# Reading International Inc: Form 10-Q for the period ended Sep 30, 2023

- Company: [Reading International Inc](/companies/rdi.md) (CIK 716634)
- Form: 10-Q
- Filed: 2023-11-15
- Accepted by EDGAR: Nov 15, 2023, 01:20 ET
- Period: 2023-09-30
- Accession: 0000716634-23-000031
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/716634/000071663423000031/rdi-20230930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/716634/000071663423000031/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $66.6m | us-gaap:Revenues |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $177.4m | us-gaap:Revenues |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $1.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$5.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $5.1m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $14.1m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $896.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $313.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$4.4m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$18.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.20 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.82 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.20 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.82 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 22,273,423 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 22,208,757 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$6.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $6.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $11.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $41.5m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $532.6m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $127.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $490.5m | us-gaap:Liabilities |
| Current portion of debt | at 2023-09-30 | $58.6m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2023-09-30 | $42.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 82,987 characters.

The MD&A should be read in conjunction with our consolidated financial statements and related notes in this Report.

### Business Overview & Updates

We continue to be optimistic about the current trajectory of our business and the cinema industry as a whole. Although we remain positive, we are currently, and have in recent years, been impacted by multiple factors. These factors are largely beyond our control, and continue to impact the profitability of our global cinema segment when compared to pre-pandemic levels:

Cinema patronage levels that have not yet returned to the higher pre-pandemic levels;

The number of movies released by the major Hollywood studios and other distributors, while increasing from pandemic levels, have not yet returned to their higher pre-pandemic levels;

The duration of the exclusive theatrical release window is under continuing pressure from cable and streaming;

Increased film rent expense, as distributors demand more and more rent for high profile movies;

Inflationary pressures, ongoing supply chain issues and increased operating expenses arising post-pandemic continue to push up our variable costs while we encounter consumer resistance to higher ticket prices;

Labor costs continue to increase (resulting from a combination of inflation and labor shortages);

Increased fixed costs for third party cinema rents, some of which are increasing due to fixed rent escalations, which are exacerbated by having to also pay our COVID-19 related rent deferrals for the periods of time when our operations were closed or restricted and

Reserve banks in the U.S., Australia and New Zealand have increased interest rates causing our cost of borrowing to increase materially.

In addition to the above factors impacting the income levels of our global cinema business, we are also monitoring the future potential impact of the Hollywood strikes on our global cinema business. On September 28, 2023, the Hollywood writers’ strike officially ended followed by the actors’ strike on November 8, 2023. While we are thrilled about the recent end of the Hollywood Strikes, we know that the duration of the strikes will likely impact our global cinema business in 2024 due to production delays and shifting theatrical release date. Nonetheless, the recent settlement gives us more confidence that 2023 will end on a positive note delivering a marked improvement over 2022.

Despite the above factors, we believe that with (i) the re-recognition by the major studios, and other distributors, including streamers such as Amazon and Apple, of the economic importance of the theatrical release of movies, (ii) the increasing quantity and quality of films being released to the cinemas compared to pandemic levels and (iii) the expansion of certain movie audiences (such as audiences for concert films and faith based films), that the long term prospects for our industry are positive. Still, it is generally recognized that there are currently too many cinemas in the U.S., and we are reviewing and culling our poor performers where possible. Fortunately, most of our cinemas are in good markets which are not, in our view, over-screened and we believe that oversupply is less of an issue in post-pandemic Australia and New Zealand. We have confidence that in the next few years, we will return to being able to again use our cinema cash flow to support our real estate development activities. We continue to receive and review proposals for new or available existing cinemas.

We are continuing to address the challenges of the post-COVID world. For instance, we are (i) increasing and improving our automated and self-service options at the cinema level to reduce labor costs, (ii) continuing to focus on our food and beverage offerings and now have liquor licenses in every U.S. cinema, and (iii) continuing to expand our alternative content program with the intention of attracting a broader and more diversified range of patrons. Despite COVID-19 legacy issues, the global cinema industry experienced a robust performance during the third quarter of 2023 which was ignited by the double feature of record-breaking films, *Barbie* and *Oppenheimer.*

We are also continuing to reduce our fixed costs of operation by closing non-performing cinemas upon the expiration of their current lease terms. In addition, in light of potential impacts to the movie release schedule in the next few years due to the Hollywood Strikes, we are in the process of seeking occupancy relief from existing cinema landlords. Over the first ten months of 2023, we have elected not to extend three underperforming US cinema leases.

While we are closing down non-performing theatres in the over-screened U.S., we are continuing to build and expand our circuit in Australia in New Zealand. In 2023, we have opened two new cinemas, representing 13 screens in Australia. We also have two more cinemas, representing an additional 11 screens that are in the pipeline: one in Queensland Australia and one in New Zealand.

We also believe that, as our guests return to the cinema, we will see enhanced operating results from the expansion of our F&B menus and our continued improvement on the quality and diversity of our F&B offer. In the U.S., 100% of our cinemas are licensed for the sale of liquor, beer and wine.

Moreover, the remainder of the year features a unique and compelling film slate that is expected to continue driving audiences to the big screens. After a wildly successful record-breaking concert tour, the *Taylor Swift: The Eras Tour* movie was released on October 13th, 2023 to excited movie-goers and continued to break records for the theaters. The “Swifties” came out in full force for opening weekend, making the movie the highest grossing concert film of all time in North America, grossing almost $93 million domestically in its opening weekend, and thus far has already earned over $241 million globally.

### Recent Box Office Improvements

The third quarter of 2023 witnessed a significant boost in box office performance due to the highly anticipated release of *Barbie* and *Oppenheimer* on July 21, 2023. This double feature drove audiences across the globe to the big screens to experience the cultural phenomenon referred to as “Barbenheimer”, resulting in a strong quarterly box office that outperformed that of Q3 2022. As of date of this report, Barbie has generated over $1.4 billion in worldwide grosses, making it 2023’s highest grossing global movie and the highest grossing opening weekend for a non-franchise film ever. Similarly, *Oppenheimer* has generated over $948 million in worldwide grosses and as of the date of this report, it is the third highest grossing film of 2023.

The simultaneous release of these two highly acclaimed films generated a surge of excitement among moviegoers that benefited the cinema industry and the summer film line up immensely. *Sound of Freedom*, which was considered this summer’s unlikely box office hit, has generated over $244 million in worldwide grosses, as of today, making it one of the most successful independent films of all time. After a 5-year franchise hiatus, *Mission: Impossible – Dead Reckoning* has grossed over $567 million worldwide. Finishing off the summer season, *Teenage Mutant Ninja Turtles: Mutant Mayhem* has become the first non-Disney, non-Universal, and non-Marvel superhero animated movie to make over $118 million domestically. As of the date of this report, it has grossed over $180 million worldwide.

The success of these films continues to support our confidence in the long-term viability of the global cinema business and reinforces the industry's resilience in the face of ongoing challenges such as labor shortages, supply chain constraints, and rising costs. The continued enthusiasm of patrons for the movie-going experience, along with the increased availability of compelling and unique film content, has been the driving force behind this success. We are confident that we will continue to build on this box office momentum as we head into the final quarter of the year with another exciting film line-up. Audiences can look forward to the release of *Hunger Games: The Ballad of Songbirds and Snakes, Napoleon, Wish, Migration, Wonka, The Color Purple*, and *Aquaman and the Lost Kingdom.*

### Real Estate Developments

In the United States, during the first quarter of 2022, we leased to Petco Animal Supplies Stores, Inc. (“Petco”), the cellar, ground floor, and second floor of our 44 Union Square property, representing approximately 42 percent of the leasable area of that building. Petco is in possession of the space and began paying cash rent in December 2022. Petco’s 44 Union Square flagship store opened on June 1, 2023.

Our real estate team continues to work to secure one or more tenants for the remaining space at 44 Union Square. We believe that the pandemic’s impact on the office leasing market in New York City and the slow pace of the “return to office” effort in New York City have adversely impacted leasing opportunities and will continue to adversely impact our efforts to locate an office tenant for the space at 44 Union Square. As a result, we are currently exploring non-office and alternative uses for the remainder of the building. Should we obtain a tenant, we already have mortgage financing in place for this project to cover leasing and tenant improvement costs.

As of September 30, 2023, all of our tenants were currently open for business at our Australian and New Zealand properties (with the exception of two new tenants in Australia completing new fit outs). Most of the rentable retail portions of our Courtenay Central location in New Zealand continue to be closed due to seismic concerns, however one tenant remains open and trading. Furthermore, there is also one tenant trading on our Wakefield property. Our open land areas in Wellington are generating parking revenues.

### BUSINESS OVERVIEW

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

Cinema exhibition, through our 62 cinemas as of September 30, 2023.

Real estate, including real estate development and the rental of retail, commercial, and live theatre assets.

We believe these two business segments complement and support one another. Prior to COVID-19, we used cash flows generated by our cinema operations to fund the front-end cash demands of our real estate development business. As a result of COVID-19, we relied more upon income from our real estate assets, and tapped into the imbedded value in those assets, to support our Company through the COVID-19 crisis. As COVID-19 impacts decrease, quality film product improves, and patrons return to our cinemas, we believe we will once again be able to rely on the cash flows generated by our cinema portfolio.

Despite the fact that our global cinema segment is improving at an income level, in light of our upcoming liquidity needs due to debt maturities, we have identified certain real estate assets to monetize to support our liquidity needs and will be exploring the monetization of other properties to the extent our liquidity needs require. We are steadfast in our belief that our two-pronged, diversified international business strategy will keep carrying our Company through these difficult times as we continue to navigate the uncertainty and challenges posed by the recent macroeconomic obstacles.

### Key Performance Indicators

### Food and Beverage Spend Per Patron

A key performance indicator utilized by management in our cinema segment is Food and Beverage (“F&B”) Spend Per Patron (“SPP”), which is calculated based on our total Food & Beverage Revenues on a post-tax basis divided by our attendance during a specific period.

One of our strategic priorities has been to continue upgrading the food and beverage menu at several of our global cinemas. As of September 30, 2023, we have a total of 39 theater locations with elevated food and beverage menus (i.e. menus that are beyond traditional popcorn, soda, and candy). We use F&B SPP as a measure of our food and beverage operational performance as compared to that of our competitors. Although the profitability of our food and beverage operations is influenced by numerous factors, including labor and cost of goods, F&B SPP serves as an indicator of our ability to achieve consistent strong top-line performance. In addition, F&B SPP highlights our ability to optimize revenue by effectively promoting and selling supplementary products to our customers during each visit. Moreover, this metric assists in evaluating how well we can differentiate our F&B offerings from our competitors. Management in turn uses F&B SPP to adjust food and beverage pricing strategies at our individual theaters, measure the effectiveness of promotional marketing initiatives, optimize menu offerings, and to ensure price barriers are not created for our attendance.

### Average Ticket Price Per Patron

An additional key performance indicator utilized by management in our cinema segment is Average Ticket Price (“ATP”) Per Patron, which is calculated based on our total Box Office Revenues on a post-tax basis divided by our attendance during a specific period. ATP serves to measure our operational cinema performance when compared to that of our competitors. ATP is a useful metric for evaluating our ability to achieve a strong top line performance as we recover from the COVID-19 pandemic. In addition, ATP gauges the effectiveness of our cinemas’ pricing strategies and our ability to draw back audiences to our theaters. Management uses ATP to adjust and inform ticket pricing schemes for our individual theaters, measure the effectiveness of our content programming, and ensure that price barriers are not created for core guests.

### Cinema Exhibition Overview

We operate our worldwide cinema exhibition businesses through various subsidiaries under various brands:

in the U.S., under the Reading Cinemas, Angelika Film Centers, and Consolidated Theatres brands.

in Australia, under the Reading Cinemas, the State Cinema by Angelika, and for our one unconsolidated joint venture theatre, Event Cinemas brands.

in New Zealand, under the Reading Cinemas and our two unconsolidated joint venture theatres, Rialto Cinemas brands.

Shown in the following table are the number of locations and screens in our cinema circuit in each country, by state/territory/region, our cinema brands, and our interest in the underlying assets as of September 30, 2023.

| Country | State / Territory / Region | Location Count(3) | Screen Count | Interest in Asset ‎Underlying the Cinema Leased | Owned | Operating Brands |
| --- | --- | ---: | ---: | ---: | ---: | --- |
| **United States** | Hawaii | 6 | 74 | 6 |  | Consolidated Theatres |
|  | California | 7 | 88 | 7 |  | Reading Cinemas, Angelika Film Center |
|  | New York | 3 | 16 | 2 | 1 | Angelika Film Center |
|  | Texas | 2 | 13 | 2 |  | Angelika Film Center |
|  | New Jersey | 1 | 12 | 1 |  | Reading Cinemas |
|  | Virginia | 1 | 8 | 1 |  | Angelika Film Center |
|  | Washington, D.C. | 1 | 3 | 1 |  | Angelika Film Center |
|  | **U.S. Total** | **21** | **214** | **20** | **1** |  |
| **Australia** | Victoria | 9 | 62 | 9 |  | Reading Cinemas |
|  | New South Wales | 6 | 44 | 5 | 1 | Reading Cinemas |
|  | Queensland | 7 | 64 | 4 | 3 | Reading Cinemas, Angelika Film Center, Event Cinemas(1) |
|  | Western Australia | 4 | 27 | 3 | 1 | Reading Cinemas |
|  | South Australia | 2 | 15 | 2 |  | Reading Cinemas |
|  | Tasmania | 2 | 14 | 2 |  | Reading Cinemas, State Cinema by Angelika |
|  | **Australia Total** | **30** | **226** | **25** | **5** |  |
| **New Zealand** | Wellington | 2 | 15 | 1 | 1 | Reading Cinemas |
|  | Otago | 3 | 15 | 2 | 1 | Reading Cinemas, Rialto Cinemas(2) |
|  | Auckland | 2 | 15 | 2 |  | Reading Cinemas, Rialto Cinemas(2) |
|  | Canterbury | 1 | 8 | 1 |  | Reading Cinemas |
|  | Southland | 1 | 5 | 1 |  | Reading Cinemas |
|  | Bay of Plenty | 1 | 5 |  | 1 | Reading Cinemas |
|  | Hawke's Bay | 1 | 4 |  | 1 | Reading Cinemas |
|  | **New Zealand Total** | **11** | **67** | **7** | **4** |  |
| **GRAND TOTAL** |  | **62** | **507** | **52** | **10** |  |

(1) Our Company has a 33.3% unincorporated joint venture interest in a 16-screen cinema located in Mt. Gravatt, Queensland managed by Event Cinemas.

(2) Our Company is a 50% joint venture partner in two New Zealand Rialto Cinemas, with a total of 13 screens. We are responsible for the booking of these cinemas and our joint venture partner, Event Cinemas, manages their day-to-day operations.

(3)Our total location counts as of September 30, 2023, reflects all operating cinemas, including (i) the Angelika Film Center at South City Square in Australia, which opened on August 24, 2023, (ii) the Reading Cinemas at Busselton in Australia, which opened on September 22, 2023, (iii) the Reading Cinemas at Courtenay Central in New Zealand, which remains closed while we address certain seismic issues and (iv) two underperforming Consolidated Theatres in Hawaii were closed, as of July 9, 2023 and July 31, 2023 respectively.

Our cinema revenues consist primarily of cinema ticket sales, F&B sales, screen advertising, gift card purchases, cinema rentals, and online convenience fee revenue generated by the sale of our cinema tickets through our websites and mobile apps. Cinema operating expenses consist of the costs directly attributable to the operation of the cinemas, including (i) film rent expense, (ii) operating costs, such as employment costs and utilities, and (iii) occupancy costs. Cinema revenues and certain expenses fluctuate with the availability of quality first run films and the number of weeks such first run films stay in the market. For a breakdown of our current cinema assets that we own and/or manage, please refer to *Part I, Item 1 – Our Business* of our 2022 Form 10-K. We now present a discussion of recent material developments.

### Cinema Additions and Pipeline

The latest additions to our cinema portfolio as of September 30, 2023, were as follows:

*Armadale, Western Australia, Australia:* On January 13, 2023, we took over an existing six-screen cinema in Armadale, Australia, a suburb of Perth in Western Australia.

*South City Square, Brisbane, Australia:* On August 24, 2023, we launched our first-ever Angelika Film Center outside of the United States at South City Square in Woolloongabba, Brisbane. The location currently operates as an eight-screen complex, featuring elevated food and beverage offerings (including alcoholic beverages) and recliner seating.

*Busselton, Western Australia, Australia:* On September 22, 2023, we opened a five-screen complex in the newly expanded Busselton Central Shopping Centre precinct of Busselton, Western Australia. The state-of-the-art complex features a TITAN LUXE screen, elevated food and beverage offerings, and recliner seating.

Our Board has authorized management to proceed with the negotiation of leases for two new state-of-the-art cinemas, one of which is Noosa in Queensland, Australia and the other in New Zealand.

### Cinema Upgrades

As of September 30, 2023, the upgrades to our cinema circuits’ film exhibition technology and amenities over the years are as summarized in the following table:

| Screen Format | Location Count | Screen ‎Count |
| --- | ---: | ---: |
| Digital (all cinemas in our cinema circuit) | 62 | 507 |
| IMAX | 1 | 1 |
| TITAN XC and LUXE | 27 | 33 |
| Dine-in Service |  |  |
| Gold Lounge (AU/NZ)(1) | 11 | 29 |
| Premium (AU/NZ)(2) | 17 | 45 |
| Spotlight (U.S.)(3) | 1 | 6 |
| Upgraded Food & Beverage menu (U.S.)(4) | 18 | n/a |
| Premium Seating (features recliner seating) | 33 | 198 |
| Liquor Licenses (5) | 48 | n/a |

(1) **Gold Lounge**: This is our "First Class Full Dine-in Service" in our Australian and New Zealand cinemas, which includes an upgraded F&B menu (with alcoholic beverages), luxury recliner seating features (intimate 25-50 seat cinemas) and waiter service.

(2) **Premium Service**: This is our "Business Class Dine-in Service" in our Australian and New Zealand cinemas, which typically includes upgraded F&B menu (some with alcoholic beverages) and may include luxury recliner seating features (less intimate 80-seat cinemas), but no waiter service.

(3) **Spotlight Service:** Our first dine-in cinema concept in the U.S. at Reading Cinemas in Murrieta, California. Six of our 17 auditoriums at this cinema feature waiter service before the movie begins with a full F&B menu, luxury recliner seating, and laser focus on customer service. Our Spotlight service has been temporarily suspended since the initial COVID-19 shutdown.

(4) **Upgraded Food & Beverage Menu:** Features an elevated F&B menu including a menu of locally inspired and freshly prepared items that go beyond traditional concessions, which we have worked with former Food Network executives to create. The elevated menu also includes beer, wine and/or spirits at most of our locations.

(5) **Liquor Licenses:** Licenses are applicable at each cinema location, rather than each cinema auditorium. As of today, we have liquor licenses in 100% of the cinemas operating in the U.S. In Australia, we have five liquor licenses pending, and in New Zealand we have two liquor licenses pending.

### Recent Enhancements

#### United States

*Renovation Work*: As of September 30, 2023, we have converted 110 of our 214 U.S. auditoriums to luxury recliner seating. We have an agreement in place with our landlord at the Dallas Angelika for a complete remodel of that cinema, which we anticipate will be completed in Q1 of 2024.

#### Australia and New Zealand

*Rouse Hill renovation:* Reading Cinema Rouse Hill will undergo a lease obligated refurbishment focusing on the foyer, concessions and the addition of another all reclining Premium auditorium. The introduction of the hot food offer and streamlining operations to ensure minimal staffing requirement productivity. The Preliminary drawings have been completed and will develop into a construction set for project/lessor approval, building consents and tender. Siteworks are expected to be completed late Q1 2024.

*Angelika Film Centre, South City Square:* Australia’s first Angelika Film Centre opened on August 24, 2023 in the Woolloongabba (Queensland) South City Square development. The complex offers eight screens, all reclining seating, and exceptional hot food and liquor offerings. The fit-out project was completed within the allocated budget and time frame.

*Other Cinema Upgrades:* In addition, during the three-year period 2021 to 2023, we also improved Sunbury and State Cinema in Australia, as well as some non-lease driven renovations at Rouse Hill in New South Wales, Australia.

During 2023, we will continue to focus on the enhancement of our proprietary online ticketing and Food & Beverage capabilities, together with improving and expanding our social media platforms and interfaces. These are intended to enhance the convenience of our offerings and to promote guest affinity with the experiences and products that we are offering.

### Cinema Closures

Our cinema in Wellington, New Zealand remains closed due to seismic concerns pending the redevelopment of that ETC. On May 7, 2023, The Hutt Pop-Up in New Zealand was permanently closed due to the expiration of our lease. We chose not to continue the cinema as it was only brought online as a “pop up” to address a temporary opening in the market. As of the date of this report, we have also closed and terminated our lease agreements at two underperforming Consolidated Theatre locations in Hawaii (Koko Marina Center and Queen Kaahumanu Center) and, as of November 1, 2023, a Reading Cinemas in California (Rohnert Park). One cinema was on a month-to-month arrangement and the other two were at the end of their respective terms. The decision to terminate these three venues was based on our belief that none of these locations could be operated profitably in the current environment on any meaningful rent paying basis at the rents being demanded by their respective landlords. Both of the Hawaii locations are currently closed and without replacement tenants. The California location is still in de-fit status.

### Real Estate Overview

Through our various subsidiaries, we engage in the real estate business through the development, ownership, rental or licensing to third parties of retail, commercial, and live theatre assets. Our real estate business creates long-term value for our stockholders through the continuous improvement and development of our investment and operating properties, including our ETCs. In addition to owning the fee interests in 10 of our cinemas (as presented in the table under *Cinema Exhibition Overview*), as of September 30, 2023, we:

own our 44 Union Square property in Manhattan comprised of retail and office space which is currently in the lease-up phase. The cellar, ground floor, and second floor of the building are now fully leased to Petco, which is in occupancy of its premises on a full rent paying basis.

own and operate four ETCs known as Newmarket Village (in a suburb of Brisbane), The Belmont Common (in a suburb of Perth), and Cannon Park (in Townsville) in Australia, and Courtenay Central (in Wellington) in New Zealand;

own and operate our administrative office building in Culver City, California, which is currently being held for sale;

own and operate our administrative office building in South Melbourne, Australia;

own and operate the fee interests in two developed commercial properties in Manhattan improved with live theatres comprised of a single stage in each location;

own a 75% managing member interest in a limited liability company which in turn owns the fee interest in and improvements constituting our Cinemas 1,2,3 located in Manhattan;

own an approximately 26.6-acre property in Williamsport, Pennsylvania, currently leased to Transco Railway Products, Inc and currently being held for sale;

own approximately 201-acres principally in Pennsylvania from our legacy railroad business, including the Reading Viaduct in downtown Philadelphia; and

have exercised our option to purchase the improvements and ground lease comprising our cinema, Village East by Angelika cinema, and headquarters building at 189 Second Avenue in Manhattan, such sale scheduled to close in July 2024.

For a breakdown of our real estate assets, made current by our discussion below, please refer to *Part I, Item 1 – Our Business* of our 2022 Form 10-K. We now present a discussion of recent material developments.

### Value-creating Opportunities

The implementation of most of our Company’s real estate development plans remained delayed due to the effects of the COVID-19 pandemic on the global cinema industry and the need to conserve capital and fund our cinema operation. However, we intend to continue to emphasize the prudent development of our real estate assets as we emerge from the pandemic.

#### United States:

*44 Union Square Redevelopment (New York, N.Y.) –* On January 27, 2022, we entered a long-term lease with Petco for the cellar, ground floor, and second floor of the building, representing 42% of the leasable area. Petco is in occupancy of its premises on a full rent cash paying basis and opened to the public on June 1, 2023. CBRE is currently engaged as our exclusive broker for the remaining space. While the space was originally designed for office uses, given the dramatic presence of the property on Union Square, the rebound in foot traffic being enjoyed by Union Square and our building’s great branding potential, we are considering, a range of uses beyond traditional office tenants, including short term and special purpose uses. While we cannot guarantee the successful leasing of the remaining space, our leasing team continues to actively pursue potential tenants.

*Minetta Lane Theatre (New York, N.Y.) –* Prior to COVID-19, our theatre was used by Audible, to present plays featuring a limited cast of one or two characters and special live performance engagements on the Audible streaming service. Due to COVID-19, no shows were presented between March 2020 and October 8, 2021, the date on which public performances resumed, and during this period we provided certain abatements. Audible has resumed full operations at the theatre and extended its license arrangement with us through March 15, 2024. Audible has informed us that they would like to extend another two years with one year option. The parties will be working on an extension agreement in the near future. No assurances can be given that we will be able to enter into such a contract extension on terms acceptable to the Company.

*Orpheum Theatre (New York, N.Y.) –* Prior to COVID-19, our theatre was the home to STOMP. Due to COVID-19, no shows were presented between April 2020 and June 2021. Thereafter, performances were intermittent. During this period, we provided certain abatements. STOMP ultimately closed (after 30 years at our theatre) on January 8, 2023. Under our termination agreement with the producers of STOMP, we have certain rights to provide the New York City venue for any future production of that show. Following STOMP’s historic run at the Orpheum, a new show, *The Empire Strips Back,* ran for approximately three months and Comedian Rachel Bloom will host a short term run for *Death, Let Me Do My Show* from December 7, 2023, to January 6, 2024. We are also in discussions with other potential shows to license the Orpheum Theatre.

*Cinemas 1,2,3 (New York, N.Y.) –* Currently operated as the Cinemas 123, we have historically treated this property as an asset held for long term development. However, in light of a variety of factors, such as market conditions in Manhattan for real estate assets, cost of capital and demands on our liquidity, we have begun to explore alternatives for this property. These alternatives may include, again by way of example, the bringing in of a capital partner, the entering into a long-term ground lease (which could serve as the basis for medium to long term finance), and/or the sale (in whole or in part) of our interest in the property.

*The Philadelphia Viaduct and Adjacent Properties (Philadelphia, Pennsylvania) –* This continues to be an area of focus for us in 2023. We have, in recent periods, begun the process of demolishing obsolete structures on the Viaduct or on our properties adjacent to the Viaduct. The city is currently considering an ordinance which would allow it to acquire, in whole or in part, our interest in the Viaduct, and we are in discussions with community leaders about ways in which we can work together to bring enhanced value to our holdings.

#### Australia:

*Newmarket Village ETC, (Brisbane, Australia) –* We continue to work on the expansion and upgrade of our Newmarket Village ETC. Our site includes a 23,250 square foot parcel adjacent to the center, improved with an office building. Over the next few years, we will be evaluating development options for this space. As of the date of this report, the combined center and office building is 99% leased.

*Cannon Park Center ETC, (Queensland, Australia) –* We own two adjoining properties in Townsville, Queensland, Australia, (Cannon Park City Center and Cannon Park Discount Center) comprising approximately 9.4-acres which we operate as our Cannon Park Center ETC. The total gross leasable area of the two properties is 133,000 square feet. Our multiplex cinema is the anchor tenant. These properties are currently 94% leased.

*The Belmont Common, (Belmont, Perth, Australia) –* The total gross leasable area of the Belmont Common is 60,117 square feet. Our multiplex cinema is the anchor tenant with six third-party tenants and our Reading Cinemas, the site is currently 100% leased.

#### New Zealand:

*Courtenay Central Redevelopment (Wellington) –* Our Wellington property is comprised of three parcels representing approximately 161,082 square feet of land in the entertainment core of Wellington, we anticipate that this redevelopment opportunity will be a principal focus over the next few years. We remain optimistic about the development potential for our Courtenay Central property, in light of, among other things, (i) the successful June 3, 2023 opening of Takina Wellington Convention and Exhibition Center (wcec.co.nz), this capital city’s first premium conference and exhibition space that already has over a hundred conferences and events booked and internationally acclaimed exhibits scheduled, (ii) the loosening of certain height and density restrictions, and (iii) the lack of comparable building sites.

For a complete list of our principal properties, see *Part I, Item 2 – Properties* under the heading “*Investment and Development Property.”*

### Corporate Matters

Refer to *Part I – Financial Information, Item 1 – Notes to Consolidated Financial Statements-- Note 17 – Stock-Based Compensation and Stock Repurchases* for details regarding our stock repurchase program and Board, Executive and Employee stock-based remuneration programs.

*Please refer to our 2022 Form 10-K for more details on our cinema and real estate segments.*

### RESULTS OF OPERATIONS

The table below summarizes the results of operations for each of our principal business segments along with the non-segment information for the quarter and nine months ended September 30, 2023, and September 30, 2022, respectively:

*(Dollars in thousands)*

| SEGMENT RESULTS Revenue | Quarter Ended September 30, 2023 | September 30, 2022 | % Change Fav/ ‎(Unfav) | Nine Months Ended September 30, 2023 | September 30, 2022 | % Change Fav/ ‎(Unfav) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cinema exhibition | $62,688 | 48,358 | 30% | $165,731 | $147,476 | 12% |
| Real estate | 5,056 | 4,070 | 24% | 15,338 | 12,265 | 25% |
| Inter-segment elimination | (1,181) | (1,232) | 4% | (3,644) | (3,833) | 5% |
| Total revenue | 66,563 | 51,196 | 30% | 177,425 | 155,908 | 14% |
| **Operating expense** |  |  |  |  |  |  |
| Cinema exhibition | (54,459) | (46,540) | (17)% | (149,941) | (138,412) | (8)% |
| Real estate | (2,281) | (2,352) | 3% | (6,600) | (6,715) | 2% |
| Inter-segment elimination | 1,181 | 1,232 | (4)% | 3,644 | 3,833 | (5)% |
| Total operating expense | (55,559) | (47,660) | (17)% | (152,897) | (141,294) | (8)% |
| **Depreciation and amortization** |  |  |  |  |  |  |
| Cinema exhibition | (2,784) | (3,161) | 12% | (8,551) | (10,057) | 15% |
| Real estate | (1,624) | (1,591) | (2)% | (4,830) | (4,920) | 2% |
| Total depreciation and amortization | (4,408) | (4,752) | 7% | (13,381) | (14,977) | 11% |
| **General and administrative expense** |  |  |  |  |  |  |
| Cinema exhibition | (1,050) | (794) | (32)% | (2,983) | (3,360) | 11% |
| Real estate | (231) | (272) | 15% | (696) | (755) | 8% |
| Total general and administrative expense | (1,281) | (1,066) | (20)% | (3,679) | (4,115) | 11% |
| **Impairment expense** |  |  |  |  |  |  |
| Cinema exhibition | — | — | -% | — | (1,549) | (\>100)% |
| Total impairment expense | — | — | -% | — | (1,549) | (\>100)% |
| **Segment operating income** |  |  |  |  |  |  |
| Cinema exhibition | 4,395 | (2,137) | \>100% | 4,256 | (5,902) | \>100% |
| Real estate | 920 | (145) | \>100% | 3,212 | (125) | \>100% |
| **Total segment operating income (loss)** | $5,315 | $(2,282) | \>100% | $7,468 | $(6,027) | \>100% |
| **NON-SEGMENT RESULTS** |  |  |  |  |  |  |
| Depreciation and amortization expense | (172) | (258) | 33% | (527) | (804) | 34% |
| General and administrative expense | (4,124) | (4,190) | 2% | (12,014) | (13,249) | 9% |
| Interest expense, net | (5,072) | (3,694) | (37)% | (14,063) | (10,242) | (37)% |
| Equity earnings of unconsolidated joint ventures | 217 | 61 | \>100% | 443 | 233 | 90% |
| Gain (loss) on sale of assets | — | (59) | (\>100)% | — | (59) | 100% |
| Other income (expense) | 267 | 5,455 | (95)% | 356 | 8,445 | (96)% |
| Income before income taxes | (3,569) | (4,967) | 28% | (18,337) | (21,703) | 16% |
| Income tax benefit (expense) | (896) | (332) | (\>100)% | (313) | (1,492) | 79% |
| **Net income (loss)** | (4,465) | (5,299) | 16% | (18,650) | (23,195) | 20% |
| Less: net income (loss) attributable to noncontrolling interests | (65) | (122) | 47% | (361) | (228) | (58)% |
| **Net income (loss) attributable to Reading International, Inc.** | **$(4,400)** | **$(5,177)** | **15%** | **$(18,289)** | **$(22,967)** | **20%** |
| **Basic earnings (loss) per share** | **$(0.20)** | **$(0.23)** | **13%** | **$(0.82)** | **$(1.04)** | **21%** |

### Consolidated and Non-Segment Results:

### Third Quarter and Nine Months Net Results

### Revenue

Revenue for the quarter ended September 30, 2023, increased by $15.4 million, to $66.6 million, compared to the same period in the prior year, primarily due to (i) increased revenues as a result of a stronger film slate and (ii) rent income from our 44 Union Square property.

Revenue for the nine months ended September 30, 2023, increased by $21.5 million, to $177.4 million, when compared to the same period in the prior year. This increase was attributable to better cinema performances across our worldwide circuit as a result of a stronger film slate and, since November 2022 rent income from our 44 Union Square property.

### Segment Operating Income/(Loss)

Our total segment operating income for the quarter ended September 30, 2023, increased by $7.6 million, from a loss of $2.3 million to an income of $5.3 million, primarily due to (i) improved operating income from our worldwide circuit and (ii) rent received from our tenant at our 44 Union Square property that did not occur in the third quarter of 2022.

Our total segment operating income for the nine months ended September 30, 2023 was $7.5 million, which increased by $13.5 million from a loss of $6.0 million, primarily due to (i) improved cinema performance from a stronger film slate, which resulted in more patrons returning to the theaters, (ii) rent received from our tenant at our 44 Union Square property that did not occur in the third quarter of 2022, (iii) impairment expense of $1.5 million that was incurred in the same period in 2022 that was not incurred in 2023 and (iv) a decrease in depreciation and amortization due to delay in Capex spending.

During the third quarter of 2023, both the Australia and New Zealand dollars devalued against the U.S. dollar. The average Australia dollar exchange rate against the U.S. dollar for the third quarter of 2023 decreased 4.1% compared to the same period in 2022. The average New Zealand dollar exchange rate against the U.S. dollar for the third quarter of 2023 decreased 1.2% compared to the same period in 2022. The devaluation of the Australia and New Zealand currencies negatively impacts segment operating income and positively impacts segment operating loss in U.S. dollar terms.

### Net Income/(Loss)

Our net loss attributable to Reading International, Inc. for the quarter ended September 30, 2023, decreased by $0.8 million, from a loss of $5.2 million to a loss of $4.4 million, when compared to the same period in the prior year, due to improved segment revenues, decreased depreciation and amortization expense, partially offset by increased interest expense, decreased other income and increased tax expense.

For the nine months ended September 30, 2023, net loss attributable to Reading International, Inc. decreased by $4.7 million, from a loss of $23.0 million to a loss of $18.3 million, compared to the same period in the prior year primarily due to better segment results, decreased G&A expenses, decreased depreciation and amortization expense, no impairment in 2023, and decreased tax expenses, partially offset by increased interest expense and a decrease in other income.

### Income Tax Expense

Income tax expense for the quarter ended September 30, 2023, increased by $0.6 million compared to the equivalent prior-year period. The change between 2023 and 2022 is primarily related to the increase in reserve for valuation allowance in 2023.

Income tax expense for the nine months ended September 30, 2023, decreased by $1.2 million compared to the equivalent prior-year period. The change between 2023 and 2022 is primarily related to the decrease in reserve for unrecognized tax benefits in 2023.

### Business Segment Results

### Cinema Exhibition

The following table details our cinema exhibition segment operating results for the quarter and nine months ended September 30, 2023, and September 30, 2022, respectively:

*(Dollars in thousands)*

| REVENUE | Quarter Ended September 30, 2023 | % of Revenue | September 30, 2022 | % of Revenue | Nine Months Ended September 30, 2023 | % of Revenue | September 30, 2022 | % of Revenue | Fav/(Unfav) Quarter ‎Ended | Nine Months Ended |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **United States** Admissions revenue | $19,495 | 31% | $13,588 | 28% | $50,250 | 30% | $39,815 | 27% | 43% | 26% |
| Food & beverage revenue | 11,663 | 19% | 8,671 | 18% | 31,108 | 19% | 25,436 | 17% | 35% | 22% |
| Advertising and other revenue | 3,074 | 5% | 2,417 | 5% | 8,700 | 5% | 7,281 | 5% | 27% | 19% |
|  | **$34,232** | **55%** | **$24,676** | **51%** | **$90,058** | **54%** | **$72,532** | **49%** | **39%** | **24%** |
| **Australia** Admissions revenue | $14,918 | 24% | $12,404 | 26% | $39,428 | 24% | $39,125 | 27% | 20% | 1% |
| Food & beverage revenue | 7,856 | 13% | 6,486 | 13% | 21,016 | 13% | 21,007 | 14% | 21% | -% |
| Advertising and other revenue | 1,412 | 2% | 1,124 | 2% | 3,894 | 2% | 3,665 | 2% | 26% | 6% |
|  | **$24,186** | **39%** | **$20,014** | **41%** | **$64,338** | **39%** | **$63,797** | **43%** | **21%** | **1%** |
| **New Zealand** Admissions revenue | $2,668 | 4% | $2,287 | 5% | $6,989 | 4% | $6,919 | 5% | 17% | 1% |
| Food & beverage revenue | 1,383 | 2% | 1,191 | 2% | 3,774 | 2% | 3,646 | 2% | 16% | 4% |
| Advertising and other revenue | 219 | 0% | 192 | 0% | 572 | 0% | 582 | 0% | 14% | (2)% |
|  | **$4,270** | **7%** | **$3,670** | **8%** | **$11,335** | **7%** | **$11,147** | **8%** | **16%** | **2%** |
| **Total revenue** | **$62,688** | **100%** | **$48,360** | **100%** | **$165,731** | **100%** | **$147,476** | **100%** | **30%** | **12%** |
| **OPERATING EXPENSE** |  |  |  |  |  |  |  |  |  |  |
| **United States** Film rent and advertising cost | $(10,876) | 17% | $(7,602) | 16% | $(27,563) | 17% | $(22,430) | 15% | (43)% | (23)% |
| Food & beverage cost | (2,908) | 5% | (2,352) | 5% | (8,039) | 5% | (6,552) | 4% | (24)% | (23)% |
| Occupancy expense | (6,265) | 10% | (6,117) | 13% | (18,768) | 11% | (18,447) | 13% | (2)% | (2)% |
| Other operating expense | (11,722) | 19% | (10,489) | 22% | (32,513) | 20% | (28,403) | 19% | (12)% | (14)% |
|  | **$(31,771)** | **51%** | **$(26,560)** | **55%** | **$(86,883)** | **52%** | **$(75,832)** | **51%** | **(20)%** | **(15)%** |
| **Australia** Film rent and advertising cost | $(6,582) | 10% | $(5,642) | 12% | $(17,652) | 11% | $(17,827) | 12% | (17)% | 1% |
| Food & beverage cost | (1,670) | 3% | (1,287) | 3% | (4,407) | 3% | (4,252) | 3% | (30)% | (4)% |
| Occupancy expense | (4,276) | 7% | (4,215) | 9% | (13,048) | 8% | (13,265) | 9% | (1)% | 2% |
| Other operating expense | (6,576) | 10% | (5,625) | 12% | (18,104) | 11% | (17,344) | 12% | (17)% | (4)% |
|  | **$(19,104)** | **30%** | **$(16,769)** | **35%** | **$(53,211)** | **32%** | **$(52,688)** | **36%** | **(14)%** | **(1)%** |
| **New Zealand** Film rent and advertising cost | $(1,190) | 2% | $(1,013) | 2% | $(3,164) | 2% | $(3,086) | 2% | (17)% | (3)% |
| Food & beverage cost | (273) | 0% | (228) | 0% | (731) | 0% | (699) | 0% | (20)% | (5)% |
| Occupancy expense | (792) | 1% | (768) | 2% | (2,357) | 1% | (2,383) | 2% | (3)% | 1% |
| Other operating expense | (1,330) | 2% | (1,203) | 2% | (3,595) | 2% | (3,724) | 3% | (11)% | 3% |
|  | **$(3,585)** | **6%** | **$(3,212)** | **7%** | **$(9,847)** | **6%** | **$(9,892)** | **7%** | **(12)%** | **-%** |
| **Total operating expense** | **$(54,460)** | **87%** | **$(46,541)** | **96%** | **$(149,941)** | **90%** | **$(138,412)** | **94%** | **(17)%** | **(8)%** |
| **DEPRECIATION, AMORTIZATION, IMPAIRMENT AND GENERAL AND ADMINISTRATIVE EXPENSE** |  |  |  |  |  |  |  |  |  |  |
| **United States** Depreciation and amortization | $(1,458) | 2% | $(1,696) | 4% | $(4,518) | 3% | $(5,373) | 4% | 14% | 16% |
| Impairment of long-lived assets | — | 0% | — | 0% | — | 0% | (1,549) | 1% | (\>100)% | (\>100)% |
| General and administrative expense | (672) | 1% | (408) | 1% | (1,839) | 1% | (2,121) | 1% | (65)% | 13% |
|  | **$(2,130)** | **3%** | **$(2,104)** | **4%** | **$(6,357)** | **4%** | **$(9,043)** | **6%** | **(1)%** | **30%** |
| **Australia** Depreciation and amortization | $(1,192) | 2% | $(1,281) | 3% | $(3,611) | 2% | $(4,034) | 3% | 7% | 10% |
| Impairment expense | — | 0% | — | 0% | — | 0% | — | 0% | -% | -% |
| General and administrative expense | (377) | 1% | (387) | 1% | (1,144) | 1% | (1,239) | 1% | 3% | 8% |
|  | **$(1,569)** | **3%** | **$(1,668)** | **3%** | **$(4,755)** | **3%** | **$(5,273)** | **4%** | **6%** | **10%** |
| **New Zealand** Depreciation and amortization | $(134) | 0% | $(184) | 0% | $(422) | 0% | $(650) | 0% | 27% | 35% |
| Impairment expense | — | 0% | — | 0% | — | 0% | — | 0% | -% | -% |
| General and administrative expense | — | 0% | — | 0% | — | 0% | — | 0% | -% | -% |
|  | **$(134)** | **0%** | **$(184)** | **0%** | **$(422)** | **0%** | **$(650)** | **0%** | **27%** | **35%** |
| **Total depreciation, amortization, general and administrative expense** | **$(3,833)** | **6%** | **$(3,956)** | **8%** | **$(11,534)** | **7%** | **$(14,966)** | **10%** | **3%** | **23%** |
| **OPERATING INCOME (LOSS) – CINEMA** |  |  |  |  |  |  |  |  |  |  |
| **United States** | $331 | 1% | $(3,988) | (8)% | $(3,182) | (2)% | $(12,343) | (8)% | \>100% | 74% |
| **Australia** | 3,513 | 6% | 1,577 | 3% | 6,372 | 4% | 5,836 | 4% | \>100% | 9% |
| **New Zealand** | 551 | 1% | 274 | 1% | 1,066 | 1% | 605 | 0% | \>100% | 76% |
| **Total Cinema operating income (loss)** | **$4,395** | **7%** | **$(2,137)** | **(4)%** | **$4,256** | **3%** | **$(5,902)** | **(4)%** | **\>100%** | **\>100%** |

### Third Quarter and Nine Months Results

### Revenue

For the quarter ended September 30, 2023, cinema revenue increased by $14.3 million, to $62.7 million compared to the same period in the prior year. Our worldwide cinema revenue increased by 30%; geographically, U.S., AU and NZ cinema revenue increased by 39%, 21% and 16% respectively.

For the nine months ended September 30, 2023, cinema revenue increased by $18.3 million, to $165.7 million compared to the same period in the prior year.

The increase in revenues for the quarter and nine months ending September 30, 2023 was primarily driven by increased attendance, increased food and beverage sales and advertising and other revenue as a result of a stronger film slate.

### Cinema Segment Operating Income/(Loss)

Cinema segment operating income for the quarter ended September 30, 2023, increased by $6.5 million, from a loss of $2.1 million to an income of $4.4 million when compared to the same period in the prior year, primarily due to a stronger film slate.

Cinema segment operating income for the nine months ended September 30, 2023, increased by $10.2 million, from a loss of $5.9 million to an income of $4.3 million when compared to the same period in the prior year primarily due to (i) improved cinema performance as a result of stronger movie slate and more patrons returning to the theaters, (ii) impairment expense that was incurred in 2022 that was not incurred in 2023 and (iii) a decrease in depreciation and amortization due to delay in Capex spending.

### Operating expense

Operating expenses for the quarter ended September 30, 2023, increased by $7.9 million, to $54.5 million, compared to the same quarter in the prior year. Operating expenses for the nine months ended September 30, 2023, increased by $11.5 million, to $149.9 million, compared to the same time period in the prior year. These increases were due to increased film rent expense, increased food and beverage costs and other operating expenses as result of a better segment performance.

### Depreciation, amortization, impairment, general and administrative expense

Depreciation, amortization, impairment, and general and administrative expenses for the quarter ended September 30, 2023, decreased by $0.1 million, to $3.8 million, compared to the same quarter in the prior year. Depreciation, amortization, impairment and general and administrative expense for the nine months ended September 30, 2023, decreased by $3.4 million, to $11.5 million, compared to the same period in the prior year. These decreases were due to (i) impairment expense that was incurred in 2022 that did not reoccur in 2023, and (ii) a decrease in depreciation and amortization due to a delay in Capex spending.

### Real Estate

The following table details our real estate segment operating results for the quarter and nine months ended September 30, 2023 and September 30, 2022, respectively:

*(Dollars in thousands)*

| REVENUE | Quarter Ended September 30, ‎2023 | % of ‎Revenue | September 30, ‎2022 | % of ‎Revenue | Nine Months Ended September 30, ‎2023 | % of ‎Revenue | September 30, ‎2022 | % of ‎Revenue | % Change Fav/(Unfav) Quarter Ended | Nine Months Ended |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **United States** Live theatre rental and ancillary income | $465 | 9% | $384 | 9% | $1,370 | 9% | $1,343 | 11% | 21% | 2% |
| Property rental income | 1,149 | 23% | 143 | 4% | 3,632 | 24% | 445 | 4% | \>100% | \>100% |
|  | **1,614** | **32%** | **527** | **13%** | **5,002** | **33%** | **1,788** | **15%** | **\>100%** | **\>100%** |
| **Australia** Property rental income | **3,063** | **61%** | **3,154** | **77%** | **9,191** | **60%** | **9,336** | **76%** | (3)% | (2)% |
| **New Zealand** Property rental income | **380** | **8%** | **390** | **10%** | **1,145** | **7%** | **1,141** | **9%** | (3)% | -% |
| **Total revenue** | **$5,057** | **100%** | **$4,071** | **100%** | **$15,338** | **100%** | **$12,265** | **100%** | **24%** | **25%** |
| **OPERATING EXPENSE** |  |  |  |  |  |  |  |  |  |  |
| **United States** Live theatre cost | $(122) | 2% | $(160) | 4% | $(476) | 3% | $(531) | 4% | 24% | 10% |
| Property cost | (466) | 9% | (330) | 8% | (1,132) | 7% | (894) | 7% | (41)% | (27)% |
| Occupancy expense | (260) | 5% | (240) | 6% | (743) | 5% | (750) | 6% | (8)% | 1% |
|  | **(848)** | **17%** | **(730)** | **18%** | **(2,351)** | **15%** | **(2,175)** | **18%** | **(16)%** | **(8)%** |
| **Australia** Property cost | (548) | 11% | (588) | 14% | (1,653) | 11% | (1,596) | 13% | 7% | (4)% |
| Occupancy expense | (505) | 10% | (500) | 12% | (1,477) | 10% | (1,541) | 13% | (1)% | 4% |
|  | **(1,053)** | **21%** | **(1,088)** | **27%** | **(3,130)** | **20%** | **(3,137)** | **26%** | **3%** | **-%** |
| **New Zealand** Property cost | (273) | 5% | (420) | 10% | (810) | 5% | (1,085) | 9% | 35% | 25% |
| Occupancy expense | (108) | 2% | (116) | 3% | (309) | 2% | (318) | 3% | 7% | 3% |
|  | **(381)** | **8%** | **(536)** | **13%** | **(1,119)** | **7%** | **(1,403)** | **11%** | **29%** | **20%** |
| **Total operating expense** | **$(2,282)** | **45%** | **$(2,354)** | **58%** | **$(6,600)** | **43%** | **$(6,715)** | **55%** | **3%** | **2%** |
| **DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE** |  |  |  |  |  |  |  |  |  |  |
| **United States** Depreciation and amortization | $(824) | 16% | $(745) | 18% | $(2,358) | 15% | $(2,243) | 18% | (11)% | (5)% |
| General and administrative expense | (171) | 3% | (211) | 5% | (507) | 3% | (643) | 5% | 19% | 21% |
|  | **(995)** | **20%** | **(956)** | **23%** | **(2,865)** | **19%** | **(2,886)** | **24%** | **(4)%** | 1% |
| **Australia** Depreciation and amortization | $(617) | 12% | $(655) | 16% | $(1,900) | 12% | $(2,042) | 17% | 6% | 7% |
| General and administrative expense | (60) | 1% | (60) | 1% | (189) | 1% | (112) | 1% | -% | (69)% |
|  | **(677)** | **13%** | **(715)** | **18%** | **(2,089)** | **14%** | **(2,154)** | **18%** | **5%** | **3%** |
| **New Zealand** Depreciation and amortization | (183) | 4% | (191) | 5% | (572) | 4% | (635) | 5% | 4% | 10% |
| General and administrative expense | — | 0% | — | 0% | — | 0% | — | 0% | -% | -% |
|  | **(183)** | **4%** | **(191)** | **5%** | **(572)** | **4%** | **(635)** | **5%** | **4%** | **10%** |
| **Total depreciation, amortization, general and administrative expense** | **$(1,855)** | **37%** | **$(1,862)** | **46%** | **$(5,526)** | **36%** | **$(5,675)** | **46%** | **-%** | **3%** |
| **OPERATING INCOME (LOSS) - REAL ESTATE** |  |  |  |  |  |  |  |  |  |  |
| **United States** | $(229) | (5)% | $(1,159) | (28)% | $(214) | (1)% | $(3,273) | (27)% | 80% | 93% |
| **Australia** | 1,333 | 26% | 1,351 | 33% | 3,972 | 26% | 4,045 | 33% | (1)% | (2)% |
| **New Zealand** | (184) | (4)% | (337) | (8)% | (546) | (4)% | (897) | (7)% | 45% | 39% |
| **Total real estate operating income (loss)** | **$920** | **18%** | **$(145)** | **(4)%** | **$3,212** | **21%** | **$(125)** | **(1)%** | **\>100%** | **\>100%** |

### Third Quarter and Nine Months Results

### Revenue

Real estate revenue for the quarter ended September 30, 2023, increased by approximately $1.0 million to $5.1 million, compared to the same period in the prior year. This increase was due to the recognition of rental income from our tenant at our 44 Union Square property, which did not occur in the same period of the prior year and increased live theatre rental income.

For the nine months ended September 30, 2023, real estate revenue increased by $3.1 million, to $15.3 million, compared to the same period in the prior year. This increase was driven by the rental income from our 44 Union Square property tenant that did not occur in the same period in the prior year.

### Real Estate Segment Income/(Loss)

Real estate segment operating income for the quarter ended September 30, 2023, increased by $1.1 million, to $0.9 million, compared to a slight loss of $0.1 million the same period in the prior year. This change was attributable to rent recognized in the current quarter 2023 from our tenant at our 44 Union Square property, that did not occur in the same period of the prior year.

For the nine months ended September 30, 2023, real estate segment operating income increased by $3.3 million, to $3.2 million, compared to a slight loss of $0.1 million in same period in the prior year. This increase was driven by the rental income from our 44 Union Square property tenant that did not occur in the same prior year period.

### LIQUIDITY AND CAPITAL RESOURCES

### Our Financing Strategy

Prior to the COVID-19 pandemic, we used cash generated from operations and other excess cash to the extent not needed to fund capital investments contemplated by our business plan, to pay down our loans and credit facilities. This provided us with availability under our loan facilities for future use and thereby, reduced interest charges. On a periodic basis, we reviewed the maturities of our borrowing arrangements and negotiated renewals and extensions where necessary.

However, disruptions to our cinema cash flow caused by the COVID-19 pandemic, government efforts to address the pandemic, and the resulting aftermath of the pandemic and those efforts have made it necessary for us to defer capital expenditures and to rely on borrowings and the proceeds of asset monetizations to cover our costs of operations, pay interest and pay down debt. We have since March 31, 2020 paid down our institutional debt by $54.4 million.

Our bank loans with Bank of America, NAB, and Westpac require that our Company comply with certain covenants. Furthermore, our Company’s use of loan funds from NAB and Westpac is limited due to limitations on the expatriation of funds from Australia and New Zealand to the United States. We believe that our lenders understand that the current situation, relating to the COVID-19 pandemic, is not of our making, that we are doing everything that can reasonably be done, and that, generally speaking, our relationship with our lenders is good.

As our Company enjoys the recovery in the global cinema business, we are still facing macroeconomic headwinds such as increased interest rates, inflation, supply chain issues and increased film rent, labor and operating costs, many of which are beyond our control. While we have been successful in negotiating extensions of $108.3 million in debt scheduled to mature in 2023, we have debt of $41.5 million coming due in the next 12 months.

If our Company is unable to generate sufficient cash flow in the upcoming months, we will be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, monetizing additional assets, restructuring our debt and/or our lease obligations or finding additional sources of liquidity (such as additional borrowings). We have listed as assets held for sale two U.S. properties with a combined book value (the lower of cost or market, as opposed to fair market value) of $11.7 million. These assets were selected since, based on recent appraisals, we believe that they would free up material amounts of cash and that it is unlikely that they would materially increase in value over the next three to five years without significant capital investment.

For more information about our borrowings, please refer to *Part I – Financial Information, Item 1 – Notes to Consolidated Financial Statements-- Note 12 – Borrowings*. For more information about our efforts to manage our liquidity issues, see *Part I- Financial Information, Item 1 – Notes to Consolidated Financial Statements – Note 3 – Impact of COVID-19 Pandemic, Artists Strike and Liquidity.*

The changes in cash and cash equivalents for the nine months ended September 30, 2023, and September 30, 2022, respectively, are discussed as follows:

*(Dollars in thousands)*

|  | Nine Months Ended September 30, 2023 | 2022 | % Change |
| --- | ---: | ---: | ---: |
| Net cash provided by (used in) operating activities | $(6,366) | $(26,114) | 76% |
| Net cash provided by (used in) investing activities | (6,191) | (6,419) | 4% |
| Net cash provided by (used in) financing activities | (3,886) | (7,946) | 51% |
| Effect of exchange rate on cash and restricted cash | (897) | (2,242) | 60% |
| Increase (decrease) in cash and cash equivalents and restricted cash | $(17,340) | $(42,721) | 59% |

### Operating activities

Cash used in operating activities for the nine months ended September 30, 2023, decreased by $19.7 million, to $6.4 million. This was driven by an improved cinema operating performance compared to the prior year period, receipt of rental income from our tenant, at our 44 Union Square property, which did not occur in the same period of prior year, and increase in operating liabilities primarily in taxes payable and account payable and accrued expenses.

### Investing activities

Cash used in investing activities during the nine months ended September 30, 2023, which was $6.2 million, stayed relatively flat compared to the same period of prior year of $6.4 million.

### Financing activities

Cash used in financing activities for the nine months ended September 30, 2023, decreased by $4.1 million, to $3.9 million due to a borrowing on an existing facility.

The table below presents the changes in our total available resources (cash and borrowings), debt-to-equity ratio, working capital, and other relevant information addressing our liquidity for the third quarter ended September 30, 2023, and preceding four years:

*($ in thousands)*

| Total Resources (cash and borrowings) | As of and for the 9-Months Ended September 30, 2023 | Year Ended December 31 2022 | 2021 | 2020 | 2019 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Cash and cash equivalents (unrestricted) | $11,925 | $29,947 | $83,251 | $26,826 | $12,135 |
| Unused borrowing facility | 8,160 | 12,000 | 12,000 | 15,490 | 73,920 |
| Restricted for capital projects | 8,160 | 12,000 | 12,000 | 9,377 | 13,952 |
| Unrestricted capacity | — | — | — | 6,113 | 59,968 |
| Total resources at period end | 20,085 | 41,947 | 95,251 | 42,316 | 86,055 |
| Total unrestricted resources at period end | 11,925 | 29,947 | 83,251 | 32,939 | 72,103 |
| **Debt-to-Equity Ratio** |  |  |  |  |  |
| Total contractual facility | $216,749 | $227,633 | $248,948 | $300,449 | $283,138 |
| Total debt (gross of deferred financing costs) | 208,589 | 215,633 | 236,948 | 284,959 | 209,218 |
| Current | 41,178 | 38,026 | 12,060 | 42,299 | 37,380 |
| Non-current | 167,411 | 177,607 | 224,888 | 242,660 | 171,838 |
| Finance lease liabilities | 3 | 28 | 209 | — | — |
| Total book equity | 42,055 | 63,279 | 105,060 | 81,173 | 139,616 |
| Debt-to-equity ratio | 4.96 | 3.41 | 2.26 | 3.51 | 1.50 |
| **Changes in Working Capital** |  |  |  |  |  |
| Working capital (deficit)(1) | $(85,664) | $(74,152) | $(6,673) | $(64,140) | $(84,138) |
| Current ratio | 0.33 | 0.39 | 0.94 | 0.47 | 0.24 |
| **Capital Expenditures (including acquisitions)** | $6,191 | $9,780 | $14,428 | $16,759 | $47,722 |

(1) Our working capital is reported as a deficit, as we receive revenue from our cinema business ahead of the time that we have to pay our associated liabilities. We use the money we receive to pay down our borrowings in the first instance.

As of September 30, 2023, we had $11.9 million in unrestricted cash and cash equivalents compared to $29.9 million on December 31, 2022. On September 30, 2023, our total outstanding borrowings were $208.6 million compared to $215.6 million on December 31, 2022.

We manage our cash, investments, and capital structure to meet the short-term and long-term obligations of our business, while maintaining financial flexibility and liquidity. We forecast, analyze, and monitor our cash flows to enable investment and financing within the overall constraints of our financial strategy. In the past, we used cash generated from operations and other excess cash to the extent not needed for any capital expenditures, to pay down our loans and credit facilities providing us some flexibility on our available loan facilities for future use and thereby, reducing interest charges.

### CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES

The following table provides information with respect to the maturities and scheduled principal repayments of our recorded contractual obligations and certain of our commitments and contingencies, either recorded or off-balance sheet, as of September 30, 2023:

*(Dollars in thousands)*

|  | 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Debt(1) | $10,625 | $96,651 | $64,810 | $314 | $7,500 | $— | $179,900 |
| Operating leases, including imputed interest | 8,149 | 31,198 | 29,159 | 27,283 | 24,977 | 139,619 | 260,385 |
| Finance leases, including imputed interest | 3 | — | — | — | — | — | 3 |
| Subordinated debt(1) | 190 | 586 | — | — | 27,913 | — | 28,689 |
| Pension liability | 171 | 684 | 684 | 684 | 684 | 548 | 3,455 |
| Estimated interest on debt (2) | 4,539 | 12,297 | 5,640 | 3,019 | 1,362 | — | 26,856 |
| Village East purchase option(3) | — | 5,900 | — | — | — | — | 5,900 |
| Total | $23,677 | $147,316 | $100,293 | $31,300 | $62,436 | $140,167 | $505,188 |

(1) Information is presented gross of deferred financing costs.

(2) Estimated interest on debt is based on the anticipated loan balances for future periods and current applicable interest rates.

(3) Represents the lease liability of the option associated with the ground lease purchase of the Village East Cinema, which on November 4, 2022, we modified to settle on or before July 1, 2024.

### Litigation

We are currently involved in certain legal proceedings and, as required, have accrued estimates of probable and estimable losses for the resolution of these claims.

Please refer to *Part I, Item 3 – Legal Proceedings* in our 2022 Form 10-K for more information. There have been no material changes to our litigation since our 2022 Form 10-K, except as set forth in *Notes to Consolidated Financial Statements-- Note 15 – Commitments and Contingencies* included herein in *Part I – Financial Information, Item 1 – Financial Statements* on this Quarterly Report on Form 10-Q. This note sets out our litigation accounting policies.

### Off-Balance Sheet Arrangements

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

### CRITICAL ACCOUNTING POLICIES

We believe that the application of the following accounting policies requires significant judgments and estimates in the preparation of our Consolidated Financial Statements and hence, are critical to our business operations and the understanding of our financial results:

*(i) Impairment of Long-lived Assets (other than Goodwill and Intangible Assets with indefinite lives) –* we evaluate our long-lived assets and finite-lived intangible assets using historical and projected data of cash flows as our primary indicator of potential impairment and we take into consideration the seasonality of our business. If the sum of the estimated, undiscounted future cash flows is less than the carrying amount of the asset, then an impairment is recognized for the amount by which the carrying value of the asset exceeds its estimated fair value based on an appraisal or a discounted cash flow calculation. For certain non-income producing properties or for those assets with no consistent historical or projected cash flows, we obtain appraisals or other evidence to evaluate whether there are impairment indicators for these assets.

No impairment losses were recorded for long-lived and finite-lived intangible assets for the third quarter and nine months ended September 30, 2023.

*(ii) Impairment of Goodwill and Intangible Assets with indefinite lives –* goodwill and intangible assets with indefinite useful lives are not amortized, but instead, tested for impairment at least annually on a reporting unit basis. The impairment evaluation is based on the present value of estimated future cash flows of each reporting unit plus the expected terminal value. There are significant assumptions and estimates used in determining the future cash flows and terminal value. The most significant assumptions include our cost of debt and cost of equity assumptions that comprise the weighted average cost of capital for each reporting unit. Accordingly, actual results could vary materially from such estimates.

No impairment losses were recorded for goodwill and indefinite-lived intangible assets for the third quarter and nine months ended September 30, 2023.

### CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Our statements in this quarterly report, including the documents incorporated herein by reference, contain a variety of forward-looking statements as defined by the Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "may," "will," "expect," "believe," "intend," "future," and "anticipate" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding the closures and reopening of our cinemas and theatres, including our expectations regarding renovations and addition of cinemas; our expectations regarding the long-term impacts of the COVID-19 pandemic on customers’ desires for social interaction our expected operating results, including the long-term impact of the COVID-19 pandemic and our ultimate return to pre-pandemic type results; our expectations regarding the recovery and future of the cinema exhibition industry, including the strength of movies anticipated for release in the future; our expectations regarding the effects of the Hollywood Strikes on the cinema industry and the recovery of the industry during the coming years; our expectations regarding the timing of completing the sale of certain assets; our expectations regarding people returning to our theatres and continuing to use discretionary funds on entertainment outside of the home; our expectations regarding our ability to extend the contract with Audible on terms acceptable to us; our expectations regarding the impact of streaming and mobile video services on the cinema exhibition industry; our belief regarding the attractiveness of 44 Union Square to potential tenants and ability to lease space on acceptable terms; our expectations regarding the effects of our enhanced F&B offerings on our operating results; our expectations regarding credit facility covenant compliance and our ability to continue to obtain necessary covenant waivers and loan extensions on terms acceptable to us; and our expectations of our liquidity and capital requirements and the allocation of funds.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

with respect to our cinema and live theatre operations:

reduced consumer demand due to recessionary pressures;

the adverse continuing impact of the COVID-19 pandemic, and other contagious diseases and the adverse effects on our anticipated cinema operations should there be further closings or restrictions mandated as a result of other pandemics or diseases;

the adverse continuing effects of the COVID-19 pandemic or other contagious diseases on our Company’s results from operations, liquidity, cash flows, financial condition, and access to credit markets;

the adverse continuing impact of the COVID-19 pandemic or other contagious diseases on short-term and/or long-term entertainment, leisure and discretionary spending habits and practices of our patrons;

the decrease in attendance at our cinemas and theatres due to a change in consumer behavior in favor of alternative forms or mediums of entertainment;

reduction in operating margins (or negative operating margins) due to the implementation of health and safety protocols;

potentially uninsurable liability exposure to customers and staff should they become (or allege that they have become) infected with COVID-19 or other contagious diseases while at one of our facilities;

unwillingness of employees to report to work due to the adverse effects of contagious diseases or to otherwise conduct work under any revised work environment protocols;

competition from cinema operators who have successfully used debtor laws or government grants to reduce their debt and/or rent exposure;

the disruptions or reductions in the utilization of entertainment, shopping, and hospitality venues, as well as in our operations, due to pandemics, epidemics, widespread health emergencies, or outbreaks of infectious diseases or to changing consumer tastes and habits;

the number and attractiveness to moviegoers of the films released in future periods, and potential changes in release dates for motion pictures;

the lack of availability of films in the short- or long-term as a result of (i) major film distributors releasing scheduled films on alternative channels or (ii) disruptions of film production;

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;

the extent to which we encounter competition from other cinema exhibitors, from other sources of outside-the-home entertainment, and from inside-the-home entertainment options, such as “home cinemas” and competitive film product distribution technology, such as, streaming, cable, satellite broadcast, video on demand platforms, and Blu-ray/DVD rentals and sales;

our ability to continue to obtain, to the extent needed, waivers or other financial accommodations from our lenders and landlords;

the impact of major movies being released directly to one of the multitudes of streaming services available;

the impact of certain competitors’ subscription or advance pay programs;

the cost and impact of improvements to our cinemas, such as improved seating, enhanced F&B offerings, and other improvements;

the ability to negotiate favorable rent abatement, deferral and repayment terms with our landlords (which may include lenders who have foreclosed on the collateral held by our prior landlords);

disruptions during cinema improvements;

in the U.S., the impact of the termination and phase-out of the so called “Paramount Decree;”

the risk of damage and/or disruption of cinema businesses from earthquakes as certain of our operations are in geologically active areas;

the impact of protests, demonstrations, and civil unrest on, among other things, government policy, consumer willingness to go to the movies;

labor shortages and increased labor costs related to such shortages and to increasingly costly labor laws and regulations applicable to part time non-exempt workers. Disruptions in film supply and film marketing due to the Hollywood Strikes; and

competition from a newly restructured Regal, which may have lower occupancy costs than we do.

with respect to our real estate development and operation activities:

the increased costs of wages, supplies, services and other development expenses from inflation;

the impact on tenants from recessionary pressures;

the impact of the COVID-19 pandemic or other contagious diseases may continue to affect many of our tenants at our real estate operations in the United States, Australia, and New Zealand, their ability to pay rent, and to stay in business;

the impact of the COVID-19 pandemic or other contagious diseases on real estate valuations in major urban centers, such as New York;

uncertainty as to governmental responses to COVID-19 or other contagious diseases;

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

the ability to negotiate and execute lease agreements with material tenants;

the extent to which we can obtain on a timely basis the various land use approvals and entitlements needed to develop our properties;

the risks and uncertainties associated with real estate development;

the availability and cost of labor and materials;

the ability to obtain all permits to construct improvements;

the ability to finance improvements, including, but not limited to increased cost of borrowing and tightened lender credit policies;

the disruptions to our business from construction and/or renovations;

the possibility of construction delays, work stoppage, and material shortage;

competition for development sites and tenants;

environmental remediation issues;

the extent to which our cinemas can continue to serve as an anchor tenant that will, in turn, be influenced by the same factors as will influence generally the results of our cinema operations;

the increased depreciation and amortization expense as construction projects transition to leased real property;

the ability to negotiate and execute joint venture opportunities and relationships;

the risk of damage and/or disruption of real estate businesses from earthquakes as certain of our operations are in geologically active areas;

the disruptions or reductions in the utilization of entertainment, shopping and hospitality venues, as well as in our operations, due to pandemics, epidemics, widespread health emergencies, or outbreaks of infectious diseases, or to changing consumer tastes and habits; and

the impact of protests, demonstrations, and civil unrest on government policy, consumer willingness to visit shopping centers.

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 ability to renew, extend, renegotiate or replace our loans that mature in 2023 and beyond, and the impact of increasing interest rates;

our ability to grow our Company and provide value to our stockholders;

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, and our ability to borrow funds to help cover the cessation of cash flows we experienced during the COVID-19 pandemic;

our ability to reallocate funds among jurisdictions to meet short-term liquidity needs;

the relative values of the currency used in the countries in which we operate;

the impact that any discontinuance, modification or other reform of London Inter-Bank Offered Rate (LIBOR), or the establishment of alternative reference rates, may have on our LIBOR-based debt instruments;

changes in government regulation, including by way of example, the costs resulting from the requirements of Sarbanes-Oxley and other increased regulatory requirements;

our labor relations and costs of labor (including future government requirements with respect to minimum wages, shift scheduling, the use of consultants, 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, and class actions and private attorney general wage and hour and/or safe workplace-based claims;

our exposure to cybersecurity risks, including misappropriation of customer information or other breaches of information security;

the impact of major outbreaks of contagious diseases;

the availability of employees and/or their ability or willingness to conduct work under any revised work environment protocols;

the increased risks related to employee matters, including increased employment litigation and claims relating to terminations or furloughs caused by cinema and ETC closures;

our ability to generate significant cash flow from operations if our cinemas and/or ETCs continue to experience demand at levels significantly lower than historical levels, which could lead to a substantial increase in indebtedness and negatively impact our ability to comply with the financial covenants, if applicable, in our debt agreements;

our ability to comply with credit facility covenants and our ability to obtain necessary covenant waivers and necessary credit facility amendments;

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;

inflationary pressures on labor and supplies, and supply chain disruptions;

changes in applicable accounting policies and practices;

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;

the impact of the conflict events occurring in Eastern Europe and the threats of potential conflicts in the Asia-Pacific region; and

the impact of the conflict events occurring in Israel and the threats of potential conflicts in the Middle East.

The above list is not necessarily exhaustive, as business is by definition unpredictable and risky, and subject to influence by numerous factors outside of our control, such as changes in government regulation or policy, competition, interest rates, supply, technological innovation, changes in consumer taste and fancy, weather, earthquakes, pandemics, and the extent to which consumers in our markets have the economic wherewithal to spend money on beyond-the-home entertainment. Refer to *Item 1A - Risk Factors*, as well as the risk factors set forth in any other filings made under the Securities Act of 1934, as amended, including any of our Quarterly Reports on Form 10-Q, for more information.

Given the variety and unpredictability of the factors that will ultimately influence our businesses and our results of operation, no guarantees can be given that any of our forward-looking statements will ultimately prove to be correct. Actual results will undoubtedly vary and there is no guarantee as to how our securities will perform either when considered in isolation or when compared to other securities or investment opportunities.

Forward-looking statements made by us in this quarter report are based only on information currently available to us and are current only as of the date of this Quarterly Report on Form 10-Q for the period ended September 30, 2023. We undertake no obligation to publicly update or to revise any of our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. Accordingly, you should always note the date to which our forward-looking statements speak.

## Market risk

As filed, 6,431 characters.

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

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

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

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

### Currency Risk

While we report our earnings and net assets in U.S. dollars, substantial portions of our revenue and of our obligations are denominated in either Australian or New Zealand dollars. The value of these currencies can vary significantly compared to the U.S. dollar and compared to each other. We do not hedge the currency risk, but rather have relied upon the natural hedges that exist as a result of the fact that our film costs are typically fixed as a percentage of the box office, and our local operating costs and obligations are likewise typically denominated in local currencies. However, we do have intercompany debt and our ability to service this debt could be adversely impacted by declines in the relative value of the Australian and New Zealand dollars compared to the U.S. dollar. Also, our use of local borrowings to mitigate the business risk of currency fluctuations has reduced our flexibility to move cash between jurisdictions. Set forth below is a chart of the exchange ratios between these three currencies since 1996:

In recent periods, we have paid material intercompany dividends and have repaid intercompany debt, using these proceeds to fund capital investment in the United States. Accordingly, our debt levels in Australia are higher than they would have been if funds had not been returned for such purposes. On a company wide basis, this means that a reduction in the relative strength of the U.S. dollar versus the Australian dollar and/or the New Zealand dollar would effectively raise the overall cost of our borrowing and capital and make it more expensive to return funds from the United States to Australia and New Zealand.

Our Company transacts business in Australia and New Zealand and is subject to risks associated with fluctuating foreign currency exchange rates. During the third quarter of 2023, the average Australian dollar and New Zealand dollar weakened against the U.S. dollar by 4.1% and 1.2%, respectively, compared to the same period prior year.

At September 30, 2023, approximately 35.4% and 8.5% of our assets were invested in assets denominated in Australian dollars (Reading Entertainment Australia) and New Zealand dollars (Reading New Zealand), respectively, including approximately $6.4 million in cash and cash equivalents. At December 31, 2022, approximately 34.1% and 8.4% of our assets were invested in assets denominated in Australian dollars (Reading Entertainment Australia) and New Zealand dollars (Reading New Zealand), respectively, including approximately ($14.6) million in cash and cash equivalents.

Our policy in Australia and New Zealand is to match revenues and expenses, whenever possible, in local currencies. As a result, we have procured a majority of our expenses in Australia and New Zealand in local currencies. Despite this natural hedge, recent movements in foreign currencies and the current holding of U.S. dollars by certain Australian and New Zealand subsidiaries have had an effect on our current earnings. The effect of the translation adjustment on our assets and liabilities noted in our other comprehensive income was a decrease of $1.7 million and $3.0 million for the quarter and nine months ended September 30, 2023, respectively. As we continue to progress our acquisition and development activities in Australia and New Zealand, no assurances can be given that the foreign currency effect on our earnings will not be material in the future.

Historically, our policy has been to borrow in local currencies to finance the development and construction of our long-term assets in Australia and New Zealand. As a result, the borrowings in local currencies have provided somewhat of a natural hedge against the foreign currency exchange exposure. We have also historically paid management fees to the U.S. to cover a portion of our domestic overhead. The fluctuations of the Australian and New Zealand currencies, however, may impact our ability to rely on such funding for ongoing support of our domestic overhead.

We record unrealized foreign currency translation gains or losses that could materially affect our financial position. As of September 30, 2023, and December 31, 2022, the balance of cumulative foreign currency translation adjustments were approximately a ($3.7) million loss and ($0.7) million loss, respectively.

### Interest Rate Risk

Our exposure to interest rate risk arises out of our long-term floating-rate borrowings. To manage the risk, we utilize interest rate derivative contracts to convert certain floating-rate borrowings into fixed-rate borrowings. It is our Company’s policy to enter into interest rate derivative transactions only to the extent considered necessary to meet its objectives as stated above. Our Company does not enter into these transactions or any other hedging transactions for speculative purposes.

Historically, we maintain most of our cash and cash equivalent balances in short-term money market instruments with original maturities of three months or less. Due to the short-term nature of such investments, a change of 1% in short-term interest rates would not have a material effect on our financial condition. The negative spread between our borrowing costs and earned interest will exacerbate as we hold cash to provide a safety net to meet our expenses.

We have a combination of fixed and variable interest rate loans. In connection with our variable interest rate loans, a change of approximately 1% in short-term interest rates would have resulted in an approximate $396,000 increase or decrease in our quarterly interest expense.

For further discussion on market risks, please refer to *Part I, Item 1A – Risk Factors* included on our 2022 Form 10-K.

## Controls and procedures

As filed, 1,754 characters.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Company’s reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such, term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based upon that evaluation, we concluded that, as of September 30, 2023, our disclosure controls and procedures were effective.

### Changes in Internal Control over Financial Reporting

There were no other changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the third quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 560 characters.

There have been no material changes to the risk factors we previously disclosed in Item 1A of our 2022 Form 10-K other than the potential impact of the Hollywood Strikes on the cinema industry and our business.

We encourage investors to review the risks and uncertainties relating to our business disclosed under the heading Risk Factors or otherwise in the 2022 Form 10-K, as well as those contained in Part I – Forward-Looking Statements thereof, as revised or supplemented by our Quarterly Reports filed with the SEC since the filing of the 2022 Form 10-K.

Filed Nov 15, 2023.
Source: SEC EDGAR, the filing index for accession 0000716634-23-000031. Last ingested by Listed: Oct 24, 2026, 14:56 ET. No prices; not investment advice.