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, 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 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 six months ended June 30, 2018 and 2017, 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, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Revenue:
Cinema exhibition	$	80,183	$	67,443	$	152,438	$	134,003
Real estate		6,385		6,933		12,342		11,431
Inter-segment elimination		(2,346)		(1,963)		(4,737)		(3,567)
	$	84,222	$	72,413	$	160,043	$	141,867
Segment operating income:
Cinema exhibition	$	12,494	$	9,788	$	22,779	$	18,879
Real estate		1,914		2,756		3,544		4,051
	$	14,408	$	12,544	$	26,323	$	22,930

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


	Quarter Ended				Six Months Ended
(Dollars in thousands)	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Segment operating income	$	14,408	$	12,544	$	26,323	$	22,930
Unallocated corporate expense
Depreciation and amortization expense		(104)		(110)		(221)		(214)
General and administrative expense		(5,730)		(4,674)		(11,886)		(9,425)
Interest expense, net		(1,790)		(1,787)		(3,384)		(3,647)
Equity earnings of unconsolidated joint ventures		331		264		588		518
Gain on sale of assets		--		9,417		--		9,417
Gain on insurance recoveries		--		9,217		--		9,217
Other income (expense)		(61)		27		(143)		848
Income before income tax expense	$	7,054	$	24,898	$	11,277	$	29,644