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Showscan: A 70mm High Impact Experience
"A very vivid illusion of
reality": Douglas Trumbull |
Read more at in70mm.com The 70mm Newsletter
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Prospectus about Showscan Film Corporation,
dated 25.06.1987 |
Date: 26.06.2011 |
Prototype
of a Showscan High Impact Theatre. 70mm film presented on a curved screen at
60 frames pr. second.
The Company has acquired and is
currently exploiting a patented motion picture filming and projection
process called Showscan. Motion pictures filmed and projected using
the Showscan process create a visual effect of depth and realism that
the Company believes is superior to conventional films. Since its
inception, the Company has been primarily engaged in the further
development of the Showscan process, equipment and technology necessary
to photograph and exhibit Showscan films.
To date, the Company's principal source of
revenues has been the production and licensing for production of
special-venue Showscan films for exhibition at expositions, tourist
attractions and corporate presentations. Such presentations have
included films shown at Expo '85 in Tsukuba, Japan, Expo '86 in
Vancouver, Canada, an exhibit at the CN Tower in Toronto, Canada, and a corporate film and commercial for the Chevrolet Motor Division of
General Motors Corporation.
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Showscan: The Future is Now - The Future of
Feature Film Exhibition
Showscan enters liquidation process
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The Company intends to license the Showscan
process in the production, distribution and theatrical exhibition of
feature-length motion pictures, although no such license agreements have
been entered into to date. The theatrical exhibition of such motion
pictures will require that specially equipped theaters capable of
exhibiting Showscan films be established in major film exhibition
markets. Since the visual effects of Showscan currently cannot be
reproduced on video or television, the Company intends to market the
Showscan concept to motion picture producers, distributors and
exhibitors as a means of attracting larger viewing audiences to
feature-length motion picture theaters. The Company intends to use a
portion of the proceeds of this offering to facilitate the production
and exhibition of feature-length Showscan motion pictures. The Company
will not initially engage in the production of any feature-length motion
pictures but, rather, will license the right to others to produce,
distribute and exhibit feature-length
Showscan motion pictures.
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Background
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The
70mm projector and 7000 watt lamp house are manufactured by Century
Projectors Corporation. Image from the Showscan brochure
General. The illusion of movement in motion
pictures is created by filming a series of still photographs in rapid
succession and then projecting those pictures onto a screen. The rate at
which the film frames are flashed onto the screen and the size of the
film frame affect the quality of the projected image.
Since Thomas Edison designed the 35mm film
format in 1890, 35mm film has been the accepted standard format for the
photography and theatrical exhibition of motion pictures. The original
silent motion pictures were usually filmed and shown at a frame rate of
16 frames per second (fps). However, opening and closing the shutter 16
times per second created flicker on the screen. In order to avoid
flicker, each frame was shown three times before the next frame was
shown, resulting in 48 flashes being projected per second. When sound
was added to motion pictures in the late 1920s, a faster frame rate was
needed so that the sound track on the film could move fast enough past
the sound head to produce acceptable sound fidelity. The standard that
was adopted was 24fps, with each frame being shown twice, also resulting
in 48 flashes being projected per second. This standard of projecting
35mm film at 24fps remains the standard today.
As theater screen sizes
increased, the graininess of the film became more noticeable. In the
1950s, some films were photographed on 65mm film and projected at 24fps
on 70mm film in order to increase clarity. In addition, new film
projection techniques, including Vista Vision (two 35mm frames projected
horizontally as a single frame),
Cinerama (three separate projectors
using 35mm film) and Todd-AO (70mm film photographed and projected at
30fps), were tried. In order to reduce film production costs,
65mm filming was largely discontinued in the 1960s. Accordingly, at present,
most films exhibited in 70mm are photographed using 35mm film and then
enlarged to 70mm. |
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Douglas
Trumbull, father of the Showscan process, from the Schowscan brochure, dated early 1990s
Development of the Showscan Process. The
development of the Showscan process was begun in 1975 by Douglas
Trumbull while he was associated with Paramount Pictures Corporation
("Paramount"). Paramount formed a subsidiary, Future General Corporation
("FGC"), to develop and eventually exploit the Showscan process. In
1978, FGC granted Mr. Trumbull a license to the Showscan process in
order to proceed with the further development of the process. In 1981,
Mr. Trumbull entered into a joint venture for the future development of
the process with Showscan Investors, a limited partnership unaffiliated
with the Company (which has since been reconstituted as WLS Partners).
In 1983, Brock Hotel Corporation ("Brock"), a
corporation engaged in the business of owning and operating hotels and
pizza parlors, installed mini-theaters in certain of its "ShowBiz Pizza
Place" restaurants in order to exhibit short Showscan films. In order to
provide the Showscan films to the pizza parlors, Brock and Mr. Trumbull
formed Brock/Trumbull Entertainment Corporation ("Brock/Trumbull") in
August 1983. Brock/Trumbull purchased the rights of Showscan Investors
in the Showscan process in exchange for the future royalty payments
described in "Business—Royalty Arrangements."
The Company was formed in August 1984 by Henry
Plitt and Roy Aaron, who were then affiliates of a major theater chain,
in order to acquire the right to use the Showscan process in
feature-length motion pictures to be exhibited in their first-run motion
picture theaters and in theaters of others.
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The Showscan Process
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70mm
clip from "New Magic" which represent 1/12th of a second. Note the
large image
area where every frame is shown only once. The amount of image information is staggering compared to the same
clip in 35mm.
In contrast to conventional filming and projection
systems, a Showscan motion picture is photographed on 65mm film at a
rate of 60fps and is projected using 70mm film at a rate of 60fps and at
a higher illumination level. (The 65mm film is projected using 70mm film
in order to accommodate the sound track that occupies approximately 5mm
of the film strip.) In addition, each frame in a Showscan film is shown
only once. Accordingly, a Showscan film projects images 2.5 times faster
and significantly brighter and larger than standard 35mm film. The
brighter image and increased visual cues perceived by the viewer of a
Showscan film result in greater picture clarity and an enhanced sense of
dimensionality and realism.
Photography on 65mm film at a frame rate of
60fps offers a number of improvements in the quality of a motion picture
image and permits the screen size to be substantially enlarged without
significant degradation. The images can be significantly brighter,
rendering the colors in the film much more saturated and vibrant, and
motion of the cameras and the subject can be substantially increased
without distortion, greatly heightening the impact of action scenes. The
larger 70mm format and faster exposure time also greatly reduce
blurring, thus recording accurately and in fine detail all the
performers, costumes, locations, sets and props.
In order to maximize the visual
impact and to convey stronger visual cues, a Showscan film is projected
onto a specially designed curved screen that is approximately twice as
wide as it is high. Such a screen, when installed in a conventional
motion picture theater, would be approximately twice the height and
width of a conventional screen and would extend from the floor to the
ceiling of the theater.
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The
same 1/12th of a second sequence as above, but in (sub standard) 35mm.
Every 35mm frame is shown twice (illustrated here with two 35mm clips
above each other). Note how ridiculously small the image area really is
compared to the 70mm clip. In this example, Showscan also exaggerated
the difference by showing a cropped widescreen 35mm image, rather than
an anamorphic 70mm-to-35mm printdown.
In order for viewers to obtain an, unobstructed view of the entire
screen, with realistic lines of view and correct perspective, the
theater's seats should face the center of the screen and the floor
should slope more steeply than in most existing theaters. Therefore, the
Company believes that most existing theaters will have to redesign their
seating arrangements to fully accommodate the exhibition of a Showscan
motion picture.
The
effects of realism produced by a Showscan motion picture are enhanced by
a sound system not ordinarily installed in conventional motion picture
theaters. Such a discrete six-channel sound system is assembled by the
Company using currently available high-quality speakers and amplifiers.
Since motion picture theaters are equipped for
conventional sound technology in which the sound track is placed on the
space available on the motion picture film print, the Company recently
developed the capability of placing the sound track on 70mm Showscan
film. The sound track is an analog recording on magnetic tape. Because
the Showscan process uses 2.5 times more film than standard 24fps motion
pictures, there is more space available on the film for the sound track.
Accordingly, the sound track on Showscan film has a greater dynamic
range than a conventional sound track on 24fps film.
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Applications of the Showscan
Process
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Feature-Length
Motion Pictures. The Company believes that the greatest long-term
potential economic benefit to be derived from the Showscan process is
from feature-length motion pictures.
Recently, domestic theatrical exhibition has faced
increased competition for viewers, largely because of the increasing
importance of pay and cable television and home video entertainment.
Because the unique characteristics of the exhibition of a Showscan film
cannot currently be reproduced on video or on television, the Company
intends to market Showscan films as a means of increasing audiences at
specially equipped motion picture theaters. In addition, since Showscan
motion pictures can be adapted for use in conventional movie theaters,
cable, pay and commercial television, and the videocassette market,
Showscan motion pictures also will be distributed to these markets.
However, a Showscan film converted to a slower frame rate or another
medium would not contain the depth and realism of the Showscan process.
Initially, the Company intends to market the
Showscan process to producers of action, adventure and other films that
feature special effects. However, the Company believes that the clarity
and sense of reality produced by Showscan films will also be attractive
to producers of high-quality dramatic films. To date, no feature-length
Showscan motion pictures have been produced and no agreements to produce
such films have been negotiated.
The Company does not currently
intend to produce or distribute feature-length Showscan motion pictures
itself. Rather, the Company plans to license the rights to produce,
distribute (in the foreign and domestic markets) and exhibit
Showscan
motion pictures. The Company anticipates that the licensing fees for the
production, distribution and exhibition of feature-length Showscan
motion pictures will be based on a percentage of box office receipts
earned by the producers or distributors from exhibition at Showscan
theaters. The Company anticipates that the theater licenses initially
will be allocated so as to provide Showscan exhibitors with a degree of
territorial exclusivity. The Company has not yet established any
licensing fee schedules or entered into any licensing arrangements, and
no assurance can be given that such licensing arrangements will be
entered into or that the Company will derive any revenues from any such
licenses. |
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Worldwide
installations by 1994. Image from the Showscan brochure.
Click image to see enlargement.
Production
of Showscan Motion Pictures. The cost of producing and distributing a Showscan motion picture typically will exceed the cost of producing the
same motion picture in the conventional 35mm and 70mm formats. Most of
the additional expense will be incurred in the higher cost of film
negatives, laboratory processing and film prints. The Showscan process
requires that a motion picture be filmed on 65mm film rather than on the
standard, and less expensive, 35mm film. The process also requires that
the film travel through the camera at a rate 2.5 times faster than in a
conventional camera, thereby requiring more film for the photography of
the motion picture. The Company estimates that these additional expenses
could add a minimum of approximately $2,000,000 to $3,000,000 to the
production costs of an average feature-length motion picture.
Showscan motion pictures must be photographed
with a camera that can accommodate 65mm film traveling at a rate of
60fps. Existing cameras have been modified to film Showscan motion
pictures. In addition, the Company owns a 65mm camera, the CP-65,
designed to the Company's specifications for filming Showscan motion
pictures. This motion picture industry equipment can be operated by
cameramen accustomed to using conventional cameras. The Company intends
to use approximately $1,800,000 of the proceeds of this offering to
purchase four additional CP-65 cameras and related accessory equipment
that the Company will use to photograph Showscan films or rent to
producers of Showscan films. As of the date hereof, only one CP-65
camera has been manufactured and used.
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A significant drawback to producing a motion
picture using the Showscan process has been the inability to convert a
Showscan film to the standard 24fps format for exhibition in
conventional theaters or on television, or for reproduction on home
videocassettes. The Company recently developed the technology for
converting Showscan film to conventional film and videocassettes, thus
making Showscan motion pictures available for exhibition in all motion
picture theaters, on television and in all ancillary markets. Such
converted film does not, however, contain the depth and realism of a
Showscan film exhibited in Showscan theaters.
In consideration of the loans in
the aggregate principal amount of $1,750,000 made by Columbia to the
Company, the Company has granted to Columbia, through June 12, 1989, the
right to negotiate with the Company to produce and distribute up to two
feature-length motion pictures utilizing the Showscan process. Such
right can be exercised when Columbia has developed a motion picture
property that it wishes to produce and distribute as a Showscan
feature-length motion picture. In addition, as long as Columbia has the
rights described in the preceding sentence, the Company is obligated to
give Columbia notice of any negotiations that it has entered into with a
third party for the production and distribution of a Showscan
feature-length motion picture and the Company may not enter into a
binding agreement with such third party until Columbia has had the
opportunity to negotiate with the Company towards such an agreement. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations—Liquidity and Capital Resources."
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500
seat Discovery Theatre, EXPO 86, Vancouver, British Columbia. Image from the
Showscan brochure.
Exhibition of Showscan Motion
Pictures. In order to obtain the maximum visual effects of the Showscan
process, motion pictures filmed using the Showscan process must be
exhibited on a curved screen with a projection system capable of
projecting 70mm film at 60fps. In addition, theaters in which Showscan
motion pictures will be exhibited should contain sound systems superior
to those generally installed in conventional theaters. Accordingly,
before a Showscan feature-length motion picture can be commercially
exhibited, theaters in the major film exhibition markets of the United
States must be converted or constructed to accommodate Showscan process
equipment. Theaters converted to exhibit Showscan motion pictures will
continue to be capable of exhibiting conventional 35mm or 70mm motion
pictures.
The
equipment necessary to exhibit a Showscan motion picture in a theater
includes a modified projection system and a larger and specially
designed curved screen, the aggregate cost of which will differ in each
instance depending on the structure and equipment of existing
facilities. In addition, in order to enhance the effect of realism in a
Showscan theater, the Company will require each theater to improve its
sound system. The Company estimates that the purchase price of a new
screen, sound system and projection system and the cost of modifying the
theater will be in the range of approximately $100,000 to $300,000.
However, in the construction of a new theater, the added cost of
equipping the theater so that it will be compatible with the Showscan
process will be significantly lower than the cost of converting an
existing theater. All of the items to be acquired or modified, including
the screens, projectors, lamp houses, lenses and components of the sound
systems, are currently available from a number of unaffiliated vendors.
In order to fully experience the
impact of the Showscan process, the seating in the theaters should
provide an unobstructed view of the entire enlarged screen. In many
existing theaters, this may require rearranging the seating or
increasing the slope of the theater's floor. Although the seating
arrangements of some existing theaters meet the Company's standards, the
Company believes that most theaters will require some modification in
their seating arrangements and acoustics, the costs of which will vary
with each theater and thus cannot be estimated.
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Special-Venue Exhibitions
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The
FIRST public Showscan cinema. The 540 seat Toshiba Showscan Theatre
in the Toshiba
Pavilion EXPO 85, The International Exposition, Tsukuba, Japan. Image from
the Showscan brochure.
To date, the Company's principal
source of revenues has been in the production, licensing and exhibition
of special-venue films. Special-venue presentations are short films,
typically 15 to 20 minutes in duration, produced using the Showscan
process and exhibited at expositions, fairs, museums and other major
tourist attractions. Special-venue theaters are either theaters
permanently dedicated to the exhibition of special-venue Showscan films
or temporary theaters erected for such purpose. In special-venue theaters, the sound track of a Showscan film is either on a separate
six-track, 35mm perforated magnetic tape or on compact laser discs,
which are electronically interlocked with the film. Placement of the
sound track on a separate piece of film or disc and synchronization of
the motion picture and the sound track through the use of an electronic
interlock system have enabled special-venue films to utilize a fully
dynamic sound system not used in conventional films.
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The
FIRST public Showscan cinema. The 540 seat Toshiba Showscan
Theatre with 25,6 m. x 11 m. (84 ft. wide x 36 ft.) high screen. Image from the Showscan brochure.
In addition to licensing the right to exhibit
the special-venue Showscan films, the Company may also produce the
special-venue film, provide post-production services, sell or rent
equipment or provide technical assistance in equipping the theaters.
Generally, the Company owns the special-venue films or tries to obtain
the Showscan distribution rights to such films. The Company intends to
distribute such films to the various special-venue Showscan theater
operators for a distribution fee based on a percentage of the gross
proceeds received by the Company from the exhibition of the films.
The income received by the Company from
special-venue presentations typically has consisted of a license fee for
the right to exhibit the Showscan film, which fee either is a percentage
of the exhibitor's gross box office receipts or a negotiated fixed fee,
a fee for producing or assisting in the production of the film, and/or
rental payments for the use of the Showscan film or equipment. The type
of equipment and services provided by the Company for special-venue
presentations varies in each instance, and the percentage of the license
fee varies depending on the other services provided by the Company and
the anticipated duration of the film's presentation.
Although the Company regards its special-venue
business as nonrecurring in nature, the Company does receive on-going
license fees from the permanent special-venue theaters. To date, most of
its revenues from special-venue presentations have come from the
following exhibitions:
- Expo '85. The Showscan process was first introduced to the public
at Expo '85, the World's Fair in Tsukuba, Japan. The Company designed
and leased the equipment for a temporary 550-seat theater in the Toshiba
Pavilion and produced a 15-minute film entitled "Let's Go", which was
exhibited during the summer of 1985. "Let's Go" was photographed and
exhibited using the Showscan process and was a leading attraction at the
fair, attracting over 2,000,000 viewers.
- Expo '86. The Company equipped and assisted in
the design of a 500-seat theater in the British Columbia Pavilion for
Expo '86, the World's Fair in Vancouver, Canada. The Company provided
all of the special effects and post-production work for the 16-minute
Showscan film exhibited in the British Columbia Pavilion. The film,
entitled "Discovery", was produced under a license from the Company by the
government of British Columbia. During Expo '86, Discovery attracted
over 2,500,000 viewers. In February 1987, the Company entered into an
agreement with the operator of the British Columbia Pavilion whereby the
Company granted it a ten-year license to continue the Showscan
exhibition of "Discovery" in the British Columbia Pavilion. During the
first two months of this license, approximately 88,000 viewers have
attended the Showscan exhibition of "Discovery".
The Company also produced a
Showscan film for the British Columbia Pavilion for projection in a
simulated submarine called the Deep Rover Shuttle. The simulated
submarine combined the visual effects of a Showscan film called "Deep Sea
Rescue" with simulator technologies to artificially create the viewers'
participation in a deep-sea rescue operation. The film was shown using
the Company's electronic projector.
A third Expo '86 Showscan film entitled
"Earthwatch", running for seven minutes, was shown in the 500-seat
Canadian Pavilion theater that was equipped by the Company.
Post-production services were provided by the Company.
- Tour of the Universe. The Company installed two Showscan systems in the CN Tower in Toronto, Canada, in two 40-passenger
space shuttle simulators. The Company produced the nine-minute Showscan
film depicting a space flight to Jupiter that is being exhibited in the
simulators. The exhibition opened in May 1986 and is a permanent
facility. The Company installed its electronic projector on the moving
platforms of the simulators and is receiving an on-going license fee for
the exhibition of the Showscan film.
- Niagara Falls. A 23-minute Showscan film entitled
"Niagara Wonders" was produced by the Company and opened in May 1987 in
the 300-seat Centennial Theater in Niagara Falls, New York. The Company
has equipped the theater and entered into a three-year licensing
agreement for the use of the Showscan process pursuant to which the
Company will receive a licensing fee based on a percentage of gross box
office receipts.
- Reuben
H. Fleet Theater and Science Center. On June 18, 1987, the Company
opened a three-month exhibition of "Discovery" at the Reuben H. Fleet Theater and Science Center in San Diego, California. The Company is
leasing the equipment to the theater and will receive a licensing fee
for the right to exhibit the film in Showscan.
Special-venue theaters and
exhibitions currently being established include the following:
- An 18-minute Showscan film entitled
"Kiwi
Experience" is currently being completed and will be exhibited in two
100-seat theaters in Rotorua and Queenstown, New Zealand, commencing in
late 1987. The Company has agreed to equip the theaters and to provide
post-production services for the film. The Company will receive a
license fee based on a percentage of box office receipts. The Company
has obtained the distribution rights to this film and intends to
distribute the film in the United States and Canada.
- The Company has entered into an agreement to
equip two 500-seat temporary theaters in Sydney, Australia, for the
exhibition of a Showscan film. The theaters are being erected for a
six-month exhibition, which will commence in February 1988. The Company
will lease the equipment to the theaters and will receive a flat license
fee for the right to exhibit the film in Showscan. The Company intends
to sell the equipment used in these theaters for installation in
permanent Showscan theaters in Australia upon the conclusion of the
exhibition.
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The
Company intends to expand its special-venue business to other
exhibitions, amusement parks, tourist centers, museums and other
special-purpose sites that are open to the public. The Company's
principal business objective in developing its special-venue business is
to license the photography and exhibition of films produced in the
Showscan process. However, the Company will continue to provide services
in the development, pre-production, principal photography, special
effects and post-production phases of a film, as well as provide
consulting services and equipment.
The Company currently has ten Showscan
special-venue films available for exhibition. The Company owns
special-venue films, including "Let's Go",
"New Magic", "Deep Sea Rescue",
"Big
Ball", "Night of the Dreams" and "Niagara Wonders", and has obtained the Showscan distribution rights on
"Discovery", "Rollercoaster", "Alpine Thrills"
and "Kiwi Experience".
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Corporate Presentations
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The Company is marketing the Showscan process for
use in corporate conventions, trade shows and other industrial
presentations.
In
1986, the Company produced and delivered a one-hour Showscan film and a
commercial for Chevrolet's 75th Anniversary Dealer Show in Orlando,
Florida. The commercial was subsequently converted to the standard 35mm
format and exhibited in motion picture theaters nationwide. The Showscan
version of the commercial and footage from the film have been and are
being exhibited by the Chevrolet Motor Division of General Motors
Corporation in auto shows in Detroit, Chicago, Cleveland and New York.
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Dynamic Motion Theaters
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Image
from the Showscan brochure.
Intamin Corporation Inc. Est. ("Intamin"), a
Liechtenstein corporation that is a manufacturer of amusement park
rides, has developed hydraulically actuated theater seats that can be
synchronized with a film image projected onto a screen in front of the
seats. By synchronizing the motion of hydraulic seats with the
projection of an action Showscan film, the Company and Intamin have been
able to simulate the experience and motion of a ride, such as a roller
coaster, a racecar or a submarine. The theaters in which such mechanized
seats and Showscan equipment are installed are called Dynamic Motion
Theaters. The Company and Intamin anticipate that Dynamic Motion
Theaters will be established to simulate a series of approximately two
to four minute action rides and intend to market the theater to
amusement centers, tourist attractions and other locations frequented by
large numbers of people, possibly including shopping centers. The
Company, in conjunction with Intamin, has filed a patent application
with respect to the mechanism for moving theater seats. Although the
development of the hydraulically actuated seats has been completed and a
number of prototypes of the seats have been manufactured, the production
of additional seats has been held in abeyance pending the receipt of
firm commitments for the establishment of commercial Dynamic Motion
Theaters.
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Curved
Showscan screen at the Dynamic Motion Theater
in Poitiers in France, 1992. Image by Thomas Hauerslev
In June 1986,
the Company and Intamin entered into an agreement to market the Dynamic
Motion Theater concept and manufacture and install mechanized seats and
projection equipment in Dynamic Motion Theaters worldwide. Pursuant to
this agreement, Intamin will manufacture the hydraulic seats and the
Company will provide the Showscan films, projection equipment, screens,
sound system and computerized motion synchronizer, supervise the
installation of Showscan equipment and train personnel to operate the
equipment. Both the Company and Intamin are authorized to market Dynamic
Motion Theaters. In consideration for its marketing services, Intamin
will receive a commission based on a percentage of the film rental
received by the Company from Dynamic Motion Theaters.
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Showscan
projector at the Dynamic Motion Theater
in Poitiers in France, 1992. Image by Thomas Hauerslev
The Company has designed Dynamic Motion
Theaters for 45 to 90 seats. Although no permanent Dynamic Motion
Theaters have been established to date, the Company has operated
temporary 16-seat theaters for the Chevrolet Motor Division of General
Motors Corporation at the Chevrolet 75th Anniversary Dealer Show and in
a temporary theater at the Chevrolet plant in Detroit, Michigan. At the
International Association of Amusement Parks and Attractions convention
held in November 1986, an eight-seat demonstration Dynamic Motion
Theater was awarded first prize for a major ride introduced at the
convention.
The
Company is developing a library of short action films for exhibition in
Dynamic Motion Theaters. Films currently owned by the Company include
films for a roller coaster ride, a car chase, a runaway train,
underwater experiences, a dune buggy ride, downhill skiing and flight
simulation.
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Showscan Equipment
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The
CP-65 highspeed, crystal-synchronized spinning mirror reflexed studio
Showscan 65mm camera. The prototype of the CP-65 camera is manufactured
exclusively for the company by Cinema Prosucts Corporation. Image from the Showscan brochure.
The photography and exhibition of Showscan motion
pictures require specially equipped or modified cameras and projectors.
In addition, certain other products and equipment are needed to produce
Showscan motion pictures and to convert Showscan film to standard film.
The Company has designed or assisted in the design of Showscan-related
equipment.
Cinema
Products Corporation ("Cinema Products"), a manufacturer and supplier of
professional motion picture cameras and equipment, has developed and
built a 65mm high-speed camera for the Company. The camera, called
"CP-65," is being used to photograph Showscan films. The CP-65, a
highspeed, crystal-synchronized spinning mirror reflexed studio camera,
is available with a full complement of lenses and associated support
equipment and is compatible with standard motion picture industry
equipment. The camera can be operated at various speeds from 2fps to
72fps and is crystal-synchronized at 24, 30 and 60fps. To date, only one
prototype of the CP-65 has been manufactured for the Company.
The Company currently does not intend to sell
any CP-65 cameras, but, rather, intends to rent the cameras. Cinema
Products has agreed to act as the Company's rental agent and will, at
its cost, perform all maintenance on the CP-65 cameras. For the
foregoing rental and maintenance services, Cinema Products will receive
a fee equal to 40% of gross receipts from the rental of the cameras.
Although the Company owns the rights to the camera and its design, it
has agreed to pay Cinema Products 25% of the Company's remaining share
(60%) of net revenues received from the rental of the cameras. The
Company has the right to terminate its obligation to pay 25% of such net
revenues by paying Cinema Products $486,000 ($536,000 after January 1,
1990) less one-half of all amounts previously paid by the Company to
Cinema Products in respect of such rental payments.
Films produced using the Showscan process can
be projected with certain conventional 70mm projectors that are modified
to project a motion picture at 60fps. The modification does not entail
significant expense nor effort and does not have an adverse effect on
the reliability of the projector.
In order to facilitate the projection of short
films in special-venue theaters and in Dynamic Motion Theaters, the
Company retained outside contractors to develop for the Company an
automatic electronic projector that uses low-inertia motors to achieve
the intermittent projection of frames of film rather than the
conventional use of gears and geneva-drive sprockets. The projector
permits computer-controlled automatic cueing, synchronization and
rewinding necessary for the continuous showing of a series of short
films. The Company has applied for a patent on certain circuitry
included in its projector.
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Research and Development
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"Centennial
Theatre" opened May 1987. 300
seat Festival Theatre, Niagra Falls, USA. Image from the Showscan
brochure.
Since its inception, the Company has engaged in the
further development of the Showscan process, equipment and technology
necessary to photograph and exhibit Showscan films. In addition, the
Company, directly or in conjunction with other companies, is engaged in
a continuing program of research and development to develop new
equipment and to improve and enhance existing motion picture techniques.
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Marketing
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To date the Company has expended only a limited
amount of its financial resources on the marketing of the Showscan
process. Its marketing efforts have consisted primarily of the
distribution of sales brochures and the demonstration of the Showscan
process at its own studio and at trade shows and conventions, including
the 1986 ShoWest motion picture convention. The Company currently has
three full-time marketing employees as well as independent marketing
representatives. Dynamic Motion Theaters are being marketed by both
Intamin and the Company.
A portion of the proceeds from this offering has been allocated for
the expansion of the Company's sales and marketing efforts. It is
anticipated that the funds will be used mainly for additional
demonstrations of the Showscan process as well as for new marketing
materials and sales brochures. The Company also intends to commence
active marketing of the Dynamic Motion Theaters.
In 1985, a prototype of the Company's
electronic projector did not operate reliably when installed in a
special-venue simulator. Although subsequent generations of this
electronic projector are operating satisfactorily, this prior problem
may make the Company's marketing efforts more difficult.
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Competition
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Close
up of Showscan ride film 70mm projector in Denmark 1995. Image by Thomas
Hauerslev
The Company faces intense
competition in all of its business activities. In the area of
feature-length motion pictures, Showscan films will compete with
conventionally produced feature-length motion pictures, as well as with
motion pictures exhibited in 70mm, with THX-enhanced sound systems,
Sensurround and with other special features. In addition, the Company's
films may also compete with motion pictures produced in FuturVision, a
70mm, 30fps filming and projection process that also uses larger screens
and requires modifications to existing theaters and projectors, after
such motion pictures are produced and such modifications are made.
Because the frame rate used in FuturVision is slower than that of the
Showscan process, producing motion pictures in FuturVision is expected
to be less expensive than the Showscan process.
Since each motion picture is a separate and
distinct product, the success of which depends on public response to
that picture and the popularity of other motion pictures then being
distributed, each Showscan motion picture will compete on its individual
content and artistic value as well as on its visual characteristics. In
addition, all motion pictures compete for audiences with television,
videocassettes and other forms of leisure-time entertainment.
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Another
Showscan product - a 70mm 15 perf IMAX clone. Image from the Showscan
brochure.
In the area of special-venue presentations, the
Company will compete with other big screen and special projection
systems, such as the motion picture production and projection processes
known as IMAX (for flat-screen projections) and OMNIMAX (for
curved-screen projections) and other newly developed formats for
projecting motion pictures, such as OMNI-Z, Omnivision and FuturVision.
The IMAX and OMNIMAX motion pictures are projected on screens of up to
seven stories high and 100 feet wide, and are exhibited in special
theaters designed to accommodate the
IMAX and OMNIMAX formats. As with
the Company's special-venue sound system, FuturVision, IMAX and OMNIMAX
use multi-channel sound systems and a separate, electronically
synchronized tape for their soundtrack. IMAX, OMNIMAX and Omnivision are
established in the special-venue markets and numerous theaters currently
exhibit films produced in these formats. The Company believes that
FuturVision and Omnivision films will have a price advantage over
Showscan process films. However, the Company believes that the Showscan
process will have a competitive advantage over all of the foregoing
processes in its picture quality and in its visual effect of depth and
realism.
The Company's corporate presentations will compete
with all other techniques used in advertising, public relations and
corporate communications. Although an established market for simulator
theaters does not yet exist, the Company is aware of several other
companies that are marketing simulator theaters which will compete with
the Company's Dynamic Motion Theater.
Nearly all of the Company's competitors and
potential competitors are well established, have substantially greater
financial and other resources than the Company and have an established
reputation for success in the development and marketing of products that
are competitive with those of the Company. There can be no assurance
that the Company will be able to compete successfully with such other
companies or that it will achieve profitability.
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Patents and Service Mark
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The Company owns two United States patents on the
Showscan process. These patents cover the combined process of (i)
filming and projecting film at a constant frame rate of at least 50fps,
(ii) projecting such film at high illumination, and (iii) using film
containing images of high-resolution. These patents expire in October
2001. The patents are important to the Company because it believes that
a frame rate of 50fps or more is necessary to achieve the desired degree
of depth and realism, and that enforcement of these patents will prevent
others from achieving the same result. There can be no assurance that
the Company's patents, if challenged, will be upheld, nor can there be
any assurance that competitors will not develop a different technology
that offers comparable or competing visual effects. Moreover, the
Company may be unable, for financial or other reasons, to enforce its
rights under its patents.
The Company also has filed patent applications relating to the the
rapid startup feature of the CP-65 camera, its process for converting
high frame-rate film to standard frame-rate film and its device for
projecting a 360-degree motion picture image. In addition, the Company,
in conjunction with Intamin, has filed a patent application with respect
to the mechanism for moving theater seats. If granted, these patents
would provide the Company with the exclusive rights to other aspects of
its business. The failure to obtain these additional patents will not,
however, have a material impact on the Company's operations.
Although the Company has filed
additional patent applications for the Showscan process in Japan,
Australia, Canada and under the European Patent Convention, the Showscan
process has not yet received patent protection in any of these
jurisdictions and no assurance can be given that any additional patents
will be granted.
Although the Company believes that its technology has been independently
developed and does not infringe the patents of others, certain of the
Company's processes could infringe patents, in which event the Company
may be required to modify its design or obtain a license. No assurance
can be given that the Company will be able to do so in a timely manner
or upon acceptable terms and conditions; and the failure to do either of
the foregoing could have a material adverse effect upon the Company's
business.
The Company
has filed an application with the United States Patent and Trademark
Office to register its service mark Showscan.
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Royalty Arrangements
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70mm
Showscan frame. Image from the Showscan
brochure.
Showscan Investors. Among the obligations entered
into by the Company in connection with the acquisition of its assets is
a royalty agreement (the "Royalty Agreement") between the Company and
Showscan Investors (which has since been reconstituted as WLS Partners).
The Royalty Agreement requires that the Company pay Showscan Investors a
royalty based upon the gross receipts to the Company from the
exploitation of any motion pictures produced using the Showscan process.
The royalty is 3% of such gross receipts until Showscan Investors has
been paid a sum of $1,750,000, and 1½% of such gross receipts
thereafter until Showscan Investors has been paid an additional
$1,750,000. There is no further royalty obligation after the foregoing
payments have been made in full.
Under the Royalty Agreement, the Company is
obligated to make $175,000 annual minimum guaranteed payments to
Showscan Investors as advances against the foregoing royalty on each
July 31 through the period ending July 31, 1995. To date, the Company
has paid $250,000 in royalties under the Royalty Agreement. |
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Paramount/Future General Corporation. On June
27, 1985, in connection with the Company's acquisition of the rights to
the Showscan process, the Company entered into an agreement with
Paramount and FGC pursuant to which the Company is obligated to pay FGC
$766,667 on the date of "commencement" of principal photography on each
of the first three motion pictures produced using the Showscan process,
for a total payment of $2,300,000. This $2,300,000 obligation will
become due and payable in June 1991, even if no photography of
feature-length Showscan motion pictures has commenced. In addition, the
Company is obligated to pay FGC a royalty, in perpetuity, equal to 2% of
the Company's gross receipts from the "worldwide exploitation" of the
Showscan process in excess of 180% of the sum of (i) $21,000,000 and
(ii) all cash contributions to the capital of the Company made by June
27, 1987, plus, to the extent such cash payments are not made from item
(ii) above, (iii) the Company's actual cost, if any, of converting and
equipping theaters for exhibition of Showscan motion pictures, and (iv)
Showscan feature-length motion picture production costs incurred by the
Company. For the purpose of determining FGC's royalty, gross receipts
are denned as all monies received by the Company from the exploitation
of the Showscan process, provided that if the Company is the exhibitor
of a Showscan film, gross receipts shall mean one-half of box office
receipts less taxes paid.
The Company also agreed to grant Paramount a license to produce a
Showscan feature-length motion picture if the Company grants any other
producer such a license before the Company has paid Paramount
$2,300,000. The license fee payable by Paramount will be 75% of the
license fee charged to such other producer. Paramount also has the right
of first negotiation with respect to distribution of the first three
Showscan motion pictures produced by the Company if the Company elects
to grant any distribution rights to a third-party distributor.
Douglas Trumbull. In connection with the
Company's acquisition of the Showscan process patents from
Douglas Trumbull, the Company entered into an agreement with Mr. Trumbull that
provides for payment of royalties to Mr. Trumbull for a period of 30
years, subject to the maintenance of certain levels of working capital.
In general, the royalty payable to Mr. Trumbull will equal 1% of all
revenues received by the Company from the "worldwide exploitation" of
the Showscan process, except that if the Company operates a full-length
motion picture theater, Mr. Trumbull will be entitled to 1% of the box
office receipts of that theater.
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Plan of Operation
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70mm
Showscan frame. Image from the Showscan
brochure.
The Company's principal objectives for the
remainder of its current fiscal year are to initiate the production of
one or more feature-length motion pictures, to expand the Company's
corporate presentation and special-venue businesses and to commercially
establish Dynamic Motion Theaters. The Company intends to use a portion
of the proceeds of this offering to expand its marketing and advertising
programs, including hiring additional necessary marketing personnel.
To date, the production of feature-length motion
pictures has not been possible because an adequate number of Showscan
process cameras and related accessories have not been available. The
Company intends to use a portion of the proceeds of this offering to
fund the manufacture of a sufficient number of cameras and other
equipment necessary for the production of feature-length motion
pictures. The Company has entered into an agreement with Cinema Products
to manufacture two additional CP-65 cameras and accessories by September
1987. The Company also intends to use a portion of the proceeds of this
offering to otherwise invest in, or facilitate the production of,
feature-length Showscan motion pictures.
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Employees
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70mm
Showscan frame. Image from the Showscan
brochure.
As of June 1, 1987, the Company had 27 full-time
employees, two of whom were employed in management, four were employed
in marketing and six were employed in engineering. The remaining 15
full-time employees are administrative and support staff. Five of the
executive officers of the Company are part-time employees. In addition,
the Company employs certain personnel, including film crews consisting
of free-lance directors, writers, artists, technicians, architects and
engineers, from time to time on a part-time basis for special-venue
projects. Such crews range in size from 25 to 50 persons. Although the
Company has not experienced difficulties in obtaining qualified
personnel and it anticipates that it will be able to continue to recruit
qualified personnel for its operations, there can be no assurance that
such personnel will be available when required.
26
The Company is a party to certain industry motion
picture union and guild agreements. These agreements require that the
Company, in connection with its film production activities, hire only
union directors and theatrical employees at specified wage scales with
standard fringe benefits. The Company cannot predict the outcome of
pending or future union contract negotiations or any renewal terms. The
Company considers its relationship with its employees to be
satisfactory. |
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Properties
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The Company subleases a 37,000-square-foot building
at 3939 Landmark Street, Culver City, California 90232, pursuant to a
sublease expiring on June 30, 1989. The Company has a 14-year option to
lease this property directly from the landlord upon the expiration of
the master lease. The current monthly rental for the premises is
$22,000, subject to annual cost-of-living adjustments. The Company's
operating headquarters, Showscan demonstration theater and film studio
are located at this site.
In addition, the Company leases a 9,321-square-foot
special effects facility on a month-to-month basis for $6,990 per month,
at 4121 Redwood Avenue, Marina del Rey, California 90292.
The Company shares its executive offices and
facilities with Plitt Entertainment Group, Inc., an affiliate of certain
officers and directors of the Company, that is the lessee of the
facilities located at 1801 Century Park East, Suite 1225, Los Angeles,
California 90067. Until April 1987, the Company did not pay any rent for
the use of these facilities. However, the Company has entered into an
agreement with Plitt Entertainment Group, Inc., pursuant to which the
Company will pay a monthly rental of $5,000 from April 1, 1987 through
April 1, 1990 for the use of the office space and other office
facilities, office equipment (such as the telephones, computer system,
photocopier and typewriter) and certain office personnel.
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Management
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Directors and Executive
Officers
The current [25.06.1987] directors and executive officers of the
Company are as follows: |
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Name |
Age |
Title |
Henry G. Plitt |
68 |
Co-Chairman of the Board of
Directors |
Douglas Trumbull |
45 |
Co-Chairman of the Board
of Directors |
Roy H. Aaron |
58 |
President, Chief Executive
Officer and Director |
Peter Beale |
43 |
Executive Vice President
and Director |
James A. Sorensen |
46 |
Financial Vice President,
Treasurer and Director |
Raymond C. Fox |
56 |
Secretary and Director |
John B. R. Leisner |
50 |
Director |
Edward M. Plitt |
44 |
Vice President—Administration |
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Showscan
logo
Henry G. Plitt has been
Co-Chairman of the Board of Directors of the Company since its formation
in August 1984. He was Chairman of the Board of Directors and Chief
Executive Officer of both Plitt Theatres, Inc. ("PTI") and Plitt Theatre
Holdings, Inc. ("PTHI"), companies engaged in the exhibition of motion
pictures, from their formation in 1974 and 1978, respectively, until
their acquisition by Cineplex Odeon Corporation in November 1985. Mr.
Plitt has been the Chairman of the Board of Directors and Chief
Executive Officer of Plitt Entertainment Group, Inc. ("PEG") since
November 1985. In his 41 years in the motion picture industry, Mr. Plitt
has served as President of Paramount-Richards Theatre Circuit, President
of ABC Films, Inc., President of Balaban & Katz, Inc. and President of
ABC Great States, Inc. Mr. Plitt also has served as a member of the
executive committee and as a Vice President of the National Association
of Theater Owners. Henry G. Plitt is the father of Edward M. Plitt.
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Showscan
logo
Douglas Trumbull has been
Co-Chairman of the Board of Directors of the Company since its
formation. Mr. Trumbull developed the Showscan process while he was
associated with Paramount Pictures Corporation. Mr. Trumbull, an
independent motion picture producer and director, has also served as the
Chief Executive Officer and a director of High Velocity Films, Inc. (a
motion picture production company) since 1981, and as the Chief
Executive Officer and a director of FX, Inc. (a company that provides
special effects to motion pictures) since 1980. Mr. Trumbull helped
create and produce the special effects for "2001: A Space Odyssey", and
has served as special photographic effects supervisor for "Close
Encounters of the Third Kind", "Star Trek: The Motion Picture" and
"Blade
Runner". In 1970, he wrote and directed "Silent Running", and in 1983 he
directed and produced "Brainstorm". The special effects for "Brainstorm" and
"Blade Runner" were completed at Mr. Trumbull's Entertainment Effects
Group, a motion-picture production facility that works exclusively in
70mm film.
Roy H.
Aaron has been President and Chief Executive Officer of the Company
since February 1986 and has been a director of the Company since its
formation. He also served as President and Chief Operating Officer of PTI and PTHI from 1980 to November 1985. Since November 1985, he has
been the President and Chief Operating Officer of PEG. From 1978 to
1980, he served as Senior Vice President and General Counsel to PTI,
prior to which time he practiced law in Los Angeles with Pacht, Ross,
Warne, Bernhard & Sears.
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Peter Beale has been the Executive Vice President
of the Company since February 1986. From the formation of the Company to
January 1986, Mr. Beale was the Company's President and Chief Executive
Officer. He has been a director since the Company's formation. Mr. Beale
has served in various capacities in the film production industry for the
past 26 years. He was President of Brock/Trumbull Entertainment
Corporation from August 1983 until April 1985. From July 1980 to August
1983, he was an independent producer, and from 1979 to July 1980, he was
managing director of production and distribution at EMI Films, Ltd. Mr.
Beale was European production representative of Twentieth Century-Fox
Productions, Ltd., London, from 1973 to 1979, during which time he
supervised such productions as "Star Wars", "Alien", "The Omen", "Julia" and
"The
Rocky Horror Picture Show".
James A. Sorensen has been a Financial Vice
President, Treasurer and a director of the Company since its formation.
Mr. Sorensen also served as Financial Vice President and Treasurer of PTI and PTHI from 1977 and 1978, respectively, to November 1985. From
1972 to 1977, Mr. Sorensen was employed at Urban Investment and
Development Company, a real estate developer, in various capacities
including Treasurer and Vice President-Finance. Mr. Sorensen is a
certified public accountant and was associated with the firm of Ernst &
Ernst from 1965 to 1972. He also has been Financial Vice President,
Secretary, a director and Treasurer of PEG since November 1985.
Raymond C. Fox has been a
director of the Company since November 1985 and the Secretary since
April 1, 1987. From 1974 to November 1985, he was Senior Vice President
of PTI, and from 1980 to November 1985, he was Secretary of PTI and
PTHI. Mr. Fox was a director of these two companies from October 1983 to
November 1985. He has been a Senior Vice President and a director of PEG
since November 1985. |
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John B. R. Leisner has been a director of the
Company since February 1987. In addition, Mr. Leisner has been the Chief
Executive Officer of John Leisner & Associates, a management consulting
firm since September 1985. Mr. Leisner was President of San Diego Fox
Productions, a company that operated a live theater, and John Leisner &
Associates from August 1981 to February 1983, Director of Spectator
Services of the Los Angeles Olympic Organizing Committee from February
1983 to September 1984, and President of Pizza Time Theater, Inc. from
September 1984 to September 1985. From 1975 to 1981, Mr. Leisner was
Chief Operating Officer of the Universal Studios Tour and Amphitheater,
which is owned and operated by MCA, Inc.
Edward M. Plitt has been Vice
President—Administration of the Company since January 1987 and was a
consultant to the Company from November 1985 to January 1987. From 1977
to November 1985, Mr. Plitt was a Vice President of PTI.
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