IMAX Corporation Reports Third Quarter 2009 Financial Results; Receives Commitment Letter for $75 Million Credit Facility

HIGHLIGHTS:

• Third Quarter EPS of $0.02 Per Diluted Share Includes $0.06 Charge Due Primarily to Increased Share Price
• Third Quarter Revenue Increases 33% to $43.6 Million
• Company Receives $75 Million Commitment Letter From Wachovia Capital Finance Corporation

IMAX Corporation (Nasdaq:IMAX) (TSX:IMX) today reported net income of $1.1 million, or $0.02 per diluted share for the third quarter ended September 30, 2009. The Company’s third quarter net income results included a year-over-year increase of $3.4 million, or $0.06 per diluted share, in share-based compensation expense primarily due to the Company’s increased stock price over the course of the quarter. For the third quarter of 2008, the Company reported a net loss of $2.1 million, or $0.05 per diluted share. Total revenues for the third quarter ended September 30, 2009 increased 33% to $43.6 million, compared to total revenues of $32.9 million in the same period last year. The Company generated operating income of $4.7 million during the third quarter, a 93% increase compared to operating income of $2.4 million in the year-ago period.

For the nine-months ended September 30, 2009, the Company reported net income of $1.0 million, or $0.02 per diluted share. The Company’s nine month net income results include a year-over-year increase of $6.5 million, or $0.13 per diluted share, in share-based compensation expense primarily due to the Company’s increased stock price over the course of the nine-month period. For the nine months ended September 30, 2008, the Company reported a net loss of $24.6 million, or $0.58 per share. Total revenue for the nine-month period increased 54% to $117.7 million compared to $76.4 million for the year-ago period. Operating income increased to $13.3 million for the nine months ended September 30, 2009, a $24.2 million turnaround compared to an operating loss of $10.9 million in the same period last year.

IMAX Chief Executive Officer Richard L. Gelfond stated, “We are pleased with our financial momentum, which reflects the continued positive impact that our growing theatre network and new business model are having on the Company. In addition, we are very pleased to announce that we have received a commitment letter from Wachovia with the participation of Export Development Canada, for a $75 million credit facility which, when finalized, will increase our borrowing capacity. We also announced today that we intend to redeem our remaining senior notes by year-end. We look forward to building on our year-to-date success in the fourth quarter, continue to expect full year profitability for 2009 and believe we are well-positioned to deliver increased earnings in 2010.”

IMAX systems revenue increased 130% to $20.1 million versus $8.7 million in the prior year period. The Company installed and recognized revenue on 13 theatre systems, including five digital upgrades, that qualified as either sales or sales-type leases in the third quarter of 2009, compared to three theatre systems recognized in the third quarter of 2008.

Revenue from joint revenue sharing arrangements increased 175% to $3.4 million in the third quarter of 2009 compared to $1.2 million last year. In the third quarter, the Company installed a total of six systems under joint revenue sharing arrangements, including one digital upgrade, compared to 14 such installations in the year ago period. As of September 30, 2009, a total of 96 joint revenue sharing systems were in operation, compared to 26 as of September 30, 2008. Since quarter-end the Company installed 11 more theatres under joint revenue sharing arrangements, for a total of 107 joint revenue sharing theatre systems.

For the third quarter of 2009, total film revenue was $12.5 million, compared to $13.0 million in the third quarter of 2008. Production and IMAX DMR(R) revenues decreased to $7.8 million compared to $9.2 million a year ago, reflecting the record performance of last year’s title, The Dark Knight: The IMAX Experience (Warner Bros.) which generated box office of $60.6 million in the third quarter of 2008. Revenue from the Company’s distribution segment increased 38% to $3.3 million reflecting the continued strength of the Company’s original title, Under the Sea 3D.

Mr. Gelfond continued, “Our third quarter gross box office results were the third highest we have ever achieved in a quarter. These results reflect how our expansion of the network, our ability to show more titles throughout the network, and our capability in selecting titles that are well-suited for The IMAX Experience(R) position us well over the long-term. This is further evidenced in the current quarter, with titles like Cloudy With a Chance of Meatballs, Where the Wild Things Are and Michael Jackson’s THIS IS IT combining to make our theatres more productive during a seasonally slow time of year.”

Gross box office from DMR titles was $57.6 million in the third quarter of 2009, compared to $66.7 million in the third quarter of 2008. The primary drivers of gross box office in the third quarter were Paramount Pictures’ Transformers: Revenge of the Fallen: The IMAX Experience and Warner Bros. Pictures’ Harry Potter and the Half-Blood Prince: An IMAX 3D Experience. The quarter included the last four weeks of Transformers, which generated $22.6 million in gross box office during the third quarter and $44.4 million over the course of its run, for a global per screen average of $184,000 and a domestic per screen average of $187,000. The delayed release of Harry Potter arrived in domestic IMAX(R) theatres July 29th and generated $27.0 million in worldwide box office during the third quarter, for a domestic per screen average of $87,000 and an international per screen average of $174,000. On September 18, Sony Pictures Cloudy With A Chance of Meatballs: An IMAX 3D Experience was released day-and-date to IMAX theatres and generated $5.4 million in worldwide box office through the third quarter and $10.5 million to date for a per screen average of $66,000. For the nine month period, IMAX DMR gross box increased 67% to a record $170.2 million compared to $102.2 million last year.

Selling, general and administrative expense as a percentage of revenue declined to 29.2% as compared to 32.0% in the third quarter of last year. Overall, SG&A expenses increased to $12.8 million in the third quarter compared to $10.5 million a year ago. Reflected in third quarter SG&A expense was the previously mentioned net increase in share-based compensation, which primarily reflected the Company’s increased stock price over the course of the quarter and its impact on employee stock appreciation rights, and a favorable foreign exchange translation adjustment of $1.0 million, which reflects an increase in exchange rates for foreign currency denominated receivables as well as the Company’s hedging strategies put in place at the end of last year which have resulted in lower operating and capital expenses.

As of September 30, 2009, the Company’s backlog consisted of 163 theatre systems compared to 238 theatre systems in backlog as of September 30, 2008. Included in the 2009 and 2008 system backlog totals were 61 and 132 theatres, respectively, under joint revenue sharing arrangements and 102 and 106 theatres, respectively, under sales and sales-type lease arrangements. During the quarter the Company signed contracts for 13 new systems, all of which were under sales and sales-type lease arrangements, compared to 11 system signings during last year’s third quarter, seven of which were under joint revenue sharing arrangements. At the end of the third quarter of 2009, 117 digital systems were in operation, compared to 14 as of September 30, 2008.

At this time, the Company expects to install between 28 and 32 IMAX systems in the fourth quarter (4 to 8 sales/sales type lease systems and approximately 24 systems under joint revenue sharing arrangements). Assuming all of these systems are installed, the Company would install 30 to 35 systems under sales type lease arrangements in 2009, above its most recent guidance of 25 to 30 systems, and approximately 75 systems under joint revenue sharing arrangements (including digital upgrades). The Company continues to expect ending 2009 with approximately 120 joint revenue sharing theatres in operation.

FUTURE FILM SLATE

Turning to the remainder of the 2009 film slate, on October 16, Warner Bros. Pictures and IMAX released Where the Wild Things Are: The IMAX Experience day-and-date to 145 domestic IMAX theatres. Through Tuesday, the film has generated $5.8 million, or approximately $40,000 per screen. On October 28, Sony Pictures and IMAX released Michael Jackson’s This Is It: The IMAX Experience, with limited show schedule domestically and full show schedule internationally. To date, the title has grossed $2.1 million in box office, with international per screen averages of over $35,000. Walt Disney Pictures’ A Christmas Carol: An IMAX 3D Experience arrives in IMAX theatres tonight at midnight and James Cameron’s Avatar: An IMAX 3D Experience (Twentieth Century Fox) arrives in IMAX theatres December 18, 2009. In total, the Company will show a record 13 new DMR titles in 2009.

The Company’s announced 2010 film slate to date includes Avatar, which is expected to carry over from its December 18, 2009 release; Disney’s Alice in Wonderland: An IMAX 3D Experience (March 2010); DreamWorks Animation’s How to Train Your Dragon: An IMAX 3D Experience (March 2010); Shrek Forever After: An IMAX 3D Experience (May 2010); Warner Bros. Pictures’ Inception: The IMAX Experience (July 2010); Walt Disney Pictures’ Tron Legacy: An IMAX 3D Experience (December 2010); and an IMAX original film in partnership with Warner Brothers, titled Hubble 3D (March 2010). In addition, during the third quarter, the Company announced its first 2011 DMR title, Sony Pictures’ Spider-Man 4: The IMAX Experience. The Company remains in active discussions with virtually all of the major studios regarding potential titles for release as far out as 2012.

Mr. Gelfond concluded, “We are pleased with the Company’s 2009 performance to date, and we look forward to 2010 with even greater anticipation. We believe that the combination of our larger theatre network, a compelling film slate and significantly reduced interest expense will result in another year of growth for IMAX and its shareholders. We believe we have put a strong foundation in place that can deliver growth over the long-term.”

CAPITAL STRUCTURE

In a separate announcement this morning, the Company announced that it has received a commitment letter from Wachovia with the participation of Export Development Canada for a $75 million credit facility, which, when finalized , will consist of revolving loans of up to $40 million and a term loan of $35 million. For additional information on this announcement, please see this morning’s press release.

CONFERENCE CALL

The Company will host a conference call today at 8:30 AM ET to discuss its third quarter 2009 financial results. To access the call via phone, interested parties should dial (866) 322-1159 approximately 10 minutes before it begins. International callers should dial (416) 640-3404. A recording of the call will be available by dialing (888) 203-1112 or (647) 436-0148. The code for both the live call and the replay is 6042955. The Company will also host a webcast of the conference call, which can be accessed on www.imax.com by clicking on ‘Investor Relations.’

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