--- title: Imax Corporation Reports Second Quarter Results publisher: "IMAX" description: "TORONTO, Aug. 10 /PRNewswire/ -- Imax Corporation (Nasdaq: IMAX; TSE: IMX) today reported results for its second quarter ended June 30, 2000. The Company reported earnings of $0.10 per share on a fully diluted basis, exceeding analyst expectations and representing a 43% increase versus the $0.07" canonical: "https://www.imax.com/pr/imax-corporation-reports-second-quarter-results" date: 2000-08-10 last_updated: 2000-08-10 --- Imax Corporation Reports Second Quarter Results =============================================== Thu, Aug 10, 2000 TORONTO, Aug. 10 /PRNewswire/ -- Imax Corporation (Nasdaq: IMAX; TSE: IMX) today reported results for its second quarter ended June 30, 2000. The Company reported earnings of $0.10 per share on a fully diluted basis, exceeding analyst expectations and representing a 43% increase versus the $0.07 per share reported in the second quarter of 1999. For the six months ended June 30, 2000, the Company reported earnings of $0.20 per share on a fully diluted basis representing a 43% increase versus the $0.14 per share reported in the prior-year period. "We are extremely pleased with our financial performance and our strategic accomplishments during the second quarter," said Imax co-Chief Executive Officers Richard L. Gelfond and Bradley J. Wechsler. "Our financial results in the quarter were highlighted by a significant increase in System revenues and margin as well as another strong quarter from our Digital Projection International subsidiary. Strategically, our deal with DreamWorks SKG to release a 3D version of its next animated film Shrek will further demonstrate the value of the IMAX(R) theatre network as a release window for Hollywood films." Messrs. Gelfond and Wechsler continued, "In addition, our agreement with Texas Instruments Inc. to be one of three licensees of its leading DLP Cinema(TM) digital projection technology and the exclusive licensee of the technology for large-format theatres, not only ensures Imax's digital future, but creates a significant new revenue stream for the Company as conventional cinema projectors are replaced with digital projectors. The digital revolution is beginning in the motion picture industry as film projectors are expected to be replaced with digital projectors and provide cost savings through the elimination of film prints, more consistent image quality and more flexible programming. Imax will be one of the few companies with access to this new technology and will be well positioned to take advantage of the changing dynamics in the media and entertainment industry." On July 13, the Company announced that consistent with the priority and commitment of its Board of Directors and senior management to realizing enhanced value for all Imax shareholders, the Company retained Goldman, Sachs & Co. and Wasserstein, Perella & Co. as financial advisors to assist in the evaluation of potential strategic alternatives that may be available to the Company, including the potential sale or merger of the Company. The Company expects to make a further announcement regarding this process in the Fall. The Company also announced today that it hired Highgate Partners, Inc. to develop a licensing strategy for the IMAX brand. Highgate, based in Wilton, CT, is a boutique management-consulting firm that develops strategic licensing alliances on behalf of its clients and the management of Highgate has arranged such licensing deals as Frigidaire's segue into residential and commercial HVAC products. Highgate will begin an in-depth study of potential licenses for the IMAX brand and will begin to approach potential partners by the end of the year. Targeted product categories for licensing the IMAX brand may include consumer electronics, photography and optics as well as consumer and business services. "The IMAX brand is known around the world for the highest quality, family entertainment presented in images that are unsurpassed in size, clarity, impact and sound," added Gelfond and Wechsler. "The worldwide awareness of the IMAX brand and its strong attributes may create significant opportunities to license the brand into other products and markets. We believe that this agreement with Highgate will allow us to begin to translate the strength of the IMAX brand directly into additional cash flows and profits for the Company." On June 5, the Company announced it signed an agreement with Texas Instruments Inc. (TI) under the terms of which Imax and its subsidiary Digital Projection International (DPI) will be one of three companies to develop, manufacture and market digital cinema projectors based on DLP Cinema(TM) projection technology for conventional cinema and will be the exclusive licensee of DLP Cinema(TM) technology for large-format venues. Digital cinema (or d-cinema) refers to conventional movie theaters replacing 35mm film prints and film-based projectors with motion pictures encoded as digital data that are projected using digital projectors. This transformation is expected to allow for a higher quality image to be projected in the theatre and a significant reduction in the cost of producing and distributing film prints. DLP Cinema(TM) projection technology is widely considered the leading technology to drive this change. On June 7, the Company announced that it had entered into an agreement with DreamWorks SKG whereby in 2001, DreamWorks' Shrek, the upcoming animated film featuring the voices of Mike Myers, Cameron Diaz, Eddie Murphy, John Lithgow and Linda Hunt, will become the first full-length animated feature ever converted into 3D for release to IMAX theatres. The IMAX 3D release will be distributed by Imax Ltd. to the growing worldwide network of IMAX theatres coincidental with DreamWorks' home video release of the film and will feature an enhanced ending filled with 3D effects created just for the IMAX 3D release. The home video and IMAX 3D launches will be cross-marketed to maximize the impact of both releases. In the second quarter, the Company's revenues increased 68% to $57.5 million from $34.3 million in the prior year, due primarily to higher Systems revenues and the inclusion of revenues from DPI. Systems revenue increased 65% to $31.3 million from $18.9 million in the prior year as the Company recognized revenues on seven theatre systems in the second quarter of 2000 versus four theatre systems in the second quarter of 1999. DPI revenues were $11.3 million, driven by strong sales of the higher-end SXGA projectors as well as increased international sales. Film revenue decreased slightly in the quarter to $10.3 million from $10.4 million in the prior year as a modest increase in post-production revenues offset a modest decline in film distribution revenues. Other revenues decreased 7% to $4.6 million from $4.9 million as an increase in revenues from Company-owned theatres and camera rentals offset the Company's reduced focus on and lower revenues from its motion simulation business. Net earnings per share on a diluted basis increased 43% to $0.10 per share from $0.07 per share in the second quarter of 1999. For the six-month period ended June 30, 2000, the Company's revenues increased 60% to $113.9 million from $71.0 million in the prior-year period as a result of an increase in Systems revenue and the inclusion of revenues from DPI. Systems revenue increased 41% to $58.3 million from $41.3 million in the prior-year period as the Company recognized revenues on 14 theatre systems as compared to 10 theatre systems in the prior-year period. DPI revenues were $24.2 million, driven by strong sales of the higher-end SXGA projectors as well as increased international sales. Film revenue increased 9% to $20.8 million from $19.1 million in the prior-year period as an increase in post-production revenues offset a modest decline in film distribution revenues. Other revenues increased slightly to $10.7 million from $10.6 million as an increase in revenues from Company-owned theatres and camera rentals offset the Company's reduced focus on and lower revenues from its motion simulation business. Net earnings per share on a diluted basis increased 43% to $0.20 per share from $0.14 per share in the prior-year period. During the second quarter, the Company signed contracts for six IMAX theatre systems valued at $18.0 million. The Company's sales backlog was $194.7 million at June 30, a 2% decline from March 31, 2000 and a 1% increase from December 31, 1999. The Company's sales backlog at June 30, 2000 represented contracts for 76 theatre systems. There are four theatre systems in backlog that will be located at theatres in which the Company has an equity interest and therefore have no dollar value ascribed to them in the Company's sales backlog. Imax Corporation and its subsidiaries comprise one of the world's leading entertainment technology companies, with particular emphasis on film and digital imaging technologies, including giant-screen images, 3D presentations, digital post-production and digital projection. There were more than 220 IMAX theatres operating in 26 countries around the world as of June 30, 2000. Imax's subsidiaries include Digital Projection International, whose primary business is the design and manufacture of high-end digital image delivery devices, and Sonics Associates, a designer and manufacturer of high-end sound systems. Imax has forged strategic alliances and relationships with some of the most prominent corporations in the world including Famous Players Inc. (a subsidiary of Viacom Inc.), America Online Inc. and Texas Instruments Inc. Imax Corporation is a publicly traded company listed on both the Toronto and Nasdaq stock exchanges. More information on the Company can be found at www.imax.com . This press release contains forward-looking statements that are based on management 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 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, the viability of new businesses 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, 1999 and in the subsequent reports filed by the Company with the Securities and Exchange Commission. IMAX(R) is a registered trademark of Imax Corporation. DLP(TM) and DLP Cinema(TM) are trademarks of Texas Instruments Inc. IMAX CORPORATION Condensed Consolidated Statements of Operations In accordance with U.S. Generally Accepted Accounting Principles (in thousands of U.S. dollars, except per share amounts) (unaudited) Three months ended June 30, Six months ended June 30, 2000 1999 2000 1999 Revenue IMAX systems $31,253 $18,889 $58,251 $41,309 Digital projection systems 11,297 -- 24,213 -- Films 10,336 10,444 20,795 19,066 Other 4,589 4,925 10,666 10,626 57,475 34,258 113,925 71,001 Costs and expenses 31,822 18,544 65,100 38,757 Gross margin 25,653 15,714 48,825 32,244 Loss from equity-accounted investees 372 44 370 162 Selling, general and administrative expenses 12,807 8,269 24,333 16,258 Research and development 2,014 812 3,606 1,287 Amortization of intangibles 1,036 472 2,045 945 Earnings from operations 9,424 6,117 18,471 13,592 Interest income 870 2,858 2,412 5,269 Interest expense (5,122) (5,181) (10,657) (11,014) Foreign exchange gain (loss) (512) 296 (653) 213 Earnings before income taxes and minority interest 4,660 4,090 9,573 8,060 Provision for income taxes (1,678) (1,597) (3,497) (3,144) Earnings before minority interest 2,982 2,493 6,076 4,916 Minority interest -- (297) -- (707) Net earnings $2,982 $2,196 $6,076 $4,209 Earnings per share: Basic $0.10 $0.07 $0.20 $0.14 Diluted $0.10 $0.07 $0.20 $0.14 Weighted average number of shares outstanding(000s) Basic 29,787 29,595 29,780 29,581 Diluted 30,650 30,393 30,767 30,435 SOURCE Imax Corporation CONTACT: Victoria Dinnick, 905-403-6366, or vdinnick@imax.com, or Analysts, Stephen Abraham, 212-821-0140, or sabraham@imax.com, both of Imax Corporation; or Entertainment Media, Al Newman of Newman & Company, 310-777-5252, or asn@newman-co.com; or Gina Stikes of Edelman Financial, 212-642-7702, or gina\_stikes@edelman.com, both for Imax Corporation/