Press

IMAX Corporation Reports Third Quarter 2014 Financial Results
Oct 23, 2014

HIGHLIGHTS
-  IMAX delivers $169 million in global box office in the third quarter, a 28% increase over Q3 2013

- Q3 2014 adjusted EPS of $0.11, up 83% compared to Q3 2013, leading to record quarterly operating cash flow of $36.6 million

- Company signs deals for 42 theater systems in the third quarter, bringing backlog to 439 theaters

NEW YORK, Oct. 23, 2014 /PRNewswire/ -- IMAX Corporation (NYSE: IMAX; TSX: IMX) today reported third quarter 2014 revenues of $60.7 million, adjusted EBITDA as calculated in accordance with the Company's credit facility of $17.6 million, adjusted net income, after non-controlling interest, of $7.8 million, or $0.11 per diluted share, and reported net income, after non-controlling interest, of $4.9 million, or $0.07 per diluted share.  

IMAX Logo

"The third quarter further validates our ongoing commitment to delivering bottom line results and advancing our corporate initiatives," stated Richard L. Gelfond, Chief Executive Officer of IMAX Corporation.  "We were able to leverage the strong box office across a growing theater network, expand margins and generate our strongest quarter ever for operating cash flow."

Network Growth Update

The total IMAX® theater network consisted of 880 systems as of September 30, 2014, of which 751 were in commercial multiplexes. There were 439 theaters in backlog as of September 30, 2014, compared to 356 in backlog as of September 30, 2013.  In the third quarter of 2014, the Company signed contracts for 42 theaters systems, of which 36 were for new locations and 6 were for system upgrades.  In the quarter, the Company installed 20 IMAX theater systems, all of which were for new theater locations.  For a breakdown of theater system signings, installations, network and backlog by type, please see the end of this press release.

"We continue to see robust worldwide signing activity, including 42 new deals this quarter, bringing our year-to-date signings total to over 100, which really demonstrates the demand for IMAX globally," continued Gelfond.  "I am also extremely enthusiastic about a demonstration I saw of our new laser projection system this quarter; it is truly spectacular. Couple this with our operating leverage potential and our ongoing focus on marketing and quality, and I believe we are well positioned to take advantage of what are shaping up to be strong film years in 2015 and 2016."

Third-Quarter Segment Results

  • Production and IMAX DMR® (Digital Re-Mastering) revenues totaled $18.4 million in the third quarter of 2014, compared to $14.5 million in the third quarter of 2013.  Gross box office from DMR titles was $169.0 million in the third quarter of 2014, compared to $132.5 million in the prior-year period.  The average global DMR box office per screen in the third quarter of 2014 was $227,900 compared to $207,500 in the prior-year period.
  • Revenue from joint revenue-sharing arrangements was $15.2 million in the quarter, compared to $12.0 million in the prior-year period.  During the quarter, the Company installed 14 new theaters under joint revenue-sharing arrangements, compared to 13 in the year-ago period.  The Company had 422 theaters operating under joint revenue-sharing arrangements as of September 30, 2014, as compared to 351 theaters one year prior.
  • Revenue from sales and sales-type leases was $6.6 million in the third quarter of 2014, compared to $6.4 million in the third quarter of 2013, resulting from the installation of 6 full, new theater systems under sales and sales-type lease arrangements compared to the 5 installed in the year-ago period.  There were no digital upgrades in the third quarter of 2014, as compared to the 9 digital upgrades the Company installed in the same period last year.

Conference Call
The Company will host a conference call today at 8:30 AM ET to discuss its third quarter 2014 financial results.  To access the call via telephone, interested parties in the US and Canada should dial (800) 524-8950 approximately 5 to 10 minutes before the call begins.  International callers should dial (416) 260-0113. The conference ID for the call is 2771960. 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 2771960.

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 theaters 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 September 30, 2014, there were 880 IMAX theaters (751 commercial multiplexes, 19 commercial destinations and 110 institutions) in 60 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, 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; the failure to convert theater system backlog into revenue; 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; risks related to the acquisition of AMC Entertainment Holdings, Inc. by Dalian Wanda Group Co., Ltd.; 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 Eastman Kodak bankruptcy and the possibility of constrained film supply; risks related to the Company's implementation of a new enterprise resource planning system; risks related to the Company's prior restatements and the related litigation; 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 and Quarterly Reports on Form 10-Q.

For additional information please contact:


Investors:

IMAX Corporation, New York

Teri Loxam

212-821-0100

tloxam@imax.com

 

Business Media:

Sloane & Company, New York

Whit Clay

212-446-1864

wclay@sloanepr.com

Media:

IMAX Corporation, New York

Ann Sommerlath

212-821-0155

asommerlath@imax.com

Entertainment Media:

Principal Communications Group, Los Angeles

Melissa Zuckerman/Paul Pflug

323-658-1555

melissa@pcommgroup.com

paul@pcommgroup.com

Additional Information

Signings and Installations





September 30, 2014








Three Months





Ended September 30,



Theater Signings:

2014


2013




Full new sales and sales-type lease arrangements

22


6

(3)



New joint revenue sharing arrangements

14


82



  Total new theaters

36


88











Upgrades of IMAX theater systems

6

(1)(2)

11

(1)(2)


Total Theater Signings

42


99












Three Months





Ended September 30,



Theater Installations:

2014


2013




Full new sales and sales-type lease arrangements

6


6

(4)



New joint revenue sharing arrangements

14


13



  Total new theaters

20


19




Upgrades of IMAX theater systems

-


9

(2)


Total Theater Installations

20


28












As of September 30,



Theater Backlog:

2014


2013




New sales and sales-type lease arrangements

169


142




New joint revenue sharing arrangements

244


191



  Total new theaters

413


333











Upgrades of IMAX theater systems

26


23



Total Theaters in Backlog

439

(5)(6)

356

(5)(7)











As of September 30,



Theater Network:

2014


2013



Commercial Multiplex Theaters:







Sales and sales-type lease arrangements

329


302




Joint revenue sharing arrangements

422


351



Total Commercial Multiplex Theaters

751


653










Commercial Destination Theaters

19


19



Institutional Theaters

110


113



Total IMAX Theater Network

880


785









(1)

Includes one signing for the installation of a laser-based digital system in an existing theater location (2013 – six signings).

(2)

Includes one signing of an upgrade to a xenon-based digital system under a short-term operating lease arrangement (2013 – 4 signings, 3 installations).

(3)

Includes one signing which replaced a theater under an existing arrangement in backlog.

(4)

Includes one full xenon-based digital system under a short-term operating lease arrangement.

(5)

 Includes 69 laser theater system configurations (2013 – 18), including upgrades.

(6)

Includes 26 upgrades to a digital theater system, in an existing IMAX theater location (3 xenon and 23 laser, of which 4 are under joint revenue sharing arrangements).

(7)

Includes 23 upgrades to a digital theater system, in an existing IMAX theater location (5 xenon and 18 laser, of which 3 are under joint revenue sharing arrangements).

Additional Information (continued)

2014 DMR Films:  
To date, IMAX has announced 34 titles to be released in 2014.  The Company released 38 titles in 2013.  The Company remains in discussions with every major Hollywood studio regarding future titles. 

  • Jack Ryan: Shadow Recruit: The IMAXExperience (Paramount Pictures, January 2014);
  • I, Frankenstein: An IMAX3D Experience (Lionsgate, January 2014);
  • The Monkey King: The IMAXExperience (Global Star Productions, January 2014, China only);
  • Robocop: The IMAXExperience (Metro-Goldwyn-Mayer Studios, Inc., February 2014);
  • 300: Rise of an Empire: An IMAX3D Experience (Warner Bros. Pictures, March 2014);
  • Need for Speed: An IMAX3D Experience  (Walt Disney Studios, March 2014, select international markets);
  • Divergent: The IMAXExperience (Summit Entertainment, March 2014);
  • Noah: The IMAXExperience (Paramount Pictures, March 2014);
  • Captain America: The Winter Soldier: An IMAX3D Experience (Marvel Entertainment, April 2014);
  • Transcendence: The IMAX Experience (Warner Bros. Pictures, April 2014);
  • The Amazing Spider-Man 2: An IMAX3D Experience (Sony Pictures, May 2014);
  • Godzilla: An IMAX3D Experience (Warner Bros. Pictures, May 2014);
  • Coming Home: The IMAXExperience (Le Vision Pictures, May 2014, China Only);
  • Maleficent: An IMAX3D Experience (Walt Disney Studios, May 2014);
  • Edge of Tomorrow: An IMAX3D Experience (Warner Bros. Pictures, June 2014);
  • How to Train Your Dragon 2: An IMAX3D Experience  (DreamWorks Animation, June 2014);
  • Transformers: Age of Extinction: An IMAX 3D Experience (Paramount Pictures, June 2014);
  • Hercules: An IMAX3D Experience (Paramount Pictures, July 2014); 
  • Lucy: The IMAXExperience (Universal Pictures, August 2014, select international markets);
  • The White Haired Witch of Lunar Kingdom: An IMAX 3D Experience (Bona Film Group, August 2014, China only);
  • Guardians of the Galaxy: An IMAX3D Experience (Walt Disney Studios, August 2014);
  • Teenage Mutant Ninja Turtles: An IMAX3D Experience (Paramount Pictures, August 2014, select international markets);
  • The Expendables 3: The IMAX Experience (Lionsgate, September 2014, China only);
  • Forrest Gump: The IMAXExperience (Paramount Pictures, September 2014);
  • The Maze Runner: The IMAXExperience (20th Century Fox, September 2014);
  • The Equalizer: The IMAXExperience (Sony Pictures, September 2014);
  • Breakup Buddies: The IMAXExperience (China Film Group, September 2014, China only);
  • Bang Bang: The IMAXExperience (Fox Star Studios, October 2014, India only);
  • Dracula Untold: The IMAXExperience (Universal Studios, October 2014);
  • John Wick: The IMAXExperience (Summit Entertainment, October 2014);
  • Fury: The IMAXExperience (Sony Pictures Entertainment, October 2014, select international markets);
  • Interstellar: The IMAXExperience (Paramount Pictures and Warner Bros. Pictures, November 2014);
  • The Hobbit: The Battle of the Five Armies: An IMAX3D Experience (Warner Bros. Pictures, December 2014); and
  • Gone with the Bullets: An IMAX3D Experience (Dongwang Yibudaowei Films Co., December 2014, China only)

2015 DMR Films:
To date, the Company has announced the following 8 titles to be released to the IMAX theater network in 2015:

  • Seventh Son: An IMAX3D Experience (Universal Studios, February 2015);
  • Fast & Furious 7: The IMAXExperience (Universal Studios, April 2015);
  • The Avengers: Age of Ultron: An IMAX3D Experience (Walt Disney Studios, May 2015);
  • Tomorrowland: The IMAXExperience (Walt Disney Studios, May 2015);
  • Jurassic World: An IMAX3D Experience (Universal Studios, June 2015);
  • Everest: An IMAX3D Experience (Universal Studios, September 2015);
  • Crimson Peak: The IMAXExperience (Universal Studios, October 2015); and
  • Star Wars: Episode VII: An IMAX3D Experience (Walt Disney Studios, December 2015).

The Company anticipates that a similar number of IMAX DMR films will be released to the IMAX network in 2015 to the 35 slated for release in 2014 and the 38 films that were released to the IMAX network in 2013.

 

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


Nine Months



Ended September 30,


Ended September 30,



2014


2013


2014


2013

Revenues 












Equipment and product sales 

$

11,765


$

9,623


$

37,621


$

40,649

Services 


33,199



28,826



101,813



97,001

Rentals 


13,646



10,987



42,278



38,782

Finance income 


2,132



2,071



6,372



6,079

Other 


-



-



-



375




60,742



51,507



188,084



182,886

Costs and expenses applicable to revenues 












Equipment and product sales  


6,041



4,086



19,126



20,561

Services  


14,788



15,910



46,318



53,361

Rentals 


4,471



4,059



12,996



11,687




25,300



24,055



78,440



85,609

Gross margin 


35,442



27,452



109,644



97,277

Selling, general and administrative expenses  


23,513



19,778



68,323



61,549


(including share-based compensation expense of $3.4 million and $11.3 million
for the three and nine months ended September 30, 2014 (2013 - expense of
$2.8 million and $8.8 million, respectively)) 












Gain on curtailment of postretirement benefit plan 


-



-



-



(2,185)

Research and development 


4,560



3,974



11,468



11,267

Amortization of intangibles 


441



409



1,259



1,146

Receivable provisions, net of recoveries 


26



224



642



279

Impairment of available-for-sale investment 


-



-



650



-

Income from operations 


6,902



3,067



27,302



25,221

Interest income 


149



14



189



39

Interest expense 


(269)



(315)



(803)



(1,008)

Income from operations before income taxes 


6,782



2,766



26,688



24,252

Provision for income taxes 


(1,188)



(685)



(6,667)



(6,701)

Loss from equity-accounted investments, net of tax 


(297)



(344)



(721)



(998)

Income from continuing operations 


5,297



1,737



19,300



16,553

Net (loss) income from discontinued operations, net of tax 


-



(128)



355



(267)

Net income 

$

5,297


$

1,609


$

19,655


$

16,286

Less: Net income attributable to non-controlling interests 


(439)



-



(911)



-

Net income attributable to Common Shareholders 

$

4,858


$

1,609


$

18,744


$

16,286














Net income per share - basic: 













Net income per share from continuing operations 

$

0.07


$

0.02


$

0.26


$

0.24


Net income per share from discontinued operations 


-



-



0.01



-



$

0.07


$

0.02


$

0.27


$

0.24

Net income per share - diluted: 













Net income per share from continuing operations 

$

0.07


$

0.02


$

0.26


$

0.24


Net income per share from discontinued operations 


-



-



0.01



-



$

0.07


$

0.02


$

0.27


$

0.24

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













Basic 


68,480



67,309



68,206



66,969


Fully Diluted 


69,602



69,116



69,597



68,853

Additional Disclosure: 













Depreciation and amortization(1)

$

7,992


$

8,826


$

23,937


$

29,027


- Includes $0.1 million and $0.4 million of amortization of deferred financing costs charged to interest expense for the three and nine months ended September 30, 2014, respectively (2013 - $0.1 million and $0.3 million, respectively).

 


IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

In accordance with United States Generally Accepted Accounting Principles

(in thousands of U.S. dollars)



As at


As at


September 30,


December 31,


2014


2013


(unaudited)




Assets






Cash and cash equivalents

$

93,705


$

29,546

Accounts receivable, net of allowance for doubtful accounts of $714 (December 31, 2013 — $887)


59,734



73,074

Financing receivables


103,616



107,110

Inventories


21,439



9,825

Prepaid expenses


5,382



3,602

Film assets


7,787



7,076

Property, plant and equipment


161,579



132,847

Other assets


20,197



27,034

Deferred income taxes


20,917



24,259

Other intangible assets


27,556



27,745

Goodwill


39,027



39,027

Total assets

$

560,939


$

481,145







Liabilities






Accounts payable

$

16,571


$

19,396

Accrued and other liabilities


55,841



65,232

Deferred revenue


100,304



76,932

Total liabilities


172,716



161,560







Commitments and contingencies












Non-controlling interest


38,187



-







Shareholders' equity






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






    Issued and outstanding — 68,520,049 (December 31, 2013 — 67,841,233)


334,415



327,313

Other equity


43,200



36,452

Accumulated deficit


(26,545)



(43,051)

Accumulated other comprehensive loss


(1,034)



(1,129)

Total shareholders' equity


350,036



319,585

Total liabilities and shareholders' equity

$

560,939


$

481,145














 


IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

In accordance with United States Generally Accepted Accounting Principles

(In thousands of U.S. dollars)

(Unaudited)



Nine Months



Ended September 30,



2014


2013

Cash provided by (used in):





Operating Activities






Net income

$

19,655


$

16,286


Net (income) loss from discontinued operations


(355)



267

Adjustments to reconcile net income to cash from operations:







Depreciation and amortization


23,937



29,027


Write-downs, net of recoveries


1,753



279


Change in deferred income taxes


3,157



5,579


Stock and other non-cash compensation


11,609



9,348


Gain on curtailment of postretirement benefit plan


-



(2,185)


Unrealized foreign currency exchange loss


847



275


Loss from equity-accounted investments


1,073



998


Gain on non-cash contribution to equity-accounted investees


(352)



-

Investment in film assets


(8,398)



(16,772)

Changes in other non-cash operating assets and liabilities


18,372



(9,860)

Net cash provided by (used in) operating activities from discontinued operations


572



(267)


Net cash provided by operating activities


71,870



32,975








Investing Activities






Purchase of property, plant and equipment


(24,686)



(6,167)

Investment in joint revenue sharing equipment


(15,908)



(16,363)

Investment in new business ventures


(2,500)



(2,500)

Acquisition of other intangible assets


(1,979)



(1,812)


Net cash used in investing activities


(45,073)



(26,842)








Financing Activities






Issuance of subsidiary shares to non-controlling interests


40,491



-

Share issuance costs from the issuance of subsidiary shares to non-controlling interests


(3,556)



-

Common shares issued - stock options exercised


3,672



6,745

Repurchase of common shares


(2,369)



-

Settlement of restricted share units


(790)



-

Increase in bank indebtedness


-



12,000

Repayment of bank indebtedness


-



(18,000)

Credit facility amendment fees paid


-



(2,089)

Share issuance expenses


-



(202)


Net cash provided by (used in) financing activities


37,448



(1,546)








Effects of exchange rate changes on cash


(86)



32








Increase in cash and cash equivalents during the period


64,159



4,619








Cash and cash equivalents, beginning of period


29,546



21,336

Cash and cash equivalents, end of period

$

93,705


$

25,955









 

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 designs, manufactures, sells or leases IMAX theater projection system equipment. The theater system maintenance segment maintains IMAX theater projection system equipment in the IMAX theater network. The joint revenue sharing arrangements segment provides IMAX theater projection system equipment to an exhibitor in exchange for a share of box-office and concession revenues. The film production and IMAX DMR segment produces films and performs film re-mastering services. The film distribution segment distributes films for which the Company has distribution rights. The film post-production segment provides 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


Nine Months




Ended September 30,


Ended September 30,





2014



2013


2014


2013

Revenue 












IMAX Theater Systems 












IMAX Systems 














Sales and sales-type leases 

$

6,644


$

6,419


$

25,629


$

33,321



Ongoing rent, fees, and finance income 


3,501



3,483



10,272



10,111



Other 


3,165



1,995



8,407



7,344





13,310



11,897



44,308



50,776


Theater system maintenance 


8,516



8,103



25,384



23,844


Joint revenue sharing arrangements 


15,238



11,960



45,457



39,672















Film 













Production and IMAX DMR 


18,350



14,547



57,585



54,854


Film distribution and post-production 


5,328



5,000



15,350



13,740





23,678



19,547



72,935



68,594

Total 

$

60,742


$

51,507


$

188,084


$

182,886















Gross margins 












IMAX Theater Systems 













IMAX systems(1)














Sales and sales-type leases 

$

4,246


$

3,928


$

14,161


$

16,390



Ongoing rent, fees, and finance income 


3,352



3,277



9,799



9,758



Other 


(218)



(108)



(202)



375





7,380



7,097



23,758



26,523


Theater system maintenance 


3,208



3,218



8,990



9,432


Joint revenue sharing arrangements(1)


9,382



7,153



30,043



26,796















Film 













Production and IMAX DMR(1)


13,469



8,596



43,177



32,744


Film distribution(1) and post-production 


2,003



1,388



3,676



1,782





15,472



9,984



46,853



34,526

Total 

$

35,442


$

27,452


$

109,644


$

97,277


(1)  IMAX systems include marketing and commission costs of $0.3 million and $1.2 million for the three and nine months ended September 30, 2014, respectively (2013 — $0.2 million and $0.9 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $0.9 million and $2.1 million for the three and nine months ended September 30, 2014, respectively (2013 — $0.9 million and $2.0 million, respectively). Production and DMR segment margins include marketing costs of $2.1 million and $5.3 million for the three and nine months ended September 30, 2014, respectively (2013 — $0.8 million and $3.1 million, respectively). Distribution segment margins include marketing costs of $0.3 million and $0.7 million for the three and nine months ended September 30, 2014, respectively (2013 — $0.1 million and $0.2 million, respectively).

 


IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)


Non-GAAP Financial Measures:


In this release, the Company presents adjusted EBITDA attributable to common shareholders, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders 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 attributable to common shareholders, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders 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 net income attributable to common shareholders. 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 attributable to common shareholders, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders 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.


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 $90.0 million on December 31, 2014, which requirement increases to $100.0 million on December 31, 2015. The Company must also maintain a Maximum Total Leverage Ratio (as defined in the Credit Agreement) of 2.00:1 on December 31, 2014, which requirement decreases to 1.75:1 on December 31, 2015. The ratio of total debt to EBITDA was nil:1 as at September 30, 2014, 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 


EBITDA per Credit Facility:  

September 30, 2014


September 30, 2014(1)


(In thousands of U.S. Dollars) 







Net income 

$

5,297


$

47,484


Add (subtract):  








Loss from equity accounted investments 


297



2,480



Provision for income taxes 


1,188



16,790



Interest expense, net of interest income 


120



936



Depreciation and amortization, including film asset amortization 


7,861



31,553



Write-downs net of recoveries including asset impairments and receivable 








     provisions 


174



2,810



Stock and other non-cash compensation 


3,519



14,946



EBITDA attributable to non-controlling interests(2)


(887)



(1,776)




$

17,569


$

115,223










(1)

Ratio of total debt calculated using twelve months ended EBITDA 







(2)

The EBITDA calculation specified for purposes of the minimum EBITDA covenant excludes the reduction in EBITDA from the Company's non-controlling interests. 




 

IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)


Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended September 30, 2014 vs. 2013:


The Company reported net income attributable to common shareholders of $4.9 million or $0.07 per basic and diluted share for the third quarter of 2014, as compared to $1.6 million or $0.02 per basic and diluted share for the third quarter of 2013. Net income attributable to common shareholders for the third quarter of 2014 includes a $3.4 million charge, or $0.04 per diluted share (after-tax), for stock-based compensation (2013 - $2.8 million or $0.04 per diluted share (after-tax)). Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding stock-based compensation expense and the related tax impact, was $7.8 million, or $0.11 per diluted share, in the third quarter of 2014, as compared to adjusted net income attributable to common shareholders of $4.4 million, or $0.06 per diluted share, for the third quarter of 2013. A reconciliation of net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:




September 30, 2014



September 30, 2013



Net Income


Diluted EPS



Net Income


Diluted EPS

Reported net income attributable to common shareholders

$

4,858


$

0.07

(1)


$

1,609


$

0.02

Adjustments:














Stock-based compensation


3,425



0.05




2,838



0.04


Tax impact of items listed above


(464)



(0.01)




(85)



-

Adjusted net income attributable to common shareholders

$

7,819


$

0.11

(1)


$

4,362


$

0.06















Weighted average diluted shares outstanding





69,602







69,116
















(1) Includes impact of $0.1 million of accretion charges associated with redeemable common stock.

 

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Nine Months Ended September 30, 2014 vs. 2013:


The Company reported net income attributable to common shareholders of $18.7 million or $0.27 per basic and diluted share for the nine months ended September 30, 2014, as compared to $16.3 million or $0.24 per basic and diluted share for the nine months ended September 30, 2013. Net income attributable to common shareholders for the nine months ended September 30, 2014 includes a $11.3 million charge, or $0.13 per diluted share (after-tax), for stock-based compensation (2013 – $8.8 million or $0.12 per diluted share (after-tax)). Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding stock-based compensation expense and the related tax expense, was $28.3 million, or $0.40 per diluted share, in the nine months ended September 30, 2014, as compared to adjusted net income attributable to common shareholders of $24.9 million, or $0.36 per diluted share, for the nine months ended September 30, 2013. A reconciliation of net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:




September 30, 2014



September 30, 2013



Net Income


Diluted EPS



Net Income


Diluted EPS

Reported net income attributable to common shareholders

$

18,744


$

0.27

(1)


$

16,286


$

0.24

Adjustments:














Stock-based compensation


11,328



0.16




8,772



0.12


Tax expense of items listed above


(1,807)



(0.03)




(159)



-

Adjusted net income attributable to common shareholders

$

28,265


$

0.40

(1)


$

24,899


$

0.36















Weighted average diluted shares outstanding





69,597







68,853




























(1) Includes impact of $0.3 million of accretion charges associated with redeemable common stock.

 


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



9 months ended


September 30, 2014

(In thousands of U.S. Dollars)



Net cash provided by operating activities

$

71,870

Net cash used in investing activities


(45,073)

Free cash flow

$

26,797

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SOURCE IMAX Corporation