LOS ANGELES, Oct. 25, 2012 /PRNewswire/ --
HIGHLIGHTS
- Operating leverage of business drives strong financial
results
- Q3 2012 Revenues increased 20% to $80.7
million
- Adjusted EPS increased 86% to $0.26 and Adjusted EBITDA grew 59% to
$34.0 million in the third
quarter
- Free Cash Flow generation of $30.3
million in the quarter
- Maintaining full year 2012 install guidance of approximately
110 new theatre installations and issuing full year 2013 guidance
of 110 to 125 new theatre installations
IMAX Corporation (NYSE: IMAX; TSX: IMX) today reported
strong financial results for the third quarter of 2012 driven by
operating leverage and continued theatre network growth globally,
with 41 signings and 33 theatre installations in the quarter.
Third quarter 2012 revenues were $80.7
million, adjusted EBITDA as calculated in accordance with
the Company's Credit Facility was $34.0
million, adjusted net income was $17.9 million, or $0.26 per diluted share, and reported net income
was $15.0 million, or $0.22 per diluted share. For reconciliations of
adjusted net income to reported net income and for the definition
of adjusted EBITDA and free cash flow, please see the tables at the
end of this press release.
(Logo: http://photos.prnewswire.com/prnh/20111107/MM01969LOGO
)
"Our strong quarterly financial results once again demonstrate
how much the IMAX business model has evolved," said IMAX Chief
Executive Officer Richard L.
Gelfond. "We believe IMAX has become a story of growth and
operating leverage, and our pipeline for future theatre deals
remains robust. Our view is that we have reached a point of
critical mass where our portfolio approach to our film slate
combined with our global network expansion is driving scalability
in the business."
"We are also seeing an increase in demand from filmmakers who
want to take advantage of our differentiation opportunities,
whether it be using our IMAX cameras, or specially formatting their
movies for IMAX, or using an early release window in IMAX to
further promote their film," Gelfond continued. "This ability to
work closely with studios and directors, taken together with our
strong brand and our end-to-end approach to our business, continues
to set us apart and positions us well to create a unique experience
that consumers cannot get anywhere else."
Third Quarter Segment Results
- IMAX posted third quarter 2012 revenues of $80.7 million, compared to $67.5 million in the same period last
year
- IMAX systems revenue was $25.4
million in the quarter, compared to $20.6 million in the third quarter of 2011,
primarily reflecting the installation of 14 full, new theatre
systems under sales and sales-type lease arrangements in the most
recent third quarter, compared to 11 full, new theatre systems in
the third quarter of 2011. The Company also installed 3
digital system upgrades under sales or sales-type lease
arrangements in the third quarter of 2012, compared to 4 upgrades
in the third quarter of 2011
- Revenue from joint revenue sharing arrangements increased 31.9%
to $13.2 million, compared to
$10.0 million in the prior-year
period. During the quarter, the Company installed 14 new
theatres under joint revenue sharing arrangements, compared to 14
in the year-ago period. The Company ended the third quarter
of 2012 with 287 theatres operating under joint revenue sharing
arrangements, as compared to 218 theatres at the end of the third
quarter of 2011
- Production and IMAX DMR® (Digital Re-Mastering) revenues
increased 35.6% to $25.2 million in
the third quarter of 2012 from $18.6
million in the third quarter of 2011. Gross box office from
DMR titles was $173.2 million in the
third quarter of 2012, compared to $149.5
million in the third quarter of 2011. The average DMR
box office per screen in the third quarter of 2012 was $311,700, compared to $355,500 in the third quarter of 2011
Network Growth and Guidance Update
In the third quarter of 2012, the Company signed contracts for
41 theatres, of which 32 were new systems, and installed 33
theatres, of which 28 were new systems and 5 were digital
upgrades.
The Company continues to expect that approximately 110 new
theatre systems (excluding digital upgrades) will be installed
during the full year of 2012, which implies that approximately 46
new theatre systems (excluding digital upgrades) will be installed
in the fourth quarter of 2012. The Company updated its annual
installation guidance to a more comprehensive definition which
includes scheduled installations from backlog as well as the
Company's estimate of installations from arrangements that will
sign and install within a given year. Under this definition,
the Company is issuing installation guidance for 2013 of an
estimated 110 to 125 new theatre systems (excluding digital
upgrades). The Company cautions that theatre system
installations can slip from period to period in the course of the
Company's business, usually for reasons beyond its control.
The total IMAX® theatre network consisted of 689 systems at the
end of the quarter, of which 556 were in commercial multiplexes.
There were 285 theatre systems in backlog as of Sept. 30, 2012, compared to 280 theatre systems
in backlog as of June 30, 2012 and
295 systems in backlog as of Sept.
30, 2011. For a breakdown of theatre system signings,
installations and backlog by type, please see the end of this press
release.
"We believe that IMAX's fundamentals have never been stronger,"
Gelfond concluded. "The healthy level of business activity is
evidenced by our signings and installations this quarter, and we
continue to be encouraged by the pace and quality of discussions
regarding future theatre deals. IMAX has created a truly
differentiated brand and entertainment offering that is being
embraced by exhibitors, studios, filmmakers, and - most importantly
- by moviegoers around the world."
Conference Call
The Company will host a conference
call today at 8:30 AM ET to discuss
its third quarter 2012 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 9337410. 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) 203-1112, or
(647) 436-0148 for international callers. The participant
passcode for the telephone replay is 9337410.
About IMAX Corporation
IMAX, an innovator in
entertainment technology, combines proprietary software,
architecture and equipment to create experiences that take you
beyond the edge of your seat to a world you've never imagined. Top
filmmakers and studios are utilizing IMAX theatres to connect with
audiences in extraordinary ways, and, as such, IMAX's network is
among the most important and successful theatrical distribution
platforms for major event films around the globe.
IMAX is headquartered in New
York, Toronto and
Los Angeles, with offices in
London, Tokyo, Shanghai and Beijing. As of Sept. 30, 2012, there were 689 IMAX theatres (556
commercial multiplex, 20 commercial destination and 113
institutional) in 52 countries.
IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D
Experience®, The IMAX Experience® and IMAX Is Believing® 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 (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 IMAX 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 (or lack thereof) that may be presented to and
pursued by the Company; the performance of IMAX DMR films;
competitive actions by other companies; conditions in the in-home
and out-of-home entertainment industries; the signing of theater
system agreements; changes in laws or regulations; conditions,
changes and developments in the commercial exhibition industry; the
failure to convert theater system backlog into revenue; the failure
to respond to change and advancements in digital technology; risks
related to the acquisition of AMC Entertainment Holdings, Inc. by
Dalian Wanda Group Co., Ltd.; risks related to the Company's
implementation of a new enterprise resource planning ("ERP")
system; risks related to new business initiatives; risks associated
with investments and operations in foreign jurisdictions and any
future international expansion, including those related to
economic, political and regulatory policies of local governments
and laws and policies of the United
States and Canada; the
potential impact of increased competition in the markets within
which the Company operates; risks related to the Company's
inability to protect the Company's intellectual property; risks
related to foreign currency transactions; risks related to the
Company's prior restatements and the related litigation; and other
factors, many of which are beyond the control of the Company. 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:
Investors:
IMAX
Corporation, New York
Teri
Loxam/Blaire Lomasky
212-821-0100
tloxam@imax.com
blomasky@imax.com
Business Media:
Sloane
& Company, New York
Whit
Clay
212-446-1864
wclay@sloanepr.com
|
Media:
IMAX
Corporation, New York
Ann
Sommerlath
212-821-0155
asommerlath@imax.com
Entertainment Media:
Principal
Communications Group, Los Angeles
Melissa
Zuckerman/Paul Pflug
323-658-1555
melissa@pcommgroup.com
paul@pcommgroup.com
|
Additional Information
2012 DMR Films Announced to Date:
To date, IMAX has announced 31 DMR titles that will be released in
the IMAX theatre network in 2012. Films to run throughout the
remainder of 2012 include:
- Paranormal Activity 4: The IMAX Experience
(Paramount Pictures, October
2012);
- Tai Chi Hero: An IMAX 3D
Experience (Huayi Brothers,
October 2012, Asia only);
- Cloud Atlas: The IMAX Experience (WB,
October 2012);
- Skyfall: The IMAX Experience (Sony, November 2012);
- The Twilight Saga: Breaking Dawn - Part 2: The IMAX
Experience (Lionsgate, November
2012, UK and select international markets only)
- Back to 1942: The IMAX Experience (Huayi Brothers, November
2012, Asia only);
- CZ12: The IMAX Experience (JCE Entertainment
Ltd., Huayi Brothers & Emperor
Motion Pictures, December 2012,
Asia only); and
- The Hobbit: An Unexpected Journey: An IMAX 3D
Experience (WB, December
2012).
2013 DMR Films Announced to Date:
To date, IMAX has announced 10 titles to be released in 2013.
The Company remains in discussions with virtually every major
studio regarding future titles and expects the total number of
titles in 2013 to be similar to that in 2012.
- Hansel & Gretel: Witch Hunters: An IMAX 3D
Experience (Paramount, January
2013);
- Jack the Giant Killer: An IMAX 3D Experience (WB,
March 2013);
- Oblivion: The IMAX Experience (Universal,
April 2013);
- Star Trek: Into Darkness: An IMAX 3D Experience
(Paramount, May 2013);
- Man of Steel: The IMAX Experience (WB,
June 2013);
- Gravity: An IMAX 3D Experience (WB, September 2013);
- Stalingrad: An IMAX 3D Experience (AR
Films, October 2013, Russia and the CIS only);
- The Hunger Games: Catching Fire: The IMAX
Experience (Lionsgate, November
2013);
- The Hobbit: The Desolation of Smaug: An IMAX 3D
Experience (WB, December
2013); and
- Dhoom 3: The IMAX Experience (Yash Raj Films,
2013, India only).
Theatre Network Details:
|
Three
Months
|
|
Nine
Months
|
|
|
|
|
|
Ended
September 30,
|
|
Ended
September 30,
|
|
|
|
|
Theatre
System Signings:
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Full new sales and sales-type lease
arrangements
|
4
|
|
10
|
|
32
|
|
46
|
New joint revenue sharing
arrangements
|
28
|
|
18
|
|
61
|
|
120
|
Total new
theatres
|
32
|
|
28
|
|
93
|
|
166
|
|
|
|
|
|
|
|
|
Upgrades of IMAX theatre
systems
|
9
|
(1)
|
2
|
|
11
|
|
17
|
Total
Theatre Signings
|
41
|
|
30
|
|
104
|
|
183
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Nine
Months
|
|
|
|
|
|
Ended
September 30,
|
|
Ended
September 30,
|
|
|
|
|
Theatre
System Installations:
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Full new sales and sales-type lease
arrangements
|
14
|
|
11
|
|
33
|
|
33
|
New joint revenue sharing
arrangements
|
14
|
|
14
|
|
31
|
|
47
|
Total new
theatres
|
28
|
|
25
|
|
64
|
|
80
|
|
|
|
|
|
|
|
|
Upgrades and other
|
5
|
|
4
|
|
15
|
|
33
|
Total
Theatre Installations
|
33
|
|
29
|
|
79
|
|
113
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
Theatre
Backlog:
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
New sales and sales-type lease
arrangements
|
133
|
|
137
|
|
|
|
|
New joint revenue sharing
arrangements
|
149
|
|
148
|
|
|
|
|
Total new
theatres
|
282
|
|
285
|
|
|
|
|
|
|
|
|
|
|
|
|
Upgrades under sales and sales-type
lease arrangements
|
3
|
|
10
|
|
|
|
|
Total
Theatres in Backlog
|
285
|
|
295
|
|
|
|
|
__________
|
(1)
|
Includes
three IMAX theatres acquired from another existing customer that
had been operating under a joint revenue sharing arrangement. These
theaters were purchased from the Company under a sales
arrangement.
|
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
|
|
Nine
Months
|
|
|
Ended
September 30,
|
|
Ended
September 30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Equipment
and product sales
|
$
|
24,327
|
|
$
|
18,378
|
|
$
|
55,756
|
|
$
|
58,359
|
Services
|
|
40,316
|
|
|
35,104
|
|
|
102,312
|
|
|
80,371
|
Rentals
|
|
14,013
|
|
|
11,350
|
|
|
42,912
|
|
|
25,416
|
Finance
income
|
|
2,055
|
|
|
1,581
|
|
|
5,537
|
|
|
4,409
|
Other
|
|
-
|
|
|
1,075
|
|
|
-
|
|
|
1,325
|
|
|
|
80,711
|
|
|
67,488
|
|
|
206,517
|
|
|
169,880
|
Costs
and expenses applicable to revenues
|
|
|
|
|
|
|
|
|
|
|
|
Equipment
and product sales
|
|
10,652
|
|
|
8,083
|
|
|
27,727
|
|
|
28,595
|
Services
|
|
21,107
|
|
|
19,113
|
|
|
55,378
|
|
|
48,015
|
Rentals
|
|
4,202
|
|
|
3,468
|
|
|
12,968
|
|
|
9,478
|
Other
|
|
-
|
|
|
386
|
|
|
-
|
|
|
406
|
|
|
|
35,961
|
|
|
31,050
|
|
|
96,073
|
|
|
86,494
|
Gross
margin
|
|
44,750
|
|
|
36,438
|
|
|
110,444
|
|
|
83,386
|
Selling,
general and administrative expenses
|
|
19,326
|
|
|
19,440
|
|
|
58,713
|
|
|
55,778
|
|
(including
share-based compensation expense of $2.8 million and
$10.3
million
for the three and nine months ended September 30, 2011,
respectively
(2011 –
expense of $0.5 million and $9.0 million, respectively))
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for arbitration award
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,055
|
Research
and development
|
|
2,528
|
|
|
2,041
|
|
|
7,623
|
|
|
6,026
|
Amortization of intangibles
|
|
166
|
|
|
113
|
|
|
532
|
|
|
341
|
Receivable
provisions, net of recoveries
|
|
241
|
|
|
408
|
|
|
829
|
|
|
767
|
Asset
impairments
|
|
-
|
|
|
8
|
|
|
-
|
|
|
8
|
Impairment
of available-for-sale investment
|
|
-
|
|
|
-
|
|
|
150
|
|
|
-
|
Income
from operations
|
|
22,489
|
|
|
14,428
|
|
|
42,597
|
|
|
18,411
|
Interest
income
|
|
22
|
|
|
13
|
|
|
73
|
|
|
44
|
Interest
expense
|
|
(373)
|
|
|
(431)
|
|
|
(1,375)
|
|
|
(1,425)
|
Income
from continuing operations before income taxes
|
|
22,138
|
|
|
14,010
|
|
|
41,295
|
|
|
17,030
|
Provision
for income taxes
|
|
(6,814)
|
|
|
(5,179)
|
|
|
(11,599)
|
|
|
(6,504)
|
Loss from
equity-accounted investments
|
|
(334)
|
|
|
(439)
|
|
|
(1,038)
|
|
|
(1,312)
|
Net
income
|
$
|
14,990
|
|
$
|
8,392
|
|
$
|
28,658
|
|
$
|
9,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per share - basic & diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
per share - basic
|
$
|
0.23
|
|
$
|
0.13
|
|
$
|
0.44
|
|
$
|
0.14
|
|
Net income
per share - diluted
|
$
|
0.22
|
|
$
|
0.12
|
|
$
|
0.42
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding (000's):
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
65,930
|
|
|
64,654
|
|
|
65,718
|
|
|
64,406
|
|
Fully
Diluted
|
|
68,301
|
|
|
67,756
|
|
|
68,187
|
|
|
68,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
Disclosure:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization(1)
|
$
|
8,038
|
|
$
|
5,838
|
|
$
|
24,704
|
|
$
|
18,020
|
__________
|
(1)
|
Includes
less than $0.1 million and $0.1 million of amortization of
deferred financing costs charged to interest expense for the three
and nine months ended September 30, 2012, respectively (September
30, 2011 — less than $0.1 million and $0.3 million ,
respectively).
|
IMAX
CORPORATION
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
In
accordance with United States Generally Accepted Accounting
Principles
|
(in
thousands of U.S. dollars)
|
|
|
As
at
|
|
As
at
|
|
September 30,
|
|
December 31,
|
|
2012
|
|
2011
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
29,450
|
|
$
|
18,138
|
Accounts
receivable, net of allowance for doubtful accounts of $1,636
(December 31, 2011 — $1,840)
|
|
36,147
|
|
|
46,659
|
Financing
receivables
|
|
91,533
|
|
|
86,714
|
Inventories
|
|
20,841
|
|
|
19,747
|
Prepaid
expenses
|
|
4,081
|
|
|
3,126
|
Film
assets
|
|
3,488
|
|
|
2,388
|
Property,
plant and equipment
|
|
109,115
|
|
|
101,253
|
Other
assets
|
|
25,480
|
|
|
14,238
|
Deferred
income taxes
|
|
40,164
|
|
|
50,033
|
Goodwill
|
|
39,027
|
|
|
39,027
|
Other
intangible assets
|
|
27,709
|
|
|
24,913
|
Total
assets
|
$
|
427,035
|
|
$
|
406,236
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Bank
indebtedness
|
$
|
30,000
|
|
$
|
55,083
|
Accounts
payable
|
|
15,389
|
|
|
28,985
|
Accrued
and other liabilities
|
|
63,405
|
|
|
54,803
|
Deferred
revenue
|
|
79,660
|
|
|
74,458
|
Total
liabilities
|
|
188,454
|
|
|
213,329
|
|
|
|
|
|
|
Commitments, contingencies and
guarantees
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
Capital
stock, common shares — no par value. Authorized — unlimited
number.
|
|
|
|
|
|
Issued and outstanding —
65,997,319 (December 31, 2011 — 65,052,740)
|
|
310,105
|
|
|
303,395
|
Other
equity
|
|
26,587
|
|
|
17,510
|
Deficit
|
|
(97,008)
|
|
|
(125,666)
|
Accumulated other comprehensive loss
|
|
(1,103)
|
|
|
(2,332)
|
Total
shareholders' equity
|
|
238,581
|
|
|
192,907
|
Total
liabilities and shareholders' equity
|
$
|
427,035
|
|
$
|
406,236
|
IMAX
CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
In
accordance with United States Generally Accepted Accounting
Principles
|
(In
thousands of U.S. dollars)
|
(Unaudited)
|
|
|
|
Nine
Months
|
|
|
Ended
September 30,
|
|
|
2012
|
|
2011
|
Cash
provided by (used in):
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
Net
income
|
$
|
28,658
|
|
$
|
9,214
|
Adjustments to reconcile net income to cash from
operations:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
24,704
|
|
|
18,020
|
|
Write-downs, net of recoveries
|
|
1,516
|
|
|
841
|
|
Change in
deferred income taxes
|
|
9,545
|
|
|
5,694
|
|
Stock and
other non-cash compensation
|
|
10,781
|
|
|
9,595
|
|
Provision
for arbitration award
|
|
-
|
|
|
2,055
|
|
Unrealized
foreign currency exchange (gain) loss
|
|
(152)
|
|
|
4,270
|
|
Loss from
equity-accounted investments
|
|
1,038
|
|
|
1,312
|
|
Gain on
non-cash contribution to equity-accounted investees
|
|
-
|
|
|
(404)
|
Investment
in film assets
|
|
(13,508)
|
|
|
(8,814)
|
Changes in
other non-cash operating assets and liabilities
|
|
(8,672)
|
|
|
(48,192)
|
|
Net cash
provided by (used in) operating activities
|
|
53,910
|
|
|
(6,409)
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
Purchase
of property, plant and equipment
|
|
(2,599)
|
|
|
(4,409)
|
Investment
in joint revenue sharing equipment
|
|
(15,174)
|
|
|
(22,432)
|
Investment
in new business ventures
|
|
(381)
|
|
|
(1,571)
|
Acquisition of other intangible assets
|
|
(5,046)
|
|
|
(4,008)
|
|
Net cash
used in investing activities
|
|
(23,200)
|
|
|
(32,420)
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
Increase
in bank indebtedness
|
|
9,917
|
|
|
59,583
|
Repayment
of bank indebtedness
|
|
(35,000)
|
|
|
(37,500)
|
Credit
facility amendment fees paid
|
|
-
|
|
|
(297)
|
Common
shares issued - stock options exercised
|
|
5,831
|
|
|
5,635
|
|
Net cash
(used in) provided by financing activities
|
|
(19,252)
|
|
|
27,421
|
|
|
|
|
|
|
|
Effects of
exchange rate changes on cash
|
|
(146)
|
|
|
(139)
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
during the period
|
|
11,312
|
|
|
(11,547)
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
|
18,138
|
|
|
30,390
|
Cash
and cash equivalents, end of period
|
$
|
29,450
|
|
$
|
18,843
|
IMAX
CORPORATION
SELECTED FINANCIAL DATA In accordance with United
States Generally Accepted Accounting Principles (in
thousands of U.S. dollars)
|
The Company has seven reportable segments identified by category
of product sold or service provided: IMAX systems; theater system
maintenance; joint revenue sharing arrangements; film production
and IMAX DMR; film distribution; film post-production; and other.
The IMAX systems segment is comprised of the design, manufacture,
sale or lease of IMAX theater projection system equipment. The
theater system maintenance segment consists of the maintenance of
IMAX theater projection system equipment in the IMAX theater
network. The joint revenue sharing arrangements segment is
comprised of the installation of IMAX theater projection system
equipment to an exhibitor in exchange for a certain percentage of
box-office receipts, concession revenue and in some cases a small
upfront or initial payment. The film production and IMAX DMR
segment is comprised of the production of films and performance of
film re-mastering services. The film distribution segment includes
the distribution of films for which the Company has distribution
rights. The film post-production segment includes the provision of
film post-production and film print services. The other segment
includes certain IMAX theaters that the Company owns and operates,
camera rentals and other miscellaneous items.
|
|
Three
Months
|
|
Nine
Months
|
|
|
Ended
September 30,
|
|
Ended
September 30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
IMAX
systems
|
|
|
|
|
|
|
|
|
|
|
|
Sales and sales-type leases
|
$
|
21,937
|
|
$
|
17,593
|
|
$
|
49,751
|
|
$
|
54,758
|
Ongoing rent, fees, and finance income
|
|
3,421
|
|
|
3,056
|
|
|
9,312
|
|
|
8,620
|
|
|
25,358
|
|
|
20,649
|
|
|
59,063
|
|
|
63,378
|
Theater
system maintenance
|
|
7,042
|
|
|
6,348
|
|
|
20,878
|
|
|
18,270
|
Joint
revenue sharing arrangements
|
|
13,186
|
|
|
9,995
|
|
|
40,477
|
|
|
22,382
|
Films
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
and IMAX DMR
|
|
25,223
|
|
|
18,600
|
|
|
58,805
|
|
|
38,280
|
|
Distribution
|
|
3,259
|
|
|
4,965
|
|
|
11,122
|
|
|
12,857
|
|
Post-production
|
|
1,646
|
|
|
3,023
|
|
|
5,778
|
|
|
5,686
|
|
|
30,128
|
|
|
26,588
|
|
|
75,705
|
|
|
56,823
|
Other
|
|
4,997
|
|
|
3,908
|
|
|
10,394
|
|
|
9,027
|
Total
|
$
|
80,711
|
|
$
|
67,488
|
|
$
|
206,517
|
|
$
|
169,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margins
|
|
|
|
|
|
|
|
|
|
|
|
IMAX
systems(1)
|
|
|
|
|
|
|
|
|
|
|
|
Sales and sales-type leases
|
$
|
12,575
|
|
$
|
10,329
|
|
$
|
25,259
|
|
$
|
28,163
|
Ongoing rent, fees, and finance income
|
|
3,381
|
|
|
2,965
|
|
|
9,216
|
|
|
8,306
|
|
|
15,956
|
|
|
13,294
|
|
|
34,475
|
|
|
36,469
|
Theater
system maintenance
|
|
2,828
|
|
|
1,944
|
|
|
8,122
|
|
|
6,912
|
Joint
revenue sharing arrangements(1)
|
|
9,286
|
|
|
6,733
|
|
|
28,340
|
|
|
13,792
|
Films
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
and IMAX DMR(1)
|
|
15,426
|
|
|
12,015
|
|
|
35,714
|
|
|
21,235
|
|
Distribution(1)
|
|
587
|
|
|
1,418
|
|
|
2,133
|
|
|
2,531
|
|
Post-production
|
|
103
|
|
|
808
|
|
|
1,373
|
|
|
2,804
|
|
|
16,116
|
|
|
14,241
|
|
|
39,220
|
|
|
26,570
|
Other
|
|
564
|
|
|
226
|
|
|
287
|
|
|
(357)
|
Total
|
$
|
44,750
|
|
$
|
36,438
|
|
$
|
110,444
|
|
$
|
83,386
|
__________
|
(1)
|
IMAX
systems include commission costs of $0.9 million and
$2.1 million for the three and nine months ended September 30,
2012, respectively (2011 — $0.6 million and
$1.4 million, respectively). Joint revenue sharing
arrangements segment margins include advertising, marketing and
commission costs of $1.1 million and $2.1 million for the
three and nine months ended September 30, 2012, respectively
(2011 — $1.3 million and $3.6 million,
respectively). Production and DMR segment margins include marketing
costs of $0.5 million and $2.2 million for the three and
nine months ended September 30, 2012, respectively (2011 —
$0.7 million and $1.9 million, respectively).
Distribution segment margins include a marketing cost recovery of
less than $0.1 million and an expense of $1.2 million for
the three and nine months ended September 30, 2012, respectively
(2011 — expense of $0.1 million and $1.7 million,
respectively).
|
IMAX
CORPORATION OTHER INFORMATION (in thousands of
U.S. dollars)
|
Non-GAAP Financial Measures:
In this release, the Company presents adjusted EBITDA, adjusted
net income, adjusted net income per diluted share and free cash
flow as supplemental measures of performance of the Company, which
are not recognized under United
States generally accepted accounting principles ("GAAP").
The Company presents adjusted EBITDA, adjusted net income, adjusted
net income per diluted share, and free cash flow because it
believes that they are important supplemental measures of its
comparable controllable operating performance and it wants to
ensure that its investors fully understand the impact of its
stock-based compensation and a provision for an arbitration award
(net of any related taxes) on its net income. Management uses these
measures to review operating performance on a comparable basis from
period to period. However, these non-GAAP measures may not be
comparable to similarly titled amounts reported by other companies.
Adjusted EBITDA, adjusted net income, adjusted net income per
diluted share and free cash flow should be considered in addition
to, and not as a substitute for, net income and other measures of
financial performance reported in accordance with GAAP.
Adjusted EBITDA:
Adjusted EBITDA is calculated on a basis consistent with the
Company's Credit Facility, which refers to Adjusted EBITDA as
EBITDA. The Credit Facility provides that the Company will be
required to maintain a ratio of funded debt (as defined in the
Credit Agreement) to EBITDA (as defined in the Credit Agreement) of
not more than 2:1. The Company will also be required to
maintain a Fixed Charge Coverage Ratio (as defined in the Credit
Agreement) of not less than 1.1:1.0. At all times under the terms
of the Credit Facility, the Company is required to maintain minimum
Excess Availability of not less than $5.0
million and minimum Cash and Excess Availability of not less
than $15.0 million. The ratio of
funded debt to EBITDA was 0.30:1 as at September 30, 2012, where Funded Debt (as defined
in the Credit Agreement) is the sum of all obligations evidenced by
notes, bonds, debentures or similar instruments and was
$30.0 million. EBITDA is
calculated as follows:
|
|
For
the
|
|
For
the
|
|
|
3
months ended
|
|
12
months ended
|
|
September 30, 2012
|
|
September 30, 2012(1)
|
(In
thousands of U.S. Dollars)
|
|
|
|
|
|
Net income
|
$
|
14,990
|
|
$
|
34,987
|
Add:
|
|
|
|
|
|
|
Loss from
equity accounted investments
|
|
334
|
|
|
1,517
|
|
Provision
for income taxes
|
|
6,814
|
|
|
14,483
|
|
Interest
expense, net of interest income
|
|
351
|
|
|
1,691
|
|
Depreciation and amortization, including film asset
amortization
|
|
7,995
|
|
|
31,676
|
|
Write-downs net of recoveries including asset
impairments and receivable provisions
|
|
597
|
|
|
2,629
|
|
Stock and
other non-cash compensation
|
|
2,930
|
|
|
13,621
|
Adjusted EBITDA
|
$
|
34,011
|
|
$
|
100,604
|
__________
|
(1)
|
Ratio of
funded debt calculated using twelve months ended EBITDA.
|
IMAX
CORPORATION OTHER INFORMATION (in thousands of
U.S. dollars)
|
Adjusted Net Income and Adjusted Diluted Per Share
Calculations – Quarter Ended September 30,
2012 vs. 2011:
The Company reported net income of $15.0 million or $0.23 per basic share and $0.22 per diluted share for the third
quarter of 2012, as compared to net income of $8.4 million or $0.13 per basic share and $0.12 per diluted share for the third
quarter of 2011. Net income for the third quarter of 2012 includes
a $2.8 million charge, or
$0.04 per diluted share, for
stock-based compensation (2011 - $0.5
million or $0.01 per diluted
share) and the related tax benefit of $0.1
million (2011 - $0.5 million
or $0.01 per diluted share).
Adjusted net income, which consists of net income excluding
stock-based compensation expense and the related tax benefit, was
$17.9 million, or $0.26 per diluted share, in the third
quarter of 2012, as compared to adjusted net income of $9.5 million, or $0.14 per diluted share, for the third quarter of
2011. A reconciliation of net income, the most directly comparable
U.S. GAAP measure, to adjusted net income and adjusted net income
per diluted share is presented in the table below:
|
|
Three
Months Ended
|
|
Three
Months Ended
|
|
|
September 30, 2012
|
|
September 30, 2011
|
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
Reported
|
$
|
14,990
|
|
$
|
0.22
|
|
$
|
8,392
|
|
$
|
0.12
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
2,756
|
|
|
0.04
|
|
|
519
|
|
|
0.01
|
|
Tax
benefit of items listed above
|
|
114
|
|
|
-
|
|
|
549
|
|
|
0.01
|
Adjusted
|
$
|
17,860
|
|
$
|
0.26
|
|
$
|
9,460
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average diluted shares outstanding
|
|
|
|
|
68,301
|
|
|
|
|
|
67,756
|
Adjusted Net Income and Adjusted Diluted Per Share
Calculations – Nine Months Ended September
30, 2012 vs. 2011:
The Company reported net income of $28.7 million or $0.44 per basic share and $0.42 per diluted share for the nine months
ended September 30, 2012, as compared
to net income of $9.2 million or
$0.14 per basic and diluted share for
the nine months ended September 30,
2011. Net income for the nine months ended September 30, 2012 includes a $10.3 million charge, or $0.15 per diluted share (2011 – $9.0 million or $0.13 per diluted share), for stock-based
compensation. Net income for the nine months ended September 30, 2011 also includes a one-time
$2.1 million pre-tax charge
($0.03 per diluted share), due to an
arbitration award arising from an arbitration proceeding brought
against the Company in connection with a discontinued subsidiary.
Adjusted net income, which consists of net income excluding the
impact of the stock-based compensation expense, the charge for the
arbitration award and the related tax impact, was $38.8 million, or $0.57 per diluted share, in the nine months
ended September 30, 2012, as compared
to adjusted net income of $19.4
million, or $0.28 per
diluted share, for the nine months ended September 30, 2011. A reconciliation of net
income, the most directly comparable U.S. GAAP measure, to adjusted
net income and adjusted net income per diluted share is presented
in the table below:
|
|
Nine
Months
|
|
Nine
Months
|
|
|
Ended
September 30, 2012
|
|
Ended
September 30, 2011
|
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
Reported
|
$
|
28,658
|
|
$
|
0.42
|
|
$
|
9,214
|
|
$
|
0.14
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
10,252
|
|
|
0.15
|
|
|
8,973
|
|
|
0.13
|
|
Provision
for arbitration award
|
|
-
|
|
|
-
|
|
|
2,055
|
|
|
0.03
|
|
Tax impact
on items listed above
|
|
(86)
|
|
|
-
|
|
|
(882)
|
|
|
(0.02)
|
Adjusted
|
$
|
38,824
|
|
$
|
0.57
|
|
$
|
19,360
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average diluted shares outstanding
|
|
|
|
|
68,187
|
|
|
|
|
|
68,110
|
Free Cash Flow:
Free cash flow is defined as cash provided by operating
activities minus cash used in investing activities (from the
consolidated statements of cash flows). Cash provided by operating
activities consist of net income, plus depreciation and
amortization, plus the change in deferred income taxes, plus other
non-cash items, plus changes in working capital, less investment in
film assets, plus other changes in operating assets and
liabilities. Cash used in investing activities includes capital
expenditures, acquisitions and other cash used in investing
activities. Management views free cash flow, a non-GAAP measure, as
a measure of the Company's after-tax cash flow available to reduce
debt, add to cash balances, and fund other financing
activities. A reconciliation of cash provided by operating
activities to free cash flow is presented in the table below:
|
|
For
the
|
|
For
the
|
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
September 30, 2012
|
|
September 30, 2012
|
(In
thousands of U.S. Dollars)
|
|
|
|
|
|
Net cash
provided by operating
activities
|
$
|
34,067
|
|
$
|
53,910
|
Net cash
(used in) investing activities
|
|
(3,797)
|
|
|
(23,200)
|
Free cash
flow
|
$
|
30,270
|
|
$
|
30,710
|
SOURCE IMAX Corporation