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Author Topic: Imax fails to Sell
Gordon McLeod
Film God

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From: Toronto Ontario Canada
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 - posted 08-13-2006 02:42 PM      Profile for Gordon McLeod   Email Gordon McLeod   Send New Private Message       Edit/Delete Post 
From The Financial Post

Can't find buyer, IMAX says

Barbara Shecter and Lori McLeod
Financial Post

Thursday, August 10, 2006

Imax Corp. shocked investors yesterday, saying it was unable to find a buyer after a five-month auction. At the same time, the company said it is being questioned about its accounting by U.S. and Canadian regulators.

Imax, a giant movie screen technology company, put itself up for sale in March, the second time it has done so without finding a buyer.

Imax shares closed at US$9.63, down US22 cents, on Nasdaq, then plunged to around US$6 in after-hours trading after the news was released.

On a conference call with analysts, Imax executives said there was interest from a dozen potential buyers, but none was willing to pay what the board of directors had hoped for.

When the auction began, analysts said the company could fetch US$550-million, with potential buyers including Warner Bros., Texas Instruments Inc. and U.S. cinema operator Regal Entertainment Group.

But Rich Gelfond, one of Imax's co-chief executives, said yesterday that only private-equity investors were left at the end of the process.

"This is a broken auction; they just have no credibility now. The SEC thing just adds to it," said a potential buyer who walked away from talks with the company earlier.

Imax, which has faced analyst questions about its accounting for 10 years, received a letter from the U.S. Securities and Exchange Commission in late June questioning the timing of revenue recognition, the company said.

The SEC and the Ontario Securities Commission are both interested in Imax's "multiple element accounting," through which the company recognizes revenue in quarters in which it didn't receive the money.

"There's a lot of subjectivity with revenue recognition," said Anthony Scilipoti, executive vice-president at Veritas Investment Research Corp. "Because of the general bias to recognize revenue as early as possible, it's an area regulators are really cracking down on."

Brad Wechsler, Imax's other co-chief executive, said the company is co-operating with regulators and has assurances from auditor PriceWaterhouseCoopers that revenue recognition for theatre systems installed beginning in late 2005 is proper.

"We don't think it was a distraction" during the sales process, Mr. Gelfond said.
He said private-equity investors were not prepared to put as much as US$300-million in cash into the business and were unable to fund the purchase at the price sought through debt.

"Banks were not willing to provide a high amount of debt in this instance [which] made some of them uncomfortable," Mr. Gelfond said.

Imax said interest remains from several parties at "a lower valuation" and bankers Allen & Co. and UBS will pursue these potential buyers.

"We want to leave our options open," said Mr. Gelfond, declining to discuss the price he and the board of directors now hope to receive.
A sale was "something we all wanted," said Mr. Gelfond, "no one more than Brad and I, who are the largest individual shareholders."

It is the second time an attempt to sell Imax has run aground. The company was for sale in the summer of 2000 but was pulled off the market three months later after a profit warning and the near-bankruptcy of movie theatre chains.

Imax leases its giant-screen movie technology to mainstream movie houses, museums and science centres. The company had a market value of $1.2-billion when it was put up for sale in 2000.

Mr. Gelfond said one reason a buyer didn't materialize this time around was "valuation, where the company was trading."

Imax shares climbed as high US$10.85 after the company was put on the block, which valued the company at about US$440-million, before taking into account any takeover premium.

Mr. Gelfond said some potential buyers wanted a bigger network of commercial Imax movie screens "before they were willing to write that size of cheque."

He said the process gave Imax executives "a strategic kick in the rear" and they hope to speed up the rollout of joint venture movie theatres and digital movies that reduce costs by getting rid of expensive prints.

While Imax continues to sign operators on for new projection equipment and giant screens, the poor performance of some recent films, including The Ant Bully, Poseidon and V for Vendetta has slowed openings, the executives said.

IMAX CORP.
Ticker: imax/nasdaq
Close: US9.63, down US22 cents
Volume: 4,305,192
Avg. 6-month vol.: 542,882

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Ben Wales
Jedi Master Film Handler

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 - posted 08-13-2006 03:01 PM      Profile for Ben Wales   Email Ben Wales   Send New Private Message       Edit/Delete Post 
I guess/bet Sony will bid for this, when the price falls and see their own 4K Digital Cinema system replacing 15/70mm in time.

Are Imax Days numbered.....?

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Mark Gulbrandsen
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 - posted 08-13-2006 11:31 PM      Profile for Mark Gulbrandsen   Email Mark Gulbrandsen   Send New Private Message       Edit/Delete Post 
And the main problem that exists is that all Imax operators eventually figure out that Imax still takes way too much of their ticket sales.... [Big Grin] . Imax always has been and always will be self destructing company. It costs too dam much!

Mark

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Floyd Justin Newton
Jedi Master Film Handler

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 - posted 08-15-2006 08:16 PM      Profile for Floyd Justin Newton   Email Floyd Justin Newton   Send New Private Message       Edit/Delete Post 
Mark==

You are sure correct on that! [thumbsup]

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Gordon McLeod
Film God

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 - posted 08-16-2006 06:49 PM      Profile for Gordon McLeod   Email Gordon McLeod   Send New Private Message       Edit/Delete Post 
I don't know mark not very many of the core business of institutions are jumping ship

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Phil Hill
I love my cootie bug

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 - posted 08-18-2006 06:46 PM      Profile for Phil Hill   Email Phil Hill       Edit/Delete Post 
quote: Gordon McLeod
...not very many of the core business of institutions are jumping ship
Not yet Gordie, but think "Titanic". In a couple/few years the IMAX format and their commercial and museum theatres will be deader than a doornail and replaced by parking garages.

IMAX management is VERY smart to make some of their key management and investors some major bux NOW by trying to unload a currently successful biz B4 it becomes passé.

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Gordon McLeod
Film God

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From: Toronto Ontario Canada
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 - posted 08-19-2006 04:37 PM      Profile for Gordon McLeod   Email Gordon McLeod   Send New Private Message       Edit/Delete Post 
I guess time will tell who is right

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Charles Greenlee
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 - posted 08-20-2006 01:12 AM      Profile for Charles Greenlee   Author's Homepage   Email Charles Greenlee   Send New Private Message       Edit/Delete Post 
Help me understand. Why is IMAX such a failure? Quality, and performance was/is a major breakthrough. You'd think it'd be a shot in the arm for the cinema industry. Was it the Apple syndrome? They wanted to own it all, and not open the license, so it never gained a power base? Is it just too expensive?

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Mark Gulbrandsen
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From: Bountiful, Utah
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 - posted 08-20-2006 05:14 AM      Profile for Mark Gulbrandsen   Email Mark Gulbrandsen   Send New Private Message       Edit/Delete Post 
quote: Charles Greenlee
Is it just too expensive?

It is beyond expensive! Like Sony... Imax is their own worst emeny. Quality is easy to attain by a little thing called work. It was the hard work of several individuals that started Imax that established the initial quality. Overall that quality has somewhat fallen apart over the years with smaller-dimmer peojecion gear, platter systems that scratch prints, and unreliable digital sound systems that were definately not needed.
In relaity it may very well end up being sold at a fire sale.

Mark

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Cameron Glendinning
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 - posted 08-20-2006 06:34 AM      Profile for Cameron Glendinning   Email Cameron Glendinning   Send New Private Message       Edit/Delete Post 
Hard to think that the idea for the original projector was due to a breakdown on a roundabout!!!!!!!! in Queensland, Australia.

Yes a true story.

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Charles Greenlee
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 - posted 08-20-2006 07:28 AM      Profile for Charles Greenlee   Author's Homepage   Email Charles Greenlee   Send New Private Message       Edit/Delete Post 
Roundabout?

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Jeffry L. Johnson
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 - posted 08-20-2006 10:31 AM      Profile for Jeffry L. Johnson   Author's Homepage   Email Jeffry L. Johnson   Send New Private Message       Edit/Delete Post 
Roundabout or rotary or traffic circle

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Adam Martin
I'm not even gonna point out the irony.

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 - posted 08-20-2006 12:06 PM      Profile for Adam Martin   Author's Homepage   Email Adam Martin       Edit/Delete Post 
quote: Mark Gulbrandsen
platter systems that scratch prints
Platter systems don't scratch prints, bad projectionists do.

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Gordon McLeod
Film God

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From: Toronto Ontario Canada
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 - posted 08-20-2006 03:58 PM      Profile for Gordon McLeod   Email Gordon McLeod   Send New Private Message       Edit/Delete Post 
Mark said "unreliable digital sound systems that were definately not needed."
Right just like D cinema vs 35mm film the analog dubber is best [Smile]

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Charles Greenlee
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From: Savannah, Ga, U.S.
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 - posted 08-20-2006 10:58 PM      Profile for Charles Greenlee   Author's Homepage   Email Charles Greenlee   Send New Private Message       Edit/Delete Post 
quote: Jeffry L. Johnson
Roundabout or rotary or traffic circle
Ah yes, I knew that. For some reason I was thinknig of a part of the IMAX was call the roundabout. [Roll Eyes] Oh well, we all have our brainfarts.

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