Thursday, August 30, 2012

This Day in Pixar History: Pixar Earnings Report, 2nd Quarter 1996

Welcome to my continuing series of posts on Pixar's quarterly results from back when they were an independent public company. In my first post I covered their first ever quarterly report (as a public company) for the first quarter of 1996 (January - March). This post will cover the second quarter of 1996 (April - June).

If you remember, Toy Story was released in November, 1995. According to their agreement with Disney, Pixar did not receive any revenue until Disney recovered all their marketing and distribution costs. This can be clearly seen in Pixar's income statements - in the first quarter Pixar recognized less than $100,000 in film revenue. But by second quarter that number had grown to $5 million (and as a teaser for next quarter's post, I can say it grows even larger)! Pixar made another $1 million on CD-ROM sales, $700,000 in other software sales (mostly from Renderman), $800,000 from commercials and $400,000 in patent licenses, for a total of $7.9 million in quarterly revenues. This compares to about $8.2 million in the first quarter of 1996 and $8 million in the second quarter of 1995, although it should be noted that $6.5 million of the $8 million was due to a one-time patent licensing agreement with Microsoft.

Most of these segments increased year over year; software sales (CD-ROM, Renderman, etc) increased 91%, and commercials increased 39% from the same 3 month period in 1995. But in July, 1996, Pixar announced they would greatly reduce their commercial business to focus on animated feature films. We should see this reflected in future quarterly reports.

Looking at the first 6 months of 1996, revenues grew a whopping 71% to $16.2 million from $9.5 million in the first 6 months of 1995.

Costs and expenses also increased substantially over 1995 amounts. According to the quarterly report,

Pixar intends to increase operating expenses in a number of areas. First, as a result of intense competition for animators, creative personnel and technical directors, Pixar expects compensation for such personnel to increase substantially. Pixar also plans to fund greater levels of research and development, expand its administrative staff and facilities, expand other operations and incur other significant costs related to being a public company.
As examples, R&D expenses increased 60% from $1 million in 1995 to $1.6 million, and Sales & Marketing increased 50% to $614,000, and General & Administrative expenses increased 81% to $1.4 million from $770,000 in 1995. The report states much of the increase in G&A was connected with stock options granted to employees.

One piece of information I found interesting was the cost of creating commercials. As the commercials became more complex, and competition in the market increased, the profit margin dramatically dropped to only 2% in 1996 from 52% in 1995. This is a significant drop, and probably also impacted Pixar's decision to move away from commercials.

Pixar's net income for the quarter was $4.8 million, down slightly from $5.1 million in 1995. This is primarily due to the large patent licensing agreement with Microsoft in 1995; looking at the first 6 months of 1996, net income was $11.1 million compared to only $4.5 million in 1995. Pixar also had over $146 million in cash and short-term investments at the end of the second quarter. Most of this cash came from their initial public offering (IPO) in late November, 1995.

From a financial standpoint, it looks like Pixar was doing well. Revenue from Toy Story was beginning to come in and would continue to grow for at least another quarter. The studio was ramping up headcount and R&D, and therefore expenses were up accordingly. Even still, the company was hugely profitable, with a profit margin of over 60%!

But while the company was performing well financially, its stock price was not following suit. During the second quarter of 1996, the price of Pixar stock was as high as $25 but trended lower throughout the quarter and was near the low point in the quarter of $17. And with this great quarterly report, maybe you'd think the stock price would then increase? No, in the third quarter it only got as high as $19 and was as low as $12. Granted, no one will say stock prices move in a logical fashion! But I think there were other reasons for the price decrease. I will discuss those reasons in my next quarter's blog post.

Thursday, August 23, 2012

This Day in Pixar History: First Annual Cartoon Art Museum Benefit (UPDATE 2)

UPDATE 2 (October 10, 2012): CAM just announced the date for the benefit has been changed from November 3 to November 10! Updated information can be found here.

UPDATE (September 27, 2012):  CAM announced the details for this year's event and tickets are now on sale! It looks like this year's event will focus on Finding Nemo 3D and Partysaurus Rex, including a Q&A session with Dr. Steve May (Finding Nemo production lead and Pixar CTO), Ronnie del Carmen (Finding Nemo story supervisor), Jim Capobianco (Finding Nemo story artist), Mark Walsh (Director of Partysaurus Rex and Finding Nemo directing animator) and Bob Whitehill (the 3D stereo supervisor on Finding Nemo 3D, as well as all of their 3D films). The Q&A session will again be hosted by Dr. Michael B. Johnson. In addition, you'll be able to view pre-production artwork from Brave in the 2nd floor gallery that surrounds the atrium.

Ticket prices are the same as last year ($450 for CAM members, $500 for non-members). Since an individual membership costs $45, you're better off becoming a member and getting a year's worth of benefits! It doesn't look like they are offering a VIP tier this year. In any case, this is a great opportunity to go inside the studios, see some awesome artwork, meet some of the filmmakers and support a great cause.

Below is my original post:

9 years ago today, the Cartoon Art Museum held their first benefit at Pixar, with event attendees enjoying hor's d'oeuvres, viewing artwork from the just released Finding Nemo, and hearing from Pixarians such as Dr. Edwin Catmull and Pete Docter. According to their website, the Cartoon Art Museum, also known as CAM, is the only museum in the western United States dedicated to the preservation and exhibition of cartoon art in all its forms. Located in downtown San Francisco, the museum has over 6,000 pieces of cartoon and animation art plus a number of galleries for exhibition purposes. Some of the current and past exhibits include one on the Avengers comic books, a celebration of Latino American comic arts, a humorous comic twist on Darth Vader and his son, and the art of DreamWorks' Puss in Boots. If you're ever in the San Francisco area, I would strongly suggest making a stop by the museum and checking out their exhibits and bookstore.

A couple of weeks ago CAM announced the date for their 9th annual benefit. There are very few ways one can visit the studios (unless you know someone who works there), and the CAM benefit is one of the best. I attended the benefit last December with my son Sam and our friend Santi from Spain, and had an awesome time! I've included a few pictures from last year's event; if you'd like to see more, please visit my flickr site.

Line waiting to enter the studio

Last year's event began at 11am. In addition to dining in the Luxo Cafe, we could explore the studio grounds (did you know they have a swimming pool?!) and interior areas that contained some of the great pre-production artwork from Cars 2, such as sculpts, drawings and storyboards. There was also artwork and storyboards from other Pixar films. I can say 2 hours was not enough time to take it all in - I could have spent a whole day going through it all!

In addition to touring the studio, they had drawing demonstrations led by Pixar artists who would teach you to draw your favorite Pixar characters. Unfortunately I spent the majority of the time looking at the artwork and missed out on these demonstrations.

One of the biggest draws was the Pixar Studio Store, which is usually only open to employees. It was extremely hard to not go crazy and buy everything in sight; I thought I did well coming out of there only a couple hundred dollars lighter, having bought a few t-shirts, a Cars 2 jacket and a couple other little souvenirs.

At 1pm we all filed into Pixar's amazing theater. This part of the event was led by Dr. Michael B. Johnson, head of Pixar's pre-production engineering group. We were treated to 6 Pixar short films. Prior to each, Dr. Johnson led a Q&A session with a different Pixarian associated with the film:
  • Day & Night - Director Teddy Newton
  • Dug's Special Mission - Director Ronnie del Carmen
  • One Man Band - Co-director Andrew Jimenez
  • Red's Dream - Technical director Eben Ostby
  • Small Fry - Director Angus MacLane
  • Tin Toy - Technical director William Reeves
Santi with Ronnie del Carmen
After the short films, the Pixar artists hung out in the atrium where we could talk to them and have them sign, and sometimes draw characters, for us. This was definitely one of the highlights of the day for me. I have signed drawings of Buzz Lightyear by Angus MacLane and the characters Day and Night by Teddy Newton. I was also able to get both Ronnie del Carmen and Enrico Casarosa (director of La Luna, more on that later) to sign my copy of Three Trees Make a Forest (a wonderful book that I strongly suggest you pick up - I purchased my copy from the Cartoon Art Museum). Ronnie made a drawing of Nina while Enrico drew Bambino. I also spent some time talking to William Reeves about the early days of Pixar - I found out they animated one of their short films on a Cray Research computer at the Minnesota Supercomputer Center where I use to work.

William Reeves
There was also a live auction, but I didn't win any of the great artwork or other items that were available. This was OK as I had decided early not to spend much money on the auction - I knew I'd be spending money at the store. Plus, I had decided to go all out and purchase VIP tickets for the event.
You can see some of the auction artwork on right-hand side

My son Sam & myself with La Luna director Enrico Casarosa
After the auction, when most folks were leaving the studio, a small number of VIP guests headed over to Pixar's new building ("Brooklyn"), where we were treated to a special screening of La Luna plus an in-depth discussion with the film's director Enrico Casarosa, who described his inspirations for  and the process of making the film. After a second showing of the film, we went to the rooftop patio for a cheese and wine reception with Enrico and Dr. Johnson.

Hopefully this has given you a good overview of last year's event. Of course, each year is different, but I would guess they all follow a similar pattern. I've been fortunate enough to visit Pixar 3 times, and while all of them have been great, I'd say the CAM benefit was the best. Being able to chat with some of the key figures at the studio, and then seeing a pre-screening of La Luna and the discussion with Enrico was a once-in-a-lifetime event.

This year's benefit will take place on Saturday, November 3. Keep your eye on the museum's Facebook page or their official website for information on tickets and event schedule!

Inside "Brooklyn"
Inside "Brooklyn"

View of "Brooklyn"
Brave pre-production artwork inside Brooklyn

Brave pre-production artwork inside Brooklyn

Drawing of Bambino by Enrico Casarosa

Drawing of Nina by Ronnie del Carmen

Monday, August 13, 2012

Pixarian Start and Birth Dates, August 2012 Edition

In my continuing series on Pixarian start and birth dates, the list for August is unfortunately rather short:
  • Jeremy Lasky (1997) - Jeremy started at Pixar as a layout artist on A Bug's Life. He has worked on many Pixar's films including Toy Story 2, Monsters, Inc., Cars and Toy Story 3. He also was Director of Photography on Cars 2. Prior to coming to Pixar, Jeremy received his Bachelor of Fine Arts degree from the Rhode Island School of Design.
That is the only employee start date I have for August. As for birthdays, 2 important Pixarians celebrate theirs in August. Lee Unkrich, director of Toy Story 3 and co-director of Toy Story 2, Monsters, Inc. and Finding Nemo, celebrated his 45th birthday on the 8th. Pete Doctor, the director of Monsters, Inc. and Up, had his birthday 2 days later on the 10th.

That's it for August! Hopefully I'll have a larger list for September!

Tuesday, August 7, 2012

New Pixar Books now Available

A number of Pixar-related books have been published today. The first is the children's book Finding Nemo Big Golden Book, which I am sure will capitalize on the upcoming re-release of Finding Nemo in 3D.

The second is the Cars Little Golden Book Library, which actually is a collection of 5 separate Little Golden Books about our favorite characters from both Cars and Cars 2.

Interestingly, Amazon has very limited quantities of both these books. When I checked this evening, Amazon reported they had 6 copies of the Finding Nemo Big Golden Book, and only 5 of the Cars Little Golden Book Library. Amazon reports there are more on the way, but I'm curious about the low inventory levels; is this a sign of larger-than-expected interest, or is Amazon keeping tight rein on their inventory?

The last book, and one I am very interested in, is The Toy Story Films: An Animated Journey, by Charles Solomon with Foreword by Hayao Miyazaki and Afterword by John Lasseter. If the name Charles Solomon sounds familiar, it's probably because he also wrote The Art of Toy Story 3! So it makes sense he would write a book on the entire Toy Story trilogy.

The Toy Story Films: An Animated Journey is a hard-cover book contains 192 pages, and as described by the book description on Amazon:
The Toy Story Films: An Animated Journey tells the tale of the incredibly talented visionaries who conceived, developed, and ultimately shared Woody, Buzz, and the rest of Andy’s toys with the entire world. Their story is recounted within these pages through candid interviews with the animators, directors, and voice actors who brought the films to life; artwork that inspired, grew into, or became a part of the iconic movies; and untold details of the growth and development of one of the most lucrative and artistically significant film series ever. It serves as a lesson to us all that we are never too old to use our imagination—and play with our toys.
I'm very excited about the interviews with the animators and directors, especially when discussing the "early years" and their first feature length film. I can't wait to get my hands on this book!

Thanks to both the Pixar Talk and the Pixar Post blogs, who brought these books to our attention a few months ago.