% Change



Quarter Ended

Year Ended

Favorable / (Unfavorable)

(Dollars in millions, except EPS)

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

Q4 2015 vs. Q4 2014

2015 vs. 2014

Revenue

$

$

$

$

%

%

  - US

%

%

  - Australia

 -

%

%

  - New Zealand

%

%

Segment operating income(1)

$

$

$

$

%

%

EBITDA(1)

$

$

$

$

%

%

Net income

$

$

$

$

%

%

Basic EPS(2)

$

$

$

$

%

%

·

EBITDA for the full year 2015 represents the highest annual level in the history of the Company.

·

Net income and EPS for the year ended 2015 represent the second best results in the history of the Company.

·

Cinema activities

§

In September 2015, we reopened our completely refurbished Reading Cinemas at Harbourtown Shopping Center on the Gold Coast in Queensland, Australia, which is the largest theater by screen count on the Gold Coast and is a key asset, having entertained more than ten million customers over the past fifteen years. The highlight of this renovation was the inclusion of our premium large format auditorium, TITAN XC (Extreme Cinema), which features a 66-foot  wide ‘wall-to-wall’ screen and Dolby Atmos, a fully immersive sound system accepted by leading exhibitors and filmmakers worldwide as the next-generation sound in cinema.  The renovation also included upgrades in the cinema’s affordable luxury ‘dine-in’ cinema, combining a fully licensed lounge bar and a full food menu.

§

In October 2015, we reopened, after extensive remodeling, our Carmel Mountain theater in San Diego as an Angelika Film Center and Café featuring luxury seating and an expanded food and beverage offering.  Dedicated to exhibiting quality films and events, the sleek and modern Angelika Film Center & Cafe is a unique venue for San Diego’s culturally rich community, offering diverse programming and a creative menu of craft beverages and foods. Each of the 12 elegantly-appointed auditoria at the new Angelika feature full-recliner luxury seats in a stadium setting, pristine digital projection by Barco, the leader in digital cinema technology, Dolby 7.1 sound system, and reserved seating for a leisurely cinematic experience. With state-of-the-art digital presentation capabilities and events specialists, the Angelika is an ideal venue for a range of meetings and events, from corporate presentations to private gatherings.

§

In November 2015, we opened the state-of-the-art Reading Cinemas LynnMall, our first Reading Cinemas-branded Auckland cinema complex, in New Lynn, New Zealand. The new state-of-the-art cinema complex brings Reading’s premium offerings to the newly redeveloped LynnMall Shopping Centre, providing a compelling and convenient movie experience for the Centre’s guests. The highlight of this cinema complex is the newly formatted TITAN XC (Extreme Cinema), a 66-foot wide ‘wall-to-wall’ screen that incorporates Dolby Atmos. To further enhance its position as a leading entertainment destination, we offer two luxury dine-in licensed “Premium Cinema” screens, with a full food and beverage menu to provide the best movie- going experience for customers.

§

Reflecting our dedication to providing our guests with a premium presentation, we opened our first IMAX at the Valley Plaza Mall in Bakersfield, California in time for the opening of “Star Wars: The Force Awakens” in December 2015.

§

On January 31, 2016, following our run of “Star Wars: The Force Awakens,” we surrendered our Gaslamp Cinema in San Diego. This cinema was acquired in 2008 as a part of the acquisition of a package of 15 locations from Pacific Theatres.  The cinema was, at that time, a substantial money-loser and the purchase price took into account the losses generated by that cinema and the likelihood that such losses would continue.

·

Real estate activities

§

Over the past 24 months, we have culled our real estate holdings to focus on the projects we believe offer the most upside potential to us. In this process, we sold the following during the year: (i) property in Lake Taupo, New Zealand, for $1.7 million (NZ$2.2 million); (ii)  land holdings in Moonee Ponds, Australia for $17.8 million (AU$23.0 million); and (iii) The Doheny

Drive condominium in Los Angeles for $3.0 million.  These property sales resulted in combined capital gains of $11.0 million.

§

We are continuing to develop our Union Square property located in Manhattan. We have (i) received authorization from the Landmarks Commission to redevelop the property, adding 23,000 square footage of rentable space to the current 46,000 square foot building for a total of approximately 70,200 square feet of rentable space, (ii) received approval from the Board of Standards and Appeals for a variance to develop the property entirely for retail and commercial uses, (iii) entered into a Development Management Agreement with Edifice Real Estate Partners, LLC, to assist in the supervision and administration of the project, (iv) entered into a real estate brokerage agreement with Newmark Grubb Knight Frank to serve as our exclusive marketing agent, and (v) retained an affiliate of CNY Construction LLC to provide pre-construction management services. All tenancies have been terminated and the building has been vacated, and we have begun internal demolition activities at the site.  We currently anticipate that construction will be complete by the second quarter of 2018.    Retail leasing interest has been strong.

§

Regarding our Cinemas 1,2,3  property in Manhattan, we have received the consent of our partner to redevelop the property. We are evaluating the potential to redevelop the property as a mixed use retail and residential and/or hotel property.  Further, we have completed a preliminary feasibility study and are currently in negotiations with the owner of the approximately 2,600 square foot corner parcel adjacent to our Cinemas 1,2,3 property on the corner of 60th Street and 3rd Avenue for the joint development of our properties.  A combination of these properties would produce approximately 121,000 square feet  of FAR and approximately 140,000 square feet of gross buildable area.  No assurances can be given that we will be able to come to terms with the adjacent owner. 

§

On April 11, 2016, we purchased for $11,150,000 a 24,000 square foot Class B office building with 72 parking spaces located at 5995 Sepulveda Boulevard in Culver City, California.  We intend to use approximately 50% of the leasable area for our headquarters offices and to lease the remainder to unaffiliated third parties.  Culver City has in recent years developed as a center of entertainment and high-tech activity in Los Angeles County.    Major tenants in the area include SONY and Google, with Facebook slated to take space in the near future.  When the move is complete and the excess space is leased, we anticipate that we will be able to reduce our headquarters occupancy cost by approximately $350,000 per annum.  The Company is in the process of obtaining a mortgage on this office building.

§

In Australia, we received Brisbane City Planning Council approval in June 2015 for the construction of an eight-screen cinema complex with 10,000 square feet of specialty retail to be located below the cinema and additional mezzanine level parking at our existing Newmarket (Brisbane, Australia) shopping center.  Construction is expected to commence in the second quarter of 2016, with a projected opening in the fourth quarter of 2017.   On November 30, 2015, we acquired an approximately 23,000 square foot parcel adjacent to our tenant, Coles supermarket, at that center.  This property is currently improved with an office building. In the future, we intend to strategically integrate this property into our Newmarket development.  This will increase Newmarket’s footprint from approximately 204,000 to approximately 227,000  square feet.

§

In New Zealand, we received town planning approval in May 2015 from the Wellington City Council for a $11.5  million (NZ$17.0 million) supermarket development project at our Courtenay Central entertainment-themed center (“ETC) (Wellington, New Zealand).  Currently, we are continuing the addition of an approximately 36,000 square foot supermarket and approximately 4,000 square feet of general retail space.  The agreement to lease the supermarket was signed in 2013, construction budgets for the supermarket have been approved by all parties, and we anticipate beginning construction in the third quarter of this year and occupancy by the fourth quarter of 2017.    We are currently upgrading our parking structure to a level where it will be among the safest (from an earthquake perspective) parking structure in Wellington which we believe will give us a competitive advantage in terms of parking but also serve an amenity to our shopping center and cinema. 

§

On December 23, 2015, we acquired two adjoining ETCs in Townsville, Queensland, Australia for a total of $24.3 million (AU$33.6 million) comprising approximately 5.6 acres. The total gross leasable area of the two properties, the Cannon Park City Centre and the Cannon Park Discount Centre, is 133,000 square feet.  The anchor tenant of the Cannon Park City Centre is our 75%-owned multiplex cinema.  This acquisition is consistent with our business plan to own, where practical, the land underlying our entertainment assets.

·

Updates on Compliance to NASDAQ Listing Rules

§

On March 31, 2016, we received a notification from the NASDAQ Listing Qualifications (“NASDAQ”) stating we were not in compliance with NASDAQ Marketplace Rule 5250(c)(1).  As detailed in the Company’s press release issued March 30, 2016, and attached to our previous Form 8-K, the Company has 60 days from the date of the notification to submit a plan to NASDAQ to regain compliance with the NASDAQ’s continued listing requirements.   On April 29, 2016, we filed our Annual Form 10-K for the year ended December 31, 2015 with the Securities and Exchange Commission.  We are anticipating a notification from NASDAQ confirming our return to compliance as a result of such filing.







Quarter Ended

Year Ended



% Change

% Change

(Dollars in thousands)

December 31,
2015

December 31,
2014

Favorable/ (Unfavorable)

December 31,
2015

December 31,
2014

Favorable / (Unfavorable)

Segment revenue

  Cinema

     United States

$

$

%

$

$

%

     Australia

 -

%

%

     New Zealand

%

%

       Total

$

$

%

$

$

%

  Real estate

     United States

$

$

%

$

$

%

     Australia

%

%

     New Zealand

%

%

       Total

$

$

%

$

$

%

  Inter-segment elimination

%

%

Total segment revenue

$

$

%

$

$

%

Segment operating income (loss)

  Cinema

     United States

$

$

%

$

$

%

     Australia

%

%

     New Zealand

%

%

       Total

$

$

%

$

$

%

  Real estate

     United States

$

$

%

$

$

%

     Australia

%

%

     New Zealand

%

%

       Total

$

$

%

$

$

%

Total segment operating income (1)

$

$

%

$

$

%





Quarter Ended

Year Ended



% Change

% Change

(Dollars in thousands)

December 31,
2015

December 31,
2014

Favorable / (Unfavorable)

December 31,
2015

December 31,
2014

Favorable/ (Unfavorable)

Segment operating income

$

$

%

$

$

%

Non-segment income and expenses:



General and administrative expense

%

%



Interest expense, net

%

%



Gain on sale of assets

 -

 -

 -

%

%



Depreciation and amortization expense

%

%



Equity earnings of unconsolidated joint ventures and entities

%

%



Other

%

%

Total non-segment income and expenses

$

$

%

$

$

%

Income before income taxes

%

%



Income tax benefit (expense)

%

%

Net income

$

$

%

$

$

%



Net loss attributable to noncontrolling interests

%

%

Net income attributable to RDI common stockholders

$

$

%

$

$

%





As of December 31, 2015

(Dollars in thousands)

Contractual Capacity

Capacity Used

Unused Capacity

Bank of America Credit Facility (USA)

$

$

$

Bank of America Line of Credit (USA)

NAB Corporate Term Loan (AU) (1)

Westpac Corporate Credit Facility (NZ) (1)



$

$

$





Quarter Ended

Year Ended

(Dollars in thousands)

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

Net income

$

$

$

$

  Add: Interest expense, net

  Add: Income tax expense (benefit)

  Add: Depreciation and amortization

EBITDA

$

$

$

$

·

the development, ownership, and operation of multiplex cinemas in the United States, Australia and New Zealand; and

·

the development, ownership, and operation of retail and commercial real estate in Australia, New Zealand, and the United States, including entertainment-themed retail centers (“ETRC”) in Australia and New Zealand and live theater assets in Manhattan and Chicago in the United States.

·

in the United States, under the

o

Reading Cinema brand (http://www.readingcinemasus.com);

o

Angelika Film Center brand (http://www.angelikafilmcenter.com);

o

Consolidated Theatres brand (http://www.consolidatedtheatres.com);

o

City Cinemas brand (http://www.citycinemas.com);

o

Beekman Theatre brand (http://www.beekmantheatre.com);

o

The Paris Theatre brand (http://www.theparistheatre.com);

o

Liberty Theatres brand (http://libertytheatresusa.com); and

o

Village East Cinema brand (http://villageeastcinema.com)

·

in Australia, under the

o

Reading Cinema brand (http://www.readingcinemas.com.au);  

o

Newmarket brand (http://readingnewmarket.com.au);  and

o

Red Yard brand (http://www.redyard.com.au)

·

in New Zealand, under the

o

Reading brand (http://www.readingcinemas.co.nz);

o

Rialto brand (http://www.rialto.co.nz);

o

Reading Properties brand (http://readingproperties.co.nz);

o

Courtenay Central brand (http://www.readingcourtenay.co.nz); and

o

Steer n’ Beer restaurant brand (http://steernbeer.co.nz).

·

With respect to our cinema operations:

o

The number and attractiveness to movie goers of the films released in future periods;

o

The amount of money spent by film distributors to promote their motion pictures;

o

The licensing fees and terms required by film distributors from motion picture exhibitors in order to exhibit their films;

o

The comparative attractiveness of motion pictures as a source of entertainment and willingness and/or ability of consumers (i) to spend their dollars on entertainment and (ii) to spend their entertainment dollars on movies in an outside the home environment; and

o

The extent to which we encounter competition from other cinema exhibitors, from other sources of outside of the home entertainment, and from inside the home entertainment options, such as “home theaters” and competitive film product distribution technology such as, by way of example, cable, satellite broadcast, DVD rentals and sales, and online streaming.

·

With respect to our real estate development and operation activities:

o

The rental rates and capitalization rates applicable to the markets in which we operate and the quality of properties that we own;

o

The extent to which we can obtain on a timely basis the various land use approvals and entitlements needed to develop our properties;

o

the risks and uncertainties associated with real estate development;

o

The availability and cost of labor and materials;

o

Competition for development sites and tenants;

o

The extent to which our cinemas can continue to serve as an anchor tenant that will, in turn, be influenced by the same factors as will influence generally the results of our cinema operations; and

o

Certain of our activities are in geologically active areas, creating a risk of damage and/or disruption of real estate and/or cinema businesses from earthquakes.

·

With respect to our operations generally as an international company involved in both the development and operation of cinemas and the development and operation of real estate; and previously engaged for many years in the railroad business in the United States:

o

Our ongoing access to borrowed funds and capital and the interest that must be paid on that debt and the returns that must be paid on such capital;

o

The relative values of the currency used in the countries in which we operate;

o

Changes in government regulation, including by way of example, the costs resulting from the implementation of the requirements of Sarbanes-Oxley;

o

Our labor relations and costs of labor (including future government requirements with respect to pension liabilities, disability insurance and health coverage, and vacations and leave);

o

Our exposure from time-to-time to legal claims and to uninsurable risks such as those related to our historic railroad operations, including potential environmental claims and health related claims relating to alleged exposure to asbestos or other substances now or in the future recognized as being possible causes of cancer or other health-related problems;

o

Changes in future effective tax rates and the results of currently ongoing and future potential audits by taxing authorities having jurisdiction over our various companies; and

o

Changes in applicable accounting policies and practices.





Quarter Ended (Unaudited)

Year Ended (Audited)



December 31,

December 31,

December 31,

December 31,

(Dollars in thousands, except per share data)

2015

2014 (1)

2015

2014 (1)

Revenue

Cinema

$

$

$

$

Real estate

Total revenue

Costs and expenses

Cinema

Real estate

Depreciation and amortization

General and administrative

Total costs and expenses

Operating income

Interest income

Interest expense

Net gain on sale of assets

 -

 -

Other income (expense)

Equity earnings of unconsolidated joint ventures and entities

Income before income taxes

Income tax benefit (expense)

Net income

$

$

$

$

Less: Net loss attributable to noncontrolling interests

Net income attributable to Reading International, Inc. common shareholders

$

$

$

$

Basic income per share attributable to Reading International, Inc. shareholders

$

$

$

$

Diluted income per share attributable to Reading International, Inc. shareholders

$

$

$

$

Weighted average number of shares outstanding–basic

Weighted average number of shares outstanding–diluted







December 31,

December 31,



2015

2014(1)

ASSETS

Current Assets:

Cash and cash equivalents

$

$

Receivables

Inventory

Investment in marketable securities

Restricted cash

Prepaid and other current assets

  Land held for sale-current

Total current assets



Operating property, net

Land held for sale-non current

Investment and development property, net

Investment in unconsolidated joint ventures and entities

Investment in Reading International Trust I

Goodwill

Intangible assets, net

Deferred tax asset, net

Other assets

Total assets

$

$



LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable and accrued liabilities

$

$

Film rent payable

Debt – current portion

Taxes payable

Deferred current revenue

Other current liabilities

Total current liabilities



Debt – long-term portion

Subordinated debt

Noncurrent tax liabilities

Other liabilities

Total liabilities

Commitments and contingencies (Note 12)

Stockholders’ equity:

Class A non-voting common stock, par value $0.01, 100,000,000 shares authorized,

32,831,113 issued and 21,654,302 outstanding at December 31, 2015 and 32,537,008

issued and 21,741,586 outstanding at December 31, 2014

Class B voting common stock, par value $0.01, 20,000,000 shares authorized and

1,680,590 issued and outstanding at December 31, 2015 and 1,495,490 issued and

outstanding at December 31, 2014

Nonvoting preferred stock, par value $0.01, 12,000 shares authorized and no issued

or outstanding shares at December 31, 2015 and 2014

--

--

Additional paid-in capital

Accumulated deficit

Treasury shares

Accumulated other comprehensive income

Total Reading International, Inc. stockholders’ equity

Noncontrolling interests

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$