The following table sets forth the terms of our interest rate swap derivative instruments at March 31, 2010:

Type of Instrument		Notional Amount				Pay Fixed Rate			Receive Variable Rate		Maturity Date
Interest rate swap		$	34,000,000			2.854%			0.290%		April 1, 2011
Interest rate swap		$	44,222,000			4.550%			4.328%		December 31, 2011
Interest rate cap		$	23,812,000			4.550%			4.328%		December 31, 2011

In accordance with FASB ASC 815-10-35, Subsequent Valuation of Derivative Instruments and Hedging Instruments (“FASB ASC 815-10-35”), we marked our interest rate swap instruments to market on the consolidated balance sheet resulting in a decrease in interest expense of $211,000 and an increase in interest expense of $243,000 during the three months ended March 31, 2010 and 2009, respectively.  At March 31, 2010, we recorded the fair market value of an interest rate swap and a cap of $918,000 as other long-term assets and an interest rate swap of $714,000 as an other long-term liability.  At December 31, 2009, we recorded the fair market value of an interest rate swap and a cap of $766,000 as other long-term assets and an interest rate swap of $785 ,000 as an other long-term liability.  In accordance with FASB ASC 815-10-35, we have not designated any of our current interest rate swap positions as financial reporting hedges.

 

 

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Note 18 – Fair Value of Financial Instruments

We measure the following items at fair value on a recurring basis subject to the disclosure requirements of FASB ASC 820-20, Fair Value of Financial Instruments (dollars in thousands):

					Book Value								Fair Value
Financial Instrument		Level			March 31, 2010				December 31, 2009				March 31, 2010				December 31, 2009
Investment in marketable securities		1			$	3,393			$	3,120			$	3,393			$	3,120
Interest rate swap & cap assets		2			$	918			$	766			$	918			$	766
Interest rate swap liability		2			$	714			$	785			$	714			$	785

 

ASC 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

 

·	Level 1: Quoted market prices in active markets for identical assets or liabilities.

 

·	Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

 

·	Level 3: Unobservable inputs that are not corroborated by market data (were not used to value any of our assets).

We used the following methods and assumptions to estimate the fair values of the assets and liabilities:

Level 1 Fair Value Measurements – are based on market quotes of our marketable securities.

Level 2 Fair Value Measurements –

Interest Rate Swaps – The fair value of interest rate swaps are estimated using internal discounted cash flow calculations based upon forward interest rate curves, which are corroborated by market data, and quotes obtained from counterparties to the agreements.

Level 3 Fair Value Measurements – we do not have any assets or liabilities that fall into this category.

As of March 31, 2010, we held certain items that are required to be measured at fair value on a recurring basis.  These included cash equivalents, available for sale securities, and interest rate derivative contracts.  Cash equivalents consist of short-term, highly liquid, income-producing investments, all of which have maturities of 90 days or less.  Derivative instruments are related to our economic hedge of interest rates.  Our available-for-sale securities primarily consist of investments associated with the ownership of marketable securities in Australia.

The fair values of the interest rate swap agreements are determined using the market standard methodology of discounting the future cash payments and cash receipts on the pay and receive legs of the interest swap agreements that have the net effect of swapping the estimated variable rate note payment stream for a fixed rate payment stream over the period of the swap.  The variable interest rates used in the calculation of projected receipts on the interest rate swap and cap agreements are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.  To comply with the provisions of ASC 820-10, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respectiv e counterparty's nonperformance risk in the fair value measurements.  Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties.  However, as of March 31, 2010, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation and determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.  As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.  The nature of our interest rate swap derivative instruments is described in Note 17 – Derivative Instruments.

We have consistently applied these valuation techniques in all periods presented and believe we have obtained the most accurate information available for the types of derivative contracts we hold.  Additionally, There were no transfers of assets and liabilities between levels 1, 2, or 3 during the three months ended March 31, 2010

 

Financial Instruments Disclosed at Fair Value

The following table sets forth the carrying value and the fair value of our financial assets and liabilities at March 31, 2010 and December 31, 2009 (dollars in thousands):

		Book Value								Fair Value
Financial Instrument		March 31, 2010				December 31, 2009				March 31, 2010				December 31, 2009
Notes payable		$	185,029			$	185,080			$	164,172			$	172,946
Notes payable to related party		$	14,000			$	14,000			$	N/A			$	N/A
Subordinated debt (trust preferred securities)		$	27,913			$	27,913			$	19,847			$	20,416

The fair value of notes payable to related party cannot be determined due to the related party nature of the terms of the notes payable.

We estimated the fair value of our secured mortgage notes payable, our unsecured notes payable, trust preferred securities, and other debt instruments by performing discounted cash flow analyses using an appropriate market discount rate.  We calculated the market discount rate by obtaining period-end treasury rates for fixed-rate debt, or LIBOR rates 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 standing, the maturity of the debt, whether the debt is secured or unsecured, and the loan-to-value ratios of the debt.

 

 

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Note 19 - Acquisitions

Manukau Land Purchase

On April 30, 2009, we entered into an agreement to purchase for $3.6 million (NZ$5.2 million) a property adjacent to our Manukau property.  An initial deposit of $26,000 (NZ$50,000) was paid upon signing of the agreement, a second deposit of $175,000 (NZ$258,000) was paid in the second quarter of 2009 and a third deposit of $531,000 (NZ$773,000) was paid in August 2009.  The fourth and final purchase payment of $2.9 million (NZ$4.1 million) was made on March 31, 2010 completing our acquisition of this land parcel.

Note 20 – Subsequent Events

Union Square Loan

On April 30, 2010, we refinanced the loan secured by our Union Square property with another lender.  The new loan in the amount of $7.5 million has a five-year term with a fixed interest rate of 5.92% per annum and an amortization payment schedule of 20 years and a balloon payment of approximately $6.4 million at the end of the five years.

Mackie Litigation

On April 16, 2010, a decision in favor of Mackie was rendered, finding us responsible to pay fees to Mackie in the amount of $917,000 (AUS$1.0 million) plus interest.  We currently estimate interest to be approximately $484,000 (AUS$528,000).  It is also possible that the court will order us to pay a proportion of Mackie Group's costs of the proceeding.  We are currently considering whether to appeal that decision.  We have accrued $1.4 million (AUS$1.5 million) associated with this judgment against us.  See Note 13 – Commitments and Contingencies.

Blythe Township

In 1996, we sold our interest in a certain coal property located in Blythe Township Pennsylvania for $525,000, plus certain royalty rights tied to the amount of coal realized from mining operations on the property.  Our interest in that coal property was subject to certain adverse claims, which resulted in litigation to which we were not a party and our sale arrangement provided that the purchase price was subject to repayment (in whole or in part) depending upon the resolution of that litigation.  Accordingly, we have through the end of the March quarter reserved 100% of that purchase price.  That litigation has now been resolved, and as a result, we will be taking the $525,000 portion of the purchase price into income in our June quarter.  Since the c oal is located under an existing municipal reservoir, we have to date assigned no value to the royalty interest.

 

 

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are an internationally diversified company principally focused on the development, ownership, and operation of entertainment and real property assets in the United States, Australia, and New Zealand.  Currently, we operate in two business segments:

 

·	cinema exhibition, through our 59 multiplex cinemas, and

 

·	real estate, including real estate development and the rental of retail, commercial and live theater assets.

 

We believe that these two business segments can complement one another, as we can use the comparatively consistent cash flows generated by our cinema operations to fund the front-end cash demands of our real estate development business.

We manage our worldwide cinema exhibition businesses under various different brands:

 

·	in the US, under the Reading, Angelika Film Center, Consolidated Amusements, and City Cinemas brands;

 

·	in Australia, under the Reading brand; and

 

·	in New Zealand, under the Reading and Rialto brands.

We believe cinema exhibition to be a business that will likely continue to generate consistent cash flows in the years ahead.  We base this on our belief that people will continue to spend some reasonable portion of their entertainment dollar on entertainment outside of the home and that, when compared to other forms of outside the home entertainment, movies continue to be a popular and competitively priced option.  During the third quarter of 2009, we leased two existing cinemas in New York City with 3 screens but elected not to renew the lease of our 5-screen cinema in Market City, Australia.  We anticipate that our cinema operations will continue as our main source of cash flow and will support our real estate oriented activities.

In short, while we do have operating company attributes, we see ourselves principally as a hard asset company and intend to add to shareholder value by building the value of our portfolio of tangible assets.

In addition, we may from time to time identify opportunities to expand our existing businesses and asset base, or to otherwise profit, through the acquisition of interests in other publicly traded companies, both in the United States and in the overseas jurisdictions in which we do business.  We may also take positions in private companies in addition to our investments in various private cinema joint ventures.

At March 31, 2010, we owned and operated 53 cinemas with 425 screens, had interests in certain unconsolidated joint ventures and entities that own an additional 4 cinemas with 32 screens and managed 2 cinemas with 9 screens.  We anticipate opening the following two newly leased cinemas:

·	one in Newcastle NSW, Australia with 8 screens which we anticipate will open in October 2010; and

·	the Angelika branded cinema in Merrifield, Virginia with 8 screens which we anticipate will open in late 2011.

On July 24, 2009, we signed a lease with the City of Brisbane, Australia to lease our Indooroopilly building to them for an initial three-year period with two three-year options.  Although we have curtailed our development activities, we remain opportunistic in our acquisitions of cinema and real estate assets.  Our business plan going forward is to continue the build-out of our existing development properties and to seek out additional, profitable real estate development opportunities while continuing to use and judiciously expand our presence in the cinema exhibition by identifying, developing, and acquiring cinema properties when and where appropriate.  In addition, we will continue to investigate potential synergistic acquisitions that may not readily fa ll into either of our two currently identified segments.

 

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We continue to acquire, to dispose of, or to reposition assets in accordance with our business plan.  For a description of our acquisitions so far in 2010, see Note 19 – Acquisitions to our March 31, 2010 Condensed Consolidated Financial Statements.

Results of Operations

At March 31, 2010, we owned and operated 53 cinemas with 425 screens, had interests in certain unconsolidated joint ventures and entities that own an additional 4 cinemas with 32 screens and managed 2 cinemas with 9 screens.  In real estate during the period, we (i) owned and operated four ETRC’s that we developed in Australia and New Zealand, (ii) owned the fee interests in four developed commercial properties in Manhattan and Chicago improved with live theaters comprising seven stages and ancillary retail and commercial space, (iii) owned the fee interests underlying one of our Manhattan cinemas, and (iv) held for development an additional seven parcels aggregating approximately 129 acres located principally in urbanized areas of Australia and New Zealand.  Tw o of these parcels held for development, Burwood and Moonee Ponds, comprise approximately 54 acres, and are in areas designated by the provincial government of Victoria, Australia as either a “major” or “principal activity centre.”

Operating expense includes costs associated with the day-to-day operations of the cinemas and the management of rental properties, including our live theater assets.  Our year-to-year results of operation were principally impacted by the following:

 

·	strong revenue growth from our cinema exhibition segment driven primarily by the availability of good 3D content and our ability to show these films on our newly implemented 3D projectors;

 

·	the fluctuation in the value of the Australian and New Zealand dollars vis-à-vis the US dollar resulting in an increase in results of operations for our foreign operations for 2010 compared to 2009.

 

During the three months ended March 31, 2010, we changed our reporting for intercompany property rent where our cinema operations were substantially the only tenant of such property eliminating the intersegment revenue and expense relating to the intercompany rent, and transferred the third party lease costs from the real estate segment to the cinema segment.  This change in management’s structure of its reportable segments commenced on January 1, 2010, such changes to segment reporting are reflected in the segment results for the three months ended March 31, 2010 and 2009, respectively.  The retroactive presentation for the three months ended March 31, 2009 segment results decreased intersegment revenue and expense for the intercompany rent by $1.1 million and transferred the third party lease costs from the real estate segment to the cinema segment.  The overall results of these changes decreased real estate segment revenues and expense by $1.1 million.  This change results in a reduction of real estate operating expense and an increase of cinema operating expense of $1.1 million on our Condensed Consolidated Statements of Operations for the three months ended March 31, 2009.

 

The tables below summarize the results of operations for each of our principal business segments for the three months ended March 31, 2010 (“2010 Quarter”) and the three months ended March 31, 2009 (“2009 Quarter”) (dollars in thousands):

Three months ended March 31, 2010		Cinema Exhibition				Real Estate				Intersegment Eliminations				Total
Revenue		$	53,846			$	5,700			$	(1,396	)		$	58,150
Operating expense			44,691				2,267				(1,396	)			45,562
Depreciation & amortization			2,553				1,153				--				3,706
General & administrative expense			593				225				--				818
Segment operating income		$	6,009			$	2,055			$	--			$	8,064

 

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Three months ended March 31, 2009		Cinema Exhibition				Real Estate				Intersegment Eliminations				Total
Revenue		$	43,437			$	4,986			$	(1,344	)		$	47,079
Operating expense			36,450				1,808				(1,344	)			36,914
Depreciation & amortization			2,909				681				--				3,590
General & administrative expense			802				180				--				982
Segment operating income		$	3,276			$	2,317			$	--			$	5,593

Reconciliation to net income attributable to Reading International, Inc. shareholders:		2010 Quarter				2009 Quarter
Total segment operating income		$	8,064			$	5,593
Non-segment:
Depreciation and amortization expense			198				254
General and administrative expense			3,388				3,453
Operating income			4,478				1,886
Interest expense, net			(3,097	)			(4,390	)
Other loss			(582	)			(795	)
Income tax expense			(582	)			(351	)
Equity earnings of unconsolidated joint ventures and entities			351				495
Net income (loss)			568				(3,155	)
Net income attributable to the noncontrolling interest			(215	)			(238	)
Net income (loss) attributable to Reading International, Inc. common shareholders		$	353			$	(3,393	)

Cinema Exhibition Segment

Included in the cinema exhibition segment above is revenue and expense from the operations of 53 cinema complexes with 425 screens during the 2010 Quarter and 52 cinema complexes with 427 screens during the 2009 Quarter and management fee income from 2 cinemas with 9 screens in both years.  The following tables detail our cinema exhibition segment operating results for the three months ended March 31, 2010 and 2009, respectively (dollars in thousands):

Three Months Ended March 31, 2010		United States				Australia				New Zealand				Total
Admissions revenue		$	18,179			$	16,324			$	4,508			$	39,011
Concessions revenue			6,673				4,689				1,039				12,401
Advertising and other revenues			1,148				1,058				228				2,434
Total revenues			26,000				22,071				5,775				53,846
Cinema costs			21,995				16,065				4,340				42,400
Concession costs			1,007				1,040				244				2,291
Total operating expense			23,002				17,105				4,584				44,691
Depreciation and amortization			1,587				707				259				2,553
General & administrative expense			446				147				--				593
Segment operating income		$	965			$	4,112			$	932			$	6,009

 

 

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Three Months Ended March 31, 2009		United States				Australia				New Zealand				Total
Admissions revenue		$	17,855			$	10,398			$	2,514			$	30,767
Concessions revenue			6,949				3,345				686				10,980
Advertising and other revenues			1,051				477				162				1,690
Total revenues			25,855				14,220				3,362				43,437
Cinema costs			20,922				10,916				2,623				34,461
Concession costs			1,090				728				171				1,989
Total operating expense			22,012				11,644				2,794				36,450
Depreciation and amortization			2,074				541				294				2,909
General & administrative expense			638				164				--				802
Segment operating income		$	1,131			$	1,871			$	274			$	3,276

 

·

Cinema revenue increased for the 2010 Quarter by $10.4 million or 24.0% compared to the same period in 2009.  The 2010 Quarter increase was primarily from our Australia and New Zealand cinema operations, which accounted for $10.3 million of the increase related in part to higher admissions for the 2010 Quarter by comparison to 2009 coupled with an increase in the average ticket price primarily associated with the recently released 3D movies.  Additionally, we recorded higher revenues for both our Australia and New Zealand cinema operations in 2010 compared to 2009 due to a year over year increase in the value of the Australia and New Zealand dollars compared to the U.S. dollar.  This increase translated to higher Australian and New Zealand revenues for the 2010 Quarter compared to the 2009 Quarter (see below).   Also, we made certain internal reporting changes to our intersegment revenue recognition between our cinema and real estate segments which resulted in an increase in other cinema revenues of $116,000 in the U.S.  Our U.S. cinemas did not experience the same uplift in revenues as noted from our Australia and New Zealand cinemas due to increased competition at one of our cinemas and decreased revenues from our art cinemas.

 

·

Operating expense increased for the 2010 Quarter by $8.2 million or 22.6% compared to the same period in 2009.  This increase followed the increased revenues noted above.  Also, as mentioned above, we made certain internal reporting changes to our intersegment cost recognition between our cinema and real estate segments that resulted in an increase in our cinema expenses of $67,000 in the U.S.  Overall, our operating expense as a percent of gross revenue decreased from 84% to 83% from the 2009 Quarter to the 2010 Quarter.

 

·	Depreciation and amortization expense decreased for the 2010 Quarter by $356,000 or 12.2% compared to the same period in 2009 primarily related to the short useful lives of the used assets associated with our Consolidated Entertainment cinemas purchased February 1998.

 

·	General and administrative costs decreased for the 2010 Quarter by $209,000 or 26.1% compared to the same period in 2009 primarily related to cost cutting measures throughout the segment.

 

·	For our statement of operations, Australia and New Zealand quarterly average exchange rates have increased by 36.1% and 32.9%, respectively, since the 2009 Quarter, which had an impact on the individual components of our income statement.

 

·	Because of the above, cinema segment income increased for the 2010 Quarter by $2.7 million compared to the same period in 2009.

 

 

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Real Estate Segment

The following tables detail our real estate segment operating results for the three months ended March 31, 2010 and 2009, respectively (dollars in thousands):

Three Months Ended March 31, 2010		United States				Australia				New Zealand				Total
Live theater rental and ancillary income		$	510			$	--			$	--			$	510
Property rental income			437				3,111				1,642				5,190
Total revenues			947				3,111				1,642				5,700
Live theater costs			458				--				--				458
Property rental cost			153				1,216				440				1,809
Total operating expense			611				1,216				440				2,267
Depreciation and amortization			80				690				383				1,153
General & administrative expense			--				226				(1	)			225
Segment operating income		$	256			$	979			$	820			$	2,055

 

Three Months Ended March 31, 2009		United States				Australia				New Zealand				Total
Live theater rental and ancillary income		$	911			$	--			$	--			$	911
Property rental income			403				2,288				1,384				4,075
Total revenues			1,314				2,288				1,384				4,986
Live theater costs			455				--				--				455
Property rental cost			232				806				315				1,353
Total operating expense			687				806				315				1,808
Depreciation and amortization			83				303				295				681
General & administrative expense			11				153				16				180
Segment operating income		$	533			$	1,026			$	758			$	2,317

·

Real estate revenue increased for the 2010 Quarter by $714,000 or 14.3% compared to the same period in 2009.  Real estate revenue increased from our Australia properties and stayed steady from our New Zealand properties, primarily due to a year over year increase in the value of the Australia and New Zealand dollars compared to the U.S. dollar.  This increase translated to higher Australian and New Zealand revenues for the 2010 Quarter compared to the 2009 Quarter (see below).  These increases in revenue were somewhat offset by a $401,000 decrease in live theater revenue due to a reduction in the number of Off-Broadway productions in the U.S.

 

·	Operating expense for the real estate segment increased for the 2010 Quarter by $459,000 or 25.4% compared to the same period in 2009.  This increase followed the increased revenues noted above.

 

·	Depreciation expense for the real estate segment increased by $472,000 or 69.3% for the 2010 Quarter compared to the same period in 2009 primarily due to the impact of currency exchange rates (see below).

 

 

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·	General and administrative costs increased for the 2010 Quarter by $45,000 or 25% compared to the same period in 2009 primarily due to the impact of currency exchange rate increases (see below).

 

·	For our statement of operations, Australia and New Zealand quarterly average exchange rates have decreased by 36.1% and 32.9%, respectively, since the 2009 Quarter, which had an impact on the individual components of our income statement.

 

·	As a result of the above, real estate segment income decreased for the 2010 Quarter by $262,000 compared to the same period in 2009.

Corporate

General and administrative expense includes expenses that are not directly attributable to other operating segments.  General and administrative expense decreased by $65,000 in the 2010 Quarter compared to the 2009 Quarter related to decreases in payroll expense and audit fees offset by an increase in legal fees primarily associated with our current tax litigation despite currency changes that increased the Australia and New Zealand reported expense.

Net interest expense decreased by $1.3 million for the 2010 Quarter compared to the 2009 Quarter.  The decrease in interest expense during the 2010 Quarter was primarily related to changes to our interest rate swaps combined with a lower debt balance and somewhat lower interest rates for the 2010 Quarter compared to the same period last year.

For the 2010 Quarter, we recorded an other loss of $582,000 compared to an other loss of $795,000 for the 2009 Quarter.  The 2010 Quarter other loss was primarily related to a $600,000 litigation loss associated with our Mackie litigation and 2009 Quarter other loss was primarily related to an other-than-temporary loss in marketable securities of $746,000.

For the 2010 Quarter, we recorded a decrease in our equity earnings of unconsolidated joint ventures and entities of $144,000 primarily related to the last condominium being sold associated with our Place 57 investment during the 2009 Quarter.  This decrease was somewhat offset by an increase in equity earnings from our Mt. Gravatt investment.

Net Income (Loss) Attributable to Reading International, Inc. Common Shareholders

During 2010, we recorded net income attributable to Reading International, Inc. common shareholders of $353,000 for the 2010 Quarter compared to a net loss attributable to Reading International, Inc. common shareholders of $3.4 million for the 2009 Quarter, respectively.

Acquisition

Manukau Land Purchase

On April 30, 2009, we entered into an agreement to purchase for $3.6 million (NZ$5.2 million) a property adjacent to our Manukau property.  An initial deposit of $26,000 (NZ$50,000) was paid upon signing of the agreement, a second deposit of $175,000 (NZ$258,000) was paid in the second quarter of 2009 and a third deposit of $531,000 (NZ$773,000) was paid in August 2009.  The fourth and final purchase payment of $2.9 million (NZ$4.1 million) was made on March 31, 2010.

 

 

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Business Plan, Capital Resources, and Liquidity

Business Plan

Our cinema exhibition business plan is to continue to identify, develop, and acquire cinema properties, where reasonably available, that allow us to leverage our cinema expertise and technology over a larger operating base.  Our real estate business plan is to continue development of our existing land assets to be sensitive to opportunities to convert our entertainment assets to higher and better uses, or, when appropriate, dispose of such assets.  Because we believe that current economic conditions are not conducive to obtaining the pre-construction leasing commitments necessary to justify commencement of construction, we currently focus our development efforts on improving and enhancing land entitlements and negotiating with end users for build to suit projects.  We will also continue to investigate pot ential synergistic acquisitions that may not readily fall into either of our two currently identified segments.

Contractual Obligations

 

The following table provides information with respect to the maturities and scheduled principal repayments of our secured debt and lease obligations at March 31, 2010 (in thousands):

 

		2010				2011				2012				2013				2014				Thereafter				Total
Debt		$	1,047			$	96,887			$	29,855			$	51,294			$	394			$	5,552			$	185,029
Notes payable to related parties			14,000				--				--				--				--				--				14,000
Subordinated notes (trust preferred securities)			--				--				--				--				--				27,913				27,913
Pension liability			5				15				23				32				40				3,309				3,424
Lease obligations			19,871				26,004				24,459				22,133				19,155				67,641				179,263
Estimated interest on debt			8,937				9,974				4,244				1,960				1,497				14,594				41,206
Total		$	43,860			$	132,880			$	58,581			$	75,419			$	21,086			$	119,009			$	450,835

On April 30, 2010, we refinanced the loan secured by our Union Square property with another lender.  As this loan was refinanced prior to the filing of this document, we classified the March 31, 2010 $6.8 million loan balance as current and reflected its principal payments and interest payments in the above table pursuant to the new loan agreement.

 

We base estimated interest on long-term debt on the anticipated loan balances for future periods calculated against current fixed and variable interest rates.

We adopted FASB ASC 740-10-2a, Accounting for Uncertainty in Income Taxes on January 1, 2007.  As of adoption, the total amount of gross unrecognized tax benefits for uncertain tax positions was $12.5 million increasing to $15.6 million as of March 31, 2010.  We do not expect a significant tax payment related to these obligations within the next 12 months.

Unconsolidated Debt

Total debt of unconsolidated joint ventures and entities was $1.2 million and $979,000 as of March 31, 2010 and December 31, 2009.  Our share of unconsolidated debt, based on our ownership percentage, was $397,000 and $326,000 as of March 31, 2010 and December 31, 2009.  This loan is guaranteed by one of our subsidiaries to the extent of our ownership percentage.

Off-Balance Sheet Arrangements

There are no off-balance sheet transactions, arrangements or obligations (including contingent obligations) that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in the financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

 

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Currency Risk

We are subject to currency risk because we conduct a significant portion of our business in Australia and New Zealand.  Set forth below is a chart indicating the various exchange rates at certain points in time for the Australian and New Zealand Dollar vis-à-vis the US Dollar over the past 20 years.

 

 

We do not engage in currency hedging activities.  Rather, to the extent possible, we operate our Australian and New Zealand operations on a self-funding basis.  Our policy in Australia and New Zealand is to match revenues and expenses, whenever possible, in local currencies.  As a result, we have procured in local currencies the majority of our expenses in Australia and New Zealand.  Due to the developing nature of our operations in Australia and New Zealand and our historic practice of funding our asset growth through local borrowings, our revenues are not yet significantly greater than our operating expenses and interest charges in these countries.  As we continue to progress with our acquisition and development activities in Australia and New Zealand, the effect of variations in currency values will likely increase.

Liquidity and Capital Resources

Our ability to generate sufficient cash flows from operating activities in order to meet our obligations and commitments drives our liquidity position.  This is further affected by our ability to obtain adequate, reasonable financing and/or to convert non-performing or non-strategic assets into cash.

Currently, our liquidity needs arise primarily from:

 

·	capital expenditure needs for our expanding digital and 3D implementations;

 

·	working capital requirements; and

 

·	debt servicing requirements.

 

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At March 31, 2010, we had approximately $5.0 million (AUS$5.5 million) in undrawn funds under our Australian Corporate Credit Facility and $18.1 million (NZ$25.5 million) available under our 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 U.S. Union Square Theatre loan matured on January 1, 2010.  The lender has provided us four 30-day extensions to allow us to finalize our new financing of this property from another lender.  The fourth 30-day extension matures on May 1, 2010.  This refinancing occurred on April 30, 2010 (see Note 20 – Subsequent Events).

Under the 2000 City Cinemas transaction, we have reached a verbal agreement with the principal of Sutton Hill Capital to restructure the two notes aggregating $14.0 million.  We are currently in the process of documenting this verbal agreement, whose revised terms call for a partial repayment in 2010 and a deferral of the remainder through a date in 2013.

Operating Activities

Cash provided by operations was $3.7 million in the 2010 Quarter compared to $730,000 used in operations in the 2009 Quarter.  The increase in cash provided by operations of $4.4 million was due primarily to a $2.0 million increase of cash provided by changes in operating assets and liabilities and a $2.4 million overall increase of operational cash flows.

Investing Activities

Cash used in investing activities for the 2010 Quarter decreased by $8.1 million to $4.4 million from $12.6 million compared to the same period in 2009.  The $4.4 million cash used for the 2010 Quarter was primarily related to:

 

·	$1.9 million in property enhancements to our existing properties;

 

·	$2.9 million to purchase a property adjacent to our Manukau property;

 

offset by

 

·	$204,000 of change in restricted cash; and

 

·	$132,000 in return of investment of unconsolidated entities.

The $12.6 million cash used for the 2009 Quarter was primarily related to:

 

·	$1.8 million in property enhancements to our existing properties; and

 

·	$11.5 million to purchase marketable securities to exchange for our Reading International Trust I securities;

 

offset by

 

·	$433,000 of change in restricted cash; and

 

·	$265,000 receipt of an option payment for the Auburn property.

 

 

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Financing Activities

 

Cash provided by financing activities for the 2010 Quarter was $2.4 million compared to $1.9 million of cash used in financing activities for the same period in 2009 resulting in a change of $4.4 million.  The $2.4 million in cash provided by financing activities during the 2010 Quarter was primarily related to:

 

·	$3.2 million of borrowing on our New Zealand credit facility; and

 

·	$83,000 of proceeds from the exercise of employee stock options;

 

offset by

 

·	$289,000 of loan repayments;

 

·	$251,000 of repurchase of Class A Nonvoting Common Stock; and

 

·	$309,000 in noncontrolling interest distributions.

The $1.9 million in cash used in the 2009 Quarter was primarily related to:

 

·	$3.1 million of loan repayments;

 

offset by

 

·	$1.2 million of borrowing on our Australia credit facilities.

Critical Accounting Policies

The SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of the company’s financial condition and results of operations and the most demanding in their calls on judgment.  Although accounting for our core business of cinema and live theater exhibition with a real estate focus is relatively straightforward, we believe our most critical accounting policies relate to:

 

·	impairment of long-lived assets, including goodwill and intangible assets;

 

·	tax valuation allowance and obligations; and

 

·	legal and environmental obligations.

We discuss these critical accounting policies in our 2009 Annual Report and advise you to refer to that discussion.

Financial Risk Management

Our internally developed risk management procedure, seeks to minimize the potentially negative effects of changes in currency exchange rates and interest rates on the results of operations.  Our primary exposure to fluctuations in the financial markets is currently due to changes in currency exchange rates between U.S and Australia and New Zealand, and interest rates.

As our operational focus continues to shift to Australia and New Zealand, unrealized foreign currency translation gains and losses could materially affect our financial position.  We currently manage our currency exposure by creating, whenever possible, natural hedges in Australia and New Zealand.  This involves local country sourcing of goods and services as well as borrowing in local currencies.

Our exposure to interest rate risk arises out of our long-term debt obligations.  Consistent with our internally developed guidelines, we seek to reduce the negative effects of changes in interest rates by changing the character of the interest rate on our long-term debt, converting a variable rate into a fixed rate.  Our internal procedures allow us to enter into derivative contracts on certain borrowing transactions to achieve this goal.  Our Australian credit facilities provide for floating interest rates but require that not less than a certain percentage of the loans be swapped into fixed rate obligations using derivative contracts.

 

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In accordance with FASB ASC 815-10-35, Subsequent Valuation of Derivative Instruments and Hedging Instruments (“FASB ASC 815-10-35”), we marked our interest rate swap instruments to market on the consolidated balance sheet resulting in a decrease in interest expense of $211,000 and an increase in interest expense of $243,000 during the three months ended March 31, 2010 and 2009, respectively.  At March 31, 2010, we recorded the fair market value of an interest rate swap and a cap of $918,000 as other long-term assets and an interest rate swap of $714,000 as an other long-term liability.  At December 31, 2009, we recorded the fair market value of an interest rate swap and a cap of $766,000 as other long-term assets and an interest rate swap of $785 ,000 as an other long-term liability.  In accordance with FASB ASC 815-10-35, we have not designated any of our current interest rate swap positions as financial reporting hedges.

Inflation

We continually monitor inflation and the effects of changing prices.  Inflation increases the cost of goods and services used.  Competitive conditions in many of our markets restrict our ability to recover fully the higher costs of acquired goods and services through price increases.  We attempt to mitigate the impact of inflation by implementing continuous process improvement solutions to enhance productivity and efficiency and, as a result, lower costs and operating expenses.  In our opinion, we have managed the effects of inflation appropriately, and, as a result, it has not had a material impact on our operations and the resulting financial position or liquidity.

Litigation

We are currently, and are from time to time, involved with claims and lawsuits arising in the ordinary course of our business.  Some examples of the types of claims are:

 

·	contractual obligations;

 

·	insurance claims;

 

·	IRS claims;

 

·	employment matters;

 

·	environmental matters; and

 

·	anti-trust issues.

Where we are the plaintiffs, we expense all legal fees on an on-going basis and make no provision for any potential settlement amounts until received.  In Australia, the prevailing party is entitled to recover its attorneys fees, which typically works 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, which insurance may not cover, as they become known and can be reasonably estimated.  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.  However, we do not give any assurance as to the ultimate outcome of such claims and litigation.  The resolution of such claims and litigation could be material to our operating results for any particular period, depending on the level of income for such period.  Except as noted below regarding Malulani Investments, Limited (“MIL”), there have been no material changes to our litigation exposure since our 2009 Annual Report.

 

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Forward-Looking Statements

Our statements in this interim quarterly report contain a variety of forward-looking statements as defined by the Securities Litigation Reform Act of 1995.  Forward-looking statements reflect only our expectations regarding future events and operating performance and necessarily speak only as of the date the information was prepared.  We cannot guarantee that our expectation will be realized in whole or in part.  You can recognize these statements by our use of words such as, by way of example, “may,” “will,” “expect,” “believe,” and “anticipate” or other similar terminology.

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

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 ability to implement digital and 3D projectors throughout our cinema circuits worldwide;

 

o	The licensing fees and terms required by film distributors from motion picture exhibitors in order to exhibit their films;

 

o	The continued willingness of moviegoers to spend money on our concession items;

 

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;

 

 

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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 who 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:

 

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;

 

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 exhaustive, as business is inherently unpredictable, risky, and subject to influence by numerous factors outside of our control.  Such factors include 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 ability 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 update publicly or to revise any of our forward-looking statements, whether because 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 interim quarterly report may contain “non-GAAP financial measures.”  In such case, we will make available in connection with such statements a reconciliation of this information to our GAAP financial statements.

 

 

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Item 3 – Quantitative and Qualitative Disclosure about Market Risk

The SEC requires that registrants include information about potential effects of changes in currency exchange and interest rates in their filings.  Several alternatives, all with some limitations, have been offered.  We base the following discussion on a sensitivity analysis, which models the effects of fluctuations in currency exchange rates and interest rates.  This analysis is constrained by several factors, including the following:

 

·	It is based on a single point in time; and

 

·	It does not include the effects of other complex market reactions that would arise from the changes modeled.

Although the results of such an analysis may be useful as a benchmark, they should not be viewed as forecasts.

At March 31, 2010, approximately 51% and 16% of our assets were invested in assets denominated in Australian dollars (Reading Australia) and New Zealand dollars (Reading New Zealand), respectively, including approximately $15.6 million in cash and cash equivalents.  At December 31, 2009, approximately 50% and 16% of our assets were invested in assets denominated in Australian dollars (Reading Australia) and New Zealand dollars (Reading New Zealand) including approximately $15.4 million in cash and cash equivalents.

Our policy in Australia and New Zealand is to match revenues and expenses, whenever possible, in local currencies.  As a result, we have procured in local currencies a majority of our expenses in Australia and New Zealand.  Due to the developing nature of our operations in Australia and New Zealand, our revenue is not yet significantly greater than our operating and interest expenses.  The resulting natural hedge has led to a somewhat negligible foreign currency effect on our current earnings.  Although foreign currency has had a nominal effect on our current earnings, the effect of the translation adjustment on our assets and liabilities noted in our other comprehensive income was an increase of $1.0 million for the three months ended March 31, 20 10.  As we continue to progress our acquisition and development activities in Australia and New Zealand, we cannot assure you that the foreign currency effect on our earnings will be negligible in the future.

Historically, our policy has been to borrow in local currencies to finance the development and construction of our ETRCs in Australia and New Zealand whenever possible.  As a result, the borrowings in local currencies have provided somewhat of a natural hedge against the foreign currency exchange exposure.  Even so, and as a result of our issuance of fully subordinated notes (TPS) in 2007, and their subsequent partial repayment, approximately 49% and 64% of our Australian and New Zealand assets, respectively, remain subject to such exposure unless we elect to hedge our foreign currency exchange between the US and Australian and New Zealand dollars.  If the foreign currency rates were to fluctuate by 10% the resulting change in Australian and New Zealand asse ts would be $10.1 million and $4.2 million, respectively, and the change in our quarterly net income would be $171,000 and $13,000, respectively.  Presently, we have no plan to hedge such exposure.

We record unrealized foreign currency translation gains or losses that could materially affect our financial position.  As of March 31, 2010 and December 31, 2009, we have recorded a cumulative unrealized foreign currency translation gain of approximately $44.2 million and $43.2 million, respectively.

Historically, we maintain most of our cash and cash equivalent balances in short-term money market instruments with original maturities of three months or less.  Due to the short-term nature of such investments, a change of 1% in short-term interest rates would not have a material effect on our financial condition.

 

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While we have typically used fixed rate financing (secured by first mortgages) in the U.S., fixed rate financing is typically not available to corporate borrowers in Australia and New Zealand.  The majority of our Australian and New Zealand bank loans have variable rates.  The Australian facility provides for floating interest rates, but requires that not less than a certain percentage of the loan be swapped into fixed rate obligations (see Financial Risk Management above).  If we consider the interest rate swaps, a 1% increase or decrease in short-term interest rates would have resulted in approximately $138,000 increase or decrease in our 2010 Quarter’s Australian and New Zealand interest expense.

 

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Item 4 – Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cos t-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended March 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

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PART II – Other Information

Item 1 - Legal Proceedings

For a description of legal proceedings, please refer to Item 3 entitled Legal Proceedings contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

For a description of grants of stock to certain executives, see the Stock Based Compensation section under see Note 2 – Stock-Based and Equity Compensation, above.

Item 3 - Defaults upon Senior Securities

Not applicable.

Item 4 - Removed and Reserved

None.

Item 5 - Other Information

Not applicable.

Item 6 - Exhibits

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.

 

 

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SIGNATURES

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

READING INTERNATIONAL, INC.

 

Date:	May 6, 2010	By:	/s/ James J. Cotter
			James J. Cotter
			Chief Executive Officer

 

Date:	May 6, 2010	By:	/s/ Andrzej Matyczynski
			Andrzej Matyczynski
			Chief Financial Officer

 

 

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EXHIBIT 31.1

CERTIFICATIONS

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James J. Cotter, certify that:

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
	May 6, 2010

EXHIBIT 31.2

CERTIFICATIONS

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrzej Matyczynski, certify that:

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
	May 6, 2010

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C.  SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, in his capacity as an officer of Reading International, Inc. (the “Company”), for purposes of 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

 

·	The Quarterly Report of the Company on Form 10-Q for the period ended March 31, 2009 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.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Dated:  May 6, 2010

 

/s/ James J. Cotter                                                                

Name:           James J. Cotter

Title:           Chief Executive Officer

 

/s/ Andrzej Matyczynski                                                                

Name:           Andrzej Matyczynski

Title:           Chief Financial Officer