updated 3/8/2006 6:13:49 PM ET 2006-03-08T23:13:49

Profits at Pixar Animation Studios Inc. dropped in the fourth quarter, but the company behind such hits as “Finding Nemo” reported record net income for the full year.

The company also said that the Securities and Exchange Commission had ended an informal inquiry into a previous quarterly earnings report.

The company issued Tuesday what is likely its last financial report as a public company. In January, Pixar agreed to be acquired by The Walt Disney Co. in an all-stock deal valued at $7.4 billion. The deal is expected to close in the next few months.

The animation studio, based in Emeryville, Calif., reported net income of $30.9 million, or 25 cents per share for the quarter ended Dec. 31, 2005, compared to $55.2 million, or 45 cents in the same period last year.

Revenue fell by more than half to $55.6 million compared to $109 million in the same period last year.

The results beat estimates from analysts surveyed by Thomson Financial, who had forecast earnings of 18 cents per share.

Pixar did not release a movie in theaters in 2005. Fourth-quarter earnings came from revenue generated by its library titles, including “Finding Nemo” and “The Incredibles.”

Last year’s fourth quarter included theatrical revenue from its hit “The Incredibles.”

“2005 marks Pixar’s 10th year as a public company and, I’m pleased to report, our most profitable year ever,” Pixar Chairman and Chief Executive Steve Jobs said in a statement.

Because of the company’s pending combination with Disney, Pixar did not hold a conference call with analysts.

For the full year, Pixar reported net income of $153 million, or $1.24 per share, compared to $142 million, or $1.19 per share in 2004.

Revenue for 2005 rose slightly to $289 million from $273 million in 2004.

At the end of the year, Pixar had just over $1.04 billion in cash, which will go to Disney after it acquires Pixar.

Analysts had expected full-year earnings of $1.17 per share.

Last August, Pixar said it had received a request from the SEC for information regarding retailer returns of DVDs of “The Incredibles” that had not sold as well as expected. Those returns caused the company to miss its second-quarter earnings projections.

The SEC informed Pixar on Feb. 17 that it had ended its inquiry, the company said.

Pixar’s next film, “Cars,” will be released in June. It is the last film produced under its distribution deal with Disney, under which the two companies split the production costs and profits. The first film fully financed by Pixar, “Ratatouille,” will be released in 2007.

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