Company finds $2.5 million mistake
Toronto-based Imax Corp.’s bean-counters have spotted $2.5 million worth of “accounting errors” in the books, and therefore the giant screen exhibitor missed its deadline for the filing of its 2006 financials.
The exhibitor was to have filed its fourth-quarter and year-end financial results on Friday. Instead, the company reported that it has uncovered errors that are expected to affect its fiscals between 2001- 06 to the tune of $2.5 million.
Its year-end and restated fiscals for 2001- 05 are expected to be released by March 30, but until then, the company said in a statement, its prior financials for the periods involved “should not be relied upon.”
Company brass said the errors relate to the improper recording of some costs as capital costs when they should have been treated as expenses. “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,” said a release.
Co-CEOs and co-chairmen Brad Wechsler and Richard Gelfond called the delay and underlying causes “unacceptable,” add-ing, “We are committed to rebuilding our financial staff.”
This is the latest in a series of corporate setbacks for the company.
Imax’s books are already the subject of informal reviews by the Securities and Exchange Commission and the Ontario Securi-ties Commission, and since 2000 the company has twice put itself on the block only to backtrack when a suitable buyer did not materialize.
In addition, chief financial officer Frank Joyce ankled in August, and a permanent replacement is yet to be found. Edward MacNeil is acting CFO in the interim.
“(We) can assure our constituencies that we have no higher priority than the smooth functioning of our finance area,” said Wechsler and Gelfond.
In spite of this latest hiccup, with the availability of lower-cost DMX theater systems and its digital remastering technique that allows the day-and-date release of Hollywood tentpoles, Imax appears, operatively speaking, to be finally finding its groove. Imax also announced that it has installed seven theater systems in the fourth quarter and has inked deals for nine more.
Investors appear to have taken this latest bit of bad news in stride. Imax shares closed on the TSX Friday, up 1¢ at C$5.88 ($4.99). The company’s share price has halved in the last six months.