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VIA
EDGAR
FILING
October
11, 2006
Linda
van
Doorn
Senior
Assistant Chief Accountant
Securities
and Exchange Commission
Washington,
D.C. 20549
Re: Reading
International, Inc.
Form
10-K for
the year ended December 31, 2005
Filed
March 16, 2006
File
No. 1-08625
Dear
Ms.
van Doorn,
Thank
you
for your letter dated September 26, 2006. While we continue to believe that
we
have made full and complete disclosure to our shareholders, we have endeavored
to address the issues you have noted in your letter.
Form
10-K
Item
7 - Management’s Discussion and Analysis of Financial Condition and Results of
Operations
|
1.
|
We
have reviewed your response to comment #1. Please tell us whether
you
considered discussing the debt obligations of your unconsolidated
joint
ventures as disclosed in Note 18 - Commitment and Contingencies,
in a
separately-captioned section of your MD&A. Refer to Item 303(a)(4) of
Regulation S-K.
|
Response:
As
indicated in Note
18 - Commitment and Contingencies,
the
Berkeley Cinema Joint Venture and Rialto Distribution loans are without recourse
beyond our investment in the joint ventures. Because no guarantee of the loans
extends beyond our equity interest in the joint venture, we would not
characterize these loans to be off-balance sheet arrangements.
In
future
filings, we will disclose separately total unconsolidated debt along with our
share thereof in the financing section of the MD&A.
-1-
Notes
to the Consolidated Financial Statements, page 79
Basis
of Consolidation, page 79
|
2.
|
We
have reviewed your response to comment #3. Please tell us whether
you will
apply the equity method of accounting for Rialto Cinemas retroactively,
as
indicated in paragraph 19.m. of APB Opinion No.
18.
|
Response:
We
acquired our interest in Rialto Cinemas on October 1, 2005 and as such we had
owned that interest for three months as of December 31, 2005, our fiscal
year-end. Based on the financial statements from the joint venture partner
that
we have now received in the third quarter of 2006, our share of equity losses
during those three months of 2005 was $127,000 (NZ$184,000), as compared to
the
cost method earnings of $0 recorded by us during that period. As indicated
in
our previous letter to you, we now have proper and timely reporting from the
joint venture partner so we are changing to the equity method effective the
third quarter of 2006. Based on the joint venture financials we have now finally
received through September 30, 2006, we would have had equity losses of $10,000
(NZ$16,000) and $671.00 (NZ$605.00) for the three months ending March 31, 2006
and June 30, 2006, respectively, in comparison with the cost method earnings
recorded of $0 and $0 over the same periods. We will report $5,000 (NZ$8,000)
of
equity earnings related to the three months ending September 30, 2006. We have
considered the impact of these unreported equity method earnings on our
consolidated financial statements for the year and quarters ended December
31,
2005, March 31, 2006, and June 30, 2006, respectively, and have concluded that
such impact is clearly immaterial to all prior period financial statements
noted
based on the loss from continuing operations and total equity for such periods.
We plan to record a cumulative catch-up of equity earnings in our third quarter
10Q filing for the period ended September 30, 2006. The impact of this
adjustment on the quarter and nine months ended September 30, 2006 is also
immaterial to the presentation of such consolidated financial statements taken
as a whole.
Note
18 - Commitments and Contingencies, page 104
Tax
Audit,
page
105
|
3.
|
We
have reviewed your response to comment #4. It appears from your response
and your disclosure that you have accrued an estimate of the probable
amount of loss from the tax audit of $3.5 million and that you believe
it
is reasonably possible that you will incur an additional loss above
what
you have accrued, with a possible range of additional loss being
between
$3.5 and $42.7 million. The former is disclosed in Note 14 on page
103 and
the latter is disclosed in Note 18 on page 105. Please tell us if
our
interpretation of your response is correct and if so, please clarify
your
disclosure in future filings and include all relevant SFAS 5 disclosures
in one footnote or cross reference as necessary. If not, clarify
to us and
in future filings the amount of the probable loss you have accrued
in
accordance with paragraph 8 of SFAS 5 and the range
of additional loss that is reasonably possible, as required by paragraph
10 of SFAS 5.
|
-2-
Response:
Your
interpretation is correct. We respectfully advise that we did cross-reference
our $3.5 million tax audit accrual mentioned in Note 14 to the Note
18 - Commitment and Contingencies
footnote. We have estimated the probable amount of loss from the tax audit
to be
$3.5 million and we believe it is reasonably possible that we will incur an
additional loss above what we have accrued, with a possible range of additional
loss being between $3.5 and $42.7 million. We will disclose this range in the
Commitment and Contingencies footnote in the future and cross-reference this
disclosure to Note
14 - Income Taxes.
We
await
your comments regarding the above responses and attached revisions and hope
that
they would have fully satisfied your enquiries.
Sincerely,
/s/
Andrzej J. Matyczynski
Andrzej
J. Matyczynski
Chief
Financial Officer
Tel:
213
235 2238
-3-