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, and, following the consummation of a consolidation transaction on December 31, 2001, is now the owner of the consolidated businesses and assets of Reading Entertainment, Inc. (“RDGE”), Craig Corporation (“CRG”) and Citadel Holding Corporation (“CDL”). Our businesses consist 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.

Business Segments

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

The tables below summarize the results of operations for each of our business segments for the quarter and six months ended June 30, 2017 and 2016, 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.


	Quarter Ended				Six Months Ended
(Dollars in thousands)	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
Revenue:
Cinema exhibition	$	67,443	$	63,439	$	134,003	$	124,754
Real estate		6,933		5,322		11,431		10,571
Inter-segment elimination		(1,963)		(1,843)		(3,567)		(3,618)
	$	72,413	$	66,918	$	141,867	$	131,707
Segment operating income:
Cinema exhibition	$	9,788	$	9,120	$	18,879	$	16,811
Real estate		2,756		2,002		4,051		4,090
	$	12,544	$	11,122	$	22,930	$	20,901

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


	Quarter Ended				Six Months Ended
(Dollars in thousands)	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
Segment operating income	$	12,544	$	11,122	$	22,930	$	20,901
Unallocated corporate expense
Depreciation and amortization expense		(110)		(99)		(214)		(194)
General and administrative expense		(4,674)		(4,935)		(9,425)		(9,925)
Interest expense, net		(1,787)		(1,762)		(3,647)		(3,636)
Equity earnings of unconsolidated joint ventures		264		305		518		608
Gain on sale of assets		9,417		--		9,417		393
Gain on insurance recoveries		9,217		--		9,217		-
Other income (expense)		27		(46)		848		(104)
Income before income tax expense	$	24,898	$	4,585	$	29,644	$	8,043