IMAX Corporation reports fourth quarter and fiscal 2007 financial results



    HIGHLIGHTS
    ----------

    
    -   Company sees important strategic successes in 2007 as setting stage
        for financial turnaround.

    -   Company announces 107 signings in the fourth quarter, including the
        largest agreement in IMAX's history for 100 joint revenue sharing
        theatres with AMC Theatres.

    -   IMAX's share of DMR box office up 81% year-over-year.

    -   Thirty-five-theatre lease deal with RACIMEC International Group
        increases IMAX's presence in South American and Central American
        markets and reflects appeal of digital product.

    -   Planned launch of digital projection system late in the second
        quarter of fiscal 2008 remains on track, and continues to spur
        signings and help position the Company for growth.
    

    TORONTO, March 14 /CNW/ - IMAX Corporation (NASDAQ:   IMAX; TSX: IMX) today
reported that it recorded a net loss per diluted share of ($0.25) for the
fourth quarter of fiscal 2007, compared to a restated net loss of ($0.23) per
diluted share for the fourth quarter of fiscal 2006. During the fourth quarter
of fiscal 2007, the Company recorded a write-down of film-related inventories,
reflected in cost of goods, totaling $4.0 million because of the obsolescence
of film based equipment associated with the Company's transition to digital
projection from film projection systems. In addition, the Company recorded a
$2.5 million gain from discontinued operations related to the sale of a
theatre in Providence, Rhode Island. Excluding the impact of the write-down on
film related inventory and the gain from the sale of the Providence Theatre,
the Company would have reported a net loss per diluted share of ($0.21) for
the fourth quarter of fiscal 2007. At the end of the fourth quarter, the
Company's cash and short term investments position was $16.9 million, down
only slightly when compared to the cash position at the end of the third
quarter of fiscal 2007.
    IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J.
Wechsler stated, "2007 was a year of extraordinary progress from a strategic
standpoint. While we are extremely pleased with our accomplishments with
respect to our signings, digital, film and joint revenue sharing initiatives,
these accomplishments have yet to manifest in our reported financial results.
Over the course of the past fiscal year, installations slowed as exhibitors
elected to wait for our digital product, and we had higher R&D costs related
to this initiative and wrote-down obsolete inventory. We are looking forward
to emerging from this transitional period and believe our rollout of digital
systems in the back half of 2008 will lay the foundation for financial
improvement later this fiscal year."
    Messrs. Gelfond and Wechsler continued, "We are very pleased to have
concluded fiscal 2007 well on our way to launching our new digital projection
system and with a new business model that we believe supports our future
growth. With the imminent launch of our digital product, the IMAX story has
moved from one of development to one of execution and implementation. We are
optimistic that as our digital initiative continues to drive signings and
results begin to flow through our new business model, we are well positioned
for improved financial and operational performance."
    The Company signed agreements for 107 IMAX- theatre systems in the fourth
quarter of fiscal 2007, compared to nine in the fourth quarter of 2006. To
date, IMAX has signed joint revenue sharing agreements with prominent
exhibitors for 115 theatres.
    "Exhibitors continue to respond positively to our digital projection
prototype, and the level of interest in IMAX's digital system is spurring
signings like never before. On the heels of our 100-theatre AMC deal, we
signed a 35-theatre lease deal with RACIMEC after year-end and are currently
in active discussions with a number of exhibitors for well over 50 joint
revenue sharing arrangements. We believe this reflects a new level of momentum
for the Company, with significant interest being generated with a scope that
is unprecedented for the Company. We are very happy with the performance of
the joint revenue sharing theaters we have opened to date, and believe
interest in JVs will not only enhance the growth of the network, but will also
result in strong recurring revenues for IMAX," said Messrs. Gelfond and
Wechsler.
    On the film side, the Company reported that the fourth quarter was
positively impacted by Beowulf: An IMAX 3D Experience, which opened November
16 and grossed to date approximately $24.4 million on 135 IMAX screens. I Am
Legend: The IMAX Experience was released on December 14 and also performed
well, grossing approximately $16.5 million to date.
    "We were happy to close out the year with such a solid film performance,"
stated Messrs. Gelfond and Wechsler. "In 2007 we generated $145 million in box
office for Hollywood releases, which is 56% higher than the $93 million that
the IMAX theater network grossed during 2006. On a 'same-store' basis, which
tracks only those theaters showing IMAX DMR(R) films open a year ago and
therefore strips out the growth of the network, our gross box office increased
48%. We are particularly pleased to note that IMAX's share of the DMR box
office increased 81% year over year."
    On April 4, the Company will release the IMAX DMR version of Shine A
Light, the Rolling Stones concert film directed by Academy Award(R)-winning
filmmaker Martin Scorsese. Then, as announced last week, on May 9 the Company
will partner with Warner Bros. Pictures to release Speed Racer: The IMAX
Experience. This action-packed adventure from The Wachowski Brothers, the
creators of 'The Matrix' trilogy, is based on the hit animated series created
by Tatsuo Yoshida and is expected to perform well heading into the summer
movie season. This will be followed on June 8 by the release of the first film
in the recently announced four-film deal with DreamWorks Animation, Kung Fu
Panda: The IMAX Experience. The next installment in the Batman series, The
Dark Knight: An IMAX Experience, will follow in July and again stars Christian
Bale as Batman and Bruce Wayne. Finally, Harry Potter and the Half Blood
Prince: An IMAX 3D Experience is scheduled for November.
    Messrs. Gelfond and Wechsler commented, "A compelling film slate helped
drive our key business initiatives in fiscal 2007, and we are optimistic that
this year will demonstrate similar strength on the film side. We are actively
negotiating for one remaining slot for 2008, and believe the year features a
host of films that are perfectly suited to the immersive IMAX Experience(R).
We have already announced three films for 2009 and 2010 as part of our
four-picture deal with DreamWorks Animation, and have several great prospects
to fill out future film slates," concluded Messrs. Gelfond and Wechsler.
    For the three months ended December 31, 2007, the Company's total
revenues were $32.3 million, as compared to $36.5 million reported for the
prior year period. Systems revenue was $17.1 million versus $20.7 million in
the prior year period. The Company recognized revenue on five theatre systems
which qualified as either sales or sales-type leases in the fourth quarter of
2007, compared to nine in 2006, and installed two systems under a joint
revenue sharing arrangement.
    For the fourth quarter of 2007, film revenues were $10.0 million, as
compared to $10.9 million in the fourth quarter of 2006. The Company's share
of IMAX DMR gross box office increased to $5.2 million in 2007 from
$5.1 million in 2006. This is included in Production and IMAX DMR revenues of
$5.2 million compared to $6.0 million in 2006. Film distribution revenue was
$2.4 million for the quarter, as compared to $3.5 million in the fourth
quarter of 2006. Theatre operations revenue was $4.1 million in the fourth
quarter of 2007 compared to $4.0 million in the fourth quarter of 2006.
    Selling, general and administrative expenses were $13.0 million in the
fourth quarter, up from $12.6 million a year ago. Research and development
costs increased to $1.6 million as compared to $1.2 million in 2006, largely
related to investments in digital technology. Legal and professional fees
decreased to $3.7 million compared to $5.2 million in the fourth quarter of
the prior year.
    For the year ended December 31, 2007, the Company's total revenues were
$115.8 million, as compared to $127.7 million reported for the prior year.
Systems revenue was $59.1 million versus $72.2 million in the prior year, a
decrease due principally to a slowdown in installations as exhibitors waited
to see the Company's digital product. The Company recognized revenue on 19
theatre systems which qualified as either sales or sales-type leases in fiscal
2007, versus 30 in 2006.
    For fiscal 2007, film revenues were $36.6 million, as compared to
$36.3 million in fiscal 2006. The Company's share of IMAX DMR gross box office
increased 81% to $19.9 million in 2007 from $11.0 million in 2006. This is
included in Production and IMAX DMR revenues of $19.9 million, compared to
$14.6 million in 2006, an increase of 36.4%. Theatre operations revenue
increased to $16.6 million in 2007 from $15.2 million in 2006. Other revenue
was $3.6 million in fiscal 2007, compared to $4.0 million in fiscal 2006.
    Selling, general and administrative expenses were $44.7 million in fiscal
2007, up from $42.5 million a year ago. Research and development costs
increased to $5.8 million as compared to $3.6 million in 2006, largely related
to investments in digital technology. Legal and professional fees increased to
$13.7 million compared to $12.4 million in the prior year.
    The Company will host a conference call on Friday, March 14, 2008 at 8:30
AM ET. To access the call, interested parties should call (866) 321-6651
approximately 10 minutes before it begins. International callers should dial
(416) 642-5212. A recording of the call will be available by dialing (647)
436-0148. The code for both the live call and the replay is 2141913. IMAX will
also host a webcast of the conference call with an accompanying PowerPoint
presentation. These can both 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(R) 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 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 December 31, 2007, there were 299 IMAX
theatres operating in 39 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, 2006 and in the subsequent reports filed by the Company with the
Securities and Exchange Commission including the Company's 10-K for the year
ended December 31, 2007, scheduled to be filed on March 14, 2008.


    
                               IMAX CORPORATION
                    CONSOLIDATED STATEMENTS OF OPERATIONS
    In accordance with United States Generally Accepted Accounting Principles
           (in thousands of U.S. dollars, except per share amounts)

                                    Three months ended       Years ended
                                       December 31,          December 31,
                                  --------------------- ---------------------
                                      2007       2006       2007       2006
                                  ---------- ---------- ---------- ----------

    Revenues
    Equipment and product sales   $  10,773  $  14,441  $  32,500  $  49,322
    Services                         18,171     18,932     69,149     67,222
    Rentals                           2,147      1,543      7,107      5,622
    Finance income                    1,074      1,251      4,649      5,242
    Other                               138        300      2,427        300
                                  ---------- ---------- ---------- ----------
                                     32,303     36,467    115,832    127,708
                                  ---------- ---------- ---------- ----------
    Cost of goods sold, services
     and rentals
    Equipment and product sales       8,433      7,137     21,546     26,008
    Services                         15,331     12,235     50,090     47,183
    Rentals                           1,083        446      2,987      1,859
    Other                                 -          -         50          -
                                  ---------- ---------- ---------- ----------
                                     24,847     19,818     74,673     75,050
                                  ---------- ---------- ---------- ----------
    Gross margin                      7,456     16,649     41,159     52,658

    Selling, general and
     administrative expenses         12,983     12,617     44,705     42,527

    Research and development          1,609      1,158      5,789      3,615

    Amortization of intangibles         141        146        547        602

    Receivable provisions net of
     (recoveries)                     1,101        816      1,795      1,066

    Asset impairments                   562      1,029        562      1,029
                                  ---------- ---------- ---------- ----------
    (Loss) earnings from
     operations                      (8,940)       883    (12,239)     3,819

    Interest income                     215        276        862      1,036
    Interest expense                 (4,128)    (4,179)   (17,093)   (16,759)
                                  ---------- ---------- ---------- ----------
    Loss from continuing
     operations before income
     taxes                          (12,853)    (3,020)   (28,470)   (11,904)

    Recovery (provision) for
     income taxes                       338     (6,128)      (472)    (6,218)
                                  ---------- ---------- ---------- ----------

    Loss from continuing operations (12,515)    (9,148)   (28,942)   (18,122)

    Net earnings (loss) from
     discontinued operations          2,370        (61)     2,002      1,273
                                  ---------- ---------- ---------- ----------

    Net loss                      $ (10,145) $  (9,209) $ (26,940) $ (16,849)
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------

    Loss per share
    Loss per share - basic &
     diluted:
      Net loss from continuing
       operations                 $   (0.31) $   (0.23) $   (0.72) $   (0.45)
      Net earnings from
       discontinued operations    $    0.06  $       -  $    0.05  $    0.03
                                  ---------- ---------- ---------- ----------
      Net loss                    $   (0.25) $   (0.23) $   (0.67) $   (0.42)
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------


    Weighted average number of
     shares outstanding (000's):
    Basic                            40,352     40,285     40,309     40,270
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------
    Diluted                          40,352     42,285     40,309     40,270
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------

    Additional disclosure:

    Depreciation and
     amortization(1)              $   4,944  $   4,005  $  17,738  $  16,872
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------

    (1) Includes $0.4 million and $1.3 million in amortization of deferred
        financing costs charged to interest expense for the three and twelve
        months ended December 31, 2007 (2006 - $0.3 million, $1.1 million)



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

                                                         December   December
                                                         31, 2007   31, 2006
                                                        ---------- ----------

    Assets
    Cash and cash equivalents                           $  16,901  $  25,123
    Short-term investments                                      -      2,115
    Accounts receivable, net of allowance for doubtful
     accounts of $3,045 (2006 - $3,253)                    25,505     26,017
    Financing receivables                                  59,092     65,878
    Inventories                                            22,050     26,913
    Prepaid expenses                                        2,187      3,432
    Film assets                                             2,042      1,235
    Property, plant and equipment                          23,708     24,639
    Other assets                                           15,093     10,365
    Goodwill                                               39,027     39,027
    Other intangible assets                                 2,377      2,547
                                                        ---------- ----------
    Total assets                                        $ 207,982  $ 227,291
                                                        ---------- ----------
                                                        ---------- ----------

    Liabilities
    Accounts payable                                    $  12,300  $  11,426
    Accrued liabilities                                    61,967     58,294
    Deferred revenue                                       59,085     55,803
    Senior Notes due 2010                                 160,000    160,000
                                                        ---------- ----------
      Total liabilities                                   293,352    285,523
                                                        ---------- ----------


    Shareholders' deficiency
    Capital stock common shares - no par value.
     Authorized - unlimited number. Issued and
     outstanding - 40,423,074 (2006 - 40,285,574)         122,455    122,024
    Other equity                                            4,088      2,937
    Deficit                                              (213,407)  (184,375)
    Accumulated other comprehensive income                  1,494      1,182
                                                        ---------- ----------
      Total shareholders' deficiency                      (85,370)   (58,232)
                                                        ---------- ----------
      Total liabilities and shareholders' deficiency    $ 207,982  $ 227,291
                                                        ---------- ----------
                                                        ---------- ----------
    





For further information:

For further information: Media: IMAX Corporation, New York, Sarah
Gormley, (212) 821-0155, sgormley@imax.com; Investors: Integrated Corporate
Relations, Amanda Mullin, (203) 682-8243; Entertainment Media: Newman &
Company, Los Angeles, Al Newman, (310) 278-1560, asn@newman-co.com; Business
Media: Sloane & Company, New York, Whit Clay, (212) 446-1864,
wclay@sloanepr.com

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