The Big Picture Just Got Bigger
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THE BIG PICTURE JUST GOT BIGGER THE BIG PICTURE Imax Corporation Corporation Imax 1997 Annual Report Annual imaxcover_AJ 5/11/98 3:58 PM Page 3 IMAX CORPORATION 1997 ANNUAL REPORT imaxcover_AJ 5/11/98 4:26 PM Page 4 imaxfinal_AJ 5/11/98 5:04 PM Page 5 T-REX: Back to the Cretaceous will feature eight-story high 3D digital dinosaurs — larger than the originals! Coming Fall 1998. imaxfinal_AJ 5/12/98 9:45 AM Page 6 “Totally amazing” LUCAS MADIGAN at Edwards IMAX 3D Theatre, Irvine Spectrum, Irvine, California imaxfinal_AJ 5/12/98 9:45 AM Page 7 IMAX® Brand Awareness in U.S. Our research* shows that recognition of the IMAX brand name in the United States has increased 50% since 1995. The IMAX brand is recognized around the world as a symbol of high-quality, family entertainment. *ANGUS REID GROUP POLL 08/1997 97 60% 96 54% 95 40% 94 33% MESSAGE TO SHAREHOLDERS 1997 was a break- through year for Imax Corporation. The Company experi- enced record financial results, increased brand name recog- nition and a doubling of our previous record for new theatre 2 • 3 signings with orders for 60 new IMAX theatres. In 1997, the Company introduced the IMAX 3D SR theatre system which allowed smaller markets to experience the magic of IMAX 3D for the first time and was a catalyst for our tremendous growth in new theatre contract signings. During the year, we also premiered our 3D animation technologies, demonstrat- ing the potential of 3D animation in IMAX theatres. The goal behind the launch of the IMAX 3D SR theatre sys- tem was to expand the number of potential markets for IMAX theatres around the world. To meet that goal, we aimed to reduce the capital costs of building an IMAX the- atre so that we could reduce the attendance needed to gen- erate a return on the investment for the theatre owner. We were able to do just that with the IMAX 3D SR system which was designed to be built as part of a multiplex and costs approximately half as much as building a stand-alone IMAX imaxfinal_AJ 5/12/98 10:12 AM Page 8 There is a huge commercial systems. This growth is being dated within a multiplex. Our in 1997, most of which were market for The IMAX driven by the exhibition indus- new compact, cost-efficient for IMAX 3D SR systems. Just Experience™ and we have just try’s recognition of the drawing IMAX 3D SR system was over- after year end, we signed an begun to scratch the surface. power of IMAX theatres and whelmingly received by the agreement with Famous Players Of our 60 theatre signings in our ability to deliver systems exhibition industry in 1997. for 10 more theatres. 1997, 90% were for commer- which can easily be accommo- Imax signed contracts with six cial systems and 90% for 3D major exhibitors for 36 systems Commercial Theatre Growth imaxfinal_AJ 5/12/98 10:14 AM Page 9 Value of Permanent Theatres Signed The value of our theatre contract signings has grown dramatically—driven by the demand for commercial IMAX theatres and IMAX 3D theatres. $ Millions U.S. 97 $132 96 $90 95 $65 94 $46 theatre, including the cost of the equipment. The response to IMAX 3D SR theatres was overwhelming. In the nine months after its launch in March, 1997, we signed contracts for 32 IMAX 3D SR systems. The new system helped Imax sign contracts with six commercial exhibitors in North America in 1997, including Cinemark USA, Edwards Theatres Circuit, Empire Theatres, Krikorian Premiere Theatres, Marcus Theatre Corporation and Regal Cinemas. In 1998, we are going to set our sights on the overseas mar- 4 • 5 kets with IMAX 3D SR systems and try to repeat our North American successes in Europe and Asia. As our theatre network grows and our company matures, we have increased our focus on, and commitment to, the success of the IMAX theatres. Affiliate Relations gives our theatres a direct line of communication to the Company and allows us to help each theatre maximize its results by providing them with the benefit of our 30-year history and by making the lat- est marketing tools available to them. In 1997, we bolstered our Affiliate Relations program which is among our most important initiatives. As a result of the launch of the IMAX 3D SR system, the Company signed contracts for a record 60 IMAX theatre sys- tems in 1997, more than double the previous record of 29 theatre systems signed in 1996. That helped to increase the imaxfinal_AJ 5/12/98 10:43 AM Page 10 Company’s backlog by a record $44 million to $175 million at year end, a 33% increase over the previous year. In addition, Imax signed a 10-theatre agreement with Famous Players Inc. early in the first quarter of 1998 which is not included in the 1997 totals. The IMAX 3D Experience continues to be warmly received by audiences and theatre customers. In 1997, 51 of our 60 new theatre signings were for IMAX 3D theatre systems. At the end of 1997, there were 35 IMAX 3D systems in opera- tion and another 61 in backlog. This is up dramatically from only 14 IMAX 3D theatres in operation at the end of 1995. By the end of 1998 there will be approximately 60 IMAX 3D theatres in operation. Financially, 1997 was another record year. Total revenues rose 22% in 1997 to $158 million, while diluted earnings per 6 • 7 share increased 36% to $0.68. The continued expansion of our film library and the dynamic growth of our theatre network is driving strong increases in Imax’s recurring revenues. Recurring revenues from royalties, maintenance fees and film distribution and post-production fees rose 38% Number of Theatre Signings The number of IMAX theatre signings more than doubled in 1997 as IMAX theatres moved into smaller markets of the world. 97 60 96 29 95 24 94 15 imaxfinal_AJ 5/12/98 10:46 AM Page 11 WOOD NICK / N VIDSO YES DA IMAGE HA BFI LONDON IMAX CINEMA Inter The potential for global growth Imax has increased its efforts in There are 159 IMAX theatres international markets including is astounding. Today 70% of Europe, Asia, and South America in 22 countries now and there is Brazil, Norway, Italy, Belgium, IMAX theatres are in North and we have been successful in still tremendous opportunity for New Zealand and Malaysia. America and Japan which repre- signing multi-theatre contracts further expansion. In the last sent only 10% of the world’s with local exhibitors. two years the Company has population. In recent years, signed contracts in several new imaxfinal_AJ 5/12/98 11:10 AM Page 12 Imax was founded on innovation allows artists to create hand- In December, Race for Atlantis, realism of the ride is made and it remains a key driver of drawn 3D animation for IMAX the world’s first IMAX 3D possible through the marriage the Company’s success today. theatres. The technology motion simulator ride, pre- of a giant IMAX Dome screen, Two more outstanding examples debuted in November with miered at Caesars Palace in state-of-the-art 3D computer of Imax’s leadership in innova- Paint Misbehavin’, a two- Las Vegas. Race for Atlantis animation, 3D sound through tion were unveiled late last minute animated 3D cartoon takes riders on an exhilarating, the IMAX Personal Sound year. In November, Imax that received an overwhelming visually stunning race to save Environment and innovative unveiled a proprietary 3D reaction from audiences. the legendary kingdom. The motion simulation technology. animation technology which multi-sensory, immersive Innovations RACE FOR ATLANTIS CAESARS PALACE LAS VEGAS imaxfinal_AJ 5/12/98 11:12 AM Page 13 Sales Backlog As the pace of new theatre signings has gained momentum, so has our sales backlog. Sales backlog provides visibility of Imax’s revenues in the years ahead. $ Millions U.S. 97 $175 96 $132 95 $107 94 $81 in 1997 as the growth in the theatre network drove increases in all four categories. The Company continued to deliver the kind of performance that its customers, partners and investors expect. Imax has never been stronger and we are carrying real momentum into 1998. 8 • 9 With a record number of new theatre openings as well as some highly-anticipated film releases, the reach and power of the IMAX brand name will show exciting growth in 1998. This year there will be more people in more IMAX theatres in more places than ever before – and they will be watching more new films that promise even greater audience impact. At the end of 1997, more than 20 film projects were in vari- ous stages of production, pre-production and development by Imax and others, the most ambitious program in history. The list includes films that we believe will push the bound- aries of the 15/70 format and establish several notable firsts. At the top of the list is MacGillivray Freeman Films’ pro- duction of Everest, which opened on March 6, 1998, sup- ported by the largest publicity and promotional campaign in the history of our industry. In its first 12 months, Everest will imaxfinal_AJ 5/12/98 11:30 AM Page 14 play in two-thirds of the IMAX theatre network or nearly 100 screens and could generate more than $50 million in box office revenues. The film has brought more people to IMAX theatres for the first time than any other film in recent histo- ry and is selling out at theatres around the world.