The Company maintains cash with various major financial institutions. The Company’s cash is invested with highly rated financial institutions.

The Company’s accounts receivables and financing receivables are subject to credit risk. The Company’s accounts receivables and financing receivables are concentrated with the theater exhibition industry and film entertainment industry. To minimize the Company’s credit risk, the Company retains title to underlying theater systems leased, performs initial and ongoing credit evaluations of its customers and makes ongoing provisions for its estimate of potentially uncollectible amounts. The Company believes it has adequately provided for related exposures surrounding receivables and contractual commitments.

The carrying values of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities due within one year approximate fair values due to the short-term maturity of these instruments. The Company’s other financial instruments are comprised of the following:

	As of September 30, 2019						As at December 31, 2018
	Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value
Level 1
Cash and cash equivalents⁽¹⁾	$	102,548		$	102,548		$	141,590		$	141,590
Equity securities ⁽³⁾		13,660			13,660			1,022			1,022
Level 2
Net financed sales receivables⁽²⁾	$	109,844		$	108,993		$	117,990		$	117,428
Net investment in sales-type leases ⁽²⁾		11,496			11,526			9,442			9,529
Convertible loan receivable⁽²⁾		1,500			1,500			1,500			1,500
Equity securities⁽¹⁾		1,000			1,000			1,000			1,000
Foreign exchange contracts — designated forwards⁽³⁾		(350	)		(350	)		(1,202	)		(1,202	)
Borrowings under the Credit Facility⁽¹⁾		(20,000	)		(20,000	)		(40,000	)		(40,000	)

When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. There were no significant transfers in or out of the Company’s Level 3 assets during the three and nine months ended September 30, 2019 and 2018.

The Company’s net investment in leases and its net financed sales receivables are subject to the disclosure requirements of ASC 310 “Receivables”. Due to differing risk profiles of its net investment in leases and its net financed sales receivables, the Company views its net investment in leases and its net financed sale receivables as separate classes of financing receivables. The Company does not aggregate financing receivables to assess impairment.

The Company monitors the credit quality of each customer on a frequent basis through collections and aging analyses. The Company also holds meetings monthly in order to identify credit concerns and whether a change in credit quality classification is required for the customer. A customer may improve in their credit quality classification once a substantial payment is made on overdue balances or the customer has agreed to a payment plan with the Company and payments have commenced in accordance to the payment plan. The change in credit quality indicator is dependent upon management approval.

The Company classifies its customers into four categories to indicate the credit quality worthiness of its financing receivables for internal purposes only:

Good standing — Theater continues to be in good standing with the Company as the client’s payments and reporting are up-to-date.

Credit Watch — Theater operator has begun to demonstrate a delay in payments, and has been placed on the Company's credit watch list for continued monitoring, but active communication continues with the Company. Depending on the size of outstanding balance, length of time in arrears and other factors, transactions may need to be approved by management. These financing receivables are considered to be in better condition than those receivables related to theaters in the "Pre-approved transactions" category, but not in as good of condition as those receivables in "Good standing".

Pre-approved transactions only — Theater operator is demonstrating a delay in payments with little or no communication with the Company. All service or shipments to the theater must be reviewed and approved by management. These financing receivables are considered to be in better condition than those receivables related to theaters in the "All transactions suspended" category, but not in as good of condition as those receivables in "Credit Watch". Depending on the individual facts and circumstances of each customer, finance income recognition may be suspended if management believes the receivable to be impaired.

All transactions suspended — Theater is severely delinquent, non-responsive or not negotiating in good faith with the Company. Once a theater is classified as “All transactions suspended” the theater is placed on nonaccrual status and all revenue recognitions related to the theater are stopped.

The following table discloses the recorded investment in financing receivables by credit quality indicator:

While recognition of finance income is suspended, payments received by a customer are applied against the outstanding balance owed. If payments are sufficient to cover any unreserved receivables, a recovery of provision taken on the billed amount, if applicable, is recorded to the extent of the residual cash received. Once the collectibility issues are resolved and the customer has returned to being in good standing, the Company will resume recognition of finance income.

The Company’s investment in financing receivables on nonaccrual status is as follows:

The Company considers financing receivables with aging between 60-89 days as indications of theaters with potential collection concerns. The Company will begin to focus its review on these financing receivables and increase its discussions internally and with the theater regarding payment status. Once a theater’s aging exceeds 90 days, the Company’s policy is to review and assess collectibility on the theater’s past due accounts. Over 90 days past due is used by the Company as an indicator of potential impairment as invoices up to 90 days outstanding could be considered reasonable due to the time required for dispute resolution or for the provision of further information or supporting documentation to the customer.

	As of September 30, 2019
	Accrued and Current		30-89 Days		90+ Days		Billed Financing Receivables		Related Unbilled Recorded Investment		Total Recorded Investment		Related Allowances			Recorded Investment Net of Allowances
Net investment in leases	$	99	$	46	$	315	$	460	$	11,191	$	11,651	$	(155	)	$	11,496
Net financed sales receivables		1,881		2,117		5,571		9,569		101,190		110,759		(915	)		109,844
Total	$	1,980	$	2,163	$	5,886	$	10,029	$	112,381	$	122,410	$	(1,070	)	$	121,340

	As at December 31, 2018
	Accrued and Current		30-89 Days		90+ Days		Billed Financing Receivables		Related Unbilled Recorded Investment		Total Recorded Investment		Related Allowances			Recorded Investment Net of Allowances
Net investment in leases	$	52	$	18	$	253	$	323	$	9,274	$	9,597	$	(155	)	$	9,442
Net financed sales receivables		1,442		2,066		5,241		8,749		110,080		118,829		(839	)		117,990
Total	$	1,494	$	2,084	$	5,494	$	9,072	$	119,354	$	128,426	$	(994	)	$	127,432

The Company’s recorded investment in financing receivables with billed amounts past due for which the Company continues to accrue finance income is as follows:

	As of September 30, 2019
	Accrued and Current		30-89 Days		90+ Days		Billed Financing Receivables		Related Unbilled Recorded Investment		Related Allowance		Recorded Investment Past Due and Accruing
Net investment in leases	$	51	$	23	$	315	$	389	$	1,372	$	—	$	1,761
Net financed sales receivables		656		1,195		5,533		7,384		32,746		—		40,130
Total	$	707	$	1,218	$	5,848	$	7,773	$	34,118	$	—	$	41,891

	As at December 31, 2018
	Accrued and Current		30-89 Days		90+ Days		Billed Financing Receivables		Related Unbilled Recorded Investment		Related Allowance		Recorded Investment Past Due and Accruing
Net investment in leases	$	28	$	9	$	246	$	283	$	1,523	$	—	$	1,806
Net financed sales receivables		558		1,472		5,860		7,890		31,507		—		39,397
Total	$	586	$	1,481	$	6,106	$	8,173	$	33,030	$	—	$	41,203

The Company considers financing receivables to be impaired when it believes it to be probable that it will not recover the full amount of principal or interest owing under the arrangement. The Company uses its knowledge of the industry and economic trends, as well as its prior experiences to determine the amount recoverable for impaired financing receivables. The following table discloses information regarding the Company’s impaired financing receivables:

	For the Three Months Ended September 30, 2019
	Recorded Investment		Unpaid Principal		Related Allowance			Average Recorded Investment		Interest Income Recognized
Recorded investment for which there is a related allowance:
Net investment in leases	$	—	$	—	$	—		$	—	$	—
Net financed sales receivables		933		216		(805	)		845		—
Recorded investment for which there is no related allowance:
Net investment in leases		—		—		—			—		—
Net financed sales receivables		—		—		—			—		—
Total recorded investment in impaired loans:
Net investment in leases	$	—	$	—	$	—		$	—	$	—
Net financed sales receivables	$	933	$	216	$	(805	)	$	845	$	—

	For the Three Months Ended September 30, 2018
	Recorded Investment		Unpaid Principal		Related Allowance			Average Recorded Investment		Interest Income Recognized
Recorded investment for which there is a related allowance:
Net investment in leases	$	—	$	—	$	—		$	—	$	—
Net financed sales receivables		869		121		(739	)		869		—
Recorded investment for which there is no related allowance:
Net investment in leases		—		—		—			—		—
Net financed sales receivables		—		—		—			—		—
Total recorded investment in impaired loans:
Net investment in leases	$	—	$	—	$	—		$	—	$	—
Net financed sales receivables	$	869	$	121	$	(739	)	$	869	$	—

	For the Nine Months Ended September 30, 2019
	Recorded Investment		Unpaid Principal		Related Allowance			Average Recorded Investment		Interest Income Recognized
Recorded investment for which there is a related allowance:
Net investment in leases	$	—	$	—	$	—		$	—	$	—
Net financed sales receivables		933		216		(805	)		815		—
Recorded investment for which there is no related allowance:
Net investment in leases		—		—		—			—		—
Net financed sales receivables		—		—		—			—		—
Total recorded investment in impaired loans:
Net investment in leases	$	—	$	—	$	—		$	—	$	—
Net financed sales receivables	$	933	$	216	$	(805	)	$	815	$	—

	For the Nine Months Ended September 30, 2018
	Recorded Investment		Unpaid Principal		Related Allowance			Average Recorded Investment		Interest Income Recognized
Recorded investment for which there is a related allowance:
Net investment in leases	$	—	$	—	$	—		$	—	$	—
Net financed sales receivables		869		121		(739	)		950		—
Recorded investment for which there is no related allowance:
Net investment in leases		—		—		—			—		—
Net financed sales receivables		—		—		—			—		—
Total recorded investment in impaired loans:
Net investment in leases	$	—	$	—	$	—		$	—	$	—
Net financed sales receivables	$	869	$	121	$	(739	)	$	950	$	—

The Company’s activity in the allowance for credit losses for the period and the Company’s recorded investment in financing receivables are as follows:

	Three Months Ended September 30, 2019				Nine Months Ended September 30, 2019
	Net Investment		Net Financed		Net Investment		Net Financed
	in Leases		Sales Receivables		in Leases		Sales Receivables
Allowance for credit losses:
Beginning balance	$	155	$	839	$	155	$	839
Charge-offs		—		—		—		—
Recoveries		—		—		—		—
Provision		—		76		—		76
Ending balance	$	155	$	915	$	155	$	915
Ending balance: individually evaluated for impairment	$	155	$	915	$	155	$	915
Financing receivables:
Ending balance: individually evaluated for impairment	$	11,651	$	110,759	$	11,651	$	110,759

	Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
	Net Investment		Net Financed		Net Investment		Net Financed
	in Leases		Sales Receivables		in Leases		Sales Receivables
Allowance for credit losses:
Beginning balance	$	155	$	839	$	155	$	922
Charge-offs		—		—		—		(183	)
Recoveries		—		—		—		—
Provision		—		—		—		100
Ending balance	$	155	$	839	$	155	$	839
Ending balance: individually evaluated for impairment	$	155	$	839	$	155	$	839
Financing receivables:
Ending balance: individually evaluated for impairment	$	8,943	$	118,369	$	8,943	$	118,369

The Company is exposed to market risk from changes in foreign currency rates. A majority of the Company’s revenues is denominated in U.S. dollars while a substantial portion of its costs and expenses is denominated in Canadian dollars. A portion of the net U.S. dollar cash flows of the Company is periodically 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 Chinese Renminbi 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 Chinese Renminbi, 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 81 different countries, unfavourable exchange rates between applicable local currencies and the U.S. dollar affect the Company’s reported gross box-office and revenues, further impacting the Company’s results of operations. The Company’s policy is to not use any financial instruments for trading or other speculative purposes.

The Company entered into a series of foreign currency forward contracts to manage the Company’s 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, 2019 (the “Foreign Currency Hedges”), with settlement dates throughout 2019, 2020 and 2021. Foreign currency derivatives are recognized and measured in the balance sheet at fair value. Changes in the fair value (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 and capital expenditures. 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 other comprehensive income and reclassified to the condensed consolidated statements of operations when the forecasted transaction occurs. For foreign currency cash flow hedging instruments related to capital expenditures, the effective portion of the gain or loss in a hedge of a forecasted transaction is reported in other comprehensive income and reclassified to property, plant and equipment on the balance sheet when the forecasted transaction occurs. The Company currently does not hold any derivatives which are not designated as hedging instruments.

The following tabular disclosures reflect the impact that derivative instruments and hedging activities have on the Company’s condensed consolidated financial statements:

The Company's estimated net amount of the existing losses as at September 30, 2019 is $0.4 million, which is expected to be reclassified to earnings within the next twelve months.

The Company accounts for investments in new business ventures using the guidance of the FASB ASC 323, FASB ASC 320 and FASB ASC 321, as appropriate.

As at September 30, 2019, the equity method of accounting is being utilized for an investment with a carrying value of $nil (December 31, 2018 — $nil). The Company’s accumulated losses in excess of its equity investment were $1.5 million as at September 30, 2019 and are classified in Accrued and other liabilities. For the three months ended September 30, 2019, gross revenues, cost of revenue and net loss for the Company’s investment was $1.1 million, $0.7 million and $0.3 million, respectively (2018 — $0.3 million, $1.0 million and $0.6 million, respectively). For the nine months ended September 30, 2019, gross revenue, cost of revenue and net loss for the Company’s investment was $1.8 million, $1.1 million and $1.1 million, respectively (2018 — $1.8 million, $2.7 million and $1.6 million, respectively). The Company has determined it is not the primary beneficiary of this VIE, and therefore this entity has not been consolidated. In a prior year, the Company issued a convertible loan of $1.5 million to this entity with a term of three years with an annual effective interest rate of 5.0%. The instrument is classified as an available-for-sale investment due to certain features that allow for conversion to common stock in the entity in the event of certain triggers occurring.

In addition, the Company has an investment in preferred stock of another business venture of $1.5 million which meets the criteria for classification as a debt security under FASB ASC 320 and is recorded at a fair value of $nil at September 30, 2019 (December 31, 2018 — $nil).

Furthermore, the Company has an investment of $1.0 million (December 31, 2018 — $1.0 million) in the shares of an exchange traded fund. This investment is classified as an equity investment.

As at September 30, 2019, the Company held investments with a total value of $3.5 million in the preferred shares of enterprises which meet the criteria for classification as an equity security under FASB ASC 325, carried at historical cost, net of impairment charges. The carrying value of these equity security investments was $1.0 million at September 30, 2019 (December 31, 2018 — $1.0 million).

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. This investment is classified as an equity security under the FASB ASC 321, with a readily determinable market value through the Hong Kong Stock Exchange. The changes in fair value are recorded in the Change in fair value of equity investment line item in the Company’s condensed consolidated statement of operations. For the three and nine months ended September 30, 2019, the Company has recorded a net unrealized loss of $0.5 million and $2.5 million, respectively.

The total carrying value of investments in new business ventures, as at September 30, 2019 is $2.5 million (December 31, 2018 — $3.5 million) and is recorded in Other assets.

The investment in shares of an exchange traded fund and the investment in Maoyan are recorded in Investment in equity securities.