<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 17, 1999
COMMISSION FILE NUMBER 0-24216
IMAX CORPORATION
(Exact name of registrant as specified in its charter)
CANADA 98-0140269
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2525 SPEAKMAN DRIVE, MISSISSAUGA, ONTARIO, CANADA L5K 1B1
(Address of principal executive offices) (Postal Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (905) 403-6500
N/A
Former Name or Former Address (If Changed Since Last Report)
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<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL STATEMENTS
DIGITAL PROJECTION INTERNATIONAL
PLC
CONSOLIDATED REPORT AND FINANCIAL STATEMENTS
31 DECEMBER 1998
DELOITTE & TOUCHE
PO BOX 500
201 DEANSGATE
MANCHESTER
M60 2AT
2
<PAGE> 3
DIGITAL PROJECTION INTERNATIONAL PLC
<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
OFFICERS AND PROFESSIONAL ADVISERS 4
DIRECTORS' REPORT 5
STATEMENT OF DIRECTORS' RESPONSIBILITIES 7
AUDITORS' REPORT 8
CONSOLIDATED PROFIT AND LOSS ACCOUNT 9
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 10
CONSOLIDATED BALANCE SHEET 11
COMPANY BALANCE SHEET 12
CONSOLIDATED CASH FLOW STATEMENT 13
NOTES TO THE ACCOUNTS 14
</TABLE>
3
<PAGE> 4
DIGITAL PROJECTION INTERNATIONAL PLC
OFFICERS AND PROFESSIONAL ADVISERS
DIRECTORS
J M Blackburn
B R Critchley
T J Cronin
D Green
M N Levi
D J Quinn
R Raworth * (Chairman)
C J Tennant *
* Non executive
SECRETARY
Mrs J M Humphreys
REGISTERED OFFICE
Greenside Way
Middleton
Manchester
M24 1XX
BANKERS
Lloyds Bank plc
PO Box 349
53 King Street
Manchester
M60 2LE
The British Linen Bank Limited
Ship Canal House
98 King Street
Manchester
M2 4WU
SOLICITORS
Garrett & Co.
Bank House
9 Charlotte Street
Manchester
M1 4EU
AUDITORS
Deloitte & Touche
Chartered Accountants
201 Deansgate
Manchester
M60 2AT
4
<PAGE> 5
DIGITAL PROJECTION INTERNATIONAL PLC
DIRECTORS' REPORT
The directors present their annual report and the audited financial statements
for the year ended 31 December 1998.
ACTIVITIES
The principal activity of the group is the research, design, manufacture and
sale of electronic projectors.
REVIEW OF DEVELOPMENTS AND FUTURE PROSPECTS
Digital Projection International produces and sells high brightness, large
screen electronic projectors. These projectors utilise the Digital Micromirror
Device produced by Texas Instruments, Dallas, USA. The company's headquarters
are in Middleton, Manchester where products are developed and manufactured.
Digital Projection Incorporated based in Atlanta, Georgia provides full sales
and marketing, product service and support to the North American market.
The results for the second year following the management buyout from the Rank
Group shows turnover more than double the previous year. The results further
reflect the investment and expenses incurred in establishing and developing the
company's worldwide operations.
During the year the company expended its product range through the launch of an
XGA resolution range of projectors. Digital Projection's products continue to be
widely acclaimed with a number of awards being received including two
prestigious "Emmy" awards. The company will continue to expand and develop its
products capitalising on its reputation for product innovation and performance.
DIVIDENDS AND TRANSFERS TO RESERVES
Details of the result for the year can be found on page 9. A dividend of
(pound)872,700 (1998 - (pound)582,000) has accrued to the preference
shareholders at 31 December 1998 and this has been charged in these accounts.
The Directors do not recommend a final dividend on the `A' ordinary or ordinary
shares.
FIXED ASSETS
Details of movements in fixed assets are set out on page 18.
SHARE CAPITAL
During the year the company issued 110,000 "A" ordinary shares to investors for
a total consideration of (pound)82,500. In addition 2,417,500 "B" preference
shares were issued for a consideration of (pound)2,417,500.
YEAR 2000
Digital Projection's business systems and products are planned to be Year 2000
compliant. To this end, the board reviews the status on compliance at each board
meeting.
The following information is provided to indicate the importance Digital
Projection place on these potential issues but it is provided without any
warranty express or implied as to the effectiveness of our own or our business
partners' actions to mitigate Year 2000 issues.
All our business computer systems have been tested and either have been or are
in the process of being upgraded to products stated to be Year 2000 compliant.
Certain non-compliant hardware is in the process of being replaced. None of our
products embody real time clocks and therefore there is no impact from the date
issues.
We are in continuing dialogue with all our suppliers on their status for
compliance. All key sub-systems suppliers are at an advanced stage of their
compliance programmes.
We have taken all reasonable and prudent steps to ensure our systems and our
suppliers systems are compliant and continue to act on new information as it
becomes available. The costs involved in this exercise are not considered to be
significant.
5
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DIGITAL PROJECTION INTERNATIONAL PLC
DIRECTORS' REPORT
RESEARCH AND DEVELOPMENT
The group has devoted substantial resources to research and development during
the period. This, together with contracts with outside parties, will enable the
company to maintain its leading position in technology and design.
SUPPLIER CREDIT
Through its subsidiaries the company's policy is to follow the CBI Code of
Practice regarding the prompt payment of suppliers. In particular, for all trade
creditors it is the company's policy to:
o Agree the terms of payment at the start of business with the supplier.
o Ensure suppliers are aware of the terms of trade.
o Pay in accordance with its contractual and other legal obligations.
As the company itself does not trade the number of creditors days is nil.
DIRECTORS AND THEIR INTERESTS
The current directors of the Company together with their beneficial
interest in the share capital of the Company are set out below:
<TABLE>
<CAPTION>
1998 1997
ORDINARY SHARES OF 3P EACH
<S> <C> <C>
J M Blackburn 333,900 333,900
B R Critchley 1,780,000 1,780,800
T J Cronin 185,500 111,300
D Green 333,900 333,900
M N Levi 333,900 333,900
R Raworth (non-executive) 333,900 333,900
C J Tennant (non-executive) - -
D J Quinn 333,900 333,900
</TABLE>
Mr. R Raworth has, in addition to the above shareholding, a beneficial interest
in 18,000 "A" Ordinary Shares and in 436,500 `A' Preference Shares which were
held at 31 December 1997 and at the end of the financial year.
Mr. C J Tennant has a beneficial interest in 863 "A" Ordinary Shares and in
1,714 `A' Preference shares which were held at 31 December 1997 and at the end
of the financial year.
Under the Articles of Association none of the directors are required to retire
by rotation.
No director had any interest in a contract to which the Company or a subsidiary
undertaking was a party during the accounting period.
AUDITORS
A resolution for the reappointment of Deloitte & Touche as auditors of the
company is to be proposed at the forthcoming Annual General Meeting.
Approved by the Board of Directors
and signed on behalf of the Board
Date: November 11, 1999
- ------------------------------------------
By: / S / T J Cronin
---------------------------------
T J Cronin
Director
6
<PAGE> 7
DIGITAL PROJECTION INTERNATIONAL PLC
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
group and company as at the end of the financial year and of the profit or loss
of the group for that year. In preparing those financial statements, the
directors are required to:
|X| select suitable accounting policies and then apply them consistently;
|X| make judgements and estimates that are reasonable and prudent;
|X| state whether applicable accounting standards have been followed;
|X| prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the group and company will continue in
business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
group and company and to enable them to ensure that the financial statements
comply with the Companies Act. They are also responsible for safeguarding the
assets of the group and company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
7
<PAGE> 8
DIGITAL PROJECTION INTERNATIONAL PLC
AUDITORS' REPORT TO THE MEMBERS
We have audited the financial statements on pages 9 to 26 which have been
prepared under the accounting policies set out on pages 14 and 15.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 7 the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report
our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the financial
statements, and of whether the accounting policies are appropriate to the
company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the financial
statements.
OPINION
In our opinion the financial statements:
- give a true and fair view of the state of affairs of the group and
company as at 31 December 1998 and of the loss of the group for the
year then ended and have been properly prepared in accordance with
the Companies Act 1985;
- present fairly, in all material respects, the consolidated
financial position of the Group as at 31 December 1998 and 31
December 1997 and the results of their operations, total recognised
gains and their cash flows for the years ended 31 December 1997 and
31 December 1998 in conformity with accounting principles generally
accepted in the United Kingdom. The principles differ in certain
respects from accounting principles generally accepted in the
United States. The effect of the differences in determination of
net income, shareholders' equity and cash flows is shown in note 23
to the financial statements.
DELOITTE & TOUCHE
Chartered Accountants and Registered Auditors
12 August 1999
(15 November 1999 for Notes 23 and 24)
8
<PAGE> 9
DIGITAL PROJECTION INTERNATIONAL PLC
<TABLE>
<CAPTION>
NOTE YEAR 58 WEEKS
ENDED 31 ENDED 31
DECEMBER DECEMBER
1998 1997
(pound) (pound)
<S> <C> <C> <C>
TURNOVER 2 19,486,258 8,371,615
---------- ----------
OPERATING LOSS 2,4 (3,801,275) (3,468,724)
---------- ----------
Interest receivable and similar income 43,584 45,275
Interest payable and similar charges 5 (743,107) (248,466)
---------- ----------
(699,523) (203,191)
---------- ----------
LOSS ON ORDINARY
ACTIVITIES BEFORE TAXATION (4,500,798) (3,671,915)
Tax on loss on ordinary activities 6 - -
---------- ----------
LOSS ON ORDINARY ACTIVITIES AFTER
TAXATION FOR THE FINANCIAL PERIOD (4,500,798) (3,671,915)
Preference dividends on non equity shares 7 (872,700) (582,000)
---------- ----------
LOSS ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS (5,373,498) (4,253,915)
Ordinary dividends on equity shares 7 - -
---------- ----------
TRANSFERRED FROM RESERVES 17 (5,373,498) (4,253,915)
========== ==========
</TABLE>
The above results all relate to continuing operations.
Other than the result for the year there were no other recognised gains or
losses.
9
<PAGE> 10
DIGITAL PROJECTION INTERNATIONAL PLC
<TABLE>
<CAPTION>
YEAR 58 WEEKS
ENDED 31 ENDED 31
DECEMBER DECEMBER
1998 1997
(pound) (pound)
<S> <C> <C>
Loss for the financial year attributable to the members (4,500,798) (3,671,915)
Share capital issued 2,500,000 10,137,358
Goodwill written off - (5,779,429)
---------- ----------
Net (reduction)/increase in shareholders' funds (2,000,798) 686,014
Shareholders' funds brought forward 686,014 -
---------- ----------
Shareholders' funds carried forward (1,314,784) 686,014
========== ==========
</TABLE>
10
<PAGE> 11
DIGITAL PROJECTION INTERNATIONAL PLC
CONSOLIDATED BALANCE SHEET
31 DECEMBER 1998
<TABLE>
<CAPTION>
NOTE 1998 1997
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Tangible assets 9 2,522,947 2,413,174
CURRENT ASSETS
Stocks 11 5,094,175 3,043,238
Debtors 12 4,606,705 2,983,128
Cash at bank and in hand 1,696,412 644,511
---------- ---------
11,397,292 6,670,877
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR 13 (7,235,023) (3,398,037)
---------- ---------
NET CURRENT ASSETS 4,162,269 3,272,840
----------- -----------
TOTAL ASSETS LESS CURRENT
LIABILITIES 6,685,216 5,686,014
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR
Loans 14 (8,000,000) (5,000,000)
PROVISIONS FOR LIABILITIES
AND CHARGES 15 - -
----------- -----------
(1,314,784) 686,014
=========== ===========
CAPITAL AND RESERVES
Called up share capital - equity 16 162,300 151,300
- non-equity 16 12,118 9,700
Share premium account 17 12,462,940 9,976,358
Other reserve 17 1,454,700 582,000
Profit and loss account 17 (15,406,842) (10,033,344)
----------- -----------
(1,314,784) 686,014
=========== ===========
Equity shareholders' funds (14,958,484) (9,595,986)
Non-equity shareholders' funds 13,643,700 10,282,000
----------- -----------
(1,314,784) 686,014
=========== ===========
</TABLE>
These financial statements were approved by the board of Directors on
12 August 1999
Signed on behalf of the Board of Directors
By: / S / T J Cronin
---------------------------------------
T J Cronin
Director
11
<PAGE> 12
DIGITAL PROJECTION INTERNATIONAL PLC
COMPANY BALANCE SHEET
31 DECEMBER 1998
<TABLE>
<CAPTION>
NOTE 1998 1997
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Investments 10 100 100
CURRENT ASSETS
Debtors 12 9,859,179 13,983,619
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR 13 (2,799,913) (29,533)
---------- ----------
NET CURRENT ASSETS 7,059,266 13,954,086
----------- -----------
TOTAL ASSETS LESS CURRENT
LIABILITIES 7,059,366 13,954,186
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR 14 (8,000,000) (5,000,000)
PROVISIONS FOR LIABILITIES
AND CHARGES 15 - -
----------- -----------
(940,634) 8,954,186
=========== ===========
CAPITAL AND RESERVES
Called up share capital - equity 16 162,300 151,300
- non-equity 16 12,118 9,700
Share premium account 17 12,462,940 9,976,358
Other reserve 17 1,454,700 582,000
Profit and loss account 17 (15,032,692) (1,765,172)
----------- -----------
(940,634) 8,954,186
=========== ===========
Equity shareholders' funds (14,584,334) (1,327,814)
Non-equity shareholders' funds 13,643,700 10,282,000
----------- -----------
(940,634) 8,954,186
=========== ===========
</TABLE>
These financial statements were approved by the Board of Directors on
12 August 1999
Signed on behalf of the Board of Directors
By: / S / T J Cronin
---------------------------------------
T J Cronin
Director
12
<PAGE> 13
DIGITAL PROJECTION INTERNATIONAL PLC
COMPANY BALANCE SHEET
31 DECEMBER 1998
<TABLE>
<CAPTION>
YEAR ENDED 58 WEEKS ENDED
31 DECEMBER 1998 31 DECEMBER 1997
NOTE (pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 19 (5,743,330) (6,525,501)
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received 43,584 45,275
Interest paid (514,007) (248,466)
---------- ----------
Net cash outflow from returns on
investments and servicing of finance (470,423) (203,191)
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Purchase of tangible fixed assets (757,219) (1,533,620)
Disposal of tangible fixed assets - 13,190
---------- ----------
Net cash outflow for capital expenditure
and financial investment (757,219) (1,520,430)
ACQUISITIONS AND DISPOSALS
Purchase of business - (6,244,367)
Net cash acquired with subsidiaries - 299
---------- ----------
Net cash outflow for acquisitions
and disposals - (6,244,068)
FINANCING
Issue of ordinary share capital 82,500 450,000
Issue of preference share capital 2,417,500 9,700,000
New medium term bank loans 3,000,000 5,000,000
Expenses paid in connection with shares
issued - (12,642)
---------- ----------
Net cash inflow from financing 5,500,000 15,137,358
----------- -----------
(DECREASE)/INCREASE IN CASH 20 (1,470,972) 644,168
=========== ===========
1998 1997
(pound) (pound)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Decrease in cash (1,470,972) 644,168
Cash inflow from change in debt (3,000,000) (5,000,000)
----------- -----------
Change in net debt (4,470,972) (4,355,832)
Net debt at 31 December 1997 (4,355,832) -
----------- -----------
Net debt at 31 December 1998 (8,826,804) (4,355,832)
=========== ===========
</TABLE>
13
<PAGE> 14
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
1. ACCOUNTING POLICIES
The financial statements are prepared in accordance with applicable
accounting standards. The particular accounting policies adopted are
described below.
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
convention.
CONSOLIDATION AND RESULTS
For all subsidiary undertakings the accounts include the results of those
companies controlled throughout the period or to the date of disposal or
from the date of acquisition as appropriate.
ACQUISITIONS
In accordance with FRS6 and 7, on the acquisition of a business, fair
values are attributed to the assets and liabilities of the acquired
business. Any excess of purchase consideration over the fair value of the
assets acquired is purchased goodwill. Prior to the issue of FRS10
goodwill was permitted to be written off directly to reserves. As a
matter of accounting policy this is the treatment adopted by the company
on its acquisitions prior to 1 January 1998.
TANGIBLE FIXED ASSETS
Depreciation is provided on cost in equal annual instalments over the
estimated useful lives of the assets. The rates of depreciation are as
follows:
Short-term leasehold improvements Over the term of the lease
Plant and machinery 15% per annum
Motor vehicles 25% per annum
Experimental and test equipment 20% per annum
Fixtures, fittings, tools and Between 7.5% and 33.3% per annum
computer equipment
INVESTMENTS
Investments held as fixed assets are stated at cost less provision for
any permanent diminution in value. Those held as current assets are
stated at the lower of cost and net realisable value.
STOCKS
Stocks and work-in-progress are stated at the lower of cost and net
realisable value. Net realisable value is based on estimated selling
price less all further costs to completion and all relevant marketing,
selling and distribution costs.
DEFERRED TAXATION
Deferred taxation is provided on timing differences, arising from the
different treatment of items for accounts and taxation purposes, which
are expected to reverse in the future, calculated at rates at which it is
estimated that tax will arise.
LEASES
Operating lease rentals are charged to income in equal annual amounts
over the lease term.
14
<PAGE> 15
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
1. ACCOUNTING POLICIES (CONTINUED)
RESEARCH AND DEVELOPMENT
Expenditure is charged to the profit and loss account in the year it is
incurred.
PENSION COSTS
The expected cost of providing pensions, as calculated periodically by
professionally qualified actuaries, is charged to the profit and loss
account so as to spread the cost over the service lives of employees in
the scheme in such a way that the pension cost is a substantially level
percentage of current and expected future pensionable payroll.
FOREIGN CURRENCIES
Assets and liabilities in foreign currencies are translated into sterling
at the rates of exchange ruling at the year end or related forward
contract rates. Trading results are translated at the average exchange
rates for the year.
Profits and losses arising in the normal course of trading and realised
exchange differences arising on the conversion or repayment of foreign
currency borrowings are dealt with in the profit and loss account.
Unrealised exchange differences arising on the translation of overseas
net assets are taken direct to reserves.
2. TURNOVER AND OPERATING LOSS
Turnover represents amounts derived from the provision of goods and
services which fall within the Group's ordinary activities after
deduction of trade discounts and value added tax. The turnover and
pre-tax profit, is attributable to one activity. A geographical analysis
of the turnover and profit has not been provided due to commercial
sensitivity.
The operating loss is arrived at as follows:
<TABLE>
<CAPTION>
YEAR 58 WEEKS
ENDED 31 ENDED 31
DECEMBER DECEMBER
1998 1997
(pound) (pound)
<S> <C> <C>
Cost of sales 12,562,450 4,787,305
---------- ---------
Gross profit 6,923,808 3,584,310
---------- ---------
Distribution costs 2,312,731 2,624,180
Administrative expenses 8,412,352 4,428,854
</TABLE>
15
<PAGE> 16
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
3. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
<TABLE>
<CAPTION>
YEAR 58 WEEKS
ENDED 31 ENDED 31
DECEMBER DECEMBER
1998 1997
(pound) (pound)
<S> <C> <C>
DIRECTORS' EMOLUMENTS
Salaries 434,174 421,448
Benefits in kind 51,404 34,100
------- -------
485,578 455,548
======= =======
</TABLE>
Four of the directors were members of the group's defined benefit scheme.
The company contributes to a defined contribution scheme in respect of
two of the directors. Total contributions were (pound)10,236.
The remuneration of the highest paid director was(pound)126,048 (1997
-(pound)114,198). The highest paid director was not a member of the
defined benefit scheme.
<TABLE>
<CAPTION>
YEAR 58 WEEKS
ENDED 31 ENDED 31
DECEMBER DECEMBER
1998 1997
NO NO
<S> <C> <C>
AVERAGE NUMBER OF PERSONS EMPLOYED
Production 33 27
Sales and distribution 31 14
Administration 13 7
--------- ---------
77 48
========= =========
(pound) (pound)
STAFF COSTS DURING THE YEAR (INCLUDING DIRECTORS)
Wages and salaries 2,485,399 1,642,516
Social security costs 232,061 124,190
Pension costs 143,643 115,879
--------- ---------
2,861,103 1,882,585
========= =========
</TABLE>
16
<PAGE> 17
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
4. OPERATING LOSS
<TABLE>
<CAPTION>
YEAR 58 WEEKS
ENDED 31 ENDED 31
DECEMBER DECEMBER
1998 1997
(POUND) (POUND)
<S> <C> <C>
Operating loss is after charging:
Management buyout and financing costs - 795,000
Depreciation and amortisation
Owned assets 647,446 468,357
Rentals under operating leases
Hire of plant and machinery 28,404 8,185
Other operating leases 196,277 52,419
Auditors' remuneration - audit 13,000 12,500
- non audit 15,000 7,259
======= =======
</TABLE>
5. INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
YEAR 58 WEEKS
ENDED 31 ENDED 31
DECEMBER DECEMBER
1998 1997
(POUND) (POUND)
<S> <C> <C>
Bank loans, overdrafts and other loans repayable within five years 743,107 248,466
======= =======
</TABLE>
6. TAX ON LOSS ON ORDINARY ACTIVITIES
There is no tax charge in the current year due to losses within the
Group.
7. DIVIDENDS
<TABLE>
<CAPTION>
YEAR 58 WEEKS
ENDED 31 ENDED 31
DECEMBER DECEMBER
1998 1997
(POUND) (POUND)
<S> <C> <C>
Dividend on `A' and `B' preference shares at 8 pence per share 872,700 582,000
======= =======
</TABLE>
No dividend has been paid or is proposed to be paid to the holders of the
`A' ordinary or ordinary shares.
8. PARENT COMPANY'S PROFIT AND LOSS ACCOUNT
The company has taken advantage of the exemption contained in section 230
of the Companies Act 1985 in not disclosing the profit and loss account
of the parent company. The parent company's loss for the financial year
was (pound)12,394,820 (1997 - (pound)1,183,172).
17
<PAGE> 18
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
9. TANGIBLE FIXED ASSETS
The Group has tangible fixed assets as detailed below:
<TABLE>
<CAPTION>
MOTOR
VEHICLES,
SHORT-TERM DEVELOP- FIXTURES,
LEASEHOLD MENT FITTINGS,
GROUP IMPROVE- PLANT AND AND TEST TOOLS AND
MENTS MACHINERY EQUIPMENT EQUIPMENT TOTAL
(POUND) (POUND) (POUND) (POUND) (POUND)
<S> <C> <C> <C> <C> <C>
Cost
At 1 January 1998 372,553 698,379 1,569,001 238,554 2,878,487
Additions 20,230 320,857 107,604 308,528 757,219
------- --------- --------- ------- ---------
At 31 December 1998 392,783 1,019,236 1,676,605 547,082 3,635,706
------- --------- --------- ------- ---------
Accumulated depreciation
At 1 January 1998 57,048 79,596 298,284 30,385 465,313
Charge for the year 77,688 145,020 325,119 99,619 647,446
------- --------- --------- ------- ---------
At 31 December 1998 134,736 224,616 623,403 130,004 1,112,759
------- --------- --------- ------- ---------
Net book value
At 31 December 1998 258,047 794,620 1,053,202 417,078 2,522,947
======= ======= ========= ======= =========
At 31 December 1997 315,505 618,783 1,270,717 208,169 2,413,174
======= ======= ========= ======= =========
</TABLE>
The company has no tangible fixed assets.
10. INVESTMENTS HELD AS FIXED ASSETS
<TABLE>
<CAPTION>
SHARES IN
SUBSIDIARIES
(POUND)
<S> <C>
Cost and net book value
Additions 100
---
At 31 December 1998 100
===
</TABLE>
INTERESTS IN SUBSIDIARIES
The investment represents 100% of the issued ordinary share capital of
Digital Projection Limited, a company registered in England and Wales.
The principal activity of Digital Projection Limited is the design,
manufacture and sale of electronic projectors.
The company also owns, through Digital Projection Limited, 100% of the
issued ordinary share capital of Digital Projection Inc., a company
registered in the United States of America whose principal activity is
the sale of electronic projectors.
18
<PAGE> 19
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
11. STOCKS
<TABLE>
<CAPTION>
GROUP GROUP
1998 1997
(POUND) (POUND)
<S> <C> <C>
Raw materials and consumables 3,232,431 1,992,455
Finished goods and goods for resale 1,861,744 1,050,783
--------- ---------
5,094,175 3,043,238
========= =========
</TABLE>
There is no stock in the company.
12. DEBTORS
<TABLE>
<CAPTION>
GROUP COMPANY
1998 1997 1998 1997
(POUND) (POUND) (POUND) (POUND)
<S> <C> <C> <C> <C>
Trade debtors 4,085,967 2,371,676 -- --
Amounts owed by subsidiary undertakings -- -- 9,859,179 13,983,544
Other debtors 321,259 520,653 -- 75
Prepayments and accrued income 199,479 90,799 -- --
---------- ---------- ---------- ----------
4,606,705 2,983,128 9,859,179 13,983,619
========== ========== ========== ==========
</TABLE>
13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
GROUP COMPANY
1998 1997 1998 1997
(POUND) (POUND) (POUND) (POUND)
<S> <C> <C> <C> <C>
Bank overdraft 2,523,216 343 2,523,216 343
Trade creditors 3,734,383 2,475,026 -- 4,400
Other creditors including taxation
and social security 476,860 663,091 21,604 24,790
Accruals and deferred income 500,564 259,577 255,093 --
--------- --------- ---------
7,235,023 3,398,037 2,799,913 29,533
========= ========= ========= =========
</TABLE>
19
<PAGE> 20
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
14. LOANS AND OVERDRAFTS
<TABLE>
<CAPTION>
GROUP AND GROUP AND
COMPANY COMPANY
1998 1997
(POUND) (POUND)
<S> <C> <C>
Due within one year 2,523,216 343
Due after more than one year 8,000,000 5,000,000
---------- ---------
10,523,216 5,000,343
========== =========
</TABLE>
The above secured obligations are the subject of a fixed and floating
charge over the company's assets.
The overdraft and loans are repayable as follows:
<TABLE>
<S> <C> <C>
Within one year 2,523,216 343
Between one and two years - -
Between two and five years 8,000,000 5,000,000
After five years - -
---------- ---------
10,523,216 5,000,343
========== =========
</TABLE>
15. PROVISIONS FOR LIABILITIES AND CHARGES
DEFERRED TAXATION
There is no deferred taxation to be provided in the group or company. The
amounts of unprovided deferred taxation are as follows:
<TABLE>
<CAPTION>
GROUP COMPANY
NOT NOT
PROVIDED PROVIDED
1998 1998
(POUND) (POUND)
<S> <C> <C>
Capital allowances in advance of depreciation 81,232 -
Other timing differences (2,292,307) (343,400)
---------- --------
(2,211,075) (343,400)
========== ========
</TABLE>
20
<PAGE> 21
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
16. CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
1998 1997
(POUND) (POUND)
Authorised
<S> <C> <C> <C>
8,000,000 ordinary shares of 3 pence each 240,000 240,000
1,000,000 `A' ordinary shares of 10 pence each 100,000 100,000
50,000,000 `A' preference shares of 0.1 pence each 50,000 50,000
2,500,000 `B' preference shares of 0.1 pence each 2,500 -
------- ---------
392,500 390,000
======= =========
Called up, allotted and fully paid
3,710,000 ordinary shares of 3 pence each 111,300 111,300
510,000 `A' ordinary shares of 10 pence each 51,000 40,000
9,700,000 `A' preference shares of 0.1 pence each 9,700 9,700
2,417,500 `B' preference shares of 0.1 pence each 2,418 -
------- ---------
174,418 161,000
======= =========
Movements in share capital during the year were:
`A' `B'
ORDINARY PREFERENCE
NO NO
Allotment on funding by directors/investors 110,000 2,417,500
======= =========
(POUND) (POUND)
The consideration for the shares issued was as follows 82,500 2,417,500
======= =========
</TABLE>
The respective rights of the shares are as follows:
`A' preference shares
- to receive a fixed cumulative preferential net cash dividend of 8
pence per annum on each share.
- on a winding up of the company to receive (pound)1 per share
together with a sum equal to any arrears on accruals of the
preference dividend.
- provided all `B' preference shares have been redeemed, 15% of `A'
preference shares will be redeemed at the paid up amount on 31
December 2003 with the balance on 31 December 2004, although earlier
redemption is provided for in the Articles.
- to vote only on those matters affecting the rights of the `A'
preference shareholders.
21
<PAGE> 22
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
16. CALLED UP SHARE CAPITAL (CONTINUED)
`B' preference shares
- to receive a fixed cumulative preferential net cash dividend of 8
pence per annum on each share.
- on a winding up of the company to receive(pound)1 per share
together with a sum equal to any arrears on accruals of the
preference dividend.
- to vote only on those matters affecting the rights of the `B'
preference shareholders.
- to be redeemed at the paid up amount on 31 December 2003 although
provisions are made in the company's Articles to redeem earlier if
permitted.
`A' ordinary shares and ordinary shares
- to receive, after payment of the `A' preference dividend, a
cumulative preferential net cash dividend based on the relationship
between 20% of net profit and the preference dividend.
- after distribution to the `A' preference shareholders, the
remaining capital is distributed to the holders of the `A' and
ordinary shares in the proportion that the two classes are entitled
to vote at general meetings.
- the shares are not redeemable
- the `A' ordinary shareholders have one vote per share, the
ordinary shareholders having 1/18.55 of the vote per share.
17. RESERVES
<TABLE>
<CAPTION>
GROUP SHARE PROFIT
PREMIUM OTHER AND LOSS
ACCOUNT RESERVE ACCOUNT TOTAL
(POUND) (POUND) (POUND) (POUND)
<S> <C> <C> <C> <C>
Brought forward at 1 January 1998 9,976,358 582,000 (10,033,344) 525,014
Premium on shares issued in the year 2,486,582 -- -- 2,486,582
Retained loss for the year -- -- (5,373,498) (5,373,498)
Dividend on non equity shares -- 872,700 -- 872,700
----------- ----------- ----------- -----------
12,462,940 1,454,700 (15,406,842) (1,489,202)
=========== =========== =========== ===========
(POUND)
Total reserves can be split as follows:
Available for distribution (10,205,355)
Not available for distribution 8,716,153
-----------
(1,489,202)
===========
</TABLE>
22
<PAGE> 23
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
17. RESERVES (CONTINUED)
<TABLE>
<CAPTION>
COMPANY SHARE PROFIT
PREMIUM OTHER AND LOSS
ACCOUNT RESERVE ACCOUNT TOTAL
(POUND) (POUND) (POUND) (POUND)
<S> <C> <C> <C> <C>
Brought forward at 1 January 1998 9,976,358 582,000 (1,765,172) 8,793,186
Premium on shares issued in period 2,486,582 - - 2,486,582
Retained loss for the period - - (13,267,520) (13,267,520)
Dividends on non equity shares - 872,700 - 872,700
---------- --------- ----------- ----------
12,462,940 1,454,700 (15,032,692) (1,115,052)
========== ========= =========== ==========
</TABLE>
18. FINANCIAL COMMITMENTS
<TABLE>
<CAPTION>
1998 1997
(POUND) (POUND)
<S> <C> <C>
CAPITAL COMMITMENTS
Contracted for but not provided 12,728 13,800
======= =======
Authorised but not yet contracted for 122,872 316,635
======= =======
OPERATING LEASE COMMITMENTS
LAND AND
BUILDINGS OTHER
(POUND) (POUND)
Leases which expire:
Within one year - 68,631
Within 2 to 5 years 75,817 84,718
After 5 years - -
------- -------
75,817 153,349
======= =======
</TABLE>
19. RECONCILIATION OF OPERATING LOSS TO NET CASH FLOW FROM OPERATING ACTIVITIES
<TABLE>
<CAPTION>
YEAR 58 WEEKS
ENDED 31 ENDED 31
DECEMBER DECEMBER
1998 1997
(POUND) (POUND)
<S> <C> <C>
Operating loss (3,801,275) (3,468,724)
Depreciation 647,446 468,357
Increase in stock (2,050,937) (3,043,238)
Increase in debtors (1,623,577) (2,869,478)
Increase in creditors 1,085,013 2,387,582
---------- ----------
Net cash outflow from continuing operating activities (5,743,330) (6,525,501)
========== ==========
</TABLE>
23
<PAGE> 24
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
20. ANALYSIS OF NET DEBT
<TABLE>
<CAPTION>
1998 1997
(POUND) (POUND)
<S> <C> <C>
Cash at bank and in hand 1,696,412 644,511
Bank overdrafts (2,523,216) (343)
---------- ----------
(826,804) 644,168
Loans (8,000,000) (5,000,000)
---------- ----------
(8,826,804) (4,355,832)
========== ==========
</TABLE>
21. RELATED PARTY TRANSACTIONS
The company has taken advantage of the exemption contained in FRS8
"Related Party Disclosure", in not disclosing transactions with its
wholly owned subsidiaries.
There were no other related party transactions.
22. PENSIONS
The Group operates a funded defined benefit scheme. The assets of the
scheme are held in a separate trustee administered fund.
The scheme is subject to a triennial valuation by independent actuaries,
the last valuation having been performed at 5 April 1999 using the
projected unit method. The following actuarial assumptions were applied:
<TABLE>
<S> <C>
Investment returns 5.71%
Salary growth 5.34%
Pension increases 2.84%
</TABLE>
At 5 April 1999 the market value of the assets of UK scheme was
(pound)957,018 and was sufficient to cover 87% of the benefits which had
accrued to members. The employers contributions rate over the average
remaining service lives of the members takes account of the deficit.
The total pension cost in the year was (pound)143,643.
23. SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
The group's consolidated financial statements are prepared in accordance
with generally accepted accounting principles in the United Kingdom (UK
GAAP), which differs in certain respects from generally accepted
accounting principles in the United States (US GAAP). Differences which
have a significant effect on the consolidated net income and
shareholders' equity of the group are set out below. While this is not a
comprehensive summary of all differences between UK and US GAAP, other
differences would not have a significant effect on the consolidated net
income or shareholders' equity of the group.
(A) PENSIONS
Under UK and US GAAP, pension costs are determined on a
systematic basis over the length of service of employees. US
GAAP is more prescriptive in the application of the actuarial
method, actuarial assumptions to be applied in the calculation
of pension costs and the allocation of costs to accounting
periods.
24
<PAGE> 25
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
23. SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CONTINUED)
(B) GOODWILL
Under UK GAAP, goodwill arising on acquisitions after 1
January 1998 will be treated in accordance with Financial
Reporting Standard 10 and capitalised and amortised as it
would be in accordance with US GAAP. Prior to that date
goodwill was and remains written off against retained earnings
in the consolidated balance sheet in the year of acquisition.
Under US GAAP, goodwill is capitalised on the balance sheet
and amortised by charges against income over its estimated
useful life, not to exceed 40 years. For US GAAP, goodwill has
been amortised over 20 years.
(C) SOFTWARE DEVELOPMENT COSTS
Under UK GAAP costs incurred in the development of computer
software are written off as incurred. Under US GAAP, costs
incurred internally in creating a computer software product to
be sold, leased or otherwise are expensed as incurred until
technological feasibility is established. After that, all
software production costs are capitalised. Amortisation of
these costs is based on current and future revenue.
Capitalisation ceases when the product is available for
general release to customers.
(D) EFFECT ON NET INCOME OF DIFFERENCES BETWEEN UK AND US GAAP
For the year/period ending 31 December
<TABLE>
<CAPTION>
NOTE 1998 1997
(POUND)'000 (POUND)'000
<S> <C> <C>
Net loss in accordance with UK GAAP (4,501) (3,672)
US GAAP adjustments -
Pension costs 23(a) (15) (21)
Amortisation of goodwill 23(b) (289) (289)
Software development costs 23(c) 131 -
------ ------
Net loss in accordance with US GAAP (4,674) (3,982)
====== ======
</TABLE>
(E) CUMULATIVE EFFECT ON SHAREHOLDER'S EQUITY OF DIFFERENCES
BETWEEN UK AND US GAAP
At 31 December
<TABLE>
<CAPTION>
NOTE 1998 1997
(POUND)'000 (POUND)'000
<S> <C> <C>
Shareholders' equity in accordance with UK GAAP (14,958) (9,596)
UK GAAP adjustments -
Pensions 23(a) (36) (21)
Goodwill 23(b) 5,201 5,490
Software development costs 23(c) 131 -
------ ------
Shareholders' equity in accordance with US GAAP (9,662) (4,127)
====== ======
</TABLE>
25
<PAGE> 26
DIGITAL PROJECTION INTERNATIONAL PLC
NOTES TO THE ACCOUNTS
YEAR ENDED 31 DECEMBER 1998
23. SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CONTINUED)
(F) CLASSIFICATION DIFFERENCES BETWEEN UK AND US GAAP
Dividends on preferred shares
Under UK GAAP, dividends on preferred shares of
(pound)1.45m are included as an `other reserve' as
the group does not have the ability to pay the dividend in
the next accounting period. Under US GAAP these dividends
would be included in accruals.
Preferred shares
Under UK GAAP preference shares are included as part of total
shareholders' funds. Under US GAAP these shares are disclosed
between liabilities and shareholders' equity.
(G) CASH FLOWS
Under UK GAAP the group complies with Financial Reporting
Standard No.1 (FRS1), the objective and principles of which
are similar to those set out in Statement of Financial
Accounting Standard No.95 (SFAS95). The principal difference
between the two standards is in respect of classification.
Set out below, for illustrative purposes, is a summary
consolidated statement of cash flows under US GAAP.
<TABLE>
<CAPTION>
1998 1997
(POUND)'000 (POUND)'000
<S> <C> <C>
Net cash provided by operating activities (6,066) (6,729)
Net cash used in investing activities (905) (7,764)
Net cash provided in financing activities 5,500 15,137
------ ------
Net (decrease)/increase in cash and cash equivalents (1,471) 644
Cash and cash equivalent at start of year 644 -
------ ------
Cash and cash equivalents at end of year (827) 644
====== ======
</TABLE>
24. POST BALANCE SHEET EVENT
On 3 September 1999, Imax Corporation, a company incorporated in Canada,
acquired the whole of the issued share capital of Digital Projection
International plc.
26
<PAGE> 27
IMAX CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
On September 3, 1999, Imax Corporation (the "Company") acquired all of the
outstanding common and preferred shares of Digital Projection International
("DPI") in a transaction accounted for under the purchase method.
The following unaudited pro forma consolidated statements of operations combine
the historical results of the Company and DPI for the year ended December 31,
1998 and the six months ended June 30, 1999, adjusted to give effect to the
transaction in both cases as if the acquisition had occurred on January 1, 1998.
The unaudited pro forma consolidated statements of operations are presented for
informational purposes only. They do not purport to be indicative of the
financial results that actually would have resulted had the transaction occurred
on January 1, 1998, nor the results that may result from future operations. The
unaudited pro forma consolidated statements of operations should be read in
conjunction with the historical financial statements and notes thereto of DPI
included elsewhere in the 8-K/A of the Company, the Company's form 10-K for the
year ended December 31, 1998, and the Company's forms 10-Q for the quarters
ended March 31, 1999, June 30, 1999 and September 30, 1999.
27
<PAGE> 28
IMAX CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(in thousands of U.S. dollars)
(unaudited)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
COMPANY DPI COMBINED (NOTE 2) CONSOLIDATED
------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
REVENUE
Systems $ 41,309 $ $ 41,309 $ $ 41,309
Films 19,066 19,066 19,066
Other 10,626 12,753 23,379 23,379
------------- ------------- ------------- ------------- -------------
71,001 12,753 83,754 83,754
COSTS AND EXPENSES 38,757 11,867 50,624 (d) (38) 50,586
------------- ------------- ------------- -------------- -------------
GROSS MARGIN 32,244 886 33,130 38 33,168
Loss from equity accounted investees 162 162 162
Selling, general and administrative expenses 16,258 3,321 19,579 (d) (13) 19,566
Research and development 1,287 893 2,180 2,180
Amortization of intangibles 945 233 1,178 (a) (233) 1,584
(b) 436
(c) 203
------------- ------------- ------------- ------------- -------------
EARNINGS (LOSS) FROM OPERATIONS 13,592 (3,561) 10,031 (355) 9,676
Interest income 5,269 5,269 5,269
Interest expense (11,014) (806) (11,820) (e) 806 (11,014)
Foreign exchange gain (loss) 213 213 213
------------- ------------- ------------- ------------- -------------
EARNINGS (LOSS) BEFORE INCOME TAXES AND MINORITY
INTEREST 8,060 (4,367) 3,693 451 4,144
Provision for income taxes (3,144) (3,144) (f) 1,044 (2,100)
-------------- ------------- -------------- ------------- --------------
NET EARNINGS (LOSS) BEFORE MINORITY INTEREST 4,916 (4,367) 549 1,495 2,044
Minority interest (707) (707) (707)
-------------- ------------- -------------- ------------- --------------
NET EARNINGS (LOSS) $ 4,209 $ (4,367) $ (158) $ 1,495 $ 1,337
============ ============= ============= ============ ============
NET EARNINGS (LOSS) PER SHARE
Basic $ 0.14 $ 0.05
Diluted $ 0.14 $ 0.04
WEIGHTED AVERAGE NUMBER OF SHARES
Basic 29,581 29,581
Diluted 30,435 30,435
</TABLE>
28
<PAGE> 29
IMAX CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
FOR THE YEAR ENDED DECEMBER 31, 1998
(in thousands of U.S. dollars)
(unaudited)
<TABLE>
<CAPTION>
PRO-FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
COMPANY DPI COMBINED (NOTE 2) CONSOLIDATED
------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
REVENUE
Systems $ 140,874 $ $ 140,874 $ $ 140,874
Films 30,824 30,824 30,824
Other 18,657 32,357 51,014 51,014
------------- ------------- ------------- ------------- -------------
190,355 32,357 222,712 222,712
COSTS AND EXPENSES 111,784 29,569 141,353 (d) (78) 141,275
------------- ------------- ------------- -------------- -------------
GROSS MARGIN 78,571 2,788 81,359 78 81,437
Loss from equity accounted investees 6,763 6,763 6,763
Selling, general and administrative expenses 38,777 6,813 45,590 (d) (27) 45,563
Research and development 2,745 1,966 4,711 4,711
Amortization of intangibles 5,948 797 6,745 (a) (797)
(b) 900
(c) 420 7,268
------------- ------------- ------------- ------------- -------------
EARNINGS (LOSS) FROM OPERATIONS 24,338 (6,788) 17,550 (418) 17,132
Interest income 5,320 5,320 5,320
Interest expense (14,646) (1,161) (15,807) (e) 1,161 (14,646)
Foreign exchange gain 588 588 588
------------- ------------- ------------- ------------- -------------
EARNINGS (LOSS) BEFORE INCOME TAXES AND MINORITY
INTEREST 15,600 (7,949) 7,651 743 8,394
Provision for income taxes (9,810) (9,810) (f) 1,892 (7,918)
-------------- ------------- -------------- ------------- --------------
EARNINGS (LOSS) BEFORE MINORITY INTEREST 5,790 (7,949) (2,159) 2,635 476
Minority interest (1,895) (1,895) (1,895)
-------------- ------------- -------------- ------------- --------------
EARNINGS (LOSS) BEFORE EXTRAORDINARY ITEM 3,895 (7,949) (4,054) 2,635 (1,419)
Extraordinary loss on early retirement of debt,
net of income tax benefit of $ 1,588 (2,095) (2,095) (2,095)
-------------- ------------- --------------- ------------- --------------
NET EARNINGS (LOSS) $ 1,800 $ (7,949) $ (6,149) $ 2,635 $ (3,514)
============ ============= ============= ============ =============
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) BEFORE EXTRAORDINARY ITEM
Basic $ 0.10 $ (0.05)
Diluted $ 0.09 $ (0.05)
NET EARNINGS (LOSS)
Basic $ 0.03 $ (0.12)
Diluted $ 0.03 $ (0.12)
WEIGHTED AVERAGE NUMBER OF SHARES
Basic 29,281 29,281
Diluted 30,474 29,281
</TABLE>
29
<PAGE> 30
IMAX CORPORATION
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND THE YEAR ENDED DECEMBER 31, 1998
(in U.S. dollars)
(unaudited)
1. ACQUISITION
On September 3, 1999, the Company paid $27.2 million to acquire all of
the Ordinary and Preference Shares of DPI in an acquisition accounted
for as a purchase. The excess of the purchase price over the book value
of the net assets acquired has been allocated to assets and liabilities
to record them at their preliminary estimated fair values at September
3, 1999 as follows:
<TABLE>
<CAPTION>
000's
-------------
<S> <C>
Cash $ 1,526
Accounts receivable 3,875
Inventory 6,771
Capital assets 3,056
Other assets 4,000
Accounts payable and accrued liabilities (11,104)
Deferred income tax 1,714
Goodwill 17,412
-------------
$ 27,250
=============
</TABLE>
2. PRO FORMA ADJUSTMENTS
The unaudited pro forma consolidated statements of operations for the
six months ended June 30, 1999 and the year ended December 31, 1998
reflect:
(a) the elimination of the amortization of DPI's acquired goodwill of
$233,000 and $797,000 respectively;
(b) the amortization of goodwill on a straight line basis over 20 years
being $436,000 and $900,000 respectively;
(c) the amortization of other assets on a straight line basis over 7 and
13 years, being $203,000 and $420,000 respectively;
(d) a decrease in the amortization of capital assets on a straight line
basis over 5 years, being $51,000 and $105,000 respectively;
(e) the elimination of interest expense of $806,000 and $1,161,000
respectively on DPI's long-term debt extinguished at acquisition; and,
(f) the tax effect of the above entries and the tax effect of the six
month and annual loss of DPI not previously tax effected.
30
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IMAX CORPORATION
Date: November 16, 1999 By: / S / John M. Davison
- ------------------------- ----------------------
John M. Davison
Chief Operating Officer and
Chief Financial Officer
(Principal Financial Officer)
By: / S / Mark J. Thornley
----------------------
Mark J. Thornley
Vice President, Finance
(Principal Accounting Officer)
31
