---
title: Imax Corporation 1998 Third Quarter Results.
publisher: "IMAX"
description: "HIGHLIGHTS Record earnings of $0.23 per share reported for third quarter, a 27% increase over $0.18 per share in the prior year quarter. Record value of theatre signings of any quarter in Company history with contracts for 14 theatre systems valued at $41.9 million."
canonical: "https://www.imax.com/pr/imax-corporation-1998-third-quarter-results"
date: 1998-11-10
last_updated: 2000-02-01
---

Imax Corporation 1998 Third Quarter Results.
============================================

Tue, Nov 10, 1998

#### HIGHLIGHTS

*   **Record earnings of $0.23 per share reported for third quarter, a 27% increase over $0.18 per share in the prior year quarter.  
      
    **
*   **Record value of theatre signings of any quarter in Company history with contracts for 14 theatre systems valued at $41.9 million.  
      
    **

*   **International theatre signings reached record level in third quarter with signing of contracts for 12 new theatres outside of North America including 9 theatres to be located in Europe.**

Toronto, Canada — November 10, 1998 -- Imax Corporation (NASDAQ:IMAXF; TSE:IMX) today reported record third quarter earnings and record IMAX® theatre system signings for the quarter ended September 30, 1998. The Company reported earnings of $0.23 per share on a diluted basis for the third quarter, a 27% increase over $0.18 per share in the third quarter of 1997. For the nine months ended September 30, 1998 the Company earned $0.57 per share on a diluted basis, a 30% increase over $0.44 per share in the prior-year period.

During the quarter, the Company established a new record for the value of theatre system signings in any quarter in the Company’s history. The Company signed contracts for 14 IMAX theatre systems valued at $41.9 million in the third quarter exceeding by 3% the previous record of $40.6 million signed in the third quarter of 1997. For the nine months ended September 30, 1998, the Company signed contracts for 35 theatre locations valued at $102.3 million, a 15% increase over the $89.1 million value of the 40 contracts (including seven theatres in which the Company had an equity interest) signed in the prior-year period. As a result of the record theatre signings, the Company’s sales backlog grew 3% in the quarter to a new high of $195.6 million.

As a result of the Company’s focus on international growth of the IMAX theatre network, during the quarter the Company signed contracts for a record 12 theatre systems to be located outside of North America. The international signings include nine theatre systems to be located in Europe and one theatre system to be located in each of Australia, South America and the Middle East. IMAX theatres are scheduled to open in 15 new countries by the end of 2000.

Bradley J. Wechsler, Chairman and co-CEO of Imax, stated, "We are very happy with the Company’s results in the third quarter and year-to-date. Our record theatre signings this quarter will lead to further growth of the IMAX theatre network in the future. This in turn will further increase Imax’s brand recognition around the world and improve the economics of producing films for IMAX theatres. As a result, we believe in the long-term future of Imax Corporation and are excited to lead Imax into this next stage of its growth."

Richard L. Gelfond, Vice Chairman and co-CEO of Imax, added, "Our international growth strategy paid great dividends in the third quarter with the signing of a record 12 theatre systems to be located internationally. We continue to believe there is tremendous opportunity for Imax overseas and are focussing our resources accordingly. Domestically, our latest film release _T-REX_ has opened to very strong box office results in its limited release and we look forward to its broader international roll-out in the coming months."

In the third quarter, the Company’s revenues increased 22% to $43.8 million from $35.9 million in the prior year as strong growth in systems revenue offset a decline in film revenue. Systems revenue increased 59% to

$35.8 million from $22.5 million in the prior year as the Company recognized revenues on nine theatre system deliveries in the third quarter of 1998 versus five theatre systems in the third quarter of 1997. Film revenue decreased 51% in the quarter to $5.2 million from $10.5 million in the prior year primarily as a result of a decline in film distribution revenue due to the timing of film releases. Earnings from operations increased 37% to $16.7 million in the third quarter from $12.2 million in the prior year due to an increase in higher margin systems revenues.

For the nine-month period ended September 30, 1998, the Company’s revenues increased 18% to $122.8 million from $103.9 million as a result of higher systems revenue. Systems revenue increased 54% to $93.0 million from $60.5 million in the prior-year period as the Company recognized revenues on 25 theatre systems as compared to 14 theatre systems in the prior-year period. Film revenue decreased 43% to $19.0 million from $33.5 million in the prior-year period due to decreases in film production and film distribution revenues. Earnings from operations increased 33% to $41.3 million in the nine-month period from $31.0 million in the prior-year period.

The Company’s sales backlog at September 30, 1998 represented contracts for 84 theatre systems including the upgrade of two existing theatres to IMAX 3D. The Company’s sales backlog was $195.6 million at September 30, 1998, a 3% increase from $189.2 million at June 30, 1998 and a 12% increase from $175.4 million at December 31, 1997. Most of the 41 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 13 theatre systems in backlog which will be located at theatres in which the Company has an equity interest and therefore have no value ascribed to them in the Company’s sales backlog.

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 September 30, 1998, there were more than 170 permanent IMAX theatres in 24 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 most prominent corporations in the world including Sony 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  
September 30,

Nine months ended  
September 30,

1998

1997

1998

1997

**Revenue**

Systems

$ 35,793

$ 22,477

$ 93,047

$ 60,456

Films

5,163

10,521

18,986

33,468

Other

2,877

2,893

10,742

9,949

43,833

35,891

122,775

103,873

**Costs and expenses**

17,845

15,558

  51,722

47,949

**Gross margin**

25,988

20,333

71,053

55,924

Selling, general and administrative expenses

7,790

6,880

25,686

21,569

Research and development

865

620

2,224

1,429

Amortization of intangibles

631

632

1,890

1,907

**Earnings from operations**

16,702

12,201

41,253

31,019

Interest income

1,044

1,645

3,448

4,485

Interest expense

(3,310)

(3,340)

(9,927)

(9,972)

Foreign exchange (loss) gain

(120)

(98)

(349)

(76)

**Earnings before income taxes and minority interest**

14,316

10,408

34,425

25,456

Provision for income taxes

(6,322)

(4,536)

(15,469)

(11,281)

**Earnings before minority interest**

7,994

5,872

18,956

14,175

Minority interest

(874)

(387)

(1,476)

(844)

**Net earnings**

$ 7,120

$ 5,485

$ 17,480

$ 13,331

**Earnings per share (note):**

Basic

$ 0.24

$ 0.19

$ 0.59

$ 0.46

Diluted

$ 0.23

$ 0.18

$ 0.57

$ 0.44

**Weighted average number of shares outstanding (000’s) (note):**

Basic

29,303

29,002

29,246

28,367

Diluted

35,006

30,380

33,517

30,064

_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