IMAX CORP [IMAX] Filings

10-Q 1 imax-20230930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-35066

IMAX Corporation

(Exact name of registrant as specified in its charter)


Canada	98-0140269
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2525 Speakman Drive, Mississauga, Ontario, Canada L5K 1B1 (905) 403-6500	902 Broadway, Floor 20 New York, New York, USA 10010 (212) 821-0100

(Address of principal executive offices, zip code, telephone numbers)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	IMAX	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class		Outstanding as of September 30, 2023
Common Shares, no par value		54,607,095

IMAX CORPORATION

Table of Contents


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	72
Item 4.	Controls and Procedures	74

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	75
Item 1A.	Risk Factors	75
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	76
Item 5.	Other Information	77
Item 6.	Exhibits	78
Signatures		79

IMAX CORPORATION

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


	Page
The following unaudited Condensed Consolidated Financial Statements are filed as part of this Report:

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	4
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022	5
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022	6
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	7
Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2023 and 2022	8
Notes to Condensed Consolidated Financial Statements	9

IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. Dollars, except share amounts)

(Unaudited)


	September 30,			December 31,
	2023			2022
Assets
Cash and cash equivalents	$	109,603		$	97,401
Accounts receivable, net of allowance for credit losses		135,962			136,142
Financing receivables, net of allowance for credit losses		125,322			129,384
Variable consideration receivables, net of allowance for credit losses		59,042			44,024
Inventories		45,365			31,534
Prepaid expenses		13,042			12,343
Film assets, net of accumulated amortization		5,232			5,277
Property, plant and equipment, net of accumulated depreciation		238,140			252,896
Investment in equity securities		—			1,035
Other assets		20,119			15,665
Deferred income tax assets, net of valuation allowance		11,961			9,900
Goodwill		52,815			52,815
Other intangible assets, net of accumulated amortization		34,343			32,738
Total assets	$	850,946		$	821,154
Liabilities
Accounts payable	$	37,699		$	25,237
Accrued and other liabilities		123,863			117,286
Deferred revenue		66,272			70,940
Revolving credit facility borrowings, net of unamortized debt issuance costs		23,903			36,111
Convertible notes and other borrowings, net of unamortized discounts and debt issuance costs		228,449			226,912
Deferred income tax liabilities		13,349			14,900
Total liabilities		493,535			491,386
Commitments, contingencies and guarantees (see Note 7)
Non-controlling interests		661			722
Shareholders' equity
Capital stock common shares — no par value. Authorized — unlimited number.
54,607,095 issued and outstanding (December 31, 2022 — 54,148,614 issued and outstanding)		390,097			376,715
Other equity		179,970			185,678
Statutory surplus reserve		3,932			3,932
Accumulated deficit		(272,318	)		(293,124	)
Accumulated other comprehensive loss		(14,637	)		(9,846	)
Total shareholders' equity attributable to common shareholders		287,044			263,355
Non-controlling interests		69,706			65,691
Total shareholders' equity		356,750			329,046
Total liabilities and shareholders' equity	$	850,946		$	821,154

(See the accompanying notes, which are an integral part of these Condensed Consolidated Financial Statements.)

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. Dollars, except per share amounts)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Revenues
Technology sales	$	18,273		$	18,065		$	65,455		$	35,270
Image enhancement and maintenance services		60,250			36,233			154,244			117,285
Technology rentals		23,008			12,540			62,612			43,726
Finance income		2,365			1,917			6,510			6,478
		103,896			68,755			288,821			202,759
Costs and expenses applicable to revenues
Technology sales		7,948			10,061			28,951			20,264
Image enhancement and maintenance services		26,646			20,563			69,470			56,259
Technology rentals		6,587			6,430			19,747			18,728
		41,181			37,054			118,168			95,251
Gross margin		62,715			31,701			170,653			107,508
Selling, general and administrative expenses		36,282			32,905			109,336			100,181
Research and development		2,771			1,115			7,388			3,667
Amortization of intangible assets		1,107			1,111			3,328			3,412
Credit loss expense, net		523			808			1,589			8,149
Asset impairments		—			—			—			4,470
Executive transition costs		—			—			1,353			—
Income (loss) from operations		22,032			(4,238	)		47,659			(12,371	)
Unrealized investment gains		364			35			436			99
Retirement benefits non-service expense		(77	)		(140	)		(232	)		(417	)
Interest income		738			257			1,838			1,176
Interest expense		(1,483	)		(1,323	)		(5,045	)		(4,354	)
Income (loss) before taxes		21,574			(5,409	)		44,656			(15,867	)
Income tax expense		(6,555	)		(2,348	)		(14,901	)		(8,091	)
Net income (loss)		15,019			(7,757	)		29,755			(23,958	)
Less: net income attributable to non-controlling interests		(3,029	)		(1,196	)		(6,960	)		(1,455	)
Net income (loss) attributable to common shareholders	$	11,990		$	(8,953	)	$	22,795		$	(25,413	)

Net income (loss) per share attributable to common shareholders:
Basic	$	0.22		$	(0.16	)	$	0.42		$	(0.44	)
Diluted	$	0.22		$	(0.16	)	$	0.41		$	(0.44	)

Weighted average shares outstanding (in thousands):
Basic		54,618			56,039			54,424			57,301
Diluted		55,535			56,039			55,261			57,301

(See the accompanying notes, which are an integral part of these Condensed Consolidated Financial Statements.)

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands of U.S. Dollars)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Net income (loss)	$	15,019		$	(7,757	)	$	29,755		$	(23,958	)
Other comprehensive (loss) income, before tax
Unrealized net loss from cash flow hedging instruments		(1,048	)		(1,567	)		(226	)		(1,862	)
Realized net loss from cash flow hedging instruments		174			80			636			175
Foreign currency translation adjustments		1,060			(11,703	)		(6,559	)		(24,644	)
Defined benefit and postretirement benefit plans		(176	)		46			(528	)		138
Total other comprehensive loss, before tax		10			(13,144	)		(6,677	)		(26,193	)
Income tax benefit related to other comprehensive (loss) income		274			380			30			408
Other comprehensive income (loss), net of tax		284			(12,764	)		(6,647	)		(25,785	)
Comprehensive income (loss) attributable to common shareholders		15,303			(20,521	)		23,108			(49,743	)
Comprehensive (income) loss attributable to non-controlling interests		(3,328	)		2,150			(5,104	)		5,630
Comprehensive income (loss) attributable to common shareholders	$	11,975		$	(18,371	)	$	18,004		$	(44,113	)

(See the accompanying notes, which are an integral part of these Condensed Consolidated Financial Statements.)

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars)

(Unaudited)


	Nine Months Ended
	September 30,
	2023			2022
Operating Activities
Net income (loss)	$	29,755		$	(23,958	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization		46,477			42,663
Amortization of deferred financing costs		1,742			2,465
Credit loss expense, net		1,589			8,149
Write-downs		872			5,707
Deferred income tax benefit		(3,724	)		(3,374	)
Share-based and other non-cash compensation		17,830			19,510
Unrealized foreign currency exchange loss		52			1,310
Unrealized investment gains		(436	)		(99	)
Changes in assets and liabilities:
Accounts receivable		(2,392	)		(18,050	)
Inventories		(13,771	)		(10,131	)
Film assets		(14,575	)		(14,174	)
Deferred revenue		(4,670	)		(5,989	)
Changes in other operating assets and liabilities		(4,141	)		(3,548	)
Net cash provided by operating activities		54,608			481
Investing Activities
Purchase of property, plant and equipment		(2,541	)		(5,248	)
Investment in equipment for joint revenue sharing arrangements		(10,705	)		(14,543	)
Interest in film classified as a financial instrument		—			(4,731	)
Acquisition of other intangible assets		(5,418	)		(3,246	)
Acquisition of SSIMWAVE, net of cash and cash equivalents acquired		—			(12,639	)
Net cash used in investing activities		(18,664	)		(40,407	)
Financing Activities
Revolving credit facility borrowings		31,032			4,890
Repayments of revolving credit facility borrowings		(43,057	)		(3,600	)
Credit facility amendment fees paid		—			(2,277	)
Other borrowings		315			—
Repurchase of common shares		(4,263	)

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10-Q	[2016-04-21]
10-K	[2016-02-24]
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10-Q	[2015-07-23]
10-Q	[2015-04-30]
10-K	[2015-02-19]
10-Q	[2014-10-23]
10-Q	[2014-07-24]
10-Q	[2014-04-24]
10-K	[2014-02-20]
10-Q	[2013-10-24]
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