In the news release, "Reading International, Inc. (Amex: <a href="http://www.readingrdi.com">RDI</a>) Announces
2nd Quarter 2008 Results," issued earlier today by Reading International, Inc.
over PR Newswire, we are advised by the company that in the first table named
"Supplemental Data," the row of values associated with: "Gain on sale of
unconsolidated entity," was incorrectly transmitted by PR Newswire. The
value, "2,450" was placed in the column "Three Months Ended, June 30, 2007"
and should have been placed in the column, "Six Months Ended, June 30, 2008."
Complete, corrected release follows:
Reading International Announces 2nd Quarter 2008 Results
- Revenue from continuing operations for the quarter was up 78.3% over the
2007 quarter, to $53.8 million
- Net Income for the quarter was $0.3 million compared to $1.6 million in the
2007 quarter
- EBITDA(1) for the quarter was $9.3 million up 30.9%, compared to
$7.1 million in 2007 quarter
LOS ANGELES, Aug. 7 /PRNewswire-FirstCall/ -- Reading International, Inc.
(Amex: RDI) announced today results for its quarter and six months ended
June 30, 2008.
Our year-to-year results of operations were principally impacted by the
following:
-- the acquisition on February 22, 2008, of 14 cinemas with 173 screens in
Hawaii and California and an agreement to manage one cinema with
8 screens in Hawaii, the "Consolidated Entertainment" acquisition;
-- the recognition of a gain on the sale of our unconsolidated 50%
interest in the cinema at Botany Downs, Auckland, New Zealand;
-- the receipt of litigation and insurance proceeds offset by fewer sales
of our Place 57 residential condominium units which have now been sold
out with the exception of the one retail unit; and
-- the change in the value of the Australian and New Zealand dollars
vis-a-vis the US dollar from $0.8491 and $0.7730, respectively, as of
June 30, 2007 to $0.9562 and $0.7609, respectively, as of June 30,
2008.
which resulted in:
-- revenue growth of $23.7 million or 78.3% to $53.8 million, compared to
$30.1 million in the 2007 quarter;
-- income from continuing operations of $284,000 in the 2008 quarter
compared to a loss from continuing operations of $278,000 in the 2007
quarter; and
-- EBITDA(1) of $9.3 million in the 2008 quarter compared to $7.1 million
in the 2007 quarter, an increase of 30.9%.
Second Quarter 2008 Discussion
Revenue from continuing operations increased from $30.1 million in the
2007 quarter to $53.8 million in 2008, a 78.3% increase. Cinema revenue
increased for the 2008 quarter by $23.5 million or 90.1% compared to the same
period in 2007. The increase was primarily a result of $21.3 million of
revenue from our newly acquired Consolidated Entertainment cinemas and
improved results from our Australia operations including $1.2 million from
admissions and $710,000 from concessions and other revenues, offset by lower
cinema revenues from our New Zealand operations of $509,000. The top 3
grossing films in our circuit worldwide were "Iron Man," "Indiana Jones & the
Kingdom of the Crystal Skull" and "Sex in the City," which between them
accounted for approximately 31% of our cinema box office revenue. Real estate
revenue increased for the 2008 Quarter by $249,000 or 4.5% compared to the
same period in 2007. The increase was primarily related to rental revenues
from our newly acquired Consolidated Entertainment cinemas that have ancillary
real estate and an increase in revenues from our U.S. live theatres.
As a percent of revenue, cinema/real estate operating expense, at 82.0% in
the 2008 quarter, was higher than the 72.3% of the 2007 quarter. The primary
driver for this was an increase in cinema costs driven by the US and primarily
related to higher film rent expense associated with our newly acquired
Consolidated Entertainment cinemas whose film product is primarily wide
release films resulting in higher film rent cost compared to our predominately
pre-acquisition art cinemas, which generally have lower film rent costs.
Depreciation and amortization increased by $2.5 million or 81.4%, from
$3.0 million in the 2007 quarter, to $5.5 million in the 2008 quarter,
primarily related to our newly acquired Consolidated Entertainment cinema
assets.
General and administrative expense increased by $1.0 million or 26.6%,
from $3.9 million to $4.9 million in the 2008 quarter. This increase was
primarily due to additional pension costs in 2008 for our Chief Operating
Officer; cost related to the Supplemental Executive Retirement Plan; and legal
and professional fees associated principally with our real estate acquisition
and investment activities.
Net interest expense increased by $1.1 million or 55.8% for the 2008
quarter compared to last year, primarily related to higher outstanding loan
balances during the 2008 quarter compared to the 2007 quarter associated with
our current year's acquisitions.
Other income increased by $1.0 million for the 2008 quarter compared to
last year. The primary reasons were a $314,000 receipt related to our
Burstone litigation and $910,000 of insurance proceeds related to damage
caused by Hurricane George in 1998 to one of our previously owned cinemas in
Puerto Rico. This increase was somewhat offset by the reduced sales of our
Place 57 units in the 2008 quarter compared to the prior year.
During the three months ended June 30, 2007, upon the fulfillment of our
commitment, we recorded the release of a deferred gain on the sale of a
discontinued operation of $1.9 million associated with a previously sold
property.
In the 2008 quarter we recorded a gain on sale of unconsolidated entities
of $2.5 million from the sale of our 50% interest in the cinema at Botany
Downs in Auckland, New Zealand.
As a result of the above, we reported a net income of $284,000 for the
2008 quarter compared to $1.6 million in the 2007 quarter.
Our EBITDA(1) at $9.3 million for the 2008 quarter was $2.2 million higher
than the 2007 quarter of $7.1 million, driven by better operating margins
(approximately $300,000); the litigation and insurance proceeds (approximately
$1.2 million) and the gain on sale of an unconsolidated entity ($2.5 million),
offset by the non-recurring gain on sale of discontinued operations in the
2007 quarter ($1.9 million).
First Half 2008 Summary
Revenue from continuing operations increased by 60.9% or $35.4 million, to
$93.5 million in the six months of 2008 compared to 2007. This increase was
driven by an increase in cinema revenue for the 2008 period of $34.3 million
or 67.8% compared to the same period in 2007. The 2008 increase was primarily
a result of $27.8 million of revenue from our newly acquired Consolidated
Entertainment cinemas and improved results from our Australia and New Zealand
operations including $4.1 million from admissions and $2.0 million from
concessions and other revenues. The same three films that were the top
grossing films in the quarter were the top three grossing films for the six
months of 2008, accounting for 19.4% of our cinema box office revenue. The
real estate revenue increase of $1.4 million or 13.1% was driven by the same
reasons as for the quarter, together with increases in revenues in Australia
and New Zealand.
As a percent of revenue, cinema/real estate operating expense, at 78.7% in
the 2008 six months, was higher than the 72.1% of the 2007 six months. The
primary drivers were the same factors that drove the 2008 quarter, above.
Depreciation and amortization increased by $3.4 million to $9.4 million in
2008 from $6.0 million in 2007, driven primarily by our newly acquired
Consolidated Entertainment cinema assets, added during the 2008 period.
General and administrative expense increased by $2.0 million in the 2008
six months compared to the 2007 period. As for the quarter, this increase was
primarily due to additional pension costs in 2008 for our Chief Operating
Officer, cost related to the Supplemental Executive Retirement Plan, and legal
and professional fees associated principally with our real estate acquisition
and investment activities.
Net interest expense increased by $2.2 million for the 2008 six months
compared to last year, primarily related to higher outstanding loan balances
during the 2008 period compared to 2007 associated with our current year's
acquisitions.
Other income increased by approximately $2.0 million for the 2008 six
months compared to last year. The increase was primarily related to the
aforementioned insurance proceeds of $910,000, coupled with cumulative
year-to-date settlements on our Burstone litigation of $1.2 million and credit
card dispute of $385,000.
During the six months ended June 30, 2007, upon the fulfillment of our
commitment, we recorded the release of a deferred gain on the sale of a
discontinued operation of $1.9 million associated with a previously sold
property.
In 2008 we recorded a gain on sale of unconsolidated entities of
$2.5 million from the sale of our 50% interest in the cinema at Botany Downs
in Auckland, New Zealand.
As a result, we reported a net income of $56,000 for the 2008 six months
compared to $988,000 in the 2007 six months.
Our EBITDA(1) at $16.2 million for the 2008 six months was $4.5 million
higher than the 2007 six months of $11.7 million, driven by better operating
margins (approximately $1.6 million), the increases in other income described
above ($2.0 million), and the gain on sale of an unconsolidated entity
($2.5 million) offset by the non-recurring gain on sale of discontinued
operations in the 2007 quarter ($1.9 million).
Balance Sheet
Our total assets at June 30, 2008 were $436.8 million compared to
$346.1 million at December 31, 2007. The currency exchange rates for
Australia and New Zealand as of June 30, 2008 were $0.9562 and $0.7609,
respectively, and as of December 31, 2007, these rates were $0.8776 and
$0.7678, respectively. As a result, currency had a net positive effect on the
balance sheet at June 30, 2008 compared to December 31, 2007.
Our cash position at June 30, 2008 was $26.8 million compared to
$20.8 million at December 31, 2007.
In addition, we have approximately $5.3 million (AUS$5.5 million) in
undrawn funds under our Australian Corporate Credit Facility, $43.2 million
(NZ$56.8 million) under our New Zealand Line of Credit, and $5.0 million under
our GECC Line of Credit, to meet our anticipated short-term working capital
requirements.
Our positive working capital at June 30, 2008 was $12.2 million compared
to $6.3 million at December 31, 2007. Negative working capital is typical in
the cinema industry, due to the lag time between the collection of box office
and concession receipts and the payment of film distributors and vendors.
Stockholders' equity was $128.8 million at June 30, 2008 compared to
$121.4 at December 31, 2007.
Subsequent Event
The Sellers of the assets of our Consolidated Entertainment cinemas'
acquisition, agreed to provide us up to three additional loans. We drew down
on the first and second of these loans of $3.0 million and $1.5 million,
respectively, on July 21, 2008.
(1) The Company defines EBITDA as net income (loss) before net interest
expense, income tax benefit, depreciation, and amortization. EBITDA
is presented solely as a supplemental disclosure as we believe it to
be a relevant and useful measure to compare operating results among
our properties and competitors, as well as a measurement tool for
evaluation of operating personnel. EBITDA is not a measure of
financial performance under the promulgations of generally accepted
accounting principles ("GAAP"). EBITDA should not be considered in
isolation from, or as a substitute for, net loss, operating loss or
cash flows from operations determined in accordance with GAAP.
Finally, EBITDA is not calculated in the same manner by all companies
and accordingly, may not be an appropriate measure for comparing
performance amongst different companies. See the "Supplemental Data"
table attached for a reconciliation of EBITDA to net income (loss).
About Reading International, Inc.
Reading International (http://www.readingrdi.com) is in the business of
owning and operating cinemas and developing, owning and operating real estate
assets. Our business consists primarily of:
-- the development, ownership and operation of multiplex cinemas in the
United States, Australia and New Zealand; and
-- the development, ownership and operation of retail and commercial real
estate in Australia, New Zealand and the United States, including
entertainment-themed retail centers ("ETRC") in Australia and New
Zealand and live theater assets in Manhattan and Chicago in the United
States.
Reading manages its worldwide cinema business under various different
brands:
Our statements in this press release contain a variety of forward-looking
statements as defined by the Securities Litigation Reform Act of 1995.
Forward-looking statements reflect only our expectations regarding future
events and operating performance and necessarily speak only as of the date the
information was prepared. No guarantees can be given that our expectation
will in fact be realized, in whole or in part. You can recognize these
statements by our use of words such as, by way of example, "may," "will,"
"expect," "believe," and "anticipate" or other similar terminology.
These forward-looking statements reflect our expectation after having
considered a variety of risks and uncertainties. However, they are
necessarily the product of internal discussion and do not necessarily
completely reflect the views of individual members of our Board of Directors
or of our management team. Individual Board members and individual members of
our management team may have different view as to the risks and uncertainties
involved, and may have different views as to future events or our operating
performance.
Among the factors that could cause actual results to differ materially
from those expressed in or underlying our forward-looking statements are the
following:
-- With respect to our cinema operations:
-- The number and attractiveness to movie goers of the films released
in future periods;
-- 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;
and
-- The extent to which we encounter competition from other cinema
exhibitors, from other sources of outside of the home entertainment,
and from inside the home entertainment options, such as "home
theaters" and competitive film product distribution technology such
as, by way of example, cable, satellite broadcast, DVD and VHS
rentals and sales, and so called "movies on demand;"
-- With respect to our real estate development and operation activities:
-- The rental rates and capitalization rates applicable to the markets
in which we operate and the quality of properties that we own;
-- 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;
-- Competition for development sites and tenants; and
-- The extent to which our cinemas can continue to serve as an anchor
tenant which will, in turn, be influenced by the same factors as
will influence generally the results of our cinema operations;
-- 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 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;
-- 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 implementation of the requirements of
Sarbanes-Oxley;
-- Our labor relations and costs of labor (including future government
requirements with respect to pension liabilities, disability
insurance and health coverage, and vacations and leave);
-- 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;
-- Changes in future effective tax rates and the results of currently
ongoing and future potential audits by taxing authorities having
jurisdiction over our various companies; and
-- Changes in applicable accounting policies and practices.
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, and the extent to which consumers in our
markets have the economic wherewithal to spend money on beyond-the-home
entertainment.
Given the variety and unpredictability of the factors that will ultimately
influence our businesses and our results of operation, it naturally follows
that 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.
Finally, please understand that 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.
Additionally, certain of the presentations included in this press release
may contain "pro forma" information or "non-US GAAP financial measures." In
such case, a reconciliation of this information to our US GAAP financial
statements will be made available in connection with such statements.
Reading International, Inc. and Subsidiaries
Supplemental Data
Reconciliation of EBITDA to Net Earnings (Unaudited)
(dollars in thousands, except per share amounts)
Statements of Operations Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue $53,751 $30,139 $93,478 $58,115
Operating expense
Cinema/real estate 44,076 21,795 73,595 41,916
Depreciation and amortization 5,528 3,047 9,411 6,016
General and administrative 4,909 3,879 9,597 7,555
Operating (loss) income (762) 1,418 875 2,628
Interest expense, net (3,039) (1,950) (5,876) (3,701)
Other income 1,860 851 3,592 1,586
Gain on sale of discontinued
operations -- 1,912 -- 1,912
Gain on sale of unconsolidated
entity 2,450 -- 2,450 --
Income tax expense (407) (443) (824) (942)
Minority interest expense 182 (154) (161) (495)
Net income $284 $1,634 $56 $988
Basic and diluted earnings per
share $0.01 $0.07 $0.00 $0.04
EBITDA* $9,258 $7,074 $16,167 $11,647
EBITDA* change $2,184 $4,520
* EBITDA presented above is net income adjusted for interest expense (net
of interest income), income tax expense, depreciation and amortization
expense, and an adjustment for discontinued operations (this includes
interest expense and depreciation and amortization for the discontinued
operations).
Reconciliation of EBITDA to the net income (loss) is presented below:
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net earnings $284 $1,634 $56 $988
Add: Interest expense, net 3,039 1,950 5,876 3,701
Add: Income tax provision 407 443 824 942
Add: Depreciation and
amortization 5,528 3,047 9,411 6,016
EBITDA $9,258 $7,074 $16,167 $11,647
Reading International, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(U.S. dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue
Cinema $49,488 $26,034 $84,831 $50,540
Real estate 4,263 4,105 8,647 7,575
53,751 30,139 93,478 58,115
Operating expense
Cinema 41,780 19,931 69,185 38,051
Real estate 2,296 1,864 4,410 3,865
Depreciation and
amortization 5,528 3,047 9,411 6,016
General and administrative 4,909 3,879 9,597 7,555
54,513 28,721 92,603 55,487
Operating income (loss) (762) 1,418 875 2,628
Non-operating income (expense)
Interest income 365 84 603 229
Interest expense (3,404) (2,034) (6,479) (3,930)
Net loss on sale of assets -- -- -- (185)
Other income (expense) 1,671 465 3,045 (271)
Loss before minority interest
expense, discontinued
operations, income tax
expense, and equity
earnings of unconsolidated
joint ventures and
entities (2,130) (67) (1,956) (1,529)
Minority interest income
(expense) 182 (154) (161) (495)
Loss before discontinued
operations, income tax
expense, and equity earnings
of unconsolidated joint
ventures and entities (1,948) (221) (2,117) (2,024)
Gain on sale of a
discontinued operation -- 1,912 -- 1,912
Income (loss) before income
tax expense and equity
earnings of unconsolidated
joint ventures and
entities (1,948) 1,691 (2,117) (112)
Income tax expense (407) (443) (824) (942)
Income (loss) before equity
earnings of unconsolidated
joint ventures and entities (2,355) 1,248 (2,941) (1,054)
Equity earnings of
unconsolidated joint
ventures and entities 189 386 547 2,042
Gain on sale of
unconsolidated entity 2,450 -- 2,450 --
Net income $284 $1,634 $56 $988
Earnings (loss) per common
share - basic and diluted:
Earnings (loss) from
continuing operations $0.01 $(0.01) $0.00 $(0.04)
Earnings from discontinued
operations 0.00 0.08 0.00 0.08
Basic and diluted earnings
per share $0.01 $0.07 $0.00 $0.04
Weighted average number of
shares outstanding
- basic 22,476,355 22,487,943 22,476,355 22,485,480
Weighted average number
of shares outstanding
- dilutive 22,763,826 22,487,943 22,763,826 22,485,480
Reading International, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(U.S. dollars in thousands)
June 30, December 31,
2008 2007
ASSETS
Current Assets:
Cash and cash equivalents $26,752 $20,782
Receivables 7,116 5,671
Inventory 816 654
Investment in marketable securities 4,939 4,533
Restricted cash 59 59
Prepaid and other current assets 2,230 3,800
Total current assets 41,912 35,499
Land held for sale 1,954 1,984
Property held for development 13,844 11,068
Property under development 77,725 66,787
Property & equipment, net 223,435 178,174
Investment in unconsolidated joint ventures and
entities 15,369 15,480
Investment in Reading International Trust I 1,547 1,547
Goodwill 25,697 19,100
Intangible assets, net 24,866 8,448
Other assets 10,494 7,984
Total assets $436,843 $346,071
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $13,814 $12,331
Film rent payable 6,471 3,275
Notes payable - current portion 1,253 395
Note payable to related party - current portion -- 5,000
Taxes payable 5,137 4,770
Deferred current revenue 2,881 3,214
Other current liabilities 200 169
Total current liabilities 29,756 29,154
Notes payable - long-term portion 187,677 111,253
Notes payable to related party - long-term portion 14,000 9,000
Subordinated debt 51,547 51,547
Noncurrent tax liabilities 5,672 5,418
Deferred non-current revenue 619 566
Other liabilities 16,379 14,936
Total liabilities 305,650 221,874
Commitments and contingencies
Minority interest in consolidated affiliates 2,344 2,835
Stockholders' equity:
Class A Nonvoting Common Stock, par value $0.01,
100,000,000 shares authorized, 35,564,339 issued
and 20,987,115 outstanding at June 30, 2008 and
at December 31, 2007 216 216
Class B Voting Common Stock, par value $0.01,
20,000,000 shares authorized and 1,495,490 issued
and outstanding at June 30, 2008 and at
December 31, 2007 15 15
Nonvoting Preferred Stock, par value $0.01,
12,000 shares authorized and no outstanding
shares -- --
Additional paid-in capital 132,446 131,930
Accumulated deficit (52,614) (52,670)
Treasury shares (4,306) (4,306)
Accumulated other comprehensive income 53,092 46,177
Total stockholders' equity 128,849 121,362
Total liabilities and stockholders' equity $436,843 $346,071
Contact Information:
Reading International, Inc.
Andrzej Matyczynski
Telephone: (213) 235-2240
------
Reading International Announces 2nd Quarter 2008 Results
- Revenue from continuing operations for the quarter was up 78.3% over the 2007 quarter, to $53.8 million - Net Income for the quarter was $0.3 million compared to $1.6 million in the 2007 quarter - EBITDA(1) for the quarter was $9.3 million up 30.9%, compared to $7.1 million in 2007 quarter
LOS ANGELES, Aug. 7 /PRNewswire-FirstCall/ -- Reading International, Inc.
(Amex: RDI) announced today results for its quarter and six months ended
June 30, 2008.
Our year-to-year results of operations were principally impacted by the
following:
-- the acquisition on February 22, 2008, of 14 cinemas with 173 screens in
Hawaii and California and an agreement to manage one cinema with
8 screens in Hawaii, the "Consolidated Entertainment" acquisition;
-- the recognition of a gain on the sale of our unconsolidated 50%
interest in the cinema at Botany Downs, Auckland, New Zealand;
-- the receipt of litigation and insurance proceeds offset by fewer sales
of our Place 57 residential condominium units which have now been sold
out with the exception of the one retail unit; and
-- the change in the value of the Australian and New Zealand dollars
vis-a-vis the US dollar from $0.8491 and $0.7730, respectively, as of
June 30, 2007 to $0.9562 and $0.7609, respectively, as of June 30,
2008.
which resulted in:
-- revenue growth of $23.7 million or 78.3% to $53.8 million, compared to
$30.1 million in the 2007 quarter;
-- income from continuing operations of $284,000 in the 2008 quarter
compared to a loss from continuing operations of $278,000 in the 2007
quarter; and
-- EBITDA(1) of $9.3 million in the 2008 quarter compared to $7.1 million
in the 2007 quarter, an increase of 30.9%.
Second Quarter 2008 Discussion
Revenue from continuing operations increased from $30.1 million in the
2007 quarter to $53.8 million in 2008, a 78.3% increase. Cinema revenue
increased for the 2008 quarter by $23.5 million or 90.1% compared to the same
period in 2007. The increase was primarily a result of $21.3 million of
revenue from our newly acquired Consolidated Entertainment cinemas and
improved results from our Australia operations including $1.2 million from
admissions and $710,000 from concessions and other revenues, offset by lower
cinema revenues from our New Zealand operations of $509,000. The top 3
grossing films in our circuit worldwide were "Iron Man," "Indiana Jones & the
Kingdom of the Crystal Skull" and "Sex in the City," which between them
accounted for approximately 31% of our cinema box office revenue. Real estate
revenue increased for the 2008 Quarter by $249,000 or 4.5% compared to the
same period in 2007. The increase was primarily related to rental revenues
from our newly acquired Consolidated Entertainment cinemas that have ancillary
real estate and an increase in revenues from our U.S. live theatres.
As a percent of revenue, cinema/real estate operating expense, at 82.0% in
the 2008 quarter, was higher than the 72.3% of the 2007 quarter. The primary
driver for this was an increase in cinema costs driven by the US and primarily
related to higher film rent expense associated with our newly acquired
Consolidated Entertainment cinemas whose film product is primarily wide
release films resulting in higher film rent cost compared to our predominately
pre-acquisition art cinemas, which generally have lower film rent costs.
Depreciation and amortization increased by $2.5 million or 81.4%, from
$3.0 million in the 2007 quarter, to $5.5 million in the 2008 quarter,
primarily related to our newly acquired Consolidated Entertainment cinema
assets.
General and administrative expense increased by $1.0 million or 26.6%,
from $3.9 million to $4.9 million in the 2008 quarter. This increase was
primarily due to additional pension costs in 2008 for our Chief Operating
Officer; cost related to the Supplemental Executive Retirement Plan; and legal
and professional fees associated principally with our real estate acquisition
and investment activities.
Net interest expense increased by $1.1 million or 55.8% for the 2008
quarter compared to last year, primarily related to higher outstanding loan
balances during the 2008 quarter compared to the 2007 quarter associated with
our current year's acquisitions.
Other income increased by $1.0 million for the 2008 quarter compared to
last year. The primary reasons were a $314,000 receipt related to our
Burstone litigation and $910,000 of insurance proceeds related to damage
caused by Hurricane George in 1998 to one of our previously owned cinemas in
Puerto Rico. This increase was somewhat offset by the reduced sales of our
Place 57 units in the 2008 quarter compared to the prior year.
During the three months ended June 30, 2007, upon the fulfillment of our
commitment, we recorded the release of a deferred gain on the sale of a
discontinued operation of $1.9 million associated with a previously sold
property.
In the 2008 quarter we recorded a gain on sale of unconsolidated entities
of $2.5 million from the sale of our 50% interest in the cinema at Botany
Downs in Auckland, New Zealand.
As a result of the above, we reported a net income of $284,000 for the
2008 quarter compared to $1.6 million in the 2007 quarter.
Our EBITDA(1) at $9.3 million for the 2008 quarter was $2.2 million higher
than the 2007 quarter of $7.1 million, driven by better operating margins
(approximately $300,000); the litigation and insurance proceeds (approximately
$1.2 million) and the gain on sale of an unconsolidated entity ($2.5 million),
offset by the non-recurring gain on sale of discontinued operations in the
2007 quarter ($1.9 million).
First Half 2008 Summary
Revenue from continuing operations increased by 60.9% or $35.4 million, to
$93.5 million in the six months of 2008 compared to 2007. This increase was
driven by an increase in cinema revenue for the 2008 period of $34.3 million
or 67.8% compared to the same period in 2007. The 2008 increase was primarily
a result of $27.8 million of revenue from our newly acquired Consolidated
Entertainment cinemas and improved results from our Australia and New Zealand
operations including $4.1 million from admissions and $2.0 million from
concessions and other revenues. The same three films that were the top
grossing films in the quarter were the top three grossing films for the six
months of 2008, accounting for 19.4% of our cinema box office revenue. The
real estate revenue increase of $1.4 million or 13.1% was driven by the same
reasons as for the quarter, together with increases in revenues in Australia
and New Zealand.
As a percent of revenue, cinema/real estate operating expense, at 78.7% in
the 2008 six months, was higher than the 72.1% of the 2007 six months. The
primary drivers were the same factors that drove the 2008 quarter, above.
Depreciation and amortization increased by $3.4 million to $9.4 million in
2008 from $6.0 million in 2007, driven primarily by our newly acquired
Consolidated Entertainment cinema assets, added during the 2008 period.
General and administrative expense increased by $2.0 million in the 2008
six months compared to the 2007 period. As for the quarter, this increase was
primarily due to additional pension costs in 2008 for our Chief Operating
Officer, cost related to the Supplemental Executive Retirement Plan, and legal
and professional fees associated principally with our real estate acquisition
and investment activities.
Net interest expense increased by $2.2 million for the 2008 six months
compared to last year, primarily related to higher outstanding loan balances
during the 2008 period compared to 2007 associated with our current year's
acquisitions.
Other income increased by approximately $2.0 million for the 2008 six
months compared to last year. The increase was primarily related to the
aforementioned insurance proceeds of $910,000, coupled with cumulative
year-to-date settlements on our Burstone litigation of $1.2 million and credit
card dispute of $385,000.
During the six months ended June 30, 2007, upon the fulfillment of our
commitment, we recorded the release of a deferred gain on the sale of a
discontinued operation of $1.9 million associated with a previously sold
property.
In 2008 we recorded a gain on sale of unconsolidated entities of
$2.5 million from the sale of our 50% interest in the cinema at Botany Downs
in Auckland, New Zealand.
As a result, we reported a net income of $56,000 for the 2008 six months
compared to $988,000 in the 2007 six months.
Our EBITDA(1) at $16.2 million for the 2008 six months was $4.5 million
higher than the 2007 six months of $11.7 million, driven by better operating
margins (approximately $1.6 million), the increases in other income described
above ($2.0 million), and the gain on sale of an unconsolidated entity
($2.5 million) offset by the non-recurring gain on sale of discontinued
operations in the 2007 quarter ($1.9 million).
Balance Sheet
Our total assets at June 30, 2008 were $436.8 million compared to
$346.1 million at December 31, 2007. The currency exchange rates for
Australia and New Zealand as of June 30, 2008 were $0.9562 and $0.7609,
respectively, and as of December 31, 2007, these rates were $0.8776 and
$0.7678, respectively. As a result, currency had a net positive effect on the
balance sheet at June 30, 2008 compared to December 31, 2007.
Our cash position at June 30, 2008 was $26.8 million compared to
$20.8 million at December 31, 2007.
In addition, we have approximately $5.3 million (AUS$5.5 million) in
undrawn funds under our Australian Corporate Credit Facility, $43.2 million
(NZ$56.8 million) under our New Zealand Line of Credit, and $5.0 million under
our GECC Line of Credit, to meet our anticipated short-term working capital
requirements.
Our positive working capital at June 30, 2008 was $12.2 million compared
to $6.3 million at December 31, 2007. Negative working capital is typical in
the cinema industry, due to the lag time between the collection of box office
and concession receipts and the payment of film distributors and vendors.
Stockholders' equity was $128.8 million at June 30, 2008 compared to
$121.4 at December 31, 2007.
Subsequent Event
The Sellers of the assets of our Consolidated Entertainment cinemas'
acquisition, agreed to provide us up to three additional loans. We drew down
on the first and second of these loans of $3.0 million and $1.5 million,
respectively, on July 21, 2008.
(1) The Company defines EBITDA as net income (loss) before net interest
expense, income tax benefit, depreciation, and amortization. EBITDA
is presented solely as a supplemental disclosure as we believe it to
be a relevant and useful measure to compare operating results among
our properties and competitors, as well as a measurement tool for
evaluation of operating personnel. EBITDA is not a measure of
financial performance under the promulgations of generally accepted
accounting principles ("GAAP"). EBITDA should not be considered in
isolation from, or as a substitute for, net loss, operating loss or
cash flows from operations determined in accordance with GAAP.
Finally, EBITDA is not calculated in the same manner by all companies
and accordingly, may not be an appropriate measure for comparing
performance amongst different companies. See the "Supplemental Data"
table attached for a reconciliation of EBITDA to net income (loss).
About Reading International, Inc.
Reading International (http://www.readingrdi.com) is in the business of
owning and operating cinemas and developing, owning and operating real estate
assets. Our business consists primarily of:
-- the development, ownership and operation of multiplex cinemas in the
United States, Australia and New Zealand; and
-- the development, ownership and operation of retail and commercial real
estate in Australia, New Zealand and the United States, including
entertainment-themed retail centers ("ETRC") in Australia and New
Zealand and live theater assets in Manhattan and Chicago in the United
States.
Reading manages its worldwide cinema business under various different
brands:
Our statements in this press release contain a variety of forward-looking
statements as defined by the Securities Litigation Reform Act of 1995.
Forward-looking statements reflect only our expectations regarding future
events and operating performance and necessarily speak only as of the date the
information was prepared. No guarantees can be given that our expectation
will in fact be realized, in whole or in part. You can recognize these
statements by our use of words such as, by way of example, "may," "will,"
"expect," "believe," and "anticipate" or other similar terminology.
These forward-looking statements reflect our expectation after having
considered a variety of risks and uncertainties. However, they are
necessarily the product of internal discussion and do not necessarily
completely reflect the views of individual members of our Board of Directors
or of our management team. Individual Board members and individual members of
our management team may have different view as to the risks and uncertainties
involved, and may have different views as to future events or our operating
performance.
Among the factors that could cause actual results to differ materially
from those expressed in or underlying our forward-looking statements are the
following:
-- With respect to our cinema operations:
-- The number and attractiveness to movie goers of the films released
in future periods;
-- 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;
and
-- The extent to which we encounter competition from other cinema
exhibitors, from other sources of outside of the home entertainment,
and from inside the home entertainment options, such as "home
theaters" and competitive film product distribution technology such
as, by way of example, cable, satellite broadcast, DVD and VHS
rentals and sales, and so called "movies on demand;"
-- With respect to our real estate development and operation activities:
-- The rental rates and capitalization rates applicable to the markets
in which we operate and the quality of properties that we own;
-- 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;
-- Competition for development sites and tenants; and
-- The extent to which our cinemas can continue to serve as an anchor
tenant which will, in turn, be influenced by the same factors as
will influence generally the results of our cinema operations;
-- 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 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;
-- 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 implementation of the requirements of
Sarbanes-Oxley;
-- Our labor relations and costs of labor (including future government
requirements with respect to pension liabilities, disability
insurance and health coverage, and vacations and leave);
-- 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;
-- Changes in future effective tax rates and the results of currently
ongoing and future potential audits by taxing authorities having
jurisdiction over our various companies; and
-- Changes in applicable accounting policies and practices.
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, and the extent to which consumers in our
markets have the economic wherewithal to spend money on beyond-the-home
entertainment.
Given the variety and unpredictability of the factors that will ultimately
influence our businesses and our results of operation, it naturally follows
that 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.
Finally, please understand that 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.
Additionally, certain of the presentations included in this press release
may contain "pro forma" information or "non-US GAAP financial measures." In
such case, a reconciliation of this information to our US GAAP financial
statements will be made available in connection with such statements.
Reading International, Inc. and Subsidiaries
Supplemental Data
Reconciliation of EBITDA to Net Earnings (Unaudited)
(dollars in thousands, except per share amounts)
Statements of Operations Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue $53,751 $30,139 $93,478 $58,115
Operating expense
Cinema/real estate 44,076 21,795 73,595 41,916
Depreciation and amortization 5,528 3,047 9,411 6,016
General and administrative 4,909 3,879 9,597 7,555
Operating (loss) income (762) 1,418 875 2,628
Interest expense, net (3,039) (1,950) (5,876) (3,701)
Other income 1,860 851 3,592 1,586
Gain on sale of discontinued
operations -- 1,912 -- 1,912
Gain on sale of unconsolidated
entity 2,450 2,450
Income tax expense (407) (443) (824) (942)
Minority interest expense 182 (154) (161) (495)
Net income $284 $1,634 $56 $988
Basic and diluted earnings per
share $0.01 $0.07 $0.00 $0.04
EBITDA* $9,258 $7,074 $16,167 $11,647
EBITDA* change $2,184 $4,520
* EBITDA presented above is net income adjusted for interest expense (net
of interest income), income tax expense, depreciation and amortization
expense, and an adjustment for discontinued operations (this includes
interest expense and depreciation and amortization for the discontinued
operations).
Reconciliation of EBITDA to the net income (loss) is presented below:
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net earnings $284 $1,634 $56 $988
Add: Interest expense, net 3,039 1,950 5,876 3,701
Add: Income tax provision 407 443 824 942
Add: Depreciation and
amortization 5,528 3,047 9,411 6,016
EBITDA $9,258 $7,074 $16,167 $11,647
Reading International, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(U.S. dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue
Cinema $49,488 $26,034 $84,831 $50,540
Real estate 4,263 4,105 8,647 7,575
53,751 30,139 93,478 58,115
Operating expense
Cinema 41,780 19,931 69,185 38,051
Real estate 2,296 1,864 4,410 3,865
Depreciation and
amortization 5,528 3,047 9,411 6,016
General and administrative 4,909 3,879 9,597 7,555
54,513 28,721 92,603 55,487
Operating income (loss) (762) 1,418 875 2,628
Non-operating income (expense)
Interest income 365 84 603 229
Interest expense (3,404) (2,034) (6,479) (3,930)
Net loss on sale of assets -- -- -- (185)
Other income (expense) 1,671 465 3,045 (271)
Loss before minority interest
expense, discontinued
operations, income tax
expense, and equity
earnings of unconsolidated
joint ventures and
entities (2,130) (67) (1,956) (1,529)
Minority interest income
(expense) 182 (154) (161) (495)
Loss before discontinued
operations, income tax
expense, and equity earnings
of unconsolidated joint
ventures and entities (1,948) (221) (2,117) (2,024)
Gain on sale of a
discontinued operation -- 1,912 -- 1,912
Income (loss) before income
tax expense and equity
earnings of unconsolidated
joint ventures and
entities (1,948) 1,691 (2,117) (112)
Income tax expense (407) (443) (824) (942)
Income (loss) before equity
earnings of unconsolidated
joint ventures and entities (2,355) 1,248 (2,941) (1,054)
Equity earnings of
unconsolidated joint
ventures and entities 189 386 547 2,042
Gain on sale of
unconsolidated entity 2,450 -- 2,450 --
Net income $284 $1,634 $56 $988
Earnings (loss) per common
share - basic and diluted:
Earnings (loss) from
continuing operations $0.01 $(0.01) $0.00 $(0.04)
Earnings from discontinued
operations 0.00 0.08 0.00 0.08
Basic and diluted earnings
per share $0.01 $0.07 $0.00 $0.04
Weighted average number of
shares outstanding
- basic 22,476,355 22,487,943 22,476,355 22,485,480
Weighted average number
of shares outstanding
- dilutive 22,763,826 22,487,943 22,763,826 22,485,480
Reading International, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(U.S. dollars in thousands)
June 30, December 31,
2008 2007
ASSETS
Current Assets:
Cash and cash equivalents $26,752 $20,782
Receivables 7,116 5,671
Inventory 816 654
Investment in marketable securities 4,939 4,533
Restricted cash 59 59
Prepaid and other current assets 2,230 3,800
Total current assets 41,912 35,499
Land held for sale 1,954 1,984
Property held for development 13,844 11,068
Property under development 77,725 66,787
Property & equipment, net 223,435 178,174
Investment in unconsolidated joint ventures and
entities 15,369 15,480
Investment in Reading International Trust I 1,547 1,547
Goodwill 25,697 19,100
Intangible assets, net 24,866 8,448
Other assets 10,494 7,984
Total assets $436,843 $346,071
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $13,814 $12,331
Film rent payable 6,471 3,275
Notes payable - current portion 1,253 395
Note payable to related party - current portion -- 5,000
Taxes payable 5,137 4,770
Deferred current revenue 2,881 3,214
Other current liabilities 200 169
Total current liabilities 29,756 29,154
Notes payable - long-term portion 187,677 111,253
Notes payable to related party - long-term portion 14,000 9,000
Subordinated debt 51,547 51,547
Noncurrent tax liabilities 5,672 5,418
Deferred non-current revenue 619 566
Other liabilities 16,379 14,936
Total liabilities 305,650 221,874
Commitments and contingencies
Minority interest in consolidated affiliates 2,344 2,835
Stockholders' equity:
Class A Nonvoting Common Stock, par value $0.01,
100,000,000 shares authorized, 35,564,339 issued
and 20,987,115 outstanding at June 30, 2008 and
at December 31, 2007 216 216
Class B Voting Common Stock, par value $0.01,
20,000,000 shares authorized and 1,495,490 issued
and outstanding at June 30, 2008 and at
December 31, 2007 15 15
Nonvoting Preferred Stock, par value $0.01,
12,000 shares authorized and no outstanding
shares -- --
Additional paid-in capital 132,446 131,930
Accumulated deficit (52,614) (52,670)
Treasury shares (4,306) (4,306)
Accumulated other comprehensive income 53,092 46,177
Total stockholders' equity 128,849 121,362
Total liabilities and stockholders' equity $436,843 $346,071
Contact Information:
Reading International, Inc.
Andrzej Matyczynski
Telephone: (213) 235-2240
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