IMAX Corporation reports third quarter 2007 financial results highlights



    HIGHLIGHTS
    ----------

    
    -   Company prepares for launch of digital projection system in second
        quarter of fiscal 2008, and believes the digital rollout will mark
        the beginning of the end of its financial transition period.

    -   Company announces 18 signings in the third quarter, including ten for
        digital theaters, equal to the number signed in the first half of
        fiscal 2007.

    -   Company eagerly anticipates remaining 2007 films, including Beowulf:
        An IMAX 3D Experience and I Am Legend: The IMAX Experience, and
        remains enthusiastic about its strong 2008 film slate to date.
    

    TORONTO, Nov. 9 /CNW/ - IMAX Corporation (NASDAQ:   IMAX; TSX: IMX) today
reported that it recorded a net loss per diluted share from continuing
operations of ($0.19) for the third quarter of fiscal 2007, compared to a
restated net loss from continuing operations of ($0.12) per diluted share for
the third quarter of fiscal 2006. The Company signed agreements for 18 IMAX(R)
theatre systems in the third quarter of fiscal 2007, compared to five in the
third quarter of last year. At the end of the third quarter, the Company's
cash and short term investments position was $18.2 million, or nearly flat
when compared to the cash position at the end of the second quarter of fiscal
2007.
    IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J.
Wechsler stated, "We are excited to be on the threshold of launching our
digital projection system late in the second quarter of 2008, ahead of
schedule. Although we have experienced both disappointments and successes over
the course of the past decade in bringing IMAX digital to the cusp of reality,
the Company is now poised to benefit from the transition from a film-based
system to a digital format. We believe our system will embody the IMAX(R)
brand and experience and that this transition will have a very positive impact
on the Company's growth and on our financial performance over the long term."
    Messrs. Gelfond and Wechsler continued, "We were pleased to announce last
month that we moved up our anticipated digital launch date. We believe this
helped remove uncertainty about our ability to deliver the system, and
contributed to our strong signings this past quarter. Many exhibitors have
seen and responded positively to our digital projection prototype, and we
believe the level of interest in an IMAX digital system remains strong."
    On the film side, the Company reported that the third quarter was
positively impacted by Warner Bros. Pictures' Harry Potter and the Order of
the Phoenix: An IMAX 3D Experience, which opened July 11 and grossed
approximately $37.8 million on 142 IMAX screens. Spurred by the growth of the
IMAX brand and network, as well as the appeal of converting the last
20 minutes of the film into IMAX(R) 3D, the film's record-breaking IMAX DMR(R)
performance far surpassed two preceding Harry Potter films released to IMAX
theatres, including Harry Potter and the Goblet of Fire: The IMAX Experience,
which grossed more than $20 million on 109 screens, and Harry Potter and the
Prisoner of Azkaban: The IMAX Experience, which grossed $14 million on 90
screens.
    "We are extremely happy with film performance in the third quarter, and
indeed throughout 2007," stated Messrs. Gelfond and Wechsler. "The strength of
the slate is clearly reflected in our DMR revenues, which increased 84% in the
third quarter of fiscal 2007 compared to the fiscal third quarter of last
year, and 71% in the first nine months of 2007 compared to the same period
last year. We believe that the recent slowdown in installs as well as our
inability to recognize revenues due to digital upgrades, both of which are
related to our digital transition, have made it difficult to see the growth in
recurring revenues."
    The Company will release Beowulf: An IMAX 3D Experience on November 16.
Robert Zemekis, the filmmaker behind The Polar Express, once again brings his
visually stunning, next-generation CGI technology to this timeless story
inspired by the ninth-century English epic poem. Beowulf will be followed by
the release of I Am Legend: The IMAX Experience on December 14. The film is an
action-packed adaptation of a science fiction novel by Richard Matheson that
stars Will Smith in a race against time to reverse the effects of a deadly
virus.
    Looking ahead to the 2008 film slate, the Company recently announced that
it was partnering with Paramount Pictures to release The Spiderwick
Chronicles: The IMAX Experience on February 15. This fantasy adventure is
based on the best-selling series of books, and marks the fourth film agreement
between IMAX and Paramount in the past five months. The Company also announced
it has set April 4 as the new release date for the IMAX DMR version of the
Rolling Stones concert film Shine A Light, which is directed by Academy
Award(R)-winning filmmaker Martin Scorsese. The next instalment in the Batman
series, The Dark Knight: An IMAX Experience, will follow in July.
    Messrs. Gelfond and Wechsler commented, "Our film slate for 2008 is
shaping up nicely, and we are pleased to have already announced four films. We
have identified and are actively negotiating for the remaining slots of the
year, and are excited about these prospective films."
    In 2007 to date, IMAX has signed joint revenue sharing agreements for 10
theatres, including a total of seven joint revenue sharing agreements with
Regal Cinemas and a three-theatre deal with Muvico Theaters.
    "We are very happy with the performances of the nine joint ventures we
have opened to date, and believe interest in JVs continues to be stimulated by
our digital initiative and strong film slate. We believe that the transition
to digital not only positively impacts the Company by driving interest in JVs
and the growth of the network, but benefits the business in several other
ways. Most importantly, it should ultimately result in a business model with
strong recurring revenues. We believe that the beginning of our digital
rollout represents the beginning of the end of our transitional financial
period, and that the underlying growth drivers that will generate improved
financial performance in a digital environment are all showing solid momentum.
We look forward to reporting on our continued progress," concluded Messrs.
Gelfond and Wechsler.
    For the three months ended September 30, 2007, the Company's total
revenues were $29.8 million, as compared to $31.0 million reported for the
prior year period. Systems revenue was $14.9 million versus $17.6 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 third quarter of
2007, compared to seven in 2006, and installed one system under a joint
revenue sharing arrangement.
    For the third quarter of 2007, film revenues were $9.5 million, as
compared to $7.7 million in the third quarter of 2006. This included IMAX DMR
revenues of $6.2 million compared to $3.4 million in 2006. Film dollar margin
was $1.8 million for the quarter, as compared to $1.4 million in the third
quarter of 2006. Theatre operations revenue was $4.4 million in the third
quarter of 2007 compared to $4.7 million in the third quarter of 2006.
    Selling, general and administrative expenses were $10.3 million in the
third quarter, up from $9.8 million a year ago. Research and development costs
increased to $1.6 as compared to $0.9 million in 2006, largely related to
investments in digital technology.
    The Company will host a conference call on Friday, November 9, 2007 at
8:30 AM ET. To access the call, interested parties should call (866) 904-6909
approximately 10 minutes before it begins. International callers should dial
(416) 915-8331. A recording of the call will be available by dialing
(647) 436-0148. The code for both the live call and the replay is 6170432. The
Company 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(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 September 30, 2007, there were 296 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 financial reporting and 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, as well as the Company's Quarterly Reports
on Form 10-Q/A.

    
                               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    Nine months ended
                                       September 30,         September 30,
                                  --------------------- ---------------------
                                      2007       2006       2007       2006
                                  ---------- ---------- ---------- ----------
                                            As restated           As restated
    Revenues
    Equipment and product sales   $   7,871  $  11,785  $  21,727  $  34,881
    Services                         17,972     16,331     51,969     49,528
    Rentals                           2,003      1,615      4,960      4,079
    Finance income                    1,208      1,252      3,576      3,991
    Other                               750          -      2,289          -
                                  ---------- ---------- ---------- ----------
                                     29,804     30,983     84,521     92,479
    Cost of goods sold, services
     and rentals
    Equipment and product sales       5,356      5,755     13,113     18,871
    Services                         14,131     12,532     36,120     36,277
    Rentals                             613        464      1,904      1,414
    Other                                31          -         50          -
                                  ---------- ---------- ---------- ----------
                                     20,131     18,751     51,187     56,562
                                  ---------- ---------- ---------- ----------
    Gross margin                      9,673     12,232     33,334     35,917

    Selling, general and
     administrative expenses         10,255      9,845     31,725     29,910
    Research and development          1,563        878      4,180      2,457
    Amortization of intangibles         129        132        406        456
    Receivable provisions net of
     (recoveries)                       718        359        693        250
                                  ---------- ---------- ---------- ----------
    Earnings (loss) from
     operations                      (2,992)     1,018     (3,670)     2,844

    Interest income                     194        227        647        760
    Interest expense                 (4,341)    (4,181)   (12,965)   (12,580)
                                  ---------- ---------- ---------- ----------
    Loss from continuing
     operations before income
     taxes                           (7,139)    (2,936)   (15,988)    (8,976)

    Provision for income taxes         (383)    (1,784)      (810)       (90)
                                  ---------- ---------- ---------- ----------
    Loss from continuing
     operations                      (7,522)    (4,720)   (16,798)    (9,066)

    Net earnings (loss) from
     discontinued operations              -       (875)         -      1,425
                                  ---------- ---------- ---------- ----------

    Net loss                      $  (7,522) $  (5,595) $ (16,798) $  (7,641)
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------

    Loss per share
    Earnings (loss) per share
     - basic & diluted:
      Net loss from continuing
       operations                 $   (0.19) $   (0.12) $   (0.42) $   (0.23)
      Net earnings from
       discontinued operations    $       -  $   (0.02) $       -  $    0.04
                                  ---------- ---------- ---------- ----------
      Net loss                    $   (0.19) $   (0.14) $   (0.42) $   (0.19)
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------
    Weighted average number of
     shares outstanding (000's):
      Basic                          40,310     40,286     40,294     40,265
      Diluted                        40,310     42,286     40,294     40,265

    Additional disclosure:

    Depreciation and
     amortization(1)              $   6,540  $   5,229  $  12,794  $  12,867

    (1) Includes $0.3 million and $0.9 million in amortization of deferred
        financing costs charged to interest expense for the three and nine
        months ended September 30, 2007 (2006 - $0.3 million, $0.9 million)


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

                                                   September 30, December 31,
                                                           2007       2006
                                                       (unaudited)
                                                        ---------- ----------
                                                                  As restated

    Assets
    Cash and cash equivalents                           $  15,981  $  25,123
    Short-term investments                                  2,192      2,115
    Accounts receivable, net of allowance for
     doubtful accounts of $3,747 (2006 - $3,253)           22,511     26,017
    Financing receivables                                  62,214     65,878
    Inventories                                            27,106     26,913
    Prepaid expenses                                        3,116      3,432
    Film assets                                             1,832      1,235
    Property, plant and equipment                          24,000     24,639
    Other assets                                           12,230     10,365
    Goodwill                                               39,027     39,027
    Other intangible assets                                 2,491      2,547
                                                        ---------- ----------
      Total assets                                      $ 212,700  $ 227,291
                                                        ---------- ----------
                                                        ---------- ----------

    Liabilities
    Accounts payable                                    $   8,781  $  11,426
    Accrued liabilities                                    62,247     58,294
    Deferred revenue                                       58,482     55,803
    Senior Notes due 2010                                 160,000    160,000
                                                        ---------- ----------
      Total liabilities                                   289,510    285,523
                                                        ---------- ----------

    Shareholders' equity (deficit)
    Capital stock common shares - no par value.
     Authorized - unlimited number. Issued and
     outstanding - 40,309,741 (2006 - 40,285,574)         122,172    122,024
    Other equity                                            3,611      2,937
    Deficit                                              (203,265)  (184,375)
    Accumulated other comprehensive income                    672      1,182
                                                        ---------- ----------
      Total shareholders' deficit                         (76,810)   (58,232)
                                                        ---------- ----------
      Total liabilities and
       shareholders' equity (deficit)                   $ 212,700  $ 227,291
                                                        ---------- ----------
                                                        ---------- ----------
    





For further information:

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

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