--- title: IMAX Corporation Reports Fourth Quarter And Full Year 2014 Financial Results publisher: "IMAX" description: "HIGHLIGHTS -  Strong margins in 2014 lead to record $86.6 million of operating cash flow, resulting in $106.5 million of cash at the end of the year -  IMAX recognizes 57 installations in the fourth quarter, bringing full year to 121 installations across 24 countries -  IMAX signs contracts for 16" canonical: "https://www.imax.com/pr/imax-corporation-reports-fourth-quarter-and-full-year-2014" date: 2015-02-19 last_updated: 2015-02-19 --- IMAX Corporation Reports Fourth Quarter And Full Year 2014 Financial Results ============================================================================ Thu, Feb 19, 2015 HIGHLIGHTS \-  Strong margins in 2014 lead to record $86.6 millionof operating cash flow, resulting in $106.5 millionof cash at the end of the year \-  IMAXrecognizes 57 installations in the fourth quarter, bringing full year to 121 installations across 24 countries \-  IMAXsigns contracts for 16 theatres in Q4, bringing the full year signings total 118 theater systems, replenishing backlog to 397 theater systems \-  2014 strategic accomplishments, including the launch of its world-class laser projection system, positions the Company well for strong film slates in 2015 and beyond NEW YORK, Feb. 19, 2015/PRNewswire/ --**IMAX Corporation**(NYSE: IMAX) today reported fourth quarter 2014 revenues of $102.4 million, adjusted EBITDA as calculated in accordance with the Company's credit facility of $45.5 million, adjusted net income after non-controlling interest of $24.2 million, or $0.34per diluted share, and reported net income after non-controlling interest of $21.0 million, or $0.30per diluted share. The Company also reported a fourth quarter global per screen average of $292,000. ![IMAX Logo.](http://photos.prnewswire.com/prnvar/20111107/MM01969LOGO "IMAX Logo.") Full year 2014 revenues were $290.5 million, adjusted EBITDA as calculated in accordance with the Company's credit facility was $108.5 million, adjusted net income was $52.5 million, or $0.75per diluted share, and reported net income attributable to common shareholders was $39.7 million, or $0.56per 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. The Company also reported a global 2014 per screen average of $1,020,600. "We achieved a great deal over the course of 2014, including the completion of our world-class laser projection system, the sale of a 20% stake in our Chinabusiness, the signing of long term film deals with most major studios and continued network growth," said IMAXCEO Richard L. Gelfond. "We believe these accomplishments position us well, not only to take advantage of the 2015 film slate, which is already off to a great start, but also to help drive long-term growth." **Network Growth Update** In the fourth quarter of 2014, the Company signed contracts for 16 theater systems, of which 3 were upgrades, bringing total singings for 2014 to 118, of which 14 were upgrades. The Company also installed 57 theater systems in the quarter, of which 2 were upgrades of existing theater locations, bringing the full year installation total to 121 theater systems, of which 8 were upgrades. "We are extremely pleased with how much the IMAXnetwork has grown over the past 5 years. We had just 288 commercial theaters in 2009, compared to the 809 we have today," continued Gelfond. "More impressive is that much of that growth has been fueled by China, where we have doubled our network over the past few years while still maintaining the same strong per screen averages. That being said, our growth has truly been global.  We installed 121 theaters across 24 countries in 2014 and our global footprint now spans 62 countries. We will continue our efforts to both expand into new markets and strengthen our presence in existing ones, and to solidify our position as the world's most immersive entertainment experience." The total IMAX® theater network consisted of 934 systems as of December 31, 2014, of which 809 were in commercial multiplexes.  IMAXsigned contracts for 118 theaters in 2014, across 28 countries, resulting in 397 theater systems in backlog as of December 31, 2014, compared to 407 theater systems in backlog as of December 31, 2013.  For a breakdown of theater system signings, installations, network and backlog by type, please see the end of this press release. **Fourth-Quarter Segment Results** * Revenue from sales and sales-type leases was $33.2 millionin the fourth quarter of 2014, compared to $32.6 millionin the fourth quarter of 2013, primarily reflecting the installation of 26 full, new theater systems under sales and sales-type lease arrangements in the most recent fourth quarter, compared to 24 installations in the fourth quarter of 2013.  In addition there were 2 digital system upgrades in existing locations in the fourth quarter of 2014, compared to 4 upgrades in the fourth quarter of 2013. * Revenue from joint revenue-sharing arrangements was $23.0 millionin the quarter, compared to $24.5 millionin the prior-year period.  During the quarter, the Company installed 29 new theaters under joint revenue-sharing arrangements, compared to 30 in the year ago period.  The Company had 451 theaters operating under joint revenue-sharing arrangements as of December 31, 2014, as compared to 382 theaters one year prior. * Production and IMAX DMR® (Digital Re-Mastering) revenues were $25.6 millionin the fourth quarter of 2014, compared to $28.6 millionin the fourth quarter of 2013.  Gross box office from DMR titles was $226.9 millionin the fourth quarter of 2014, compared to $244.5 millionin the prior-year period.  The average global DMR box office per screen in the fourth quarter of 2014 was $292,200compared to $366,300in 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 2014 financial results. To access the call via telephone, interested parties in the US and Canadashould dial (800) 524-8950 approximately 5 to 10 minutes before the call begins.  International callers should dial (416) 260-0113. The conference ID for the call is 7208716. 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 7208716**.** **Shares Subject To Purchase Under Equity Compensation Plans** IMAXannounced that the Computershare Trust Companyof Canada, previously appointed trustee of IMAXequity compensation plans, has been authorized to purchase common shares up to $10 million USDstarting February 25, 2015through December 31, 2015to satisfy obligations under our equity compensation plans.  The Company has no obligation to purchase shares and the Company is committed to retaining the financial strength and flexibility it needs to invest in its core business and ensuring its ability to pursue other opportunities that might arise. **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 IMAXtheaters 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 Dec. 31, 2014, there were 934 IMAXtheaters (809 commercial multiplexes, 19 commercial destinations and 106 institutions) in 62 countries. 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)). _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 wholly-owned 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 the Company's inability to protect the Company's 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; risks related to the Company's dependence on a sole supplier for its analog film; risks related to cybersecurity; 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._ For additional information please contact: **_Investors:_** **IMAX Corporation, New York** **Teri Loxam** 212-821-0100 [tloxam@imax.com](mailto:tloxam@imax.com) **_Business Media:_** Sloane & Company, New York Whit Clay 212-446-1864 [wclay@sloanepr.com](mailto:esloane@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** December 31, 2014 **Years** **Ended December 31,** **Theater Signings:** **2014** **2013** Full new sales and sales-type lease arrangements 81 (1) 56 (1) New joint revenue sharing arrangements 23 190 **Total new theaters** **104** **246** Upgrades of IMAX theater systems 14 (2)(3) 31 (2)(3) **Total Theater Signings** **118** **277** **Years** **Ended December 31,** **Theater Installations:** **2014** **2013** Full new sales and sales-type lease arrangements 46 47 (4) New joint revenue sharing arrangements 67 65 **Total new theaters** **113** **112** Upgrades of IMAX theater systems 8 (3) 21 (4) **Total Theater Installations** **121** **133** **As of December 31,** **Theater Backlog:** **2014** **2013** New sales and sales-type lease arrangements 153 125 New joint revenue sharing arrangements 217 259 **Total new theaters** **370** **384** Upgrades of IMAX theater systems 27 23 **Total Theaters in Backlog** **397** (5)(6) **407** (5)(7) **As of December 31,** **Theater Network:** **2014** **2013** Commercial Multiplex Theaters: Sales and sales-type lease arrangements 358 319 Joint revenue sharing arrangements 451 382 **Total Commercial Multiplex Theaters** **809** **701** Commercial Destination Theaters 19 19 Institutional Theaters 106 117 **Total IMAX Theater Network** **934** **837** (1) Includes three signings which replaced theaters under an existing arrangement in backlog (2013 – three signings) and one new xenon-based digital system under a short-term operating lease arrangement. (2) Includes five signings for the installation of laser-based digital systems in existing theater locations (2013 – 15 signings). (3) Includes three signings and two installations of upgrades to xenon-based digital systems under short-term operating lease arrangements (2013 - 10 signings, 8 installations). (4) Includes the following items: (i) one new xenon-based digital system under a short-term operating lease arrangement in an existing theater location; (ii) one theater system which has increased the Company's institutional theater network; and (iii) one IMAX Private Theater (the first of its kind in the IMAX theater network). (5) Includes 71 laser theater system configurations (2013 – 62), including upgrades and one of which is now operational. The Company continues to develop and roll out its laser projection system. (6) Includes 27 upgrades to a digital theater system, in existing IMAX theater locations (2 xenon and 25 laser, of which 4 are under joint revenue sharing arrangements). (7) Includes 23 upgrades to a digital theater system, in existing IMAX theater locations (3 xenon and 20 laser, of which 4 are under joint revenue sharing arrangements). **Additional Information (continued)** **_2014 DMR Films:_**   In 2014, 40 films were converted through the IMAX DMR process and released to theaters in the IMAXnetwork by film studios as compared to 38 films in 2013. These films were: * _Jack Ryan: Shadow Recruit: The_ IMAX_Experience_ (Paramount Pictures, January 2014); * _I, Frankenstein: An_ IMAX_3D Experience_ (Lionsgate, January 2014);  * _The Monkey King: The_ IMAX_Experience_ (Global Star Productions, January 2014, Chinaonly); * _Robocop: The_ IMAX_Experience_ (Metro-Goldwyn-Mayer Studios, Inc., February 2014); * _300: Riseof an Empire: An_ IMAX_3D Experience_ (Warner Bros. Pictures, March 2014); * _Need for Speed: An_ IMAX_3D Experience_ (Walt Disney Studios, March 2014, select international markets); * _Divergent: The_ IMAX_Experience_ (Summit Entertainment, March 2014); * _Noah: The_ IMAX_Experience_ (Paramount Pictures, March 2014); * _Captain America: The Winter Soldier: An_ IMAX_3D Experience_ (Marvel Entertainment, April 2014); * _Transcendence: The_ IMAX_Experience_ (Warner Bros. Pictures, April 2014); * _The Amazing Spider-Man 2: An_ IMAX_3D Experience_ (Sony Pictures, May 2014); * _Godzilla:_ _An_ IMAX_3D Experience_(Warner Bros. Pictures, May 2014); * _Coming Home: The_ IMAX_Experience_ (Le Vision Pictures, May 2014, China Only); * _Maleficent: An_ IMAX_3D Experience_ (Walt Disney Studios, May 2014); * _Edge of Tomorrow:_ _An_ IMAX_3D Experience_(Warner Bros. Pictures, June 2014); * _How to Train Your Dragon 2: An_ IMAX_3D Experience_ (DreamWorks Animation, June 2014, select international       markets); * _Transformers: Age of Extinction: An_ IMAX_3D Experience_ (Paramount Pictures, June 2014); * _Hercules: An_ IMAX_3D Experience_ (Paramount Pictures, July 2014); * _Lucy: The_ IMAX_Experience_ (Universal Pictures, August 2014); * _The White Haired Witch of Lunar Kingdom: An_ IMAX_3D Experience_ (Bona Film Group, August 2014, Chinaonly); * _Guardians of the Galaxy: An_ IMAX_3D Experience_ (Walt Disney Studios, August 2014); * _Teenage Mutant Ninja Turtles: An_ IMAX_3D Experience_ (Paramount Pictures, August 2014); * _The Expendables 3: The_ IMAX_Experience_ (Lionsgate, September 2014, Chinaonly); * _Forrest Gump: The_ IMAX_Experience_ (Paramount Pictures, September 2014); * _The Maze Runner: The_ IMAX_Experience_ (20th Century Fox, September 2014); * _The Equalizer: The_ IMAX_Experience_ (Sony Pictures, September 2014); * _Breakup Buddies: The_ IMAX_Experience_ (China Film Group, September 2014, Chinaonly); * _Bang Bang: The_ IMAX_Experience_ (Fox Star Studios, October 2014, Indiaonly); * _Dracula Untold: The_ IMAX_Experience_ (Universal Studios, October 2014); * _John Wick: The_ IMAX_Experience_ (Summit Entertainment, October 2014); * _Fury: The_ IMAX_Experience_ (Sony Pictures Entertainment, October 2014, select international markets); * _Interstellar: The_ IMAX_Experience_ (Paramount Picturesand Warner Bros. Pictures, November 2014); * _Big Hero 6:_ _An_ IMAX_3D Experience_ (Walt Disney Studios, November 2014, select international markets); * _Penguins of Madagascar:_ _An_ IMAX_3D Experience_ (20th Century Fox, November 2014, select international markets); * _Exodus: Gods and Kings:_ _An_ IMAX_3D Experience_ (20th Century Fox, December 2014, select international markets); * _The Hobbit: The Battle of the Five Armies: An IMAX 3D Experience_ (Warner Bros. Pictures, December 2014); * _Gone with the Bullets: An_ IMAX_3D Experience_ (Dongwang Yibudaowei Films Co., December 2014, Chinaonly); * _Seventh Son: An_ IMAX_3D Experience_ (Universal Studios, December 2014, Chinaonly); * _The Crossing Part 1: An_ IMAX_3D Experience_(LeVision, December 2014, Chinaonly); and * _Night at the Museum: Secret of the Tomb:_ _An_ IMAX_3D Experience_ (20th Century Fox, December 2014, select international markets). **_2015 DMR Films:_**   To date, the Company has announced the following 26 DMR titles to be released in 2015 to the IMAXtheater network. 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 titles will be released to the IMAXtheater network in 2015 to the films that were released to the IMAXtheater network in 2014. * _Taken 3:__The_ IMAX_Experience_(20th Century Fox, January 2015, select international markets); * _American Sniper: The_ IMAX_Experience_ (Warner Bros. Pictures, January 2015); * _Game of Thrones: The_ IMAX_Experience_ (Season 4, Episodes 9 and 10)(Warner Bros. Pictures, January 2015, Domestic Only); * _Kingsman: The Secret Service: The_ IMAX_Experience_ (20th Century Fox, January 2015, international only); * _Seventh Son: An_ IMAX_3D Experience_ (Universal Studios, January 2015); * _Jupiter Ascending:__An_ IMAX_3D Experience_ (Warner Bros. Pictures, February 2015); * _Fifty Shades of Grey: The_ IMAX_Experience_ (Universal Studios, February 2015, Domestic only); * _Wolf Totem: The_ IMAX_Experience_ (China Film Group, February 2015, Chinaonly); * _Dragon Blade: An_IMAX_3D Experience_ (Shanghai Film Group, February 2015, Chinaonly); * _Focus: The_ IMAX_Experience_ (Warner Bros. Pictures, February 2015); * _Chappie:__The_ IMAX_Experience_ (Sony Pictures Entertainment, March 2015); * _Cinderella: The_ IMAX_Experience_ (Walt Disney Studios, March 2015); * _The Divergent Series: Insurgent:_ _An_ IMAX_3D Experience_ (Summit Entertainment, March 2015); * _Furious 7: The_ IMAX_Experience_ (Universal Studios, April 2015); * _Dragon Ball Z: Revival of 'F': An_ IMAX_3D Experience_(Toei Animation, April 2015, Japanonly);  * _The Avengers: Age of Ultron: An_ IMAX_3D Experience_ (Walt Disney Studios, May 2015); * _Tomorrowland: The_ IMAX_Experience_ (Walt Disney Studios, May 2015); * _Jurassic World: An_ IMAX_3D Experience_ (Universal Studios, June 2015); * _Terminator Genisys: The_ IMAX_Experience_ (Paramount Pictures, July 2015); * _Mission: Impossible 5: The_ IMAX_Experience_ (Paramount Pictures, July 2015); * _Crouching Tiger, Hidden Dragon: The Green Legend: The_ IMAX_Experience_ (China Film Group, August 2015, Select Markets); * _Everest: An_ IMAX_3D Experience_ (Universal Studios, September 2015); * _The Walk: The_ IMAX_Experience_ (Sony Pictures Entertainment, October 2015); * _Crimson Peak: The_ IMAX_Experience_ (Universal Studios, October 2015); * _The Hunger Games: Mockingjay Part 2: An_ IMAX_3D Experience_ (Lionsgate, November 2015); and * _Star Wars: The Force Awakens: An_ IMAX_3D Experience_ (Walt Disney Studios, December 2015). **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,** **2014** **2013** **2014** **2013** **Revenues**  Equipment and product sales  $ 41,084 $ 38,014 $ 78,705 $ 78,663 Services  40,794 42,463 142,607 139,464 Rentals  18,427 22,511 60,705 61,293 Finance income  2,152 2,063 8,524 8,142 Other  \- \- \- 375 102,457 105,051 290,541 287,937 **Costs and expenses applicable to revenues**  Equipment and product sales 17,871 16,956 36,997 37,517 Services 15,910 15,483 62,228 68,844 Rentals  4,932 5,286 17,928 16,973 38,713 37,725 117,153 123,334 **Gross margin**  63,744 67,326 173,388 164,603 Selling, general and administrative expenses 24,937 23,305 93,260 84,854 (including share-based compensation expense of $3.8 million and $15.1 million for the three months and year ended December 31, 2014, respectively (2013 - expense of $3.2 million and $11.9 million, respectively)) Gain on curtailment of postretirement benefit plan  \- \- \- (2,185) Research and development  4,628 3,504 16,096 14,771 Amortization of intangibles  465 472 1,724 1,618 Receivable provisions, net of recoveries  276 166 918 445 Asset impairments  314 \- 314 \- Impairment of investments  2,556 \- 3,206 \- **Income from operations** 30,568 39,879 57,870 65,100 Interest income  216 16 405 55 Interest expense  (121) (338) (924) (1,345) **Income from operations before income taxes** 30,663 39,557 57,351 63,810 Provision for income taxes  (7,799) (9,927) (14,466) (16,629) Loss from equity-accounted investments, net of tax  (350) (1,759) (1,071) (2,757) **Income from continuing operations**  22,514 27,871 41,814 44,424 (Loss) income from discontinued operations, net of tax  \- (42) 355 (309) **Net Income** 22,514 27,829 42,169 44,115 Less: Net income attributable to non-controlling interests  (1,522) \- (2,433) \- **Net Income attributable to common shareholders** $ 20,992 $ 27,829 $ 39,736 $ 44,115 **Net income per share - Basic:**  Net income per share from continuing operations  $ 0.30 $ 0.41 $ 0.57 $ 0.66 Net income per share from discontinued operations  \- \- 0.01 \- $ 0.30 $ 0.41 $ 0.58 $ 0.66 **Net income per share - Diluted:** Net income per share from continuing operations  $ 0.30 $ 0.40 $ 0.56 $ 0.64 Net income per share from discontinued operations  \- \- \- \- $ 0.30 $ 0.40 $ 0.56 $ 0.64 Weighted average number of shares outstanding (000's):  Basic  68,769 67,696 68,346 67,151 Fully Diluted  69,958 69,334 69,754 68,961 Additional Disclosure:  Depreciation and amortization(1) $ 9,819 $ 8,145 $ 33,756 $ 37,172 (1) Includes $0.1 million and $0.5 million of amortization of deferred financing costs charged to interest expense for the three months and year ended December 31, 2014 (2013 - $0.1 million and $0.5 million respectively). **IMAX CORPORATION** **CONSOLIDATED BALANCE SHEETS** **In accordance with United States Generally Accepted Accounting Principles** _(In thousands of U.S. dollars)_ **As at December 31,** **2014** **2013** **Assets** Cash and cash equivalents $ 106,503 $ 29,546 Accounts receivable, net of allowance for doubtful accounts of $947 (December 31, 2013 — $887) 76,051 73,074 Financing receivables  105,700 107,110 Inventories  17,063 9,825 Prepaid expenses 4,946 3,602 Film assets  15,163 7,076 Property, plant and equipment  183,424 132,847 Other assets  23,047 27,034 Deferred income taxes 23,058 24,259 Other intangible assets  27,551 27,745 Goodwill 39,027 39,027 **Total assets** **$** **621,533** **$** **481,145** **Liabilities** Bank indebtedness  $ 4,710 $ \- Accounts payable 26,145 19,396 Accrued and other liabilities  75,425 65,232 Deferred revenue 88,566 76,932 **Total liabilities** **194,846** **161,560** **Commitments and contingencies** **Non-controlling interests** **43,912** \- **Shareholders' equity** Capital stock common shares — no par value. Authorized — unlimited number. Issued and outstanding — 68,988,050 (December 31, 2013 — 67,841,233) 344,862 327,313 Other equity 47,319 36,452 Accumulated deficit (6,259) (43,051) Accumulated other comprehensive loss (3,147) (1,129) **Total shareholders' equity** **382,775** **319,585** **Total liabilities and shareholders' equity** **$** **621,533** **$** **481,145** **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,** **2014** **2013** **Cash provided by (used in):** **Operating Activities** Net income $ 42,169 $ 44,115 (Income) loss from discontinued operations  (355) 309 Adjustments to reconcile net income to cash from operations: Depreciation and amortization  33,756 37,172 Write-downs, net of recoveries  5,294 1,336 Change in deferred income taxes 627 12,899 Stock and other non-cash compensation 15,467 12,685 Unrealized foreign currency exchange loss 1,180 1,183 Gain on curtailment of postretirement benefit plan \- (2,185) Loss from equity-accounted investments 1,774 2,757 Gain on non-cash contribution to equity-accounted investees  (703) \- Investment in film assets (19,233) (20,935) Changes in other non-cash operating assets and liabilities  6,057 (33,755) Net cash provided by (used in) operating activities from discontinued operations  572 (548) **Net cash provided by operating activities** **86,605** **55,033** **Investing Activities** Purchase of property, plant and equipment (40,104) (13,016) Investment in joint revenue sharing equipment (16,838) (22,775) Investment in new business ventures (2,500) (4,000) Proceeds from sale of business ventures 507 \- Acquisition of other intangible assets (2,918) (2,486) **Net cash used in investing activities** **(61,853)** **(42,277)** **Financing Activities** Increase in bank indebtedness  4,710 12,000 Repayment of bank indebtedness \- (23,000) Issuance of subsidiary shares to non-controlling interests   44,551 \- Share issuance costs from the issuance of subsidiary shares to non-controlling interests (3,556) \- Repurchase of common shares (3,063) \- Common shares issued - stock options exercised  10,834 8,970 Settlement of restricted share units   (790) \- Credit Facility amendment fees paid (427) (2,151) Share issuance expenses \- (202) **Net cash provided by (used in) financing activities** **52,259** **(4,383)** Effects of exchange rate changes on cash (54) (163) **Increase in cash and cash equivalents during year** **76,957** **8,210** **Cash and cash equivalents, beginning of year** **29,546** **21,336** **Cash and cash equivalents, end of year** **$** **106,503** **$** **29,546** **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 is comprised of the design, manufacture, sale or lease IMAX theater projection system equipment. The theater system maintenance segment consists of the maintenance of IMAX theater projection system equipment in the IMAX theater network. The joint revenue sharing arrangements segment is comprised of the installation IMAX theater projection system equipment to an exhibitor in exchange for a certain percentage of box-office receipts, concession revenue and in some cases a small upfront or initial payment. The film production and IMAX DMR segment is comprised of the production of films and 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 includes the provision of 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** **Year Ended** **Ended December 31,** **Ended December 31,** **2014** **2013** **2014** **2013** **Revenue**  **IMAX Theater Systems** IMAX Systems  Sales and sales-type leases  $ 33,246 $ 32,623 $ 58,875 $ 65,944 Ongoing rent, fees, and finance income  3,845 4,134 14,117 14,245 Other  3,747 3,838 12,154 11,182 40,838 40,595 85,146 91,371 Theater system maintenance  8,658 8,134 34,042 31,978 Joint revenue sharing arrangements  22,961 24,458 68,418 64,130 **Film** Production and IMAX DMR  25,587 28,642 83,172 83,496 Film distribution and post-production  4,413 3,222 19,763 16,962 30,000 31,864 102,935 100,458 **Total** $ 102,457 $ 105,051 $ 290,541 $ 287,937 **Gross margins**  **IMAX Theater Systems** IMAX systems(1) Sales and sales-type leases  $ 20,322 $ 19,262 $ 34,483 $ 35,652 Ongoing rent, fees, and finance income  3,646 3,630 13,445 13,388 Other  331 (273) 129 102 24,299 22,619 48,057 49,142 Theater system maintenance  3,385 2,664 12,375 12,096 Joint revenue sharing arrangements(1) 14,671 17,769 44,714 44,565 **Film** Production and IMAX DMR(1) 19,745 23,344 62,922 56,088 Film distribution and post-production  1,644 930 5,320 2,712 21,389 24,274 68,242 58,800 **Total** $ 63,744 $ 67,326 $ 173,388 $ 164,603 (1) IMAX systems include marketing and commission costs of $1.5 million and $2.7 million for the three and twelve months ended December 31, 2014, respectively (2013 — $1.5 million and $2.5 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $1.1 million and $3.2 million for the three and twelve months ended December 31, 2014, respectively (2013 — $1.6 million and $3.6 million, respectively). Production and DMR segment margins include marketing costs of $1.8 million and $7.1 million for the three and twelve months ended December 31, 2014, respectively (2013 — $1.1 million and $4.2 million, respectively). Distribution segment margins include marketing costs of $0.1 million recovery and $0.6 million expense for the three and twelve months ended December 31, 2014, respectively (2013 — $0.2 million and $0.4 million, respectively). **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. Adjusted EBITDA is calculated on a basis consistent with the Company's Credit Facility, which refers to Adjusted EBITDA as EBITDA. The Credit Facility provides that the Company will be required to maintain a Fixed Charge Coverage Ratio (as defined in the credit agreement) of not less than 1.1:1. The Company will also be required to maintain minimum EBITDA (as defined in the credit agreement) of $90.0 million on December 31, 2014, which requirement increases to $100.0 million on December 31, 2015. The Company must also maintain a Maximum Total Leverage Ratio (as defined in the credit agreement) of 2.00:1 on December 31, 2014, which requirement decreases to 1.75:1 on December 31, 2015. The Company was in compliance with all of these requirements at December 31, 2014. The ratio of total debt to EBITDA was 0.04:1 as at December 31, 2014, 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 $4.7 million. EBITDA is calculated as follows: **For the** **For the** **3 months ended** **12 months ended** **December 31, 2014** **December 31, 2014**(1) **_(In thousands of U.S. Dollars)_** Net income $ 22,514 $ 42,169 Add: Loss from equity-accounted investments 350 1,071 Provision for income taxes(2) 7,799 14,683 Interest (recovery) expense, net of interest income (95) 519 Depreciation and amortization, including film asset amortization 9,687 33,230 Write-downs, net of recoveries and receivable provisions 3,541 5,294 Stock and other non-cash compensation 3,858 15,467 EBITDA attributable to non-controlling interests(3) (2,161) (3,937) **Adjusted EBITDA** $ 45,493 $ 108,496 (1) Ratio of total debt calculated using twelve months ended EBITDA. (2) Includes a tax expense in discontinued operations of $0.2 million. (3) The EBITDA calculation specified for purposes 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 December 31, 2014 vs. 2013:_** The Company reported net income of $22.5 million or $0.32 per basic and diluted share for the year ended December 31, 2014 as compared to $27.8 million or $0.41 per basic share and $0.40 per diluted share for the year ended December 31, 2013. Net income for the year ended December 31, 2014 includes a $3.8 million charge or $0.05 per diluted share (2013 — $3.2 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 $25.8 million or $0.36 per diluted share for the year ended December 31, 2014 as compared to adjusted net income of $30.8 million or $0.44 per diluted share for the year ended December 31, 2013. 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 $24.2 million or $0.34 per diluted share for the year ended December 31, 2014 as compared to adjusted net income attributable to common shareholders of $30.8 million or $0.44 per diluted share for the year ended December 31, 2013. 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 December 31,** **2014** **2013** **Net Income** **Diluted EPS** **Net Income** **Diluted EPS** Reported net income $ 22,514 $ 0.32 (1) $ 27,829 $ 0.40 Adjustments: Stock-based compensation 3,800 0.05 3,156 0.04 Tax impact on items listed above (563) (0.01) (185) \- Adjusted net income 25,751 0.36 30,800 0.44 Net income attributable to non-controlling interests (1,522) (0.02) \- \- Adjusted net income attributable to common shareholders $ 24,229 $ 0.34 (1) $ 30,800 $ 0.44 Weighted average diluted shares outstanding 69,958 69,334 **_Adjusted Net Income and Adjusted Diluted Per Share Calculations – Year Ended December 31, 2014 vs. 2013:_** The Company reported net income of $42.2 million or $0.61 per basic share and $0.59 per diluted share for the year ended December 31, 2014 as compared to net income of $44.1 million or $0.66 per basic share and $0.64 per diluted share for the year ended December 31, 2013. Net income for the year ended December 31, 2014 includes a $15.1 million charge or $0.22 per diluted share (2013 — $11.9 million or $0.17 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 $54.9 million or $0.78 per diluted share for the year ended December 31, 2014 as compared to adjusted net income of $55.7 million or $0.81 per diluted share for the year ended December 31, 2013. 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 $52.5 million or $0.75 per diluted share for the year ended December 31, 2014 as compared to adjusted net income attributable to common shareholders of $55.7 million or $0.81 per diluted share for the year ended December 31, 2013. 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: **Year Ended December 31,** **2014** **2013** **Net Income** **Diluted EPS** **Net Income** **Diluted EPS** Reported net income $ 42,169 $ 0.59 (1) $ 44,115 $ 0.64 Adjustments: Stock-based compensation 15,128 0.22 11,928 0.17 Tax impact on items listed above (2,370) (0.03) (344) \- Adjusted net income 54,927 0.78 55,699 0.81 Net income attributable to non-controlling interests (2,433) (0.03) \- \- Adjusted net income attributable to common shareholders $ 52,494 $ 0.75 (1) $ 55,699 $ 0.81 Weighted average diluted shares outstanding 69,754 68,961 (1) Includes impact of $0.1 million of accretion charges associated with redeemable common stock (2) Includes impact of $0.4 million of accretion charges associated with redeemable common stock. **_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** **3 months ended** **12 months ended** **December 31, 2014** **December 31, 2014** **_(In thousands of U.S. Dollars)_** Net cash provided by operating activities $ 14,735 $ 86,605 Net cash used in investing activities (16,780) (61,853) Free cash flow $ (2,045) $ 24,752 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-fourth-quarter-and-full-year-2014-financial-results-300038252.html](http://www.prnewswire.com/news-releases/imax-corporation-reports-fourth-quarter-and-full-year-2014-financial-results-300038252.html) SOURCE IMAX Corporation