--- title: IMAX Corporation Reports Fourth Quarter and Full-Year 2019 Results publisher: "IMAX" description: "NEW YORK , Feb. 19, 2020 /PRNewswire/ --  IMAX Corporation (NYSE:IMAX) today reported full-year 2019 revenues of $395.7 million , gross profit of $214.2 million , net income of $58.6 million , or $0.95 per diluted share, and net income attributable to common shareholders of $46.9 million , or $0.76" canonical: "https://www.imax.com/pr/imax-corporation-reports-fourth-quarter-and-full-year-2019" date: 2020-02-19 last_updated: 2020-02-19 --- IMAX Corporation Reports Fourth Quarter and Full-Year 2019 Results ================================================================== Wed, Feb 19, 2020 NEW YORK, Feb. 19, 2020/PRNewswire/ -- IMAX Corporation(NYSE:IMAX) today reported full-year 2019 revenues of $395.7 million, gross profit of $214.2 million, net income of $58.6 million, or $0.95per diluted share, and net income attributable to common shareholders of $46.9 million, or $0.76per diluted share. Adjusted net income attributable to common shareholders for the year ended December 31, 2019was $64.8 million, or $1.05per diluted share. Adjusted EBITDA attributable to common shareholders was $149.3 million. ![IMAX Logo. (PRNewsFoto/IMAX Corporation)](https://mma.prnewswire.com/media/74988/imax_corporation_logo.jpg "IMAX Logo. (PRNewsFoto/IMAX Corporation)") HIGHLIGHTS * Company achieved record full-year 2019 box office of $1.1 billion, up 7% over the prior year * Full-year 2019 revenue increased 6% versus 2018 to $396 million, a new record * Full-year 2019 net income attributable to common shareholders increased 105% versus 2018 to $47 millionand full-year 2019 net income increased 74% to $59 million; Adjusted net income attributable to common shareholders increased 12% year-over-year to $65 million * Full-year 2019 earnings per share attributable to common shareholders increased 111% to $0.76; Adjusted net earnings per share attributable to common shareholders increased 15% to $1.05 * Company's total commercial multiplex network grew to 1,529 theatres, 73% of which are in international markets **Three Months Ended** **12 Months Ended** **December 31,** **December 31,** _In millions, except per share data_ **2019** **2018** **YoY %** **2019** **2018** **YoY %** **Change** **Change** Total Revenue **$** 124.3 **$** 109.0 14% **$** 395.7 **$** 374.4 6% Gross Margin 62.4 54.6 14% 214.2 207.9 3% Gross Margin (%) 50.2% 50.1% 54.1% 55.5% Net Income $ 21.4 $ 3.8 461% $ 58.6 $ 33.6 74% Net Income(1) 18.2 1.7 973% 46.9 22.8 105% Adjusted Net Income (1) 21.5 16.4 31% 64.8 57.8 12% Diluted Net Income Per Share(1) **$** 0.29 **$** 0.03 867% **$** 0.76 **$** 0.36 111% Adj. Net Income Per Share(1) **$** 0.35 **$** 0.26 35% **$** 1.05 **$** 0.91 15% Adjusted EBITDA **$** 47.0 **$** 36.4 29% **$** 149.3 **$** 133.2 12% Adj. EBITDA Margin (%) 41.7% 37.3% 41.7% 39.6% (1)Attributable to common shareholders Note: For the definition and reconciliations of reported results to non-GAAP financial results, please refer to the discussion of non-GAAP financial measures at the end of this earnings release. The Company also reported fourth quarter 2019 revenues of $124.3 million, gross profit of $62.4 million, net income of $21.4 million, or $0.35per diluted share, and net income attributable to common shareholders of $18.2 million, or $0.29per diluted share. Adjusted net income attributable to common shareholders for the fourth quarter was $21.5 million, or $0.35per diluted share. Adjusted EBITDA attributable to common shareholders was $47.0 million. For reconciliations of reported results to non-GAAP financial results, and for the definition and reconciliation of Adjusted EBITDA, please see the end of this press release. "IMAXis among the world's premiere entertainment experiences, and our record 2019 financial results reflect sharp focus, strong execution, and disciplined cost management as we continue to grow our global footprint, diversify our content portfolio, and enhance our pioneering end-to-end technology," said IMAXCEO Richard L. Gelfond. "Across 2019, our business demonstrated significant strength by setting a number of new records for the Company including annual revenue as well as global, international, and local language box office — underscoring the increasing geographic diversification of our business." "In a world of nearly infinite entertainment choices, audiences continue to choose IMAX. Immersive entertainment experiences continue to connect fans and drive culture around the globe. We are committed to building on strong demand for The IMAX Experience®to strengthen our unique position in the entertainment ecosystem and deliver value for our shareholders." "In terms of the health crisis in China, where movie theatres nationwide remain closed, we are continuing to monitor the situation closely and needless to say the safety of our team and audiences is our top priority," said Mr. Gelfond. "We look forward to circumstances improving and IMAXcontinuing to satisfy China'sstrong demand for premium quality content and entertainment experiences." **Fourth Quarter and Full-Year Segment Results** **Network Business** **Theatre Business** **Revenue** **Gross** **Margin** **Gross** **Margin %** **Revenue** **Gross** **Margin** **Gross** **Margin %** **4Q19** **$** 43.0 **$** 24.4 56.8% **$** 77.6 **$** 39.7 51.2% **4Q18** **$** 41.7 24.7 59.2% 61.9 29.1 47.1% **% change** 3.3% (0.9%) 25.3% 36.4% **YTD 4Q19** **$** 196.8 **$** 126.7 64.4% **$** 180.5 **$** 86.8 48.1% **YTD 4Q18** **$** 184.2 121.6 66.0% 168.4 85.8 50.9% **% change** 6.9% 4.1% 7.2% 1.2% **Network Business** * Network business revenues increased 6.9% to $196.8 millionin 2019, compared to $184.2 millionin the prior-year period. The strong overall increase in network business revenues was primarily driven by a $76.4 million, or 7.4%, increase in IMAXglobal box office to $1.1 billion. * Total gross margin for the network business was 64.4% in the most recent quarter, compared to 66.0% in the prior-year period. The year-over-year decrease in total gross margin was primarily driven by increased contractual marketing expense. **Theatre Business** * Theatre business segment revenues increased 7.2% to $180.5 millionin 2019, compared with $168.4 millionin the prior-year period. * Total gross margin for the theatre business was 48.1% compared to 50.9% in the prior-year period. The year-over-year decline in total gross margin was primarily driven by the geographic and system mix of installations in the first quarter of 2018. The theatre business gross margin increased steadily throughout 2019, landing at 51.2% for the entire segment in the fourth quarter of 2019, and 53.0% specifically for sales and sales type lease theatres. **Cash Balances and Outstanding Debt** Total cash and cash equivalents as of December 31, 2019was $109.5 million. Total bank indebtedness was $18.2 millionas of December 31, 2019and represented a decrease compared to $37.8 millionas of December 31, 2018. As of December 31, 2019, $280.0 millionwas available under the Company's $300.0 millioncredit facility due June 28, 2023. **Share Count and Capital Return** * The weighted average diluted shares outstanding at the end of the fourth quarter of 2019 declined 2.7% to 61.5 million, compared to 63.2 million in fourth quarter 2018, due primarily to share repurchase activity. During 2019 a total of 134 thousand shares were repurchased at an average price of $19.76for a total value of approximately $2.7 million. A total of $125.9 millionremains available under the Company's outstanding share repurchase authorization, which expires in June 2020. * During 2019, IMAX Chinarepurchased a total of 8.05 million shares at an average price of $2.38for a total value of approximately $19.2 million. **Supplemental Materials** For more information about the Company's results, please refer to the IMAX Investor Relations website located at investors.imax.com. **Investor Relations Website and Social Media** On a weekly basis, the Company posts quarter-to-date box office results on the IMAX Investor Relations website located at [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. The information posted on the Company's website may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's website in addition to the Company's press releases, SECfilings and public conference calls and webcasts. **Conference Call** The Company will host a conference call today at 4:30PM ETto discuss its fourth quarter and full year 2019 financial results. This call is being webcast by Nasdaq and can be accessed at [www.imax.com/content/investor-relations](https://c212.net/c/link/?t=0&l=en&o=2725147-1&h=4225654162&u=http%3A%2F%2Fwww.imax.com%2Fcontent%2Finvestor-relations&a=www.imax.com%2Fcontent%2Finvestor-relations). To access the call via telephone, interested parties in the US and Canadashould dial (888) 204-4368 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 794-4605. The conference ID for the call is 9833755. A replay of the call will be available via webcast at [www.imax.com/content/investor-relations](https://c212.net/c/link/?t=0&l=en&o=2725147-1&h=4225654162&u=http%3A%2F%2Fwww.imax.com%2Fcontent%2Finvestor-relations&a=www.imax.com%2Fcontent%2Finvestor-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 9833755. **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, Toronto, and Los Angeles, with additional offices in London, Dublin, Tokyo, and Shanghai. As of December 31, 2019, there were 1,624 IMAXtheatre systems (1,529 commercial multiplexes, 14 commercial destinations, 81 institutional) operating in 81 countries and territories. Shares of IMAX China, a subsidiary of IMAX Corp., trade 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](https://c212.net/c/link/?t=0&l=en&o=2725147-1&h=2494239833&u=http%3A%2F%2Fwww.imax.com%2F&a=www.imax.com). You may also connect with IMAXon Instagram ([https://www.instagram.com/imax](https://c212.net/c/link/?t=0&l=en&o=2725147-1&h=3517088265&u=https%3A%2F%2Fwww.instagram.com%2Fimax&a=https%3A%2F%2Fwww.instagram.com%2Fimax)), Facebook([www.facebook.com/imax](https://c212.net/c/link/?t=0&l=en&o=2725147-1&h=4030078232&u=http%3A%2F%2Fwww.facebook.com%2Fimax&a=www.facebook.com%2Fimax)), Twitter ([www.twitter.com/imax](https://c212.net/c/link/?t=0&l=en&o=2725147-1&h=2994007419&u=http%3A%2F%2Fwww.twitter.com%2Fimax&a=www.twitter.com%2Fimax)) and YouTube([www.youtube.com/imaxmovies](https://c212.net/c/link/?t=0&l=en&o=2725147-1&h=4123685528&u=http%3A%2F%2Fwww.youtube.com%2Fimaxmovies&a=www.youtube.com%2Fimaxmovies)). For additional information please contact: **_Investors:_** IMAX Corporation, New York Heather Anthony 212-821-0121 hanthony@imax.com **_Media:_** IMAX Corporation, New York Mark Jafar 212-821-0155 mjafar@imax.com **Forward****\-Looking Statements** _This earnings 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, including the adverse impact of the coronavirus outbreak in China; the performance of IMAX DMR__®__films; the signing of theater system agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates; competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to recent consolidation among commercial exhibitors and studios; risks related to new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security and data privacy; risks related to the Company's inability to protect the Company's intellectual property; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; the failure to fully realize the projected cost savings and benefits from any of the Company's restructuring initiatives; 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._ _The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise._ **Primary****Reporting Groups** The Company has four primary reporting groups identified by nature of product sold or service provided: (1) Network Business, representing variable revenue generated by box-office results and which includes the reportable segments of IMAX DMR and contingent rent from the JRSAs and IMAXsystems segments; (2) Theater Business, representing revenue generated by the sale and installation of theater systems and maintenance services, primarily related to the IMAX Systems and Theater System Maintenance reportable segments, and also includes fixed hybrid revenues and upfront installation costs from the JRSA segment; (3) New Business, which includes home entertainment, and other new business initiatives that are in the development, start-up and/or wind-up phases, and (4) Other; which includes the film post-production and distribution segments and certain IMAXtheaters that the Company owns and operates, camera rentals and other miscellaneous items. **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, EBITDA, Adjusted EBITDA per Credit Facility, Adjusted EBITDA margin, free cash flow and return on invested capital 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) and non-recurring charges 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) and non-recurring charges in determining net income attributable to common shareholders. Management uses these measures to review operating performance on a comparable basis from period to period. However, these non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share should be considered in addition to, and not as a substitute for, net income and net income attributable to common shareholders and other measures of financial performance reported in accordance with U.S. GAAP. The Company is required to maintain a minimum level of "EBITDA", as such term is defined in the Company's credit agreement (and which is referred to herein as "Adjusted EBITDA per Credit Facility", as the credit agreement includes additional adjustments beyond interest, taxes, depreciation and amortization). EBITDA and Adjusted EBITDA per Credit Facility (each as defined below) should not be construed as substitutes for net income or as better measures of liquidity as determined in accordance with U.S. GAAP. The Company believes that EBITDA, Adjusted EBITDA per Credit Facility and Adjusted EBITDA margin are relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry. Accordingly, the Company is disclosing this information to permit a more comprehensive analysis of its operating performance and to provide additional information with respect to the Company's ability to comply with its credit agreement requirements. Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the condensed consolidated statements of cash flows). Cash provided by operating activities consist of net income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company's after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented below.  **Signings and Installations** **12 Months Ended December 31,** **Theater System Signings:** **2019** **2018** Full new sales and sales-type lease arrangements 49 57 New traditional joint revenue sharing arrangements 7 55 New hybrid joint revenue sharing lease arrangements 48 10 **Total new theaters** **104** **122** Upgrades of IMAX theater systems 39 112 (1) **Total theater signings** **143** **234** **12 Months Ended December 31,** **Theater System Installations:** **2019** **2018** Full new sales and sales-type lease arrangements 55 (2) 63 New traditional joint revenue sharing arrangements 54 72 New hybrid joint revenue sharing lease arrangements 20 14 **Total new theaters** **129** **149** Upgrades of IMAX theater systems 57 23 **Total theater installations** **186** **172** **12 Months Ended December 31,** **Theater Sales Backlog:** **2019** **2018** Sales and sales-type lease arrangements 178 177 Joint revenue sharing arrangements Hybrid lease arrangements 140 118 Traditional arrangements 213 (3) 269 (5) **Total theater backlog** **531** (4) **564** (6) **12 Months Ended December 31,** **Theater Network:** **2019** **2018** Commercial Multiplex Theaters: Sales and sales-type lease arrangements 659 611 Traditional joint revenue sharing arrangements 731 674 Hybrid joint revenue sharing lease arrangements 139 124 **Total Commercial Multiplex Theaters** **1,529** **1,409** Commercial Destination Theaters 14 14 Institutional Theaters 81 82 **Total theater network** **1,624** **1,505** (1)     Includes 105 theater systems related to existing AMC, Regal and Pathé theaters to be upgraded to IMAX with Laser projection systems on new lease terms ranging from 10 to 12 years.  (2)     Includes one IMAX digital theater system that was relocated from a previous location. This installation is incremental to the IMAX theater network but full revenue for the digital theater system was not received. (3)    Includes 47 theater systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement. (4)     Includes 153 new laser projection system configurations (144 of which are IMAX with Laser projection system configurations and 9 of which are GT Lasers) and 97 upgrades of existing locations to laser projection system configurations (92 of which are for the IMAX with Laser projection system configurations and 5 of which are GT Lasers). (5)    Includes 46 theater systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement. (6)    Includes 83 new laser projection system configurations (73 of which are IMAX with Laser projection system configurations and 10 of which are GT Lasers) and 100 upgrades of existing locations to laser projection system configurations (98 of which are for the IMAX with Laser projection system configurations and 2 of which are GT Lasers). **IMAX CORPORATION** **CONDENSED 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 Ended** **12 Months Ended** **December 31,** **December 31,** **2019** **2018** **2019** **2018** **Revenues** Equipment and product sales $ 61,616 $ 46,409 $ 118,245 $ 106,591 Services  43,570 42,769 188,547 181,740 Rentals 16,286 16,667 77,961 74,472 Finance income 2,807 3,119 10,911 11,598 **124,279** **108,964** **395,664** **374,401** **Costs and expenses applicable to revenues** Equipment and product sales  30,513 25,233 63,627 54,853 Services 21,970 21,428 88,175 84,236 Rentals  9,437 7,661 29,690 27,383 **61,920** **54,322** **181,492** **166,472** **Gross margin** **62,359** **54,642** **214,172** **207,929** Selling, general and administrative expenses 34,189 30,380 123,456 117,477 Research and development 1,486 2,186 5,203 13,728 Amortization of intangibles 1,391 1,249 4,955 4,145 Receivable provisions, net of recoveries 473 1,463 2,430 3,130 Legal arbitration award \- 4,237 \- 11,737 Executive transition cost \- 2,994 \- 2,994 Exit costs, restructuring charges and associated impairments \- 8,384 850 9,542 **Income from operations** **24,820** **3,749** **77,278** **45,176** Change in fair value of equity securities 2,026 \- (517) \- Retirement benefits non-service expense (257) (125) (737) (499) Interest income 473 723 2,105 1,844 Interest expense (987) (613) (2,793) (2,916) **Income before income taxes** **26,075** **3,734** **75,336** **43,605** Provision for income taxes (4,782) 22 (16,768) (9,518) Income (loss) from equity-accounted investments, net of tax 59 15 3 (492) **Net income**  **21,352** **3,771** **58,571** **33,595** Less: net income attributable to non-controlling interests (3,181) (2,077) (11,705) (10,751) **Net income attributable to common shareholders** **$** **18,171** **$** **1,694** **$** **46,866** **$** **22,844** **Net income per share attributable to common shareholders - basic and diluted:** Net income per share — basic and diluted **$** **0.29** **$** **0.03** **$** **0.76** **$** **0.36** Weighted average number of shares outstanding (000's): Basic 61,228 61,924 61,310 63,075 Fully Diluted 61,542 62,127 61,489 63,207 Additional Disclosure: Depreciation and amortization(1) $ 17,987 $ 15,453 $ 63,487 $ 57,437 (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, 2019, respectively (2018 - $0.1 million and  $1.1 million, respectively). **IMAX CORPORATION** **CONDENSED CONSOLIDATED BALANCE SHEETS** **In accordance with United States Generally Accepted Accounting Principles** _(In thousands of U.S. dollars)_ **December 31,** **2019** **2018** **Assets** Cash and cash equivalents $        109,484 $       141,590 Accounts receivable, net of allowance for doubtful accounts of $5,138 (December 31, 2018 — $3,174) 99,513 93,309 Financing receivables, net of allowance for uncollectible amounts 128,038 127,432 Variable consideration receivable from contracts  40,040 35,985 Inventories  42,989 44,560 Prepaid expenses 10,237 10,294 Film assets  17,921 16,367 Property, plant and equipment  306,849 280,658 Investment in equity securities  15,685 1,022 Other Assets  25,034 17,997 Deferred income taxes  23,905 31,264 Other intangible assets  30,347 34,095 Goodwill  39,027 39,027 **Total assets**  **$      889,069** **$    873,600** **Liabilities** Bank indebtedness $          18,229 $         37,753 Accounts payable 20,414 32,057 Accrued and other liabilities  112,779 97,724 Deferred revenue 94,552 106,709 **Total liabilities**  **245,974** **274,243** **Commitments and contingencies**  **Non-controlling interests**  **5,908** **6,439** **Shareholders' equity** Capital stock (note 16) common shares — no par value. Authorized — unlimited number 61,362,872 issued and 61,175,852 outstanding (December 31, 2018 — 61,478,168 issued and 61,433,589 outstanding) 423,386 422,455 Less: Treasury stock, 187,020 shares at cost (December 31, 2018 — 44,579) (4,038) (916) Other equity 171,789 179,595 Accumulated deficit (40,253) (85,385) Accumulated other comprehensive loss  (3,190) (3,588) **Total shareholders' equity attributable to common shareholders** **547,694** **512,161** Non-controlling interests  89,493 80,757 **Total shareholders' equity** **637,187** **592,918** **Total liabilities and shareholders' equity** **$      889,069** **$    873,600** **IMAX CORPORATION** **CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS** **In accordance with United States Generally Accepted Accounting Principles** _(In thousands of U.S. dollars)_ **Years Ended December 31,** **2019** **2018** **Cash provided by (used in):** **Operating Activities** Net income $ 58,571 $ 33,595 Adjustments to reconcile net income to cash from operations: Depreciation and amortization 63,487 57,437 Write-downs, net of recoveries 6,806 11,770 Deferred income taxes 6,762 (6,923) Stock and other non-cash compensation 23,570 23,723 Unrealized foreign currency exchange loss 33 631 Change in fair value of equity investment 517 — Loss from equity-accounted investments 730 95 (Gain) loss on non-cash contribution to equity-accounted investees (733) 397 Investment in film assets (23,437) (23,200) Changes in other non-cash operating assets and liabilities (45,929) 12,447 **Net cash provided by operating activities** **90,377** **109,972** **Investing Activities** Purchase of property, plant and equipment (7,421) (13,368) Investment in joint revenue sharing equipment (40,489) (34,810) Acquisition of other intangible assets (2,931) (8,696) Investment in equity securities (15,153) — **Net cash used in investing activities** **(65,994)** **(56,874)** **Financing Activities** Increase in bank indebtedness 35,000 65,000 Repayment of bank indebtedness (55,000) (50,667) Treasury stock repurchased for future settlement of restricted share units (4,038) (916) Settlement of restricted share units and options (9,795) (5,249) Repurchase of common shares, IMAX China (19,162) (6,084) Taxes withheld and paid on employee stock awards vested (590) (1,437) Common shares issued - stock options exercised 2,404 1,017 Repurchase of common shares (2,659) (71,479) Issuance of subsidiary shares to non-controlling interests (net of return on capital) 1,106 7,796 Dividends paid to non-controlling interests (4,384) (6,934) Credit facility amendment fees paid — (1,909) **Net cash used in financing activities** **(57,118)** **(70,862)** Effects of exchange rate changes on cash 630 629 **Decrease in cash and cash equivalents during period** **(32,106)** **(17,135)** **Cash and cash equivalents, beginning of period** **141,590** **158,725** **Cash and cash equivalents, end of period** $ **109,484** $ **141,590** **IMAX CORPORATION ****SELECTED FINANCIAL DATA ****In accordance with United States Generally Accepted Accounting Principles **_(in thousands of U.S. dollars)_ **Three Months Ended** **12 Months Ended** **December 31,** **December 31,** **2019** **2018** **2019** **2018** **Revenue** **Network business** IMAX DMR $     26,857 $     25,207 $   120,765 $   110,793 Joint revenue sharing arrangements – contingent rent 16,228 16,452 75,932 73,371 IMAX systems – contingent rent (50) — 139 — 43,035 41,659 196,836 184,164 **Theater business** **IMAX systems** Sales and sales-type leases  54,098 37,887 96,310 88,432 Ongoing fees and finance income  3,025 3,242 11,613 12,224 Joint revenue sharing arrangements – fixed fees 4,489 5,885 11,014 9,706 Theater system maintenance 13,336 12,222 53,151 49,684 Other theater 2,624 2,651 8,390 8,358 77,572 61,887 180,478 168,404 **New business** 846 770 2,754 5,769 **Other**  Film distribution and film post-production 2,419 3,806 12,210 12,962 Other 407 842 3,386 3,102 2,826 4,648 15,596 16,064 **Total revenues** $   124,279 $   108,964 $   395,664 $   374,401 **Gross Margin** **Network business** IMAX DMR(1) $     16,990 $     15,250 $     78,592 $     72,773 Joint revenue sharing arrangements – contingent rent(1) 7,498 9,415 47,935 48,856 IMAX systems – contingent rent (50) — 139 — 24,438 24,665 126,666 121,629 **Theater business** IMAX systems(1) Sales and sales-type leases  28,689 19,338 47,118 47,986 Ongoing fees and finance income  2,977 3,194 11,422 12,033 Joint revenue sharing arrangements – fixed fees(1) 1,312 1,206 2,613 1,982 Theater system maintenance 5,964 4,702 23,010 21,991 Other theater 803 707 2,624 1,806 39,745 29,147 86,787 85,798 **New business** 665 (489) 2,106 (350) **Other**  Film distribution and film post-production(1) (1,745) 1,443 (1,262) 1,763 Other (744) (124) (125) (911) (2,489) 1,319 (1,387) 852 **Total segment margin** $     62,359 $     54,642 $   214,172 $   207,929 (1) IMAX DMR segment margins include marketing costs of $4.8 million and $22.5 million for the three months and year ended December 31, 2019, respectively (2018 - $2.8 million and $16.5 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $3.4 million and $4.5 million for the three months and year ended December 31, 2019, respectively (2018 - $1.4 million and $3.6 million, respectively). IMAX system segment margins include marketing and commission costs of $0.5 million and $2.0 million for the three months and year ended December 31, 2019, respectively (2018 - $1.5 million and $2.4 million). Film distribution and post production segment margins include marketing recovery of $0.3 million and expense of $0.4 million for the three months and year ended December 31, 2019, respectively (2018 - $0.2 million and expense of $2.2 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, EBITDA, adjusted EBITDA per Credit Facility, free cash flow and return on invested capital 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) and non-recurring charges 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, its stock-based compensation (net of any related tax impact) and non-recurring charges in determining net income attributable to common shareholders. Management uses these measures to review operating performance on a comparable basis from period to period. However, these non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share should be considered in addition to, and not as a substitute for, net income and net income attributable to common shareholders and other measures of financial performance reported in accordance with U.S. GAAP. The Company is required to maintain a minimum level of "EBITDA", as such term is defined in the Company's credit agreement (and which is referred to herein as "Adjusted EBITDA per Credit Facility" or "Adjusted EBITDA per Credit Facility excluding _Marvel's Inhumans_", as the credit agreement includes additional adjustments beyond interest, taxes, depreciation and amortization). EBITDA and Adjusted EBITDA per Credit Facility (each as defined below) should not be construed as substitutes for net income or as better measures of liquidity as determined in accordance with U.S. GAAP. The Company believes that EBITDA and Adjusted EBITDA per Credit Facility excluding _Marvel's Inhumans_are relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry. **Three Months Ended** **Three Months Ended** **12 Months Ended** **12 Months Ended** **December 31, 2019** **December 31, 2018** **December 31, 2019**(1)**** **December 31, 2018**(1)**** Net income $ 21,352 $ 3,771 $ 58,571 $ 33,595 Add (subtract):  \- Provision for income taxes 4,782 (22) 16,768 9,518 Interest expense, net of interest income 381 (110) 423 1,072 Depreciation and amortization, including film asset amortization 17,987 15,453 63,487 57,437 EBITDA $ 44,502 $ 19,092 $ 139,249 $ 101,622 Stock and other non-cash compensation 6,173 5,483 23,570 23,723 Change in fair value of equity investment (2,026) — 517 — Write-downs, net of recoveries including asset impairments and receivable provisions 3,822 2,797 6,806 5,338 Exit costs, restructuring charges and associated impairments — 8,384 850 9,542 Legal arbitration award — 4,237 \- 11,737 Executive transition costs — 2,994 \- 2,994 (Income) loss from equity accounted investments (59) (15) (3) 492 Adjusted EBITDA before non-controlling interests $ 52,412 $ 42,972 $ 170,989 $ 155,448 Adjusted EBITDA attributable to non-controlling interests(2) (5,457) (6,593) (21,661) (22,220) Adjusted EBITDA per Credit Facility $ 46,955 $ 36,379 $ 149,328 $ 133,228 Adjusted revenues attributable to common shareholders(3) $ 112,635 $ 97,573 $ 358,053 $ 336,723 Adjusted EBITDA margin 41.7 % 37.3 % 41.7 % 39.6 % \_\_\_\_\_\_\_\_\_\_\_\_\_ (1) Senior Secured Net Leverage Ratio calculated using twelve months ended Adjusted EBITDA per Credit Facility. (2) The Adjusted EBITDA per Credit Facility calculation specified for purpose of the minimum Adjusted EBITDA covenant excludes the reduction in Adjusted EBITDA from the Company's non-controlling interests.  (3) **Three months ended** **December 31, 2019** **Three months ended** **December 31, 2018** **12 months ended** **December 31, 2019** **12 months ended** **December 31, 2018** Total revenues $ 124,279 $ 108,964 $ 395,664 $ 374,401 Greater China revenues $ 38,481 $ 35,553 $ 124,294 $ 117,520 Non-controlling interest ownership percentage(4) 30.26% 32.04% 30.26% 32.06% Deduction for non-controlling interest share of revenues (11,644) (11,391) (37,611) (37,678) Adjusted revenues attributable to common shareholders $ 112,635 $ 97,573 $ 358,053 $ 336,723 (4) Weighted average ownership percentage for change in non-controlling interest share **IMAX CORPORATION ****Adjusted Net Income and Adjusted Diluted Per Share Calculations **_(In thousands of U.S. dollars) __(Unaudited)_ **Three Months Ended** **Three Months Ended** **December 31, 2019** **December 31, 2018** **Net Income** **Diluted EPS** **Net Income** **Diluted EPS** Reported net income $                    21,352 $                        0.35 $                      3,771 $                        0.06 Adjustments: — Stock-based compensation 5,914 0.10 5,046 0.08 Exit costs, restructuring charges and associated impairments — — 8,384 0.13 Legal arbitration award — — 4,237 0.07 Executive transition costs — — 2,994 0.05 Change in fair value of equity investment (2,026) (0.03) — — Impact of enactment of U.S. Tax Act — — — — Tax impact on items listed above (1,095) (0.02) (4,586) (0.07) Adjusted net income 24,145 0.40 19,846 0.32 Net income attributable to non-controlling interests(1) (3,181) (0.05) (2,077) (0.04) Stock-based compensation (net of tax of less than $0.1 million and less than $0.1 million, respectively)(1) (112) (0.01) (115) — Exit costs, restructuring charges and associated impairments (net of tax of $nil and $0.4 million, respectively)(1) — — (1,262) (0.02) Change in fair value of equity investment 617 0.01 — — Adjusted net income attributable to common shareholders $                    21,469 $                        0.35 $                    16,392 $                        0.26 Weighted average diluted shares outstanding 61,542 62,127 (1) Reflects amounts attributable to non-controlling interests. **12 Months Ended** **12 Months Ended** **December 31, 2019** **December 31, 2018** **Net Income** **Diluted EPS** **Net Income** **Diluted EPS** Reported net income $                    58,571 $                        0.95 $                    33,595 $                        0.53 Adjustments: Stock-based compensation 22,830 0.37 22,211 0.35 Exit costs, restructuring charges and associated impairments 850 0.01 9,542 0.15 Legal arbitration award — — 11,737 0.19 Executive transition costs — — 2,994 0.05 Change in fair value of equity investment 517 0.01 — — Impact of enactment of U.S Tax Cut and Jobs Act — — — — Tax impact on items listed above (5,614) (0.09) (9,873) (0.16) Adjusted net income 77,154 1.25 70,206 1.11 Net income attributable to non-controlling interests(1) (11,705) (0.19) (10,751) (0.17) Stock-based compensation (net of tax of $0.1 million and $0.1 million, respectively)(1) (480) (0.01) (394) (0.01) Exit costs, restructuring charges and associated impairments (net of tax of $nil and $0.4 million, respectively)(1) — — (1,262) (0.02) Change in fair value of equity investment (184) — — — Adjusted net income attributable to common shareholders $                    64,785 $                        1.05 $                    57,799 $                        0.91 Weighted average diluted shares outstanding 61,489 63,207 (1) Reflects amounts attributable to non-controlling interests. **_Return on Invested Capital:_** Return on Invested Capital("ROIC") is not defined under U.S. generally accepted accounting principles. Therefore, ROIC should not be considered a substitute for other measures prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. The Company defines ROIC as earnings before interest after taxes (before non-controlling interests) divided by total invested capital (total equity plus total debt less goodwill and other intangible assets). The Company believes ROIC is meaningful to investors as it focuses on shareholder value creation. A reconciliation of ROIC is presented in the table below: **Twelve Months Ended** **December 31,** **2019** **2018** Income from operations $ 77,278 $ 45,176 Provision for income taxes (16,768) (9,518) **EBIAT** $ 60,510 $ 35,658 Total shareholders' equity $ 637,187 $ 592,918 Total bank indebtedness 18,229 37,753 Less: Goodwill 39,027 39,027 Less: Other intangible assets 30,347 34,095 **Total Invested Capital** $ 586,042 $ 557,549 **Return on Invested Capital (Non-GAAP measure)** 10.33% 6.40% **_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: **Three Months Ended** **12 Months Ended** **December 31, 2019** **December 31, 2019** Net cash provided by operating activities $ 23,119 $ 90,376 Net cash used in investing activities (12,340) (65,994) Free cash flow $ 10,779 $ 24,382 ![Cision](https://c212.net/c/img/favicon.png?sn=NY24477&sd=2020-02-19 "Cision ID")View original content to download multimedia:[http://www.prnewswire.com/news-releases/imax-corporation-reports-fourth-quarter-and-full-year-2019-results-301007871.html](http://www.prnewswire.com/news-releases/imax-corporation-reports-fourth-quarter-and-full-year-2019-results-301007871.html) SOURCE IMAX Corporation