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IMAX Corporation Reports Second Quarter 2012 Financial Results

July 26, 2012

NEW YORK, July 26, 2012 /PRNewswire/ –

HIGHLIGHTS

  • Q2 2012 Revenues Increased 23% to $70.2 million
  • Q2 2012 Adjusted Net Income Increased 206% to $14.1 million
  • New Theatre Signings Momentum Leads to Increase in 2012 Scheduled Installations

IMAX Corporation (NYSE: IMAX; TSX: IMX) today reported second quarter 2012 revenues of $70.2 million, adjusted EBITDA as calculated in accordance with the Company’s Credit Facility of $29.0 million, adjusted net income of $14.1 million, or $0.21 per diluted share, and reported net income of $11.1 million, or $0.16 per diluted share. For reconciliations of adjusted net income to reported net income and for the definition of adjusted EBITDA, please see the tables at the end of this press release.

(Logo: http://photos.prnewswire.com/prnh/20111107/MM01969LOGO )

“Our second quarter financial results reflect growth in recurring revenues and gross margin, driven by the power and scale of our global network and the solid performance of a portfolio of films,” said IMAX Chief Executive Officer Richard L. Gelfond. “In addition to our healthy box office results and our expanding network, during the quarter we signed deals for 40 IMAX® theatre systems, our backlog rose sequentially and our pipeline for future theatre deals remains robust. We believe the fundamentals of our business are fueling our earnings growth and positioning us for success over the long term.”

Network Growth Update
In the second quarter of 2012, the Company signed contracts for 40 theatre systems and installed 20 theatre systems. Based on the number of recent theatre signings, the Company has increased its 2012 installations scheduled only from current backlog to approximately 110 new theatres, from its previous outlook of 95 to 100 new theatres from backlog. In addition, the Company may sign agreements for new theatres that install within that same year. The Company cautions that installations can slip from period to period, usually for reasons beyond its control.

There were 280 theatre systems in backlog as of June 30, 2012, compared to 261 systems in backlog as of March 31, 2012 and 294 systems in backlog as of June 30, 2011. For a breakdown of system signings, installations and backlog by type, please see the end of this press release.

Second Quarter Segment Results
Second quarter 2012 total film revenue was $26.5 million, compared to $18.7 million in the second quarter of 2011. Production and IMAX DMR® revenues were $19.7 million in the second quarter of 2012, versus $12.4 million in the year-ago period. Gross box office from DMR titles was $173.5 million in the second quarter of 2012, compared to $107.7 million in the second quarter of 2011. The average DMR box office per screen in the second quarter of 2012 was $341,900, compared to $315,700 in the second quarter of 2011.

“Differentiation continues to be a key focus of our film strategy in 2012 and beyond,” added Mr. Gelfond. “Several recent titles have featured various elements of IMAX differentiation, including Prometheus and The Amazing Spider-Man. The highlight of our third quarter, Christopher Nolan’s The Dark Knight Rises, includes a record of over 70-plus minutes of IMAX footage. We believe that the success of this film will drive longer term benefits to our business like continued theatre signings momentum and interest in IMAX differentiation among filmmakers. In 2013, we will achieve an exciting milestone with the release of two movies featuring sequences filmed with IMAX cameras, Paramount Pictures’ sequel to Star Trek and Lionsgate’s Catching Fire, the second installment of The Hunger Games series.”

In the second quarter of 2012, revenue from joint revenue sharing arrangements was $15.6 million, compared to $8.3 million in the prior-year period. During the quarter, the Company installed 9 new theatres under joint revenue sharing arrangements, compared to 23 in the year-ago period. As of June 30, 2012, there were 274 IMAX theatres operating under joint revenue sharing arrangements, compared to 204 joint revenue sharing theatres open as of June 30, 2011.

In the second quarter of 2012, IMAX systems revenue was $18.0 million, compared to $20.5 million in the second quarter of 2011, primarily reflecting the installation of 11 full, new theatre systems in the most recent second quarter, compared to a total of 18 systems installed in the second quarter of 2011, which included 11 full, new systems, one used system and six digital system upgrades.

Mr. Gelfond concluded, “Global demand for The IMAX Experience® is as strong as ever, as evidenced by our box office performance, our upcoming lineup of films and a robust pipeline of theatre deals. We are still in the early stages of our network expansion, having recently increased the estimated number of worldwide IMAX zones by 10% to 1,700 theatres. While we continue to grow at a rapid pace, we are also reinvesting in our brand and technology to even further differentiate the IMAX platform, solidifying our position as the premier global blockbuster entertainment platform.”

Second quarter 2012 total revenues were $70.2 million, adjusted EBITDA was $29.0 million, adjusted net income was $14.1 million, or $0.21 per diluted share, and reported net income was $11.1 million, or $0.16 per diluted share. For the second quarter of 2011, total revenues were $57.2 million, adjusted net income was $4.6 million, or $0.07 per diluted share, reported net income was $1.8 million, or $0.03 per diluted share, and adjusted EBITDA was $16.2 million.

For the six months ended June 30, 2012, total revenues were $125.8 million, adjusted EBITDA was $45.5 million, adjusted net income was $18.1 million, or $0.27 per diluted share, and reported net income was $13.7 million, or $0.20 per diluted share. For the six months ended June 30, 2011, total revenues were $102.4 million, adjusted EBITDA was $25.2 million, adjusted net income was $7.1 million, or $0.10 per diluted share, and reported net income was $0.8 million, or $0.01 per diluted share.

Adjusted Net Income and Adjusted Earnings Per Diluted Share Calculation – Beginning Quarter Ended September 30, 2012:
Beginning in the third quarter of 2012, the Company intends to adopt a revised definition of “Adjusted Net Income” and “Adjusted Earnings Per Diluted Share” to exclude all stock-based compensation and one-time items. In addition, Adjusted Net Income and Adjusted Earnings Per Diluted Share will be fully tax-affected. The Company believes that this revised definition should provide for a more straightforward and conventional calculation of adjusted earnings.

Conference Call
The Company will host a conference call today at 8:30 AM ET to discuss its second quarter 2012 financial results. To access the call via telephone, interested parties should dial (866) 321-6651 approximately 5 to 10 minutes before it begins. International callers should dial (416) 642-5212. The participant passcode for the call is 5745205. This call is also being webcast by Thomson Financial and can be accessed on the ‘Investor Relations’ section of www.imax.com. A replay of the call will be available via webcast on the ‘Investor Relations’ section of www.imax.com or via telephone by dialing (888) 203-1112, or (647) 436-0148 for international callers. The participant passcode for the telephone replay is 5745205.

About IMAX Corporation
IMAX Corporation is one of the world’s leading entertainment and technology companies, specializing in the creation and delivery of premium, awe-inspiring entertainment experiences. With a growing suite of cutting-edge motion picture and sound technologies, and a globally recognized entertainment brand, IMAX is singularly situated at the convergence of the entertainment industry, innovation and the digital media world. The industry’s top filmmakers and studios are utilizing IMAX theatres to connect with audiences in extraordinary ways, and as such, the IMAX network is among the most important and successful theatrical distribution platforms for major event films around the globe. The Company’s new digital projection and sound systems – combined with a growing blockbuster film slate – are fueling the rapid expansion of the IMAX network in established markets such as North America, Western Europe, and Japan, as well as emerging markets such as China and Russia. IMAX deliver the world’s best cinematic presentations using proprietary IMAX®, IMAX 3D®, and IMAX DMR® (Digital Re-Mastering) technologies. IMAX DMR enables virtually any motion picture to be transformed into the unparalleled image and sound quality of The IMAX Experience®.

IMAX is headquartered in New York, Toronto and Los Angeles, with offices in London, Tokyo, Shanghai and Beijing. As of June 30, 2012, there were 663 IMAX theatres (529 commercial multiplex, 20 commercial destination and 114 institutional) in 52 countries.

IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D Experience®, The IMAX Experience® and IMAX Is Believing® are trademarks of IMAX Corporation. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).

This press release contains forward looking statements that are based on IMAX management’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, general economic, market or business conditions, including the length and severity of the current economic downturn, the performance of IMAX DMR films, the opportunities that may be presented to and pursued by IMAX, competitive actions by other companies, conditions in the in-home and out-of home entertainment industries, the signing of theatre system agreements, changes in law or regulations, conditions, changes and developments in the commercial exhibition industry, the failure to respond to changes and advancements in digital technology, the failure to convert theatre system backlog into revenue, new business initiatives, investments and operations in foreign jurisdictions and any future international expansion, the inability to protect IMAX’s intellectual property foreign currency fluctuations and IMAX’s prior restatements and the related litigation. These factors and other risks and uncertainties are discussed in IMAX’s most recent Annual Report on Form 10-K and most recent Quarterly Reports on Form 10-Q.

For additional information please contact:

    Investors:                     Media:
    IMAX Corporation, New York     IMAX Corporation, New York
    Heather Anthony/Blaire Lomasky Ann Sommerlath
    212-821-0100                   212-821-0155
    hanthony@imax.com              asommerlath@imax.com
    blomasky@imax.com

    Business Media:                Entertainment Media:
    Sloane & Company, New York     Principal Communications Group, Los Angeles
    Whit Clay                      Melissa Zuckerman/Paul Pflug
    212-446-1864                   323-658-1555
    wclay@sloanepr.com             melissa@pcommgroup.com
                                   paul@pcommgroup.com
    ---                            -------------------

Additional Information

2012 DMR Films Announced to Date

To date, IMAX has announced 25 DMR titles that will be released in the IMAX theatre network in 2012. The Company expects the total number of titles in 2012 to be similar to that in 2011. Films to run throughout the remainder of 2012 include:

  • The Amazing Spider-Man: An IMAX 3D Experience (Sony, July 2012);
  • The Dark Knight Rises: The IMAX Experience (WB, July 2012);
  • Total Recall: The IMAX Experience (Sony, August 2012, late-breaking select international markets only);
  • The Bourne Legacy: The IMAX Experience (Universal, August 2012, late-breaking select international markets only);
  • Resident Evil: Retribution: An IMAX 3D Experience (Sony, September 2012);
  • Frankenweenie: An IMAX 3D Experience (Disney, October 2012);
  • Skyfall: The IMAX Experience (Sony, November 2012);
  • Remembering 1942: The IMAX Experience (Huayi Brothers, November 2012, Asia only);
  • CZ12: The IMAX Experience (JCE Entertainment Ltd., Huayi Brothers & Emperor Motion Pictures, December 2012, Asia only); and
  • The Hobbit: An Unexpected Journey: An IMAX 3D Experience (WB, December 2012).

2013 DMR Films Announced to Date

To date, IMAX has announced 7 titles to be released in 2013.

  • Jack the Giant Killer: An IMAX 3D Experience (WB, March 2013);
  • The Sequel to Star Trek: An IMAX 3D Experience (Paramount, May 2013);
  • Man of Steel: The IMAX Experience (WB, June 2013);
  • Gravity: An IMAX 3D Experience (WB, September 2013);
  • Stalingrad: An IMAX 3D Experience (AR Films, October 2013, Russia and the CIS only);
  • The Hunger Games: Catching Fire: The IMAX Experience (Lionsgate, November 2013); and
  • The Hobbit: There and Back Again: An IMAX 3D Experience (WB, December 2013).

The Company remains in discussions with virtually every major studio regarding future titles. For periodic box office updates, please visit the corporate news section of www.imax.com.

Theatre System Signings
In the second quarter of 2012, the Company signed contracts for 38 new theatre systems (28 under joint revenue sharing arrangements and 10 under sales and sales-type lease arrangements) and 2 digital upgrades, for a total of 40 theatre system signings. In the second quarter of 2011, the Company signed contracts for 39 new theatre systems (26 under joint revenue sharing arrangements and 13 under sales and sales-type lease arrangements) and 13 digital and other upgrades, for a total of 52 theatre system signings.

Through the first six months of 2012, the Company has signed contracts for 61 new theatre systems (33 under joint revenue sharing arrangements and 28 under sales and sales-type lease arrangements) and 2 digital upgrades, for a total of 63 theatre system signings. Through the first six months of 2011, the Company signed contracts for 138 new theatre systems (102 under joint revenue sharing arrangements and 36 under sales and sales-type lease arrangements) and 15 digital upgrades, for a total of 153 theatre system signings.

Theatre System Installations
In the second quarter of 2012, the Company installed 20 new theatre systems (9 under joint revenue sharing arrangements and 11 under sales and sales-type lease arrangements). In the second quarter of 2011, the Company installed 34 new theatre systems (23 under joint revenue sharing arrangements and 11 under sales and sales-type lease arrangements), 1 used system under a sales and sales-type lease arrangement and 6 digital upgrades, for a total of 41 theatre system installations.

Through the first six months of 2012, the Company installed 36 new theatre systems (17 under joint revenue sharing arrangements and 19 under sales and sales-type lease arrangements) and 10 upgrades (9 digital), for a total of 46 theatre system installations. Through the first six months of 2011, the Company installed 56 new theatre systems (33 systems under joint revenue arrangements and 23 sales and sales-type lease systems) and 28 digital upgrades, for a total of 84 theatre system installations.

Theatre System Backlog
As of June 30, 2012, the Company’s theatre backlog consisted of 280 theatre systems (135 under joint revenue sharing arrangements and 145 under sales and sales-type lease arrangements, one of which was a system designated for a digital upgrade). As of June 30, 2011, the Company’s theatre backlog consisted of 294 systems (128 under joint revenue sharing arrangements and 166 under sales and sales-type lease arrangements, 12 of which were systems designated for digital upgrades).

IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In accordance with United States Generally Accepted Accounting Principles
(In thousands of U.S. dollars, except per share amounts)
(Unaudited)

                                                 Three Months           Six Months
                                                Ended June 30,        Ended June 30,
                                                --------------        --------------
                                                          2012           2011            2012 2011
                                                          ----           ----            ---- ----
    Revenues
    Equipment and product sales                                  $17,050              $19,750        $31,429   $39,981
    Services                                                      34,929               26,993         61,996    45,267
    Rentals                                                       16,429                9,015         28,899    14,066
    Finance income                                                 1,802                1,474          3,482     2,828
    Other                                                              -                    -              -       250
                                                                   ---                  ---            ---       ---
                                                                70,210               57,232        125,806   102,392
                                                                ------               ------        -------   -------
    Costs and expenses applicable
     to revenues
    Equipment and product sales                                  7,980                9,661         17,075    20,512
    Services                                                    18,651               17,525         34,271    28,902
    Rentals                                                      4,746                3,744          8,766     6,010
    Other                                                            -                    -              -        20
                                                                   ---                  ---            ---       ---
                                                                31,377               30,930         60,112    55,444
                                                                ------               ------         ------    ------
    Gross margin                                                38,833               26,302         65,694    46,948
    Selling, general and
     administrative expenses                                    20,325               19,470         39,387    36,338
                (including share-based
                compensation expense of $3.7
                million and $7.5 million for the
                three and six months ended June
                30, 2011, respectively (2011 -
                expense of $4.6 million and $8.5
                million, respectively))
    Provision for arbitration
     award                                                           -                    -              -     2,055
    Research and development                                     2,465                2,117          5,095     3,985
    Amortization of intangibles                                    190                  116            366       228
    Receivable provisions, net of
     recoveries                                                    137                  151            588       359
    Impairment of available-for-
     sale investment                                               150                    -            150         -
                                                                   ---                  ---            ---       ---
    Income from operations                                      15,566                4,448         20,108     3,983
    Interest income                                                 27                   13             51        31
    Interest expense                                              (476)                (551)        (1,002)     (994)
                                                                  ----                 ----         ------      ----
    Income from continuing
     operations before income
     taxes                                                      15,117                3,910         19,157     3,020
    Provision for income taxes                                  (3,792)              (1,634)        (4,785)   (1,325)
    Loss from equity-accounted
     investments                                                  (245)                (451)          (704)     (873)
                                                                  ----                 ----           ----      ----
    Net income                                                 $11,080               $1,825        $13,668      $822
                                                               =======               ======        =======      ====

    Net income per share -basic &
     diluted:
               Net income per share - basic                      $0.17                $0.03          $0.21     $0.01
                                                         ===
               Net income per share - diluted                    $0.16                $0.03          $0.20     $0.01
                                                         ===

    Weighted average number of
     shares outstanding (000's):
               Basic                                            65,822               64,376         65,612    64,282
               Fully Diluted                                    68,374               68,699         68,190    68,378

    Additional Disclosure:

    Depreciation and
     amortization(1)                                            $9,200               $6,936        $16,666   $12,183


(1) Includes less than $0.1 million and $0.1 million of amortization of deferred financing costs charged to interest expense for the three and six months ended June 30, 2012, respectively (June 30, 2011 – $0.2 million and $0.3 million, respectively).

IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In accordance with United States Generally Accepted Accounting Principles
(in thousands of U.S. dollars)

                                              As at          As at
                                            June 30,     December 31,
                                                  2012           2011
                                                  ----           ----
                                           (unaudited)
    Assets
    Cash and cash equivalents                           $23,580        $18,138
    Accounts receivable, net of allowance
     for doubtful accounts                                47,124         46,659
    of $2,358 (December 31, 2011 - $1,840)
    Financing receivables                                 88,191         86,714
    Inventories                                          19,647         19,747
    Prepaid expenses                                      6,407          3,126
    Film assets                                           6,001          2,388
    Property, plant and equipment                       107,459        101,253
    Other assets                                         14,736         14,238
    Deferred income taxes                                46,193         50,033
    Goodwill                                             39,027         39,027
    Other intangible assets                              27,111         24,913
                                                         ------         ------
    Total assets                                       $425,476       $406,236
                                                       ========       ========

    Liabilities
    Bank indebtedness                                   $55,000        $55,083
    Accounts payable                                     20,001         28,985
    Accrued and other liabilities                        51,540         54,803
    Deferred revenue                                     79,688         74,458
    Total liabilities                                   206,229        213,329
                                                        -------        -------

    Commitments, contingencies and
     guarantees

    Shareholders' equity
    Capital stock, common shares -no par
     value. Authorized -
    unlimited number.
        Issued and outstanding -65,892,986
         (December 31,                                  308,953        303,395
    2011 - 65,052,740)
    Other equity                                         23,783         17,510
    Deficit                                            (111,998)      (125,666)
    Accumulated other comprehensive loss                 (1,491)        (2,332)
                                                         ------         ------
    Total shareholders' equity                          219,247        192,907
                                                        -------        -------
    Total liabilities and
     shareholders' equity                              $425,476       $406,236
                                                       ========       ========

IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In accordance with United States Generally Accepted Accounting Principles
(In thousands of U.S. dollars)
(Unaudited)

                                                                        Six Months
                                                                      Ended June 30,
                                                                      --------------
                                                                     2012            2011
                                                                     ----            ----
    Cash provided by (used in):
    Operating Activities
    Net income                                                              $13,668                $822
    Adjustments to reconcile net
     income to cash from
     operations:
                                   Depreciation and amortization             16,666              12,183
                                   Write-downs, net of recoveries               919                 370
                                   Change in deferred income taxes            3,665               1,104
                                    Stock and other non-cash
                                    compensation                              7,850               8,944
                                   Provision for arbitration award                -               2,055
                                    Unrealized foreign currency
                                    exchange gain                              (720)                (97)
                                    Loss from equity-accounted
                                    investments                                 704                 873
                                    Gain on non-cash contribution to
                                    equity-accounted investees                    -                (404)
    Investment in film assets                                               (11,141)             (6,288)
    Changes in other non-cash
     operating assets and
     liabilities                                                            (11,769)            (30,002)
                                    Net cash provided by (used in)
                                    operating activities                     19,842             (10,440)

    Investing Activities
    Purchase of property, plant
     and equipment                                                           (1,775)             (2,227)
    Investment in joint revenue
     sharing equipment                                                      (13,024)            (14,886)
    Investment in new business
     ventures                                                                  (381)               (760)
    Acquisition of other
     intangible assets                                                       (4,223)               (504)
                                                                             ------                ----
                                    Net cash used in investing
                                    activities                              (19,403)            (18,377)

    Financing Activities
    Increase in bank indebtedness                                             9,917              49,583
    Repayment of bank indebtedness                                          (10,000)            (32,500)
    Credit facility amendment fees
     paid                                                               -                 (259)
    Common shares issued -stock
     options exercised                                                        5,039               5,095
                                                                              -----               -----
                                    Net cash provided by financing
                                    activities                                4,956              21,919

    Effects of exchange rate
     changes on cash                                                             47                (260)
                                                                                ---                ----

    Increase (decrease) in cash
     and cash equivalents during
     the period                                                               5,442              (7,158)

    Cash and cash equivalents,
     beginning of period                                                     18,138              30,390
                                                                             ------              ------
    Cash and cash equivalents, end
     of period                                                              $23,580             $23,232
                                                                            =======             =======

IMAX CORPORATION
SELECTED FINANCIAL DATA
In accordance with United States Generally Accepted Accounting Principles
(in thousands of U.S. dollars)

The Company has seven reportable segments identified by category of product sold or service provided: IMAX systems; theater system maintenance; joint revenue sharing arrangements; film production and IMAX DMR; film distribution; film post-production; and other. The IMAX systems segment is comprised of the design, manufacture, sale or lease IMAX theater projection system equipment. The theater system maintenance segment consists of the maintenance of IMAX theater projection system equipment in the IMAX theater network. The joint revenue sharing arrangements segment is comprised of the installation IMAX theater projection system equipment to an exhibitor in exchange for a certain percentage of box-office receipts, concession revenue and in some cases a small upfront or initial payment. The film production and IMAX DMR segment is comprised of the production of films and performance of film re-mastering services. The film distribution segment includes the distribution of films for which the Company has distribution rights. The film post-production segment includes the provision of film post-production and film print services. The other segment includes certain IMAX theaters that the Company owns and operates, camera rentals and other miscellaneous items.

                                               Three Months        Six Months
                                              Ended June 30,     Ended June 30,
                                              --------------     --------------
                                                                2012              2011 2012           2011
                                                                ----              ---- ----           ----
    Revenue
    IMAX systems
    Sales and sales-type
     leases                                                  $14,948           $17,857       $27,814        $37,165
    Ongoing rent, fees, and
     finance income                                            3,099             2,613         5,891          5,564
                                                               -----             -----         -----          -----
                                                              18,047            20,470        33,705         42,729
                                                              ------            ------        ------         ------
    Theater system
     maintenance                                               6,989             6,127        13,836         11,922
                                                               -----             -----        ------         ------
    Joint revenue sharing
     arrangements                                             15,593             8,347        27,291         12,387
                                                              ------             -----        ------         ------
    Films
                     Production and IMAX DMR                  19,744            12,422        33,582         19,680
                     Distribution                              4,725             5,275         7,863          7,892
                     Post-production                           2,055             1,039         4,132          2,663

                                                              26,524            18,736        45,577         30,235
                                                              ------            ------        ------         ------
    Other                                                      3,057             3,552         5,397          5,119
                                                               -----             -----         -----          -----
    Total                                                    $70,210           $57,232      $125,806       $102,392
                                                             =======           =======      ========       ========

    Gross margins
    IMAX systems(1)
    Sales and sales-type
     leases                                                   $8,034            $8,892       $12,684        $17,834
    Ongoing rent, fees, and
     finance income                                            3,073             2,548         5,835          5,341
                                                               -----             -----         -----          -----
                                                              11,107            11,440        18,519         23,175
                                                              ------            ------        ------         ------
    Theater system
     maintenance                                               2,568             2,381         5,294          4,968
                                                               -----             -----         -----          -----
    Joint revenue sharing
     arrangements(1)                                          11,117             4,881        19,054          7,059
                                                              ------             -----        ------          -----
    Films
                     Production and IMAX DMR(1)               12,358             6,461        20,288          9,220
                     Distribution(1)                             837               487         1,546          1,113
                     Post-production                             666               307         1,270          1,996

                                                              13,861             7,255        23,104         12,329
                                                              ------             -----        ------         ------
    Other                                                        180               345          (277)          (583)
                                                                 ---               ---          ----           ----
    Total                                                    $38,833           $26,302       $65,694        $46,948
                                                             =======           =======       =======        =======

_________
(1) IMAX systems include commission costs of $0.5 million and $1.2 million for the three and six months ended June 30, 2012, respectively (2011 – $0.1 million and $0.8 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $0.7 million and $1.0 million for the three and six months ended June 30, 2012, respectively (2011 – $1.8 million and $2.3 million, respectively). Production and DMR segment margins include marketing costs of $1.1 million and $1.7 million for the three and six months ended June 30, 2012, respectively (2011 – $0.7 million and $1.2 million, respectively). Distribution segment margins include marketing costs of $0.4 million and $1.2 million for the three and six months ended June 30, 2012, respectively (2011 – $1.4 million and $1.6 million, respectively).

IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)

Non-GAAP Financial Measures:

In this release, the Company presents adjusted EBITDA, adjusted net income and adjusted net income per diluted share as supplemental measures of performance of the Company, which are not recognized under United States generally accepted accounting principles (“GAAP”). The Company presents adjusted EBITDA, 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 variable share-based compensation, provision for arbitration award and deferred taxes on its net income. 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 EBITDA, adjusted net income and adjusted net income per diluted share should be considered in addition to, and not as a substitute for, net income and other measures of financial performance reported in accordance with GAAP.

Adjusted EBITDA is calculated on a basis consistent with the Company’s Credit Facility, which refers to Adjusted EBITDA as EBITDA. The Credit Facility provides that the Company will be required to maintain a ratio of funded debt (as defined in the Credit Agreement) to EBITDA (as defined in the Credit Agreement) of not more than 2:1. The Company will also be required to maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.1:1.0. At all times under the terms of the Credit Facility, the Company is required to maintain minimum Excess Availability of not less than $5.0 million and minimum Cash and Excess Availability of not less than $15.0 million. The ratio of funded debt to EBITDA was 0.63:1 as at June 30, 2012, where Funded Debt (as defined in the Credit Agreement) is the sum of all obligations evidenced by notes, bonds, debentures or similar instruments and was $55.0 million. EBITDA is calculated as follows:

                                                For the               For the
                                                 3 months            12 months
                                                ended                ended
                                                 June 30,            June 30,
                                                  2012              2012(1)
                                                ---------           ---------
    (In thousands of U.S.
     Dollars)
    Net income                                              $11,080              $28,389
    Add (subtract):
              Loss from equity accounted
              investments                                     245                1,622
             Provision for income taxes                     3,792               12,848
              Interest expense, net of interest
              income                                          449                1,758
              Depreciation and amortization,
              including film asset amortization             9,158               29,476
              Write-downs net of recoveries
              including asset impairments and
              receivable provisions                           438                2,502
              Stock and other non-cash
              compensation                                  3,868               11,342
                                                          $29,030              $87,937
                                                          =======              =======


(1) Ratio of funded debt calculated using twelve months ended EBITDA.

IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended June 30, 2012 vs. 2011:
The Company reported net income of $11.1 million or $0.17 per basic share and $0.16 per diluted share for the second quarter of 2012, as compared to a net income of $1.8 million or $0.03 per basic and diluted share for the second quarter of 2011. Net income for the quarter includes a deferred tax provision of $3.0 million or $0.05 per diluted share (2011 – $1.4 million or $0.02 per diluted share). Net income for the second quarter of 2011 also includes a charge of $1.4 million or $0.02 per diluted share for variable share-based compensation. Adjusted net income, which consists of net income excluding the impact of variable share-based compensation and the deferred tax provision, was $14.1 million or $0.21 per diluted share in the second quarter of 2012 as compared to adjusted net income of $4.6 million or $0.07 per diluted share for the second quarter of 2011. A reconciliation of net income, the most directly comparable U.S. GAAP measure, to adjusted net income and adjusted net income per diluted share is presented in the table below:

                                                Three Months Ended Three Months Ended
                                                        June 30, 2012 June 30, 2011
                                                        ------------- -------------
                                                 Net Income     Diluted EPS  Net Income Diluted EPS
                                                 ----------     -----------  ---------- -----------
    Reported                                                   $11,080                         $0.16 $1,825       $0.03
    Adjustments:
                             Variable stock compensation           (28)                            -  1,357        0.02
                             Deferred tax provision              3,014                          0.05  1,419        0.02
    Adjusted                                                   $14,066                         $0.21 $4,601       $0.07
                                                               =======                         ===== ======       =====

    Weighted average diluted
     shares outstanding                                                     68,374                          68,699
                                                                            ======                          ======

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Six Months Ended June 30, 2012 vs. 2011:
The Company reported net income of $13.7 million or $0.21 per basic share and $0.20 per diluted share for the six months ended June 30, 2012, as compared to net income of $0.8 million or $0.01 per basic and diluted share for the six months ended June 30, 2011. Net income for the six months ended June 30, 2012 includes a $0.8 million pre-tax charge or $0.01 per diluted share (2011 – $3.2 million or $0.05 per diluted share) for variable share-based compensation expense during the six months ended June 30, 2012 and a deferred tax provision of $3.7 million or $0.06 per diluted share (2011 – $1.1 million or $0.01 per diluted share). Net income for the six months ended June 30, 2011 also includes a one-time $2.1 million pre-tax charge ($0.03 per diluted share) due to an arbitration award arising from an arbitration proceeding brought against the Company in connection with a discontinued subsidiary. Adjusted net income, which consists of net income excluding the impact of the variable share-based compensation expense, the charge for the arbitration award and the deferred tax provision was $18.1 million or $0.27 per diluted share in the six months ended June 30, 2012, as compared to adjusted net income of $7.1 million or $0.10 per diluted share for the six months ended June 30, 2011. A reconciliation of net income, the most directly comparable U.S. GAAP measure, to adjusted net income and adjusted net income per diluted share is presented in the table below:

                                                                Six Months       Six Months
                                                        Ended June 30, 2012 Ended June 30, 2011
                                                        ------------------- -------------------
                                                      Net Income    Diluted EPS  Net Income Diluted EPS
                                                      ----------    -----------  ---------- -----------
    Net income                                                      $13,668            $0.20               $822       $0.01
    Add:
                             Variable stock compensation                754             0.01              3,160        0.05
                             Deferred tax provision                   3,665             0.06              1,104        0.01
                             Provision for arbitration award              -                -              2,055        0.03

    Adjusted net income                                             $18,087            $0.27             $7,141       $0.10
                                                                    =======            =====             ======       =====

    Weighted average diluted
     shares outstanding                                                         68,190                          68,378
                                                                                ======                          ======

SOURCE IMAX Corporation


Source: PR Newswire