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Dynamic quotes 
OFFON

IMAX CORPORATION

(IMAX)
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IMAX : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

07/27/2021 | 05:32pm EDT
Presented below is Management's Discussion and Analysis of Financial Condition
and Results of Operations (or "MD&A") for IMAX Corporation and its consolidated
subsidiaries ("IMAX" or the "Company") for the three and six months ended
June 30, 2021 and 2020. MD&A should be read in conjunction with Note
14, "Segment Reporting" in the accompanying Condensed Consolidated Financial
Statements in Item 1.

As of June 30, 2021, the Company indirectly owns 69.83% of IMAX China Holding,
Inc. ("IMAX China"), whose shares trade on the Hong Kong Stock Exchange. IMAX
China is a consolidated subsidiary of the Company.

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION


Certain statements included in this quarterly report may constitute
"forward-looking statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. These forward-looking statements
include, but are not limited to, references to business and technology
strategies and measures to implement strategies, competitive strengths, goals,
expansion and growth of business, operations and technology, future capital
expenditures (including the amount and nature thereof), plans and references to
the future success of the Company and expectations regarding its future
operating, financial and technological results. These forward-looking statements
are based on certain assumptions and analyses made by the Company in light of
its experience and its perception of historical trends, current conditions and
expected future developments, as well as other factors it believes are
appropriate in the circumstances. However, whether actual results and
developments will conform with the expectations and predictions of the Company
is subject to a number of risks and uncertainties, including, but not limited
to, risks related to the adverse impact of the COVID-19 pandemic; risks
associated with investments and operations in foreign jurisdictions and any
future international expansion, including those related to economic, political
and regulatory policies of local governments and laws and policies of the United
States and Canada; risks related to the Company's growth and operations in
China; the performance of IMAX DMR® films; the signing of theater system
agreements; conditions, changes and developments in the commercial exhibition
industry; risks related to currency fluctuations; the potential impact of
increased competition in the markets within which the Company operates,
including competitive actions by other companies; the failure to respond to
change and advancements in digital technology; risks relating to recent
consolidation among commercial exhibitors and studios; risks related to new
business initiatives; conditions in the in-home and out-of-home entertainment
industries; the opportunities (or lack thereof) that may be presented to and
pursued by the Company; risks related to cyber-security and data privacy; risks
related to the Company's inability to protect its intellectual property; risks
related to the Company's indebtedness and compliance with its debt agreements;
general economic, market or business conditions; the failure to convert theater
system backlog into revenue; changes in laws or regulations; the failure to
fully realize the projected cost savings and benefits from any of the Company's
restructuring initiatives; any statements of belief and any statements of
assumptions underlying any of the foregoing; other factors and risks outlined in
the Company's periodic filings with the United States Securities and Exchange
Commission (the "SEC"); and other factors, many of which are beyond the control
of the Company. Consequently, all of the forward-looking statements made in this
quarterly report are qualified by these cautionary statements, and actual
results or anticipated developments by the Company may not be realized, and even
if substantially realized, may not have the expected consequences to, or effects
on, the Company. The forward-looking statements herein are made only as of the
date hereof and the Company undertakes no obligation to update publicly or
otherwise revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

The Company makes available, free of charge, its Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any
amendments to such reports, as soon as reasonably practicable after such filings
have been made with the SEC. Reports may be obtained free of charge through the
SEC's website at www.sec.gov and through the Company's website at www.imax.com
or by calling the Company's Investor Relations Department at 212-821-0100. No
information included on the Company's website shall be deemed included or
otherwise incorporated into this filing, except where expressly indicated.

The information posted on the Company's corporate and Investor Relations websites may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's websites in addition to the Company's press releases, SEC filings and public conference calls and webcasts.




IMAX®, IMAX® Dome, IMAX® 3D, IMAX® 3D Dome, Experience It In IMAX®, The IMAX
Experience®, An IMAX Experience®, An IMAX 3D Experience®, IMAX DMR®, DMR®, IMAX
nXos® and Films to the Fullest®, are trademarks and trade names of the Company
or its subsidiaries that are registered or otherwise protected under laws of
various jurisdictions.


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OVERVIEW

IMAX is one of the world's leading entertainment technology companies,
specializing in technological innovations powering the presentation of some of
today's most immersive entertainment experiences. Through its proprietary
software, theater architecture, patented intellectual property and specialized
equipment, IMAX offers a unique end-to-end cinematic solution to create the
highest-quality, most immersive motion picture and other entertainment event
experiences for which the IMAX® brand has become known globally. Top filmmakers
and movie studios utilize the cutting-edge visual and sound technology of IMAX
to connect with audiences in innovative ways, and, as a result, the IMAX network
is among the most important and successful distribution platforms for major
films and other events around the world.

The Company leverages its proprietary technology and engineering in all aspects
of its core business, which principally consists of the digital remastering of
films and other presentations into the IMAX format ("IMAX DMR®") and the sale or
lease of premium IMAX theater systems ("IMAX Theater Systems").

IMAX Theater Systems are based on proprietary and patented image, audio and
other technology developed over the course of the Company's 53-year history. The
Company's customers for IMAX Theater Systems are principally theater exhibitors
that operate commercial theaters (particularly multiplexes) and, to a much
lesser extent, museums, science centers, and destination entertainment sites.
The Company generally does not own the theaters in the IMAX network, but sells
or leases the IMAX Theater System to the exhibitor along with a license to use
its trademarks.

As of June 30, 2021, there were 1,654 IMAX Theater Systems operating in 85
countries and territories, including 1,569 commercial multiplexes, 12 commercial
destinations and 73 institutional locations. This compares to 1,615 IMAX Theater
Systems operating in 81 countries and territories as of June 30, 2020 including
1,527 commercial multiplexes, 13 commercial destinations and 75 institutional
locations. (See the table below under "IMAX Network and Backlog" for additional
information on the composition of the IMAX network.)

The IMAX Theater System provides the Company's exhibitor customers with a combination of the following benefits:

• the ability to exhibit content that has undergone the IMAX DMR conversion

process, which results in higher image and sound fidelity than conventional

cinema experiences;

• advanced, high-resolution projectors with specialized equipment and automated

     theater control systems, which generate significantly more contrast and
     brightness than conventional theater systems;


  •  large screens and proprietary theater geometry, which result in a

substantially larger field of view so that the screen extends to the edge of

a viewer's peripheral vision and creates more realistic images;

• advanced sound system components, which deliver more expansive sound imagery

and pinpointed origination of sound to any specific spot in an IMAX theater;

• specialized theater acoustics, which result in a four-fold reduction in

     background noise; and


  • a license to the globally recognized IMAX brand.


In addition, certain movies shown in IMAX theaters are filmed using proprietary
IMAX film and IMAX certified digital cameras, which offer filmmakers customized
guidance and a workflow process to provide further enhanced and differentiated
image quality and a film aspect ratio that delivers up to 26% more image onto a
movie screen.

Together these components cause audiences in IMAX theaters to feel as if they are a part of the on-screen action, creating a more intense, immersive and exciting experience than a traditional theater.

                                       48

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As a result of the engineering and scientific achievements that are a hallmark
of The IMAX Experience®, the Company's exhibitor customers typically charge a
premium for IMAX DMR films over films exhibited in their other auditoriums. The
premium pricing, combined with the higher attendance levels associated with IMAX
DMR films, generates incremental box office for the Company's exhibitor
customers and for the movie studios releasing their films to the IMAX
network. The incremental box office generated by IMAX DMR films has helped
establish IMAX as a key premium distribution and marketing platform for
Hollywood blockbuster films and foreign local language movie studios.

As one of the world's leaders in entertainment technology, the Company strives
to remain at the forefront of advancements in cinema technology. The Company
offers IMAX with Laser, a laser projection system designed for IMAX theaters in
commercial multiplexes. The Company believes that IMAX with Laser delivers
increased resolution, sharper and brighter images, deeper contrast and the
widest range of colors available to filmmakers today. The Company further
believes that IMAX with Laser is helping facilitate the next major lease renewal
and upgrade cycle for the global IMAX network.

The Company is also experimenting with new technologies and new content as a way
to deepen consumer engagement and brand loyalty, which includes curating unique,
differentiated alternative content to be exhibited in IMAX theaters,
particularly during those periods when Hollywood blockbuster film content is not
available.

IMPACT OF COVID-19 PANDEMIC

The impact of the COVID-19 pandemic is complex and continuously evolving,
resulting in significant disruption to the Company's business and the global
economy. The pandemic has led authorities around the world to impose measures
intended to control the spread of COVID-19, including stay-at-home orders and
restrictions on large public gatherings, which caused movie theaters in
countries around the world to temporarily close, including the IMAX theaters in
those countries. As a result of the theater closures, movie studios postponed
the theatrical release of most films originally scheduled for release in 2020
and early 2021, including many scheduled to be shown in IMAX theaters, while
several other films were released directly or concurrently to streaming
platforms. More recently, stay-at-home orders and capacity restrictions have
been lifted in many key markets and, beginning in the third quarter of 2020,
movie theaters throughout the IMAX network gradually reopened. As of June 30,
2021, 89% of the theaters in the global IMAX commercial multiplex network were
open, spanning 62 countries. This included 93% of Domestic theaters (i.e., in
the United States and Canada), 90% of the theaters in Greater China and 75% of
the theaters in Rest of World markets.

The impact of the COVID-19 global pandemic has resulted in significantly lower
levels of revenues, earnings and operating cash flows for the Company during
2020 and through the end of the second quarter of 2021, when compared to periods
prior to the onset of the pandemic, as gross box office ("GBO") results from the
Company's theater customers declined significantly, the installation of certain
theater systems was delayed, and maintenance services were generally suspended
for theaters that were closed. In response to uncertainties associated with the
pandemic, the Company took significant steps to preserve cash by eliminating
non-essential costs, temporarily furloughing certain employees, reducing the
working hours of other employees and reducing all non-essential capital
expenditures to minimum levels. The Company also implemented an active cash
management process, which, among other things, required senior management
approval of all outgoing payments. In addition, as a result of the financial
difficulties faced by certain of the Company's exhibition customers arising out
of pandemic-related closures, the Company has experienced and may continue to
experience delays in collecting payments due under existing theater sale or
lease arrangements. The Company has provided temporary relief to certain
exhibitor customers by waiving or reducing maintenance fees during periods when
theaters are closed or operating with reduced capacities and, in certain
situations, by providing extended payment terms on annual minimum payment
obligations in exchange for a corresponding or longer extension of the term of
the underlying sale or lease arrangement.

For the six months ended June 30, 2021, GBO receipts generated by IMAX DMR films
totaled $218.8 million, surpassing the total for the second half of 2020 by
$57.6 million (36%). Management is encouraged by these box office results and
believes they indicate that moviegoers are eager to return to cinemas where and
when theaters are open and they feel safe. Management is further encouraged by
the strong pipeline of Hollywood movies scheduled to be released for theatrical
exhibition in the second half of 2021. However, the impact of the COVID-19
global pandemic on the Company's business and financial results will continue to
depend on numerous evolving factors that cannot be accurately predicted and that
will vary by jurisdiction and market, including the duration and scope of the
pandemic, the emergence of variants of the virus, the progress made on
administering vaccines, the continuing impact of the pandemic on global economic
conditions and ongoing government responses to the pandemic, which could lead to
further theater closures, theater capacity restrictions and/or delays in the
release of films.

(See "Risk Factors - The Company has experienced a significant decrease in its
revenues, earnings and cash flows due to the COVID-19 global pandemic and its
business, financial condition and results of operations may continue to be
significantly harmed in future reporting periods" in Part II, Item 1A in this
report.)

                                       49
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SOURCES OF REVENUE


For the presentation of MD&A, the Company has organized its reportable segments
into the following four categories: (i) IMAX Technology Network; (ii) IMAX
Technology Sales and Maintenance; (iii) New Business Initiatives; and (iv) Film
Distribution and Post-Production. Within these four categories are the Company's
following reportable segments: (i) IMAX DMR; (ii) Joint Revenue Sharing
Arrangements; (iii) IMAX Systems; (iv) IMAX Maintenance; (v) Other Theater
Business; (vi) New Business Initiatives; (vii) Film Distribution; and (viii)
Film Post-Production. For additional details regarding the Company's sources of
revenue, refer to its Form 10-K for the year ended December 31, 2020 (the "2020
Form 10-K").

IMAX Technology Network

The IMAX Technology Network category earns revenue based on contingent box office receipts. Included in the IMAX Technology Network category are the IMAX DMR segment and contingent rent from the Joint Revenue Sharing Arrangement ("JRSA") segment, which are each described in more detail below.

IMAX DMR


The Company has developed IMAX DMR, a proprietary technology that digitally
remasters films into IMAX formats. In a typical IMAX DMR film arrangement, the
Company receives a percentage of the box office receipts from a movie studio in
exchange for converting a commercial film into IMAX DMR format and distributing
it through the IMAX network. In recent years, the percentage of gross box office
receipts earned in IMAX DMR arrangements has averaged approximately 12.5%,
except for within Greater China, where the Company receives a lower percentage
of net box office receipts for certain Hollywood films.

IMAX DMR digitally enhances the image resolution of films for projection on IMAX
screens while maintaining or enhancing the visual clarity and sound quality to
levels for which The IMAX Experience is known. In addition, the original
soundtrack of a film to be exhibited in IMAX theaters is remastered for IMAX
digital sound systems in connection with the IMAX DMR release of the film.
Unlike the soundtracks played in conventional theaters, IMAX remastered
soundtracks are uncompressed and full fidelity. IMAX sound systems use
proprietary loudspeaker systems and proprietary surround sound configurations
that ensure every theater seat is in an optimal listening position.

IMAX films also benefit from enhancements made by individual filmmakers
exclusively for the IMAX release of the film. Collectively, the Company refers
to these enhancements as "IMAX DNA". Filmmakers and movie studios have sought
IMAX-specific enhancements in recent years to generate interest in and
excitement for their films. Such enhancements include shooting films with IMAX
cameras to increase the audience's immersion in the film and to take advantage
of the unique dimensions of the IMAX screen by projecting the film in a larger
aspect ratio that delivers up to 26% more image onto a movie screen. Detective
Chinatown 3 and A Writer's Odyssey, which were released in China in 2021, were
filmed with IMAX cameras.

Management believes that growth in international box office remains an important
driver of growth for the Company. To support continued growth in international
markets, the Company has sought to bolster its international film strategy,
supplementing the Company's film slate of Hollywood DMR titles with appealing
local IMAX DMR releases in select markets, particularly in China. During 2020,
17 local language IMAX DMR films were released to the IMAX network, including
ten in China, three in Russia, three in Japan, and one in South Korea. During
the six months ended June 30, 2021, 12 local language IMAX DMR films were
released to the IMAX network, including seven in China and five in Japan. The
Company expects to announce additional local language IMAX DMR films to be
released to the IMAX network in the remainder of 2021.

                                       50

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During the six months ended June 30, 2021, 26 IMAX DMR films were released to
the global IMAX theater network and the following 20 additional IMAX DMR films
are scheduled to be released during the remainder of 2021:

                                                           Scheduled
                                                            Release
                Title                        Studio         Date(1)      IMAX DNA
                                                                         Expanded
      1921: The IMAX Experience              Tencent       July 2021   

Aspect Ratio

The Pioneer: The IMAX Experience Enlight July 2021 None

Chinese Doctor: The IMAX Experience Bona July 2021 None

                                           Walt Disney                   

Expanded

Black Widow: The IMAX Experience Studios July 2021 Aspect Ratio

      Belle: The IMAX Experience              Toho         July 2021      

None

                                            Paramount

Snake Eyes: The IMAX Experience Pictures July 2021 None

Green Snake: The IMAX Experience Alibaba July 2021 None

                                           Walt Disney

Jungle Cruise: The IMAX Experience Studios July 2021 None

Escape From Mogadishu: The IMAX

              Experience                      Lotte        July 2021       

None

                                          Warner Bros.      August       

Filmed in The Suicide Squad: The IMAX Experience Pictures 2021 IMAX

                                          20th Century      August
    Free Guy: The IMAX Experience            Studios         2021          

None

                                          Warner Bros.      August

Reminiscence: The IMAX Experience Pictures 2021 None

Shang-Chi and the Legend of the Ten Walt Disney September Filmed in

      Rings: The IMAX Experience             Studios         2021         

IMAX

Venom: Let There Be Carnage: The IMAX                      September
              Experience                  Sony Pictures      2021          None
                                            Universal
                                         Pictures / MGM
                                            / United        October      Filmed in

No Time to Die: The IMAX Experience Artists 2021 IMAX

                                          Warner Bros.      October      

Filmed in

      Dune: The IMAX Experience             Pictures         2021         

IMAX

                                           Walt Disney     November      

Filmed in

The Eternals: The IMAX Experience Studios 2021 IMAX

                                            Paramount      November      

Filmed in Top Gun: Maverick: The IMAX Experience Pictures 2021 IMAX

  Spider-Man: No Way Home: The IMAX        Walt Disney     December      Expanded
              Experience                     Studios         2021      Aspect Ratio
                                          Warner Bros.     December       

To be Untitled MATRIX 4: The IMAX Experience Pictures 2021 determined

(1) The scheduled release dates in the table above are subject to change and may

vary by territory.



The Company remains in active negotiations with all major Hollywood studios for
additional films to fill out its short and long-term film slate for the IMAX
network.

Joint Revenue Sharing Arrangements - Contingent Rent


The JRSA segment provides IMAX Theater Systems to exhibitors through joint
revenue sharing arrangements. Under the traditional form of these arrangements,
IMAX provides the IMAX projection and sound system under a long-term lease in
which the Company assumes the majority of the equipment and installation costs.
In exchange for its upfront investment, the Company earns rent based on a
percentage of contingent box office receipts and, in some cases, concession
revenues, rather than requiring the customer to pay a fixed upfront fee or
annual minimum payments. Rental payments from the customer are required
throughout the term of the arrangement and are due either monthly or quarterly.
The Company retains title to the IMAX Theater System equipment components
throughout the lease term, and the equipment is returned to the Company at the
conclusion of the arrangement.

Under certain other joint revenue sharing arrangements, known as hybrid
arrangements, the customer is responsible for making fixed upfront payments
prior to the delivery and installation of the IMAX Theater System in an amount
that is typically half of what the Company would receive from a typical sale
transaction. As with a traditional joint revenue sharing arrangement, the
customer also pays the Company a percentage of contingent box office receipts
over the term of the arrangement, although this percentage is typically half
that of a traditional joint revenue sharing arrangement. For hybrid joint
revenue sharing arrangements that take the form of a lease, the contingent rent
is reported within the IMAX Technology Network, while the fixed upfront payment
is recorded as revenue within IMAX Technology Sales and Maintenance, as
discussed below. For hybrid joint revenue sharing arrangements that take the
form of a sale, see the discussion below under IMAX Technology Sales and
Maintenance.

Under most joint revenue sharing arrangements (both traditional and hybrid), the
initial non-cancellable term is 10 years or longer and is renewable by the
customer for one to two additional terms of between three to five years. The
Company has the right to remove the equipment for non-payment or other defaults
by the customer. The contracts are non-cancellable by the customer unless the
Company fails to perform its obligations.

                                       51

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The revenue earned from customers under the Company's joint revenue sharing
arrangements can vary from quarter-to-quarter and year-to-year based on a number
of factors including film performance, the mix of theater system configurations,
the timing of installation of IMAX Theater Systems, the nature of the
arrangement, the location, size and management of the theater and other factors
specific to individual arrangements.

Joint revenue sharing arrangements also require IMAX to provide maintenance and
extended warranty services to the customer over the term of the lease in
exchange for a separate fixed annual fee. These fees are reported within IMAX
Technology Sales and Maintenance, as discussed below.

The introduction of joint revenue sharing arrangements has been an important
factor in the expansion of the Company's commercial theater network. Joint
revenue sharing arrangements allow commercial theater exhibitors to install IMAX
Theater Systems without the significant initial capital investment required in a
sale or sales-type lease arrangement. Joint revenue sharing arrangements drive
recurring cash flows and earnings for the Company, as customers under these
arrangements pay the Company a portion of their ongoing box office receipts. The
Company funds its joint revenue sharing arrangements through cash flows from
operations. As of June 30, 2021, the Company had 897 theaters in operation under
joint revenue sharing arrangements, a 3.3% increase as compared to the 868
theaters in operation under joint revenue sharing arrangements as of June 30,
2020. The Company also had contracts in backlog for 329 theaters under joint
revenue sharing arrangements as of June 30, 2021, including 84 upgrades to
existing theater locations and 245 new theater locations.

IMAX Technology Sales and Maintenance


The IMAX Technology Sales and Maintenance category earns revenue principally
from the sale or sales-type lease of IMAX Theater Systems, as well as from the
maintenance of IMAX Theater Systems. To the lesser extent, the IMAX Technology
Sales and Maintenance category earns revenue from certain ancillary theater
business activities and revenues from hybrid joint revenue sharing arrangements.
These activities are described in more detail below under each of their
respective segments.

IMAX Systems


The IMAX Systems segment provides IMAX Theater Systems to exhibitors through
sale arrangements or long-term lease arrangements that for accounting purposes
are classified as sales-type leases. Under these arrangements, in exchange for
providing the IMAX Theater System, the Company earns initial fees and ongoing
consideration (which can include fixed annual minimum payments and contingent
fees in excess of the minimum payments), as well as maintenance and extended
warranty fees (see "IMAX Maintenance" below). The initial fees vary depending on
the system configuration and location of the theater. Initial fees are paid to
the Company in installments between the time of signing the arrangement and the
time of system installation, which is when the total of these fees, in addition
to the present value of future annual minimum payments, are recognized as
revenue. Finance income is recognized over the term of a financed sale or
sales-type lease arrangement. In addition, in sale arrangements, an estimate of
the contingent fees that may become due if certain annual minimum box office
receipt thresholds are exceeded is recorded as revenue in the period when the
sale is recognized and is adjusted in future periods based on actual results and
changes in estimates. Such variable consideration is only recognized on sales
transactions to the extent the Company believes there is not a risk of
significant revenue reversal.

In sale arrangements, title to the IMAX Theater System equipment generally
transfers to the customer. However, in certain instances, the Company retains
title or a security interest in the equipment until the customer has made all
payments required by the agreement or until certain shipment events for the
equipment have occurred. In a sales-type lease arrangement, title to the IMAX
Theater System equipment remains with the Company. The Company has the right to
remove the equipment for non-payment or other defaults by the customer.

The revenue earned from customers under the Company's theater system sales or
lease agreements varies from quarter-to-quarter and year-to-year based on a
number of factors, including the number and mix of theater system configurations
sold or leased, the timing of installation of the IMAX Theater Systems, the
nature of the arrangement and other factors specific to individual contracts.

Joint Revenue Sharing Arrangements - Fixed Fees


Under certain joint revenue sharing arrangements, known as hybrid arrangements,
the customer is responsible for making fixed upfront payments prior to the
delivery and installation of the IMAX Theater System in an amount that is
typically half of what the Company would receive from a typical sale
transaction. For hybrid joint revenue sharing arrangements that take the form of
a lease, the contingent rent is reported within the IMAX Technology Network, as
discussed above, while the fixed upfront payment is reported within IMAX
Technology Sales and Maintenance.

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IMAX Maintenance


For all IMAX theaters, theater owners or operators are also responsible for
paying the Company an annual maintenance and extended warranty fee. Under these
arrangements, the Company provides proactive and emergency maintenance services
to every theater in its network to ensure that each presentation is up to the
highest IMAX quality standard. Annual maintenance fees are paid throughout the
duration of the term of the theater agreements.

Other Theater Business

The Other Theater Business segment principally includes after-market sales of IMAX projection system parts and 3D glasses.

New Business Initiatives and Other

The New Business Initiatives segment includes activities related to the exploration of new lines of business and new initiatives outside of the Company's core business, which seek to leverage its proprietary, innovative technologies, its leadership position in the entertainment technology space and its unique relationship with content creators.


The Company has developed a new home entertainment licensing and certification
program called IMAX Enhanced. IMAX Enhanced was launched in September 2018,
along with audio leader DTS (an Xperi subsidiary) to capitalize on the
companies' decades of combined expertise in image and sound science. IMAX
Enhanced brings IMAX digitally re-mastered 4K high dynamic range (HDR) content
and DTS audio technologies to premier streaming platforms and best-in-class
consumer electronics devices worldwide, offering consumers high-fidelity sight
and sound experiences for the home.

To be certified, leading consumer electronics manufacturers spanning 4K/8K
televisions, projectors, A/V receivers, loudspeakers, subwoofers and soundbars
must meet a carefully prescribed set of audio and video performance standards,
set by a certification committee of IMAX and DTS engineers and some of
Hollywood's leading technical specialists.

IMAX Enhanced global device partners include Sony Electronics, Hisense, TCL,
Phillips, Xiaomi, and Sound United, among others. IMAX Enhanced has an estimated
six million certified devices in-market. IMAX Enhanced content is now available
on six streaming platforms worldwide, with partners that include Sony Pictures
Entertainment, Paramount Pictures, Huayi Brothers, Bona Film Group, Tencent
Video, iQIYI and FandangoNOW, with more on the way.

Film Distribution and Post-Production


Through the Film Distribution segment, the Company licenses film content and
distributes large-format films, primarily for its institutional theater
partners. The Company receives as its distribution fee either a fixed amount or
fixed percentage of the theater box office receipts and, following the Company's
recoupment of its costs, is typically entitled to receive an additional
percentage of gross revenues as participation revenues.

In addition, through its Connected Theaters initiative, the Company is currently
exploring new technologies and forms of content as a way to deepen consumer
engagement and brand loyalty, including new technologies to further connect the
IMAX network and to facilitate bringing more unique content, including live
events, to IMAX theater audiences. The Company believes such additional
connectivity can provide more innovative content to the IMAX network and in turn
permit the Company to engage audiences in new ways.

The Company continues to believe that the IMAX network serves as a valuable platform to launch and distribute original content, especially during periods between peak and off-peak seasons, known as "shoulder periods".

The Film Post-Production segment provides film post-production and quality control services for large-format films (whether produced by IMAX or third parties), and digital post-production services.

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IMAX NETWORK AND BACKLOG

IMAX Network

The following table provides detailed information about the IMAX network by type and geographic location as of June 30, 2021 and 2020:



                                                          June 30, 2021                                                        June 30, 2020
                                  Commercial       Commercial                                          Commercial       Commercial
                                  Multiplex        Destination       Institutional        Total        Multiplex        Destination       Institutional        Total
United States                             361                 4                  27           392              371                 4                  30           405
Canada                                     39                 1                   7            47               39                 2                   7            48
Greater China(1)                          743                 -                  16           759              699                 -                  15           714
Western Europe                            115                 4                   8           127              114                 4                   7           125
Asia (excluding Greater China)            121                 2                   2           125              122                 2                   2           126
Russia & the CIS                           68                 -                   -            68               68                 -                   -            68
Latin America(2)                           51                 1                  11            63               50                 1                  12            63
Rest of the World                          71                 -                   2            73               64                 -                   2            66
Total(3)                                1,569                12                  73         1,654            1,527                13                  75         1,615





(1) Greater China includes China, Hong Kong, Taiwan and Macau.

(2) Latin America includes South America, Central America and Mexico.

(3) Period-to-period changes in the tables above are reported net of the effect

of permanently closed theaters.



The Company currently believes that over time its commercial multiplex network
could grow to approximately 3,318 IMAX theaters worldwide from the 1,569
operating as of June 30, 2021. The Company believes that the majority of its
future growth will come from international markets. As of June 30, 2021, 73.5%
of IMAX Theater Systems in operation were located within international markets
(defined as all countries other than the United States and Canada), compared to
72.0% as of June 30, 2020. Revenues and gross box office derived from
international markets continue to exceed revenues and gross box office from the
United States and Canada. Risks associated with the Company's international
business are outlined in "Risk Factors - The Company conducts business
internationally, which exposes it to uncertainties and risks that could
negatively affect its operations, sales and future growth prospects" in Part I,
Item 1A of the Company's 2020 Form 10-K.

Greater China is the Company's largest market, measured by revenues, with
approximately 38% and 31% of overall revenues generated from its Greater China
operations in the years ended December 31, 2020 and 2019, respectively. During
the first half of 2021, this percentage increased to 60% as the pace of the
reopening of IMAX theaters in Greater China has exceeded that of theaters in
Domestic and Rest of World markets. As of June 30, 2021, the Company had 759
theaters operating in Greater China with an additional 237 theaters in backlog
that are scheduled to be installed by 2028. The Company's backlog in Greater
China represents 46.1% of its total current backlog, including upgrades in
system type. The Company's largest single international partnership is in China
with Wanda Film ("Wanda"). Wanda's total commitment to the Company is for 363
IMAX Theater Systems in Greater China (of which 357 IMAX Theater Systems are
under the parties' joint revenue sharing arrangement).

(See "Risk Factors - The Company faces risks in connection with its significant
presence in China and the continues expansion of its business there" and "Risk
Factors - General political, social and economic conditions can affect the
Company's business by reducing both revenues generated from existing IMAX
Theater Systems and the demand for new IMAX Theater Systems" in Part I, Item 1A
of the Company's 2020 Form 10-K.)

(See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Impact of COVID-19 Pandemic" and "Risk Factors - The Company has
experienced a significant decrease in its revenues, earnings and cash flows due
to the COVID-19 global pandemic and its business, financial condition and
results of operations may continue to be significantly harmed in future
reporting periods" in Part II, Item 1A of this report.)

                                       54

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The following tables provide detailed information about the Commercial Multiplex
theaters in operation within the IMAX network by arrangement type and geographic
location as of June 30, 2021 and 2020:



                                                                        June 30, 2021
                                                        Commercial

Multiplex Theaters in IMAX Network

                                            Traditional          Hybrid     

Sale / Sales-

                                               JRSA               JRSA            type Lease              Total
Domestic Total (United States & Canada)              273                5                   122                 400

International:

Greater China                                        384              108                   251                 743
Asia (excluding Greater China)                        33                2                    86                 121
Western Europe                                        47               28                    40                 115
Russia & the CIS                                       -                -                    68                  68
Latin America                                          1                -                    50                  51
Rest of the World                                     16                -                    55                  71
International Total                                  481              138                   550               1,169
Worldwide Total(1)                                   754              143                   672               1,569

                                                                        June 30, 2020
                                                        Commercial

Multiplex Theaters in IMAX Network

                                            Traditional          Hybrid     

Sale / Sales-

                                               JRSA               JRSA            type Lease              Total
Domestic Total (United States & Canada)              278                5                   127                 410

International:

Greater China                                        358              104                   237                 699
Asia (excluding Greater China)                        33                2                    87                 122
Western Europe                                        45               27                    42                 114
Russia & the CIS                                       -                -                    68                  68
Latin America                                          2                -                    48                  50
Rest of the World                                     14                -                    50                  64
International Total                                  452              133                   532               1,117
Worldwide Total(1)                                   730              138                   659               1,527





(1) Period-to-period changes in the tables above are reported net of the effect

    of permanently closed theaters.



                                       55
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Backlog

The following table provides detailed information about the Company's backlog as
of June 30, 2021 and 2020:



                                                       June 30, 2021                                                       June 30, 2020
                                       Number of                        Dollar Value                       Number of                        Dollar Value
                                        Systems                        (in thousands)                       Systems                        (in thousands)
                                 New            Upgrade             New            Upgrade           New            Upgrade             New            Upgrade
Sales and sales-type lease
arrangements                       174                11         $ 198,192         $ 13,184            179                11         $ 207,544         $ 14,518
Hybrid joint revenue sharing
arrangements                       136                 6            97,361            4,785            147                 7           106,400            5,560
Traditional joint revenue
sharing arrangements               109   (1)          78   (1)         247   (2)      5,500   (2)      133   (1)          82   (1)         300   (2)      5,500   (2)
                                   419                95         $ 295,800         $ 23,469            459               100         $ 314,244         $ 25,578



(1) Includes 44 IMAX Theater Systems (2020 - 46) where the customer has the

option to convert from a joint revenue sharing arrangement to a sales

arrangement.

(2) Reflects contractual upfront payments. Future contingent payments are not

reflected as these are based on negotiated shares of box office results.



The number of IMAX Theater Systems in the backlog reflects the minimum number of
commitments under signed contracts. The dollar value fluctuates depending on the
number of new arrangements signed from year-to-year, which adds to backlog and
the installation and acceptance of IMAX Theater Systems and the settlement of
contracts, both of which reduce backlog. Backlog typically represents the fixed
contracted revenue under signed IMAX Theater System sale and lease agreements
that the Company believes will be recognized as revenue upon installation and
acceptance of the associated system, as well as an estimate of variable
consideration in sales arrangements, however it excludes amounts allocated to
maintenance and extended warranty revenues. The value of backlog does not
include revenue from theaters in which the Company has an equity interest,
operating leases and long-term conditional theater commitments. Theaters under
joint revenue sharing arrangements do not usually have dollar value in backlog,
although certain IMAX Theater Systems under joint revenue sharing arrangements
provide for contracted upfront payments and therefore carry a backlog value
based on those payments. The Company believes that the contractual obligations
for IMAX Theater System installations that are listed in backlog are valid and
binding commitments.

From time to time, in the normal course of its business, the Company will have
customers who are unable to proceed with an IMAX Theater System installation for
a variety of reasons, including the inability to obtain certain consents,
approvals or financing. Once the determination is made that the customer will
not proceed with installation, the agreement with the customer is terminated or
amended. If the agreement is terminated, once the Company and the customer are
released from all their future obligations under the agreement, all or a portion
of the initial rents or fees that the customer previously made to the Company
are recognized as revenue.

Certain of the Company's contracts contain options for the customer to elect to
upgrade system type during the term or to alter the contract structure (for
example, from a joint revenue sharing arrangement to a sale) after signing but
before installation. Current backlog information reflects all known elections.



                                       56
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The following tables provide detailed information about the Company's backlog by arrangement type and geographic location as of June 30, 2021 and 2020:



                                                                    June 30, 2021
                                                             IMAX Theater System Backlog
                                           Traditional           Hybrid
                                               JRSA               JRSA         Sale / Lease        Total
Domestic Total (United States & Canada)              120                 3                 9            132

International:

Greater China                                         45               110                82            237
Asia (excluding Greater China)                         5                15                32             52
Western Europe                                        11                12                 6             29
Russia & the CIS                                       -                 1                16             17
Latin America                                          3                 -                 8             11
Rest of the World                                      3                 1                32             36
International Total                                   67               139               176            382
Worldwide Total                                      187               142               185            514   (1)

                                                                    June 30, 2020
                                                             IMAX Theater System Backlog
                                           Traditional           Hybrid
                                               JRSA               JRSA         Sale / Lease        Total
Domestic Total (United States & Canada)              124                 3                11            138

International:

Greater China                                         67               121                83            271
Asia (excluding Greater China)                         5                15                32             52
Western Europe                                        12                13                 7             32
Russia & the CIS                                       -                 1                15             16
Latin America                                          3                 -                10             13
Rest of the World                                      4                 1                32             37
International Total                                   91               151               179            421
Worldwide Total                                      215               154               190            559   (2)



(1) Includes 146 new IMAX with Laser projection system configurations and 91

upgrades of existing locations to IMAX with Laser projection system

configurations.

(2) Includes 154 new IMAX with Laser projection system configurations and 94

upgrades of existing locations to IMAX with Laser projection system

configurations.

Approximately 74.3% of IMAX Theater System arrangements in backlog as of June 30, 2021 are scheduled to be installed in international markets (2020 - 75.3%).


(See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Impact of COVID-19 Pandemic" and "Risk Factors - The Company has
experienced a significant decrease in its revenues, earnings and cash flows due
to the COVID-19 global pandemic and its business, financial condition and
results of operations may continue to be significantly harmed in future
reporting periods" in Part II, Item 1A of this report.)

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Signings and Installations


The following tables provide detailed information about IMAX Theater System
signings and installations for the three and six months ended June 30, 2021 and
2020:



                                                    For the Three Months Ended            For the Six Months Ended
                                                             June 30,                             June 30,
                                                    2021                   2020            2021               2020
Theater System Signings:
New IMAX Theater Systems
Sales and sales-type lease arrangements                    3                     12              9                 14
Hybrid joint revenue sharing lease arrangements            -                     17              -                 17
Traditional joint revenue sharing arrangements             3                      -              3                  2
Total new IMAX Theater Systems                             6                     29             12                 33
Upgrades of IMAX Theater Systems                           2                      -              2                 11
Total IMAX Theater System signings                         8                     29             14                 44

                                                    For the Three Months Ended            For the Six Months Ended
                                                             June 30,                             June 30,
                                                    2021                   2020            2021               2020
Theater System Installations:
New IMAX Theater Systems
Sales and sales-type lease arrangements                    9                      2             11                  4
Hybrid joint revenue sharing lease arrangements            2                      1              4                  2
Traditional joint revenue sharing arrangements             4                      -              9                  2
Total new IMAX Theater Systems                            15                      3             24                  8
Upgrades of IMAX Theater Systems                           1                      -              4                  7
Total IMAX Theater System installations                   16                      3             28                 15


(See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Impact of COVID-19 Pandemic" and "Risk Factors - The Company has
experienced a significant decrease in its revenues, earnings and cash flows due
to the COVID-19 global pandemic and its business, financial condition and
results of operations may continue to be significantly harmed in future
reporting periods" in Part II, Item 1A of this report.)




                                       58
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RESULTS OF OPERATIONS

The Company's business and future prospects are evaluated by Richard L. Gelfond,
its Chief Executive Officer ("CEO"), using a variety of factors and financial
and operational metrics including: (i) the signing, installation and financial
performance of theater system arrangements, particularly joint revenue sharing
arrangements and those involving laser-based projection systems; (ii) film
performance and the securing of new film projects, particularly IMAX DMR films;
(iii) the continuing ability to invest in and improve the Company's technology
to enhance the differentiation of The IMAX Experience versus other cinematic
experiences; (iv) revenues and gross margins earned by the Company's segments,
as discussed below; (v) consolidated earnings from operations, as adjusted for
unusual items; (vi) the overall execution, reliability and consumer acceptance
of The IMAX Experience; (vii) the success of new business initiatives; and
(viii) short- and long-term cash flow projections.

The CEO is the Company's Chief Operating Decision Maker ("CODM"), as such term
is defined under United States Generally Accepted Accounting Principles ("U.S.
GAAP"). The CODM, along with other members of management, assess segment
performance based on segment revenues and gross margins. Selling, general and
administrative expenses, research and development costs, the amortization of
intangible assets, provisions for (recoveries of) current expected credit
losses, certain write-downs, interest income, interest expense and income tax
(expense) benefit are not allocated to the Company's segments.

The Company's reportable segments are organized into the following four
categories: (i) IMAX Technology Network; (ii) IMAX Technology Sales and
Maintenance; (iii) New Business Initiatives; and (iv) Film Distribution and
Post-Production. Within these categories are the Company's following reportable
segments: (i) IMAX DMR; (ii) Joint Revenue Sharing Arrangements; (iii) IMAX
Systems, (iv) IMAX Maintenance; (v) Other Theater Business; (vi) New Business
Initiatives; (vii) Film Distribution; and (viii) Film Post-Production, each of
which are described above under "Sources of Revenue." This categorization is
consistent with how the CODM reviews the financial performance of the Company
and makes strategic decisions regarding resource allocation and investments to
meet long-term business goals. Management believes that a discussion and
analysis based on the four categories listed above is significantly more
relevant and useful to readers, as the Company's Condensed Consolidated
Statements of Operations captions combine results from several segments.


                                       59

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Results of Operations for the Three Months Ended June 30, 2021 and June 30, 2020


For the three months ended June 30, 2021, the Company reported a net loss
attributable to common shareholders of $(9.2) million, or $(0.16) per diluted
share, as compared to a net loss attributable to common shareholders of $(26.0)
million, or $(0.44) per diluted share, for the same period in 2020.

For the three months ended June 30, 2021, the Company reported an adjusted net
loss attributable to common shareholders* of $(7.0) million, or $(0.12) per
diluted share*, as compared to an adjusted net loss attributable to common
shareholders* of $(26.1) million, or $(0.44) per diluted share*, for the same
period in 2020.

The following table presents the Company's revenue and gross margin (margin loss) by category and reportable segment for the three months ended June 30, 2021 and 2020:




                                                   Revenue                Gross Margin (Margin Loss)
(In thousands of U.S. Dollars)               2021          2020            2021                2020
IMAX Technology Network
IMAX DMR                                   $  11,793     $     546     $       6,861       $         (30 )
Joint Revenue Sharing Arrangements,
contingent rent(1)                             7,862          (137 )           1,790              (6,501 )
                                              19,655           409             8,651              (6,531 )
IMAX Technology Sales and Maintenance
IMAX Systems(2)                               15,982         4,549            10,548               2,650
Joint Revenue Sharing Arrangements,
fixed fees                                     1,002           369               347                  48
IMAX Maintenance                              11,235             -             5,075              (1,908 )
Other Theater Business(3)(4)                     483          (309 )             142                (564 )
                                              28,702         4,609            16,112                 226
New Business Initiatives                         648           632               634                 512

Film Distribution and Post-Production 1,590 3,182

     606              (1,396 )
Sub-total                                     50,595         8,832            26,003              (7,189 )
Other                                            360            23              (400 )              (499 )
Total                                      $  50,955     $   8,855     $      25,603       $      (7,688 )



(1) For the three months ended June 30, 2020, the Company reported negative

revenue due to the continued amortization of lessee incentives that are

typically netted against lease revenues, which were abnormally low in the

period due to the COVID-19 global pandemic.

(2) Includes initial upfront payments and the present value of fixed minimum

payments from sale and sales-type lease arrangements of IMAX Theater Systems,

and the present value of estimated variable consideration from sales of IMAX

Theater Systems. To a lesser extent, this line item also includes finance

income associated with these revenue streams.

(3) Principally includes after-market sales of IMAX projection system parts and

3D glasses.

(4) For the three months ended June 30, 2020, the Company reported negative

    revenue due to an adjustment to prior period revenue.









* See "Non-GAAP Financial Measures" below for a description of this non-GAAP

financial measure and a reconciliation to the most comparable GAAP amount.




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Revenues and Gross Margin

In the second quarter of 2020, due to the outbreak of the COVID-19 global
pandemic, substantially all of the theaters in the IMAX network were closed.
Since that time, stay-at-home orders and capacity restrictions have been lifted
in many key markets and movie theaters throughout the IMAX network have
gradually reopened. As of June 30, 2021, 89% of the theaters in the global IMAX
commercial multiplex network were open, including 93% of the theaters in
Domestic theaters (i.e., United States and Canada), 90% of the theaters in
Greater China and 75% of the theaters in Rest of World markets. As a result, GBO
receipts generated by IMAX DMR films and joint revenue sharing arrangements
increased during the current quarter, leading to improvement in the Company's
segment results, when compared to the prior year. See the captioned sections
below for a discussion of the Company's segment results.

IMAX Technology Network


IMAX Technology Network results are influenced by the level of commercial
success and box office performance of the films released to the network, as well
as other factors including the timing of the films released, the length of the
theatrical distribution window, the take rates under the Company's DMR and joint
revenue sharing arrangements and the level of marketing spend associated with
the films released in the year. Other factors impacting IMAX Technology Network
results include fluctuations in the value of foreign currencies versus the U.S.
Dollar.

For the three months ended June 30, 2021, IMAX Technology Network revenues and
gross margin increased by $19.2 million and $15.2 million, respectively, when
compared to the same period in 2020. See below for separate discussions of IMAX
DMR and JRSA contingent rent results for the period.

IMAX DMR


For the three months ended June 30, 2021, IMAX DMR revenues and gross margin
increased by $11.2 million and $6.9 million, respectively, when compared to the
same period in 2020. These increases are primarily due to a $106.0 million
increase in GBO receipts generated by IMAX DMR films in the second quarter of
2021, from $2.6 million to $108.6 million. In the second quarter of 2021, GBO
was generated by the exhibition of 17 films (14 new films and 3 carryovers),
including six local language films in China and Japan, and the re-release of
classic titles. In the second quarter of 2020, GBO was generated by the
exhibition of 1 new film and the re-release of classic titles.

In addition to the level of revenues, IMAX DMR gross margin is also influenced
by the costs associated with the films exhibited in the period, and can vary
from period-to-period, particularly with respect to marketing expenses. For the
three months ended June 30, 2021, marketing expenses were $1.5 million, as
compared to $nil during the same period in 2020.

Joint Revenue Sharing Arrangements - Contingent Rent


For the three months ended June 30, 2021, JRSA contingent rent revenue and gross
margin increased by $8.0 million and $8.3 million, respectively, when compared
to the same period in 2020. These increases are largely due to a $58.7 million
increase in GBO generated by theaters under joint revenue sharing arrangements
in the second quarter of 2021 when compared to the same period in the prior
year, from $1.0 million to $59.7 million.

In addition to the level of revenues, JRSA contingent rent margin is also
influenced by the level of costs associated with such arrangements, such as
depreciation expense related to the underlying theater systems and costs
incurred to upgrade theater systems from digital xenon to IMAX with Laser, as
well as advertising, marketing and commission costs primarily for the launch of
new theaters. The level of depreciation expense in a period relative to the
prior year is a function of the growth of the theater network and the mix of
theater system configurations in the network. For the three months ended
June 30, 2021, JRSA gross margin included depreciation expense of $5.5 million,
which represents a $0.7 million decrease as compared to $6.2 million recorded in
the same period of the prior year. The lower level of depreciation expense in
the current period is due, in part, to the effect of lease term extensions
entered into with exhibitor customers as a result of the COVID-19 global
pandemic, partially offset by incremental depreciation expense associated with a
3% increase in the number of theaters operating under joint revenue sharing
arrangements. For the three months ended June 30, 2021, JRSA gross margin
includes advertising, marketing and commission costs of $0.3 million, as
compared to less than $0.1 million in the same period of the prior year.

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IMAX Technology Sales and Maintenance


The primary drivers of IMAX Technology Sales and Maintenance results are the
number of IMAX Theater Systems installed in a year, and the level of gross
margin percentage earned on each installation, as well as the associated
maintenance contracts that accompany each theater installation. The installation
of IMAX Theater Systems in newly built theaters or multiplexes, which make up a
large portion of the Company's theater system backlog, depends primarily on the
timing of the construction of those projects, which is not under the Company's
control.

The following table provides detailed information about the mix of IMAX Theater
System installed and recognized during the three months ended June 30, 2021 and
2020:



                                                           For the Three Months Ended June 30,
                                                        2021                                 2020
(In thousands of U.S. Dollars, except       Number of                              Number of
number of systems)                           Systems            Revenue             Systems          Revenue
New IMAX Theater Systems:
Sales and sales-types lease
arrangements(1)                                       9       $     12,046                    2     $    1,731
Joint revenue sharing arrangements -
hybrid                                                2              1,026                    1            356
Total new IMAX Theater Systems                       11             13,072                    3          2,087

IMAX Theater System upgrades:
Sales and sales-types lease arrangements              1              1,437                    -              -
Total                                                12       $     14,509                    3     $    2,087



(1) The arrangement for the sale of an IMAX Theater System includes fixed upfront

and ongoing consideration, including indexed annual minimum payment increases

over the term of the arrangement, as well as an estimate of the contingent

fees that may become due if certain annual minimum box office receipt

thresholds are exceeded.



The average revenue per IMAX Theater System under sales and sales-type lease
arrangements varies depending upon the number of IMAX Theater System commitments
with a single respective exhibitor, an exhibitor's location and various other
factors. The average revenue per full (i.e., not hybrid), new IMAX Theater
System under sales and sales-type lease arrangements was $1.3 million for the
three months ended June 30, 2021, as compared to $0.9 million during the same
period of the prior year.

For the three months ended June 30, 2021, IMAX Technology Sales and Maintenance
revenue and gross margin increased by $24.1 million and $15.9 million,
respectively, when compared to the same period in the prior year as the pace of
theater system installations increased when compared to the prior year and
regular maintenance services began to resume with the reopening of theaters as
the effects of the COVID-19 pandemic began to subside. See below for separate
discussions of IMAX Systems and IMAX Maintenance results for the period.

IMAX Systems


For the three months ended June 30, 2021, IMAX Systems revenue and gross margin
increased by $11.4 million and $7.9 million, respectively, when compared to the
same period in the prior year. The higher level of revenue and gross margin is
the result of seven additional IMAX Theater System installations in the current
period due to an increased pace of installations as the effects of the COVID-19
pandemic began to subside.

IMAX Maintenance

For the three months ended June 30, 2021, IMAX Maintenance segment revenues and
gross margin increased by $11.2 million and $7.0 million, respectively, when
compared to the same period in the prior year, due to the gradual reopening of
the IMAX network. In 2020, regular maintenance services were suspended and the
associated revenue was not recognized during the period when substantially all
of the theaters in the network were temporarily closed due to the COVID-19
global pandemic.

Maintenance margins vary depending on the mix of theater system configurations
in the theater network, volume-pricing related to larger relationships and the
timing and the date(s) of installation and/or service.

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Film Distribution and Post-Production


For the three months ended June 30, 2021, Film Distribution and Post-Production
revenues decreased by $1.6 million and gross margin increased by $2.0 million,
when compared to the same period in the prior year. The comparison to the prior
year period is significantly influenced by $2.2 million of impairment losses
recorded in the second quarter of 2020 principally to write-down the carrying
value of certain documentary and alternative content film assets due to a
decrease in projected box office totals and related revenues. No such impairment
losses were recorded in the second quarter of 2021.

Selling, General and Administrative Expenses


For the three months ended June 30, 2021, total Selling, General and
Administrative Expenses decreased by $1.0 million (3%), when compared to the
same period in 2020. For the three months ended June 30, 2021, Selling, General
and Administrative Expenses, excluding the impact of share-based compensation of
$6.4 million, were $22.4 million, as compared to $23.3 million in the same
period in the prior year, excluding share-based compensation expense of $6.5
million, representing a decrease of $0.9 million (4%). A portion of share-based
compensation expense is recognized within Cost and Expenses Applicable to
Revenue and Research and Development. (See Note 12 of Notes to Condensed
Consolidated Financial Statements.)

For the three months ended June 30, 2021, the Company recognized $2.0 million in
benefits from the Canada Emergency Wage Subsidy ("CEWS") program as reductions
to Selling, General and Administrative Expenses ($1.4 million) and Costs and
Expenses Applicable to Revenues ($0.6 million) in the Condensed Consolidated
Statements of Operations. For the three months ended June 30, 2020, the Company
recognized $3.2 million from the CEWS program and the U.S. CARES Act as
reductions to Selling, General and Administrative Expenses ($2.9 million) and
Costs and Expenses Applicable to Revenues ($0.3 million) in the Condensed
Consolidated Statements of Operations. The CEWS program has been extended to
September 2021. The Company will continue to review for the availability of
additional subsidies and credits for the remaining terms of these programs,
where applicable, although there are no guarantees that the Company will
ultimately apply for or receive any such additional benefits.

The decrease in second quarter Selling, General and Administrative Expenses
versus the prior year is primarily due to a $4.3 million (97%) increase in labor
and other costs capitalized to inventory, film assets, and joint venture theater
equipment or allocated to costs applicable to revenues, due to the higher level
of business activity during current quarter as the effects of the COVID-19
global pandemic began to subside. This factor is partially offset by a $1.5
million decrease in wage subsidies, tax credits and other financial support that
the Company is entitled to receive under various COVID-19 relief programs in the
countries in which it operates, as well as a higher level of staff and other
costs due to a return to a more normal level of business activities.

Research and Development

A significant portion of the Company's recent research and development efforts have been focused on laser-based projection systems, which the Company believes deliver increased resolution, sharper and brighter images, deeper contrast as well as the widest range of colors available to filmmakers today.

For the three months ended June 30, 2021, Research and Development expenses increased by $1.0 million (79%), when compared to the prior year.


The Company intends to continue research and development in other areas
considered important to the Company's continued commercial success, including
further improving the reliability of its projectors, certifying more IMAX
cameras, enhancing the Company's image quality, expanding the applicability of
the Company's digital technology in both theater and home entertainment and
improvements to the DMR process.

In addition, in the second quarter of 2021, the Company used time and resources
to work on leveraging and developing technologies and systems to help bring
additional interactivity to its theater network, better manage certain of the
Company's internal workflows and better organize and codify certain of the
Company's data.


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Credit Loss (Reversal) Expense, Net


For the three months ended June 30, 2021, the Company recorded a reversal of
current expected credit losses of $1.9 million, reflecting a reduction to
previously recorded provisions for foreign theater and studio receivable
balances due to better than anticipated collection experience. For the three
months ended June 30, 2020, the Company recorded a provision for current
expected credit losses of $1.4 million, which reflected judgments made by
management at the onset of the COVID-19 global pandemic regarding the credit
quality of Company's theater and studio related receivable balances.
Management's judgments regarding expected credit losses are based on the facts
available to management at the time that the Condensed Consolidated Financial
Statements are prepared and involve estimates about the future. Due to the
unprecedented nature of the COVID-19 pandemic, its effect on the Company's
customers and their ability to meet their financial obligations to the Company
is difficult to predict. As a result, the Company's judgments and associated
estimates of credit losses may ultimately prove, with the benefit of hindsight,
to be incorrect. (See Notes 1 and 4 of Notes to Condensed Consolidated Financial
Statements.)

Legal Judgment and Arbitration Awards

In the second quarter of 2021, the Company recorded a $1.8 million benefit within Legal Judgment and Arbitration Awards as a result of the settlement of the Giencourt matter, as discussed in Note 8(b)(ii) of Notes to Condensed Consolidated Financial Statements. There was no comparable amount recorded during the same period of the prior year.

Realized and Unrealized Investment Gains


In the first quarter of 2019, IMAX China (Hong Kong), Limited, a wholly-owned
subsidiary of IMAX China, entered into a cornerstone investment agreement with
Maoyan Entertainment ("Maoyan") and purchased equity securities for $15.2
million. In February 2021, IMAX China (Hong Kong), Limited sold all of its
shares of Maoyan. Prior to this sale, the Company accounted for its investment
in Maoyan at fair value with any changes in fair value recorded to the Condensed
Consolidated Statements of Operations. For the three months ended June 30, 2020,
the fair value of the Company's investment in Maoyan experienced an unrealized
gain of $2.0 million.

Income Taxes

For the three months ended June 30, 2021, the Company recorded income tax
expense of $1.9 million (2020 - income tax benefit of $10.2 million). The
Company's effective tax rate for the three months ended June 30, 2021 of (46.7)%
differs from the Canadian statutory tax rate of 26.2% primarily due to the fact
that the company recorded an additional $3.0 million valuation allowance against
deferred tax assets in jurisdictions where management could not reliably
forecast that future tax liabilities would arise, principally due to the
uncertainties around the long-term impact of the COVID-19 global pandemic.
Accordingly, the tax benefit associated with the current period losses in these
jurisdictions is not ultimately reflected in the Company's Condensed
Consolidated Statements of Operations. Also impacting the Company's effective
tax rate for the three months ended June 30, 2021 are jurisdictional tax rate
differences.

In the first quarter of 2020, management completed a reassessment of its
strategy with respect to the most efficient means of deploying the Company's
capital resources globally. Based on the results of this reassessment,
management concluded that the historical earnings of certain foreign
subsidiaries in excess of amounts required to sustain business operations would
no longer be indefinitely reinvested. As a result, the Company recognized a
deferred tax liability of $19.7 million in the first quarter of 2020 for
the estimated applicable foreign withholding taxes associated with these
historical earnings, which will become payable upon the repatriation of any such
earnings. In the second quarter of 2020, the estimate of the applicable foreign
withholding taxes was reduced by $1.2 million to $18.5 million due to a
reduction in the amount of distributable historical earnings. In the first
quarter of 2021, the applicable foreign withholding taxes was increased by $0.5
million due to an increase in the amount of distributable historical earnings.

(See Note 11 of Notes to Condensed Consolidated Financial Statements.)

Non-Controlling Interests


The Company's Condensed Consolidated Financial Statements primarily include the
non-controlling interest in the net income (loss) of IMAX China, as well as the
impact of non-controlling interests in the activity of its Original Film Fund
subsidiary. For the three months ended June 30, 2021, the net income
attributable to non-controlling interests of the Company's subsidiaries was $3.1
million (2020 - net loss of $(4.1) million).


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Results of Operations for the Six Months Ended June 30, 2021 and June 30, 2020


For the six months ended June 30, 2021, the Company reported a net loss
attributable to common shareholders of $(24.1) million, or $(0.41) per diluted
share, as compared to a net loss attributable to common shareholders of $(75.3)
million, or $(1.26) per diluted share, for the same period in 2020.

For the six months ended June 30, 2021, the Company reported an adjusted net
loss attributable to common shareholders* of $(21.8) million, or $(0.37) per
diluted share*, as compared to an adjusted net loss attributable to common
shareholders* of $(54.8) million, or $(0.92) per diluted share*, for the same
period in 2020.

The following table presents the Company's revenue and gross margin (margin loss) by category and reportable segment for the six months ended June 30, 2021 and 2020:




                                                   Revenue                Gross Margin (Margin Loss)
(In thousands of U.S. dollars)               2021          2020            2021                2020
IMAX Technology Network
IMAX DMR                                   $  23,737     $  11,175     $      15,112       $       4,413
Joint Revenue Sharing Arrangements,
contingent rent                               16,221         5,834             3,673              (8,119 )
                                              39,958        17,009            18,785              (3,706 )
IMAX Technology Sales and Maintenance
IMAX Systems(1)                               21,881        10,237            13,560               5,826
Joint Revenue Sharing Arrangements,
fixed fees                                     2,740         1,139               503                 227
IMAX Maintenance                              20,141         7,370             8,898              (1,149 )
Other Theater Business(2)                        920           954               205                  46
                                              45,682        19,700            23,166               4,950
New Business Initiatives                       1,316         1,110             1,092                 873

Film Distribution and Post-Production 2,403 5,676

     581              (3,331 )
Sub-total                                     89,359        43,495            43,624              (1,214 )
Other                                            350           262              (740 )            (1,388 )
Total                                      $  89,709     $  43,757     $      42,884       $      (2,602 )



(1) Includes initial upfront payments and the present value of fixed minimum

payments from sale and sales-type lease arrangements of IMAX Theater Systems,

and the present value of estimated variable consideration from sales of IMAX

Theater Systems. To a lesser extent, this line item also includes finance

income associated with these revenue streams.

(2) Principally includes after-market sales of IMAX projection system parts and

    3D glasses.









* See "Non-GAAP Financial Measures" below for a description of this non-GAAP

financial measure and a reconciliation to the most comparable GAAP amount.




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Revenues and Gross Margin

During the six months ended June 30, 2020, due to the outbreak of the COVID-19
global pandemic, substantially all of the theaters in the IMAX network were
closed for some period of the time, with the theaters in Greater China closing
in late-January 2020 and the remainder of the Company's theaters closing in
mid-to-late March 2020. Since that time, stay-at-home orders and capacity
restrictions have been lifted in many key markets and movie theaters throughout
the IMAX network have gradually reopened. As of June 30, 2021, 89% of the
theaters in the global IMAX commercial multiplex network were open, including
93% of the theaters in Domestic theaters (i.e., United States and Canada), 90%
of the theaters in Greater China and 75% of the theaters in Rest of World
markets. As a result, GBO receipts generated by IMAX DMR films and joint revenue
sharing arrangements increased during the current year-to-date period, leading
to improvement in the Company's segment results, when compared to the prior
year. See the captioned sections below for a discussion of the Company's segment
results.

IMAX Technology Network

IMAX Technology Network results are influenced by the level of commercial
success and box office performance of the films released to the network, as well
as other factors including the timing of the films released, the length of the
theatrical distribution window, the take rates under the Company's DMR and joint
revenue sharing arrangements and the level of marketing spend associated with
the films released in the year. Other factors impacting IMAX Technology Network
results include fluctuations in the value of foreign currencies versus the U.S.
Dollar.

For the six months ended June 30, 2021, IMAX Technology Network revenues and
gross margin increased $22.9 million and $22.5 million, respectively, when
compared to the same period in 2020. See below for separate discussions of IMAX
DMR and JRSA contingent rent results for the period.

IMAX DMR


For the six months ended June 30, 2021, IMAX DMR revenues and gross margin
increased by $12.6 million and $10.7 million, respectively, when compared to the
same period in 2020. These increases are primarily due to a $120.9 million
increase in GBO receipts generated by IMAX DMR films during the six months ended
June 30, 2021, from $97.9 million to $218.8 million. During the six months ended
June 30, 2021, GBO was generated by the exhibition of 32 films (26 new and 6
carryovers), including 12 local language films in China and Japan, and the
re-release of classic titles. During the six months ended June 30, 2020, GBO was
generated by the exhibition of 14 films (10 new and 4 carryovers) and the
re-release of classic titles.

In addition to the level of revenues, IMAX DMR gross margin is also influenced
by the costs associated with the films exhibited in the period, and can vary
from period-to-period, particularly with respect to marketing expenses. For the
six months ended June 30, 2021, marketing expenses were $2.6 million, as
compared to $2.4 million during the same period of 2020.

Joint Revenue Sharing Arrangements - Contingent Rent


For the six months ended June 30, 2021, JRSA contingent rent revenue and gross
margin increased by $10.4 million and $11.8 million, respectively, when compared
to the same period in 2020. These increases are largely due to a $79.9 million
increase in GBO generated by theaters under joint revenue sharing arrangements
during the six months ended June 30, 2021, from $45.6 million to $125.5
million.

In addition to the level of revenues, JRSA contingent rent margin is also
influenced by the level of costs associated with such arrangements, such as
depreciation expense related to the underlying theater systems and costs
incurred to upgrade theater systems from digital xenon to IMAX with Laser, as
well as advertising, marketing and commission costs primarily for the launch of
new theaters. The level of depreciation expense in a period relative to the
prior year is a function of the growth of the theater network and the mix of
theater system configurations in the network. For the six months ended June 30,
2021, JRSA gross margin included depreciation expense of $11.3 million, which
represents a $1.9 million decrease when compared to the same period of the prior
year. The lower level of depreciation expense in the current period is due, in
part, to the effect of lease term extensions entered into with exhibitor
customers as a result of the COVID-19 global pandemic, partially offset by
incremental depreciation expense associated with a 3% increase in the number of
theaters operating under joint revenue sharing arrangements. For the six months
ended June 30, 2021, JRSA gross margin includes advertising, marketing and
commission costs of $1.1 million, as compared to $0.6 million in the same period
of the prior year.

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IMAX Technology Sales and Maintenance


The primary drivers of IMAX Technology Sales and Maintenance results are the
number of IMAX Theater Systems installed in a year, and the level of gross
margin percentage earned on each installation, as well as the associated
maintenance contracts that accompany each theater installation. The installation
of IMAX Theater Systems in newly built theaters or multiplexes, which make up a
large portion of the Company's theater system backlog, depends primarily on the
timing of the construction of those projects, which is not under the Company's
control.

The following table provides detailed information about the mix of IMAX Theater
System installed and recognized during the six months ended June 30, 2021 and
2020:

                                                           For the Six Months Ended June 30,
                                                        2021                                2020
(In thousands of U.S. Dollars, except       Number of                             Number of
number of systems)                           Systems            Revenue            Systems         Revenue
New IMAX Theater Systems:
Sales and sales-types lease
arrangements(1)                                      11       $     15,025                  4     $    3,731
Joint revenue sharing arrangements -
hybrid                                                4              2,530                  2          1,126
Total new IMAX Theater Systems                       15             17,555                  6          4,857

IMAX Theater System upgrades:
Joint revenue sharing arrangements -
hybrid                                                1                775                  -              -
Sales and sales-types lease arrangements              1              1,437                  -              -
Total upgraded IMAX Theater Systems                   2              2,212                  -              -

Total                                                17       $     19,767                  6     $    4,857



(1) The arrangement for the sale of an IMAX Theater System includes fixed upfront

and ongoing consideration, including indexed annual minimum payment increases

over the term of the arrangement, as well as an estimate of the contingent

fees that may become due if certain annual minimum box office receipt

thresholds are exceeded.



The average revenue per IMAX Theater System under sales and sales-type lease
arrangements varies depending upon the number of IMAX Theater System commitments
with a single respective exhibitor, an exhibitor's location and various other
factors. The average revenue per full (i.e., not hybrid), new IMAX Theater
System under sales and sales-type lease arrangements was $1.4 million for the
six months ended June 30, 2021, as compared to $0.9 million during the same
period of the prior year.

For the six months ended June 30, 2021, IMAX Technology Sales and Maintenance
revenue and gross margin increased by $26.0 million and $18.2 million,
respectively, when compared to the same period of the prior year as the pace of
theater system installations increased when compared to the prior year and
regular maintenance services began to resume with the reopening of theaters as
the effects of the COVID-19 pandemic began to subside. See below for separate
discussions of IMAX Systems and IMAX Maintenance results for the period.

IMAX Systems


For the six months ended June 30, 2021, IMAX Systems revenue and gross margin
increased $11.6 million and $7.7 million, respectively, when compared to the
same period of the prior year. The higher level of revenue and gross margin is
the result of seven additional IMAX Theater System installation in the current
period due to an increased pace of theater system installations as the effects
of the COVID-19 pandemic began to subside.

IMAX Maintenance


For the six months ended June 30, 2021, IMAX Maintenance segment revenues and
gross margin increased by $12.8 million and $10.0 million, respectively, when
compared to the same period of the prior year, due to the gradual reopening of
the IMAX network. In 2020, regular maintenance services were suspended and the
associated revenue was not recognized during the period when theaters in the
network were temporarily closed due to the COVID-19 global pandemic.



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Maintenance margins vary depending on the mix of theater system configurations
in the theater network, volume-pricing related to larger relationships and the
timing and the date(s) of installation and/or service.

Film Distribution and Post-Production


For the six months ended June 30, 2021, Film Distribution and Post-Production
revenues decreased by $3.3 million and gross margin increased by $3.9 million,
when compared to the same period of the prior year. The comparison to the prior
year period is significantly influenced by $4.5 million of impairment losses
recorded during the six months ended June 30, 2020 principally to write-down the
carrying value of certain documentary and alternative content film assets due to
a decrease in projected box office totals and related revenues. No such
impairment losses were recorded during the six months ended June 30, 2021.

Selling, General and Administrative Expenses


For the six months ended June 30, 2021, total Selling, General and
Administrative Expenses decreased by $4.4 million (8%), when compared to the
same period in 2020. For the six months ended June 30, 2021, Selling, General
and Administrative Expenses, excluding the impact of share-based compensation of
$11.3 million, were $42.7 million, as compared to $48.3 million in the same
period of the prior year, excluding share-based compensation expense of $10.2
million, representing a decrease of $5.6 million (12%). A portion of share-based
compensation expense is recognized within Cost and Expenses Applicable to
Revenue and Research and Development. (See Note 12 of Notes to Condensed
Consolidated Financial Statements.)

For the six months ended June 30, 2021, the Company recognized $3.5 million in
benefits from CEWS program as reductions to Selling, General and Administrative
Expenses ($2.6 million) and Costs and Expenses Applicable to Revenues ($0.9
million) in the Condensed Consolidated Statements of Operations. For the six
months ended June 30, 2020, the Company recognized $3.2 million from the CEWS
program and the U.S. CARES Act as reductions to Selling, General and
Administrative Expenses ($2.9 million) and Costs and Expenses Applicable to
Revenues ($0.3 million) in the Condensed Consolidated Statements of Operations.
The CEWS program has been extended to September 2021. The Company will continue
to review for the availability of additional subsidies and credits for the
remaining terms of these programs, where applicable, although there are no
guarantees that the Company will ultimately apply for or receive any such
additional benefits.

The decrease in June year-to-date Selling, General and Administrative Expenses
versus the prior year is primarily due to management's cost control efforts and
lower business activity amidst the COVID-19 global pandemic resulting in lower
staff costs, travel, and facilities related expenses, among others. In response
to uncertainties associated with the COVID-19 global pandemic, management is
continuing to take steps to preserve the Company's cash and liquidity by closely
monitoring and controlling operating expenses and capital expenditures.

Research and Development


A significant portion of the Company's recent research and development efforts
have been focused on IMAX with Laser, the Company's laser-based projection
systems, which the Company believes deliver increased resolution, sharper and
brighter images, deeper contrast as well as the widest range of colors available
to filmmakers today. To a lesser extent, the Company's recent research and
development efforts have also focused on image enhancement technology.

For the six months ended June 30, 2021, Research and Development expenses increased by $0.2 million (7%), when compared to the prior year.


The Company intends to continue research and development in other areas
considered important to the Company's continued commercial success, including
further improving the reliability of its projectors, certifying more IMAX
cameras, enhancing the Company's image quality, expanding the applicability of
the Company's digital technology in both theater and home entertainment and
improvements to the DMR process.

In addition, during the six months ended June 30, 2021, the Company used time
and resources to work on leveraging and developing technologies and systems to
help bring additional interactivity to its theater network, better manage
certain of the Company's internal workflows and better organize and codify
certain of the Company's data.

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Credit Loss (Reversal) Expense, Net


For the six months ended June 30, 2021, the Company recorded a reversal of
current expected credit losses of $1.6 million, reflecting a reduction to
previously recorded provisions for foreign theater and studio receivable
balances due to better than anticipated collection experience. For the six
months ended June 30, 2020, the Company recorded a provision for current
expected credit losses of $11.7 million, which reflected judgments made by
management at the onset of the COVID-19 global pandemic regarding the credit
quality of Company's theater and studio related receivable balances.
Management's judgments regarding expected credit losses are based on the facts
available to management at the time that the Condensed Consolidated Financial
Statements are prepared and involve estimates about the future. Due to the
unprecedented nature of the COVID-19 pandemic, its effect on the Company's
customers and their ability to meet their financial obligations to the Company
is difficult to predict. As a result, the Company's judgments and associated
estimates of credit losses may ultimately prove, with the benefit of hindsight,
to be incorrect. (See Notes 1 and 4 of Notes to Condensed Consolidated Financial
Statements.)

Asset Impairments

For the six months ended June 30, 2020, the Company recorded asset impairments
of $1.2 million principally related to the write-down of content-related assets
which became impaired in the period. There were no such impairments recorded
during the six months ended June 30, 2021.

Legal Judgment and Arbitration Awards

In the six months ended June 30, 2021, the Company recorded a $1.8 million benefit within Legal Judgment and Arbitration Awards as a result of the settlement of the Giencourt matter, as discussed in Note 8(b)(ii) of Notes to Condensed Consolidated Financial Statements. There was no comparable amount recorded during the same period of the prior year.

Realized and Unrealized Investment Gains (Losses)


In the first quarter of 2019, IMAX China (Hong Kong), Limited, a wholly-owned
subsidiary of IMAX China, entered into a cornerstone investment agreement with
Maoyan Entertainment ("Maoyan") and purchased equity securities for $15.2
million. In February 2021, IMAX China (Hong Kong), Limited sold all of its
7,949,000 shares of Maoyan for gross proceeds of $17.8 million, which represents
a $2.6 million gain relative to the Company's acquisition cost and a $5.2
million gain compared to the fair value of the investment as of December 31,
2020. Prior to this sale, the Company accounted for its investment in Maoyan at
fair value with any changes in fair value recorded to the Condensed Consolidated
Statements of Operations. For the six months ended June 30, 2020, the fair value
of the Company's investment in Maoyan experienced an unrealized loss of $2.5
million.

Interest Expense

For the six months ended June 30, 2021, interest expense was $4.0 million, as
compared to $2.2 million during the same period of the prior year. The increase
in interest expense versus the same period of the prior year is due to a higher
level of indebtedness coupled with a higher interest rate applicable during the
designated amendment period. (See Note 7 of Notes to Condensed Consolidated
Financial Statements.)

Income Taxes


For the six months ended June 30, 2021, the Company recorded income tax expense
of $5.0 million (2020 - $5.3 million). The Company's effective tax rate for the
six months ended June 30, 2021 of (43.2)% differs from the Canadian statutory
tax rate of 26.2% primarily due to the fact that the Company recorded an
additional $10.0 million valuation allowance against deferred tax assets in
jurisdictions where management could not reliably forecast that future tax
liabilities would arise, principally due to the uncertainties around the
long-term impact of the COVID-19 global pandemic. Accordingly, the tax benefit
associated with the current period losses in these jurisdictions is not
ultimately reflected in the Company's Condensed Consolidated Statements of
Operations. Also impacting the Company's effective tax rate for the six months
ended June 30, 2021 are jurisdictional tax rate differences, including a
difference related to the gain on the sale of the Maoyan investment (see
"Realized and Unrealized Investment Gains (Losses)" above) and a change in the
estimated contingent liabilities related to the potential resolution of various
tax examinations.



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In the first quarter of 2020, management completed a reassessment of its
strategy with respect to the most efficient means of deploying the Company's
capital resources globally. Based on the results of this reassessment,
management concluded that the historical earnings of certain foreign
subsidiaries in excess of amounts required to sustain business operations would
no longer be indefinitely reinvested. As a result, the Company recognized a
deferred tax liability of $19.7 million in the first quarter of 2020 for the
estimated applicable foreign withholding taxes associated with these historical
earnings, which will become payable upon the repatriation of any such earnings.
In the second quarter of 2020, the estimate of the applicable foreign
withholding taxes was reduced by $1.2 million to $18.5 million due to a
reduction in the amount of distributable historical earnings. In the first
quarter of 2021, the applicable foreign withholding taxes was increased by $0.5
million due to an increase in the amount of distributable historical earnings.

(See Note 11 of Notes to Condensed Consolidated Financial Statements.)

Non-Controlling Interests


The Company's Condensed Consolidated Financial Statements primarily include the
non-controlling interest in the net income (loss) of IMAX China, as well as the
impact of non-controlling interests in the activity of its Original Film Fund
subsidiary. For the six months ended June 30, 2021, the net income attributable
to non-controlling interests of the Company's subsidiaries was $7.4 million
(2020 - net loss of $(14.1) million).




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CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Operating Activities


The net cash used in or provided by the Company's operating activities is
affected by a number of factors, including: (i) the level of cash collections
from customers in respect of existing IMAX Theater System sale and lease
agreements, (ii) the amount of upfront payments collected in respect of IMAX
Theater System sale and lease agreements in backlog, (iii) the box-office
performance of films distributed by the Company and/or released to IMAX
theaters, (iv) the level of inventory purchases and (v) the level of the
Company's operating expenses, including expenses for research and development
and new business initiatives.

For the six months ended June 30, 2021, net cash used in the Company's operating
activities totaled $17.0 million, as compared to net cash used in operating
activities of $20.9 million in the same period of the prior year. For the six
months ended June 30, 2021, the net cash used in the Company's operating
activities is principally due to an increase in Accounts Receivable of $11.0
million as a result of theaters reopening amidst the early stages of recovery
from the COVID-19 global pandemic, as well as a $9.5 million payment made in the
second quarter of 2021 in connection with the settlement of the Giencourt
matter, as discussed in Note 8(b)(ii) of Notes to Condensed Consolidated
Financial Statements, and the settlement of other payables. For the six months
ended June 30, 2020, the net cash outflow from operating activities was
principally due to the significant decrease in the Company's revenue and
earnings as a result of the COVID-19 global pandemic. In addition, the Company
experienced a slowdown in manufacturing, shipments and installation of IMAX
Theater Systems at customer sites, resulting in an increase in Inventories.
These cash outflows were partially offset by a $37.0 million decrease in
Accounts Receivable.

Investing Activities


For the six months ended June 30, 2021, net cash provided by investing
activities totaled $11.4 million, as compared to net cash used in investing
activities of $5.7 million in the same period of the prior year. For the six
months ended June 30, 2021, the net cash provided by investing activities is
primarily driven by $17.8 million in cash proceeds received from the sale of the
Company's investment in Maoyan in the first quarter of 2021 (see "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Realized and Unrealized Investment Gains (Losses)"). This cash inflow is
partially offset by $2.4 million invested in equipment to be used in the
Company's joint revenue sharing arrangements with exhibitors (2020 - $3.9
million), $2.6 million of intangible assets acquired, principally related to the
purchase or development of software (2020 - $1.2 million), and $1.4 million for
the purchase of property, plant and equipment (2020 - $0.6 million). Based on
management's current operating plan for 2021, the Company expects to continue to
use cash to deploy additional IMAX Theater Systems under joint revenue sharing
arrangements.

Capital expenditures, including the Company's investment in joint revenue sharing equipment, purchase of property, plant and equipment, other intangible assets and investments in film assets were $12.2 million for the six months ended June 30, 2021, as compared to $9.8 million for the six months ended June 30, 2020.

Financing Activities


For the six months ended June 30, 2021, net cash used in financing activities
totaled $96.6 million, as compared to $235.7 million provided by financing
activities in the same period of the prior year. For the six months ended
June 30, 2021, the net cash used in financing activities is principally due to
$296.6 million in net repayments of revolving credit facility borrowings, which
were funded in part with a portion of the $223.7 million in net proceeds
received from the issuance of the Convertible Notes (as defined in "Liquidity
and Capital Resources"). The net cash used in financing activities for the
current period is also the result of the $19.1 million purchase of capped calls
related to the Convertible Notes. (See Note 7 of Notes to Condensed Consolidated
Financial Statements in Part I, Item 1 for additional information on the
issuance of the Convertible Notes and the related capped call transactions.)

For the six months ended June 30, 2020, net cash provided by financing
activities totaled $235.7 million and was principally due to $280.2 million in
Credit Facility borrowings drawn in the period, partially offset by $36.6
million paid to repurchase common shares under the Company's share repurchase
program.


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LIQUIDITY AND CAPITAL RESOURCES

Credit Agreement


The Company has a credit agreement, the Fifth Amended and Restated Credit
Agreement, with Wells Fargo Bank, National Association ("Wells Fargo"), as
agent, and a syndicate of lenders party thereto (the "Credit Agreement"). The
Company's obligations under the Credit Agreement are guaranteed by certain of
its subsidiaries (the "Guarantors") and are secured by first-priority security
interests in substantially all the assets of the Company and the Guarantors. The
facility provided by the Credit Agreement (the "Credit Facility") matures on
June 28, 2023.

The Credit Agreement has a revolving borrowing capacity of $300.0 million, and
contains an uncommitted accordion feature allowing the Company to further expand
its borrowing capacity to $440.0 million or greater, subject to certain
conditions, depending on the mix of revolving and term loans comprising the
incremental facility.

In the first quarter of 2020, in response to uncertainties associated with the
outbreak of the COVID-19 global pandemic and its impact on the Company's
business, the Company drew down $280.0 million in available borrowing capacity
under the Credit Facility, resulting in total outstanding borrowings of $300.0
million, which remained outstanding as of December 31, 2020. During the six
months ended June 30, 2021, the Company completely repaid the $300.0 million of
Credit Facility borrowings, using cash on hand following the issuance of the
Convertible Notes (as discussed below). Accordingly, as of June 30, 2021, there
were no outstanding borrowings under the Credit Facility. As of June 30, 2021
and December 31, 2020, the Company did not have any letters of credit or advance
payment guarantees outstanding under the Credit Facility.

The Credit Agreement contains a covenant that requires the Company to maintain a
Senior Secured Net Leverage Ratio (as defined in the Credit Agreement), as of
the last day of any Fiscal Quarter (as defined in the Credit Agreement) of no
greater than 3.25:1.00. In addition, the Credit Agreement contains customary
affirmative and negative covenants, including covenants that limit indebtedness,
liens, capital expenditures, asset sales, investments and restricted payments,
in each case subject to negotiated exceptions and baskets. The Credit Agreement
also contains customary representations, warranties and event of default
provisions.

On March 15, 2021, the Company entered into the Second Amendment to the Credit
Agreement (as previously amended by the First Amendment to the Credit Agreement,
dated as of June 10, 2020), (collectively, the "Amendments"). The Amendments,
among other things, (i) suspend the Senior Secured Net Leverage Ratio covenant
through the first quarter of 2022, (ii) re-establish the Senior Secured Net
Leverage Ratio covenant thereafter, provided that for subsequent quarters that
such covenant is tested, as applicable, the Company will be permitted to use its
quarterly EBITDA (as defined in the Credit Agreement) from the third and fourth
quarters of 2019 in lieu of EBITDA for the corresponding quarters of 2021, (iii)
add a $75.0 million minimum liquidity covenant measured at the end of each
calendar month, (iv) restrict the Company's ability to make certain restricted
payments, dispositions and investments, create or assume liens and incur debt
that would otherwise have been permitted by the Credit Agreement and (v) permit
the issuance of the Convertible Notes (as discussed below) and related
transactions, including the capped call transactions, or other unsecured debt,
in an amount not to exceed $290.0 million. The modifications to the negative
covenants, the minimum liquidity covenant and modifications to certain other
provisions in the Credit Agreement pursuant to the Amendments are effective
until the earlier of the delivery of the compliance certificate for the fourth
quarter of 2022 or the date on which the Company, in its sole discretion, elects
to calculate its compliance with the Senior Secured Net Leverage Ratio by using
either its actual EBITDA or annualized EBITDA (the "Designated Period"). As of
June 30, 2021, the Company was in compliance with all of its requirements under
the Credit Agreement, as amended.

Borrowings under the Credit Facility bear interest, at the Company's option, at
(i) LIBOR plus a margin ranging from 1.00% to 1.75% per annum; or (ii) the U.S.
base rate plus a margin ranging from 0.25% to 1.00% per annum, in each case
depending on the Company's Total Leverage Ratio (as defined in the Credit
Agreement); provided, however, that from the effective date of the First
Amendment to the Credit Agreement until the Company delivers a compliance
certificate under the Credit Facility following the end of the Designated
Period, the applicable margin for LIBOR borrowings will be 2.50% per annum and
the applicable margin for U.S. base rate borrowings will be 1.75% per annum. The
effective interest rate for the three and six months ended June 30, 2021 was
2.63% and 2.64%, respectively (2020 - 1.83% and 1.86%, respectively).

In addition, the Credit Facility has standby fees ranging from 0.25% to 0.38%
per annum, based on the Company's Total Leverage Ratio with respect to the
unused portion of the Credit Facility; provided, however, that from the
effective date of the First Amendment to the Credit Agreement until the Company
delivers a compliance certificate under the Credit Facility following the end of
the Designated Period, the standby fee will be 0.50% per annum.



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The Company incurred fees of approximately $1.2 million in connection with the Amendments, which are being amortized on a straight-line basis to Interest Expense over the relevant amendment periods.

Working Capital Facility

On July 1, 2021, IMAX (Shanghai) Multimedia Technology Co., Ltd. ("IMAX Shanghai"), one of the Company's majority-owned subsidiaries in China, renewed its unsecured revolving facility for up to 200.0 million Chinese Renminbi ("RMB") (approximately $30.9 million) to fund ongoing working capital requirements (the "Working Capital Facility"). The Working Capital Facility expires in July 2022.


As of June 30, 2021, outstanding Working Capital Facility borrowings were RMB
71.2 million ($11.0 million) and outstanding letters of guarantee were RMB 2.4
million ($0.4 million). As of December 31, 2020, outstanding Working Capital
Facility borrowings were RMB 49.9 million ($7.6 million) and no letters of
guarantee were issued. As of June 30, 2021, the amount available for future
borrowings under the Working Capital Facility was RMB 118.8 million ($18.4
million) and the amount available for letters of guarantee was RMB 7.6 million
($1.1 million). The amount available for future borrowings under the Working
Capital Facility is not subject to a standby fee. The effective interest rate
for borrowings under the Working Capital Facility for the three and six months
ended June 30, 2021 was 4.35% (2020 - 4.35%).

Wells Fargo Foreign Exchange Facility


Within the Credit Facility, the Company is able to enter into foreign currency
forward contracts and/or other swap arrangements. As of June 30, 2021, the net
unrealized gain on the Company's outstanding foreign currency forward contracts
was $0.9 million, representing the amount by which the fair value of these
forward contracts exceeded their notional value (December 31, 2020 - $2.0
million). As of June 30, 2021, the notional value of the Company's outstanding
foreign currency forward contracts was $13.7 million (December 31, 2020 - $31.9
million).

NBC Facility

On October 28, 2019, the Company entered into a $5.0 million facility with the
National Bank of Canada (the "NBC Facility") fully insured by Export Development
Canada for use solely in conjunction with the issuance of performance guarantees
and letters of credit. The Company did not have any letters of credit or advance
payment guarantees outstanding as of June 30, 2021 and December 31, 2020 under
the NBC Facility.

Convertible Notes

On March 19, 2021, the Company issued $230.0 million of 0.500% Convertible
Senior Notes due 2026 (the "Convertible Notes") in a private placement conducted
pursuant to Rule 144A under the Securities Act of 1933, as amended. The net
proceeds from the issuance of the Convertible Notes were $223.7 million, after
deducting the initial purchasers' discounts and commissions. In addition, the
Company incurred $1.2 million of debt issuance costs associated with the
Convertible Notes. The Company used a portion of the net proceeds from the
issuance of the Convertible Notes to make a partial repayment of outstanding
Credit Facility borrowings (as discussed above), and is using the remainder for
working capital or other general corporate purposes.

The Convertible Notes are senior unsecured obligations of the Company and bear
interest at a rate of 0.500% per annum on the principal thereof, payable
semi-annually in arrears on April 1 and October 1 of each year, beginning on
October 1, 2021. The Convertible Notes will mature on April 1, 2026, unless they
are redeemed or repurchased by the Company or converted on an earlier date.

Holders of the Convertible Notes have the right to convert their Convertible
Notes in certain circumstances and during specified periods. Before January 1,
2026, holders of the Convertible Notes have the right to convert their
Convertible Notes only upon the occurrence of certain events. From and after
January 1, 2026, holders of the Convertible Notes may convert their Convertible
notes at any time at their election until the close of business on the second
scheduled trading day immediately before the maturity date. Upon conversion, the
Company will pay or deliver, as applicable, cash or a combination of cash (in an
amount no less than the principal amount of the Convertible Notes being
converted) and common shares, at its election, based on the applicable
conversion rates. The initial conversion rate is 34.7766 common shares per
$1,000 principal amount of Convertible Notes, which represents an initial
conversion price of approximately $28.75 per common share, and is subject to
adjustment upon the occurrence of certain events.

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The Convertible Notes are redeemable, in whole or in part, at the Company's
option at any time, and from time to time, on or after April 6, 2024 and on or
before the 40th scheduled trading day immediately before the maturity date, at a
cash redemption price equal to the principal amount of the Convertible Notes to
be redeemed, plus accrued and unpaid interest, if any, but only if the last
reported sale price per share of the Company's common stock exceeds 130% of the
conversion price for a specified period of time. In addition, calling any
Convertible Notes for redemption will constitute a "make-whole fundamental
change" with respect to such notes, in which case the conversion rate applicable
to the conversion of such notes will be increased in certain circumstances if
such notes are converted after they are called for redemption.

In addition, upon the occurrence of a "fundamental change" (as defined below),
holders may require the Company to repurchase their Convertible Notes at a cash
repurchase price equal to the principal amount of the Convertible Notes to be
repurchased, plus accrued and unpaid interest, if any. Subject to the terms and
conditions of the indenture governing the Convertible Notes, a "fundamental
change" means, among other things, an event resulting in (i) a change of
control, (ii) a transfer of all or substantially all of the assets of the
Company, (iii) a merger, (iv) liquidation or dissolution of the Company, (v) or
delisting of the Company's common shares from a national securities exchange.

On January 1, 2021, the Company elected to early adopt ASU No. 2020-06,
"Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU
2020-06"). ASU 2020-06 simplifies the accounting for convertible debt that may
be settled in cash. As a result, the Company recorded the Convertible Notes
entirely as a liability in the Condensed Consolidated Balance Sheets, net of
initial purchasers' discounts and commissions and other debt issuance costs,
with interest expense reflecting the cash coupon plus the amortization of the
discounts and capitalized costs. Additionally, ASU 2020-06 modifies the
treatment of convertible debt securities that may be settled in cash or shares
by requiring the use of the "if-converted" method. Under the "if-converted"
method, because the principal amount of the Convertible Notes is settled in cash
and the conversion spread is settleable in the Company's common shares, diluted
earnings per share is calculated by including the net number of incremental
shares that would be issued upon conversion of the Convertible Notes, using the
average market price during the period. Accordingly, the application of the
"if-converted" method may reduce the Company's reported diluted earnings per
share.

In connection with the pricing of the Convertible Notes, the Company entered
into privately negotiated capped call transactions (the "Capped Call
Transactions") with certain financial institutions. The Capped Call Transactions
are expected to reduce potential dilution resulting from the common shares the
Company is required to issue and/or to offset any potential cash payments the
Company is required to make in excess of the principal amount of the Convertible
Notes in the event that the market price per share of the Company's common
shares is greater than the strike price of the Capped Call Transactions with
such reduction and/or offset subject to a cap. The Capped Call Transactions have
an initial cap price of $37.2750 per share of the Company's common shares, which
represents a premium of 75% over the last reported sale price of the common
shares on March 16, 2021, and is subject to certain adjustments under the terms
of the Capped Call Transactions. Collectively, the Capped Call Transactions
cover, subject to anti-dilution adjustments substantially similar to those
applicable to the Convertible Notes, the number of the Company's common shares
underlying the Convertible Notes. The cost of the Capped Call Transactions was
approximately $19.1 million.

The Capped Call Transactions are separate transactions, and are not part of the
terms of the Convertible Notes and will not affect any holder's rights under the
notes. Holders of the Convertible Notes will not have any rights with respect to
the Capped Call Transactions.

The Capped Call Transactions meet all of the applicable criteria for equity classification in accordance with ASC 815-10-15-74(a), "Derivatives and Hedging-Embedded Derivatives-Certain Contracts Involving an Entity's Own Equity," and, as a result, the related $19.1 million cost was recorded as a reduction to Other Equity within Shareholders' Equity on the Company's Condensed Consolidated Statements of Shareholder's Equity and Condensed Consolidated Balance Sheets.

Assessment of Liquidity and Capital Requirements


As of June 30, 2021, the Company's principal sources of liquidity included: (i)
its balances of cash and cash equivalents ($214.1 million); (ii) the anticipated
collection of trade accounts receivable, which includes amounts owed under joint
revenue sharing arrangements and DMR agreements with movie studios; (iii) the
anticipated collection of financing receivables due in the next 12 months; and
(iv) installment payments expected in the next 12 months on its existing sales
and sales and sales-type lease arrangements in backlog. In addition, as of June
30, 2021, the Company had $300.0 million in available borrowing capacity under
the Credit Facility and $18.4 million in available borrowing capacity under the
Working Capital Facility, as described above.

                                       74

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The Company's $214.1 million balance of cash and cash equivalents as of June 30,
2021 includes $118.5 million in cash held outside of Canada (December 31, 2020 -
$89.9 million), of which $94.2 million was held in the People's Republic of
China (the "PRC") (December 31, 2020 - $77.2 million). In the first quarter of
2020, management completed a reassessment of its strategy with respect to the
most efficient means of deploying the Company's capital resources globally.
Based on the results of this reassessment, management concluded that the
historical earnings of certain foreign subsidiaries in excess of amounts
required to sustain business operations would no longer be indefinitely
reinvested. As of June 30, 2021, the Company's Condensed Consolidated Balance
Sheets include a deferred tax liability of $19.7 million for the applicable
foreign withholding taxes associated with these historical earnings, which will
become payable upon the repatriation of any such earnings.

The Company's operating cash flows will be adversely affected if management's
projections of future signings of IMAX Theater Systems and film performance,
theater installations and film productions are not realized. The Company
forecasts its short-term liquidity requirements on a quarterly and annual basis.
Since the Company's future cash flows are based on estimates and there may be
factors that are outside of the Company's control (see "Risk Factors" in Item 1A
in the Company's 2020 Form 10-K), there is no guarantee that the Company will
continue to be able to fund its operations through cash flows from operations.
Under the terms of the Company's typical sale and sales-type lease agreements,
the Company receives substantial cash payments before the Company completes the
performance of its obligations. Similarly, the Company receives cash payments
for some of its film productions in advance of related cash expenditures.

The impact of the COVID-19 global pandemic has resulted in significantly lower
levels of revenues, earnings and operating cash flows for the Company during
2020 and through the end of the second quarter of 2021, when compared to periods
prior to the onset of the pandemic, as GBO results from the Company's theater
customers declined significantly, the installation of certain theater systems
was delayed, and maintenance services were generally suspended for theaters that
were closed. In addition, as a result of the financial difficulties faced by
certain of the Company's exhibition customers arising out of pandemic-related
closures, the Company has experienced and may continue to experience delays in
collecting payments due under existing theater sale or lease arrangements. The
Company has provided temporary relief to certain exhibitor customers by waiving
or reducing maintenance fees during periods when theaters are closed or
operating with reduced capacities and, in certain situations, by providing
extended payment terms on annual minimum payment obligations in exchange for a
corresponding or longer extension of the term of the underlying sale or lease
arrangement. However, with approximately 89% of the Company's global theater
network open as of June 30, 2021, GBO receipts generated by IMAX DMR films and
joint revenue sharing arrangements increased in the current quarter and
year-to-date periods, leading to improvement in the Company's results, when
compared to the prior year periods covered by this report.

Based on the Company's current cash balances and operating cash flows, management expects to have sufficient capital and liquidity to fund its anticipated operating needs and capital requirements during the next twelve month period following the date of this report.


(See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Impact of COVID-19 Pandemic" and "Risk Factors - The Company has
experienced a significant decrease in its revenues, earnings and cash flows due
to the COVID-19 global pandemic and its business, financial condition and
results of operations may continue to be significantly harmed in future
reporting periods" in Part II, Item 1A of this Form 10-Q.)


                                       75

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CONTRACTUAL OBLIGATIONS

Payments to be made by the Company under contractual obligations as of June 30,
2021 are as follows:



                                                                   Payments Due by Period
                                         Total         Less Than
(In thousands of U.S. Dollars)         Obligation       One Year       1 to 3 years      3 to 5 years       Thereafter
Purchase obligations(1)               $     33,371     $   32,727     $          616     $           -     $         28
Pension obligations(2)                      20,298              -             20,298                 -                -
Operating lease obligations(3)              20,280          3,409              5,260             4,253            7,358
Working Capital Facility(4)                 11,017         11,017                  -                 -                -
Convertible Notes(5)                       235,750          1,150              2,300             2,300          230,000
Postretirement benefits obligations          3,297            129                272               280            2,616
                                      $    324,013     $   48,432     $       28,746     $       6,833     $    240,002



(1) Represents total payments to be made under binding commitments with suppliers

and outstanding payments to be made for supplies ordered, but yet to be

invoiced.

(2) The Company has an unfunded defined benefit pension plan, the Supplemental

Executive Retirement Plan (the "SERP"), covering its CEO, Mr. Richard L.

Gelfond. The SERP has a fixed benefit payable of $20.3 million. The table

above assumes that Mr. Gelfond will receive a lump sum payment of $20.3

million six months after retirement at the end of the term of his current

employment agreement, which expires on December 31, 2022, in accordance with

the terms of the SERP, although Mr. Gelfond has not informed the Company that

he intends to retire at that time.

(3) Represents total minimum annual rental payments due under the Company's

operating leases, which almost entirely consist of rent at the Company's

leased office space in New York.

(4) On July 1, 2021, IMAX Shanghai renewed the Working Capital Facility through

July 2022.

(5) The Convertible Notes bear interest at a rate of 0.500% per annum on the

principal of $230.0 million, payable semi-annually in arrears on April 1 and

October 1 of each year, beginning on October 1, 2021. The Convertible Notes

will mature on April 1, 2026, unless earlier repurchased, redeemed or

converted.

Pension and Postretirement Obligations


The Company has an unfunded defined benefit pension plan, the SERP, covering the
Company's CEO, Mr. Gelfond. Under the terms of the SERP, if Mr. Gelfond's
employment is terminated other than for cause (as defined in his employment
agreement), he is entitled to receive SERP benefits in the form of a lump sum
payment. SERP benefit payments to Mr. Gelfond are subject to a deferral of six
months after the termination of his employment, at which time Mr. Gelfond will
be entitled to receive interest on the deferred amount credited at the
applicable federate rate for short-term obligations. Pursuant to an amendment to
his employment agreement dated November 1, 2019, the term of Mr. Gelfond's
employment was extended through December through December 31, 2022, although Mr.
Gelfond has not informed the Company that he intends to retire at that time.
Under the terms of this amendment to his employment agreement, the total benefit
payable to Mr. Gelfond under the SERP has been fixed at $20.3 million. As of
June 30, 2021, the Company's Condensed Consolidated Balance Sheets include the
present value of the related SERP benefit obligation of approximately $20.2
million recorded within Accrued and Other Liabilities (December 31, 2020 - $20.1
million).

The Company has a postretirement plan to provide health and welfare benefits to
Canadian employees meeting certain eligibility requirements. As of June 30,
2021, the Company's Condensed Consolidated Balance Sheets include an unfunded
benefit obligation of $1.9 million within Accrued and Other Liabilities related
to this plan (December 31, 2020 - $1.9 million).

In July 2000, the Company agreed to maintain health benefits for Messrs. Gelfond
and Bradley J. Wechsler, the Company's former Co-CEO and former Chairman of its
Board of Directors, upon retirement. As of June 30, 2021, the Company's
Condensed Consolidated Balance Sheets include an unfunded benefit obligation of
$0.7 million within Accrued and Other Liabilities (December 31, 2020 - $0.7
million). Mr. Wechsler retired from the Company's Board of Directors on June 9,
2021. The Company will maintain Mr. Wechsler's current health benefits through
December 31, 2021, and thereafter will provide him with Medicare supplemental
coverage.

                                       76
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The Company maintained a nonqualified deferred compensation benefit plan (the
"Retirement Plan") covering the former CEO of IMAX Entertainment and Senior
Executive Vice President of the Company. Under the terms of the Retirement Plan,
the benefits were due to vest in full if the executive incurred a separation
from service from the Company (as defined therein). In the fourth quarter of
2018, the executive incurred a separation from service from the Company, and as
such, the Retirement Plan benefits became fully vested as of December 31, 2018
and the accelerated costs were recognized and reflected in Executive Transition
Costs in the Consolidated Statements of Operations.

As of June 30, 2021, the benefit obligation related to the Retirement Plan was
$3.7 million (December 31, 2020 - $3.7 million) and is recorded on the Company's
Condensed Consolidated Balance Sheets within Accrued and Other Liabilities. As
the Retirement Plan is fully vested, the benefit obligation is measured at the
present value of the benefits expected to be paid in the future with the
accretion of interest recognized in the Condensed Consolidated Statements of
Operations within Retirement Benefits Non-Service Expenses.

The Retirement Plan is funded by an investment in company-owned life insurance
("COLI"), which is recorded at its fair value on the Company's Condensed
Consolidated Balance Sheets within Prepaid Expenses. As of June 30, 2021, fair
value of the COLI asset was $3.2 million (December 31, 2020 - $3.2 million).
Gains and losses resulting from changes in the cash surrender value of the COLI
asset are recognized in the Condensed Consolidated Statements of Operations
within Realized and Unrealized Investment Gains (Losses).

OFF-BALANCE SHEET ARRANGEMENTS

There are currently no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on the Company's financial condition.


NON-GAAP FINANCIAL MEASURES

GAAP refers to generally accepted accounting principles in the United States of
America. In this report, the Company presents financial measures in accordance
with GAAP and also on a non-GAAP basis under the SEC regulations. Specifically,
the Company presents the following non-GAAP financial measures as supplemental
measures of its performance:



  • Adjusted net loss attributable to common shareholders;



• Adjusted net loss attributable to common shareholders per basic and diluted

     share;




  • EBITDA; and




  • Adjusted EBITDA per Credit Facility.


Adjusted net loss attributable to common shareholders and adjusted net loss
attributable to common shareholders per basic and diluted share exclude, where
applicable: (i) share-based compensation; (ii) COVID-19 government relief
benefits; (iii) legal judgment and arbitration awards; (iv) realized and
unrealized investment gains, as well as the related tax impact of these
adjustments, and (v) income taxes resulting from management's decision to no
longer indefinitely reinvest the historical earnings of certain foreign
subsidiaries.

The Company believes that these non-GAAP financial measures are important
supplemental measures that allow management and users of the Company's financial
statements to view operating trends and analyze controllable operating
performance on a comparable basis between periods without the after-tax impact
of share-based compensation and certain unusual items included in net loss
attributable to common shareholders. Although share-based compensation is an
important aspect of the Company's employee and executive compensation packages,
it is a non-cash expense and is excluded from certain internal business
performance measures.


                                       77
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Reconciliations of net loss attributable to common shareholders and the associated per share amounts to adjusted net loss attributable to common shareholders and adjusted net loss attributable to common shareholders per diluted share are presented in the tables below.


                                                    Three Months Ended      

Three Months Ended

                                                       June 30, 2021                     June 30, 2020
(In thousands of U.S. Dollars, except per
share amounts)                                  Net Loss         Per Share        Net Loss         Per Share
Reported net loss attributable to common
shareholders                                    $  (9,211 )     $     (0.16 )     $ (25,967 )     $     (0.44 )
Adjustments(1):
Share-based compensation                            6,451              0.11           6,168              0.10
COVID-19 government relief benefits(2)             (1,981 )           (0.03 )        (3,151 )           (0.05 )
Legal judgment and arbitration awards              (1,770 )           (0.03 )             -                 -
Unrealized investment gains                           (33 )               -          (1,413 )           (0.02 )
Tax impact on items listed above                     (428 )           (0.01 )          (857 )           (0.01 )
Income taxes resulting from management's
decision to no longer indefinitely reinvest
the historical earnings of certain foreign
subsidiaries                                            -                 -            (841 )           (0.02 )
Adjusted net loss(1)                            $  (6,972 )     $     (0.12 )     $ (26,061 )     $     (0.44 )

Weighted average basic shares outstanding                            59,367                            58,808
Weighted average diluted shares outstanding                          59,367                            58,808




                                                    Six Months Ended                  Six Months Ended
                                                       June 30, 2021                     June 30, 2020
(In thousands of U.S. dollars, except per
share amounts)                                  Net Loss         Per Share        Net Loss         Per Share
Reported net loss attributable to common
shareholders                                    $ (24,051 )     $     (0.41 )     $ (75,321 )     $     (1.26 )
Adjustments(1):
Share-based compensation                           11,799              0.20          10,243              0.17
COVID-19 government relief benefits(3)             (3,465 )           (0.06 )        (3,151 )           (0.05 )
Legal judgment and arbitration awards              (1,770 )           (0.03 )             -                 -
Realized and unrealized investment (gains)
losses                                             (3,710 )           (0.06 )         1,752              0.03
Tax impact on items listed above                     (965 )           (0.02 )        (1,195 )           (0.02 )
Income taxes resulting from management's
decision to no longer indefinitely reinvest
the historical earnings of certain foreign
subsidiaries                                          381              0.01          12,885              0.21
Adjusted net loss(1)                            $ (21,781 )     $     (0.37 )     $ (54,787 )     $     (0.92 )

Weighted average basic shares outstanding                            59,190                            59,613
Weighted average diluted shares outstanding                          59,190                            59,613



(1) Reflects amounts attributable to common shareholders.

(2) For the three months ended June 30, 2021, the Company recognized $2.0 million

in COVID-19 government relief benefits (2020 - $3.2 million), as reductions

to Selling, General and Administrative Expenses ($1.4 million) (2020 - $2.9

million) and Costs and Expenses Applicable to Revenues ($0.6 million) (2020 -

$0.3 million) in the Condensed Consolidated Statements of Operations.

(3) For the six months ended June 30, 2021, the Company recognized $3.5 million

in COVID-19 government relief benefits (2020 -$3.2 million), as reductions to

Selling, General and Administrative Expenses ($2.6 million) (2020 - $2.9

million) and Costs and Expenses Applicable to Revenues ($0.9 million) (2020 -

    $0.3 million) in the Condensed Consolidated Statements of Operations.


                                       78
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In addition to the non-GAAP financial measures discussed above, management also
uses "EBITDA," as such term is defined in the Credit Agreement, and which is
referred to herein as "Adjusted EBITDA per Credit Facility." As allowed by the
Credit Agreement, Adjusted EBITDA per Credit Facility includes adjustments in
addition to the exclusion of interest, taxes, depreciation and amortization.
Accordingly, this non-GAAP financial measure is presented to allow a more
comprehensive analysis of the Company's operating performance and to provide
additional information with respect to the Company's compliance against its
Credit Agreement requirements in the current period, if applicable. In addition,
the Company believes that Adjusted EBITDA per Credit Facility presents relevant
and useful information widely used by analysts, investors and other interested
parties in the Company's industry to evaluate, assess and benchmark the
Company's results.

EBITDA is defined as net income or loss excluding: (i) income tax expense or
benefit; (ii) interest expense, net of interest income; (iii) depreciation and
amortization, including film asset amortization; and (iv) amortization of
deferred financing costs. Adjusted EBITDA per Credit Facility is defined as
EBITDA excluding: (i) share-based and other non-cash compensation; (ii) realized
and unrealized investment gains or losses; (iii) write-downs, net of recoveries,
including asset impairments and credit loss expense; (iv) legal judgment and
arbitration awards; and (v) the gain or loss from equity accounted investments.

Reconciliations of net loss attributable to common shareholders, which is the
most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA per Credit
Facility are presented in the tables below.

                                                         For the Three 

Months Ended June 30, 2021 (1)

                                           Attributable to
                                           Non-controlling
                                            Interests and            Less: Attributable to          Attributable to
                                                                        Non-controlling
(In thousands of U.S. Dollars)           Common Shareholders               Interests              Common Shareholders
Reported net loss                       $               (6,112 )     $               3,099       $               (9,211 )
Add (subtract):
Income tax expense                                       1,946                         884                        1,062
Interest expense, net of interest
income                                                     432                         (89 )                        521
Depreciation and amortization,
including film asset amortization                       12,994                       1,038                       11,956
Amortization of deferred financing
costs(2)                                                   699                           -                          699
EBITDA                                  $                9,959       $               4,932       $                5,027
Share-based and other non-cash
compensation                                             6,911                         345                        6,566
Unrealized investment gains                                (33 )                         -                          (33 )
(Recoveries) write-downs, including
asset impairments and credit loss
expense                                                 (1,623 )                      (575 )                     (1,048 )
Legal judgment and arbitration awards                   (1,770 )                         -                       (1,770 )
Adjusted EBITDA per Credit Facility     $               13,444       $               4,702       $                8,742






                                       79
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                                                         For the Twelve 

Months Ended June 30, 2021 (1)

                                           Attributable to
                                           Non-controlling
                                            Interests and            Less: Attributable to           Attributable to
                                                                        Non-controlling
(In thousands of U.S. Dollars)           Common Shareholders               Interests               Common Shareholders
Reported net loss                       $              (84,640 )     $               7,865       $               (92,505 )
Add (subtract):
Income tax expense                                      26,261                       2,072                        24,189
Interest expense, net of interest
income                                                   4,890                        (346 )                       5,236
Depreciation and amortization,
including film asset amortization                       51,492                       4,468                        47,024
Amortization of deferred financing
costs(2)                                                 1,611                           -                         1,611
EBITDA                                  $                 (386 )     $              14,059       $               (14,445 )
Share-based and other non-cash
compensation                                            23,520                       1,109                        22,411
Realized and unrealized investment
gains                                                   (5,714 )                    (1,702 )                      (4,012 )
Write-downs, including asset
impairments and credit loss expense                     16,769                       3,102                        13,667
Legal judgment and arbitration awards                    2,335                           -                         2,335
Loss from equity accounted investments                   1,329                           -                         1,329
Adjusted EBITDA per Credit Facility     $               37,853       $              16,568       $                21,285



(1) The Senior Secured Net Leverage Ratio is calculated using Adjusted EBITDA per

Credit Facility determined on a trailing twelve-month basis. During the first

quarter of 2021, the Company entered into the Second Amendment to the Credit

Facility Agreement which, among other things, suspends the Senior Secured Net

Leverage Ratio financial covenant in the Credit Agreement through the first

quarter of 2022 and, once re-established, permits the Company to use EBITDA

    from the third and fourth quarters of 2019 in lieu of EBITDA for the
    corresponding quarters of 2021. (See Note 7 of Notes to Condensed
    Consolidated Financial Statements.)

(2) The amortization of deferred financing costs is recorded within Interest Expense in the Condensed Consolidated Statements of Operations.


The Company cautions users of its financial statements that these non-GAAP
financial measures may not be comparable to similarly titled measures reported
by other companies. Additionally, the non-GAAP financial measures used by the
Company should not be considered as a substitute for, or superior to, the
comparable GAAP amounts.

© Edgar Online, source Glimpses

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09/21IMAX : reg; Storms to Blazing Start with DUNE, Kicking up $3.6 Million on Less Than 150 In..
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09/18IMAX : The First 007 Film Shot with IMAX« Film Cameras | No Time To Die
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09/18IMAX : Marvel Studios' Eternals | Official Trailer | Experience It In IMAX«
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09/15IMAX CORPORATION : to Present at the Goldman Sachs 2021 Communacopia Conference
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09/09China-focused equity funds see outflows for second month in August
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09/09IMAX CORPORATION : to Present at the Bank of America Securities 2021 Media, Communications..
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09/08IMAX : Dune Was Filmed For IMAX«
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