þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
NEVADA
(State
or other jurisdiction of incorporation or organization)
|
95-3885184
(IRS
Employer Identification No.)
|
500
Citadel Drive, Suite 300
Commerce CA
(Address
of principal executive offices)
|
90040
(Zip
Code)
|
Page
|
|
|
June
30, 2008
|
December
31, 2007
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 26,752 | $ | 20,782 | ||||
Receivables
|
7,116 | 5,671 | ||||||
Inventory
|
816 | 654 | ||||||
Investment
in marketable securities
|
4,939 | 4,533 | ||||||
Restricted
cash
|
59 | 59 | ||||||
Prepaid
and other current assets
|
2,230 | 3,800 | ||||||
Total
current assets
|
41,912 | 35,499 | ||||||
Land
held for sale
|
1,954 | 1,984 | ||||||
Property
held for development
|
13,844 | 11,068 | ||||||
Property
under development
|
77,725 | 66,787 | ||||||
Property
& equipment, net
|
223,435 | 178,174 | ||||||
Investment
in unconsolidated joint ventures and entities
|
15,369 | 15,480 | ||||||
Investment
in Reading International Trust I
|
1,547 | 1,547 | ||||||
Goodwill
|
25,697 | 19,100 | ||||||
Intangible
assets, net
|
24,866 | 8,448 | ||||||
Other
assets
|
10,494 | 7,984 | ||||||
Total
assets
|
$ | 436,843 | $ | 346,071 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 13,814 | $ | 12,331 | ||||
Film
rent payable
|
6,471 | 3,275 | ||||||
Notes
payable – current portion
|
1,253 | 395 | ||||||
Note
payable to related party – current portion
|
-- | 5,000 | ||||||
Taxes
payable
|
5,137 | 4,770 | ||||||
Deferred
current revenue
|
2,881 | 3,214 | ||||||
Other
current liabilities
|
200 | 169 | ||||||
Total
current liabilities
|
29,756 | 29,154 | ||||||
Notes
payable – long-term portion
|
187,677 | 111,253 | ||||||
Notes
payable to related party – long-term portion
|
14,000 | 9,000 | ||||||
Subordinated
debt
|
51,547 | 51,547 | ||||||
Noncurrent
tax liabilities
|
5,672 | 5,418 | ||||||
Deferred
non-current revenue
|
619 | 566 | ||||||
Other
liabilities
|
16,379 | 14,936 | ||||||
Total
liabilities
|
305,650 | 221,874 | ||||||
Commitments
and contingencies (Note 13)
|
||||||||
Minority
interest in consolidated affiliates
|
2,344 | 2,835 | ||||||
Stockholders’
equity:
|
||||||||
Class
A Nonvoting Common Stock, par value $0.01, 100,000,000 shares authorized,
35,564,339 issued and 20,987,115 outstanding at June 30, 2008 and at
December 31, 2007
|
216 | 216 | ||||||
Class
B Voting Common Stock, par value $0.01, 20,000,000 shares authorized and
1,495,490 issued and outstanding at June 30, 2008 and at December 31,
2007
|
15 | 15 | ||||||
Nonvoting
Preferred Stock, par value $0.01, 12,000 shares authorized and no
outstanding shares
|
-- | -- | ||||||
Additional
paid-in capital
|
132,446 | 131,930 | ||||||
Accumulated
deficit
|
(52,614 | ) | (52,670 | ) | ||||
Treasury
shares
|
(4,306 | ) | (4,306 | ) | ||||
Accumulated
other comprehensive income
|
53,092 | 46,177 | ||||||
Total
stockholders’ equity
|
128,849 | 121,362 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 436,843 | $ | 346,071 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenue
|
||||||||||||||||
Cinema
|
$ | 49,488 | $ | 26,034 | $ | 84,831 | $ | 50,540 | ||||||||
Real
estate
|
4,263 | 4,105 | 8,647 | 7,575 | ||||||||||||
53,751 | 30,139 | 93,478 | 58,115 | |||||||||||||
Operating
expense
|
||||||||||||||||
Cinema
|
41,780 | 19,931 | 69,185 | 38,051 | ||||||||||||
Real
estate
|
2,296 | 1,864 | 4,410 | 3,865 | ||||||||||||
Depreciation
and amortization
|
5,528 | 3,047 | 9,411 | 6,016 | ||||||||||||
General
and administrative
|
4,909 | 3,879 | 9,597 | 7,555 | ||||||||||||
54,513 | 28,721 | 92,603 | 55,487 | |||||||||||||
Operating
income (loss)
|
(762 | ) | 1,418 | 875 | 2,628 | |||||||||||
Non-operating
income (expense)
|
||||||||||||||||
Interest
income
|
365 | 84 | 603 | 229 | ||||||||||||
Interest
expense
|
(3,404 | ) | (2,034 | ) | (6,479 | ) | (3,930 | ) | ||||||||
Net
loss on sale of assets
|
-- | -- | -- | (185 | ) | |||||||||||
Other
income (expense)
|
1,671 | 465 | 3,045 | (271 | ) | |||||||||||
Loss
before minority interest expense, discontinued operations, income tax
expense, and equity earnings of unconsolidated joint ventures and
entities
|
(2,130 | ) | (67 | ) | (1,956 | ) | (1,529 | ) | ||||||||
Minority
interest income (expense)
|
182 | (154 | ) | (161 | ) | (495 | ) | |||||||||
Loss
before discontinued operations, income tax expense, and equity earnings of
unconsolidated joint ventures and entities
|
(1,948 | ) | (221 | ) | (2,117 | ) | (2,024 | ) | ||||||||
Gain
on sale of a discontinued operation
|
-- | 1,912 | -- | 1,912 | ||||||||||||
Income
(loss) before income tax expense and equity earnings of unconsolidated
joint ventures and entities
|
(1,948 | ) | 1,691 | (2,117 | ) | (112 | ) | |||||||||
Income
tax expense
|
(407 | ) | (443 | ) | (824 | ) | (942 | ) | ||||||||
Income
(loss) before equity earnings of unconsolidated joint ventures and
entities
|
(2,355 | ) | 1,248 | (2,941 | ) | (1,054 | ) | |||||||||
Equity
earnings of unconsolidated joint ventures and entities
|
189 | 386 | 547 | 2,042 | ||||||||||||
Gain
on sale of unconsolidated entity
|
2,450 | -- | 2,450 | -- | ||||||||||||
Net
income
|
$ | 284 | $ | 1,634 | $ | 56 | $ | 988 | ||||||||
Earnings
(loss) per common share – basic and diluted:
|
||||||||||||||||
Earnings (loss) from continuing
operations
|
$ | 0.01 | $ | (0.01 | ) | $ | 0.00 | $ | (0.04 | ) | ||||||
Earnings from discontinued
operations
|
0.00 | 0.08 | 0.00 | 0.08 | ||||||||||||
Basic
and diluted earnings per share
|
$ | 0.01 | $ | 0.07 | $ | 0.00 | $ | 0.04 | ||||||||
Weighted
average number of shares outstanding – basic
|
22,476,355 | 22,487,943 | 22,476,355 | 22,485,480 | ||||||||||||
Weighted
average number of shares outstanding – dilutive
|
22,763,826 | 22,487,943 | 22,763,826 | 22,485,480 |
Six
Months Ended
|
||||||||
June
30,
|
||||||||
2008
|
2007
|
|||||||
Operating
Activities
|
||||||||
Net
income
|
$ | 56 | $ | 988 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Gain
recognized on foreign currency transactions
|
(447 | ) | (132 | ) | ||||
Equity
earnings of unconsolidated joint ventures and entities
|
(547 | ) | (2,042 | ) | ||||
Distributions
of earnings from unconsolidated joint ventures and
entities
|
507 | 4,318 | ||||||
(Gain)
loss on marketable securities
|
1 | (224 | ) | |||||
Gain
on sale of an unconsolidated joint venture
|
(2,450 | ) | -- | |||||
Gain
on sale of a discontinued operation
|
-- | (1,912 | ) | |||||
Loss
on disposal of assets
|
-- | 185 | ||||||
Loss
on extinguishment of debt
|
-- | 97 | ||||||
Gain
on insurance settlement
|
(910 | ) | -- | |||||
Depreciation
and amortization
|
9,411 | 6,016 | ||||||
Amortization
of prior service costs
|
143 | -- | ||||||
Amortization
of above and below market leases
|
378 | -- | ||||||
Stock
based compensation expense
|
516 | 539 | ||||||
Minority
interest
|
161 | 495 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
(Increase)
decrease in receivables
|
(1,177 | ) | 1,617 | |||||
Increase
in prepaid and other assets
|
479 | (183 | ) | |||||
Increase
(decrease) in accounts payable and accrued expenses
|
1,614 | (2,645 | ) | |||||
Increase
(decrease) in film rent payable
|
3,032 | (1,167 | ) | |||||
Increase
in deferred revenues and other liabilities
|
1,514 | 1,207 | ||||||
Net
cash provided by operating activities
|
12,281 | 7,157 | ||||||
Investing
activities
|
||||||||
Acquisitions
|
(51,746 | ) | (11,768 | ) | ||||
Acquisition
deposit returned
|
2,000 | -- | ||||||
Purchases
of and additions to property and equipment
|
(12,067 | ) | (7,944 | ) | ||||
Change
in restricted cash
|
-- | 326 | ||||||
Investment
in Reading International Trust I
|
-- | (1,547 | ) | |||||
Investment
in unconsolidated joint ventures and entities
|
(460 | ) | -- | |||||
Distributions
of investment in unconsolidated joint ventures
|
198 | 1,434 | ||||||
Purchase
of marketable securities
|
-- | (11,861 | ) | |||||
Net
proceeds from the sale of an unconsolidated joint venture
|
3,340 | -- | ||||||
Sale
of marketable securities
|
-- | 4,010 | ||||||
Proceeds
from insurance settlement
|
910 | -- | ||||||
Net
cash used in investing activities
|
(57,825 | ) | (27,350 | ) | ||||
Financing
activities
|
||||||||
Repayment
of long-term borrowings
|
(5,416 | ) | (43,539 | ) | ||||
Proceeds
from borrowings
|
59,659 | 78,204 | ||||||
Capitalized
borrowing costs
|
(2,498 | ) | (2,254 | ) | ||||
Minority
interest contributions
|
75 | -- | ||||||
Minority
interest distributions
|
(761 | ) | (838 | ) | ||||
Net
cash provided by financing activities
|
51,059 | 31,573 | ||||||
Effect
of exchange rate changes on cash and cash equivalents
|
455 | 3 | ||||||
Increase
in cash and cash equivalents
|
5,970 | 11,383 | ||||||
Cash
and cash equivalents at beginning of period
|
20,782 | 11,008 | ||||||
Cash
and cash equivalents at end of period
|
$ | 26,752 | $ | 22,391 | ||||
Supplemental
Disclosures
|
||||||||
Interest paid
|
$ | 8,008 | $ | 5,208 | ||||
Income taxes paid
|
$ | 161 | $ | 123 | ||||
Non-cash
transactions
|
||||||||
Note payable due to Seller issued
for acquisition
|
$ | 14,750 | $ | -- | ||||
Decrease
in cost basis of Cinema 1, 2 & 3 related to the purchase price
adjustment of the call option liability to related party
|
$ | -- | $ | (2,100 | ) | |||
Adjustment
to accumulated deficit related to adoption of FIN 48 (Note
10)
|
$ | -- | $ | 509 | ||||
Decrease
in deposit payable and increase in minority interest liability related to
the exercise of the Cinema 1, 2 & 3 call option by a related
party
|
$ | -- | $ | (3,000 | ) | |||
Decrease
in call option liability and increase in additional paid in capital
related to the exercise of the Cinema 1, 2 & 3 call option by a
related party
|
$ | -- | $ | (2,513 | ) | |||
Accrued
construction-in-progress cost
|
$ | -- | $ | (2,440 | ) |
|
·
|
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 theatre assets in Manhattan and Chicago in the United
States.
|
|
·
|
Non-financial
assets and liabilities initially measured at fair value in an acquisition
or business combination
|
|
·
|
Long-lived
assets measured at fair value due to an impairment assessment under SFAS
No. 144, Accounting for
the Impairment or Disposal of Long-Lived
Assets
|
|
·
|
Asset
retirement obligations initially measured under SFAS No. 143, Accounting for Asset
Retirement Obligations
|
Non-Vested
Restricted Stock
|
Fair
Value at Grant Date
|
|||||||
Outstanding
– December 31, 2007
|
61,756 | $ | 524 | |||||
Granted
|
10,309 | $ | 100 | |||||
Vested
|
(5,794 | ) | $ | (50 | ) | |||
Outstanding
– June 30, 2008
|
66,271 | $ | 574 |
2007
|
|
Stock
option exercise price
|
$
8.35 - $10.30
|
Risk-free
interest rate
|
4.636
- 4.824%
|
Expected
dividend yield
|
--
|
Expected
option life
|
9.60
- 9.96 yrs
|
Expected
volatility
|
33.64
- 33.74%
|
Weighted
average fair value
|
$4.42
- $ 4.82
|
Common Stock Options
Outstanding
|
Weighted Average Exercise
Price of Options
Outstanding
|
Common Stock Exercisable
Options
|
Weighted Average
Price of Exercisable
Options
|
|||||||||||||||||||||||||||||
Class
A
|
Class
B
|
Class
A
|
Class
B
|
Class
A
|
Class
B
|
Class
A
|
Class
B
|
|||||||||||||||||||||||||
Outstanding-
January 1, 2007
|
514,100 | 185,100 | $ | 5.21 | $ | 9.90 | 488,475 | 185,100 | $ | 5.06 | $ | 9.90 | ||||||||||||||||||||
Granted
|
151,250 | 150,000 | $ | 9.37 | $ | 10.24 | ||||||||||||||||||||||||||
Exercised
|
(6,250 | ) | -- | $ | 4.01 | $ | -- | |||||||||||||||||||||||||
Expired
|
(81,250 | ) | (150,000 | ) | $ | 10.25 | $ | 10.24 | ||||||||||||||||||||||||
Outstanding-
December 31, 2007
|
577,850 | 185,100 | $ | 5.60 | $ | 9.90 | 477,850 | 35,100 | $ | 4.72 | $ | 8.47 | ||||||||||||||||||||
No activity during the
period
|
-- | -- | $ | -- | $ | -- | ||||||||||||||||||||||||||
Outstanding-June
30, 2008
|
577,850 | 185,100 | $ | 5.60 | $ | 9.90 | 477,850 | 35,100 | $ | 4.72 | $ | 8.47 |
Three
months ended June 30, 2008
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
||||||||||||
Revenue
|
$ | 49,488 | $ | 5,813 | $ | (1,550 | ) | $ | 53,751 | |||||||
Operating
expense
|
43,330 | 2,296 | (1,550 | ) | 44,076 | |||||||||||
Depreciation
& amortization
|
4,060 | 1,287 | -- | 5,347 | ||||||||||||
General
& administrative expense
|
1,129 | 432 | -- | 1,561 | ||||||||||||
Segment
operating income
|
$ | 969 | $ | 1,798 | $ | -- | $ | 2,767 | ||||||||
Three
months ended June 30, 2007
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
||||||||||||
Revenue
|
$ | 26,034 | $ | 5,564 | $ | (1,459 | ) | $ | 30,139 | |||||||
Operating
expense
|
21,390 | 1,864 | (1,459 | ) | 21,795 | |||||||||||
Depreciation
& amortization
|
1,798 | 1,108 | -- | 2,906 | ||||||||||||
General
& administrative expense
|
761 | 271 | -- | 1,032 | ||||||||||||
Segment
operating income
|
$ | 2,085 | $ | 2,321 | $ | -- | $ | 4,406 |
Reconciliation
to consolidated net income:
|
2008
Quarter
|
2007
Quarter
|
||||||
Total
segment operating income
|
$ | 2,767 | $ | 4,406 | ||||
Non-segment:
|
||||||||
Depreciation and amortization
expense
|
181 | 141 | ||||||
General and administrative
expense
|
3,348 | 2,847 | ||||||
Operating
income (loss)
|
(762 | ) | 1,418 | |||||
Interest expense,
net
|
(3,039 | ) | (1,950 | ) | ||||
Other income
|
1,671 | 465 | ||||||
Minority
interest
|
182 | (154 | ) | |||||
Gain on sale of a discontinued
operation
|
-- | 1,912 | ||||||
Income tax
expense
|
(407 | ) | (443 | ) | ||||
Equity earnings of
unconsolidated joint ventures and entities
|
189 | 386 | ||||||
Gain on sale of unconsolidated
entity
|
2,450 | -- | ||||||
Net
income
|
$ | 284 | $ | 1,634 |
Six
months ended June 30, 2008
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
||||||||||||
Revenue
|
$ | 84,831 | $ | 11,763 | $ | (3,116 | ) | $ | 93,478 | |||||||
Operating
expense
|
72,301 | 4,410 | (3,116 | ) | 73,595 | |||||||||||
Depreciation
& amortization
|
6,669 | 2,382 | -- | 9,051 | ||||||||||||
General
& administrative expense
|
1,898 | 598 | -- | 2,496 | ||||||||||||
Segment
operating income
|
$ | 3,963 | $ | 4,373 | $ | -- | $ | 8,336 |
Six
months ended June 30, 2007
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
||||||||||||
Revenue
|
$ | 50,540 | $ | 10,405 | $ | (2,830 | ) | $ | 58,115 | |||||||
Operating
expense
|
40,881 | 3,865 | (2,830 | ) | 41,916 | |||||||||||
Depreciation
& amortization
|
3,592 | 2,146 | -- | 5,738 | ||||||||||||
General
& administrative expense
|
1,525 | 457 | -- | 1,982 | ||||||||||||
Segment
operating income
|
$ | 4,542 | $ | 3,937 | $ | -- | $ | 8,479 |
Reconciliation
to consolidated net income:
|
2008
Six Months
|
2007
Six Months
|
||||||
Total
segment operating income
|
$ | 8,336 | $ | 8,479 | ||||
Non-segment:
|
||||||||
Depreciation and amortization
expense
|
360 | 278 | ||||||
General and administrative
expense
|
7,101 | 5,573 | ||||||
Operating
income
|
875 | 2,628 | ||||||
Interest expense,
net
|
(5,876 | ) | (3,701 | ) | ||||
Other income
(expense)
|
3,045 | (456 | ) | |||||
Minority
interest
|
(161 | ) | (495 | ) | ||||
Gain on sale of a discontinued
operation
|
-- | 1,912 | ||||||
Income tax
expense
|
(824 | ) | (942 | ) | ||||
Equity earnings of
unconsolidated joint ventures and entities
|
547 | 2,042 | ||||||
Gain on sale of unconsolidated
entity
|
2,450 | -- | ||||||
Net
income
|
$ | 56 | $ | 988 |
US
Dollar
|
||||||||
June
30, 2008
|
December
31, 2007
|
|||||||
Australian
Dollar
|
$ | 0.9562 | $ | 0.8776 | ||||
New
Zealand Dollar
|
$ | 0.7609 | $ | 0.7678 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Income
(loss) from continuing operations
|
$ | 284 | $ | (278 | ) | $ | 56 | $ | (924 | ) | ||||||
Gain
on sale of a discontinued operation
|
-- | 1,912 | -- | 1,912 | ||||||||||||
Net
income
|
$ | 284 | $ | 1,634 | $ | 56 | $ | 988 | ||||||||
Earnings
(loss) per common share – basic and diluted:
|
||||||||||||||||
Earnings (loss) from continuing
operations
|
$ | 0.01 | $ | (0.01 | ) | $ | 0.00 | $ | (0.04 | ) | ||||||
Gain on sale of a discontinued
operation
|
0.00 | 0.08 | 0.00 | 0.08 | ||||||||||||
Basic
and diluted earnings per share
|
$ | 0.01 | $ | 0.07 | $ | 0.00 | $ | 0.04 | ||||||||
Weighted
average common stock – basic
|
22,476,355 | 22,487,943 | 22,476,355 | 22,485,480 | ||||||||||||
Weighted
average common stock – dilutive
|
22,763,826 | 22,487,943 | 22,763,826 | 22,485,480 |
Property
Under Development
|
June
30,
2008
|
December
31,
2007
|
||||||
Land
|
$ | 39,778 | $ | 36,994 | ||||
Construction-in-progress
(including capitalized interest)
|
37,947 | 29,793 | ||||||
Property
Under Development
|
$ | 77,725 | $ | 66,787 |
Property
and equipment
|
June
30,
2008
|
December
31,
2007
|
||||||
Land
|
$ | 60,261 | $ | 58,757 | ||||
Building
|
118,476 | 112,818 | ||||||
Leasehold
interest
|
46,324 | 12,430 | ||||||
Construction-in-progress
|
741 | 1,318 | ||||||
Fixtures
and equipment
|
81,895 | 64,648 | ||||||
307,697 | 249,971 | |||||||
Less:
accumulated depreciation
|
(84,262 | ) | (71,797 | ) | ||||
Property
and equipment, net
|
$ | 223,435 | $ | 178,174 |
Interest
|
June
30,
2008
|
December
31,
2007
|
||||||||||
Malulani
Investments Limited
|
18.4%
|
$ | 1,800 | $ | 1,800 | |||||||
Rialto
Distribution
|
33.3%
|
1,293 | 1,029 | |||||||||
Rialto
Cinemas
|
50.0%
|
5,653 | 5,717 | |||||||||
205-209
East 57th
Street Associates, LLC
|
25.0%
|
1,059 | 1,059 | |||||||||
Mt.
Gravatt Cinema
|
33.3%
|
5,418 | 5,159 | |||||||||
Berkeley
Cinemas – Botany
|
50.0%
|
- | 716 | |||||||||
Other
investments
|
146 | -- | ||||||||||
Total
investment
|
$ | 15,369 | $ | 15,480 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Malulani
Investments, Ltd.
|
$ | -- | $ | -- | $ | -- | $ | -- | ||||||||
Rialto
Distribution
|
115 | 63 | 172 | 88 | ||||||||||||
Rialto
Cinemas
|
(47 | ) | 3 | (14 | ) | (20 | ) | |||||||||
205-209
East 57th
Street Associates, LLC
|
-- | 39 | -- | 1,349 | ||||||||||||
Mt.
Gravatt Cinema
|
192 | 211 | 457 | 427 | ||||||||||||
Berkeley
Cinema – Botany
|
1 | 70 | 88 | 198 | ||||||||||||
Other
investments
|
(72 | ) | -- | (156 | ) | -- | ||||||||||
Total
equity earnings
|
$ | 189 | $ | 386 | $ | 547 | $ | 2,042 |
Cinema
|
Real
Estate
|
Total
|
||||||||||
Balance
as of December 31, 2007
|
$ | 13,827 | $ | 5,273 | $ | 19,100 | ||||||
Goodwill
acquired during 2008
|
6,307 | -- | 6,307 | |||||||||
Foreign
currency translation adjustment
|
297 | (7 | ) | 290 | ||||||||
Balance
at June 30, 2008
|
$ | 20,431 | $ | 5,266 | $ | 25,697 |
As
of June 30, 2008
|
Beneficial
Leases
|
Trade
name
|
Option
Fee
|
Other
Intangible Assets
|
Total
|
|||||||||||||||
Gross
carrying amount
|
$ | 22,316 | $ | 7,220 | $ | 2,773 | $ | 638 | $ | 32,947 | ||||||||||
Less:
Accumulated amortization
|
5,174 | 281 | 2,568 | 58 | 8,081 | |||||||||||||||
Total,
net
|
$ | 17,142 | $ | 6,939 | $ | 205 | $ | 580 | $ | 24,866 |
As
of December 31, 2007
|
Beneficial
Leases
|
Trade
name
|
Option
Fee
|
Other
Intangible Assets
|
Total
|
|||||||||||||||
Gross
carrying amount
|
$ | 12,295 | $ | -- | $ | 2,773 | $ | 238 | $ | 15,306 | ||||||||||
Less:
Accumulated amortization
|
4,311 | -- | 2,521 | 26 | 6,858 | |||||||||||||||
Total,
net
|
$ | 7,984 | $ | -- | $ | 252 | $ | 212 | $ | 8,448 |
June
30,
2008
|
December
31,
2007
|
|||||||
Prepaid
and other current assets
|
||||||||
Prepaid
expenses
|
$ | 673 | $ | 569 | ||||
Prepaid
taxes
|
521 | 602 | ||||||
Deposits
|
302 | 2,097 | ||||||
Other
|
734 | 532 | ||||||
Total prepaid and other current
assets
|
$ | 2,230 | $ | 3,800 | ||||
Other
non-current assets
|
||||||||
Other
non-cinema and non-rental real estate assets
|
$ | 1,254 | $ | 1,270 | ||||
Deferred
financing costs, net
|
5,352 | 2,805 | ||||||
Interest
rate swaps
|
1,342 | 526 | ||||||
Other
receivables
|
1,694 | 1,648 | ||||||
Pre-acquisition
costs
|
162 | 948 | ||||||
Other
|
690 | 787 | ||||||
Total non-current
assets
|
$ | 10,494 | $ | 7,984 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Foreign
income tax provision
|
$ | 46 | $ | 73 | $ | 115 | $ | 160 | ||||||||
Foreign
withholding tax
|
191 | 172 | 379 | 312 | ||||||||||||
Federal
tax provision
|
127 | 128 | 254 | 255 | ||||||||||||
Other
income tax
|
43 | 70 | 76 | 215 | ||||||||||||
Net
tax provision
|
$ | 407 | $ | 443 | $ | 824 | $ | 942 |
Interest Rates as of
|
Balance as of
|
|||||||||||||||||||
Name
of Note Payable or Security
|
June
30, 2008
|
December
31, 2007
|
Maturity
Date
|
June
30, 2008
|
December
31, 2007
|
|||||||||||||||
Australian
Corporate Credit Facility
|
8.48%
|
7.75%
|
June
30, 2011
|
$ | 96,098 | $ | 85,772 | |||||||||||||
Australian
Shopping Center Loans
|
--
|
--
|
2007-2013
|
1,066 | 1,066 | |||||||||||||||
New
Zealand Corporate Credit Facility
|
9.80%
|
10.10%
|
November
23, 2010
|
2,465 | 2,488 | |||||||||||||||
Trust
Preferred Securities
|
9.22%
|
9.22%
|
April
30, 2027
|
51,547 | 51,547 | |||||||||||||||
US
Euro-Hypo Loan
|
6.73%
|
6.73%
|
June
30, 2012
|
15,000 | 15,000 | |||||||||||||||
US
GE Capital Term Loan
|
6.90%
|
--
|
February
21, 2013
|
44,750 | -- | |||||||||||||||
US
Liberty Theatres Term Loan
|
6.20%
|
--
|
April
1, 2013
|
7,050 | -- | |||||||||||||||
US
Nationwide Loan
|
6.50%
– 7.50%
|
--
|
|
February
21, 2013
|
15,279 | -- | ||||||||||||||
US
Sutton Hill Capital Note 1 – Related Party
|
9.91%
|
9.91%
|
December
31, 2010
|
5,000 | 5,000 | |||||||||||||||
US
Sutton Hill Capital Note 2 – Related Party
|
8.25%
|
8.25%
|
December
31, 2010
|
9,000 | 9,000 | |||||||||||||||
US
Union Square Theatre Term Loan
|
6.26%
|
6.26%
|
January
1, 2010
|
7,222 | 7,322 | |||||||||||||||
Total
|
$ | 254,477 | $ | 177,195 |
June
30,
2008
|
December
31, 2007
|
|||||||
Current
liabilities
|
||||||||
Security deposit
payable
|
$ | 198 | $ | 168 | ||||
Other
|
2 | 1 | ||||||
Other current
liabilities
|
$ | 200 | $ | 169 | ||||
Other
liabilities
|
||||||||
Foreign withholding
taxes
|
$ | 5,614 | $ | 5,480 | ||||
Straight-line rent
liability
|
4,855 | 3,783 | ||||||
Environmental
reserve
|
1,656 | 1,656 | ||||||
Accrued pension
|
2,852 | 2,626 | ||||||
Other
|
1,402 | 1,391 | ||||||
Other
liabilities
|
$ | 16,379 | $ | 14,936 |
|
·
|
50%
of membership interest in Angelika Film Center LLC (“AFC LLC”) owned by a
subsidiary of National Auto Credit,
Inc.;
|
|
·
|
25%
minority interest in Australia Country Cinemas Pty Ltd (“ACC”) owned by
Panorama Cinemas for the 21st
Century Pty Ltd.;
|
|
·
|
33%
minority interest in the Elsternwick Joint Venture owned by Champion
Pictures Pty Ltd.;
|
|
·
|
Up
to 27.5% minority interest in certain property holding trusts established
by Landplan Property Partners to hold, manage and develop properties
identified by Doug Osborne;
|
|
·
|
25%
minority interest in the Sutton Hill Properties, LLC owned by Sutton Hill
Capital, LLC; and
|
|
·
|
20%
minority interest in Big 4 Farming LLC by Cecelia Packing
Corporation.
|
June
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
AFC
|
$ | 1,758 | $ | 2,256 | ||||
Australian
Country Cinemas
|
146 | 232 | ||||||
Elsternwick
Unincorporated Joint Venture
|
178 | 145 | ||||||
Landplan
Property Partners Property Trusts
|
331 | 237 | ||||||
Sutton
Hill Properties
|
(70 | ) | (36 | ) | ||||
Other
(Big 4 Farming)
|
1 | 1 | ||||||
Minority interest in consolidated
affiliates
|
$ | 2,344 | $ | 2,835 |
Expense
for the
|
Expense
for the
|
|||||||||||||||
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
AFC
LLC
|
$ | (118 | ) | $ | 61 | $ | 102 | $ | 329 | |||||||
Australian
Country Cinemas
|
21 | 26 | 58 | 52 | ||||||||||||
Elsternwick
Unincorporated Joint Venture
|
15 | (19 | ) | 19 | 18 | |||||||||||
Landplan
Property Partners Property Trusts
|
30 | 86 | 91 | 96 | ||||||||||||
Sutton
Hill Properties
|
(130 | ) | -- | (110 | ) | -- | ||||||||||
Other
(Big 4 Farming)
|
-- | -- | 1 | -- | ||||||||||||
Minority interest
|
$ | (182 | ) | $ | 154 | $ | 161 | $ | 495 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
income
|
$ | 284 | $ | 1,634 | $ | 56 | $ | 988 | ||||||||
Foreign
currency translation gain
|
1,258 | 8,582 | 6,768 | 12,417 | ||||||||||||
Accrued
pension
|
71 | 76 | 143 | (2,600 | ) | |||||||||||
Unrealized
gain on AFS securities
|
3 | 385 | 4 | 738 | ||||||||||||
Comprehensive
income
|
$ | 1,616 | $ | 10,677 | $ | 6,971 | $ | 11,543 |
Inventory
|
$ | 271 | ||
Prepaid
assets
|
543 | |||
Property
& Equipment:
|
||||
Leasehold
improvements
|
32,303 | |||
Machinery and
equipment
|
4,329 | |||
Furniture and
fixtures
|
2,701 | |||
Intangibles:
|
||||
Trade name
|
7,220 | |||
Non-compete
agreement
|
400 | |||
Below market
leases
|
9,999 | |||
Goodwill
|
6,306 | |||
Trade
payables
|
(123 | ) | ||
Total
Purchase Price
|
$ | 63,949 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenue
|
$ | 53,752 | $ | 49,901 | $ | 97,823 | $ | 96,359 | ||||||||
Operating
income (loss)
|
(761 | ) | 1,742 | (1,132 | ) | 878 | ||||||||||
Net
income (loss) from continuing operations
|
282 | (1,422 | ) | (2,790 | ) | (5,609 | ) | |||||||||
Basic
and diluted loss per share from continuing operations
|
0.01 | (0.06 | ) | (0.12 | ) | (0.25 | ) | |||||||||
Weighted
average number of shares outstanding – basic
|
22,476,355 | 22,487,943 | 22,476,355 | 22,485,480 | ||||||||||||
Weighted
average number of shares outstanding – dilutive
|
22,763,826 | 22,487,943 | 22,476,355 | 22,485,480 |
Type of Instrument
|
Notional Amount
|
Pay Fixed Rate
|
Receive Variable Rate
|
Maturity Date
|
|||||||||
Interest
rate swap
|
$ | 26,296,000 |
6.4400%
|
7.9133%
|
December
31, 2008
|
||||||||
Interest
rate swap
|
$ | 15,610,000 |
6.6800%
|
7.9133%
|
December
31, 2008
|
||||||||
Interest
rate swap
|
$ | 11,642,000 |
5.8800%
|
7.9133%
|
December
31, 2008
|
||||||||
Interest
rate swap
|
$ | 3,347,000 |
6.3600%
|
7.9133%
|
December
31, 2008
|
||||||||
Interest
rate swap
|
$ | 3,347,000 |
6.9600%
|
7.9133%
|
December
31, 2008
|
||||||||
Interest
rate swap
|
$ | 2,677,000 |
|
7.0000%
|
7.9133%
|
December
31, 2008
|
|||||||
Interest
rate swap
|
$ | 1,329,000 |
7.1900%
|
7.9133%
|
December
31, 2008
|
||||||||
Interest
rate swap
|
$ | 2,687,000 |
7.5900%
|
7.9133%
|
December
31, 2008
|
||||||||
Interest
rate swap
|
$ | 49,000,000 |
6.8540%
|
6.6975%
|
April
1, 2009
|
||||||||
Interest
rate swap
|
$ | 1,434,000 |
8.2500%
|
n/a
|
December
31, 2008
|
Book Value
|
Fair Value
|
|||||||||||
Financial
Instrument
|
Level
|
June
30, 2008
|
June
30, 2008
|
|||||||||
Investment
in marketable securities
|
1
|
$ | 4,939 | $ | 4,939 | |||||||
Interest
rate swaps asset
|
2
|
$ | 1,342 | $ | 1,342 |
|
·
|
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’s”) in Australia and New
Zealand and live theatre assets in Manhattan and Chicago in the United
States.
|
|
·
|
in
the US, under the Reading, Angelika Film Center,
Consolidated Theatres and City Cinemas
brands;
|
|
·
|
in
Australia, under the Reading brand;
and
|
|
·
|
in
New Zealand, under the Reading and Rialto
brands.
|
|
·
|
the
above mentioned acquisition on February 22, 2008 of 15 cinemas with 181
screens in Hawaii and California as part of the Consolidated Entertainment
acquisition;
|
|
·
|
the
acquisition in February 2007, of the long-term ground lease interest
underlying our Tower Theater in Sacramento, California (the principal art
cinema in Sacramento); and
|
|
·
|
the
increase in the value of the Australian dollar vis-à-vis the US dollar
from $0.8491, as of June 30, 2007, to $0.9562, as of June 30,
2008. The New Zealand dollar to US dollar relationship was
basically flat between these dates.
|
Three
months ended June 30, 2008
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
||||||||||||
Revenue
|
$ | 49,488 | $ | 5,813 | $ | (1,550 | ) | $ | 53,751 | |||||||
Operating
expense
|
43,330 | 2,296 | (1,550 | ) | 44,076 | |||||||||||
Depreciation
& amortization
|
4,060 | 1,287 | -- | 5,347 | ||||||||||||
General
& administrative expense
|
1,129 | 432 | -- | 1,561 | ||||||||||||
Segment
operating income
|
$ | 969 | $ | 1,798 | $ | -- | $ | 2,767 | ||||||||
Three
months ended June 30, 2007
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
||||||||||||
Revenue
|
$ | 26,034 | $ | 5,564 | $ | (1,459 | ) | $ | 30,139 | |||||||
Operating
expense
|
21,390 | 1,864 | (1,459 | ) | 21,795 | |||||||||||
Depreciation
& amortization
|
1,798 | 1,108 | -- | 2,906 | ||||||||||||
General
& administrative expense
|
761 | 271 | -- | 1,032 | ||||||||||||
Segment
operating income
|
$ | 2,085 | $ | 2,321 | $ | -- | $ | 4,406 |
Reconciliation
to consolidated net income:
|
2008
Quarter
|
2007
Quarter
|
||||||
Total
segment operating income
|
$ | 2,767 | $ | 4,406 | ||||
Non-segment:
|
||||||||
Depreciation and amortization
expense
|
181 | 141 | ||||||
General and administrative
expense
|
3,348 | 2,847 | ||||||
Operating
income (loss)
|
(762 | ) | 1,418 | |||||
Interest expense,
net
|
(3,039 | ) | (1,950 | ) | ||||
Other income
|
1,671 | 465 | ||||||
Minority
interest
|
182 | (154 | ) | |||||
Gain on sale of a discontinued
operation
|
-- | 1,912 | ||||||
Income tax
expense
|
(407 | ) | (443 | ) | ||||
Equity earnings of
unconsolidated joint ventures and entities
|
189 | 386 | ||||||
Gain on sale of unconsolidated
entity
|
2,450 | -- | ||||||
Net
income
|
$ | 284 | $ | 1,634 |
Six
months ended June 30, 2008
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
||||||||||||
Revenue
|
$ | 84,831 | $ | 11,763 | $ | (3,116 | ) | $ | 93,478 | |||||||
Operating
expense
|
72,301 | 4,410 | (3,116 | ) | 73,595 | |||||||||||
Depreciation
& amortization
|
6,669 | 2,382 | -- | 9,051 | ||||||||||||
General
& administrative expense
|
1,898 | 598 | -- | 2,496 | ||||||||||||
Segment
operating income
|
$ | 3,963 | $ | 4,373 | $ | -- | $ | 8,336 |
Six
months ended June 30, 2007
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
||||||||||||
Revenue
|
$ | 50,540 | $ | 10,405 | $ | (2,830 | ) | $ | 58,115 | |||||||
Operating
expense
|
40,881 | 3,865 | (2,830 | ) | 41,916 | |||||||||||
Depreciation
& amortization
|
3,592 | 2,146 | -- | 5,738 | ||||||||||||
General
& administrative expense
|
1,525 | 457 | -- | 1,982 | ||||||||||||
Segment
operating income
|
$ | 4,542 | $ | 3,937 | $ | -- | $ | 8,479 |
Reconciliation
to consolidated net income:
|
2008
Six Months
|
2007
Six Months
|
||||||
Total
segment operating income
|
$ | 8,336 | $ | 8,479 | ||||
Non-segment:
|
||||||||
Depreciation and amortization
expense
|
360 | 278 | ||||||
General and administrative
expense
|
7,101 | 5,573 | ||||||
Operating
income
|
875 | 2,628 | ||||||
Interest expense,
net
|
(5,876 | ) | (3,701 | ) | ||||
Other income
(expense)
|
3,045 | (456 | ) | |||||
Minority
interest
|
(161 | ) | (495 | ) | ||||
Gain on sale of a discontinued
operation
|
-- | 1,912 | ||||||
Income tax
expense
|
(824 | ) | (942 | ) | ||||
Equity earnings of
unconsolidated joint ventures and entities
|
547 | 2,042 | ||||||
Gain on sale of unconsolidated
entity
|
2,450 | -- | ||||||
Net
income
|
$ | 56 | $ | 988 |
Three
Months Ended June 30, 2008
|
United
States
|
Australia
|
New
Zealand
|
Total
|
||||||||||||
Admissions
revenue
|
$ | 18,862 | $ | 12,145 | $ | 3,627 | $ | 34,634 | ||||||||
Concessions
revenue
|
7,732 | 4,225 | 1,089 | 13,046 | ||||||||||||
Advertising
and other revenues
|
868 | 715 | 225 | 1,808 | ||||||||||||
Total
revenues
|
27,462 | 17,085 | 4,941 | 49,488 | ||||||||||||
Cinema
costs
|
22,882 | 13,609 | 3,976 | 40,467 | ||||||||||||
Concession
costs
|
1,598 | 975 | 290 | 2,863 | ||||||||||||
Total
operating expense
|
24,480 | 14,584 | 4,266 | 43,330 | ||||||||||||
Depreciation
and amortization
|
2,762 | 833 | 465 | 4,060 | ||||||||||||
General
& administrative expense
|
758 | 362 | 9 | 1,129 | ||||||||||||
Segment
operating income (loss)
|
$ | (538 | ) | $ | 1,306 | $ | 201 | $ | 969 |
Three
Months Ended June 30, 2007
|
United
States
|
Australia
|
New
Zealand
|
Total
|
||||||||||||
Admissions
revenue
|
$ | 3,911 | $ | 10,915 | $ | 4,113 | $ | 18,939 | ||||||||
Concessions
revenue
|
1,151 | 3,615 | 1,134 | 5,900 | ||||||||||||
Advertising
and other revenues
|
377 | 615 | 203 | 1,195 | ||||||||||||
Total
revenues
|
5,439 | 15,145 | 5,450 | 26,034 | ||||||||||||
Cinema
costs
|
4,178 | 11,567 | 4,278 | 20,023 | ||||||||||||
Concession
costs
|
242 | 835 | 290 | 1,367 | ||||||||||||
Total
operating expense
|
4,420 | 12,402 | 4,568 | 21,390 | ||||||||||||
Depreciation
and amortization
|
491 | 873 | 434 | 1,798 | ||||||||||||
General
& administrative expense
|
532 | 227 | 2 | 761 | ||||||||||||
Segment
operating income (loss)
|
$ | (4 | ) | $ | 1,643 | $ | 446 | $ | 2,085 |
|
·
|
Cinema
revenue increased for the 2008 Quarter by $23.5 million or 90.1% compared
to the same period in 2007. The 2008 Quarter increase was
primarily a result of $21.3 million of revenue from our newly acquired
Consolidated Entertainment cinemas and improved results from our Australia
operations including $1.2 million from admissions and $710,000 from
concessions and other revenues, offset by lower cinema revenues from our
New Zealand operations of $509,000.
|
|
·
|
Operating
expense increased for the 2008 Quarter by $21.9 million or 102.1% compared
to the same period in 2007. This increase followed the
aforementioned increase in revenues. Overall, our operating
expenses as a ratio to gross revenue increased from 82.2% to 87.6% for the
2007 and 2008 Quarters, respectively. This increase in cinema
costs was driven by the US and primarily related to higher film rent
expense associated with our newly acquired Consolidated Entertainment
cinemas whose film product is primarily wide release films resulting in
higher film rent cost compared to our predominately pre-acquisition art
cinemas, which generally have lower film rent
costs.
|
|
·
|
Depreciation
and amortization expense increased for the 2008 Quarter by $2.3 million or
125.8% compared to the same period in 2007 primarily related to our newly
acquired Consolidated Entertainment cinemas’
assets.
|
|
·
|
General
and administrative costs increased for the 2008 Quarter by $368,000 or
48.4% compared to the same period in 2007 primarily related to the
purchase and operations of our newly acquired Consolidated Entertainment
cinemas and legal matters associated with our cinema
assets.
|
|
·
|
The
Australia and New Zealand quarterly average exchange rates have increased
by 13.5% and 4.7%, respectively, since 2007, which had an impact on the
individual components of the income statement. However, the
overall effect of the foreign currency change on operating income was
minimal.
|
|
·
|
Because
of the above, cinema segment income decreased for the 2008 Quarter by $1.1
million compared to the same period in
2007.
|
Six
Months Ended June 30, 2008
|
United
States
|
Australia
|
New
Zealand
|
Total
|
||||||||||||
Admissions
revenue
|
$ | 28,244 | $ | 24,501 | $ | 7,605 | $ | 60,350 | ||||||||
Concessions
revenue
|
10,933 | 8,182 | 2,232 | 21,347 | ||||||||||||
Advertising
and other revenues
|
1,446 | 1,249 | 439 | 3,134 | ||||||||||||
Total
revenues
|
40,623 | 33,932 | 10,276 | 84,831 | ||||||||||||
Cinema
costs
|
33,295 | 26,214 | 8,149 | 67,658 | ||||||||||||
Concession
costs
|
2,242 | 1,829 | 572 | 4,643 | ||||||||||||
Total
operating expense
|
35,537 | 28,043 | 8,721 | 72,301 | ||||||||||||
Depreciation
and amortization
|
4,205 | 1,535 | 929 | 6,669 | ||||||||||||
General
& administrative expense
|
1,296 | 588 | 14 | 1,898 | ||||||||||||
Segment
operating income (loss)
|
$ | (415 | ) | $ | 3,766 | $ | 612 | $ | 3,963 | |||||||
Six
Months Ended June 30, 2007
|
United
States
|
Australia
|
New
Zealand
|
Total
|
||||||||||||
Admissions
revenue
|
$ | 9,102 | $ | 20,545 | $ | 7,397 | $ | 37,044 | ||||||||
Concessions
revenue
|
2,524 | 6,480 | 2,125 | 11,129 | ||||||||||||
Advertising
and other revenues
|
833 | 1,100 | 434 | 2,367 | ||||||||||||
Total
revenues
|
12,459 | 28,125 | 9,956 | 50,540 | ||||||||||||
Cinema
costs
|
8,904 | 21,737 | 7,729 | 38,370 | ||||||||||||
Concession
costs
|
500 | 1,464 | 547 | 2,511 | ||||||||||||
Total
operating expense
|
9,404 | 23,201 | 8,276 | 40,881 | ||||||||||||
Depreciation
and amortization
|
978 | 1,774 | 840 | 3,592 | ||||||||||||
General
& administrative expense
|
1,071 | 450 | 4 | 1,525 | ||||||||||||
Segment
operating income
|
$ | 1,006 | $ | 2,700 | $ | 836 | $ | 4,542 |
|
·
|
Cinema
revenue increased for the 2008 Six Months by $34.3 million or 67.8%
compared to the same period in 2007. The 2008 Six Months
increase was primarily a result of $27.8 million of revenue from our newly
acquired Consolidated Entertainment cinemas and improved results from our
Australia and New Zealand operations including $4.1 million from
admissions and $2.0 million from concessions and other
revenues.
|
|
·
|
Operating
expense increased for the 2008 Six Months by $31.4 million or 76.3%
compared to the same period in 2007. This increase followed the
aforementioned increase in revenues. Overall, our operating
expenses as a ratio to gross revenue increased from 80.9% to 85.2% for the
2007 and 2008 Six Months, respectively. The increase was
primarily driven by the same factor that drove the 2008 Quarter,
above.
|
|
·
|
Depreciation
and amortization expense increased for the 2008 Six Months by $3.1 million
or 85.7% compared to the same period in 2007 primarily related to our
newly acquired Consolidated Entertainment cinemas’ assets being added
during the 2008 Six Months.
|
|
·
|
General
and administrative costs increased for the 2008 Six Months by $373,000 or
24.5% compared to the same period in 2007 primarily related to our newly
acquired Consolidated Entertainment cinemas. The
increase was primarily driven by the same factor that drove the 2008
Quarter, above.
|
|
·
|
The
Australia and New Zealand quarterly average exchange rates have increased
by 14.3% and 9.0%, respectively, since 2007, which had an impact on the
individual components of the income statement. However, the
overall effect of the foreign currency change on operating income was
minimal.
|
|
·
|
Because
of the above, cinema segment income decreased for the 2008 Six Months by
$579,000 compared to the same period in
2007.
|
|
·
|
ETRC’s
at Belmont in Perth; at Auburn in Sydney; and at Courtenay Central in
Wellington, New Zealand; and our Newmarket shopping center in Brisbane,
Australia;
|
|
·
|
three
single auditorium live theatres in Manhattan (Minetta Lane, Orpheum, and
Union Square) and a four auditorium live theatre complex in Chicago (The
Royal George) and, in the case of the Union Square and the Royal George
their accompanying ancillary retail and commercial
tenants;
|
|
·
|
the
ancillary retail and commercial tenants at some of our non-ETRC cinema
locations; and
|
|
·
|
certain
raw land, used in our historic activities, which generates minimal
rent.
|
Three
Months Ended June 30, 2008
|
United
States
|
Australia
|
New
Zealand
|
Total
|
||||||||||||
Live
theatre rental and ancillary income
|
$ | 1,131 | $ | -- | $ | -- | $ | 1,131 | ||||||||
Property
rental income
|
411 | 2,517 | 1,754 | 4,682 | ||||||||||||
Total
revenues
|
1,542 | 2,517 | 1,754 | 5,813 | ||||||||||||
Live
theatre costs
|
540 | -- | -- | 540 | ||||||||||||
Property
rental cost
|
495 | 828 | 433 | 1,756 | ||||||||||||
Total
operating expense
|
1,035 | 828 | 433 | 2,296 | ||||||||||||
Depreciation
and amortization
|
91 | 651 | 545 | 1,287 | ||||||||||||
General
& administrative expense
|
2 | 392 | 38 | 432 | ||||||||||||
Segment
operating income
|
$ | 414 | $ | 646 | $ | 738 | $ | 1,798 | ||||||||
Three
Months Ended June 30, 2007
|
United
States
|
Australia
|
New
Zealand
|
Total
|
||||||||||||
Live
theatre rental and ancillary income
|
$ | 997 | $ | -- | $ | -- | $ | 997 | ||||||||
Property
rental income
|
370 | 2,445 | 1,752 | 4,567 | ||||||||||||
Total
revenues
|
1,367 | 2,445 | 1,752 | 5,564 | ||||||||||||
Live
theatre costs
|
526 | -- | -- | 526 | ||||||||||||
Property
rental cost
|
211 | 717 | 410 | 1,338 | ||||||||||||
Total
operating expense
|
737 | 717 | 410 | 1,864 | ||||||||||||
Depreciation
and amortization
|
95 | 590 | 423 | 1,108 | ||||||||||||
General
& administrative expense
|
2 | 164 | 105 | 271 | ||||||||||||
Segment
operating income
|
$ | 533 | $ | 974 | $ | 814 | $ | 2,321 |
|
·
|
Real
estate revenue increased for the 2008 Quarter by $249,000 or 4.5% compared
to the same period in 2007. The increase was primarily related
to rental revenues from our newly acquired Consolidated Entertainment
cinemas that have ancillary real estate and an increase in revenues from
our U.S. live theatres.
|
|
·
|
Operating
expense for the real estate segment increased for the 2008 Quarter by
$432,000 or 23.2% compared to the same period in 2007. This
increase in expense was primarily related to our newly acquired
Consolidated Entertainment cinemas that have ancillary real estate coupled
with increasing utility and other operating costs primarily in our US
properties.
|
|
·
|
Depreciation
expense for the real estate segment increased by $179,000 or 16.2% for the
2008 Six Months compared to the same period in
2007.
|
|
·
|
General
and administrative costs increased for the 2008 Quarter by $161,000 or
59.4% compared to the same period in 2007 primarily related to an increase
in administrative activities associated with our properties in
Australia.
|
|
·
|
The
Australia and New Zealand quarterly average exchange rates have increased
by 13.5% and 4.7%, respectively, since 2007, which had an impact on the
individual components of the income statement. However, the
overall effect of the foreign currency change on operating income was
minimal.
|
|
·
|
As
a result of the above, real estate segment income decreased for the 2008
Quarter by $523,000 compared to the same period in
2007.
|
Six
Months Ended June 30, 2008
|
United
States
|
Australia
|
New
Zealand
|
Total
|
||||||||||||
Live
theatre rental and ancillary income
|
$ | 2,054 | $ | -- | $ | -- | $ | 2,054 | ||||||||
Property
rental income
|
924 | 5,022 | 3,763 | 9,709 | ||||||||||||
Total
revenues
|
2,978 | 5,022 | 3,763 | 11,763 | ||||||||||||
Live
theatre costs
|
1,075 | -- | -- | 1,075 | ||||||||||||
Property
rental cost
|
723 | 1,694 | 918 | 3,335 | ||||||||||||
Total
operating expense
|
1,798 | 1,694 | 918 | 4,410 | ||||||||||||
Depreciation
and amortization
|
181 | 1,271 | 930 | 2,382 | ||||||||||||
General
& administrative expense
|
14 | 523 | 61 | 598 | ||||||||||||
Segment
operating income
|
$ | 985 | $ | 1,534 | $ | 1,854 | $ | 4,373 |
Six
Months Ended June 30, 2007
|
United
States
|
Australia
|
New
Zealand
|
Total
|
||||||||||||
Live
theatre rental and ancillary income
|
$ | 1,729 | $ | -- | $ | -- | $ | 1,729 | ||||||||
Property
rental income
|
907 | 4,483 | 3,286 | 8,676 | ||||||||||||
Total
revenues
|
2,636 | 4,483 | 3,286 | 10,405 | ||||||||||||
Live
theatre costs
|
1,010 | -- | -- | 1,010 | ||||||||||||
Property
rental cost
|
562 | 1,441 | 852 | 2,855 | ||||||||||||
Total
operating expense
|
1,572 | 1,441 | 852 | 3,865 | ||||||||||||
Depreciation
and amortization
|
191 | 1,147 | 808 | 2,146 | ||||||||||||
General
& administrative expense
|
14 | 309 | 134 | 457 | ||||||||||||
Segment
operating income
|
$ | 859 | $ | 1,586 | $ | 1,492 | $ | 3,937 |
|
·
|
Real
estate revenue increased for the 2008 Six Months by $1.4 million or 13.1%
compared to the same period in 2007. The increase was primarily
related to real estate associated with our newly acquired Consolidated
Entertainment cinemas, higher rental revenues from the majority of our
Australia tenancies, and our newly acquired properties in New
Zealand. Also, revenue from our domestic live theatre
operations was higher than the same period in
2007.
|
|
·
|
Operating
expense for the real estate segment increased for the 2008 Six Months by
$545,000 or 14.1% compared to the same period in 2007. This
increase in expense was primarily related to our newly acquired
Consolidated Entertainment cinemas that have ancillary real estate coupled
with increasing utility and other operating costs primarily in our US
properties.
|
|
·
|
Depreciation
expense for the real estate segment increased by $236,000 or 11.0% for the
2008 Six Months compared to the same period in
2007.
|
|
·
|
General
and administrative costs increased for the 2008 Six Months by $141,000 or
30.9% compared to the same period in 2007 primarily related to an increase
in administrative activities associated with our properties in
Australia.
|
|
·
|
The
Australia and New Zealand quarterly average exchange rates have increased
by 14.3% and 9.0%, respectively, since 2007, which had an impact on the
individual components of the income statement. However, the
overall effect of the foreign currency change on operating income
was
|
|
minimal.
|
|
·
|
As
a result of the above, real estate segment income increased for the 2008
Six Months by $436,000 compared to the same period in
2007.
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
|||||||||||||||||||
Long-term
debt
|
$ | 525 | $ | 1,267 | $ | 10,410 | $ | 97,151 | $ | 16,060 | $ | 63,517 | ||||||||||||
Notes
payable to related parties
|
-- | -- | 14,000 | -- | -- | -- | ||||||||||||||||||
Subordinated
notes
|
-- | -- | -- | -- | -- | 51,547 | ||||||||||||||||||
Pension
liability
|
3 | 10 | 15 | 20 | 25 | 2,370 | ||||||||||||||||||
Lease
obligations
|
12,349 | 24,949 | 24,559 | 24,115 | 22,674 | 96,808 | ||||||||||||||||||
Estimated
interest on long-term debt
|
9,584 | 19,043 | 14,390 | 13,094 | 8,271 | 50,700 | ||||||||||||||||||
Total
|
$ | 22,461 | $ | 45,269 | $ | 63,374 | $ | 134,380 | $ | 47,030 | $ | 264,942 |
|
·
|
working
capital requirements;
|
|
·
|
debt
servicing requirements; and
|
|
·
|
capital
expenditures, centered on obtaining the right financing for the
development of our Burwood
property.
|
|
·
|
increased
cinema operational cash flow primarily from our Australia and domestic
acquisition operations;
|
|
·
|
increased
real estate operational cash flow predominately from our Australia and New
Zealand operations; and
|
|
·
|
one
time cash receipts related to litigation and other claims of $2.4
million;
|
|
·
|
a
decrease in distributions from predominately our Place 57 joint venture of
$3.6 million.
|
|
·
|
$49.2
million to purchase the assets of the Consolidated Cinemas
circuit;
|
|
·
|
$2.5
million to purchase real estate assets associated with our Australia
properties investments with Landplan Property Parties Pty Ltd;
and
|
|
·
|
$12.1
million in property enhancements to our existing
properties;
|
|
·
|
$2.0
million of deposit returned upon acquisition of the Consolidated Cinema
circuit;
|
|
·
|
$910,000
of proceeds from insurance settlement;
and
|
|
·
|
$3.3
million of cash received from the sale of our interest in the Botany Downs
cinema in New Zealand.
|
|
·
|
$11.9
million to purchase marketable
securities;
|
|
·
|
$11.8
million to purchase real estate assets including $11.2 million for real
estate purchases made in New Zealand, $100,000 for the purchase of the
Cinemas 1, 2, & 3 building, and $493,000 for the purchase of the
ground lease of our Tower Cinema in Sacramento,
California;
|
|
·
|
$7.9
million in property enhancements to our properties;
and
|
|
·
|
$1.5
million in our investment in Reading International Trust I securities (the
issuer of our Trust Preferred
Securities);
|
|
·
|
$4.0
million in cash provided by the sale of marketable securities;
and
|
|
·
|
$1.4
million in distributions from our investment in Place
57.
|
|
·
|
$48.0
million of net proceeds from our new GE Capital loan used to finance the
purchase of Consolidated Cinemas;
|
|
·
|
$6.6
million of net proceeds from our new Liberty Theatres loan;
and
|
|
·
|
$2.6
million of borrowing on our Australia credit
facility;
|
|
·
|
$5.4
million of loan repayments including $5.3 million to paydown on our GE
Capital loan; and
|
|
·
|
$761,000
in distributions to minority
interests.
|
|
·
|
$49.9
million of net proceeds from our new Trust Preferred
Securities;
|
|
·
|
$14.4
million of net proceeds from our new Euro-Hypo
loan;
|
|
·
|
$3.1
million of proceeds from our margin account on marketable securities;
and
|
|
·
|
$8.6
million of borrowing on our Australia and New Zealand credit
facilities;
|
|
offset
by
|
|
·
|
$43.5
million of cash used to retire bank indebtedness including $34.4 million
(NZ$50.0 million) to pay off our New Zealand term debt, $5.8 million
(AUS$7.4 million) to retire a portion of our bank indebtedness in
Australia, and $3.1 million to pay off our margin account on marketable
securities; and
|
|
·
|
$838,000
in distributions to minority
interests.
|
|
·
|
impairment
of long-lived assets, including goodwill and intangible
assets;
|
|
·
|
tax
valuation allowance and obligations;
and
|
|
·
|
legal
and environmental obligations.
|
|
·
|
contractual
obligations;
|
|
·
|
insurance
claims;
|
|
·
|
IRS
claims;
|
|
·
|
employment
matters;
|
|
·
|
environmental
matters; and
|
|
·
|
anti-trust
issues.
|
|
·
|
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;
|
|
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;” and
|
|
o
|
The
extent to and the efficiency with which, we are able to integrate
acquisitions of cinema circuits with our existing
operations.
|
|
·
|
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;
|
|
o
|
Environmental
remediation issues; 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;
and
|
|
·
|
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;
|
|
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.
|
|
·
|
It
is based on a single point in time.
|
|
·
|
It
does not include the effects of other complex market reactions that would
arise from the changes modeled.
|
10.76*
|
Employment
Agreement dated June 5, 2008 between Reading International, Inc. and Jay
Laifman, filed herewith
|
31.1
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
31.2
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
32
|
Certifications
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
Date:
|
August
6, 2008
|
By:
|
/s/ James J. Cotter
|
James
J. Cotter
|
|||
Chief
Executive Officer
|
|||
Date:
|
August
6, 2008
|
By:
|
/s/ Andrzej Matyczynski
|
Andrzej
Matyczynski
|
|||
Chief
Financial Officer
|
|
Salary:
|
$265,000.00
per annum
|
|
Stock
Grant:
|
$100,000,
at the stock price on the day of acceptance, vesting 50% on the one year
anniversary of acceptance, 50% on the second
year
|
|
Travel
Allowance:
|
$18,000
per year reimbursement
|
|
Change
in Control:
|
If
company is sold and Jay does not continue with the company after the sale,
at his option or the company’s, he will be paid one year’s salary as
severance
|
|
Start
Date:
|
To
be determined upon acceptance of
offer
|
|
Benefits:
|
Health
and others as provided
|
|
1)
|
I
have reviewed this quarterly report on Form 10-Q of Reading International
Inc.;
|
|
2)
|
Based
on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|
|
3)
|
Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly
report;
|
|
4)
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and we
have:
|
|
a)
|
designed
such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
|
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with general accepted accounting
principles;
|
|
c)
|
evaluated
the effectiveness of the registrant's disclosure controls and procedures
as of the end of the period covered by this report based on such
evaluation; and
|
|
d)
|
presented
in this quarterly report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
|
|
5)
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
|
|
a)
|
all
significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
|
|
6)
|
The registrant's other certifying
officer and I have indicated in this quarterly report whether or not there
were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material
weaknesses.
|
By:
|
/s/ James
J. Cotter
|
James
J. Cotter
|
|
Chief
Executive Officer
|
|
August
6, 2008
|
|
1)
|
I
have reviewed this quarterly report on Form 10-Q of Reading International
Inc.;
|
|
2)
|
Based
on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|
|
3)
|
Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly
report;
|
|
4)
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and we
have:
|
|
a)
|
designed
such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
|
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with general accepted accounting
principles;
|
|
c)
|
evaluated
the effectiveness of the registrant's disclosure controls and procedures
as of the end of the period covered by this report based on such
evaluation; and
|
|
d)
|
presented
in this quarterly report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
|
|
5)
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
|
|
a)
|
all
significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
|
|
6)
|
The
registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|
By:
|
/s/ Andrzej
Matyczynski
|
Andrzej
Matyczynski
|
|
Chief
Financial Officer
|
|
August
6, 2008
|
|
·
|
The
Quarterly Report of the Company on Form 10-Q for the period ended June 30,
2007 as filed with the Securities and Exchange Commission fully complies
with the requirements of Section 13(a) and 15(d), as applicable, of the
Securities Exchange Act of 1934;
and
|
|
·
|
The
information contained in such report fairly presents, in all material
respects, the financial condition and results of operation of the
Company.
|