Imax to restate fiscal earnings again
EmptyTORONTO – Giant screen exhibitor Imax Corp. on Friday said it plans to restate yet again earnings for fiscal 2006 and the first two quarters of 2007 after it uncovered another accounting error.
The latest accounting changes relates to leases for owned-and-operated theatre and corporate facilities, and will result in a future charge of between $5.5 million and $6.5 million.
Toronto-based Imax in July last restated faulty financial results for fiscal 2002 through 2005 after it made changes to how it accounts for revenues from theatre systems installations.
Imax also in July revised financial statements for 2006 and the first quarter of 2007. That restatement had been delayed from March when the exhibitor first raised questions over its accounting treatment.
The accounting policy changes have been prompted in part by on-going probes into the financial books at Imax by the U.S. Securities and Exchange Commission and the Ontario Securities Commission.
Imax said Friday the latest effort to clean up its balance sheet relates mostly to accounting practices from 1997 to 2002.
The exhibitor previously recorded rent reductions – including rent holidays and abatments -- for certain property leases in the years the reductions were received, rather than on a straight-line basis over the remaining lease term.
Imax said it will amortize the rent credits into income over the remaining terms of the leases, leading to the estimated $5.5 million to $6.5 million charge.
Imax also said it did not properly record some leasehold improvements funded by landlords.
The giant screen exhibitor said the latest amendments to its financial results would not likely "impact its cash or liquidity," or relate to how it recognized theatre system and film revenues.
Imax said it hoped to complete the latest restatements within 35 days, and that its tangled 2006 results should not be relied upon until then.