HIGHLIGHTS
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- IMAX remains on track to install approximately 50 digital systems by
year-end
- Summer blockbuster The Dark Knight: The IMAX Experience has grossed
over $32 million, sets new IMAX DMR(R) 2D record
- Completes 2008 film slate with DreamWorks Pictures/Paramount's
Eagle Eye for September/October time period
- Adds Three Films to 2009 Film Slate: Watchmen; Night at the Museum 2:
Escape to the Smithsonian; and Transformers: Revenge of the Fallen
- Company signs first international joint venture agreements
- Ends second quarter with record backlog of 246 theatre systems driven
by joint revenue sharing model
TORONTO, Aug. 7 /PRNewswire-FirstCall/ - IMAX Corporation (NASDAQ: IMAX; TSX: IMX) today reported that it recorded a net loss per diluted share of $0.29 for the second quarter of fiscal 2008, compared to a net loss of $0.11 per diluted share for the second quarter of fiscal 2007. At the same time, the Company announced that the roll out of its IMAX(R) Digital system technology launched as scheduled, with the successful delivery and installation of its first three digital projection systems at three AMC Entertainment, Inc. ('AMC') theatres located in the Baltimore/Washington D.C. area, during the second quarter.
IMAX Co-Chairmen and Co-CEOs Richard L. Gelfond and Bradley J. Wechsler commented, 'We are very pleased with the significant strategic progress made thus far in 2008, despite the fact that, as we have previously discussed, our financial results do not yet reflect the pieces being put in place that should return IMAX to profitability. Importantly, the execution of our digital roll out launched on time, our future film slate is strong and growing, our pipeline of new business remains robust, we have the largest systems backlog in our history reflecting our joint revenue sharing strategy, and we believe we have the necessary financing in place to fund our joint venture initiative. Looking ahead, we believe the combination of having approximately 50 digital systems in operation by year-end and the strength of our second half film slate, led by The Dark Knight: The IMAX Experience, should drive improved second half financial performance. We continue to expect profitability in 2009.'
The Company signed agreements for six IMAX theatre systems in the second quarter of fiscal 2008 compared to agreements for six IMAX theatre systems in the second quarter of 2007. At the end of the second quarter, the Company's backlog consisted of a record 246 theatre systems compared to 79 theatre systems in backlog at the end of last year's second quarter. Included in the 2008 and 2007 system backlog totals were 139 and three joint revenue sharing arrangements, respectively, for which there is no assigned backlog value. To date, the Company has signed contracts for 189 IMAX Digital theatre systems. In late July, the Company delivered its second set of digital systems to three AMC theatres in the Philadelphia market and expects the systems to be operational by next weekend, as planned.
Messrs. Gelfond and Wechsler continued, 'The launch of our digital technology and 100-theatre joint revenue sharing arrangement with AMC are important strategic milestones for IMAX and represent the first steps toward what we expect to be a period of significant future growth for our organization. The advent of IMAX Digital virtually eliminates high film print costs incurred by the studios and lowers installation costs for exhibitors, allowing for greater programming flexibility. In addition, with digital we will have the ability to show 10 to 12 major studio releases per year, as opposed to six to eight historically, which should translate into higher revenue and greater per-theatre profitability.'
In addition to the Company's joint revenue sharing arrangement with AMC announced in the fourth quarter of 2007 as well as its 31 digital theatre joint revenue sharing arrangement with Regal Cinemas, Inc. announced in the first quarter of 2008, exhibitor interest in IMAX Digital and the Company's joint revenue sharing model continues, evidenced by recently announced theatre deals with leading international exhibitors Hoyts Cinemas Ltd. in Australia and Tokyu Recreation in Japan.
'Our joint revenue sharing business model makes it more affordable for exhibitors to be in the IMAX business while driving greater recurring revenue into our business. This model, coupled with our digital platform, should enable us to rapidly increase the size of our worldwide network. The installation of our commercial system backlog will roughly triple the number of IMAX theatres in domestic multiplexes and more than double the size of our commercial international network by 2010,' said Messrs. Gelfond and Wechsler.
Turning to second quarter financial results, for the three months ended June 30, 2008, total revenues were $21.2 million, as compared to $27.1 million reported for the prior year period.
- Systems revenue was $10.6 million versus $14.0 million in the prior
year period. The Company installed four theatre systems in the second
quarter, same as last year, however revenue recognition was deferred
on two of those systems due to contractual rights for digital
upgrades.
- Film revenue was $6.6 million during the second quarter of 2008
versus $8.0 million in the second quarter of 2007. This included
IMAX DMR(R) revenues of $2.5 million compared to $3.8 million in
2007.
- Theatre operations and other revenue of $4.0 million in the second
quarter of 2008 compared to $5.1 million in the second quarter of
2007.
Regarding second quarter film performance, in April the Company released Paramount Pictures' Shine A Light: The IMAX Experience which grossed $4.6 million worldwide as of quarter end, and was followed on May 9 by Warner Bros. Pictures' Speed Racer: The IMAX Experience, which grossed $5.3 million worldwide as of quarter end. On June 6, the Company released DreamWorks Animation's Kung Fu Panda: The IMAX Experience, which grossed $8.1 million worldwide for the quarter and has grossed $11.7 million to date.
Selling, general and administrative expenses were $11.2 million in the second quarter compared to $11.1 million in the same period a year ago. Research and development costs increased to $2.0 million in the second quarter of 2008 as compared to $1.1 million in the second quarter of 2007, reflecting the Company's investment in digital technology.
Messrs. Gelfond and Wechsler commented, 'The Company's second quarter results reflect investments made to transition the Company to a digital platform, two fewer system installations for which we could recognize revenue as well as difficult year-over-year comparisons to last year's highly successful Spider-Man 3: The IMAX Experience. We believe The Dark Knight: The IMAX Experience, combined with strength of our second half film slate, should offset much of the softness of our year-to-date IMAX DMR film performance.'
The Company's cash position was $24.6 million as of June 30, 2008, compared to cash and short term investments of $16.9 million as of December 31, 2007 and $18.5 million as of June 30, 2007. The Company's increased cash position includes the private placement sale of approximately 2.73 million common shares in May of this year at market prices, and resulting proceeds of approximately $18 million. The Company made its bi-annual interest payment on its senior notes of $7.7 million in June.
With respect to the third quarter, on July 18th, IMAX released Warner Bros. Pictures' blockbuster hit The Dark Knight: The IMAX Experience which is currently showing on 94 domestic and 29 international screens. Director Christopher Nolan shot six sequences of the film with IMAX cameras, marking the first time ever that a major Hollywood film has been even partially shot using IMAX cameras.
