This excerpt taken from the DIS 10-K filed Nov 21, 2007.
The Companys acquisition of Pixar causes short term dilution in earnings per share and there can be no assurance that anticipated improvements in earnings per share will be realized.
On May 5, 2006, the Company completed its all stock acquisition of Pixar. To purchase Pixar, Disney exchanged 2.3 shares of its common stock for each share of Pixar common stock, resulting in the issuance of 279 million shares of Disney common stock and converted previously issued vested and unvested Pixar equity-based awards into approximately 45 million Disney equity-based awards.
As anticipated, the earnings contributed by Pixars operations in fiscal 2007 per share issued in the transaction were less than the earnings per share of the remainder of our businesses, effectively reducing earnings per share in fiscal 2007 compared to what earnings per share would have been in the absence of the transaction. The Company believes, however, that the transaction yields benefits beyond the earnings contributed by the operations of Pixar and that the transaction will ultimately be accretive to earnings per share. There can be no assurance that the increase in earnings per share expected in the longer term will be achieved. In order to achieve increases in earnings per share as a result of the acquisition, the Company will, among other things, need to effectively continue the successful operations of Pixar, develop successful sequels to prior Pixar productions and improve the overall performance of the Disney feature animation business.