TORONTO, March 29 /CNW/ - IMAX Corporation (NASDAQ: IMAX; TSX:IMX)
announced today it will further delay the filing of its annual report on Form
10-K for fiscal 2006 and the corresponding filings under Canadian provincial
securities laws beyond the filing deadline, in each case, of March 31, 2007.
As previously announced, management and the Audit Committee of the Board
of Directors are evaluating certain accounting errors over a six-year period.
As a result, the Company expects to file restated financial statements for
certain periods during those years. In the course of completing this
restatement and the year-end audit, and in recently reviewing certain comments
received from the U.S. Securities and Exchange Commission (SEC) and the
Ontario Securities Commission (OSC), the Company has determined to broaden its
review to address certain issues related to these comments, primarily in
connection with its revenue recognition for certain theatre system
installations in previous periods, including the fourth quarter of 2005. As a
result of this expanded review, which is ongoing by the Company and its
auditors, Pricewaterhouse Coopers LLP, the Company may determine that it is
necessary to restate additional items beyond the previously identified errors.
The Company does not believe that a potential restatement resulting from
changes to its revenue recognition accounting would have any impact on its
previously reported or existing cash accounts. While the Company cannot
predict when it will complete this review and file its 10-K, it is working to
do so as soon as practicable.
As previously disclosed by the Company, it has been the subject of
informal inquiries by the SEC and the OSC since 2006, particularly with regard
to its revenue recognition policies. The primary focus of the SEC and OSC
inquiries has been the Company's application of multiple element arrangement
accounting to its theatre installations and system agreements.
The Company also noted that the filing delay will result in the Company
being in default of a financial reporting covenant under the indenture
governing its Senior Notes. The Company intends to seek consents from holders
of Senior Notes to provide the Company with additional time to file, using a
record date of March 28, 2007. In addition, the Company has already obtained a
waiver under its bank credit agreement of the covenant to deliver its audited
financial statements until June 30, 2007.
The Company stated that it did not believe its operations will be
impacted by any delays in filing. However, this and other statements set forth
in this press release are preliminary, reflect information currently known to
the Company and are subject to change as a result of the accounting review and
restatement process, subsequent events and the completion of the audit of the
financial statements by the Company's independent auditors,
PricewaterhouseCoopers, LLP. The Company's aforementioned intention to seek
bondholder consents to obtain additional time to file and the expected impact
on operations are based on management assumptions and existing information and
involve certain risks and uncertainties, and the Company makes no assurances
that it will ultimately either seek or obtain such consents. In addition, the
Company expects to receive a notice of delisting from NASDAQ as a result of
the delayed filing and, although it does not expect that NASDAQ would initiate
delisting procedures in the near future, there can be no assurances that it
would not do so.
Filing Default in Canada
Under Canadian provincial securities laws, the Company is required to
file its audited comparative financial statements for the year ended
December 31, 2006, related management's discussion and analysis and annual
information form on or before March 31, 2007. For the reasons discussed above,
the Company will not be able to meet this deadline and cannot predict when it
will complete its review and file its financial statements, although it
intends to do so as soon as practicable. Pending the filing of the financial
statements, the Company intends to satisfy the alternative information
guidelines recommended by the Canadian provincial securities regulatory
authorities by issuing a news release every two weeks to update investors on
the filing delay.
The Company intends to request that the OSC and other Canadian provincial
securities regulatory authorities issue a management and insider cease trade
order (MCTO) under applicable regulatory policies pending the completion and
filing of its audited financial statements and related documents. If the MCTO
is granted, trading in the Company's securities by directors, officers and
other insiders of the Company will be prohibited pending the filing of all
required financial statements and other disclosure documents. Such a cease
trade order would not generally affect the ability of other security holders
to trade their securities of the Company. However, the Company acknowledges
that in accordance with applicable Canadian provincial securities laws, the
OSC or other Canadian provincial securities regulatory authorities may impose
an issuer cease trade order that would affect all outstanding securities of
the Company traded on the Toronto Stock Exchange if the filing default is not
remedied by May 31, 2007, or earlier if the Company fails to file default
status reports as required by regulatory policies.
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 network is among the most important and successful
theatrical distribution platforms for major event Hollywood films around the
globe, with IMAX(R) 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 the outcome of
the accounting review and related matters discussed in this press release, 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. These factors and other risks
and uncertainties are discussed in the Company's Annual Report on Form 10-K
for the year ended December 31, 2005.
For further information:
For further information: Media: IMAX Corporation, New York, Sarah
Gormley, (212) 821-0155, firstname.lastname@example.org; Business Media: Sloane & Company,
New York, Whit Clay, (212) 446-1864, email@example.com; Investors: Integrated
Corporate Relations, Amanda Mullin, (203) 682-8243, Amanda.Mullin@icrinc.com