IMAX Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

imax-10q_20200331.htm

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 March 31, 2020

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

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

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

None

(Title of class)

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 March 31, 2020
Common Shares, no par value		58,786,792

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	39
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	63
Item 4.	Controls and Procedures	65

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	66
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 6.	Exhibits	68
Signatures		69

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 at March 31, 2020 and December 31, 2019	4
Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019	5
Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31, 2020 and 2019	6
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019	7
Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2020 and 2019	8
Notes to Condensed Consolidated Financial Statements	9

IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)

	March 31,			December 31,
	2020			2019
Assets
Cash and cash equivalents	$	352,277		$	109,484
Accounts receivable, net of allowance for credit losses		64,818			99,513
Financing receivables, net of allowance for credit losses		121,112			128,038
Variable consideration receivable, net of allowance for credit losses		38,694			40,040
Inventories		61,635			42,989
Prepaid expenses		11,558			10,237
Film assets		15,645			17,921
Property, plant and equipment		294,361			306,849
Investment in equity securities		11,131			15,685
Other assets		24,559			25,034
Deferred income tax assets		37,967			23,905
Other intangible assets		29,542			30,347
Goodwill		39,027			39,027
Total assets	$	1,102,326		$	889,069
Liabilities
Bank indebtedness	$	298,355		$	18,229
Accounts payable		25,296			20,414
Accrued and other liabilities		111,850			112,779
Deferred revenue		103,267			94,552
Deferred income tax liabilities		19,681			—
Total liabilities		558,449			245,974
Commitments and contingencies
Non-controlling interests		5,500			5,908
Shareholders' equity
Capital stock common shares — no par value. Authorized — unlimited number.
58,878,749 issued and 58,786,792 outstanding (December 31, 2019 — 61,362,872 issued and 61,175,852 outstanding)		405,583			423,386
Less: Treasury stock, 91,957 shares at cost (December 31, 2019 — 187,020)		(1,419	)		(4,038	)
Other equity		168,892			171,789
Accumulated deficit		(108,428	)		(40,253	)
Accumulated other comprehensive loss		(5,759	)		(3,190	)
Total shareholders' equity attributable to common shareholders		458,869			547,694
Non-controlling interests		79,508			89,493
Total shareholders' equity		538,377			637,187
Total liabilities and shareholders' equity	$	1,102,326		$	889,069

(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
	March 31,
	2020			2019


Revenues
Technology sales	$	5,662		$	15,200
Image enhancement and maintenance services		20,721			44,147
Technology rentals		5,971			18,170
Finance income		2,548			2,681
		34,902			80,198
Costs and expenses applicable to revenues
Technology sales		3,869			9,435
Image enhancement and maintenance services		17,816			19,243
Technology rentals		8,131			6,380
		29,816			35,058
Gross margin		5,086			45,140
Selling, general and administrative expenses		28,636			27,649
Research and development		2,200			1,136
Amortization of intangibles		1,321			1,075
Credit loss expense		10,217			431
Asset impairments		1,151			—
Exit costs, restructuring charges and associated impairments		—			850
(Loss) income from operations		(38,439	)		13,999
Change in fair value of equity securities		(4,539	)		2,491
Retirement benefits non-service expense		(116	)		(160	)
Interest income		365			570
Interest expense		(648	)		(681	)
(Loss) income before taxes		(43,377	)		16,219
Income tax expense		(15,505	)		(3,648	)
Equity in losses of investees, net of tax		(529	)		(84	)
Net (loss) income		(59,411	)		12,487
Less: Net loss (income) attributable to non-controlling interests		10,057			(4,222	)
Net (loss) income attributable to common shareholders	$	(49,354	)	$	8,265


Net (loss) income per share attributable to common shareholders - basic and diluted:
Net (loss) income per share — basic and diluted	$	(0.82	)	$	0.13

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

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands of U.S. dollars)

(Unaudited)

	Three Months Ended
	March 31,
	2020			2019
Net (loss) income	$	(59,411	)	$	12,487
Unrealized net (loss) gain from cash flow hedging instruments		(2,860	)		68
Realized net loss from cash flow hedging instruments		358			319
Foreign currency translation adjustments		(1,111	)		1,085
Defined benefit and postretirement benefit plans		13			—
Other comprehensive (loss) income, before tax		(3,600	)		1,472
Income tax benefit (expense) related to other comprehensive (loss) income		695			(101	)
Other comprehensive (loss) income, net of tax		(2,905	)		1,371
Comprehensive (loss) income		(62,316	)		13,858
Less: Comprehensive (loss) income attributable to non-controlling interests		10,393			(4,567	)
Comprehensive (loss) income attributable to common shareholders	$	(51,923	)	$	9,291

(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)

	Three Months Ended
	March 31,
	2020			2019
Cash provided by (used in):
Operating Activities
Net (loss) income	$	(59,411	)	$	12,487
Adjustments to reconcile net (loss) income to cash from operating activities:
Depreciation and amortization		15,252			14,211
Credit loss expense		10,217			431
Write-downs		4,403			266
Deferred income tax expense		5,627			688
Share and other non-cash compensation		4,309			4,524
Unrealized foreign currency exchange loss (gain)		223			(24	)
Change in fair value of equity securities		4,539			(2,491	)
Equity in losses of investees		529			84
Investment in film assets		(3,064	)		(3,740	)
Changes in other non-cash operating assets and liabilities		23,342			(27,105	)
Net cash provided by (used in) operating activities		5,966			(669	)
Investing Activities
Purchase of property, plant and equipment		(271	)		(2,237	)
Purchase of equipment for joint revenue sharing arrangements		(1,580	)		(9,716	)
Acquisition of other intangible assets		(862	)		(540	)
Investment in equity securities		—			(15,153	)
Net cash used in investing activities		(2,713	)		(27,646	)
Financing Activities
Increase in bank indebtedness		280,000			35,000
Repayment of bank indebtedness		—			(15,000	)
Settlement of restricted share units and options		(1,667	)		(4,987	)
Treasury stock repurchased for future settlement of restricted share units		(1,419	)		(4,207	)
Repurchase of common shares, IMAX China		(891	)		(1,767	)
Taxes withheld and paid on employee stock awards vested		(236	)		(219	)
Common shares issued - stock options exercised		—			803
Repurchase of common shares		(36,624	)		—
Net cash provided by financing activities		239,163			9,623
Effects of exchange rate changes on cash		377			186
Increase (decrease) in cash and cash equivalents during period		242,793			(18,506	)
Cash and cash equivalents, beginning of period		109,484			141,590
Cash and cash equivalents, end of period	$	352,277		$	123,084

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

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands of U.S. dollars)

(Unaudited)

		Three Months Ended
		March 31,
		2020				2019

Price	22.31	EPS	1
Shares	62	P/E	33
MCap	1,372	P/FCF	20
Net Debt	-84	EBIT	47
TEV	1,288	TEV/EBIT	27
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-04-30
10-K	2019-12-31	Filed 2020-02-19
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-07-30
10-Q	2019-03-31	Filed 2019-04-26
10-K	2018-12-31	Filed 2019-02-26
10-Q	2018-09-30	Filed 2018-10-25
10-Q	2018-06-30	Filed 2018-07-25
10-Q	2018-03-31	Filed 2018-05-01
10-K	2017-12-31	Filed 2018-02-27
10-Q	2017-09-30	Filed 2017-10-26
10-Q	2017-06-30	Filed 2017-07-26
10-Q	2017-03-31	Filed 2017-04-20
10-K	2016-12-31	Filed 2017-02-23
10-Q	2016-09-30	Filed 2016-10-20
10-Q	2016-06-30	Filed 2016-07-20
10-Q	2016-03-31	Filed 2016-04-21
10-K	2015-12-31	Filed 2016-02-24
10-Q	2015-09-30	Filed 2015-10-28
10-Q	2015-06-30	Filed 2015-07-23
10-Q	2015-03-31	Filed 2015-04-30
10-K	2014-12-31	Filed 2015-02-19
10-Q	2014-09-30	Filed 2014-10-23
10-Q	2014-06-30	Filed 2014-07-24
10-Q	2014-03-31	Filed 2014-04-24
10-K	2013-12-31	Filed 2014-02-20
10-Q	2013-09-30	Filed 2013-10-24
10-Q	2013-06-30	Filed 2013-07-25
10-Q	2013-03-31	Filed 2013-04-25
10-K	2012-12-31	Filed 2013-02-21
10-Q	2012-06-30	Filed 2012-07-26
10-Q	2012-03-31	Filed 2012-04-27
10-K	2011-12-31	Filed 2012-02-24
10-Q	2011-09-30	Filed 2011-10-27
10-Q	2011-06-30	Filed 2011-07-28
10-Q	2011-03-31	Filed 2011-04-28
10-K	2010-12-31	Filed 2011-02-24
10-Q	2010-09-30	Filed 2010-10-28
10-Q	2010-06-30	Filed 2010-07-29
10-Q	2010-03-31	Filed 2010-04-29
10-K	2009-12-31	Filed 2010-03-11

8-K	2020-06-10
8-K	2020-06-03
8-K	2020-04-30
8-K	2020-03-11
8-K	2020-02-19
8-K	2019-12-17
8-K	2019-11-20
8-K	2019-10-31
8-K	2019-10-30
8-K	2019-07-30
8-K	2019-06-05
8-K	2019-04-26
8-K	2019-02-26
8-K	2018-12-13
8-K	2018-10-25
8-K	2018-10-15
8-K	2018-07-25
8-K	2018-06-28
8-K	2018-06-05
8-K	2018-05-01
8-K	2018-03-23
8-K	2018-02-27

EX-10.47	imax-ex1047_99.htm
EX-31.1	imax-ex311_8.htm
EX-31.2	imax-ex312_6.htm
EX-32.1	imax-ex321_7.htm
EX-32.2	imax-ex322_9.htm

IMAX 10Q Quarterly Report

IMAX Earnings 2020-03-31