2019 Q3_Taxonomy2018

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 1-8625

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READING INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

NEVADA

(State or other jurisdiction of incorporation or organization)

95-3885184

(IRS Employer Identification No.)

5995 Sepulveda Boulevard, Suite 300

Culver City, CA

(Address of principal executive offices)

90230

(Zip Code)

Registrant’s telephone number, including area code: (213) 235-2240

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	RDI	The Nasdaq Stock Market LLC
Class B Common Stock, $0.01 par value	RDIB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☑ Non-accelerated filer ☐ Smaller reporting company ☐Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 8, 2019 there were 20,404,573 shares of Class A Nonvoting Common Stock, $0.01 par value per share and 1,680,590 shares of Class B Voting Common Stock, $0.01 par value per share outstanding.

READING INTERNATIONAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


	Page
PART I - Financial Information	3
Item 1 – Financial Statements	3
Consolidated Balance Sheets (Unaudited)	3
Consolidated Statements of Income (Unaudited)	4
Consolidated Statements of Comprehensive Income (Unaudited)	5
Consolidated Statements of Cash Flows (Unaudited)	6
Notes to Consolidated Financial Statements (Unaudited)	7
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3 – Quantitative and Qualitative Disclosure about Market Risk	48
Item 4 – Controls and Procedures	49
PART II – Other Information	50
Item 1 – Legal Proceedings	50
Item 1A – Risk Factors	51
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3 – Defaults Upon Senior Securities	51
Item 5 – Other Information	51
Item 6 – Exhibits	51
SIGNATURES	53
Certifications

PART 1 – FINANCIAL INFORMATION

Item 1 - Financial Statements

READING INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except share information)



	September 30,		December 31,
	2019		2018
ASSETS	(unaudited)
Current Assets:
Cash and cash equivalents	$	8,708	$	13,127
Receivables		4,363		8,045
Inventory		1,195		1,419
Prepaid and other current assets		10,831		7,667
Total current assets		25,097		30,258
Operating property, net		248,100		257,667
Operating lease right-of-use assets		216,963		—
Investment and development property, net		107,292		86,804
Investment in unconsolidated joint ventures		4,721		5,121
Goodwill		19,913		19,445
Intangible assets, net		3,607		7,369
Deferred tax asset, net		25,959		26,235
Other assets		6,164		6,129
Total assets	$	657,816	$	439,028
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	24,318	$	26,154
Film rent payable		6,430		8,661
Debt - current portion		34,374		30,393
Derivative financial instruments - current portion		105		41
Taxes payable - current		611		1,710
Deferred current revenue		6,406		9,264
Operating lease liabilities - current portion		19,579		—
Other current liabilities		9,339		9,305
Total current liabilities		101,162		85,528
Debt - long-term portion		131,681		106,286
Derivative financial instruments - non-current portion		291		145
Subordinated debt, net		26,255		26,061
Noncurrent tax liabilities		11,647		11,530
Operating lease liabilities - non-current portion		210,737		—
Other liabilities		12,330		28,931
Total liabilities		494,103		258,481
Commitments and contingencies (Note 13)
Stockholders’ equity:
Class A non-voting common stock, par value $0.01, 100,000,000 shares authorized,
32,963,489 issued and 20,404,573 outstanding at September 30, 2019 and 33,112,337 issued and 21,194,748 outstanding at December 31, 2018		231		232
Class B voting common stock, par value $0.01, 20,000,000 shares authorized and
1,680,590 issued and outstanding at September 30, 2019 and December 31, 2018		17		17
Nonvoting preferred stock, par value $0.01, 12,000 shares authorized and no issued
or outstanding shares at September 30, 2019 and December 31, 2018		—		—
Additional paid-in capital		148,236		147,452
Retained earnings		48,859		47,616
Treasury shares		(36,541)		(25,222)
Accumulated other comprehensive income		(1,288)		6,115
Total Reading International, Inc. stockholders’ equity		159,514		176,210
Noncontrolling interests		4,199		4,337
Total stockholders’ equity		163,713		180,547
Total liabilities and stockholders’ equity	$	657,816	$	439,028

See accompanying Notes to the Unaudited Consolidated Financial Statements.

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; U.S. dollars in thousands, except per share data)



	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Revenue
Cinema	$	66,733		70,671	$	197,101	$	223,109
Real estate		3,723		3,590		11,001		11,286
Total revenue		70,456		74,261		208,102		234,395
Costs and expenses
Cinema		(53,709)		(54,929)		(158,273)		(170,183)
Real estate		(2,225)		(2,475)		(7,108)		(7,408)
Depreciation and amortization		(5,704)		(5,829)		(16,870)		(16,705)
General and administrative		(5,908)		(6,489)		(18,426)		(21,250)
Total costs and expenses		(67,546)		(69,722)		(200,677)		(215,546)
Operating income (loss)		2,910		4,539		7,425		18,849
Interest expense, net		(1,871)		(1,748)		(5,924)		(5,132)
Gain (loss) on sale of assets		(1)		—		(1)		—
Other income (expense)		141		(130)		190		(273)
Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures		1,179		2,661		1,690		13,444
Equity earnings of unconsolidated joint ventures		220		80		581		667
Income (loss) before income taxes		1,399		2,741		2,271		14,111
Income tax benefit (expense)		(547)		(1,482)		(1,159)		(4,618)
Net income (loss)	$	852	$	1,259	$	1,112	$	9,493
Less: net income (loss) attributable to noncontrolling interests		(50)		(38)		(103)		88
Net income (loss) attributable to Reading International, Inc. common shareholders	$	902	$	1,297	$	1,215	$	9,405
Basic earnings (loss) per share attributable to Reading International, Inc. shareholders	$	0.04	$	0.06	$	0.05	$	0.41
Diluted earnings (loss) per share attributable to Reading International, Inc. shareholders	$	0.04	$	0.06	$	0.05	$	0.41
Weighted average number of shares outstanding–basic		22,546,827		23,006,040		22,791,530		22,988,227
Weighted average number of shares outstanding–diluted		22,688,230		23,197,924		22,952,838		23,185,021

See accompanying Notes to the Unaudited Consolidated Financial Statements.

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; U.S. dollars in thousands)



	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Net income (loss)	$	852	$	1,259	$	1,112	$	9,493
Foreign currency translation gain (loss)		(6,598)		(3,547)		(7,355)		(12,318)
Gain (loss) on cash flow hedges		(20)		—		(211)		—
Other		51		53		159		155
Comprehensive income (loss)		(5,715)		(2,235)		(6,295)		(2,670)
Less: net income (loss) attributable to noncontrolling interests		(50)		(38)		(103)		88
Less: comprehensive income (loss) attributable to noncontrolling interests		(2)		(5)		(2)		(15)
Comprehensive income (loss) attributable to Reading International, Inc.	$	(5,663)		(2,192)	$	(6,190)	$	(2,743)

See accompanying Notes to the Unaudited Consolidated Financial Statements.

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; U.S. dollars in thousands)



	Nine Months Ended
	September 30,
	2019		2018
Operating Activities
Net income (loss)	$	1,112	$	9,493
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity earnings of unconsolidated joint ventures		(581)		(667)
Distributions of earnings from unconsolidated joint ventures		760		532
Amortization of operating leases		15,719		—
Amortization of finance leases		121		—
Change in operating lease liabilities		(15,209)		—
Interest on hedged derivatives		1		—
Change in net deferred tax assets		272		(888)
Depreciation and amortization		16,870		16,705
Other amortization		1,088		7
Stock based compensation expense		1,097		1,066
Net changes in operating assets and liabilities:
Receivables		3,393		4,492
Prepaid and other assets		(4,757)		(545)
Payments for accrued pension		(513)		(2,655)
Accounts payable and accrued expenses		(3,165)		411
Film rent payable		(2,129)		(6,366)
Taxes payable		(1,091)		(877)
Deferred revenue and other liabilities		(2,191)		(1,636)
Net cash provided by (used in) operating activities		10,797		19,072
Investing Activities
Insurance recoveries relating to property damage and demolition costs		168		—
Purchases of and additions to operating and investment properties		(33,205)		(50,118)
Acquisition of business combinations		(1,380)		—
Change in restricted cash		1,334		(1,556)
Net cash provided by (used in) investing activities		(33,083)		(51,674)
Financing Activities
Repayment of long-term borrowings		(31,692)		(29,546)
Repayment of finance lease principal		(120)		—
Proceeds from borrowings		58,677		65,213
Capitalized borrowing costs		(502)		—
Repurchase of Class A Nonvoting Common Stock		(7,800)		(397)
(Cash paid) proceeds from the settlement of employee share transactions		(315)		340
Noncontrolling interest contributions		55		75
Noncontrolling interest distributions		(42)		(117)
Net cash provided by (used in) financing activities		18,261		35,568
Effect of exchange rate changes on cash and cash equivalents		(394)		(920)
Net decrease in cash and cash equivalents		(4,419)		2,046
Cash and cash equivalents at January 1		13,127		13,668
Cash and cash equivalents at September 30	$	8,708	$	15,714
Supplemental Disclosures
Interest paid	$	8,134	$	5,762
Income taxes paid		5,669		6,365
Non-Cash Transactions
Additions to operating and investing properties through accrued expenses		5,768		2,911

See accompanying Notes to the Unaudited Consolidated Financial Statements.

READING INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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, operation and/or rental of retail, commercial and live venue real estate assets 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 Australia, 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, 2019 and 2018, 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
	September 30,				September 30,
(Dollars in thousands)	2019		2018		2019		2018
Revenue:
Cinema exhibition	$	66,733	$	70,671	$	197,101	$	223,109
Real estate		5,531		5,771		16,525		18,204
Inter-segment elimination		(1,808)		(2,181)		(5,524)		(6,918)
	$	70,456	$	74,261	$	208,102	$	234,395
Segment operating income (loss):
Cinema exhibition	$	6,021	$	8,202	$	17,931	$	30,983
Real estate		1,485		1,260		3,987		4,896
	$	7,506	$	9,462	$	21,918	$	35,879

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



	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2019		2018		2019		2018
Segment operating income (loss)	$	7,506	$	9,462	$	21,918	$	35,879
Unallocated corporate expense
Depreciation and amortization expense		(103)		(92)		(288)		(313)
General and administrative expense		(4,493)		(4,831)		(14,205)		(16,717)
Interest expense, net		(1,871)		(1,748)		(5,924)		(5,132)
Equity earnings of unconsolidated joint ventures		220		80		581		667
Gain (loss) on sale of assets		(1)		—		(1)		—
Other income (expense)		141		(130)		190		(273)
Income (loss) before income tax expense	$	1,399	$	2,741	$	2,271	$	14,111

Note 2 – Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries as well as majority-owned subsidiaries that the Company controls, and should be read in conjunction with the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2018 (“2018 Form 10-K”). All significant intercompany balances and transactions have been eliminated on consolidation. These consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”). As such, they do not include

all information and footnotes required by U.S. GAAP for complete financial statements. We believe that we have included all normal and recurring adjustments necessary for a fair presentation of the results for the interim period.

Operating results for the quarter and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Significant estimates include (i) projections we make regarding the recoverability and impairment of our assets (including goodwill and intangibles), (ii) valuations of our derivative instruments, (iii) recoverability of our deferred tax assets, (iv) estimation of breakage and redemption experience rates, which drive how we recognize breakage on our gift card and gift certificates, and revenue from our customer loyalty program, and (v) allocation of insurance proceeds to various recoverable components. Actual results may differ from those estimates.

Recently Adopted and Issued Accounting Pronouncements

Adopted:

Accounting Standards Update (“ASU”) 2016-02 Leases: In February 2016, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard, Accounting Standards Codification (“ASC”) 842 Leases, to increase transparency and comparability among organizations by requiring the recognition of right-of-use assets and lease liabilities on the balance sheet. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees with capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.

On January 1, 2019, we adopted the new accounting standard ASC 842 Leases using the modified retrospective method. We recognized the cumulative effect of initially applying the new leasing standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The standard had a material impact on our consolidated balance sheets, but not on our consolidated income statements or statements of cash flow.


(Dollars in thousands)	Balance at December 31, 2018		Adjustments due to ASC 842		Balance at January 1, 2019
Assets
Operating property, net	$	257,667	$	370	$	258,037
Operating lease right-of-use assets		—		232,319		232,319
Intangible assets, net		7,369		(3,542)		3,827
Deferred tax asset, net		26,235		82		26,317
Liabilities
Operating lease liabilities	$	—	$	245,280	$	245,280
Other non-current liabilities		28,931		(16,033)		12,898
Stockholders' Equity
Non-controlling interest	$	4,337	$	(46)	$	4,291
Retained earnings		47,616		28		47,644


	Quarter Ended September 30, 2019						Nine Months Ended September 30, 2019
(Dollars in thousands)	As Reported, September 30, 2019		Balances Without Adoption of ASC 842		Effect of change Higher / (Lower)		As Reported, September 30, 2019		Balances Without Adoption of ASC 842		Effect of change Higher / (Lower)
Cinema costs and expenses	$	53,709	$	53,746	$	(37)	$	158,273	$	158,357	$	(84)
Depreciation and amortization		5,704		5,665		39		16,870		16,749		121
General and administrative		5,908		5,949		(41)		18,426		18,554		(128)
Interest expense, net		1,871		1,867		4		5,924		5,914		10
Income tax (benefit) expense		547		535		12		1,159		1,132		27
Net income (loss)	$	852	$	829	$	23	$	1,112	$	1,058	$	54


(Dollars in thousands)	As Reported, September 30, 2019		Balances Without Adoption of ASC 842		Effect of change Higher / (Lower)
Assets
Operating property, net	$	248,100	$	247,939	$	161
Intangible assets		3,607		6,894		(3,287)
Operating lease right-of-use assets		216,963		—		216,963
Deferred tax asset, net		25,959		25,904		55
Liabilities
Other current liabilities	$	9,339	$	9,459	$	(120)
Operating lease liabilities, current		19,579		—		19,579
Other non-current liabilities		12,330		28,727		(16,397)
Operating lease liabilities, non-current		210,737		—		210,737
Stockholders' Equity
Retained earnings	$	48,859	$	48,805	$	54

ASU 2014-09 Revenue from Contracts with Customers: On January 1, 2018, we adopted the new accounting standard ASC 606 Revenue from Contracts with Customers using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information was not restated. Adoption of this standard has no material effect on our consolidated financial statements.

On January 1, 2018, we adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, a consensus of the FASB Emerging Issues Task Force. This standard requires that amounts generally described as restricted cash and cash equivalents be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Adoption of this standard has no material effect on our consolidated statement of cash flows.

On January 1, 2018, we adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The standard applies to eight (8) specific cash flow classification issues, reducing the current and potential future diversity in the presentation of certain cash flows. Adoption of this standard has no material effect on our consolidated statement of cash flows.

On January 1, 2018, we adopted ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This standard (i) requires that an employer disaggregate the service cost component from the other components of net benefit cost, and (ii) specifies how to present the service cost component and the other components of net benefit cost in the income statement and (iii) allows only the service cost component of net benefit cost to be eligible for capitalization. Adoption of this standard has no material impact on our consolidated financial statements.

On January 1, 2018, we adopted ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU provides that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the asset is not a “business”, thus reducing the number of transactions that need further evaluation for business combination. The standard has no material impact on our current consolidated financial statements, and we do not expect it to be applicable to our consolidated financial statements in the near term unless we enter into a definitive business acquisition transaction.

Issued:

ASUs Effective 2019 and Beyond

Goodwill Impairment Simplification (ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment)

Issued by FASB in January 2017, this standard removes the second step of the two-step impairment test for measuring goodwill and is to be applied on a prospective basis only. The new standard is effective for the Company on January 1, 2020, including interim periods within the year of adoption. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Early adoption is not being contemplated. It is not anticipated that adoption of this standard will have any material impact on our consolidated financial statements.

Note 3 – Operations in Foreign Currency

We have significant assets in Australia and New Zealand. Historically, we have conducted our Australian and New Zealand operations (collectively “foreign operations”) on a self-funding basis where we use cash flows generated by our foreign operations to pay for the expense of foreign operations. Our Australian and New Zealand assets and liabilities are translated from their functional currencies of Australian dollar (“AU$”) and New Zealand dollar (“NZ$”), respectively, to the U.S. dollar based on the exchange rate as of September 30, 2019. The carrying value of the assets and liabilities of our foreign operations fluctuates as a result of changes in the exchange rates between the functional currencies of the foreign operations and the U.S. dollar. The translation adjustments are accumulated in the Accumulated Other Comprehensive Income in the Consolidated Balance Sheets.

Due to the natural-hedge nature of our funding policy, we have not historically used derivative financial instruments to hedge against the risk of foreign currency exposure. However, in certain circumstances, we move funds between jurisdictions where circumstances encouraged us to do so from an overall economic standpoint. Going forward, particularly in light of recent tax law changes, we intend to take a more global view of our financial resources, and to be more flexible in making use of resources from one jurisdiction in other jurisdictions.

Presented in the table below are the currency exchange rates for Australia and New Zealand:



	Foreign Currency / USD
	As of and for the quarter ended	As of and for the nine months ended	As of and for the twelve months ended	As of and for the quarter ended	As of and for the nine months ended
	September 30, 2019		December 31, 2018	September 30, 2018
Spot Rate
Australian Dollar	0.6746		0.7046	0.7238
New Zealand Dollar	0.6262		0.6711	0.6635
Average Rate
Australian Dollar	0.6856	0.6993	0.7479	0.7311	0.7580
New Zealand Dollar	0.6486	0.6643	0.6930	0.6685	0.7002

Note 4 – Earnings Per Share

Basic earnings per share (“EPS”) is calculated by dividing the net income attributable to the Company’s common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated by dividing the net income attributable to the Company’s common stockholders by the weighted average number of common and common equivalent shares outstanding during the period and is calculated using the treasury stock method for equity-based compensation awards.

The following table sets forth the computation of basic and diluted EPS and a reconciliation of the weighted average number of common and common equivalent shares outstanding:



	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands, except share data)	2019		2018		2019		2018
Numerator:
Net income (loss) attributable to RDI common stockholders	$	902	$	1,297	$	1,215	$	9,405
Denominator:
Weighted average number of common stock – basic		22,546,827		23,006,040		22,791,530		22,988,227
Weighted average dilutive impact of awards		141,403		191,884		161,308		196,794
Weighted average number of common stock – diluted		22,688,230		23,197,924		22,952,838		23,185,021
Basic earnings (loss) per share attributable to RDI common stockholders	$	0.04	$	0.06	$	0.05	$	0.41
Diluted earnings (loss) per share attributable to RDI common stockholders	$	0.04	$	0.06	$	0.05	$	0.41
Awards excluded from diluted earnings (loss) per share		516,010		276,681		516,010		126,840

Our weighted average number of common stock - basic decreased, primarily as a result of the repurchase of shares of Class A Non-Voting Common Stock pursuant to our current stock repurchase program offset by the issuance of shares due to the exercise of share options and vesting of restricted stock units. During the first nine months of 2019, we repurchased 856,563 shares of Class A Non-Voting Common Stock at an average price of $13.20 per share.

Note 5 – Property and Equipment

Operating Property, net

As of September 30, 2019 and December 31, 2018, property associated with our operating activities is summarized as follows:



	September 30,		December 31,
(Dollars in thousands)	2019		2018
Land	$	73,675	$	75,689
Building and improvements		143,408		149,734
Leasehold improvements		55,867		55,299
Fixtures and equipment		172,687		167,943
Construction-in-progress		7,032		3,478
Total cost		452,669		452,143
Less: accumulated depreciation		(204,569)		(194,476)
Operating property, net	$	248,100	$	257,667

Depreciation expense for operating property was $5.5 million and $16.3 million for the quarter and nine months ended September 30, 2019 and $5.4 million and $15.6 million for the quarter and nine months ended September 30, 2018, respectively.

Investment and Development Property, net

As of September 30, 2019 and December 31, 2018, our investment and development property is summarized below:



	September 30,		December 31,
(Dollars in thousands)	2019		2018
Land	$	23,392	$	24,371
Building		1,900		1,900
Construction-in-progress (including capitalized interest)		82,000		60,533
Investment and development property	$	107,292	$	86,804

Construction-in-Progress – Operating and Investing Properties

Construction-in-Progress balances are included in both our operating and development properties. The balances of our major projects along with the movements for the nine months ended September 30, 2019 are shown below:



(Dollars in thousands)	Balance, December 31, 2018		Additions during the period(1)		Completed during the period		Foreign currency translation		Balance, September 30, 2019
Union Square development	$	55,634	$	21,098	$	—	$	—	$	76,732
Courtenay Central development		5,571		611		(40)		(411)		5,731
Cinema developments and improvements		1,664		13,470		(9,931)		(75)		5,128
Other real estate projects		1,142		717		(338)		(80)		1,441
Total	$	64,011	$	35,896	$	(10,309)	$	(566)	$	89,032

(1)

Includes capitalized interest of $2.2 million and $4.9 million for the quarter and nine months ended September 30, 2019.

Real Estate Transactions

Purchase of Income Producing Property at Auburn/Redyard, Australia – On June 29, 2018, we added 20,870 square feet of land, improved with a 16,830 square foot office building, to our Auburn/Redyard entertainment-themed center (“ETC”). The property was acquired at auction for $3.5 million (AU$4.5 million) and is bordered by our existing ETC on three sides. The property is leased to Telstra through July 2022. This lease will allow us time to plan for the efficient integration of the property into our ETC. With this acquisition, Auburn/Redyard now represents approximately 519,992 square feet (48,309 square meters) of land, with approximately 1,620 feet (498 meters) of uninterrupted frontage to Parramatta Road, a major Sydney arterial motorway.

Purchase of Land at Cannon Park in Townsville, Australia – On June 13, 2018, we acquired a 163,000 square foot (15,150 square meter) parcel of land at our Cannon Park ETC, in connection with the restructuring of our relationship with the adjacent land owner. Prior to the restructuring, this parcel was commonly owned by us and the adjoining land owner. In the restructuring, the adjoining land owner conveyed to us its interest in the parcel for AU$1. We granted the adjoining land owner certain access rights with respect to that parcel.

Exercise of Option to Acquire Ground Lessee’s interest in Ground Lease and Improvements Constituting the Village East Cinema – On August 28, 2019, we exercised our option to acquire the ground lessee’s interest in the 13 year ground lease underlying and the real property assets constituting our Village East Cinema in Manhattan. The purchase price under the option is $5.9 million. It is anticipated that the transaction will close on or about May 31, 2020.

Note 6 – Investments in Unconsolidated Joint Ventures

Our investments in unconsolidated joint ventures are accounted for under the equity method of accounting.

The table below summarizes our active investment holdings in two (2) unconsolidated joint ventures as of September 30, 2019 and December 31, 2018:



		September 30,		December 31,
(Dollars in thousands)	Interest	2019		2018
Rialto Cinemas	50.0%	$	1,112	$	1,260
Mt. Gravatt	33.3%		3,609		3,861
Total investments		$	4,721	$	5,121

For the quarter and nine months ended September 30, 2019 and 2018, the recognized share of equity earnings from our investments in unconsolidated joint ventures are as follows:



	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2019		2018		2019		2018
Rialto Cinemas	$	64	$	—	$	78	$	152
Mt. Gravatt		156		80		503		515
Total equity earnings	$	220	$	80	$	581	$	667

Note 7 – Goodwill and Intangible Assets

The table below summarizes goodwill by business segment as of September 30, 2019 and December 31, 2018.



(Dollars in thousands)	Cinema		Real Estate		Total
Balance at December 31, 2018	$	14,221	$	5,224	$	19,445
Change in goodwill due to a purchase of a business combination		1,225		—		1,225
Foreign currency translation adjustment		(757)		—		(757)
Balance at September 30, 2019	$	14,689	$	5,224	$	19,913

The Company is required to test goodwill and other intangible assets for impairment on an annual basis and, if current events or circumstances require, on an interim basis. Our next annual evaluation of goodwill and other intangible assets is scheduled during the fourth quarter of 2019. To test the impairment of goodwill, the Company compares the fair value of each reporting unit to its carrying amount, including the goodwill, to determine if there is potential goodwill impairment. A reporting unit is generally one level below the operating segment. As of September 30, 2019, we were not aware that any events indicating potential impairment of goodwill had occurred.

The tables below summarize intangible assets other than goodwill, as of September 30, 2019 and December 31, 2018, respectively.



	As of September 30, 2019
(Dollars in thousands)	Beneficial Leases		Trade Name		Other Intangible Assets		Total
Gross carrying amount	$	14,973	$	7,258	$	2,262	$	24,493
Less: Accumulated amortization		(14,388)		(5,389)		(1,109)		(20,886)
Net intangible assets other than goodwill	$	585	$	1,869	$	1,153	$	3,607



	As of December 31, 2018
(Dollars in thousands)	Beneficial Leases		Trade Name		Other Intangible Assets		Total
Gross carrying amount	$	28,592	$	7,254	$	1,951