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Imax Corp – ‘10-Q’ for 9/30/97

As of: Friday, 11/14/97 · For: 9/30/97 · Accession #: 950130-97-5028 · File #: 0-24216

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/14/97  Imax Corp                         10-Q        9/30/97    2:42K                                    Donnelley R R & S… 02/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      16     75K 
 2: EX-11       Statement Re: Computation of Earnings Per Share        2±    11K

10-Q — Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Exhibits and Reports on Form 8-K Financial Statements Legal Proceedings Legal Proceedings (Cont'd) Management's Discussion and Analysis of Financial Condition and Results of Operations Management's Discussion and Analysis of Financial Condition and Results of Operations (CONT'D)
1	1st Page - Filing Submission
3	Item 1. Financial Statements
10	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
11	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (CONT'D)
14	Item 1. Legal Proceedings
15	Item 1. Legal Proceedings (Cont'd)
"	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st Page of 16 TOC ↑Top Previous Next ↓Bottom Just 1st
 
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  

FORM 10-Q 

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES         
EXCHANGE ACT OF 1934                                                  

For the quarterly period ended September 30, 1997 
                              ------------------

OR  

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES        
EXCHANGE ACT OF 1934                                                  

Commission File Number 0-24216  

IMAX CORPORATION  
(Exact name of registrant as specified in its charter)  

           Canada                                       98-0140269
        -----------------------------------             ------------------------
(State or other jurisdiction of                 (I.R.S. Employer
      incorporation or organization)                  Identification Number)

   2525 Speakman Drive, Mississauga, Ontario, Canada         L5K 1B1
    ---------------------------------------------------    -------------
    (Address of principal executive offices)               (Postal Code)

   Registrant's telephone number, including area code   (905) 403-6500
                                                        --------------

NONE  
------------------------------------------------------------------------------- 
(Former name or former address, if changed since last report) 

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was     
required to file such reports), and (2) has been subject to such filing         
requirements for the past 90 days.  Yes  X   No                                 
          ---    ---

Indicate the number of shares of each of the issuer's classes of common stock,  
as of the latest practicable date:                                              

Class                                        Outstanding as of November 11, 1997
---------------------------                  -----------------------------------
Common stock, no par value                              29,272,218              

Page 1 of 16  
Exhibit Index on Page 15  

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IMAX CORPORATION  

INDEX 

                                                  Page
                                                  ----

PART I.        FINANCIAL INFORMATION                                            

Item 1.   Financial Statements                               3        

Item 2.   Management's Discussion and Analysis of                     
  Financial Condition and Results of Operations     10

PART II.       OTHER INFORMATION                                                

Item 1.   Legal Proceedings                                 14        

Item 6.   Listing of Exhibits and Reports on Form 8-K       15        

Signatures                                                  16        

FORWARD LOOKING INFORMATION                                                     

Certain statements in this Report on Form 10-Q under the captions "Management's 
Discussion and Analysis of Financial Condition and Results of Operations" and   
"Legal Proceedings" may constitute forward looking statements that involve      
certain risks and uncertainties which could cause actual results to differ      
materially from future results expressed or implied by such forward looking     
statements.  Important factors that could effect these statements include the   
timing of theater system deliveries, the mix of theater systems shipped, the    
timing of the recognition of revenues and expenses on film production and       
distribution agreements, and foreign currency fluctuations.  These factors and  
other risks and uncertainties are discussed in the Company's Annual Report on   
Form 10-K for the year ended December 31, 1996 filed by the Company with the    
Securities and Exchange Commission.                                             

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  IMAX CORPORATION

                                                        [Enlarge/Download Table]

                                                                                Page 
                                                                                ---- 
PART I  FINANCIAL INFORMATION                                                        

ITEM 1. FINANCIAL STATEMENTS                                                         

                                                                                     
        The following condensed consolidated financial statements are filed as       
        part of this Report:                                                         

        Condensed Consolidated Balance Sheets as at September 30, 1997               
        and December 31, 1996                                                     4  

        Condensed Consolidated Statements of Operations for the                      
        three and nine month periods ended September 30, 1997 and 1996            5  

        Condensed Consolidated Statements of Cash Flow                               
        for the nine month periods ended September 30, 1997 and 1996              6  

        Notes to Condensed Consolidated Financial Statements                      7  

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  IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS 
Amounts in accordance with U.S. Generally Accepted Accounting Principles
(in thousands of U.S. dollars)
(UNAUDITED) 

                                                                [Download Table]

                                                       September 30,  December 31,
                                                           1997           1996    
                                                                                  
ASSETS                                                                            
Current assets                                                                    
  Cash and cash equivalents                             $ 72,330         $102,589 
  Short-term marketable securities                         3,843                - 
  Accounts receivable                                     31,293           17,995 
  Current portion of net investment in leases              4,478            4,218 
  Inventories and systems under construction (note 2)     29,858           21,292 
  Prepaid expenses                                         4,852            2,109 
                                                        --------         -------- 

     Total current assets                                146,654          148,203 
Long-term marketable securities                           23,161           18,099 
Net investment in leases                                  43,511           34,494 
Film assets                                               32,879           19,050 
Capital assets                                            45,974           37,791 
Deferred charges on debt financing                         3,991            4,653 
Goodwill                                                  44,545           46,454 
                                                        --------         -------- 

     Total assets                                       $340,715         $308,744 
                                                        ========         ======== 

Liabilities                                                                       
Current liabilities                                                               
  Accounts payable                                      $  6,538         $  4,530 
  Accrued liabilities                                     18,375           16,677 
  Current portion of deferred revenue                     37,771           40,485 
  Current portion of long-term debt                          516            1,156 
  Income taxes payable                                     1,274            2,213 
                                                        --------         -------- 

     Total current liabilities                            64,474           65,061 
Long-term debt                                               609            1,178 
Deferred revenue                                          20,102           14,117 
Senior notes                                              65,000           64,689 
Convertible subordinated notes                           100,000          100,000 
Deferred income taxes                                     13,503            6,081 
                                                        --------         -------- 

     Total liabilities                                   263,688          251,126 
                                                        --------         -------- 

MINORITY INTEREST                                          2,437            1,593 
                                                        --------         -------- 
Redeemable preferred shares                                1,302            1,184 
                                                        --------         -------- 

COMMITMENTS AND CONTINGENCIES (notes 3 and 4)                                     

SHAREHOLDERS' EQUITY                                                              
Capital stock                                             51,839           46,810 
Retained earnings                                         21,391            8,307 
Cumulative translation adjustment                             58             (276)
                                                        --------         -------- 

     Total shareholders' equity                           73,288           54,841 
                                                        --------         -------- 

     Total liabilities and shareholders' equity         $340,715         $308,744 
                                                        ========         ======== 

(See accompanying notes to the condensed consolidated financial statements on 
pages 7 to 9.)  

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IMAX CORPORATION
CONDENSED CONSOLIDATED  STATEMENTS OF OPERATIONS
Amounts in accordance with U.S. Generally Accepted Accounting Principles
(in thousands of U.S. dollars, except per share data) 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                       Three months ended September 30,    Nine months ended September 30,  
                                                            1997              1996             1997              1996       
                                                       ---------------  ----------------  ---------------  -----------------
                                                                                                                            
Revenue                                                                                                                     
Systems                                                       $22,477           $24,355         $ 60,456            $60,286 
Films                                                          10,521             5,907           33,468             21,641 
Other                                                           2,893             2,824            9,949             10,177 
                                                              -------           -------         --------            ------- 
                                                               35,891            33,086          103,873             92,104 

COSTS AND EXPENSES                                             15,558            13,988           47,949             41,523 
                                                              -------           -------         --------            ------- 

GROSS MARGIN                                                   20,333            19,098           55,924             50,581 

Selling, general and administrative expenses                    6,880             7,179           21,569             20,530 
Research and development                                          620               565            1,429              1,916 
Amortization of intangibles                                       632               635            1,907              1,906 
                                                              -------           -------         --------            ------- 

EARNINGS FROM OPERATIONS                                       12,201            10,719           31,019             26,229 

Interest income                                                 1,645             1,605            4,485              3,713 
Interest expense                                               (3,340)           (3,350)          (9,972)            (8,453)
Foreign exchange gain (loss)                                      (98)               67              (76)              (281)
                                                              -------           -------         --------            ------- 

EARNINGS BEFORE INCOME TAXES AND MINORITY INTEREST             10,408             9,041           25,456             21,208 

Provision for income taxes                                     (4,536)           (4,242)         (11,281)            (9,737)
                                                              -------           -------         --------            ------- 

EARNINGS BEFORE MINORITY INTEREST                               5,872             4,799           14,175             11,471 

Minority interest                                                (387)             (555)            (844)              (965)
                                                              -------           -------         --------            ------- 

NET EARNINGS                                                  $ 5,485           $ 4,244         $ 13,331            $10,506 
                                                              =======           =======         ========            ======= 

Net earnings available to common shareholders                 $ 5,401           $ 4,166         $ 13,084            $10,275 
                                                              =======           =======         ========            ======= 

PER SHARE DATA (NOTE 5)                                                                                                     

Net earnings                                                    $0.18             $0.14            $0.44              $0.34 

Weighted average number of shares outstanding (000's)          30,380            29,654           30,064             29,978 

(See accompanying notes to the condensed consolidated financial statements on 
pages 7 to 9.)  

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IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Amounts in accordance with U.S. Generally Accepted Accounting Principles
(in thousands of U.S. dollars)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                           Nine months ended September 30,
                                                                    1997             1996 
                                                         ---------------  --------------- 
                                                                                          
CASH PROVIDED BY (USED IN):                                                               

OPERATING ACTIVITIES                                                                      
Net earnings                                                   $ 13,331          $ 10,506 
Items not involving cash:                                                                 
 Depreciation and amortization                                    9,926             8,168 
 Deferred income taxes                                            8,024             7,077 
 Minority interest                                                  844               965 
 Amortization of discount on senior notes                           311             1,398 
 Other                                                              115               377 
Change in net investment in leases                               (9,261)           (8,687)
Change in deferred revenue                                        3,270            (1,346)
Changes in non-cash operating assets and liabilities            (22,832)          (11,545)
                                                               --------          -------- 

Net cash provided by operating activities                         3,728             6,913 
                                                               --------          -------- 

INVESTING ACTIVITIES                                                                      
Increase in marketable securities                                (8,803)          (66,069)
Purchase of capital assets                                      (12,082)           (9,491)
Increase in film assets                                         (17,137)           (8,896)
                                                               --------          -------- 
Net cash used in investing activities                           (38,022)          (84,456)
                                                               --------          -------- 

FINANCING ACTIVITIES                                                                      
Repayment of long-term debt                                      (1,201)             (547)
Issue of convertible subordinated notes                               -           100,000 
Repurchase of senior notes                                            -            (4,919)
Deferred charges on debt financing                                    -            (3,289)
Common shares repurchased                                             -           (19,508)
Common shares issued                                              4,993             1,417 
                                                               --------          -------- 

Net cash provided by financing activities                         3,792            73,154 
                                                               --------          -------- 

Effect of exchange rate changes on cash                             243               (73)
                                                               --------          -------- 

DECREASE IN CASH AND CASH EQUIVALENTS DURING THE PERIOD         (30,259)           (4,462)

Cash and cash equivalents, beginning of period                  102,589            50,747 
                                                               --------          -------- 

CASH AND CASH EQUIVALENTS, END OF PERIOD                       $ 72,330          $ 46,285 
                                                               ========          ======== 

(See accompanying notes to the condensed consolidated financial statements on 
pages 7 to 9.)  

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IMAX CORPORATION  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996  
(UNAUDITED) 

1.   BASIS OF PRESENTATION                                                      

The consolidated financial statements include the accounts of Imax    
Corporation and its wholly-owned and majority owned subsidiaries.  The
    results of operations for the interim periods shown in this report are not
   necessarily indicative of results to be expected for the fiscal year.  In
  the opinion of management, the information contained herein reflects all
 adjustments necessary to make the results of operations for the interim
     periods a fair statement of such operations.  All such adjustments are of a
normal recurring nature.                                              

     These financial statements should be read in conjunction with the Company's
    annual report on Form 10-K and the financial statements contained therein.

2.   INVENTORIES AND SYSTEMS UNDER CONSTRUCTION:                                

                                                                [Download Table]

                                 September 30,      December 31,   
                                     1997               1996       
                               -----------------  -----------------
                                    (000's)            (000's)     

                                                                   
Raw materials                           $ 7,260            $ 4,840 
Work-in-process                          22,128             15,008 
Finished goods                              470                417 
Acquired contracts in process                 -              1,027 
                                        -------            ------- 
                                        $29,858            $21,292 
                                        =======            ======= 

3.   FINANCIAL INSTRUMENTS                                                      

   From time to time the Company engages in hedging activities to reduce the
    impact of fluctuations in foreign currencies on its profitability and cash
   flow.  The credit risk exposure associated with these activities would be
limited to all unrealized gains on contracts based on current market  
   prices.  The Company believes that this credit risk has been minimized by
dealing with highly rated financial institutions.                     

To fund Canadian dollar costs through December 1998, the Company had  
   entered into forward exchange contracts as at September 30, 1997 to hedge
    the conversion of $30 million of its cash flow into Canadian dollars at an
  average exchange rate of Canadian $1.36 per U.S. dollar.    In addition,
     the Company had entered into forward exchange contracts as at September 30,
 1997 to hedge the conversion of 55 million Yen of its cash flow in 1997
   into U.S. dollars at an average exchange rate of 106 Yen per U.S. dollar.

 The Company has also entered into foreign currency swap transactions to
  hedge minimum lease payments receivable under sales-type lease contracts
     denominated in Japanese Yen and French Francs.  These swap transactions fix
   the foreign exchange rates on conversion of 168 million Yen at 98 Yen per
     U.S. dollar through September 2004 and on 17.4 million Francs at 5.1 Francs
per U.S. dollar through September 2005.                               

  These hedging contracts are expected to be held to maturity; however, if
     they were terminated on September 30, 1997, the Company would have realized
    a gain of approximately $0.2 million based on the then prevailing exchange
rates.                                                                

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IMAX CORPORATION  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) 
For the Nine Month Periods Ended September 30, 1997 and 1996  
(unaudited) 

4.   CONTINGENCIES                                                              

 a)  In April 1994, Compagnie France Film Inc. filed a claim against the
    Company in the Superior Court in the District of Montreal, in the Province
of Quebec, alleging breach of contract and bad faith in respect of an 
   agreement which the Plaintiff claims it entered into with the Company for
     the establishment of an IMAX theater in Quebec City, Quebec, Canada.  Until
December 1993, Imax was in negotiations with the Plaintiff and another
  unrelated party for the establishment of an IMAX theater in Quebec City.
 In December 1993, Imax executed a system lease agreement with the other
party.  During the negotiations, both parties were aware of the other 
    party's interest in also establishing an IMAX theater in Quebec City.  The
    Plaintiffs are claiming damages of Canadian $4.6 million, representing the
amount of profit they claim they are denied due to their inability to 
proceed with an IMAX theater in Quebec City, together with expenses   
     incurred in respect of this project and pre-judgment interest.  The Company
disputes this claim and has filed a defense in response.   Trial is   
scheduled for January 1998.                                           

Compagnie France Film had also incorporated a shell company, 3101-8450
    Quebec Inc. ("3101").  3101 was to, among other things, enter into a lease
   for the proposed IMAX theater site.  In November 1993, while negotiations
between Compagnie France Film and the Company were still ongoing, 3101
 entered into a lease for the site.  3101 defaulted on the lease and the
  landlord sued 3101 in an unrelated action to which the Company was not a
     party.  In February 1996, 3101 was found liable to pay the landlord damages
   in the amount of Canadian $2.5 million.  Subsequent to that judgment 3101
    intervened in the lawsuit between Compagnie France Film and the Company in
order to claim from the Company damages in the amount of Canadian $2.5
million.                                                              

  The Company believes that it will be successful in its  defense of these
  claims and the ultimate loss, if any, will not have a material impact on
     the financial position or results of operations of the Company, although no
assurance can be given with respect to the ultimate outcome of this   
litigation.                                                           

(b) On February 26, 1996, Iwerks Entertainment Inc. filed a complaint 
    against the Company alleging violations under the Sherman Act, the Clayton
Act, tortious interference with contracts and prospective economic    
   advantage, and unfair competition.  The plaintiff is seeking unquantified
damages, injunctive relief and restitution.  The Company has filed an 
    answer denying the material allegations of the complaint and is vigorously
defending this action.  The amount of the loss, if any, cannot be     
determined at this time.                                              

  (c) In July 1997, Debra B. Altman filed a claim against the Company, and
 certain unidentified individuals, in the Superior Court of the State of
California for the County of Los Angeles, alleging breach of contract,
breach of implied covenant of good faith and fair dealing, breach of  
     implied-in-fact contract, breach of confidence, constructive fraud, quantum
 meruit, unjust enrichment and constructive trust with respect to a film
project the Plaintiff claims to have pursued with the Company.  The   
Plaintiff is seeking unquantified damages exceeding $5 million.  The  
   Company disputes this claim and has removed it to the U.S. District Court
  for the Central District of California, Western Division, and intends to
   vigorously defend this action.  The amount of the loss, if any, cannot be
determined at this time.                                              

 In addition to the litigation described above, the Company is currently
involved in other litigation which, in the opinion of the Company's   
    management, will not materially affect the Company's financial position or
   future operating results, although no assurance can be given with respect
to the ultimate outcome for any such litigation.                      

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IMAX CORPORATION  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) 
For the Nine Month Periods Ended September 30, 1997 and 1996  
(unaudited) 

5.   EARNINGS PER SHARE                                                         

In deriving the net earnings available to common shareholders, the net
earnings for the period have been decreased for the accretion and     
cumulative dividends on preferred shares.                             

   Pursuant to shareholders' approval at the Annual and Special Meeting held
  on May 6, 1997 the Company's shares were split on a 2-for-1 basis in May
     1997.  Earnings per share data for the current and comparative periods give
     effect to the stock split as if it had  taken place at the beginning of the
respective period.                                                    

Financial Accounting Standards No.128, Earnings Per Share ("FAS 128") 
requires a change in the method of calculation of basic and diluted   
    earnings per share for periods ended after December 15, 1997.  The Company
 plans to adopt FAS 128 in the fourth quarter of 1997 for the year ended
December 31, 1997.  If FAS 128 had been adopted at September 30, 1997,
basic earnings per share would have been $0.19 and $0.15 for the three
  month periods ended September 30, 1997 and 1996, respectively, and $0.46
 and $0.37 for the nine month periods ended September 30, 1997 and 1996,
  respectively. Diluted earnings per share would have been $0.18 and $0.14
for the three month periods ended September 30, 1997 and 1996,        
respectively, and $0.44 and $0.34 for the nine month periods ended    
September 30, 1997 and 1996, respectively.                            

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  IMAX CORPORATION

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations                                                 

Business of the Company                                                         

The Company derives revenue principally from long-term theater system lease     
agreements, maintenance agreements, film production agreements, from the        
distribution of films and from the sale of motion simulator and other           
attractions products.                                                           

Under the Company's theater system sales and lease agreements,  the Company     
receives upfront fees prior to the delivery of a system which are deferred and  
not recorded as revenue.  At the time of delivery of the system, the upfront    
fees, plus in the case of sales-type leases the present value of the minimum    
annual royalty stream, are recognized as revenue.  The cost of the system is    
charged as a cost of sale at the time of delivery.  The discounted future       
minimum royalties are recorded on the Company's balance sheet as net investment 
in leases.  In the event of default of payment of minimum contracted royalties  
the Company may repossess the system and refurbish it for resale.               

Revenue from theater system sale and sales-type lease agreements is recognized  
on the completed contract method (that is, upon delivery of the system).  The   
timing of theater system deliveries is largely dependent on timing of the       
construction and opening of the customer's theater.  Revenue from system        
deliveries generally represents results from contracts signed 12 to 24 months   
prior to the date of recognition.  Revenue from films produced for third parties
is recognized when the film is completed and delivered to the sponsor.  The     
completion of films for third parties depends upon the contracted delivery dates
with film sponsors.                                                             

Revenue from theater systems and film production is generally predictable on a  
long-term basis given the relationship to projected theater systems deliveries  
and film completion dates.  However, systems revenue and film revenue in any    
given quarter may vary significantly depending on the nature and timing of the  
delivery of systems and the completion of films.                                

The Company's other sources of revenue, which are independent from the delivery 
of theater systems and the completion of films for third parties, include:      
royalties not subject to minimums, royalties in excess of minimum royalties and 
finance income on sales-type leases, maintenance fees on systems, film          
distribution fees, film post-production fees, revenue from Company-operated     
theaters and camera rentals.                                                    

Results of Operations                                                           

Theater Signings and Backlog                                                    

During the third quarter of 1997, the Company signed contracts for 16 IMAX      
theater systems valued at $41.4 million. The value of signings represents a 49% 
increase over the $27.7 million value of the eight theater contracts signed in  
the third quarter of 1996.  The theater signings for the third quarter of 1997  
include one owned and operated location.                                        

For the nine months ended September 30, 1997, the Company signed contracts for  
40 theater systems valued at $93.0 million, a 49% increase over the $62.4       
million value of the 21 contracts signed in the prior year period.  As a result 
of these theater signings, the Company's sales backlog grew to $172.7 million at
September 30, 1997, a 13% increase from $152.4 million at June 30, 1997 and a   
31% increase from $131.8 million at December 31, 1996.  The theater signings for
the first nine months of 1997 include three owned and operated locations versus 
one owned and operated location in the same period last year.                   

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  IMAX CORPORATION

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (CONT'D)                                        

THEATER SIGNINGS AND BACKLOG (CONT'D)                                           

The Company's sales backlog at September 30, 1997 represented contracts for 68  
theater systems, including two upgrades of existing theaters to IMAX 3D.  The   
Company's sales backlog will vary from quarter to quarter depending on the      
signing of new systems which adds to backlog and the delivery of systems which  
reduces backlog.  Sales backlog represents the revenue under firm contracts for 
new theater system installations not yet completed which will be recognized as  
revenue over approximately the next two years as the theater systems are        
delivered.  The value of sales backlog does not include owned and operated,     
participation or joint venture theaters, letters of intent, IMAX(R) Ridefilm(TM)
contracts or long-term  theater commitments.  As of September 30, 1997, there   
was a backlog of 27 IMAX Ridefilm systems, including six upgrades, and 16 IMAX  
Ridefilm theaters in operation.                                                 

THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THREE MONTHS ENDED SEPTEMBER 30,   
1996                                                                            

The Company reported net earnings of $5.5 million or $0.18 per share for the    
third quarter of 1997 compared to $4.2 million or $0.14 per share for the third 
quarter of 1996.  Earnings per share information has been adjusted for the 2-   
for-1 stock split which became effective by May 27, 1997.                       

The Company's revenues for the third quarter of 1997 increased 8% to $35.9      
million from $33.1 million in the corresponding quarter last year as a result of
growth in film and other revenues offsetting a decline in system revenues.      

Systems revenue, which includes revenue from theater system sales and leases,   
royalties and maintenance fees, decreased approximately 8% to $22.5 million in  
the third quarter of 1997 from $24.4 million in the same quarter last year.     
Revenue from theater system deliveries was lower in the third quarter of 1997   
compared to the third quarter of 1996.  The Company recognized revenues on five 
theater systems in the third quarter of 1997 versus eight theater systems in the
third quarter of 1996.  Revenues in the third quarter of 1997 reflect a higher  
average value of theater systems contracts recognized compared to 1996 due to a 
higher proportion of international and IMAX 3D theater system deliveries.       
Recurring revenues from both royalties and maintenance fees increased 23% in the
third quarter of 1997 over the prior year period principally as a result of     
growth in the IMAX theater network.                                             

Film revenue comprises revenue recognized from film production, film            
distribution and film post-production activities. Film revenue increased 78% to 
$10.5 million in the third quarter of 1997 from $5.9 million in the same quarter
last year due to an increase in film distribution and post-production revenues. 
Film distribution revenue increased in the current quarter over the comparable  
quarter of 1996 due to strong results of films which were released in the latter
half of 1996 and the first half of 1997 and also due to growth in the IMAX      
theater network.                                                                

Other revenues increased 2% to $2.9 million from $2.8 million in the prior year 
quarter.  There were no deliveries of IMAX Ridefilm  systems to third parties in
the third quarter of 1997 or the corresponding quarter last year.               

Gross margin for the second quarter of 1997 was $20.3 million, or 57% of total  
revenue, compared to $19.1 million, or 58% of total revenue, in the             
corresponding quarter last year.  Gross margin as a percentage of total revenue 
in the current year is relatively consistent with the prior year period despite 
the lower proportion of systems revenue due to better margin on film production,
post-production and other activities and lower purchase accounting in the       
current year.                                                                   

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  IMAX CORPORATION

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (CONT'D)                                        

THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THREE MONTHS ENDED SEPTEMBER 30,   
1996 (CONT'D)                                                                   

Selling, general and administrative expenses were $6.9 million in the third     
quarter of 1997 compared to $7.2 million in the corresponding quarter last year.
The decrease in selling, general and administrative expenses in 1997 compared to
1996 resulted from a reduction in costs associated with IMAX Ridefilm,          
litigation and other corporate expenses, partially offset by increases in costs 
associated with branding and affiliate relations initiatives.                   

The effective tax rate on earnings before taxes differs from the statutory tax  
rate and will vary from quarter to quarter primarily as a result of the         
amortization of goodwill, which is not deductible for tax purposes, and the     
provision of income taxes at different tax rates in foreign and other provincial
jurisdictions.                                                                  

NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 1996

The Company reported net earnings of $13.3 million or $0.44 per share for the   
first nine months of 1997 compared to $10.5 million or $0.34 per share for the  
first nine months of 1996.  Earnings per share information has been adjusted for
the 2-for-1 stock split which became effective by May 27, 1997.                 

The Company's revenues for the first nine months of 1997 increased 13% to $103.9
million from $92.1 million in the corresponding period last year as a result of 
higher recurring revenues from royalties and maintenance fees and higher film   
revenues.                                                                       

Systems revenue was essentially flat at $60.5 million in the first nine months  
of 1997 compared to $60.3 million in the same period last year.  Revenue from   
theater system deliveries was lower in the first nine months of 1997 compared to
the same period last year.  The Company recognized revenues on 14 theater       
systems in the first nine months of 1997 as compared to 19 theater systems in   
the prior year period.  Revenues in the first nine months of 1997 reflect a     
higher average value of theater systems contracts recognized compared to the    
same period in 1996 due to a higher proportion of international and IMAX 3D     
theater system deliveries.  Recurring revenues from both royalties and          
maintenance fees increased 30% in the first nine months of 1997 over the prior  
year period.                                                                    

Film revenue increased 55% to $33.5 million in the first nine months of 1997    
from $21.6 million in the same period last year due to an increase in film      
distribution and post-production revenues.  Film distribution revenue increased 
in the first nine months of 1997 over the comparable period last year due to    
strong results of films which were released in the latter half of 1996 and first
half of 1997 and also due to growth in the IMAX theater network.  There was one 
film produced for a third party in each of the first nine months of 1997 and    
1996.                                                                           

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  IMAX CORPORATION

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (CONT'D)                                                          

NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 1996
(CONT'D)                                                                        

Gross margin for the first nine months of 1997 was $55.9 million, or 54% of     
total revenue, compared to $50.6 million, or 55% of total revenue, in the       
corresponding  period last year.  Gross margin as a percentage of total revenue 
in the current year is relatively consistent with the prior year period despite 
the lower proportion of systems revenue due to better margin on film production,
post-production and other activities and lower purchase accounting in the       
current year.                                                                   

Selling, general and administrative expenses were $21.6 million in the first    
nine months of 1997 compared to $20.5 million in the first nine months of 1996. 
The increase in selling, general and administrative expenses in 1997 over 1996  
resulted principally from marketing, branding and affiliate relations           
initiatives and litigation costs, offset by a decrease in costs associated with 
IMAX Ridefilm.                                                                  

Research and development expenses decreased to $1.4 million in the first nine   
months of 1997 compared to $1.9 million in the first nine months of last year.  
The Company's technical staff were engaged, earlier in 1997, in the design and  
production of the new IMAX 3D SR theater system and not in the typical research 
and development activities.  Research and development expenses returned to      
historical levels in the third quarter of 1997.                                 

The effective tax rate on earnings before taxes differs from the statutory tax  
rate and will vary from quarter to quarter primarily as a result of the         
amortization of goodwill, which is not deductible for tax purposes, and the     
provision of income taxes at different tax rates in foreign and other provincial
jurisdictions.                                                                  

LIQUIDITY AND CAPITAL RESOURCES                                                 

At September 30, 1997, the Company's principal source of liquidity included cash
and cash equivalents of $72.3 million, marketable securities totalling $27.0    
million, trade accounts receivable of $31.3 million, and the amounts receivable 
under contracts in backlog which are not yet reflected on the balance sheet.    
The Company also has unused lines of credit under a working capital facility of 
U.S. $6.3 million.                                                              

The Company partially funds its operations primarily through cash flow from     
operations.  Under the terms of the Company's typical theater system lease      
agreement, the Company receives cash payments before it completes the           
performance of its obligations.  Similarly, the Company typically receives cash 
payments for film production in advance of related cash expenditures.  These    
cash flows have generally been adequate to finance the ongoing operations of the
Company.                                                                        

In the first nine months of 1997, cash provided by operating activities amounted
to $3.7 million after the payment of interest on the Senior and Convertible     
Notes totalling $9.4 million and working capital requirements.   Working capital
requirements in the first nine months of 1997 included an increase of $8.6      
million in the Company's inventory due to manufacturing activity related to     
systems in backlog and IMAX Ridefilm  systems scheduled for delivery  over the  
next 18 months and an increase in accounts receivable of $13.3 million,         
primarily related to an increase in the amount of upfront fees billed in        
connection with the higher signings activity and the  growth in the number of   
systems in backlog.                                                             

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  IMAX CORPORATION

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (CONT'D)                                                          

LIQUIDITY AND CAPITAL RESOURCES (CONT'D)                                        

Cash used in investing activities in the first nine months of 1997 included an  
increase in marketable securities of $8.8 million, expenditure of $12.1 million 
on capital assets, principally building and other assets under construction and 
motion simulation equipment, and investment of $17.1 million in film assets.    

During the first nine months of 1997, the Company repaid $1.2 million of long-  
term debt, compared to $0.5 million in the first nine months of 1996 and        
received $5.0 million of proceeds from common shares issued under stock option  
agreements.                                                                     

The Company believes that cash flows from operations together with existing cash
balances and the working capital facility will continue to be sufficient to meet
cash requirements in the foreseeable future.                                    

PART II    OTHER INFORMATION                                                    

ITEM 1.  LEGAL PROCEEDINGS                                                      

In April 1994, Compagnie France Film Inc. filed a claim against the Company in  
the Superior Court in the District of Montreal, in the Province of Quebec,      
alleging breach of contract and bad faith in respect of an agreement which the  
plaintiff claims it entered into with the Company for the establishment of an   
IMAX theater in Quebec City, Quebec, Canada.  Until December 1993, Imax was in  
negotiations with the plaintiff and another unrelated party for the             
establishment of an IMAX theater in Quebec City.  In December 1993, Imax        
executed a system lease agreement with the other party.  During the             
negotiations, both parties were aware of the other party's interest in also     
establishing an IMAX theater in Quebec City.  The plaintiffs are claiming       
damages of Canadian $4.6 million, representing the amount of profit they claim  
they are denied due to their inability to proceed with an IMAX theater in Quebec
City, together with expenses incurred in respect of this project and pre-       
judgement interest. The Company disputes this claim and has filed a defense in  
response.  Trial is scheduled for January 1998.  Compagnie France Film had also 
incorporated a shell company, 3101-8450 Quebec Inc. ("3101").  3101 was to,     
among other things, enter into a lease for the proposed IMAX theater site.  In  
November 1993, while negotiations between Compagnie France Film and the Company 
were still ongoing, 3101 entered into a lease for the site.  3101 defaulted on  
the lease and the landlord sued 3101 in an unrelated action to which the Company
was not a party.  In February 1996, 3101 was found liable to pay the landlord   
damages in the amount of Canadian $2.5 million.  Subsequent to that judgment    
3101 intervened in the lawsuit between Compagnie France Film and the Company in 
order to claim from the Company damages in the amount of Canadian $2.5 million. 
The Company believes that it will be successful in its defense of these claims  
and the ultimate loss, if any, will not have a material impact on the financial 
position or results of operations of the Company, although no assurance can be  
given with respect to the ultimate outcome of this litigation.                  

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  IMAX CORPORATION

Item 1.  Legal Proceedings (Cont'd)                                             

The Company filed a complaint in August 1994 in the U.S. District Court for the 
Northern District of California claiming that Neil Johnson, NJ Engineering Inc. 
and Cinema Technologies Inc. have misappropriated the Company's trade secrets in
the design and manufacture of defendants' 70mm 15-perforation projection        
systems.  The Company is seeking an injunction against Cinema Technologies Inc. 
to prevent shipment of projectors, which incorporate the Company's trade        
secrets, in addition to damages.  The defendant has brought two motions for     
summary judgement, one of which was based on the defendant's statute of         
limitations defense and the other based on, among others, the defendant's       
contention that the trade secrets at issue were not trade secrets.  The court   
denied the motion based on the statute of limitations defense, granted the      
motion based on the trade secret status issue, and entered a judgement for the  
defendants.  The Company has filed an appeal of this decision to the U.S. Court 
of Appeal for the Ninth Circuit.  The Company expects that the appeal will be   
heard in early 1998.                                                            

Iwerks Entertainment, Inc. filed a complaint against the Company on February 26,
1996 in the U.S. District Court for the Central District of California alleging 
violations under the Sherman Act, the Clayton Act, and tortious interference    
with contracts and prospective economic advantage. Iwerks Entertainment, Inc. is
seeking unquantified damages, injunctive relief and restitution.  The Company   
has filed an answer denying the material allegations of the complaint and is    
vigorously defending this action.                                               

In July 1997, Debra B. Altman filed a claim against the Company, and certain    
unidentified individuals, in the Superior Court of the State of California for  
the County of Los Angeles, alleging breach of contract, breach of implied       
covenant of good faith and fair dealing, breach of implied-in-fact contract,    
breach of confidence, constructive fraud, quantum meruit, unjust enrichment and 
constructive trust with respect to a film project the Plaintiff claims to have  
pursued with the Company.  The Plaintiff is seeking unquantified damages        
exceeding $5 million.  The Company disputes this claim and has removed it to the
U.S. District Court for the Central District of California, Western Division,   
and intends to vigorously defend this action.  The amount of the loss, if any,  
cannot be determined at this time.                                              

 In addition to the litigation described above, the Company is
currently involved in other litigation which, in the opinion of the Company's   
management, will not materially affect the Company's financial position or      
future operating results, although no assurance can be given with respect to the
ultimate outcome for any such litigation.                                       

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                       

A.       EXHIBITS                                                               

  11    Statement Re: Computation of earnings per share for the three and nine
month periods ended September 30, 1997 and 1996               

B.       REPORTS ON FORM 8-K                                                    

   No reports on Form 8-K were filed in the three month period ended
September 30, 1997.                                           

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SIGNATURES    

Pursuant to the requirements of the Securities Exchange Act of 1934, the        
registrant has duly caused this report to be signed on its behalf by the        
undersigned thereunto duly authorized.                                          

        IMAX CORPORATION

Date:  November 11, 1997             By: /S/ John M. Davison                    
-------------------------                ----------------------                 
                 John M. Davison
                                      Executive Vice President, Operations
                             and Chief Financial Officer
                               (Principal Financial Officer)

                    By: /S/  Michael M. Davies
                           -----------------------------
               Michael M. Davies
                          Vice President and Corporate
        Controller
                            (Principal Accounting Officer)

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	12/31/97	9		10-K405
	12/15/97	9
	11/19/97
Filed on:	11/14/97
	11/11/97	1	16
For Period End:	9/30/97	1	15
	6/30/97	10
	5/27/97	11	12
	5/6/97	9
	12/31/96	2	10
	9/30/96	3	15
	2/26/96	8	15
				List all Filings

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Imax Corp – ‘10-Q’ for 9/30/97

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