IMAX Corporation Reports Third Quarter 2009 Financial Results; Receives
Commitment Letter for $75 Million Credit Facility
HIGHLIGHTS
----------
-- Third Quarter EPS of $0.02 Per Diluted Share Includes $0.06
Charge Due Primarily to Increased Share Price
-- Third Quarter Revenue Increases 33% to $43.6 Million
-- Company Receives $75 Million Commitment Letter From Wachovia
Capital Finance Corporation
TORONTO, Nov. 5, 2009 (GLOBE NEWSWIRE) -- IMAX Corporation (Nasdaq:IMAX)
(TSX:IMX) today reported net income of $1.1 million, or $0.02 per diluted share
for the third quarter ended September 30, 2009. The Company's third quarter net
income results included a year-over-year increase of $3.4 million, or $0.06 per
diluted share, in share-based compensation expense primarily due to the
Company's increased stock price over the course of the quarter. For the third
quarter of 2008, the Company reported a net loss of $2.1 million, or $0.05 per
diluted share. Total revenues for the third quarter ended September 30, 2009
increased 33% to $43.6 million, compared to total revenues of $32.9 million in
the same period last year. The Company generated operating income of $4.7
million during the third quarter, a 93% increase compared to operating income of
$2.4 million in the year-ago period.
For the nine-months ended September 30, 2009, the Company reported net income of
$1.0 million, or $0.02 per diluted share. The Company's nine month net income
results include a year-over-year increase of $6.5 million, or $0.13 per diluted
share, in share-based compensation expense primarily due to the Company's
increased stock price over the course of the nine-month period. For the nine
months ended September 30, 2008, the Company reported a net loss of $24.6
million, or $0.58 per share. Total revenue for the nine-month period increased
54% to $117.7 million compared to $76.4 million for the year-ago period.
Operating income increased to $13.3 million for the nine months ended September
30, 2009, a $24.2 million turnaround compared to an operating loss of $10.9
million in the same period last year.
IMAX Chief Executive Officer Richard L. Gelfond stated, "We are pleased with our
financial momentum, which reflects the continued positive impact that our
growing theatre network and new business model are having on the Company. In
addition, we are very pleased to announce that we have received a commitment
letter from Wachovia with the participation of Export Development Canada, for a
$75 million credit facility which, when finalized, will increase our borrowing
capacity. We also announced today that we intend to redeem our remaining senior
notes by year-end. We look forward to building on our year-to-date success in
the fourth quarter, continue to expect full year profitability for 2009 and
believe we are well-positioned to deliver increased earnings in 2010."
IMAX systems revenue increased 130% to $20.1 million versus $8.7 million in the
prior year period. The Company installed and recognized revenue on 13 theatre
systems, including five digital upgrades, that qualified as either sales or
sales-type leases in the third quarter of 2009, compared to three theatre
systems recognized in the third quarter of 2008.
Revenue from joint revenue sharing arrangements increased 175% to $3.4 million
in the third quarter of 2009 compared to $1.2 million last year. In the third
quarter, the Company installed a total of six systems under joint revenue
sharing arrangements, including one digital upgrade, compared to 14 such
installations in the year ago period. As of September 30, 2009, a total of 96
joint revenue sharing systems were in operation, compared to 26 as of September
30, 2008. Since quarter-end the Company installed 11 more theatres under joint
revenue sharing arrangements, for a total of 107 joint revenue sharing theatre
systems.
For the third quarter of 2009, total film revenue was $12.5 million, compared to
$13.0 million in the third quarter of 2008. Production and IMAX DMR(R) revenues
decreased to $7.8 million compared to $9.2 million a year ago, reflecting the
record performance of last year's title, The Dark Knight: The IMAX Experience
(Warner Bros.) which generated box office of $60.6 million in the third quarter
of 2008. Revenue from the Company's distribution segment increased 38% to $3.3
million reflecting the continued strength of the Company's original title, Under
the Sea 3D.
Mr. Gelfond continued, "Our third quarter gross box office results were the
third highest we have ever achieved in a quarter. These results reflect how our
expansion of the network, our ability to show more titles throughout the
network, and our capability in selecting titles that are well-suited for The
IMAX Experience(R) position us well over the long-term. This is further
evidenced in the current quarter, with titles like Cloudy With a Chance of
Meatballs, Where the Wild Things Are and Michael Jackson's THIS IS IT combining
to make our theatres more productive during a seasonally slow time of year."
Gross box office from DMR titles was $57.6 million in the third quarter of 2009,
compared to $66.7 million in the third quarter of 2008. The primary drivers of
gross box office in the third quarter were Paramount Pictures' Transformers:
Revenge of the Fallen: The IMAX Experience and Warner Bros. Pictures' Harry
Potter and the Half-Blood Prince: An IMAX 3D Experience. The quarter included
the last four weeks of Transformers, which generated $22.6 million in gross box
office during the third quarter and $44.4 million over the course of its run,
for a global per screen average of $184,000 and a domestic per screen average of
$187,000. The delayed release of Harry Potter arrived in domestic IMAX(R)
theatres July 29th and generated $27.0 million in worldwide box office during
the third quarter, for a domestic per screen average of $87,000 and an
international per screen average of $174,000. On September 18, Sony Pictures
Cloudy With A Chance of Meatballs: An IMAX 3D Experience was released
day-and-date to IMAX theatres and generated $5.4 million in worldwide box office
through the third quarter and $10.5 million to date for a per screen average of
$66,000. For the nine month period, IMAX DMR gross box increased 67% to a record
$170.2 million compared to $102.2 million last year.
Selling, general and administrative expense as a percentage of revenue declined
to 29.2% as compared to 32.0% in the third quarter of last year. Overall, SG&A
expenses increased to $12.8 million in the third quarter compared to $10.5
million a year ago. Reflected in third quarter SG&A expense was the previously
mentioned net increase in share-based compensation, which primarily reflected
the Company's increased stock price over the course of the quarter and its
impact on employee stock appreciation rights, and a favorable foreign exchange
translation adjustment of $1.0 million, which reflects an increase in exchange
rates for foreign currency denominated receivables as well as the Company's
hedging strategies put in place at the end of last year which have resulted in
lower operating and capital expenses.
As of September 30, 2009, the Company's backlog consisted of 163 theatre systems
compared to 238 theatre systems in backlog as of September 30, 2008. Included in
the 2009 and 2008 system backlog totals were 61 and 132 theatres, respectively,
under joint revenue sharing arrangements and 102 and 106 theatres, respectively,
under sales and sales-type lease arrangements. During the quarter the Company
signed contracts for 13 new systems, all of which were under sales and
sales-type lease arrangements, compared to 11 system signings during last year's
third quarter, seven of which were under joint revenue sharing arrangements. At
the end of the third quarter of 2009, 117 digital systems were in operation,
compared to 14 as of September 30, 2008.
At this time, the Company expects to install between 28 and 32 IMAX systems in
the fourth quarter (4 to 8 sales/sales type lease systems and approximately 24
systems under joint revenue sharing arrangements). Assuming all of these systems
are installed, the Company would install 30 to 35 systems under sales type lease
arrangements in 2009, above its most recent guidance of 25 to 30 systems, and
approximately 75 systems under joint revenue sharing arrangements (including
digital upgrades). The Company continues to expect ending 2009 with
approximately 120 joint revenue sharing theatres in operation.
FUTURE FILM SLATE
Turning to the remainder of the 2009 film slate, on October 16, Warner Bros.
Pictures and IMAX released Where the Wild Things Are: The IMAX Experience
day-and-date to 145 domestic IMAX theatres. Through Tuesday, the film has
generated $5.8 million, or approximately $40,000 per screen. On October 28, Sony
Pictures and IMAX released Michael Jackson's This Is It: The IMAX Experience,
with limited show schedule domestically and full show schedule internationally.
To date, the title has grossed $2.1 million in box office, with international
per screen averages of over $35,000. Walt Disney Pictures' A Christmas Carol: An
IMAX 3D Experience arrives in IMAX theatres tonight at midnight and James
Cameron's Avatar: An IMAX 3D Experience (Twentieth Century Fox) arrives in IMAX
theatres December 18, 2009. In total, the Company will show a record 13 new DMR
titles in 2009.
The Company's announced 2010 film slate to date includes Avatar, which is
expected to carry over from its December 18, 2009 release; Disney's Alice in
Wonderland: An IMAX 3D Experience (March 2010); DreamWorks Animation's How to
Train Your Dragon: An IMAX 3D Experience (March 2010); Shrek Forever After: An
IMAX 3D Experience (May 2010); Warner Bros. Pictures' Inception: The IMAX
Experience (July 2010); Walt Disney Pictures' Tron Legacy: An IMAX 3D Experience
(December 2010); and an IMAX original film in partnership with Warner Brothers,
titled Hubble 3D (March 2010). In addition, during the third quarter, the
Company announced its first 2011 DMR title, Sony Pictures' Spider-Man 4: The
IMAX Experience. The Company remains in active discussions with virtually all of
the major studios regarding potential titles for release as far out as 2012.
Mr. Gelfond concluded, "We are pleased with the Company's 2009 performance to
date, and we look forward to 2010 with even greater anticipation. We believe
that the combination of our larger theatre network, a compelling film slate and
significantly reduced interest expense will result in another year of growth for
IMAX and its shareholders. We believe we have put a strong foundation in place
that can deliver growth over the long-term."
CAPITAL STRUCTURE
In a separate announcement this morning, the Company announced that it has
received a commitment letter from Wachovia with the participation of Export
Development Canada for a $75 million credit facility, which, when finalized ,
will consist of revolving loans of up to $40 million and a term loan of $35
million. For additional information on this announcement, please see this
morning's press release.
CONFERENCE CALL
The Company will host a conference call today at 8:30 AM ET to discuss its third
quarter 2009 financial results. To access the call via phone, interested parties
should dial (866) 322-1159 approximately 10 minutes before it begins.
International callers should dial (416) 640-3404. 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 6042955. The Company will also host a webcast of the
conference call, which can be accessed on www.imax.com by clicking on 'Investor
Relations.'
ABOUT IMAX Corporation
IMAX Corporation is one of the world's leading entertainment technology
companies, specializing in immersive motion picture technologies. 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 re-mastering technology that allows it to digitally transform virtually
any conventional motion picture into the unparalleled image and sound quality of
The IMAX Experience. The IMAX brand is recognized throughout the world for
extraordinary and immersive entertainment experiences for consumers. As of
September 30, 2009, there were 403 IMAX theatres (280 commercial, 123
institutional) operating in 44 countries.
IMAX(R), IMAX(R) 3D, IMAX DMR(R), Experience It In IMAX(R), An IMAX 3D
Experience(R) and The IMAX Experience(R) are trademarks of IMAX Corporation.
More information about the Company can be found at www.imax.com. You may also
connect with IMAX on Facebook (www.facebook.com/imax), Twitter
(www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).
The IMAX Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6469
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, but are not limited to,
general economic, market or business conditions, including the length and
severity of the current economic downturn, the opportunities that may be
presented to and pursued by the Company, the performance of IMAX DMR films,
conditions in the in-home and out-of home entertainment industries, the signing
of theatre system agreements, changes and developments in the commercial
exhibition industry, the failure to convert theatre system backlog into revenue,
investments and operations in foreign jurisdictions, foreign currency
fluctuations and the Company's prior restatements and the related litigation and
ongoing inquiries by the SEC and the OSC. These factors and other risks and
uncertainties are discussed in the Company's most recent Annual Report on Form
10-K and most recent Quarterly Reports on Form 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 Nine Months
Ended September 30, Ended September 30,
--------------------- ---------------------
2009 2008 2009 2008
-------- -------- -------- --------
Revenues
Equipment and product
sales $ 18,217 $ 7,154 $ 38,714 $ 18,089
Services 19,445 22,103 58,449 48,777
Rentals 4,283 2,532 15,528 5,712
Finance income 1,052 1,079 3,125 3,234
Other 646 -- 1,862 611
-------- -------- -------- --------
43,643 32,868 117,678 76,423
-------- -------- -------- --------
Costs and expenses
applicable to revenues
Equipment and product
sales 8,727 4,097 19,793 10,028
Services 13,903 12,124 36,542 31,994
Rentals 1,961 1,691 7,293 3,388
Other 390 -- 635 98
-------- -------- -------- --------
24,981 17,912 64,263 45,508
-------- -------- -------- --------
Gross margin 18,662 14,956 53,415 30,915
Selling, general and
administrative
expenses 12,756 10,531 35,917 34,185
(including
share-based
compensation
expense of $3.2
million and $7.8
million for the
three months and
nine months ended
September 30, 2009,
respectively
(2008 - ($0.2) million
and $1.4 million,
respectively)
Research and
development 998 1,619 2,731 6,155
Amortization of
intangibles 144 119 424 389
Receivable provisions,
net of recoveries 89 265 1,078 1,114
-------- -------- -------- --------
Income (loss) from
operations 4,675 2,422 13,265 (10,928)
Interest income 23 82 49 282
Interest expense (3,094) (4,471) (11,592) (13,307)
(Loss) gain on
repurchase of Senior
Notes due December
2010 (220) -- 224 --
-------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes 1,384 (1,967) 1,946 (23,953)
Provision for income
taxes (344) (229) (885) (755)
-------- -------- -------- --------
Income (loss) from
continuing operations 1,040 (2,196) 1,061 (24,708)
Income (loss) from
discontinued
operations 22 89 (79) 149
-------- -------- -------- --------
Net Income (loss) $ 1,062 $ (2,107) $ 982 $(24,559)
======== ======== ======== ========
Net Income (loss) per
share - basic & diluted:
Net income (loss) per
share from continuing
operations $ 0.02 $ (0.05) $ 0.02 $ (0.58)
Net income (loss)
per share from
discontinued
operations -- -- -- --
-------- -------- -------- --------
$ 0.02 $ (0.05) $ 0.02 $ (0.58)
======== ======== ======== ========
Weighted average
number of shares
outstanding (000's):
Basic 58,390 42,181 49,574 42,026
Fully Diluted 60,710 42,181 50,934 42,026
Additional Disclosure:
Depreciation and
amortization (1) $ 5,353 $ 4,523 $ 14,629 $ 12,799
(1) Includes $0.3 million and $0.4 million of amortization of
deferred financing costs charged to interest expense for the
three months and nine months ended September 30, 2009 (2008
- $0.8 million and $1.1 million)
IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In accordance with United States Generally
Accepted Accounting Principles
(in thousands of U.S. dollars)
Sept. 30, Dec. 31,
2009 2008
--------- ----------
(unaudited)
Assets
Cash and cash equivalents $ 98,692 $ 27,017
Accounts receivable, net of allowance
for doubtful accounts of $2,969
(December 31, 2008 -- $2,901) 21,427 22,982
Financing receivables 58,711 56,138
Inventories 14,315 19,822
Prepaid expenses 2,368 1,998
Film assets 2,892 3,923
Property, plant and equipment 52,724 39,405
Other assets 16,692 16,074
Goodwill 39,027 39,027
Other intangible assets 2,117 2,281
--------- ---------
Total assets $ 308,965 $ 228,667
========= =========
Liabilities
Bank indebtedness $ 20,000 $ 20,000
Accounts payable 12,391 15,790
Accrued liabilities 72,213 58,199
Deferred revenue 59,689 71,452
Senior Notes due December 2010 104,437 160,000
--------- ----------
Total liabilities 268,730 325,441
========= =========
Shareholders' equity
(deficiency)
Capital stock, common shares -- no par
value. Authorized -- unlimited number.
Issued and outstanding --
62,269,486 (December 31, 2008
-- 43,490,631) 276,201 141,584
Other equity 5,946 5,183
Deficit (246,027) (247,009)
Accumulated other
comprehensive income 4,115 3,468
--------- ----------
Total shareholders' equity (deficiency) 40,235 (96,774)
--------- ----------
Total liabilities and shareholders'
equity (deficiency) $ 308,965 $ 228,667
========= =========
IMAX CORPORATION
SELECTED FINANCIAL DATA
In accordance with United States Generally
Accepted Accounting Principles
(in thousands of U.S. dollars)
The Company has eight reportable segments identified by category of
product sold or service provided: IMAX systems; theater system
maintenance; joint revenue sharing arrangements; film production
and IMAX DMR; film distribution; film post-production; theater
operations; and other. The IMAX systems segment designs,
manufactures, sells or leases IMAX theater projection system
equipment. The theater system maintenance segment maintains IMAX
theater projection system equipment in the IMAX theater network.
The joint revenue sharing arrangements segment provides IMAX
theater projection system equipment to an exhibitor in exchange
for a share of the box-office and concessions revenue. The film
production and IMAX DMR segment produces films and performs film
re-mastering services. The film distribution segment distributes
films for which the Company has distribution rights. The film
post-production segment provides film post-production and film
print services. The theater operations segment owns and operates
certain IMAX theaters. The other segment includes camera rentals
and other miscellaneous items.
Three Months Nine Months
Ended September 30, Ended September 30,
----------------------- ---------------------
2009 2008 2009 2008
--------- --------- -------- ---------
Revenue
IMAX systems $ 20,070 $ 8,731 $ 44,861 $ 23,172
Theater system
maintenance 4,502 4,156 13,295 11,989
Joint revenue
sharing
arrangements 3,432 1,246 12,532 2,027
Films
Production and
IMAX DMR 7,822 9,174 23,658 14,580
Distribution 3,339 2,412 10,075 7,472
Post-production 1,368 1,433 2,755 4,955
Theater operations 2,414 4,928 8,666 9,782
Other 696 788 1,836 2,446
--------- --------- -------- ---------
Total $ 43,643 $ 32,868 $117,678 $ 76,423
========= ========= ======== =========
Gross margins
IMAX systems(1) $ 11,190 $ 4,848 $ 24,620 $ 13,862
Theater system
maintenance 2,109 2,063 6,740 5,180
Joint revenue
sharing
arrangements(1) 1,749 79 6,729 6
Films
Production and
IMAX DMR(1) 2,840 6,282 12,524 6,012
Distribution(1) 675 538 1,664 2,658
Post-production 211 355 906 2,740
Theater operations (293) 741 72 194
Other 181 50 160 263
--------- --------- -------- ---------
Total $ 18,662 $ 14,956 $ 53,415 $ 30,915
========= ========= ======== =========
----------------------
(1) Included in the gross margin were certain advertising, marketing
and selling expenses of $0.3 million associated with the
initial launch theaters opened during the quarter as compared to
$0.5 million in the third quarter of 2008. Excluding these
launch expenses, the gross margin would have been $2.0 million
for the third quarter of 2009 compared to $0.6 million in the
second quarter of 2008.
(2) Included in the margin for the nine months ending September 30,
were certain advertising, marketing and selling expenses of $2.5
million associated with the initial launch of theaters opened
during the period as compared to $0.5 million in 2008. Excluding
these launch expenses, gross margin would have been $9.2 million
for the nine months ended September 30, 2009 compared to $0.5
million in the nine months ended September 30, 2008.
-0-
CONTACT: IMAX Corporation, New York
Media:
Sarah Gormley
212-821-0155
sgormley@imax.com
Investors:
Heather Anthony
212-821-0121
hanthony@imax.com
Rogers & Cowan, Los Angeles
Entertainment Media:
Elliot Fischoff/Jason Magner
310-854-8128
jmagner@rogersandcowan.com
Sloane & Company, New York
Business Media:
Whit Clay
212-446-1864
wclay@sloanepr.com
