IMAX Corporation Reports Earnings
TORONTO, March 29 /PRNewswire/ -- IMAX Corporation (Nasdaq: IMAX) (Toronto: IMX) today reported earnings for the fourth quarter and fiscal year ended December 31, 2000. The Company also reported that it is aggressively moving forward with its strategy to build the Company's long-term growth around its industry-leading digital expertise, world-renowned brand and by attracting greater commercial content for its unique IMAX(R) theatre experience.
"IMAX's financial results in 2000 were adversely impacted by the financial difficulties of the commercial theatre operators," said IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J. Wechsler. "While we expect such difficulties to continue to affect our financial results into 2001, we are putting in place strategic initiatives to improve the Company's results in 2002 and beyond."
The Company's results for fiscal 2000 include the impact of significant one-time charges primarily related to the implementation of new accounting policies SAB 101 and SOP 00-2 as described below. As a result of these and other charges, the Company reported a loss of $32.5 million or $1.08 per share for the fourth quarter and a loss of $92.9 million or $3.11 per share for the full year.
Gelfond and Wechsler emphasized, "The IMAX Experience is becoming increasingly popular with audiences around the world. We are particularly pleased that The Walt Disney Company announced last month that it intends to follow last year's successful release of Fantasia/2000: The IMAX Experience(R) with a large-format release of Beauty and The Beast next March, which should provide a further boost to IMAX's exposure and theatre attendance. This is a clear validation of our strategy to attract better film content to IMAX theatres."
"We are moving forward with the leveraging of IMAX's world-renowned brand, industry-leading digital expertise and one-of-a-kind theatre experience into developing new digital tools for converting 35mm films into IMAX's film format, developing new products including digital cinema projectors and digital media networks and attracting new commercial films for IMAX theatres. Furthermore, we have restructured the Company, reducing our workforce by 15%, consolidating our manufacturing facilities and redeploying our assets to focus on digital tools, products and technologies that will be a key factor in IMAX's future. We believe we are taking the necessary steps in 2001 to ensure IMAX's return to profitability in 2002."
In the fourth quarter, the Company's revenues decreased 40% to $54.4 million from $90.4 million in the prior year primarily due to a decrease in systems revenues. Systems revenue decreased 45% to $32.8 million from $60.1 million. These results reflect the change in accounting standards (SAB 101) as described below and the Company's recognition of revenue on nine theatre system installations. Film revenue decreased 40% in the quarter to $10.3 million from $17.1 million in the prior year due to a decrease in post-production revenues. DPI revenue decreased 10% to $8.1 million versus $9.0 million in its core staging and rental business as a decrease in SXGA unit sales more than offset the increase in revenues from the introduction of a new projector. Other revenue decreased 22% to $3.3 million from $4.2 million due to lower revenue from Company-owned theatres and camera revenue.
For the fiscal year ended December 31, 2000, the Company's revenues increased 8% to $219.5 million from $203.8 million as the inclusion of a full year of DPI revenues more than offset a decline in system and film revenues. Systems revenue decreased 11% to $113.2 million from $126.8 million. Due to the change in accounting standards (SAB 101) as described below, the Company recognized revenue from theatre systems upon the installation of theatre systems in 2000 as compared to upon the delivery of the system in 1999. As a result, the Company recognized revenue on 24 theatre systems in 2000 versus 35 theatre systems in the prior-year period. Film revenue decreased 12% to $41.7 million from $47.2 million in the prior-year period due to a decline in post-production revenues and due to the timing and performance of films released in the year. DPI revenue was $46.4 million for the full year, which reflects a full year of revenues versus only four months of revenues for the 1999 fiscal year. Other revenue decreased 3% to $18.2 million from $18.8 million as a decline in the Company's discontinued Ridefilm operations more than offset higher revenue from an increased number of Company-owned theatres in operation and higher camera revenues.
The Company's results reflect the adoption of SEC Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" (SAB 101). In accordance with the interpretative guidance of SAB 101, effective January 1, 2000, the Company recognizes revenue on theatre systems at the time the installation of the theatre system is complete. Prior to the adoption of SAB 101, the Company recognized revenue from these theatre systems at the time of delivery. The Company's reported results for fiscal 2000 reflect a restatement as if this change had occurred on January 1, 2000. The effect of applying this change in accounting principle is a fiscal 2000 non-cash after-tax charge of $54.5 million or $1.83 per share, representing the cumulative impact on retained earnings as at December 31, 1999.
The Company adopted Statement of Position 00-2 of the American Institute of Certified Public Accountants, "Accounting by Producers or Distributors of Films" (SOP 00-2) effective January 1, 2000. As a result of adopting this industry-wide change, the Company recorded a non-cash after-tax charge of $6.6 million, or $0.22 per share, to fiscal 2000 earnings, representing the cumulative impact on retained earnings as at December 31, 1999. The Company's reported results for fiscal 2000 reflect a restatement as if this change had occurred on January 1, 2000.
For the fiscal year ending December 31, 2000 the Company also recorded a number of other one-time charges including those related to amounts that were determined to be uncollectable from certain commercial theatre customers and the write-down of the carrying value of certain of the Company's theatres, fixed assets, long-term investments and films in its library and the expense of film exploitation costs incurred in 2000, as required pursuant to SOP 00-2 effective January 1, 2000. The total after-tax impact of these other charges was $34.7 million or $1.16 per share.
The Company signed contracts for 32 new IMAX theatre systems valued at $91.1 million in fiscal 2000 including contracts for three IMAX theatre systems valued at $10.8 million that were signed in the fourth quarter. The Company's sales backlog was approximately $214 million at December 31, 2000 representing contracts for approximately 72 theatre systems.
IMAX's management team will conduct a conference call to discuss the fourth quarter and year-end 2000 results today at 10:30 a.m. EDT. The call can be accessed on the Internet at www.imax.com/corporate in the Investor Relations section.
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 28 countries around the world as of December 31, 2000. IMAX's subsidiaries include Digital Projection International, whose primary business is the design and manufacture of high-end digital image delivery devices and DKP/70MM Inc., award-winning specialists in image quality control and post-production. 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 fluctuations in foreign currency and in the 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, 2000 and in the subsequent reports filed by the Company with the Securities and Exchange Commission.
IMAX(R) is a registered trademark of IMAX Corporation.
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 Years ended
December 31, December 31,
2000 1999 2000 1999
Revenue
IMAX systems $ 32,753 $ 60,059 $ 113,226 $ 126,826
Digital Projection
International 8,059 8,989 46,356 10,999
Films 10,282 17,119 41,711 47,227
Other 3,289 4,214 18,179 18,783
54,383 90,381 219,472 203,835
Costs and expenses (a) 56,845 44,441 159,998 106,241
Gross margin (2,462) 45,940 59,474 97,594
Loss from equity accounted
investees (b) 4,320 233 4,811 683
Selling, general and
administrative
expenses (c) 25,414 11,724 62,946 36,584
Research and development 3,164 1,554 8,732 3,868
Amortization of intangibles 1,139 1,059 4,202 2,585
Earnings (loss) from
operations (36,499) 31,370 (21,217) 53,874
Interest income 334 2,434 3,339 9,984
Interest expense (5,686) (5,445) (21,961) (21,860)
Impairment of long-term
investments (d) (4,133) -- (4,133) --
Foreign exchange gain
(loss) (95) 361 (1,103) 977
Earnings (loss) before
income taxes, minority
interest and cumulative of
changes in accounting
principles (46,079) 28,720 (45,075) 42,975
Recovery of (provision for)
income taxes 13,533 (10,940) 13,238 (16,535)
Earnings (loss) before
minority interest (32,546) 17,780 (31,837) 26,440
Minority interest -- -- -- (1,207)
Earnings (loss) before
cumulative effect of
changes in accounting
principles (32,546) 17,780 (31,837) 25,233
Cumulative effect of
changes in accounting
principles, net of income
tax benefit of $37,286 (e) -- -- (61,110) --
Net earnings (loss) $ (32,546) $ 17,780 $ (92,947) $ 25,233
Net earnings (loss)
available to
common shareholders $ (32,546) $ 17,780 $ (92,947) $ 25,233
Per share data
Earnings (loss) before
cumulative effect of
change in accounting
principles
Basic $ (1.08) $ 0.60 $ (1.07) $ 0.85
Diluted $ (1.08) $ 0.53 $ (1.07) $ 0.83
Net earnings (loss)
after cumulative effect
of change in accounting
principles
Basic $ (1.08) $ 0.60 $ (3.11) $ 0.85
Diluted $ (1.08) $ 0.53 $ (3.11) $ 0.83
Weighted average number
of shares outstanding (000s)
Basic 30,039 29,669 29,874 29,616
Diluted 30,039 35,426 29,874 31,682
(a) Included in costs and expenses are charges of $29.4 million which
principally relate to the impairment of certain theatres and fixed
assets, the write down of certain films in distribution and
development and the expense of film exploitation costs as required
pursuant to the Statement of Position No. 00-2, "Accounting by
Producers or Distribution of Films" ("SOP 00-2") effective January 1,
2000.
(b) Included in loss from equity accounted investees is a charge of
$4.0 million relating to future debt guarantees in a joint venture.
(c) Included in selling, general and administrative expenses is a charge
of $11.5 million relating to provisions for uncollectable amounts
owing from commercial theatres.
(d) Impairment of long-term investments represents a charge of
$4.1 million relating to the impairment of certain of the Company's
long-term investments.
(e) Effective January 1, 2000, the Company reflected the adoption of
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101") and SOP 00-2.
CONTACT: Victoria Dinnick, Toronto, 905-403-6366, or Stephen G. Abraham, Analysts, New York, 212-821-0140, both of IMAX Corporation; or Al Newman, Entertainment Media, of Newman & Company, Los Angeles, 310-777-5252/