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March 4, 2021 at 4:05 PM EST

IMAX Corporation Reports Fourth Quarter And Full Year 2020 Results

HIGHLIGHTS
- Strong box office across Asia drove IMAX results, offering encouraging signs of pent-up demand among global audiences with a robust Hollywood slate scheduled ahead
- IMAX posted another quarter of sequential improvement in key financial metrics, validating the Company's superior asset-light business model and strategic market position in the entertainment industry
- IMAX ended the quarter with $317 million of cash and cash equivalents
- IMAX installed 71 systems and signed agreements for 65 systems for the full year, demonstrating continued partner demand for IMAX® theater systems, contributing to a strong 527 system backlog despite the COVID-19 pandemic

NEW YORK, March 4, 2021 /PRNewswire/ -- IMAX Corporation (NYSE: IMAX) today reported results for the fourth quarter and full year 2020 driven by the strong recovery of the Asian box office, which offered an encouraging sign of continued demand for The IMAX Experience® around the world.   

Results for the fourth quarter reflect the strong performance of the IMAX network in China and Japan, where local language releases recorded robust box office at near pre-pandemic levels, tapping into pent-up demand for big screen experiences. Additionally, fourth quarter results benefitted from the Company's continued growth in its global network, demonstrating strong exhibitor and consumer demand for The IMAX Experience®.  IMAX installed 33 systems and signed 11 agreements in the fourth quarter, ending the year with 527 systems in backlog.

"As the world's only global blockbuster entertainment platform, we are encouraged to see that audiences are eager to return to the movies where the virus is under control and they feel safe, and this promising trend is reflected in our consistent financial improvement since the start of the pandemic," said IMAX CEO, Richard L. Gelfond. "IMAX continues to lead the recovery of the movie industry in markets like China and Japan as audiences seek out The IMAX Experience®, driving record-breaking performances among local language films, gaining market share, and growing our relationships with local exhibitors, studios, and filmmakers."

"Given strong demand for The IMAX Experience in Asia, the extremely promising pipeline of Hollywood blockbusters, and the accelerating pace of vaccinations in North America and Europe, we remain confident and optimistic that the global film industry is poised for a strong and sustainable recovery in the second half of 2021."

"As we manage through the pandemic, IMAX continues to benefit from its strong, differentiated business model and unique position in the entertainment ecosystem. Our global footprint offers access to open markets and thriving local language film industries. Our premium experience and strong brand help ensure that our passionate, engaged fans will be among the first to return to theaters. Finally, our asset-light, flexible model enables us to manage costs, capitalize on opportunities in this dynamic environment, and generate the improving financial results we posted in the fourth quarter."

IMAX reported fourth quarter 2020 revenues of $56.0 million, gross margin of $20.3 million, and a net (loss) attributable to common shareholders of ($21.2) million, or ($0.36) per diluted share, and operating cash inflows of $7.8 million.

IMAX achieved positive EBITDA per Credit Facility(1) and free cash flow for the first time since the first quarter of 2020, despite capacity limitations and continued delays in the Hollywood film slate. The Company has posted sequential quarterly improvement in EBITDA, cash flow, revenue, and box office since the global impact of the pandemic first took hold in the second quarter of 2020. As a result, the Company continued to strengthen its balance sheet, ending the year with $317 million in cash and cash equivalents, up from $305 million at the close of the third quarter.

IMAX results reflect the COVID-19 related partial closure of the Company's network as well as the inclusion of a number of notable non-cash items, including: a valuation allowance to reduce the value of deferred tax assets of $4.9 million or $0.08 per share; a $3.0 million provision for current expected credit losses reflecting a reduction in the credit quality of the theater receivables balances and the heightened collection risk associated with certain movie studios in foreign markets; and, a $2.9 million write-down of excess and obsolete inventory. The company also recorded a $4.1 million charge associated with the final judgement in a legal matter and received $1.9 million of COVID-19 government relief benefits.

Fourth Quarter and December Year-to-Date Financial Highlights


Three Months Ended



Year Ended



December 31,



December 31,


In thousands except per share data

2020



2019



YoY %

Change



2020



2019



YoY %

Change


Total Revenue

$

56.0



$

124.3




(54.9)

%


$

137.0



$

395.7




(65.4)

%

























Gross Margin

$

20.3



$

62.4




(67.4)

%


$

21.5



$

214.2




(89.9)

%

Gross Margin (%)


36.3

%



50.2

%







15.7

%



54.1

%





























Net (Loss) Income attributable to common shareholders

$

(21.2)



$

18.2



N/A



$

(143.8)



$

46.9



N/A


Diluted Net (Loss) Income per share attributable to common shareholders

$

(0.36)



$

0.29



N/A



$

(2.43)



$

0.76



N/A


Adjusted Net (Loss) Income attributable to common shareholders(1)

$

(12.7)



$

21.5



N/A



$

(112.1)



$

64.8



N/A


Adjusted Net (Loss) Income per share attributable to common shareholders(1)

$

(0.21)



$

0.35



N/A



$

(1.89)



$

1.05



N/A


























Adjusted EBITDA per Credit Facility attributable to common shareholders(1)

$

10.0



$

47.0




(78.7)

%


$

(13.1)



$

149.3




(108.8)

%

Adjusted EBITDA Margin attributable to common shareholders (%) (1)


20.8

%



41.7

%



(50.0)

%



(10.8)

%



41.7

%



(125.9)

%


(1)     Non-GAAP Financial Measure


Note: For the definition and reconciliations of reported results to non-GAAP financial results, please refer to the discussion of non-GAAP financial measures at the end of this earnings release.

Fourth Quarter and December Year-to-Date Segment Results(1)


IMAX Technology Network



IMAX Technology Sales and Maintenance




























Revenue



Gross Margin

Gross
Margin %



Revenue



Gross Margin



Gross
Margin %


4Q20

$

17.7



$

7.3




41.4

%


$

36.4




$

13.6




37.5

%

4Q19

43.3




24.7




56.9

%


77.3





39.5




51.2

%

% change


(59.1)

%



(70.2)

%







(52.9)

%




(65.5)

%






























YTD 4Q20

$

46.1



$

4.2




9.2

%


$

79.8




$

28.0




35.1

%

YTD 4Q19

197.4




127.0




64.3

%



179.9





86.4




48.0

%

% change


(76.6)

%



(96.7)

%







(55.6)

%




(67.6)

%





_____________

(1)  Please refer to the Company's Form 10-K for the period ended December 31, 2020 for additional segment information

IMAX Technology Network

  • IMAX Technology Network revenues decreased 59.1% to $17.7 million in the fourth quarter of 2020, compared to $43.3 million in the prior-year period. The partial closure of the Company's network through the quarter and the release of fewer films, both a result of the COVID-19 global pandemic, drove the decline in gross box office and revenue.
  • Gross margin for the IMAX Technology Network declined 70.2% to $7.3 million in the fourth quarter of 2020. The decline was driven by lower segment revenue and ongoing fixed costs associated with the installed IMAX network.

IMAX Technology Sales and Maintenance

  • IMAX Technology Sales and Maintenance revenues decreased 52.9% to $36.4 million in the fourth quarter of 2020, compared with $77.3 million in the prior year period. The decline in revenue was the result of installing 12 fewer sales-type-lease and 5 fewer hybrid systems in the quarter.
  • Total gross margin for IMAX Technology Sales and Maintenance was $13.6 million compared to $39.5 million in the prior year period. The decrease in gross margin was the result of lower sales activity and revenue in the quarter.

Cash Balances and Outstanding Debt

Total cash and cash equivalents as of December 31, 2020 were $317 million. Total debt, excluding deferred financing fees, was $306 million as of December 31, 2020.

Share Count and Capital Return

The weighted average diluted shares outstanding at the end of the fourth quarter of 2020 declined 4.4% to 58.9 million, compared to 61.5 million in the fourth quarter of 2019, due primarily to share repurchase activity during the twelve-month period. During the fourth quarter of 2020, the Company did not repurchase any stock. A total of $89.4 million remains available under the Company's outstanding share repurchase authorization, which was extended in June 2020 and now expires in June 2021.

Supplemental Materials

For more information about the Company's results, please refer to the IMAX Investor Relations website located at investors.imax.com.

Investor Relations Website and Social Media

On a weekly basis, the Company posts quarter-to-date box office results on the IMAX Investor Relations website located at investors.imax.com. The Company expects to provide such updates on Friday of each week, although the Company may change this timing without notice. Results will be displayed with a one-week lag.

The Company may post additional information on the Company's corporate and Investor Relations website which may be material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's website in addition to the Company's press releases, SEC filings and public conference calls and webcasts, for additional information about the Company

Conference Call

The Company will host a conference call today at 4:30PM ET to discuss its fourth quarter and full year 2020 financial results. This call is being webcast by PGI and can be accessed at investors.imax.com. To access the call via telephone, interested parties in the US and Canada should dial (800) 437-2398 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 792-1240. The conference ID for the call is 3139582. A replay of the call will be available via webcast at investors.imax.com or via telephone by dialing (888) 203-1112 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 3139582.

About IMAX Corporation 

IMAX, an innovator in entertainment technology, combines proprietary software, architecture and equipment to create experiences that take you beyond the edge of your seat to a world you've never imagined. Top filmmakers and studios are utilizing IMAX theaters to connect with audiences in extraordinary ways, and, as such, IMAX's network is among the most important and successful theatrical distribution platforms for major event films around the globe.

IMAX is headquartered in New York, Toronto, and Los Angeles, with additional offices in London, Dublin, Tokyo, and Shanghai. As of December 31, 2020, there were 1,650 IMAX theater systems (1,562 commercial multiplexes, 12 commercial destinations, 76 institutional) operating in 84 countries and territories. Shares of IMAX China Holding, Inc., a subsidiary of IMAX Corporation, trade on the Hong Kong Stock Exchange under the stock code "1970."

IMAX®, IMAX® Dome, IMAX® 3D, IMAX® 3D Dome, Experience It In IMAX®, The IMAX Experience®, An IMAX Experience®, An IMAX 3D Experience®, IMAX DMR®, DMR®, IMAX nXos® and Films to the Fullest®, are trademarks and trade names of the Company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Instagram (https://www.instagram.com/imax), Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).

For additional information please contact:

Investors:

Media:

IMAX Corporation, New York

IMAX Corporation, New York

Brett Harriss

Mark Jafar

212-821-0187

212-821-0102

bharriss@IMAX.com

mjafar@imax.com

Forward-Looking Statements

This earnings release contains forward looking statements that are based on IMAX management's assumptions and existing information and involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. Important factors that could affect these statements include, but are not limited to, references to business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), plans and references to the future success of IMAX Corporation together with its consolidated subsidiaries (the "Company") and expectations regarding the Company's future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, the impact of COVID-19 on the Company's business, financial conditions and results of operations and on the businesses of our customers and exhibitor partners; risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada; risks related to the Company's growth and operations in China; the performance of IMAX DMR® films; the signing of IMAX Theater System agreements; conditions, changes and developments in the commercial exhibition industry and broader entertainment industry, including both the in-home and out-of-home entertainment markets; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates, including competitive actions by other companies; the failure to respond to change and advancements in entertainment technology; risks relating to consolidation among commercial exhibitors and movie studios; risks related to new business initiatives that may be presented to and pursued by the Company; risks related to cyber-security and data privacy; risks related to the Company's inability to protect the Company's intellectual property; general economic, market or business conditions; the failure to convert IMAX Theater System backlog into revenue; changes in laws or regulations; the failure to fully realize the projected cost savings and benefits from any of the Company's restructuring initiatives; assumptions related to the foregoing; other risks outlined in our periodic filings with the SEC; and other factors, many of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this earnings release are qualified by these cautionary statements, and actual results or anticipated developments by the Company may not be realized, and even if substantially realized, may not have the expected consequences to, or effects on, the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Primary Reporting Groups

The Company has the following reportable segments: (i) IMAX DMR; (ii) Joint Revenue Sharing Arrangements; (iii) IMAX Systems, (iv) IMAX Maintenance; (v) Other Theater Business; (vi) New Business Initiatives; (vii) Film Distribution; and (viii) Film Post-Production. The Company organizes its reportable segments into the following four categories, identified by the nature of the product sold or service provided:

(i)

IMAX Technology Network, which earns revenue based on contingent box office receipts and includes the IMAX DMR segment and contingent rent from the Joint Revenue Sharing Arrangement ("JRSA") segment;

(ii)

IMAX Technology Sales and Maintenance, which includes results from the IMAX Systems, IMAX Maintenance and Other Theater Business segments, as well as fixed revenues from the JRSA segment;

(iii)

New Business Initiatives, which is a segment that includes activities related to the exploration of new lines of business and new initiatives outside of the Company's core business; and

(iv)

Film Distribution and Post-Production, which includes activities related to the licensing of film content, the distribution of films primarily for the Company's institutional theater partners (through the Film Distribution segment) and the provision of film post-production and quality control services (through the Film Post-Production segment).

 

Signings and Installations




Twelve Months

Ended December 31,



Theater System Signings:

2020




2019



New IMAX Theater Systems










Sales and sales-type lease arrangements


28





49



Hybrid joint revenue sharing lease arrangements


18





48



Traditional joint revenue sharing arrangements


2





7



Total new IMAX Theater Systems


48





104



Upgrades of IMAX Theater Systems


17





39



Total IMAX Theater System signings


65





143














Twelve Months

Ended December 31,



Theater System Installations:

2020




2019



New IMAX Theater Systems










Sales and sales-type lease arrangements


27





55



Hybrid joint revenue sharing lease arrangements


5





20



Traditional joint revenue sharing arrangements


23





54



Total new IMAX Theater Systems


55





129



Upgrades of IMAX Theater Systems


16





57



Total IMAX Theater System installations


71





186














Twelve Months

Ended December 31,



Theater Sales Backlog:

2020




2019



Sales and sales-type lease arrangements


185





178



Hybrid joint revenue sharing lease arrangements


147





140



Traditional joint revenue sharing lease arrangements


195


(1)



213


(1)

Total Theater backlog


527


(2)



531


(3)












Twelve Months

Ended December 31,



Theater Network:

2020




2019



Commercial Multiplex Theaters










Sales and sales-type lease arrangements


672





659



Hybrid joint revenue sharing lease arrangements


140





139



Traditional joint revenue sharing lease arrangements


750





731



Total Commercial Multiplex Theaters


1,562





1,529



Commercial Destination Theaters


12





14



Institutional Theaters


76





81



Total Theater network


1,650





1,624



_____________

(1)  Includes 46 IMAX Theater Systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement (2019 — 47).

(2)  Includes 148 new IMAX with Laser projection system configurations and 95 upgrades of existing locations to IMAX with Laser projection system configurations.

(3)  Includes 144 new IMAX with Laser projection system configurations and 92 upgrades of existing locations to IMAX with Laser projection system configurations.

 

 IMAX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except per share amounts)




Three Months Ended












December 31,



Year Ended




(Unaudited)



December 31,




2020



2019



2020



2019


Revenues
















Technology sales

$

25,626



$

61,616



$

49,728



$

118,245


Image enhancement and maintenance services


20,209




43,570




59,318




188,547


Technology rentals


7,534




16,286




17,841




77,961


Finance income


2,621




2,807




10,116




10,911





55,990




124,279




137,003




395,664


Costs and expenses applicable to revenues
















Technology sales


17,533




30,513




33,170




63,627


Image enhancement and maintenance services


11,549




21,970




53,598




88,175


Technology rentals


6,595




9,437




28,695




29,690





35,677




61,920




115,463




181,492


Gross margin


20,313




62,359




21,540




214,172


Selling, general and administrative expenses


25,238




34,189




108,485




123,456


Research and development


1,056




1,486




5,618




5,203


Amortization of intangibles


1,380




1,391




5,394




4,955


Credit loss expense


3,026




473




18,608




2,430


Asset impairments


-




-




1,151




-


Legal judgment and arbitration awards


4,105




-




4,105




-


Exit costs, restructuring charges and associated impairments


-




-




-




850


(Loss) income from operations


(14,492)




24,820




(121,821)




77,278


(Loss) gain in fair value of investments


(1,142)




2,026




(2,081)




(517)


Retirement benefits non-service expense


(168)




(257)




(600)




(737)


Interest income


546




473




2,388




2,105


Interest expense


(2,390)




(987)




(7,010)




(2,793)


(Loss) income before taxes


(17,646)




26,075




(129,124)




75,336


Income tax expense


(1,898)




(4,782)




(26,504)




(16,768)


Equity in (losses) gains of investees, net of tax


-




59




(1,858)




3


Net (loss) income


(19,544)




21,352




(157,486)




58,571


Net loss (income) attributable to non-controlling interests


(1,701)




(3,181)




13,711




(11,705)


Net (loss) income attributable to common shareholders

$

(21,245)



$

18,171



$

(143,775)



$

46,866


Net (loss) income per share attributable to common shareholders basic and diluted:















Net (loss) income per share — basic and diluted

$

(0.36)



$

0.29



$

(2.43)



$

0.76



















Weighted average number of shares outstanding (000's):

















Basic


58,872




61,228




59,237




61,310



Fully Diluted


58,872




61,542




59,237




61,489


Additional Disclosure:
















Depreciation and amortization(1)

$

12,312



$

17,987



$

53,606



$

63,487



















(1) Includes $0.3 million and $0.9 million of amortization of deferred financing costs charged to interest expense for the three months and year ended December 31, 2020, respectively ($0.1 million and $0.5 million, respectively).

 

IMAX CORPORATION

CONSOLIDATED BALANCE SHEETS

In accordance with United States Generally Accepted Accounting Principles

(In thousands of dollars, except share amounts)



As of December 31,



2020



2019


Assets








Cash and cash equivalents

$

317,379



$

109,484


Accounts receivable, net of allowance for credit losses


56,300




99,513


Financing receivables, net of allowance for credit losses


131,810




128,038


Variable consideration receivable, net of allowance for credit losses


40,526




40,040


Inventories


39,580




42,989


Prepaid expenses


10,420




10,237


Film assets


5,777




17,921


Property, plant and equipment, net of accumulated depreciation


277,397




306,849


Investment in equity securities


13,633




15,685


Other assets


21,673




25,034


Deferred income tax assets


17,983




23,905


Other intangible assets, net of accumulated amortization


26,245




30,347


Goodwill


39,027




39,027


Total assets

$

997,750



$

889,069


Liabilities








Bank indebtedness, net of unamortized debt issuance costs

$

305,676



$

18,229


Accounts payable


20,837




20,414


Accrued and other liabilities


99,354




112,779


Deferred revenue


87,982




94,552


Deferred income tax liabilities


19,134





Total liabilities


532,983




245,974


Commitments and contingencies








Non-controlling interests


759




5,908


Shareholders' equity








Capital stock common shares — no par value. Authorized — unlimited number.








58,921,731 issued and 58,921,008 outstanding (December 31, 2019 — 61,362,872 issued and 61,175,852 outstanding)


407,031




423,386


Less: Treasury stock, 723 shares at cost (December 31, 2019 — 187,020)


(11)




(4,038)


Other equity


180,330




171,789


Accumulated deficit


(202,849)




(40,253)


Accumulated other comprehensive income (loss)


988




(3,190)


Total shareholders' equity attributable to common shareholders


385,489




547,694


Non-controlling interests


78,519




89,493


Total shareholders' equity


464,008




637,187


Total liabilities and shareholders' equity

$

997,750



$

889,069


 

IMAX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)



Years Ended December 31,



2020



2019


Cash provided by (used in):










Operating Activities










Net (loss) income

$


(157,486)



$


58,571


Adjustments to reconcile net (loss) income to cash from operations:










Depreciation and amortization



53,606





63,487


Credit loss expense



18,608





2,430


Write-downs



17,729





4,376


Deferred income tax expense



23,618





6,762


Share-based and other non-cash compensation



22,038





23,570


Unrealized foreign currency exchange (gain) loss



(1,355)





32


Loss in fair value of investments



2,081





517


Equity in losses (income) of investees



1,858





(3)


Changes in assets and liabilities:









Accounts receivable



33,597





(8,621)


Inventories



1,637





1,942


Film assets



(7,665)





(23,437)


Deferred revenue



(6,637)





(12,242)


Changes in other operating assets and liabilities



(24,640)





(27,008)


Net cash (used in) provided by operating activities



(23,011)





90,376


Investing Activities










Purchase of property, plant and equipment



(697)





(7,421)


Investment in equipment for joint revenue sharing arrangements



(6,654)





(40,489)


Acquisition of other intangible assets



(1,904)





(2,931)


Investment in equity securities







(15,153)


Net cash used in investing activities



(9,255)





(65,994)


Financing Activities










Increase in revolving credit facility borrowings



287,610





35,000


Repayment of revolving credit facility borrowings







(55,000)


Credit facility amendment fees paid



(1,073)






Settlement of restricted share units and options



(3,075)





(9,795)


Treasury stock repurchased for future settlement of restricted share units



(11)





(4,038)


Repurchase of common shares, IMAX China



(1,534)





(19,162)


Taxes withheld and paid on employee stock awards vested



(512)





(590)


Common shares issued - stock options exercised







2,404


Repurchase of common shares



(36,624)





(2,659)


Issuance of subsidiary shares to non-controlling interests (net of return on capital)







1,106


Dividends paid to non-controlling interests



(4,214)





(4,384)


Net cash provided by (used in) financing activities



240,567





(57,118)


Effects of exchange rate changes on cash



(406)





630


Increase (decrease) in cash and cash equivalents during year



207,895





(32,106)


Cash and cash equivalents, beginning of year



109,484





141,590


Cash and cash equivalents, end of year

$


317,379



$


109,484


 


Three Months Ended



Year Ended



December 31,



December 31,



2020



2019



2020



2019


Revenue
















IMAX Technology Network
















IMAX DMR

$

10,204



$

26,857



$

28,265



$

120,765


Joint revenue sharing arrangements, contingent rent


7,534




16,484




17,841




76,673




17,738




43,341




46,106




197,438


IMAX Technology Sales and Maintenance
















IMAX Systems


26,381




56,817




54,055




107,321


Joint revenue sharing arrangements, fixed fees


860




4,489




2,056




11,014


IMAX Maintenance


8,774




13,336




21,999




53,151


Other Theater Business


405




2,624




1,666




8,390




36,420




77,266




79,776




179,876


New Business Initiatives


738




846




2,226




2,754


Film Distribution and Post-Production


1,178




2,419




8,719




12,210




56,074




123,872




136,827




392,278


Other


(84)




407




176




3,386


Total revenues

$

55,990



$

124,279



$

137,003



$

395,664


















Gross Margin (Margin Loss)
















IMAX Technology Network
















IMAX DMR(1)

$

6,239



$

16,990



$

13,731



$

78,592


Joint revenue sharing arrangements, contingent rent(1)


1,110




7,669




(9,500)




48,446




7,349




24,659




4,231




127,038


IMAX Technology Sales and Maintenance
















IMAX Systems (1)


10,319




31,445




24,816




58,168


Joint revenue sharing arrangements, fixed fees(1)


419




1,312




529




2,613


IMAX Maintenance


3,423




5,964




3,068




23,010


Other Theater Business


(515)




803




(438)




2,624




13,646




39,524




27,975




86,415


New Business Initiatives


633




665




1,878




2,106


Film Distribution and Post-Production (1)(2)


(806)




(1,745)




(10,198)




(1,262)




20,822




63,103




23,886




214,297


Other


(509)




(744)




(2,346)




(125)


Total Segment Margin

$

20,313



$

62,359



$

21,540



$

214,172


__________________

(1)   IMAX DMR segment margins include marketing cost of $0.6 million and $3.4 million for the three months and year ended December 31, 2020, respectively (2019 — $4.8 million and $22.5 million, respectively). JRSA gross margin includes advertising, marketing and commission expense of $0.5 million and $1.8 million for the three months and year ended December 31, 2020, respectively (2019 — $3.4 million and $4.5 million, respectively). IMAX Systems gross margin includes marketing and commission costs of $1.0 million and $2.0 million for the three months and year ended December 31, 2020, respectively, (2019 — $0.5 million and $2.0 million, respectively). Film Distribution segment gross margin includes marketing expense of $0.3 million and $0.7 million for the three months and year ended December 31, 2020, respectively (2019 — recovery of $0.3 million and expense of $0.4 million, respectively).

(2)   Film Distribution margins were significantly influenced by impairment loss recorded of $0.1 million and $10.0 million for the three months and year ended December 31, 2020 to write-down the carrying value of certain documentary and alternative content film assets (2019 – $1.2 million and $1.4 million).

IMAX CORPORATION
NON-GAAP FINANCIAL MEASURES
(in thousands of U.S. dollars)

In this release, the Company presents adjusted net (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per diluted share, EBITDA, Adjusted EBITDA per Credit Facility, Adjusted EBITDA margin, and free cash flow as supplemental measures of the Company's performance, which are not recognized under U.S. GAAP. Adjusted net (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per basic and diluted share exclude, where applicable: (i) share-based compensation; (ii) COVID-19 government relief benefits, (iii) legal judgment and arbitration awards; (iv) exit costs, restructuring charges and associated impairments, (v) gain (loss) in the fair value of investments, as well as the related tax impact of these adjustments, and (vi) income taxes resulting from management's decision to no longer indefinitely reinvest the historical earnings of certain foreign subsidiaries.

The Company believes that these non-GAAP financial measures are important supplemental measures that allow management and users of the Company's financial statements to view operating trends and analyze controllable operating performance on a comparable basis between periods without the after-tax impact of share-based compensation and certain unusual items included in net (loss) income attributable to common shareholders. Although share-based compensation is an important aspect of the Company's employee and executive compensation packages, it is a non-cash expense and is excluded from certain internal business performance measures.

A reconciliation from net (loss) income attributable to common shareholders and the associated per share amounts to adjusted net (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per diluted share is presented in the table below. Net (loss) income attributable to common shareholders and the associated per share amounts are the most directly comparable GAAP measures because they reflect the earnings relevant to the Company's shareholders, rather than the earnings attributable to non-controlling interests. Accordingly, beginning in the first quarter of 2020, the Company updated its reconciliations of these non-GAAP financial measures to reflect this approach.

In addition to the non-GAAP financial measures discussed above, management also uses "EBITDA," as such term is defined in the Credit Agreement, and which is referred to herein as "Adjusted EBITDA per Credit Facility." As allowed by the Credit Agreement, Adjusted EBITDA per Credit Facility includes adjustments in addition to the exclusion of interest, taxes, depreciation and amortization. Adjusted EBITDA per Credit Facility measure is presented to allow a more comprehensive analysis of the Company's operating performance and to provide additional information with respect to the Company's compliance against its Credit Agreement requirements when applicable. In addition, the Company believes that Adjusted EBITDA per Credit Facility presents relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry to evaluate, assess and benchmark the Company's results.

EBITDA is defined as net income or loss excluding (i) interest expense, net of interest income; (ii) income tax expense or benefit; and (iii) depreciation and amortization, including film asset amortization. Adjusted EBITDA per Credit Facility is defined as EBITDA excluding: (i) share-based and other non-cash compensation; (ii) gain or loss in fair value of investments; (iii) write-downs, net of recoveries, including asset impairments and credit loss expense; (iv) legal judgment and arbitration award; (v) gain or loss from equity accounted investments; and (vi) exit costs, restructuring charges and associated impairments.

A reconciliation of net loss attributable to common shareholders, which is the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA per Credit Facility is presented in the table below. Net loss attributable to common shareholders is the most directly comparable GAAP measure because it reflects the earnings relevant to the Company's shareholders, rather than the earnings attributable to non-controlling interests. Accordingly, beginning in the first quarter of 2020, the Company updated its reconciliations of these non-GAAP financial measures to reflect this approach.

Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the condensed consolidated statements of cash flows). Cash provided by operating activities consist of net (loss) income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company's after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented below.

These non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Additionally, the non-GAAP financial measures used by the Company should not be considered as a substitute for, or superior to, the comparable GAAP amounts.

Adjusted EBITDA per Credit Facility



For the Three Months Ended December 31, 2020



For the Three Months Ended December 31, 2019



Attributable to

Non-controlling



Less:






Attributable to

Non-controlling



Less:






Interests and



Attributable to



Attributable to



Interests and



Attributable to



Attributable to



Common



Non-controlling



Common



Common



Non-controlling



Common



Shareholders



Interests



Shareholders



Shareholders



Interests



Shareholders


(In thousands of U.S. Dollars)






























Reported net (loss) income

$


(19,544)



$


1,701



$


(21,245)



$


21,352



$


3,181



$


18,171


Add (subtract):






























Income tax expense



1,898





717





1,181





4,782





858





3,924


Interest expense, net of interest income



1,537





(90)





1,627





381





(108)





489


Depreciation and amortization, including film asset amortization



12,312





1,099





11,213





17,987





1,266





16,721


EBITDA

$


(3,797)



$


3,427



$


(7,224)



$


44,502



$


5,197



$


39,305


Share-based and other non-cash compensation



5,693





226





5,467





6,173





143





6,030


Loss (gain) in fair value of investments



1,142





353





789





(2,026)





(642)





(1,384)


Write-downs, including asset impairments and credit loss expense



7,416





533





6,883





3,822





759





3,063


Legal judgment and arbitration awards(4)



4,105









4,105

















Gain from equity accounted investments















(59)









(59)


Adjusted EBITDA per Credit Facility

$


14,559



$


4,539



$


10,020



$


52,412



$


5,457



$


46,955


Revenues attributable to common shareholders(2)



55,990





7,926





48,064





124,279





11,644





112,635


Adjusted EBITDA margin attributable to common shareholders



26.0

%




57.3

%




20.8

%




42.2

%




46.9

%




41.7

%
































For the Twelve Months Ended December 31, 2020 (1)



For the Twelve Months Ended December 31, 2019 (1)



Attributable to

Non-controlling



Less:






Attributable to

Non-controlling



Less:






Interests and



Attributable to



Attributable to



Interests and



Attributable to



Attributable to



Common



Non-controlling



Common



Common



Non-controlling



Common



Shareholders



Interests



Shareholders



Shareholders



Interests



Shareholders


(In thousands of U.S. Dollars)






























Reported net (loss) income

$


(157,486)



$


(13,711)



$


(143,775)



$


58,571



$


11,705



$


46,866


Add (subtract):






























Income tax expense



26,504





5,408





21,096





16,768





3,625





13,143


Interest expense, net of interest income



3,720





(370)





4,090





423





(524)





947


Depreciation and amortization, including film asset amortization



53,606





4,570





49,036





63,487





5,033





58,454


EBITDA

$


(73,656)



$


(4,103)



$


(69,553)



$


139,249



$


19,839



$


119,410


Share-based and other non-cash compensation



22,038





968





21,070





23,570





617





22,953


Loss in fair value of investments



2,081





631





1,450





517





165





352


Write-downs, including asset impairments and credit loss expense



36,337





8,364





27,973





6,806





1,040





5,766


Legal judgment and arbitration awards(4)



4,105









4,105














Loss from equity accounted investments



1,858









1,858





(3)









(3)


Exit costs, restructuring charges and associated impairments















850









850


Adjusted EBITDA per Credit Facility

$


(7,237)



$


5,860



$


(13,097)



$