IMAX Corporation Reports Third Quarter Results
TORONTO, Nov. 14 /PRNewswire/ -- IMAX Corporation (Nasdaq: IMAX; TSE: IMX) today reported its results for the third quarter ended September 30, 2001. The Company reported proforma net losses from continuing operations of $0.16 per share for the third quarter on a fully diluted basis. For the nine months ended September 30, 2001, the Company reported proforma net losses from continuing operations of $0.60 per share on a fully diluted basis. The Company reported cash and cash equivalents of $31.6 million at September 30, 2001, approximately $7 million greater than its balance at June 30, 2001.
In the third quarter, IMAX took previously announced restructuring and other, non-cash charges of $142 million. These charges include employee termination, uncollectable amounts from customers and other asset write-downs, including approximately $55.2 million related to the Company's decision to dispose of the core rental and staging operations of its Digital Projection International, (DPI) subsidiary. DPI's results are treated as discontinued operations in the Company's reported financial statements.
"We are making progress with our strategy to get IMAX back on solid financial footing and working towards a return to profitability in 2002 and beyond," said IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J. Wechsler. "We continue to implement the restructuring that began earlier this year, and believe that most of this process is now behind us. We remain focused on increasing returns for our shareholders, reducing our debt and managing our cash balance which stood at more than $31 million at September 30, 2001."
Messrs. Gelfond and Wechsler continued, "The charges taken in the third quarter reflect the changing economic conditions that IMAX has had to adapt to, including the global economic slowdown and the financial difficulties facing the North American exhibition market. Our decision to exit DPI's core business, which was never strategic for IMAX, is a financial one. We purchased DPI to help make IMAX a leader in the eventual conversion from film to digital technologies. This decision should not impact our plans to participate in the high end of digital cinema, including large format."
Shortly after the conclusion of the third quarter, the Company announced that it had retired approximately $48 million of its 5.75% Convertible Subordinated Notes due April 2003, at a cost of $7.9 million. On November 8, the Company announced that it had signed a contract with National Amusements to add an IMAX 3D theatre to its new cutting-edge entertainment complex in West Los Angeles.
Messrs. Gelfond and Wechsler further commented, "As we look towards the future, we remain optimistic about IMAX. We are re-establishing a solid financial base and, with the 2002 film slate set as the strongest in our industry's history, we are seeing increased customer activity. Approximately 20 large-format films will be released from a variety of independent and Hollywood filmmakers and distributors, including Disney's Beauty and the Beast, IMAX's own Space Station, a 3D film shot by astronauts, Steve Oedekerk's Santa vs. The Snowman, Disney's prequel to The Black Stallion, The Young Black Stallion and James Cameron's Ghosts of the Abyss."
In the third quarter, the Company's revenues were $23.3 million as compared to $32.9 million in the prior year. Systems revenue was $13.6 million versus $18.2 million in the prior year as the Company recognized revenues on three theatre systems, one of which was an operating lease, in the third quarter of 2001 versus three theatre systems in the third quarter of 2000. Film revenue was $6.4 million versus $10.6 million in the prior year due primarily to a reduction in post-production activity. Other revenue was $3.3 million as compared to $4.1 million in the prior year. The Company had reported losses of $4.48 per share for the third quarter on a fully diluted basis including the $4.56 per share impact of restructuring and other, non-cash charges, as compared to losses of $0.19 per share in the third quarter of 2000, after giving effect to the accounting changes taken at December 31, 2000. The Company signed contracts for two IMAX theatre systems in the third quarter. The Company's sales backlog was approximately $173 million at September 30, 2001, representing contracts for 60 theatre systems.
For the nine-month period ended September 30, 2001, the Company's revenues were $84.8 million as compared to $126.3 million in the prior-year period. Systems revenue was $52.0 million versus $80.0 million in the prior-year period as the Company recognized revenues on nine theatre systems as compared to 15 theatre systems in the prior-year period. Film revenue was $23.3 million as compared to $31.4 million in the prior year due primarily to a reduction in post-production activity. Other revenue was $9.5 million versus $14.9 million in the prior year in part due to the strong Company-owned theatre revenue in the first four months of 2000 as a result of the release of Fantasia/2000: The IMAX Experience(R). For the nine months ended September 30, 2001, the Company reported a loss of $5.35 per share on a fully diluted basis including the impact of $4.99 per share of restructuring and other, non-cash charges. The Company's comparative results for the first nine months of 2000 were losses of $1.98 per share, after giving effect to the accounting changes taken at December 31, 2000.
Proforma net losses from continuing operations refers to losses before any of the restructuring and other non-cash charges taken, and excludes discontinued operations. (See the column labeled "Proforma" on the attached financial tables.)
Founded in 1967, IMAX Corporation is one of the world's leading entertainment technology companies. IMAX's businesses include the world's best cinematic presentations together with IMAX, IMAX 3D and the development of the highest quality digital production and presentation. The IMAX brand is recognized throughout the world for extraordinary and immersive family experiences. As of September 2001, there were more than 220 IMAX theatres operating in 30 countries. More than 700 million people have seen an IMAX presentation since the medium premiered in 1970. IMAX Corporation is a publicly traded company listed on both the Toronto and Nasdaq stock exchanges. IMAX(R) is a registered trademark of IMAX Corporation. 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 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 for the year ended December 31, 2000 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)
(unaudited)
Three months ended
September 30, Three months ended
2001 September 30,
As reported Adjustments Proforma 2000
Revenue
IMAX systems $13,628 $-- $13,628 $18,215
Films 6,448 -- 6,448 10,634
Other 3,261 -- 3,261 4,078
23,337 -- 23,337 32,927
Costs and expenses 33,139 (17,079) 16,060 24,728
Gross margin (9,802) (17,079) 7,277 8,199
Selling, general
and administrative
expenses 12,125 (2,899) 9,226 10,426
Research and development 419 -- 419 1,470
Amortization
of intangibles 762 -- 762 706
Loss from equity-
accounted investees 146 -- 146 121
Restructuring costs and
asset impairments 46,819 (46,819) -- --
Loss from operations (70,073) (66,797) (3,276) (4,524)
Interest income 160 -- 160 575
Interest expense (5,655) -- (5,655) (5,618)
Impairment of
long-term investments (5,584) (5,584) -- --
Foreign exchange
gain (loss) 242 -- 242 (672)
Loss from continuing
operations before
income taxes (80,910) (72,381) (8,529) (10,239)
Recovery of (provision
for) income taxes (10,997) (14,448) 3,451 3,563
Net loss from
continuing operations (91,907) (86,829) (5,078) (6,676)
Net earnings (loss)
from discontinued
operations (55,171) (55,171) -- 928
Net loss before
cumulative effect of
changes in accounting
principles and
extraordinary items (147,078) (142,000) (5,078) (5,748)
Cumulative effect of
changes in accounting
principles, net
of income tax
benefit of $37,286 -- -- -- --
Extraordinary gain on
repurchase of convertible
subordinated notes,
net of income tax
expense of $5,450 7,525 -- 7,525 --
Net earning (loss) $(139,553) $(142,000) $2,447 $(5,748)
Earnings (loss) per share
Earnings (loss) per share - basic:
Net loss from
continuing operations $(2.95) $(2.76) $(0.16) $(0.22)
Net earnings (loss)
from discontinued
operations $(1.77) $(1.77) $-- $0.03
Net loss before
cumulative effect of
changes in accounting
principles and
extraordinary items $(4.72) $(4.56) $(0.16) $(0.19)
Cumulative effect of
changes in accounting
principles $-- $-- $-- $--
Extraordinary gain on
repurchase of convertible
subordinated notes $0.24 $-- $0.24 $--
Net earnings (loss) $(4.48) $(4.56) $0.08 $(0.19)
Earnings (loss) per share - diluted:
Net loss from
continuing operations $(2.95) $(2.76) $(0.16) $(0.22)
Net earnings (loss)
from discontinued
operations $(1.77) $(1.77) $-- $0.03
Net loss before
cumulative effect of
changes in accounting
principles $(4.72) $(4.56) $(0.16) $(0.19)
Cumulative effect of
changes in accounting
principles $-- $-- $-- $--
Extraordinary gain on
repurchase of convertible
subordinated notes $0.24 $-- $0.24 $--
Net earnings (loss) $(4.48) $(4.56) $0.08 $(0.19)
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)
(unaudited)
Nine months ended
September 30, Nine months ended
2001 September 30,
As reported Adjustment Proforma 2000
Revenue
IMAX systems $51,954 $-- $51,954 $79,978
Films 23,312 -- 23,312 31,429
Other 9,535 -- 9,535 14,890
84,801 -- 84,801 126,297
Costs and expenses 73,131 (17,079) 56,052 74,995
Gross margin 11,670 (17,079) 28,749 51,302
Selling, general
and administrative
expenses 36,176 (2,899) 33,277 30,473
Research and
development 3,009 -- 3,009 3,791
Amortization of
intangibles 2,272 -- 2,272 2,119
Loss from equity-
accounted investees 323 -- 323 491
Restructuring costs
and asset impairments 59,679 (59,679) -- --
Earnings (loss) from
continuing operations (89,789) (79,657) (10,132) 14,428
Interest income 725 -- 725 2,965
Interest expense (16,497) -- (16,497) (16,275)
Impairment of
long-term investments (5,584) (5,584) -- --
Foreign exchange loss (1,220) -- (1,220) (1,884)
Loss from operations
before income taxes (112,365) (85,241) (27,124) (766)
Recovery of (provision
for) income taxes (1,196) (9,723) (8,527) 59
Net loss from continuing
operations (113,561) (94,964) (18,597) (707)
Net earnings (loss)
from discontinued
operations (58,712) (58,712) -- 1,416
Net earnings (loss)
before cumulative
effect of changes
in accounting
principles and
extraordinary items (172,273) (153,676) (18,597) 709
Cumulative effect of
changes in accounting
principles, net
of income tax
benefit of $37,286 -- -- -- (61,110)
Extraordinary gain on
repurchase of convertible
subordinated notes,
net of income tax
expense of $5,450 7,525 -- 7,525 --
Net loss $(164,748) $(153,676) $(11,072) $(60,401)
Earnings (loss) per share
Earnings (loss) per share - basic:
Net loss from
continuing operations $(3.69) $(3.08) $(0.60) $(0.02)
Net earnings (loss)
from discontinued
operations $(1.91) $(1.91) $-- $0.05
Net earnings (loss)
before cumulative
effect of changes
in accounting
principles and
extraordinary items $(5.59) $(4.99) $(0.60) $0.02
Cumulative effect of
changes in accounting
principles $-- $-- $-- $(2.05)
Extraordinary gain on
repurchase of convertible
subordinated notes $0.24 $-- $0.24 $--
Net loss $(5.35) $(4.99) $(0.36) $(2.03)
Earnings (loss) per share - diluted:
Net loss from
continuing operations $(3.69) $(3.08) $(0.60) $(0.02)
Net earnings (loss)
from discontinued
operations $(1.91) $(1.91) $-- $0.05
Net earnings (loss)
before cumulative
effect of changes in
accounting principles $(5.59) $(4.99) $(0.60) $0.02
Cumulative effect of
changes in accounting
principles $-- $-- $-- $(2.01)
Extraordinary gain on
repurchase of convertible
subordinated notes $0.24 $-- $0.24 $--
Net loss $(5.35) $(4.99) $(0.36) $(1.98)
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SOURCE IMAX Corporation
CONTACT: Media - Victoria Dinnick of IMAX Corporation, Toronto, +1-905-403-6366, [email protected]; or Analysts - Stephen G. Abraham of IMAX Corporation, New York, +1-212-821-0140, [email protected]; or Entertainment Media - Al Newman of Newman & Company, LA, +1-310-777-5252, [email protected]/