UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date
of
report (Date of earliest event reported): May
10, 2007
Reading
International, Inc.
(Exact
Name of Registrant as Specified in its Charter)
|
Nevada
|
1-8625
|
95-3885184
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
|
500
Citadel Drive, Suite 300, Commerce, California
|
90040
|
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
|
Registrant's
telephone number, including area code (213)
235-2240
N/A
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
Item
2.02. Results of Operations and Financial Condition.
On
May
10, 2007, Reading International, Inc. issued a press release announcing
information regarding its results of operations and financial condition for
the
quarter ended March 31, 2007, a copy of which is attached as Exhibit
99.1.
Item
9.01. Financial Statements and Exhibits.
|
99.1
|
Press
release issued by Reading International, Inc. pertaining to its results
of
operations and financial condition for the quarter ended March 31,
2007.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
|
READING
INTERNATIONAL, INC.
|
||
|
Date:
May 11, 2007
|
|
By:
|
|
/s/
Andrzej Matyczynski
|
|
|
|
Name:
|
|
Andrzej
Matyczynski
|
|
|
|
Title:
|
|
Chief
Financial Officer
|
Reading
International Announces 1st
Quarter 2007 Results
|
·
|
Revenue
from continuing operations was up
10.8%
over the 2006 quarter, to $28.0
million
|
|
·
|
Net
Loss for
the quarter was reduced
by 79.5%
over the 2006 quarter, to ($646,000)
|
|
·
|
EBITDA(1)as
reported, was $4.6 million up
106.5% compared to $2.2 million in 2006
quarter
|
Los
Angeles, California, - (PR NEWSWIRE) -May 10, 2007 -
Reading
International, Inc. (AMEX: RDI) announced today results for its quarter ended
March 31, 2007.
First
Quarter 2007 Highlights
Our
year-to-year
results of operations were principally impacted
by the following:
|
·
|
the
opening in the fourth quarter of 2005 and the occupancy of the majority
of
tenancies during first and second quarters of 2006 of our Newmarket
Shopping Center, a 100,000 square foot retail center in a suburb
of
Brisbane, Australia;
|
|
·
|
the
acquisition of a cinema in Queenstown, New Zealand effective February
23,
2006;
|
|
·
|
the
purchase of the 50% share that we did not already own of the Palms
8-screen, leasehold cinema located in Christchurch, New Zealand effective
April 1, 2006;
|
|
·
|
the
sale of our 50% share of the cinemas at Whangaparaoa, Takapuna and
Mission
Bay, New Zealand formerly part of the Berkeley Cinemas Group effective
August 28, 2006;
|
|
·
|
the
acquisition of the long-term ground lease interest underlying our
Tower
Theater in Sacramento, California (the principal art cinema in
Sacramento);
|
|
·
|
through
March 31, 2007, the sale of 65 out of 67 residential units comprising
our
Place 57 residential condominium tower in Manhattan, in which we
own a 25%
interest. There were 6 units closed in the 2007 quarter;
and
|
|
·
|
the
increase in the value of the Australian and New Zealand dollars vis-à-vis
the US dollar from $0.7165 and $0.6164, respectively, as of March
31, 2006
to $0.8104 and $0.7158, respectively, as of March 31,
2007.
|
(1) The
Company defines EBITDA as net income (loss) before net interest expense,
income
tax benefit, depreciation, and amortization. EBITDA is presented solely as
a
supplemental disclosure as we believe it to be a relevant and useful measure
to
compare operating results among our properties and competitors, as well as
a
measurement tool for evaluation of operating personnel. EBITDA is not a measure
of financial performance under the promulgations of generally accepted
accounting principles (“GAAP”). EBITDA should not be considered in isolation
from, or as a substitute for, net loss, operating loss or cash flows from
operations determined in accordance with GAAP. Finally, EBITDA is not calculated
in the same manner by all companies and accordingly, may not be an appropriate
measure for comparing performance amongst different companies. See the
“Supplemental Data” table attached for a reconciliation of EBITDA to net income
(loss).
1
First
Quarter 2007 Discussion
Revenue
from continuing operations increased from $25.2 million in the 2006 quarter
to
$28.0 million in 2007, a 10.8% increase. The cinema revenue increase of $2.0
million was predominantly due to the US ($1.1 million higher than last year)
and
New Zealand ($0.6 million higher than last year). The top 3 grossing films
in
our circuit worldwide were “Happy
Feet”, “Night at the Museum” and“The
Queen” which
between them accounted for approximately 20% of our cinema box office revenue.
The increase in real estate revenue was primarily in Australia, principally
attributable to increased revenue from our Newmarket site. This was offset
by a
decrease in the US, primarily due to our live theater rental
income.
As
a
percent of revenue, operating expense, at 71.9% in the 2007 quarter was lower
than the 74.8% of the 2006 quarter. The primary drivers for this were a better
expense/revenue mix on higher realized revenues and continued expense control
in
all geographic areas.
Depreciation
and amortization decreased by $272,000 or 8.4%, from $3.2 million in the 2006
quarter, to $3.0 million in the 2007 quarter, as several Australian cinema
assets reached the end of their depreciable lives.
General
and administrative expense increased by $308,000 or 9.1%, from $3.4 million
to
$3.7 million in the 2007 quarter. This increase was primarily due to our
expensing the cost of 70,000 fully vested options granted to our directors.
The
other
significant driver that affected the 2007 quarter compared to the 2006 quarter
was the reported $735,000 Other
Income
in the
2007 quarter, compared to the ($689,000) Other
Expense
in the
2006 quarter. The change of $1.4 million was primarily due to the $1.3 million
of income recognized in the 2007 quarter with respect to our investment in
Place
57.
As
a
result of the above, we reported a net loss of ($646,000) for the 2007 quarter
compared to a net loss of ($3.1) million in the 2006 quarter.
Our
EBITDA (1)
at $4.6
million for the 2007 quarter was $2.4 million higher than the 2006 quarter
of
$2.2 million, equally driven by better operating margins (approximately $1.2
million) and income recognized from our Place 57 investment in the 2007 quarter
($1.3 million).
Balance
Sheet
Our
total
assets at March 31, 2007 were $306.6 million compared to $289.2 million at
December 31, 2006. The currency exchange rates for Australia and New Zealand
as
of March 31, 2007 were $0.8104 and $0.7158, respectively, and as of December
31,
2006, these rates were $0.7884 and $0.7046, respectively. As a result, currency
had a positive effect on the balance sheet at March 31, 2007 compared to
December 31, 2006.
Our
cash
position at March 31, 2007 was $9.0 million compared to $11.0 million at
December 31, 2006.
On
February 5, 2007 we issued $51.5 million in trust preferred securities through
our wholly owned trust subsidiary. These securities are reflected on our balance
sheet as subordinated debt. There are no principal payments until maturity
in
2027 when the securities are fully paid and we have fixed the interest payment
for the first 5 years at 9.22%. We used the funds from this transaction to
principally payoff our bank indebtedness in New Zealand by $34.4
million (NZ$50.0 million) and to pay down our indebtedness in Australia by
$5.8
million (AUS$7.4 million).
2
As
a
result, at the present time we have approximately $11.3 million (AUS$14.0
million) in undrawn funds under our Australian Corporate Credit Facility. We
have left in place a $43.0 million (NZ$60.0 million) Line of Credit in New
Zealand. Accordingly, we believe that we have sufficient borrowing capacity
under our Australian Corporate Credit Facility and our New Zealand Line of
Credit, to meet our anticipated short-term working capital requirements.
Our
positive working capital at March 31, 2007 of $5.2 million compares to a
negative working capital of $7.0 million at December 31, 2006. Negative working
capital is typical in the cinema industry, due to the lag time between the
collection of box office and concession receipts and the payment of film
distributors and vendors.
Requiring
estimated funding of approximately $500.0 million, our development in Burwood,
Australia will clearly not be funded from normal working capital even in a
phased approach. We have approached several financing sources who have already
given a high-level, favorable response to this funding. However, we continue
to
investigate all options available to us including debt financing, equity
financing, and joint venture partnering to achieve the optimal financing
structure for this most significant development.
Stockholders’
equity was $108.4 million at March 31, 2007 compared to $107.7 at December 31,
2006.
About
Reading International, Inc.
Reading
International (http://www.readingrdi.com)
is in
the business of owning and operating cinemas and developing, owning and
operating real estate assets. Our business consists primarily of:
|
·
|
the
development, ownership and operation of multiplex cinemas in the
United
States, Australia and New Zealand; and
|
|
·
|
the
development, ownership and operation of retail and commercial real
estate
in Australia, New Zealand and the United States, including
entertainment-themed retail centers (“ETRC”) in Australia and New Zealand
and live theater assets in Manhattan and Chicago in the United
States.
|
Reading
manages its worldwide cinema business under various different
brands:
|
·
|
in
the United States, under the
|
|
o
|
Reading
brand,
|
|
o
|
Angelika
Film Center brand (http://angelikafilmcenter.com/),
and
|
|
o
|
City
Cinemas brand (http://citycinemas.moviefone.com/);
|
|
·
|
in
Australia, under the Reading brand (http://www.readingcinemas.com.au/);
and
|
|
·
|
in
New Zealand, under the
|
|
o
|
Reading
(http://www.readingcinemas.co.nz),
|
|
o
|
Rialto
(http://www.rialto.co.nz),
and
|
|
o
|
Berkeley
Cinemas (http://www.berkeleycinemas.co.nz/)
brands.
|
Our
statements in this press release contain a variety of forward-looking statements
as defined by the Securities Litigation Reform Act of 1995. Forward-looking
statements reflect only our expectations regarding future events and operating
performance and necessarily speak only as of the
3
date the information was prepared. No guarantees can be given that our expectation will in fact be realized, in whole or in part. You can recognize these statements by our use of words such as, by way of example, “may,” “will,” “expect,” “believe,” and “anticipate” or other similar terminology.
These
forward-looking statements reflect our expectation after having considered
a
variety of risks and uncertainties. However, they are necessarily the product
of
internal discussion and do not necessarily completely reflect the views of
individual members of our Board of Directors or of our management team.
Individual Board members and individual members of our management team may
have
different view as to the risks and uncertainties involved, and may have
different views as to future events or our operating
performance.
Among
the factors that could cause actual results to differ materially from those
expressed in or underlying our forward-looking statements are the
following:
| · |
With
respect to our cinema operations:
|
| o |
The
number and attractiveness to movie goers of the films released in
future
periods;
|
| o |
The
amount of money spent by film distributors to promote their motion
pictures;
|
| o |
The
licensing fees and terms required by film distributors from motion
picture
exhibitors in order to exhibit their
films;
|
| o |
The
comparative attractiveness of motion pictures as a source of entertainment
and willingness and/or ability of consumers (i) to spend their dollars
on
entertainment and (ii) to spend their entertainment dollars on movies
in
an outside the home environment; and
|
| o |
The
extent to which we encounter competition from other cinema exhibitors,
from other sources of outside of the home entertainment, and from
inside
the home entertainment options, such as “home theaters” and competitive
film product distribution technology such as, by way of example,
cable,
satellite broadcast, DVD and VHS rentals and sales, and so called
“movies
on demand;”
|
| · |
With
respect to our real estate development and operation
activities:
|
| o |
The
rental rates and capitalization rates applicable to the markets in
which
we operate and the quality of properties that we
own;
|
| o |
The
extent to which we can obtain on a timely basis the various land
use
approvals and entitlements needed to develop our
properties;
|
| o |
the
risks and uncertainties associated with real estate
development;
|
| o |
The
availability and cost of labor and materials;
|
| o |
Competition
for development sites and tenants;
and
|
| o |
The
extent to which our cinemas can continue to serve as an anchor tenant
which will, in turn, be influenced by the same factors as will influence
generally the results of our cinema
operations;
|
| · |
With
respect to our operations generally as an international company involved
in both the development and operation of cinemas and the development
and
operation of real estate; and previously engaged for many years in
the
railroad business in the United
States:
|
| o |
Our
ongoing access to borrowed funds and capital and the interest that
must be
paid on that debt and the returns that must be paid on such capital;
|
4
| o |
The
relative values of the currency used in the countries in which we
operate;
|
| o |
Changes
in government regulation, including by way of example, the costs
resulting
from the implementation of the requirements of
Sarbanes-Oxley;
|
| o |
Our
labor relations and costs of labor (including future government
requirements with respect to pension liabilities, disability insurance
and
health coverage, and vacations and
leave);
|
| o |
Our
exposure from time to time to legal claims and to uninsurable risks
such
as those related to our historic railroad operations, including potential
environmental claims and health related claims relating to alleged
exposure to asbestos or other substances now or in the future recognized
as being possible causes of cancer or other health related
problems;
|
| o |
Changes
in future effective tax rates and the results of currently ongoing
and
future potential audits by taxing authorities having jurisdiction
over our
various companies; and
|
| o |
Changes
in applicable accounting policies and
practices.
|
The
above list is not necessarily exhaustive, as business is by definition
unpredictable and risky, and subject to influence by numerous factors outside
of
our control such as changes in government regulation or policy, competition,
interest rates, supply, technological innovation, changes in consumer taste
and
fancy, weather, and the extent to which consumers in our markets have the
economic wherewithal to spend money on beyond-the-home
entertainment.
Given
the variety and unpredictability of the factors that will ultimately influence
our businesses and our results of operation, it naturally follows that no
guarantees can be given that any of our forward-looking statements will
ultimately prove to be correct. Actual results will undoubtedly vary and there
is no guarantee as to how our securities will perform either when considered
in
isolation or when compared to other securities or investment
opportunities.
Finally,
please understand that we undertake no obligation to publicly update or to
revise any of our forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under
applicable law. Accordingly, you should always note the date to which our
forward-looking statements speak.
Additionally,
certain of the presentations included in this press release may contain “pro
forma” information or “non-US
GAAP financial measures.” In such case, a reconciliation of this information to
our US GAAP financial statements will be made available in connection with
such
statements.
For
more
information, contact:
Andrzej
Matyczynski, Chief Financial Officer
Reading
International, Inc. (213) 235 2240
[TABLES
FOLLOW]
5
Reading
International, Inc. and Subsidiaries
Supplemental
Data
Reconciliation
of EBITDA to Net Loss (Unaudited)
(dollars
in thousands, except per share amounts)
|
Statements
of Operations
|
Three
Months Ended
March
31,
|
||||||
|
2007
|
2006
|
||||||
|
Revenue
|
$
|
27,975
|
$
|
25,243
|
|||
|
Operating
expense
|
|||||||
|
Cinema/real
estate
|
20,122
|
18,893
|
|||||
|
Depreciation
and amortization
|
2,968
|
3,240
|
|||||
|
General
and administrative
|
3,675
|
3,367
|
|||||
|
Operating
income (loss)
|
1,210
|
(257
|
)
|
||||
|
Interest
expense, net
|
(1,750
|
)
|
(1,784
|
)
|
|||
|
Other
income (expense)
|
735
|
(689
|
)
|
||||
|
Income
tax expense
|
(499
|
)
|
(337
|
)
|
|||
|
Minority
interest expense
|
(342
|
)
|
(80
|
)
|
|||
|
Net
loss
|
$
|
(646
|
)
|
$
|
(3,147
|
)
|
|
|
Basic
and diluted loss per share
|
$
|
(0.03
|
)
|
$
|
(0.14
|
)
|
|
|
EBITDA*
|
$
|
4,571
|
$
|
2,214
|
|||
|
EBITDA*
change
|
$2,357
|
||||||
* EBITDA
presented above is net loss adjusted for interest expense (net of interest
income), income tax expense, depreciation and amortization expense, and an
adjustment for discontinued operations (this includes interest expense and
depreciation and amortization for the discontinued operations).
Reconciliation
of EBITDA to the net loss is presented below:
|
Three
Months Ended
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
Net
loss
|
$
|
(646
|
)
|
$
|
(3,147
|
)
|
|
|
Add: Interest
expense, net
|
1,750
|
1,784
|
|||||
|
Add: Income
tax provision
|
499
|
337
|
|||||
|
Add: Depreciation
and amortization
|
2,968
|
3,240
|
|||||
|
EBITDA
|
$
|
4,571
|
$
|
2,214
|
|||
6
Reading
International, Inc. and Subsidiaries
Consolidated
Statements of Operations (Unaudited)
(U.S.
dollars in thousands,
except per share amounts)
|
Three
Months Ended
|
|||||||
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
Revenue
|
|||||||
|
Cinema
|
$
|
24,506
|
$
|
22,509
|
|||
|
Real
estate
|
3,469
|
2,734
|
|||||
|
27,975
|
25,243
|
||||||
|
Operating
expense
|
|||||||
|
Cinema
|
18,120
|
17,182
|
|||||
|
Real
estate
|
2,002
|
1,711
|
|||||
|
Depreciation
and amortization
|
2,968
|
3,240
|
|||||
|
General
and administrative
|
3,675
|
3,367
|
|||||
|
26,765
|
25,500
|
||||||
|
Operating
income (loss)
|
1,210
|
(257
|
)
|
||||
|
Non-operating
income (expense)
|
|||||||
|
Interest
income
|
145
|
61
|
|||||
|
Interest
expense
|
(1,895
|
)
|
(1,845
|
)
|
|||
|
Net
gain (loss)on sale of assets
|
(185
|
)
|
3
|
||||
|
Other
expense
|
(736
|
)
|
(1,159
|
)
|
|||
|
Loss
before minority interest expense, income tax expense, and equity
earnings
of unconsolidated joint ventures and entities
|
(1,461
|
)
|
(3,197
|
)
|
|||
|
Minority
interest expense
|
(342
|
)
|
(80
|
)
|
|||
|
Loss
before income tax expense and equity earnings of unconsolidated joint
ventures and entities
|
(1,803
|
)
|
(3,277
|
)
|
|||
|
Income
tax expense
|
(499
|
)
|
(337
|
)
|
|||
|
Loss
before equity earnings of unconsolidated joint ventures and
entities
|
(2,302
|
)
|
(3,614
|
)
|
|||
|
Equity
earnings of unconsolidated joint ventures and entities
|
1,656
|
467
|
|||||
|
Net
loss
|
$
|
(646
|
)
|
$
|
(3,147
|
)
|
|
|
Basic
and diluted loss per share
|
$
|
(0.03
|
)
|
$
|
(0.14
|
)
|
|
|
Weighted
average number of shares outstanding - basic and
diluted
|
22,482,804
|
22,450,007
|
|||||
7
Reading
International, Inc. and Subsidiaries
Consolidated
Balance Sheets (Unaudited)
(U.S.
dollars in thousands)
|
March
31, 2007
|
December
31, 2006
|
||||||
|
ASSETS
|
|||||||
|
Current
Assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
9,023
|
$
|
11,008
|
|||
|
Receivables
|
5,731
|
6,612
|
|||||
|
Inventory
|
457
|
606
|
|||||
|
Investment
in marketable securities
|
20,063
|
8,436
|
|||||
|
Restricted
cash
|
842
|
1,040
|
|||||
|
Prepaid
and other current assets
|
2,219
|
2,589
|
|||||
|
Total
current assets
|
38,335
|
30,291
|
|||||
|
Land
held for sale
|
1,809
|
--
|
|||||
|
Property
held for development
|
1,643
|
1,598
|
|||||
|
Property
under development
|
45,585
|
38,876
|
|||||
|
Property
& equipment, net
|
171,192
|
170,667
|
|||||
|
Investment
in unconsolidated joint ventures and entities
|
15,799
|
19,067
|
|||||
|
Investment
in Reading International Trust I
|
1,547
|
--
|
|||||
|
Goodwill
|
18,158
|
17,919
|
|||||
|
Intangible
assets, net
|
8,194
|
7,954
|
|||||
|
Other
assets
|
4,387
|
2,859
|
|||||
|
Total
assets
|
$
|
306,649
|
$
|
289,231
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Current
Liabilities:
|
|||||||
|
Accounts
payable and accrued liabilities
|
$
|
12,817
|
$
|
13,539
|
|||
|
Film
rent payable
|
2,494
|
4,642
|
|||||
|
Notes
payable - current portion
|
5,271
|
2,237
|
|||||
|
Notes
payable to related parties - current portion
|
5,000
|
5,000
|
|||||
|
Current
tax liabilities
|
4,928
|
9,128
|
|||||
|
Deferred
current revenue
|
2,420
|
2,565
|
|||||
|
Other
current liabilities
|
241
|
177
|
|||||
|
Total
current liabilities
|
33,171
|
37,288
|
|||||
|
Notes
payable - long-term portion
|
74,616
|
113,975
|
|||||
|
Notes
payable to related parties
|
9,000
|
9,000
|
|||||
|
Subordinated
debt
|
51,547
|
--
|
|||||
|
Noncurrent
tax liabilities
|
4,890
|
--
|
|||||
|
Deferred
non-current revenue
|
552
|
528
|
|||||
|
Other
liabilities
|
22,095
|
18,178
|
|||||
|
Total
liabilities
|
195,871
|
178,969
|
|||||
|
Commitments
and contingencies
|
--
|
--
|
|||||
|
Minority
interest in consolidated affiliates
|
2,375
|
2,603
|
|||||
|
Stockholders’
equity:
|
|||||||
|
Class
A Nonvoting Common Stock, par value $0.01, 100,000,000 shares authorized,
35,495,729 issued and 20,992,453 outstanding at March 31, 2007 and
35,468,733 issued and 20,980,865 outstanding at December 31,
2006
|
216
|
216
|
|||||
|
Class
B Voting Common Stock, par value $0.01, 20,000,000 shares authorized
and
1,495,490 issued and outstanding at March 31, 2006 and December 31,
2006
|
15
|
15
|
|||||
|
Nonvoting
Preferred Stock, par value $0.01, 12,000 shares authorized and no
outstanding shares
|
--
|
--
|
|||||
|
Additional
paid-in capital
|
128,786
|
128,399
|
|||||
|
Accumulated
deficit
|
(51,213
|
)
|
(50,058
|
)
|
|||
|
Treasury
shares
|
(4,306
|
)
|
(4,306
|
)
|
|||
|
Accumulated
other comprehensive income
|
34,905
|
33,393
|
|||||
|
Total
stockholders’ equity
|
108,403
|
107,659
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
306,649
|
$
|
289,231
|
|||
8