About IMAX

IMAX Corporation (IMAX) operates as a technology platform for entertainment and events worldwide. As of December 31, 2023, the company indirectly owned 71.55% of IMAX China Holding, Inc. (IMAX China). Through its proprietary software, auditorium, architecture, patented intellectual property, and specialized equipment, IMAX offers a unique end-to-end solution to create superior, awe-inspiring immersive content experiences for which the IMAX brand is globally renowned. Top filmmakers, movie studios, artists, and creators utilize the cutting-edge visual and sound technology of IMAX to connect with audiences in innovative ways. As a result, IMAX is among the most important and successful global distribution platforms. The company leverages its proprietary technology and engineering in all aspects of its business, which principally consists of the IMAX film remastering (IMAX Film Remastering) and the sale or lease of premium IMAX theater systems (IMAX System(s)). The customers for IMAX Systems are principally theatrical exhibitors that operate commercial multiplex theaters, and, to a much lesser extent, museums, science centers and destination entertainment sites. As of December 31, 2023, there were 1,772 IMAX Systems operating in 90 countries and territories, including 1,693 commercial multiplexes, 12 commercial destinations, and 67 institutional locations in the company’s global network. This compares to 1,716 IMAX Systems operating in 87 countries and territories as of December 31, 2022, including 1,633 commercial multiplexes, 12 commercial destinations, and 71 institutional locations in the company’s global network. The company’s global content portfolio includes blockbuster films, both from Hollywood and local language film industries worldwide; IMAX documentaries, both original and acquired (IMAX Documentaries), and IMAX events and experiences in emerging verticals including music, gaming, and sports. IMAX relaunched its IMAX Documentaries unit to focus on a new generation of narrative-driven original and acquired documentary films, as well as downstream revenue opportunities through partnerships with leading streaming platforms. Additional forthcoming IMAX original documentaries include The Blue Angels and The Elephant Odyssey. The company also continues to evolve its platform to bring new, innovative events and experiences to audiences worldwide. In January 2024, the company and Pathé Live in partnership with Mercury Studios and Queen Films released Queen Rock Montreal, a concert from 1981, exclusively in 450 IMAX locations globally. As of December 31, 2023, the company had a footprint of 252 connected locations in the IMAX network across North America, Europe, and Asia were configured with connectivity to deliver live and interactive content with low latency and superior sight and sound. For more information on the company’s content. As a premier global technology platform for entertainment and events, the company strives to remain at the forefront of advancements in entertainment technology. The company offers a suite of laser-based digital projection systems (IMAX Laser Systems), which deliver increased resolution, sharper and brighter images, deeper contrast, and the widest range of colors available to filmmakers. In 2022, the company acquired SSIMWAVE Inc. (SSIMWAVE), a leader in artificial intelligence (AI)-driven video quality solutions for media and entertainment companies. The acquisition of SSIMWAVE marks a significant expansion of the company’s streaming and consumer technology strategy to deliver the highest quality images on any screen, while also creating cost efficiencies to streaming companies, broadcasters and other companies that transmit visual data — to drive new, recurring revenue and grow its global leadership in entertainment technology. In 2023, the company formed a new business unit, Streaming and Consumer Technology to focus on in-home entertainment technology. The business unit includes the streaming technology acquired in the SSIMWAVE acquisition as well as IMAX Enhanced product services. The company utilizes AI for image enhancement, streaming technology, and data analysis to improve various aspects of its business. It is actively exploring other global use cases for AI to improve its products, operations, and efficiency. IMAX Network The IMAX network is the most extensive premium network in the world with 1,772 IMAX Systems operating in 90 countries and territories, including 1,693 commercial multiplexes, 12 commercial destinations and 67 institutional locations as of December 31, 2023. The Company currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,693 IMAX Systems operating as of December 31, 2023, representing a market penetration of only 46.8%. IMAX grew its network by 3.7% in 2023 driven by 128 system installations and ended the year with a backlog of 450 IMAX Systems. The Company believes that the majority of its future network growth will come from international markets outside of China. As of December 31, 2023, 76% of IMAX Systems in the global commercial multiplex network were located within international markets (defined as all countries other than the United States and Canada). Revenues and GBO derived from international markets continue to exceed revenues and GBO from the United States and Canada. For the year ended December 31, 2023, the company’s revenue generated from its Greater China (which includes the mainland of the People’s Republic of China, Hong Kong, Macau, and Taiwan) operations represents 25% of consolidated revenue. As of December 31, 2023, the company had 807 IMAX Systems operating in Greater China with an additional 206 systems in backlog. The company has a partnership in China with Wanda Film (Wanda) and as of December 31, 2023, through the company’s partnership with Wanda, there were 376 IMAX Systems operational in Greater China, of which 362 are under the parties’ joint revenue sharing arrangements. In December 2023, Beijing Wanda Investment, which owns a 20% stake in Wanda Film Holding, was sold to China Ruyi Holdings, a Tencent Holdings-backed company. Principal Products and Services The company operates as designer and manufacturer of specialty premium projection and sound system components for premium large-format theaters around the world, and it is also a significant distributor of large-format films. The company’s principal products and services are as follows: IMAX Film Remastering – The digital remastering of films and other content into IMAX formats for distribution to the IMAX network. Film Distribution and Post-Production – The distribution of large-format documentary films, primarily to institutional theaters, and, increasingly, the distribution of exclusive IMAX events and experiences including music, gaming, and sports, as well as the provision of film post-production services. IMAX Systems – The sale or lease of premium IMAX Systems to exhibitor customers. IMAX Maintenance – The provision of preventative and emergency maintenance services and quality monitoring to the IMAX network. Other – Principally includes the company’s streaming and consumer technology business, including its streaming technology and IMAX Enhanced product services, as well as other ancillary activities. The company assesses and evaluates its performance based on the operating results of the Content Solutions and Technology Products and Services segments, which largely reflect the different customer bases it serves. The Content Solutions segment principally focuses on content enhancement and distribution services for the company’s movie studio customers. The Technology Products and Services segment primarily consists of products and services for its exhibitor customers, including the sale, lease and ongoing service of IMAX Systems. IMAX Film Remastering IMAX Film Remastering is a proprietary technology that digitally remasters films into IMAX formats. IMAX Film Remastering digitally enhances the image resolution of films for projection on IMAX screens while maintaining or enhancing the visual clarity and sound quality to levels for which The IMAX Experience is known. In addition, the original soundtrack of a film to be exhibited across the IMAX network is remastered for IMAX digital sound systems. IMAX remastered soundtracks are uncompressed and full fidelity. IMAX sound systems use proprietary loudspeaker systems and proprietary surround sound configurations that ensure every seat in an auditorium is an optimal listening position. The IMAX Film Remastering process involves: IMAX films also benefit from enhancements made by individual filmmakers exclusively for the IMAX release of the film. Collectively, the company refers to these enhancements as IMAX DNA. Filmmakers and movie studios have sought IMAX-specific enhancements in recent years to generate interest in and excitement for their films. Such enhancements include shooting films with IMAX cameras to increase the audience’s immersion in the film and to take advantage of the unique dimensions of the IMAX screen by projecting the film in a larger aspect ratio that delivers up to 26% more image onto a standard IMAX screen. In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, with up to 67% more image. The company has a Filmed For IMAX program under which filmmakers craft films from their inception in various ways in order to optimize The IMAX Experience. The program includes incremental and bespoke marketing support, which box office metrics demonstrate audiences respond extremely favorably to, and drives higher market share for IMAX. To support continued growth in international markets, the company focuses on the expansion of the IMAX network and has sought to bolster its international film strategy, supplementing its slate of Hollywood films with appealing local language films released in select markets, including China, Japan, India, and South Korea. The company remains in active negotiations with studios for additional films to fill out its short- and long-term film slate for the IMAX network. The company also expects to announce additional local language films and exclusive IMAX events and experiences to be released to its global network throughout 2024. Film Distribution and Post-Production The company distributes large-format documentary films, primarily to institutional customers. The company receives as its distribution fee either a fixed amount or a fixed percentage of the box office receipts and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues. The ownership rights to such films may be held by the film sponsors, the film investors and/or the company. As of December 31, 2023, the company had distribution rights with respect to approximately 60 films, which cover subjects such as space, wildlife, music, sports, history and natural wonders. In May 2023, the company announced that Amazon Studios acquired worldwide rights to its original documentary, The Blue Angels, filmed with IMAX digital certified cameras and produced in collaboration with Dolphin Entertainment, Bad Robot Productions, and Zipper Bros Films. The documentary is expected to be delivered in the second quarter of 2024. In October 2023, Deep Sky, a documentary on NASA’s Webb Telescope in collaboration with Crazy Boat Pictures Ltd. and filmmaker Nathaniel Kahn, was released to the IMAX network. In July 2023, the company also announced the start of production of The Elephant Odyssey, a documentary in collaboration with Beach House Pictures Pte Ltd and China International Communications Group, which is expected to be released in 2025. In addition, the company continues to evolve its platform to bring new, innovative IMAX events and experiences to audiences worldwide. As of December 31, 2023, the company had a footprint of 252 connected locations in the IMAX network across the United States, Canada, Europe, and Asia configured with connectivity to deliver live, interactive content with low latency and superior sight and sound. In 2023, the company partnered with Metro-Goldwyn-Studios Inc. (MGM) for an IMAX premiere event, consisting of red carpet interviews and behind the scenes footage, followed by a special advanced screening of Creed III, which was released across the IMAX global network. The company also hosted a reunion of the iconic band Talking Heads at the Toronto International Film Festival, followed by a screening of Stop Making Sense, before the movie was released to the IMAX network more broadly. These events were broadcast live to much of the IMAX Domestic connected network. In January 2024, the Company and Pathe Live in partnership with Mercury Studios and Queen Films released Queen Rock Montreal, a concert film from 1981, exclusively in 450 IMAX locations globally. The company also provides film post-production and quality control services for large-format films, whether produced by IMAX or third-parties, and digital post-production services. In addition, the company provides IMAX film and digital cameras to content creators under the IMAX certified camera program. IMAX Systems The company’s primary products are its various digital projection systems, which are either sold or leased to exhibitor customers along with a license for the use of the globally recognized IMAX brand. The company’s digital projection systems include a projector that offers superior image quality and stability and a digital theater control system; a digital audio system delivering up to 12,000 watts of sound; a screen with a proprietary coating technology, and, in certain situations, 3D glasses and cleaning equipment. IMAX’s digital projection systems also operate without the need for analog film prints. The company’s digital projection systems provide a premium and differentiated experience to audiences that is consistent with what they have come to expect from the IMAX brand, while providing exhibitor customers with the compelling economics and flexibility that digital technology affords. As part of the arrangement to sell or lease an IMAX System, the company provides extensive advice on auditorium planning and design, and supervision of installation services. The terms of each sale or lease arrangement vary according to the configuration of the IMAX System, as well as the cinema and film distribution markets relevant to the geographic location of the customer. Revenue from the sale or lease of an IMAX System may be recognized at a different time from when cash is collected from the exhibitor customer. IMAX Laser Systems In 2014, the company introduced its first laser-based digital projection system. Since then, the company has continued research and development aimed at creating more affordable laser-based solutions with various screen sizes for its commercial multiplex customers. Beginning in 2021, the company began offering an additional laser-based system product to provide customers with an opportunity to replace and upgrade IMAX Xenon Systems. The company sells two different configurations of its laser systems. IMAX Xenon Systems In 2008, the company introduced its digital IMAX Xenon System. Prior to 2008, all of the IMAX Systems offered by the company were film-based and required analog film prints. The IMAX Xenon Systems deliver higher quality imagery when compared with IMAX Film Systems. IMAX Film Systems IMAX Film Systems include various configurations, including 2D and 3D systems, and screen sizes. Following the introduction of the digital IMAX Xenon System in 2008, the number of IMAX Film Systems in the IMAX network has decreased significantly. However, IMAX’s proprietary format, the IMAX 70mm Film System continues to be a sought after IMAX viewing experience. The existing network of 30 unique locations are being actively supported and leveraged for special event releases throughout the year such as with the 2023 release of Oppenheimer in IMAX 70mm film, which garnered significant consumer interest and demand for this format. From time to time, in the normal course of its business, the company will have customers who are unable to proceed with an IMAX System installation for a variety of reasons, including the inability to obtain certain consents, approvals or financing. Once the determination is made that the customer will not proceed with installation, the agreement with the customer is terminated or amended. If the agreement is terminated, once the company and the customer are released from all their future obligations under the agreement, all or a portion of the initial rents or fees that the customer previously made to the company are recognized as revenue. Certain of the company’s contracts contain options for the customer to elect to upgrade system type during the term or to alter the contract structure (for example, from a joint revenue sharing arrangement to a sale) after signing, but before installation. The current backlog information reflects all known elections. IMAX Maintenance IMAX System arrangements also include a requirement for the company to provide maintenance services over the life of the arrangement in exchange for an extended warranty and annual maintenance fee paid by the exhibitor. Under these arrangements, the company provides preventative and emergency maintenance services to ensure that each presentation is up to the highest IMAX quality standard. Other Products and Services Streaming and Consumer Technology Streaming and Consumer Technology includes the company’s Streaming Technology software offerings and IMAX Enhanced product services. Streaming Technology consists of several software products including: IMAX Stream Smart works within existing video compression workflows to reduce bitrates and retain picture quality across all devices and formats and deliver significant cost savings. IMAX StreamAware On-Demand all-in-one quality assurance and quality control to automate and standardize checks for comprehensive content integrity and regulatory compliance for third-party content libraries, across an entire video compression workflow IMAX StreamAware On-Air real-time monitoring software for live streams, which enables users to monitor video quality across their networks and to identify and address streaming issues. These AI-powered products allow streaming platforms and broadcasters to automate workflows. IMAX Enhanced is a solution to bring The IMAX Experience into the home. IMAX Enhanced provides end-to-end premium technology across streaming content and best-in-class entertainment devices, offering consumers high-fidelity playback of image and sound in the home and beyond, including the following features: IMAX’s expanded aspect ratio, which is available on select titles and streaming platforms, including Disney+; IMAX’s proprietary remastering technology, which produces more vivid, higher-fidelity 4K HDR images on premium televisions; and IMAX’s signature sound, which was specially recreated and calibrated for the home to unlock more immersive audio. To be certified as IMAX Enhanced, leading consumer electronics manufacturers spanning 4K/8K televisions, projectors, A/V receivers, loudspeakers, soundbars, smartphones, personal computers, tablets, and more must meet a carefully prescribed set of audiovisual performance standards, set by a certification committee, along with some of Hollywood’s leading technical specialists. At present, certified global device partners include Sony Electronics, Hisense, TCL, LG, Phillips, Hewlett Packard, Xiaomi, Sound United and Honor, among others. As of December 31, 2023, more than 300 IMAX Enhanced titles have been released across five of the biggest streaming platforms worldwide: Disney+, Sony Bravia CORE, Tencent Video, iQiyi and Rakuten TV. The company’s collaboration with Disney allows fans to stream 20 Disney titles in IMAX’s expanded aspect ratio at home on Disney+. The presence of IMAX Enhanced on Disney+ provides strong brand exposure for IMAX by expanding its in-home entertainment footprint to Disney+ and most of its 150 million global subscribers. IMAX Enhanced is part of the company’s next evolutionary step to extend the IMAX brand and technology further into new use cases, including streaming entertainment and the consumer electronics market. Other The company derives a small portion of its revenue from other sources including one owned and operated IMAX System in Sacramento, California; a commercial arrangement with one theater resulting in the sharing of profits and losses; the provision of management services to three other theaters; renting the company’s proprietary 2D and 3D large-format film cameras; and also offering production advice and technical assistance to both documentary and Hollywood filmmakers. Marketing and Customers The company markets IMAX Systems through a direct sales force and marketing staff located in offices in Canada, the United States, Greater China, Europe, and Asia. In addition, the company has agreements with consultants, business brokers and real estate professionals to locate potential customers and system locations for the company on a commission basis. IMAX estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,693 IMAX Systems operating as of December 31, 2023, representing a market penetration of only 46.8%. Commercial multiplex systems are the largest part of the IMAX network, comprising 1,693 IMAX Systems, or 96%, of the 1,772 IMAX Systems in the IMAX network as of December 31, 2023. The company’s institutional customers include science and natural history museums, zoos, aquaria, and other educational and cultural centers. The company also sells or leases IMAX Systems to commercial destinations such as theme parks, private home theaters, tourist destination sites, fairs, and expositions. As of December 31, 2023, approximately 75% of all open and operational IMAX Systems were in locations outside of the United States and Canada. The company also receives revenues from studios releasing IMAX films. Hollywood studios have also experienced consolidation, as evidenced by the Walt Disney company’s acquisition of certain studio assets from Twenty First Century Fox in 2019. The company has a partnership in China with Wanda which is its largest exhibitor customer. As of December 31, 2023, Wanda Film (Wanda) represented 22% of its commercial network. Exhibitor Consolidation The company’s primary customers are commercial multiplex exhibitors. THE IMAX Brand IMAX is a premier global technology platform for entertainment and events. The company has a Filmed for IMAX program through which filmmakers partner closely with IMAX to craft films that fully leverage IMAX technology and where every frame, from inception, is intentionally designed for The IMAX Experience. Box office metrics demonstrate audiences respond extremely favorably to Filmed for IMAX titles. To capture content in a resolution appropriate for IMAX screens, filmmakers utilize IMAX 70mm film cameras or IMAX-certified best-in-class digital cameras with leading brands, including ARRI, Panavision, RED Digital Cinema and Sony. The IMAX brand is a promise to deliver what audiences crave, which is a memorable, more emotionally engaging, more thrilling and shareable experience. IMAX commissions on-going third party consumer research to measure the strength of its brand in numerous markets. The company’s latest 2023 studies show that the IMAX brand has achieved near universal awareness, is uniquely recognized as a leading, ultra-premium brand, and offers one of the most differentiated movie-going experiences. The IMAX brand has also been proven to signal a special, must-see event at levels far greater than any other entertainment technology brand based on evidence. Across various measures of brand equity and health, the IMAX brand ranged from two to 10 times more powerful than other entertainment technology brands. Research and Development For the year ended December 31, 2023, the company’s research and Development expenses included $10.1 million. Patents and Trademarks The company’s inventions cover various aspects of its proprietary technology and many of these inventions are protected by Letters of Patent or applications filed throughout the world, most significantly in the United States, Canada, China, Belgium, Japan, France, Germany, and the United Kingdom. Included in the company’s patent portfolio are more than 30 patents and patent families acquired from the Eastman Kodak Company covering laser projection technology. In addition, the company acquired more than 15 patent families in connection with the acquisition of SSIMWAVE in September 2022. The company has been and will continue to be diligent in the protection of its proprietary interests. As of December 31, 2023, the company held 92 patents, had 14 patents pending in the United States and has corresponding patents or filed applications in many countries throughout the world. Certain of the company’s patents expire between 2024 and 2041. The company owns or otherwise has rights to trademarks and trade names used in conjunction with the sale of its products, systems, and services. IMAX, IMAX 3D, Experience It In IMAX, The IMAX Experience, DMR, Filmed For IMAX, IMAX Live, IMAX Enhanced, Stream Smart and SSIMWAVE are trademarks and trade names of the company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions. History IMAX Corporation was founded in 1967. The company was incorporated in 2002.