# Reading International Inc: Form 10-Q for the period ended Sep 30, 2024

- Company: [Reading International Inc](/companies/rdi.md) (CIK 716634)
- Form: 10-Q
- Filed: 2024-11-14
- Accepted by EDGAR: Nov 14, 2024, 21:52 ET
- Period: 2024-09-30
- Accession: 0000716634-24-000035
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/716634/000071663424000035/rdi-20240930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/716634/000071663424000035/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $60.1m | us-gaap:Revenues |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $152.0m | us-gaap:Revenues |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$246.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$12.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $5.2m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $15.8m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $700.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $321.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$6.9m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$29.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.31 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$1.32 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.31 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$1.32 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 23,202,192 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 23,265,575 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$11.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $4.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $10.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $59.0m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $495.7m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $139.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $491.1m | us-gaap:Liabilities |
| Current portion of debt | at 2024-09-30 | $52.6m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2024-09-30 | $5.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 92,707 characters.

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

### Business Overview & Updates

While our performance this quarter was not as strong as we had anticipated, especially in comparison to the third quarter of 2023, we remain optimistic about the direction of our cinema business and the cinema industry as a whole. Presales to date for *Wicked* and *Moana 2*, which open in November 2024 are strong and we have high expectations for *Gladiator II, Mufasa: The Lion King* and *Sonic the Hedgehog 3,* each of which open in December 2024. As we think about the future of the cinema industry, we are encouraged about the long term prospects of the cinema industry for a variety of reasons, including (i) the current movie release schedule from 2025 to 2027 reflects an increase in quality tentpole movies, (ii) more content is being released catering to niche cinema audiences, such as faith-based movies and concert films, (iii) major studios and distributors, including streaming platforms like Amazon, Apple TV, and Netflix, are adding a cinema exhibition leg to their overall distribution plan as they recognize the economic value of the theatrical release window, not only for driving box office revenues, but also for promoting and distinguishing their films from other content available on their platforms, and (iv) the success of certain highly anticipated and well-marketed films has shown that audiences are willing to return to cinemas, with attendance levels on a per film basis rivaling those of pre-pandemic blockbusters.

We have reduced our operating costs by neither renewing nor extending our leases at five (5) underperforming locations (three in Hawaii, one in California and one in Texas). The reduction in our cinema count has, however, negatively impacted our gross revenues. We have been working to re-negotiate leases at our continuing U.S. cinemas to either reduce occupancy or to convert fixed rent to percentage rent, thus better aligning our landlord's interests with our own.

With respect to our real estate segment, our Australian real estate operations continue to perform well, when measured in local currency. However, while the exchange rates for the Australian dollar have improved marginally in the third quarter 2024 as reflected above, the contribution of the Australian real estate operations to our financial performance for the nine-month period ended September 30, 2024 has been adversely impacted by the generally downward trend in exchange rates. And, recognizing our reduced need for administrative space, in 2024, we streamlined operations by selling our administrative building in Culver City, California, generating $1.2 million in cash after settling mortgages, brokerage fees, and transactional costs. Further, we anticipate that this sale will save us around $1.5 million in operating and holding costs through the end of 2025. Currently, we are managing our California operations remotely while we search for a more affordable, appropriately sized space for relocation.

The current macroeconomic situations such as inflation, interest rates, labor cost increases and the relatively low exchange value of the Australian and New Zealand dollars have continued to be obstacles that our cinema operations and the entire cinema industry continues to navigate, and have adversely impacted our global cinema segment:

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

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

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 COVID-19 related rent deferrals for the periods of time when our operations were closed or restricted;

Since March 2022, reserve banks in the U.S., Australia and New Zealand have materially increased interest rates causing our cost of borrowing to increase materially. We are encouraged by (i) the U.S. Federal Reserve reducing interest rates by 50 basis points in September 2024 and by 25 basis points in November 2024 and (ii) the New Zealand Reserve Bank in October 2024 reducing interest rates by 50 basis points, with an indication that the market expects a further 75 basis point cut by the New Zealand Reserve Bank in November;

Also, while exchange rates for the Australian and New Zealand dollar have improved somewhat over the quarter ended September 30, 2024, exchange rates for the Australian and New Zealand currencies have generally decreased when compared to the U.S. Dollar, on a year-to-date basis; and

General market and economic conditions.

The film exhibition industry has seen some notable movie titles initially slated for 2024 being 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, which, while negatively impacting our current year, we anticipate will make for a positive effect on the 2025 movie slate.

The third quarter of 2024 did have some impressive movie releases such as *Deadpool & Wolverine, Despicable Me 4, Beetlejuice Beetlejuice, Twisters*, and *It Ends with Us*. The third quarter of 2024 was also helped by the steady success of *Inside Out 2*, which is now the highest grossing animated movie of all time worldwide. *Deadpool & Wolverine* led the way for the third quarter (global box office to date $1.3 billion), along with *Despicable Me 4* (global box office to date of $969 million), *Twisters* (global box office to date of almost $371 million), and the recently released *Beetlejuice Beetlejuice* (global box office to date of $451 million). Surprisingly, the independent film, *Longlegs*, performed better than expected at the box office grossing $126 million worldwide. While these titles helped uplift the third quarter’s grosses, they were released late in the quarter and, as a result, were not enough to boost the third quarter of

2024’s grosses to the same level or higher than that of the third quarter of 2023. In addition, our specialty cinemas in the U.S. did not perform as well in the third quarter 2024 compared to the same period in 2023 when movies like *Past Lives, Bottoms, Theater Camp* and *Asteroid City* were in release, in addition to two key New York City engagements of *Oppenheimer* in 70mm projection.

The 2024 remaining film lineup looks robust, and features some highly anticipated releases, which are expected to continue driving audiences to our big screens. These films include: *Wicked, Moana 2, Gladiator 2,* and *Mufasa: The Lion King*. On the specialty film side, while our specialty film slate is not as strong as it was in 2023, the releases for the remainder of 2024 are promising. Films such as *Anora, Conclave, Nickel Boys, A Complete Unknown, September 5* and *Nosferatu* are either performing well right now or expect to be well received at the box office when they open later in 2024.

We are actively working with our landlords to manage our occupancy costs, which remain high relative to our current revenue levels. Recognizing the oversupply of cinemas in the U.S., we have been evaluating our U.S. holdings and plan to close underperforming locations where reasonable agreements with landlords cannot be reached. Since the start of fourth quarter 2022, we have chosen not to renew leases at three locations in Hawaii, one location in Texas, and one location in Northern California (all of which experienced negative cash flow at the theater level). While some of our U.S. landlords have initiated legal proceedings incident to these negotiations, we believe that we have tentatively reached revised lease agreements in each pending case, which are now being documented. While in the short term, cinema closures will have an impact on our gross revenue levels year-over-year, we anticipate that they will improve our longer term operating results and remain confident that such closures are in the best interests of our Company and our stockholders and that in the coming years, our cinema revenue will once again support our real estate development initiatives. Currently, we have one eight-screen cinema project in the pipeline in Australia.

Additionally, we expect continued improvements to the operational performance of our cinemas as our global circuit steadily recovers. A key factor in this optimism is the ongoing expansion and enhancement of our Food and Beverage (F&B) offerings. As of 2023, we are currently able to sell beer and wine in 100% of our U.S. cinemas, and liquor in all but three. We are actively pursuing licenses to offer liquor, along with beer and wine, at those remaining three locations. Looking ahead, we are committed to securing liquor licenses and enhancing our F&B offerings across our circuits in Australia and New Zealand as well, reinforcing our dedication to elevating the cinema experience for our customers.

### Recent Box Office Improvements

The box office performance of certain films released in the third quarter of 2024 has illustrated resilience for the industry as a whole. As previously noted, sequel movies, such as *Deadpool & Wolverine* and *Inside Out 2,* delivered stellar results. The Marvel sequel, *Deadpool & Wolverine* led the charge for released films this past quarter and quickly became the number one R rated movie of all time both domestically and worldwide*. Inside Out 2* has soared to become the highest grossing animated movie of all time worldwide and continued its success into the third quarter. Another animated success that is continuing to generate revenue is *Despicable Me 4*, which by producing just under $1 billion worldwide, brings the franchise’s collective revenue to over $5.6 billion worldwide. Also, *Beetlejuice Beetlejuice* has become Warner Bros highest grossing domestic movie of 2024 and the overall fourth highest grossing movie of 2024.

The success of these films has reinforced our confidence in the resilience of the global cinema industry, demonstrating its ability to withstand adversity, including rising operating costs, labor shortages, and shifting release schedules. Additionally, several standout releases from the third quarter of 2024 achieved significant milestones with *Twisters* having the highest domestic opening weekend ever for a natural disaster film, while *It Ends With Us* became the highest-grossing romantic drama since the 2018 hit, *A Star is Born*. As mentioned above, another Michael Keaton, reborn cult classic, *Beetlejuice Beetlejuice* became the highest-grossing domestic film of the year for Warner Bros., surpassing *Dune: Part Two* for the top spot. As we enter the fourth quarter of 2024, we are ready to build on this momentum continuing another exciting movie lineup. We look forward to the diverse lineup of releases planned for the rest of 2024, including (i)*Wicked, Moana 2, Gladiator 2, Mufasa: Lion King* and *Sonic the Hedgehog 3* and (ii) critically acclaimed films from specialty distributors, such as director John Crowley’s *We Live in Time,* director RaMell Ross’ *Nickel Boys,* director James Mangold’s *A Complete Unknown* and director Robert Eggers’ *Nosferatu.*

### Real Estate Developments

Regarding our United States real estate, during the first quarter of 2024, we sold our underutilized administrative office building in Culver City, California for $10.0 million.

Regarding our 44 Union Square property in New York City, we enlisted George Comfort & Sons (www.gcomfort.com) as our new leasing broker in the first quarter of 2024 to lead efforts in securing tenants for the remaining space. While the space was initially intended for office use, we are exploring a variety of alternative options beyond traditional office tenants. This shift is driven by the property's prime location in Union Square, the resurgence of foot traffic in the area, and the building’s strong branding potential, including short-term and special purpose uses. We believe that the Manhattan real estate market is improving. Compared to earlier periods in 2024, inquiries about rates and availability have increased over the last two months.

As of September 30, 2024, all of our tenants at our Australian and New Zealand properties were operational. While most of the retail spaces at our Courtenay Central location in New Zealand remain closed due to seismic concerns, one tenant is still open and conducting business. Additionally, one tenant is trading at our Wakefield property. Our open land areas in Wellington are also generating parking revenue.

Given our liquidity requirements, we have largely paused our real estate development projects. Our restricted capital expenditures in 2023 and through the majority of 2024 have primarily targeted improvements to our existing cinemas. To bolster our liquidity, the Company has listed for sale various assets, being our Newberry Yard property in Williamsport, Pennsylvania, as well as locations in (i) Townsville, Queensland, Australia, (ii) Wellington, New Zealand, and (iii) Rotorua, New Zealand. In each case where we are selling a cinema property, we intend to take back a lease of the cinema component.

### 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 60 cinemas as of September 30, 2024.

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

It is evident that these two business segments complement and support each other. In the post-pandemic environment, we have increasingly depended on income from our real estate assets and leveraged the inherent value of those assets to navigate current industry and economic challenges. As the impact of ongoing macroeconomic challenges begins to settle and the movie release schedule improves in both quality and volume, attracting more moviegoers to our cinemas, we expect to once again rely on the cash flows generated by our cinema portfolio.

While we remain confident in the long-term viability of the cinema industry, we acknowledge our upcoming liquidity needs arising from debt maturities and other factors. As a result, we have identified specific real estate assets for monetization and will consider additional properties if necessary to meet our liquidity requirements. We are confident that our two-pronged, diversified international business strategy will support the Company through these challenging times as we navigate the uncertainties and difficulties posed by recent macroeconomic conditions. Please refer to Note 3 – *Liquidity and Impairment Assessment* for more details.

### Key Performance Indicators

### Food and Beverage Spend Per Patron

A key performance indicator utilized by management in our cinema segment is F&B Spend Per Patron (“SPP”). This metric is calculated by dividing our post-tax F&B Revenues by the number of cinema attendees during a specific period.

One of our strategic priorities has been to continue upgrading the F&B menu at several of our global cinemas. As of September 30, 2024, we have a total of 38 theater locations with elevated F&B menus (i.e. menus that are beyond traditional popcorn, soda, and candy). We use SPP to assess our F&B performance compared to our competitors. While various factors like labor and cost of goods affect our F&B profitability, SPP indicates our ability to maintain strong top-line performance. It also reflects our success in generating additional revenue by promoting and selling supplementary products to our customers during their visits. Furthermore, this metric helps us evaluate how well we differentiate our F&B offerings from competitors. Management uses F&B SPP to adjust pricing strategies, measure the effectiveness of marketing initiatives, optimize menu offerings, and ensure that prices remain accessible to our customers.

### Average Ticket Price per Patron

Another key performance indicator used 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 cinema attendance during a specific period. ATP measures 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 entice customers back to our theaters. Management uses ATP to adjust and inform ticket pricing schemes for our individual theaters, measures the effectiveness of our content programming, and ensures that price barriers are not created for our 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 is a comparison of these indicators for the third quarter and nine months ended September 30, 2024 compared to the corresponding periods in 2023. As a matter of clarification, we have not included 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 third quarter of 2024 and 2023 are reflected in the chart below..

Historically, in the case of our development properties (such as 44 Union Square in New York City) and our various international properties such as Newmarket Village in Australia, we have no specific key performance standards to compare performance from period to period. Rather we continue to analyze 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, Consolidated Theatres and Angelika Film Center brands.

in Australia, under the Reading Cinemas, 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, 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 | 1 | 8 | 1 |  | 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** | **19** | **193** | **18** | **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** |  | **60** | **486** | **51** | **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.

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 September 30, 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 F&B offerings (including alcoholic beverages), and recliner seating. Three of the auditoriums, known as Soho Lounge cinemas, offer table service.

*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 F&B offerings, and recliner seating.

Our Board has also authorized management to proceed with the negotiation of lease for one new state-of-the-art cinema, located in Noosa, Queensland, Australia.

### Cinema Upgrades

As of September 30, 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) | 60 | 486 |
| 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) | 16 | n/a |
| Premium Seating (features recliner seating) | 33 | 198 |
| Liquor Licenses (5) | 49 | 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 (i) have licenses in 100% of our cinemas operating in the U.S. to sell beer and wine and (ii) we are working to add liquor to our licenses in our three New York City cinemas. In Australia, 83% of our cinemas are licensed and we have one liquor license pending. In New Zealand, 45% of our cinemas are licensed and we have no liquor licenses pending.

### Recent Enhancements

#### United States

*Renovation Work*: As of September 30, 2024, we have converted 110 of our 193 U.S. auditoriums to luxury recliner seating. As of the date of this Report, we are continuing to engage in discussions with certain landlords in the U.S. about tenant allowances to upgrade certain U.S. cinemas.

#### Australia and New Zealand

*Other Cinema Upgrades:* In addition, during the three-year period of 2021 to 2023, we improved our Reading Cinemas in Epping (VIC), Sunbury (VIC) and the State Cinema (TAS) in Australia.

During the remainder of 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 and the development of a paid subscription plan, plus the relaunching of our loyalty program in Australia and New Zealand. These are intended to enhance the convenience of our offerings and to promote guest affinity with the experiences and products we offer.

### 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. Since the fourth quarter of 2022, we have closed five cinema locations, all of which were loss makers: three in Hawaii, one in Northern California and one in Texas.

### 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 is intended to create long-term value for our stockholders through the continuous improvement and development of our investment and operating properties, including our ETCs, and has, in recent times and will over the next 12 months, assist our liquidity needs through various asset monetizations. In addition to owning the fee interests in nine of our cinemas (as presented in the table under *Cinema Exhibition Overview*), as of September 30, 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 two ETCs known as Newmarket Village (in a suburb of Brisbane) and the Belmont Common (in a suburb of Perth)in Australia;

own and operate another ETC known as Cannon Park in Townsville, Australia, which is currently held for sale;

 own property assets in Wellington, New Zealand (including Courtenay Central , historically operated as an ETC), which are all currently 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, 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.

### Real Estate Held for Development

The combination of the COVID-19 pandemic, the lack of any material U.S. public pandemic financial assistance due to our public company status, the 2023 Hollywood Strike, increased interest rates, inflation, increased labor costs, and decreases in the value of the Australian Dollar and New Zealand Dollar vise a vise the U.S. Dollar, have significantly impacted our cinema operations and necessitated capital conservation to sustain our cinema operations and service our debt. This has required us to rethink our real estate business plan and to monetize a number of properties that had pre-COVID been slated for long-term development.

To date, we have monetized the following property assets:

(i) Our non-income producing land holdings in Coachella, California and Manukau, New Zealand;

(ii) Our Redyard ETC in Auburn, Australia;

(iii) Our Royal George live theatre complex in Chicago (slated for redevelopment, and now being redeveloped for residential purposes by the new owner);

(iv) The land underlying our cinema in Invercargill, New Zealand;

(v) Our non-competitive four-screen strata title cinema in Maitland, Australia; and

(vi) Our administrative office building in Culver City, California.

These properties were identified for sale and sold in significant part because of (i) our need for liquidity due to the circumstances referred to above, (ii) the amount of capital required to materially increase their value in the immediate to mid-term, (iii) they were either non-income producing or provided immaterial cash flow and (iv) in the case of our Culver City office building, the property was not required for our operations because it exceeded our office size requirements.

As of the date of this Report, we continue to have the following properties classified as held for sale:

(i) The land underlying our cinema in Rotorua, New Zealand;

(ii) Our approximately 3.7 acre five-parcel assemblage in the entertainment center of Wellington, New Zealand, which includes the Courtenay Central building;

(iii) Our ETC properties in Townsville (QLD) in Australia known as Cannon Park; and

(iv) Our approximately 24 acre Newberry Yard in Williamsport, Pennsylvania (also currently non-income producing).

In the case of Rotorua, Courtenay Central and Cannon Park, if the potential buyer elects to have a cinema use on the property, we intend to lease back our existing Reading Cinema or a potentially new cinema, in the event the potential buyer elects to build a new cinema. Our remaining assets held for development include the Cinemas 1,2,3 in Manhattan, and our various historic railroad properties, the principal of these being our holding in downtown Philadelphia, which is discussed in greater detail below.

#### 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. 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. Also, we are advised by our broker that in the last two months there have been an increase in the number of inquiries regarding rates and availability compared to earlier periods in 2024.

*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 due to the COVID-19 pandemic, during which we provided certain abatements. Audible has since resumed full operations and extended its license agreement 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 the rights to host any future productions of the show. Following STOMP's departure, new productions such as *The Empire Strips Back* and Comedian Rachel Bloom's *Death, Let Me Do My Show* brought fresh excitement to audiences during 2023. During the first quarter of 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* began at the Orpheum. This new show from a book by Marla Mindelle, the co-author and original star of the Off Broadway hit musical-comedy *Titanique* is being produced by *(i)* LuckyChap, the producing team, which includes Margot Robbie, behind *Barbie* and *Saltburn* and (ii) multiple-Tony-winning Broadway producing veterans Sue Wagner and John Johnson (*Stereophonic, Lempicka).*

*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) –* The Reading Viaduct is an 0.7-mile-long raised rail bed and bridge system that spans the Callowhill and Poplar neighborhoods and extends 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 we believe there continues to be interest from the City of Philadelphia and the City Center District in acquiring the Reading Viaduct for park purposes and while the City did pass an ordinance last year to facilitate an acquisition through condemnation, no concrete steps have been taken to proceed with condemnation or transfer of the property. Recent developments in the area include the announcement of a $158 million federal grant for the Chinatown Stitch project in mid-March 2024, which further highlight the potential of the Reading Viaduct. The Chinatown Stitch 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 into 2025 we plan to continue operating 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 126,368 square feet. Our six-screen Reading Cinema is an anchor tenant. These properties are currently 94% leased. This property is currently being marketed for sale.

*The Belmont Common (Belmont, Perth, Australia) –* The total gross leasable area of the Belmont Common is 60,116 square feet. Our ten-screen Reading Cinema is the anchor tenant with six third-party tenants. The site is currently 100% leased.

#### New Zealand:

*Wellington, New Zealand, including Courtenay Central. –* Our Wellington properties include five contiguous parcels representing approximately 161,082 square feet of land located in the entertainment core of Wellington and within walking distance and offering direct views of Wellington Harbor. Assembled over a period of years, we believe our properties represent the largest commercial assemblage available anywhere in Wellington. After recently encountering certain challenges with our development plans, we engaged JLL as our exclusive sales agent to market these key property assets that represent a once-in-a-lifetime development opportunity for a well-capitalized buyer. The June 2023 opening of Takina, Wellington’s first and state-of-the-art Convention and Exhibition Center (wcec.co.nz) directly across the street from our properties, the loosening of certain height and density restrictions, and the lack of comparable building sites, are among the characteristics that we believe make this development site a generational opportunity.

It is our intention to structure any monetization transaction to preserve for us the right to lease or operate any cinema that is built or operated on the assemblage, in the future.

For a complete list of our principal properties, see *Part I, Item 2 – Properties* under the heading “*Investment and Development Property”* in our 2023 Form 10-K”

### 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 nine months ended September 30, 2024, and September 30, 2023, respectively:

*(Dollars in thousands)*

| SEGMENT RESULTS Revenue | Quarter Ended September 30, 2024 | September 30, 2023 | % Change Fav/ ‎(Unfav) | Nine Months Ended September 30, 2024 | September 30, 2023 | % Change Fav/ ‎(Unfav) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cinema exhibition | $56,357 | 62,687 | (10)% | $140,570 | $165,731 | (15)% |
| Real estate | 4,898 | 5,056 | (3)% | 14,844 | 15,338 | (3)% |
| Inter-segment elimination | (1,165) | (1,181) | 1% | (3,463) | (3,644) | 5% |
| Total revenue | 60,090 | 66,562 | (10)% | 151,951 | 177,425 | (14)% |
| **Operating expense** |  |  |  |  |  |  |
| Cinema exhibition | (50,535) | (54,458) | 7% | (132,972) | (149,941) | 11% |
| Real estate | (2,106) | (2,281) | 8% | (6,801) | (6,600) | (3)% |
| Inter-segment elimination | 1,165 | 1,181 | (1)% | 3,463 | 3,644 | (5)% |
| Total operating expense | (51,476) | (55,558) | 7% | (136,310) | (152,897) | 11% |
| **Depreciation and amortization** |  |  |  |  |  |  |
| Cinema exhibition | (2,611) | (2,784) | 6% | (7,753) | (8,551) | 9% |
| Real estate | (1,210) | (1,624) | 25% | (4,084) | (4,830) | 15% |
| Total depreciation and amortization | (3,821) | (4,408) | 13% | (11,837) | (13,381) | 12% |
| **General and administrative expense** |  |  |  |  |  |  |
| Cinema exhibition | (902) | (1,050) | 14% | (2,973) | (2,983) | -% |
| Real estate | (186) | (231) | 19% | (725) | (696) | (4)% |
| Total general and administrative expense | (1,088) | (1,281) | 15% | (3,698) | (3,679) | (1)% |
| **Segment operating income** |  |  |  |  |  |  |
| Cinema exhibition | 2,309 | 4,395 | (47)% | (3,128) | 4,256 | (\>100)% |
| Real estate | 1,396 | 920 | 52% | 3,234 | 3,212 | 1% |
| **Total segment operating income (loss)** | $3,705 | $5,315 | (30)% | $106 | $7,468 | (99)% |
| **NON-SEGMENT RESULTS** |  |  |  |  |  |  |
| Depreciation and amortization expense | (106) | (172) | 38% | (305) | (527) | 42% |
| General and administrative expense | (3,845) | (4,124) | 7% | (11,928) | (12,014) | 1% |
| Interest expense, net | (5,229) | (5,072) | (3)% | (15,766) | (14,063) | (12)% |
| Equity earnings of unconsolidated joint ventures | 71 | 217 | (67)% | 164 | 443 | (63)% |
| Gain (loss) on sale of assets | (208) | — | —% | (1,324) | — | -% |
| Other income (expense) | (715) | 267 | (\>100)% | (592) | 356 | (\>100)% |
| Income before income taxes | (6,327) | (3,569) | (77)% | (29,645) | (18,337) | (62)% |
| Income tax benefit (expense) | (700) | (896) | 22% | (321) | (313) | (3)% |
| **Net income (loss)** | (7,027) | (4,465) | (57)% | (29,966) | (18,650) | (61)% |
| Less: net income (loss) attributable to noncontrolling interests | (111) | (65) | (71)% | (481) | (361) | (33)% |
| **Net income (loss) attributable to Reading International, Inc.** | **$(6,916)** | **$(4,400)** | **(57)%** | **$(29,485)** | **$(18,289)** | **(61)%** |
| **Basic earnings (loss) per share** | **$(0.31)** | **$(0.20)** | **(55)%** | **$(1.32)** | **$(0.82)** | **(61)%** |

### Consolidated and Non-Segment Results:

### Third Quarter Net Results

### Revenue

Revenue for the quarter ended September 30, 2024, decreased by $6.5 million, to $60.1 million, compared to the same period in the prior year, primarily due to (i) lower attendance in all three countries as a result of closing cinemas in the U.S. along with lower performing titles for our theaters in the third quarter of 2024 compared to 2023, (ii) slight decreases in property rent revenue in all three countries, and (iii) lower U.S. live theatre revenue. The decrease in revenue was offset by the appreciation of the AU/NZ foreign exchange rates against US dollar.

Revenue for the nine months ended September 30, 2024, decreased by $25.5 million, to $152.0 million, when compared to the same period in the prior year. This decrease is attributable to lower cinema performances in all countries, as a result of a decline in attendance, lower U.S. live theatre revenue and reduced rental income in the U.S. and New Zealand.

### Segment Operating Income/(Loss)

Our total segment operating income for the quarter ended September 30, 2024, decreased by $1.6 million, from a gain of $5.3 million to a gain of $3.7 million, primarily due to weaker attendance, and lower global rent revenue.

Our total segment operating income for the nine months ended September 30, 2024, decreased by $7.4 million, from an income of $7.5 million to an income of $0.1 million, primarily due to (i) weakened cinema performance, as attendance declined year-over-year, and (ii) a loss in third party rental revenue in the U.S. and New Zealand.

During the third quarter of 2024, both the Australia and New Zealand dollars improved against the U.S. dollar. The average Australia dollar exchange rate against the U.S. dollar for the third quarter of 2024 increased 2.3% compared to the same period in 2023. The average New Zealand dollar exchange rate against the U.S. dollar for the third quarter of 2024 increased 1.1% compared to the same period in 2023. The appreciation of the Australia and New Zealand currencies positively impacts segment operating income and negatively impacts segment operating loss in U.S. dollar terms for the period.

### Net Income/(Loss)

Our net loss attributable to Reading International, Inc. for the quarter ending September 30, 2024, increased by $2.5 million, from a loss of $4.4 million to a loss of $6.9 million, when compared to the same period in the prior year, primarily due to weakened cinema performance and increased interest expense, partially offset by reduced depreciation expense.

For the nine months ended September 30, 2024, net loss attributable to Reading International, Inc. increased by $11.2 million, from a loss of $18.3 million to a loss of $29.5 million, when compared to the same period in the prior year primarily due to decreased cinemas segment results, increased interest expense, and a loss on the sale of our Culver City office building.

### Income Tax Expense

Income tax expense for the three months ended September 30, 2024, decreased by $0.2 million compared to the equivalent prior-year period. The change between 2024 and 2023 is primarily related to an increase in pretax loss in 2024.

Income tax expense for the nine months ended September 30, 2024, increased by $0.01 million compared to the equivalent prior-year period. The change between 2024 and 2023 is primarily related to an increase in unrecognized tax benefits in 2024, partially offset by an increased in pretax loss in 2024.

### Business Segment Results

### Cinema Exhibition

The following table details our cinema exhibition segment operating results for the quarter and nine months ended September 30, 2024, and September 30, 2023, respectively:

*(Dollars in thousands)*

| REVENUE | Quarter Ended September 30, 2024 | % of Revenue | September 30, 2023 | % of Revenue | Nine Months Ended September 30, 2024 | % of Revenue | September 30, 2023 | % of Revenue | Fav/(Unfav) Quarter ‎Ended | Nine Months Ended |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **United States** Admissions revenue | $15,445 | 27% | $19,495 | 31% | $39,368 | 28% | $50,250 | 30% | (21)% | (22)% |
| Food & beverage revenue | 9,824 | 17% | 11,663 | 19% | 24,237 | 17% | 31,108 | 19% | (16)% | (22)% |
| Advertising and other revenue | 2,547 | 5% | 3,074 | 5% | 6,996 | 5% | 8,700 | 5% | (17)% | (20)% |
|  | **$27,816** | **49%** | **$34,232** | **55%** | **$70,601** | **50%** | **$90,058** | **54%** | **(19)%** | **(22)%** |
| **Australia** Admissions revenue | $14,445 | 26% | $14,918 | 24% | $35,559 | 25% | $39,428 | 24% | (3)% | (10)% |
| Food & beverage revenue | 8,691 | 15% | 7,856 | 13% | 20,805 | 15% | 21,016 | 13% | 11% | (1)% |
| Advertising and other revenue | 1,609 | 3% | 1,412 | 2% | 4,248 | 3% | 3,894 | 2% | 14% | 9% |
|  | **$24,745** | **44%** | **$24,186** | **39%** | **$60,612** | **43%** | **$64,338** | **39%** | **2%** | **(6)%** |
| **New Zealand** Admissions revenue | $2,215 | 4% | $2,668 | 4% | $5,559 | 4% | $6,989 | 4% | (17)% | (20)% |
| Food & beverage revenue | 1,339 | 2% | 1,383 | 2% | 3,262 | 2% | 3,774 | 2% | (3)% | (14)% |
| Advertising and other revenue | 242 | 0% | 219 | 0% | 536 | 0% | 572 | 0% | 11% | (6)% |
|  | **$3,796** | **7%** | **$4,270** | **7%** | **$9,357** | **7%** | **$11,335** | **7%** | **(11)%** | **(17)%** |
| **Total revenue** | **$56,357** | **100%** | **$62,688** | **100%** | **$140,570** | **100%** | **$165,731** | **100%** | **(10)%** | **(15)%** |
| **OPERATING EXPENSE** |  |  |  |  |  |  |  |  |  |  |
| **United States** Film rent and advertising cost | $(8,780) | 16% | $(10,876) | 17% | $(21,192) | 15% | $(27,563) | 17% | 19% | 23% |
| Food & beverage cost | (2,632) | 5% | (2,908) | 5% | (6,550) | 5% | (8,039) | 5% | 9% | 19% |
| Occupancy expense | (5,102) | 9% | (6,265) | 10% | (14,095) | 10% | (18,768) | 11% | 19% | 25% |
| Other operating expense | (10,388) | 18% | (11,722) | 19% | (28,485) | 20% | (32,513) | 20% | 11% | 12% |
|  | **$(26,902)** | **48%** | **$(31,771)** | **51%** | **$(70,322)** | **50%** | **$(86,883)** | **52%** | **15%** | **19%** |
| **Australia** Film rent and advertising cost | $(6,775) | 12% | $(6,582) | 10% | $(16,170) | 12% | $(17,652) | 11% | (3)% | 8% |
| Food & beverage cost | (1,922) | 3% | (1,670) | 3% | (4,631) | 3% | (4,407) | 3% | (15)% | (5)% |
| Occupancy expense | (4,673) | 8% | (4,276) | 7% | (13,612) | 10% | (13,048) | 8% | (9)% | (4)% |
| Other operating expense | (6,831) | 12% | (6,576) | 10% | (19,156) | 14% | (18,104) | 11% | (4)% | (6)% |
|  | **$(20,201)** | **36%** | **$(19,104)** | **30%** | **$(53,569)** | **38%** | **$(53,211)** | **32%** | **(6)%** | **(1)%** |
| **New Zealand** Film rent and advertising cost | $(1,048) | 2% | $(1,190) | 2% | $(2,482) | 2% | $(3,164) | 2% | 12% | 22% |
| Food & beverage cost | (273) | 0% | (273) | 0% | (703) | 1% | (731) | 0% | -% | 4% |
| Occupancy expense | (804) | 1% | (792) | 1% | (2,347) | 2% | (2,357) | 1% | (2)% | -% |
| Other operating expense | (1,306) | 2% | (1,330) | 2% | (3,549) | 3% | (3,595) | 2% | 2% | 1% |
|  | **$(3,431)** | **6%** | **$(3,585)** | **6%** | **$(9,081)** | **6%** | **$(9,847)** | **6%** | **4%** | **8%** |
| **Total operating expense** | **$(50,534)** | **90%** | **$(54,460)** | **87%** | **$(132,972)** | **95%** | **$(149,941)** | **90%** | **7%** | **11%** |
| **DEPRECIATION, AMORTIZATION, IMPAIRMENT AND GENERAL AND ADMINISTRATIVE EXPENSE** |  |  |  |  |  |  |  |  |  |  |
| **United States** Depreciation and amortization | $(1,262) | 2% | $(1,458) | 2% | $(3,784) | 3% | $(4,518) | 3% | 13% | 16% |
| Impairment of long-lived assets | — | 0% | — | 0% | — | 0% | — | 0% | (\>100)% | (\>100)% |
| General and administrative expense | (513) | 1% | (672) | 1% | (1,885) | 1% | (1,839) | 1% | 24% | (3)% |
|  | **$(1,775)** | **3%** | **$(2,130)** | **3%** | **$(5,669)** | **4%** | **$(6,357)** | **4%** | **17%** | **11%** |
| **Australia** Depreciation and amortization | $(1,237) | 2% | $(1,192) | 2% | $(3,619) | 3% | $(3,611) | 2% | (4)% | -% |
| Impairment expense | — | 0% | — | 0% | — | 0% | — | 0% | -% | -% |
| General and administrative expense | (389) | 1% | (377) | 1% | (1,087) | 1% | (1,144) | 1% | (3)% | 5% |
|  | **$(1,626)** | **3%** | **$(1,569)** | **3%** | **$(4,706)** | **3%** | **$(4,755)** | **3%** | **(4)%** | **1%** |
| **New Zealand** Depreciation and amortization | $(112) | 0% | $(134) | 0% | $(350) | 0% | $(422) | 0% | 16% | 17% |
| Impairment expense | — | 0% | — | 0% | — | 0% | — | 0% | -% | -% |
| General and administrative expense | (1) | 0% | — | 0% | (1) | 0% | — | 0% | -% | -% |
|  | **$(113)** | **0%** | **$(134)** | **0%** | **$(351)** | **0%** | **$(422)** | **0%** | **16%** | **17%** |
| **Total depreciation, amortization, general and administrative expense** | **$(3,514)** | **6%** | **$(3,833)** | **6%** | **$(10,726)** | **8%** | **$(11,534)** | **7%** | **8%** | **7%** |
| **OPERATING INCOME (LOSS) – CINEMA** |  |  |  |  |  |  |  |  |  |  |
| **United States** | $(861) | (2)% | $331 | 1% | $(5,390) | (4)% | $(3,182) | (2)% | (\>100)% | (69)% |
| **Australia** | 2,918 | 5% | 3,513 | 6% | 2,337 | 2% | 6,372 | 4% | (17)% | (63)% |
| **New Zealand** | 252 | 0% | 551 | 1% | (75) | (0)% | 1,066 | 1% | (54)% | (\>100)% |
| **Total Cinema operating income (loss)** | **$2,309** | **4%** | **$4,395** | **7%** | **$(3,128)** | **(2)%** | **$4,256** | **3%** | **(47)%** | **(\>100)%** |

### Third Quarter Results

### Revenue

For the quarter ended September 30, 2024, cinema revenue decreased by $6.3 million, to $56.4 million when compared to the same period in the prior year. This decrease was primarily due to a global decline in attendance, in part due to the closure of the cinemas in the U.S. described above and a weaker slate of film in our U.S. specialty cinemas.

For the nine months ended September 30, 2024, cinema revenue decreased by $25.2 million, to $140.6 million compared to the same period in the prior year. This decrease was primarily driven by (i) weaker movie slates as result of the 2023 Hollywood Strikes, (ii) weaker film slate in our U.S. specialty cinemas, (iii) four closed U.S. cinemas, and (iv) and lower Average Ticket Price in AU and NZ, along with (v) a weakening of AU/NZ foreign exchange rates. This was offset by a higher Average Ticket Price in the U.S and higher global F&B per capitas

### Cinema Segment Operating Income/(Loss)

Cinema segment operating income for the quarter ended September 30, 2024, decreased by $2.1 million, from an income of $4.4 million to an income of $2.3 million when compared to the same period in the prior year. This decline in operating income is due to a decrease in cinema revenue in the U.S. and New Zealand as a result of lower attendance.

Cinema segment operating loss for the nine months ended September 30, 2024, was $3.1 million compared to a gain of $4.3 million during the same period in the prior year, primarily due to decreased attendance as a result of a weaker film slate as a result of the impacts of the 2023 Hollywood Strikes, in addition to a weaker film slate at our U.S. specialty cinemas and the closure of multiple cinemas in the U.S.

### Operating Expense

Operating expenses for the quarter ended September 30, 2024, decreased by $3.9 million, to $50.5 million, compared to the same quarter in the prior year. Operating expenses for the nine months ended September 30, 2024, decreased by $17.0 million, to $133.0 million, compared to the same time period in the prior year. These decreases were due to decreased global film rent expense as a result of lower attendance, decreased food & beverage cost, primarily in the U.S., and reduced U.S. occupancy costs offset by increases in Australia occupancy and other operating expenses.

### Real Estate

The following table details our real estate segment operating results for the quarters and nine months ended September 30, 2024 and September 30, 2023, respectively:

*(Dollars in thousands)*

| REVENUE | Quarter Ended September 30, 2024 | % of ‎Revenue | September 30, 2023 | % of ‎Revenue | Nine Months Ended September 30, 2024 | % of ‎Revenue | September 30, 2023 | % of ‎Revenue | % Change Fav/(Unfav) Quarter Ended | Nine Months Ended |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **United States** Live theatre rental and ancillary income | $391 | 8% | $465 | 9% | $1,220 | 8% | $1,370 | 9% | (16)% | (11)% |
| Property rental income | 1,053 | 21% | 1,149 | 23% | 3,192 | 22% | 3,632 | 24% | (8)% | (12)% |
|  | **1,444** | **29%** | **1,614** | **32%** | **4,412** | **30%** | **5,002** | **33%** | **(11)%** | **(12)%** |
| **Australia** Property rental income | **3,082** | **63%** | **3,063** | **61%** | **9,342** | **63%** | **9,191** | **60%** | 1% | 2% |
| **New Zealand** Property rental income | **372** | **8%** | **380** | **8%** | **1,090** | **7%** | **1,145** | **7%** | (2)% | (5)% |
| **Total revenue** | **$4,898** | **100%** | **$5,057** | **100%** | **$14,844** | **100%** | **$15,338** | **100%** | **(3)%** | **(3)%** |
| **OPERATING EXPENSE** |  |  |  |  |  |  |  |  |  |  |
| **United States** Live theatre cost | $(143) | 3% | $(122) | 2% | $(550) | 4% | $(476) | 3% | (17)% | (16)% |
| Property cost | (290) | 6% | (466) | 9% | (1,069) | 7% | (1,132) | 7% | 38% | 6% |
| Occupancy expense | (220) | 4% | (260) | 5% | (676) | 5% | (743) | 5% | 15% | 9% |
|  | **(653)** | **13%** | **(848)** | **17%** | **(2,295)** | **15%** | **(2,351)** | **15%** | **23%** | **2%** |
| **Australia** Property cost | (488) | 10% | (548) | 11% | (1,661) | 11% | (1,653) | 11% | 11% | -% |
| Occupancy expense | (509) | 10% | (505) | 10% | (1,476) | 10% | (1,477) | 10% | (1)% | -% |
|  | **(997)** | **20%** | **(1,053)** | **21%** | **(3,137)** | **21%** | **(3,130)** | **20%** | **5%** | **-%** |
| **New Zealand** Property cost | (327) | 7% | (273) | 5% | (1,019) | 7% | (810) | 5% | (20)% | (26)% |
| Occupancy expense | (129) | 3% | (108) | 2% | (350) | 2% | (309) | 2% | (19)% | (13)% |
|  | **(456)** | **9%** | **(381)** | **8%** | **(1,369)** | **9%** | **(1,119)** | **7%** | **(20)%** | **(22)%** |
| **Total operating expense** | **$(2,106)** | **43%** | **$(2,282)** | **45%** | **$(6,801)** | **46%** | **$(6,600)** | **43%** | **8%** | **(3)%** |
| **DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE** |  |  |  |  |  |  |  |  |  |  |
| **United States** Depreciation and amortization | $(673) | 14% | $(824) | 16% | $(2,089) | 14% | $(2,358) | 15% | 18% | 11% |
| General and administrative expense | (193) | 4% | (171) | 3% | (673) | 5% | (507) | 3% | (13)% | (33)% |
|  | **(866)** | **18%** | **(995)** | **20%** | **(2,762)** | **19%** | **(2,865)** | **19%** | **13%** | 4% |
| **Australia** Depreciation and amortization | $(490) | 10% | $(617) | 12% | $(1,632) | 11% | $(1,900) | 12% | 21% | 14% |
| General and administrative expense | 7 | (0)% | (60) | 1% | (52) | 0% | (189) | 1% | \>100% | 72% |
|  | **(483)** | **10%** | **(677)** | **13%** | **(1,684)** | **11%** | **(2,089)** | **14%** | **29%** | **19%** |
| **New Zealand** Depreciation and amortization | (47) | 1% | (183) | 4% | (363) | 2% | (572) | 4% | 74% | 37% |
| General and administrative expense | — | 0% | — | 0% | — | 0% | — | 0% | -% | -% |
|  | **(47)** | **1%** | **(183)** | **4%** | **(363)** | **2%** | **(572)** | **4%** | **74%** | **37%** |
| **Total depreciation, amortization, general and administrative expense** | **$(1,396)** | **29%** | **$(1,855)** | **37%** | **$(4,809)** | **32%** | **$(5,526)** | **36%** | **25%** | **13%** |
| **OPERATING INCOME (LOSS) - REAL ESTATE** |  |  |  |  |  |  |  |  |  |  |
| **United States** | $(75) | (2)% | $(229) | (5)% | $(645) | (4)% | $(214) | (1)% | 67% | (\>100)% |
| **Australia** | 1,602 | 33% | 1,333 | 26% | 4,521 | 30% | 3,972 | 26% | 20% | 14% |
| **New Zealand** | (131) | (3)% | (184) | (4)% | (642) | (4)% | (546) | (4)% | 29% | (18)% |
| **Total real estate operating income (loss)** | **$1,396** | **29%** | **$920** | **18%** | **$3,234** | **22%** | **$3,212** | **21%** | **52%** | **1%** |

### Third Quarter Results

### Revenue

Real estate revenue for the quarter ended September 30, 2024, decreased slightly by $0.2 million, to $4.9 million, compared to the same period in the prior year. This revenue decrease was primarily due to the elimination of intercompany rent income due to 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 office building due to the abandonment by that tenant of their premises at the building in July 2023 (we subsequently sold the property in February 2024). Additionally, as a result of the Orpheum Theater being “dark” for July and August 2024, there was a decrease in Live theater rental and ancillary income contributing to the real estate revenue being $0.1 million lower compared to the same period in the prior year.

For the nine months ended September 30, 2024, real estate revenue decreased by $0.5 million, to $14.8 million, compared to the same period in the prior year. Aligning with the third quarter of 2024, the slight decrease was due to the decrease in U.S. rental income, partially offset by the increase in rental income in Australia.

### Real Estate Segment Income/(Loss)

Real estate segment operating income for the quarter ended September 30, 2024 increased by $0.5 million to $1.4 million, compared to the same period in the prior year. This increase was primarily due reduced operating expenses in the U.S. and Australia and reduced global depreciation and amortization.

For the nine months ended September 30, 2024, real estate segment operating income increased slightly to $3.2 million, compared to the same period in the prior year. This increase in operating income was due to lower depreciation and amortization expenses across all three countries and lower general and administrative expense in Australia.

### 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 (i) COVID-19 pandemic and government efforts to address the pandemic, (ii) the lack of receiving any U.S. federal COVID-19 pandemic funding (i.e. Payroll Protection Program and Shutter Venue Program) due to our public company status, (iii) the historic rise in interest rates and inflation which occurred following the pandemic and (iv) the 2023 Hollywood Strikes, we have needed to defer capital expenditures and to rely on borrowings and the proceeds of asset monetizations to cover our costs of operations, pay interest expense and pay down debt. Since March 31, 2020, we have paid down our institutional debt by $48.0 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 we are doing everything that can reasonably be done, and that, generally speaking, our relationships with our lenders are good.

While our Company believes that there will be recovery in the global cinema business, 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 have taken a variety of steps across our various operating jurisdictions to reduce our spending, including, without limitation, deferring non-essential capital expenditures, deferring certain operational expenses, renegotiating occupancy arrangements, deferring compensation expense and eliminating certain T&E expenses. We are closely monitoring our debt maturity dates to arrange necessary amendments. In this third quarter of 2024, we have drawn an additional NZD $5.0 million loan from Westpac and extended the Santander loan’s maturity to June 1, 2025. In October 2024, we executed an amendment to our Bank of America loan to defer the monthly principal payments of $500,000 in October, November and December 2024 to the end of December 2024. In October 2024, we obtained two further six-month extensions for the Valley National Bank loan, the first of which we exercised. As of September 30, 2024, we have debt of $52.6 million coming due in the next 12 months. Notably, we expect that the recent reductions of federal funds rate in September 2024 (50 bps) and November 2024 (25 bps) will help ease the pressure on our financing and have a favorable impact on our interest expense and financial results in the coming quarter.

As discussed elsewhere in this Report, we believe that cinema cash flow for the fourth quarter of this year and for 2025 will be strong. However, 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 expenditure, monetizing additional assets, restructuring our debt and/or our lease obligations or finding additional sources of liquidity. 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 Newberry Yard property in Williamsport, Pennsylvania. This property was historically used as a rail yard, and, accordingly, improved with tracks and switches and 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 it is currently non-income producing. Certain issues as to the location of various railroad rights of way have now been resolved on what we believe to be favorable terms and terms which enhance the value of the property.

In order to further bolster our liquidity and capital resources, in the second quarter 2024, we classified our Cannon Park property in Townsville, Australia and our Wellington property assemblage in New Zealand, with book values of $19.5 million and $17.9 million, respectively, as properties held for sale. Our Wellington assemblage consists of five parcels aggregating 161,082 square feet located in the entertainment center of Wellington and within walking distance of Wellington harbor, we are currently conducting a controlled auction of the property through JLL. No assurances can be given that we will consummate a sale of such assets. We have also classified the land underlying our Rotorua, New Zealand as held for sale.

In the event that we cannot obtain sufficient net proceeds from the disposition of these assets (or determine to defer disposition due to unfavorable market conditions), in addition to other strategies, we may look to monetize other real estate assets.

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 – Liquidity and Impairment Assessment.*

The changes in cash and cash equivalents for the nine months ended September 30, 2024, and September 30, 2023, respectively, are discussed as follows:

*(Dollars in thousands)*

|  | Nine Months Ended September 30, 2024 | 2023 | % Change |
| --- | ---: | ---: | --- |
| Net cash provided by (used in) operating activities | $(11,818) | $(6,366) | (86)% |
| Net cash provided by (used in) investing activities | 4,989 | (6,191) | \>100% |
| Net cash provided by (used in) financing activities | 2,127 | (3,886) | \>100% |
| Effect of exchange rate on cash and restricted cash | 744 | (897) | \>100% |
| Increase (decrease) in cash and cash equivalents and restricted cash | $(3,958) | $(17,340) | 77% |

### Operating activities

Cash used in operating activities for the nine months ended September 30, 2024, increased by $5.5 million, to $11.8 million compared to cash used in the same period of prior year of $6.4 million. This was primarily driven by an increase in Net Loss and offset by an increase in net payables.

### Investing activities

Cash provided in investing activities during the nine months ended September 30, 2024 was $5.0 million compared to cash used in the same period of prior year of $6.2 million. This was due to $9.7 million proceeds from sale of the Culver City office building in February 2024.

### Financing activities

Cash provided in financing activities for the nine months ended September 30, 2024, increased by $6.0 million, to $2.1 million compared to cash used in the same prior year period. This was primarily due to the new bridge loan of $13.9 million from NAB on April 10, 2024, and an increase of $3.2 million for Westpac loan on August 19, 2024. The increase was partially offset by the payoff of the Citizens loan of $8.4 million, following the sale of the Culver City office buildings, the scheduled repayments of $4.0 million on the Bank of America Credit Facility, and $0.3 million debt repayment to Santander on August 23, 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 nine months ended September 30, 2024, and preceding four years:

*($ in thousands)*

| Total Resources (cash and borrowings) | As of and ‎for the ‎9-Months ‎Ended September 30, 2024 | Year Ended December 31 2023 | 2022 | 2021 | 2020 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Cash and cash equivalents (unrestricted) | $10,083 | $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 | 17,942 | 20,765 | 41,947 | 95,251 | 42,316 |
| Total unrestricted resources at period end | 10,083 | 12,906 | 29,947 | 83,251 | 32,939 |
| **Debt-to-Equity Ratio** |  |  |  |  |  |
| Total contractual facility | $222,876 | $218,159 | $227,633 | $248,948 | $300,449 |
| Total debt (gross of deferred financing costs) | 215,017 | 210,300 | 215,633 | 236,948 | 284,959 |
| Current | 52,624 | 35,070 | 38,026 | 12,060 | 42,299 |
| Non-current | 162,393 | 175,230 | 177,607 | 224,888 | 242,660 |
| Finance lease liabilities | 54 | 83 | 209 | — | — |
| Total book equity | 4,606 | 32,996 | 63,279 | 105,060 | 81,173 |
| Debt-to-equity ratio | 46.68 | 6.37 | 3.41 | 2.26 | 3.51 |
| **Changes in Working Capital** |  |  |  |  |  |
| Working capital (deficit)(1) | $(80,490) | $(88,373) | $(74,152) | $(6,673) | $(64,140) |
| Current ratio | 0.42 | 0.30 | 0.39 | 0.94 | 0.47 |
| **Capital Expenditures (including acquisitions)** | $4,571 | $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 September 30, 2024, we had $10.1 million in unrestricted cash and cash equivalents compared to $12.9 million on December 31, 2023. On September 30, 2024, our total outstanding borrowings were $215.0 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 September 30, 2024:

*(Dollars in thousands)*

|  | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Debt(1) | $22,303 | $99,622 | $65,179 | $— | $— | $— | $187,104 |
| Operating leases, including imputed interest | 30,862 | 29,623 | 27,239 | 23,460 | 21,834 | 113,572 | 246,590 |
| Finance leases, including imputed interest | 44 | 11 | — | — | — | — | 55 |
| Subordinated debt(1) | — | — | — | 27,913 | — | — | 27,913 |
| Pension liability | 132 | 547 | 576 | 607 | 638 | 443 | 2,943 |
| Interest on pension liability | 39 | 137 | 108 | 77 | 45 | 11 | 417 |
| Estimated interest on debt (2) | 4,650 | 11,060 | 5,293 | 1,317 | — | — | 22,320 |
| Village East purchase option(3) | 5,900 | — | — | — | — | — | 5,900 |
| Total | $63,930 | $141,000 | $98,395 | $53,374 | $22,517 | $114,026 | $493,242 |

(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 August 12, 2024 was extended to November 30, 2024 and our sublease of the facility was extended until September 1, 2026.

### 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 September 30, 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 September 30, 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 future of the Reading Viaduct; 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; our expectations regarding our ability timely monetize certain assets and to generate sufficient cash proceeds from such sales; and our expectations concerning our ability to negotiate arrangements with our landlords to abate and/or defer the payment of rent; and our expectations regarding the reduction of the federal funds rate on our liquidity.

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 the past COVID-19 pandemic and Hollywood 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 effects 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

the ability to negotiate terms and conditions, including price, for the asset monetization transactions for the assets we have held for sale as of June 30, 2024.

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 September 30, 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, 6,562 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 third quarter of 2024, the average Australian dollar and New Zealand dollar strengthened against the U.S. dollar by 2.3% and 1.1%, respectively, compared to the same prior year period. However, on a year-to-date basis, the average Australian dollar and New Zealand dollar weakened against the U.S. Dollar by 1.0% and 1.3%, respectively.

At September 30, 2024, approximately 38.1% and 9.3% of our assets were invested in assets denominated in Australian dollars (Reading Entertainment Australia) and New Zealand dollars (Reading New Zealand), respectively, including approximately $6.3 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 an increase of $1.6 million for the quarter ended September 30, 2024. 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, 2024, and December 31, 2023, the balance of cumulative foreign currency translation adjustments were approximately a ($1.0) 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 $518,000 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

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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, 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 third quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

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There have been no material changes to the risk factors we previously disclosed in Item 1A of our 2023 Form 10-K.

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 Nov 14, 2024.
Source: SEC EDGAR, the filing index for accession 0000716634-24-000035. Last ingested by Listed: Oct 24, 2026, 14:56 ET. No prices; not investment advice.