We are an internationally diversified company principally focused on the development, ownership, and operation of entertainment and real property assets in the United States, Australia, and New Zealand. Currently, we operate in two business segments:

· cinema exhibition, through our 56 multiplex cinemas; and

· real estate, including real estate development and the rental of retail, commercial and live theater assets.

We believe that these two business segments can complement one another, as we can use the comparatively consistent cash flows generated by our cinema operations to fund the front-end cash demands of our real estate development business.

We manage our worldwide cinema exhibition businesses under various different brands:

· in the US, under the Reading, Angelika Film Center, Consolidated Amusements, and City Cinemas brands;

· in Australia, under the Reading brand; and

· in New Zealand, under the Reading and Rialto brands.

We continue to consider opportunities to expand our cinema operations, while at the same time continuing to cull those cinema assets which are underperforming or have unacceptable risk profiles on a go forward basis.

Although we have curtailed our real estate development activities, we remain opportunistic in our acquisitions of both cinema and real estate assets. Our business plan going forward is to continue the build-out of our existing development properties and to seek out additional, profitable real estate development opportunities while continuing to use and judiciously expand our presence in the cinema exhibition business by identifying, developing, and acquiring cinema properties when and where appropriate. In addition, we will continue to investigate potential synergistic acquisitions that may not readily fall into either of our two currently identified segments.

On January 10, 2012, Shadow View Land and Farming, LLC, a limited liability company owned by our Company, acquired a 202-acre property, zoned for the development of up to 843 single-family residential units, located in the City of Coachella, California. The property was acquired at a foreclosure auction for $5.5 million. The property was acquired as a long-term investment in developable land with the intention of using it in the interim for agricultural purposes. Half of the funds used to acquire the land were provided by James J. Cotter, our Chairman, Chief Executive Officer and controlling shareholder. Upon the approval of our Conflicts Committee, these funds were converted on January 18, 2012 into a 50% interest. The limited liability company is administratively managed by our Company.

We continue to consider the potential sale of certain of our real estate assets. As part of this business strategy, on February 21, 2012, we sold the three properties in the Taringa area of Brisbane, Australia of approximately 1.1 acres for $1.9 million (AUS$1.8 million). Also, we continue to consider various methods to monetize all or at least the residential portion of our Burwood development site and our Lake Taupo properties even though they cannot be classified as a property held for sale pursuant to ASC 360-10-45.

Results of Operations

At March 31, 2012, we owned and operated 51 cinemas with 429 screens, had interests in certain unconsolidated joint ventures and entities that own an additional 3 cinemas with 29 screens and managed 2 cinemas with 9 screens. In real estate during the period, we (i) owned and operated four Entertainment Themed Retail Centers ("ETRCs") that we developed in Australia and New Zealand,
(ii) owned the fee interests in four developed commercial properties in Manhattan and Chicago improved with live theaters comprising seven stages and ancillary retail and commercial space, (iii) owned the fee interests underlying one of our Manhattan cinemas, (iv) held for development an additional seven parcels aggregating approximately 129 acres located principally in urbanized areas of Australia and New Zealand, and (v) owned 50% of a 202-acre property, zoned for the development of up to 843 single-family residential units in Coachella, California.

Operating expense includes costs associated with the day-to-day operations of the cinemas and the management of rental properties, including our live theater assets. Our year-to-year results of operations were impacted by the fluctuation in the value of the Australian and New Zealand dollars vis-à-vis the US dollar resulting in an increase in results of operations for our foreign operations for 2012 compared to 2011.

The tables below summarize the results of operations for each of our principal business segments for the three ("2012 Quarter") months ended March 31, 2012 and the three ("2011 Quarter") months ended March 31, 2012, respectively (dollars in thousands):

                                               Cinema                              Intersegment
Three Months Ended March 31, 2012            Exhibition        Real Estate         Eliminations          Total
Revenue                                    $       57,402     $        7,132     $          (1,882 )   $  62,652
Operating expense                                  48,215              2,795                (1,882 )      49,128
Depreciation & amortization                         2,830              1,228                    --         4,058
General & administrative expense                      702                179                    --           881
Segment operating income                   $        5,655     $        2,930     $              --     $   8,585

                                                Cinema                              Intersegment
Three Months Ended March 31, 2011            Exhibition         Real Estate        Eliminations           Total
Revenue                                    $       49,473     $        6,436     $          (1,667 )   $  54,242
Operating expense                                  43,140              2,431                (1,667 )      43,904
Depreciation & amortization                         2,904              1,222                    --         4,126
General & administrative expense                      612                187                    --           799
Segment operating income                   $        2,817     $        2,596     $              --     $   5,413

Reconciliation to net loss attributable to Reading
International, Inc. shareholders:                               2012 Quarter       2011 Quarter
Total segment operating income                                 $        8,585     $        5,413
Non-segment:
Depreciation and amortization expense                                     139                  3
General and administrative expense                                      3,539              3,436
Operating income                                                        4,907              1,974
Interest expense, net                                                  (3,759 )           (3,930 )
Other expense                                                             (45 )              (19 )
Income tax expense                                                     (1,625 )             (636 )
Equity earnings of unconsolidated joint ventures and
entities                                                                  413                364
Net loss                                                       $         (109 )   $       (2,247 )
Net income attributable to noncontrolling interests                      (130 )             (233 )
Net loss attributable to Reading International, Inc. common
shareholders                                                   $         (239 )   $       (2,480 )

Cinema Exhibition Segment

Included in the cinema exhibition segment above is revenue and expense from the operations of 51 cinema complexes with 429 screens during the 2012 Quarter and 52 cinema complexes with 421 screens during the 2011 Quarter and management fee income from 2 cinemas with 9 screens in both years reflecting the purchase of our CalOaks Cinema in Marietta, California cinema with 17 screens in August 2011, the sale of our Elsternwick cinema in Australia with 5 screens in April 2011, and the closing of our Hastings, New Zealand cinema with 4 screens in January 2012. The following tables detail our cinema exhibition segment operating results for the three months ended March 31, 2012 and 2011, respectively (dollars in thousands):

Three Months Ended March 31, 2012           United States       Australia       New Zealand        Total
Admissions revenue                         $        19,523     $    17,418     $       3,163     $  40,104
Concessions revenue                                  7,648           5,972               875        14,495
Advertising and other revenues                       1,250           1,386               167         2,803
Total revenues                                      28,421          24,776             4,205        57,402

Cinema costs                                        23,221          18,804             3,530        45,555
Concession costs                                     1,243           1,200               217         2,660
Total operating expense                             24,464          20,004             3,747        48,215

Depreciation and amortization                        1,650             926               254         2,830
General & administrative expense                       518             184                --           702
Segment operating income                   $         1,789     $     3,662     $         204     $   5,655

Three Months Ended March 31, 2011           United States       Australia       New Zealand        Total
Admissions revenue                         $        15,348     $    16,819     $       2,991     $  35,158
Concessions revenue                                  5,793           5,186               741        11,720
Advertising and other revenues                       1,095           1,341               159         2,595
Total revenues                                      22,236          23,346             3,891        49,473

Cinema costs                                        20,078          17,582             3,290        40,950
Concession costs                                       888           1,128               174         2,190
Total operating expense                             20,966          18,710             3,464        43,140

Depreciation and amortization                        1,620           1,009               275         2,904
General & administrative expense                       469             143                --           612
Segment operating income (loss)            $          (819 )   $     3,484     $         152     $   2,817

· Cinema revenue increased for the 2012 Quarter by $7.9 million or 16.0% compared to the same period in 2011. The 2012 Quarter increase was primarily from an increase in U.S. box office attendance of 518,000 from improved film product compared to the same period in 2011 resulting in an increase in box office revenue of $4.2 million and an increase in concessions and other revenue of $2.0 million. Our Australia and New Zealand admissions were relatively flat but our revenue increased from these regions due to an increase in the value of the Australia and New Zealand dollars compared to the U.S. dollar (see below).

· Operating expense increased for the 2012 Quarter by $5.1 million or 11.8% compared to the same period in 2011. This increase followed the increased revenues noted above primarily relating to the improved film product in 2012 compared to 2011. The increase in expense was also as a result of an increase in the value of the Australia and New Zealand dollars compared to the U.S. dollar (see below). Overall, our operating expense as a percent of gross revenue decreased from 87.2% to 84.0% primarily resulting from an increase in admissions which drove down our labor per admit costs and from our fixed rent costs relative to the aforementioned increase in revenue.

· General and administrative costs increased for the 2012 Quarter by $90,000 or 14.7% compared to the same period in 2011 due to an increase in payroll and related costs for our U.S. and Australia cinema circuits.

· For our statement of operations, Australia and New Zealand quarterly average exchange rates have increased by 5.0% and 8.2%, respectively, since the 2011 Quarter, which had an impact on the individual components of our income statement.

· Because of the above, and driven by the increased revenue, the cinema exhibition segment income increased for the 2012 Quarter by $2.8 million compared to the same period in 2011, a 100.7% increase.

Real Estate Segment

The following tables detail our real estate segment operating results for the
three months ended March 31, 2012 and 2011, respectively (dollars in thousands):

Three Months Ended March 31, 2012           United States       Australia       New Zealand        Total
Live theater rental and ancillary income   $           899     $        --     $          --     $     899
Property rental income                                 419           3,858             1,956         6,233
Total revenues                                       1,318           3,858             1,956         7,132

Live theater costs                                     515              --                --           515
Property rental cost                                   300           1,449               531         2,280
Total operating expense                                815           1,449               531         2,795

Depreciation and amortization                           78             817               333         1,228
General & administrative expense                         9             157                13           179
Segment operating income                   $           416     $     1,435     $       1,079     $   2,930

Three Months Ended March 31, 2011           United States       Australia       New Zealand        Total
Live theater rental and ancillary income   $           853     $        --     $          --     $     853
Property rental income                                 470           3,319             1,794         5,583
Total revenues                                       1,323           3,319             1,794         6,436

Live theater costs                                     500              --                --           500
Property rental cost                                   142           1,352               437         1,931
Total operating expense                                642           1,352               437         2,431

Depreciation and amortization                           82             783               357         1,222
General & administrative expense                         9             157                21           187
Segment operating income                   $           590     $     1,027     $         979     $   2,596

· Real estate revenue increased for the 2012 Quarter by $696,000 or 10.8% compared to the same period in 2011. Our Australia and New Zealand revenue increased primarily due to higher rents in 2012 compared to the same period in 2011 coupled with a year over year increase in the value of the Australia and New Zealand dollars compared to the U.S. dollar. This increase translated to higher Australian and New Zealand revenues for the 2012 Quarter compared to the 2011 Quarter (see below). The change in our U.S. real estate revenues from the 2012 Quarter to the 2011 Quarter was relatively flat.

· Operating expense for the real estate segment increased for the 2012 Quarter by $364,000 or 15.0% compared to the same period in 2011. This increase resulted from higher repairs, maintenance, and insurance costs for our operating properties and from legal costs incurred in 2012 associated with our old railroad properties.

· For our statement of operations, Australia and New Zealand quarterly average exchange rates have increased by 5.0% and 8.2%, respectively, since the 2011 Quarter, which had an impact on the individual components of our income statement.

· As a result of the above, real estate segment income increased for the 2012 Quarter by $334,000 or 12.9% compared to the same period in 2011.

Corporate

Quarterly Results

General and administrative expense includes expenses that are not directly attributable to other operating segments. General and administrative expense increased by $103,000 in the 2012 Quarter compared to the 2011 Quarter primarily related to an increase in compensation expense; an increase in litigation related legal costs in Australia and in the U.S.; an increase in professional fees in Australia for information systems and tax consulting; and additional costs associated with relocating our office in Los Angeles, California; offset by, cost savings relating to the transfer of our accounting department from Australia and the U.S. to New Zealand.

Net interest expense decreased by $171,000 for the 2012 Quarter compared to the 2011 Quarter. The decrease in interest expense during the 2012 Quarter was primarily due to the change in fair value of our interest rate swaps in 2012 resulting in a net decrease in interest expense compared to a net increase for the same period in 2011.

For the 2012 Quarter, we recorded an other expense of $45,000 compared to an other expense of $19,000 for the 2011 Quarter. The 2012 Quarter other expense was primarily related to a litigation loss associated with our former Houston cinema lease offset by a gain on sale of marketable securities and the 2011 Quarter other expense was primarily related to the write off of certain long-term assets.

For the 2012 Quarter, income tax expense increased by $989,000 primarily relating to taxable income generated by our Australia group of subsidiaries.

For the 2012 Quarter, we recorded an increase in our equity earnings of unconsolidated joint ventures and entities of $49,000 primarily due to improved earnings from our Mt. Gravatt investment.

Net Loss Attributable to Reading International, Inc. Common Shareholders

We recorded a net loss attributable to Reading International, Inc. common shareholders of $239,000 for the 2012 Quarter compared to a net loss of $2.5 million for the 2011 Quarter. As described above, the $2.2 million change in net loss from 2011 to 2012 related to a $2.8 million increase in operating income offset by a $989,000 increase in tax expense. The increase in operating income was primarily from our cinema operations driven by a worldwide cinema attendance increase of 544,000.

Acquisition

Coachella, California Land Acquisition

On January 10, 2012, Shadow View Land and Farming, LLC, a limited liability company owned by our Company, acquired a 202-acre property, zoned for the development of up to 843 single-family residential units, located in the City of Coachella, California. The property was acquired at a foreclosure auction for $5.5 million. The property was acquired as a long-term investment in developable land with the intention of using it in the interim for agricultural purposes. Half of the funds used to acquire the land were provided by Mr. James J. Cotter, our Chairman, Chief Executive Officer and controlling shareholder. Upon the approval of our Conflicts Committee, these funds were converted on January 18, 2012 into a 50% interest. The limited liability company is administratively managed by our Company.

Business Plan, Capital Resources, and Liquidity

Business Plan

Our cinema exhibition business plan is to continue to identify, develop, and acquire cinema properties, where reasonably available, that allow us to leverage our cinema expertise and technology over a larger operating base. Our real estate business plan is to continue development of our existing land assets to be sensitive to opportunities to convert our entertainment assets to higher and better uses, or, when appropriate, dispose of such assets. Because we believe that current economic conditions are not conducive to obtaining the pre-construction leasing commitments necessary to justify commencement of construction, we currently focus our development efforts on improving and enhancing land entitlements and negotiating with end users for build to suit projects. In addition, we review opportunities to monetize our assets where such action leads to a financially acceptable outcome. We will also continue to investigate potential synergistic acquisitions that may not readily fall into either of our two currently identified segments.

Contractual Obligations

The following table provides information with respect to the maturities and
scheduled principal repayments of our secured debt and lease obligations at
March 31, 2012 (in thousands):

                             2012         2013         2014          2015         2016        Thereafter        Total
Debt                       $ 25,459     $ 31,320     $  69,967     $ 43,803     $     --     $         --     $ 170,549
Notes payable to related
parties                          --        9,000            --           --           --               --         9,000
Subordinated notes
(trust preferred
securities)                      --           --            --           --           --           27,913        27,913
Pension liability                 7           20            30           40           50            4,232         4,379
Lease obligations            23,804       28,687        25,309       21,264       19,769           77,699       196,532
Estimated interest on
debt                          9,869       11,260         6,927        2,609        1,568           16,460        48,693
Total                      $ 59,139     $ 80,287     $ 102,233     $ 67,716     $ 21,387     $    126,304     $ 457,066

We base estimated interest on long-term debt on the anticipated loan balances for future periods calculated against current fixed and variable interest rates.

We adopted FASB ASC 740-10-25, Income Taxes - Uncertain Tax Positions on January 1, 2007. As of adoption, the total amount of gross unrecognized tax benefits for uncertain tax positions was $12.5 million decreasing to $2.1 million as of March 31, 2012 mainly as a result of the settlement on January 6, 2011 of the Tax Audit/Litigation matter.

Unconsolidated Debt

Total debt of unconsolidated joint ventures and entities was $1.0 million and $663,000 as of March 31, 2012 and December 31, 2011. Our share of unconsolidated debt, based on our ownership percentage, was $340,000 and $221,000 as of March 31, 2012 and December 31, 2011. This debt is guaranteed by one of our subsidiaries to the extent of our ownership percentage.

Off-Balance Sheet Arrangements

There are no off-balance sheet transactions, arrangements or obligations (including contingent obligations) that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in the financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Currency Risk

We are subject to currency risk because we conduct a significant portion of our business in Australia and New Zealand. Set forth below is a chart indicating the various exchange rates at certain points in time for the Australian and New Zealand Dollar vis-à-vis the US Dollar over the past 20 years.

[[Image Removed]]

We do not engage in currency hedging activities. Rather, to the extent possible, we operate our Australian and New Zealand operations on a self-funding basis. Our policy in Australia and New Zealand is to match revenues and expenses, whenever possible, in local currencies. As a result, we have procured in local currencies the majority of our expenses in Australia and New Zealand. Due to the developing nature of our operations in Australia and New Zealand and our historic practice of funding our asset growth through local borrowings, our revenues are not yet significantly greater than our operating expenses and interest charges in these countries. As we continue to progress with our acquisition and development activities in Australia and New Zealand, the effect of variations in currency values will likely increase.

Liquidity and Capital Resources

Our ability to generate sufficient cash flows from operating activities in order to meet our obligations and commitments drives our liquidity position. This is further affected by our ability to obtain adequate, reasonable financing and/or to convert non-performing or non-strategic assets into cash.

Currently, our liquidity needs arise primarily from:

· capital expenditure needs for our expanding digital and 3D implementations;

· working capital requirements; and

· debt servicing requirements.

Long-Term Debt

Renewed New Zealand Credit Facility

On February 8, 2012, we received an approved amendment from Westpac renewing our existing $36.9 million (NZ$45.0 million) New Zealand credit facility with a 3-year credit facility. The renewed facility calls for a decrease in the overall facility by $4.1 million ($5.0 million) to $32.8 million (NZ$40.0 million) and an increase in the facility margin of 0.55% to 2.0%. No other significant changes to the facility were made.

Liquidity Requirements

Cinemas 1, 2, 3 Term Loan

As our Cinemas 1, 2, 3 loan is due to mature on July 1, 2012, the March 31, 2012 outstanding balance of this debt of $15.0 million is classified as current on our balance sheet. We intend to either refinance the property's debt with similar financing or a bridge loan until we have secured an agreement to sell the property.

Tax Settlement Liability

As indicated in our 2011 Annual Report, in accordance with the agreement between the U.S. Internal Revenue Service and our subsidiary, Craig Corporation, we are obligated to pay $290,000 per month, $3.5 million per year, in settlement for our tax liability for tax year ending June 30, 1997.

For the abovementioned liabilities, we believe that we have sufficient borrowing capacity under our various credit facilities, together with our $29.1 million cash balance, to meet our anticipated short-term working capital requirements for the next twelve months.

Operating Activities

. . .