IMAX Corporation Reports Third Quarter 2014 Financial Results

HIGHLIGHTS
-  IMAX delivers $169 million in global box office in the third quarter, a 28% increase over Q3 2013

- Q3 2014 adjusted EPS of $0.11, up 83% compared to Q3 2013, leading to record quarterly operating cash flow of $36.6 million

- Company signs deals for 42 theater systems in the third quarter, bringing backlog to 439 theaters

NEW YORK, Oct. 23, 2014 /PRNewswire/ -- IMAX Corporation (NYSE: IMAX; TSX: IMX) today reported third quarter 2014 revenues of $60.7 million, adjusted EBITDA as calculated in accordance with the Company's credit facility of $17.6 million, adjusted net income, after non-controlling interest, of $7.8 million, or $0.11 per diluted share, and reported net income, after non-controlling interest, of $4.9 million, or $0.07 per diluted share.  

"The third quarter further validates our ongoing commitment to delivering bottom line results and advancing our corporate initiatives," stated Richard L. Gelfond, Chief Executive Officer of IMAX Corporation.  "We were able to leverage the strong box office across a growing theater network, expand margins and generate our strongest quarter ever for operating cash flow."

Network Growth Update

The total IMAX® theater network consisted of 880 systems as of September 30, 2014, of which 751 were in commercial multiplexes. There were 439 theaters in backlog as of September 30, 2014, compared to 356 in backlog as of September 30, 2013.  In the third quarter of 2014, the Company signed contracts for 42 theaters systems, of which 36 were for new locations and 6 were for system upgrades.  In the quarter, the Company installed 20 IMAX theater systems, all of which were for new theater locations.  For a breakdown of theater system signings, installations, network and backlog by type, please see the end of this press release.

"We continue to see robust worldwide signing activity, including 42 new deals this quarter, bringing our year-to-date signings total to over 100, which really demonstrates the demand for IMAX globally," continued Gelfond.  "I am also extremely enthusiastic about a demonstration I saw of our new laser projection system this quarter; it is truly spectacular. Couple this with our operating leverage potential and our ongoing focus on marketing and quality, and I believe we are well positioned to take advantage of what are shaping up to be strong film years in 2015 and 2016."

Third-Quarter Segment Results

• Production and IMAX DMR® (Digital Re-Mastering) revenues totaled $18.4 million in the third quarter of 2014, compared to $14.5 million in the third quarter of 2013.  Gross box office from DMR titles was $169.0 million in the third quarter of 2014, compared to $132.5 million in the prior-year period.  The average global DMR box office per screen in the third quarter of 2014 was $227,900 compared to $207,500 in the prior-year period.
• Revenue from joint revenue-sharing arrangements was $15.2 million in the quarter, compared to $12.0 million in the prior-year period.  During the quarter, the Company installed 14 new theaters under joint revenue-sharing arrangements, compared to 13 in the year-ago period.  The Company had 422 theaters operating under joint revenue-sharing arrangements as of September 30, 2014, as compared to 351 theaters one year prior.
• Revenue from sales and sales-type leases was $6.6 million in the third quarter of 2014, compared to $6.4 million in the third quarter of 2013, resulting from the installation of 6 full, new theater systems under sales and sales-type lease arrangements compared to the 5 installed in the year-ago period.  There were no digital upgrades in the third quarter of 2014, as compared to the 9 digital upgrades the Company installed in the same period last year.

Conference Call
The Company will host a conference call today at 8:30 AM ET to discuss its third quarter 2014 financial results.  To access the call via telephone, interested parties in the US and Canada should dial [phone] approximately 5 to 10 minutes before the call begins.  International callers should dial [phone]. The conference ID for the call is 2771960. A replay of the call will be available via webcast on the 'Investor Relations' section of www.imax.com or via telephone by dialing [phone] (US and Canada), or [phone] (international). The Conference ID for the telephone replay is 2771960.

About IMAX Corporation
IMAX, an innovator in entertainment technology, combines proprietary software, architecture and equipment to create experiences that take you beyond the edge of your seat to a world you've never imagined. Top filmmakers and studios are utilizing IMAX theaters to connect with audiences in extraordinary ways, and, as such, IMAX's network is among the most important and successful theatrical distribution platforms for major event films around the globe.

IMAX is headquartered in New York, Toronto and Los Angeles, with offices in London, Tokyo, Shanghai and Beijing.  As of September 30, 2014, there were 880 IMAX theaters (751 commercial multiplexes, 19 commercial destinations and 110 institutions) in 60 countries.

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

This press release contains forward looking statements that are based on IMAX management's assumptions and existing information and involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. Important factors that could affect these statements include, but are not limited to, general economic, market or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by the Company; the performance of IMAX DMR films; competitive actions by other companies; conditions in the in-home and out-of-home entertainment industries; the signing of theater system agreements; changes in laws or regulations; conditions, changes and developments in the commercial exhibition industry; the failure to convert theater system backlog into revenue; 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 failure to respond to change and advancements in digital technology; risks related to the acquisition of AMC Entertainment Holdings, Inc. by Dalian Wanda Group Co., Ltd.; risks related to new business initiatives; the potential impact of increased competition in the markets within which the Company operates; risks related to the Company's inability to protect the Company's intellectual property; risks related to Eastman Kodak bankruptcy and the possibility of constrained film supply; risks related to the Company's implementation of a new enterprise resource planning system; risks related to the Company's prior restatements and the related litigation; and other factors, many of which are beyond the control of the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

For additional information please contact:

Additional Information

Signings and Installations
September 30, 2014
			Three Months
			Ended September 30,
	Theater Signings:		2014		2013
		Full new sales and sales-type lease arrangements	22		6	^(3)
		New joint revenue sharing arrangements	14		82
	Total new theaters		36		88
		Upgrades of IMAX theater systems	6	^(1)(2)	11	^(1)(2)
	Total Theater Signings		42		99
			Three Months
			Ended September 30,
	Theater Installations:		2014		2013
		Full new sales and sales-type lease arrangements	6		6	^(4)
		New joint revenue sharing arrangements	14		13
	Total new theaters		20		19
		Upgrades of IMAX theater systems	-		9	^(2)
	Total Theater Installations		20		28
			As of September 30,
	Theater Backlog:		2014		2013
		New sales and sales-type lease arrangements	169		142
		New joint revenue sharing arrangements	244		191
	Total new theaters		413		333
		Upgrades of IMAX theater systems	26		23
	Total Theaters in Backlog		439	^(5)(6)	356	^(5)(7)
			As of September 30,
	Theater Network:		2014		2013
	Commercial Multiplex Theaters:
		Sales and sales-type lease arrangements	329		302
		Joint revenue sharing arrangements	422		351
	Total Commercial Multiplex Theaters		751		653
	Commercial Destination Theaters		19		19
	Institutional Theaters		110		113
	Total IMAX Theater Network		880		785

(1)	Includes one signing for the installation of a laser-based digital system in an existing theater location (2013 – six signings).
(2)	Includes one signing of an upgrade to a xenon-based digital system under a short-term operating lease arrangement (2013 – 4 signings, 3 installations).
(3)	Includes one signing which replaced a theater under an existing arrangement in backlog.
(4)	Includes one full xenon-based digital system under a short-term operating lease arrangement.
(5)	Includes 69 laser theater system configurations (2013 – 18), including upgrades.
(6)	Includes 26 upgrades to a digital theater system, in an existing IMAX theater location (3 xenon and 23 laser, of which 4 are under joint revenue sharing arrangements).
(7)	Includes 23 upgrades to a digital theater system, in an existing IMAX theater location (5 xenon and 18 laser, of which 3 are under joint revenue sharing arrangements).

Additional Information (continued)

2014 DMR Films:  
To date, IMAX has announced 34 titles to be released in 2014.  The Company released 38 titles in 2013.  The Company remains in discussions with every major Hollywood studio regarding future titles. 

• Jack Ryan: Shadow Recruit: The IMAX Experience (Paramount Pictures, January 2014);
• I, Frankenstein: An IMAX 3D Experience (Lionsgate, January 2014);
• The Monkey King: The IMAX Experience (Global Star Productions, January 2014, China only);
• Robocop: The IMAX Experience (Metro-Goldwyn-Mayer Studios, Inc., February 2014);
• 300: Rise of an Empire: An IMAX 3D Experience (Warner Bros. Pictures, March 2014);
• Need for Speed: An IMAX 3D Experience  (Walt Disney Studios, March 2014, select international markets);
• Divergent: The IMAX Experience (Summit Entertainment, March 2014);
• Noah: The IMAX Experience (Paramount Pictures, March 2014);
• Captain America: The Winter Soldier: An IMAX 3D Experience (Marvel Entertainment, April 2014);
• Transcendence: The IMAX Experience (Warner Bros. Pictures, April 2014);
• The Amazing Spider-Man 2: An IMAX 3D Experience (Sony Pictures, May 2014);
• Godzilla: An IMAX 3D Experience (Warner Bros. Pictures, May 2014);
• Coming Home: The IMAX Experience (Le Vision Pictures, May 2014, China Only);
• Maleficent: An IMAX 3D Experience (Walt Disney Studios, May 2014);
• Edge of Tomorrow: An IMAX 3D Experience (Warner Bros. Pictures, June 2014);
• How to Train Your Dragon 2: An IMAX 3D Experience  (DreamWorks Animation, June 2014);
• Transformers: Age of Extinction: An IMAX 3D Experience (Paramount Pictures, June 2014);
• Hercules: An IMAX 3D Experience (Paramount Pictures, July 2014); 
• Lucy: The IMAX Experience (Universal Pictures, August 2014, select international markets);
• The White Haired Witch of Lunar Kingdom: An IMAX 3D Experience (Bona Film Group, August 2014, China only);
• Guardians of the Galaxy: An IMAX 3D Experience (Walt Disney Studios, August 2014);
• Teenage Mutant Ninja Turtles: An IMAX 3D Experience (Paramount Pictures, August 2014, select international markets);
• The Expendables 3: The IMAX Experience (Lionsgate, September 2014, China only);
• Forrest Gump: The IMAX Experience (Paramount Pictures, September 2014);
• The Maze Runner: The IMAX Experience (20th Century Fox, September 2014);
• The Equalizer: The IMAX Experience (Sony Pictures, September 2014);
• Breakup Buddies: The IMAX Experience (China Film Group, September 2014, China only);
• Bang Bang: The IMAX Experience (Fox Star Studios, October 2014, India only);
• Dracula Untold: The IMAX Experience (Universal Studios, October 2014);
• John Wick: The IMAX Experience (Summit Entertainment, October 2014);
• Fury: The IMAX Experience (Sony Pictures Entertainment, October 2014, select international markets);
• Interstellar: The IMAX Experience (Paramount Pictures and Warner Bros. Pictures, November 2014);
• The Hobbit: The Battle of the Five Armies: An IMAX 3D Experience (Warner Bros. Pictures, December 2014); and
• Gone with the Bullets: An IMAX 3D Experience (Dongwang Yibudaowei Films Co., December 2014, China only)

2015 DMR Films:
To date, the Company has announced the following 8 titles to be released to the IMAX theater network in 2015:

• Seventh Son: An IMAX 3D Experience (Universal Studios, February 2015);
• Fast & Furious 7: The IMAX Experience (Universal Studios, April 2015);
• The Avengers: Age of Ultron: An IMAX 3D Experience (Walt Disney Studios, May 2015);
• Tomorrowland: The IMAX Experience (Walt Disney Studios, May 2015);
• Jurassic World: An IMAX 3D Experience (Universal Studios, June 2015);
• Everest: An IMAX 3D Experience (Universal Studios, September 2015);
• Crimson Peak: The IMAX Experience (Universal Studios, October 2015); and
• Star Wars: Episode VII: An IMAX 3D Experience (Walt Disney Studios, December 2015).

The Company anticipates that a similar number of IMAX DMR films will be released to the IMAX network in 2015 to the 35 slated for release in 2014 and the 38 films that were released to the IMAX network in 2013.

IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In accordance with United States Generally Accepted Accounting Principles
(In thousands of U.S. dollars, except per share amounts)
(Unaudited)
		Three Months						Nine Months
		Ended September 30,						Ended September 30,
		2014			2013			2014			2013
Revenues
Equipment and product sales		$	11,765		$	9,623		$	37,621		$	40,649
Services			33,199			28,826			101,813			97,001
Rentals			13,646			10,987			42,278			38,782
Finance income			2,132			2,071			6,372			6,079
Other			-			-			-			375
			60,742			51,507			188,084			182,886
Costs and expenses applicable to revenues
Equipment and product sales			6,041			4,086			19,126			20,561
Services			14,788			15,910			46,318			53,361
Rentals			4,471			4,059			12,996			11,687
			25,300			24,055			78,440			85,609
Gross margin			35,442			27,452			109,644			97,277
Selling, general and administrative expenses			23,513			19,778			68,323			61,549
	(including share-based compensation expense of $3.4 million and $11.3 million for the three and nine months ended September 30, 2014 (2013 - expense of $2.8 million and $8.8 million, respectively))
Gain on curtailment of postretirement benefit plan			-			-			-			(2,185)
Research and development			4,560			3,974			11,468			11,267
Amortization of intangibles			441			409			1,259			1,146
Receivable provisions, net of recoveries			26			224			642			279
Impairment of available-for-sale investment			-			-			650			-
Income from operations			6,902			3,067			27,302			25,221
Interest income			149			14			189			39
Interest expense			(269)			(315)			(803)			(1,008)
Income from operations before income taxes			6,782			2,766			26,688			24,252
Provision for income taxes			(1,188)			(685)			(6,667)			(6,701)
Loss from equity-accounted investments, net of tax			(297)			(344)			(721)			(998)
Income from continuing operations			5,297			1,737			19,300			16,553
Net (loss) income from discontinued operations, net of tax			-			(128)			355			(267)
Net income		$	5,297		$	1,609		$	19,655		$	16,286
Less: Net income attributable to non-controlling interests			(439)			-			(911)			-
Net income attributable to Common Shareholders		$	4,858		$	1,609		$	18,744		$	16,286
Net income per share - basic:
	Net income per share from continuing operations	$	0.07		$	0.02		$	0.26		$	0.24
	Net income per share from discontinued operations		-			-			0.01			-
		$	0.07		$	0.02		$	0.27		$	0.24
Net income per share - diluted:
	Net income per share from continuing operations	$	0.07		$	0.02		$	0.26		$	0.24
	Net income per share from discontinued operations		-			-			0.01			-
		$	0.07		$	0.02		$	0.27		$	0.24
Weighted average number of shares outstanding (000's):
	Basic		68,480			67,309			68,206			66,969
	Fully Diluted		69,602			69,116			69,597			68,853
Additional Disclosure:
	Depreciation and amortization^(1)	$	7,992		$	8,826		$	23,937		$	29,027
- Includes $0.1 million and $0.4 million of amortization of deferred financing costs charged to interest expense for the three and nine months ended September 30, 2014, respectively (2013 - $0.1 million and $0.3 million, respectively).

IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In accordance with United States Generally Accepted Accounting Principles
(in thousands of U.S. dollars)
	As at			As at
	September 30,			December 31,
	2014			2013
	(unaudited)
Assets
Cash and cash equivalents	$	93,705		$	29,546
Accounts receivable, net of allowance for doubtful accounts of $714 (December 31, 2013 — $887)		59,734			73,074
Financing receivables		103,616			107,110
Inventories		21,439			9,825
Prepaid expenses		5,382			3,602
Film assets		7,787			7,076
Property, plant and equipment		161,579			132,847
Other assets		20,197			27,034
Deferred income taxes		20,917			24,259
Other intangible assets		27,556			27,745
Goodwill		39,027			39,027
Total assets	$	560,939		$	481,145
Liabilities
Accounts payable	$	16,571		$	19,396
Accrued and other liabilities		55,841			65,232
Deferred revenue		100,304			76,932
Total liabilities		172,716			161,560
Commitments and contingencies
Non-controlling interest		38,187			-
Shareholders' equity
Capital stock common shares — no par value. Authorized — unlimited number.
Issued and outstanding — 68,520,049 (December 31, 2013 — 67,841,233)		334,415			327,313
Other equity		43,200			36,452
Accumulated deficit		(26,545)			(43,051)
Accumulated other comprehensive loss		(1,034)			(1,129)
Total shareholders' equity		350,036			319,585
Total liabilities and shareholders' equity	$	560,939		$	481,145

IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In accordance with United States Generally Accepted Accounting Principles
(In thousands of U.S. dollars)
(Unaudited)
		Nine Months
		Ended September 30,
		2014			2013
Cash provided by (used in):
Operating Activities
Net income		$	19,655		$	16,286
	Net (income) loss from discontinued operations		(355)			267
Adjustments to reconcile net income to cash from operations:
	Depreciation and amortization		23,937			29,027
	Write-downs, net of recoveries		1,753			279
	Change in deferred income taxes		3,157			5,579
	Stock and other non-cash compensation		11,609			9,348
	Gain on curtailment of postretirement benefit plan		-			(2,185)
	Unrealized foreign currency exchange loss		847			275
	Loss from equity-accounted investments		1,073			998
	Gain on non-cash contribution to equity-accounted investees		(352)			-
Investment in film assets			(8,398)			(16,772)
Changes in other non-cash operating assets and liabilities			18,372			(9,860)
Net cash provided by (used in) operating activities from discontinued operations			572			(267)
	Net cash provided by operating activities		71,870			32,975
Investing Activities
Purchase of property, plant and equipment			(24,686)			(6,167)
Investment in joint revenue sharing equipment			(15,908)			(16,363)
Investment in new business ventures			(2,500)			(2,500)
Acquisition of other intangible assets			(1,979)			(1,812)
	Net cash used in investing activities		(45,073)			(26,842)
Financing Activities
Issuance of subsidiary shares to non-controlling interests			40,491			-
Share issuance costs from the issuance of subsidiary shares to non-controlling interests			(3,556)			-
Common shares issued - stock options exercised			3,672			6,745
Repurchase of common shares			(2,369)			-
Settlement of restricted share units			(790)			-
Increase in bank indebtedness			-			12,000
Repayment of bank indebtedness			-			(18,000)
Credit facility amendment fees paid			-			(2,089)
Share issuance expenses			-			(202)
	Net cash provided by (used in) financing activities		37,448			(1,546)
Effects of exchange rate changes on cash			(86)			32
Increase in cash and cash equivalents during the period			64,159			4,619
Cash and cash equivalents, beginning of period			29,546			21,336
Cash and cash equivalents, end of period		$	93,705		$	25,955

IMAX CORPORATION
SELECTED FINANCIAL DATA
In accordance with United States Generally Accepted Accounting Principles
(in thousands of U.S. dollars)
The Company has seven reportable segments identified by category of product sold or service provided: IMAX systems; theater system maintenance; joint revenue sharing arrangements; film production and IMAX DMR; film distribution; film post-production; and other. The IMAX systems segment designs, manufactures, sells or leases IMAX theater projection system equipment. The theater system maintenance segment maintains IMAX theater projection system equipment in the IMAX theater network. The joint revenue sharing arrangements segment provides IMAX theater projection system equipment to an exhibitor in exchange for a share of box-office and concession revenues. The film production and IMAX DMR segment produces films and performs film re-mastering services. The film distribution segment distributes films for which the Company has distribution rights. The film post-production segment provides film post-production and film print services. The other segment includes certain IMAX theaters that the Company owns and operates, camera rentals and other miscellaneous items.
			Three Months						Nine Months
			Ended September 30,						Ended September 30,
				2014			2013		2014			2013
Revenue
IMAX Theater Systems
	IMAX Systems
		Sales and sales-type leases	$	6,644		$	6,419		$	25,629		$	33,321
		Ongoing rent, fees, and finance income		3,501			3,483			10,272			10,111
		Other		3,165			1,995			8,407			7,344
				13,310			11,897			44,308			50,776
	Theater system maintenance			8,516			8,103			25,384			23,844
	Joint revenue sharing arrangements			15,238			11,960			45,457			39,672
Film
	Production and IMAX DMR			18,350			14,547			57,585			54,854
	Film distribution and post-production			5,328			5,000			15,350			13,740
				23,678			19,547			72,935			68,594
Total			$	60,742		$	51,507		$	188,084		$	182,886
Gross margins
IMAX Theater Systems
	IMAX systems^(1)
		Sales and sales-type leases	$	4,246		$	3,928		$	14,161		$	16,390
		Ongoing rent, fees, and finance income		3,352			3,277			9,799			9,758
		Other		(218)			(108)			(202)			375
				7,380			7,097			23,758			26,523
	Theater system maintenance			3,208			3,218			8,990			9,432
	Joint revenue sharing arrangements^(1)			9,382			7,153			30,043			26,796
Film
	Production and IMAX DMR^(1)			13,469			8,596			43,177			32,744
	Film distribution^(1) and post-production			2,003			1,388			3,676			1,782
				15,472			9,984			46,853			34,526
Total			$	35,442		$	27,452		$	109,644		$	97,277
(1)  IMAX systems include marketing and commission costs of $0.3 million and $1.2 million for the three and nine months ended September 30, 2014, respectively (2013 — $0.2 million and $0.9 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $0.9 million and $2.1 million for the three and nine months ended September 30, 2014, respectively (2013 — $0.9 million and $2.0 million, respectively). Production and DMR segment margins include marketing costs of $2.1 million and $5.3 million for the three and nine months ended September 30, 2014, respectively (2013 — $0.8 million and $3.1 million, respectively). Distribution segment margins include marketing costs of $0.3 million and $0.7 million for the three and nine months ended September 30, 2014, respectively (2013 — $0.1 million and $0.2 million, respectively).

IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)
Non-GAAP Financial Measures:
In this release, the Company presents adjusted EBITDA attributable to common shareholders, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share as supplemental measures of performance of the Company, which are not recognized under United States generally accepted accounting principles ("GAAP"). The Company presents adjusted EBITDA attributable to common shareholders, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share because it believes that they are important supplemental measures of its comparable controllable operating performance and it wants to ensure that its investors fully understand the impact of its stock-based compensation (net of any related tax impact) on net income attributable to common shareholders. Management uses these measures to review operating performance on a comparable basis from period to period. However, these non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted EBITDA attributable to common shareholders, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share should be considered in addition to, and not as a substitute for, net income and other measures of financial performance reported in accordance with GAAP.
The Credit Facility provides that the Company will be required to maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.1:1. The Company will also be required to maintain minimum EBITDA (as defined in the Credit Agreement) of $90.0 million on December 31, 2014, which requirement increases to $100.0 million on December 31, 2015. The Company must also maintain a Maximum Total Leverage Ratio (as defined in the Credit Agreement) of 2.00:1 on December 31, 2014, which requirement decreases to 1.75:1 on December 31, 2015. The ratio of total debt to EBITDA was nil:1 as at September 30, 2014, where Total Debt (as defined in the Credit Agreement) is the sum of all obligations evidenced by notes, bonds, debentures or similar instruments and was $nil. EBITDA is calculated as follows:
		For the			For the
		3 months ended			12 months ended
EBITDA per Credit Facility:		September 30, 2014			September 30, 2014^(1)
(In thousands of U.S. Dollars)
Net income		$	5,297		$	47,484
Add (subtract):
	Loss from equity accounted investments		297			2,480
	Provision for income taxes		1,188			16,790
	Interest expense, net of interest income		120			936
	Depreciation and amortization, including film asset amortization		7,861			31,553
	Write-downs net of recoveries including asset impairments and receivable
	provisions		174			2,810
	Stock and other non-cash compensation		3,519			14,946
	EBITDA attributable to non-controlling interests^(2)		(887)			(1,776)
		$	17,569		$	115,223
(1)	Ratio of total debt calculated using twelve months ended EBITDA
(2)	The EBITDA calculation specified for purposes of the minimum EBITDA covenant excludes the reduction in EBITDA from the Company's non-controlling interests.

IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)
Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended September 30, 2014 vs. 2013:
The Company reported net income attributable to common shareholders of $4.9 million or $0.07 per basic and diluted share for the third quarter of 2014, as compared to $1.6 million or $0.02 per basic and diluted share for the third quarter of 2013. Net income attributable to common shareholders for the third quarter of 2014 includes a $3.4 million charge, or $0.04 per diluted share (after-tax), for stock-based compensation (2013 - $2.8 million or $0.04 per diluted share (after-tax)). Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding stock-based compensation expense and the related tax impact, was $7.8 million, or $0.11 per diluted share, in the third quarter of 2014, as compared to adjusted net income attributable to common shareholders of $4.4 million, or $0.06 per diluted share, for the third quarter of 2013. A reconciliation of net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:
		September 30, 2014							September 30, 2013
		Net Income			Diluted EPS				Net Income			Diluted EPS
Reported net income attributable to common shareholders		$	4,858		$	0.07	^(1)		$	1,609		$	0.02
Adjustments:
	Stock-based compensation		3,425			0.05				2,838			0.04
	Tax impact of items listed above		(464)			(0.01)				(85)			-
Adjusted net income attributable to common shareholders		$	7,819		$	0.11	^(1)		$	4,362		$	0.06
Weighted average diluted shares outstanding						69,602							69,116
(1) Includes impact of $0.1 million of accretion charges associated with redeemable common stock.

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Nine Months Ended September 30, 2014 vs. 2013:
The Company reported net income attributable to common shareholders of $18.7 million or $0.27 per basic and diluted share for the nine months ended September 30, 2014, as compared to $16.3 million or $0.24 per basic and diluted share for the nine months ended September 30, 2013. Net income attributable to common shareholders for the nine months ended September 30, 2014 includes a $11.3 million charge, or $0.13 per diluted share (after-tax), for stock-based compensation (2013 – $8.8 million or $0.12 per diluted share (after-tax)). Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding stock-based compensation expense and the related tax expense, was $28.3 million, or $0.40 per diluted share, in the nine months ended September 30, 2014, as compared to adjusted net income attributable to common shareholders of $24.9 million, or $0.36 per diluted share, for the nine months ended September 30, 2013. A reconciliation of net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:
		September 30, 2014							September 30, 2013
		Net Income			Diluted EPS				Net Income			Diluted EPS
Reported net income attributable to common shareholders		$	18,744		$	0.27	^(1)		$	16,286		$	0.24
Adjustments:
	Stock-based compensation		11,328			0.16				8,772			0.12
	Tax expense of items listed above		(1,807)			(0.03)				(159)			-
Adjusted net income attributable to common shareholders		$	28,265		$	0.40	^(1)		$	24,899		$	0.36
Weighted average diluted shares outstanding						69,597							68,853
(1) Includes impact of $0.3 million of accretion charges associated with redeemable common stock.

Free Cash Flow:

Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the consolidated statements of cash flows). Cash provided by operating activities consist of net income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company's after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. A reconciliation of cash provided by operating activities to free cash flow is presented in the table below:

		For the
		9 months ended
		September 30, 2014
(In thousands of U.S. Dollars)
Net cash provided by operating activities		$	71,870
Net cash used in investing activities			(45,073)
Free cash flow		$	26,797

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SOURCE IMAX Corporation