# Reading International Inc: Form 10-Q for the period ended Mar 31, 2024

- Company: [Reading International Inc](/companies/rdi.md) (CIK 716634)
- Form: 10-Q
- Filed: 2024-05-15
- Accepted by EDGAR: May 15, 2024, 20:59 ET
- Period: 2024-03-31
- Accession: 0000716634-24-000018
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/716634/000071663424000018/rdi-20240331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/716634/000071663424000018/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $45.1m | us-gaap:Revenues |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$7.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $5.3m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | −$223.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$13.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.59 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.59 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 22,348,994 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$2.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $1.9m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-03-31 | $7.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $20.3m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $494.9m | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $134.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $477.1m | us-gaap:Liabilities |
| Current portion of debt | at 2024-03-31 | $41.9m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2024-03-31 | $18.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 79,723 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 cinema 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, such as COVID-19, the 2023 Hollywood Strikes and current macroeconomic situations. These factors are largely beyond our control, and continue to adversely impact the profitability of our global cinema segment when compared to pre-pandemic levels:

Cinema patronage levels that have not yet returned to the 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;

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 due to inflation and labor shortages and government mandates;

Increased fixed costs for third party cinema rents, some of which are increasing due to fixed rent escalations, some of which are fixed and some of which are adjusted by reference to changes in the cost of living index, 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;

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

Declines in exchange rates for the Australian and New Zealand currencies when compared to the U.S. Dollar.

In addition to the above factors influencing the revenue streams of our global cinema business, we are closely monitoring the repercussions of the 2023 Hollywood strikes on our operations. While we celebrated the resolution of the strikes, we acknowledge that their aftermath will continue to impact our global cinema business throughout 2024, primarily due to production delays and the rescheduling of theatrical release dates. Several notable titles initially slated for 2024 have been postponed to 2025, including *Captain America: Brave New World, Thunderbolts*, Disney’s *Snow White, Elio, Mission: Impossible 8, SpongeBob SquarePants*, and James Cameron’s eagerly awaited *Avatar* sequel. However, the remaining 2024 film lineup remains robust, featuring highly anticipated releases that are expected to continue driving audiences to our big screens, including: *Inside Out 2, Deadpool & Wolverine, Joker: Folie a Deux, Wicked*, and *Gladiator 2.*

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), 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 strong 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 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 for 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.

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 2023 Hollywood Strikes, we are in the process of seeking occupancy relief from existing cinema landlords.

In the beginning of 2024, recognizing a reduction in our corporate demand for administrative space, we streamlined our operations by divesting our administrative building in Culver City, California. This strategic move freed up approximately $1.2 million in cash reserves after covering mortgage settlements, brokerage commissions, and transactional fees. It is our expectation that this asset disposition will yield savings of approximately $1.5 million in operational and holding expenses between now and the end of 2025.

Additionally, we anticipate sustained improvements in the operational performance of our cinemas as our global circuit continues its recovery. One driving factor for this optimism is the ongoing expansion and refinement of our F&B menus. Notably, as mentioned above, in 2023, our U.S. circuit became 100% licensed for the sale of liquor, beer and wine. Looking ahead, we are committed to obtaining liquor licenses and enriching our F&B offerings across our circuits in Australia and New Zealand. This strategic focus underscores our dedication to enhancing the overall cinema experience for our valued customers.

### Recent Box Office Improvements

Despite the impact from the 2023 Hollywood Strikes, the end of the first quarter of 2024 delivered stronger box office results. Audiences were treated to the eagerly anticipated return of beloved franchises, with highlights including the success of *Dune: Part Two*. Surpassing its predecessor's performance from 2021, *Dune: Part Two* has soared to over $710 million in worldwide grosses, solidifying its place as one of the most successful IMAX releases of all time. Adding to the excitement, after an eight-year hiatus, the fourth installment of the Kung Fu Panda franchise delighted audiences worldwide. *Kung Fu Panda 4* has generated over $529 million in worldwide grosses, pushing the franchise past the $2 billion mark and securing its position as the seventh highest-grossing animated franchise ever. Further bolstering the box office of Q1 2024 was the highly anticipated biopic, *Bob Marley: One Love*. Premiering on February 14th, the film made history as the highest-grossing Valentine’s Day opener ever, pulling in over $14 million in domestic grosses on its debut. As of today, *Bob Marley: One Love* has amassed over $177 million in worldwide grosses. Finishing off the first quarter of 2024, *Godzilla x Kong: The New Empire* has also generated over $558 million in worldwide grosses since its release on March 29.

The success of these films not only bolsters our confidence in the enduring strength of the global cinema industry but also underscores its resilience in the face of persistent challenges, including rescheduled release dates, labor shortages, supply chain disruptions, and escalating costs. The unwavering enthusiasm of moviegoers for the cinematic experience has been instrumental in driving this success. As we venture into the second quarter of the year, we are poised to capitalize on this momentum with another compelling movie lineup. Audiences can anticipate a diverse range of releases, including *Inside Out 2, The Garfield Movie, A Quiet Place: Day One and Bad Boys: Ride or Die.*

### 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.

We recognize that the lingering effects of the pandemic on the office leasing market in New York City, coupled with the slow pace of the “return to office” effort, have presented challenges in finding an office tenant for the space at 44 Union Square. As a result, we are also exploring non-office and alternative uses for the remaining space within the building. To bolster our efforts, we recently engaged George Comfort & Sons as our exclusive leasing broker for the remaining space. Leveraging their esteemed reputation and extensive experience in New York City real estate, we are optimistic about their ability to bring fresh perspectives and innovative strategies to attract tenants to 44 Union Square. We remain prepared for any leasing opportunities that may arise. With mortgage financing already secured for the project, we are well-positioned to cover leasing and tenant improvement costs upon securing a tenant.

As of March 31, 2024, all of our tenants were currently open for business at our Australian and New Zealand properties. 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.

Our development endeavors have largely been put on hold (other than advancing certain predevelopment work). Our limited capital expenditures during 2023 and the first quarter of 2024 have been largely focused on the enhancement of our existing cinemas.

With respect to our assets in Wellington, New Zealand, we were approached by the Wellington City Council (“WCC”) in late 2022 about accelerating the redevelopment of our cinema and retail property known as Courtenay Central. For approximately 18 months, we engaged with representatives of the WCC about a transaction that would accelerate the redevelopment of our Courtenay Central building. While we were able to negotiate an agreement that was approved by the WCC and which would have facilitated financing for the initiation of the project, that agreement required the negotiation of definitive additional documentation. After months of negotiating that documentation and believing that we had substantively finished it in all material respects, negotiations were purportedly terminated by the WCC on a unilateral basis without warning. Following this, the Company is reassessing its options with respect to all of our real estate holdings in Wellington.

### Company 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 61 cinemas as of March 31, 2024.

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 the residual COVID-19 and the 2023 Hollywood Strikes impacts continue to subside, quality film product will improve and entice patrons to return to our cinemas, reaffirming our belief that 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. See Note 3 – *Impacts on our Business Due to the COVID-19 Pandemic, the 2023 Hollywood Strikes, the Dramatic Interest Rate Rise and Increased Operating Costs, together with our Company’s Resources, above.*

### 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 March 31, 2024, 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, gauging 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.

### Real Estate Key Performance Indicators

The key performance indicators used by management in our real estate segment with respect to our properties held for rent (other than our Live Theatres) are net operating income, occupancy factor (the percentage of the net rentable area of our properties that is leased) and average lease duration. Set forth in the table below are a comparison of these indicators for our first quarter 2024 compared to our first quarter 2023. As a matter of clarification, we do not include in our calculation of net rentable area available for lease any space that is closed for renovation or redevelopment (such as our Courtenay Central property).

In the case of our Live Theatres, with respect to key performance indicators, we primarily look to the live theater rental revenue and ancillary income from the theatres. This key performance indicator represents box office revenues less amounts paid to producers for license fee settlements, plus ancillary income earned by us from certain theater operations. Our live theater rental revenue and ancillary income for the first quarter 2024 was $413,402 and was $339,364 for the first quarter 2023.

In the case of our development properties (such as 44 Union Square in New York City and our various properties in Wellington, New Zealand) we do not have specific key performance standards to compare performance from period to period. Rather we look to budgets and projections and compare actual results to budgeted or projected results from time to time.

### 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, Angelika 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 March 31, 2024.

| 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 | 6 | 72 | 6 |  | 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** | **20** | **198** | **19** | **1** |  |
| **Australia** | Victoria | 9 | 62 | 9 |  | Reading Cinemas |
|  | New South Wales | 6 | 44 | 6 | 0 | Reading Cinemas |
|  | Queensland | 7 | 64 | 4 | 3 | Reading Cinemas, Angelika Cinemas, 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** | **26** | **4** |  |
| **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 | 0 | Reading Cinemas |
|  | Bay of Plenty | 1 | 5 | 0 | 1 | Reading Cinemas |
|  | Hawke's Bay | 1 | 4 | 0 | 1 | Reading Cinemas |
|  | **New Zealand Total** | **11** | **67** | **7** | **4** |  |
| **GRAND TOTAL** |  | **61** | **491** | **52** | **9** |  |

(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 March 31, 2024, reflects all operating cinemas, including (i) the Angelika Cinemas 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 for seismic issues and (iv) two underperforming Consolidated Theatres in Hawaii were closed, as of July 9, 2023 and July 31, 2023, respectively, one underperforming Reading Cinemas in Northern California closed on November 1, 2023, and one underperforming Reading Cinemas in New Zealand was closed on May 7, 2023.

Our cinema revenues consist primarily of cinema ticket sales, F&B sales, screen advertising, gift card sales, 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 2023 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 March 31, 2024, 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 Cinemas outside of the United States at South City Square in Woolloongabba, Brisbane. The location 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 one new state-of-the-art cinema, located in Noosa, Queensland, Australia.

### Cinema Upgrades

As of March 31, 2024, 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) | 61 | 491 |
| IMAX | 1 | 1 |
| TITAN XC and TITAN LUXE | 26 | 32 |
| 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) | 17 | n/a |
| Premium Seating (features recliner seating) | 33 | 198 |
| Liquor Licenses (5) | 46 | 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 our cinemas operating in the U.S. In Australia, 72% of our cinemas are licensed and we have three liquor licenses pending. In New Zealand, 33% of our cinemas are licensed and we have two liquor licenses pending.

### Recent Enhancements

#### United States

*Renovation Work*: As of March 31, 2024, we have converted 110 of our 198 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.

#### Australia and New Zealand

*Rouse Hill renovation:* Reading Cinema Rouse Hill will undergo a lease obligated refurbishment focusing on the foyer, concessions, including the introduction of hot food offerings, and the addition of another all reclining Premium auditorium. The Preliminary drawings have been completed and will develop into a construction set for project/lessor approval, building consents and tender.

*Angelika Film Centre, South City Square:* Australia’s first Angelika 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.

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

During 2024, 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

On May 7, 2023, The Hutt Pop-Up in New Zealand was permanently closed due to the expiration of our lease for that location. 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. During 2023, 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 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.

### 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 nine of our cinemas (as presented in the table under *Cinema Exhibition Overview*), as of March 31, 2024, 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 three 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. We also own Courtenay Central (in Wellington) in New Zealand, which we historically operated as an ETC;

owned and operated our administrative office building in Culver City, California, which was sold on February 23, 2024;

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, which is currently being held for sale; and

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

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 2023 Form 10-K. We now present a discussion of recent material developments.

### Value-creating Opportunities

While the COVID-19 pandemic significantly impacted the global cinema industry and necessitated capital conservation to sustain our cinema operations, resulting in delays in executing many of our Company’s real estate development plans, we are now actively refocusing on advancing these initiatives as we continue to operate in post-pandemic era. Our commitment to the prudent development of our real estate assets remains steadfast, and we are dedicated to leveraging this post-pandemic period to go forward with our strategic real estate endeavors.

#### United States:

*44 Union Square Redevelopment (New York, N.Y.) –* On January 27, 2022, we finalized a long-term lease agreement with Petco, securing occupancy of the cellar, ground floor, and second floor of the building, amounting to 42% of the leasable area. Petco commenced full-rent, cash-paying occupancy and officially opened its doors to the public on June 1, 2023. During mid-March 2024, we engaged George Comfort & Sons as our exclusive leasing broker for the remaining space at 44 Union Square. Originally designated for office use, the property's striking presence in Union Square, coupled with the resurgence of foot traffic in the area, and its exceptional branding potential, prompt us to explore a spectrum of uses beyond traditional office tenants. This includes consideration for short-term and special-purpose arrangements. While we cannot guarantee the successful leasing of the remaining space, we are optimistic that George Comfort & Sons, well known for their extensive experience in New York City real estate, will bring a fresh perspective and innovative strategies to activate the remaining space at 44 Union Square.

*Minetta Lane Theatre (New York, N.Y.) –* Prior to the pandemic, our theater hosted Audible productions featuring a limited cast and special live performances streamed on the Audible platform. Public performances resumed on October 8, 2021, after an approximate 1.5-year hiatus, during which we provided certain abatements. Audible has since resumed full operations and extended its license with us through March 15, 2026, with an option to extend for an additional year.

*Orpheum Theatre (New York, N.Y.) –* Before COVID-19, our Orpheum Theatre was home to STOMP. While shows ceased from April 2020 to June 2021 due to the pandemic, performances afterward were intermittent. During this time, we provided certain abatements. STOMP concluded its 30-year run at our theater on January 8, 2023. Under our termination agreement, we retain rights to host any future productions of the show. Following STOMP's departure, new productions like *The Empire Strips Back* and Comedian Rachel Bloom's *Death, Let Me Do My Show* brought fresh excitement to audiences during 2023. During Q1 2024, the Orpheum hosted Eddie Izzard’s *Hamlet* which had a four-week run through April 14, 2024. And, on September 14, 2024 performances of *The Big Gay Jamboree* begin at the Orpheum. This new show is from LuckyChap, the producing team, which includes Margot Robbie, behind *Barbie* and *Saltburn* and multiple-Tony-winning Broadway producing veterans Sue Wagner and John Johnson (*Stereophonic, Lempicka*) from a book by Marla Mindelle, the co-author and original star of the Off Broadway hit musical-comedy *Titaníque.*

*Cinemas 1,2,3 (New York, N.Y.) –* Currently operated as the Cinemas 123 by Angelika, 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 in 2024 as we continue our efforts to develop and maximize the potential of our real estate holdings in Philadelphia. Since 2023, we have resumed work on this project, particularly concentrating on the Reading Viaduct—an 0.7-mile-long raised rail bed and bridge system spanning the Callowhill and Poplar neighborhoods, extending to Vine Street in the heart of the city's Central Business District, near the proposed new home of the Philadelphia 76ers. Comprising approximately 6.5 acres of land, along with various connecting bridges over public streets and sidewalks, the Reading Viaduct represents a significant contiguous land holding unobstructed by public thoroughfares. While there has been interest from the City of Philadelphia and the City Center District in acquiring the Reading Viaduct for park purposes, no concrete steps have been taken to proceed with condemnation or transfer of the property. We are currently evaluating whether a dedicated public park is the most beneficial use of the space. While a public park and pedestrian corridor, similar to the New York High Line, could be integral to the Viaduct's development, we are also exploring mixed-use options such as residential, retail, and entertainment developments. Recent developments in the area, such as the announcement of a $158 million federal grant for the Chinatown Stitch project in mid-March 2024, further highlight the potential of the Reading Viaduct. This project aims to reconnect the Chinatown community and surrounding neighborhoods by capping the Vine Street Expressway I-676, which directly intersects with the Reading Viaduct at Vine Street. We believe that capping the expressway at our property would significantly enhance the attractiveness and viability of the Reading Viaduct for future development.

#### Australia:

*Newmarket Village ETC (Brisbane, Australia) –* Through 2024 and 2025 we will continue to operate our Newmarket Village ETC, which includes Reading Cinemas as an anchor tenant Our site includes a 23,218 square foot parcel adjacent to the center, improved with an office building. Over the next few years, we will be evaluating different 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 126,433 square feet. Our multiplex cinema is an 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. 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. While our own plans for the redevelopment of our cinema complex at Courtenay Central have encountered difficulties (see discussion above under the Caption Real Estate Developments) we remain optimistic about the potential for our Wellington assemblage, 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, (ii) the loosening of certain height and density restrictions, and (iii) the lack of comparable building sites. We are currently in the process of reassessing our options.

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 2023 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 three months ended March 31, 2024, and March 31, 2023, respectively:

*(Dollars in thousands)*

| SEGMENT RESULTS Revenue | Three Months Ended March 31, ‎2024 | March 31, ‎2023 | % Change Fav/ ‎(Unfav) |
| --- | ---: | ---: | ---: |
| Cinema exhibition | $41,271 | $41,987 | (2)% |
| Real estate | 4,933 | 5,065 | (3)% |
| Inter-segment elimination | (1,152) | (1,245) | 7% |
| Total revenue | 45,052 | 45,807 | (2)% |
| **Operating expense** |  |  |  |
| Cinema exhibition | (41,872) | (42,899) | 2% |
| Real estate | (2,235) | (2,215) | (1)% |
| Inter-segment elimination | 1,152 | 1,245 | (7)% |
| Total operating expense | (42,955) | (43,869) | 2% |
| **Depreciation and amortization** |  |  |  |
| Cinema exhibition | (2,587) | (2,873) | 10% |
| Real estate | (1,517) | (1,587) | 4% |
| Total depreciation and amortization | (4,104) | (4,460) | 8% |
| **General and administrative expense** |  |  |  |
| Cinema exhibition | (977) | (827) | (18)% |
| Real estate | (291) | (257) | (13)% |
| Total general and administrative expense | (1,268) | (1,084) | (17)% |
| **Segment operating income** |  |  |  |
| Cinema exhibition | (4,165) | (4,612) | 10% |
| Real estate | 890 | 1,006 | (12)% |
| **Total segment operating income (loss)** | $(3,275) | $(3,606) | 9% |
| **NON-SEGMENT RESULTS** |  |  |  |
| Depreciation and amortization expense | (102) | (179) | 43% |
| General and administrative expense | (4,154) | (4,095) | (1)% |
| Interest expense, net | (5,286) | (4,117) | (28)% |
| Equity earnings of unconsolidated joint ventures | (25) | 19 | (\>100)% |
| Gain (loss) on sale of assets | (1,125) | — | -% |
| Other income (expense) | 341 | 174 | 96% |
| Income before income taxes | (13,626) | (11,804) | (15)% |
| Income tax benefit (expense) | 223 | 480 | (54)% |
| **Net income (loss)** | (13,403) | (11,324) | (18)% |
| Less: net income (loss) attributable to noncontrolling interests | (175) | (213) | 18% |
| **Net income (loss) attributable to Reading International, Inc.** | **$(13,228)** | **$(11,111)** | **(19)%** |
| **Basic earnings (loss) per share** | **$(0.59)** | **$(0.50)** | **(18)%** |

### Consolidated and Non-Segment Results:

### First Quarter Net Results

### Revenue

Revenue for the quarter ended March 31, 2024, decreased by $0.8 million, to $45.1 million, compared to the same period in the prior year, primarily due to (i) slight weakening in cinema operations, as a result of lower US food and beverage revenues, lower US advertising and other revenue, and lowered NZ admissions compounded with a lower Average Ticket Price, (ii) decreased US property rent revenue, in part due to loss of third party rent revenue from our Culver City Office building, which was sold in February 2024, and (iii) a softening of the AU/NZ foreign exchange rates.

### Segment Operating Income/(Loss)

Our total segment operating loss for the quarter ended March 31, 2024, improved by $0.3 million, from a loss of $3.6 million to a loss of $3.3 million, primarily due to improved operating income from our U.S. cinema circuit as a result of lower operating expenses, partially offset by increases in general and administrative expenses, along with a decrease in property operating gain primarily due to the loss of third party rental revenue from our Culver City Office building which was sold in February 2024.

During the first quarter of 2024, 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 first quarter of 2024 decreased 3.9% compared to the same period in 2023. The average New Zealand dollar exchange rate against the U.S. dollar for the first quarter of 2024 decreased 2.8% compared to the same period in 2023. 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 March 31, 2024, increased by $2.1 million, from a loss of $11.1 million to a loss of $13.2 million, when compared to the same period in the prior year, primarily due to increased interest expense and a loss on the sale of our Culver City office building.

### Income Tax Expense

Income tax benefit for the quarter ended March 31, 2024, decreased by $0.3 million compared to the equivalent prior-year period. The change between 2024 and 2023 is primarily related to an increase in reserve for unrecognized tax benefits in 2024.

### Business Segment Results

### Cinema Exhibition

The following table details our cinema exhibition segment operating results for the quarter ended March 31, 2024, and March 31, 2023, respectively:

*(Dollars in thousands)*

| REVENUE | Three Months Ended March 31, ‎2024 | % of Revenue | March 31, ‎2023 | % of Revenue | Three Months Ended |
| --- | ---: | ---: | ---: | ---: | ---: |
| **United States** Admissions revenue | $12,245 | 30% | $12,044 | 29% | 2% |
| Food & beverage revenue | 6,960 | 17% | 7,448 | 18% | (7)% |
| Advertising and other revenue | 2,103 | 5% | 2,319 | 6% | (9)% |
|  | **$21,308** | **52%** | **$21,811** | **52%** | **(2)%** |
| **Australia** Admissions revenue | $10,261 | 25% | $10,371 | 25% | (1)% |
| Food & beverage revenue | 5,765 | 14% | 5,634 | 13% | 2% |
| Advertising and other revenue | 1,296 | 3% | 1,207 | 3% | 7% |
|  | **$17,322** | **42%** | **$17,212** | **41%** | **1%** |
| **New Zealand** Admissions revenue | $1,600 | 4% | $1,805 | 4% | (11)% |
| Food & beverage revenue | 909 | 2% | 991 | 2% | (8)% |
| Advertising and other revenue | 132 | 0% | 168 | 0% | (21)% |
|  | **$2,641** | **6%** | **$2,964** | **7%** | **(11)%** |
| **Total revenue** | **$41,271** | **100%** | **$41,987** | **100%** | **(2)%** |
| **OPERATING EXPENSE** |  |  |  |  |  |
| **United States** Film rent and advertising cost | $(6,139) | 15% | $(6,238) | 15% | 2% |
| Food & beverage cost | (1,906) | 5% | (1,981) | 5% | 4% |
| Occupancy expense | (5,787) | 14% | (6,113) | 15% | 5% |
| Other operating expense | (9,008) | 22% | (9,899) | 24% | 9% |
|  | **$(22,840)** | **55%** | **$(24,231)** | **58%** | **6%** |
| **Australia** Film rent and advertising cost | $(4,448) | 11% | $(4,366) | 10% | (2)% |
| Food & beverage cost | (1,275) | 3% | (1,209) | 3% | (5)% |
| Occupancy expense | (4,402) | 11% | (4,292) | 10% | (3)% |
| Other operating expense | (6,161) | 15% | (5,822) | 14% | (6)% |
|  | **$(16,286)** | **39%** | **$(15,689)** | **37%** | **(4)%** |
| **New Zealand** Film rent and advertising cost | $(682) | 2% | $(772) | 2% | 12% |
| Food & beverage cost | (204) | 0% | (192) | 0% | (6)% |
| Occupancy expense | (760) | 2% | (789) | 2% | 4% |
| Other operating expense | (1,100) | 3% | (1,226) | 3% | 10% |
|  | **$(2,746)** | **7%** | **$(2,979)** | **7%** | **8%** |
| **Total operating expense** | **$(41,872)** | **101%** | **$(42,899)** | **102%** | **2%** |
| **DEPRECIATION, AMORTIZATION, IMPAIRMENT AND GENERAL AND ADMINISTRATIVE EXPENSE** |  |  |  |  |  |
| **United States** Depreciation and amortization | $(1,271) | 3% | $(1,483) | 4% | 14% |
| Impairment of long-lived assets | — | 0% | — | 0% | (\>100)% |
| General and administrative expense | (633) | 2% | (423) | 1% | (50)% |
|  | **$(1,904)** | **5%** | **$(1,906)** | **5%** | **-%** |
| **Australia** Depreciation and amortization | $(1,190) | 3% | $(1,244) | 3% | 4% |
| Impairment expense | — | 0% | — | 0% | -% |
| General and administrative expense | (344) | 1% | (404) | 1% | 15% |
|  | **$(1,534)** | **4%** | **$(1,648)** | **4%** | **7%** |
| **New Zealand** Depreciation and amortization | $(126) | 0% | $(146) | 0% | 14% |
| Impairment expense | — | 0% | — | 0% | -% |
| General and administrative expense | — | 0% | — | 0% | -% |
|  | **$(126)** | **0%** | **$(146)** | **0%** | **14%** |
| **Total depreciation, amortization, general and administrative expense** | **$(3,564)** | **9%** | **$(3,700)** | **9%** | **4%** |
| **OPERATING INCOME (LOSS) – CINEMA** |  |  |  |  |  |
| **United States** | $(3,436) | (8)% | $(4,326) | (10)% | 21% |
| **Australia** | (498) | (1)% | (125) | (0)% | (\>100)% |
| **New Zealand** | (231) | (1)% | (161) | (0)% | (43)% |
| **Total Cinema operating income (loss)** | **$(4,165)** | **(10)%** | **$(4,612)** | **(11)%** | **10%** |

### First Quarter Results

### Revenue

For the quarter ended March 31, 2024, cinema revenue decreased by $0.7 million, to $41.3 million compared to the same period in the prior year. This decrease was primarily due to (i) lower US food and beverage revenues, lower US advertising and other revenue, and lowered NZ admissions compounded with a lower Average Ticket Price and (ii) weakening of AU/NZ foreign exchange rates.

### Cinema Segment Operating Income/(Loss)

Cinema segment operating loss for the quarter ended March 31, 2024, improved by $0.4 million, from a loss of $4.6 million to a loss of $4.2 million when compared to the same period in the prior year. The improvement is primarily due to improved operating income from our U.S. cinema circuit as a result of lower operating expenses from having shut down underperforming cinemas.

### Operating expense

Operating expenses for the quarter ended March 31, 2024, decreased by $1.0 million, to $41.9 million, compared to the same quarter in the prior year. This decrease was due to lower occupancy expenses and other operating expenses in U.S. and New Zealand as a result of the recent cinema closures that occurred in the second half of 2023, partially offset by higher operating expenses in Australia.

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

Depreciation, amortization, impairment, and general and administrative expenses for the quarter ended March 31, 2024, decreased by $0.1 million, to $3.6 million, compared to the same quarter in the prior year. These decreases were due to 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 quarters ended March 31, 2024 and March 31, 2023, respectively:

*(Dollars in thousands)*

| REVENUE | Three Months Ended March 31, ‎2024 | % of ‎Revenue | March 31, ‎2023 | % of ‎Revenue | Three Months Ended |
| --- | ---: | ---: | ---: | ---: | ---: |
| **United States** Live theatre rental and ancillary income | $413 | 8% | $339 | 7% | 22% |
| Property rental income | 1,072 | 22% | 1,215 | 24% | (12)% |
|  | **1,485** | **30%** | **1,554** | **31%** | **(4)%** |
| **Australia** Property rental income | **3,083** | **62%** | **3,137** | **62%** | (2)% |
| **New Zealand** Property rental income | **365** | **7%** | **374** | **7%** | (2)% |
| **Total revenue** | **$4,933** | **100%** | **$5,065** | **100%** | **(3)%** |
| **OPERATING EXPENSE** |  |  |  |  |  |
| **United States** Live theatre cost | $(182) | 4% | $(172) | 3% | (6)% |
| Property cost | (419) | 8% | (441) | 9% | 5% |
| Occupancy expense | (244) | 5% | (243) | 5% | -% |
|  | **(845)** | **17%** | **(856)** | **17%** | **1%** |
| **Australia** Property cost | (521) | 11% | (512) | 10% | (2)% |
| Occupancy expense | (489) | 10% | (483) | 10% | (1)% |
|  | **(1,010)** | **20%** | **(995)** | **20%** | **(2)%** |
| **New Zealand** Property cost | (269) | 5% | (262) | 5% | (3)% |
| Occupancy expense | (111) | 2% | (102) | 2% | (9)% |
|  | **(380)** | **8%** | **(364)** | **7%** | **(4)%** |
| **Total operating expense** | **$(2,235)** | **45%** | **$(2,215)** | **44%** | **(1)%** |
| **DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE** |  |  |  |  |  |
| **United States** Depreciation and amortization | $(739) | 15% | $(739) | 15% | -% |
| General and administrative expense | (268) | 5% | (176) | 3% | (52)% |
|  | **(1,007)** | **20%** | **(915)** | **18%** | (10)% |
| **Australia** Depreciation and amortization | $(591) | 12% | $(648) | 13% | 9% |
| General and administrative expense | (24) | 0% | (81) | 2% | 70% |
|  | **(615)** | **12%** | **(729)** | **14%** | **16%** |
| **New Zealand** Depreciation and amortization | (186) | 4% | (200) | 4% | 7% |
| General and administrative expense | — | 0% | — | 0% | -% |
|  | **(186)** | **4%** | **(200)** | **4%** | **7%** |
| **Total depreciation, amortization, general and administrative expense** | **$(1,808)** | **37%** | **$(1,844)** | **36%** | **2%** |
| **OPERATING INCOME (LOSS) - REAL ESTATE** |  |  |  |  |  |
| **United States** | $(367) | (7)% | $(217) | (4)% | (69)% |
| **Australia** | 1,458 | 30% | 1,413 | 28% | 3% |
| **New Zealand** | (201) | (4)% | (190) | (4)% | (6)% |
| **Total real estate operating income (loss)** | **$890** | **18%** | **$1,006** | **20%** | **(12)%** |

### First Quarter Results

### Revenue

Real estate revenue for the quarter ended March 31, 2024, decreased by $0.1 million, to $4.9 million, compared to the same period in the prior year. This rent revenue decrease was primarily due to intercompany rent income loss from the sale of our Maitland property in the fourth quarter of 2023 and the third party and intercompany rent income loss from our Culver City headquarter building which was sold in February of 2024.

### Real Estate Segment Income/(Loss)

Real estate segment operating income for the quarter ended March 31, 2024 decreased by $0.1 million to $0.9 million, compared to $1.0 million in the same period in the prior year. This change was primarily due to the loss in income from the sales of our Culver City Office building in February 2024 and our Maitland property in August 2023.

### 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. Since March 31, 2020 we have paid down our institutional debt by $67.3 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.

While our Company believes that there will be recovery in the global cinema business, which was interrupted by the impacts of the 2023 Hollywood Strikes, we still face 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. We are closely monitoring our debt maturity dates to arrange necessary amendments. As of March 31, 2024, we have debt of $41.9 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). In February 2024, we sold our Culver City office building for $10.0 million. While we incurred a loss of $1.1 million, on the transaction, we were able to reduce debt by $8.4 million and to free up cash in the amount of $1.2 million which was used to support operational activities. Further, due to the scope and extent of office vacancies in Los Angeles County, we anticipate that we will be able to save approximately $1.5 million between now and the end of 2025 by moving to other premises. We listed as an asset held for sale our approximately 26.6-acre industrial property in Williamsport, Pennsylvania. This property was historically used as a rail yard, and, accordingly, has direct access to the area’s rail system. We carry the property on our books at a book value (the lower of cost or market, as opposed to fair market value) of $0.5 million. This asset was selected since, based on recent appraisals, we believe that it would free up amounts of cash and that it is unlikely that it would materially increase in value over the next three to five years without significant capital investment.

In order to further bolster our liquidity and capital resources, our Board of Directors has directed management to review the Company’s real estate portfolio for potential assets to monetize. As of the date of this report, Management has received specific authorization from the Board to progress the monetization of our Cannon Park assets in Townsville, Queensland Australia. Management is also analyzing potential monetization strategies for certain of its real estate assets in New Zealand.

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 three months ended March 31, 2024, and March 31, 2023, respectively, are discussed as follows:

*(Dollars in thousands)*

|  | Three Months Ended March 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | --- |
| Net cash provided by (used in) operating activities | $(2,770) | $(11,552) | 76% |
| Net cash provided by (used in) investing activities | 7,637 | (1,527) | \>100% |
| Net cash provided by (used in) financing activities | (11,225) | (1,409) | (\>100)% |
| Effect of exchange rate on cash and restricted cash | (751) | (114) | (\>100)% |
| Increase (decrease) in cash and cash equivalents and restricted cash | $(7,109) | $(14,602) | 51% |

### Operating activities

Cash used in operating activities for the three months ended March 31, 2024, decreased by $8.8 million, to $2.8 million compared to cash used in the same period of prior year of $11.6 million. This was primarily driven by an operating liabilities increase from accounts payable.

### Investing activities

Cash provided in investing activities during the three months ended March 31, 2024 was $7.6 million compared to cash used in the same period of prior year of $1.5 million. This was due to $9.7 million proceeds from sale of the Culver City office building in February 2024.

### Financing activities

Cash used in financing activities for the three months ended March 31, 2024, increased by $9.8 million, to $11.2 million compared to cash used in the same period of prior year due to the payoff of the Citizens loan of $8.4 million, following the sale of the Culver City office building, and additional $0.3 million debt repayment that was required when our Bank of America Credit Facility was amended on March 27, 2024.

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 first quarter ended March 31, 2024, and preceding four years:

*($ in thousands)*

| Total Resources (cash and borrowings) | As of and ‎for the ‎3-Months ‎Ended March 31, 2024 | Year Ended December 31 2023 | 2022 | 2021 | 2020 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Cash and cash equivalents (unrestricted) | $7,501 | $12,906 | $29,947 | $83,251 | $26,826 |
| Unused borrowing facility | 7,859 | 7,859 | 12,000 | 12,000 | 15,490 |
| Restricted for capital projects | 7,859 | 7,859 | 12,000 | 12,000 | 9,377 |
| Unrestricted capacity | — | — | — | — | 6,113 |
| Total resources at period end | 15,360 | 20,765 | 41,947 | 95,251 | 42,316 |
| Total unrestricted resources at period end | 7,501 | 12,906 | 29,947 | 83,251 | 32,939 |
| **Debt-to-Equity Ratio** |  |  |  |  |  |
| Total contractual facility | $203,510 | $218,159 | $227,633 | $248,948 | $300,449 |
| Total debt (gross of deferred financing costs) | 195,651 | 210,300 | 215,633 | 236,948 | 284,959 |
| Current | 41,857 | 35,070 | 38,026 | 12,060 | 42,299 |
| Non-current | 153,794 | 175,230 | 177,607 | 224,888 | 242,660 |
| Finance lease liabilities | 73 | 83 | 209 | — | — |
| Total book equity | 17,728 | 32,996 | 63,279 | 105,060 | 81,173 |
| Debt-to-equity ratio | 11.04 | 6.37 | 3.41 | 2.26 | 3.51 |
| **Changes in Working Capital** |  |  |  |  |  |
| Working capital (deficit)(1) | $(114,566) | $(88,373) | $(74,152) | $(6,673) | $(64,140) |
| Current ratio | 0.15 | 0.30 | 0.39 | 0.94 | 0.47 |
| **Capital Expenditures (including acquisitions)** | $1,926 | $4,711 | $9,780 | $14,428 | $16,759 |

(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 March 31, 2024, we had $7.5 million in unrestricted cash and cash equivalents compared to $12.9 million on December 31, 2023. On March 31, 2024, our total outstanding borrowings were $195.7 million compared to $210.3 million on December 31, 2023.

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 March 31, 2024:

*(Dollars in thousands)*

|  | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Debt(1) | $31,928 | $74,091 | $61,327 | $— | $— | $— | $167,346 |
| Operating leases, including imputed interest | 30,740 | 28,928 | 26,990 | 24,215 | 21,433 | 116,048 | 248,354 |
| Finance leases, including imputed interest | 44 | 34 | — | — | — | — | 78 |
| Subordinated debt(1) | 393 | — | — | 27,913 | — | — | 28,306 |
| Pension liability | 392 | 547 | 576 | 607 | 638 | 443 | 3,203 |
| Interest on pension liability | 121 | 137 | 108 | 77 | 45 | 11 | 499 |
| Estimated interest on debt (2) | 13,327 | 10,479 | 5,228 | 1,311 | — | — | 30,345 |
| Village East purchase option(3) | 5,900 | — | — | — | — | — | 5,900 |
| Total | $82,844 | $114,217 | $94,229 | $54,123 | $22,116 | $116,502 | $484,031 |

(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 2023 Form 10-K for more information. There have been no material changes to our litigation since our 2023 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 quarter ended March 31, 2024.

*(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 quarter ended March 31, 2024.

### 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, our expectations regarding renovations and addition of cinemas; our beliefs

regarding the impact of the 2023 Hollywood Strikes on the cinema business; our expected operating results, including 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 people returning to our theatres and continuing to use

discretionary funds on entertainment outside of the home; our beliefs regarding the impact of our cinema-anchored real estate

developments; our beliefs regarding the success of our diversified business strategy; our beliefs regarding the appeal of the Courtenay

Central site and the neighboring areas in Wellington; 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 timing of the completions our renovation projects; 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 inflationary pressures;

the adverse continuing effects of external events of past pandemic and strikes 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 (i) increased ticket prices (ii) a change in consumer

behavior in favor of alternative forms or mediums of entertainment, and (iii) limited availability of wide release content;

reduction in operating margins (or negative operating margins) due to (i) decreased attendance, (ii) limited availability of wide release content, and (iii.) increased operating expenses;

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 to reduce their debt and/or rent exposure;

the uncertainty as to the scope and extent of our government's responses to future outbreak of infectious diseases;

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 or (iii) rescheduling of movie releases into later

periods, as most currently experienced due to the implications of the 2023 Hollywood Strikes;

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 failure of our new initiatives to gain significant customer acceptance and use or to generate meaningful profits;

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 2023 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 inflationary pressures;

uncertainty as to governmental responses to infectious 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 2024 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;

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 future 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 other 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 March 31, 2024. 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, 6,407 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 two currencies in relation to US dollars 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 first quarter of 2024, the average Australian dollar and New Zealand dollar weakened against the U.S. dollar by 3.9% and 2.8%, respectively, compared to the same period prior year.

At March 31, 2024, approximately 36.5% and 8.8% of our assets were invested in assets denominated in Australian dollars (Reading Entertainment Australia) and New Zealand dollars (Reading New Zealand), respectively, including approximately $5.0 million in cash and cash equivalents. At December 31, 2023, approximately 36.4% and 8.9% of our assets were invested in assets denominated in Australian dollars (Reading Entertainment Australia) and New Zealand dollars (Reading New Zealand), respectively, including approximately $5.8 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 $2.6 million for the quarter ended March 31, 2024, 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 March 31, 2024, and December 31, 2023, the balance of cumulative foreign currency translation adjustments were approximately a ($3.6) million loss and ($1.0) 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 $488,000 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 2023 Form 10-K.

## Controls and procedures

As filed, 1,746 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 March 31, 2024, 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 first quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 565 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 2023 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 2023 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 2023 Form 10-K.

Filed May 15, 2024.
Source: SEC EDGAR, the filing index for accession 0000716634-24-000018. Last ingested by Listed: Oct 24, 2026, 14:56 ET. No prices; not investment advice.