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Non-Tech : IMAX 3D-the wave of the future -- Ignore unavailable to you. Want to Upgrade?

To: Ian who wrote (21)	1/28/1998 5:51:00 PM
From: Neil Kalton	Respond to of 170

Ian, The last backlog number I have heard was $172 million at the end of October. This number did not include the Cinemark 12 theater deal (the largest deal Imax has inked thus far). The backlog numbers seem to indicate that Imax has very good visibility heading into 1998 and 1999. Looking at Imax's recent history (1992-1997) when backlog has risen year-over-year revenues have also risen (when backlog did not rise in 1993 over 1992, 1994 revenue growth was flat). I am anticipating that Imax will announce year end backlog numbers in the neighborhood of $180-185 million. This would represent roughly a 40% increase over year end 1996 backlog of $131 million. This would be the biggest percentage backlog increase for the period 1992-1997. 1998 looks like a layup for Imax though this is probably already reflected in the current stock price. What, IMO, is not adequately reflected in the current stock price is that the company should have pretty phenomenal growth over the next five years (25-35% annually). From the research I've done so far one of the biggest knocks from the analysts against Imax is that they are skeptical whether commercial Imax theaters will be successful in suburban areas. There is no disputing that the downtown sites are hugely successful and probably will continue to be so. However, what about the suburbs? While this is a valid concern it is a rather Americancentric view of things. Urban America may be nearing saturation in terms of Imax theaters but the rest of the world is definitely not. Imax is eyeing both South America and China where there are virtually no Imax theaters. Imax is also looking to expand its presence in Europe. Currently, Great Britain only has two Imax theaters (Birmingham, Manchester, Edinburgh, Glasgow ... could all easily support Imax theaters). IMO, these markets will fuel growth over the next five years. As for acceptance in suburbia? I'm pretty confident that Imax will indeed play in Peoria. George Lucas thinks so as he expects to see more "big" movies being made for Imax theaters. Also, there is serious talk of a short Star Trek film being made for Imax. This is just a sign of things to come. -nk