IMAX Delays Showtime Again for Financials

It will be in default on some notes, but will file shortly, before accelerated payments to holders are forced.
Stephen TaubJuly 2, 2007

IMAX Corp. missed the June 30 deadline it had set for itself for the already-delayed filing its 2006 annual report and first quarter report for 2007, but said it would file the reports shortly.

In March, the Mississauga, Ontario-based entertainment-technology company and theatre operator warned that it would delay filing its financial statements due to the discovery of accounting errors, and a broadened review that included accounting matters reflected in Securities and Exchange Commission and the Ontario Securities Commission comments to the company. IMAX said at the time it had obtained a waiver under its bank credit agreement of the covenant to deliver its audited financial statements until June 30.

On Friday, however, in saying that it would not meet the June 30 deadline, the company said it expects to be in default of certain indentures relating to its 9 5/8 percent senior notes dues 2010. IMAX added, however, that it expects to make the filings within the 30-day period after notice of default, which allows for the cure of the default under the indenture, before holders can seek to accelerate payments.

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In addition, the company said, it obtained a further waiver under its bank credit agreement of the covenant to deliver its audited financial statements until July 31.

the company said it had substantially addressed the SEC’s comments by revising its accounting policy regarding revenue recognition for theatre systems. The revised policy has the effect of shifting a portion of systems revenue between periods during the years 2002 through 2006, it said. In the majority of cases, the timing of revenue recognition shifts by 90 to 180 days.

The company also said it does not intend to seek any further extensions in connection with its filing obligations from any parties.