TORONTO - IMAX Corporation (NASDAQ: IMAX; TSX: IMX) today reported total revenues of $33.7 million for the first quarter ended March 31, 2009, a 43% increase compared to total revenues of $23.5 million for the first quarter of 2008. Operating income increased to $2.0 million, a $7.6 million increase compared to last year's operating loss of $5.6 million. The Company's first quarter net loss per diluted share of $0.06 compares favorably to the net loss per diluted share of $0.25 for the first quarter of fiscal 2008.
IMAX Chief Executive Officer Richard L. Gelfond stated, "We have often said that our introduction of digital and our joint revenue sharing initiative would yield improved financial results and we believe the first quarter reflects early progress towards this goal. Our highest level of sales-type lease system installs in over two years, the continued rapid growth of our joint revenue sharing theater network and our focus on cost containment were the primary drivers of our improved performance. We are particularly encouraged by our performance given that the first full-length new IMAX DMR(R) release did not occur until Warner Brothers' Watchmen opened in March, the last month of the quarter. Given the early success of our digital roll-out, our strong line-up of film product and our focus on cost containment, we continue to believe that we should achieve strong revenue growth and return to profitability in 2009."
IMAX systems revenue increased over 100% to $16.5 million versus $8.2 million in the prior year period. The Company installed and recognized revenue on nine theatre systems that qualified as either sales or sales-type leases in the first quarter of 2009 (including three digital upgrades), compared to four in 2008. Revenue from joint revenue sharing arrangements increased nearly six-fold to $1.9 million, compared to $0.3 million last year. The Company installed 22 new systems under joint revenue sharing arrangements (including five digital upgrades of theatres under joint revenue sharing arrangements) in the first quarter of 2009, compared to zero in the year ago period.
For the first quarter of 2009, film revenue increased 6% to $7.8 million, compared to $7.4 million in the first quarter of 2008. This included Production and IMAX DMR revenues of $3.7 million compared to $2.9 million a year ago.
Mr. Gelfond continued, "On the film side, Watchmen: The IMAX Experience delivered a domestic per screen average of approximately $92,000 and Monsters vs. Aliens: An IMAX 3D Experience has grossed an average of $126,000 per screen in IMAX theatres to date, outpacing both the 2D and other 3D versions of the film on a per screen basis. We are very encouraged that, in these challenging economic times, consumers are continuing to embrace The IMAX Experience(R)."
First quarter gross box office from DMR titles increased to $29.9 million in the first quarter of 2009, compared to $15.7 million in the first quarter of 2008. The titles that contributed the majority of the Company's first quarter box office results were the March 6th release of Warner Brother's Watchmen: The IMAX Experience, which generated approximately $14.6 million in IMAX theatres worldwide and DreamWorks Animation SKG's Monsters vs. Aliens: An IMAX 3D Experience, which was released to IMAX theaters on March 27th and generated $6.6 million in gross box office as of quarter end and $24.7 million through Sunday. Additional DMR titles within the quarter were Twentieth Century Fox's The Day the Earth Stood Still: The IMAX Experience, the re-release of Warner Bros. Pictures' The Dark Knight: The IMAX Experience, and the one week run of Disney's The Jonas Brothers: A 3D Concert Experience.
First quarter gross margin increased 39% to $14.1 million from $10.1 million last year. Negatively impacting gross margin was $0.7 million of non-recurring launch costs associated with the 17 new theatres opened under joint revenue sharing arrangements during the quarter. A description of how this impacted the gross margin of the Company's joint revenue sharing business segment is included with the segment table at the end of this press release.
Selling, general and administrative expenses decreased to $10.9 million in the first quarter, compared to $12.4 million a year ago. Lower professional fees and operating expenses were partially offset by a $1.2 million foreign currency exchange charge largely due to a decline in the Canadian dollar, which impacts foreign currency denominated receivables, unhedged forward currency contracts and other working capital balances. The exchange rate on the Canadian dollar has since improved from quarter-end. Research and development costs decreased to $0.5 million in the first quarter of 2009 as compared to $2.5 million in the first quarter of 2008. Last year's research and development expenses reflected the costs associated with the development of the Company's digital projection system that launched in July of 2008.
The Company ended the quarter with a total of 371 IMAX theaters in operation, a 24% increase over last year's first quarter. Its commercial theater count increased to 250 theaters, a 40% increase over last year. The Company's digital and joint revenue sharing strategies continued to drive its rapid growth. At the end of the quarter, 73 digital systems were in operation, up from 46 as of December 31, 2008. The number of IMAX(R) theatres under joint revenue sharing arrangements also grew, to 69 theaters in operation, up from 52 as of year-end and compared to 11 last year. The Company currently remains on track to have between 115 and 125 joint revenue sharing theaters in operation by year-end.
As of March 31, 2009, the Company's backlog consisted of 190 theatre systems compared to 245 theatre systems in backlog as of March 31, 2008. Included in the 2009 and 2008 system backlog totals were 89 and 135 theatres, respectively, under joint revenue sharing arrangements. During the quarter the Company signed contracts for three new systems under sales and sales-type lease arrangements, one of which was installed in the first quarter.
At the end of the first quarter, the Company's cash position was approximately $18.7 million, compared to $27.0 million at the end of 2008 and $18.1 million as of March 31, 2008. The Company's cash position is after investments related to its joint revenue sharing digital projection systems, which amounted to approximately $7.0 million in the first quarter. The Company commented that it remains confident that the combination of its cash position, available credit of $11.6 million under its credit facility, and operating cash flows will provide the necessary funding for its continued roll-out of joint revenue sharing digital projection systems.
Looking ahead to the remainder of the 2009 film slate, Star Trek: The IMAX Experience (Paramount Pictures), will be released to 167 IMAX theaters today at 7:00 PM for a two-week limited engagement, followed by Night at the Museum: Battle of the Smithsonian: The IMAX Experience (Twentieth Century Fox, May 22, 2009); Transformers: Revenge of the Fallen: The IMAX Experience (Paramount Pictures, June 2009); Harry Potter and the Half-Blood Prince: An IMAX 3D Experience (WB, July 2009); Disney's A Christmas Carol: An IMAX 3D Experience (Walt Disney Pictures and ImageMovers Digital, November 2009); and James Cameron's Avatar: An IMAX 3D Experience (Twentieth Century Fox, December 2009). The Company believes it will also have an additional DMR title in the fall.
Mr. Gelfond concluded, "We are encouraged by our first quarter results, our success in the second quarter with Monsters vs. Aliens and pre-sales for Star Trek. We believe our 2009 slate includes some of the most popular franchises and highly anticipated films of the year. The record number of films coming through the IMAX network this year, combined with the quality of those titles, is allowing our business to be less about the performance of a single film and more about the success of the overall portfolio, which is much more diversified than in past years. We look forward to announcing more titles in the coming months."
The Company's 2010 film slate currently includes Avatar: An IMAX 3D Experience, which should carry over from its December 18, 2009 release, Disney's Alice in Wonderland: An IMAX 3D Experience (March 2010), DreamWorks Animation's How to Train Your Dragon: An IMAX 3D Experience (March 2010), DreamWorks Animation's Shrek Goes Fourth: An IMAX 3D Experience (May 2010) and an IMAX original film, in partnership with Warner Brothers, currently titled Hubble 3D. The Company is currently in discussions with virtually every major studio about other films for potential release in 2010.