IMAX Corporation Reports Second Quarter 2007 Financial Results



    
    HIGHLIGHTS
    ----------
    -   Company continues to enjoy outstanding performance of Harry Potter
        and the Order of the Phoenix: An IMAX 3D Experience, which has
        grossed nearly $28 million in worldwide IMAX box office to date.
    -   Company launches prototype theatre for digital projection system and
        enjoys positive initial test audience response.
    -   Company announces new film, Warner Bros.' I Am Legend, scheduled for
        2007 holiday season release.
    -   As anticipated, Company announces Joseph Sparacio will assume the
        duties of Chief Financial Officer effective August 10, 2007.
    

    TORONTO, Aug. 9 /CNW/ - IMAX Corporation (NASDAQ:   IMAX; TSX: IMX) today
reported that it recorded a net loss per diluted share from continuing
operations of ($0.11) for the second quarter of fiscal 2007, compared to net
earnings of $0.04 per diluted share from continuing operations for the second
quarter of fiscal 2006. As previously announced, the Company signed agreements
for six IMAX(R) theatre systems in the second quarter of fiscal 2007.
    IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J.
Wechsler stated, "As we have previously discussed, 2007 is expected to be a
transitional year from a financial perspective. That said, we are growing
increasingly optimistic about the progress we are making in executing our
strategic initiatives. Our strong film slate is contributing nicely to our
momentum, as is the encouraging initial performance of our joint ventures. We
expect to see continued positive trends in these areas in the back half of the
year, driven most recently by the record-breaking performance of Harry Potter
and the Order of the Phoenix: An IMAX 3D Experience."
    Warner Bros. Pictures' 300: The IMAX Experience, grossed approximately
$24.0 million on IMAX screens since its release March 9th, and Sony's
Spider-Man 3: The IMAX Experience, released domestically on May 4th, has
grossed approximately $24.2 million to date. Warner Bros. Pictures' Harry
Potter and the Order of the Phoenix: An IMAX 3D Experience opened July 11,
with the film's 18-minute finale digitally converted into live-action IMAX(R)
3D. The film has grossed approximately $28.0 million to date, and continues to
perform well both domestically and internationally.
    The Company announced the addition of I Am Legend: The IMAX Experience,
starring two-time Academy Award-nominated actor Will Smith and directed by
Francis Lawrence, to its 2007 film slate. The Warner Bros. film, which is an
adaptation of the 1954 science fiction novel by Richard Matheson, will be
simultaneously released to IMAX and conventional theatres on December 14,
2007.
    The Company recently announced that it was partnering with Paramount
Pictures, Shangri-La Entertainment and Concert Productions International to
release an IMAX DMR(R) version of the Rolling Stones concert film Shine A
Light, which is directed by Academy Award(R)-winning filmmaker Martin
Scorsese. Originally slated for release in September, Shine A Light's release
date is being moved to the first half of 2008, so the Company is currently in
active discussions for an additional film to precede the November 2007 release
of the IMAX 3D version of Robert Zemekis' Beowulf.
    Messrs. Gelfond and Wechsler commented, "We are delighted to work once
again with our partners at Warner Bros. to release I Am Legend: The IMAX
Experience. This action-packed holiday release is well suited to IMAX, and we
believe this event film, bolstered by the star power of Will Smith, will
really draw audiences in. We also have several great prospects for our
remaining 2007 film and our 2008 slate, and look forward to more exciting
announcements in the near term."
    The Company announced it has opened a prototype theatre for its new
digital projection system in Canada, and has begun testing of the IMAX digital
image. The Company indicated it remains on track to debut its digital system
in late 2008 to mid-2009.
    Messrs. Gelfond and Wechsler stated, "We are excited to be able to share
a prototype digital image with exhibitors and test audiences. We are
particularly encouraged by initial survey results, which indicate that
moviegoers find the IMAX digital experience to be superior to conventional
digital images in every aspect comprising the viewing experience, including
sound quality, picture quality and the overall immersive quality of the
experience."
    In 2007 to date, IMAX has signed joint revenue sharing agreements for
five theatres: a two-theatre joint revenue sharing agreement with Regal
Cinemas in the first quarter and three-theatre deal with Muvico Theaters in
the second quarter. Four of those five theatres have since opened and have
experienced strong early results.
    "We are excited about the positive performances of our joint ventures to
date, and are actively participating in numerous joint revenue sharing
discussions both domestically and abroad. We are confident that our joint
revenue sharing and digital initiatives, combined with the strength of our
film slate, will enable us to expand our worldwide network and generate
greater recurring revenues. In turn, we believe this will drive shareholder
value over the long term," concluded Messrs. Gelfond and Wechsler.
    For the three months ended June 30, 2007, the Company's total revenues
were $27.5 million, as compared to $38.1 million reported for the prior year
period. Systems revenue was $14.0 million versus $21.1 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 second quarter of 2007,
compared to nine in 2006, and installed three systems under joint revenue
sharing arrangements.
    For the second quarter of 2007, film revenues were $8.0 million, as
compared to $11.7 million in the second quarter of 2006. This included IMAX
DMR revenues of $3.8 million compared to $4.1 million in 2006. Film dollar
margin was $3.6 million for the quarter, as compared to $3.8 million in the
second quarter of 2006. Theatre operations revenue was $4.6 million in the
second quarter of 2007 compared to $4.1 million in the second quarter of 2006.
    The Company's cash and short term investments position was $18.5 million
as of June 30, 2007, compared to $27.4 million as of March 31, 2007. The
Company made its bi-annual interest payment on its senior notes of
$7.7 million in June.
    As anticipated, the Company announced that Joseph Sparacio, who had been
serving as the Company's Executive Vice President, Finance since joining the
Company in April 2007, will assume the duties of Chief Financial Officer
effective August 10, 2007. Mr. Sparacio, who previously held the positions of
Senior Vice President and Chief Financial Officer for the programming company
iN Demand L.L.C., and Vice President of Finance and Controller for Loews
Cineplex Entertainment Corporation, replaced the Company's Interim Chief
Financial Officer, Edward MacNeil, after the completion of the Company's
Report on Form 10-Q for the fiscal quarter ended June 30, 2007.

    The Company will host a conference call on Thursday, August 9, 2007 at
4:30 PM 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 (719)
457-0820. The code for both the live call and the replay is 2844847. 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 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 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(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
June 30, 2007, there were 290 IMAX theatres operating in 40 countries.

    IMAX(R), IMAX(R) 3D, IMAX DMR-, IMAX- MPX-, 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 for
the year ended December 31, 2006, as well as the Company's Quarterly Report on
Form 10-Q, which is scheduled to be filed by the Company with the Securities
and Exchange Commission today.



    
                               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     Six months ended
                                          June 30,              June 30,
                                      2007       2006       2007       2006
                                   ---------  ---------  ---------  ---------
                                             As restated          As restated

    Revenues
    Equipment and product sales    $  6,813   $ 15,358   $ 13,918   $ 23,178
    Services                         16,329     19,708     33,974     33,142
    Rentals                           1,607      1,416      2,828      2,315
    Finance income                    1,181      1,627      2,367      2,739
    Other                             1,539          -      1,539          -
                                   ---------  ---------  ---------  ---------
                                     27,469     38,109     54,626     61,374
    Cost of goods sold, services
     and rentals
    Equipment and product sales       3,813      8,910      7,756     13,116
    Services                         10,682     13,050     21,958     23,667
    Rentals                             719        461      1,268        926
    Other                                19          -         19          -
                                   ---------  ---------  ---------  ---------
                                     15,233     22,421     31,001     37,709
                                   ---------  ---------  ---------  ---------
    Gross margin                     12,236     15,688     23,625     23,665

    Selling, general and
     administrative expenses         11,168      9,554     21,510     20,107
    Research and development          1,121        664      2,616      1,579
    Amortization of intangibles         141        132        277        324
    Receivable provisions net
     of (recoveries)                    (31)      (252)       (25)      (109)
                                   ---------  ---------  ---------  ---------
    Earnings (loss) from
     operations                        (163)     5,590       (753)     1,764

    Interest income                     227        280        453        533
    Interest expense                 (4,375)    (4,242)    (8,624)    (8,399)
                                   ---------  ---------  ---------  ---------
    Earnings (loss) from continuing
     operations before income taxes  (4,311)     1,628     (8,924)    (6,102)
    (Provision for) recovery
     of income taxes                   (260)         2       (427)     1,694
                                   ---------  ---------  ---------  ---------
    Net earnings (loss) from
     continuing operations           (4,571)     1,630     (9,351)    (4,408)
    Net earnings from
     discontinued operations              -          -          -      2,300
                                   ---------  ---------  ---------  ---------
    Net earnings (loss)            $ (4,571)  $  1,630   $ (9,351)  $ (2,108)
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------

    Earnings (loss) per share
    Earnings (loss) per share
     - basic & diluted:
      Net earnings (loss) from
       continuing operations       $  (0.11)  $   0.04   $  (0.23)  $  (0.10)
      Net earnings from
       discontinued operations     $      -   $      -   $      -   $   0.05
                                   ---------  ---------  ---------  ---------
      Net earnings (loss)          $  (0.11)  $   0.04   $  (0.23)  $  (0.05)
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------

    Weighted average number
     of shares outstanding (000's):
      Basic                          40,287     40,285     40,286     40,255
      Diluted                        40,287     42,204     40,286     40,255


    Additional disclosure:

    Depreciation and
     amortization(1)               $  3,236   $  4,224   $  6,231   $  7,614

    (1) Includes $0.3 million and $0.6 million in amortization of deferred
        financing costs charged to interest expense for the three and six
        months ended June 30, 2007 (2006 - $0.3 million, $0.6 million)



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

                                                        June 30, December 31,
                                                           2007         2006
                                                     (unaudited)
                                                     -----------  -----------
    Assets
    Cash and cash equivalents                        $   16,310   $   25,123
    Short-term investments                                2,164        2,115
    Accounts receivable, net of allowance
     for doubtful accounts of $3,112
    (2006 - $3,253)                                      26,354       26,017
    Financing receivables                                62,792       65,878
    Inventories                                          27,122       26,913
    Prepaid expenses                                      3,052        3,432
    Film assets                                           4,178        1,235
    Property, plant and equipment                        24,507       24,389
    Other assets                                         12,174       10,365
    Goodwill                                             39,027       39,027
    Other intangible assets                               2,526        2,547
                                                     -----------  -----------
      Total assets                                   $  220,206   $  227,041
                                                     -----------  -----------
                                                     -----------  -----------

    Liabilities
    Accounts payable                                 $    8,454   $   11,426
    Accrued liabilities                                  54,454       51,052
    Deferred revenue                                     61,074       56,694
    Senior Notes due 2010                               160,000      160,000
                                                     -----------  -----------
      Total liabilities                                 283,982      279,172
                                                     -----------  -----------

    Shareholders' equity (deficit)
    Capital stock common shares - no par value.
     Authorized - unlimited number. Issued and
     outstanding - 40,288,074 (2006 - 40,285,574)       122,032      122,024
    Other equity                                          3,400        2,937
    Deficit                                            (189,718)    (178,274)
    Accumulated other comprehensive income                  510        1,182
                                                     -----------  -----------
      Total shareholders' deficit                       (63,776)     (52,131)
                                                     -----------  -----------
      Total liabilities and shareholders'
       equity (deficit)                              $  220,206   $  227,041
                                                     -----------  -----------
                                                     -----------  -----------
    





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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