þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
NEVADA
(State
or other jurisdiction of incorporation or organization)
|
95-3885184
(IRS
Employer Identification No.)
|
500
Citadel Drive, Suite 300
Commerce
CA
(Address
of principal executive offices)
|
90040
(Zip
Code)
|
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March
31, 2007
|
December
31, 2006
|
||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
9,023
|
$
|
11,008
|
|||
Receivables
|
5,731
|
6,612
|
|||||
Inventory
|
457
|
606
|
|||||
Investment
in marketable securities
|
20,063
|
8,436
|
|||||
Restricted
cash
|
842
|
1,040
|
|||||
Prepaid
and other current assets
|
2,219
|
2,589
|
|||||
Total
current assets
|
38,335
|
30,291
|
|||||
Land
held for sale
|
1,809
|
--
|
|||||
Property
held for development
|
1,643
|
1,598
|
|||||
Property
under development
|
45,585
|
38,876
|
|||||
Property
& equipment, net
|
171,192
|
170,667
|
|||||
Investment
in unconsolidated joint ventures and entities
|
15,799
|
19,067
|
|||||
Investment
in Reading International Trust I
|
1,547
|
--
|
|||||
Goodwill
|
18,158
|
17,919
|
|||||
Intangible
assets, net
|
8,194
|
7,954
|
|||||
Other
assets
|
4,387
|
2,859
|
|||||
Total
assets
|
$
|
306,649
|
$
|
289,231
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable and accrued liabilities
|
$
|
12,817
|
$
|
13,539
|
|||
Film
rent payable
|
2,494
|
4,642
|
|||||
Notes
payable - current portion
|
5,271
|
2,237
|
|||||
Notes
payable to related parties - current portion
|
5,000
|
5,000
|
|||||
Current
tax liabilities
|
4,928
|
9,128
|
|||||
Deferred
current revenue
|
2,420
|
2,565
|
|||||
Other
current liabilities
|
241
|
177
|
|||||
Total
current liabilities
|
33,171
|
37,288
|
|||||
Notes
payable - long-term portion
|
74,616
|
113,975
|
|||||
Notes
payable to related parties
|
9,000
|
9,000
|
|||||
Subordinated
debt
|
51,547
|
--
|
|||||
Noncurrent
tax liabilities
|
4,890
|
--
|
|||||
Deferred
non-current revenue
|
552
|
528
|
|||||
Other
liabilities
|
22,095
|
18,178
|
|||||
Total
liabilities
|
195,871
|
178,969
|
|||||
Commitments
and contingencies
|
--
|
--
|
|||||
Minority
interest in consolidated affiliates
|
2,375
|
2,603
|
|||||
Stockholders’
equity:
|
|||||||
Class
A Nonvoting Common Stock, par value $0.01, 100,000,000 shares
authorized,
35,495,729 issued and 20,992,453 outstanding at March 31, 2007
and
35,468,733 issued and 20,980,865 outstanding at December 31,
2006
|
216
|
216
|
|||||
Class
B Voting Common Stock, par value $0.01, 20,000,000 shares authorized
and
1,495,490 issued and outstanding at March 31, 2006 and December
31,
2006
|
15
|
15
|
|||||
Nonvoting
Preferred Stock, par value $0.01, 12,000 shares authorized and
no
outstanding shares
|
--
|
--
|
|||||
Additional
paid-in capital
|
128,786
|
128,399
|
|||||
Accumulated
deficit
|
(51,213
|
)
|
(50,058
|
)
|
|||
Treasury
shares
|
(4,306
|
)
|
(4,306
|
)
|
|||
Accumulated
other comprehensive income
|
34,905
|
33,393
|
|||||
Total
stockholders’ equity
|
108,403
|
107,659
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
306,649
|
$
|
289,231
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2007
|
2006
|
||||||
Revenue
|
|||||||
Cinema
|
$
|
24,506
|
$
|
22,509
|
|||
Real
estate
|
3,469
|
2,734
|
|||||
27,975
|
25,243
|
||||||
Operating
expense
|
|||||||
Cinema
|
18,120
|
17,182
|
|||||
Real
estate
|
2,002
|
1,711
|
|||||
Depreciation
and amortization
|
2,968
|
3,240
|
|||||
General
and administrative
|
3,675
|
3,367
|
|||||
26,765
|
25,500
|
||||||
Operating
income (loss)
|
1,210
|
(257
|
)
|
||||
Non-operating
income (expense)
|
|||||||
Interest
income
|
145
|
61
|
|||||
Interest
expense
|
(1,895
|
)
|
(1,845
|
)
|
|||
Net
gain (loss)on sale of assets
|
(185
|
)
|
3
|
||||
Other
expense
|
(736
|
)
|
(1,159
|
)
|
|||
Loss
before minority interest expense, income tax expense, and equity
earnings
of unconsolidated joint ventures and entities
|
(1,461
|
)
|
(3,197
|
)
|
|||
Minority
interest expense
|
(342
|
)
|
(80
|
)
|
|||
Loss
before income tax expense and equity earnings of unconsolidated
joint
ventures and entities
|
(1,803
|
)
|
(3,277
|
)
|
|||
Income
tax expense
|
(499
|
)
|
(337
|
)
|
|||
Loss
before equity earnings of unconsolidated joint ventures and
entities
|
(2,302
|
)
|
(3,614
|
)
|
|||
Equity
earnings of unconsolidated joint ventures and entities
|
1,656
|
467
|
|||||
Net
loss
|
$
|
(646
|
)
|
$
|
(3,147
|
)
|
|
Basic
and diluted loss per share
|
$
|
(0.03
|
)
|
$
|
(0.14
|
)
|
|
Weighted
average number of shares outstanding - basic and
diluted
|
22,482,804
|
22,450,007
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2007
|
2006
|
||||||
Operating
Activities
|
|||||||
Net
loss
|
$
|
(646
|
)
|
$
|
(3,147
|
)
|
|
Adjustments
to reconcile net loss to net cash used in (provided by) operating
activities:
|
|||||||
Gain
recognized on foreign currency transactions
|
(22
|
)
|
(24
|
)
|
|||
Equity
earnings of unconsolidated joint ventures and entities
|
(1,656
|
)
|
(467
|
)
|
|||
Distributions
of earnings from unconsolidated joint ventures and
entities
|
4,034
|
332
|
|||||
Loss
(gain) on disposal of assets
|
185
|
(3
|
)
|
||||
Loss
on extinguishment of debt
|
94
|
--
|
|||||
Depreciation
and amortization
|
2,968
|
3,240
|
|||||
Stock
based compensation expense
|
387
|
21
|
|||||
Minority
interest
|
342
|
80
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Decrease
in receivables
|
1,548
|
1,846
|
|||||
Decrease
(increase) in prepaid and other assets
|
641
|
(1,530
|
)
|
||||
Decrease
in accounts payable and accrued expenses
|
(881
|
)
|
(961
|
)
|
|||
Decrease
in film rent payable
|
(2,172
|
)
|
(1,042
|
)
|
|||
Increase
in deferred revenues and other liabilities
|
1,075
|
1,120
|
|||||
Net
cash provided by (used in) operating activities
|
5,897
|
(535
|
)
|
||||
Investing
activities
|
|||||||
Acquisitions
|
(5,471
|
)
|
(939
|
)
|
|||
Purchase
of property and equipment
|
(2,774
|
)
|
(2,695
|
)
|
|||
Change
in restricted cash
|
199
|
191
|
|||||
Investment
in Reading International Trust I
|
(1,547
|
)
|
--
|
||||
Distributions
of investment in unconsolidated joint ventures
|
926
|
--
|
|||||
Purchase
of marketable securities
|
(11,258
|
)
|
(184
|
)
|
|||
Net
cash used in investing activities
|
(19,925
|
)
|
(3,627
|
)
|
|||
Financing
activities
|
|||||||
Repayment
of long-term borrowings
|
(40,311
|
)
|
(604
|
)
|
|||
Proceeds
from borrowings
|
54,628
|
2,273
|
|||||
Capitalized
borrowing costs
|
(1,633
|
)
|
--
|
||||
Proceeds
from exercise of stock options
|
--
|
87
|
|||||
Repurchase
of Class A Nonvoting Common Stock
|
--
|
(792
|
)
|
||||
Minority
interest distributions
|
(579
|
)
|
(285
|
)
|
|||
Net
cash provided by financing activities
|
12,105
|
679
|
|||||
Effect
of exchange rate changes on cash and cash
equivalents
|
(62
|
)
|
(430
|
)
|
|||
Decrease
in cash and cash equivalents
|
(1,985
|
)
|
(3,913
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
11,008
|
8,548
|
|||||
Cash
and cash equivalents at end of period
|
$
|
9,023
|
$
|
4,635
|
|||
Supplemental
Disclosures
|
|||||||
Interest
paid
|
$
|
2,244
|
$
|
1,597
|
|||
Income
taxes paid
|
$
|
44
|
$
|
134
|
|||
Non-cash
transactions
|
|||||||
Increase
in cost basis of Cinemas 1, 2, & 3 related to the purchase price
adjustment of the purchase option liability to related
party
|
$
|
--
|
$
|
1,087
|
|||
Adjustment
to accumulated deficit related to adoption of FIN 48 (Note
10)
|
$
|
509
|
$
|
--
|
|||
Accrued
obligation related to lease acquisition
|
$
|
250
|
$
|
--
|
·
|
the
development, ownership and operation of multiplex cinemas in the
United
States, Australia, and New Zealand
and
|
·
|
the
development, ownership, and operation of retail and commercial
real estate
in Australia, New Zealand, and the United States, including
entertainment-themed retail centers (“ETRC”) in Australia and New Zealand
and live theatre assets in Manhattan and Chicago in the United
States.
|
2006
|
|||||||
Real
Estate Revenue
|
Cinema
Expense
|
||||||
As
originally reported
|
$
|
3,428
|
$
|
17,876
|
|||
Australia
intercompany eliminations
|
(694
|
)
|
(694
|
)
|
|||
As
adjusted
|
$
|
2,734
|
$
|
17,182
|
Non-Vested
Restricted Stock
|
Weighted
Average Share Price at Grant Date
|
||||||
Outstanding
- December 31, 2006
|
46,313
|
$
|
8.10
|
||||
Granted
|
11,587
|
$
|
8.63
|
||||
Outstanding
- March 31, 2007
|
57,900
|
$
|
8.20
|
2007
|
|
Stock
option exercise price
|
$
8.35
|
Risk-free
interest rate
|
4.824%
|
Expected
dividend yield
|
--
|
Expected
option life
|
9.96
yrs
|
Expected
volatility
|
33.74%
|
Weighted
average fair value
|
$
4.82
|
Common
Stock Options Outstanding
|
Weighted
Average Exercise
Price
of Options Outstanding
|
Common
Stock Exercisable
Options
|
Weighted
Average
Price
of Exercisable
Options
|
||||||||||||||||||||||
Class
A
|
Class
B
|
Class
A
|
Class
B
|
Class
A
|
Class
B
|
Class
A
|
Class
B
|
||||||||||||||||||
Outstanding-January
1, 2006
|
521,100
|
185,100
|
$
|
5.00
|
$
|
9.90
|
474,600
|
185,100
|
$
|
5.04
|
$
|
9.90
|
|||||||||||||
Exercised
|
(27,000
|
)
|
--
|
$
|
3.22
|
$
|
--
|
|
|
||||||||||||||||
Granted
|
20,000
|
--
|
$
|
8.10
|
$
|
--
|
|
|
|
||||||||||||||||
Outstanding-December
31, 2006
|
514,100
|
185,100
|
$
|
5.21
|
$
|
9.90
|
488,475
|
185,100
|
$
|
5.06
|
$
|
9.90
|
|||||||||||||
Granted
|
70,000
|
--
|
$
|
8.35
|
$
|
--
|
|
|
|
||||||||||||||||
Outstanding-March
31, 2007
|
584,100
|
185,100
|
$
|
5.40
|
$
|
9.90
|
558,475
|
185,100
|
$
|
5.28
|
$
|
9.90
|
Three
months ended March 31, 2007
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
|||||||||
Revenue
|
$
|
24,506
|
$
|
4,841
|
$
|
(1,372
|
)
|
$
|
27,975
|
||||
Operating
expense
|
19,492
|
2,002
|
(1,372
|
)
|
20,122
|
||||||||
Depreciation
& amortization
|
1,794
|
1,037
|
--
|
2,831
|
|||||||||
General
& administrative expense
|
763
|
187
|
--
|
950
|
|||||||||
Segment
operating income
|
$
|
2,457
|
$
|
1,615
|
$
|
--
|
$
|
4,072
|
|||||
Three
months ended March 31, 2006
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
|||||||||
Revenue1
|
$
|
22,509
|
$
|
4,001
|
$
|
(1,267
|
)
|
$
|
25,243
|
||||
Operating
expense1
|
18,449
|
1,711
|
(1,267
|
)
|
18,893
|
||||||||
Depreciation
& amortization
|
2,085
|
1,020
|
--
|
3,105
|
|||||||||
General
& administrative expense
|
1,168
|
100
|
--
|
1,268
|
|||||||||
Segment
operating income
|
$
|
807
|
$
|
1,170
|
$
|
--
|
$
|
1,977
|
Reconciliation
to net loss:
|
2007
|
2006
|
|||||
Total
segment operating income
|
$
|
4,072
|
$
|
1,977
|
|||
Non-segment:
|
|||||||
Depreciation
and amortization expense
|
137
|
135
|
|||||
General
and administrative expense
|
2,725
|
2,099
|
|||||
Operating
income (loss)
|
1,210
|
(257
|
)
|
||||
Interest
expense, net
|
(1,750
|
)
|
(1,784
|
)
|
|||
Other
expense
|
(921
|
)
|
(1,156
|
)
|
|||
Minority
interest
|
(342
|
)
|
(80
|
)
|
|||
Income
tax expense
|
(499
|
)
|
(337
|
)
|
|||
Equity
earnings of unconsolidated joint ventures and entities
|
1,656
|
467
|
|||||
Net
loss
|
$
|
(646
|
)
|
$
|
(3,147
|
)
|
US
Dollar
|
|||||||
March
31, 2007
|
December
31, 2006
|
||||||
Australian
Dollar
|
$
|
0.8104
|
$
|
0.7884
|
|||
New
Zealand Dollar
|
$
|
0.7158
|
$
|
0.7046
|
Three
Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
Net
loss
|
$
|
(646
|
)
|
$
|
(3,147
|
)
|
|
Loss
from continuing operations - basic and diluted
|
$
|
(0.03
|
)
|
$
|
(0.14
|
)
|
|
Weighted
average shares of common stock - dilutive
|
22,482,804
|
22,450,007
|
Property
Under Development
|
March
31,
2007
|
December
31,
2006
|
|||||
Land
|
$
|
34,218
|
$
|
30,296
|
|||
Construction-in-progress
(including capitalized interest)
|
11,367
|
8,580
|
|||||
Property
Under Development
|
$
|
45,585
|
$
|
38,876
|
Property
and equipment
|
March
31,
2007
|
December
31,
2006
|
|||||
Land
|
$
|
57,376
|
$
|
56,830
|
|||
Building
|
101,491
|
99,285
|
|||||
Leasehold
interest
|
11,262
|
11,138
|
|||||
Construction-in-progress
|
563
|
425
|
|||||
Fixtures
and equipment
|
59,686
|
58,164
|
|||||
230,378
|
225,842
|
||||||
Less:
accumulated depreciation
|
(59,186
|
)
|
(55,175
|
)
|
|||
Property
and equipment, net
|
$
|
171,192
|
$
|
170,667
|
Interest
|
March
31,
2007
|
December
31,
2006
|
||||||||
Malulani
Investments, Limited
|
18.4%
|
|
$
|
1,800
|
$
|
1,800
|
||||
Rialto
Film Distribution
|
33.3%
|
|
821
|
782
|
||||||
Rialto
Cinemas
|
50.0%
|
|
5,673
|
5,608
|
||||||
205-209
East 57th
Street Associates, LLC
|
25.0%
|
|
2,026
|
5,557
|
||||||
Mt.
Gravatt Cinema
|
33.3%
|
|
4,946
|
4,713
|
||||||
Berkeley
Cinemas - Botany
|
50.0%
|
|
533
|
607
|
||||||
Total
|
$
|
15,799
|
$
|
19,067
|
Three
Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
Malulani
Investments, Limited
|
$
|
--
|
$
|
--
|
|||
Rialto
Film Distribution
|
25
|
--
|
|||||
Rialto
Cinemas
|
(23
|
)
|
--
|
||||
205-209
East 57th
Street Associates, LLC
|
1,309
|
--
|
|||||
Mt.
Gravatt Cinema
|
216
|
188
|
|||||
Berkeley
Cinema - Group & Palms
|
--
|
197
|
|||||
Berkeley
Cinemas -Botany
|
129
|
82
|
|||||
Total
|
$
|
1,656
|
$
|
467
|
2007
Three Months
|
||||
Net
revenue
|
$
|
20,251
|
||
Operating
expense
|
14,640
|
|||
Net
income
|
$
|
5,611
|
Cinema
|
Real
Estate
|
Total
|
||||||||
Balance
as of January 1, 2007
|
$
|
12,713
|
$
|
5,206
|
$
|
17,919
|
||||
Goodwill
acquired during 2007
|
--
|
--
|
--
|
|||||||
Foreign
currency translation adjustment
|
227
|
12
|
239
|
|||||||
Balance
at March 31, 2007
|
$
|
12,940
|
$
|
5,218
|
$
|
18,158
|
As
of March 31, 2007
|
Beneficial
Leases
|
Option
Fee
|
Other
Intangible Assets
|
Total
|
|||||||||
Gross
carrying amount
|
$
|
11,448
|
$
|
2,773
|
$
|
222
|
$
|
14,443
|
|||||
Less:
Accumulated amortization
|
3,779
|
2,450
|
20
|
6,249
|
|||||||||
Total,
net
|
$
|
7,669
|
$
|
323
|
$
|
202
|
$
|
8,194
|
As
of December 31, 2006
|
Beneficial
Leases
|
Option
Fee
|
Other
Intangible Assets
|
Total
|
|||||||||
Gross
carrying amount
|
$
|
10,984
|
$
|
2,773
|
$
|
219
|
$
|
13,976
|
|||||
Less:
Accumulated amortization
|
3,577
|
2,426
|
19
|
6,022
|
|||||||||
Total,
net
|
$
|
7,407
|
$
|
347
|
$
|
200
|
$
|
7,954
|
March
31,
2007
|
December
31,
2006
|
||||||
Prepaid
and other current assets
|
|||||||
Prepaid
expenses
|
$
|
1,377
|
$
|
1,214
|
|||
Prepaid
taxes
|
483
|
552
|
|||||
Deposits
|
147
|
534
|
|||||
Other
|
212
|
289
|
|||||
Total
prepaid and other current assets
|
$
|
2,219
|
$
|
2,589
|
|||
Other
non-current assets
|
|||||||
Other
non-cinema and non-rental real estate assets
|
$
|
1,270
|
$
|
1,270
|
|||
Deferred
financing costs, net
|
2,355
|
898
|
|||||
Interest
rate swap
|
243
|
206
|
|||||
Other
|
519
|
485
|
|||||
Total
other non-current assets
|
$
|
4,387
|
$
|
2,859
|
Three
Months Ended
March
31
|
|||||||
2007
|
2006
|
||||||
Foreign
income tax provision
|
$
|
87
|
$
|
29
|
|||
Foreign
withholding tax
|
140
|
136
|
|||||
Federal
tax expense
|
127
|
127
|
|||||
Other
tax
|
145
|
45
|
|||||
Net
income tax provision
|
$
|
499
|
$
|
337
|
Before
Application of FIN 48 on January 1, 2007
|
FIN
48 Adjustments as of January 1, 2007
|
After
Application of FIN 48 on January 1, 2007
|
||||||||
Current
tax liabilities
|
$
|
9,128
|
$
|
(4,000
|
)
|
$
|
5,128
|
|||
Noncurrent
tax liabilities
|
$
|
--
|
$
|
4,509
|
$
|
4,509
|
||||
Accumulated
deficit
|
$
|
(50,058
|
)
|
$
|
(509
|
)
|
$
|
(50,567
|
)
|
Interest
Rates as of
|
Balance
as of
|
|||||||||||||||
Name
of Note Payable or Security
|
March
31, 2007
|
December
31, 2006
|
Maturity
Date
|
March
31, 2007
|
December
31, 2006
|
|||||||||||
Australian
Corporate Credit Facility
|
7.35%
|
|
7.33%
|
|
January
1, 2009
|
$
|
66,453
|
$
|
70,516
|
|||||||
Australian
Shopping Center Loans
|
--
|
--
|
2007-2013
|
1,106
|
1,147
|
|||||||||||
New
Zealand Corporate Credit Facility
|
--
|
9.15%
|
|
November
23, 2009
|
--
|
35,230
|
||||||||||
Trust
Preferred Securities
|
9.22%
|
|
--
|
April
30, 2027
|
51,547
|
--
|
||||||||||
UBS
Line of Credit
|
7.25%
|
|
--
|
N/A
|
3,082
|
--
|
||||||||||
US
Sutton Hill Capital Note 1 - Related Party
|
9.69%
|
|
9.69%
|
|
July
28, 2007
|
5,000
|
5,000
|
|||||||||
US
Royal George Theatre Term Loan
|
7.85%
|
|
7.86%
|
|
November
29, 2007
|
1,778
|
1,819
|
|||||||||
US
Sutton Hill Capital Note 2 - Related Party
|
8.25%
|
|
8.25%
|
|
December
31, 2010
|
9,000
|
9,000
|
|||||||||
US
Union Square Theatre Term Loan
|
6.26%
|
|
6.26%
|
|
January
1, 2010
|
7,468
|
7,500
|
|||||||||
Total
|
$
|
145,434
|
$
|
130,212
|
March
31, 2007
|
December
31, 2006
|
||||||
Current
liabilities
|
|||||||
Security
deposit payable
|
$
|
240
|
$
|
177
|
|||
Other
|
1
|
--
|
|||||
Other
current liabilities
|
$
|
241
|
$
|
177
|
|||
Other
liabilities
|
|||||||
Foreign
withholding taxes
|
$
|
5,279
|
$
|
5,212
|
|||
Straight-line
rent liability
|
3,717
|
3,693
|
|||||
Purchase
option liability
|
4,631
|
3,681
|
|||||
Environmental
reserve
|
1,656
|
1,656
|
|||||
Executive
pension plans
|
2,895
|
--
|
|||||
Option
deposit
|
3,000
|
3,000
|
|||||
Other
|
917
|
936
|
|||||
Other
liabilities
|
$
|
22,095
|
$
|
18,178
|
·
|
50%
of membership interest in Angelika Film Center LLC (“AFC LLC”) owned by a
subsidiary of National Auto Credit,
Inc.;
|
·
|
25%
minority interest in Australia Country Cinemas Pty Ltd (“ACC”) owned by
Panorama Cinemas for the 21st
Century Pty Ltd.;
|
·
|
33%
minority interest in the Elsternwick Joint Venture owned by Champion
Pictures Pty Ltd.;
|
·
|
Up
to 27.5% minority interest in the Landplan Property Partners, Ltd
by
Landplan Property Group, Ltd; and
|
·
|
20%
minority interest in Big 4 Farming LLC by Cecelia Packing
Corporation
|
March
31,
|
December
31,
|
||||||
2007
|
2006
|
||||||
AFC
|
$
|
2,032
|
$
|
2,264
|
|||
Australian
Country Cinemas
|
133
|
174
|
|||||
Elsternwick
Unincorporated Joint Venture
|
158
|
151
|
|||||
Landplan
Property Partners
|
51
|
13
|
|||||
Other
|
1
|
1
|
|||||
Minority
interest in consolidated affiliates
|
$
|
2,375
|
$
|
2,603
|
Expense
for the
|
|||||||
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
AFC
|
$
|
268
|
$
|
70
|
|||
Australian
Country Cinemas
|
26
|
3
|
|||||
Elsternwick
Unincorporated Joint Venture
|
37
|
7
|
|||||
Landplan
Property Partners
|
11
|
--
|
|||||
Minority
interest expense
|
$
|
342
|
$
|
80
|
Three
Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
Net
income (loss)
|
$
|
(646
|
)
|
$
|
(3,147
|
)
|
|
Foreign
currency translation gain (loss)
|
3,836
|
(3,496
|
)
|
||||
Supplemental
Executive Retirement Plan - pension liability adjustment
|
(2,676
|
)
|
--
|
||||
Unrealized
gain on AFS
|
352
|
7
|
|||||
Comprehensive
income (loss)
|
$
|
866
|
$
|
(6,636
|
)
|
Type
of Instrument
|
Notional
Amount
|
Pay
Fixed Rate
|
Receive
Variable Rate
|
Maturity
Date
|
Interest
rate swap
|
$8,914,000
|
5.7000%
|
6.4917%
|
December
31, 2007
|
Interest
rate swap
|
$13,371,000
|
6.4400%
|
6.4917%
|
December
31, 2008
|
Interest
rate swap
|
$13,230,000
|
6.6800%
|
6.4917%
|
December
31, 2008
|
Interest
rate swap
|
$9,867,000
|
5.8800%
|
6.4917%
|
December
31, 2008
|
Interest
rate swap
|
$2,836,000
|
6.3600%
|
6.4917%
|
December
31, 2008
|
·
|
the
development, ownership, and operation of multiplex cinemas in the
United
States, Australia, and New Zealand;
and
|
·
|
the
development, ownership, and operation of retail and commercial
real estate
in Australia, New Zealand, and the United States, including
entertainment-themed retail centers (“ETRCs”) 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; and
|
·
|
in
New Zealand, under the Reading,
Berkeley Cinemas
and Rialto
brands.
|
·
|
the
opening in the fourth quarter of 2005 and the occupancy of the
majority of
tenancies during first and second quarters of 2006 of our Newmarket
Shopping Center, a 100,000 square foot retail center in a suburb
of
Brisbane, Australia;
|
·
|
the
acquisition of a cinema in Queenstown, New Zealand effective February
23,
2006;
|
·
|
the
purchase of the 50% share that we did not already own of the Palms
8-screen, leasehold cinema located in Christchurch, New Zealand
effective
April 1, 2006;
|
·
|
the
sale of our 50% share of the cinemas at Whangaparaoa, Takapuna
and Mission
Bay, New Zealand formerly part of the Berkeley Cinemas Group effective
August 28, 2006; and
|
·
|
the
increase in the value of the Australian and New Zealand dollars
vis-à-vis
the US dollar from $0.7165 and $0.6164, respectively, as of March
31, 2006
to $0.8104 and $0.7158, respectively, as of March 31,
2007.
|
Three
months ended March 31, 2007
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
|||||||||
Revenue
|
$
|
24,506
|
$
|
4,841
|
$
|
(1,372
|
)
|
$
|
27,975
|
||||
Operating
expense
|
19,492
|
2,002
|
(1,372
|
)
|
20,122
|
||||||||
Depreciation
& amortization
|
1,794
|
1,037
|
--
|
2,831
|
|||||||||
General
& administrative expense
|
763
|
187
|
--
|
950
|
|||||||||
Segment
operating income
|
$
|
2,457
|
$
|
1,615
|
$
|
--
|
$
|
4,072
|
|||||
Three
months ended March 31, 2006
|
Cinema
|
Real
Estate
|
Intersegment
Eliminations
|
Total
|
|||||||||
Revenue1
|
$
|
22,509
|
$
|
4,001
|
$
|
(1,267
|
)
|
$
|
25,243
|
||||
Operating
expense1
|
18,449
|
1,711
|
(1,267
|
)
|
18,893
|
||||||||
Depreciation
& amortization
|
2,085
|
1,020
|
--
|
3,105
|
|||||||||
General
& administrative expense
|
1,168
|
100
|
--
|
1,268
|
|||||||||
Segment
operating income
|
$
|
807
|
$
|
1,170
|
$
|
--
|
$
|
1,977
|
Reconciliation
to net loss:
|
2007
|
2006
|
|||||
Total
segment operating income
|
$
|
4,072
|
$
|
1,977
|
|||
Non-segment:
|
|||||||
Depreciation
and amortization expense
|
137
|
135
|
|||||
General
and administrative expense
|
2,725
|
2,099
|
|||||
Operating
income (loss)
|
1,210
|
(257
|
)
|
||||
Interest
expense, net
|
(1,750
|
)
|
(1,784
|
)
|
|||
Other
expense
|
(921
|
)
|
(1,156
|
)
|
|||
Minority
interest
|
(342
|
)
|
(80
|
)
|
|||
Income
tax expense
|
(499
|
)
|
(337
|
)
|
|||
Equity
earnings of unconsolidated joint ventures and entities
|
1,656
|
467
|
|||||
Net
loss
|
$
|
(646
|
)
|
$
|
(3,147
|
)
|
Three
Months Ended March 31, 2007
|
United
States
|
Australia
|
New
Zealand
|
Total
|
|||||||||
Admissions
revenue
|
$
|
5,191
|
$
|
9,630
|
$
|
3,284
|
$
|
18,105
|
|||||
Concessions
revenue
|
1,373
|
2,864
|
992
|
5,229
|
|||||||||
Advertising
and other revenues
|
456
|
486
|
230
|
1,172
|
|||||||||
Total
revenues
|
7,020
|
12,980
|
4,506
|
24,506
|
|||||||||
Cinema
costs
|
4,726
|
10,170
|
3,452
|
18,348
|
|||||||||
Concession
costs
|
258
|
629
|
257
|
1,144
|
|||||||||
Total
operating expense
|
4,984
|
10,799
|
3,709
|
19,492
|
|||||||||
Depreciation
and amortization
|
487
|
901
|
406
|
1,794
|
|||||||||
General
& administrative expense
|
539
|
223
|
1
|
763
|
|||||||||
Segment
operating income
|
$
|
1,010
|
$
|
1,057
|
$
|
390
|
$
|
2,457
|
|||||
Three
Months Ended March 31, 2006
|
United
States
|
Australia
|
New
Zealand
|
Total
|
|||||||||
Admissions
revenue
|
$
|
4,286
|
$
|
9,383
|
$
|
2,818
|
$
|
16,487
|
|||||
Concessions
revenue
|
1,319
|
2,918
|
860
|
5,097
|
|||||||||
Advertising
and other revenues
|
283
|
467
|
175
|
925
|
|||||||||
Total
revenues
|
5,888
|
12,768
|
3,853
|
22,509
|
|||||||||
Cinema
costs1
|
4,652
|
9,813
|
2,813
|
17,278
|
|||||||||
Concession
costs
|
259
|
656
|
256
|
1,171
|
|||||||||
Total
operating expense
|
4,911
|
10,469
|
3,069
|
18,449
|
|||||||||
Depreciation
and amortization
|
446
|
1,367
|
272
|
2,085
|
|||||||||
General
& administrative expense
|
935
|
196
|
37
|
1,168
|
|||||||||
Segment
operating income (loss)
|
$
|
(404
|
)
|
$
|
736
|
$
|
475
|
$
|
807
|
·
|
Cinema
revenue increased for the 2007 Quarter by $2.0 million or 8.9%
compared to
the same period in 2006. The 2007 Quarter increase was from improved
attendance at our New Zealand and United States cinemas.
|
·
|
Operating
expense increased for the 2007 Quarter by $1.0 million or 5.7%
compared to
the same period in 2006. This increase was primarily related to
increased
film rent, staffing costs and concession costs associated with
increased
attendance at our New Zealand and United States cinemas offset
in part by
improved cost management in our United States operations. Although
our
occupancy cost increased in the 2007 Quarter compared to 2006,
we noted an
overall reduction in our operating expense percentage from 82%
to 80% of
gross revenue for the 2006 and 2007 Quarters,
respectively.
|
·
|
Depreciation
and amortization expense decreased for the 2007 Quarter by $291,000
or
14.0% compared to the same period in 2006 primarily related to
several
Australia cinema assets reaching their useful depreciable life
as of
December 31, 2006 partially offset by an increase in depreciation
from our
April 2006 acquisition of the New Zealand Palms
cinema.
|
·
|
General
and administrative expense decreased for the 2007 Quarter by $405,000
or
34.7% compared to the same period in 2006. The decrease was due
to a drop
in legal costs, primarily as a result of the termination of certain
anti-trust litigation.
|
·
|
As
a result of the above, cinema segment income increased for the
2007
Quarter by $1.7 million compared to the same period in
2006.
|
·
|
ETRCs
at Belmont in Perth; at Auburn in Sydney; and at Newmarket in Brisbane
in
Australia; and Courtenay Central in Wellington, New
Zealand;
|
·
|
three
single auditorium live theatres in Manhattan (Minetta Lane, Orpheum,
and
Union Square) and a four auditorium live theatre complex in Chicago
(The
Royal George) and, in the case of the Union Square and the Royal
George
their accompanying ancillary retail and commercial
tenants;
|
·
|
the
ancillary retail and commercial tenants at some of our non-ETRC
cinema
locations; and
|
·
|
certain
unimproved land, used in our historic
activities.
|
Three
Months Ended March 31, 2007
|
United
States
|
Australia
|
New
Zealand
|
Total
|
|||||||||
Live
theatre rental and ancillary income
|
$
|
732
|
$
|
--
|
$
|
--
|
$
|
732
|
|||||
Property
rental income
|
538
|
2,038
|
1,533
|
4,109
|
|||||||||
Total
revenues
|
1,270
|
2,038
|
1,533
|
4,841
|
|||||||||
Live
theatre costs
|
484
|
--
|
--
|
484
|
|||||||||
Property
rental cost
|
351
|
725
|
442
|
1,518
|
|||||||||
Total
operating expense
|
835
|
725
|
442
|
2,002
|
|||||||||
Depreciation
and amortization
|
95
|
558
|
384
|
1,037
|
|||||||||
General
& administrative expense
|
12
|
145
|
30
|
187
|
|||||||||
Segment
operating income
|
$
|
328
|
$
|
610
|
$
|
677
|
$
|
1,615
|
Three
Months Ended March 31, 2006
|
United
States
|
Australia
|
New
Zealand
|
Total
|
|||||||||
Live
theatre rental and ancillary income
|
$
|
1,036
|
$
|
--
|
$
|
--
|
$
|
1,036
|
|||||
Property
rental income1
|
433
|
1,166
|
1,366
|
2,965
|
|||||||||
Total
revenues
|
1,469
|
1,166
|
1,366
|
4,001
|
|||||||||
Live
theatre costs
|
656
|
--
|
--
|
656
|
|||||||||
Property
rental cost
|
190
|
531
|
334
|
1,055
|
|||||||||
Total
operating expense
|
846
|
531
|
334
|
1,711
|
|||||||||
Depreciation
and amortization
|
106
|
525
|
389
|
1,020
|
|||||||||
General
& administrative expense
|
--
|
100
|
--
|
100
|
|||||||||
Segment
operating income
|
$
|
517
|
$
|
10
|
$
|
643
|
$
|
1,170
|
·
|
Revenue
increased for the 2007 Quarter by $840,000 or 21.0% compared to
the same
period in 2006. The increase was primarily related to additional
property
revenues from our newly constructed Australia Newmarket shopping
centre in
Brisbane, Australia offset by a drop in rents from our domestic
live
theatres due to fewer shows during 2007 compared to
2006.
|
·
|
Operating
expense for the real estate segment increased for the 2007 Quarter
by
$291,000 or 17.0% compared to the same period in 2006. This increase
in
expense was primarily related to our newly constructed Newmarket
shopping
centre, our newly acquired Lake Taupo motel and an increase in
property
taxes related to our domestic properties, offset by decreased live
theatre
costs.
|
·
|
Depreciation
expense for the real estate segment increased by $17,000 or 1.7%
for the
2007 Quarter compared to the same period in
2006.
|
·
|
General
and administrative expense increased for the 2007 Quarter by $87,000
compared to the same period in 2006.
|
·
|
As
a result of the above, real estate segment income increased for
the 2007
Quarter by $445,000 compared to the same period in
2006.
|
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
||||||||||||||
Long-term
debt
|
$
|
5,271
|
$
|
368
|
$
|
66,834
|
$
|
7,009
|
$
|
162
|
$
|
243
|
|||||||
Notes
payable to related parties
|
5,000
|
--
|
--
|
9,000
|
--
|
--
|
|||||||||||||
Subordinated
notes
|
--
|
--
|
--
|
--
|
--
|
51,547
|
|||||||||||||
Lease
obligations
|
8,760
|
10,918
|
10,951
|
10,731
|
10,053
|
66,420
|
|||||||||||||
Estimated
interest on long-term debt
|
9,264
|
10,537
|
5,791
|
5,353
|
4,610
|
70,680
|
|||||||||||||
Total
|
$
|
28,295
|
$
|
21,823
|
$
|
83,576
|
$
|
32,093
|
$
|
14,825
|
$
|
188,890
|
·
|
working
capital requirements;
|
·
|
debt
servicing requirements; and
|
·
|
capital
expenditures, centered on obtaining the right financing for the
development of our Burwood
property.
|
·
|
increased
cinema operational cash flow from our domestic and New Zealand
operations;
|
·
|
increased
real estate operational cash flow from our Australia and New Zealand
operations. This increase was particularly attributed to our Newmarket
ETRC in Brisbane, Australia; and
|
·
|
an
increase in distributions from unconsolidated joint ventures and
entities
of $3.7 million.
|
·
|
$11.3
million to purchase marketable
securities;
|
·
|
$5.5
million to purchase real estate
assets;
|
·
|
$2.8
million in property enhancements to our Australia, New Zealand,
and U.S.
properties; and
|
·
|
$1.5
million in our investment in the Reading International Trust
I
securities;
|
·
|
$926,000
in distributions from our investment in Place
57.
|
·
|
$939,000
in cash used to purchase a cinema in New Zealand
and
|
·
|
$2.7
million in cash used to complete the Newmarket property and for
property
enhancements to our U.S.
properties.
|
· |
$49.9
million of net proceeds from our new Trust Preferred Securities
and
|
· |
$3.1
million of net proceeds from our broker margin account used to
purchase
marketable securities;
|
·
|
$40.3
million of cash used to retire our New Zealand bank indebtedness
of $34.4
million (NZ$50.0 million) and to retire a portion of our bank indebtedness
in Australia of $5.8 million (AUS$7.4 million);
and
|
·
|
$579,000
in distributions to minority
interests.
|
·
|
$2.3
million of new borrowings on our Newmarket credit facility;
|
·
|
$604,000
of cash used to pay down long-term debt which was primarily related
the
final payoff of the Movieland purchase note payable of approximately
$512,000;
|
·
|
$792,000
of cash used to repurchase the Class A Nonvoting Common Stock (these
shares were previously issued to the Movieland sellers who exercised
their
put option during the 2006 Quarter to sell back to us the shares
they had
received in partial consideration for the sale of the Movieland
cinemas);
and
|
·
|
$285,000
in distributions to minority
interests.
|
· |
$5.9
million net cash provided by operating
activities;
|
· |
$49.9
million of net proceeds from our new Trust Preferred Securities;
|
· |
$3.1
million of net proceeds from our broker margin account used to
purchase
marketable securities;
|
· |
$926,000
in distributions from our investment in Place
57;
|
· |
$11.3
million in cash used to purchase marketable
securities;
|
· |
$5.5
million to purchase certain real estate
assets;
|
· |
$2.8
million in property enhancements to our Australia, New Zealand
and U.S.
properties;
|
· |
$40.3
million of cash used to retire our New Zealand bank indebtedness
of $34.4
million (NZ$50.0 million) and to retire a portion of our bank indebtedness
in Australia of $5.8 million (AUS$7.4
million);
|
· |
$1.5
million in our investment in the Reading International Trust I
securities;
and
|
· |
$579,000
in distributions to minority
interests.
|
·
|
impairment
of long-lived assets, including goodwill and intangible
assets;
|
·
|
tax
valuation allowance and obligations;
and
|
·
|
legal
and environmental obligations.
|
·
|
contractual
obligations;
|
·
|
insurance
claims;
|
·
|
IRS
claims;
|
·
|
employment
matters; and
|
·
|
anti-trust
issues.
|
·
|
With
respect to our cinema operations:
|
o
|
The
number and attractiveness to movie goers of the films released
in future
periods;
|
o
|
The
amount of money spent by film distributors to promote their motion
pictures;
|
o
|
The
licensing fees and terms required by film distributors from motion
picture
exhibitors in order to exhibit their
films;
|
o
|
The
comparative attractiveness of motion pictures as a source of entertainment
and willingness and/or ability of consumers (i) to spend their
dollars on
entertainment and (ii) to spend their entertainment dollars on
movies in
an outside the home environment;
and
|
o
|
The
extent to which we encounter competition from other cinema exhibitors,
from other sources of outside of the home entertainment, and from
inside
the home entertainment options, such as “home theaters” and competitive
film product distribution technology such as, by way of example,
cable,
satellite broadcast, DVD and VHS rentals and sales, and so called
“movies
on demand;”
|
·
|
With
respect to our real estate development and operation
activities:
|
o
|
The
rental rates and capitalization rates applicable to the markets
in which
we operate and the quality of properties that we
own;
|
o
|
The
extent to which we can obtain on a timely basis the various land
use
approvals and entitlements needed to develop our
properties;
|
o
|
The
risks and uncertainties associated with real estate
development;
|
o
|
The
availability and cost of labor and
materials;
|
o
|
Competition
for development sites and tenants;
and
|
o
|
The
extent to which our cinemas can continue to serve as an anchor
tenant
which will, in turn, be influenced by the same factors as will
influence
generally the results of our cinema operations;
and
|
·
|
With
respect to our operations generally as an international company
involved
in both the development and operation of cinemas and the development
and
operation of real estate; and previously engaged for many years
in the
railroad business in the United
States:
|
o
|
Our
ongoing access to borrowed funds and capital and the interest that
must be
paid on that debt and the returns that must be paid on such
capital;
|
o
|
The
relative values of the currency used in the countries in which
we
operate;
|
o
|
Changes
in government regulation, including by way of example, the costs
resulting
from the implementation of the requirements of
Sarbanes-Oxley;
|
o
|
Our
labor relations and costs of labor (including future government
requirements with respect to pension liabilities, disability insurance
and
health coverage, and vacations and
leave);
|
o
|
Our
exposure from time to time to legal claims and to uninsurable risks
such
as those related to our historic railroad operations, including
potential
environmental claims and health related claims relating to alleged
exposure to asbestos or other substances now or in the future recognized
as being possible causes of cancer or other health related
problems;
|
o
|
Changes
in future effective tax rates and the results of currently ongoing
and
future potential audits by taxing authorities having jurisdiction
over our
various companies; and
|
o
|
Changes
in applicable accounting policies and
practices.
|
·
|
It
is based on a single point in time.
|
·
|
It
does not include the effects of other complex market reactions
that would
arise from the changes modeled.
|
10.67
|
Reading
International Supplemental Executive Retirement Plan effective
March 1,
2007, filed herewith.
|
31.1
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
31.2
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
32
|
Certifications
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
Date:
|
May
8, 2007
|
By:
|
/s/
James J. Cotter
|
James
J. Cotter
|
|||
Chief
Executive Officer
|
Date:
|
May
8, 2007
|
By:
|
/s/
Andrzej Matyczynski
|
Andrzej
Matyczynski
|
|||
Chief
Financial Officer
|