Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
RDI > SEC Filings for RDI > Form 10-Q on 8-Aug-2013All Recent SEC Filings

Show all filings for READING INTERNATIONAL INC

Form 10-Q for READING INTERNATIONAL INC


8-Aug-2013

Quarterly Report


Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

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.

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.

Real Estate Activities

Although to date we have curtailed our real estate development activities, we are in the predevelopment stage on certain of our Manhattan U.S. properties and 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, such as our Wellington, New Zealand site, 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 may sell all or portions of our properties in order to provide liquidity for other projects. Finally, we will continue to investigate potential synergistic acquisitions that may not readily fall into either of our two currently identified segments.

Results of Operations

At June 30, 2013, we owned and operated 51 cinemas with 433 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.

The tables below summarize the results of operations for each of our principal business segments for the three ("2013 Quarter") and six ("2013 Six Months") months ended June 30, 2013 and the three ("2012 Quarter") and six ("2012 Six Months") months ended June 30, 2012, respectively (dollars in thousands):

                                       Cinema                     Intersegment
Three Months Ended June 30, 2013     Exhibition    Real Estate    Eliminations      Total
Revenue                               $   64,659   $     6,896     $     (1,913)  $  69,642
Operating expense                         53,008         2,730           (1,913)     53,825
Depreciation and amortization              2,525         1,015                --      3,540
General and administrative expense           801           214                --      1,015
Segment operating income              $    8,325   $     2,937     $          --  $  11,262

                                       Cinema                     Intersegment
Three Months Ended June 30, 2012     Exhibition    Real Estate    Eliminations      Total
Revenue                               $   57,988   $     6,841     $     (1,882)  $  62,947
Operating expense                         48,347         2,582           (1,882)     49,047
Depreciation and amortization              2,733         1,087                --      3,820
General and administrative expense           782           146                --        928
Segment operating income              $    6,126   $     3,026     $          --  $   9,152

Reconciliation to net income
attributable to Reading
International, Inc. shareholders:                              2013 Quarter    2012 Quarter
Total segment operating income                               $      11,262   $       9,152
Non-segment:
Depreciation and amortization
expense                                                                110              97
General and administrative expense                                   3,386           3,398
Operating income                                                     7,766           5,657
Interest expense, net                                               (2,636)         (5,683)
Other income                                                           113              68
Loss on sale of assets                                                   --             (2)
Income tax expense                                                  (1,500)           (259)
Equity earnings of unconsolidated
joint ventures and entities                                            432             399
Income from discontinued operations                                      --             44
Net income                                                   $       4,175   $         224
Net (income) loss attributable to
noncontrolling interests                                               (40)             15
Net income attributable to Reading
International, Inc. common
shareholders                                                 $       4,135   $         239


                                       Cinema                    Intersegment
Six Months Ended June 30, 2013       Exhibition   Real Estate    Eliminations      Total
Revenue                              $  119,429   $    13,606     $     (3,826) $  129,209
Operating expense                       100,956         5,399           (3,826)    102,529
Depreciation and amortization             5,285         2,134                --      7,419
General and administrative expense        1,571           334                --      1,905
Segment operating income             $   11,617   $     5,739     $          -- $   17,356

                                       Cinema                    Intersegment
Six Months Ended June 30, 2012       Exhibition   Real Estate    Eliminations      Total
Revenue                              $  115,390   $    13,753     $     (3,765) $  125,378
Operating expense                        96,563         5,326           (3,765)     98,124
Depreciation and amortization             5,563         2,222                --      7,785
General and administrative expense        1,484           325                --      1,809
Segment operating income             $   11,780   $     5,880     $          -- $   17,660

Reconciliation to net income
attributable                                                   2013 Six    2012 Six
to Reading International, Inc.
shareholders:                                                   Months      Months
Total segment operating income                              $    17,356  $   17,660
Non-segment:
Depreciation and amortization
expense                                                             221         236
General and administrative expense                                6,833       6,937
Operating income                                                 10,302      10,487
Interest expense, net                                            (5,309)     (9,443)
Other income                                                        128          23
Loss on sale of assets                                               (7)         (2)
Income tax expense                                               (2,389)     (1,884)
Equity earnings of unconsolidated
joint ventures and entities                                         779         812
Income from discontinued operations                                   --        120
Net income                                                  $     3,504  $      113
Net income attributable to
noncontrolling interests                                            (36)       (116)
Net income (loss) attributable to
Reading International, Inc. common
shareholders                                                $     3,468  $       (3)

Cinema Exhibition Segment

Included in the cinema exhibition segment above is revenue and expense from the operations of 51 cinema complexes with 433 screens during the 2013 Quarter and 51 cinema complexes with 429 screens during the 2012 Quarter and management fee income from 2 cinemas with 9 screens in both years. The following tables detail our cinema exhibition segment operating results for the three months ended June 30, 2013 and 2012, respectively (dollars in thousands):


Three Months Ended June 30, 2013     United States   Australia   New Zealand    Total
Admissions revenue                 $       22,198  $   17,474  $      3,962  $ 43,634
Concessions revenue                         9,665       6,648         1,487    17,800
Advertising and other revenue               1,560       1,396           269     3,225
Total revenues                             33,423      25,518         5,718    64,659

Cinema costs                               26,244      18,977         4,270    49,491
Concession costs                            1,688       1,396           433     3,517
Total operating expense                    27,932      20,373         4,703    53,008

Depreciation and amortization               1,514         807           204     2,525
General and administrative expense            603         198             --      801
Segment operating income           $        3,374  $    4,140  $        811  $  8,325

Three Months Ended June 30, 2012     United States   Australia   New Zealand    Total
Admissions revenue                 $       19,138  $   17,258  $      3,501  $ 39,897
Concessions revenue                         8,136       5,938         1,082    15,156
Advertising and other revenue               1,300       1,381           254     2,935
Total revenues                             28,574      24,577         4,837    57,988

Cinema costs                               23,431      18,447         3,728    45,606
Concession costs                            1,281       1,189           271     2,741
Total operating expense                    24,712      19,636         3,999    48,347

Depreciation and amortization               1,648         843           242     2,733
General and administrative expense            607         175             --      782
Segment operating income           $        1,607  $    3,923  $        596  $  6,126

Cinema revenue increased for the 2013 Quarter by $6.7 million or 11.5% compared to the same period in 2012. The 2013 Quarter increase was primarily due to an increase in our U.S. and Australian box office admissions of 385,000, related to the quality of film product in 2013 compared to the same period in 2012. This resulted in increased box office, concessions and other revenue of $5.8 million. This increase in revenue was augmented by a 33,000 increase in our New Zealand box office admissions resulting in an increase in revenue of $881,000 primarily as a result of the reopening of an earthquake damaged New Zealand multiplex in early January 2012. Both the Australian and New Zealand results were affected by quarter over quarter changes in the value of the Australian and New Zealand dollars compared to the U.S. dollar (see below).

Operating expense increased for the 2013 Quarter by $4.7 million or 9.6% compared to the same period in 2012. Overall, our operating expense as a percent of gross revenue decreased from 83.4% to 82.0% primarily due to the aforementioned increase in box office admissions which decreased our labor per admit costs and from our fixed property rent costs relative to the aforementioned increase in revenue. Additionally, not previously occurring during 2012, our 2013 quarterly operating expense was affected by a net charge of $111,000 for our digital projection lease after the effect of the virtual print fees to be received from film distributors.


Depreciation expense decreased for the 2013 Quarter by $208,000 or 7.6% compared to the same period in 2012 due to certain of our worldwide cinema assets coming to the end of their depreciable lives.

For our statement of operations, the Australian quarterly average exchange rates decreased by 1.9% and the New Zealand quarterly average exchange rates increased by 3.8% since the 2012 Quarter, both of which had an impact on the individual components of our income statement.

Because of the above, and driven by the increased revenue, our cinema exhibition segment income increased for the 2013 Quarter by $2.2 million or 35.9% compared to the same period in 2012.

The following tables detail our cinema exhibition segment operating results for the six months ended June 30, 2013 and 2012, respectively (dollars in thousands):

Six Months Ended June 30, 2013       United States   Australia   New Zealand    Total
Admissions revenue                 $       40,245  $   33,477  $      7,430  $  81,152
Concessions revenue                        17,084      12,382         2,693     32,159
Advertising and other revenue               2,918       2,711           489      6,118
Total revenues                             60,247      48,570        10,612    119,429

Cinema costs                               49,217      37,168         8,120     94,505
Concession costs                            3,058       2,571           822      6,451
Total operating expense                    52,275      39,739         8,942    100,956

Depreciation and amortization               3,131       1,652           502      5,285
General and administrative expense          1,166         405             --     1,571
Segment operating income           $        3,675  $    6,774  $      1,168  $  11,617

Six Months Ended June 30, 2012       United States   Australia   New Zealand    Total
Admissions revenue                 $       38,662  $   34,676  $      6,664  $  80,002
Concessions revenue                        15,784      11,910         1,958     29,652
Advertising and other revenue               2,548       2,767           421      5,736
Total revenues                             56,994      49,353         9,043    115,390

Cinema costs                               46,653      37,251         7,258     91,162
Concession costs                            2,524       2,389           488      5,401
Total operating expense                    49,177      39,640         7,746     96,563

Depreciation and amortization               3,298       1,768           497      5,563
General and administrative expense          1,124         360             --     1,484
Segment operating income           $        3,395  $    7,585  $        800  $  11,780

Driven by the strong 2013 Quarter, cinema revenue increased for the 2013 Six Months by $4.0 million or 3.5% compared to the same period in 2012. The 2013 Six Months increase was primarily due to an increase in the U.S. box office admissions of 45,000, related to the quality of film product in 2013 Six Months compared to the same period in 2012 which was augmented by a 3.1% increase in the U.S. average ticket price. This increase in revenue was enhanced in part by an 82,000 increase in our New Zealand box office admissions resulting in an increase in revenue of $1.6 million primarily as a result of the reopening of an earthquake damaged New Zealand multiplex in early January 2012. These revenue increases were offset by a decrease in our


Australian revenue of $783,000 primarily due to a 3.0% decrease in the average ticket price. Both the Australian and New Zealand results were affected by changes in the value of the Australian and New Zealand dollars compared to the U.S. dollar (see below).

Operating expense increased for the 2013 Six Months by $4.4 million or 4.5% compared to the same period in 2012. Overall, our operating expense as a percent of gross revenue increased from 83.7% during the 2012 Six Months to 84.5% for the 2013 Six Months. A contributing factor to this increase was that our 2013 Six Months operating expense was affected by a net charge of $241,000 for our digital projection lease after the effect of the virtual print fees to be received from film distributors. This lease was not in place during 2012.

Depreciation expense decreased for the 2013 Six Months by $278,000 or 5.0% compared to the same period in 2012 due to certain of our worldwide cinema assets coming to the end of their depreciable lives.

For our statement of operations, the Australian average exchange rates decreased by 1.8% for the 2013 Six Months while the New Zealand average exchange rates increased by 2.8% for the 2013 Six Months, compared to the 2012 Six Months, both of which had an impact on the individual components of our income statement.

Because of the above, the cinema exhibition segment income marginally decreased for the 2013 Six Months by $163,000 or 1.4% compared to the same period in 2012 principally related to the decrease in Australian cinema box office revenue.

Real Estate Segment

The following tables detail our real estate segment operating results for the three months ended June 30, 2013 and 2012, respectively (dollars in thousands):

Three Months Ended June 30,
2013                             United States   Australia    New Zealand     Total
Live theater rental and
ancillary income               $          933  $         -- $          -- $       933
Property rental income                    414        3,626         1,923        5,963
Total revenues                          1,347        3,626         1,923        6,896

Live theater costs                        490            --            --         490
Property rental cost                      188        1,393           659        2,240
Total operating expense                   678        1,393           659        2,730

Depreciation and amortization              77          671           267        1,015
General and administrative
expense                                    69          118            27          214
Segment operating income       $          523  $     1,444  $        970  $     2,937

Three Months Ended June 30,
2012                             United States   Australia    New Zealand     Total
Live theater rental and
ancillary income               $          977            -- $          -- $       977
Property rental income                    410        3,582         1,872        5,864
Total revenues                          1,387        3,582         1,872        6,841

Live theater costs                        523            --            --         523
Property rental cost                      181        1,354           524        2,059
Total operating expense                   704        1,354           524        2,582

Depreciation and amortization              74          693           320        1,087
General and administrative
expense                                    15          118            13          146
Segment operating income       $          594  $     1,417  $      1,015  $     3,026


Real estate revenue increased for the 2013 Quarter by $55,000 or 0.8% compared to the same period in 2012 primarily related to slightly higher rents and occupancy associated with our Australian retail properties in the 2013 Quarter compared to the same period in 2012. These increases were offset in part by a decrease in live theater revenue. Both the Australian and New Zealand results were also affected by changes in the value of the Australian and New Zealand dollars compared to the U.S. dollar (see below).

Operating expense for the real estate segment increased for the 2013 Quarter by $148,000 or 5.7% compared to the same period in 2012. This increase resulted primarily from additional costs associated with the start of development work on our Wellington, New Zealand location. Our operating expense was also affected by changes in the value of the Australian and New Zealand dollars compared to the U.S. dollar (see below).

For our statement of operations, the Australian quarterly average exchange rates decreased by 1.9% and the New Zealand quarterly average exchange rates increased by 3.8% since the 2012 Quarter, both of which had an impact on the individual components of our income statement.

As a result of the above, real estate segment income decreased for the 2013 Quarter by $89,000 or 2.9% compared to the same period in 2012.

The following tables detail our real estate segment operating results for the six months ended June 30, 2013 and 2012, respectively (dollars in thousands):

Six Months Ended June 30, 2013    United States   Australia    New Zealand     Total
Live theater rental and
ancillary income                $        1,527            -- $          -- $     1,527
Property rental income                     830        7,333         3,916       12,079
Total revenues                           2,357        7,333         3,916       13,606

Live theater costs                         949            --            --         949
Property rental cost                       430        2,789         1,231        4,450
Total operating expense                  1,379        2,789         1,231        5,399

Depreciation and amortization              157        1,373           604        2,134
General and administrative
expense                                     71          240            23          334
Segment operating income        $          750  $     2,931  $      2,058  $     5,739

Six Months Ended June 30, 2012    United States   Australia    New Zealand     Total
Live theater rental and
ancillary income                $        1,877            -- $          -- $     1,877
Property rental income                     829        7,219         3,828       11,876
Total revenues                           2,706        7,219         3,828       13,753

Live theater costs                       1,038            --            --       1,038
Property rental cost                       483        2,750         1,055        4,288
Total operating expense                  1,521        2,750         1,055        5,326

Depreciation and amortization              154        1,415           653        2,222
General and administrative
expense                                     23          275            27          325
Segment operating income        $        1,008  $     2,779  $      2,093  $     5,880


Real estate revenue decreased for the 2013 Six Months by $147,000 or 1.1% compared to the same period in 2012. The decrease in real estate revenue was primarily related to a $350,000 decrease in live theater revenue offset by increased revenue from our Australian and New Zealand real estate assets primarily due to higher rents in 2013 compared to the same period in 2012. Both the Australian and New Zealand results were also affected by changes in the value of the Australian and New Zealand dollars compared to the U.S. dollar (see below).

Operating expense for the real estate segment increased for the 2013 Six Months by $73,000 or 1.4% compared to the same period in 2012. This increase resulted primarily from additional costs associated with the start of development work on our Wellington, New Zealand location. Our operating expense was also affected by changes in the value of the Australian and New Zealand dollars compared to the U.S. dollar (see below).

For our statement of operations, the Australian average exchange rates decreased by 1.8% for the 2013 Six Months while the New Zealand average exchange rates increased 2.8% for the 2013 Six Months compared to the 2012 Six Months, both of which had an impact on the individual components of our income statement.

As a result of the above, real estate segment income decreased for the 2013 Six Months by $141,000 or 2.4% compared to the same period in 2012.

Corporate

Quarterly Results

Net interest expense decreased by $3.0 million for the 2013 Quarter compared to the 2012 Quarter. The decrease in interest expense during the 2013 Quarter was primarily due to a decrease in the fair value of our interest rate swap liabilities in 2013 compared to an increase in these liabilities during the same period in 2012 resulting in a comparative $2.7 million decrease in interest expense from the 2012 Quarter to the 2013 Quarter. Additionally, there was an overall decrease in our worldwide debt balances and a decrease in the interest rates on our corporate loans in the U.S. and Australia, both of which resulted in lower interest expense.

For the 2013 Quarter, our income tax expense increased by $1.2 million compared to the 2012 Quarter primarily associated with an increase in our net income before income tax expense.

For the 2012 Quarter, we recorded income from discontinued operations of $44,000 associated with the sale of our Indooroopilly property in November 2012.

Six Months Results

Net interest expense decreased by $4.1 million for the 2013 Six Months compared to the 2012 Six Months. The decrease in interest expense during the 2013 Six Months was due to the same reasons noted above for the quarterly results.

The 2013 Six Months income tax expense increased by $0.5 million compared to the 2012 Six Months due to the same reasons noted in the quarterly results.

For the 2012 Six Months, we recorded income from discontinued operations of $120,000 associated with the sale of our Indooroopilly property in November 2012.


Net Income (Loss) Attributable to Reading International, Inc. Common Shareholders

We recorded a net income attributable to Reading International, Inc. common shareholders of $4.1 million for the 2013 Quarter compared to a net income of $239,000 for the 2012 Quarter and a net income of $3.5 million for the 2013 Six Months compared to a net loss of $3,000 for the 2012 Six Months. As described above, the change from a net loss to a net income from 2012 to 2013 was primarily from the aforementioned decrease in interest expense.

Acquisition

U.S. Land Parcel Acquisition

. . .

  Add RDI to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for RDI - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.