================================================================================
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): November 10, 2003
IMAX CORPORATION
-----------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
CANADA
-----------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-24216 98-0140269
-----------------------------------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
2525 SPEAKMAN DRIVE, SHERIDAN PARK, MISSISSAUGA, ONTARIO L5K 1B1
-----------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(905) 403-6500
-----------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
-----------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
================================================================================
2
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On November 10, 2003, IMAX Corporation (the "Company") issued a press
release announcing the Company's financial and operating results for the quarter
ended September 30, 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.
3
[IMAX LOGO]
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 RESULTS
HIGHLIGHTS
o The Matrix Revolutions: The IMAX Experience breaks box office records,
grossing over $3 million in 48 IMAX(R) theatres in North America in its first
five days.
o Net losses of $0.07 per share consistent with guidance. Company expects to
earn $0.10 to $0.15 for all of 2003 before a potential one-time charge.
o Company reduces debt by an additional $15.7 million in October.
o Commercial business momentum continues with five theatre systems signings in
third quarter and three additional signings since September.
Toronto, Canada - November 10, 2003 - IMAX Corporation (Nasdaq:IMAX; TSX:IMX)
today reported net losses of $0.07 per share on a basic and fully diluted basis,
including a gain of $0.01 from discontinued operations, for the quarter ended
September 30, 2003. The results compare to net losses of $0.07 in the comparable
period of 2002 and are consistent with guidance. Net losses from continuing
operations were $0.08 per share on a basic and fully diluted basis for the third
quarter ended September 30, 2003, as compared to losses from continuing
operations of $0.13 per share for the three months ending September 30, 2002.
On November 5th, The Matrix Revolutions: The IMAX Experience, the first
contemporaneous release of a live-action Hollywood event film in IMAX and 35mm
theatres, set numerous one-day and weekend box office records, grossing over $3
million on 48 screens in North America, an average of almost $65,000 per screen,
over its five-day opening. The international IMAX screens also performed
exceptionally well, selling out the majority of shows while charging premiums of
up to three times the ticket price at conventional theatres.
"The results from our first contemporaneous release are in, and we couldn't
possibly be happier with the performance," said IMAX Co-Chief Executive Officers
Richard L. Gelfond and Bradley J. Wechsler. "In many IMAX theatres the only
limiting factor was running out of seats, with most of the IMAX network sold out
for the majority of the weekend. We believe these results, which come on the
heels of a highly successful IMAX release of The Matrix Reloaded, further
solidify IMAX's place in the release strategy for Hollywood event films."
4
The Matrix Revolutions: The IMAX Experience is the most successful opening of an
IMAX(R) DMR(TM) release to date. The North American per-screen revenue for the
film's three-day weekend, at $37,000, was more than double that of The Matrix
Reloaded: The IMAX Experience in its first weekend. Additionally, on just its
opening day, The Matrix Revolutions: The IMAX Experience earned approximately
$16,000 per screen selling out 6:00 a.m. shows across the west coast and
charging an average adult ticket price of over $11.00, a premium of greater than
$2.50 versus conventional theatres. Independent research performed over this
initial period was also very positive, indicating that 87% of those polled who
saw the film at an IMAX theatre would recommend seeing the film to others who
had already seen it in a 35mm theatre.
In October, the Company retired an additional $15.7 million in outstanding
senior notes through a series of debt-for-equity transactions, lowering the
principal amount of its outstanding notes to $153 million. Separately, the
Company announced that it plans to refinance all of its outstanding debt through
an offering of new senior notes with a proposed maturity of 2010. The Company
may take a charge to its earnings in the fourth quarter in relation to this
proposed offering.
"We remain pleased with IMAX's financial results, which reflect the seasonality
of our business and show a continued improvement over last year's performance,"
said Messrs. Gelfond and Wechsler. "We believe that many of the initiatives that
IMAX is currently undertaking will be reflected in our financial results in 2004
and beyond, as our IMAX DMR technology and lower cost IMAX(R) MPX(TM) projection
system begin to have an accelerating effect on new theatre signings." Messrs.
Gelfond and Wechsler indicated that the Company expects to earn between $0.25
and $0.35 per share in 2004, approximately double the Company's expected 2003
earnings.
During the quarter, the Company signed new contracts for five IMAX theatre
systems, including additional theatres to be opened by current IMAX customers in
China and Moscow and a deal with Bella Films in Missouri, launching an
initiative that may include future contracts for additional IMAX theatres.
Subsequent to the end of the quarter, the Company singed deals for three
additional systems, including a contract for two IMAX MPX theatres with a
commercial property developer in Dubai, UAE.
During the first nine months of 2003, the Company signed contracts for 18
theatre systems as compared to 10 during the first nine months of 2002. Trailing
12-month IMAX theatre systems signings stand at 29, which is an increase of over
60% compared to 18 signings during the prior 12-month period.
In the third quarter, the Company's total revenues were $21.4 million as
compared to $23.2 million in the prior year period. IMAX systems revenue was
$11.5 million versus $9.6 million in the prior year period, as the Company
recognized revenues on one theatre system in the third quarter of 2003,
consistent with the one theatre system installed during the in the third quarter
of 2002. Film revenue was $5.3 million versus $9.8 million in the third quarter
of 2002, a decline primarily due to last year's release of the Company's
record-breaking film SPACE STATION. Other revenue was $4.7 million in the
quarter versus $3.8 million in the third quarter of 2002.
For the nine months ended September 30, 2003, the Company's revenues were $90.2
million as compared to $93.3 million in the prior-year period. Systems revenue
was $55.9 million versus $50.7 million in the prior year period, as the Company
recognized revenues on 15 theatre systems as compared to 11 theatre systems in
the prior-year period. Films revenue was $19.6 million compared to $29.1
million. Other revenue was $14.7 million versus $13.6 million. For the nine
months ended September 30, 2003, the company broke even in terms of net earnings
per share from continuing operations on a fully diluted basis. During the first
nine months of 2002, the Company earned $0.34 per share, which included a gain
of $12 million from the repurchase of certain of the Company's subordinated
notes.
5
The Company will be hosting a conference call to discuss these results at 10:30
AM EDT. To access the call interested parties should call (719) 457-2727.
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(R) 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 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 experiences. As of September 30 2003, there
were more than 235 IMAX theatres operating in 35 countries.
IMAX(R), IMAX(R) 3D, IMAX(R)DMR(TM) and The IMAX Experience(R) 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 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
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 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
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
6
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 ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- ----------------------------
2003 2002 2003 2002
------------- -------------- ------------- -------------
REVENUE
IMAX systems $ 11,455 $ 9,574 $ 55,913 $ 50,671
Films 5,275 9,786 19,570 29,050
Other 4,697 3,819 14,676 13,584
------------- ------------- ------------- -------------
21,427 23,179 90,159 93,305
COSTS OF GOODS AND SERVICES 12,081 16,397 51,075 54,427
------------- ------------- ------------- -------------
GROSS MARGIN 9,346 6,782 39,084 38,878
Selling, general and administrative expenses 8,265 7,564 24,864 26,672
Research and development 952 900 2,833 1,701
Amortization of intangibles 181 339 473 1,067
Income from equity-accounted investees (228) (167) (501) (88)
Receivable provisions, net of (recoveries) (425) (1,173) 264 53
Restructuring recoveries - (497) - (497)
------------- ------------- ------------- -------------
EARNINGS (LOSS) FROM OPERATIONS 601 (184) 11,151 9,970
Interest income 105 106 515 295
Interest expense (3,606) (4,299) (11,949) (13,048)
Gain (loss) on retirement of notes (146) 17 (333) 12,005
Recovery on long-term investments 355 - 355 -
------------- ------------- ------------- -------------
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES (2,691) (4,360) (261) 9,222
Recovery of (provision for) income taxes (163) - 400 -
------------- ------------- ------------- -------------
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS (2,854) (4,360) 139 9,222
Net earnings from discontinued operations 200 2,066 599 2,066
------------- ------------- ------------- -------------
NET EARNINGS (LOSS) $ (2,654) $ (2,294) $ 738 $ 11,288
============= ============= ============= =============
EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share - basic and fully diluted:
Net earnings (loss) from continuing operations $ (0.08) $ (0.13) $ - $ 0.28
Net earnings from discontinued operations $ 0.01 $ 0.06 $ 0.02 $ 0.06
------------- ------------- ------------- -------------
Net earnings (loss) $ (0.07) $ (0.07) $ 0.02 $ 0.34
============= ============= ============= =============
Weighted average number of shares outstanding (000's):
Basic 37,091 32,962 34,592 32,933
Fully diluted 37,091 32,962 35,124 33,263
7
IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(in thousands of U.S. dollars)
SEPTEMBER 30,
2003 DECEMBER 31,
(UNAUDITED) 2002
----------- ------------
ASSETS
Cash and cash equivalents $ 23,595 $ 37,136
Accounts receivable, less allowance for doubtful accounts of $9,192
(2002 - $9,248) 13,285 15,054
Financing receivables 53,914 51,918
Inventories 29,012 34,092
Prepaid expenses 2,999 2,383
Film assets 580 419
Fixed assets 40,242 45,308
Other assets 8,801 10,455
Deferred income taxes 3,821 3,821
Goodwill 39,027 39,027
Other intangible assets 3,765 3,363
----------- ------------
Total assets $ 219,041 $ 242,976
=========== ============
LIABILITIES
Accounts payable $ 6,115 $ 6,768
Accrued liabilities 44,824 43,451
Deferred revenue 68,529 87,284
Senior notes due 2005 168,475 200,000
Convertible subordinated notes due 2003 - 9,143
----------- ------------
Total liabilities 287,943 346,646
----------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock - no par value. Authorized - unlimited number
Issued and outstanding - 37,353,298 (2002 - 32,973,366) 98,695 65,563
Other equity 2,440 1,542
Deficit (170,682) (171,420)
Accumulated other comprehensive income 645 645
----------- ------------
Total shareholders' equity (deficit) (68,902) (103,670)
----------- ------------
Total liabilities and shareholders' equity (deficit) $ 219,041 $ 242,976
=========== ============
8
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: November 10, 2003 By: /s/ Richard L. Gelfond
--------------------------------
Name: Richard L. Gelfond
Title: Co-Chairman and
Co-Chief Executive Officer