-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MNSxUTFS6kvC84BPAr+Tigc/5BrXIhnahvpDs/crGHtPBWT9+DN8CrkLfFre3KH6 S6DY5pOlhnMyaA05iY7tsw== 0000891618-98-002036.txt : 19980504 0000891618-98-002036.hdr.sgml : 19980504 ACCESSION NUMBER: 0000891618-98-002036 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980430 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIXAR \CA\ CENTRAL INDEX KEY: 0001002114 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 680086179 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-26976 FILM NUMBER: 98605607 BUSINESS ADDRESS: STREET 1: 1001 WEST CUTTING BLVD CITY: RICHMOND STATE: CA ZIP: 94808 BUSINESS PHONE: 5102364000 MAIL ADDRESS: STREET 1: 1001 WEST CUTTING BLVD CITY: RICHMOND STATE: VA ZIP: 94804 10-K405/A 1 AMENDMENT NO.1 TO FORM 10-K 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A Amendment No. 1 To ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR COMMISSION FILE NUMBER ENDED 0-26976 DECEMBER 31, 1997 PIXAR (Exact name of registrant as specified in its charter) CALIFORNIA 68-0086179 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 1001 WEST CUTTING BOULEVARD, RICHMOND, CALIFORNIA 94804 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (510) 236-4000 ---------------------- Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, NO PAR VALUE PER SHARE (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ As of March 18, 1998, there were 43,515,276 shares of the Registrant's Common Stock outstanding and the aggregate market value of such shares held by non-affiliates of the Registrant (based upon the closing sale price of such shares on the Nasdaq National Market on March 18, 1998) was approximately $403,074,076. Shares of Common Stock held by each executive officer and director have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. DOCUMENTS INCORPORATED BY REFERENCE Certain sections of Pixar's Annual Report to Shareholders for the year ended December 31, 1997 (the "1997 Annual Report") are incorporated by reference in Parts II and IV of this Form 10-K to the extent stated herein. ================================================================================ 2 EXPLANATORY NOTE This Annual Report on Form 10-K/A ("Form 10-K/A") is being filed as Amendment No. 1 to the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1998 ("Form 10-K") for the purpose of amending Items 10, 11, 12 and 13 of Part III of Pixar's Form 10-K. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Name Age(1) Position with Pixar - ------------------------------------------- ------ ------------------------------------- Steve Jobs................................. 43 Chairman, Chief Executive Officer and Office of the President Larry W. Sonsini........................... 57 Director Skip M. Brittenham......................... 56 Director Joseph A. Graziano......................... 54 Director Jill E. Barad.............................. 46 Director
- ---------------------- (1) As of April 20, 1998. Mr. Jobs is a co-founder of Pixar and has served as its Chairman since March 1991, as its Chief Executive Officer since February 1986 and in the Office of the President since February 1995. He has been a director of Pixar since February 1986. In addition, Mr. Jobs currently serves as interim Chief Executive Officer and as a member of the Board of Directors of Apple Computer, Inc. ("Apple"). Mr. Jobs was also a co-founder of NeXT Software, Inc. ("NeXT"), which developed and marketed object-oriented software for client/server business applications and the Internet, and served as the Chairman and Chief Executive Officer of NeXT from October 1985 until February 1997, when NeXT was acquired by Apple. Mr. Jobs then served as an advisor to Apple on a limited basis until assuming his current role as interim Chief Executive Officer at Apple. Mr. Sonsini has served as a director of Pixar since April 1995 and served as Secretary from April 1995 to October 1995. He has been an attorney with the law firm of Wilson Sonsini Goodrich & Rosati since 1966 and currently serves as the Chairman of the firm's Executive Committee. Mr. Sonsini also serves as a director of Lattice Semiconductor Corporation and Novell, Inc. Mr. Sonsini received A.B. and L.L.B. degrees from the University of California, Berkeley. Mr. Brittenham has served as a director of Pixar since August 1995. He has been an attorney with the law firm of Ziffren, Brittenham, Branca & Fischer, an entertainment law firm, since 1978. Mr. Brittenham currently serves on the board of, or is a trustee of, numerous charitable organizations, including Conservation International, the American Oceans Campaign, the Environmental Media Association and the Alternative Medical AIDS Foundation. Mr. Brittenham received a B.S. from the United States Air Force Academy and a J.D. from the University of California at Los Angeles. Mr. Graziano has served as a director of Pixar since August 1995. From June 1989 to December 1995, he was the Executive Vice President and Chief Financial Officer of Apple and was a member of the Board of Directors of Apple from June 1993 until October 1995. From May 1987 to June 1989, Mr. Graziano served as Chief Financial Officer of Sun Microsystems, Inc. and from October 1981 to May 1985 as Chief Financial Officer of Apple. In addition, he has held accounting positions with various technology companies in the Silicon Valley. Mr. Graziano also serves as a director of IntelliCorp, Inc. Mr. Graziano received a B.S. in accounting from Merrimack College and is a certified public accountant. Ms. Barad has served as a director of Pixar since July 1997. She has been Chairman & Chief Executive Officer of Mattel, Inc. since October 1997. From January 1997 to October 1997, she was President and Chief Executive Officer of Mattel, Inc., and from July 1992 until December 1996, she was President and Chief Operating Officer. Ms. Barad serves as a director of Mattel, Inc. and Microsoft Corporation. 2 3 EXECUTIVE OFFICERS The information required by this item concerning the executive officers of Pixar is incorporated by reference to the information set forth in the section entitled "Executive Officers of the Company" at the end of Part I of this Form 10-K. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act ("Section 16(a)") requires Pixar's executive officers, directors and persons who own more than ten percent of Pixar's Common Stock, to file initial reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the SEC and the National Association of Securities Dealers, Inc. Such executive officers, directors and ten-percent shareholders are also required by SEC rules to furnish Pixar with copies of all such forms that they file. Based solely on its review of the copies of such forms received by Pixar and written representations from certain reporting persons that no Forms 5 were required for such persons, Pixar believes that during fiscal 1997 all Section 16(a) filing requirements applicable to its executive officers, directors and ten-percent shareholders were complied with. ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table shows, as to the Chief Executive Officer and each of the five most highly compensated executive officers whose salary plus bonus exceeded $100,000 during the last fiscal year (the "Named Officers"), information concerning compensation paid for services to Pixar in all capacities during the last three fiscal years.
Long Term Compensation Awards ---------- Annual Compensation Securities ------------------------ Underlying Name and Principal Position Year Salary($) Bonus($) Options(#) - ------------------------------------------------- ---- --------- -------- ---------- Steve Jobs . . . . . . . . . . . . . . . . . . . 1997 $ -- $ -- -- Chairman, Chief Executive Officer 1996 -- -- -- and Office of the President 1995 -- -- -- Edwin E. Catmull . . . . . . . . . . . . . . . . 1997 208,539 -- -- Executive Vice President, Chief 1996 198,512 -- -- Technical Officer and Office of the President 1995 182,646 -- 1,600,000 Lawrence B. Levy(1) . . . . . . . . . . . . . . . 1997 208,539 -- -- Executive Vice President, Chief Financial 1996 197,789 -- -- Officer and Office of the President 1995 158,509 -- 1,600,000 John Lasseter . . . . . . . . . . . . . . . . . . 1997 625,903 1,250,000 125,000 Vice President, Creative Development 1996 256,203 -- -- 1995 200,463 35,000 1,600,000 Sarah McArthur(2) . . . . . . . . . . . . . . . . 1997 196,148 -- 200,000 Vice President, Production 1996 N/A N/A N/A 1995 N/A N/A N/A William T. Reeves(3) . . . . . . . . . . . . . . 1997 222,219 -- -- Technical Director, Feature Films 1996 211,899 -- -- 1995 172,430 -- 840,000
- ------------ (1) Mr. Levy joined Pixar in 1995. (2) Ms. McArthur joined Pixar in 1997. (3) Mr. Reeves has not been an executive officer since May 1997. 3 4 OPTION GRANTS IN LAST FISCAL YEAR The following table shows, as to each of the Named Officers, information concerning stock options granted during the fiscal year ended December 31, 1997. OPTION GRANTS IN FISCAL 1997
INDIVIDUAL GRANTS POTENTIAL REALIZABLE --------------------------------------------------- VALUE AT NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES SECURITIES OPTIONS OF STOCK PRICE APPRECIATION UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(4) OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------- NAME GRANTED(1) FISCAL YEAR(2) ($/SH) DATE(3) 5% 10% - ------------------------- --------- -------------- --------- ---------- ----------- ----------- Steven P. Jobs . . . . . -- -- % $ -- -- $ -- $ -- Edwin E. Catmull . . . . -- -- -- -- -- -- Lawrence B. Levy . . . . -- -- -- -- -- -- John Lasseter . . . . . . 125,000(5) 7.6 14.125 2/22/07 1,110,392 2,813,952 Sarah McArthur . . . . . 200,000(5) 12.2 12.75 1/27/07 1,603,681 4,064,043 William T. Reeves . . . . -- -- -- -- -- --
- ---------- (1) All options in this table were granted under the 1995 Stock Plan and have exercise prices equal to the fair market value on the date of grant. (2) Pixar granted options for 1,641,700 shares of Common Stock to employees in fiscal 1997. (3) Options may terminate before their expiration upon the termination of optionee's status as an employee or consultant, the optionee's death or an acquisition of Pixar. (4) The 5% and 10% assumed rates of appreciation are provided in accordance with rules of the SEC and do not represent Pixar's estimate or projection of the future Common Stock price. This table does not take into account any appreciation in the price of the Common Stock from the date of grant to date. (5) These options are nonstatutory stock options which vest over a four-year period at the rate of one-fourth at the end of one year from the vesting start date and 1/48th at the end of each month thereafter. 4 5 OPTION EXERCISES AND HOLDINGS The following table sets forth, for each of the Named Officers, certain information concerning stock options exercised during fiscal 1997, and the number of shares subject to both exercisable and unexercisable stock options as of December 31, 1997. Also reported are values for "in-the-money" options that represent the positive spread between the respective exercise prices of outstanding stock options and the fair market value of Pixar's Common Stock as of December 31, 1997. AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UDERLYING UNEXERCISED IN-THE-MONEY OPTIONS SHARES VALUE OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END ($)(1) ACQUIRED ON REALIZED --------------------------- ---------------------------- NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ------------------------- ------------ ---------- ----------- ------------- ------------ -------------- Steven P. Jobs . . . . . -- $ -- -- -- $ -- $ -- Edwin E. Catmull . . . . 600,000 10,267,750 206,667 283,333 4,427,840 6,070,410 Lawrence B. Levy . . . . 346,000 6,170,800 682,334 466,666 14,619,006 9,998,319 John Lasseter . . . . . . 240,000 4,395,063 646,667 408,333 13,854,840 7,007,910 Sarah McArthur . . . . . 0 0 0 200,000 0 1,775,000 William T. Reeves . . . . 55,833 1,214,450 120,000 14,167 2,571,000 303,528
- -------------- (1) Market value of underlying securities based on the closing price of Pixar's Common Stock on December 31, 1997 (the last trading day of fiscal 1997) on the Nasdaq National Market of $21.625 minus the exercise price. EMPLOYMENT AGREEMENTS Pixar has employment agreements with Edwin E. Catmull and William T. Reeves that extend until the earlier of (i) the delivery of Pixar's animated feature film A Bug's Life, (ii) the date the feature film agreement between Pixar and Walt Disney Pictures dated May 3, 1991 terminates or (iii) July 31, 1998. During the term of their employment agreements, Mr. Catmull and Mr. Reeves are prohibited from seeking other employment, except during the last six months of the term of the agreement, and from becoming financially interested or associated with any entity engaged in a related or competitive business. The employment agreements can be terminated by Pixar only upon the respective employee's death or disability or, subject to the consent of Walt Disney Pictures, for cause. In February 1997, Pixar entered into a new employment agreement with John Lasseter that extends until February 23, 2004. Pursuant to the agreement, Mr. Lasseter received a signing bonus of $1,250,000 and was granted additional stock options to purchase 125,000 shares of Pixar's Common Stock which vest over four years. The agreement provides for a current annual salary of $756,000 with 8% annual increases. The agreement also provides for the payment of a bonus (the "Motion Picture Bonus") based upon domestic theatrical box office gross receipts from feature-length animated motion pictures ("Feature Films") directed by Mr. Lasseter. Under the agreement, Mr. Lasseter will direct three Feature Films and has the option to direct certain sequels to Feature Films he directed if Pixar elects to produce such sequels within twelve years after the initial release of the applicable picture. During the term of the agreement, Mr. Lasseter is prohibited from accepting other employment and from becoming financially interested or associated with any entity engaged in a related or competitive business. Pixar can terminate the agreement at any time for any reason. However, if Pixar terminates Mr. Lasseter's employment without cause, Pixar must pay Mr. Lasseter (i) an amount equal to 75% of the balance of the salary Mr. Lasseter 5 6 would have earned through the remainder of the term of the agreement and (ii) any portion of the Motion Picture Bonus as and if due. In addition, the vesting of Mr. Lasseter's stock options would accelerate so that they would be exercisable in full and Mr. Lasseter could accept employment with any third party. DIRECTOR COMPENSATION Directors who are not employees of Pixar receive a fee of $1,000 for each meeting attended of the Board of Directors and a fee of $1,000 for each meeting attended of a committee of the Board of Directors if such committee meeting is not held in conjunction with a meeting of the Board of Directors. All directors are reimbursed for expenses incurred in attending such meetings. Non-employee directors are eligible to receive option grants pursuant to Pixar's 1995 Director Option Plan (the "Director Plan") which was adopted by the Board of Directors in October 1995, approved by the shareholders in November 1995 and took effect in November 1995. A total of 200,000 shares of Common Stock has been reserved for issuance under the Director Plan. As of April 20, 1998, there were 30,000 options outstanding under the Director Plan. The Director Plan provides for an automatic grant of an option to purchase 30,000 shares of Common Stock (the "First Option") to each nonemployee director who first becomes a non-employee director (other than an employee director who ceases to be an employee but remains a director) after the effective date of the Director Plan on the date on which such person first becomes a non-employee director. Beginning on the third anniversary of the date he or she became an outside director, each nonemployee director will automatically be granted an option to purchase 10,000 shares of Common Stock (a "Subsequent Option") each year on the date of such anniversary, provided he or she is then a non-employee director. Each nonemployee director will be eligible to receive a Subsequent Option, regardless of whether such non-employee director was eligible to receive a First Option. First Options and each Subsequent Option will have a term of ten years. One-third of the shares subject to a First Option will vest one year after its date of grant and an additional one-third will vest at the end of each year thereafter, provided that the optionee continues to serve as a director on such dates. All of the shares subject to a Subsequent Option will vest one year after the date of the option grant, provided that the optionee continues to serve as a director on such date. The exercise prices of the First Option and each Subsequent Option will be 100% of the fair market value per share of Pixar's Common Stock on the date of the grant of the option. Ms. Barad was granted a First Option in July 1997 at an exercise price of $15.125 per share. Messrs. Brittenham and Graziano and Ms. Barad, all of whom are non-employee directors of Pixar, will be eligible for Subsequent Options under the Director Plan on the third anniversary of the date they became directors. Mr. Sonsini, also a non-employee director, is eligible for Subsequent Options each year on the anniversary of the date he became a director. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Pixar's Compensation Committee was formed in October 1995 and is currently composed of Ms. Barad and Mr. Graziano. No interlocking relationship exists between any member of Pixar's Board of Directors or Compensation Committee and any member of the board of directors or compensation committee of any other company, nor has any such interlocking relationship existed in the past. No member of the Compensation Committee is or was formerly an officer or an employee of Pixar. 6 7 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the beneficial ownership of Common Stock of Pixar as of April 20, 1998 for the following: (i) each person who is known by Pixar to own beneficially more than 5% of the outstanding shares of Pixar's Common Stock; (ii) each of Pixar's directors; (iii) each of the Named Officers; and (iv) all directors and executive officers of Pixar as a group.
Number of Percent Name of Beneficial Owner Shares (1) of Total (1) - ------------------------ ---------- ------------ Steve Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000,001 68.9% c/o Pixar 1001 West Cutting Boulevard Richmond, CA 94804 Disney Enterprises, Inc.(2) . . . . . . . . . . . . . . . . . . . . . . . . 2,500,100 5.6 500 South Buena Vista Street Burbank, CA 91521 First Interstate(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,442,100 5.6 John Lasseter(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,010,231 2.3 Edwin E. Catmull(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705,167 1.6 Lawrence B. Levy(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891,034 2.0 Sarah McArthur(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,167 * William T. Reeves(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . 578,333 1.3 Larry W. Sonsini(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 * Skip M. Brittenham(10) . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 * Joseph A. Graziano(11) . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 * Jill E. Barad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- All directors and executive officers as a group (9 persons)(12) . . . . . . 32,720,600 72.8 ---------- ----
- ------------------------- * Represents less than 1% of the total. (1) Based on 43,545,826 shares outstanding on April 20, 1998. The number and percentage of shares beneficially owned is determined under rules of the Securities and Exchange Commission ("SEC"), and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within sixty days of April 20, 1998 through the exercise of any stock option or other right. Unless otherwise indicated in the footnotes, each person has sole voting and investment power (or shares such powers with his or her spouse) with respect to the shares shown as beneficially owned. (2) As indicated in the Schedule 13D filed by Disney Enterprises, Inc. pursuant to the Exchange Act on April 18, 1997. Includes 1,500,000 shares issuable upon exercise of warrants. (3) As indicated in the Schedule 13G filed by Transamerica Corporation pursuant to the Exchange Act on February 17, 1998. (4) Includes 495,730 shares subject to options that are exercisable within 60 days of April 20, 1998. (5) Includes 106,667 shares subject to options that are exercisable within 60 days of April 20, 1998. (6) Includes 657,334 shares subject to options that are exercisable within 60 days of April 20, 1998. (7) Includes 54,167 shares subject to options that are exercisable within 60 days of April 20, 1998. (8) Includes 105,000 shares subject to options that are exercisable within 60 days of April 20, 1998. (9) Includes 20,000 shares subject to options that are exercisable within 60 days of April 20, 1998. (10) Includes 20,000 shares subject to options that are exercisable within 60 days of April 20, 1998. (11) Includes 20,000 shares subject to options that are exercisable within 60 days of April 20, 1998. (12) Includes 1,373,898 shares subject to options that are exercisable within 60 days of April 20, 1998. 7 8 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Pixar has engaged the law firm of Ziffren, Brittenham, Branca & Fischer ("ZBB&F") to handle certain matters. Skip M. Brittenham, a director of Pixar, is a senior partner of the firm. Pixar has also engaged the law firm of Wilson Sonsini Goodrich & Rosati ("WSGR") to handle certain legal matters. Larry W. Sonsini, a director of Pixar, is a member of the firm. Payments by Pixar to each of ZBB&F and WSGR did not exceed five percent of either law firm's respective gross revenues in the last fiscal year of either such firm. Pixar believes that all of the transactions set forth above were made on terms no less favorable to Pixar than could have been obtained from unaffiliated third parties. All future transactions, including loans, between Pixar and its officers, directors and principal shareholders and their affiliates will be approved by a majority of the Board of Directors, including a majority of the independent and disinterested directors of the Board of Directors, and will be on terms no less favorable to Pixar than could be obtained from unaffiliated third parties. 8 9 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized, on this 29th day of April 1998. PIXAR /s/ LAWRENCE B. LEVY By:_____________________________________ Lawrence B. Levy Executive Vice President and Chief Financial Officer 9 -----END PRIVACY-ENHANCED MESSAGE-----