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Pixar Prepared To Leave Disney Behind

In a February 6, 2003 fourth quarter and fiscal year earnings teleconference, Steve Jobs confirmed that Pixar was in initial talks with other major motion picture studios, heightening the speculation that Pixar may not renew its partnership with Disney once the seventh film under the current deal is completed. Under the conditions of the existing agreement, Pixar had the right to begin negotiations after the fifth film was delivered. That feature, FINDING NEMO, is to be handed to Disney in March for a scheduled release date of May 30, 2003. Pixar, which currently splits profits with Disney as well as paying Disney a distribution fee, is looking to get more of the profits from future films. "Our first choice is to continue our relationship with Disney in a new form," Jobs said. "While it is far from certain at this point whether we will continue the relationship or not, our seven-picture deal has been one of the most successful partnerships in Hollywood history." The four released films under the deal: TOY STORY, A BUGS LIFE, TOY STORY 2 and MONSTERS, INC. have earned a combined domestic box office total of over $855 million. For the fiscal year ended December 28, 2002, Pixar earned $90 million, or $1.68 per share, on revenues of $201.7 million. These results compare to earnings of $36.2 million, or $0.71 per diluted share, on revenues of $70.2 million for the full year ended December 29, 2001. The higher than anticipated earnings were based on the home video revenues from MONSTERS, INC. and the company's other library titles during the fourth quarter. As of the year end, MONSTERS, INC. had sold 30.4 million units worldwide, making it 2002's top selling home video release of the year. "2002 was the most financially successful year in Pixar's history, driven by the phenomenal success of MONSTERS, INC. and our growing film library," said Pixar CEO Steve Jobs. "Our next film, FINDING NEMO, may be Pixar's best film to date."

Karl Cohen meets the key players behind Pixar's MONSTERS, INC., and describes why there is that certain Pixar magic.