SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 9, 2004
IMAX CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
CANADA
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(State or Other Jurisdiction of Incorporation)
0-24216 98-0140269
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(Commission File Number) (I.R.S. Employer Identification No.)
2525 SPEAKMAN DRIVE, SHERIDAN PARK, MISSISSAUGA, ONTARIO L5K 1B1
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(Address of Principal Executive Offices) (Zip Code)
(905) 403-6500
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On August 9, 2004, IMAX Corporation (the "Company") issued a press release
announcing the Company's financial and operating results for the quarter ended
June 30, 2004, a copy of which is attached below.
The information in this current report on Form 8-K, including the Exhibit
attached hereto, shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, except as shall be
expressly set forth by specific reference to in such filing.
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[IMAX "LOGO"]
IMAX CORPORATION
2525 Speakman Drive
Mississauga, Ontario, Canada L5K 1B1
Tel: (905) 403-6500 Fax: (905) 403-6450
www.imax.com
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IMAX CORPORATION REPORTS SECOND QUARTER 2004 FINANCIAL RESULTS
HIGHLIGHTS
- Company signs multi-theatre deals with two of the top ten North American
exhibitors, boosting commercial growth strategy; deals to increase total
number of domestic multiplexes with an IMAX theatre by over 20%.
- National Amusements signs six-theatre deal with option to expand to as many
as eighteen.
- Cinemark USA signs contract for two IMAX(R) MPX(TM) theatre installations.
- Current IMAX DMR(R) releases of Warner Bros. Pictures' Harry Potter and the
Prisoner of Azkaban and Columbia Pictures' Spider-Man 2 have strong box
office performances.
- Company reports earnings of $0.04 per share, in-line with management
guidance.
TORONTO -- August 9, 2004 -- IMAX Corporation (NASDAQ: IMAX; TSX: IMX) today
delivered on-target financial results for the second quarter of 2004 and
presented strong evidence that its commercial strategy is taking hold. IMAX
announced this morning that it has signed agreements with two of the top ten
North American exhibitors for installations of between eight and twenty IMAX(R)
MPX(TM) systems. In addition, early results for Spider-Man 2: The IMAX
Experience, released by Sony Inc.'s Columbia Pictures, the fourth and latest
studio to release an IMAX DMR(R) film to the worldwide IMAX network, show that
the Company's newest DMR release is performing well at the box office.
The Company today reported that earnings for the three months ended June 30,
2004 were $0.04 per share on a diluted basis as compared to $0.03 per share in
the prior year period. Excluding a gain of $0.2 million associated with
discontinued operations, IMAX reported earnings from continued operations of
$0.03 per diluted share in the second quarter of 2004.
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"Today's announcements and the continued strong performance of our current DMR
film releases show that we're making progress toward establishing IMAX theatres
as a destination location for Hollywood event films," said IMAX co-Chairmen and
co-CEOs Richard L. Gelfond and Bradley J. Wechsler. "As we continue to sign
deals and partner with key exhibitors, we are advancing toward our goal of
building a widespread, profitable network of IMAX theatres that will drive
returns for our shareholders."
The Company announced this morning that it has signed an agreement with National
Amusements Inc., the sixth largest North American commercial exhibitor,
operating more than 1,425 motion picture screens in the U.S., the U.K., and
Latin America, to install as many as 18 IMAX(R) theatre systems over the next
several years. Under the specific terms of the deal, National Amusements will
install 4 theatre systems in 2004 and 2 additional theatre systems in 2005 or
2006. As part of the deal, National Amusements may purchase up to 12 additional
systems, predominantly in the United Kingdom. For National Amusements, which
currently operates an IMAX theatre at The Bridge Cinema de lux in West Los
Angeles, this marks a significant acceleration of its IMAX strategy.
IMAX further announced that it signed a deal with Cinemark USA, the number-three
operator of commercial theatres in the U.S., to install two additional IMAX MPX
theatre systems beginning next year. Cinemark operates more than 3,200 screens
in 302 theatres worldwide, primarily in the U.S. and Latin America. The
exhibitor currently operates over 2,200 screens in 188 domestic theatres,
concentrated in mid-sized cities throughout the U.S., including 5 IMAX theatres.
These two theatre deals were completed subsequent to the close of the second
quarter of 2004. During the second quarter, the Company signed new contracts for
four IMAX theatre systems with a value of $7.3 million. Year to date, the
Company has signed contracts for 19 theatre systems, on pace to meet its goal of
30 to 35 signings for the year. The Company signed contracts for 25 theatre
systems for the full year 2003. If the theatres signed in the deals with
National Amusements and Cinemark announced this morning were installed today, it
would increase the number of domestic multiplexes with an IMAX theatre by 23%
from 35 to 43.
"The early verdict is in," continued Messrs. Gelfond and Wechsler. "Major
commercial exhibitors are starting to respond to our new business model, with
IMAX DMR films driving revenues and our new IMAX MPX system significantly
lowering the cost of entry into the IMAX business. We believe this will yield
meaningful economic returns for our commercial customers, and we think that
today's announcements and the increasing momentum in Hollywood event film
releases should accelerate our ongoing discussions with other major exhibitors."
On June 4th, IMAX, in collaboration with Warner Bros. Pictures, released Harry
Potter and the Prisoner of Azkaban: The IMAX Experience to 49 theatres
domestically. The film grossed nearly $2.0 million in its opening weekend, and
has since continued to perform well, grossing nearly $10.0 million domestically
and nearly $12 million worldwide, and posting an 8% week-over-week increase in
ticket sales in its 9th weekend.
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On July 7th, IMAX and Sony's Columbia Pictures announced that Spider-Man 2: The
IMAX Experience would be distributed to IMAX theatres beginning July 23rd. The
film, which was released three weeks after the 35mm version, replaced Catwoman,
a Warner Bros. Pictures release, as IMAX's second DMR summer release, after that
picture was held back due to post-production delays. With this announcement,
Sony's Columbia Pictures became the fourth major Hollywood studio to release an
IMAX DMR film. Despite sharing screen time with Harry Potter and The Prisoner of
Azkaban in 34 of 45 theatres, Spider-Man 2 grossed approximately $2.0 million in
its first two weeks as fans everywhere opted to "Take Another Spin in IMAX."
These early results are consistent with those for The Matrix Reloaded: The IMAX
Experience, a similarly delayed release that grossed nearly $12 million
domestically, and $15 million worldwide, in its 22-week run in IMAX theatres.
Today, IMAX also announced financial results for its second quarter of 2004. The
Company's consolidated revenues were $31.7 million for the quarter as compared
to $34.5 million in the prior year period. IMAX systems revenue was $20.5
million versus $22.1 million in the prior year period, as the Company recognized
revenue on five theatre systems versus six in the second quarter of 2003. Film
revenue was $6.6 million versus $7.5 million in the same period last year, as
increases in film production revenue and film distribution revenue were more
than offset by a decline in film print revenue. Theatre operations revenue
increased to $3.8 million in the second quarter of 2004 from $3.6 million in the
same period last year. Other revenues decreased to $0.9 million in the second
quarter of 2004 from $1.2 million in the same period last year.
For the six-month period ended June 30, 2004, the Company's consolidated
revenues were $56.6 million as compared to $68.1 million in the prior year
period. Systems revenue was $36.5 million versus $44.5 million in the prior year
period, as the Company recognized revenue on seven theatre systems as opposed to
fourteen theatre systems in the year-ago period. Film revenue was $11.1 million,
as compared to $14.3 million for the six months ended June 30, 2003. Theatre
operations revenue was $7.5 million for the six months ended June 30, 2004, as
compared to $6.8 million in the same period last year. Other revenues were
$1.5 million, as compared to $2.6 million in the same period last year. The
Company reported earnings from continuing operations of $0.01 per diluted share
for the six months ended June 30, 2004, as compared to earnings per diluted
share of $0.10 for the prior year period. Excluding the costs associated with
the refinancing of the Company's Senior Notes of approximately $0.8 million,
earnings from continuing operations were $0.03 per diluted share for the six
months ended June 30, 2004.
The Company will host a conference call to discuss these results at 10:30 AM ET.
To access the call interested parties should call (913) 981-5510 approximately
10 minutes before it begins. A recording of the call will be available by
dialing (719) 457-0820. The code for both calls is 611793.
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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(R) 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 June 30,
2004, there were 240 IMAX theatres operating in 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.
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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,
2003 and in the subsequent reports filed by the Company with the Securities and
Exchange Commission.
For additional information please contact:
MEDIA: ANALYSTS:
IMAX CORPORATION, New York IMAX CORPORATION, New York
Romi Schutzer Cheryl Cramer
212-821-0144 212-821-0121
rschutzer@imax.com ccramer@imax.com
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ENTERTAINMENT MEDIA: BUSINESS MEDIA:
Newman & Company, Los Angeles Sloane & Company, New York
Al Newman Whit Clay
818-784-2130 212-446-1864
asn@newman-co.com wclay@sloanepr.com
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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 JUNE 30, SIX MONTHS ENDED JUNE 30,
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2004 2003 2004 2003
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REVENUE
IMAX systems $ 20,482 $ 22,143 $ 36,502 $ 44,459
Films 6,600 7,460 11,089 14,294
Theater operations 3,771 3,608 7,513 6,775
Other 895 1,239 1,524 2,571
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31,748 34,450 56,628 68,099
COSTS OF GOODS AND SERVICES 17,139 20,164 29,657 37,813
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GROSS MARGIN 14,609 14,286 26,971 30,286
Selling, general and administrative expenses 8,620 8,456 16,954 16,600
Research and development 870 1,168 2,015 1,881
Amortization of intangibles 154 152 305 291
Loss (income) from equity-accounted investees -- 14 -- (273)
Receivable provisions, net of (recoveries) (69) 75 (967) 689
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EARNINGS FROM OPERATIONS 5,034 4,421 8,664 11,098
Interest income 98 145 225 410
Interest expense (4,120) (4,056) (8,189) (8,343)
Loss on retirement of notes -- (187) (784) (187)
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NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 1,012 323 (84) 2,978
Recovery of income taxes 340 700 340 563
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NET EARNINGS FROM CONTINUING OPERATIONS 1,352 1,023 256 3,541
Net earnings (loss) from discontinued operations 200 (54) 400 (149)
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NET EARNINGS $ 1,552 $ 969 $ 656 $ 3,392
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EARNINGS PER SHARE:
Earnings per share -- basic and fully diluted:
Net earnings from continuing operations $ 0.03 $ 0.03 $ 0.01 $ 0.10
Net earnings from discontinued operations $ 0.01 $ -- $ 0.01 $ --
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Net earnings $ 0.04 $ 0.03 $ 0.02 $ 0.10
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Weighted average number of shares outstanding (000's):
Basic 39,310 34,159 39,307 33,566
Fully diluted 39,937 35,454 39,621 34,364
Additional disclosure:
Depreciation and amortization(1) $ 4,074 $ 3,311 $ 6,556 $ 5,844
(1) Includes $0.3 million and $0.6 million in amortization of deferred
financing costs charged to interest expense for the three and six months
ended June 30, 2004 (2003 -- $0.2 million, $0.4 million)
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IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(in thousands of U.S. dollars)
JUNE 30,
2004 DECEMBER 31,
(UNAUDITED) 2003
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ASSETS
Cash and cash equivalents $ 16,951 $ 47,282
Restricted cash -- 4,961
Accounts receivable, net of allowance for doubtful accounts of $7,598
(2003 -- $7,278) 16,054 13,887
Financing receivables 56,968 56,742
Inventories 26,449 28,218
Prepaid expenses 3,997 1,902
Film assets 1,098 1,568
Fixed assets 33,104 35,818
Other assets 13,554 13,827
Deferred income taxes 4,623 3,756
Goodwill 39,027 39,027
Other intangible assets 3,260 3,388
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Total assets $ 215,085 $ 250,376
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LIABILITIES
Accounts payable $ 4,968 $ 5,780
Accrued liabilities 49,879 43,794
Deferred revenue 51,223 63,344
New Senior Notes due 2010 160,000 160,000
Old Senior Notes due 2005 -- 29,234
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Total liabilities 266,070 302,152
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Capital stock -- no par value. Authorized --
unlimited number. Issued and outstanding -- 39,314,991 (2003 -- 39,301,758) 115,652 115,609
Other equity 3,251 3,159
Deficit (170,533) (171,189)
Accumulated other comprehensive income 645 645
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Total shareholders' deficit (50,985) (51,776)
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Total liabilities and shareholders' equity (deficit) $ 215,085 $ 250,376
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMAX CORPORATION
(Registrant)
Date: August 9, 2004 By: "Richard L. Gelfond"
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Name: Richard L. Gelfond
Title: Co-Chairman and
Co-Chief Executive Officer