Add
RDI to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| RDI > SEC Filings for RDI > Form 10-Q on 9-Nov-2012 | All Recent SEC Filings |
9-Nov-2012
Quarterly Report
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 57 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.
Cinema Activities
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. During September 2012, we opened an 8-screen art cinema in the Mosaic District in the greater Washington D.C. metropolitan area. Additionally, during 2012, we elected not to renew the leases of our 4-screen Hastings cinema in New Zealand and our 4-screen Kukui cinema in Hawaii. We terminated operations with the Hastings cinema in January 2012 and we anticipate terminating operations for our Kukui cinema in November 2012.
On September 30, 2012, we entered into a long-term agreement with an affiliate of Cinedigm Digital Cinema Corp. designed to allow us to collect Virtual Print Fees ("VPFs")from film distributors with respect to digital content exhibited in our U.S. cinemas. These VPFs are intended to assist exhibitors, such as ourselves, to pay for the cost of converting from film to digital projection, and reflect (to some extent) costs saved by distributors as a result of not needing to produce film prints of their movies.
Real Estate Activities
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 is to begin the build-out of our existing undeveloped 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 we believe to be appropriate. In addition, we will continue to investigate potential synergistic acquisitions that may not readily fall into either of our two currently identified segments.
Table of Contens
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. 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 into a 50% interest in Shadow View Land and Farming, LLC. We are the managing member of this 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 even though it cannot be classified as a property held for sale pursuant to FASB ASC 360-10-45. Additionally, we are currently reevaluating our options for the Cinemas 1, 2, 3 property with an intent to redevelop rather than sell the property.
Effective October 5, 2012, we entered into an agreement to sell our Indooroopilly property for $12.4 million (AUS$12.0 million) (See Note 18 - Subsequent Events to our Condensed Consolidated Financial Statements). The net book value of this property's assets is included in held for sale assets on our Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011 and the operational results are included in income (loss) from discontinued operations on our Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2012 and 2011.
Results of Operations
At September 30, 2012, we owned and operated 52 cinemas with 437 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 the
U.S. In addition, we continue to hold various properties used in our historic
railroad operations.
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.
Table of Contens
The tables below summarize the results of operations for each of our principal business segments for the three ("2012 Quarter") and nine ("2012 Nine Months") months ended September 30, 2012 and the three ("2011 Quarter") and nine ("2011 Nine Months") months ended September 30, 2012, respectively (dollars in thousands):
Cinema Intersegment
Three Months Ended September 30, 2012 Exhibition Real Estate Eliminations Total
Revenue $ 59,246 $ 6,570 $ (1,882 ) $ 63,934
Operating expense 50,554 3,153 (1,882 ) 51,825
Depreciation and amortization 2,786 1,108 -- 3,894
General and administrative expense 653 197 -- 850
Segment operating income $ 5,253 $ 2,112 $ -- $ 7,365
Cinema Intersegment
Three Months Ended September 30, 2011 Exhibition Real Estate Eliminations Total
Revenue $ 61,867 $ 6,354 $ (1,667 ) $ 66,554
Operating expense 50,310 2,519 (1,667 ) 51,162
Depreciation and amortization 2,966 1,033 -- 3,999
General and administrative expense 649 130 -- 779
Segment operating income $ 7,942 $ 2,672 $ -- $ 10,614
Reconciliation to net income attributable to Reading International, Inc.
shareholders: 2012 Quarter 2011 Quarter
Total segment operating income $ 7,365 $ 10,614
Non-segment:
Depreciation and amortization expense 101 205
General and administrative expense 3,107 3,393
Operating income 4,157 7,016
Interest expense, net (4,165 ) (7,280 )
Other income 182 6
Gain on sale of assets 86 1
Income tax benefit 100 38
Equity earnings of unconsolidated joint ventures and entities 277 454
Income (loss) from discontinued operations (241 ) 55
Net income $ 396 $ 290
Net loss attributable to noncontrolling interests (33 ) (253 )
Net income attributable to Reading International, Inc. common shareholders $ 363 $ 37
|
Cinema Intersegment
Nine Months Ended September 30, 2012 Exhibition Real Estate Eliminations Total
Revenue $ 174,636 $ 20,324 $ (5,647 ) $ 189,313
Operating expense 147,117 8,479 (5,647 ) 149,949
Depreciation and amortization 8,349 3,331 -- 11,680
General and administrative expense 2,137 522 -- 2,659
Segment operating income $ 17,033 $ 7,992 $ -- $ 25,025
Cinema Intersegment
Nine Months Ended September 30, 2011 Exhibition Real Estate Eliminations Total
Revenue $ 173,577 $ 18,981 $ (5,000 ) $ 187,558
Operating expense 143,352 7,430 (5,000 ) 145,782
Depreciation and amortization 8,869 3,358 -- 12,227
General and administrative expense 1,930 524 -- 2,454
Segment operating income $ 19,426 $ 7,669 $ -- $ 27,095
|
Table of Contens
Reconciliation to net income attributable 2012 Nine 2011 Nine to Reading International, Inc. shareholders: Months Months Total segment operating income $ 25,025 $ 27,095 Non-segment: Depreciation and amortization expense 336 216 General and administrative expense 10,042 10,709 Operating income 14,647 16,170 Interest expense, net (13,608 ) (16,616 ) Other income 202 79 Gain (loss) on sale of assets 84 (66 ) Income tax benefit (expense) (1,784 ) 13,177 Equity earnings of unconsolidated joint ventures and entities 1,090 1,087 Income (loss) from discontinued operations (121 ) 170 Gain on sale of discontinued operation -- 1,656 Net income $ 510 $ 15,657 Net income attributable to noncontrolling interests (149 ) (667 ) Net income attributable to Reading International, Inc. common shareholders $ 361 $ 14,990 |
Cinema Exhibition Segment
Included in the cinema exhibition segment above is revenue and expense from the operations of 52 cinema complexes with 437 screens during the 2012 Quarter and 52 cinema complexes with 433 screens during the 2011 Quarter and management fee income from 2 cinemas with 9 screens in both years. These results reflect the purchase of a U.S. cinema in August 2011 of an existing cinema from a third party, the sale of a cinema in Australia April 2011, and the closing of a New Zealand cinema in January 2012. The following tables detail our cinema exhibition segment operating results for the three months ended September 30, 2012 and 2011, respectively (dollars in thousands):
Three Months Ended September 30, 2012 United States Australia New Zealand Total Admissions revenue $ 19,111 $ 18,111 $ 3,458 $ 40,680 Concessions revenue 7,795 6,596 1,092 15,483 Advertising and other revenues 1,378 1,467 238 3,083 Total revenues 28,284 26,174 4,788 59,246 Cinema costs 24,416 19,473 3,743 47,632 Concession costs 1,364 1,298 260 2,922 Total operating expense 25,780 20,771 4,003 50,554 Depreciation and amortization 1,592 942 252 2,786 General and administrative expense 475 178 -- 653 Segment operating income $ 437 $ 4,283 $ 533 $ 5,253 |
Table of Contens
Three Months Ended September 30, 2011 United States Australia New Zealand Total Admissions revenue $ 19,103 $ 21,101 $ 3,459 $ 43,663 Concessions revenue 7,400 6,527 950 14,877 Advertising and other revenues 1,509 1,606 212 3,327 Total revenues 28,012 29,234 4,621 61,867 Cinema costs 23,159 20,677 3,658 47,494 Concession costs 1,198 1,366 252 2,816 Total operating expense 24,357 22,043 3,910 50,310 Depreciation and amortization 1,581 1,101 284 2,966 General and administrative expense 481 168 -- 649 Segment operating income $ 1,593 $ 5,922 $ 427 $ 7,942 |
· Cinema revenue decreased for the 2012 Quarter $2.6 million or 4.2% compared to the same period in 2011. The 2012 Quarter decrease was primarily due to a decrease in Australian box office admissions of 120,000 and a decrease in the average price per ticket of $0.68, related to the available film product in 2012 compared to the same period in 2011. Our New Zealand and U.S. box office admissions increased by 70,000 resulting in an increase in revenue of $439,000 primarily as a result of the reopening an earthquake damaged New Zealand multiplex in early January 2012 and the acquisition of a U.S. cinema from a third party operator in August 2011. Both the Australian and New Zealand results were affected by a decrease in the value of the Australian and New Zealand dollars compared to the U.S. dollar (see below).
· Operating expense increased for the 2012 Quarter $244,000 or 0.5% compared to the same period in 2011. Cinema operating expense increased in our U.S. cinemas by $1.4 million primarily associated with opening of a new cinema in the U.S. in September 2012, the acquisition in 2011 of an existing cinema from a third party, and the anticipated closing of an older cinema in the U.S. These costs were offset by $1.3 million in costs decreases from our Australian circuit which followed the decreased revenues noted above associated with the overall decrease in box office admissions, assisted by a decrease in the value of the Australian and New Zealand dollars compared to the U.S. dollar (see below). Overall, our operating expense as a percent of gross revenue increased from 81.3% to 85.3% primarily due to the aforementioned operating cost increases coupled with the decrease in box office admissions which increased our labor per admit costs and from our fixed property rent costs relative to the aforementioned decrease in revenue.
· Depreciation expense decreased for the 2012 Quarter by $180,000 or 6.1% compared to the same period in 2011 due to certain Australian and New Zealand cinema assets coming to the end of their depreciable lives in 2011.
· For our statement of operations, the Australian and New Zealand quarterly average exchange rates decreased by 1.0% and 2.8%, 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 decreased revenue, the cinema exhibition segment income decreased for the 2012 Quarter by $2.7 million or 33.9% compared to the same period in 2011.
Table of Contens
The following tables detail our cinema exhibition segment operating results for the nine months ended September 30, 2012 and 2011, respectively (dollars in thousands):
Nine Months Ended September 30, 2012 United States Australia New Zealand Total Admissions revenue $ 57,772 $ 52,786 $ 10,123 $ 120,681 Concessions revenue 23,579 18,506 3,050 45,135 Advertising and other revenues 3,927 4,234 659 8,820 Total revenues 85,278 75,526 13,832 174,636 Cinema costs 71,068 56,724 11,001 138,793 Concession costs 3,888 3,687 749 8,324 Total operating expense 74,956 60,411 11,750 147,117 Depreciation and amortization 4,891 2,710 748 8,349 General and administrative expense 1,599 538 -- 2,137 Segment operating income $ 3,832 $ 11,867 $ 1,334 $ 17,033 Nine Months Ended September 30, 2011 United States Australia New Zealand Total Admissions revenue $ 54,870 $ 57,904 $ 9,724 $ 122,498 Concessions revenue 21,182 18,147 2,595 41,924 Advertising and other revenues 4,032 4,578 545 9,155 Total revenues 80,084 80,629 12,864 173,577 Cinema costs 66,728 58,408 10,317 135,453 Concession costs 3,365 3,875 659 7,899 Total operating expense 70,093 62,283 10,976 143,352 Depreciation and amortization 4,807 3,205 857 8,869 General and administrative expense 1,488 442 -- 1,930 Segment operating income $ 3,696 $ 14,699 $ 1,031 $ 19,426 |
· Despite the somewhat weak 2012 Quarter, cinema revenue still increased for the 2012 Nine Months by $1.1 million or 0.6% compared to the same period in 2011. The 2012 Nine Months increase was primarily due to an increase in U.S. and New Zealand box office admissions of 447,000 and 127,000, respectively. The uplift in box office admissions in the U.S. was primarily from the improved film product noted in the first quarter of 2012 and from the acquisition of a cinema from a third party in August 2011 while the increase in New Zealand was primarily as a result of the reopening of an earthquake damaged New Zealand multiplex in early January 2012. These changes resulted in an increase in box office revenue from our U.S. and New Zealand circuits of $3.3 million and an increase in concessions and other revenue of $2.9 million. Our New Zealand revenue was also impacted by an increase in the value of the New Zealand dollar compared to the U.S. dollar (see below) for the 2012 Nine Months compared to the same period in 2011. Our Australian cinema revenue decreased by $5.1 million primarily relating to an 184,000 decrease in box office admissions coupled with a $0.54 decrease in the average ticket price per admission. This decrease included the temporary closure of a cinema in Australia due to renovations during the second quarter. As noted below, there was only a nominal change in the Australian dollar compared to the U.S. dollar for the comparable periods.
Table of Contens
· Operating expense increased for the 2012 Nine Months by $3.8 million or 2.6% compared to the same period in 2011. This increase mainly followed the increased revenues noted above primarily relating to the improved film product in the first quarter of 2012 compared to 2011. The operating expense was also impacted by the increase in the value of the New Zealand dollar compared to the U.S. dollar (see below). Overall, our operating expense as a percent of gross revenue increased from 82.6% during the 2011 Nine Months to 84.2% for the 2012 Nine Months.
· Depreciation expense decreased for the 2012 Nine Months by $520,000 or 5.9% compared to the same period in 2011 due to certain Australian and New Zealand cinema assets coming to the end of their depreciable lives in 2011.
· General and administrative costs increased for the 2012 Nine Months by $207,000 or 10.7% compared to the same period in 2011 due to an increase in payroll and travel related costs for our U.S. and Australian cinema circuits.
· For our statement of operations, the Australian average exchange rates decreased by 0.4% for the 2012 Nine Months while the New Zealand average exchange rates increased 1.3% for the 2012 Nine Months, compared to the 2011 Nine Months, which had an impact on the individual components of our income statement.
· Because of the above, the cinema exhibition segment income decreased for the 2012 Nine Months by $2.4 million or 12.3% compared to the same period in 2011 principally related to the decrease Australian cinema box office admissions.
Real Estate Segment The following tables detail our real estate segment operating results for the three months ended September 30, 2012 and 2011, respectively (dollars in thousands): Three Months Ended September 30, 2012 United States Australia New Zealand Total Live theater rental and ancillary income $ 669 $ -- $ -- $ 669 Property rental income 434 3,601 1,866 5,901 Total revenues 1,103 3,601 1,866 6,570 Live theater costs 490 -- -- 490 Property rental cost 273 1,859 531 2,663 Total operating expense 763 1,859 531 3,153 Depreciation and amortization 74 706 328 1,108 General and administrative expense 51 133 13 197 Segment operating income $ 215 $ 903 $ 994 $ 2,112 |
Table of Contens
Three Months Ended September 30, 2011 United States Australia New Zealand Total Live theater rental and ancillary income $ 678 -- $ -- $ 678 Property rental income 398 3,362 1,916 5,676 Total revenues 1,076 3,362 1,916 6,354 Live theater costs 471 -- -- 471 Property rental cost 101 1,417 530 2,048 Total operating expense 572 1,417 530 2,519 Depreciation and amortization 82 724 227 1,033 General and administrative expense (7 ) 119 18 130 Segment operating income $ 429 $ 1,102 $ 1,141 $ 2,672 |
· Real estate revenue increased for the 2012 Quarter by $216,000 or 3.4% compared to the same period in 2011 primarily related to higher rents and occupancy associated with our Australian retail properties in 2012 compared to the same period in 2011. Both the Australian and New Zealand results were also affected by a decrease in the value of the Australian and New Zealand dollars . . .
|
|