Company is evaluating an estimated $2.5 million of identified
accounting errors that occurred between 2001-2006
Company also announces 7 installs and 9 signings for fourth quarter
TORONTO, March 16 /CNW/ - IMAX Corporation (NASDAQ: IMAX; TSX:IMX)
announced today that it will delay the filing of its Form 10-K for fiscal 2006
beyond the filing deadline of March 16, 2007. Management and the Audit
Committee of the Board of Directors are evaluating certain identified
accounting errors with a currently expected impact of approximately $2.5
million over six years. As a result, the Company intends to file restated
financial statements for certain periods during those years.
Separately, the Company announced that it had installed 7 theater systems
in the fourth quarter of 2006, signed deals for 9 theater systems in the
period and finished 2006 with approximately $27 million in cash and short-term
"The timing of these accounting issues is particularly unfortunate
because it masks significant business developments which have affected our
business in a very positive way," said Richard L. Gelfond and Bradley J.
Wechsler, IMAX's co-CEOs and co-Chairmen. "Specifically, the record-breaking
performance of the recent film 300, along with our recent joint venture
agreement with Regal Cinemas, the world's largest exhibitor, and five-system
deal with Dickinson Theaters, our largest theatre sale or lease deal since
2004, have increased our confidence in the business."
The Company intends to file its 2006 Form 10-K on or before March 30,
2007, and will therefore file with the Securities and Exchange Commission a
Form 12b-25 Notification of Late Filing, and indicate that its 10-K filing is
expected to be made within the 15-day grace period. Until then, management and
the Audit Committee have stated that the Company's prior-filed financial
statements for the years and periods involved should not be relied upon.
The Company and its auditors, PricewaterhouseCoopers LLP, remain in the
process of analyzing the errors and the Company will make a subsequent
announcement when it concludes this analysis. The estimated $2.5 million in
errors that occurred during 2001-2006 relate to the accounting treatment of
certain costs previously capitalized that should have been expensed as
incurred and unrecorded branch-level interest taxes, as well as certain
adjustments for errors determined to have been immaterial and previously
identified in the related periods. The Company is also evaluating the effect
of these matters on its internal control over financial reporting and expects
to report material weaknesses with respect to certain of these matters.
"We recognize that the delay in filing the 10-K and the underlying causes
are unacceptable, and we are committed to rebuilding our financial staff,"
said Messrs. Gelfond and Wechsler. "All of the identified errors relating to
the current situation arise from prior quarters and prior years. In August
2006, our Chief Financial Officer resigned and, since then, we have been ably
led by our Acting Chief Financial Officer, Edward MacNeil. We have been
engaged in the process of hiring a permanent CFO, have interviewed several
strong candidates to date, and can assure our constituencies that we have no
higher priority than the smooth functioning of our finance area."
The results set forth in this press release, including estimated
restatement impacts, are preliminary and reflect known adjustments. These
results are subject to change as a result of any adjustment arising from the
restatement process, subsequent events and the completion of the audit of the
financial statements by the Company's independent auditors,
PricewaterhouseCoopers, LLP. In addition, the Company's intention to file its
Form 10-K on or before March 30, 2007 is based on management assumptions and
existing information and involves certain risks and uncertainties, and the
Company makes no assurances that it will ultimately do so.
The Company will host its previously-scheduled conference call to discuss
its business performance as well as the issues above at 8:30 AM ET on Friday,
March 16, 2007. To access the call interested parties should call (913)
981-5542 approximately 10 minutes before it begins. A recording of the call
will be available by dialing (719) 457-0820. The code for both calls is
4938307. The Company will also host a web-cast of the conference call, which
can be accessed on www.imax.com by clicking on 'Company Info' and then
In addition, the Company is scheduled to host its fourth quarter earnings
conference call at 8:30 AM ET on Friday, March 30, 2007. Dial-in information
will be included in the press release issued that morning.
About IMAX Corporation
IMAX Corporation is one of the world's leading entertainment technology
companies, specializing in digital and film-based motion picture technologies.
The worldwide IMAX(R) network is among the most important and successful
theatrical distribution platforms for major event Hollywood films around the
globe, with IMAX theatres delivering the world's best cinematic presentations
using proprietary IMAX, IMAX(R) 3D, and IMAX DMR(R) technology. IMAX DMR is
the Company's groundbreaking digital remastering technology that allows it to
digitally transform virtually any conventional motion picture into the
unparalleled image and sound quality of The IMAX Experience(R). IMAX's
renowned projectors display crystal-clear images on the world's biggest
screens, and the IMAX brand is recognized throughout the world for
extraordinary and immersive entertainment experiences for consumers. As of
September 30, 2006, there were 280 IMAX theatres operating in 40 countries.
IMAX(R), IMAX(R) 3D, IMAX DMR(R), IMAX MPX(R) and The IMAX Experience(R)
are trademarks of IMAX Corporation. More information on the Company can be
found at www.imax.com.
This press release contains forward looking statements that are based on
management assumptions and existing information and involve certain risks and
uncertainties which could cause actual results to differ materially from
future results expressed or implied by such forward looking statements.
Important factors that could affect these statements include, but are not
limited to, the timing of theatre system deliveries, the mix of theatre
systems shipped, the timing of the recognition of revenues and expenses on
film production and distribution agreements, the performance of films, the
viability of new businesses and products, and fluctuations in foreign currency
and in the large format and general commercial exhibition market.
For further information:
For further information: Media: IMAX Corporation, New York, Sarah
Gormley, (212) 821-0155, email@example.com; Business Media: Sloane & Company,
New York, Whit Clay, (212) 446-1864, firstname.lastname@example.org; Investors: Integrated
Corporate Relations, Amanda Mullin, (203) 682-8243, Amanda.Mullin@icrinc.com