Press

IMAX CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 2013 FINANCIAL RESULTS
Feb 20, 2014

HIGHLIGHTS
- Robust performance in Q4 leads to adjusted EPS of $0.44, 91% growth over same period last year, drives full year adjusted EPS to $0.81
- Highest global box office quarter ever for IMAX of $244 million, brings full year 2013 box office to $727 million
- IMAX has record year for signings with 119 signings in Q4 and 277 in the full year, double that of 2012
- IMAX expands backlog to historical high of 384 new commercial theatres, a 45% increase year-over-year

NEW YORK, Feb. 20, 2014 /PRNewswire/ -- IMAX Corporation (NYSE:IMAX; TSX:IMX) today reported robust fourth quarter 2013 financial results driven by the combination of strong installations as well as its highest grossing quarterly global box office ever. The Company reported revenues for the fourth quarter 2013 of $105.1 million, adjusted EBITDA as calculated in accordance with the Company's credit facility of $52.2 million, adjusted net income of $30.8 million, or $0.44 per diluted share, and reported net income of $27.8 million, or $0.40 per diluted share. The Company also reported a fourth quarter per screen average of $366,300.

Full year 2013 revenues were $287.9 million, adjusted EBITDA as calculated in accordance with the Company's credit facility was $113.2 million, adjusted net income was $55.7 million, or $0.81 per diluted share, and reported net income was $44.1 million, or $0.64 per diluted share. For reconciliations of adjusted net income to reported net income and for the definition of adjusted EBITDA and free cash flow, please see the tables at the end of this press release. The Company also reported a 2013 per screen average of $1.15 million. With the exception of 2010, when the Company's per screen average was much higher driven by Avatar, the Company's per screen averages over the past 5 years have been in a range of approximately $1.1 to $1.2 million.

"IMAX fired on all cylinders in the fourth quarter, with an exceptional number of installations and signings, as well as the highest grossing box office in the Company's history," said IMAX CEO, Richard L. Gelfond. "Breakout performances by films such as Gravity, Hobbit, and Stalingrad internationally, exemplify the power and differentiation of the IMAX format." Gelfond continued, "The strong fourth quarter drove over 90% growth in our EBITDA compared to the same period last year, resulting in margin expansion and strong operating leverage for the full year. Overall, 2013 was a very exciting and productive year at IMAX as we effectively streamlined costs, expanded the network, signed a record number of deals and continued to execute on the film front."

Network Growth Update

In the fourth quarter of 2013, the Company signed contracts for 119 theatre systems and installed 58 theatre systems, of which 4 were upgrades of existing theatre locations, bringing the full year total installations to 112 new theatre systems across 23 countries.

"With our footprint now spanning 57 countries, IMAX is more global than ever before," added Gelfond. "Moving forward, we are focused on managing all aspects of our business to ensure that we take full advantage of attractive movie-going trends unique to each local market and that we secure IMAX's position as the world's premium cinematic experience. Our record level of signings in 2013 will drive ongoing network growth, and we are optimistic about what the future holds."

The total IMAX® theatre network consisted of 837 systems as of December 31, 2013, of which 701 were in commercial multiplexes. IMAX signed contracts for 277 theatres in 2013, across 31 countries, resulting in 407 theatre systems in backlog as of December 31, 2013, compared to 276 theatre systems in backlog as of December 31, 2012. For a breakdown of theatre system signings, installations, network and backlog by type, please see the end of this press release.

Fourth-Quarter Segment Results

- Revenue from sales and sales-type leases was $32.6 million in the fourth quarter of 2013, compared to $20.2 million in the fourth quarter of 2012, primarily reflecting the installation of 24 full, new theatre systems under sales and sales-type lease arrangements in the most recent fourth quarter, compared to the 14 in the fourth quarter of 2012. In addition there were 4 digital system upgrades in existing locations in the fourth quarter of 2013, compared to 3 upgrades in the fourth quarter of 2012.
- Revenue from joint revenue-sharing arrangements was $24.5 million in the quarter, compared to $17.0 million in the prior-year period. During the quarter, the Company installed 30 new theatres under joint revenue-sharing arrangements, compared to 29 in the year ago period. The Company had 382 theatres operating under joint revenue-sharing arrangements as of December 31, 2013, as compared to 316 theatres one year prior.
- Production and IMAX DMR® (Digital Re-Mastering) revenues were $28.6 million in the fourth quarter of 2013, compared to $19.2 million in the fourth quarter of 2012. Gross box office from DMR titles was $244.5 million in the fourth quarter of 2013, compared to $152.0 million in the prior-year period. The average global DMR box office per screen in the fourth quarter of 2013 was $366,300 compared to $264,400 in the prior-year period.

Conference Call

The Company will host a conference call today at 8:30 AM ET to discuss its fourth quarter and full year 2013 financial results. To access the call via telephone, interested parties in the US and Canada should dial (800) 820-0231 approximately 5 to 10 minutes before the call begins. International callers should dial (416) 640-5926. The conference ID for the call is 9729185. A replay of the call will be available via webcast on the 'Investor Relations' section of www.imax.com or via telephone by dialing (888) 203-1112 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 9729185.

About IMAX Corporation

IMAX, an innovator in entertainment technology, combines proprietary software, architecture and equipment to create experiences that take you beyond the edge of your seat to a world you've never imagined. Top filmmakers and studios are utilizing IMAX theatres to connect with audiences in extraordinary ways, and, as such, IMAX's network is among the most important and successful theatrical distribution platforms for major event films around the globe.

IMAX is headquartered in New York, Toronto and Los Angeles, with offices in London, Tokyo, Shanghai and Beijing. As of Dec. 31, 2013, there were 837 IMAX theatres (701 commercial multiplexes, 19 commercial destinations and 117 institutions) in 57 countries.

IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D Experience®, The IMAX Experience®, IMAX Is Believing® and IMAX nXos® are trademarks of IMAX Corporation. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).

This press release contains forward looking statements that are based on IMAX 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, references to future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, plans and references to the future success of IMAX Corporation together with its wholly-owned subsidiaries (the "Company") and expectations regarding the Company's future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, general economic, market or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by the Company; the performance of IMAX DMR films; competitive actions by other companies; conditions in the in-home and out-of-home entertainment industries; the signing of theater system agreements; changes in laws or regulations; conditions, changes and developments in the commercial exhibition industry; risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada; risks related to the Company's growth and operations in China; the failure to respond to change and advancements in digital technology; the Company's largest customer accounting for a significant portion of the Company's revenue and backlog; risks related to new business initiatives; the potential impact of increased competition in the markets within which the Company operates; risks related to the Company's inability to protect the Company's intellectual property; risks related to the Company's implementation of a new enterprise resource planning system; the failure to convert theater system backlog into revenue; risks related to the Company's dependence on a sole supplier for its analog film; and other factors, many of which are beyond the control of the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX's most recent Annual Report on Form 10-K.

Additional Information

Signings and Installations

 

Dec. 31, 2013

         
   

Three Months

  

Twelve Months

 
   

Ended Dec. 31,

  

Ended Dec. 31,

 
 

Theatre Signings:

2013

 

2012

  

2013

 

2012

 
  

Full new sales and sales-type lease arrangements

18

 

11

  

56

 

43

 
  

New joint revenue sharing arrangements

98

 

17

  

190

 

78

 
 

  Total new theatres

116

 

28

  

246

 

121

 
            
  

Upgrades of IMAX theatre systems

3

 

10

  

31

(1)

21

(2)

 

Total Theatre Signings

119

 

38

  

277

 

142

 
            
   

Three Months

  

Twelve Months

 
   

Ended Dec. 31,

  

Ended Dec. 31,

 
 

Theatre Installations:

2013

 

2012

  

2013

 

2012

 
  

Full new sales and sales-type lease arrangements

24

 

14

  

47

(3)

47

 
  

New joint revenue sharing arrangements

30

 

29

  

65

 

60

 
 

  Total new theatres

54

 

43

  

112

(3)

107

 
            
  

Upgrades of IMAX theatre systems

4

 

3

  

21

(1)

18

 
 

Total Theatre Installations

58

 

46

  

133

 

125

 
            
   

As of Dec. 31,

      
 

Theatre Backlog:

2013

 

2012

      
  

New sales and sales-type lease arrangements

125

 

128

      
  

New joint revenue sharing arrangements

259

 

137

      
 

  Total new theatres

384

 

265

      
            
  

Upgrades of IMAX theatre systems

23

 

11

      
 

Total Theatres in Backlog

407

(4)

276

(5)

     
            
   

As of Dec. 31,

      
 

Theatre Network:

2013

 

2012

      
 

Commercial Multiplex Theatres:

         
  

Sales and sales-type lease arrangements

319

 

282

      
  

Joint revenue sharing arrangements

382

 

316

      
 

Total Commercial Multiplex Theatres

701

 

598

      
            
 

Commercial Destination Theatres

19

 

19

      
 

Institutional Theatres

117

 

114

      
 

Total IMAX Theatre Network

837

 

731

      

______________________

(1)

Includes upgrades to xenon-based digital systems under short-term operating lease arrangements (10 signings, 10 installations).

(2)

Includes 3 IMAX theaters acquired from another existing customer that has been operating under a joint revenue sharing arrangement. These theaters were purchased from the Company under a sales arrangement.

(3)

Includes the following items: (i) one new xenon-based digital system under a short-term operating lease arrangement; (ii) one theater system which has increased the Company's institutional theater network; and (iii) one IMAX Private Theater (the first of its kind in the IMAX theater network). 

(4)

Includes 23 upgrades to a digital theater system, in an existing IMAX theater location (3 xenon and 20 laser, of which 4 are under joint revenue sharing arrangements).

(5)

Includes 11 upgrades to a digital theater system, in an existing IMAX theater location (6 xenon and 5 laser).

 

Additional Information (continued)

2013 DMR Films:  

In 2013, 38 films were converted through the IMAX DMR process and released to theaters in the IMAX network by film studios as compared to 35 films in 2012. These films were:

- The Grandmaster: The IMAX Experience (Jet Tone Films and Sil-Metropole Organization, January 2013, China only);Hansel & Gretel: Witch Hunters: An IMAX 3D Experience (Paramount Pictures,January 2013);
Top Gun: An IMAX 3D Experience (Paramount PicturesFebruary 2013);
Journey to the West: Conquering the Demons: An IMAX 3D Experience (Bingo Movie Development LtdFebruary 2013China only);
- A Good Day to Die Hard: The IMAX Experience (Twentieth Century Fox, February 2013);
Jack the Giant Slayer: An IMAX 3D Experience (Warner Bros. Pictures, March 2013);
Oz: The Great and Powerful: An IMAX 3D Experience (Walt Disney Pictures, March 2013);
G.I. Joe: Retaliation: An IMAX 3D Experience (Paramount PicturesMarch 2013);
Dragon Ball Z: Battle of the Gods: An IMAX 3D Experience (Toei Animation CompanyMarch 2013Japan only);
Jurassic Park: An IMAX 3D Experience (Universal PicturesApril 2013);
Oblivion: The IMAX Experience (Universal PicturesApril 2013);
Iron Man 3: An IMAX 3D Experience (Walt Disney Pictures, May 2013);
Star Trek: Into Darkness: An IMAX 3D Experience (Paramount PicturesMay 2013);
Fast & Furious 6: The IMAX Experience (Universal PicturesMay 2013, select international markets);
After Earth: The IMAX Experience (Columbia Pictures, May 2013);
Man of Steel: The IMAX Experience (Warner Bros. Pictures, June 2013);
World War Z: An IMAX 3D Experience (Paramount PicturesJune 2013, select international markets);
Despicable Me 2: An IMAX 3D Experience (Universal PicturesJuly 2013, select international markets);
White House Down: The IMAX Experience (Sony PicturesJuly 2013, select international markets);
Man of Tai Chi: The IMAX Experience (China Film GroupWanda GroupVillage RoadshowJuly 2013China only);
Lone Ranger: The IMAX Experience (Walt Disney Pictures, July 2013, select international markets);
Pacific Rim: An IMAX 3D Experience (Warner Bros. Pictures, July 2013);
Elysium: The IMAX Experience (Sony PicturesAugust 2013);
The Mortal Instruments: City of Bones: The IMAX Experience (Sony PicturesAugust 2013);
- R
iddick Sequel: The IMAX Experience (Universal PicturesSeptember 2013);
The Wizard of Oz: An IMAX 3D Experience (Picturehouse, September 2013);
Young Detective Dee: Rise of the Sea Dragon: An IMAX 3D Experience (Huayi Bros.,September 2013China only);
Metallica Through the Never: An IMAX 3D Experience (Warner Bros. Pictures,September 2013);
Gravity: An IMAX 3D Experience (Warner Bros. Pictures, October 2013);
Stalingrad: An IMAX 3D Experience (AR Films, October 2013Russia and the CIS only);
Captain Phillips: The IMAX Experience (Sony PicturesOctober 2013);
The Young and Prodigious T.S. Spivet: An IMAX 3D Experience (Epithète Films.,October 2013France only);
Thor: The Dark World: An IMAX 3D Experience (Walt Disney Pictures, October 2013, select international markets);
Ender's Game: The IMAX Experience (Lionsgate, November 2013);
The Hunger Games: Catching Fire: The IMAX Experience (Lionsgate, November 2013);
The Hobbit: The Desolation of Smaug: An IMAX 3D Experience (Warner Bros. Pictures, December 2013);
Dhoom 3: The IMAX Experience (Yash Raj Films, December 2013India only); and
Police Story: An IMAX 3D Experience (China Vision, December 2013China only).

 

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

 

Year Ended

  

Ended December 31,

 

Ended December 31,

  

2013

 

2012*

 

2013

 

2012*

Revenues

           

Equipment and product sales

$

38,014

 

$

22,405

 

$

78,663

 

$

78,161

Services

 

42,463

  

33,936

  

139,464

  

135,071

Rentals

 

22,511

  

18,356

  

61,293

  

61,268

Finance income

 

2,063

  

1,986

  

8,142

  

7,523

Other

 

-

  

732

  

375

  

732

   

105,051

  

77,415

  

287,937

  

282,755

Costs and expenses applicable to revenues

           

Equipment and product sales

 

16,956

  

9,811

  

37,517

  

37,538

Services

 

15,483

  

16,741

  

68,844

  

70,570

Rentals

 

5,286

  

8,434

  

16,973

  

21,402

Other

 

-

  

-

  

-

  

-

   

37,725

  

34,986

  

123,334

  

129,510

Gross margin

 

67,326

  

42,429

  

164,603

  

153,245

Selling, general and administrative expenses

 

23,305

  

22,529

  

82,669

  

81,560

 

(including share-based compensation expense of $3.2 million and $11.9 million for the three months and year ended December 31, 2013, respectively (2012 - expense of $2.8 million and $13.1 million, respectively))

           

Research and development

 

3,504

  

3,788

  

14,771

  

11,411

Amortization of intangibles

 

472

  

174

  

1,618

  

706

Receivable provisions, net of recoveries

 

166

  

(305)

  

445

  

524

Impairment of available-for-sale investment

 

-

  

-

  

-

  

150

Income from operations

 

39,879

  

16,243

  

65,100

  

58,894

Interest income

 

16

  

12

  

55

  

85

Interest expense

 

(338)

  

686

  

(1,345)

  

(689)

Income from continuing operations before income taxes

 

39,557

  

16,941

  

63,810

  

58,290

Provision for income taxes

 

(9,927)

  

(3,594)

  

(16,629)

  

(15,079)

Loss from equity-accounted investments

 

(1,759)

  

(324)

  

(2,757)

  

(1,362)

Income from continuing operations 

 

27,871

  

13,023

  

44,424

  

41,849

Net loss from discontinued operations

 

(42)

  

(140)

  

(309)

  

(512)

Net Income

$

27,829

 

$

12,883

 

$

44,115

 

$

41,337

             

Net income per share - Basic:

           
 

Net income per share from continuing operations

$

0.41

 

$

0.20

 

$

0.66

 

$

0.64

 

Net loss per share from discontinued operations

 

-

  

-

  

-

  

(0.01)

  

$

0.41

 

$

0.20

 

$

0.66

 

$

0.63

Net income per share - Diluted:

           
 

Net income per share from continuing operations

$

0.40

 

$

0.19

 

$

0.64

 

$

0.62

 

Net loss per share from discontinued operations

 

-

  

-

  

-

  

(0.01)

  

$

0.40

 

$

0.19

 

$

0.64

 

$

0.61

             

Weighted average number of shares outstanding (000's):

           
 

Basic

 

67,696

  

66,264

  

67,151

  

65,854

 

Fully Diluted

 

69,334

  

68,281

  

68,961

  

67,933

             
             

Additional Disclosure:

           

Depreciation and amortization(1)

$

8,145

 

$

8,084

 

$

37,172

 

$

32,788

                                               

(1)

Includes $0.1 million and $0.5 million of amortization of deferred financing costs charged to interest expense for the three months and year ended December 31, 2013 (2012 - less than $0.1 million and $0.2 million respectively).

  

*

Includes a reclass of the Company's owned and operated Nyack theater from continuing operations to discontinued operations.

 

                 

 

IMAX CORPORATION

CONSOLIDATED BALANCE SHEETS

In accordance with United States Generally Accepted Accounting Principles

(In thousands of U.S. dollars)

       
       
       
  

As at December 31,

  

2013

 

2012

      

Assets

      

Cash and cash equivalents

 

$

29,546

 

$

21,336

Accounts receivable, net of allowance for doubtful accounts of $887 (December 31, 2012 — $1,564)

 

73,074

  

42,007

Financing receivables 

  

107,110

  

94,193

Inventories 

  

9,825

  

15,794

Prepaid expenses

  

3,602

  

3,833

Film assets 

  

7,076

  

3,737

Property, plant and equipment 

  

132,847

  

113,610

Other assets 

  

27,034

  

23,963

Deferred income taxes

  

24,259

  

36,461

Goodwill

  

39,027

  

39,027

Other intangible assets 

  

27,745

  

27,911

Total assets

 

$

481,145

 

$

421,872

       

Liabilities

      

Bank indebtedness 

 

$

-

 

$

11,000

Accounts payable

  

19,396

  

15,144

Accrued and other liabilities 

  

65,232

  

68,695

Deferred revenue

  

76,932

  

73,954

Total liabilities

  

161,560

  

168,793

       

Commitments and contingencies

      
       

Shareholders' equity

      

Capital stock common shares — no par value. Authorized — unlimited number.

      

    Issued and outstanding — 67,841,233 (December 31, 2012 — 66,482,425)

  

327,313

  

313,744

Other equity

  

36,452

  

28,892

Deficit

  

(43,051)

  

(87,166)

Accumulated other comprehensive loss

  

(1,129)

  

(2,391)

Total shareholders' equity

  

319,585

  

253,079

Total liabilities and shareholders' equity

 

$

481,145

 

$

421,872

 

IMAX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

In accordance with United States Generally Accepted Accounting Principles

(In thousands of U.S. dollars)

  

Years Ended December 31,

  

2013

 

2012*

 

Cash provided by (used in):

     

Operating Activities

      

Net income

$

44,115

 

$

41,337

 
 

Net loss from discontinued operations

 

309

  

512

 

Adjustments to reconcile net income to cash from operations:

      
 

Depreciation and amortization

 

37,172

  

32,788

 
 

Write-downs, net of recoveries

 

1,336

  

1,607

 
 

Change in deferred income taxes

 

12,899

  

14,724

 
 

Stock and other non-cash compensation

 

12,685

  

14,220

 
 

Unrealized foreign currency exchange loss (gain)

 

1,183

  

(329)

 
 

Gain on curtailment of postretirement benefits

 

(2,185)

  

-

 
 

Loss from equity-accounted investments

 

2,757

  

1,362

 

Investment in film assets

 

(20,935)

  

(16,817)

 

Changes in other non-cash operating assets and liabilities

 

(33,755)

  

(15,262)

 

Net cash used in operating activities from discontinued operations

 

(548)

  

(512)

 
 

Net cash provided by operating activities

 

55,033

  

73,630

 
        

Investing Activities

      

Purchase of property, plant and equipment

 

(13,016)

  

(6,055)

 

Investment in joint revenue sharing equipment

 

(22,775)

  

(23,257)

 

Investment in new business ventures

 

(4,000)

  

(381)

 

Acquisition of other intangible assets

 

(2,486)

  

(5,826)

 
 

Net cash used in investing activities

 

(42,277)

  

(35,519)

 
        

Financing Activities

      

Increase in bank indebtedness

 

12,000

  

9,917

 

Repayment of bank indebtedness

 

(23,000)

  

(54,000)

 

Common shares issued - stock options exercised

 

8,970

  

8,920

 

Proceeds from disgorgement of stock sale profits

 

-

  

314

 

Credit Facility amendment fees paid

 

(2,151)

  

-

 

Share issuance expenses

 

(202)

  

-

 
 

Net cash used in financing activities

 

(4,383)

  

(34,849)

 
        

Effects of exchange rate changes on cash

 

(163)

  

(64)

 
        

Increase in cash and cash equivalents during year

 

8,210

  

3,198

 
        

Cash and cash equivalents, beginning of year

 

21,336

  

18,138

 
        

Cash and cash equivalents, end of year

$

29,546

 

$

21,336

 

                                      

 

*  

Includes a reclass of the Company's owned and operated Nyack theater from continuing operations to discontinued operations.

 

IMAX CORPORATION 
SELECTED FINANCIAL DATA
In accordance with United States Generally Accepted Accounting Principles

(In thousands of U.S. dollars)

 

The Company has seven 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; and other. The IMAX systems segment is comprised of the design, manufacture, sale or lease IMAX theater projection system equipment. The theater system maintenance segment consists of the maintenance of IMAX theater projection system equipment in the IMAX theater network. The joint revenue sharing arrangements segment is comprised of the installation IMAX theater projection system equipment to an exhibitor in exchange for a certain percentage of box-office receipts, concession revenue and in some cases a small upfront or initial payment. The film production and IMAX DMR segment is comprised of the production of films and performance of film re-mastering services. The film distribution segment includes the distribution of films for which the Company has distribution rights. The film post-production segment includes the provision of film post-production and film print services. The other segment includes certain IMAX theaters that the Company owns and operates, camera rentals and other miscellaneous items.

 
   

Three Months

 

Year Ended

   

Ended December 31,

 

Ended December 31,

    

2013

  

2012(*)

 

2013

 

2012(*)

Revenue

           

IMAX Theater Systems

           
 

IMAX Systems

           
  

Sales and sales-type leases

$

32,623

 

$

20,237

 

$

65,944

 

$

69,988

  

Ongoing rent, fees, and finance income

 

4,134

  

4,105

  

14,245

  

13,417

  

Other

 

3,838

  

3,802

  

11,182

  

13,019

    

40,595

  

28,144

  

91,371

  

96,424

 

Theater system maintenance

 

8,134

  

7,751

  

31,978

  

28,629

 

Joint revenue sharing arrangements

 

24,458

  

17,049

  

64,130

  

57,526

              

Film

           
 

Production and IMAX DMR

 

28,642

  

19,245

  

83,496

  

78,050

 

Film distribution and post-production

 

3,222

  

5,226

  

16,962

  

22,126

    

31,864

  

24,471

  

100,458

  

100,176

Total

$

105,051

 

$

77,415

 

$

287,937

 

$

282,755

              

Gross margins

           

IMAX Theater Systems

           
 

IMAX systems(1)

           
  

Sales and sales-type leases

$

19,262

 

$

11,715

 

$

35,652

 

$

36,974

  

Ongoing rent, fees, and finance income

 

3,630

  

4,055

  

13,388

  

13,271

  

Other

 

(273)

  

398

  

102

  

1,057

    

22,619

  

16,168

  

49,142

  

51,302

 

Theater system maintenance

 

2,664

  

2,848

  

12,096

  

10,970

 

Joint revenue sharing arrangements(1)

 

17,769

  

8,968

  

44,565

  

37,308

              

Film

           
 

Production and IMAX DMR(1)

 

23,344

  

13,641

  

56,088

  

49,355

 

Film distribution and post-production

 

930

  

804

  

2,712

  

4,310

    

24,274

  

14,445

  

58,800

  

53,665

Total

$

67,326

 

$

42,429

 

$

164,603

 

$

153,245

               

 

(1)

IMAX systems include marketing and commission costs of $1.5 million and $2.5 million for the three and twelve months ended December 31, 2013, respectively (2012 — $0.6 million and $2.7 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $1.6 million and $3.6 million for the three and twelve months ended December 31, 2013, respectively (2012 — $1.3 million and $3.4 million, respectively). Production and DMR segment margins include marketing costs of $1.1 million and $4.2 million for the three and twelve months ended December 31, 2013, respectively (2012 — $1.1 million and $3.3 million, respectively). Distribution segment margins include marketing costs of $0.2 million and $0.4 million for the three and twelve months ended December 31, 2013, respectively (2012 — $0.3 million and $1.5 million, respectively).

 

*

 

Includes a reclass of the Company's owned and operated Nyack theater from continuing operations to discontinued operations.

 

IMAX CORPORATION 
OTHER INFORMATION

(In thousands of U.S. dollars)

 

Non-GAAP Financial Measures:

In this release, the Company presents adjusted EBITDA, adjusted net income and adjusted net income per diluted share as supplemental measures of performance of the Company, which are not recognized under United States generally accepted accounting principles ("GAAP"). The Company presents adjusted EBITDA, adjusted net income and adjusted net income per diluted share because it believes that they are important supplemental measures of its comparable controllable operating performance and it wants to ensure that its investors fully understand the impact of its stock-based compensation (net of any related tax impact) on its net income. Management uses these measures to review operating performance on a comparable basis from period to period. However, these non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted EBITDA, adjusted net income and adjusted net income per diluted share should be considered in addition to, and not as a substitute for, net income and other measures of financial performance reported in accordance with GAAP.

Adjusted EBITDA is calculated on a basis consistent with the Company's Credit Facility, which refers to Adjusted EBITDA as EBITDA. The Credit Facility provides that the Company will be required to maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.1:1. The Company will also be required to maintain minimum EBITDA (as defined in the Credit Agreement) of $80.0 million on December 31, 2013, which increases to $90.0 million on December 31, 2014, and $100.0 million on December 31, 2015. The Company must also maintain a Maximum Total Leverage Ratio (as defined in the Credit Agreement) of 2.25:1 on December 31, 2013, which requirement decreases to 2.0:1 on December 31, 2014, and 1.75:1 on December 31, 2015. The ratio of total debt to EBITDA was nil:1 as at December 31, 2013, where Total Debt (as defined in the Credit Agreement) is the sum of all obligations evidenced by notes, bonds, debentures or similar instruments and was $nil. EBITDA is calculated as follows:

 

       
  

For the

 

For the

  

3 months ended

 

12 months ended

 

December 31, 2013

 

December 31, 2013

(In thousands of U.S. Dollars)

     

Net income

$

27,829

 

$

44,115

Add:

     
 

Loss from equity-accounted investments

 

1,759

  

2,757

 

Provision for income taxes(1)

 

9,906

  

16,470

 

Interest expense, net of interest income

 

321

  

1,290

 

Depreciation and amortization, including film asset amortization

 

8,011

  

36,685

 

Write-downs, net of recoveries and receivable provisions

 

1,057

  

1,336

 

Stock and other non-cash compensation

 

3,337

  

12,685

 

Gain on curtailment of postretirement benefits

 

-

  

(2,185)

 

Adjusted EBITDA

$

52,220

 

$

113,153

 

               

 

(1)

Includes a tax recovery in discontinued operations of less than $0.1 million and $0.2 million for the three and twelve months ended December 31, 2013, respectively.

 

IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)

 

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter EndedDecember 31, 2013 vs. 2012:

The Company reported net income of $27.8 million or $0.41 per basic share and $0.40per diluted share for the fourth quarter of 2013 as compared to $12.9 million or $0.20 per basic share and $0.19 per diluted share for the fourth quarter of 2012. Net income for the quarter includes a $3.2 million charge or $0.04 per diluted share (2012 – $2.9 million or$0.04 per diluted share) for stock-based compensation. Adjusted net income, which consists of net income excluding the impact of stock-based compensation and the related tax impact, was $30.8 million or $0.44 per diluted share in the fourth quarter of 2013 as compared to adjusted net income of $15.7 million or $0.23 per diluted share for the fourth quarter of 2012. A reconciliation of net income, the most directly comparable U.S. GAAP measure, to adjusted net income and adjusted net income per diluted share is presented in the table below:

 

  

Three Months Ended

 

Three Months Ended

  

December 31, 2013

 

December 31, 2012

  

Net Income

 

Diluted EPS

 

Net Income

 

Diluted EPS

Reported

$

27,829

 

$

0.40

 

$

12,883

 

$

0.19

Adjustments:

           
 

Stock-based compensation

 

3,156

  

0.04

  

2,861

  

0.04

 

Tax impact on item listed above

 

(185)

  

-

  

(74)

  

-

Adjusted

$

30,800

 

$

0.44

 

$

15,670

 

$

0.23

             

Weighted average diluted shares outstanding

    

69,334

     

68,281

 

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Year EndedDecember 31, 2013 vs. 2012:

The Company reported net income of $44.1 million or $0.66 per basic share and $0.64 per diluted share for the year ended December 31, 2013 as compared to net income of $41.3 million or $0.63 per basic share and $0.61 per diluted share for the year ended December 31, 2012. Net income for the year ended December 31, 2013 includes an $11.9 million charge or $0.17 per diluted share (2012 — $13.1 million or $0.19 per diluted share) for stock-based compensation. Adjusted net income, which consists of net income excluding the impact of stock-based compensation and the related tax impact, was $55.7 million or $0.81 per diluted share for the year ended December 31, 2013 as compared to adjusted net income of $54.3 million or $0.80 per diluted share for the year ended December 31, 2012. A reconciliation of net income, the most directly comparable U.S. GAAP measure, to adjusted net income and adjusted net income per diluted share is presented in the table below:

 

 

  

Year Ended

 

Year Ended

  

December 31, 2013

 

December 31, 2012

  

Net Income

 

Diluted EPS

 

Net Income

 

Diluted EPS

Net income

$

44,115

 

$

0.64

 

$

41,337

 

$

0.61

Add:

           
 

Stock-based compensation

 

11,928

  

0.17

  

13,113

  

0.19

 

Tax impact on items listed above

 

(344)

  

-

  

(160)

  

-

Adjusted net income

$

55,699

 

$

0.81

 

$

54,290

 

$

0.80

             

Weighted average diluted shares outstanding

    

68,961

     

67,933

Free Cash Flow:

Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the consolidated statements of cash flows). Cash provided by operating activities consist of net income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company's after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. A reconciliation of cash provided by operating activities to free cash flow is presented in the table below:

 

  

For the

 

For the

  

3 months ended

 

12 months ended

 

December 31, 2013

 

December 31, 2013

(In thousands of U.S. Dollars)

     

Net cash provided by operating activities

$

22,058

 

$

55,033

Net cash (used in) investing activities

 

(15,435)

  

(42,277)

Free cash flow

$

6,623

 

$

12,756