Toy Story Theatrical Release, Pixar's IPO and the Brilliance of Steve Jobs

In honor of the 20th anniversary of the theatrical release of Toy Story (which occurred exactly 20 years ago today), I want to do some historical looks at Pixar and its employees back around the time of Toy Story's release. This post is one I've wanted to write for quite a while.

I don't think there's any argument that Steve Jobs was a marketing genius. I think on his return to Apple in 1996, he had a well thought out strategy for the company and its products and services. To me it's clear he knew exactly where he wanted the company to be in the future and he laid it out perfectly.

But his genius went beyond marketing, which he demonstrated at Pixar. Perhaps his most brilliant and boldest move was taking the company public only a week after the release of their first feature film, Toy Story. To understand, companies usually don't try to access the public markets until they are on firm ground and have a history demonstrating that their business plan is working. Without this confidence, investors will not give the company a high valuation and likely shy away from investing.

Pixar's situation in late 1995 couldn't be farther from solid ground. This was a company that had already lost approximately $50 million. They were going to release their first ever film, never having made anything longer than commercials and some short films. In addition, they were using this new technology called computer generated animation. Everything screamed "Stay Away!"

But Jobs had reasons for his timing, much of which was explained in Ed Catmull's excellent book, Creativity, Inc. To take a step back, Jobs wanted to turn Pixar into a world-class studio. To do this would require a lot of money, more than the 10%-15% of profits they were receiving under the current Feature Film Agreement with Disney. He knew they would need a new agreement with Disney that evenly shared profits between the 2 partners. But he also knew that Disney wasn't going to just hand Pixar such generous terms - Jobs needed the financial footing necessary so that they could leave Disney and go it alone if the 2 companies couldn't come to agreement.

Jobs knew he had the best artists and computer animation engineers assembled at Pixar. He'd also seen how strong of a story John Lasseter and the creative team had constructed.  Then, in the spring of 1995, Jobs saw the power of Disney marketing with the release of Pocahontas. With that knowledge, all the pieces were in place to give him confidence that Toy Story would be a success.

He knew if Toy Story was as big of a success as he expected, Michael Eisner would immediately want to extend their agreement rather than risk Pixar going independent and becoming a formidable competitor. With the film's success he knew an IPO would also be a success, giving him the financial footing he could utilize in his negotiations with Eisner. In his mind, Jobs knew Eisner would have no choice but to agree to his terms.

The Pixar management team in 1995: Lawrence Levy, CFO; Ed Catmull, CTO; Steve Jobs, CEO;
John Lasseter, VP of Creative; Sarah McArthur, VP of Production

By the fall of 1995 the board was set and the game played out exactly as Jobs envisioned. Toy Story was the #1 film its opening weekend and for the year, going on to make almost $362 million worldwide and garnering a 100% score on Rotten Tomatoes. A week after its release, Pixar went public in a very successful IPO, raising almost $140 million for the company and valuing Pixar at close to $1.5 billion. Within weeks, Eisner called to renegotiate their agreement, which led to Disney and Pixar signing the Co-Production Agreement, a 10 year, 5 film agreement entitling Pixar to 50% of all theatrical and merchandise revenue.


I marvel at how Steve Jobs was able to so clearly see the future and predict how Michael Eisner would respond. This demonstrates a deep insight not only in business logic but also human behavior, something I don't think Jobs gets enough credit for. Because of his vision, he was able to put Pixar on the path of stability and accomplish his goal of creating a world-class animation studio.

Pixar News Articles for May 17, 2015

I know I've said it before, but this is such an exciting year for Pixar fans! Yes, the excitement always builds as we approach a new theatrical release. But this year we have not one but two releases, and both are looking to be amazing. Plus, not only are we looking to the future with these new films, but we can look back to the studio's first feature length film, as this year marks the 20th anniversary of Toy Story. Here are a couple news stories surrounding Toy Story. The first is a story that KTLA aired, going into how dependent Pixar was on the success of their first film. I love hearing from some of the long-time employees like Bill Reeves and Tom Porter, and hopefully with more attention being paid to Toy Story we'll be seeing and hearing from more of these artists who really created the computer animation industry.

Twitter user e_pixar retweeted a Variety article which recapped a recent speech John Lasseter gave at the Academy of Motion Picture Arts and Sciences. He began by talking about technology and the part technology plays in film grammar. Then he went on to talk about the importance of learning the fundamentals and continuous learning, the importance of showing your work often, and surrounding yourself with people you trust, who will give you honest and candid feedback. I love these themes of learning and trusted mentors, and how they permeate the Pixar culture. I mentioned this in a post earlier this year where I highlighted some of my favorite Pixar interviews from 2014, and how often these topics came up in those interviews. I strongly recommend listening to the speech; if you want to hear it, head over to the Pixar Post and grab episode 38 of their podcast where they have a recording of it.

As I started writing this article, I noticed I had started another article a few weeks ago that I never finished. That post contained links regarding Brent Schlender and Rick Tetzeli's new book Becoming Steve Jobs: The Evolution of a Reckless Upstart Into a Visionary Leader. The first link was to a great BusinessWeek cover story written back on November 23, 1998, just days before A Bug's Life was released. Titled Steve Jobs, Movie Mogul, the in-depth article covered the beginnings of Pixar back at the New York Institute of Technology, through Job's purchase of the company from Lucasfilm, their film agreements with Disney and even hinted at a future where Disney might buy out Pixar. One quote I enjoyed was from Ed Catmull, who stated "We're not jumping on the bandwagon, we're making it." In addition to the cover story, the BusinessWeek site has links to other related information such as how the company brings a character like Flik to life and some estimates of how much profit Pixar could make from A Bug's Life. I will have to dig deeper into that last one and see how it compares to reality.

Another article related to Becoming Steve Jobs came from Business Insider and talks about how Jobs split his time between Pixar and Apple, and how he was more hands off, and therefore more relaxed, when he was at Pixar. The article states that Apple employees would try to meet with Jobs on Fridays when he was at Pixar as he was less likely to get upset.

A fun factoid, I found these last 2 articles through tweets from long-time Pixar employee AJ Riebli. If you read the BusinessWeek story, you'll recognize that it was Riebli who won the 1998 Halloween contest mentioned in the first paragraph of the article!

This Day in Pixar History: Pixar's 1997 Annual Report

© Pixar

I've written a number of articles on Pixar's financial reports when it was a public company. Today, let's turn time back about 26 years to look at their 1997 annual report, which came out in early 1998. As with many of Pixar's early annual reports, it started with an informative and entertaining letter from CEO Steve Jobs. They also often included a nice little gift - the 1997 annual report came with a VHS copy of the Academy Award winning short film Geri's Game. So I will try and minimize the financial information (much of it has already been covered in the individual quarterly posts I've done) and focus on the other content.

In their 1996 annual report, Pixar warned of a significant decrease in revenue for the upcoming year due to a decrease in revenue from Toy Story. This was logical; Toy Story was released more than 2 years earlier in late 1995, and Pixar's revenue in 1996 were over $35 million, primarily from the film. But in usual Pixar fashion, they were conservative in their guidance for 1997 and the company's revenue were almost as much as in 1996, $34.7 million. In fact, film revenue was higher in 1997 than 1996: $26.9 million versus $18.8 million, or an increase of 43%!! Not too bad given the expectations of a significant decline! The increase in film revenue was due to the Feature Film agreement between Pixar and Disney: as Toy Story revenue began to accrue, Disney was allowed to capture the majority of it to offset their marketing and distribution costs. As Disney's outstanding costs declined, Pixar received a larger percentage of the revenue. By the middle of 1997 Disney had recovered all their costs, allowing Pixar to capture a proportionally higher percentage of the Toy Story home video and merchandise sales.

© Pixar

You might then ask why were overall revenues down in 1997? This was due to 2 areas. First was in patent revenues - in 1996 Pixar received patent revenue of over $9 million from Silicon Graphics (SGI), which dropped to only $1.7 million in 1997. The second area of decreased revenue was in animation services, such as television commercials. Pixar decided to get out of doing animation services for external customers in 1996 to focus on its feature films which caused this revenue drop.

Pixar's gross margins continued to increase, which is amazing since they already were quite high. Overall gross margins increased from 86.6% in 1996 to 92.7% in 1997. Much of the increase came from Pixar getting out of animation services, which had the lowest gross margins of all their segments. Patent licensing revenue had no associated costs and the software segment (which derived revenues from sales of their RenderMan application) had very low costs (1.8% in 1997 versus 3.4% in 1996). Cost of film revenue also dropped to 5.5% versus 8.2%, mostly due to Disney recovering all their costs in mid-1997 which allowed Pixar to receive a proportionally higher amount of the revenue.

Overall, 1997 turned out to be a better year financially than 1996, except for the bottom line. Pixar ended up paying quite a higher amount of taxes ($9.9 million) in 1997 than 1996 ($2.0 million), due to the utilization of net operating loss carryforwards during 1996. In the end, Pixar reported net income of $22.2 million ($0.46/share) in 1997 versus $25.3 million ($0.54/share) in 1996. Still, I'd consider those pretty good results given the guidance Pixar gave at the beginning of the year!

Pixar's cash position also improved in 1997, growing from $161 million in 1996 to $176 million, even with the much larger outflow of cash Pixar experienced. Pixar spent $10 million on computers and other property to run the studio and $7.7 million on the new Emeryville studio. In addition, with the new Co-Production agreement Disney and Pixar signed in early 1997, Pixar was responsible for half of all film development costs, which totaled a little over $27 million. These costs were more than offset by the higher revenues and the $15 million Disney invested in Pixar on the signing of the Co-Production agreement.

© Pixar

OK, enough of the financial information. As I mentioned at the beginning of the post, Steve Jobs started the annual report with the shareholder letter, which he wrote after watching the 1997 Academy Awards. Pixar won their third Oscar that year, this time a Best Animated Short Film award for Geri's Game. Jobs congratulated director Jan Pinkava,  producer Karen Dufilho and the entire Geri's Game team. Besides the Oscar, Tom Duff, Eben Ostby and Bill Reeves each won an Academy Scientific and Technical Achievement award for their work on Pixar's Marionette 3-D Animation System. In addition, Tom Porter won a Scientific Academy Award for his work on digital painting. The addition of these awards brought Pixar's total count of Academy Science awards to 18.

A few other pieces of information Jobs shared:

• Hiring 97 employees during 1997 for a total of 391.
• Expecting to break ground on the new Emeryville studio that summer with a move-in date of early 2000.
• Investing over $8 million annually on research.
• Growing the size of their RenderFarm to 1000 Sun processors and having storage capacity of over 5 terabytes.
• Highlighting that Toy Story 2 had been upgraded to a full theatrical release, and that their still secret 4th film (Monsters, Inc.) was in development and was hoped to go into production by the end of the year.

Jobs was very clear on his goal for Pixar - to make it the second greatest feature animation studio in the world, only behind Disney Animation. As part of reaching this goal, Jobs stated they were trying to release one animated film per year for the next 3 years (A Bug's Life in 1998, Toy Story 2 in 1999 and Monsters, Inc. in 2000). But Monsters, Inc. would end up not being released until 2001 and Pixar did not accomplish the goal of 3 films in 3 years until 10 years later.

© Pixar

Jobs went into great detail on the making of A Bug's Life.  He highlighted how there were over a dozen major characters, and that each one was more complex than any characters in Toy Story. He talked about how a new subdivision surface technology developed for Geri's Game was used to bring more subtlety and lifelike expressions to the characters. He also explained how they were using simulation software for moving crowds of hundreds of ants or creating lifelike movement in blades of grass (Simulation would reach a new level of complexity and use in Monsters, Inc.). Finally, he discussed how the lighting team was challenged to create more sophisticated lighting to support the outdoors environment the film takes place in. He said the results were "breathtaking". Jobs was also excited about the wide-screen nature of the film, stating that it would look "epic".  A Bug's Life was the first film entirely transferred to film via lasers, and Pixar had to develop their own laser film recorder to perform the transfer. And with all the complexity and larger cast of characters, Jobs stated they were using 10 times more processing power to create the film as they did on Toy Story just three years earlier.

© Pixar

Jobs also explained how it was decided to upgrade Toy Story 2 to a full theatrical release. They originally felt that, with most of their key people from the original Toy Story working on A Bug's Life, they would not be able to find and recruit enough talent to meet the higher standard demanded of a theatrical release. But since the success of Toy Story, Jobs stated Pixar had "become one of the hottest places to work in our industry," and had pulled together a team capable of delivering the necessary quality, at that time being led by Ash Brannon and Colin Brady. The decision to expand Toy Story 2 to a full theatrical release occurred after a November, 1997 meeting in which teams from Disney and Pixar watched the completed story reels and felt the story was strong enough to receive a full theatrical treatment.

Readers of this blog are probably familiar with the story that, less than a year after Jobs wrote this letter, Pixar would realize the story wasn't as strong as originally thought, and in late 1998 production was stopped and the story underwent a major overhaul, with John Lasseter, Lee Unkrich and others coming on board to make sure the film was delivered on time.

© Pixar

To finish this post, many of you have probably seen the image above of Ed Catmull, Steve Jobs and John Lasseter. Interestingly, the image's origination was in this annual report but in a slightly different fashion. You can see the original image below, which is of Pixar's executive team at the end of 1997, including CFO Lawrence Levy and Vice President of Production Sarah McArthur.

© Pixar

© Pixar

This Day In Pixar History: Tia Kratter Quits (and Quits Again)!

It's April Fools Day, so what better way to celebrate it than with a story of April Fools pranks! Tia Kratter is a long time Pixar employee, starting her career as a digital painter on Toy Story in 1993.  Since then she has been the shading art director on a number of films including A Bug's Life, Monsters, Inc., Cars and most recently Brave.

Growing up in a family of practical jokers, she decided to play an April Fools joke on her co-workers. So on April 1, 1998 she sent a company-wide email saying she was quitting. She fooled quite a few people (she even got a "Goodbye Tia" cake!), and has quit every year since (at least through 2009). She even fooled CEO Steve Jobs on 3 separate occasions! You can tell Tia is a true Pixarian, as her reasons for quitting are always original, such as becoming the art director for Tron 2, going to work in a wax museum and (my favorite) air brushing monster trucks!

Not to be outdone, her co-workers did get her back one year. I won't say how - if you want to find out go to the Disney/Pixar official YouTube channel and watch the "Tia Quits" Studio Story, which is narrated by Tia Kratter and Pixar producer Jonas Rivera.

I would love to hear if Tia has kept this tradition going and if so, what new ways she has come up with for quitting!

This Day in Pixar History: Pixar and Disney Film Agreements

In this look at Pixar history, I wanted to dig into the two film agreements between Pixar and The Walt Disney Company. These agreements launched Pixar from being a money-losing software and animated commercial company into creating Toy Story and all its other animated feature films.

Discussions surrounding the first agreement began in late 1990 when Peter Schneider, head of Disney Feature Animation, met with Pixar management to discuss the possibility of creating a feature film. As an aside, this was not the first interaction between Disney and Pixar. Back in the late 1980s, when Pixar was primarily a hardware company, Disney purchased a large number of the Pixar Image Computers for their Computer Animated Production System (CAPS). Disney was extremely happy with the system and this success likely helped pave the way for the feature film deal (If you'd like to hear more about this early Pixar history and the Pixar Image Computer, you should listen to The Pixar Post's episode 14 podcast where TJ, Julie and I discuss these and many other topics).

Discussions continued throughout the rest of 1990 and into 1991, when John Lasseter made his buddy movie pitch to Disney Studios chairman Jeffrey Katzenberg. Katzenberg loved the idea, and the Feature Film Agreement was finalized and announced in the spring of 1991. This agreement was for the development of 3 full-length computer animated feature films and would last through the end of the decade. Pixar would develop and produce the films while Disney was responsible for marketing and distributing them. The agreement called for Disney to reimburse Pixar for almost all production and development costs of the film. In return, when the film was released, Disney would initially receive the majority of all revenue to recover the amounts paid to Pixar, plus its marketing and distribution costs. Once production and marketing costs had been reimbursed, Disney would continue to receive the bulk of any additional revenue from the distribution of the film and associated merchandise such as toys and home videos, while Pixar would be eligible to receive approximately 10% - 15% of the remaining profits. Finally, Disney owned the rights to the characters developed under the agreement, plus controlled the development of any sequels.

Cover of Pixar's first annual report,
which covered the Co-Production
agreement in detail

This agreement was in place until February 24, 1997, when Disney and Pixar announced a new 10 year, 5 film Co-Production Agreement, starting with A Bug's Life. This new agreement split all costs and profits equally between Disney and Pixar, after Disney received a small distribution fee. The agreement covered revenue from the theatrical and international releases plus home video and merchandise sales. In addition, the films would be equally branded as Disney-Pixar and co-owned by both Disney and Pixar, while Disney would have exclusive rights to market and distribute the films. Disney would become an investor in Pixar, purchasing 1 million shares with the option of buying up to 5% of Pixar. As for ownership of the films and characters, the Co-Production Agreement called for Disney and Pixar to mutually agree to any derivative works, but if an agreement couldn't be reached, Disney had the final say. Pixar had no rights to use or distribute any characters or elements from any of the films without first receiving a license from Disney. The 5 films that were produced under this agreement were A Bug's Life, Monsters, Inc., Finding Nemo, The Incredibles and Cars (Toy Story 2 was also produced under the Co-Production Agreement, but since it was a derivative of Toy Story, it was not counted as one of the 5 Co-Production films).

To see how much Pixar gained from the new agreement, let's look at revenue and costs for their first two films, Toy Story and A Bug's Life. From numbers in Pixar's annual reports, the studio made approximately $55M from Toy Story through 1998, while the film earned $362M worldwide, not including home video and other merchandise sales. This film was developed under the original Feature Film Agreement, and Disney was responsible for paying almost all development costs. So we can estimate almost all of the $55M was profit. In comparison, A Bug's Life, which had $363M in worldwide revenue and was  accounted for using the Co-Production Agreement, had brought in almost $115M by the end of 2000. While Pixar was responsible for half of all production costs for A Bug's Life, that amounted to less than 30% of film revenue, meaning Pixar's net income from A Bug's Life was over $80M. So while the original agreement was a breakthrough for Pixar, given it was an unknown and untested studio teaming up with the leader in the animated film industry, it is obvious the new Co-Production Agreement was a much better arrangement in terms of economics.

The Co-Production Agreement was announced just weeks before Pixar's 1996 annual report (their first as a public company) was released, and in the report CEO Steve Jobs did an excellent job explaining why Pixar made the new agreement. The first reason for the new agreement was better economics, which from the previous paragraph we can see worked out perfectly.

The second reason was even more important to the long-term strategy of Pixar. As Jobs explained in the annual report, their goal was to build a world-class studio. In the eyes of Steve Jobs, there were only 2 significant brands in the film industry at the time - Disney and Steven Spielberg. Jobs wanted Pixar to become the third. To accomplish this goal, the new agreement gave Pixar more brand recognition than the first agreement. All products would be equally branded Disney and Pixar, including feature films, home videos, derivative works (sequels), toys and merchandise.

Storyboards of how the new co-branding in films will occur, © Disney/Pixar

I was fascinated to also read that Pixar had contemplated going it alone once the original 3 film agreement expired in 2000, but in the end decided against this direction. As Jobs writes in the annual report,

Going it alone was certainly tempting, especially in the heady atmosphere surrounding Toy Story's success. But it would have been an exercise in hubris.

He goes on to explain the costs and risks of taking on the marketing and distribution functions, noting that marketing can be as expensive as, if not more than, the development of a film. He also points out that Pixar had little experience in marketing, and it was far from their core capabilities of creating memorable animated films. Jobs realized that they would have to grow the company and bring on people with completely different skill sets than the current environment of artists, engineers and production experts. Doing so would have diverted management attention, possibly causing a loss of focus and destroying the unique culture they had built (I have a whole series of posts regarding Pixar's culture stuck in my head, I hope to get it written down someday). Steve Jobs is often referred to as egotistical and arrogant, but I think this gives a much different picture, someone who is savvy, humble and understands the importance of business focus and company culture.

The Co-Production Agreement was in place until 2006, when Pixar was bought out by Disney, just months before the last film of the agreement, Cars, was released. By then, the relationship between Disney and Pixar had soured dramatically to the point where Pixar was looking for a new distribution partner and Disney had plans to move ahead with development of Toy Story 3 without the support of Pixar. That was not a happy time, and is good material for a future blog post!

This Day in Pixar History: Pixar 1996 Annual Report

Once again, I'm back looking at the financial earnings reports from Pixar when they were an independent public company. In my previous posts, I covered their quarterly earnings for the first, second and third quarters of 1996. In this post I'm going to cover their 1996 annual report.

1996 Annual Report cover

For their first year as a public company, Pixar did quite well. The studio ended the year with over $38.2 million in revenues, more than 200% higher than the $12.1 million made in 1995. Almost half of the revenue, $18.8 million, came from their first feature film, Toy Story, released November 22, 1995. $9.1 million came from patent licensing, primarily from Silicon Graphics. Another $6.3 million came from software, such as RenderMan licenses and their 2 Toy Story-based CD-ROM products, The Toy Story Animated Storybook and The Toy Story Activity Center. Finally, they made another $3.9 million from television commercials and other animation services.

Toy Story 2 art

Gross margins for the year were amazing - over 87%, higher than the 80% margins in 1995. As I mentioned in my post for the 3rd quarter of 1996, Pixar had very low cost of revenue. According to the Feature Film Agreement signed with Disney in 1991 (and the subsequent CD-ROM agreement), Disney reimbursed Pixar for almost all costs related to the development and production of Toy Story and the CD-ROM titles. In addition, there were no costs of revenues associated with their licensing revenue. Their total cost of revenue was only $4.7 million, of which $3 million was attributed to their television commercials and animation services. Pixar had announced in 1996 they would be getting out of the commercial business and moving those employees to their feature film development teams. As this segment had the lowest margins (23% vs 95% for the other business segments), it is not surprising that Pixar made the decision to exit it.

Research & Development expenses increased from $4.1 million in 1995 to $7.0 million in 1996, primarily in support of their software tools like RenderMan, Marionette (their animation system), and Ringmaster (a production management software system). General & Administrative expenses increased 87% from $3.0 million to $5.6 million. Pixar stated in the annual report that they expected G&A expenses to continue to increase, partly due to intense competition (and the corresponding higher salaries) for animators and other creative personnel. Pixar also experienced an increase in Sales & Marketing expenses in 1996 compared to 1995 (from $1.6 million to $1.8 million) due to the release of Toy Story and becoming a public company.

Net Income for the year was over $25.3 million, or $0.54/share, compared to only $1.6 million ($0.04/share) in 1995. This is a net profit margin of over 66%! Pixar's balance sheet was also very strong, courtesy of their IPO in late 1995 and the good results in 1996. Cash and short-term investments grew from $144.3 million in December, 1995 to $161.0 million in December, 1996, and liabilities were only $6.7 million with not a dollar of debt on the balance sheet!

Even with all this good news, Pixar raised concerns regarding their future financial situation. They stated they expected a substantial decline in their operating results in 1997. The primary cause of this was the expected drop-off in revenue from Toy Story. They only expected revenue from the Toy Story home video release, and the majority of that would occur in the first half of the year. And according to their agreement with Disney, they received a lessor amount of home video revenue than theatrical revenue.

In addition, Pixar had decided in early 1997 to discontinue its CD-ROM production business. The business had been successful, but Pixar wanted to reassign most of the 60 employees in that department to other groups such as feature film production. This meant Pixar would experience a "material adverse impact" (accounting lingo for "we're going to make less money than we expected") on its operating results in both 1997 and 1998.

Pixar also warned of a decline in RenderMan revenue, as the company focused more on their film business, plus they expected increases in operating expenses from continued growth in their operations and research and development efforts.

Finally, they had no new films due for almost 1 1/2 years. A Bug's Life was to be released in late 1998, and Pixar didn't expect to recognize any revenue until later half of 1999. Also, at this point, Toy Story 2 was still scheduled to be a direct-to-video release, also in late 1998, which meant no revenue from that would be received until 1999. I did find it interesting though that they mention the possibility of releasing Toy Story 2 to theaters rather than direct-to-video. I had always thought that decision had been made late in its production.

It should not be much of a surprise then, given all the cautionary talk on decreasing revenues and increasing expenses, that Pixar stock was stuck in the low to mid teens. I made my first purchase of Pixar stock in April, 1997 for $15/share. Obviously, I was in it for the long term!

I am probably one of those rare (some may say weird) people who enjoy reading annual reports, especially the ones from Pixar! They always started out with an entertaining and informative letter from Chairman and CEO Steve Jobs. His letter in this report was 15 pages long, and include some beautiful drawings, pre-production artwork and storyboards from Toy Story 2, Geri's Game and The Adventures of André and Wally B. In addition to discussing the previous year's results, Jobs provided a good summary of the what's and why's on the newly signed co-production agreement with Disney (I will discuss this agreement in detail in a future post). He also discussed Pixar's 3 core capabilities that would enable them to become a world-class animation studio: Creative, Technical and Production. The annual report also discussed their purchase of land in Emeryville to build a new studio facility. Pixar had put down a $300,000 non-refundable deposit for the land, and while they had not made the final decision to move ahead with building the new studio, the report stated that was their intention.

The next post in this series will cover results from the first quarter of 1997.

Back cover

This Day in Pixar History: Pixar IPO

How many of you remember 1995? I would guess there are a few of you who weren't even born! But 1995 had a number of significant events including Finland winning the ice hockey world championship, Microsoft releasing Windows 95, Netscape becoming a public company and the final original Calvin and Hobbes comic strip being published! Of course, it was a big year for Pixar as they released Toy Story, their first and the first ever full length computer animated feature film! You might think the folks at Pixar would be nervous leading up to the film's release, but CEO Steve Jobs must have been confident as he scheduled Pixar's IPO exactly one week after the theatrical release, on November 28, 1995.

Just like the Netscape IPO a few months earlier, the Pixar IPO was highly anticipated. The IPO brought 6.9 million shares to the public market at $22/share. The proceeds from it provided Pixar with almost $140 million which was used to expand the studio as they worked on producing A Bug's Life and Toy Story 2. The stock opened at $47/share, more than double its offering price, and closed its first day of trading at $39, valuing the company at almost $1.5 billion! As Steve Jobs owned approximately 30 million shares, he became an instant billionaire that day.

Looking back, Steve Jobs was right to be confident. Toy Story ended up becoming an immediate classic, earning a perfect 100% rating on Rotten Tomatoes and becoming the highest grossing film of 1995, earning close to $362 million worldwide.

Pixarian Start and Birth Dates, October 2012 Edition

Wow, this is a busy month for people to both start at Pixar and have their birthdays! First, some Pixarians who started at Pixar during October:

• Dylan Brown (1995) - Dylan Brown is the creative director for Pixar Canada, where the animation is done for shorts like Partysaurus Rex and Air Mater. Brown has worked on films beginning with A Bug's Life and including Monsters, Inc., The Incredibles and Ratatouille. Brown has lead Pixar Canada since its inception in 2010.

• Matt Jones (2010) - Matt Jones is a story artist for Pixar. According to his website, he saw John Lasseter on TV talking about Knick Knack, and decided then that was what he wanted to do.

• Shawn Krause (1994) - Shawn started his Pixar career working on the studio's first feature film, Toy Story, as an animator and layout artist. He has worked as an animator on a number of other films such as Toy Story 2 and Finding Nemo. He was the Directing Animator on Up and Supervising Animator on Cars 2. Krause has also been involved in theme park attractions, working on The Seas with Nemo and Friends at Epcot in Florida. You can see Shawn visiting Disney's Art of Animation Resort in this YouTube video. Krause graduated from the University of Missouri, Columbia with a degree in Art and a Minor in Art History and Archaeology. He studied character animation for a year at California Institute of the Arts (CalArts) before starting at Pixar.

• John Lasseter (1984) - John Lasseter was hired by Ed Catmull while Catmull was working in the Computer Division of Lucasfilm. Catmull knew he wouldn't be able to hire Lasseter as an animator, so John was given the title of Interface Designer. While at Lucasfilm, Lasseter animated the short film, The Adventures of André and Wally B. He directed a number of Pixar's early short films like Luxo Jr., Tin Toy and Knick Knack. He also directed the first 3 feature length films (Toy Story, A Bug's Life, Toy Story 2), plus Cars and Cars 2. Lasseter is now the chief creative officer at both Pixar and Disney Animation Studios. Prior to working at Lucasfilm, Lasseter was in the inaugural class of the Character Animation program at CalArts, along with Brad Bird and John Musker. While at CalArts, he received 2 Student Academy Awards for Animation for his films Lady and the Lamp and Nitemare (both which will be on the upcoming Pixar Short Films Collection, Volume 2). He received his BFA in film in 1979, and went to work at Disney.

• Mark Nielsen (1996) - Mark joined Pixar as a modeling and shading coordinator on A Bug's Life. He has worked on many of Pixar's feature films, such as a lighting manager on Monsters, Inc., story and crowds manager on Cars, Production Manager on Up and the Associate Producer on Cars 2. Nielsen has been interested in the behind-the-scenes activities for films since watching Star Wars at age 7. Nielsen graduated from Chico State University with a degree in English and Journalism, and did production work on a number of films prior to coming to Pixar, including The Joy Luck Club and James and the Giant Peach.

• Denise Ream (2006) - Ream started her Pixar career as an Associate Producer on Up. She also produced Cars 2, and has a character named after her (Denise Beam). Prior to Pixar, Ream spent 13 years at ILM, working on films like Harry Potter and the Sorcerer's Stone and Star Wars: Episode III - Revenge of the Sith.

Apurva Shah (left)

• Apurva Shah (2001) - Apurva Shah is an effects wizard, lending his talented hand to films such as Finding Nemo and Ratatouille, the latter which won him an award from the Visual Effects Society. He was Supervising Technical Director on the short films Your Friend the Rat and Tokyo Mater. You can see some of the papers he has authored in Pixar's online library. Shah has taught at the Art Institute, Academy of Art University in San Francisco and Ringling School of Art and Design. Prior to coming to Pixar, Shah worked at Dreamworks on Shrek and Antz, and did visual effects for the live action film Batman Forever.

Finally, the late Joe Ranft started at Pixar in 1992. One of the early, key artists at Pixar (along with Lasseter, Pete Docter and Andrew Stanton), Ranft was Pixar's first Head of Story and made large contributions to a number of early Pixar films from Toy Story through Cars, where he received Director credit alongside Lasseter. He also voiced a number of memorable characters such as Lenny the binocular from Toy Story, Heimlich the caterpillar in A Bug's Life, Wheezy in Toy Story 2 and Jacques in Finding Nemo. Prior to Pixar, Ranft worked on many animated films for The Walt Disney Company, including Beauty and the Beast, The Lion King, The Nightmare Before Christmas and James and the Giant Peach. Sadly, Joe died in a car accident on August 16, 2005, near the end of production on Cars. Joe was a comedic genius and loyal friend to many people inside and out of Pixar. From the number of tributes and comments across the web and on sites like YouTube and his Facebook page, it is easy to see the impact he has had. One of the most poignant tributes was done by John Musker for what would have been Ranft's 50th birthday.

Now for birthdays:

• Enrico Casarosa, October 19, 1970 - Casarosa joined Pixar in 2002 as a story artist. He has worked on films such as Cars, Ratatouille and Up. He directed the short film La Luna, and received an Academy Award Nomination for Best Animated Short Film. Casarosa is now working as Head of Story on Bob Peterson's The Good Dinosaur. Prior to coming to Pixar, Casarosa worked at Blue sky Studios on films like Ice Age.

• Pete Docter, October 9, 1968 - Pete Docter was born and grew up in my home state of Minnesota! He was the third animator hired at Pixar, after John Lasseter and Andrew Stanton. His early Pixar work was directing and animating commercials. He was one of the primary writers and animators of Pixar's first feature film Toy Story. He also worked on A Bug's Life and Toy Story 2, before being asked by John Lasseter to direct Monsters, Inc. Docter also directed Up, and is now working on the untitled Inside the Human Mind project. Docter is very musical, and comes from a musical family; if you watch the special features on the Up Blu-ray/DVD you may see him playing with the orchestra as they record the score.

• Ralph Eggleston, October 18, 1965 - Eggleston is a long-time Pixar employee, starting in 1992 to work as Art Director on Toy Story. Since then he has done visual development on Monsters, Inc., production design on Finding Nemo and WALL•E, and was the Art Director on The Incredibles. He was one of the writers on Monsters, Inc., and wrote and directed one of my favorite short films, For the Birds. Eggleston's name was used as inspiration for the moving company in Toy Story (Eggman Movers). 

• While not a Pixar employee, I must give a special shout-out to composer Michael Giacchino, born on October 10, 1967. Giacchino has done a number of scores for Pixar feature and short films such as The Incredibles, Ratatouille, Up, Cars 2 and One Man Band. When not composing music for Pixar, he's doing it for other films such as Mission: Impossible - Ghost Protocol, John Carter, Super 8, Star Trek and television shows like Lost and Alias. You can check out clips of his work on his website. I've never met Michael but was at his session at Pixar Weekend at Epcot a couple years ago. He seems like a genuinely nice person, and someone who would be a blast to just hang out with!

• Another shout-out to the late Ollie Johnston, who was born on Halloween in 1912. Johnston was one of Walt Disney's Nine Old Men, the main animators at The Walt Disney Company responsible for many classic animated films such as Snow White and the Seven Dwarfs, Pinocchio and Bambi. Many Pixarians, including Lasseter and Brad Bird, have found inspiration from Johnston and the other Nine Old Men. Bird even gave cameo roles to Johnston in two of his films, The Iron Giant and The Incredibles. Johnston passed away on April 14, 2008. While working on this post I stumbled across the official site for Johnston and Frank Thomas, another of the Nine Old Men and a close personal friend of Johnston. I strongly recommend this site if you want to learn more about these 2 friends and animation giants.

In sad news, Steve Jobs passed away last year on October 5. William at A113Animation wrote a wonderful piece on the one year anniversary of Steve's passing that is more eloquent than anything I could ever come up with, so I won't try. But I can say that two of the companies Steve led (Pixar and Apple) probably have had more impact on my life and of my family than any other company.
 

Also, Pixar animator Glenn McQueen passed away on October 29, 2002 at the age of 41. He started at Pixar in 1994 as an animator on Toy Story, and was Supervising Animator on their next 3 films, A Bug's Life, Toy Story 2 and Monsters, Inc. He passed away during the production of Finding Nemo. McQueen was described as "the heart and soul of the animation department" by John Lasseter. Finding Nemo was dedicated to McQueen, and there is a very nice tribute to him on the Finding Nemo DVD.