Imax Corp (IMAX) 2003 Q1 法說會逐字稿

Please stand by, we're about to begin. Good day, everyone. Welcome to the IMAX conference call. This call is being recorded. At this time I would like to turn the call over to Mr. Brad Wechsler. Please go ahead, sir.

Thank you, operator. Thank you all for joining us today. With me today is my partner and Co-CEO, Rich Gelfond, Frank Joyce, our Chief Financial Officer, and Steve Abraham, Head of IR. Before we begin, our lawyers have asked me to read the following forward-looking statement language. Our comments and comments to your questions on this call might include statements that are forward looking in that they address future results or occurrences. Actual future results and occurrences may differ materially from these forward-looking statements. You should refer to our SEC and OSC filings for a more detailed discussion of some of the factors that could affect our future results and occurrences. That said, what we'd like to accomplish on today's call is a financial and operational review of the first quarter ended march 31, '03 and update you on our commercial strategy is continuing. In particular, we will share with you why we believe that we put in place all the elements of a found business model that can grow IMAX into a significantly larger enterprise.

We have concrete evidence that this is happening, including an agreement with Warner Bros. For the next two chapters in the Matrix trilogy, as well as the return of north American exhibitors, to our business partially driven by a new IMAX theater system called the MPX, a system designed specifically for multiplex clients. The goal of our research and development process is to make the IMAX business easy and profitable for both Hollywood studios and commercial exhibitors. Indeed, this is the process which is driving our commercial business from theory to reality. Before we get into some of the specifics, let me begin with our first quarter financial results, which saw improvement year over year while exceeding analyst expectations. In the first quarter, IMAX reported earnings from continuing operations of 7 cents per share, which exceeded analyst expectations of 3 cents. In last year's first quarter, we had earnings of 6 cents per share, excluding a one-time gain from our bond repurchases. On a reported basis, last year's first quarter number included $12 million or $26 cents per share, generated from the retirement of a portion of our junior debt at a significant discount.

When we reported our first quarter results last year, this gain was recorded as an extraordinary gain. However, due to an accounting change that took effect this past year, gains of this nature are now considered part of ordinary income. For the quarter, our revenues increased 9% or the prior period period. Broken out, IMAX systems revenues increased by 9% as we recognized revenues on 8 theater systems versus 6 in last year's first quarter. Film revenues increased 13%, primarily due to the continued strong performance of our film space station which was released about a year ago and has broken the $50 million mark in total growth and is still generating just under $.5 million a week-- other revenues are flat at about $5 million. Gross margin for the quarter was approximately 46% of revenues, up from 43% in last year's first quarter. Moving down the income statement statement, SG&A declined to 9.2 million from 10.8 million in the first quarter last year. The 15% decrease over the prior period was due to a reduction in legal fees and lower bad debt expense.

For the quarter, R&D was approximately $700,000 versus $200,000 last year, due primarily to development of the IMAX MPX theater system. Interest expense was essentially flat at $4.3 million for the first quarter. Beyond our reported financial results, there are a number of other highlights for the quarter, led by increased theater signings in both domestic and international commercial markets, continuing our signings momentum that we experienced in the fourth quarter of last year. During the quarter, we signed deals for six new theater systems which is doubled the number of deals that we signed in the first quarter of 2002, and our best first quarter for signings since the year 2000. Specifically, we signed a three theater deal in India, with a local real estate development that specializes in leading edge entertainment projects, multiplexes and retail malls. The theaters are expected to be installed by 2006.

This agreement follows the strong business trend that we are experiencing in new markets internationally, both in signings and attendance. We're continuing to make significant strides in growing the IMAX network around the world. For example, we recently opened our first theater in Russia and early box office numbers are encouraging. We also are pleased with the performance of a theater that just opened in Prague, that is also generating strong early numbers. Of course, the Moscow opening is mostly about establishing an IMAX platform for future installations in different Russian cities.

We expect to be able to replicate the experience that is we've had in other countries, like the people's republic of China, India and Poland. In China, for example, we just opened our first theater in December of 2001, and we are now scheduled to have eight theaters open by 2005. In terms of the commercial market, which Rich will address in more detail later in the call call, we're coming off of a very important quarter where we began to see the return of the north American exhibitors to our business, something we didn't expect until the second half of this year. Specifically, we signed deals with those Regal Entertainment. Group and Jack Loeks theaters two existing customers. With the addition of its two first quarter signings, Regal now operates 14 IMAX theaters, making it the largest third-party operator of IMAX theaters in the world.

The quarter also saw us sign our first contract for an IMAX MPX theater, a newer less expensive projection system designed specifically for multiplex operator with Jack Loeks theaters. Jack Loeks already successfully operates and IMAX theater systems system in Grand Rapids Michigan and now is able to add an IMAX theater to it’s complex in Lansing, a smaller market and one that might not have been able to support a more expensive IMAX theater. These deals with Regal and jack Loeks, demonstrate that our commercial strategy is starting to take hold. In terms of our balance sheet, we ended the quarter with a cash balance of $37 million, similar to where we were on December 31st. We also ended the quarter with about $209 million in debt, which translates into net debt of about $172 million. On April 1st, we retired the remaining $9 million of our junior notes.

We believe that our debt to EBITDA ratio will continually improve over the next three years, enabling us to refinance our '05 maturing debt on reasonable terms. In terms of guidance, based on what we see now, we remain on track to install between 18 to 20 new theater systems in 2003 and generate earnings per share of 10 cents to 15 cents. In terms of the second quarter, we expect to install 6 systems, have approximately $35 million in revenues and be slightly profitable. In terms of the second half of the year, as we discussed with you on the last call, we expect to report a small loss in the third quarter and be profitable for the fourth quarter. Finally, as we looked at 2003, our key goal remains unchained, growing the IMAX network and introducing more day and date releases like " "Matrix III" fortunately, the next two Matrix films as which will explain look like the perfect opportunities we need to really drive our business going forward.

Strong Hollywood content should lead to new leases of IMAX leaders. Which will increase the [Inaudible] of our commercial network With that, let me turn it over to Rich.

Thanks, Brad. As Brad indicated earlier, we're optimistic about our business and the progress we've made to date. The company is financially stable, our R&D efforts have produced two key innovations that will drive our business in the future, and our key customer groups are helping. The main factor driving both our optimism and commercial strategy is a fundamental change in our business model that has occurred over the last 12 months. We've taken numerous steps towards making the I IMAX business easier and more profitable for two key constituencies. Hollywood studio and Commercial exhibitors . Specifically we've use innovation using IMAX MPX and DMR to make our business plug and play for the studios and exhibitors. As most of you know IMAX makes most of its profits from sales and leases of new IMAX theaters and increasing the attendance at existing theaters. In order to continue to make theaters attractive to potential customers, we have to ensure that we're driving strong returns for our existing theater customers.

With IMAX DMR and IMAX MPX, we can combine the best of Hollywood event films which consumers will pay a premium price for with IMAX theater which delivers the IMAX experience at lower capital and lower operating costs. To begin with, IMAX DMR, our proprietary technology that allows us to convert virtually any 35 millimeter live action Hollywood film into the IMAX 1570 film format for a modest cost of $2 to $3 million, has infinitely increased the number of potential films for IMAX theaters. We've already demonstrated that this technology works, and that there is considerable consumer appeal with the DMR with the releases of last year of Apollo 13 the IMAX experience and star wars II, attack of the clones the IMAX experience.

With the release of both films, we commission third party research studies that found that consumers will pay a premium price to see IMAX Films and just as importantly, they will drive farther for the experience. For both those films, the average drive distance is over 25 miles and for star wars the ticket price was about $10 versus $6.50 when it played in 35 mm. On April 23rd, we made perhaps the most important film announcement in our history, that the Matrix reloaded and the Matrix revolution, the second and third chapters in the [Inaudible] brothers film trilogy will both be released in the IMAX theaters this spring and fall. Included in this announcement is the first day and day release of an IMAX DMR film with the Matrix revolutions opening simultaneously [Inaudible]in both 35 millimeter theaters and IMAX theater. -- A day and day release of Hollywood film is crucial to our strategy, as now IMAX theaters will be able to benefit from the multi-million dollar marketing campaign that films of this magnitude receive.

An interesting thing occurred as we were in discussions with Warner Bros., [Inaudible] and Producer Joe Silver for the day and day release in November of Revolution. When the filmmakers at Warner saw the test of the Matrix, their reactions were so positive that they wanted to release "reloaded" the film opening this May, as soon as possible. Given the timing involved we weren't able to do a day in day release of the film, but the film will be opening two to three weeks after the May 15th release of the 35 millimeter version. We're extremely excited about the commercial prospects of both of these films and by the fact that this is a first multiple IMAX PMR film commitment. 2003 has been described by some major news magazines as the year of the Matrix. And for IMAX, it certainly will be.

We will measure success for each of these two films in somewhat different ways. For "reloaded" in a few weeks, given its delayed release, we will be looking at the per screen grosses of that film versus the 35 millimeter grosses, at the same point in the release. We will also be focusing on the or how long the film lasts as another key measure of success. For the third film in the trilogy this November, we'll pay more attention to the overall box office gross as well as the per screen gross which we expect to be multiples of what the film runs in 35 millimeter. We think that a major day in day release of a film like the Matrix revolution can generate approximately $20-25 million gross in IMAX theaters.

With an all-in cost of $5-6 million, which includes DMR and print and marketing costs, IMAX theaters offers studios a compelling new release window for its films. In addition to the direct financial benefits available to studios that make their films available to IMAX theater through IMAX DMR, there are a number of other benefits that have the studios excited. Studios can charge a premium price for their better films and help turn their films into event, making them stand out in a crowded market and helping to improve word of mouth. Hollywood is already starting to take notice and use IMAX theaters as a new outlet for its content. In fact, in just the 12-month period, four studios, Universal, Fox, Disney and now Warner Bros. Will have released films to IMAX theaters. The revenue from films that are Hollywood continues to release to IMAX theaters will significantly benefit the commercial theater exhibitors who lease IMAX system. As I mentioned earlier, however, that is still only half the equation.

We must remain focused on the cost side of the theater equation as well. As we discussed with you on our last call, we've been developing a new lower cost theater system, the IMAX MPX. On March 3rd at show west, the annual conference for commercial exhibitors. We officially launched the IMAX MPX, which is a product designed specifically for multiplexes. The MPX in combination with our film technology DMR delivers on our goal of making the IMAX business easier and potentially more profitable for commercial exhibitors. In addition to the significant cost savings as compared to existing IMAX theaters, it also makes the IMAX business easier and cheaper on the operational side. The MPX offers exhibitors something very compelling, a way to distinguish their complexes from their competitors. Additionally, the MPX no longer requires specialized staff, including the specially trained IMAX projection.

The introduction of the MPX dovetails very well with what is going on with commercial exhibitors in North America. The exhibitors who have recently experienced a dramatic financial turnaround are generating significant cash flows and they need way to his grow, but not by building new complexes. IMAX MPX offers exhibitors a way to better utilize their existing complexes either adding a new exhibitor or by retrofitting two existing stadium seat multiplex auditorium in to one IMAX theater. We've been very pleased by the reception that IMAX MPX has received from exhibitors, both at show west and our discussions since then.

Just since our Matrix announcement about two weeks ago ago, we've seen interest levels increase. Finally, as Brad mentioned earlier, Jack Loeks theaters has already placed the first order for MPX and that theater will open within the next 12 months. In conclusion, we're very excited to see our goals, one by one, become realities and we're more focused on translating these events into financial performance as we move through the next 24 months. With that, we would like to open it up for questions. Operator?

Thank you, Mr. Gelfond. Today’s question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key, followed by the digit 1 on your touchtone telephone at this time. You'll if you are on a speaker phone turn off the mute function so that your signal can reach our equipment. If your question has been asked and answered please press the pound key. Again that’s star-1 for questions. We'll pause for just a moment to give everyone the chance to respond. We'll first go to Richard Engracia (ph) at Ross capital Partners.

Good morning, everyone.

Good morning.

Can you speak to the gross margin improvement? Anything significant to speak of there, other than what I suspect is product mix shifting back more towards systems?

Yeah, it's just product mix, Rich. You can't discern any trends from that.

And are you seeing or do you expect to see any more in overages on the box office percentage on the contracts?

You mean royalty overages?

Right.

I think it's too early to predict anything like that, Rich.

Okay. And just quickly, I imagine we would have heard if there were more than just the Loeks MPX? That's all we have right now.

We sell the GP, we sell the MPX, we sell the [FR]all can go to multiplexes. The MPX is specifically designed for multiplexes it's less expensive and easier to use. It's just going to be a part of our product mix. We're not going to make an announcement every time we sell an MPX. It's another arrow in the quiver.

And Frank may be just quickly on DNA and CAPEX for the quarter?

Sure.- Depreciation is about $2.4 million. CAPEX, 2.4 versus about 3.9 last year. CAPEX is about 600,000 versus 2.1 last year.

Okay. Thanks, congrats, everyone.

We'll go next at Calfier Dhar from Jeffries and Company.

Hey thanks and congratulations on Matrix, that’s really great news. A few questions here. First one, regarding the DMR fee for the two Matrix fees -- for the Matrix sequels rather-- is that commensurate with the quarter as it will be earned in the quarter in which the films are released or is that kind of all at one time? Any sense for that?

When you say the DMR fees --

Yeah.

You know, basically, DMR, the money that it costs to DMR a film incurs in a quarter that the film is really being produced or released.

Okay. So in this case, what would it be for reloaded and revelation?

Let me stop you, Kavir. We said we're going to do this on a break-even basis in general general, and we haven't disclosed the financial arrangements with Warner. I don't think you should draw any conclusions about what the impact will be.

Okay. As far as any sense of how many theaters are expected to play the reloaded version?

It's really, you know, it's really hard to specifically say, because actually Warner Bros. Is handling that, but you know, I think, you know, given our somewhat late start, we see maybe a potential of approximately 50.

Okay. All right. And I don't think I saw in the release any mention of the value of the backlog. I'm assuming it's at 66 systems at the end of Q3, or I'm sorry, the first quarter?

It's about 59 systems with the value of about 146 million.

146, okay. And any sense of -- can you share with us the composition of the backlog, how does it break out domestic versus international and institutional versus commercial?

Frank will give you the broad sweep. We don't do that in real profound detail.

You know, I've got breakdown briefly about region. Roughly about 30% is Asia. 35% Europe. North America 17%, South America 10%, things like that, Middle East 8%, as a general breakdown of the dollars. If it is largely into the 90% commercial as opposed to institutional.

Okay. All right. And okay, so you gave us also the sense of how the installations should break out. Obviously you gave us Q2 guidance. As far as the remained based on your guidance it seems like Q4 should be heavily weighted the remaining [Inaudible] to Q4; is that correct?

Q4 is better than Q3, that's correct.

Thanks a lot, appreciate it.

We'll go next to Michael Galand (ph) at CIBC World Markets.

Good morning, guys. I had some questions on the installs. Given all of the signings you've had of late, including India in the Regal systems and all of that, I know it's early, but can we -- is it reasonable to think that in '04, your system installs will actually be higher than this year where I think you said you are going to do 18 to 20?

It's way too early to make predictions like that right now. Obviously our strategy of releasing Hollywood day in day movies in the Matrix is to stimulate -- in addition to increasing attendance at existing theaters, is to stimulate demand and increase theater sales. That's what we would hope would happen, but it's way too early to predict that.

The question that's implicit sit in your question which is hard to answer, which is the gap between signings and installations. You know, first you see momentum on the signing side, which translates into momentum on the installation side.

Right, right. And can you also talk a little bit about how the discussions have gone with some of the other studios and some other big films coming up? Obviously you nailed the biggest film of the year. Have the conversations changed that you've had since you had that landmark press release?

You know, oddly enough, the tenor of our conversations was pretty positive, even with multiple studios, even before we did the deal with Warner Bros., and they continue to be positive. I mean, as Rich said, four studios have already released films in the IMAX world, and two or three more are also interested in doing it. So, it's never done until it's done, but, you know, obviously, we're building our strategy brick by brick, and you know, getting the Matrix done is one mighty big brick, but we expect there will be others following.

Congratulations.

Thank you.

We'll go next to Ken Silver (ph) at CRT Capital.

Good morning. A few questions, Rich, the four studios you said, Universal, Disney, Warner Bros. -- what was was the fourth wan?

Fox.

Sorry about that. The signings in the first quarter, obviously, two of them were Regal. What were the other four?

Jack Loeks and the other three in India.

That was first quarter? I thought that was second quarter.

That was first quarter.

2003 full-year CAPEX. Do you have a number for that?

Yeah, I have around $5 million.

Does that include --

Compared to $5 million last year. That I know clouds both film as well as traditional fixed assets.

Okay. Are you still -- I'm going back to the last conference call now. Are you still forecasting $20 million of cash at year-end?

That's approximately correct.

Approximate.

On the last call, you said that you thought you would announce two DMR movies, and you have announced two. Do you think that's it for this year or do you think there may be more announcements later in the year?

We hope there'll be other announcements this year.

Okay. Thanks, and good luck.

Thank you.

Just as a reminder, if you have a question, please press star 1 at this time. We'll go next to Mark Redman (ph) at Harvest Management.

Hi, guys, how are you. A couple of questions to follow Up on last one. You said you hope you have more announcements this year. Will that be for a next year slate or that be potentially for still something this year year?

No, we would be looking to fill in '04 at this point.

Can you talk a little bit about the box office economics? I know that you didn't disclose on this particular deal, but on a conceptual going forward, how do the economics translate, will translate to IMAX, if it's a couple years down the road and we have three or four day in date releases, how do you see the economics?

Sure, it's actually a combination of an oblique and sophisticated response. Everybody should know because says it's so key to our business. Our goal is not to make money in the movie business. We make money by expanding the IMAX network and selling and leasing additional systems. So, the predicate is, we have to make money for our licensees for our customers, and these movies make money for our customers as we said by, driving their revenue line. What also makes money for our customers is lowering their capital costs of entry into the IMAX business. As that occurs, our signings and our installations should accelerate. And that's the big driver of where we make money. The other place, which is really further down the road, and we certainly don't model this in yet, but it's an interesting dynamic, which is, if we start making money, and a lot of money for the studios, there'll be competition for the IMAX slots, particularly the IMAX slots whether they are at Thanksgiving or Christmas or summer time when the big block busters come out. It's possible at some point down the road, depending upon the IMAX competition, that there might be an ability for IMAX Corporations to charge a toll for product that gets into the IMAX system, but that's further down the road.

What about the IMAX share of the gross as it applies against the guaranteed minimum payments and to the extent that you have three or four tent pull films a year, are we going to be potentially materially above the guaranteed payments and there are --

Absolutely. That is another area where we will make money. There are two other areas. Our owned and operated theaters will make more money with this product, and also with the overages from the royalties. But when you put it into comparison to what we would expect to make from growing our theaters system, the real material jump up would be from increase in [Inaudible] signs and installation.

Last but not least, the washer steam block. Can you enlighten us, have there been any discussions with the washer Stein people and where it stands because I think the partnership the last extension expires again in August.

Yeah, I mean, sure. We talk to them quite often about it. Their merchant banking fund expired several years ago, and I think they've gotten four extensions now. As you said, the last extension expires this august. They seem to have four options which would be a sale of the block, a secondary offering, a distribution to their limited, or get an extension, as they've done before. They haven't given the company notice of what route they are going to take or when they are going to take it. That's kind of where it is.

Okay. Great, well, you guys did a great job. Thank you very much.

Thank you.

We'll take our next question from David Marsh (ph) at Friedman Billings and Ramsey.

Hey, guys, good quarter. I wanted to talk a little bit about the deferred revenue line on the balance sheet. By the way, thank you very much for providing balance sheets. It's much appreciated. Obviously deferred revenue came in the quarter due to the very strong number of installations, and I just wanted to get some sense from you in terms of what are your expectations for that line item going forward. Would you expect it to continue to come in or would you expect it to level off here or resume growth as you continue to sign new theaters?

Boy, I don't think we can answer that with any degree of certainty. I mean, it's a combination of, you know, so many different things. I mean, the balance between the signings and backlog and the mix of new signings and absolute values and of these new signings. I think anything we said right now would be too much of a guess, and I think we're reluctant to do that.

Okay. I apologize if I missed this. What was the number of systems in backlog at the end of the quarter. ?

It's 59.

Super. And finally, could you talk a little bit about the performance of ghosts of the abyss thus far, because I've been having some difficult getting numbers on, you know, the actual IMAX performance of it, as opposed to kind of an overall performance. Can you talk about how the film has performed thus far?

It's actually done pretty well network wide, including at our O & O theaters. When I say that, though, I -- it's not a block buster, but for an IMAX, you know, for what I call more of a traditional type IMAX film, it's generated some pretty reasonable numbers. The IMAX versus 35 millimeter theaters, the first weekend, the eye fax theaters out grossed them by I think about three to four times, and then the 35 millimeter theaters fell off quite rapidly, and by the second or the third week, the IMAX theaters were outdrawing them about six to one. And it was coming off the 35 millimeter screens. At the IMAX theaters between weeks one and two, it had a very very, very minor drop, and I think week three it fell around another 10% and this week week, which is week four, we're seeing a drop of around a third. It's held up nicely for the first month. I think we're pretty pleased with its performance.

Great, thanks a lot, guys.

We'll go next to Ken Silver from CRT capital.

Hey just a few follow-up. First, the depreciation number you gave us, 2.4 million, does that include good will amortization.

We don't amortize good will any more.

That's an easy answer, then. Out of the 8 theaters you installed, were any of them operating leases during the first quarter?

There was one.

Okay. Can you talk about lease renewals. Do you have how many leases or approximately do you have coming up this year, have you had recent renewals and how those discussions have gone? Can you give us a feel for that?

I'm not sure whether we have any up this year. I think generally it's gone fine. I think there are some that haven't renewed for whatever reason, but many have renewed. But I really don't have a -- it's not a material issue this year.

Okay, all right. Thank you.

And we'll go to Peter Sires (ph) with [Inaudible] Capital.

I want to get away from this next quarter this next year, is that okay?

Sure.

If -- as I see it, one of two things is going to happen. Either everybody is going to think these day in day things are sensational, and you'll have more of them than you can handle handle, or it'll be a, you know, a one or two-time fad and you'll have once a year and you'll have a business similar to what you have now but maybe a little bigger. My question is very simple, which is, if these day in dates work, and if the studios decide they want to introduce all of their block busters in IMAX as well as in regular, what is -- I don't care, pick 8 years out, I'm not looking for an earnings estimate -- what do you guys think the worldwide potential is is, if this thing works, and then what does the company earn under that assumption?

I don't think that's something that we're comfortable sharing, specifically. I think the point that you made was -- you're seeing the world in a somewhat binary fashion, which is the IMAX strategy, you know, takes hold in a modest way way, or it really takes hold in sort of an accelerated fashion and the studios really embrace this. What does it mean for us financially. I can tell you what we're doing, you know, on the steps to that, because indeed, that is our goal, obviously. Besides trying to get all of the studios to release their 6 or 8.

Don't you see the world in a binary fashion?

Somewhat, yeah. I mean I think we do, but every time that Rich and I predict that binary things happen, they turn into rate of return deals. If something does really well or the home run or it's a strikeout and it ends up being a rate of return. That not with standing, I do agree with your analysis. One of the things that we're doing, consistent with your analysis, is we're looking at film zones, creating IMAX film zones, domestically, U.S. and Canada, and we're also doing the same thing internationally. Looking at what we think the worldwide penetration of the IMAX theaters can be. If on the strategy really does take hold, it's a very scientific process. It's what the studios have done in the United States. The IMAX zones aren't going to be the same as the 35 millimeter zones. So if there are, you know, X thousands of multiplex locations in the United States for 35 millimeter, you're talking about a lesser amount, obviously, for IMAX. And we're in the process of putting it together. You know, obviously it's very -- if our strategy works, it's very bullish and you see some very big numbers in terms of the size of the IMAX network and earnings and cash generating potential. That's what we're striving for.

Let me tell you what I'm looking for and I don't need to have it on the call today, but I want to understand -- how do I get to understand what the upside, the long-term upside potential is? Because if I look at -- if I look at what the analysts say, the analysts have some number for next year. Here's our estimate for next year. That's absolutely irrelevant to me, because you know, it's who cares -- I -- I'm not trying to be facetious. Who cares what you earn next year. I want to make an assumption as to whether these things are going to work, and if they work, I want to know where this thing can go long term. How do I accomplish that? How do I figure that out?

As Brad said, we're dividing the world in these sort of zones and we started doing it -- for example, one of the cuts of our analysis shows that there might be up to 800 stadium seat multiplexes in the United States that could accommodate an IMAX theater. However -- an IMAX theater. However, you can't put an IMAX theater across the street from another one, so some subset of that is appropriate for the number of multiplex that is you could put an IMAX theater in. Now, is it 15%? Is it 20%? Is it 30%? We're doodling through that right now and we're going to do the same kind of exercise for the entire world. Once we get done with that analysis, at some point, we'll make a determination whether it makes sense to share it or not, and I think that will give you an analytic way to gage the size of the market. You know, one of the analogies that we've used before on this call, I think, is the Starbucks analogy, which is they created a premium brand of coffee, where one didn't exist before, and now Starbucks is fairly ubiquitous, back to where you started the discussion, if in fact our strategy is successful of creating a premium movie-going experience, there will certainly be a lot more IMAX theaters than there are today. In time, we hope to be able to quantify that for you in a more mathematical way.

Thanks.

Having no further questions, I'd like to turn the call back over to Mr. Wechsler for any additional or closing remarks.

Thank you very much. In conclusion, I'm going to sort of repeat what Rich said, the conclusion of his remarks, because I think it's dead on. We're in the process of implementing a long-term strategy that we put together a couple of years ago and we're pretty excited about the progress we're making on the two tracks in terms of lowering the cost of entry into the IMAX business for theater owners, and providing the best world class product to them through repurchased Hollywood films. And our attitude is, you've got to build a house brick by brick and we're delighted to see some of the fruition of our efforts and we're pretty please beside where we are now and thank you all for supporting us, and we will we'll speak to you soon, bye-bye.

Thank you for today's participation in today's conference and you may disconnect at this time.