v3.22.2.2
Segment Reporting
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Segment Reporting

15. Segment Reporting

 

The Company's Chief Executive Officer ("CEO") is its Chief Operating Decision Maker ("CODM"), as such term is defined under U.S. GAAP. The CODM, along with other members of management, assess segment performance based on segment revenues and gross margins. Selling, general and administrative expenses, research and development costs, the amortization of intangible assets, provision for (reversal of) current expected credit losses, certain write-downs, interest income, interest expense, and income tax (expense) benefit are not allocated to the Company's segments.

The Company has the following reportable segments: (i) IMAX DMR; (ii) Joint Revenue Sharing Arrangements ("JRSA"); (iii) IMAX Systems; (iv) IMAX Maintenance; (v) Other Theater Business; (vi) Film Distribution; and (vii) Film Post-Production. The Company's activities that do not meet the criteria to be considered a reportable segment are disclosed within All Other. The Company organizes its reportable segments into the following three categories, identified by the nature of the product sold or service provided:

 

(i)
IMAX Technology Network, which earns revenue based on contingent box office receipts and includes the IMAX DMR segment and contingent rent from the JRSA segment;

 

(ii)
IMAX Technology Sales and Maintenance, which includes results from the IMAX Systems, IMAX Maintenance, and Other Theater Business segments, as well as fixed revenues from the JRSA segment; and

 

(iii)
Film Distribution and Post-Production, which includes activities related to the distribution of large-format documentary films, primarily to institutional theaters, and the distribution of exclusive experiences ranging from live performances to interactive events with leading artists and creators (through the Film Distribution segment) and the provision of film post-production and quality control services.

The Company presents its segment information at a disaggregated level to provide more relevant information to the users of its financial statements.

Transactions between the IMAX DMR segment and the Film Post-Production segment are valued at exchange value. Inter-segment profits are eliminated upon consolidation, as well as for the disclosures below.

In the first quarter of 2022, the Company's internal reporting was updated to reclassify the results of IMAX Enhanced®, an initiative to bring The IMAX Experience® into the home, out of the New Business Initiatives segment and into All Other for segment reporting purposes. IMAX Enhanced was the only component of the New Business Initiatives segment. Prior period comparatives have been reclassified to conform with the current period presentation.

The following table presents the Company's revenue and gross margin (margin loss) by category and reportable segment for the three months ended September 30, 2022 and 2021:

 

 

Revenue(1)

 

 

Gross Margin (Margin Loss)

 

(In thousands of U.S. Dollars)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

IMAX Technology Network

 

 

 

 

 

 

 

 

 

 

 

 

IMAX DMR

 

$

19,919

 

 

$

15,701

 

 

$

11,408

 

 

$

7,293

 

JRSA, contingent rent

 

 

12,540

 

 

 

9,887

 

 

 

6,302

 

 

 

3,626

 

 

 

 

32,459

 

 

 

25,588

 

 

 

17,710

 

 

 

10,919

 

IMAX Technology Sales and Maintenance

 

 

 

 

 

 

 

 

 

 

 

 

IMAX Systems(2)

 

 

15,957

 

 

 

13,236

 

 

 

9,029

 

 

 

8,086

 

JRSA, fixed fees

 

 

998

 

 

 

1,036

 

 

 

(154

)

 

 

280

 

IMAX Maintenance

 

 

13,939

 

 

 

13,055

 

 

 

6,406

 

 

 

6,462

 

Other Theater Business(3)

 

 

2,107

 

 

 

363

 

 

 

168

 

 

 

64

 

 

 

 

33,001

 

 

 

27,690

 

 

 

15,449

 

 

 

14,892

 

Film Distribution and Post-Production

 

 

 

 

 

 

 

 

 

 

 

 

Film Distribution

 

 

1,081

 

 

 

699

 

 

 

(2,369

)

 

 

(4

)

Post-Production

 

 

968

 

 

 

899

 

 

 

287

 

 

 

420

 

 

 

 

2,049

 

 

 

1,598

 

 

 

(2,082

)

 

 

416

 

Sub-total for reportable segments

 

 

67,509

 

 

 

54,876

 

 

 

31,077

 

 

 

26,227

 

All Other(4)

 

 

1,246

 

 

 

1,726

 

 

 

624

 

 

 

1,260

 

Total

 

$

68,755

 

 

$

56,602

 

 

$

31,701

 

 

$

27,487

 

 

The following table presents the Company's revenue and gross margin (margin loss) by category and reportable segment for the nine months ended September 30, 2022 and 2021:

 

 

Revenue(1)

 

 

Gross Margin (Margin Loss)

 

(In thousands of U.S. Dollars)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

IMAX Technology Network

 

 

 

 

 

 

 

 

 

 

 

 

IMAX DMR

 

$

67,064

 

 

$

39,438

 

 

$

42,965

 

 

$

22,405

 

JRSA, contingent rent

 

 

43,708

 

 

 

26,108

 

 

 

25,389

 

 

 

7,299

 

 

 

 

110,772

 

 

 

65,546

 

 

 

68,354

 

 

 

29,704

 

IMAX Technology Sales and Maintenance

 

 

 

 

 

 

 

 

 

 

 

 

IMAX Systems(2)

 

 

32,806

 

 

 

35,117

 

 

 

18,432

 

 

 

21,646

 

JRSA, fixed fees

 

 

2,486

 

 

 

3,776

 

 

 

79

 

 

 

783

 

IMAX Maintenance

 

 

43,564

 

 

 

33,196

 

 

 

21,643

 

 

 

15,360

 

Other Theater Business(3)

 

 

3,697

 

 

 

1,283

 

 

 

314

 

 

 

269

 

 

 

 

82,553

 

 

 

73,372

 

 

 

40,468

 

 

 

38,058

 

Film Distribution and Post-Production

 

 

 

 

 

 

 

 

 

 

 

 

Film Distribution

 

 

2,503

 

 

 

1,115

 

 

 

(4,631

)

 

 

(319

)

Post-Production

 

 

2,915

 

 

 

2,886

 

 

 

1,161

 

 

 

1,316

 

 

 

 

5,418

 

 

 

4,001

 

 

 

(3,470

)

 

 

997

 

Sub-total for reportable segments

 

 

198,743

 

 

 

142,919

 

 

 

105,352

 

 

 

68,759

 

All Other(4)

 

 

4,016

 

 

 

3,392

 

 

 

2,156

 

 

 

1,612

 

Total

 

$

202,759

 

 

$

146,311

 

 

$

107,508

 

 

$

70,371

 

 

(1)
The Company's largest customer represents 11% and 13%, respectively, of total Revenues for the three and nine months ended September 30, 2022 (2021 — 18% and 22%, respectively). No single customer comprises more than 10% of the Company's total Accounts Receivable as of September 30, 2022 and December 31, 2021.
(2)
The revenue from this segment includes the initial upfront payments and the present value of fixed minimum payments from sale and sales-type lease arrangements of IMAX Theater Systems, as well as the present value of estimated variable consideration from sales of IMAX Theater Systems. To a lesser extent, the revenue from this segment also includes finance income associated with these revenue streams.
(3)
The revenue from this segment principally includes after-market sales of IMAX Theater System parts and 3D glasses.
(4)
All Other includes the results from IMAX Enhanced, SSIMWAVE, and other ancillary activities. In the first quarter of 2022, the Company's internal reporting was updated to reclassify the results of IMAX Enhanced out of the New Business Initiatives segment into All Other for segment reporting purposes. Prior period comparatives have been revised to conform with the current period presentation. The results of SSIMWAVE, which was acquired on September 22, 2022, were not material to the period. (See Note 4 for additional information related to the Company's acquisition of SSIMWAVE)

Geographic Information

Revenue by geographic area is based on the location of the customer. Revenue related to IMAX DMR is presented based upon the geographic location of the theaters that exhibit the remastered films. IMAX DMR revenue is generated through contractual relationships with studios and other third parties and these may not be in the same geographical location as the theater.

The following table summarizes the Company's revenues by geographic area for the three and nine months ended September 30, 2022 and 2021:

 

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

September 30,

 

(In thousands of U.S. Dollars)

 

2022

 

 

 

2021

 

 

2022

 

 

2021

 

United States

 

$

23,168

 

 

 

$

16,469

 

 

 

$

75,881

 

 

 

$

34,275

 

Greater China

 

 

14,889

 

 

 

 

22,203

 

 

 

 

47,602

 

 

 

 

75,634

 

Asia (excluding China)

 

 

13,921

 

 

 

 

4,925

 

 

 

 

31,045

 

 

 

 

12,837

 

Western Europe

 

 

8,938

 

 

 

 

7,634

 

 

 

 

26,700

 

 

 

 

11,160

 

Latin America

 

 

2,397

 

 

 

 

1,181

 

 

 

 

6,826

 

 

 

 

1,579

 

Canada

 

 

1,780

 

 

 

 

1,083

 

 

 

 

5,520

 

 

 

 

620

 

Russia/the CIS & Ukraine(1)

 

 

1,638

 

 

 

 

1,353

 

 

 

 

2,794

 

 

 

 

4,577

 

Rest of the World

 

 

2,024

 

 

 

 

1,754

 

 

 

 

6,391

 

 

 

 

5,629

 

Total

 

$

68,755

 

 

 

$

56,602

 

 

 

$

202,759

 

 

 

$

146,311

 

 

(1)
In addition to Russia, the CIS includes Azerbaijan, Belarus, Kazakhstan, and Kyrgyzstan. Commencing in March 2022, in response to the ongoing conflict between Russia and Ukraine and resulting sanctions, the Company suspended its operations in Russia and Belarus. As of September 30, 2022, the IMAX network includes 54 theaters in Russia, nine theaters in Ukraine, and one theater in Belarus.

No single country in the Rest of the World, Western Europe, Latin America and Asia (excluding Greater China) comprises more than 10% of the Company's total revenue in the nine months ended September 30, 2022 and 2021.