0000716634-21-000005 | 10-K | XBRL Viewer | Reading International INC

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Document And Entity Information - USD ($)	12 Months Ended
Document And Entity Information - USD ($)	Dec. 31, 2020	Mar. 30, 2021	Jun. 30, 2020
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Entity File Number	1-8625
Amendment Flag	false
Document Period End Date	Dec. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Entity Registrant Name	READING INTERNATIONAL, INC.
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	95-3885184
Entity Address, Address Line One	5995 Sepulveda Boulevard
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Culver City
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90230
City Area Code	213
Local Phone Number	235-2240
Entity Central Index Key	0000716634
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
ICFR Auditor Attestation Flag	true
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Interactive Data Current	Yes
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 75,993,611
Documents Incorporated by Reference	Documents Incorporated by ReferenceCertain portions of the registrant’s definitive Proxy Statement for the 2021 annual meeting of the stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year ended December 31, 2020 are incorporated by reference into Part III of this Annual Report on Form 10-K.
Class A [Member]
Title of 12(b) Security	Class A Nonvoting Common Stock, $0.01 par value
Trading Symbol	RDI
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		20,120,625
Class B [Member]
Title of 12(b) Security	Class B Voting Common Stock, $0.01 par value
Trading Symbol	RDIB
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		1,680,590

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current Assets:
Cash and cash equivalents	$ 26,826	$ 12,135
Receivables	2,438	7,085
Inventories	1,059	1,674
Prepaid and other current assets	8,414	6,105
Land held for sale	17,730
Total Current Assets	56,467	26,999
Operating properties, net	353,125	258,138
Operating lease right-of-use assets	220,503	229,879
Investment and development properties, net	11,570	114,024
Investment in unconsolidated joint ventures	5,025	5,069
Goodwill	28,116	26,448
Intangible assets, net	3,971	4,320
Deferred tax assets, net	3,362	3,444
Other assets	8,030	6,668
Total Assets	690,169	674,989
Current Liabilities:
Accounts payable and accrued liabilities	38,877	29,436
Film rent payable	2,473	8,716
Debt – current portion	41,459	36,736
Subordinated debt - current portion	840	644
Derivative financial instruments - current portion	218	109
Taxes payable	82	140
Deferred current revenue	10,133	11,324
Operating lease liabilities - current portion	22,699	20,379
Other current liabilities	3,826	3,653
Total Current Liabilities	120,607	111,137
Debt – long-term portion	213,779	140,602
Derivative financial instruments - non-current portion	212	233
Subordinated debt - non-current portion	26,505	29,030
Noncurrent tax liabilities	13,070	12,353
Operating lease liabilities - non-current portion	212,806	223,164
Other non-current liabilities	22,017	18,854
Total Liabilities	608,996	535,373
Commitments and Contingencies
Stockholders' Equity:
Nonvoting preferred shares, par value $0.01, 12,000 shares authorized and no issued or outstanding shares at December 31, 2020 and 2019
Additional paid-in capital	149,979	148,602
Retained earnings (deficit)	(44,553)	20,647
Treasury shares, at cost	(40,407)	(39,737)
Accumulated other comprehensive income	12,502	5,589
Total Reading International, Inc. ("RDI") Stockholders' Equity	77,769	135,349
Noncontrolling Interests	3,404	4,267
Total Stockholders' Equity	81,173	139,616
Total Liabilities and Stockholders’ Equity	690,169	674,989
Class A [Member]
Stockholders' Equity:
Common stock	231	231
Class B [Member]
Stockholders' Equity:
Common stock	$ 17	$ 17

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2020	Dec. 31, 2019
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	12,000	12,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Class A [Member]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	33,004,717	32,963,489
Common stock, shares outstanding	20,068,606	20,102,535
Class B [Member]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	1,680,590	1,680,590
Common stock, shares outstanding	1,680,590	1,680,590

Consolidated Statements Of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenues
Total revenues	$ 77,862	$ 276,768	$ 308,931
Costs and expenses
Depreciation and amortization	(22,317)	(22,747)	(22,275)
General and administrative	(16,998)	(25,395)	(27,337)
Impairment of long-lived assets	(217)
Total costs and expenses	(139,175)	(267,645)	(285,307)
Operating income (loss)	(61,313)	9,123	23,624
Interest expense, net	(9,354)	(7,904)	(6,837)
Gain (loss) on sale of assets	(1)	(2)	(41)
Other income (expense)	293	325	(256)
Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures	(70,375)	1,542	16,490
Equity earnings (loss) of unconsolidated joint ventures	(449)	792	974
Income (loss) before income taxes	(70,824)	2,334	17,464
Income tax benefit (expense)	4,967	(28,837)	(3,298)
Net income (loss)	(65,857)	(26,503)	14,166
Less: net income (loss) attributable to noncontrolling interests	(657)	(74)	132
Net income (loss) attributable to Reading International, Inc. common shareholders	$ (65,200)	$ (26,429)	$ 14,034
Basic earnings (loss) per share attributable to Reading International, Inc. shareholders	$ (3.00)	$ (1.17)	$ 0.61
Diluted earnings (loss) per share attributable to Reading International, Inc. shareholders	$ (3.00)	$ (1.17)	$ 0.60
Weighted average number of shares outstanding-basic	21,749,155	22,631,754	22,991,277
Weighted average number of shares outstanding-diluted	22,215,511	22,784,122	23,208,991
Cinema [Member]
Revenues
Total revenues	$ 67,014	$ 262,189	$ 293,723
Costs and expenses
Total costs and expenses	(91,065)	(210,050)	(225,791)
Real Estate [Member]
Revenues
Total revenues	10,848	14,579	15,208
Costs and expenses
Total costs and expenses	$ (8,578)	$ (9,453)	$ (9,904)

Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Consolidated Statements Of Comprehensive Income [Abstract]
Net income (loss)	$ (65,857)	$ (26,503)	$ 14,166
Foreign currency translation gain (loss)	6,837	(567)	(14,903)
Gain (loss) on cash flow hedges	(65)	(115)	(137)
Others	130	158	149
Comprehensive income (loss)	(58,955)	(27,027)	(725)
Less: net income (loss) attributable to noncontrolling interests	(657)	(74)	132
Less: comprehensive income (loss) attributable to noncontrolling interests	(11)	2	(15)
Comprehensive income (loss) attributable to Reading International, Inc.	$ (58,287)	$ (26,955)	$ (842)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

Consolidated Statements Of Stockholders' Equity - USD ($) $ in Thousands	Cumulative Effect, Period of Adoption, Adjustment [Member] Reading International Inc. Stockholders' Equity [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Retained Earnings (Accumulated Deficit) [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Noncontrolling Interests [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Common Shares [Member] Class A [Member]	Common Shares [Member] Class B [Member]	Treasury Shares [Member]	Accumulated Other Comprehensive Income/(Loss) [Member]	Reading International Inc. Stockholders' Equity [Member]	Additional Paid-In Capital [Member]	Retained Earnings (Accumulated Deficit) [Member]	Noncontrolling Interests [Member]	Class A [Member]	Class B [Member]	Total
Balance at Dec. 31, 2017					$ 231	$ 17		$ 20,991	$ 177,051	$ 145,898	$ 32,820	$ 4,331			$ 181,382
Balance, shares at Dec. 31, 2017					21,251,000	1,680,000	(22,906,000)
Net income (loss)									14,034		14,034	132			14,166
Other comprehensive income, net								(14,876)	(14,876)			(15)			(14,891)
Share-based compensation expense									1,458	1,458					1,458
Share repurchase plan									(2,316)						(2,316)
Share repurchase plan, shares					(149,000)		(2,316,000)
Class A common stock issued for share-based bonuses and options exercised									219	219					219
Class A common stock issued for share-based bonuses and options exercised, shares					35,000
In-kind exchange of share for the exercise of options, net issued					$ 1				(73)	(74)					(73)
In-kind exchange of share for the exercise of options, net issued, shares					13,000
Restricted Stock Units									(49)	(49)					(49)
Restricted Stock Units, shares					45,000
Contributions from noncontrolling stockholders												82			82
Distributions to noncontrolling stockholders												(191)			(191)
Balance (Accounting Standards Update 2014-09 [Member]) at Dec. 31, 2018	$ 194	$ 194	$ (2)	$ 192
Balance at Dec. 31, 2018					$ 232	$ 17		6,115	175,642	147,452	47,048	4,337			179,979
Balance, shares at Dec. 31, 2018					21,195,000	1,680,000	(25,222,000)
Net income (loss)									(26,429)		(26,429)	(74)			(26,503)
Other comprehensive income, net								(526)	(526)			2			(524)
Share-based compensation expense									1,463	1,463					1,463
Share repurchase plan									(14,518)						(14,518)
Share repurchase plan, shares					(1,159,000)		(14,518,000)
Class A common stock issued for share-based bonuses and options exercised									(185)	(185)					(185)
Retirements					$ (2)				2						2
Retirements, shares							2,000
In-kind exchange of share for the exercise of options, net issued
In-kind exchange of share for the exercise of options, net issued, shares
Restricted Stock Units					$ 1				(128)	(128)					(128)
Restricted Stock Units, shares					66,000
Contributions from noncontrolling stockholders												90			90
Distributions to noncontrolling stockholders												(42)			(42)
Balance (Accounting Standards Update 2014-09 [Member]) at Dec. 31, 2019	$ 28	$ 28	$ (46)	$ (18)
Balance at Dec. 31, 2019					$ 231	$ 17		5,589	135,349	148,602	20,647	4,267			139,616
Balance, shares at Dec. 31, 2019					20,103,000	1,680,000	(39,737,000)						20,102,535	1,680,590
Net income (loss)									(65,200)		(65,200)	(657)			(65,857)
Other comprehensive income, net								6,913	6,913			(11)			6,902
Share-based compensation expense									1,421	1,421					1,421
Share repurchase plan									(670)						(670)
Share repurchase plan, shares					(75,000)		(670,000)
Restricted Stock Units									(44)	(44)					(44)
Restricted Stock Units, shares					41,000
Contributions from noncontrolling stockholders												55			55
Distributions to noncontrolling stockholders												(250)			(250)
Balance at Dec. 31, 2020					$ 231	$ 17		$ 12,502	$ 77,769	$ 149,979	$ (44,553)	$ 3,404			$ 81,173
Balance, shares at Dec. 31, 2020					20,069,000	1,680,000	(40,407,000)						20,068,606	1,680,590

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Operating Activities
Net income (loss)	$ (65,857)	$ (26,503)	$ 14,166
Adjustments to reconcile net income to net cash flows from operating activities:
Equity earnings of unconsolidated joint ventures	449	(792)	(974)
Distributions of earnings from unconsolidated joint ventures	240	864	670
Net loss (gain) on sale of assets	1	2	41
Amortization of operating leases	21,458	20,765
Amortization of finance leases	93	165
Change in operating lease liabilities	(20,400)	(20,137)
Interest on hedged derivatives		(10)	5
Change in net deferred tax assets	401	23,115	(1,841)
Depreciation and amortization	22,317	22,747	22,275
Impairment of long-lived assets	217
Other amortization	1,046	952	1,161
Share-based compensation expense	1,421	1,463	1,458
Net changes in operating assets and liabilities:
Receivables	4,805	704	2,868
Prepaid and other assets	(1,307)	(216)	(2,761)
Payments for accrued pension	(683)	(683)	(2,961)
Accounts payable and accrued expenses	9,330	508	2,562
Film rent payable	(6,323)	48	(4,525)
Taxes payable	(34)	(1,514)	(994)
Deferred revenue and other liabilities	2,625	3,129	1,495
Net cash provided by (used in) operating activities	(30,201)	24,607	32,645
Investing Activities
Purchases of and additions to operating and investment properties	(18,526)	(45,709)	(63,529)
Acquisition of business		(7,877)
Change in restricted cash		1,334	(1,326)
Cash settlement on insurance claim		323
Contributions to unconsolidated joint ventures	(245)
Net cash provided by (used in) investing activities	(18,771)	(51,929)	(64,855)
Financing Activities
Repayment of long-term borrowings	(29,896)	(52,394)	(54,374)
Repayment of finance lease principal	(92)	(160)
Proceeds from borrowings	90,323	90,507	90,895
Capitalized borrowing costs	(97)	(526)	(1,230)
Repurchase of Class A nonvoting common stock	(670)	(11,152)	(2,316)
Proceeds (payments) from stock option exercises	(43)	(315)	344
Noncontrolling interest contributions	55	90	82
Noncontrolling interest distributions	(250)	(42)	(191)
Net cash provided by (used in) financing activities	59,330	26,008	33,210
Effect of exchange rate changes on cash	4,333	322	(1,541)
Net increase (decrease) in cash and cash equivalents	14,691	(992)	(541)
Cash and cash equivalents at the beginning of the year	12,135	13,127	13,668
Cash and cash equivalents at the end of the year	26,826	12,135	13,127
Supplemental Disclosures
Interest paid	10,240	10,650	8,035
Income taxes paid (refunded), net	(2,333)	7,038	8,941
Non-Cash Transactions
Lease make-good accrual	62	902
Additions to long-term borrowings		3,519
Additions to operating and investing properties through accrued expenses	$ 4,346	$ 6,003	$ 3,969

Description Of Business And Segment Reporting

12 Months Ended

Dec. 31, 2020

Description Of Business And Segment Reporting [Abstract]

Description Of Business And Segment Reporting

NOTE 1 – DESCRIPTION OF BUSINESS AND SEGMENT REPORTING

The 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 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

Our business is comprised of two operating segments, as follows: (i) cinema exhibition and (ii) real estate. Each of these segments has discrete and separate financial information and for which operating results are evaluated regularly by our Chief Executive Officer, the chief operating decision-maker of the Company. As part of our real estate segment, we acquired, and held, raw land in urban and suburban centers in New Zealand, Australia and the United States as of December 31, 2020.

The tables below summarize the results of operations for each of our business segments. 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.



	2020						2019						2018
(Dollars in thousands)	Cinema		Real ‎Estate		Total		Cinema		Real ‎Estate		Total		Cinema		Real ‎Estate		Total
Revenue - third party	$	67,014	$	10,848	$	77,862	$	262,189	$	14,579	$	276,768	$	293,723	$	15,208	$	308,931
Inter-segment revenue ⁽¹⁾		—		2,115		2,115		—		7,326		7,326		—		9,027		9,027
Total segment revenue		67,014		12,963		79,977		262,189		21,905		284,094		293,723		24,235		317,958
Operating expense
Operating Expense - Third Party		(91,065)		(8,578)		(99,643)		(210,050)		(9,453)		(219,503)		(225,791)		(9,904)		(235,695)
Inter-Segment Operating Expenses ⁽¹⁾		(2,115)		—		(2,115)		(7,326)		—		(7,326)		(9,027)		—		(9,027)
Total of services and products (excluding depreciation and amortization)		(93,180)		(8,578)		(101,758)		(217,376)		(9,453)		(226,829)		(234,818)		(9,904)		(244,722)
Depreciation and amortization		(15,246)		(6,101)		(21,347)		(16,940)		(5,393)		(22,333)		(16,314)		(5,567)		(21,881)
Impairment of long-lived assets		(217)		—		(217)		—		—		—		—		—		—
General and administrative expense		(3,427)		(747)		(4,174)		(4,544)		(1,918)		(6,462)		(3,724)		(2,326)		(6,050)
Total operating expense		(112,070)		(15,426)		(127,496)		(238,860)		(16,764)		(255,624)		(254,856)		(17,797)		(272,653)
Segment operating income (loss)	$	(45,056)	$	(2,463)	$	(47,519)	$	23,329	$	5,141	$	28,470	$	38,867	$	6,438	$	45,305

(1)Inter-segment Revenues and Operating Expense relates to the internal charge between the two segments where the cinema operates within real estate owned within the group.

A reconciliation of segment operating income to income before income taxes is as follows:



(Dollars in thousands)	2020		2019		2018
Segment operating income (loss)	$	(47,519)	$	28,470	$	45,305
Unallocated corporate expense:
Depreciation and amortization expense		(970)		(414)		(394)
General and administrative expense		(12,824)		(18,933)		(21,287)
Interest expense, net		(9,354)		(7,904)		(6,837)
Equity earnings (loss) of unconsolidated joint ventures		(449)		792		974
(Loss) gain on sale of assets		(1)		(2)		(41)
Other (expense) income		293		325		(256)
Income (loss) before income taxes	$	(70,824)	$	2,334	$	17,464

Assuming cash and cash equivalents are accounted for as corporate assets, total assets by business segment and by country are presented as follows:



	December 31,
(Dollars in thousands)	2020		2019
By segment:
Cinema	$	357,196	$	364,905
Real estate		312,832		295,213
Corporate ⁽¹⁾		20,141		14,871
Total assets	$	690,169	$	674,989
By country:
United States	$	340,836	$	356,191
Australia		267,153		248,031
New Zealand		82,180		70,767
Total assets	$	690,169	$	674,989

(1)Corporate Assets includes cash and cash equivalents of $26.8 million and $12.1 million as of December 31, 2020 and 2019, respectively.

The following table sets forth our operating properties by country:



	December 31,
(Dollars in thousands)	2020		2019
United States	$	182,416	$	91,704
Australia		144,573		137,677
New Zealand		26,136		28,757
Total operating property	$	353,125	$	258,138

The table below summarizes capital expenditures for the three years ended December 31, 2020:



(Dollars in thousands)	2020		2019		2018
Segment capital expenditures	$	16,686	$	47,555	$	56,795
Corporate capital expenditures		73		167		32
Total capital expenditures	$	16,759	$	47,722	$	56,827

Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

Basis of Consolidation

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These consolidated financial statements include the accounts of our wholly owned subsidiaries, which are RDGE, CRG, and CDL. We have also consolidated the following entities that are not wholly owned for which we have control:

Australia Country Cinemas Pty, Limited, a company in which we own a 75% interest and whose only assets are our leasehold cinema at Dubbo, Australia and our owned cinema at Townsville, Australia;

Sutton Hill Properties, LLC (“SHP”), a company based in New York in which we own a 75% interest and whose only asset is the fee interest in the Cinemas 1,2,3; and,

Shadow View Land and Farming, LLC in which we own a 50% controlling membership interest and whose only asset is a 202-acre land parcel in Coachella, California as of December 31, 2020.

Our investment interests in certain joint venture arrangements, for which we own between 20% to 50% and for which we have no control over the operations, are accounted for as unconsolidated joint ventures, and hence, recorded in the consolidated financial statements under the equity method. These investment interests include our:

33.3% undivided interest in the unincorporated joint venture that owns the Mt. Gravatt cinema in a suburb of Brisbane, Australia;

50% undivided interest in the unincorporated joint venture that owns Rialto Cinemas in New Zealand.

We consider that we have control over our partially owned subsidiaries and joint venture interests (collectively “investee”) when these conditions exist:

(i)we own a majority of the voting rights or interests of the investee (typically above 50%), or

(ii)in the case when we own less than the majority voting rights or interests, we have the power over the investee when the voting rights or interests are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.

The Company considers all relevant facts and circumstances in assessing whether or not our voting rights in the investee are sufficient to give it power, including:

(i)the size of our voting rights and interests relative to the size and dispersion of holdings of other vote holders;

(ii)potential voting rights and interests held by us;

(iii)rights and interests arising from other contractual arrangements; and,

(iv)any additional other relevant facts.

All significant intercompany balances and transactions have been eliminated in the consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Hence, actual results may differ from those estimates. Significant estimates and assumptions include, but are not limited to:

(i)projections we make regarding the recoverability and impairment of our assets (including goodwill and intangibles);

(ii)valuations of our derivative instruments;

(iii)allocation of insurance proceeds to various recoverable components;

(iv)recoverability of our deferred tax;

(v)estimation of our Incremental Borrowing Rate (“IBR”) as relates to the valuation of our right-of-use assets and lease liabilities; and,

(vi)estimation of gift card and gift certificate breakage where we have concluded that the likelihood of redemption is remote.

Revenue Recognition

(i)Cinema Exhibition Segment (all net of related taxes):

Sales of Cinema tickets (excluding bulk and advanced ticket sales) and food and beverage (“F&B”) sales – recognized when sold and collected, either in cash or credit card at our theatre locations and through our online selling channels;

Sales of Bulk and Advanced Cinema Ticket Sales – deferred and recognized as revenue when the promised performance or movie that the ticket has been purchased for is shown;

Gift Cards and Gift Certificate Sales – deferred and recognized as revenue when redeemed, except for the breakage portion, as described below;

Breakage Income – recognized for unredeemed cards and certificates using the proportional method, whereby breakage revenue is recognized in proportion to the pattern of rights exercised by the customer when the Company expects that it is probable that a significant revenue reversal would not occur for any estimated breakage amounts. This is based on a breakage ‘experience rate’ which is determined by historical redemption data;

Loyalty Income - a component of revenue from members of our loyalty programs relating to the earning of loyalty rewards is deferred until such a time as members redeem rewards, or until we believe the likelihood of redemption by the member is remote. Deferral is based on the progress made toward the next reward, the fair value of that reward, and the likelihood of redemption, determined by historical redemption data, and;

Advertising Revenues – recognized based on contractual arrangements or relevant admissions information, as appropriate, when the related performance obligation is satisfied.

(ii)Real Estate Segment:

Property Rentals –we contractually retain substantially all of the risks and benefits of ownership of our real estate properties and therefore, we account for our tenant leases as operating leases. Accordingly, rental revenue is recognized on a straight-line basis over the lease term; and,

Live Theatre License Fees – we have real property interest in and license theatre space to third parties for the presentation of theatrical productions. Revenue is recognized in accordance with the license agreement, and is typically recorded on a weekly basis after the performance of a show has occurred.

Cash and Cash Equivalents

We consider all highly liquid investments with original maturities of three months or less at the time of purchase as cash equivalents for which cost approximates fair value.

Receivables

Our receivables balance is composed primarily of credit card and booking agent receivables, representing the purchase price of tickets, food & beverage items, or coupon books sold at our various businesses. Sales charged on customer credit cards are collected when the credit card transactions are processed. The remaining receivables balance is primarily made up of the sales tax refund receivable from our Australian taxing authorities, rents receivable from our third-party tenants, and the management fee receivable from the managed cinemas and property damage insurance recovery proceeds. We have no history of significant bad debt losses and we have established an allowance for accounts that we deem uncollectible.

Inventory

Inventory is composed of food and beverage items in our theater operations and books and associated stationery items at our State Cinema bookstore, and is stated at the lower of cost (first-in, first-out method) or net realizable value.

Restricted Cash

Restricted cash includes those cash accounts for which the use of funds is restricted by any contract or bank covenant. At December 31, 2020 and 2019, our restricted cash balance, included as part of prepaid and other current assets, was $8,000 and $7,000, respectively.

Derivative Financial Instruments

From time to time, we purchase interest rate derivative instruments to hedge the interest rate risk that results from the variability of our floating-rate borrowings. Our use of derivative transactions is intended to reduce long-term fluctuations in cash flows caused by market movements. Derivative instruments are recorded on the balance sheet at fair value with changes in fair value through interest expense in the Consolidated Statements of Operations or, in the case of accounting hedges, in Other Comprehensive Income and then reclassified into interest expense in the same period(s) during which the hedged transactions affect earnings. The cash flows from interest rate derivatives are classified as cashflows provided by operating activities in the Consolidated Cashflow Statement, as are the hedged transactions. As of December 31, 2020 and 2019 we have unfavorable derivative positions designated as accounting hedges of $430,000 and $342,000, respectively.

With regards to accounting hedges, the Company has elected, by reference to certain practical expedients contained within ASC 848 Reference Rate Reform, to continue the method of assessing effectiveness as document in the original hedge, so that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument. In addition, the Company has elected the expedient permitting the assertion of probability of the hedged interest payments regardless of any expected modification in the terms related to reference rate reform.

Operating Properties, net

Our Operating Properties consist of land, buildings and improvements, leasehold improvements, fixtures and equipment, which we use to derive operating income associated with our two business segments, cinema exhibition and real estate. Buildings and improvements, leasehold improvements, fixtures and equipment are initially recorded at the lower of cost or fair market value and depreciated over the useful lives of the related assets. Land is not depreciated. Expenditures relating to renovations, betterments or improvements to existing assets are capitalized if they improve or extend the lives of the respective assets and/or provide long-term future net cash inflows, including the potential for cost savings.

Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are generally as follows:


Building and improvements	15 – 60 years
Leasehold improvements	Shorter of the lease term or useful life of the improvement
Theater equipment	7 years
Furniture and fixtures	3 – 10 years

Investment and Development Properties, net

Investment and Development Properties consist of land, buildings and improvements under development, and their associated capitalized interest and other development costs that we are either holding for development, currently developing, or holding for

investment appreciation purposes. These properties are initially recorded at the lower of cost or fair market value. Within this category are building and improvement costs directly associated with the development of potential cinemas (whether for sale or lease), the development of entertainment-themed centers (“ETCs”), or other improvements to real property. As incurred, we expense start-up costs (such as pre-opening cinema advertising and training expense) and other costs not directly related to the acquisition and development of long-term assets. We cease cost capitalization (including interest) on a development property when the property is complete and ready for its intended use, or if activities necessary to get the property ready for its intended use have been substantially curtailed. However, we do not suspend cost capitalization for brief interruptions and interruptions that are externally imposed, such as mandates from governmental authorities.

Impairment of Long-Lived Assets

We review long-lived assets, including goodwill and intangibles, for impairment as part of our annual budgeting process, at the beginning of the fourth quarter, and whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable. In 2020, due to the impacts of COVID-19, we have reviewed our long-lived assets, including goodwill and intangibles, for impairment at the end of each reporting quarter.

We review internal management reports on a monthly basis as well as monitor current and potential future competition in film markets for indications of potential impairment.

(i)Impairment of Long-lived Assets (other than Goodwill and Intangible Assets with indefinite lives) – we evaluate our long-lived assets and finite-lived intangible assets using historical and projected data of cash flows as our primary indicator of potential impairment and we take into consideration the seasonality of our business. If the sum of the estimated, undiscounted future cash flows is less than the carrying amount of the asset, then an impairment is recognized for the amount by which the carrying value of the asset exceeds its estimated fair value based on an appraisal or a discounted cash flow calculation. Following the adoption of Accounting Standards Codification 842 Leases, we include all relevant right-of-use assets in our impairment assessments and exclude the related lease liabilities and payments. For certain non-income producing properties or for those assets with no consistent historical or projected cash flows, we obtain appraisals or other evidence to evaluate whether there are impairment indicators for these assets.

$217,000 of impairment losses were recorded for long-lived and finite-lived intangible assets for the year ended December 31, 2020, based on historical information and projected cash flow. No impairment losses were recorded for the years ended December 31, 2019 or December 31, 2018.

(ii)Impairment of Goodwill and Intangible Assets with indefinite lives – goodwill and intangible assets with indefinite useful lives are not amortized, but instead, tested for impairment at least annually on a reporting unit basis. The impairment evaluation is based on the present value of estimated future cash flows of the reporting unit plus the expected terminal value. There are significant assumptions and estimates used in determining the future cash flows and terminal value. The most significant assumptions include our cost of debt and cost of equity assumptions that comprise the weighted average cost of capital for each reporting unit. Accordingly, actual results could vary materially from such estimates.

No impairment losses were recorded for goodwill and indefinite-lived intangible assets for the three years ended December 31, 2020.

For a detailed discussion of our impairment assessments, refer to Note 3 – Impact of COVID-19 Pandemic on Liquidity.

Variable Interest Entity

The Company enters into relationships or investments with other entities that may be a variable interest entity (“VIE”). A VIE is consolidated in the financial statements if the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Reading International Trust I is a VIE. It is not consolidated in our financial statements because we are not the primary beneficiary. We carry our investment in the Reading International Trust I, recorded under “Other Assets”, using the equity method of accounting because we have the ability to exercise significant influence (but not control) over operating and financial policies of the entity. We eliminate transactions with an equity method entity to the extent of our ownership in such an entity. Accordingly, our share of net income/(loss) of this equity method entity is included in consolidated net income/(loss). We have no implicit or explicit obligation to further fund our investment in Reading International Trust I.

Land and Property Held for Sale

When a property is classified as held for sale, we present the respective assets and liabilities related to the property held for sale separately on the balance sheet and cease to record depreciation and amortization expense. Properties held for sale are reported at the lower of their carrying value or their estimated fair value less the estimated costs to sell. As of December 31, 2020, we classified our landholding at Coachella, California and Manukau, New Zealand, as held for sale. There were no adjustments necessary to reduce the carrying value of these assets on transfer to held for sale – accordingly, these assets are held at historical cost on the consolidated balance sheet. Refer to Note 5 – Real Estate Transactions for details.

Deferred Leasing/Financing Costs

Direct costs incurred in connection with obtaining tenants and or financing are amortized over the respective term of the loan utilizing the effective interest method, or straight-line method if the result is not materially different. In addition, interest on loans with increasing interest rates and scheduled principal pre-payments are also recognized on the effective interest method. Net deferred financing costs are presented as a reduction in the associated debt account (see Note 11 – Borrowings).

Film Rental Costs

Film rental costs are accrued based on the applicable box office receipts and estimates of the final settlement to the film licensors.

Advertising Expense

We expense our advertising as incurred. The amount of our advertising expense was $0.7 million, $1.8 million, and $2.4 million in 2020, 2019, and 2018, respectively.

Operating Leases

As Lessee

The majority of our cinema operations are conducted in premises under non-cancellable lease arrangements. Prior to January 1, 2019, under Accounting Standards Codification (“ASC”) 840 Leases, such lease arrangements were classified as operating leases, and the related lease expenses recorded on a straight-line basis over the initial base terms, taking into account any rate change clauses.

Following the adoption of ASC 842 Leases effective January 1, 2019, we determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities, current and non-current, in our consolidated balance sheets. Finance leases are included in operating properties, other current liabilities, and other long-term liabilities in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any prepaid lease payments made and excludes lease incentives received. Our lease terms may include options to extend or not to terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which we do not separate. For certain equipment leases, such as cinema equipment, we account for the lease and non-lease components as a single lease component.

As a result of the impacts of COVID-19, we have obtained certain concessions from our landlords. We have elected to account for these concessions as if there have been no changes to the underlying contracts, thereby recognizing abatements secured as variable lease expenses, and increasing payables for lease payment deferrals.

As Lessor

As part of our real estate operations, we own certain real estate property in the U.S., Australia and New Zealand which we lease to third parties. We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term. The lease term includes all non-cancellable periods contracted for within the lease and excludes any option periods which a tenant may hold.

As a result of the impacts of COVID-19, we have provided certain concessions to specific tenants. We have elected to account for these concessions as if there have been no changes to the underlying contracts, thereby recognizing abatements granted as variable lease payments through revenue and increasing receivables for lease payment deferrals.

Share-based Compensation

The determination of the compensation cost for our share-based awards (primarily in the form of stock options or restricted stock units) is made at the grant date based on the estimated fair value of the award, and such cost is recognized over the grantee’s requisite service period (which typically equates to our vesting term). Previously recognized compensation cost shall be reversed for any forfeited award to the extent unvested at the time of forfeiture. Refer to Note 15 – Share-based Compensation and Repurchase Plans for further details.

Treasury Shares

In recent years, we repurchased our own Class A common shares as part of a publicly announced stock repurchase plan. We account for these repurchases using the cost method and present these as a separate line within the Stockholders’ Equity section in our consolidated balance sheets. Refer to Note 15 – Share-based Compensation and Repurchase Plans for further details of our stock repurchase plan.

Insurance Recoveries and Other Contingency Matters

(i)Loss contingencies – we record any loss contingencies if there is a “probable” likelihood that the liability had been incurred, and the amount of the loss can be reasonably estimated.

(ii)Gain contingencies:

Insurance recoveries – in the event we incur a loss attributable to an impairment of an asset or incurrence of a liability that is recoverable, in whole or in part, through an insurance claim, we record an insurance recoverable (not to exceed the amount of the total losses incurred) only when the collectability of such claim is probable. To evaluate the probable collectability of an insurance claim, we consider communications with third parties (such as with our insurance company), in addition to advice from legal counsel.

Others – other gain contingencies typically result from legal settlements and we record those settlements in income when cash or other forms of payments are received.

Legal costs relating to our litigation matters, whether we are the plaintiff or the defendant, are recorded when incurred. For the years ended December 31, 2020, 2019, and 2018, we recorded gains/(losses) relating to litigation settlement of $3,000, ($67,000), and $nil, respectively.

Currency Translation Policy

The financial statements and transactions of our Australian and New Zealand cinema and real estate operations are recorded in their functional currencies, namely Australian and New Zealand dollars, respectively, and are then translated into U.S. dollars. Assets and liabilities of these operations are denominated in their functional currencies and are then translated at exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rate for the reporting period. Translation adjustments are reported in “Accumulated Other Comprehensive Income,” a component of Stockholders’ Equity.

The carrying values of our Australian and New Zealand assets fluctuate due to changes in the exchange rate between the U.S. dollar and the Australian and New Zealand dollars. Presented in the table below are the currency exchange rates for Australia and New Zealand as of and for the three years ended December 31, 2020:



	As of and for the year ended December 31, 2020	As of and for the year ended December 31, 2019	As of and for the year ended December 31, 2018
Spot Rate
Australian Dollar	0.7709	0.7030	0.7046
New Zealand Dollar	0.7194	0.6745	0.6711
Average Rate
Australian Dollar	0.6904	0.6954	0.7479
New Zealand Dollar	0.6504	0.6593	0.6930

Income Taxes

We account for income taxes under an asset and liability approach. Under the asset and liability method, deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying

amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled and are classified as noncurrent on the balance sheets in accordance with current U.S. GAAP. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable (refundable) for the period and the change during the period in deferred tax assets and liabilities. The effect of a change in tax rates or law on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.

A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. We record interest and penalties related to income tax matters as part of income tax expense and record the related liabilities in income tax related balance sheet accounts. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which it is determined a change in recognition or measurement is appropriate.

The Tax Act creates a new requirement for U.S. corporations to include in U.S. taxable income certain earnings of their foreign subsidiaries, effective beginning tax year 2018. The Global Intangible Low Taxed Income (“GILTI”) framework introduces a new tax on foreign earnings of U.S. based consolidated groups. We record taxes related to GILTI as a current-period expense when incurred.

Earnings (Loss) Per Share

The Company presents both basic and diluted earnings (loss) per share amounts. Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to the Company by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is based upon the weighted average number of common and common equivalent shares outstanding during the year, which is calculated using the treasury-stock method for equity-based awards. Common equivalent shares are excluded from the computation of diluted earnings (loss) per share in periods for which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the period are anti-dilutive and, accordingly, are excluded from the calculation.

Government Grants

In the second quarter of 2020, in order to account for certain wage subsidies received from the Australian and New Zealand governments, we adopted International Accounting Standard 20 - Accounting for Government Grants and Disclosure of Government Assistance (“IAS 20”). The aim of these Australian and New Zealand government subsidies is to protect as many jobs as possible during the COVID-19 pandemic by subsidizing the wages of employees, using the administrative capabilities of employers to forward such subsidies to their employees. The subsidies are not loans to employees or employers. U.S. GAAP has no codified accounting guidance concerning the measurement and presentation of such government grants for for-profit entities, and in lieu of such guidance, common practice is to refer to IAS 20. IAS 20 permits entities to account for government grants on a gross basis, showing grants receivable as income and the associated expense as costs, or on a net basis, by deducting the grant from the related expense. The nature of the wage subsidies is such that, without them, our Company would likely have reduced its wages and salaries expense through the termination of certain employees. In order to faithfully present the transaction, our Company has therefore elected to present wages and salaries expense net of government grants. The impacted wages and salaries costs are contained within ‘other operating expenses’ and ‘general and administrative expenses’ in our cinema and real estate segments. As of December 31, 2020, we have received subsidies totaling $9.5 million (AU$12.3 million) and $1.4 million (NZ$1.9 million) in Australia and New Zealand, respectively. There are no unfulfilled conditions or contingencies relating to these subsidies as of December 31, 2020.

Business Acquisition Valuation and Purchase Price Allocation

In recent years, our business acquisition efforts have been focused on our real estate segment however, in 2019 we completed two acquisitions of established cinemas in Tasmania, Australia. For acquisitions meeting the definition of a “business” in accordance with ASC 805, Business Combinations, the assets acquired, and the liabilities assumed are recorded at their fair values as of the acquisition date. To accomplish this, we typically obtain third-party valuations to allocate the purchase price to the assets acquired and liabilities assumed, including both tangible and intangible components. The determination of the fair values of the acquisition components and its related determination of the estimated lives of depreciable tangible assets and amortizing intangible assets/liabilities require significant judgment and several considerations, described as follows:

(i)Tangible assets – we allocate the purchase price to the tangible assets of an acquired property (which typically includes land, building and site/tenant improvements) based on the estimated fair values of those tangible assets assuming the building was vacant. Estimates of fair value for land are based on factors such as comparisons to other properties sold in the same geographic area adjusted for unique characteristics. Estimates of fair values of buildings, and site/tenant improvements are based on present values determined based upon the application of hypothetical leases with market rates and terms. Estimates of plant and equipment, leasehold improvements and any cinema related equipment are based on their current market values with relation to their age and condition. Building and site improvements are depreciated over their remaining economic lives, while tenant improvements are depreciated over the remaining non-cancelable terms of the respective leases. Plant and equipment, leasehold improvements and any cinema related equipment are depreciated over the shorter of their useful economic lives and the underlying cinema lease.

(ii)Intangible assets and liabilities – the valuation of the intangible assets and liabilities in a typical real estate acquisition is described below:

Above-market and below-market leases – where we are the lessor, we record above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. We amortize any capitalized above-market lease values (an intangible asset) and capitalized below-market lease values (an intangible liability) over the remaining non-cancelable terms of the respective leases. Where we are the lessee, lease arrangements entered into are assessed under ASC 842 Leases.

Benefit of avoided costs due to existing tenancies – this typically includes (i) in-place leases (the value of avoided lease-up costs) and (ii) leasing commissions and legal/marketing costs avoided with the leases in place. We measure the fair values of the in-place leases based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if vacant. Factors considered in the fair value determination include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing, and leasing activities in estimating the fair value of the intangible assets acquired. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. Management also estimates costs to execute similar leases including leasing commissions, legal, and other related expenses to the extent that such costs are not already incurred in connection with a new lease origination as part of the transaction.

We amortize the value of in-place leases and unamortized leasing origination costs to expense over the remaining term of the respective leases. Should a tenant terminate its lease, the unamortized portion of the in-place lease values and leasing origination costs will be charged to expense.

Intangible assets acquired in cinema business combination typically relate to the brand of the underlying business being acquired.

These assessments have a direct impact on revenue and net income, particularly on the depreciable base of the allocated assets which will impact the timing of expense allocation. In accordance with our adoption of ASU 2015-16, we record the changes in depreciation and amortization in the period we finalized our purchase price allocation.

New Accounting Standards and Accounting Changes

Recently Adopted and Issued Accounting Pronouncements

Adopted:

ASU 2020-04 – Reference Rate Reform

In the fourth quarter of 2020, we adopted certain practical expedients provided by ASU 2020-04 Reference Rate Reform (Topic 848). This new guidance contains optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform. We have elected certain expedients which permit us to i) continue the method of assessing hedge effectiveness such that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument and ii) to continue to assert probability of the relevant hedged interest payments regardless of any expected modification in terms related to reference reform.

The guidance allows for different expedient elections to be made at different points in time, and to this end the Company intends to reassess its elections of such expedients as and when alternations become necessary.

IAS 20 – Accounting for Government Grants and Disclosure of Government Assistance

ASU 2017-04 Intangibles – Goodwill and Other (Topic 305): Simplifying the Test for Goodwill Impairment
‎

On January 1, 2020, we adopted ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This new guidance removes the second step of the two-step impairment test for measuring goodwill and is to be applied on a prospective basis only. Adoption of this standard has no material effect on our consolidated financial statements.

ASU 2016-13 Financial Instruments – Credit Losses (Topic 326)

On January 1, 2020, we adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). This new guidance replaces the incurred loss impairment methodology under prior GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. We have no history of significant bad debt losses and as such adoption of this standard has no material effect on our consolidated financial statements.

ASU 2016-02 Leases

On January 1, 2019, we adopted the new accounting standard ASU 2016-02 Leases, codified as ASC 842, using the current period adjustment method. We recognized the cumulative effect of initially applying the new leasing standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The standard had a material impact on our consolidated balance sheets, but not on our consolidated statements of operations or statements of cash flow.

The cumulative effect of the changes made to our consolidated January 1, 2019 balance sheet for the adoption of ASC 842 Leases were as follows:


(Dollars in thousands)	Balance at ‎December 31, ‎2018		Adjustments ‎due to ASC ‎842		Balance at ‎January 1, ‎2019
Assets
Operating property, net	$	257,667	$	370	$	258,037
Operating lease right-of-use assets		—		232,319		232,319
Intangible assets, net		7,369		(3,542)		3,827
Deferred tax asset, net		26,444		82		26,526
Liabilities
Operating lease liabilities	$	—	$	245,280	$	245,280
Other non-current liabilities		28,931		(16,033)		12,898
Stockholders' Equity
Non-controlling interest	$	4,337	$	(46)	$	4,291

Retained earnings

47,048

47,076

In accordance with the new lease accounting standard requirements, the disclosure of the impact of adoption on our consolidated statements of operations and balance sheet was as follows:


	December 31, 2020						December 31, 2019
(Dollars in thousands)	As Reported, ‎December 31, 2020		Balances ‎Without ‎Adoption of ‎ASC 842		Effect of ‎change ‎Higher / ‎(Lower)			As Reported, ‎December 31, 2020			Balances ‎Without ‎Adoption of ‎ASC 842	Effect of ‎change ‎Higher / ‎(Lower)
Cinema costs and expenses	$	91,065	$	91,228	$	(163)		$	210,050	$	210,110		$	(60)
Depreciation and amortization		22,317		22,224		93			22,747		22,582			165
General and administrative		16,998		17,098		(100)			25,395		25,569			(174)
Interest expense, net		9,354		9,346		8			7,904		7,891			13
Income tax (benefit) expense		(4,967)		(4,914)		53			28,837		28,819			18
Net income (loss)	$	(65,857)	$	(65,966)	$	109		$	(26,503)	$	(26,541)		$	38


	Year Ended December 31, 2020						Year Ended December 31, 2019
(Dollars in thousands)	As Reported, ‎December 31, 2020		Balances ‎Without ‎Adoption of ‎ASC 842		Effect of ‎change ‎Higher / ‎(Lower)		As Reported, ‎December 31, 2019		Balances ‎Without ‎Adoption of ‎ASC 842		Effect of ‎change ‎Higher / ‎(Lower)
Assets
Operating property, net	$	353,125	$	353,013	$	112	$	258,138	$	257,933	$	205
Intangible assets		3,971		6,275		(2,304)		4,320		7,523		(3,203)
Operating lease right-of-use assets		220,503		—		220,503		229,879		—		229,879
Deferred tax asset, net		3,362		3,352		10		3,444		3,380		64
Liabilities
Other current liabilities	$	3,826	$	4,006	$	(180)	$	3,653	$	3,789	$	(136)
Operating lease liabilities, current		22,699		—		22,699		20,379		—		20,379
Other non-current liabilities		22,017		38,855		(16,838)		18,854		35,276		(16,422)
Operating lease liabilities, non-current		212,806		—		212,806		223,164		—		223,164
Stockholders' Equity
Retained earnings	$	81,173	$	81,008	$	165	$	139,616	$	139,578	$	38

Refer to Note 2 – Summary of Significant Accounting Policies for a description of our new lease accounting recognition policies

ASU 2016-18 Statement of Cash Flows, Topic 230: Restricted Cash, a consensus of the FASB Emerging Issues Task Force

On January 1, 2018, the Company adopted ASU 2016-18, Statement of Cash Flows, Topic 230: Restricted Cash, a consensus of the FASB Emerging Issues Task Force. This standard requires that amounts generally described as restricted cash and cash equivalents should be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Adoption of this standard did not have a material effect on our consolidated statement of cash flows.

ASU 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments

On January 1, 2018, the Company adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The standard applies to eight (8) specific cash flow classification issues, reducing the current and potential future diversity in the presentation of certain cash flows. Adoption of this standard did not have a material effect on our consolidated statement of cash flows.

ASU 2017-07 Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

On January 1, 2018, the Company adopted ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This standard (i) requires that an employer disaggregate the service cost component from the other components of net benefit cost, and (ii) specifies how to present the service cost component and the other components of net benefit cost in the income statement and (iii) allows only the service cost component of net benefit cost to be eligible for capitalization. Adoption of this standard did not have a material effect on our consolidated financial statements.

ASU 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business

On January 1, 2018, the Company adopted ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU provides that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the asset is not a “business”, thus reducing the number of transactions that need further evaluation for business combination. Adoption of this standard did not have a material effect on our current consolidated financial statements.

Prior period financial statement correction of immaterial errors

Sales tax

During the fourth quarter of 2019, we identified immaterial errors related to the accounting for sales tax certain products sold from cinemas dating back to 2017. These errors resulted in an overstatement of revenue for certain periods.

We assessed the materiality of these errors on our financial statements for prior periods in accordance with the SEC Staff Accounting Bulletin (SAB) No. 99, Materiality, codified in ASC 250, Presentation of Financial Statements, and concluded that they were not material to any prior annual or interim periods. However, the aggregate amount of $993,000 related to the prior period immaterial errors through September 30, 2019, would have been material to the full year Consolidated Statements of Operations to December 31, 2019, presented within this Form 10-K. Consequently, in accordance with ASC 250 (specifically SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), we have corrected these errors for all prior periods presented by revising the consolidated financial statements and other financial information included herein.

The following is a summary of the previously issued financial statement line items for all periods and statements included in this Form 10-K report affected by the correction.

Consolidated Statements of Operations:


	Year Ended December 31, 2018
(Dollars in thousands)	As Reported		Adjustment		As Revised
Cinema revenue	$	294,177	$	(455)	$	293,723
Total revenue		309,385		(455)		308,931
Operating income (loss)		24,078		(455)		23,623
Income (loss) before income taxes		17,918		(455)		17,463
Income tax (expense) benefit		(3,420)		122		(3,298)
Net income (loss)		14,498		(332)		14,166
Net income (loss) attributable to Reading International, Inc. common shareholders		14,366		(332)		14,034

Basic earnings (loss) per share	$	0.62	$	(0.01)	$	0.61
Diluted earnings (loss) per share		0.62		(0.02)		0.60

Consolidated Balance Sheets:


	Summary of Equity
(Dollars in thousands)	As Reported		Adjustment		As Revised
Equity at January 1, 2018	$	181,618	$	(236)	$	181,382
Net income (loss) attributable to Reading International, Inc. common shareholders		14,366		(332)		14,034
Equity at December 31, 2018		180,547		(568)		179,979

Consolidated Statements of Cash Flows:


	Year Ended December 31, 2018
(Dollars in thousands)	As Reported		Adjustment		As Revised
Net income	$	14,498	$	(332)	$	14,166
Change in net deferred tax assets		(1,719)		(122)		(1,841)
Accounts payable and accrued expenses		2,107		455		2,562
Net cash provided by operating activities		32,645		—		32,645

Impact Of COVID-19 Pandemic And Liquidity	12 Months Ended
Impact Of COVID-19 Pandemic And Liquidity	Dec. 31, 2020
Impact Of COVID-19 Pandemic And Liquidity [Abstract]
Impact Of COVID-19 Pandemic And Liquidity	NOTE 3 – IMPACT OF COVID-19 PANDEMIC ON LIQUIDITY On March 11, 2020, the World Health Organization (“WHO”) declared the novel coronavirus, COVID-19, a global pandemic. Following the date of this declaration, many jurisdictions imposed various restrictions on “non-essential” activities. In the jurisdictions in which we operate, these restrictions typically included closure of all business deemed “non-essential” (including movie-theaters and most other indoor forms of entertainment), and that all “non-essential” workers, and all members of the public, remain in their homes. As a result, beginning in March 2020 and continuing through and beyond the end of the first quarter of 2020, we temporarily closed all of our live theatres and cinema operations in the U.S., Australia and New Zealand. Operating restrictions adopted in Australia and New Zealand also affected, and to varying degrees continue to affect, many of our tenants at our retail shopping centers. While most of these tenants have, to date, remained open for trading, we have in many cases agreed to rent abatements or deferrals. In the second to fourth quarters of 2020, and continuing into 2021, several jurisdictions began relaxing COVID-19 restrictions, however other jurisdictions are, to varying degrees reinstating their lockdowns due to the resurgence of COVID-19. Even where businesses have been allowed to reopen, operational limitations on density, hours of operation, and other operating factors, and public concern about interacting with third parties, have prevented a return to normal operations. Vaccination programs have begun across the globe, but periodic closures and limitations on operating activities are expected to continue until the COVID-19 spread is considered materially contained. There is no reliable estimate as to when this will be. Cinema Segment Impact As of March 31, 2021, we had reopened 19 of our 24 cinemas in the U.S. Our Kahala cinema is closed pending the completion of renovations which have been delayed due to COVID-19. We will open the remaining five cinemas when Management determines it is operationally expedient to do so. In the second quarter of 2020, we reopened all the cinemas in our New Zealand circuit except for our Reading Cinemas at Courtenay Central (which continues to be closed due to seismic concerns), with social distancing measures in place. Government imposed social distancing requirements were discontinued in New Zealand on June 8, 2020. In June and July 2020, we reopened all our Australia circuit with social distancing measures in place. Certain locations in Australia and New Zealand have been, and may be in the future, subject to short local lockdowns in instances where community transition of the virus as spread, but these have been isolated to individual areas. As we complete the reopening of our cinemas in the U.S., COVID-19 has and continues to adversely impact our business not only because of government mandated closures, but also by reducing our seating capacities, increasing our costs of operation due to the need for the implementation of enhanced cleaning protocols, deterring potential customers from sharing entertainment spaces with third parties, and deterring film distributors from releasing their films to exhibitors. While we have confidence in the movies anticipated for release in 2021 and 2022, there can be no assurances that the timing of these releases will not be materially rescheduled by movie studios. Such rescheduling may push the relative revenues into later quarters, and in circumstances where a movie is released to streaming on the same day as the theaters, also have the effect of reducing our potential patronage. For these reasons, even if legally permitted to reopen, our decisions to reopen any particular theaters, and whether to have that theater remain open, will be impacted by a variety of considerations including movie availability, customer demand, and safety considerations relative to our staff and customers. Real Estate Segment Impact Substantially all our tenants in our Australian real estate business are currently open for trading. All our tenants in our New Zealand real estate business are currently open for trading. However, most of the rentable retail portions of our Courtenay Central location continue to be closed since January 2019 due to seismic concerns. We have, to varying degrees, supported certain tenants with rent abatements and deferrals, and may continue to do so until we believe that such tenants are able to fully perform their obligations despite COVID-19 impacts, although the magnitude of such assistance has diminished since the end of the third quarter of 2020. In the U.S., much of our real estate income is generated by rental revenue from our live theatres which, as of the date of this Report, are closed to the public due to COVID-19. Liquidity Impact The repercussions of COVID-19 resulted in a significant decrease in our Company’s revenues and earnings for the year ended December 31, 2020. The closure of our global cinemas resulted in effectively no revenue in the second quarter of 2020, and significantly reduced revenues for the remainder of the year, albeit with some improvements in Australia and New Zealand towards the end of the fourth quarter. The closures caused our Company to experience significantly reduced revenues and incur operating losses due to (i) the continuing closure of certain cinemas due to government mandates as a result of COVID-19, (ii) the major studios postponing or removing their tentpole movies from the global 2020 release calendar as a direct result of COVID-19, (iii) increased operating costs due to COVID-19 safety protocols, and (iv) reduced attendance due to potential audience hesitance to engage socially with third parties and/or a lack of compelling movies scheduled at reopened theaters. Despite our third and fourth quarter losses being partially offset by income generated by our reopened New Zealand and Australia cinemas, and to a lesser extent our reopened U.S. cinemas, as a result of the conditions described in (ii), (iii) and (iv) above, even in markets where we have been permitted to reopen, we have, in many cases, not been able to operate profitably at the theater level. With regards to our real estate operations, while all our New Zealand and Australian real estate tenants are currently trading (other than certain tenants who have closed for reasons unrelated to COVID-19), our real estate revenue and earnings may continue to be affected by any rent relief that we may deem necessary to provide to certain tenants experiencing impacts from COVID-19. Cost reduction activities As of December 31, 2020, our Company had negative working capital of $64.1 million compared to negative working capital of $84.1 million at December 31, 2019. Due to timing differences between the date revenues are recognized at our cinemas and the date on which we pay our film rent, we customarily have some level of negative working capital. In response to the issues associated with COVID-19, our Company has taken, and continues to take, significant proactive steps to preserve cash by: (i)Completing arrangements with substantially all our third-party landlords, arrangements which have resulted in both abatements and deferrals of our occupancy costs. We continue to negotiate with landlords for further abatement and/or deferrals of occupancy costs and related terms; (ii)Reducing our costs of labor across the company through a combination of terminations, working hour reductions, cash bonus eliminations and hiring freezes; (iii)Eliminating non-essential operating costs; (iv)Deferring, to the extent practicable, certain operating expenses, such as utility costs; and (v)Deferring, to the extent practicable, all non-essential capital expenditures. Cash generation activities In addition to the actions taken to preserve cash during the effects of COVID-19, our Company has taken proactive steps to generate additional cash inflows. As detailed at Note 5 – Real Estate Transactions, we sold our non-income generating land at Manukau, New Zealand, and Coachella, California, in the first quarter of 2021. These sales produced net cash inflow of $60.0 million, net of transfers to our 50% partner with respect to the sale of Coachella. Our Company secured access to government wage subsidy programs in Australia and New Zealand. The Australian wage subsidy program expired on March 27, 2021. The New Zealand program expired on August 25, 2020. Our Company continues to review various programs offered by governmental agencies in the jurisdictions where it operates as those programs are further defined or revised, but there can be no assurances that our Company will qualify for any such programs or, even if it does qualify, the degree that it may be successful in its applications for such support. In addition, during the third quarter of 2020, Management lodged an application to carry back certain operating losses under the recently enacted CARES Act. The CARES Act permits net operating losses generated from tax years 2018 through 2020 to be carried back five years. During the third quarter of 2020, the Company filed its 2019 federal income tax return and carried back the net operating losses generated in 2019 to offset taxable income from tax years 2015 and 2016. The CARES Act also permits corporate taxpayers to claim in full any previously unrefunded alternative minimum tax credit in the 2019 tax year. This claim was made with our Company’s 2019 federal income tax return. The carryback of the 2019 net operating loss and the refund claim for 100% of the remaining alternative minimum tax credit resulted in a tax refund receivable of approximately $5.1 million after the filing of the 2019 federal income tax return. The $5.1 million refund was received as of January 31, 2021. Debt Management To address the impacts of COVID-19 on our financing arrangements, we have renegotiated certain financial covenant modifications with our applicable lenders. These modifications permit us to classify the relevant debt instruments as long term and are further discussed below in Note 11 – Borrowings. As of March 31, 2020, Management had drawn down in full the operating debt facilities available to our Company. As of December 31, 2020, all our Company’s facilities remain fully drawn with the exception of the Bank of America Credit Facility which has $3.8 million of capacity available, as detailed in Note 11 – Borrowings. Our Company’s use of these funds is in some ways limited due to limitations on the repatriation of funds from Australia and New Zealand to the United States and limitations on our use of the proceeds from our $55.0 million Bank of America Credit Facility for purposes unrelated to our U.S. cinema activities. Our Company has continued its efforts to secure our financing position in 2021. On March 26, 2021, we repaid in full the $40.6 million construction loan secured by our 44 Union Square property. We are actively engaged in the refinancing of this property and while no assurances can be given, believe that this financing will be in place by June 30, 2021. Going Concern Management continues to evaluate the assertion required by ASC 205-40 Going Concern as it relates to our Company, including its operations in its various individual operating jurisdictions: U.S., Australia and New Zealand. Management’s evaluation is informed by current liquidity positions, cash flow estimates, known capital and other expenditure requirements and commitments and Management’s current business plan and strategies. Our Company’s business plan - two businesses (real estate and cinema) in three countries (Australia, New Zealand and the U.S.) - has served us well since the onset of COVID-19 and is key to Management’s overall evaluation of ASC 205-40 Going Concern. The above discussed factors, including principally but not limited, to the temporary closure of our cinemas, materially reduced cinema attendances and as a result materially reduced revenues and cash flows mean that, absent Management plans, the Company’s liquidity is insufficient to meet its obligations as they fall due. As a result, there is substantial doubt that the Company will be able to continue as a going concern for at least twelve months following the issuance of our financial statements; however, it is probable that Management’s plans described herein will alleviate that substantial doubt. Management’s forecasts and cash flow estimates are based on the current expectation that the global cinema industry will begin to recover in 2021, but this forecast relies upon, among other things, the elimination of governmental restrictions on the reopening of cinemas, the resumption of release of tentpole movies, and confidence of moviegoers in the safety protocols established by the global cinema industry. These named factors are both out of Management’s control and are material, individually and in the aggregate, to the realization of Management’s forecasts and expectations throughout the period of COVID-19. Management recognizes that in times of domestic or global economic turmoil, including COVID-19, our estimates and judgments with respect to these cash flow estimates are subject to greater uncertainty than in more stable periods. The forecasts are inherently uncertain and have required us to make estimates and judgements regarding the extent to which COVID-19 will continue to affect the cinema industry. Management reviewed its significant cinema and real estate operations in Australia and New Zealand, two geographies that have experienced relatively more success in controlling COVID-19 than the U.S. As of December 31, 2020, substantially all our cinema operations and real estate operations had resumed in Australia and New Zealand. However, the cash flow of our Australian and New Zealand cinemas has been diminished by the temporary determinations by the major studios to delay the global release of tentpole movies. The major studios are delaying these releases, largely because key cinema markets in the U.S. (i.e. New York City and Los Angeles) had remained, and to an extent continue to be, closed. Our Australian real estate’s revenue generation abilities are less affected by COVID-19, and aside from the issuance of rental abatements and deferrals to certain tenants, our portfolio continues to generate near-to-expected cash flows. In order to alleviate the substantial doubt that the Company will be able to generate sufficient cash flows within the twelve month period after the issuance of these financial statements to meet its obligations as they become due, Management has in place specific plans to meet such obligations. Firstly, Management is implementing its business plan to refinance our Company’s 44 Union Square property, having on March 26, 2021, repaid the $40.6 million construction loan. The refinancing of 44 Union Square has been a key part of the three-year real estate business strategy presented to our Board of Directors annually since 2018. Although no assurances can be given, based on current facts and circumstances, including, without limitation, recent appraisals and the progress of negotiations with a prospective lender, Management is confident that this takeout financing will be completed before the end of the second quarter 2021, on satisfactory terms. Secondly, we are continuing to implement our plan to monetize certain assets within our real estate portfolio. As noted at Note 23 – Subsequent Events, we began actively marketing for sale our Auburn/Redyard and our Royal George Theater properties, in January 2021 and February 2021, respectively. Real Estate development and monetization is a core component of our Company’s real estate business. Although no assurances can be given, based on current facts and circumstances and the interest received in these properties to date, Management is confident that these real estate sales will be completed in or around the second quarter of 2021, on satisfactory terms. In conclusion, as of the date of issuance of these financial statements, based on Management’s evaluation of ASC 205-40 Going Concern and the current conditions and events, considered in the aggregate, and Management’s various plans for enhancing its liquidity and the extent to which those plans are progressing, Management concludes that the plans are probable of being implemented and probable that they alleviate the substantial doubt about the Company’s ability to continue as a going concern. Impairment Considerations Our Company considers that the events and factors described above constitute impairment indicators under ASC 360 Property, Plant and Equipment. Our Company performed a quantitative recoverability test of the carrying values of all its asset groups. Our Company estimated the undiscounted future cash flows expected to result from the use of these asset groups. The cash flow estimates used in this review are consistent with budgetary revisions performed by Management in response to COVID-19 and the developing market conditions. The realization of these forecasts is dependent on several variables and conditions, many of which are subject to the uncertainties associated with COVID-19 and as a result, actual results may materially differ from Management’s estimates. Our recoverability testing determined that, for certain asset groups, the sum of the estimated undiscounted future cash flows attributable to those assets was less than their carrying amount. Our Company evaluated the fair value of these assets which consisted of certain items of machinery and equipment and concluded that their fair value was less than their carrying values and recorded a $217,000 impairment loss, reducing the relevant machinery and equipment. The remaining net book value of the impaired assets was $nil. Our Company also considers that the events and factors described above constitute impairment indicators under ASC 350 Intangibles – Goodwill and Other. Our Company performed a quantitative goodwill impairment test and determined that its goodwill was not impaired as of December 31, 2020. The test was performed at a reporting unit level by comparing each reporting unit’s carrying value, including goodwill, to its fair value. The fair value of each reporting unit was assessed using a discounted cash flow model based on the budgetary revisions performed by Management in response to COVID-19 and the developing market conditions. The realization of these forecasts is dependent on several variables and conditions, many of which are subject to the uncertainties associated with COVID-19 and as a result, actual results may materially differ from Management’s estimates.

Earnings (Loss) Per Share

12 Months Ended

Dec. 31, 2020

Earnings (Loss) Per Share [Abstract]

Earnings (Loss) Per Share

NOTE 4 – EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted earnings (loss) per share and a reconciliation of the weighted average number of common and common equivalent shares outstanding for the three years ended December 31, 2020:



(Dollars in thousands, except share and per share data)	2020		2019		2018
Numerator:
Net income (loss) attributable to RDI common stockholders	$	(65,200)	$	(26,429)	$	14,034
Denominator:
Weighted average shares of common stock – basic		21,749,155		22,631,754		22,991,277
Weighted average dilutive impact of stock-based awards		466,356		152,368		217,714
Weighted average shares of common stock – diluted		22,215,511		22,784,122		23,208,991
Basic earnings (loss) per share attributable to RDI common stockholders	$	(3.00)	$	(1.17)	$	0.61
Diluted earnings (loss) per share attributable to RDI common stockholders	$	(3.00)	$	(1.17)	$	0.60
Awards excluded from diluted earnings (loss) per share		674,676		516,010		276,681

Outstanding awards of 674,676 for the year ended December 31, 2020, and 516,010 for the year ended December 31, 2019, were excluded from the computation of dilutive shares, as they were anti-dilutive because of the net loss from continuing operations.

Real Estate Transactions	12 Months Ended
Real Estate Transactions	Dec. 31, 2020
Real Estate Transactions [Abstract]
Real Estate Transactions	NOTE 5 – REAL ESTATE TRANSACTIONS Discussed below are the real estate transactions affecting the presentation in our consolidated balance sheets as of December 31, 2020 and 2019, and the profitability determination in our consolidated statements of income for the three years ended December 31, 2020: Real Estate Landholding Held for Sale during the Reporting Period As of December 31, 2020, we classified our landholdings at Coachella, California, and Manukau, New Zealand as held for sale. Both landholdings are part of our Real Estate operating segment. Coachella, California Shadow View Land and Farming LLC, a 50% non-controlling interest of which we are the Manager, owns certain non-income producing land at Coachella, California. As detailed at Note 21 – Related Parties, the Audit and Conflicts Committee of the Board of Directors is charged with overseeing our Management Shadow View Land and Farming. In December 2020, we classified the non-income producing land at Coachella as held for sale as part of our strategy to monetize certain real estate assets in order to provide the necessary cash to support our Company during the period affected by COVID-19. This disposal unit, which consists of land and certain improvements to that land, was transferred to Land Held for Sale at its book value of $4.5 million, being the lower of cost and fair value less costs to sell. No adjustments to the book value of this asset were required. The sale of this land was completed on March 5, 2021 for $11.0 million. As a 50% member in Shadow View Land & Farming LLC, the Company received 50% of the sale proceeds. These actions were approved by Shadow View Land and Farming LLC and the Audit and Conflicts Committee of our Board of Directors. Manukau, New Zealand In December 2020, we classified our non-income producing land at Manukau, New Zealand, as held for sale as part of our strategy to monetize real estate certain assets in order provide the necessary cash to support our Company during the period affected by COVID-19. This disposal unit, which consists of land and certain improvements to that land, was transferred to Land Held for Sale at its book value of $13.4 million, being the lower of cost and fair value less costs to sell. No adjustments to the book value of this asset were required. The sale of this land was completed on March 4, 2021, for NZ$77.2 million, of which NZ$1.0 million was received on February 23, 2021 and the balance of funds was received on March 4, 2021. Real Estate Asset Groups Held for Sale after the Reporting Period After December 31, 2020, but before these financial statements were issued, we classified our Auburn Redyard and Royal George Theatre properties, and their associated asset groups, as held for sale. The anticipated sales are expected to be concluded in or around the second quarter of 2021 and are consistent with our strategy to provide the Company with adequate cash flow during the period affected by COVID-19. Real Estate Acquisitions Exercise of Option to Acquire Ground Lessee’s Interest in Ground Lease and Improvements Constituting the Village East Cinema On August 28, 2019, we exercised our option to acquire the ground lessee’s interest in the 13-year ground lease underlying and the real property assets constituent with our Village East Cinema in Manhattan. The purchase price under the option is $5.9 million. It was initially agreed that the transaction would close on or about May 31, 2021. On March 12, 2020, we amended the original agreement to (i) extend the term of the Citadel Cinemas, Inc. lease with Sutton Hill to January 31, 2022 and extend the put option to December 4, 2021 and (ii) at SHC’s request, in connection with our deferral of the closing date for our acquisition of SHC’s interest in the Village East Cinema, the Company reinstated and extended until December 4, 2021 SHC’s right to put that interest to us. That put right had previously expired on December 4, 2019. We were advised by SHC that it wanted this reinstatement and extension in order to assure itself that, in the event of the non-performance by us of our current contractual obligation to close our purchase of the interest in the ground lease on or about the extended date of May 31, 2021, that it could (as, in effect, an additional remedy) exercise this reinstated and extended put right. We believe that the reinstatement and extension of this put right is immaterial to our Company, since we have in fact already exercised our option, are in fact under contract with SHC to acquire SHC’s interest in the Village East Cinema and have every intention of completing that acquisition. On March 29, 2021, we extended this closing date to January 1, 2023.

Properties And Equipment

12 Months Ended

Dec. 31, 2020

Properties And Equipment [Abstract]

Properties And Equipment

NOTE 6 – PROPERTIES AND EQUIPMENT

Operating Property, Net

Property associated with our operating activities is summarized as follows:



	December 31,
(Dollars in thousands)	2020		2019
Land	$	82,286	$	75,663
Building and improvements		253,419		149,852
Leasehold improvements		59,054		56,912
Fixtures and equipment		201,518		186,949
Construction-in-progress		9,285		5,484
Total cost		605,562		474,860
Less: accumulated depreciation		(252,437)		(216,722)
Operating Properties, net	$	353,125	$	258,138

Of our total operating properties as disclosed above, the gross and carrying amounts of the portion of our properties currently on lease or held for leasing as of December 31, 2020 and 2019 are as follows:



	December 31,
(Dollars in thousands)	2020		2019
Building and improvements
Gross balance	$	153,643	$	67,766
Less: Accumulated depreciation		(26,107)		(20,220)
Net Book Value	$	127,536	$	47,546

Depreciation expense for operating property was $21.5 million, $22.0 million, and $19.5 million for the year ended December 31, 2020, 2019 and 2018, respectively.

Investment and Development Property

Investment and development property is summarized as follows:



	December 31,
(Dollars in thousands)	2020		2019
Land	$	5,936	$	24,446
Building		—		1,900
Construction-in-progress (including capitalized interest)		5,634		87,678
Investment and development property, net	$	11,570	$	114,024

For the year ended December 31, 2020 and 2019, we capitalized interest charges of $2.4 million and $6.2 million pertaining to our on-going development projects.

Investments In Unconsolidated Joint Ventures

12 Months Ended

Dec. 31, 2020

Investments In Unconsolidated Joint Ventures [Abstract]

Investments In Unconsolidated Joint Ventures

NOTE 7 – INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

Our investments in unconsolidated joint ventures are accounted for under the equity method of accounting. The table below summarizes our active investment holdings in two unconsolidated joint ventures:



			December 31,
(Dollars in thousands)	Interest		2020		2019
Mt. Gravatt		33.3%	$	3,960	$	3,894
Rialto Cinemas		50.0%		1,065		1,175
Total Joint Ventures			$	5,025	$	5,069

Our recorded share of equity earnings (losses) from our investments in unconsolidated joint ventures are as follows:



(Dollars in thousands)	2020		2019		2018
Mt. Gravatt	$	(249)	$	674	$	690
Rialto Cinemas		(200)		118		284
Total equity earnings	$	(449)	$	792	$	974

Mt. Gravatt

We own an undivided 33.3% interest in Mt. Gravatt, an unincorporated joint venture that owns and operates a sixteen-screen multiplex cinema in Australia.

Rialto Cinemas

We own an undivided 50.0% interest in the assets and liabilities of the Rialto Entertainment joint venture that owns and operates two (2) movie theaters, with 13 screens in New Zealand.

Goodwill And Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill And Intangible Assets [Abstract]

Goodwill And Intangible Assets

NOTE 8 – GOODWILL AND INTANGIBLE ASSETS

The table below summarizes goodwill by business segment:



(Dollars in thousands)	Cinema		Real Estate		Total
Balance at January 1, 2019	$	14,221	$	5,224	$	19,445
Change in goodwill due to purchase of business		7,126		—		7,126
Foreign currency translation adjustment		(123)		—		(123)
Balance at December 31, 2019	$	21,224	$	5,224	$	26,448
Change in goodwill due to completion of prior period purchase price accounting		120		—		120
Foreign currency translation adjustment		1,548		—		1,548
Balance at December 31, 2020	$	22,892	$	5,224	$	28,116

The Company is required to test goodwill and other intangible assets for impairment on an annual basis and, if current events or circumstances require, on an interim basis. To test the impairment of goodwill, the Company compares the fair value of each reporting unit to its carrying amount, including the goodwill, to determine if there is potential goodwill impairment. A reporting unit is generally one level below the operating segment. The most recent annual assessment occurred in the fourth quarter of 2020. The assessment results, as described at Note 3 – Impact of COVID-19 Pandemic and Liquidity, indicated that there is no impairment to our goodwill as of December 31, 2020.

The tables below summarize intangible assets other than goodwill:



	December 31, 2020
(Dollars in thousands)	Beneficial ‎Leases		Trade ‎Name		Other ‎Intangible ‎Assets		Total
Gross carrying amount	$	12,451	$	9,058	$	4,764	$	26,273
Less: accumulated amortization		(10,375)		(7,377)		(4,533)		(22,285)
Less: impairment charges		—		—		(17)		(17)
Net intangible assets other than goodwill	$	2,076	$	1,681	$	214	$	3,971



	December 31, 2019
(Dollars in thousands)	Beneficial ‎Leases		Trade ‎Name		Other ‎Intangible ‎Assets		Total
Gross carrying amount	$	15,048	$	7,258	$	3,145	$	25,451
Less: accumulated amortization		(14,496)		(5,449)		(1,186)		(21,131)
Net intangible assets other than goodwill	$	552	$	1,809	$	1,959	$	4,320

Beneficial leases obtained from business combinations relating to our arrangements as lessee were amortized over the life of the lease up to 30 years until January 1, 2019. Under ASC 842 they are now incorporated into the relevant right-of-use asset. The remaining balance of beneficial leases relates to our operations as lessor. Trade names are amortized using an accelerated amortization method over an estimated useful life of 30 years, and other intangible assets over their estimated useful life of up to 30 years (except for

transferrable liquor licenses, which are indefinite-lived assets, with a balance of $490,000 and $490,000 as of December 31, 2020 and 2019).

For the years ended December 31, 2020, 2019, and 2018, our amortization expense was $0.9 million, $0.7 million, and $1.9 million, respectively.

As of December 31, 2020, the estimated amortization expense for our amortizable intangibles, in the five succeeding years and thereafter is as follows:



(Dollars in thousands)	Estimated ‎Future ‎Amortization ‎Expense
2021	$	990
2022		902
2023		313
2024		224
2025		144
Thereafter		908
Total future amortization expense	$	3,481

Prepaid And Other Assets

12 Months Ended

Dec. 31, 2020

Prepaid And Other Assets [Abstract]

Prepaid And Other Assets

NOTE 9 – PREPAID AND OTHER ASSETS

Prepaid and other assets are summarized as follows:



	December 31,
(Dollars in thousands)	2020		2019
Prepaid and other current assets
Prepaid expenses	$	1,946	$	2,163
Prepaid taxes		455		912
Income taxes receivable		5,572		1,669
Prepaid rent		162		1,093
Deposits		245		214
Restricted cash		8		7
Investments in marketable securities		26		47
Total prepaid and other current assets	$	8,414	$	6,105
Other non-current assets
Other non-cinema and non-rental real estate assets	$	1,134	$	1,134
Investment in Reading International Trust I		838		838
Straight-line rent asset		6,050		4,689
Long-term deposits		8		7
Total non-current assets	$	8,030	$	6,668

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes [Abstract]

Income Taxes

NOTE 10 - INCOME TAXES

Income before income taxes includes the following:



(Dollars in thousands)	2020		2019		2018
United States	$	(56,709)	$	(11,539)	$	(3,493)
Foreign		(13,666)		13,081		19,983
Income (loss) before income taxes and equity earnings of unconsolidated joint ventures	$	(70,375)	$	1,542	$	16,490
Equity earnings of unconsolidated joint ventures:
United States		—		—		—
Foreign		(449)		792		974
Income (loss) before income taxes	$	(70,824)	$	2,334	$	17,464

Significant components of the provision for income taxes are as follows:



(Dollars in thousands)	2020		2019		2018
Current income tax expense (benefit)
Federal	$	349	$	239	$	297
State		424		391		382
Foreign		(2,233)		5,648		6,158
Total		(1,460)		6,278		6,837
Deferred income tax expense (benefit)
Federal		(3,263)		17,277		(3,991)
State		(5)		6,204		22
Foreign		(239)		(922)		430
Total		(3,507)		22,559		(3,539)
Total income tax expense (benefit)	$	(4,967)	$	28,837	$	3,298

Deferred income taxes reflect the “temporary differences” between the financial statement carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, adjusted by the relevant tax rate. The components of the deferred tax assets and liabilities are as follows:



	December 31,
(Dollars in thousands)	2020		2019
Deferred Tax Assets:
Net operating loss carry-forwards	$	21,498	$	9,398
Alternative minimum tax credit carry-forwards		—		661
Foreign Tax Credit		3,743		3,114
Compensation and employee benefits		3,255		3,731
Deferred revenue		2,552		2,912
Accrued expenses		9,691		4,385
Accrued taxes		2,313		2,193
Lease obligations		64,859		68,320
Land and property		4,842		7,886
Total Deferred Tax Assets		112,753		102,600
Deferred Tax Liabilities:
Lease liabilities		(60,886)		(64,551)
Intangibles		(429)		(352)
Other		(1,020)		(307)
Total Deferred Tax Liabilities		(62,335)		(65,210)
Net deferred tax assets before valuation allowance		50,418		37,390
Valuation allowance		(47,056)		(33,946)
Net deferred tax asset	$	3,362	$	3,444

We record net deferred tax assets to the extent we believe these assets will more-likely-than-not be realized. In making such determination, we considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. As of December 31, 2020, based on all available evidence, we believe the U.S. and state deferred tax assets as well as New Zealand loss carry-forwards do not support a conclusion of being more-likely-than-not to be realized. Accordingly, we recorded an increase to valuation allowance of $13.1 million. We reassess the valuation allowance quarterly and if future evidence allows for a partial or full release of the valuation allowance, a tax benefit will be recorded.

As of December 31, 2020, we had the following carry-forwards:

approximately $45.6 million in Federal loss carry-forwards with no expiration date;

approximately $19.7 million in California loss carry-forwards expiring in 2040;

approximately $17.0 million in Hawaii loss carry-forwards expiring in 2040;

approximately $1.9 million in New Jersey state loss carry-forwards expiring in 2040;

approximately $48.8 million in New York state loss carry-forwards substantially expiring in 2034;

approximately $48.7 million in New York city loss carry-forwards substantially expiring in 2034; and,

approximately $13.4 million in available New Zealand loss carry-forwards with no expiration date.

We expect no substantial limitations on the future use of U.S. or foreign loss carry-forwards.

The provision for income taxes is different from amounts computed by applying U.S. statutory rates to consolidated losses before taxes. The significant reason for these differences is as follows:



(Dollars in thousands)	2020		2019		2018
Expected tax provision	$	(14,873)	$	490	$	3,668
Increase (decrease) in tax expense resulting from:
Foreign tax rate differential		(1,159)		1,269		1,874
Change in valuation allowance		11,424		19,950		(451)
State and local tax provision		418		6,595		378
Tax rate change		(1,397)		—		—
Prior year adjustment		877		85		40
Unrecognized tax benefits		246		257		438
Impact of Tax Act		—		—		(2,265)
GILTI		—		103		193
Foreign Tax Credit		—		(81)		(846)
Other		(503)		169		269
Total income tax expense (benefit)	$	(4,967)	$	28,837	$	3,298

On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. The Tax Act significantly changed the U.S. corporate income tax law by lowering the statutory corporate tax rate from 35% to 21%, imposed a one-time mandatory repatriation tax on deferred earnings of foreign subsidiaries, and changed how foreign earnings are subject to U.S. tax.

As the result of the Tax Act and under the guidance of the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118, we recorded a provisional tax expense of approximately $13.0 million for the impact of the Tax Act in the fourth quarter of 2017. During the fourth quarter of 2018, upon finalizing the analysis of the impact from the Tax Act, we recorded a tax benefit of $2.3 million as an adjustment to the provisional estimate, for a net tax impact of $10.7 million. The $2.3 million is comprised of an adjustment of $1.2 million to the impact of the one-time mandatory repatriation tax on previously undistributed earnings of our foreign subsidiaries and $1.1 million from the re-measurement of federal net deferred tax liabilities resulting from the reduction in the U.S. statutory corporate tax rate.

The undistributed earnings of the Company's Australian subsidiaries are not indefinitely reinvested. Due to the enactment of the Tax Act, future repatriations of foreign earnings will generally not be subject to U.S. federal taxation but may incur minimal state taxes.

The following table is a summary of the activity related to unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2020, 2019, and 2018:



(Dollars in thousands)	2020		2019		2018
Unrecognized tax benefits – gross beginning balance	$	4,082	$	4,709	$	3,123
Gross increase (decrease) - prior year tax positions		(1,996)		(148)		2,304
Gross increase (decrease) - current year tax positions		—		—		—
Settlements		—		(479)		(718)
Unrecognized tax benefits – gross ending balance	$	2,086	$	4,082	$	4,709

As of December 31, 2020 and 2019, if recognized, $2.1 million and $4.1 million respectively, of the unrecognized tax benefits would impact the Company’s effective tax rate.

During the year ended December 31, 2020, we recorded an increase to tax interest of $0.7 million, resulting in a total $10.9 million in interest. During the year ended December 31, 2019, we recorded an increase to tax interest of $0.7 million, resulting in a total $10.2 million in interest.

It is difficult to predict the timing and resolution of uncertain tax positions. Based upon the Company’s assessment of many factors, including past experience and judgments about future events, it is probable that within the next 12 months the reserve for uncertain tax positions will increase within a range of $500,000 to $1.5 million. The reasons for such change include but are not limited to tax positions expected to be taken during 2020, revaluation of current uncertain tax positions, and expiring statutes of limitations.

Generally, changes to our federal and most state income tax returns for the calendar year 2015 and earlier are barred by statutes of limitations. The Internal Revenue Service (“IRS”) examined the tax return of Craig Corporation (“CRG”) for its tax year ended June 30, 1997. CRG was a stand-alone entity in the year of audit but is now a wholly owned subsidiary of the Company. In Tax Court,

CRG and the IRS agreed to compromise the claims made by the IRS against CRG, and the court order was entered on January 6, 2011.

As of December 31, 2020, federal income tax returns for 2017 and after are open for examination. California worldwide unitary income tax returns for 2016 and after are open for examination. Income tax returns filed in Puerto Rico for calendar year 2016 and 2017 are open for examination. Australia income tax returns for calendar years 2016 and after are open for examination. Generally, New Zealand returns for calendar years 2015 and after remain open for examination.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Borrowings

12 Months Ended

Dec. 31, 2020

Borrowings [Abstract]

Borrowings

NOTE 11 – BORROWINGS

The Company’s borrowings at December 31, 2020 and 2019, net of deferred financing costs and incorporating the impact of interest rate swaps on our effective interest rates, are summarized below:



	As of December 31, 2020
(Dollars in thousands)	Maturity Date	Contractual ‎Facility		Balance, ‎Gross		Balance, ‎Net⁽¹⁾		Stated ‎Interest ‎Rate	Effective ‎Interest ‎Rate
Denominated in USD
Trust Preferred Securities (USA)	April 30, 2027	$	27,913	$	27,913	$	26,505	4.27%	4.27%
Bank of America Credit Facility (USA)	March 6, 2023		55,000		51,200		50,990	4.00%	4.00%
Bank of America Line of Credit (USA)	March 6, 2023		5,000		5,000		5,000	3.15%	3.15%
Cinemas 1, 2, 3 Term Loan (USA)	April 1, 2022		24,625		24,625		24,248	4.25%	4.25%
Minetta & Orpheum Theatres Loan (USA)⁽²⁾	November 1, 2023		8,000		8,000		7,914	2.20%	5.15%
U.S. Corporate Office Term Loan (USA)	January 1, 2027		9,186		9,186		9,095	4.64% / 4.44%	4.64%
Union Square Construction Financing (USA)	March 31, 2021		50,000		40,623		40,620	17.50%	17.50%
Purchase Money Promissory Note	September 18, 2024		2,883		2,883		2,883	5.00%	5.00%
Denominated in foreign currency ("FC")⁽³⁾
NAB Corporate Term Loan (AU)	December 31, 2023		94,821		92,508		92,307	1.81%	1.81%
Westpac Bank Corporate (NZ)	December 31, 2023		23,021		23,021		23,021	2.95%	2.95%
Total		$	300,449	$	284,959	$	282,583

(1)Net of deferred financing costs amounting to $2.4 million.

(2)The interest rate derivative associated with the Minetta & Orpheum loan provides for an effective fixed rate of 5.15%.

(3)The contractual facilities and outstanding balances of the FC-denominated borrowings were translated into U.S. dollars based on exchange rates as of December 31, 2020.



	As of December 31, 2019
(Dollars in thousands)	Maturity Date	Contractual ‎Facility		Balance, ‎Gross		Balance, ‎Net⁽¹⁾		Stated ‎Interest ‎Rate	Effective ‎Interest ‎Rate
Denominated in USD
Trust Preferred Securities (USA)	April 30, 2027	$	27,913	$	27,913	$	26,311	5.94%	5.94%
Bank of America Credit Facility (USA)	March 6, 2023		55,000		33,500		33,445	4.80%	4.80%
Bank of America Line of Credit (USA)	March 6, 2023		5,000		—		—	4.80%	4.80%
Cinemas 1, 2, 3 Term Loan (USA)	April 1, 2022		18,658		18,658		18,532	3.25%	3.25%
Minetta & Orpheum Theatres Loan (USA)(2)	November 1, 2023		8,000		8,000		7,887	3.74%	5.15%
U.S. Corporate Office Term Loan (USA)	January 1, 2027		9,260		9,260		9,153	4.64% / 4.44%	4.64%
Union Square Construction Financing (USA)	December 29, 2020		50,000		36,048		36,035	6.02%	6.02%
Purchase Money Promissory Note (USA)	September 18, 2024		3,363		3,363		3,363	5.00%	5.00%
Denominated in foreign currency ("FC")⁽³)
NAB Corporate Term Loan (AU)	December 31, 2023		84,360		65,731		65,541	1.77%	1.77%
Westpac Bank Corporate (NZ)	December 31, 2023		21,584		6,745		6,745	3.05%	3.05%
Total		$	283,138	$	209,218	$	207,012

(1)Net of deferred financing costs amounting to $2.2 million.

(2)The interest rate derivative associated with the Minetta & Orpheum loan provides for an effective fixed rate of 5.15%.

(3)The contractual facilities and outstanding balances of the FC-denominated borrowings were translated into U.S. dollar based on exchange rates as of December 31, 2019.

Our loan arrangements are presented, net of the deferred financing costs, on the face of our consolidated balance sheet as follows:



(Dollars in thousands)	December 31,
Balance Sheet Caption	2020		2019
Debt - current portion	$	41,459	$	36,736
Debt - long-term portion		213,779		140,602
Subordinated debt - current portion		840		644
Subordinated debt - long-term portion		26,505		29,030
Total borrowings	$	282,583	$	207,012

Impact of COVID-19

To address the impact of COVID-19 on our business, we sought and obtained certain modifications to our loan agreements with the Bank of America, National Australia Bank, and Westpac. These loan modifications included changes to some of the covenant compliance terms and waivers of certain covenant testing periods. As of December 31, 2020, we are currently in compliance with our loan covenants as so modified. To date it has not been necessary for us to seek modifications or waivers with respect to our other loan agreements, as we continue to be in compliance with the terms of such loan agreements without the need for any such modifications or waivers.

Debt denominated in USD

Bank of America Credit Facility

On March 3, 2016, we amended our $55.0 million credit facility with Bank of America to permit real property acquisition loans. This amendment reduces the applicable consolidated leverage ratio covenant by 0.25% and modifies the term of the facility based on the earlier of the eighteen months from the date of such borrowing or the maturity date of the credit agreement. Such modification was not considered substantial in accordance with U.S. GAAP. On March 5, 2019, this Credit Facility was extended for six (6) months to May 1, 2020. On August 8, 2019, this Credit Facility was extended by an additional four months to September 1, 2020. On March 6, 2020, we completed the refinancing of this $55.0 million facility, wherein the maturity date was extended to March 6, 2023. The refinanced facility carries an interest rate of 2.5% - 3.0%, depending on certain financial ratios plus a variable rate based on the loan defined “Eurodollar” interest rate.

On August 7, 2020, we modified certain financial covenants within this credit facility and temporarily suspended the testing of certain other covenant tests through the measurement period ending September 30, 2021. The testing of the financial covenant resumes for the measurement period ending December 31, 2021. In addition to the covenant modifications, the interest rate on borrowings under this facility was fixed at 3.0% above the “Eurodollar” rate, which itself now has a floor of 1.0%. Such a modification was not considered to be substantial under U.S. GAAP.

Bank of America Line of Credit

In October 2016, the term of this $5.0 million line of credit was extended to October 31, 2019. Such modification was not considered to be substantial under U.S. GAAP. On August 8, 2019, this Line of Credit was extended an additional ten months to September 1, 2020. On March 6, 2020, the term of our $5.0 million line of credit was extended to March 6, 2023. On August 7, 2020 we modified the interest rate on this line of credit, wherein the LIBOR portion of the rate now has a floor of 1.0%.

Minetta and Orpheum Theatres Loan

On October 12, 2018, we refinanced our $7.5 million loan with Santander Bank, which is secured by our Minetta and Orpheum Theaters, with a loan for a five year term of $8.0 million. Such modification was not considered to be substantial under U.S. GAAP.

Banc of America Digital Projector Loan

On February 5, 2018, we purchased our U.S. digital cinema projectors, which had previously been held on operating leases, using a $4.6 million loan from Banc of America. We made further U.S. digital cinema projector purchases, of projectors similarly held on other operating leases, in March and April 2018, increasing this loan to $4.9 million. This loan carried an interest rate of 5% and was paid in full on December 28, 2019.

44 Union Square Construction Financing

On December 29, 2016, we closed our new construction finance facilities totaling $57.5 million to fund the non-equity portion of the anticipated construction costs of the redevelopment of our property at 44 Union Square in New York City. The combined facilities consist of $50.0 million in aggregate loans (comprised of three loan tranches) from BankOZK (formerly Bank of the Ozarks), and a $7.5 million mezzanine loan from Tammany Mezz Investor, LLC, an affiliate of Fisher Brothers. As of December 31, 2016, BankOZK advanced $8.0 million to repay the existing $8.0 million loan with East West Bank. On August 8, 2019, we repaid in full the $7.5 million mezzanine loan from Tammany Mezz Investor, LLC. On January 24, 2020, we exercised the first of our two one year extension options on the BankOZK loan, taking the maturity to December 29, 2020. On December 29, 2020, we further extended the maturity of this loan to March 31, 2021, at an interest rate of 17.5% and on March 26, 2021, we repaid this loan in full.

U.S. Corporate Office Term Loan

On December 13, 2016, we obtained a ten year $8.4 million mortgage loan on our new Los Angeles Corporate Headquarters at a fixed annual interest rate of 4.64%. This loan provided for a second loan upon completion of certain improvements. On June 26, 2017, we obtained a further $1.5 million under this provision at a fixed annual interest rate of 4.44%.

Cinemas 1,2,3 Term Loan and Line of Credit

On August 31, 2016, Sutton Hill Properties LLC (“SHP”), a 75% subsidiary of RDI, refinanced its $15.0 million Santander Bank term loan with a new lender, Valley National Bank. This new $20.0 million loan is collateralized by our Cinema 1,2,3 property and bears an interest rate of 3.25% per annum, with principal installments and accruing interest paid monthly. The loan had an option to extend the maturity date for a period of 12 months to March 1, 2021. On March 13, 2020, we refinanced this loan with a new term loan of $25.0 million, an interest rate of 4.25%, and maturity date of April 1, 2022 with two six month options to extend.

Purchase Money Promissory Note

On September 18, 2019, we purchased 407,000 Company shares in a privately negotiated transaction under our Share Repurchase Program for $5.5 million. Of this amount, $3.5 million was paid by the issuance of a Purchase Money Promissory Note, which bears an interest rate of 5.0% per annum, payable in equal quarterly payments of principal plus accrued interest. The Purchase Money Promissory Note matures on September 18, 2024.

Trust Preferred Securities (“TPS”)

On February 5, 2007, we issued $51.5 million in 20-year fully subordinated notes to a trust over which we have significant influence, which in turn issued $51.5 million in securities. Of the $51.5 million, $50.0 million in TPS were issued to unrelated investors in a private placement and $1.5 million of common trust securities were issued by the trust to Reading called “Investment in Reading International Trust I” on our balance sheets. Effective May 1, 2012, the interest rate on our Trust Preferred Securities changed from a fixed rate of 9.22%, which was in effect for five years, to a variable rate of three month LIBOR plus 4.00%, which will reset each quarter through the end of the loan unless we exercise our right to re-fix the rate at the current market rate at that time. There are no principal payments due until maturity in 2027 when the notes and the trust securities are scheduled to be paid in full. We may pay off the debt after the first five years at 100% of the principal amount without any penalty. The trust is essentially a pass through, and the transaction is accounted for on our books as the issuance of fully subordinated notes. The credit facility includes a number of affirmative and negative covenants designed to monitor our ability to service the debt. The most restrictive covenant of the facility requires that we must maintain a fixed charge coverage ratio at a certain level. However, on December 31, 2008, we secured a waiver of all financial covenants with respect to our TPS for a period of nine years (through December 31, 2017), in consideration of the payment of $1.6 million, consisting of an initial payment of $1.1 million, a payment of $270,000 made in December 2011, and a payment of $270,000 in December 2014. The covenant waiver expired January 1, 2018, after which a further covenant waiver was secured on October 11, 2018 for the remaining term of the loan, in consideration of payments totaling $1.6 million, consisting of an initial payment of $1.1 million paid on October 31, 2018, and a further contractual obligation to pay $270,000 in October 2021 and $225,000 in October 2025.

During the first quarter of 2009, we took advantage of the then current market illiquidity for securities such as our TPS to repurchase $22.9 million in face value of those securities through an exchange of $11.5 million worth of marketable securities purchased during the period for the express purpose of executing this exchange transaction with the third-party holder of these TPS. During the twelve

months ended 2009, we amortized $106,000 of discount to interest income associated with the holding of these securities prior to their extinguishment. On April 30, 2009, we extinguished $22.9 million of these TPS, which resulted in a gain on retirement of subordinated debt (TPS) of $10.7 million net of loss on the associated write-off of deferred loan costs of $749,000 and a reduction in our Investment in Reading International Trust I from $1.5 million to $838,000.

During the three years ended December 31, 2020, we paid $1.6 million in 2018, $1.8 million in 2019 and $1.4 million in 2020 in preferred dividends to unrelated investors that are included in interest expense. At December 31, 2020 and 2019, we had preferred dividends payable of $195,000 and $272,000, respectively. Interest payments for this loan are required every three months.

Debt denominated in foreign currencies

Australian NAB Corporate Loan Facility

On March 15, 2019, we amended our Revolving Corporate Markets Loan Facility with National Australia Bank (“NAB”) from a facility comprised of (i) a AU$66.5 million loan facility with an interest rate of 0.95% above the Bank Bill Swap Bid Rate (“BBSY) and a maturity date of June 30, 2019 and (ii) a bank guarantee of AU$5.0 million at a rate of 1.90% per annum into a (i) AU$120.0 million Corporate Loan facility at rates of 0.85%-1.3% above BBSY depending on certain ratios with a due date of December 31, 2023, of which AU$80.0 million is revolving and AU$40.0 million is core and (ii) a Bank Guarantee Facility of AU$5.0 million at a rate of 1.85% per annum. Such modifications of this particular term loan were not considered to be substantial under U.S. GAAP.

On August 6, 2020, we modified certain covenants within this Revolving Corporate Markets Loan Facility. These modifications apply until the quarter ended September 30, 2021. In addition, for the period in which these covenant modifications apply, the interest rate on amounts borrowed under the facility is 1.75%. Such a modification was not considered to be substantial under U.S. GAAP.

On December 29, 2020, to fund the completion of our recently opened cinema in Jindalee, Queensland, we increased the core portion of our Revolving Corporate Markets Loan Facility by AU$3.0 million, and is repayable in installments by October 31, 2023. This amendment increases the Facility Limit to AU$123.0 million, which will be reduced back to AU $120.0 million as the Jindalee funding is repaid. We further modified certain covenants within this Revolving Corporate Markets Loan Facility with NAB.

New Zealand Westpac Bank Corporate Credit Facility

On December 20, 2018, we restructured our Westpac Corporate Credit Facilities. The maturity of the 1^st tranche (general/non-construction credit line) was extended to December 31, 2023, with the available facility being reduced from NZ$35.0 million to NZ$32.0 million. The facility bears an interest rate of 1.75% above the Bank Bill Bid Rate on the drawn down balance and a 1.1% line of credit charge on the entire facility. The 2^nd tranche (construction line) with a facility of NZ$18.0 million was removed.

On June 29, 2020, Westpac pushed out the June 30, 2020 covenant testing date to July 31, 2020. On July 27, 2020, Westpac waived the requirement to test certain covenants as of July 31, 2020. This agreement also increased the interest rate and line of credit charge to 2.40% above the Bank Bill Bid Rate and 1.65% respectively. The maturity date was extended to January 1, 2024. Such modifications of this facility were not considered to be substantial under U.S. GAAP. At the request of Westpac, we have deposited $10.6 million (NZ$16.0 million) in a term deposit with Westpac, as we have no current operating need for such funds in New Zealand. On September 15, 2020, Westpac waived the requirement to test certain covenants as of September 30, 2020. On December 8, 2020, Westpac waived the requirement to test certain covenants as of December 31, 2020.

Aggregate amount of future principal debt payments

As of December 31, 2020, our aggregate amount of future principal debt payments is estimated as follows:



(Dollars in thousands)	Future ‎Principal ‎Debt Payments
2021	$	42,307
2022		25,020
2023		180,759
2024		881
2025		287
Thereafter		35,705
Total future principal debt payments	$	284,959

The estimated amount of future principal payments in U.S. dollars is subject to change because the payments in U.S. dollars on the debt denominated in foreign currencies, which represent a significant portion of our total outstanding debt balance, will fluctuate based on the applicable foreign currency exchange rates.

Pension And Other Liabilities

12 Months Ended

Dec. 31, 2020

Pension And Other Liabilities [Abstract]

Pension And Other Liabilities

NOTE 12 – PENSION AND OTHER LIABILITIES

Other liabilities including pension are summarized as follows:



	December 31,
(Dollars in thousands)	2020		2019
Current liabilities
Liability for demolition and remediation costs	$	2,928	$	2,745
Accrued pension⁽²⁾		684		684
Security deposit payable		132		114
Finance lease liabilities		49		93
Other		33		17
Other current liabilities	$	3,826	$	3,653
Other liabilities
Accrued pension⁽³⁾		4,048		4,469
Lease make-good provision		7,408		6,667
Deferred rent liability		2,897		—
Environmental reserve		1,656		1,656
Lease liability⁽¹⁾		5,900		5,900
Acquired leases		31		37
Finance lease liabilities		69		116
Other		8		9
Other non-current liabilities	$	22,017	$	18,854

(1)Represents the lease liability of the option associated with the ground lease purchase of the Village East Cinema. See below for more information.

(2)Represents the pension liability associated with the Supplemental Executive Retirement Plan explained below.

Lease Liability – Village East Purchase Option

Our Village East lease included a call option pursuant to which we may purchase the cinema ground lease for $5.9 million at the end of the lease term in June 2020. Additionally, our lease has a put option pursuant to which SHC may require our Company to purchase all or a portion of SHC’s interest in the existing cinema lease and the cinema ground lease at any time between July 1, 2013 and December 4, 2019. Because our late Chairman, Chief Executive Officer, and controlling shareholder, Mr. James J. Cotter, Sr. was also the managing member of SHC, RDI and SHC are considered entities under common control. As a result, we have recorded the Village East Cinema building as a property asset of $4.7 million on our balance sheet based on the cost carry-over basis from an entity under common control with a corresponding lease liability of $0.0 million presented under other liabilities which accreted up to the $5.9 million liability through July 1, 2013 (see Note 21 – Related Parties). On August 28, 2019, we exercised our option to acquire the ground lessee’s interest in the 13-year ground lease underlying and the real property assets constituting our Village East Cinema in Manhattan. The purchase price under the option is $5.9 million, being the lease liability of $5.9 million presented under other liabilities. It was initially agreed that the transaction would close on or about May 31, 2021.

On March 12, 2020, we amended the original agreement to (i) extend the term of the Citadel Cinemas, Inc. lease with Sutton Hill to January 31, 2022 and extend the put option to December 4, 2021 and (ii) at SHC’s request, in connection with our deferral of the closing date for our acquisition of SHC’s interest in the Village East Cinema, the Company reinstated and extended until December 4, 2021 SHC’s right to put that interest to us. That put right had previously expired on December 4, 2019. We were advised by SHC that it wanted this reinstatement and extension in order to assure itself that, in the event of the non-performance by us of our current contractual obligation to close our purchase of the interest in the ground lease on or about the extended date of May 31, 2021, that it could (as, in effect, an additional remedy) exercise this reinstated and extended put right. We believe that the reinstatement and extension of this put right is immaterial to our Company, since we have in fact already exercised our option, are in fact under contract with SHC to acquire SHC’s interest in the Village East Cinema and have every intention of completing that acquisition. On March 29, 2021, we extended this closing date to January 1, 2023.

Pension Liability – Supplemental Executive Retirement Plan

On August 29, 2014, the Supplemental Executive Retirement Plan (“SERP”) that was effective since March 1, 2007, was ended and replaced with a new pension annuity. As a result of the termination of the SERP program, the accrued pension liability of $7.6 million was reversed and replaced with a new pension annuity liability of $7.5 million. The valuation of the liability is based on the present value of $10.2 million discounted at 4.25% over a 15-year term, resulting in a monthly payment of $57,000 payable to the estate of Mr. James J. Cotter, Sr. The discounted value of $2.7 million (which is the difference between the estimated payout of $10.2 million

and the present value of $7.5 million) will be amortized and expensed based on the 15-year term. In addition, the accumulated actuarial loss of $3.1 million recorded, as part of other comprehensive income, will also be amortized based on the 15-year term.

As a result of the above, included in our other current and non-current liabilities are accrued pension costs of $4.7 million and $5.2 million as of December 31, 2020 and 2019, respectively. The benefits of our pension plans are fully vested and therefore no service costs were recognized 2020 and 2019. Our pension plans are unfunded.

The change in the SERP pension benefit obligation and the funded status are as follows:



	December 31,
(Dollars in thousands)	2020		2019
Benefit obligation at January 1	$	5,153	$	5,354
Service cost
Interest cost		262		482
Payments made		(683)		(683)
Benefit obligation at December 31	$	4,732	$	5,153
Unfunded status at December 31	$	(4,732)	$	(5,153)

Amounts recognized in the balance sheet consists of:



	December 31,
(Dollars in thousands)	2020		2019
Current liabilities	$	684	$	684
Other liabilities - Non current		4,048		4,469
Total pension liability	$	4,732	$	5,153

The components of the net periodic benefit cost and other amounts recognized in other comprehensive income are as follows:



	December 31,
(Dollars in thousands)	2020		2019
Net periodic benefit cost
Interest cost	$	262	$	483
Amortization of prior service costs		—		—
Amortization of net actuarial gain		152		151
Net periodic benefit cost	$	414	$	634
Items recognized in other comprehensive income
Net loss	$	—	$	—
Amortization of net aloss		(152)		(151)
Total recognized in other comprehensive income	$	(152)	$	(151)
Total recognized in net periodic benefit cost and other comprehensive income	$	262	$	483

Items not yet recognized as a component of net periodic pension cost consist of the following:



	December 31,
(Dollars in thousands)	2020		2019
Unamortized actuarial loss	$	2,135	$	2,287
Accumulated other comprehensive income	$	2,135	$	2,287

The estimated unamortized actuarial loss for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year will be $207,000 (gross of any tax effects).

The following table presents estimated future benefit payments for the next five years and thereafter as of December 31, 2020:



(Dollars in thousands)	Estimated ‎Future ‎Pension ‎Payments
2021	$	684
2022		684
2023		684
2024		684
2025		684
Thereafter		1,312
Total pension payments	$	4,732

Lease Make-Good Provision

We recognize obligations for future leasehold restoration costs relating to properties that we use mostly on our cinema operations under operating lease arrangements. Each lease is unique to the negotiated conditions with the lessor, but in general most leases require for the removal of cinema-related assets and improvements. There are no assets specifically restricted to settle this obligation.

A reconciliation of the beginning and ending carrying amounts of the lease make-good provision is presented in the following table:



(Dollars in thousands)	As of and for the year ended December 31, 2020		As of and for the year ended December 31, 2019
Lease make-good provision, at January 1	$	6,667	$	5,614
Liabilities incurred during the year		62		902
Liabilities settled during the year		—		(206)
Accretion expense		291		352
Effect of changes in foreign currency		388		5
Lease make-good provision, at December 31	$	7,408	$	6,667

Commitments And Contingencies

12 Months Ended

Dec. 31, 2020

Commitments And Contingencies [Abstract]

Commitments And Contingencies

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Insofar as our Company is aware, there are no claims, arbitration proceedings, or litigation proceedings that constitute material contingent liabilities of our Company. Such matters require significant judgments based on the facts known to us. These judgments are inherently uncertain and can change significantly when additional facts become known. We provide accruals for matters that have probable likelihood of occurrence and can be properly estimated as to their expected negative outcome. We do not record expected gains until the proceeds are received by us. However, we typically make no accruals for potential costs of defense, as such amounts are inherently uncertain and dependent upon the scope, extent and aggressiveness of the activities of the applicable plaintiff.

Discussed below are certain litigation matters which, however, have been significant to our Company.

Litigation Matters

We are currently involved in certain legal proceedings and, as required, have accrued estimates of probable and estimable losses for the resolution of these claims, including legal costs.

Where we are the plaintiffs, we accrue legal fees as incurred on an on-going basis and make no provision for any potential settlement amounts until received. In Australia, the prevailing party is usually entitled to recover its attorneys’ fees, which recoveries typically work out to be approximately 60% of the amounts actually spent where first-class legal counsel is engaged at customary rates. Where we are a plaintiff, we have likewise made no provision for the liability for the defendant’s attorneys’ fees in the event we are determined not to be the prevailing party.

Where we are the defendants, we accrue for probable damages that insurance may not cover as they become known and can be reasonably estimated, as permitted under ASC 450-20 Loss Contingencies. In our opinion, any claims and litigation in which we are currently involved are not reasonably likely to have a material adverse effect on our business, results of operations, financial position, or liquidity. It is possible, however, that future results of the operations for any particular quarterly or annual period could be materially affected by the ultimate outcome of the legal proceedings. From time to time, we are involved with claims and lawsuits arising in the ordinary course of our business that may include contractual obligations, insurance claims, tax claims, employment matters, and anti-trust issues, among other matters.

Environmental and Asbestos Claims on Reading Legacy Operations

Certain of our subsidiaries were historically involved in railroad operations, coal mining, and manufacturing. Also, certain of these subsidiaries appear in the chain-of-title of properties that may suffer from pollution. Accordingly, certain of these subsidiaries have, from time to time, been named in and may in the future be named in various actions brought under applicable environmental laws. Also, we are in the real estate development business and may encounter from time to time environmental conditions at properties that we have acquired for development and which will need to be addressed in the future as part of the development process. These environmental conditions can increase the cost of such projects and adversely affect the value and potential for profit of such projects. We do not currently believe that our exposure under applicable environmental laws is material in amount.

From time to time, there are claims brought against us relating to the exposure of former employees to asbestos and/or coal dust. These are generally covered by an insurance settlement reached in September 1990 with our insurance providers. However, this insurance settlement does not cover litigation by people who were not employees of our historic railroad operations and who may claim direct or second-hand exposure to asbestos, coal dust and/or other chemicals or elements now recognized as potentially causing cancer in humans. Our known exposure to these types of claims, asserted or probable of being asserted, is not material.

Cotter Jr. Related Litigation Matters

The following table provides a list of legal matters and their current status relating to the derivative action brought against the Company and our directors by James J. Cotter, Jr. (“Cotter, Jr.”) and to Cotter, Jr.’s efforts to cause a change of control of the Company.


Description	Plaintiff	Filed with	Current Status
 Cotter, Jr. Derivative Litigation against all Director: James J. Cotter, Jr., individually and derivatively on behalf of Reading International, Inc. vs. Margaret Cotter, et al.” Case No,: A-15-719860-V	Cotter, Jr.	Nevada District Court	On October 1, 2020, the Nevada Supreme Court determined that the District Court had erred when it denied the defendants’ motions to dismiss the case for lack of standing on the part of Cotter, Jr., to bring such an action, vacated the District Court’s orders denying the motions to dismiss and remanded for entry of judgment. The Supreme Court sustained the District Court’s award to our Company of costs in the amount of $809,000 and having received such amount, Reading authorized the District Court to enter satisfaction of judgment on January 6, 2021. This matter is now at an end.
 Cotter Trust Litigation: Determination of Status of Cotter, Jr., as Trustee: In re James J. Cotter Living Trust dated August 1, 2000 (Case No. BP159755) Our Company is not a party to the Trust Litigation. However, as the Cotter Voting Trust is anticipated to at some currently undetermined future date, to hold a majority of our Company’s voting control, we include here certain information as to the status of that litigation.	Ellen Cotter and Margaret Cotter, as Trustees	California Superior Court	The California Superior Court has ruled that Cotter, Jr., is not a trustee of either the James J. Cotter Living Trust (the “Cotter Living Trust”) or of the voting trust established under the Cotter Living Trust (the “Cotter Voting Trust”) to eventually hold the Class B Voting Common Stock beneficially owned by Mr. Cotter, Sr., at the time of his passing. The California Superior Court further determined that Ellen Cotter and Margaret Cotter are the sole trustees of the Cotter Living Trust and that Margaret Cotter is the sole trustee of the Cotter Voting Trust. Accordingly, Cotter, Jr., has neither dispositive power nor voting power over any of the Class B Voting Common Stock currently held by the Cotter Estate or the Cotter Living Trust, or which it is anticipated will be held by the Cotter Voting Trust. The time to appeal that ruling has now lapsed. The California Superior Court has also determined that the amendment to the Cotter Living Trust championed by Mr. Cotter, Jr., was not effective as Mr. Cotter, Sr. was not competent at the time it was purportedly executed and as it was procured by undue influence (the “Living Trust Ruling”). At December 31, 2020, the Cotter Estate held 427,808 shares of Class B Voting Stock, representing 25.5% of the voting power of such class. The Cotter Living Trust held 696,080 shares of Class B Voting Stock at such date, representing 41.4% of the voting power of such class. It is anticipated that, when funded, the Cotter Voting Trust will own 1,123,888 shares of Class B Voting Stock, representing 66.9% of the voting power of such class (the “Cotter Voting Stock”).

 Cotter Trust Litigation: Motions re sale of: In re James J. Cotter Living Trust dated August 1, 2000 (Case No. BP159755)

Cotter, Jr. and Guardian Ad Litem

California Superior Court

In response to the ex parte petition of Cotter, Jr. filed on March 23, 2016, the California Superior Court on March 23, 2018 directed that an unnamed temporary trustee ad litem be appointed to solicit offers to purchase the Cotter Voting Stock. On appellate review, the California Court of Appeal reversed the California Superior Court, determined that Cotter, Jr. did not have standing to purse that ex parte motion.

However, issues as to the ongoing control of our Company are still uncertain.

The Superior Court, at the request of Mr. Cotter, Jr., appointed a guardian ad litem (the “GAL”) to represent the interests of the beneficiaries of the Cotter Voting Trust. The GAL has motions pending (i) to divide the Cotter Voting Trust into separate trusts, one for the benefit of Margaret Cotter’s children and one for the benefit of James J. Cotter, Jr.’s children, (ii) in order to achieve diversification of the assets of these trusts, to sell the Class B stock eventually to be held by the Cotter Voting Trust, and (iii) to immediately retain a valuation expert to advise him as to value of the Class B Voting Stock to be eventually held by the Cotter Voting Trust. A motion brought by Margaret Cotter and Ellen Cotter, as Co-Trustees of the Cotter Living Trust, to disqualify the GAL on the basis that he cannot simultaneously represent the interests of Margaret Cotter and James J. Cotter’s, Jr’s, children as the interests of those children differ, was denied by the California Superior Court and that order is currently subject to appeal. Ellen Cotter and Margaret Cotter, as Co-Trustees of the Cotter Living Trust, have advised that they believe that it was the intention of their father that the Class B Voting Stock be held in the Cotter Voting Trust as long as possible and that they intend to oppose any splitting of the Cotter Voting Trust and/or sale of the Class B Voting Stock eventually to be held by the Cotter Voting Trust.

James J. Cotter, Jr., has a pending motion to remove Ellen Cotter and Margaret Cotter as trustees of the Cotter Living Trust (a motion for which no discovery schedule, briefing schedule or hearing date has been set). Also, James J. Cotter, Jr., has historically supported the above described motion brought by the GAL to divide up the Cotter Voting Trust and sell the Class B Voting Stock to be held by the Cotter Voting Trust. The status of these motions is uncertain, as James J. Cotter, Jr., passed away on March 10, 2021.

As a consequence of the Superior Court’s Living Trust Ruling, Ellen Cotter and Margaret Cotter, as Co-Trustees of the Cotter Living Trust, have brought a motion to enforce the no-contest clause of the Cotter Living Trust, which if successful would remove Mr. Cotter, Jr., and his descendants as beneficiaries of the Cotter Living Trust, and moot the GAL’s motion to divide up the Cotter Voting Trust and to sell the Class B Voting Stock to be held in the Cotter Voting Trust. It would also moot Mr. Cotter, Jr.’s motions (to the extent that they survive his passing), as he would be neither a trustee nor a beneficiary of the Cotter Living Trust.

Mr. Cotter, Jr. has opposed the Co-Trustees motion to enforce the no-contest clause and brought an Anti-SLAPP claim against the Co-Trustees. That Anti-SLAPP claim was dismissed by the California Superior Court, which dismissal is now on appeal.

California Employment Litigation

Our Company is currently involved in two California employment matters which include substantially overlapping wage and hour claims: Taylor Brown, individually, and on behalf of other members of the general public similarly situated vs. Reading Cinemas et al. Superior Court of the State of California for the County of Kern, Case No. BCV-19-1000390 (“Brown v. RC,” and the “Brown Class Action Complaint” respectively) and Peter M. Wagner, Jr., an individual, vs. Consolidated Entertainment, Inc. et al., Superior Court of the State of California for the County of San Diego, Case NO. 37-2019-00030695-CU-WT-CTL (“Wagner v. CEI,” and the “Wagner Individual Complaint” respectively). Brown v. RC was initially filed in December 2018, as an individual action and refiled as a putative class action in February 2019, but not served until June 24, 2019. These lawsuits seek damages, and attorneys’ fees, relating to alleged violations of California labor laws relating to meal periods, rest periods, reporting time pay, unpaid wages, timely pay upon termination and wage statements violations. Wagner v. CEI was filed as a discrimination and retaliation lawsuit in June 2019. The following month, in July 2019, a notice was served on us by separate counsel for Mr. Wagner under the California Private Attorney General Act of 2004 (Cal. Labor Code Section 2698, et seq) (the “Wagner PAGA Claim”) purportedly asserting in a representational capacity claims under the PAGA statute, overlapping, in substantial part, the allegations set forth in the Brown Class Action Complaint. On March 6, 2020, Wagner filed a purported class action in the Superior Court of California, County of San Diego, again covering basically the same allegations as set forth in the Brown Class Action Complaint, and titled Peter M. Wagner, an individual, on behalf of himself and all others similarly situated vs. Reading International, Inc., Consolidated Entertainment, Inc. and Does 1 through 25, Case No. 37-2020-000127-CU-OE-CTL (the “Wagner Class Action”). Neither plaintiff has specified the amount of damages sought.

Our Company is investigating and intends to vigorously defend the allegations of the Brown Class Action Complaint, the Wagner PAGA Claim and the Wagner Class Action Complaint. In addition, we have denied that a PAGA representative action is appropriate. These matters are in their early stages, and the putative class actions have not been certified. As these cases are in early stages, our Company is unable to predict the outcome of the litigation or the range of potential loss, if any; however, our Company believes that its potential liability with respect to such matters is not material to its overall financial position, results of operations and cash flows. Accordingly, our Company has not established a reserve for loss in connection with these matters. The Wagner Individual Complaint has been settled. As this matter was coved by insurance, the Company’s liability was limited to its deductible of $150,000.

Non-controlling Interests

12 Months Ended

Dec. 31, 2020

Non-controlling Interests [Abstract]

Non-controlling Interests

NOTE 14 – NON-CONTROLLING INTERESTS

As of December 31, 2020, the non-controlling interests in our consolidated subsidiaries are comprised of the following:

Australia Country Cinemas Pty Ltd. – 25% non-controlling interest owned by Panorama Group International Pty.;

Shadow View Land and Farming, LLC – 50% non-controlling membership interest owned by either the estate of Mr. James J. Cotter, Sr. (the “Cotter Estate”) or the James J. Cotter Sr. Living Trust (the “Cotter Trust”); and,

Sutton Hill Properties, LLC – 25% non-controlling interest owned by Sutton Hill Capital, LLC (which in turn is 50% owned by the Cotter Estate and/or the Cotter Trust).

The components of non-controlling interest are as follows:



	December 31,
(Dollars in thousands)	2020		2019
Australian Country Cinemas, Pty Ltd	$	(51)	$	119
Shadow View Land and Farming, LLC		2,131		2,145
Sutton Hill Properties, LLC		1,324		2,003
Non-controlling interests in consolidated subsidiaries	$	3,404	$	4,267

The components of income/(loss) attributable to non-controlling interests are as follows:



(Dollars in thousands)	2020		2019		2018
Australian Country Cinemas, Pty Ltd	$	(158)	$	117	$	157
Shadow View Land and Farming, LLC		(69)		(99)		(56)
Sutton Hill Properties, LLC		(430)		(92)		31
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries	$	(657)	$	(74)	$	132

Shadow View Land and Farming, LLC

Our Coachella Valley land is held in Shadow View Land and Farming, LLC, in which the Cotter Estate or the Cotter Trust now owns a 50% interest. We are the managing member of Shadow View Land and Farming, LLC. We consolidate the Cotter Estate’s and/or the Cotter Trust’s interest in the property and its expenses with that of our interest and show their interest as a non-controlling interest. The property has been sold subsequent to December 31, 2020 as discussed above.

Share-Based Compensation And Share Repurchase Plans

12 Months Ended

Dec. 31, 2020

Share-Based Compensation And Share Repurchase Plans [Abstract]

Share-Based Compensation And Share Repurchase Plans

NOTE 15 – SHARE-BASED CO MPENSATION AND SHARE REPURCHASE PLANS

2010 Stock Incentive Plan

Our 2010 Stock Incentive Plan (as amended, the “2010 Plan”) under which our Company has granted stock options and other share-based payment awards of our Common Stock to eligible employees, directors, and consultants has expired. In total, 1,663,731 shares of Class A Common Stock were issued or reserved for issuance pursuant to the previously granted options or restricted stock units under that plan.

2020 Stock Incentive Plan

On November 4, 2020, the Company enacted the 2020 Stock Incentive Plan (the “2020 Plan”). Under the 2020 Plan, the Company may grant stock options and other share-based payment awards of our Class A Common Stock to eligible employees, directors and consultants. The aggregate total number of shares of Class A Common Stock authorized for issuance under the 2020 Plan at December 31, 2020 was 1,250,000, of which 1,096,394 remain available for future issuance, and 200,000 shares of Class B stock. In addition, if any awards that were outstanding under the 2010 Plan as of November 3, 2020 are subsequently forfeited or if the related shares are repurchased, a corresponding number of shares will automatically become available for issuance under the 2020 Plan, thus resulting in an increase in the number of shares available for issuance under the 2020 Plan (up to an additional 1,024,902 shares of Class A Stock).

Stock options are granted at exercise prices equal to the grant-date market prices and typically expire no later than five years from the grant date. In contrast to a stock option where the grantee buys our Company’s share at an exercise price determined on grant date, a restricted stock unit (“RSU”) entitles the grantee to receive one share for every RSU based on a vesting plan, typically between one and four years from grant. At the time the options are exercised or RSUs vest and are settled, at the discretion of management, we will issue treasury shares or make a new issuance of shares to the option or RSU holder.

Stock Options

We have estimated the grant-date fair value of our stock options using the Black-Scholes option-valuation model, which takes into account assumptions such as the dividend yield, the risk-free interest rate, the expected stock price volatility, and the expected life of the options. We expensed the estimated grant-date fair values of options over the vesting period on a straight-line basis. Based on our historical experience, the “deemed exercise” of expiring in-the-money options and the relative market price to strike price of the options, we have not estimated any forfeitures of vested or unvested options.

The weighted average assumptions used in the option-valuation model for the years 2020, 2019 and 2018 were as follows:



	2020		2019		2018
Stock option exercise price	$	4.66	$	16.12	$	16.40
Risk-free interest rate		0.25%		2.42%		2.56%
Expected dividend yield		—		—		—
Expected option life in years		3.75		3.75		3.75
Expected volatility		51.83%		23.32%		24.99%
Weighted average fair value	$	1.80	$	3.50	$	3.80

We recorded stock-based compensation expense of $460,000, $458,000, and $425,000 for 2020, 2019, and 2018, respectively. At December 31, 2020, the total unrecognized estimated compensation cost related to non-vested stock options was $650,000 which is expected to be recognized over a weighted average vesting period of 1.44 years. No cash was received from option exercises in 2020. Cash consideration received from option exercises during 2019 and 2018 totaled $906,000 and $361,000 respectively.

The following is a summary of the status of RDI’s outstanding stock options for the three years ended December 31, 2020:



	Outstanding Stock Options
	Number of ‎Options		Weighted Average ‎Exercise Price				Weighted Average ‎Remaining Years of ‎Contractual Life	Aggregate ‎Intrinsic ‎Value
	Class A	Class B	Class A		Class B		Class A&B	Class A&B
Outstanding - January 1, 2018	524,589	—	$	12.50	$	—	3.15	$	3,054,325
Granted	126,840	—		16.40		—
Exercised	(60,000)	—		6.02		—			610,249
Expired	(4,960)	—		12.08		—
Outstanding - December 31, 2018	586,469	—	$	14.01	$	—	2.88	$	1,530,528
Granted	219,408	—		16.12		—
Exercised	(69,500)	—		13.42		—			185,175
Expired	(25,000)	—		13.42		—
Outstanding - December 31, 2019	711,377	—	$	14.74	$	—	2.79	$	136,350
Granted	38,803	—		4.66		—
Exercised	—	—		—		—			—
Expired	(36,701)	—		14.74		—
Outstanding - December 31, 2020	713,479	—	$	14.64	$	—	2.18	$	13,969

The following is a summary of the status of RDI’s vested and unvested stock options as of December 31, 2020, 2019 and 2018:



	Vested and Unvested Stock Options
	Number of ‎Options		Weighted Average ‎Exercise Price				Weighted Average ‎Remaining Years of ‎Contractual Life	Aggregate ‎Intrinsic ‎Value
	Class A	Class B	Class A			Class B	Class A&B	Class A&B
Vested
December 31, 2020	418,435	—	$	13.87	$	—	1.64	$	—
December 31, 2019	273,866	—		12.59		—	1.87		136,350
December 31, 2018	231,124	—		12.38		—	2.28		1,306,643
Unvested
December 31, 2020	295,044	—	$	15.77	$	—	2.47	$	13,969
December 31, 2019	437,511	—		15.78		—	3.36		—
December 31, 2018	355,345	—		15.07		—	3.27		223,885

Restricted Stock Units

RSU awards to Management vest 25% on the anniversary of the grant date over a period of four years. Beginning this year, a performance component has been added to certain of the RSUs granted to Management. On March 10, 2020, RSUs covering 287,163 shares were issued to members of executive Management and other employees of our Company. Between December 14, 2020 and December 16, 2020, RSUs covering 114,803 shares were issued to members of executive Management and other employees of our Company, all of which vest 100% on the anniversary of the grant date over a period of one year.

We estimate the grant-date fair values of our RSUs using the Company’s stock price at grant-date and record such fair values as compensation expense over the vesting period on a straight-line basis. Prior to November 7, 2018, RSU awards to non-employee directors vested 100% in January of the following year in which such RSUs were granted. At the November 7, 2018 Board meeting, it was determined that it would be more appropriate for the vesting of RSUs to align with the director’s term of office. Accordingly, the RSUs granted on November 7, 2018, vested on the first to occur of (i) 5:00 pm, Los Angeles, CA time on the last business day prior to the one year anniversary of the grant date, or (ii) the date on which the recipient’s term as a director ended and the recipient or, as the case may be, the recipient’s successor was elected to the board of directors. Accordingly, the RSUs granted to directors on November 7, 2018 vested on May 7, 2019 annual meeting of stockholders. Due to the fact that our Company moved up our annual meeting of stockholders from November to May in 2019, the vesting period for the RSUs issued on November 7, 2018 was shorter than anticipated. In order to adjust for this factor, the award of RSUs to directors made immediately following the 2019 Annual Meeting of Stockholders was determined using a value of $35,000 or one half of the dollar amount of the prior year’s annual grant. The RSUs issued to non-employee directors on May 7, 2019 vested on May 6, 2020. We granted non-employee directors 60,084 RSUs on December 16, 2020.

During the years ended December 31, 2020 and December 31, 2019, we recognized compensation expense related to RSUs of $1.0 million and $1.0 million respectively. The total unrecognized compensation expense related to these unvested RSUs was $2.6 million as of December 31, 2020.

Below is a table that shows the restricted stock units that have been issued and vested during the years ending December 31, 2020 along with the dollar value of these awards:



	Number of RSUs					$ value of RSUs
	Granted	Vesting	Forfeited	Unvested	Granted		Vesting			Forfeited	Unvested
2016	68,153	67,372	781	—	$	815,160	$	805,760	$	9,400	$	—
2017	70,538	61,590	532	8,416		1,124,348		981,448		8,496		134,404
2018	97,600	74,292	2,102	21,206		1,581,512		1,199,232		34,240		348,040
2019	59,258	22,713	3,104	33,441		944,070		354,806		50,005		539,259
2020	401,966	—	818	401,148		1,756,002		—		5,002		1,751,000
Total	697,515	225,967	7,337	464,211	$	6,221,091	$	3,341,245	$	107,144	$	2,772,703

2017 Stock Repurchase Plan

On March 14, 2019, the Board of Directors extended our Company’s stock repurchase program for two years, through March 2, 2021. The Board did not increase the authorized amount, which was initially fixed at $25.0 million. On March 10, 2020, the Board increased the authorized amount by $25.0 million and extended it to March 2, 2022. At the present time, the repurchase program authorization is $26.0 million.

The repurchase program allows Reading to repurchase its shares in accordance with the requirements of the SEC on the open market, in block trades and in privately negotiated transactions, depending on market conditions and other factors. All purchases are subject to the availability of shares at prices that are acceptable to Reading, and accordingly, no assurances can be given as to the timing or number of shares that may ultimately be acquired pursuant to this authorization.

Under the stock repurchase program, as of December 31, 2020, our Company had reacquired a total of 1,792,819 shares of Class A Non-Voting Common Stock for $24.0 million at an average price of $13.39 per share (excluding transaction costs). 75,157 shares of Class A Non-Voting Common Stock were purchased during the quarter ended March 31, 2020 at an average price of $8.92 per share. No shares have been repurchased since. The last share repurchase made by our Company was made on March 5, 2020, at which time 25,000 shares were purchased at an average cost per share of $7.30. This leaves $26.0 million available under the March 2, 2017 program, as extended, to March 2, 2022.

Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2020

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

NOTE 16 – ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes in each component of accumulated other comprehensive income attributable to RDI:



(Dollars in thousands)	Foreign ‎Currency ‎Items⁽¹⁾		Unrealized ‎Gain (Losses) ‎on Available- ‎for-Sale ‎Investments		Accrued ‎Pension ‎Service ‎Costs⁽²⁾		Hedge ‎Accounting ‎Reserve⁽³⁾		Total
Balance at January 1, 2020	$	8,118	$	10	$	(2,287)	$	(252)	$	5,589

Change related to derivatives
Total change in hedge fair value recorded in Other Comprehensive Income		—		—		—		(267)		(267)
Amounts reclassified from accumulated other comprehensive income		—		—		—		202		202
Net change related to derivatives		—		—		—		(65)		(65)

Net current-period other comprehensive income		6,848		(22)		152		(65)		6,913
Balance at December 31, 2020	$	14,966	$	(12)	$	(2,135)	$	(317)	$	12,502

(1)Net of income tax benefit of $34,000.

(2)Net of income tax expense of $55,000.

(3)Net of income tax benefit of $23,000

Fair Value Measurements

12 Months Ended

Dec. 31, 2020

Fair Value Measurements [Abstract]

Fair Value Measurements

NOTE 17 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If quoted prices in an active market are available, fair value is determined by reference to these prices. If quoted prices are not available, fair value is determined by valuation models that primarily use, as inputs, market-based or independently sourced parameters, including but not limited to interest rates, volatilities, and credit curves. Additionally, we may reference prices for similar instruments, quoted prices or recent transactions in less active markets. We use prices and inputs that are current as of the measurement date. Assets and liabilities that are carried at fair value (either recurring or non-recurring basis) are classified and disclosed in one of the following categories:

Level 1: Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. This consist primarily of investments in marketable securities which are our investments associated with the ownership of marketable securities in U.S. and New Zealand. These investments are valued based on observable market quotes on the last trading date of the reporting period.

Level 2: Quoted prices in active markets for similar assets and liabilities, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes our derivative financial instruments which are valued based on discounted cash flow models that incorporate observable inputs such as interest rates and yield curves from the derivative counterparties. The credit valuation adjustments associated with our non-performance risk and counterparty credit risk are incorporated in the fair value estimates of our derivatives. As of December 31, 2020 and 2019, we concluded that the credit valuation adjustments were not significant to the overall valuation of our derivatives.

Level 3: Unobservable inputs that are supported by little or no market activity may require significant judgment in order to determine the fair value of the assets and liabilities. This category includes:

i.Debt – includes secured and unsecured notes payable, trust preferred securities and other debt instruments. The borrowings are valued based on discounted cash flow models that incorporate appropriate market discount rates. We calculated the market discount rate by obtaining period-end treasury rates for fixed-rate debt, or LIBOR for variable-rate debt, for maturities that correspond to the maturities of our debt, adding appropriate credit spreads derived from information obtained from third-party financial institutions. These credit spreads take into account factors such as our credit rate, debt maturity, types of borrowings, and the loan-to-value ratios of the debt.

ii.Goodwill, Other Intangibles and Other Long-lived Assets – refer to the “Impairment of Long-Lived Assets” section in Note 2 – Summary of Significant Accounting Policies for a description of valuation methodology used for fair value measurements of goodwill, intangible assets and long-lived assets. Given this category represents several lines in our Consolidated Balance Sheet and since the recorded values agree to fair values, we did not include this in the subsequent tables presented.

Also, our Level 1 financial instruments include cash and cash equivalents, receivables, and accounts payable and accrued liabilities. The carrying values of these financial instruments approximate the fair values due to their short maturities. There have been no changes in the methodologies used at December 31, 2020 and 2019. Additionally, there were no transfers of assets and liabilities between Levels 1, 2, or 3 during the three years ended December 31, 2020.

Recurring Fair Value Measurements

As of December 31, 2020 and 2019, we do not have material financial assets carried and measured at fair value on a recurring basis. As of December 31, 2020 and 2019, we had derivative financial liabilities carried and measured at fair value on a recurring basis of $430,000 and $342,000 respectively.

Nonrecurring Fair Value Measurements

The following tables provide information about financial assets and liabilities not carried at fair value on a nonrecurring basis in our consolidated balance sheets:



		Carrying		Fair Value Measurements at December 31, 2020
(Dollars in thousands)	Balance Sheet Location	Value⁽¹⁾		Level 1		Level 2		Level 3		Total
Financial liabilities
Notes payable	Debt - current and long-term portion	$	257,046	$	—	$	—	$	258,525	$	258,525
Subordinated debt	Subordinated debt - current and long-term portion		27,913		—		—		20,423		20,423
Total		$	284,959	$	—	$	—	$	278,949	$	278,949



		Carrying		Fair Value Measurements at December 31, 2019
(Dollars in thousands)	Balance Sheet Location	Value⁽¹⁾		Level 1		Level 2		Level 3		Total
Financial liabilities
Notes payable	Debt - current and long-term portion	$	181,305	$	—	$	—	$	185,295	$	185,295
Subordinated debt	Subordinated debt		27,913		—		—		18,753		18,753
Total		$	209,218	$	—	$	—	$	204,048	$	204,048

(1)These balances are presented gross of deferred financing costs.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Hedge Accounting

12 Months Ended

Dec. 31, 2020

Hedge Accounting [Abstract]

Hedge Accounting

NOTE 18 – HEDGE ACCOUNTING

As of December 31, 2020 and 2019, the Company held interest rate derivatives in the total notional amount of $8.0 million and $8.0, respectively.

The derivatives are recorded on the balance sheet at fair value and are included in the following line items:


	Liability Derivatives
	December 31,
	2020			2019
(Dollars in thousands)	Balance sheet location	Fair value		Balance sheet location	Fair value
Interest rate contracts	Derivative financial instruments - current portion	$	218	Derivative financial instruments - current portion	$	109
	Derivative financial instruments - non-current portion		212	Derivative financial instruments - non-current portion		233
Total derivatives designated as hedging instruments		$	430		$	342
Total derivatives		$	430		$	342

We have no derivatives designated as hedging instruments which are in asset positions.

The changes in fair value are recorded in Other Comprehensive Income and released into interest expense in the same period(s) in which the hedged transactions affect earnings. In 2020 and 2019, the derivative instruments affected Comprehensive Income as follows:


(Dollars in thousands)	Location of Loss Recognized in Income on Derivatives	Amount of Loss Recognized in Income on Derivatives
			2020		2019
Interest rate contracts	Interest expense, net	$	202	$	68
Total		$	202	$	68


	Loss Recognized in OCI on Derivatives (Effective Portion)				Loss Reclassified from OCI into Income (Effective Portion)					Loss Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
(Dollars in thousands)	Amount				Line Item	Amount				Line Item	Amount
	2020		2019			2020		2019			2020		2019
Interest rate contracts	$	267	$	182	Interest expense, net	$	202	$	68	Interest expense, net	$	—	$	—
Total	$	267	$	182		$	202	$	68		$	—	$	—

In 2021, the Company expects to release $241,000 to earnings.

Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

NOTE 19 – LEASES

In all leases, whether we are the lessor or lessee, we define lease term as the non-cancellable term of the lease plus any renewals covered by renewal options that are reasonably certain of exercise based on our assessment of economic factors relevant to the lessee. The non-cancellable term of the lease commences on the date the lessor makes the underlying property in the lease available to the lessee, irrespective of when lease payments begin under the contract.

As Lessee

We have operating leases for certain cinemas and corporate offices, and finance leases for certain equipment assets. Our leases have remaining lease terms of 1 to 20 years, with certain leases having options to extend to up to a further 20 years.

Contracts are analyzed in accordance with the criteria set out in ASC 842 to determine if there is a lease present. For contracts that contain an operating lease, we account for the lease component and the non-lease component together as a single component. For contracts that contain a finance lease we account for the lease component and the non-lease component separately in accordance with ASC 842.

In leases where we are the lessee, we recognize a right of use asset and lease liability at lease commencement, which is measured by discounting lease payments using an incremental borrowing rate applicable to the relevant country and term of the lease as the discount rate. Subsequent amortization of the right of use asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the term of the lease. Lease term includes option periods where we determine that we are reasonably certain to be exercising those options. A finance lease right-of-use asset is depreciated on a straight-line basis over the lesser of the useful life of the leased asset or the lease term. Interest on each finance lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability. Property taxes and other non-lease costs are accounted for on an accrual basis.

Lease payments for our cinema operating leases consist of fixed base rent, and for certain leases, variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics.

The components of lease expense are as follows:


	December 31,
(Dollars in thousands)	2020		2019
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	93	$	165
Interest on lease liabilities		8		13
Operating lease cost		33,462		31,675
Variable lease cost		(4,445)		1,489
Total lease cost	$	29,118	$	33,342

‎

Supplemental cash flow information related to leases is as follows:


	December 31,
(Dollars in thousands)	2020		2019
Cash flows relating to lease cost
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	105	$	174
Operating cash flows for operating leases		14,060		31,220
Right-of-use assets obtained in exchange for new finance lease liabilities		—		—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	(2,054)	$	18,091

Supplemental balance sheet information related to leases is as follows:


	December 31,
(Dollars in thousands)	2020		2019
Operating leases
Operating lease right-of-use assets	$	220,503	$	229,879
Operating lease liabilities - current portion		22,699		20,379
Operating lease liabilities - non-current portion		212,806		223,164
Total operating lease liabilities	$	235,505	$	243,543
Finance leases
Property plant and equipment, gross	$	383	$	370
Accumulated depreciation		(271)		(165)
Property plant and equipment, net	$	112	$	205
Other current liabilities		49		93
Other long-term liabilities		69		116
Total finance lease liabilities	$	118	$	209

Other information
Weighted-average remaining lease term - finance leases		3		3
Weighted-average remaining lease term - operating leases		11		11
Weighted-average discount rate - finance leases		5.27%		5.13%
Weighted-average discount rate - operating leases		4.71%		4.86%

The Maturities of our leases were as follows:


(Dollars in thousands)	Operating ‎leases		Finance ‎leases
2021	$	33,328	$	54
2022		33,388		43
2023		32,579		29
2024		30,692		—
2025		28,521		—
Thereafter		144,402		—
Total lease payments	$	302,910	$	126
Less imputed interest		(67,405)		(8)
Total	$	235,505	$	118

As of December 31, 2020, we have additional operating leases, primarily for cinemas, that have not yet commenced of approximately $24.9 million. It is anticipated that these operating leases will commence between fiscal year 2021 and fiscal year 2022 with lease terms of 15 to 20 years.

As Lessor

We have entered into various leases as a lessor for our owned real estate properties. These leases vary in length between 1 and 20 years, with certain leases containing options to extend at the behest of the applicable tenants. Lease components consist of fixed base rent, and for certain leases, variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics. None of our leases grant any right to the tenant to purchase the underlying asset.

We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term.

Lease income relating to operating lease payments was as follows:


	December 31,
(Dollars in thousands)	2020		2019
Components of lease income
Lease payments	$	9,432	$	9,074
Variable lease payments		(131)		1,087
Total lease income	$	9,301	$	10,161

The book value of underlying assets under operating leases from owned assets was as follows:


	December 31,		December 31,
(Dollars in thousands)	2020		2019
Building and improvements
Gross balance	$	153,643	$	67,766
Accumulated depreciation		(26,107)		(20,220)
Net Book Value	$	127,536	$	47,546

The Maturity of our leases were as follows:


(Dollars in thousands)	Operating ‎leases
2021	$	9,384
2022		8,518
2023		7,670
2024		6,677
2025		5,381
Thereafter		6,158
Total	$	43,788

Business Combinations

12 Months Ended

Dec. 31, 2020

Business Combinations [Abstract]

Business Combinations

NOTE 20 – BUSINESS COMBINATIONS

Devonport, Tasmania, Australia

On January 30, 2019, we purchased the tenant’s interest and other operating assets of an established four-screen cinema in Devonport, Tasmania, Australia, for $1.4 million (AU$1.95 million). We commenced trading from this new cinema site on January 30, 2019.

The total purchase price was allocated to the identifiable assets acquired based on our estimates of their fair values on the acquisition date. The identified assets included fixtures and equipment and immaterial working capital balances. Goodwill consists of intangible assets than cannot be separately identified. There were immaterial liabilities assumed.

‎

Our final purchase price allocation is as follows:


(Dollars in thousands)	Preliminary Purchase Price Allocation⁽¹⁾		Measurement Period Adjustments⁽²⁾		Final Purchase Price Allocation⁽¹⁾
Tangible Assets
Operating property:
Fixtures and equipment	$	153	$	—	$	153
Intangible Assets
Goodwill		1,248		(23)		1,225
Total assets acquired		1,401		(23)		1,378

Net assets acquired	$	1,401	$	(23)	$	1,378

(1)The balances were translated into U.S. Dollars based on the applicable exchange rate as of the date of acquisition, January 30, 2019.

(2)The measurement period adjustments relate to finalization of immaterial employee obligations.

State Cinema Hobart, Tasmania, Australia

On December 3, 2019, we purchased the tenant’s interest and other operating assets of an established ten-screen cinema in Hobart, Tasmania, Australia, for $6.2m (AU$9.0m). We commenced trading from this new cinema site on December 5, 2019.

The total purchase price was allocated to the identifiable assets acquired based on our estimates of their fair values on the acquisition date. The identified assets include fixtures and equipment, the State Cinema brand, inventory and immaterial working capital balances. There were immaterial liabilities assumed, including certain gift card obligations.

Our final purchase price allocation is as follows:


(Dollars in thousands)	Preliminary Purchase Price Allocation⁽¹⁾		Measurement Period Adjustments		Final Purchase Price Allocation⁽¹⁾
Tangible Assets
Operating property:
Fixtures and equipment	$	481	$	(119)	$	362
Deferred tax		5		—		5
Current assets:
Inventory		333		—		333

Intangible Assets
Brand name		—		250		250
Liquor license				1		1
Goodwill		5,617		(132)		5,485
Total assets acquired		6,436		—		6,436

Liabilities
Employee liabilities		(20)		—		(20)
Deferred revenue balances		(236)		—		(236)
Total liabilities acquired		(256)		—		(256)

Net assets acquired	$	6,180	$	—	$	6,180

(1)The balances were translated into U.S. Dollars based on the applicable exchange rate as of the date of acquisition, December 3, 2019.

Related Parties

12 Months Ended

Dec. 31, 2020

Related Parties [Abstract]

Related Parties

‎

NOTE 21 – RELATED PARTIES

The following table identifies our related parties as of December 31, 2020, in accordance with ASC 850, Related Party Transactions:


Categories	Related Parties	Discussion Notes
 Principal Owners and immediate families	 Cotter Family’s Estate and Living Trust (controlling family)  Mark Cuban (above 10% voting ownership)	The Cotter Family is involved in certain litigation matters. Refer to Note 13 – Commitments and Contingencies for further details.
 Key Executive Officers and immediate families	 Ellen M. Cotter  Margaret Cotter  Gilbert Avanes  Andrzej J. Matyczynski  S Craig Tompkins  Robert F. Smerling  Mark Douglas	President and Chief Executive Officer EVP Real Estate Development and Management (NY) EVP Chief Financial Officer and Treasurer EVP Global Operations EVP General Counsel President – U.S. Cinemas Managing Director, Australia and New Zealand
 Investments in Joint Ventures accounted for under equity method	 Rialto Cinemas  Mt. Gravatt	Refer to Note 7 – Investment in Joint Ventures
 Other Affiliates	 Entities under common control  All subsidiaries of RDI	Refer to Exhibit 21 of this 2020 Form 10-K filing for the complete list of subsidiaries. Refer below for further discussions on certain key transactions with related parties, including those with minority interests.

Sutton Hill Capital

In 2001, we entered into a transaction with Sutton Hill Capital, LLC (“SHC”) regarding the master leasing, with an option to purchase, of certain cinemas located in Manhattan including our Village East and Cinemas 1,2,3 theaters. In connection with that transaction, we also agreed (i) to lend certain amounts to SHC, to provide liquidity in its investment, pending our determination whether or not to exercise our option to purchase and (ii) to manage the 86^th Street Cinema on a fee basis. SHC is a limited liability company owned in equal shares by the Cotter Estate or the Cotter Trust and a third party.

As previously reported, over the years, two of the cinemas subject to the master leasing agreement have been redeveloped and one (the Cinemas 1,2,3 discussed below) has been acquired. The Village East is the only cinema that remains subject to this master lease. In 2020 we were charged rent of $590,000 for this cinema by SHC, of which we paid $148,000, and deferred $442,000. We paid an annual rent of $590,000 for this cinema to SHC in 2019 and 2018. During this same period, we received management fees from the 86^th Street Cinema of $0, $45,000 and $172,000 during the years ended December 31, 2020, 2019 and 2018, respectively. During the second quarter of 2019, our management agreement for the operation of the 86^th Street Cinema terminated due to the expiration of the underlying lease.

In 2005, we acquired (i) from a third party the fee interest underlying the Cinemas 1,2,3 and (ii) from SHC its interest in the ground lease estate underlying and the improvements constituting the Cinemas 1,2,3. The ground lease estate and the improvements acquired from SHC were originally a part of the master lease transaction, discussed above. In connection with that transaction, we granted to SHC an option to acquire at cost a 25% interest in the special purpose entity (Sutton Hill Properties, LLC) formed to acquire these fee, leasehold and improvements interests. On June 28, 2007, SHC exercised this option, paying $3.0 million and assuming a proportionate share of SHP’s liabilities. At the time of the option exercise and the closing of the acquisition of the 25% interest, SHP had debt of $26.9 million, including a $2.9 million, non-interest-bearing intercompany loan from the Company. Since the acquisition by SHC of its 25% interest, SHP has covered its operating costs and debt service through cash flow from the Cinema 1,2,3, (ii) borrowings from third parties, and (iii) pro-rata contributions from the members. We receive an annual management fee equal to 5% of SHP’s gross income for managing the cinema and the property, amounting to $177,000 during 2015. This management fee was modified in 2015, as discussed below, retroactive to December 1, 2014.

On June 29, 2010, we agreed to extend our existing lease from SHC of the Village East Cinema by 10 years, with a new termination date of June 30, 2020. This amendment was reviewed and approved by our Audit and Conflicts Committee. The Village East lease includes a sub-lease of the ground underlying the cinema that is subject to a longer-term ground lease between SHC and an unrelated third party that expires in June 2031 (the “cinema ground lease”). The extended lease provides for a call option pursuant to which Reading may purchase the cinema ground lease for $5.9 million at the end of the lease term, which we exercised on August 28, 2019. It was initially agreed that the transaction would close on or about May 31, 2021. We recorded the Village East Cinema building as a property asset of $4.7 million on our balance sheet based on the cost carry-over basis from an entity under common control with a corresponding capital lease liability of $5.9 million presented under other liabilities (see Note 12 – Pension and Other Liabilities).

closing date for our acquisition of SHC’s interest in the Village East Cinema, the Company reinstated and extended until December 4, 2021 SHC’s right to put that interest to us. That put right had previously expired on December 4, 2019. We were advised by SHC that it wanted this reinstatement and extension in order to assure itself that, in the event of the non-performance by us of our current contractual obligation to close our purchase of the interest in the ground lease on or about the extended date of May 31, 2021, that it could (as, in effect, an additional remedy) exercise this reinstated and extended put right. We believe that the reinstatement and extension of this put right is immaterial to our Company, since we have in fact already exercised our option, are in fact under contract with SHC to acquire SHC’s interest in the Village East Cinema and have every intention of completing that acquisition. On March 29, 2021, we extended this closing date to January 1, 2023.

In February 2015, we and SHP amended the management agreement dated as of June 27, 2007 relating to our management of the Cinemas 1,2,3. The amendment, which was retroactive to December 1, 2014, memorialized our undertaking to SHP to fund up to $750,000 (the “Renovation Funding Amount”) of renovations to Cinemas 1,2,3. In consideration of our funding of the renovations, our annual management fee was increased commencing January 1, 2015 by an amount equivalent to 100% of any incremental positive cash flow of Cinemas 1,2,3 over the average annual positive cash flow of the Cinemas 1,2,3 over the three year period ended December 31, 2014 (not to exceed a cumulative aggregate amount equal to the Renovation Funding Amount), plus a 15% annual cash-on-cash return on the balance outstanding from time to time of the Renovation Funding Amount, payable at the time of the payment of the annual management fee (the “Improvements Fee”). Under the amended management agreement, we retained ownership of (and any right to depreciate) any furniture, fixtures and equipment purchased by us in connection with such renovation and had the right (but not the obligation) to remove all such furniture, fixtures and equipment (at our own cost and expense) from the Cinemas 1,2,3 upon the termination of the management agreement. The amendment also provided that, during the term of the management agreement, SHP would be responsible for the cost of repair and maintenance of the renovations. In 2019 and 2018 we charged Improvements Fees of $96,000 and $425,000, respectively. This amendment was approved by SHC and by the Audit and Conflicts Committee of our Board of Directors.

On November 6, 2020, we and SHP further amended the management agreement to terminate the Investments Fee in consideration of a one time payment to us of $112,500 and the reimbursement in full of the Renovation Funding Amount, and transferred to SHC all of our ownership rights in the renovation assets. This amendment was approved by SHC and by the Audit and Conflicts Committee of our Board of Directors.

On August 31, 2016, we refinanced the debt of Cinemas 1,2,3, pursuant to a $20.0 million loan from Valley National Bank. Refer to Note 11 – Borrowings for further details on this loan transaction. The proceeds from the loan were used to retire an existing $15.0 million first mortgage loan and the above-referenced $2.9 million intercompany loan, with the remainder to be used for working capital and to cover cash flow shortfalls. Since the cash flow from the Cinemas 1,2,3 is not sufficient to service this loan, it is anticipated that the members of SHP (our Company and SHC) will ultimately need to make periodic contributions to the capital of SHP in order to avoid dilution of their respective interests in SHP. In 2016, our Company and SHC funded capital calls of $506,000 and $169,000, respectively. No capital contributions were called or made in 2018, 2019 or 2020.

The Valley National Loan has been guaranteed by our Company and an environmental indemnity has been provided by our Company. SHC has agreed to indemnify our Company to the extent of 25% of any loss incurred by our Company with respect to any such guarantee and/or indemnity (a percentage reflecting SHC’s membership interest in SHP). The refinancing transaction, including the guarantee and indemnity, were review and approved by the Audit and Conflicts Committee of our Board of Directors. The Valley National loan matured on March 1, 2020, however the loan included an option to extend the maturity date to March 1, 2021. As described in Note 11 – Borrowings, on March 13, 2020, we refinanced this loan into a new $25.0 million term loan at an interest rate of 4.25% which matures on April 1, 2022 with two six month options to extend the maturity date until April 1, 2023.

On October 1, 2020, SHP made a distribution of $1.0 million, paying $750,000 to our Company and $250,000 to SHC.

Live Theatre Play Investment

From time to time, our Officers and Directors may invest in plays that lease our live theatres. The play STOMP has been playing in our Orpheum Theatre since prior to the time we acquired the theatre in 2001. The Cotter Estate or the Cotter Trust and a third party own an approximately 5% interest in that play, an interest that they have held since prior to our acquisition of the theatre.

Shadow View Land and Farming LLC

During 2012, Mr. James J. Cotter, Sr., our then Chairman, Chief Executive Officer and controlling stockholder, contributed $2.5 million cash and $255,000 of his 2011 bonus as his 50% share of the purchase price of a land parcel in Coachella, California and to cover his 50% share of certain costs associated with that acquisition. As of December 31, 2020, this property was held in Shadow View Land and Farming, LLC, in which the Cotter Estate or the Cotter Trust owns a 50% interest. Since the establishment of Shadow View Land and Farming, LLC, we have been the managing member (See Note 14 – Non-Controlling Interests). As of December 31, 2020, the property was held debt free and operating and holding costs were covered by member contributions. Since the property was purchased, he Audit and Conflicts Committee of the Board of Directors has been charged with responsibility for oversight of our

management of Shadow View. As discussed at Note 5 – Real Estate Transactions, the land held by Shadow View Land and Farming LLC was classified as held for sale in December, 2020 and was subsequently sold on March 5, 2021.

Unaudited Quarterly Financial Information

12 Months Ended

Dec. 31, 2020

Unaudited Quarterly Financial Information [Abstract]

Unaudited Quarterly Financial Information

NOTE 22 – UNAUDITED QUARTERLY FINANCIAL INFORMATION

Set forth below is our unaudited quarterly financial information as previously published, and then adjusted for the sales tax prior period correction as described in Note 2 – Summary of Significant Accounting Policies (Prior period financial statement correction of immaterial errors).


	Previously published

(Dollars in thousands, except per share data)	First ‎Quarter		Second ‎Quarter		Third ‎Quarter		Fourth Quarter (¹⁾
2020
Revenue	$	49,228	$	3,422	$	10,191	$	15,021
Net income (loss)		(5,955)		(22,887)		(19,352)		(17,663)
Net income (loss) attributable to RDI shareholders		(5,875)		(22,702)		(19,228)		(17,395)
Basic earnings (loss) per share		(0.27)		(1.04)		(0.88)		(0.80)
Diluted earnings (loss) per share		(0.27)		(1.04)		(0.88)		(0.80)
2019
Revenue	$	61,551	$	76,096	$	70,456	$	68,880
Net income (loss)		(2,097)		2,357		852		(27,458)
Net income (loss) attributable to RDI shareholders		(2,081)		2,394		902		(27,487)
Basic earnings (loss) per share		(0.09)		0.10		0.04		(0.99)
Diluted earnings (loss) per share		(0.09)		0.10		0.04		(0.99)

	Corrections

	First ‎Quarter		Second ‎Quarter		Third ‎Quarter		Fourth Quarter (¹⁾
2020
Revenue	$	—	$	—	$	—	$	—
Net income (loss)		—		—		—		—
Net income (loss) attributable to RDI shareholders		—		—		—		—
Basic earnings (loss) per share		—		—		—		—
Diluted earnings (loss) per share		—		—		—		—
2019
Revenue	$	(58)	$	(87)	$	(70)	$	—
Net income (loss)		(43)		(63)		(51)		—
Net income (loss) attributable to RDI shareholders		(43)		(63)		(51)		—
Basic earnings (loss) per share		—		—		—		—
Diluted earnings (loss) per share		—		—		—		—

	Revised

	First ‎Quarter		Second ‎Quarter		Third ‎Quarter		Fourth Quarter (¹⁾
2020
Revenue	$	49,228	$	3,422	$	10,191	$	15,021
Net income (loss)		(5,955)		(22,887)		(19,352)		(17,663)
Net income (loss) attributable to RDI shareholders		(5,875)		(22,702)		(19,228)		(17,395)
Basic earnings (loss) per share		(0.27)		(1.04)		(0.88)		(0.80)
Diluted earnings (loss) per share		(0.27)		(1.04)		(0.88)		(0.80)
2019
Revenue	$	61,493	$	76,009	$	70,386	$	68,880
Net income (loss)		(2,140)		2,294		801		(27,458)
Net income (loss) attributable to RDI shareholders		(2,124)		2,331		851		(27,487)
Basic earnings (loss) per share		(0.09)		0.10		0.04		(0.99)
Diluted earnings (loss) per share		(0.09)		0.10		0.04		(0.99)

(1)

Since previously published financial statements have been corrected, there is no impact on the fourth quarter results for 2019 or for the full year of 2020 and so no data is displayed here.

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	NOTE 23 – SUBSEQUENT EVENTS On January 24, 2021 we listed for sale our Auburn/Redyard ETC, and this property has been reclassified as Held For Sale during Q1 2021. On February 9, 2021 we listed for sale our Royal George Theatre, and this property has been reclassified as Held For Sale during Q1 2021. On March 4, 2021 we closed on the sale of our Manukau land, achieving a sale price of NZ$77.2m (US$56.1 million). On March 5, 2021, we sold our land holdings in Coachella, California for $11.0 million. As a 50% member in Shadow View Land & Farming LLC, the Company received 50% of the net sale proceeds. During the period March 1, 2021 to March 5, 2021, SHP loaned our Company the amount of $2.0 million, which was fully repaid on March 5, 2021 together with interest of $1,181 (representing an interest rate of 4.5%). On March 26, 2021, we paid off the $40.6 million construction loan encumbering our 44 Union Square property. On March 29, 2021, we extended the $5.9 million Village East option closing date to January 1, 2023. ‎

Schedule II - Valuation And Qualifying Accounts

12 Months Ended

Dec. 31, 2020

Schedule II - Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation And Qualifying Accounts

Schedule II – Valuation and Qualifying Accounts



	Balance at ‎January 1		Increase		Decrease		Balance at ‎December 31
Allowance for doubtful accounts
2020	$	1,519	$	386		523	$	1,382
2019	$	1,048	$	1,526		1,055	$	1,519
2018	$	1,088	$	658		698	$	1,048
Tax valuation allowance
2020	$	33,946	$	13,110			$	47,056
2019	$	6,720	$	27,226		—	$	33,946
2018	$	6,870	$	—		150	$	6,720

‎

Summary Of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2020

Summary Of Significant Accounting Policies [Abstract]

Basis Of Consolidation