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IMAX CORP

IMAX CORPIMAXEarnings & Financial Report

NYSE · Consumer Discretionary · Motion Picture Production and Services

IMAX Corporation is a Canadian production theatre company which designs and manufactures IMAX cameras and projection systems as well as performing film development, production, post-production and distribution to IMAX-affiliated theatres worldwide. Founded in Montreal in 1967, it has headquarters in the Toronto area, and operations in New York City and Los Angeles.

What changed in IMAX CORP's 10-K — 2023 vs 2024

Top changes in IMAX CORP's 2024 10-K

535 paragraphs added · 578 removed · 392 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

98 edited+49 added−46 removed28 unchanged
As a premier global technology platform for entertainment and events, the Company strives to remain at the forefront of advancements in entertainment technology. The Company offers a suite of laser-based digital projection systems (“IMAX Laser Systems”), which deliver increased resolution, sharper and brighter images, deeper contrast, and the widest range of colors available to filmmakers today.
As a premier global technology platform for entertainment and events, the Company strives to remain at the forefront of advancements in technology. The Company offers a suite of laser-based digital projection systems (“IMAX Laser Systems”), which deliver increased resolution, sharper and brighter images, deeper contrast, and the widest range of colors available to filmmakers today.
(2) Latin America includes South America, Central America, and Mexico. 12 (3) Period-to-period changes in the table above are reported net of the effect of permanently closed locations. The Company has a partnership in China with Wanda which is its largest exhibitor customer.
(2) Latin America includes South America, Central America, and Mexico. (3) Period-to-period changes in the table above are reported net of the effect of permanently closed locations. The Company has a partnership in China with Wanda, which is its largest exhibitor customer.
(Refer to “Risk Factors ― Failure to respond adequately or in a timely fashion to changes and advancements in technology could negatively affect the Company’s business.”) Other The Company derives a small portion of its revenue from other sources including one owned and operated IMAX System in Sacramento, California; a commercial arrangement with one theater resulting in the sharing of profits and losses; the provision of management services to three other theaters; renting the Company’s proprietary 2D and 3D large-format film cameras; and also offering production advice and technical assistance to both documentary and Hollywood filmmakers.
(Refer to “Risk Factors ― Failure to respond adequately or in a timely fashion to changes and advancements in technology could negatively affect the Company’s business.”) Other The Company derives a small portion of its revenue from other sources including one owned and operated IMAX System in Sacramento, California; a commercial arrangement with one theater resulting in the sharing of profits and losses; the provision of management services to three other theaters; renting the Company’s proprietary large-format film cameras; and also offering production advice and technical assistance to both documentary and Hollywood filmmakers.
In addition, an adverse economic impact on a significant customer’s business operations could have a corresponding material adverse effect on the Company.” in Part I, Item 1A.) 13 THE IMAX BRAND IMAX is a premier global technology platform for entertainment and events.
In addition, an adverse economic impact on a significant customer’s business operations could have a corresponding material adverse effect on the Company.” in Part I, Item 1A.) THE IMAX BRAND IMAX is a premier global technology platform for entertainment and events.
The backlog reflects the minimum number of commitments for IMAX Systems according to the 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 Systems and the settlement of contracts, both of which reduce backlog.
“Backlog” reflects the minimum number of commitments for IMAX Systems according to the 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 Systems and the settlement of contracts, both of which reduce backlog.
The standard screen system component consists of a projection screen manufactured to IMAX specifications and a frame to hang the projection screen. The proprietary glasses cleaning machine is a stand-alone unit that is connected to the theater’s water and electrical supply to automate the cleaning of 3D glasses.
The standard screen system component consists of a projection screen manufactured to IMAX specifications and a frame to hang the projection screen. The glasses cleaning machine is a stand-alone unit that is connected to the theater’s water and electrical supply to automate the cleaning of 3D glasses.
(Refer to “Risk Factors ― The Company may not convert all of its backlog into revenue and cash flows.”) 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.
(Refer to “Risk Factors ― The Company may not convert all of its backlog into revenue and cash flows.”) Certain of the Company’s contracts contain options for the exhibitor customer to elect to upgrade the system type configuration 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.
The Company currently sells two different configurations of its laser systems. The Company believes that IMAX Laser Systems present greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, consume less power and last longer than other digital projection technologies, and are capable of illuminating the largest screens in the IMAX network.
IMAX Laser Systems The Company currently sells or leases two different configurations of its laser systems. The Company believes that IMAX Laser Systems present greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, consume less power and last longer than other digital projection technologies, and are capable of illuminating the largest screens in the IMAX network.
(Refer to “Maintenance and Extended Warranty Services” below.) OTHER PRODUCTS AND SERVICES Streaming and Consumer Technology Streaming and Consumer Technology includes the Company’s Streaming Technology software offerings and IMAX Enhanced product services.
(Refer to “Maintenance and Extended Warranty Services” below.) OTHER PRODUCTS AND SERVICES Streaming and Consumer Technology Streaming and Consumer Technology includes the Company’s Streaming Technology software offerings and IMAX Enhanced products and services.
The Company also sells or leases IMAX Systems to commercial destinations such as theme parks, private home theaters, tourist destination sites, fairs, and expositions. As of December 31, 2023, approximately 75% of all open and operational IMAX Systems were in locations outside of the United States and Canada.
The Company also sells or leases IMAX Systems to commercial destinations such as theme parks, private home theaters, tourist destination sites, fairs, and expositions. As of December 31, 2024, approximately 75% of all open and operational IMAX Systems were in locations outside of the United States and Canada.
The existing network of 30 unique locations are being actively supported and leveraged for special event releases throughout the year such as with the 2023 release of Oppenheimer in IMAX 70mm film, which garnered significant consumer interest and demand for this format .
The existing network of 44 unique locations are being actively supported and leveraged for special event releases throughout the year such as with the 2023 release of Oppenheimer in IMAX 70mm film, which garnered significant consumer interest and demand for this format.
The incremental box office generated by IMAX films combined with IMAX’s unmatched global network footprint and scale has helped establish IMAX as a key premium distribution and marketing platform for Hollywood and foreign local language movie studios.
The incremental box office generated by IMAX films combined with IMAX’s leading global network footprint and scale has helped establish IMAX as a key premium distribution and marketing platform for Hollywood and foreign local language movie studios.
The Company also provides film post-production and quality control services for large-format films, whether produced by IMAX or third-parties, and digital post-production services. In addition, the Company also provides IMAX film and digital cameras to content creators under the IMAX certified camera program.
The Company provides film post-production and quality control services for films, whether produced by IMAX or third parties, and digital post-production services. In addition, the Company also provides IMAX film and digital cameras to content creators under the IMAX certified camera program.
IMAX Enhanced provides end-to-end premium technology across streaming content and best-in-class entertainment devices, offering consumers high-fidelity playback of image and sound in the home and beyond, including the following features: • IMAX’s expanded aspect ratio, which is available on select titles and streaming platforms, including Disney+; • IMAX’s proprietary remastering technology, which produces more vivid, higher-fidelity 4K HDR images on premium televisions; and 11 • IMAX’s signature sound, which was specially recreated and calibrated for the home to unlock more immersive audio.
IMAX Enhanced provides end-to-end premium technology across streaming content and entertainment devices, offering consumers high-fidelity playback of image and sound in the home and beyond, including the following features: • IMAX’s expanded aspect ratio, which is available on select titles and streaming platforms; • IMAX’s proprietary remastering technology, which produces more vivid, higher-fidelity 4K HDR images on premium televisions; and • IMAX’s signature sound, which was specially recreated and calibrated for the home to unlock more immersive audio.
A significant portion of the Company’s research and development efforts have been focused on the IMAX Laser Systems, which the Company believes is capable of illuminating the largest screens in the IMAX network and provides greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, while consuming less power and lasting longer than existing digital technology, to ensure that the Company continues to provide the highest quality, premier cinematic experience available to consumers.
A significant portion of the Company’s research and development efforts has been focused on the IMAX Laser Systems, which the Company believes are capable of illuminating the largest screens in the IMAX network and provides greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, while consuming less power and lasting longer than existing digital technology, to ensure that the Company continues to provide the highest quality, premier cinematic experience available to consumers.
The IMAX brand is a promise to deliver what today’s audiences crave, which is a memorable, more emotionally engaging, more thrilling and shareable experience. IMAX commissions on-going third party consumer research to measure the strength of its brand in numerous markets.
The IMAX brand is a promise to deliver what today’s audiences crave, which is a memorable, more emotionally engaging, more thrilling and shareable experience. IMAX commissions ongoing third-party consumer research to measure the strength of its brand in numerous markets.
Across various measures of brand equity and health, the IMAX brand ranged from two to 10 times more powerful than other entertainment technology brands. The Company believes that its strong brand equity supports consumers’ predisposition to choose IMAX over competing brands and to pay a premium for The IMAX Experience now and into the future.
Based on Brand Tracking Research, the IMAX brand ranged from two to 10 times more powerful than other entertainment technology brands across various measures of brand equity and health. The Company believes that its strong brand equity supports consumers’ predisposition to choose IMAX over competing brands and to pay a premium for The IMAX Experience now and into the future.
The IMAX Film Remastering process involves: • in certain instances, scanning, at the highest possible resolution, each individual frame of the film and converting it into a digital image; • optimizing the image using proprietary image enhancement tools; • enhancing the digital image using techniques such as sharpening, color correction, grain and noise removal and the elimination of unsteadiness and removal of unwanted artifacts; • recording the enhanced digital image into an IMAX digital cinema package format or onto IMAX 15/70-format film; and • specially remastering the soundtrack to take full advantage of the unique sound system of IMAX Systems.
The IMAX Film Remastering process can involve: • scanning, at the highest possible resolution, each individual frame of the film and converting it into a digital image; • optimizing the image using proprietary image enhancement tools; • enhancing the digital image using techniques such as sharpening, color correction, grain and noise removal and the elimination of unsteadiness and removal of unwanted artifacts; • recording the enhanced digital image into an IMAX digital cinema package format or onto IMAX 15/70-format film; and • specially remastering the soundtrack to take full advantage of the unique sound system of IMAX Systems.
The Company believes that all of these alternative formats deliver overall experiences that are inferior to The IMAX Experience and do not have IMAX's brand trust, filmmaker endorsement, loyal fan base, or global footprint and scale. Exhibitor Consolidation The Company’s primary customers are commercial multiplex exhibitors.
The Company believes that these alternative formats deliver overall experiences that are inferior to The IMAX Experience and do not have IMAX’s brand trust, filmmaker endorsement, loyal fan base, or global footprint and scale. Exhibitor and Studio Consolidation The Company’s primary customers are commercial multiplex exhibitors and studios.
At present, certified global device partners include Sony Electronics, Hisense, TCL, LG, Phillips, Hewlett Packard, Xiaomi, Sound United and Honor, among others. As of December 31, 2023, more than 300 IMAX Enhanced titles have been released across five of the biggest streaming platforms worldwide: Disney+, Sony Bravia CORE, Tencent Video, iQiyi and Rakuten TV.
At present, certified global device partners include Sony Electronics, Hisense, TCL, LG, Phillips, Hewlett Packard, Sound United and Honor, among others. As of December 31, 2024, more than 300 IMAX Enhanced titles had been released across five of the biggest streaming platforms worldwide: Disney+, Sony Bravia CORE, Tencent Video, iQiyi and Rakuten TV.
Streaming Technology consists of several software products including: • IMAX Stream Smart ― works within existing video compression workflows to reduce bitrates and retain picture quality across all devices and formats and deliver significant cost savings. • IMAX StreamAware On-Demand ― all-in-one quality assurance and quality control to automate and standardize checks for comprehensive content integrity and regulatory compliance for third-party content libraries, across an entire video compression workflow • IMAX StreamAware On-Air ― real-time monitoring software for live streams, which enables users to monitor video quality across their networks and to identify and address streaming issues.
Streaming Technology consists of several software products including: • IMAX StreamSmart ― works within existing video compression workflows to reduce bitrates and retain picture quality across all devices and formats and deliver significant cost savings for both on-demand and live content. 12 Table of Contents • IMAX StreamAware On-Demand ― all-in-one quality assurance and quality control to automate and standardize checks for comprehensive content integrity and regulatory compliance for third-party content libraries, across an entire video compression workflow • IMAX StreamAware On-Air ― real-time monitoring software for live streams, which enables users to monitor video quality across their networks and to identify and address streaming issues.
The Company has a Filmed for IMAX program through which filmmakers partner closely with IMAX to craft films that fully leverage IMAX technology and where every frame, from inception, is intentionally designed for The IMAX Experience . Box office metrics demonstrate audiences respond extremely favorably to Filmed for IMAX titles.
The Company has a Filmed for IMAX ® program through which filmmakers partner closely with IMAX to craft films that fully leverage IMAX technology and where every frame, from inception, is intentionally designed for The IMAX Experience . Box office metrics have demonstrated that audiences respond favorably to Filmed for IMAX titles.
The Company believes that the majority of its future network growth will come from international markets outside of China. As of December 31, 2023, 76% of IMAX Systems in the global commercial multiplex network were located within international markets (defined as all countries other than the United States and Canada).
The Company believes that the majority of its future network growth will come from international markets (defined as all countries other than the United States and Canada). As of December 31, 2024, 76% of IMAX Systems in the global commercial multiplex network were located within international markets.
IMAX Systems provide the Company’s exhibitor customers with a combination of the following benefits: • the ability to exhibit content that has been enhanced through IMAX Film Remastering, which usually 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 auditorium 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 auditorium equipped with an IMAX System; • specialized theater acoustics, which result in a four-fold reduction in background noise; • ongoing maintenance and extended warranty services; and • a license to the globally recognized IMAX brand, as well as benefits from IMAX marketing of films being shown in its network and IMAX’s growing social media followership. 4 In addition, certain movies shown in the IMAX network are filmed using proprietary IMAX film cameras or IMAX certified digital cameras, which along with IMAX’s customized guidance and a workflow process provide filmmakers enhanced and differentiated image quality and an IMAX-exclusive film aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen.
Additional information on the composition of the IMAX network is provided in the discussion under the caption “Marketing and Customers.” IMAX Systems provide the Company’s exhibitor customers with a combination of the following benefits: • the ability to exhibit content that has been enhanced through the IMAX Film Remastering 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 auditorium 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 auditorium equipped with an IMAX System; • specialized theater acoustics, which result in a four-fold reduction in background noise than conventional cinema experiences; • ongoing maintenance and extended warranty services; and • a license to the globally recognized IMAX brand, as well as benefits from IMAX marketing of films being shown in its network and IMAX’s growing social media followership. 4 Table of Contents In addition, select movies shown in the IMAX network are filmed using proprietary IMAX film cameras or IMAX certified digital cameras, which along with IMAX’s customized guidance and a workflow process, provide filmmakers enhanced and differentiated image quality and an IMAX-exclusive film aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen.
The Company receives as its distribution fee either a fixed amount or a fixed percentage of the box office receipts and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues. The ownership rights to such films may be held by the film sponsors, the film investors and/or the Company.
The Company receives as its distribution fee either a fixed amount or a fixed percentage of the box office receipts and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues. 9 Table of Contents The ownership rights to such content may be held by the film sponsors, the film investors and/or the Company.
In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, with up to 67% more image. Together, these components cause audiences in IMAX locations to feel as if they are a part of the on-screen action, creating a more intense, immersive, and awe-inspiring exciting experience than a conventional cinematic format.
In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, delivering up to 67% more image. The Company believes that these components cause audiences in IMAX locations to feel as if they are a part of the on-screen action, creating a more intense, immersive, and awe-inspiring experience than a conventional cinematic format.
The following trademarks are considered significant in terms of the current and contemplated operations of the Company: IMAX, IMAX 3D, Experience It In IMAX ® , The IMAX Experience , DMR, Filmed For IMAX, IMAX Live, IMAX Enhanced, and SSIMWAVE ® .
The following trademarks are considered significant in terms of the current and contemplated operations of the Company: IMAX ® , IMAX 3D ® , Experience It In IMAX ® , The IMAX Experience ® , DMR ® , Filmed For IMAX ® , IMAX Live ® , IMAX Enhanced ® , and IMAX StreamSmart TM .
To capture content in a resolution appropriate for IMAX screens, filmmakers utilize IMAX 70mm film cameras or IMAX-certified best-in-class digital cameras with leading brands including ARRI, Panavision, RED Digital Cinema and Sony. When this content is paired with IMAX’s proprietary post-production process, the resulting craftsmanship enthralls fans in 1,700+ IMAX locations around the world.
To capture content in a resolution appropriate for IMAX screens, filmmakers utilize IMAX 65mm film cameras or IMAX-certified digital cameras with leading brands including ARRI, Panavision, RED Digital Cinema and Sony. When this content is paired with IMAX’s proprietary post-production process, the resulting craftsmanship enthralls fans in 1,800+ IMAX locations around the world.
A geographic breakdown of the Company’s revenue is provided in Note 21 to Consolidated Financial Statements in Part II, Item 8. INDUSTRY OVERVIEW Competition The out-of-home entertainment industry is very diverse with numerous companies vying for the public’s leisure time, and the Company faces competition as a consequence.
A geographic breakdown of the Company’s revenue is provided in Note 20 to “Consolidated Financial Statements” in Part II, Item 8. INDUSTRY OVERVIEW Competition The out-of-home entertainment industry is very diverse with numerous companies vying for the public’s leisure time, and the Company faces competition as a consequence.
As of December 31, 2023, the Company indirectly owns 71.55% 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. GENERAL IMAX is a premier global technology platform for entertainment and events.
As of December 31, 2024, the Company indirectly owned 71.40% 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. GENERAL IMAX is a premier global technology platform for entertainment and events.
The Company does not own the locations in the IMAX network, except for one, and is not an exhibitor, but instead sells or leases the IMAX System to exhibitor customers along with a license to use its trademarks and ongoing maintenance services for which there is an annual payment by the exhibitor to IMAX.
The Company does not own the locations in the IMAX network, except for one, and is not an exhibitor, but instead sells or leases the IMAX System to exhibitor customers along with licenses to use its trademarks and ongoing maintenance services for which there are annual payments by the exhibitors to IMAX.
The current backlog information reflects all known elections. IMAX MAINTENANCE IMAX System arrangements also include a requirement for the Company to provide maintenance services over the life of the arrangement in exchange for an extended warranty and annual maintenance fee paid by the exhibitor.
Backlog information as of December 31, 2024, reflects all known elections as of such date. IMAX MAINTENANCE IMAX System arrangements also include a requirement for the Company to provide maintenance services over the life of the arrangement in exchange for an extended warranty and annual maintenance fee paid by the exhibitor.
The subject matter covered by these patents and applications includes auditorium design and geometry, audio and display technology, mechanisms employed in projectors and projection equipment (including 3D projection equipment), stereoscopic (3D) imaging, digitally re-mastering 35mm films into large-format, dynamic range and contrast of projectors, seaming or superimposing images from multiple projectors, and other inventions relating to imaging technology, digital projectors, laser projection, and video quality assessment.
The subject matter covered by these patents and applications includes auditorium design and geometry, audio and display technology, mechanisms employed in projectors and projection equipment (including 3D projection equipment), stereoscopic (3D) imaging, digital remastering, dynamic range and contrast of projectors, seaming or superimposing images from multiple projectors, and other inventions relating to imaging technology, digital projectors, laser projection, and video quality assessment.
The program includes incremental and bespoke marketing support, which box office metrics demonstrate audiences respond extremely favorably to, and drives higher market share for IMAX. Management believes that growth in international box office remains an important driver of growth for the Company.
The program includes incremental and bespoke marketing support, which box office metrics have demonstrated audiences respond favorably to, and has driven higher market share for IMAX. Management believes that growth in international box office remains an important driver of growth for the Company.
The Company remains in active negotiations with studios for additional films to fill out its short- and long-term film slate for the IMAX network.
(2) Denotes local language release. The Company remains in active negotiations with studios for additional films to fill out its short- and long-term film slate for the IMAX network.
These AI-powered products allow streaming platforms and broadcasters to automate workflows. The Company believes that these products allow users to deliver the highest quality viewing experiences to their subscribers while reducing costs. IMAX Enhanced is a solution to bring The IMAX Experience into the home.
These products are powered by IMAX VisionScience ® , an AI technology that allows streaming platforms and broadcasters to automate workflows. The Company believes that these products allow users to deliver higher quality viewing experiences to their subscribers while reducing costs. IMAX Enhanced is a solution to bring The IMAX Experience into the home.
IMAX Systems are based on proprietary and patented image, audio and other technology developed over the course of the Company’s history since its founding in 1967. The customers for IMAX Systems are principally theatrical exhibitors that operate commercial multiplex theaters, and, to a much lesser extent, museums, science centers and destination entertainment sites.
IMAX Systems are based on proprietary and patented image, audio and other technology developed over the course of the Company’s history. The customers for IMAX Systems are principally exhibitors that operate commercial multiplex theaters, and, to a much lesser extent, institutional locations, including museums and science centers, and destination entertainment sites.
This includes bringing connectivity to the Company’s global network to support live and interactive events worldwide; developing new IMAX film cameras and certifying additional digital cameras; further improving its proprietary film remastering and distribution process for the delivery of content for both theatrical (including local language content) and home entertainment; and further improving the reliability of its projectors, as well as enhancing the Company’s image and sound quality.
This includes bringing connectivity to the Company’s global network to support live and interactive events worldwide; further improving its proprietary Film 15 Table of Contents Remastering and distribution process for the delivery of content for both theatrical (including local language content) and home entertainment; and further improving the reliability of its projectors, as well as enhancing the Company’s image and sound quality.
The premium pricing, combined with the higher attendance levels associated with IMAX films, generates incremental box office for the Company’s exhibitor customers and for the movie studios releasing their films to the IMAX network.
The premium pricing, combined with the higher attendance levels associated with IMAX films, tends to generate incremental box office receipts (“box office”) for the Company’s exhibitor customers and for the movie studios releasing their films to the IMAX network.
As of December 31, 2023, the Company has distribution rights with respect to approximately 60 films, which cover subjects such as space, wildlife, music, sports, history and natural wonders.
As of December 31, 2024, the Company had distribution rights with respect to approximately 62 films, which cover subjects such as space, wildlife, music, sports, history and natural wonders.
The Company believes that the consolidation of the commercial exhibition industry has helped facilitate the growth of the IMAX network. The Company has historically enjoyed strong relationships with large commercial exhibitor chains, which have greater capital to purchase, lease or otherwise acquire IMAX Systems.
The Company believes that such consolidation in the entertainment industry has helped facilitate the growth of the IMAX network. The Company has historically enjoyed strong relationships with large commercial exhibitor chains, which have greater capital to purchase, lease, or otherwise acquire IMAX Systems, and major Hollywood studios.
Commercial multiplex systems are the largest part of the IMAX network, comprising 1,693 IMAX Systems, or 96%, of the 1,772 IMAX Systems in the IMAX network as of December 31, 2023. The Company’s institutional customers include science and natural history museums, zoos, aquaria, and other educational and cultural centers.
Commercial multiplex systems are the largest part of the IMAX network, comprising 1,735, or 96%, of the 1,807 IMAX Systems in the IMAX network as of December 31, 2024. The Company’s institutional customers include science and natural history museums, zoos, aquariums, and other educational and cultural centers.
It is actively exploring other global use cases for AI to improve its products, operations, and efficiency. 5 IMAX NETWORK The IMAX network is the most extensive premium network in the world with 1,772 IMAX Systems operating in 90 countries and territories, including 1,693 commercial multiplexes, 12 commercial destinations and 67 institutional locations as of December 31, 2023.
It is actively exploring other global use cases for AI to improve its products, operations, and efficiency. IMAX NETWORK The IMAX network is the most extensive premium network in the world with 1,807 IMAX Systems operating in 90 countries and territories, including 1,735 commercial multiplexes, 11 commercial destinations and 61 institutional locations as of December 31, 2024.
As of December 31, 2023, the Company has a footprint of 252 connected locations in the IMAX network across North America, Europe, and Asia were configured with connectivity to deliver live and interactive content with low latency and superior sight and sound. For more information on the Company’s content, see section “FILM DISTRIBUTION AND POST-PRODUCTION” below.
As of December 31, 2024, the Company had a footprint of 265 connected locations in the IMAX network across North America, Europe, Africa, Australia and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound. For more information on the Company’s content, see the section titled “FILM DISTRIBUTION, PRODUCTION AND POST-PRODUCTION” below.
IMAX has the largest global premium format network, more than double the size of its nearest competitor. As of December 31, 2023, there were 1,772 IMAX Systems operating in 90 countries and territories, including 1,693 commercial multiplexes, 12 commercial destinations, and 67 institutional locations in the Company’s global network.
IMAX has the largest global premium format network, more than double the size of its nearest competitor. As of December 31, 2024, there were 1,807 IMAX Systems operating in 90 countries and territories, including 1,735 commercial multiplexes, 11 commercial destinations, and 61 institutional locations in the Company’s global network.
The Company has a partnership in China with Wanda Film (“Wanda”) and as of December 31, 2023, through the Company’s partnership with Wanda, there were 376 IMAX Systems operational in Greater China, of which 362 are under the parties’ joint revenue sharing arrangements.
The Company has a partnership in China with Wanda and as of December 31, 2024, through the Company’s partnership with Wanda, there were 384 IMAX Systems operational in Greater China, of which 334 are under the parties’ joint revenue sharing arrangements (“JRSA”).
IMAX Film Systems IMAX Film Systems include various configurations, including 2D and 3D systems, and screen sizes. Following the introduction of the digital IMAX Xenon System in 2008, the number of IMAX Film Systems in the IMAX network has decreased significantly. However, IMAX’s proprietary format, the IMAX 70mm Film System continues to be a sought after IMAX viewing experience.
Following the introduction of the digital IMAX Xenon System in 2008, the number of IMAX Film Systems in the IMAX network has decreased significantly. However, IMAX’s proprietary format, the IMAX 70mm Film System continues to be a sought-after IMAX viewing experience.
The Company’s principal products and services are as follows: • IMAX Film Remastering – The digital remastering of films and other content into IMAX formats for distribution to the IMAX network. • Film Distribution and Post-Production – The distribution of large-format documentary films, primarily to institutional theaters, and, increasingly, the distribution of exclusive IMAX events and experiences including music, gaming, and sports, as well as the provision of film post-production services. • IMAX Systems – The sale or lease of premium IMAX Systems to exhibitor customers. • IMAX Maintenance – The provision of preventative and emergency maintenance services and quality monitoring to the IMAX network. • Other – Principally includes the Company’s streaming and consumer technology business, including its streaming technology and IMAX Enhanced product services, as well as other ancillary activities.
The Company’s principal products and services are as follows: • IMAX Film Remastering – The digital remastering of films and other content into IMAX formats for distribution to the IMAX network. • Film Distribution and Post-Production – The distribution of large-format documentary films, primarily to institutional theaters, and, increasingly, the distribution of exclusive IMAX events and experiences including music, gaming, and sports, as well as the provision of film post-production services. • IMAX Systems – The sale or lease of premium IMAX Systems to exhibitor customers. • IMAX Maintenance – The provision of preventative and emergency maintenance services and quality monitoring to the IMAX network. • Other – Principally includes the Company’s streaming and consumer technology business, including its streaming technology and IMAX Enhanced product services, as well as other ancillary activities. 6 Table of Contents The Company assesses and evaluates its performance based on the operating results of the Content Solutions and Technology Products and Services segments, which largely reflect the different customer bases the Company serves.
The Company owns or otherwise has rights to trademarks and trade names used in conjunction with the sale of its products, systems, and services.
Certain of the Company’s patents expire between 2025 and 2041. The Company owns or otherwise has rights to trademarks and trade names used in conjunction with the sale of its products, systems, and services.
The Company’s segment information is provided in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 21 to Consolidated Financial Statements in Part II, Item 8. 6 IMAX FILM REMASTERING IMAX Film Remastering is a proprietary technology that digitally remasters films into IMAX formats.
The Company’s segment information is provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 20 to “Consolidated Financial Statements” in Part II, Item 8. IMAX FILM REMASTERING IMAX Film Remastering is a proprietary technology that digitally remasters films into IMAX formats.
IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,693 IMAX Systems operating as of December 31, 2023, representing a market penetration of only 46.8%.
The Company currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,735 IMAX Systems operating as of December 31, 2024, representing a market penetration of only 48%.
Maintenance and Extended Warranty Services The Company provides ongoing maintenance and extended warranty services to IMAX Systems. These arrangements are usually for a separate fee, although the Company sometimes includes free service in the initial year of the arrangement. The maintenance and extended warranty arrangements include service, maintenance, and replacement parts for IMAX Systems.
Maintenance and Extended Warranty Services The Company provides ongoing maintenance and extended warranty services to IMAX Systems. These arrangements are usually for a separate fee. The maintenance and extended warranty arrangements include service, maintenance, and replacement parts for IMAX Systems.
IMAX Enhanced is part of the Company’s next evolutionary step to extend the IMAX brand and technology further into new use cases, including streaming entertainment and the consumer electronics market.
Over 15 million IMAX Enhanced certified devices are estimated to be in use today. IMAX Streaming and Consumer Technology is part of the Company’s next evolutionary step to extend the IMAX brand and technology further into new use cases, including streaming entertainment and the consumer electronics market.
The Company inspects all parts and sub-assemblies, completes the final assembly, and then subjects the sound system to comprehensive testing as a system. Screen and Other Components The Company purchases its screen components and glasses cleaning equipment from third parties.
These proprietary parts include custom loudspeaker enclosures and horns, specialized amplifiers, and signal processing and control equipment. The Company inspects all parts and sub-assemblies, completes the final assembly, and then subjects the sound system to comprehensive testing as a system. Screen and Other Components The Company purchases its screen components and glasses cleaning equipment from third parties.
A cornerstone of the IMAX brand for more than 50 years, IMAX recently relaunched its IMAX Documentaries unit to focus on a new generation of narrative-driven original and acquired documentary films, as well as downstream revenue opportunities through partnerships with leading streaming platforms. Additional forthcoming IMAX original documentaries include The Blue Angels and The Elephant Odyssey .
A cornerstone of the IMAX brand for almost 60 years, IMAX relaunched its IMAX Documentaries strategy to focus on a new generation of narrative-driven original and acquired documentary films, as well as downstream revenue opportunities through partnerships with leading streaming platforms.
Included in the Company’s patent portfolio are more than 30 patents and patent families acquired from the Eastman Kodak Company covering laser projection technology. In addition, the Company acquired more than 15 patent families in connection with the acquisition of SSIMWAVE in September 2022.
Included in the Company’s patent portfolio are patent families acquired from the Eastman Kodak Company covering laser projection technology. In addition, the Company acquired more than 15 patent families in connection with the acquisition of SSIMWAVE in September 2022. The Company has been and will continue to be diligent in the protection of its proprietary interests.
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.
Once the determination is made that the customer is unable to proceed with installation, the agreement with the customer may be terminated or amended. If the agreement is terminated and there are no 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.
The Company’s global content portfolio includes blockbuster films, both from Hollywood and local language film industries worldwide; IMAX documentaries, both original and acquired (“IMAX Documentaries”), and IMAX events and experiences in emerging verticals including music, gaming, and sports.
The Company’s global content portfolio includes blockbuster films, both from Hollywood and local language film industries worldwide; IMAX documentaries, both original and acquired (“IMAX Documentaries”); and IMAX events and experiences in emerging verticals including music, gaming, and sports. The Company achieved its second highest year for domestic (United States and Canada combined) box office in 2024.
As of December 31, 2023, the Company has a footprint of 252 connected locations in the IMAX network across the United States, Canada, Europe, and Asia configured with connectivity to deliver live, interactive content with low latency and superior sight and sound. In 2023, the Company partnered with Metro-Goldwyn-Studios Inc.
As of December 31, 2024, the Company had a footprint of 265 connected locations in the IMAX network across the United States, Canada, Europe, Africa, Australia, and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound.
The following table provides detailed information about the IMAX network by system type and geographic location as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Commercial Multiplex Commercial Destination Institutional Total Commercial Multiplex Commercial Destination Institutional Total United States 363 4 24 391 364 4 25 393 Canada 42 1 7 50 40 1 7 48 Greater China (1) 791 — 16 807 778 — 16 794 Asia (excluding Greater China) 166 2 2 170 138 2 2 142 Western Europe 126 4 8 138 118 4 8 130 Latin America (2) 60 1 8 69 55 1 11 67 Rest of the World 145 — 2 147 140 — 2 142 Total (3) 1,693 12 67 1,772 1,633 12 71 1,716 (1) Greater China includes China, Hong Kong, Taiwan, and Macau.
The following table provides detailed information about the IMAX network by system type and geographic location as of December 31, 2024 and 2023: 13 Table of Contents December 31, 2024 December 31, 2023 Commercial Multiplex Commercial Destination Institutional Total Commercial Multiplex Commercial Destination Institutional Total United States 370 4 24 398 363 4 24 391 Canada 44 1 5 50 42 1 7 50 Greater China (1) 796 — 13 809 791 — 16 807 Asia (excluding Greater China) 185 1 2 188 166 2 2 170 Western Europe 135 4 8 147 126 4 8 138 Latin America (2) 62 1 7 70 60 1 8 69 Rest of the World 143 — 2 145 145 — 2 147 Total (3) 1,735 11 61 1,807 1,693 12 67 1,772 (1) Greater China includes China, Hong Kong, Taiwan, and Macau.
(3) Includes 30 IMAX Systems (2022 ― 38) where certain of the Company’s contracts contain options for the customer to elect to upgrade system type or to alter the contract structure (for example, from a joint revenue sharing arrangement to a sale) after signing, but before installation.
(3) Includes 31 IMAX Systems (2023 ― 30) where certain of the Company’s contracts contain options for the customer to elect to upgrade system type or to alter the contract structure (for example, from a JRSA to a sale) after signing, but before installation. Current backlog information reflects all known elections.
(Refer to “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”, “– The Company faces risks in connection with its significant presence in China and the continued expansion of its business there”, “– General political, social and economic conditions can affect the Company’s business by reducing both revenues generated from existing IMAX Systems and the demand for new IMAX Systems”, and “– The Company may not convert all of its backlog into revenue and cash flows” in Part I, Item 1A.) PRINCIPAL PRODUCTS AND SERVICES The Company believes it is the world’s largest designer and manufacturer of specialty premium projection and sound system components for premium large-format theaters around the world, and it is also a significant distributor of large-format films.
(Refer to “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,” “– The Company faces risks in connection with its significant presence in China and the continued expansion of its business there,” “– General political, social and economic conditions can affect the Company’s business by reducing both revenues generated from existing IMAX Systems and the demand for new IMAX Systems,” and “– The Company may not convert all of its backlog into revenue and cash flows” in Part I, Item 1A.) PRINCIPAL PRODUCTS AND SERVICES The Company is an innovator in entertainment technology, combining proprietary software, auditorium architecture, and specialty projection and sound system equipment to deliver what it believes is the most immersive in-theater experience in the world while also distributing a significant and growing portfolio of films and other content across its global network.
In May 2023, the Company announced that Amazon Studios acquired worldwide rights to the Company’s original documentary, The Blue Angels , filmed with IMAX digital certified cameras and produced in collaboration with Dolphin Entertainment, Bad Robot Productions, and Zipper Bros Films. The documentary is expected to be delivered in the second quarter of 2024.
In May 2024, Amazon Content completed its acquisition of the worldwide rights to the Company’s original documentary, The Blue Angels , filmed with IMAX certified digital cameras and produced in collaboration with Dolphin Entertainment, Bad Robot Productions, and Zipper Bros Films.
The Company believes that continued consolidation could facilitate further signings and other strategic benefits going forward. However, exhibitor consolidation has also resulted in individual exhibitor chains constituting a material portion of the Company’s revenue and network. Continued industry consolidation, as well as consolidation in the movie studio industry, may present risks to the Company.
However, exhibitor consolidation has also resulted in individual exhibitor chains constituting a material portion of the Company’s revenue and network. Continued industry consolidation may present risks to the Company.
The Company’s latest 2023 studies show that the IMAX brand has achieved near universal awareness, is uniquely recognized as a leading, ultra-premi um brand, and offers one of the most differentiated movie-going experiences. The IMAX brand has also been proven to signal a special, must-see event at levels far greater than any other entertainment technology brand based on evidence.
The Company’s latest 2024 studies show that the IMAX brand has achieved near universal consumer awareness, is uniquely recognized as a leading, ultra-premium brand, and offers one of the most differentiated movie-going experiences. The IMAX brand has also shown to signal a special, must-see event.
The Technology Products and Services segment primarily consists of products and services for the Company’s exhibitor customers, including the sale, lease and ongoing service of IMAX Systems.
The Content Solutions segment principally focuses on content enhancement and distribution services for the Company’s movie studio customers and content creators. The Technology Products and Services segment primarily consists of products and services for the Company’s exhibitor customers, including the sale, lease and ongoing maintenance of IMAX Systems.
The standard IMAX sound system component consists of parts from a variety of sources, with approximately 50% of the materials of each sound system attributable to proprietary parts provided under original equipment manufacturers agreements with outside vendors. These proprietary parts include custom loudspeaker enclosures and horns, specialized amplifiers, and signal processing and control equipment.
Sound System Component Manufacturing The Company develops, designs, and assembles the key elements of the theater sound system component. The standard IMAX sound system component consists of parts from a variety of sources, with approximately 50% of the materials of each sound system attributable to proprietary parts provided under original equipment manufacturers agreements with outside vendors.
Under some arrangements, customers can elect to participate in a service partnership program whereby the Company trains a customer’s technician to carry out certain aspects of maintenance. Under such shared maintenance arrangements, the Company participates in certain of the customer’s maintenance checks each year, provides a specified number of emergency visits, and provides spare parts, as necessary.
Under some arrangements, customers can elect to participate in a service partnership program whereby the Company trains a customer’s technician to carry out certain aspects of maintenance.
In 2023, the Company formed a new business unit, Streaming and Consumer Technology to focus on in-home entertainment technology. The business unit includes the streaming technology acquired in the SSIMWAVE acquisition as well as IMAX Enhanced ® product services. The Company utilizes AI for image enhancement, streaming technology, and data analysis to improve various aspects of its business.
The business unit includes the streaming technology acquired in the SSIMWAVE Inc. (“SSIMWAVE”) acquisition (completed in 2022) as well as IMAX Enhanced ® products. 5 Table of Contents The Company utilizes AI for image enhancement, streaming technology, and data analysis to improve various aspects of its business.
The Company believes that its competitive strengths include the value of the IMAX brand name, the premium IMAX consumer experience, the design, quality and historic reliability rate of IMAX Systems (including the IMAX Laser Systems as well as the IMAX immersive sound system, the return on investment of an IMAX System for exhibitors, the number and quality of IMAX films that it distributes, the tailored distribution and marketing support by dedicated teams around the world, the relationships the Company maintains with prominent Hollywood and international filmmakers and other content creators (a number of whom desire to film their movies and events with IMAX cameras), the availability of Hollywood and international films to the IMAX network through IMAX Film Remastering technology, the availability of unique and innovative events and experiences such as distributed concerts, special theatrical screenings, and live Q&A sessions with top content creators, consumer loyalty and the level of the Company’s service and maintenance and extended warranty efforts.
Furthermore, from a technological perspective, the Company believes that its competitive strengths include the design, quality, and historic reliability rate of IMAX Systems (including the IMAX Laser Systems), the IMAX immersive sound system, the level of the Company’s service and maintenance and extended warranty efforts, the number and quality of IMAX films that it distributes, the availability of Hollywood and international films to the IMAX network through IMAX Film Remastering technology, and the availability of unique and innovative events and experiences such as live streaming of sporting events, esports, distributed concerts, special theatrical screenings, and live Q&A sessions with top content creators.
Pictures/DC Studios October 2024 Filmed For IMAX Venom 3 Sony Pictures November 2024 Filmed For IMAX Untitled Gladiator Sequel Paramount Pictures November 2024 — Wicked – Part 1 Universal Pictures November 2024 — (1) The scheduled release dates in the table above are subject to change, may vary by territory, and may not reflect the date(s) of limited premiere events.
Pictures October 2025 Filmed for IMAX Predator: Badlands Walt Disney Studios November 2025 — The Running Man Paramount Pictures November 2025 — Wicked: For Good Universal Pictures November 2025 — Zootopia 2 Walt Disney Studios November 2025 — Avatar: Fire and Ash Walt Disney Studios December 2025 — (1) The scheduled release dates in the table above are subject to change, may vary by territory, and may not reflect the date(s) of limited premiere events.
As of December 31, 2023, Wanda represented 22% of the Company’s commercial network, 4% of the Company’s backlog and 10% of its revenues. As of December 31, 2022, Wanda represented 23% of the Company’s commercial network, 4% of the Company’s backlog and 7% of its revenue.
As of December 31, 2024, Wanda represented 21% of the Company’s commercial network (2023 ― 22%) and 12% of the Company’s backlog (2023 ― 4%) as well as 9% of its revenues for the year ended December 31, 2024 (2023 ― 10%).
The fabrication of a majority of parts and sub-assemblies is subcontracted to a group of carefully pre-qualified third-party suppliers. Manufacture and supply contracts are signed for the delivery of the component on an order-by-order basis. The Company believes its significant suppliers will continue to supply quality products in quantities sufficient to satisfy its needs.
With a few exceptions, the Company develops and designs all of the key elements of the proprietary technology involved in this component. The fabrication of a majority of parts and sub-assemblies is subcontracted to a group of carefully pre-qualified third-party suppliers. Manufacture and supply contracts are signed for the delivery of the component on an order-by-order basis.
The Company also expects to announce additional local language films and exclusive IMAX events and experiences to be released to its global network throughout 2024. 8 FILM DISTRIBUTION AND POST-PRODUCTION The Company continues to believe that the IMAX network serves as a valuable platform to launch and distribute original content. The Company distributes large-format documentary films, primarily to institutional customers.
FILM DISTRIBUTION, PRODUCTION AND POST-PRODUCTION The Company continues to believe that the IMAX network is a valuable global platform to launch and distribute original content, including documentaries. The Company distributes large-format documentary films, primarily to institutional customers.
As a result, IMAX is among the most important and successful global distribution platforms. The Company leverages its proprietary technology and engineering in all aspects of its business, which principally consists of the IMAX film remastering (“IMAX Film Remastering” and formerly known as “IMAX DMR”) and the sale or lease of premium IMAX theater systems (“IMAX System(s)”).
The Company leverages its proprietary technology and engineering in all aspects of its business, which principally consists of the digital remastering of films and other content into the IMAX format for distribution across the IMAX network (“IMAX Film Remastering”) and the sale or lease of premium IMAX theater systems (“IMAX System(s)”).
This compares to 1,716 IMAX Systems operating in 87 countries and territories as of December 31, 2022, including 1,633 commercial multiplexes, 12 commercial destinations, and 71 institutional locations in the Company’s global network. Additional information on the composition of the IMAX network is provided in the discussion of Marketing and Customers.
This compares to 1,772 IMAX Systems operating in 90 countries and territories as of December 31, 2023, including 1,693 commercial multiplexes, 12 commercial destinations, and 67 institutional locations in the Company’s global network.
These trademarks are widely protected by registration or common law throughout the world. 15 HUMAN CAPITAL The Company believes that effective human capital management is critical to its success.
These trademarks are widely protected by registration or common law throughout the world. HUMAN CAPITAL The Company recognizes that effective human capital management is essential to its success. The Company’s objectives are centered on cultivating a culture and employee experience that transcends the ordinary.
To date, in 2024, 18 titles have been released to the global IMAX network, including three re-releases, and the Company has announced the following additional 24 titles to be released in 2024: Scheduled Title Studio Release Date (1) IMAX DNA Dune: Part II Warner Bros.
To date, in 2025, 21 titles have been released to the global IMAX network, including three titles with IMAX DNA, and the Company has announced the following additional 31 titles to be released in 2025: 8 Table of Contents Title Studio Scheduled Release Date (1) IMAX DNA Moonlight A24 February 2025 — Mickey 17 Warner Bros.
PATENTS AND TRADEMARKS The Company’s inventions cover various aspects of its proprietary technology and many of these inventions are protected by Letters of Patent or applications filed throughout the world, most significantly in the United States, Canada, China, Belgium, Japan, France, Germany, and the United Kingdom.
Under such shared maintenance arrangements, the Company participates in certain of the customer’s maintenance checks each year, provides a specified number of emergency visits, and provides spare parts, as necessary. 16 Table of Contents PATENTS AND TRADEMARKS The Company’s inventions cover various aspects of its proprietary technology and many of these inventions are protected by Letters of Patent or applications filed throughout the world, most significantly in the United States, Canada, China, India, Japan, France, Germany, and the United Kingdom.
The acquisition of SSIMWAVE marks a significant expansion of the Company’s streaming and consumer technology strategy to deliver the highest quality images on any screen, while also creating cost efficiencies to streaming companies, broadcasters and other companies that transmit visual data — to drive new, recurring revenue and grow its global leadership in entertainment technology.
Included in the product offerings are AI-driven video quality solutions for media and entertainment companies, to deliver the highest quality images on any screen, while also enabling cost efficiencies for streaming companies, broadcasters and other companies that transmit visual data — to create opportunities for new, recurring revenue and grow its global leadership in entertainment technology.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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The introduction of new, competing products and technologies could harm the Company’s business. The entertainment industry is very competitive. The Company faces competition both in the form of technological advances in in-home entertainment, as well as those within the out-of-home entertainment, including the theater-going experience.
The introduction of new, competing products and technologies could harm the Company’s business. The entertainment industry is very competitive. The Company faces competition both in the form of technological advances in in- home entertainment, as well as those within out-of-home entertainment, including the theater-going experience.
If the Company is unable to continue to produce a differentiated theater experience, consumers may be unwilling to pay the price premiums associated with the cost of IMAX tickets and box office performance of IMAX films may decline.
If the Company is unable to continue to produce a differentiated theater experience, consumers may be unwilling to pay the price premiums associated with the cost of IMAX tickets and the box office performance of IMAX films may decline.
Any such attack or unauthorized access could result in a disruption of the Company’s operations, the theft, unauthorized use or publication of confidential or proprietary information of the Company or its customers, employees, licensees or suppliers, a reduction of the revenues the Company is able to generate from its operations, damage to the Company’s brand and reputation, a loss of confidence in the security 19 of the Company’s business and products, and significant legal and financial exposure, each of which could potentially have an adverse effect on the Company’s business.
Any such attack or unauthorized access could result in a disruption of the Company’s operations, the theft, unauthorized use or publication of confidential or proprietary information of the Company or its customers, employees, licensees or suppliers, a reduction of the revenues the Company is able to generate from its operations, damage to the Company’s brand and reputation, a loss of confidence in the security of the Company’s business and products, and significant legal and financial exposure, each of which could potentially have an adverse effect on the Company’s business.
For example, in response to the ongoing conflict between Russia and Ukraine, Canada, the United States, and other countries in which the Company operates have imposed broad sanctions and other restrictive actions against governmental and other entities in Russia and Belarus, which in turn have and may continue to have an adverse impact on the Company’s business and results of operations in affected regions.
For example, in response to the ongoing conflict between Russia and Ukraine, Canada, the United States, and other countries in which the Company operates have imposed broad sanctions and other restrictive actions against governmental and other entities in Russia, which in turn have and may continue to have an adverse impact on the Company’s business and results of operations in affected regions.
These restrictive covenants impose operating and financial restrictions on the Company that limit its ability to engage in acts that may be in the Company’s long-term best interests. 28 The Company’s indebtedness and liabilities could limit the cash flow available for its operations, and expose the Company to risks that could adversely affect its business, financial condition, and results of operations.
These restrictive covenants impose operating and financial restrictions on the Company that limit its ability to engage in acts that may be in the Company’s long-term best interests. The Company’s indebtedness and liabilities could limit the cash flow available for its operations, and expose the Company to risks that could adversely affect its business, financial condition, and results of operations.
RISKS RELATED TO THE COMPANY’S INTERNATIONAL OPERATIONS The Company conducts business internationally, which exposes it to uncertainties and risks that could negatively affect its operations, sales, and future growth prospects. A significant portion of the GBO generated by the Company’s exhibitor customers and its revenues are generated by customers located outside the United States and Canada.
RISKS RELATED TO THE COMPANY’S INTERNATIONAL OPERATIONS The Company conducts business internationally, which exposes it to uncertainties and risks that could negatively affect its operations, sales, and future growth prospects. A significant portion of the GBO generated by the Company’s exhibitor customers and its revenues are generated from customers located outside the United States and Canada.
In order to keep pace with changes and advancements in digital technology and in order to continue to provide an experience that is premium to and differentiated from conventional entertainment experiences, the Company has made, and expects to continue to make, significant investments in digital technology in the form of research and development and the acquisition of third-party intellectual property and/or proprietary technology.
In order to keep pace with changes and advancements in technology and in order to continue to provide an experience that is premium to and differentiated from conventional entertainment experiences, the Company has made, and expects to continue to make, significant investments in technology in the form of research and development and the acquisition of third-party intellectual property and/or proprietary technology.
Additional risks that the Company currently deems immaterial or that are currently unknown to the Company may also impair its business or operations. 17 RISKS RELATED TO THE COMPANY’S BUSINESS AND OPERATIONS General political, social and economic conditions can affect the Company’s business by reducing both revenues generated from existing IMAX Systems and the demand for new IMAX Systems.
Additional risks that the Company currently deems immaterial or that are currently unknown to the Company may also impair its business or operations. RISKS RELATED TO THE COMPANY’S BUSINESS AND OPERATIONS General political, social and economic conditions can affect the Company’s business by reducing both revenues generated from existing IMAX Systems and the demand for new IMAX Systems.
The Company depends on its proprietary knowledge regarding IMAX Systems and digital and film technology, video quality assessment and image enhancement. The Company relies principally upon a combination of copyright, trademark, patent and trade secret laws, restrictions on disclosures and contractual provisions to protect its proprietary and intellectual property rights.
The Company depends on its proprietary knowledge regarding IMAX Systems including digital and film technology, video quality assessment and image enhancement. The Company relies principally upon a combination of copyright, trademark, patent and trade secret laws, restrictions on disclosures and contractual provisions to protect its proprietary and intellectual property rights.
If the Company fails to enhance its current AI products and develop new products in response to changes in technology or industry standards, or the Company fails to bring product enhancements or new product developments to market quickly enough, the Company’s AI products could rapidly become less competitive or obsolete.
If the Company fails to enhance its current AI products and develop new products in response to changes in technology or industry standards, or the Company fails to bring product enhancements or new product developments to market quickly enough, the Company’s AI-enabled products could rapidly become less competitive or obsolete.
The success of the IMAX network is directly related to the availability and success of the IMAX remastered films, and other films released to the IMAX network, as well as the continued purchase or lease of IMAX Systems and other support by theatrical exhibitors, for which there can be no guarantee.
The success of the IMAX network is directly related to the availability and success of the IMAX remastered films, and other films released to the IMAX network, as well as the continued purchase or lease of IMAX Systems and other support by exhibitors, for which there can be no guarantee.
A decline in the capital markets generally, or an adjustment in the market price or trading volumes of the Company’s publicly traded securities, may negatively affect its ability to raise capital, issue debt, secure customer business or retain employees.
A decline in the capital markets generally, or an adjustment in the market price or trading volumes of the Company’s publicly traded securities, may negatively affect the Company’s ability to raise capital, issue debt, secure customer business or retain employees.
The Company has notified its exhibitor clients in Russia and Belarus that such sanctions and actions constitute a force majeure event under their system agreements, resulting in the suspension of the Company’s obligations thereunder.
The Company has notified its exhibitor clients in Russia that such sanctions and actions constitute a force majeure event under their system agreements, resulting in the suspension of the Company’s obligations thereunder.
Although the Company maintains robust procedures, internal policies and technological security measures to safeguard such content and information, as well as a cyber-security insurance policy, the Company’s information technology systems, and the information technology systems of its current or future third-party vendors, collaborators, consultants and service providers, could be penetrated by internal or external parties intent on extracting information, corrupting information, stealing intellectual property or trade secrets, or disrupting business processes.
Although the Company maintains robust procedures, internal policies and technological security measures to safeguard such content and information, as well as a cybersecurity insurance policy, the Company’s information technology systems, and the information technology systems of its current or future third-party vendors, collaborators, consultants and service providers, could be penetrated by internal or external parties intent on extracting information, corrupting information, stealing intellectual property or trade secrets, or disrupting business processes.
In addition, in the wake of the Russia-Ukraine conflict and resulting sanctions, major movie studios suspended the theatrical release of films in Russia and Belarus and financial institutions halted transactions with Russian entities.
In addition, in the wake of the Russia-Ukraine conflict and resulting sanctions, major movie studios suspended the theatrical release of films in Russia and financial institutions halted transactions with Russian entities.
Also, conflicts in international release schedules may make it difficult to release every IMAX film in certain markets. 18 The Company depends principally on commercial theatrical exhibitors to purchase or lease IMAX Systems, to supply box office revenue under joint revenue sharing arrangements and under its sale and sales-type lease agreements and to supply venues in which to exhibit IMAX films.
Also, conflicts in international release schedules may make it difficult to release every IMAX film in certain markets. The Company depends principally on commercial exhibitors to purchase or lease IMAX Systems, to supply box office revenue under joint revenue sharing arrangements and under its sale and sales-type lease agreements, and to supply venues in which to exhibit IMAX films.
The Company’s network spanned 90 different countries as of December 31, 2023, and the Company expects its international operations to continue to account for an increasingly significant portion of its future revenues. There are a number of risks associated with operating in international markets that could negatively affect the Company’s operations, sales and future growth prospects.
The Company’s network spanned 90 different countries as of December 31, 2024, and the Company expects its international operations to continue to account for an increasingly significant portion of its future revenues. There are a number of risks associated with operating in international markets that could negatively affect the Company’s operations, sales and future growth prospects.
Approximately 7% of the Company’s sales and lease agreements are due to expire in the next 12 months. If these agreements are not renewed, or if the Company is unable to enter into new leases agreements comparable to those currently in effect in a timely manner, then the Company’s systems revenue could be adversely affected.
Approximately 9% of the Company’s sales and lease agreements are due to expire in the next 12 months. If these agreements are not renewed, or if the Company is unable to enter into new leases agreements comparable to those currently in effect in a timely manner, then the Company’s systems revenue could be adversely affected.
The patent applications may also be challenged by third parties. Several of the Company’s issued patents expire between 2024 and 2041. If the Company’s patent claims are rendered invalid or unenforceable, or narrowed in scope, the patent coverage afforded the Company’s products and services could be impaired, which could negatively affect its competitive position.
The patent applications may also be challenged by third parties. Several of the Company’s issued patents expire between 2025 and 2041. If the Company’s patent claims are rendered invalid or unenforceable, or narrowed in scope, the patent coverage afforded the Company’s products and services could be impaired, which could negatively affect its competitive position.
Furthermore, many of the Company’s commercial exhibitor customers are reliant on the availability of retail shopping malls at physical locations, which compete with other forms of retailing such as online retail websites, and may be adversely affected by the changes in the retail shopping landscape and consumer purchasing pattern.
Furthermore, many of the Company’s commercial exhibitor customers are reliant on the availability of retail shopping malls at physical locations, which compete with other forms of retailing such as online retail websites, and may be adversely affected by the changes in the retail shopping landscape and consumer purchasing patterns.
The credit agreement governing the Company’s senior secured credit facility contains certain restrictive covenants that, among other things, limit its ability to: • incur additional indebtedness; • pay dividends and make distributions; • repurchase stock; • make certain investments; • transfer or sell assets; • create liens; • enter into transactions with affiliates; • issue or sell stock of subsidiaries; • create dividend or other payment restrictions affecting restricted subsidiaries; and • merge, consolidate, amalgamate, or sell all or substantially all of its assets to another person.
The credit agreement governing the Company’s senior secured credit facility contains certain restrictive covenants that, among other things, limit its ability to: • incur additional indebtedness; • pay dividends and make distributions; • repurchase stock; 28 Table of Contents • make certain investments; • transfer or sell assets; • create liens; • enter into transactions with affiliates; • issue or sell stock of subsidiaries; • create dividend or other payment restrictions affecting restricted subsidiaries; and • merge, consolidate, amalgamate, or sell all or substantially all of its assets to another person.
Furthermore, regulatory efforts to combat climate change could result in increases in the cost of raw materials, taxes, transportation and utilities for the Company’s suppliers and vendors 30 which would result in higher operating costs for the Company and potentially impact the availability of components used in the Company’s systems.
Furthermore, regulatory efforts to combat climate change could result in increases in the cost of raw materials, taxes, transportation and utilities for the Company’s suppliers and vendors which would result in higher operating costs for the Company and potentially impact the availability of components used in the IMAX Systems.
These and other rapidly changing laws, regulations, policies, interpretations, and expectations may increase the cost of the Company’s compliance, divert management attention, alter the environment in which it does business, and expose the Company to potentially significant fines or other penalties if it is unable to comply with such laws, regulations or policies, any of which could have a material adverse effect on the Company’s business, results of operations, and financial condition.
These and other rapidly changing laws, regulations, policies, interpretations, and expectations and shift in consumer sentiment may increase the cost of the Company’s compliance, divert management attention, alter the environment in which it does business, and expose the Company to potentially significant fines or other penalties if it is unable to comply with such laws, regulations or policies, any of which could have a material adverse effect on the Company’s business, results of operations, and financial condition.
To the extent any PRC laws and regulations become applicable to the Company, it may be subject to the risks and uncertainties associated with the legal system in the PRC, including with respect to the enforcement of laws and the possibility of changes of rules and regulations with little or no advance notice.
To the extent any additional PRC laws and regulations become applicable to the Company, it may be subject to increased risks and uncertainties associated with the legal system in the PRC, including with respect to the enforcement of laws and the possibility of changes of rules and regulations with little or no advance notice.
Refer to Part 1C, Cybersecurity for additional information. In addition, a variety of laws and regulations at the international, national, and state level govern the Company’s collection, use, protection and processing of personal data.
Refer to Part 1C, “Cybersecurity” for additional information. In addition, a variety of laws and regulations at the international, national, and state level govern the Company’s collection, use, protection and processing of personal data.
Of the IMAX Systems currently scheduled to be installed in Greater China, 71% are under joint revenue sharing arrangements, which further increases the Company’s ongoing exposure to box office performance in this market.
Of the IMAX Systems currently scheduled to be installed in Greater China, 78% are under joint revenue sharing arrangements, which further increases the Company’s ongoing exposure to box office performance in this market.
In addition, the Company’s sensitive, proprietary, or confidential information could be leaked, disclosed, or revealed as a result of or in connection with the Company’s employees’ or third-party vendor’s use of generative AI technologies.
In addition, the Company’s sensitive, proprietary, or confidential information could be leaked, disclosed, or revealed as a result of or in connection with the Company’s employees’ or third-party vendors’ use of generative AI technologies.
The Company may be unable to select films which will be successful in international markets or may be unsuccessful in selecting the right mix of Hollywood and local language films for a particular country or region, notably Greater China, the Company’s largest market.
The Company may be unable to select films which will be successful in international markets or may be unsuccessful in selecting the right mix of Hollywood and local language 19 Table of Contents films for a particular country or region, notably Greater China, the Company’s largest market.
The Company may experience adverse effects due to exchange rate fluctuations. A substantial portion of the Company’s revenues are denominated in U.S. Dollars, while a substantial portion of its expenses are denominated in Canadian Dollars. The Company also generates revenues in Chinese Yuan Renminbi, Euros and Japanese Yen.
The Company may experience adverse effects due to exchange rate fluctuations. A substantial portion of the Company’s revenues is denominated in U.S. Dollars, while a substantial portion of its expenses is denominated in Canadian Dollars. The Company also generates revenues in Chinese Renminbi, Euros and Japanese Yen.
Results of operations in future years will include the amortization of the Company’s film assets and may be significantly affected by periodic adjustments in amortization rates. The Company may be subject to impairment losses on its inventories if they become obsolete.
Results of operations in future years will include the amortization of the Company’s film assets and may be significantly affected by periodic adjustments in amortization rates. The Company has been and may continue to be subject to impairment losses on its inventories if they become obsolete.
If the Company fails to comply with these covenants or to make payments under its indebtedness when due, then the Company would be in default under that indebtedness, which could, in turn, result in that and the Company’s other indebtedness becoming immediately payable in full.
If the Company fails to comply with these covenants and that of other debt agreements or to make payments under its indebtedness when due, then the Company would be in default under that indebtedness, which could, in turn, result in that and the Company’s other indebtedness becoming immediately payable in full.
The Company faces cyber-security and similar risks, which could result in the disclosure, theft, or loss of confidential or other proprietary information, including intellectual property, damage to the Company’s brand and reputation, legal exposure and financial losses.
The Company faces cybersecurity and similar risks, which could result in the disclosure, theft, or loss of confidential or other proprietary information, including intellectual property, damage to the Company’s brand and reputation, legal exposure and financial losses.
The Company itself produces only a small number of such films and, as a result, the Company relies principally on films produced by third-party filmmakers and studios, including both Hollywood and local language features converted into the Company’s format. In 2023, 95 new IMAX films were released to the Company’s global network.
The Company itself produces only a small number of such films and, as a result, the Company relies principally on films produced by third-party filmmakers and studios, including both Hollywood and local language features converted into the Company’s format. In 2024, 118 new IMAX films were released to the Company’s global network.
Dollar and potential currency devaluations; • new tariffs, trade protection measures, import or export licensing requirements, trade embargoes, sanctions, and other trade barriers; • difficulties in obtaining competitively priced key commodities, raw materials, and component parts from various international sources that are needed to manufacture quality products on a timely basis; • imposition of foreign exchange controls in foreign jurisdictions; • dependence on foreign distributors and their sales channels; • reliance on local partners, including in connection with joint revenue sharing arrangements; • difficulties in staffing and managing foreign operations; • inability to complete installations of IMAX Systems, including as a result of material disruptions or delays in the Company’s supply chains, or collect full payment on installations thereof; • local business practices that can present challenges to compliance with applicable anti-corruption and bribery laws; • difficulties in establishing market-appropriate pricing; • less accurate and/or less reliable box office reporting; • adverse changes in foreign government monetary and/or tax policies, and/or difficulties in repatriating cash from foreign jurisdictions (including with respect to China, where approval of the State Administration of Foreign Exchange is required); • poor recognition of intellectual property rights; • difficulties in enforcing contractual rights; • economic conditions in foreign markets, including inflation; 20 • public health concerns, including pandemics or epidemics, and regulations in response thereto, which could adversely affect the Company’s and its customers' operations; • requirements to provide performance bonds and letters of credit to international customers to secure system component deliveries; • harm to the IMAX brand from operating in countries with records of controversial government action, including human rights abuses; and • political, economic and social instability, which could result in adverse consequences for the Company’s interests in different regions of the world.
Dollar, potential currency devaluations, and imposition of foreign exchange controls in foreign jurisdictions; • difficulties in obtaining competitively priced key commodities, raw materials, and component parts from various international sources that are needed to manufacture quality products on a timely basis; • dependence on foreign distributors and their sales channels; • reliance on local partners, including in connection with joint revenue sharing arrangements; • difficulties in staffing and managing foreign operations; • inability to complete installations of IMAX Systems, including as a result of material disruptions or delays in the Company’s supply chains, or collect full payment on installations thereof; • local business practices that can present challenges to compliance with applicable anti-corruption and bribery laws; • difficulties in establishing market-appropriate pricing; • less accurate and/or less reliable box office reporting; • adverse changes in foreign government monetary and/or tax policies, and/or difficulties in repatriating cash from foreign jurisdictions (including with respect to China, where approval of the State Administration of Foreign Exchange is required); 21 Table of Contents • poor recognition of intellectual property rights; • difficulties in enforcing contractual rights; • economic conditions in foreign markets, including inflation; • public health concerns, including pandemics or epidemics, and regulations in response thereto, which could adversely affect the Company’s and its customers’ operations; • requirements to provide performance bonds and letters of credit to international customers to secure system component deliveries; • harm to the IMAX brand from operating in countries with records of controversial government action, including human rights abuses; and • political, economic and social instability, which could result in adverse consequences for the Company’s interests in different regions of the world.
While the Company periodically enters into forward contracts to hedge its exposure to exchange rate fluctuations between the U.S. and the Canadian Dollar, the Company may not be successful in reducing its exposure to these fluctuations.
While the Company periodically enters into forward contracts to hedge a portion of its exposure to exchange rate fluctuations between the U.S. and the Canadian Dollar, the Company may not be successful in reducing its exposure to these fluctuations.
The declining box-office performance of IMAX films could materially and adversely harm the Company’s business and prospects. 23 The Company may not be able to adequately protect its intellectual property, and competitors could misappropriate its technology or brand, which could weaken its competitive position.
The declining box office performance of IMAX films could materially and adversely harm the Company’s business and prospects. 24 Table of Contents The Company may not be able to adequately protect its intellectual property, and competitors could misappropriate its technology or brand, which could weaken its competitive position.
Moreover, the development and maintenance of these security measures may be costly and will require ongoing updates as technologies evolve and techniques to overcome the Company’s security measures become more sophisticated.
Moreover, the development and maintenance of these security measures may be costly and will require ongoing updates as technologies evolve and techniques to overcome the Company’s security measures 20 Table of Contents become more sophisticated.
An economic downturn, recession, significant increases in interest rates or other adverse economic developments could impact developers’ ability to secure financing on acceptable terms and complete the buildout of these locations, thereby negatively impacting the Company’s ability to install IMAX Systems, grow its theater network and collects its contractual revenue.
An economic downturn, recession, significant increases in interest rates or other adverse economic developments could impact developers’ ability to secure financing on acceptable terms and complete the build-out of these locations, thereby negatively impacting the Company’s ability to install IMAX Systems, grow its theater network and collect its contractual revenue.
Commercial theatrical exhibitors generate revenues from consumer attendance at their theaters, which depends on the willingness of consumers to visit movie theaters and spend discretionary income at movie theaters. In the event of declining box office and concession revenues, commercial exhibitors may be less willing to invest capital in IMAX Systems.
Commercial exhibitors generate revenues from consumer attendance at their theaters, which depends on the willingness of consumers to visit movie theaters and spend discretionary income at movie theaters. In the event of declining box office and concession revenues, or other economic headwinds, commercial exhibitors may be less willing to invest capital in IMAX Systems.
Initial fees generally make up the vast majority of cash received under IMAX System sales or sales-type lease agreements for a theater arrangement. For sale and sales-type leases, the revenue recorded is generally equal to the sum of initial fees and the present value of any future initial payments, and fixed minimum ongoing payments.
Initial fees generally make up the vast majority of cash received under IMAX System sales or sales-type lease agreements. For sale and sales-type leases, the revenue recorded is generally equal to the sum of initial fees and the present value of any future initial payments, and where applicable fixed minimum ongoing payments.
Additionally, given the global nature of the Company’s operations, any protracted conflict or the broader macroeconomic impact of geopolitical conflicts and sanctions imposed in response thereto, could have an adverse impact on the Company’s business, results of operations, financial condition, and future performance (the Company has 20 systems in its backlog from Russia, the CIS and Ukraine, and none from Israel) and may also magnify the impact of other risks described herein, including the risk of cybersecurity attacks, which may impact information technology systems unrelated to the conflict, or jeopardize critical infrastructure in jurisdictions where the Company operates.
Additionally, given the global nature of the Company’s operations, any protracted conflict or the broader macroeconomic impact of geopolitical conflicts and sanctions imposed in response thereto, have had and could continue to have an adverse impact on the Company’s business, results of operations, financial condition, and future performance (the Company has 11 systems in its backlog from Russia, the Confederation of Independent States (“CIS”) and Ukraine, and none from Israel) and may also magnify the impact of other risks described herein, including the risk of cybersecurity attacks, which may impact information technology systems unrelated to the conflict, or jeopardize critical infrastructure in jurisdictions where the Company operates.
The Company may not be aware of whether its products or services do or will infringe existing or future patents or the intellectual property rights of others.
The Company 25 Table of Contents may not be aware of whether its products or services do or will infringe existing or future patents or the intellectual property rights of others.
The sale and sales-type lease agreements for IMAX Systems typically provide for three major sources of cash flow: • initial fees, which are paid in installments generally commencing upon the signing of the agreement until installation of the IMAX System; 25 • ongoing fees, which are paid monthly after the IMAX System has been opened to the public and are generally equal to the greater of a fixed minimum amount per annum and a percentage of box office receipts; and • ongoing annual maintenance and extended warranty fees, which are generally payable commencing in the second year of theater operations.
The sale and sales-type lease agreements for IMAX Systems typically provide for three major sources of cash flow: • initial fees, which are paid in installments generally commencing upon the signing of the agreement until installation of the IMAX System; • ongoing fees, which are paid monthly after the IMAX System has been opened to the public and are generally equal to the greater of a fixed minimum amount per annum and a percentage of box office receipts; and • ongoing annual maintenance and extended warranty fees, which are generally payable annually or quarterly.
The climates and geology of some of the regions in which the Company’s principal offices are located, including California, present increased risks of adverse weather or natural disasters. Any such events in the future could disrupt the Company’s operations and impact the Company’s ability to serve its customers. Item 1B. Unreso lved Staff Comments None.
The 30 Table of Contents climates and geology of some of the regions in which the Company’s principal offices are located, including California, present increased risks of adverse weather or natural disasters. Any such events in the future could disrupt the Company’s operations and impact the Company’s ability to serve its customers. Item 1B. Unresolved Staff Comments None.
Moreover, a deterioration of the diplomatic relations between the United States or Canada and a given country may impede the Company’s ability to operate IMAX systems in such countries and have a negative impact on the Company’s financial condition and future growth prospects.
Moreover, a deterioration of the diplomatic relations between the United States or Canada and a given country may impede the Company’s ability to conduct business in such countries and have a negative impact on the Company’s financial condition and future growth prospects.
In particular, you should carefully consider the risk factors described below and the risks and uncertainties related to “Forward Looking Statements,” any of which could have a material adverse effect on the Company’s business, results of operations, financial condition and the actual outcome of matters as to which forward looking statements are made in this annual report.
In particular, you should carefully consider the risk factors described below and the risks and uncertainties discussed in “Special Note Regarding Forward-Looking Information,” any of which could have a material adverse effect on the Company’s business, results of operations and financial condition and on the actual outcome of matters as to which forward-looking statements are made in this annual report.
As of December 31, 2023, the Company’s backlog included 450 IMAX Systems, consisting of 164 IMAX Systems under sales or lease arrangements and 286 IMAX Systems under joint revenue sharing arrangements. The Company lists signed contracts for IMAX Systems for which revenue has not been recognized as backlog prior to the time of revenue recognition.
As of December 31, 2024, the Company’s backlog included 440 IMAX Systems, consisting of 164 IMAX Systems under sales or lease arrangements and 276 IMAX Systems under joint revenue sharing arrangements. The Company lists signed contracts for IMAX Systems for which revenue has not been recognized as backlog prior to the time of revenue recognition.
The following risk factors should be read in conjunction with the balance of this annual report, including the Consolidated Financial Statements and related notes. The risks described below are not the only ones the Company faces.
The following risk factors should be read in conjunction with the balance of this annual report, including the Consolidated Financial Statements and the “Notes to Consolidated Financial Statements.” The risks described below are not the only ones the Company faces.
Item 1A. Ri sk Factors Before you make an investment decision with respect to the Company’s common shares, you should carefully consider all of the information included in this Form 10-K and the Company’s subsequent periodic filings with the SEC.
Item 1A. Risk Factors 18 Table of Contents Before you make an investment decision with respect to the Company’s common shares, you should carefully consider all of the information included in this Form 10-K and the Company’s subsequent periodic filings with the SEC.
The Company’s indebtedness could have significant negative consequences for its security holders and its business, results of operations and financial condition by, among other things: • increasing its vulnerability to adverse economic and industry conditions; • limiting its ability to obtain additional financing; • requiring the dedication of a substantial portion of its cash flow from operations to service its indebtedness, which will reduce the amount of cash available for other purposes; • limiting its flexibility to plan for, or react to, changes in its business; • diluting the interests of its shareholders as a result of issuing common shares upon conversion of the 0.500% Convertible Senior Notes due 2026 (the “Convertible Notes”); and • placing the Company at a possible competitive disadvantage with competitors that are less leveraged than the Company or have better access to capital.
The Company’s indebtedness could have significant negative consequences for its security holders and its business, results of operations and financial condition by, among other things: • increasing its vulnerability to adverse economic and industry conditions; • limiting its ability to obtain additional financing; • requiring the dedication of a substantial portion of its cash flow from operations to service its indebtedness, which will reduce the amount of cash available for other purposes; • limiting its flexibility to plan for, or react to, changes in its business; • diluting the interests of its shareholders as a result of issuing common shares upon conversion of the Convertible Notes; • holders of the Convertible Notes may, subject to certain conditions, require the Company to repurchase their Convertible Notes following a fundamental change; and • placing the Company at a possible competitive disadvantage with competitors that are less leveraged than the Company or have better access to capital.
For example, according to research conducted by Omdia, there were approximately 42,000 conventional-sized screens in North American commercial multiplexes in 2022.
For example, according to research conducted by Omdia, there were approximately 39,000 conventional-sized screens in North American commercial multiplexes in 2023.
The terms of leases or financing receivables are typically 10 to 12 years.
The terms of leases or financing 26 Table of Contents receivables are typically 10 to 12 years.
Approximately 64%, 62%, and 70% of the Company’s revenues were derived outside of the United States and Canada in 2023, 2022 and 2021, respectively. As of December 31, 2023, approximately 78% of IMAX Systems in backlog are scheduled to be installed in international markets.
Approximately 58%, 64%, and 62% of the Company’s revenues were derived outside of the United States and Canada in 2024, 2023, and 2022, respectively. As of December 31, 2024, approximately 84% of IMAX Systems in backlog were scheduled to be installed in international markets.
Additionally, global geopolitical tensions, such as the Russia and Ukraine and Israel-Hamas Wars, and actions that governments take in response may adversely impact the Company’s ability to operate in such regions and/or result in global or regional economic downturns.
Additionally, global geopolitical tensions, such as the conflicts between Russia and Ukraine and in the Middle East, and actions that governments take in response may adversely impact the Company’s ability to operate in such regions and/or result in global or regional economic downturns.
In addition, it may be difficult for plaintiffs to bring an original action outside of the United States against the Company to enforce liabilities based solely on United States federal securities laws. RISKS RELATED TO THE COMPANY’S INDEBTEDNESS The credit agreement governing the Company’s senior secured credit facility contains significant restrictions that limit its operating and financial flexibility.
In addition, it may be difficult for plaintiffs to bring an original action outside of the United States against the Company to enforce liabilities based solely on United States federal securities laws. RISKS RELATED TO THE COMPANY’S INDEBTEDNESS The Company’s debt agreements contain significant restrictions that limit its operating and financial flexibility.
More information is provided in Critical Accounting Estimates within Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7. Regulatory and market responses to climate change concerns may negatively impact our business and increase our operating costs.
More information is provided in “Critical Accounting Estimates” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7. Regulatory and market responses to climate change concerns may negatively impact our business and increase our operating costs.
As of December 31, 2023 , the Company had approximately $389.5 million of consolidated indebtedness and liabilities. The Company may also incur additional indebtedness to meet future financing needs.
As of December 31, 2024, the Company had approximately $387.0 million of consolidated indebtedness and liabilities. The Company may also incur additional indebtedness to meet future financing needs.
The competition for experienced senior management in the Company’s industry is intense, and the Company may not find qualified replacements for any of these individuals if their services are no longer available on the same terms or at all.
The Company’s operations and prospects depend in large part on the performance and continued service of its senior management team. The competition for experienced senior management in the Company’s industry is intense, and the Company may not find qualified replacements for any of these individuals if their services are no longer available on the same terms or at all.
Changes in these rules, their interpretation, management’s estimates, or changes in the Company’s products or business could significantly change its reported future earnings and operating income and could add significant volatility to those measures, without a comparable underlying change in cash flow from operations.
GAAP and accompanying accounting pronouncements are highly complex and involve many subjective judgments. Changes in these rules, their interpretation, management’s estimates, or changes in the Company’s products or business could significantly change its reported future earnings and operating income and could add significant volatility to those measures, without a comparable underlying change in cash flow from operations.
For instance, Wanda is the Company’s largest exhibitor customer, representing approximately 10% of the Company’s total revenues in 2023. As of December 31, 2023, through the Company’s partnership with Wanda, there were 376 IMAX Systems operational in Greater China and Wanda represented approximately 21% of the commercial network and 4% of the Company’s backlog.
For instance, Wanda is the Company’s largest exhibitor customer, representing approximately 9% of the Company’s total revenues in 2024. As of December 31, 2024, through the Company’s partnership with Wanda, there were 384 IMAX Systems operational in Greater China and Wanda represented approximately 21% of the global network and 12% of the Company’s global backlog.
Such enhanced governmental and societal attention to climate matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change impacts, carbon emissions, water usage, waste management, and risk oversight, could expand the nature, scope, and complexity of matters that the Company is required to control, assess, and report.
Growing public concern about climate change and enhanced governmental attention to climate matters has resulted in expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change impacts, carbon emissions, water usage, waste management, and risk oversight and has expanded and may continue to expand the nature, scope, and complexity of matters that the Company is required to control, assess, and report.
Notwithstanding the legal obligation to do so, some of the Company’s customers with which it has signed contracts may not accept delivery of IMAX Systems that are included in the Company’s backlog. An economic or industry downturn may exacerbate the risk of customers not accepting delivery of IMAX Systems.
Notwithstanding their legal obligations, some of the Company’s exhibition customers with which it has signed contracts may be delinquent in their contractual payments and/or not accept delivery of IMAX Systems that are included in the Company’s backlog. An economic or industry downturn may exacerbate exhibition customer liquidity constraints and the risk of customers not accepting delivery of IMAX Systems.
These risks include: • new restrictions on access to markets, both for IMAX Systems and films; • unusual or burdensome foreign laws or regulatory requirements or unexpected changes to those laws or requirements, including censorship of content that may restrict what films the Company’s network can present; • fluctuations in the value of various foreign currencies versus the U.S.
These risks include: • new tariffs, trade protection measures, import or export licensing requirements, trade embargoes, sanctions, and other trade barriers, including but not limited to tariffs planned, implemented or threatened by the new U.S. administration and retaliatory responses thereto; • new restrictions on access to markets, both for IMAX Systems and films; • unusual or burdensome foreign laws or regulatory requirements or unexpected changes to those laws or requirements, including censorship of content that may restrict what films the Company’s network can present; • fluctuations in the value of various foreign currencies versus the U.S.
The total value of the backlog represents all signed IMAX System sale or lease agreements that are expected to be recognized as revenue in the future and includes initial fees along with the estimated present value of contractual ongoing fees due over the term, and a variable consideration estimate for the IMAX Systems under sales arrangements, but it excludes amounts allocated to maintenance and extended warranty revenues.
The total value of the backlog represents all binding IMAX System sale or lease agreements scheduled to be installed in the future. Backlog value includes initial fees along with the estimated present value of contractual ongoing fees due over the term, but excludes any variable consideration estimates and amounts allocated to maintenance and extended warranty revenues.
Sales arrangements also include an estimate of future variable consideration due under the agreement. Cash received from initial fees in advance of meeting the revenue recognition criteria for the IMAX Systems is recorded as deferred revenue. Leases that do not transfer substantially all of the benefits and risks of ownership to the customer are classified as operating leases.
Revenue recorded for sales arrangements may also include an estimate of future variable consideration due under the agreement. Cash received from initial fees in advance of meeting the revenue recognition criteria for the IMAX Systems is recorded as deferred revenue.
As a result, the Company’s future revenues and cash flows could be adversely affected. The Company may be subject to impairment losses on its film assets if such assets do not meet management’s estimates of total revenues.
The Company has been and may continue to be subject to impairment losses on its film assets if such assets do not meet management’s estimates of total revenues.
If the Company does business with Wanda or other large exhibitor chains less frequently or on less favorable terms than currently, the Company’s business, financial condition or results of operations may be adversely affected.
If the Company does business with Wanda or other large exhibitor chains less frequently or on less favorable terms than currently, the Company’s business, financial condition or results of operations may be adversely affected. In 23 Table of Contents addition, an adverse economic impact on a significant customer’s business operations could have a corresponding material adverse effect on the Company.
Goodwill is required to be qualitatively assessed at least annually and when events or changes in circumstances arise or can be quantitatively tested for impairment.
GAAP”), the Company reviews its long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be qualitatively assessed at least annually and when events or changes in circumstances arise or can be quantitatively tested for impairment.
Customer-requested delays in the installation of IMAX Systems in backlog remain a recurring and unpredictable part of the Company’s business. The Company’s inability to enter into renewals of new sales and lease agreements on favorable terms or at all would adversely affect its cash flows and operating results.
Any reduction or change in backlog could adversely affect the Company’s future revenues and cash flows. The Company’s inability to enter into renewals of new sales and lease agreements on favorable terms or at all would adversely affect its cash flows and operating results.
In addition, there can be no assurance that one or more of The Company’s competitors who have developed competing technologies or the Company’s other competitors will not be granted patents for their technology and allege that the Company has infringed. 24 Any claims that the Company’s business infringes the intellectual property rights of others, regardless of the merit or resolution of such claims, could entail significant costs in responding to, defending, and resolving such claims.
In addition, there can be no assurance that one or more of the Company’s competitors who have developed competing technologies or the Company’s other competitors will not be granted patents for their technology and allege that the Company has infringed.
The Company’s revenue under its joint revenue sharing arrangements, a portion of the Company’s payments under lease or sales arrangements and its film distribution fees are based upon financial reporting provided by its customers. If such reporting is inaccurate, incomplete, or withheld, the Company’s ability to receive the appropriate payments it is owed in a timely fashion may be impaired.
The Company’s revenue under its joint revenue sharing arrangements, a portion of the Company’s payments under lease or sales arrangements and its film distribution fees are based upon financial reporting provided by its customers.
The worsening of United States–China political tensions could exacerbate any or all of these risks, and adverse developments in any of these areas could impact the Company’s future revenues and cash flows and could cause the Company to fail to achieve anticipated growth. 21 The Company does not believe that it is currently required to obtain any permission or approval from the China Securities Regulatory Commission, the Cyberspace Administration of China or any other regulatory authority in the PRC for its operations, but there can be no assurance that such permissions or approvals would not be required in the future and, if required, that they would be granted in a timely manner, on acceptable terms, or at all.
There are no guarantees that such financial difficulties will not continue, or that partner delays or failures to meet contractual obligations will not occur in the future, adversely impacting the Company’s future revenues and cash flows. 22 Table of Contents The Company does not believe that it is currently required to obtain any permission or approval from the China Securities Regulatory Commission, the Cyberspace Administration of China or any other regulatory authority in the People’s Republic of China (“PRC”) for its operations, but there can be no assurance that such permissions or approvals would not be required in the future and, if required, that they would be granted in a timely manner, on acceptable terms, or at all.
The Company may be required to record a significant charge to earnings in its financial statements during the period in which any impairment of its goodwill or long-lived assets is determined. 27 RISKS RELATED TO THE COMPANY’S COMMON SHARES The market price for the Company’s common shares has historically been volatile and declines in market price, may negatively affect its ability to raise capital, issue debt, secure customer business, and retain employees.
RISKS RELATED TO THE COMPANY’S COMMON SHARES The market price for the Company’s common shares has historically been volatile and declines in market price, may negatively affect its ability to raise capital, issue debt, secure customer business, and retain employees.
As a result of the above, the revenue set forth in the Company’s Consolidated Financial Statements does not necessarily correlate with the Company’s cash flow or cash position.
Contingent payments in excess of fixed minimum ongoing payments are recognized as revenue when reported by theater operators, provided collectability is reasonably assured. As a result of the above, the revenue set forth in the Company’s Consolidated Financial Statements does not necessarily correlate with the Company’s cash flow or cash position.
If the Company’s goodwill or long-lived assets become impaired, the Company may be required to record a significant charge to earnings. Under United States Generally Accepted Accounting Principles (“U.S. GAAP”), the Company reviews its long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
If the Company experiences high attrition rates in its employee population, the results of our operations may be adversely affected. If the Company’s goodwill or long-lived assets become impaired, the Company may be required to record a significant charge to earnings. Under United States Generally Accepted Accounting Principles (“U.S.
In addition, an adverse economic impact on a significant customer’s business operations could have a corresponding material adverse effect on the Company. 22 The Company also receives revenues from studios releasing IMAX films. Hollywood studios have also experienced consolidation, as evidenced by the Walt Disney Company’s acquisition of certain studio assets from Twenty First Century Fox in 2019.
The Company also receives revenues from studios releasing IMAX films. Hollywood studios have also experienced consolidation, as evidenced by Disney’s acquisition of certain studio assets from Twenty First Century Fox in 2019 and the expected acquisition of Paramount by Skydance.
However, there can be no assurance that direct or concurrent release to streaming services will not resume or increase in the future, intensifying in-home competition. The Company further competes for the public’s leisure time and disposable income with other forms of entertainment, including gaming, sporting events, concerts, live theater, social media, and restaurants.
The Company further competes for the public’s leisure time and disposable income with other forms of entertainment, including gaming, sporting events, concerts, live theater, social media, and restaurants.
The Company’s contractual ability to audit IMAX locations may not rectify payments lost or delayed as a result of customers not fulfilling their contractual obligations with respect to financial reporting. 26 There is collection risk associated with payments to be received over the terms of the Company’s IMAX System agreements.
If such reporting is inaccurate, incomplete, or withheld, the Company’s ability to receive the appropriate payments it is owed in a timely fashion may be 27 Table of Contents impaired. The Company’s contractual ability to audit IMAX locations may not rectify payments lost or delayed as a result of customers not fulfilling their contractual obligations with respect to financial reporting.
As of December 31, 2023, the Company had 807 IMAX Systems operating in Greater China with an additional 206 systems in backlog, which represent 46% of the Company’s current backlog.
The Company faces risks in connection with its significant presence in China and the continued expansion of its business there. As of December 31, 2024, the Company had 809 IMAX Systems operating in Greater China with an additional 237 systems in backlog, which represent 54% of the Company’s current backlog.
The majority of the Company’s revenue is directly derived from the box office results of its exhibitor partners. Accordingly, a decline in attendance at commercial IMAX locations could materially and adversely affect several sources of key revenue streams for the Company.
Accordingly, a decline in attendance at commercial IMAX locations could materially and adversely affect several sources of key revenue streams for the Company. The Company also depends on the sale, lease and installation of IMAX Systems to commercial exhibitors to generate revenue.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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With respect to cybersecurity, the Company’s Chief Technology Officer (“CTO”) and Head of Information Security updates the Audit Committee on at least an annual basis on matters such as external cybersecurity threats and attack trends; updates to threat monitoring processes; the composition of the Company’s information security team; cybersecurity awareness training and testing; cybersecurity strategy; cybersecurity metrics, and assessments the progress of cybersecurity programs; and the potential scope and impact of cybersecurity risks and incidents on the Company’s operations and financial condition.
With respect to cybersecurity, the Company’s Chief Technology Officer (“CTO”) and Head of Information Security updates the Audit Committee on at least an annual basis on matters such as external cybersecurity threats and attack trends; updates to threat monitoring processes; the composition of the Company’s information security team; cybersecurity awareness training and testing; cybersecurity strategy; cybersecurity metrics, and assessments 31 Table of Contents the progress of cybersecurity programs; and the potential scope and impact of cybersecurity risks and incidents on the Company’s operations and financial condition.
The Company’s current Head of Information Securities has over 20 years of experience in cybersecurity roles, including in cybersecurity engineering, information security assessment, and development and management of corporate security policies and governance problems. 32
The Company’s current Head of Information Security has over 20 years of experience in cybersecurity roles, including in cybersecurity engineering, information security assessment, and development and management of corporate security policies and governance problems.
The Company aligns its security policies and practices with the ISO 27001 framework and manages its cybersecurity risks through a dedicated information security team, reporting to Mr. Preston. The information security team is tasked with, among other things, assessing, identifying and managing material cybersecurity risks and overseeing the implementation of the Company’s cybersecurity strategy.
The Company aligns its security policies and practices with the ISO 27001 framework and manages its cybersecurity risks through a dedicated information security team, reporting to the Head of Information Security. The information security team is tasked with, among other things, assessing, identifying and managing material cybersecurity risks and overseeing the implementation of the Company’s cybersecurity strategy.
More information on how material cybersecurity attacks may impact the Company’s business is provided in “Item 1A. Risk Factors”. Cybersecurity Risk Management Framework The Company employs a multi-faceted cybersecurity risk management framework, which is integrated into its enterprise risk management system.
More information on how material cybersecurity attacks may impact the Company’s business is provided in “Item 1A. Risk Factors ”. CYBERSECURITY RISK MANAGEMENT FRAMEWORK The Company employs a multi-faceted cybersecurity risk management framework, which is integrated into its enterprise risk management system.
The CTO and Head of Information Security update the Audit Committee about cybersecurity risks and any investigation of a material cybersecurity incident. The Company’s current CTO has over 20 years of experience in senior technology leadership roles, involving oversight of all aspects of technology development and technical operations, including cybersecurity.
The Company’s current CTO has over 20 years of experience in senior technology leadership roles, involving oversight of all aspects of technology development and technical operations, including cybersecurity.
Furthermore, the information security team develops and provides cybersecurity awareness training to the Company’s employees and regularly communicates updates on best cybersecurity practices and improvements in the cybersecurity program. The Company may use third-party programs and software and engage assessors, consultants, cybersecurity auditors, or other third parties to review, test, and advise on improvements to the Company’s cybersecurity infrastructure.
The Company may use third-party programs and software and engage assessors, consultants, cybersecurity auditors, or other third parties to review, test, and advise on improvements to the Company’s cybersecurity infrastructure.
Management presents the Company’s risk assessment, which includes its cybersecurity risks, to the Audit Committee on at least an annual basis. The Chief Technology Officer (“CTO”) leads management’s assessment and management of cybersecurity risks.
Management presents the Company’s risk assessment, which includes its cybersecurity risks, to the Audit Committee on at least an annual basis. The CTO leads management’s assessment and management of cybersecurity risks. The Company’s Head of Information Security leads the information security team, which is responsible for managing day-to-day cybersecurity risks and implementing and maintaining the Company’s cybersecurity strategy.
The Company’s Head of Information Security leads the information security team, which is responsible for managing day-to-day cybersecurity risks and implementing and maintaining the Company’s cybersecurity strategy. The Head of Information Security reports to and regularly briefs the CTO on cybersecurity matters, including results of vulnerability testing and remediation, cyber incident responses, and progress on cybersecurity infrastructure initiatives.
The Head of Information Security reports to and regularly briefs the CTO on cybersecurity matters, including results of vulnerability testing and remediation, cyber incident responses, and progress on cybersecurity infrastructure initiatives. The CTO and Head of Information Security update the Audit Committee about cybersecurity risks and any investigation of a material cybersecurity incident.
The information security team 31 periodically reviews key vendors and counterparties’ cybersecurity practices and may conduct audits or assessments at its discretion. In addition, the Company has established clear lines of communication with key stakeholders, including executives, IT teams, employees, and customers, to ensure transparency and an effective response to cybersecurity incidents.
In addition, the Company has established clear lines of communication with key stakeholders, including executives, IT teams, employees, and customers, to ensure transparency and an effective response to cybersecurity incidents. Furthermore, the information security team develops and provides cybersecurity awareness training to the Company’s employees and regularly communicates updates on best cybersecurity practices and improvements in the cybersecurity program.
The Company’s cybersecurity risk management includes, but is not limited to, the following elements. • Risk Identification and Assessment: o The team conducts periodic risk assessments, which includes penetration testing and vulnerability scanning, on the Company’s Information Technology (IT) infrastructure, systems, and networks to identify potential vulnerabilities, weaknesses, and risks, and evaluates the potential impact of cybersecurity risks on the Company’s operations, financials, and business. • Risk Mitigation Measures: o The team implements and maintains a multi-layered defense approach to safeguard the Company’s information technology infrastructure in accordance with industry best practices and updates the Company’s systems and software to address identified vulnerabilities.
Risk Identification and Assessment The information security team conducts periodic risk assessments, which includes penetration testing and vulnerability scanning, on the Company’s Information Technology (“IT”) infrastructure, systems, and networks to identify potential vulnerabilities, weaknesses, and risks, and evaluates the potential impact of cybersecurity risks on the Company’s operations, financials, and business.
The Company has also developed an incident response and disaster recovery plan to respond to cybersecurity incidents. • Vendor Risk Management: o The Company evaluates the risk profile of its third-party service providers and may include cybersecurity enhancement or compliance requirements in its service agreements, as needed.
Vendor Risk Management The Company evaluates the risk profile of its third-party service providers and may include cybersecurity enhancement or compliance requirements in its service agreements, as needed. The information security team periodically reviews key vendors and counterparties’ cybersecurity practices and may conduct audits or assessments at its discretion.
Added
The Company’s cybersecurity risk management includes, but is not limited to, the following elements.
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Risk Mitigation Measures The information security team implements and maintains a multi-layered defense approach to safeguard the Company’s information technology infrastructure in accordance with industry best practices and updates the Company’s systems and software to address identified vulnerabilities. The Company has also developed an incident response and disaster recovery plan to respond to cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

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As of December 31, 2023, the Company’s principal facilities are as follows: Operation Own/Lease Expiration Mississauga, Ontario (1) Headquarters, Administrative, Assembly, Research and Development, and Maintenance Services Own N/A Playa Vista, California Sales, Marketing, Film Production and Post-Production Own N/A New York, New York Executive Lease 2029 Tokyo, Japan Sales, Marketing, and Maintenance Services Lease 2024 Shanghai, China Sales, Marketing, Maintenance Services, and Administrative Lease 2029 Waterloo, Ontario Sales, Marketing, Administrative, and Research and Development Lease 2024 Dublin, Ireland Sales, Marketing, Administrative, and Research and Development Lease 2026 London, United Kingdom Sales Lease 2024 (1) This facility is subject to a charge in favor of Wells Fargo Bank in connection with a secured revolving credit facility.
As of December 31, 2024, the Company’s principal facilities are as follows: Operation Own/Lease Expiration Mississauga, Ontario (1) Headquarters, Administrative, Assembly, Research and Development, and Maintenance Services Own N/A Playa Vista, California Sales, Marketing, Film Production and Post-Production Own N/A New York, New York Executive Lease 2029 Tokyo, Japan Sales, Marketing, and Maintenance Services Lease 2025 Shanghai, China Sales, Marketing, Maintenance Services, and Administrative Lease 2029 Waterloo, Ontario Sales, Marketing, Administrative, and Research and Development Lease 2025 Dublin, Ireland Sales, Marketing, Administrative, and Research and Development Lease 2026 London, United Kingdom Sales Lease 2025 (1) This facility is subject to a charge in favor of Wells Fargo Bank in connection with a secured revolving credit facility.
Item 2. P roperties The Company’s principal executive offices are located in Mississauga, Ontario, Canada, New York, New York, and Playa Vista, California.
Item 2. Properties The Company’s principal executive offices are located in Mississauga, Ontario, Canada, New York, New York, and Playa Vista, California.
More information is provided in Note 14 to Consolidated Financial Statements in Part II, Item 8. The Company believes that its existing facilities and equipment are in good operating condition and are suitable for the conduct of its business. Item 3. Legal Proceedings Refer to Note 16 to Consolidated Financial Statements in Part II, Item 8. Item 4.
More information is provided in Note 13 to “Consolidated Financial Statements” in Part II, Item 8. The Company believes that its existing facilities and equipment are in good operating condition and are suitable for the conduct of its business. Item 3. Legal Proceedings Refer to Note 15 to “Consolidated Financial Statements” in Part II, Item 8.
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Mine Saf ety Disclosures Not applicable. 33 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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This program will be valid until the 2024 Annual General Meeting of IMAX China. The repurchases may be made in the open market or through other means permitted by applicable laws. IMAX China has no obligation to repurchase its shares and the share repurchase program may be suspended or discontinued by IMAX China at any time.
This program will be valid until the 2025 Annual General Meeting of IMAX China. The repurchases may be made in the open market or through other means permitted by applicable laws. IMAX China has no obligation to repurchase its shares and the share repurchase program may be suspended or discontinued by IMAX China at any time.
As of December 31, 2023 and December 31, 2022, the IMAX LTIP trustee did not hold any shares. Any shares held with the trustee are recorded at cost and are reported as a reduction against Capital Stock on the Company's Consolidated Balance Sheets.
As of December 31, 2024 and December 31, 2023, the IMAX LTIP trustee did not hold any shares. Any shares held with the trustee are recorded at cost and are reported as a reduction against Capital Stock on the Company’s Consolidated Balance Sheets.
The IMAX Peer Group consists of Ambarella, Inc., Cinemark Holdings, Inc., Cineplex Inc., Dolby Laboratories, Inc., Harmonic Inc., Knowles Corporation, Lions Gate Entertainment Corp., The Marcus Corporation, and WildBrain Ltd. The performance period includes the COVID-19 pandemic, which significantly impacted the out-of-home entertainment industry.
The IMAX Peer Group consists of Ambarella, Inc., Cinemark Holdings, Inc., Cineplex Inc., Corsair Gaming, Inc., Dolby Laboratories, Inc., fuboTV Inc., Harmonic Inc., Knowles Corporation, Lions Gate Entertainment Corp., The Marcus Corporation, WildBrain Ltd., and Xperi Inc. The performance period includes the COVID-19 pandemic, which significantly impacted the out-of-home entertainment industry.
In 2023, the Company’s Board approved a 36-month extension to its share repurchase program through June 30, 2026. As of December 31, 2023, the Company had $167.0 million authorized for repurchase under its approved share repurchase program.
In 2023, the Company’s Board approved a 36-month extension to its share repurchase program through June 30, 2026. As of December 31, 2024, the Company had $150.7 million authorized for repurchase under its approved share repurchase program.
The impact of the pandemic on the Company’s operations are discussed elsewhere herein. 35 Issuer Purchases of Equity Securities On June 12, 2017, the Company announced that the Board approved a $200.0 million share repurchase program for its common shares that would have initially expired on June 30, 2020, which was subsequently extended and increased in the total share repurchase authority to $400.0 million.
Issuer Purchases of Equity Securities In 2017, the Company announced that the Board approved a $200.0 million share repurchase program for its common shares that would have initially expired on June 30, 2020, which was subsequently extended and increased in the total share repurchase authority to $400.0 million.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters, and Issuer Purchases of Equity Securities The Company’s common shares are traded on the NYSE under the symbol “IMAX”. As of January 31, 2024, the Company had approximately 231 registered holders of record of its common shares.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common shares are traded on the NYSE under the symbol “IMAX.” As of January 31, 2025, the Company had approximately 225 registered holders of record of its common shares.
This program expired on the date of the 2023 Annual General Meeting of IMAX China on June 7, 2023. During the 2023 Annual General Meeting, shareholders approved the repurchase of shares of IMAX China not to exceed 10% of the total number of shares as of June 7, 2023 (33,959,314 shares).
This program expired on the date of the 2024 Annual General Meeting of IMAX China on June 7, 2024. During the 2024 Annual General Meeting, shareholders approved the repurchase of shares of IMAX China not to exceed 10% of the total number of shares as of June 7, 2024 (34,000,845 shares).
The payment of any future dividends will be determined by the Board in light of conditions then existing, including the Company’s financial condition and requirements, future prospects, restrictions in financing agreements, business conditions and other factors deemed relevant by the Board.
The payment of dividends by the Company is subject to certain restrictions under the terms of the Company’s indebtedness (see Note 13 to “Consolidated Financial Statements” in Part II, Item 8.) The payment of any future dividends will be determined by the Board in light of conditions then existing, including the Company’s financial condition and requirements, future prospects, restrictions in financing agreements, business conditions and other factors deemed relevant by the Board.
The Company’s common share repurchase program activity for the three months ended December 31, 2023 was as follows: Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Maximum value of shares that may yet be purchased under the program October 1 through October 31, 2023 350,058 $ 17.89 350,058 $ 184,936,439 November 1 through November 30, 2023 715,080 16.76 715,080 172,950,160 December 1 through December 31, 2023 394,810 14.96 394,810 167,042,020 Total 1,459,948 $ 16.54 1,459,948 In 2022, IMAX China’s shareholders granted its Board of Directors (the “IMAX China Board”) a general mandate authorizing the IMAX China Board, subject to applicable laws, to repurchase shares of IMAX China not to exceed 10% of the total number of issued shares as of June 23, 2022 (34,063,480 shares).
The Company’s common share repurchase program activity for the three months ended December 31, 2024 was as follows: Three Months Ended December 31, 2024 Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Maximum value of shares that may yet be purchased under the program October 1 through October 31, 2024 — $ — — $ 150,720,352 November 1 through November 30, 2024 — — — 150,720,352 December 1 through December 31, 2024 — — — 150,720,352 Total — $ — — In 2023, IMAX China’s shareholders granted its Board of Directors (the “IMAX China Board”) a general mandate authorizing the IMAX China Board, subject to applicable laws, to repurchase shares of IMAX China not to exceed 10% of the total number of issued shares as of June 7, 2023 (33,959,314 shares).
A summary of the material terms and conditions of the Company’s revolving credit facility, which include a limitation of the amount of permitted share repurchases, is provided in Note 14 to Consolidated Financial Statements in Part II, Item 8. Issuer Sales of Unregistered Securities Refer to Note 17(c) to Consolidated Financial Statements in Part II, Item 8. Item 6.
A summary of the material terms and conditions of the Company’s revolving credit facility, which includes a limitation of the amount of permitted share repurchases, is provided in Note 13 to “Consolidated Financial Statements” in Part II, Item 8.
The Company has no obligation to repurchase shares and the share repurchase program may be suspended or discontinued by the Company at any time.
The Company has no obligation to repurchase shares and the 34 Table of Contents share repurchase program may be suspended or discontinued by the Company at any time. During the three months ended December 31, 2024, the Company did not repurchase any common shares.
During the three months ended December 31, 2023, IMAX China repurchased 16,800 common shares at an average price of HKD 7.11 per share ($0.91 per share) for a total of HKD 0.1 million or less than $0.1 million. For the years ended December 31, 2023 and 2022, there were no shares purchases in the administration of employee share-based plans.
During the three months ended December 31, 2024, IMAX China did not repurchase any common shares. For the years ended December 31, 2024 and 2023, there were no share purchases in the administration of employee share-based plans.
At the conclusion of the three-year performance period, the number of PSUs that ultimately vest can range from 0% to a maximum vesting opportunity of 175% of the initial Adjusted EBITDA PSU award or 150% of the initial TSR PSU award depending upon actual performance versus the established Adjusted EBITDA and TSR, respectively.
At the conclusion of the three-year performance period, the number of PSUs that ultimately vest can range from 0% to a maximum vesting opportunity of 175% of the initial Adjusted EBITDA PSU award or 150% of the initial TSR PSU award depending upon actual performance versus the established Adjusted EBITDA and TSR, respectively. 33 Table of Contents Performance Graph The following graph compares the total cumulative shareholder return for $100 invested on December 31, 2019 (assuming that all dividends were reinvested) in common shares of the Company against the cumulative total return of the NYSE Composite Index, the S&P/TSX Composite Index and the IMAX Peer Group to the end of the most recently completed fiscal year.
Over the last few years, the Company has not paid, nor does the Company have any current plans to pay, cash dividends on its common shares. The payment of dividends by the Company is subject to certain restrictions under the terms of the Company’s indebtedness (see Note 14 to Consolidated Financial Statements in Part II, Item 8).
The Company has not paid, nor does the Company have any current plans to pay, cash dividends on its common shares.
Removed
Equity Compensation Plans The following table sets forth information regarding the Company’s Equity Compensation Plan as of December 31, 2023: (A) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (2) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A)) Plan Category Equity compensation plans approved by security holders 5,538,873 $ 15.77 4,895,941 Equity compensation plans not approved by security holders nil nil nil Total (1) 5,538,873 $ 15.77 4,895,941 (1) The number of securities to be issued upon exercise of outstanding options, warrants, and rights excludes 668,708 common shares that may be issued with respect to PSUs outstanding, assuming full achievement of the Adjusted EBITDA and TSR targets.
Added
The impact of the pandemic on the Company’s operations are discussed elsewhere herein.
Removed
(2) The weighted average exercise price is calculated based solely on outstanding stock options and does not take into account common shares that are subject to outstanding RSUs and PSUs, which do not have an exercise price. 34 Performance Graph The following graph compares the total cumulative shareholder return for $100 invested on December 31, 2018 (assuming that all dividends were reinvested) in common shares of the Company against the cumulative total return of the NYSE Composite Index, the S&P/TSX Composite Index and the IMAX Peer Group to the end of the most recently completed fiscal year.
Added
Issuer Sales of Unregistered Securities Refer to “Capital Stock — Shared-Based Compensation ” in Note 16 to “Consolidated Financial Statements” in Part II, Item 8.
Removed
During the three months ended December 31, 2023, the Company repurchased 1,459,948 common shares at an average price of $16.55 per share, for a total of $24.2 million, excluding commissions, of which 108,393 were common shares where settlement occurred subsequent to December 31, 2023, at an average price of $14.98 per share, for a total of $1.6 million, excluding commission.
Removed
Subsequent to December 31, 2023 and through February 26, 2024, the Company completed repurchases through a 10b5-1 program of 1,158,724 shares at an average of $13.99 per share, for a total cost of $16.2 million, excluding commission.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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As a premier global technology platform for entertainment and events, the Company strives to remain at the forefront of advancements in entertainment technology. The Company offers a suite of laser-based digital projection systems (“IMAX Laser Systems”), which deliver increased resolution, sharper and brighter images, deeper contrast, and the widest range of colors available to filmmakers today.
As a premier global technology platform for entertainment and events, the Company strives to remain at the forefront of advancements in technology. The Company offers a suite of laser-based digital projection systems (“IMAX Laser Systems”), which deliver increased resolution, sharper and brighter images, deeper contrast, and the widest range of colors available to filmmakers today.
The backlog reflects the minimum number of commitments for IMAX Systems according to the 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 Systems and the settlement of contracts, both of which reduce backlog.
The backlog reflects the minimum number of commitments for IMAX Systems according to 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 Systems and the settlement of contracts, both of which reduce backlog.
Content Solutions Content Solutions segment results are influenced by the level of commercial success and box office performance of the films and other content released to the IMAX network, as well as other factors including the timing of the releases, the length of play across the IMAX network, the box office share take rates under the Company’s film remastering and distribution arrangements, the level of marketing spend associated with the releases in the year and the fluctuations in the value of foreign currencies versus the U.S.
Content Solutions Content Solutions segment results are influenced by the level of commercial success and box office performance of the films and other content released to the IMAX network, as well as other factors including the timing of the releases, the length of play across the IMAX network, the box office share take rates under the Company’s Film Remastering and distribution arrangements, the level of marketing spend associated with the releases in the year, and fluctuations in the value of foreign currencies versus the U.S.
IMAX Systems provide the Company’s exhibitor customers with a combination of the following benefits: • the ability to exhibit content that has been enhanced through the IMAX Film Remastering, 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 auditorium 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 auditorium equipped with an IMAX System; • specialized theater acoustics, which result in a four-fold reduction in background noise; • ongoing maintenance and extended warranty services; and • a license to the globally recognized IMAX brand as well as benefits from IMAX marketing of films being shown in its network and IMAX’s growing social media followership.
IMAX Systems provide the Company’s exhibitor customers with a combination of the following benefits: • the ability to exhibit content that has been enhanced through the IMAX Film Remastering 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 auditorium 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 auditorium equipped with an IMAX System; • specialized theater acoustics, which result in a four-fold reduction in background noise than conventional cinema experiences; • ongoing maintenance and extended warranty services; and • a license to the globally recognized IMAX brand, as well as benefits from IMAX marketing of films being shown in its network and IMAX’s growing social media followership.
IMAX Enhanced provides end-to-end premium technology across streaming content and best-in-class entertainment devices, offering consumers high-fidelity playback of image and sound in the home and beyond, including the following features: • IMAX’s expanded aspect ratio, which is available on select titles and streaming platforms, including Disney+; • IMAX’s proprietary remastering technology, which produces more vivid, higher-fidelity 4K HDR images on premium televisions; and • IMAX’s signature sound, which was specially recreated and calibrated for the home to unlock more immersive audio.
IMAX Enhanced provides end-to-end premium technology across streaming content and best-in-class entertainment devices, offering consumers high-fidelity playback of image and sound in the home and beyond, including the following features: • IMAX’s expanded aspect ratio, which is available on select titles and streaming platforms; • IMAX’s proprietary remastering technology, which produces more vivid, higher-fidelity 4K HDR images on premium televisions; and • IMAX’s signature sound, which was specially recreated and calibrated for the home to unlock more immersive audio.
Variable consideration related to indexed minimum payment increases is outside of the Company’s control, but the movement in the rates is historically well documented and economic trends in inflation are easily accessible. Accordingly, for each contract subject to an indexed minimum payment increase, the Company estimates the most likely amount using published indices.
Variable consideration related to indexed minimum payment increases is outside of the Company’s control, but the movement in the rates is historically well documented and economic trends in inflation are easily accessible. Accordingly, for each contract subject to an indexed minimum payment increase, the Company estimates the most likely amount using published indices, subject to collectability.
Such variable consideration is only recognized on sales transactions to the extent the Company believes there is not a risk of significant revenue reversal. Finance income is recognized over the term of a financed sale or sales-type lease arrangement. 41 In sale arrangements, title to the IMAX System equipment generally transfers to the customer.
Such variable consideration is only recognized on sales transactions to the extent the Company believes there is not a risk of significant revenue reversal. Finance income is recognized over the term of a financed sale or sales-type lease arrangement. In sale arrangements, title to the IMAX System equipment generally transfers to the customer.
If management made different estimates or judgments, material differences in the fair values of the net assets acquired may result. 49 The estimates of fair value are based on assumptions believed to be reasonable at that time. If management made different estimates or judgments, material differences in the fair values of the net assets acquired may result.
If management made different estimates or judgments, material differences in the fair values of the net assets acquired may result. The estimates of fair value are based on assumptions believed to be reasonable at that time. If management made different estimates or judgments, material differences in the fair values of the net assets acquired may result.
Additionally, the non-GAAP financial measures used by the Company should not be considered in isolation, or as a substitute for, or superior to, the comparable GAAP amounts. 63
Additionally, the non-GAAP financial measures used by the Company should not be considered in isolation, or as a substitute for, or superior to, the comparable GAAP amounts.
To be certified as IMAX Enhanced, leading consumer electronics manufacturers spanning 4K/8K televisions, projectors, A/V receivers, loudspeakers, soundbars, smartphones, personal computers, tablets, and more must meet a carefully prescribed set of audiovisual performance standards, set by a certification committee, along with some of Hollywood's leading technical specialist.
To be certified as IMAX Enhanced, leading consumer electronics manufacturers spanning 4K/8K televisions, projectors, A/V receivers, loudspeakers, soundbars, smartphones, personal computers, tablets, and more must meet a carefully prescribed set of audiovisual performance standards, set by a certification committee, along with some of Hollywood’s leading technical specialists.
Technology Products and Services The Technology Product and Services segment earns revenue principally from the sale or lease of IMAX Systems, as well as from the maintenance of IMAX Systems. To a lesser extent, the Technology Product and Services segment also earns revenue from certain ancillary theater business activities, including after-market sales of IMAX System parts and 3D glasses.
Technology Products and Services The Technology Products and Services segment earns revenue principally from the sale or lease of IMAX Systems, as well as from the maintenance of IMAX Systems. To a lesser extent, the Technology Products and Services segment also earns revenue from certain ancillary theater business activities, including after-market sales of IMAX Systems parts and 3D glasses.
Streaming Technology consists of several software products including: • IMAX Stream Smart – works within existing video compression workflows to reduce bitrates and retain picture quality across all devices and formats and deliver significant cost savings. • IMAX StreamAware On-Demand – all-in-one quality assurance and quality control to automate and standardize checks for comprehensive content integrity and regulatory compliance for third-party content libraries, across an entire video compression workflow. • IMAX StreamAware On-Air – real-time monitoring software for live streams, which enables users to monitor video quality across their networks and to identify and address streaming issues.
Streaming Technology consists of several software products including: • IMAX StreamSmart – works within existing video compression workflows to reduce bitrates and retain picture quality across all devices and formats and deliver significant cost savings for both on-demand and live content. • IMAX StreamAware On-Demand – all-in-one quality assurance and quality control to automate and standardize checks for comprehensive content integrity and regulatory compliance for third-party content libraries, across an entire video compression workflow. • IMAX StreamAware On-Air – real-time monitoring software for live streams, which enables users to monitor video quality across their networks and to identify and address streaming issues.
The Company’s activities that do not meet the criteria to be considered a reportable segment are disclosed within All Other. Additional information is provided in Note 21 to the Consolidated Financial Statements in Part II, Item 8.
The Company’s activities that do not meet the criteria to be considered a reportable segment are disclosed within All Other. Additional information is provided in Note 20 to the Consolidated Financial Statements in Part II, Item 8.
The average revenue and gross margin per IMAX System under sale and sales-type lease arrangements varies depending upon the number of IMAX System commitments with a single respective exhibitor, an exhibitor’s location, the type of system sold and various other factors.
The average revenue and gross margin per IMAX System under sale and sales-type lease arrangements vary depending upon the number of IMAX System commitments with a single respective exhibitor, an exhibitor’s location, the type of IMAX System sold, and various other factors.
The Company also provides film post-production and quality control services for large-format films, whether produced by IMAX or third parties, and digital post-production services. In addition, the Company also provides IMAX film and digital cameras to content creators under the IMAX certified camera program.
The Company provides film post-production and quality control services for films, whether produced by IMAX or third parties, and digital post-production services. In addition, the Company also provides IMAX film and digital cameras to content creators under the IMAX certified camera program.
Inventories The Company records write-downs for excess and obsolete inventory based upon management’s judgments regarding future events and business conditions, including the anticipated installation dates for the current backlog of theater system contracts, contracts in negotiation, technological developments, growth prospects within the customers’ ultimate marketplace, and anticipated market acceptance of the Company’s current and pending IMAX Systems.
Inventories 48 Table of Contents The Company records write-downs for excess and obsolete inventory based upon management’s judgments regarding future events and business conditions, including the anticipated installation dates for the current backlog of theater system contracts, contracts in negotiation, technological developments, growth prospects within the customers’ ultimate marketplace, and anticipated market acceptance of the Company’s current and pending IMAX Systems.
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 that drive box office levels including film performance, the mix of IMAX System configurations, the timing of installation of IMAX Systems, the nature of the arrangement, the location, size and management of the theater and other factors specific to individual arrangements.
The revenue earned from customers under the Company’s JRSA can vary from quarter-to-quarter and year-to-year based on a number of factors that drive box office levels including film performance, the mix of IMAX System configurations, the timing of installation of IMAX Systems, the nature of the arrangement, the location, size and management of the theater and other factors specific to individual arrangements.
In a typical film remastering and distribution arrangement, the Company receives a percentage of the box office receipts from a movie studio in exchange for converting a commercial film into the IMAX format and distributing it across the IMAX network.
In a typical IMAX Film Remastering and distribution arrangement, the Company receives a percentage of the box office receipts from a movie studio in exchange for converting a commercial film into the IMAX format and distributing it through the IMAX network.
A significant portion of the Company’s research and development efforts have been focused on the IMAX Laser Systems, which the Company believes is capable of illuminating the largest screens in the IMAX network and provides greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, while consuming less power and lasting longer than existing digital technology, to ensure that the Company continues to provide the highest quality, premier cinematic experience available to consumers.
A significant portion of the Company’s research and development efforts has been focused on the IMAX Laser Systems, which the Company believes are capable of illuminating the largest screens in the IMAX network and provides greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, while consuming less power and lasting longer than existing digital technology, to ensure that the Company continues to provide the highest quality, premier cinematic experience available to consumers.
In exchange for its upfront investment, the Company, primarily, earns rent based on a percentage of contingent box office receipts rather than a fixed upfront fee or fixed annual minimum payments. Rental payments from the customer are required throughout the term of the arrangement and are typically due either monthly or quarterly.
In exchange for its upfront investment, the Company, primarily, earns rent based on a percentage of contingent box office receipts rather than requiring the customer to pay a fixed upfront fee or fixed annual minimum payments. Rental payments from the customer are required throughout the term of the arrangement and are typically due either monthly or quarterly.
Conversely, if, after recording a valuation allowance, management determines that sufficient positive evidence exists in the jurisdiction in which a valuation allowance 50 is recorded, the Company may reverse all or a portion of the valuation allowance in that jurisdiction.
Conversely, if, after recording a valuation allowance, management determines that sufficient positive evidence exists in the jurisdiction in which a valuation allowance is recorded, the Company may reverse all or a portion of the valuation allowance in 50 Table of Contents that jurisdiction.
In cases where direct historical experience can be observed, average historical box office results, eliminating significant outliers, are used. The resulting amount of variable consideration is then recorded at its present value as of the date of recognition using a risk-weighted discount rate.
In cases where direct historical experience can be observed, average historical box office results, eliminating significant outliers, are used. The resulting amount of variable consideration is then recorded at its present value as of the date of recognition using a risk-weighted discount rate, subject to collectability.
Management reassessed its strategy with respect to the most efficient means of deploying the Company’s capital resources globally and determined that historical earnings of certain foreign subsidiaries in excess of amounts required to sustain business operations would no longer be indefinitely reinvested.
In a prior year, management reassessed its strategy with respect to the most efficient means of deploying the Company’s capital resources globally and determined that historical earnings of certain foreign subsidiaries in excess of amounts required to sustain business operations would no longer be indefinitely reinvested.
The following table presents the Company’s revenue, gross margin and gross margin percentage by reportable segment for the years ended December 31, 2023 and 2022: Revenue Gross Margin Gross Margin % (In thousands of U.S.
The following table presents the Company’s revenue, gross margin and gross margin percentage by reportable segment for the years ended December 31, 2024 and 2023: Revenue Gross Margin Gross Margin % (In thousands of U.S.
Selling, General and Administrative Expenses The following table presents information about the Company’s Selling, General and Administrative Expenses for the years ended December 31, 2023 and 2022: Years Ended December 31, Variance (In thousands of U.S.
Selling, General and Administrative Expenses The following table presents information about the Company’s Selling, General and Administrative Expenses for the years ended December 31, 2024 and 2023: Years Ended December 31, Variance (In thousands of U.S.
The fee earned by the Company in a typical film remastering and distribution arrangement averages approximately 12.5% of box office receipts (i.e., GBO less applicable sales taxes), except for within Greater China, where the Company receives a lower percentage of net box office receipts for certain Hollywood films due to an import tax.
The fee earned by the Company in a typical IMAX Film Remastering and distribution arrangement averages approximately 12.5% of box office receipts (i.e., gross box office (“GBO”) less applicable sales taxes), except for within Greater China, where the Company receives a lower percentage of net box office receipts for certain Hollywood films due to an import tax.
Joint revenue sharing arrangements allow commercial theater exhibitors to install IMAX 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.
JRSAs allow commercial theater exhibitors to install IMAX Systems without the significant initial capital investment required in a sale or sales-type lease arrangement. JRSAs 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.
As of December 31, 2023, the Company’s Consolidated Balance Sheets include a deferred tax liability of $12.5 million (December 31, 2022 — $14.9 million) for the applicable foreign withholding taxes associated with the remaining balance of unrepatriated historical earnings that will not be indefinitely reinvested outside of Canada. These taxes will become payable upon the repatriation of any such earnings.
As of December 31, 2024, the Company’s Consolidated Balance Sheets include a deferred tax liability of $12.5 million (December 31, 2023 — $12.5 million) for the applicable foreign withholding taxes associated with the remaining balance of unrepatriated historical earnings that will not be indefinitely reinvested outside of Canada. These taxes will become payable upon the repatriation of any such earnings.
The incremental box office generated by IMAX films combined with IMAX’s unmatched global network footprint and scale has helped establish IMAX as the key premium distribution and marketing platform for Hollywood and foreign local language movie studios.
The incremental box office generated by IMAX films combined with IMAX’s leading global network footprint and scale has helped establish IMAX as a key premium distribution and marketing platform for Hollywood and foreign local language movie studios.
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 with its Credit Agreement requirements, when applicable.
Accordingly, this non-GAAP financial measure is presented to allow a more comprehensive analysis of the Company’s 58 Table of Contents operating performance and to provide additional information with respect to the Company’s compliance with its Credit Agreement requirements, when applicable.
Content Solutions The Content Solutions segment earns revenue principally from the digital remastering of films and other content into IMAX formats for distribution across the IMAX network.
Content Solutions The Content Solutions segment earns revenue principally from studios and other content creators for the digital remastering of films and other content into IMAX formats for distribution across the IMAX network.
The Company’s significant accounting policies are described in Note 2 to Consolidated Financial Statements in Part II, Item 8. Revenue Recognition The application of U.S. GAAP related to the measurement and recognition of revenue requires management to make judgments and estimates. In addition, revenue contracts with nonstandard terms and conditions may require significant interpretation to determine the appropriate accounting.
The Company’s significant accounting policies are described in Note 2 to “Consolidated Financial Statements” in Part II, Item 8. Revenue Recognition The application of U.S. GAAP related to the measurement and recognition of revenue requires management to make judgments and estimates. In addition, revenue contracts with nonstandard terms and conditions may require significant interpretation to determine the appropriate accounting.
(Refer to Note 12 to Consolidated Financial Statements in Part II, Item 8 for more information on the Company’s tax position.) Non-Controlling Interests The Company’s Consolidated Financial Statements include the non-controlling interest in the net income or loss of IMAX China, as well as the impact of non-controlling interests in the activity of its Original Film Fund subsidiary.
(Refer to Note 11 to “Consolidated Financial Statements” in Part II, Item 8 for more information on the Company’s tax position.) Non-Controlling Interests The Company’s Consolidated Financial Statements include the non-controlling interest in the net income or loss of IMAX China, as well as the impact of non-controlling interests in the activity of its Original Film Fund subsidiary.
Reconciliations of net income (loss) attributable to common shareholders and the associated per share amounts to adjusted net income (loss) attributable to common shareholders and adjusted net income attributable to common shareholders per basic and diluted share are presented in the table below. Years Ended December 31, 2023 2022 (In thousands of U.S.
Reconciliations of net income attributable to common shareholders and the associated per share amounts to adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per basic and diluted share are presented in the table below. Years Ended December 31, 2024 2023 (In thousands of U.S.
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 System in an amount that is typically half of what the Company would receive from a typical sale transaction.
Under certain other JRSAs, known as hybrid arrangements, the customer is responsible for making fixed upfront payments prior to the delivery and installation of the IMAX System in an amount that is typically half of what the Company would receive from a typical sale transaction.
Furthermore, the Company intends to invest in activities that will capture opportunities to create/build AI and automation into its operations and processes. As of December 31, 2023 and 2022, 86 and 66 of the Company’s employees were connected with research and development projects, respectively.
Furthermore, the Company intends to invest in activities that will capture opportunities to create/build AI and automation into its operations and processes. As of December 31, 2024 and 2023, 89 and 86 of the Company’s employees were connected with research and development projects, respectively.
In addition, select movies shown in the IMAX network are filmed using proprietary IMAX film cameras or IMAX certified digital cameras, which offer filmmakers customized guidance and a workflow process to provide further enhanced and differentiated image quality and an IMAX-exclusive film aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen.
In addition, select movies shown in the IMAX network are filmed using proprietary IMAX film cameras or IMAX certified digital cameras, which along with IMAX’s customized guidance and a workflow process, provide filmmakers enhanced and differentiated image quality and an IMAX-exclusive film aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen.
(2) Period-to-period changes in the tables above are reported net of permanently closed systems. Backlog The following table provides detailed information about the Company’s system backlog as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Number of Number of Systems Dollar Value Systems Dollar Value (In thousands of U.S.
(2) Period-to-period changes in the tables above are reported net of permanently closed systems. Backlog The following table provides detailed information about the Company’s system backlog as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Number of Systems Dollar Values Number of Systems Dollar Values (In thousands of U.S.
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 Maintenance, as discussed below. Joint revenue sharing arrangements have been an important factor in the expansion of the Company’s commercial system network.
JRSAs 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 Maintenance, as discussed below. JRSAs have been an important factor in the expansion of the Company’s commercial system network.
(Refer to Note 26 to Consolidated Financial Statements in Part II, Item 8.) 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.
(Refer to Note 25 to “Consolidated Financial Statements” in Part II, Item 8.) 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.
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.
Under most JRSAs (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.
Top filmmakers, movie studios, artists, and creators utilize the cutting-edge visual and sound technology of IMAX to connect with audiences in innovative ways. As a result, IMAX is among the most important and successful global distribution platforms.
Top filmmakers, movie studios, artists, and creators utilize the cutting-edge visual and sound technology of IMAX to connect with audiences in innovative ways. As a result, IMAX is among the most important and successful global distribution platforms for domestic and international tentpole films.
(“IMAX Shanghai”) revolving credit facility with the Bank of China (the “Bank of China Facility”), and $28.2 million in available borrowing capacity under IMAX Shanghai’s revolving credit facility with HSBC Bank (China) Company Limited, Shanghai Branch (the “HSBC China Facility”).
(“IMAX Shanghai”) revolving credit facility with the Bank of China (the “Bank of China Facility”), and $27.8 million in available borrowing capacity under IMAX Shanghai’s revolving credit facility with HSBC Bank (China) Company Limited, Shanghai Branch (the “HSBC China Facility”).
During the year ended December 31, 2023, $24.0 million of historical earnings from a subsidiary in China were distributed (December 31, 2022 — $27.4 million) and, as a result, $2.4 million of foreign withholding taxes were paid to the relevant tax authorities (December 31, 2022 — $2.7 million).
During the year ended December 31, 2024, $nil (2023 — $24.0 million) of historical earnings from a subsidiary in China were distributed and, as a result, $nil (2023 — $2.4 million) of foreign withholding taxes were paid to the relevant tax authorities.
(2) Latin America includes South America, Central America, and Mexico. (3) Period-to-period changes in the table above are reported net of the effect of permanently closed locations. IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,693 IMAX Systems operating as of December 31, 2023, representing a market penetration of only 46.8%.
(2) Latin America includes South America, Central America, and Mexico. (3) Period-to-period changes in the table above are reported net of the effect of permanently closed locations. IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,735 IMAX Systems operating as of December 31, 2024, representing a market penetration of only 48%.
These AI-powered products allow streaming platforms and broadcasters to automate workflows. The Company believes that these products allow users to deliver the highest quality viewing experiences to their subscribers while reducing costs. IMAX Enhanced is a solution to bring The IMAX Experience into the home.
These products are powered by IMAX VisionScience ® , an AI technology that allows streaming platforms and broadcasters to automate workflows. The Company believes that these products allow users to deliver the highest quality viewing experiences to their subscribers while reducing costs. IMAX Enhanced is a solution to bring The IMAX Experience into the home.
The ownership rights to such films may be held by the film sponsors, the film investors and/or the Company. As of December 31, 2023, the Company has distribution rights with respect to approximately 60 films, which cover subjects such as space, wildlife, music, sports, history and natural wonders.
The ownership rights to such films may be held by the film sponsors, the film investors and/or the Company. As of December 31, 2024, the Company had distribution rights with respect to approximately 62 films, which cover subjects such as space, wildlife, music, sports, history and natural wonders.
(Refer to Note 8 to Consolidated Financial Statements in Part II, Item 8.) Asset Impairments Goodwill Goodwill represents the excess of the purchase price paid over the fair value of net assets acquired in a business combination.
(Refer to Note 7 to “Consolidated Financial Statements” in Part II, Item 8.) Asset Impairments Goodwill Goodwill represents the excess of the purchase price paid over the fair value of net assets acquired in a business combination.
The program includes incremental and bespoke marketing support, which box office metrics demonstrate audiences respond extremely favorably to, and drives higher market share for IMAX. Management believes that growth in international box office remains an important driver of growth for the Company.
The program includes incremental and bespoke marketing support, which box office metrics demonstrate audiences respond extremely favorably to, and drives a higher market share for IMAX. Management believes that growth in international box office represents an important growth opportunity for the Company.
During the year ended December 31, 2023, $24.0 million (2022 — $27.4 million) of historical earnings from a subsidiary in China were distributed and, as a result, $2.4 million (2022 — $2.7 million) of foreign withholding taxes were paid 55 to the relevant tax authorities.
During the year ended December 31, 2024, $nil of historical earnings from a subsidiary in China were distributed (2023 — $24.0 million) and, as a result, $nil of foreign withholding taxes were paid to the relevant tax authorities (2023 — $2.4 million).
A customer may improve their credit quality classification once a substantial payment is made on an overdue balance or when the customer has agreed to a payment plan and payments have commenced in accordance with that plan.
A customer may improve their credit quality classification once a substantial payment is made on an overdue balance or when the customer has agreed to a payment plan and payments have commenced in accordance with that plan. Changes in credit quality classification are dependent upon management approval.
At present, certified global device partners include Sony Electronics, Hisense, TCL, LG, Phillips, Hewlett Packard, Xiaomi, Sound United and Honor, among others. As of December 31, 2023, more than 300 IMAX Enhanced titles have been released across five of the biggest streaming platforms worldwide: Disney+, Sony Bravia CORE, Tencent Video, iQiyi and Rakuten TV.
At present, certified global device partners include Sony Electronics, Hisense, TCL, LG, Phillips, Hewlett Packard, Xiaomi, Sound United and Honor, among others. As of December 31, 2024, more than 300 IMAX Enhanced titles had been released across six of the biggest streaming platforms worldwide: Disney+, Sony Pictures CORE, Tencent Video, iQiyi, Yonku and Rakuten TV.
The Company does not own the locations in the IMAX network, except for one, and is not an exhibitor, but instead sells or leases the IMAX System to exhibitor customers along with a license to use its trademarks and ongoing maintenance services for which there is an annual payment by the exhibitor to IMAX.
The Company does not own the locations in the IMAX network, except for one, and is not an exhibitor, but instead sells or leases the IMAX System to exhibitor customers along with licenses to use its trademarks and ongoing maintenance services for which there are annual payments by the exhibitors to IMAX.
An estimate of the present value of such variable consideration is recognized as revenue upon the transfer of control of the System Obligation to the customer, subject to constraints to ensure that there is not a risk of significant revenue reversal.
These contract provisions are considered to be variable consideration. An estimate of the present value of such variable consideration is recognized as revenue upon the transfer of control of the System Obligation to the customer, subject to constraints to ensure that there is not a risk of significant revenue reversal.
Gelfond, its Chief Executive Officer (“CEO”), using a variety of factors and financial and operational metrics including: (i) IMAX box office performance and the securing of new films and other events to be exhibited across the IMAX network; (ii) the signing, installation, and financial performance of IMAX System arrangements, particularly those involving laser-based projection systems; (iii) the success of the Company's investments in business evolution and brand extensions, including the integration and performance of SSIMWAVE, the distribution of live events to the IMAX network, and IMAX Enhanced, (iv) revenues and gross margins earned by the Company's segments, as discussed below; (v) consolidated earnings (loss) from operations, as adjusted for unusual items; (vi) the continuing ability to invest in and improve the Company’s technology to enhance the differentiation of The IMAX Experience versus other out-of-home experiences; (vii) the overall execution, reliability, and consumer acceptance of The IMAX Experience ; and (viii) short- and long-term cash flow projections.
Gelfond, its Chief Executive Officer (“CEO”), using a variety of factors and financial and operational metrics including: (i) IMAX box office performance and the securing of new IMAX films and alternative content to be exhibited across the IMAX network; (ii) the signing, installation, and financial performance of IMAX System arrangements; (iii) the success of the Company’s investments in business evolution and brand extensions into streaming and consumer technology; (iv) revenues and gross margins earned by the Company’s segments; (v) consolidated earnings (loss) from operations, as adjusted for unusual items; (vi) the continuing ability to invest in and improve the Company’s technology to enhance the differentiation of The IMAX Experience versus other out-of-home experiences; (vii) the overall execution, reliability, and consumer acceptance of The IMAX Experience ; and (viii) short- and long-term cash flow projections.
(3) Includes 30 IMAX Systems (2022 ― 38) where certain of the Company’s contracts contain options for the customer to elect to upgrade system type 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.
(3) Includes 31 IMAX Systems (2023 ― 30) where certain of the Company’s contracts contain options for the customer to elect to upgrade system type or to alter the contract structure (for example, from a JRSA to a sale) after signing, but before installation. Current backlog information reflects all known elections.
The following table provides detailed information about IMAX Systems installed and the associated revenue recognized at that time, except for traditional joint revenue sharing arrangement as revenue is recognized over the lease term, during the years ended December 31, 2022 and 2021: 2022 2021 (In thousands of U.S.
The following table provides detailed information about IMAX Systems installed and the associated revenue recognized at that time, except for traditional JRSAs as revenue is recognized over the lease term, during the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 2023 (In thousands of U.S.
IMAX Systems are based on proprietary and patented image, audio and other technology developed over the course of the Company’s history since its founding in 1967. The customers for IMAX Systems are principally theatrical exhibitors that operate commercial multiplex theaters, and, to a much lesser extent, museums, science centers and destination entertainment sites.
IMAX Systems are based on proprietary and patented image, audio and other technology developed over the course of the Company’s history. The customers for IMAX Systems are principally exhibitors that operate commercial multiplex theaters, and, to a much lesser extent, institutional locations, including museums and science centers, and destination entertainment sites.
The Company believes that the majority of its future growth will come from international markets. As of December 31, 2023, 76% of IMAX Systems in operation were located within international markets (defined as all countries other than the United States and Canada) (2022 ― 74%).
The Company believes that the majority of its future growth will come from international markets. As of December 31, 2024, 76% of IMAX Systems in the global commercial multiplex network were located within international markets (defined as all countries other than the United States and Canada) (2023 ― 76%).
The premium pricing, combined with the higher attendance levels associated with IMAX films, generates incremental box office for the Company’s exhibitor customers and for the movie studios releasing their films to the IMAX network.
The premium pricing, combined with the higher attendance levels associated with IMAX films, tends to generate incremental box office receipts (“box office”) for the Company’s exhibitor customers and for the movie studios releasing their films to the IMAX network.
The Company receives as its distribution fee either a fixed amount or a fixed percentage of the box office receipts and, following the recoupment of its costs, is typically entitled to receive an additional percentage as participation revenues. The Company continues to believe that the IMAX network serves as a valuable platform to launch and distribute original content.
Traditionally, the Company receives as its distribution fee either a fixed amount or a fixed percentage of the theater box office receipts and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues. 40 Table of Contents The Company continues to believe that the IMAX network is a valuable global platform to launch and distribute original content, including documentaries.
The transaction price in an IMAX System arrangement is allocated to each good or service that is identified as a separate performance obligation based on estimated standalone selling prices.
The transaction price in an IMAX System arrangement is allocated to each good or service that is identified as a separate performance obligation based on estimated standalone selling prices. This allocation is based on observable prices when the Company sells the good or service separately.
In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, with up to 67% more image. 37 Together, these components cause audiences in IMAX locations to feel as if they are a part of the on-screen action, creating a more intense, immersive, and exciting experience than a conventional cinematic format.
In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, delivering up to 67% more image. 36 Table of Contents The Company believes that these components cause audiences in IMAX locations to feel as if they are a part of the on-screen action, creating a more intense, immersive, and awe-inspiring experience than a conventional cinematic format.
IMAX remastered soundtracks are uncompressed for full fidelity. IMAX sound systems use proprietary loudspeaker systems and proprietary surround sound configurations that ensure every seat in an auditorium is an optimal listening position. IMAX films also benefit from enhancements made by individual filmmakers exclusively for the IMAX release of the film.
IMAX sound systems use proprietary loudspeaker systems, designs and proprietary surround sound configurations to ensure every seat in an auditorium is an optimal listening position. IMAX films also benefit from enhancements made by individual filmmakers exclusively for the IMAX release of the film.
Segment Operating Results The Company’s segment operating results are presented based on how the Company assesses operating performance and internally reports financial information. See Note 21 to Consolidated Financial Statements in Part II, Item 8 for additional information on the Company’s reportable segments.
Segment Operating Results The Company’s segment operating results are presented based on how the CODM assesses operating performance and internally reports financial information. See Note 20 to “Consolidated Financial Statements” in Part II, Item 8 for additional information on the Company’s reportable segments.
IMAX has the largest global premium format network, more than double the size of its nearest competitor. As of December 31, 2023, there were 1,772 IMAX Systems operating in 90 countries and territories, including 1,693 commercial multiplexes, 12 commercial destinations, and 67 institutional locations in the Company’s global network.
IMAX has the largest global premium format network, more than double the size of its nearest competitor. As of December 31, 2024, there were 1,807 IMAX Systems operating in 90 countries and territories, including 1,735 commercial multiplexes, 11 commercial destinations, and 61 institutional locations in the Company’s global network.
(Refer to Note 14(b) to Consolidated Financial Statements in Part II, Item 8.) LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2023, the Company’s principal sources of liquidity included: (i) its balances of cash and cash equivalents of $76.2 million; (ii) the anticipated collection of trade accounts receivable, which includes amounts owed under joint revenue sharing arrangements and film remastering agreements with movie studios; (iii) the anticipated collection of financing receivables due in the next 12 months under sale and sales-type lease arrangements for systems currently in operation; and (iv) installment payments expected in the next 12 months under sale and sales-type lease arrangements in backlog.
LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2024, the Company’s principal sources of liquidity included: (i) its balances of cash and cash equivalents of $100.6 million; (ii) the anticipated collection of trade accounts receivable, which includes amounts owed under joint revenue sharing arrangements and film remastering agreements with movie studios; (iii) the anticipated collection of financing receivables due in the next 12 months under sale and sales-type lease arrangements for IMAX Systems currently in operation; and (iv) installment payments expected in the next 12 months under sale and sales-type lease arrangements in backlog.
Sales Arrangements The C ompany provides IMAX Systems to exhibitors through sale arrangements or long-term lease arrangements that for accounting purposes are classified as sales-type leases.
Sales Arrangements 41 Table of Contents The Company provides IMAX Systems to exhibitors through sale arrangements or long-term lease arrangements that for accounting purposes are classified as sales-type leases.
The Company believes that the contractual obligations for IMAX System installations that are listed in backlog are valid and binding commitments. 45 From time to time, in the normal course of its business, the Company will have customers who are unable to proceed with an IMAX System installation for a variety of reasons, including the inability to obtain certain consents, approvals or financing.
From time to time, in the normal course of its business, the Company will have customers who are unable to proceed with an IMAX System installation for a variety of reasons, including the inability to obtain certain consents, approvals or financing.
(Refer to Note 23 to Consolidated Financial Statements in Part II, Item 8.) (3) Represents total minimum annual rental payments due under the Company’s operating leases. (4) The Federal Economic Development Loan will be repayable over 36 months, with repayments estimated to begin in January 2024.
(Refer to Note 22 to “Consolidated Financial Statements” in Part II, Item 8.) (3) Represents total minimum annual rental payments due under the Company’s operating leases. (4) The Federal Economic Development Loan is repayable over 36 months, with repayments commencing January 2024.
The Company grants two types of PSU awards, one which vests based on a combination of employee service and the achievement of certain Adjusted EBITDA targets, and one which vests based on a combination of employee service and the achievement of total shareholder return (“TSR”) targets.
The Company grants two types of PSU awards, one which vests based on a combination of employee service and the achievement of certain Adjusted Earnings Before Interest, Income Taxes, Depreciation, and Amortization (“EBITDA”) targets, and one which vests based on a combination of employee service and the achievement of total shareholder return (“TSR”) targets.
This allocation is based on observable prices when the Company sells the good or service separately. 47 The Company’s “System Obligation” consists of the following: (i) an IMAX System, which includes the projector, sound system, screen system and, if applicable, a 3D glasses cleaning machine; (ii) services associated with the IMAX System, including theater design support, the supervision of installation services, and projectionist training; and (iii) a license to use the IMAX brand to market the location.
The Company’s “System Obligation” consists of the following: (i) an IMAX System, which includes the projector, sound system, screen system and, if applicable, a 3D glasses cleaning machine; (ii) services associated with the IMAX System, including theater design support, the supervision of installation services, and projectionist training; and (iii) a license to use the IMAX brand to market the location.
As of December 31, 2023, the Company has a footprint of 252 connected locations in the IMAX network across North America, Europe, and Asia were configured with connectivity to deliver live and interactive content with low latency and superior sight and sound.
As of December 31, 2024, the Company had a footprint of 265 connected locations in the IMAX network across North America, Europe, Africa, Australia and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound.
The arrangement for the sale of an IMAX System includes indexed minimum payment increases over the term of the arrangement, as well as the potential for additional payments owed by the customer if certain minimum box office receipt thresholds are exceeded.
The arrangement for the sale of an IMAX System includes indexed minimum payment increases over the term of the arrangement, as well as the potential for additional payments owed by the customer if certain minimum box office receipt thresholds are exceeded or where no minimum is required, based on a percentage of their box office receipts over the term of the arrangement.
(Refer to “Risk Factors ― Failure to respond adequately or in a timely fashion to changes and advancements in technology could negatively affect the Company’s business.”) Other All Other also includes revenues from sources including one owned and operated IMAX System in Sacramento, California; a commercial arrangement with one theater resulting in the sharing of profits and losses; the provision of management services to three other theaters; renting the Company’s proprietary 2D and 3D large-format film cameras; and also offering production advice and technical assistance to both documentary and Hollywood filmmakers. 43 IMAX NETWORK AND BACKLOG IMAX Network The following table provides detailed information about the IMAX network by system type and geographic location as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Commercial Multiplex Commercial Destination Institutional Total Commercial Multiplex Commercial Destination Institutional Total United States 363 4 24 391 364 4 25 393 Canada 42 1 7 50 40 1 7 48 Greater China (1) 791 — 16 807 778 — 16 794 Asia (excluding Greater China) 166 2 2 170 138 2 2 142 Western Europe 126 4 8 138 118 4 8 130 Latin America (2) 60 1 8 69 55 1 11 67 Rest of the World 145 — 2 147 140 — 2 142 Total (3) 1,693 12 67 1,772 1,633 12 71 1,716 (1) Greater China includes China, Hong Kong, Taiwan, and Macau.
(Refer to “Risk Factors ― Failure to respond adequately or in a timely fashion to changes and advancements in technology could negatively affect the Company’s business.” and “― The Company is undertaking brand extensions and new business initiatives, and the Company’s investments and efforts in such business evolution may not be successful.”) Other All Other also includes revenues from sources including one owned and operated IMAX System in Sacramento, California; a commercial arrangement with one theater resulting in the sharing of profits and losses; the provision of management services to three other theaters; renting the Company’s proprietary 2D and 3D large-format film cameras; and offering production advice and technical assistance to both documentary and Hollywood filmmakers. 43 Table of Contents IMAX NETWORK AND BACKLOG IMAX Network The following table provides detailed information about the IMAX network by system type and geographic location as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Commercial Multiplex Commercial Destination Institutional Total Commercial Multiplex Commercial Destination Institutional Total United States 370 4 24 398 363 4 24 391 Canada 44 1 5 50 42 1 7 50 Greater China (1) 796 — 13 809 791 — 16 807 Asia (excluding Greater China) 185 1 2 188 166 2 2 170 Western Europe 135 4 8 147 126 4 8 138 Latin America (2) 62 1 7 70 60 1 8 69 Rest of the World 143 — 2 145 145 — 2 147 Total (3) 1,735 11 61 1,807 1,693 12 67 1,772 (1) Greater China includes China, Hong Kong, Taiwan, and Macau.
The value of backlog does not include amounts allocated to maintenance and extended warranty revenues or revenue from systems in which the Company has an equity interest, operating leases, and long-term conditional theater commitments.
The value of backlog does not include amounts allocated to maintenance and extended warranty revenues or revenue from systems in which the Company has an equity interest, operating leases, and long-term conditional theater commitments. The Company believes that the contractual obligations for IMAX System installations that are listed in backlog are valid and binding commitments.
Dollars, except per share amounts) Net Income Per Diluted Share Net (Loss) Income Per Diluted Share Net income (loss) attributable to common shareholders $ 25,335 $ 0.46 $ (22,800 ) $ (0.40 ) Adjusted net income attributable to common shareholders* $ 52,079 $ 0.94 $ 3,207 $ 0.06 * Refer to “Non-GAAP Financial Measures” below for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP amount.
Dollars, except per diluted share amounts) Net Income Per Diluted Share Net Income Per Diluted Share Net income attributable to common shareholders $ 26,059 $ 0.48 $ 25,335 $ 0.46 Adjusted net income attributable to common shareholders* $ 51,010 $ 0.95 $ 52,079 $ 0.94 *Refer to “Non-GAAP Financial Measures” for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP amount.
These variables include, but are not limited to, market conditions as of the grant date, the Company’s expected share price volatility over the term of the award, and other relevant data. The compensation expense is fixed on the date of grant based on the dollar value of the PSUs granted.
These variables include, but are not limited to, market conditions as of the grant date, the Company’s expected share price volatility over the term of the award, and other relevant data.
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. Hybrid joint revenue sharing arrangements take the form of a sale.
As with a traditional JRSA, 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 JRSA.
Consolidated Financial Statements are prepared and involve estimates about the future. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect.
Management’s judgments regarding expected credit losses are based on the facts available to management at the time that the Consolidated Financial Statements are prepared and involve estimates about the future. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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The Company’s primary market risk exposure is the risk of unfavorable movements in exchange rates between the U.S. Dollar, the Canadian Dollar (“CAD”), and Chinese Renminbi (“RMB”). The Company does not use financial instruments for trading or other speculative purposes. Foreign Exchange Rate Risk A majority of the Company’s revenue is denominated in U.S.
The Company’s primary market risk exposure is the risk of unfavorable movements in exchange rates between the U.S. Dollar, the Canadian Dollar, and Chinese Renminbi (“RMB”). The Company does not use financial instruments for trading or other speculative purposes. Foreign Exchange Rate Risk A majority of the Company’s revenue is denominated in U.S.
A gain of $0.6 million was recorded to Other Comprehensive (Loss) Income with respect to the change in fair value of these contracts in 2023 (2022 — loss of $1.3 million; 2021 — gain of $0.5 million ).
A loss of $3.5 million was recorded to Other Comprehensive Income (Loss) with respect to the change in fair value of these contracts in 2024 (2023 — gain of $0.6 million; 2022 — loss of $1.3 million).
In 2023, there were no gains or losses resulting from a change in the classification of certain forward contracts no longer meeting the requirements for hedge accounting were reclassified from Accumulated Other Comprehensive Loss to Selling, General and Administrative Expenses (2022 — $nil).
Dollar. In 2024, there were no gains or losses resulting from a change in the classification of certain forward contracts no longer meeting the requirements for hedge accounting were reclassified from Accumulated Other Comprehensive Loss to Selling, General and Administrative Expenses (2023 — $nil).
Changes in the fair value (i.e., gains or losses) are recognized in the Consolidated Statements of Operations except for derivatives designated and qualifying as foreign currency cash flow hedging instruments. The Company currently has cash flow hedging instruments associated with Selling, General and Administrative Expenses.
Foreign currency derivatives are recognized and measured on the Consolidated Balance Sheets at fair value. Changes in the fair value (i.e., gains or losses) are recognized in the Consolidated Statements of Operations except for derivatives designated and qualifying as foreign currency cash flow hedging instruments. The Company currently has cash flow hedging instruments associated with Selling, General and Administrative Expenses.
The notional value of forward contracts that do not qualify for hedge accounting as of December 31, 2023 was $nil (December 31, 2022 — $nil). 64 For all derivative instruments, the Company is subject to counterparty credit risk to the extent that the counterparty may not meet its obligations to the Company.
The notional value of forward contracts that do not qualify for hedge accounting as of December 31, 2024 was $nil (December 31, 2023 — $nil). 60 Table of Contents For all derivative instruments, the Company is subject to counterparty credit risk to the extent that the counterparty may not meet its obligations to the Company.
Any ineffective portion is recognized immediately in the Consolidated Statements of Operations. The notional value of foreign currency cash flow hedging instruments that qualify for hedge accounting as of December 31, 2023 was $40.6 million (December 31, 2022 — $24.7 million).
Any ineffective portion is recognized immediately in the Consolidated Statements of Operations. The notional value of foreign currency cash flow hedging instruments that qualify for hedge accounting as of December 31, 2024 was $48.4 million (December 31, 2023 — $40.6 million).
To manage this risk, the Company enters into derivative transactions only with major financial institutions. As of December 31, 2023, the Company’s Financing Receivables and working capital items denominated in Canadian Dollars, RMB, Japanese Yen, Euros and other foreign currencies translated into U.S. Dollars was $172.7 million, of which $172.5 million was denominated in RMB.
To manage this risk, the Company enters into derivative transactions only with major financial institutions. As of December 31, 2024, the Company’s Financing Receivables and working capital items denominated in Canadian Dollars, RMB, Japanese Yen, Euros and other foreign currencies translated into U.S. Dollars was $156.2 million.
For the year ended December 31, 2023 the Company had drawn down $24.0 million on its Credit Facility (December 31, 2022 — $25.0 million), $nil on its HSBC China Facility (December 31, 2022 — $12.5 million) and $nil on its Bank of China Facility (December 31, 2022 — $0.4 million), which are all subject to variable effective interest rates.
For the year ended December 31, 2024 the Company had drawn down $37.0 million on its Credit Facility (December 31, 2023 — $24.0 million), $nil on its HSBC China Facility (December 31, 2023 — $nil) and $nil on its Bank of China Facility (December 31, 2023 — $nil), which are all subject to variable effective interest rates.
In addition, IMAX films generate box office in 90 different countries, and therefore unfavorable exchange rates between applicable local currencies and the U.S. Dollar could have an impact on the GBO generated by the Company’s exhibitor customers and its revenues.
In addition, IMAX films generate box office in 90 different countries, and therefore unfavorable exchange rates between applicable local currencies and the U.S. Dollar could have an impact on the GBO generated by the Company’s exhibitor customers and its revenues. For example, the impact of changes in foreign currency valuations versus the U.S.
The Company’s variable rate debt instruments were $24.0 million as of December 31, 2023 or 37% less than $37.9 million as of December 31 2022. Variable rate debt instruments represented 5% and 8% of its total liabilities as of December 31, 2023 and 2022, respectively.
The Company’s variable rate debt instruments were $37.0 million as of December 31, 2024, or 54% greater than $24.0 million as of December 31 2023. Variable rate debt instruments represented 8% and 5% of its total liabilities as of December 31, 2024 and 2023, respectively.
Item 7A. Quantitative and Quali tative Factors about Market Risk The Company is exposed to market risk from foreign currency exchange rates and interest rates, which could affect operating results, financial position and cash flows. Market risk is the potential change in an instrument’s value caused by, for example, fluctuations in interest and currency exchange rates.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 59 Table of Contents The Company is exposed to market risk from foreign currency exchange rates and interest rates, which could affect operating results, financial position and cash flows. Market risk is the potential change in an instrument’s value caused by, for example, fluctuations in interest and currency exchange rates.
A loss of $0.9 million was reclassified from Accumulated Other Comprehensive Loss to Selling, General and Administrative Expenses in 2023 (2022 — loss of $0.6 million; 2021 — gain of $1.7 million), primarily due to the fairly stabilized CAD against the U.S. Dollar through most of 2023 compared to 2022, when the CAD weakened against the U.S. Dollar.
A loss of $0.6 million was reclassified from Accumulated Other Comprehensive Loss to Selling, General and Administrative Expenses in 2024 (2023 — loss of $0.9 million; 2022 — loss of $0.6 million), primarily due to more fluctuations of the Canadian Dollar against the U.S. Dollar through most of 2024 compared to 2023, when the Canadian Dollar weakened against the U.S.
Certain of the Company’s PRC subsidiaries held approximately RMB 213.0 million or $30.0 million in cash and cash equivalents as of December 31, 2023 (December 31, 2022 — RMB 303.8 million or $43.6 million) and are required to transact locally in RMB.
Certain of the Company’s PRC subsidiaries held approximately RMB 341.1 million or $47.5 million in cash and cash equivalents as of December 31, 2024 (December 31, 2023 — RMB 213.0 million or $30.0 million) and are required to transact locally in RMB.
Assuming a 1% change appreciation or depreciation in foreign currency exchange rates as of December 31, 2023, the potential change in the amount of Selling, General, and Administrative Expenses would be $0.2 million.
A significant portion of the Company’s Selling, General, and Administrative Expenses is denominated in Canadian Dollars. Assuming a 1% change appreciation or depreciation in foreign currency exchange rates as of December 31, 2024, the potential change in the amount of Selling, General, and Administrative Expenses would be $0.3 million.
These foreign currency forward contracts met the criteria required for hedge accounting under the Derivatives and Hedging Topic of the FASB ASC at inception, and continue to meet hedge effectiveness tests as of December 31, 2023, with settlement dates throughout 2024 and 2025. Foreign currency derivatives are recognized and measured in the Consolidated Balance Sheets at fair value.
These foreign currency forward contracts met the criteria required for hedge accounting under the Derivatives and Hedging Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) at inception, and continue to meet hedge effectiveness tests as of December 31, 2024, with settlement dates throughout 2025 and 2026.
Assuming a 10% appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency exchange rates as of December 31, 2023, the potential change in the fair value of foreign currency-denominated financing receivables and working capital items would have been $17.3 million. A significant portion of the Company’s Selling, General, and Administrative Expenses is denominated in Canadian Dollars.
Assuming a 10% appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency exchange rates as of December 31, 2024, the potential change in the fair value of foreign currency-denominated financing receivables and working capital items would have been $15.6 million, which would be mostly revalued through Shareholders’ Equity.
The Company has incoming cash flows from its revenue generating IMAX network and ongoing operating expenses in China through its majority-owned subsidiary IMAX Shanghai. In Japan, the Company has ongoing Yen-denominated operating expenses related to its Japanese operations. Net RMB and Japanese Yen cash flows are converted to U.S. Dollars through the spot market.
In Japan, the Company has ongoing Yen-denominated operating expenses related to its Japanese operations. Net RMB and Japanese Yen cash flows are converted to U.S. Dollars through the spot market. The Company also has cash receipts under leases denominated in RMB, Japanese Yen, British Pound Sterling, Euros and Canadian Dollars.
These derivative financial instruments are utilized to hedge economic exposures as well as reduce earnings and cash flow volatility resulting from shifts in market rates.
The Company manages its exposure to foreign exchange rate risks through its regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. These derivative financial instruments are utilized to hedge economic exposures as well as reduce earnings and cash flow volatility resulting from shifts in market rates.
(Refer to “Risk Factors – The Company faces risks in connection with its significant presence in China and the continued expansion of its business there”) For the year ended December 31, 2023, the Company recorded a foreign exchange net loss of $0.7 million as compared to a foreign exchange net loss of $3.2 million in 2022, associated with the translation of foreign currency denominated monetary assets and liabilities, primarily due to the slower pace of RMB weakening against the U.S.
For the year ended December 31, 2024, the Company recorded a foreign exchange net loss of $1.2 million as compared to a foreign exchange net loss of $0.7 million in 2023, associated with the translation of foreign currency denominated monetary assets and liabilities.
If the interest rates available to the Company increased by 10%, the Company’s interest expense would increase by $0.2 million and interest income from cash would increase by $0.2 million. These amounts are determined by considering the impact of the hypothetical interest rates on the Company’s variable rate debt and cash balances as of December 31, 2023. 65
These amounts are determined by considering the impact of the hypothetical interest rates on the Company’s variable rate debt and cash balances as of December 31, 2024. 61 Table of Contents
Dollar throughout 2023 compared to 2022. The impact of changes in foreign currency valuations versus the U.S. Dollar led to a decrease in GBO of $30.4 million in 2023 as compared to prior year rates. The Company has entered into a series of foreign currency forward contracts to manage the risks associated with the volatility of foreign currencies.
The Company has entered into a series of foreign currency forward contracts to manage the risks associated with the volatility of foreign currencies.
Removed
The Company also has cash receipts under leases denominated in RMB, Japanese Yen, British Pound Sterling, Euros and Canadian Dollars. The Company manages its exposure to foreign exchange rate risks through its regular operating and financing activities and, when appropriate, through the use of derivative financial instruments.
Added
Dollar led to a decrease in IMAX GBO of approximately $14 million in 2024 as compared to the prior year’s currency rates, and approximately $87 million as compared to those in 2019. The Company has incoming cash flows from its revenue generating IMAX network and ongoing operating expenses in China through its majority-owned subsidiary IMAX Shanghai.
Added
(Refer to “Risk Factors – The Company faces risks in connection with its significant presence in China and the continued expansion of its business there”).
Added
If the interest rates available to the Company increased by 10%, the Company’s interest expense would increase by $0.3 million and interest income from cash would increase by $0.3 million.

Other IMAX 10-K year-over-year comparisons