--- title: IMAX Corporation Reports Year End and Fourth Quarter Results publisher: "IMAX" description: "TORONTO, Ontario, Feb 27, 2003 /PRNewswire-FirstCall via COMTEX/ -- HIGHLIGHTS * Company beats expectations with full year earnings from continuing operations of $0.05 per share and net earnings of $0.36 per share, after extraordinary items. * Commercial strategy gains momentum with IMAX(R) DMR(TM)" canonical: "https://www.imax.com/pr/imax-corporation-reports-year-end-and-fourth-quarter-results" date: 2003-02-27 last_updated: 2003-02-27 --- IMAX Corporation Reports Year End and Fourth Quarter Results ============================================================ Thu, Feb 27, 2003 TORONTO, Ontario, Feb 27, 2003 /PRNewswire-FirstCall via COMTEX/ -- _**HIGHLIGHTS \* Company beats expectations with full year earnings from continuing operations of $0.05 per share and net earnings of $0.36 per share, after extraordinary items. \* Commercial strategy gains momentum with IMAX(R) DMR(TM) success and increased theatre system signings. \* Company indicates growth in 2003 with guidance for earnings from continuing operations of $0.10 to $0.15 per basic and fully diluted share. \* Company has strongest quarter for signings in over two years, leading to full year signings of 21 theatre systems worth $45.6 million, compared to 12 systems worth $23.3 million in 2001.**_ IMAX Corporation (Nasdaq: IMAX; TSX: IMX) today reported operating profits from continuing operations of $0.05 per share and net profits of $0.36 per share, after extraordinary items, on a basic and fully diluted basis for the full year ended December 31, 2002. For the three months ended December 31, 2002, the Company reported net earnings from continuing operations of $0.02 per share on a basic and fully diluted basis, versus net losses from continuing operations of $0.62 per share on a basic and fully diluted basis in the prior year period. The results mark the Company's first profitable year since 1999. "IMAX completed its financial turnaround in 2002, and in 2003 we expect significant increases in profitability," said IMAX co-Chairmen and co-CEOs Richard L. Gelfond and Bradley J. Wechsler. "We also ended the year with an improved balance sheet including cash of over $37 million." "Given our current business momentum," Messrs. Gelfond and Wechsler continued, "in 2003 we expect to achieve even greater profitability. With the overall progress in our commercial theatre strategy, lowered corporate cost structure and growth in our theatre system signings, we believe that we will earn between $0.10 and $0.15 per share for 2003. We remain very focused on translating this business success and improvement in earnings into significant returns for our shareholders over time." During the year, the Company introduced proprietary IMAX(R) DMR(TM) technology which allows the Company to convert virtually any live-action 35mm film into IMAX's 15/70 format at an approximate cost of $2 to $4 million per film. The Company also lowered SG&A, significantly reduced net debt, continued its international expansion and expanded the commercial IMAX(R) theatre network. On November 1, 2002 Star Wars: Episode II Attack of The Clones: The IMAX Experience debuted at 58 IMAX theatres in North America and was the second film to undergo the IMAX DMR process. This film followed the critical success of Apollo 13 The IMAX Experience, which was released to theatres on September 20. Based on a research study conducted by Rabin Research, an independent research firm, consumers who saw IMAX DMR film releases traveled over 20 miles and indicated that they would be willing to pay a price premium of $3.00 to $4.00 for IMAX DMR releases of event films. "In addition to our financial progress in 2002, we also laid the groundwork for further success in our commercial theatre strategy of making IMAX theatres the newest release window for Hollywood films," said Messrs. Gelfond and Wechsler. "We believe that the early success of IMAX DMR films coupled with the significant research findings we've seen will convince Hollywood studios to release more films to IMAX theatres, which should lead to increased theatre signings around the world, particularly with commercial multiplex operators. We believe that IMAX theatre systems can differentiate commercial multiplexes and potentially drive incremental economics for commercial exhibitors. We are continuing to develop new theatre system technology that will make it easier for commercial exhibitors to get involved in the IMAX business." On February 24, 2003, the Company announced that it had entered into an agreement with Regal Entertainment Group Inc. to further expand its IMAX theatre network by opening two additional IMAX theatres at Regal multiplexes in Boise, Idaho and Denver, Colorado. This agreement follows an earlier agreement, signed in October of 2002, whereby Regal committed to re-open five previously closed IMAX theatres and make a substantial cash payment to the Company. All seven of these Regal theatres are expected to be open by the summer of 2003. With these commitments, Regal will operate 14 IMAX theatres, making it the largest third party operator of IMAX theatres in the world. During the fourth quarter, the Company signed new theatre contracts for 11 IMAX systems with an aggregate value of $23.3 million, compared to contracts for eight theatre systems worth $11.7 million in the fourth quarter of 2001. For all of 2002, the Company signed new agreements for 21 theatre systems with an aggregate value of $45.6 million, compared to 12 systems with a value of $23.3 million for all of 2001. The year showed significant positive momentum in international theatre signings that included the Company's first theatres in South America, the first theatre in Russia and six theatres in Asia. In the fourth quarter, the Company's revenues were $37.3 million as compared to $33.9 million in the prior year period. IMAX systems revenue was $20.3 million versus $24.6 million in the prior year as the Company recognized revenues on five theatre systems in the fourth quarter of 2002 versus six theatre systems in the fourth quarter of 2001. Film revenue was $11.5 million in the fourth quarter versus $6.6 million in the prior year period due primarily to the strong performance of the Company's film SPACE STATION. Other revenue was $5.6 million in the fourth quarter as compared to $2.6 million in the prior year period mainly due to stronger performance from the Company's owned and operated theatres primarily attributable to the release of Star Wars: Episode II Attack of The Clones The IMAX Experience and the Company's film Santa vs. The Snowman. The Company reported net earnings from continuing operations of $0.02 per share on a basic and fully diluted basis for the quarter, compared to net losses from continuing operations of $0.62 per share on a basic and fully diluted basis for the fourth quarter of 2001. The Company reported net earnings of $0.02 per share for the quarter on a basic and fully diluted basis, compared to net earnings of $0.63 per share on a basic and fully diluted basis in the prior year period. For the full year ended December 31, 2002, the Company's revenues were $130.7 million as compared to $118.7 million in 2001. Systems revenue was $71.0 million versus $76.6 million in the prior year as the Company recognized revenues on 16 theatre systems in 2002, one of which was an operating lease, compared to 15 theatre systems in 2001, one of which was an operating lease. Film revenue was $40.6 million in 2002 as compared to $29.9 million in the prior year. Other revenue was $19.1 million in 2002 as compared to $12.2 million in the prior year due to the stronger performance from the company's owned and operated theatres. The Company reported net earnings from continuing operations of $0.05 per share on a basic and fully diluted basis for the full 2002 fiscal year, compared to net losses from continuing operations of $4.30 per share on a basic and fully diluted basis for the 2001 fiscal year. The Company reported net earnings of $0.36 per share on a basic and fully diluted basis in 2002, compared to net losses of $4.69 per share on a basic and fully diluted basis in 2001. The Company will be hosting a conference call to discuss these results at 10:30 AM EST today. To access the call interested parties should call 913-981-4912 approximately ten minutes before it begins. 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 will make 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 December 2002, there were 232 IMAX theatres operating in 32 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 Amounts in Accordance with United States. Generally Accepted Accounting Principles (in thousands of U.S. dollars, except per share data) (unaudited) Three months ended Years ended December 31, December 31, 2002 2001 2002 2001 Revenue IMAX systems $20,288 $24,628 $70,959 $76,582 Films 11,506 6,611 40,556 29,923 Other 5,551 2,619 19,135 12,154 37,345 33,858 130,650 118,659 Costs of goods and services 24,011 24,260 78,438 97,391 Gross margin 13,334 9,598 52,212 21,268 Selling, general and administrative expenses 8,065 12,786 36,916 48,962 Research and development 661 376 2,362 3,385 Amortization of intangibles 351 733 1,418 3,005 Income from equity-accounted investees (195) (396) (283) (73) Restructuring costs and asset impairments (recoveries) (505) 189 (2,961) 59,868 Earnings (loss) from operations 4,957 (4,090) 14,760 (93,879) Interest income 118 122 413 847 Interest expense (4,522) (5,523) (17,570) (22,020) Impairment of long-term investments -- -- -- (5,584) Foreign exchange gain (loss) 236 (137) 403 (1,357) Earnings (loss) from continuing operations before income taxes 789 (9,628) (1,994) (121,993) Recovery of (provision for) income taxes -- (9,809) 3,606 (11,005) Net earnings (loss) from continuing operations 789 (19,437) 1,612 (132,998) Net earnings (loss) from discontinued operations -- 7,862 2,066 (50,850) Net earnings (loss) before cumulative effect of changes in accounting principles and extraordinary items 789 (11,575) 3,678 (183,848) Extraordinary gain on repurchase of convertible subordinated notes, net of income tax expense of $nil, $11,393, $3,606 and $16,843 (105) 31,209 8,294 38,734 Net earnings (loss) $684 $19,634 $11,972 $(145,114) Earnings (loss) per share: Earnings (loss) per share - basic and fully diluted: Net earnings (loss) from continuing operations $0.02 $(0.62) $0.05 $(4.30) Net earnings (loss) from discontinued operations $-- $0.25 $0.06 $(1.64) Net earnings (loss) before cumulative effect of changes in accounting principles and extraordinary items $0.02 $(0.37) $0.11 $(5.94) Extraordinary items $-- $1.00 $0.25 $1.25 Net earnings (loss) $0.02 $0.63 $0.36 $(4.69) Weighted average number of shares outstanding (000's): Basic 32,973 31,286 32,943 30,916 Fully diluted 33,436 31,286 33,307 30,916 SOURCE IMAX Corporation CONTACT: Media - Romi Schutzer, +1-212-821-0144, or rschutzer@imax.com, or, Analysts - Stephen G. Abraham, +1-212-821-0140, or sabraham@imax.com, both of IMAX Corporation; or Entertainment Media - Al Newman, +1-818-784-2130, or asn@newman-co.com, of Newman & Company; or Business Media - Whit Clay, +1-212-446-1864, or wclay@sloanepr.com, of Sloane & Company, both for IMAX Corporation /Company News On-Call: http://www.prnewswire.com/comp/103201.html URL: http://www.imax.com http://www.prnewswire.com Copyright (C) 2003 PR Newswire. All rights reserved.