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INTRODUCTION
The OTC Digest is pleased to introduce IMAX Corporation (NASDAQ: IMAX) headquartered in Toronto, Canada. IMAX is one of the world's leading entertainment companies. Their businesses include the creation and delivery of the world's best cinematic large-format presentations, using proprietary IMAX® and IMAX® 3D technology on screens up to eight stories high and 120 feet wide. The IMAX brand is recognized throughout the world for extraordinary and immersive entertainment experiences for all consumers.
IMAX theatre systems currently use 15-perforation 70m film (the largest commercially available film format) to present stunning images of exceptional quality and clarity. These images fill a viewer's peripheral vision, and together with IMAX's proprietary digital sound system and unique theatre designs, create "The IMAX Experience," which makes audiences feel as if they are "in the movie." To date over 800 million people worldwide have experienced IMAX’s revolutionary technology. In 2008, IMAX will go digital, which dramatically improves the quality of their business model.
The IMAX Theatre Network consists of more than 300 IMAX theaters in 40 countries, with 60 percent in North America and 40 percent spread internationally. Roughly 50 percent of the theatres are located in institutional venues, such as museums, planetariums, and maritime centers, with the balance consisting of commercial theatre complexes. More than 100 of these theatres are equipped with IMAX 3D technology.
In addition to their theatrical presence, IMAX also designs and manufactures cameras, projectors and consistently commits significant funding to ongoing research and development to remain a leader in the entertainment industry.
FUNDAMENTAL OUTLOOK
On January 16, 2007, IMAX Corporation continued its impressive box office winning streak with the announcement that they generated $145 million for Hollywood releases last year. This figure is 56% higher than the $93 million the IMAX (R) theatre network grossed during 2006. Hollywood films that played in IMAX theatres in 2007 included eight titles from 4 different studios.
IMAX's 2007 record-breaking film slate included 300 (Warner Bros. Pictures), Spider-Man 3 (Sony), Harry Potter and the Order of the Phoenix (Warner Bros. Pictures), Transformers (Paramount Pictures), Beowulf (Paramount Pictures) and I Am Legend (Warner Bros. Pictures), Night at the Museum (Twentieth Century Fox) and the Polar Express re-issue (Warner Bros. Pictures).
IMAX has already secured significant titles for its film line up for 2008, 2009 and 2010 through agreements with major Hollywood studios including: The Spiderwick Chronicles (February 2008), Shine A Light (April 2008), Kung Fu Panda (June 2008), The Dark Knight (July 2008), Under the Sea 3D (February 2009), Monsters vs. Aliens 3D (March 2009), How to Train Your Dragon 3D (November 2009), Hubble 3D (working title, February 2010) and Shrek Goes Forth 3D (May 2010).
Last month, IMAX Corporation and AMC Entertainment Inc., one of the worlds’ largest and most innovative theatrical exhibition companies, announced a joint-venture agreement to install 100 IMAX(R) digital projection systems at AMC locations in 33 major U.S. markets. The theatres will feature IMAX's digital projection system developed for the IMAX MPX(R) theatre design. The agreement is projected to double IMAX's current commercial theatre footprint in North America and accelerates the momentum behind IMAX and AMC's transition to digital projection technology.
IMAX announced that it had moved up the launch date of its digital projection system to mid-2008. The highly anticipated IMAX digital projection system will further enhance The IMAX Experience and help to drive greater profitability for studios, exhibitors and IMAX theatres by virtually eliminating the need for film prints, increasing program flexibility and ultimately increasing the number of movies shown on IMAX screens.
TECHNICAL REVIEW
Over the past five years, IMAX shares appear to have established a clear bottom just under $4.00 per share. By January 2005, shares peaked at just over $12.00 before pulling back to the $7.00 area two years ago. From that level, shares peaked at $11.00 per share by the end of July 2006.
Since July 2006, IMAX shares again drifted lower even though fundamentals were improving, and once again bottomed just under $4.00 a little over a year ago. During the better part of 2007, IMAX spent most of its’ trading time between $4.00 and $5.00 per share.
On last month’s announcement regarding their AMC deal, IMAX shares once again broke out and traded as high as $7.32 on December 7, 2007. Volume on December 7 and 8, 2007 totaled 11.1M shares, or 30% of the entire float of 36.6M shares, with 40.3M total shares outstanding on the Company.
Current market conditions have created an excellent opportunity for savvy long term aggressive investors with IMAX shares pulling back under $6.00 recently. Shares now appear to be forming the handle of a fourteen-month cup and handle formation.
THE BIG PICTURE
In 2002, IMAX films grossed about $8M, last year IMAX grossed $123M, a fifteen-fold increase in revenue. With roughly $45M per year committed to research and development, IMAX has positioned itself as one of the entertainment industry’s few bright spots for investors.
IMAX R&D effort appears poised to pay big dividends over the next three to five year period. The recent deal signed with AMC shows that IMAX has prepared itself to be able to dramatically increase the number of IMAX screens in the global marketplace.
By the 2nd and 3rd quarter, IMAX will be generating digital media for their existing production partners including Warner Brothers Pictures, Sony, DreamWorks, and Paramount Pictures. The ability of IMAX to go digital comes at a time when the big studios are wringing their hands trying to get costs under control.
By establishing joint ventures with the likes of the big movie house chains as well as the biggest production studios in the business, IMAX is poised to experience a dramatic increase in revenue and profitability for the next several years.
The OTC Digest urges investors to consider the fact that six years ago, IMAX was a company valued at about $150M at a time when “the IMAX experience” was only generating about $8M in box office gross. With 2007 box office revenue of fifteen times that amount, we see current market weakness as an excellent opportunity for aggressive long-term investors.
Corporate Information Links:
Web Sites: Corporate Web site and www.imax.com
Stock Quote: NasdaqGM: IMAX
The Numbers: Key Statistics
Investor Info: IMAX Investor Relations