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: September 30, 2023

OR

¨ 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

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)
189 Second Avenue, Suite 2S New York, New York (Address of principal executive offices)	10003 (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	The Nasdaq Stock Market LLC
Class B Voting 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 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 ¨ Non-Accelerated Filer  þ Smaller Reporting Company þ 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 November 13, 2023, there were 20,592,834 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.
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1

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	25
Item 3 – Quantitative and Qualitative Disclosure about Market Risk	44
Item 4 – Controls and Procedures	46
PART II – Other Information	47
Item 1 – Legal Proceedings	47
Item 1A – Risk Factors	47
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3 – Defaults Upon Senior Securities	47
Item 4 – Mine Safety Disclosure	47
Item 5 – Other Information	47
Item 6 – Exhibits	48
SIGNATURES	49
Certifications

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2

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,
	2023		2022
ASSETS	(unaudited)
Current Assets:
Cash and cash equivalents	$	11,925	$	29,947
Restricted cash		5,714		5,032
Receivables		5,779		6,206
Inventories		1,488		1,616
Derivative financial instruments - current portion		17		907
Prepaid and other current assets		4,243		3,804
Land and property held for sale		12,362		—
Total current assets		41,528		47,512
Operating property, net		261,614		286,952
Operating lease right-of-use assets		180,718		200,417
Investment and development property, net		8,336		8,792
Investment in unconsolidated joint ventures		4,488		4,756
Goodwill		24,597		25,504
Intangible assets, net		2,110		2,391
Deferred tax asset, net		489		447
Other assets		8,717		10,284
Total assets	$	532,597	$	587,055
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	41,896	$	42,590
Film rent payable		3,462		5,678
Debt - current portion		40,402		37,279
Subordinated debt - current portion		776		747
Taxes payable - current		2,390		300
Deferred revenue		8,616		10,286
Operating lease liabilities - current portion		22,977		23,971
Other current liabilities		6,673		813
Total current liabilities		127,192		121,664
Debt - long-term portion		138,560		148,688
Subordinated debt, net		27,117		26,950
Noncurrent tax liabilities		5,842		7,117
Operating lease liabilities - non-current portion		180,002		200,037
Other liabilities		11,829		19,320
Total liabilities	$	490,542	$	523,776
Commitments and contingencies (Note 15)
Stockholders’ equity:
Class A non-voting common shares, par value $0.01, 100,000,000 shares authorized,
33,528,994 issued and 20,592,834 outstanding at September 30, 2023 and
33,348,295 issued and 20,412,185 outstanding at December 31, 2022		236		235
Class B voting common shares, par value $0.01, 20,000,000 shares authorized and
1,680,590 issued and outstanding at September 30, 2023 and December 31, 2022		17		17
Nonvoting preferred shares, par value $0.01, 12,000 shares authorized and no issued
or outstanding shares at September 30, 2023 and December 31, 2022		—		—
Additional paid-in capital		154,903		153,784
Retained earnings/(deficits)		(67,104)		(48,816)
Treasury shares		(40,407)		(40,407)
Accumulated other comprehensive income		(5,647)		(1,957)
Total Reading International, Inc. stockholders’ equity		41,998		62,856
Noncontrolling interests		57		423
Total stockholders’ equity		42,055		63,279
Total liabilities and stockholders’ equity	$	532,597	$	587,055

See accompanying Notes to the Unaudited Consolidated Financial Statements.

3

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,
	2023		2022		2023		2022
Revenue
Cinema	$	62,688	$	48,359	$	165,731	$	147,476
Real estate		3,875		2,837		11,694		8,432
Total revenue		66,563		51,196		177,425		155,908
Costs and expenses
Cinema		(53,278)		(45,308)		(146,297)		(134,579)
Real estate		(2,281)		(2,352)		(6,600)		(6,715)
Depreciation and amortization		(4,580)		(5,010)		(13,908)		(15,781)
Impairment expense		—		—		—		(1,549)
General and administrative		(5,405)		(5,257)		(15,693)		(17,364)
Total costs and expenses		(65,544)		(57,927)		(182,498)		(175,988)
Operating income (loss)		1,019		(6,731)		(5,073)		(20,080)
Interest expense, net		(5,072)		(3,693)		(14,063)		(10,242)
Gain (loss) on sale of assets		—		(59)		—		(59)
Other income (expense)		267		5,455		356		8,445
Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures		(3,786)		(5,028)		(18,780)		(21,936)
Equity earnings of unconsolidated joint ventures		217		61		443		233
Income (loss) before income taxes		(3,569)		(4,967)		(18,337)		(21,703)
Income tax benefit (expense)		(896)		(332)		(313)		(1,492)
Net income (loss)	$	(4,465)	$	(5,299)	$	(18,650)	$	(23,195)
Less: net income (loss) attributable to noncontrolling interests		(65)		(122)		(361)		(228)
Net income (loss) attributable to Reading International, Inc.	$	(4,400)	$	(5,177)	$	(18,289)	$	(22,967)
Basic earnings (loss) per share	$	(0.20)	$	(0.23)	$	(0.82)	$	(1.04)
Diluted earnings (loss) per share	$	(0.20)	$	(0.23)	$	(0.82)	$	(1.04)
Weighted average number of shares outstanding–basic		22,273,423		22,043,823		22,208,757		22,011,755
Weighted average number of shares outstanding–diluted		22,273,423		22,043,823		22,208,757		22,011,755

See accompanying Notes to the Unaudited Consolidated Financial Statements. 

4

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; U.S. dollars in thousands)

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net income (loss)	$	(4,465)	$	(5,299)	$	(18,650)	$	(23,195)
Foreign currency translation gain (loss)		(1,686)		(8,279)		(3,038)		(15,268)
Gain (loss) on cash flow hedges		(26)		60		(813)		1,253
Other		52		49		156		154
Comprehensive income (loss)		(6,125)		(13,469)		(22,345)		(37,056)
Less: net income (loss) attributable to noncontrolling interests		(65)		(122)		(361)		(228)
Less: comprehensive income (loss) attributable to noncontrolling interests		(3)		(3)		(5)		(1)
Comprehensive income (loss)	$	(6,057)		(13,344)	$	(21,979)	$	(36,827)

See accompanying Notes to the Unaudited Consolidated Financial Statements. 

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5

READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; U.S. dollars in thousands)

	Nine Months Ended
	September 30,
	2023		2022
Operating Activities
Net income (loss)	$	(18,650)	$	(23,195)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity earnings of unconsolidated joint ventures		(443)		(233)
Distributions of earnings from unconsolidated joint ventures		468		283
(Gain) loss recognized on foreign currency transactions		—		(5,952)
Loss provision on impairment of asset		—		1,549
(Gain) Loss on sale of assets		—		59
Amortization of operating leases		14,871		17,342
Amortization of finance leases		23		30
Change in operating lease liabilities		(15,998)		(17,560)
Purchase of derivative instruments		—		(86)
Change in net deferred tax assets		(98)		(370)
Depreciation and amortization		13,908		15,781
Other amortization		1,157		1,225
Stock based compensation expense		1,364		1,379
Net changes in operating assets and liabilities:
Receivables		325		2,536
Prepaid and other assets		(483)		(1,768)
Payments for accrued pension		(513)		(513)
Accounts payable and accrued expenses		932		(2,333)
Film rent payable		(2,127)		(4,014)
Taxes payable		2,155		(8,131)
Deferred revenue and other liabilities		(3,257)		(2,143)
Net cash provided by (used in) operating activities		(6,366)		(26,114)
Investing Activities
Purchases of and additions to operating and investment properties		(6,191)		(6,387)
Contributions to unconsolidated joint ventures		—		(32)
Net cash provided by (used in) investing activities		(6,191)		(6,419)
Financing Activities
Repayment of borrowings		(6,862)		(7,535)
Repayment of finance lease principal		(25)		(32)
Proceeds from borrowings		3,839		—
Capitalized borrowing costs		(594)		(236)
(Cash paid) proceeds from the settlement of employee share transactions		(244)		(83)
Noncontrolling interest contributions		—		4
Noncontrolling interest distributions		—		(64)
Net cash provided by (used in) financing activities		(3,886)		(7,946)
Effect of exchange rate on cash and restricted cash		(897)		(2,242)
Net increase (decrease) in cash and cash equivalents and restricted cash		(17,340)		(42,721)
Cash and cash equivalents and restricted cash at the beginning of the period		34,979		88,571
Cash and cash equivalents and restricted cash at the end of the period	$	17,639	$	45,850
Cash and cash equivalents and restricted cash consists of:
Cash and cash equivalents	$	11,925	$	39,628
Restricted cash		5,714		6,222
	$	17,639	$	45,850
Supplemental Disclosures
Interest paid	$	13,826	$	9,082
Income taxes (refunded) paid		(697)		9,636
Non-Cash Transactions
Additions to operating and investing properties through accrued expenses		2,557		2,961

See accompanying Notes to the Unaudited Consolidated Financial Statements. 

6

READING INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 – Description of Business and Segment Reporting

Our 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, owned and operated through our various subsidiaries, consist primarily of:

the development, ownership, and operation of 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 our Company for which separate financial information is available and evaluated regularly by the Chief Executive Officer, the chief operating decision-maker of our Company. As part of our real estate activities, we hold undeveloped land in urban and suburban centers in the United States and New Zealand.

The table below summarizes the results of operations for each of our business segments for the quarter and nine months ended September 30, 2023, and 2022, respectively. Operating expense includes costs associated with the day-to-day operations of the cinemas and the management of rental properties, including our live theatre assets.

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2023		2022		2023		2022
Revenue:
Cinema exhibition	$	62,688	$	48,358	$	165,731	$	147,476
Real estate		5,056		4,070		15,338		12,265
Inter-segment elimination		(1,181)		(1,232)		(3,644)		(3,833)
	$	66,563	$	51,196	$	177,425	$	155,908
Segment operating income (loss):
Cinema exhibition	$	4,395	$	(2,137)	$	4,256	$	(5,902)
Real estate		920		(145)		3,212		(125)
	$	5,315	$	(2,282)	$	7,468	$	(6,027)

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)	2023		2022		2023		2022
Segment operating income (loss)	$	5,315	$	(2,282)	$	7,468	$	(6,027)
Unallocated corporate expense
Depreciation and amortization expense		(172)		(258)		(527)		(804)
General and administrative expense		(4,124)		(4,190)		(12,014)		(13,249)
Interest expense, net		(5,072)		(3,694)		(14,063)		(10,242)
Equity earnings of unconsolidated joint ventures		217		61		443		233
Gain (loss) on sale of assets		—		(59)		—		(59)
Other income (expense)		267		5,455		356		8,445
Income (loss) before income tax expense	$	(3,569)	$	(4,967)	$	(18,337)	$	(21,703)

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7

Note 2 – Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of our Company’s wholly-owned subsidiaries as well as majority-owned subsidiaries that our Company controls, and should be read in conjunction with our Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2022 (“2022 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, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

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) estimation of our Incremental Borrowing Rate (“IBR”) as relates to the valuation of our right-of-use assets and lease liabilities. Actual results may differ from those estimates.

Note 3 – Impact of COVID-19 Pandemic and the Writers and Actors Strikes on Operations and Liquidity

Cinema Segment Ongoing Impacts

With respect to the COVID-19 pandemic, the World Health Organization has declared that the COVID-19 emergency has passed. However, the legacy of COVID-19 continues to negatively impact the profitability of our cinema operating segment. The following factors, which are largely beyond our control, continue to impact the profitability of our global cinema segment compared to pre-pandemic levels:

(i)The number of movies released by the major Hollywood studios and other distributors, while increasing from pandemic levels, has not yet returned to pre-pandemic levels;

(ii)The timing of certain anticipated cinema releases and the effectiveness of cinema marketing related to cinema releases have been adversely affected by the now settled writers’ and actors’ strikes (the “Hollywood Strikes”);

(iii)Inflationary pressures, ongoing supply chain issues and increased variable operating expenses continue to compress margins as we encounter consumer resistance to price increases;

(iv)Labor costs continue to increase (due both to government mandates and labor shortages);

(v)The Reserve banks in the U.S., Australia and New Zealand have increased interest rates causing our cost of borrowing to increase materially; and

(vi)Increased fixed costs, such as third-party cinema rents, some of which are increasing due to long ago negotiated fixed rent increases, which are exacerbated on a cash flow basis now by our need to also pay certain rent deferrals accrued during the periods when our operations were closed or restricted due to the COVID-19 pandemic.

Notwithstanding the above, our global cinema segment operating income continues to grow when compared to pandemic periods. Movies leading the box office during this period included Barbie, Oppenheimer, Mission: Impossible – Dead Reckoning Part One, Indiana Jones and the Dial of Destiny, Teenage Mutant Ninja Turtles: Mutant Mayhem and Sound of Freedom. Despite the fact that our industry has not fully returned to pre-COVID-19 pandemic levels, our industry is recovering.

In light of the above factors, our Company continues its cost-reduction efforts in our cinema operating segment, including, but not limited to, restricting utilities and essential operating expenses to the minimum levels necessary, reducing employment costs by limiting hours of operation and/or shifts and increasing reliance on automation, and minimizing capital outlays. We continue to work with our landlords to manage our rent obligations. We have terminated cinema leases where their long-term profitability is in sufficient doubt.

Our Real Estate operating segment has been less impacted by the legacy impacts of the COVID-19 pandemic, with the exception of our assets associated with office space, such as 44 Union Square in New York City and 5995 Sepulveda in Culver City, California.

8

Going Concern

We continue to evaluate the going concern assertion required by ASC 205-40 Going Concern as it relates to our Company. The evaluation of the going concern assertion involves firstly considering whether it is probable that our Company has sufficient resources, as at the issue date of the financial statements, to meet its obligations as they fall due for twelve months following the issue date. Should it be probable that there are not sufficient resources, we must determine whether it is probable that our plans will mitigate the consequential going concern substantial doubt. Our evaluation is informed by current operating conditions (including the progressive improvement in both the cinema segment revenues and operating income due to the successful release of various movies during the period), liquidity positions, debt obligations, cash flow estimates, known capital and other expenditure requirements and commitments and our current business plan and strategies. Our Company’s business plan - two businesses (real estate and cinema) in three countries (Australia, New Zealand and the U.S.) - has served us well since the onset of COVID-19 and is key to management’s overall evaluation of ASC 205-40 Going Concern. As of December 31, 2022, in our Form 10-K, we reported that our plans were probable of being implemented and thus they alleviated the substantial doubt about our Company’s ability to continue as a going concern.

We have $58.6 million of debt maturing in the twelve months from the issue of this Form 10-Q. As at September 30, 2023, we have unrestricted cash of $11.9 million and negative working capital of $85.7 million. To alleviate doubt that our Company will be able to generate sufficient cash flows for the coming twelve-months, these loans need to be refinanced, our revenues and net income need to continue to improve, cinema rents need to be renegotiated downward, and/or funds need to be raised through asset monetizations.

We believe that it is probable that our outstanding loans with current maturities will be extended on terms reasonably acceptable to us. The maturity date of our loan on the Cinemas 123 from Valley National Bank was extended from April 1, 2023, to July 3, 2023, then to October 3, 2023 to allow additional time to complete a refinance under a term sheet, and has now been extended to October 1, 2024, following the refinance on September 29, 2023. We extended our loan on our Australian assets from NAB facility to July 31, 2025. With respect to our U.S. based loan from Santander ($8.0 million), we expect our lender to extend that loan for a reasonable period to allow for an appropriate refinance. With respect to our loan on our assets in New Zealand from Westpac ($8.3 million), we have requested an extension for a reasonable period to allow for an appropriate refinance.

We have begun active processes to monetize certain assets as detailed in Note 6. Based on the results of our asset monetizations in 2021, we believe these processes will produce net proceeds sufficient to alleviate any substantial doubt about our Company’s ability to continue as a going concern. As we monitor the cinema market conditions (such as improving box office and progression of the Hollywood Strike negotiations), we are also currently exploring the potential monetization of other real estate assets to further enhance our liquidity conditions for the long-term future of our Company.

As noted above, we are continuing to reduce our fixed costs of operation by renegotiating lease rents and closing non-performing cinemas upon the expiration of their current lease terms.

Notwithstanding some temporary release schedule impacts from the Hollywood Strikes, we believe that the global cinema industry will continue to recover in 2023 and into 2024 and 2025. This belief underpins our forecasts and cash flow projections. Our forecasts rely upon, among other things, the current industry movie release schedule, which demonstrates an increased number of movies from the major studios and other distributors and an improvement in the quality of the movie titles, and the public’s demonstrable desire to attend movies in a theatrical environment. These factors are both out of management’s control and are material, individually and in aggregate, to the realization of management’s forecasts and expectations.

In conclusion, as of the date of issuance of these financial statements, based on our evaluation of ASC 205-40 Going Concern and the current conditions and events, considered in the aggregate, and our various plans for enhancing liquidity and the extent to which those plans are progressing, we conclude that our plans are probable of being implemented and that they alleviate the substantial doubt about our Company’s ability to continue as a going concern.

Impairment Considerations

Our Company considers that the events and factors described above constitute impairment indicators under ASC 360 Property, Plant and Equipment. In 2022, when considered necessary, our Company performed quantitative recoverability tests of the carrying values of all its asset groups. These tests compare the carrying values of all asset groups to the estimated undiscounted future cash flows expected to result from the use of those asset groups. As a result of this testing, we recorded $1.5 million of impairment charges against certain cinema asset groups in the second quarter of 2022. The charges related to cinemas whose performance had not improved commensurate with the wider group. No further impairment charges were recorded in the remainder of the year. No impairment charges were recorded in nine months of 2023. Actual performance against our forecasts is dependent on several variables and conditions, many of which are subject to the uncertainties associated with COVID-19 and its aftermath, with government policy related to work-place regulation, increasing interest rates, inflationary impacts and with ongoing theatrical release patterns and applicable film rent, and as a result, actual results may materially differ from management’s estimates.

9

Our Company also considers that the events and factors described above continue to constitute impairment indicators under ASC 350 Intangibles – Goodwill and Other. Our Company performed a quantitative goodwill impairment test and determined that our goodwill was not impaired as of December 31, 2022. The test was performed at a reporting unit level by comparing each reporting unit’s carrying value, including goodwill, to its fair value. The fair value of each reporting unit was assessed using a discounted cash flow model based on the budgetary revisions performed by management in response to COVID-19 and the developing market conditions. No additional triggering events were identified in the first nine months of 2023, and therefore no goodwill impairment testing or charges were necessary. Actual performance against our forecasts is dependent on several variables and conditions, many of which are subject to the uncertainties associated with COVID-19 and its aftermath, with government policy related to work-place regulation, increasing interest rates, inflationary impacts and with ongoing theatrical release patterns and applicable film rent and as a result, actual results may materially differ from management’s estimates.

Note 4 – 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 expenses of those foreign operations. However, in recent periods, we have looked to our overseas operations to cover an increasing portion of our domestic general and administrative costs. 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, 2023. 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. We take a global view of our financial resources and are 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, 2023		December 31, 2022	September 30, 2022
Spot Rate
Australian Dollar	0.6451		0.6805	0.6437
New Zealand Dollar	0.6013		0.6342	0.5642
Average Rate
Australian Dollar	0.6551	0.6691	0.6946	0.6829	0.7071
New Zealand Dollar	0.6053	0.6179	0.6357	0.6127	0.6463

Note 5 – Earnings Per Share

Basic earnings per share (“EPS”) is calculated by dividing the net income attributable to our Company by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated by dividing the net income attributable to our Company 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.

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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)	2023		2022		2023		2022
Numerator:
Net income (loss) attributable to Reading International, Inc.	$	(4,400)	$	(5,177)	$	(18,289)	$	(22,967)
Denominator:
Weighted average number of common stock – basic		22,273,423		22,043,823		22,208,757		22,011,755
Weighted average dilutive impact of awards		—		—		—		—
Weighted average number of common stock – diluted		22,273,423		22,043,823		22,208,757		22,011,755
Basic earnings (loss) per share	$	(0.20)	$	(0.23)	$	(0.82)	$	(1.04)
Diluted earnings (loss) per share	$	(0.20)	$	(0.23)	$	(0.82)	$	(1.04)
Awards excluded from diluted earnings (loss) per share		205,122		911,732		205,122		911,732

Our weighted average number of common stock - basic increased, primarily as a result of the vesting of restricted stock units. We did not repurchase any shares of Class A Common Stock during the first nine months of 2023 and 2022.

Certain shares issuable under stock options and restricted stock units were excluded from the computation of diluted net income (loss) per share in periods when their effect was anti-dilutive; either because our Company incurred a net loss for the period, or the exercise price of the options was greater than the average market price of the common stock during the period, or the effect was anti-dilutive as a result of applying the treasury stock method.

Note 6 – Property and Equipment

Operating Property, net

Property associated with our operating activities as at September 30, 2023 and December 31, 2022, is summarized as follows:

	September 30,		December 31,
(Dollars in thousands)	2023		2022
Land	$	59,479	$	67,392
Building and improvements		202,302		213,226
Leasehold improvements		59,067		64,230
Fixtures and equipment		188,955		194,753
Construction-in-progress		4,845		6,839
Total cost		514,648		546,440
Less: accumulated depreciation		(253,034)		(259,488)
Operating property, net	$	261,614	$	286,952

Depreciation expense for operating property was $4.5 million and $13.8 million for the quarter and nine months ended September 30, 2023, respectively, and $4.9 million and $15.5 million for the quarter and nine months ended September 30, 2022, respectively.

Investment and Development Property, net

Our investment and development property as of September 30, 2023 and December 31, 2022, is summarized below:

	September 30,		December 31,
(Dollars in thousands)	2023		2022
Land	$	3,657	$	3,857
Construction-in-progress (including capitalized interest)		4,679		4,935
Investment and development property	$	8,336	$	8,792

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Construction-in-Progress – Operating and Investment 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, 2023, are shown below:

(Dollars in thousands)	Balance, ‎December 31, ‎2022		Additions during the period		Completed ‎during the ‎period		Foreign ‎currency ‎translation		Balance, ‎September 30, ‎2023
Courtenay Central development		6,380		—		—		(318)		6,062
Cinema developments and improvements		2,990		2,880		(3,542)		(61)		2,267
Other real estate projects		2,404		1,557		(2,744)		(22)		1,195
Total	$	11,774	$	4,437	$	(6,286)	$	(401)	$	9,524

Disposal Groups Held for Sale

Culver City, Los Angeles

In May 2023, we classified our Culver City administrative building, commonly known as 5995 Sepulveda Blvd., as held for sale. Our book value (as opposed to fair value) of the property is $11.2 million, being the lower of cost and fair value less costs to sell. No adjustments to the book value of the assets contained within this disposal group were required. The disposal group consists of land, a building and various leasehold improvements. We expect to complete the sale within 12 months. The property is currently encumbered with a $8.5 million first mortgage which will become due on sale. It is not anticipated that any pre-payment penalty or make-whole payment will be payable in connection with such payoff.

2483 Trenton Avenue, Williamsport, Pennsylvania

In June 2023, we classified our approximately 26.6-acre property at 2483 Trenton Avenue, Williamsport, Pennsylvania, as held for sale at the lower of cost and fair value less costs to sell. The current book value (as opposed to fair value) of the property is $460,000. The property is part of our historic railroad operations, consisting of land and an 18,000 square foot industrial building. No adjustments to the book value of the assets contained within this disposal group were required. We expect to complete the sale within 12 months. The property is unencumbered. We have retained CBRE as our exclusive agent for the marketing of this property.

Maitland Centre, New South Wales

In September 2023, we classified our freehold Maitland cinema as held for sale. Our book value (as opposed to fair value) of the property is $706,000, being the lower of cost and fair value less costs to sell. No adjustments to the book value of the assets contained within this disposal group were required. On October 25, 2023, we completed the sale of this property at a sales price of AU$2,800,000.

Note 7 – Leases

In all leases, whether we are the lessor or lessee, we define lease term as the non-cancellable term of the lease plus any renewals covered by renewal options that are reasonably certain of exercise based on our assessment of economic factors relevant to the lessee. The non-cancellable term of the lease commences on the date the lessor makes the underlying property in the lease available to the lessee, irrespective of when lease payments begin under the contract.

As Lessee

We have operating leases for certain cinemas, and finance leases for certain equipment assets. Our leases have remaining lease terms of 1 to 25 years, with certain leases having options to extend to up to a further 20 years. Lease payments for our cinema operating leases consist of fixed base rent, and for certain leases, variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics.

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The components of lease expense were as follows:

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2023		2022		2023		2022
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	8	$	8	$	23	$	30
Interest on lease liabilities		—		1		1		2
Operating lease cost		8,076		8,160		24,287		24,475
Variable lease cost		722		181		1,377		270
Total lease cost	$	8,806	$	8,350	$	25,688	$	24,777

Supplemental cash flow information related to leases is as follows:

	Nine Months Ended
	September 30,
(Dollars in thousands)	2023		2022
Cash flows relating to lease cost
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	26	$	33
Operating cash flows for operating leases		24,944		26,034
Right-of-use assets obtained in exchange for new operating lease liabilities		1,578		6,720

Supplemental balance sheet information related to leases is as follows:

	September 30,		December 31,
(Dollars in thousands)	2023		2022
Operating leases
Operating lease right-of-use assets	$	180,718	$	200,417
Operating lease liabilities - current portion		22,977		23,971
Operating lease liabilities - non-current portion		180,002		200,037
Total operating lease liabilities	$	202,979	$	224,008
Finance leases
Property plant and equipment, gross		356		363
Accumulated depreciation		(353)		(338)
Property plant and equipment, net	$	3	$	25
Other current liabilities		3		28
Total finance lease liabilities	$	3	$	28
Other information
Weighted-average remaining lease term - finance leases		0		1
Weighted-average remaining lease term - operating leases		11		11
Weighted-average discount rate - finance leases		5.21%		5.21%
Weighted-average discount rate - operating leases		4.56%		4.55%

The maturities of our leases were as follows:

(Dollars in thousands)	Operating ‎leases		Finance ‎leases
2023	$	8,149	$	3
2024		31,198		—
2025		29,159		—
2026		27,283		—
2027		24,977		—
Thereafter		139,619		—
Total lease payments	$	260,385	$	3
Less imputed interest		(57,406)		—
Total	$	202,979	$	3

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As Lessor

We have entered into various leases as a lessor for our owned real estate properties. These leases vary in length between 1 and 20 years, with certain leases containing options to extend at the behest of the applicable tenants. Lease components consist of fixed base rent, and for certain leases, variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics. None of our leases grant any right to the tenant to purchase the underlying asset.

Lease income relating to operating lease payments was as follows:

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2023		2022		2023		2022
Components of lease income
Lease payments	$	2,834		2,046	$	8,271	$	6,065
Variable lease payments		288		333		618		598
Total lease income	$	3,122	$	2,379	$	8,889	$	6,663

The book value of underlying assets under operating leases from owned assets was as follows:

	September 30,		December 31,
(Dollars in thousands)	2023		2022
Building and improvements
Gross balance	$	132,000	$	136,749
Accumulated depreciation		(27,234)		(26,148)
Net Book Value	$	104,766	$	110,601

The Maturity of our leases were as follows:

(Dollars in thousands)	Operating ‎leases
2023	$	2,345
2024		9,083
2025		8,696
2026		7,225
2027		6,541
Thereafter		28,045
Total	$	61,935

Note 8 – Goodwill and Intangible Assets

The table below summarizes goodwill by business segment as of September 30, 2023, and December 31, 2022.

(Dollars in thousands)	Cinema		Real Estate		Total
Balance at December 31, 2022	$	20,280	$	5,224	$	25,504
Foreign currency translation adjustment		(907)		—		(907)
Balance at September 30, 2023	$	19,373	$	5,224	$	24,597

Our Company is required to test goodwill and other intangible assets for impairment on an annual basis and, if current events or circumstances require them, on an interim basis. Our next annual evaluation of goodwill and other intangible assets is scheduled during the fourth quarter of 2023. To test the impairment of goodwill, our 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, 2023, we were not aware that any events indicating potential impairment of goodwill had occurred outside of those described at Note 3 – Impact of COVID-19 Pandemic and Liquidity.

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The tables below summarize intangible assets other than goodwill, as of September 30, 2023, and December 31, 2022, respectively.

	As of September 30, 2023
(Dollars in thousands)	Beneficial ‎Leases		Trade ‎Name		Other ‎Intangible ‎Assets		Total
Gross carrying amount	$	11,237	$	9,058	$	4,829	$	25,124
Less: Accumulated amortization		(11,030)		(7,956)		(4,020)		(23,006)
Less: Impairments		—		—		(8)		(8)
Net intangible assets other than goodwill	$	207	$	1,102	$	801	$	2,110

	As of December 31, 2022
(Dollars in thousands)	Beneficial ‎Leases		Trade ‎Name		Other ‎Intangible ‎Assets		Total
Gross carrying amount	$	12,216	$	9,058	$	4,915	$	26,189
Less: Accumulated amortization		(11,964)		(7,838)		(3,956)		(23,758)
Less: Impairments		—		—		(40)		(40)
Net intangible assets other than goodwill	$	252	$	1,220	$	919	$	2,391

Beneficial leases obtained in business combinations where we are the landlord are amortized over the life of the relevant leases. Trade names are amortized based on the accelerated amortization method over their estimated useful life of 30 years, and other intangible assets are amortized over their estimated useful lives of up to 30 years (except for transferrable liquor licenses, which are indefinite-lived assets). The table below summarizes the amortization expense of intangible assets for the quarter and nine months ended September 30, 2023

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2023		2022		2023		2022
Beneficial lease amortization	$	21	$	21	$	43	$	65
Other amortization		129		286		182		396
Total intangible assets amortization	$	150	$	307	$	225	$	461

Note 9 – 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, 2023, and December 31, 2022:

		September 30,		December 31,
(Dollars in thousands)	Interest	2023		2022
Rialto Cinemas	50.0%	$	860	$	920
Mt. Gravatt	33.3%		3,628		3,836
Total investments		$	4,488	$	4,756

For the quarter and nine months ended September 30, 2023 and 2022, 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)	2023		2022		2023		2022
Rialto Cinemas	$	25	$	(15)	$	(14)	$	(68)
Mt. Gravatt		192		76		457		301
Total equity earnings	$	217	$	61	$	443	$	233

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Note 10 – Prepaid and Other Assets

Prepaid and other assets are summarized as follows:

	September 30,		December 31,
(Dollars in thousands)	2023		2022
Prepaid and other current assets
Prepaid expenses	$	2,349	$	1,859
Prepaid taxes		1,181		1,687
Income taxes receivable		415		—
Prepaid rent		19		—
Deposits		247		233
Interest receivable		16		8
Investments in marketable securities		16		17
Total prepaid and other current assets	$	4,243	$	3,804
Other non-current assets
Other non-cinema and non-rental real estate assets		675		1,134
Investment in Reading International Trust I		838		838
Straight-line rent asset		7,196		8,302
Long-term deposits		8		10
Total other non-current assets	$	8,717	$	10,284

Note 11 – Income Taxes

The interim provision for income taxes is different from the amount determined by applying the U.S. federal statutory rate to consolidated income or loss before taxes. The differences are attributable to foreign tax rate differential, unrecognized tax benefits, and change in valuation allowance. Our effective tax rate was (1.7%) and (6.9%) for the nine months ended September 30, 2023 and 2022, respectively. The difference is primarily due to a decrease in reserve for unrecognized tax benefits in 2023. The forecasted effective tax rate is updated each quarter as new information becomes available. 

Note 12 – Borrowings

Our Company’s borrowings at September 30, 2023 and December 31, 2022, net of deferred financing costs and including the impact of interest rate derivatives on effective interest rates, are summarized below:

	As of September 30, 2023
(Dollars in thousands)	Maturity Date	Contractual ‎Facility		Balance, ‎Gross		Balance, ‎Net(1)		Stated ‎Interest Rate	Effective ‎Interest ‎Rate
Denominated in USD
Trust Preferred Securities (US)	April 30, 2027	$	27,913	$	27,913	$	27,117	9.63%	9.63%
Bank of America Credit Facility (US)	September 4, 2024		22,375		22,375		22,260	11.00%	11.00%
Cinemas 1, 2, 3 Term Loan (US)	October 1, 2024		21,061		21,061		20,805	8.31%	8.31%
Minetta & Orpheum Theatres Loan (US)(2)	November 1, 2023		8,000		8,000		7,998	8.22%	6.00%
U.S. Corporate Office Term Loan (US)	January 1, 2027		8,471		8,471		8,422	4.64% / 4.44%	4.61%
Union Square Financing (US)	May 6, 2024		55,000		46,840		46,447	12.52%	12.52%
Purchase Money Promissory Note (US)	September 18, 2024		776		776		776	5.00%	5.00%
Denominated in foreign currency ("FC") (3)
NAB Corporate Term Loan (AU)	July 31, 2025		64,831		64,831		64,708	5.85%	5.85%
Westpac Bank Corporate (NZ)	January 1, 2024		8,322		8,322		8,322	8.20%	8.20%
		$	216,749	$	208,589	$	206,855

(1)Net of deferred financing costs amounting to $1.7 million.

(2)The interest rate derivative associated with the Minetta & Orpheum loan provides for an effective fixed rate of 6.00%.

(3)The contractual facilities and outstanding balances of the foreign currency denominated borrowings were translated into U.S. dollars based on the applicable exchange rates as of September 30, 2023.

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	As of December 31, 2022
(Dollars in thousands)	Maturity Date	Contractual ‎Facility		Balance, ‎Gross		Balance, ‎Net(1)		Stated ‎Interest ‎Rate	Effective ‎Interest ‎Rate
Denominated in USD
Trust Preferred Securities (US)	April 30, 2027	$	27,913	$	27,913	$	26,950	8.41%	8.41%
Bank of America Credit Facility (US)(5)	March 1, 2024		26,750		26,750		26,663	10.00%	10.00%
Cinemas 1, 2, 3 Term Loan (US)(5)	April 1, 2023		22,455		22,455		22,208	6.63%	6.63%
Minetta & Orpheum Theatres Loan (US)(2)	November 1, 2023		8,000		8,000		7,974	7.12%	5.15%
U.S. Corporate Office Term Loan (US)	January 1, 2027		8,674		8,674		8,613	4.64% / 4.44%	4.64%
Union Square Financing (US)(3)	May 6, 2024		55,000		43,000		42,484	11.25%	7.40%
Purchase Money Promissory Note (US)	September 18, 2024		1,333		1,333		1,333	5.00%	5.00%
Denominated in foreign currency ("FC")(4)
NAB Corporate Term Loan (AU)	June 30, 2024		68,731		68,731		68,662	4.82%	4.82%
Westpac Bank Corporate (NZ)	January 1, 2024		8,777		8,777		8,777	6.95%	6.95%
Total		$	227,633	$	215,633	$	213,664

(1)Net of deferred financing costs amounting to $2.0 million.

(2)The interest rate derivative associated with the Minetta & Orpheum loan provided for an effective fixed rate of 5.15%.

(3)The interest rate derivative associated with the Union Square loan provided for an effective fixed rate of 7.40%.

(4)The contractual facilities and outstanding balances of the foreign currency denominated borrowings were translated into U.S. dollars based on the applicable exchange rates as of December 31, 2022.

(5)This financing facilities were extended after December 31, 2022.

Our loan arrangements are presented, net of the deferred financing costs, on the face of our consolidated balance sheet as follows:

	September 30,		December 31,
Balance Sheet Caption (Dollars in thousands)	2023		2022
Debt - current portion	$	40,402	$	37,279
Debt - long-term portion		138,560		148,688
Subordinated debt - current portion		776		747
Subordinated debt - long-term portion		27,117		26,950
Total borrowings	$	206,855	$	213,664

Bank of America Credit Facility

Our Bank of America facility now matures on September 4, 2024, following a Q1 2023 loan modification, which, among other things, extended the maturity date from March 1, 2024. The current facility requires monthly repayments of $725,000 commencing in May 2023, with a balloon payment upon maturity. Interest is charged at a fixed rate of 3.0% above the Bank of America Prime rate, which itself has a floor of 1.0%. Payment-in-kind interest of 0.5% accrues from January 1, 2024, but will be waived in the event of repayment of the entire debt prior to April 1, 2024.

Minetta and Orpheum Theatres Loan

On October 12, 2018, we refinanced our $7.5 million loan with Santander Bank, which is secured by our Minetta and Orpheum Theatres, with a loan for a five-year term of $8.0 million.  Such modification was not considered to be substantial under U.S. GAAP.   Our current loan with Bank Santander matured on November 1, 2023.   Based on conversations with the Bank Santander, and while no assurances can be given, we understand that Bank Santander is preparing a proposal for a short term extension of that loan. 

U.S. Corporate Office Term Loan

On December 13, 2016, we obtained a ten-year $8.4 million mortgage loan on our Culver City building at a fixed annual interest rate of 4.64%. On June 26, 2017, we obtained a further $1.5 million at a fixed annual interest rate of 4.44%.

Cinemas 1,2,3 Term Loan

Our Cinemas 1,2,3 Term Loan is held by Sutton Hill Properties LLC (“SHP”), a 75% owned subsidiary of RDI. On September 29, 2023, we extended the maturity of this loan from October 3, 2023, to October 1, 2024. The loan is with Valley National Bank, carries an interest rate of 3.50% above monthly SOFR, with a floor of 7.50%, and includes provisions for a prepaid interest reserve.

Union Square Financing

On May 7, 2021, we closed on a new three-year $55.0 million loan facility with Emerald Creek Capital secured by our 44 Union Square property and certain limited guarantees. The facility bears a variable interest rate of one month LIBOR plus 6.9% with a floor of 7.0 %

17

and includes provisions for a prepaid interest and property tax reserve fund. The loan has two 12-month options to extend, and may be repaid at any time, without the payment of any premium. As these options are within our control, we continue to keep the loan classified as long-term. The loan currently carries an interest rate of 12.52%.

Purchase Money Promissory Note

On September 18, 2019, we purchased for $5.5 million 407,000 shares of our Class A Common Stock in a privately negotiated transaction under our Share Repurchase Program. Of this amount, $3.5 million was paid by the issuance of a Purchase Money Promissory Note, which bears an interest rate of 5.0% per annum, payable in equal quarterly payments of principal plus accrued interest. The Purchase Money Promissory Note matures on September 18, 2024.

Westpac Bank Corporate Credit Facility (NZ)

Our Westpac Corporate Credit Facility for NZ$13.8 million matures on January 1, 2024. The facility currently carries an interest rate and line of credit charge of 2.40% above the Bank Bill Bid Rate and 1.65% respectively. Westpac has waived the requirement to test certain covenants for each quarter since the third quarter of 2020, including the current quarter and the quarter ending December 31, 2023.

Australian NAB Corporate Term Loan (AU)

Our Revolving Corporate Markets Loan Facility with National Australia Bank (“NAB”) matures on July 31, 2025. It currently consists of (i) a AU$100.5 million Corporate Loan facility at 1.75% above BBSY, of which AU$60.0 million is revolving and AU$40.5 million is core and (ii) a Bank Guarantee Facility of AU$5.0 million at a rate of 1.9% per annum. The last required AU$500,000 in principal payment for core Corporate Loan Facility, before maturity, was paid in full on October 31, 2023.

Note 13 – Other Liabilities

Other liabilities are summarized as follows:

	September 30,		December 31,
(Dollars in thousands)	2023		2022
Current liabilities
Lease liability	$	5,900	$	—
Accrued pension		684		684
Security deposit payable		53		68
Finance lease liabilities		3		28
Other		33		33
Other current liabilities	$	6,673	$	813
Other liabilities
Lease make-good provision		5,860		6,131
Accrued pension		2,771		3,138
Deferred rent liability		1,537		2,484
Environmental reserve		1,656		1,656
Lease liability		—		5,900
Acquired leases		5		11
Other non-current liabilities	$	11,829	$	19,320

Pension Liability – Supplemental Executive Retirement Plan

Details of our Supplemental Executive Retirement Plan are disclosed in Note 13 – Pension and Other Liabilities in our 2022 Form 10-K.

Included in our current and non-current liabilities are accrued pension costs of $3.5 million on September 30, 2023. The benefits of our pension plan are fully vested and therefore no service costs were recognized for the nine months ended September 30, 2023, and 2022. Our pension plan is unfunded.

During the quarter and nine months ended September 30, 2023, the interest cost was $47,000 and $146,000, respectively, and the actuarial loss was $52,000 and $155,000, respectively. During the quarter and nine months ended September 30, 2022, the interest cost was $53,000 and $165,000, respectively, and the actuarial loss was $52,000 and $155,000, respectively.

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Note 14 – Accumulated Other Comprehensive Income

The following table summarizes the changes in each component of accumulated other comprehensive income attributable to RDI:

(Dollars in thousands)	Foreign ‎Currency ‎Items		Unrealized ‎Gain (Losses) ‎on Available- ‎for-Sale ‎Investments		Accrued ‎Pension ‎Service Costs		Hedge ‎Accounting ‎Reserve		Total
Balance at January 1, 2023	$	(697)	$	(18)	$	(1,822)	$	580	$	(1,957)
Change related to derivatives
Total change in hedge fair value recorded in Other Comprehensive Income		—		—		—		(2)		(2)
Amounts reclassified from accumulated other comprehensive income		—		—		—		(811)		(811)
Net change related to derivatives		—		—		—		(813)		(813)
Net current-period other comprehensive income (loss)		(3,033)		1		155		(813)		(3,690)
Balance at September 30, 2023	$	(3,730)	$	(17)	$	(1,667)	$	(233)	$	(5,647)

Note 15 – Commitments and Contingencies

Litigation General

Insofar as our Company is aware, there are no claims, arbitration proceedings, or litigation proceedings that constitute material contingent liabilities of our Company. Such matters require significant judgments based on the facts known to us. These judgments are inherently uncertain and can change significantly when additional facts become known. We provide accruals for matters that have probable likelihood of occurrence and can be properly estimated as to their expected negative outcome. We do not record expected gains until the proceeds are received by us. However, we typically make no accruals for potential costs of defense, as such amounts are inherently uncertain and dependent upon the scope, extent and aggressiveness of the activities of the applicable plaintiff.

Litigation Matters

We are currently involved in certain legal proceedings and, as required, have accrued estimates of probable and estimable losses for the resolution of these claims, including legal costs.

Where we are the plaintiffs, we accrue legal fees as incurred on an on-going basis and make no provision for any potential settlement amounts until received. In Australia, the prevailing party is usually entitled to recover its attorneys’ fees, which recoveries typically work out to be approximately 60% of the amounts actually spent where first-class legal counsel is engaged at customary rates. Where we are a plaintiff, we have likewise made no provision for the liability for the defendant’s attorneys’ fees in the event we are determined not to be the prevailing party.

Where we are the defendants, we accrue for probable damages that insurance may not cover as they become known and can be reasonably estimated, as permitted under ASC 450-20 Loss Contingencies. In our opinion, any claims and litigation in which we are currently involved are not reasonably likely to have a material adverse effect on our business, results of operations, financial position, or liquidity. It is possible, however, that future results of the operations for any particular quarterly or annual period could be materially affected by the ultimate outcome of the legal proceedings. From time to time, we are involved with claims and lawsuits arising in the ordinary course of our business that may include contractual obligations, insurance claims, tax claims, employment matters, and anti-trust issues, among other matters.

Environmental and Asbestos Claims on Reading Legacy Operations

Certain of our subsidiaries were historically involved in railroad operations, coal mining, and manufacturing. Also, certain of these subsidiaries appear in the chain-of-title of properties that may suffer from pollution. Accordingly, certain of these subsidiaries have, from time to time, been named in and may in the future be named in various actions brought under applicable environmental laws. Also, we are in the real estate development business and may encounter from time to time environmental conditions at properties that we have acquired for development and which will need to be addressed in the future as part of the development process. These environmental conditions can increase the cost of such projects and adversely affect the value and potential for profit of such projects. We do not currently believe that our exposure under applicable environmental laws is material in amount.

From time to time, there are claims brought against us relating to the exposure of former employees to asbestos and/or coal dust. These are generally covered by an insurance settlement reached in September 1990 with our insurance providers1555. However, this insurance

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settlement does not cover litigation by people who were not employees of our historic railroad operations and who may claim direct or second-hand exposure to asbestos, coal dust and/or other chemicals or elements now recognized as potentially causing cancer in humans. Our known exposure to these types of claims, asserted or probable of being asserted, is not material.

Note 16 – Non-controlling Interests

These are composed of the following enterprises:

Australia Country Cinemas Pty Ltd. - 25% noncontrolling interest owned by Panorama Group International Pty Ltd;

Shadow View Land and Farming, LLC - 50% noncontrolling membership interest owned by the estate of Mr. James J. Cotter, Sr. (the “Cotter Estate”); and,

Sutton Hill Properties, LLC - 25% noncontrolling interest owned by Sutton Hill Capital, LLC (which in turn is 50% owned by the Cotter Estate).

The components of noncontrolling interests are as follows:

	September 30,		December 31,
(Dollars in thousands)	2023		2022
Australian Country Cinemas, Pty Ltd	$	82	$	26
Shadow View Land and Farming, LLC		(2)		(3)
Sutton Hill Properties, LLC		(23)		400
Noncontrolling interests in consolidated subsidiaries	$	57	$	423

The components of income attributable to noncontrolling interests are as follows:

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2023		2022		2023		2022
Australian Country Cinemas, Pty Ltd	$	25	$	15	$	60	$	76
Shadow View Land and Farming, LLC		1		(3)		1		(4)
Sutton Hill Properties, LLC		(91)		(134)		(422)		(300)
Net income (loss) attributable to noncontrolling interests	$	(65)	$	(122)	$	(361)	$	(228)

Summary of Controlling and Noncontrolling Stockholders’ Equity

A summary of the changes in controlling and noncontrolling stockholders’ equity is as follows:

	Common Stock								Retained				Accumulated		Reading
	Class A	Class A		Class B	Class B		Additional		Earnings				Other		International Inc.				Total
	Non-Voting	Par		Voting	Par		Paid-In		(Accumulated		Treasury		Comprehensive		Stockholders’		Noncontrolling		Stockholders’
(Dollars in thousands, except shares)	Shares	Value		Shares	Value		Capital		Deficit)		Shares		Income (Loss)		Equity		Interests		Equity
At January 1, 2023	20,412	$	235	1,681	$	17	$	153,784	$	(48,816)	$	(40,407)	$	(1,957)	$	62,856	$	423	$	63,279
Net income (loss)	—		—	—		—		—		(11,111)		—		—		(11,111)		(213)		(11,324)
Other comprehensive income, net	—		—	—		—		—		—		—		(1,293)		(1,293)		(1)		(1,294)
Share-based compensation expense	—		—	—		—		443		—		—		—		443		—		443
Restricted Stock Units	89		—	—		—		(132)		—		—		—		(132)		—		(132)
At March 31, 2023	20,501	$	235	1,681	$	17	$	154,095	$	(59,927)	$	(40,407)	$	(3,250)	$	50,763	$	209	$	50,972
Net income	—		—	—		—		—		(2,778)		—		—		(2,778)		(83)		(2,861)
Other comprehensive income, net	—		—	—		—		—		—		—		(740)		(740)		(1)		(741)
Share-based compensation expense	—		—	—		—		308		—		—		—		308		—		308
Restricted Stock Units	92		1	—		—		(113)		—		—		—		(112)		—		(112)
At June 30, 2023	20,593	$	236	1,681	$	17	$	154,290	$	(62,705)	$	(40,407)	$	(3,990)	$	47,441	$	125	$	47,566
Net income	—		—	—		—		—		(4,400)		—		—		(4,400)		(65)		(4,465)
Other comprehensive income, net	—		—	—		—		—		—		—		(1,657)		(1,657)		(3)		(1,660)
Share-based compensation expense	—		—	—		—		614		—		—		—		614		—		614
Restricted Stock Units	0		—	—		—		—		—		—		—		—		—		—
At September 30, 2023	20,593	$	236	1,681	$	17	$	154,904	$	(67,105)	$	(40,407)	$	(5,647)	$	41,998	$	57	$	42,055

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	Common Stock								Retained				Accumulated		Reading
	Class A	Class A		Class B	Class B		Additional		Earnings				Other		International Inc.				Total
	Non-Voting	Par		Voting	Par		Paid-In		(Accumulated		Treasury		Comprehensive		Stockholders’		Noncontrolling		Stockholders’
(Dollars in thousands, except shares)	Shares	Value		Shares	Value		Capital		Deficit)		Shares		Income (Loss)		Equity		Interests		Equity
At January 1, 2022	20,260	$	233	1,680	$	17	$	151,981	$	(12,632)	$	(40,407)	$	4,882	$	104,074	$	986	$	105,060
Net income (loss)	—		—	—		—		—		(15,354)		—		—		(15,354)		(99)		(15,453)
Other comprehensive income, net	—		—	—		—		—		—		—		3,524		3,524		1		3,525
Share-based compensation expense	—		—	—		—		415		—		—		—		415		—		415
Restricted Stock Units	52		1	—		—		(32)		—		—		—		(31)		—		(31)
Distributions to noncontrolling stockholders	—		—	—		—		—		—		—		—		—		(22)		(22)
At March 31, 2022	20,312	$	234	1,680	$	17	$	152,364	$	(27,986)	$	(40,407)	$	8,406	$	92,628	$	866	$	93,494
Net income	—		—	—		—		—		(2,436)		—		—		(2,436)		(7)		(2,443)
Other comprehensive income, net	—		—	—		—		—		—		—		(9,218)		(9,218)		1		(9,217)
Share-based compensation expense	—		—	—		—		466		—		—		—		466		—		466
Restricted Stock Units	49		—	—		—		(52)		—		—		—		(52)		—		(52)
Distributions to noncontrolling stockholders	—		—	—		—		—		—		—		—		—		(21)		(21)
At June 30, 2022	20,361	$	234	1,680	$	17	$	152,778	$	(30,422)	$	(40,407)	$	(812)	$	81,388	$	839	$	82,227
Net income	—		—	—		—		—		(5,177)		—		—		(5,177)		(122)		(5,299)
Other comprehensive income, net	—		—	—		—		—		—		—		(8,167)		(8,167)		(3)		(8,170)
Share-based compensation expense	—		—	—		—		497		—		—		—		497		--		497
Distributions to noncontrolling stockholders	—			—		—		—		—		—		—		--		(21)		(21)
At September 30, 2022	20,361	$	234	1,680	$	17	$	153,275	$	(35,599)	$	(40,407)	$	(8,979)	$	68,541	$	693	$	69,234

Note 17 – Stock-Based Compensation and Stock Repurchases

Employee and Director Stock Incentive Plan

2020 Stock Incentive Plan

On November 4, 2020, the Company enacted the 2020 Stock Incentive Plan, which was also approved by the Company’s stockholders on December 8, 2020 (the “2020 Plan”). Under the 2020 Plan, the number of permitted authorized shares for issuance was 1,250,000 (the “2020 Authorized Amount”).   Added to the 2020 Authorized Amount would be any awards outstanding under the 2010 Plan and 2020 Plan that were subsequently forfeited (for instance, through a then outstanding out of the money option) or if the related shares are repurchased, a corresponding number of shares would automatically become available for issuance under the 2020 Plan, thus resulting in a potential increase from the 2020 Authorized Amount available for issuance under the 2020 Plan.

Under the 2020 Plan, the Company may grant stock options and other share-based payment awards of our Class A Common Stock to eligible employees, directors and consultants. At September 30, 2023, there were 278,193 shares of Class A Common Stock available for issuance under the 2020 Plan, which includes shares from the 2010 Plan that become available for issuance due to the forfeiture of then outstanding out of the money stock options.

Stock options are granted at exercise prices equal to the grant-date market prices and typically expire no later than five years from the grant date. In contrast to a stock option where the grantee buys our Company’s share at an exercise price determined on the grant date, a restricted stock unit (“RSU”) entitles the grantee to receive one share for every RSU based on a vesting plan, typically between one year and four years from grant. As discussed further below, a performance component has been added to certain of the RSUs granted to management. At the time the options are exercised or RSUs vest and are settled, at the discretion of management, we will issue treasury shares or make a new issuance of shares to the option or RSU holder.

Stock Options

We have estimated the grant-date fair value of our stock options using the Black-Scholes option-valuation model, which takes into account assumptions such as the dividend yield, the risk-free interest rate, the expected stock price volatility, and the expected life of the options. We expensed the estimated grant-date fair values of options over the vesting period on a straight-line basis. Based on our historical experience, the “deemed exercise” of expiring in-the-money options and the relative market price to strike price of the options, we have not estimated any forfeitures of vested or unvested options.

No stock options were issued in the nine months ended September 30, 2023.

For the quarters ended September 30, 2023, and 2022, we recorded a compensation expense of $9,000 and $53,000, respectively. For the nine months ended September 30, 2023, and 2022, we recorded a compensation expense of $27,000 and $159,000, respectively, with respect to our prior stock option grants. At September 30, 2023, the total unrecognized estimated compensation expense related to non-vested stock options was $9,000, which we expect to recognize over a weighted average vesting period of 0.25 years. The intrinsic, unrealized value of all options outstanding vested and expected to vest, at September 30, 2023, was nil, as the closing price of our Class A Common Stock on that date was $2.12.

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The following table summarizes the number of options outstanding and exercisable as of September 30, 2023, and December 31, 2022:

	Outstanding Stock Options - Class A Shares
	Number ‎of Options	Weighted ‎Average ‎Exercise Price		Weighted ‎Average ‎Remaining ‎Years of ‎Contractual ‎Life	Aggregate ‎Intrinsic ‎Value
	Class A	Class A		Class A	Class A
Balance - December 31, 2021	517,344	$	15.42	1.66	$	—
Granted	—		—	—		—
Exercised	—		—	—		—
Forfeited	(189,846)		14.63	—		—
Balance - December 31, 2022	327,498	$	15.87	1.24	$	—
Granted	—		—	—		—
Exercised	—		—	—		—
Forfeited	(122,376)		—	—		—
Balance - September 30, 2023	205,122	$	15.92	0.45	$	—

Restricted Stock Units

The following table summarizes the status of RSUs granted to date as of September 30, 2023:

	Restricted Stock Units
	RSU Grants (in units)			Vested,	Unvested,	Forfeited,
Grant Date	Directors	Management	Total ‎Grants	September 30, ‎2023	September 30, ‎2023	September 30, ‎2023
Opening balance	189,880	507,635	697,515	642,908	18,758	35,849
April 5, 2021	—	262,830	262,830	90,804	149,008	23,018
April 19, 2021	—	22,888	22,888	10,831	10,560	1,497
August 11, 2021	26,924	—	26,924	26,924	—	—
December 8, 2021	48,951	—	48,951	48,951	—	—
April 18, 2022	—	428,899	428,899	75,721	316,601	36,577
December 15, 2022	73,683	—	73,683	—	73,683	—
April 11, 2023	—	413,536	413,536	—	413,536	—
April 21, 2023	—	237,719	237,719	—	237,719	—
April 28, 2023	—	20,427	20,427	—	20,427	—
Total	339,438	1,893,934	2,233,372	896,139	1,240,292	96,941

Time vested RSU awards to management vest 25% on the anniversary of the grant date and the remainder over a period of four years. Beginning in 2020, a performance component has been added to certain of the RSUs granted to management, which vest on the third anniversary of their grant date based on the achievement of certain performance metrics. From 2021 onwards, RSUs have two structures, which include time vesting and performance vesting. The majority of RSUs vest 75% evenly over a period of four years, with the remaining 25% contingent upon the achievement of certain performance metrics, vesting in full on the third anniversary of the date of the grant. In the case of our Chief Executive Officer, RSUs vest 50% evenly over a period of four years with the remaining 50%, contingent upon the achievement of certain performance metrics, vesting in full on the third anniversary of the grant date. On April 11 and April 21, 2023, the Board of Directors determined that our Company was not in a position to pay cash bonuses that would otherwise have been earned by certain members of management under our Company’s Incentive Compensation Plan for 2022, and authorized the issuance in lieu of such cash bonuses 85,139 RSUs, vesting on April 11, 2024 and 52,350 RSUs, vesting on April 21, 2024.

RSUs issued to non-employee directors vest on the first to occur of (i) 5:00 pm, Los Angeles, CA time on the last business day prior to the one-year anniversary of the Grant Date or (ii) the date on which the Recipient has served such Recipient’s full term as a Director.

For the quarters ended September 30, 2023, and 2022, we recorded compensation expense of $604,000 and $444,000, respectively. For the nine months ended September 30, 2023, and 2022, we recorded compensation expense of $1.3 million and $1.2 million, respectively. The total unrecognized compensation expense related to the non-vested RSUs was $4.1 million as of September 30, 2023, which we expect to recognize over a weighted average vesting period of 1.48 years.

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Stock Repurchase Program

On March 10, 2020, our Board of Directors authorized a $25.0 million increase to our 2017 stock repurchase program, bringing our total authorized repurchase amount remaining to $26.0 million, and extended the program to March 2, 2024. Through September 30, 2023, we have repurchased 1,792,819 shares of Class A Common Stock at an average price of $13.39 per share (excluding transaction costs). The last share repurchase made by our Company was made on March 5, 2020, at which time 25,000 shares were purchased at an average cost per share of $7.30.

Note 18 – Hedge Accounting

As of September 30, 2023, our Company held interest rate derivatives in the total nominal amount of $8.0 million. As of December 31, 2022, our Company held interest rate derivatives in the total notional amount of $51.0 million.

The derivatives are recorded on the balance sheet at fair value and are included in the following line items:

	Asset Derivatives
	September 30,			December 31,
	2023			2022
(Dollars in thousands)	Balance sheet location	Fair value		Balance sheet location	Fair value
Interest rate contracts	Derivative financial instruments - current portion	$	17	Derivative financial instruments - current portion	$	907
	Derivative financial instruments - non-current portion		—	Derivative financial instruments - non-current portion		—
Total derivatives designated as hedging instruments		$	17		$	907
Total derivatives		$	17		$	907

The changes in fair value are recorded in Other Comprehensive Income and released into interest expense in the same period(s) in which the hedged transactions affect earnings. In the quarter and nine months ended September 30, 2023 and September 30, 2022, respectively, the derivative instruments affected Comprehensive Income as follows:

(Dollars in thousands)	Location of Loss Recognized in Income on Derivatives	Amount of Loss (Gain) Recognized in Income on Derivatives
		Quarter Ended September 30				Nine Months Ended September 30
			2023		2022		2023		2022
Interest rate contracts	Interest expense	$	(26)	$	(252)	$	(812)	$	(204)
Total		$	(26)	$	(252)	$	(812)	$	(204)

	Loss (Gain) Recognized in OCI on Derivatives (Effective Portion)
(Dollars in thousands)	Amount				Amount
	Quarter Ended September 30				Nine Months Ended September 30
		2023		2022		2023		2022
Interest rate contracts	$	—	$	(312)	$	2	$	(1,457)
Total	$	—	$	(312)	$	2	$	(1,457)
	Loss (Gain) Reclassified from OCI into Income (Effective Portion)
Line Item	Amount				Amount
	Quarter Ended September 30				Nine Months Ended September 30
		2023		2022		2023		2022
Interest expense	$	(26)	$	(252)	$	(812)	$	(204)
Total	$	(26)	$	(252)	$	(812)	$	(204)

 The derivatives have no ineffective portion, and consequently no losses have been recognized directly in income.

Note 19 – Fair Value Measurements

ASC 820, Fair Value Measurement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities;

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and,

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Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As of September 30, 2023, and December 31, 2022, we had derivative financial assets carried and measured at fair value on a recurring basis of $17,000 and $907,000, respectfully. As of September 30, 2023, and December 31, 2022, we had no derivatives in a liability position.

The following tables summarize our financial liabilities that are carried at cost and measured at fair value on a non-recurring basis as of September 30, 2023, and December 31, 2022, by level within the fair value hierarchy.

			Fair Value Measurement at September 30, 2023
(Dollars in thousands)	Carrying ‎Value(1)		Level 1		Level 2		Level 3		Total
Notes payable	$	179,900	$	—	$	—	$	177,329	$	177,329
Subordinated debt		28,689		—		—		26,035		26,035
	$	208,589	$	—	$	—	$	203,364	$	203,364

			Fair Value Measurement at December 31, 2022
(Dollars in thousands)	Carrying ‎Value(1)		Level 1		Level 2		Level 3		Total
Notes payable	$	186,387	$	—	$	—	$	172,230	$	172,230
Subordinated debt		29,246		—		—		25,025		25,025
	$	215,633	$	—	$	—	$	197,255	$	197,255

(1)These balances are presented before any deduction for deferred financing costs.

The following is a description of the valuation methodologies used to estimate the fair value of our financial assets and liabilities. There have been no changes in the methodologies used as of September 30, 2023, and December 31, 2022.

Level 1 investments in marketable securities primarily consist of investments associated with the ownership of marketable securities in U.S. and New Zealand. These investments are valued based on observable market quotes on the last trading date of the reporting period.

Level 2 derivative financial instruments are valued based on discounted cash flow models that incorporate observable inputs such as interest rates and yield curves from the derivative counterparties. The credit valuation adjustments associated with our non-performance risk and counterparty credit risk are incorporated in the fair value estimates of our derivatives. As of September 30, 2023, and December 31, 2022, we concluded that the credit valuation adjustments were not significant to the overall valuation of our derivatives.

Level 3 borrowings include our secured and unsecured notes payable, trust preferred securities and other debt instruments. The borrowings are valued based on discounted cash flow models that incorporate appropriate market discount rates. We calculated the market discount rate by obtaining period-end treasury rates for fixed-rate debt, or LIBOR for variable-rate debt, for maturities that correspond to the maturities of our debt, adding appropriate credit spreads derived from information obtained from third-party financial institutions. These credit spreads take into account factors such as our credit rate, debt maturity, types of borrowings, and the loan-to-value ratios of the debt.

Our Company’s financial instruments also include cash, cash equivalents, receivables and accounts payable. The carrying values of these financial instruments approximate the fair values due to their short maturities. Additionally, there were no transfers of assets and liabilities between levels 1, 2, or 3 during the quarter and nine months ended September 30, 2023, and September 30, 2022.

Note 20 – Subsequent Events

On October 25, 2023, we closed on the sale of our property in Maitland, NSW in Australia for AU$2.8 million. We simultaneously entered into a lease back to Reading Cinemas for a 2-year period.

On November 1, 2023, we closed our Reading Cinema in Rohnert Park, California.

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This MD&A should be read in conjunction with the accompanying unaudited consolidated financial statements included in Part I, Item 1 (Financial Statements). The foregoing discussions and analyses contain certain forward-looking statements. Please refer to the “Cautionary Statement Regarding Forward-Looking Statements” included at the conclusion of this section and our “Risk Factors” set forth in our 2022 Form 10-K, Part 1 – Financial Information, Item 1A and the Risk Factors set out below.

Item 2 – Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations

The MD&A should be read in conjunction with our consolidated financial statements and related notes in this Report.

Business Overview & Updates

We continue to be optimistic about the current trajectory of our business and the cinema industry as a whole. Although we remain positive, we are currently, and have in recent years, been impacted by multiple factors. These factors are largely beyond our control, and continue to impact the profitability of our global cinema segment when compared to pre-pandemic levels:

Cinema patronage levels that have not yet returned to the higher pre-pandemic levels;

The number of movies released by the major Hollywood studios and other distributors, while increasing from pandemic levels, have not yet returned to their higher pre-pandemic levels;

The duration of the exclusive theatrical release window is under continuing pressure from cable and streaming;

Increased film rent expense, as distributors demand more and more rent for high profile movies;

Inflationary pressures, ongoing supply chain issues and increased operating expenses arising post-pandemic continue to push up our variable costs while we encounter consumer resistance to higher ticket prices;

Labor costs continue to increase (resulting from a combination of inflation and labor shortages);

Increased fixed costs for third party cinema rents, some of which are increasing due to fixed rent escalations, which are exacerbated by having to also pay our COVID-19 related rent deferrals for the periods of time when our operations were closed or restricted and

Reserve banks in the U.S., Australia and New Zealand have increased interest rates causing our cost of borrowing to increase materially.

In addition to the above factors impacting the income levels of our global cinema business, we are also monitoring the future potential impact of the Hollywood strikes on our global cinema business. On September 28, 2023, the Hollywood writers’ strike officially ended followed by the actors’ strike on November 8, 2023. While we are thrilled about the recent end of the Hollywood Strikes, we know that the duration of the strikes will likely impact our global cinema business in 2024 due to production delays and shifting theatrical release date. Nonetheless, the recent settlement gives us more confidence that 2023 will end on a positive note delivering a marked improvement over 2022.

Despite the above factors, we believe that with (i) the re-recognition by the major studios, and other distributors, including streamers such as Amazon and Apple, of the economic importance of the theatrical release of movies, (ii) the increasing quantity and quality of films being released to the cinemas compared to pandemic levels and (iii) the expansion of certain movie audiences (such as audiences for concert films and faith based films), that the long term prospects for our industry are positive. Still, it is generally recognized that there are currently too many cinemas in the U.S., and we are reviewing and culling our poor performers where possible. Fortunately, most of our cinemas are in good markets which are not, in our view, over-screened and we believe that oversupply is less of an issue in post-pandemic Australia and New Zealand. We have confidence that in the next few years, we will return to being able to again use our cinema cash flow to support our real estate development activities. We continue to receive and review proposals for new or available existing cinemas.

We are continuing to address the challenges of the post-COVID world. For instance, we are (i) increasing and improving our automated and self-service options at the cinema level to reduce labor costs, (ii) continuing to focus on our food and beverage offerings and now have liquor licenses in every U.S. cinema, and (iii) continuing to expand our alternative content program with the intention of attracting a broader and more diversified range of patrons. Despite COVID-19 legacy issues, the global cinema industry experienced a robust performance during the third quarter of 2023 which was ignited by the double feature of record-breaking films, Barbie and Oppenheimer.

We are also continuing to reduce our fixed costs of operation by closing non-performing cinemas upon the expiration of their current lease terms. In addition, in light of potential impacts to the movie release schedule in the next few years due to the Hollywood Strikes, we are in the process of seeking occupancy relief from existing cinema landlords. Over the first ten months of 2023, we have elected not to extend three underperforming US cinema leases.

While we are closing down non-performing theatres in the over-screened U.S., we are continuing to build and expand our circuit in Australia in New Zealand. In 2023, we have opened two new cinemas, representing 13 screens in Australia. We also have two more cinemas, representing an additional 11 screens that are in the pipeline: one in Queensland Australia and one in New Zealand.

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We also believe that, as our guests return to the cinema, we will see enhanced operating results from the expansion of our F&B menus and our continued improvement on the quality and diversity of our F&B offer. In the U.S., 100% of our cinemas are licensed for the sale of liquor, beer and wine.

Moreover, the remainder of the year features a unique and compelling film slate that is expected to continue driving audiences to the big screens. After a wildly successful record-breaking concert tour, the Taylor Swift: The Eras Tour movie was released on October 13^th, 2023 to excited movie-goers and continued to break records for the theaters. The “Swifties” came out in full force for opening weekend, making the movie the highest grossing concert film of all time in North America, grossing almost $93 million domestically in its opening weekend, and thus far has already earned over $241 million globally.

Recent Box Office Improvements

The third quarter of 2023 witnessed a significant boost in box office performance due to the highly anticipated release of Barbie and Oppenheimer on July 21, 2023. This double feature drove audiences across the globe to the big screens to experience the cultural phenomenon referred to as “Barbenheimer”, resulting in a strong quarterly box office that outperformed that of Q3 2022. As of date of this report, Barbie has generated over $1.4 billion in worldwide grosses, making it 2023’s highest grossing global movie and the highest grossing opening weekend for a non-franchise film ever. Similarly, Oppenheimer has generated over $948 million in worldwide grosses and as of the date of this report, it is the third highest grossing film of 2023.

The simultaneous release of these two highly acclaimed films generated a surge of excitement among moviegoers that benefited the cinema industry and the summer film line up immensely. Sound of Freedom, which was considered this summer’s unlikely box office hit, has generated over $244 million in worldwide grosses, as of today, making it one of the most successful independent films of all time. After a 5-year franchise hiatus, Mission: Impossible – Dead Reckoning has grossed over $567 million worldwide. Finishing off the summer season, Teenage Mutant Ninja Turtles: Mutant Mayhem has become the first non-Disney, non-Universal, and non-Marvel superhero animated movie to make over $118 million domestically. As of the date of this report, it has grossed over $180 million worldwide.

The success of these films continues to support our confidence in the long-term viability of the global cinema business and reinforces the industry's resilience in the face of ongoing challenges such as labor shortages, supply chain constraints, and rising costs. The continued enthusiasm of patrons for the movie-going experience, along with the increased availability of compelling and unique film content, has been the driving force behind this success. We are confident that we will continue to build on this box office momentum as we head into the final quarter of the year with another exciting film line-up. Audiences can look forward to the release of Hunger Games: The Ballad of Songbirds and Snakes, Napoleon, Wish, Migration, Wonka, The Color Purple, and Aquaman and the Lost Kingdom.

Real Estate Developments

In the United States, during the first quarter of 2022, we leased to Petco Animal Supplies Stores, Inc. (“Petco”), the cellar, ground floor, and second floor of our 44 Union Square property, representing approximately 42 percent of the leasable area of that building. Petco is in possession of the space and began paying cash rent in December 2022. Petco’s 44 Union Square flagship store opened on June 1, 2023.

Our real estate team continues to work to secure one or more tenants for the remaining space at 44 Union Square. We believe that the pandemic’s impact on the office leasing market in New York City and the slow pace of the “return to office” effort in New York City have adversely impacted leasing opportunities and will continue to adversely impact our efforts to locate an office tenant for the space at 44 Union Square. As a result, we are currently exploring non-office and alternative uses for the remainder of the building. Should we obtain a tenant, we already have mortgage financing in place for this project to cover leasing and tenant improvement costs.

As of September 30, 2023, all of our tenants were currently open for business at our Australian and New Zealand properties (with the exception of two new tenants in Australia completing new fit outs). Most of the rentable retail portions of our Courtenay Central location in New Zealand continue to be closed due to seismic concerns, however one tenant remains open and trading. Furthermore, there is also one tenant trading on our Wakefield property. Our open land areas in Wellington are generating parking revenues.

BUSINESS OVERVIEW

We are an internationally diversified company principally focused on the development, ownership, and operation of entertainment and real estate assets in the United States, Australia, and New Zealand. Currently, we operate in two business segments:

Cinema exhibition, through our 62 cinemas as of September 30, 2023.

Real estate, including real estate development and the rental of retail, commercial, and live theatre assets.

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We believe these two business segments complement and support one another. Prior to COVID-19, we used cash flows generated by our cinema operations to fund the front-end cash demands of our real estate development business. As a result of COVID-19, we relied more upon income from our real estate assets, and tapped into the imbedded value in those assets, to support our Company through the COVID-19 crisis. As COVID-19 impacts decrease, quality film product improves, and patrons return to our cinemas, we believe we will once again be able to rely on the cash flows generated by our cinema portfolio.

Despite the fact that our global cinema segment is improving at an income level, in light of our upcoming liquidity needs due to debt maturities, we have identified certain real estate assets to monetize to support our liquidity needs and will be exploring the monetization of other properties to the extent our liquidity needs require. We are steadfast in our belief that our two-pronged, diversified international business strategy will keep carrying our Company through these difficult times as we continue to navigate the uncertainty and challenges posed by the recent macroeconomic obstacles.

Key Performance Indicators

Food and Beverage Spend Per Patron

A key performance indicator utilized by management in our cinema segment is Food and Beverage (“F&B”) Spend Per Patron (“SPP”), which is calculated based on our total Food & Beverage Revenues on a post-tax basis divided by our attendance during a specific period.

One of our strategic priorities has been to continue upgrading the food and beverage menu at several of our global cinemas. As of September 30, 2023, we have a total of 39 theater locations with elevated food and beverage menus (i.e. menus that are beyond traditional popcorn, soda, and candy). We use F&B SPP as a measure of our food and beverage operational performance as compared to that of our competitors. Although the profitability of our food and beverage operations is influenced by numerous factors, including labor and cost of goods, F&B SPP serves as an indicator of our ability to achieve consistent strong top-line performance. In addition, F&B SPP highlights our ability to optimize revenue by effectively promoting and selling supplementary products to our customers during each visit. Moreover, this metric assists in evaluating how well we can differentiate our F&B offerings from our competitors. Management in turn uses F&B SPP to adjust food and beverage pricing strategies at our individual theaters, measure the effectiveness of promotional marketing initiatives, optimize menu offerings, and to ensure price barriers are not created for our attendance.

Average Ticket Price Per Patron

An additional key performance indicator utilized by management in our cinema segment is Average Ticket Price (“ATP”) Per Patron, which is calculated based on our total Box Office Revenues on a post-tax basis divided by our attendance during a specific period. ATP serves to measure our operational cinema performance when compared to that of our competitors. ATP is a useful metric for evaluating our ability to achieve a strong top line performance as we recover from the COVID-19 pandemic. In addition, ATP gauges the effectiveness of our cinemas’ pricing strategies and our ability to draw back audiences to our theaters. Management uses ATP to adjust and inform ticket pricing schemes for our individual theaters, measure the effectiveness of our content programming, and ensure that price barriers are not created for core guests.

Cinema Exhibition Overview

We operate our worldwide cinema exhibition businesses through various subsidiaries under various brands:

in the U.S., under the Reading Cinemas, Angelika Film Centers, and Consolidated Theatres brands.

in Australia, under the Reading Cinemas, the State Cinema by Angelika, and for our one unconsolidated joint venture theatre, Event Cinemas brands.

in New Zealand, under the Reading Cinemas and our two unconsolidated joint venture theatres, Rialto Cinemas brands.

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Shown in the following table are the number of locations and screens in our cinema circuit in each country, by state/territory/region, our cinema brands, and our interest in the underlying assets as of September 30, 2023.

	State / Territory /	Location	Screen	Interest in Asset ‎Underlying the Cinema
Country	Region	Count(3)	Count	Leased	Owned	Operating Brands
United States	Hawaii	6	74	6		Consolidated Theatres
	California	7	88	7		Reading Cinemas, Angelika Film Center
	New York	3	16	2	1	Angelika Film Center
	Texas	2	13	2		Angelika Film Center
	New Jersey	1	12	1		Reading Cinemas
	Virginia	1	8	1		Angelika Film Center
	Washington, D.C.	1	3	1		Angelika Film Center
	U.S. Total	21	214	20	1
Australia	Victoria	9	62	9		Reading Cinemas
	New South Wales	6	44	5	1	Reading Cinemas
	Queensland	7	64	4	3	Reading Cinemas, Angelika Film Center, Event Cinemas(1)
	Western Australia	4	27	3	1	Reading Cinemas
	South Australia	2	15	2		Reading Cinemas
	Tasmania	2	14	2		Reading Cinemas, State Cinema by Angelika
	Australia Total	30	226	25	5
New Zealand	Wellington	2	15	1	1	Reading Cinemas
	Otago	3	15	2	1	Reading Cinemas, Rialto Cinemas(2)
	Auckland	2	15	2		Reading Cinemas, Rialto Cinemas(2)
	Canterbury	1	8	1		Reading Cinemas
	Southland	1	5	1		Reading Cinemas
	Bay of Plenty	1	5		1	Reading Cinemas
	Hawke's Bay	1	4		1	Reading Cinemas
	New Zealand Total	11	67	7	4
GRAND TOTAL		62	507	52	10

(1)Our Company has a 33.3% unincorporated joint venture interest in a 16-screen cinema located in Mt. Gravatt, Queensland managed by Event Cinemas.

(2)Our Company is a 50% joint venture partner in two New Zealand Rialto Cinemas, with a total of 13 screens. We are responsible for the booking of these cinemas and our joint venture partner, Event Cinemas, manages their day-to-day operations.

(3)Our total location counts as of September 30, 2023, reflects all operating cinemas, including (i) the Angelika Film Center at South City Square in Australia, which opened on August 24, 2023, (ii) the Reading Cinemas at Busselton in Australia, which opened on September 22, 2023, (iii) the Reading Cinemas at Courtenay Central in New Zealand, which remains closed while we address certain seismic issues and (iv) two underperforming Consolidated Theatres in Hawaii were closed, as of July 9, 2023 and July 31, 2023 respectively.

Our cinema revenues consist primarily of cinema ticket sales, F&B sales, screen advertising, gift card purchases, cinema rentals, and online convenience fee revenue generated by the sale of our cinema tickets through our websites and mobile apps. Cinema operating expenses consist of the costs directly attributable to the operation of the cinemas, including (i) film rent expense, (ii) operating costs, such as employment costs and utilities, and (iii) occupancy costs. Cinema revenues and certain expenses fluctuate with the availability of quality first run films and the number of weeks such first run films stay in the market. For a breakdown of our current cinema assets that we own and/or manage, please refer to Part I, Item 1 – Our Business of our 2022 Form 10-K. We now present a discussion of recent material developments.

Cinema Additions and Pipeline

The latest additions to our cinema portfolio as of September 30, 2023, were as follows:

Armadale, Western Australia, Australia: On January 13, 2023, we took over an existing six-screen cinema in Armadale, Australia, a suburb of Perth in Western Australia.

South City Square, Brisbane, Australia: On August 24, 2023, we launched our first-ever Angelika Film Center outside of the United States at South City Square in Woolloongabba, Brisbane. The location currently operates as an eight-screen complex, featuring elevated food and beverage offerings (including alcoholic beverages) and recliner seating.

Busselton, Western Australia, Australia: On September 22, 2023, we opened a five-screen complex in the newly expanded Busselton Central Shopping Centre precinct of Busselton, Western Australia. The state-of-the-art complex features a TITAN LUXE screen, elevated food and beverage offerings, and recliner seating.

Our Board has authorized management to proceed with the negotiation of leases for two new state-of-the-art cinemas, one of which is Noosa in Queensland, Australia and the other in New Zealand.

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Cinema Upgrades

As of September 30, 2023, the upgrades to our cinema circuits’ film exhibition technology and amenities over the years are as summarized in the following table:

	Location Count	Screen ‎Count
Screen Format
Digital (all cinemas in our cinema circuit)	62	507
IMAX	1	1
TITAN XC and LUXE	27	33
Dine-in Service
Gold Lounge (AU/NZ)(1)	11	29
Premium (AU/NZ)(2)	17	45
Spotlight (U.S.)(3)	1	6
Upgraded Food & Beverage menu (U.S.)(4)	18	n/a
Premium Seating (features recliner seating)	33	198
Liquor Licenses (5)	48	n/a

(1)Gold Lounge: This is our "First Class Full Dine-in Service" in our Australian and New Zealand cinemas, which includes an upgraded F&B menu (with alcoholic beverages), luxury recliner seating features (intimate 25-50 seat cinemas) and waiter service.

(2)Premium Service: This is our "Business Class Dine-in Service" in our Australian and New Zealand cinemas, which typically includes upgraded F&B menu (some with alcoholic beverages) and may include luxury recliner seating features (less intimate 80-seat cinemas), but no waiter service.

(3)Spotlight Service: Our first dine-in cinema concept in the U.S. at Reading Cinemas in Murrieta, California. Six of our 17 auditoriums at this cinema feature waiter service before the movie begins with a full F&B menu, luxury recliner seating, and laser focus on customer service. Our Spotlight service has been temporarily suspended since the initial COVID-19 shutdown.

(4)Upgraded Food & Beverage Menu: Features an elevated F&B menu including a menu of locally inspired and freshly prepared items that go beyond traditional concessions, which we have worked with former Food Network executives to create. The elevated menu also includes beer, wine and/or spirits at most of our locations.

(5)Liquor Licenses: Licenses are applicable at each cinema location, rather than each cinema auditorium.  As of today, we have liquor licenses in 100% of the cinemas operating in the U.S.  In Australia, we have five liquor licenses pending, and in New Zealand we have two liquor licenses pending.

Recent Enhancements

United States

Renovation Work: As of September 30, 2023, we have converted 110 of our 214 U.S. auditoriums to luxury recliner seating. We have an agreement in place with our landlord at the Dallas Angelika for a complete remodel of that cinema, which we anticipate will be completed in Q1 of 2024.

Australia and New Zealand

Rouse Hill renovation: Reading Cinema Rouse Hill will undergo a lease obligated refurbishment focusing on the foyer, concessions and the addition of another all reclining Premium auditorium. The introduction of the hot food offer and streamlining operations to ensure minimal staffing requirement productivity. The Preliminary drawings have been completed and will develop into a construction set for project/lessor approval, building consents and tender. Siteworks are expected to be completed late Q1 2024.

Angelika Film Centre, South City Square: Australia’s first Angelika Film Centre opened on August 24, 2023 in the Woolloongabba (Queensland) South City Square development. The complex offers eight screens, all reclining seating, and exceptional hot food and liquor offerings. The fit-out project was completed within the allocated budget and time frame.

Other Cinema Upgrades: In addition, during the three-year period 2021 to 2023, we also improved Sunbury and State Cinema in Australia, as well as some non-lease driven renovations at Rouse Hill in New South Wales, Australia.

During 2023, we will continue to focus on the enhancement of our proprietary online ticketing and Food & Beverage capabilities, together with improving and expanding our social media platforms and interfaces. These are intended to enhance the convenience of our offerings and to promote guest affinity with the experiences and products that we are offering.

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Cinema Closures

Our cinema in Wellington, New Zealand remains closed due to seismic concerns pending the redevelopment of that ETC. On May 7, 2023, The Hutt Pop-Up in New Zealand was permanently closed due to the expiration of our lease. We chose not to continue the cinema as it was only brought online as a “pop up” to address a temporary opening in the market. As of the date of this report, we have also closed and terminated our lease agreements at two underperforming Consolidated Theatre locations in Hawaii (Koko Marina Center and Queen Kaahumanu Center) and, as of November 1, 2023, a Reading Cinemas in California (Rohnert Park). One cinema was on a month-to-month arrangement and the other two were at the end of their respective terms. The decision to terminate these three venues was based on our belief that none of these locations could be operated profitably in the current environment on any meaningful rent paying basis at the rents being demanded by their respective landlords. Both of the Hawaii locations are currently closed and without replacement tenants. The California location is still in de-fit status.

Real Estate Overview

Through our various subsidiaries, we engage in the real estate business through the development, ownership, rental or licensing to third parties of retail, commercial, and live theatre assets. Our real estate business creates long-term value for our stockholders through the continuous improvement and development of our investment and operating properties, including our ETCs. In addition to owning the fee interests in 10 of our cinemas (as presented in the table under Cinema Exhibition Overview), as of September 30, 2023, we:

own our 44 Union Square property in Manhattan comprised of retail and office space which is currently in the lease-up phase. The cellar, ground floor, and second floor of the building are now fully leased to Petco, which is in occupancy of its premises on a full rent paying basis.

own and operate four ETCs known as Newmarket Village (in a suburb of Brisbane), The Belmont Common (in a suburb of Perth), and Cannon Park (in Townsville) in Australia, and Courtenay Central (in Wellington) in New Zealand;

own and operate our administrative office building in Culver City, California, which is currently being held for sale;

own and operate our administrative office building in South Melbourne, Australia;

own and operate the fee interests in two developed commercial properties in Manhattan improved with live theatres comprised of a single stage in each location;

own a 75% managing member interest in a limited liability company which in turn owns the fee interest in and improvements constituting our Cinemas 1,2,3 located in Manhattan;

own an approximately 26.6-acre property in Williamsport, Pennsylvania, currently leased to Transco Railway Products, Inc and currently being held for sale;

own approximately 201-acres principally in Pennsylvania from our legacy railroad business, including the Reading Viaduct in downtown Philadelphia; and

have exercised our option to purchase the improvements and ground lease comprising our cinema, Village East by Angelika cinema, and headquarters building at 189 Second Avenue in Manhattan, such sale scheduled to close in July 2024.

For a breakdown of our real estate assets, made current by our discussion below, please refer to Part I, Item 1 – Our Business of our 2022 Form 10-K. We now present a discussion of recent material developments.
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Value-creating Opportunities

The implementation of most of our Company’s real estate development plans remained delayed due to the effects of the COVID-19 pandemic on the global cinema industry and the need to conserve capital and fund our cinema operation. However, we intend to continue to emphasize the prudent development of our real estate assets as we emerge from the pandemic.

United States:

44 Union Square Redevelopment (New York, N.Y.) – On January 27, 2022, we entered a long-term lease with Petco for the cellar, ground floor, and second floor of the building, representing 42% of the leasable area. Petco is in occupancy of its premises on a full rent cash paying basis and opened to the public on June 1, 2023. CBRE is currently engaged as our exclusive broker for the remaining space. While the space was originally designed for office uses, given the dramatic presence of the property on Union Square, the rebound in foot traffic being enjoyed by Union Square and our building’s great branding potential, we are considering, a range of uses beyond traditional office tenants, including short term and special purpose uses. While we cannot guarantee the successful leasing of the remaining space, our leasing team continues to actively pursue potential tenants.

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Minetta Lane Theatre (New York, N.Y.) – Prior to COVID-19, our theatre was used by Audible, to present plays featuring a limited cast of one or two characters and special live performance engagements on the Audible streaming service. Due to COVID-19, no shows were presented between March 2020 and October 8, 2021, the date on which public performances resumed, and during this period we provided certain abatements. Audible has resumed full operations at the theatre and extended its license arrangement with us through March 15, 2024. Audible has informed us that they would like to extend another two years with one year option. The parties will be working on an extension agreement in the near future. No assurances can be given that we will be able to enter into such a contract extension on terms acceptable to the Company.

Orpheum Theatre (New York, N.Y.) – Prior to COVID-19, our theatre was the home to STOMP. Due to COVID-19, no shows were presented between April 2020 and June 2021. Thereafter, performances were intermittent. During this period, we provided certain abatements. STOMP ultimately closed (after 30 years at our theatre) on January 8, 2023. Under our termination agreement with the producers of STOMP, we have certain rights to provide the New York City venue for any future production of that show. Following STOMP’s historic run at the Orpheum, a new show, The Empire Strips Back, ran for approximately three months and Comedian Rachel Bloom will host a short term run for Death, Let Me Do My Show from December 7, 2023, to January 6, 2024. We are also in discussions with other potential shows to license the Orpheum Theatre.

Cinemas 1,2,3 (New York, N.Y.) – Currently operated as the Cinemas 123, we have historically treated this property as an asset held for long term development. However, in light of a variety of factors, such as market conditions in Manhattan for real estate assets, cost of capital and demands on our liquidity, we have begun to explore alternatives for this property. These alternatives may include, again by way of example, the bringing in of a capital partner, the entering into a long-term ground lease (which could serve as the basis for medium to long term finance), and/or the sale (in whole or in part) of our interest in the property.

The Philadelphia Viaduct and Adjacent Properties (Philadelphia, Pennsylvania) – This continues to be an area of focus for us in 2023. We have, in recent periods, begun the process of demolishing obsolete structures on the Viaduct or on our properties adjacent to the Viaduct. The city is currently considering an ordinance which would allow it to acquire, in whole or in part, our interest in the Viaduct, and we are in discussions with community leaders about ways in which we can work together to bring enhanced value to our holdings.

Australia:

Newmarket Village ETC, (Brisbane, Australia) – We continue to work on the expansion and upgrade of our Newmarket Village ETC. Our site includes a 23,250 square foot parcel adjacent to the center, improved with an office building. Over the next few years, we will be evaluating development options for this space. As of the date of this report, the combined center and office building is 99% leased.

Cannon Park Center ETC, (Queensland, Australia) – We own two adjoining properties in Townsville, Queensland, Australia, (Cannon Park City Center and Cannon Park Discount Center) comprising approximately 9.4-acres which we operate as our Cannon Park Center ETC. The total gross leasable area of the two properties is 133,000 square feet. Our multiplex cinema is the anchor tenant. These properties are currently 94% leased.

The Belmont Common, (Belmont, Perth, Australia) – The total gross leasable area of the Belmont Common is 60,117 square feet. Our multiplex cinema is the anchor tenant with six third-party tenants and our Reading Cinemas, the site is currently 100% leased.

New Zealand:

Courtenay Central Redevelopment (Wellington) – Our Wellington property is comprised of three parcels representing approximately 161,082 square feet of land in the entertainment core of Wellington, we anticipate that this redevelopment opportunity will be a principal focus over the next few years. We remain optimistic about the development potential for our Courtenay Central property, in light of, among other things, (i) the successful June 3, 2023 opening of Takina Wellington Convention and Exhibition Center (wcec.co.nz), this capital city’s first premium conference and exhibition space that already has over a hundred conferences and events booked and internationally acclaimed exhibits scheduled, (ii) the loosening of certain height and density restrictions, and (iii) the lack of comparable building sites.

For a complete list of our principal properties, see Part I, Item 2 – Properties under the heading “Investment and Development Property.”

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Corporate Matters

Refer to Part I – Financial Information, Item 1 – Notes to Consolidated Financial Statements-- Note 17 – Stock-Based Compensation and Stock Repurchases for details regarding our stock repurchase program and Board, Executive and Employee stock-based remuneration programs.

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Please refer to our 2022 Form 10-K for more details on our cinema and real estate segments.

RESULTS OF OPERATIONS

The table below summarizes the results of operations for each of our principal business segments along with the non-segment information for the quarter and nine months ended September 30, 2023, and September 30, 2022, respectively:

		Quarter Ended				% Change		Nine Months Ended				% Change
(Dollars in thousands)		September 30, 2023		September 30, 2022		Fav/ ‎(Unfav)		September 30, 2023		September 30, 2022		Fav/ ‎(Unfav)
SEGMENT RESULTS
	Revenue
	Cinema exhibition	$	62,688		48,358	30	%	$	165,731	$	147,476	12	%
	Real estate		5,056		4,070	24	%		15,338		12,265	25	%
	Inter-segment elimination		(1,181)		(1,232)	4	%		(3,644)		(3,833)	5	%
	Total revenue		66,563		51,196	30	%		177,425		155,908	14	%
	Operating expense
	Cinema exhibition		(54,459)		(46,540)	(17)	%		(149,941)		(138,412)	(8)	%
	Real estate		(2,281)		(2,352)	3	%