--- title: Imax Corporation 1998 Second Quarter Results publisher: "IMAX" description: "HIGHLIGHTS Record earnings of $0.20 per share reported for second quarter, a 43% increase over $0.14 per share in the prior year quarter. Signed contracts for theatre systems valued at $28.8 million in second quarter, a 26% increase over prior year quarter." canonical: "https://www.imax.com/pr/imax-corporation-1998-second-quarter-results" date: 1998-08-05 last_updated: 2000-02-01 --- Imax Corporation 1998 Second Quarter Results ============================================ Wed, Aug 5, 1998 #### HIGHLIGHTS ** * Record earnings of $0.20 per share reported for second quarter, a 43% increase over $0.14 per share in the prior year quarter. * Signed contracts for theatre systems valued at $28.8 million in second quarter, a 26% increase over prior year quarter. * Revenues increased 21% in second quarter driven by a 54% increase in systems revenue. ** Toronto, Canada – August 5, 1998 -- Imax Corporation (NASDAQ:IMAXF; TSE:IMX) today reported record second quarter earnings and record IMAX® theatre system signings for the quarter ended June 30, 1998. The Company reported earnings of $0.20 per share on a diluted basis for the second quarter, a 43% increase over $0.14 per share in the second quarter of 1997. For the six months ended June 30, 1998 the Company earned $0.34 per share on a diluted basis, a 31% increase over $0.26 per share in the prior-year period. During the quarter, the Company established a new record for the value of theatre system signings in its second quarter, beating last year’s record. The Company signed contracts for eight IMAX theatre systems valued at $28.8 million in the second quarter representing a 26% increase over the $22.9 million value of the 15 theatre systems (including six theatres in which the Company had an equity interest) signed in the prior-year period. The Company does not attribute any value to theatres in which it has an equity interest in its signings totals. For the six months ended June 30, 1998, the Company signed contracts for 21 theatre locations valued at $60.5 million, a 25% increase over the $48.5 million value of the 24 contracts (including six theatres in which the Company had an equity interest) signed in the prior-year period. Bradley J. Wechsler, Chairman and co-CEO of Imax, stated, "We are very happy with the Company’s results in the second quarter and year-to-date. Imax’s business is as strong as it has been at any time in our recent history. By any measure - record theatre attendance due to the success of _Everest_, new theatre signings around the world, record earnings and financial performance, new film productions including our upcoming release of _T-REX: Back to the Cretaceous_ - the Company is excelling. We are very excited about the continued progress of the Company." Richard L. Gelfond, Vice Chairman and co-CEO of Imax, added, "We continue to believe that Imax is in its infancy because of the opportunities that exist both internationally and in smaller markets with the IMAX 3D SR system. In the first half of 1998, we signed contracts for five new IMAX theatre systems in each of Europe and Asia and one theatre system in the Middle East. Since the launch of the IMAX 3D SR system last year, we have signed contracts for 40 IMAX SR systems destined for smaller markets of the world. We have several promising discussions ongoing for significant theatre contracts both internationally and in smaller markets and believe that our theatre expansion is in its early stages." In the second quarter, the Company’s revenues increased 21% to $42.8 million from $35.4 million in the prior year as strong growth in systems revenue offset a decline in film revenue. Systems revenue increased 54% to $30.9 million from $20.0 million in the prior year as the Company recognized revenues on eight theatre system deliveries in the second quarter of 1998 versus five theatre systems in the second quarter of 1997. Film revenue decreased 37% in the quarter to $6.8 million from $10.6 million in the prior year as a result of a decline in film distribution revenue due to the timing of film releases. Other revenues increased 10% to $5.2 million from $4.7 million. Earnings from operations increased 54% to $14.6 million in the second quarter from $9.4 million in the prior year due to an increase in gross margin to 57% from 50% in 1997, resulting from an increase in higher margin systems revenues and a decrease in lower margin film revenues. For the six-month period ended June 30, 1998, the Company’s revenues increased 16% to $78.9 million from $68.0 million as a result of higher systems revenue. Systems revenue increased 51% to $57.3 million from $38.0 million in the prior-year period as the Company recognized revenues on 16 theatre systems as compared to nine theatre systems in the prior-year period. Film revenue decreased 40% to $13.8 million from $22.9 million in the prior-year period due to decreases in film production and film distribution revenues. Earnings from operations increased 30% to $24.6 million in the six-month period from $18.8 million in the prior-year period. The Company’s sales backlog at June 30, 1998 represented contracts for 82 theatre systems including the upgrade of one existing theatre to IMAX 3D. The Company’s sales backlog was $189.2 million at June 30, 1998, a 2% increase from $185.8 million at March 31, 1998 and an 8% increase from $175.4 million at December 31, 1997. Most of the 36 IMAX 3D SR theatre systems in backlog represent theatre systems contracted for under multi-theatre exhibitor agreements and may be replaced in backlog by larger IMAX 3D theatre systems when specific theatre locations are determined in the future. There are 14 theatre systems in backlog which will be located at theatres in which the Company has an equity interest. The value of sales backlog does not include theatre systems which will be located at theatres in which the Company has an equity interest, letters of intent or IMAX _Ridefilm™_ contracts. As of June 30, 1998, there was a backlog of 15 IMAX _Ridefilm_ systems including six upgrades. Founded in 1967, Imax Corporation has consistently delivered the world's premiere cinematic experiences. In 1997, Imax was awarded the sole Oscar® for Scientific and Technical Achievement by the Academy of Motion Picture Arts and Sciences. The award recognized Imax’s innovation in creating one of the world’s best film capture and projection systems as well as Imax’s acceptance as part of the entertainment mainstream. As of June 30, 1998, there were more than 170 permanent IMAX theatres in 23 countries, with a backlog of more than 80 theatre systems scheduled to open during the next few years. Imax has forged strategic alliances and relationships with some of the largest corporations in the world, including Sony Corporation, Caesars World (a Starwood Hotels and Resorts subsidiary), Circus Circus Enterprises, Ogden Corporation, Famous Players Inc. (a subsidiary of Viacom Inc.) and Regal Cinemas, Inc. Over 500 million people have seen an IMAX presentation since the medium premiered in 1970. In 1998, more than 65 million people worldwide are expected to attend an IMAX theatre. This press release may contain forward looking statements that involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. Comparative figures above relate to the entity formed as the result of an amalgamation of various predecessor companies on March 1, 1994. Important factors that could effect these statements include 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, and foreign currency fluctuations. 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, 1997 and in the subsequent reports filed by the Company with the Securities and Exchange Commission. **IMAX CORPORATION **CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Amounts in Accordance with U.S. Generally Accepted Accounting Principles _(in thousands of U.S. dollars, except per share data) **(unaudited)**_ Three months ended June 30, Six months ended June 30, 1998 1997 1998 1997 **Revenue** Systems $ 30,890 $ 20,061 $ 57,254 $37,979 Films 6,761 10,648 13,823 22,947 Other 5,191 4,731 7,865 7,056 42,842 35,440 78,942 67,982 **Costs and expenses** 18,554 17,726 33,877 32,391 **Gross margin** 24,288 17,714 45,065 35,591 Selling, general and administrative expenses 8,462 7,349 17,896 14,689 Research and development 630 310 1,359 809 Amortization of intangibles 630 614 1,259 1,275 **Earnings from operations** 14,566 9,441 24,551 18,818 Interest income 1,142 1,346 2,404 2,840 Interest expense (3,330) (3,333) (6,617) (6,632) Foreign exchange (loss) gain (156) 98 (229) 22 **Earnings before income taxes and minority interest** 12,222 7,552 20,109 15,048 Provision for income taxes (5,679) (3,201) (9,147) (6,745) **Earnings before minority interest** 6,543 4,351 10,962 8,303 Minority interest (382) (203) (602) (457) **Net earnings** $6,161 $4,148 $10,360 $7,846 **Earnings per share (note):** Basic $0.21 $0.14 $0.35 $0.27 Diluted $0.20 $0.14 $0.34 $0.26 **Weighted average number of shares outstanding (000’s) (note):** Basic 29,253 28,198 29,218 28,050 Diluted 35,129 30,047 32,772 29,906 _ Note:Earnings per share and weighted average shares outstanding in the prior-year periods give retroactive effect to: (a) the 2-for-1 stock split which became effective by May 27, 1997 and (b) the adoption of Financial Accounting Standards No. 128 which became effective by December 15, 1997. _ For additional information, please contact: Imax Corporation, Toronto Victoria Dinnick 905-403-6366 Imax Corporation, New York Brian Weisfeld (Analysts) 212-821-0121 Newman & Company, Los Angeles Al Newman (Entertainment Media) 310-777-5252 Edelman Financial, New York Silvia Rosselli (Media) 212-704-8217