================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM ______ TO ______ COMMISSION FILE NUMBER A. Full title of the plan and the address of the plan, if different from that of the issuer named below: IMAX CORPORATION 401(k) RETIREMENT PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: IMAX CORPORATION 2525 Speakman Drive Mississauga, Ontario L5K 1B1 ================================================================================ IMAX CORPORATION 401(k) RETIREMENT PLAN TABLE OF CONTENTS OF INFORMATION REQUIRED IN REPORT ITEM 4. Financial Statements and Supplemental for the Plan The IMAX Corporation 401(k) Retirement Plan (the "Plan") is subject to the Employee Retirement Income Security Act of 1974 ("ERISA"). In lieu of the requirements of Items 1-3 of this Form, the Plan is filing the financial statements and supplemental schedules prepared in accordance with the financial reporting requirements of ERISA. The Plan financial statements and supplemental schedules for the year ended December 31, 2005 are included as Exhibit 99.1 to this report on Form 11-K and are incorporated herein by reference. The Plan financial statements and supplemental schedules have been examined by PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, and their report is included therein. Page ---- Signatures 2 EXHIBITS 23.1 Consent of Independent Registered Public Accounting Firm 3 99.1 Financial Statements and Supplemental Schedules of the IMAX Corporation 401(k) Retirement Plan for the year ended December 31, 2005, prepared in accordance with the financial reporting requirements of ERISA 4
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees of the IMAX Corporation 401(k) Retirement Plan have duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. IMAX CORPORATION 401(k) RETIREMENT PLAN Date: July 14, 2006 By: /s/ Mary C. Sullivan ------------------------------------------ Name: Mary C. Sullivan Title: Senior Vice President, Human Resources & Administration By: /s/ G. Mary Ruby ------------------------------------------ Name: G. Mary Ruby Title: Senior Vice President Legal Affairs, Corporate Secretary, Deputy General Counsel & Chief Compliance Officer 2
EXHIBIT 23.1 PRICEWATERHOUSECOOPERS LLP CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-134811) of IMAX Corporation of our report dated July 11, 2006 relating to the financial statements and financial statement schedules of the IMAX Corporation 401(k) Retirement Plan, which appears in this Form 11-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Buffalo, New York July 14, 2006 3 EXHIBIT 99.1 Index to Financial Statements and Supplemental Schedules of the IMAX Corporation 401(k) Retirement Plan PAGE(s) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM........................5 FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits as of December 31, 2005 and 2004.....................................................6 Statement of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2005.................................7 Notes to Financial Statements...............................................8-12 ADDITIONAL INFORMATION Schedule of Assets (Held at End of Year) as of December 31, 2005..............13 Schedule of Delinquent Participant Contributions for the year ended December 31, 2005..............................................14 *Other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act ("ERISA") of 1974 have been omitted because they are not applicable. 4 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Participants and Administrator of IMAX Corporation 401(k) Retirement Plan In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of IMAX Corporation 401(k) Retirement Plan (the "Plan") at December 31, 2005 and 2004, and the changes in net assets available for benefits for the year than ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) and Schedule of Delinquent Participant Contributions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. PricewaterhouseCoopers LLP Buffalo, New York July 11, 2006 5 IMAX CORPORATION 401(k) RETIREMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 2005 AND 2004 - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 6
2005 2004 ---------------- ---------------- ASSETS Investments at fair value: Interest-bearing cash $ 521 $ 980 IMAX common stock 9,466 - Common collective trust 1,527,387 1,595,468 Mutual funds 5,681,958 5,612,463 Participant loans 39,275 48,002 ---------------- ---------------- Total investments 7,258,607 7,256,913 ---------------- ---------------- Contributions receivable: Participant 12,557 33,267 Employer 64,210 7,577 Other (Note 7) 399 2,805 ---------------- ---------------- Total receivables 77,166 43,649 ---------------- ---------------- Total assets $ 7,335,773 $ 7,300,562 ---------------- ---------------- LIABILITIES Excess contributions payable to participants $ - $ 23,797 Accounts payable - 50 ---------------- ---------------- Total liabilities - 23,847 ---------------- ---------------- Net assets available for benefits $ 7,335,773 $ 7,276,715 ================ ================ IMAX CORPORATION 401(K) RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEAR ENDED DECEMBER 31, 2005 - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 7
2005 ---------------- ADDITIONS TO NET ASSETS Net appreciation in fair value of investments (Note 3) $ 29,987 Interest and dividends 341,690 CONTRIBUTIONS Employer's 266,287 Participants' 452,826 ---------------- Total contributions 719,113 ---------------- Total additions 1,090,790 ---------------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 1,030,749 Administrative expenses 983 ---------------- Total deductions 1,031,732 ---------------- Net increase in net assets available for benefits 59,058 ---------------- Net assets available for benefits Beginning of year 7,276,715 ---------------- End of year $ 7,335,773 ================ IMAX CORPORATION 401(k) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2005 AND 2004 - -------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN The following brief description of the IMAX Corporation 401(k) Retirement Plan (the "Plan") is provided for general information purposes only. For a more complete description of the Plan's provisions, participants should refer to the Plan agreement. GENERAL The Plan was established by IMAX Corporation (the "Company") effective January 1, 1993. The Plan is a defined contribution retirement plan covering all eligible employees of the Company who are not covered by a collective bargaining agreement, and is subject to the provisions of the Employee Retirement Income Security Act ("ERISA") of 1974 and the Internal Revenue Code. Effective July 1, 2004, the Plan transferred all of the recordkeeping responsibilities from Fidelity Investments Institutional Operations Company, Inc. to ABN AMRO Trust Service Company and transferred all plan assets to ABN ARMO Trust Service Company, which replaced Fidelity Management Trust Company ("Fidelity") as the Plan's trustee and custodian (the "Trustee"). ELIGIBILITY Employees of the Company are eligible to participate in the Plan after completing one year and at least 1,000 hours of service and are twenty-one years of age. CONTRIBUTIONS The Plan allows participants to contribute an amount up to 60% of their annual compensation, not to exceed the ceiling imposed by the Internal Revenue Service of $14,000 for 2005 and $13,000 for 2004, as prescribed by the Plan Agreement. A participant who has attained age 50 before the close of the respective Plan year, is eligible to make unmatched catch-up contributions up to a maximum of $4,000 for 2005 ($3,000 for 2004), increasing by $1,000 each year up to $5,000 in 2006. The Company will match 100% of the participants' contributions, not to exceed 2% of their total compensation. Additionally, profit sharing amounts may be contributed at the discretion of the Company's management. Total profit sharing contributions in 2005 were $120,189. VESTING Participants are vested immediately in their contributions plus actual earnings thereon. Vesting in the employer contribution portion of their accounts is based on years of continuous service as follows: VESTING YEARS OF SERVICE PERCENTAGE ---------------- ---------- Less than 1 0% 1 25% 2 50% 3 or more 100% Participants will be immediately vested upon the occurrence of certain events such as reaching normal retirement age, reaching early retirement age and completing 5 years of vesting service, becoming disabled and upon death. 8 IMAX CORPORATION 401(k) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2005 AND 2004 - -------------------------------------------------------------------------------- 1. DESCRIPTION OF PLAN (cont'd) PARTICIPANT ACCOUNTS Separate accounts are maintained for each Plan participant. Participants may direct the investment of their contributions in 1% increments in any of several investment fund alternatives, which include mutual funds, a common collective trust and the IMAX stock fund. Participants may, in accordance with the rules of the Plan, transfer existing balances among the available investments funds, and/or redirect their current contributions into different funds, daily. A participant may increase or decrease, at any time, the percentage of salary reduction elected, effective the first day of each payroll period. Contributions may be suspended at any time. Each participant's account is credited with the participant's and the Company's contributions and investment earnings, and charged with investment losses. The benefit to which a participant is entitled is equal to the amount of the participant's vested account balance. PARTICIPANT LOANS Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their vested account balance, whichever is less. The loans are collateralized by the balance in the participant's account and bear interest at rates commensurate with local prevailing rates as determined annually by the plan administrator. The loans outstanding at December 31, 2005 bear interest rates at 5.00% - 7.25% (5.00% - 5.75% for 2004). Loans may not exceed 5 years and home loans may not exceed 10 years. BENEFIT PROVISIONS Normal retirement age is 65, at which time participants are entitled to 100% of their account balance. Vested amounts are distributable upon termination, death, undue financial hardship or the termination of the Plan. FORFEITURES Participants not fully vested in employer contributions upon termination of employment forfeit their non-vested balances when they incur a forfeiture break in service. A forfeiture break in service is a period of five consecutive vesting service periods in which a participant completes fewer than a minimum number of hours, as defined by the Plan, in each vesting service period comprising the five-year period. The forfeitures are retained in the Plan and are used to either pay administrative expense or reduce future employer contributions payable under the Plan. At December 31, 2005 and 2004, unallocated forfeited non-vested accounts totaled $11,628 and $5,051, respectively. During 2005 and 2004, $0 and $11,247 of forfeited unallocated assets were used to reduce employer contributions or pay administrative expense, respectively. ADMINISTRATIVE EXPENSES Administrative expenses incurred in connection with the administration of the Plan are generally paid for by the Company. Other administrative expenses incurred related to specific transactions requested by participants and are paid for out of the respective participant accounts. The total amount of administrative expenses paid by plan participants as of December 31, 2005 was $983. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time subject to the provisions of ERISA. In the event of Plan termination, participants would become fully vested in their accounts as of the effective date of termination. 9 IMAX CORPORATION 401(k) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2005 AND 2004 - -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accounts of the Plan are maintained on the accrual basis of accounting. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. BENEFIT PAYMENTS Benefits are recorded when paid. INVESTMENT VALUATION AND INCOME RECOGNITION Investments are reported at fair value. Investments in the common stock of IMAX Corporation, which are traded on the New York Stock Exchange, are valued using the last reported sales price prior to close of the Plan year. Investments in mutual funds are valued at the net asset value of shares held at the end of the Plan year. Investments in common collective trust funds are valued at the net asset value based on the last reported sales price of the underlying investments held. Interest-bearing cash includes money market accounts valued at the net asset value of shares held by the Plan at year-end. Loans to participants are valued at cost, plus accrued interest which approximates fair value. Investment income of IMAX common stock, the mutual funds, and the common collective trust funds are allocated to participants based on their proportionate share of the net assets of the respective investment fund. Purchases and sales of securities are reflected on a trade-date basis. Dividend income is recorded on the ex-dividend date. RISK AND UNCERTAINTY Investments are exposed to various risks, such as interest rate and market risk. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risk in the near term could materially affect participants' account balances and the amounts reported in the statement of net assets available for benefits and the statement of changes in net assets available for benefits. 10 IMAX CORPORATION 401(k) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2005 AND 2004 - -------------------------------------------------------------------------------- 3. INVESTMENTS On December 31, the following presents investments that represent 5% or more of the Plan's net assets: The Plan presents in the statement of changes in net assets available for benefits the net appreciation (depreciation) in fair value of investments, which consists of the realized gains and losses from the sale of investments and the unrealized appreciation (depreciation) on investments. The Plan's investments appreciated (depreciated) in value as follows:
2005 2004 ---------------- ---------------- ABN AMRO Income Plus $ 649,798 $ 737,156 ABN AMRO S&P 500 Index 877,589 858,312 ABN AMRO Balanced N 601,057 642,240 ABN AMRO Growth N 1,538,796 1,610,480 Calvert Social Investment Equity A 712,579 678,001 Evergreen Special Values 427,497 379,458 MFS Research International A 782,593 720,655 4. RELATED PARTY TRANSACTIONS Effective July 1, 2004, the Plan allowed participants to invest in shares of the IMAX Stock Fund. The Fund normally keeps over 95% of the assets in IMAX common stock with the remaining assets held in a money market fund. As of December 31, 2004 there were no shares outstanding in the IMAX Stock. As at December 31, 2005, there were 1,330 shares outstanding in IMAX common stock. During 2005, 1,430 shares of IMAX Common Stock were purchased and 100 shares were sold. During the period from January 1, 2004 through June 30, 2004, certain Plan investments were shares of mutual funds managed by an affiliate of Fidelity, and therefore, these transactions qualify as party-in-interest transactions. During the period from July 1, 2004 to December 31, 2005, certain Plan investments were shares of mutual funds and units of commingled trusts managed by an affiliate of ABN AMRO Trust Service Company the trustee and, therefore, these transactions qualify as party-in-interest transactions. Loans to participants as of December 31, 2005 and 2004 were $39,275 and $48,002, respectively and are also considered party in interest transactions. 11
YEAR ENDED 2005 ----------------- Mutual funds $ (29,208) Common collective trusts 61,542 IMAX common stock (2,347) ----------------- $ 29,987 ================= IMAX CORPORATION 401(k) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2005 AND 2004 - -------------------------------------------------------------------------------- 5. TAX STATUS The Internal Revenue Service ("IRS"), issued a favorable determination letter on October 9, 2003 regarding the qualified and tax-exempt status of the Plan under Section 401 and 501 of the Internal Revenue Code. Subsequent to receipt of the favorable determination letter, the Plan was amended. The plan administrator and the Plans tax counsel are of the opinion that the amendments did not affect the qualified and tax-exempt status of the Plan and, accordingly, no provision has been made for income taxes. Participants are not subject to federal or state income tax on employer matching contributions and pre-tax participant salary reduction contributions until such contributions are withdrawn or distributed. Participants are also not subject to federal or state income tax on the earnings and appreciation of the assets of the Plan until such amounts are withdrawn or distributed. 6. DISTRIBUTIONS OF EXCESS PARTICIPANTS CONTRIBUTIONS For purposes of complying with the participation and discrimination rules set forth in Section 401(k)(3) of the Internal Revenue Code, certain contributions from "highly compensated" participants were deemed to exceed allowable deferral limits for the year ended December 31, 2004 by $23,797. These excess contributions were refunded during 2005. 7. NON-EXEMPT TRANSACTIONS The Company was not in compliance with Regulation 2510.3-102 of the Department of Labor regarding the timely remittance of employee contributions withheld in February 2005, April 2005, and August 2005 to the Plan. Regulation 2510.3-102 requires that contributions by employees be remitted to the Trustee as soon as possible but no later than the 15th business day following the end of the month. The Company remitted the employee contributions for February 2005 in March 2005, for April 2005 in May 2005, and for August 2005 in September 2005, and was therefore not in compliance. The Company is in process of filing a Form 5330. 8. UNREGISTERED SALE OF IMAX COMMON STOCK The Plan has offered IMAX common stock to participants as an investment option effective July 1, 2004. The stock was required to be registered with the Securities and Exchange Commission prior to offering to participants. The Company filed a Form S-8 on June 7, 2006 to register the shares to be offered under the Plan. The Plan sponsor may be subject to claims for rescission of acquisitions of shares of the Plan sponsor's common stock under applicable securities laws during the one year following the date of acquisition of the shares, the statute of limitations period that the Plan sponsor believes may apply to claims for rescission under applicable federal laws. The prospectus mailed to participants included disclosure of this matter. 12 IMAX CORPORATION 401(k) RETIREMENT PLAN SCHEDULE H, LINE 4 i -- SCHEDULE OF ASSETS (HELD AT END OF YEAR) DECEMBER 31, 2005 AND 2004 - -------------------------------------------------------------------------------- *Denotes party-in-interest. **Cost omitted for these investments as they are participant-directed 13
DESCRIPTION OF INVESTMENT, INCLUDING MATURITY DATE, RATE OF INTEREST, NUMBER ** LENDOR, IDENTITY OF ISSUE, (c) COLLATERAL, PAR OR MATURITY OF SHARES/ (d) CURRENT (a) (b) BORROWER, OR SIMILAR PARTY VALUE UNITS COST (e) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST BEARING CASH: * IMAX Stock Fund Interest Bearing Cash 204 204 * Liquidity Fund Interest Bearing Cash 317 317 ----------- 521 COMMON STOCK: * IMAX Stock Fund Common Stock 1,330 9,466 COMMON COLLECTIVE TRUST: * ABN AMRO Income Plus Fund Common Collective Trust 110,306 649,798 * ABN AMRO S&P 500 Index Common Collective Trust 168,529 877,589 ----------- 1,527,387 MUTUAL FUNDS: * ABN AMRO Balanced N Mutual Funds 57,003 601,057 * ABN AMRO Growth N Mutual Funds 68,888 1,538,796 * ABN AMRO Investment Grade Bond #221 Mutual Funds 19,498 179,113 * ABN AMRO Mid Cap N Mutual Funds 459 11,129 * American Fundamental Investor R4 Mutual Funds 929 33,568 * Calvert Social Investment Equity A Mutual Funds 20,141 712,579 * Columbia Acorn Fund Class A Mutual Funds 12,397 342,688 * Evergreen Special Values Mutual Funds 15,912 427,497 * Federated Kaufmann A Mutual Funds 2,151 12,167 * Franklin Mutual Discovery Mutual Funds 12,309 319,148 * Hotchkis & Wiley Mid Cap Value Mutual Funds 3,969 111,958 * MFS International New Discovery A Mutual Funds 3,579 85,861 * MFS Research International A Mutual Funds 46,461 782,593 * PIMCO Real Return Bond A Mutual Funds 11,366 126,921 * Pioneer High Yield A Mutual Funds 9,881 107,536 * RS Partners Fund Mutual Funds 2,959 98,273 * T Rowe Price Spectrum Income Mutual Funds 16,075 191,074 -------------- 5,681,958 PARTICIPANT LOANS: Qualified participant loans issued; Interest rates at 5.00%-7.25%; Range of maturities range between * Participant Loans 5 - 10 years 39,275 -------------- Total Investments $ 7,258,607 ============== IMAX CORPORATION 401(K) RETIREMENT PLAN SCHEDULE 4a - SCHEDULE OF DELINQUENT PARTICIPANT CONTRIBUTIONS FOR THE YEAR ENDED DECEMBER 31, 2005 Certain participants' contributions of the Plan, for the months of February, April, and August of 2005 amounting to $52,830 in total, were not remitted in the month following the pay period in which funds were withheld. Management represents lost earnings, amounting to $399, have been added to participant accounts on July 6, 2006. The Company is in the process of filing Form 5330. 14
Total that Constitute Non-exempt Prohibited Transactions -------------------------------------------------------------------- Participant Contributions Total Fully Contributions Contributions Pending Corrected Under Transferred Late to Contributions Not Corrected Correction in VFCP and PTE Plan Corrected Outside VFCP VFCP 2002-51 - -------------------------- ---------------------- -------------------- ------------------ -------------------- $ 52,830 $ - $ 52,830 $ - $ - ========================== ====================== ==================== ================== ====================