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 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 hold undeveloped land in urban and suburban centers in New Zealand and the United States.

The table below summarizes the results of operations for each of our business segments for the quarter and nine months ended September 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				Nine Months Ended
(Dollars in thousands)	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Revenue:
Cinema exhibition	$	62,059	$	67,825	$	196,062	$	192,579
Real estate		6,036		5,390		17,467		15,961
Inter-segment elimination		(2,008)		(1,900)		(5,575)		(5,518)
	$	66,087	$	71,315	$	207,954	$	203,022
Segment operating income:
Cinema exhibition	$	6,703	$	9,726	$	25,581	$	26,536
Real estate		1,549		1,755		5,600		5,844
	$	8,252	$	11,481	$	31,181	$	32,380

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


	Quarter Ended				Nine Months Ended
(Dollars in thousands)	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Segment operating income	$	8,252	$	11,481	$	31,181	$	32,380
Unallocated corporate expense
Depreciation and amortization expense		(108)		(102)		(321)		(295)
General and administrative expense		(4,506)		(4,769)		(13,931)		(14,693)
Interest expense, net		(1,663)		(1,553)		(5,310)		(5,190)
Equity earnings of unconsolidated joint ventures		136		200		654		808
Gain on sale of assets		--		--		9,417		393
Gain on insurance recoveries		--		--		9,217		--
Other income (expense)		89		(12)		937		(115)
Income before income tax expense	$	2,200	$	5,245	$	31,844	$	13,288