TORONTO, May 12 /PRNewswire-FirstCall/ - IMAX Corporation (NASDAQ: IMAX;
TSX: IMX) today reported that it recorded a net loss per diluted share of
($0.25) for the first quarter of fiscal 2008, compared to a net loss per
diluted share of ($0.12) for the first quarter of fiscal 2007. At the same
time, the Company announced that its pending digital roll-out was on schedule
and that it had added DreamWorks Animation's Magadascar 2 to the 2008 film
slate.
IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J.
Wechsler stated, "As anticipated, our first quarter results reflect the
transitional nature of 2008 from a financial perspective as we continue
implementing our key joint venture revenue sharing and digital initiatives.
From a strategic standpoint, however, we are very encouraged by our
accomplishments to date and believe that the Company is well positioned to
benefit both financially and operationally from the steps we are taking. We
continue to expect improved results in the fourth quarter of 2008 and
profitability in 2009."
The Company signed agreements for 66 IMAX(R) theatre systems in the first
quarter of fiscal 2008, compared to 13 in the first quarter of 2007. To date,
IMAX has signed joint revenue sharing agreements with prominent exhibitors for
146 theatres. To assist in funding its digital joint venture roll-out, the
Company entered into two significant financing transactions last week, one
with Wachovia Capital Finance Corporation to increase future availability and
modify other terms under the Company's existing credit facility, and one with
the Douglas family, IMAX's largest shareholder, for the sale of 2,726,447
million common shares in a private placement at market prices, for an
aggregate purchase price of $18.0 million.
"Our transition from a film to a digital platform is on track, and we are
fast approaching the launch of our highly anticipated digital product.
Importantly, we believe we are well positioned to fund our digital and joint
venture roll-outs thanks to our two recently-announced financing agreements,
which we expect will ultimately leave us with approximately $55-60 million in
funding. The implementation of our joint venture agreements should
significantly transform IMAX, and we are pleased to have the resources to roll
out our 100-theatre JV deal with AMC Entertainment, Inc., our 31-system JV
deal with Regal Cinemas, Inc., and to pursue other joint venture revenue
sharing opportunities in the future. We are encouraged by the level of
interest we continue to see in IMAX, and believe this will ultimately
translate into strong network growth and recurring revenues," said Messrs.
Gelfond and Wechsler.
On the film side, on May 9 the Company released Warner Bros.' Speed Racer:
The IMAX Experience. This family adventure from The Wachowski Brothers, the
creators of 'The Matrix' trilogy, is based on the hit animated series created
by Tatsuo Yoshida and grossed $1.9 million on 84 screens over its opening
weekend.
Regarding film performance in the first quarter of fiscal 2008, the
Company noted that the seasonally weak quarter faced an especially difficult
year-over-year comparison given the strong IMAX DMR(R) release of 300: The
IMAX Experience in the first quarter of last year. The Spiderwick Chronicles:
The IMAX Experience opened on February 15 and grossed $6.8 million in IMAX
theatres. Shine A Light, the Rolling Stones concert film directed by Academy
Award(R)-winning filmmaker Martin Scorsese, opened April 4 and the IMAX
release has grossed approximately $3.9 million to date.
"While we were disappointed that Spiderwick and Shine a Light did not
perform as well as we had hoped, we remain very optimistic about the films on
our slate for the balance of the year and beyond," stated Messrs. Gelfond and
Wechsler. "We have already announced three films for 2009 and 2010 as part of
our deal with DreamWorks Animation, and have several great prospects to fill
out future film slates."
Speed Racer will be followed on June 8 by the release of the DreamWorks
Animation film Kung Fu Panda: The IMAX Experience. The next installment in the
Batman series, The Dark Knight: An IMAX Experience, will follow in July. The
Company will again partner with DreamWorks Animation to release Madagascar 2:
The IMAX Experience for a two-week run beginning November 7. Finally, Harry
Potter and the Half Blood Prince: An IMAX 3D Experience is scheduled for
November.
November's two-week Madagascar 2 run is a further endorsement of the
Company's pending transition to digital technology. Digital's virtual
elimination of film prints, allowing studios to recoup a higher return on
their pictures over shorter periods of time, was a significant factor in the
deal with DreamWorks. The Company expects 35 digital theatres to be up and
running in time to exhibit this film.
For the three months ended March 31, 2008, the Company's total revenues
were $23.5 million, as compared to $26.8 million reported for the prior year
period. Systems revenue was $12.5 million versus $13.1 million in the prior
year period. The Company recognized revenue on four theatre systems which
qualified as either sales or sales-type leases in the first quarter of 2008,
as compared to five in 2007.
For the first quarter of 2008, film revenues were $7.4 million, as
compared to $9.1 million in the first quarter of 2007. This included
Production and IMAX DMR revenues of $2.9 million compared to $4.6 million a
year ago. Film distribution revenue was $2.8 million for the quarter, as
compared to $3.4 million in the first quarter of 2007. Post production revenue
was $1.7 million for the quarter, as compared to $1.1 million in the first
quarter of 2007. Theatre operations revenue was $2.8 million in the first
quarter of 2008, as compared to $4.1 million in the first quarter of 2007.
Selling, general and administrative expenses were $12.4 million in the
first quarter, up from $10.3 million a year ago. Research and development
costs increased to $2.5 million in the first quarter of 2008 as compared to
$1.5 million in the first quarter of 2007, largely related to investments in
digital technology. Legal and professional fees (included in selling, general
and administrative expenses) increased to $3.1 million compared to $2.4
million in the first quarter of the prior year.
At the end of the first quarter, the Company's cash position was $18.1
million, which represents an increase from the cash position at the end of the
fourth quarter of fiscal 2007.
The Company will host a conference call on Monday, May 12, 2008 at 8:30 AM
ET. To access the call, interested parties should call (866) 321-8231
approximately 10 minutes before it begins. International callers should dial
(416) 642-5213. A recording of the call will be available by dialing (888)
203-1112 or (647) 436-0148. The code for both the live call and the replay is
6854871. IMAX will also host a webcast of the conference call, which can be
accessed on www.imax.com by clicking on 'Company Info' and then 'Investor
Relations.'
About IMAX Corporation
IMAX Corporation is one of the world's leading digital entertainment and
technology companies. The worldwide IMAX network is among the most important
and successful theatrical distribution platforms for major event Hollywood
films around the globe, with IMAX theatres delivering the world's best
cinematic presentations using proprietary IMAX, IMAX(R) 3D, and IMAX DMR
technology. IMAX DMR is the Company's groundbreaking digital remastering
technology that allows it to digitally transform virtually any conventional
motion picture into the unparalleled image and sound quality of The IMAX
Experience. IMAX's renowned projectors and new digital systems display
crystal-clear images on the world's biggest screens. The IMAX brand is
recognized throughout the world for extraordinary and immersive entertainment
experiences for consumers. As of March 31, 2008, there were 298 IMAX theatres
operating in 40 countries.
IMAX(R), IMAX(R) 3D, IMAX DMR(R), IMAX(R) MPX(R), and The IMAX
Experience(R) are trademarks of IMAX Corporation. More information on the
Company can be found at www.imax.com.
This press release contains forward looking statements that are based on
management's assumptions and existing information and involve certain risks
and uncertainties which could cause actual results to differ materially from
future results expressed or implied by such forward looking statements.
Important factors that could affect these statements include ongoing
discussions with the SEC and OSC relating to their ongoing inquiries and the
Company's accounting, the timing of theatre system deliveries, the mix of
theatre systems shipped, the timing of the recognition of revenues and
expenses on film production and distribution agreements, the performance of
films, the viability of new businesses and products, risks arising from
potential material weaknesses in internal control over financial reporting and
fluctuations in foreign currency and in the large format and general
commercial exhibition market. These factors and other risks and uncertainties
are discussed in the Company's Annual Report on Form 10-K/A for the year ended
December 31, 2007, as well as the Company's Quarterly Reports on Form 10-Q/A
and 10-Q.
IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In accordance with United States Generally Accepted Accounting Principles
(in thousands of U.S. dollars, except per share amounts)
(unaudited)
Three Months Ended
March 31,
-----------------------
2008 2007
----------- -----------
Revenues
Equipment and product sales..................... $ 6,698 $ 7,074
Services........................................ 14,207 17,301
Rentals......................................... 1,544 1,286
Finance income.................................. 1,071 1,186
----------- -----------
23,520 26,847
----------- -----------
Cost of goods sold, services and rentals
Equipment and product sales..................... 2,965 3,943
Services........................................ 9,689 10,803
Rentals......................................... 730 560
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13,384 15,306
----------- -----------
Gross margin.................................... 10,136 11,541
Selling, general and administrative expenses.... 12,387 10,321
Research and development........................ 2,488 1,495
Amortization of intangibles..................... 133 136
Receivable provisions net of (recoveries)....... 748 6
----------- -----------
Loss from operations............................ (5,620) (417)
----------- -----------
Interest income................................. 126 226
Interest expense................................ (4,496) (4,249)
----------- -----------
Loss from continuing operations before income
taxes.......................................... (9,990) (4,440)
Provision for income taxes...................... (269) (167)
----------- -----------
Loss from continuing operations................. (10,259) (4,607)
Net loss from discontinued operations........... - (133)
----------- -----------
Net loss........................................ $ (10,259) $ (4,740)
----------- -----------
----------- -----------
Loss per share
Loss per share - basic & diluted:
Net loss from continuing operations........... $ (0.25) $ (0.11)
Net loss from discontinued operations......... $ - $ (0.01)
----------- -----------
Net loss...................................... $ (0.25) $ (0.12)
----------- -----------
----------- -----------
Other comprehensive income consists of:
Amortization of prior service credits (net of tax
provision of $17 and $76 for the three months
ended March 31, 2008 and 2007, respectively)... 45 161
----------- -----------
$ 45 $ 161
----------- -----------
----------- -----------
Weighted average number of shares outstanding
(000's):
Basic 40,444 40,286
Fully diluted 40,444 40,286
Additional disclosure:
Depreciation and amortization(1) $ 4,203 $ 3,014
(1) Includes $0.4 million of amortization of deferred financing costs
charged to interest expense for the quarter ended March 31, 2008
(March 31, 2007 - $0.2 million)
IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In accordance with United States Generally Accepted Accounting Principles
(in thousands of U.S. dollars)
March December
31, 2008 31, 2007
----------- -----------
(unaudited)
Assets
Cash and cash equivalents....................... $ 18,061 $ 16,901
Accounts receivable, net of allowance for
doubtful accounts of $3,354 (2007 - $3,045).... 20,632 25,505
Financing receivables........................... 58,050 59,092
Inventories..................................... 21,640 22,050
Prepaid expenses................................ 3,722 2,187
Film assets..................................... 2,177 2,042
Property, plant and equipment................... 23,949 23,708
Other assets.................................... 14,107 15,093
Goodwill........................................ 39,027 39,027
Other intangible assets......................... 2,338 2,377
----------- -----------
Total assets.................................. $ 203,703 $ 207,982
----------- -----------
----------- -----------
Liabilities
Accounts payable................................ $ 8,775 $ 12,300
Accrued liabilities............................. 63,088 61,967
Deferred revenue................................ 67,054 59,085
Senior Notes due 2010........................... 160,000 160,000
----------- -----------
Total liabilities............................. 298,917 293,352
----------- -----------
Shareholders' deficiency
Capital stock common shares - no par value.
Authorized - unlimited number. Issued and
outstanding - 40,510,407 (2007 - 40,423,074)... 122,721 122,455
Other equity.................................... 4,282 4,088
Deficit......................................... (223,666) (213,407)
Accumulated other comprehensive income.......... 1,449 1,494
----------- -----------
Total shareholders' deficiency................ (95,214) (85,370)
----------- -----------
Total liabilities and shareholders'
deficiency................................... $ 203,703 $ 207,982
----------- -----------
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