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Receivables | 6 Months Ended
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Jun. 30, 2023
Receivables [Abstract] |
Receivables | 3. Receivables The ability of the Company to collect its receivables is principally dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions. Theater operators, or other customers, may experience financial difficulties that could result in them being unable to fulfill their payment obligations to the Company. In order to mitigate the credit risk associated with its receivables, management performs an initial credit evaluation prior to entering into an arrangement with a customer and then regularly monitors the credit quality of each customer through an analysis of collections history and aging. This monitoring process includes meetings on at least a monthly basis to identify credit concerns and potential changes in credit quality classification. A customer may improve their credit quality classification once a substantial payment is made on an overdue balance or when the customer has agreed to a payment plan and payments have commenced in accordance with that plan. Changes in credit quality classification are dependent upon management approval. The Company’s internal credit quality classifications for theater operators are as follows: • Good Standing — The theater operator continues to be in good standing as payments and reporting are received on a regular basis. • Credit Watch — The theater operator has demonstrated a delay in payments, but continues to be in active communication with the Company. Theater operators placed on Credit Watch are subject to enhanced monitoring. In addition, depending on the size of the outstanding balance, length of time in arrears, and other factors, future transactions may need to be approved by management. These receivables are in better condition than those in the Pre-Approved Transactions Only category, but are not in as good condition as the receivables in the Good Standing category. • Pre-Approved Transactions Only — The theater operator has demonstrated a delay in payments with little or no communication with the Company. All services and shipments to the theater operator must be reviewed and approved by management. These receivables are in better condition than those in the All Transactions Suspended category, but are not in as good condition as the receivables in the Credit Watch category. In certain situations, a theater operator may be placed on nonaccrual status and all revenue recognition related to the theater may be suspended, including the accretion of Finance Income for Financing Receivables. • All Transactions Suspended — The theater operator is severely delinquent, non-responsive or not negotiating in good faith with the Company. Once a theater operator is classified within the All Transactions Suspended category, the theater is placed on nonaccrual status and all revenue recognitions related to the theater are suspended, including the accretion of Finance Income for Financing Receivables. During the period when the accretion of Finance Income is suspended for Financing Receivables, any payments received from a customer are applied against the outstanding balance owed. If payments are sufficient to cover any unreserved receivables, a reversal of the provision is recorded to the extent of the residual cash received. Once the collectability issues are resolved and the customer has returned to being in good standing, the Company will resume recognition of Finance Income. When a customer’s aging exceeds 90 days, the Company’s policy is to perform an enhanced review to assess collectability of the theater’s past due accounts. The over 90 days past due category may be an indicator of potential impairment as up to 90 days outstanding is considered to be a reasonable time to resolve any issues. The Company develops an estimate of expected credit losses by class of receivable and customer type through a calculation that utilizes historical loss rates, which are then adjusted for specific receivables that are judged to have a higher-than-normal risk profile after considering management’s internal credit quality classifications. Additional credit loss provisions are also recorded taking into account macro-economic and industry risk factors. The write-off of any billed receivable balance requires the approval of management. Commencing in March 2022, in response to numerous sanctions imposed by the United States, Canada and the European Union on companies transacting in Russia and Belarus resulting from ongoing conflict between Russia and Ukraine, the Company suspended its operations in Russia and Belarus. In the first quarter of 2022, the Company recorded provisions for potential credit losses against substantially all of its receivables in Russia due to uncertainties associated with the ongoing conflict and resulting sanctions. These receivables relate to existing sale agreements as the Company is not party to any joint revenue sharing arrangements in these countries. In addition, beginning in the first quarter of 2022, exhibitors in Russia, Ukraine, and Belarus were placed on nonaccrual status for maintenance revenue and finance income. Beginning in the second quarter of 2023, due to the resumption of operations throughout Ukraine’s theatrical exhibition industry, as evidenced by the reopening of all eight IMAX Systems in Ukraine and payments received from exhibitor customers, the Company recognized maintenance revenue and finance income. The Company continues to closely monitor the evolving impacts of this conflict (including the sanctions imposed by the United States, Canada and the European Union) and its effects on the global economy and the Company. On September 7, 2022, Cineworld, the parent company of Regal, and certain of its subsidiaries and Regal CineMedia Holdings, LLC, filed petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the Southern District of Texas. The Company had an unsecured pre-petition claim of $11.4 million related to receivables from the entities included in the reorganization proceedings. On October 21, 2022, the Company was ratified by the bankruptcy court as a critical vendor of Cineworld, allowing the Company to collect pre-petition amounts owed to it by Cineworld, and requiring Cineworld to stay current on the Company’s post-petition receivables. On November 8, 2022, IMAX Corporation entered into a trade agreement with Cineworld (the “Trade Agreement”), pursuant to which Cineworld affirmed its pre-petition obligations to the Company and its post-petition obligations to the Company during the Chapter 11 proceedings, the amount of the receivables owed to the Company and agreed to a payment plan under which all amounts due will be settled over the period from November 9, 2022 to April 12, 2023. As of April 17, 2023, the Company had received all of the payments due from Cineworld in accordance with the terms of the Trade Agreement with respect to the pre-petition obligations. Cineworld had its Plan of Reorganization approved by the Court on June 28, 2023, in which it disclosed that it plans to emerge from the Chapter 11 proceedings on or about July 28, 2023. As part of the Plan, Cineworld agreed to assume the Global Agreement between IMAX and the Cineworld entities (the “Assumption”). The Assumption shall expressly provide for (i) Cineworld’s assumption of the Global Agreement, (ii) Cineworld’s payment of all current arrears and (iii) a revised schedule of system installations. Based on its evaluation of its contracts with Cineworld, its assessment of the reorganization and its discussions with Cineworld to date, the Company has determined that no additional provision for expected credit losses is required. The Company also does not expect to see a material impact on its IMAX network with Cineworld resulting from this reorganization. There can, however, be no guarantees as to the ultimate outcome of a Chapter 11 proceeding. Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect. The impacts of inflation, and rising interest rates may impact future credit losses. The Company will continue to monitor economic trends and conditions and portfolio performance and adjust its allowance for credit loss accordingly. Accounts Receivable Accounts receivable principally includes amounts currently due to the Company under IMAX System sale and sales-type lease arrangements, contingent fees owed by theater operators as a result of box office performance, and fees for maintenance services. Accounts receivable also includes amounts due to the Company from movie studios and other content creators principally for digitally remastering films into IMAX formats, as well as for film distribution and post-production services. The following tables summarize the activity in the allowance for credit losses related to Accounts Receivable for the three and six months ended June 30, 2023 and 2022:
| Three Months Ended June 30, 2023 |  |  | Six Months Ended June 30, 2023 |
(In thousands of U.S. Dollars) | Theater Operators |  |  | Studios |  |  | Other |  |  | Total |  |  | Theater Operators |  |  | Studios |  |  | Other |  |  | Total |
Beginning balance | $ | 10,824 |  |  | $ | 1,707 |  |  | $ | 1,297 |  |  | $ | 13,828 |  |  | $ | 11,144 |  |  | $ | 1,699 |  |  | $ | 1,276 |  |  | $ | 14,119 |
Current period provision (reversal), net |  | 1,704 |  |  |  | (802 | ) |  |  | 189 |  |  | $ | 1,091 |  |  |  | 1,439 |  |  |  | (799 | ) |  |  | 210 |  |  |  | 850 |
Write-offs |  | (682 | ) |  |  | — |  |  |  | — |  |  | $ | (682 | ) |  |  | (797 | ) |  |  | — |  |  |  | — |  |  |  | (797 | )
Foreign exchange |  | (206 | ) |  |  | (11 | ) |  |  | — |  |  | $ | (217 | ) |  |  | (146 | ) |  |  | (6 | ) |  |  | — |  |  |  | (152 | )
Ending balance | $ | 11,640 |  |  | $ | 894 |  |  | $ | 1,486 |  |  | $ | 14,020 |  |  | $ | 11,640 |  |  | $ | 894 |  |  | $ | 1,486 |  |  | $ | 14,020 |
| Three Months Ended June 30, 2022 |  |  | Six Months Ended June 30, 2022 |
(In thousands of U.S. Dollars) | Theater Operators |  |  | Studios |  |  | Other |  |  | Total |  |  | Theater Operators |  |  | Studios |  |  | Other |  |  | Total |
Beginning balance | $ | 10,831 |  |  | $ | 1,995 |  |  | $ | 1,358 |  |  | $ | 14,184 |  |  | $ | 8,867 |  |  | $ | 1,994 |  |  | $ | 1,085 |  |  | $ | 11,946 |
Current period provision (reversal), net |  | 134 |  |  |  | (104 | ) |  |  | (57 | ) |  |  | (27 | ) |  |  | 2,115 |  |  |  | (101 | ) |  |  | 216 |  |  |  | 2,230 |
Write-offs |  | (43 | ) |  |  | (124 | ) |  |  | (394 | ) |  |  | (561 | ) |  |  | (43 | ) |  |  | (124 | ) |  |  | (394 | ) |  |  | (561 | )
Foreign exchange |  | (218 | ) |  |  | (23 | ) |  |  | — |  |  |  | (241 | ) |  |  | (235 | ) |  |  | (25 | ) |  |  | — |  |  |  | (260 | )
Ending balance | $ | 10,704 |  |  | $ | 1,744 |  |  | $ | 907 |  |  | $ | 13,355 |  |  | $ | 10,704 |  |  | $ | 1,744 |  |  | $ | 907 |  |  | $ | 13,355 |
For the three and six months ended June 30, 2023, the Company’s allowance for current expected credit losses related to Accounts Receivable increased by $0.2 million and decreased by less than $0.1 million, respectively. For the three and six months ended June 30, 2022, the Company’s allowance for current expected credit losses related to Accounts Receivable decreased by $0.8 million and increased by $2.4 million respectively, principally due to reserves established against its receivables in Russia due to uncertainties associated with the ongoing Russia-Ukraine conflict, partially offset by the reversal of provisions associated with the COVID-19 pandemic. Financing Receivables Financing receivables are due from theater operators and consist of the Company’s net investment in sales-type leases and receivables associated with financed sales of IMAX Systems. As of June 30, 2023 and December 31, 2022, financing receivables consist of the following:
| June 30, |  |  | December 31, |
(In thousands of U.S. Dollars) | 2023 |  |  | 2022 |
Net investment in leases |  |  |  |  |
Gross minimum payments due under sales-type leases | $ | 30,480 |  |  | $ | 29,727 |
Unearned finance income |  | (511 | ) |  |  | (619 | )
Present value of minimum payments due under sales-type leases |  | 29,969 |  |  |  | 29,108 |
Allowance for credit losses |  | (689 | ) |  |  | (776 | )
Net investment in leases |  | 29,280 |  |  |  | 28,332 |
Financed sales receivables |  |  |  |  |
Gross minimum payments due under financed sales |  | 135,628 |  |  |  | 141,337 |
Unearned finance income |  | (28,431 | ) |  |  | (29,340 | )
Present value of minimum payments due under financed sales |  | 107,197 |  |  |  | 111,997 |
Allowance for credit losses |  | (11,027 | ) |  |  | (10,945 | )
Net financed sales receivables |  | 96,170 |  |  |  | 101,052 |
Total financing receivables | $ | 125,450 |  |  | $ | 129,384 |
Net financed sales receivables due within one year | $ | 31,445 |  |  | $ | 32,366 |
Net financed sales receivables due after one year |  | 64,725 |  |  |  | 68,686 |
Total financed sales receivables | $ | 96,170 |  |  | $ | 101,052 |
As of June 30, 2023 and December 31, 2022, the weighted-average remaining lease term and weighted-average interest rate associated with the Company’s sales-type lease arrangements and financed sale receivables, as applicable, are as follows:
|  | June 30, |  |  |  | December 31, |
|  | 2023 |  |  |  | 2022 |
Weighted-average remaining lease term (in years) |  |  |  |  |  |
Sales-type lease arrangements |  |  | 8.7 |  |  |  |  | 9.0 |
Weighted-average interest rate |  |  |  |  |  |  |
Sales-type lease arrangements |  | 8.10% |  |  |  | 8.23% |
Financed sales receivables |  | 8.94% |  |  |  | 8.79% |
The tables below provide information on the Company’s net investment in leases by credit quality indicator as of June 30, 2023 and December 31, 2022. The amounts disclosed for each credit quality classification are determined on a customer-by-customer basis and include both billed and unbilled amounts.
(In thousands of U.S. Dollars) | By Origination Year |  |  |  |
As of June 30, 2023 | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Total |
Net investment in leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit quality classification: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
In good standing | $ | 2,075 |  |  | $ | 3,576 |  |  | $ | 6,506 |  |  | $ | 2,424 |  |  | $ | 2,059 |  |  | $ | 1,509 |  |  | $ | 18,149 |
Credit Watch |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Pre-approved transactions |  | — |  |  |  | 25 |  |  |  | 2,949 |  |  |  | 1,511 |  |  |  | 5,092 |  |  |  | 1,842 |  |  |  | 11,419 |
Transactions suspended |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 401 |  |  |  | 401 |
Total net investment in leases | $ | 2,075 |  |  | $ | 3,601 |  |  | $ | 9,455 |  |  | $ | 3,935 |  |  | $ | 7,151 |  |  | $ | 3,752 |  |  | $ | 29,969 |
(In thousands of U.S. Dollars) | By Origination Year |  |  |  |
As of December 31, 2022 | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | Prior |  |  | Total |
Net investment in leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit quality classification: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
In good standing | $ | 4,148 |  |  | $ | 6,969 |  |  | $ | 2,494 |  |  | $ | 1,977 |  |  | $ | — |  |  | $ | 1,016 |  |  | $ | 16,604 |
Credit Watch |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Pre-approved transactions |  | — |  |  |  | 3,089 |  |  |  | 1,162 |  |  |  | 5,401 |  |  |  | 2,451 |  |  |  | — |  |  |  | 12,103 |
Transactions suspended |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 401 |  |  |  | 401 |
Total net investment in leases | $ | 4,148 |  |  | $ | 10,058 |  |  | $ | 3,656 |  |  | $ | 7,378 |  |  | $ | 2,451 |  |  | $ | 1,417 |  |  | $ | 29,108 |
The tables below provide information on the Company’s financed sale receivables by credit quality indicator as of June 30, 2023 and December 31, 2022. The amounts disclosed for each credit quality classification are determined on a customer-by-customer basis and include both billed and unbilled amounts.
(In thousands of U.S. Dollars) | By Origination Year |  |  |  |
As of June 30, 2023 | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Total |
Financed sales receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit quality classification: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
In good standing | $ | 4,012 |  |  | $ | 6,198 |  |  | $ | 5,895 |  |  | $ | 5,693 |  |  | $ | 8,940 |  |  | $ | 45,363 |  |  | $ | 76,101 |
Credit Watch |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 558 |  |  |  | 773 |  |  |  | 1,331 |
Pre-approved transactions |  | 97 |  |  |  | 313 |  |  |  | 3,016 |  |  |  | 1,558 |  |  |  | 1,774 |  |  |  | 10,206 |  |  |  | 16,964 |
Transactions suspended |  | — |  |  |  | — |  |  |  | 1,220 |  |  |  | 143 |  |  |  | 1,252 |  |  |  | 10,186 |  |  |  | 12,801 |
Total financed sales receivables | $ | 4,109 |  |  | $ | 6,511 |  |  | $ | 10,131 |  |  | $ | 7,394 |  |  | $ | 12,524 |  |  | $ | 66,528 |  |  | $ | 107,197 |
(In thousands of U.S. Dollars) | By Origination Year |  |  |  |
As of December 31, 2022 | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | Prior |  |  | Total |
Financed sales receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit quality classification: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
In good standing | $ | 10,252 |  |  | $ | 8,643 |  |  | $ | 6,280 |  |  | $ | 8,541 |  |  | $ | 9,854 |  |  | $ | 39,912 |  |  | $ | 83,482 |
Credit Watch |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,152 |  |  |  | 1,152 |
Pre-approved transactions |  | — |  |  |  | 2,318 |  |  |  | 1,399 |  |  |  | 1,134 |  |  |  | 1,449 |  |  |  | 9,243 |  |  |  | 15,543 |
Transactions suspended |  | 272 |  |  |  | 664 |  |  |  | 142 |  |  |  | 1,269 |  |  |  | 1,197 |  |  |  | 8,276 |  |  |  | 11,820 |
Total financed sales receivables | $ | 10,524 |  |  | $ | 11,625 |  |  | $ | 7,821 |  |  | $ | 10,944 |  |  | $ | 12,500 |  |  | $ | 58,583 |  |  | $ | 111,997 |
The following tables provide an aging analysis for the Company’s net investment in leases and financed sale receivables as of June 30, 2023 and December 31, 2022:
| As of June 30, 2023 |
(In thousands of U.S. Dollars) | Accrued and Current |  |  | 30-89 Days |  |  | 90+ Days |  |  | Billed |  |  | Unbilled |  |  | Recorded Receivable |  |  | Allowance for Credit Losses |  |  | Net |
Net investment in leases | $ | 264 |  |  | $ | 336 |  |  | $ | 3,324 |  |  | $ | 3,924 |  |  | $ | 26,045 |  |  | $ | 29,969 |  |  | $ | (689 | ) |  | $ | 29,280 |
Financed sales receivables |  | 1,313 |  |  |  | 1,616 |  |  |  | 10,288 |  |  |  | 13,217 |  |  |  | 93,980 |  |  | $ | 107,197 |  |  |  | (11,027 | ) |  |  | 96,170 |
Total | $ | 1,577 |  |  | $ | 1,952 |  |  | $ | 13,612 |  |  | $ | 17,141 |  |  | $ | 120,025 |  |  | $ | 137,166 |  |  | $ | (11,716 | ) |  | $ | 125,450 |
| As of December 31, 2022 |
(In thousands of U.S. Dollars) | Accrued and Current |  |  | 30-89 Days |  |  | 90+ Days |  |  | Billed |  |  | Unbilled |  |  | Recorded Receivable |  |  | Allowance for Credit Losses |  |  | Net |
Net investment in leases | $ | 237 |  |  | $ | 216 |  |  | $ | 2,593 |  |  | $ | 3,046 |  |  | $ | 26,062 |  |  | $ | 29,108 |  |  | $ | (776 | ) |  | $ | 28,332 |
Financed sales receivables |  | 2,269 |  |  |  | 1,307 |  |  |  | 12,793 |  |  |  | 16,369 |  |  |  | 95,628 |  |  |  | 111,997 |  |  |  | (10,945 | ) |  |  | 101,052 |
Total | $ | 2,506 |  |  | $ | 1,523 |  |  | $ | 15,386 |  |  | $ | 19,415 |  |  | $ | 121,690 |  |  | $ | 141,105 |  |  | $ | (11,721 | ) |  | $ | 129,384 |
The following tables provide information about the Company’s net investment in leases and financed sale receivables with billed amounts past due for which it continues to accrue finance income as of June 30, 2023 and December 31, 2022. The amounts disclosed for each credit quality classification are determined on a customer-by-customer basis and include both billed and unbilled amounts.
| As of June 30, 2023 |
(In thousands of U.S. Dollars) | Accrued and Current |  |  | 30-89 Days |  |  | 90+ Days |  |  | Billed |  |  | Unbilled |  |  | Allowance for Credit Losses |  |  | Net |
Net investment in leases | $ | 205 |  |  | $ | 318 |  |  | $ | 3,324 |  |  | $ | 3,847 |  |  | $ | 19,729 |  |  | $ | (294 | ) |  | $ | 23,282 |
Financed sales receivables |  | 779 |  |  |  | 1,292 |  |  |  | 9,774 |  |  |  | 11,845 |  |  |  | 39,772 |  |  |  | (1,676 | ) |  |  | 49,941 |
Total | $ | 984 |  |  | $ | 1,610 |  |  | $ | 13,098 |  |  | $ | 15,692 |  |  | $ | 59,501 |  |  | $ | (1,970 | ) |  | $ | 73,223 |
| As of December 31, 2022 |
(In thousands of U.S. Dollars) | Accrued and Current |  |  | 30-89 Days |  |  | 90+ Days |  |  | Billed |  |  | Unbilled |  |  | Allowance for Credit Losses |  |  | Net |
Net investment in leases | $ | 190 |  |  | $ | 181 |  |  | $ | 2,593 |  |  | $ | 2,964 |  |  | $ | 17,070 |  |  | $ | (230 | ) |  | $ | 19,804 |
Financed sales receivables |  | 1,550 |  |  |  | 1,115 |  |  |  | 10,814 |  |  |  | 13,479 |  |  |  | 43,172 |  |  |  | (1,587 | ) |  |  | 55,064 |
Total | $ | 1,740 |  |  | $ | 1,296 |  |  | $ | 13,407 |  |  | $ | 16,443 |  |  | $ | 60,242 |  |  | $ | (1,817 | ) |  | $ | 74,868 |
The following table provides information about the Company’s net investment in leases and financed sale receivables that are on nonaccrual status as of June 30, 2023 and December 31, 2022:
| As of June 30, 2023 |  |  | As of December 31, 2022 |
(In thousands of U.S. Dollars) | Recorded Receivable |  |  | Allowance for Credit Losses |  |  | Net |  |  | Recorded Receivable |  |  | Allowance for Credit Losses |  |  | Net |
Net investment in leases | $ | 401 |  |  | $ | (401 | ) |  | $ | — |  |  | $ | 401 |  |  | $ | (401 | ) |  | $ | — |
Net financed sales receivables |  | 29,765 |  |  |  | (7,530 | ) |  |  | 22,235 |  |  |  | 27,364 |  |  |  | (9,589 | ) |  |  | 17,775 |
Total | $ | 30,166 |  |  | $ | (7,931 | ) |  | $ | 22,235 |  |  | $ | 27,765 |  |  | $ | (9,990 | ) |  | $ | 17,775 |
For the three and six months ended June 30, 2023, the Company recognized less than $0.1 million (2022 — less than $0.1 million and $0.1 million, respectively) in Finance Income related to the net investment in leases with billed amounts past due. For the three and six months ended June 30, 2023 and 2022, the Company did no t recognize Finance Income related to the net investment in leases on nonaccrual status. For the three and six months ended June 30, 2023, the Company recognized $0.9 million and $1.7 million (2022 — $1.3 million and $2.0 million, respectively) in Finance Income related to the financed sale receivables with billed amounts past due. For the three and six months ended June 30, 2023, the Company recognized less than $0.1 million (2022 — $0.3 million and $0.5 million, respectively) in Finance Income related to the financed sales receivables in nonaccrual status. The following tables summarize the activity in the allowance for credit losses related to the Company’s net investment in leases and financed sale receivables for the three and six months ended June 30, 2023 and 2022:
| Three Months Ended June 30, 2023 |  |  | Six Months Ended June 30, 2023 |
| Net Investment |  |  | Financed |  |  | Net Investment |  |  | Financed |
(In thousands of U.S. Dollars) | in Leases |  |  | Sales Receivables |  |  | in Leases |  |  | Sales Receivables |
Beginning balance | $ | 778 |  |  | $ | 11,533 |  |  | $ | 776 |  |  | $ | 10,945 |
Current period reversal, net |  | (79 | ) |  |  | (336 | ) |  |  | (81 | ) |  |  | 213 |
Write-offs |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign exchange |  | (10 | ) |  |  | (170 | ) |  |  | (6 | ) |  |  | (131 | )
Ending balance | $ | 689 |  |  | $ | 11,027 |  |  | $ | 689 |  |  | $ | 11,027 |
| Three Months Ended June 30, 2022 |  |  | Six Months Ended June 30, 2022 |
| Net Investment |  |  | Net Financed |  |  | Net Investment |  |  | Net Financed |
(In thousands of U.S. Dollars) | in Leases |  |  | Sales Receivables |  |  | in Leases |  |  | Sales Receivables |
Beginning balance | $ | 706 |  |  | $ | 11,135 |  |  | $ | 798 |  |  | $ | 5,414 |
Current period (reversal) provision, net |  | (1 | ) |  |  | 67 |  |  |  | (94 | ) |  |  | 5,775 |
Write-offs |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign exchange |  | (17 | ) |  |  | (164 | ) |  |  | (16 | ) |  |  | (151 | )
Ending balance | $ | 688 |  |  | $ | 11,038 |  |  | $ | 688 |  |  | $ | 11,038 |
For the three and six months ended June 30, 2023, the Company’s allowance for current expected credit losses related to its net investment in leases and financed sale receivables decreased by $0.6 million and increased by less than $0.1 million, respectively. For the three and six months ended June 30, 2022, the Company’s allowance for current expected credit losses related to its net investment in leases and financed sale receivables decreased by $0.1 million and increased by $5.5 million, respectively. The increase is principally due to reserves established against its receivables in Russia due to uncertainties associated with the ongoing Russia-Ukraine conflict and resulting sanctions, partially offset by the reversal of provisions associated with the COVID-19 pandemic as the outlook for the theatrical exhibition industry in Domestic and Rest of World markets improved. Variable Consideration Receivables In sale arrangements, variable consideration may become due to the Company from theater operators if certain annual minimum box office receipt thresholds are exceeded. Such variable consideration is recorded as revenue in the period when the sale is recognized and adjusted in future periods based on actual results and changes in estimates. Variable consideration is only recognized to the extent the Company believes there is not a risk of significant revenue reversal. The following table summarizes the activity in the Allowance for Credit Losses related to Variable Consideration Receivables for the three and six months ended June 30, 2023 and 2022:
| Three Months Ended June 30, |  |  | Six Months Ended June 30, |
| 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
(In thousands of U.S. Dollars) | Theater Operators |  |  | Theater Operators |  |  | Theater Operators |  |  | Theater Operators |
Beginning balance | $ | 526 |  |  | $ | 439 |  |  | $ | 610 |  |  | $ | 1,082 |
Current period provision (reversal), net |  | 183 |  |  |  | 73 |  |  |  | 97 |  |  |  | (570 | )
Write-offs |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign exchange |  | (4 | ) |  |  | (9 | ) |  |  | (2 | ) |  |  | (9 | )
Ending balance | $ | 705 |  |  | $ | 503 |  |  | $ | 705 |  |  | $ | 503 |
For the three and six months ended June 30, 2023, the Company’s allowance for current expected credit losses related to Variable Consideration Receivables increased by $0.2 million and $0.1 million, respectively. For the three and six months ended June 30, 2022, the Company’s allowance for current expected credit losses related to Variable Consideration Receivables increased by $0.1 million and decreased by $0.6 million, respectively. This decrease is principally due to the reversal of provisions associated with the COVID-19 pandemic as the outlook for the theatrical exhibition industry in Domestic and Rest of World markets improved.

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