In 1982, the team began working on special-effects film sequences with Industrial Light & Magic. After years of research, and key milestones such as the Genesis Effect in "" and the Stained Glass Knight in "Young Sherlock Holmes", the group, which then numbered 40 individuals, was spun out as a corporation in February 1986 by Catmull and Smith. Among the 38 remaining employees, there were also Malcolm Blanchard, David DiFrancesco, Ralph Guggenheim, and Bill Reeves, who had been part of the team since the days of NYIT. Tom Duff, also an NYIT member, would later join Pixar after its formation. With Lucas's 1983 divorce, which coincided with the sudden dropoff in revenues from "Star Wars" licenses following the release of "Return of the Jedi", they knew he would most likely sell the whole Graphics Group. Worried that the employees would be lost to them if that happened, which would prevent the creation of the first computer-animated movie, they concluded that the best way to keep the team together was to turn the group into an independent company. But Moore's Law also suggested that sufficient computing power for the first film was still some years away, and they needed to focus on a proper product until then. Eventually, they decided they should be a hardware company in the meantime, with their Pixar Image Computer as the core product, a system primarily sold to governmental, scientific, and medical markets. They also used SGI computers.