Release Details

NEW YORK, Feb. 20, 2014 /PRNewswire/ -- IMAX Corporation (NYSE:IMAX; TSX:IMX) today reported robust fourth quarter 2013 financial results driven by the combination of strong installations as well as its highest grossing quarterly global box office ever. The Company reported revenues for the fourth quarter 2013 of $105.1 million, adjusted EBITDA as calculated in accordance with the Company's credit facility of $52.2 million, adjusted net income of $30.8 million, or $0.44 per diluted share, and reported net income of $27.8 million, or $0.40 per diluted share. The Company also reported a fourth quarter per screen average of $366,300.

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Full year 2013 revenues were $287.9 million, adjusted EBITDA as calculated in accordance with the Company's credit facility was $113.2 million, adjusted net income was $55.7 million, or $0.81 per diluted share, and reported net income was $44.1 million, or $0.64 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. The Company also reported a 2013 per screen average of $1.15 million. With the exception of 2010, when the Company's per screen average was much higher driven by Avatar, the Company's per screen averages over the past 5 years have been in a range of approximately $1.1 to $1.2 million.

"IMAX fired on all cylinders in the fourth quarter, with an exceptional number of installations and signings, as well as the highest grossing box office in the Company's history," said IMAX CEO, Richard L. Gelfond. "Breakout performances by films such as Gravity, Hobbit, and Stalingrad internationally, exemplify the power and differentiation of the IMAX format." Gelfond continued, "The strong fourth quarter drove over 90% growth in our EBITDA compared to the same period last year, resulting in margin expansion and strong operating leverage for the full year. Overall, 2013 was a very exciting and productive year at IMAX as we effectively streamlined costs, expanded the network, signed a record number of deals and continued to execute on the film front."

Network Growth Update

In the fourth quarter of 2013, the Company signed contracts for 119 theatre systems and installed 58 theatre systems, of which 4 were upgrades of existing theatre locations, bringing the full year total installations to 112 new theatre systems across 23 countries. 

"With our footprint now spanning 57 countries, IMAX is more global than ever before," added Gelfond.  "Moving forward, we are focused on managing all aspects of our business to ensure that we take full advantage of attractive movie-going trends unique to each local market and that we secure IMAX's position as the world's premium cinematic experience. Our record level of signings in 2013 will drive ongoing network growth, and we are optimistic about what the future holds."

The total IMAX® theatre network consisted of 837 systems as of December 31, 2013, of which 701 were in commercial multiplexes.  IMAX signed contracts for 277 theatres in 2013, across 31 countries, resulting in 407 theatre systems in backlog as of December 31, 2013, compared to 276 theatre systems in backlog as of December 31, 2012.  For a breakdown of theatre system signings, installations, network and backlog by type, please see the end of this press release.

Fourth-Quarter Segment Results

• Revenue from sales and sales-type leases was $32.6 million in the fourth quarter of 2013, compared to $20.2 million in the fourth quarter of 2012, primarily reflecting the installation of 24 full, new theatre systems under sales and sales-type lease arrangements in the most recent fourth quarter, compared to the 14 in the fourth quarter of 2012.  In addition there were 4 digital system upgrades in existing locations in the fourth quarter of 2013, compared to 3 upgrades in the fourth quarter of 2012.
• Revenue from joint revenue-sharing arrangements was $24.5 million in the quarter, compared to $17.0 million in the prior-year period.  During the quarter, the Company installed 30 new theatres under joint revenue-sharing arrangements, compared to 29 in the year ago period.  The Company had 382 theatres operating under joint revenue-sharing arrangements as of December 31, 2013, as compared to 316 theatres one year prior.
• Production and IMAX DMR® (Digital Re-Mastering) revenues were $28.6 million in the fourth quarter of 2013, compared to $19.2 million in the fourth quarter of 2012.  Gross box office from DMR titles was $244.5 million in the fourth quarter of 2013, compared to $152.0 million in the prior-year period.  The average global DMR box office per screen in the fourth quarter of 2013 was $366,300 compared to $264,400 in the prior-year period.

Conference Call

The Company will host a conference call today at 8:30 AM ET to discuss its fourth quarter and full year 2013 financial results. To access the call via telephone, interested parties in the US and Canada should dial (800) 820-0231 approximately 5 to 10 minutes before the call begins.  International callers should dial (416) 640-5926. The conference ID for the call is 9729185. 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 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 9729185.

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 Dec. 31, 2013, there were 837 IMAX theatres (701 commercial multiplexes, 19 commercial destinations and 117 institutions) in 57 countries.

IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D Experience®, The IMAX Experience®, IMAX Is Believing® and IMAX nXos® 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, references to future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, plans and references to the future success of IMAX Corporation together with its wholly-owned subsidiaries (the "Company") and expectations regarding the Company's future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, general economic, market or business conditions; 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; 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; risks related to the Company's growth and operations in China; the failure to respond to change and advancements in digital technology; the Company's largest customer accounting for a significant portion of the Company's revenue and backlog; risks related to new business initiatives; 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 the Company's implementation of a new enterprise resource planning system; the failure to convert theater system backlog into revenue; risks related to the Company's dependence on a sole supplier for its analog film; and other factors, many of which are beyond the control of the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX's most recent Annual Report on Form 10-K.

For additional information please contact:

Additional Information

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Additional Information (continued)

2013 DMR Films:  

In 2013, 38 films were converted through the IMAX DMR process and released to theaters in the IMAX network by film studios as compared to 35 films in 2012. These films were:

• The Grandmaster: The IMAX Experience (Jet Tone Films and Sil-Metropole Organization, January 2013, China only);
• Hansel & Gretel: Witch Hunters: An IMAX 3D Experience (Paramount Pictures, January 2013);
• Top Gun: An IMAX 3D Experience (Paramount Pictures, February 2013);
• Journey to the West: Conquering the Demons: An IMAX 3D Experience (Bingo Movie Development Ltd, February 2013, China only);
• A Good Day to Die Hard: The IMAX Experience (Twentieth Century Fox, February 2013);
• Jack the Giant Slayer: An IMAX 3D Experience (Warner Bros. Pictures, March 2013);
• Oz: The Great and Powerful: An IMAX 3D Experience (Walt Disney Pictures, March 2013);
• G.I. Joe: Retaliation: An IMAX 3D Experience (Paramount Pictures, March 2013);
• Dragon Ball Z: Battle of the Gods: An IMAX 3D Experience (Toei Animation Company, March 2013, Japan only);
• Jurassic Park: An IMAX 3D Experience (Universal Pictures, April 2013);
• Oblivion: The IMAX Experience (Universal Pictures, April 2013);
• Iron Man 3: An IMAX 3D Experience (Walt Disney Pictures, May 2013);
• Star Trek: Into Darkness: An IMAX 3D Experience (Paramount Pictures, May 2013);
• Fast & Furious 6: The IMAX Experience (Universal Pictures, May 2013, select international markets);
• After Earth: The IMAX Experience (Columbia Pictures, May 2013);
• Man of Steel: The IMAX Experience (Warner Bros. Pictures, June 2013);
• World War Z: An IMAX 3D Experience (Paramount Pictures, June 2013, select international markets);
• Despicable Me 2: An IMAX 3D Experience (Universal Pictures, July 2013, select international markets);
• White House Down: The IMAX Experience (Sony Pictures, July 2013, select international markets);
• Man of Tai Chi: The IMAX Experience (China Film Group, Wanda Group, Village Roadshow, July 2013, China only);
• Lone Ranger: The IMAX Experience (Walt Disney Pictures, July 2013, select international markets);
• Pacific Rim: An IMAX 3D Experience (Warner Bros. Pictures, July 2013);
• Elysium: The IMAX Experience (Sony Pictures, August 2013);
• The Mortal Instruments: City of Bones: The IMAX Experience (Sony Pictures, August 2013);
• Riddick Sequel: The IMAX Experience (Universal Pictures, September 2013);
• The Wizard of Oz: An IMAX 3D Experience (Picturehouse, September 2013);
• Young Detective Dee: Rise of the Sea Dragon: An IMAX 3D Experience (Huayi Bros., September 2013, China only);
• Metallica Through the Never: An IMAX 3D Experience (Warner Bros. Pictures, September 2013);
• Gravity: An IMAX 3D Experience (Warner Bros. Pictures, October 2013);
• Stalingrad: An IMAX 3D Experience (AR Films, October 2013, Russia and the CIS only);
• Captain Phillips: The IMAX Experience (Sony Pictures, October 2013);
• The Young and Prodigious T.S. Spivet: An IMAX 3D Experience (Epithète Films., October 2013, France only);
• Thor: The Dark World: An IMAX 3D Experience (Walt Disney Pictures, October 2013, select international markets);
• Ender's Game: The IMAX Experience (Lionsgate, November 2013);
• The Hunger Games: Catching Fire: The IMAX Experience (Lionsgate, November 2013);
• The Hobbit: The Desolation of Smaug: An IMAX 3D Experience (Warner Bros. Pictures, December 2013);
• Dhoom 3: The IMAX Experience (Yash Raj Films, December 2013, India only); and
• Police Story: An IMAX 3D Experience (China Vision, December 2013, China only).

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 and adjusted net income per diluted share 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 and adjusted net income per diluted share 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 (net of any related tax impact) 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 and adjusted net income per diluted share 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 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 Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.1:1. The Company will also be required to maintain minimum EBITDA (as defined in the Credit Agreement) of $80.0 million on December 31, 2013, which increases to $90.0 million on December 31, 2014, and $100.0 million on December 31, 2015. The Company must also maintain a Maximum Total Leverage Ratio (as defined in the Credit Agreement) of 2.25:1 on December 31, 2013, which requirement decreases to 2.0:1 on December 31, 2014, and 1.75:1 on December 31, 2015. The ratio of total debt to EBITDA was nil:1 as at December 31, 2013, where Total Debt (as defined in the Credit Agreement) is the sum of all obligations evidenced by notes, bonds, debentures or similar instruments and was $nil. EBITDA is calculated as follows:

IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended December 31, 2013 vs. 2012:

The Company reported net income of $27.8 million or $0.41 per basic share and $0.40 per diluted share for the fourth quarter of 2013 as compared to $12.9 million or $0.20 per basic share and $0.19 per diluted share for the fourth quarter of 2012. Net income for the quarter includes a $3.2 million charge or $0.04 per diluted share (2012 – $2.9 million or $0.04 per diluted share) for stock-based compensation. Adjusted net income, which consists of net income excluding the impact of stock-based compensation and the related tax impact, was $30.8 million or $0.44 per diluted share in the fourth quarter of 2013 as compared to adjusted net income of $15.7 million or $0.23 per diluted share for the fourth quarter of 2012. 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:

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Year Ended December 31, 2013 vs. 2012:

The Company reported net income of $44.1 million or $0.66 per basic share and $0.64 per diluted share for the year ended December 31, 2013 as compared to net income of $41.3 million or $0.63 per basic share and $0.61 per diluted share for the year ended December 31, 2012. Net income for the year ended December 31, 2013 includes an $11.9 million charge or $0.17 per diluted share (2012 — $13.1 million or $0.19 per diluted share) for stock-based compensation. Adjusted net income, which consists of net income excluding the impact of stock-based compensation and the related tax impact, was $55.7 million or $0.81 per diluted share for the year ended December 31, 2013 as compared to adjusted net income of $54.3 million or $0.80 per diluted share for the year ended December 31, 2012. 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:

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:

SOURCE IMAX Corporation