IMAX Corporation Reports Fourth Quarter and Full-Year 2003 Results
HIGHLIGHTS
- Company reports profit in 2003 with earnings from continuing operations of $0.14 per share before costs associated with debt repurchasing and refinancing, at high end of guided range.
- Company successfully rolls out IMAX(R) MPX(TM) with nine orders from exhibitors worldwide.
- IMAX DMR(R) success drives increased theatre system signings and further establishes IMAX as a new release window for Hollywood event films.
- Company completes balance sheet restructuring through debt reduction and refinancing remainder of senior notes.
- Company to announce new IMAX DMR film deal for 2004 on 10:30 a.m. earnings conference call.
TORONTO, March 9 /PRNewswire-FirstCall/ -- IMAX Corporation (Nasdaq: IMAX; TSX: IMX) today reported earnings from continuing operations of $0.14 per share on a basic and fully diluted basis for the full year ended December 31, 2003, before giving effect to the costs associated with the repurchase and refinancing of the Company's senior notes in 2003. This compares to earnings from continuing operations of $0.09 per diluted share for the full year ended December 31, 2002, before giving effect to $0.25 per share in gains associated with the retirement of the Company's subordinated notes in 2002.
When including costs of approximately $4.9 million, or $0.13 per share, associated with the repurchase and refinancing of the Company's senior notes during the year, IMAX reported earnings from continuing operations of $0.01 per diluted share in 2003. When including a gain of $0.25 per diluted share associated with the retirement of the Company's subordinated notes in 2002, IMAX reported earnings from continuing operations of $0.34 per diluted share in 2002.
For the three months ended December 31, 2003, IMAX reported net earnings from continuing operations of $0.09 per share on a diluted basis, before giving effect to the costs associated with the repurchasing and refinancing of its senior notes in the quarter. This compares to net earnings from continuing operations of $0.03 per share on a basic and diluted basis in the prior year period.
When including costs of approximately $4.6 million, or $0.11 per share, associated with the refinancing of the Company's senior notes during the quarter, IMAX reported a net loss of $0.01 per diluted share in the quarter.
"We are pleased with our financial performance in 2003, as we improved our results and positioned the Company for continued growth," said IMAX co- Chairmen and co-CEOs Richard L. Gelfond and Bradley J. Wechsler. "2003 was a pivotal year for IMAX as we significantly furthered implementation of our commercial strategy with the successful release of two IMAX DMR(R) titles, built a solid release slate for 2004 and introduced the IMAX(R) MPX(TM) theatre system. Given the strong operating momentum of our business right now, we are extremely optimistic about our future."
In 2003, the Company signed contracts for 25 theatres systems, which compares to 21 in 2002 including contracts for the re-opening of five theatres in Regal multiplexes resulting from the settlement of bankruptcy litigation with Edwards Theaters that year. During the fourth quarter, the Company signed new contracts for seven IMAX theatre systems with an aggregate value of $10.8 million. This compares to contracts for 11 IMAX theatres in the fourth quarter of 2002, which included the five Regal re-openings. Noteworthy signings during the past quarter included contracts for two IMAX MPX theatres with Nakheel LLC in Dubai, UAE and a contract with Yelmo Cineplex, a Loews Cineplex joint venture in Spain, for three retrofit IMAX MPX systems.
"The nine IMAX MPX orders from domestic and international exhibitors in 2003 demonstrated that commercial operators are interested in this exciting product," continued Messrs. Gelfond and Wechsler. "We are particularly encouraged by the traction we are gaining with the IMAX MPX retrofit option, as witnessed by the Yelmo signings. Based on the current level of discussions with exhibitors, we expect a significant acceleration of IMAX MPX signings in 2004."
Following the successful IMAX DMR releases of The Matrix Reloaded: The IMAX Experience last June and The Matrix Revolutions: The IMAX Experience in November, Warner Bros. Pictures and IMAX announced on December 18, 2003 that Harry Potter and the Prisoner of Azkaban, the third installment of the Harry Potter film series, will be released to IMAX(R) theatres in addition to conventional theatres in June 2004. The deal represented the third IMAX DMR film commitment from Warner Bros. within the year. In addition to this film, IMAX is in active discussions with Warner Bros. regarding an IMAX(R) 3D release of Polar Express in November 2004 and an IMAX DMR release of Tim Burton's Charlie and the Chocolate Factory in summer 2005.
"We are extremely pleased with the reaction of consumers to IMAX DMR based on the successful releases of the Matrix films and impressive ticket price premiums," continued Messrs. Gelfond and Wechsler. "We expect to release three IMAX DMR releases this year, which would make 2004 the strongest commercial release schedule in IMAX's history. With IMAX DMR continuing to gain acceptance in Hollywood, we are growing even more optimistic about the place of IMAX theatres as the newest release window for the industry's biggest event films."
In addition to IMAX DMR films, the Company's scheduled film slate over the next two years will include highly anticipated IMAX 3D films. On March 12, 2004, IMAX, in collaboration with Warner Bros., and with sponsorship from AOL, will launch NASCAR 3D: The IMAX Experience in 68 IMAX theatres, marking the widest domestic opening for an IMAX film in the Company's history. Early film reviews have praised the film's spectacular visual display of emotion and excitement as well as the film's wide appeal. IMAX recently announced that Lockheed Martin will sponsor the next IMAX 3D space film, Magnificent Desolation, to be produced by IMAX in association with Tom Hanks' and Gary Goetzman's Playtone. The film, which will chronicle man's walking on the moon, is slated for release in 2005.
IMAX recently completed the restructuring of its balance sheet by retiring a portion of its long-term debt and refinancing its remaining senior notes through a $160 million issue of new bonds due in December 2010. The Company also recently improved its liquidity significantly with the closing of a $20 million credit facility with Congress Financial of Canada. These improvements were recognized by Moody's and Standard & Poor's, which each upgraded IMAX by two notches over the past six months. Over the past two and a half years, IMAX has reduced debt from $300 million to $160 million.
For the twelve-month period ended December 31, 2003, the Company's total revenues were $119.3 million as compared to $129.1 million in the prior-year period. Systems revenue was $75.8 million versus $71.0 million in the prior year period, as the Company recognized revenues on 20 theatre systems as compared to 16 theatre systems in the prior-year period. Film revenue was $25.8 million compared to $40.6 million in 2002. Theatre Operations revenue was $13.1 million versus $12.3 million in the prior-year period. Other revenue was $4.5 million compared to the $5.3 million reported in 2002.
The Company previously reported earnings from continuing operations of $0.05 per diluted share for the year ended December 31, 2002. As a result of a discontinued operation in December 2003, the loss from which has been included into discontinued operations for all comparative periods, the Company's 2002 reported earnings from continuing operations increased from $0.05 per diluted share, to a reported $0.09 per diluted share.
In the fourth quarter, the Company's total revenues were $29.9 million as compared to $37.0 million in the prior year period. IMAX Systems revenue was $19.9 million versus $20.3 million in the prior year period. Film revenue was $6.2 million versus $11.5 million in the fourth quarter of 2002. The decline, which was anticipated, was primarily attributed to the Company's record-breaking film SPACE STATION in 2002. Theatre Operations revenue was $3.0 million versus $3.8 million in the prior year period. Other revenue was $0.8 million in the quarter versus $1.4 million in the fourth quarter of 2002.
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) 457-2692 approximately 10 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 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 virtually 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 entertainment experiences. As of December 2003, there were 240 IMAX theatres operating in more than 35 countries.
IMAX(R), IMAX(R) 3D, IMAX DMR(R), IMAX(R) MPX(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'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 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 performance of films, 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/A 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)
Three months ended Years ended
December 31, December 31,
2003 2002 2003 2002
Revenue
IMAX systems $19,934 $20,288 $75,848 $70,959
Films 6,233 11,506 25,803 40,556
Theater operations 2,967 3,797 13,109 12,284
Other 799 1,387 4,500 5,303
29,933 36,978 119,260 129,102
Costs of goods and services 17,931 23,397 67,283 75,634
Gross margin 12,002 13,581 51,977 53,468
Selling, general and
administrative expenses 8,448 8,237 33,312 34,906
Research and development 961 661 3,794 2,362
Amortization of intangibles 101 351 573 1,418
Income from equity-accounted
investees (1,995) (195) (2,496) (283)
Receivable provisions
(recoveries), net (2,489) (1,288) (2,225) (1,233)
Restructuring costs and asset
impairments (recoveries) 969 376 969 (121)
Earnings (loss) from operations 6,007 5,439 18,050 16,419
Interest income 140 118 656 413
Interest expense (3,907) (4,483) (15,856) (17,564)
Gain (loss) on retirement of
notes (4,577) (105) (4,910) 11,900
Recovery (impairment) of
long-term investments 1,538 -- 1,892 --
Earnings (loss) from continuing
operations before income taxes (799) 969 (168) 11,168
Recovery of (provision for)
income taxes (14) -- 386 --
Net earnings (loss) from
continuing operations (813) 969 218 11,168
Net earnings (loss) from
discontinued operations 488 (285) 195 804
Net earnings (loss) before
cumulative effect of changes
in accounting principles (325) 684 413 11,972
Cumulative effect of changes in
accounting principles (182) -- (182) --
Net earnings (loss) $(507) $684 $231 $11,972
Earnings (loss) per share:
Earnings (loss) per share -
basic and diluted:
Net earnings (loss) from
continuing operations $(0.02) $0.03 $0.01 $0.34
Net earnings (loss) from
discontinued operations $0.01 $(0.01)$ -- $0.02
Net earnings (loss) before
cumulative effect of
changes in accounting
principles (0.01) 0.02 0.01 0.36
Cumulative effect of changes in
accounting principles -- -- -- --
Net earnings (loss) $(0.01) $0.02 $0.01 $0.36
Weighted average number of
shares outstanding
(000's):
Basic 38,843 32,973 35,663 32,943
Diluted 40,317 33,436 36,431 33,306
IMAX CORPORATION
CONSOLIDATED BALANCE SHEETS
In accordance with United States Generally Accepted Accounting Principles
(In thousands of U.S. dollars)
As at December 31,
2003 2002
Assets
Cash and cash equivalents $47,282 $33,801
Restricted cash 4,961 3,335
Accounts receivable, net of allowance for doubtful
accounts of $7,278 (2002 - $9,248) 13,887 15,054
Financing receivables 56,742 51,918
Inventories 28,218 34,092
Prepaid expenses 1,902 2,372
Film assets 1,568 419
Fixed assets 35,818 43,616
Other assets 13,827 10,455
Deferred income taxes 3,756 3,821
Goodwill 39,027 39,027
Other intangible assets 3,388 3,363
Assets of discontinued operations -- 1,703
Total assets $250,376 $242,976
Liabilities
Accounts payable $5,780 $6,167
Accrued liabilities 43,794 43,365
Deferred revenue 63,344 85,590
New Senior Notes due 2010 160,000 --
Old Senior Notes due 2005 29,234 200,000
Subordinated Notes due 2003 -- 9,143
Liabilities of discontinued operations -- 2,381
Total liabilities 302,152 346,646
Commitments, contingencies and guarantees
Shareholders' equity (deficit)
Capital stock Common shares - no par value.
Authorized - unlimited number.
Issued and outstanding -
39,301,758 (2002 - 32,973,366) 115,609 65,563
Other equity 3,159 1,542
Deficit (171,189) (171,420)
Accumulated other comprehensive income 645 645
Total shareholders' deficit (51,776) (103,670)
Total liabilities and shareholders' equity
(deficit) $250,376 $242,976
SOURCE IMAX Corporation
CONTACT:
Media -
Romi Schutzer of IMAX Corporation, New York
+1-212-821-0144
[email protected]
Entertainment Media -
Al Newman of Newman
& Company, Los Angeles
+1-818-784-2130
[email protected]
Analysts -
Jennifer Gery of IMAX Corporation, New York
+1-212-821-0144
[email protected]
Business Media - Whit Clay of Sloane & Company, New York
+1-212-446-1864
[email protected]
Company News On-Call: http://www.prnewswire.com/comp/103201.html
Web site: http://www.imax.com
(IMAX IMX.)