IMAX Corporation Reports Fourth Quarter and Full Year 2011 Financial Results

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:

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).

SOURCE IMAX Corporation