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IMAX Reports First Quarter 2011 Financial Results
April 28, 2011--IMAX Corporation today reported its first quarter 2011 financial results and increased its fiscal 2011 outlook for new theater installations by approximately 40%, after signing agreements for 101 IMAX® theater systems in the first quarter.
"The first quarter lacked event films, particularly compared to the phenomenal strength of last year's
, and our financial results as compared to last year reflect this," said IMAX Chief Executive Officer Richard L. Gelfond. "At the same time, we signed agreements for 101 theater systems in the quarter, allowing us to surpass our signings goal for the full year of 2011 in just three months. As a result, we are increasing our 2011 outlook for new theater installations by 40 percent, and we now expect our commercial theater network to grow by at least 30 percent in 2011 for the third consecutive year, which we believe will yield significant long-term benefits for our shareholders."
The Company reported total revenue for the first quarter ended March 31, 2011 of $45.2 million. Last year's first quarter revenue was $72.8 million. Fiscal 2011 adjusted net income, excluding a charge related to the change in the value of the Company's variable stock compensation, a non-cash tax benefit, and a one-time charge of $2.1 million, or $0.03 per diluted share, related to an arbitration proceeding arising from a discontinued subsidiary, was $2.5 million, or $0.04 per diluted share, versus adjusted net income of $35.3 million, or $0.53 per diluted share in the same period last year. The Company reported a net loss for the first quarter of 2011 of $1.0 million, or $0.02 per diluted share. First quarter 2010 reported net income was $26.6 million, or $0.40 per diluted share. First quarter adjusted EBITDA was $9.0 million. For a reconciliation of adjusted net income to reported net income and to adjusted EBITDA, please see the tables at the end of this press release.
Theaters Signings/Network Growth Outlook
The Company signed contracts for 101 theater systems in the first quarter of 2011, compared to 41 theater systems signed in the first quarter of 2010. As a result, the Company now expects to install between 115 and 125 new theaters this year, compared to its previous expectations for 80 to 90 theater installations in 2011. This implies year-over-year commercial multiplex network growth of more than 30 percent. Of the 115 to 125 new theaters to be installed in 2011, it is expected that between 25 and 35 (20 to 25 new joint revenue sharing systems and 5 to 10 new sales-type lease systems, excluding upgrades) will be installed in the second quarter of 2011. The Company's current outlook for network growth is only based on theaters currently in backlog and does not account for any theaters that may both sign and install during the remainder of 2011. The Company cautions that installations can slip from period to period, usually for reasons beyond its control. For a breakdown of first quarter system signings by type, please see the end of this press release.
"The types of theater deals signed recently are strategically significant as they highlight two of the growth paths we are pursuing—international and small- to mid-tier domestic markets," said Mr. Gelfond. "We made significant inroads in several of the BRIC nations, particularly in China, where we signed our first full joint revenue sharing arrangement for 75 theaters with Wanda Cinema Line, the largest international theater deal in our history. Domestically, we continued to penetrate small to mid-tier domestic markets with new theater agreements with prominent regional exhibitors like Premiere Cinema Corp. and Warren Theatres."
Theater System Installations
During the first quarter of 2011, the Company installed 43 theater systems, compared to a total of 19 system installations in the first quarter of 2010. Total installations include new IMAX theater locations, as well as the upgrade of existing IMAX film-based theater systems to digital. For a breakdown of system installations by type, please see the end of this press release.
"In addition to our theater signings momentum, we focused heavily on operational execution this quarter so that we will be in position to capitalize on the remainder of our 2011 film slate, which includes IMAX versions of some of the most highly anticipated films of the year," added Mr. Gelfond. "The summer 2011 movie season kicks off tomorrow with
internationally, and will feature the latest installments of the popular
Pirates of the Caribbean
series. As a result, we installed IMAX digital theater systems, in both new and existing locations, at an aggressive pace of more than three systems per week, making the first quarter one of our busiest periods ever for theater installations."
Theater System Backlog
As of March 31, 2011, the Company's backlog consisted of a record 283 theater systems, including 125 systems under joint revenue sharing arrangements and 158 systems under sales and sales-type lease arrangements, five of which were systems designated for digital upgrades. This compares to a theater backlog of 156 systems as of March 31, 2010, which included 56 theaters under joint revenue sharing arrangements and 100 theaters under sales and sales-type lease arrangements, seven of which were designated for digital upgrades.
First Quarter Segment Results
In the first quarter of 2011, IMAX systems revenue was $22.3 million, compared to $11.0 million in the first quarter of 2010, primarily reflecting the installation of 11 new theater systems in the most recent first quarter, compared to four systems in the first quarter of 2010. The Company also installed 22 digital upgrades in the first quarter of 2011, compared to nine in the same year-ago period.
In the first quarter of 2011, revenue from joint revenue sharing arrangements was $4.0 million, compared to $18.9 million in the prior year period. During the quarter, the Company installed 10 new joint revenue sharing theaters, compared to five in the year-ago period. As of March 31, 2011, there were a total of 181 theaters under joint revenue sharing arrangements, a 48% increase compared to 122 joint revenue sharing theaters open as of the year-ago period.
First quarter 2011 total film revenue was $11.5 million, compared to $29.3 million in the first quarter of 2010. Production and IMAX DMR® revenues were $7.3 million in the first quarter of 2011. Production and IMAX DMR revenues were $23.5 million in the year-ago period, $16.2 million of which was generated by
Avatar: An IMAX 3D Experience
. Gross box office from DMR titles was $62.1 million in the first quarter of 2011, compared to $232.2 million in the first quarter of 2010. The average DMR box office per screen in the first quarter was $175,000 ($133,000 domestic, $266,000 international) versus $844,000 ($695,000 domestic, $1.2 million international) in the first quarter of 2010.
Mr. Gelfond continued, "While our first quarter box office was disappointing, we maintained above average market share across a broad film slate, demonstrating the strong consumer appetite for The IMAX Experience®. Our theater backlog is at record levels and the 2011 summer movie season, which kicks off tomorrow, will feature more IMAX releases than in any year prior, on our rapidly growing network of screens. We continue to anticipate growth in revenues and adjusted EBITDA in 2011 as compared to 2010."
New Credit Facility Commitment Letter
In a separate release today, the Company announced that it has received a commitment letter from its commercial lender, Wells Fargo Capital Finance Corporation Canada ("Wells Fargo Capital Finance"), pursuant to which Wells Fargo Capital Finance and Export Development Canada (EDC) will expand its credit facility to up to $110 million. Upon execution of definitive documents, the new expanded facility will replace the Company's current facility and extend the maturity to October 2015. Consistent with the Company's strong credit statistics, borrowings under the credit facility will bear interest at the reduced spread of 2.00% above LIBOR, versus previous interest rates of LIBOR plus 3.75% and 2.75% for the current term loan and revolving asset-based loan, respectively.
"Upon completion, this newly expanded and extended credit agreement reflects the positive growth trends our Company is experiencing, and we are pleased to continue our strong relationship with Wells Fargo Capital Finance and Export Development Canada," said Mr. Gelfond. "This larger facility, coupled with the strong cash-generating nature of our business, will be used for general corporate purposes, as well as allow us to pursue our strategic initiatives and the continued global expansion of our Company."
The Company will host a conference call today at 8:30 AM ET to discuss its first quarter 2011 financial results. To access the call via telephone, interested parties should dial (800) 901-5217 approximately 5 to 10 minutes before it begins. International callers should dial (617) 786-2964. The participant passcode for the call is 76417399. This call is also being webcast by Thomson Financial and 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.com or via telephone by dialing (888) 286-8010, or (617) 801-6888 for international callers. The participant passcode for the telephone replay is 34167967.
About IMAX Corporation
IMAX Corporation is 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, IMAX is singularly situated at the convergence of the entertainment industry, innovation and the digital media world. The industry's top filmmakers and studios are utilizing IMAX theaters to connect with audiences in extraordinary ways, and as such, the IMAX network 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 IMAX network in established markets such as North America, Western Europe, and Japan, as well as emerging markets such as China and Russia. IMAX theaters deliver the world's best cinematic presentations using proprietary IMAX®, IMAX 3D®, 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®.
IMAX is headquartered in New York, Toronto and Los Angeles, with offices in London, Tokyo and Shanghai. As of March 31, 2011, there were 528 IMAX theaters (408 commercial, 120 institutional) operating in 46 countries.
The IMAX Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6469
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 IMAX on Facebook (
), Twitter (
) and YouTube (
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, but are not limited to, general economic, market or business conditions, including the length and severity of the current economic downturn, the opportunities that may be presented to and pursued by the Company, competitive actions by other companies, the performance of IMAX DMR films, conditions in the in-home and out-of home entertainment industries, the signing of theater system agreements, changes in law or regulations, conditions, changes and developments in the commercial exhibition industry, the failure to convert theater system backlog into revenue, new business initiatives, investments and operations in foreign jurisdictions and any future international expansion, foreign currency fluctuations and the Company's prior restatements and the related litigation and investigation by the SEC and the ongoing inquiry by the OSC. These factors and other risks and uncertainties are discussed in the Company's most recent Annual Report on Form 10-K and most recent Quarterly Reports on Form 10-Q.
Gross Box Office from DMR
The primary drivers of gross box office in the first quarter of 2011 were Walt Disney Pictures'
TRON: Legacy: An IMAX 3D Experience
, Sony Pictures'
The Green Hornet: An IMAX 3D Experience
, and DreamWorks' and Disney's
I Am Number Four: The IMAX Experience
has generated approximately $60.2 million in worldwide IMAX box office to date, $25.3 million of which was captured in the first quarter.
The Green Hornet
has generated approximately $10.7 million in worldwide IMAX box office to date.
I Am Number Four
has generated approximately $10.8 million in worldwide IMAX box office to date.
2011 Film Slate
To date, the Company has signed contracts for 22 DMR films that will play in the IMAX theater network in 2011. The Company remains in active discussions with every major Hollywood studio regarding future titles. Films to be released throughout the remainder of 2011 include:
Fast Five: The IMAX Experience (Universal, April 2011);
Thor: An IMAX3D Experience (Marvel, Paramount, May 2011);
Pirates of the Caribbean: On Stranger Tides: An IMAX3D Experience
(Disney, May 2011);
Kung Fu Panda 2: An IMAX3D Experience (Paramount, May 2011, to be
released in select international markets);
Super 8: The IMAX Experience (Paramount, June 2011);
The Founding of a Party: The IMAX Experience (China Film Group, June
2011, to be released in the People's Republic of China);
Cars 2: An IMAX3D Experience (Disney, June 2011);
Transformers 3: Dark of the Moon: An IMAX 3D Experience (Paramount, July
Harry Potter and the Deathly Hallows: Part II: An IMAX3D Experience (WB,
Real Steel: The IMAX Experience (DreamWorks Studios Disney, October
Contagion: The IMAX Experience (WB, October 2011);
Puss in Boots: An IMAX3D Experience (Paramount, November 2011);
Happy Feet 2: An IMAX3D Experience (WB, November 2011);
Mission: Impossible -- Ghost Protocol: The IMAX Experience (Paramount,
December 2011); and
The Adventures of Tintin: The Secret of the Unicorn: An IMAX3D
Experience (Paramount, December 2011)
Theater System Signings
During the first quarter of 2011, the Company signed contracts for 101 theater systems (76 joint venture systems; and 25 sales/sales-type lease systems, including two digital upgrades), compared to contracts for 41 theater systems (19 joint venture systems; and 22 sales/sales-type lease systems, including 14 digital upgrades) in the first quarter of 2010.
Theater System Installations
In the first quarter of 2011, the Company installed a total of 43 theater systems (10 joint venture systems; and 33 sales/sales-type lease systems, including 22 digital upgrades), compared to having installed 19 theater systems (6 joint venture systems, including one digital upgrade; and 13 sales/sales-type lease systems, including nine digital upgrades) in the first quarter of 2010.
SOURCE (tables mentioned in press release available at this link):