Investors:

IMAX Corporation, New York

Michael K. Mougias

212-821-0187

mmougias@imax.com

Media:

IMAX Corporation, New York

Amanda Collins

212-821-0155

abcollins@imax.com

Signings and Installations

September 30, 2018

Three Months

Ended September 30,

Theater Signings:

2018

2017

Full new sales and sales-type lease arrangements

22

17

New traditional joint revenue sharing arrangements

1

-

New hybrid joint revenue sharing lease arrangements

2

-

Total new theaters

25

17

Upgrades of IMAX theater systems

12

-

Total Theater Signings

37

17

Three Months

Ended September 30,

Theater Installations:

2018

2017

Full new sales and sales-type lease arrangements

15

19

New traditional joint revenue sharing arrangements

15

25

New hybrid joint revenue sharing lease arrangements

6

5

Total new theaters

36

49

Upgrades of IMAX theater systems

1

2

Total Theater Installations

37

51

Three Months

Ended September 30,

Theater Backlogs:

2018

2017

New sales and sales-type lease arrangements

189

(1)

170

New joint revenue sharing arrangements

Hybrid lease arrangements

119

130

Traditional arrangements

327

245

Total Theater Backlog

635

(2)

545

(3)

Three Months

Ended September 30,

Theater Network:

2018

2017

Commercial Multiplex Theaters:

Sales and sales-type lease arrangements

589

501

Traditional joint revenue sharing arrangements

641

575

Hybrid joint revenue sharing lease arrangements

116

127

Total Commercial Multiplex Theaters

1,346

1,203

Commercial Destination Theaters

13

13

Institutional Theaters

84

86

Total Theater Network

1,443

1,302

(1)

Includes 22 hybrid sales theater systems which were previously classified under joint revenue sharing arrangements – hybrid sales arrangements.

(2)

Includes 93 new laser projection system configurations, including 112 upgrades of existing locations to laser projection system configurations (110 of these 112 are for the new next generation laser projection system configurations).

(3)

Includes 25 new laser projection system configurations and three upgrades of existing locations to laser projection system configurations.

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

Revenues

Equipment and product sales

$

25,301

$

30,714

$

60,182

$

63,593

Services

39,440

49,817

138,971

133,264

Rentals

14,479

15,849

57,805

51,143

Finance income

2,888

2,420

8,479

7,214

82,108

98,800

265,437

255,214

Costs and expenses applicable to revenues

Equipment and product sales

14,099

14,270

29,620

32,352

Services

18,824

37,763

62,808

79,678

Rentals

6,994

6,899

19,722

18,086

39,917

58,932

112,150

130,116

Gross margin

42,191

39,868

153,287

125,098

Selling, general and administrative expenses

26,780

25,540

87,471

85,071

(including share-based compensation expense of $4.8 million and $15.5 million
for the three and nine months ended September 30, 2018 (2017 — $5.2 million
and $16.2 million, respectively))

Research and development

4,028

4,626

11,542

14,638

Asset impairments

-

-

-

1,225

Amortization of intangibles

1,039

802

2,896

2,182

Receivable provisions, net of recoveries

861

963

1,667

2,088

Legal arbitration award

-

-

7,500

-

Exit costs, restructuring charges and associated impairments

-

3,437

1,158

13,695

Income from operations

9,483

4,500

41,053

6,199

Interest income

631

253

1,121

761

Interest expense

(958)

(528)

(2,303)

(1,418)

Income from operations before income taxes

9,156

4,225

39,871

5,542

Provision for income taxes

(1,452)

(1,009)

(9,540)

(885)

Loss from equity-accounted investments, net of tax

(202)

(318)

(507)

(837)

Net income

7,502

2,898

29,824

3,820

Less: net income attributable to non-controlling interests

(2,482)

(3,748)

(8,674)

(6,307)

Net income (loss) attributable to common shareholders

$

5,020

$

(850)

$

21,150

$

(2,487)

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

Net income (loss) per share — basic and diluted

$

0.08

(0.01)

$

0.33

$

(0.04)

Weighted average number of shares outstanding (000's):

Basic

62,551

64,736

63,466

65,624

Fully Diluted

62,793

64,803

63,580

65,834

Additional Disclosure:

Depreciation and amortization(1)

$

13,950

$

14,413

$

41,984

$

39,767

(1) Includes $0.4 million and $1.0 million of amortization of deferred financing costs charged to interest expense for the three and nine months
ended September 30, 2018, respectively (2017 - $0.2 million and $0.4 million, respectively).

IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)

(Unaudited)

September 30,

December 31,

2018

2017

Assets

Cash and cash equivalents

$

133,615

$

158,725

Accounts receivable, net of allowance for doubtful accounts of $3,192 (December 31, 2017 — $1,613)

106,117

130,546

Financing receivables

126,318

129,494

Inventories

52,614

30,788

Prepaid expenses

10,442

7,549

Film assets

16,220

5,026

Property, plant and equipment

276,090

276,781

Other assets

55,173

26,757

Deferred income taxes

27,326

30,708

Other intangible assets

30,688

31,211

Goodwill

39,027

39,027

Total assets

$

873,630

$

866,612

Liabilities

Bank indebtedness

$

17,625

$

25,357

Accounts payable

15,445

24,235

Accrued and other liabilities

104,983

100,140

Deferred revenue

114,075

113,270

Total liabilities

252,128

263,002

Commitments and contingencies

Non-controlling interests

8,029

1,353

Shareholders' equity

Capital stock common shares — no par value. Authorized — unlimited number.

62,760,262 issued and 62,585,192 outstanding (December 31, 2017 — 64,902,201 issued and
64,695,550 outstanding)

431,290

445,797

Less: Treasury stock, 175,070 shares at cost (December 31, 2017 — 206,651)

(3,597)

(5,133)

Other equity

184,133

175,300

Accumulated deficit

(70,888)

(87,592)

Accumulated other comprehensive loss

(4,185)

(626)

Total shareholders' equity attributable to common shareholders

536,753

527,746

Non-controlling interests

76,720

74,511

Total shareholders' equity

613,473

602,257

Total liabilities and shareholders' equity

$

873,630

$

866,612

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

Nine Months Ended September 30,

2018

2017

Cash provided by (used in):

Operating Activities

Net income

$

29,824

$

3,820

Adjustments to reconcile net income to cash from operations:

Depreciation and amortization

41,984

39,767

Write-downs, net of recoveries

2,541

25,620

Change in deferred income taxes

(2,849)

(5,145)

Stock and other non-cash compensation

18,240

18,916

Unrealized foreign currency exchange loss (gain)

406

(863)

Loss from equity-accounted investments

209

539

Loss on non-cash contribution to equity-accounted investees

298

298

Investment in film assets

(22,240)

(30,686)

Changes in other non-cash operating assets and liabilities

(343)

11,153

Net cash provided by operating activities

68,070

63,419

Investing Activities

Purchase of property, plant and equipment

(7,367)

(16,356)

Investment in joint revenue sharing equipment

(22,710)

(35,538)

Acquisition of other intangible assets

(3,198)

(3,939)

Investment in new business ventures

-

(1,500)

Net cash used in investing activities

(33,275)

(57,333)

Financing Activities

Increase in bank indebtedness

35,000

-

Repayment of bank indebtedness

(40,667)

(1,500)

Repurchase of common shares

(46,452)

(46,138)

Treasury stock purchased for future settlement of restricted share units

(3,597)

(4,386)

Taxes withheld and paid on employee stock awards vested

(1,437)

(218)

Settlement of restricted share units and options

(2,567)

(15,366)

Issuance of subsidiary shares to a non-controlling interest

7,546

-

Common shares issued - stock options exercised

1,017

14,419

Dividend paid to non-controlling shareholders

(6,934)

-

Credit facility amendment fees paid

(1,909)

-

Net cash used in financing activities

(60,000)

(53,189)

Effects of exchange rate changes on cash

95

52

Decrease in cash and cash equivalents during period

(25,110)

(47,051)

Cash and cash equivalents, beginning of period

158,725

204,759

Cash and cash equivalents, end of period

$

133,615

$

157,708

IMAX CORPORATION

SELECTED FINANCIAL DATA

In accordance with United States Generally Accepted Accounting Principles

(in thousands of U.S. dollars)

The Company has four primary reporting groups identified by nature of product sold or service provided: (1) Network Business, representing variable revenue generated by box-office results and which includes the reportable segments of IMAX DMR and contingent rent from the JRSAs and IMAX systems segments; (2) Theater Business, representing revenue generated by the sale and installation of theater systems and maintenance services, primarily related to the IMAX Systems and Theater System Maintenance reportable segments, and also includes fixed hybrid revenues and upfront installation costs from the JRSA segment; (3) New Business, which includes content licensing and distribution fees associated with our original content investments, virtual reality initiatives, IMAX Home Entertainment, and other business initiatives that are in the development and/or start-up phase, and (4) Other; which includes the film post-production and distribution segments and certain IMAX theaters that the Company owns and operates, camera rentals and other miscellaneous items.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

Revenue

Network Business

IMAX DMR

$

22,372

$

25,971

$

85,586

$

77,136

Joint revenue sharing arrangements – contingent rent

14,327

15,572

56,919

49,702

IMAX systems – contingent rent

-

1,094

-

2,573

36,699

42,637

142,505

129,411

Theater Business

IMAX systems

Sales and sales-type leases

20,427

25,111

50,545

48,178

Ongoing fees and finance income

2,971

2,646

8,982

7,844

Joint revenue sharing arrangements – fixed fees

2,798

2,658

3,821

4,536

Theater system maintenance

12,415

11,511

37,462

33,459

Other theater

2,076

1,586

5,707

5,449

40,687

43,512

106,517

99,466

New Business

1,275

8,917

4,999

11,508

Other

Film distribution and post-production

3,062

2,698

9,156

11,369

Other

385

1,036

2,260

3,460

3,447

3,734

11,416

14,829

Total

$

82,108

$

98,800

$

265,437

$

255,214

Gross margin

Network Business

IMAX DMR(1)

$

14,461

$

18,114

$

57,523

$

52,578

Joint revenue sharing arrangements – contingent rent(1)

8,081

9,351

39,441

33,271

IMAX systems – contingent rent

-

1,094

-

2,573

22,542

28,559

96,964

88,422

Theater Business

IMAX systems

Sales and sales-type leases

10,141

15,246

28,648

28,190

Ongoing fees and finance income

2,923

2,522

8,839

7,582

Joint revenue sharing arrangements – fixed fees(1)

529

624

776

887

Theater system maintenance

5,996

4,624

17,289

13,306

Other theater

581

247

1,099

1,082

20,170

23,263

56,651

51,047

New Business

(298)

(11,912)

139

(13,432)

Other

Film distribution and post-production(1)

260

402

320

(262)

Other

(483)

(444)

(787)

(677)

(223)

(42)

(467)

(939)

Total

$

42,191

$

39,868

$

153,287

$

125,098

(1)

IMAX DMR segment margins include marketing costs of $3.1 million and $13.7 million for the three and nine months ended September 30, 2018, respectively
(2017 - $2.5 million and $9.8 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs
of $1.0 million and $2.2 million for the three and nine months ended September 30, 2018, respectively (2017 - $1.3 million and $2.5, respectively). IMAX
system sales and sales-type lease segment margins include marketing and commission costs of $0.8 million and $2.0 million for the three and nine months
ended September 30, 2018, respectively (2017 - $1.1 million and $2.2 million). Film distribution and post production segment margins include marketing
expense of less than $0.1 million and $2.0 million for the three and nine months ended September 30, 2018 (2017 - an expense of less than $0.1 million and
recovery of $0.7 million, respectively).

IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)

Non-GAAP Financial Measures:

In this release, the Company presents adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share, EBITDA and adjusted EBITDA as supplemental measures of performance of the Company, which are not recognized under U.S. GAAP. The Company presents adjusted net income and adjusted net income per diluted share because it believes that they are important supplemental measures of its comparable controllable operating performance and it wants to ensure that its investors fully understand the impact of its stock-based compensation (net of any related tax impact) on net income. In addition, the Company presents 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 financial results and could potentially distort the analysis of trends in business performance and it wants to ensure that its investors fully understand the impact of net income attributable to non-controlling interests and its stock-based compensation (net of any related tax impact) in determining 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 net income, adjusted net income per diluted share, 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 net income attributable to common shareholders and other measures of financial performance reported in accordance with U.S. GAAP.

Management uses  "EBITDA", as such term is defined in the Company's credit agreement (and which is referred to herein as "Adjusted EBITDA per Credit Facility", as the credit agreement includes additional adjustments beyond interest, taxes, depreciation and amortization). Adjusted EBITDA  per Credit Facility (each as defined below) should not be construed as substitutes for net income or as better measures of liquidity as determined in accordance with U.S. GAAP.  The Company believes that Adjusted EBITDA per Credit Facility is relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry.

For the

For the

3 Months Ended

12 Months Ended

September 30, 2018

September 30, 2018

(1)

(In thousands of U.S. Dollars)

Net income

$

7,502

$

38,522

Add (subtract):

Provision for income taxes

1,452

25,445

Interest expense, net of interest income

327

1,440

Depreciation and amortization, including film asset amortization

13,950

69,025

EBITDA

$

23,231

$

134,432

Stock and other non-cash compensation

6,320

23,042

Write-downs, net of recoveries including asset impairments and

receivable provisions

855

6,489

Exit costs, restructuring charges and associated impairments

-

3,637

Legal arbitration award

-

7,500

Loss from equity accounted investments

202

373

Adjusted EBITDA before non-controlling interests(2)

$

30,608

$

175,473

Adjusted EBITDA attributable to non-controlling interests

(4,789)

(22,682)

Adjusted EBITDA per Credit Facility

$

25,819

*

$

152,791

*

Adjusted EBITDA per Credit Facility, excluding impact from "Marvel's Inhumans"

$

25,819

*

$

128,922

*

Adjusted revenues attributable to common shareholders (3)

$

72,333

$

352,434

Adjusted EBITDA margin, excluding impact from "Marvel's Inhumans"

35.7

%

36.6

%

Adjusted EBITDA per Credit Facility of $25.8 million and $152.8 million for the three and twelve months ended September 30, 2018 respectively, includes the impact of the Company's investment in "Marvel's Inhumans", which resulted in a $nil and $1.1 million loss, respectively. However, as permitted by the Credit Facility, this loss was offset by addbacks of $nil and $13.3 million for amortization and by addbacks of $nil and $11.7 million for impairment charges relating to the investment, in each case for the three and twelve months ended September 30, 2018, respectively. The net effect of these addbacks was to increase Adjusted EBITDA per Credit Facility by $nil and $23.9 million for the three and twelve months ended September 30, 2018, respectively. This investment represents the Company's first foray into a commercial television property, and therefore the Adjusted EBITDA per Credit Facility metric presented above may not be reflective of the Company's typical operational activity. Further, the Company does not expect to make meaningful direct investments in original content going forward. As a result, the Company is also presenting Adjusted EBITDA per Credit Facility excluding the impact of "Marvel's Inhumans" to better facilitate comparisons to prior and future periods.

(1)

Senior Secured Net Leverage Ratio calculated using twelve months ended Adjusted EBITDA per Credit Facility.

(2)

The Adjusted EBITDA per Credit Facility calculation specified for purpose of the minimum Adjusted EBITDA covenant excludes the reduction in Adjusted
EBITDA from the Company's non-controlling interests.

(3)

3 months ended September 30, 2018

12 months ended September 30, 2018

Total revenues

$

82,108

$

390,989

Greater China revenues

$

30,480

$

120,306

Non-controlling interest ownership percentage(4)

32.07%

32.05%

Deduction for non-controlling interest share of revenues

(9,775)

(38,555)

Adjusted revenues attributable to common shareholders

$

72,333

$

352,434

(4)

Weighted average ownership percentage for change in non-controlling interest share

IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended September 30, 2018 vs. 2017:

The Company reported net income of $7.5 million, which calculates to $0.12 per basic and diluted share, for the third quarter of 2018 as compared to a net income of $2.9 million, $0.04 per basic and diluted share for the third quarter of 2017.

Net income for the third quarter of 2018 includes a $5.6 million charge, or $0.08 per diluted share (2017 — $5.7 million or $0.09 per diluted share), for stock-based compensation. In the third quarter of 2018, the Company did not have any additional expenses for exit costs, restructuring charges and associated impairments (2017 - $3.4 million or $0.05 per diluted share).

Adjusted net income, which consists of net income excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, and the related tax impact of these adjustments, was $11.6 million, or $0.18 per diluted share, for the third quarter of 2018 as compared to adjusted net income of $9.2 million, or $0.14 per diluted share, for the third quarter of 2017.

The Company reported net income attributable to common shareholders of $5.0 million, or $0.08 per basic and diluted share for the third quarter of 2018 (2017 — net loss of $0.9 million, or a loss of $0.01 per basic and diluted share).

Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, and the related tax impact of these adjustments, was $9.0 million, or $0.14 per diluted share, for the third quarter of 2018 as compared to adjusted net income attributable to common shareholders of $5.2 million, or $0.08 per diluted share, for the third quarter of 2017.

A reconciliation of net income and net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:

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

Quarter Ended September 30,

2018

2017

Net Income

Diluted EPS

Net Income

Diluted EPS

Reported net income

$

7,502

$

0.12

$

2,898

$

0.04

Adjustments:

Stock-based compensation

5,562

0.08

5,739

0.09

Exit costs, restructuring charges and associated impairments

-

-

3,437

0.05

Tax impact on items listed above

(1,500)

(0.02)

(2,855)

(0.04)

Adjusted net income

11,564

0.18

9,219

0.14

Net income attributable to non-controlling interests

(2,482)

(0.04)

(3,748)

(0.06)

Stock-based compensation (net of tax of less than

$0.1 million and $0.1 million, respectively) 

(75)

-

(263)

-

Exit costs, restructuring charges and associated

  impairments (net of tax of $nil and less than $0.1 million,
respectively)

-

-

(11)

-

Adjusted net income attributable to common shareholders

$

9,007

$

0.14

$

5,197

$

0.08

Weighted average diluted shares outstanding

62,793

64,803

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Nine Months Ended September 30, 2018 vs. 2017:

The Company reported net income of $29.8 million, or $0.47 per basic and diluted share, for the nine months ended September 30, 2018 as compared to net income of $3.8 million, or $0.06 per basic and diluted share for the nine months ended September 30, 2017.

Net income for the nine months ended September 30, 2018 includes a $17.2 million charge, or $0.26 per diluted share (2017 — $17.8 million or $0.27 per diluted share) for stock-based compensation, and a $1.2 million charge, or $0.02 per diluted share for exit costs, restructuring charges and associated impairments (2017 — $13.7 million, or $0.20 per diluted share), and a $7.5 million charge, or $0.12 per diluted share for a legal arbitration award related to one of the Company's litigation matters from 2006 (2017 - $nil, or $nil per diluted share).

Adjusted net income, which consists of net income excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award and the related tax impact, was $50.4 million, or $0.79 per diluted share, for the nine months ended September 30, 2018 as compared to adjusted net income of $25.7 million, or $0.38 per diluted share, for the nine months ended September 30, 2017.

The Company reported a net income attributable to common shareholders of $21.2 million, or $0.33 per basic and diluted share for the nine months ended September 30, 2018 (2017 — net loss of $2.5 million, or a loss of $0.04 per basic and diluted share).

Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award and the related tax impact, was $41.4 million, or $0.65 per diluted share, for the nine months ended September 30, 2018 as compared to adjusted net income attributable to common shareholders of $18.7 million, or $0.28 per diluted share, for the nine months ended September 30, 2017.

A reconciliation of net income and net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:

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

Nine Months Ended September 30,

2018

2017

Net Income

Diluted EPS

Net Income

Diluted EPS

Reported net income

$

29,824

$

0.47

$

3,820

$

0.06

Adjustments:

Stock-based compensation

17,165

0.26

17,796

0.27

Exit costs, restructuring charges and associated impairments

1,158

0.02

13,695

0.20

Legal arbitration award

7,500

0.12

-

-

Tax impact on items listed above

(5,287)

(0.08)

(9,578)

(0.15)

Adjusted net income

50,360

0.79

25,733

0.38

Net income attributable to non-controlling interests

(8,674)

(0.14)

(6,307)

(0.10)

Stock-based compensation (net of tax of $0.1 million and

$0.2 million, respectively)

(279)

-

(544)

-

Exit costs, restructuring charges and associated impairments

(net of tax of $nil and $0.1 million, respectively)

-

-

(179)

-

Adjusted net income attributable to common shareholders

$

41,407

$

0.65

$

18,703

$

0.28

Weighted average diluted shares outstanding

63,580

65,834

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. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented in the table below:

For the

For the

Three months ended

Nine months ended

September 30, 2018

September 30, 2018

(In thousands of U.S. Dollars)

Net cash provided by operating activities

$

21,416

$

68,070

Net cash used in investing activities

(14,483)

(33,275)

Net cash flow

$

6,933

$

34,795