- Revenue from continuing operations for the quarter was up 81.9%
over the 2007 quarter, to $56.5 million LOS ANGELES, Nov. 7
/PRNewswire-FirstCall/ -- Reading International, Inc. (NYSE
Alternext US: RDI) announced today results for its quarter and nine
months ended September 30, 2008. (Logo:
http://www.newscom.com/cgi-bin/prnh/20030403/LATH058LOGO) Third
Quarter 2008 Highlights Our year-to-year results of operations were
principally impacted by the following: -- the acquisition on
February 22, 2008, of 15 cinemas with 181 screens in Hawaii and
California, 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 the
non-recurrence of sale revenues with respect to our Place 57
residential condominium project. All of the condominium units in
that project have now been sold, with the exception of one retail
unit; and -- the decline in the value of the Australian and New
Zealand dollars vis-a-vis the US dollar from $0.8855 and $0.7568,
respectively, as of September 30, 2007 to $0.7904 and $0.6690,
respectively, as of September 30, 2008. which resulted in: --
revenue growth of $25.5 million or 81.9% to $56.5 million, compared
to $31.0 million in the 2007 quarter; -- net loss from continuing
operations of $2.1 million in the 2008 quarter compared to net
income from continuing operations of $870,000 in the 2007 quarter;
but -- an EBITDA(1) of $7.7 million in the 2008 quarter compared to
$6.6 million in the 2007 quarter, an increase of 17.3%. Third
Quarter 2008 Discussion Revenue from continuing operations
increased from $31.1 million in the 2007 quarter to $56.5 million
in 2008, an 81.9% increase. Cinema segment revenue increased for
the 2008 quarter by $24.9 million or 88.9% compared to the same
period in 2007. The increase was primarily a result of $21.1
million of revenue from our newly acquired Consolidated
Entertainment cinemas and improved results from our Australia
operations including $2.9 million from admissions and $973,000 from
concessions and other revenues, offset by lower cinema revenues
from our New Zealand operations of $680,000. The top 3 grossing
films in our circuit worldwide were "The Dark Night," "Mamma Mia!"
and "Hancock," which between them accounted for approximately 32.5%
of our cinema box office revenue. Real estate segment revenue
increased for the 2008 Quarter by $730,000 or 15.0% 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 associated with them. As a percent
of revenue, cinema/real estate segment operating expense, at 77.9%
in the 2008 quarter, was higher than the 71.1% of the 2007 quarter.
The primary driver for this was an increase in cinema costs
primarily related to higher film rent expense incurred in the
United States as the result of the acquisition of the Consolidated
Entertainment cinemas. Since Consolidated Entertainment cinemas are
commercial houses, their film product is more expensive than the
art and specialty film featured at the art cinemas, which made up
the bulk of our US cinema assets. Depreciation and amortization
increased by $2.2 million or 84.2%, from $2.6 million in the 2007
quarter, to $4.9 million in the 2008 quarter, primarily related to
our newly acquired Consolidated Entertainment cinema assets.
General and administrative expense increased by $526,000 or 13.6%,
from $3.9 million to $4.4 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 investment activities.
Net interest expense increased by $1.7 million or 74.0% 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 decreased by $2.0 million for the 2008 quarter compared to
last year. The primary reasons were a $1.0 million impairment
charge against our Lake Taupo asset in New Zealand, a $549,000 gain
on sale of marketable securities in 2007, not repeated in 2008, and
the completion of the sale phase of the residential condominiums in
our Place 57 project. During 2007 and 2006, all of the residential
condominiums were sold and only the retail condominium is still
available for sale. During 2007, the partnership closed on the sale
of one condominium during the three months ended September 30,
2007, resulting in gross sales of $3.4 million and equity earnings
from unconsolidated joint ventures and entities to us of $201,000.
As a result of the above, we reported a net loss of $2.1 million
for the 2008 quarter compared to a net income of $870,000 in the
2007 quarter. Our EBITDA(1) at $7.7 million for the 2008 quarter
was $1.1 million higher than the 2007 quarter of $6.6 million,
driven exclusively by better operating margins (approximately $3.0
million) and offset by the reduction in other income (approximately
$2.0 million) as described above. Nine Months 2008 Summary Revenue
from continuing operations increased by 69.6% or $60.5 million, to
$147.5 million in the nine months of 2008 compared to 2007. This
increase was driven by an increase in cinema segment revenue for
the 2008 period of $58.9 million or 76.6% compared to the same
period in 2007. The 2008 increase was primarily a result of $49.0
million of revenue from our newly acquired Consolidated
Entertainment cinemas and improved results from our Australia
operations including $6.3 million from admissions and $2.6 million
from concessions and other revenues, offset slightly by New
Zealand. The top three grossing films in our circuit worldwide, for
the nine months of 2008, were "The Dark Night," "Iron Man" and
"Indiana Jones and the Kingdom of the Crystal Skull" accounting for
15.3% of our cinema box office revenue. The real estate segment
revenue increase of $2.1 million or 14.7% 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 segment operating expense, at 78.5% in the 2008 nine months,
was higher than the 71.7% of the 2007 nine months. The primary
drivers were the same factors that drove the 2008 quarter, above.
Depreciation and amortization increased by $5.9 million to $13.8
million in 2008 from $8.0 million in 2007, driven primarily by our
newly acquired Consolidated Entertainment cinema assets, added
during the 2008 period. General and administrative expense
increased by $2.6 million in the 2008 nine 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 $3.9 million for the 2008 nine 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 was flat for the 2008 nine months
compared to last year. Increases to other income were primarily
related to 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. These were offset by the $1.0
million impairment charge against our Lake Taupo asset in New
Zealand and the changing sales activity in our investment related
to 205-209 East 57th Street Associates, LLC, as described above.
During 2007, the partnership closed on the sale of eight
condominiums during the nine months ended September 30, 2007,
resulting in gross sales of $26.0 million, and equity earnings from
unconsolidated joint ventures and entities to us of $1.6 million.
During the nine months ended September 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 loss of $2.0
million for the 2008 nine months compared to a net income of $1.9
million in the 2007 nine months. Our EBITDA(1) at $23.9 million for
the 2008 nine months was $5.6 million higher than the 2007 nine
months of $18.2 million, driven predominantly by better operating
margins (approximately $4.6 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 September 30, 2008 were
$392.1 million compared to $346.1 million at December 31, 2007. The
currency exchange rates for Australia and New Zealand as of
September 30, 2008 were $0.7904 and $0.6690, respectively, and as
of December 31, 2007, these rates were $0.8776 and $0.7678,
respectively. As a result, currency had a negative effect on the
balance sheet at September 30, 2008 compared to December 31, 2007.
Our cash position at September 30, 2008 was $25.1 million compared
to $20.8 million at December 31, 2007. In addition, we have
approximately $4.3 million (AUS$5.5 million) in undrawn funds under
our Australian Corporate Credit Facility, $38.0 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
September 30, 2008 was $35.3 million compared to $32.3 million at
December 31, 2007. The increase in the September number and the
reclassification of the December 2007 number was as a result of the
movement of our Auburn, Australia property, to an asset held for
sale (see below -- Real Estate Update). Stockholders' equity was
$99.3 million at September 30, 2008 compared to $121.4 million at
December 31, 2007 due principally to the strengthening of the US
dollar compared to the Australian dollar and the New Zealand
dollar. Real Estate Update On September 16, 2008, we entered into a
sale option agreement to sell our Auburn real estate property and
cinema for $28.5 million (AUS$36.0 million). The sale option
agreement calls for an initial option payment of $948,000 (AUS$1.2
million), received on the agreement date, and four option
installment payments of $316,000 (AUS$400,000), $316,000
(AUS$400,000), $316,000 (AUS$400,000), and $948,000 (AUS$1.2
million) payable over the subsequent 9 months. The option comes to
term on November 1, 2009 at which time the balance of $25.6 million
(AUS$32.4 million) is due and payable. At any time during the
13-month option, the buyer may decline to move further in the sale
process resulting in a forfeiture of all previous option payments.
Subsequent Event In October 2008, Prime Media of Australia
announced that it is offering stock at ratio of 0.257 shares of
Prime Media for each share of Broadcast Production Services
(formerly Becker Group). We currently hold 12,768,106 shares of
Broadcast Production Services. We are currently evaluating whether
or not we will participate in this offering. 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. Reading manages its worldwide cinema
business under various different brands: -- in the United States,
under the o Reading brand, o Angelika Film Center brand
(http://angelikafilmcenter.com/), o Consolidated Theatres brand
(http://www.consolidatedtheatres.com/), and o City Cinemas brand;
-- in Australia, under the Reading brand
(http://www.readingcinemas.com.au/); and -- in New Zealand, under
the o Reading (http://www.readingcinemas.co.nz/) and o Rialto
(http://www.rialto.co.nz/) 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: o The number and
attractiveness to movie goers of the films released in future
periods; o The amount of money spent by film distributors to
promote their motion pictures; o The licensing fees and terms
required by film distributors from motion picture exhibitors in
order to exhibit their films; o 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 o 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: o The rental rates and
capitalization rates applicable to the markets in which we operate
and the quality of properties that we own; o The extent to which we
can obtain on a timely basis the various land use approvals and
entitlements needed to develop our properties; o The risks and
uncertainties associated with real estate development; o The
availability and cost of labor and materials; o Competition for
development sites and tenants; and o 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: o 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; o The
relative values of the currency used in the countries in which we
operate; o Changes in government regulation, including by way of
example, the costs resulting from the implementation of the
requirements of Sarbanes-Oxley; o 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); o 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; o
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 o 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. For more information,
contact: Andrzej Matyczynski, Chief Financial Officer Reading
International, Inc. (213) 235 2240 (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). Reading International, Inc. and Subsidiaries
Supplemental Data Reconciliation of EBITDA to Net Income
(Unaudited) (dollars in thousands, except per share amounts) Three
Months Ended Nine Months Ended Statements of Operations September
30, September 30, 2008 2007 2008 2007 Revenue $56,528 $31,077
$147,472 $86,949 Operating expense Cinema/real estate 44,018 22,085
115,736 62,340 Depreciation and amortization 4,877 2,647 13,829
7,970 General and administrative 4,397 3,871 13,993 11,424
Operating income 3,236 2,474 3,914 5,215 Interest expense, net
(3,962) (2,277) (9,832) (5,978) Other income (739) 1,291 2,850
2,876 Gain on sale of discontinued operations 178 45 371 1,845 Gain
on sale of unconsolidated entity -- -- 2,450 -- Income tax expense
(689) (501) (1,513) (1,443) Minority interest expense (85) (162)
(246) (657) Net (loss) income $(2,061) $870 $(2,006) $1,858 Basic
(loss) earnings per share $(0.09) $0.04 $(0.09) $0.08 Diluted
(loss) earnings per share $(0.09) $0.04 $(0.09) $0.08 EBITDA*
$7,686 $6,555 $23,851 $18,202 EBITDA* change $1,131 $5,649 * 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 is presented below: Three Months Ended Nine Months Ended
September 30, September 30, 2008 2007 2008 2007 Net (loss) income
$(2,061) $870 $(2,006) $1,858 Add: Interest expense, net 3,962
2,277 9,832 5,978 Add: Income tax provision 689 501 1,513 1,443
Add: Depreciation and amortization 4,877 2,647 13,829 7,970 Add:
EBITDA adjustment for discontinued operations 219 260 683 953
EBITDA $7,686 $6,555 $23,851 $18,202 Reading International, Inc.
and Subsidiaries Consolidated Statements of Operations (Unaudited)
(U.S. dollars in thousands, except per share amounts) Three Months
Ended Nine Months Ended September 30, September 30, 2008 2007 2008
2007 Revenue Cinema $52,909 $28,009 $135,693 $76,825 Real estate
3,619 3,068 11,779 10,124 56,528 31,077 147,472 86,949 Operating
expense Cinema 41,765 20,041 109,597 56,878 Real estate 2,253 2,044
6,139 5,462 Depreciation and amortization 4,877 2,647 13,829 7,970
General and administrative 4,397 3,871 13,993 11,424 53,292 28,603
143,558 81,734 Operating income 3,236 2,474 3,914 5,215 Interest
income 221 329 829 558 Interest expense (4,183) (2,606) (10,661)
(6,536) Loss on sale of assets -- -- -- (185) Other income (1,009)
707 2,033 435 Income (loss) before minority interest expense,
discontinued operations, income tax expense, and equity earnings of
unconsolidated joint ventures and entities (1,735) 904 (3,885)
(513) Minority interest expense (85) (162) (246) (657) Income
(loss) before discontinued operations, income tax expense, and
equity earnings of unconsolidated joint ventures and entities
(1,820) 742 (4,131) (1,170) Gain on sale of a discontinued
operation, net of tax -- -- -- 1,912 Income (loss) from
discontinued operations, net of tax 178 45 371 (67) Income (loss)
before income tax expense and equity earnings of unconsolidated
joint ventures and entities (1,642) 787 (3,760) 675 Income tax
expense (689) (501) (1,513) (1,443) Income (loss) before equity
earnings of unconsolidated joint ventures and entities (2,331) 286
(5,273) (768) Equity earnings of unconsolidated joint ventures and
entities 270 584 817 2,626 Gain on sale of unconsolidated entity --
-- 2,450 -- Net income (loss) $(2,061) $870 $(2,006) $1,858
Earnings (loss) per common share - basic and diluted: Earnings
(loss) from continuing operations $(0.10) $0.04 $(0.11) $0.00
Earnings from discontinued operations 0.01 0.00 0.02 0.08 Basic and
diluted earnings (loss) per share $(0.09) $0.04 $(0.09) $0.08
Weighted average number of shares outstanding basic 22,476,904
22,487,943 22,476,514 22,486,395 Weighted average number of shares
outstanding - dilutive 22,476,904 22,761,270 22,476,514 22,759,723
Reading International, Inc. and Subsidiaries Consolidated Balance
Sheets (Unaudited) (U.S. dollars in thousands) September 30,
December 31, 2008 2007 ASSETS Current Assets: Cash and cash
equivalents $25,119 $20,783 Receivables 7,220 5,670 Inventory 695
654 Investment in marketable securities 4,085 4,533 Restricted cash
-- 59 Assets held for sale 22,775 25,942 Prepaid and other current
assets 2,334 3,799 Total current assets 62,228 61,440 Land held for
sale -- 1,984 Property held for development 7,304 9,289 Property
under development 69,387 66,787 Property & equipment, net
179,789 154,011 Investments in unconsolidated joint ventures and
entities 13,603 15,480 Investment in Reading International Trust I
1,547 1,547 Goodwill 23,808 19,100 Intangible assets, net 23,999
8,448 Other assets 10,483 7,985 Total assets $392,148 $346,071
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts
payable and accrued liabilities $11,634 $12,331 Film rent payable
4,326 3,275 Notes payable - current portion 1,533 395 Note payable
to related party - current portion -- 5,000 Taxes payable 6,115
4,770 Deferred current revenue 3,130 3,214 Liabilities of assets
held for sale -- -- Other current liabilities 202 169 Total current
liabilities 26,940 29,154 Notes payable - long-term portion 173,774
111,253 Notes payable to related party - long-term portion 14,000
9,000 Subordinated debt 51,547 51,547 Noncurrent tax liabilities
6,070 5,418 Deferred non-current revenue 609 566 Other liabilities
17,654 14,936 Total liabilities 290,594 221,874 Commitments and
contingencies Minority interest in consolidated affiliates 2,288
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 September 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 September 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 132,838 131,930
Accumulated deficit (54,676) (52,670) Treasury shares (4,306)
(4,306) Accumulated other comprehensive income 25,179 46,177 Total
stockholders' equity 99,266 121,362 Total liabilities and
stockholders' equity $392,148 $346,071
http://www.newscom.com/cgi-bin/prnh/20030403/LATH058LOGO
http://photoarchive.ap.org/ DATASOURCE: Reading International, Inc.
CONTACT: Andrzej Matyczynski, Chief Financial Officer of Reading
International, Inc., +1-213-235-2240 Web site:
http://www.readingcinemas.com.au/
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