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Wiki	Wiki Summary
Risk factor	In epidemiology, a risk factor or determinant is a variable associated with an increased risk of disease or infection.: 38 Due to a lack of harmonization across disciplines, determinant, in its more widely accepted scientific meaning, is often used as a synonym. The main difference lies in the realm of practice: medicine (clinical practice) versus public health.
Risk factor (finance)	In finance, risk factors are the building blocks of investing, that help explain the systematic returns in equity market, and the possibility of losing money in investments or business adventures. A risk factor is a concept in finance theory such as the capital asset pricing model, arbitrage pricing theory and other theories that use pricing kernels.
Risk factors of schizophrenia	Risk factors of schizophrenia include many genetic and environmental phenomena. The prevailing model of schizophrenia is that of a special neurodevelopmental disorder with no precise boundary or single cause (i.e.
Suicide	Suicide is the act of intentionally causing one's own death. Mental disorders (including depression, bipolar disorder, autism spectrum disorders, schizophrenia, personality disorders, anxiety disorders), physical disorders (such as chronic fatigue syndrome), and substance use disorders (including alcohol use disorder and the use of and withdrawal from benzodiazepines) are risk factors.
Risk factors for genocide	The assessment of risk factors for genocide is an upstream mechanism for genocide prevention. The goal is to apply an assessment of risk factors to improve the predictive capability of the international community before the killing begins, and prevent it.
Colorectal cancer	Colorectal cancer (CRC), also known as bowel cancer, colon cancer, or rectal cancer, is the development of cancer from the colon or rectum (parts of the large intestine). Signs and symptoms may include blood in the stool, a change in bowel movements, weight loss, and fatigue.Most colorectal cancers are due to old age and lifestyle factors, with only a small number of cases due to underlying genetic disorders.
Risk management	Risk management is the identification, evaluation, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities.\nRisks can come from various sources including uncertainty in international markets, threats from project failures (at any phase in design, development, production, or sustaining of life-cycles), legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an adversary, or events of uncertain or unpredictable root-cause.
Enterprise risk management	Enterprise risk management (ERM) in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives (threats and opportunities), assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring process.
Arithmetic	Arithmetic (from Ancient Greek ἀριθμός (arithmós) 'number', and τική [τέχνη] (tikḗ [tékhnē]) 'art, craft') is an elementary part of mathematics that consists of the study of the properties of the traditional operations on numbers—addition, subtraction, multiplication, division, exponentiation, and extraction of roots. In the 19th century, Italian mathematician Giuseppe Peano formalized arithmetic with his Peano axioms, which are highly important to the field of mathematical logic today.
Operation Mincemeat	Operation Mincemeat was a successful British deception operation of the Second World War to disguise the 1943 Allied invasion of Sicily. Two members of British intelligence obtained the body of Glyndwr Michael, a tramp who died from eating rat poison, dressed him as an officer of the Royal Marines and placed personal items on him identifying him as the fictitious Captain (Acting Major) William Martin.
Bitwise operation	In computer programming, a bitwise operation operates on a bit string, a bit array or a binary numeral (considered as a bit string) at the level of its individual bits. It is a fast and simple action, basic to the higher-level arithmetic operations and directly supported by the processor.
Special Activities Center	The Special Activities Center (SAC) is a division of the Central Intelligence Agency responsible for covert operations and paramilitary operations. The unit was named Special Activities Division (SAD) prior to 2015.
Operations management	Operations management is an area of management concerned with designing and controlling the process of production and redesigning business operations in the production of goods or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed and effective in meeting customer requirements.
Operations research	Operations research (British English: operational research), often shortened to the initialism OR, is a discipline that deals with the development and application of advanced analytical methods to improve decision-making. It is sometimes considered to be a subfield of mathematical sciences.
Emergency operations center	An emergency operations center (EOC) is a central command and control facility responsible for carrying out the principles of emergency preparedness and emergency management, or disaster management functions at a strategic level during an emergency, and ensuring the continuity of operation of a company, political subdivision or other organization.\nAn EOC is responsible for strategic direction and operational decisions and does not normally directly control field assets, instead leaving tactical decisions to lower commands.
Surgery	Surgery is a medical or dental specialty that uses operative manual and instrumental techniques on a person to investigate or treat a pathological condition such as a disease or injury, to help improve bodily function, appearance, or to repair unwanted ruptured areas.\nThe act of performing surgery may be called a surgical procedure, operation, or simply "surgery".
Special operations	Special operations (S.O.) are military activities conducted, according to NATO, by "specially designated, organized, selected, trained, and equipped forces using unconventional techniques and modes of employment". Special operations may include reconnaissance, unconventional warfare, and counter-terrorism actions, and are typically conducted by small groups of highly-trained personnel, emphasizing sufficiency, stealth, speed, and tactical coordination, commonly known as "special forces".
RepRisk	RepRisk AG is an environmental, social, and corporate governance (ESG) data science company based in Zurich, Switzerland, specializing in ESG and business-conduct risk research, and quantitative solutions.The company runs an online due-diligence database that allows clients to monitor and assess the risk exposure of companies, infrastructure projects, sectors, and countries related to 28 ESG issues. The issues are mapped to the 10 principles of the UN Global Compact, the Sustainability Accounting Standards Board (SASB) Materiality Map, and the United Nations Sustainable Development Goals (SDGs).On a daily basis, RepRisk assesses ESG risks such as environmental degradation, human rights abuses, child labor, forced labor, fraud, and corruption that can impact an organization's reputation, financial profitability, or lead to compliance issues.
Financial risk	Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial loss and uncertainty about its extent.A science has evolved around managing market and financial risk under the general title of modern portfolio theory initiated by Dr.
Global catastrophic risk	A global catastrophic risk or a doomsday scenario is a hypothetical future event that could damage human well-being on a global scale, even endangering or destroying modern civilization. An event that could cause human extinction or permanently and drastically curtail humanity's potential is known as an "existential risk."Over the last two decades, a number of academic and non-profit organizations have been established to research global catastrophic and existential risks, formulate potential mitigation measures and either advocate for or implement these measures.
Chief risk officer	The chief risk officer (CRO) or chief risk management officer (CRMO) or chief risk and compliance officer (CRCO) of a firm or corporation is the executive accountable for enabling the efficient and effective governance of significant risks, and related opportunities, to a business and its various segments. Risks are commonly categorized as strategic, reputational, operational, financial, or compliance-related.
Debt	Death is the irreversible cessation of all biological functions that sustain an organism. Brain death is sometimes used as a legal definition of death.
Bond (finance)	In finance, a bond is a type of security under which the issuer (debtor) owes the holder (creditor) a debt, and is obliged – depending on the terms – to repay the principal (i.e. amount borrowed) of the bond at the maturity date as well as interest (called the coupon) over a specified amount of time.
List of most indebted companies	The following article lists the indebted companies in the world by total corporate debt according estimates by the British-Australian investment firm Janus Henderson. In 2019, the total debt of the 900 most indebted companies was $8,325 billion.
Heavily indebted poor countries	The heavily indebted poor countries (HIPC) are a group of 39 developing countries with high levels of poverty and debt overhang which are eligible for special assistance from the International Monetary Fund (IMF) and the World Bank.\n\n\n== HIPC Initiative ==\nThe HIPC Initiative was initiated by the International Monetary Fund and the World Bank in 1996, following extensive lobbying by NGOs and other bodies.
United States Treasury security	United States Treasury securities, also called Treasuries or Treasurys, are government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Since 2012, U.S. government debt has been managed by the Bureau of the Fiscal Service, succeeding the Bureau of the Public Debt.
Cancellation of Debt Income	Taxpayers in the United States may have tax consequences when debt is cancelled. This is commonly known as COD (Cancellation of Debt) Income.
Gratitude	Gratitude, thankfulness or gratefulness, from the Latin word gratus, meaning "pleasing" or "thankful", is regarded as a feeling of appreciation (or similar positive response) by a recipient of another's kindness, gifts, help, favours, or other form of generosity to the giver of such gifts.\nHistorically, gratitude has been a part of several world religions.
Abby Elliott	Abby Elliott is an American actress and comedian who was a cast member on Saturday Night Live from 2008 to 2012 and has since starred on the Bravo comedy Odd Mom Out and the NBC sitcom Indebted. She is the daughter of actor/comedian Chris Elliott.
Holding company	A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself.
East India Company	The East India Company (EIC) was an English, and later British, joint-stock company founded in 1600. It was formed to trade in the Indian Ocean region, initially with the East Indies (the Indian subcontinent and Southeast Asia), and later with East Asia.
The Walt Disney Company	The Walt Disney Company, commonly known as Disney (), is an American multinational mass media and entertainment conglomerate headquartered at the Walt Disney Studios complex in Burbank, California.\nDisney was originally founded on October 16, 1923, by brothers Walt and Roy O. Disney as the Disney Brothers Cartoon Studio; it also operated under the names the Walt Disney Studio and Walt Disney Productions before changing its name to the Walt Disney Company in 1986.
The Honest Company	The Honest Company, Inc. is an American consumer goods company, founded by actress Jessica Alba.
The Longaberger Company	The Longaberger Company is an American manufacturer and distributor of handcrafted maple wood baskets and other home and lifestyle products. The company opened in 1973, was acquired in 2013 by CVSL, Inc., and closed in 2018.
Movie theater	A movie theater (American English), cinema (British English), or cinema hall (Indian English), also known as a picture house, the pictures, picture theater, the silver screen, the big screen or the movies, is a building that contains auditoria for viewing films (also called movies) for entertainment. Most, but not all, theaters are commercial operations catering to the general public, who attend by purchasing a ticket.

Risk Factors
IMAX CORP Item 1A Risk Factors
14 ITEM 1A RISK FACTORS If any of the risks described below occurs, the Companyapstas business, operating results and financial condition could be materially adversely affected
The risks described below are not the only ones the Company faces
Additional risks not presently known to the Company or that it deems immaterial, may also impair its business or operations
Page 14 IMAX CORPORATION ITEM 1A RISK FACTORS (cont &apos d) RISKS RELATED TO THE COMPANY &apos S FINANCIAL PERFORMANCE OR CONDITION THE COMPANY IS HIGHLY LEVERAGED, AND THIS IMPAIRS ITS ABILITY TO OBTAIN FINANCING AND LIMITS CASH FLOW AVAILABLE FOR ITS OPERATIONS The Company is highly leveraged
As at December 31, 2005, its total long-term indebtedness was dlra160dtta0 million
At December 31, 2005, the Companyapstas shareholders &apos deficiency was dlra23dtta0 million
The Companyapstas high leverage has important possible consequences
It may: - make it more difficult for the Company to satisfy its financial obligations; - limit its ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes; - require the Company to dedicate all or a substantial portion of its cash flow from operations to the payment of principal and interest on its indebtedness, resulting in less cash available for its operations and other purposes; - limit its ability to rapidly adjust to changing market conditions; and - increase its vulnerability to downturns in its business or in general economic conditions
The Companyapstas ability to satisfy its obligations and to reduce its total debt depends on its future operating performance
The Companyapstas future operating performance is subject to many factors, including economic, financial and competitive factors, which may be beyond its control
As a result, it may not be able to generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet these obligations or to execute its business strategy successfully
THE COMPANY MAY STILL BE ABLE TO INCUR MORE INDEBTEDNESS, WHICH COULD FURTHER EXACERBATE THE RISKS ASSOCIATED WITH ITS EXISTING INDEBTEDNESS The Company may be able to incur substantial additional indebtedness in the future
Although the agreements governing the indebtedness contain restrictions on the incurrence of additional indebtedness, debt incurred in compliance with these restrictions could be substantial
If additional indebtedness is added to its current indebtedness levels, the related risks that the Company faces would be magnified
THE COMPANY MAY NOT GENERATE CASH FLOW SUFFICIENT TO SERVICE ALL OF ITS OBLIGATIONS The Companyapstas ability to make payments on and to refinance its indebtedness and to fund its operations, working capital and capital expenditures, depends on its ability to generate cash in the future
The Companyapstas cash flow is subject to general economic, industry, financial, competitive, operating, regulatory and other factors, many of which are beyond its control
The Companyapstas business may not generate cash flow in an amount sufficient to enable it to repay its indebtedness or to fund its other liquidity needs
THE AGREEMENTS GOVERNING THE COMPANY &apos S INDEBTEDNESS CONTAIN SIGNIFICANT RESTRICTIONS THAT LIMIT ITS OPERATING AND FINANCIAL FLEXIBILITY The indenture governing the Companyapstas indebtedness including the agreement governing its credit facility contains covenants that, among other things, limit its ability to: - incur additional indebtedness; - pay dividends and make distributions; - repurchase stock; - make certain investments; - transfer or sell assets; - create liens; - enter into transactions with affiliates; - issue or sell stock of subsidiaries; - create dividend or other payment restrictions affecting restricted subsidiaries; and - merge, consolidate, amalgamate or sell all or substantially all of its assets to another person
Page 15 IMAX CORPORATION ITEM 1A RISK FACTORS (cont &apos d) RISKS RELATED TO THE COMPANY &apos S FINANCIAL PERFORMANCE OR CONDITION (cont &apos d) THE AGREEMENTS GOVERNING THE COMPANY &apos S INDEBTEDNESS CONTAIN SIGNIFICANT RESTRICTIONS THAT LIMIT ITS OPERATING AND FINANCIAL FLEXIBILITY (cont &apos d) These restrictions may limit the Companyapstas ability to execute its business strategy
Moreover, if operating results fall below current levels, the Company may be unable to comply with these covenants
If that occurs, the Companyapstas lenders could accelerate its indebtedness
CERTAIN BANKRUPTCY AND INSOLVENCY LAWS MAY IMPAIR A CREDITOR &apos S ABILITY TO ENFORCE REMEDIES IN AN INSOLVENCY The Company is incorporated under the laws of Canada, and substantially all of its assets are located in Canada
Under bankruptcy laws in the United States, courts typically have jurisdiction over a debtorapstas property, wherever located, including property situated in other countries
There can be no assurance, however, that courts outside the United States would recognize the US bankruptcy courtapstas jurisdiction
Accordingly, difficulties may arise in administering a US bankruptcy case involving a Canadian company like the Company with property located outside the United States, and any orders or judgments of a bankruptcy court in the United States may not be enforceable in Canada against the Company
The rights of a creditor to enforce remedies may be significantly impaired by the restructuring provisions of applicable Canadian federal bankruptcy, insolvency and other restructuring legislation if the benefit of such legislation is sought with respect to the Company
For example, both the Bankruptcy and Insolvency Act (Canada) and the Companies &apos Creditors Arrangement Act (Canada) contain provisions enabling an &quote insolvent person &quote to obtain a stay of proceeding as against its creditors and others and to prepare and file a proposal for consideration by all or some of its creditors to be voted on by the various classes of its creditors
Moreover, this legislation permits, in certain circumstances, an insolvent debtor to retain possession and administration of its property, even though it may be in default under the applicable debt instrument
RISKS RELATED TO THE COMPANY &apos S BUSINESS THE COMPANY &apos S THEATER SYSTEM REVENUE CAN VARY SIGNIFICANTLY FROM ITS CASH FLOWS UNDER THEATER SYSTEM SALES AND LEASE AGREEMENTS The Companyapstas theater system revenue can vary significantly from the associated cash flows
The Company generally provides its theater systems to customers on a long-term lease basis with initial lease terms of typically 10 to 20 years
The Companyapstas lease agreements typically provide for three major sources of cash flow: - initial rental fees, which are paid in installments commencing upon the signing of the lease agreement until installation of the system; - ongoing rental payments, which are paid monthly after system installation and are generally equal to the greater of a fixed minimum amount per annum and a percentage of box office receipts; and - annual maintenance fees, which are generally payable commencing in the second year of theater operations
Initial rental payments generally make up a majority of cash received for a theater system lease
Theater system leases that transfer substantially all of the benefits and risks of ownership to customers are classified as sales-type leases
Revenue from sales-type leases is recorded at the time installation is complete and other revenue recognition conditions are satisfied
The revenue recorded is equal to the sum of initial rental payments and the present value of minimum additional rental fees due under the lease agreement
Cash received from initial rental fees in advance of installation is recorded as deferred revenue
Leases that do not transfer substantially all of the benefits and risks of ownership to the customer are classified as operating leases
For these leases, initial rental fees and minimum ongoing rental payments are recognized as revenue on a straight-line basis over the lease term
Periodically, the Company sells its theater systems to customers
These sales generally provide for initial cash receipts and the receipt of payments over time, typically 10 to 20 years
Page 16 IMAX CORPORATION ITEM 1A RISK FACTORS (cont &apos d) RISKS RELATED TO THE COMPANY &apos S BUSINESS (cont &apos d) THERE IS COLLECTION RISK ASSOCIATED WITH LEASE PAYMENTS TO BE RECEIVED OVER THE TERMS OF THE COMPANY &apos S THEATER SYSTEM LEASES The Company is dependent in part on the viability of its customers for collections under long-term leases
The Company cannot assure that exhibitors or other operators to whom it leases theater systems will not experience financial difficulties in the future
The Company may not collect all of its contracted future lease payments
The Companyapstas revenue can vary significantly from its cash flows under theater system sales and lease agreements, and there is collection risk associated with rental payments to be received over the terms of its leases
THE COMPANY MAY NOT CONVERT ALL OF ITS BACKLOG INTO REVENUE AND CASH FLOWS The Company lists signed contracts for theater system sales and sales-type leases as sales backlog prior to the time of revenue recognition
Sales backlog represents the total value of all signed system sales and lease agreements that are expected to be recognized as revenue in the future and includes initial rental fees along with the present value of contractual minimum rents due over the lease term, but excludes maintenance revenues as well as rents in excess of contractual minimums that might be received in the future
All of the Companyapstas customers with which it has signed contracts may not accept delivery of theater systems that are included in the Companyapstas backlog
Moreover, if the Company litigates to enforce a customerapstas contractual obligations, there are no guarantees that such obligations will ultimately be deemed to be enforceable
This could adversely affect the Companyapstas future revenues
In addition, customers with system obligations in backlog sometimes request that the Company agree to modify or reduce such obligations
The Company has in the past, under certain circumstances, restructured backlog obligations of certain customers
The backlog obligations of other customers may also be modified, reduced or otherwise restructured in the future, which can adversely affect the Companyapstas future revenues and cash flows
THE COMPANY DEPENDS ON COMMERCIAL MOVIE EXHIBITORS TO LEASE ITS IMAX THEATER SYSTEMS AND TO PROVIDE ADDITIONAL REVENUES AND VENUES IN WHICH TO EXHIBIT ITS IMAX DMR FILMS A number of its commercial exhibition customers emerged from bankruptcy protection in recent years
The Company is unable to predict if or when they or other exhibitors will lease or continue to lease IMAX theater systems from the Company or whether other commercial movie exhibitors will experience significant financial difficulties in the future
If exhibitors choose to reduce their levels of expansion or decide not to lease IMAX theater systems for their existing or new theaters, the Companyapstas revenues would not increase at an anticipated rate and motion picture studios may be less willing to reformat Hollywood 35mm films into the Companyapstas 15/70 film format for exhibition in commercial IMAX theaters
As a result, the Companyapstas future revenues could be adversely affected
THE COMPANY &apos S OPERATING RESULTS AND CASH FLOW CAN VARY SUBSTANTIALLY FROM QUARTER TO QUARTER AND COULD INCREASE THE VOLATILITY OF ITS SHARE PRICE The Companyapstas operating results and cash flow can fluctuate substantially from quarter to quarter
In particular, fluctuations in theater system installations can materially affect operating results
Factors that have affected the Companyapstas operating results and cash flow in the past, and are likely to affect its operating results and cash flow in the future include, among other things: - the timing of signing and installation of new theater systems; - demand for, and acceptance of, its products and services; - revenue recognition of sales and sales-type leases; - classification of leases as sales-type versus operating leases; - volume of orders received and that can be fulfilled in the quarter; - the level of its sales backlog; - the timing and commercial success of films produced and distributed by the Company and others; - the signing of film distribution agreements; - the financial performance of IMAX theaters operated by the Companyapstas customers and by the Company; and - the financial difficulties, including bankruptcies, faced by customers, particularly customers in the commercial exhibition industry
Page 17 IMAX CORPORATION ITEM 1A RISK FACTORS (cont &apos d) RISKS RELATED TO THE COMPANY &apos S BUSINESS (cont &apos d) THE COMPANY &apos S OPERATING RESULTS AND CASH FLOW CAN VARY SUBSTANTIALLY FROM QUARTER TO QUARTER AND COULD INCREASE THE VOLATILITY OF ITS SHARE PRICE (cont &apos d) Most of the Companyapstas operating expenses are fixed in the short term
The Company may be unable to rapidly adjust its spending to compensate for any unexpected sales shortfall, which would harm quarterly operating results
The results of any quarterly period are not necessarily indicative of its results for any other quarter or for a full fiscal year
THE COMPANY MAY NOT BE ABLE TO GENERATE PROFITS IN THE FUTURE The Company may not be able to generate profits in any future period
If the Company does not generate profits in future periods, it may be unable to finance the operations of its business or meet its debt obligations
THE SUCCESS OF THE IMAX THEATER NETWORK IS DIRECTLY RELATED TO THE AVAILABILITY AND SUCCESS OF 15/70 FORMAT FILMS, PARTICULARLY IMAX DMR FILMS An important factor affecting the growth and success of the IMAX theater network is the availability of 15/70 format films
The Company produces only a small number of 15/70 format films and, as a result, the Company relies principally on 15/70 format films produced by third party filmmakers and studios, particularly those converted from 35mm format using the Companyapstas IMAX DMR technology
There are no guarantees that these filmmakers and studios will continue to release 15/70 or IMAX DMR films, or that the 15/70 format films they produce will be commercially successful
THE COMPANY &apos S REVENUES FROM EXISTING CUSTOMERS ARE DERIVED IN PART FROM FINANCIAL REPORTING PROVIDED BY ITS CUSTOMERS, WHICH MAY BE INACCURATE OR INCOMPLETE, RESULTING IN LOST OR DELAYED REVENUES A portion of the Companyapstas lease payments and its film license fees are based upon financial reporting provided by its customers
If such reporting is inaccurate, incomplete or withheld, the Companyapstas ability to invoice and receive the proper amount from its customers in a timely fashion will be impaired
The Companyapstas contractual audits may not rectify payments lost or delayed as a result of customers not fulfilling their contractual requirements with respect to financial reporting
THE COMPANY CONDUCTS BUSINESS INTERNATIONALLY WHICH EXPOSES IT TO UNCERTAINTIES AND RISKS THAT COULD NEGATIVELY AFFECT ITS OPERATIONS AND SALES A significant portion of the Companyapstas sales are made to customers located outside the United States and Canada
Approximately 44prca, 43prca and 40prca of its revenues were derived outside of the United States and Canada in 2005, 2004 and 2003, respectively
The Company expects its international operations to continue to account for a significant portion of its revenues in the future and plan to expand into new markets in the future
The Company does not have significant experience in operating in certain foreign countries and are subject to the risks associated with operating in those countries
The Company currently has installation and sales activity projected in countries where economies have been unstable in recent years
The economies of other foreign countries important to the Companyapstas operations could also suffer slower economic growth or instability in the future
The following are among the risks that could negatively affect the Companyapstas operations and sales in foreign markets: Page 18 IMAX CORPORATION ITEM 1A RISK FACTORS (cont &apos d) RISKS RELATED TO THE COMPANY &apos S BUSINESS (cont &apos d) THE COMPANY CONDUCTS BUSINESS INTERNATIONALLY WHICH EXPOSES IT TO UNCERTAINTIES AND RISKS THAT COULD NEGATIVELY AFFECT ITS OPERATIONS AND SALES (cont &apos d) - new restrictions on access to markets; - unusual or burdensome foreign laws or regulatory requirements or unexpected changes to those laws or requirements; - fluctuations in the value of foreign currency versus the US dollar and potential currency devaluations; - new tariffs, trade protection measures, import or export licensing requirements, trade embargoes and other trade barriers; - imposition of foreign exchange controls in such foreign jurisdictions; - dependence on foreign distributors and their sales channels; - difficulties in staffing and managing foreign operations; - adverse changes in monetary and/or tax policies; - poor recognition of intellectual property rights; - inflation; - requirements to provide performance bonds and letters of credit to international customers to secure system deliveries; and - political, economic and social instability in foreign countries
THE COMPANY FACES RISKS IN CONNECTION WITH THE CONTINUED EXPANSION OF ITS BUSINESS IN CHINA AND OTHER PARTS OF ASIA The first IMAX projection system in a theater in China was installed in December 2001 and 13 additional IMAX theater systems are scheduled to be installed in China by 2008
China is now the Companyapstas second largest and fastest growing market
However, the geopolitical instability of the region comprising China, Taiwan, North Korea and South Korea could result in economic embargoes, disruptions in shipping or even military hostilities, which could interfere with both the fulfillment of the Companyapstas existing contracts and its pursuit of additional contracts in China
THE INTRODUCTION OF NEW PRODUCTS AND TECHNOLOGIES AND CHANGES IN THE WAY THE COMPANY &apos S COMPETITORS OPERATE COULD HARM THE COMPANY &apos S BUSINESS The out-of-home entertainment industry is very competitive, and the Company faces a number of challenges
The Company competes with other large-format film projection system manufacturers as well as, indirectly, conventional motion picture exhibitors
In addition to existing competitors, the Company may also face competition in the future from companies in the entertainment industry with new technologies and/or substantially greater capital resources
The Company also faces competition from a number of alternative motion picture distribution channels such as home video, pay-per-view, video-on-demand, DVD, and syndicated and broadcast television
The Company also competes for the publicapstas leisure time and disposable income with other forms of entertainment, including sporting events, concerts, live theater and restaurants
Furthermore, the out-of-home entertainment industry in general is undergoing significant changes
Primarily due to technological developments and changing consumer tastes, numerous companies are developing, and are expected to continue to develop, new entertainment products for the out-of-home entertainment industry, which may compete directly with the Companyapstas products
Competitors may design products which are more attractive to the consumer and/or more cost effective than the Companyapstas and may make its products less competitive
The products that the Company is currently developing may never be attractive to consumers or be competitive
As a result of this competition, the Company could lose market share as demand for its products declines, which could seriously harm its business and operating results
The motion picture exhibition industry is in the early stages of conversion from film based media to electronic based media
The Company is similarly in the very early stages of developing a digital projection system that can be utilized in IMAX theaters
Such risks could include the need for the Company to raise additional capital to finance remanufacturing of theater systems and associated conversion costs, which capital may not be available to the Company on attractive terms, or at all
Page 19 IMAX CORPORATION ITEM 1A RISK FACTORS (cont &apos d) RISKS RELATED TO THE COMPANY &apos S BUSINESS (cont &apos d) AN ECONOMIC DOWNTURN COULD MATERIALLY AFFECT THE COMPANY &apos S BUSINESS BY REDUCING DEMAND FOR IMAX THEATER SYSTEMS AND REVENUE GENERATED FROM BOX OFFICE SALES The Company depends on the sale and lease of IMAX theater systems to commercial movie exhibitors to generate a significant portion of its revenues
Most of the Companyapstas lease agreements provide for additional revenues based on a percentage of theater box office receipts when attendance at an IMAX theater exceeds a minimum threshold
Commercial movie exhibitors generate revenues from consumer attendance at their theaters, which are subject to general political, social and economic conditions and the willingness of consumers to spend discretionary money at movie theaters
If there is a prolonged economic downturn, commercial movie exhibitors could be less willing to invest capital in new theaters resulting in a decline in demand for new IMAX theater systems
In addition, any decline in attendance at commercial IMAX theaters will reduce the additional revenues the Company generates from a percentage of theater box office receipts
Institutional exhibitors may also experience a decline in attendance given general political, social and economic conditions, which may result in reduced revenues generated from receipts attributed to IMAX theaters at such institutions and reduced film license fees
THE COMPANY MAY EXPERIENCE ADVERSE EFFECTS DUE TO EXCHANGE RATE FLUCTUATIONS A substantial portion of the Companyapstas revenues is denominated in US dollars, while a substantial portion of its expenses is denominated in Canadian dollars
The Company also generates revenues in Euros and Japanese Yen
From time to time, the Company enters into forward contracts to hedge its exposure to exchange rate fluctuations
However, the Companyapstas strategy may not be successful in reducing its exposure to these fluctuations
Any material increase in the value of the Canadian dollar in relation to the US dollar compared to historical levels could have a material adverse effect on its operating results
THE COMPANY IS SUBJECT TO IMPAIRMENT LOSSES ON ITS ASSETS The Company amortizes its film assets using the individual film forecast method whereby the costs of film assets are amortized and participation costs are accrued for each film in the ratio of revenues earned in the current period to managementapstas estimate of total revenues ultimately expected to be received for that title
Management regularly reviews and revises when necessary its estimates of ultimate revenues on a title-by-title basis, which may result in a change in the rate of amortization of the film assets and write-downs to film assets
Results of operations in future years depend upon the amortization of the Companyapstas film assets and may be significantly affected by periodic adjustments in amortization rates
IF THE COMPANY &apos S GOODWILL OR AMORTIZABLE INTANGIBLE ASSETS BECOME IMPAIRED THE COMPANY MAY BE REQUIRED TO RECORD A SIGNIFICANT CHARGE TO EARNINGS Under United States Generally Accepted Accounting Principles ( &quote US GAAP &quote ), the Company reviews its amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable
Goodwill is required to be tested for impairment at least annually
Factors that may be considered a change in circumstances indicating that the carrying value of the Companyapstas goodwill or amortizable intangible assets may not be recoverable include a decline in stock price and market capitalization, future cash flows, and slower growth rates in Companyapstas the industry
The Company may be required to record a significant charge to earnings in its financial statements during the period in which any impairment of its goodwill or amortizable intangible assets is determined resulting in an impact on the Companyapstas results of operations
Page 20 IMAX CORPORATION ITEM 1A RISK FACTORS (cont &apos d) RISKS RELATED TO THE COMPANY &apos S BUSINESS (cont &apos d) CHANGES IN ACCOUNTING AND CHANGES IN MANAGEMENT &apos S ESTIMATES MAY AFFECT THE COMPANY &apos S REPORTED EARNINGS AND OPERATING INCOME US GAAP and accompanying accounting pronouncements, implementation guidelines and interpretations for many aspects of the Companyapstas business, such as revenue recognition, multiple element arrangements, film accounting, accounting for pensions, accounting for income taxes, and treatment of goodwill or amortizable intangible assets, are highly complex and involve subjective judgments
Changes in these rules, their interpretation, managementapstas estimates, or changes in the Companyapstas products or business could significantly change its reported earnings and operating income and could add significant volatility to those measures, without a comparable underlying change in cash flow from operations
THE COMPANY RELIES ON ITS KEY PERSONNEL, AND THE LOSS OF ONE OR MORE OF THOSE PERSONNEL COULD HARM ITS ABILITY TO CARRY OUT ITS BUSINESS STRATEGY The Companyapstas operations and prospects depend in large part on the performance and continued service of its senior management team
The Company may not find qualified replacements for any of these individuals if their services are no longer available
The loss of the services of one or more members of the Companyapstas senior management team could adversely affect its ability to effectively pursue its business strategy
THE COMPANY &apos S ABILITY TO ADEQUATELY PROTECT ITS INTELLECTUAL PROPERTY IS LIMITED, AND COMPETITORS MAY MISAPPROPRIATE ITS TECHNOLOGY, WHICH COULD WEAKEN ITS COMPETITIVE POSITION The Company depends on its proprietary knowledge regarding IMAX theater systems and film technology
The Company relies principally upon a combination of copyright, trademark, patent and trade secret laws, restrictions on disclosures and contractual provisions to protect its proprietary and intellectual property rights
These laws and procedures may not be adequate to prevent unauthorized parties from attempting to copy or otherwise obtain the Companyapstas processes and technology or deter others from developing similar processes or technology, which could weaken the Companyapstas competitive position
The protection provided to the Companyapstas proprietary technology by the laws of foreign jurisdictions may not protect it as fully as the laws of Canada or the United States
Some of the underlying technologies of the Companyapstas products and systems are not covered by patents or patent applications
The Company has patents issued, provisional patents and patent applications pending, including those pending for its digital conversion technology, IMAX DMR and new projection system technology, IMAX MPX The Companyapstas patents are filed in the United States often with corresponding patents or filed applications in other jurisdictions, such as Canada, Japan, Korea, France, Germany and the United Kingdom
The patents may not be issued or provide the Company with any competitive advantages
The patent applications may also be challenged by third parties
Several of the Companyapstas issued patents in the United States, Canada and Japan for improvements to IMAX projection systems, IMAX 3D Dome and sound systems expire between 2008 and 2020
Any claims or litigation initiated by the Company to protect its proprietary technology could be time consuming, costly and divert the attention of its technical and management resources
Page 21 IMAX CORPORATION ITEM 1A RISK FACTORS (cont &apos d) RISKS RELATED TO THE COMPANY &apos S BUSINESS (cont &apos d) THE COMPANY IS SUBJECT TO LAWSUITS THAT COULD DIVERT ITS RESOURCES AND RESULT IN THE PAYMENT OF SUBSTANTIAL DAMAGES The Companyapstas industry is characterized by frequent claims and related litigation regarding breach of contract and related issues
The Company is subject to a number of legal proceedings and claims that arise in the ordinary course of its business
The Company cannot assure that it will succeed in defending any claims, that judgments will not be entered against it with respect to any litigation or that reserves the Company may set aside will be adequate to cover any such judgments
If any of these actions or proceedings against the Company is successful, it may be subject to significant damages awards
The Company is incurring significant legal fees in prosecuting these lawsuits, and it may not ultimately prevail in such lawsuits or be able to collect on such judgments if it does
In addition, the defense and prosecution of these claims divert the attention of the Companyapstas management and other personnel for significant periods of time
As the largest manufacturer of large-format theater projection systems in the world, the Company has been the subject of anti-trust complaints and investigations in the past
The Company may be unsuccessful in defeating potential claims against it, and it may be sued or investigated on similar grounds in the future
BECAUSE THE COMPANY IS INCORPORATED IN CANADA, IT MAY BE DIFFICULT FOR PLAINTIFFS TO ENFORCE AGAINST THE COMPANY LIABILITIES BASED SOLELY UPON US FEDERAL SECURITIES LAWS The Company is incorporated under the federal laws of Canada, some of its directors and officers are residents of Canada and a substantial portion of its assets and the assets of such directors and officers are located outside the United States
As a result, it may be difficult for United States &apos plaintiffs to effect service within the United States upon those directors or officers who are not residents of the United States, or to realize against them or the Company in the United States upon judgments of courts of the United States predicated upon the civil liability under the United States federal securities laws
In addition, it may be difficult for plaintiffs to bring an original action outside of the United States against the Company to enforce liabilities based solely on US federal securities laws