Ø Achieves All-Time Record Quarterly Revenue of $84.2 million

Ø Second Quarter Operating Income of $8.6 million, Represents Second Highest Quarter on Record





Quarter Ended

Six Months Ended



% Change

% Change

(Dollars in millions, except EPS)

June 30,

2018

June 30,

2017

Favorable/
(Unfavorable)

June 30,

2018

June 30,

2017

Favorable/
(Unfavorable)

Revenue

$

$

%

$

$

%

    - US

%

%

    - Australia

%

%

    - New Zealand

%

%

Segment operating income (1)

$

$

%

$

$

%

Net income(2)

$

$

%

$

$

%

EBITDA (1)

$

$

%

$

$

%

Adjusted EBITDA (1)

$

$

%

$

$

%

Basic EPS (2)

$

$

%

$

$

%

·

Operating Results: For the quarter ended June 30, 2018, we achieved revenue of $84.2 million, up $11.8 million from the prior year. Our operating results benefitted from the strong performance of our US cinema operations.

·

Capex program: During the second quarter of 2018, we invested $18.0 million in capital improvements to our cinemas, continuing our investment in the upgrading of select cinemas and real estate properties.

·

Cinema activities: During the second quarter of 2018, we saw the benefit in performance as a result of the completed renovations at four U.S. theaters: Cal Oaks, Manville, Pearlridge, and Ward. We continue to upgrade our food and beverage (“F&B”) offerings and, as of June 30, 2018, we have obtained liquor licenses for 26 of our existing cinemas in the U.S., Australia and New Zealand. Our cinema pipeline includes three new cinemas in Australia that have been approved by our Board of Directors and which we anticipate bringing on line in 2019/2020.

·

Real estate activities:

·

Purchase of Land at Cannon Park, Australia – On June 13, 2018, we acquired a 163,000 square foot (15,150 square meter) parcel at our Cannon Park ETC, in connection with the restructuring of our relationship with the adjacent land owner.  Prior to the restructuring, this parcel was commonly owned by us and the adjoining land owner. In the restructuring, the adjoining land owner conveyed to us its interest in the parcel for AU$1. We granted the adjoining land owner certain access rights.

§

Purchase of Property in Auburn, Australia – On June 29, 2018, we purchased a property for $3.5 million (AU$ 4.5 million) in Auburn (Sydney area), Australia. The property which borders our Redyard ETC in Auburn on three sides to the east, west and south and consists of an approximately 16,830 square foot building located on an estimated 20,870 square foot lot, is subject to a lease to Telstra Corporation through September 2022.  This will allow us time to plan for the efficient integration into our ETC.  Including this acquisition, our Redyard ETC represents approximately 519,992 square feet (48,309 square meters) of land, with approximately 1,620 feet (498 meters) of uninterrupted frontage to Parramatta Road, a major Sydney arterial motorway.

§

Expansion Project for our Newmarket Shopping Center at an affluent suburb of Brisbane, Australia – In December 2017 we opened our eight-screen Reading Cinema with TITAN LUXE, including 10,150 square feet of additional retail space and 124 additional parking spaces. As of June 30, 2018, approximately 93% of this new retail space has been leased. 

§

Belmont (Perth, Australia) – In the first half of 2018, we continued with the re-positioning of our ETC in Belmont (a suburb of Perth), which features new F&B offerings and a Reading Cinema with TITAN LUXE. During the latter part of the second quarter of 2018, the Asian inspired Tao Café (with approximately 3,190 square feet) opened joining our existing restaurants, Dome Café and Tavolo.

§

Manukau Land Rezoning (Auckland, New Zealand) – We own two parcels in Manukau comprising 64.0 acres zoned for light industrial use and 6.4 acres zoned for heavy industrial use. Now that our zoning enhancement goal is achieved, we are reviewing our options with respect to the value realization opportunities and commercial exploitation of this asset. We see this property as a future value realization opportunity. This tract is adjacent to the Auckland Airport which has recently been expanding toward our property. We are currently working with adjoining landowners to develop an infrastructure plan for the approximately 355 acres of rezoned land of which our property is a significant part.

§

Minetta Lane (New York, USA) – In February 2018, we entered into a one-year license agreement with Audible, Inc. a subsidiary of Amazon, at the Minetta Lane Theatre.  We understand that Audible intends to produce one to two character plays, from which it will record audio productions available through Audible.

§

Redevelopment of 44 Union Square Property (New York, USA) – At the beginning of January 2016, we ceased our live theatre business at our Union Square property in New York, terminated all tenant leases and prepared the property for redevelopment.  Accordingly, this property is no longer treated as an operating property. We anticipate that the 73,000 square foot redevelopment project in Union Square will be ready for the commencement of tenant fit-out in the first quarter of 2019. Retail and office leasing interest to date has been strong and we are currently in discussions with a number of quality tenants. This redevelopment will add approximately 23,000 square footage of rentable space to the current square footage of the building for an approximate total of 73,322 square feet of rentable space, inclusive of anticipated BOMA (Building Owners and Managers Association) adjustments and subject to lease negotiations and the final tenant mix.

§

Cinema 1,2,3 Redevelopment (New York, USA) – In June 2017, we entered into an exclusive dealing and pre-development agreement with our adjoining neighbors, 260-264 LLC, to jointly develop the properties, currently home to Cinemas 1,2,3 and Anassa Taverna.  While this agreement has expired, we both (i) remain open to the common development of these properties given the synergies and value creation opportunities of the joint development and (ii) have been and will continue to evaluate alternative opportunities for the property.

§

Our 2018 Annual Stockholders Meeting of the Company is scheduled to be held on November 7, 2018, and the record date for stockholders entitled to vote is September 17, 2018.





Quarter Ended

Six Months Ended



% Change

% Change

(Dollars in thousands)

June 30,
2018

June 30,
2017

Favorable/
(Unfavorable)

June 30,
2018

June 30,
2017

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

  Cinema

     United States

$

$

%

$

$

%

     Australia

%

 -

%

     New Zealand

%

%

       Total

$

$

%

$

$

%

  Real estate

     United States

$

$

%

$

$

%

     Australia

%

%

     New Zealand

%

%

       Total

$

$

%

$

$

%

Total segment operating income (1)

$

$

%

$

$

%

(1)

Aggregate segment operating income is a non-GAAP financial measure. See the discussion of non-GAAP financial measures that follows.

·

Revenue in the United States increased by 33%, or $11.0 million, due to a 11% increase in ATP, a 5% increase in SPP, and a 22% increase in attendance. These changes are primarily due to improvements resulting from our continuous capital improvements at several of our theaters, the introduction of “Spotlight”, as well as strong film product for the quarter.

·

Australia’s cinema revenue increased by 7%, or $1.7 million, primarily due to an 8% increase in ATP, an 8% increase in SPP, offset by a 1% decrease in attendance.

·

While the attendance and SPP of our New Zealand cinema operations have increased versus the same period in 2017, our New Zealand revenue remained flat over the prior year quarter primarily because the 2016 quarter included business interruption insurance related to the Wellington earthquake.   

·

Revenue in the United States increased by 18%, or $12.7 million, primarily driven by increases in ATP, SPP, and attendance.

·

Australia’s cinema revenue increased by 7%, or $3.5 million, primarily due to an 8% increase in ATP, a 7% increase in SPP, offset by a 1% decrease in attendance.

·

New Zealand cinema revenue increased by 16%, or $2.2 million, as a result of the 17% increase in attendance, a 9% increase in SPP,  and a 3% increase in ATP.





Quarter Ended

Six Months Ended



% Change

% Change

(Dollars in thousands)

June 30,
2018

June 30,
2017

Favorable/
(Unfavorable)

June 30,
2018

June 30,
2017

Favorable/
(Unfavorable)

Segment operating income

$

$

%

$

$

%

Non-segment income and expenses:



  General and administrative expense

%

%



  Interest expense, net

 -

%

%



  Gain on sale of assets

--

n/a

 -

%



  Gain on insurance recoveries

--

n/a

 -

%



  Other

nm

%

Total non-segment income and expenses

$

$

%

$

$

%

Income before income taxes

%

%



Income tax expense

%

%

Net income

$

$

%

$

$

%



Less: net income attributable to noncontrolling interests

nm

nm

Net income attributable to RDI common stockholders

$

$

%

$

$

%





As of and for the 6-Months Ended

Year Ended December 31

($ in thousands)

6/30/2018

2017

2016

2015

2014

Total Resources (cash and borrowings)

Cash and cash equivalents (unrestricted)

$

$

$

$

$

Unused borrowing facility

Restricted for capital projects(1)

--

Unrestricted capacity

Total resources at period end

Total unrestricted resources at period end

Debt-to-Equity Ratio

Total contractual facility

$

$

$

$

$

Total debt (gross of deferred financing costs)

Current

Non-current

Total book equity

Debt-to-equity ratio

Changes in Working Capital

Working capital (deficit)

$

$

$

$

$

Current ratio

Capital Expenditures (including acquisitions)

$

$

$

$

$





As of June 30, 2018

(Dollars in thousands)

Contractual Capacity

Capacity Used

Unused Capacity

Restricted for Capital Projects

Unrestricted Capacity

Bank of America Credit Facility (USA)

$

$

$

$

--

$

Bank of America Line of Credit (USA)

--

--

Union Square Construction Financing (USA)

--

NAB Corporate Term Loan (AU) (1)

--

Westpac Bank Corporate (general/non-construction) Credit Facility (NZ) (1)

--

--

Westpac Bank Corporate (construction) Credit Facility (NZ) (1)

--

--



Total

$

$

$

$

$

·

Legal expenses relating to the Derivative litigation, the James J. Cotter, Jr. employment arbitration and other Cotter litigation matters – while we started to incur expenses in relation to these legal matters in 2015, we believe that the majority of these costs were thrust upon the Company as it became necessary to defend the Company’s position in the Derivative litigation and related matters, to resolve Mr. Cotter, Jr.’s claims relating to his termination, and to protect our Company’s interests, and that of our shareholders in light of Mr. Cotter, Jr.’s efforts to effect a change of control of our Company. For this reason, we believe these costs should also be treated as non-recurring in nature and accordingly, an adjustable item for purposes of determining our Adjusted EBITDA.





Quarter Ended

Six Months Ended



June 30

June 30

June 30

June 30

(Dollars in thousands)

2018

2017

2018

2017

Net Income

$

$

$

$

Add: Interest expense, net

Add: Income tax expense

Add: Depreciation and amortization

EBITDA

$

$

$

$

Adjustments for:

Gain on insurance recoveries

--

--

Legal expenses relating to the derivative ligation, the Cotter employment arbitration and other Cotter litigation matters

Adjusted EBITDA

$

$

$

$

·

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;

o

the extent to which we encounter competition from other cinema exhibitors, from other sources of outside-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 and DVD rentals and sales, and online streaming;

o

the cost and impact of improvements to our cinemas, such as improved seating, enhanced food and beverage offerings and other improvements;

o

service disruption during theater improvements; and

o

the extent to and the efficiency with which we are able to integrate acquisitions of cinema circuits with our existing operations.

·

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

the ability to obtain all permits to construct improvements;

o

the ability to finance improvements;

o

the disruptions from construction;

o

the possibility of construction delays, work stoppage and material shortage;

o

competition for development sites and tenants;

o

environmental remediation issues;

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;

o

the ability to negotiate and execute joint venture opportunities and relationships; 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 ability to renew, extend or renegotiate our loans that mature in 2018;

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

expenses, management and Board distraction and other effects of the litigation efforts mounted by James Cotter, Jr. against the Company, including his efforts to cause a sale of voting control of the Company;

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

our exposure to cyber-security risks, including misappropriation of customer information or other breaches of information security;

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

Six Months Ended



June 30,

June 30,

June 30,

June 30,



2018

2017 (1)

2018

2017(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 expense, net

Gain on sale of assets

--

--

Gain on insurance recoveries

--

--

Other (expense) income

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

Equity earnings of unconsolidated joint ventures

Income before income taxes

Income tax expense

Net income

$

$

$

$

Less: net income attributable to noncontrolling interests

Net income attributable to Reading International, Inc. common shareholders

$

$

$

$

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

$

$

$

$

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

$

$

$

$

Weighted average number of shares outstanding–basic

Weighted average number of shares outstanding–diluted





June 30,

December 31,



2018

2017

ASSETS

(unaudited)

Current Assets:

Cash and cash equivalents

$

$

Receivables

Inventory

Prepaid and other current assets

Total current assets

Operating property, net

Investment and development property, net

Investment in unconsolidated joint ventures

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 – current

Deferred current revenue

Other current liabilities

Total current liabilities

Debt – long-term portion

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,

33,101,614 issued and 21,309,702 outstanding at June 30, 2018, and

33,019,565 issued and 21,251,291 outstanding at December 31, 2017

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

  1,680,590 issued and outstanding at June 30, 20 18 and December 31, 2017

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

  or outstanding shares at June 30, 2018 and December 31, 2017

--

--

Additional paid-in capital

Retained earnings

Treasury shares

Accumulated other comprehensive income

Total Reading International, Inc. stockholders’ equity

Noncontrolling interests

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$