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): March 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 March 9, 2004, IMAX Corporation (the "Company") issued a press release
announcing the Company's financial and operating results for the year ended
December 31, 2003, 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 FOURTH QUARTER AND FULL-YEAR
2003 RESULTS
HIGHLIGHTS
- Company reports profit in 2003 with earnings from continuing operations of
$0.14 per share before costs associated with debt repurchasing and
refinancing, at high end of guided range.
- Company successfully rolls out IMAX(R) MPX(TM) with nine orders from
exhibitors worldwide.
- IMAX DMR(R) success drives increased theatre system signings and further
establishes IMAX as a new release window for Hollywood event films.
- Company completes balance sheet restructuring through debt reduction and
refinancing remainder of senior notes.
- Company to announce new IMAX DMR film deal for 2004 on 10:30 a.m. earnings
conference call.
Toronto, Canada -- March 9, 2004 -- IMAX Corporation (Nasdaq:IMAX; TSX:IMX)
today reported earnings from continuing operations of $0.14 per share on a basic
and fully diluted basis for the full year ended December 31, 2003, before giving
effect to the costs associated with the repurchase and refinancing of the
Company's senior notes in 2003. This compares to earnings from continuing
operations of $0.09 per diluted share for the full year ended December 31, 2002,
before giving effect to $0.25 per share in gains associated with the retirement
of the Company's subordinated notes in 2002.
When including costs of approximately $4.9 million, or $0.13 per share,
associated with the repurchase and refinancing of the Company's senior notes
during the year, IMAX reported earnings from continuing operations of $0.01 per
diluted share in 2003. When including a gain of $0.25 per diluted share
associated with the retirement of the Company's subordinated notes in 2002, IMAX
reported earnings from continuing operations of $0.34 per diluted share in 2002.
For the three months ended December 31, 2003, IMAX reported net earnings from
continuing operations of $0.09 per share on a diluted basis, before giving
effect to the costs associated with the repurchasing and refinancing of its
senior notes in the quarter. This compares to net earnings from continuing
operations of $0.03 per share on a basic and diluted basis in the prior year
period.
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When including costs of approximately $4.6 million, or $0.11 per share,
associated with the refinancing of the Company's senior notes during the
quarter, IMAX reported a net loss of $0.01 per diluted share in the quarter.
"We are pleased with our financial performance in 2003, as we improved our
results and positioned the Company for continued growth," said IMAX co-Chairmen
and co-CEOs Richard L. Gelfond and Bradley J. Wechsler. "2003 was a pivotal year
for IMAX as we significantly furthered implementation of our commercial strategy
with the successful release of two IMAX DMR(R) titles, built a solid release
slate for 2004 and introduced the IMAX(R) MPX(TM) theatre system. Given the
strong operating momentum of our business right now, we are extremely optimistic
about our future."
In 2003, the Company signed contracts for 25 theatres systems, which compares to
21 in 2002 including contracts for the re-opening of five theatres in Regal
multiplexes resulting from the settlement of bankruptcy litigation with Edwards
Theaters that year. During the fourth quarter, the Company signed new contracts
for seven IMAX theatre systems with an aggregate value of $10.8 million. This
compares to contracts for 11 IMAX theatres in the fourth quarter of 2002, which
included the five Regal re-openings. Noteworthy signings during the past quarter
included contracts for two IMAX MPX theatres with Nakheel LLC in Dubai, UAE and
a contract with Yelmo Cineplex, a Loews Cineplex joint venture in Spain, for
three retrofit IMAX MPX systems.
"The nine IMAX MPX orders from domestic and international exhibitors in 2003
demonstrated that commercial operators are interested in this exciting product,"
continued Messrs. Gelfond and Wechsler. "We are particularly encouraged by the
traction we are gaining with the IMAX MPX retrofit option, as witnessed by the
Yelmo signings. Based on the current level of discussions with exhibitors, we
expect a significant acceleration of IMAX MPX signings in 2004."
Following the successful IMAX DMR releases of The Matrix Reloaded: The IMAX
Experience last June and The Matrix Revolutions: The IMAX Experience in
November, Warner Bros. Pictures and IMAX announced on December 18, 2003 that
Harry Potter and the Prisoner of Azkaban, the third installment of the Harry
Potter film series, will be released to IMAX(R) theatres in addition to
conventional theatres in June 2004. The deal represented the third IMAX DMR film
commitment from Warner Bros. within the year. In addition to this film, IMAX is
in active discussions with Warner Bros. regarding an IMAX(R) 3D release of Polar
Express in November 2004 and an IMAX DMR release of Tim Burton's Charlie and the
Chocolate Factory in summer 2005.
"We are extremely pleased with the reaction of consumers to IMAX DMR based on
the successful releases of the Matrix films and impressive ticket price
premiums," continued Messrs. Gelfond and Wechsler. "We expect to release three
IMAX DMR releases this year, which would make 2004 the strongest commercial
release schedule in IMAX's history. With IMAX DMR continuing to gain acceptance
in Hollywood, we are growing even more optimistic about the place of IMAX
theatres as the newest release window for the industry's biggest event films."
In addition to IMAX DMR films, the Company's scheduled film slate over the next
two years will include highly anticipated IMAX 3D films. On March 12, 2004,
IMAX, in collaboration with Warner Bros., and with sponsorship from AOL, will
launch NASCAR 3D: The IMAX Experience in 68 IMAX theatres, marking the widest
domestic opening for an IMAX film in the Company's history. Early film reviews
have praised the film's spectacular visual display of emotion and excitement as
well as the film's wide appeal. IMAX recently announced that Lockheed Martin
will sponsor the next IMAX 3D space film, Magnificent Desolation, to be produced
by IMAX in association with Tom Hanks' and Gary Goetzman's Playtone. The film,
which will chronicle man's walking on the moon, is slated for release in 2005.
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IMAX recently completed the restructuring of its balance sheet by retiring a
portion of its long-term debt and refinancing its remaining senior notes through
a $160 million issue of new bonds due in December 2010. The Company also
recently improved its liquidity significantly with the closing of a $20 million
credit facility with Congress Financial of Canada. These improvements were
recognized by Moody's and Standard & Poor's, which each upgraded IMAX by two
notches over the past six months. Over the past two and a half years, IMAX has
reduced debt from $300 million to $160 million.
For the twelve-month period ended December 31, 2003, the Company's total
revenues were $119.3 million as compared to $129.1 million in the prior-year
period. Systems revenue was $75.8 million versus $71.0 million in the prior year
period, as the Company recognized revenues on 20 theatre systems as compared to
16 theatre systems in the prior-year period. Film revenue was $25.8 million
compared to $40.6 million in 2002. Theatre Operations revenue was $13.1 million
versus $12.3 million in the prior-year period. Other revenue was $4.5 million
compared to the $5.3 million reported in 2002.
The Company previously reported earnings from continuing operations of $0.05 per
diluted share for the year ended December 31, 2002. As a result of a
discontinued operation in December 2003, the loss from which has been included
into discontinued operations for all comparative periods, the Company's 2002
reported earnings from continuing operations increased from $0.05 per diluted
share, to a reported $0.09 per diluted share.
In the fourth quarter, the Company's total revenues were $29.9 million as
compared to $37.0 million in the prior year period. IMAX Systems revenue was
$19.9 million versus $20.3 million in the prior year period. Film revenue was
$6.2 million versus $11.5 million in the fourth quarter of 2002. The decline,
which was anticipated, was primarily attributed to the Company's record-breaking
film SPACE STATION in 2002. Theatre Operations revenue was $3.0 million versus
$3.8 million in the prior year period. Other revenue was $0.8 million in the
quarter versus $1.4 million in the fourth quarter of 2002.
The Company will be hosting a conference call to discuss these results at
10:30 AM EST. To access the call interested parties should call (719) 457-2692
approximately 10 minutes before it begins.
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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 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 December
2003, there were 240 IMAX theatres operating in more than 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,
2002 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 Jennifer Gery
212-821-0144 212-821-0144
rschutzer@imax.com jgery@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)
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
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2003 2002 2003 2002
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Revenue
IMAX systems $ 19,934 $ 20,288 $ 75,848 $ 70,959
Films 6,233 11,506 25,803 40,556
Theater operations 2,967 3,797 13,109 12,284
Other 799 1,387 4,500 5,303
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29,933 36,978 119,260 129,102
COSTS OF GOODS AND SERVICES 17,931 23,397 67,283 75,634
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GROSS MARGIN 12,002 13,581 51,977 53,468
Selling, general and administrative expenses 8,448 8,237 33,312 34,906
Research and development 961 661 3,794 2,362
Amortization of intangibles 101 351 573 1,418
Income from equity-accounted investees (1,995) (195) (2,496) (283)
Receivable provisions (recoveries), net (2,489) (1,288) (2,225) (1,233)
Restructuring costs and asset
impairments (recoveries) 969 376 969 (121)
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EARNINGS (LOSS) FROM OPERATIONS 6,007 5,439 18,050 16,419
Interest income 140 118 656 413
Interest expense (3,907) (4,483) (15,856) (17,564)
Gain (loss) on retirement of notes (4,577) (105) (4,910) 11,900
Recovery (impairment) of long-term investments 1,538 -- 1,892 --
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EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (799) 969 (168) 11,168
Recovery of (provision for) income taxes (14) -- 386 --
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NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS (813) 969 218 11,168
Net earnings (loss) from discontinued operations 488 (285) 195 804
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Net earnings (loss) before cumulative effect of
changes in accounting principles (325) 684 413 11,972
Cumulative effect of changes in
accounting principles (182) -- (182) --
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NET EARNINGS (LOSS) $ (507) $ 684 $ 231 $ 11,972
======== ======== ========= =========
EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share -- basic and diluted:
Net earnings (loss) from continuing operations $ (0.02) $ 0.03 $ 0.01 $ 0.34
Net earnings (loss) from discontinued operations $ 0.01 $ (0.01) $ -- $ 0.02
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Net earnings (loss) before cumulative effect of
changes in accounting principles (0.01) 0.02 0.01 0.36
Cumulative effect of changes in accounting
principles -- -- -- --
-------- -------- ------- -------
Net earnings (loss) $ (0.01) $ 0.02 $ 0.01 $ 0.36
======== ======== ======== ========
Weighted average number of shares
outstanding (000's):
Basic 38,843 32,973 35,663 32,943
Diluted 40,317 33,436 36,431 33,306
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IMAX CORPORATION
CONSOLIDATED BALANCE SHEETS
IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(In thousands of U.S. dollars)
AS AT DECEMBER 31,
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2003 2002
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ASSETS
Cash and cash equivalents $ 47,282 $ 33,801
Restricted cash 4,961 3,335
Accounts receivable, net of allowance for doubtful accounts of $7,278
(2002 -- $9,248) 13,887 15,054
Financing receivables 56,742 51,918
Inventories 28,218 34,092
Prepaid expenses 1,902 2,372
Film assets 1,568 419
Fixed assets 35,818 43,616
Other assets 13,827 10,455
Deferred income taxes 3,756 3,821
Goodwill 39,027 39,027
Other intangible assets 3,388 3,363
Assets of discontinued operations -- 1,703
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Total assets $ 250,376 $ 242,976
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LIABILITIES
Accounts payable $ 5,780 $ 6,167
Accrued liabilities 43,794 43,365
Deferred revenue 63,344 85,590
New Senior Notes due 2010 160,000 --
Old Senior Notes due 2005 29,234 200,000
Subordinated Notes due 2003 -- 9,143
Liabilities of discontinued operations -- 2,381
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Total liabilities 302,152 346,646
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COMMITMENTS, CONTINGENCIES AND GUARANTEES
SHAREHOLDERS' EQUITY (DEFICIT)
Capital stock Common shares -- no par value. Authorized --
unlimited number. Issued and outstanding -- 39,301,758
(202 -- 32,973,366) 115,609 65,563
Other equity 3,159 1,542
Deficit (171,189) (171,420)
Accumulated other comprehensive income 645 645
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Total shareholders' deficit (51,776) (103,670)
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Total liabilities and shareholders' equity (deficit) $ 250,376 $ 242,976
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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: March 11, 2004 By: "Bradley J. Wechsler"
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Name: Bradley J. Wechsler
Title: Co-Chairman and
Co-Chief Executive Officer