IMAX (IMAX) 8-K Imax Corporation Reports Second Quarter 2018 Results

IMAX CORPORATION

Exhibit 99.1

IMAX CORPORATION

2525 Speakman Drive

Mississauga, Ontario, Canada L5K 1B1

Tel: (905)403-6500 Fax: (905)403-6450

www.imax.com

IMAX CORPORATION REPORTS SECOND QUARTER 2018 RESULTS

HIGHLIGHTS

• Strong financial results driven by compelling blockbuster content worldwide, global network expansion and ongoing cost discipline – three factors the Company anticipates will continue to drive earnings in the future.

• Delivered Q2 2018 earnings per share and adjusted earnings per share of $0.12 and $0.30, respectively compared to a loss per share of $0.03 and adjusted earnings per share of $0.15, respectively in Q2 2017.

• Studios’ continued emphasis on blockbuster content, coupled with consumers’ desire to experience that content in differentiated ways, drove IMAX global box office to $343 million in the second quarter, a 28% increase compared to Q2 2017 and, representing the Company’s fifth consecutive period of quarterly box office growth.

• Repurchased $33.0 million of shares in the second quarter at an average price of $22.01 per share, and repurchased $46 million of shares in the first half of 2018 at an average price of $21.54 per share.

NEW YORK – July 25, 2018 –IMAX Corporation (NYSE:IMAX) today reported second quarter 2018 revenues of $98.3 million, gross profit of $60.4 million and net income attributable to common shareholders of $7.6 million, which calculates to $0.12 per diluted share. Adjusted net income attributable to common shareholders for the second quarter was $19.0 million, which calculates to $0.30 per diluted share. Adjusted EBITDA per Credit Facility was $39.5 million. For reconciliations of reported results tonon-GAAP financial results, and for the definition and reconciliation of Adjusted EBITDA per Credit Facility, please see the end of this press release.

“Building on our first quarter momentum, we continued to demonstrate the value of our differentiated consumer experience, expanding global footprint and focus on blockbuster content from around the world. These factors, coupled with our continued focus on controlling costs, helped drive second quarter adjusted EBITDA of $39.5 million, a 35% increase compared to the second quarter last year. Through the first six months of 2018, adjusted EBITDA is up 49% compared to the same period last year,” said IMAX CEO Richard L. Gelfond. “Not only are studios emphasizing blockbuster-type content, consumers are increasingly seeking differentiated ways to experience that content. We believe IMAX is uniquely positioned to benefit from these trends, especially with the roll out of our new IMAX^® with Laser experience, which we expect will further increase the differentiation of The IMAX Experience^®.”

Second Quarter 2018 Results

Network Update

During the quarter, the Company installed 31 theater systems, 30 of which were for new theater locations. The total IMAX^® theater network consisted of 1,410 systems as of June 30, 2018, of which 1,314 were in commercial multiplexes. There were 635 theaters in backlog as of June 30, 2018, compared to the 580 in backlog as of June 30, 2017.

IMAX also signed contracts for 40 new theaters and 98 upgrades in the second quarter of 2018. For a breakdown of theater system signings, installations, network and backlog by type for the second quarter of 2018, please see the end of this press release.

Box Office Update

Gross box office from IMAX DMR^® films increased 27.4% to $342.6 million in the second quarter of 2018 from $268.9 million in the second quarter of 2017. Gross box office was generated primarily by the exhibition of 14 films (10 new and 4 carryovers), as compared to 16 films (11 new and 5 carryovers) exhibited in the second quarter of 2017.

Second Quarter Consolidated Results

The gross margin across all segments in the second quarter of 2018 was $60.4 million, or 61.4% of total revenues, compared to $49.5 million, or 56.4% of total revenues, in the second quarter of 2017. Operating expenses (which includes SG&A, excludingstock-based compensation, plus R&D) were $30.3 million in the quarter.

Gelfond continued, “Blockbuster content from Hollywood, China, India and South Korea will hit IMAX screens across the globe this year. Expanding our content offering by including more local-language titles is a key initiative of the Company, given our1,300-plus screens span nearly 80 countries. We believe that tailoring our slate to the varying consumer preferences in diverse markets such as China will increase the box office productivity of our network. In addition to the compelling mix of global blockbusters, we are also confident that the launch of our new global brand campaign will more effectively communicate to consumers the benefits of the premium IMAX experience. We expect the new brand campaign, combined with the launch of IMAX with Laser and our growing global footprint, to drive incremental attendance at IMAX screens around the world.”

Second Quarter Segment Results

Network Business

• Network business revenues were $60.9 million in the quarter, compared with $47.4 million in the prior-year period. Gross margin for the network business were 70.5% in the most recent quarter, compared to 66.3% in the prior-year period. The increase in revenue and gross margin was primarily driven by a 27.4% increase in box office.

• IMAX DMR revenues were $36.2 million in the second quarter of 2018, compared to $27.8 million in the second quarter of 2017. Gross margin for the IMAX DMR segment was 67.1%, compared to 61.2% in the prior-year comparative period.

• Revenue from joint revenue-sharing arrangements were $24.7 million in the quarter, compared with $18.9 million in the prior-year period. Gross margin for joint revenue-sharing arrangements was 75.3%, compared to 72.3% in the prior-year comparative period.

Theater Business

• Theater business segment revenues were $30.9 million in the quarter, compared with $32.7 million in the prior-year period, primarily reflecting the installation of 3 fewer sales-type theaters.

• Gross margin on sales and sales-type leases was 57.6% compared with 60.3% in theyear-ago period. The decrease in the recent period is primarily the result of three fewer system installations compared to the prior year period.

Supplemental Materials

For more information about the Company’s results, please refer to the IMAX Investor Relations website located atinvestors.imax.com.

Investor Relations Website and Social Media

On a weekly basis, the Company postsquarter-to-date box office results on the IMAX Investor Relations website located at www.imax.com/content/investor-relations. The Company expects to provide such updates on Friday of each week, although the Company may change this timing without notice. Results will be displayed with aone-week lag. In addition, the Company maintains a Twitter account: @IMAX_Investors. The Company intends to use Twitter to disclose the box office information, as well as other information that may be of interest to the Company’s investor community.

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The information posted on the Company’s website and/or via its Twitter account may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company’s website and its Twitter account in addition to the Company’s press releases, SEC filings and public conference calls and webcasts.

Conference Call

The Company will host a conference call today at 4:30PM ET to discuss its second quarter 2018 financial results. This call is being webcast by Nasdaq and can be accessed atinvestors.imax.com. To access the call via telephone, interested parties in the US and Canada should dial (800)263-0877 approximately 5 to 10 minutes before the call begins. Other international callers should dial(438) 968-3557. The conference ID for the call is 5362019. A replay of the call will be available via webcast atinvestors.imax.com or via telephone by dialing (888)203-1112 (US and Canada), or (647)436-0148 (international). The Conference ID for the telephone replay is 5362019.

About IMAX Corporation

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

IMAX is headquartered in New York, Toronto and Los Angeles, with additional offices in London, Dublin, Tokyo, and Shanghai. As of June 30, 2018, there were 1,410 IMAX theater systems (1,314 commercial multiplexes, 12 commercial destinations, 84 institutional) operating in 79 countries. On Oct. 8, 2015, shares of IMAX China, a subsidiary of IMAX Corp., began trading on the Hong Kong Stock Exchange under the stock code “HK.1970.”

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

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This press release contains forward looking statements that are based on IMAX management’s assumptions and existing information and involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. Important factors that could affect these statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, plans and references to the future success of IMAX Corporation together with its consolidated subsidiaries (the “Company”) and expectations regarding the Company’s future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada; risks related to the Company’s growth and operations in China; the performance of IMAX DMR films; the signing of theater system agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates; competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to recent consolidation among commercial exhibitors and studios; risks related to new business initiatives; conditions in thein-home andout-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security; risks related to the Company’s inability to protect the Company’s intellectual property; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; the failure to fully realize the projected cost savings and benefits from the Company’s restructuring initiative; and other factors, many of which are beyond the control of the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX’s most recent Annual Report on Form10-K and Quarterly Reports on Form10-Q.

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For additional information please contact:

Investors: IMAX Corporation, New York Michael K. Mougias 212-821-0187 mmougias@imax.com   Media: IMAX Corporation, New York Amanda Collins 212-821-0155 abcollins@imax.com

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Additional Information

Signings and Installations

June 30, 2018

	Three Months Ended June 30,
Theater Signings:	2018			2017
Full new sales and sales-type lease arrangements		9			14
New traditional joint revenue sharing arrangements		31			31
New hybrid joint revenue sharing lease arrangements		—			47
Total new theaters		40			92
Upgrades of IMAX theater systems		98			3
Total Theater Signings		138			95
	Three Months Ended June 30,
Theater Installations:	2018			2017
Full new sales and sales-type lease arrangements		9			12
New traditional joint revenue sharing arrangements		19			18
New hybrid joint revenue sharing lease arrangements		2			3
Total new theaters		30			33
Upgrades of IMAX theater systems		1	(1)		1	(1)
Total Theater Installations		31			34
	Three Months Ended June 30,
Theater Backlog:	2018			2017
New sales and sales-type lease arrangements		181	(2)		174
New joint revenue sharing arrangements
Hybrid lease arrangements		115			137
Traditional arrangements		339			269
Total Theater Backlog		635	(3)		580	(4)
	Three Months Ended June 30,
Theater Network:	2018			2017
Commercial Multiplex Theaters:
Sales and sales-type lease arrangements		576	(5)		483
Traditional joint revenue sharing arrangements		628			554
Hybrid joint revenue sharing lease arrangements		110			117
Total Commercial Multiplex Theaters		1,314			1,154
Commercial Destination Theaters		12			13
Institutional Theaters		84			90
Total Theater Network		1,410			1,257

(1) Includes one installation of an upgrade to a laser-based digital system under a joint revenue (2017 – one under a sales arrangement).

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

(3) Includes 75 new laser projection system configurations, including 101 upgrades of existing locations to laser projection system configurations (99 of these 101 are for the new next generation laser projection system configurations).

(4) Includes 24 laser projection system configurations and four upgrades of existing locations to laser projection system configurations.

(5) Includes 35 theater systems which were previously classified under joint revenue sharing arrangements – hybrid sales arrangements. See “Critical Accounting Policies and estimates” in the form10-Q for further details of the adoption impact of ASC Topic 606 on the Company’s revenues.

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IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenues
Equipment and product sales	$	15,368		$	21,334		$	34,881		$	32,879
Services		54,785			44,603			99,531			83,447
Rentals		25,124			19,438			43,326			35,294
Finance income		3,068			2,383			5,591			4,794
		98,345			87,758			183,329			156,414
Costs and expenses applicable to revenues
Equipment and product sales		7,549			11,453			15,521			18,917
Services		23,633			21,266			43,984			41,080
Rentals		6,759			5,580			12,728			11,187
		37,941			38,299			72,233			71,184
Gross margin		60,404			49,459			111,096			85,230
Selling, general and administrative expenses		32,608			28,589			60,691			59,531
(including share-based compensation expense of $6.2 million and $10.7 million for the three and six months ended June 30, 2018 (2017 — $6.2 million and $11.0 million, respectively))
Research and development		3,922			5,678			7,514			10,012
Asset impairments		—			1,225			—			1,225
Amortization of intangibles		965			779			1,857			1,380
Receivable provisions, net of recoveries		355			940			806			1,125
Legal arbitration award		7,500			—			7,500			—
Exit costs, restructuring charges and associated impairments		456			10,258			1,158			10,258
Income from operations		14,598			1,990			31,570			1,699
Interest income		243			280			490			508
Interest expense		(851	)		(435	)		(1,345	)		(890	)
Income from operations before income taxes		13,990			1,835			30,715			1,317
(Provision for) recovery of income taxes		(3,635	)		238			(8,088	)		124
Loss from equity-accounted investments, net of tax		(100	)		(264	)		(305	)		(519	)
Net income		10,255			1,809			22,322			922
Less: income loss attributable tonon-controlling interests		(2,630	)		(3,521	)		(6,192	)		(2,559	)
Net income (loss) attributable to common shareholders	$	7,625		$	(1,712	)	$	16,130		$	(1,637	)
Net income (loss) per share attributable to common shareholders – basic and diluted:
Net income (loss) per share — basic and diluted	$	0.12			(0.03	)	$	0.25		$	(0.02	)
Weighted average number of shares outstanding (000’s):
Basic		63,314			65,793			63,931			66,076
Fully Diluted		63,426			65,992			64,006			66,548
Additional Disclosure:
Depreciation and amortization(1)	$	14,513		$	13,266		$	28,034		$	25,354

(1) Includes $0.4 million and $0.5 million of amortization of deferred financing costs charged to interest expense for the three and six months ended June 30, 2018, respectively (2017 – $0.2 million and $0.3 million, respectively).

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IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)

(Unaudited)

	June 30, 2018			December 31, 2017
Assets
Cash and cash equivalents	$	133,042		$	158,725
Accounts receivable, net of allowance for doubtful accounts of $2,348 (December 31, 2017 — $1,613)		113,461			130,546
Financing receivables		125,756			129,494
Inventories		40,705			30,788
Prepaid expenses		9,401			7,549
Film assets		15,193			5,026
Property, plant and equipment		276,129			276,781
Other assets		61,956			26,757
Deferred income taxes		24,386			30,708
Other intangible assets		30,456			31,211
Goodwill		39,027			39,027
Total assets	$	869,512		$	866,612
Liabilities
Bank indebtedness	$	24,377		$	25,357
Accounts payable		15,027			24,235
Accrued and other liabilities		107,799			100,140
Deferred revenue		110,286			113,270
Total liabilities		257,489			263,002
Commitments and contingencies
Non-controlling interests		7,578			1,353
Shareholders’ equity
Capital stock common shares — no par value. Authorized — unlimited number. 62,747,512 issued and 62,521,916 outstanding (December 31, 2017 — 64,902,201 issued and 64,695,550 outstanding)		431,003			445,797
Less: Treasury stock, 225,596 shares at cost (December 31, 2017 — 206,651)		(4,636	)		(5,133	)
Other equity		179,767			175,300
Accumulated deficit		(75,908	)		(87,592	)
Accumulated other comprehensive loss		(2,762	)		(626	)
Total shareholders’ equity attributable to common shareholders		527,464			527,746
Non-controlling interests		76,981			74,511
Total shareholders’ equity		604,445			602,257
Total liabilities and shareholders’ equity	$	869,512		$	866,612

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IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

	Six Months Ended June 30,
	2018			2017
Cash provided by (used in):
Operating Activities
Net income	$	22,322		$	922
Adjustments to reconcile net income to cash from operations:
Depreciation and amortization		28,034			25,354
Write-downs, net of recoveries		1,686			13,155
Change in deferred income taxes		347			(3,133	)
Stock and othernon-cash compensation		11,920			12,570
Unrealized foreign currency exchange gain		473			(462	)
Loss from equity-accounted investments		106			321
Loss onnon-cash contribution to equity-accounted investees		199			198
Investment in film assets		(18,219	)		(19,589	)
Changes in othernon-cash operating assets and liabilities		(214	)		7,884
Net cash provided by operating activities		46,654			37,220
Investing Activities
Purchase of property, plant and equipment		(8,632	)		(9,771	)
Investment in joint revenue sharing equipment		(8,455	)		(17,550	)
Acquisition of other intangible assets		(1,705	)		(2,624	)
Investment in new business ventures		—			(1,500	)
Net cash used in investing activities		(18,792	)		(31,445	)
Financing Activities
Repayment of bank indebtedness		(1,000	)		(1,000	)
Repurchase of common shares		(46,452	)		(46,138	)
Treasury stock purchased for future settlement of restricted share units		(4,636	)		(5,412	)
Taxes withheld and paid on employee stock awards vested		(1,279	)		(187	)
Settlement of restricted share units and options		(1,529	)		(14,048	)
Issuance of subsidiary shares to anon-controlling interest		6,696			—
Common shares issued – stock options exercised		799			14,419
Credit facility amendment fees paid		(1,963	)		—
Dividends paid tonon-controlling interests		(4,623	)		—
Net cash used in financing activities		(53,987	)		(52,366	)
Effects of exchange rate changes on cash		442			76
Decrease in cash and cash equivalents during period		(25,683	)		(46,515	)
Cash and cash equivalents, beginning of period		158,725			204,759
Cash and cash equivalents, end of period	$	133,042		$	158,244

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IMAX CORPORATION

SELECTED FINANCIAL DATA

In accordance with United States Generally Accepted Accounting Principles

(in thousands of U.S. dollars)

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenue
Network Business
IMAX DMR	$	36,161		$	27,757		$	63,214		$	51,166
Joint revenue sharing arrangements – contingent rent		24,730			18,896			42,593			34,130
IMAX systems – contingent rent		—			790			—			1,478
		60,891			47,443			105,807			86,774
Theater Business
IMAX systems
Sales and sales-type leases		11,981			16,125			30,118			23,067
Ongoing fees and finance income		3,282			2,613			6,012			5,198
Joint revenue sharing arrangements – fixed fees		1,022			1,408			1,022			1,878
Theater system maintenance		12,335			10,904			25,047			21,949
Other theater		2,255			1,699			3,631			3,864
		30,875			32,749			65,830			55,956
New Business		3,116			1,311			3,723			2,591
Other
Film distribution and post-production		2,360			5,087			6,094			8,670
Other		1,103			1,168			1,875			2,423
		3,463			6,255			7,969			11,093
Total	$	98,345		$	87,758		$	183,329		$	156,414
Gross margin
Network Business
IMAX DMR(1)	$	24,280		$	16,998		$	43,063		$	34,466
Joint revenue sharing arrangements – contingent rent(1)		18,621			13,668			31,362			23,920
IMAX systems – contingent rent		—			790			—			1,478
		42,901			31,456			74,425			59,864
Theater Business
IMAX systems
Sales and sales-type leases		6,899			9,724			18,508			12,944
Ongoing fees and finance income		3,234			2,539			5,917			5,060
Joint revenue sharing arrangements – fixed fees(1)		246			176			246			264
Theater system maintenance		5,088			4,434			11,292			8,683
Other theater		563			405			517			834
		16,030			17,278			36,480			27,785
New Business		1,906			(1,183	)		436			(1,520	)
Other
Film distribution and post-production(1)		(387	)		1,998			59			(665	)
Other		(46	)		(90	)		(304	)		(234	)
		(433	)		1,908			(245	)		(899	)
Total	$	60,404		$	49,459		$	111,096		$	85,230

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(1) IMAX DMR segment margins include marketing costs of $6.5 million and $10.6 million for the three and six months ended June 30, 2018, respectively (2017 – $4.7 million and $7.3 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $1.0 million and $1.2 million for the three and six months ended June 30, 2018, respectively (2017 – $0.8 million and $1.2, respectively). IMAX system sales and sales-type lease segment margins include marketing and commission costs of $0.5 million and $1.2 million for the three and six months ended June 30, 2018, respectively (2017 – $0.8 million and $1.1 million). Film distribution and post production segment margins include marketing expense of $0.8 million and $2.0 million for the three and six months ended June 30, 2018 (2017 – recovery of $0.6 million and $0.7 million, respectively).

IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)

Non-GAAP Financial Measures:

In this release, the Company presents adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share, EBITDA and adjusted EBITDA as supplemental measures of performance of the Company, which are not recognized under U.S. GAAP. The Company presents adjusted net income and adjusted net income per diluted share because it believes that they are important supplemental measures of its comparable controllable operating performance and it wants to ensure that its investors fully understand the impact of its stock-based compensation (net of any related tax impact) on net income. In addition, the Company presents adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share because it believes that they are important supplemental measures of its comparable financial results and could potentially distort the analysis of trends in business performance and it wants to ensure that its investors fully understand the impact of net income attributable tonon-controlling interests and its stock-based compensation (net of any related tax impact) in determining net income attributable to common shareholders. Management uses these measures to review operating performance on a comparable basis from period to period. However, thesenon-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share should be considered in addition to, and not as a substitute for, net income and net income attributable to common shareholders and other measures of financial performance reported in accordance with U.S. GAAP.

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

	For the 3 months ended June 30, 2018			For the 12 months ended June 30, 2018(1)
(In thousands of U.S. Dollars)
Net income	$	10,255		$	33,918
Add (subtract):
Provision for income taxes		3,635			25,002
Interest expense, net of interest income		608			1,388
Depreciation and amortization, including film asset amortization		14,513			69,488
EBITDA	$	29,011		$	129,796
Stock and othernon-cash compensation		6,779			23,141
Write-downs, net of recoveries including asset impairments and receivable provisions		650			18,099
Exit costs, restructuring charges and associated impairments		456			7,074
Legal arbitration award		7,500			7,500
Loss from equity accounted investments		100			489
Adjusted EBITDA beforenon-controlling interests(2)	$	44,496		$	186,099
Adjusted EBITDA attributable tonon-controlling interests		(5,014	)		(24,404	)
Adjusted EBITDA per Credit Facility	$	39,482	*	$	161,695	*
Adjusted EBITDA per Credit Facility, excluding impact from “Marvel’s Inhumans”	$	39,489	*	$	148,930	*
Adjusted revenues attributable to common shareholders(3)	$	90,860		$	367,281
Adjusted EBITDA margin, excluding impact from “Marvel’s Inhumans”		43.5	%		40.5	%

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* Adjusted EBITDA per Credit Facility of $39.5 million and $161.7 million for the three and twelve months ended June 30, 2018 respectively, include the impact of the Company’s investment in “Marvel’s Inhumans”, which resulted in a less than $0.1 million and $12.2 million loss, respectively. However, as permitted by the Credit Facility, this loss was offset by addbacks of $nil and $13.3 million for amortization and by addbacks of, $nil and $11.7 million for impairment charges relating to the investment, in each case for the three and twelve months ended June 30, 2018, respectively. The net effect of these addbacks was to increase Adjusted EBITDA per Credit Facility by less than $0.1 million and $12.8 million for the three and twelve months ended June 30, 2018, respectively. This investment represents the Company’s first foray into a commercial television property, and therefore the Adjusted EBITDA per Credit Facility.

(1) Ratio of funded debt calculated using twelve months ended Adjusted EBITDA per Credit Facility.

(2) The Adjusted EBITDA per Credit Facility calculation specified for purpose of the minimum Adjusted EBITDA covenant excludes the reduction in Adjusted EBITDA from the Company’snon-controlling interests.

(3)		3 months ended June 30, 2018						12 months ended June 30, 2018
	Total revenues				$	98,345					$	407,681
	Greater China revenues	$	23,341					$	126,389
	Non-controlling interest ownership percentage(4)		32.07	%					31.96	%
	Deduction fornon-controlling interest share of revenues					(7,485	)					(40,400	)
	Adjusted revenues attributable to common shareholders				$	90,860					$	367,281

(4) Weighted average ownership percentage for change innon-controlling interest share

11

IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)

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

The Company reported net income of $10.3 million, which calculates to $0.16 per basic and diluted share, for the second quarter of 2018 as compared to a net income of $1.8 million, $0.03 per basic and diluted share for the second quarter of 2017.

Net income for the second quarter of 2018 includes a $6.8 million charge, or $0.10 per diluted share (2017 — $6.8 million or $0.10 per diluted share), for stock-based compensation and a $0.5 million charge, or $0.01 per diluted share for exit costs, restructuring charges and associated impairments (2017 — $10.3 million or $0.15 per diluted share), and a $7.5 million charge, or $0.12 per diluted share, for a legal arbitration award related to one of the Company’s litigation matters from 2006 (2017 — $nil or $nil per diluted share).

Adjusted net income, which consists of net income excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award and the related tax impact, was $21.7 million, or $0.34 per diluted share, for the second quarter of 2018 as compared to adjusted net income of $13.5 million, or $0.20 per diluted share, for the second quarter of 2017.

The Company reported net income attributable to common shareholders of $7.6 million, or $0.12 per basic and diluted share for the second quarter of 2018 (2017 — loss of $1.7 million or $0.03 per basic and diluted share).

Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award and the related tax impact, was $19.0 million, or $0.30 per diluted share, for the second quarter of 2018 as compared to adjusted net income attributable to common shareholders of $9.6 million, or $0.15 per diluted share, for the second quarter of 2017.

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

	Quarter Ended June 30,
(In thousands of U.S. dollars, except per share amounts)	2018						2017
	Net Income			Diluted EPS			Net Income			Diluted EPS
Reported net income	$	10,255		$	0.16		$	1,809		$	0.03
Adjustments:
Stock-based compensation		6,756			0.10			6,793			0.10
Exit costs, restructuring charges and associated impairments		456			0.01			10,258			0.15
Legal arbitration award		7,500			0.12			—			—
Tax impact on items listed above		(3,228	)		(0.05	)		(5,382	)		(0.08	)
Adjusted net income		21,739			0.34			13,478			0.20
Net (income) loss attributable tonon-controlling interests		(2,630	)		(0.04	)		(3,521	)		(0.05	)
Stock-based compensation (net of tax of less than $0.1 million and less than $0.1 million, respectively)		(147	)		—			(153	)		—
Exit costs, restructuring charges and associated impairments (net of tax of less than $0.1 million)		—			—			(168	)		—
Adjusted net income attributable to common shareholders	$	18,962		$	0.30		$	9,636		$	0.15
Weighted average diluted shares outstanding					63,426						65,992

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

The Company reported net income of $22.3 million, or $0.35 per basic and diluted share, for the six months ended June 30, 2018 as compared to net income of $0.9 million, or $0.01 per basic and diluted share for the six months ended June 30, 2017.

Net income for the six months ended June 30, 2018 includes a $11.6 million charge, or $0.18 per diluted share (2017 — $12.1 million or $0.18 per diluted share) for stock-based compensation, and a $1.2 million charge, or $0.02 per diluted share for exit costs, restructuring charges and associated impairments (2017 — $10.3 million, or $0.15 per diluted share), and a $7.5 million charge, or $0.12 per diluted share for a legal arbitration award related to one of the Company’s litigation matters from 2006 (2017 — $nil or $nil per diluted share).

Adjusted net income, which consists of net income excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award and the related tax impact, was $38.8 million, or $0.61 per diluted share, for the six months ended June 30, 2018 as compared to adjusted net income of $16.5 million, or $0.24 per diluted share, for the six months ended June 30, 2017.

The Company reported a net income attributable to common shareholders of $16.1 million, or $0.25 per basic and diluted share for the six months ended June 30, 2018 (2017 — net loss of $1.6 million, or a loss of $0.02 per basic and diluted share).

Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award and the related tax impact, was $32.4 million, or $0.51 per diluted share, for the six months ended June 30, 2018 as compared to adjusted net income attributable to common shareholders of $13.5 million, or $0.20 per diluted share, for the six months ended June 30, 2017.

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

	Six Months Ended June 30,
(In thousands of U.S. dollars, except per share amounts)	2018						2017
	Net Income			Diluted EPS			Net Income			Diluted EPS
Reported net income	$	22,322		$	0.35		$	922		$	0.01
Adjustments:
Stock-based compensation		11,603			0.18			12,057			0.18
Exit costs, restructuring charges and associated impairments		1,158			0.02			10,258			0.15
Legal arbitration award		7,500			0.12			—			—
Tax impact on items listed above		(3,787	)		(0.06	)		(6,723	)		(0.10	)
Adjusted net income		38,796			0.61			16,514			0.24
Net (income) loss attributable tonon-controlling interests		(6,192	)		(0.10	)		(2,559	)		(0.04	)
Stock-based compensation (net of tax of $0.1 million and $0.1 million, respectively)		(204	)		—			(281	)		—
Exit costs, restructuring charges and associated impairments (net of tax of less than $0.1 million)		—			—			(168	)		—
Adjusted net income attributable to common shareholders	$	32,400		$	0.51		$	13,506		$	0.20
Weighted average diluted shares outstanding					64,006						66,548

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Free Cash Flow:

Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the consolidated statements of cash flows). Cash provided by operating activities consist of net income, plus depreciation and amortization, plus the change in deferred income taxes, plus othernon-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, anon-GAAP measure, as a measure of the Company’safter-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented in the table below:

	For the Three months ended June 30, 2018			For the Six months ended June 30, 2018
(In thousands of U.S. Dollars)
Net cash provided by operating activities	$	31,191		$	46,654
Net cash used in investing activities		(6,839	)		(18,792	)
Net cash flow	$	24,352		$	27,862

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