IMAX Corporation reports first quarter 2009 financial results



    
    HIGHLIGHTS
    ----------
    -  Operating income increased to $2.0 million versus operating loss of
       $5.6 million last year
    -  Loss per share of $0.06 compares favorably to last year's loss per
       share of $0.25
    -  Commercial theater network grows by 40% versus last year
    -  Continued system installations, joint revenue sharing model and film
       slate are strategic drivers for 2009
    

    TORONTO, May 7 /CNW/ - IMAX Corporation (NASDAQ:   IMAX; TSX: IMX) today
reported total revenues of $33.7 million for the first quarter ended March 31,
2009, a 43% increase compared to total revenues of $23.5 million for the first
quarter of 2008. Operating income increased to $2.0 million, a $7.6 million
increase compared to last year's operating loss of $5.6 million. The Company's
first quarter net loss per diluted share of $0.06 compares favorably to the
net loss per diluted share of $0.25 for the first quarter of fiscal 2008.
    IMAX Chief Executive Officer Richard L. Gelfond stated, "We have often
said that our introduction of digital and our joint revenue sharing initiative
would yield improved financial results and we believe the first quarter
reflects early progress towards this goal. Our highest level of sales-type
lease system installs in over two years, the continued rapid growth of our
joint revenue sharing theater network and our focus on cost containment were
the primary drivers of our improved performance. We are particularly
encouraged by our performance given that the first full-length new IMAX DMR(R)
release did not occur until Warner Brothers' Watchmen opened in March, the
last month of the quarter. Given the early success of our digital roll-out,
our strong line-up of film product and our focus on cost containment, we
continue to believe that we should achieve strong revenue growth and return to
profitability in 2009."
    IMAX systems revenue increased over 100% to $16.5 million versus $8.2
million in the prior year period. The Company installed and recognized revenue
on nine theatre systems that qualified as either sales or sales-type leases in
the first quarter of 2009 (including three digital upgrades), compared to four
in 2008. Revenue from joint revenue sharing arrangements increased nearly
six-fold to $1.9 million, compared to $0.3 million last year. The Company
installed 22 new systems under joint revenue sharing arrangements (including
five digital upgrades of theatres under joint revenue sharing arrangements) in
the first quarter of 2009, compared to zero in the year ago period.
    For the first quarter of 2009, film revenue increased 6% to $7.8 million,
compared to $7.4 million in the first quarter of 2008. This included
Production and IMAX DMR revenues of $3.7 million compared to $2.9 million a
year ago.
    Mr. Gelfond continued, "On the film side, Watchmen: The IMAX Experience
delivered a domestic per screen average of approximately $92,000 and Monsters
vs. Aliens: An IMAX 3D Experience has grossed an average of $126,000 per
screen in IMAX theatres to date, outpacing both the 2D and other 3D versions
of the film on a per screen basis. We are very encouraged that, in these
challenging economic times, consumers are continuing to embrace The IMAX
Experience(R)."
    First quarter gross box office from DMR titles increased to $29.9 million
in the first quarter of 2009, compared to $15.7 million in the first quarter
of 2008. The titles that contributed the majority of the Company's first
quarter box office results were the March 6th release of Warner Brother's
Watchmen: The IMAX Experience, which generated approximately $14.6 million in
IMAX theatres worldwide and DreamWorks Animation SKG's Monsters vs. Aliens: An
IMAX 3D Experience, which was released to IMAX theaters on March 27th and
generated $6.6 million in gross box office as of quarter end and $24.7 million
through Sunday. Additional DMR titles within the quarter were Twentieth
Century Fox's The Day the Earth Stood Still: The IMAX Experience, the
re-release of Warner Bros. Pictures' The Dark Knight: The IMAX Experience, and
the one week run of Disney's The Jonas Brothers: A 3D Concert Experience.
    First quarter gross margin increased 39% to $14.1 million from $10.1
million last year. Negatively impacting gross margin was $0.7 million of
non-recurring launch costs associated with the 17 new theatres opened under
joint revenue sharing arrangements during the quarter. A description of how
this impacted the gross margin of the Company's joint revenue sharing business
segment is included with the segment table at the end of this press release.
    Selling, general and administrative expenses decreased to $10.9 million
in the first quarter, compared to $12.4 million a year ago. Lower professional
fees and operating expenses were partially offset by a $1.2 million foreign
currency exchange charge largely due to a decline in the Canadian dollar,
which impacts foreign currency denominated receivables, unhedged forward
currency contracts and other working capital balances. The exchange rate on
the Canadian dollar has since improved from quarter-end. Research and
development costs decreased to $0.5 million in the first quarter of 2009 as
compared to $2.5 million in the first quarter of 2008. Last year's research
and development expenses reflected the costs associated with the development
of the Company's digital projection system that launched in July of 2008.
    The Company ended the quarter with a total of 371 IMAX theaters in
operation, a 24% increase over last year's first quarter. Its commercial
theater count increased to 250 theaters, a 40% increase over last year. The
Company's digital and joint revenue sharing strategies continued to drive its
rapid growth. At the end of the quarter, 73 digital systems were in operation,
up from 46 as of December 31, 2008. The number of IMAX(R) theatres under joint
revenue sharing arrangements also grew, to 69 theaters in operation, up from
52 as of year-end and compared to 11 last year. The Company currently remains
on track to have between 115 and 125 joint revenue sharing theaters in
operation by year-end.
    As of March 31, 2009, the Company's backlog consisted of 190 theatre
systems compared to 245 theatre systems in backlog as of March 31, 2008.
Included in the 2009 and 2008 system backlog totals were 89 and 135 theatres,
respectively, under joint revenue sharing arrangements. During the quarter the
Company signed contracts for three new systems under sales and sales-type
lease arrangements, one of which was installed in the first quarter.
    At the end of the first quarter, the Company's cash position was
approximately $18.7 million, compared to $27.0 million at the end of 2008 and
$18.1 million as of March 31, 2008. The Company's cash position is after
investments related to its joint revenue sharing digital projection systems,
which amounted to approximately $7.0 million in the first quarter. The Company
commented that it remains confident that the combination of its cash position,
available credit of $11.6 million under its credit facility, and operating
cash flows will provide the necessary funding for its continued roll-out of
joint revenue sharing digital projection systems.
    Looking ahead to the remainder of the 2009 film slate, Star Trek: The
IMAX Experience (Paramount Pictures), will be released to 167 IMAX theaters
today at 7:00 PM for a two-week limited engagement, followed by Night at the
Museum: Battle of the Smithsonian: The IMAX Experience (Twentieth Century Fox,
May 22, 2009); Transformers: Revenge of the Fallen: The IMAX Experience
(Paramount Pictures, June 2009); Harry Potter and the Half-Blood Prince: An
IMAX 3D Experience (WB, July 2009); Disney's A Christmas Carol: An IMAX 3D
Experience (Walt Disney Pictures and ImageMovers Digital, November 2009); and
James Cameron's Avatar: An IMAX 3D Experience (Twentieth Century Fox, December
2009). The Company believes it will also have an additional DMR title in the
fall.
    Mr. Gelfond concluded, "We are encouraged by our first quarter results,
our success in the second quarter with Monsters vs. Aliens and pre-sales for
Star Trek. We believe our 2009 slate includes some of the most popular
franchises and highly anticipated films of the year. The record number of
films coming through the IMAX network this year, combined with the quality of
those titles, is allowing our business to be less about the performance of a
single film and more about the success of the overall portfolio, which is much
more diversified than in past years. We look forward to announcing more titles
in the coming months."
    The Company's 2010 film slate currently includes Avatar: An IMAX 3D
Experience, which should 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),
DreamWorks Animation's Shrek Goes Fourth: An IMAX 3D Experience (May 2010) and
an IMAX original film, in partnership with Warner Brothers, currently titled
Hubble 3D. The Company is currently in discussions with virtually every major
studio about other films for potential release in 2010.

    The Company will host a conference call today at 9:30 AM ET to discuss
its first quarter 2009 financial results. To access the call via phone,
interested parties should dial (866) 322-8032 approximately 10 minutes before
it begins. International callers should dial (416) 640-3406. 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 4690351. 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 digital and film-based 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(R) 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(R). IMAX's
renowned projectors display crystal-clear images on the world's biggest
screens, and the IMAX brand is recognized throughout the world for
extraordinary and immersive entertainment experiences for consumers. As of
March 31, 2009, there were 371 IMAX theatres (250 commercial, 121
institutional) operating in 43 countries.

    IMAX(R), IMAX(R) 3D, IMAX(R) DMR, The 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.

    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
                                                           Ended March 31,
                                                   --------------------------
                                                          2009          2008
                                                   ------------  ------------
    Revenues
    Equipment and product sales.................... $   13,360    $    6,698
    Services.......................................     14,887        14,207
    Rentals........................................      3,247         1,544
    Finance income.................................      1,012         1,071
    Other..........................................      1,216             -
                                                   ------------  ------------
                                                        33,722        23,520
                                                   ------------  ------------
    Costs and expenses applicable to revenues
    Equipment and product sales....................      7,241         2,965
    Services.......................................      9,940         9,689
    Rentals........................................      2,166           730
    Other..........................................        245             -
                                                   ------------  ------------
                                                        19,592        13,384
                                                   ------------  ------------
    Gross margin...................................     14,130        10,136
    Selling, general and administrative expenses...     10,904        12,387
    Research and development.......................        547         2,488
    Amortization of intangibles....................        145           133
    Receivable provisions net of recoveries........        510           748
                                                   ------------  ------------
    Income (loss) from operations..................      2,024        (5,620)
    Interest income................................         21           126
    Interest expense...............................     (4,427)       (4,496)
                                                   ------------  ------------
    Loss from continuing operations
     before income taxes...........................     (2,382)       (9,990)
    Provision for income taxes.....................       (260)         (269)
                                                   ------------  ------------
    Net loss....................................... $   (2,642)   $  (10,259)
                                                   ------------  ------------
                                                   ------------  ------------

    Loss per share - basic & diluted:
      Net loss..................................... $    (0.06)   $    (0.25)
                                                   ------------  ------------
                                                   ------------  ------------

    Weighted average number of shares
     outstanding (000's):
      Basic                                             43,681        40,444
      Fully diluted                                     43,681        40,444
    Additional disclosure:
      Depreciation and amortization(1)              $    3,993    $    4,203

    (1) Includes $0.3 million of amortization of deferred financing costs
        charged to interest expense for the quarter ended March 31, 2009
        (March 31, 2008 - $0.3 million)



                               IMAX CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
    In accordance with United States Generally Accepted Accounting Principles
                       (in thousands of U.S. dollars)

                                                      March 31,  December 31,
                                                          2009          2008
                                                   ------------  ------------
                                                    (unaudited)
    Assets
    Cash and cash equivalents...................... $   18,721    $   27,017
    Accounts receivable, net of allowance for
     doubtful accounts of $2,808 (December 31,
     2008 - $2,901)                                     24,822        22,982
    Financing receivables..........................     57,452        56,138
    Inventories....................................     15,863        19,822
    Prepaid expenses...............................      3,071         1,998
    Film assets....................................      3,629         3,923
    Property, plant and equipment..................     45,237        39,405
    Other assets...................................     16,945        16,074
    Goodwill.......................................     39,027        39,027
    Other intangible assets........................      2,214         2,281
                                                   ------------  ------------
      Total assets................................. $  226,981    $  228,667
                                                   ------------  ------------
                                                   ------------  ------------

    Liabilities
    Bank indebtedness.............................. $   20,000    $   20,000
    Accounts payable...............................     16,205        15,790
    Accrued liabilities............................     64,108        58,199
    Deferred revenue...............................     65,187        71,452
    Senior Notes due 2010..........................    160,000       160,000
                                                   ------------  ------------
      Total liabilities............................    325,500       325,441
                                                   ------------  ------------

    Shareholders' deficiency
    Capital stock common shares - no par value.
     Authorized - unlimited number.
      Issued and outstanding - 43,730,631
       (December 31, 2008 - 43,490,631)............    142,430       141,584
    Other equity...................................      5,728         5,183
    Deficit........................................   (249,651)     (247,009)
    Accumulated other comprehensive income.........      2,974         3,468
                                                   ------------  ------------
      Total shareholders' deficiency...............    (98,519)      (96,774)
                                                   ------------  ------------
      Total liabilities and shareholders'
       deficiency.................................. $  226,981    $  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
                                                           Ended March 31,
                                                   --------------------------
                                                          2009          2008
                                                   ------------  ------------
    Revenue
    IMAX systems................................... $   16,452    $    8,158
    Theater system maintenance.....................      4,360         3,983
    Joint revenue sharing arrangements.............      1,908           348
    Films
      Production and IMAX DMR......................      3,700         2,916
      Distribution.................................      3,242         2,753
      Post-production..............................        872         1,724
    Theater operations.............................      2,714         2,831
    Other..........................................        474           807
                                                   ------------  ------------
    Total.......................................... $   33,722    $   23,520
                                                   ------------  ------------
                                                   ------------  ------------

    Gross margins
    IMAX systems................................... $    8,895    $    5,559
    Theater system maintenance.....................      2,312         1,588
    Joint revenue sharing arrangements(1)..........        344            40
    Films
      Production and IMAX DMR......................      1,770           306
      Distribution.................................        336         1,374
      Post-production..............................        640         1,551
    Theater operations.............................       (110)         (302)
    Other..........................................        (57)           20
                                                   ------------  ------------
    Total.......................................... $   14,130    $   10,136
                                                   ------------  ------------
                                                   ------------  ------------

    ----------------------------------------
    (1) Offsetting the gross margin of the Company's joint revenue sharing
        arrangement segment in the first three months of 2009 were certain
        advertising, marketing and selling expenses of $0.7 million
        associated with the initial launch of 17 new theaters opened during
        the quarter. Excluding these launch expenses, gross margin would have
        been $1.0 million for the first quarter of 2009 compared to less than
        $0.1 million in the first quarter of 2008.
    





For further information:

For further information: Media: IMAX Corporation, New York, Sarah
Gormley, (212) 821-0155, sgormley@imax.com; Entertainment Media: Rogers &
Cowan, Los Angeles, Elliot Fischoff/Jason Magner, (310) 854-8128,
jmagner@rogersandcowan.com; Investors: IMAX Corporation, New York, Heather
Anthony, (212) 821-0121, hanthony@imax.com; Business Media: Sloane & Company,
New York, Whit Clay, (212) 446-1864, wclay@sloanepr.com

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