The Company maintains cash with various major financial institutions. The Company's cash is invested with highly rated financial institutions. The Company's $87.2 million balance of cash and cash equivalents as of September 30, 2022 (December 31, 2021 — $189.7 million) includes $65.5 million in cash held outside of Canada (December 31, 2021 — $102.1 million), of which $27.9 million was held in the PRC (December 31, 2021 — $76.3 million).

The carrying values of the Company's Cash and Cash Equivalents, Accounts Receivable, Accounts Payable and Accrued and Other Liabilities due within one year approximate their fair values due to the short-term maturity of these instruments. Including these instruments, the Company's financial instruments consist of the following:


	As of September 30, 2022						As of December 31, 2021
(In thousands of U.S. Dollars)	Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value
Level 1
Cash and cash equivalents(1)	$	87,151		$	87,151		$	189,711		$	189,711
Equity securities(2)		1,095			1,095			1,087			1,087
Level 2
Net financed sales receivables(3)	$	97,770		$	96,019		$	112,657		$	112,662
Net investment in sales-type leases(3)		24,848			24,823			28,392			28,407
Equity securities(1)		1,000			1,000			1,000			1,000
COLI(4)		3,366			3,366			3,275			3,275
Foreign exchange contracts — designated forwards(2)		(1,608	)		(1,608	)		79			79
Bank of China Facility borrowings(1)		(4,763	)		(4,763	)		(3,612	)		(3,612	)
Federal Economic Development Loan(3)		(1,772	)		(1,772	)	n/a			n/a
Convertible Notes(5)		(230,000	)		(193,400	)		(230,000	)		(223,100	)
Level 3
Interest in film classified as a financial instrument(6)	$	—		$	—		$	—		$	—

(1)

Recorded at cost, which approximates fair value.

(2)

Fair value is determined using quoted prices in active markets.

(3)

Fair value is estimated based on discounting future cash flows at currently available interest rates with comparable terms.

(4)

Measured at cash surrender value, which approximates fair value.

(5)

Fair value is determined using quoted market prices that are observable in the market or that could be derived from observable market data.

(6)

Recorded at amortized cost less impairment losses. Inputs used in the calculation of estimated fair value include management's projection of future box office and ancillary receipts for the film net of distribution costs and other costs in accordance with the investment agreement. See 17(e) below.

A majority of the Company's revenues is denominated in U.S. Dollars while a significant portion of its costs and expenses is denominated in Canadian Dollars. A portion of the Company's net U.S. Dollar cash is converted to Canadian Dollars to fund Canadian Dollar expenses through the spot market. In China and Japan, the Company has ongoing operating expenses related to its operations in RMB and Japanese Yen, respectively. Net cash flows are converted to and from U.S. Dollars through the spot market. The Company also has cash receipts under leases denominated in RMB, Japanese Yen, Canadian Dollars and Euros which are converted to U.S. Dollars through the spot market. In addition, because IMAX films generate box office in 87 different countries, unfavorable exchange rates between applicable local currencies and the U.S. Dollar could have an impact on box-office receipts and the Company's revenues and results of operations. The Company's policy is to not use any financial instruments for trading or other speculative purposes.

The Company has entered into a series of foreign currency forward contracts to manage the risks associated with the volatility of foreign currencies. Certain of these foreign currency forward contracts met the criteria required for hedge accounting under the Derivatives and Hedging Topic of the FASB ASC at inception, and continue to meet hedge effectiveness tests at September 30, 2022 (the "Foreign Currency Hedges"), with settlement dates throughout 2022 and 2023. Foreign currency derivatives are recognized and measured in the Condensed Consolidated Balance Sheets at fair value. Changes in the fair value (i.e., gains or losses) are recognized in the Condensed Consolidated Statements of Operations except for derivatives designated and qualifying as foreign currency cash flow hedging instruments. The Company currently has cash flow hedging instruments associated with Selling, General and Administrative Expenses. For foreign currency cash flow hedging instruments related to Selling, General and Administrative Expenses, the effective portion of the gain or loss in a hedge of a forecasted transaction is reported in Accumulated Other Comprehensive (Loss) Income and reclassified to the Condensed Consolidated Statements of Operations when the forecasted transaction occurs. Any ineffective portion is recognized immediately in the Condensed Consolidated Statements of Operations.

Fair value of derivatives in foreign exchange contracts:


		September 30,			December 31,
(In thousands of U.S. Dollars)	Balance Sheet Location	2022			2021
Derivatives designated as hedging instruments:
Foreign exchange contracts — Forwards	Other assets	$	—		$	184
	Accrued and other liabilities		(1,608	)		(105	)
		$	(1,608	)	$	79

Derivatives in foreign currency hedging relationships are as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands of U.S. Dollars)		2022			2021			2022			2021
Foreign exchange contracts	Derivative Loss
— Forwards	Recognized in OCI
	(Effective Portion)	$	(1,567	)	$	(759	)	$	(1,862	)	$	(159	)

	Location of Derivative (Loss) Gain
	Reclassified from AOCI	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands of U.S. Dollars)	(Effective Portion)	2022			2021			2022			2021
Foreign exchange contracts	Selling, general and
— Forwards	administrative expenses	$	(80	)	$	312		$	(175	)	$	1,367

Non-designated derivatives in foreign currency relationships are as follows:


		Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands of U.S. Dollars)	Location of Derivative (Loss) Gain	2022		2021			2022		2021
Foreign exchange contracts	Selling, general and
— Forwards	administrative expenses	$	—	$	(122	)	$	—	$	269

The Company's estimated net amount of the existing loss as of September 30, 2022 is $(1.5) million, which is expected to be reclassified to earnings within the next twelve months.

As of September 30, 2022, the Condensed Consolidated Balance Sheets includes $1.1 million (December 31, 2021 — $1.1 million) of investments in equity securities.

On January 17, 2019, IMAX China (Hong Kong), Limited, a wholly-owned subsidiary of IMAX China, as an investor entered into a cornerstone investment agreement with Maoyan Entertainment ("Maoyan") (as the issuer) and Morgan Stanley Asia Limited (as a sponsor, underwriter and the underwriters' representative). Pursuant to this agreement, IMAX China (Hong Kong), Limited agreed to invest $15.2 million to subscribe for a certain number of shares of Maoyan at the final offer price pursuant to the global offering of the share capital of Maoyan, and this investment would be subject to a lock-up period of six months following the date of the global offering. On February 4, 2019, Maoyan completed its global offering, upon which, IMAX China (Hong Kong), Limited became a less than 1% shareholder in Maoyan. During the first quarter of 2021, IMAX China (Hong Kong), Limited sold all of its 7,949,000 shares of Maoyan for gross proceeds of $17.8 million and recognized $5.2 million gain in the Condensed Consolidated Statements of Operations.

The Company has an investment of $1.1 million (December 31, 2021 — $1.1 million) in the shares of an exchange traded fund. This investment is classified as an equity investment.

As of September 30, 2022, the Company held investments in the preferred shares of enterprises which meet the criteria for classification as an equity security carried at historical cost, net of impairment charges. The carrying value of these equity security investments was $1.0 million at September 30, 2022 (December 31, 2021 — $1.0 million) and is recorded in Other Assets.

On January 10, 2022, IMAX (Shanghai) Culture and Technology Co., Ltd, a wholly-owned subsidiary of IMAX China, entered into a joint film investment agreement with Wanda Film (Horgos) Co. Ltd. to invest RMB 30.0 million ($4.7 million) in the movie Mozart from Space, which was released on July 15, 2022. Pursuant to the investment agreement, IMAX (Shanghai) Culture and Technology Co., Ltd. has the right to receive a share of the profits or losses of the film distribution. IMAX (Shanghai) Culture and Technology Co., Ltd.'s commitment is limited to its investment and has no further obligation if the actual movie production cost exceeds the original budget. The investment meets the criteria for classification as a financial asset. The investment is measured at amortized cost less impairment losses and is recorded within Other Assets in the Condensed Consolidated Balance Sheets.

During the second quarter of 2022, the Company recognized a full impairment of its RMB 30.0 million ($4.5 million) investment in Mozart from Space based on projected box office results and distribution costs.