PR Newswire | Oct 29, 2020 08:02AM EDT

10/29 07:00 CDT

IMAX Corporation Reports Third Quarter 2020 Results NEW YORK, Oct. 29, 2020

NEW YORK, Oct. 29, 2020 /PRNewswire/ --

HIGHLIGHTS

* Global theatrical industry continues opening with IMAX network in Asia almost fully operational and robust local language titles driving IMAX box office grosses near pre-pandemic levels * IMAX ended the quarter with $305 million of cash and cash equivalents * Company expects average monthly cash flow for fourth quarter of 2020 and first quarter of 2021 to be approximately break-even, representing continued free cash flow improvement * IMAX installed 23 systems and signed agreements for ten systems in the quarter, demonstrating continued partner demand for IMAX(r) theater systems despite the temporary delay of major theatrical releases * As a result of the global pandemic, third quarter 2020 revenue was $37.3 million versus $86.4 million in the third quarter of 2019. Third quarter 2020 net (loss) attributable to common shareholders was ($47.2) million versus $9.0 million in the prior-year period. Third quarter financial results include the following non-cash items: $23.7 million or $0.40 per share deferred tax asset valuation allowance, $5.7 million film asset impairment, and a $3.9 million provision for credit losses * Non-GAAP adjusted EBITDA (loss) was ($0.3) million in third quarter 2020 versus $32.4 million in the prior-year period

Three Months Ended

September 30,

YoY %In thousands except per share data 2020 2019 Change

Total Revenue $ 37.3 $ 86.4 (56.9) %

Gross Margin $ 3.8 $ 47.1 (91.9) %

Gross Margin (%) 10.3 % 54.5 %

Net (Loss) Income attributable to common $ (47.2) $ 9.0 N/Ashareholders

Diluted Net (Loss) Income per $ (0.80) $ 0.15 N/Ashare attributable to common shareholders

Adjusted Net (Loss) Income attributable to $ (44.6) $ 12.8 N/Acommon shareholders^(1)

Adjusted Net (Loss) Income per share $ (0.75) $ 0.21 N/Aattributable to common shareholders^(1)

Adjusted EBITDA per Credit Facility $ (0.3) $ 32.4 N/Aattributable to common shareholders^(1)

Adjusted EBITDA Margin attributable to common (0.8) % 41.4 % N/Ashareholders (%) ^(1)

(1) Non-GAAP Financial Measure

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

IMAX Corporation (NYSE: IMAX) today reported third quarter results as the global theatrical industry continues recovery, highlighted by a notably resurgent box office in Asia. IMAX reported improved cash flow and further reduced costs while benefiting from the Company's diversified global footprint, continued growth in its theater network as well as the robust Asian film market - particularly in China and Japan - where audiences are returning to theaters attracted by a strong local language slate.

"As the only global theatrical platform for blockbuster entertainment, our experience around the world has proven that audiences will enthusiastically return to the movies where theaters are open and they feel safe. As they do return, they are coming back to IMAX - underscoring the enduring strength of our brand and the power of TheIMAX Experience(r)," said IMAX CEO, Richard L. Gelfond.

"With continued box office revenues from our strong local language slate and revenues from theater installations, the Company estimates our average monthly cash flow will be approximately break-even through the first quarter of 2021."

"Our multi-year strategic effort to geographically diversify our business is paying off, as our strong local language slate continues to partially offset the lack of Hollywood releases in the market. From the year's number-one global box office release in China, "The Eight Hundred" - the first commercial Asian film shot entirely with IMAX cameras - to Japan's record-breaking "Demon Slayer", we believe that IMAX is poised to benefit from the impressive resurgence of the Asian film market. IMAX has no fewer than 10 local language releases in the fourth quarter of 2020, with the promising Chinese New Year box office period on its heels in February."

"IMAX remains well-positioned to manage through the continued recovery of the global film industry as cinemas await the return of Hollywood tentpoles. We have a significant financial runway with $305 million of cash on our balance sheet at the end of the third quarter."

The Company reported 2020 revenues of $37.3 million, gross margin of $3.8 million, and a net (loss) attributable to common shareholders of ($47.2) million, or ($0.80) per diluted share.

IMAX results reflect the COVID-19 related closure of the majority of the Company's network through a portion of the third quarter. Third quarter financial results also reflect the inclusion of a number of notable non-cash items related to COVID-19 driven uncertainty, the delay of Hollywood releases, and the reclosure of theaters in some markets. These non-cash items include: a $23.7 million valuation allowance to reduce the value of deferred tax assets; a $5.7 million impairment loss related to documentary and alternative content films assets; and a $3.9 million provision for current expected credit losses reflecting a reduction in the credit quality of the theater receivable balances.

Third Quarter and September Year-to-Date Segment Results^(1)

IMAX Technology Network IMAX Technology Sales and Maintenance

Gross Gross Margin Margin Gross Gross Revenue Revenue Margin Margin % (Margin (Margin Loss) Loss) %

3Q20 $ 11.4 $ 0.6 5.2 % $ 23.7 $ 9.4 39.6 %

3Q19 43.3 27.4 63.3 % 37.6 18.4 48.9 %

% change (73.7) % (97.9) % (37.1) % (49.1) %

YTD 3Q20 $ 28.4 $ (3.1) (11.0) % $ 43.4 $ 14.3 33.0 %

YTD 3Q19 154.1 102.4 66.4 % 102.6 46.9 45.7 %

% change (81.6) % (103.0) % (57.7) % (69.4) %

(1) Please refer to the Company's Form 10-Q for the period ended September 30,2020 for additional segment information

IMAX Technology Network

* IMAX Technology Network revenues decreased 73.7% to $11.4 million in the third quarter of 2020, compared to $43.3 million in the prior-year period. The closure of the Company's network through the first half of the quarter, the partial opening of theaters in late August and September, and the release of fewer films as Hollywood continues to delay major titles impacted year over year results. * Gross margin for the IMAX Technology Network was $0.6 million in the third quarter of 2020 and was driven by lower revenue and ongoing fixed costs associated with our installed IMAX network.

IMAX Technology Sales and Maintenance

* IMAX Technology Sales and Maintenance revenues decreased 37.1% to $23.7 million in the third quarter of 2020, compared with $37.6 million in the prior year period. Five fewer sales and sales type lease installations resulted in lower IMAX system revenue. IMAX maintenance revenue declined to $5.9 million as COVID-19-related closures of IMAX theater systems through a portion of the quarter prevented the recognition of revenue. * Total gross margin for IMAX Technology Sales and Maintenance was $9.4 million compared to $18.4 million in the prior year period.

Cash Balances and Outstanding Debt

Total cash and cash equivalents as of September 30, 2020 were $305 million. Total debt, excluding deferred financing fees, was $300.3 million as of September 30, 2020.

Share Count and Capital Return

The weighted average diluted shares outstanding at the end of the third quarter of 2020 declined 4.3% to 58.9 million, compared to 61.5 million in the third quarter of 2019, due primarily to share repurchase activity during the twelve-month period. During the third 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 information posted on the Company's corporate and Investor Relations website may be deemed 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.

Conference Call

The Company will host a conference call today at 8:30AM ET to discuss its third quarter 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) 367-2403 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 490-5367. The conference ID for the call is 4692103. 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 4692103.

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 September 30, 2020, there were 1,632 IMAX theater systems (1,542 commercial multiplexes, 13 commercial destinations, 77 institutional) operating in 82 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 "HK.1970."

IMAX(r), IMAX(r) Dome, IMAX(r) 3D, IMAX(r) 3D Dome, Experience It In IMAX(r), The IMAX Experience(r), An IMAX Experience(r), An IMAX 3D Experience(r), IMAX DMR(r), DMR(r), IMAX nXos(r) and Films to the Fullest(r), 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 YorkIMAX Corporation, New YorkBrett 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, 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(r)films; the signing of IMAX Theater System agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates; competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to recent consolidation among commercial exhibitors and movie studios; risks related to new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) 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; the impact of COVID-19 on our financial condition and results of operations and on the businesses of our customers and exhibitor partners;and other factors, many of which are beyond the control of the Company.Consequently, all of the forward-looking statements made in thisearnings releaseare 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, theCompany. 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.

PrimaryReporting 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:

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

IMAX Technology Sales and Maintenance, which includes results from the(ii) 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

Film Distribution and Post-production, which includes activities related to the licensing of film content, the distribution of films primarily for(iv) 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

Three Months

Ended September 30,

Theater System Signings: 2020 2019

Full new sales and sales-type lease arrangements 8 22

New hybrid joint revenue sharing lease arrangements - -

New traditional joint revenue sharing arrangements - -

Total new IMAX theaters 8 22

Upgrades of IMAX theater systems 2 8

Total theater signings 10 30

Three Months

Ended September 30,

Theater System Installations: 2020 2019

Full new sales and sales-type lease arrangements 9 14

New hybrid joint revenue sharing lease arrangements 1 4

New traditional joint revenue sharing arrangements 8 12

Total new IMAX theaters 18 30

Upgrades of IMAX theater systems 5 9

Total theater installations 23 39

Three Months

Ended September 30,

Theater Sales Backlog: 2020 2019

Sales and sales-type lease arrangements 193 205

Hybrid JRSA 146 149

Traditional JRSA 206 ^(1) 253 ^(1)

Total theater backlog 545 ^(2) 607 ^(3)

Three Months

Ended September 30,

Theater Network: 2020 2019

Commercial Multiplex Theaters:

Sales and sales-type lease arrangements 661 632

Hybrid joint revenue sharing lease arrangements 139 135

Traditional joint revenue sharing lease 742 706arrangements

Total Commercial Multiplex Theaters^(4) 1,542 1,473

Commercial Destination Theaters 13 14

Institutional Theaters 77 81

Total theater network 1,632 1,568

(1) Includes 46 IMAX Theater Systems where the customer has the option toconvert from a joint revenue sharing arrangement to a sales arrangement (2019 -50).

(2) Includes 155 new IMAX with Laser projection system configurations and 92upgrades of existing locations to IMAX with Laser projection systemconfigurations.

(3) Includes 145 new IMAX with Laser projection system configurations and 119upgrades of existing locations to IMAX with Laser projection systemconfigurations.

(4) Period to period changes are net of the effects of permanently closedtheaters.

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Revenues

Technology sales $ 15,753 $ 21,735 $ 24,102 $ 56,629

Image enhancement and maintenance services 14,589 44,168 39,109 144,977

Technology rentals 4,473 17,642 10,307 61,675

Finance income 2,441 2,845 7,495 8,104

37,256 86,390 81,013 271,385

Costs and expenses applicable to revenues

Technology sales 9,222 11,740 15,637 33,114

Image enhancement and maintenance services 16,989 20,181 42,049 66,205

Technology rentals 7,216 7,349 22,100 20,253

33,427 39,270 79,786 119,572

Gross margin 3,829 47,120 1,227 151,813

Selling, general and administrative expenses 24,815 29,482 83,247 89,267

Research and development 1,130 1,359 4,562 3,717

Amortization of intangibles 1,349 1,271 4,014 3,564

Credit loss expense 3,925 599 15,582 1,957

Asset impairments - - 1,151 -

Exit costs, restructuring charges and associated - - - 850impairments

(Loss) income from operations (27,390) 14,409 (107,329) 52,458

Gain (loss) in fair value of investments 1,575 (490) (939) (2,543)

Retirement benefits non-service expense (186) (160) (432) (480)

Interest income 586 490 1,842 1,632

Interest expense (2,391) (489) (4,620) (1,806)

(Loss) income before taxes (27,806) 13,760 (111,478) 49,261

Income tax expense (19,349) (3,030) (24,606) (11,986)

Equity in (losses) gains of investees, net of tax (1,329) 166 (1,858) (56)

Net (loss) income (48,484) 10,896 (137,942) 37,219

Less: Net loss (income) attributable to 1,275 (1,863) 15,412 (8,524)non-controlling interests

Net (loss) income attributable to common shareholders $ (47,209) $ 9,033 $ (122,530) $ 28,695

Net (loss) income per share attributable to common shareholders -

basic and diluted:

Net (loss) income per share - basic and diluted $ (0.80) $ 0.15 $ (2.06) $ 0.47

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

Basic 58,859 61,304 59,360 61,337

Fully Diluted 58,859 61,479 59,360 61,509

Additional Disclosure:

Depreciation and amortization^(1) $ 14,112 $ 15,696 $ 41,294 $ 45,500

(1) Includes $0.3 million and $0.6 million of amortization of deferredfinancing costs charged to interest expense for the three months and ninemonths ended September 30, 2020, respectively ($0.1 million and $0.4 million,respectively).

IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

In accordance with United States Generally Accepted Accounting Principles

(In thousands of dollars, except share amounts)

(Unaudited)

September 30, December 31,

2020 2019

Assets

Cash and cash equivalents $ 305,197 $ 109,484

Accounts receivable, net of allowance for credit losses 59,674 99,513

Financing receivables, net of allowance for credit losses 126,740 128,038

Variable consideration receivable, net of allowance for credit losses 39,394 40,040

Inventories 53,021 42,989

Prepaid expenses 10,812 10,237

Film assets 7,468 17,921

Property, plant and equipment 282,854 306,849

Investment in equity securities 14,803 15,685

Other assets 23,796 25,034

Deferred income tax assets 17,737 23,905

Other intangible assets 27,019 30,347

Goodwill 39,027 39,027

Total assets $ 1,007,542 $ 889,069

Liabilities

Bank indebtedness $ 297,985 $ 18,229

Accounts payable 12,011 20,414

Accrued and other liabilities 103,970 112,779

Deferred revenue 99,770 94,552

Deferred income tax liabilities 18,661 -

Total liabilities 532,397 245,974

Commitments and contingencies

Non-controlling interests 776 5,908

Shareholders' equity

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

58,878,749 issued and 58,861,171 outstanding (December 31, 2019 - 405,583 423,38661,362,872 issued and 61,175,852 outstanding)

Less: Treasury stock, 17,578 shares at cost (December 31, 2019 - 187,020) (271) (4,038)

Other equity 177,110 171,789

Accumulated deficit (181,604) (40,253)

Accumulated other comprehensive loss (1,984) (3,190)

Total shareholders' equity attributable to common shareholders 398,834 547,694

Non-controlling interests 75,535 89,493

Total shareholders' equity 474,369 637,187

Total liabilities and shareholders' equity $ 1,007,542 $ 889,069

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)

(Unaudited)

Nine Months Ended

September 30,

2020 2019

Cash (used in) provided by:

Operating Activities

Net (loss) income $ (137,942) $ 37,219

Adjustments to reconcile net (loss) income to cash from operating activities:

Depreciation and amortization 41,294 45,500

Credit loss expense 15,582 1,957

Write-downs 13,339 1,027

Deferred income tax expense 23,142 1,035

Share-based and other non-cash compensation 16,345 17,397

Unrealized foreign currency exchange (gain) loss (394) 214

Loss in fair value of equity securities 939 2,543

Equity in losses of investees 1,858 56

Changes in assets and liabilities:

Accounts receivable 30,350 9,613

Inventories (10,278) (13,422)

Film Assets (6,177) (15,405)

Deferred revenue 5,233 (2,599)

Changes in other operating assets and liabilities (24,109) (17,878)

Net cash (used in) provided by operating activities (30,818) 67,257

Investing Activities

Purchase of property, plant and equipment (658) (5,528)

Investment in equipment for joint revenue sharing arrangements (5,289) (31,099)

Acquisition of other intangible assets (1,661) (1,874)

Investment in equity securities - (15,153)

Net cash used in investing activities (7,608) (53,654)

Financing Activities

Increase in revolving credit facility borrowings 280,244 35,000

Repayment of revolving credit facility borrowings - (55,000)

Credit facility amendment fees paid (1,026) -

Settlement of restricted share units and options (2,815) (8,589)

Treasury stock repurchased for future settlement of restricted share units (271) (1,572)

Repurchase of common shares, IMAX China (1,534) (19,157)

Taxes withheld and paid on employee stock awards vested (251) (508)

Common shares issued - stock options exercised - 2,391

Repurchase of common shares (36,624) (2,659)

Issuance of subsidiary shares to non-controlling interests (net of return on - 1,106capital)

Dividends paid to non-controlling interests (4,214) (4,384)

Net cash provided by (used in) financing activities 233,509 (53,372)

Effects of exchange rate changes on cash 630 727

Increase (decrease) in cash and cash equivalents during period 195,713 (39,042)

Cash and cash equivalents, beginning of period 109,484 141,590

Cash and cash equivalents, end of period $ 305,197 $ 102,548

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Revenue

IMAX Technology Network

IMAX DMR $ 6,886 $ 26,665 $ 18,061 $ 93,908

Joint revenue sharing arrangements, contingent rent 4,473 16,605 10,307 60,189

11,359 43,270 28,368 154,097

IMAX Technology Sales and Maintenance

IMAX Systems 17,437 20,977 27,674 50,504

Joint revenue sharing arrangements, fixed fees 57 1,438 1,196 6,525

IMAX Maintenance 5,855 13,657 13,225 39,815

Other Theater Business 307 1,560 1,261 5,766

23,656 37,632 43,356 102,610

New Business Initiatives 378 596 1,488 1,908

Film Distribution and Post-production 1,865 3,528 7,541 9,791

37,258 85,026 80,753 268,406

Other (2) 1,364 260 2,979

Total revenues $ 37,256 $ 86,390 $ 81,013 $ 271,385

Gross Margin (Margin Loss)

IMAX Technology Network

IMAX DMR^(1) $ 3,079 $ 17,866 $ 7,492 $ 61,602

Joint revenue sharing arrangements, contingent rent^(1) (2,491) 9,524 (10,610) 40,777

588 27,390 (3,118) 102,379

IMAX Technology Sales and Maintenance

IMAX Systems ^(1) 8,671 11,652 14,497 26,723

Joint revenue sharing arrangements, fixed fees^(1) (117) 136 110 1,301

IMAX Maintenance 794 6,125 (355) 17,046

Other Theater Business 31 505 77 1,821

9,379 18,418 14,329 46,891

New Business Initiatives 372 541 1,245 1,441

Film Distribution and Post-production ^(1)(2) (6,061) 50 (9,392) 483

4,278 46,399 3,064 151,194

Other (449) 721 (1,837) 619

Total Segment Margin $ 3,829 $ 47,120 $ 1,227 $ 151,813

(1) IMAX DMR gross margin includes marketing expense of $0.4 million and $2.8million for the three and nine months ended September 30, 2020, respectively(2019 - $4.3 million and $17.7 million, respectively). JRSA gross marginincludes advertising, marketing and commission expense of $0.7 million and $1.3million for the three and nine months ended September 30, 2020, respectively(2019 -$0.8 million and $1.1 million, respectively). IMAX Systems gross marginincludes marketing and commission costs of $0.6 million and $1.0 million forthe three and nine months ended September 30, 2020, respectively, (2019 - $0.6million and $1.5 million, respectively). Film Distribution segment gross marginincludes marketing expense of $0.2 million and $0.4 million for the three andnine months ended September 30, 2020, respectively (2019 - $0.1 million and$0.7 million, respectively).

(2) Film Distribution margins were significantly influenced by impairment lossrecorded of $5.4 million and $9.9 million for the three and nine months endedSeptember 30, 2020 to write-down the carrying value of certain documentary andalternative content film assets (2019 - $0.2 million and $0.2 million).

IMAX CORPORATIONOTHER INFORMATION(in thousands of U.S. dollars)

Non-GAAP Financial Measures:

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 diluted share exclude, where applicable: (i) share-based compensation; (ii) exit costs, restructuring charges and associated impairments, (iii) gain (loss) in the fair value of investments, (iv) COVID-19 government relief benefits, as well as the related tax impact of these adjustments, and (v) the income tax effects related to the removal of the indefinitely reinvested assertion on the historical earnings of certain 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 of net (loss) income attributable to common shareholders and the comparable per share amounts, the most directly comparable GAAP measure to adjusted net (loss) income attributable to common shareholders, adjusted net (loss) income attributable to common shareholders per diluted share, EBITDA, Adjusted EBITDA per Credit Facility and Adjusted EBITDA margin is presented in the table below. The Company believes that net (loss) income attributable to common shareholders is the most directly comparable GAAP measure because it reflects the earnings relevant to the Company's shareholders, rather than including the non-controlling interest. As such, beginning in the first quarter of 2020, the Company has updated the reconciliations for such non-GAAP financial measures included herein.

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. Accordingly, this non-GAAP financial 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 in the current period, if 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 (loss) income excluding (i) interest expense, net of interest income; (ii) income tax (benefit) expense; 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 (loss) in fair value of investments; (iii) write-downs, net of recoveries, including asset impairments and credit loss expense; (iv) gain (loss) from equity accounted investments; (v) exit costs, restructuring charges and associated impairments; (vi) legal arbitration award; and (vii) executive transition costs.

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. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP measures is presented below.

For the Three Months Ended September 30, 2020 For the Three Months Ended September 30, 2019

Attributable to Less: Attributable to Less: Non-controlling Non-controlling

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 $ (48,484) $ (1,275) $ (47,209) $ 10,896 $ 1,863 $ 9,033

Add (subtract):

Income tax expense (benefit) 19,349 (503) 19,852 3,030 654 2,376

Interest expense, net of interest income 1,509 (81) 1,590 (133) (117) (16)

Depreciation and amortization, including film asset 14,112 1,182 12,930 15,696 1,342 14,354 amortization

EBITDA $ (13,514) $ (677) $ (12,837) $ 29,489 $ 3,742 $ 25,747

Share-based and other non-cash compensation 5,495 292 5,203 5,687 137 5,550

(Gain) loss in fair value of investments (1,575) (484) (1,091) 490 156 334

Write-downs, including asset 10,458 3,324 7,134 1,118 154 964impairments and credit loss expense

Loss (gain) from equity accounted investments 1,329 - 1,329 (166) - (166)

Adjusted EBITDA per Credit Facility $ 2,193 $ 2,455 $ (262) $ 36,618 $ 4,188 $ 32,430

Revenues attributable to common 37,256 5,825 31,431 86,390 8,036 78,354 shareholders^(2)

Adjusted EBITDA margin attributable to common 5.9 % 42.1 % (0.8) % 42.4 % 52.1 % 41.4 % shareholders

For the Twelve Months Ended September 30, 2020 ^(1) For the Twelve Months Ended September 30, 2019 ^(1)

Attributable to Less: Attributable to Less: Non-controlling Non-controlling

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 $ (116,590) $ (12,231) $ (104,359) $ 40,990 $ 10,601 $ 30,389

Add (subtract):

Income tax expense 29,388 5,549 23,839 11,964 3,581 8,383

Interest expense, net of interest income 2,564 (388) 2,952 (68) (224) 156

Depreciation and amortization, including film asset 59,281 4,737 54,544 60,953 5,276 55,677 amortization

EBITDA $ (25,357) $ (2,333) $ (23,024) $ 113,839 $ 19,234 $ 94,605

Share-based and other non-cash compensation 22,518 885 21,633 22,880 573 22,307

(Gain) loss in fair value of investments (1,087) (364) (723) 2,543 807 1,736

Write-downs, including asset impairments and 32,743 8,590 24,153 5,781 2,183 3,598 credit loss expense

Loss from equity accounted investments 1,799 - 1,799 41 - 41

Exit costs, restructuring charges and associated impairments - - - 9,234 - 4,237

Legal arbitration award - - - 4,237 - 9,234

Executive transition costs - - - 2,994 - 2,994

Adjusted EBITDA per Credit Facility $ 30,616 $ 6,778 $ 23,838 $ 161,549 $ 22,797 $ 138,752

Revenues attributable to common 205,292 19,486 185,806 380,349 38,117 342,232 shareholders^(2)

Adjusted EBITDA margin attributable to common 14.9 % 34.8 % 12.8 % 42.5 % 59.8 % 40.5 % shareholders

(1) Senior Secured Net Leverage Ratio calculated using twelve months endedAdjusted EBITDA per Credit Facility. During the second quarter of 2020, theCompany entered into the Amendment to the Credit Facility Agreement whichprovides for, among other things, the suspension of the Senior Secured NetLeverage Ratio financial covenant through the first quarter of 2021.

(2)

Three months ended Three months ended September 12 months ended September 30, 12 months ended September 30, September 30, 2019 2020 2019 30, 2020

Total revenues $ 37,256 $ 86,390 $ 205,292 $ 380,349

Greater China revenues $ 19,346 $ 26,557 $ 64,489 $ 121,366

Non-controlling interest ownership percentage^ 30.11 % 30.26 % 30.22 % 31.41 %(3)

Deduction for non-controlling interest share of (5,825) (8,036) (19,486) (38,117)revenues

Revenues attributable to common shareholders $ 31,431 $ 78,354 $ 185,806 $ 342,232

(3) Weighted average ownership percentage for change in non-controllinginterest share

IMAX CORPORATION

Adjusted Net (Loss) Income Attributable to Common Shareholders and AdjustedDiluted Per Share Calculations

(In thousands of U.S. dollars)

(Unaudited)

Three Months Ended Three Months Ended

September 30, 2020 September 30, 2019

(In thousands of U.S. dollars, except per share amounts) Net Loss Diluted EPS Net Income Diluted EPS

Reported net (loss) income attributable to common shareholders $ (47,209) $ (0.80) $ 9,033 $ 0.15

Adjustments^(1):

Stock-based compensation 5,019 0.09 $ 5,390 0.09

(Gain) loss in fair value of investments (1,091) (0.02) 341 -

COVID-19 government relief benefits (2,084) (0.03) - -

Tax Impact on items listed above^(2) 611 0.01 (1,953) (0.03)

Income tax effects related to the removal of the indefinitelyreinvested assertion on the historical earnings of certain 129 - - -subsidiaries

Adjusted net (loss) income^(1) $ (44,625) $ (0.75) $ 12,811 $ 0.21

Weighted average basic shares outstanding 58,859 61,304

Weighted average diluted shares outstanding 58,859 61,479

(1) Reflects amounts attributable to non-controlling interests.

The tax impact on the listed items includes a year-to-date additive(2) adjustment in the current year related to the valuation allowance recorded in respect of certain deferred tax assets booked in the three months ended September 30, 2020.

Nine Months Ended Nine Months Ended

September 30, 2020 September 30, 2019

(In thousands of U.S. dollars, except per share amounts) Net Income Diluted EPS Net Income Diluted EPS

Reported net (loss) income attributable to common shareholders $ (122,530) $ (2.06) $ 28,695 $ 0.47

Adjustments^(1):

Stock-based compensation 15,262 0.26 $ 16,466 0.26

Exit costs, restructuring charges and associated impairments - - 850 0.01

Loss in the fair value of investments 661 0.01 1,742 0.03

COVID-19 government relief benefits (5,235) (0.08) - -

Tax impact on items listed above^(2) (584) (0.01) (4,437) (0.07)

Income tax effects related to the removal of the indefinitelyreinvested assertion on the historical earnings of certain 13,014 0.21 - -subsidiaries

Adjusted net (loss) income^(1) $ (99,412) $ (1.67) $ 43,316 $ 0.70

Weighted average basic shares outstanding 59,360 61,337

Weighted average diluted shares outstanding 59,360 61,509

(1) Reflects amounts attributable to non-controlling interests.

The tax impact on the listed items includes a year-to-date additive(2) adjustment in the current year related to the valuation allowance recorded in respect of certain deferred tax assets booked in the three months ended September 30, 2020.

Free Cash Flow:

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2020

Net cash used in operating activities $ (9,938) $ (30,818)

Net cash used in investing activities (1,885) (7,608)

Free cash flow $ (11,823) $ (38,426)

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SOURCE IMAX Corporation