ensure thatinformation we are required to disclose in reports that we file orsubmit under the Securities Exchange Act of 1934 is recorded,processed, summarized and reported within the time periods specifiedin Securities and Exchange Commission rules and forms .

Changes in internal control over financial reporting. There was nochange in our internal control over financial reporting that occurredduring the period covered by this Quarterly Report on Form 10-Q thathas materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting .

24. Additionally, the Company's Form 10-Q contained the following certifications signe d

by defendants Jobs and Bax :

1 . I have reviewed this Quarterly Report on Form 10-Q of Pixar ;

2. Based on my knowledge, this report does not contain any untruestatement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circumstances underwhich such statements were made, not misleading with respect to theperiod covered by this report ;

3. Based on my knowledge, the financial statements, and otherfinancial information included in this report, fairly present in allmaterial respects the financial condition, results of operations andcash flows ofthe registrant as of, and for, the periods presented in thisreport ;

4 . The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internalcontrol over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) for the registrant and have :

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(a) Designed such disclosure controls and procedures, orcaused such disclosure controls and procedures to be designed underour supervision, to ensure that material information relating to theregistrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period inwhich this report is being prepared ;

(b) Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generallyaccepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosurecontrols and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, asof the end of the period covered by this report based on suchevaluation; and

(d) Disclosed in this report any change in the registrant'sinternal control over financial reporting that occurred during theregistrant's most recent fiscal quarter (the registrant's fourth fiscalquarter in the case of an annual report) that has materially affected, oris reasonably likely to materially affect, the registrant's internalcontrol over financial reporting ; and

5. The registrant's other certifying officer and I havedisclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant's auditors and the auditcommittee of the registrant's board of directors (or personsperforming the equivalent functions) :

(a) All significant deficiencies and material weaknesses in thedesign or operation of internal control over financial reporting whichare reasonably likely to adversely affect the registrant's ability torecord, process, summarize and report financial information ; and

(b) Any fraud, whether or not material , that involvesmanagement or other employees who have a signi ficant role in theregis trant's internal control over financial reporting.

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25 . The statements contained in 11 16-24 were materially false and misleading when

made because defendants failed to disclose or indicate the following: (1) that defendants, in an effor t

to demonstrate positive earnings and inflate the Company's sales figures, shipped millions of exces s

copies of The Incredibles home videos to the market ; (2) that defendants' were aware that the video

shipments significantly exceeded the levels ofconsumer demand , and as a result were eventually

forced to increase the reserve for video returns ; (3) that the Company lacked adequate interna l

controls ; and (4) that as a consequence of the foregoing defendants' statements with respect to th e

forecasted sale of The Incredibles home video units lacked in any reasonable basis .

The Truth BeginsTo Emerge

26 . On June 30, 2005, Pixar issued a press release entitled "Pixar Updates Second Quarte r

Financial Guidance." Therein, the Company, in relevant part, stated :

Pixar Animation Studios (Nasdaq : PURR) today announced an updateto its fiscal second quarter 2005 guidance . Following a review of themost current domestic and international home video sales data forThe Incredibles, the company is updating its second quarter homevideo projections to increase its reserves for returns . As a result, Pixaris modifying its earlier projection of roughly $0 .15 per diluted sharefor the quarter ending July 2, 2005, to approximately $0.10 perdiluted share, which equates to around a $6 million difference in ne tincome .

"The Incredibles is the best-selling home video title of 2005 to date,and we continue to expect it to generate home video revenues similarto Monsters, Inc .," said Pixar CEO Steve Jobs . "But based on themost recent sell-through information, we have opted to be morecautious with respect to our second quarter home video reserves . "

27. On this news, shares of Pixar fell $ 6.99 per share, or 13 .97 percent, on July 1, 2005 ,

to close at $43 .06 per share .

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28. On August 26, 2005, the Associated Press published an on-line article entitled "Pixar

Shares Dip on Report of SEC Inquiry." The article, in relevant part, read :

Shares of Pixar Animation Studios Inc . fell nearly 2 .5 percent Fridayafter a published report said the Securities and Exchange CommissionInc. has requested information leading up to the filmmaker's reportearlier this month of lower second-quarter earnings .

The company issued a statement at midday confirming that it hadreceived "an informal request for information from the SEC, ascompanies do from time to time, and we believe we have fullycomplied with that request."

But the one-sentence statement did not address what the SEC wantedor when the request was made, and spokesman Nils Erdmanndeclined to elaborate . "We have no other comments," he said .

Pixar shares fell $ 1 .01 to close at $41 .99 Friday on the Nasdaq StockMarket, where its shares have traded in a 52-week range of $36 .56 to$54.47 .

The Wall Street Journal reported Friday that the SEC launched aninformal inquiry into Pixar after heavier-than-expected returns of"The Incredibles" DVD led the studio to miss its second-quarterearnings forecast .

PLAINTIFF'S CLASS ACTION ALLEGATIONS

29. Plaintiff brings this action as a class action pursuant to Federal Rule of Civi l

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased the securitie s

of Pixar between January 18, 2005 and June 30, 2005, common stock offering, and who wer e

damaged thereby . Excluded from the Class are defendants, the officers and directors of th e

Company, at all relevant times, members of their immediate families and their legal representatives ,

heirs, successors or assigns and any entity in which defendants have or had a controlling interest .

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30. The members of the Class are so numerous that joinder of all members is imprac-

ticable . Throughout the Class Period, Pixar's securities were actively traded on the NASDAQ.

While the exact number of Class members is unknown to Plaintiff at this time and can only be

ascertained through appropriate discovery, Plaintiff believes that there are hundreds or thousands o f

members in the proposed Class . Record owners and other members of the Class may be identifie d

from records maintained by Pixar or its transfer agent and may be notified of the pendency of thi s

action by mail, using the form of notice similar to that customarily used in securities class actions .

31 . Plaintiffs claims are typical of the claims of the members of the Class, as al l

members of the Class are similarly affected by defendants' wrongful conduct in violation of federal

law that is complained of herein .

32. Plaintiff will fairly and adequately protect the interests of the members of the Class

and has retained counsel competent and experienced in class and securities litigation .

33 . Common questions of law and fact exist as to all members of the Class an d

predominate over any questions solely affecting individual members of the Class . Among the

questions of law and fact common to the Class are :

(a) whether the federal securities laws were violated by defendants' acts as allege d

herein ;

(b) whether statements made by defendants to the investing public during th e

Class Period misrepresented material facts about the business, operations and management o f

Pixar ; and

(c) to what extent the members of the Class have sustained damages and th e

proper measure of damages .

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34. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable . Furthermore, as the

damages suffered by individual Class members may be relatively small, the expense and burden o f

individual litigation make it impossible for members of the Class to individually redress the wrong s

done to them. There will be no difficulty in the management of this action as a class action .

SCIENTER ALLEGATION S

35 . As alleged herein, defendants acted with scienter in that defendants knew that the

public documents and statements issued or disseminated in the name of the Company were

materially false and misleading; knew that such statements or documents would be issued o r

disseminated to the investing public ; and knowingly and substantially participated or acquiesced in

the issuance or dissemination of such statements or documents as p rimary violations of the federal

securities laws. As set forth elsewhere herein in detail, defendants, by virtue of their receipt of

information reflecting the true facts regarding Pixar, their control over, and/or receipt and/o r

modification of Pixar's allegedly materially misleading misstatements and/or their associations wit h

the Company which made them privy to confidential proprietary information concerning Pixar ,

participated in the fraudulent scheme alleged herein .

36. During the Class Period and with the Company's stock trading at artificially inflate d

prices , defendants sold 425,000 for gross proceeds of $27,115,047 . As evidenced by the following

chart :

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Edwin Catmull 18-May-05 50,000 @ $49.85 - $49.95 $2,495,0004-Mar-05 20,000 @ $92 .50 $1,850,0443-Mar-05 10,000 @ $91 .10 $911,00017-Feb-05 20,000 @ $89 .34 - $89 .44 $1,788,000

Total Shares: 100,000 Total Proceeds:$7,044,044

John Lasseter 18-May-05 20,000 @ $50.47 $1,009,44411-May-05 10,000 @ $47.50 - $47.59 $475,00011-May-05 10,000 @ $47.45 $474,55910-May-05 40,000 @ $48 .12 - $48 .68 $1,936,00025-Feb-05 80,000 @ $89.05 - $89 .65 $7,148,000

Total Shares : 160, 000 Total Proceeds:$11,043,003

Sarah Mcarthur 13-May-05 50,000 @ $47 .15 - $47.60 $2,369,00 017-Feb-05 10,000 @ $89 .40 $894,000

Total Shares: 60,000 Total Proceeds:$3,263,000

John Lasseter, & 11-May-05 30,000 @ $50.00 $1,500,000N.T. TR96 Total Shares: 30,000 Total Proceeds :

$1,500,000

Simon T Bax 10-May-05 30,000 @ $48.32 - $48.57 $1,453,00 0Total Shares : 30, 000 Total Proceeds:

$1,453,000

Lois J . Scali 10-May-05 30,000 @ $48.68 - $48 .70 $1,461,00018-Feb-05 5,000 @ $90 .27 - $90.28 $451,00015-Feb-05 10,000 @ $89.70 - $90 .25 $900,000

Total Shares: 45,000 Total Proceeds:$2,812,000

UNDISCLOSED ADVERSE FACTS

37. The market for Pixar' s securities was open , well-developed and efficient at al l

relevant times. As a result of these materially false and misleading statements and failures t o

disclose, Pixar's securities traded at artificially inflated prices during the Class Period . Plaintiff and

other members of the Class purchased or otherwise acquired Pixar securities relying upon th e

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integrity of the market price of Pixar' s securities and market information relating to Pixar, and hav e

been damaged thereby.

38 . During the Class Period, defendants materially misled the investing public, thereb y

inflating the price of Pixar's securities, by publicly issuing false and misleading statements and

omitting to disclose material facts necessary to make defendants' statements, as set forth herein, no t

false and misleading. Said statements and omissions were materially false and misleading in that

they failed to disclose material adverse information and misrepresented the truth about the Company,

its business and operations, as alleged herein .

39 . At al l relevant times, the material misrepresentations and omissions particularized

in this Complaint directly or proximately caused or were a substantial contributing cause of th e

damages sustained by plaintiff and other members of the Class . As described herein, during the

Class Period, defendants made or caused to be made a series of materially false or misleadin g

statements about Pixar's business, prospects and operations . These material misstatements an d

omissions had the cause and effect of creating in the market an unrealistically positive assessmen t

of Pixar and its business, prospects and operations, thus causing the Company's securities to b e

overvalued and artificially inflated at all relevant times . Defendants' materially false and misleadin g

statements during the Class Period resulted in plaintiff and other members of the Class purchasin g

the Company's securities at artificially inflated prices, thus causing the damages complained o f

herein.

LOSS CAUSATIO N

40. Defendants' wrongful conduct, as alleged herein, directly and proximately caused the

economic loss suffered by Plaintiff and the Class .

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41 . During the Class Period, Plaintiff and the Class purchased securities of Pixar a t

artificially in flated prices and were damaged thereby. The price of Pixar's common stock decline d

when the misrepresentations made to the market, and/or the information alleged herein to had bee n

concealed from the market, and/or the effects thereof, were revealed, causing investors' losses .

Applicability Of Presumption Of Reliance :Fraud-On-The-Market Doctrine

42 . At all relevant times, the market for Pixar securities was an efficient market for the

following reasons, among others :

(a) Pixar stock met the requirements for listing, and was listed and actively trade d

on the NASDAQ, a highly efficient and automated market ;

(b) As a regulated issuer, Pixar filed periodic public reports with the SEC and th e

NASDAQ;

(c) Pixar regularly communicated with public investors via established marke t

communication mechanisms, including through regular disseminations of press releases on th e

national circuits of major news wire services and through other wide-ranging public disclosures, suc h

as communications with the financial press and other similar reporting services ; and

(d) Pixar was followed by several securities analysts employed by major brokerag e

firms who wrote reports which were distributed to the sales force and certain customers of their

respective brokerage firms. Each of these reports was publicly available and entered the publi c

marketplace.

43 . As a result of the foregoing, the market for Pixar securities promptly digested curren t

information regarding Pixar from all publicly-available sources and reflected such information i n

Pixar's stock price. Under these circumstances, all purchasers of Pixar securities during the Clas s

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Period suffered similar injury through their purchase of Pixar securities at artificially inflated price s

and a presumption of reliance applies .

NO SAFE HARBO R

44. The statutory safe harbor provided for forward- looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this complaint .

Many of the specific statements pleaded herein were not identified as "forward -looking statements"

when made . To the extent there were any forward-looking statements, there were no meaningful

cautionary statements identifying important factors that could cause actual results to differ materially

from those in the purportedly forward- looking statements . Alternatively, to the extent that the

statutory safe harbor does apply to any forward-looking statements pleaded herein, defendants are

liable for those false forward-looking statements because at the time each of those forward-looking

statements was made, the particular speaker knew that the particular forward-looking statement was

false, and/or the forward-looking statement was authorized and/or approved by an executive office r

of Pixar who knew that those statements were false when made .

FIRST CLAIMViolation Of Section 10(b) Of

The Exchange Act Against And Rule 10b-5Promulgated Thereunder Against A ll Defendants

45 . Plaintiffrepeats and realleges each and every allegation contained above as if fully

set forth herein .

46 . During the Class Period, defendants carried out a plan, scheme and course of conduc t

which was intended to and, throughout the Class Period, did : (i) deceive the investing public ,

including Plaintiff and other Class members, as alleged herein ; and (ii) cause Plaintiff and other

members of the Class to purchase Pixar securities at artificially inflated prices . In furtherance of thi s

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unlawful scheme, plan and course of conduct, defendants, and each of them, took the actions se t

forth herein .

47. Defendants (a) employed devices, schemes, and artifices to defraud ; (b) made untrue

statements of material fact and/or omitted to state material facts necessary to make the statement s

not misleading; and (c) engaged in acts, practices, and a course ofbusiness which operated as a fraud

and deceit upon the purchasers of the Company' s securities in an effort to maintain artificially high

market prices for Pixar securities in violation of Section 10(b) of the Exchange Act and Rule I Ob-5.

All defendants are sued either as primary participants in the wrongful and illegal conduct charge d

herein or as controlling persons as alleged below .

48. Defendants , individually and in concert , directly and indirectly, by the use , means or

instrumentalities of interstate commerce and/or of the mails, engaged and participated in a

continuous course of conduct to conceal adverse material information about the business, operation s

and future prospects of Pixar as specified herein .

49 . These defendants employed devices, schemes, and artifices to defraud, while i n

possession of material adverse non-public information and engaged in acts, practices , and a cours e

of conduct as alleged herein in an effort to assure investors of Pixar value and performance and

continued substantial growth, which included the making of, or the participation in the making of ,

untrue statements of material facts and omitting to state material facts necessary in order to make the

statements made about Pixar and its business operations and future prospects in light of the

circumstances under which they were made , not misleading, as set forth more particularly herein,

and engaged in transactions , practices and a course ofbusiness which operated as a fraud and deceit

upon the purchasers of Pixar securities during the Class Period .

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50. Each of the Individual Defendants' primary liability, and controlling person liability,

arises from the following facts : (i) the Individual Defendants were high-level executives and/o r

directors at the Company during the Class Period and members of the Company's management tea m

or had control thereof; (ii) each of these defendants, by virtue of his or her responsibilities an d

activities as a senior officer and/or director of the Company was privy to and participated in th e

creation, development and repo rting of the Company's internal budgets , plans, projections and/o r

reports ; (iii) each of these defendants enjoyed significant personal contact and familiarity with the

other defendants and was advised of and had access to other members of the Company' s

management team, internal reports and other data and information about the Company's finances ,

operations, and sales at all relevant times ; and (iv) each of these defendants was aware of the

Company's dissemination of information to the investing public which they knew or recklessl y

disregarded was materially false and misleading .

51 . The defendants had actual knowledge of the misrepresentations and omissions of

material facts set forth herein, or acted with reckless disregard for the truth in that they failed t o

ascertain and to disclose such facts, even though such facts were available to them . Such defendants '

material misrepresentations and/or omissions were done knowingly or recklessly and for the purpos e

and effect ofconcealing Pixar's operating condition and future business prospects from the investin g

public and supporting the artificially inflated price of its securities . As demonstrated by defendants '

overstatements and misstatements of the Company's business , operations and earnings throughout

the Class Period, defendants, if they did not have actual knowledge of the misrepresentations and

omissions alleged, were reckless in failing to obtain such knowledge by deliberately refraining from

taking those steps necessary to discover whether those statements were false or misleading.

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52. As a result of the dissemination of the materially false and misleading informatio n

and failure to disclose material facts, as set forth above, the market price of Pixar securities wa s

artificially inflated during the Class Period . In ignorance of the fact that market prices of Pixar' s

publicly-traded securities were artificially inflated, and relying directly or indirectly on the false and

misleading statements made by defendants, or upon the integrity of the market in which the securitie s

trade, and/or on the absence of material adverse information that was known to or recklessl y

disregarded by defendants but not disclosed in public statements by defendants during the Class

Period, Plaintiff and the other members of the Class acquired Pixar securities during the Class Period

at artificially high prices and were damaged thereby.

53. At the time of said misrepresentations and omissions , Plaintiff and other member s

of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff and the other

members of the Class and the marketplace known the truth regarding the problems that Pixar wa s

experiencing, which were not disclosed by defendants, Plaintiff and other members of the Clas s

would not have purchased or otherwise acquired their Pixar securities , or, if they had acquired such

securities during the Class Period, they would not have done so at the artificially inflated price s

which they paid.

54. By virtue of the foregoing, defendants have violated Section 10(b) of the Exchang e

Act, and Rule I Ob-5 promulgated thereunder .

55 . As a direct and proximate result of defend ants ' wrongful conduct, Plaintiff and the

other members of the Class suffered damages in connection with their respective purchases and sales

of the Company's securities during the Class Period .

SECOND CLAIMViolation Of Section 20(a) O f

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The Exchange Act Against the Individual Defendants

56. Plaintiff repeats and realleges each and every allegation contained above as if fully

set forth herein.

57. The Individual Defendants acted as controlling persons of Pixar within the meaning

of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions, and

their ownership and contractual rights, participation in and/or awareness of the Company's

operations and/or intimate knowledge of the false financial statements filed by the Company with

the SEC and disseminated to the investing public, the Individual Defendants had the power t o

influence and control and did influence and control, directly or indirectly, the decision-making of

the Company, including the content and dissemination of the various statements which Plaintiff

contends are false and misleading. The Individual Defendants were provided with or had unlimited

access to copies of the Company's reports, press releases, public filings and other statements allege d

by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had the

ability to prevent the issuance of the statements or cause the statements to be corrected .

58. In particular, each of these defendants had direct and supervisory involvement in the

day-to-day operations of the Company and, therefore, is presumed to have had the power to contro l

or influence the particular transactions giving rise to the securities violations as alleged herein, an d

exercised the same .

59 . As set forth above, Pixar and the Individual Defendants each violated Section 10(b )

and Rule 1 Ob-5 by their acts and omissions as alleged in this Complaint . By virtue of their positions

as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of the

Exchange Act. As a direct and proximate result of defendants' wrongful conduct, Plaintiff and other

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members of the Class suffered damages in connection with their purchases of the Company' s

securities during the Class Period .

WHEREFORE, Plaintiff prays for relief and judgment, as follows :

(a) Determining that this action is a proper class action, designating Plaintiff as Lea d

Plaintiff and certifying Plaintiff as a class representative under Rule 23 of the Federal Rules of Civi l

Procedure and Plaintiff' s counsel as Lead Counsel ;

(b) Awarding compensatory damages in favor of Plaintiff and the other Clas s

members against all defendants, jointly and severally, for all damages sustained as a result of

defendants' wrongdoing, in an amount to be proven at trial, including interest thereon ;

(c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in

this action, including counsel fees and expert fees ; and

(d) Such other and further relief as the Court may deem just and proper .

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JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury.

Dated:

GREEN WELLING, LLPBy:Robert Green, Esquire235 Pine Street, 15th FloorSan Francisco, California 94104(415) 477-6700

SCHIFFRIN & BARROWAY, LLPMarc A. Topaz , EsquireRichard A . Maniskas, EsquireTamara Skvirsky, Esquire280 King of Prussia Road,Radnor, PA 19087(610) 667-7706

BRODSKY & SMITH, LLCEvan J . Smith, EsquireTwo Bala Plaza , Suite 602Bala Cynwyd, PA 19004(610)667-6200

Attorneys for Plaintiff

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