##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file Number 001-35066
 IMAX Corporation
 (Exact name of registrant as specified in its charter)
 Canada(State or other jurisdiction of 
incorporation or organization)
    
    98-0140269(I.R.S. Employer
Identification Number)2525 Speakman Drive, 
Mississauga, Ontario, Canada(Address of principal executive offices)
    
    L5K 1B1(Postal Code)
 Registrants telephone number, including area code:
(905) 403-6500
Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Exchange on Which RegisteredCommon Shares, no par value
    
    The New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
None  (Title of class)
 þ o
 o þ
 þ o
 o o
 o
  Large accelerated filer þ   
    Accelerated filer o
    Non-accelerated filer o
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   Document Incorporated by Reference




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##### 



IMAX CORPORATION
 December 31, 2010
 Table of Contents
 PagePART IItem 1. Business
    
    
    4Item 1A. Risk Factors
    
    
    16Item 1B. Unresolved Staff Comments
    
    
    23Item 2. Properties
    
    
    23Item 3. Legal Proceedings
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
    
    
    27Item 6. Selected Financial Data
    
    
    30Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    34Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    67Item 8. Financial Statements and Supplementary Data
    
    
    69Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    123Item 9A. Controls and Procedures
    
    
    123Item 9B. Other Information
    
    
    123PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    124Item 11. Executive Compensation
    
    
    124Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    124Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    124Item 14. Principal Accounting Fees and Services
    
    
    124PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    124Signatures
    
    
    127EX-10.1EX-10.9EX-10.16EX-10.24EX-10.32EX-10.34EX-21EX-23EX-24EX-31.1EX-31.2EX-32.1EX-32.2
  2




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IMAX CORPORATION
 EXCHANGE RATE DATA
  Years Ended December 31,2010
    
    2009
    
    2008
    
    2007
    
    2006Exchange rate at end of period
    
    
    1.0054
    
    
    
    0.9555
    
    
    
    0.8170
    
    
    
    1.0120
    
    
    
    0.8582Average exchange rate during period
    
    
    0.9709
    
    
    
    0.8757
    
    
    
    0.9381
    
    
    
    0.9425
    
    
    
    0.8818High exchange rate during period
    
    
    1.0054
    
    
    
    0.9716
    
    
    
    1.0291
    
    
    
    1.0908
    
    
    
    0.9100Low exchange rate during period
    
    
    0.9278
    
    
    
    0.7692
    
    
    
    0.7710
    
    
    
    0.8437
    
    
    
    0.8528
 SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
  ® ® ® ® ® The Experience ® An Experience ® An 3D Experience ® ® ® ® ® ®
 3




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##### Table of Contents



PART I
 
 Item 1. Business
 GENERAL
    The Dark Knight: The Experience Transformers: Revenge of the Fallen: The Experience. Mission:
Impossible  Ghost Protocol: The Experience The Dark Knight Rises: The Experience
   4




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##### Table of Contents



(2009  12),
 The Experience The Experience
 The Experience
    PRODUCT LINES
  IMAX Systems, Theater System Maintenance and Joint Revenue Sharing Arrangements
  5




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##### Table of Contents




    
    the GT projection systems, film-based theater systems for the largest IMAX theaters;
 
    
    the SR system, film-based theater systems for smaller theaters than the GT systems;
 
    
    the IMAX MPX systems, which are film-based systems targeted for multiplex theaters (MPX
theater systems);
 
    
    the IMAX digital systems, which are the replacement to the IMAX MPX systems and which are
accordingly targeted for multiplex theaters; and
 
    
    theater systems featuring heavily curved and tilted screens that are used in dome shaped
theaters.
      6




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Sales Backlog.
 7




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##### Table of Contents



December 31, 2010
    
    
    December 31, 2009Number of
    
    
    Dollar Value
    
    
    Number of
    
    
    Dollar ValueSystems
    
    
    (in thousands)
    
    
    Systems
    
    
    (in thousands)Sales and sales-type lease arrangements
    
    
    165
    (1)
    
    $
    184,588
    
    
    
    94
    (1)
    
    $
    117,157Joint revenue sharing arrangements
    
    
    59
    
    
    
    n/a
    
    
    
    42
    
    
    
    n/a224
    (2)
    
    $
    184,588
    
    
    
    136
    
    
    $
    117,157
 
 (1)
    
    Includes 25 upgrades from film-based IMAX theater systems to IMAX
digital theater systems as at December 31, 2010, and 1 upgrade from a
film-based IMAX theater system to an IMAX digital theater system as at
December 31, 2009.(2)
    
    Reflects the minimum number of theaters arising from signed contracts
in backlog. Up to an additional 25 theaters (2009  1) may be
installed pursuant to certain provisions in signed contracts in
backlog.   2010
    
    2009Theater
    
    
    
    
    
    TheaterNetwork
    
    
    
    
    
    NetworkBase
    
    Backlog
    
    Base
    
    BacklogFlat Screen (2D)
    
    
    30
    (1)
    
    
    
    
    
    
    36
    
    
    
    Dome Screen (2D)
    
    
    66
    
    
    
    
    
    
    
    65
    
    
    
    1IMAX 3D Dome (3D)
    
    
    3
    
    
    
    
    
    
    
    2
    
    
    
    IMAX 3D GT (3D)
    
    
    80
    (1)
    
    
    2
    
    
    
    88
    
    
    
    5IMAX 3D SR (3D)
    
    
    44
    (1)
    
    
    1
    
    
    
    51
    
    
    
    2IMAX MPX (3D)
    
    
    19
    (1)
    
    
    4
    
    
    
    37
    (2)
    
    
    13IMAX digital (3D)
    
    
    276
    (1)
    
    
    217
    (3)
    
    
    151
    (2)
    
    
    115
    (3)Total
    
    
    518
    
    
    
    224
    
    
    
    430
    
    
    
    136
 
 (1)
    
    In 2010, the Company upgraded 32 film-based IMAX theater
systems across various categories to
IMAX digital theater systems (30 sales arrangements and 2 joint
revenue sharing arrangements).(2)
    
    In 2009, the Company upgraded 25 film-based IMAX theater
systems across various categories to
IMAX digital theater systems (14 sales arrangements, 2 treated
previously as operating lease arrangements and 9 systems under joint
revenue sharing arrangements).(3)
    
    Includes 59 and 42 theater systems as at December 31, 2010 and 2009,
respectively, under joint revenue sharing arrangements. IMAX Flat Screen and IMAX Dome Systems.
 IMAX 3D GT and IMAX 3D SR Systems.
 8




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IMAX MPX.
 IMAX Digital.
 Films
 Film Production and Digital Re-mastering (IMAX DMR)
    
    
    in certain instances, scanning, at the highest possible resolution, each individual frame
of the movie and converting it into a digital image;
 
    
    optimizing the image using proprietary image enhancement tools;
 
    
    enhancing the digital image using techniques such as sharpening, color correction, grain
and noise removal and the elimination of unsteadiness and removal of unwanted artifacts;
 
    
    recording the enhanced digital image onto IMAX 15/70-format film or IMAX digital cinema
package (DCP) format;
 
    
    specially re-mastering the sound track to take full advantage of the IMAX theaters
unique sound system; and
 
    
    in certain instances, performing the Companys proprietary live-action 2D to 3D
conversion.
 9




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##### Table of Contents



Apollo 13: The Experience Tron Legacy Apollo 13: The Experience
 Apollo 13: The Experience Iron Man 2: The Experience
 Cyberworld, The Polar Express: The 3D Experience Beowulf: An 3D Experience Superman
Returns: An 3D Experience Harry Potter and the Order of the Phoenix: An 3D Experience, Harry Potter and the Half-Blood Prince: An 3D Experience
   
    
    Alice In Wonderland: AnIMAX 3D Experience(Disney, March 2010);
    
    How To Train Your Dragon: AnIMAX 3D Experience(Dreamworks Animation Paramount, March
2010);
    
    Iron Man 2: TheIMAX Experience(Marvel and Paramount, May 2010);
    
    Shrek Forever After: AnIMAX 3D Experience(Dreamworks Animation Paramount, May 2010);
    
    Prince of Persia: The Sands of Time: TheIMAX Experience(Disney, May 2010);
    
    Toy Story 3: AnIMAX 3D Experience(Disney, June 2010);
    
    The Twilight Saga: Eclipse: TheIMAX Experience(Summit Entertainment, June 2010);
    
    Inception: TheIMAX Experience(Warner Bros. Pictures (WB)), July 2010);
    
    Aftershock: TheIMAX Experience(Huayi Brothers Group, July 2010, primarily distributed
in China and other parts of Asia);
    
    Resident Evil: Afterlife: AnIMAX 3D Experience(Sony, September 2010);
    
    Legends of the Guardian: The Owls of GaHoole: AnIMAX 3D Experience(WB, September
2010);
    
    Paranormal Activity 2: TheIMAX Experience(Paramount, October 2010);
    
    Megamind: AnIMAX 3D Experience (Dreamworks Animation Paramount,November 2010);
    
    Harry Potter and the Deathly Hallows: Part I: TheIMAX Experience(WB, November 2010);
and
    
    Tron Legacy: AnIMAX 3D Experience(Disney, December 2010).
  Hubble 3D: An 3D Experience
  10




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##### Table of Contents




    
    TRON: Legacy: AnIMAX 3D Experience(Walt Disney Studios, continued from 2010);
    
    The Green Hornet: AnIMAX 3D Experience(Sony, January 2011);
    
    Tangled: AnIMAX 3D Experience(Disney, February 2011, released in select Asian markets
on respective regional release dates);
    
    Sanctum: AnIMAX 3D Experience(Universal, February 2011);
    
    I Am Number Four: TheIMAX Experience(Dreamworks Studios Disney, February 2011);
    
    Mars Needs Moms: AnIMAX 3D Experience(Disney, March 2011);
    
    Sucker Punch: TheIMAX Experience(WB, March 2011);
    
    Fast Five: TheIMAX Experience(Universal, April 2011);
    
    Pirates of the Caribbean: On Stranger Tides: AnIMAX 3D Experience(Disney, May 2011);
    
    Kung Fu Panda 2: AnIMAX 3D Experience(Paramount, May 2011, to be released in select
international markets);
    
    Super 8: TheIMAX Experience(Paramount, June 2011);
    
    The Founding of a Party: The IMAX Experience (China Film Group, June 2011, to be released
in the Peoples Republic of China)
    
    Cars 2: An IMAX 3D Experience (Disney, June 2011);
    
    Transformers: Dark of the Moon: AnIMAX 3D Experience(Paramount, July 2011);
    
    Harry Potter and the Deathly Hallows: Part II: AnIMAX 3D Experience(WB, July 2011);
    
    Real Steel: TheIMAX Experience(Dreamworks Studios Disney, October 2011);
    
    Contagion: TheIMAX Experience(WB, October 2011);
    
    Puss in Boots: AnIMAX 3D Experience(Paramount, November 2011);
    
    Happy Feet 2: AnIMAX 3D Experience(WB, November 2011);
    
    Mission: Impossible  Ghost Protocol: TheIMAX Experience(Paramount, December 2011);
and
    
    The Adventures of Tintin: The Secret of the Unicorn: AnIMAX 3D Experience(Paramount,
December 2011).
  Born to be
Wild 3D: An 3D Experience
 Film Distribution
  Hubble 3D: An 3D Experience Under the Sea 3D: An 3D Experience Deep Sea 3D: An 3D Experience SPACE STATION, T-REX: Back to the Cretaceous, To Fly! ), Grand Canyon  The Hidden Secrets ) The Dream Is
Alive
 Film Post-Production
  11




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Theater Operations
  Other
 Cameras
   MARKETING AND CUSTOMERS
   2010 Theater Network Base
    
    2009 Theater Network BaseCommercial
    
    Commercial
    
    
    
    
    
    
    
    
    
    Commercial
    
    CommercialMultiplex
    
    Destination
    
    Institutional
    
    Total
    
    Multiplex
    
    Destination
    
    Institutional
    
    TotalUnited States
    
    
    217
    
    
    
    9
    
    
    
    65
    
    
    
    291
    
    
    
    175
    
    
    
    8
    
    
    
    66
    
    
    
    249Canada
    
    
    17
    
    
    
    2
    
    
    
    7
    
    
    
    26
    
    
    
    13
    
    
    
    2
    
    
    
    7
    
    
    
    22Mexico
    
    
    8
    
    
    
    
    
    
    
    11
    
    
    
    19
    
    
    
    8
    
    
    
    
    
    
    
    11
    
    
    
    19Russia & the CIS
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Western Europe
    
    
    35
    
    
    
    7
    
    
    
    9
    
    
    
    51
    
    
    
    23
    
    
    
    7
    
    
    
    10
    
    
    
    40Rest of Europe
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Japan
    
    
    9
    
    
    
    2
    
    
    
    7
    
    
    
    18
    
    
    
    5
    
    
    
    2
    
    
    
    7
    
    
    
    14Greater China(1)
    
    
    22
    
    
    
    
    
    
    
    18
    
    
    
    40
    
    
    
    14
    
    
    
    
    
    
    
    15
    
    
    
    29Rest of World
    
    
    40
    
    
    
    3
    
    
    
    5
    
    
    
    48
    
    
    
    32
    
    
    
    2
    
    
    
    5
    
    
    
    39Total
    
    
    373
    
    
    
    23
    
    
    
    122
    
    
    
    518
    
    
    
    288
    
    
    
    21
    
    
    
    121
    
    
    
    430
 
 (1)
    
    Greater China includes China, Hong Kong, Taiwan and Macau.  12




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INDUSTRY AND COMPETITION
 The Experience
   THE IMAX BRAND
 The Experience
 Avatar: An 3D Experience,
Alice in Wonderland Inception: The Experience The Dark Knight: The Experience,
Transformers: Revenge of the Fallen: The Experience, Beowulf: An 3D Experience, 300: The Experience, Spider-Man 3: The Experience, Superman Returns: An 3D Experience Harry Potter
 RESEARCH AND DEVELOPMENT
  13




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,
 Born to be Wild 3D: An 3D Experience
    MANUFACTURING AND SERVICE
 Projector Component Manufacturing
  Sound System Component Manufacturing
  14




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Screen and Other Components
  Maintenance and Extended Warranty Services
   PATENTS AND TRADEMARKS
   ® ® The Experience ® An Experience ® An 3D Experience ® ® ® ® ® ® ® tm
 EMPLOYEES
  15




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##### Table of Contents



AVAILABLE INFORMATION
  
 Item 1A. Risk Factors
   RISKS RELATED TO THE COMPANYS FINANCIAL PERFORMANCE OR CONDITION
 The Company depends principally on commercial movie exhibitors to purchase or lease IMAX
theater systems, to supply box office revenue under joint revenue sharing arrangements and under
its sales and sales-type lease agreements and to supply venues in which to exhibit IMAX DMR films
and the Company can make no assurances that exhibitors will continue to do any of these things.
  The success of the IMAX theater network is directly related to the availability and success of
IMAX DMR films for which there can be no guarantee.
 Apollo 13: The Experience Tron: Legacy: An 3D Experience
 The introduction of new products and technologies could harm the Companys business.
  16




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The Company is undertaking new lines of business and these new business initiatives may not be
successful.
   The Company may not be able to adequately protect its intellectual property, and competitors
could misappropriate its technology, which could weaken its competitive position.
   Current economic conditions beyond the Companys control could materially affect the Companys
business by reducing both revenue generated from existing IMAX theater systems and the demand for
new IMAX theater systems.
  17




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##### Table of Contents



The issuance of the Companys common shares and the accumulation of shares by certain
shareholders could result in the loss of the Companys ability to use certain of the Companys net
operating losses.
  There is collection risk associated with payments to be received over the terms of the
Companys theater system agreements.
  The Company may not convert all of its backlog into revenue and cash flows.
  The Company conducts business internationally, which exposes it to uncertainties and risks
that could negatively affect its operations and sales.
  18




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##### Table of Contents




    
    new restrictions on access to markets, both for theater systems and films;
 
    
    unusual or burdensome foreign laws or regulatory requirements or unexpected changes to
those laws or requirements;
 
    
    fluctuations in the value of foreign currency versus the U.S. dollar and potential
currency devaluations;
 
    
    new tariffs, trade protection measures, import or export licensing requirements, trade
embargoes and other trade barriers;
 
    
    imposition of foreign exchange controls in such foreign jurisdictions;
 
    
    dependence on foreign distributors and their sales channels;
 
    
    difficulties in staffing and managing foreign operations;
 
    
    adverse changes in monetary and/or tax policies;
 
    
    poor recognition of intellectual property rights;
 
    
    inflation;
 
    
    requirements to provide performance bonds and letters of credit to international
customers to secure system component deliveries; and
 
    
    political, economic and social instability.
  The Company faces risks in connection with the continued expansion of its business in Greater
China and other parts of Asia.
  The Companys theater system revenue can vary significantly from its cash flows under theater
system sales or lease agreements.
  
    
    initial fees, which are paid in installments generally commencing upon the signing of the
agreement until installation of the theater systems;
 
    
    ongoing fees, which are paid monthly after all theater systems have been installed and
are generally equal to the greater of a fixed minimum amount per annum and a percentage of
box-office receipts; and
 19




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
    
    ongoing annual maintenance and extended warranty fees, which are generally payable
commencing in the second year of theater operations.
     The Companys operating results and cash flow can vary substantially from quarter to quarter
and could increase the volatility of its share price.
  
    
    the timing of signing and installation of new theater systems;
 
    
    the demand for, and acceptance of, its products and services;
 
    
    the recognition of revenue of sales and sales-type leases;
 
    
    the classification of leases as sales-type versus operating leases;
 
    
    the timing and commercial success of films produced and distributed by the Company and
others;
 
    
    the volume of orders received and that can be filled in the quarter;
 
    
    the level of its sales backlog;
 
    
    the signing of film distribution agreements;
 
    
    the financial performance of IMAX theaters operated by the Companys customers and by the
Company;
 
    
    financial difficulties faced by customers, particularly customers in the commercial
exhibition industry;
 
    
    the magnitude and timing of spending in relation to the Companys research and
development efforts; and
 
    
    the number and timing of joint revenue sharing arrangement installations, related capital
expenditures and timing of related cash receipts.
  The Companys revenues from existing customers are derived in part from financial reporting
provided by its customers, which may be inaccurate or incomplete, resulting in lost or delayed
revenues.
 20




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The Companys stock price has historically been volatile and declines in market price,
including as a result a market downturn, may negatively affect its ability to raise capital, issue
debt, secure customer business and retain employees.
  The credit agreement governing the Companys senior secured credit facility contains
significant restrictions that limit its operating and financial flexibility.
  
    
    incur additional indebtedness;
 
    
    pay dividends and make distributions;
 
    
    repurchase stock;
 
    
    make certain investments;
 
    
    transfer or sell assets;
 
    
    create liens;
 
    
    enter into transactions with affiliates;
 
    
    issue or sell stock of subsidiaries;
 
    
    create dividend or other payment restrictions affecting restricted subsidiaries; and
 
    
    merge, consolidate, amalgamate or sell all or substantially all of its assets to another
person.
  The Company may experience adverse effects due to exchange rate fluctuations.
  21




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The Company is subject to impairment losses on its film assets.
  The Company is subject to impairment losses on its inventories.
  If the Companys goodwill or long lived assets become impaired the Company may be required to
record a significant charge to earnings.
  Changes in accounting and changes in managements estimates may affect the Companys reported
earnings and operating income.
  The Company relies on its key personnel, and the loss of one or more of those personnel could
harm its ability to carry out its business strategy.
  Because the Company is incorporated in Canada, it may be difficult for plaintiffs to enforce
against the Company liabilities based solely upon U.S. federal securities laws.
  22




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RISKS RELATED TO THE COMPANYS PRIOR RESTATEMENTS AND RELATED MATTERS
 The Company is subject to ongoing informal inquiries and a formal investigation by regulatory
authorities in the U.S. and Canada, and it cannot predict the timing of developments and outcomes
in these matters.
    The Company is subject to lawsuits that could divert its resources and result in the payment
of significant damages and other remedies.
    The outcome of informal inquiries and a formal investigation by regulatory authorities in the
U.S. and Canada may affect the Companys business and the market price of its publicly traded
common shares.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  23




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Operation
    
    Own/Lease
    
    ExpirationMississauga, Ontario(1)
    
    Headquarters, Administrative, Assembly and Research and Development
    
    Own
    
    N/ANew York, New York
    
    Executive
    
    Lease
    
    2014Santa Monica, California
    
    Sales, Marketing, Film Production and Post-Production
    
    Lease
    
    2013Shanghai, China
    
    Sales, Marketing and Maintenance
    
    Lease
    
    2012London, United Kingdom
    
    Sales, Marketing and Maintenance
    
    Lease
    
    2011Tokyo, Japan
    
    Sales, Marketing and Maintenance
    
    Lease
    
    2011
 
 (1)
    
    This facility is subject to a charge in favor of Wells Fargo Capital Finance Corporation Canada (formerly
Wachovia Capital Finance Corporation (Canada)) in connection with a secured term and revolving credit
facility (see note 12 to the accompanying audited consolidated financial statements in Item 8). 
 Item 3. Legal Proceedings
 .
     24




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25




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Item 4. Submission of Matters to a Vote of Security Holders
  26




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases
of Equity Securities
  U.S. DollarsHigh
    
    LowNASDAQYear ended December 31, 2010Fourth quarter
    
    $
    32.30
    
    
    $
    16.93Third quarter
    
    $
    17.25
    
    
    $
    12.10Second quarter
    
    $
    21.30
    
    
    $
    14.28First quarter
    
    $
    18.26
    
    
    $
    11.50Year ended December 31, 2009Fourth quarter
    
    $
    13.87
    
    
    $
    9.00Third quarter
    
    $
    10.14
    
    
    $
    7.14Second quarter
    
    $
    8.49
    
    
    $
    4.28First quarter
    
    $
    5.49
    
    
    $
    3.74
 Canadian DollarsHigh
    
    LowTSXYear ended December 31, 2010Fourth quarter
    
    $
    32.56
    
    
    $
    17.20Third quarter
    
    $
    17.69
    
    
    $
    12.78Second quarter
    
    $
    21.45
    
    
    $
    15.02First quarter
    
    $
    18.56
    
    
    $
    12.34Year ended December 31, 2009Fourth quarter
    
    $
    14.56
    
    
    $
    9.68Third quarter
    
    $
    10.82
    
    
    $
    8.39Second quarter
    
    $
    9.77
    
    
    $
    5.45First quarter
    
    $
    6.66
    
    
    $
    4.89
   Equity Compensation Plans
  27




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Number of SecuritiesRemaining Available forNumber of Securities to be
    
    
    
    
    
    
    Future Issuance UnderIssued Upon Exercise of
    
    
    Weighted Average
    
    
    Equity Compensation PlansOutstanding Options,
    
    
    Exercise Price of
    
    
    (Excluding SecuritiesWarrants and Rights
    
    
    Outstanding Options
    
    
    Reflected in Column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved by security holders
    
    
    6,743,272
    
    
    $
    10.79
    
    
    
    6,085,843Equity compensation plans not approved by security holders
    
    nil
    
    
    nil
    
    
    nilTotal
    
    
    6,743,272
    
    
    $
    10.79
    
    
    
    6,085,843
 Performance Graph
  
 CERTAIN INCOME TAX CONSIDERATIONS
 United States Federal Income Tax Considerations
  Distributions on Common Shares
  28




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##### Table of Contents



Disposition of Common Shares
  Canadian Federal Income Tax Considerations
 Income Tax Act
 Income Tax Act
  Dividends on Common Shares
  Capital Gains and Losses
 Income
Tax Act Income Tax Act
 29




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##### Table of Contents



Item 6. Selected Financial Data
  Years Ended December 31,(In thousands of U.S. dollars, except per share amounts)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Statements of Operations Data:RevenueEquipment and product sales
    
    $
    72,578
    
    
    $
    57,304
    
    
    $
    27,853
    
    
    $
    32,500
    
    
    $
    49,322Services
    
    
    123,911
    
    
    
    82,052
    
    
    
    61,477
    
    
    
    64,972
    
    
    
    62,927Rentals
    
    
    46,936
    
    
    
    25,758
    
    
    
    8,207
    
    
    
    7,107
    
    
    
    5,622Finance income
    
    
    4,789
    
    
    
    4,235
    
    
    
    4,300
    
    
    
    4,649
    
    
    
    5,242Other revenues(2)
    
    
    400
    
    
    
    1,862
    
    
    
    881
    
    
    
    2,427
    
    
    
    300248,614
    
    
    
    171,211
    
    
    
    102,718
    
    
    
    111,655
    
    
    
    123,413Costs and expenses applicable to revenuesEquipment and product sales(3)(4)
    
    
    36,394
    
    
    
    29,040
    
    
    
    17,182
    
    
    
    21,546
    
    
    
    26,008Services(3)(4)
    
    
    63,425
    
    
    
    49,891
    
    
    
    40,771
    
    
    
    46,254
    
    
    
    43,679Rentals(4)
    
    
    11,111
    
    
    
    10,093
    
    
    
    7,043
    
    
    
    2,987
    
    
    
    1,859Other
    
    
    32
    
    
    
    635
    
    
    
    169
    
    
    
    50
    
    
    
    110,962
    
    
    
    89,659
    
    
    
    65,165
    
    
    
    70,837
    
    
    
    71,546Gross margin
    
    
    137,652
    
    
    
    81,552
    
    
    
    37,553
    
    
    
    40,818
    
    
    
    51,867Selling, general and administrative expenses(5)
    
    
    78,428
    
    
    
    56,207
    
    
    
    43,681
    
    
    
    44,716
    
    
    
    42,543Research and development
    
    
    6,249
    
    
    
    3,755
    
    
    
    7,461
    
    
    
    5,789
    
    
    
    3,615Amortization of intangibles
    
    
    513
    
    
    
    546
    
    
    
    526
    
    
    
    547
    
    
    
    602Receivable provisions, net of recoveries
    
    
    1,443
    
    
    
    1,067
    
    
    
    1,977
    
    
    
    1,795
    
    
    
    1,066Restructuring costs and asset impairments(6)
    
    
    45
    
    
    
    180
    
    
    
    
    
    
    
    485
    
    
    
    1,029Earnings (loss) from operations
    
    
    50,974
    
    
    
    19,797
    
    
    
    (16,092
    )
    
    
    (12,514
    )
    
    
    3,012Interest income
    
    
    399
    
    
    
    98
    
    
    
    381
    
    
    
    862
    
    
    
    1,036Interest expense
    
    
    (1,885
    )
    
    
    (13,845
    )
    
    
    (17,707
    )
    
    
    (17,093
    )
    
    
    (16,759
    )Loss on repurchase of Senior Notes due December 2010(7)
    
    
    
    
    
    
    (579
    )
    
    
    
    
    
    
    
    
    
    
    Earnings (loss) from continuing operations before income taxes
    
    
    49,488
    
    
    
    5,471
    
    
    
    (33,418
    )
    
    
    (28,745
    )
    
    
    (12,711
    )Recovery of (provision for) income taxes(8)
    
    
    51,784
    
    
    
    (274
    )
    
    
    (92
    )
    
    
    (472
    )
    
    
    (6,218
    )Loss from equity-accounted investments
    
    
    (493
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net earnings (loss) from continuing operations
    
    
    100,779
    
    
    
    5,197
    
    
    
    (33,510
    )
    
    
    (29,217
    )
    
    
    (18,929
    )Net (loss) earnings from discontinued operations(1)
    
    
    
    
    
    
    (176
    )
    
    
    (92
    )
    
    
    2,277
    
    
    
    2,080Net earnings (loss)
    
    $
    100,779
    
    
    $
    5,021
    
    
    $
    (33,602
    )
    
    $
    (26,940
    )
    
    $
    (16,849
    )Earnings (loss) per share:Earnings (loss) per share  basic:Net earnings (loss) from continuing operations
    
    $
    1.59
    
    
    $
    0.10
    
    
    $
    (0.79
    )
    
    $
    (0.72
    )
    
    $
    (0.47
    )Net earnings from discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.05
    
    
    $
    0.05$
    1.59
    
    
    $
    0.10
    
    
    $
    (0.79
    )
    
    $
    (0.67
    )
    
    $
    (0.42
    )Earnings (loss) per share  diluted:Net earnings (loss) from continuing operations
    
    $
    1.51
    
    
    $
    0.09
    
    
    $
    (0.79
    )
    
    $
    (0.72
    )
    
    $
    (0.47
    )Net earnings from discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.05
    
    
    $
    0.05$
    1.51
    
    
    $
    0.09
    
    
    $
    (0.79
    )
    
    $
    (0.67
    )
    
    $
    (0.42
    )
 30




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##### Table of Contents



(1)
    
    In 2009, the Company closed its owned and operated Vancouver and Tempe
IMAX theaters. The net (loss) earnings from the operation of the
theaters are reflected as discontinued operations and disclosed in
note 23(c) to the accompanying audited consolidated financial
statements in Item 8, as there are no continuing cash flows from
either a migration or a continuation of activities. The remaining
assets and liabilities of the owned and operated Vancouver and Tempe
IMAX theaters are included in the Companys consolidated balance sheet
as at December 31, 2010 and are disclosed in note 23(d) to the
accompanying audited consolidated financial statements in Item 8.(2)
    
    The Company enters into theater system arrangements with customers
that typically contain customer payment obligations prior to the
scheduled installation of the theater systems. The Companys joint
revenue sharing arrangements are not included in these arrangements as
the Company receives a portion of a theaters box-office and
concession revenue in exchange for contributing a theater system at
theater operators venues with no upfront payment obligations
required. During the period of time between signing and theater system
installation, certain customers each year are unable to, or elect not
to, proceed with the theater system installation for a number of
reasons, including business considerations, or the inability to obtain
certain consents, approvals or financing. Once the determination is
made that the customer will not proceed with installation, the
customer and/or the Company may terminate the arrangement by default
or by entering into a consensual buyout. In these situations the
parties are released from their future obligations under the
arrangement, and the initial payments that the customer previously
made to the Company and recognized as revenue are typically not
refunded. In addition, the Company enters into agreements with
customers to terminate their obligations for a theater system
configuration and enter into a new arrangement for a different
configuration. Included in Other Revenues for the periods 2006 through
2010 are the following types of settlement arrangements: 2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Theater system configuration conversions
    
    $
    
    
    
    $
    136
    
    
    $
    
    
    
    $
    
    
    
    $
    300Consensual buyouts
    
    
    400
    
    
    
    1,726
    
    
    
    881
    
    
    
    2,247
    
    
    
    $
    400
    
    
    $
    1,862
    
    
    $
    881
    
    
    $
    2,247
    
    
    $
    300
 
 (3)
    
    In recent years, the Company has recorded a charge to costs and
expenses to revenues, primarily for its film-based projector
inventories, due to a reduction in the net realizable value resulting
from the Company development of a digital projection system. Included
for the periods 2006 through 2010 are the following inventory
write-downs: 2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Equipment and product sales
    
    $
    827
    
    
    $
    48
    
    
    $
    2,397
    
    
    $
    3,284
    
    
    $
    1,322Services
    
    
    172
    
    
    
    849
    
    
    
    93
    
    
    
    564
    
    
    
    $
    999
    
    
    $
    897
    
    
    $
    2,490
    
    
    $
    3,848
    
    
    $
    1,322
 
 (4)
    
    The Company recorded advertising, marketing, and commission costs for
the periods 2006 through 2010 as listed below: 2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Equipment and product sales
    
    $
    1,925
    
    
    $
    2,041
    
    
    $
    1,035
    
    
    $
    810
    
    
    $
    1,630Services
    
    
    2,793
    
    
    
    2,381
    
    
    
    1,622
    
    
    
    1,755
    
    
    
    2,142Rentals
    
    
    4,236
    
    
    
    3,405
    
    
    
    1,788
    
    
    
    177
    
    
    
    Advertising, marketing, and commission costs
    
    $
    8,954
    
    
    $
    7,827
    
    
    $
    4,445
    
    
    $
    2,742
    
    
    $
    3,772
 
 (5)
    
    Includes share-based compensation expense of $26.0 million, $17.5
million, $1.0 million, $2.9 million and $0.6 million for 2010, 2009,
2008, 2007 and 2006, respectively.(6)
    
    In 2010, the Company recorded asset impairment charges of less than
$0.1 million related to the impairment of assets of certain theater
operations. Asset impairment charges amounted to $0.2 million, $nil,
$0.5 million and $1.0 million in 2009, 2008, 2007 and 2006,
respectively, after the Company assessed the carrying value of certain
assets. 31




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##### Table of Contents



(7)
    
    In 2009, the Company repurchased all of its outstanding $160.0 million
aggregate principal amount of the Companys 9.625% Senior Notes. The
Company paid cash to reacquire its bonds, thereby releasing the
Company from further obligations to various holders under the
Indenture governing the Senior Notes. The Company accounted for the
bond repurchase in accordance with the Debt Topic of the FASB
Accounting Standards Codification whereby the net carrying amount of
the debt extinguished was the face value of the bonds adjusted for any
unamortized premium, discount and costs of issuance, which resulted in
a loss of $0.6 million.(8)
    
    The recovery for income taxes in the year ended December 31, 2010
includes a net non-cash income tax benefit of $54.8 million related to
a decrease in the valuation allowance for the Companys deferred tax
assets and other tax adjustments. This release of the valuation
allowance was recorded after it was determined that realization of
this deferred income tax benefit is now more likely than not based on
current and anticipated future earnings trends. In 2006, the Company recorded an increase
to the deferred tax valuation allowance of $6.2 million based on the
Companys recoverability assessments of deferred tax balances carried
forward from the prior year. As at December 31, 2006, and continuing
through to the third quarter of the current year, the Company
determined that based on the weight of available evidence, positive
and negative, a full valuation allowance for the net deferred tax
assets was required. BALANCE SHEETS DATA
 As at December 31,(in thousands of U.S. dollars)
    
    2010
    
    2009
    
    2008
    
    2007
    
    2006Cash, cash equivalents and short-term investments
    
    $
    30,390
    
    
    $
    20,081
    
    
    $
    27,017
    
    
    $
    16,901
    
    
    $
    27,238Total assets(1)
    
    $
    349,088
    
    
    $
    247,545
    
    
    $
    228,667
    
    
    $
    207,982
    
    
    $
    227,291Total indebtedness
    
    $
    17,500
    
    
    $
    50,000
    
    
    $
    180,000
    
    
    $
    160,000
    
    
    $
    160,000Total shareholders equity (deficiency)
    
    $
    158,458
    
    
    $
    45,010
    
    
    $
    (96,774
    )
    
    $
    (85,370
    )
    
    $
    (58,232
    )
 
 (1)
    
    Includes the assets of discontinued operations. 32




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##### Table of Contents



QUARTERLY STATEMENTS OF OPERATIONS SUPPLEMENTARY DATA (UNAUDITED)
 2010(in thousands of U.S. dollars, except per share amounts)
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4(2)Revenues
    
    $
    72,784
    
    
    $
    55,598
    
    
    $
    51,069
    
    
    $
    69,163Costs and expenses applicable to revenues
    
    
    24,484
    
    
    
    28,558
    
    
    
    25,140
    
    
    
    32,780Gross margin
    
    $
    48,300
    
    
    $
    27,040
    
    
    $
    25,929
    
    
    $
    36,383Net earnings from continuing operations
    
    $
    26,580
    
    
    $
    13,302
    
    
    $
    6,736
    
    
    $
    54,161Net earnings from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net earnings
    
    $
    26,580
    
    
    $
    13,302
    
    
    $
    6,736
    
    
    $
    54,161Net earnings per share  basic
    
    $
    0.42
    
    
    $
    0.21
    
    
    $
    0.11
    
    
    $
    0.85Net earnings per share  diluted
    
    $
    0.40
    
    
    $
    0.20
    
    
    $
    0.10
    
    
    $
    0.80
 2009Q1(1)
    
    
    Q2(1)
    
    
    Q3(1)
    
    
    Q4(1)Revenues
    
    $
    33,136
    
    
    $
    40,362
    
    
    $
    43,476
    
    
    $
    54,237Costs and expenses applicable to revenues
    
    
    18,928
    
    
    
    19,679
    
    
    
    24,697
    
    
    
    26,355Gross margin
    
    $
    14,208
    
    
    $
    20,683
    
    
    $
    18,779
    
    
    $
    27,882Net earnings (loss) from continuing operations
    
    $
    (2,565
    )
    
    $
    2,723
    
    
    $
    1,157
    
    
    $
    3,882Net earnings (loss) from discontinued operations
    
    
    (77
    )
    
    
    (161
    )
    
    
    (95
    )
    
    
    157Net earnings (loss)
    
    $
    (2,642
    )
    
    $
    2,562
    
    
    $
    1,062
    
    
    $
    4,039Net earnings (loss) per share  basic
    
    $
    (0.06
    )
    
    $
    0.06
    
    
    $
    0.02
    
    
    $
    0.07Net earnings (loss) per share  diluted
    
    $
    (0.06
    )
    
    $
    0.05
    
    
    $
    0.02
    
    
    $
    0.06
 
 (1)
    
    The Company reclassified the owned and operated Vancouver and Tempe
IMAX theaters operations from continuing operations to discontinued
operations as it does not anticipate having significant future cash
flows from these theaters or any involvement in the day to day
operations of these theaters. As a result, the respective prior
periods figures have been reclassified to conform to the current
years presentation.(2)
    
    Net earnings from continuing operations for the fourth quarter
includes a release of the valuation allowance on deferred tax assets
of $54.8 million. See note 9 to the financial statements for further
details. 33




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 GENERAL
    The Experience
 IMAX Systems, Theater System Maintenance and Joint Revenue Sharing Arrangements
   34




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##### Table of Contents



Theater Network
  2010
    
    2009Theater
    
    TheaterNetwork
    
    NetworkBase
    
    BaseFlat Screen (2D)
    
    
    30
    (1)
    
    
    36Dome Screen (2D)
    
    
    66
    
    
    
    65IMAX 3D Dome (3D)
    
    
    3
    
    
    
    2IMAX 3D GT (3D)
    
    
    80
    (1)
    
    
    88IMAX 3D SR (3D)
    
    
    44
    (1)
    
    
    51IMAX MPX (3D)
    
    
    19
    (1)
    
    
    37
    (2)IMAX digital (3D)
    
    
    276
    (1)
    
    
    151
    (2)Total
    
    
    518
    
    
    
    430
 35




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##### Table of Contents



(1)
    
    In 2010, the Company upgraded 32 film-based IMAX theater systems to
IMAX digital theater systems (30 sales arrangements and 2 joint
revenue sharing arrangements).(2)
    
    In 2009, the Company upgraded 25 film-based IMAX theater systems to
IMAX digital theater systems (14 sales arrangements, 2 treated
previously as operating lease arrangements and 9 systems under joint
revenue sharing arrangements).    Sales Backlog
   December 31, 2010
    
    
    December 31, 2009Number of
    
    
    Dollar Value
    
    
    Number of
    
    
    Dollar ValueSystems
    
    
    (in thousands)
    
    
    Systems
    
    
    (in thousands)Sales and sale-type lease arrangements
    
    
    165
    (1)
    
    $
    184,588
    
    
    
    94
    (1)
    
    $
    117,157Joint revenue sharing arrangements
    
    
    59
    
    
    
    n/a
    
    
    
    42
    
    
    
    n/a224
    (2)
    
    $
    184,588
    
    
    
    136
    
    
    $
    117,157
 
 (1)
    
    Includes 25 upgrades from film-based IMAX theater systems to IMAX
digital theater systems as at December 31, 2010, and 1 upgrade from a
film-based IMAX theater system to an IMAX digital theater system as at
December 31, 2009.(2)
    
    Reflects the minimum number of theaters arisings from signed
contracts in backlog. Up to an additional 25 theaters
(2009  1) may be installed pursuant to certain provisions
in signed contracts in backlog. 36




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##### Table of Contents



Year Ended December 31,2010
    
    
    2009Number of
    
    
    Dollar Value
    
    
    Number of
    
    
    Dollar ValueSystems
    
    
    (in millions)
    
    
    Systems
    
    
    (in millions)Full new sales and sale-type lease arrangements
    
    
    95
    (1)
    
    $
    112.6
    
    
    
    20
    (1)
    
    $
    27.0Digital upgrades under sales and sale-type lease arrangements
    
    
    55
    (2)
    
    
    24.0
    
    
    
    12
    (2)
    
    
    5.3Joint revenue sharing arrangements
    
    
    71
    (3)
    
    
    n/a
    
    
    
    3
    (3)
    
    
    n/a221
    
    
    $
    136.6
    
    
    
    35
    
    
    $
    32.3
 
 (1)
    
    Includes 24 installations in 2010 and 71 in backlog as at
December 31, 2010 (6 installations in 2009 and 14 in backlog as
at December 31, 2009).(2)
    
    Includes 28 installations in 2010 and 27 in backlog as at
December 31, 2010 (11 installations in 2009 and 1 in backlog as
at December 31, 2009).(3)
    
    Includes 20 installations in 2010 and 51 in backlog as at
December 31, 2010 (2 installations and 1 in backlog as at
December 31, 2009).     Film Production and Digital Re-Mastering (IMAX DMR)
 Born to be Wild 3D: An 3D Experience Hubble 3D: An 3D Experience Under the Sea 3D: An 3D Experience
 37




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##### Table of Contents



The Experience
 Film Distribution
  Theater Operations
  INTERNATIONAL ACTIVITIES
  CRITICAL ACCOUNTING POLICIES
    38




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##### Table of Contents



Revenue Recognition
  
    
    design, manufacture, sale and lease of proprietary theater systems for IMAX theaters
principally owned and operated by commercial and institutional customers located in 46
countries as at December 31, 2010;
    
    production, digital re-mastering, post-production and/or distribution of certain films
shown throughout the IMAX theater network;
    
    operation of certain IMAX theaters primarily in the United States;
    
    provision of other services to the IMAX theater network, including ongoing maintenance and
extended warranty services for IMAX theater systems; and
    
    other activities, which includes short-term rental of cameras and aftermarket sales of
projector system components.
 Multiple Element Arrangements
  Theater Systems
   39




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##### Table of Contents



Sales Arrangements
     Lease Arrangements
    40




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##### Table of Contents



Finance Income
  Terminations, Consensual Buyouts and Concessions
    41




---



##### Table of Contents



Maintenance and Extended Warranty Services
  Film Production and IMAX DMR Services
     Film Distribution
  Film Post-Production Services
  Theater Operations Revenue
  42




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##### Table of Contents



Other
    Allowances for Accounts Receivable and Financing Receivables
       Inventories
    43




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##### Table of Contents



Asset Impairments
     Foreign Currency Translation
   Pension Plan and Postretirement Benefit Obligations Assumptions
    44




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##### Table of Contents



Deferred Tax Asset Valuation
   Tax Exposures
  Stock-Based Compensation
  Impact of Recently Issued Accounting Pronouncements
  DISCONTINUED OPERATIONS
  45




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##### Table of Contents



Form 10-K.
  ASSET IMPAIRMENTS AND OTHER SIGNIFICANT CHARGES
  Years Ended December 31,(in thousands of U.S. dollars)
    
    2010
    
    
    2009
    
    
    2008Asset impairmentsProperty, plant and equipment(1)
    
    $
    45
    
    
    $
    180
    
    
    $
    Other significant charges:Accounts receivable
    
    
    499
    
    
    
    127
    
    
    
    382Financing receivables
    
    
    944
    
    
    
    1,377
    
    
    
    1,595Other intangible assets
    
    
    64
    
    
    
    
    
    
    
    Inventories
    
    
    999
    
    
    
    897
    
    
    
    2,489Total asset impairments and other significant charges
    
    $
    2,551
    
    
    $
    2,581
    
    
    $
    4,466
 
 (1)
    
    The Company reclassified the owned and operated Vancouver and Tempe
IMAX theaters operations from continuing operations to discontinued
operations as it does not anticipate having significant future cash
flows from these theaters or any involvement in the day to day
operations of these theaters. Asset Impairments
  Other Significant Charges
    46




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RESULTS OF OPERATIONS
    Revenue
    
    
    Gross MarginYears Ended December 31,
    
    
    Years Ended December 31,(In thousands of U.S. dollars)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008IMAX SystemsSales and sales-type leases(1)
    
    $
    63,023
    
    
    $
    53,923
    
    
    $
    24,476
    
    
    $
    31,452
    
    
    $
    26,441
    
    
    $
    9,284Ongoing rent, fees, and finance
income(2)
    
    
    12,981
    
    
    
    10,581
    
    
    
    10,307
    
    
    
    12,531
    
    
    
    9,075
    
    
    
    9,09076,004
    
    
    
    64,504
    
    
    
    34,783
    
    
    
    43,983
    
    
    
    35,516
    
    
    
    18,374Theater System Maintenance
    
    
    21,444
    
    
    
    18,246
    
    
    
    16,331
    
    
    
    10,084
    
    
    
    8,361
    
    
    
    7,117Joint Revenue Sharing Arrangements
    
    
    41,757
    
    
    
    21,598
    
    
    
    3,435
    
    
    
    31,703
    
    
    
    13,261
    
    
    
    (1,865
    )FilmProduction and IMAX DMR
    
    
    63,462
    
    
    
    35,648
    
    
    
    17,944
    
    
    
    41,159
    
    
    
    19,979
    
    
    
    6,992Distribution
    
    
    17,937
    
    
    
    12,365
    
    
    
    9,559
    
    
    
    5,205
    
    
    
    2,147
    
    
    
    3,120Post-production
    
    
    7,702
    
    
    
    3,604
    
    
    
    6,929
    
    
    
    2,891
    
    
    
    939
    
    
    
    3,45189,101
    
    
    
    51,617
    
    
    
    34,432
    
    
    
    49,255
    
    
    
    23,065
    
    
    
    13,563Theater Operations(3)
    
    
    13,366
    
    
    
    11,810
    
    
    
    10,532
    
    
    
    1,147
    
    
    
    649
    
    
    
    (39
    )Other
    
    
    6,942
    
    
    
    3,436
    
    
    
    3,205
    
    
    
    1,480
    
    
    
    700
    
    
    
    403$
    248,614
    
    
    $
    171,211
    
    
    $
    102,718
    
    
    $
    137,652
    
    
    $
    81,552
    
    
    $
    37,553
 
 (1)
    
    Includes initial payments and the present value of fixed minimum
payments from equipment, sales and sales-type lease transactions.(2)
    
    Includes rental income from operating leases, contingent rents from
operating and sales-type leases, contingent fees from sales
arrangements and finance income.(3)
    
    Excludes the impact of discontinued operations. 47




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##### Table of Contents



Year Ended December 31, 2010 versus Year Ended December 31, 2009
  Revenues and Gross Margin
  IMAX Systems
     48




---



##### Table of Contents



2010
    
    2009Sales and Sales-type lease systems  installed and recognized2D SR Dome
    
    
    1
    
    
    
    1IMAX 3D GT
    
    
    1
    
    
    
    3IMAX 3D SR
    
    
    2
    
    
    
    4IMAX digital
    
    
    63
    (1)
    
    
    35
    (2)67
    
    
    
    43Operating lease  installed and operatingIMAX 3D MPX(2)
    
    
    
    
    
    
    1Joint revenue sharing arrangements  installed and operatingIMAX digital
    
    
    56
    (1)
    
    
    74
    (2)123
    
    
    
    118
 
 (1)
    
    Includes the digital upgrade of 32 systems (30 sales arrangements and
2 systems under joint revenue sharing arrangements) from film-based to
digital.(2)
    
    Includes the digital upgrade of 25 systems (14 sales arrangements, 2
treated previously as operating lease arrangements and 9 systems under
joint revenue sharing arrangements) from film-based to digital.       49




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##### Table of Contents



Theater System Maintenance
  Joint Revenue Sharing Arrangements
 Avatar: An 3D Experience
  Film
  Avatar: An 3D Experience
 2010 Films Exhibited
    
    2009 Films ExhibitedAvatar: AnIMAX 3D ExperienceAlice in Wonderland: AnIMAX 3D ExperienceHow To Train Your Dragon: AnIMAX 3D ExperienceIron Man 2: TheIMAX ExperienceShrek Forever After: AnIMAX 3D ExperiencePrince of Persia: The Sands of Time: TheIMAX ExperienceToy Story 3: AnIMAX 3D ExperienceThe Twilight Saga: Eclipse: TheIMAX ExperienceInception: TheIMAX ExperienceAftershock: TheIMAX ExperienceResident Evil: Afterlife: AnIMAX 3D ExperienceLegends of the Guardian: The Owls of GaHoole: AnIMAX 3D
     ExperienceParanormal Activity 2: TheIMAX ExperienceMegamind: AnIMAX 3D ExperienceHarry Potter and the Deathly Hallows Part I: TheIMAX ExperienceTron Legacy: AnIMAX 3D Experience
    
    The Day the Earth Stood Still: TheIMAX ExperienceThe Dark Knight: TheIMAX ExperienceJonas Bros: The 3D Concert ExperienceWatchmen: TheIMAX ExperienceMonsters vs. Aliens: AnIMAX 3D ExperienceStar Trek: TheIMAX ExperienceNight at the Museum: Battle of the Smithsonian: TheIMAX ExperienceTransformers: Revenge of the Fallen: TheIMAX ExperienceHarry Potter and the Half Blood Prince: AnIMAX 3D ExperienceCloudy with a Chance of Meatballs: AnIMAX 3D ExperienceWhere the Wild Things Are: TheIMAX ExperienceMichael Jacksons This Is It: TheIMAX ExperienceDisneys A Christmas Carol: AnIMAX 3D ExperienceAvatar: AnIMAX 3D Experience
 50




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##### Table of Contents



Avatar: An 3D Experience Avatar
 Hubble 3D:
An 3D Experience
  Avatar: An 3D Experience .
 Theater Operations
   Other
   Selling, General and Administrative Expenses
  
    
    an $8.5 million increase in the Companys stock-based compensation expense (including a
$6.4 million increase in charges for variable share-based awards) primarily due to an
increase in the Companys stock price during the period (an increase from $13.31 at year-end
2009 to $28.07 per share at year-end 2010, as compared to an increase from $4.46 per share
at year-end 2008 to $13.31 per share at year-end 2009) and its impact on variable awards
such as SARs. The Company has no present intention to issue such variable awards in the
future;
    
    an $8.7 million increase in staff-related costs and compensation costs including (i) an
increase in salaries and benefits of $6.3 million including a higher average Canadian dollar
denominated salary expense ($1.9 million), increased staffing and normal merit increase
partially offset by lower pension plan costs and (ii) a $2.4 million increase in travel and
entertainment costs commensurate with business activity;
    
    a $3.1 million increase in legal and professional fees and other expenses, including a
multi-jurisdictional patent and contract lawsuit settled at year-end, and work performed
relating to new business initiatives, such as 3net, a 3D television channel operated by a
Limited Liability Corporation owned by the Company, Discovery Communications and Sony
Corporation;
    
    a $1.4 million decrease in gains due to foreign exchange. During the year ended December
31, 2010, the Company recorded a foreign exchange gain of $1.5 million due to the impact of
a decrease in exchange rates on foreign currency denominated working capital balances and
unmatured and un-hedged foreign currency forward contracts as compared to a gain of $2.9
million
 51




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##### Table of Contents



recorded in 2009. See note 16(b) of the audited consolidated financial statements in Item 8 of
the Companys 2010 Form 10-K for more information; and
    
    a $0.5 million increase in other general corporate expenditures, which resulted from an
expansion of the Companys overall business.
 Research and Development
  Receivable Provisions, Net of Recoveries
   Asset Impairments and Other Significant Charges
     Interest Income and Expense
   Income Taxes
  52




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##### Table of Contents



Discontinued Operations
   Pension Plan
   53




---



##### Table of Contents



Years ended December 312010
    
    
    2009Service cost
    
    $
    447
    
    
    $
    643Interest cost
    
    
    351
    
    
    
    1,341Amortization of prior service credit
    
    
    
    
    
    
    145Amortization of actuarial gain
    
    
    
    
    
    
    (681
    )Realized actuarial gain on settlement of pension liability
    
    
    (385
    )
    
    
    Pension expense
    
    $
    413
    
    
    $
    1,448
      Stock-Based Compensation
   54




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##### Table of Contents



Years Ended December 31, 2009 versus Years Ended December 31, 2008
  Revenues and Gross Margin
  IMAX Systems
    2009
    
    2008Sales and Sales-type lease systems  installed and recognized2D SR Dome
    
    
    1
    
    
    
    IMAX 3D GT
    
    
    3
    
    
    
    2IMAX 3D SR
    
    
    4
    
    
    
    1IMAX 3D MPX
    
    
    
    
    
    
    7IMAX digital
    
    
    35
    (1)
    
    
    5
    (2)43
    
    
    
    15IMAX 3D MPX  installed and deferred
    
    
    
    
    
    
    343
    
    
    
    18Operating lease  installed and operatingIMAX 3D MPX(1)
    
    
    1
    
    
    
    1Joint revenue sharing arrangements  installed and operatingIMAX digital
    
    
    74
    (1)
    
    
    41
    (2)118
    
    
    
    60
 
 (1)
    
    Includes the digital upgrade of 25 systems (14 sales arrangements, 2
treated previously as operating lease arrangements and 9 systems under
joint revenue sharing arrangements) from film-based to digital. 55




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##### Table of Contents



(2)
    
    Includes the digital upgrade of 2 systems (one sales arrangement and
one system under a joint revenue sharing arrangement) from film-based
to digital.      Theater System Maintenance
  Joint Revenue Sharing Arrangements
   56




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##### Table of Contents



Film
  The Day The Earth Stood Still: The Experience, The Dark Knight: The Experience Jonas Bros: The 3D Concert Experience,
Watchmen: The Experience Monsters vs. Aliens: An 3D Experience Star Trek: The Experience Night at the Museum: Battle of the Smithsonian: The Experience, Transformers:
Revenge of the Fallen: The Experience Harry Potter and the Half Blood Prince: An 3D
Experience, Cloudy with a Chance of Meatballs: An 3D Experience Where the Wild Things Are:
The Experience, Michael Jacksons This Is It: The Experience, Disneys A Christmas Carol:
An 3D Experience Avatar: An 3D Experience The Spiderwick Chronicles: The Experience, Shine A Light: The Experience, Speed Racer: The Experience, Kung Fu Panda: The Experience, The Dark Knight:
The Experience, Eagle Eye: The Experience, Madagascar: Escape 2 Africa: The Experience The Day the Earth Stood Still: The Experience.
 Under the Sea 3D: An IMAX 3D Experience
  .
 Theater Operations
   Other
   Selling, General and Administrative Expenses
  
    
    a $16.5 million increase in the Companys stock-based compensation expense (including
$15.4 million for variable share-based awards) primarily due to an increase in the Companys
stock price during the period (an increase from $4.46 to $13.31 per share in 2009 as
compared to a decrease from $6.82 per share to $4.46 per share in the prior year) and its
impact on variable awards such as SARs. The Company has no present intention to issue such
variable awards in the future; and
 57




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##### Table of Contents




    
    a $2.1 million increase in legal and professional fees, including professional fees of
approximately $1.0 million in connection with the termination of a service arrangement.
  
    
    a $1.4 million decrease in staff-related costs and compensation costs, which was the
result of a decrease in salaries and benefits primarily due to a lower average Canadian
dollar denominated salary expense (including a $0.9 million benefit from hedged forward
contracts) and a $0.6 million decrease in travel and entertainment costs;
    
    a $3.6 million decrease due to a gain from unhedged forward contracts and foreign
exchange translation adjustments. In 2009, the Company recorded a foreign exchange gain of
$2.9 million due to an increase in the exchange rates of foreign currency denominated
receivables, other working capital balances and foreign currency unhedged forward contracts,
as compared to a loss of $0.7 million recorded in 2008; and
    
    a $1.1 million decrease in other general corporate expenditures.
 Receivable Provisions, Net of Recoveries
   Asset Impairments and Other Significant Charges
     Interest Income and Expenses
   Income Taxes
  58




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##### Table of Contents



Research and Development
  Discontinued Operations
   Pension Plan
   59




---



##### Table of Contents



Years ended December 312009
    
    
    2008Service cost
    
    $
    643
    
    
    $
    793Interest cost
    
    
    1,341
    
    
    
    1,251Amortization of prior service credit
    
    
    145
    
    
    
    (248
    )Amortization of actuarial gain
    
    
    (681
    )
    
    
    Pension expense
    
    $
    1,448
    
    
    $
    1,796
    Stock-Based Compensation
   60




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##### Table of Contents



Outlook
    Born to be Wild 3D:
An 3D Experience
  Aftershock: The Experience Flying Tigers, The Founding of a Party: The Experience Prince of Persia: Sands of Time: The Experience Tangled: An 3D Experience
 61




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##### Table of Contents



Tron Legacy: An 3D Experience Harry Potter and the Deathly
Hallows: Part I: The Experience Tron Legacy: An 3D
Experience
  LIQUIDITY AND CAPITAL RESOURCES
 Credit Facility
   December 31,
    
    
    December 31,2010
    
    
    2009Term Loan
    
    $
    17,500
    
    
    $
    35,000Revolving Credit Facility
    
    
    
    
    
    
    15,000$
    17,500
    
    
    $
    50,000
       62




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##### Table of Contents



EBITDA per Credit Facility:(In thousands of U.S. Dollars)Net earnings
    
    $
    100,779Add (subtract):Loss from equity accounted investments
    
    
    493Recovery of income taxes
    
    
    (51,784
    )Interest expense net of interest income
    
    
    1,486Depreciation and amortization including film asset amortization(1)
    
    
    20,195Write-downs net of recoveries including asset impairments and receivable provisions(1)
    
    
    2,551Stock and other non-cash compensation
    
    
    28,195Other, net
    
    
    (536
    )$
    101,379
 
 (1)
    
    See note 19 to the accompanying audited consolidated financial
statements in Item 8.    Letters of Credit and Other Commitments
   63




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##### Table of Contents



Senior Notes due December 2010
  Cash and Cash Equivalents
     Operating Activities
   64




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##### Table of Contents



Investing Activities
  Financing Activities
  Capital Expenditures
  Prior Year Cash Flow Activities
   CONTRACTUAL OBLIGATIONS
  65




---



##### Table of Contents



Payments Due by PeriodTotal(In thousands of U.S. Dollars)
    
    Obligations
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    ThereafterPension obligations (1)
    
    $
    18,813
    
    
    $
    
    
    
    $
    
    
    
    $
    18,813
    
    
    $
    
    
    
    $
    
    
    
    $
    Credit Facility(2)
    
    
    17,500
    
    
    
    11,667
    
    
    
    5,833
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations (3)
    
    
    16,253
    
    
    
    5,673
    
    
    
    5,390
    
    
    
    2,064
    
    
    
    879
    
    
    
    490
    
    
    
    1,757Purchase obligations (4)
    
    
    13,561
    
    
    
    13,561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Postretirement benefits obligations
    
    
    131
    
    
    
    13
    
    
    
    15
    
    
    
    31
    
    
    
    34
    
    
    
    38
    
    
    
    Capital lease obligations (5)
    
    
    70
    
    
    
    27
    
    
    
    23
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    $
    66,328
    
    
    $
    30,941
    
    
    $
    11,261
    
    
    $
    20,928
    
    
    $
    913
    
    
    $
    528
    
    
    $
    1,757
 
 (1)
    
    The SERP assumptions are that Mr. Gelfond will receive a lump sum
payment at the beginning of 2013 upon retirement at the end of
the current term of his employment agreement, although Mr.
Gelfond has not informed the Company that he intends to retire at
that time.(2)
    
    Interest on the Credit Facility is payable monthly in arrears
based on the applicable variable rate and is not included above.(3)
    
    The Companys total minimum annual rental payments to be made
under operating leases, mostly consisting of rent at the
Companys properties in New York and Santa Monica, and at the
various owned and operated theaters.(4)
    
    The Companys total payments to be made under binding commitments
with suppliers and outstanding payments to be made for supplies
ordered but yet to be invoiced.(5)
    
    The Companys total minimum annual payments to be made under
capital leases, mostly consisting of payments for IT hardware and
various other fixed assets. Pension and Postretirement Obligations
    66




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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  
 Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
  Foreign Exchange Rate Risk
      67




---



##### Table of Contents



Interest Rate Risk Management
     68




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##### Table of Contents



Item 8.
    
    Financial Statements and Supplementary Data
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    70Consolidated Balance Sheets as at December 31, 2010 and 2009
    
    
    71Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008
    
    
    72Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
    
    
    73Consolidated Statements of Shareholders Equity (Deficiency) for the years ended December 31, 2010, 2009 and 2008
    
    
    74Notes to Consolidated Financial Statements
    
    
    75
  69




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
       
 70




---



##### Table of Contents



IMAX CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
 In accordance with United States Generally Accepted Accounting Principles
 (In thousands of U.S. dollars)
 As at December 31,2010
    
    
    2009AssetsCash and cash equivalents
    
    $
    30,390
    
    
    $
    20,081Accounts receivable, net of allowance for doubtful accounts of $1,988 (December 31,
2009  $2,770)
    
    
    39,570
    
    
    
    37,652Financing receivables (note 4, note 21(c))
    
    
    73,601
    
    
    
    62,585Inventories (note 5)
    
    
    15,275
    
    
    
    10,271Prepaid expenses
    
    
    2,832
    
    
    
    2,609Film assets (note 6)
    
    
    2,449
    
    
    
    3,218Property, plant and equipment (note 7)
    
    
    74,035
    
    
    
    54,820Other assets (note 8)
    
    
    12,350
    
    
    
    15,140Deferred income taxes (note 9)
    
    
    57,122
    
    
    
    Goodwill
    
    
    39,027
    
    
    
    39,027Other intangible assets (note 10)
    
    
    2,437
    
    
    
    2,142Total assets
    
    $
    349,088
    
    
    $
    247,545LiabilitiesBank indebtedness (note 12)
    
    $
    17,500
    
    
    $
    50,000Accounts payable
    
    
    20,384
    
    
    
    16,803Accrued
liabilities (notes 6, 9(g), 13(a), 13(c), 15(c), 22, 23(d) and 24)
    
    
    78,994
    
    
    
    77,853Deferred revenue
    
    
    73,752
    
    
    
    57,879Total liabilities
    
    
    190,630
    
    
    
    202,535Commitments and contingencies(notes 13 and 14)Shareholders equityCapital stock (note 15) common shares  no par value. Authorized  unlimited number.
Issued and outstanding  64,145,573 (December 31, 2009  62,831,974)
    
    
    292,977
    
    
    
    280,048Other equity
    
    
    7,687
    
    
    
    6,044Deficit
    
    
    (141,209
    )
    
    
    (241,988
    )Accumulated other comprehensive income (note 25)
    
    
    (997
    )
    
    
    906Total shareholders equity
    
    
    158,458
    
    
    
    45,010Total liabilities and shareholders equity
    
    $
    349,088
    
    
    $
    247,545
 (the accompanying notes are an integral part of these consolidated financial statements)
 71




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##### Table of Contents



IMAX CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 In accordance with United States Generally Accepted Accounting Principles
 (In thousands of U.S. dollars, except per share amounts)
 Years Ended December 31,2010
    
    
    2009
    
    
    2008RevenuesEquipment and product sales
    
    $
    72,578
    
    
    $
    57,304
    
    
    $
    27,853Services (note 16(c))
    
    
    123,911
    
    
    
    82,052
    
    
    
    61,477Rentals (note 16(c))
    
    
    46,936
    
    
    
    25,758
    
    
    
    8,207Finance income
    
    
    4,789
    
    
    
    4,235
    
    
    
    4,300Other (note 16(a))
    
    
    400
    
    
    
    1,862
    
    
    
    881248,614
    
    
    
    171,211
    
    
    
    102,718Costs and expenses applicable to revenues(note 2(n))Equipment and product sales
    
    
    36,394
    
    
    
    29,040
    
    
    
    17,182Services (note 16(c))
    
    
    63,425
    
    
    
    49,891
    
    
    
    40,771Rentals
    
    
    11,111
    
    
    
    10,093
    
    
    
    7,043Other
    
    
    32
    
    
    
    635
    
    
    
    169110,962
    
    
    
    89,659
    
    
    
    65,165Gross margin
    
    
    137,652
    
    
    
    81,552
    
    
    
    37,553Selling, general and administrative expenses (note 16(b))
(including share-based
compensation expense of $26.0
million, $17.5 million and
$1.0 million for 2010, 2009,
2008, respectively)
    
    
    78,428
    
    
    
    56,207
    
    
    
    43,681Research and development
    
    
    6,249
    
    
    
    3,755
    
    
    
    7,461Amortization of intangibles
    
    
    513
    
    
    
    546
    
    
    
    526Receivable provisions, net of recoveries (note 17)
    
    
    1,443
    
    
    
    1,067
    
    
    
    1,977Asset impairments (note 18)
    
    
    45
    
    
    
    180
    
    
    
    Earnings (loss) from operations
    
    
    50,974
    
    
    
    19,797
    
    
    
    (16,092
    )Interest income
    
    
    399
    
    
    
    98
    
    
    
    381Interest expense
    
    
    (1,885
    )
    
    
    (13,845
    )
    
    
    (17,707
    )Loss on repurchase of Senior Notes due December 2010 (note 11)
    
    
    
    
    
    
    (579
    )
    
    
    Earnings (loss) from continuing operations before income taxes
    
    
    49,488
    
    
    
    5,471
    
    
    
    (33,418
    )Recovery of (provision for) income taxes
    
    
    51,784
    
    
    
    (274
    )
    
    
    (92
    )Loss from equity-accounted investments
    
    
    (493
    )
    
    
    
    
    
    
    Earnings (loss) from continuing operations
    
    
    100,779
    
    
    
    5,197
    
    
    
    (33,510
    )Loss from discontinued operations (note 23(c))
    
    
    
    
    
    
    (176
    )
    
    
    (92
    )Net earnings (loss)
    
    $
    100,779
    
    
    $
    5,021
    
    
    $
    (33,602
    )Earnings (loss) per share:(note 15(d))Net earnings (loss) per share  basic:Net earnings (loss) per share from continuing operations
    
    $
    1.59
    
    
    $
    0.10
    
    
    $
    (0.79
    )Net loss per share from discontinued operations
    
    
    
    
    
    
    
    
    
    
    $
    1.59
    
    
    $
    0.10
    
    
    $
    (0.79
    )Net earnings (loss) per share  diluted:Net earnings (loss) per share from continuing operations
    
    $
    1.51
    
    
    $
    0.09
    
    
    $
    (0.79
    )Net loss per share from discontinued operations
    
    
    
    
    
    
    
    
    
    
    $
    1.51
    
    
    $
    0.09
    
    
    $
    (0.79
    )
 (the accompanying notes are an integral part of these consolidated financial statements)
 72




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IMAX CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 In accordance with United States Generally Accepted Accounting Principles
 (In thousands of U.S. dollars)
 Years Ended December 31,2010
    
    
    2009
    
    
    2008Cash provided by (used in):Operating ActivitiesNet earnings (loss)
    
    $
    100,779
    
    
    $
    5,021
    
    
    $
    (33,602
    )Net loss from discontinued operations (note 23(c))
    
    
    
    
    
    
    176
    
    
    
    92Items not involving cash:Depreciation and amortization (notes 19(c) and 20(a))
    
    
    20,536
    
    
    
    19,051
    
    
    
    18,018Write-downs, net of recoveries (notes 19(d) and 20(a))
    
    
    2,551
    
    
    
    2,581
    
    
    
    4,466Change in deferred income taxes
    
    
    (54,275
    )
    
    
    8
    
    
    
    (749
    )Stock and other non-cash compensation
    
    
    28,195
    
    
    
    19,183
    
    
    
    3,320Foreign currency exchange (gain) loss
    
    
    (865
    )
    
    
    (974
    )
    
    
    480Gain on sale of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    (43
    )Loss on repurchase of Senior Notes due December 2010 (note 11)
    
    
    
    
    
    
    579
    
    
    
    Loss from equity-accounted investments
    
    
    493
    
    
    
    
    
    
    
    Change in cash surrender value of life insurance
    
    
    (107
    )
    
    
    (330
    )
    
    
    (270
    )Investment in film assets
    
    
    (10,139
    )
    
    
    (9,235
    )
    
    
    (10,145
    )Changes in other non-cash operating assets and liabilities (note 19(a))
    
    
    (28,682
    )
    
    
    (21,885
    )
    
    
    11,925Net cash used in operating activities from discontinued operations
    
    
    
    
    
    
    (393
    )
    
    
    (40
    )Net cash provided by (used in) operating activities
    
    
    58,486
    
    
    
    13,782
    
    
    
    (6,548
    )Investing ActivitiesPurchase of property, plant and equipment
    
    
    (5,338
    )
    
    
    (1,426
    )
    
    
    (2,805
    )Investment in joint revenue sharing equipment
    
    
    (21,275
    )
    
    
    (25,072
    )
    
    
    (18,478
    )Investment in new business ventures
    
    
    (3,636
    )
    
    
    
    
    
    
    Cash surrender value of life insurance
    
    
    7,797
    
    
    
    
    
    
    
    Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    43Acquisition of other assets
    
    
    (691
    )
    
    
    (748
    )
    
    
    (748
    )Acquisition of other intangible assets
    
    
    (681
    )
    
    
    (320
    )
    
    
    (430
    )Net cash used in investing activities
    
    
    (23,824
    )
    
    
    (27,566
    )
    
    
    (22,418
    )Financing ActivitiesIncrease in bank indebtedness (note 12)
    
    
    
    
    
    
    55,000
    
    
    
    20,000Repayment of bank indebtedness (note 12)
    
    
    (32,500
    )
    
    
    (25,000
    )
    
    
    Repurchase of Senior Notes due December 2010 (note 11)
    
    
    
    
    
    
    (159,104
    )
    
    
    Common shares issued  public offerings, net of offering expenses paid (note 15(b))
    
    
    
    
    
    
    130,774
    
    
    
    Common shares issued  private offering
    
    
    
    
    
    
    
    
    
    
    17,931Common shares issued  stock options exercised (note 15(b))
    
    
    8,276
    
    
    
    6,332
    
    
    
    1,202Shelf registration fees paid
    
    
    
    
    
    
    (150
    )
    
    
    Debt modification fees paid
    
    
    
    
    
    
    
    
    
    
    (114
    )Fees paid pertaining to amended Credit Facility agreement
    
    
    
    
    
    
    (671
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (24,224
    )
    
    
    7,181
    
    
    
    39,019Effects of exchange rate changes on cash
    
    
    (129
    )
    
    
    (333
    )
    
    
    63Increase (decrease) in cash and cash equivalents during year
    
    
    10,309
    
    
    
    (6,936
    )
    
    
    10,116Cash and cash equivalents, beginning of year
    
    
    20,081
    
    
    
    27,017
    
    
    
    16,901Cash and cash equivalents, end of year
    
    $
    30,390
    
    
    $
    20,081
    
    
    $
    27,017
 (the accompanying notes are an integral part of these consolidated financial statements)
 73




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##### Table of Contents



IMAX CORPORATION
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIENCY)
 In accordance with United States Generally Accepted Accounting Principles
 (In thousands of U.S. dollars)
 Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedCommon
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalShares Issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive
    
    
    Shareholdersand
    
    
    Capital
    
    
    Other
    
    
    
    
    
    
    Income (Loss)
    
    
    Equity
    
    
    ComprehensiveOutstanding
    
    
    Stock
    
    
    Equity
    
    
    Deficit
    
    
    (note 25)
    
    
    (Deficiency)
    
    
    Income (Loss)Balance as at December 31, 2007
    
    
    40,423,074
    
    
    $
    122,455
    
    
    $
    4,088
    
    
    $
    (213,407
    )
    
    $
    1,494
    
    
    $
    (85,370
    )Common shares issued for private
offering
    
    
    2,726,447
    
    
    
    17,681
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,681Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,602
    )
    
    
    
    
    
    
    (33,602
    )
    
    $
    (33,602
    )Paid-in capital for non-employee
stock options granted (note 15(c))
    
    
    
    
    
    
    
    
    
    
    416
    
    
    
    
    
    
    
    
    
    
    
    416
    
    
    
    Employee stock options exercised
    
    
    238,745
    
    
    
    751
    
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    737
    
    
    
    Non-employee stock options exercised
    
    
    102,365
    
    
    
    697
    
    
    
    (232
    )
    
    
    
    
    
    
    
    
    
    
    465
    
    
    
    Paid-in capital for employee stock
options granted (note 15(c))
    
    
    
    
    
    
    
    
    
    
    925
    
    
    
    
    
    
    
    
    
    
    
    925
    
    
    
    Unrecognized prior service costs
(net of income tax recovery of $66)
(note 22)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (181
    )
    
    
    (181
    )
    
    
    (181
    )Unrecognized actuarial gain (net of
income tax provision of $770)(note 22)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,029
    
    
    
    2,029
    
    
    
    2,029Unrealized net gain on derivative
instruments (net of income tax
provision of $46) (note 21)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126
    
    
    
    126
    
    
    
    126$
    (31,628
    )Balance as at December 31, 2008
    
    
    43,490,631
    
    
    $
    141,584
    
    
    $
    5,183
    
    
    $
    (247,009
    )
    
    $
    3,468
    
    
    $
    (96,774
    )Common shares issued for public
offering
    
    
    18,034,706
    
    
    
    130,682
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,682
    
    
    
    Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,021
    
    
    
    
    
    
    
    5,021
    
    
    
    5,021Paid-in capital for non-employee
stock options granted (note 15(c))
    
    
    
    
    
    
    
    
    
    
    215
    
    
    
    
    
    
    
    
    
    
    
    215
    
    
    
    Employee stock options exercised
    
    
    1,103,091
    
    
    
    6,391
    
    
    
    (962
    )
    
    
    
    
    
    
    
    
    
    
    5,429
    
    
    
    Non-employee stock options exercised
    
    
    203,546
    
    
    
    1,391
    
    
    
    (488
    )
    
    
    
    
    
    
    
    
    
    
    903
    
    
    
    Paid-in capital for employee stock
options granted (note 15(c))
    
    
    
    
    
    
    
    
    
    
    2,096
    
    
    
    
    
    
    
    
    
    
    
    2,096
    
    
    
    Unrecognized prior service costs
(net of income tax provision of
$38) (note 22)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107
    
    
    
    107
    
    
    
    107Unrecognized actuarial loss (net of
income tax recovery of $nil) (note 22)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,075
    )
    
    
    (3,075
    )
    
    
    (3,075
    )Unrealized net gain on derivative
instruments (net of income tax
recovery of $46) (note 21)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    406
    
    
    
    406
    
    
    
    406$
    2,459Balance as at December 31, 2009
    
    
    62,831,974
    
    
    $
    280,048
    
    
    $
    6,044
    
    
    $
    (241,988
    )
    
    $
    906
    
    
    $
    45,010Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,779
    
    
    
    
    
    
    
    100,779
    
    
    
    100,779Paid-in capital for non-employee
stock options granted (note 15(c))
    
    
    
    
    
    
    
    
    
    
    383
    
    
    
    
    
    
    
    
    
    
    
    383
    
    
    
    Employee stock options exercised
    
    
    1,090,782
    
    
    
    8,063
    
    
    
    (1,696
    )
    
    
    
    
    
    
    
    
    
    
    6,367
    
    
    
    Non-employee stock options exercised
    
    
    222,817
    
    
    
    3,016
    
    
    
    (1,102
    )
    
    
    
    
    
    
    
    
    
    
    1,914
    
    
    
    Paid-in capital for employee stock
options granted (note 15(c))
    
    
    
    
    
    
    
    
    
    
    4,058
    
    
    
    
    
    
    
    
    
    
    
    4,058
    
    
    
    Unrealized actuarial loss (net of
income tax recovery of $662) (note 22)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,985
    )
    
    
    (1,985
    )
    
    
    (1,985
    )Unrealized net gain on derivative
instruments (net of income tax
provision of $182)(note 21)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50
    )
    
    
    (50
    )
    
    
    (50
    )Tax recovery related to share
issuance expenses
    
    
    
    
    
    
    1,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,850
    
    
    
    Realized actuarial gain on
settlement of pension liability
(net of income tax provision of
$517)(note 22)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132
    
    
    
    132
    
    
    
    132$
    98,876Balance as at December 31, 2010
    
    
    64,145,573
    
    
    $
    292,977
    
    
    $
    7,687
    
    
    $
    (141,209
    )
    
    $
    (997
    )
    
    $
    158,458
 (The accompanying notes are an integral part of these consolidated financial statements)
 74




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##### Table of Contents



IMAX CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 In accordance with United States Generally Accepted Accounting Principles
 (Tabular amounts in thousands of U.S. dollars, unless otherwise stated)
 1. Description of the Business
  
    
    design, manufacture, sale and lease of proprietary theater systems for IMAX
theaters principally owned and operated by commercial and institutional customers located
in 46 countries as at December 31, 2010;
    
    production, digital re-mastering, post-production and/or distribution of certain
films shown throughout the IMAX theater network;
    
    provision of other services to the IMAX theater network, including ongoing
maintenance and extended warranty services for IMAX theater systems;
    
    operation of certain theaters primarily in the United States; and
    
    other activities, which includes short-term rental of cameras and aftermarket sales
of projector system components.
       2. Summary of Significant Accounting Policies
   (a) Basis of Consolidation
   75




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##### Table of Contents



(b) Use of Estimates
  (c) Cash and Cash Equivalents
  (d) Short-Term Investments
   (e) Accounts Receivable and Financing Receivables
   76




---



##### Table of Contents



(f) Inventories
     (g) Film Assets
    77




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##### Table of Contents



(h) Property, Plant and Equipment
  Theater system components (1)
    
    
    
    Over the equipments anticipated useful life (7 to 20 years)Camera equipment
    
    
    
    5 to 10 yearsBuildings
    
    
    
    20 to 25 yearsOffice and production equipment
    
    
    
    3 to 5 yearsLeasehold improvements
    
    
    
    over the shorter of the initial term of the underlying
leases plus any reasonably assured renewal terms, and the
useful life of the asset
 
 (1)
    
    includes equipment under joint revenue sharing arrangements.    (i) Other Assets
    78




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##### Table of Contents



(j) Goodwill
  (k) Other Intangible Assets
   (l) Deferred Revenue
  (m) Income Taxes
    79




---



##### Table of Contents



(n) Revenue Recognition
 Multiple Element Arrangements
  Theater Systems
   Sales Arrangements
     80




---



##### Table of Contents



Lease Arrangements
       Finance Income
  81




---



##### Table of Contents



Improvements and Modifications
  Cost of Equipment and Product Sales
  Cost of Rentals
  Terminations, Consensual Buyouts and Concessions
    82




---



##### Table of Contents



Maintenance and Extended Warranty Services
  Film Production and IMAX DMR Services
     Film Distribution
  Film Post-Production Services
  83




---



##### Table of Contents



Theater Operations Revenue
   Other
    (o) Research and Development
  (p) Foreign Currency Translation
   (q) Stock-Based Compensation
     84




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##### Table of Contents



Stock Option Plan
   Restricted Common Shares and Stock Appreciation Rights
  Awards to Non-Employees
  (r) Pension Plans and Postretirement Benefits
     85




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##### Table of Contents



(s) Guarantees
  3. New Accounting Standards and Accounting Changes
 Changes in Accounting Standards
  No. 46(R)
  note 21(c).
 86




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##### Table of Contents



Recently Issued FASB Accounting Standard Codification Updates
     4. Lease Arrangements
 (a) General Terms of Lease Arrangements
  87




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##### Table of Contents



(b) Financing Receivables
  As at December 31,2010
    
    
    2009Gross minimum lease payments receivable
    
    $
    49,977
    
    
    $
    64,779Unearned finance income
    
    
    (15,158
    )
    
    
    (18,939
    )Minimum lease payments receivable
    
    
    34,819
    
    
    
    45,840Accumulated allowance for uncollectible amounts
    
    
    (4,838
    )
    
    
    (5,734
    )Net investment in leases
    
    
    29,981
    
    
    
    40,106Gross financed sales receivables
    
    
    62,127
    
    
    
    32,526Unearned finance income
    
    
    (18,441
    )
    
    
    (9,869
    )Financed sales receivables
    
    
    43,686
    
    
    
    22,657Accumulated allowance for uncollectible amounts
    
    
    (66
    )
    
    
    (178
    )Net financed sales receivables
    
    
    43,620
    
    
    
    22,479Total financing receivables
    
    $
    73,601
    
    
    $
    62,585Net financed sales receivables due within one year
    
    $
    6,166
    
    
    $
    4,304Net financed sales receivables due after one year
    
    $
    37,454
    
    
    $
    18,175
  (c) Contingent Fees
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Sales
    
    $
    1,629
    
    
    $
    406
    
    
    $
    285Sales-type leases
    
    
    1,970
    
    
    
    1,717
    
    
    
    1,730Operating leases
    
    
    1,616
    
    
    
    1,483
    
    
    
    1,681Subtotal  sales, sales-type leases and operating leases
    
    
    5,215
    
    
    
    3,606
    
    
    
    3,696Joint revenue sharing arrangements
    
    
    41,646
    
    
    
    21,598
    
    
    
    3,435$
    46,861
    
    
    $
    25,204
    
    
    $
    7,131
 88




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##### Table of Contents



(d) Future Minimum Rental Payments
  Operating Leases
    
    
    Sales-Type Leases2011
    
    $
    2,041
    
    
    $
    6,5972012
    
    
    1,962
    
    
    
    5,5652013
    
    
    1,834
    
    
    
    5,3162014
    
    
    1,747
    
    
    
    4,9652015
    
    
    1,736
    
    
    
    4,563Thereafter
    
    
    6,896
    
    
    
    19,479Total
    
    $
    16,216
    
    
    $
    46,485
  5. Inventories
 As at December 31,2010
    
    
    2009Raw materials
    
    $
    4,693
    
    
    $
    4,045Work-in-process
    
    
    2,293
    
    
    
    983Finished goods
    
    
    8,289
    
    
    
    5,243$
    15,275
    
    
    $
    10,271
   6. Film Assets
 As at December 31,2010
    
    
    2009Completed
and released films, net of accumulated amortization of $38,914 (2009  $28,015)
    
    $
    1,704
    
    
    $
    1,897Films in production
    
    
    532
    
    
    
    1,136Films in development
    
    
    213
    
    
    
    185$
    2,449
    
    
    $
    3,218
  89




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##### Table of Contents



7. Property, Plant and Equipment
 As at December 31, 2010Accumulated
    
    
    Net BookCost
    
    
    Depreciation
    
    
    ValueEquipment leased or held for useTheater system components(1)(2)
    
    $
    86,249
    
    
    $
    33,775
    
    
    $
    52,474Camera equipment(5)
    
    
    6,355
    
    
    
    6,008
    
    
    
    34792,604
    
    
    
    39,783
    
    
    
    52,821Assets under construction(3)
    
    
    8,305
    
    
    
    
    
    
    
    8,305Other property, plant and equipmentLand
    
    
    1,593
    
    
    
    
    
    
    
    1,593Buildings
    
    
    14,723
    
    
    
    8,906
    
    
    
    5,817Office and production equipment(4)
    
    
    27,172
    
    
    
    23,454
    
    
    
    3,718Leasehold improvements
    
    
    8,603
    
    
    
    6,822
    
    
    
    1,78152,091
    
    
    
    39,182
    
    
    
    12,909$
    153,000
    
    
    $
    78,965
    
    
    $
    74,035
 As at December 31, 2009Accumulated
    
    
    Net BookCost
    
    
    Depreciation
    
    
    ValueEquipment leased or held for useTheater system components(1)(2)
    
    $
    68,349
    
    
    $
    30,240
    
    
    $
    38,109Camera equipment(5)
    
    
    5,954
    
    
    
    5,954
    
    
    
    74,303
    
    
    
    36,194
    
    
    
    38,109Assets under construction(3)
    
    
    3,700
    
    
    
    
    
    
    
    3,700Other property, plant and equipmentLand
    
    
    1,593
    
    
    
    
    
    
    
    1,593Buildings
    
    
    14,723
    
    
    
    8,404
    
    
    
    6,319Office and production equipment(4)
    
    
    27,145
    
    
    
    24,347
    
    
    
    2,798Leasehold improvements
    
    
    8,421
    
    
    
    6,120
    
    
    
    2,30151,882
    
    
    
    38,871
    
    
    
    13,011$
    129,885
    
    
    $
    75,065
    
    
    $
    54,820
 
 (1)
    
    Included in theater system components are assets with costs of $19.9 million (2009  $21.3
million) and accumulated depreciation of $19.0 million (2009  $20.2 million) that are leased
to customers under operating leases.(2)
    
    Included in theater system components are assets with costs of $62.8 million (2009  $42.7
million) and accumulated depreciation of $12.0 million (2009  $6.7 million) that are used in
joint revenue sharing arrangements.(3)
    
    Included in assets under construction are components with costs of $6.2 million (2009  $3.1
million) that will be utilized to construct assets to be used in joint revenue sharing
arrangements.(4)
    
    Included in office and production equipment are assets under capital lease with costs of $1.5
million (2009  $1.5 million) and accumulated depreciation of $1.4 million (2009 $1.3
million).(5)
    
    Fully amortized camera equipment is still in use by the Company. 90




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8. Other Assets
 As at December 31,2010
    
    
    2009Cash surrender value of life insurance policies
    
    $
    
    
    
    $
    7,313Commissions and other deferred selling expenses
    
    
    3,349
    
    
    
    2,828Deferred charges on debt financing
    
    
    1,174
    
    
    
    1,489Insurance recoveries
    
    
    1,896
    
    
    
    2,053Foreign currency derivatives
    
    
    1,913
    
    
    
    1,389Shelf registration fees
    
    
    
    
    
    
    68Investment in new business ventures
    
    
    1,500
    
    
    
    Equity-accounted investments
    
    
    1,643
    
    
    
    Other
    
    
    875
    
    
    
    $
    12,350
    
    
    $
    15,140
 9. Income Taxes
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Canada
    
    $
    47,954
    
    
    $
    4,833
    
    
    $
    (42,285
    )United States
    
    
    2,088
    
    
    
    497
    
    
    
    7,723Other
    
    
    (554
    )
    
    
    141
    
    
    
    1,144$
    49,488
    
    
    $
    5,471
    
    
    $
    (33,418
    )
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Current:Canada
    
    $
    (1,027
    )
    
    $
    (104
    )
    
    $
    (865
    )Foreign
    
    
    (1,465
    )
    
    
    (162
    )
    
    
    24(2,492
    )
    
    
    (266
    )
    
    
    (841
    )Deferred:(1)Canada
    
    
    49,612
    
    
    
    (8
    )
    
    
    749Foreign
    
    
    4,664
    
    
    
    
    
    
    
    54,276
    
    
    
    (8
    )
    
    
    749$
    51,784
    
    
    $
    (274
    )
    
    $
    (92
    )
 
 (1)
    
    For the year ended December 31, 2010 the Company has released a
valuation allowance of $54.8 million relating to the future
utilization of deductible temporary differences, tax credits, and
certain net operating loss carryforwards. Offsetting this recovery for
income taxes is the deferred tax provision related to a partial
pension settlement reclassed from other comprehensive income in the
year of $0.5 million. 91




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Years Ended December 31,2010
    
    
    2009 (1)
    
    
    2008 (1)Income tax (provision) recovery at combined statutory rates
    
    $
    (15,343
    )
    
    $
    (1,806
    )
    
    $
    11,225Adjustments resulting from:Non-taxable portion of capital gains and losses
    
    
    
    
    
    
    142
    
    
    
    Non-deductible stock based compensation
    
    
    (1,713
    )
    
    
    (704
    )
    
    
    (467
    )Other non-deductible/non-includable items
    
    
    420
    
    
    
    14
    
    
    
    (131
    )Decrease (increase) in valuation allowance relating to current year temporary
differences
    
    
    12,708
    
    
    
    (7,327
    )
    
    
    (11,560
    )Decrease in valuation allowance relating to reversal of future temporary
differences
    
    
    54,793
    
    
    
    
    
    
    
    Tax effect of pension settlement reclassed from other comprehensive income
    
    
    (517
    )
    
    
    
    
    
    
    Withholding and other taxes
    
    
    (1,041
    )
    
    
    (490
    )
    
    
    (455
    )Changes to tax reserves
    
    
    13
    
    
    
    413
    
    
    
    (323
    )US federal and state taxes
    
    
    (1,465
    )
    
    
    (107
    )
    
    
    88Income tax at different rates in foreign and other provincial jurisdictions
    
    
    (374
    )
    
    
    (76
    )
    
    
    (648
    )Impact of changes in future enacted tax rates on current year temporary
differences
    
    
    4,444
    
    
    
    (259
    )
    
    
    (1,877
    )Carryforward of investment and other tax credits (non-refundable)
    
    
    1,642
    
    
    
    819
    
    
    
    883Effect of changes in legislation relating to enacted tax rate reductions
    
    
    
    
    
    
    (3,652
    )
    
    
    Effect of changes in legislation relating to foreign currency election
    
    
    
    
    
    
    14,147
    
    
    
    Effect of changes in legislation relating to tax credits
    
    
    
    
    
    
    928
    
    
    
    511Changes to deferred tax assets and liabilities resulting from audit and other
tax return adjustments
    
    
    14
    
    
    
    (2,216
    )
    
    
    1,435Expiration of losses and credits carried forward
    
    
    (1,558
    )
    
    
    (7
    )
    
    
    (549
    )Changes to deferred tax assets and liabilities resulting from foreign exchange
    
    
    
    
    
    
    6
    
    
    
    1,911Tax effect of loss from equity-accounted investments
    
    
    168
    
    
    
    
    
    
    
    Other
    
    
    (407
    )
    
    
    (99
    )
    
    
    (135
    )Recovery (provision) for income taxes, as reported
    
    $
    51,784
    
    
    $
    (274
    )
    
    $
    (92
    )
 
 (1)
    
    Prior years comparatives have been restated to conform to the current
years presentation.  As at December 31,2010
    
    
    2009Net operating loss carryforwards
    
    $
    16,245
    
    
    $
    19,404Investment tax credit and other tax credit carryforwards
    
    
    4,837
    
    
    
    5,186Write-downs of other assets
    
    
    651
    
    
    
    651Excess tax over accounting basis in property, plant and equipment and inventories
    
    
    36,373
    
    
    
    45,941Accrued pension liability
    
    
    4,799
    
    
    
    7,887Other accrued reserves
    
    
    8,133
    
    
    
    6,134Total deferred income tax assets
    
    
    71,038
    
    
    
    85,203Income recognition on net investment in leases
    
    
    (6,167
    )
    
    
    (7,639
    )Other
    
    
    180
    
    
    
    (284
    )65,051
    
    
    
    77,280Valuation allowance
    
    
    (7,929
    )
    
    
    (77,280
    )Net deferred income tax asset
    
    $
    57,122
    
    
    $
    
 92




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Investment TaxCredits andOther
    
    
    Net OperatingTax Credit
    
    
    LossCarryforwards
    
    
    Carryforwards2011
    
    $
    
    
    
    $
    2012
    
    
    
    
    
    
    2013
    
    
    393
    
    
    
    2014
    
    
    
    
    
    
    92015
    
    
    
    
    
    
    16Thereafter
    
    
    5,742
    
    
    
    53,207$
    6,135
    
    
    $
    53,232
     93




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(In thousands of U.S. Dollars)Balance at January 1, 2010
    
    $
    3,237Additions based on tax positions related to the current year
    
    
    410Additions for tax positions of prior years
    
    
    Reductions for tax positions of prior years
    
    
    (10
    )Settlements
    
    
    Reductions resulting from lapse of applicable statute of limitations
    
    
    (418
    )Balance at December 31, 2010
    
    $
    3,219
    10. Other Intangible Assets
 As at December 31, 2010Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    ValuePatents and trademarks
    
    $
    7,289
    
    
    $
    4,852
    
    
    $
    2,437Other
    
    
    250
    
    
    
    250
    
    
    
    $
    7,539
    
    
    $
    5,102
    
    
    $
    2,437
 As at December 31, 2009Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    ValuePatents and trademarks
    
    $
    6,543
    
    
    $
    4,452
    
    
    $
    2,091Intellectual property rights
    
    
    100
    
    
    
    49
    
    
    
    51Other
    
    
    250
    
    
    
    250
    
    
    
    $
    6,893
    
    
    $
    4,751
    
    
    $
    2,142
  94




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11. Senior Notes due December 2010
  12. Credit Facility
        95




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##### Table of Contents



December 31,
    
    
    December 31,2010
    
    
    2009Term Loan
    
    $
    17,500
    
    
    $
    35,000Revolving Credit Facility
    
    
    
    
    
    
    15,000$
    17,500
    
    
    $
    50,000
    2011
    
    $
    11,6672012
    
    
    5,8332013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    $
    17,500
 Wells Fargo Foreign Exchange Facility
  96




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##### Table of Contents



Bank of Montreal Facilities
   13. Commitments
  Operating Leases
    
    
    Capital Leases2011
    
    $
    5,673
    
    
    $
    272012
    
    
    5,390
    
    
    
    232013
    
    
    2,064
    
    
    
    202014
    
    
    879
    
    
    
    2015
    
    
    490
    
    
    
    Thereafter
    
    
    1,757
    
    
    
    $
    16,253
    
    
    $
    70
      14. Contingencies and Guarantees
  97




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.
     98




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99




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##### Table of Contents



Financial Guarantees
  Product Warranties
  100




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##### Table of Contents



As at December 31,2010
    
    
    2009Balance at the beginning of the year
    
    $
    36
    
    
    $
    33Warranty redemptions
    
    
    (87
    )
    
    
    (41
    )Warranties issued
    
    
    211
    
    
    
    115Revisions
    
    
    
    
    
    
    (71
    )Balance at the end of the year
    
    $
    160
    
    
    $
    36
 Director/Officer Indemnifications
 Canada Business Corporations Act
 Other Indemnification Agreements
  15. Capital Stock
 (a) Authorized
 Common Shares
    (b) Changes during the Year
  101




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##### Table of Contents



(c) Stock-Based Compensation
  Stock Option Plan
     2010
    
    2009
    
    2008Average risk-free interest rate
    
    
    3.18
    %
    
    
    3.14
    %
    
    
    2.68
    %Expected option life (in years)
    
    
    2.82 - 5.41
    
    
    
    4.94 - 5.85
    
    
    
    3.49 - 5.85Expected volatility
    
    
    50% - 61
    %
    
    
    62
    %
    
    
    61% - 62
    %Annual termination probability
    
    
    0% - 9.69
    %
    
    
    0% - 10.30
    %
    
    
    9.52% - 11.20
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
  102




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##### Table of Contents



Weighted Average ExerciseNumber of Shares
    
    Price Per Share2010
    
    2009
    
    2008
    
    2010
    
    2009
    
    2008Options outstanding, beginning of year
    
    
    6,173,795
    
    
    
    6,686,182
    
    
    
    5,908,080
    
    
    $
    6.52
    
    
    $
    5.97
    
    
    $
    6.71Granted
    
    
    2,001,703
    
    
    
    1,051,217
    
    
    
    1,472,038
    
    
    
    21.72
    
    
    
    10.00
    
    
    
    4.47Exercised
    
    
    (1,313,599
    )
    
    
    (1,306,637
    )
    
    
    (341,110
    )
    
    
    6.30
    
    
    
    4.85
    
    
    
    3.52Forfeited
    
    
    (23,825
    )
    
    
    (35,488
    )
    
    
    (84,608
    )
    
    
    8.35
    
    
    
    6.48
    
    
    
    5.83Expired
    
    
    (94,802
    )
    
    
    (212,229
    )
    
    
    (158,000
    )
    
    
    26.08
    
    
    
    16.18
    
    
    
    23.95Cancelled
    
    
    
    
    
    
    (9,250
    )
    
    
    (110,218
    )
    
    
    
    
    
    
    18.51
    
    
    
    7.51Options outstanding, end of period
    
    
    6,743,272
    
    
    
    6,173,795
    
    
    
    6,686,182
    
    
    
    10.79
    
    
    
    6.52
    
    
    
    5.97Options exercisable, end of period
    
    
    3,090,755
    
    
    
    3,618,618
    
    
    
    4,451,715
    
    
    
    5.64
    
    
    
    6.22
    
    
    
    6.50
   Options to Non-Employees
   Years Ended December 312010
    
    2009
    
    2007Average risk-free interest rate
    
    
    2.09
    %
    
    
    2.03
    %
    
    
    1.71
    %Contractual option life
    
    
    1.70 - 6.25
    years
    
    
    6
    years
    
    
    6
    yearsAverage expected volatility
    
    
    50% - 61
    %
    
    
    62
    %
    
    
    62
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
 103




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##### Table of Contents



Restricted Common Shares
  Stock Appreciation Rights
  As at December 31,2010
    
    2009Average risk-free interest rate
    
    
    0.65
    %
    
    
    1.17
    %Expected option life (in years)
    
    
    0.24 to 2.51
    
    
    
    0.15 to 3.48Expected volatility
    
    
    50% to 61
    %
    
    
    62
    %Annual termination probability
    
    
    0% - 8.31
    %
    
    
    0% - 9.69
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
 Warrants
  104




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##### Table of Contents



(d) Earnings (loss) per share
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Net earnings (loss) from continuing operations applicable to common shareholders
    
    $
    100,779
    
    
    $
    5,197
    
    
    $
    (33,510
    )Weighted average number of common shares (000s):Issued and outstanding, beginning of period
    
    
    62,831,974
    
    
    
    43,490,631
    
    
    
    40,423,074Weighted average number of shares issued during the period
    
    
    743,499
    
    
    
    9,330,152
    
    
    
    1,970,011Weighted average number of shares used in computing basic earnings per
share
    
    
    63,575,473
    
    
    
    52,820,783
    
    
    
    42,393,085Assumed exercise of stock options, net of shares assumed
    
    
    3,108,130
    
    
    
    1,697,358
    
    
    
    Weighted average number of shares used in computing diluted earnings per
share
    
    
    66,683,603
    
    
    
    54,518,141
    
    
    
    42,393,085
  16. Consolidated Statements of Operations Supplemental Information
 (a) Other Revenues
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Theater system configuration conversions
    
    $
    
    
    
    $
    136
    
    
    $
    Consensual buyouts
    
    
    400
    
    
    
    1,726
    
    
    
    881$
    400
    
    
    $
    1,862
    
    
    $
    881
 (b) Foreign Exchange
  (c) Collaborative Arrangements
 105




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##### Table of Contents



Joint Revenue Sharing Arrangements
    IMAX DMR
    Co-Produced Film Arrangements
    17. Receivable Provisions, Net of Recoveries
 Years Ended December 31,2010
    
    
    2009
    
    
    2008Accounts receivable provisions, net of recoveries
    
    $
    499
    
    
    $
    127
    
    
    $
    382Financing receivables, net of recoveries
    
    
    944
    
    
    
    940
    
    
    
    1,595Receivable provisions, net of recoveries
    
    $
    1,443
    
    
    $
    1,067
    
    
    $
    1,977
 106




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##### Table of Contents



18. Asset Impairments
 Years Ended December 31,2010
    
    
    2009
    
    
    2008Property, plant and equipment
    
    $
    45
    
    
    $
    180
    
    
    $
    Total
    
    $
    45
    
    
    $
    180
    
    
    $
    
  19. Consolidated Statements of Cash Flows Supplemental Information
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Decrease (increase) in:Accounts receivable
    
    $
    (2,423
    )
    
    $
    (13,444
    )
    
    $
    1,944Financing receivables
    
    
    (11,874
    )
    
    
    (7,162
    )
    
    
    (199
    )Inventories
    
    
    (3,828
    )
    
    
    10,082
    
    
    
    837Prepaid expenses
    
    
    (223
    )
    
    
    (686
    )
    
    
    189Commissions and other deferred selling expenses
    
    
    (432
    )
    
    
    708
    
    
    
    (749
    )Insurance recoveries
    
    
    156
    
    
    
    694
    
    
    
    (122
    )Other assets
    
    
    (25
    )
    
    
    
    
    
    
    Increase (decrease) in:Accounts payable
    
    
    100
    
    
    
    1,500
    
    
    
    145Accrued and other liabilities(1)
    
    
    (25,823
    )
    
    
    (42
    )
    
    
    (2,487
    )Deferred revenue
    
    
    15,690
    
    
    
    (13,535
    )
    
    
    12,367$
    (28,682
    )
    
    $
    (21,885
    )
    
    $
    11,925
 
 (1)
    
    Decrease in accruals largely due to a payment of pension benefits in the amount of
$14.7 million and payments of $14.5 million in variable stock-based
compensation.  Years Ended December 31,2010
    
    
    2009
    
    
    2008Income taxes
    
    $
    682
    
    
    $
    519
    
    
    $
    518Interest
    
    $
    1,719
    
    
    $
    13,864
    
    
    $
    15,961
 107




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##### Table of Contents



Years Ended December 31,2010
    
    
    2009
    
    
    2008Film assets(1)
    
    $
    10,900
    
    
    $
    8,592
    
    
    $
    8,305Property, plant and equipmentJoint revenue sharing arrangements
    
    
    5,315
    
    
    
    4,625
    
    
    
    3,512Other property, plant and equipment
    
    
    3,525
    
    
    
    4,156
    
    
    
    4,255Other intangible assets
    
    
    448
    
    
    
    546
    
    
    
    526Other assets
    
    
    7
    
    
    
    
    
    
    
    Deferred financing costs
    
    
    341
    
    
    
    1,132
    
    
    
    1,420$
    20,536
    
    
    $
    19,051
    
    
    $
    18,018
 
 (1)
    
    Included in film asset amortization is a charge of less than $0.1 million (2009  $0.2
million, 2008  $2.1 million) relating to changes in estimates based on the ultimate
recoverability of future films.  Years Ended December 31,2010
    
    
    2009
    
    
    2008Asset impairmentsProperty, plant and equipment(1)
    
    $
    45
    
    
    $
    180
    
    
    $
    Other significant chargesAccounts receivables
    
    
    499
    
    
    
    127
    
    
    
    382Financing receivables
    
    
    944
    
    
    
    1,377
    
    
    
    1,595Inventories(2)
    
    
    998
    
    
    
    897
    
    
    
    2,489Other intangible assets
    
    
    65
    
    
    
    
    
    
    
    $
    2,551
    
    
    $
    2,581
    
    
    $
    4,466Inventory ChargesRecorded in costs and expenses applicable to revenues  product & equip. sales
    
    $
    827
    
    
    $
    48
    
    
    $
    2,396Recorded in costs and expenses applicable to revenues  services
    
    
    172
    
    
    
    849
    
    
    
    93$
    999
    
    
    $
    897
    
    
    $
    2,489
 
 (1)
    
    The Company reclassified the owned and operated Vancouver and Tempe IMAX theaters operations
from continuing operations to discontinued operations as it does not anticipate having
significant future cash flows from these theaters or any involvement in the day to day
operations of these theaters.(2)
    
    In 2010, the Company recorded a charge of $1.0 million (2009  $0.9 million, 2008  $2.5
million, respectively) in costs and expenses applicable to revenues, primarily for its
film-based projector inventories due to lower net realizable values resulting from the
Companys development of a digital projection system. Specifically, IMAX systems includes
inventory write-downs of $0.8 million (2009  less than $0.1 million, 2008  $2.4 million).
Theater system maintenance includes inventory write-downs of $0.2 million (2009  $0.8
million, 2008  $0.1 million). 108




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20. Segmented Information
     (a) Operating Segments
 Years Ended December 31,2010
    
    
    2009
    
    
    2008Revenue(1)IMAX systems
    
    $
    76,004
    
    
    $
    64,504
    
    
    $
    34,783Theater system maintenance
    
    
    21,444
    
    
    
    18,246
    
    
    
    16,331Joint revenue sharing arrangements
    
    
    41,757
    
    
    
    21,598
    
    
    
    3,435FilmsProduction and IMAX DMR
    
    
    63,462
    
    
    
    35,648
    
    
    
    17,944Distribution
    
    
    17,937
    
    
    
    12,365
    
    
    
    9,559Post-production
    
    
    7,702
    
    
    
    3,604
    
    
    
    6,929Theater operations(2)
    
    
    13,366
    
    
    
    11,810
    
    
    
    10,532Other
    
    
    6,942
    
    
    
    3,436
    
    
    
    3,205Total
    
    $
    248,614
    
    
    $
    171,211
    
    
    $
    102,718Gross marginsIMAX systems(3)(5)
    
    $
    43,983
    
    
    
    35,516
    
    
    
    18,374Theater system maintenance(3)
    
    
    10,084
    
    
    
    8,361
    
    
    
    7,117Joint revenue sharing arrangements(4)(5)
    
    
    31,703
    
    
    
    13,261
    
    
    
    (1,865
    )FilmsProduction and IMAX DMR(5)
    
    
    41,159
    
    
    
    19,979
    
    
    
    6,992Distribution(5)
    
    
    5,205
    
    
    
    2,147
    
    
    
    3,120Post-production
    
    
    2,891
    
    
    
    939
    
    
    
    3,451Theater operations(2)
    
    
    1,147
    
    
    
    649
    
    
    
    (39
    )Other
    
    
    1,480
    
    
    
    700
    
    
    
    403Total
    
    $
    137,652
    
    
    $
    81,552
    
    
    $
    37,553
 109




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##### Table of Contents



Years Ended December 31,2010
    
    
    2009
    
    
    2008Depreciation and amortizationIMAX systems
    
    $
    2,253
    
    
    $
    4,133
    
    
    $
    4,507Theater systems maintenance
    
    
    
    
    
    
    191
    
    
    
    149Joint revenue sharing arrangements
    
    
    5,322
    
    
    
    4,625
    
    
    
    3,512FilmsProduction and IMAX DMR
    
    
    10,360
    
    
    
    9,338
    
    
    
    9,040Distribution
    
    
    1,334
    
    
    
    229
    
    
    
    309Post-production
    
    
    588
    
    
    
    456
    
    
    
    416Theater operations(2)
    
    
    78
    
    
    
    79
    
    
    
    85Other
    
    
    54
    
    
    
    
    
    
    
    Corporate and other non-segment specific assets
    
    
    547
    
    
    
    
    
    
    
    Total
    
    $
    20,536
    
    
    $
    19,051
    
    
    $
    18,018
 Years Ended December 31,2010
    
    
    2009
    
    
    2008Asset Impairments and Write-Downs, Net of RecoveriesIMAX systems
    
    $
    2,271
    
    
    $
    1,734
    
    
    $
    4,373Theater systems maintenance
    
    
    171
    
    
    
    847
    
    
    
    93FilmsProduction and IMAX DMR
    
    
    64
    
    
    
    
    
    
    
    Theater operations(2)
    
    
    45
    
    
    
    
    
    
    
    Total
    
    $
    2,551
    
    
    $
    2,581
    
    
    $
    4,466
 Years Ended December 31,2010
    
    
    2009
    
    
    2008Purchase of property, plant and equipmentIMAX systems
    
    $
    3,441
    
    
    $
    862
    
    
    $
    1,575Theater system maintenance
    
    
    18
    
    
    
    12
    
    
    
    22Joint revenue sharing arrangements
    
    
    21,275
    
    
    
    25,072
    
    
    
    18,478FilmsProduction and IMAX DMR
    
    
    450
    
    
    
    313
    
    
    
    571Distribution
    
    
    90
    
    
    
    63
    
    
    
    114Post-production
    
    
    514
    
    
    
    131
    
    
    
    362Theater operation
    
    
    98
    
    
    
    45
    
    
    
    161Other
    
    
    443
    
    
    
    
    
    
    
    Corporate and other non-segment specific assets
    
    
    284
    
    
    
    
    
    
    
    Total
    
    $
    26,613
    
    
    $
    26,498
    
    
    $
    21,283
 110




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##### Table of Contents



As at December 31,2010
    
    
    2009AssetsIMAX systems
    
    $
    119,708
    
    
    $
    98,530
    (6)Theater system maintenance
    
    
    13,548
    
    
    
    12,415
    (6)Joint revenue sharing arrangements
    
    
    81,376
    
    
    
    62,812
    (6)FilmsProduction and IMAX DMR
    
    
    17,229
    
    
    
    15,357Distribution
    
    
    5,313
    
    
    
    5,688Post-production
    
    
    2,877
    
    
    
    7,554Theater operations
    
    
    582
    
    
    
    776Other
    
    
    1,785
    
    
    
    1,864Corporate and other non-segment specific assets
    
    
    106,670
    
    
    
    42,549Total
    
    $
    349,088
    
    
    $
    247,545
 
 (1)
    
    The Companys two largest customers as at December 31, 2010
collectively represent 16.9% of total revenues (2009  14.5,
2008  4.9%).(2)
    
    In 2009, the Company closed its operated Vancouver and Tempe IMAX
theaters and reclassified the operations from continuing
operations to discontinued operations.(3)
    
    Includes a charge of $1.0 million in 2010 (2009  $0.9 million,
2008  $2.5 million), in costs and expenses applicable to
revenues, primarily for film-based projector inventories.
Specifically, IMAX systems includes inventory write-downs of $0.8
million in 2010 (2009  less than $0.1 million, 2008  $2.4
million). Theater system maintenance includes inventory
write-downs of $0.2 million in 2010 (2009  $0.8 million, 2008
 $0.1 million).(4)
    
    The Company adjusted the estimated useful life of its IMAX
digital projection systems in use for those joint revenue sharing
theaters, on a prospective basis, to reflect the change in term
from 7 years to 10 years. This resulted in decreased depreciation
expense of $1.0 million in 2010. Previously, the Company adjusted
the estimated useful life of its film-based IMAX MPX projection
systems in use by existing joint revenue sharing theaters, on a
prospective basis, to reflect the Companys accelerated
transition to a digital projection system for these theaters
resulting in increased depreciation expense of less than $0.1
million and $1.5 million in 2009 and 2008, respectively.(5)
    
    IMAX systems includes commission costs of $1.9 million, $2.0
million and $1.0 million in 2010, 2009 and 2008, respectively.
Joint revenue sharing arrangements includes advertising,
marketing, and selling costs of $4.2 million, $3.4 million and
$1.8 million in 2010, 2009 and 2008, respectively. Production and
DMR includes marketing costs of $2.1 million, $1.6 million and
$0.9 million in 2010, 2009 and 2008, respectively. Distribution
includes marketing costs of $0.7 million, $0.8 million and $0.7
million in 2010, 2009 and 2008, respectively.(6)
    
    As a result of the classification of theater system maintenance
and joint revenue sharing arrangement segments in 2008, goodwill
was reallocated on a relative fair market value basis to the IMAX
systems segment, theater system maintenance segment and joint
revenue sharing arrangements segment. Goodwill had previously
been wholly allocated to the IMAX systems segment. 111




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##### Table of Contents



(b) Geographic Information
  Years Ended December 31,2010
    
    
    2009
    
    
    2008RevenueCanada
    
    $
    5,683
    
    
    $
    4,592
    
    
    $
    3,131United States
    
    
    168,781
    
    
    
    106,715
    
    
    
    66,390Russia and
the CIS
    
    
    14,640
    
    
    
    3,771
    
    
    
    3,830Western Europe
    
    
    18,805
    
    
    
    9,150
    
    
    
    9,292Rest of Europe
    
    
    2,640
    
    
    
    3,063
    
    
    
    1,338Asia (excluding China)
    
    
    11,082
    
    
    
    6,610
    
    
    
    5,030Greater China
    
    
    17,604
    
    
    
    17,907
    
    
    
    3,861Mexico
    
    
    2,611
    
    
    
    5,163
    
    
    
    5,000Rest of World
    
    
    6,768
    
    
    
    14,240
    
    
    
    4,846Total
    
    $
    248,614
    
    
    $
    171,211
    
    
    $
    102,718
  As at December 31,2010
    
    
    2009Property, plant and equipmentCanada
    
    $
    22,881
    
    
    $
    14,931United States
    
    
    42,756
    
    
    
    35,358Western Europe
    
    
    2,679
    
    
    
    1,030Rest of Europe
    
    
    656
    
    
    
    698Japan
    
    
    3,220
    
    
    
    1,553Rest of World
    
    
    1,843
    
    
    
    1,250Total
    
    $
    74,035
    
    
    $
    54,820
 21. Financial Instruments
 (a) Financial Instruments
   (b) Fair Value Measurements
  112




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2010
    
    2009Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueBorrowings under Credit Facility
    
    $
    17,500
    
    
    $
    17,500
    
    
    $
    50,000
    
    
    $
    50,000Financed sales receivable
    
    $
    43,620
    
    
    $
    43,615
    
    
    $
    22,479
    
    
    $
    22,745Net investment in sales-type leases
    
    $
    29,981
    
    
    $
    32,613
    
    
    $
    40,106
    
    
    $
    40,910Foreign exchange contracts  designated forwards
    
    $
    664
    
    
    $
    664
    
    
    $
    532
    
    
    $
    532Foreign exchange contracts  non-designated forwards
    
    $
    1,249
    
    
    $
    1,249
    
    
    $
    857
    
    
    $
    857
    (c) Financing Receivables
        113




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##### Table of Contents



Net
    
    
    Net FinancedInvestment
    
    
    Salesin Leases
    
    
    Receivables
    
    
    TotalIn good standing
    
    $
    26,839
    
    
    $
    42,528
    
    
    $
    69,367Pre-approved transactions
    
    
    2,939
    
    
    
    649
    
    
    
    3,588Transactions suspended
    
    
    5,041
    
    
    
    509
    
    
    
    5,550$
    34,819
    
    
    $
    43,686
    
    
    $
    78,505
   Recorded
    
    
    RelatedInvestment
    
    
    AllowanceNet investment in leases
    
    $
    6,228
    
    
    $
    (4,505
    )Net financed sales receivables
    
    
    251
    
    
    
    (66
    )Total
    
    $
    6,479
    
    
    $
    (4,571
    )
   Related
    
    
    
    
    
    
    
    
    
    
    RecordedBilled
    
    
    Unbilled
    
    
    Total
    
    
    
    
    
    
    InvestmentFinancing
    
    
    Recorded
    
    
    Recorded
    
    
    Related
    
    
    Net ofCurrent
    
    
    30-89 Days
    
    
    90+ Days
    
    
    Receivables
    
    
    Investment
    
    
    Investment
    
    
    Allowances
    
    
    AllowancesNet investment in leases
    
    $
    602
    
    
    $
    287
    
    
    $
    2,012
    
    
    $
    2,901
    
    
    $
    31,918
    
    
    $
    34,819
    
    
    $
    (4,838
    )
    
    $
    29,981Net financed sales
receivables
    
    
    646
    
    
    
    349
    
    
    
    366
    
    
    
    1,361
    
    
    
    42,325
    
    
    
    43,686
    
    
    
    (66
    )
    
    
    43,620Total
    
    $
    1,248
    
    
    $
    636
    
    
    $
    2,378
    
    
    $
    4,262
    
    
    $
    74,243
    
    
    $
    78,505
    
    
    $
    (4,904
    )
    
    $
    73,601
 114




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##### Table of Contents



Related
    
    
    
    
    
    
    RecordedBilled
    
    
    Unbilled
    
    
    
    
    
    
    InvestmentFinancing
    
    
    Recorded
    
    
    Related
    
    
    Past DueCurrent
    
    
    30-89 Days
    
    
    90+ Days
    
    
    Receivables
    
    
    Investment
    
    
    Allowance
    
    
    and AccruingNet investment in leases
    
    $
    88
    
    
    $
    97
    
    
    $
    730
    
    
    $
    915
    
    
    $
    2,207
    
    
    $
    (333
    )
    
    $
    2,789Net financed sales
receivables
    
    
    100
    
    
    
    161
    
    
    
    197
    
    
    
    458
    
    
    
    6,094
    
    
    
    
    
    
    
    6,552Total
    
    $
    188
    
    
    $
    258
    
    
    $
    927
    
    
    $
    1,373
    
    
    $
    8,301
    
    
    $
    (333
    )
    
    $
    9,341
  Impaired Financing ReceivablesFor the Year Ended December 31, 2010Average
    
    
    InterestRecorded
    
    
    Unpaid
    
    
    Related
    
    
    Recorded
    
    
    IncomeInvestment
    
    
    Principal
    
    
    Allowanced
    
    
    Investment
    
    
    RecognizedRecorded investment for which there is a related
allowance:Net financed sales receivables
    
    
    246
    
    
    
    5
    
    
    
    (66
    )
    
    
    246
    
    
    
    Total recorded investment in impaired loans:Net financed sales receivables
    
    $
    246
    
    
    $
    5
    
    
    $
    (66
    )
    
    $
    246
    
    
    $
    
 (d) Foreign Exchange Risk Management
    115




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##### Table of Contents



As at December 31,2010
    
    
    2009Derivatives designated as hedging instruments:Foreign exchange contracts  Forwards
    
    $
    12,671
    
    
    $
    2,815Derivatives not designated as hedging instruments:Foreign exchange contracts  Forwards
    
    
    28,842
    
    
    
    4,500$
    41,513
    
    
    $
    7,315
  As at December 31,Balance Sheet Location
    
    
    2010
    
    
    2009Derivatives designated as hedging instruments:Foreign exchange contracts  Forwards
    
    Other assets
    
    $
    664
    
    
    $
    532Derivatives not designated as hedging instruments:Foreign exchange contracts  Forwards
    
    Other assets
    
    
    1,249
    
    
    
    857$
    1,913
    
    
    $
    1,389
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Foreign exchange contracts  Forwards
    
    Derivative Gain Recognized in OCI (Effective Portion)
    
    $
    797
    
    
    $
    1,656
    
    
    $
    172$
    797
    
    
    $
    1,656
    
    
    $
    172
 Location of Derivative GainReclassified fromAOCI into Income
    
    
    Years Ended December 31,(Effective Portion)
    
    
    2010
    
    
    2009
    
    
    2008Foreign exchange contracts  Forwards
    
    Selling, general and administrative expenses
    
    $
    665
    
    
    $
    1,296
    
    
    $
    $
    665
    
    
    $
    1,296
    
    
    $
    
  Years Ended December 31,Location of Derivative Gain
    
    
    2010
    
    
    2009
    
    
    2008Foreign exchange contracts  Forwards
    
    Selling, general and administrative expenses
    
    $
    2,036
    
    
    $
    2,257
    
    
    $
    226$
    2,036
    
    
    $
    2,257
    
    
    $
    226
 116




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##### Table of Contents



(e) Investments in New Business Ventures
  22. Employees Pension and Postretirement Benefits
 (a) Defined Benefit Plan
    117




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##### Table of Contents



As at December 31,2010
    
    2009Discount rate
    
    
    1.54
    %
    
    
    1.50
    %Lump sum interest rate:First 25 years
    
    
    4.07
    %
    
    
    n/aFirst 20 years
    
    
    n/a
    
    
    
    4.89
    %Thereafter
    
    
    3.93
    %
    
    
    4.63
    %Cost of living adjustment on benefits
    
    
    1.20
    %
    
    
    1.20
    %Rate of increase in qualifying compensation levels
    
    
    0.00
    %
    
    
    0.00
    %
  Years Ended December 31,2010
    
    
    2009Projected benefit obligation:Obligation, beginning of year
    
    $
    29,862
    
    
    $
    26,381Service cost
    
    
    448
    
    
    
    643Interest cost
    
    
    351
    
    
    
    1,341Benefits paid
    
    
    (15,199
    )
    
    
    (894
    )Actuarial loss
    
    
    2,646
    
    
    
    2,391Obligation, end of year and unfunded status
    
    $
    18,108
    
    
    $
    29,862
  As at December 31,2010
    
    
    2009Accrued benefits cost
    
    $
    (18,108
    )
    
    $
    (29,862
    )Accumulated other comprehensive income
    
    
    2,239
    
    
    
    (793
    )Net amount recognized in the consolidated balance sheets
    
    $
    (15,869
    )
    
    $
    (30,655
    )
  Years ended December 312010
    
    
    2009
    
    
    2008Service cost
    
    $
    448
    
    
    $
    643
    
    
    $
    793Interest cost
    
    
    351
    
    
    
    1,341
    
    
    
    1,251Amortization of prior service credit
    
    
    
    
    
    
    145
    
    
    
    (248
    )Amortization of actuarial gain
    
    
    
    
    
    
    (681
    )
    
    
    Realized actuarial gain of settlement of pension liability
    
    
    (385
    )
    
    
    
    
    
    
    Pension expense
    
    $
    414
    
    
    $
    1,448
    
    
    $
    1,796
  118




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##### Table of Contents



As at December 31,2010
    
    
    2009
    
    
    2008Prior service cost (credits)
    
    $
    
    
    
    $
    
    
    
    $
    145Unrecognized actuarial (gain) loss
    
    
    2,239
    
    
    
    (793
    )
    
    
    (3,868
    )$
    2,239
    
    
    $
    (793
    )
    
    $
    (3,723
    )
   2011
    
    $
    2012
    
    
    2013
    
    
    18,8132014
    
    
    2015
    
    
    Thereafter
    
    
    $
    18,813
  (b) Defined Contribution Pension Plan
  (c) Postretirement Benefits
  119




---



##### Table of Contents



As at December 31,2010
    
    
    2009Obligation, beginning of year
    
    $
    456
    
    
    $
    438Interest cost
    
    
    26
    
    
    
    26Actuarial gain
    
    
    (6
    )
    
    
    (8
    )Obligation, end of year
    
    $
    476
    
    
    $
    456
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Interest cost
    
    $
    26
    
    
    $
    26
    
    
    $
    25Actuarial (gain) loss
    
    
    (6
    )
    
    
    (8
    )
    
    
    11$
    20
    
    
    $
    18
    
    
    $
    36
  As at December 31,2010
    
    2009
    
    2008Discount rate
    
    
    5.30
    %
    
    
    5.75
    %
    
    
    6.00
    %
  Years Ended December 312010
    
    2009
    
    2008Discount rate
    
    
    4.50
    %
    
    
    4.50
    %
    
    
    5.00
    %
  2011
    
    $
    132012
    
    $
    152013
    
    $
    312014
    
    $
    342015
    
    $
    38Thereafter
    
    $
    
 23. Discontinued Operations
 (a) Tempe Theater
  120




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(b) Starboard Theater Ltd
   (c) Operating Results for Discontinued Operations
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Gain on termination of Tempe theater lease (net of tax recovery of $nil)
    
    $
    
    
    
    $
    437
    
    
    $
    Loss from Tempe Theater (net of tax recovery of $nil, respectively)
    
    
    
    
    
    
    (525
    )
    
    
    (263
    )(Loss) earnings from Vancouver Theater (net of tax recovery of $nil, respectively)
    
    
    
    
    
    
    (88
    )
    
    
    171Net loss from discontinued operations
    
    $
    
    
    
    $
    (176
    )
    
    $
    (92
    )
 121




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##### Table of Contents



(d) Assets and Liabilities of Discontinued Operations
  As at December 31,2010
    
    
    2009Cash
    
    $
    
    
    
    $
    299Accounts receivable
    
    
    
    
    
    
    129Total assets
    
    $
    
    
    
    $
    428Accounts payable
    
    $
    
    
    
    $
    149Accrued liabilities
    
    
    
    
    
    
    1,018Total liabilities
    
    $
    
    
    
    $
    1,167
 24. Asset Retirement Obligations
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Beginning balance, January 1
    
    $
    267
    
    
    $
    297
    
    
    $
    301Accretion expense
    
    
    19
    
    
    
    24
    
    
    
    13Reduction in asset retirement obligation due to lease renegotiation
    
    
    
    
    
    
    (54
    )
    
    
    (17
    )Ending balance, December 31
    
    $
    286
    
    
    $
    267
    
    
    $
    297
 25. Accumulated Other Comprehensive Income (Loss) Supplemental Information
  As at December 31,2010
    
    
    2009Unrecognized actuarial loss on defined benefit pension plan (net of
income tax recovery (provision) of $115, 2009  ($1,064))
    
    $
    (2,124
    )
    
    $
    (271
    )Foreign currency translation adjustments
    
    
    645
    
    
    
    645Unrealized hedging gain (net of income tax provision of $182, 2009  $nil)
    
    
    482
    
    
    
    532Accumulated other comprehensive (loss) income
    
    $
    (997
    )
    
    $
    906
 122




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
   MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
      CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
  
 Item 9 B. Other Information
  123




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)(1) Financial Statements
   (a)(2) Financial Statement Schedules
   (a)(3) Exhibits
  124




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##### Table of Contents



ExhibitNo.
    
    Description3.1
    
    Articles of Amalgamation of IMAX Corporation, dated January 1, 2002, as amended by the Articles of Amendment of IMAX
Corporation, dated June 25, 2004. Incorporated by reference to Exhibit 4.1 to IMAX Corporations Registration statement
on Form S-3 (File No. 333-157300).3.2
    
    By-Law No. 1 of IMAX Corporation enacted on June 3, 2004. Incorporated by reference to Exhibit 3.2 to IMAX
Corporations Form 10-K for the year ended December 31, 2009 (File No. 000-24216).4.1
    
    Shareholders Agreement, dated as of January 3, 1994, among WGIM Acquisition Corporation, the Selling Shareholders as
defined therein, Wasserstein Perella Partners, L.P., Wasserstein Perella Offshore Partners, L.P., Bradley J. Wechsler,
Richard L. Gelfond and Douglas Trumbull (the Selling Shareholders Agreement). Incorporated by reference to Exhibit
4.1 to IMAX Corporations Form 10-K for the year ended December 31, 2006 (File No. 000-24216).4.2
    
    Amendment, dated as of March 1, 1994, to the Selling Shareholders Agreement. Incorporated by reference to Exhibit 4.2
to IMAX Corporations Form 10-K for the year ended December 31, 2006 (File No. 000-24216).4.3
    
    Registration Rights Agreement, dated as of February 9, 1999, by and among IMAX Corporation, Wasserstein Perella
Partners, L.P., Wasserstein Perella Offshore Partners, L.P., WPPN Inc., the Michael J. Biondi Voting Trust, Bradley J.
Wechsler and Richard L. Gelfond. Incorporated by reference to Exhibit 4.3 to IMAX Corporations Form 10-K for the year
ended December 31, 2006 (File No. 000-24216).*10.1
    
    Stock Option Plan of IMAX Corporation, dated June 18, 2008.10.2
    
    IMAX Corporation Supplemental Executive Retirement Plan, as amended and restated as of January 1, 2006. Incorporated by
reference to Exhibit 10.2 to IMAX Corporations Form 10-K for the year ended December 31, 2006 (File No. 000-24216).10.3
    
    Employment Agreement, dated July 1, 1998, between IMAX Corporation and Bradley J. Wechsler. Incorporated by reference
to Exhibit 10.3 to IMAX Corporations Form 10-K for the year ended December 31, 2006 (File No. 000-24216).10.4
    
    Amended Employment Agreement, dated July 12, 2000, between IMAX Corporation and Bradley J. Wechsler. Incorporated by
reference to Exhibit 10.4 to IMAX Corporations Form 10-K for the year ended December 31, 2006 (File No. 000-24216).10.5
    
    Amended Employment Agreement, dated March 8, 2006, between IMAX Corporation and Bradley J. Wechsler. Incorporated by
reference to Exhibit 10.8 to IMAX Corporations Form 10-K for the year ended December 31, 2005 (File No. 000-24216).10.6
    
    Amended Employment Agreement, dated February 15, 2007, between IMAX Corporation and Bradley, J. Wechsler. Incorporated
by reference to Exhibit 10.31 to IMAX Corporations Form 8-K dated February 16, 2007 (File No. 000-24216).10.7
    
    Amended Employment Agreement, dated December 31, 2007, between IMAX Corporation and Bradley J. Wechsler. Incorporated
by reference to Exhibit 10.7 to IMAX Corporations Form 10-K for the year ended December 31, 2007 (File No. 000-24216).10.8
    
    Services Agreement, dated December 11, 2008, between IMAX Corporation and Bradley J. Wechsler. Incorporated by
reference to Exhibit 10.8 to IMAX Corporations Form 10-K for the year ended December 31, 2008 (File No. 000-24216).*10.9
    
    Services Agreement Amendment, dated February 14, 2011, between IMAX Corporation and Bradley J. Wechsler.10.10
    
    Employment Agreement, dated July 1, 1998, between IMAX Corporation and Richard L. Gelfond. Incorporated by reference to
Exhibit 10.7 to IMAX Corporations Form 10-K for the year ended December 31, 2006 (File No. 000-24216).10.11
    
    Amended Employment Agreement, dated July 12, 2000, between IMAX Corporation and Richard L. Gelfond. Incorporated by
reference to Exhibit 10.8 to IMAX Corporations Form 10-K for the year ended December 31, 2006 (File No. 000-24216).10.12
    
    Amended Employment Agreement, dated March 8, 2006, between IMAX Corporation and Richard L. Gelfond. Incorporated by
reference to Exhibit 10.14 to IMAX Corporations Form 10-K dated December 31, 2005 (File No. 000-24216).10.13
    
    Amended Employment Agreement, dated February 15, 2007, between IMAX Corporation and Richard L. Gelfond. Incorporated by
reference to Exhibit 10.30 to IMAX Corporations Form 8-K dated February 16, 2007 (File No. 000-24216).10.14
    
    Amended Employment Agreement, dated December 31, 2007, between IMAX Corporation and Richard L. Gelfond. Incorporated by
reference to Exhibit 10.12 to IMAX Corporations Form 10-K for the year ended December 31, 2007 (File No. 000-24216).10.15
    
    Amended Employment Agreement, dated December 11, 2008, between IMAX Corporation and Richard L. Gelfond. Incorporated by
reference to Exhibit 10.14 to IMAX Corporations Form 10-K for the year ended December 31, 2008 (File No. 000-2416).*10.16
    
    Amended Employment Agreement, dated December 20, 2010, between IMAX Corporation and Richard L. Gelfond.10.17
    
    Employment Agreement, dated March 9, 2006, between IMAX Corporation and Greg Foster. Incorporated by reference to
Exhibit 10.18 to IMAX Corporations Form 10-K for the year ended December 31, 2005 (File No. 000-24216).
 125




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##### Table of Contents



ExhibitNo.
    
    Description10.18
    
    First Amending Agreement, dated December 31, 2007, between IMAX Corporation and Greg Foster. Incorporated by reference
to Exhibit 10.14 to IMAX Corporations Form 10-K for the year ended December 31, 2007 (File No. 000-24216).10.19
    
    Second Amending Agreement, dated April 29, 2010, between IMAX Corporation and Greg Foster. Incorporated by reference to
IMAX Corporations Form 10-Q for the quarter ended June 30, 2010 (File No. 000-24216).10.20
    
    Employment Agreement, dated May 17, 1999, between IMAX Corporation and Robert D. Lister. Incorporated by reference to
Exhibit 10.15 to IMAX Corporations Form 10-K for the year ended December 31, 2007 (File No. 000-24216).10.21
    
    Letter Agreement, dated August 21, 2000 between IMAX Corporation and Robert D. Lister. Incorporated by reference to
Exhibit 10.15 to IMAX Corporations Form 10-K for the year ended December 31, 2006 (File No. 000-24216).10.22
    
    Amended Employment Agreement, dated April 4, 2001 between IMAX Corporation and Robert D. Lister. Incorporated by
reference to Exhibit 10.17 to IMAX Corporations Form 10-K for the year ended December 31, 2007 (File No. 000-24216).10.23
    
    Amended Employment Agreement, dated January 1, 2004, between IMAX Corporation and Robert D. Lister. Incorporated by
reference to Exhibit 10.17 to IMAX Corporations Registration Statement on Form S-4 (File No. 333-113141).*10.24
    
    Third Amending Agreement, dated February 14, 2006, between IMAX Corporation and Robert D. Lister.10.25
    
    Fourth Amending Agreement, dated October 5, 2006, between IMAX Corporation and Robert D. Lister. Incorporated by
reference to Exhibit 10.28 to IMAX Corporations Form 10-Q for the quarter ended September 30, 2006 (File No.
000-24216).10.26
    
    Fifth Amending Agreement, dated December 31, 2007, between IMAX Corporation and Robert D. Lister. Incorporated by
reference to Exhibit 10.21 to IMAX Corporations Form 10-K for the year ended December 31, 2007 (File No. 000-24216).10.27
    
    Stock Appreciation Rights Agreement, dated December 31, 2007, between IMAX Corporation and Robert D. Lister.
Incorporated by reference to Exhibit 10.22 to IMAX Corporations Form 10-K for the year ended December 31, 2007 (File
No. 000-24216).10.28
    
    Sixth Amending Agreement, dated December 31, 2009, between IMAX Corporation and Robert D. Lister. Incorporated by
reference to IMAX Corporations Form 10-K for the year ended December 31, 2009 (File No. 000-24216).10.29
    
    Employment Agreement, dated May 14, 2007, between IMAX Corporation and Joseph Sparacio. Incorporated by reference to
Exhibit 10.25 to IMAX Corporations Form 10-Q for the quarter ended September 30, 2007 (File No. 000-24216).10.30
    
    First Amending Agreement, dated May 14, 2009, between IMAX Corporation and Joseph Sparacio. Incorporated by reference
to IMAX Corporations Form 10-K for the year ended December 31, 2009 (File No. 000-24216).10.31
    
    Second Amending Agreement, dated May 14, 2010, between IMAX Corporation and Joseph Sparacio. Incorporated by reference
to IMAX Corporations Form 10-Q for the quarter ended June 30, 2010 (File No. 000-24216).*10.32
    
    Statement of Directors Compensation, dated August 11, 2005.10.33
    
    Amended and Restated Credit Agreement, dated November 16, 2009 by and between IMAX Corporation and Wells Fargo Capital
Finance Corporation Canada (formerly Wachovia Capital Finance Corporation (Canada)) and Export Development Canada.
Incorporated by reference to IMAX Corporations Form 10-K for the year ended December 31, 2009 (File No. 000-24216).*10.34
    
    First Amendment to the Amended and Restated Credit Agreement, dated January 21, 2011 between IMAX Corporation and Wells
Fargo Capital Finance Corporation Canada (formerly known as Wachovia Capital Finance Corporation (Canada)).10.35
    
    Securities Purchase Agreement, dated as of May 5, 2008, by and between IMAX Corporation, Douglas Family Trust, James
Douglas and Jean Douglas Irrevocable Descendants Trust, James E. Douglas, III, and K&M Douglas Trust. Incorporated by
reference to Exhibit 10.32 to IMAX Corporations Form 10-Q for the quarter ended March 31, 2008 (File No. 000-24216).10.36
    
    Amendment No. 1 to Securities Purchase Agreement, dated December 1, 2008, by and between IMAX Corporation, Douglas
Family Trust, James Douglas and Jean Douglas Irrevocable Descendants Trust, James E. Douglas, III, and K&M Douglas
Trust. Incorporated by reference to Exhibit 10.34 to IMAX Corporations Form 10-K for the year ended December 31, 2008
(File No. 000-24216).*21
    
    Subsidiaries of IMAX Corporation.*23
    
    Consent of PricewaterhouseCoopers LLP.*24
    
    Power of Attorney of certain directors.*31.1
    
    Certification Pursuant to Section 302 of the Sarbanes  Oxley Act of 2002, dated February 24, 2011, by Richard L.
Gelfond.*31.2
    
    Certification Pursuant to Section 302 of the Sarbanes  Oxley Act of 2002, dated February 24, 2011, by Joseph Sparacio.*32.1
    
    Certification Pursuant to Section 906 of the Sarbanes  Oxley Act of 2002, dated February 24, 2011, by Richard L.
Gelfond.*32.2
    
    Certification Pursuant to Section 906 of the Sarbanes  Oxley Act of 2002, dated February 24, 2011, by Joseph Sparacio.
 
 *
    
    Filed herewith 126




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SIGNATURES
  IMAX CORPORATIONBy
    


    /s/  JOSEPH SPARACIOJoseph SparacioExecutive Vice-President & Chief Financial Officer   /s/ RICHARD L. GELFOND
    
    /s/ JOSEPH SPARACIO
    
    /s/ JEFFREY VANCERichard L. Gelfond 

Chief Executive Officer &

Director

(Principal Executive Officer)
    
    Joseph Sparacio
Executive Vice President &
Chief Financial Officer
(Principal Financial Officer)
    
    Jeffrey Vance
Vice-President,
Finance & Controller
(Principal Accounting Officer)*
    
    *
    
    *Bradley J. Wechsler 

Chairman of the Board & Director
    
    Neil S. Braun 

Director
    
    Kenneth G. Copland 

Director*
    
    *
    
    *Eric A. Demirian 

Director
    
    Garth M. Girvan 

Director
    
    David W. Leebron 

Director*Marc A. Utay 

Director
 By
    
    *  /s/ JOSEPH SPARACIOJoseph Sparacio(as attorney-in-fact) 127




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##### Table of Contents



IMAX CORPORATION
Schedule II
Valuation and Qualifying Accounts  (In thousands of U.S. dollars)
 Additions/Balance at
    
    (recoveries)
    
    Otherbeginning
    
    charged to
    
    additions/
    
    Balance atof year
    
    expenses
    
    (deductions)(1)
    
    end of yearAllowance for net investment in leasesYear ended December 31, 2008
    
    $
    4,152
    
    
    $
    1,595
    
    
    $
    (863
    )
    
    $
    4,884Year ended December 31, 2009
    
    $
    4,884
    
    
    $
    761
    
    
    $
    89
    
    
    $
    5,734Year ended December 31, 2010
    
    $
    5,734
    
    
    $
    1,056
    
    
    $
    (1,952
    )
    
    $
    4,838Allowance for financed sale receivablesYear ended December 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Year ended December 31, 2009
    
    $
    
    
    
    $
    178
    
    
    $
    
    
    
    $
    178Year ended December 31, 2010
    
    $
    178
    
    
    $
    (112
    )
    
    $
    
    
    
    $
    66Allowance for doubtful accounts receivableYear ended December 31, 2008
    
    $
    3,045
    
    
    $
    382
    
    
    $
    (526
    )
    
    $
    2,901Year ended December 31, 2009
    
    $
    2,901
    
    
    $
    127
    
    
    $
    (258
    )
    
    $
    2,770Year ended December 31, 2010
    
    $
    2,770
    
    
    $
    499
    
    
    $
    (1,281
    )
    
    $
    1,988Inventories valuation allowanceYear ended December 31, 2008
    
    $
    4,287
    
    
    $
    2,489
    
    
    $
    (1,435
    )
    
    $
    5,341Year ended December 31, 2009
    
    $
    5,341
    
    
    $
    897
    
    
    $
    (2,488
    )
    
    $
    3,750Year ended December 31, 2010
    
    $
    3,750
    
    
    $
    665
    
    
    $
    (16
    )
    
    $
    4,399Deferred income tax valuation allowanceYear ended December 31, 2008
    
    $
    55,639
    
    
    $
    11,560
    
    
    $
    834
    
    
    $
    68,033Year ended December 31, 2009
    
    $
    68,033
    
    
    $
    7,327
    
    
    $
    1,920
    
    
    $
    77,280Year ended December 31, 2010
    
    $
    77,280
    
    
    $
    (67,501
    )
    
    $
    (1,850
    )
    
    $
    7,929
 
 (1)
    
    Deductions represent write-offs of amounts previously charged to
the provision. 128