Walt Disney Company (DIS)

Pixar Acquisition

On May 5, 2006, the Company acquired Pixar in an all-stock transaction. As a result of the acquisition, the Company now produces feature animation films under both the Disney and Pixar banners. Additional information regarding the acquisition of Pixar is set forth in Note 3 to the consolidated financial statements and in Item 1A – Risk Factors, above.

35

Table of Contents

Pixar Acquisition

On May 5, 2006, the Company acquired Pixar in an all-stock transaction and Pixar became a wholly-owned subsidiary of the Company. As a result of the acquisition, the Company now produces feature animation films under both the Disney and Pixar banners. Additional information regarding the acquisition of Pixar is set forth in Note 3 to the consolidated financial statements and in Item 1A – Risk Factors, above.

PIXAR ACQUISITION

On May 5, 2006, the Company completed an all-stock acquisition of Pixar, resulting in an increase of approximately 288 million in the then outstanding Disney shares on a diluted basis. The results of Pixar’s operations have been included in the Company’s consolidated financial statements since the closing date.

In connection with the acquisition, the Company recorded a net gain of $30 million after-tax. The principal components of this net gain were a non-cash, non-taxable gain from the deemed termination of the existing Pixar distribution agreement with the Company and impairment charges related to the abandonment of the Pixar sequel projects commenced by the Company prior to the acquisition.