IMAX Corporation Reports First Quarter Results
Toronto, May 11 /PRNewswire/ -- IMAX Corporation (Nasdaq: IMAX; TSE: IMX) today reported its results for the first quarter ended March 31, 2001. The Company reported a loss of $0.23 per share for the first quarter before the impact of a previously announced restructuring charge. After the impact of the restructuring charge, the Company reported a loss of $0.46 per share. The Company's comparative results for the first quarter of 2000 were earnings of $0.06 per share before the cumulative effect of changes in accounting principles and a loss of $1.92 per share after such changes.
IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J. Wechsler commented, "While the Company's earnings for the quarter are disappointing, they are consistent with our expectations given the current environment. We are making progress in advancing our strategy of attracting Hollywood film content, developing new digital markets and revenue streams and returning IMAX to profitability in 2002."
During the first quarter, the Company signed an agreement with Sweden's DHJ Media AB to develop and install digital media network systems that will replace traditional poster advertising with high revenue digital billboards. The London Underground is the first location to enter into a definitive agreement for the installation of such a digital billboard system. Also during the first quarter, The Walt Disney Company announced that it is moving up its large-format release of "Beauty and the Beast" to January 1, 2002, following on the success of last year's January 1 release of "Fantasia/2000: The IMAX Experience(R)."
In the first quarter, the Company's revenues decreased 36% to $35.1 million from $54.8 million in the prior year. Systems revenue decreased 36% to $16.3 million from $25.3 million in the prior year as the Company recognized revenues on three theatre systems in the first quarter of 2001 versus five theatre systems in the first quarter of 2000. These results reflect the change in accounting principles (SAB 101) effective January 1, 2000 as described below. DPI revenues decreased 50% to $6.4 million from $12.9 million as a result of a shift of the staging and rental business from high-end to mid-market products. Other revenues decreased 49% to $3.1 million from $6.1 million in part due to the strong Company-owned theatre revenue in the first quarter of 2000 as a result of the release of "Fantasia/2000: The IMAX Experience."
During the first quarter of 2001, the Company recorded a restructuring charge related to a previously announced 15% reduction in its workforce and the consolidation of its manufacturing facilities. The total after-tax impact of this charge was $6.9 million or $0.23 per share. The Company's sales backlog was approximately $210 million at March 31, 2001 representing contracts for approximately 70 theatre systems.
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 comparative results for fiscal 2000 reflect a restatement as if this change had occurred on January 1, 2000. The Company recognized a charge of $1.98 per share in the comparative first quarter of 2000 for the cumulative effect of the changes in accounting principles SAB 101 for revenue recognition and SOP 00-2 for film assets effective January 1, 2000.
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 225 IMAX(R) theatres operating in 30 countries around the world as of March 31, 2001. IMAX's subsidiaries include Digital Projection International whose primary business is the design and manufacture of high-end digital image delivery devices. 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 http://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 March 31,
2001 2000
Revenue
IMAX systems $16,278 $25,273
Digital projection systems 6,399 12,916
Films 9,256 10,459
Other 3,145 6,150
35,078 54,798
Costs and expenses 24,789 33,783
Gross margin 10,289 21,015
Selling, general and administrative expenses 11,821 11,528
Research and development 1,294 1,592
Restructuring costs 10,942 --
Amortization of intangibles 1,077 1,009
Loss (income) from equity-accounted investees 93 (2)
Earnings (loss) from operations (14,938) 6,888
Interest income 357 1,542
Interest expense (5,303) (5,535)
Foreign exchange loss (1,118) (141)
Earnings (loss)before income taxes (21,002) 2,754
Recovery of (provision for) income taxes 7,231 (1,019)
Earnings (loss) before cumulative effect
of changes in accounting principles (13,771) 1,735
Cumulative effect of changes in accounting
principles, net of income tax benefit
of $37,286 -- (61,110)
Net loss $(13,771) $(59,375)
Net earnings available to common
shareholders $(13,771) $(59,375)
Per share data:
Earnings (loss) per share -- basic :
Earnings (loss) before cumulative effect of
changes in accounting principles $(0.46) $0.06
Cumulative effect of changes in accounting
principles $-- $(2.05)
Net loss $(0.46) $(1.99)
Earnings (loss) per share -- diluted :
Earnings (loss) before cumulative effect of
changes in accounting principles $(0.46) $0.06
Cumulative effect of changes in accounting
principles $-- $(1.98)
Net loss $(0.46) $(1.92)
Weighted average number of shares outstanding (000s)
Basic 30,114 29,567
Diluted 30,114 30,884
SOURCE Imax Corporation
CONTACT: Victoria Dinnick of IMAX Corporation, Toronto, 905-403-6366; Analysts - Stephen G. Abraham of IMAX Corporation, New York, 212-821-0140; or Entertainment Media - Al Newman of Newman & Company, Los Angeles, 310-777-5252, for IMAX Corporation/