IMAX CORPORATION
Exhibit 99.1
IMAX CORPORATION
2525 Speakman Drive
Mississauga, Ontario, Canada L5K 1B1
Tel: (
905) 403-6500 Fax: (
905) 403-6450
www.imax.com
IMAX CORPORATION
2525 Speakman Drive
Mississauga, Ontario, Canada L5K 1B1
Tel: (
905) 403-6500 Fax: (
905) 403-6450
www.imax.com
IMAX CORPORATION REPORTS THIRD QUARTER FINANCIAL RESULTS
— Pursuing Key Initiatives
Designed to Grow Business and Shareholder Value over Long Term —
TORONTO —
November 8, 2006 — IMAX Corporation (NASDAQ: IMAX; TSX: IMX) today reported that
primarily because it did not install any theatre systems in the third quarter ended
September 30,
2006, it incurred a net loss of $0.30 per diluted share for the three month period.
The Company
emphasized, however, that it has during the recently completed quarter signed five theatre deals,
bringing the year-to-date total to 25, including four of which remain subject to conditions. For
the 2005 third quarter,
the Company had net earnings of $0.05 per diluted share.
IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J. Wechsler emphasized,
“While the
third quarter results are disappointing, we are making progress with what we are confident are the
appropriate strategic initiatives to grow the business profitably and build shareholder value over
the long term. Specifically, we have begun the important transition to a digital IMAX system and
are accelerating our joint venture investment strategy, the objectives both being to help
substantially expand the worldwide IMAX network and achieve attractive economics for the Company.”
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In addition to the slipping of installations,
the Company’s 2006 third quarter performance was
affected by the disappointing box office performance of
Ant Bully, and higher than anticipated SG&A
due to increased legal expenses and costs related to
the Company’s previously reported process of
exploring strategic alternatives.
Messrs. Gelfond and Wechsler stated, “We strongly view the introduction of a digital IMAX system in
2008 as being potentially very beneficial to
the Company. Although we face challenges in managing
the transition to digital, we expect it to enable us to virtually eliminate IMAX print costs and
allow operators and studios enhanced flexibility in their programming options. Moreover, by
accelerating
the Company’s involvement in box office sharing arrangements with exhibitors in which
we contribute the projection systems (
“joint ventures”), IMAX should be in a position to generate
greater recurring revenues. Through a greater emphasis on joint ventures,
the Company should
realize benefits from deployment of capital, the expansion of its network, and in the incremental
revenues and profitability that IMAX drives both for studios and the exhibitors.”
For the three months ended
September 30, 2006,
the Company’s total revenues were $20.7 million.
Systems revenue was $7.3 million, as
the Company recognized revenue on the sale of one theatre
system in the third quarter of 2006. For the same 2005 period, IMAX had total revenues of $33.4
million and systems revenue of $20.2 million, as
the Company recognized revenue on six theatre
systems which qualified as either sales or sales-type leases in the prior year period. There were
no revenues associated with consensual buyouts, terminations by default and MPX conversion
agreements in the third quarter of 2006. This compares to $2.4 million in such settlement revenues
in the third quarter of fiscal 2005.
For the third quarter of 2006, film revenues were $7.7 million, including IMAX DMR revenues of $3.4
million, theatre operations revenue was $4.7 million and other revenue was $1.0 million. For the
2005 third quarter, film revenues were $8.0 million, including IMAX DMR revenues of $3.0 million,
theatre operations revenue was $4.3 million and other revenue was $0.8 million.
The Company ended the third quarter of fiscal 2006 with $26.2 million in cash, cash equivalents and
short term investments.
The Company stated that it expects to install between five and eight theatre systems during the
fourth quarter of fiscal 2006. This expectation reflects the impact of an unusually high number of
installation slippages. Six systems currently in backlog were originally expected to be installed
in the fourth quarter of fiscal 2006 but are now likely to be installed in fiscal 2007 instead. At
the present time
the Company has 24 systems in backlog scheduled for installation in 2007 and an
additional eight systems that could be installed as early as December of that year.
The Company
went on to caution that slippages remain a recurring and unpredictable part of its business.
“Our clients are currently being impacted by slower than expected theatre construction and permit
approval process delays. Unfortunately slippages remain a very unpredictable component of our
business, but we note that as these installations ultimately occur they should benefit our 2007
results,” stated Messrs. Gelfond and Wechsler.
Separately,
the Company provided an update regarding its exploration of strategic alternatives,
including the possible sale or merger of
the company. While
the Company did not find a buyer
willing to acquire IMAX at terms initially sought by the Board of Directors, the Special Committee
of the Board has since authorized the investment banks Allen & Company and UBS to explore interest
existing at a lower valuation than originally sought. As part of this ongoing process,
the Company
remains committed to exploring additional interest as appropriate.
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On the film side,
Superman Returns:
An IMAX
3D Experience has grossed approximately $30.8 million
to date.
The Ant Bully: An IMAX
3D Experience, which opened in late July, grossed $7.1 million.
The Company released
Open Season: An IMAX
3D Experience on September 29, which so far has grossed
$7.8 million.
The remainder of IMAX’s 2006 film slate includes
Happy Feet: The IMAX
Experience, a CGI animated
musical-comedy to be released on November 17th, and Twentieth Century Fox’s
Night at the Museum:
The IMAX
Experience, an adventure comedy starring Ben Stiller and Robin Williams, which premieres
December 22nd.
The Company’s 2007 film slate includes
Spider-Man 3: The IMAX
Experience scheduled
for release in May, and
Harry Potter and the Order of the Phoenix:
The IMAX
Experience, which will
be released in July.
“To date, 16 Hollywood titles have been digitally re-mastered with DMR technology and released to
IMAX® theatres, and we are optimistic about the strong prospects of the films scheduled for the
remainder of the year as well as our 2007 film slate. In 2006 we have partnered with three major
studios, and we look forward to continuing to expand our studio relationships in 2007 and beyond.
IMAX’s significance to the Hollywood release platform continues to increase, and we think that our
ability to deliver a unique out-of-home entertainment experience via the expanding network of IMAX
theatres remains a key component of our future growth,” concluded Messrs. Gelfond and Wechsler.
The Company stated that it is still responding to informal inquiries from the U.S. Securities and
Exchange Commission and the Ontario Securities Commission regarding
the Company’s timing of revenue
recognition, including its application of multiple element arrangement accounting in its revenue
recognition for theatre systems.
The Company continues to cooperate in this inquiry.
The Company
believes its application of this accounting policy is, and has historically been, in accordance
with GAAP, and
the Company’s position continues to be supported by its auditors,
PricewaterhouseCoopers LLP.
The Company will host a conference call on Thursday,
November 9, 2006 at 8:00 AM ET. To access the
call interested parties should call (
719) 457-2692 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 2262074.
The Company 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
Founded in 1967, IMAX Corporation is one of the world’s leading entertainment technology companies
and the newest distribution window for Hollywood films. IMAX delivers the world’s best cinematic
presentations using proprietary IMAX, IMAX
® 3D, and IMAX DMR
technology. IMAX
DMR (Digital Re-mastering) makes it possible for virtually any 35mm film to be transformed into the
unparalleled image and sound quality of The IMAX Experience. The IMAX brand is recognized
throughout the world for extraordinary and immersive entertainment experiences. As of
September 30,
2006, there were 280 IMAX theatres operating in 40 countries.
IMAX
®, IMAX
® 3D, IMAX DMR
Ò, IMAX
Ò
MPX
Ò, and The IMAX Experience
® 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 the timing of
theatre system installations, 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, including the transition to digital systems, 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 for the year ended December 31, 2005 and in the subsequent reports filed by the Company
with the Securities and Exchange Commission including the Company’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2006, scheduled to be filed on November 9, 2006.
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