--- title: IMAX Corporation Reports First-Quarter 2016 Financial Results Highlights publisher: "IMAX" description: "NEW YORK , April 21, 2016 /PRNewswire/ --  HIGHLIGHTS Adjusted EPS of $0.22 , up 214% over prior-year period, attributable to robust global box office growth and operating expense leverage Global Box Office of $272 million , up 64% from Q1 2015, driven by strong growth domestically and continued" canonical: "https://www.imax.com/pr/imax-corporation-reports-first-quarter-2016-financial-results" date: 2016-04-21 last_updated: 2016-04-21 --- IMAX Corporation Reports First-Quarter 2016 Financial Results Highlights ======================================================================== Thu, Apr 21, 2016 NEW YORK, April 21, 2016/PRNewswire/ --  HIGHLIGHTS * Adjusted EPS of $0.22, up 214% over prior-year period, attributable to robust global box office growth and operating expense leverage * Global Box Officeof $272 million, up 64% from Q1 2015, driven by strong growth domestically and continued strength in international markets. * Revenues increased 48% from prior-year period to $92.1 million, primarily due to strong box office * Adjusted EBITDA grew 97% year-over-year to $31.5 million, resulting in adjusted EBITDA margins of 37.4%, up over 1,000 basis points from Q1 2015 * Signings growth of 71%, with 36 new signings up from 21 in Q1 2015 **IMAX Corporation(NYSE: IMAX)**today reported first-quarter 2016 revenues of $92.1 million, adjusted EBITDA as calculated in accordance with the Company's credit facility of $31.5 million, and adjusted net income after non-controlling interest of $15.5 million, or $0.22per diluted share, representing a 214% increase over the prior-year period. GAAP net income after non-controlling interest was $9.5 million, or $0.14per diluted share. The Company also reported a first-quarter global per-screen average of $284,400, up 40% over Q1 2015. For reconciliations of adjusted net income to reported net income and for the definition of adjusted EBITDA, please see the tables at the end of this press release. ![IMAX Logo](http://photos.prnewswire.com/prnvar/20111107/MM01969LOGO "IMAX Logo") "2016 is off to an exceptional start for IMAX," said IMAXCEO Richard L. Gelfond. "The pace of IMAX® theatre signings, installations and box office growth, both domestically and globally, continues to drive real momentum in the business. We saw strong financial results in the first quarter, with 48% revenue growth, over 1,000 basis points of EBITDA margin expansion, and adjusted EPS growth of more than 214% compared to the same period last year. We believe significant opportunity lies ahead as we continue the year with a robust pipeline of films featuring major blockbuster titles including a strong start to the second quarter with _The Jungle Book_, followed by _Captain America: Civil War_, _Independence Day: Resurgence,__Star Trek Beyond_, _Fantastic Beasts and Where to Find Them_, _Rogue One: A Star Wars Story_and numerous other "IMAX\-centric" motion pictures that are ideally sequenced throughout the year. We think we are well-positioned to continue to deliver sustainable long-term growth for our shareholders." **Network Growth Update** The total IMAXtheatre network consisted of 1,066 systems as of March 31, 2016, of which 952 were in commercial multiplexes. There were 388 theatres in backlog as of March 31, 2016, compared to 372 in backlog as of December 31, 2015.  In the first quarter of 2016, the Company signed contracts for 36 theatres, of which 35 were for new locations and one was an upgrade.  In the quarter, the Company also installed 19 theatres, of which 10 were for new theatre locations and nine were upgrades.  For a breakdown of theatre system signings, installations, network and backlog by type, please see the end of this press release. "We continue to see substantial signings momentum in key geographical areas including China, Japanand India," continued Gelfond. "This sustained international expansion, coupled with a North American outlook about which we are very optimistic, reflects the strong opportunity within our business moving forward." **First-Quarter Segment Results** * Revenue from sales and sales-type leases was $18.0 millionin the first quarter of 2016, compared to $8.6 millionin the first quarter of 2015, primarily reflecting nine digital system upgrades in existing locations, compared to two upgrades (one sale and one operating lease) in the first quarter of 2015. In addition, the company installed five full new theatre systems under sales and sales-type lease arrangements in the most recent first quarter, compared to the five sales-type theatres the Company installed in the first quarter of 2015.   * Revenue from joint revenue-sharing arrangements was $23.4 millionin the quarter, compared to $15.9 millionin the prior-year period. Gross margins on joint revenue-sharing arrangements grew from 66.9% in Q1 2015, to 76.9% in the first quarter of 2016. During the quarter, the Company installed five new theatres under joint revenue-sharing arrangements, compared to six in 2015. The Company had 534 theatres operating under joint revenue-sharing arrangements as of March 31, 2016, as compared to 457 joint-venture theatres one year prior.  * Production and IMAX DMR® (Digital Re-Mastering) revenues were $29.8 millionin the first quarter of 2016, compared to $17.7 millionin the first quarter of 2015. DMR gross margins grew from 74.8% in Q1 2015, to 76.6% in the first quarter of 2016. Gross box office from DMR titles was $272.0 millionin the first quarter of 2016, compared with $165.6 millionin the prior-year period. The average global DMR box office per screen in the first quarter of 2016 was $284,400compared with $202,900in same period last year. * Gross margin of 56.6% compared to 57.8% last year, which was impacted by the installation of nine digital upgrades under sales and sales-type lease arrangements.  Excluding the impact of these upgrades, gross margin grew 480 basis points from 58.6% to 63.4%.  * Operating expenses, excluding stock based compensation, were lower than the prior year period and contributed to the significant operating expense leverage realized in the first quarter. Adjusted EBITDA margins of 37.4% grew over 1,000 basis points versus a prior year level of 26.9%. **Share Buybacks** As previously disclosed, the Company repurchased 1,627,645 shares in the first quarter of 2016, which includes 181,227 shares purchased in connection with the Company's long-term incentive plan. The Company purchased the shares at an average price of $30.98for a total value of $50.5 million. On April 20, 2016, the Company's board of directors approved an incremental $50.0 millionincrease to the repurchase allowance under the Company's previously-announced share repurchase program, for an aggregate repurchase allowance of $200.0 million. All other terms of the repurchase program remain unchanged. In addition, on February 22, 2016, the Company amended the terms of its credit facility to increase the general restricted payment basket thereunder (which covers, among other things, the repurchase of shares) from $150.0 million to $350.0 millionin the aggregate after the amendment date. **Conference Call** The Company will host a conference call today at 8:30 AM ETto discuss its first-quarter 2016 financial results. To access the call via telephone, interested parties in the US and Canadashould dial (800) 505-9568 approximately 5 to 10 minutes before the call begins. International callers should dial (416) 204-9271. The conference ID for the call is **1374767.**A replay of the call will be available via webcast on the 'Investor Relations' section of [www.imax.com](http://www.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 **1374767.** **Canadian Securities Update** The Company has received an exemption decision issued by the Ontario Securities Commissiondated April 1, 2016, for relief from the formal issuer bid requirements under Canadian securities laws. The exemption decision permits the Company to repurchase up to 10% of its outstanding common shares in any 12-month period through the facilities of the New York Stock Exchangeunder repurchase programs that the Company may implement from time to time.  Canadian securities laws regulate an issuer's ability to make repurchases of its own securities. The Company sought the exemption so that it can make repurchases under its repurchase programs in excess of the maximum allowable in reliance on the existing "other published markets" exemption from the formal issuer bid requirements available under Canadian securities laws. The "other published markets" exemption caps the Company's ability to repurchase its securities through the facilities of the NYSEat 5% of the issuer's outstanding securities during any 12-month period. The conditions of the exemption decision are as follows: (i) any repurchases made in reliance on the exemption decision must be permitted under, and part of repurchase programs established and conducted in accordance with, U.S. securities laws and NYSErules, (ii) the aggregate number of common shares acquired in reliance on the exemption decision by the Company and any person or company acting jointly or in concert with the Company within any 12 months does not exceed 10% of the outstanding common shares at the beginning of the 12-month period, (iii) the common shares are not listed and posted for trading on an exchange in Canada, (iv) the exemption decision applies only to the acquisition of common shares by the Company within 36 months of the date of the  decision, and (v) prior to purchasing common shares in reliance on the exemption decision, the Company discloses the terms of the exemption decision and the conditions applicable thereto in a press release that is issued on SEDAR and includes such language as part of the news release required to be issued in accordance with the "other published markets exemption" in respect of any repurchase program that may be implemented by the Company. **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 IMAXtheatres to connect with audiences in extraordinary ways, and, as such, IMAX'snetwork is among the most important and successful theatrical distribution platforms for major event films around the globe. IMAXis headquartered in New York, Torontoand Los Angeles, with offices in London, Tokyo, Shanghaiand Beijing. As of Mar. 31, 2016, there were 1,066 IMAXtheatres (952 commercial multiplexes, 17 commercial destinations and 97 institutions) in 68 countries. On Oct. 8, 2015, shares of IMAX China, a subsidiary of IMAX Corp., began trading on the Hong Kong Stock Exchangeunder the stock code "HK.1970." IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D Experience®, The IMAX Experience®, IMAX Is Believing® and IMAXnXos® are trademarks of IMAX Corporation. More information about the Company can be found at [www.imax.com](http://www.imax.com). You may also connect with IMAXon Facebook([www.facebook.com/imax](http://www.facebook.com/imax)), Twitter ([www.twitter.com/imax](http://www.twitter.com/imax)) and YouTube([www.youtube.com/imaxmovies](http://www.youtube.com/imaxmovies)). [www.imax.com](http://www.imax.com/) _This press release contains forward looking statements that are based on IMAXmanagement'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 future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, plans and references to the future success of IMAX Corporationtogether 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 signing of theater system agreements; conditions, changes and developments in the commercial exhibition industry; the performance of IMAX DMR films; 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 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 Statesand Canada; risks related to the Company's growth and operations in China; the Company's largest customer accounting for a significant portion of the Company's revenue and backlog; 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; risks related to the Company's inability to protect its intellectual property; risks related to the Company's implementation of a new enterprise resource planning system; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; and other factors, many of which are beyond the control of the Company__. These factors, other risks and uncertainties and financial details are discussed in IMAX'smost recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q._ For additional information please contact: **_Investors:_** IMAX Corporation, New York Jessica Kourakos 212-821-0100 [jkourakos@imax.com](mailto:jkourakos@imax.com) **_Business Media:_** Sloane & Company, New York Whit Clay 212-446-1864 [wclay@sloanepr.com](mailto:wclay@sloanepr.com) **_Media:_** IMAX Corporation, New York Ann Sommerlath 212-821-0155 [asommerlath@imax.com](mailto:asommerlath@imax.com) **_Entertainment Media:_** Principal Communications Group, Los Angeles Melissa Zuckerman/Paul Pflug 323-658-1555 [melissa@pcommgroup.com](mailto:melissa@pcommgroup.com) [paul@pcommgroup.com](mailto:paul@pcommgroup.com) **Additional Information** **Signings and Installations** March 31, 2016 **Three Months** **Ended March 31,** **Theater Signings:** **2016** **2015** Full new sales and sales-type lease arrangements 28 12 New joint revenue sharing arrangements 7 8 **Total new theaters** **35** **20** Upgrades of IMAX theater systems 1 (1) 1 (2) **Total Theater Signings** **36** **21** **Three Months** **Ended March 31,** **Theater Installations:** **2016** **2015** Full new sales and sales-type lease arrangements 5 5 New joint revenue sharing arrangements 5 6 **Total new theaters** **10** **11** Upgrades of IMAX theater systems 9 (3)(4) 2 (3)(4) **Total Theater Installations** **19** **13** **As of March 31,** **As of December 31,** **Theater Backlog:** **2016** **2015** **2015** New sales and sales-type lease arrangements 169 160 145 New joint revenue sharing arrangements 213 218 212 **Total new theaters** **382** **378** **357** Upgrades of IMAX theater systems 6 25 15 **Total Theaters in Backlog** **388** (5)(6) **403** (5)(7) **372** (5)(8) **As of March 31,** **As of December 31,** **Theater Network:** **2016** **2015** **2015** Commercial Multiplex Theaters: Sales and sales-type lease arrangements 418 363 414 Joint revenue sharing arrangements 534 457 529 **Total Commercial Multiplex Theaters** **952** **820** **943** Commercial Destination Theaters 17 18 19 Institutional Theaters 97 105 99 **Total IMAX Theater Network** **1,066** **943** **1,061** (1) Includes one signing for the installation of an upgrade to a laser-based digital system under sales and sales-type lease arrangements in existing theater locations. (2) Includes one signing for the installation of an upgrade to a xenon-based digital system under a sales and sales-type lease arrangement. (3) Includes eight installations of an upgrade to a laser-based digital system under sales and sales-type lease arrangements (2015 – one laser-based digital system under a sales and sales-type lease arrangement). (4) Includes one installation of an upgrade to a xenon-based digital system under a sale arrangement (2015 – one under a short-term operating lease arrangement). (5) Includes 21 laser-based digital theater system configurations (Q1 2015 – 69, Q4 2015 – 24), including upgrades. The Company continues to develop and roll out its laser-based digital projection system. (6) Includes six upgrades to a digital theater system, in existing IMAX theater locations (one xenon configuration and five laser configurations). (7) Includes 25 upgrades to a digital theater system, in existing IMAX theater locations (two xenon configurations and 23 laser configurations, of which five are under joint revenue sharing arrangements). (8) Includes 15 upgrades to a digital theatre system, in existing IMAX theatre locations (two xenon configurations and 13 laser configurations). **IMAX Greater China Business Metrics Supplement** **Three Months ended March 31,** **2016** **2015** IMAX Greater China Box Office $83.4 million $62.9 million IMAX Greater China Per Screen Avg. $290,000 $295,400 Greater China Theatre Installations 7 (1) 5 Greater China Backlog 227 219 Greater China Network: Commercial Multiplex 295 220 Institution 17 19 **Total** **312** **239** (1) Includes two upgrades to laser-based digital technology. **Additional Information (continued)** **_2016 DMR Films:_**   In addition to the 11 IMAX DMR films released to the IMAXtheater network during the first three months of 2016, 17 additional IMAX DMR films have been announced so far to be released in the remaining nine months of 2016: * _The Crew: An_IMAX3D _Experience_(Russia\-1 Channel, April 2016, Russiaonly); * _The Jungle Book:  An_IMAX3D _Experience_(Walt Disney Studios, April 2016); * _Captain America: Civil War: An_IMAX_3D Experience_(Walt Disney Studios, May 2016); * _X-Men: Apocalypse: An_ IMAX_3D Experience_(20th Century Fox, May 2016); * _Alice in Wonderland: Through the Looking Glass: An_IMAX_3D Experience_(Walt Disney Studios, May 2016); * _Warcraft: An_IMAX_3D Experience_(Universal Studios, June 2016); * _Finding Dory: An_IMAX_3D Experience_(Walt Disney Studios, June 2016); * _Independence Day: Resurgence: An_IMAX_3D Experience_(20th Century Fox, June 2016); * _The Legend of Tarzan: An_IMAX_3D Experience_(Warner Bros. Pictures, July 2016); * _Ghostbusters: An_IMAX_3D Experience_(Sony Pictures,  July 2016); * _Star Trek Beyond: An_IMAX_3D Experience_(Paramount Pictures, July 2016); * _Suicide Squad: An_IMAX_3D Experience_(Warner Bros. Pictures, August 2016); * _Deepwater Horizon: The_IMAX_Experience_(Lionsgate Entertainment, September 2016); * _The Duelist: The_IMAX_Experience_(Non-Stop Production LLC, October 2016, Russiaonly); * Doctor Strange: An IMAX 3D Experience (Walt Disney Studios, November 2016); * _Fantastic Beasts and Where to Find Them: An_IMAX_3D Experience_(Warner Bros. Pictures, November 2016); and * _Rogue One: A Star Wars Story: An_IMAX_3D Experience_(Walt Disney Studios, December 2016). In addition, the Company will be releasing an IMAXoriginal production, _A Beautiful Planet_, on April 29, 2016and a documentary film, _Voyage of Time_, on October 7, 2016. To date, the Company has announced the following 9 titles to be released in 2017 to the IMAXtheater network: * _Attraction: An_IMAX_3D Experience_(Art Pictures Studio, January 2017, Russiaonly); * _The Maze Runner: The Death Cure: The_IMAX_Experience_(20th Century Fox, February 2017); * _Wolverine: The_IMAX_Experience_(20th Century Fox, March 2017); * _Kong: Skull Island: An_IMAX_3D Experience_(Warner Bros. Pictures, March 2017); * _Guardians of the Galaxy Vol. 2: An_IMAX_3D Experience_(Walt Disney Studios, May 2017); * _Pirates of the Caribbean: Dead Men Tell No Tales: An_IMAX_3D Experience_(Walt Disney Studios, May 2017); * _Spider-Man: Homecoming: An_IMAX_3D Experience_(Sony Pictures,  July 2017); * _Thor: Ragnarok: An_IMAX_3D Experience_(Walt Disney Studios, November 2017); * _Star Wars: Episode VIII: An_IMAX_3D Experience_(Walt Disney Studios, December 2017); The Company remains in active negotiations with all of the major Hollywoodstudios for additional films to fill out its short and long-term film slate, and anticipates that a similar number of IMAX DMR films will be released to the IMAXnetwork in 2016 to the 44 films that were released to the IMAXnetwork in 2015. **IMAX CORPORATION** **CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS** _(In thousands of U.S. dollars, except per share amounts)_ **_(Unaudited)_** **Three Months** **Ended March 31,** **2016** **2015** **Revenues** Equipment and product sales $ 23,740 $ 14,436 Services 44,273 31,716 Rentals 21,779 13,814 Finance income 2,336 2,245 **92,128** **62,211** **Costs and expenses applicable to revenues** Equipment and product sales 17,791 7,540 Services 17,596 14,807 Rentals 4,565 3,883 **39,952** **26,230** **Gross margin** **52,176** **35,981** Selling, general and administrative expenses 31,584 28,352 (including share-based compensation expense of $8.5 million for the three months ended March 31, 2016 (2015 - expense of $5.6 million)) Research and development 3,708 4,542 Amortization of intangibles 491 430 Receivable provisions, net of recoveries 126 5 **Income from operations** **16,267** **2,652** Interest income 467 246 Interest expense (398) (304) **Income from operations before income taxes** **16,336** **2,594** Provision for income taxes (3,718) (675) Loss from equity-accounted investments, net of tax (441) (434) **Net income** **12,177** **1,485** Less: net income attributable to non-controlling interests (2,650) (1,094) **Net income attributable to common shareholders** **$** **9,527** **$** **391** **Net income per share attributable to common shareholders - basic & diluted:** Net income per share - basic **$** **0.14** **$** **\-** Net income per share - diluted **$** **0.14** **$** **\-** Weighted average number of shares outstanding (000's): Basic 69,379 69,210 Fully Diluted 70,120 70,676 Additional Disclosure: Depreciation and amortization(1) $ 10,438 $ 9,633 (1) Includes $0.1 million of amortization of deferred financing costs charged to interest expense for the three months ended March 31, 2016 (2015 - $0.2 million). **IMAX CORPORATION** **CONDENSED CONSOLIDATED BALANCE SHEETS** _(In thousands of U.S. dollars)_ **_(Unaudited)_** **March 31** **December 31** **2016** **2015** **Assets** Cash and cash equivalents $ 259,752 $ 317,449 Accounts receivable, net of allowance for doubtful accounts of $1,061 (December 31, 2015 — $1,146) 91,933 97,981 Financing receivables 119,649 117,231 Inventories 44,564 38,753 Prepaid expenses 8,844 6,498 Film assets 14,703 14,571 Property, plant and equipment 220,211 218,267 Other assets 26,278 26,136 Deferred income taxes 25,197 25,766 Other intangible assets 29,137 28,950 Goodwill 39,027 39,027 **Total assets** **$** **879,295** **$** **930,629** **Liabilities** Bank indebtedness $ 28,786 $ 29,276 Accounts payable 20,952 23,455 Accrued and other liabilities 76,234 95,748 Deferred revenue 102,049 104,993 **Total liabilities** **228,021** **253,472** **Commitments and contingencies** **Non-controlling interests** **3,263** **3,307** **Shareholders' equity** Capital stock common shares — no par value. Authorized — unlimited number. Issued and outstanding — 68,276,139 (December 31, 2015 — 69,673,244) 440,248 448,310 Other equity 165,395 163,094 Accumulated (deficit) earnings (5,854) 19,930 Accumulated other comprehensive loss (3,732) (7,443) **Total shareholders' equity attributable to common shareholders** **596,057** **623,891** Non-controlling interests 51,954 49,959 **Total shareholders' equity** **648,011** **673,850** **Total liabilities and shareholders' equity** **$** **879,295** **$** **930,629** **IMAX CORPORATION** **CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS** _(In thousands of U.S. dollars)_ **_(Unaudited)_** **Three Months Ended March 31,** **2016** **2015** **Cash provided by (used in):** **Operating Activities** Net income $ 12,177 $ 1,485 Adjustments to reconcile net income to cash from operations: Depreciation and amortization 10,438 9,633 Write-downs, net of recoveries 648 128 Change in deferred income taxes (185) 191 Stock and other non-cash compensation 8,667 5,666 Unrealized foreign currency exchange loss (557) 1,351 Loss from equity-accounted investments 818 785 Gain on non-cash contribution to equity-accounted investees (377) (352) Investment in film assets (3,919) (3,013) Changes in other non-cash operating assets and liabilities (22,746) (9,805) **Net cash provided by operating activities** **4,964** **6,069** **Investing Activities** Purchase of property, plant and equipment (4,585) (22,582) Investment in joint revenue sharing equipment (3,988) (4,815) Acquisition of other intangible assets (770) (665) **Net cash used in investing activities** **(9,343)** **(28,062)** **Financing Activities** Increase in bank indebtedness \- 11,371 Repayment of bank indebtedness (500) \- Repurchase of common shares (44,618) \- Settlement of restricted share units (5,849) (3,905) Taxes paid on secondary sale and repatriation dividend (2,991) \- Common shares issued - stock options exercised 740 11,407 Credit facility amendment fees paid \- (1,003) Issuance of subsidiary shares to non-controlling interests - private offering \- 40,000 Share issuance costs from the issuance of subsidiary shares to non-controlling interests - private offering \- (2,000) **Net cash (used in) provided by financing activities** **(53,218)** **55,870** Effects of exchange rate changes on cash (100) (38) **(Decrease) increase in cash and cash equivalents during period** **(57,697)** **33,839** **Cash and cash equivalents, beginning of period** **317,449** **106,503** **Cash and cash equivalents, end of period** $ **259,752** $ **140,342** **IMAX CORPORATION** **SELECTED FINANCIAL DATA** **In accordance with United States Generally Accepted Accounting Principles** _(in thousands of U.S. dollars)_ The Company has seven reportable segments identified by category of product sold or service provided: IMAX systems; theater system maintenance; joint revenue sharing arrangements; film production and IMAX DMR; film distribution; film post-production; and other. The IMAX systems segment includes the design, manufacture, sale or lease of IMAX theater projection system equipment. The theater system maintenance segment includes the maintenance of IMAX theater projection system equipment in the IMAX theater network. The joint revenue sharing arrangements segment includes the provision of IMAX theater projection system equipment to an exhibitor in exchange for a share of the box-office and concession revenues. The film production and IMAX DMR segment includes the production of films and the performance of film re-mastering services. The film distribution segment includes the distribution of films for which the Company has distribution rights. The film post-production segment provides film post-production and film print services. The other segment includes certain IMAX theaters that the Company owns and operates, camera rentals and other miscellaneous items. **Three Months** **Ended March 31,** **2016** **2015** **Revenue** **IMAX Theater Systems** IMAX Systems Sales and sales-type leases $ 17,998 $ 8,616 Ongoing rent, fees, and finance income 3,862 3,498 Other 4,481 3,425 26,341 15,539 Theater System Maintenance 9,826 8,850 Joint Revenue Sharing Arrangements 23,386 15,868 **Film** Production and IMAX DMR 29,805 17,676 Film distribution and post-production 2,770 4,278 32,575 21,954 **Total** $ 92,128 $ 62,211 **Gross margins** **IMAX Theater Systems** IMAX systems(1) Sales and sales-type leases $ 4,319 $ 4,907 Ongoing rent, fees, and finance income 3,515 3,278 Other (482) (40) 7,352 8,145 Theater System Maintenance 3,439 3,281 Joint Revenue Sharing Arrangements(1) 17,992 10,617 **Film** Production and IMAX DMR(1) 22,823 13,225 Film distribution and post-production(1) 570 713 23,393 13,938 **Total** $ 52,176 $ 35,981 (1) IMAX systems include marketing and commission costs of $0.5 million for the three months ended March 31, 2016 (2015 - $0.3 million). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $0.1 million for the three months ended March 31, 2016 (2015 - $0.1 million). Production and DMR segment margins include marketing costs of $2.3 million for the three months ended March 31, 2016 (2015 - $1.3 million). Distribution segment margins include marketing expense of $0.7 million for the three months ended March 31, 2016 (2015 - recovery of $0.1 million). **IMAX CORPORATION** **OTHER INFORMATION** _(in thousands of U.S. dollars)_ **_Non-GAAP Financial Measures:_** In this release, the Company presents adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share as supplemental measures of performance of the Company, which are not recognized under U.S. GAAP. The Company presents adjusted net income and adjusted net income per diluted share because it believes that they are important supplemental measures of its comparable controllable operating performance and it wants to ensure that its investors fully understand the impact of its stock-based compensation (net of any related tax impact) on net income. In addition, the Company presents adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share because it believes that they are important supplemental measures of its comparable financial results and could potentially distort the analysis of trends in business performance and it wants to ensure that its investors fully understand the impact of net income attributable to non-controlling interests and its stock-based compensation (net of any related tax impact) in determining net income attributable to common shareholders. Management uses these measures to review operating performance on a comparable basis from period to period. However, these non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share should be considered in addition to, and not as a substitute for, net income and net income attributable to common shareholders and other measures of financial performance reported in accordance with U.S. GAAP. The Credit Facility provides that the Company will be required at all times to satisfy a Minimum Liquidity Test (as defined in the Credit Agreement) of at least $50.0 million. The Company will also be required to maintain minimum EBITDA (as defined in the credit agreement) of $100.0 million. The Company must also maintain a Maximum Total Leverage Ratio (as defined in the credit agreement) of 2.25:1.0, which requirement decreases to (i) 2.0:1.0 on December 31, 2016; and (ii) 1.75:1.0 on December 31, 2017. The Company was in compliance with all of these requirements at March 31, 2016. The ratio of total debt to EBITDA was 0.19:1 as at March 31, 2016, where Total Debt (as defined in the credit agreement) is the sum of all obligations evidenced by notes, bonds, debentures or similar instruments and was $29.2 million. EBITDA is calculated as follows: **For the** **For the** **For the** **3 months ended** **12 months ended** **3 months ended** **March 31, 2016** **March 31, 2016** (1) **March 31, 2015** **_(In thousands of U.S. Dollars)_** Net income $ 12,177 $ 75,316 $ 1,485 Add (subtract): Loss from equity accounted investments 441 2,409 434 Provision for income taxes 3,718 23,095 675 Interest expense, net of interest income (69) 566 58 Depreciation and amortization, including film asset amortization 10,297 42,617 9,467 Write-downs, net of recoveries including asset impairments and receivable provisions 648 4,245 128 Stock and other non-cash compensation 8,667 25,380 5,666 EBITDA before non-controlling interests 35,879 173,628 17,913 EBITDA attributable to non-controlling interests(2) (4,377) (17,329) (1,933) EBITDA attributable to common shareholders $ 31,502 $ 156,299 $ 15,980 Revenue attributable to common shareholders $ 84,203 $ 372,672 $ 59,393 Adjusted EBITDA margin 37.4% 41.9% 26.9% (1) Ratio of funded debt calculated using twelve months ended EBITDA. (2) The EBITDA calculation specified for purpose of the minimum EBITDA covenant excludes the reduction in EBITDA from the Company's non-controlling interests. **IMAX CORPORATION** **OTHER INFORMATION** _(in thousands of U.S. dollars)_ **_Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended_** **_March 31,_****_2016_****_vs._** **_2015_****_:_** The Company reported net income of $12.2 million or $0.18 per basic share and $0.17 per diluted share for the quarter ended March 31, 2016 as compared to net income of $1.5 million or $0.02 per basic and diluted share for the quarter ended March 31, 2015. Net income for the quarter ended March 31, 2016 includes an $8.5 million charge or $0.12 per diluted share (2015 — $5.6 million or $0.08 per diluted share) for stock-based compensation. Adjusted net income, which consists of net income excluding the impact of stock-based compensation and the related tax impact, was $18.3 million or $0.26 per diluted share for the quarter ended March 31, 2016 as compared to adjusted net income of $6.1 million or $0.09 per diluted share for the quarter ended March 31, 2015. Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding the impact of stock-based compensation and the related tax impact, was $15.5 million or $0.22 per diluted share for the quarter ended March 31, 2016 as compared to adjusted net income attributable to common shareholders of $5.0 million or $0.07 per diluted share for the quarter ended March 31, 2015. A reconciliation of net income and net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below: **Quarter Ended March 31,** **2016** **2015** **Net Income** **Diluted EPS** **Net Income** **Diluted EPS** Reported net income $ 12,117 $ 0.17 $ 1,485 $ 0.02 (1) Adjustments: Stock-based compensation 8,538 0.12 5,575 0.08 Tax impact on items listed above (2,440) (0.03) (962) (0.01) Adjusted net income 18,275 0.26 6,098 0.09 (1) Net income attributable to non-controlling interests (2,650) (0.04) (1,094) (0.02) Stock-based compensation (net of tax) attributable to non-controlling interests (125) \- \- \- Adjusted net income attributable to common shareholders $ 15,500 $ 0.22 $ 5,004 $ 0.07 (1) Weighted average diluted shares outstanding 70,120 70,676 (1) Includes impact of $0.2 million of accretion charges associated with redeemable Class C shares of IMAX China. **_Free Cash Flow:_** Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the consolidated statements of cash flows). Cash provided by operating activities consist of net 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. A reconciliation of cash provided by operating activities to free cash flow is presented in the table below: **For the** **3 months ended** **March 31, 2016** **_(In thousands of U.S. Dollars)_** Net cash provided by operating activities $ 4,964 Net cash used in investing activities (9,343) Free cash flow $ (4,379) Logo - [http://photos.prnewswire.com/prnh/20111107/MM01969LOGO](http://photos.prnewswire.com/prnh/20111107/MM01969LOGO) To view the original version on PR Newswire, visit:[http://www.prnewswire.com/news-releases/imax-corporation-reports-first-quarter-2016-financial-results-highlights-300255225.html](http://www.prnewswire.com/news-releases/imax-corporation-reports-first-quarter-2016-financial-results-highlights-300255225.html) SOURCE IMAX Corporation