1 unchanged sentence
The following unaudited Condensed Consolidated Financial Statements are filed as part of this Report:
−Removed: Condensed Consolidated Balance Sheets as at June 30, 2020 and December 31, 2019
−Removed: Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019
−Removed: Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 30, 2020 and 2019
−Removed: Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019
−Removed: Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2020 and 2019
+Added: Condensed Consolidated Balance Sheets as at September 30, 2020 and December 31, 2019
+Added: Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019
+Added: Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2020 and 2019
+Added: Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019
+Added: Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2020 and 2019
Notes to Condensed Consolidated Financial Statements
3 unchanged sentences
dollars except per share amounts)
+Added: September 30,
Cash and cash equivalents
32 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Technology sales
6 unchanged sentences
Technology rentals
−Removed: (Margin loss) gross margin
Selling, general and administrative expenses
5 unchanged sentences
(Loss) income from operations
−Removed: Gain (loss) in fair value of equity securities
+Added: Gain (loss) in fair value of investments
Retirement benefits non-service expense
2 unchanged sentences
(Loss) income before taxes
−Removed: Income tax benefit (expense)
−Removed: Equity in losses of investees, net of tax
+Added: Income tax expense
+Added: Equity in (losses) gains of investees, net of tax
Net (loss) income
8 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Net (loss) income
4 unchanged sentences
Other comprehensive income (loss), before tax
−Removed: Income tax (expense) benefit related to other comprehensive (loss) income
+Added: Income tax (expense) benefit related to other comprehensive income (loss)
Other comprehensive income (loss), net of tax
6 unchanged sentences
(In thousands of U.S.
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Cash (used in) provided by:
4 unchanged sentences
Credit loss expense
−Removed: Deferred income tax (benefit) expense
+Added: Deferred income tax expense
Share-based and other non-cash compensation
−Removed: Unrealized foreign currency exchange loss (gain)
−Removed: Loss in fair value of equity securities
+Added: Unrealized foreign currency exchange (gain) loss
+Added: Loss in fair value of investments
Equity in losses of investees
6 unchanged sentences
Purchase of property, plant and equipment
−Removed: Purchase of equipment for joint revenue sharing arrangements
+Added: Investment in equipment for joint revenue sharing arrangements
Acquisition of other intangible assets
2 unchanged sentences
Financing Activities
−Removed: Increase in credit facility borrowings
−Removed: Repayment of credit facility borrowings
+Added: Increase in revolving credit facility borrowings
+Added: Repayment of revolving credit facility borrowings
Credit facility amendment fees paid
17 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Adjustments to capital stock:
27 unchanged sentences
Balance, beginning of period
−Removed: Net (loss) income attributable to non-controlling interests
+Added: Net income (loss) attributable to non-controlling interests
Other comprehensive income (loss), net of tax
14 unchanged sentences
In the Company’s opinion, the unaudited Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods presented.
−Removed: The interim results presented in the Company’s Condensed Consolidated Statements of Operations are not necessarily indicative of results for a full year, particularly in this interim period due to the impacts of the COVID-19 global pandemic.
−Removed: (See Note 2.)
−Removed: The Company’s Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the its 2019 Annual Report on Form 10-K (the “2019 Form 10-K”), which should be consulted for a summary of the significant accounting policies utilized by the Company.
−Removed: The Condensed Consolidated Financial Statements are prepared following the same accounting policies disclosed in the Company’s 2019 Form 10-K, except as described in Note 4 below.
+Added: The interim results presented in the Company’s Condensed Consolidated Statements of Operations are not necessarily indicative of results for a full year, particularly in this interim period due to the impacts of the COVID-19 global pandemic (see Note 2).
+Added: These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s 2019 Annual Report on Form 10-K (the “2019 Form 10-K”), which should be consulted for a summary of the significant accounting policies utilized by the Company.
+Added: The Condensed Consolidated Financial Statements are prepared following the same accounting policies disclosed in the 2019 Form 10-K, except as described in Note 4 below.
In the first quarter of 2020, the Company updated certain account names within Revenues and Costs and Expenses Applicable to Revenues in its Condensed Consolidated Statements of Operations to better describe the nature of its revenue-generating activities and related costs.
1 unchanged sentence
These Condensed Consolidated Financial Statements include the accounts of the Company, except for subsidiaries which have been identified as variable interest entities (“VIEs”) where the Company is not the primary beneficiary.
−Removed: All intercompany accounts and transactions, including all unrealized intercompany profits on transactions with equity method investees, have been eliminated.
+Added: All intercompany accounts and transactions have been eliminated.
The Company has interests in ten film production companies, which have been identified as VIEs.
1 unchanged sentence
The majority of the assets relating to these production companies are held by the IMAX Original Film Fund (the “Original Film Fund”) as described in Note 17(b).
−Removed: The Company does not consolidate the other five film production companies because it does not have the power to direct their activities and does not have the obligation to absorb the majority of the expected losses or the right to receive expected residual returns.
+Added: The Company does not consolidate the other five film production companies because it does not have the power to direct their activities and it does not have the obligation to absorb the majority of the expected losses or the right to receive expected residual returns.
The Company uses the equity method of accounting for these entities, which are not material to the Company’s Condensed Consolidated Financial Statements.
−Removed: A loss in value of an investment that is other than temporary is recognized as a charge to the Condensed Consolidated Statements of Operations.
+Added: A loss in value of an investment that is other than temporary is recognized as a charge in the Condensed Consolidated Statements of Operations.
Total assets and liabilities of the Company’s consolidated VIEs are as follows:
+Added: September 30,
Total liabilities (1)
+Added: (1) Prior year comparative has been reclassified to conform with current period presentation.
Estimates and Assumptions
In preparing the Company’s Condensed Consolidated Financial Statements, management makes judgments in applying various accounting policies.
−Removed: The areas of policy judgment are consistent with those reported in the Company’s 2019 Form 10-K, with the exception of the adoption of the estimate of current expected credit losses that became effective January 1, 2020, which also involves significant judgment and estimation, and is described in Note 4 below.
+Added: The areas of policy judgment are consistent with those reported in Note 2(b) in the 2019 Form 10-K, with the exception of the estimates used by the Company in applying ASU No.
+Added: 2016-13, “Financial Instruments – Credit Losses (Topic 326):
+Added: Measurement of Credit Losses on Financial Instruments,” which was adopted on January 1, 2020 and also involves significant judgment and estimation (see Note 4).
In addition, management makes assumptions about the Company’s future operating results and cash flows in deriving critical accounting estimates used in preparing the Condensed Consolidated Financial Statements.
−Removed: As disclosed in the Company’s 2019 Form 10-K, such sources of estimation include estimates used to determine the recoverable amounts of receivables, inventory, film assets, long-lived assets (including assets used to support
−Removed: joint revenue sharing arrangements), goodwill and deferred tax assets, as well as estimates of variable consideration related to future box office performance.
−Removed: To date, the Company’s operations have been significantly impacted by the COVID-19 pandemic, as described in Note 2.
−Removed: There continues to be significant ongoing uncertainty surrounding the extent and duration of the impacts that the pandemic will have on box office results and the installation of IMAX Theater Systems, as well as the Company’s customers, suppliers, and employees.
−Removed: There is heightened potential for future credit losses on receivables, inventory write downs, impairments of film assets, impairments of long-lived assets (including the theater system equipment supporting the Company’s joint revenue sharing arrangements), impairments of goodwill, valuation allowances against deferred tax assets, and the reversal of variable consideration receivables that are based on future box office performance.
+Added: As disclosed in Note 2(b) in the 2019 Form 10-K, such sources of estimation include estimates used to determine the recoverable amounts of receivables, inventory, film assets, long-lived assets (including the theater system equipment supporting the Company’s joint revenue sharing arrangements), goodwill and deferred tax assets, as well as estimates of variable consideration related to future box office performance.
+Added: To date, the Company’s operations have been significantly impacted by the COVID-19 global pandemic, as described in Note 2.
+Added: There continues to be significant ongoing uncertainty surrounding the extent and duration of the impacts that the pandemic will continue to have on box office results and the installation of IMAX Theater Systems, as well as the Company’s customers, suppliers, and employees.
+Added: There is heightened potential for future credit losses on receivables, inventory write downs, impairments of film assets, impairments of long-lived assets (including the theater system equipment supporting the Company’s joint revenue sharing arrangements), impairments of goodwill, valuation allowances against deferred tax assets, and the reversal of variable consideration receivables that are based on estimates of future box office performance.
In the current environment, assumptions about box office results, IMAX Theater System installations, and customer creditworthiness have greater variability than normal, which could in the future significantly affect the valuation of the Company’s assets, both financial and non-financial.
−Removed: The Company’s cash flow estimates for testing the recoverability of certain long-lived assets are based on a longer time horizon due to the long-term nature of its underlying contracts, allowing time for a recovery of the cash flows associated with the underlying assets groups, which management has factored into its estimates.
−Removed: The accuracy of management’s estimates is dependent, in part, on the timing of the reopening of theaters in the IMAX network, and on the release of new films by production studios.
+Added: The cash flow estimates used to test the recoverability of certain of the Company’s long-lived assets are based on a longer time horizon due to the long-term nature of the underlying contracts, allowing time for a recovery of the cash flows associated with the underlying assets groups, which management has factored into its estimates.
+Added: The accuracy of management’s estimates is dependent, in part, on the timing and extent of the reopening of theaters in the IMAX network, and on the release of new films by movie studios.
These theater reopening and film release scenarios are highly uncertain and have been factored into management’s cash flow estimates.
−Removed: As an understanding of the longer-term impacts of COVID-19 on the Company’s customers and business develops, there is a heightened potential for changes in management’s estimates over the remainder of 2020.
+Added: As an understanding of the longer-term impacts of COVID-19 on the Company’s customers and business develops, there is a heightened potential for changes in management’s estimates over the remainder of 2020 and into 2021.
Impact of COVID-19 Pandemic
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On March 11, 2020, due to the worsening public health crisis associated with the novel coronavirus, COVID-19 was characterized as a pandemic by the World Health Organization, and in the following weeks, local, state and national governments instituted stay-at-home orders and restrictions on large public gatherings which caused movie theaters in countries around the world to temporarily close, including substantially all of the IMAX theaters in those countries.
−Removed: As a result of the theater closures, Hollywood and Chinese movie studios have postponed the theatrical release of multiple films, including many scheduled to be shown in IMAX theaters, while other films have been released directly to streaming platforms.
−Removed: As of the date of this report, stay-at-home orders have been lifted in many countries and movie theaters are gradually reopening with reduced capacities, physical distancing requirements, and other safety measures.
−Removed: Subsequent to June 30, 2020, approximately 40 % of the theaters in the IMAX commercial multiplex network have begun to report gross box office (“GBO”) results in July.
−Removed: These theaters span across 40 countries and include the Domestic, Greater China and Rest of World markets.
−Removed: The repercussions of the COVID-19 global pandemic have resulted in a significant decrease in the Company’s revenues, earnings and operating cash flows during the three and six months ended June 30, 2020 as GBO results declined significantly, the installation of certain theater systems was delayed, and maintenance services were generally suspended.
−Removed: During the time period when a significant number of theaters in the IMAX network are closed, the Company has and will continue to experience a significant decline in earnings and operating cash flows as it is generating significantly lower than normal levels of GBO-based revenue from its joint revenue sharing arrangements and digital remastering services, it is unable to provide normal maintenance services to any of the theaters that remain closed, and while some installation activity is continuing, certain theater system installations have, and may continue to be delayed.
−Removed: In addition, the Company has experienced and may continue to experience delays in collecting payments due under existing theater sale or lease arrangements from its exhibitor partners who are now facing financial difficulties as a result of the theater closures.
−Removed: T he Company may continue to be significantly impacted by the COVID-19 global pandemic even after some or all theaters are reopened.
+Added: As a result of the theater closures, Hollywood and Chinese movie studios postponed the theatrical release of multiple films, including many scheduled to be shown in IMAX theaters, while certain other films have been released directly to streaming platforms.
+Added: More recently, stay-at-home orders have been lifted in many countries and movie theaters throughout the IMAX network gradually reopened in the third quarter of 2020 with reduced capacities, physical distancing requirements, and other safety measures.
+Added: During the third quarter of 2020, a significant number of the theaters in the IMAX commercial multiplex network reopened, including substantially all of the theaters in Greater China and the majority of the theaters in Domestic (i.e., United States and Canada) locations and Rest of World markets.
+Added: In many parts of Asia, audiences have returned to theaters, particularly IMAX theaters, in numbers consistent with pre-pandemic attendance.
+Added: However, ticket sales have been significantly lower than normal levels in theaters outside of Asia and, in recent weeks, Hollywood movie studios further delayed a number of films due to be released in the fourth quarter of 2020.
+Added: As a result, certain theater chains have recently closed again or have reduced their operating hours.
+Added: In addition, theaters in major markets such as New York City and Los Angeles continue to remain temporarily closed.
+Added: The repercussions of the COVID-19 global pandemic have resulted in a significant decrease in the Company’s revenues , earnings and operating cash flows during the three and nine months ended September 30, 2020 as gross box office (“ GBO ”) results declined significantly, the installation s of certain theater systems w ere delayed, and maintenance services were generally suspended for theaters that were closed.
+Added: During time periods in which there is a lack of new films released by movie studios and a significant number of theaters in the IMAX network are closed, the Company has and will continue to experience a significant decline in earnings and operating cash flows as it is generating significantly lower than normal levels of GBO-based revenue from its joint revenue sharing arrangements and digital remastering services, it is unable to provide normal maintenance services to any of the theaters that remain closed, and while some installation activity is continuing, certain theater system installations have, and may continue to be delayed.
+Added: In addition, the Company has experienced and is likely to continue to experience delays in collecting payments due under existing theater sale or lease arrangements from its exhibitor partners who are now facing financial difficulties as a result of the theater closures.
+Added: In response, the Company has provided temporary relief to exhibitor partners by waiving maintenance fees during periods when theaters are closed and, in certain situations, by providing extended payment terms on annual minimum payment obligations in exchange for a corresponding extension of the term of the underlying sale or lease arrangement.
+Added: A s discussed in Note 4, for the three and nine months ended September 30, 2020, the Company increased its provision for current expected credit losses by $ 3.9 million and $ 15.6 million , respectively, principally reflecting a reduction in the credit quality of its theater related accounts receivable , financing receivables and variable consideration receivables .
+Added: T he Company may continue to be significantly impacted by the COVID-19 global pandemic even after a significant portion or all theaters are reopened.
The global economic impact of COVID-19 has led to record levels of unemployment in certain countries, which has led to, and may continue to result in lower consumer spending.
The timing and extent of a recovery of consumer behavior and willingness to spend discretionary income on movie-going may delay the Company’s ability to generate significant GBO-based revenue until such time as consumer behavior normalizes and consumer spending recovers.
−Removed: In response to uncertainties associated with the COVID-19 pandemic, the Company has taken and is continuing to take significant steps to preserve cash by eliminating non-essential costs, reducing employee hours and deferring all non-essential capital expenditures to minimum levels.
+Added: In response to uncertainties associated with the COVID-19 global pandemic, the Company has taken and is continuing to take significant steps to preserve cash by eliminating non-essential costs, placing certain employees on a temporary furlough for at least the remainder of the current fiscal year, reducing the working hours of other employees and deferring all non-essential capital expenditures to minimum levels.
The Company has also implemented an active cash management process, which, among other things, requires senior management approval of all outgoing payments.
−Removed: In addition, in the first quarter of 2020, the Company drew down the $ 280.0 million in available borrowing capacity under its credit facility, which was then amended in June 2020 to, among other things, suspend the senior secured net leverage ratio financial covenant in the underlying credit agreement through the first quarter of 2021
−Removed: (see Note 7) .
−Removed: Furthermore, the Company has applied for wage subsidies , tax credits and other financial support under the newly enacted COVID-19 relief legislation in the countries in which it operates .
−Removed: The Company receive d approximately $ 2.2 million in July 2020 under the Canada Emergency Wage Subsidy program and expects to receive approximately $ 1.0 million under the U.S.
−Removed: CARES Act, both of which were recognized in the second quarter of 2020 as reduction s to S elling, G eneral and A dministrative E xpenses ( $ 2.9 million) and C osts and E xpenses A pplicable to R evenues ( $ 0.3 million) in the Condensed Consolidated Statements of Operations .
+Added: In addition, in the first quarter of 2020, the Company drew down the $ 280.0 million in remaining available borrowing capacity under its credit facility, which was then amended in June 2020 to, among other things, suspend the senior secured net leverage ratio financial covenant in the underlying credit agreement through the first quarter of 2021 and substitute quarterly EBITDA from the third and fourth quarters of 2019 in lieu of the EBITDA for the corresponding quarters of 2020 to meet the original senior secured net leverage ratio financial covenant (see Note 7).
+Added: Furthermore, the Company has applied for wage subsidies, tax credits and other financial support under the enacted COVID-19 relief legislation in the countries in which it operates.
+Added: During 2020, the Company recognized $ 4.5 million under the Canada Emergency Wage Subsidy (“CEWS”) program and $ 0.7 million under the U.S.
+Added: CARES Act, as reductions to Selling, General and Administrative Expenses ($ 4.5 million), Costs and Expenses Applicable to Revenues ($ 0.6 million) and Research and Development ($ 0.1 million) in the Condensed Consolidated Statements of Operations.
+Added: The CEWS program has been extended to June 2021.
The Company will continue to review and apply for additional subsidies and credits for the remaining terms of these programs, where applicable.
−Removed: Consistent with the first quarter of 2020, the Company performed a quantitative goodwill impairment test taking into account the latest available information and determined that its goodwill was no t impaired as of June 30, 2020.
+Added: Consistent with the first and second quarters of 2020, the Company performed a quantitative goodwill impairment test considering the latest available information and determined that its goodwill was not impaired as of September 30, 2020.
As of that date, the Company’s total Goodwill was $ 39.0 million, of which $ 19.0 million relates to the IMAX Systems reporting unit, $ 13.6 million relates to the Joint Revenue Sharing Arrangement reporting unit, and $ 6.4 million relates to the IMAX Maintenance reporting unit .
2 unchanged sentences
These estimates and the likelihood of future changes in these estimates depend on a number of underlying variables and a range of possible outcomes.
−Removed: Actual results may materially differ from management’s estimates, especially due to the uncertainties associated with the COVID-19 pandemic .
−Removed: (See Note 1.)
−Removed: In the second quarter of 2020, the Company also updated its recoverability tests of the carrying values of the theater system equipment supporting its joint revenue sharing arrangements, which are recorded within Property, Plant and Equipment .
−Removed: In performing its reviews of recoverability, the Company estimated the undiscounted future cash flows expected to result from the use of the assets and determined that there was no impairment as of the date of each test.
−Removed: The cash flow estimates used in these reviews are consistent with management’s estimated long-term projections, against which various sensitivity analyses were performed.
−Removed: These estimates are highly uncertain due to the COVID-19 pandemic, therefore management’s estimated cash flows factor in a number of underlying variables and ranges of possible cash flow scenarios.
−Removed: Actual results may materially differ from management’s estimates, especially due to the uncertainties associated with the COVID-19 pandemic .
−Removed: (See Note 1.)
+Added: Actual results may materially differ from management’s estimates, especially due to the uncertainties associated with the COVID-19 pandemic (see Note 1).
+Added: In the third quarter of 2020, the Company also updated its recoverability tests of the carrying values of the theater system equipment supporting its joint revenue sharing arrangements, which are recorded within Property, Plant and Equipment .
+Added: In performing its reviews of recoverability, the Company estimated the undiscounted future cash flows expected to result from the use of the assets and determined that there was no impairment as of September 30, 2020.
+Added: The cash flow estimates used in these tests are consistent with management’s estimated long-term projections, against which various sensitivity analyses were performed.
+Added: These estimates are highly uncertain due to the COVID-19 global pandemic;
+Added: therefore, management’s estimated cash flows factor in a number of underlying variables and ranges of possible cash flow scenarios.
+Added: Actual results may materially differ from management’s estimates, especially due to the uncertainties associated with the COVID-19 pandemic (see Note 1).
+Added: In the third quarter of 2020, the Company also assessed the recoverability of its deferred tax assets due to losses recognized in the period associated with the COVID-19 global pandemic.
+Added: The utilization of the Company’s deferred tax assets is dependent on having sufficient future tax benefits, such as taxable income in each of the jurisdictions to which the deferred tax assets relate.
+Added: In the third quarter of 2020, the Company recorded a $ 23.7 million valuation allowance to reduce the value of deferred tax assets in certain jurisdictions where the Company incurs corporate leadership and administrative costs and where management could not reliably estimate future taxable income in th ose jurisdiction s due to uncertainties associated with the COVID-19 global pandemic.
+Added: At the point in time when the uncertainties of COVID-19 resolve and the Company is able to reliably forecast sufficient future taxable income in the impacted jurisdictions, the $ 23.7 million valuation allowance recorded in the third quarter of 2020 may be reversed.
+Added: Despite this valuation allowance, the Company remains entitled to benefit from tax attributes which currently have a valuation allowance applied (see Note 11).
If business conditions deteriorate further, or should they remain depressed for a prolonged period of time, management’s estimates of operating results and future cash flows for the IMAX Systems and Joint Revenue Sharing Arrangements reporting units may be insufficient to support the goodwill assigned to them, thus requiring impairment charges.
The Company will continue to evaluate the recoverability of goodwill at the reporting unit level on an annual basis as of the beginning of its fourth fiscal quarter and whenever events or changes in circumstances indicate there may be a potential impairment.
−Removed: Estimates related to future expected credit losses (Note 4) and deferred tax assets (Note 11) could also be materially impacted by changes in estimates in the future.
−Removed: (See Note 1.)
+Added: In addition, estimates related to future expected credit losses (Note 4) and the recoverability of deferred tax assets (Note 11) could also be further materially impacted by changes in estimates in the future (see Note 1).
Recently Issued Accounting Standards Not Yet Adopted
3 unchanged sentences
The purpose of ASU 2019-05 is to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.
−Removed: The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022.
+Added: The amendments are effective for all entities from the beginning of an interim period that includes the issuance date of the ASU.
+Added: An entity may elect to apply the amendments prospectively through December 31, 2022.
The Company is currently assessing the impact of ASU 2020-04 on its Condensed Consolidated Financial Statements.
The Company considers the applicability and impact of all recently issued FASB accounting standard codification updates.
−Removed: Accounting standards updates that are not noted above were assessed and determined to be not applicable or not significant to the Company’s Condensed Consolidated Financial Statements for the period ended June 30, 2020.
+Added: Accounting standards updates that are not noted above were assessed and determined to be not applicable or not significant to the Company’s Condensed Consolidated Financial Statements for the period ended September 30, 2020.
Current Expected Credit Losses
7 unchanged sentences
Accounts Receivable
−Removed: Accounts receivable principally includes amounts currently due to the Company under theater sale and sales-type lease arrangements, contingent fees earned from theaters operators as a result of box office performance, and fees for theater maintenance services.
−Removed: To a lesser extent, accounts receivable also includes amounts due from movie studios and other content creators for digitally remastering films into IMAX formats, as well as for film distribution and post-production services.
+Added: Accounts receivable principally includes amounts currently due to the Company under theater sale and sales-type lease arrangements, contingent fees owed by theater operators as a result of box office performance and fees for theater maintenance services.
+Added: Accounts receivable also includes amounts due from movie studios and other content creators for digitally remastering films into IMAX formats, as well as for film distribution and post-production services.
In order to mitigate the credit risk associated with accounts receivable, management performs an initial credit evaluation prior to entering into an arrangement with a customer and then regularly monitors the credit quality of each customer through an analysis of collections history and aging.
16 unchanged sentences
The ability of the Company to collect its accounts receivable balances is heavily dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions.
−Removed: Theater operators, or other customers, may experience financial difficulties that could cause them to be unable to fulfill their payment obligations to the Company.
+Added: Theater operators, or other customers, may experience financial difficulties, such as those imposed by the COVID-19 global pandemic, that could cause them to be unable to fulfill their payment obligations to the Company.
The Company develops its estimate of credit losses by class of receivable and customer type through a calculation that utilizes historical loss rates which are then adjusted for specific receivables that are judged to have a higher than normal risk profile after taking into account management’s internal credit quality classifications, as well as macro-economic and industry risk factors.
−Removed: The following table summarizes the activity in the allowance for credit losses related to accounts receivable for the three and six months ended June 30, 2020:
−Removed: Three Months Ended June 30, 2020
−Removed: Six Months Ended June 30, 2020
+Added: The following table summarizes the activity in the allowance for credit losses related to accounts receivable for the three and nine months ended September 30, 2020:
+Added: Three Months Ended September 30, 2020
+Added: Nine Months Ended September 30, 2020
Beginning balance
2 unchanged sentences
Ending balance
−Removed: For the three and six months ended June 30, 2020, the Company recorded provisions for current expected credit losses of $ 1.3 million and $ 7.7 million, respectively, reflecting a reduction in the credit quality of its theater and studio related accounts receivable, which management believes is primarily related to the COVID-19 global pandemic.
−Removed: For the three months ended June 30, 2020, the reductions to the provisions for the Theater Operators and Other categories are principally due to decreases in the underlying receivable balances.
+Added: For the three and nine months ended September 30, 2020, the Company recorded provisions for current expected credit losses of $ 1.8 million and $ 9.5 million, respectively, reflecting a reduction in the credit quality of its theater and studio related accounts receivable, which management believes is primarily related to the COVID-19 global pandemic.
+Added: For the three months ended September 30, 2020, the reduction to the provision for Studios is principally due to improved collection experience with a particular customer.
Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future.
Due to the unprecedented nature of the COVID-19 pandemic, its effect on the Company’s customers and their ability to meet their financial obligations to the Company is difficult to predict.
−Removed: As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect.
−Removed: (See Notes 1 and 2.)
+Added: As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect (see Notes 1 and 2).
Financing Receivables
6 unchanged sentences
The ability of the Company to collect its financing receivable balances is heavily dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions.
−Removed: Theater operators may experience financial difficulties that could cause them to be unable to fulfill their payment obligations to the Company.
+Added: Theater operators may experience financial difficulties, such as those imposed by the COVID-19 global pandemic, that could cause them to be unable to fulfill their payment obligations to the Company.
The Company develops its estimate of credit losses by class of receivable and customer type through a calculation that utilizes historical loss rates which are then adjusted for specific receivables that are judged to have a higher than normal risk profile after taking into account management’s internal credit quality classifications, as well as macro-economic and industry risk factors.
−Removed: As at June 30, 2020 and December 31, 2019, financing receivables consist of the following:
+Added: As at September 30, 2020 and December 31, 2019, financing receivables consist of the following:
+Added: September 30,
Net investment in leases
14 unchanged sentences
Total financed sales receivables
−Removed: As at June 30, 2020 and December 31, 2019, the weighted-average remaining lease term and weighted-average interest rate associated with the Company’s sales-type lease arrangements and financed sale receivables, as applicable, are as follows:
+Added: As at September 30, 2020 and December 31, 2019, the weighted-average remaining lease term and weighted-average interest rate associated with the Company’s sales-type lease arrangements and financed sale receivables, as applicable, are as follows:
+Added: September 30,
Weighted-average remaining lease term (in years)
3 unchanged sentences
Financed sales receivables
−Removed: The following tables provide information on the Company’s net investment in leases by credit quality indicator as at June 30, 2020 and December 31, 2019:
+Added: The following tables provide information on the Company’s net investment in leases by credit quality indicator as at September 30, 2020 and December 31, 2019:
By Origination Year
−Removed: As at June 30, 2020
+Added: As at September 30, 2020
Net investment in leases:
4 unchanged sentences
Total net investment in leases
−Removed: Current-period gross write-offs
−Removed: Current-period recoveries
−Removed: Current-period net write-offs
By Origination Year
6 unchanged sentences
Total net investment in leases
−Removed: The following tables provide information on the Company’s financed sale receivables by credit quality indicator as at June 30, 2020 and December 31, 2019:
+Added: The following tables provide information on the Company’s financed sale receivables by credit quality indicator as at September 30, 2020 and December 31, 2019:
By Origination Year
−Removed: As at June 30, 2020
+Added: As at September 30, 2020
Financed sales receivables:
4 unchanged sentences
Total financed sales receivables
−Removed: Current-period gross write-offs
−Removed: Current-period recoveries
−Removed: Current-period net write-offs
By Origination Year
6 unchanged sentences
Total financed sales receivables
−Removed: The following tables provide an aging analysis for the Company’s net investment in leases and financed sale receivables as at June 30, 2020 and December 31, 2019:
−Removed: As at June 30, 2020
+Added: The following tables provide an aging analysis for the Company’s net investment in leases and financed sale receivables as at September 30, 2020 and December 31, 2019:
+Added: As at September 30, 2020
Net investment in leases
4 unchanged sentences
The Company considers financing receivables with an aging between 60-89 days as indications of theaters with potential collection concerns.
−Removed: The Company will begin to focus its review on these financing receivables and increase its discussions internally and with the theater regarding payment status.
+Added: At this point, the Company will begin to focus its review on these financing receivables and increase its discussions internally and with the theater regarding payment status.
Once a theater’s aging exceeds 90 days, the Company’s policy is to perform an enhanced review to assess collectibility of the theater’s past due accounts.
1 unchanged sentence
Given the potential impacts of the COVID-19 global pandemic on the Company’s customers, management is enhancing its monitoring procedures with respect to overdue receivables.
−Removed: The following table provides information about the Company’s net investment in leases and financed sale receivables with billed amounts past due for which it continues to accrue finance income as at June 30, 2020 and December 31, 2019:
−Removed: As at June 30, 2020
+Added: The following table provides information about the Company’s net investment in leases and financed sale receivables with billed amounts past due for which it continues to accrue finance income as at September 30, 2020 and December 31, 2019:
+Added: As at September 30, 2020
Net investment in leases
3 unchanged sentences
Financed sales receivables
−Removed: The following table provides information about the Company’s net investment in leases and financed sale receivables that are on nonaccrual status as at June 30, 2020 and December 31, 2019:
−Removed: As at June 30, 2020
+Added: The following table provides information about the Company’s net investment in leases and financed sale receivables that are on nonaccrual status as at September 30, 2020 and December 31, 2019:
+Added: As at September 30, 2020
As at December 31, 2019
5 unchanged sentences
Once the collectibility issues are resolved and the customer has returned to being in good standing, the Company will resume recognition of finance income.
−Removed: For the three and six months ended June 30, 2020, the Company recognized $ 0.1 million and $ 0.2 million, respectively (2019 — $ 0.1 million and $ 0.2 million, respectively) in finance income related to the net investment in leases with billed amounts past due.
−Removed: For the three and six months ended June 30, 2020, the Company recognized $ 0.9 million and $ 3.0 million, respectively (2019 —$ 2.1 million and $ 4.6 million, respectively) in finance income related to the financed sale receivables with billed amounts past due.
−Removed: The following table summarizes the activity in the allowance for credit losses related to the Company’s net investment in leases and financed sale receivables for the three and six months ended June 30, 2020 and 2019:
−Removed: Three Months Ended June 30, 2020
−Removed: Six Months Ended June 30, 2020
+Added: For the nine months ended September 30, 2020, the Company recognized $ 0.1 million (2019 —$ 0.1 million) in finance income related to the net investment in leases with billed amounts past due.
+Added: There was no such finance income recognized for the three months ended September 30, 2020 and 2019.
+Added: For the three and nine months ended September 30, 2020, the Company recognized $ 1.4 million and $ 4.2 million, respectively (2019 —$ 1.5 million and $ 5.1 million, respectively) in finance income related to the financed sale receivables with billed amounts past due.
+Added: The following table summarizes the activity in the allowance for credit losses related to the Company’s net investment in leases and financed sale receivables for the three and nine months ended September 30, 2020 and 2019:
+Added: Three Months Ended September 30, 2020
+Added: Nine Months Ended September 30, 2020
Net Investment
6 unchanged sentences
Ending balance
−Removed: Three Months Ended June 30, 2019
−Removed: Six Months Ended June 30, 2019
+Added: Three Months Ended September 30, 2019
+Added: Nine Months Ended September 30, 2019
Net Investment
4 unchanged sentences
Ending balance
−Removed: For the three and six months ended June 30, 2020, the Company recorded a provision for current expected credit losses of $ 0.2 million and $ 3.1 million, respectively, reflecting a reduction in the credit quality of its theater related financing receivables, which management believes is primarily related to the COVID-19 global pandemic.
+Added: For the three and nine months ended September 30, 2020, the Company recorded a provision for current expected credit losses of $ 1.3 million and $ 4.4 million, respectively, reflecting a reduction in the credit quality of its theater related financing receivables, which management believes is primarily related to the COVID-19 global pandemic.
Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future.
Due to the unprecedented nature of the COVID-19 pandemic, its effect on the Company’s customers and their ability to meet their financial obligations to the Company is difficult to predict.
−Removed: As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect.
−Removed: (See Notes 1 and 2.)
+Added: As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect (see Notes 1 and 2).
Variable Consideration Receivable
3 unchanged sentences
The ability of the Company to collect its variable consideration receivables is heavily dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions.
−Removed: Theater operators may experience financial difficulties that could cause them to be unable to fulfill their payment obligations to the Company.
−Removed: The Company develops its estimate of credit losses by class of receivable and customer type through a calculation utilizing historical loss rates for financed sale receivables which are then adjusted for specific receivables that are judged to have a higher than normal risk profile after taking into account management’s internal credit quality classifications, as well as macro-economic and industry risk factors.
−Removed: The following table summarizes the activity in the allowance for credit losses related to variable consideration receivables for the three and six months ended June 30, 2020 :
−Removed: Three Months Ended June 30, 2020
−Removed: Six Months Ended June 30, 2020
+Added: Theater operators may experience financial difficulties, such as those imposed by the COVID-19 global pandemic, that could cause them to be unable to fulfill their payment obligations to the Company.
+Added: The Company develops its estimate of credit losses by class of receivable and customer type through a calculation utiliz ing historic al loss rates for financed sale receivables which are then adjusted for specific receivables that are judged to have a higher than normal risk profile after taking into account management’s internal credit quality classifications, as well as macro-economic and industry risk factors.
+Added: The following table summarizes the activity in the allowance for credit losses related to variable consideration receivables for the three and nine months ended September 30, 2020:
+Added: Three Months Ended September 30, 2020
+Added: Nine Months Ended September 30, 2020
Beginning balance
Current period provision
+Added: Foreign Exchange
Ending balance
−Removed: For the six months ended June 30, 2020, the Company recorded a provision of $ 0.9 million for current expected credit losses, reflecting a reduction in the credit quality of its theater related variable consideration receivables, which management believes is primarily related to the COVID-19 global pandemic.
+Added: For the nine months ended September 30, 2020, the Company recorded a provision of $ 1.7 million for current expected credit losses, reflecting a reduction in the credit quality of its theater related variable consideration receivables, which management believes is primarily related to the COVID-19 global pandemic.
Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future.
Due to the unprecedented nature of the COVID-19 pandemic, its effect on the Company’s customers and their ability to meet their financial obligations to the Company is difficult to predict.
−Removed: As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect.
−Removed: (See Notes 1 and 2.)
+Added: As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect (see Notes 1 and 2).
Lease Arrangements
10 unchanged sentences
The Company rents or subleases certain office space to third parties, which have a remaining term of less than 12 months and are not expected to be renewed.
−Removed: For three and six months ended June 30, 2020 and 2019, the components of lease expense recorded within Selling, General and Administrative expenses are as follows:
−Removed: Three Months Ended June 30,
−Removed: Six Months Ended June 30,
+Added: For three and nine months ended September 30, 2020 and 2019, the components of lease expense recorded within Selling, General and Administrative expenses are as follows:
+Added: Three Months Ended September 30,
+Added: Nine Months Ended September 30,
Operating lease cost (1)
2 unchanged sentences
Total lease cost
−Removed: Includes short-term leases and variable lease costs, which are not significant for the three and six months ended June 30, 2020 and 2019.
−Removed: For three and six months ended June 30, 2020 and 2019, supplemental cash flow information related to leases is as follows:
−Removed: Six Months Ended
+Added: Includes short-term leases and variable lease costs, which are not significant for the three and nine months ended September 30, 2020 and 2019.
+Added: For three and nine months ended September 30, 2020 and 2019, supplemental cash and non-cash information related to leases is as follows:
+Added: Nine Months Ended
+Added: September 30,
Cash paid for amounts included in the measurement of lease liabilities
Right-of-use assets obtained in exchange for lease obligations
−Removed: As at June 30, 2020 and December 31, 2019, supplemental balance sheet information related to leases is as follows:
+Added: As at September 30, 2020 and December 31, 2019, supplemental balance sheet information related to leases is as follows:
+Added: September 30,
Right-of-Use Assets
2 unchanged sentences
Accrued and other liabilities
−Removed: As at June 30, 2020 and December 31, 2019, the weighted-average remaining lease term and weighted-average interest rate associated with the Company’s operating leases are as follows:
+Added: As at September 30, 2020 and December 31, 2019, the weighted-average remaining lease term and weighted-average interest rate associated with the Company’s operating leases are as follows:
+Added: September 30,
Weighted-average remaining lease term (years)
Weighted-average discount rate
−Removed: As at June 30, 2020, the maturities of the Company’s operating lease liabilities are as follows:
+Added: As at September 30, 2020, the maturities of the Company’s operating lease liabilities are as follows:
Operating Leases
−Removed: 2020 (six months remaining)
+Added: 2020 (three months remaining)
Total lease payments
11 unchanged sentences
The customer is required to pay for executory costs such as insurance and taxes and is required to pay the Company for maintenance and extended warranty generally after the first year of the lease until the end of the lease term.
−Removed: The customer is responsible for obtaining insurance coverage for the
−Removed: IMAX Theater System commencing on the date specified in the arrangement’s shipping terms and ending on the date the IMAX Theater System is returned to the Company.
+Added: The customer is responsible for obtaining insurance coverage for the IMAX Theater System commencing on the date specified in the arrangement’s shipping terms and ending on the date the IMAX Theater System is returned to the Company.
The Company also provides IMAX Theater Systems to customers through joint revenue sharing arrangements.
−Removed: Under the traditional form of these arrangements, in exchange for providing the IMAX system under a long-term lease, the Company earns rent based on a percentage of contingent box office receipts and, in some cases, concession revenues, rather than requiring the customer to pay a fixed upfront fee or annual minimum payments.
+Added: Under the traditional form of these arrangements, in exchange for providing the IMAX Theater System under a long-term lease, the Company earns rent based on a percentage of contingent box office receipts and, in some cases, concession revenues, rather than requiring the customer to pay a fixed upfront fee or annual minimum payments.
The Company has assessed the nature of its joint revenue sharing arrangements and concluded that the arrangements contain an operating lease.
11 unchanged sentences
The adoption of this guidance did not have a material effect on the Company’s Condensed Consolidated Financial Statements.
−Removed: As at June 30, 2020 and December 31, 2019, inventories consist of the following:
+Added: As at September 30, 2020 and December 31, 2019, inventories consist of the following:
+Added: September 30,
Raw materials
1 unchanged sentence
Finished goods
−Removed: When compared to December 31, 2019, inventories increased by $ 17.2 million due to delays in manufacturing, shipments and installation of IMAX Theater Systems at customer sites due to government restrictions in various countries limiting public gatherings as a result of the COVID-19 global pandemic.
−Removed: At June 30, 2020, inventories include finished goods of $ 4.0 million (December 31, 2019 — $ 0.7 million) for which title had passed to the customer, but the criteria for revenue recognition were not met as of the balance sheet date.
−Removed: During the three and six months ended June 30, 2020, the Company recognized write-downs of $ 0.1 million for excess and obsolete inventory based on current estimates of net realizable value.
−Removed: (2019 — $nil).
+Added: When compared to December 31, 2019, inventories increased by $ 10.0 million due to delays in manufacturing, shipments and installation of IMAX Theater Systems at customer sites due to the COVID-19 global pandemic.
+Added: At September 30, 2020, inventories include finished goods of $ 4.8 million (December 31, 2019 — $ 0.7 million) for which title had passed to the customer, but the criteria for revenue recognition were not met as of the balance sheet date.
+Added: During the three and nine months ended September 30, 2020, the Company recognized write-downs of $ 0.6 million and $ 0.7 million, respectively, for excess and obsolete inventory based on current estimates of net realizable value.
+Added: There were no write-downs recorded during the three and nine months ended September 30, 2019.
Credit Facility and Other Financing Arrangements
−Removed: As at June 30, 2020 and December 31, 2019, bank indebtedness includes the following:
+Added: As at September 30, 2020 and December 31, 2019, bank indebtedness includes the following:
+Added: September 30,
Credit Facility
12 unchanged sentences
The modifications to the negative covenants, the minimum liquidity covenant and modifications to certain other provisions in the Credit Agreement pursuant to the Amendment were effective from the date of the Amendment until the earlier of the delivery of the compliance certificate for the fourth quarter of 2021 and the date on which the Company, in its sole discretion, elects to calculate its compliance with the Senior Secured Net Leverage Ratio by using either its actual EBITDA or annualized EBITDA (the “Designated Period”).
−Removed: The Company was in compliance with all of its requirements under the Credit Agreement, as amended, as at June 30, 2020, and based on current projections expects to be in compliance through at least the next year.
+Added: The Company was in compliance with all of its requirements under the Credit Agreement, as amended, as at September 30, 2020, and based on current projections expects to be in compliance through the next twelve months.
Borrowings under the Credit Facility bear interest, at the Company’s option, at (i) LIBOR plus a margin ranging from 1.00 % to 1.75 % per annum;
3 unchanged sentences
base rate borrowings will be 1.75 % per annum.
−Removed: The effective interest rate for the three and six months ended June 30, 2020 was 1.83 % and 1.86 %, respectively (2019 — 3.52 % and 3.55 %, respectively).
+Added: The effective interest rate for the three and nine months ended September 30, 2020 was 2.70 % and 2.24 %, respectively (2019 — 3.34 % and 3.50 %, respectively).
In addition, the Credit Facility has standby fees ranging from 0.25 % to 0.38 % per annum, based on the Company’s Total Leverage Ratio with respect to the unused portion of the Credit Facility;
−Removed: provided, however, that from the effective date of the Amendment until
−Removed: the Company delivers a compliance certificate under the Credit Facility following the end of the Designated Period, the standby fee will be 0.50 % per annum.
+Added: provided, however, that from the effective date of the Amendment until the Company delivers a compliance certificate under the Credit Facility following the end of the Designated Period, the standby fee will be 0.50 % per annum.
The Company incurred fees of approximately $ 1.1 million in connection with the Amendment, which are being amortized on a straight-line basis through December 31, 2021.
−Removed: As at June 30, 2020 and December 31, 2019, the Company did no t have any letters of credit or advance payment guarantees outstanding under the Credit Facility.
+Added: As at September 30, 2020 and December 31, 2019, the Company did no t have any letters of credit or advance payment guarantees outstanding under the Credit Facility.
Working Capital Facility
1 unchanged sentence
(“IMAX Shanghai”), one of the Company’s majority-owned subsidiaries in China, renewed its unsecured revolving facility for up to 200.0 million Renminbi (approximately $ 30.0 million) to fund ongoing working capital requirements (the “Working Capital Facility”).
−Removed: As at June 30, 2020, there was 1.7 million Renminbi ($ 0.2 million) in borrowings outstanding under the Working Capital Facility and 198.3 million Renminbi ($ 29.8 million) was available for future borrowings.
+Added: As at September 30, 2020, there was 1.7 million Renminbi ($ 0.3 million) in borrowings outstanding under the Working Capital Facility and 198.3 million Renminbi ($ 29.7 million) was available for future borrowings.
There were no amounts drawn under the Working Capital facility at December 31, 2019.
The amounts available for borrowing under the Working Capital Facility are not subject to a standby fee.
−Removed: The effective interest rate for the three and six months ended June 30, 2020 was 4.35 %, respectively.
−Removed: Subsequent to June 30, 2020, IMAX Shanghai renewed its Working Capital Facility.
+Added: The effective interest rate for the three and nine months ended September 30, 2020 was 4.35 %, respectively.
Wells Fargo Foreign Exchange Facility
Within the Credit Facility, the Company is able to purchase foreign currency forward contracts and/or other swap arrangements.
−Removed: The net settlement loss on its foreign currency forward contracts was $ 0.3 million at June 30, 2020, as the notional value exceeded the fair value of the forward contracts (December 31, 2019 — $ 0.5 million net settlement gain).
−Removed: As at June 30, 2020, the Company has $ 36.0 million in notional value of such arrangements outstanding (December 31, 2019 — $ 36.1 million).
+Added: The net settlement gain on its foreign currency forward contracts was $ 0.5 million at September 30, 2020, as the fair value of the forward contracts exceeded the notional value (December 31, 2019 — $ 0.5 million net settlement gain).
+Added: As at September 30, 2020, the Company has $ 40.2 million in notional value of such arrangements outstanding (December 31, 2019 — $ 36.1 million).
On October 28, 2019, the Company entered into a $ 5.0 million facility with the National Bank of Canada (the “NBC Facility”) fully insured by Export Development Canada for use solely in conjunction with the issuance of performance guarantees and letters of credit.
−Removed: The Company did no t have any letters of credit or advance payment guarantees outstanding as at June 30, 2020 and December 31, 2019 under the NBC Facility.
+Added: The Company did no t have any letters of credit or advance payment guarantees outstanding as at September 30, 2020 and December 31, 2019 under the NBC Facility.
Commitments, Contingencies and Guarantees
42 unchanged sentences
Product Warranties
−Removed: The Company’s accrual for product warranties, which was recorded as part of accrued and other liabilities in the Condensed Consolidated Balance Sheets, was less than $ 0.1 million and $ 0.2 million at June 30, 2020 and December 31, 2019 , respectively.
+Added: The Company’s accrual for product warranties, which was recorded as part of accrued and other liabilities in the Condensed Consolidated Balance Sheets, was less than $ 0.1 million and $ 0.2 million at September 30, 2020 and December 31, 2019 , respectively.
Director/Officer Indemnifications
3 unchanged sentences
The Company has purchased directors’ and officers’ liability insurance.
−Removed: No amount has been accrued in the Condensed Consolidated Balance Sheets as at June 30, 2020 and December 31, 2019, with respect to this indemnity.
+Added: No amount has been accrued in the Condensed Consolidated Balance Sheets as at September 30, 2020 and December 31, 2019, with respect to this indemnity.
Other Indemnification Agreements
13 unchanged sentences
The Company defers direct selling costs such as sales commissions and other amounts related to its sales and sales-type lease arrangements until the related revenue is recognized.
−Removed: These costs and direct advertising and marketing, which are included in Costs and Expenses Applicable to Revenues – Technology Sales, totaled $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2020, respectively (2019 — $ 0.4 million and $ 0.9 million, respectively).
−Removed: Film exploitation costs, including advertising and marketing, totaled a recovery of less than $ 0.1 million and expense of $ 2.6 million for the three and six months ended June 30, 2020, respectively (2019 — expense of $ 9.6 million and $ 14.1 million, respectively), and are recorded as incurred in Costs and Expenses Applicable to Revenues – Image Enhancement and Maintenance Services.
−Removed: Commissions are recognized as Costs and Expenses Applicable to Revenues – Technology Rentals in the month they are earned.
−Removed: These costs totaled less than $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2020, respectively (2019 — recovery of $ 0.4 million and recovery of $ 0.6 million, respectively).
+Added: These costs and direct advertising and marketing, which are included in Costs and Expenses Applicable to Revenues – Technology Sales, totaled $ 0.6 million and $ 1.0 million for the three and nine months ended September 30, 2020, respectively (2019 — $ 0.6 million and $ 1.5 million, respectively).
+Added: Film exploitation costs, including advertising and marketing expense, totaled $ 0.5 million and $ 3.1 million for the three and nine months ended September 30, 2020, respectively (2019 — expense of $ 4.3 million and $ 18.4 million, respectively), and are expensed as incurred in Costs and Expenses Applicable to Revenues – Image Enhancement and Maintenance Services.
+Added: Sales commissions related to joint revenue sharing arrangements accounted for operating leases are recognized as Costs and Expenses Applicable to Revenues – Technology Rentals in the month they are earned.
+Added: These costs totaled $ 0.3 million and $ 0.5 million for the three and nine months ended September 30, 2020, respectively (2019 — expense of $ 0.3 million and recovery of $ 0.3 million, respectively).
Direct advertising and marketing costs for each theater are charged to Costs and Expenses Applicable to Revenues – Technology Rentals as incurred.
−Removed: These costs totaled less than $ 0.1 million and $ 0.4 million for the three and six months ended June 30, 2020, respectively (2019 — $ 0.7 million and $ 0.9 million, respectively).
+Added: These costs totaled $ 0.4 million and $ 0.8 million for the three and nine months ended September 30, 2020, respectively (2019 — $ 0.5 million and $ 1.4 million, respectively).
Foreign Exchange
−Removed: Included in Selling, General and Administrative Expenses for the three and six months ended June 30, 2020 is a loss of $ 0.3 million and a loss of $ 1.0 million, respectively (2019 — loss of $ 0.2 million and loss of $ 0.4 million, respectively) for net foreign exchange gains/losses related to the translation of foreign currency denominated monetary assets and liabilities.
+Added: Included in Selling, General and Administrative Expenses for the three and nine months ended September 30, 2020 is a gain of $ 0.2 million and a loss of $( 0.8 ) million, respectively (2019 — loss of ($ 0.7 ) million and $( 1.1 ) million, respectively) for net foreign exchange gains/losses related to the translation of foreign currency denominated monetary assets and liabilities.
See Note 16(c) for additional information.
1 unchanged sentence
Joint Revenue Sharing Arrangements
−Removed: In a joint revenue sharing arrangement, the Company receives a portion of a theater’s box office and in certain arrangements a portion of concession revenues and a small upfront or initial payment, in exchange for placing an IMAX Theater System at the theater operator’s venue.
+Added: In a joint revenue sharing arrangement, the Company receives a portion of a theater’s box office receipts and in certain arrangements a portion of concession revenues and a small upfront or initial payment, in exchange for placing an IMAX Theater System at the theater operator’s venue.
Under joint revenue sharing arrangements, the customer has the ability and the right to operate the hardware components or direct others to operate them in a manner determined by the customer.
4 unchanged sentences
The customer is responsible for obtaining insurance coverage for the IMAX Theater System commencing on the date specified in the arrangement’s shipping terms and ending on the date the IMAX Theater System is returned to the Company.
−Removed: The Company has signed traditional and hybrid joint revenue sharing agreements with 41 exhibitors for a total of 1,237 IMAX Theater Systems, of which 868 theaters were included in the IMAX network as at June 30, 2020, the terms of which are similar in nature, rights and obligations.
+Added: The Company has signed traditional and hybrid joint revenue sharing agreements with 41 exhibitors for a total of 1,233 IMAX Theater Systems, of which 881 theaters were included in the IMAX network as at September 30, 2020, the terms of which are similar in nature, rights and obligations.
The accounting policy for the Company’s joint revenue sharing arrangements is disclosed in Note 2(n) of the Company’s 2019 Form 10-K.
−Removed: Amounts attributable to transactions arising between the Company and its customers under joint revenue sharing arrangements are included in Revenues — Technology Sales and Revenues — Technology Rentals and for the three and six months ended June 30, 2020 amounted to $ 0.1 million and $ 6.9 million, respectively (2019 — $ 27.8 million and $ 48.2 million, respectively).
+Added: Amounts attributable to transactions arising between the Company and its customers under joint revenue sharing arrangements are included in Revenues — Technology Sales and Revenues — Technology Rentals and for the three and nine months ended September 30, 2020 amounted to $ 4.5 million and $ 11.5 million, respectively (2019 — $ 17.9 million and $ 66.1 million, respectively).
In an IMAX DMR arrangement, the Company transforms conventional motion pictures into the Company’s large screen format, allowing the release of Hollywood content to the global IMAX theater network.
1 unchanged sentence
In recent years, the percentage of gross box office receipts earned in IMAX DMR arrangements has averaged approximately 12.5 %, except for within Greater China, where the Company receives a lower percentage of net box office receipts for certain Hollywood films.
−Removed: For the six months ended June 30, 2020, the majority of IMAX DMR revenue was earned from the exhibition of 14 IMAX DMR films (2019 – 39 ) throughout the IMAX theater network.
+Added: For the three and nine months ended September 30, 2020, the majority of IMAX DMR revenue was earned from the exhibition of six and 20 IMAX DMR films, respectively (2019 – 26 and 59 , respectively) and the re-release of classic titles throughout the IMAX theater network.
The accounting policy for the Company’s IMAX DMR arrangements is disclosed in Note 2(n) of the Company’s 2019 Form 10-K.
−Removed: Amounts attributable to transactions arising between the Company and its customers under IMAX DMR arrangements are included in Revenues – Image Enhancement and Maintenance Services and for the three and six months ended June 30, 2020 amounted to $ 0.6 million and $ 11.2 million, respectively (2019 — $ 39.3 million and $ 67.2 million, respectively).
+Added: Amounts attributable to transactions arising between the Company and its customers under IMAX DMR arrangements are included in Revenues – Image Enhancement and Maintenance Services and for the three and nine months ended September 30, 2020 amounted to $ 6.9 million and $ 18.1 million, respectively (2019 — $ 26.7 million and $ 93.9 million, respectively).
Co-Produced Film Arrangements
2 unchanged sentences
Under these arrangements, both parties contribute funding to the Company’s partly-owned subsidiary for the production and distribution of the film and for associated exploitation costs.
−Removed: As at June 30, 2020, the Company has two significant co-produced film arrangements which represent the VIE total assets balance of $ 7.0 million and liabilities balance of $ 15.5 million and three other co-produced film arrangements, the terms of which are similar.
+Added: As at September 30, 2020, the Company has two co-produced film arrangements which represent the VIE total assets balance of $ 1.6 million and liabilities balance of $ 0.2 million and three other co-produced film arrangements, the terms of which are similar.
The accounting policies relating to co-produced film arrangements are disclosed in Notes 2(a) and 2(n) of the Company’s 2019 Form 10-K.
−Removed: For the three and six months ended June 30, 2020, expenses totaling $ 1.2 million and $ 1.4 million, respectively (2019 — less than $ 0.1 million and $ 0.2 million, respectively) attributable to transactions between the Company and other parties involved in the production of the films have been included in Costs and Expenses Applicable to Revenues – Image Enhancement and Maintenance Services.
−Removed: For the three and six months ended June 30, 2020, revenue of $ 0.1 million and $ 0.1 million, respectively (2019 — $nil and less than $ 0.1 million, respectively) and Costs and Expenses Applicable to Revenues of $nil and $nil, respectively (2019 — $nil and less than $ 0.1 million, respectively) attributable to this collaborative arrangement have been recorded in Revenue – Image Enhancement and Maintenance Services and Costs and Expenses Applicable to Revenues – Image Enhancement and Maintenance Services.
+Added: For the three and nine months ended September 30, 2020, expenses totaling $ 0.5 million and $ 1.9 million, respectively (2019 —$ 0.1 million and $ 0.3 million, respectively) attributable to transactions between the Company and other parties involved in the production of the films have been included in Costs and Expenses Applicable to Revenues – Image Enhancement and Maintenance Services.
Condensed Consolidated Statements of Cash Flows Supplemental Information
Changes in other operating assets and liabilities as reported in the Condensed Consolidated Statements of Cash Flows are comprised of the following:
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Decrease (increase) in:
6 unchanged sentences
Depreciation and amortization are comprised of the following:
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Property, plant and equipment:
4 unchanged sentences
Write-downs are comprised of the following:
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Film assets (1)
Other assets (2)
−Removed: Joint revenue sharing arrangements (3)
Property, plant and equipment
+Added: Joint revenue sharing arrangements (3)
+Added: Other property, plant and equipment
+Added: Inventories (4)
Other intangible assets
−Removed: In the six months ended June 30, 2020, the Company recorded an impairment loss of $ 4.5 million (2019 — $nil) to write-down the carrying value of certain documentary and alternative content film assets due to a decrease in projected box office totals and related revenues based on management’s regular quarterly recoverability assessments.
−Removed: As of June 30, 2020 , following the recording of these write-downs, the Company’s film assets totaled $ 13.1 million, which principally consists of documentary and DMR content.
−Removed: The recoverability of these assets assumes the return to historical levels of box office results as theaters reopen following the lifting of COVID-19 restrictions.
−Removed: There can be no assurances that there will not be additional write-downs to the carrying values of these assets as the Company continues to assess the ongoing impact of the COVID-19 pandemic.
−Removed: (See Notes 1 and 2.)
−Removed: In the six months ended June 30, 2020, the Company recorded a $ 1.2 million (2019 - $ nil ) write-down of other assets, of which $ 1.0 million relates to the write-down of certain content-related assets which became impaired in the period.
−Removed: In the six months ended June 30, 2020, the Company recorded charges of $ 0.9 million in Costs and Expenses Applicable to Technology Rentals principally related to the write-down of xenon-based digital systems which were upgraded by customers to laser-based digital systems and taken out of service.
−Removed: In the six months ended June 30, 2019, the Company recorded a charge of $ 0.1 million in Costs and Expenses Applicable to Technology Rentals and $ 0.1 million in Revenues -Technology Rentals upon the upgrade of xenon-based digital systems under joint revenue sharing arrangements to laser-based digital systems.
+Added: In the nine months ended September 30, 2020, the Company recorded impairment losses of $ 10.2 million (2019 — $ 0.2 million) principally to write-down the carrying value of certain documentary and alternative content film assets due to a decrease in projected box office totals and related revenues based on management’s regular quarterly recoverability assessments.
+Added: To a much lesser extent, the impairment losses also relate to the write-down of DMR related film assets.
+Added: As of September 30, 2020 , following the recording of these write-downs, the Company’s film assets totaled $ 7.5 million, which principally consists of DMR and documentary content.
+Added: There can be no assurances that there will not be additional write-downs to the carrying values of these assets as the Company continues to assess the ongoing impact of the COVID-19 pandemic (see Notes 1 and 2).
+Added: In the nine months ended September 30, 2020, the Company recorded a $ 1.2 million (2019 — $ nil ) write-down of other assets, of which $ 1.0 million relates to the write-down of certain content-related assets which became impaired in the period.
+Added: In the nine months ended September 30, 2020, the Company recorded charges of $ 1.1 million in Costs and Expenses Applicable to Technology Rentals principally related to the write-down of leased xenon-based digital systems which were taken out of service in connection with customer upgrades to laser-based digital systems.
+Added: In the nine months ended September 30, 2019, the Company recorded a charge of $ 0.1 million in Costs and Expenses Applicable to Technology Rentals and $ 0.1 million in Revenues -Technology Rentals related to the write-down of leased xenon-based digital systems which were taken out of service in connection with customer upgrades to laser-based digital systems.
+Added: In the nine months ended September 30, 2020, the Company recorded write-downs of $ 0.7 million (2019 — $nil) related to excess inventory .
Significant non-cash investing activities are comprised of the following:
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Net (decrease) increase in accruals related to:
3 unchanged sentences
Income Tax Expense
−Removed: The Company’s effective tax benefit rate for the three months ended June 30, 2020, is 25.4 % and differs from the Canadian statutory tax rate of 26.2 %, primarily due to permanent book to tax differences, investment and other tax credits, jurisdictional tax rate differences, management’s estimates of contingent liabilities related to the resolution of various tax examinations and withholding taxes associated with the reversal of the indefinite reinvestment assertion for certain foreign subsidiaries, as discussed below.
+Added: For the three months ended September 30, 2020, the Company recorded income tax expense of $ 19.3 million (2019 — tax expense of $ 3.0 million), which includes a $ 23.7 million valuation allowance to reduce the value of deferred tax assets in certain jurisdictions where the Company incurs corporate leadership and administrative costs and where management could not reliably estimate future taxable income in those jurisdictions due to uncertainties associated with the COVID-19 global pandemic.
+Added: The Company’s effective tax rate for the three months ended September 30, 2020 of ( 69.6 )% differs from the Canadian statutory tax rate of 26.2 %, primarily due to the recording of this valuation allowance, permanent book to tax differences, jurisdictional tax rate differences, and management’s estimates of contingent liabilities related to the resolution of various tax examinations.
+Added: For the nine months ended September 30, 2020, the Company recorded income tax expense of $ 24.6 million (2019 — tax expense of $ 12.0 million), which includes the $ 23.7 million valuation allowance recorded in the third quarter of 2020, as discussed above.
+Added: The Company’s effective tax rate for the nine months ended September 30, 2020 of ( 22.1 )% differs from the Canadian statutory tax rate of 26.2 %, primarily due to the recording of this valuation allowance, withholding taxes associated with the reversal of the indefinite reinvestment assertion for certain subsidiaries as discussed below, permanent book to tax differences, jurisdictional tax rate differences, and management’s estimates of contingent liabilities related to the resolution of various tax examinations.
+Added: At the point in time when the uncertainties of COVID-19 resolve and the Company is able to reliably forecast sufficient future taxable income in the impacted jurisdictions, the $ 23.7 million valuation allowance recorded in the third quarter of 2020 may be reversed.
+Added: Despite this valuation allowance, the Company remains entitled to benefit from tax attributes which currently have a valuation allowance applied .
+Added: As at September 30, 2020, the Company’s Condensed Consolidated Balance Sheets include net deferred income tax assets of $ 17.7 million, net of a valuation allowance of $ 23.9 million (December 31, 2019 — $ 23.9 million, net of a valuation allowance of $ 0.2 million).
+Added: The utilization of the Company’s deferred tax assets is dependent on having a sufficient level of future tax benefits, such as taxable income in each of the jurisdictions to which the deferred tax assets relate.
+Added: Accordingly, the net amount recorded on the Condensed Consolidated Balance Sheets relies on management’s estimates of future taxable income and is therefore subject to the uncertainties associated with accounting estimates, as discussed in Note 1.
+Added: Should actual results differ from management’s estimates of future taxable income, an increased valuation allowance may be required.
+Added: As at September 30, 2020, the Company’s Condensed Consolidated Balance Sheets include a deferred income tax liability of $ 18.7 million (December 31, 2019 — $nil).
In the first quarter of 2020, management completed a reassessment of its strategy with respect to the most efficient means of deploying the Company’s capital resources globally.
Based on the results of this reassessment, management concluded that the historical earnings of certain foreign subsidiaries in excess of amounts required to sustain business operations would no longer be indefinitely reinvested.
−Removed: As a result, the Company recognized a deferred tax liability of $ 19.7 million in the first quarter of 2020 for the estimated applicable foreign withholding taxes associated with these historical earnings, which will become payable upon the
−Removed: repatriation of any such earnings.
−Removed: In the second quarter of 2020, the estimate of the applicable foreign withholding taxes was reduced by $ 1.2 million to $ 18.5 million due to a reduction in the amount of distributable historical earnings .
−Removed: Cash held outside of Canada as at June 30, 2020 was $ 75.0 million ( December 31, 2019 — $ 90.1 million ), of which $ 61.5 million was held in the People’s Republic of China (“PRC”) ( December 31, 2019 — $ 67.6 million ).
−Removed: For the three months ended June 30, 2020, the Company recorded income tax benefit of $ 10.2 million (2019 — tax expense of $ 5.3 million), which includes the $ 1.2 million reduction to the foreign withholding taxes discussed above.
−Removed: In addition, in the second quarter of 2020 , the Company recognized income tax expense of $ 0.3 million (2019 — $ 0.1 million) related to the provision for uncertain tax positions.
−Removed: The Company’s effective tax rate for the six months ended June 30, 2020 is - 6.3 % and differs from the Canadian statutory tax rate of 26.2 %, primarily due to permanent book to tax differences, investment and other tax credits, jurisdictional tax rate differences, managements estimates of contingent liabilities related to the resolution of various tax examinations and withholding taxes associated with the reversal of the indefinite reinvestment assertion for certain foreign subsidiaries, as discussed above.
−Removed: For the six months ended June 30, 2020 , the Company recorded income tax expense of $ 5.3 million (2019 — $ 9.0 million) , which includes the $ 18.5 million foreign withholding taxes discussed above .
−Removed: In addition, in the six months ended June 30, 2020, the Company recognized income tax expense of $ 5.1 million ( 2019 — $ 0.5 million) related to the provision for uncertain tax positions and an expense of $ 0.7 million ( 2019 — $ 0.3 million) recognized to reduce the tax benefit available on share-based compensation costs recognized in the period.
−Removed: As at June 30, 2020, the Company’s Condensed Consolidated Balance Sheets include net deferred income tax assets of $ 46.8 million, which is net of a valuation allowance of $0.2 million (December 31, 2019 — $ 23.9 million).
−Removed: As at June 30, 2020, the Company’s Condensed Consolidated Balance Sheets include a deferred income tax liability of $ 18.5 million (December 31, 2019 — $nil).
−Removed: During the three months ended June 30, 2020, deferred tax assets increased by $ 8.9 million due to losses recognized in the period.
−Removed: The recoverability of these deferred tax assets is subject to certain levels of future taxable income and the uncertainties associated with accounting estimates, as discussed in Note 1.
−Removed: Based on a review of the projected future earnings of the Company there was no change in management’s estimates of the recoverability of the Company’s deferred tax assets.
−Removed: Should actual results differ from management’s estimates of future taxable income, an increased valuation allowance may be required.
−Removed: The Company’s Chinese subsidiary had taken a deduction for certain share-based compensation issued by its parent company in a prior period and had recognized a related deferred tax asset of $ 1.4 million (December 31, 2019 — $ 1.4 million).
−Removed: Chinese regulatory authorities responsible for capital and exchange controls will need to review and approve the proposed settlement of these transactions before they can be completed.
−Removed: There may be a requirement for future investment of funds into China in order to secure the deduction.
−Removed: Should the Company proceed, any such future investment would come from existing capital invested in the IMAX China group of companies being redeployed amongst the IMAX China group of companies, including the Chinese subsidiary.
+Added: As a result, the Company recognized a deferred tax liability of $ 19.7 million in the first quarter of 2020 for the estimated applicable foreign withholding taxes associated with these historical earnings, which will become payable upon the repatriation of any such earnings The estimate of the applicable foreign withholding taxes was subsequently reduced by $ 1.0 million, principally in the second quarter of 2020, to $ 18.7 million due to a reduction in the amount of distributable historical earnings.
+Added: Cash held outside of Canada as at September 30, 2020 was $ 76.4 million (December 31, 2019 — $ 90.1 million), of which $ 62.6 million was held in the People’s Republic of China (“PRC”) (December 31, 2019 — $ 67.6 million).
Income Tax Effect on Other Comprehensive (Loss) Income
1 unchanged sentence
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Unrealized change in cash flow hedging instruments
3 unchanged sentences
Share-Based Compensation
−Removed: For the three and six months ended June 30, 2020, share-based compensation expense totaled $ 6.5 million and $ 10.7 million, respectively (2019 — $ 7.0 million and $ 11.4 million, respectively) and is reflected in the following accounts in the Condensed Consolidated Statements of Operations:
+Added: For the three and nine months ended September 30, 2020, share-based compensation expense totaled $ 5.3 million and $ 16.0 million, respectively (2019 — $ 5.5 million and $ 16.9 million, respectively) and is reflected in the following accounts in the Condensed Consolidated Statements of Operations:
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Cost and expenses applicable to revenues
1 unchanged sentence
Research and development
−Removed: There were no share-based compensation expenses allocated to Costs and Expenses Applicable to Revenues or Research and Development in the three months ended June 30, 2020 due to the idling of the Company’s productive capacity and slowdown in business activities during the COVID-19 global pandemic.
+Added: For the three and nine months ended September 30, 2020, there was a decrease in share-based compensation expenses allocated to Costs and Expenses Applicable to Revenues and Research and Development, when compared to same period in 2019, due to the lower level of production during the COVID-19 global pandemic.
The following table summarizes the Company’s share-based compensation expense by each award type:
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Stock Options
4 unchanged sentences
IMAX China Long Term Incentive Plan Performance Stock Units
−Removed: For the six months ended June 30, 2020, the above includes expense of $ 0.1 million and $ 0.1 million in the three and six months ended June 30, 2020, respectively (2019 — $ nil and $ nil , respectively) related to restricted share units granted to a certain advisor of the Company.
+Added: Included in the above table is an expense of $nil and $ 0.1 million in the three and nine months ended September 30, 2020, respectively (2019 — less than $ 0.1 million and less than $ 0.1 million, respectively) related to restricted share units granted to a certain advisor of the Company.
+Added: In the third quarter of 2020, IMAX China modified the terms of certain fully vested stock options to extend their contractual life by two years and recorded an associated expense of $ 0.6 million.
Stock Option Summary
−Removed: The following table summarizes the activity under the Company’s Stock Option Plan (“SOP”) and IMAX Amended and Restated Long Term Incentive Plan (“IMAX LTIP”) for the six months ended June 30:
+Added: The following table summarizes the activity under the Company’s Stock Option Plan (“SOP”) and IMAX Amended and Restated Long Term Incentive Plan (as amended, “IMAX LTIP”) for the nine months ended September 30, 2020 and 2019:
Number of Shares
4 unchanged sentences
Stock options exercisable, end of period
−Removed: Stock options are no longer granted under the Company’s previous approved SOP.
+Added: Stock options are no longer granted under the Company’s previously approved SOP.
Restricted Share Units (“RSU”) Summary
−Removed: The following table summarizes the activity in respect of RSUs issued under the IMAX LTIP for the six months ended June 30:
+Added: The following table summarizes the activity in respect of RSUs issued under the IMAX LTIP for the nine months ended September 30, 2020 and 2019:
Number of Awards
4 unchanged sentences
RSUs outstanding, end of period
−Removed: Performance Stock Units Summary
+Added: Performance S tock Units Summary
In the first quarter of 2020, the Company expanded its share-based compensation program to include performance stock units (“PSUs”).
1 unchanged sentence
These awards vest over a three-year performance period.
−Removed: The fair value of PSUs with EBITDA-based targets is equal to the closing price on date of grant or the average closing price of the Company’s common stock for five days prior to the date of grant.
−Removed: The fair value of PSUs with stock-price targets is determined on the grant date using a Monte Carlo simulation, which is a valuation model that takes into account the likelihood of achieving the stock-price targets embedded in the award (“Monte Carlo Model”).
+Added: The grant date fair value of PSUs with EBITDA-based targets is equal to the closing price on date of grant or the average closing price of the Company’s common stock for five days prior to the date of grant.
+Added: The grant date fair value of PSUs with stock-price targets is determined on the grant date using a Monte Carlo simulation, which is a valuation model that takes into account the likelihood of achieving the stock-price targets embedded in the award (“Monte Carlo Model”).
The compensation expense attributable to each type of PSU is recognized on a straight-line basis over the requisite service period.
The fair value determined by the Monte Carlo Model is affected by the Company’s stock price, as well as assumptions regarding a number of highly complex and subjective variables.
−Removed: These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.
+Added: These variables include, but are not limited to, market conditions as of the grant date, the Company’s expected stock price volatility over the term of the awards, and other relevant data.
The compensation expense is fixed on the date of grant based on the dollar value granted.
2 unchanged sentences
Conversely, if, as a result of management’s assessment, it is projected that a lower number of PSUs will vest than previously anticipated, a life-to-date adjustment to decrease compensation expense is recorded in the period such determination is made.
+Added: The Company will complete an assessment of the likelihood of achieving these targets in the fourth quarter of 2020 in connection with its annual budget process for 2021.
+Added: As a result, no adjustment to compensation expense has been recognized in the three and nine months ended September 30, 2020, respectively, related to the PSUs granted in 2020.
Compensation expense is not adjusted for estimated forfeitures, but is instead adjusted based upon the actual forfeiture of the award.
−Removed: The following table summarizes the activity in respect of PSUs issued under the IMAX LTIP for the six months ended June 30:
+Added: The following table summarizes the activity in respect of PSUs issued under the IMAX LTIP for the nine months ended September 30:
Number of Awards
7 unchanged sentences
The Company has no obligation to repurchase shares and the share repurchase program may be suspended or discontinued by the Company at any time.
−Removed: There were no common stock repurchases during the three months ended June 30, 2020.
−Removed: During the six months ended June 30, 2020, the Company repurchased 2,484,123 shares of its common stock at an average price of $ 14.72 per share, excluding commissions.
−Removed: During the three and six months ended June 30, 2019, the Company repurchased 87,769 common shares at an average price of $ 19.45 per share, excluding commissions.
+Added: There were no common stock repurchases during the three months ended September 30, 2020.
+Added: During the nine months ended September 30, 2020, the Company repurchased 2,484,123 shares of its common stock at an average price of $ 14.72 per share, excluding commissions.
+Added: During the three and nine months ended September 30, 2019, the Company repurchased 46,615 and 134,384 common shares, respectively at an average price of $ 20.35 and $ 19.76 per share, respectively excluding commissions.
+Added: The total number of shares purchased during the three and nine months ended September 30, 2020 does not include nil and 200,000 common shares (2019 — 45,000 and 445,000 common shares, respectively) purchased in the administration of employee share-based compensation plans, at an average price of $nil and $ 15.43 per share (2019 — $ 21.52 and $ 22.83 per share, respectively).
+Added: As at September 30, 2020, the IMAX LTIP trustee held 17,578 shares (December 31, 2019 — 187,020 shares) purchased for $ 0.3 million (December 31, 2019 — $ 4.0 million) in the open market to be issued upon the settlement of RSUs and certain stock options.
+Added: The shares held with the trustee are recorded at cost and are reported as a reduction against capital stock on the Condensed Consolidated Balance Sheets.
In 2019, IMAX China announced that its shareholders granted its Board of Directors a general mandate authorizing the Board, subject to applicable laws, to repurchase shares of IMAX China in an amount not to exceed 10 % of the total number of issued shares as at June 6, 2019 ( 35,605,560 shares).
4 unchanged sentences
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.
−Removed: During the three and six months ended June 30, 2020, IMAX China repurchased 425,800 and 906,400 shares of its common stock, respectively, at an average price of HKD 11.63 per share and HKD 13.13 per share, respectively (U.S.
−Removed: $ 1.50 and U.S.
+Added: During the three and nine months ended September 30, 2020, IMAX China repurchased nil and 906,400 shares of its common stock, respectively, at an average price of HKD nil and HKD 13.13 per share, respectively (U.S.
+Added: $nil and U.S.
$ 1.69 , respectively).
−Removed: During the three and six months ended June 30, 2019, IMAX China repurchased 6,315,900 and 7,025,700 of its common shares, respectively, at an average price of HKD 18.59 per share and HKD 18.68 per share, respectively (U.S.
+Added: During the three and nine months ended September 30, 2019, IMAX China repurchased 1,025,800 and 8,051,500 of its common shares, respectively, at an average price of HKD 17.90 and HKD 18.63 per share, respectively (U.S.
$ 2.29 and U.S.
$ 2.38 , respectively).
−Removed: The total number of shares purchased during the six months ended June 30, 2020 does not include 200,000 common shares (2019 — 400,000 common shares) purchased in the administration of employee share-based compensation plans, at an average price of $ 15.43 per share (2019 — $ 22.98 per share).
−Removed: There were no such purchases made during the three months ended June 30, 2020 and 2019.
−Removed: As at June 30, 2020, the IMAX LTIP trustee held 21,313 shares (December 31, 2019 — 187,020 shares) purchased for $ 0.3 million (December 31, 2019 — $ 4.0 million) in the open market to be issued upon the settlement of RSUs and certain stock options.
−Removed: The shares held with the trustee are recorded at cost and are reported as a reduction against capital stock on the Condensed Consolidated Balance Sheets.
Basic and Diluted Weighted Average Shares Outstanding
1 unchanged sentence
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Weighted average number of common shares (000's):
8 unchanged sentences
income per share
−Removed: For three and six months ended June 30, 2020, the calculation of diluted weighted average shares outstanding excludes 6,973,840 and 6,973,840 shares, respectively (2019 — 6,153,795 and 6,226,887 shares, respectively) of common shares issuable upon the vesting of RSUs and PSUs and the exercise of stock options.
+Added: For the three and nine months ended September 30, 2020, the calculation of diluted weighted average shares outstanding excludes 6,959,515 and 6,959,515 shares, respectively (2019 — 5,289,172 and 5,902,208 shares, respectively) of common shares issuable upon the vesting of RSUs and PSUs and the exercise of stock options as the effect would be anti-dilutive.
Revenue from Contracts with Customers
(a) Disaggregated Information About Revenue
−Removed: The following tables summarize the Company’s revenues by type and reportable segment for the three and six months ended June 30, 2020:
−Removed: Three Months Ended June 30, 2020
+Added: The following tables summarize the Company’s revenues by type and reportable segment for the three and nine months ended September 30, 2020:
+Added: Three Months Ended September 30, 2020
Contracts with Customers
13 unchanged sentences
Finance income
−Removed: Six Months Ended June 30, 2020
+Added: Nine Months Ended September 30, 2020
Contracts with Customers
13 unchanged sentences
Finance income
−Removed: The Company is reporting negative revenue due to an adjustment to prior period revenue.
−Removed: Other sales include New Business Initiatives.
−Removed: The Company is reporting negative revenue due to the continued amortization of lessee incentives that are typically netted against lease revenues, which are abnormally low during the period due to the COVID-19 global pandemic, as discussed in Note 2.
−Removed: The following tables summarize the Company’s revenues by type and reportable segment for the three and six months ended June 30, 2019 :
−Removed: Three Months Ended June 30, 2019
+Added: (1) Other sales include revenues associated with New Business Initiatives such as IMAX Enhanced.
+Added: The following tables summarize the Company’s revenues by type and reportable segment for the three and nine months ended September 30, 2019 :
+Added: Three Months Ended September 30, 2019
Contracts with Customers
13 unchanged sentences
Finance income
−Removed: Six Months Ended June 30, 2019
+Added: Nine Months Ended September 30, 2019
Contracts with Customers
13 unchanged sentences
Finance income
−Removed: (1) Other sales include New Business Initiatives.
−Removed: (See Note 2 for information on the current impacts and uncertainties relating to the COVID-19 pandemic, which are impacting the Company’s revenues.)
+Added: (1) Other sales include revenues associated with New Business Initiatives, such as IMAX Enhanced.
+Added: (See Note 2 for information on the current impacts and uncertainties relating to the COVID-19 global pandemic, which are impacting the Company’s revenues.)
(b) Deferred Revenue
−Removed: The Company’s IMAX Theater System sale and lease arrangements include a requirement for it to provide maintenance services over the life of the arrangement, subject to a consumer price index adjustment each year.
+Added: IMAX Theater System sale and lease arrangements include a requirement for the Company to provide maintenance services over the life of the arrangement, subject to a consumer price index adjustment each year.
In circumstances where customers prepay the entire term’s maintenance fee, additional payments are due to the Company for the years after its extended warranty and maintenance obligations expire.
Payments upon renewal each year are either prepaid or made in arrears and can vary in frequency from monthly to annually.
−Removed: At June 30, 2020, $ 17.2 million of consideration has been deferred in relation to outstanding maintenance services to be provided on existing maintenance contracts (December 31, 2019 — $ 17.7 million).
−Removed: The maintenance revenue is recognized evenly over the contract term which coincides with the maintenance services being provided.
+Added: At September 30, 2020, $ 16.7 million of consideration has been deferred in relation to outstanding maintenance services to be provided on existing maintenance contracts (December 31, 2019 — $ 17.7 million).
+Added: Maintenance revenue is recognized evenly over the contract term which coincides with the period over which maintenance services are provided.
In the event of customer default, any payments made by the customer may be retained by the Company.
3 unchanged sentences
Recognition dates are variable and depend on numerous factors, including some outside of the Company’s control.
−Removed: (See Note 2 for information on the current impacts of and uncertainties relating to the COVID-19 pandemic which are impacting Company’s revenues .)
+Added: (See Note 2 for information on the current impacts of and uncertainties relating to the COVID-19 global pandemic which are impacting Company’s revenues .)
Segment Reporting
18 unchanged sentences
Inter-segment profits are eliminated upon consolidation, as well as for the disclosures below.
−Removed: The following table sets forth the breakdown of revenue and (margin loss) gross margin by category for the three months ended June 30, 2020:
−Removed: (Margin Loss) Gross Margin (3)
+Added: The following table sets forth the breakdown of revenue and gross margin (margin loss) by category for the three months ended September 30, 2020:
+Added: Gross Margin (Margin Loss) (3)
IMAX Technology Network
9 unchanged sentences
Post-production
−Removed: The following table sets forth the breakdown of revenue and (margin loss) gross margin by category for six months ended June 30, 2020:
−Removed: (Margin Loss) Gross Margin (3)
+Added: The following table sets forth the breakdown of revenue and gross margin (margin loss) by category for nine months ended September 30, 2020:
+Added: Gross Margin (Margin Loss) (3)
IMAX Technology Network
12 unchanged sentences
Principally includes after-market sales of IMAX projection system parts and 3D glasses .
−Removed: IMAX DMR gross margin includes marketing cost of $nil and $ 2.4 million for the three and six months ended June 30, 2020, respectively (2019 — $ 9.5 million and $ 13.4 million, respectively).
−Removed: JRSA gross margin includes advertising, marketing and commission expense of less than $ 0.1 million and $ 0.6 million for the three and six months ended June 30, 2020, respectively (2019 —$ 0.2 million and $ 0.3 million, respectively).
−Removed: IMAX Systems gross margin includes marketing and commission costs of $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2020, respectively, (2019 — $ 0.4 million and $ 0.9 million, respectively).
−Removed: Film Distribution segment gross margin includes marketing expense of less than $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2020, respectively (2019 — less than $ 0.1 million and $ 0.6 million, respectively).
−Removed: The Company is reporting negative revenue due to the continued amortization of lessee incentives that are typically netted against lease revenues, which are abnormally low during the period due to the COVID-19 global pandemic, as discussed in Note 2.
−Removed: The Company is reporting negative revenue due to an adjustment to prior period revenue.
+Added: IMAX DMR gross margin includes marketing costs of $ 0.4 million and $ 2.8 million for the three and nine months ended September 30, 2020, respectively (2019 — $ 4.3 million and $ 17.7 million, respectively).
+Added: JRSA gross margin includes advertising, marketing and commission expense of $ 0.7 million and $ 1.3 million for the three and nine months ended September 30, 2020, respectively (2019 —$ 0.8 million and $ 1.1 million, respectively).
+Added: IMAX Systems gross margin includes marketing and commission costs of $ 0.6 million and $ 1.0 million for the three and nine months ended September 30, 2020, respectively, (2019 — $ 0.6 million and $ 1.5 million, respectively).
+Added: Film Distribution segment gross margin includes marketing expense of $ 0.2 million and $ 0.4 million for the three and nine months ended September 30, 2020, respectively (2019 — $ 0.1 million and $ 0.7 million, respectively).
+Added: During the three and nine months ended September 30, 2020, Film Distribution segment results were significantly influenced by impairment losses of $ 5.4 million and $ 9.9 million, respectively, to write-down the carrying value of certain documentary and alternative content film assets due to a decrease in projected box office totals and related revenues based on management’s regular quarterly recoverability assessments (2019 – $ 0.2 million and $ 0.2 million ).
Geographic Information
3 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
−Removed: United States
−Removed: Asia (excluding Greater China)
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Greater China
−Removed: Russia & the CIS
Western Europe
+Added: Asia (excluding China)
+Added: United States
Latin America
+Added: Russia & the CIS
Rest of the World
−Removed: No single country in the Rest of the World, Western Europe, Latin America and Asia (excluding Greater China) comprises more than 10% of the Company’s total revenue, except for Japan in the three months ended June 30, 2020 .
+Added: No single country in the Rest of the World, Western Europe, Latin America and Asia (excluding Greater China) comprises more than 10% of the Company’s total revenue in the three months ended September 30, 2020 .
Employee's Pension and Postretirement Benefits
5 unchanged sentences
Gelfond has not informed the Company that he intends to retire at that time.
−Removed: As at June 30, 2020 and December 31, 2019 , the Company’s projected benefit obligation and unfunded status related to the SERP are as follows :
+Added: As at September 30, 2020 and December 31, 2019, the Company’s projected benefit obligation and unfunded status related to the SERP are as follows:
+Added: September 30,
Projected benefit obligation:
4 unchanged sentences
Obligation, end of period and unfunded status
−Removed: The accumulated benefit obligation for the SERP was $ 19.0 million at June 30, 2020 (December 31, 2019 —$ 18.8 million).
−Removed: For the three and six months ended June 30, 2020, the Company recorded interest costs of $ 0.1 million and $ 0.2 million, respectively, (2019 — $ 0.1 million and $ 0.3 million, respectively) related to the SERP.
−Removed: The Company expects to recognize interest costs of $ 0.2 million related to the SERP during the remainder of 2020.
+Added: The accumulated benefit obligation for the SERP was $ 19.1 million at September 30, 2020 (December 31, 2019 —$ 18.8 million).
+Added: For the three and nine months ended September 30, 2020, the Company recorded interest costs of $ 0.1 million and $ 0.3 million, respectively, (2019 — $ 0.1 million and $ 0.4 million, respectively) related to the SERP.
+Added: The Company expects to recognize additional interest costs of $ 0.1 million related to the SERP during the remainder of 2020.
No contributions are expected to be made for the SERP during the remainder of 2020.
2 unchanged sentences
The Company makes contributions to these plans on behalf of employees in an amount up to 5 % of their base salary subject to certain prescribed maximums.
−Removed: During the three and six months ended June 30, 2020, the Company contributed and recorded expense of $ 0.2 million and $ 0.5 million, respectively, (2019 — $ 0.3 million and $ 0.6 million, respectively) to its Canadian defined contribution plan and $ 0.1 million and $ 0.4 million, respectively, (2019 — $ 0.1 million and $ 0.3 million, respectively) to its defined contribution employee plan under Section 401(k) of the U.S.
+Added: During the three and nine months ended September 30, 2020, the Company contributed and recorded expense of $ 0.3 million and $ 0.8 million, respectively, (2019 — $ 0.3 million and $ 0.9 million, respectively) to its Canadian defined contribution plan and $ 0.1 million and $ 0.5 million, respectively, (2019 — $ 0.1 million and $ 0.5 million, respectively) to its defined contribution employee plan under Section 401(k) of the U.S.
Internal Revenue Code.
4 unchanged sentences
The plan provides that the Company will maintain health benefits for Messrs.
−Removed: Gelfond and Wechsler until they become eligible for Medicare and, thereafter, the Company will provide Medicare supplement coverage as selected by Messrs.
+Added: Gelfond and Wechsler until they become eligible for Medicare and, thereafter, the Company will provide Medicare supplemental coverage as selected by Messrs.
Gelfond and Wechsler.
−Removed: As at June 30, 2020, the Company’s postretirement benefits obligation under this plan is $ 0.6 million (December 31, 2019 — $ 0.7 million).
−Removed: For the three and six months ended June 30, 2020, the Company has recorded expense of less than $ 0.1 million and less than $ 0.1 million, respectively (2019 — less than $ 0.1 million and less than $ 0.1 million, respectively) related to this plan.
+Added: As at September 30, 2020, the Company’s postretirement benefits obligation under this plan is $ 0.6 million (December 31, 2019 — $ 0.7 million).
+Added: For the three and nine months ended September 30, 2020, the Company has recorded expense of less than $ 0.1 million and less than $ 0.1 million, respectively (2019 — less than $ 0.1 million and less than $ 0.1 million, respectively) related to this plan.
Postretirement Benefits – Canadian Employees
1 unchanged sentence
The Company will provide eligible participants, upon retirement, with health and welfare benefits.
−Removed: As at June 30, 2020, the Company’s postretirement benefits obligation under this plan is $ 1.5 million (December 31, 2019 — $ 1.6 million).
−Removed: For the three and six months ended June 30, 2020, the Company has recorded expense of less than $ 0.1 million and $ 0.1 million, respectively (2019 — less than $ 0.1 million and less than $ 0.1 million, respectively) related to this plan.
+Added: As at September 30, 2020, the Company’s postretirement benefits obligation under this plan is $ 1.5 million (December 31, 2019 — $ 1.6 million).
+Added: For the three and nine months ended September 30, 2020, the Company has recorded expense of less than $ 0.1 million and $ 0.1 million, respectively (2019 — less than $ 0.1 million and less than $ 0.1 million, respectively) related to this plan.
Deferred Compensation Benefit Plan
The Company maintained a nonqualified deferred compensation benefit plan (the “Retirement Plan”) covering the former CEO of IMAX Entertainment and Senior Executive Vice President of the Company.
−Removed: Under the terms of the Retirement Plan, the benefits were due to vest in full if he incurred a separation from service (as defined therein).
−Removed: In the fourth quarter of 2018, the executive incurred a separation from service, and as such, the Retirement Plan benefits became fully vested as at December 31, 2018 and the accelerated costs were recognized and reflected in Executive Transition Costs on the Consolidated Statement of Operations.
−Removed: As at June 30, 2020, the Company had a funded benefit obligation recorded of $ 3.6 million (December 31, 2019 — $ 3.6 million).
−Removed: The Company did no t recognize any additional expenses in the three and six months ended June 30, 2020 and 2019 .
+Added: Under the terms of the Retirement Plan, the benefits were due to vest in full if the executive incurred a separation from service from the Company (as defined therein).
+Added: In the fourth quarter of 2018, the executive incurred a separation from service from the Company, and as such, the Retirement Plan benefits became fully vested as at December 31, 2018 and the accelerated costs were recognized and reflected in Executive Transition Costs on the Consolidated Statement of Operations.
+Added: As at September 30, 2020, the benefit obligation related to the Retirement Plan was $ 3.6 million (December 31, 2019 — $ 3.6 million) and is recorded on the Company’s Condensed Consolidated Balance Sheets within Accrued and Other Liabilities.
+Added: As the Retirement Plan is fully vested, the benefit obligation is measured at the present value of the benefits expected to be paid in the future with the accretion of interest recognized in the Condensed Consolidated Statements of Operations within Retirement Benefits Non-service Expenses.
+Added: The Retirement Plan is funded by an investment in company-owned life insurance (“COLI”), which is recorded at its fair value on the Company’s Condensed Consolidated Balance Sheets within Prepaid Expenses.
+Added: As at September 30, 2020, fair value of the COLI asset was $ 3.1 million (December 31, 2019 — $ 3.2 million).
+Added: Gains and losses resulting from changes in the cash surrender value of the COLI asset are recognized in the Condensed Consolidated Statement of Operations within Gain (Loss) In Fair Value of Investments.
Financial Instruments
3 unchanged sentences
Fair Value Measurements
−Removed: The carrying values of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities due within one year approximate fair values due to the short-term maturity of these instruments.
−Removed: The Company’s other financial instruments are comprised of the following:
−Removed: As at June 30, 2020
+Added: The carrying values of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities due within one year approximate their fair values due to the short-term maturity of these instruments.
+Added: Including these instruments, the Company’s financial instruments consist of the following:
+Added: As at September 30, 2020
As at December 31, 2019
12 unchanged sentences
Value determined using quoted prices in active markets.
+Added: Measured at cash surrender value, which approximates fair value.
When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.
−Removed: There were no significant transfers in or out of the Company’s Level 3 assets during the three and six months ended June 30, 2020 and 2019.
+Added: There were no significant transfers in or out of the Company’s Level 3 assets during the three and nine months ended September 30, 2020 and 2019.
Foreign Exchange Risk Management
13 unchanged sentences
The Company entered into a series of foreign currency forward contracts to manage the Company’s risks associated with the volatility of foreign currencies.
−Removed: Certain of 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 at June 30, 2020 (the “Foreign Currency Hedges”), with settlement dates throughout 2020 and 2021 .
+Added: Certain of 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 at September 30, 2020 (the “Foreign Currency Hedges”), with settlement dates throughout 2020 and 2021 .
Foreign currency derivatives are recognized and measured in the Condensed Consolidated Balance Sheets at fair value.
Changes in the fair value (gains or losses) are recognized in the Condensed Consolidated Statements of Operations except for derivatives designated and qualifying as foreign currency cash flow hedging instruments.
−Removed: The Company currently has cash flow hedging instruments associated with selling, general and administrative
−Removed: expenses and inventories .
−Removed: For foreign currency cash flow hedging instruments related to selling, general and administrative expenses, the effective portion of the gain or loss in a hedge of a forecasted transaction is reported in O ther C omprehensive I ncome and reclassified to the C ondensed C onsolidated St atements of O perations when the forecasted transaction occurs.
−Removed: For foreign currency cash flow hedging instruments related to inventories , the effective portion of the gain or loss in a hedge of a forecasted transaction is reported in O ther C omprehensive I ncome and reclassified to Inventories in the Condensed Consolidated B alance S heet s when the forecasted transaction occurs.
−Removed: Any ineffective portion is recognized immediately in the Condensed C onsolidated S tatement of O perations.
+Added: The Company currently has cash flow hedging instruments associated with selling, general and administrative expenses and inventories.
+Added: For foreign currency cash flow hedging instruments related to selling, general and administrative expenses, the effective portion of the gain or loss in a hedge of a forecasted transaction is reported in Other Comprehensive Income and reclassified to the Condensed Consolidated Statements of Operations when the forecasted transaction occurs.
+Added: For foreign currency cash flow hedging instruments related to inventories, the effective portion of the gain or loss in a hedge of a forecasted transaction is reported in Other Comprehensive Income and reclassified to Inventories in the Condensed Consolidated Balance Sheets when the forecasted transaction occurs.
+Added: Any ineffective portion is recognized immediately in the Condensed Consolidated Statement of Operations.
On April 28, 2020, the FASB staff issued a question-and-answer document (Q&A) to respond to frequently asked questions about the disruptive effects of COVID-19 on cash flow hedge accounting.
5 unchanged sentences
Notional value of foreign exchange contracts:
+Added: September 30,
Derivatives designated as hedging instruments:
3 unchanged sentences
Fair value of derivatives in foreign exchange contracts:
+Added: September 30,
Balance Sheet Location
6 unchanged sentences
Derivatives in Foreign Currency Hedging relationships are as follows:
−Removed: Three Months Ended June 30,
−Removed: Six Months Ended June 30,
+Added: Three Months Ended September 30,
+Added: Nine Months Ended September 30,
Foreign exchange contracts
4 unchanged sentences
Reclassified from AOCI
−Removed: Three Months Ended June 30,
−Removed: Six months ended June 30,
+Added: Three Months Ended September 30,
+Added: Nine months ended September 30,
(Effective Portion)
3 unchanged sentences
Property, plant and equipment
−Removed: Three Months Ended June 30,
−Removed: Six months ended June 30,
+Added: Three Months Ended September 30,
+Added: Nine months ended September 30,
Foreign exchange contracts
2 unchanged sentences
Non Designated Derivatives in Foreign Currency relationships are as follows:
−Removed: Three Months Ended June 30,
−Removed: Six months ended June 30,
+Added: Three Months Ended September 30,
+Added: Nine months ended September 30,
Location of Derivative Gain
2 unchanged sentences
administrative expenses
−Removed: The Company's estimated net amount of the existing losses as at June 30, 2020 is $ 0.4 million, which is expected to be reclassified to earnings within the next twelve months.
+Added: The Company's estimated net amount of the existing gains as at September 30, 2020 is $ 0.5 million, which is expected to be reclassified to earnings within the next twelve months.
Investments in Equity Securities
−Removed: As at June 30, 2020, the Condensed Consolidated Balance Sheets includes $ 13.2 million (December 31, 2019 — $ 15.7 million) of investments in equity securities.
+Added: As at September 30, 2020, the Condensed Consolidated Balance Sheets includes $ 14.8 million (December 31, 2019 — $ 15.7 million) of investments in equity securities.
On January 17, 2019, IMAX China (Hong Kong), Limited, a wholly-owned subsidiary of IMAX China, as an investor entered into a cornerstone investment agreement with Maoyan Entertainment (“Maoyan”) (as the issuer) and Morgan Stanley Asia Limited (as a sponsor, underwriter and the underwriters’ representative).
2 unchanged sentences
This investment is classified as an equity security, with a readily determinable market value through the Hong Kong Stock Exchange.
−Removed: The changes in fair value are recorded in gain (loss) in fair value of equity investment line item in the Company’s Condensed Consolidated Statement of Operations.
−Removed: As at June 30, 2020, the value of the Company’s investment in Maoyan was $ 12.1 million (December 31, 2019 — $ 14.6 million).
−Removed: For the three and six months ended June 30, 2020, the Company has recorded a net unrealized gain of $ 2.0 million and loss of $ 2.5 million, respectively ( 2019— loss of $ 4.5 million and $ 2.1 million, respectively).
+Added: The changes in fair value are recorded in Gain (Loss) in Fair Value of Investment in the Company’s Condensed Consolidated Statement of Operations.
+Added: As at September 30, 2020, the value of the Company’s investment in Maoyan was $ 13.7 million (December 31, 2019 — $ 14.6 million).
+Added: For the three and nine months ended September 30, 2020, the Company has recorded a net unrealized gain of $ 1.6 million and a net unrealized loss of $ 0.9 million, respectively (2019— unrealized losses of $ 0.5 million and $ 2.5 million, respectively).
The Company has an investment of $ 1.1 million (December 31, 2019 — $ 1.0 million) in the shares of an exchange traded fund.
This investment is classified as an equity investment.
−Removed: As at June 30, 2020 , the Company held investments in the preferred shares of enterprises which meet the criteria for classification as an equity security under FASB ASC 325, carried at historical cost, net of impairment charges.
−Removed: The carrying value of these equity security investments was $ 1.0 million at June 30, 2020 ( December 31, 2019 — $ 1.0 million ) and is recorded in Other Assets.
+Added: As at September 30, 2020, the Company held investments in the preferred shares of enterprises which meet the criteria for classification as an equity security under FASB ASC 325, carried at historical cost, net of impairment charges.
+Added: The carrying value of these equity security investments was $ 1.0 million at September 30, 2020 (December 31, 2019 — $ 1.0 million) and is recorded in Other Assets.
Non-Controlling Interests
3 unchanged sentences
IMAX China is a consolidated subsidiary of the Company.
−Removed: The balance of the non-controlling interest in IMAX China as at June 30, 2020 is $ 74.7 million.
−Removed: The net loss attributable to the non-controlling interest in IMAX China for the three and six months ended June 30, 2020 is $ 2.8 million and $ 12.5 million, respectively (2019 — net income of $ 2.7 million and $ 7.0 million, respectively).
+Added: The balance of the non-controlling interest in IMAX China as at September 30, 2020 is $ 75.5 million.
+Added: For the three months ended September 30, 2020, the net income attributable to the non-controlling interest in IMAX China is $ 2.2 million (2019 — $ 2.3 million).
+Added: For the nine months ended September 30, 2020, the net loss attributable to the non-controlling interest in IMAX China is $ 10.3 million (2019 — net income of $ 9.3 million).
Other Non-Controlling Interest
2 unchanged sentences
The Company has contributed $ 9.0 million to the Original Film Fund since 2014 and has reached its maximum contribution.
−Removed: As at June 30, 2020, the Original Film Fund has invested $ 22.3 million toward the development of original films.
+Added: As at September 30, 2020, the Original Film Fund has invested $ 22.3 million toward the development of original films.
The related production, financing and distribution agreement includes put and call rights relating to change of control of the rights, title and interest in the co-financed pictures.
−Removed: The following table summarizes the movement of the non-controlling interest in temporary equity, in the Company’s subsidiary for the six months ended June 30, 2020:
+Added: The following table summarizes the movement of the non-controlling interest in temporary equity, in the Company’s subsidiary for the nine months ended September 30, 2020:
Balance as at December 31, 2019
−Removed: Balance as at June 30, 2020
+Added: Balance as at September 30, 2020
Exit costs, restructuring charges and associated impairments
1 unchanged sentence
In addition, as part of management’s efforts to decrease costs, the Company reduced certain functions and realigned resources.
−Removed: During the six months ended June 30, 2019, the Company recognized charges of $ 0.9 million associated with these actions in its Condensed Consolidated Statements of Operations, consisting of restructuring charges and costs to exit leases.
+Added: During the nine months ended September 30, 2019, the Company recognized charges of $ 0.9 million associated with these actions in its Condensed Consolidated Statements of Operations, consisting of restructuring charges and costs to exit leases.
Restructuring charges relate to the Company’s corporate unit and are comprised of employee severance costs including benefits and share-based compensation, costs of consolidating facilities and contract termination costs.
+Added: Subsequent Event
+Added: In October 2020, the Company furloughed approximately 150 employees for at least two months beginning on October 26, 2020 .
+Added: This action will enable the Company to temporarily reduce expenses, conserve resources and adjust its operations during the continuing business slowdown associated with the COVID-19 global pandemic.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.