Edwards Shuts Down 6 Imax Screens

Imax Corp., the giant-screen film company snared in the financial turbulence gripping several cinema chains, suffered another blow Wednesday when Edwards Theatres Circuit Inc. shuttered six Imax theaters, including three in Southern California.

The downturn in the industry has had a dramatic effect on Imax, which features documentaries-- ranging from an ascent of Mt. Everest to raging oil fires in Kuwait--on screens up to 80-feet tall.

As major theater chains filed for bankruptcy protection after racking up huge debts from a building spree, they scaled back plans for new Imax theaters. Some struggling chains also delayed paying their bills or didn’t pay at all.

The Canadian company manufactures and leases projection and sound systems for 227 large-screen Imax theaters in 30 countries. It generates much of its revenue from ticket sales and the rental of high-tech film equipment to exhibitors. The theaters operate in museums, science centers and commercial venues.

Last year, Imax lost nearly $93 million, including a $34.7-million charge partly because of writing off uncollected debts from commercial theater customers.

The stock has taken a beating as well, tumbling more than 93% over the past year. Imax shares were unchanged Wednesday, closing at $1.68 in Nasdaq trading.

Attendance has been sluggish at Imax theaters, a trend that industry observers attribute in part to limited offerings.

Until recently, Hollywood rarely made movies specifically for Imax or reformatted them to run in Imax theaters. With a lack of blockbusters, Imax attendance has stagnated at 75 million customers over the last couple of years, the company said.

“Nobody would consider what they’re doing mainstream entertainment,” said Paul Dergarabedian, president of Exhibitor Relations Co., a Los Angeles firm that tracks box-office receipts. “They’re very niche-oriented films, which some people may associate with trips to the museum.”

Edwards, which is reorganizing under bankruptcy protection, closed Imax screens in Irvine, Valencia, Ontario, Fresno, Houston and Boise, Idaho. The Newport Beach chain said it took the action because the Imax movie houses were unprofitable.

Edwards said it plans to convert four Imax theaters, including the three Southern California venues, into traditional theaters.

Imax hopes to reopen two of the closed movie houses by either taking over the leases or finding a new operator, Co-Chief Executive Richard L. Gelfond said. The company also expects to open two new Imax theaters in Orange County by 2003, he added. Gelfond did not disclose further details, including locations.

Some wonder whether struggling Imax will be around that long. “Do they survive? That is the key question,” said Katherine Styponias, an analyst at Prudential Securities Research, which has “hold” rating on Imax shares.

But Imax executives remain upbeat about the company’s prospects.

Disney’s success with animated feature “Fantasia 2000,” which last year took in $64 million in four months on 75 Imax screens, has created more enthusiasm in Hollywood for the technology, Gelfond said.

Disney’s “Beauty and the Beast” is being reformatted for Imax theaters and is scheduled to run early next year. And a 3-D animated movie called “Santa and the Snowman” should hit the screens in November 2002.

Other technological breakthroughs could provide a boost, Gelfond said. By the middle of next year, technology will exist to convert live-action movies to the Imax format.

“We’re trying to wait out the storm, and when the storm subsides we plan to be in a position to take advantage of [existing] conditions,” he said.

Just two years ago, the company was riding high as theater chains rushed to open new multiplexes featuring Imax theaters. In 1999, the company posted a $25-million profit and added a record 28 new theaters.

As a result of the industry’s struggles, however, Imax expects to open only 15 to 17 new theaters this year.

“There’s no question that the financial condition of the exhibitors has affected our growth in a significant way,” Gelfond said.

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Big Screen Goes Dark

Edwards Theatres Circuit Inc. closed six Imax theaters, another setback for the Canadian giant-screen company, which logged a huge loss last year. Imax Corp. at a glance:SALES AND EARNINGS

* Headquarters: Mississauga, Canada

* Founded: 1967

* Co-CEOs: Bradley J. Wechsler, Richard L. Gelfond

* Employees: 701

* First large-screen theater introduced: 1970

* Size at peak: 227 large- screen Imax theaters in 30 countries

Source: Bloomberg News