--- title: IMAX Corporation Reports Fourth Quarter and Full Year 2012 Financial Results publisher: "IMAX" description: "NEW YORK , Feb. 21, 2013 /PRNewswire/ --  HIGHLIGHTS Adjusted EPS increases 95% to $0.80 for full year; Q4 2012 adjusted EPS of $0.23 Full year revenues increase 20% to $284.3 million with fourth quarter revenues of $77.8 million Network scale and global film portfolio drive approximately 50% box" canonical: "https://www.imax.com/pr/imax-corporation-reports-fourth-quarter-and-full-year-2012" date: 2013-02-21 last_updated: 2013-02-21 --- IMAX Corporation Reports Fourth Quarter and Full Year 2012 Financial Results ============================================================================ Thu, Feb 21, 2013 NEW YORK, Feb. 21, 2013/PRNewswire/ --  HIGHLIGHTS * Adjusted EPS increases 95% to $0.80for full year; Q4 2012 adjusted EPS of $0.23 * Full year revenues increase 20% to $284.3 millionwith fourth quarter revenues of $77.8 million * Network scale and global film portfolio drive approximately 50% box office growth in full year 2012 **IMAX Corporation**(NYSE: IMAX; TSX: IMX) today reported its financial results for the fourth quarter of 2012, driven by continued theatre network growth and strong box office performance, derived from a diverse global film portfolio.  Fourth quarter 2012 revenues were $77.8 million, adjusted EBITDA as calculated in accordance with the Company's Credit Facility was $27.4 million, adjusted net income was $15.7 million, or $0.23per diluted share, and reported net income was $12.9 million, or $0.19per diluted share. (Logo: [http://photos.prnewswire.com/prnh/20111107/MM01969LOGO](http://photos.prnewswire.com/prnh/20111107/MM01969LOGO)) Full year 2012 revenues were $284.3 million, adjusted EBITDA as calculated in accordance with the Company's Credit Facility was $106.8 million, adjusted net income was $54.3 million, or $0.80per diluted share, and reported net income was $41.3 million, or $0.61per diluted share. For reconciliations of adjusted net income to reported net income and for the definition of adjusted EBITDA and free cash flow, please see the tables at the end of this press release. "Our fourth quarter results once again demonstrated the operating leverage inherent in the IMAXbusiness model and was a strong finish to a successful year for the Company," said IMAXChief Executive Officer Richard L. Gelfond. "We executed on all key fronts, with the combination of network expansion and an increasingly global portfolio approach to our film slate translating into solid financial results." **Network Growth Update** In the fourth quarter of 2012, the Company signed contracts for 38 theatre systems, of which 28 were systems in new theatre locations, and installed 46 theatre systems, of which 43 were systems in new theatre locations.  For the full year of 2012, the Company signed contracts for 142 theatre systems, of which 121 were systems in new theatre locations, and installed 125 theatre systems, of which 107 were systems in new theatre locations. The total IMAX® theatre network consisted of 731 systems as of Dec. 31, 2012, of which 598 were in commercial multiplexes.  There were 276 theatre systems in backlog as of Dec. 31, 2012, compared to 263 theatre systems in backlog as of Dec. 31, 2011.  For a breakdown of theatre system signings, installations and backlog by type, please see the end of this press release. "We believe the financial and strategic accomplishments of 2012 re-confirmed IMAX's position as a unique global player in the film industry and laid a solid foundation for long-term growth," Mr. Gelfond concluded.  "Our 2013 objectives are straight forward - continue to expand our footprint worldwide, maximize the scalability of our business and further leverage our differentiated end-to-end technology platform to enable more leading filmmakers and studios to create an entertainment experience that cannot be found anywhere else." **Fourth Quarter Segment Results** * IMAXsystems revenue was $24.3 millionin the quarter, compared to $29.8 millionin the fourth quarter of 2011, primarily reflecting the installation of 14 full, new theatre systems under sales and sales-type lease arrangements in the most recent fourth quarter, compared to 17 full, new theatre systems in the prior year period.  The Company also installed three digital system upgrades under sales or sales-type lease arrangements in the fourth quarter of 2012, compared to one upgrade in the fourth quarter of 2011. * Revenue from joint revenue sharing arrangements increased 103.4% to $17.0 million, from $8.4 millionin the prior-year period.  During the quarter, the Company installed 29 new theatres under joint revenue sharing arrangements, compared to 39 in the year-ago period.  The Company ended 2012 with 316 theatres operating under joint revenue sharing arrangements, as compared to 257 theatres at the end of 2011. * Production and IMAX DMR® (Digital Re-Mastering) revenues increased 56.3% to $19.2 millionin the fourth quarter of 2012 from $12.3 millionin the fourth quarter of 2011. Gross box office from DMR titles was a record $152.0 millionin the fourth quarter of 2012, compared to $97.6 millionin the prior year period.  The average global DMR box office per screen in the fourth quarter of 2012 was $264,400, compared to $221,600in the prior year period. **Conference Call** The Company will host a conference call today at 8:30 AM ETto discuss its fourth quarter and full year 2012 financial results.  To access the call via telephone, interested parties should dial (800) 820-0231 approximately 5 to 10 minutes before it begins.  International callers should dial (416) 640-5926.  The participant passcode for the call is 4550645.  This call is also being webcast by Thomson Financialand can be accessed on the 'Investor Relations' section of [www.imax.com](http://www.imax.com).   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 4550645. **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's network 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 Dec. 31, 2012, there were 731 IMAXtheatres (598 commercial multiplexes, 19 commercial destinations and 114 institutions) in 53 countries. IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D Experience®, The IMAX Experience® and IMAX Is Believing® 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)). _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, general economic, market or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by the Company; the performance of IMAX DMR films; competitive actions by other companies; conditions in the in-home and out-of-home entertainment industries; the signing of theater system agreements; changes in laws or regulations; conditions, changes and developments in the commercial exhibition industry; the failure to convert theater system backlog into revenue; 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 failure to respond to change and advancements in digital technology; risks related to the acquisition of AMC Entertainment Holdings, Inc.by Dalian Wanda Group Co., Ltd.; risks related to new business initiatives; the potential impact of increased competition in the markets within which the Company operates; risks related to the Company's inability to protect the Company's intellectual property; risks related to Eastman Kodakbankruptcy and the possibility of constrained film supply; risks related to the Company's implementation of a new enterprise resource planning system; risks related to the Company's prior restatements and the related litigation; and other factors, many of which are beyond the control of the Company. These factors and other risks and uncertainties are discussed in IMAX's most recent Annual Report on Form 10-K and most recent Quarterly Reports on Form 10-Q._ For additional information please contact: **_Investors:_** IMAX Corporation, New York Teri Loxam/Blaire Lomasky 212-821-0100 [tloxam@imax.com](mailto:tloxam@imax.com) [blomasky@imax.com](mailto:blomasky@imax.com) **_Media:_** IMAX Corporation, New York Ann Sommerlath 212-821-0155 [asommerlath@imax.com](mailto:asommerlath@imax.com) **_Business Media:_** Sloane & Company, New York Whit Clay 212-446-1864 [wclay@sloanepr.com](mailto:wclay@sloanepr.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** **_Theatre Network Details:_** **Three Months** **Twelve Months** **Ended December 31,** **Ended December 31,** **Theatre System Signings:** **2012** **2011** **2012** **2011** Full new sales and sales-type lease arrangements 11 13 43 58 New joint revenue sharing arrangements 17 11 78 132 Total new theatres **28** **24** **121** **190** Upgrades and other 10 (1) 2 21 (1) (2) 19 Total Theatre Signings **38** **26** **142** **209** **Three Months** **Twelve Months** **Ended December 31,** **Ended December 31,** **Theatre System Installations:** **2012** **2011** **2012** **2011** Full new sales and sales-type lease arrangements 14 17 47 51 New joint revenue sharing arrangements 29 39 60 86 Total new theatres **43** **56** **107** **137** Upgrades and other 3 1 18 33 Total Theatre Installations **46** **57** **125** **170** **As of** **Ended December 31,** **Theatre Backlog:** **2012** **2011** New sales and sales-type lease arrangements 128 134 New joint revenue sharing arrangements 137 119 Total new theatres **265** **253** Upgrades under sales and sales-type lease arrangements 11 (1) 10 Total Theatres in Backlog **276** **263** \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (1) Includes one laser-based system for a commercial theater and four laser-based systems for institutional theaters. (2) Includes three IMAX theatres acquired from another existing customer that had been operating under a joint revenue sharing arrangement. These theaters were purchased from the Company under a sales arrangement. **Additional Information (continued)** **_2013 DMR Films Announced to Date:_**  To date, IMAXhas announced 23 titles to be released in 2013.  The Company remains in discussions with virtually every major studio regarding future titles and expects the total number of titles in 2013 to be similar to that in 2012.  * _The Grandmaster: The_ IMAX_Experience_ (Jet Tone Films and Sil-Metropole Organization, January 2013); * _Hansel & Gretel: Witch Hunters: An_ IMAX3D _Experience_ (Paramount Pictures, January 2013); * _Journey to the West: Conquering the Demons: An_ IMAX3D_Experience_ (Bingo Movie Development Ltd, February 2013); * _Top Gun: An_ IMAX3D_Experience_ (Paramount Pictures, February 2013); * _A Good Day to Die Hard: The_ IMAX_Experience_ (Twentieth Century Fox, February 2013); * _Jack the Giant Slayer: An_ IMAX3D_Experience_ (Warner Bros., March 2013); * _Oz: The Great and Powerful: An_ IMAX3D_Experience_ (Walt Disney Pictures, March 2013); * _G.I. Joe: Retaliation: An_ IMAX3D _Experience_ (Paramount Pictures, March 2013); * _Dragon Ball Z: Battle of the Gods: An_ IMAX3D_Experience_ (Toei Animation Company, March 2013); * _Oblivion: The_ IMAX_Experience_ (Universal Pictures, April 2013); * _Jurassic Park: An_ IMAX3D_Experience_(Universal Pictures, April 2013); * _Iron Man 3: An_ IMAX3D _Experience_ (Walt Disney Pictures, May 2013); * _Star Trek: Into Darkness: An_ IMAX3D_Experience_ (Paramount Pictures, May 2013); * _Man of Steel: The_ IMAX_Experience_ (Warner Bros., June 2013); * _Pacific Rim: An_ IMAX3D_Experience_ (Warner Bros., July 2013); * _300: Riseof an Empire: An_ IMAX3D_Experience_ (Warner Bros., August 2013); * _Riddick Sequel: The_ IMAX_Experience_ (Universal Pictures, September 2013); * _Gravity: An_ IMAX3D_Experience_ (Warner Bros., October 2013); * _Stalingrad: An_ IMAX3D_Experience_ (AR Films, October 2013, Russiaand the CIS only ); * _Seventh Son: An_ IMAX3D_Experience_ (Warner Bros., October 2013); * _The Hunger Games: Catching Fire: The_ IMAX_Experience_ (Lionsgate, November 2013); * _The Hobbit: The Desolation of Smaug: An_ IMAX3D_Experience_ (Warner Bros., December 2013); and * _Dhoom 3: The_ IMAX_Experience_(Yash Raj Films, 2013, Indiaonly). **IMAX CORPORATION** **CONSOLIDATED STATEMENTS OF OPERATIONS** **In accordance with United States Generally Accepted Accounting Principles** _(In thousands of U.S. dollars, except per share amounts)_ **Three Months** **Year Ended** **Ended December 31,** **Ended December 31,** **2012**  **2011\*** **2012** **2011\*** **Revenues** Equipment and product sales $ 22,405 $ 26,657 $ 78,161 $ 85,016 Services 34,294  26,349 136,606 106,720 Rentals 18,356  9,394 61,268 34,810 Finance income 1,986  1,753 7,523 6,162 Other 732  2,523 732 3,848 77,773  66,676 284,290 236,556 **Costs and expenses applicable to revenues** Equipment and product sales 9,811  10,147 37,538 38,742 Services 17,239  21,262 72,617 69,277 Rentals 8,434  4,823 21,402 14,301 Other \-  612 \- 1,018 35,484  36,844 131,557 123,338 **Gross margin** 42,289  29,832 **152,733** 113,218 Selling, general and administrative expenses 22,529  17,093 81,560 73,157 (including share-based compensation expense of $2.9 million and $13.1 million for the three months and year ended December 31, 2012, respectively (2011 - expense of $2.7 million and $11.7 million, respectively)) Provision for arbitration award \-  \- \- 2,055 Research and development 3,788  1,803 11,411 7,829 Amortization of intangibles 174  125 706 465 Receivable provisions, net of recoveries (305) 804 524 1,570 Asset impairments \-  20 \- 28 Impairment of available-for-sale investment \-  \- 150 \- **Income from operations** 16,103  9,987 58,382 28,114 Interest income 12  13 85 57 Interest recovery (expense) 686  (402) (689) (1,827) **Income from continuing operations before income taxes** 16,801  9,598 **57,778** 26,344 (Provision for) recovery of income taxes (3,594) (2,861) (15,079) (9,293) Loss from equity-accounted investments (324) (479) (1,362) (1,791) **Net Income** $ 12,883 $ 6,258 $ 41,337 $ 15,260 **Net income per share - basic & diluted:** Net income per share - basic $ 0.19 $ 0.10 $ 0.63 $ 0.24 Net income per share - diluted $ 0.19 $ 0.09 $ 0.61 $ 0.22 Weighted average number of shares outstanding (000's): Basic 66,264  64,799 _65,854_ 64,504 Fully Diluted 68,281  67,460 _67,933_ 67,859 Additional Disclosure: Depreciation and amortization(1) $ 8,084 7,143 $ 32,788 25,163 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (1) Includes less than $0.1 million and $0.2 million of amortization of deferred financing costs charged to interest expense for the three months and year ended December 31, 2012 (2011 - less than $0.1 million and $0.4 million respectively). \* Reflects a revision resulting from an adjustment to reflect an unfunded postretirement obligation of the Company. **IMAX CORPORATION** **CONSOLIDATED BALANCE SHEETS** **In accordance with United States Generally Accepted Accounting Principles** _(In thousands of U.S. dollars)_ **As at December 31,** **2012** **2011\*** **Assets** Cash and cash equivalents $ 21,336 $ 18,138 Accounts receivable, net of allowance for doubtful accounts of $1,564 (December 31, 2011 — $1,840) 42,007 46,659 Financing receivables  94,193 86,714 Inventories  15,794 19,747 Prepaid expenses 3,833 3,126 Film assets  3,737 2,388 Property, plant and equipment  113,610 101,253 Other assets  23,963 14,238 Deferred income taxes 36,461 51,046 Goodwill 39,027 39,027 Other intangible assets  27,911 24,913 **Total assets** **$** **421,872** **$** **407,249** **Liabilities** Bank indebtedness  $ 11,000 $ 55,083 Accounts payable 15,144 28,985 Accrued and other liabilities  68,695 58,855 Deferred revenue 73,954 74,458 **Total liabilities** **168,793** **217,381** **Commitments and contingencies** **Shareholders' equity** Capital stock common shares — no par value. Authorized — unlimited number. Issued and outstanding — 66,482,425 (December 31, 2011 — 65,052,740) 313,744 303,395 Other equity 28,892 17,510 Deficit (87,166) (128,503) Accumulated other comprehensive loss (2,391) (2,534) **Total shareholders' equity** **253,079** **189,868** **Total liabilities and shareholders' equity** **$** **421,872** **$** **407,249** **IMAX CORPORATION** **CONSOLIDATED STATEMENTS OF CASH FLOWS** **In accordance with United States Generally Accepted Accounting Principles** _(In thousands of U.S. dollars)_ **Years Ended December 31,** **2012** **2011\*** **Cash provided by (used in):** **Operating Activities** Net income $ 41,337 $ 15,260 Adjustments to reconcile net income to cash from operations: Depreciation and amortization 32,788 25,163 Write-downs, net of recoveries 1,607 1,954 Change in deferred income taxes 14,724 7,994 Stock and other non-cash compensation 14,220 12,814 Provision for arbitration award \- 2,055 Foreign currency exchange (gain) loss (329) 1,255 Loss from equity-accounted investments 1,362 1,791 Gain on non-cash contribution to equity-accounted investees \- (404) Investment in film assets (16,817) (12,256) Changes in other non-cash operating assets and liabilities (15,262) (49,379) **Net cash provided by operating activities** **73,630** **6,247** **Investing Activities** Purchase of property, plant and equipment (6,055) (5,528) Investment in joint revenue sharing equipment (23,257) (33,290) Investment in new business ventures (381) (2,483) Acquisition of other intangible assets (5,826) (22,206) **Net cash used in investing activities** **(35,519)** **(63,507)** **Financing Activities** Increase in bank indebtedness **9,917** 75,083 Repayment of bank indebtedness **(54,000)** (37,500) Common shares issued - stock options exercised 8,920 7,864 Proceeds from disgorgement of stock sale profits 314 \- Credit Facility amendment fees paid \- (306) **Net cash (used in) provided by financing activities** **(34,849)** **45,141** Effects of exchange rate changes on cash (64) (133) **Increase (decrease) in cash and cash equivalents during year** **3,198** **(12,252)** **Cash and cash equivalents, beginning of year** **18,138** **30,390** **Cash and cash equivalents, end of year** **$** **21,336** **$** **18,138** **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; theater operations; and other. The IMAX systems segment designs, manufactures, sells or leases IMAX theater projection system equipment. The theater system maintenance segment maintains IMAX theater projection system equipment in the IMAX theater network. The joint revenue sharing arrangements segment provides IMAX theater projection system equipment to an exhibitor in exchange for a share of the box-office and concessions revenue. The film production and IMAX DMR segment produces films and performs film re-mastering services. The film distribution segment distributes 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 theater operations from certain IMAX theaters, camera rentals and other miscellaneous items. **Three Months** **Year Ended** **Ended December 31,** **Ended December 31,** **2012**  **2011** **2012** **2011** **Revenue** **IMAX systems** Sales and sales-type leases $ 20,237 $ 26,552 $ 69,988 $ 81,310 Ongoing rent, fees, and finance income 4,105  3,270 13,417 11,890 24,342  29,822 83,405 93,200 **Theater system maintenance** 7,751  6,570 28,629 24,840 **Joint revenue sharing arrangements** 17,049  8,382 57,526 30,764 **Film** Production and IMAX DMR 19,245  12,312 78,050 50,592 Distribution 3,100  3,217 14,222 16,074 Post-production 2,126  2,549 7,904 8,235 24,471  18,078 100,176 74,901 **Other** 4,160  3,824 14,554 12,851 **Total** $ 77,773 $ 66,676 $ 284,290 $ 236,556 **Gross margins** **IMAX systems**(1) Sales and sales-type leases $ 11,715 $ 17,088 $ 36,974 $ 45,251 Ongoing rent, fees, and finance income 4,055  3,372 13,271 11,678 15,770  20,460 50,245 56,929 **Theater system maintenance** 2,848  2,525 10,970 9,437 **Joint revenue sharing arrangements**(1) 8,968  3,813 37,308 17,605 **Film** Production and IMAX DMR(1) 13,641  2,339 49,355 23,574 Distribution(1) 223  494 2,356 3,025 Post-production 581  181 1,954 2,985 14,445  3,014 53,665 29,584 **Other** 258  20 545 (337) **Total** $ 42,289 $ 29,832 $ 152,733 $ 113,218 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (1) IMAX systems include commission costs of $0.6 million and $2.7 million for the three and twelve months ended December 31, 2012, respectively (2011 — $0.9 million and $2.4 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $1.3 million and $3.4 million for the three and twelve months ended December 31, 2012, respectively (2011 — $1.9 million and $5.4 million, respectively). Production and DMR segment margins include marketing costs of $1.1 million and $3.3 million for the three and twelve months ended December 31, 2012, respectively (2011 — $1.9 million and $3.8 million, respectively). Distribution segment margins include marketing costs of $0.3 million and $1.5 million for the three and twelve months ended December 31, 2012, respectively (2011 — $0.2 million and $1.9 million, respectively). **IMAX CORPORATION** **OTHER INFORMATION** _(In thousands of U.S. dollars)_ **_Non-GAAP Financial Measures:_** In this release, the Company presents adjusted EBITDA, adjusted net income and adjusted net income per diluted share as supplemental measures of performance of the Company, which are not recognized under United States generally accepted accounting principals ("GAAP"). The Company presents adjusted EBITDA, 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 variable share-based compensation, provision for arbitration award and deferred taxes on its net income. 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 EBITDA, adjusted net income and adjusted net income per diluted share should be considered in addition to, and not as a substitute for, net income and other measures of financial performance reported in accordance with GAAP. Adjusted EBITDA is calculated on a basis consistent with the Company's Credit Facility, which refers to Adjusted EBITDA as EBITDA. As of December 31, 2012, the Credit Facility provided that the Company was required to maintain a ratio of funded debt (as defined in the Credit Agreement) to EBITDA (as defined in the Credit Agreement) of not more than 2:1. The Company was also required to maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.1:1.0. As of December 31, 2012, under the terms of the Credit Facility, the Company was required to maintain minimum Excess Availability of not less than $5.0 million and minimum Cash and Excess Availability of not less than $15.0 million. The ratio of funded debt to EBITDA was 0.10:1 as at December 31, 2012, where Funded Debt (as defined in the Credit Agreement) is the sum of all obligations evidenced by notes, bonds, debentures or similar instruments and was $11.0 million. EBITDA is calculated as follows: **Quarter Ended December 31,** **Year Ended December 31,** **2012** **2011\*** **2012** **2011\*** Net income $ 12,883 $ 6,258 $ 41,337 $ 15,260 Add (subtract): Loss for equity-accounted investments 324 479 1,362 1,791 Provision for income taxes 3,595 2,860 15,079 9,293 Interest (recovery) expense net of interest income (698) 389 604 1,770 Depreciation and amortization including film asset amortization 8,041 7,100 32,618 24,774 Write-downs net of recoveries including asset impairments and receivable provisions 91 1,113 1,607 1,954 Stock and other non-cash compensation 3,121 2,936 14,220 12,814 **Adjusted EBITDA** **$** 27,357 $ 21,135 $ 106,827 $ 67,657 **IMAX CORPORATION** **OTHER INFORMATION** _(in thousands of U.S. dollars)_ **_Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended December 31, 2012 vs. 2011:_** The Company reported net income of $12.9 million or $0.20 per basic share and $0.19 per diluted share for the fourth quarter of 2012 as compared to $6.3 million or $0.10 per basic share and $0.09 per diluted share for the fourth quarter of 2011. Net income for the quarter includes a $2.9 million charge or $0.04 per diluted share (2011 – $2.7 million or $0.04 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 $15.7 million or $0.23 per diluted share in the fourth quarter of 2012 as compared to adjusted net income of $8.9 million or $0.13 per diluted share for the fourth quarter of 2011. A reconciliation of net income, the most directly comparable U.S. GAAP measure, to adjusted net income and adjusted net income per diluted share is presented in the table below: **Three Months Ended** **Three Months Ended** **December 31, 2012** **December 31, 2011\*** **Net Income** **Diluted EPS** **Net Income** **Diluted EPS** Reported $ 12,883 $ 0.19 $ 6,258 $ 0.09 Adjustments: Stock-based compensation 2,861 0.04 2,708 0.04 Tax impact on item listed above (77) \- (113) \- Adjusted $ 15,667 $ 0.23 $ 8,853 $ 0.13 Weighted average diluted shares outstanding **68,281** **67,460** **_Adjusted Net Income and Adjusted Diluted Per Share Calculations – Year Ended December 31, 2012 vs. 2011:_** The Company reported net income of $41.3 million or $0.63 per basic share and $0.61 per diluted share for the year ended December 31, 2012 as compared to net income of $15.3 million or $0.24 per basic share and $0.22 per diluted share for the year ended December 31, 2011. Net income for the year ended December 31, 2012 includes a $13.1 million charge or 0.19 per diluted share (2011 — $11.7 million or 0.17 per diluted share) for stock-based compensation. Net income for December 31, 2011 also includes a one-time $2.1 million pre-tax charge ($0.03 per diluted share) due to an arbitration award arising from an arbitration proceeding brought against the Company in connection with a discontinued subsidiary. Adjusted net income, which consists of net income excluding the impact of stock-based compensation, the charge for arbitration award and the related tax impact, was $54.3 million or $0.80 per diluted share for the year ended December 31, 2012 as compared to adjusted net income of $28.0 million or $0.41 per diluted share for the year ended December 31, 2011. A reconciliation of net income, the most directly comparable U.S. GAAP measure, to adjusted net income and adjusted net income per diluted share is presented in the table below: **Year Ended** **Year Ended** **December 31, 2012** **December 31, 2011\*** **Net Income** **Diluted EPS** **Net Income** **Diluted EPS** Net income $ 41,337 $ 0.61 $ 15,260 $ 0.22 Adjustments: Stock-based compensation 13,113 0.19 11,681 0.17 Provision for arbitration award \- \- 2,055 0.03 Tax impact on items listed above (160) \- (973) (0.01) Adjusted net income $ 54,290 $ 0.80 $ 28,023 $ 0.41 Weighted average diluted shares outstanding **67,933** **67,859** **_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** **For the** **Quarter Ended** **Year Ended** **_(In thousands of U.S. Dollars)_** **December 31, 2012** **December 31, 2012** Net cash provided by operating activities $ 19,720 $ 73,630 Net cash (used in) investing activities  (12,319) (35,519) Free cash flow $ 7,401 $ 38,111 SOURCE IMAX Corporation