IMAX Corporation reports fourth quarter 2008 financial results
HIGHLIGHTS
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- Company reports fourth quarter 2008 net loss per share of
$0.21 , or loss per share of$0.11 excluding charges related to the Company's introduction of digital and launch of its joint revenue sharing initiative
- Company installed a total of 60 systems in 2008, including 46
digital; 64 digital systems currently in operation
-
IMAX total network grows by 17% in 2008 to 351 theatres; commercial network increases 29% to 231 theatres
- Watchmen: The IMAX Experience officially kicks off highly anticipated
2009 movie slate, delivering approximately
$8.0 million in gross box office through first six days
IMAX Co-Chairmen and Co-CEOs Richard L. Gelfond and
The Company achieved several important strategic milestones in fiscal 2008 that it believes positions it for significant growth in 2009 and beyond:
- Successfully launched its
IMAX digital product, with 46 digital systems deployed in the second half of 2008. - Installed a total of 60
IMAX projection systems (including two digital upgrades), the most installations in any given year in the history of the Company. Eighteen were under sales/sales type lease agreements (15 of which were recognized as revenue), 41 were under joint revenue sharing arrangements, and one was an operating lease. The Company ended 2008 with a total of 351IMAX systems in operation, a 17% increase over 2007, and its commercial network grew to 231 theatres, up 29% over last year. - Secured
$18.0 million in funding inMay 2008 through a private placement of common stock to its largest shareholder at market prices of$6.60 per share and re-negotiated its$30.0 million credit facility such that it is no longer subject to any EBITDA maintenance covenants provided the Company is in compliance with certain minimum liquidity requirements. - Broadened its studio relationships, including signing a multi-picture deal with Walt Disney Pictures.
- Signed deals for 90 new systems: 42 under joint revenue sharing arrangements and 48 under sales/sales type lease/operating lease arrangements.
Messrs. Gelfond and Wechsler continued, "We believe that the combination of these very significant initiatives creates a more compelling business proposition for ourselves and for our constituencies. Given the rate at which we are capable of installing new systems, the proven reliability of the systems to date, the positive feedback we are getting from our studio and exhibitor partners, and, perhaps most importantly, the response from the consumer, we feel very pleased and confident about our digital roll-out thus far."
For the three months ended
"Our fourth quarter revenue results primarily reflect the near-term impact
of
The Company installed and recognized revenue on six theatre systems that qualified as either sales or sales-type leases in the fourth quarter of 2008, compared to five in 2007, and installed 26 new systems under joint revenue sharing arrangements in the fourth quarter, compared to two in the year ago period.
Fourth quarter gross margin of
Selling, general and administrative expenses decreased to
At the end of 2008, the Company's backlog consisted of 213 theatre systems compared to 186 theatre systems in backlog at the end of 2007. Included in the 2008 and 2007 system backlog totals were 106 and 104 theatres under joint revenue sharing arrangements, respectively.
As of
The Company believes that its joint revenue sharing business model makes
it significantly more affordable and less capital intensive for exhibitors to
be in the
During the fourth quarter, the Company continued its roll out of
Messrs. Gelfond and Wechsler continued, "Our joint revenue sharing model,
coupled with our digital technology, are the catalysts behind our record
network growth, record year-end systems backlog and record number of
The Company's 2009 movie slate currently includes 11 titles (one
The year officially kicked into gear last weekend with WB's Watchmen: The
IMAX Experience. The
Messrs. Gelfond and Wechsler commented, "Our film slate is the fuel that
drives our go-forward business model, and we are very pleased with how the
slate for 2009 has come together. We are on track to show a record 11 titles
in the
Messrs. Gelfond and Wechsler concluded, "Given our film slate, anticipated
network growth and the strength we are seeing in the movie industry overall,
we believe there is good reason to be optimistic about our business
performance in 2009. Our number of contracted theatre systems planned for 2009
coupled with the quality of our movie slate is providing increased visibility
into our business. Similar to 2008, our goal for 2009 is to have the bulk of
our 2010 movie slate finalized this year. To that end, we are speaking to
every major
Conference Call Information
The Company will host a conference call this morning at
About
IMAX(R), IMAX(R) Dome, IMAX(R) 3D, IMAX(R) 3D Dome, Experience It In
IMAX(R), The IMAX Experience(R), An IMAX Experience(R), IMAX DMR(R), DMR(R),
IMAX MPX(R),
This press release contains forward looking statements that are based on management's 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 ongoing discussions with the SEC and OSC relating to their ongoing inquiries and the Company's accounting, the performance of films, the signing of theatre system agreements, the viability of new technologies, businesses and products, 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, risks arising from potential material weaknesses in internal control over financial reporting and fluctuations in foreign currency and in the large format, general commercial exhibition and out-of-home entertainment markets. These factors and other risks and uncertainties are discussed in the Company's most recent Annual Report on Form 10-K and most recent Quarterly Reports on Form 10-Q.
IMAX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
In accordance with United States Generally Accepted Accounting
Principles
(In thousands of U.S. dollars, except per share amounts)
Three Months Year Ended
Ended December 31, December 31,
------------------------ -----------------------
2008 2007 2008 2007
------------ ----------- ----------- -----------
Revenues
Equipment and product
sales................... $ 9,764 $ 10,773 $ 27,853 $ 32,500
Services................. 14,470 18,171 64,985 69,149
Rentals.................. 2,495 2,147 8,207 7,107
Finance income........... 1,065 1,074 4,300 4,649
Other.................... 270 138 881 2,427
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28,064 32,303 106,226 115,832
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Costs and expenses
applicable to revenues
Equipment and product
sales................... 7,154 8,433 17,182 21,546
Services................. 10,753 15,331 44,372 50,090
Rentals.................. 3,654 1,083 7,043 2,987
Other.................... 71 - 169 50
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21,632 24,847 68,766 74,673
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Gross margin............. 6,432 7,456 37,460 41,159
Selling, general and
administrative expenses 9,503 12,982 43,652 44,705
Research and development 1,306 1,609 7,461 5,789
Amortization of
intangibles............. 137 141 526 547
Receivable provisions net
of recoveries........... 863 1,102 1,977 1,795
Asset impairments........ 28 562 28 562
------------ ----------- ----------- -----------
Loss from operations..... (5,405) (8,940) (16,184) (12,239)
Interest income.......... 99 215 381 862
Interest expense......... (4,400) (4,128) (17,707) (17,093)
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Loss from continuing
operations before
income taxes............ (9,706) (12,853) (33,510) (28,470)
Recovery of (provision
for) income taxes....... 663 338 (92) (472)
Loss from continuing
operations.............. (9,043) (12,515) (33,602) (28,942)
Earnings from
discontinued operations - 2,370 - 2,002
------------ ----------- ----------- -----------
Net loss................. $ (9,043) $ (10,145) $ (33,602) $ (26,940)
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Loss per share
Loss per share -
basic & diluted:
Net loss from
continuing operations $ (0.21) $ (0.31) $ (0.79) $ (0.72)
Net loss from
discontinued
operations............ - 0.06 - 0.05
------------ ----------- ----------- -----------
Net loss............... $ (0.21) $ (0.25) $ (0.79) $ (0.67)
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Weighted average number
of shares outstanding
(000's):
Weighted average number
of shares used in
computing basic loss
per share............. 43,421 40,444 42,393 40,309
------------ ----------- ----------- -----------
Weighted average number
of shares used in
computing diluted loss
per share............. 43,421 40,444 42,393 40,309
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Additional disclosure:
Depreciation and
amortization (1) $ 5,272 $ 4,944 $ 18,071 $ 17,738
(1) Includes $0.3 million and $1.4 million of amortization of deferred
financing costs charged to interest expense for the three months and
year ended December 31, 2008 , respectively (December 31, 2007 - $0.3
million and $1.3 million , respectively)
IMAX CORPORATION
CONSOLIDATED BALANCE SHEETS
In accordance with United States Generally Accepted Accounting
Principles
(In thousands of U.S. dollars)
December 31, December 31,
2008 2007
------------ ------------
Assets
Cash and cash equivalents...................... $ 27,017 $ 16,901
Accounts receivable, net of allowance for
doubtful accounts of $2,901 (2007 - $3,045)... 22,982 25,505
Financing receivables.......................... 56,138 59,092
Inventories.................................... 19,822 22,050
Prepaid expenses............................... 1,998 2,187
Film assets.................................... 3,923 2,042
Property, plant and equipment.................. 39,405 23,708
Other assets................................... 16,074 15,093
Goodwill....................................... 39,027 39,027
Other intangible assets........................ 2,281 2,377
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Total assets................................. $ 228,667 $ 207,982
------------ ------------
------------ ------------
Liabilities
Bank indebtedness.............................. $ 20,000 $ -
Accounts payable............................... 15,790 12,300
Accrued liabilities............................ 58,199 61,967
Deferred revenue............................... 71,452 59,085
Senior Notes due 2010.......................... 160,000 160,000
------------ ------------
Total liabilities............................ 325,441 293,352
------------ ------------
Commitments and contingencies
Shareholders' deficiency
Capital stock common shares - no par value.
Authorized - unlimited number.
Issued and outstanding - 43,490,631 (2007
- 40,423,074)............................... 141,584 122,455
Other equity................................... 5,183 4,088
Deficit........................................ (247,009) (213,407)
Accumulated other comprehensive income......... 3,468 1,494
------------ ------------
Total shareholders' deficiency............... (96,774) (85,370)
------------ ------------
Total liabilities and shareholders'
deficiency.................................. $ 228,667 $ 207,982
------------ ------------
------------ ------------
IMAX CORPORATION
SELECTED FINANCIAL DATA
In accordance with United States Generally Accepted Accounting
Principles
(in thousands of U.S. dollars)
The Company has eight reportable segments identified by category of
product sold or service provided:
Three Months Year Ended
Ended December 31, December 31,
------------------------ -----------------------
2008 2007 2008 2007
------------ ----------- ----------- -----------
Revenue
IMAX systems............. $ 11,611 $ 12,314 $ 34,783 $ 40,782
Theater system
maintenance............. 4,342 4,035 16,331 15,991
Joint revenue sharing
arrangements............ 1,408 726 3,435 2,343
Films
Production and IMAX
DMR................... 3,364 5,224 17,944 19,863
Distribution........... 2,087 2,369 9,559 11,018
Post-production........ 1,974 2,402 6,929 5,693
Theater operations....... 2,520 4,141 14,040 16,584
Other.................... 758 1,092 3,205 3,558
------------ ----------- ----------- -----------
Total.................... $ 28,064 $ 32,303 $ 106,226 $ 115,832
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Gross margins
IMAX systems(1).......... $ 4,512 $ 4,074 $ 18,374 $ 20,239
Theater system
maintenance(2).......... 1,938 1,303 7,117 6,970
Joint revenue sharing
arrangements(3)......... (1,872) 287 (1,865) 1,362
Films
Production and IMAX
DMR................... 980 697 6,992 4,915
Distribution........... 462 (37) 3,120 3,484
Post-production........ 711 1,023 3,451 2,552
Theater operations....... (439) (146) (132) 1,137
Other.................... 140 255 403 500
------------ ----------- ----------- -----------
Total.................... $ 6,432 $ 7,456 $ 37,460 $ 41,159
------------ ----------- ----------- -----------
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- Includes a charge of
$1.5 million and$2.4 million for the three months and year endedDecember 31, 2008 , respectively, (December 31, 2007 -$3.2 million and$3.3 million , respectively), in costs and expenses applicable to revenues, primarily for the write-down of film-based projector inventories. - Includes a charge of
$0.1 million and$0.1 million for the three months and year endedDecember 31, 2008 , respectively, (December 31, 2007 -$0.6 million and$0.6 million , respectively), in costs and expenses applicable to revenues, primarily for the write-down of film-based service inventories. - In 2008, the Company adjusted the estimated useful life of its film-
based IMAX MPX projection systems in use by existing JRSA theaters,
on a prospective basis, to reflect the Company's accelerated
transition to a digital projection system for these theatres,
resulting in increased depreciation expense of
$1.3 million and$1.5 million for the quarter and year endedDecember 31, 2008 . Also includes launch expenses associated with the opening of new joint revenue sharing arrangement theatres of$1.5 million and$1.8 million for the three months and year-endedDecember 31, 2008 , respectively.
SOURCE
CONTACT: Media:
(212) 821-0155, [email protected];
Elliot Fischoff,
[email protected];
Investors:
[email protected]; Business Media:
(212) 446-1864, [email protected]
(IMAX IMX.)