Company Quick10K Filing
Quick10K
Reading
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$14.93 23 $342
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-10 Earnings, Exhibits
8-K 2019-05-07 Shareholder Vote, Regulation FD, Exhibits
8-K 2019-04-19 Other Events
8-K 2019-03-21 Other Events
8-K 2019-03-19 Earnings, Exhibits
8-K 2019-01-29 Control, Officers, Other Events, Exhibits
8-K 2018-11-13 Earnings, Shareholder Vote, Regulation FD, Other Events, Exhibits
8-K 2018-08-10 Earnings, Other Events, Exhibits
8-K 2018-06-21 Other Events, Exhibits
8-K 2018-05-11 Earnings, Exhibits
8-K 2018-02-23 Other Events, Exhibits
AMX America Movil 46,080
CMA Comerica 11,750
BHC Bausch 9,120
HII Huntington Ingalls Industries 8,620
WAIR Wesco Aircraft Holdings 1,020
HLIT Harmonic 509
LGC Legacy Acquisition 373
TSQ Townsquare Media 117
VSPC Viaspace 0
IGEN Igen Networks 0
RDI 2019-03-31
Part 1 – Financial Information
Item 1 - Financial Statements
Note 1 – Description of Business and Segment Reporting
Note 2 – Summary of Significant Accounting Policies
Note 3 – Operations in Foreign Currency
Note 4 – Earnings per Share
Note 5 – Property and Equipment
Note 6 – Investments in Unconsolidated Joint Ventures
Note 7 – Goodwill and Intangible Assets
Note 8 – Prepaid and Other Assets
Note 9 – Income Taxes
Note 10 – Debt
Note 11 – Other Liabilities
Note 12 – Accumulated Other Comprehensive Income
Note 13 – Commitments and Contingencies
Note 14 – Non-Controlling Interests
Note 15 – Stock-Based Compensation and Stock Repurchases
Note 16 - Leases
Note 17 – Hedge Accounting
Note 18 – Fair Value Measurements
Note 19 – Business Combination
Item 2 – Management’S Discussions and Analysis (“MD&A”) of Financial Condition and Results of Operations
Item 3 – Quantitative and Qualitative Disclosure About Market Risk
Item 4 – Controls and Procedures
Part II – Other Information
Item 1 – Legal Proceedings
Item 1A – Risk Factors
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds
Item 3 – Defaults Upon Senior Securities
Item 4 – Mine Safety Disclosure
Item 5 – Other Information
Item 6 – Exhibits
EX-31.1 rdi-20190331xex31_1.htm
EX-31.2 rdi-20190331xex31_2.htm
EX-32 rdi-20190331xex32.htm

Reading Earnings 2019-03-31

RDI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 rdi-20190331x10q.htm 10-Q 2019 Q1_Taxonomy2018

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

_____________________________________________________

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  March 31, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________



Commission file number 1-8625

C:\Users\matthew.elmshauser\Pictures\Reading International logo.jpg

READING INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

NEVADA

(State or other jurisdiction of incorporation or organization)

95-3885184

(IRS Employer Identification No.)

5995 Sepulveda Boulevard, Suite 300

Culver City, CA

(Address of principal executive offices)

 

90230

(Zip Code)

Registrant’s telephone number, including area code: (213) 235-2240



Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer   Accelerated filer   Non-accelerated filer   Smaller reporting company Emerging growth company 



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No  

Securities registered pursuant to Section 12(b) of the Act:



 

 

 

 





 

 

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, $0.01 par value

 

RDI

 

The Nasdaq Stock Market LLC

Class B Common Stock, $0.01 par value

 

RDIB

 

The Nasdaq Stock Market LLC



Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  As of May 7, 2019 there were 21,282,169 shares of Class A Nonvoting Common Stock, $0.01 par value per share and 1,680,590 shares of Class B Voting Common Stock, $0.01 par value per share outstanding.

 

 

1


 

READING INTERNATIONAL, INC. AND SUBSIDIARIES



TABLE OF CONTENTS







 



Page

PART I - Financial Information

Item 1 – Financial Statements

Consolidated Balance Sheets (Unaudited)

Consolidated Statements of Income (Unaudited)

Consolidated Statements of Comprehensive Income (Unaudited)

Consolidated Statements of Cash Flows (Unaudited)

Notes to Consolidated Financial Statements (Unaudited)

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

28 

Item 3 – Quantitative and Qualitative Disclosure about Market Risk

44 

Item 4 – Controls and Procedures

45 

PART II – Other Information

46 

Item 1 – Legal Proceedings

46 

Item 1A – Risk Factors

46 

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

46 

Item 3 – Defaults Upon Senior Securities

47 

Item 5 – Other Information

48 

Item 6 – Exhibits

48 

SIGNATURES

49 

Certifications

 

 

 

2


 

PART 1 – FINANCIAL INFORMATION

Item 1 - Financial Statements



READING INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited; U.S. dollars in thousands, except share information)







 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2019

 

2018

ASSETS

 

(unaudited)

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,648 

 

$

13,127 

Receivables

 

 

7,094 

 

 

8,045 

Inventory

 

 

1,165 

 

 

1,419 

Prepaid and other current assets

 

 

9,642 

 

 

7,667 

Total current assets

 

 

30,549 

 

 

30,258 

Operating property, net

 

 

257,402 

 

 

257,667 

Operating lease right-of-use assets

 

 

229,266 

 

 

 —

Investment and development property, net

 

 

95,156 

 

 

86,804 

Investment in unconsolidated joint ventures

 

 

4,958 

 

 

5,121 

Goodwill

 

 

20,836 

 

 

19,445 

Intangible assets, net

 

 

3,694 

 

 

7,369 

Deferred tax asset, net

 

 

26,483 

 

 

26,235 

Other assets

 

 

6,199 

 

 

6,129 

Total assets

 

$

674,543 

 

$

439,028 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

23,492 

 

$

26,154 

Film rent payable

 

 

6,559 

 

 

8,661 

Debt - current portion

 

 

40,077 

 

 

30,393 

Derivative financial instruments - current portion

 

 

52 

 

 

41 

Taxes payable - current

 

 

571 

 

 

1,710 

Deferred current revenue

 

 

7,712 

 

 

9,264 

Operating lease liabilities - current portion

 

 

19,797 

 

 

 —

Other current liabilities

 

 

9,525 

 

 

9,305 

Total current liabilities

 

 

107,785 

 

 

85,528 

Debt - long-term portion

 

 

113,816 

 

 

106,286 

Derivative financial instruments - non-current portion

 

 

203 

 

 

145 

Subordinated debt, net

 

 

26,116 

 

 

26,061 

Noncurrent tax liabilities

 

 

11,737 

 

 

11,530 

Operating lease liabilities - non-current portion

 

 

222,594 

 

 

 —

Other liabilities

 

 

12,346 

 

 

28,931 

Total liabilities

 

 

494,597 

 

 

258,481 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Class A non-voting common stock, par value $0.01,  100,000,000 shares authorized,

 

 

 

 

 

 

33,172,823 issued and 21,249,935 outstanding at March 31, 2019 and

33,112,337 issued and 21,194,748 outstanding at December 31, 2018

 

 

233 

 

 

232 

Class B voting common stock, par value $0.01,  20,000,000 shares authorized and

 

 

 

 

 

 

1,680,590 issued and outstanding at March 31, 2019 and December 31, 2018

 

 

17 

 

 

17 

Nonvoting preferred stock, par value $0.01,  12,000 shares authorized and no issued

 

 

 

 

 

 

or outstanding shares at March 31, 2019 and December 31, 2018

 

 

 —

 

 

 —

Additional paid-in capital

 

 

147,472 

 

 

147,452 

Retained earnings

 

 

45,563 

 

 

47,616 

Treasury shares

 

 

(25,231)

 

 

(25,222)

Accumulated other comprehensive income

 

 

7,625 

 

 

6,115 

Total Reading International, Inc. stockholders’ equity

 

 

175,679 

 

 

176,210 

Noncontrolling interests

 

 

4,267 

 

 

4,337 

Total stockholders’ equity

 

 

179,946 

 

 

180,547 

Total liabilities and stockholders’ equity

 

$

674,543 

 

$

439,028 



See accompanying Notes to the Unaudited Consolidated Financial Statements.

 

3


 

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; U.S. dollars in thousands, except per share data)











 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2019

 

2018

Revenue

 

 

 

 

 

 

Cinema

 

$

57,986 

 

$

72,255 

Real estate

 

 

3,565 

 

 

3,617 

Total revenue

 

 

61,551 

 

 

75,872 

Costs and expenses

 

 

 

 

 

 

Cinema

 

 

(48,329)

 

 

(54,948)

Real estate

 

 

(2,445)

 

 

(2,384)

Depreciation and amortization

 

 

(5,594)

 

 

(5,250)

General and administrative

 

 

(6,484)

 

 

(7,597)

Total costs and expenses

 

 

(62,852)

 

 

(70,179)

Operating income (loss)

 

 

(1,301)

 

 

5,693 

Interest expense, net

 

 

(1,852)

 

 

(1,594)

Other income (expense)

 

 

(20)

 

 

(82)

Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures

 

 

(3,173)

 

 

4,017 

Equity earnings of unconsolidated joint ventures

 

 

34 

 

 

257 

Income (loss) before income taxes

 

 

(3,139)

 

 

4,274 

Income tax benefit (expense)

 

 

1,042 

 

 

(1,170)

Net income (loss)

 

$

(2,097)

 

$

3,104 

Less: net income (loss) attributable to noncontrolling interests

 

 

(16)

 

 

22 

Net income (loss) attributable to Reading International, Inc. common shareholders

 

$

(2,081)

 

$

3,082 

Basic earnings (loss) per share attributable to Reading International, Inc. shareholders

 

$

(0.09)

 

$

0.13 

Diluted earnings (loss) per share attributable to Reading International, Inc. shareholders

 

$

(0.09)

 

$

0.13 

Weighted average number of shares outstanding–basic

 

 

22,920,486 

 

 

22,967,237 

Weighted average number of shares outstanding–diluted

 

 

23,124,106 

 

 

23,132,989 



See accompanying Notes to the Unaudited Consolidated Financial Statements. 

 

4


 

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; U.S. dollars in thousands)







 

 

 

 

 



 

 

 

 

 



Three Months Ended



March 31,



2019

 

2018

Net income (loss)

$

(2,097)

 

$

3,104 

Foreign currency translation gain (loss)

 

1,526 

 

 

(803)

Gain (loss) on cash flow hedges

 

(69)

 

 

 —

Other

 

53 

 

 

50 

Comprehensive income (loss)

 

(587)

 

 

2,351 

Less: net income (loss) attributable to noncontrolling interests

 

(16)

 

 

22 

Less: comprehensive income (loss) attributable to noncontrolling interests

 

 

 

(3)

Comprehensive income (loss) attributable to Reading International, Inc.

$

(572)

 

$

2,332 



See accompanying Notes to the Unaudited Consolidated Financial Statements

 

5


 

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; U.S. dollars in thousands)









 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2019

 

2018

Operating Activities

 

 

 

 

 

 

Net income (loss)

 

$

(2,097)

 

$

3,104 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

Equity earnings of unconsolidated joint ventures

 

 

(34)

 

 

(257)

Distributions of earnings from unconsolidated joint ventures

 

 

249 

 

 

236 

Amortization of operating leases

 

 

5,895 

 

 

 —

Amortization of finance leases

 

 

41 

 

 

 —

Change in operating lease liabilities

 

 

(5,754)

 

 

 —

Interest on hedged derivatives

 

 

(5)

 

 

 —

Change in net deferred tax assets

 

 

(150)

 

 

172 

Depreciation and amortization

 

 

5,594 

 

 

5,250 

Other amortization

 

 

341 

 

 

224 

Stock based compensation expense

 

 

280 

 

 

379 

Net changes in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

993 

 

 

3,205 

Prepaid and other assets

 

 

(1,957)

 

 

(2,309)

Payments for accrued pension

 

 

(171)

 

 

(2,404)

Accounts payable and accrued expenses

 

 

(2,204)

 

 

1,997 

Film rent payable

 

 

(2,132)

 

 

(5,790)

Taxes payable

 

 

(1,151)

 

 

150 

Deferred revenue and other liabilities

 

 

(1,579)

 

 

(1,505)

Net cash provided by (used in) operating activities

 

 

(3,841)

 

 

2,452 

Investing Activities

 

 

 

 

 

 

Purchases of and additions to operating and investment properties

 

 

(11,476)

 

 

(23,231)

Acquisition of business combinations

 

 

(1,380)

 

 

 —

Change in restricted cash

 

 

243 

 

 

(260)

Net cash provided by (used in) investing activities

 

 

(12,613)

 

 

(23,491)

Financing Activities

 

 

 

 

 

 

Repayment of long-term borrowings

 

 

(6,113)

 

 

(9,707)

Repayment of finance lease principle

 

 

(41)

 

 

 —

Proceeds from borrowings

 

 

22,349 

 

 

25,998 

Repurchase of Class A Nonvoting Common Stock

 

 

(9)

 

 

(317)

(Cash paid) proceeds from the exercise of stock options

 

 

(259)

 

 

203 

Noncontrolling interest contributions

 

 

18 

 

 

27 

Noncontrolling interest distributions

 

 

(27)

 

 

(43)

Net cash provided by (used in) financing activities

 

 

15,918 

 

 

16,161 

Effect of exchange rate changes on cash and cash equivalents

 

 

57 

 

 

(122)

Net decrease in cash and cash equivalents

 

 

(479)

 

 

(5,000)

Cash and cash equivalents at January 1

 

 

13,127 

 

 

13,668 

Cash and cash equivalents at March 31

 

$

12,648 

 

$

8,668 

Supplemental Disclosures

 

 

 

 

 

 

Interest paid

 

$

2,304 

 

$

2,121 

Income taxes paid

 

 

1,883 

 

 

808 

Non-Cash Transactions

 

 

 

 

 

 

Additions to operating and investing properties through accrued expenses

 

 

3,423 

 

 

4,530 



See accompanying Notes to the Unaudited Consolidated Financial Statements. 

 

6


 

READING INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

Note 1 – Description of Business and Segment Reporting

 

The Company

Reading International, Inc., a Nevada corporation (“RDI” and collectively with our consolidated subsidiaries and corporate predecessors, the “Company”, “Reading” and “we”, “us”, or “our”), was incorporated in 1999.  Our businesses consist primarily of:

·

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

·

the development, ownership, operation and/or rental of retail, commercial and live venue real estate assets in Australia, New Zealand, and the United States.



Business Segments

Reported below are the operating segments of the Company for which separate financial information is available and evaluated regularly by the Chief Executive Officer, the chief operating decision-maker of the Company.  As part of our real estate activities, we hold undeveloped land in urban and suburban centers in Australia, New Zealand, and the United States.



The table below summarizes the results of operations for each of our business segments for the quarter ended March 31, 2019 and 2018, respectively.  Operating expense includes costs associated with the day-to-day operations of the cinemas and the management of rental properties, including our live theater assets.











 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(Dollars in thousands)

 

2019

 

2018

Revenue:

 

 

 

 

 

 

  Cinema exhibition

 

$

57,986 

 

$

72,255 

  Real estate

 

 

5,431 

 

 

6,008 

  Inter-segment elimination

 

 

(1,866)

 

 

(2,391)



 

$

61,551 

 

$

75,872 

Segment operating income (loss):

 

 

 

 

 

 

  Cinema exhibition

 

$

2,642 

 

$

10,285 

  Real estate

 

 

1,159 

 

 

1,681 



 

$

3,801 

 

$

11,966 



A reconciliation of segment operating income to income before income taxes is as follows:









 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(Dollars in thousands)

 

2019

 

2018

Segment operating income (loss)

 

$

3,801 

 

$

11,966 

Unallocated corporate expense

 

 

 

 

 

 

    Depreciation and amortization expense

 

 

(61)

 

 

(117)

    General and administrative expense

 

 

(5,041)

 

 

(6,156)

    Interest expense, net

 

 

(1,852)

 

 

(1,594)

Equity earnings of unconsolidated joint ventures

 

 

34 

 

 

257 

Other income (expense)

 

 

(20)

 

 

(82)

Income (loss) before income tax expense

 

$

(3,139)

 

$

4,274 

 

Note 2 – Summary of Significant Accounting Policies



Basis of Consolidation

The accompanying consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries as well as majority-owned subsidiaries that the Company controls, and should be read in conjunction with the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2018 (“2018 Form 10-K”).  All significant intercompany balances and transactions have been eliminated on consolidation.  These consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”).  As such, they do not include

 

7


 

all information and footnotes required by U.S. GAAP for complete financial statements. We believe that we have included all normal and recurring adjustments necessary for a fair presentation of the results for the interim period.



Operating results for the quarter ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.



Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Significant estimates include (i) projections we make regarding the recoverability and impairment of our assets (including goodwill and intangibles), (ii) valuations of our derivative instruments, (iii) recoverability of our deferred tax assets, (iv) estimation of breakage and redemption experience rates, which drive how we recognize breakage on our gift card and gift certificates, and revenue from our customer loyalty program, and (v) allocation of insurance proceeds to various recoverable components. Actual results may differ from those estimates.



Recently Adopted and Issued Accounting Pronouncements



Adopted:



Accounting Standards Update (“ASU”) 2016-02 Leases: In February 2016, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard, ASC 842 Leases, to increase transparency and comparability among organizations by requiring the recognition of right-of-use ("ROU") assets and lease liabilities on the balance sheet.  Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.  A modified retrospective transition approach is required for lessees with capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.



On January 1, 2019, we adopted the new accounting standard Accounting Standards Codification (“ASC”) 842 Leases using the modified retrospective method. We recognized the cumulative effect of initially applying the new leasing standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The standard had a material impact on our consolidated balance sheets, but not on our consolidated income statements or statements of cash flow.







 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Balance at
December 31,
2018

 

Adjustments
due to ASC
842

 

Balance at
January 1,
2019

Assets

 

 

 

 

 

 

 

 

 

Operating property, net

 

$

257,667 

 

$

370 

 

$

258,037 

Operating lease right-of-use assets

 

 

 —

 

 

232,319 

 

 

232,319 

Intangible assets, net

 

 

7,369 

 

 

(3,542)

 

 

3,827 

Deferred tax asset, net

 

 

26,235 

 

 

82 

 

 

26,317 

Liabilities

 

 

 

 

 

 

 

 

 

Operating lease liabilities

 

$

 —

 

$

245,280 

 

$

245,280 

Other non-current liabilities

 

 

28,931 

 

 

(16,033)

 

 

12,898 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

$

4,337 

 

$

(46)

 

$

4,291 

Retained earnings

 

 

47,616 

 

 

28 

 

 

47,644 









 

 

 

 

 

 

 

 

 



 

Period Ended March 31, 2019

(Dollars in thousands)

 

As Reported,
March 31, 2019

 

Balances
Without
Adoption of
ASC 842

 

Effect of
change
Higher /
(Lower)

Cinema costs and expenses

 

$

48,329 

 

$

48,334 

 

$

(5)

Depreciation and amortization

 

 

5,594 

 

 

5,552 

 

 

42 

General and administrative

 

 

6,484 

 

 

6,528 

 

 

(44)

Interest expense, net

 

 

1,852 

 

 

1,849 

 

 

Income tax (benefit) expense

 

 

1,042 

 

 

1,041 

 

 

Net income (loss)

 

$

(2,097)

 

$

(2,094)

 

$

 

8


 









 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

As Reported,
March 31, 2019

 

Balances
Without
Adoption of
ASC 842

 

Effect of
change
Higher /
(Lower)

Assets

 

 

 

 

 

 

 

 

 

Operating property, net

 

$

257,402 

 

$

257,072 

 

$

330 

Intangible assets

 

 

3,694 

 

 

7,151 

 

 

(3,457)

Operating lease right-of-use assets

 

 

229,266 

 

 

 —

 

 

229,266 

Deferred tax asset, net

 

 

26,483 

 

 

26,400 

 

 

83 

Liabilities

 

 

 

 

 

 

 

 

 

Other current liabilities

 

$

9,525 

 

$

9,363 

 

$

162 

Operating lease liabilities, current

 

 

19,797 

 

 

 —

 

 

19,797 

Other non-current liabilities

 

 

12,346 

 

 

28,643 

 

 

(16,297)

Operating lease liabilities, non-current

 

 

222,594 

 

 

 —

 

 

222,594 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

Retained earnings

 

$

45,563 

 

$

45,585 

 

$

(22)





1)

ASU 2014-09 Revenue from Contracts with Customers: On January 1, 2018, we adopted the new accounting standard ASC 606 Revenue from Contracts with Customers using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information was not restated. Adoption of this standard has no material effect on our consolidated financial statements.



2)

On January 1, 2018, the Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, a consensus of the FASB Emerging Issues Task Force. This standard requires that amounts generally described as restricted cash and cash equivalents should be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Adoption of this standard has no material effect on our consolidated statement of cash flows.



3)

On January 1, 2018, the Company adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments). The standard applies to eight (8) specific cash flow classification issues, reducing the current and potential future diversity in the presentation of certain cash flows. Adoption of this standard has no material effect on our consolidated statement of cash flows.



4)

On January 1, 2018, the Company adopted ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.  This standard (i) requires that an employer disaggregate the service cost component from the other components of net benefit cost, and (ii) specifies how to present the service cost component and the other components of net benefit cost in the income statement and (iii) allows only the service cost component of net benefit cost to be eligible for capitalization.  Adoption of this standard has no material impact on our consolidated financial statements.



5)

On January 1, 2018, the Company adopted ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business.  This ASU provides that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the asset is not a “business”, thus reducing the number of transactions that need further evaluation for business combination.   The standard has no material impact on our current consolidated financial statements, and we do not expect it to be applicable to our consolidated financial statements in the near term unless we enter into a definitive business acquisition transaction.



Issued:



v

ASUs Effective 2019 and Beyond

·

Goodwill Impairment Simplification  (ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment)



Issued by FASB in January 2017, this standard removes the second step of the two-step impairment test for measuring goodwill and is to be applied on a prospective basis only. The new standard is effective for the Company on January 1, 2020, including interim periods within the year of adoption.  Early adoption is permitted for interim or annual goodwill impairment

 

9


 

tests performed on testing dates after January 1, 2017.  It is not anticipated that adoption of this standard will have any material impact on our consolidated financial statements.



Prior period financial statement correction of immaterial errors



During the third quarter of 2018, we identified immaterial errors related to the accounting for straight line rent receivable from tenants in our real estate operations dating back to 2015. These errors resulted in an understatement of real estate revenue.



We assessed the materiality of these errors on our financial statements for prior periods in accordance with the SEC Staff Accounting Bulletin (SAB) No. 99, Materiality, codified in ASC 250, Presentation of Financial Statements, and concluded that they were not material to any prior annual or interim periods. However, the aggregate amount of $440k related to the prior period immaterial errors through June 30, 2018, would have been material to the quarterly accounts with our current Consolidated Statements of Income. Consequently, in accordance with ASC 250 (specifically SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), we have corrected these errors for all prior periods presented by revising the consolidated financial statements and other financial information included herein.



The following is a summary of the previously issued financial statement line items for all periods and statements included in this report.



Consolidated Statements of Income:







 

 

 

 

 

 

 

 

 



 

Three Months Ended March 31, 2018

(Dollars in thousands)

 

As Reported

 

Adjustment

 

As Revised

Real estate revenue

 

$

3,567 

 

$

50 

 

$

3,617 

Total revenue

 

 

75,822 

 

 

50 

 

 

75,872 

Operating income (loss)

 

 

5,643 

 

 

50 

 

 

5,693 

Income before income taxes

 

 

4,224 

 

 

50 

 

 

4,274 

Income tax benefit (expense)

 

 

(1,155)

 

 

(15)

 

 

(1,170)

Net income (loss)

 

 

3,069 

 

 

35 

 

 

3,104 

Net income (loss) attributable to Reading International, Inc. common shareholders

 

 

3,047 

 

 

35 

 

 

3,082 



 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

$

0.13 

 

$

 —

 

$

0.13 

Diluted earnings (loss) per share

 

 

0.13 

 

 

 —

 

 

0.13 



Consolidated Balance Sheets:











 

 

 

 

 

 

 

 

 



 

Summary of Equity

(Dollars in thousands)

 

As Reported

 

Adjustment

 

As Revised

Equity at January 1, 2018

 

$

176,910 

 

$

377 

 

$

177,287 

Net income (loss)

 

 

3,047 

 

 

35 

 

 

3,082 

Equity at March 31, 2018

 

$

179,423 

 

$

412 

 

$

179,835 





Consolidated Statements of Cash Flows:







 

 

 

 

 

 

 

 

 



 

Three Months Ended March 31, 2018

(Dollars in thousands)

 

As Reported

 

Adjustment

 

As Revised

Net income (loss)

 

$

3,069 

 

$

35 

 

$

3,104 

Change in net deferred tax assets

 

 

157 

 

 

15 

 

 

172 

Prepaid and other assets

 

 

(2,259)

 

 

(50)

 

 

(2,309)

Net cash provided by operating activities

 

$

2,452 

 

$

 —

 

$

2,452 

 

 

10


 

Note 3 – Operations in Foreign Currency



We have significant assets in Australia and New Zealand. Historically, we have conducted our Australian and New Zealand operations (collectively “foreign operations”) on a self-funding basis where we use cash flows generated by our foreign operations to pay for the expense of foreign operations.  Our Australian and New Zealand assets and liabilities are translated from their functional currencies of Australian dollar (“AU$”) and New Zealand dollar (“NZ$”), respectively, to the U.S. dollar based on the exchange rate as of March 31, 2019. The carrying value of the assets and liabilities of our foreign operations fluctuates as a result of changes in the exchange rates between the functional currencies of the foreign operations and the U.S. dollar. The translation adjustments are accumulated in the Accumulated Other Comprehensive Income in the Consolidated Balance Sheets.



Due to the natural-hedge nature of our funding policy, we have not historically used derivative financial instruments to hedge against the risk of foreign currency exposure.  However, in certain circumstances, we move funds between jurisdictions where circumstances encouraged us to do so from an overall economic standpoint. Going forward, particularly in light of recent tax law changes, we intend to take a more global view of our financial resources, and to be more flexible in making use of resources from one jurisdiction in other jurisdictions.



Presented in the table below are the currency exchange rates for Australia and New Zealand:







 

 

 

 

 

 



 

 

 

 

 

 



Foreign Currency / USD



As of and
for the
quarter
ended

 

As of and
for the
twelve months
ended

 

As of and
for the
quarter
ended

 



March 31, 2019

December 31, 2018

 

March 31, 2018

Spot Rate

 

 

 

 

 

 

Australian Dollar

0.7104

0.7046

 

0.7690

New Zealand Dollar

0.6820

0.6711

 

0.7239

Average Rate

 

 

 

 

 

 

Australian Dollar

0.7123

 

0.7479

 

0.7861

 

New Zealand Dollar

0.6816

 

0.6930

 

0.7275

 

 

Note 4 – Earnings Per Share



Basic earnings per share (“EPS”) is calculated by dividing the net income attributable to the Company’s common stockholders by the weighted average number of common shares outstanding during the period.  Diluted EPS is calculated by dividing the net income attributable to the Company’s common stockholders by the weighted average number of common and common equivalent shares outstanding during the period and is calculated using the treasury stock method for equity-based compensation awards



The following table sets forth the computation of basic and diluted EPS and a reconciliation of the weighted average number of common and common equivalent shares outstanding:







 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(Dollars in thousands, except share data)

 

2019

 

2018

Numerator:

 

 

 

 

 

 

Net income (loss) attributable to RDI common stockholders

 

$

(2,081)

 

$

3,082 

Denominator:

 

 

 

 

 

 

Weighted average number of common stock – basic

 

 

22,920,486 

 

 

22,967,237 

Weighted average dilutive impact of awards

 

 

203,620 

 

 

165,752 

Weighted average number of common stock – diluted

 

 

23,124,106 

 

 

23,132,989 

Basic earnings (loss) per share attributable to RDI common stockholders

 

$

(0.09)

 

$

0.13 

Diluted earnings (loss) per share attributable to RDI common stockholders

 

$

(0.09)

 

$

0.13 

Awards excluded from diluted earnings (loss) per share

 

 

496,089 

 

 

 —



Our weighted average number of common stock - basic decreased, primarily as a result of the repurchase of shares of Class A Non-Voting Common Stock pursuant to our current stock repurchase program offset by the issuance of shares due to the exercise of share options and vesting of restricted stock units.

 

 

11


 

Note 5 – Property and Equipment



Operating Property, net



As of March 31, 2019 and December 31, 2018, property associated with our operating activities is summarized as follows:







 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,

(Dollars in thousands)

 

2019

 

2018

Land

 

$

76,110 

 

$

75,689 

Building and improvements

 

 

151,525 

 

 

149,734 

Leasehold improvements

 

 

56,160 

 

 

55,299 

Fixtures and equipment

 

 

171,674 

 

 

167,943 

Construction-in-progress

 

 

3,185 

 

 

3,478 

Total cost

 

 

458,654 

 

 

452,143 

Less: accumulated depreciation

 

 

(201,252)

 

 

(194,476)

Operating property, net

 

$

257,402 

 

$

257,667 



Depreciation expense for operating property was $5.4 million for the quarter ended March 31, 2019 and $4.7 million for the quarter ended March 31, 2018.  



Investment and Development Property, net



As of March 31, 2019 and December 31, 2018, our investment and development property is summarized below:





 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,

(Dollars in thousands)

 

2019

 

2018

Land

 

$

24,310 

 

$

24,371 

Building

 

 

1,900 

 

 

1,900 

Construction-in-progress (including capitalized interest)

 

 

68,946 

 

 

60,533 

Investment and development property

 

$

95,156 

 

$

86,804 



Construction-in-Progress – Operating and Investing Properties



Construction-in-Progress balances are included in both our operating and development properties. The balances of our major projects along with the movements for the three months ended March 31, 2019 are shown below:







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Balance,
December 31,
2018

 

Additions during the period(1)

 

Completed
during the
period

 

Foreign
currency
translation

 

Balance,
March 31,
2019

Union Square development

 

$

55,634 

 

$

7,724 

 

$

 —

 

$

(1)

 

$

63,357 

Newmarket Property development

 

 

 

 

 

 

 —

 

 

 —

 

 

13 

Courtenay Central development

 

 

5,571 

 

 

234 

 

 

 —

 

 

94 

 

 

5,899 

Cinema developments and improvements

 

 

1,664 

 

 

3,551 

 

 

(3,997)

 

 

 

 

1,222 

Other real estate projects

 

 

1,133 

 

 

528 

 

 

(27)

 

 

 

 

1,640 

Total

 

$

64,011 

 

$

12,041 

 

$

(4,024)

 

$

103 

 

$

72,131 



(1)

Includes capitalized interest of $1.3 million for the quarter ended March 31, 2019.



Real Estate Transactions



Purchase of Income Producing Property at Auburn/Redyard, Australia –  On June 29, 2018, we added 20,870 square feet of land, improved with a 16,830 square foot office building, to our Auburn/Redyard ETC.  The property was acquired at auction for $3.5 million (AU$4.5 million) and is bordered by our existing ETC on three sides. The property is leased to Telstra through July 2022.  This will allow us time to plan for the efficient integration of the property into our ETC.  With this acquisition, Auburn/Redyard now represents approximately 519,992 square feet (48,309 square meters) of land, with approximately 1,620 feet (498 meters) of uninterrupted frontage to Parramatta Road, a major Sydney arterial motorway.



 

12


 

Purchase of Land at Cannon Park in Townsville, Australia – On June 13, 2018, we acquired a 163,000 square foot (15,150 square meter) parcel of land at our Cannon Park ETC, in connection with the restructuring of our relationship with the adjacent land owner. Prior to the restructuring, this parcel was commonly owned by us and the adjoining land owner. In the restructuring, the adjoining land owner conveyed to us its interest in the parcel for AU$1. We granted the adjoining land owner certain access rights with respect to that parcel.



Note 6 – Investments in Unconsolidated Joint Ventures



Our investments in unconsolidated joint ventures are accounted for under the equity method of accounting.



The table below summarizes our active investment holdings in two (2) unconsolidated joint ventures as of March 31, 2019 and December 31, 2018:





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

 

 

March 31,

 

December 31,

(Dollars in thousands)

 

Interest

 

2019

 

2018

Rialto Cinemas

 

50.0%

 

$

1,224 

 

$

1,260 

Mt. Gravatt

 

33.3%

 

 

3,734 

 

 

3,861 

Total investments

 

 

 

$

4,958 

 

$

5,121 



For the quarter ended March 31, 2019 and 2018, the recognized share of equity earnings from our investments in unconsolidated joint ventures are as follows:







 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(Dollars in thousands)

 

2019

 

2018

Rialto Cinemas

 

$

(56)

 

$

70 

Mt. Gravatt

 

 

90 

 

 

187 

Total equity earnings

 

$

34 

 

$

257 

 

Note 7 – Goodwill and Intangible Assets



The table below summarizes goodwill by business segment as of March 31, 2019 and December 31, 2018.  







 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Cinema

 

Real Estate

 

Total

Balance at, December 31, 2018

 

$

14,221 

 

$

5,224 

 

$

19,445 

Change in goodwill due to a purchase of business combination

 

 

1,248 

 

 

 —

 

 

1,248 

Foreign currency translation adjustment

 

 

143 

 

 

 —

 

 

143 

Balance at, March 31, 2019

 

$

15,612 

 

$

5,224 

 

$

20,836 



The Company is required to test goodwill and other intangible assets for impairment on an annual basis and, if current events or circumstances require, on an interim basis.  Our next annual evaluation of goodwill and other intangible assets is scheduled during the fourth quarter of 2019. To test the impairment of goodwill, the Company compares the fair value of each reporting unit to its carrying amount, including the goodwill, to determine if there is potential goodwill impairment. A reporting unit is generally one level below the operating segment. As of March 31, 2019, we were not aware that any events indicating potential impairment of goodwill had occurred.



The tables below summarize intangible assets other than goodwill as of March 31, 2019 and December 31, 2018, respectively.







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

As of March 31, 2019

(Dollars in thousands)

 

Beneficial
Leases

 

Trade
Name

 

Other
Intangible
Assets

 

Total

Gross carrying amount

 

$

15,069 

 

$

7,255 

 

$

1,999 

 

$

24,323 

Less: Accumulated amortization

 

 

(14,260)

 

 

(5,269)

 

 

(1,100)

 

 

(20,629)

Net intangible assets other than goodwill

 

$

809 

 

$

1,986 

 

$

899 

 

$

3,694 



 

13


 





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

As of December 31, 2018

(Dollars in thousands)

 

Beneficial
Leases

 

Trade
Name

 

Other
Intangible
Assets

 

Total

Gross carrying amount

 

$

28,592 

 

$

7,254 

 

$

1,951 

 

$

37,797 

Less: Accumulated amortization

 

 

(24,145)

 

 

(5,207)

 

 

(1,076)

 

 

(30,428)

Net intangible assets other than goodwill

 

$

4,447 

 

$

2,047 

 

$

875 

 

$

7,369 



Beneficial leases were amortized over the life of the lease up to 30 years up until January 1, 2019, when under ASC 842 they were incorporated into the relevant right-of-use asset. Trade names are amortized based on the accelerated amortization method over their estimated useful life of 30 years, and other intangible assets are amortized over their estimated useful lives of up to 30 years (except for transferrable liquor licenses, which are indefinite-lived assets).  The table below summarizes the amortization expense of intangible assets for the quarter ended March 31, 2019.  







 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(Dollars in thousands)

 

2019

 

2018

Beneficial lease amortization

 

$

79 

 

$

207 

Other amortization

 

 

22 

 

 

93 

Total intangible assets amortization

 

$

101 

 

$

300 

 

Note 8 – Prepaid and Other Assets



Prepaid and other assets are summarized as follows:







 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,

(Dollars in thousands)

 

2019

 

2018

Prepaid and other current assets

 

 

 

 

 

 

Prepaid expenses

 

$

2,105 

 

$

1,761 

Prepaid rent

 

 

1,020 

 

 

930 

Prepaid taxes

 

 

1,026 

 

 

646 

Income taxes receivable

 

 

4,106 

 

 

2,704 

Deposits

 

 

242 

 

 

242 

Investment in marketable securities

 

 

44 

 

 

42 

Restricted cash

 

 

1,099 

 

 

1,342 

Total prepaid and other current assets

 

$

9,642 

 

$

7,667 

Other non-current assets

 

 

 

 

 

 

Straight-line rent

 

 

4,219 

 

 

4,150 

Other non-cinema and non-rental real estate assets

 

 

1,134 

 

 

1,134 

Investment in Reading International Trust I

 

 

838 

 

 

838 

Long-term deposits

 

 

 

 

Long-term restricted cash

 

 

 —

 

 

 —

Total other non-current assets

 

$

6,199 

 

$

6,129 

 

Note 9 – Income Taxes



The interim provision for income taxes is different from the amount determined by applying the U.S. federal statutory rate to consolidated income before taxes.  The differences are attributable to foreign tax rate differential, unrecognized tax benefits, and foreign tax credits. Our effective tax rate was 33.2% and 27.3% for the three months ended March 31, 2019 and 2018, respectively. The change between 2019 and 2018 is primarily related to decrease in benefits from foreign tax credits and increase in valuation allowance related to our foreign operation.     



 

14


 

Note 10 – Debt



The Company’s borrowings at March 31, 2019 and December 31, 2018, net of deferred financing costs and including the impact of interest rate derivatives on effective interest rates, are summarized below: