Form 8-K IMAX CORP For: Jul 20
Tweet
Share
E-mail
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
July 20, 2016
Date of report (Date of earliest event reported)
IMAX Corporation
(Exact Name of Registrant as Specified in Its Charter)
| Canada | 1-35066 | 98-0140269 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) | ||
| 2525 Speakman Drive Mississauga, Ontario, Canada L5K 1B1 (905) 403-6500 |
110 E. 59th Street, Suite 2100 New York, New York, USA 10022 (212) 821-0100 | |||
(Address of principal executive offices, zip code, telephone numbers)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On July 20, 2016, IMAX Corporation (the “Company”) issued a press release announcing the Company’s financial and operating results for the quarter ended June 30, 2016, a copy of which is attached as Exhibit 99.1.
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 or otherwise subject to the liabilities of that section, 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 in such filing.
Item 9.01 Financial Statements and Exhibits
| (d) | Exhibits |
| Exhibit No. |
Description | |
| 99.1 | Press Release dated July 20, 2016. | |
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: July 20, 2016 | By: | /s/ Richard L. Gelfond | ||
| Name: | Richard L. Gelfond | |||
| Title: | Chief Executive Officer & Director | |||
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 REPORTS SECOND-QUARTER 2016 FINANCIAL RESULTS
HIGHLIGHTS
| - | Robust Q2 2016 signings of 95 IMAX® theatre systems, up 217% year-over-year |
| - | IMAX increases 2016 installation guidance to 155 theatres, up from original 2016 guidance of 115 to 120 theatres, underscoring strong worldwide demand for IMAX theatres |
| - | Record backlog of 442 systems represents 40% growth to existing network of 1,102 theatres |
NEW YORK – July 20, 2016 – IMAX Corporation (NYSE: IMAX) today reported second-quarter 2016 revenues of $91.7 million and GAAP net income after non-controlling interest of $7.8 million, or $0.11 per share. Adjusted net income after non-controlling interest was $12.1 million, or $0.18 per diluted share. EBITDA as calculated in accordance with the Company’s credit facility was $29.0 million. For reconciliations of adjusted net income to reported net income, adjusted earnings per share to reported earnings per share, and for the definition and reconciliation of EBITDA as calculated in accordance with the Company’s credit facility, please see the tables at the end of this press release.
“Demand for IMAX theatres has never been stronger and bodes well for our business as more signings lead to more installs, which then lead to more box office, and, ultimately, to greater revenue. Including the 95 theatres signed in the second quarter, we have signed nearly as many deals in the first half of 2016 as we did in all of 2015. This robust signings momentum has resulted in a record backlog, which includes a 40-theatre full revenue-share agreement with Guangzhou JinYi Media Corporation, a 25-theatre deal with AMC Theatres and additional multi-theatre agreements with several other key exhibition partners, and improves visibility into installations and ultimately revenue over the next several years. As a result, we are once again raising our installation guidance –this time to 155 theatres, up from our prior guidance range of 135 to 140 theatres and compared to our original 2016 install guidance range of 115 to 120 that was set late last year,” said IMAX CEO Richard L. Gelfond.
Network Update:
During the quarter, the Company installed 40 theatres, of which 38 were for new theatre locations and two were upgrades. The Company also signed contracts for 95 theatres in the second quarter of 2016. The total IMAX theatre network consisted of 1,102 systems as of June 30, 2016, of which 990 were in commercial multiplexes. There were 442 theatres in backlog as of June 30, 2016, up 14% from the 388 in backlog as of March 31, 2016. For a breakdown of theatre system signings, installations, network and backlog by type, please see the end of this press release.
Box Office Update:
Gross box office from IMAX DMR® titles was $260.8 million in the second quarter of 2016, compared with $343.0 million in the prior-year period, which was the highest-grossing box office quarter in Company history and included Furious 7, Jurassic World, and Avengers: Age of Ultron last year. The average global DMR box office per-screen average in the second quarter of 2016 was $268,200.
1
“While IMAX faced a challenging comparison to last year’s second-quarter box office – which was the highest-grossing box office quarter in Company history – considering the strong outperformance in box office we saw in the first quarter, we believe our portfolio of titles released across the full year will result in an annual box office that is relatively consistent with our historical PSA. Looking ahead, we expect our heightened network growth in 2016, which is heavily weighted towards our joint revenue-sharing model, will position us well to capitalize on a promising array of upcoming tentpole franchises and sequels this year and next, including Suicide Squad, Marvel’s Dr. Strange, Fantastic Beasts and Where to Find Them, Rogue One: A Star Wars Story, Kong: Skull Island, Guardians of the Galaxy Vol. 2, Spider-Man Homecoming, and, of course, Star Wars: Episode VIII.”
Second-Quarter Segment Results
| • | Revenue from sales and sales-type leases was $18.7 million in the second quarter of 2016, compared with $18.7 million in the second quarter of 2015. The Company installed 13 full theatre systems under sales and sales-type lease arrangements in the most recent quarter, compared with the 15 full sales-type theatres the Company installed in the second quarter of 2015. |
| • | Revenue from joint revenue-sharing arrangements was $23.9 million in the quarter, compared with $31.6 million in the prior-year period. During the quarter, the Company installed 25 new theatres under joint revenue-sharing arrangements, compared with 20 in the second quarter of 2015. The Company had 559 theatres operating under joint revenue-sharing arrangements as of June 30, 2016, as compared to 477 joint revenue-sharing theatres one year prior. |
| • | Production and DMR revenues were $27.4 million in the second quarter of 2016, compared with $36.6 million in the second quarter of 2015. As mentioned above, gross box office from DMR titles was $260.8 million in the second quarter of 2016, compared with $343.0 million in the prior-year period, which was the highest grossing box office quarter in Company history and included Furious 7, Jurassic World, and Avengers: Age of Ultron last year. The global DMR per screen average in the second quarter of 2016 was $268,200, compared with $414,600 in same period last year. |
| • | Gross margin of 54.8%, compared with 64.4% last year, primarily resulting from lower box office, higher DMR cost and a larger mix of hybrid sales in the quarter. |
| • | Operating expenses (which include SG&A and R&D, and excludes stock-based compensation) were $27.7 million in the quarter, compared with $26.3 million in the second quarter of 2015. |
Share Buybacks
The Company repurchased 1,344,094 shares in the second quarter of 2016, which does not include 68,430 shares purchased in connection with the Company’s long-term incentive plan. The Company purchased the shares at an average price of $30.55, for a total value of $41.1 million.
Conference Call
The Company will host a conference call today at 4:30 PM ET to discuss its second-quarter 2016 financial results. To access the call via telephone, interested parties in the US and Canada should dial (800) 505-9568 approximately 5 to 10 minutes before the call begins. Other international callers should dial (416) 204-9271. The conference ID for the call is 1146762. 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 1146762.
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.
2
IMAX is headquartered in New York, Toronto and Los Angeles, with offices in London, Tokyo, Shanghai and Beijing. As of Jun. 30, 2016, there were 1,102 IMAX theatres (990 commercial multiplexes, 16 commercial destinations and 96 institutions) in 69 countries. On Oct. 8, 2015, shares of IMAX China, a subsidiary of IMAX Corp., began trading on the Hong Kong Stock Exchange under the stock code “HK.1970.”
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 consolidated 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, the signing of theater system agreements; conditions, changes and developments in the commercial exhibition industry; the performance of IMAX DMR films; the potential impact of increased competition in the markets within which the Company operates; competitive actions by other companies; the failure to respond to change and advancements in digital technology; 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 Company’s largest customer accounting for a significant portion of the Company’s revenue and backlog; risks related to new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security; risks related to the Company’s inability to protect its intellectual property; risks related to the Company’s implementation of a new enterprise resource planning system; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; 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 and Quarterly Reports on Form 10-Q.
For additional information please contact:
|
Investors: IMAX Corporation, New York Jessica Kourakos 212-821-0100
Michael Mougias 212-821-0187
Business Media: Sloane & Company, New York
Whit Clay 212-446-1864
|
Media: IMAX Corporation, New York Ann Sommerlath 212-821-0155
Entertainment Media: Principal Communications Group, Los Angeles Melissa Zuckerman/Paul Pflug 323-658-1555 |
3
Additional Information
| Signings and Installations | ||||||||
| June 30, 2016 |
||||||||
| Three Months Ended June 30, | ||||||||||||
| Theater Si gnings: | 2016 | 2015 | ||||||||||
| Full new sales and sales-type lease arrangements |
19 | 19 | (1) | |||||||||
| New joint revenue sharing arrangements |
75 | 9 | ||||||||||
|
|
|
|
|
|||||||||
| Total new theaters |
94 | 28 | ||||||||||
| Upgrades of IMAX theater systems |
1 | 2 | ||||||||||
|
|
|
|
|
|||||||||
| Total Theater Signings |
95 | 30 | ||||||||||
|
|
|
|
|
|||||||||
| Three Months Ended June 30, |
||||||||||||
| Theater Installations: | 2016 | 2015 | ||||||||||
| Full new sales and sales-type lease arrangements |
13 | (2) | 15 | (2) | ||||||||
| New joint revenue sharing arrangements |
25 | 20 | ||||||||||
|
|
|
|
|
|||||||||
| Total new theaters |
38 | 35 | ||||||||||
| Upgrades of IMAX theater systems |
2 | (3) | - | |||||||||
|
|
|
|
|
|||||||||
| Total Theater Installations |
40 | 35 | ||||||||||
|
|
|
|
|
|||||||||
| As of June 30, | ||||||||||||
| Theater Backlog: | 2016 | 2015 | ||||||||||
| New sales and sales-type lease arrangements |
178 | 181 | ||||||||||
| New joint revenue sharing arrangements |
264 | 210 | ||||||||||
|
|
|
|
|
|||||||||
| Total new theaters |
442 | (4)(5) | 391 | (4)(6) | ||||||||
|
|
|
|
|
|||||||||
| As of June 30, | ||||||||||||
| Theater Network: | 2016 | 2015 | ||||||||||
| Commercial Multiplex Theaters: |
||||||||||||
| Sales and sales-type lease arrangements |
431 | 375 | ||||||||||
| Joint revenue sharing arrangements |
559 | 477 | ||||||||||
|
|
|
|
|
|||||||||
| Total Commercial Multiplex Theaters |
990 | 852 | ||||||||||
| Commercial Destination Theaters |
16 | 20 | ||||||||||
| Institutional Theaters |
96 | 104 | ||||||||||
|
|
|
|
|
|||||||||
| Total IMAX Theater Network |
1,102 | 976 | ||||||||||
|
|
|
|
|
|||||||||
| (1) | Includes one signing which replaced a theatre system under an existing arrangement in backlog. |
| (2) | Includes one used theater system (2015 – one theater system). |
| (3) | Includes one installation of an upgrade to a laser-based digital system and one upgrade to a xenon-based digital system under sales and sales-type lease arrangements. |
| (4) | Includes 19 laser-based digital theater system configurations (2015 – 73), including upgrades. The Company continues to develop and roll out its laser-based digital projection system. |
| (5) | Includes seven upgrades to a digital theater system, in existing IMAX theater locations (one xenon configuration and six laser configurations). |
| (6) | Includes 24 upgrades to a digital theater system, in existing IMAX theater locations (two xenon configurations and 22 laser configurations, of which five are under joint revenue sharing arrangements). |
4
Additional Information (continued)
In addition to the 21 IMAX DMR films released to the IMAX theater network during the first six months ended June 30, 2016, 21 additional IMAX DMR films have been announced so far to be released in the remaining six months of 2016:
| • | Ice Age: Collision Course: An IMAX 3D Experience (20th Century Fox, July 2016); |
| • | The BFG: An IMAX 3D Experience (Walt Disney Studios, July 2016); |
| • | Jason Bourne: The IMAX Experience (Universal Studios, July 2016); |
| • | Godzilla: Resurgence: The IMAX Experience (Toho-Towa Company, Ltd., July 2016, Japan only); |
| • | Cold War 2: An IMAX 3D Experience (Edko Films, July 2016, China only); |
| • | Ghostbusters: An IMAX 3D Experience (Sony Pictures, July 2016); |
| • | For A Few Bullets: The IMAX Experience (Wanda Media Co., July 2016, China only); |
| • | Star Trek Beyond: An IMAX 3D Experience (Paramount Pictures, July 2016); |
| • | Skiptrace: An IMAX 3D Experience (Talent Int., August 2016, China only); |
| • | Time Raiders: An IMAX 3D Experience (Le Vision Pictures, August 2016, China only); |
| • | Suicide Squad: An IMAX 3D Experience (Warner Bros. Pictures, August 2016); |
| • | Ben-Hur: An IMAX 3D Experience (Paramount Pictures, August 2016); |
| • | Sully: The IMAX Experience (Warner Bros. Pictures, September 2016); |
| • | The Magnificent Seven: The IMAX Experience (Sony Pictures, September 2016); |
| • | Deepwater Horizon: The IMAX Experience (Lionsgate Entertainment, September 2016); |
| • | Inferno: The IMAX Experience (Sony Pictures, October 2016); |
| • | Jack Reacher: Never Go Back: The IMAX Experience (Paramount Pictures, October 2016); |
| • | The Duelist: The IMAX Experience (Non-Stop Production LLC, October 2016, Russia only); |
| • | Doctor Strange: An IMAX 3D Experience (Walt Disney Studios, November 2016); |
| • | Fantastic Beasts and Where to Find Them: An IMAX 3D Experience (Warner Bros. Pictures, November 2016); and |
| • | Rogue One: A Star Wars Story: An IMAX 3D Experience (Walt Disney Studios, December 2016). |
In addition, the Company will be releasing an IMAX documentary film, Voyage of Time, on October 7, 2016.
To date, the Company has announced the following 13 titles to be released in 2017 to the IMAX theater network:
| • | Attraction: An IMAX 3D Experience (Art Pictures Studio, January 2017, Russia only); |
| • | God Particle: The IMAX Experience (Paramount Pictures, February 2017); |
| • | Untitled Wolverine Film: The IMAX Experience (20th Century Fox, March 2017); |
| • | Kong: Skull Island: An IMAX 3D Experience (Warner Bros. Pictures, March 2017); |
| • | Ghost in the Shell: An IMAX 3D Experience (Paramount Pictures, March 2017); |
| • | Guardians of the Galaxy Vol. 2: An IMAX 3D Experience (Walt Disney Studios, May 2017); |
| • | Pirates of the Caribbean: Dead Men Tell No Tales: An IMAX 3D Experience (Walt Disney Studios, May 2017); |
| • | Transformers: The Last Knight: An IMAX 3D Experience (Paramount Pictures, June 2017); |
| • | Spider-Man: Homecoming: An IMAX 3D Experience (Sony Pictures, July 2017); |
| • | Dunkirk: The IMAX Experience (Warner Bros. Pictures, July 2017); |
| • | Thor: Ragnarök: An IMAX 3D Experience (Walt Disney Studios, November 2017); |
| • | Justice League: An IMAX 3D Experience (Warner Bros. Pictures, November 2017); and |
| • | Star Wars: Episode VIII: An IMAX 3D Experience (Walt Disney Studios, December 2017); |
The Company remains in active negotiations with all of the major Hollywood studios for additional films to fill out its short and long-term film slate, and anticipates that a similar number of IMAX DMR films will be released to the IMAX network in 2016 to the 44 films that were released to the IMAX network in 2015.
5
IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except per share amounts)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenues |
||||||||||||||||
| Equipment and product sales |
$ | 26,489 | $ | 25,305 | $ | 50,229 | $ | 39,741 | ||||||||
| Services |
41,385 | 50,958 | 85,658 | 82,674 | ||||||||||||
| Rentals |
20,752 | 28,527 | 42,531 | 42,341 | ||||||||||||
| Finance income |
2,367 | 2,229 | 4,703 | 4,474 | ||||||||||||
| Other |
750 | 141 | 750 | 141 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 91,743 | 107,160 | 183,871 | 169,371 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Costs and expenses applicable to revenues |
||||||||||||||||
| Equipment and product sales |
15,594 | 13,521 | 33,385 | 21,061 | ||||||||||||
| Services |
20,528 | 19,495 | 38,124 | 34,302 | ||||||||||||
| Rentals |
5,298 | 5,109 | 9,863 | 8,992 | ||||||||||||
| Other |
46 | – | 46 | – | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 41,466 | 38,125 | 81,418 | 64,355 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross margin |
50,277 | 69,035 | 102,453 | 105,016 | ||||||||||||
| Selling, general and administrative expenses |
30,436 | 29,023 | 62,020 | 57,375 | ||||||||||||
| (including share-based compensation expense of $6.2 million and $14.7 million for the three and six months ended June 30, 2016, respectively (2015 – expense of $5.1 million and $10.7 million, respectively)) |
||||||||||||||||
| Research and development |
3,435 | 2,347 | 7,143 | 6,889 | ||||||||||||
| Amortization of intangibles |
515 | 443 | 1,006 | 873 | ||||||||||||
| Receivable provisions, net of recoveries |
230 | 343 | 356 | 348 | ||||||||||||
| Impairment of investments |
194 | 350 | 194 | 350 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from operations |
15,467 | 36,529 | 31,734 | 39,181 | ||||||||||||
| Interest income |
380 | 259 | 847 | 505 | ||||||||||||
| Interest expense |
(458 | ) | (403 | ) | (856 | ) | (707 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from operations before income taxes |
15,389 | 36,385 | 31,725 | 38,979 | ||||||||||||
| Provision for income taxes |
(3,366 | ) | (9,256 | ) | (7,084 | ) | (9,931 | ) | ||||||||
| Loss from equity-accounted investments, net of tax |
(1,340 | ) | (749 | ) | (1,781 | ) | (1,183 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
10,683 | 26,380 | 22,860 | 27,865 | ||||||||||||
| Less: net income attributable to non-controlling interests |
(2,892 | ) | (2,030 | ) | (5,542 | ) | (3,124 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income attributable to common shareholders |
$ | 7,791 | $ | 24,350 | $ | 17,318 | $ | 24,741 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share attributable to common shareholders – basic & diluted: |
||||||||||||||||
| Net income per share – basic |
$ | 0.11 | $ | 0.34 | $ | 0.25 | $ | 0.35 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share – diluted |
$ | 0.11 | $ | 0.34 | $ | 0.25 | $ | 0.34 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average number of shares outstanding (000’s): |
||||||||||||||||
| Basic |
67,768 | 69,843 | 68,540 | 69,526 | ||||||||||||
| Fully Diluted |
68,455 | 71,688 | 69,222 | 71,349 | ||||||||||||
| Additional Disclosure: |
||||||||||||||||
| Depreciation and amortization(1) |
$ | 11,626 | $ | 11,091 | $ | 22,064 | $ | 20,724 | ||||||||
| (1) | Includes $0.2 million and $0.3 million of amortization of deferred financing costs charged to interest expense for the three and six months ended June 30, 2016, respectively (2015 – $0.2 million and $0.4 million, respectively). |
6
IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
(Unaudited)
| As at June 30 2016 |
As at December 31 2015 |
|||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 228,081 | $ | 317,449 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $1,319 (December 31, 2015 – $1,146) |
94,687 | 97,981 | ||||||
| Financing receivables |
118,884 | 117,231 | ||||||
| Inventories |
44,776 | 38,753 | ||||||
| Prepaid expenses |
8,754 | 6,498 | ||||||
| Film assets |
16,859 | 14,571 | ||||||
| Property, plant and equipment |
234,480 | 218,267 | ||||||
| Other assets |
26,017 | 26,136 | ||||||
| Deferred income taxes |
25,893 | 26,666 | ||||||
| Other intangible assets |
29,279 | 28,950 | ||||||
| Goodwill |
39,027 | 39,027 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 866,737 | $ | 931,529 | ||||
|
|
|
|
|
|||||
| Liabilities |
||||||||
| Bank indebtedness |
$ | 28,296 | $ | 29,276 | ||||
| Accounts payable |
21,451 | 23,455 | ||||||
| Accrued and other liabilities |
83,539 | 95,748 | ||||||
| Deferred revenue |
106,967 | 104,993 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
240,253 | 253,472 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Non-controlling interests |
3,221 | 3,307 | ||||||
|
|
|
|
|
|||||
| Shareholders’ equity |
||||||||
| Capital stock common shares – no par value. Authorized – unlimited number. |
435,711 | 448,310 | ||||||
| Less: Treasury stock held in trust, 393 shares at cost |
(13 | ) | – | |||||
| Other equity |
172,645 | 168,425 | ||||||
| Accumulated (deficit) earnings |
(34,923 | ) | 15,499 | |||||
| Accumulated other comprehensive loss |
(4,471 | ) | (7,443 | ) | ||||
|
|
|
|
|
|||||
| Total shareholders’ equity attributable to common shareholders |
568,949 | 624,791 | ||||||
| Non-controlling interests |
54,314 | 49,959 | ||||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
623,263 | 674,750 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
$ | 866,737 | $ | 931,529 | ||||
|
|
|
|
|
|||||
7
IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2016 | 2015 | |||||||
| Cash provided by (used in): |
||||||||
| Operating Activities |
||||||||
| Net income |
$ | 22,860 | $ | 27,865 | ||||
| Adjustments to reconcile net income to cash from operations: |
||||||||
| Depreciation and amortization |
22,064 | 20,724 | ||||||
| Write-downs, net of recoveries |
1,249 | 1,457 | ||||||
| Change in deferred income taxes |
(29 | ) | 2,232 | |||||
| Stock and other non-cash compensation |
15,014 | 10,861 | ||||||
| Unrealized foreign currency exchange (gain) loss |
(583 | ) | 851 | |||||
| Loss from equity-accounted investments |
1,980 | 1,923 | ||||||
| Gain on non-cash contribution to equity-accounted investees |
(199 | ) | (740 | ) | ||||
| Investment in film assets |
(10,890 | ) | (7,404 | ) | ||||
| Changes in other non-cash operating assets and liabilities |
(15,399 | ) | (39,271 | ) | ||||
|
|
|
|
|
|||||
| Net cash (used in) provided by operating activities |
36,067 | 18,498 | ||||||
|
|
|
|
|
|||||
| Investing Activities |
||||||||
| Purchase of property, plant and equipment |
(8,472 | ) | (34,920 | ) | ||||
| Investment in joint revenue sharing equipment |
(20,700 | ) | (11,613 | ) | ||||
| Acquisition of other intangible assets |
(1,691 | ) | (2,972 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(30,863 | ) | (49,505 | ) | ||||
|
|
|
|
|
|||||
| Financing Activities |
||||||||
| Increase in bank indebtedness |
– | 17,568 | ||||||
| Repayment of bank indebtedness |
(1,000 | ) | – | |||||
| Repurchase of common shares |
(85,714 | ) | – | |||||
| Settlement of restricted share units and options |
(8,369 | ) | (4,988 | ) | ||||
| Common shares issued – stock options exercised |
3,582 | 22,850 | ||||||
| Taxes paid on secondary sale and repatriation dividend |
(2,991 | ) | – | |||||
| Taxes withheld and paid on employee stock awards vested |
(73 | ) | – | |||||
| Treasury stock purchased for future settlement of restricted share units |
(13 | ) | (1,214 | ) | ||||
| Credit facility amendment fees paid |
– | (1,161 | ) | |||||
| Issuance of subsidiary shares to non-controlling interests – private offering |
– | 40,000 | ||||||
| Share issuance costs from the issuance of subsidiary shares to non-controlling interests – private offering |
– | (2,000 | ) | |||||
|
|
|
|
|
|||||
| Net cash (used in) provided by financing activities |
(94,578 | ) | 71,055 | |||||
|
|
|
|
|
|||||
| Effects of exchange rate changes on cash |
6 | (168 | ) | |||||
|
|
|
|
|
|||||
| (Decrease) increase in cash and cash equivalents during period |
(89,368 | ) | 39,880 | |||||
| Cash and cash equivalents, beginning of period |
317,449 | 106,503 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of period |
$ | 228,081 | $ | 146,383 | ||||
|
|
|
|
|
|||||
8
IMAX CORPORATION
SELECTED FINANCIAL DATA
In accordance with United States Generally Accepted Accounting Principles
(in thousands of U.S. dollars)
The Company has seven reportable segments identified by category of product sold or service provided: IMAX systems; theater system maintenance; joint revenue sharing arrangements; film production and IMAX DMR; film distribution; film post-production; and other. The IMAX systems segment includes the design, manufacture, sale or lease of IMAX theater projection system equipment. The theater system maintenance segment includes the maintenance of IMAX theater projection system equipment in the IMAX theater network. The joint revenue sharing arrangements segment includes the provision of IMAX theater projection system equipment to an exhibitor in exchange for a share of the box-office and concession revenues. The film production and IMAX DMR segment includes the production of films and the performance of film re-mastering services. The film distribution segment includes the distribution of films for which the Company has distribution rights. The film post-production segment provides film post-production and film print services. The other segment includes certain IMAX theaters that the Company owns and operates, camera rentals and other miscellaneous items.
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue |
|
|||||||||||||||
| IMAX Theater Systems |
|
|||||||||||||||
| IMAX Systems |
||||||||||||||||
| Sales and sales-type leases |
$ | 18,720 | $ | 18,674 | $ | 36,718 | $ | 27,289 | ||||||||
| Ongoing rent, fees, and finance income |
4,241 | 3,691 | 8,103 | 7,190 | ||||||||||||
| Other |
5,009 | 4,674 | 9,490 | 8,099 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 27,970 | 27,039 | 54,311 | 42,578 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Theater System Maintenance |
9,912 | 9,158 | 19,738 | 18,008 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Joint Revenue Sharing Arrangements |
23,856 | 31,594 | 47,242 | 47,462 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Film |
||||||||||||||||
| Production and IMAX DMR |
27,413 | 36,603 | 57,218 | 54,279 | ||||||||||||
| Film distribution and post-production |
2,592 | 2,766 | 5,362 | 7,044 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 30,005 | 39,369 | 62,580 | 61,323 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 91,743 | $ | 107,160 | $ | 183,871 | $ | 169,371 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross margins |
||||||||||||||||
| IMAX Theater Systems |
||||||||||||||||
| IMAX systems(1) |
||||||||||||||||
| Sales and sales-type leases |
$ | 9,540 | $ | 10,038 | $ | 13,859 | $ | 14,945 | ||||||||
| Ongoing rent, fees, and finance income |
4,135 | 3,499 | 7,650 | 6,777 | ||||||||||||
| Other |
162 | (114 | ) | (320 | ) | (154 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 13,837 | 13,423 | 21,189 | 21,568 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Theater System Maintenance |
3,370 | 3,089 | 6,809 | 6,370 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Joint Revenue Sharing Arrangements(1) |
15,744 | 24,069 | 33,736 | 34,686 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Film |
||||||||||||||||
| Production and IMAX DMR(1) |
17,127 | 28,488 | 39,950 | 41,713 | ||||||||||||
| Film distribution and post-production(1) |
199 | (34 | ) | 769 | 679 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 17,326 | 28,454 | 40,719 | 42,392 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 50,277 | $ | 69,035 | $ | 102,453 | $ | 105,016 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) | IMAX systems include marketing and commission costs of $0.6 million and $1.1 million for the three and six months ended June 30, 2016, respectively (2015 – $0.6 million and $0.9 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $1.4 million and $1.5 million for the three and six months ended June 30, 2016, respectively (2015 – $1.3 million and $1.4 million, respectively). Production and DMR segment margins include marketing costs of $5.2 million and $7.5 million for the three and six months ended June 30, 2016, respectively (2015 – $3.6 million and $4.9 million, respectively). Distribution segment margins include marketing expense of $0.8 million and $1.5 million for the three and six months ended June 30, 2016, respectively (2015—cost of less than $0.1 million and cost recovery of $0.1 million, respectively). |
9
IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)
Non-GAAP Financial Measures:
In this release, the Company presents adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share as supplemental measures of performance of the Company, which are not recognized under U.S. GAAP. The Company presents 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 net income. In addition, the Company presents adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share because it believes that they are important supplemental measures of its comparable financial results and could potentially distort the analysis of trends in business performance and it wants to ensure that its investors fully understand the impact of net income attributable to non-controlling interests and its stock-based compensation (net of any related tax impact) in determining net income attributable to common shareholders. 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 net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share should be considered in addition to, and not as a substitute for, net income and net income attributable to common shareholders and other measures of financial performance reported in accordance with U.S. GAAP.
The Credit Facility provides that the Company will be required at all times to satisfy a Minimum Liquidity Test (as defined in the Credit Agreement) of at least $50.0 million. The Company will also be required to maintain minimum adjusted EBITDA (as defined in the credit agreement) of $100.0 million. The Company must also maintain a Maximum Total Leverage Ratio (as defined in the credit agreement) of 2.25:1.0, which requirement decreases to (i) 2.0:1.0 on December 31, 2016; and (ii) 1.75:1.0 on December 31, 2017. The Company was in compliance with all of these requirements at June 30, 2016. The ratio of total debt to adjusted EBITDA was 0.21:1 as at June 30, 2016, 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 $28.7 million. Adjusted EBITDA is calculated as follows:
| For the 3 months ended June 30, 2016 |
For the 12 months ended June 30, 2016 (1) |
For the 3 months ended June 30, 2015 |
||||||||||
| (In thousands of U.S. Dollars) | ||||||||||||
| Net income |
$ | 10,683 | $ | 59,619 | $ | 26,380 | ||||||
| Add (subtract): |
||||||||||||
| Loss from equity accounted investments |
1,340 | 3,000 | 749 | |||||||||
| Provision for income taxes |
3,366 | 17,205 | 9,256 | |||||||||
| Interest expense, net of interest income |
78 | 500 | 144 | |||||||||
| Depreciation and amortization, including film asset amortization |
11,496 | 43,252 | 10,861 | |||||||||
| Write-downs, net of recoveries including asset impairments and |
601 | 3,517 | 1,329 | |||||||||
| Stock and other non-cash compensation |
6,347 | 26,532 | 5,195 | |||||||||
|
|
|
|
|
|
|
|||||||
| EBITDA before non-controlling interests |
33,911 | 153,625 | 53,914 | |||||||||
| EBITDA attributable to non-controlling interests(2) |
(4,876 | ) | (18,667 | ) | (3,538 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| EBITDA attributable to common shareholders |
$ | 29,035 | $ | 134,958 | $ | 50,376 | ||||||
|
|
|
|
|
|
|
|||||||
| (1) | Ratio of funded debt calculated using twelve months ended EBITDA. |
| (2) | The EBITDA calculation specified for purpose of the minimum EBITDA covenant excludes the reduction in EBITDA from the Company’s non-controlling interests. |
10
IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)
Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended June 30, 2016 vs. 2015:
The Company reported net income of $10.7 million or $0.16 per basic and diluted share for the second quarter of 2016 as compared to net income of $26.4 million or $0.37 per basic share and $0.36 per diluted share for the second quarter of 2015. Net income for the second quarter of 2016 includes a $6.2 million charge or $0.09 per diluted share (2015 — $5.1 million or $0.07 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 $15.1 million or $0.22 per diluted share for the second quarter of 2016 as compared to adjusted net income of $30.7 million or $0.42 per diluted share for the quarter ended June 30, 2015. Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding the impact of stock-based compensation and the related tax impact, was $12.1 million or $0.18 per diluted share for the second quarter of 2016 as compared to adjusted net income attributable to common shareholders of $28.7 million or $0.40 per diluted share for the second quarter of 2015. A reconciliation of net income and net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:
| Quarter Ended June 30, | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Net Income | Diluted EPS | Net Income | Diluted EPS | |||||||||||||
| Reported net income |
$ | 10,683 | $ | 0.16 | $ | 26,380 | $ | 0.36 | (1) | |||||||
| Adjustments: |
||||||||||||||||
| Stock-based compensation |
6,205 | 0.09 | 5,103 | 0.07 | ||||||||||||
| Tax impact on items listed above |
(1,744 | ) | (0.03 | ) | (740 | ) | (0.01 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted net income |
15,144 | 0.22 | 30,743 | 0.42 | (1) | |||||||||||
| Net income attributable to non-controlling interests |
(2,892 | ) | (0.04 | ) | (2,030 | ) | (0.02 | ) | ||||||||
| Stock-based compensation (net of tax of less than $0.1 |
(168 | ) | – | – | – | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted net income attributable to common shareholders |
$ | 12,084 | $ | 0.18 | $ | 28,713 | $ | 0.40 | (1) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average diluted shares outstanding |
|
68,455 | 71,688 | |||||||||||||
|
|
|
|
|
|||||||||||||
| (1) | Includes impact of $0.3 million of accretion charges associated with redeemable Class C shares of IMAX China. |
11
Adjusted Net Income and Adjusted Diluted Per Share Calculations – Period Ended June 30, 2016 vs. 2015
The Company reported net income of $22.9 million or $0.33 per basic and diluted share for the six months ended June 30, 2016, as compared to net income of $27.9 million or $0.39 per basic share and $0.38 per diluted share for the six months ended June 30, 2015. Net income for the six months ended June 30, 2016 includes a $14.7 million charge or $0.21 per diluted share (2015 — $10.7 million or $0.15 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 $33.4 million or $0.48 per diluted share for the six months ended June 30, 2016, as compared to adjusted net income of $36.8 million or $0.51 per diluted share for the six months ended June 30, 2015. Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding the impact of stock-based compensation and the related tax impact, was $27.6 million or $0.40 per diluted share for the six months ended June 30, 2016, as compared to adjusted net income attributable to common shareholders of $33.7 million or $0.47 per diluted share for the six months ended June 30, 2015. A reconciliation of net income and net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:
| Six Months Ended June 30, | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Net Income | Diluted EPS | Net Income | Diluted EPS | |||||||||||||
| Reported net income |
$ | 22,860 | $ | 0.33 | $ | 27,865 | $ | 0.38 | (1) | |||||||
| Adjustments: |
||||||||||||||||
| Stock-based compensation |
14,743 | 0.21 | 10,678 | 0.15 | ||||||||||||
| Tax impact on items listed above |
(4,184 | ) | (0.06 | ) | (1,702 | ) | (0.02 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted net income |
33,419 | 0.48 | 36,841 | 0.51 | (1) | |||||||||||
| Net income attributable to non-controlling interests |
(5,542 | ) | (0.08 | ) | (3,124 | ) | (0.04 | ) | ||||||||
| Stock-based compensation (net of tax of $0.1 million) |
(293 | ) | – | – | – | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted net income attributable to common shareholders |
$ | 27,584 | $ | 0.40 | $ | 33,717 | $ | 0.47 | (1) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average diluted shares outstanding |
69,222 | 71,349 | ||||||||||||||
|
|
|
|
|
|||||||||||||
| (1) | Includes impact of $0.5 million of accretion charges associated with redeemable Class C shares of IMAX China. |
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. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented in the table below:
| For the 3 months ended June 30, 2016 |
For the 6 months ended June 30, 2016 |
|||||||
| (In thousands of U.S. Dollars) | ||||||||
| Net cash provided by operating activities |
$ | 31,103 | $ | 36,067 | ||||
| Net cash used in investing activities |
(21,520 | ) | (30,863 | ) | ||||
|
|
|
|
|
|||||
| Free cash flow |
$ | 9,583 | $ | 5,204 | ||||
|
|
|
|
|
|||||
12
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- IMAX® and CineNOVA Launch Partnership With Four New IMAX Locations Across Turkey
- LBank Exchange Will List Armonia Meta Chain (AMAX) on April 28, 2024
- Tim Kirchen appointed Executive Vice President, UPM Raflatac and member of the Group Executive Team
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
