rdi-20200630x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

FORM 10-Q

(Mark One)


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

For the quarterly period ended: June 30, 2020


¨	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 Number)

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	Name of each exchange on which registered
Class A Nonvoting Common Stock, $0.01 par value	RDI	NASDAQ
Class B Voting Common Stock, $0.01 par value	RDIB	NASDAQ

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 12 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 þ 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 þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 þ 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 þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 7, 2020, there were 20,067,635 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	33
Item 3 – Quantitative and Qualitative Disclosure about Market Risk	59
Item 4 – Controls and Procedures	60
PART II – Other Information	61
Item 1 – Legal Proceedings	61
Item 1A – Risk Factors	61
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3 – Defaults Upon Senior Securities	62
Item 4 – Mine Safety Disclosure	62
Item 5 – Other Information	62
Item 6 – Exhibits	63
SIGNATURES	64
Certifications

‎

PART 1 – FINANCIAL INFORMATION

Item 1 - Financial Statements

READING INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

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



	June 30,		December 31,
	2020		2019
ASSETS	(unaudited)
Current Assets:
Cash and cash equivalents	$	40,364	$	12,135
Receivables		3,255		7,085
Inventory		1,204		1,674
Prepaid and other current assets		12,630		6,105
Total current assets		57,453		26,999
Operating property, net		247,330		258,138
Operating lease right-of-use assets		217,692		229,879
Investment and development property, net		119,667		114,024
Investment in unconsolidated joint ventures		4,556		5,069
Goodwill		26,008		26,448
Intangible assets, net		4,549		4,320
Deferred tax asset, net		3,386		3,444
Other assets		7,109		6,668
Total assets	$	687,750	$	674,989
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	28,179	$	29,436
Film rent payable		1,551		8,716
Debt - current portion		40,331		36,736
Subordinated debt - current portion		644		644
Derivative financial instruments - current portion		218		109
Taxes payable - current		1,855		140
Deferred current revenue		9,128		11,324
Operating lease liabilities - current portion		21,091		20,379
Other current liabilities		9,400		3,653
Total current liabilities		112,397		111,137
Debt - long-term portion		203,650		140,602
Derivative financial instruments - non-current portion		329		233
Subordinated debt, net		28,796		29,030
Noncurrent tax liabilities		12,697		12,353
Operating lease liabilities - non-current portion		210,560		223,164
Other liabilities		13,735		18,854
Total liabilities		582,164		535,373
Commitments and contingencies (Note 14)
Stockholders’ equity:
Class A non-voting common stock, par value $0.01, 100,000,000 shares authorized,
33,003,745 issued and 20,067,635 outstanding at June 30, 2020 and 32,963,489 issued and 20,102,535 outstanding at December 31, 2019		231		231
Class B voting common stock, par value $0.01, 20,000,000 shares authorized and
1,680,590 issued and outstanding at June 30, 2020 and December 31, 2019		17		17
Nonvoting preferred stock, par value $0.01, 12,000 shares authorized and no issued
or outstanding shares at June 30, 2020 and December 31, 2019		—		—
Additional paid-in capital		149,266		148,602
Retained earnings/(deficits)		(7,930)		20,647
Treasury shares		(40,407)		(39,737)
Accumulated other comprehensive income		417		5,589
Total Reading International, Inc. stockholders’ equity		101,594		135,349
Noncontrolling interests		3,992		4,267
Total stockholders’ equity		105,586		139,616
Total liabilities and stockholders’ equity	$	687,750	$	674,989

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				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Revenue
Cinema	$	1,217		72,296	$	47,527	$	130,223
Real estate		2,205		3,713		5,123		7,278
Total revenue		3,422		76,009		52,650		137,501
Costs and expenses
Cinema		(13,660)		(56,235)		(55,952)		(104,564)
Real estate		(1,589)		(2,438)		(4,349)		(4,883)
Depreciation and amortization		(5,266)		(5,572)		(10,537)		(11,166)
General and administrative		(5,102)		(6,034)		(11,047)		(12,518)
Total costs and expenses		(25,617)		(70,279)		(81,885)		(133,131)
Operating income (loss)		(22,195)		5,730		(29,235)		4,370
Interest expense, net		(2,004)		(2,204)		(3,797)		(4,054)
Other income (expense)		19		71		(196)		50
Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures		(24,180)		3,597		(33,228)		366
Equity earnings of unconsolidated joint ventures		(274)		327		(195)		361
Income (loss) before income taxes		(24,454)		3,924		(33,423)		727
Income tax benefit (expense)		1,567		(1,630)		4,580		(573)
Net income (loss)	$	(22,887)	$	2,294	$	(28,843)	$	154
Less: net income (loss) attributable to noncontrolling interests		(185)		(37)		(266)		(53)
Net income (loss) attributable to Reading International, Inc. common shareholders	$	(22,702)		2,331	$	(28,577)	$	207
Basic earnings (loss) per share attributable to Reading International, Inc. shareholders	$	(1.04)		0.10	$	(1.31)	$	0.01
Diluted earnings (loss) per share attributable to Reading International, Inc. shareholders	$	(1.04)		0.10	$	(1.31)	$	0.01
Weighted average number of shares outstanding–basic		21,742,667		22,894,083		21,749,356		22,901,764
Weighted average number of shares outstanding–diluted		22,095,136		23,059,733		22,102,215		23,074,673

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				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net income (loss)	$	(22,887)	$	2,294	$	(28,843)	$	154
Foreign currency translation gain (loss)		10,655		(2,279)		(5,051)		(753)
Gain (loss) on cash flow hedges		10		(122)		(205)		(191)
Other		51		55		84		108
Comprehensive income (loss)		(12,171)		(52)		(34,015)		(682)
Less: net income (loss) attributable to noncontrolling interests		(185)		(37)		(266)		(53)
Less: comprehensive income (loss) attributable to noncontrolling interests		(9)		(1)		(9)		—
Comprehensive income (loss) attributable to Reading International, Inc.	$	(11,977)		(14)	$	(33,740)	$	(629)

See accompanying Notes to the Unaudited Consolidated Financial Statements.

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; U.S. dollars in thousands)



	Six Months Ended
	June 30,
	2020		2019
Operating Activities
Net income (loss)	$	(28,843)	$	154
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity earnings of unconsolidated joint ventures		195		(361)
Distributions of earnings from unconsolidated joint ventures		229		537
Amortization of operating leases		10,244		10,823
Amortization of finance leases		64		82