Three Months Ended



% Change

(Dollars in millions, except EPS)

March 31,
2016

March 31,
2015

Favorable/
(Unfavorable)

Revenue

$

$

%

    - US

%

    - Australia

%

    - New Zealand

%

Segment operating income (1)

$

$

%

Net income(2)

$

$

%

Basic EPS (2)

$

$

%

EBITDA (1)

$

$

%

·

Segment operating income for the first quarter of 2016 increased by 14% over the prior-year period to $9.8 million, which represents the second highest quarterly level in the Company’s history.  Additionally, segment operating income for U.S. Cinema’s business increased 100% to $2.56 million.

·

Cinema activities

§

On January 31, 2016, following the run of “Star Wars: The Force Awakens”,  we surrendered our Gaslamp Cinema in San Diego, California. This cinema was acquired in 2008 as part of the acquisition of a package of 15 locations from Pacific Theatres.  The cinema was not profitable and the purchase price for this asset reflected the losses generated by the  cinema and the likelihood that such losses would continue into the future.

·

Real estate activities

§

In April 2016, we have received a Final Award of $2.3 million for attorney’s fees and costs in connection with our arbitration with The STOMP Company Limited Partnership, the producer of the show STOMP that is currently playing at our Orpheum Theater in New York City.    We are currently pursuing collection of this Final Award in the New York Supreme Court.

§

On March 31, 2016, we completed the second of the two definitive sale agreements of our Taupo property in New Zealand, for which we received the remaining sales price of $831,000 (NZ$1.2 million).

§

On April 11, 2016, we purchased a 24,000 square foot Class B office building with 72 parking spaces located at 5995 Sepulveda Boulevard in Culver City, California for $11,150,000.  We intend to use approximately 50% of the leasable area for our corporate headquarters and lease the remainder to unaffiliated third party tenants.  In recent years, Culver City has 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.  Upon completion of the move and after leasing excess space at the property, we anticipate that the move will reduce our headquarters’ occupancy cost by approximately $350,000 per annum.  We are in the process of obtaining a mortgage on this office building.

§

We continued to make progress on the development of our Union Square property located in Manhattan, New York.  We received authorization from the Landmarks Commission to develop the BKSK Architects’ design, which will add approximately 23,000 square footage of rentable space to the current square footage of the building for an approximate total of 73,000 square feet of rentable space subject to lease negotiations and the final tenant mix. We also received approval from the Board of Standards and Appeals for a variance to develop the property entirely for retail and commercial uses.  We entered into a Development Management Agreement with Edifice Real Estate Partners, LLC, to assist in the supervision and administration of the project as well as an agreement with real estate brokerage Newmark Grubb Knight Frank to serve as our exclusive marketing agent.  We retained an affiliate of CNY Construction LLC to provide pre-construction management services.  All tenancies have been terminated and the building vacated, and internal demolition activities have commenced at the site.  We currently anticipate that construction will be complete by the second quarter of 2018 and noted that leasing interest has been strong.







Three Months Ended



% Change

(Dollars in thousands)

March 31,
2016

March 31,
2015

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)

$

$

%

·

First quarter 2016 revenue in the United States increased by 14%, or $4.2 million, primarily driven by higher average admission prices, increased attendance and concessions revenue.

·

Australia cinema revenue decreased by 3%, or $685,000, primarily due to unfavorable impact from FX average rate movements. When expressed in local currency, Australian cinema revenues increased by 7% or AU$1.8 million, due to higher admissions. 

·

In New Zealand, cinema revenue increased by 16%, or $878,000, mainly due to higher admission revenue and higher concession revenue as result of higher attendance and the opening of Reading’s New Lynn Mall cinema in November 2015, partially offset by unfavorable impact from

FX average rate movements.  When expressed in local currency, New Zealand cinema revenues increased by 32% or NZ$2.3 million.     

·

In U.S. and New Zealand, property rental income decreased due to the closure of the Company’s Union Square property in New York, which is currently being re-developed, and the sale of our Taupo property in New Zealand.

·

In Australia, higher property rental income was due to the purchase of Cannon Park in December 2015.





Three Months Ended



% Change

(Dollars in thousands)

March 31,
2016

March 31,
2015

Favorable/
(Unfavorable)

Segment operating income

$

$

%

Non-segment income and expenses:



  General and administrative expense

%



  Interest expense, net

%



  Gain on sale of assets

%



  Other

%

Total non-segment income and expenses

$

$

%

Income before income taxes

%



Income tax expense

%

Net income

$

$

%



Net loss attributable to noncontrolling interests

%

Net income attributable to RDI common stockholders

$

$

%





As of March 31, 2016

(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)



Total

$

$

$





Three Months Ended



March 31

March 31

(Dollars in thousands)

2016

2015

Net Income

$

$

Add: Interest expense, net

Add: Income tax expense

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 centers (“ETC”) 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.







Three Months Ended



March 31,

March 31,



2016

2015



Operating revenue

Cinema

$

$

Real estate

Total operating revenue

Operating expense

Cinema

Real estate

Depreciation and amortization

General and administrative

Total operating expense

Operating income

Interest income

Interest expense

Net gain on sale of assets

Other expense

Income before income tax expense and equity earnings of unconsolidated joint ventures and entities

Equity earnings of unconsolidated joint ventures and entities

Income before income taxes

Income tax expense

Net income

$

$

Net loss attributable to noncontrolling interests

Net income attributable to Reading International, Inc. common stockholders

$

$

Basic earnings per share attributable to Reading International, Inc. stockholders

$

$

Diluted earnings  per share attributable to Reading International, Inc. stockholders

$

$

Weighted average number of shares outstanding–basic

Weighted average number of shares outstanding–diluted









March 31,

December 31,



2016

2015(1)

ASSETS

(Unaudited)

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, net

Taxes payable – current

Deferred current revenue

Other current liabilities

Total current liabilities

Debt – long-term, net

Subordinated debt, net

Noncurrent tax liabilities

Other liabilities

Total liabilities

Commitments and contingencies

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 March 31, 2016 and December 31, 2015

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

  1,680,590 issued and outstanding at March 31, 2016 and December 31, 2015

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

  or outstanding shares at March 31, 2016 and December 31, 2015

--

--

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

$

$