UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported):  May 8, 2015

 

Reading International, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

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

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02.  Results of Operations and Financial Condition.

 

On May 5, 2015, Reading International, Inc. issued a press release announcing information regarding its results of operations and financial condition for the quarter ended March 31, 2015, a copy of which is attached as Exhibit 99.1.

 

Item 9.01.  Financial Statements and Exhibits.

 

99.1Press release issued by Reading International, Inc. pertaining to its results of operations and financial condition for the quarter ended March 31, 2015.

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

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Reading International Announces

1st Quarter 2015 Results

 

Los Angeles, California, - (BUSINESS WIRE) –May 5, 2015– Reading International, Inc. (NASDAQ: RDI) announced today the results for its quarter ended March 31, 2015.

 

2015 First Quarter Highlights

 

 

First Quarter 2015 Discussion

 

Revenue from operations increased from $58.1 million in the 2014 Quarter to $60.6 million in the same Quarter in 2015, a $2.5 million or a 4.4% increase.    

 

Cinema segment revenue increased by $3.5 million or 6.5%,  compared to the same period in 2014 due to strong showing in United States, Australia and New Zealand. The United States revenue was up USD$931,000 or 3.2%. In Australia cinema revenue was up AUD$5.1 million or 22.9% at a functional currency level due to an additional 380,000 admits or a 28.4%  attendance increase. This increase reduced to $1.8 million or 8.8% after foreign currency movements. New Zealand cinema revenue grew by NZD$1.6 million or 30.0% when compared to the 2014 Quarter. Cinema revenue increased NZD$763,000 or 13.9% due to the opening of our Dunedin site in September 2014. The increase in New Zealand cinema revenue was reduced to an increase of USD$793,000 or 17.3% due to foreign currency movements.

 

The top three grossing films for the 2015 Quarter in our worldwide cinema circuit were “American Sniper” “Fifty Shades of Grey” and “Kingsman: The Secret Service.” These three films accounted for approximately 21.7% of our cinema box office revenue.  The comparative top three grossing films for  the 2014 Quarter were “Frozen” “Wolf of Wall Street” and “Hobbit: Desolation of Smaug.” These three films accounted for approximately 17.6% of our cinema box office revenue.

 

Our real estate segment revenue decreased for the 2015 Quarter by $1.2 million or 17.9% compared to the same period in 2014.  Our live theatre rental income for the 2015 Three Months decreased by $474,000 or 40.9% compared to the same period in 2014.  Property rental revenue also decreased by $702,000 or 13.2%, mainly due to the strengthening of the US dollar compared to the Australian dollar. At a functional

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currency level, Australia revenue was consistent with the same period in 2014.

 

As a percentage of revenue, operating expense was 78.0% of revenue in the 2015 Quarter, compared to 80.6% in the 2014 Quarter, which was driven by expense management, and the percentage of our fixed costs (rent, etc.) compared to the increase in our revenue streams. 

 

For our statement of operations, the Australian quarterly average exchange rate to U.S. dollar declined to 0.7862 for the 2015 Quarter from 0.8974 for the 2014 Quarter, a decrease of 12.4%.  The New Zealand quarterly average exchange rate to U.S. dollar declined to 0.7514 for the 2015 Quarter from 0.8370 for the 2014 Quarter, a decrease of 10.2%.  Both had an impact on the individual components of our income statement.

 

Driven by the above factors, our operating income for the 2015 Quarter increased by $2.7 million to an operating income of $5.2 million, compared to an operating income of $2.6 million in the same quarter last year.

 

Net interest expense increased by $278,000 for the 2015 Quarter compared to the 2014 Quarter. The increase in interest expense primarily resulted from a change in the mark-to-market interest rate swap valuations for the quarter, resulting in a lower decrease than the comparable quarter in 2014.

For the 2015 Quarter, we recorded $3.0 million of other income primarily due to the sale of the Doheny Condo in February 2015 for $3.0 million. For the 2014 Quarter, we recorded $1.1 million of other income, which consisted primarily of business interruption insurance proceeds related to the temporary closure of the Courtenay Central parking structure to repair earthquake damages and $310,000 in income from unconsolidated entities.

 

For the 2015 Quarter, our income tax expense increased by $931,000,  compared to the 2014 Quarter, mainly as a result of the reversal of the valuation allowance previously recorded against U.S. deferred tax assets during the first quarter of 2014.

 

Because of the above, we reported a net income of $3.1 million for the 2015 Quarter, compared to a net loss of $215,000 in the 2014 Quarter.

 

Our EBITDA(1) at $12.0 million for the 2015 Quarter was $4.5 million or 60.0% higher than the EBITDA(1) for the 2014 Quarter of $7.5 million. 

 

Our Adjusted EBITDA(1) for the 2015 Quarter was $9.0 million, after adjusting for the Doheny Condo sale.  For the 2014 Quarter, our Adjusted EBITDA(1) was $6.8 million, after excluding the $687,000 Courtenay Central car park business interruption insurance claim included in other income. This resulted in an increase in Adjusted EBITDA(1) of $2.2 million or 32.4% from the 2014 Quarter to the 2015 Quarter.

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Balance Sheet and Liquidity

 

Our total assets at March 31, 2015 were $371.2 million, compared to $401.6 million at December 31, 2014.  The currency exchange rates for the Australian and New Zealand dollar to the U.S. dollar at March 31, 2015 were $ 0.7625 and $ 0.7485, respectively, and at December 31, 2014, these rates were $ 0.8173 and $ 0.7796, respectively.

 

Our cash position at March 31, 2015 was $39.8 million.  Of the $39.8 million, $24.5 million was in Australia, $7.8 million was in the U.S., and $7.5 million was in New Zealand.  As part of our main credit facilities in Australia, New Zealand, and the U.S., we are subject to certain debt covenants, which limit the transfer or use of cash outside of the various regional subsidiaries in which the cash is held.  As such, at March 31, 2015,  we had approximately $22.1 million of cash worldwide that was not restricted by loan covenants.

 

At March 31, 2015, we had undrawn funds of $7.6 million (AUS$10.0 million) available under our NAB line of credit in Australia, $9.0 million (NZ$12.0 million) available under our New Zealand corporate credit facility, and $30.3 million available under our Bank of America revolving loan credit facility in the U.S., for a total of $46.9 million.  Accordingly, we believe that we have sufficient borrowing capacity under our various credit facilities, together with our $39.8 million cash balance, to meet our anticipated short-term working capital requirements.

 

We originally extended our New Zealand Westpac bank loan to April 30, 2015, but have since received a second extension to July 30, 2015.  In addition, we have signed a term sheet for our new credit facility, and expect the loan documents to be finalized prior to the end of the current extension. This loan has been classified as a short-term liability on the consolidated balance sheet as at March 31, 2015.

The US Union Square Term loan, which would have matured on May 1, 2015, has been extended to June 1, 2015. We signed a term sheet for our new credit facility and expect the loan documents to be finalized prior to the end of the current extension. This loan has been classified as a short-term liability on the consolidated balance sheet as at March 31, 2015.

 

Our working capital at March 31, 2015  reduced by $769,000 or 8.7% to a negative $9.6 million compared to $8.8 million at December 31, 2014 as a result of our two current loans that had not yet been fully documented as of March 31, 2015.

 

Stockholders’ equity was $124.0 million at March 31, 2015, compared to $132.3 million at December 31, 2014, primarily related to the foreign currency translation loss for the quarter.

 

 

Subsequent Events

 

In Australia the closing of the sale of our Moonee Ponds property occurred on April 15, 2015 and as per the purchase and sale agreement we received $17.5 million  (AUS$23.0 million) in sales proceeds.

 

In New Zealand we received a second extension letter that extended the termination date of the $21.0 million (NZ$28.0 million) Westpac Term Facility from April 30, 2015 to July 30, 2015.

 

In New Zealand during April 2015 we sold our two parcels of land at Lake Taupo for a combined $2.5 million (NZ$3.4 million). $1.6 million (NZ$2.2) million for one parcel will be received by May 6, 2015 and the $898,000 (NZ$1.2 million) for the second parcel will be received by March 31, 2016.

 

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Liberty Theaters, LLC, the owner of the Orpheum Theater and an indirect wholly owned subsidiary of the Company, recently received a purported notice of termination from the long-running show “STOMP” in violation of the license agreement between the parties, and has filed a court action seeking a preliminary injunction that would prevent the show from moving to a new venue pending an arbitration of the parties’ dispute.  The court hearing on such injunction motion is scheduled for May 21, 2015.

 

On April 30, 2015, our Ward 16 Theater at Victoria Ward, operated under our Consolidated Theatres brand, became the first movie theater on the island of Oahu in the State of Hawai‘i to be granted a liquor license.

 

 

 

 

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About Reading International, Inc.

 

Reading International (http://www.readingrdi.com) is in the business of owning and operating cinemas and developing, owning and operating real estate assets.  Our business consists primarily of:

 

 

Reading manages its worldwide business under various different brands:

 

 

 

 

 

 

Forward-Looking Statements

 

Our statements in this press release contain a variety of forward-looking statements as defined by the Securities Litigation Reform Act of 1995.  Forward-looking statements reflect only our expectations regarding future events and operating performance and necessarily speak only as of the date the information was prepared.  No guarantees can be given that our expectation will in fact be realized, in whole or in part.  You can recognize these statements by our use of words such as, by way of example, “may,” “will,” “expect,” “believe,” and “anticipate” or other similar terminology.

 

These forward-looking statements reflect our expectation after having considered a variety of risks and uncertainties.  However, they are necessarily the product of internal discussion and do not necessarily completely reflect the views of individual members of our Board of Directors or of our management team.  Individual Board members and individual members of our management team may have different views as to the risks and uncertainties involved, and may have different views as to future events or our operating performance.

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Among the factors that could cause actual results to differ materially from those expressed in or underlying our forward-looking statements are the following:

 

 

 

 

 

 

 

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The above list is not necessarily exhaustive, as business is by definition unpredictable and risky, and subject to influence by numerous factors outside of our control such as changes in government regulation or policy, competition, interest rates, supply, technological innovation, changes in consumer taste and fancy, weather, and the extent to which consumers in our markets have the economic wherewithal to spend money on beyond-the-home entertainment.

 

Given the variety and unpredictability of the factors that will ultimately influence our businesses and our results of operation, no guarantees can be given that any of our forward-looking statements will ultimately prove to be correct.  Actual results will undoubtedly vary and there is no guarantee as to how our securities will perform either when considered in isolation or when compared to other securities or investment opportunities.

 

Finally, we undertake no obligation to publicly update or to revise any of our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.  Accordingly, you should always note the date to which our forward-looking statements speak.

 

Additionally, certain of the presentations included in this press release may contain “pro forma” information or “non-US GAAP financial measures.”  In such case, a reconciliation of this information to our US GAAP financial statements will be made available in connection with such statements.

 

For more information, contact:

 

Andrzej Matyczynski, Chief Financial Officer

Reading International, Inc.  (213) 235-2240

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Reading International, Inc. and Subsidiaries

Supplemental Data

Reconciliation of EBITDA* to Net Loss

(dollars in thousands, except per share amounts)

 

 

 

 

*EBITDA presented above is net loss adjusted for interest expense (net of interest income), income tax expense, depreciation and amortization expense, and if appropriate, an adjustment for discontinued operations (this includes interest expense and depreciation and amortization for the discontinued operations).

 

Reconciliation of EBITDA* to the net loss is presented below:

 

 

 

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Reading International, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

(U.S. dollars in thousands, except per share amounts)

 

 

 

 

 

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Reading International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

 

 

 

 

 

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