--- title: IMAX Corporation Reports Second-Quarter 2019 Financial Results publisher: "IMAX" description: "NEW YORK , July 30, 2019 /PRNewswire/ --  HIGHLIGHTS (Note: Percentage and other changes refer to second quarter 2018 unless otherwise noted.) Strong execution and focus on core business driving solid financial performance, with record results across key metrics for China business." canonical: "https://www.imax.com/pr/imax-corporation-reports-second-quarter-2019-financial-results" date: 2019-07-30 last_updated: 2019-07-30 --- IMAX Corporation Reports Second-Quarter 2019 Financial Results ============================================================== Tue, Jul 30, 2019 NEW YORK, July 30, 2019/PRNewswire/ --  ![IMAX Logo. (PRNewsFoto/IMAX Corporation)](https://mma.prnewswire.com/media/74988/imax_corporation_logo.jpg "IMAX Logo. (PRNewsFoto/IMAX Corporation)") **HIGHLIGHTS** **_(Note: Percentage and other changes refer to second quarter 2018 unless otherwise noted.)_** * **Strong execution and focus on core business driving solid financial performance, with record results across key metrics for Chinabusiness.** * **6.6% growth in revenue driven by growth in global box office.** * **10.0% growth in commercial network.** * **28.8% growth in IMAX Greater China box office.** * **Delivered GAAP net income per share of $0.19, compared to $0.12; adjusted net income per share of $0.32, compared to $0.30per share.** * **On-track to deliver low double-digit growth in IMAXglobal box office for full-year 2019.** IMAX Corporation(NYSE: IMAX), a world leader in using technology to eventicize content, reported revenues of $104.8 million, gross profit of $59.6 millionand net income attributable to common shareholders of $11.4 million, or $0.19per diluted share, for the second-quarter ended June 30, 2019. Adjusted net income attributable to common shareholders for the quarter was $19.7 million, or $0.32per diluted share, Adjusted EBITDA was $41.4 millionand Adjusted EBITDA margin was 43.8%. For reconciliations of reported results to non-GAAP financial results, and for the definition and reconciliation of Adjusted EBITDA, please refer to **Tables 8 - 10**and the discussion of non-GAAP measures at the end of this earnings release. "IMAXis on track to deliver its best year ever at the box office, with the success of _Spider-Man: Far From Home_, _The Lion King,_ and our record-breaking, first local language animated release in Chinathis past weekend, _Ne Zha_, leading a strong second half film slate and building on our solid first-half," said IMAXCEO Richard L. Gelfond.  "Our continued success is driven by the privileged position we hold in the entertainment ecosystem, where our end-to-end technology empowers world-class creators to bring cultural events and communal experiences to life on a global scale." **Second Quarter 2019 Results** **Box Office Update (Table 2)**  Gross box office from IMAX DMR® films was $364.9 millionin the second quarter of 2019, compared to $342.6 millionin the second quarter of 2018, representing an increase of 6.5%. The $22.3 millionincrease in gross box office was principally driven by a $29.1 millionincrease in Chinabox office. A total of 19 films (15 new and 4 carryovers) were exhibited in the quarter, compared to 14 films (10 new and 4 carryovers) in the second quarter of 2018. "Through our strong relationships with creators, the power of our global network and our continued cost discipline, we are now delivering top-line growth, EBITDA margin expansion and enhanced returns on capital for investors," Gelfond added. "We continue to enhance IMAX'sposition in the entertainment ecosystem and have established a solid foundation to deliver further growth in the quarters and years ahead."  **Global Network Update (Table 3)**  The total IMAX® theater network consisted of 1,541 systems as of June 30, 2019, of which 1,445 were in commercial multiplexes. Including upgrades, there were 612 theaters in backlog as of June 30, 2019, compared to the 635 in backlog as of June 30, 2018. IMAXalso signed contracts for 54 new theaters and 19 upgrades in the second quarter of 2019, reflecting the strong demand for our systems. During the quarter, the Company installed 35 theater systems, 27 of which were for new theater locations. For a breakdown of theater system signings, backlog, installations, and network by type for the second quarter of 2019, please refer to **Table 3**at the end of this earnings release. **Second Quarter Consolidated Results** The gross margin across all segments in the second quarter of 2019 was $59.6 million, or 56.8% of total revenues, compared to $60.4 million, or 61.4% of total revenues, in the second quarter of 2018. The slight decline in gross margin was driven by higher cost of revenues in our Network and Theater businesses, as well as a decline in revenues in our New Business segment as a result of a residual one-time payment to the Company of $2.6 millionin the prior year period related to our discontinued virtual reality initiative. Operating expenses (which includes SG&A, excluding stock-based compensation, plus R&D) were $26.8 millionin the quarter representing an 10.9% decline from the prior year period. **Second Quarter Segment Results (Table 1)** _(in millions of USD except % change amounts)_           **Network Business**   **Theater Business**       **Revenue**   **Gross Margin** **Gross Margin %**   **Revenue**   **Gross Margin** **Gross Margin %**                           2Q19 $ 64.7 $ 43.2 66.8% $ 34.9 $ 15.4 44.2%   2Q18   60.9   42.9 70.5%   30.9   16.0 51.9%   % change   6.3%   0.7%     13.2%   (3.8%)                             YTD 2Q19 $ 110.6 $ 74.8 67.7% $ 65.2 $ 28.6 43.9%   YTD 2Q18   105.8   74.4 70.3%   65.8   36.5 55.4%   % change   4.5%   0.5%     (0.9%)   (21.5%)                                                         **Second Quarter Segment Results (Tables 1 and 7)** **Network Business** * Network business revenues increased 6.3% to $64.7 millionin the quarter, compared with $60.9 millionin the prior-year period. The $3.8 millionincrease in revenues was driven principally by a $3.1 million, or 8.7%, increase in IMAX DMR revenues and a $0.6 million, or 2.3% increase in revenues from joint revenue-sharing arrangements. The strong increase in IMAX DMR revenues was driven by a $22.3 millionincrease in IMAXglobal box office. * The blended take-rate (defined as total Network revenue divided by total IMAXglobal box office) for IMAX DMR and joint revenue sharing arrangements was 17.7% in the quarter, compared to 17.8% in the prior year period.  The slight decline is due to mix of global box office, including the strong performance of Greater China. * Gross margin for the Network business was 66.8%, compared to 70.5% in the prior-year period. The decline in gross margin for the business was due to higher contractual marketing costs driven by the strong performance of _Avengers: Endgame_, as well as a 50% increase in the number of releases in the quarter from the 10 new films released in the prior year period. **Theater Business** * Theater business segment revenues increased 13.2% to $34.9 millionin the quarter, compared with $30.9 millionin the prior year period. The $4.1 millionincrease in revenues was driven principally by the higher number of installations in the quarter, as well as higher maintenance revenue on our expanded commercial theater network, partially offset by lower financing revenue. The commercial theater network increased 10.0% to 1,445 commercial multiplex theaters in the current quarter. (Please refer to **Table 3**for detail on our signings, installations and theater network at the end of this earnings release). * The average revenue per new theater system was $1.3 million, compared to $1.2 millionin the prior year period. * Gross margin on sales and sales-type leases was 38.5% compared to 57.6% in the prior year period. The decline in gross margin is due principally to the mix of systems installed in the current quarter, compared to the prior year, as well as the Company's decision to allocate additional resources to ensure the successful roll out and launch of its new IMAXwith Laser® technology. For full-year 2019, the Company anticipates margins on sales type theaters to return to approximately 50%. **Cash Balances and Outstanding Debt (Table 5)** Total cash and cash equivalents as of June 30, 2019was $106.5 million, which includes $64.9 millionheld in the People's Republic of China. Total bank indebtedness was $23.0 millionas of June 30, 2019, including the impact of $2.0 millionof deferred financing fees, and represented a decrease of $14.8 millionfrom $37.8 millionat December 31, 2018. As of June 30, 2019, $275.0 millionis available under the $300.0 millioncredit facility in place due June 28, 2023. **Share Count and Capital Return** The weighted average diluted shares outstanding in second quarter 2019 declined 3.0% to 61.5 million, compared to 63.4 million in second quarter 2018, due to share repurchase activity. In the second quarter of 2019, a total of 87,769 shares were repurchased at an average price of $19.45for a total value of $1.7 million. A total of $126.9 millionis available under the outstanding share repurchase authorization, which expires on June 30, 2020. Total shares outstanding as of June 30, 2019was 61.3 million. **Full-Year 2019 Guidance** IMAX'sguidance for full-year 2019 is as follows: * IMAXglobal box office is expected to experience low double-digit growth compared to the $1,032.1 millionrecorded in full-year 2018. * Operating expenses, defined as selling, general and administrative expenses less stock-based compensation plus research and development costs are expected to be in-line with the $110.7 millionrecorded in full-year 2018. * The effective tax rate is expected to be approximately 23%. * Adjusted EBITDA margin is expected to be approximately 41% to 42%. * Total theater installations are expected in the range of 185 to 190, consisting of new theater installs of 140 to 145 systems and upgrades to IMAXwith Laser of approximately 45 systems. New theater installs are heavily weighted toward the fourth quarter of 2019. * Total theaters equipped with IMAXwith Laser are expected to grow to approximately 140 systems. **Conference Call** The Company will host a conference call today at 4:30 PM ETto discuss its second quarter 2019 financial results. This call is being webcast by Nasdaq and can be accessed at investors.imax.com. To access the call via telephone, interested parties in the US and Canadashould dial (888) 254-3590 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 794-4605. The conference ID for the call is 2957384. A replay of the call will be available via webcast at investors.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 2957384. **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. 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 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 earnings releases, SECfilings and public conference calls and webcasts. **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 additional offices in London, Dublin, Tokyo, and Shanghai. As of June 30, 2019, there were 1,541 IMAXtheater systems (1,445 commercial multiplexes, 15 commercial destinations, 81 institutional) operating in 81 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](https://c212.net/c/link/?t=0&l=en&o=2538786-1&h=403354068&u=http%3A%2F%2Fwww.youtube.com%2Fimaxmovies&a=www.youtube.com%2Fimaxmovies)). For additional information please contact:   _**Investors:**_ IMAX Corporation, New York Stephen Davidson 212-821-0125 [sdavidson@imax.com](mailto:sdavidson@imax.com) _**Media:**_ IMAX Corporation, New York Mark Jafar 212-821-0102 [mjafar@imax.com](mailto: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; 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 and free cash flow 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 and Adjusted EBITDA per Credit Facility are relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry. 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 in Table 6. **Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended June 30, 2019vs. 2018** The Company reported net income of $13.8 million, or $0.22per basic and diluted share, for the second quarter of 2019 as compared to net income of $10.3 million, or $0.16per basic and diluted share, for the second quarter of 2018. Net income for the second quarter of 2019 includes a $7.0 millioncharge, or $0.11per diluted share (2018— $6.8 millionor $0.10per diluted share), for stock-based compensation and a loss of $4.5 million, or $0.07per diluted share, for the change in fair value of equity investment (2018 — $nil). The second quarter of 2018 also includes a $0.5 millioncharge, or $0.01per diluted share, for exit costs, restructuring charges and associated impairments and a $7.5 millioncharge, or $0.12per diluted share, for a legal arbitration award related to one of the Company's litigation matters from 2006. Adjusted net income, which consists of net income excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award, the change in fair value of equity investment and the related tax impact of these adjustments, was $23.8 million, or $0.38per diluted share, for the second quarter of 2019 as compared to adjusted net income of $21.7 million, or $0.34  per diluted share, for the second quarter of 2018. The Company reported net income attributable to common shareholders of $11.4 million, or $0.19per basic and diluted share for the second quarter of 2019 (2018 — $7.6 million, or $0.12per basic and 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, exit costs, restructuring charges and associated impairments, the legal arbitration award, the change in fair value of equity investment and the related tax impact of these adjustments, was $19.7 million, or $0.32per diluted share, for the second quarter of 2019 as compared to adjusted net income attributable to common shareholders of $19.0 million, or $0.30per diluted share, for the second quarter of 2018. 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 Table 4. **Adjusted Net Income and Adjusted Diluted Per Share Calculations – Six Months Ended June 30, 2019vs. 2018** The Company reported net income of $26.3 million, or $0.43per basic and diluted share, for the six months ended June 30, 2019as compared to net income of $22.3 million, or $0.35per basic and diluted share, for the six months ended June 30, 2018. Net income for the six months ended June 30, 2019, includes a $11.4 millioncharge, or $0.19per diluted share (2018 — $11.6 millionor $0.18per diluted share), for stock-based compensation, a $0.9 millioncharge, or $0.01per diluted share for exit costs, restructuring charges and associated impairments (2018 — $1.2 million, or $0.02per diluted share) and a loss of $2.1 million, or $0.03per diluted share, for the change in fair value of equity investment (2018 — $nil). The six months ended June 30, 2018includes a $7.5 millioncharge, or $0.12per diluted share, for a legal arbitration award related to one of the Company's litigation matters from 2006. Adjusted net income, which consists of net income excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award, the change in fair value of equity investment and the related tax impact of these adjustments, was $38.1 million, or $0.62per diluted share, for the six months ended June 30, 2019, as compared to adjusted net income of $38.8 million, or $0.61per diluted share, for the six months ended June 30, 2018. The Company reported net income attributable to common shareholders of $19.7 million, or $0.32per basic and diluted share for the six months ended June 30, 2019(2018 — $16.1 million, or $0.25per basic and 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, exit costs, restructuring charges and associated impairments, the legal arbitration award, the change in fair value of equity investment and the related tax impact of these adjustments, was $30.5 million, or $0.49per diluted share, for the six months ended June 30, 2019, as compared to adjusted net income attributable to common shareholders of $32.4 million, or $0.51per diluted share, for the six months ended June 30, 2018. 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 Table 4. **Table 2:**   **IMAX Global Box Office**   _(in millions of USD)_ **For the three months ended,**   **Jun. 30, 2019** **Mar. 31, 2019** **Dec. 31, 2018** **Sept. 30, 2018** **Jun. 30, 2018** **Domestic** $ 123.3 $ 71.8 $ 82.1 $ 62.0 $ 131.2 **Greater China**   130.1   105.8   69.2   77.8   101.0 **Rest of World**   111.5   78.7   85.4   66.7   110.4 **Total Global Box Office**   364.9   256.3   236.7   206.5   342.6  **Table 3:** **Signings and Installations**               **Three Months** **Ended June 30,**       **Theater System Signings:** **2019**   **2018**       Full new sales and sales-type lease arrangements 7   9       New traditional joint revenue sharing arrangements 2   31       New hybrid joint revenue sharing lease arrangements 45   \-       **Total new theaters** **54**   **40**       Upgrades of IMAX theater systems 19   98           **Total theater signings** **73**   **138**                                     **Three Months** **Ended June 30,**       **Theater System Installations:** **2019**   **2018**       Full new sales and sales-type lease arrangements 9   9       New traditional joint revenue sharing arrangements 13   19       New hybrid joint revenue sharing lease arrangements 5   2       **Total new theaters** **27**   **30**       Upgrades of IMAX theater systems 8   1          **Total theater installations** **35**   **31**                       **Three Months** **Ended June 30,**               **Theater Sales Backlog:** **2019**   **2018**       Sales and sales-type lease arrangements 182   181       Joint revenue sharing arrangements             Hybrid lease arrangements 154   115       Traditional arrangements 276 (1) 339       **Total theater backlog** **612** (2) **635** (3)                     **Three Months** **Ended June 30,**               **Theater Network:** **2019**   **2018**       Commercial Multiplex Theaters:             Sales and sales-type lease arrangements 619   576       Traditional joint revenue sharing arrangements 693   628       Hybrid joint revenue sharing lease arrangements 133   110       **Total Commercial Multiplex Theaters** **1,445**   **1,314**                     Commercial Destination Theaters 15   12       Institutional Theaters 81   84          **Total theater network** **1,541**   **1,410**     \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (1) Includes 60 theater systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement. (2) Includes 150 new laser projection system configurations and 121 upgrades of existing locations to laser projection system configurations (118 of the 121 upgrades are for the IMAX with Laser projection system configurations). (3) Includes 75 new laser projection system configurations and 101 upgrades of existing locations to laser projection system configurations (99 of the 101 upgrades are for the IMAX with Laser projection system configurations).   **Table 4:** **IMAX CORPORATION** **CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS** _(In thousands of U.S. dollars, except per share amounts)_ **_(Unaudited)_**                                   **Three Months Ended**   **Six Months Ended**       **June 30,**   **June 30,**       **2019**   **2018**   **2019**   **2018** **Revenues**                         Equipment and product sales   $ 19,694   $ 15,368   $ 34,894   $ 34,881 Services     56,662     54,785     100,809     99,531 Rentals     25,863     25,124     44,033     43,326 Finance income     2,578     3,068     5,259     5,591         **104,797**     **98,345**     **184,995**     **183,329** **Costs and expenses applicable to revenues**                         Equipment and product sales     11,939     7,549     21,374     15,521 Services     26,781     23,633     46,024     43,984 Rentals     6,524     6,759     12,904     12,728         **45,244**     **37,941**     **80,302**     **72,233** **Gross margin**     **59,553**     **60,404**     **104,693**     **111,096** Selling, general and administrative expenses     32,136     32,484     59,785     60,443 Research and development     1,222     3,922     2,358     7,514 Amortization of intangibles     1,218     965     2,293     1,857 Receivable provisions, net of recoveries     927     355     1,358     806 Legal arbitration award     \-     7,500     \-     7,500 Exit costs, restructuring charges and associated impairments     \-     456     850     1,158 **Income from operations**     **24,050**     **14,722**     **38,049**     **31,818** Change in fair value of equity investment     (4,544)     \-     (2,053)     \- Retirement benefits non-service expense     (160)     (124)     (320)     (248) Interest income     572     243     1,142     490 Interest expense     (636)     (851)     (1,317)     (1,345) **Income before income taxes**     **19,282**     **13,990**     **35,501**     **30,715** Provision for income taxes     (5,308)     (3,635)     (8,956)     (8,088) Loss from equity-accounted investments, net of tax   (138)     (100)     (222)     (305) **Net income**     **13,836**     **10,255**     **26,323**     **22,322** Less: net income attributable to non-controlling interests     (2,439)     (2,630)     (6,661)     (6,192) **Net income attributable to common shareholders**   **$** **11,397**   **$** **7,625**   **$** **19,662**   **$** **16,130**                             **Net income per share attributable to common shareholders - basic and diluted:**                   Net income per share — basic and diluted   **$** **0.19**   **$** **0.12**   **$** **0.32**   **$** **0.25**                             Weighted average number of shares outstanding (000's):                           Basic     61,331     63,314     61,354     63,931   Fully Diluted     61,507     63,426     61,525     64,006                             Additional Disclosure:                         Depreciation and amortization(1)   $ 15,593   $ 14,513   $ 29,804   $ 28,034                             (1) Includes $0.1 million and $0.2 million of amortization of deferred financing costs charged to interest expense for the three and six months ended June 30, 2019, respectively (2018 - $0.4 million and $0.6 million, respectively). **Table 5:** **IMAX CORPORATION** **CONDENSED CONSOLIDATED BALANCE SHEETS** _(In thousands of U.S. dollars)_ **_(Unaudited)_**           **June 30,**   **December 31,**   **2019**   **2018** **Assets**           Cash and cash equivalents $ 106,451   $ 141,590 Accounts receivable, net of allowance for doubtful accounts of $4,641 (December 31, 2018 — $3,174)   91,490     93,309 Financing receivables, net of allowance for uncollectible amounts   121,649     127,432 Variable consideration receivable from contracts   36,347     35,985 Inventories   47,976     44,560 Prepaid expenses   11,447     10,294 Film assets   17,266     16,367 Property, plant and equipment   308,326     280,658 Investment in equity securities   14,149     1,022 Other assets   19,946     17,997 Deferred income taxes   29,638     31,264 Other intangible assets   32,176     34,095 Goodwill   39,027     39,027 **Total assets** **$** **875,888**   **$** **873,600**             **Liabilities**           Bank indebtedness $ 22,976   $ 37,753 Accounts payable   22,155     32,057 Accrued and other liabilities   114,150     97,724 Deferred revenue   105,384     106,709 **Total liabilities**   **264,665**     **274,243**             **Commitments and contingencies**                       **Non-controlling interests**   **7,172**     **6,439**             **Shareholders' equity**           Capital stock common shares — no par value. Authorized — unlimited number.           61,432,275 issued and 61,331,289 outstanding (December 31, 2018 — 61,478,168 issued and 61,433,589 outstanding)   423,676     422,455 Less: Treasury stock, 77,607 shares at cost (December 31, 2018 — 44,579)   (1,575)     (916) Other equity   166,232     179,595 Accumulated deficit   (66,828)     (85,385) Accumulated other comprehensive loss   (2,926)     (3,588) **Total shareholders' equity attributable to common shareholders**   **518,579**     **512,161** Non-controlling interests   85,472     80,757 **Total shareholders' equity**   **604,051**     **592,918** **Total liabilities and shareholders' equity** **$** **875,888**   **$** **873,600** ****Table 6:**** **IMAX CORPORATION** **CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS** _(In thousands of U.S. dollars)_ **_(Unaudited)_**       **Six Months Ended**       **June 30,**       **2019**   **2018**   **Cash provided by (used in):**             **Operating Activities**               Net income   $ 26,323   $ 22,322   Adjustments to reconcile net income to cash from operations:               Depreciation and amortization     29,804     28,034   Write-downs, net of recoveries     1,866     1,686   Change in deferred income taxes     1,296     347   Stock and other non-cash compensation     11,710     11,920   Unrealized foreign currency exchange (gain) loss     (14)     473   Change in fair value of equity investment     2,053     \-   Loss from equity-accounted investments     421     106   (Gain) loss on non-cash contribution to equity-accounted investees     (199)     199   Investment in film assets     (8,214)     (18,219)   Changes in other non-cash operating assets and liabilities     (16,529)     (214)   **Net cash provided by operating activities**     **48,517**     **46,654**                   **Investing Activities**               Purchase of property, plant and equipment     (4,175)     (8,632)   Investment in joint revenue sharing equipment     (22,235)     (8,455)   Acquisition of other intangible assets     (1,121)     (1,705)   Investment in equity securities     (15,153)     \-   **Net cash used in investing activities**     **(42,684)**     **(18,792)**                   **Financing Activities**               Increase in bank indebtedness     35,000     \-   Repayment of bank indebtedness     (50,000)     (1,000)   Settlement of restricted share units and options     (7,619)     (1,529)   Treasury stock purchased for future settlement of restricted share units     (1,575)     (4,636)   Repurchase of common shares, IMAX China     (16,813)     \-   Taxes withheld and paid on employee stock awards vested     (219)     (1,279)   Common shares issued - stock options exercised     2,379     799   Repurchase of common shares     (1,258)     (46,452)   Issuance of subsidiary shares to non-controlling interests (net of return on capital)     1,106     6,696   Dividends paid to non-controlling interests     (2,266)     (4,623)   Credit facility amendment fees paid     \-     (1,963)   **Net cash used in financing activities**     **(41,265)**     **(53,987)**                   Effects of exchange rate changes on cash     293     442                   **Decrease in cash and cash equivalents during period**     **(35,139)**     **(25,683)**                   **Cash and cash equivalents, beginning of period**     **141,590**     **158,725**                   **Cash and cash equivalents, end of period**   $ **106,451**   $ **133,042**   **Table 7:** **IMAX CORPORATION** **SELECTED FINANCIAL DATA** **In accordance with United States Generally Accepted Accounting Principles** _(in thousands of U.S. dollars)_             **Three Months Ended**           **June 30,**             **2019**     **2018** **Revenue**               **Network Business**                 IMAX DMR     $ 39,293   $ 36,161   Joint revenue sharing arrangements – contingent rent       25,301     24,730   IMAX systems – contingent rent       131     \-             64,725     60,891 **Theater Business**               IMAX systems                   Sales and sales-type leases       13,793     11,981     Ongoing fees and finance income       2,816     3,282   Joint revenue sharing arrangements – fixed fees       2,548     1,022   Theater system maintenance       13,207     12,335   Other theater       2,580     2,255             34,944     30,875                     **New Business**       478     3,116                     **Other**                 Film distribution and post-production       3,601     2,360   Other       1,049     1,103             4,650     3,463 **Total**     $ 104,797   $ 98,345                     **Gross margin**               **Network Business**                 IMAX DMR(1)     $ 23,961   $ 24,280   Joint revenue sharing arrangements – contingent rent(1)       19,128     18,621   IMAX systems – contingent rent       131     \-             43,220     42,901 **Theater Business**                 IMAX systems(1)                   Sales and sales-type leases       5,310     6,899     Ongoing fees and finance income       2,768     3,234   Joint revenue sharing arrangements – fixed fees(1)       870     246   Theater system maintenance       5,640     5,088   Other theater       841     563             15,429     16,030                     **New Business**       281     1,906                     **Other**                 Film distribution and post-production(1)       458     (387)   Other       165     (46)             623     (433) **Total**     $ 59,553   $ 60,404 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_               (1) IMAX DMR segment margins include marketing costs of $9.5 million and $13.4 million for the three and six months ended June 30, 2019, respectively (2018 - $6.5 million and $10.6 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $0.2 million and $0.3 million for the three and six months ended June 30, 2019, respectively (2018 - $1.0 million and $1.2 million, respectively). IMAX system segment margins include marketing and commission costs of $0.4 million and $0.9 million for the three and six months ended June 30, 2019, respectively (2018 - $0.5 million and  $1.2 million, respectively). Film distribution and post production segment margins include marketing expense of $0.1 million and $0.6 for the three and six months ended June 30, 2019, respectively (2018 - an expense of $0.8 million and $2.0 million, respectively). **Table 8:** **IMAX CORPORATION** **Adjusted EBITDA per Credit Facility**  _(in thousands of U.S. dollars)_         **For the**   **For the**       **3 Months Ended**   **12 Months Ended**     **June 30, 2019**   **June 30, 2019** (1) **_(In thousands of U.S. Dollars)_**             Net income $ 13,836   $ 37,596   Add (subtract):               Provision for income taxes   5,308     10,386     Interest expense, net of interest income   64     392     Depreciation and amortization, including film asset amortization   15,593     59,207     EBITDA $ 34,801   $ 107,581     Stock and other non-cash compensation   7,186     23,513     Change in fair value of equity investment   4,544     2,053     Write-downs, net of recoveries including asset impairments and               receivable provisions   1,169     5,518     Exit costs, restructuring charges and associated impairments   \-     9,234     Legal arbitration award   \-     4,237     Executive transition costs   \-     2,994     Loss from equity accounted investments   138     409     Adjusted EBITDA before non-controlling interests $ 47,838   $ 155,539     Adjusted EBITDA attributable to non-controlling interests(2)   (6,418)     (23,398)     Adjusted EBITDA per Credit Facility $ 41,420   $ 132,141     Adjusted revenues attributable to common shareholders (3) $ 94,581   $ 336,162     Adjusted EBITDA margin   43.8 %   39.3 %                 (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)     **3 months ended June 30, 2019**   **12 months ended June 30, 2019**   Total revenues       $ 104,797       $ 376,067   Greater China revenues   $ 32,575       $ 125,289       Non-controlling interest ownership percentage(4)     31.36%         31.85%       Deduction for non-controlling interest share of revenues         (10,216)         (39,905)   Adjusted revenues attributable to common shareholders       $ 94,581       $ 336,162                         (4) Weighted average ownership percentage for change in non-controlling interest share **Table 9:**   **IMAX CORPORATION** **Adjusted Net Income and Adjusted Diluted Per Share Calculations**  _(in thousands of U.S. dollars)_       **_(In thousands of U.S. dollars, except per share amounts)_** **Quarter Ended June 30,**   **2019**     **2018**       **Net Income**   **Diluted EPS**     **Net Income**   **Diluted EPS**   Reported net income $ 13,836   $ 0.22     $ 10,255   $ 0.16   Adjustments:                             Stock-based compensation   7,027     0.11       6,756     0.10     Exit costs, restructuring charges and associated impairments   \-     \-       456     0.01     Legal arbitration award   \-     \-       7,500     0.12     Change in fair value of equity investment   4,544     0.07       \-     \-     Tax impact on items listed above   (1,655)     (0.02)       (3,228)     (0.05)   Adjusted net income   23,752     0.38       21,739     0.34     Net income attributable to non-controlling interests(1)   (2,439)     (0.04)       (2,630)     (0.04)     Stock-based compensation (net of tax of less than                             $0.1 million and less than $0.1 million, respectively)(1)   (177)     \-       (147)     \-     Change in fair value of equity investment(1)   (1,443)     (0.02)       \-     \-   Adjusted net income attributable to common shareholders $ 19,693   $ 0.32     $ 18,962   $ 0.30                                 Weighted average diluted shares outstanding         61,507             63,426                                                               **_(In thousands of U.S. dollars, except per share amounts)_** **Six Months Ended June 30,**   **2019**     **2018**       **Net Income**   **Diluted EPS**     **Net Income**   **Diluted EPS**   Reported net income $ 26,323   $ 0.43     $ 22,322   $ 0.35   Adjustments:                             Stock-based compensation   11,389     0.19       11,603     0.18     Exit costs, restructuring charges and associated impairments   850     0.01       1,158     0.02     Legal arbitration award   \-     \-       7,500     0.12     Change in fair value of equity investment   2,053     0.03       \-     \-     Tax impact on items listed above   (2,535)     (0.04)       (3,787)     (0.06)   Adjusted net income   38,080     0.62       38,796     0.61     Net income attributable to non-controlling interests(1)   (6,661)     (0.12)       (6,192)     (0.10)     Stock-based compensation (net of tax of $0.1 million and                             $0.1 million, respectively) (1)   (262)     \-       (204)     \-     Change in fair value of equity investment(1)   (652)     (0.01)       \-     \-   Adjusted net income attributable to common shareholders $ 30,505   $ 0.49     $ 32,400   $ 0.51                                 Weighted average diluted shares outstanding         61,525             64,006         (1) Reflects amounts attributable to non-controlling interests. **Table 10:** **IMAX CORPORATION** **Free Cash Flow Calculation**  _(in thousands of U.S. dollars)_         **For the**   **For the**       **Three months ended**   **Six months ended**     **June 30, 2019**   **June 30, 2019** **_(In thousands of U.S. Dollars)_**             Net cash provided by operating activities   $ 49,186   $ 48,517 Net cash used in investing activities     (15,038)     (42,684)   Net free cash flow   $ 34,148   $ 5,833 ![Cision](https://c212.net/c/img/favicon.png?sn=NY27926&sd=2019-07-30 "Cision ID")View original content to download multimedia:[http://www.prnewswire.com/news-releases/imax-corporation-reports-second-quarter-2019-financial-results-300893510.html](http://www.prnewswire.com/news-releases/imax-corporation-reports-second-quarter-2019-financial-results-300893510.html) SOURCE IMAX Corporation