IMAX Corporation Reports Fourth-Quarter and Full-Year 2018 Results

Investors:

IMAX Corporation, New York

Michael K. Mougias

212-821-0187

[email protected]

Media:

IMAX Corporation, New York

Amanda Collins

212-821-0155

[email protected]

Signings and Installations

December 31, 2018

Year Ended December 31,

Theater Signings:

2018

2017

Full new sales and sales-type lease arrangements

57

85

New traditional joint revenue sharing lease arrangements

55

35

New hybrid joint revenue sharing lease arrangements

10

50

Total new theaters

122

170

Upgrades of IMAX theater systems

112

⁽¹⁾

7

Total Theater Signings

234

177

Year Ended December 31,

Theater Installations:

2018

2017

Full new sales and sales-type lease arrangements

63

60

New traditional joint revenue sharing lease arrangements

72

86

New hybrid joint revenue sharing lease arrangements

14

19

Total new theaters

149

165

Upgrades of IMAX theater systems

23

5

Total Theater Installations

172

170

As of December 31,

Theater Backlog:

2018

2017

Sales and sales-type lease arrangements

177

⁽²⁾

162

Joint revenue sharing arrangements

Hybrid lease arrangements

118

121

Traditional arrangements

269

⁽³⁾

216

Total Theater Backlog

564

⁽⁴⁾

499

⁽⁵⁾

As of December 31,

Theater Network:

2018

2017

Commercial Multiplex Theaters:

Sales and sales-type lease arrangements

611

525

Traditional joint revenue sharing arrangements

674

613

Hybrid joint revenue sharing lease arrangements

124

134

Total Commercial Multiplex Theaters

1,409

1,272

Commercial Destination

14

12

Institutional

82

86

Total Theater Network

1,505

1,370

(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 20 hybrid sales theater systems which were previously classified under joint revenue sharing arrangements – hybrid sales arrangements.

(3)

Includes 46 theater systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement.

(4)

Includes 83 new laser projection system configurations (73 of the 83 new systems are IMAX with Laser projection system configurations) and 100 upgrades of

existing locations to laser projection system configurations (98 of the 100 upgrades are for the IMAX with Laser projection system configurations).

(5)

Includes 27 new laser projection system configurations (three of the 27 new systems are IMAX with Laser projection system configurations) and five upgrades of

existing locations to laser projection system configurations (three of the five upgrades are for the IMAX with Laser projection system configurations).

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,

2018

2017

2018

2017

Revenues

Equipment and product sales

$

46,409

$

39,701

$

106,591

$

103,294

Services

42,769

62,330

181,740

195,594

Rentals

16,667

21,138

74,472

72,281

Finance income

3,119

2,384

11,598

9,598

108,964

125,553

374,401

380,767

Costs and expenses applicable to revenues

Equipment and product sales

25,233

15,820

54,853

48,172

Services

21,428

40,951

84,236

120,629

Rentals

7,661

8,634

27,383

26,720

54,322

65,405

166,472

195,521

Gross margin

54,642

60,148

207,929

185,246

Selling, general and administrative expenses

30,380

25,199

117,477

109,882

Research and development

2,186

6,217

13,728

20,855

Amortization of intangibles

1,249

837

4,145

3,019

Receivable provisions, net of recoveries

1,463

559

3,130

2,647

Asset impairments

-

-

-

1,225

Legal arbitration award

4,237

-

11,737

-

Executive transition costs

2,994

-

2,994

-

Exit costs, restructuring charges and associated impairments

8,384

2,479

9,542

16,174

Income from operations

3,749

24,857

45,176

31,444

Retirement benefits non-service expense

(125)

(130)

(499)

(518)

Interest income

723

266

1,844

1,027

Interest expense

(613)

(524)

(2,916)

(1,942)

Income from operations before income taxes

3,734

24,469

43,605

30,011

Provision for income taxes

22

(15,905)

(9,518)

(16,790)

Gain (loss) from equity-accounted investments, net of tax

15

134

(492)

(703)

Net income

3,771

8,698

33,595

12,518

Less: net income attributable to non-controlling interests

(2,077)

(3,867)

(10,751)

(10,174)

Net income attributable to common shareholders

$

1,694

$

4,831

$

22,844

$

2,344

Net income per share attributable to common shareholders - basic and diluted:

Net income per share - basic

$

0.03

$

0.08

$

0.36

$

0.04

Net income per share - diluted

$

0.03

$

0.08

$

0.36

$

0.04

Weighted average number of shares outstanding (000's):

Basic

61,924

64,658

63,075

65,380

Fully Diluted

62,127

64,790

63,207

65,540

Additional Disclosure:

Depreciation and amortization⁽¹⁾

$

15,453

$

27,040

$

57,437

$

66,807

(1) Includes $0.1 million and $1.1 million of amortization of deferred financing costs charged to interest expense for the three months and year

ended December 31, 2018 (2017 - $0.2 million and $0.6 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,

2018

2017

Assets

Cash and cash equivalents

$

141,590

$

158,725

Accounts receivable, net of allowance for doubtful accounts of $3,174 (December 31, 2017 — $1,613)

93,309

130,546

Financing receivables, net of allowance for uncollectible amounts

127,432

129,494

Inventories

44,560

30,788

Prepaid expenses

10,294

7,549

Film assets

16,367

5,026

Property, plant and equipment

280,658

276,781

Other assets

55,004

26,757

Deferred income taxes

31,264

30,708

Other intangible assets

34,095

31,211

Goodwill

39,027

39,027

Total assets

$

873,600

$

866,612

Liabilities

Bank indebtedness

$

37,753

$

25,357

Accounts payable

32,057

24,235

Accrued and other liabilities

97,724

100,140

Deferred revenue

106,709

113,270

Total liabilities

274,243

263,002

Commitments and contingencies

Non-controlling interests

6,439

1,353

Shareholders' equity

Capital stock common shares — no par value. Authorized — unlimited number.

61,478,168 — issued and 61,433,589 — outstanding (December 31, 2017 — 64,902,201 — issued
and 64,695,550 — outstanding)

422,455

445,797

Less: Treasury stock, 44,579 shares at cost (December 31, 2017 — 206,651)

(916)

(5,133)

Other equity

179,595

175,300

Accumulated deficit

(85,385)

(87,592)

Accumulated other comprehensive loss

(3,588)

(626)

Total shareholders' equity attributable to common shareholders

512,161

527,746

Non-controlling interests

80,757

74,511

Total shareholders' equity

592,918

602,257

Total liabilities and shareholders' equity

$

873,600

$

866,612

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,

2018

2017

Cash provided by (used in):

Operating Activities

Net income

$

33,595

$

12,518

Adjustments to reconcile net income to cash from operations:

Depreciation and amortization

57,437

66,807

Write-downs, net of recoveries

11,770

29,568

Change in deferred income taxes

(6,923)

(4,017)

Stock and other non-cash compensation

23,723

24,075

Unrealized foreign currency exchange loss (gain)

631

(502)

Loss from equity-accounted investments

95

306

Gain on non-cash contribution to equity-accounted investees

397

397

Investment in film assets

(23,200)

(34,645)

Changes in other non-cash operating assets and liabilities

12,447

(9,141)

Net cash provided by operating activities

109,972

85,366

Investing Activities

Purchase of property, plant and equipment

(13,368)

(24,143)

Investment in joint revenue sharing equipment

(34,810)

(42,634)

Investment in new business ventures

-

(1,606)

Acquisition of other intangible assets

(8,696)

(5,214)

Net cash used in investing activities

(56,874)

(73,597)

Financing Activities

Increase in bank indebtedness

65,000

-

Repayment of bank indebtedness

(50,667)

(2,000)

Repurchase of common shares

(71,479)

(46,140)

Repurchase of common shares, IMAX China

(6,084)

-

Settlement of restricted share units and options

(916)

(20,331)

Common shares issued - stock options exercised

1,017

16,668

Treasury stock repurchased for future settlement of restricted share units

(5,249)

(5,133)

Taxes withheld and paid on employee stock awards vested

(1,437)

(600)

Issuance of subsidiary shares to non-controlling interests

7,796

-

Dividends paid to non-controlling interests

(6,934)

-

Credit facility amendment fees paid

(1,909)

-

Net cash used in financing activities

(70,862)

(57,536)

Effects of exchange rate changes on cash

629

(267)

Decrease in cash and cash equivalents during year

(17,135)

(46,034)

Cash and cash equivalents, beginning of year

158,725

204,759

Cash and cash equivalents, end of year

$

141,590

$

158,725

IMAX CORPORATION

SELECTED FINANCIAL DATA

In accordance with United States Generally Accepted Accounting Principles

(in thousands of U.S. dollars)

The Company has four primary reporting groups identified by nature of product sold or service provided: (1) Network Business, reporting

variable revenue generated by box-office results and which includes the reportable segments of IMAX DMR and contingent rent from the JRSAs and

IMAX systems-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 Theatre System Maintenance reportable segments, and also includes fixed hybrid revenue and upfront

installation costs from the JRSA segment; (3) New Business, which includes content licensing and distribution fees associated with our content

investments, virtual reality initiatives, IMAX Home Entertainment, and other business initiatives that are in the development and/or start-up phase, and

(4) Other; which includes the film post-production and distribution segments and certain IMAX theaters that the Company owns and operates, camera

rentals and other miscellaneous items.

Three Months

Years Ended

Ended December 31,

Ended December 31,

2018

2017

2018

2017

Revenue

Network Business

IMAX DMR

$

25,207

$

31,717

$

110,793

$

108,853

Joint revenue sharing arrangements - contingent rent

16,452

20,741

73,371

70,444

IMAX systems - contingent rent

-

1,317

-

3,890

41,659

53,775

184,164

183,187

Theater Business

IMAX systems

Sales and sales-type leases

37,887

31,675

88,432

79,853

Ongoing fees and finance income

3,242

2,650

12,224

10,494

Joint revenue sharing arrangements – fixed fees

5,885

5,582

9,706

10,118

Theater system maintenance

12,222

11,924

49,684

45,383

Other theater

2,651

3,696

8,358

9,145

61,887

55,527

168,404

154,993

New Business

770

13,014

5,769

24,522

Other

Film distribution and post-production

3,806

1,803

12,962

13,172

Other

842

1,433

3,102

4,893

4,648

3,236

16,064

18,065

Total revenues

$

108,964

$

125,552

$

374,401

$

380,767

Gross margin

Network Business

IMAX DMR ⁽¹⁾

$

15,250

$

19,211

$

72,773

$

71,789

Joint revenue sharing arrangements – contingent rent⁽¹⁾

9,415

14,066

48,856

47,337

IMAX systems - contingent rent

-

1,317

-

3,890

24,665

34,594

121,629

123,016

Theater Business

IMAX systems ⁽¹⁾

Sales and sales-type leases

$

19,338

$

19,449

$

47,986

$

47,639

Ongoing fees and finance income

3,194

2,513

12,033

10,095

Joint revenue sharing arrangements – fixed fees⁽¹⁾

1,206

1,462

1,982

2,349

Theater system maintenance

4,702

4,969

21,991

18,275

Other theater

707

883

1,806

1,965

29,147

29,276

85,798

80,323

New Business

(489)

(2,744)

(350)

(16,176)

Other

Film distribution and post-production ⁽¹⁾

1,443

(744)

1,763

(1,006)

Other

(124)

(234)

(911)

(911)

1,319

(978)

852

(1,917)

Total segment margin

$

54,642

$

60,148

$

207,929

$

185,246

(1)

IMAX DMR segment margins include marketing costs of $2.8 million and $16.5 million for the three months and year ended, respectively (2017

- $5.6 million and $15.4 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and

commission costs of $1.4 million and $3.6 million for the three months and year ended, respectively (2017 - $2.0 million and $4.5 million,

respectively). IMAX system segment margins include marketing and commission costs of $0.9 million and $2.9 million for the three months and

year ended, respectively (2017 - $1.3 million and $3.5 million). Film distribution and post production segment margins include marketing

expense of $0.2 million and $2.2 million for the three months and year ended (2017 - an expense of $nil and recovery of $0.7 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 and adjusted EBITDA per Credit Facility 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 Inhumansare relevant and useful

information widely used by analysts, investors and other interested parties in the Company's industry.

Quarter Ended

Year Ended

Year Ended

December 31, 2018

December 31, 2018

⁽¹⁾

December 31, 2017

(In thousands of U.S. Dollars)

Net income

$

3,771

$

33,595

$

12,518

Add (subtract):

Provision for income taxes

(22)

9,518

16,790

Interest expense, net of interest income

(110)

1,072

915

Depreciation and amortization, including film asset amortization⁽¹⁾

15,453

57,437

66,245

EBITDA

19,092

101,622

96,468

Stock and other non-cash compensation

5,483

23,723

23,718

Write-downs, net of recoveries including asset impairments and

receivable provisions⁽¹⁾

2,797

5,338

24,015

Exit costs, restructuring charges and associated impairments

8,384

9,542

16,174

Legal arbitration award

4,237

11,737

-

Executive transition costs

2,994

2,994

-

(Gain) loss from equity accounted investments

(15)

492

703

Adjusted EBITDA before non-controlling interests

42,972

155,448

161,078

Adjusted EBITDA attributable to non-controlling interests⁽²⁾

(6,593)

(22,220)

(22,927)

Adjusted EBITDA per Credit Facility

$

36,379

$

133,228

$

138,151

*

Adjusted EBITDA per Credit Facility, excluding impact

from "Marvel's Inhumans"

$

36,379

$

133,228

$

126,158

*

Adjusted revenues attributable to common shareholders

$

97,573

$

336,723

$

340,460

Adjusted EBITDA margin, excluding impact from "Marvel's Inhumans"

37.3

%

39.6

%

37.1

%

* Adjusted EBITDA per Credit Facility of $138.2 million includes the impact of the Company's investment in "Marvel's

Inhumans", which resulted in a $13.0 million loss. However, as permitted by the Credit Facility, this loss was offset by addbacks of

$13.3 million and $11.7 million for amortization and impairment charges, respectively, relating to the investment, the net effect of

which was to increase Adjusted EBITDA per Credit Facility by $12.0 million. This investment represents the Company's first foray

into a commercial television property, and therefore the Adjusted EBITDA per Credit Facility metric presented above may not be

reflective of the Company's typical operational activity. Further, the Company does not yet know whether it will make similar

investments in the future. As a result, the Company is also presenting Adjusted EBITDA per Credit Facility excluding the impact of

"Marvel's Inhumans" to better facilitate comparisons to prior and future periods.

__________________

(1) Senior Secured Net Leverage Ratio calculated using twelve months ended Adjusted EBITDA per Credit Facility.

(2) The Adjusted EBITDA per Credit Facility calculation includes the reduction in Adjusted EBITDA per Credit Facility from the

Company's non-controlling interests.

(3)

Quarter Ended

Year Ended

Year Ended

December 31, 2018

December 31, 2018

December 31, 2017

Total revenues

$

108,964

$

374,401

$

380,767

Greater China revenues

$

35,553

$

117,520

$

126,474

Non-controlling interest ownership percentage⁽⁴⁾

32.04%

32.06%

31.87%

Deduction for non-controlling interest share

of revenues

(11,391)

(37,678)

(40,307)

Adjusted revenues attributable to common

shareholders

$

97,573

$

336,723

$

340,460

(4)

Weighted average ownership percentage for change in non-controlling interest share

Return on Invested Capital:

2018

2017

Income from operations

$

45,176

$

31,444

Provision for income taxes

(9,518)

(16,790)

EBIAT Return

$

35,658

$

14,654

Total shareholders' equity

$

592,918

$

602,257

Total bank indebtedness

37,753

25,357

Less: Goodwill

39,027

39,027

Less: Other intangible assets

34,095

31,211

Total Invested Capital

$

557,549

$

557,376

Return on Invested Capital (Non-GAAP measure)

6.4%

2.6%

*

* 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.

IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended December 31, 2018 vs. 2017:

The Company reported net income of $3.8 million or $0.06 per basic and diluted share for the quarter ended December 31, 2018 as

compared to net income of $8.7 million or $0.13 per basic and diluted share for the quarter ended December 31, 2017.

Net income for the quarter ended December 31, 2018 includes a $5.0 million charge or $0.08 per diluted share (2017 — $4.9 million

or $0.08 per diluted share) for stock-based compensation, a $8.4 million charge, or $0.13 per diluted share for exit costs, restructuring

charges and associated impairments (2017 - $2.5 million or $0.04 per diluted share), a $4.2 million, or $0.07 per diluted share, for a

legal arbitration award related to one of the Company's litigation matters from 2006 (2017- $nil) and a $3.0 million, or $0.05 per diluted

share for executive transition costs (2017 — $nil). In 2017, the Company also recognized a $9.3 million, or $0.14 per diluted share, non-

recurring tax charge as the Company re-measured its deferred tax assets and liabilities as at the date of enactment of the amended Tax

Cut and Jobs Act.

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, executive transition costs, the related tax impact of these adjustments,

and tax charge from the provisional re-measurement of U.S. deferred tax assets and liabilities given changes enacted by the Tax Act,

was $19.8 million, or $0.32 per diluted share, for the quarter ended December 31, 2018 as compared to adjusted net income of $25.7

million or $0.40 per diluted share for the quarter ended December 31, 2017.

The Company reported net income attributable to common shareholders of $1.7 million, or $0.03 per basic and diluted share for the

year ended December 31, 2018 (2017 — $4.8 million, or $0.08 per 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, executive transition costs, the related tax impact of these adjustments, and tax charge from the provisional re-measurement of

U.S. deferred tax assets and liabilities given changes enacted by the Tax Act, was $16.4 million, or $0.26 per diluted share, for the

quarter ended December 31, 2018 as compared to adjusted net income attributable to common shareholders of $21.8 million or $0.34

per diluted share for the quarter ended December 31, 2017.

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,

2018

2017

Net Income

Diluted EPS

Net Income

Diluted EPS

Reported net income

$

3,771

$

0.06

$

8,698

$

0.13

Adjustments:

Stock-based compensation

5,046

0.08

4,857

0.08

Exit costs, restructuring charges and associated impairments

8,384

0.13

2,479

0.04

Legal arbitration award

4,237

0.07

-

-

Executive transition costs

2,994

0.05

-

-

Tax impact on items listed above

(4,586)

(0.07)

360

0.01

Impact of enactment of U.S. Tax Act

-

-

9,323

0.14

Adjusted net income

19,846

0.32

25,717

0.40

Net income attributable to non-controlling interests ⁽¹⁾

(2,077)

(0.04)

(3,867)

(0.06)

Stock-based compensation (net of tax of less than $0.1

million and less than $0.1 million, respectively)⁽¹⁾

(115)

-

(76)

-

Exit costs, restructuring charges and associated impairments

(net of tax of $0.4 million and $nil, respectively) ⁽¹⁾

(1,262)

(0.02)

(2)

-

Adjusted net income attributable to common shareholders

$

16,392

$

0.26

$

21,774

$

0.34

Weighted average diluted shares outstanding

62,127

64,790

(1) Reflects amounts attributable to non-controlling interests.

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Year Ended December 31, 2018 vs. 2017:

The Company reported net income of $33.6 million or $0.53 per basic and diluted share for the year ended December 31, 2018 as

compared to net income of $12.5 million and $0.19 per basic and diluted share, for the year ended December 31, 2017.

Net income for the year ended December 31, 2018 includes a $22.2 million charge or $0.35 per diluted share (2017 — $22.7 million

or $0.35 per diluted share) for stock-based compensation, a $9.5 million charge or $0.15 per diluted share for exit costs, restructuring

charges and associated impairments (2017 - $16.2 million or $0.25 per diluted share), a $11.7 million, or $0.19 per diluted share, for a

legal arbitration award related to one of the Company's litigation matters from 2006 (2017 — $nil) and a $3.0 million, or $0.05 per diluted

share for executive transition costs (2017 — $nil). In 2017, the Company also recognized a $9.3 million, or $0.14 per diluted

share, non-recurring tax charge as the Company re-measured its deferred tax assets and liabilities as of the date of enactment of the

recently passed Tax Act.

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, executive transition costs, the related tax impact of these adjustments,

and tax charge from the provisional re-measurement of U.S. deferred tax assets and liabilities given changes enacted by the Tax Act,

was $70.2 million, or $1.11 per diluted share, for the year ended December 31, 2018 as compared to adjusted net income of $51.5 million

or $0.79 per diluted share for the year ended December 31, 2017.

The Company reported net income attributable to common shareholders of $22.8 million, or $0.36 per basic and diluted share for the

year ended December 31, 2018 (2017 — $2.3 million, or $0.04 per basic share 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, executive transition costs, the related tax impact of these adjustments, and tax charge from the provisional re-measurement of

U.S. deferred tax assets and liabilities given changes enacted by the Tax Act, was $57.8 million or $0.91 per diluted share for the year

ended December 31, 2018 as compared to adjusted net income attributable to common shareholders of $40.5 million or $0.62 per diluted

share for the year ended December 31, 2017.

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,

2018

2017

Net Income

Diluted EPS