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Imax displays strong 2nd quarter results

Company hopes strong fiscal track record propels sale, merger

TORONTO — Bigscreen and digital film company Imax Corp. announced “very strong” second-quarter results that include a 68% increase in revenue and a 36% increase in net earnings over the second quarter of 1999.

Revenue for the second quarter ended June 20 rose to $57.5 million. The jump was driven by a 70% improvement in revenue from the company’s systems division (the end of the business that leases the bigscreen projectors) plus the addition of $11.3 million from Digital Projection International (DPI), which the company bought in September 1999. Net earnings were $3.0 million, up from $2.2 million a year ago.

“It was a very strong quarter,” said Bill Scovin, managing director of Auerback, Pollak &Richardson of N.Y., who has a “buy” rating on the company.

On the block

The strategic highlight of the quarter is Imax’s putting itself on the block, hiring big-gun investment banks Wasserstein, Perella & Co. and Goldman Sachs & Co. to find a buyer or merger partner. With the company’s solid fiscal track record and string of increasingly mainstream box office forays — “Everest,” “Fantasia 2000” and a deal to release DreamWorks SKG’s animated film “Shrek” in 3D for the bigscreen — Imax should draw decent interest. Disney is said to be among interested parties reviewing briefing books.

But it may not be so quick or easy. “Hollywood is pretty slow on the adoption curve,” Scovin said. “It’s not a group that has to run out and try the newest technology.” Company officials said in a conference call the search for new investors or an outright buyer was going well, but they provided no details.

With Imax’s foray into digital film projection with its purchase of DPI, the company has put itself into two unique high-tech businesses as opposed to one. “The digital projection business is still untested territory,” Scovin said. “A lot of people believe in it — but it has not yet been given the test.”

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