Sunday, December 14, 2014

Pixarian Birth and Start Dates, December, 2014 Edition

Wow, it's been almost a year since I last posted a birth and start dates article! Where did the time go? Well, let's jump right in with some Pixar employees who started with the company in the month of December:
  • Mark Andrews (2000) -
    Before Mark came to Pixar, he had been a storyboard artist for a number of animated films, including The Iron Giant, for which he won an Annie Award. Andrews also worked on animated television shows such as The New Adventures of Jonny Quest and Star Wars: The Clone Wars (which he won an Emmy award). Mark has also worked on live action films including Spider-Man, and was second-unit director and co-writer on Andrew Stanton's John Carter. Andrews came to Pixar with Brad Bird and others in 2000, first working as story supervisor on The Incredibles. He also serve as a storyboard artist on Cars, then again as story supervisor on Ratatouille. His latest effort was as co-writer and co-director of Brave. According to an interview the A113Animation blog did with Brave Story Supervisor Brian Larsen, Andrews is working with Larsen in the early stages of development of an idea for a new film.
  • Jay Ward (1998) - Jay started in the art department as a production assistant on Monsters, Inc. Then in 2001, he began working on Cars.
    With his deep knowledge of cars, he quickly became a key contributor on the film's development, acting as consultant to co-directors John Lasseter and Joe Ranft, plus as the character team manager. Ward's passion for automobiles has led to him being named the Guardian of the Cars franchise, and he has worked on Cars 2 plus other Cars-related efforts. Ward also organizes the annual Motorama car show at Pixar. Prior to coming to Pixar, Ward received a Bachelor of Fine Arts in Illustration from the California College of the Arts.
And now for some birth dates:
  • Jordy Ranft (December 24, 1991) - Jordy is the son of late Pixar story artist Joe Ranft. He is an actor and poet, and voiced Tad in Finding Nemo, and one of the ants in A Bug's Life. Jordy has a sister, Sophia, who has also done voice work for Pixar, voicing one of the monster children in Monsters, Inc. 
  • Scott Morse (December 4th) - Morse studied character animation at CalArts in the early 1990s, then went to work at Chuck Jones' Film Productions. At Pixar, Scott has been a story artist on Ratatouille, Cars 2 and Brave. He has also been active with a number of the Cars Toons episodes, with writing credit on episodes such as Time Travel Mater, Unidentified Flying Mater and Monster Truck Mater. He is now serving as director for the next episode, To Protect and Serve. Morse is also a well-known author of a number of graphic novels and other books, including the Magic Pickle series and the rare The Ancient Book of Myth and War, which he did with other Pixarians like Lou Romano, Nate Wragg and Don Shank.
  • Andrew Stanton (December 3, 1965) -
    Many of you may know that when Pixar started creating animated television commercials in the late 1980s, the first animator John Lasseter hired was Stanton. Since then, Stanton has written and directed a number of Pixar films, having writing credits on Pixar's first 5 films, co-directing A Bug's Life and having directed Finding Nemo and WALL•E. Stanton has also done a number of character voices including Zurg in Toy Story 2 and Crush in Finding Nemo. Stanton is busy directing Finding Dory, coming out June 17, 2016. 
  • Ronnie del Carmen (December 31, 1959) - Ronnie was born in the Philippines and received a fine arts degree from the University of Santo Tomas. He worked at both Warner Brothers and Dreamworks before coming to Pixar in 2000. His first Pixar effort was story supervisor for Finding Nemo.
    He also did storyboard work on Ratatouille and was story supervisor on Up. del Carmen directed the wonderfully cute short film Dug's Special Mission, and is now co-director of next year's Inside Out. Ronnie has also published a number of books such as My Name is Dug, Three Trees Make a Forest (along with Tadahiro Uesugi and fellow Pixarian Enrico Casarosa), plus And There You Are, featuring beautiful drawings of Nina (from del Carmen's Paper Biscuit series) plus a look into his story and character creation process. I love both this book and Three Trees Make a Forest, and find myself often going back and flipping through the pages admiring his illustrations.
  • Eugene Levy (December 17, 1946) - Levy is a well-known Canadian actor and comedian, having been in films such as Night at the Museum: Battle of the Smithsonian, Cheaper by the Dozen 2 and both Father of the Bride films. He has also done voice acting in Curious George and Over the Hedge. His first Pixar effort will be for Charlie, Dory's father in Finding Dory
Sadly, December has also held some Pixar-related losses. Japeth Pieper, an artist on Cars, Ratatouille and WALL•E, passed away on December 7, 2010. Pixar dedicated Cars 2 to him. And exactly 1 year ago today on December 14th, 2013, the amazing Peter O'Toole, the voice of Anton Ego in Ratatouille, passed away.

Sunday, December 7, 2014

This Day in Pixar History: Pixar Earnings Report, 3rd Quarter 1998

Welcome back to another look at Pixar's earnings reports from when the studio was a standalone company. Today I am looking back at their 3rd quarter 1998 results.

As had been the case for a few quarters, revenues for Pixar had been dropping as Toy Story revenue was drying up, and their next film, A Bug's Life, wouldn't be released until later in 1998. Total revenues for the quarter were $2.5 million, down over 50% from $5.3 million in the 3rd quarter of 1997. This was due to a 63% drop in film revenue, from over $3.5 million to $1.3 million, but that's not the full story. As part of the Feature Film Agreement between Disney and Pixar, once Disney recovered all their marketing and production costs, Pixar was eligible to receive a higher percentage of the revenue. Disney ended up recovering all their costs earlier than expected, so in the 3rd quarter of 1997, Disney paid Pixar an additional $1.8 million to catch up for the higher percentage. Removing this one-time item, film revenue only dropped $400,000. There was also no animation service or patent licensing revenue in 1998, compared to almost $1 million in 1997. There was an uptick in software revenue, growing from $900,000 to $1.2 million, which I think can be mostly attributed to their purchase of PEI which had occurred in June of 1998.

Not surprisingly, gross profits for the quarter also dropped to $2.2 million from $4.7 million in the 3rd quarter of 1997. There was a large increase in software cost of revenues due to the PEI acquisition. As discussed in the quarterly report, Pixar was amortizing a large portion ($2.7 million) of the purchase price for PEI over the next 3 years. Basically, Pixar would match amortized expenses against any related revenue so there would be no gross profit until the $2.7 million had been accounted for.

Even though software cost of revenues increased dramatically, gross margins stayed the same at 88% year-over-year. This was due to the high cost of animation services that was recorded in 1997 - $534,000 in costs against $896,000 in revenue for a gross margin of only 40%. While 40% gross margins would be good in many businesses, that was less than half of what Pixar was generating with their film and software businesses, and I'm sure had a large influence on the company deciding to exit that business segment.

Expenses for the quarter were $3 million, up from only $658,000 in 1997. But I should point out that 1997 had an extraordinary event which I discussed in my post of that quarterly report: due to Disney and Pixar signing the new Co-Production Agreement in early 1997, Disney was responsible for paying half of all the costs Pixar incurred in developing films. At the time of signing the agreement, both A Bug's Life and Toy Story 2 had been in production since 1996, so Disney was responsible for paying half of those expenses, resulting in a $2.2 million reimbursement.

In the end, net income for the quarter was $867,000 (net profit margin of 35%)  or $0.02/share versus $3.6 million (68%) or $0.08/share in 1997, but given the 2 extraordinary revenue and expense reimbursements that occurred in 1997, it's not an apples-to-apples comparison.

Pixar also continued to burn through cash, although fortunately they still had a large amount of cash from their IPO. Cash and short-term investments were $153.2 million at the end of the 3rd quarter of 1998, down from $176.0 million at the beginning of the year. Much of the cash burn was due to development and production costs for A Bug's Life, Toy Story 2 and Film Four (the title for Monsters, Inc. before it was green-lit), which totaled almost $24 million for the first 3 quarters of 1998. Another $8.8 million had been spent for new computers and other equipment.

Pixar's stock had a wild ride during the quarter. Whereas the first half of the year was good for shareholders, with the stock tripling from around $20 to the mid-$60s by July, the stock dropped over 50% to below $28 by the end of August. It recovered somewhat and ended the quarter around $40. While I was a long-term buy-and-hold Pixar investor (making my first purchase in early 1997 and holding on through the merger with Disney), the stock's volatility made it possible to do some "stock trading". Pixar's stock seemed to often follow the "buy on rumor, sell on fact" axiom. In early July, 1998, with the price over $60, there was a lot of optimism about the company with A Bug's Life soon to be released and Toy Story 2 being upgraded to a full theatrical sequel. But it seemed premature for the stock price to be increasing so rapidly since it would be close to a year before any income from A Bug's Life would be recognized. I sold about half my holdings in early July, and would buy back all that and more in the spring of 1999 at a 30% discount.