IMAX Corporation reports fourth quarter and fiscal 2007 financial results
IMAX Corporation reports fourth quarter and fiscal 2007 financial results
HIGHLIGHTS ----------
- Company sees important strategic successes in 2007 as setting stage for financial turnaround.
- Company announces 107 signings in the fourth quarter, including the largest agreement in IMAX's history for 100 joint revenue sharing theatres with AMC Theatres.
- IMAX's share of DMR box office up 81% year-over-year.
- Thirty-five-theatre lease deal with RACIMEC International Group increases IMAX's presence in South American and Central American markets and reflects appeal of digital product.
- Planned launch of digital projection system late in the second quarter of fiscal 2008 remains on track, and continues to spur signings and help position the Company for growth.
TORONTO, March 14 /PRNewswire-FirstCall/ -- IMAX Corporation (NASDAQ: IMAX; TSX: IMX) today reported that it recorded a net loss per diluted share of ($0.25) for the fourth quarter of fiscal 2007, compared to a restated net loss of ($0.23) per diluted share for the fourth quarter of fiscal 2006. During the fourth quarter of fiscal 2007, the Company recorded a write-down of film-related inventories, reflected in cost of goods, totaling $4.0 million because of the obsolescence of film based equipment associated with the Company's transition to digital projection from film projection systems. In addition, the Company recorded a $2.5 million gain from discontinued operations related to the sale of a theatre in Providence, Rhode Island. Excluding the impact of the write-down on film related inventory and the gain from the sale of the Providence Theatre, the Company would have reported a net loss per diluted share of ($0.21) for the fourth quarter of fiscal 2007. At the end of the fourth quarter, the Company's cash and short term investments position was $16.9 million, down only slightly when compared to the cash position at the end of the third quarter of fiscal 2007.
IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J. Wechsler stated, "2007 was a year of extraordinary progress from a strategic standpoint. While we are extremely pleased with our accomplishments with respect to our signings, digital, film and joint revenue sharing initiatives, these accomplishments have yet to manifest in our reported financial results. Over the course of the past fiscal year, installations slowed as exhibitors elected to wait for our digital product, and we had higher R&D costs related to this initiative and wrote-down obsolete inventory. We are looking forward to emerging from this transitional period and believe our rollout of digital systems in the back half of 2008 will lay the foundation for financial improvement later this fiscal year."
Messrs. Gelfond and Wechsler continued, "We are very pleased to have concluded fiscal 2007 well on our way to launching our new digital projection system and with a new business model that we believe supports our future growth. With the imminent launch of our digital product, the IMAX story has moved from one of development to one of execution and implementation. We are optimistic that as our digital initiative continues to drive signings and results begin to flow through our new business model, we are well positioned for improved financial and operational performance."
The Company signed agreements for 107 IMAX- theatre systems in the fourth quarter of fiscal 2007, compared to nine in the fourth quarter of 2006. To date, IMAX has signed joint revenue sharing agreements with prominent exhibitors for 115 theatres.
"Exhibitors continue to respond positively to our digital projection prototype, and the level of interest in IMAX's digital system is spurring signings like never before. On the heels of our 100-theatre AMC deal, we signed a 35-theatre lease deal with RACIMEC after year-end and are currently in active discussions with a number of exhibitors for well over 50 joint revenue sharing arrangements. We believe this reflects a new level of momentum for the Company, with significant interest being generated with a scope that is unprecedented for the Company. We are very happy with the performance of the joint revenue sharing theaters we have opened to date, and believe interest in JVs will not only enhance the growth of the network, but will also result in strong recurring revenues for IMAX," said Messrs. Gelfond and Wechsler.
On the film side, the Company reported that the fourth quarter was positively impacted by Beowulf: An IMAX 3D Experience, which opened November 16 and grossed to date approximately $24.4 million on 135 IMAX screens. I Am Legend: The IMAX Experience was released on December 14 and also performed well, grossing approximately $16.5 million to date.
"We were happy to close out the year with such a solid film performance," stated Messrs. Gelfond and Wechsler. "In 2007 we generated $145 million in box office for Hollywood releases, which is 56% higher than the $93 million that the IMAX theater network grossed during 2006. On a 'same-store' basis, which tracks only those theaters showing IMAX DMR(R) films open a year ago and therefore strips out the growth of the network, our gross box office increased 48%. We are particularly pleased to note that IMAX's share of the DMR box office increased 81% year over year."
On April 4, the Company will release the IMAX DMR version of Shine A Light, the Rolling Stones concert film directed by Academy Award(R)-winning filmmaker Martin Scorsese. Then, as announced last week, on May 9 the Company will partner with Warner Bros. Pictures to release Speed Racer: The IMAX Experience. This action-packed adventure from The Wachowski Brothers, the creators of 'The Matrix' trilogy, is based on the hit animated series created by Tatsuo Yoshida and is expected to perform well heading into the summer movie season. This will be followed on June 8 by the release of the first film in the recently announced four-film deal with DreamWorks Animation, Kung Fu Panda: The IMAX Experience. The next installment in the Batman series, The Dark Knight: An IMAX Experience, will follow in July and again stars Christian Bale as Batman and Bruce Wayne. Finally, Harry Potter and the Half Blood Prince: An IMAX 3D Experience is scheduled for November.
Messrs. Gelfond and Wechsler commented, "A compelling film slate helped drive our key business initiatives in fiscal 2007, and we are optimistic that this year will demonstrate similar strength on the film side. We are actively negotiating for one remaining slot for 2008, and believe the year features a host of films that are perfectly suited to the immersive IMAX Experience(R). We have already announced three films for 2009 and 2010 as part of our four-picture deal with DreamWorks Animation, and have several great prospects to fill out future film slates," concluded Messrs. Gelfond and Wechsler.
For the three months ended December 31, 2007, the Company's total revenues were $32.3 million, as compared to $36.5 million reported for the prior year period. Systems revenue was $17.1 million versus $20.7 million in the prior year period. The Company recognized revenue on five theatre systems which qualified as either sales or sales-type leases in the fourth quarter of 2007, compared to nine in 2006, and installed two systems under a joint revenue sharing arrangement.
For the fourth quarter of 2007, film revenues were $10.0 million, as compared to $10.9 million in the fourth quarter of 2006. The Company's share of IMAX DMR gross box office increased to $5.2 million in 2007 from $5.1 million in 2006. This is included in Production and IMAX DMR revenues of $5.2 million compared to $6.0 million in 2006. Film distribution revenue was $2.4 million for the quarter, as compared to $3.5 million in the fourth quarter of 2006. Theatre operations revenue was $4.1 million in the fourth quarter of 2007 compared to $4.0 million in the fourth quarter of 2006.
Selling, general and administrative expenses were $13.0 million in the fourth quarter, up from $12.6 million a year ago. Research and development costs increased to $1.6 million as compared to $1.2 million in 2006, largely related to investments in digital technology. Legal and professional fees decreased to $3.7 million compared to $5.2 million in the fourth quarter of the prior year.
For the year ended December 31, 2007, the Company's total revenues were $115.8 million, as compared to $127.7 million reported for the prior year. Systems revenue was $59.1 million versus $72.2 million in the prior year, a decrease due principally to a slowdown in installations as exhibitors waited to see the Company's digital product. The Company recognized revenue on 19 theatre systems which qualified as either sales or sales-type leases in fiscal 2007, versus 30 in 2006.
For fiscal 2007, film revenues were $36.6 million, as compared to $36.3 million in fiscal 2006. The Company's share of IMAX DMR gross box office increased 81% to $19.9 million in 2007 from $11.0 million in 2006. This is included in Production and IMAX DMR revenues of $19.9 million, compared to $14.6 million in 2006, an increase of 36.4%. Theatre operations revenue increased to $16.6 million in 2007 from $15.2 million in 2006. Other revenue was $3.6 million in fiscal 2007, compared to $4.0 million in fiscal 2006.
Selling, general and administrative expenses were $44.7 million in fiscal 2007, up from $42.5 million a year ago. Research and development costs increased to $5.8 million as compared to $3.6 million in 2006, largely related to investments in digital technology. Legal and professional fees increased to $13.7 million compared to $12.4 million in the prior year.
The Company will host a conference call on Friday, March 14, 2008 at 8:30 AM ET. To access the call, interested parties should call (866) 321-6651 approximately 10 minutes before it begins. International callers should dial (416) 642-5212. A recording of the call will be available by dialing (647) 436-0148. The code for both the live call and the replay is 2141913. IMAX will also host a webcast of the conference call with an accompanying PowerPoint presentation. These can both be accessed on www.imax.com by clicking on 'Company Info' and then 'Investor Relations.'
About IMAX Corporation
IMAX Corporation is one of the world's leading digital entertainment and technology companies. The worldwide IMAX network is among the most important and successful theatrical distribution platforms for major event Hollywood films around the globe, with IMAX(R) theatres delivering the world's best cinematic presentations using proprietary IMAX, IMAX(R) 3D, and IMAX DMR(R) technology. IMAX DMR is the Company's groundbreaking digital remastering technology that allows it to digitally transform virtually any conventional motion picture into the unparalleled image and sound quality of The IMAX Experience. IMAX's renowned projectors and new digital systems display crystal-clear images on the world's biggest screens. The IMAX brand is recognized throughout the world for extraordinary and immersive entertainment experiences for consumers. As of December 31, 2007, there were 299 IMAX theatres operating in 39 countries.
IMAX(R), IMAX(R) 3D, IMAX DMR(R), IMAX(R) MPX(R), 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 ongoing discussions with the SEC and OSC relating to their ongoing inquiries and the Company's accounting, 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, risks arising from potential material weaknesses in internal control over financial reporting 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, 2006 and in the subsequent reports filed by the Company with the Securities and Exchange Commission including the Company's 10-K for the year ended December 31, 2007, scheduled to be filed on March 14, 2008.
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 ended Years ended December 31, December 31, --------------------- --------------------- 2007 2006 2007 2006 ---------- ---------- ---------- ---------- Revenues Equipment and product sales $ 10,773 $ 14,441 $ 32,500 $ 49,322 Services 18,171 18,932 69,149 67,222 Rentals 2,147 1,543 7,107 5,622 Finance income 1,074 1,251 4,649 5,242 Other 138 300 2,427 300 ---------- ---------- ---------- ---------- 32,303 36,467 115,832 127,708 ---------- ---------- ---------- ---------- Cost of goods sold, services and rentals Equipment and product sales 8,433 7,137 21,546 26,008 Services 15,331 12,235 50,090 47,183 Rentals 1,083 446 2,987 1,859 Other - - 50 - ---------- ---------- ---------- ---------- 24,847 19,818 74,673 75,050 ---------- ---------- ---------- ---------- Gross margin 7,456 16,649 41,159 52,658 Selling, general and administrative expenses 12,983 12,617 44,705 42,527 Research and development 1,609 1,158 5,789 3,615 Amortization of intangibles 141 146 547 602 Receivable provisions net of (recoveries) 1,101 816 1,795 1,066 Asset impairments 562 1,029 562 1,029 ---------- ---------- ---------- ---------- (Loss) earnings from operations (8,940) 883 (12,239) 3,819 Interest income 215 276 862 1,036 Interest expense (4,128) (4,179) (17,093) (16,759) ---------- ---------- ---------- ---------- Loss from continuing operations before income taxes (12,853) (3,020) (28,470) (11,904) Recovery (provision) for income taxes 338 (6,128) (472) (6,218) ---------- ---------- ---------- ---------- Loss from continuing operations (12,515) (9,148) (28,942) (18,122) Net earnings (loss) from discontinued operations 2,370 (61) 2,002 1,273 ---------- ---------- ---------- ---------- Net loss $ (10,145) $ (9,209) $ (26,940) $ (16,849) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Loss per share Loss per share - basic & diluted: Net loss from continuing operations $ (0.31) $ (0.23) $ (0.72) $ (0.45) Net earnings from discontinued operations $ 0.06 $ - $ 0.05 $ 0.03 ---------- ---------- ---------- ---------- Net loss $ (0.25) $ (0.23) $ (0.67) $ (0.42) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of shares outstanding (000's): Basic 40,352 40,285 40,309 40,270 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Diluted 40,352 42,285 40,309 40,270 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Additional disclosure: Depreciation and amortization(1) $ 4,944 $ 4,005 $ 17,738 $ 16,872 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- (1) Includes $0.4 million and $1.3 million in amortization of deferred financing costs charged to interest expense for the three and twelve months ended December 31, 2007 (2006 - $0.3 million, $1.1 million) IMAX CORPORATION CONSOLIDATED BALANCE SHEETS In accordance with United States Generally Accepted Accounting Principles (in thousands of U.S. dollars) December December 31, 2007 31, 2006 ---------- ---------- Assets Cash and cash equivalents $ 16,901 $ 25,123 Short-term investments - 2,115 Accounts receivable, net of allowance for doubtful accounts of $3,045 (2006 - $3,253) 25,505 26,017 Financing receivables 59,092 65,878 Inventories 22,050 26,913 Prepaid expenses 2,187 3,432 Film assets 2,042 1,235 Property, plant and equipment 23,708 24,639 Other assets 15,093 10,365 Goodwill 39,027 39,027 Other intangible assets 2,377 2,547 ---------- ---------- Total assets $ 207,982 $ 227,291 ---------- ---------- ---------- ---------- Liabilities Accounts payable $ 12,300 $ 11,426 Accrued liabilities 61,967 58,294 Deferred revenue 59,085 55,803 Senior Notes due 2010 160,000 160,000 ---------- ---------- Total liabilities 293,352 285,523 ---------- ---------- Shareholders' deficiency Capital stock common shares - no par value. Authorized - unlimited number. Issued and outstanding - 40,423,074 (2006 - 40,285,574) 122,455 122,024 Other equity 4,088 2,937 Deficit (213,407) (184,375) Accumulated other comprehensive income 1,494 1,182 ---------- ---------- Total shareholders' deficiency (85,370) (58,232) ---------- ---------- Total liabilities and shareholders' deficiency $ 207,982 $ 227,291 ---------- ---------- ---------- ----------
Source: IMAX Corporation
CONTACT: Media: IMAX Corporation, New York, Sarah Gormley, (212)
821-0155, sgormley@imax.com; Investors: Integrated Corporate Relations, Amanda
Mullin, (203) 682-8243; Entertainment Media: Newman & Company, Los Angeles, Al
Newman, (310) 278-1560, asn@newman-co.com; Business Media: Sloane & Company,
New York, Whit Clay, (212) 446-1864, wclay@sloanepr.com
Profile: International Entertainment
posted by EntertainmentNews @ 4:04 AM
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