IMAX Corporation Reports Fourth Quarter and Full Year 2011 Financial Results

Thu, Feb 23, 2012

NEW YORK, Feb. 23, 2012/PRNewswire/ --

HIGHLIGHTS

  • Company Reports Q4 2011 Revenues of $66.7 million; Adjusted EPS of $0.14
  • Record Level of Theatre Openings in 2011 Results in Year-over-Year Commercial Network Growth of 33%
  • Company Signs 200+ Theatres for Second Year in a Row
  • 2012 Begins with the Addition of Several Titles to the Film Slate and Progress Across Key International Growth Initiatives

IMAX Corporation(NYSE: IMAX; TSX: IMX) today reported fourth quarter 2011 revenues of $66.7 million, adjusted net income of $9.2 million, or $0.14per diluted share, reported net income of $6.3 million, or $0.09per diluted share, and adjusted EBITDA as calculated in accordance with the Company's Credit Facility of $21.1 million.  For reconciliations of adjusted net income to reported net income and for the definition of adjusted EBITDA, please see the tables at the end of this press release.

(Logo: http://photos.prnewswire.com/prnh/20111107/MM01969LOGO)

"Our fourth quarter financial results came in as expected and the year ended on a positive note with the success of Paramount'sMission: Impossible – Ghost Protocol, which was released five days early in IMAX," said IMAXChief Executive Officer Richard L. Gelfond.  "Overall, 2011 was highly productive from a strategic perspective.  In addition to the success of Mission: Impossible, we made progress toward introducing best-in-class laser based projection technology, and grew our commercial network by 33%, installing a record 170 IMAX® theatre systems.  This strategic momentum has carried into 2012, as the recent WTO agreement with China, highlighting IMAX, should enhance programming flexibility in our biggest international market, and we have also made early progress toward igniting network growth in Latin Americaand Europe.  While we are disappointed that 2011 did not meet our financial objectives, in 2012, we believe we are positioning ourselves for both financial and strategic success, through our continued focus on differentiation, executing on network growth, and creating a compelling film slate."

Network Growth Update

2011 marked the second year in a row in which IMAXsigned contracts for over 200 theatre systems, and a record year for both new theatre signings and installations.  The Company signed contracts for a total of 209 theatre systems in 2011 and installed 170 theatre systems.  In the fourth quarter of 2011, the Company signed contracts for 26 theatre systems and installed a record 57 theatre systems.  As of December 31, 2011, there were a total of 497 IMAXtheatres installed in commercial multiplexes, which represents a 33% increase from the 373 theatres installed as of December 31, 2010.  There were 263 theatre systems in backlog as of December 31, 2011, compared to 224 systems in backlog as of December 31, 2010.  For a breakdown of system signings, installations and backlog by type, please see the end of this press release.

"The rapid expansion of our network in 2011 was mostly driven by continued success in China, Russiaand North America," said Mr. Gelfond.  "In 2012, we are increasingly focused on igniting our growth in underpenetrated markets like South America, Western Europeand India.  Our restructured master license agreement in South Americais resulting in increased activity in that region of the world and we look forward to the opening of four new IMAXtheatres in Brazilin the first half of this year.  In addition, we believe the hiring of Andrew Crippsto lead our sales effort in EMEA should be a catalyst for our business in Western Europe, and our recent announcement of new IMAXtheatres coming to Indiashould contribute to our ability to release Bollywood titles in IMAX.  All of these efforts should accelerate the expansion of our network in these strategically important regions of the world."

Network Growth Outlook

Based on theatres currently in backlog, the Company expects to install 95 to 100 new theatre systems in 2012 (45 to 50 under revenue sharing arrangements and approximately 50 under sales arrangements).  Of the 95 to 100 new theatres expected to be installed in 2012, the Company expects to install approximately 13 to 17 new theatres in the first quarter (7 to 9 under revenue sharing arrangements and 6 to 8 under sales arrangements).  Current network growth outlook is based solely on theatres in backlog as of December 31, 2011and does not include any theatres that may sign and install throughout the year.  In 2011, 39% of the 137 new theatres installed were from theatre agreements that were signed in 2011.  The Company cautions that installations can slip from period to period, usually for reasons beyond its control.

Fourth Quarter Segment Results

In the fourth quarter of 2011, IMAXsystems revenue was $29.8 million, compared to $32.9 millionin the fourth quarter of 2010, primarily reflecting the installation of 17 full, new theatre systems in the most recent fourth quarter, compared to 20 full, new systems in the fourth quarter of 2010.  The Company also installed one digital upgrade in the fourth quarter of 2011, compared to seven in the same period last year.

Fourth quarter 2011 total film revenue was $18.1 million, compared to $18.0 millionin the fourth quarter of 2010.  Production and IMAX DMR® revenues were $12.3 millionin the fourth quarter of 2011, versus $13.1 millionin the year-ago period.  Gross box office from DMR titles was $97.6 millionin the fourth quarter of 2011, compared to $101.9 millionin the fourth quarter of 2010.  The average DMR box office per screen in the fourth quarter of 2011 was $221,600($184,900domestic, $294,700international).

"The highlight of the fourth quarter was the release of Paramount's Mission: Impossible – Ghost Protocol," added Mr. Gelfond.  "The film featured scenes shot with IMAXcameras and utilized the early release in IMAXto build positive word of mouth, which helped lead to its status as the must see film of the holiday season.  We look forward to an exciting lineup of films for 2012, anchored by key franchise titles including The Avengers, Men in Black 3,The Amazing Spider-Man, The Hobbit: An Unexpected Journey, Skyfall, and the highly-anticipated finale of Christopher Nolan's Batman trilogy, The Dark Knight Rises, which will feature more footage shot in IMAXthan any feature film to date.  In addition to our Hollywoodtentpole titles, in 2012 we plan to build on the success we have had with local releases in markets like China, and we believe we are now in a position to expand our offering of local content into other international territories, such as Franceand Russia."

In the fourth quarter of 2011, revenue from joint revenue sharing arrangements was $8.4 million, compared to $7.8 millionin the prior-year period.  During the quarter, the Company installed 39 new theatres under joint revenue sharing arrangements, compared to 27 in the year-ago period.  As of December 31, 2011, there were 257 IMAXtheatres operating under joint revenue sharing arrangements, compared to 171 joint revenue sharing theatres open as of December 31, 2010.

Fourth quarter 2011 gross margin was $29.8 million, compared to $36.4 millionin the fourth quarter of 2010, and as a percentage of revenues, gross margin was 44.7% in the quarter, versus 52.6% in the same period last year.  Gross margin from DMR was negatively impacted by the purchase of more film prints on certain titles in the fourth quarter, versus last year.

Fourth quarter 2011 revenues were $66.7 million, adjusted net income was $9.2 million, or $0.14per diluted share, reported net income was $6.3 million, or $0.09per diluted share, and adjusted EBITDA as calculated in accordance with the Company's Credit Facility was $21.1 million.  Fourth quarter 2010 revenues were $69.2 million, adjusted net income was $14.3 million, or $0.21per diluted share, reported net income was $54.2 million, or $0.80per diluted share, which included a one-time, non-cash deferred tax benefit of $54.8 million, or $0.81per diluted share, and adjusted EBITDA was $25.8 million.

For the full year ended December 31, 2011, total revenues were $236.6 million, adjusted net income was $27.3 million, or $0.40per diluted share, reported net income was $15.5 million, or $0.23per diluted share, and adjusted EBITDA as calculated in accordance with the Company's Credit Facility was $67.7 million.  For the full year ended December 31, 2010, total revenues were $248.6 million, adjusted net income was $67.8 million, or $1.02per diluted share, reported net income was $100.8 million, or $1.51per diluted share, and adjusted EBITDA was $101.4 million.

Mr. Gelfond concluded, "The strategic momentum of 2011 has continued here in the early weeks of 2012.  We enter this new year with a commercial network that is substantially larger than it was a year ago, our mix between domestic and international theatres is moving toward higher-grossing international, and we believe our 2012 film slate reflects what our fans want to experience in IMAX.  We believe the fundamentals of our business model – network expansion and higher revenue contribution coming from our higher margin businesses – should position us well for the long-term."

Conference Call

The Company will host a conference call today at 8:30 AM ETto discuss its fourth quarter 2011 financial results.  To access the call via telephone, interested parties should dial (866) 321-6651 approximately 5 to 10 minutes before it begins.  International callers should dial (416) 642-5212.  The participant passcode for the call is 6489570.  This call is also being webcast by Thomson Financialand can be accessed on the 'Investor Relations' section of www.imax.com.  A replay of the call will be available via webcast on the 'Investor Relations' section of www.imax.comor via telephone by dialing (888) 203-1112, or (647) 436-0148 for international callers.  The participant passcode for the telephone replay is 6489570.

About IMAX Corporation

IMAX Corporationis one of the world's leading entertainment and technology companies, specializing in the creation and delivery of premium, awe-inspiring entertainment experiences. With a growing suite of cutting-edge motion picture and sound technologies, and a globally recognized entertainment brand, IMAXis singularly situated at the convergence of the entertainment industry, innovation and the digital media world. The industry's top filmmakers and studios are utilizing IMAXtheatres to connect with audiences in extraordinary ways, and as such, the IMAXnetwork is among the most important and successful theatrical distribution platforms for major event films around the globe. The Company's new digital projection and sound systems - combined with a growing blockbuster film slate - are fueling the rapid expansion of the IMAXnetwork in established markets such as North America, Western Europe, and Japan, as well as emerging markets such as Chinaand Russia. IMAXdeliver the world's best cinematic presentations using proprietary IMAX®, IMAX3D®, and IMAX DMR® (Digital Re-Mastering) technologies. IMAX DMR enables virtually any motion picture to be transformed into the unparalleled image and sound quality of The IMAX Experience®.

IMAXis headquartered in New York, Torontoand Los Angeles, with offices in London, Tokyo, Shanghaiand Beijing.  As of December 31, 2011, there were 634 IMAXtheatres (497 commercial multiplex, 20 commercial destination and 117 institutional) in 50 countries.

IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D Experience® and The IMAX Experience® are trademarks of IMAX Corporation. More information about the Company can be found at www.imax.com. You may also connect with IMAXon Facebook(www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube(www.youtube.com/imaxmovies).

This press release contains forward looking statements that are based on IMAXmanagement'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, but are not limited to, general economic, market or business conditions, including the length and severity of the current economic downturn, the performance of IMAX DMR films, the opportunities that may be presented to and pursued by IMAX, competitive actions by other companies, conditions in the in-home and out-of home entertainment industries, the signing of theatre system agreements, changes in law or regulations, conditions, changes and developments in the commercial exhibition industry, the failure to respond to changes and advancements in digital technology, the failure to convert theatre system backlog into revenue, new business initiatives, investments and operations in foreign jurisdictions and any future international expansion, the inability to protect IMAX's intellectual property foreign currency fluctuations and IMAX's prior restatements and the related litigation. These factors and other risks and uncertainties are discussed in IMAX's most recent Annual Report on Form 10-K and most recent Quarterly Reports on Form 10-Q.

For additional information please contact:


Investors:

IMAX Corporation, New York

Heather Anthony/Blaire Lomasky

212-821-0100

[email protected]

[email protected]


Business Media:

Sloane & Company, New York

Whit Clay

212-446-1864

[email protected]

Media:

IMAX Corporation, New York

Ann Sommerlath

212-821-0155

[email protected]


Entertainment Media:

Principal Communications Group, Los Angeles

Melissa Zuckerman/Paul Pflug

323-658-1555

[email protected]

[email protected]




Additional Information

2012 DMR Films Announced to Date

To date, IMAXhas announced 17 DMR titles that will play in the IMAXtheatre network in 2012.  The Company remains in discussions with virtually every studio regarding future titles and expects the total number of titles in 2012 to be similar to that in 2011.  For periodic box office updates, please visit the corporate news section of www.imax.com.

  • Mission: Impossible – Ghost Protocol: The IMAXExperience (Paramount, cont'd from 2011);
  • Underworld: Awakening: AnIMAX3DExperience(Sony, January 2012);
  • Journey 2: The Mysterious Island: AnIMAX3DExperience(WB, February 2012);
  • The Lorax: An IMAX3DExperience (Universal, March 2012);
  • John Carter: An IMAX3DExperience (Disney, March 2012);
  • The Hunger Games: TheIMAXExperience(Lionsgate, March 2012);
  • Wrath of the Titans: An IMAX3DExperience (WB, March 2012);
  • HOUBA! On the Trail of the Marsupilami: The IMAXExperience (Chez WAM, Pathe Distribution, April 2012, Franceonly);
  • The Avengers: An IMAX3DExperience (Disney, Marvel, May 2012);
  • Dark Shadows: TheIMAXExperience(WB, May 2012);
  • Men in Black III: An IMAX3DExperience(Sony, May 2012);
  • The Amazing Spider-Man: An IMAX3DExperience (Sony, July 2012);
  • The Dark Knight Rises: TheIMAXExperience (WB, July 2012);
  • Skyfall: The IMAXExperience (Sony, November 2012);
  • Gravity: An IMAX3DExperience(WB, November 2012);
  • Chinese Zodiac: TheIMAXExperience(JCE Entertainment Ltd., Huayi Brothers& Emperor Motion Pictures, December 2012, int'l only); and
  • The Hobbit: An Unexpected Journey: An IMAX3DExperience (WB, December 2012).

Theatre System Signings

In the fourth quarter of 2011, the Company signed contracts for 24 new theatre systems (11 under joint revenue sharing arrangements and 13 under sales and sales-type lease arrangements) and 2 digital and other upgrades, for a total of 26 theatre system signings.  In the fourth quarter of 2010, the Company signed contracts for 9 new theatre systems (4 under joint revenue sharing arrangements and 5 under sales and sales-type lease arrangements) and 14 digital and other upgrades, for a total of 23 theatre system signings.

For the full year of 2011, the Company signed contracts for a record 190 new theatre systems (132 under joint revenue sharing arrangements and 58 under sales and sales-type lease arrangements) and 19 digital and other upgrades, for a total of 209 theatre system signings.  For the full year of 2010, the Company signed contracts for 166 new theatre systems (71 under joint revenue sharing arrangements and 95 under sales and sales-type lease arrangements) and 55 digital and other upgrades, for a total of 221 theatre system signings.

Theatre System Installations

In the fourth quarter of 2011, the Company installed a record 56 new theatre systems (39 under joint revenue sharing arrangements and 17 under sales and sales-type lease arrangements) and 1 digital upgrade, for a total of 57 theatre system installations.  In the fourth quarter of 2010, the Company installed 47 new theatre systems (27 under joint revenue sharing arrangements and 20 under sales and sales-type lease arrangements) and 7 digital upgrades, for a total of 54 theatre system installations.

For the full year of 2011, the Company installed a record 137 new theatre systems (86 under joint revenue sharing arrangements and 51 under sales and sales-type lease arrangements) and 33 digital upgrades, for a total of 170 theatre system installations.  For the full year of 2010, the Company installed 91 new theatre systems (54 under joint revenue sharing arrangements and 37 under sales and sales-type lease arrangements) and 32 digital upgrades, for a total of 123 theatre system installations.

Theatre System Backlog

As of December 31, 2011, the Company's theatre backlog consisted of 263 theatre systems (119 under joint revenue sharing arrangements and 144 under sales and sales-type lease arrangements, 10 of which were systems designated for digital upgrades).  As of December 31, 2010, the Company's theatre backlog consisted of 224 systems (59 under joint revenue sharing arrangements and 165 under sales and sales-type lease arrangements, 25 of which were systems designated for digital upgrades).


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,


Ended December 31,



2011


2010


2011


2010

Revenues












Equipment and product sales

$

26,657


$

31,044


$

85,016


$

72,578

Services


26,349



26,389



106,720



123,911

Rentals


9,394



10,313



34,810



46,936

Finance income


1,753



1,417



6,162



4,789

Other


2,523



-



3,848



400




66,676



69,163



236,556



248,614

Costs and expenses applicable to revenues












Equipment and product sales


10,147



13,569



38,742



36,394

Services


21,262



15,471



69,277



63,425

Rentals


4,823



3,708



14,301



11,111

Other


612



32



1,018



32




36,844



32,780



123,338



110,962

Gross margin


29,832



36,383



113,218



137,652

Selling, general and administrative expenses


17,001



31,714



72,779



78,428


(including share-based compensation expense of $2.7 million and $11.7 million for the three months and year ended December 31, 2011, respectively (2010 - expense of $16.3 million and $26.0 million, respectively))











Provision for arbitration award


-



-



2,055



-

Research and development


1,803



2,278



7,829



6,249

Amortization of intangibles


124



162



465



513

Receivable provisions, net of recoveries


803



1,007



1,570



1,443

Asset impairments


20



45



28



45

Income from operations


10,081



1,177



28,492



50,974

Interest income


13



25



57



399

Interest expense


(402)



(324)



(1,827)



(1,885)

Income from continuing operations before income taxes


9,692



878



26,722



49,488

(Provision for) recovery of income taxes(1)


(2,884)



53,776



(9,388)



51,784

Loss from equity-accounted investments


(479)



(493)



(1,791)



(493)

Net Income

$

6,329


$

54,161


$

15,543


$

100,779














Net income per share - basic & diluted:













Net income per share - basic

$

0.10


$

0.85


$

0.24


$

1.59


Net income per share - diluted

$

0.09


$

0.80


$

0.23


$

1.51














Weighted average number of shares outstanding (000's):













Basic


64,799



63,951



64,504



63,575


Fully Diluted


67,460



67,690



67,859



66,684



























Additional Disclosure:












Depreciation and amortization(2)

$

7,143


$

5,028


$

25,163


$

20,536


(1) In the fourth quarter of 2010, the Company released a significant portion of its deferred tax valuation allowance,  resulting in a non-cash tax benefit of $54.8 million.

(2) Includes less than $0.1 million and $0.4 million of amortization of deferred financing costs charged to interest expense  for the three months and year ended December 31, 2011 (2010 - $0.1 million and $0.3 million respectively).




IMAX CORPORATION

CONSOLIDATED BALANCE SHEETS

In accordance with United States Generally Accepted Accounting Principles

(In thousands of U.S. dollars)
























As at December 31,



2011


2010







Assets







Cash and cash equivalents


$

18,138


$

30,390

Accounts receivable, net of allowance for doubtful accounts of $1,840 (December 31, 2010 — $1,988)


46,659



39,570

Financing receivables  



86,714



73,601

Inventories  



19,747



15,275

Prepaid expenses



3,126



2,832

Film assets  



2,388



2,449

Property, plant and equipment  



101,253



74,035

Other assets  



14,238



12,350

Deferred income taxes



50,033



57,122

Goodwill



39,027



39,027

Other intangible assets  



24,913



2,437

Total assets


$

406,236


$

349,088








Liabilities







Bank indebtedness  


$

55,083


$

17,500

Accounts payable



28,985



20,384

Accrued and other liabilities  



54,803



78,994

Deferred revenue



74,458



73,752

Total liabilities



213,329



190,630








Commitments and contingencies














Shareholders' equity







Capital stock common shares — no par value. Authorized — unlimited number.







Issued and outstanding — 65,052,740 (December 31, 2010 — 64,145,573)



303,395



292,977

Other equity



17,510



7,687

Deficit



(125,666)



(141,209)

Accumulated other comprehensive loss



(2,332)



(997)

Total shareholders' equity



192,907



158,458

Total liabilities and shareholders' equity


$

406,236


$

349,088




















IMAX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

In accordance with United States Generally Accepted Accounting Principles

(In thousands of U.S. dollars)



Years Ended December 31,



2011


2010


Cash provided by (used in):






Operating Activities







Net earnings

$

15,543


$

100,779


Items not involving cash:








Depreciation and amortization


25,163



20,536



Write-downs, net of recoveries


1,954



2,551



Change in deferred income taxes


8,089



(54,275)



Stock and other non-cash compensation


12,436



28,195



Provision for arbitration award


2,055



-



Foreign currency exchange gain


1,255



(865)



Loss from equity-accounted investments


1,791



493



Gain on non-cash contribution to equity-accounted investees


(404)



-



Change in cash surrender value of life insurance


-



(107)


Investment in film assets


(12,256)



(10,139)


Changes in other non-cash operating assets and liabilities


(49,379)



(28,682)



Net cash provided by operating activities


6,247



58,486










Investing Activities







Purchase of property, plant and equipment


(5,528)



(5,338)


Investment in joint revenue sharing equipment


(33,290)



(21,275)


Investment in new business ventures


(2,483)



(3,636)


Cash surrender value of life insurance


-



7,797


Acquisition of other assets


-



(691)


Acquisition of other intangible assets


(22,206)



(681)



Net cash used in investing activities


(63,507)



(23,824)










Financing Activities







Increase in bank indebtedness


75,083



-


Repayment of bank indebtedness


(37,500)



(32,500)


Common shares issued - stock options exercised


7,864



8,276


Credit Facility amendment fees paid


(306)



-



Net cash provided by (used in) financing activities


45,141



(24,224)










Effects of exchange rate changes on cash


(133)



(129)










(Decrease) increase in cash and cash equivalents during year


(12,252)



10,309










Cash and cash equivalents, beginning of year


30,390



20,081










Cash and cash equivalents, end of year

$

18,138


$

30,390






IMAX CORPORATION

SELECTED FINANCIAL DATA

In accordance with United States Generally Accepted Accounting Principles

(In thousands of U.S. dollars)


The Company has seven reportable segments identified by category of product sold or service provided: IMAX systems; theater system maintenance; joint revenue sharing arrangements; film production and IMAX DMR; film distribution; film post-production; theater operations; and other. The IMAX systems segment designs, manufactures, sells or leases IMAX theater projection system equipment. The theater system maintenance segment maintains IMAX theater projection system equipment in the IMAX theater network. The joint revenue sharing arrangements segment provides IMAX theater projection system equipment to an exhibitor in exchange for a share of the box-office and concessions revenue. The film production and IMAX DMR segment produces films and performs film re-mastering services. The film distribution segment distributes films for which the Company has distribution rights. The film post-production segment provides film post-production and film print services. The other segment includes theater operations from certain IMAX theaters, camera rentals and other miscellaneous items.






Three Months


Year Ended



Ended December 31,


Ended December 31,




2011



2010



2011



2010

Revenue












IMAX systems













Sales and sales-type leases

$

26,552


$

27,720


$

81,310


$

63,023


Ongoing rent, fees, and finance income


3,270



5,156



11,890



12,981




29,822



32,876



93,200



76,004

Theater system maintenance


6,570



6,102



24,840



21,444

Joint revenue sharing arrangements


8,382



7,843



30,764



41,757

Film













Production and IMAX DMR


12,312



13,093



50,592



63,462


Distribution


3,217



3,658



16,074



17,937


Post-production


2,549



1,255



8,235



7,702




18,078



18,006



74,901



89,101

Other


3,824



4,336



12,851



20,308

Total

$

66,676


$

69,163


$

236,556


$

248,614














Gross margins












IMAX systems(1)













Sales and sales-type leases

$

17,088


$

15,287


$

45,251


$

31,452


Ongoing rent, fees, and finance income


3,372



5,037



11,678



12,531




20,460



20,324



56,929



43,983

Theater system maintenance


2,525



3,222



9,437



10,084

Joint revenue sharing arrangements(1)


3,813



4,360



17,605



31,703

Film













Production and IMAX DMR(1)


2,339



7,203



23,574



41,159


Distribution(1)


494



956



3,025



5,205


Post-production


181



(55)



2,985



2,891




3,014



8,104



29,584



49,255

Other


20



373



(337)



2,627

Total

$

29,832


$

36,383


$

113,218


$

137,652


(1) IMAX systems include commission costs of $0.9 million and $2.4 million for the three and twelve months ended December 31, 2011, respectively (2010 — $0.9 million and $1.9 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $1.9 million and $5.4 million for the three and twelve months ended December 31, 2011, respectively (2010 — $1.8 million and $4.2 million, respectively). Production and DMR segment margins include marketing costs of $1.9 million and $3.8 million for the three and twelve months ended December 31, 2011, respectively (2010 — $0.7 million and $2.1 million, respectively). Distribution segment margins include marketing costs of $0.2 million and $1.9 million for the three and twelve months ended December 31, 2011, respectively (2010 — $0.4 million and $0.7 million, respectively).



IMAX CORPORATION

OTHER INFORMATION

(In thousands of U.S. dollars)



Non-GAAP Financial Measures:


In this release, the Company presents adjusted EBITDA, adjusted net income and adjusted net income per diluted share as supplemental measures of performance of the Company, which are not recognized under United States generally accepted accounting principals ("GAAP"). The Company presents adjusted EBITDA, adjusted net income and adjusted net income per diluted share because it believes that they are important supplemental measures of its comparable controllable operating performance and it wants to ensure that its investors fully understand the impact of its variable share-based compensation, provision for arbitration award and deferred taxes on its net income. Management uses these measures to review operating performance on a comparable basis from period to period.  However, these non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted EBITDA, adjusted net income and adjusted net income per diluted share should be considered in addition to, and not as a substitute for, net income and other measures of financial performance reported in accordance with GAAP.


Adjusted EBITDA is calculated on a basis consistent with the Company's Credit Facility, which refers to Adjusted EBITDA as EBITDA. The Credit Facility provides that the Company will be required to maintain a ratio of funded debt (as defined in the Credit Agreement) to EBITDA (as defined in the Credit Agreement) of not more than 2:1.  The Company will also be required to maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.1:1.0. At all times under the terms of the Credit Facility, the Company is required to maintain minimum Excess Availability of not less than $5.0 million and minimum Cash and Excess Availability of not less than $15.0 million. The ratio of funded debt to EBITDA was 0.82:1 as at December 31, 2011, where Funded Debt (as defined in the Credit Agreement) is the sum of all obligations evidenced by notes, bonds, debentures or similar instruments and was $55.1 million. Adjusted EBITDA is calculated as follows:






Quarter Ended December 31,


Year Ended December 31,


2011


2010


2011


2010













Net earnings

$

6,329


$

54,161


$

15,543


$

100,779

Add (subtract):













Loss for equity-accounted investments


479



493



1,791



493


Provision for (recovery of) income taxes


2,884



(53,776)



9,388



(51,784)


Interest expense net of interest income


389



299



1,770



1,486


Depreciation and amortization including film asset amortization


7,100



4,941



24,775



20,195


Write-downs net of recoveries including asset impairments and receivable provisions


1,113



1,570



1,954



2,551


Stock and other non-cash compensation


2,841



18,079



12,436



28,195


Other, net


-



-



-



(536)


Adjusted EBITDA

$

21,135


$

25,767


$

67,657


$

101,379




IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)


Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended December 31, 2011 vs. 2010:

The Company reported net income of $6.3 million, or $0.10 per basic share and $0.09 per diluted share, for the fourth quarter of 2011, as compared to net income of $54.2 million, or $0.85 per basic share and $0.80 per diluted share, for the fourth quarter of 2010. Net income for the quarter includes a charge of $0.4 million, or $0.01 per diluted share, (2010 – $14.9 million or $0.22 per diluted share) for variable share-based compensation and a deferred tax provision of $2.4 million, or $0.04 per diluted share, (2010 – benefit of $54.8 million or $0.81 per diluted share). Adjusted net income, which consists of net income excluding the impact of variable share-based compensation and the deferred tax adjustment was $9.2 million, or $0.14 per diluted share, in the fourth quarter of 2011 as compared to adjusted net income of $14.3 million, or $0.21 per diluted share, for the fourth quarter of 2010.  A reconciliation of net income, the most directly comparable U.S. GAAP measure, to adjusted net income and adjusted net income per diluted share is presented in the table below:






Three Months Ended


Three Months Ended



December 31, 2011


December 31, 2010



Net Income


Diluted EPS


Net Income


Diluted EPS

Reported

$

6,329


$

0.09


$

54,161


$

0.80

Adjustments:













Variable stock compensation


441



0.01



14,943



0.22


Deferred tax adjustment


2,407



0.04



(54,793)



(0.81)

Adjusted

$

9,177


$

0.14


$

14,311


$

0.21














Weighted average diluted shares outstanding





67,460






67,690

















Adjusted Net Income and Adjusted Diluted Per Share Calculations – Year Ended December 31, 2011 vs. 2010:

The Company reported net income of $15.5 million, or $0.24 per basic share and $0.23 per diluted share, for the year ended December 31, 2011 as compared to net income of $100.8 million, or $1.59 per basic share and $1.51 per diluted share, for the year ended December 31, 2010. The year ended December 31, 2010 included the record-breaking performance of the film Avatar: An IMAX 3D Experience. Net income for the year ended December 31, 2011 includes a deferred tax provision of $8.1 million, or $0.12 per diluted share (2010 - benefit of $54.8 million or $0.82 per diluted share), a $1.6 million pre-tax charge or $0.02 per diluted share (2010 — $21.9 million or $0.33 per diluted share) for variable share-based compensation and a one-time $2.1 million pre-tax charge ($0.03 per diluted share) due to an arbitration award arising from an arbitration proceeding brought against the Company in connection with a discontinued subsidiary. Adjusted net income, which consists of net income excluding the impact of the deferred tax adjustment, variable share-based compensation and the charge for arbitration award was $27.3 million, or $0.40 per diluted share, for the year ended December 31, 2011 as compared to adjusted net income of $67.8 million, or $1.02 per diluted share, for the year ended December 31, 2010. A reconciliation of net income, the most directly comparable U.S. GAAP measure, to adjusted net income and adjusted net income per diluted share is presented in the table below:






Year Ended


Year Ended



December 31, 2011


December 31, 2010



Net Income


Diluted EPS


Net Income


Diluted EPS

Net income

$

15,543


$

0.23


$

100,779


$

1.51

Add:













Deferred tax adjustment


8,089



0.12



(54,793)



(0.82)


Variable stock compensation


1,607



0.02



21,857



0.33


Provision for arbitration award


2,055



0.03



-



-

Adjusted net income

$

27,294


$

0.40


$

67,843


$

1.02














Weighted average diluted shares outstanding





67,859






66,684

















SOURCE IMAX Corporation