Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Revenue from Contracts with Customers

12.  Revenue from Contracts with Customers

The Company’s revenue arrangements with certain customers may involve performance obligations consisting of the delivery of a theater system (projector, sound system, screen system and, if applicable, 3D glasses cleaning machine); services associated with the theater system including theater design support, supervision of installation, and projectionist training; a license to use the IMAX brand; 3D glasses; maintenance and extended warranty services; and licensing of films. The Company evaluates all of the performance obligations in an arrangement to determine which are considered distinct, either individually or in a group, for accounting purposes and which of the deliverables represent separate units of accounting based on the applicable accounting guidance in the Leases Topic of the FASB ASC; the Guarantees Topic of the FASB ASC; and the Revenue Recognition Topic of the FASB ASC.  If separate units of accounting are either required under the relevant accounting standards or determined to be applicable under the Revenue Recognition Topic, the total transaction price received or receivable in the arrangement is allocated based on the applicable guidance in the above noted standards. The Company’s revenue recognition policies are described in note 2(m) in the Company’s 2018 Form 10-K.

The Company’s arrangements include a requirement for the provision of maintenance services over the life of the arrangement, subject to a consumer price index increase on renewal each year. In circumstances where customers prepay the entire term’s maintenance arrangement, payments are due to the Company for the years after the extended warranty and maintenance services offered as part of the System Obligation expire. Payments upon renewal each year can be either in arrears or in advance and can vary in frequency from monthly to annually. At September 30, 2019 $15.5 million of consideration has been deferred in relation to outstanding stand ready performance obligations related to these maintenance services (December 31, 2018 — $21.9 million). As the maintenance services are a stand ready obligation, revenue, subject to appropriate constraint, is recognized evenly over the contract term.

In instances where consideration is received prior to performance obligations being satisfied, it is deferred. The majority of the Company’s deferred revenue balance relates to payments for theater systems that have not yet been recognized. The deferred revenue related to an individual theater increases as progress payments are made and is recognized at the time the system obligation is satisfied. Recognition dates are variable and depend on numerous factors, including some outside of the Company’s control.

The recognition of variable consideration involves a significant amount of judgment. Variable consideration is to be recognized subject to appropriate constraints to avoid a significant reversal of revenue in future periods. The Company will review the variable

interest assets on an ongoing basis. In the three and nine months ended September 30, 2019, the Company recorded a true-up of variable consideration of $0.6 million and $2.5 million, respectively due to the modification of existing arrangements.

The following tables present a breakdown of the Company’s revenues between fixed and variable consideration and lease arrangements:

	Three Months Ended
	September 30, 2019
	Subject to the Revenue				Subject to the
	Recognition Standard				Lease Standard
	Fixed consideration		Variable consideration		Lease arrangements		Total
Network business
IMAX DMR	$	—	$	26,665	$	—	$	26,665
Joint revenue sharing arrangements – contingent rent		—		—		16,546		16,546
IMAX systems – contingent rent		—		—		32		32
		—		26,665		16,578		43,243
Theater business
IMAX systems
Sales and sales-type leases		15,520		2,580		—		18,100
Ongoing fees and finance income		2,903		—		—		2,903
Joint revenue sharing arrangements – fixed fees		—		—		1,438		1,438
Theater system maintenance		13,657		—		—		13,657
Other theater		1,560		—		—		1,560
		33,640		2,580		1,438		37,658
New business		596		-		—		596
Other
Film post-production		2,185		—		—		2,185
Film distribution		—		1,343		—		1,343
Other		—		328		1,037		1,365
		2,185		1,671		1,037		4,893
Total	$	36,421	$	30,916	$	19,053	$	86,390

	Nine Months Ended
	September 30, 2019
	Subject to the Revenue				Subject to the
	Recognition Standard				Lease Standard
	Fixed consideration		Variable consideration		Lease arrangements		Total
Network business
IMAX DMR	$	—	$	93,908	$	—	$	93,908
Joint revenue sharing arrangements – contingent rent		—		—		59,704		59,704
IMAX systems – contingent rent		—		—		189		189
		—		93,908		59,893		153,801
Theater business
IMAX systems
Sales and sales-type leases		36,758		5,454		—		42,212
Ongoing fees and finance income		8,588		—		—		8,588
Joint revenue sharing arrangements – fixed fees		—		—		6,525		6,525
Theater system maintenance		39,815		—		—		39,815
Other theater		5,766		—		—		5,766
		90,927		5,454		6,525		102,906
New business		1,908		-		—		1,908
Other
Film post-production		6,458		—		—		6,458
Film distribution		—		3,333		—		3,333
Other		—		1,519		1,460		2,979
		6,458		4,852		1,460		12,770
Total	$	99,293	$	104,214	$	67,878	$	271,385

	Three Months Ended
	September 30, 2018
	Subject to the Revenue				Subject to the
	Recognition Standard				Lease Standard
	Fixed consideration		Variable consideration		Lease arrangements		Total
Network business
IMAX DMR	$	—	$	22,372	$	—	$	22,372
Joint revenue sharing arrangements – contingent rent		—		—		14,327		14,327
		—		22,372		14,327		36,699
Theater business
IMAX systems
Sales and sales-type leases		19,320		1,107		—		20,427
Ongoing fees and finance income		2,971		—		—		2,971
Joint revenue sharing arrangements – fixed fees		2,798		—		—		2,798
Theater system maintenance		12,415		—		—		12,415
Other theater		2,076		—		—		2,076
		39,580		1,107		—		40,687
New business		1,112		163		—		1,275
Other
Film post-production		2,262		—		—		2,262
Film distribution		—		800		—		800
Other		—		385		—		385
		2,262		1,185		—		3,447
Total	$	42,954	$	24,827	$	14,327	$	82,108

	Nine Months Ended
	September 30, 2018
	Subject to the Revenue				Subject to the
	Recognition Standard				Lease Standard
	Fixed consideration		Variable consideration		Lease arrangements		Total
Network business
IMAX DMR	$	—	$	85,586	$	—	$	85,586
Joint revenue sharing arrangements – contingent rent		—		—		56,919		56,919
		—		85,586		56,919		142,505
Theater business
IMAX systems
Sales and sales-type leases		45,142		5,403		—		50,545
Ongoing fees and finance income		8,982		—		—		8,982
Joint revenue sharing arrangements – fixed fees		3,821		—		—		3,821
Theater system maintenance		37,462		—		—		37,462
Other theater		5,707		—		—		5,707
		101,114		5,403		—		106,517
New business		3,938		1,061		—		4,999
Other
Film post-production		6,512		—		—		6,512
Film distribution		—		2,644		—		2,644
Other		50		2,210		—		2,260
		6,562		4,854		—		11,416
Total	$	111,614	$	96,904	$	56,919	$	265,437