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rdi-20230331x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

FORM 10-Q

(Mark One)


þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2023


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 1-8625

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READING INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

Nevada

State or other jurisdiction of incorporation or organization)

95-3885184

(IRS Employer Identification Number)

189 Second Avenue, Suite 2S

New York, New York

(Address of principal executive offices)

10003

(Zip Code)

Registrant’s telephone number, including area code: (213) 235-2240

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Nonvoting Common Stock, $0.01 par value	RDI	NASDAQ
Class B Voting Common Stock, $0.01 par value	RDIB	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer þ Smaller Reporting Company þ Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 14, 2023, there were 20,592,834 shares of Class A Nonvoting Common Stock, $0.01 par value per share and 1,680,590 shares of Class B Voting Common Stock, $0.01 par value per share outstanding.
‎

READING INTERNATIONAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


	Page
PART I - Financial Information	3
Item 1 – Financial Statements	3
Consolidated Balance Sheets (Unaudited)	3
Consolidated Statements of Income (Unaudited)	4
Consolidated Statements of Comprehensive Income (Unaudited)	5
Consolidated Statements of Cash Flows (Unaudited)	6
Notes to Consolidated Financial Statements (Unaudited)	7
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3 – Quantitative and Qualitative Disclosure about Market Risk	43
Item 4 – Controls and Procedures	45
PART II – Other Information	46
Item 1 – Legal Proceedings	46
Item 1A – Risk Factors	46
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3 – Defaults Upon Senior Securities	46
Item 4 – Mine Safety Disclosure	46
Item 5 – Other Information	46
Item 6 – Exhibits	47
SIGNATURES	48
Certifications

‎

PART 1 – FINANCIAL INFORMATION

Item 1 - Financial Statements

READING INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except share information)



	March 31,		December 31,
	2023		2022
ASSETS	(unaudited)
Current Assets:
Cash and cash equivalents	$	14,628	$	29,947
Restricted cash		5,749		5,032
Receivables		4,858		6,206
Inventories		1,417		1,616
Derivative financial instruments - current portion		293		907
Prepaid and other current assets		5,905		3,804
Total current assets		32,850		47,512
Operating property, net		281,886		286,952
Operating lease right-of-use assets		193,655		200,417
Investment and development property, net		8,694		8,792
Investment in unconsolidated joint ventures		4,707		4,756
Goodwill		25,272		25,504
Intangible assets, net		2,292		2,391
Deferred tax asset, net		420		447
Other assets		10,422		10,284
Total assets	$	560,198	$	587,055
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	40,418	$	42,590
Film rent payable		3,944		5,678
Debt - current portion		47,345		37,279
Subordinated debt - current portion		756		747
Taxes payable - current		649		300
Deferred revenue		9,093		10,286
Operating lease liabilities - current portion		24,016		23,971
Other current liabilities		824		813
Total current liabilities		127,045		121,664
Debt - long-term portion		136,473		148,688
Subordinated debt, net		27,005		26,950
Noncurrent tax liabilities		6,797		7,117
Operating lease liabilities - non-current portion		192,787		200,037
Other liabilities		19,119		19,320
Total liabilities	$	509,226	$	523,776
Commitments and contingencies (Note 15)
Stockholders’ equity:
Class A non-voting common shares, par value $0.01, 100,000,000 shares authorized,
33,437,260 issued and 20,501,150 outstanding at March 31, 2023 and
33,348,295 issued and 20,412,185 outstanding at December 31, 2022		235		235
Class B voting common shares, par value $0.01, 20,000,000 shares authorized and
1,680,590 issued and outstanding at March 31, 2023 and December 31, 2022		17		17
Nonvoting preferred shares, par value $0.01, 12,000 shares authorized and no issued
or outstanding shares at March 31, 2023 and December 31, 2022		—		—
Additional paid-in capital		154,095		153,784
Retained earnings/(deficits)		(59,927)		(48,816)
Treasury shares		(40,407)		(40,407)
Accumulated other comprehensive income		(3,250)		(1,957)
Total Reading International, Inc. stockholders’ equity		50,763		62,856
Noncontrolling interests		209		423
Total stockholders’ equity		50,972		63,279
Total liabilities and stockholders’ equity	$	560,198	$	587,055

See accompanying Notes to the Unaudited Consolidated Financial Statements.

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; U.S. dollars in thousands, except per share data)



	Three Months Ended
	March 31,
	2023		2022
Revenue
Cinema	$	41,987	$	37,347
Real estate		3,820		2,853
Total revenue		45,807		40,200
Costs and expenses
Cinema		(41,654)		(38,503)
Real estate		(2,215)		(2,157)
Depreciation and amortization		(4,639)		(5,524)
General and administrative		(5,179)		(5,796)
Total costs and expenses		(53,687)		(51,980)
Operating income (loss)		(7,880)		(11,780)
Interest expense, net		(4,117)		(3,205)
Other income (expense)		174		(781)
Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures		(11,823)		(15,766)
Equity earnings of unconsolidated joint ventures		19		(65)
Income (loss) before income taxes		(11,804)		(15,831)
Income tax benefit (expense)		480		378
Net income (loss)	$	(11,324)	$	(15,453)
Less: net income (loss) attributable to noncontrolling interests		(213)		(99)
Net income (loss) attributable to Reading International, Inc.	$	(11,111)	$	(15,354)
Basic earnings (loss) per share	$	(0.50)	$	(0.70)
Diluted earnings (loss) per share	$	(0.50)	$	(0.70)
Weighted average number of shares outstanding–basic		22,114,927		21,955,985
Weighted average number of shares outstanding–diluted		22,897,990		22,500,658

See accompanying Notes to the Unaudited Consolidated Financial Statements.

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; U.S. dollars in thousands)



	Three Months Ended
	March 31,
	2023		2022
Net income (loss)	$	(11,324)	$	(15,453)
Foreign currency translation gain (loss)		(763)		2,677
Gain (loss) on cash flow hedges		(582)		800
Other		52		47
Comprehensive income (loss)		(12,617)		(11,929)
Less: net income (loss) attributable to noncontrolling interests		(213)		(99)
Less: comprehensive income (loss) attributable to noncontrolling interests		(1)		1
Comprehensive income (loss)	$	(12,403)	$	(11,831)

See accompanying Notes to the Unaudited Consolidated Financial Statements.

‎

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; U.S. dollars in thousands)



	Three Months Ended
	March 31,
	2023		2022
Operating Activities
Net income (loss)	$	(11,324)	$	(15,453)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity earnings of unconsolidated joint ventures		(19)		65
(Gain) loss recognized on foreign currency transactions		—		793
Amortization of operating leases		5,523		5,846
Amortization of finance leases		8		12
Change in operating lease liabilities		(5,910)		(5,839)
Change in net deferred tax assets		11		67
Depreciation and amortization		4,639		5,524
Other amortization		400		396
Stock based compensation expense		443		416
Net changes in operating assets and liabilities:
Receivables		1,333		2,024
Prepaid and other assets		(2,142)		(2,093)
Payments for accrued pension		(171)		(171)
Accounts payable and accrued expenses		(1,656)		(397)
Film rent payable		(1,717)		(3,894)
Taxes payable		351		(230)
Deferred revenue and other liabilities		(1,321)		(1,128)
Net cash provided by (used in) operating activities		(11,552)		(14,062)
Investing Activities
Purchases of and additions to operating and investment properties		(1,527)		(1,741)
Contributions to unconsolidated joint ventures		—		(34)
Net cash provided by (used in) investing activities		(1,527)		(1,775)
Financing Activities
Repayment of borrowings		(1,116)		(1,540)
Repayment of finance lease principal		(8)		(12)
Capitalized borrowing costs		(154)		—
(Cash paid) proceeds from the settlement of employee share transactions		(131)		(32)
Noncontrolling interest distributions		—		(22)
Net cash provided by (used in) financing activities		(1,409)		(1,606)
Effect of exchange rate on cash and restricted cash		(114)		687
Net increase (decrease) in cash and cash equivalents and restricted cash		(14,602)		(16,756)
Cash and cash equivalents and restricted cash at the beginning of the period		34,979		88,571
Cash and cash equivalents and restricted cash at the end of the period	$	20,377	$	71,815

Cash and cash equivalents and restricted cash consists of:
Cash and cash equivalents	$	14,628	$	67,263
Restricted cash		5,749		4,552
	$	20,377	$	71,815



Supplemental Disclosures
Interest paid	$	4,374	$	2,732
Income taxes (refunded) paid		57		399
Non-Cash Transactions
Additions to operating and investing properties through accrued expenses		3,127		2,970

See accompanying Notes to the Unaudited Consolidated Financial Statements.

READING INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 – Description of Business and Segment Reporting

Our Company

Reading International, Inc., a Nevada corporation (“RDI” and collectively with our consolidated subsidiaries and corporate predecessors, the “Company,” “Reading,” and “we,” “us,” or “our”) was incorporated in 1999. Our businesses, owned and operated through our various subsidiaries, consist primarily of:

the development, ownership, and operation of cinemas in the United States, Australia, and New Zealand; and,

the development, ownership, operation and/or rental of retail, commercial and live venue real estate assets in Australia, New Zealand, and the United States.

Business Segments

Reported below are the operating segments of our Company for which separate financial information is available and evaluated regularly by the Chief Executive Officer, the chief operating decision-maker of our Company. As part of our real estate activities, we hold undeveloped land in urban and suburban centers in the United States and New Zealand.

The table below summarizes the results of operations for each of our business segments for the quarter ended March 31, 2023, and 2022, respectively. Operating expense includes costs associated with the day-to-day operations of the cinemas and the management of rental properties, including our live theatre assets.



	Three Months Ended
	March 31,
(Dollars in thousands)	2023		2022
Revenue:
Cinema exhibition	$	41,987	$	37,347
Real estate		5,065		4,162