Failed Iwerks merger cited
Showscan Entertainment Inc.’s net loss doubled during its fiscal year ended March 31 to $8.5 million. The company cited confusion in the marketplace over its failed merger with Iwerks Entertainment in August 1997 as the core reason for the drop in sales.
The Culver City-based company, which operates a series of motion-simulation speciality theaters, reported a net loss of $8.5 million, or $1.51 per share, on sales of $10.4 million for the fiscal year ended March 31, 1998, compared with a net loss for the comparable period a year ago of $3.9 million, or 70¢ per share, on sales of $17.7 million.
Showscan said factors that contributed to the significant slowdown in new sales orders were a result of the failed merger with rival Iwerks; a decrease in film revenues related to the closure of its theaters; and the turbulent Asian economy.
During the fiscal year, Showscan closed seven of its theaters in London; San Antonio, Texas; and Framingham, Mass. The company plans to limit its future investments in motion simulation movie theaters to 10% to 15%, rather than owning 50% of the exhibs.
“Over the past year, Showscan and its primary constituencies, current customers and sales prospects, have focused on the sale or merger of the company,” said Dennis Pope, Showscan’s president and CEO.
Pope said Showscan to get back to profitability by transferring its film titles to DVD and 3-D formats, marketing titles to other operators of simulation attractions and pursuing the production of videogames and features based on titles in its film library.