--- title: IMAX Corporation Reports Third Quarter Results publisher: "IMAX" description: "HIGHLIGHTS -- The Matrix Revolutions: The IMAX Experience breaks box office records, grossing over $3 million in 48 IMAX(R) theatres in North America in its first five days. -- Net losses of $0.07 per share consistent with guidance. Company expects to earn $0.10 to $0.15 for all of 2003 before a" canonical: "https://www.imax.com/pr/imax-corporation-reports-third-quarter-results-2" date: 2003-11-10 last_updated: 2003-11-12 --- IMAX Corporation Reports Third Quarter Results ============================================== Mon, Nov 10, 2003 HIGHLIGHTS -- The Matrix Revolutions: The IMAX Experience breaks box office records, grossing over $3 million in 48 IMAX(R) theatres in North America in its first five days. -- Net losses of $0.07 per share consistent with guidance. Company expects to earn $0.10 to $0.15 for all of 2003 before a potential one-time charge. -- Company reduces debt by an additional $15.7 million in October. -- Commercial business momentum continues with five theatre systems signings in third quarter and three additional signings since September. TORONTO, Nov. 10 /PRNewswire-FirstCall/ -- IMAX Corporation (Nasdaq: IMAX; TSX: IMX) today reported net losses of $0.07 per share on a basic and fully diluted basis, including a gain of $0.01 from discontinued operations, for the quarter ended September 30, 2003. The results compare to net losses of $0.07 in the comparable period of 2002 and are consistent with guidance. Net losses from continuing operations were $0.08 per share on a basic and fully diluted basis for the third quarter ended September 30, 2003, as compared to losses from continuing operations of $0.13 per share for the three months ending September 30, 2002. On November 5th, The Matrix Revolutions: The IMAX Experience, the first contemporaneous release of a live-action Hollywood event film in IMAX and 35mm theatres, set numerous one-day and weekend box office records, grossing over $3 million on 48 screens in North America, an average of almost $65,000 per screen, over its five-day opening. The international IMAX screens also performed exceptionally well, selling out the majority of shows while charging premiums of up to three times the ticket price at conventional theatres. "The results from our first contemporaneous release are in, and we couldn't possibly be happier with the performance," said IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J. Wechsler. "In many IMAX theatres the only limiting factor was running out of seats, with most of the IMAX network sold out for the majority of the weekend. We believe these results, which come on the heels of a highly successful IMAX release of The Matrix Reloaded, further solidify IMAX's place in the release strategy for Hollywood event films." The Matrix Revolutions: The IMAX Experience is the most successful opening of an IMAX(R) DMR(TM) release to date. The North American per-screen revenue for the film's three-day weekend, at $37,000, was more than double that of The Matrix Reloaded: The IMAX Experience in its first weekend. Additionally, on just its opening day, The Matrix Revolutions: The IMAX Experience earned approximately $16,000 per screen selling out 6:00 a.m. shows across the west coast and charging an average adult ticket price of over $11.00, a premium of greater than $2.50 versus conventional theatres. Independent research performed over this initial period was also very positive, indicating that 87% of those polled who saw the film at an IMAX theatre would recommend seeing the film to others who had already seen it in a 35mm theatre. In October, the Company retired an additional $15.7 million in outstanding senior notes through a series of debt-for-equity transactions, lowering the principal amount of its outstanding notes to $153 million. Separately, the Company announced that it plans to refinance all of its outstanding debt through an offering of new senior notes with a proposed maturity of 2010. The Company may take a charge to its earnings in the fourth quarter in relation to this proposed offering. "We remain pleased with IMAX's financial results, which reflect the seasonality of our business and show a continued improvement over last year's performance," said Messrs. Gelfond and Wechsler. "We believe that many of the initiatives that IMAX is currently undertaking will be reflected in our financial results in 2004 and beyond, as our IMAX DMR technology and lower cost IMAX(R) MPX(TM) projection system begin to have an accelerating effect on new theatre signings." Messrs. Gelfond and Wechsler indicated that the Company expects to earn between $0.25 and $0.35 per share in 2004, approximately double the Company's expected 2003 earnings. During the quarter, the Company signed new contracts for five IMAX theatre systems, including additional theatres to be opened by current IMAX customers in China and Moscow and a deal with Bella Films in Missouri, launching an initiative that may include future contracts for additional IMAX theatres. Subsequent to the end of the quarter, the Company singed deals for three additional systems, including a contract for two IMAX MPX theatres with a commercial property developer in Dubai, UAE. During the first nine months of 2003, the Company signed contracts for 18 theatre systems as compared to 10 during the first nine months of 2002. Trailing 12-month IMAX theatre systems signings stand at 29, which is an increase of over 60% compared to 18 signings during the prior 12-month period. In the third quarter, the Company's total revenues were $21.4 million as compared to $23.2 million in the prior year period. IMAX systems revenue was $11.5 million versus $9.6 million in the prior year period, as the Company recognized revenues on one theatre system in the third quarter of 2003, consistent with the one theatre system installed during the in the third quarter of 2002. Film revenue was $5.3 million versus $9.8 million in the third quarter of 2002, a decline primarily due to last year's release of the Company's record-breaking film SPACE STATION. Other revenue was $4.7 million in the quarter versus $3.8 million in the third quarter of 2002. For the nine months ended September 30, 2003, the Company's revenues were $90.2 million as compared to $93.3 million in the prior-year period. Systems revenue was $55.9 million versus $50.7 million in the prior year period, as the Company recognized revenues on 15 theatre systems as compared to 11 theatre systems in the prior-year period. Films revenue was $19.6 million compared to $29.1 million. Other revenue was $14.7 million versus $13.6 million. For the nine months ended September 30, 2003, the company broke even in terms of net earnings per share from continuing operations on a fully diluted basis. During the first nine months of 2002, the Company earned $0.34 per share, which included a gain of $12 million from the repurchase of certain of the Company's subordinated notes. The Company will be hosting a conference call to discuss these results at 10:30 AM EST. To access the call interested parties should call (719) 457-2727. About IMAX Corporation: Founded in 1967, IMAX Corporation is one of the world's leading entertainment technology companies. IMAX's businesses include the creation and delivery of the world's best cinematic presentations using proprietary IMAX and IMAX(R) 3D technology, and the development of the highest quality digital production and presentation. IMAX has developed revolutionary technology called IMAX DMR (Digital Re-mastering) that makes it possible for any 35mm film to be transformed into the unparalleled image and sound quality of The IMAX Experience(R). The IMAX brand is recognized throughout the world for extraordinary and immersive family experiences. As of September 30 2003, there were more than 235 IMAX theatres operating in 35 countries. IMAX(R), IMAX(R) 3D, IMAX(R)DMR(TM) and The IMAX Experience(R) are trademarks of IMAX Corporation. 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 affect 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 products, and fluctuations in foreign currency and in the large format and general commercial exhibition market. 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, 2002 and in the subsequent reports filed by the Company with the Securities and Exchange Commission. 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 ended September 30, September 30, 2003 2002 2003 2002 Revenue IMAX systems $11,455 $9,574 $55,913 $50,671 Films 5,275 9,786 19,570 29,050 Other 4,697 3,819 14,676 13,584 21,427 23,179 90,159 93,305 Costs of goods and services 12,081 16,397 51,075 54,427 Gross margin 9,346 6,782 39,084 38,878 Selling, general and administrative expenses 8,265 7,564 24,864 26,672 Research and development 952 900 2,833 1,701 Amortization of intangibles 181 339 473 1,067 Income from equity-accounted investees (228) (167) (501) (88) Receivable provisions, net of (recoveries) (425) (1,173) 264 53 Restructuring recoveries -- (497) -- (497) Earnings (loss) from operations 601 (184) 11,151 9,970 Interest income 105 106 515 295 Interest expense (3,606) (4,299) (11,949) (13,048) Gain (loss) on retirement of notes (146) 17 (333) 12,005 Recovery on long-term investments 355 -- 355 -- Net earnings (loss) from continuing operations before income taxes (2,691) (4,360) (261) 9,222 Recovery of (provision for) income taxes (163) -- 400 -- Net earnings (loss) from continuing operations (2,854) (4,360) 139 9,222 Net earnings from discontinued operations 200 2,066 599 2,066 Net earnings (loss) $(2,654) $(2,294) $738 $11,288 Earnings (loss) per share: Earnings (loss) per share \_ basic and fully diluted: Net earnings (loss) from continuing operations $(0.08) $(0.13) $ -- $0.28 Net earnings from discontinued operations $0.01 $0.06 $0.02 $0.06 Net earnings (loss) $(0.07) $(0.07) $0.02 $0.34 Weighted average number of shares outstanding (000's): Basic 37,091 32,962 34,592 32,933 Fully diluted 37,091 32,962 35,124 33,263 IMAX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS In accordance with United States Generally Accepted Accounting Principles (in thousands of U.S. dollars) September 30, 2003 December 31, (unaudited) 2002 Assets Cash and cash equivalents $23,595 $37,136 Accounts receivable, less allowance for doubtful accounts of $9,192 (2002 - $9,248) 13,285 15,054 Financing receivables 53,914 51,918 Inventories 29,012 34,092 Prepaid expenses 2,999 2,383 Film assets 580 419 Fixed assets 40,242 45,308 Other assets 8,801 10,455 Deferred income taxes 3,821 3,821 Goodwill 39,027 39,027 Other intangible assets 3,765 3,363 Total assets $219,041 $242,976 Liabilities Accounts payable $6,115 $6,768 Accrued liabilities 44,824 43,451 Deferred revenue 68,529 87,284 Senior notes due 2005 168,475 200,000 Convertible subordinated notes due 2003 -- 9,143 Total liabilities 287,943 346,646 Commitments and contingencies Shareholders' equity (deficit) Common stock \_ no par value. Authorized \_unlimited number Issued and outstanding \_ 37,353,298 (2002\_32,973,366) 98,695 65,563 Other equity 2,440 1,542 Deficit (170,682) (171,420) Accumulated other comprehensive income 645 645 Total shareholders' equity (deficit) (68,902) (103,670) Total liabilities and shareholders' equity (deficit) $219,041 $242,976 SOURCE IMAX Corporation CONTACT: Media, Romi Schutzer of IMAX Corporation, New York +1-212-821-0144 or rschutzer@imax.com or entertainment media Al Newman of Newman & Company, Los Angeles +1-818-784-2130 or asn@newman-co.com or business media Whit Clay of Sloane & Company, New York +1-212-446-1864 or wclay@sloanepr.com or analysts Jennifer Gery of IMAX Corporation, New York +1-212-821-0144 or jgery@imax.com Company News On-Call: http://www.prnewswire.com/comp/103201.html Web site: http://www.imax.com (IMAX)