Imax posts 43% earnings gain in second quarter

Higher cost for large-format systems credited

TORONTO — Imax Corp. reported stronger than expected second quarter and six month earnings Wednesday.

The large-format film company reported earnings of $6.2 million, or 21¢ per share for the second quarter ended June 30, an increase of 43% from $4.1 million or 14¢ per share reported for the same period a year earlier.

“Management indicated in their annual meeting that the second quarter was going to be 20% ahead of the last quarter,” said analyst David McFadgen, with Griffiths McBurney Partners in Montreal. “So I think for most people it was a positive surprise.”

For the six months ended June 30, Imax’s earnings were $10.4 million or 35¢ a share, up 31% from earnings of $8.3 million or 27¢ per share a year earlier.

Revenues for the second quarter were $42.8 million, a 21% increase over $35.4 million the previous year. The majority of that increase came from a 54% increase in the sale and lease of the company’s large-format systems.

Revenue from films declined 37% in the quarter, said Imax vice chairman and co-CEO Richard Gelfond, because Imax released one film in the second, whereas in the same quarter last year it released two.

“This year, because ‘Everest’ was so strong during the second quarter, it didn’t really make sense to launch another film then,” he said, “so that’s why we’ve scheduled our next major launch (“T-Rex: Back to the Cretaceous”) for October.”

Systems tends to account for a good chunk of the company’s revenue while Imax tries to get a large enough network of its theaters up and running to catch the interest of mainstream Hollywood.

“Over the last year or so we’ve stepped up our film efforts,” said Gelfond. “Obviously, it takes a year or two to get a film out, so I think you’ll start to see growth on the film revenue side really starting in about 1999.”

One project Imax has in development is a co-production with Vancouver-based Mainframe Entertainment of the first ever 70mm animated feature, based on Jonathan Swift’s “Gulliver’s Travels.”

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