--- title: IMAX Corporation Reports Fourth-Quarter And Full-Year 2016 Results publisher: "IMAX" description: "NEW YORK , Feb. 23, 2017 /PRNewswire/ -- HIGHLIGHTS Installed 166 new IMAX® theatres during 2016, up 22% vs. prior year, bringing the IMAX theatre network count to 1,215 screens across 75 countries Signed agreements for record 319 IMAX theatre systems during 2016, up from 138 signings in 2015 Ended" canonical: "https://www.imax.com/pr/imax-corporation-reports-fourth-quarter-and-full-year-2016" date: 2017-02-23 last_updated: 2017-02-23 --- IMAX Corporation Reports Fourth-Quarter And Full-Year 2016 Results ================================================================== Thu, Feb 23, 2017 NEW YORK, Feb. 23, 2017/PRNewswire/ -- ![](https://mma.prnewswire.com/media/74988/imax_corporation_logo.jpg) HIGHLIGHTS * Installed 166 new IMAX® theatres during 2016, up 22% vs. prior year, bringing the IMAXtheatre network count to 1,215 screens across 75 countries * Signed agreements for record 319 IMAXtheatre systems during 2016, up from 138 signings in 2015 * Ended year with 498 theatres in backlog, up 34% vs. prior year * Company provides 2017 installation guidance range of approximately 150-155 new systems * Opened flagship IMAX Virtual Reality Centre in Los Angelesin January of 2017, with an additional five pilot centres signed and scheduled to be open in coming months **IMAX Corporation(NYSE:IMAX)**today reported fourth-quarter 2016 revenue of $106.9 millionand net income attributable to common shareholders of $8.9 million, or $0.13per diluted share. Full year 2016 revenue was $377.3 millionand net income attributable to common shareholders was $28.8 million, or $0.42per diluted share. Adjusted net income attributable to common shareholders for the fourth quarter and full year was $0.22per diluted share and $0.73per diluted share, respectively. For reconciliations of reported results to non-GAAP financial results, and for the definition and reconciliation of Adjusted EBITDA as calculated in accordance with the Company's credit facility, please see the end of this press release. "2016 was an impressive year for IMAXon several strategic fronts: our footprint grew 15%, we signed a record 319 new theatre agreements, and we further established IMAXas a leader in the entertainment industry through two key growth initiatives – original content and virtual reality," said IMAXCEO Richard L. Gelfond. "We're extremely optimistic on the theatrical side of the business, where demand for IMAXhas hit record levels. With a global footprint of 1,215 theatres in 75 countries and a promising blockbuster-driven 2017 film slate that features more IMAXdifferentiation than any year in our history, we believe we're extremely well positioned for future growth." **Fourth-Quarter 2016 Results** **Network Update **During the quarter, the Company installed 73 theatres, of which 70 were for new theatre locations and 3 were upgrades. The Company also signed contracts for 26 theatres in the fourth quarter of 2016. The total IMAXtheatre network consisted of 1,215 systems as of Dec. 31, 2016, of which 1,107 were in commercial multiplexes. For a breakdown of theatre system signings, installations, network and backlog by type, please see the end of this press release. **Box Office Update **Gross box office from IMAX DMR titles was $246.5 millionin the fourth quarter of 2016, compared with $288.4 millionin the prior-year period. The average global DMR box office per-screen average in the fourth quarter of 2016 was $233,300, compared with $318,600in same period last year. **Fourth-Quarter Segment Results** * Revenue from sales and sales-type leases was $31.0 millionin the fourth quarter of 2016, compared with $33.0 millionin the fourth quarter of 2015. The Company installed 23 full theatre systems under sales and sales-type lease arrangements in the most recent quarter, compared with the 24 full sales-type theatres the Company installed in the fourth quarter of 2015. The Company also recognized one laser upgrade under a sales-type lease arrangement in the most recent quarter, compared to two in the same period last year. Gross margin for sales and sales-type leases was 58.9% vs. 60.7% in the year ago period, primarily a result of lower margins from the installation of laser-based digital systems. The Company's margins on full, new sales and sales-type leases was 62.6% in the most recent quarter. * Revenue from joint revenue-sharing arrangements was $24.5 millionin the quarter, compared with $31.9 millionin the prior-year period. During the quarter, the Company installed 46 new theatres under joint revenue-sharing arrangements, compared with 32 new theatres in the fourth quarter of 2015. The Company had 640 theatres operating under joint revenue-sharing arrangements as of Dec. 31, 2016, as compared to 529 theatres one year prior. Gross margin for joint revenue-sharing arrangements was 61.8%, compared to 67.7% in the prior-year period. Revenue and gross margin results primarily reflected lower box office revenue and FX headwinds. * Production and DMR revenues were $27.6 millionin the fourth quarter of 2016, compared with $31.9 millionin the fourth quarter of 2015. Gross margin for the Production and DMR segment was 60.8%, compared to 68.9% in the prior-year period, primarily a result of lower box office revenue, higher marketing costs and FX headwinds. * Gross margin across all segments in the fourth quarter of 2016 was 51.7%, compared to 60.2% in the fourth quarter of 2015, mainly due to lower box office, upfront costs associated with heightened installation activity and FX headwinds. * Operating expenses (which includes SG&A and R&D, and excludes stock-based compensation) were $28.7 millionin the quarter, compared to $29.2 millionin the fourth quarter of 2015 and consistent with guidance disclosed on the Q3 2016 call. **Full-Year 2016 Results **Full-year 2016 revenue was $377.3 millionas compared to 2015 revenue of $373.8 million. Reported net income attributable to common shareholders was $28.8 million, or $0.42per diluted share, as compared to $55.8 millionor $0.78per diluted share in 2015. Adjusted net income attributable to common shareholders was $50.0 millionas compared to $73.0 millionin 2015, or $0.73per diluted share as compared to $1.02per diluted share in 2015 Adjusted EBITDA, as calculated in accordance with the Company's credit facility, was $121.9 millionin 2016 as compared to $140.8 millionin 2015.  The Company also reported a global 2016 per-screen average of $963,800, as compared to $1,155,800in the prior year. The full-year installations total grew to 182 theatre systems, of which 16 were upgrades, compared with 154 and 18, respectively, in the prior-year period. IMAXsigned contracts for 319 theatres in 2016, across 28 countries, resulting in 498 theatre systems in backlog as of Dec. 31, 2016, compared to 372 theatre systems in backlog as of Dec. 31, 2015. The Company's top three markets for signings were China, the United Statesand France. For a breakdown of theatre system signings, installations, network and backlog by type, please see the end of this press release. "In terms of new business opportunities, we formed a ground-breaking partnership with Marvel and ABCto exclusively launch the first two episodes of the television series Marvel's _Inhumans_across the global IMAXnetwork ahead of its premiere on ABCand in international markets later this year. We are excited to have an equity interest in the venture and we believe this approach could help facilitate quicker international syndication," Gelfond said. "We've also taken a giant step forward in establishing location-based VR with the launch of our $50 millionVR content fund and several new innovative technology and content partnerships," he continued. "Last month, we opened our flagship pilot IMAX VR Centre in Los Angeles, which has already had more than 7,000 unique, satisfied visitors. We also signed agreements to open five new VR pilot centres in China, the U.K.and the U.S. by year-end. While this venture is still in its pilot phase, we are extremely encouraged by the initial results and look forward to getting the additional locations up and running over the coming months." **Share Buybacks **In 2016, the Company repurchased 3,849,222 common shares under the Company's repurchase program at an average price of $30.25per share. The retired shares were purchased for $116.5 million. The Company has $46.3 millionavailable under its approved repurchase program. **Supplemental Materials **For more information about our results, please refer to the IMAX Investor Relations website located at [www.imax.com/content/investor-relations](http://www.imax.com/content/investor-relations). **Investor Relations Website and Social Media **On a weekly basis, the Company posts quarter-to-date box office results on the IMAX Investor Relations website located at [www.imax.com/content/investor-relations](http://www.imax.com/content/investor-relations). The Company expects to provide such updates on Friday of each week, although the Company may change this timing without notice. Results will be displayed with a one week lag. In addition, the Company maintains a Twitter account: @IMAX\_Investors. The Company intends to use Twitter to disclose the box office information, as well as other information that may be of interest to the Company's investor community. The information posted on the Company's Investor Relations website and/or via its Twitter account may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's website and its Twitter account in addition to the Company's press releases, SECfilings and public conference calls and webcasts. **Conference Call **The Company will host a conference call today at 4:30 PM ETto discuss its fourth-quarter and full-year 2016 financial results. To access the call via telephone, interested parties in the US and Canadashould dial (800) 274-0251 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 794-1827. The conference ID for the call is 6312959. A replay of the call will be available via webcast on the IMAX Investor Relations website located at [www.imax.com/content/investor-relations](http://www.imax.com/content/investor-relations)or via telephone by dialing (888) 203-1112 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 6312959. **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 Dec. 31, 2016, there were 1,215 IMAXtheatres (1,107 commercial multiplexes, 16 commercial destinations and 92 institutions) in 75 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)). _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,__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 signing of theater system agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; 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; 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) Michael Mougias 212-821-0187 [mmougias@imax.com](mailto:mmougias@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, 2016 **Year Ended December 31,** **Theater Signings:** **2016** **2015** Full new sales and sales-type lease arrangements 61 55 (1) New joint revenue sharing arrangements 253 78 **Total new theaters** **314** **133** Upgrade of IMAX theater systems 5 5 **Total Theater Signings** **319** **138** **Year Ended December 31,** **Theater Installations:** **2016** **2015** Full new sales and sales-type lease arrangements 56 (2) 56 (2) New joint revenue sharing arrangements 109 80 Operating lease arrangements 1 \- **Total new theaters** **166** **136** Upgrade of IMAX theater systems 16 (3)(4) 18 (3)(4) **Total Theater Installations** **182** **154** **As of December 31,** **Theater Backlogs:** **2016** **2015** New sales and sales-type lease arrangements 143 160 New joint revenue sharing arrangements Hybrid arrangements 92 117 Traditional arrangements 263 95 **Total new theaters** **498** (5)(6) **372** (5)(7) **As of December 31,** **Theater Network:** **2016** **2015** Commercial Multiplex Theaters: Sales and sales-type lease arrangements 467 414 Joint revenue sharing arrangements 640 529 **Total Commercial Multiplex Theaters** **1,107** **943** Commercial Destination Theaters 16 19 Institutional Theaters 92 99 **Total Theater Network** **1,215** **1,061** \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (1) Includes four signings which replaced theaters under an existing arrangement in backlog. (2) Includes one used theater system (2015 – one used theater system). (3) Includes 14 installations of an upgrade to a laser-based digital system, 12 under sales and sales-type lease arrangement and two under joint revenue sharing arrangements (2015 – 16 laser-based digital systems, ten under sales and sales-type lease arrangements, one under a short-term operating lease arrangement and five under joint revenue sharing arrangements). (4) Includes two installations of an upgrade to a xenon-based digital system under sales arrangements (2015 – two xenon-based digital systems, one under a sales and sales-type lease arrangement and one under a short-term operating lease arrangement). (5) Includes 20 laser-based digital theater system configurations (2015 – 24), including upgrades. The Company continues to develop and roll out its laser-based digital projection system. (6) Includes three upgrades to a laser-based digital theater system, in existing IMAX theater locations. (7) Includes 15 upgrades to a digital theater system, in existing IMAX theater locations (two xenon configurations and 13 laser configurations). **2017 DMR Films:** To date, the Company has announced the following 26 DMR titles to be released in 2017 to the IMAXtheater network. The Company remains in active negotiations with all of the major Hollywoodstudios, as well as international studios, for additional films to fill out its short and long-term film slate, and anticipates that the number of IMAX DMR films to be released to the IMAXnetwork in 2017 will be similar to the IMAX DMR films released to the IMAXnetwork in 2016. * Your Name: The IMAX Experience (Toho Co., Ltd., January 2017); * xXx: Return of Xander Cage: The IMAX Experience (Paramount Pictures, January 2017); * Resident Evil: The Final Chapter: The IMAX Experience (Sony Pictures, February 2017); * Attraction: The IMAX Experience (Art Pictures Studio, January 2017, Russiaonly); * Journey to The West: The Demons Strike Back: The IMAX Experience (Alibaba Pictures Group, January 2017); * The Lego Batman Movie: The IMAX Experience (Warner Bros. Pictures, February 2017); * Sing: The IMAX Experience (Universal Pictures, February 2017, Chinaand Japanonly); * Logan: The IMAX Experience (20th Century Fox, March 2017); * Kong: Skull Island: The IMAX Experience (Warner Bros. Pictures, March 2017); * Beauty and The Beast: The IMAX Experience (Walt Disney Studios, March 2017); * Ghost in the Shell: The IMAX Experience (Paramount Pictures, March 2017); * The Fate of the Furious: The IMAX Experience (Universal Pictures, April 2017); * Guardians of the Galaxy Vol. 2: The IMAX Experience (Walt Disney Studios, May 2017); * Pirates of the Caribbean: Dead Men Tell No Tales: The IMAX Experience (Walt Disney Studios, May 2017); * Wonder Woman: The IMAX Experience (Warner Bros. Pictures, June 2017); * The Mummy: The IMAX Experience (Universal Pictures, June 2017); * Transformers: The Last Knight: The IMAX Experience (Paramount Pictures, June 2017); * Spider-Man: Homecoming: The IMAX Experience (Sony Pictures\-distributed and Marvel Studios and Sony Pictures\- produced, July 2017); * Dunkirk: The IMAX Experience (Warner Bros. Pictures, July 2017); * The Solutrean: The IMAX Experience (Sony Pictures, September 2017); * The Lego Ninjago Movie: The IMAX Experience (Warner Bros. Pictures, September 2017); * Blade Runner 2049: The IMAX Experience (Warner Bros. Pictures, October 2017); * Geostorm: The IMAX Experience (Warner Bros. Pictures, October 2017); * Thor: Ragnarök: The IMAX Experience (Walt Disney Studios, November 2017); * Justice League: The IMAX Experience (Warner Bros. Pictures, November 2017); and * Star Wars: The Last Jedi: The IMAX Experience (Walt Disney Studios, December 2017). In addition, in conjunction with Marvel and Disney|ABC Television Group, the Company will be co-producing and exclusively premiering the new ABCseries "Marvel's Inhumans" in IMAXtheaters. The first two episodes of the series are expected to run worldwide exclusively in IMAXtheaters for two weeks in September 2017, and several weeks later, the series will premiere on the ABCnetwork. The Company will have an equity participation both in the pilot and in the television series, representing the first time the Company will have an economic interest in a television property. **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** **Years Ended** **Ended December 31,** **Ended December 31,** **2016** **2015** **2016** **2015** **Revenues** Equipment and product sales $ 41,318 $ 46,113 $ 122,382 $ 118,937 Services 44,009 46,266 166,862 161,964 Rentals 18,777 24,645 77,315 83,651 Finance income 2,509 2,309 9,500 9,112 Other 300 \- 1,275 141 **106,913** **119,333** **377,334** **373,805** **Costs and expenses applicable to revenues** Equipment and product sales 20,605 20,625 69,680 63,635 Services 25,263 20,654 83,780 70,855 Rentals 5,719 6,171 21,086 20,027 Other \- \- 110 \- **51,587** **47,450** **174,656** **154,517** **Gross margin** **55,326** **71,883** **202,678** **219,288** Selling, general and administrative expenses 32,039 32,997 124,745 115,345 (including share-based compensation expense of $8.0 million and $30.5 million for the three months and year ended December 31, 2016, respectively (2015 - expense of $7.0 million and $21.9 million, respectively)) Research and development 4,712 3,119 16,315 12,730 Amortization of intangibles 542 558 2,079 1,860 Receivable provisions, net of recoveries 323 43 954 752 Asset (recoveries) impairments (1,000) 235 417 830 **Income from operations** **18,710** **34,931** **58,168** **87,771** Interest income 273 241 1,490 968 Interest expense (480) (491) (1,805) (1,661) **Income from operations before income taxes** **18,503** **34,681** **57,853** **87,078** Provision for income taxes (6,577) (7,644) (16,212) (20,052) Gain (loss) from equity-accounted investments, net of tax 150 (792) (2,321) (2,402) **Net income** **12,076** **26,245** **39,320** **64,624** Less: net income attributable to non-controlling interests (3,131) (3,752) (10,532) (8,780) **Net income attributable to common shareholders** **$** **8,945** **$** **22,493** **$** **28,788** **$** **55,844** **Net income per share attributable to common shareholders - basic and diluted:** **$** **0.14** **$** **0.33** **$** **0.43** **$** **0.79** **$** **0.13** **$** **0.32** **$** **0.42** **$** **0.78** Weighted average number of shares outstanding (000's): Basic 66,152 69,364 67,575 69,526 Fully Diluted 66,950 70,764 68,263 71,058 Additional Disclosure: Depreciation and amortization(1) $ 12,306 $ 11,612 $ 46,485 $ 42,803 (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, 2016 (2015 - $0.4 million and $1.0 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,** **2016** **2015** **Assets** Cash and cash equivalents $ 204,759 $ 317,449 Accounts receivable, net of allowance for doubtful accounts of $1,250 (December 31, 2015 — $1,146) 96,349 97,981 Financing receivables 122,125 117,231 Inventories 42,121 38,753 Prepaid expenses 6,626 6,498 Film assets 16,522 14,571 Property, plant and equipment 245,415 218,267 Other assets 33,195 26,136 Deferred income taxes 20,779 25,766 Other intangible assets 30,416 28,950 Goodwill 39,027 39,027 **Total assets** **$** **857,334** **$** **930,629** **Liabilities** Bank indebtedness $ 27,316 $ 29,276 Accounts payable 19,990 23,455 Accrued and other liabilities 93,208 95,748 Deferred revenue 90,266 104,993 **Total liabilities** **230,780** **253,472** **Commitments and contingencies** **Non-controlling interests** **4,980** **3,307** **Shareholders' equity** Capital stock common shares — no par value. Authorized — unlimited number. 66,224,467 — issued and 66,159,902 — outstanding (December 31, 2015 — 69,673,244 — issued and outstanding) 439,213 448,310 Less: Treasury stock, 64,565 shares at cost (December 31, 2015 – nil) (1,939) \- Other equity 177,304 163,094 Accumulated (deficit) earnings (47,366) 19,930 Accumulated other comprehensive loss (5,200) (7,443) **Total shareholders' equity attributable to common shareholders** **562,012** **623,891** Non-controlling interests 59,562 49,959 **Total shareholders' equity** **621,574** **673,850** **Total liabilities and shareholders' equity** **$** **857,334** **$** **930,629** **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,** **2016** **2015** **Cash provided by (used in):** **Operating Activities** Net income $ 39,320 $ 64,624 Adjustments to reconcile net income to cash from operations: Depreciation and amortization 46,485 42,803 Write-downs, net of recoveries 5,940 3,725 Change in deferred income taxes 4,940 (1,336) Stock and other non-cash compensation 31,586 22,379 Unrealized foreign currency exchange loss 462 785 Loss from equity-accounted investments 2,685 3,838 Gain on non-cash contribution to equity-accounted investees (364) (1,436) Investment in film assets (22,308) (15,119) Changes in other non-cash operating assets and liabilities (30,874) (36,058) **Net cash provided by operating activities** **77,872** **84,205** **Investing Activities** Purchase of property, plant and equipment (15,278) (43,257) Investment in joint revenue sharing equipment (42,910) (28,474) Investment in new business ventures (1,911) (2,000) Acquisition of other intangible assets (4,787) (5,065) **Net cash used in investing activities** **(64,886)** **(78,796)** **Financing Activities** Increase in bank indebtedness \- 25,290 Repayment of bank indebtedness (2,000) (333) Repurchase of common shares (116,518) (34,276) Settlement of restricted share units and options (17,889) (10,000) Exercise of stock options 13,113 35,609 Taxes paid on secondary sales and repatriation dividend (2,443) \- Treasury stock repurchased for future settlement of restricted share units (1,996) \- Taxes withheld and paid on employee stock awards vested (528) (520) Issuance of subsidiary shares to non-controlling interests - private offering 2,479 40,000 Share issuance costs from the issuance of subsidiary shares to non-controlling  interests - private offering \- (2,000) Issuance of subsidiary shares to non-controlling interests - public offering \- 178,226 Share issuance expenses - public offering \- (16,257) Dividends paid to non-controlling interests \- (9,511) Credit facility amendment fees paid \- (1,533) **Net cash (used in) provided by financing activities** **(125,782)** **204,695** Effects of exchange rate changes on cash 106 842 **(Decrease) increase in cash and cash equivalents during year** **(112,690)** **210,946** **Cash and cash equivalents, beginning of year** **317,449** **106,503** **Cash and cash equivalents, end of year** $ **204,759** $ **317,449** **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: IMAXsystems; theater system maintenance; joint revenue sharing arrangements; film production and IMAX DMR; film distribution; film post-production; and other. The IMAXsystems segment includes the design, manufacture, sale or lease of IMAXtheater projection system equipment. The theater system maintenance segment includes the maintenance of IMAXtheater projection system equipment in the IMAXtheater network. The joint revenue sharing arrangements segment includes the provision of IMAXtheater 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 IMAXtheaters that the Company owns and operates, camera rentals and other miscellaneous items. **Three Months** **Years Ended** **Ended December 31,** **Ended December 31,** **2016** **2015** **2016** **2015** **Revenue** **IMAX Theater Systems** IMAX Systems Sales and sales-type leases $ 31,002 $ 33,011 $ 89,524 $ 86,935 Ongoing rent, fees, and finance income 4,017 4,485 16,003 15,193 Other 5,040 6,259 19,434 17,579 40,059 43,755 124,961 119,707 Theater System Maintenance 10,399 9,599 40,430 36,944 Joint Revenue Sharing Arrangements 24,473 31,861 91,413 99,120 **Film** Production and IMAX DMR 27,636 31,945 106,403 107,089 Film distribution and post-production 4,346 2,173 14,127 10,945 31,982 34,118 120,530 118,034 **Total** $ 106,913 $ 119,333 $ 377,334 $ 373,805 **Gross margins** **IMAX Theater Systems** IMAX Systems(1) Sales and sales-type leases $ 17,991 $ 20,070 $ 44,786 $ 44,790 Ongoing rent, fees, and finance income 3,847 4,267 15,304 14,378 Other 327 700 76 279 22,165 25,037 60,166 59,447 Theater System Maintenance 3,452 2,811 13,659 12,702 Joint Revenue Sharing Arrangements(1) 15,121 21,556 59,837 68,372 **Film** Production and IMAX DMR(1) 16,798 22,003 69,196 77,645 Film distribution and post-production(1) (2,210) 476 (180) 1,122 14,588 22,479 69,016 78,767 **Total** $ 55,326 $ 71,883 $ 202,678 $ 219,288 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (1) IMAX systems include marketing and commission costs of $1.1 million and $3.0 million for the three and twelve months ended December 31, 2016, respectively (2015 - $1.2 million and $3.0 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $1.2 million and $4.1 million for the three and twelve months ended December 31, 2016, respectively (2015 - $1.6 million and $4.3 million, respectively). Production and DMR segment margins include marketing costs of $5.8 million and $17.5 million for the three and twelve months ended December 31, 2016, respectively (2015 - $5.0 million and $13.3 million, respectively). Distribution segment margins include marketing costs of $0.1 million and $2.2 million for the three and twelve months ended December 31, 2016, respectively (2015 - less than $0.1 million recovery and $0.1 million recovery, 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 not including these measures could potentially distort the analysis of trends in business performance. 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 is required to maintain a minimum level of "EBITDA" of $100.0 million, as such term is defined in the Company's credit agreement (herein referred to as "Adjusted EBITDA" as the credit agreement includes additional adjustments beyond interest, taxes, depreciation and amortization). EBITDA and Adjusted EBITDA should not be construed as substitutes for net income or as better measures of liquidity than cash flow from operating activities determined in accordance with U.S. GAAP.  The Company must also maintain a Maximum Total Leverage Ratio (as defined in the credit agreement) of 2.0:1.0, which requirement decreases to 1.75:1.0 on December 31, 2017. The Company was in compliance with all of these requirements at December 31, 2016. The Maximum Total Leverage Ratio was 0.23:1 as at December 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 $27.7 million. Adjusted EBITDA is calculated as follows: **Quarter Ended** **Year Ended** **Year Ended** **December 31, 2016** **December 31, 2016** (1) **December 31, 2015** **_(In thousands of U.S. Dollars)_** Net income $ 12,076 $ 39,320 $ 64,624 Add (subtract): Provision for income taxes 6,577 16,212 20,052 Interest expense, net of interest income 207 315 693 Depreciation and amortization, including film asset amortization 12,176 45,953 41,787 EBITDA $ 31,036 $ 101,800 $ 127,156 Write-downs, net of recoveries including asset impairments and receivable provisions 3,037 5,940 3,725 (Gain) loss from equity accounted investments (150) 2,321 2,402 Stock and other non-cash compensation 8,690 31,586 22,379 Adjusted EBITDA before non-controlling interests 42,613 141,647 155,662 Adjusted EBITDA attributable to non-controlling interests(2) (5,752) (19,743) (14,885) Adjusted EBITDA attributable to common shareholders $ 36,861 $ 121,904 $ 140,777 Adjusted revenues attributable to common shareholders(3) $ 96,192 $ 339,868 $ 347,862 Adjusted EBITDA margin 38.3 % 35.9 % 40.5 % \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (1) Ratio of funded debt calculated using twelve months ended Adjusted EBITDA. (2) The Adjusted EBITDA calculation specified for purpose of the minimum Adjusted EBITDA covenant excludes the reduction in EBITDA from the Company's non-controlling interests. (3) **Quarter Ended** **Year Ended** **Year Ended** **December 31, 2016** **December 31, 2016** **December 31, 2015** Total revenues $ 106,913 $ 377,334 $ 373,805 Greater China revenues $ 33,735 $ 118,532 $ 110,591 Non-controlling interest ownership percentage(4) 31.78% 31.61% 23.46% Deduction for non-controlling interest share  of revenues (10,721) (37,466) (25,943) Adjusted revenues attributable to common shareholders $ 96,192 $ 339,868 $ 347,862 (4) Weighted average ownership percentage for change in non-controlling interest share **IMAX CORPORATION ****OTHER INFORMATION **_(in thousands of U.S. dollars)_ **_Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended December 31, 2016vs. 2015: _**The Company reported net income of $12.1 millionor $0.18 per basic and diluted share for the quarter ended December 31, 2016 as compared to net income of $26.2 million or $0.38per basic share and $0.37 per diluted share for the quarter ended December 31, 2015. Net income for the quarter ended December 31, 2016 includes a $8.0 million charge or $0.13 per diluted share (2015 — $6.9 million or $0.10 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 $17.7 millionor $0.27per diluted share for the quarter ended December 31, 2016as compared to adjusted net income of $31.7 millionor $0.45per diluted share for the quarter ended December 31, 2015. The Company reported net income attributable to common shareholders of $8.9 million, or $0.14per basic and $0.13per diluted share for the year ended December 31, 2016(2015 — $22.5 million, or $0.33per basic share and $0.32per diluted share).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 $14.5 millionor $0.22per diluted share for the quarter ended December 31, 2016as compared to adjusted net income attributable to common shareholders of $27.3 millionor $0.39per diluted share for the quarter ended December 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 December 31,** **2016** **2015** **Net Income** **Diluted EPS** **Net Income** **Diluted EPS** Reported net income $ 12,076 $ 0.18 $ 26,245 $ 0.37 (1) Adjustments: Stock-based compensation 8,038 0.13 6,949 0.10 Tax impact on items listed above (2,389) (0.04) (1,453) (0.02) Adjusted net income 17,725 0.27 31,741 0.45 (1) Net income attributable to non-controlling interests (3,131) (0.05) (3,752) (0.05) Stock-based compensation (net of tax of less than $0.1 million and $0.2 million, respectively) attributable to non-controlling interests (112) \- (703) (0.01) Adjusted net income attributable to common shareholders $ 14,482 $ 0.22 $ 27,286 $ 0.39 (1) Weighted average diluted shares outstanding 66,950 70,764 \_\_\_\_\_\_\_\_\_\_\_\_\_ (1) Includes impact of less than $0.1 million of accretion charges associated with redeemable Class C shares of IMAX China. **_Adjusted Net Income and Adjusted Diluted Per Share Calculations – Year Ended December 31, 2016vs. 2015: _**The Company reported net income of $39.3 millionor $0.58 per basic and diluted share for the year ended December 31, 2016 as compared to net income of $64.6 million or $0.92 per basic share and $0.90per diluted share for the year ended December 31, 2015. Net income for the year ended December 31, 2016 includes a $30.5 million charge or $0.45 per diluted share (2015 — $21.9 million or $0.31 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 $61.1 millionor $0.90per diluted share for the year ended December 31, 2016as compared to adjusted net income of $82.4 millionor $1.15per diluted share for the year ended December 31, 2015. The Company reported net income attributable to common shareholders of $28.8 million, or $0.43per basic and $0.42per diluted share for the year ended December 31, 2016(2015 — $55.8 million, or $0.79per basic share and $0.78per diluted share). 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 $50.0 millionor $0.73per diluted share for the year ended December 31, 2016as compared to adjusted net income attributable to common shareholders of $73.0 millionor $1.02per diluted share for the year ended December 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: **Year Ended December 31,** **2016** **2015** **Net Income** **Diluted EPS** **Net Income** **Diluted EPS** Reported net income $ 39,320 $ 0.58 $ 64,624 $ 0.90 (1) Adjustments: Stock-based compensation 30,523 0.45 21,880 0.31 Tax impact on items listed above (8,783) (0.13) (4,056) (0.06) Adjusted net income 61,060 0.90 82,448 1.15 (1) Net income attributable to non-controlling interests (10,532) (0.16) (8,780) (0.12) Stock-based compensation (net of tax of $0.2 million and $0.2 million, respectively) attributable to non-controlling interests (533) (0.01) (703) (0.01) Adjusted net income attributable to common shareholders $ 49,995 $ 0.73 $ 72,965 $ 1.02 (1) Weighted average diluted shares outstanding 68,263 71,058 \_\_\_\_\_\_\_\_\_\_\_\_\_ (1) Includes impact of $0.8 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** **For the** **3 months ended** **12 months ended** **December 31, 2016** **December 31, 2016** **_(In thousands of U.S. Dollars)_** Net cash provided by operating activities $ 32,568 $ 77,872 Net cash used in investing activities (26,398) (64,886) Free cash flow $ 6,170 $ 12,986 To view the original version on PR Newswire, visit:[http://www.prnewswire.com/news-releases/imax-corporation-reports-fourth-quarter-and-full-year-2016-results-300412853.html](http://www.prnewswire.com/news-releases/imax-corporation-reports-fourth-quarter-and-full-year-2016-results-300412853.html) SOURCE IMAX Corporation