IMRIS REPORTS RECORD THIRD QUARTER 2010 RESULTS

- Strong financial performance and highest order bookings ever-

WINNIPEG, Nov. 4 /CNW/ - IMRIS Inc. (TSX: IM) ("IMRIS" or the "Company") today reported its results for the third quarter 2010 highlighted by record order bookings, growth in backlog and financial performance that included strong revenue increases together with positive EBITDA¹ and earnings. 

Highlights:

• Record quarterly order bookings of $42.7 million increased backlog to a record $120 million
• Global growth strategy resulted in 4 new system orders
• Two new IMRIScardio systems sold
• Revenues increased 75% to $17.3 million over Q3 2009
• Positive EBITDA of $1.3 million and earnings per share of $0.02
• Agreement with Varian Medical Systems to co-develop advanced new radiation therapy product

Performance continued to be strong in the third quarter of 2010 with revenues increasing by 75% to $17.3 million.  Year to date September 30, 2010, sales increased to $46.6 million or by 90% compared with the first nine months of 2009.  Gross profit also increased significantly, increasing by 78% to $7.9 million in the quarter and by 80% to $19.4 million during the first nine months of 2010.  The Company delivered positive EBITDA and net income in the quarter of $1.3 million and $0.7 million respectively. Net loss was $3.1 million year to date, representing an improvement of 68% from the same period in 2009. 

"We had a very strong quarter on all fronts," said David Graves, IMRIS CEO.  "Consistent with our expectations, order bookings accelerated significantly driving our backlog to an all time high of $120 million.  At the same time, we continued to advance customer installations, achieving strong top line performance while carefully managing operations with the result being $1.3 million of positive EBITDA for the quarter."

Financial Highlights:

($ 000's except per share amounts) (unaudited)		3 months ended Sept 30			9 months ended Sept 30
		2010	2009	Change	2010	2009	Change
Sales		17,289	9,864	75.3%	46,588	24,496	90.2%
Gross profit		7,928	4,462	77.7%	19,362	10,738	80.3%
	Gross profit as % of sales	45.9%	45.2%	n/m^2	41.6%	43.8%	n/m
Operating expenses		7,473	6,078	23.0%	22,771	18,662	22.0%
EBITDA		1,329	(1,077)	n/m	(797)	(6,359)	87.5%
Operating income (loss) before		455	(1,616)	n/m	(3,409)	(7,924)	57.0%
	Foreign exchange gain (loss)	207	(1,034)	n/m	220	(1,658)	n/m
	Interest income (expense)	69	(6)	n/m	79	(1)	n/m
Net income (loss)		731	(2,656)	n/m	(3,110)	(9,583)	67.5%
Basic & diluted loss per share		0.02	(0.10)	n/m	(0.10)	(0.35)	71.4%
Cash, cash equivalents & accounts receivable^3		30,930	12,441	148.6%	30,930	12,441	148.6%
Total assets		64,143	36,364	76.4%	64,143	36,364	76.4%

¹ EBITDA is defined as earnings before interest income (expense), foreign exchange gain (loss) taxes and amortization.  See "Non-GAAP Financial Measures" in the Company's Q3 2010 MD&A for a reconciliation of EBITDA to GAAP measures.

² Not measurable.

³ Includes restricted cash pledged as security for letters of credit on certain system installations.

Third Quarter and Nine Month Results

Sales

Sales in the third quarter of 2010 were $17.3 million, increasing by 75% from $9.9 million in the third quarter of 2009. During the first nine months of 2010 sales climbed by 90% to $46.6 million.  The higher performance in 2010 reflects higher average revenue per system and increased system deliveries versus 2009. Growth in revenues from service contracts also contributed to higher sales results through the first nine months of the year.  Revenues from service contracts contributed $0.4 million in the third quarter and $1.4 million year to date compared with $0.4 million and $1.2 million in the third quarter of 2009 and first nine months of 2009 respectively. 

Gross Profit

Gross profit increased by 78% to $7.9 million in the third quarter of 2010 and by 80% to $19.4 million in the first nine months of the year. Gross profit as a percentage of sales was a record 45.9% in the third quarter of 2010 and was 41.6% year to date.  In 2009, gross profit as a percentage of sales was 45.2% and 43.8% in the third quarter and first nine months respectively.

The year over year increase in quarterly gross profit as a percentage of sales reflected the delivery of higher margined systems during the quarter.  Performance would have been even higher if not for the completion of the Company's first IMRISNV/IMRIScardio system, which somewhat reduced the gross profit percentage.  Gross profit as a percentage of sales was lower in the first nine months of 2010 versus the same period in 2009 due to two lower margined systems that were substantially delivered in the first half of the fiscal year. 

Operating Expenses

IMRIS continues to carefully manage its investment in operations in support of strong top line growth while at the same time improving profitability. Operating expenses in the third quarter of 2010 were $7.5 million and $22.8 million year to date, compared to $6.1 million and $18.7 million during the same periods in 2009.  The 2010 increases are due to a significant increase in non-cash amortization expense primarily related to the acquisition of NeuroArm Surgical Limited at the beginning of the year.  In addition, higher cash operating costs have been incurred to fund growth in the business, increasing year over year by $1.1 million in the third quarter and by $3.1 million through the first nine months of 2010.  These increased cash operating costs reflect the Company's ability to leverage its investment in operations and have contributed to incremental revenues of $7.4 million in the third quarter of 2010 and $22.1 million year to date. 

EBITDA

EBITDA in the third quarter of 2010 was $1.3 million compared with negative $1.1 million in the third quarter of 2009.  Year to date September 30, 2010 EBITDA improved to negative $0.8 million compared with negative $6.4 million in the first three quarters of 2009.  The year over year improvements are primarily due to increased sales volumes and improvement in gross margin, net of the higher cash operating expenses described above. 

Operating and Net Income

Operating income increased to $0.5 million from a loss of $1.6 in the third quarter of 2009 contributing to an operating loss during the first nine months of 2010 of $3.4 million compared with $7.9 million during the same period in 2009. Net income was $0.7 million in the third quarter of 2010 versus a net loss of $2.7 million in Q3 2009.  Net loss improved by 68% to $3.1 million year to date. The year over year improvements reflect higher gross profit net of higher operating expenses to fund growth.  Foreign exchange gains arising from translation of foreign currency cash balances also contributed to the year over year improvements in net loss.  The Company realized foreign exchange gains of $0.2 million in each of the third quarter and first nine months of 2010 compared with foreign exchange losses of $1.0 million and $1.7 million in the third quarter and first nine months of 2009 respectively.

Liquidity and Capital Resources

Cash, cash equivalents and restricted cash at September 30, 2010 totaled $14.1 million.  In addition the Company had accounts receivable of $16.8 million, the majority of which are expected to be collected within the next 60 days.  These funds together with ongoing operating cash flow will be used to fund the Company's working capital and general corporate purposes. 

Backlog⁴

In the third quarter of 2010, IMRIS received record order bookings totalling $42.7 million comprised of 4 new system orders, one system upgrade and three new service agreements.  Two of the new system orders received, were for IMRIScardio, one of the Company's recently launched products.  During the quarter $17.3 million of backlog was converted into revenues, and the depreciation of the Canadian dollar resulted in a $0.5 million increase in the value of backlog.  Net of these items, backlog at September 30, 2010 was $120.0 million, including $92.3 million of system orders and $27.7 million of service contracts. 

IMRIS and Varian Medical Systems to Co-Develop MR-Guided Radiation Therapy System

On October 5, 2010 IMRIS announced an agreement with Varian Medical Systems to co-develop an innovative new MR-guided radiation therapy system for use in treating a variety of cancers.  Under the terms of the agreement, the two companies will develop a solution that combines IMRIS's proprietary MR imaging technology with Varian's TrueBeam^TM system. Following successful completion of the development stage of this project, and subject to necessary regulatory approvals, the companies anticipate co-branding the new MR-guided radiation therapy suite and leveraging Varian's global presence and leadership position in the fields of radiotherapy and radiosurgery to market the new product.  

⁴ See "Non-GAAP Financial Measures" in the Company's Q3 2010 MD&A for further information on backlog.

Financial Outlook

The Company has experienced strong growth through the first nine months of 2010 and expects these trends to continue for the balance of the year.  Following a very positive third quarter that saw record quarterly order bookings, the Company expects to further build on its order backlog in the fourth quarter of this year.  Conversion of order bookings into revenues is forecast at a higher rate than historical trends and 2010 annual gross profit as a percentage of sales is anticipated to be similar to performance levels achieved in 2009.  Operating expenses are expected to increase in the fourth quarter, however these expenses will continue to decline as a percentage of sales, consistent with the Company's overall approach to investing to capture top line growth while at the same time improving the Company's overall profitability profile.

The Company's full financial statements as well as management's discussion and analysis will be available at www.sedar.com and www.imris.com.

Conference Call

Management will host a conference call to discuss the results at 4:30 p.m. ET today, Thursday, November 4, 2010.  Following management's presentation, there will be a question-and-answer session for analysts and institutional investors.  To participate in the teleconference, please call 416-644-3423 or 877-974-0449.  To access the live audio webcast, please visit IMRIS's website at www.imris.com.  A taped rebroadcast will be available to listeners following the call until midnight (ET) on November 11, 2010.   To access the rebroadcast, please call 416-640-1917 or 877-289-8525 and enter passcode 4381039#.  The webcast will also be archived on IMRIS's website.

About IMRIS

IMRIS (TSX: IM) is a global leader in providing image guided therapy solutions.  These solutions feature fully integrated surgical and interventional suites that incorporate magnetic resonance, fluoroscopy and computed tomography to deliver on demand imaging during procedures. The Company's systems serve the neurosurgical, cardiovascular and neurovascular markets and have been selected by leading medical institutions around the world.

For more information, visit www.imris.com.

Forward-Looking Statements

This press release may contain or refer to forward-looking information based on current expectations.  In some cases, forward-looking statements can be identified by terminology such as "anticipate", "may", "expect", "believe", "prospective", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts.  These statements should not be understood as guarantees of future performance or results.  Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements.  Although such statements are based on management's reasonable assumptions, there can be no assurance that actual results will be consistent with such statements.  Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results.  These forward-looking statements are made as of the date hereof and we assume no responsibility to update or revise them to reflect new events or circumstances.

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