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

The carrying values of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued 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 at September 30, 2020						As at December 31, 2019
	Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value
Level 1
Cash and cash equivalents⁽¹⁾	$	305,197		$	305,197		$	109,484		$	109,484
Equity securities⁽³⁾		14,803			14,803			15,685			15,685
Level 2
Net financed sales receivables⁽²⁾	$	109,645		$	110,443		$	112,432		$	111,441
Net investment in sales-type leases⁽²⁾		17,095			16,829			15,606			15,309
Convertible loan receivable⁽²⁾		—			—			1,500			1,500
Equity securities⁽¹⁾		1,000			1,000			1,000			1,000
COLI⁽⁴⁾		3,125			3,125			3,150			3,150
Foreign exchange contracts — designated forwards⁽³⁾		380			380			530			530
Foreign exchange contracts — non-designated forwards⁽³⁾		102			102			—			—
Bank indebtedness - under the Working Capital Facility⁽¹⁾		(253	)		(253	)		—			—
Bank indebtedness - under the Credit Facility⁽¹⁾		(300,000	)		(300,000	)		(20,000	)		(20,000	)

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, 2020 and 2019.

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 82 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, 2020 (the “Foreign Currency Hedges”), with settlement dates throughout 2020 and 2021. Foreign currency derivatives are recognized and measured in the Condensed Consolidated Balance Sheets 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 inventories. 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 inventories, the effective portion of the gain or loss in a hedge of a forecasted transaction is reported in Other Comprehensive Income and reclassified to Inventories in the Condensed Consolidated Balance Sheets when the forecasted transaction occurs. Any ineffective portion is recognized immediately in the Condensed Consolidated Statement of Operations.

On April 28, 2020, the FASB staff issued a question-and-answer document (Q&A) to respond to frequently asked questions about the disruptive effects of COVID-19 on cash flow hedge accounting. FASB Accounting Standards Codification Topic 815, Derivative and Hedging, provides guidance on when to discontinue cash flow hedge accounting and when and how to reclassify amounts deferred in accumulated other comprehensive income (AOCI) to earnings. The Q&A document addresses how the postponement or cancellation of forecasted transactions related to the effects of the COVID-19 pandemic should be considered when applying cash flow hedge accounting under Topic 815. The Company has considered the Q&A document when applying cash hedge flow accounting under Topic 815. The guidance did not have a material impact to the Company’s Condensed Consolidated Financial Statements.

The following tabular disclosures reflect the impact that derivative instruments and hedging activities have on the Company’s Condensed Consolidated Financial Statements:

	September 30,		December 31,
	2020		2019
Derivatives designated as hedging instruments:
Foreign exchange contracts — Forwards	$	36,659		36,052
Derivatives not designated as hedging instruments:
Foreign exchange contracts — Forwards		3,579		—
	$	40,238	$	36,052

		September 30,			December 31,
	Balance Sheet Location	2020			2019
Derivatives designated as hedging instruments:
Foreign exchange contracts — Forwards	Other assets	$	465		$	602
	Accrued and other liabilities		(85	)		(72	)
Derivatives not designated as hedging instruments:
Foreign exchange contracts — Forwards	Other assets		107			—
	Accrued and other liabilities		(5	)		—
		$	482		$	530

		Three Months Ended September 30,						Nine Months Ended September 30,
		2020			2019			2020			2019
Foreign exchange contracts	Derivative Gain (Loss)
— Forwards	Recognized in OCI
	(Effective Portion)	$	591		$	(527	)	$	(935	)	$	(162	)

	Location of Derivative Loss
	Reclassified from AOCI	Three Months Ended September 30,						Nine months ended September 30,
	(Effective Portion)	2020			2019			2020			2019
Foreign exchange contracts	Selling, general and
— Forwards	administrative expenses	$	(110	)	$	(322	)	$	(779	)		(983	)
	Property, plant and equipment		—			—			—			(32	)
	Inventory		—			—		$	(26	)		—
		$	(110	)	$	(322	)	$	(805	)	$	(1,015	)

		Three Months Ended September 30,				Nine months ended September 30,
		2020		2019		2020			2019
Foreign exchange contracts	Derivative Gain (Loss) Recognized In
— Forwards	and Out of OCI	$	—	$	2	$	(55	)	$	2

		Three Months Ended September 30,				Nine months ended September 30,
	Location of Derivative Gain	2020		2019		2020		2019
Foreign exchange contracts	Selling, general and
— Forwards	administrative expenses	$	75	$	—	$	102		—
		$	75	$	—	$	102	$	—

The Company's estimated net amount of the existing gains as at September 30, 2020 is $0.5 million, which is expected to be reclassified to earnings within the next twelve months.

As at September 30, 2020, the Condensed Consolidated Balance Sheets includes $14.8 million (December 31, 2019 — $15.7 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. This investment is classified as an equity security, with a readily determinable market value through the Hong Kong Stock Exchange. The changes in fair value are recorded in Gain (Loss) in Fair Value of Investment in the Company’s Condensed Consolidated Statement of Operations. As at September 30, 2020, the value of the Company’s investment in Maoyan was $13.7 million (December 31, 2019 — $14.6 million). For the three and nine months ended September 30, 2020, the Company has recorded a net unrealized gain of $1.6 million and a net unrealized loss of $0.9 million, respectively (2019— unrealized losses of $0.5 million and $2.5 million, respectively).

The Company has an investment of $1.1 million (December 31, 2019 — $1.0 million) in the shares of an exchange traded fund. This investment is classified as an equity investment.

As at September 30, 2020, the Company held investments 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, 2020 (December 31, 2019 — $1.0 million) and is recorded in Other Assets.