Imax Profit Slips

The stock slides as the theater technology company posts a drop on the top and bottom lines.
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Updated from 9:37 a.m.

Imax

(IMAX) - Get Report

reported lower second-quarter earnings and revenue Thursday.

The Toronto-based film technology and distribution company made $1.1 million, or 3 cents a share, down from $1.5 million, or 4 cents a share, a year ago. Revenue fell to $30.9 million from $31.7 million last year.

Analysts had expected earnings of a penny a share on $28.7 million in revenue.

Film revenue at the company dropped to $5.3 million from $6.6 million.

"Our continued strong performance underscores the significant value Imax delivers to all of its key constituents: commercial exhibitors, Hollywood studios and moviegoers," said co-CEOs Richard Gelfond and Bradley Wechsler in a joint statement. "Our commercial strategy is driving tangible business results for Imax, including accelerating signings momentum, strong summer film performance and on-target financial results in the second quarter."

The company signed agreements for 13 theater systems during the period. During the past year, Imax has signed deals for 51 systems, according to the company. Included in those contracts is an agreement with large exhibitor AMC Entertainment to retrofit five domestic multiplexes with Imax MPX theatre systems.

On June 15, Imax released Warner Bros. Pictures'

Batman Begins: The Imax Experience

and

Charlie and the Chocolate Factory: The Imax Experience

, the widest-ever Imax domestic opening. Both films set Imax records for openings.

"The industry dynamics currently pressuring box-office grosses across the U.S. have presented us with a great opportunity," added Gelfond and Wechsler. "The Imax box office is up significantly year over year, and together,

Batman Begins: The Imax Experience

and

Charlie and the Chocolate Factory: The Imax Experience

have grossed nearly $22 million in just seven weeks. The Imax Experience is proving to be that special differentiator that not only draws people out of their homes and back into theaters, but also garners a premium ticket price and high customer satisfaction ratings."

Separately, a patent infringement lawsuit between Imax and partner Three-Dimensional Media Group against California's In-Three is set to go to trial later this year. Imax sued In-Three for patent infringement relating to its 2D to 3D live action film conversion process in a suit filed U.S. District Court of California in March. In-Three, in turn, claims that it has been working on its process for the past six years.

A federal district court in California rejected In-Three's motion to dismiss the proceedings, Imax said Thursday, as well as its motion to stay the proceedings for an examination by the U.S. Patent and Trademark Office. The court also rejected motions for preliminary injunctions on either side.

"Imax has raised a substantial question concerning validity" of In-Three's intellectual property, and "a swift resolution of the issues is in the best interest of all involved," wrote Judge Florence-Marie Cooper, according to an Imax statement. The case is now expected to proceed to trial after discovery.

"We are pleased by the Court's rejecting of In-Three's repeated attempts to derail a full and fair hearing of our infringement claims, which we are now confident will happen quickly and in our favor," said Gelfond and Wheschler. "Meanwhile, we make continued progress towards the announcement of our first 2D-to-3D Hollywood live-action film project."

Wednesday, In-Three chief Michael Kaye said, "We are very pleased that the court has rejected Imax's attempt to use a recently-licensed 15-year-old patent to prevent In-Three from using its own Dimensionalization process. We are confident the public will be stunned and pleasantly surprised when they see the first 3D movie released using our unique Dimensionalization technology which we have been developing for more than six years."

The patent of reference is a May 15, 1990, patent covering a "method to convert two-dimensional motion pictures for three-dimensional systems," and names as inventors David Geshwind and Anthony Handal of 3DMG.

Imax released a 2D to 3D converted film

Space Station

in 2002 after several years of production.

Imax was was up a penny Thursday at $10.34.