LOS ANGELES -- IMAX Corporation (NYSE:IMAX) (TSX:IMX) today reported that its 2010 revenues, earnings and adjusted EBITDA were the highest of any year in its 43-year history.
"In 2010, we saw most aspects of our strategy come together," said IMAX Chief Executive Officer, Richard L. Gelfond. "The public came to enjoy The IMAX Experience® in record numbers, our commercial network grew by 30%, our digital network grew by more than 80% and we signed new theatres in record numbers. The year's record revenues and earnings reflect the success of our model."
In addition to reporting its fiscal year results, today IMAX Corp. announced that total revenue for the fourth quarter ended December 31, 2010 increased 28% to $69.2 million, compared to $54.2 million in the fourth quarter of 2009. Reported net income for the fourth quarter of 2010 increased to $54.2 million, or $0.80 per diluted share, from $4.0 million, or $0.06 per diluted share, in last year's fourth quarter. Fourth quarter 2010 adjusted net income, which excludes the impact of the change in the value of the Company's variable stock compensation and a non-cash tax benefit related to a reversal of the Company's deferred tax valuation allowance, increased 11% to $14.3 million, or $0.21 per diluted share, compared to adjusted net income of $12.9 million, or $0.20 per diluted share, on the same basis in the fourth quarter of 2009. Fourth quarter adjusted EBITDA increased 23% to $25.8 million from $20.9 million in the same period last year.
"The fourth quarter of 2010 marked a strong finish to what was a record year for IMAX in virtually all respects," said Mr. Gelfond. "The success of the Company's digital strategy and the transformation to a business model that benefits from dual recurring revenue streams became evident through this year's financial results. When we consider our contracted-in theatre backlog, our announced film slate, film deals we are working on and the pipeline of theatre deals we are working on, we believe we are positioned to grow revenue, adjusted earnings and EBITDA in 2011."
Total revenue for 2010 increased 45% to $248.6 million, compared to $171.2 million for fiscal 2009. Reported net income for fiscal 2010 increased to $100.8 million, or $1.51 per diluted share, compared to $5.0 million, or $0.09 per diluted share, in 2009. Fiscal 2010 adjusted net income, which excludes the aforementioned impact of variable stock compensation and a non-cash tax benefit, increased 232% to a record $67.8 million, or $1.02 per diluted share, compared to $20.5 million, or $0.38 per share, on the same basis last year. For the 12 months ended December 31, 2010, adjusted EBITDA increased 73% to a record $101.4 million, compared to $58.5 million last year. For the definition of and reconciliation to adjusted EBITDA, please see the tables at the end of this press release.
Included in fourth quarter and fiscal 2010 reported results was a non-cash tax benefit of $54.8 million. In the fourth quarter, the Company released the vast majority of its valuation allowance against deferred tax assets resulting from the determination that it will no longer be needed based on current and anticipated future earnings levels. In the coming quarters, the amount of $54.8 million will be drawn down against earnings at the applicable effective tax rate, resulting in non-cash charges in those periods. The net impact of the positive non-cash tax benefit of $54.8 million, and the negative $14.9 million charge due to the change in the value of the Company's variable stock compensation, is excluded from adjusted net income. For a reconciliation of adjusted net income to reported net income, please see the tables at the end of this press release.
Theatre System Installations
During the fourth quarter of 2010, the Company installed a record 54 theatre systems, compared to a total of 38 system installations in the fourth quarter of 2009. In 2010, the Company installed a total of 123 theatre systems, compared to 118 theatre system installations in 2009. Total installations include new IMAX theatre systems, as well as the upgrade of existing IMAX film-based theatre systems to digital. For a breakdown of system installations by type, please see the end of this press release.
"In the fourth quarter we installed more systems than in any other quarter in our history," added Mr. Gelfond. "This momentum is continuing into 2011 as we work with a number of new and existing exhibitor partners around the world to bring The IMAX Experience to our growing global audience while maintaining and building on our position as the premiere movie-going experience in the industry."
Fourth Quarter Segment Results
In the fourth quarter of 2010, IMAX systems revenue increased 67% to $32.9 million from $19.6 million in the fourth quarter of 2009, primarily reflecting the installation of 20 full, new theatre systems in the most recent fourth quarter, compared to 10 full, new systems in the fourth quarter of 2009. The Company also installed seven digital upgrades in the fourth quarter of 2010 compared to six in the same year-ago period. The increase in IMAX systems revenue also reflects a 62% increase in ongoing rent, fees and finance income, including several sale and lease theatres which reached box office levels in 2010 that triggered an increase in box office overage fees.
Fourth quarter 2010 total film revenue increased 19% to $18.0 million, compared to $15.1 million in the fourth quarter of 2009. Production and IMAX DMR® revenues increased 9% to $13.1 million, compared to $12.0 million in the year-ago period. Gross box office from DMR titles was $101.9 million in the fourth quarter of 2010, compared to $101.0 million in the fourth quarter of 2009. The average DMR box office per screen in the fourth quarter was $312,000 ($300,000 domestic, $339,000 international) versus $429,000 ($410,300 domestic, $460,600 international) in the fourth quarter of 2009. For title by title detail, please see the end of this press release.
Mr. Gelfond added, "In the fourth quarter, our gross box office held steady during a challenging time for the industry, thanks to our strong showing with tentpole titles like Warner Bros.' Harry Potter and the Deathly Hallows and Disney's TRON: Legacy, which significantly over-indexed in IMAX, and the increased size of our commercial theatre network. Looking ahead to the remainder of our 2011 film slate, we have more visibility than ever before, and we have secured more titles to show in the IMAX network than ever before. In addition, we are committed to further differentiating the IMAX version of titles shown in the IMAX format, whether through the use of IMAX cameras, special marketing events or exclusive IMAX-only release windows in certain territories."
In the fourth quarter of 2010, revenue from joint revenue sharing arrangements decreased 13