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(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
		For the fiscal year ended December 31, 2004
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
		For the transition period from           to

Nevada		95-3885184
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
550 South Hope Street, Suite 1825 Los Angeles, CA (Address of principal executive offices)		90071 (Zip Code)

Title of each class		Name of each exchange on which registered
Class A Nonvoting Common Stock, $0.01 par value		American Stock Exchange
Class B Voting Common Stock, $0.01 par value		American Stock Exchange

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PART I				2
	Item 1 — Our Business			2
	Item 2 — Properties			32
	Item 3 — Legal Proceedings			33
	Item 4 — Submission of Matters to a Vote of Security Holders			36
PART II				37
	Item 5 — Market for Registrant’s Common Equity and Related Stockholder Matters			37
	Item 6 — Selected Financial Data			38
	Item 7 — Management’s Discussions and Analysis of Financial Condition and Results of Operations			38
	Item 7A — Quantitative and Qualitative Disclosure about Market Risk			65
	Item 8 — Financial Statements and Supplementary Data			67
		Report of Independent Registered Public Accountants		68
		Consolidated Balance Sheets as of December 31, 2004 and 2003		69
		Consolidated Statements of Operations for the Three Years Ended December 31, 2004		70
		Consolidated Statements of Stockholders’ Equity for the Three Years Ended December 31, 2004		71
		Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2004		72
		Notes to Consolidated Financial Statements		73
	Item 9 — Change in and Disagreements with Accountants on Accounting and Financial Disclosure			107
	Item 9A — Controls and Procedures			107
PART III				110
PART IV				111
	Item 15 — Exhibits, Financial Statement Schedules, and Reports on Form 8-K			111
	SIGNATURES			116
	CERTIFICATIONS			117
EX-3.6
EX-10.52
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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Item 1 —	Our Business

	•	the development, ownership and operation of multiplex cinemas in the United States, Australia, New Zealand and Puerto Rico; and
	•	the development, ownership and operation of retail and commercial real estate in Australia, New Zealand and the United States, including entertainment-themed retail centers (“ETRC”) in Australia and New Zealand and live theater assets in Manhattan and Chicago in the United States.

	•	interests in 47 cinemas comprising some 319 screens;
	•	assets with a book value of approximately $230,227,000; and
	•	stockholders’ equity of approximately $102,010,000.

	•	First, notwithstanding the enormous advances that have been made in home entertainment technology, we are essentially social beings, and will continue to want to go beyond the home for our entertainment.
	•	Second, cinemas can be used as anchors for larger retail developments, and our involvement in the cinema business can give us an advantage over other real estate developers or redevelopers who must identify and negotiate with third party anchor tenants.
	•	Third, pure cinema operators can get themselves into financial difficulty as demands upon them to produce earnings growth tempt them into reinvesting their cash flow into increasingly marginal cinema

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		sites. We do not feel pressure to build cinemas for the sake of simply adding on units, and intend to focus our cash flow on our real estate development and operating activities, to the extent that attractive cinema opportunities are not available to us.
	•	Fourth, we are never afraid to convert a cinema to another use, if that is a higher and better use of our property, or to sell individual assets, if we are presented with an attractive opportunity.

Wholly Owned

Consolidated(1)

Unconsolidated(2)

Managed(3)

Totals

Australia

15 cinemas

3 cinemas

1 cinema(4)

None

19 cinemas

112 screens

16 screens

16 screens

144  screens

New Zealand

7 cinemas

None

5 cinemas(5)

1 cinema(6)

13 cinemas

37 screens

29 screens

5 screens

71 screens

Puerto Rico

6 cinemas

None

None

None

6 cinemas

48 screens

48 screens

United States

6 cinemas

1 cinema(7)

None

2 cinemas

9 cinemas

41 screens

6 screens

9 screens

56 screens

TOTALS

34 cinemas

4 cinemas

6 cinemas

3 cinemas

47 cinemas

238 screens

22 screens

45 screens

14 screens

319  screens

(1)	Cinemas owned and operated through majority owned subsidiaries.
(2)	Cinemas owned and operated through unconsolidated subsidiaries.
(3)	Cinemas in which we have no ownership interest, but which are operated by us under management agreements.
(4)	33.3% unincorporated joint venture interest.
(5)	50% unincorporated joint venture interests.
(6)	Managed through Berkeley Cinemas.
(7)	The Angelika Film Center and Café in Manhattan is owned by a limited liability company in which we own a 50% interest with right to manage.

	•	the completion of construction of an approximately 100,000 square foot ETRC on our approximately 190,000 square foot parcel in Newmarket, a suburb of Brisbane, in Queensland, Australia;
	•	the commencement of construction of an approximately 150,000 square foot retail and art cinema development as Phase II of our existing ETRC in Wellington, New Zealand;
	•	the completion of planning for a mixed use ETRC/ residential development on our 124,754 square foot parcel in Moonee Ponds, a suburb of Melbourne, in Victoria, Australia;
	•	the integration into our operations of the 14 cinemas (77 screens) added in 2004 and the addition this year of a new 8 screen cinema under the terms of an existing heads of agreement in an Australia; and

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	•	the completion of the initial master planning and entitlement process for the development of our 50-acre site in Burwood, a suburb of Melbourne, in Victoria, Australia as a mixed-use development, including entertainment, retail, office and residential components.

	•	the acquisition of ten existing cinemas (49 screens) in Australia and New Zealand (including the fee interests underlying three of the New Zealand cinemas) and the opening of two new cinemas (15 screens) in Australia, one new cinema (8 screens) in New Zealand, and one new cinema (5 screens) in the United States. The newly opened New Zealand cinema is owned and operated by our Berkeley Cinemas joint venture;
	•	the renegotiation of our credit facility in Australia to increase that facility from $21.4 million (AUS$30 million) to $39.3 million (AUS$55.0 million), and to add a new facility in the amount of $25.2 million (AUS$32.7 million) to provide construction finance for our Newmarket ETRC;
	•	the replacement of our New Zealand credit facility with a new facility in the amount of $33.5 million (NZ$50 million) (an increase of approximately $12.6 million (NZ$18.7 million) over the facility that it replaced);
	•	the exercise of our option to acquire, at developer’s cost, a 25% membership interest in the limited liability company formed to redevelop an approximately 100,000 square foot mixed use condominium project (“Place 57”) on which the Sutton Cinema was located, in Manhattan on 57th Street near its intersection with 3rd Avenue;
	•	the execution of an agreement to acquire the fee interest underlying our Cinemas 1, 2 & 3 property located on 3rd Avenue in Manhattan; and
	•	the negotiation with applicable governmental authorities of an accelerated program for the rezoning of our 50-acre Burwood site as part of an area designated as a “major activity center” by the Victorian Government. Our Burwood site is the largest undeveloped parcel of land in the “major activity center” and the largest undeveloped parcel of land in any “major activity center” in Victoria, Australia. Approximately 430,000 people live within five miles of the site, which is well served by both public transit and surface streets. We estimate that approximately 70,000 people pass by the site each day. It is currently anticipated that the site will be developed as a mixed use project with entertainment, retail and residential components.

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	•	developed a chain of multiplex cinemas in Australia and New Zealand operating principally under the “Reading” name and featuring primarily conventional film product;
	•	developed a chain of principally art and urban cinemas including the Angelika Film Center & Café complexes in Manhattan and in Dallas, Houston and Plano, Texas;
	•	acquired and expanded a chain of multiplex cinemas in Puerto Rico featuring conventional film product (“CineVista”); and
	•	acquired seven “off Broadway” style live theaters, located in four fee owned complexes, three in Manhattan and one in Chicago.

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	•	are more capital intensive;
	•	have longer lead times and entail greater development risks during the development phase; and
	•	have, at least initially, lower cash returns than those of companies focused on the development of cinemas in leased facilities in established or newly developed malls.

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	•	the fee interest in all of our live theater complexes (three of which are located in Manhattan and one of which is located in Chicago);
	•	three in-fill suburban development sites in Australia (including a 50-acre parcel in suburban Melbourne);
	•	additional land for development contiguous to our Auburn and Wellington ETRC’s (95,530 and 37,674-square feet, respectively);
	•	a 95,752 square foot office building in Glendale, California (currently under contract to be sold); and
	•	various miscellaneous land holdings related to our historic railroad activities, comprising over 400 acres.

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	1.     Domestic Based Borrowings:

	•	$10,188,000 non-recourse fixed rate first mortgage loan secured by our Glendale office building.
	•	$3,325,000 non-recourse fixed rate first mortgage loan secured by our Union Square property, located at 100 E. 17th Street, New York, New York.
	•	$2,153,000 LIBOR based first mortgage loan secured by our Royal George Theater property, located in Chicago, Illinois.

	2.     Australian Based Borrowings:

	•	$39.3 million (AUS$55.0 million) credit facility with the Bank of Western Australia, Ltd through our Australian subsidiary, Reading Entertainment, Australia Pty, Limited (the “Australia Credit Facility”). This credit facility replaces our prior facility with that lender in the amount of $21.4 million (AUS$30.0 million), expires on January 1, 2009 and provides for interest-only payments until June 30, 2006. Our Australian Corporate Credit Facility is secured by substantially all of our cinema assets in Australia, but has not been guaranteed by any company other than several of our wholly owned Australian subsidiaries. As of December 31, 2004, we have drawn down $24.9 million (AUS$32.3 million) on our Australian Corporate Credit Facility with an additional reduction of the overall facility of $1.9 million (AUS$2.7 million) for bank guarantees. At December 31, 2004, the variable interest rate on this credit facility was 6.48%. The credit facility includes a number of affirmative and negative covenants designed to protect the Bank’s security interests. The most restrictive covenant of the facility is a limitation on the total amount that we are able to drawdown based on the total assets that are securing the loan. Our Australian Corporate Credit Facility provides for floating interest rates based on the BBSY bid rate, but requires that not less than 50% of the loan be swapped into fixed rate obligations. The facility allowed us to utilize the old swap that was in place for our previous facility, at 6.70%, through its term, and to swap up to 50% of the maximum credit facility immediately. As a result, at December 31, 2004, the floating rate portion at 6.48% was $3.7 million (AUS$4.8 million); the old swap at 6.70% was notionally $10.2 million (AUS$13.3 million); and the new swap, at 7.44% was notionally $10.9 million (AUS$14.3 million). The old swap fully expires on December 31, 2007, at which time the full swap amount will be held under the new swap, which expires on December 31, 2008. All interest rates above include a 1.00% interest rate margin.
	•	$25.2 million (AUS$32.7 million) construction loan with the Bank of Western Australia, Ltd through our Australian subsidiary Newmarket Properties Pty, Ltd. (the “Newmarket Loan”). This loan is being used to finance the construction of our approximately 100,000 square foot shopping center, currently under construction in Newmarket, Queensland, Australia and is generally without recourse to our assets other than the Newmarket construction project and the various Australian based cinema assets which also secure our Australian Corporate Credit Facility. Our Newmarket Loan has not been guaranteed by any entity other than several of our Australian subsidiaries. The construction portion of our Newmarket Loan converts to a term loan on completion of the construction and is interest only during the construction period and for the remaining years of the term loan expiring on January 1, 2009. Our Newmarket Loan provides for floating rate interest and includes usual and customary affirmative and negative covenants designed to protect the bank’s security interest. The most restrictive covenant of the facility is a limitation on the total amount that we are able to drawdown based on the total assets that are securing the loan. Minimum debt service coverage and maximum leveraging ratio are the same as described above. While our

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		Newmarket Loan provides for a floating rate of interest, it requires not less than 75% of the loan to be swapped into fixed rate obligations. At December 31, 2004, the fixed rate portion under the interest rate swap was at 7.18%. The current swap continues until May 31, 2006. As of December 31, 2004, we had not as yet drawn down on the loan. All interest rates above include a 1.00% interest rate margin.
	•	In accordance with SFAS No. 133, we marked our Australian interest rate swap instruments to market resulting in $91,000 (AUS$118,000) increase to interest expense during 2004 and an $80,000 (AUS$106,000) decrease in interest expense in 2003.

	•	During 2004, we replaced our existing $20.9 million (NZ$31.3 million) credit facility with a $35.5 million (NZ$50.0 million) credit facility with Westpac Banking Corporation. The facility is secured by substantially all of our New Zealand assets, but has not been guaranteed by any entity other than several of our New Zealand subsidiaries. The facility expires on November 23, 2009 and provides for payment of interest only through November 23, 2006. The credit facility has been fully drawn in order to repay the replaced facility and to finance our previously disclosed acquisition of six cinemas (27 screens) and three underlying fee interests in New Zealand. The facility includes various affirmative and negative covenants designed to protect the bank’s security, limits capital expenditures and the repatriation of funds out of New Zealand without the approval of the bank. The most restrictive covenant of the facility is the restriction of transferring funds from subsidiary to parent. Interest on the facility is a floating rate. At December 31, 2004 that rate was 8.25% (which includes a 1.45% interest rate margin) and the amount outstanding was $35.5 million (NZ$50.0 million).
	•	We are the 50% co-owners with Everard Entertainment Ltd of the assets comprising three unincorporated joint ventures in New Zealand, referred to in this annual report as the New Zealand JVs. We are 50% liable for three bank loans aggregating $10,685,000 (NZ$14,996,000) which are secured by a first mortgage over the land and building assets of the three joint ventures. However, as we do not consolidate the accounts of the NZ JVs, the bank loans discussed above are not reflected in the Consolidated Balance Sheet at December 31, 2004. These loans are without recourse to any assets other than our interests in these three joint ventures.

	4.     Other Borrowings:

In 2000, we entered into a transaction with a related party designed to give us (i) operating control, through an operating lease, of the City Cinemas theater chain in Manhattan, and (ii) the right to enjoy any appreciation in the underlying real estate assets, though a fixed price option to purchase these cinemas on an all or nothing basis in 2010. Two of the cinemas included in that chain — the Murray Hill Cinema and the Sutton Cinema — have now been sold for redevelopment, under terms that we believe preserve this basic structure and which will, if we exercise our purchase option, give us the future benefit of any appreciation realized in those assets during the time they were under our operation and control.

In July 2000, we acquired from Sutton Hill Capital, LLC (“SHC”) the Manhattan based City Cinemas circuit in a transaction structured as a 10 year operating lease (the “City Cinemas Operating Lease”) with options either to extend the lease for an additional 10 year term or, alternatively, to purchase the improvements and certain of the real estate assets underlying that lease (the “City Cinemas Purchase Option”). We paid an option fee of $5,000,000, which will be applied against the purchase price if we elected to exercise the City Cinemas Purchase Option. The aggregate exercise price of the City Cinemas Purchase Option was originally $48,000,000, and rent was calculated to provide an 8.25% yield to SHC (subject to an annual modified cost of living adjustment) on the difference between the exercise price and the $5,000,000 option fee. Incident to that

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	transaction, we agreed to lend to SHC (the “City Cinemas Standby Credit Facility”) up to $28,000,000, beginning in July 2007, all due and payable in December 2010 (the principal balance and accrued interest on any such loan was likewise to be applied against the option exercise price, in the event the option was exercised). The interest rate on the City Cinemas Standby Credit Facility was also fixed at 8.25%, subject to the same modified cost of living adjustment used to calculate rent under the City Cinemas Operating Lease.
	We have no legal obligation to exercise either the option to extend the City Cinemas Operating Lease or the City Cinemas Purchase Option. However, our recourse against SHC on the City Cinemas Standby Credit Facility is limited to the assets of SHC which consist of, generally speaking, only the assets subject to the City Cinemas Purchase Option. In this annual report, we refer to the transaction memorialized by the City Cinemas Operating Lease, City Cinemas Purchase Option and City Cinemas Standby Credit Agreement as the City Cinemas Transaction. Because the City Cinemas Operating Lease is an operating lease and since the City Cinemas Standby Credit Facility was, in our view, adequately secured, no asset or liability was established on our balance sheet at the time of the City Cinemas Transaction other than the option fee, which has been deferred and is being amortized over the 10 year period of the lease.
	SHC is indirectly owned by Messrs. James J. Cotter and Michael Forman. Mr. Cotter is our Chairman, Chief Executive Officer and controlling stockholder. Mr. Forman is a major holder of our Class A Stock. As the transaction was a related party transaction, it was reviewed and approved by a committee of our Board of Directors comprised entirely of independent directors.
	Since we entered into the City Cinemas Transaction, two of the cinema properties involved in that transaction have been sold to third parties for redevelopment: the Murray Hill Cinema and the Sutton Cinema. These purchasers paid $10,000,000 and $18,000,000 respectively for these two properties, which included the cost of acquiring the fee interest in these properties held by Nationwide Theaters (an affiliate of SHC), the leasehold interest held by SHC, and our rights under the City Cinemas Operating Lease and the City Cinemas Purchase Option. Since we believed that a sale of these properties at these prices was more beneficial to us than continuing to operate them as cinemas, and since the original City Cinemas Transaction did not contemplate a piece-meal release of properties or give us the right to exercise our City Cinemas Purchase Option either (i) on a piece-meal basis or (ii) prior to July 2010, we worked with SHC to devise a transaction that would allow us to dispose of our collective interests in these properties while preserving the fundamental benefits of the transaction for ourselves and SHC. Included among the benefits to be preserved by SHC was the deferral of any capital gains tax with respect to the transfer of the remaining properties until 2010 and assurances that the various properties involved in the City Cinemas Transaction would only be acquired by us on an “all or none” basis. Included among the benefits to be preserved for us was the right to get the benefit of 100% of any appreciation in the properties underlying the City Cinemas Operating Lease between the date of that lease (July 2000) and the date any such properties were sold, provided that we ultimately exercised our purchase rights under the City Cinemas Purchase Option.
	As a result of these negotiations and the sale of these two properties, our rent under the City Cinemas Operating Lease has been reduced by approximately $1,861,000 per annum, the exercise price of the City Cinemas Purchase Option has been reduced from $48,000,000 to $33,000,000, and our funding obligation under the City Cinemas Standby Line of Credit has been reduced from $28,000,000 to $13,000,000. In addition, we received in consideration of the release of our interest in the Murray Hill Cinema a cash payment of $500,000. In consideration of the transfer of our interest in the Sutton Cinema we received (i) a $13,000,000 purchase money promissory note (the Sutton Purchase Money Note”)

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	secured by a first mortgage on the Sutton Cinema property (the “Sutton Purchase Money Mortgage”), (ii) a right to acquire up to a 25% interest in the special purpose entity formed to redevelop the Sutton Cinema property for a prorated capital contribution (the “Sutton Reinvestment Option”) or to receive instead an in lieu fee of $650,000, and (iii) the right to operate the Sutton Cinema until such time as the Sutton Purchase Money Note was paid. The Sutton Purchase Money Note was due and payable on October 21, 2005, and carried interest for the first year at 3.85%, increasing in the second year to 8.25%. On September 14, 2004, the Sutton Purchase Money Note was prepaid in full and we exercised our Sutton Reinvestment Option.
	In keeping with the “all or nothing” nature of our rights under the City Cinemas Purchase Option, we agreed to use the principal proceeds of the Sutton Purchase Money Promissory Note to fund a portion of our remaining $13.0 million obligation under the City Cinemas Standby Credit Facility. As of December 31, 2004, we have funded $8.0 million of this obligation. We anticipate that the remaining obligation will be fully funded by July 2007. We have also agreed that the principal amount of the City Cinemas Standby Credit Facility will be forgiven if we do not exercise our purchase rights under the City Cinemas Purchase Option. Accordingly, if we exercise our rights under the City Cinemas Purchase Option to purchase the remaining City Cinemas assets, we will be acquiring the remaining assets subject to the City Cinemas Operating Lease for an additional cash payment of $15,000,000, (offsetting against the current $33,000,000 exercise price, the previously paid $5,000,000 deposit and the $13,000,000 principal amount of the City Cinemas Standby Credit Facility) and will receive, in essence, the benefit of 100% of the appreciation in all of the properties initially subject to the City Cinemas Operating Lease between July 2000, and the date such properties were either disposed of or acquired by us pursuant to the City Cinemas Purchase Option. If we do not exercise our option to purchase, then the City Cinemas Credit Facility will be forgiven, and we will not get the benefit of such appreciation. The remaining properties consist of the Village East Cinema, which is located at the corner of 2nd Avenue and 11th Street in Manhattan, on a 27 year land lease, and the Cinemas 1, 2 & 3. It is located on 3rd Avenue between E. 59th and E. 60th Streets in Manhattan and likewise on a long term ground lease. We are currently under contract to purchase the Cinemas 1, 2, & 3 ground lease from another party for $12.2 million.
	Since the Murray Hill Cinema sale transaction was structured as a release of our leasehold interest in the Murray Hill Cinema, we did not recognize any gain or loss for either book or tax purposes, other than the $500,000 in lieu fee, which was recognized as non-operating income. We likewise did not book any gain or loss on the disposition of the Sutton Cinema for book purposes. However, we did recognize gain in the amount of approximately $13,000,000 for state and federal tax purposes, which gain was offset against net operating losses. Notwithstanding this offset, we were still liable for alternative minimum tax on the transaction. That alternative minimum tax will, however, be offset against our future tax liabilities. In the event that we decide not to exercise our City Cinemas Purchase Option, we would at that time recognize a $13 million loss for tax purposes.
	Following the release of our leasehold interest in the Murray Hill Cinema and disposition of the Sutton Cinema in 2003 we accelerated the amortization of the option fee in the City Cinemas Purchase Option agreement by $890,000. In addition, in October 2003 we recorded our loan commitment under the City Cinemas Standby Credit Facility as a payable in our long-term debt on the Consolidated Balance Sheet. As a result of having funded $8.0 million of this obligation during 2004, the remaining balance recorded as long-term debt is $5.0 million.

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	•	property and equipment with an aggregate book value of approximately $133,660,000; and
	•	property held for development with an aggregate net book value of approximately $27,346,000.

	•	the development, ownership and operation of multiplex cinemas in the U.S., Australia, New Zealand and Puerto Rico;
	•	the development, ownership and operation of cinema-based ETRC’s in Australia and New Zealand; and
	•	the development, ownership and operation of commercial real estate in the U.S., Australia and New Zealand as a business that has been historically ancillary to our cinema exhibition business.

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	General

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	Entertainment-Themed Retail Center Development

	Our Ongoing Entertainment-Themed Retail Center Projects

	Joint Venture Cinemas

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	Certain Real Estate Development Risk Factors

	•	construction risks, such as weather, unknown and unknowable site conditions, and the availability and cost of materials and labor;
	•	leasing risk with respect to ancillary space being constructed in connection with the ETRC — in certain cases such ancillary space constitutes a substantial portion of the net leasable area of a particular ETRC;
	•	political risk, such as the possible change in midstream of existing zoning or development laws to accommodate competitive interests at Burwood; and
	•	financing risks, such as interest rate risk, the risk of investing during times of currency exchange rate instability, and the difficulties of acquiring construction financing.

	Management of Cinemas

	Background Information Concerning Australia

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	Background Information Concerning New Zealand

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	Licensing/Pricing

	Competition

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	Currency Risk

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		Net Assets
Reading Australia		$	111,602,000
Reading New Zealand			56,759,000
		$	168,361,000

	Seasonality

	Employees

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	General

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	•	as to when it will be available on an economically attractive bases;
	•	as to who will pay for the conversion from conventional to digital technology between exhibitors and distributors;
	•	as to what the impact will be on film licensing expense; and
	•	as to how to deal with security and potential pirating issues if film is distributed in a digital format.

	Licensing/ Pricing

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	Competition

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	Seasonality

	Management

	Employees

	General

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	Background Information about Puerto Rico and the Puerto Rican Cinema Market

	Licensing/ Pricing

	Competition

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	Seasonality

	Employees

	General

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	Real Estate Holdings

			Square Footage of
			Improvements				Percentage
Property(1)			(Rental/Entertainment)				Leased				Gross Book Value
											(In U.S. dollars)
Auburn				59,169/ 56,693				91	%		$	26,419,713
	100 Paramatta Road
	Auburn, NSW, Australia
Belmont				19,138/40,687				83	%		$	11,688,263
	Knutsford Ave and Fulham St
	Belmont, WA, Australia
Brand Blvd				95,752/0				100	%		$	8,351,724
	600 N. Brand Blvd Glendale, CA, USA		Plus a 128,537 square foot parking structure
Courtenay Central				37,383/65,768				86	%		$	32,866,243
	100 Courtenay Place Wellington, New Zealand		Plus a 400,000 square foot parking structure
Invercargill Cinema				7,158/19,784				100	%		$	2,857,694
	29 Doe Street Invercargill, New Zealand
Maitland Cinema				1,550/20,860				100	%		$	1,943,062
	Ken Tubman Drive Maitland, NSW, Australia
Minetta Lane Theatre				0/9,212				N/A			$	4,116,691
	18-22 Minetta Lane Manhattan, NY, USA
Napier Cinema				6,480/17,018				100	%		$	3,690,000
	154 Station Street Napier, New Zealand
Newmarket(2)				103,821/0				71	%		$	26,711,685	(3)
	Newmarket, QLD, Australia
Orpheum Theatre				0/5,146				N/A			$	1,541,768
	126 2nd Street Manhattan, NY, USA
Royal George				5,055/41,748				100	%		$	2,856,930
	1633 N. Halsted Street Chicago, IL, USA		Plus 21,456 square feet of parking
Rotorua Cinema				0/18,783				N/A			$	2,572,125
	1281 Eruora Street Rotorua, New Zealand
Union Square Theatre				21,125/ 16,825				100	%		$	8,252,586
	100 E. 17th Street Manhattan, NY, USA

(1)	A number of our properties include entertainment components rented to one or more of our subsidiaries. The rentable area and percentaged leased numbers are net of such entertainment components. Book value, however, includes the entire investment in the property, including any cinema fit-out. Rental information is as of January 31, 2005. Book value information is as of December 31, 2004.
(2)	The retail components of this project are currently under construction. The cinema component is still in the design phase.
(3)	Estimated cost to complete project.

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Square Footage

Property(1)

(Rental/Entertainment)

Percentage Leased

Gross Book Value

(In U.S. dollars)

Manville

0/ 63,257

“Owner” Occupied

$

1,535,587

Village East

2,404/ 33,099

100%

$

464,018

Waurn Ponds

5,791/51,904

100%

$

5,800,163

(1)	A number of our properties include entertainment components rented to one or more of our subsidiaries. The rentable area and percentaged leased numbers are net of such entertainment components. Book value, however, includes the entire investment in the property, including any cinema fit-out. Rental information is as of January 31, 2005. Book value information is as of December 31, 2004.

	Live Theaters (Liberty Theaters)

	•	the Minetta Lane (399 seats);
	•	the Orpheum (364 seats); and
	•	the Union Square (499 seats).

	Development Projects

	•	Burwood, Victoria:

	•	Our Burwood site is comprised of 50 acres of raw land, previously used as a brickworks and quarry, and currently zoned for “extractive industries.” Located in the Burwood suburb of Melbourne, it was last year designated as a “major activity centre” by the Victoria government, hopefully paving the way for its redevelopment as a multi-use suburban in-fill site. We currently anticipate that the site will be rezoned to permit development as a mixed use project with entertainment, retail, office and residential components.
	•	The site is the largest undeveloped parcel of land in the “major activity center” and the largest undeveloped parcel of land in any “major activity center” in Victoria. Approximately 430,000 people live within five miles of the site, which is well served by both public transit and surface streets. We estimate that approximately 70,000 people pass by the site each day.

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	•	We are currently in the initial master planning and entitlements phase. We currently anticipate that we will have completed this phase by the end of this year, and that we will be able to obtain specific building permits and to commence actual site work early in 2006. It is our hope and expectation to kick off the development with a major cinema based entertainment center.
	•	We anticipate that the project will be built in phases, over a significant period of years. The initial phase, however, will likely be an ETRC, as this is the area of development and construction with which we are most familiar.
	•	We do not currently have any funding in place for the development, and are paying for current master planning activities out of cash flow and working capital.
	•	Our original cost basis in the site is approximately $4,173,000 (AUD$5,250,000). The property was originally acquired in 1996, but was revalued upward in connection with the Consolidation in 2001, which was treated as a purchase for accounting purposes. This revaluation was made prior to the designation of the site as a “major activity center” in 2004. The property is currently on our books for $16.6 million (AUS$21.5 million).

	•	Newmarket, Queensland:

	•	Our Newmarket site is comprised of approximately 190,000 square feet of land, located in a suburb of Brisbane. We are currently in the construction phase of the development.
	•	While we currently intend to develop the property as an ETRC, we are still working on the design and layout of the cinema portion. Currently, the project is anchored by a major supermarket and a major pub operator.
	•	As of January 31, 2005 we had pre-leased approximately 82,906 square feet (71%) of the non-cinema space in the centre.
	•	We are financing construction through a $23.3 million (AUD$32.7 million) construction loan with an Australian bank.
	•	We originally acquired approximately 176,500 square feet of the property in 1998, for a purchase price of $4.2 million (AUD$6.9 million), acquiring an additional approximately 13,400 square feet in 2004, for a purchase price of $1.2 million (AUD$1.5 million). At December 31, 2004 (before drawdown under the construction loan) our investment in the property was $8.0 million (AUD$10.4 million).

	•	Courtenay Central Phase II, Wellington, New Zealand:

	•	We are currently the owner operator of an approximately 103,000 square foot ETRC in Wellington, New Zealand, known as Courtenay Central. The existing ETRC consists of a ten screen cinema and approximately 37,400 square feet of retail space. The property also includes a separate 9 level parking structure, with approximately 1,086 parking spaces. During 2004, approximately 3.5 million people went through the center.
	•	We are in the design phase and in discussions with potential tenants with respect to an approximately 150,000 Phase II expansion to the centre, to be constructed on the approximately 38,000 square foot parcel adjacent to the existing centre. It is anticipated that the expansion will include an art specialty cinema and several major retail users, and will be fully integrated into the existing center.
	•	We anticipate completing lease negotiations with the principal tenants and completing project design by the end of this year.
	•	No financing is currently in place with respect to Phase II, and current work is being funded from working capital and cash flow.

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	•	Moonee Ponds, Victoria:

	•	Our Moonee Ponds site is located in suburban Melbourne and currently consists of approximately 125,000 square feet of raw land.
	•	We are currently working on a plan for the mixed use development of the site for cinema and residential purposes. The site, like our Burwood site, is located in a “major activity centre.”
	•	We acquired the property in April 1997, for a purchase price of $4.9 million (AUS$6.4 million) and currently carry the property on our books at $5.7 million (AUS$7.4 million).

	•	57th Street, Manhattan, New York:

	•	We have a 25% non-managing membership interest in the single purpose limited liability company formed to develop the site located at 205-209 E. 57th Street.
	•	The property is being redeveloped as an approximately 100,000 square foot residential condominium project with ground floor retail and is currently being marketed under the name “Place 57.”
	•	The project is being financed with a combination construction and mezzanine finance, totaling approximately $80,602,000. The remainder of the funds required has been supplied by the members of the limited liability company. The financing is without recourse to the members.
	•	Construction at the site commenced in September of 2004.
	•	We have retained a right of first offer with respect to the ground retail component of the project.

	General

	Agriculture

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	Health Care

Item 2 —	Properties

	Leasehold Interests

						Approximate Range of
		Aggregate				Remaining Lease Terms
		Square Footage				(Including Renewals)
United States			204,425				5 – 42 years
Australia			493,418				29 – 40 years
New Zealand			60,066				5 – 10 years
Puerto Rico			180,024				3 – 40 years

	Fee Interests

	Joint Venture Interests

	•	In Australia, we own a 66% unincorporated joint venture interest in a leased 5-screen multiplex cinema in Melbourne and a 75% interest in a subsidiary company that leases two cinemas with eleven screens in two Australian country towns. In 2003, we acquired a 33% unincorporated joint venture interest in a 16-screen leasehold cinema in a suburb of Brisbane.

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	•	In New Zealand we own a 50% unincorporated joint venture interest in two fee properties and three leasehold properties, totaling approximately 135,000 square feet in the Auckland and Christchurch areas. The two fee parcels are improved with cinema/restaurant complexes.
	•	In the United States, we own a 50% membership interest in Angelika Film Center, LLC, which holds the lease to the approximately 17,500 square foot Angelika Film Center & Café in the Soho district of Manhattan. We also hold the management rights with respect to this asset.

	Reading Australia

	Domestic

	•	Commercial Property: We own a 95,752 square foot 6 level office building, located on a 1.06 acre square foot parcel, with a 2 level parking structure, located in Glendale California. This property is fully leased to Disney Enterprises, Inc. (87%) and California National Bank (13%). These leases expire in February 2007 and May 2005, respectively. The property is under contract to be sold for $21 million.
	•	Railroad Properties: When our railroad assets were conveyed to Conrail, we retained fee ownership of approximately 700 parcels and rights-of-way located throughout Pennsylvania, Delaware, and New Jersey. We now own fee interest in 11 parcels comprising over 250 acres. These acres consist primarily of vacant land and buildings, some of which are leased to third parties.
	•	Administrative Properties: We own a residential condominium in Los Angeles that is used by our Chairman and Chief Executive Officer when he is in Los Angeles.

Item 3 —	Legal Proceedings

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Item 4 —	Submission of Matters to a Vote of Security Holders

	•	By the following vote, our eight directors were reelected to serve on the Board of Directors until the 2005 Annual Meeting of Stockholders:

Election of Directors		For				Withheld
James J. Cotter			1,551,138				200,045
Eric Barr			1,734,881				16,302
James J. Cotter, Jr.			1,551,138				200,045
Margaret Cotter			1,551,138				200,045
Edward L. Kane			1,551,138				200,045
Gerard P. Laheney			1,734,881				16,302
William D. Gould			1,551,138				200,045
Alfred Villaseñor, Jr.			1,734,881				16,302

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Item 5 —	Market for Registrant’s Common Equity and Related Stockholder Matters

			Class A Nonvoting				Class B Voting
			Common Stock				Common Stock
			High		Low		High		Low
2004:
	Fourth Quarter		$8.8000		$7.5500		$8.5000		$7.5000
	Third Quarter		$8.3100		$7.4500		$8.3000		$7.4500
	Second Quarter		$8.7000		$6.1800		$8.3500		$6.2000
	First Quarter		$6.8500		$5.7000		$6.7000		$5.8500
2003:
	Fourth Quarter		$6.5000		$5.5200		$6.1000		$5.7500
	Third Quarter		$6.2000		$4.3500		$6.0500		$1.9000
	Second Quarter		$6.2900		$3.9500		$6.0000		$1.4000
	First Quarter		$4.3900		$3.7500		$4.1000		$1.3000

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Item 6 —	Selected Financial Data

		At or for the Year Ended December 31,
		2004				2003				2002				2001				2000
Revenue		$	102,982			$	93,739			$	86,486			$	23,744			$	7,384
Operating loss		$	(5,952	)		$	(5,340	)		$	(5,977	)		$	(3,382	)		$	(1,055	)
Net loss		$	(8,463	)		$	(5,928	)		$	(7,954	)		$	(4,572	)		$	(3,542	)
Basic loss per share		$	(0.39	)		$	(0.27	)		$	(0.36	)		$	(0.21	)		$	(0.47	)
Diluted loss per share		$	(0.39	)		$	(0.27	)		$	(0.36	)		$	(0.21	)		$	(0.47	)
Other Information:
Shares outstanding			21,998,239				21,899,290				21,821,154				21,821,324				9,947,964
Weighted average shares and dilutive share equivalents			21,948,065				21,860,222				21,821,236				9,980,946				7,557,718
Total assets		$	230,227			$	222,866			$	182,772			$	170,595			$	63,922
Total debt		$	83,252			$	71,145			$	48,121			$	37,490			$	15,221
Working capital		$	(5,808	)		$	(154	)		$	124			$	548			$	13,062
Stockholders’ equity		$	102,010			$	108,491			$	91,265			$	91,125			$	39,128
EBIT		$	(3,500	)		$	(1,794	)		$	(5,172	)		$	(3,425	)		$	(3,928	)
Depreciation and amortization		$	12,899			$	12,003			$	8,705			$	2,044			$	657
EBITDA		$	9,399			$	10,209			$	3,533			$	(1,381	)		$	(3,271	)
Debt to EBITDA			8.86				6.97				13.62				—				—
Capital expenditure (including acquisitions)		$	33,180			$	5,809			$	10,437			$	10,325			$	10,773
Number of employees at 12/31			1,677				1,453				1,304				1,110				147

Item 7 —	Management’s Discussions and Analysis of Financial Condition and Results of Operations

	•	the development, ownership and operation of multiplex cinemas in the United States, Australia, New Zealand, and Puerto Rico; and

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	•	the development, ownership and operation of retail and commercial real estate in Australia, New Zealand and the United States, including entertainment-themed retail centers (“ETRC”) in Australia and New Zealand and live theater assets in Manhattan and Chicago in the United States.

	•	in the US, under the Reading, Angelika Film Center and City Cinemas brands;
	•	in Australia, under the Reading brand;
	•	in New Zealand, under the Reading and Berkeley Cinemas brand; and
	•	in Puerto Rico, under the CineVista brand.

	•	The results of our cinema operations in the US were unusually poor, due to the cost of the anti-trust litigation and the refusal of Fox and Universal to supply us with film product while we were pursuing claims against them. Now that we have achieved settlement with Fox and Universal, we expect that things will return more to normal from a supply point of view;
	•	We have not yet fully integrated the Anderson and Movieland circuits and have not yet realized the synergies that we anticipate in 2005. Indeed, we have realized higher costs and expenses as we have worked to integrate these cinemas into our system;
	•	Our depreciation and amortization is increasing as we continue to increase our asset base; and
	•	As we continue to grow, we continue to incur start-up costs inherent in bringing new projects, whether cinema or real estate, on line. We enjoyed unusual growth in 2004 and as a result, these costs were higher than in prior years. This was prominent last year given that our two newest cinemas did not open until late December. We had only limited revenues cinemas to offset their pre-opening costs.

	1.	Glendale Building: In January 2005, we entered into a purchase and sale agreement providing for the sale of our office building in Glendale, California for $21.0 million. Our Glendale property is currently subject to a first mortgage in the amount of approximately $10.2 million. The sale of the property is subject to the buyer assuming this mortgage. As the mortgage is non-recourse in nature, we believe it likely that the assumption will be approved. However, no assurances can be given in this regard. It is currently our intention to complete a “1031 exchange” of the Glendale property for the fee, ground lease and building comprising the property.

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	2.	West Lakes and Rhodes: In December 2004 we completed the fit outs of the two cinemas with a total of 15 screens. The leases and development rights for the two cinemas were acquired as part of the Anderson acquisition discussed below.
	3.	Botany Downs: On December 24, 2004, we opened an additional 8-screen cinema, this one located in a suburb of Auckland, New Zealand and owned in an unincorporated joint venture with our partner in the Berkeley Cinemas chain in New Zealand.
	4.	The Sutton Redevelopment Investment: On September 14, 2004, we acquired for $2.3 million a non-managing membership interest in 205-209 East 57th Street Associates, LLC a limited liability company formed to redevelop our former cinema site at 205 East 57th Street in Manhattan. Our membership interest represents a 25% interest in the LLC, and was issued to us by 205-209 East 57th Street Associates, LLC in consideration of a capital contribution equal to 25% of its total book capital, calculated after taking into account the effect of our capital contribution. In December 2004, a capital call of $2,877,000 was made to make up the shortfall in equity resulting from higher than budgeted cost for the redevelopment project. In order not to dilute our 25% interest we decided to increase our capital contribution by $719,000 as requested and will make this payment in the first quarter of 2005.
	5.	The Cinemas 1, 2 & 3 Land Acquisition: On August 4, 2004, we entered into an agreement to purchase for $12 million the approximately 7,840 square-foot fee interest underlying our current leasehold estate in the Cinemas 1, 2 & 3 property located in Manhattan on 3rd Avenue between 58th Street and 59th Street. The ownership of the Cinemas 1, 2 & 3 property is currently divided into three components: the fee interest (which we now have under contract to purchase); the ground lease and improvements (which are owned by Sutton Hill Capital LLC but which we, have an option to purchase as a part of a pool of assets in 2010); and our current space lease which also runs until 2010. We are currently in negotiations with Sutton Capital to acquire immediately Sutton Capital’s ground lease interest in the property and its proprietary interest in the building and other improvements on the land, and have agreed in principal that, as a part of the transaction, Sutton Capital will have an option to acquire at cost up to a 25% non-managing membership interest in the limited liability company that we have formed to take title to the property. These negotiations are ongoing, and any potential transaction will ultimately be subject to review and approval by the Conflicts Committee of our Board of Directors. In connection with these negotiations, the parties are also discussing an early acquisition of Sutton Capital’s interest in the Village East Cinema. As of December 31, 2004, we had deposited earnest money totaling $800,000 into escrow with respect to the purchase of the fee interest. In January, the purchase price was increased to $12.2 million and the deposit was increased to $4.0 million in consideration of an extension of the closing date to June 1, 2005.
	6.	Movieland Cinemas Circuit: In August 2004, we closed a series of agreements which, together, provided for the acquisition of six existing New Zealand cinemas, representing 27 screens, and in the case of three of these locations, the fee interests underlying such cinemas. Two of the locations included ancillary retail and commercial tenants. We also acquired the plans and permits for the development of an additional two screens at each of two of the cinemas, for a potential increase of 4 additional screens.

	We acquired the “Movieland Circuit” in New Zealand for $7.2 million (NZ$10.7 million) representing a multiple of approximately 5 times projected cash flow, the underlying fee interests of three of the cinema properties for $7.4 million (NZ$11.0 million) representing a capitalization rate of approximately 9%. Although there was a degree of overlapping ownership of these six cinemas and although the purchase was negotiated as a package, these cinemas were not in fact managed as a single circuit. We anticipate that we will be able to significantly improve the cash flow from these assets, once they are integrated with the remainder of our cinema assets, and can enjoy the benefits of our greater purchasing power and other economies of scale.
	The acquisition costs of these cinemas and fee interests amounting to $14.6 million (NZ$21.8 million) was funded by a combination of $13.3 million (NZ$19.8 million) of working

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	capital, $792,000 (NZ$1.2 million) in shares of our Class A Common Stock (98,949 shares issued at $8.00 per share (NZ$11.94, using a NZ$ to US$ exchange ratio of $0.67)), and a $546,000 (NZ$784,000) purchase money promissory note The working capital was funded through a combination of cash of $5.4 million (NZ$8.1 million) and a drawdown under of our new banking facility in New Zealand of $8.3 million (NZ$12.3 million). The shares issued includes a non-transferable option to put to us the Class A Common Stock issued to them at a put price of NZ$11.94 at any time during January 2006. The $546,000 (NZ$784,000) purchase money promissory note has an interest rate of 5.50% and requires that all principal and interest be paid in February 2006.
	With the closing of the Movieland acquisition and the opening of a new 8 screen Berkeley joint venture cinema, (discussed separately above) we now own directly seven cinemas representing 37 screens and own indirectly through our various Berkeley joint ventures an additional five cinemas with 29 screens in New Zealand. As previously mentioned, two of the newly acquired cinemas have the capacity for 4 additional screens. Completion of these expansion screens will increase our New Zealand screen count to 70 screens in twelve cinemas plus a 5-plex cinema managed by one of our Berkeley joint ventures. By comparison, our principal competitors in New Zealand, Hoyts and Village/ Sky, own 50 screens, and 60 screens, respectively.

	7.	Anderson Cinema Circuit: On July 1, 2004, we acquired most of the assets of the Australia based “Anderson Circuit” for $5.7 million (AUS$8.0 million) giving us four existing cinemas with 22 screens and agreements to lease with respect to two additional cinemas (with an additional 15 screens) in two facilities then under construction. Prior to selling the circuit, the Andersons had encountered financial difficulties, and substantially all of their cinema assets had been placed in the hands of a receiver by their bank lender. Ultimately, as the result of negotiations with the Andersons, certain other stockholders, landlords and the bank, we were able to acquire all but one of the cinemas that had historically comprised the Anderson circuit and both of their projects (West Lakes and Rhodes) then under development.

	The total acquisition costs of these cinemas, of $5.7 million (AUS$8.0 million), excluding the cost of the fit-out of the two development cinemas, were met from our own funds in conjunction with a $3.4 million (AUS$4.7 million) drawdown on the newly signed $39.3 million (AUS$55.0 million) bank facility. As part of this acquisition, several landlords required bank guarantees, which increased our restricted cash by $296,000 (AUS$417,000) and reduced our total credit facility by $1.9 million (AUS$2.7 million). The total fit-out cost for the two development cinemas aggregated $3.8 million (AUS$5.0 million) and was paid from our own funds.
	As ownership of the various cinemas in the circuit was divided among a variety of entities and subject to the claims of a variety of creditors, the acquisitions were ultimately structured as the acquisition of (i) the shares of one company, which owns as its sole asset the 10-screen leasehold cinema at Epping (a suburb of Melbourne), (ii) agreements to lease with respect to two leasehold cinemas opened in the fourth quarter at Rhodes (8 screens) (a suburb of Sydney) and West Lakes (7 screens) (a suburb of Adelaide), and (iii) three existing leasehold cinemas at Colac (2 screen), Melton (5 screens) and Sunbury (5 screens) (all suburbs of Melbourne).

	8.	Newmarket Property: We currently own an approximately four-acre property located in the Newmarket area of Brisbane, Australia, which we are developing as an approximately 100,000 square foot shopping center. On July 1, 2004, we acquired an approximately 12,500 square foot parcel adjacent to that development site for $1.0 million (AUS$1.4 million). We anticipate that the addition of this property will allow the addition of a complementary cinema element to the project. On December 31, 2004, we entered into a $25.2 million (AUS$32.7 million) construction loan with the Bank of Western Australia, Ltd. This loan will be used to fund the construction of the Newmarket site.
	9.	Angelika — Plano: We have been retained to manage a new art cinema in Plano, Texas which is being operated under our Angelika name and which commenced operations in June 2004.

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	10.	CineVista Cinema: Negotiations for the sale of the Puerto Rican circuit are ongoing, but have not progressed. No assurances can be given that the sale will be consummated. As a result, effective December 31, 2002, the Puerto Rican circuit was no longer deemed to be an asset held for sale for accounting purposes and was no longer presented as such at December 31, 2004 or 2003, respectively.
	11.	Christchurch: In September 2003, we opened an 8-screen cinema in Christchurch, New Zealand (beneficially owned in an unincorporated joint venture with our partner in the Berkeley Cinemas chain in New Zealand).
	12.	Mt. Gravatt: On May 15, 2003, we acquired, for $2,178,000 (AUS$3,244,000), and the settlement of certain litigation claims (i) an undivided 1/3rd interest in the unincorporated joint venture that owns and operates the 16-screen multiplex cinema at the Mt. Gravatt shopping center in suburban Brisbane, Australia and (ii) the right, exercisable at any time prior to December 16, 2003, to sell that interest back to the sellers for $4,960,000 (AUS$7,388,000), the “Put Price.” We have elected to continue to hold our ownership interest in that cinema. In addition, as a part of that settlement, we also received the right to acquire at cost an undivided interest in an additional multiplex cinema development opportunity. The extent of our participation is subject to certain factors outside of our control, but will not be less than a 1/3 interest nor greater than a 1/2 interest. While the development is proceeding, it has not yet reached the point of maturity where we are obliged to make an election whether or not to participate, or as to the extent of our participation.

Our purchase of our undivided ownership interest in the Mt. Gravatt cinema at the seller’s undepreciated historic cost of $2,178,000 (AUS$3,244,000) resulted in a one-time gain of $2,259,000 (AUS$3,463,000), net of applicable expenses. The gain was based on a fair market value for that unconsolidated joint venture interest of $4,960,000 (AUS$7,388,000), as reflected by the above described “Put Price.” In addition, we received approximately $287,000 (AUS$430,000) in profit distribution covering the period from December 18, 2002 (the agreed effective date of the parties’ settlement) to May 15, 2003 (the date on which the settlement was completed). We additionally booked the recovery of approximately $518,000 in legal fees related to the litigation. As permitted by SFAS No. 141, Business Combinations, the proceeds were prorated and approximately $60,000 (AUS$92,000) was recognized as income. The remainder was recorded as an adjustment to the joint venture purchase price.

	13.	Gish Biomedical: We began liquidating our investment in Gish in 2003, and as of April 30, 2003 we had divested all of our holdings. For the year ended December 31, 2002, the Gish stock was carried as an available-for-sale security at approximately $1,016,000 under the caption “Investment in Marketable Securities” on our Consolidated Balance Sheets.
	14.	Disposition of Agricultural Operations: In July 2002, we effectively disposed of our agricultural investment when certain agricultural partnerships in which we had an interest reconveyed their interests in the Big 4 Ranch to the original owner of that property in satisfaction of the purchase money mortgage held by the original owner. We had previously written off our investment in and advances made to these agricultural partnerships in September 2000.
	15.	Courtenay Central Opening: In March 2002, we opened our Courtenay Central ETRC complex located in Wellington, New Zealand. In addition to a 10-screen cinema, there is approximately 37,383 square feet of restaurant and retail space and a car park. As of December 31, 2004, approximately 86% of the available restaurant and retail space had been leased. We are now working on Phase II of that project, a planned 150,000 square foot expansion including approximately 110,000 square feet of retail and a multiplex art specialty cinema.
	16.	Sutton Hill Transaction: In 2000, we entered into a transaction with a related party designed to give us (i) operating control, through an operating lease, of the City Cinemas theater chain in Manhattan, and (ii) the right to enjoy any appreciation in the underlying real estate assets, through a fixed price option to purchase these cinemas on an all or nothing basis in 2010. Two of the cinemas included in that chain — the Murray Hill Cinema and the Sutton Cinema — have now been sold for redevelop-

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		ment, under terms that we believe preserve this basic structure and which will, if we exercise our purchase option, give us the future benefit of any appreciation realized in those assets during the time they were under our operation and control.

	In July 2000, we acquired from Sutton Hill Capital, LLC (“SHC”) the Manhattan based City Cinemas circuit in a transaction structured as a 10 year operating lease (the “City Cinemas Operating Lease”) with options either to extend the lease for an additional 10 year term or, alternatively, to purchase the improvements and certain of the real estate assets underlying that lease (the “City Cinemas Purchase Option”). We paid an option fee of $5,000,000, which will be applied against the purchase price if we elected to exercise the City Cinemas Purchase Option. The aggregate exercise price of the City Cinemas Purchase Option was originally $48,000,000, and rent was calculated to provide an 8.25% yield to SHC (subject to an annual modified cost of living adjustment) on the difference between the exercise price and the $5,000,000 option fee. Incident to that transaction, we agreed to lend to SHC (the “City Cinemas Standby Credit Facility”) up to $28,000,000, beginning in July 2007, all due and payable in December 2010 (the principal balance and accrued interest on any such loan was likewise to be applied against the option exercise price, in the event the option was exercised). The interest rate on the City Cinemas Standby Credit Facility was also fixed at 8.25%, subject to the same modified cost of living adjustment used to calculate rent under the City Cinemas Operating Lease.
	We have no legal obligation to exercise either the option to extend the City Cinemas Operating Lease or the City Cinemas Purchase Option. However, our recourse against SHC on the City Cinemas Standby Credit Facility is limited to the assets of SHC which consist of, generally speaking, only the assets subject to the City Cinemas Purchase Option. In this annual report, we refer to the transaction memorialized by the City Cinemas Operating Lease, City Cinemas Purchase Option and City Cinemas Standby Credit Agreement as the City Cinemas Transaction. Because the City Cinemas Operating Lease is an operating lease and since the City Cinemas Standby Credit Facility was, in our view, adequately secured, no asset or liability was established on our balance sheet at the time of the City Cinemas Transaction other than the option fee, which has been deferred and is being amortized over the 10 year period of the lease.
	SHC is indirectly owned by Messrs. James J. Cotter and Michael Forman. Mr. Cotter is our Chairman, Chief Executive Officer and controlling stockholder. Mr. Forman is a major holder of our Class A Stock. As the transaction was a related party transaction, it was reviewed and approved by a committee of our Board of Directors comprised entirely of independent directors.
	Since we entered into the City Cinemas Transaction, two of the cinema properties involved in that transaction have been sold to third parties for redevelopment: the Murray Hill Cinema and the Sutton Cinema. These purchasers paid $10,000,000 and $18,000,000 respectively for these two properties, which included the cost of acquiring the fee interest in these properties held by Nationwide Theaters (an affiliate of SHC), the leasehold interest held by SHC, and our rights under the City Cinemas Operating Lease and the City Cinemas Purchase Option. Since we believed that a sale of these properties at these prices was more beneficial to us than continuing to operate them as cinemas, and since the original City Cinemas Transaction did not contemplate a piece-meal release of properties or give us the right to exercise our City Cinemas Purchase Option either (i) on a piece-meal basis or (ii) prior to July 2010, we worked with SHC to devise a transaction that would allow us to dispose of our collective interests in these properties while preserving the fundamental benefits of the transaction for ourselves and SHC. Included among the benefits to be preserved by SHC was the deferral of any capital gains tax with respect to the transfer of the remaining properties until 2010 and assurances that the various properties involved in the City Cinemas Transaction would only be acquired by us on an “all or none” basis. Included among the benefits to be preserved for us was the right to get the benefit of 100% of any appreciation in the properties underlying the City Cinemas Operating Lease between the date of that lease (July 2000) and the date any such properties were sold,

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	provided that we ultimately exercised our purchase rights under the City Cinemas Purchase Option.
	As a result of these negotiations and the sale of these two properties, our rent under the City Cinemas Operating Lease has been reduced by approximately $1,861,000 per annum, the exercise price of the City Cinemas Purchase Option has been reduced from $48,000,000 to $33,000,000, and our funding obligation under the City Cinemas Standby Line of Credit has been reduced from $28,000,000 to $13,000,000. In addition, we received in consideration of the release of our interest in the Murray Hill Cinema a cash payment of $500,000. In consideration of the transfer of our interest in the Sutton Cinema we received (i) a $13,000,000 purchase money promissory note (the Sutton Purchase Money Note”) secured by a first mortgage on the Sutton Cinema property (the “Sutton Purchase Money Mortgage”), (ii) a right to acquire up to a 25% interest in the special purpose entity formed to redevelop the Sutton Cinema property for a prorated capital contribution (the “Sutton Reinvestment Option”) or to receive instead an in lieu fee of $650,000, and (iii) the right to operate the Sutton Cinema until such time as the Sutton Purchase Money Note was paid. The Sutton Purchase Money Note was due and payable on October 21, 2005, and carried interest for the first year at 3.85%, increasing in the second year to 8.25%. On September 14, 2004, the Sutton Purchase Money Note was prepaid in full and we exercised our Sutton Reinvestment Option.
	In keeping with the “all or nothing” nature of our rights under the City Cinemas Purchase Option, we agreed to use the principal proceeds of the Sutton Purchase Money Promissory Note to fund a portion of our remaining $13.0 million obligation under the City Cinemas Standby Credit Facility. As of December 31, 2004, we have funded $8.0 million of this obligation. We anticipate that the remaining obligation will be fully funded by July 2007. We have also agreed that the principal amount of the City Cinemas Standby Credit Facility will be forgiven if we do not exercise our purchase rights under the City Cinemas Purchase Option. Accordingly, if we exercise our rights under the City Cinemas Purchase Option to purchase the remaining City Cinemas assets, we will be acquiring the remaining assets subject to the City Cinemas Operating Lease for an additional cash payment of $15,000,000, (offsetting against the current $33,000,000 exercise price, the previously paid $5,000,000 deposit and the $13,000,000 principal amount of the City Cinemas Standby Credit Facility) and will receive, in essence, the benefit of 100% of the appreciation in all of the properties initially subject to the City Cinemas Operating Lease between July 2000, and the date such properties were either disposed of or acquired by us pursuant to the City Cinemas Purchase Option. If we do not exercise our option to purchase, then the City Cinemas Credit Facility will be forgiven, and we will not get the benefit of such appreciation. The remaining properties consist of the Village East Cinema, which is located at the corner of 2nd Avenue and 11th Street in Manhattan, on a 27 year land lease, and the Cinemas 1, 2 & 3. It is located on 3rd Avenue between E. 59th and E. 60th Streets in Manhattan and likewise on a long term ground lease. We are currently under contract to purchase the Cinemas 1, 2, & 3 ground lease from another party for $12.2 million.
	Since the Murray Hill Cinema sale transaction was structured as a release of our leasehold interest in the Murray Hill Cinema, we did not recognize any gain or loss for either book or tax purposes, other than the $500,000 in lieu fee, which was recognized as non-operating income. We likewise did not book any gain or loss on the disposition of the Sutton Cinema for book purposes. However, we did recognize gain in the amount of approximately $13,000,000 for state and federal tax purposes, which gain was offset against net operating losses. Notwithstanding this offset, we were still liable for alternative minimum tax on the transaction. That alternative minimum tax will, however, be offset against our future tax liabilities. In the event that we decide not to exercise our City Cinemas Purchase Option, we would at that time recognize a $13 million loss for tax purposes.
	Following the release of our leasehold interest in the Murray Hill Cinema and disposition of the Sutton Cinema in 2003 we accelerated the amortization of the option fee in the City Cinemas

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	Purchase Option agreement by $890,000. In addition, in October 2003 we recorded our loan commitment under the City Cinemas Standby Credit Facility as a payable in our long-term debt on the Consolidated Balance Sheet. As a result of having funded $8.0 million of this obligation during 2004, the remaining balance recorded as long-term debt is $5.0 million.
	Each of the above modification transactions involved was reviewed by a committee of the independent directors of the Board of Directors with the assistance of outside counsel. In each case, the independent directors of the applicable committee have found the transaction to be fair and in the best interests of Reading and its public stockholders. The material documents memorializing these transactions with SHC have been previously filed as exhibits to this annual report.
	Reflecting the disposition of the Murray Hill Cinema and the Sutton Cinema and the amendments to date with respect to the City Cinemas Transaction, we are currently paying SHC rent of $1,686,000 per year on a triple net basis. For the years ended December 31, 2004 and 2003, rent expense to SHC was $2,386,000 and $2,674,000, respectively. We have funded $8,000,000 of our remaining $13,000,000 obligation under the City Cinemas Standby Credit Facility (which currently earns interest at 8.98%, reduced our rent obligation under the City Cinemas Operating Lease to $1,686,000 per year for the Village East Cinema and the Cinemas 1, 2 & 3. Every $1,000,000 in increased funding under the City Cinemas Standby Credit Facility currently will result in an approximately $90,000 annual effective reduction in that rent obligation). We also have the option to purchase in July 2010 the remaining assets under the City Cinemas Operating Agreement (SHC’s long term leasehold interests in the Village East Cinema and the Cinemas 1, 2 & 3 in Manhattan and the improvements comprising these two cinemas) for an additional payment of $15,000,000 (plus whatever unfunded balance remains with respect to our funding obligation under the City Cinemas Standby Credit Facility).

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Year Ended December 31, 2004		Cinema				Real Estate				Corporate				Total
Revenue		$	87,257			$	15,725			$	—			$	102,982
Operating expense			72,476				7,321				—				79,797
Depreciation & amortization			8,569				4,230				100				12,899
General & administrative expense			5,172				638				10,428				16,238
Operating income (loss)			1,040				3,536				(10,528	)			(5,952	)
Other expense			—				(720	)			(745	)			(1,465	)
Income (loss) before tax			1,040				2,816				(11,273	)			(7,417	)
Income tax expense			—				—				1,046				1,046
Net income (loss)		$	1,040			$	2,816			$	(12,319	)		$	(8,463	)
Year Ended December 31, 2003
Revenue		$	81,464			$	12,275			$	—			$	93,739
Operating expense			65,002				7,436				—				72,438
Depreciation & amortization			7,517				4,301				185				12,003
General & administrative expense			4,782				1,017				8,839				14,638
Operating income (loss)			4,163				(479	)			(9,024	)			(5,340	)
Other income			—				—				123				123
Income (loss) before tax			4,163				(479	)			(8,901	)			(5,217	)
Income tax expense			—				—				711				711
Net income (loss)		$	4,163			$	(479	)		$	(9,612	)		$	(5,928	)
Year Ended December 31, 2002
Revenue		$	75,717			$	10,683			$	86			$	86,486
Operating expense			62,845				6,482				—				69,327
Depreciation & amortization			5,621				2,689				395				8,705
General & administrative expense			5,789				1,097				7,545				14,431
Operating income (loss)			1,462				415				(7,854	)			(5,977	)
Other expense			—				—				(1,971	)			(1,971	)
Income (loss) before tax			1,462				415				(9,825	)			(7,948	)
Income tax expense			—				—				6				6
Net income (loss)		$	1,462			$	415			$	(9,831	)		$	(7,954	)

	Cinema

	2004 Compared with 2003

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	•	increased domestic depreciation expense stemming from various renovation/remodeling projects undertaken at the Angelika New York and Village East cinemas; and
	•	increased depreciation and amortization expense related to our acquisitions of the Movieland and Anderson circuits.

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	2003 Compared with 2002

	•	accelerated amortization taken against the Option Fee in the City Cinemas Purchase Option agreement;

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	•	increased domestic depreciation expense stemming from various renovation/remodeling projects undertaken at the Angelika New York and Village East cinemas; and
	•	a full year of depreciation taken on the Wellington ETRC.

	•	the decrease in the beneficial lease rent payments;
	•	the credit of approximately $518,000 of reimbursed legal fees resulting from the settlement and acquisition of a joint venture (fully described in Note 6 to the consolidated financial statements);
	•	the closure of the administrative office in Puerto Rico; offset by
	•	litigation against one of our joint venture partners in Australia relative to collection on a promissory note related to our former investment in the Whitehorse center.

	Real Estate

	2004 Compared with 2003

	Rental Real Estate Holdings

	•	the Belmont, Perth ETRC, the Auburn, Sydney ETRC and the Courtenay Central ETRC in Wellington, New Zealand;
	•	three single auditorium live theaters in Manhattan (Minetta Lane, Orpheum, and Union Square) and a four auditorium live theater complex in Chicago (The Royal George) and their accompanying ancillary retail and commercial tenants;
	•	the ancillary retail and commercial tenants at some of our cinema locations;
	•	an office building located in Glendale, California (which we are under contract to sell in the first quarter of 2005); and
	•	certain domestic properties historically used in our railroad operations (which were held for sale at December 31, 2004).

	•	three fee parcels, incident to our acquisition of the Movieland Circuit in New Zealand. These parcels included, in addition to cinemas, expansion space for two of the cinemas and the ancillary retail and commercial tenants at two of the locations;
	•	an approximately 13,000 square foot parcel next to our Newmarket site. It is anticipated that the acquisition of this fee interest will enable us to develop a cinema at that site, in addition to the approximately 100,000 square foot shopping center being constructed at that location as discussed below under the caption “Property Held for Development;” and
	•	the beneficial interest under an executory agreement to purchase the fee interest in the land underlying our Cinemas 1, 2 & 3 property.

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	•	an increase in rental revenue at our Australia and New Zealand ETRC’s due to higher occupancy rates;
	•	an increase in rental revenue relating to the ancillary retail and commercial tenants at two of our locations acquired in the Movieland acquisition;
	•	renegotiation of rents at our Union Square property which resulted in a $358,000 per annum increase; and
	•	a 2% decrease in “dark-time” (period when the live theaters carry no productions) when compared to fiscal 2003 at our rental live theaters. The rental live theaters’ decrease in dark time was positively impacted by the continued success of the production, Stomp, at our Orpheum Theater as well as improved occupancy rates in our Royal George Theater (where a production has been in our main stage for 31 weeks in 2004; this stage had been dark for 49 weeks in 2003) and Minetta Theater.

	Property Held for Development

	•	an approximately 50-acre property located in the Burwood area of Melbourne, Australia (currently in the zoning and planning stages for mixed use residential, retail, entertainment and commercial purposes);
	•	an approximately three-acre property located in the Moonee Ponds area of Melbourne, Australia (currently in the planning stages as an ETRC);
	•	an approximately four-acre property located in the Newmarket area of Brisbane, Australia (currently in the construction phase for a multiplex cinema and an approximately 100,000 square foot shopping center);
	•	an approximately two-acre property located adjacent to our Auburn ETRC in the Auburn area of Sydney, Australia (currently being held for development);
	•	an approximately one acre property located adjacent to the Courtenay Central ETRC in Wellington, New Zealand (currently in the design and governmental approval stages; negotiations are ongoing with two anchor tenants with respect to development of this approximately 150,000 square foot retail/entertainment addition to our existing Courtenay Central ETRC in downtown Wellington ); and
	•	a 25% interest in the redevelopment of our previously sold Sutton Cinema site on 57th street near its intersection with 3rd Avenue. The property is being redeveloped as an approximately 100,000 square foot residential condominium project with ground floor retail.

	2003 Compared with 2002

	Rental Real Estate Holdings

	•	the Belmont, Perth ETRC, the Auburn, Sydney ETRC and the Courtenay Central ETRC in Wellington, New Zealand;
	•	three single auditorium live theaters in Manhattan (Minetta Lane, Orpheum, and Union Square) and a four auditorium live theater complex in Chicago (The Royal George) and their accompanying ancillary retail and commercial tenants;
	•	the ancillary retail and commercial tenants at some of our cinema locations;
	•	an office building located in Glendale, California; and

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	•	certain domestic railroad-related properties (held for sale).

	•	a full year of depreciation expense in 2003 attributable to the Courtenay Central ETRC, which opened in March 2002;
	•	the write off of certain legal and development costs relating to the Whitehorse Center, an aborted development project in Australia; which was offset by
	•	a 9% decrease in “dark-time” (period when the live theaters carry no productions) for our live theater rentals when compared to fiscal 2002. The live theaters’ operating results were positively impacted by the continued success of the production, Stomp, as well as a full year of revenue and the high gross returns earned on the I Love You You’re Perfect, Now Change production. In September 2003, the production of Portraits opened at the Union Square Theater on September 9, 2003 and closed on October 5, 2003.

	•	an approximately 50-acre property located in the Burwood area of Melbourne, Australia;
	•	an approximately three-acre property located in the Moonee Ponds area of Melbourne, Australia;
	•	an approximately four-acre property located in the Newmarket area of Brisbane, Australia;
	•	an approximately 12,500 square foot parcel adjacent to the four-acre property located in the Newmarket area of Brisbane;
	•	an approximately two-acre property located adjacent to the Auburn ETRC in the Auburn area of Sydney, Australia; and
	•	an approximately one acre property located adjacent to the Courtenay Central ETRC in Wellington, New Zealand.

	Corporate

	2004 Compared to 2003

	•	costs for Sarbanes-Oxley implementation and the associated first year audit costs of $520,000;
	•	duplicate salaries and severance payments relating to a major change-over in executive personnel at our Australian operation of approximately $540,000; and
	•	bank fees associated with financing activities that ultimately were not consummated due to our decision to pursue alternate financing opportunities amounted to approximately $165,000.

	•	Interest expense/income;
	•	Gain/loss on sale of assets;
	•	equity income/loss;
	•	minority interest; and
	•	other miscellaneous income/loss items.

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	•	net interest expense of $4,762,000 which was $531,000 higher than 2003 because of higher debt and interest rates and an $91,000 increase in interest related to marking our interest swap instruments to market in accordance with SFAS No. 133 — Accounting for Derivatives; and
	•	the absence in income to compensate for the $500,000 release of option, recorded in 2003 with respect to the disposition of our interest in the Murray Hill cinema and for the $2,259,000 also recorded in 2003 with respect to the settlement of certain litigation claims in Australia.

	•	equity earnings from our affiliates of $1,680,000 which was $1,092,000 higher than 2003 primarily due to a full year of earnings from our Christchurch joint venture which opened in September 2003 and a full year of earnings at our Mt. Gravatt joint venture which effected earnings from May 2003; and
	•	$1,686,000 of realized exchange gain on monies transferred from our Australian subsidiary to the US parent.

	2003 Compared to 2002

	•	interest (expense) income;
	•	gain (loss) on sale of assets;
	•	equity income (loss);
	•	minority interest; and
	•	other miscellaneous income and loss items.

	•	the recording in June 2003 of a $2,259,000 one-time gain on the settlement of two lawsuits involving antitrust and trade practices as fully described in Note 6 to the consolidated financial statements;
	•	the recognition of a $500,000 gain on the release of the Murray Hill option in May 2003; and
	•	increased interest expense due to the completion of the Wellington project in that interest could no longer be capitalized and was expensed.

	Financial Condition

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	Liquidity and Capital Resources

	•	working capital requirements;
	•	capital expenditures; and
	•	debt servicing requirements.

	Operating Activities

	•	approximately $1.6 million in reduced operating cash flows from our cinemas predominately in the United States;
	•	a $1.7 million gain on foreign currency translation;
	•	an increase of $1.1 million in equity earnings of unconsolidated investments; and
	•	in 2003, a disposal of our Gish stock which resulted in the receipt of $1.0 million in cash proceeds.

	Investing Activities

	•	$20.0 million of business acquisition costs related to the Anderson Circuit acquisition for $5.7 million (AUS$8.0 million), to the Newmarket land purchase of $1.0 million (AUS$1.4 million) and the Movieland Circuit acquisition of $13.3 million (NZ$19.8 million);
	•	$3.8 million (AUS$5.0 million) related to the fit-outs to our Westlake and Rhodes locations;
	•	$2.3 million of joint venture costs relating to our investment in the Sutton redevelopment project with 205-209 E. 57th Street Associates, LLC; offset by
	•	$13.0 million receivable payment on the Sutton Promissory Note.

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	Financing Activities

	•	$60.7 million of proceeds in borrowings primarily from our new credit facilities in Australia of $24.9 million (AUS$32.3 million) and in New Zealand of $35.5 million (NZ$50.0 million) and
	•	$600,000 of lower distributions to minority interests; offset by
	•	$52.4 million of repayments on existing debt and obligations.

	Contractual Obligations

			2005				2006				2007				2008				2009				Thereafter
Long-term debt			$	610			$	1,529			$	9,638			$	2,785			$	56,297			$	12,393
Lease obligations				13,601				13,739				13,923				13,173				12,797				98,966
Interest on long-term debt				5,886				5,826				5,695				5,485				3,639				445
	Total		$	20,097			$	21,094			$	29,256			$	21,443			$	72,733			$	111,804

	•	commitment to purchase for $12.2 million the fee interest underlying our current leasehold estate in the Cinemas 1, 2, & 3 properties.
	•	put option valued at $175,000 (NZ$261,000) in relation to the stock issued to the sellers of Movieland.
	•	commitment to make a capital contribution of $719,000 to 205-209 East 57th Street Associates, LLC relating to the Sutton Redevelopment in the first quarter of 2005.

	Summary

	•	Cash used in the purchase of the Anderson circuit of $5.7 million (AUS$8.0 million) and the related fit-out costs of two new cinemas $3.8 million (AUS$5.0 million) totaling $9.5 million (AUS$13.0 million);
	•	Cash used in the purchase of the Movieland circuit and related fee interests of $13.3 million (NZ$19.8 million);
	•	Cash of $1.0 million (AUS$1.4 million) paid for the acquisition of land adjacent to our Newmarket property in Brisbane, Australia;

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	•	Cash of $1.4 million expended on the Newmarket development project (an approximately 100,000 square foot shopping center located in a suburb of Brisbane, Australia), to date;
	•	Cash of $800,000 deposited in connection with our acquisition of the Cinemas 1, 2 and 3 fee interest in Manhattan;
	•	Cash of $2.3 million paid as our 25% ownership equity in the redevelopment of the property located on 57th Street just below 3rd Avenue in Manhattan as an approximately 100,000 square foot condominium complex; offset by
	•	Net borrowings increase of $21.2 million primarily from increased borrowings in Australia and New Zealand.

	•	On December 31, 2004 we entered into a $25.2 million (AUS$32.7 million) construction loan with the Bank of Western Australia, Ltd through our Australian subsidiary Newmarket Properties Pty, Ltd. This loan is to be used to finance the construction of our approximately 100,000 square foot shopping center, currently under construction in Newmarket, Queensland, Australia;
	•	In December 2004, we concluded negotiations to move our Los Angeles corporate headquarters out of downtown to the City of Commerce, California, a suburb of Los Angeles, resulting in a projected annual savings of approximately $100,000;
	•	On November 23, 2004, we replaced our existing $20.9 million (NZ$31.3 million) New Zealand credit facility with a $35.5 million (NZ$50.0 million) credit facility providing us the funds to pay off the notes payable related to the Movieland acquisition and providing additional funds for current liquidity;
	•	On October 4, 2004 we entered into a $39.3 million (AUS$55.0 million) credit facility with the Bank of Western Australia, Ltd through our Australian subsidiary, Reading Entertainment, Australia, Pty, Limited. This credit facility replaces our prior facility with that lender in the amount of $21.4 million (AUS$30 million), expires on January 1, 2009 and provides for interest-only payments until June 30, 2006. At December 31, 2004, we had drawn down $24.9 million (AUS$32.3 million) and issued guarantees of $1.9 million (AUS$2.7 million); therefore, we have $15.4 million (AUS$20.0 million) available to draw on for future liquidity;
	•	In January 2004, we concluded the consolidation of our worldwide insurance coverage at an anticipated saving of approximately $500,000 annually in insurance costs. In January 2005, this policy has been renewed with an additional $100,000 savings;
	•	As more fully described in the 2003 Annual Report, on October 22, 2003 we finalized the sale of our Sutton Property located in Manhattan. Since we previously held the Sutton Property pursuant to a master operating lease with option to purchase, we expect the net economic effect of the sale will be to reduce our annual net expense by approximately $1.2 million after the first anniversary year of the sale. During 2004, we realized savings of approximately $966,000; and
	•	In the first quarter of 2003, as part of our ongoing drive to reduce general and administrative expense and notwithstanding our commitment to sell our Puerto Rico circuit, we consolidated our Puerto Rican administrative support function into our corporate office in Los Angeles, California. This consolidation has resulted in an annual reduction to our general and administrative expense of approximately $170,000.

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	•	the payment of tenant improvement incentives to lessees in Australia and the US;
	•	equity funding for several new developments in Australia and New Zealand;
	•	funding the balance of the purchase price of the underlying ground lease of our Cinemas 1, 2 & 3 land acquisition; and
	•	funding of the Whitehorse Litigation judgment.

	•	to defer construction of projects currently slated for land presently owned by us;
	•	to take on joint venture partners with respect to such development projects; and/or
	•	to sell assets.

	Critical Accounting Policies

	•	impairment of long-lived assets, including goodwill and intangible assets;
	•	tax valuation allowance and obligations; and
	•	legal and environmental obligations.

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	Financial Risk Management

	•	Our Australian Corporate Credit Facility provides for floating interest rates, but requires that not less than 50% of the loan be swapped into fixed rate obligations. The facility allowed us to utilize the old swap that was in place from our previous facility, at 6.70%, through its term, and to swap up to 50% of the maximum credit facility immediately. As a result, at December 31, 2004, the floating rate portion, at 6.48% was $3.7 million (AUS$4.8 million); the old swap at 6.70% was $10.2 million (AUS$13.3 million); and the new swap, at 7.44% was $10.9 million (AUS$14.3 million). The old swap expires fully on December 31, 2007, at which time the full swap amount will be held under the new swap, which expires on December 31, 2008. We believe the interest rate and other terms of Our Australian Corporate Credit Facility to be customary for loans of this type in Australia and competitive. All interest rates above include a 1.00% interest rate margin.
	•	The Australian construction/term facility of $25.2 million (AUS$32.7 million) provides for a floating rate of interest, but requires not less than 75% of the loan to be swapped into fixed rate obligations. At

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		December 31, 2004, the fixed rate portion was at 7.18%. The current swap continues until May 31, 2006. The construction loan converts to a term loan on completion of the construction, and is interest only during the construction period and for the remaining years of the term loan expiring on January 1, 2009. All interest rates above include a 1.00% interest rate margin. As of 12/31/2004 there was no drawdown on the facility.

	Inflation

	Litigation

	•	contractual obligations;
	•	insurance claims;
	•	IRS claims;
	•	employment matters; and
	•	anti-trust issues.

	Tax Audit

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	Environmental and Asbestos Claims

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	Whitehorse Center Litigation

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	Other Claims

	Recent Accounting Pronouncements

	Business Climate

	Cinema Exhibition — General

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	Cinema Exhibition — North America

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	Cinema Exhibition — Australia/New Zealand

	Cinema Exhibition — Puerto Rico

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	Income Taxes

	•	the amount of taxable income in particular jurisdictions;
	•	the tax rates in particular jurisdictions;
	•	tax treaties between jurisdictions;
	•	the extent to which income is repatriated; and
	•	future changes in law.

	•	With respect to our cinema operations:

	•	The number and attractiveness to movie goers of the films released in future periods;
	•	The amount of money spent by film distributors to promote their motion pictures;
	•	The licensing fees and terms required by film distributors from motion picture exhibitors in order to exhibit their films;
	•	The comparative attractiveness of motion pictures as a source of entertainment and willingness and/or ability of consumers (i) to spend their dollars on entertainment and (ii) to spend their entertainment dollars on movies in an outside the home environment; and
	•	The extent to which we encounter competition from other cinema exhibitors, from other sources of outside of the home entertainment, and from inside the home entertainment options, such as “home theaters” and competitive film product distribution technology such as, by way of example, cable, satellite broadcast, DVD and VHS rentals and sales, and so called “movies on demand;”

	•	With respect to our real estate development and operation activities:

	•	The rental rates and capitalization rates applicable to the markets in which we operate and the quality of properties that we own;

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	•	The extent to which we can obtain on a timely basis the various land use approvals and entitlements needed to develop our properties;
	•	The availability and cost of labor and materials;
	•	Competition for development sites and tenants; and
	•	The extent to which our cinemas can continue to serve as an anchor tenant which will, in turn, be influenced by the same factors as will influence generally the results of our cinema operations;

	•	With respect to our operations generally as an international company involved in both the development and operation of cinemas and the development and operation of real estate; and previously engaged for many years in the railroad business in the United States:

	•	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;
	•	The relative values of the currency used in the countries in which we operate;
	•	Changes in government regulation, including by way of example, the costs resulting from the implementation of the requirements of Sarbanes Oxley;
	•	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);
	•	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;
	•	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
	•	Changes in applicable accounting policies and practices.

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	•	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.

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Item 8 —	Financial Statements and Supplementary Data

Report of Independent Registered Public Accountants		68
Consolidated Balance Sheets as of December 31, 2004 and 2003		69
Consolidated Statements of Operations for the Three Years Ended December 31, 2004		70
Consolidated Statements of Stockholders’ Equity for the Three Years Ended December 31, 2004		71
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2004		72
Notes to Consolidated Financial Statements		73

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				December 31,
				2004				2003
				(U.S. dollars in
				thousands)
ASSETS
Current Assets:
Cash and cash equivalents				$	12,292			$	21,735
Receivables					7,145				4,787
Inventory					804				518
Investment in marketable securities, at cost					29				85
Restricted cash					815				456
Prepaid and other current assets					3,185				2,161
	Total current assets				24,270				29,742
Rental property, net					7,396				7,916
Property & equipment, net					133,660				122,546
Property held for development					27,346				24,364
Investment in unconsolidated joint ventures					7,352				3,407
Note receivable due from related party					—				13,000
Capitalized leasing costs					297				411
Goodwill					13,816				5,090
Intangible assets, net					11,957				12,248
Other non-current assets					4,133				4,142
		Total assets		$	230,227			$	222,866
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued liabilities				$	15,341			$	13,222
Film rent payable					4,144				4,489
Notes payable — current portion					610				1,930
Income taxes payable					7,157				7,546
Deferred current revenue					2,227				1,561
Other current liabilities					599				1,148
	Total current liabilities				30,078				29,896
Notes payable — long-term portion					82,642				69,215
Deferred non-current revenue					733				1,143
Other non-current liabilities					11,294				9,633
	Total liabilities				124,747				109,887
Commitments and contingencies (Note 17)
Minority interest in consolidated affiliates					3,470				4,488
Stockholders equity:
Class A Nonvoting Common Stock, par value $0.01, 100,000,000 shares authorized, 34,444,167 issued and 20,452,733 outstanding at December 31, 2004 and 33,858,310 issued and 19,866,876 outstanding at December 31, 2003					205				199
Class B Voting Common Stock, par value $0.01, 20,000,000 shares authorized, 2,198,761 issued and 1,545,506 outstanding at December 31, 2004 and 2,685,669 issued and 2,032,414 outstanding at December 31, 2003					15				20
Nonvoting Preferred Stock, par value $0.01, 12,000 shares authorized and no outstanding shares at December 31, 2004 and 2003					—				—
Additional paid-in capital					124,307				123,516
Accumulated deficit					(54,903	)			(46,440	)
Accumulated other comprehensive income					32,386				31,196
	Total stockholders equity				102,010				108,491
		Total liabilities and stockholders equity		$	230,227			$	222,866

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				Year Ended December 31,
				2004				2003				2002
				(U.S. dollars in thousands,
				except per share amounts)
Operating revenue
	Cinema			$	87,257			$	81,464			$	75,717
	Real estate				15,725				12,275				10,683
	Other				—				—				86
		Total operating revenue			102,982				93,739				86,486
Operating expense
	Cinema				72,476				65,002				62,845
	Real estate				7,321				7,436				6,482
	Depreciation and amortization				12,899				12,003				8,705
	General and administrative				16,238				14,638				14,431
		Total operating expense			108,934				99,079				92,463
Operating loss					(5,952	)			(5,340	)			(5,977	)
Non-operating income (expense)
	Interest income				845				808				512
	Interest expense				(4,762	)			(4,231	)			(3,288	)
	Earnings from investment advances to agricultural partnerships				—				—				1,110
	Net gain on sale of marketable securities				—				235				—
	Net (loss) gain on sale of assets				(114	)			148				—
	Other income (expense)				998				2,824				(55	)
Loss before minority interest, income tax expense and equity earnings of unconsolidated investments					(8,985	)			(5,556	)			(7,698	)
Minority interest					112				249				461
Loss before income taxes and equity earnings of unconsolidated investments					(9,097	)			(5,805	)			(8,159	)
Income tax expense					1,046				711				6
Loss before equity earnings					(10,143	)			(6,516	)			(8,165	)
Equity earnings of unconsolidated investments					1,680				588				211
Net loss				$	(8,463	)		$	(5,928	)		$	(7,954	)
Basic and diluted — loss per share				$	(0.39	)		$	(0.27	)		$	(0.36	)
Weighted average number of shares outstanding					21,948,065				21,860,222				21,821,236

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			Common Stock																								Accumulated
																			Additional								Other				Total
			Class A				Class A				Class B				Class B				Paid-In				Accumulated				Comprehensive				Stockholders’
			Shares				Par Value				Shares				Par Value				Capital				Deficit				Income/(Loss)				Equity
			(U.S. dollars in thousands)
At January 1, 2002				20,485			$	205				1,336			$	13			$	123,517			$	(32,558	)		$	(52	)		$	91,125
Net loss				—				—				—				—				—				(7,954	)			—				(7,954	)
Other comprehensive income:				—				—				—				—				—				—				—				—
	Cumulative foreign exchange rate adjustment			—				—				—				—				—				—				7,786				7,786
	Unrealized gain on securities			—				—				—				—				—				—				308				308
Total comprehensive income				—				—				—				—				—				—				—				140
At December 31, 2002				20,485			$	205				1,336			$	13			$	123,517			$	(40,512	)		$	8,042			$	91,265
Net loss				—				—				—				—				—				(5,928	)			—				(5,928	)
Other comprehensive income:				—				—				—				—				—				—				—				—
	Cumulative foreign exchange rate adjustment			—				—				—				—				—				—				23,373				23,373
	Unrealized loss on securities			—				—				—				—				—				—				(219	)			(219	)
Total comprehensive income				—				—				—				—				—				—				—				17,226
Class A common stock received from stockholder in exchange for Class B common stock				(618	)			(6	)			696				7				(1	)			—				—				—
At December 31, 2003				19,867			$	199				2,032			$	20			$	123,516			$	(46,440	)		$	31,196			$	108,491
Net loss				—				—				—				—				—				(8,463	)			—				(8,463	)
Other comprehensive income:				—				—				—				—				—				—				—				—
	Cumulative foreign exchange rate adjustment			—				—				—				—				—				—				1,190				1,190
Total comprehensive income				—				—				—				—				—				—				—				(7,273	)
Class B common stock received from stockholder in exchange for Class A common stock				487				5				(487	)			(5	)			—				—				—				—
Class A common stock issued				99				1				—				—				791				—				—				792
At December 31, 2004				20,453			$	205				1,545			$	15			$	124,307			$	(54,903	)		$	32,386			$	102,010

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					Year Ended December 31,
					2004				2003				2002
					(U.S. dollars in thousands)
Operating Activities
Net loss					$	(8,463	)		$	(5,928	)		$	(7,954	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization				12,899				12,003				8,705
		Gain on settlement of litigation				(1,375	)			(2,259	)			—
		Loss (gain) on sale of assets, net				114				(148	)			—
		Realized gain on foreign currency translation				(1,686	)			—				—
		Equity earnings of unconsolidated investments				(1,680	)			(588	)			(211	)
		Minority interest				112				249				461
		Earnings from investment advances to Agricultural Partnerships				—				—				(1,110	)
		Other, net				—				213				56
		Changes in assets and liabilities:
			Increase in receivables			(889	)			(806	)			(83	)
			(Increase) decrease in prepaid and other assets			(885	)			1,702				(209	)
			Increase (decrease) in payable and accrued liabilities			448				(1,626	)			1,503
			(Decrease) increase in film rent payable			(402	)			(4	)			509
			Increase in deferred revenues and other liabilities			778				2,899				1,498
Net cash (used in) provided by operating activities						(1,029	)			5,707				3,165
Investing Activities
	Proceeds from disposal of assets, net					157				932				—
	Purchase of property and equipment, net					(7,794	)			(2,889	)			(4,511	)
	Acquisitions of real estate and leasehold interests, net of cash acquired					(20,031	)			—				—
	Additions to property held for development					—				(888	)			(5,926	)
	Contributions to unconsolidated joint ventures					(2,290	)			(2,032	)			(85	)
	(Increase) decrease in restricted cash					(359	)			65				194
	Distributions from unconsolidated joint ventures					1,546				1,104				436
	Repayment of loan receivable					13,000				—				—
Net cash used in investing activities						(15,771	)			(3,708	)			(9,892	)
Financing Activities
	Repayments of debt					(52,439	)			(1,431	)			(4,958	)
	Distributions to minority interest					(1,137	)			(1,789	)			(328	)
	Proceeds from borrowings					60,681				—				8,130
	Repayments from agricultural partnerships and joint ventures					—				—				780
Net cash provided by (used in) financing activities						7,105				(3,220	)			3,624
Decrease in cash and cash equivalents						(9,695	)			(1,221	)			(3,103	)
Effect of exchange rate on cash						252				3,670				1,513
Cash and cash equivalents at beginning of year						21,735				19,286				20,876
Cash and cash equivalents at end of year					$	12,292			$	21,735			$	19,286
Supplemental Disclosures
	Cash paid during the period for:
		Interest on borrowings (net of $178,000 capitalized for property under development in 2002)			$	4,634			$	3,938			$	3,307
		Income taxes			$	312			$	524			$	18
Non-Cash Transactions
	Sale of Sutton Cinema (Note 4)
	Common Stock Issued for stock options exercised (Note 2)
	Common Stock Issued for acquisition (Note 18)
	Common Stock Exchanged (Note 18)

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Note 1 —	Nature of Business

	•	The development, ownership and operation of multiplex cinemas in the United States, Australia, New Zealand and Puerto Rico; and
	•	the development, ownership and operation of retail and commercial real estate in Australia, New Zealand and the United States, including entertainment-themed retail centers (“ETRC”) in Australia and New Zealand and live theater assets in Manhattan and Chicago in the United States.

											Weighted Average																Weighted Average
			Common Stock								Price of Options								Common Stock								Price of Exercisable
			Options Outstanding								Outstanding								Exercisable Options								Options
			Class A				Class B				Class A				Class B				Class A				Class B				Class A				Class B
Outstanding-December 31, 2001				405,250				1,231,470			$	5.40			$	8.10				303,650				1,231,470			$	5.81			$	7.53
	Expired			(51,250	)			(350,290	)		$	5.24			$	11.20				(43,750	)			(350,290	)		$	5.24			$	11.20
	Granted			1,105,000				—			$	3.75			$	—				709,688				—			$	3.75			$	—
Outstanding-December 31, 2002				1,459,000				881,180			$	4.15			$	6.08				969,588				881,180			$	4.59			$	7.25
	Exercised			—				(696,080	)		$	—			$	5.06				—				(696,080	)		$	—			$	5.06
	Expired/ Forfeited			(151,800	)			—			$	4.10			$	—				(151,800	)			—			$	4.00			$	—
	Granted			141,000				—			$	4.01			$	—				35,250				—			$	4.01			$	—
Outstanding-December 31, 2003				1,448,200				185,100			$	4.09			$	9.90				853,038				185,100			$	4.75			$	9.90
	Granted			40,000				—			$	7.80			$	—				40,000				—			$	7.80			$	—
Outstanding-December 31, 2004				1,488,200				185,100			$	4.19			$	9.90				893,038				185,100			$	4.80			$	9.90

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		Number Outstanding at December 31,
Class A Common Stock Range of Exercise Price		2004				2003				2002
$ 2.00 to $ 4.99			1,331,850				1,331,850				1,181,800
$ 5.00 to $ 9.99			75,100				35,100				90,950
$10.00 to $11.00			81,250				81,250				186,250
Total Outstanding			1,488,200				1,448,200				1,459,000

		Number Outstanding at December 31,
Class B Common Stock Range of Exercise Price		2004				2003				2002
$ 2.00 to $ 4.99			—				—				—
$ 5.00 to $ 9.99			35,100				35,100				713,630
$10.00 to $11.00			150,000				150,000				167,550
Total Outstanding			185,100				185,100				881,180

		2004		2003		2002
Stock option exercise price		$7.80		$4.01		$3.75
Risk-free interest rate		4.22%		4.04%		3.06%
Expected dividend yield		—		—		—
Expected option life		9.9 yrs		9.9 yrs		9.9 yrs
Expected volatility		36.4%		58.2%		50.2%
Weighted average fair value		$4.28		$2.83		$1.54

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			2004				2003				2002
Pro forma net loss:
	Net loss after tax		$	(8,463	)		$	(5,928	)		$	(7,954	)
	Add: Stock-based compensation costs included in reported net loss			—				—				—
	Deduct: Stock-based compensation costs under SFAS 123			(358	)			(287	)			(1,330	)
	Proforma net loss after tax		$	(8,821	)		$	(6,215	)		$	(9,284	)
Pro forma basic net loss per common share:
	Pro forma net loss per common share-basic and diluted		$	(0.40	)		$	(0.28	)		$	(0.43	)
	Reported net loss per common share-basic and diluted		$	(0.39	)		$	(0.27	)		$	(0.36	)

Note 3 —	Summary of Significant Accounting Policies

	Basis of Consolidation

	Accounting Principles

	Cash and Cash Equivalents

	Receivables

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	Inventory

	Investment in Marketable Securities

	Fair Value of Financial Instruments

	Derivative Financial Instruments

	Property Held for Development

	Property

	Construction-in-Progress and Property Development Costs

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	Depreciation and Amortization

Building and building improvements		40 years
Leasehold improvement		Shorter of the life of the lease or useful life of the improvement
Theater equipment		7 years
Furniture and fixtures		5 – 10 years

	Deferred Leasing/ Financing Costs

	Advertising Costs

	Revenue Recognition

	General and Administrative Expenses

	Translation of Non-U.S. Currency Amounts

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	Earnings Per Share

	Accounting for the Impairment of Long Lived Assets

	Goodwill and Intangible Assets

	Recent Accounting Pronouncements

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	Use of Estimates

	Reclassifications

Note 4 —	Related Parties and Transactions

	Sutton Hill Transaction

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	In July 2000, we acquired from Sutton Hill Capital, LLC (“SHC”) the Manhattan based City Cinemas circuit in a transaction structured as a 10 year operating lease (the “City Cinemas Operating Lease”) with options either to extend the lease for an additional 10 year term or, alternatively, to purchase the improvements and certain of the real estate assets underlying that lease (the “City Cinemas Purchase Option”). We paid an option fee of $5,000,000, which will be applied against the purchase price if we elected to exercise the City Cinemas Purchase Option. The aggregate exercise price of the City Cinemas Purchase Option was originally $48,000,000, and rent was calculated to provide an 8.25% yield to SHC (subject to an annual modified cost of living adjustment) on the difference between the exercise price and the $5,000,000 option fee. Incident to that transaction, we agreed to lend to SHC (the “City Cinemas Standby Credit Facility”) up to $28,000,000, beginning in July 2007, all due and payable in December 2010 (the principal balance and accrued interest on any such loan was likewise to be applied against the option exercise price, in the event the option was exercised). The interest rate on the City Cinemas Standby Credit Facility was also fixed at 8.25%, subject to the same modified cost of living adjustment used to calculate rent under the City Cinemas Operating Lease.
	We have no legal obligation to exercise either the option to extend the City Cinemas Operating Lease or the City Cinemas Purchase Option. However, our recourse against SHC on the City Cinemas Standby Credit Facility is limited to the assets of SHC which consist of, generally speaking, only the assets subject to the City Cinemas Purchase Option. In this annual report, we refer to the transaction memorialized by the City Cinemas Operating Lease, City Cinemas Purchase Option and City Cinemas Standby Credit Agreement as the City Cinemas Transaction. Because the City Cinemas Operating Lease is an operating lease and since the City Cinemas Standby Credit Facility was, in our view, adequately secured, no asset or liability was established on our balance sheet at the time of the City Cinemas Transaction other than the option fee, which has been deferred and is being amortized over the 10 year period of the lease.
	SHC is indirectly owned by Messrs. James J. Cotter and Michael Forman. Mr. Cotter is our Chairman, Chief Executive Officer and controlling stockholder. Mr. Forman is a major holder of our Class A Stock. As the transaction was a related party transaction, it was reviewed and approved by a committee of our Board of Directors comprised entirely of independent directors.
	Since we entered into the City Cinemas Transaction, two of the cinema properties involved in that transaction have been sold to third parties for redevelopment: the Murray Hill Cinema and the Sutton Cinema. These purchasers paid $10,000,000 and $18,000,000 respectively for these two properties, which included the cost of acquiring the fee interest in these properties held by Nationwide Theaters (an affiliate of SHC), the leasehold interest held by SHC, and our rights under the City Cinemas Operating Lease and the City Cinemas Purchase Option. Since we believed that a sale of these properties at these prices was more beneficial to us than continuing to operate them as cinemas, and since the original City Cinemas Transaction did not contemplate a piece-meal release of properties or give us the right to exercise our City Cinemas Purchase Option either (i) on a piece-meal basis or (ii) prior to July 2010, we worked with SHC to devise a transaction that would allow us to dispose of our collective interests in these properties while preserving the fundamental benefits of the transaction for ourselves and SHC. Included among the benefits to be preserved by SHC was the deferral of any capital gains tax with respect to the transfer of the remaining properties until 2010 and assurances that the various properties involved in the City Cinemas Transaction would only be acquired by us on an “all or none” basis. Included among the benefits to be preserved for us was the right to get the benefit of 100% of any appreciation in the properties underlying the City Cinemas Operating Lease between the date of that lease (July 2000) and

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	the date any such properties were sold, provided that we ultimately exercised our purchase rights under the City Cinemas Purchase Option.
	As a result of these negotiations and the sale of these two properties, our rent under the City Cinemas Operating Lease has been reduced by approximately $1,861,000 per annum, the exercise price of the City Cinemas Purchase Option has been reduced from $48,000,000 to $33,000,000, and our funding obligation under the City Cinemas Standby Line of Credit has been reduced from $28,000,000 to $13,000,000. In addition, we received in consideration of the release of our interest in the Murray Hill Cinema a cash payment of $500,000. In consideration of the transfer of our interest in the Sutton Cinema we received (i) a $13,000,000 purchase money promissory note (the Sutton Purchase Money Note”) secured by a first mortgage on the Sutton Cinema property (the “Sutton Purchase Money Mortgage”), (ii) a right to acquire up to a 25% interest in the special purpose entity formed to redevelop the Sutton Cinema property for a prorated capital contribution (the “Sutton Reinvestment Option”) or to receive instead an in lieu fee of $650,000, and (iii) the right to operate the Sutton Cinema until such time as the Sutton Purchase Money Note was paid. The Sutton Purchase Money Note was due and payable on October 21, 2005, and carried interest for the first year at 3.85%, increasing in the second year to 8.25%. On September 14, 2004, the Sutton Purchase Money Note was prepaid in full and we exercised our Sutton Reinvestment Option.
	In keeping with the “all or nothing” nature of our rights under the City Cinemas Purchase Option, we agreed to use the principal proceeds of the Sutton Purchase Money Promissory Note to fund a portion of our remaining $13.0 million obligation under the City Cinemas Standby Credit Facility. As of December 31, 2004, we have funded $8.0 million of this obligation. We anticipate that the remaining obligation will be fully funded by July 2007. We have also agreed that the principal amount of the City Cinemas Standby Credit Facility will be forgiven if we do not exercise our purchase rights under the City Cinemas Purchase Option. Accordingly, if we exercise our rights under the City Cinemas Purchase Option to purchase the remaining City Cinemas assets, we will be acquiring the remaining assets subject to the City Cinemas Operating Lease for an additional cash payment of $15,000,000, (offsetting against the current $33,000,000 exercise price, the previously paid $5,000,000 deposit and the $13,000,000 principal amount of the City Cinemas Standby Credit Facility) and will receive, in essence, the benefit of 100% of the appreciation in all of the properties initially subject to the City Cinemas Operating Lease between July 2000, and the date such properties were either disposed of or acquired by us pursuant to the City Cinemas Purchase Option. If we do not exercise our option to purchase, then the City Cinemas Credit Facility will be forgiven, and we will not get the benefit of such appreciation. The remaining properties consist of the Village East Cinema, which is located at the corner of 2nd Avenue and 11th Street in Manhattan, on a 27 year land lease, and the Cinemas 1, 2 & 3. It is located on 3rd Avenue between E. 59th and E. 60th Streets in Manhattan and likewise on a long term ground lease. We are currently under contract to purchase the Cinemas 1, 2, & 3 ground lease from another party for $12.2 million.
	Since the Murray Hill Cinema sale transaction was structured as a release of our leasehold interest in the Murray Hill Cinema, we did not recognize any gain or loss for either book or tax purposes, other than the $500,000 in lieu fee, which was recognized as non-operating income. We likewise did not book any gain or loss on the disposition of the Sutton Cinema for book purposes. However, we did recognize gain in the amount of approximately $13,000,000 for state and federal tax purposes, which gain was offset against net operating losses. Notwithstanding this offset, we were still liable for alternative minimum tax on the transaction. That alternative minimum tax will, however, be offset against our future tax liabilities. In the event that we decide not to exercise our City Cinemas Purchase Option, we would at that time recognize a $13 million loss for tax purposes.
	Following the release of our leasehold interest in the Murray Hill Cinema and disposition of the Sutton Cinema in 2003 we accelerated the amortization of the option fee in the City Cinemas Purchase Option

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	agreement by $890,000. In addition, in October 2003 we recorded our loan commitment under the City Cinemas Standby Credit Facility as a payable in our long-term debt on the Consolidated Balance Sheet. As a result of having funded $8.0 million of this obligation during 2004, the remaining balance recorded as long-term debt is $5.0 million.
	Each of the above modification transactions involved was reviewed by a committee of the independent directors of the Board of Directors with the assistance of outside counsel. In each case, the independent directors of the applicable committee have found the transaction to be fair and in the best interests of Reading and its public stockholders.
	Reflecting the disposition of the Murray Hill Cinema and the Sutton Cinema and the amendments to date with respect to the City Cinemas Transaction, we are currently paying SHC rent of $1,686,000 per year on a triple net basis. For the years ended December 31, 2004 and 2003, rent expense to SHC was $2,386,000 and $2,674,000, respectively. We have funded $8,000,000 of our remaining $13,000,000 obligation under the City Cinemas Standby Credit Facility (which currently earns interest at 8.98%, reduced our rent obligation under the City Cinemas Operating Lease to $1,686,000 per year for the Village East Cinema and the Cinemas 1, 2 & 3. Every $1,000,000 in increased funding under the City Cinemas Standby Credit Facility currently will result in an approximately $90,000 annual effective reduction in that rent obligation). We also have the option to purchase in July 2010 the remaining assets under the City Cinemas Operating Agreement (SHC’s long term leasehold interests in the Village East Cinema and the Cinemas 1, 2 & 3 in Manhattan and the improvements comprising these two cinemas) for an additional payment of $15,000,000 (plus whatever unfunded balance remains with respect to our funding obligation under the City Cinemas Standby Credit Facility).

	OBI Management Agreement

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	Live Theater Play Investment

	Acquisition of the Angelika Film Center

Note 5 —	Fair Value of Financial Instruments

		Book Value								Fair Value
Financial Instrument		2004				2003				2004				2003
Cash		$	12,292			$	21,735			$	12,292			$	21,735
Accounts receivable		$	7,145			$	4,787			$	7,145			$	4,787
Investment in marketable securities		$	29			$	85			$	53			$	85
Restricted cash		$	815			$	456			$	815			$	456
Interest rate swaps asset		$	—			$	105			$	—			$	105
Note receivable		$	—			$	13,000			$	—			$	13,000
Accounts and film rent payable		$	19,485			$	17,711			$	19,485			$	17,711
Notes payable		$	83,252			$	71,145			$	82,007			$	70,251
Interest rate swaps liability		$	810			$	—			$	810			$	—

Note 6 —	Acquisitions and Disposal of Assets

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		“Anderson”				“Movieland”				Newmarket
Assets Acquired		Acquisition				Acquisition				Acquisition				Total
Cash		$	135			$	18			$	—			$	153
Receivables			99				48				—				147
Inventory			25				—				—				25
Prepayments			56				—				—				56
Land			—				992				—				992
Building			—				6,083				—				6,083
Lease agreements			282				593				—				875
Fixtures and equipment			3,237				2,157				—				5,394
Property held for development			—				—				1,042				1,042
Plans and permits			—				162				—				162
Deferred tax asset			9				—				—				9
Goodwill			3,129				5,026				—				8,155
Total Acquired Assets		$	6,972			$	15,079			$	1,042			$	23,093
Liabilities Assumed
Creditors		$	433			$	—			$	—			$	433
Prepaid revenue			8				—				—				8
Accruals			71				—				—				71
Other payables			62				—				—				62
Provisions			95				—				—				95
Lease agreements			450				277				—				727
Loans			661				—				—				661
Put Option			—				175				—				175
Total Liabilities Assumed		$	1,780			$	452			$	—			$	2,232
Total Net Assets		$	5,192			$	14,627			$	1,042			$	20,861

	Movieland Circuit

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	Anderson Circuit

	Newmarket Property

	Other Acquisitions or Divestitures

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Note 7 —	Rental Property

			December 31,
			2004				2003
Rental Property
	Land		$	2,951			$	2,951
	Building and improvements			7,516				7,516
				10,467				10,467
	Less accumulated depreciation			(3,071	)			(2,551	)
Rental property, net			$	7,396			$	7,916

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Note 8 —	Property and Equipment

				December 31,
Property and Equipment				2004				2003
				(In thousands)
	Land			$	29,579			$	26,889
	Building				69,288				57,919
	Leasehold Interests & Improvements				7,947				7,305
	Construction-in-progress and property development				6,485				8,348
	Fixtures and equipment				52,264				41,397
		Total cost			165,563				141,858
	Less accumulated depreciation				(31,903	)			(19,312	)
Property and equipment, net				$	133,660			$	122,546

Note 9 —	Equity Investments, Investment in Joint Ventures and Investment in Affiliates

	Australian Joint Venture

	New Zealand Joint Ventures

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	The Sutton Redevelopment Investment

	Investment in AFC

	Investment in and Advances to the Agricultural Partnerships

Note 10 —	Goodwill and Intangible Assets

		Cinema				Real Estate				Corporate				Total
Balance as of January 1, 2004		$	1,050			$	4,040			$	—			$	5,090
Goodwill acquired during 2004			7,834				322				—				8,156
Foreign currency exchange adjustment			544				26				—				570
Balance at December 31, 2004		$	9,428			$	4,388			$	—			$	13,816

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			Beneficial				Option				Acquisition
As of December 31, 2004			Lease				Fee				Costs				Total
Gross carrying amount			$	10,459			$	5,000			$	1,793			$	17,252
Less: Accumulated amortization				2,041				2,923				331				5,295
	Total, net		$	8,418			$	2,077			$	1,462			$	11,957

			Beneficial				Option				Acquisition
As of December 31, 2003			Lease				Fee				Costs				Total
Gross carrying amount			$	10,459			$	5,000			$	951			$	16,410
Less: Accumulated amortization				1,271				2,557				334				4,162
	Total, net		$	9,188			$	2,443			$	617			$	12,248

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Note 11 —	Prepaid and Other Assets

				December 31,
				2004				2003
Prepaid and other current assets
	Prepaid expenses			$	338			$	529
	Prepaid taxes				762				594
	Deposits				983				341
	Impounds				599				478
	Other				503				219
		Total prepaid and other current assets		$	3,185			$	2,161
Other non-current assets
	Railroad right-of-way and other assets			$	2,073			$	2,804
	Long-term restricted cash				399				387
	Deferred rent receivable				200				296
	Deferred financing costs, net				1,076				451
	Deferred expense				353				179
	Other				32				25
		Total non-current assets		$	4,133			$	4,142

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Year Ending December 31,
2005		$	7,173
2006			7,516
2007			4,679
2008			3,615
2009			2,053
Thereafter			12,083
		$	37,119

	Domestic

	City Cinemas Standby Credit Facility

	Royal George Theater LLC Term Loan

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	Union Square Theater Term Loan

	Glendale Office Building Term Loan

	Australia

	Australian General Corporate Credit Facility

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	Newmarket Loan

	Fair Value of Interest Rate Swap Agreements

	New Zealand

	New Zealand Corporate Credit Facility

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	Summary of Notes Payable

Year Ending December 31,
2005		$	610
2006			1,529
2007			9,638
2008			2,785
2009			56,297
Thereafter			12,393
		$	83,252

Note 14 —	Other Liabilities

			December 31,
			2004				2003
Current liabilities
	Deferred payables		$	599			$	1,104
	Other			—				44
			$	599			$	1,148
Non current liabilities
	Foreign withholding taxes		$	5,233			$	4,995
	Straight-line rent liability			3,747				3,387
	Other			2,314				1,251
			$	11,294			$	9,633

Note 15 —	Minority Interest

	•	50% of membership interest in AFC by a subsidiary of National Auto Credit, Inc. (“NAC”)
	•	25% minority interest in Australian Country Cinemas by 21st Century Pty, Ltd
	•	20% minority interest in Big 4 Farming LLC by Cecelia Packing Corporation

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		December 31,
		2004				2003
AFC		$	2,997			$	3,816
Australian Country Cinemas			471				672
Other			2				—
		$	3,470			$	4,488

Note 16 —	Lease Agreements

		Minimum
		Lease
		Payments
2005		$	13,601
2006			13,739
2007			13,923
2008			13,173
2009			12,797
Thereafter			98,966
Total minimum lease payments		$	166,199

Note 17 —	Commitments and Contingencies

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	Cinemas 1, 2 & 3 Land Acquisition

	New Zealand Joint Venture Loans

	Tax Audit

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	Environmental and Asbestos Claims

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	Whitehorse Center Litigation

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	Other Claims

		Year Ended December 31,
		2004				2003				2002
United States		$	20			$	(9,345	)		$	1,704
Foreign			(9,117	)			3,540				(9,863	)
		$	(9,097	)		$	(5,805	)		$	(8,159	)

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				Year Ended December 31,
				2004				2003				2002
Current income tax expense (benefit)
	Federal			$	—			$	(1,184	)		$	(1,134	)
	State				216				(101	)			367
	Foreign				830				988				759
		Total			1,046				(297	)			(8	)
Deferred income tax expense
	Federal				—				819				11
	State				—				189				3
	Foreign				—				—				—
		Total			—				1,008				14
Total income tax expense				$	1,046			$	711			$	6

			December 31,
Deferred tax assets (Liabilities)			2004				2003
	Acquired and option properties		$	1,515			$	1,408
	Net operating loss carry forwards			27,516				26,921
	Impairment reserves			13,439				13,159
	Alternative minimum tax carry forwards			3,445				3,415
	Unrealized (gain) loss on marketable securities			—				(22	)
	Installment sale of cinema property			5,671				5,324
	Other			827				456
Gross deferred tax assets				52,413				50,661
Valuation allowance				(52,413	)			(50,661	)
Net deferred tax asset			$	—			$	—

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Expiration Date		Amount
2018		$	4
2019			1,376
2020			542
2021			16,777
2022			1,636
		$	20,335

			Year Ended December 31,
			2004				2003				2002
Expected tax benefit			$	(2,596	)		$	(1,826	)		$	(2,784	)
Reduction (increase) in taxes resulting from:
	Change in valuation allowance			1,752				1,699				1,544
	Foreign withholding tax provision			830				802				759
	Tax effect of foreign tax rates on current income			341				433				75
	State and local tax (benefit) provision			216				88				367
	Other items			503				(485	)			45
Actual tax provision			$	1,046			$	711			$	6

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		Years Ended
		December 31,
		2004				2003
Net loss		$	(8,463	)		$	(5,928	)
Cumulative foreign currency adjustment			1,190				23,373
Unrealized loss on securities			—				(219	)
Comprehensive (loss) income		$	(7,273	)		$	17,226

Note 21 —	Business Segments and Geographic Area Information

		Cinema				Real Estate				Corporate				Consolidated
2004
Revenue		$	87,257			$	15,725			$	—			$	102,982
Net earnings (loss)			1,040				2,816				(12,319	)			(8,463	)
Assets			81,439				133,110				15,678				230,227
Capital expenditures (including acquisitions)			21,971				11,016				193				33,180
2003
Revenue		$	81,464			$	12,275			$	—			$	93,739
Net earnings (loss)			4,163				(479	)			(9,612	)			(5,928	)
Assets			72,180				133,677				17,009				222,866
Capital expenditures (including acquisitions)			3,321				2,401				87				5,809
2002
Revenue		$	75,717			$	10,683			$	86			$	86,486
Net earnings (loss)			1,462				415				(9,831	)			(7,954	)
Assets			54,403				115,451				12,918				182,772
Capital expenditures (including acquisitions)			4,815				5,340				282				10,437

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		December 31,
		2004				2003				2002
Australia		$	67,399			$	65,689			$	49,258
New Zealand			41,582				31,372				26,127
Puerto Rico			1,987				2,403				2,602
United States			22,692				23,082				23,494
		$	133,660			$	122,546			$	101,481

		December 31,
		2004				2003				2002
Australia		$	46,979			$	35,833			$	31,121
New Zealand			13,531				10,079				5,786
Puerto Rico			12,932				14,336				14,581
United States			29,540				33,491				34,998
		$	102,982			$	93,739			$	86,486

		First				Second				Third				Fourth
		Quarter				Quarter				Quarter				Quarter
2004
Revenue		$	23,338			$	25,066			$	28,098			$	26,480
Net loss		$	(1,353	)		$	(584	)		$	(2,162	)		$	(4,364	)
Basic loss per share		$	(0.06	)		$	(0.03	)		$	(0.10	)		$	(0.20	)
Diluted loss per share		$	(0.06	)		$	(0.03	)		$	(0.10	)		$	(0.20	)
2003
Revenue		$	21,970			$	23,285			$	23,656			$	24,828
Net (loss) income		$	(1,945	)		$	1,418			$	(2,577	)		$	(2,824	)
Basic (loss) earnings per share		$	(0.09	)		$	0.06			$	(0.12	)		$	(0.12	)
Diluted (loss) earnings per share		$	(0.09	)		$	0.06			$	(0.12	)		$	(0.12	)

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												Receive Variable
Type of Instrument				Notional Amount				Pay Fixed Rate				Rate				Maturity Date
	Interest rate swap			$	2,356,000				6.1800	%			5.4400	%			March 31, 2006
	Interest rate swap			$	12,585,000				6.6800	%			n/a				December 31, 2008
	Interest rate swap			$	10,985,000				6.4400	%			5.4833	%			December 31, 2008
	Interest rate swap			$	10,214,000				5.7000	%			5.4833	%			December 31, 2007

						December 31,
		Interest				2004				2003
Mt. Gravatt			33.3%			$	3,845			$	2,032
Berkeley Cinemas			50.0%				1,217				1,375
205-209 East 57th Street Associates, LLC			25.0%				2,290				—
Total						$	7,352			$	3,407

	Mt. Gravatt

	Berkeley Cinemas

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	205-209 East 57th Street Associates, LLC

		December 31,
		2004				2003
Current Assets		$	3,145			$	2,077
Non current assets			17,157				12,638
Current Liabilities			4,850				2,775
Non current liabilities			11,385				9,015
Minority Interest			7,352				3,407

		December 31,
		2004				2003
Net Revenue		$	21,195			$	15,319
Operating Income			7,971				4,553
Net Income			4,024				2,641

	Glendale Building

	Cinemas 1, 2, & 3

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	Colac

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Item 9 —	Change in and Disagreements with Accountants on Accounting and Financial Disclosure

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	DELOITTE & TOUCHE LLP

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Item 15 —	Exhibits, Financial Statement Schedules, and Reports on Form 8-K

	1. Financial Statements

Description		Pg. No
Report of Independent Registered Public Accountants			68
Consolidated Balance Sheets as of December 31, 2004 and 2003			69
Consolidated Statements of Operations for the Three Years Ended December 31, 2004			70
Consolidated Statements of Stockholders’ Equity for the Three Years Ended December 31, 2004			71
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2004			72
Notes to Consolidated Financial Statements			73

	2. Financial Statement Schedules for the years ended December 31, 2004, 2003 and 2002

	3. Exhibits (Listed by numbers corresponding to Item 601 of Regulation S-K)

	3	.1		Certificate of Amendment of Restatement Articles of Incorporation of Citadel Holding Corporation (filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999, and incorporated herein by reference)
	3	.2		Restated By-laws of Citadel Holding Corporation, a Nevada corporation (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999, and incorporated herein by reference)
	3	.3		Certificate of Amendment of Articles of Incorporation of Citadel Holding Corporation (filed as Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001)
	3	.4		Articles of Merger of Craig Merger Sub, Inc. with and into Craig Corporation (filed as Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001)
	3	.5		Articles of Merger of Reading Merger Sub, Inc. with and into Reading Entertainment, Inc. (filed as Exhibit 3.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001)
	3	.6		Restated By-laws of Reading International, Inc., a Nevada corporation (filed herewith)
	10	.1		Tax Disaffiliation Agreement, dated as of August 4, 1994, by and between Citadel Holding Corporation and Fidelity Federal Bank (filed as Exhibit 10.27 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, and incorporated herein by reference)
	10	.2		Standard Office lease, dated as of July 15, 1994, by and between Citadel Realty, Inc. and Fidelity Federal Bank (filed as Exhibit 10.42 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, and incorporated herein by reference)
	10	.3		First Amendment to Standard Office Lease, dated May 15, 1995, by and between Citadel Realty, Inc. and Fidelity Federal Bank (filed as Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, and incorporated herein by reference)
	10	.4		Guaranty of Payment dated May 15, 1995 by Citadel Holding Corporation in favor of Fidelity Federal Bank (filed as Exhibit 10.47 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, and incorporated herein by reference)

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	10	.5		Exchange Agreement dated September 4, 1996 among Citadel Holding Corporation, Citadel Acquisition Corp., Inc. Craig Corporation, Craig Management, Inc., Reading Entertainment, Inc., Reading Company (filed as Exhibit 10.51 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference)
	10	.6		Asset Put and Registration Rights Agreement dated October 15, 1996 among Citadel Holding Corporation, Citadel Acquisition Corp., Inc., Reading Entertainment, Inc., and Craig Corporation (filed as Exhibit 10.52 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference)
	10	.7		Articles of Incorporation of Reading Entertainment, Inc., A Nevada Corporation (filed as Exhibit 10.7 to the Company’s Annual Report on Form  10-K for the year ended December 31, 1999, and incorporated herein by reference)
	10	.7a		Certificate of Designation of the Series A Voting Cumulative Convertible preferred stock of Reading Entertainment, Inc. (filed as Exhibit 10.7a to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999, and incorporated herein by reference)
	10	.8		Lease between Citadel Realty, Inc., Lesser and Disney Enterprises, Inc., Lessee dated October 1, 1996 (filed as Exhibit 10.54 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, and incorporated herein by reference)
	10	.9		Second Amendment to Standard Office Lease between Citadel Realty, Inc. and Fidelity Federal Bank dated October 1, 1996 (filed as Exhibit 10.55 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, and incorporated herein by reference)
	10	.10		Citadel 1996 Non-employee Director Stock Option Plan (filed as Exhibit 10.57 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1996, and incorporated herein by reference)
	10	.11		Reading Entertainment, Inc. Annual Report on Form 10-K for the year ended December 31, 1997 (filed as Exhibit 10.58 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.12		Stock Purchase Agreement dated as of April 11, 1997 by and between Citadel Holding Corporation and Craig Corporation (filed as Exhibit 10.56 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997)
	10	.13		Secured Promissory Note dated as of April 11, 1997 issued by Craig Corporation to Citadel Holding Corporation in the principal amount of $1,998,000 (filed as Exhibit 10.60 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997)
	10	.14		Agreement for Purchase and Sale of Real Property between Prudential Insurance Company of America and Big 4 Farming LLC dated August 29, 1997 (filed as Exhibit 10.61 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997)
	10	.15		Second Amendment to Agreement of Purchase and Sale between Prudential Insurance Company of America and Big 4 Farming LLC dated November 5, 1997 (filed as Exhibit 10.62 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997)
	10	.16		Partnership Agreement of Citadel Agricultural Partners No. 1 dated December 19, 1997 (filed as Exhibit 10.63 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.17		Partnership Agreement of Citadel Agricultural Partners No. 2 dated December 19, 1997 (filed as Exhibit 10.64 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.18		Partnership Agreement of Citadel Agricultural Partners No. 3 dated December 19, 1997 (filed as Exhibit 10.65 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.19		Farm Management Agreement dated December 26, 1997 between Citadel Agricultural Partner No. 1 and Big 4 Farming LLC (filed as Exhibit 10.67 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.20		Farm Management Agreement dated December 26, 1997 between Citadel Agricultural Partner No. 2 and Big 4 Farming LLC (filed as Exhibit 10.68 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)

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	10	.21		Farm Management Agreement dated December 26, 1997 between Citadel Agricultural Partner No. 3 and Big 4 Farming LLC (filed as Exhibit 10.69 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.22		Line of Credit Agreement dated December 29, 1997 between Citadel Holding Corporation and Big 4 Ranch, Inc. (filed as Exhibit 10.70 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.23		Management Services Agreement dated December 26, 1997 between Big 4 Farming LLC and Cecelia Packing (filed as Exhibit 10.71 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.24		Agricultural Loan Agreement dated December 29, 1997 between Citadel Holding Corporation and Citadel Agriculture Partner No. 1 (filed as Exhibit 10.72 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.25		Agricultural Loan Agreement dated December 29, 1997 between Citadel Holding Corporation and Citadel Agriculture Partner No. 2 (filed as Exhibit 10.73 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.26		Agricultural Loan Agreement dated December 29, 1997 between Citadel Holding Corporation and Citadel Agriculture Partner No. 3 (filed as Exhibit 10.74 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.27		Promissory Note dated December 29, 1997 between Citadel Holding Corporation and Citadel Agricultural Partners No. 1 (filed as Exhibit 10.75 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.28		Promissory Note dated December 29, 1997 between Citadel Holding Corporation and Citadel Agricultural Partners No. 2 (filed as Exhibit 10.76 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.29		Promissory Note dated December 29, 1997 between Citadel Holding Corporation and Citadel Agricultural Partners No. 3 (filed as Exhibit 10.77 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.30		Security Agreement dated December 29, 1997 between Citadel Holding Corporation and Citadel Agricultural Partnership No. 1 (filed as Exhibit 10.78 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.31		Security Agreement dated December 29, 1997 between Citadel Holding Corporation and Citadel Agricultural Partnership No. 2 (filed as Exhibit 10.79 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.32		Security Agreement dated December 29, 1997 between Citadel Holding Corporation and Citadel Agricultural Partnership No. 3 (filed as Exhibit 10.80 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.33		Administrative Services Agreement between Citadel Holding Corporation and Big 4 Ranch, Inc. dated December 29, 1997 (filed as Exhibit 10.81 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference)
	10	.34		Reading Entertainment, Inc. Annual Report on Form 10-K for the year ended December 31, 1998 (filed as Exhibit as 10.41 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference)
	10	.35		Reading Entertainment, Inc. Annual Report on Form 10-K for the year ended December 31, 1999 (filed by Reading Entertainment Inc. as Form 10-K for the year ended December 31, 1999 on April 14, 2000 and incorporated herein by reference)
	10	.36		Promissory note dated December 20, 1999 between Citadel Holding Corporation and Nationwide Life Insurance 3 (filed as Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference)
	10	.37*		Employment Agreement between Citadel Holding Corporation and Andrzej Matyczynski (filed as Exhibit 10.37 to the Company’s Annual Report on Form  10-K for the year ended December 31, 1999 and incorporated herein by reference)
	10	.38		Citadel 1999 Employee Stock Option Plan (filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference)

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	10	.39		Amendment and Plan of Merger By and Among Citadel Holding Corporation and Off-Broadway Theatres, Inc. (filed as Exhibit A to the Company’s Proxy Statement and incorporated herein by reference)
	10	.40		Amended and Restated Lease Agreement dated as of July 28, 2000 as amended and restated as of January 29, 2002 between Sutton Hill Capital, L.L.C. and Citadel Cinemas, Inc. (filed as Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference)
	10	.41		Amended and Restated Citadel Standby Credit Facility dated as of July 28, 2000 as amended and restated as of January 29, 2002 between Sutton Hill Capital, L.L.C. and Reading International, Inc. (filed as Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference)
	10	.42		Amended and Restated Security Agreement dated as of July 28, 2000 as amended and restated as of January 29, 2002 between Sutton Hill Capital, L.L.C. and Reading International, Inc. (filed as Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference)
	10	.43		Amended and Restated Pledge Agreement dated as of July 28, 2000 as amended and restated as of January 29, 2002 between Sutton Hill Capital, L.L.C. and Reading International, Inc. (filed as Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference)
	10	.44		Amended and Restated Intercreditor Agreement dated as of July 28, 2000 as amended and restated as of January 29, 2002 between Sutton Hill Capital, L.L.C. and Reading International, Inc. and Nationwide Theatres Corp. (filed as Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference)
	10	.45		Guaranty dated July 28, 2000 by Michael R. Forman and James J. Cotter in favor of Citadel Cinemas, Inc. and Citadel Realty, Inc. (filed as Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference)
	10	.46		Amended and Restated Agreement with Respect to Fee Option dated as of July 28, 2000 as amended and restated as of January 29, 2002 between Sutton Hill Capital, L.L.C. and Citadel Realty, Inc. (filed as Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference)
	10	.47		Theater Management Agreement between Liberty Theaters Inc. and OBI LLC (filed as Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference)
	10	.48*		Non-qualified Stock Option Agreement between Reading International, Inc. and James J. Cotter (filed as Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference)
	10	.49		Omnibus Agreement between Citadel Cinemas, Inc. and Sutton Hill Capital, LLC, dated October 22, 2003 (filed on Quarterly Report Form 10-Q for the period ended September 30, 2003 and incorporated herein by reference)
	10	.50		Pledge Agreement between Citadel Cinemas, Inc. and Sutton Hill Capital, LLC, dated October 22, 2003 (filed on Quarterly Report Form 10-Q for the period ended September 30, 2003 and incorporated herein by reference)
	10	.51		Guarantee of Lenders Obligation Under Standby Credit Agreement in favor of Sutton Hill Capital, LLC, dated October 22, 2003(filed on Quarterly Report Form 10-Q for the period ended September 30, 2003 and incorporated herein by reference)
	10	.52*		Employment agreement between Reading International, Inc. and Wayne D. Smith (filed herewith)
	21			List of Subsidiaries (filed herewith)
	23			Consent of Independent Auditors (filed herewith)
	31	.1		Certification of Principal Executive Officer dated March 25, 2005 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
	31	.2		Certification of Principal Financial Officer dated March 25, 2005 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

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	32	.1		Certification of Principal Executive Officer dated March 25, 2005 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
	32	.2		Certification of Principal Financial Officer dated March 25, 2005 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

*	These exhibits constitute the executive compensation plans and arrangements of the Company.

	See Item (3) above.

	See Item (2) above.

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	Reading International, Inc.
	(Registrant)

	By:	/s/ Andrzej Matyczynski

	Andrzej Matyczynski
	Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)

Signature				Title(s)		Date
/s/ James J. Cotter   James J. Cotter				Chairman of the Board and Director and Chief Executive Officer		March 25, 2005
/s/ Eric Barr   Eric Barr				Director		March 25, 2005
/s/ James J. Cotter, Jr.   James J. Cotter, Jr.				Director		March 25, 2005
/s/ Margaret Cotter   Margaret Cotter				Director		March 25, 2005
/s/ William D. Gould   William D. Gould				Director		March 25, 2005
/s/ Edward L. Kane   Edward L. Kane				Director		March 25, 2005
/s/ Gerard P. Laheney   Gerard P. Laheney				Director		March 25, 2005
/s/ Alfred Villaseñor, Jr.   Alfred Villaseñor, Jr.				Director		March 25, 2005

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	a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 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 generally accepted accounting principles;
	c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ James J. Cotter
	James J. Cotter
	Chief Executive Officer

 

	a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 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 generally accepted accounting principles;
	c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Andrzej Matyczynski
	Andrzej Matyczynski
	Chief Financial Officer

 

	1.	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ James J. Cotter
	James J. Cotter
	Chief Executive Officer

 

	1.	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Andrzej Matyczynski
	Andrzej Matyczynski
	Chief Financial Officer