Reading International Inc.
Annual Report 2017

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KREADING INTERNATIONAL INC - RDIFiled: March 16, 2018 (period: December 31, 2017)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017 or☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _______ to ______Commission File No. 1-8625READING INTERNATIONAL, INC.(Exact name of registrant as specified in its charter)​ NEVADA(State or other jurisdiction of incorporation or organization)5995 Sepulveda Boulevard, Suite 300Culver City, CA(Address of principal executive offices)95-3885184(I.R.S. Employer Identification Number) 90230(Zip Code)Registrant’s telephone number, including Area Code: (213) 235-2240Securities Registered pursuant to Section 12(b) of the Act:​Title of each className of each exchange on which registeredClass A Nonvoting Common Stock, $0.01 par valueNASDAQClass B Voting Common Stock, $0.01 par valueNASDAQSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934. Yes ☐ No ☑Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding12 months (or for shorter period than the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90days. Yes ☑ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to besubmitted 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 theregistrant was required to submit and post such files). Yes ☑ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best ofthe registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K of any amendments to thisForm 10-K. ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerginggrowth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.Large Accelerated Filer ☐ Accelerated Filer ☑ Non-Accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of March 12, 2018, there were21,497,716 shares of class A non-voting common stock, par value $0.01 per share and 1,680,590 shares of class B voting common stock, par value $0.01 pershare, outstanding. The aggregate market value of voting and nonvoting stock held by non-affiliates of the Registrant was $287,968,855 as of December 31,2017. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.READING INTERNATIONAL, INC.ANNUAL REPORT ON FORM 10-KYEAR ENDED DECEMBER 31, 2017INDEXPage​PART I3​Item 1 – Our Business3​Item 1A – Risk Factors18​Item 1B – Unresolved Staff Comments27​Item 2 – Properties28​Item 3 – Legal Proceedings32​Item 4 – Mine Safety Disclosures32​PART II32​Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities32​Item 6 – Selected Financial Data35​Item 7 – Management’s Discussions and Analysis of Financial Condition and Results of Operations37​Item 7A – Quantitative and Qualitative Disclosure about Market Risk57​Item 8 – Financial Statements and Supplementary Data58​Management’s Report on Internal Control over Financial Reporting59​Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements)60​Report of Independent Registered Public Accounting Firm (Internal Control over Financial Reporting)61​Consolidated Balance Sheets as of December 31, 2017 and 201662​Consolidated Statements of Income for the Three Years Ended December 31, 201763​Consolidated Statements of Comprehensive Income for the Three Years Ended December 31, 201764​Consolidated Statements of Stockholders’ Equity for the Three Years Ended December 31, 201765​Consolidated Statements of Cash Flows for the Three Years Ended December 31, 201766​Notes to Consolidated Financial Statements67​Schedule II – Valuation and Qualifying Accounts60​Item 9 – Change in and Disagreements with Accountants on Accounting and Financial Disclosure110​Item 9A – Controls and Procedures110​PART III111​PART IV112​Item 15 – Exhibits, Financial Statement Schedules112​SIGNATURES1152 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The information in this Annual Report on Form 10-K for the year ended December 31, 2017 ("2017 Form 10-K" or “2017 Annual Report”) contains certain forward-lookingstatements, including statements related to trends in the Company's business. The Company's actual results may differ materially from the results discussed in the forward-lookingstatements. Factors that might cause such a difference include those discussed in "Item 1 – Our Business," "Item 1A – Risk Factors," and "Item 7 – Management's Discussions andAnalysis of Financial Condition and Results of Operations" as well as those discussed elsewhere in this 2017 Form 10-K. PART I Item 1 – Our BusinessGENERALReading International, Inc. (“RDI” and collectively with our consolidated subsidiaries and corporate predecessors, the “Company,”“Reading”, “we,” “us,” or “our”) was incorporated in 1999 incident to our reincorporation in the State of Nevada. Our class A non-votingcommon stock (“Class A Stock”) and class B voting common stock (“Class B Stock”) are listed for trading on the NASDAQ Capital Market(Nasdaq-CM) under the symbols RDI and RDIB, respectively. Our Corporate Headquarters is located at 5995 Sepulveda Blvd, Suite 300,Culver City (a Los Angeles suburb), California, United States 90230.Our corporate website address is www.ReadingRDI.com. We provide, free of charge, on our website our annual report on Form 10-K,quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a)or 15(d) of the Exchange Act as soon as reasonably practicable after we have electronically filed such material with or furnished it to theSecurities and Exchange Commission (www.sec.gov). The contents of our Company website are not incorporated into this report. Ourcorporate governance charters for our Audit and Conflicts Committee and Compensation and Stock Options Committee are available onour website.BUSINESS DESCRIPTIONSynergistic Diversification and BrandingWe are a diversified company principally focused on the development, ownership and operation of entertainment and real property assets inthree jurisdictions: (i) United States (“U.S.”), (ii) Australia, and (iii) New Zealand. We group our businesses in two (2) operating segments:·Theatrical Motion Picture Exhibition (“Cinema Exhibition”), through our 59 cinemas, and,·Real Estate, including real estate development and the rental or licensing of retail, commercial and live theater assets comprisingsome 21,918,000 square foot of land and approximately 842,000 square feet of net rentable area.Our portfolio of commercial brands is described as follows:BusinessSegment / UnitOur Commercial BrandsCountryDescriptionWebsite LinkCinemaExhibition/ AllCountriesUnited States,Australia, NewZealandOur Reading Cinemas brand, a name we tookfrom our corporate predecessor (refer to Item 7 –Management’s Discussion & Analysis for ourCompany History), delivers movie entertainmentacross our three operating jurisdictions. All ourcinemas are equipped with the latest state-of-the-artdigital equipment, and some screens feature TITANXC/LUXE or IMAX.Reading Cinemas US Reading Cinemas AU Reading Cinemas NZ United StatesSince its opening in 1989, the Angelika FilmCenter (“AFC”) in New York City (“NYC”) is asuccessful and well-recognized dedicated arthousein the U.S., featuring independent and foreignfilms. Our Angelika brand now has five additionalcinemas in the U.S., including the states of Virginia,Texas, California, and Washington D.C. Angelika FilmCenter CONSOLIDATED THEATRESUnited StatesIn 2017, our Consolidated Theatres celebrated100 years of providing cinematic entertainment inthe state of Hawaii. Currently, we have one (1)cinema on the island of Maui and eight (8) cinemason the island of Oahu, including the newly-openedstate-of-the-art 8-screen cinema, Olino byConsolidated Theatres.ConsolidatedTheatres 3 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.BusinessSegment / UnitOur Commercial BrandsCountryDescriptionDescription United StatesOur City Cinemas circuit, which consists of fivecinemas in New York (including one managedcinema), features an eclectic mix of programming,from mainstream blockbusters to independent films.City Cinemas Real Estate /LeasingUnited StatesThe redevelopment of 44 Union Square, a historicUnion Square landmark in New York City, is underconstruction and we anticipate this flagship realestate property in the U.S. will be ready for tenantfit-out by 3rd quarter of 2018.44 Union Square AustraliaWe just completed a major expansion ofNewmarket Village, located in a suburb ofBrisbane, that added a new 8-screen ReadingCinemas with TITAN LUXE, an additional 10,150square feet (943m2) of restaurant tenants and 124parking spaces.Newmarket Village AustraliaAnchored by a 9-screen Reading Cinemas,Auburn/Redyard is an outdoor retail centerlocated in a suburb of Sydney that is undergoing amajor facelift to enhance and improve our retailtenancy mix and added three new restaurant tenantsin 2017.Auburn/Redyard AustraliaAnchored by our own Reading Cinemas, weacquired Cannon Park, comprised of two-adjoining retail centers in the State ofQueensland. The property was purchased inDecember 2015, in line with our strategic businessplan to organically grow our real estate business. Cannon ParkTownsville New ZealandAs a result of an earthquake in November 2016, wenow have the opportunity to re-think ourCourtenay Central expansion project, whichincludes plans to construct a supermarket. Thisproperty in the heart of New Zealand’s capital cityis anchored by our 10-screen Reading Cinemas,which re-opened in March 2017 following theearthquake. While we re-think our expansion plans,we have launched a pop up food and entertainmentexperience called The Courtyard.Courtenay Central Real Estate /Live TheatreUnited StatesWe continue to operate three (3) off-Broadway livetheatres, one (1) in Chicago and two (2) inManhattan, New York, all branded under LibertyTheatres.Liberty Theatres We synergistically bring together cinema based entertainment and real estate and believe that these two business segments complement oneanother, as our cinemas have historically provided the steady cash flows that allow us to be opportunistic in acquiring and holding realestate assets (including non-income producing land) and support our real estate development activities. Our real estate allows us todevelop an asset base that we believe will stand the test of time and one that is capable of being leveraged. More specifically, thecombination of these two segments provides a variety of business advantages including the following:4 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.·Cinema Anchor Tenancy. Cinemas can be used as anchors for larger retail developments (referred to as entertainment-themed centers, or“ETCs”), and our involvement in the cinema business can give us an advantage over other real estate developers or redevelopers whomust identify and negotiate with third-party anchor tenants. We have used cinemas to create our own anchors in the following ETCs:ETCCity, State or Region / Urban AreaRecent or In-development ProjectsNewmarket VillageNewmarket, Queensland / BrisbaneExpansion Project which added an 8-ScreenReading Cinemas and new retail and parkingspaces, completed December 2017.RedyardAuburn, New South Wales / SydneyExpansion Project to add new retail,completed December 2017. Re-developmentof public alfresco space, target completionQ3-18.Cannon ParkTownsville / QueenslandConcept master planning in development.Courtenay CentralWellington / New ZealandRe-design of Expansion Project in progress.BelmontPerth / Western AustraliaNo current development planned.·Reduced Pressure to Deliver Cinema Business Growth. Pure cinema operators can encounter financial difficulty as demands upon themto produce cinema-based earnings growth tempt them into reinvesting their cash flow into increasingly marginal cinema sites oroverpaying for existing cinemas. While we believe that there will continue to be attractive opportunities to acquire cinema assets and/orto develop upper-end specialty type theaters in the future, we do not feel pressure to build or acquire cinemas for the sake of addingunits or building gross revenues. This strategy has, over the years, allowed us to acquire cinemas at multiples of trailing theater cash flowbelow those paid by third parties in recent acquisitions. We intend to focus our use of cash flow on our real estate development andoperating activities, to the extent that attractive cinema opportunities are not available to us or that such funds are not needed forreinvestment to maintain our cinemas in a competitive position.·Flexibility in Property Use. We are always open to the idea of converting an entertainment property to another use, if there is a higherand better use for the property, or to sell individual assets, if we are presented with an attractive opportunity. Our Union Squareproperty, where redevelopment is currently in progress, and our Cinema 1,2,3 property on Third Avenue (near 60th Street) in New YorkCity, which is slated for redevelopment, were initially acquired as, and in the case of our Third Avenue property, continues to be used as,an entertainment property.Insofar as we are aware, we are the only publicly traded company in the world to apply this two-track, synergistic approach to the cinemaand real estate development businesses on an international basis. None of the major cinema exhibition companies (other than MarcusTheatres) have any material landholdings as they operate predominantly on a leased-facility model.We believe that this synergistic two-pronged strategy – which focuses on the building of long term real estate assets as well as cinemaoperations – has gained respect in the market, as the trading price of our stock has, generally speaking, outperformed those of our purecinema competitors in recent periods.Business Mix and Impact of Foreign Currency FluctuationsWe have worked to maintain a balance both between our cinema and real estate assets and between our U.S. and our Australian and NewZealand assets. In 2017, we invested approximately $38.1 million in our U.S. assets, including approximately $20.1 million for thedevelopment of our real estate assets (principally construction of our Union Square property) and $18.0 million for the improvements of ourcinema assets (principally upgrading our offerings at our existing cinemas). We invested approximately $35.6 million in our Australianassets, including approximately $28.2 million for the development of our real estate assets (principally at our Newmarket (Brisbane) andAuburn (Sydney) shopping centers), and $7.5 million for the development of our cinema assets (principally the fit out of our new cinema atNewmarket and the upgrade of certain other cinemas). We invested approximately $3.3 million in our New Zealand assets, includingapproximately $2.7 million for the development of real estate assets (principally towards the redevelopment of our Courtenay Centralassets), and approximately $571,000 for the development of cinema assets (principally upgrades).As shown in the chart within the International Business Risks section below, exchange rates for the currencies of these jurisdictions havevaried, sometimes materially. These ratios naturally have an impact on our revenues and asset values, which are reported in USD. Notwithstanding these fluctuations, however, we continue to believe that, over the long term, operating in Australia and New Zealand is aprudent diversification of risk. Australia has been identified by the United Nations as one of the Top 10 highest natural resources perperson in the world. In 2017, Deutsche Bank named Wellington the best place in the world to live. In 2013, the Organization for EconomicCo-operation and Development rated Australia as the best place to live and work in the world. In our view, the Australian and New Zealandlifestyles support our entertainment/lifestyle focus.At December 31, 2017, the book value of our assets was $423.0 million, and, as of that same date, we had a consolidated stockholders’ bookequity of $181.2 million. Calculated based on book value, $135.2 million, or 32% of our assets, relate to our cinema exhibition activitiesand $249.2 million, or 59%, of our assets, relate to our real estate activities. 5 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. For additional segment financial information, please see Note 1 – Description of Business and Segment Reporting to our 2017 consolidatedfinancial statements. We have diversified our assets among three countries: the United States, Australia, and New Zealand. Based on book value, at December 31,2017, we had approximately 45% of our assets in the United States, 40% in Australia and 15% in New Zealand compared to 40%, 42%, and18% respectively, at the end of 2016.At December 31, 2017, we had cash and cash equivalents of $13.7 million, which has been treated as a corporate asset. Our cash included$9.1 million denominated in U.S. dollars, $2.9 million (AU $3.6 million) in Australian dollars, and $1.7 million (NZ$2.4 million) in NewZealand dollars. We had non-current assets of $169.3 million in the United States, $158.5 million (AU$202.8 million) in Australia and$61.7 million (NZ$86.9 million) in New Zealand. We had $75.0 million unused capacity of available and unrestricted corporate creditfacilities at December 31, 2017.For 2017, our gross revenues in these jurisdictions were $143.8 million, $106.2 million, and $29.7 million, respectively, compared to$143.1 million, $97.5 million, and $29.9 million for 2016. The United States and Australia both posted revenue increases again in 2017primarily due to increased box office sales as a result of higher attendance in Australia and increases in our food & beverage (“F&B”). Otherrevenues increased in all jurisdictions including the business interruption insurance proceeds from our Courtenay Central insurance claim.New Zealand revenue decreased slightly in 2017 compared to 2016 due to the closure of our Courtenay Central ETC and the associated carparking building. The complex and Cinema re-opened for business in March 2017. CINEMA EXHIBITIONOverallWe are dedicated to creating inspiring cinema experiences for our guests through hospitality-styled comfort and service, cinematicpresentation, uniquely designed venues, curated film and event programming, and crafted food and beverage options. As discussedpreviously, we manage our worldwide cinema exhibition business under various brands. Historically, we have focused on the ownershipand/or operation of three categories of cinemas:·Modern stadium-seating multiplex cinemas featuring conventional film product;·Specialty and art cinemas, such as Angelika Film Centers in the U.S. and Rialto Cinema in New Zealand; and,·Conventional sloped-floor cinemas in certain markets, including New York City with its prohibitory occupancy and constructioncosts as well as small town markets that will not support the development of a modern stadium-design multiplex cinema. 6 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Shown in the following table are the number of locations and theatre screens in our theatre circuit in each country, by state/territory/ regionand indicating our cinema brands and our interest in the underlying asset as of December 31, 2017: State / Territory /LocationScreenInterest in Asset Underlyingthe CinemaCountryRegionCountCountLeasedOwnedOperating BrandsUnited StatesHawaii9989Consolidated TheatresCalifornia7887Reading Cinemas, Angelika Film CenterNew York(3)62351Angelika Film Center, City CinemasTexas2132Angelika Film CenterNew Jersey1121Reading CinemasVirginia181Angelika Film CenterWashington DC131Angelika Film CenterU.S. Total27245261AustraliaNew South Wales64342Reading CinemasVictoria6436Reading CinemasQueensland54823Reading Cinemas, Event Cinemas(1)Western Australia21611Reading CinemasSouth Australia2152Reading CinemasAustralia Total21165156New ZealandWellington21511Reading CinemasOtago31521Reading Cinemas, Rialto Cinemas(2)Auckland2152Reading Cinemas, Rialto Cinemas(2)Canterbury181Reading CinemasSouthland151Reading CinemasBay of Plenty151Reading CinemasHawke's Bay141Reading CinemasNew Zealand Total116765GRAND TOTAL594774712(1)The Company has a 33.3% unincorporated joint venture interest in a 16-screen cinema located in Mt. Gravatt, Queensland managed by Event Cinemas.(2)The Company is a 50% joint venture partner in two (2) New Zealand Rialto cinemas. We are responsible for the booking of these cinemas and our joint venture partner, Event Cinemas,manages their day-to-day operations.(3)Our New York statistics include one (1) managed cinema.We continue to focus on upgrading our existing cinemas and developing new cinema opportunities to provide our customers with premiumofferings, including luxury seating, state-of-the-art presentation including sound, lounges, cafés and bar service, and other amenities. In2017, we increased the number of auditoriums featuring luxury recliner seating from 58 to 112. In addition, we added large format TITANXC or LUXE screen offerings to 15 of our cinemas. Our circuit has been completely converted to digital projection and sound systems. In2017, we upgraded 6 of our auditoriums to feature Dolby ATMOS sound (including our new Newmarket site), which we consider to be thebest in the industry at this time.While attendance and gross box office was somewhat down for the exhibition industry in the U.S., Australia and New Zealand for 2017,compared to 2016, we believe that the cinema exhibition business will continue to generate fairly consistent cash flows in the years ahead,even in recessionary or inflationary environments, because people will continue to spend a reasonable portion of their entertainment dollarson entertainment outside of the home. When compared to other forms of outside-the-home entertainment, movies continue to be a popularand competitively priced option.Recognizing that the cinema exhibition business is considered a mature business, we continue to see growth opportunities in our cinemaexhibition business principally from (i) the enhancement of our existing cinemas, (ii) the development in select markets of art and specialtycinemas, (iii) the development of new state-of-the-art cinemas on land that we already own or may in the future acquire, and (iv) thedevelopment of new cinemas in selected markets. While we continue to consider possible opportunities in third party developments, weprefer, where possible, to put our capital to work in properties that we own rather than take on potentially burdensome lease obligationswith their built-in rent increases and pass-throughs. 7 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We continue to expand and upgrade our circuit on an opportunistic basis. Our philosophy is not one of growth at any cost and our goal isnot to have more screens than anyone else. Rather, our goal is to have high quality, consistently grossing cinemas, and to grow on a steadyand sustainable basis. In 2017, we opened a new 8 screen cinema at our Newmarket Shopping Center in Brisbane, Australia, and began theprocess of repositioning our Cal Oaks cinema, located in Murrieta, California which will feature our new “Spotlight” level of service in 6out of the 17 auditoriums. “Spotlight” puts focus directly on our customers by providing an in-auditorium, waitered, enhanced F&Bexperience for their enjoyment. We also upgraded 54 of our screens to luxury seating and extended our enhanced food offerings (featuringalcoholic beverages) to 26 of our cinemas. In 2016, we opened an eight-screen, state-of-the-art cinema, branded Olino by ConsolidatedTheatres, our ninth theatre and first to break ground since 2001 in the state of Hawaii. In 2015, we opened a new state-of-the-art cinema(eight screens) in Auckland, New Zealand, completed the renovation and rebranding as an “Angelika” luxury art cinema of ourconventional cinema at the Carmel Mountain Plaza in San Diego, California, completely renovated our fourteen-screen Harbourtowncinema in Queensland, Australia, and added the first IMAX screen to our circuit. We currently have 3 new cinemas, representing 17 screens,in our pipeline for opening before the end of 2019, with 15 existing cinemas, representing 113 screens, scheduled for significant updatingand refurbishment during that same period.Since 2015, we have consistently executed our strategic priority of upgrading the food and beverage menu at a number of our U.S. cinemas.We are focused on the renovation and upgrading of our existing U.S. cinemas, along the lines of our Carmel Mountain cinema. Workingwith Bruce Seidel (veteran Food Network executive) of Hot Lemon Productions and chef Santos Loo, we are upgrading our food andbeverage offerings. During 2017, we created our “Spotlight” service concept, which is being implemented at our Cal Oaks cinema. Wehave obtained beer and wine, and in some cases liquor, licenses for 12 of our venues in the U.S. and are in the application process for anadditional 4 venues. As a result we are currently offering alcoholic beverages at 12 of our U.S. cinemas. In our international cinemaoperations, we offer beer and wine menu options for 10 of our cinema locations in Australia and four of our cinema locations in NewZealand.On January 31, 2016, following our run of “Star Wars: The Force Awakens”, we surrendered our Gaslamp Cinema in San Diego. In 2015, wepaid the landlord a $1.0 million negotiated termination fee, which was less expensive than continuing to operate an unprofitable theater atthis location. This cinema was acquired in 2008 as a part of the acquisition of a package of 15 locations from Pacific Theatres. The cinemawas, at that time, a substantial money-loser and the purchase price was calculated taking into account the losses generated by that cinemaand the likelihood that such losses would continue into the future.Operating InformationAt December 31, 2017, our principal tangible assets included:·interests in 58 cinemas comprising some 473 screens;·fee interests in three live theaters (the Orpheum and Minetta Lane in Manhattan and the Royal George in Chicago);·fee interest in one cinema (the Cinemas 1,2,3), in New York City;·fee interests in two cinemas in Australia (Bundaberg and Maitland) and four cinemas in New Zealand (Dunedin, Invercargill,Napier and Rotorua);·fee interest in our Union Square property, previously used by us as a live theater venue and for rental to third parties and nowbeing redeveloped for retail and office uses;·our ETCs in Sydney (Redyard Center), Brisbane (Newmarket Center), Townsville (Cannon Park), Perth (Belmont) and Wellington(Courtenay Central);·an interest in 70.4 acres of currently vacant land located between Auckland and the airport, zoned for light industrial andindustrial purposes.·an interest in 202 acres of currently vacant land located in Coachella, California zoned for residential and mixed use purposes.·fee interest in 2 office buildings, our corporate office in Culver City, Los Angeles as well as an office in Melbourne, Australia.Both buildings are mixed use assets, housing our corporate staff with any surplus space rented, or available to rent to third parties.·In addition to the fee interests described immediately above, fee ownership of approximately 20.7 million square feet of developedand undeveloped real estate in the United States, Australia and New Zealand; and,·cash and cash equivalents, aggregating $13.7 million.Although we operate cinemas in three jurisdictions, the general nature of our operations and operating strategies does not vary materiallyfrom jurisdiction-to-jurisdiction. In each jurisdiction, our gross receipts are primarily from box office receipts, food and beverage sales, andscreen advertising. Our ancillary revenue is created principally from theater rentals (for example, for film festivals and special events), andancillary programming (such as concerts and sporting events).Our cinemas generated approximately 63% of their 2017 revenue from box office receipts. Ticket prices vary by location, and in selectedlocations we offer reduced rates for senior citizens, children and, in certain markets, military and students.8 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Show times and features are placed in advertisements on our various websites, on internet sites and, in some markets, in local newspapers.Film distributors may also advertise certain feature films in various print, radio and television media, as well as on the internet, and thosecosts are generally paid by distributors. We are increasing our presence in social media, thereby reducing our dependency on printadvertising.F&B sales accounted for approximately 30% of our total 2017 cinema revenue. Although certain cinemas have licenses for the sale andconsumption of alcoholic beverages, historically F&B products have been primarily popcorn, candy, and soda. This is changing, as more ofour theaters are offering expanded food and beverage offerings. One of our strategic focuses is to upgrade our existing cinemas withexpanded F&B offerings.Screen advertising and other revenue contribute approximately 7% of our total 2017 cinema revenue. With the exception of certain rightsthat we have retained to sell to local advertisers, generally speaking, we are not in the screen advertising business and nationallyrecognized screen-advertising companies contract with us for the right to show such advertising on our screens.Management of CinemasWith the exception of our three unconsolidated cinemas, we manage our cinemas with executives located in Los Angeles and Manhattan inthe U.S.; Melbourne, Australia; and Wellington, New Zealand. Our two New Zealand Rialto cinemas are owned by a joint venture in whichReading New Zealand is a 50% joint venture partner. While we assist in the booking of these two cinemas, our joint venture partner, EventCinemas, manages their day-to-day operations. In addition, we have a one-third interest in a 16-screen Brisbane cinema managed by EventCinemas.Licensing and PricingFilm product is available from a variety of sources, ranging from the major film distributors, such as Paramount Pictures, Twentieth CenturyFox, Warner Bros, Buena Vista Pictures (Disney), Sony Pictures Releasing, Universal Pictures and Lionsgate, to a variety of smallerindependent film distributors. In Australia and New Zealand, some of those major distributors distribute through local unaffiliateddistributors. Worldwide, the major film distributors dominate the market for mainstream conventional films. In the U.S., art and specialtyfilm is distributed through the art and specialty divisions of these major distributors, such as Fox Searchlight and Sony Pictures Classics,and through independent distributors such as A24 and Annapurna Pictures. Generally speaking, film payment terms are based upon anagreed-upon percentage of box office receipts that will vary from film-to-film.Competition In certain of our U.S. markets, film may be allocated by the applicable distributor among competitive cinemas, commonly known as“clearance”, while in other such U.S. markets we have access to all film in the market. This is discussed in greater detailbelow. Accordingly, from time-to-time, we are unable to license every film that we may desire to play. In the Australian and New Zealandmarkets, we generally have access to all film product in the market.We believe that the success of a cinema depends on its access to popular film product because film patrons tend to decide on a film theywould like to see first and then a cinema where the film is available. If a particular film is only offered at one cinema in a given market, thencustomers wishing to see that film will, out of necessity, go to that cinema. If two or more cinemas in the same market offer the same film,then customers will typically take into account factors such as the relative convenience, quality and cost of tickets at the various cinemas.For example, most cinema patrons seem to prefer a modern stadium-design multiplex to an older sloped-floor cinema, and to prefer a cinemathat either offers convenient access to free parking (or public transport) over a cinema that does not.This view is being challenged by some exhibitors, who are now promoting a “dine-in” concept. These exhibitors believe that if offered theright environment, consumers will choose the venue first, and the movie second. We believe that the jury is out as to the economicviability of this concept given, among other things, the space and fit-out costs involved, the necessarily reduced seat count where food isserved at the seat, the split between consumers who want and who oppose having in-auditorium dining (some people just want to see themovie, and find in-auditorium service and dining to be a distraction from the movie itself), and the pricing of such offerings. It also appearsto us, that one still needs to at least offer top film product. So, even with these dine-in theaters, access to film remains a principal concern.In certain markets in the U.S., distributors typically take the position that they are free to provide or not provide their films to particularexhibitors, at their complete and absolute discretion, even though the number of “digital prints” is theoretically unlimited and alladvertising for conventional film is paid for by the distributors. Some competitors, like AMC, have in recent periods been increasinglyaggressive in their efforts to prevent competitors’ access to film product in film zones where they have cinemas. Currently we still faceclearance situations in several markets.9 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.However the use of clearances is currently being challenged. We believe that, as the two principal justifications for clearances (the cost ofproducing an additional print and the shared advertising cost) no longer exist, that ultimately clearances should (except in exceptionalcases – for example where a distributor’s strategy is for a limited or staged release) go away. If this occurs, on balance, we believe that thiswill be a positive development for us, as it will generally increase our access to film in competitive markets. Pressure on the major chains tostop using “clearances” is increasing. An investigation by the United States Department of Justice, Antitrust Division, into the possibleanticompetitive activities of major chains has been initiated. Also, there have been private lawsuits by small chains to stop the practice. For example, iPic Theaters has obtained a temporary injunction against clearance practices by one major chain in Harris County, Texas, andis seeking further injunctions against other major chains in Texas as well as in other jurisdictions, such as the District of Columbia. In 2016,several major distributors (including 20th Century Fox and Universal Studios) announced that they would no longer grant clearances. Webelieve that this will increase our access to top film product.For now, competition for films can be intense, depending upon the number of cinemas in a particular market. Our ability to obtain topgrossing first run feature films may be adversely impacted by our comparatively small size, and the limited number of screens and marketsthat we can supply to distributors. Moreover, in the United States, because of the dramatic consolidation of screens into the hands of a fewvery large and powerful exhibitors such as Cineworld (the new owners of Regal), AMC (including the newly acquired Carmike) andCinemark, these mega-exhibition companies are in a position to offer distributors access to many more screens in major markets than wecan. Also, the majors have a significant number of markets where they operate without material competition, meaning that the distributorshave no alternative exhibitor for their films in these markets. Accordingly, distributors may decide to give preference to these mega-exhibitors when it comes to licensing top-grossing films, rather than deal with independents such as ourselves. The situation is different inAustralia and New Zealand, where typically every major multiplex cinema has access to all of the film currently in distribution, regardlessof the ownership of that multiplex cinema. However, on the reverse side, we have suffered somewhat in these markets from competitionfrom boutique operators, who are able to book top grossing commercial films for limited runs, thus increasing competition for customerswishing to view such top grossing films.In general, our cinemas are modern multiplex cinemas with competitive parking. The availability of state-of-the-art technology and/orluxury seating can also be a factor in the preference of one cinema over another. In recent periods, a number of cinemas have been openedor re-opened featuring luxury seating and/or expanded food and beverage service, including the sale of alcoholic beverages and foodserved to the seat. We have, for a number of years, offered alcoholic beverages in certain of our Australia and New Zealand cinemas and atcertain of our Angelika Film Centers in the U.S. We are currently working to upgrade the seating and food and beverage offerings(including the offering of alcoholic beverages) at a number of our existing cinemas.The film exhibition markets in the United States, Australia, and New Zealand are to a certain extent dominated by a limited number ofmajor exhibition companies. The principal exhibitors in the United States are AMC (with 11,247 screens in 1,027 cinemas, which includesthe information of newly acquired Carmike), Regal (with 7,315 screens in 561 cinemas), recently acquired by Cineworld Group, the U.K.’slargest cinema operator, and Cinemark (with 4,561 screens in 339 cinemas). As of December 31, 2017, we were the 9th largest exhibitorwith 1% of the box office in the United States with 245 screens in 27 cinemas under management.The principal exhibitors in Australia are Greater Union, which does business under the Event Cinemas name (a subsidiary of AmalgamatedHoldings Limited) (“Event”), Hoyts Cinemas (“Hoyts”), and Village Cinemas (“Village”). The major exhibitors control approximately 76%of the total cinema box office: Event 41%, Hoyts 22%, and Village 13%. Event has 566 screens nationally, Hoyts 354 screens, and Village210 screens. By comparison, our 149 screens (excluding any partnership theaters) represent approximately 7% of the total box office. InJune 2015, Hoyts was acquired by Wanda, which also holds a controlling interest in AMC.The principal exhibitors in New Zealand are Event Cinemas with 116 screens nationally and Hoyts with 63 screens. Reading has 54 screens(excluding its interest in unconsolidated joint ventures). The major exhibitors in New Zealand control approximately 53% of the total boxoffice: Event 33% and Hoyts 20%. Reading has 15% of the market (Event and Reading market share figures exclude any partnershiptheaters).In Australia and New Zealand, the industry is somewhat vertically integrated in that Roadshow Film Distributors, a subsidiary of Village,serves as a distributor of film in Australia and New Zealand for Warner Brothers. Films produced or distributed by the majority of the localinternational independent producers are also distributed by Roadshow Film Distributors.Many of our competitors have substantial financial resources which could allow them to operate in a more competitive manner than us.10 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In-Home and Mobile Device CompetitionThe “in-home” and mobile device entertainment industry has experienced significant leaps in recent periods in both the quality andaffordability of in-home and mobile device entertainment systems and in the accessibility to, and quality of, entertainment programmingthrough cable, satellite, internet distribution channels, and Blu-ray/DVD. The success of these alternative distribution channels and theentrance of new sources of product (like NetFlix and Amazon) who are producing product competitive with films produced for theatricalrelease puts additional pressure on film distributors to reduce and/or eliminate the time period between theatrical and secondary releasedates and the willingness of consumers to take the time and pay the admission price to go to the movie theater. To a certain extent, itappears that consumers are willing to choose convenience over presentation quality. We are responding to this challenge generally byincreasing the comfort and service levels available at our cinemas and by, in our case, bringing in more specialized and alternative productto our audiences. We are focusing on the fact that going to the movies is a social experience, and we are working to make that experiencethe best that it can be. These are issues common to both our U.S. and international cinema operations. Competitive issues are discussed in greater detail under the caption, Item 1A – Risk Factors.SeasonalityMajor films are generally released to coincide with holidays. With the exception of Christmas and New Year’s Days, this fact provides somebalancing of our revenue because there is no material overlap between holidays in the United States and those in Australia and NewZealand. Distributors will delay, in certain cases, releases in Australia and New Zealand to take advantage of Australian and New Zealandholidays that are not celebrated in the United States. However, the deferral of releases is becoming increasingly less common, given theneed to address internet and other channels of distribution that operate on a worldwide basis. REAL ESTATEOverallWe engage in real estate development and the ownership and rental or licensing to third parties of retail, commercial and live theater assets.We own the fee interests in all of our live theaters, and in 12 of our cinemas (as presented in the preceding table within the “CinemaExhibition” section). Our real estate business creates long-term value for our stockholders through the continuous improvement anddevelopment of our investment and operating properties, including our ETCs.Our real estate activities have historically consisted principally of:·the ownership of fee or long-term leasehold interests in properties used in our cinema exhibition activities or which were acquiredfor the development of cinemas or cinema-based real estate development projects;·the acquisition of fee interests in land for general real estate development;·the licensing to production companies of our live theaters; and·the redevelopment of our existing fee-owned cinema or live theater sites to their highest and best use. Over 2016 and 2017, we added 25,635 square foot of newly constructed net rentable space to our existing ETCs (calculated exclusive ofcinema space), of which 24,924 square foot has been rented.In light of the geographic reach of our business, and the highly localized nature of the real estate business, we have historically made use ofthird party contractors to provide on-site management of our real estate development and management activities. We have begun, however,in recent periods to selectively build our internal resources in this regard, concentrating on Australia and New Zealand where we haveincreased our overall real estate team from 3 to 9 full time employees over the last 2 years.Given the substantial increase in Manhattan rents and commercial real estate values in recent periods, we closed our live theater at ourUnion Square property and commenced construction of a revitalized retail and office offering, known as 44 Union Square, at thatlocation. Also, we continue to pursue the redevelopment of our Cinemas 1,2,3 property.In 2016, we began the construction phase of the redevelopment of our Union Square property into approximately 73,322 square feet of netleasable area (inclusive of anticipated BOMA adjustments), comprised of retail and office space. A short video on this project can be seenat www.44unionsquare.com. The redeveloped building, designed by BKSK Architects, features an iconic glass dome, reviewed andapproved by the City of New York Landmarks Preservation Commission. Edifice Real Estate Partners, LLC is our development manager;Newmark Grubb Knight Frank is our leasing agent; and, an affiliate of CNY Construction LLC is our construction manager. BKSK andGensler have assisted with the internal layout and interior design of the building. Construction financing is being provided by the Bank ofthe Ozarks and an affiliate of Fisher Brothers, who will together provide approximately $57.5 million in financing. The total cost of theredevelopment is currently estimated at $74.5 million. Newmark advises us that retail tenant demand in our property continues to bestrong. Construction of our redeveloped building is currently more than 50% complete, and we currently anticipate that, subject to thesigning of acceptable leases, the building will be ready for the commencement of the construction of tenant improvements in the thirdquarter of 2018.11 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Regarding our Cinemas 1,2,3 property in Manhattan, we have received the consent of the 25% minority member of the ownership entity forthe redevelopment of the property. We are evaluating the potential to redevelop the property as a mixed use retail and residential and/orhotel property. Further, we have completed a preliminary feasibility study and are currently in negotiations with the owner of theapproximately 2,600 square foot corner parcel adjacent to our Cinemas 1,2,3 property on the corner of 60th Street and 3rd Avenue for thejoint development of our properties. A combination of the properties would produce approximately 121,000 square foot of FAR andapproximately 140,000 square feet of gross buildable area. While no assurances can be given that we will be able to come to terms with theadjacent owner, negotiations are progressing. On August 31, 2016, we secured a new three-year mortgage loan ($20.0 million) with ValleyNational Bank, the proceeds of which were used to repay the mortgage on the property with the Bank of Santander ($15.0 million), to repayReading for its $2.9 million loan to Sutton Hill Properties, LLC (the owner of the property), and for working capital purposes. We own a75% managing member interest in Sutton Hill Properties, LLC.On April 11, 2016, we purchased for $11.2 million a 24,000 square foot office building with 72 parking spaces located at 5995 SepulvedaBoulevard in Culver City, California. We currently use approximately 50% of the leasable area for our headquarters offices and endeavorto lease the remainder to unaffiliated third parties. Culver City has in recent years developed as a center of entertainment and high-techactivity in Los Angeles County. We moved into the building in February, 2017, and have obtained $8.4 million in financing on theproperty pursuant to a 10-year, fixed rate mortgage loan at an interest rate of 4.64% per annum and in June 2017 we obtained an additional$1.5 million in financing due to a reappraisal of the property, at an interest rate of 4.44%. Currently, we own essentially all of the officespace from which we conduct our executive and administrative operations. All of our leasehold interests are cinema operating properties.Overseas, on December 23, 2015, we acquired two adjoining properties in Townsville, Queensland, Australia for a total of $24.1 million(AU$33.4 million) comprising approximately 5.6 acres. The total gross leasable area of the two properties, the Cannon Park City Centre andthe Cannon Park Discount Centre, is 133,000 square feet. Our multiplex cinema at the Cannon Park City Centre is the anchor tenant of thatcenter. This acquisition is consistent with our business plan to own, where practical, the land underlying our entertainment assets. Weoperate these two (2) properties as a single ETC. For additional information, see Note 4 – Real Estate Transactions. We continue to work on the expansion and upgrading of our Auburn ETC in Sydney, Australia, our Newmarket ETC in Brisbane, Australia,and our Courtenay Central ETC in Wellington, New Zealand.At Auburn, since the beginning of 2016, we have entered into leases representing approximately 15,000 square feet of additional retailspace, which will increase the square footage of that center from approximately 117,000 to approximately 132,000 square feet. Of this15,500 square feet, 9,600 square feet was completed in 2016, and the remaining 5,900 square feet was completed in Q4 2017. Thisexpansion is being funded internally.At Newmarket, we have added a state-of-the art eight-screen cinema, 10,165 square feet of additional retail space and 124 additionalparking spaces. On November 30, 2015, we acquired an approximately 23,000 square foot parcel adjacent to our tenant Colessupermarket. This property is currently improved with an office building, which is now fully leased. These leases have early developmentprovisions allowing us to terminate these arrangements in connection with a redevelopment of the property. We intend to ultimatelydemolish this office building and to integrate this parcel into our Newmarket development. This will increase our Newmarket footprintfrom approximately 204,000 square feet to approximately 227,000 square feet. Our Newmarket project is currently being funded internally.In May 2015 we received town planning approval for an $11.8 million (NZ$17.0 million) supermarket and retail expansion at ourCourtenay Central ETC, located in Wellington, New Zealand. The expansion was anticipated to consist of an approximately 36,000 squarefoot “Countdown” supermarket and approximately 4,000 square feet of general retail space. In connection with the expansion, we werecontemplating an approximately NZ$6.0 million upgrade and re-tenanting of the remainder of Courtenay Central. However, theearthquake in late 2016 has added complexity to our development activities at Courtenay Central, both necessitating and permitting acomplete review of our plans for that location. ·First of all, our supermarket tenant advised us that it desired to upgrade the quality of the offering at our Center, which causedinitial design and construction delays. This was both good news and bad news, since while we believe that our Center wouldbenefit from an upgraded grocery offering (the tenant being responsible for the increased costs resulting from such enhancedimprovements), such upgrades would have delayed the opening date of the supermarket. However, in some ways, these delayconcerns may have been mooted by the earthquake. ·This earthquake severely damaged our 9 story parking garage at the Center, necessitating its demolition for health and safetyreasons. We have recovered insurance proceeds of $25 million with respect to this damage. However, the location andconfiguration of the historic parking garage were less than ideal from the point of view of the refurbishment and expansion ofCourtenay Central. Accordingly, while we still intend to construct a supermarket at the site (but now upgraded to a “premium”supermarket), and while we do not contemplate the demolition of any of the remaining elements of Courtenay Central, we arereconsidering the layout of the property and the potential to increase the leasable square footage at the site by optimizing thelocation and configuration of the replacement parking garage. This re-evaluation process is ongoing.12 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In addition to certain historic railroad properties (such as our 6.8 acre Viaduct Property in downtown Philadelphia) and certain expansionspace associated with our existing ETC operations, we have two unimproved properties that we acquired for, and are currently being heldfor, development: (i) our 202-acre parcel in Coachella, California (near Palm Springs), currently zoned for residential and mixed-use uses,and (ii) our 70.4–acre parcel in Manukau, a suburb of Auckland, New Zealand (located adjacent to the Auckland Airport).In the second quarter of 2016, the Auckland City Council revised the zoning of the agricultural portion of our property in Manukau(approximately 64.0 acres) to light industrial uses. The remaining 6.4 acres of our Manukau property were already zoned for heavyindustrial use. Light industrial uses include certain manufacturing, production, logistic, transportation, warehouse and wholesaledistribution activities and, on an ancillary basis, certain office, retail and educational uses. That decision was subject to a publicannouncement process, and became final in September 2016. Now that our zoning enhancement goal has been achieved, we are workingwith the southern gateway consortium on the development of a master plan for the construction of needed infrastructure works, while wecontinue to develop our long range plans for the property.We have culled our real estate holdings to focus on those projects which we believe offer more upside potential to us. As part of thisprocess, we sold our land holdings in Moonee Ponds, Australia for $17.5 million (AU$23.0 million) and a Los Angeles condominium for$3.0 million in 2015 and our land holdings in Burwood, Australia, for $51.6 million (AU$64.9 million) in 2014, the balance of the saleprice of this property of $45.7 million (AU$58.4 million) was received in two installments, a partial payment in June 2017 and the finalsettlement in December 2017. These sales were made based on our belief that the assets involved had reached the highest value that wecould reasonably achieve without investing substantial additional sums for land use planning, construction, and marketing.While we report our real estate as a separate segment, it has historically operated as an integral portion of our overall business and,historically, has principally been in support of that business. We have, however, acquired or developed certain properties that do notcurrently have any cinema or other entertainment component. Our real estate activities, holdings and developments are described in greater detail in Item 2 – Properties. EMPLOYEESAs of December 31, 2017, we had 84 full-time executive and administrative employees, 69 live theatre employees, 9 Real Estate employeesand 2,423 cinema employees. A small number of our cinema employees in New Zealand are union members, as are our projectionists inHawaii. None of our Australian-based employees or other employees are subject to union contracts. Overall, we are of the view that theexistence of these collective-bargaining agreements does not materially increase our costs of labor or our ability to compete. We believeour relations with our employees to be generally good.EXECUTIVE OFFICERS OF THE REGISTRANTThe following table sets forth information regarding our key executive officers as of February 28, 2018:NameAgeTitleEllen M. Cotter51Chairperson of the Board, Chief Executive Officer and PresidentMargaret Cotter50Vice Chairperson of the Board, Executive Vice President – Real Estate Management andDevelopment-NYCDev Ghose64Executive Vice President, Chief Financial Officer, Treasurer and Corporate SecretaryAndrzej J. Matyczynski65Executive Vice President – Global OperationsRobert F. Smerling83President – Domestic CinemasWayne D. Smith60Managing Director – Australia and New ZealandEllen M. Cotter. Ellen M. Cotter has been a member of our Board of Directors since March 13, 2013, and currently serves as a member ofour Executive Committee. Ms. Cotter was appointed Chairperson of our Board on August 7, 2014 and served as our interim President andChief Executive Officer from June 12, 2015 until January 8, 2016, when she was appointed our permanent President and Chief ExecutiveOfficer. She joined the Company in March 1998. Ms. Cotter is also a director of Cecelia Packing Corporation (a Cotter family-ownedcitrus grower, packer and marketer). Ms. Cotter is a graduate of Smith College and holds a Juris Doctor from Georgetown University LawCenter. Prior to joining the Company, Ms. Cotter spent four years in private practice as a corporate attorney with the law firm of White &Case in New York City. Ms. Cotter is the sister of Margaret Cotter and James J. Cotter, Jr. Prior to being appointed as our President andChief Executive Officer, Ms. Cotter served for more than ten years as the Chief Operating Officer (“COO”) of our domestic cinemaoperations, in which capacity she had, among other things, responsibility for the acquisition and development, marketing and operation ofour cinemas in the United States. Prior to her appointment as COO of Domestic Cinemas, she spent a year in Australia and New Zealand,working to develop our cinema and real estate assets in those countries. Ms. Cotter is the Co-Executor of her father’s estate, which is therecord owner of 297,070 shares of Class A Stock and 427,808 shares of our Class B Stock (representing 25.5% of such Class B Stock). Ms.Cotter is a Co-Trustee of the James J. Cotter Foundation (the “Cotter Foundation”), which is the record holder of 102,751 shares of Class AStock and Co-Trustee of the James J. Cotter, Sr. Trust (the “Cotter Trust”), which is the record owner of 1,897,649 shares of Class A Stockand 696,080 shares of Class B Stock (representing an additional 41.4% of such Class B Stock). Ms. Cotter also holds various positions inher family’s agricultural enterprises. 13 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Ms. Cotter brings to our Board her nineteen years of experience working in our Company’s cinema operations, both in the United Statesand Australia. She has also served as the Chief Executive Officer of Reading’s subsidiary, Consolidated Entertainment, LLC, whichoperates substantially all of our cinemas in Hawaii and California. In addition, with her direct ownership of 802,903 shares of Class A Stockand 50,000 shares of Class B Stock and her positions as Co-Executor of her father’s estate and Co-Trustee of the Cotter Trust and the CotterFoundation, Ms. Cotter is a significant stakeholder in our Company. Ms. Cotter is well recognized in and a valuable liaison to the filmindustry. In recognition of her contributions to the independent film industry, Ms. Cotter was awarded the first Gotham AppreciationAward at the 2015 Gotham Independent Film Awards. She was also inducted that same year into the Show East Hall of Fame.Margaret Cotter. Margaret Cotter has been a Director of our Company since September 27, 2002, and on August 7, 2014 was appointedVice Chairperson of our Board and currently serves as a member of our Executive Committee. On March 10, 2016, our Board appointed Ms.Cotter as Executive Vice President-Real Estate Management and Development-NYC, and Ms. Cotter became a full time employee of ourCompany. In this position, Ms. Cotter is responsible for the management of our live theater properties and operations, including theoversight of the day to day development process of our Union Square and Cinemas 1, 2, 3 properties. Ms. Cotter is the owner and Presidentof OBI, LLC (“OBI”), which, from 2002 until her appointment as Executive Vice President – Real Estate Management and Development-NYC, managed our live-theater operations under a management agreement and provided management and various services regarding thedevelopment of our New York theater and cinema properties. Pursuant to the OBI management agreement, Ms. Cotter also served as thePresident of Liberty Theaters, LLC, the subsidiary through which we own our live theaters. The OBI management agreement wasterminated with Ms. Cotter’s appointment as Executive Vice President-Real Estate Management and Development-NYC. Ms. Cotter is alsoa theatrical producer who has produced shows in Chicago and New York and in May 2017 due to other commitments stepped down as along time board member of the League of Off-Broadway Theaters and Producers. She is a director of Cecelia Packing Corporation. Ms.Cotter, a former Assistant District Attorney for King’s County in Brooklyn, New York, graduated from Georgetown University andGeorgetown University Law Center. She is the sister of Ellen M. Cotter and James J. Cotter, Jr. Ms. Margaret Cotter is a Co-Executor of herfather’s estate, which is the record owner of 297,070 shares of Class A Stock and 427,808 shares of our Class B Stock (representing 25.5% ofsuch Class B Stock). Ms. Cotter is also a Co-Trustee of the Cotter Trust, which is the record owner of 1,897,649 shares of Class A Stock and696,080 shares of Class B Voting Common Stock (representing an additional 41.4% of such Class B Stock). Ms. Cotter is also a Co-Trusteeof the Cotter Foundation, which is the record holder of 102,751 shares of Class A Stock and of the James. J. Cotter Grandchildren’s Trustwhich is the record holder of 274,390 shares of Class A Stock. Ms. Cotter also holds various positions in her family’s agriculturalenterprises.Ms. Cotter brings to the Board her experience as a live theater producer, theater operator and an active member of the New York theatrecommunity, which gives her insight into live theater business trends that affect our business in this sector, and in New York and Chicagoreal estate matters. Operating and the daily oversight of our theater properties for over 18 years, Ms. Cotter contributes to the strategicdirection for our developments. In addition, with her direct ownership of 810,284 shares of Class A Stock and 35,100 shares of Class BStock and her positions as Co-Executor of her father’s estate and Co-Trustee of the Cotter Trust, the Cotter Foundation, and the James J.Cotter Grandchildren’s Trust, Ms. Cotter is a significant stakeholder in our Company.Devasis (“Dev”) Ghose. Dev Ghose was appointed Chief Financial Officer and Treasurer on May 11, 2015, Executive Vice President onMarch 10, 2016 and was Corporate Secretary from April 28, 2016 until March 9, 2018. Over the past 25 years, Mr. Ghose served asExecutive Vice President and Chief Financial Officer in a number of senior finance roles with three NYSE-listed companies: SkilledHealthcare Group (a health services company, now part of Genesis HealthCare) from 2008 to 2013, Shurgard Storage Centers, Inc. (aninternational company focused on the acquisition, development and operation of self-storage centers in the U.S. and Europe; now part ofPublic Storage) from 2004 to 2006, and HCP, Inc., (which invests primarily in real estate serving the healthcare industry) from 1986 to2003, and as Managing Director-International for Green Street Advisors (an independent research and trading firm concentrating onpublicly traded real estate corporate securities in the U.S. & Europe) from 2006 to 2007. Prior thereto, Mr. Ghose worked forPricewaterhouseCoopers in the U.S. and KPMG in the UK from 1975 to 1985. He qualified as a Certified Public Accountant in the U.S. anda Chartered Accountant in the U.K., and holds an Honors Degree in Physics from the University of Delhi, India and an Executive M.B.A.from the University of California, Los Angeles.Andrzej J. Matyczynski. On March 10, 2016, Mr. Matyczynski was appointed as our Executive Vice President—Global Operations. FromMay 11, 2015 until March 10, 2016, Mr. Matyczynski acted as the Strategic Corporate Advisor to the Company, and served as our ChiefFinancial Officer and Treasurer from November 1999 until May 11, 2015 and as Corporate Secretary from May 10, 2011 to October 20,2014. Prior to joining our Company, he spent 20 years in various senior roles throughout the world at Beckman Coulter Inc., a U.S. basedmulti-national. Mr. Matyczynski earned a Master’s Degree in Business Administration from the University of Southern California.14 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Robert F. Smerling. Robert F. Smerling has served as President of our domestic cinema operations since 1994. He has been involved in theacquisition and/or development of all of our existing cinemas. Prior to joining our Company, Mr. Smerling was the President of LoewsTheaters, at that time a wholly owned subsidiary of Sony. While at Loews, Mr. Smerling oversaw operations at some 600 cinemasemploying some 6,000 individuals and the development of more than 25 new multiplex cinemas. Among Mr. Smerling’s accomplishmentsat Loews was the development of the Lincoln Square Cinema Complex with IMAX in New York City, which continues today to be one ofthe top five grossing cinemas in the United States. Prior to Mr. Smerling’s employment at Loews, he was Vice Chairman of USA Cinemas inBoston, and President of Cinema National Theatres. Mr. Smerling, a recognized leader in our industry, has been a director of the NationalAssociation of Theater Owners, the principal trade group representing the cinema exhibition industry.Wayne D. Smith. Wayne D. Smith joined our Company in April 2004 as our Managing Director - Australia and New Zealand, after 23 yearswith Hoyts Cinemas. During his time with Hoyts, he was a key driver, as Head of Property, in growing that company’s Australian and NewZealand operations via an AUD$250 million expansion to more than 50 sites and 400 screens. While at Hoyts, his career included headingup the group’s car parking company, cinema operations, representing Hoyts as a director on various joint venture interests, andcoordinating many asset acquisitions and disposals the company made.15 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.FORWARD LOOKING STATEMENTSOur statements in this annual report, including the documents incorporated herein by reference, contain a variety of forward-lookingstatements as defined by the Securities Litigation Reform Act of 1995. Forward-looking statements reflect only our expectations regardingfuture events and operating performance and necessarily speak only as of the date the information was prepared. No guarantees can begiven that our expectation will in fact be realized, in whole or in part. You can recognize these statements by our use of words such as, byway of example, “may,” “will,” “expect,” “believe,” and “anticipate” or other similar terminology.These forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on ourcurrent beliefs, expectations and assumptions regarding the future of our business, future plans and strategies after having considered avariety of risks and uncertainties. Forward-looking statements are necessarily the product of internal discussion and do not necessarilycompletely reflect the views of individual members of our Board of Directors or of our management team. Individual Board members andindividual members of our management team may have a different view as to the risks and uncertainties involved, and may have differentviews as to future events or our operating performance.Among the factors that could cause actual results and our financial condition to differ materially from those expressed in or underlying ourforward-looking statements are the following:·with respect to our cinema operations:othe number and attractiveness to movie goers of the films released in future periods;othe amount of money spent by film distributors to promote their motion pictures;othe licensing fees and terms required by film distributors from motion picture exhibitors in order to exhibit their films;othe comparative attractiveness of motion pictures as a source of entertainment and willingness and/or ability of consumers(i) to spend their dollars on entertainment and (ii) to spend their entertainment dollars on movies in an outside-the-homeenvironment;othe extent to which we encounter competition from other cinema exhibitors, from other sources of outside-the-homeentertainment, and from inside-the-home entertainment options, such as “home theaters” and competitive film productdistribution technology, such as, by way of example, cable, satellite broadcast and Blu-ray/DVD rentals and sales, and socalled “movies on demand;”othe cost and impact of improvements to our cinemas, such as improved seating, enhanced food and beverage offerings andother improvements;oservice disruption during theater improvements; andothe extent to, and the efficiency with, which we are able to integrate acquisitions of cinema circuits with our existingoperations.·with respect to our real estate development and operation activities:othe rental rates and capitalization rates applicable to the markets in which we operate and the quality of properties that weown;othe extent to which we can obtain on a timely basis the various land use approvals and entitlements needed to developour properties;othe risks and uncertainties associated with real estate development;othe availability and cost of labor and materials;othe ability to obtain all permits to construct improvements;othe ability to finance improvements;othe disruptions from construction;othe possibility of construction delays, work stoppage and material shortage;ocompetition for development sites and tenants;oenvironmental remediation issues;othe extent to which our cinemas can continue to serve as an anchor tenant that will, in turn, be influenced by the samefactors as will influence generally the results of our cinema operations;othe ability to negotiate and execute joint venture opportunities and relationships; andocertain of our activities are in geologically active areas, creating a risk of damage and/or disruption of real estate and/orcinema businesses from earthquakes.·with respect to our operations generally as an international company involved in both the development and operation of cinemasand the development and operation of real estate and previously engaged for many years in the railroad business in the UnitedStates:oour ongoing access to borrowed funds and capital and the interest that must be paid on that debt and the returns that mustbe paid on such capital;oexpenses, management and Board distraction and other effects of the litigation efforts mounted by James Cotter, Jr.against the Company, including his efforts to cause a sale of voting control of the Company;othe relative values of the currency used in the countries in which we operate;ochanges in government regulation, including by way of example, the costs resulting from the implementation of therequirements of Sarbanes-Oxley;16 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.oour labor relations and costs of labor (including future government requirements with respect to pension liabilities,disability insurance and health coverage, and vacations and leave);oour exposure from time-to-time to legal claims and to uninsurable risks, such as those related to our historic railroadoperations, including potential environmental claims and health-related claims relating to alleged exposure to asbestos orother substances now or in the future recognized as being possible causes of cancer or other health related problems;oour exposure to cyber-security risks, including misappropriation of customer information or other breaches of informationsecurity;ochanges in future effective tax rates and the results of currently ongoing and future potential audits by taxing authoritieshaving jurisdiction over our various companies; andochanges in applicable accounting policies and practices.The above list is not necessarily exhaustive, as business is by definition unpredictable and risky, and it is subject to influence by numerousfactors outside of our control, such as changes in government regulation or policy, competition, interest rates, supply, technologicalinnovation, changes in consumer taste, the weather, and the extent to which consumers in our markets have the economic wherewithal tospend money on beyond-the-home entertainment. Refer to Item 1A Risk factors for more information.Given the variety and unpredictability of the factors that will ultimately influence our businesses and our results of operation, it naturallyfollows that no guarantees can be given that any of our forward-looking statements will ultimately prove to be correct. Actual results willundoubtedly vary and there is no guarantee as to how our securities will perform either when considered in isolation or when compared toother securities or investment opportunities.Finally, we undertake no obligation to update publicly or to revise any of our forward-looking statements, whether as a result of newinformation, future events or otherwise, except as may be required under applicable law. Accordingly, you should always note the date towhich our forward-looking statements speak.Additionally, certain of the presentations included in this annual report may contain “non-US GAAP financial measures.” In such case, areconciliation of this information to our US GAAP financial statements will be made available in connection with such statements.17 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 1A – Risk FactorsInvesting in our securities involves risk. Set forth below is a summary of various risk factors that you should consider in connection withyour investment in our Company. This summary should be considered in the context of our overall Annual Report on Form 10-K, as manyof the topics addressed below, and our plans to address or mitigate the risks involved, are discussed in significantly greater detail in thecontext of specific discussions of our business plan, our operating results, and the various competitive forces that we face.BUSINESS RISK FACTORSWe are currently engaged principally in the cinema exhibition and real estate businesses. Because we operate in two business segments(cinema exhibition and real estate), we discuss separately below the risks we believe to be material to our involvement in each of thesesegments. We have discussed separately certain risks relating to the international nature of our business activities, our use of leverage, andour status as a controlled corporation. Please note that, while we report the results of our live theater operations as real estate operations –because we are principally in the business of renting space to producers rather than in producing plays ourselves – the cinema exhibitionand live theater businesses share certain risk factors and are, accordingly, discussed together below.Cinema Exhibition and Live Theater Business Risk FactorsWe operate in a highly competitive environment with many competitors who are significantly larger and may have significantly betteraccess to funds than we do. We are a comparatively small cinema operator and face competition from much larger cinemaexhibitors. These larger exhibitors are able to offer distributors more screens in more markets – including markets where they may be theexclusive exhibitor – than can we. Faced with such competition, we may not be able to get access to all of the films we want, which mayadversely affect our revenue and profitability. While we are concerned about the use of larger competitors of national and internationalbooking power to limit our access to film, there is little we can do to mitigate this risk as antitrust litigation is very expensive and typicallylong lived. While several private lawsuits are currently pending challenging the practice of certain competitors to prevent or limit theiraccess to film product, these are private lawsuits. We have no control over the prosecution of such lawsuits or the terms on which they maybe privately resolved or settled. While several distributors have announced that they will generally provide access of film to all who desireit, this practice is not universal. Also, for major films, like the most recent installment of Star Wars, the terms of exhibition as a practicalmatter limited the competitors who could exhibit the film. This competitive disadvantage has been, in our view, exacerbated in recentperiods with the further concentration of the cinema exhibition industry, for example, Cineworld Group Plc’s acquisition of RegalEntertainment Group and Dalian Wanda’s acquisition of AMC Entertainment, which, had previously acquired Carmike Cinemas, Odeon &UCI Cinemas Group and Nordic Cinema Group.These larger competitors may also enjoy (i) greater cash flow, which can be used to develop additional cinemas, including cinemas thatmay be competitive with our existing cinemas, (ii) better access to equity capital and debt, (iii) better visibility to landlords and real estatedevelopers, and (iv) better economies of scale than us.In the case of our live theaters, we compete for shows not only with other “for profit” Off-Broadway theaters, but also with “not-for-profit”operators and, increasingly, with Broadway theaters. We believe our live theaters are generally competitive with other Off-Broadwayvenues. However, due to the increased cost of staging live theater productions, we are seeing an increasing tendency for plays that wouldhistorically have been staged in an Off-Broadway theater moving directly to larger Broadway venues. In 2016, we closed our principal livetheater in New York, the Union Square.We face competition from other sources of entertainment and other entertainment delivery systems. Both our cinema and live theateroperations face competition from “in-home” and mobile device sources of entertainment. These include competition from network, cableand satellite television, internet streaming video services, Video on Demand, Blu-ray/DVD, the internet, video games and other sources ofentertainment. The quality of “in-home” and mobile entertainment systems, as well as programming available on an in-home and mobilebasis, has increased, while the cost to consumers of such systems (and such programming) has decreased in recent periods, and someconsumers may prefer the security and/or convenience of an “in-home” or mobile entertainment experience to the more public andpresentation oriented experience offered by our cinemas and live theaters. Film distributors have been responding to these developmentsby, in some cases, decreasing or eliminating the period of time between cinema release and the date such product is made available to “in-home” or mobile forms of distribution.There is the risk that, over time, distributors may move towards simultaneous release of motion picture product in multiple channels ofdistribution. Also, some traditional in-home and mobile distributors have begun the production of full-length movies, specifically for thepurpose of direct or simultaneous release to the in-home and mobile markets. These factors may adversely affect the competitive advantageenjoyed by cinemas over “in-home” and mobile forms of entertainment, as it may be that the cinema market and the “in-home” and mobilemarkets will have simultaneous access to the same motion picture product. In recent times, a number of movies were released on asimultaneous basis to movie exhibitors and to in-home and mobile markets. It is likely that this trend will continue, making it, in our view,increasingly important for exhibitors to enhance the convenience and quality of the theater-going experience. This can require substantialcapital outlays and increased labor expense, which exhibitors may not be able to fully pass on to their customers. Also, the amount ofprogramming (including without limitation, the live streaming of sporting, theatrical and political events) available on an “in-home” andmobile basis continues to increase.18 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The narrowing and/or elimination of this so-called “window” for cinema exhibition may be problematic for the cinema exhibitionindustry. However, to date, attempts by the major film distributors to continue to narrow or eliminate the window have been strenuouslyresisted by the cinema exhibition industry, and we view the total elimination of the cinema exhibition window by major film distributors,while theoretically possible, to be unlikely.We also face competition from various other forms of “beyond-the-home” entertainment, including sporting events, concerts, restaurants,casinos, video game arcades, and nightclubs. Our cinemas also face competition from live theaters and vice versa. Also, social mediaofferings – such as Facebook, Instagram and Snapchat – appear to be commanding increasing portions of the recreational time of ourpotential audience.Our cinema and live theater businesses may be vulnerable to fears of terrorism and random shooter incidents which could causecustomers to avoid public assembly seating, and natural disasters. Political events, such as terrorist attacks, random shooter incidents andhealth-related epidemics, such as flu outbreaks, could cause patrons to avoid our cinemas or other public places where large crowds are inattendance. In addition, a natural disaster, such as a typhoon or an earthquake, could impact our ability to operate certain of our cinemas,which could adversely affect our results of operations.Our cinema operations depend upon access to film and alternative entertainment product that is attractive to our patrons, and our livetheater operations depend upon the continued attractiveness of our theaters to producers. Our ability to generate revenue and profits islargely dependent on factors outside of our control, specifically, the continued ability of motion picture, alternative entertainment and livetheater producers to produce films, alternative entertainment and plays that are attractive to audiences, the amount of money spent by filmand alternative entertainment distributors and theatrical producers to promote their motion pictures, alternative entertainment and plays,and the willingness of these distributors and producers to license their films and alternative entertainment on terms that are financiallyviable to our cinemas and to rent our theaters for the presentation of their plays. To the extent that popular movies, alternativeentertainment and plays are produced, our cinema and live theater activities are ultimately dependent upon our ability, in the face ofcompetition from other cinema and live theater operators to book such movies, alternative entertainment and plays into our facilities, andto provide a superior customer offering.We rely on film distributors to supply the films shown in our theatres. In North America, the film distribution business is highlyconcentrated, with seven major film distributors accounting for approximately 87.9% of box office revenues. Numerous antitrust cases andthe consent decree resulting from these antitrust cases affect the distribution of films. Consequently, we cannot guarantee a supply of filmsby entering into long-term arrangements with major distributors. We are therefore required to negotiate licenses for each film and for eachtheatre. A deterioration of our relationship with any of the seven major film distributors could adversely affect our ability to obtaincommercially successful films and to negotiate favorable licensing terms for such films, both of which could adversely affect our businessand operating results.In the U.S., at least until recently, distributors have had broad discretion not to show the same film at competitive cinemas. This has, inmany situations, given the larger exhibitors (as a result of their market power) power to influence distributors to exercise their discretion inthis regard in favor of the larger exhibitors. In this industry, this is called “clearance.” Recent judicial decisions, however, have throwndoubt on the extent to which this practice will continue to be permitted under applicable antitrust laws. Several major distributors haveadvised the market that they will no longer clear their films.Adverse economic conditions could materially affect our business by reducing discretionary income and by limiting or reducing sourcesof film and live theater funding. Cinema and live theater attendance is a luxury, not a necessity. Furthermore, consumer demand for betterand better amenities and food offerings have resulted in an increase of the cost of a night at the movies. Accordingly, a decline in theeconomy resulting in a decrease in discretionary income, or a perception of such a decline, may result in decreased discretionary spending,which could adversely affect our cinema and live theater businesses. Adverse economic conditions can also affect the supply side of ourbusiness, as reduced liquidity can adversely affect the availability of funding for movies and plays. This is particularly true in the case ofOff-Broadway plays, which are often times financed by high net worth individuals (or groups of such individuals) and that are very riskydue to the absence of any ability to recoup investment in secondary markets like Blu-ray/DVD, cable, satellite or internet distribution.Our screen advertising or auditorium leasing revenue may decline. Over the past several years, cinema exhibitors have been lookingincreasingly to screen advertising and auditorium leasing as a way to improve income. No assurances can be given that this source ofincome will be continuing, or that the use of screen advertising will not ultimately prove to be counterproductive, by giving consumers adisincentive to choose going to the movies over “in-home” or mobile entertainment alternatives.We face uncertainty as to the timing and direction of technological innovations in the cinema exhibition business and as to our access tothose technologies. We have converted all of our cinema auditoriums to digital projection. However, no assurances can be given that othertechnological advances will not require us to make further material investments in our cinemas or face loss of business. Also, equipment iscurrently being developed for holographic or laser projection. The future of these technologies in the cinema exhibition industry isuncertain.19 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We face competition from competitors offering food and beverage and luxury seating as an integral part of their cinema offerings. Anumber of our competitors offering an expanded food and beverage menu (including the sale of alcoholic beverages) and luxury seating,have emerged in recent periods. In addition, some competitors such as AMC are converting existing cinemas to provide such expandedmenu offerings and in-theater dining options. The existence of such cinemas may alter traditional cinema selection practices of moviegoers,as they seek out cinemas with such expanded offerings as a preferred alternative to traditional cinemas. In order to compete with these newcinemas, the Company has begun to materially increase its capital expenditures to add such features to many of our cinemas and to take onadditional and more highly trained (and, consequently, compensated) staff. Also, the conversion to luxury seating typically requires amaterial reduction in the number of seats that an auditorium can accommodate.We may be subject to increased labor and benefits costs generally. We are subject to laws governing such matters as minimum wages,working conditions and overtime. As minimum wage rates increase, we may need to increase not only the wages of our minimum wageemployees, but also the wages paid to employees at wage rates that are above minimum wage. Labor shortages, increased employeeturnover and health care mandates could also increase our labor costs. This in turn could lead us to increase prices which could impact oursales. Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs by increases in prices, our resultsof operations may be adversely impacted.Cyber security threats and our failure to protect our electronically stored data could adversely affect our business. We store and maintainelectronic information and data necessary to conduct our business. Data maintained in electronic form is subject to the risk of intrusion,tampering and theft. While we have adopted industry-accepted security measures and technology to protect the confidential andproprietary information, the development and maintenance of these systems is costly and require ongoing monitoring and updating astechnologies change and efforts to overcome security measures become more sophisticated. As such, we may be unable to anticipate andimplement adequate preventive measures in time. This may adversely affect our business, including exposure to government enforcementactions and private litigation, and our reputation with our customers and employees may be injured. In addition to Company-specific cyberthreats or attacks, our business and results of operations could also be impacted by breaches affecting our peers and partners within theentertainment industry, as well as other retail companies.Real Estate Development and Ownership Business RisksWe operate in a highly competitive environment in which we must compete against companies with much greater financial and humanresources than we have. We have limited financial and human resources, compared to our principal real estate competitors. In recentperiods, we have relied heavily on outside professionals in connection with our real estate development activities. Many of ourcompetitors have significantly greater resources and may be able to achieve greater economies of scale than we can. Given our structure asa taxable corporation, our cost of capital is typically higher than other real estate investment vehicles such as real estate investment trusts.Risks Related to the Real Estate Industry GenerallyOur financial performance will be affected by risks associated with the real estate industry generally. Events and conditions generallyapplicable to developers, owners, and operators of real property will affect our performance as well. These include (i) changes in thenational, regional and local economic climate, (ii) local conditions, such as an oversupply of, or a reduction in demand for, commercialspace and/or entertainment-oriented properties, (iii) reduced attractiveness of our properties to tenants, (iv) the rental rates andcapitalization rates applicable to the markets in which we operate and the quality of properties that we own, (v) competition from otherproperties, (vi) inability to collect rent from tenants, (vii) increased operating costs, including labor, materials, real estate taxes, insurancepremiums, and utilities, (viii) costs of complying with changes in government regulations, (ix) the relative illiquidity of real estateinvestments, and (x) decreases in sources of both construction and long-term lending as traditional sources of such funding leave or reducetheir commitments to real estate-based lending. In addition, periods of rising interest rates or declining demand for real estate (for example,due to competition from internet sellers the demand for brick and mortar retail spaces may decline, and due to the increasing popularity oftele-commuting demand for traditional office space may decline), or the public perception that any of these events may occur, could resultin declining rents or increased lease defaults. Increasing cap rates can result in lower property values. Also, we have holdings in areas thatare subject to earthquake, storm and flooding risk.We may incur costs complying with the Americans with Disabilities Act and similar laws. Under the Americans with Disabilities Act andsimilar statutory regimes in Australia and New Zealand or under applicable state or local law, all places of public accommodation(including cinemas and theaters) are required to meet certain governmental requirements related to access and use by persons withdisabilities. A determination that we are not in compliance with those governmental requirements with respect to any of our propertiescould result in the imposition of fines or an award of damages to private litigants. The cost of addressing these issues could be substantial. 20 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Illiquidity of real estate investments could impede our ability to respond to adverse changes in the performance of our properties. Realestate investments are relatively illiquid and, therefore, tend to limit our ability to vary our portfolio promptly in response to changes ineconomic or other conditions. Many of our properties are either (i) “special purpose” properties that could not be readily converted togeneral residential, retail or office use, or (ii) undeveloped land. In addition, certain significant expenditures associated with real estateinvestment, such as real estate taxes and maintenance costs, are generally not reduced when circumstances cause a reduction in income fromthe investment, and competitive factors may prevent the pass-through of such costs to tenants.Real estate development involves a variety of risks. Real estate development involves a variety of risks, including the following:·The identification and acquisition of suitable development properties. Competition for suitable development properties is intense.Our ability to identify and acquire development properties may be limited by our size and resources. Also, as we and our affiliates areconsidered to be “foreign owned” for purposes of certain Australian and New Zealand statutes, we have been in the past, and may inthe future be, subject to regulations that are not applicable to other persons doing business in those countries.·The procurement of necessary land use entitlements for the project. This process can take many years, particularly if opposed bycompeting interests. Competitors and community groups (sometimes funded by such competitors) may object based on variousfactors, including, for example, impacts on density, parking, traffic, noise levels and the historic or architectural nature of the buildingbeing replaced. If they are unsuccessful at the local governmental level, they may seek recourse to the courts or other tribunals. Thiscan delay projects and increase costs. ·The construction of the project on time and on budget. Construction risks include the availability and cost of financing; theavailability and costs of material and labor; the costs of dealing with unknown site conditions (including addressing pollution orenvironmental wastes deposited upon the property by prior owners); inclement weather conditions; and the ever-present potential forlabor-related disruptions.·The leasing or sell-out of the project. Ultimately, there are risks involved in the leasing of a rental property or the sale of acondominium or built-for-sale property. For our ETCs, the extent to which our cinemas can continue to serve as an anchor tenant willbe influenced by the same factors as will influence generally the results of our cinema operations. Leasing or sale can be influencedby economic factors that are neither known nor knowable at the commencement of the development process and by local, national,and even international economic conditions, both real and perceived.·The refinancing of completed properties. Properties are often developed using relatively short-term loans. Upon completion of theproject, it may be necessary to find replacement financing for these loans. This process involves risk as to the availability of suchpermanent or other take-out financing, the interest rates, and the payment terms applicable to such financing, which may be adverselyinfluenced by local, national, or international factors. The ownership of properties involves risk. The ownership of investment properties involves risks, such as: (i) ongoing leasing and re-leasing risks, (ii) ongoing financing and re-financing risks, (iii) market risks as to the multiples offered by buyers of investment properties,(iv) risks related to the ongoing compliance with changing governmental regulation (including, without limitation, environmental laws andrequirements to remediate environmental contamination that may exist on a property (such as, by way of example, asbestos), even thoughnot deposited on the property by us), (v) relative illiquidity compared to some other types of assets, and (vi) susceptibility of assets touninsurable risks, such as biological, chemical or nuclear terrorism, or risks that are subject to caps tied to the concentration of such assetsin certain geographic areas, such as earthquakes. Furthermore, as our properties are typically developed around an entertainment use, theattractiveness of these properties to tenants, sources of finance and real estate investors will be influenced by market perceptions of thebenefits and detriments of such entertainment-type properties.A number of our assets are in geologically active areas, presenting risk of earthquake and land movement. We have properties inCalifornia and New Zealand, areas that present a greater risk of earthquake and/or land movement than other locations. New Zealand has inrecent periods had several major earthquakes damaging our facilities in Christchurch and Wellington. The ability to insure for suchcasualties is limited and may become more difficult and/or more expensive in future periods.We may be subject to liability under environmental laws and regulations. We own and operate a large number of cinemas and otherproperties within the U.S. and internationally, which may be subject to various foreign, federal, state and local laws and regulations relatingto the protection of the environment or human health. Such environmental laws and regulations include those that impose liability for theinvestigation and remediation of spills or releases of hazardous materials. We may incur such liability, including for any currently orformerly owned, leased or operated property, or for any site, to which we may have disposed, or arranged for the disposal of, hazardousmaterials or wastes. Certain of these laws and regulations may impose liability, including on a joint and several liability, which can result ina liable party being obliged to pay for greater than its share, regardless of fault or the legality of the original disposal. Environmentalconditions relating to our properties or operations could have an adverse effect on our business and results of operations and cash flows.21 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Legislative or regulatory initiatives related to global warming/climate change concerns may negatively impact our business. Recently,there has been an increasing focus and continuous debate on global climate change including increased attention from regulatory agenciesand legislative bodies. This increased focus may lead to new initiatives directed at regulating an as yet unspecified array of environmentalmatters. Legislative, regulatory or other efforts in the U.S. to combat climate change could result in future increases in the cost of rawmaterials, taxes, transportation and utilities for our vendors and for us which would result in higher operating costs for the Company. Also,compliance by our cinemas and accompanying real estate with new and revised environmental, zoning, land-use or building codes, laws,rules or regulations, could have a material and adverse effect on our business. However, we are unable to predict at this time, the potentialeffects, if any, that any future environmental initiatives may have on our business.International Business RisksOur international operations are subject to a variety of risks, including the following:·Currency Risk: while we report our earnings and net assets in U.S. dollars, substantial portions of our revenue and of ourobligations are denominated in either Australian or New Zealand dollars. The value of these currencies can vary significantlycompared to the U.S. dollar and compared to each other. We do not hedge the currency risk, but rather have relied upon the naturalhedges that exist as a result of the fact that our film costs are typically fixed as a percentage of the box office, and our localoperating costs and obligations are likewise typically denominated in local currencies. However, we do have intercompany debtand our ability to service this debt could be adversely impacted by declines in the relative value of the Australian and NewZealand dollar compared to the U.S. dollar. Also, our use of local borrowings to mitigate the business risk of currency fluctuationshas reduced our flexibility to move cash between jurisdictions. Set forth below is a chart of the exchange ratios between thesethree currencies since 1996: In recent periods, we have repaid intercompany debt and used the proceeds to fund capital investment in the United States. Accordingly,our debt levels in Australia are higher than they would have been if funds had not been returned for such purposes. On a company widebasis, this means that a reduction in the relative strength of the US dollar versus the Australian Dollar and/or the New Zealand dollar willeffectively raise the overall cost of our borrowing and capital and make it more expensive to return funds from the United States to Australiaand New Zealand.·Risk of adverse government regulation: currently, we believe that relations between the United States, Australia, and New Zealandare good. However, no assurances can be given that these relationships will continue and that Australia and New Zealand will notin the future seek to regulate more highly the business done by U.S. companies in their countries. 22 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.·Risk of adverse labor relations: deterioration in labor relations could lead to an increased cost of labor (including futuregovernment requirements with respect to pension liabilities, disability insurance and health coverage, and vacations and leave).Risks Associated with Certain Discontinued OperationsCertain of our subsidiaries were previously in industrial businesses. As a consequence, properties that are currently owned or may have inthe past been owned, by these subsidiaries may prove to have environmental issues. Where we have knowledge of such environmentalissues and are in a position to make an assessment as to our exposure, we have established what we believe to be appropriate reserves, butwe are exposed to the risk that currently unknown problems may be discovered. These subsidiaries are also exposed to potential claimsrelated to exposure of former employees to coal dust, asbestos, and other materials now considered to be, or which in the future may befound to be, carcinogenic or otherwise injurious to health. Operating, Financial Structure and Borrowing RiskFrom time to time, we may have negative working capital. In recent years, as we have invested our cash in new acquisitions and thedevelopment of our existing properties, we have had negative working capital. This negative working capital is typical in the cinemaexhibition industry because our short-term liabilities are in part financing our long-term assets instead of long-term liabilities financingshort-term assets, as is the case in other industries such as manufacturing and distribution.We are subject to complex taxation, changes in tax rates, adoption of new U.S. or international tax legislation and disagreements withtax authorities that could adversely affect our business, financial condition or results of operations We are subject to many different formsof taxation in both the U.S. and in foreign jurisdictions where we operate, such as the U.S. Tax Cuts and Jobs Act signed into law inDecember 2017. The new laws are still evolving and require we interpret the provisions of the law as we try to comply with them. The costsof compliance with these laws and regulations are high and are likely to increase in the future. Any failure on our part to comply with theselaws and regulations can result in negative publicity and diversion of management time and effort and may subject us to significantliabilities and other penalties.We have substantial short to medium term debt. Generally speaking, we have historically financed our operations through relatively short-term debt. No assurances can be given that we will be able to refinance this debt, or if we can, that the terms will be reasonable. However,as a counterbalance to this debt, we have certain unencumbered real property assets, which could be sold to pay debt or encumbered toassist in the refinancing of existing debt, if necessary. We have substantial lease liabilities. Most of our cinemas operate in leased facilities. These leases typically have “cost of living” or otherrent adjustment features and require that we operate the properties as cinemas. A downturn in our cinema exhibition business might,depending on its severity, adversely affect the ability of our cinema operating subsidiaries to meet these rental obligations. Even if ourcinema exhibition business remains relatively constant, cinema level cash flow will likely be adversely affected unless we can increase ourrevenue sufficiently to offset increases in our rental liabilities. Unlike property rental leases, our newly added digital equipment leases donot have “cost of living” or other lease adjustment features.Our stock is thinly traded. Our stock is thinly traded, with an average daily volume in 2017 of only approximately 41,000 Class AStock. Our Class B Stock is very thinly traded with even less volume. This can result in significant volatility, as demand by buyers andsellers can easily get out of balance.Ownership and Management Structure, Corporate Governance, and Change of Control Risks Pending disputes among the heirs of James J. Cotter, Sr., have over the past two years caused, and may continue to cause, uncertaintyregarding the ongoing control of the Company by the Cotter family and have distracted and may continue to distract the time andattention of our officers and directors from our business and operations and may ultimately interfere with the effective management ofthe Company. Up until his death on September 13, 2014, James J. Cotter, Sr., the father of Ellen Cotter, James J. Cotter, Jr. and MargaretCotter, was our controlling stockholder, having the sole power to vote approximately 66.9% of the outstanding voting stock of theCompany. Under applicable Nevada Law, a stockholder holding more than 2/3rds of the Company’s voting stock has the power at anytime, with or without cause, to remove any one or more directors (up to and including the entire board of directors) by written consent takenwithout a meeting of the stockholders.23 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Since his death, disputes have arisen among Ellen Cotter, James J. Cotter, Jr. and Margaret Cotter concerning the voting control of thoseshares and regarding the exercise by the Estate of James J. Cotter, Sr. Deceased (the “Cotter Estate”) of options to acquire an additional100,000 shares of Class B Stock. At the present time, Ellen Cotter is the Chair, President and Chief Executive Officer of ourCompany. James J. Cotter, Jr. is a director and from June 2013 until June 12, 2015 was the President and from August 7, 2014 until June 12,2015 was the Chief Executive Officer of our Company, having been removed from those positions by Board action on June 12,2015. Margaret Cotter is the Vice-Chair of our Company, Executive Vice-President – Real Estate Management and Development, NYC andthe President of Liberty Theaters, LLC, the company through which we own and operate our live theaters. She heads up the managementand redevelopment of our New York properties.As of December 31, 2017, according to the books of the Company, the Living Trust established by the Declaration of Trust dated June 5,2013, by James J. Cotter, Sr. (the “Cotter Trust”), held of record 696,080 shares of our Class B Stock constituting approximately 41.4% ofthe voting power of our outstanding capital stock. According to the books of the Company, the Cotter Estate as of that date held of recordan additional 427,808 shares of Class B Stock, constituting approximately 25.5% of the voting power of our outstanding capital stock. Weare advised, based upon public filings made by one or more of Ellen Cotter, Margaret Cotter and James J. Cotter, Jr. (the “Cotter Filings”)that the Class B Stock currently held of record by the Cotter Estate will eventually pour over into the Cotter Trust. We are further advisedfrom the Cotter Filings that the Cotter Trust also provides for the establishment of a voting trust (the “Cotter Voting Trust”) which willeventually hold the Class B Stock currently held by the Cotter Estate and the Cotter Trust. At the present time, however, such Class BStock is held of record by the Cotter Trust and the Cotter Estate, respectively.On December 22, 2014, the District Court of Clark County, Nevada, (the “Nevada District Court”) appointed Ellen Cotter and MargaretCotter as co-executors of the Cotter Estate. While no final ruling has been entered, the Superior Court of the State of California, County ofLos Angeles (the “California Superior Court”), in the case captioned In re James J. Cotter Living Trust dated August 1, 2000 (Case No.BP159755) (the “Trust Case”), has issued its Statement of Decision to the effect that (subject to appeal) Ellen Cotter and Margaret Cotterare the Co-Trustees of the Cotter Trust and that Margaret Cotter is the sole Trustee of the Voting Trust. Accordingly, in the view of theCompany, Ellen Cotter and Margaret Cotter have voting control over the shares held by the Cotter Trust and the Cotter Estate, collectivelyrepresenting 66.9% of our Company’s Class B Stock. Taking into account Ellen Cotter and Margaret Cotter’s personal holdings of votingstock, Ellen Cotter and Margaret Cotter have the power to vote 71.9% of our Company’s voting stock. However, there is no assurance thatJames Cotter, Jr., upon the issuance of a final ruling, will not appeal this decision by the California Superior Court.We understand from public filings made by Ellen Cotter and Margaret Cotter and public filings made by James J. Cotter, that James J.Cotter, Jr. is the first alternate trustee of the Voting Trust, in the event that Margaret Cotter is unable or unwilling to serve as trustee.While our Company is not a party to the Trust Case, our Company has appeared to protect (a) the business plan adopted by our Board ofDirectors and its determination that stockholder interests are best achieved by continuing with that business plan rather than selling theCompany at this time and (b) in the event that the California Court were to disregard the advice of our Board and order that a controllinginterest in our Company be marketed or sold, that the interests of our Company and stockholders generally are protected. Our Company’sparticipation in the Trust Case since August 2017 has been overseen by a Special Independent Committee of the Board of Directors chairedby our Lead Independent Director, Mr. William Gould, and comprised, in addition to Mr. Gould, of directors Doug McEachern and JudyCodding.On February 8, 2017, James Cotter, Jr. filed in the Trust Case an Ex Parte Petition for Appointment of a trustee ad litem and of a guardian adlitem for the benefit of Cotter, Sr.’s, minor grandchildren (two of whom are the children of Margaret Cotter and three of whom are thechildren of James Cotter, Jr., and who are referred to herein as the “Cotter Grandchildren”). Mr. Cotter, Jr., sought the appointment of atrustee ad litem, to evaluate the non-binding indication of interest sent by Patton Vision, LLC (“Patton Vision”), to the Trustees of theCotter Trust to acquire the RDI shares held by the Cotter Trust at $18.50 per share (referred to in Mr. Cotter, Jr’s pleadings as the “Offer”)and to take reasonable steps to act on the Offer in the trustee’s sole discretion. Specifically, Mr. Cotter Jr. sought an order “granting thetrustee ad litem with full power, authority, and protections under the Cotter Trust and California trust law, as any other named trustee wouldhave, to evaluate the Offer, conduct due diligence, negotiate with Patton Vision or any other potential offerors, and take all actionsnecessary or appropriate to consummate the sale of the Cotter Trust’s RDI shares, including but not limited to:a.communicate solely with Patton Vision regarding their Offer to purchase the Cotter Trust’s RDI shares;b.receive solely and exclusively all offers for the purchase of the Cotter Trust’s RDI shares;c.enter into purchase and sale agreements with respect to the Cotter Trust’s RDI shares;d.take all actions necessary to carry out the terms, conditions, and obligations of any purchase and sale agreement with respect to theCotter Trust’s RDI shares, including negotiating any modifications thereto;e.receive all proceeds of sale from the Cotter Trust’s RDI shares;f.return to the co-trustees of the Cotter Trust, namely Margaret Cotter, Ellen Cotter, and James J. Cotter, Jr., net proceeds of the sale of theCotter Trust’s RDI shares to be invested, managed and distributed in accordance with the terms of the Cotter Trust;g.hire investment advisors, tax advisors, accountants, attorneys, or any other advisors the trustee ad litem deems necessary and reasonable,in his or her sole discretion, to carry out his powers; and,24 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.h.temporarily suspending James J. Cotter, Jr., Margaret and Ellen’s powers with respect to all of the foregoing matters until further order ofthis Court.” On February 14, 2018, the California Superior Court issued its “Statement of Decision” to appoint a temporary trustee ad litem (the“TTAL”) “with the narrow and specific authority to obtain offers to purchase the RDI stock in the voting trust, but not to exercise any otherpowers without court approval, specifically the sale of the company or any other powers possessed by the trustees.” We are informed thatthe Statement of Decision does not become effective until the Superior Court’s order is issued and filed, which, as of the date of this filing,has not occurred. No TTAL has been appointed. The California Superior Court has directed the parties to either agree upon a TTAL, or inthe alternative to submit to the court three acceptable names. No timeline is specified in the Statement of Decision for the appointment of aTTAL or for the execution of such person’s charge to “obtain offers to purchase RDI stock in the voting trust.” In so far as we are aware,based upon public filings and our internal records, at the present time the Voting Trust does not own any shares of RDI stock. The shareswhich are anticipated to flow into the Voting Trust are, insofar as our Company is aware, currently owned by the Cotter Estate and theCotter Trust.We continue to believe that, whether or not a final determination is made to sell the voting shares, the appointment of a TTAL poses risks toour Company and our stockholders for a variety of reasons, including the resultant potential for: (i) distraction of management and keyemployees from focusing on the conduct of our business, including the implementation of our three year business strategy, (ii) incurrence ofadditional general and administrative costs due to the need to implement employee retention programs and to incur legal expenses of thetype and at levels not typically required in the ordinary conduct of our Company’s business, (iii) interference with contractualrelationships, negotiations and potential negotiations with third parties important to our Company’s business, including, withoutlimitation, current and future lenders, tenants, landlords, suppliers and co-developers, (iv) increased difficulty in hiring and retaining highquality employees and (v) exposure of our Company to potential litigation claims of the type which often accompany any extraordinarycorporate transactions together with the expense, distraction and time loss that typically results from any such litigation. If a decision tosell a controlling interest is made by the California Superior Court, then there would be the additional risk that control might be sold to anunqualified purchaser who might exploit such control position in a manner not consistent with the best interests of our Company orstockholders generally.Since May 2016, Patton Vision has sent four different indications of interest to us to purchase all of our Company’s outstanding shares. Ineach case our Board of Directors has determination that our Company and our stockholders would be best served by our continuedindependence and by our pursuit of our business strategy. We were informed that on January 23, 2017, Patton Vision separately sent asimilar indication of interest to the co-trustees of the Cotter Trust to purchase the Cotter Trust’s shares and to the Co-Executors of the CotterEstate to purchase the Cotter Estate’s shares. On March 2, 2017, our Board of Directors, following consideration and adoption of our three year business strategy, confirmed itsdetermination that our Company and our stockholders would be best served by our continued independence and by our pursuit of ourbusiness strategy. Our Board of Directors instructed our management to inform Patton Vision that our Board had no interest in engaging indiscussions regarding our possible sale. Our Board of Directors took this action in fulfilling its fiduciary duty on behalf of all stockholders,and in this matter, James J. Cotter, Jr., in his capacity as a director of Reading, abstained.In mid-September, 2017, Director William Gould (our Lead Independent Director and Chair of the Special Independent Committee)received a letter from Patton Vision once again expressing its desire to meet to discuss a potential acquisition of our Company. The letterreferenced the California Superior Court’s tentative statement of decision regarding the appointment of a TTAL, stated no specific price orother terms and was, in our view, simply a request to do due diligence on our Company.In response to the September Patton Vision Letter, the Board reviewed with management the progress being made on the strategic planpreviously adopted by the Board, and determined (with Director Cotter, Jr., voting no) that there was no reason to deviate from that strategicplan or to reconsider the Board’s prior determination that the best interests of the Company and its stockholders would best be served bycontinuing to pursue the Company’s strategic plan as an independent company. Our Board of Directors instructed management tocommunicate the Board’s determination to Patton Vision. Our Board of Directors will be reviewing our management’s updated three yearbusiness strategy in late March 2018.The California Superior Court, in the Trust Case, has jurisdiction over a potentially controlling block of our voting power. The CotterTrust, which as described in more detail above, currently owns 41.4% of our Class B Stock, and, at such time as the Cotter Estate isprobated, may receive up to an additional 25.5% of our Class B Stock, should the California Superior Court order the sale of the Trusts’Class B Stock and such sale be completed, then there may be a change of control of our Company (depending on, among other things, whothe ultimate purchaser(s) of such shares might be, the number of shares of Voting Stock distributed by the Cotter Estate to the Cotter Trust,and whether the California Superior Court orders a sale of all or only some portion to the Class B Stock held by the Cotter Trust). Wecannot predict what reactions, including appeals or other steps, might be taken by Ellen Cotter and Margaret Cotter in their respectivecapacities as Trustees under the Cotter Trust, or in other capacities (for example, as Co-Executors of the Cotter Estate, should the CaliforniaSuperior Court make such an order. We also cannot predict what action our Board of Directors would take in response, if any. However, ourBoard of Directors has an obligation to act in the best interest of our Company, and in the event25 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.the California Superior Court were to order a sale of the Class B Stock held by the Cotter Trust, our Board of Directors would be obligatedto consider the interests of the Company and to act accordingly. In addition, James J. Cotter, Jr., has filed a derivative action (discussed in greater detail below) against Ellen Cotter and Margaret Cotter andcertain of our Directors, alleging a variety of misconduct on their part and, among other things, seeking the reinstatement of James J. Cotter,Jr. as president and chief executive officer of our Company, and challenging the voting by Ellen Cotter and Margaret Cotter of the sharesheld by the Cotter Estate. The Nevada District Court dismissed all of Mr. Cotter, Jr.’s derivative claims against Directors Judy Codding,William Gould, Edward L. Kane, Doug McEachern and Michael Wrotniak in December 2017. See Notes to Consolidated FinancialStatements—Note 12—Commitments and Contingencies—Cotter Jr. Related Litigation Matters (including legal costs coverage). TheNevada District Court also dismissed all of the Defendant Directors Mr. Cotter, Jr.’s claims against them relating to their handling of thePatton Vision indication of interest.The Nevada derivative litigation and related matters has for multiple years, required the time and attention of Ellen Cotter, Margaret Cotter,our directors and members of our management team and could, in the future, potentially further distract the time and attention of these keypersons from the business and operations of our Company.Furthermore, the uncertainty as to the future management and control of our Company could potentially adversely impact, among otherthings (i) our ability to develop and maintain favorable business relationships, (ii) our ability to attract and retain talented and experienceddirectors, executives and employees, (iii) the compensation and other terms needed to attract and retain such individuals (including,without limitation, the potential need for retentions agreements and other incentive arrangements typically put into place when control of apublic company is uncertain), (iv) our ability to borrow money on favorable long-term terms, and (v) our ability to pursue and completelong-term business objectives. The interests of our controlling stockholder may conflict with your interests. As of December 31, 2017, the Cotter Estate and the CotterTrust beneficially own 66.9% of our outstanding Class B Stock. At the present time, according to the books of the Company, Ellen Cotterand Margaret Cotter vote (including their direct holdings of 50,000 shares and 35,100 shares respectively of the Class B Stock), Class BStock representing 71.9% of our outstanding Class B Stock. Our Class A Stock is non-voting, while our Class B Stock represents all of thevoting power of our Company. For as long as the Cotter Estate, the Cotter Trust and/or the Cotter Voting Trust (referred to hereincollectively as the “Cotter Entities”) continue to own shares of Class B Stock representing more than 50% of the voting power of ourcommon stock, the Cotter Entities will be able to elect all of the members of our Board of Directors and determine the outcome of allmatters submitted to a vote of our stockholders, including matters involving mergers or other business combinations, the acquisition ordisposition of assets, the incurrence of indebtedness, the issuance of any additional shares of common stock or other equity securities andthe payment of dividends on common stock. The Cotter Entities will also have the power to prevent or cause a change in control, and couldtake other actions that might be desirable to the Cotter Entities but not to other stockholders. To the extent that the Cotter Entities holdmore than 2/3rds of our outstanding Class B Stock, the Cotter Entities will have the power at any time, with or without cause, to remove anyone or more Directors (up to and including the entire board of directors) by written consent taken without a meeting of the stockholders. In addition, the Cotter Estate or the Cotter Trust and/or their respective affiliates have controlling interests in companies in related andunrelated industries. In the future, we may participate in transactions with these companies (see Note 18 – Related Parties).While controlling stockholders may owe certain fiduciary duties to our Company and/or minority stockholders, these duties arelimited. No assurances can be given that the Cotter Entities will not take action that, while beneficial to them and legally enforceable,would not necessarily be in the best interests of our Company and/or our stockholders generally.We are a “Controlled Company” under applicable NASDAQ Regulations. As permitted by those Regulations, our Board has elected toopt-out of certain corporate governance rules applicable to non-controlled companies. Generally speaking, the NASDAQ requires listedcompanies to meet certain minimum corporate governance provisions. However, a “Controlled Company”, such as we, may elect not to begoverned by certain of these provisions. Our Board of Directors has elected to exempt our Company from requirements that (i) at least amajority of our Directors be independent, and (ii) nominees to our Board of Directors be nominated by a committee comprised entirely ofindependent Directors or by a majority of our Company’s independent Directors. Notwithstanding the determination by our Board ofDirectors to opt-out of these NASDAQ requirements, we believe that a majority of our Board of Directors is nevertheless currentlycomprised of independent Directors. In this regard, our Board takes note of the fact that notwithstanding the allegations of Mr. Cotter, Jr., inthe Derivative Case, the Nevada District Court has determined that, after more than 30 months of litigation, Mr. Cotter, Jr., has failed todemonstrate any issue of fact as to the independence of five our current nine directors: Directors Judy Codding, William Gould, Edward L.Kane, Doug McEachern and Michael Wrotniak. Nominations are considered by the Board, acting as a whole. While as a ControlledCompany, we are not subject to the requirement that the compensation of our Chief Executive Officer be determined or recommended toour Board of Directors by a compensation committee comprised entirely of independent Directors or by a majority of our Company’sindependent Directors, the current charter of our Compensation and Stock Options Committee nevertheless requires that this committee becomprised entirely of independent Directors.26 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We depend on key personnel for our current and future performance. Our current and future performance depends to a significant degreeupon the continued contributions of our senior management team and other key personnel. The loss or unavailability to us of any memberof our senior management team or a key employee could significantly harm us. We cannot assure you that we would be able to locate oremploy qualified replacements for senior management or key employees on acceptable terms. Due to the uncertainty of our controlsituation, the ongoing availability of these employees and our ability to replace them is uncertain.If our company suffers cyber-security attacks, data security challenges or privacy incidents that result in security breaches, we couldsuffer a loss of sales, additional liability, reputational harm or other adverse consequences.The effective operation of our international businesses depends on our network infrastructure, computer systems, physical, virtual and/orcloud based, and software. Our information technology systems collect and process information provided by customers, employees andvendors. In addition, third party vendors’ systems process ticketing for our theaters. These various information technology systems and thedata stored within them are subject to penetration by cyber attackers. We utilize industry accepted security protocols to securely maintainand protect proprietary and confidential information. However, in spite of our best efforts, our information systems may fail to operate for avariety of technological or human reasons. An interruption or failure of our information technology systems and of those maintained byour third party providers could adversely affect our business, liquidity or results of operations and result in increases in reputational risk,litigation or penalties. Furthermore, any such occurrence, if significant could require us to expend resources to remediate and upgradeinformation technology systems. Since 2015, we have annually procured cybersecurity insurance to protect against cyber-security risks;however, such we cannot provide any assurance regarding the adequacy of such insurance coverage. Item 1B – Unresolved Staff CommentsNone.27 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 2 – Properties EXECUTIVE AND ADMINISTRATIVE OFFICESAs discussed previously, in February 2017, we moved our executive headquarters in the U.S. from an 11,700 square foot leased office spacelocated at 6100 Center Drive, Suite 900, Los Angeles, California 90045 to a 24,000 square foot Class B office building with 72 parkingspaces located at 5995 Sepulveda Boulevard, Suite 300, Culver City, California 90230, which we purchased on April 11, 2016. We arecurrently using approximately 50% of the leasable area for our headquarters’ offices and intend to lease, over time, the remainder tounaffiliated third parties.We own an 8,300 square foot office building in Melbourne, Australia, approximately 5,200 square feet of which serve as the headquartersfor our Australian and New Zealand operations (the remainder being leased to an unrelated third party). We maintain our accountingpersonnel and certain IT and operational personnel in approximately 5,900 square foot of offices located in our Wellington CourtenayCentral ETC. We also occupy approximately 3,500 square feet at our Village East leasehold property in New York for administrativepurposes.ENTERTAINMENT PROPERTIESEntertainment Use Leasehold InterestsAs of December 31, 2017, we lease approximately 1,800,000 square feet of completed cinema space in the United States, Australia, and NewZealand as follows:Aggregate SquareFootageApproximate Range of RemainingLease Terms (including renewals)United States962,0002018 – 2052Australia659,0002019 – 2039New Zealand191,0002019 – 2050In December 2014, we entered into (i) a lease for a new luxury cinema, Olino by Consolidated Theatres, which opened on October 21, 2016at the new Ka Makana Ali'i Shopping Center developed in Kapolei, Hawaii by an affiliate of DeBartolo Development and (ii) finalizedterms for a new eight-screen cinema complex in New Lynn Auckland, New Zealand, which opened in November 2015.REAL ESTATE INTERESTSFee InterestsIn Australia, as of December 31, 2017, we owned approximately 1,200,000 square feet of land at nine locations. Most of this land is locatedin the greater metropolitan areas of Brisbane, Perth, and Sydney. Of these fee interests, approximately 208,000 square feet are currentlyimproved with cinemas. We also own an approximately 23,000 square foot parcel currently improved with an approximately 22,000 squarefoot office building that we intend to integrate with and into our Newmarket ETC and that, accordingly, is not included in the above table.In New Zealand, as of December 31, 2017, we owned approximately 3,300,000 square feet of land at six locations. The foregoing includesthe Courtenay Central ETC in Wellington, the development land adjacent to our Courtenay Central ETC, the 70.4-acre Manukau site, andthe fee interests underlying four cinemas in New Zealand, which properties include approximately 20,000 square feet of ancillary retailspace.In the United States, as of December 31, 2017, we owned approximately 134,000 square feet of improved real estate comprised of three livetheater buildings, which include approximately 37,000 square feet of leasable space, the fee interest in the Union Square property (currentlybeing redeveloped), and the fee interest in our Cinemas 1,2,3 in Manhattan (held through a limited liability company in which we have a75% managing member interest). We also own various properties relating to our historic railroad business. Live TheatersIncluded among our real estate holdings are three Off-Broadway style live theaters, operated through our Liberty Theaters subsidiary. Welicense theater auditoriums to the producers of Off-Broadway theatrical productions and provide various box office and food & beverageservices. The terms of our licenses are, naturally, principally dependent upon the commercial success of our tenants. While we attempt tochoose productions that we believe will be successful, we have no control over the production itself. At the current time, we have twosingle-auditorium theaters in Manhattan:·the Minetta Lane (399 seats); and,28 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.·the Orpheum (347 seats).We also own a four-auditorium theater complex, the Royal George Theatre in Chicago (main stage 452 seats, cabaret 199 seats, great room100 seats and gallery 60 seats), which has ancillary retail and office space.At the end of 2015, we closed our Union Square Theatre as a part of our redevelopment of that property. As discussed previously, we beganthe construction phase of the redevelopment during 2016.Liberty Theaters is primarily in the business of renting theater space. However, we may from time-to-time participate as an investor in aplay, which can help facilitate the exhibition of the play at one of our facilities, and do from time-to-time rent space on a basis that allowsus to share in a production’s revenue or profits. Revenue, expense, and profits are reported as a part of the real estate segment of ourbusiness.Joint Venture InterestsReal estate joint ventures comprise of a 75% managing member interest in the limited liability company that owns our Cinemas 1,2,3property and a 50% managing member interest in Shadow View Land & Farming, LLC, which owns an approximately 202-acre property inCoachella, California that is currently zoned for residential and mixed use. 29 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.OPERATING PROPERTYAs of December 31, 2017, we own fee interests on approximately 842,000 square feet of income-producing properties (including certainproperties principally occupied by our cinemas) as follows:PropertySquare Feetof Improvements(rental/entertainment)(1)PercentageLeased(2)Net BookValue(3) (US Dollars inthousands)Reporting SegmentAddressUnited States1 Cinemas 1, 2, 3(4)0 / 21,000n/a$24,293 Cinema Exhibition1003 Third Avenue, Manhattan, NY2 LA Office Building,Culver City12,000 / 14,0000%13,513 Real Estate5995 Sepulveda Blvd, Culver City, CA3 Minetta Lane Theatre0 / 9,000n/a2,515 Real Estate18-22 Minetta Lane, Manhattan, NY4 Orpheum Theatre1,000 / 5,000100%1,374 Real Estate126 2nd Street, Manhattan, NY5 Royal George37,000 / 23,00091%2,300 Real Estate1633 N. Halsted Street, Chicago, ILplus a 55-space parking structureAustralia1 Newmarket(5)102,000 / 42,00074%31,804 Real Estate400 Newmarket Road, Newmarket, QLDplus a 574-space parking structure2 Auburn(5)75,000 / 57,00079%24,621 Cinema Exhibition /100 Parramatta Road, Auburn, NSWplus a 757-space parking structureReal Estate3 Cannon Park(6)105,000 / 28,00094%24,593 Cinema Exhibition /Real EstateHigh Range Drive, Thuringowa, QLD4 Belmont15,000 / 45,00071%6,459 Cinema ExhibitionKnutsford Avenue and Fulham Street,Belmont, WA5 York Street Office3,000 / 5,000100%1,985 Real Estate98 York Street, South Melbourne, VIC6 Maitland Cinema0 / 22,000n/a1,102 Cinema ExhibitionKen Tubman Drive, Maitland, NSW7 Bundaberg0 / 14,000n/a1,267 Cinema Exhibition1 Johanna Boulevard, Bundaberg, QLDNew Zealand1 Courtenay Central(5)29,000 / 76,00042%13,295 Cinema Exhibition /100 Courtenay Place, WellingtonPlus an additional 37,000 feet of land currently used as car parkingwhere our car parking structure once was.Real Estate24 Tory Street, Wellington (Parking)2 Dunedin Cinema0 / 25,000n/a6,486 Cinema Exhibition33 The Octagon, Dunedin3 Napier Cinema12,000 / 18,000100%2,046 Cinema Exhibition154 Station Street, Napier4 Invercargill Cinema8,000 / 24,00061%1,633 Cinema Exhibition29 Dee Street, Invercargill5 Rotorua Cinema0 / 19,000n/a1,825 Cinema Exhibition1281 Eruera Street, RotoruaTOTAL(7)$161,111 (1) Rental square footage refers to the amount of area available to be rented to third parties. A number of our real estate holdings include entertainment components rented to one or more of oursubsidiaries at fair market rent. The rental area to such subsidiaries is noted under the entertainment square footage.(2) Represents the percentage of rental square footage currently leased to third parties.(3) Refers to the net carrying value of the land and buildings of the property presented as “Operating Property” in our Consolidated Balance Sheet as of December 31, 2017 (net of any impairmentsrecorded).(4) Owned by a limited liability company in which we hold a 75% managing member interest. The remaining 25% is owned by Sutton Hill Capital, LLC (“SHC”), a company owned in equal partsby the Cotter Estate or the Cotter Trust and a third party.(5) Our Courtenay Central parking structure has been demolished due to an earthquake on November 14, 2016. For further information on the on-going development projects of these properties,refer to succeeding section "Investment and Development Property."(6) Our Cannon Park City and Discount Centers are operated as a single ETC.(7) This schedule does not include (i) our leasehold assets on cinemas under leased-facility model, (ii) those portion of the owned assets that are not income-producing or purely used foradministrative purposes, and (iii) our assets on our legacy business in Philadelphia and New Jersey.LONG-TERM LEASEHOLD OPERATING PROPERTYIn certain cases, we have long-term leases that we view more akin to real estate investments than cinema leases. As of December 31, 2017,we had approximately 149,000 square foot of space subject to such long-term leases, which are reported as part of our Cinema Exhibitionsegment, detailed as follows:PropertySquare Feet of Improvements(rental/entertainment)(1)PercentageLeased(2)Net Book Value(3) (US Dollars in thousands)In United States1 Village East(4)4,000 / 38,000100%$5,327 2 Manville0 / 46,000n/a3,076 3 Tower0 / 17,000n/a--In Australia1 Waurn Ponds6,000 / 38,000100%415 TOTAL$8,818 (1) Rental square footage refers to the amount of area available to be rented to third parties. A number of our real estate holdings include entertainment components rented to one or more of oursubsidiaries at fair market rent. The rental area to such subsidiaries is noted under the entertainment square footage.(2) Represents the percentage of rental square footage currently leased to third parties.(3) Refers to the net carrying value of the leasehold property presented as “Operating Property” in our Consolidated Balance Sheet as of December 31, 2017 (net of any impairments recorded).30 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(4) The lease of the Village East provides for a call option pursuant to which Reading may purchase the cinema ground lease for $5.9 million at the end of the lease term in 2020. Additionally, thelease has a put option pursuant to which SHC may require Reading to purchase all or a portion of SHC's interest in the existing cinema lease and the cinema ground lease at any time betweenJuly 1, 2013 and December 4, 2019. See Note 18 – Related Party Transactions to our 2017 consolidated financial statements.INVESTMENT AND DEVELOPMENT PROPERTYWe are engaged in several investment and development projects relative to our currently undeveloped parcels of land. In addition, we arecurrently executing, or still pursuing to execute, our redevelopment plans on several of our existing developed properties to take them totheir highest and best use. The following table summarizes our investment and development projects as of December 31, 2017: Property(1) Acreage Net BookValue(2)(US Dollars inthousands) StatusUnited States 1 Union Square Theatre 0.08 $36,013 We closed down the live theatre business and terminated third partyretail tenants in order to actively pursue the redevelopment of thisproperty. Construction phase began and construction financingwas obtained during 2016, and we anticipate this redevelopmentproject will be substantially completed by third quarter of2018. The net book value of $36.0 million represents historic costplus capital expenditures through December 31, 2017.2 Coachella, CA 202.39 4,318 We continue to evaluate our options with regards to this property.Australia 1 Auburn, Sydney,New South Wales 2.62 1,584 We have commenced the development of the next phase of thisproperty. In 2015 and 2016, we entered into agreements to leaseapproximately 15,500 square feet of to-be-built retail space. Two(2) newly constructed retailers (Intersport and MCMD) openedduring the third quarter of 2016, one (1) (Chicago Jones Cafe)opened in March 2017 and two restaurants opened at the end of2017. The center has approximately 118,000 square feet of landarea available for development.New Zealand 1 Manukau, Auckland 64.0 acres zoned agricultural and 6.4acres zoned light industrial 12,372 In August 2016, the agricultural portion of our property inManukau (approximately 64.0 acres) was rezoned to light industrialuses. In 2010, we acquired an adjacent property (6.4 acres) that isalready zoned for heavy industrial use. That property links ourexisting parcel with the existing road network. We continue toevaluate our options in regards to this property.2 Courtenay Central,Wellington (includingWakefield andTaranaki) 1.08 6,967 On November 14, 2016, Wellington experienced a severe 7.8magnitude earthquake. That earthquake rendered our Tory Streetparking building unsafe and ultimately led to the demolition of thatbuilding and the temporary closure of our adjacent ETC, whichreopened on March 29, 2017. Our supermarket tenant remainscommitted to the site but has delayed construction in order toupgrade to a “premium” offering. Under the agreement to lease,our tenant is responsible for any increase in our costs resulting fromthose design changes. In light of the demolition of the existingparking building (a major portion of the cost of which is coveredby insurance), we are undertaking a comprehensive redesignanalysis, intended to increase the amount of retail leasable space atthe center and to better coordinate the interface between theparking building and the remainder of the center. While we workon a redesign of the property, we have activated the building withseveral temporary “pop-up” retail offerings. We are currentlyworking on plans and in discussions with tenants regarding theconstruction of additional retail space at the site.TOTAL $61,254 (1) A number of our real estate holdings include additional land held for development. In addition, we have acquired certain parcels for future development.(2) Refers to the recorded values of our non-operating and currently in-development stage properties, which are comprised of land, building, development costs and capitalized interest, and presentedas “Investment and Development Property” in our Consolidated Balance Sheet as of December 31, 2017. Not included in this number is the book value of those portions of such propertieswhich have already been developed.Some of our income operating properties and our investment and development properties carry various debt encumbrances based on theirincome streams and geographic locations. For an explanation of our debt and the associated security collateral please see Note 10 –Borrowings to our 2017 consolidated financial statements.31 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.OTHER PROPERTY INTERESTS AND INVESTMENTSWe own the fee interests in eight parcels comprising 197 acres in Pennsylvania and New Jersey. These acres consist primarily of vacantland. With the exception of certain properties located in Philadelphia (including the raised railroad bed near the Center City, known as theNorth Viaduct), the properties are principally located in rural areas of Pennsylvania and New Jersey. These properties are unencumbered byany debt. Item 3 – Legal ProceedingsThe information required under Part I, Item 3 (Legal Proceedings) is incorporated by reference to the information contained in Note 12 –Commitments and Contingencies to the Consolidated Financial Statements included herein in Part II, Item 8 (Financial Statements andSupplementary Data) on this Annual Report on Form 10-K. Item 4 – Mine Safety DisclosuresNot Applicable. Properties relating to our legacy business are currently not used and classified as Investment Property. PART II Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity SecuritiesMARKET INFORMATIONThe following table sets forth the high and low closing prices of the RDI (Class A Stock) and RDIB (Class B Stock) common stock for eachof the quarters in 2017 and 2016 as reported by NASDAQ:Class A StockClass B Stock​HighLowHighLow2017 4th Quarter$16.70 $14.67 $23.15 $20.50 3rd Quarter16.21 15.42 22.52 18.00 2nd Quarter16.63 14.65 18.48 17.16 1st Quarter16.95 15.23 20.34 16.29 2016 4th Quarter$16.88 $12.59 $18.88 $15.05 3rd Quarter13.83 12.07 16.99 12.59 2nd Quarter13.63 11.79 13.80 11.65 1st Quarter12.80 9.78 13.72 11.69 As of December 31, 2017, the approximate number of common stockholders of record was 2,300 for Class A Stock and 375, for Class BStock. On March 12, 2018, the closing prices per share of our Class A Stock and Class B Stock were $16.86 and $29.41, respectively.We have never declared a cash dividend on our common stock and we have no current plans to declare a dividend.The following table summarizes the securities authorized for issuance under our equity compensation plans:Number of securitiesto be issued uponexercise of outstandingoptions, warrants, andrightsWeighted-averageexercise price ofoutstandingoptions, warrants,and rightsNumber of securitiesremaining available forfuture issuance underequity compensationplansEquity compensation plans approved bysecurity holdersStock options524,589 $12.50 Restricted stock units138,691 13.98 Total663,280 457,431 32 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Performance GraphThe following line graph compares the cumulative total stockholder return on RDI’s common stock for the five-year period endedDecember 31, 2017 against the cumulative total return as calculated by the NASDAQ composite, a peer group of public companies engagedin the motion picture theater operator industry and a peer group of public companies engaged in the real estate operator industry.Measurement points are the last trading day for each of the five years ended December 31, 2017. The graph assumes that $100 was investedon December 31, 2012 in our common stock, the NASDAQ composite and the noted peer groups, and assumes reinvestment of anydividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance.RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIESNone.PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSOn March 2, 2017 our Board of Directors authorized a stock buy-back program to spend up to an aggregate of $25.0 million to acquireshares of the Company’s Class A non-voting stock. Below is a summary of share repurchases during 2017: Refer to Note 14 - Share-BasedCompensation and Share Repurchase Plans in the 2017 Consolidated Financial Statements for further details.PeriodTotal Number ofShares PurchasedAverage Price Paid perShareTotal Number of SharesPurchased as part of ourStock Buy-Back ProgramApproximate Dollar Value of Sharesthat may yet be Purchased under theStock Buy-Back ProgramMarch 201741,899 $15.99 41,899 $24,330,149 May 201798,816 15.78 98,816 22,771,316 June 201770,234 16.39 70,234 21,620,212 August 2017187,207 15.81 187,207 18,659,580 September 20175,000 15.71 5,000 18,581,038 October 2017 - - -18,581,038 November 2017 - - -18,581,038 December 20176,567 16.01 6,567 18,475,900 Total409,723 $15.92 409,723 $18,475,900 33 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Previously, in May 2014, our Board of Directors had authorized a stock buy-back program to spend up to an aggregate of $10.0 million toacquire shares of the Company’s Class A Stock. We executed these repurchases pursuant to the publicly announced stock buy-backprogram requirements. As of December 31, 2016, we had fully spent the $10.0 million budget. Refer to Note 14 - Share-BasedCompensation and Share Repurchase Plans in the 2017 Consolidated Financial Statements for further details. The following tablesummarizes the repurchases (by month) during the fiscal year 2016:PeriodTotal Number of SharesPurchasedAverage Price Paidper ShareTotal Number of SharesPurchased as part of ourStock Buy-Back ProgramApproximate Dollar Valueof Shares that may yet bePurchased under the StockBuy-Back Program11/1/2016 - 11/30/201681,439 $15.16 81,439 $1,608,313 12/1/2016 - 12/31/2016100,300 16.04 100,300 --Total181,739 $15.64 181,739 $--34 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 6 – Selected Financial DataThe table below sets forth certain historical financial data regarding our Company. This information is derived in part from, and should beread in conjunction with, our consolidated financial statements included in Item 8 of this 2017 Annual Report, and the related notes to theconsolidated financial statements.($ in thousands, except per share data)201720162015(2)2014(2)2013(3)Statement of operationsRevenue$279,734 $270,473 $257,865 $255,242 $258,221 Operating income20,561 20,311 23,696 22,667 20,935 Net income attributable to RDI30,999 9,403 23,110 25,335 9,041 Per common share Net income/ attributed to RDI Basic EPS$1.35 $0.40 $0.99 $1.08 $0.39 Diluted EPS1.33 0.40 0.98 1.07 0.38 Balance sheetTotal assets$423,026 $405,766 $372,198 $401,586 $386,807 Total debt (gross of deferred financing costs)134,501 148,535 130,941 164,036 168,460 Working capital (deficit)(4)(46,971)6,655 (35,581)(15,119)(75,067)Stockholders’ equity181,241 146,615 138,951 133,716 123,531 Statement of cash flowsCash provided by / (used in): Operating activities$23,851 $30,188 $28,574 $28,343 $25,183 Investing activities(6,786)(42,861)(29,710)(9,898)(6,142) Financing activities(22,055)11,246 (27,961)(3,275)(17,775)Other InformationEBIT$40,530 $20,205 $35,562 $25,410 $24,020 EBITDA$57,472 (1)$35,894 $50,124 (1)$40,878 $39,217 Debt to EBITDA Ratio2.34 4.14 2.61 4.01 4.30 Capital expenditure (including acquisitions)$76,708 $49,166 $53,119 $14,914 $20,082 Shares outstanding22,931,881 23,178,307 23,334,892 23,237,076 23,385,519 Weighted average - basic23,041,190 23,431,855 23,293,696 23,431,855 23,348,003 Weighted average - diluted23,247,969 23,749,221 23,495,618 23,749,221 23,520,271 Number of employees at 12/312,585 2,793 2,712 2,596 2,494 (1 2017 includes gain on sale of assets amounting to $9.4 million and casualty gain of $9.2 million. 2015 Includes gain on sale of assets amounting to $11.0 million.(2) Certain 2015 and 2014 balances included the restatement impact as a result of a change in accounting principle (see Note 2 – Summary of Significant Accounting Policies – AccountingChanges). For 2014, financial information relating to our Statement of Operations were restated to conform to the restatement adjustments. For the Balance Sheet, no other changes made,except for the Stockholders’ Equity balance as of 12/31/2014, as we are not required to present the restatement numbers as of December 31, 2014.(3) 2013 are periods not covered by the restatement as a result of a change in accounting principle. Except for the Stockholders’ Equity balance as of 12/31/2013, no other changes made.(4) Typically our working capital (deficit) is negative as we receive revenue from our cinema business ahead of the time that we have to pay our associated liabilities. We use the money we receiveto pay down our borrowings in the first instance.Both EBIT and EBITDA are non-US GAAP measures and are presented for informational purposes. They should not be construed as analternative to net earnings (loss), as an indicator of operating performance or as an alternative to cash flow provided by operating activitiesas a measure of liquidity (as determined in accordance with US GAAP). These measures should be reviewed in conjunction with therelevant US GAAP financial measures. EBIT and EBITDA as we have calculated them may not be comparable to similarly titled measuresreported by other companies.EBIT presented above represents net income (loss) adjusted for interest expense (net of interest income), income tax expense and anadjustment of interest expense for discontinued operations, if any. EBIT is useful in evaluating our operating results for the followingreasons:·EBIT removes the impact of the varying tax rates and tax regimes in the jurisdictions where we operate and the impact of taxtiming differences that may vary from time-to-time and from jurisdiction-to-jurisdiction·EBIT removes the impact from our effective tax rate of factors not directly related to our business operations.·EBIT removes the impact of our historically significant net loss carry-forwards.·EBIT allows a better performance comparison between RDI and other companies. For example, it allows us to compare ourselveswith other companies that may have more or less debt than we do.35 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We define EBITDA as net income adjusted for interest expense (net of interest income), income tax expense, depreciation and amortizationexpense, and an adjustment of interest expense, depreciation, and amortization for discontinued operations, if any. EBITDA is usefulprincipally for the following reasons:·EBITDA is an industry comparative measure of financial performance. Analysts and financial commentators who report on thecinema exhibition and real estate industries often use EBITDA to determine the valuation of a company in such industries. ·EBITDA is a measure used by financial institutions to determine the credit rating of companies in cinema exhibition and realestate industries. Reconciliation of EBIT and EBITDA to net income is presented below:($ in thousands)20172016201520142013(1)Net income (loss) attributable to RDI$30,999 $9,403 $23,110 $25,335 $9,041 Add: Interest expense, net6,194 6,782 7,304 9,000 10,037 Add: Income tax (benefit) expense3,337 4,020 5,148 (8,925)4,942 EBIT$40,530 $20,205 $35,562 $25,410 $24,020 Add: Depreciation and amortization16,942 15,689 14,562 15,468 15,197 EBITDA$57,472 $35,894 $50,124 $40,878 $39,217 (1) 2013 are periods not covered by the restatement as a result of a change in accounting principle.36 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 7 – Management’s Discussions and Analysis of Financial Condition and Results of Operations (“MD&A”)This MD&A should be read in conjunction with the accompanying consolidated financial statements included in Part II, Item 8 (Financial Statements and Supplementary Data). Theforegoing discussions and analyses contain certain forward-looking statements. Please refer to the “Forward Looking Statements” included as a preface in Part I, Item 1A – RiskFactors of this 2017 Form 10-K. INDEXPage​Business Overview37​Recent Developments39​Results of Operations43​Business Segment Results – 2017 vs 201645​Non-Segment Results – 2017 vs 201648​Business Segment Results – 2016 vs 201549​Non-Segments Results – 2016 vs 201551​Liquidity and Capital Resources52​Contractual Obligations, Commitments and Contingencies54​Financial Risk Management54​Critical Accounting Estimates55BUSINESS OVERVIEWWe are an internationally diversified company principally focused on the development, ownership, and operation of entertainment and realestate assets in the United States, Australia, and New Zealand. Currently, we operate in two business segments:·Cinema exhibition, through our 59, including one managed only cinema multiplex cinemas; and,·Real estate, including real estate development and the rental of retail, commercial and live theater assets.We believe that these two business segments can complement one another, as we can use the comparatively consistent cash flows generatedby our cinema operations to fund the front-end cash demands of our real estate development business.We operate our worldwide cinema exhibition businesses under various brands:·in the U.S., under the following brands: Reading Cinemas, Angelika Film Centers, Consolidated Theatres, and City Cinemas;·in Australia, under the Reading Cinemas brand; and,·in New Zealand, under the Reading Cinemas and Rialto brands.37 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Our Business Strategy: Applying a Synergistic ApproachWe believe the cinema business to be one that will likely continue to generate fairly consistent cash flows in the years ahead, even in arecessionary or inflationary environment. This is based on our belief that people will continue to spend a reasonable portion of theirentertainment dollars on entertainment outside of the home and that, when compared to other forms of outside-the-home entertainment,movies continue to be a popular and competitively priced option. We believe the cinema exhibition business to be a mature business withmost markets either adequately screened or over-screened and we see growth in our cinema business coming principally from (i) theenhancement of our existing cinemas (for example, by the addition of luxury recliner seating and expanding our food and beverageprogram), (ii) the development in select markets of specialty cinemas and where applicable, new cinemas in underserved markets, and (iii)the opportunistic acquisition of already existing cinemas. From time-to-time, we might invest in the securities of other companies, where webelieve the business or assets of those companies to be attractive or to offer synergies to our existing entertainment and real estatebusinesses. We continue to focus on the development and redevelopment of our existing assets (particularly our real estate assets in (i) NewYork, (ii) Brisbane and Sydney in Australia, and (iii) Wellington, New Zealand, and our Angelika Film Center chain), as well as to continueto be opportunistic in identifying and endeavoring to acquire undervalued assets, particularly assets with proven cash flow and that webelieve to be resistant to recessionary trends.We see ourselves principally as a geographically diversified real estate and cinema exhibition company and intend to add to stockholdervalue by building the value of our portfolio of tangible assets, including both entertainment and other types of land and “brick and mortar”assets. We endeavor to maintain a reasonable asset allocation between our domestic and international assets and operations, and betweenour cash-generating cinema operations and our cash-consuming real estate investment and development activities. We believe that, byblending the cash generating capabilities of a cinema operation with the investment and development opportunities of our real estateoperations, our business strategy is unique among public companies.Industry OutlookCinema ExhibitionAlong with most of our industry, we have completed the conversion of all of our U.S., Australia, and New Zealand cinema operations todigital exhibition. We believe that a substantial part of this cost of conversion has been or will be recovered by the receipt of “virtual printfees” paid by film distributors for the use of such digital projection equipment.The “in-home” entertainment industry has experienced significant leaps in recent periods in both the quality and affordability of in-homeentertainment systems and in the accessibility to and quality of entertainment programming through alternative film distribution channels,such as network, cable, satellite, internet distribution channels, and Blu-ray/DVD. The success of these alternative distribution channelsputs additional pressure on film distributors to reduce and/or eliminate the time period between theatrical and secondary release dates.These are issues common to both our U.S. and international cinema operations.Certain new entrants to the cinema exhibition market, as well as certain of our historic competitors, have begun to develop new, and toreposition existing, cinemas that offer a broader selection of premium seating and food and beverage choices. These include, in some cases,food service to the seat and the offering of alcoholic beverages. We have for some years offered premium seating, café food selections andalcoholic beverages in certain cinemas. Based on our experience, we believe that we can compete effectively with this emergingcompetition. We are currently reviewing the potential for further expanding our offerings at a variety of our cinemas.Below is a summary discussion of the competitive aspects of our two cinema exhibition markets:·North America: We face strong competition in North America as distributors may find it more commercially appealing to dealwith major exhibitors, rather than to deal with independents such as us. This competitive disadvantage has increased significantlyin recent periods, with the development of mega-circuits such as Regal and AMC, who are able to offer distributors access toscreens on a truly nationwide basis, or, on the other hand, to limit access if their desires with respect to film supply are notsatisfied. AMC has now completed its acquisition of the 4th largest exhibitor in the U.S., Carmike Cinemas, making it the largest circuit inthe U.S. and when considered with its parent (Dalian Wanda), the largest exhibitor in the world. Just recently, Regal has beenacquired by Cineworld, a major European cinema circuit operator. The restructuring and consolidation undertaken in the industryis decreasing the number of exhibitors in the market, and the emergence of increasingly attractive “in-home” and mobileentertainment alternatives and the continued growth of in-home and mobile viewing options is resulting in pressure for shortenedrelease windows.38 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.·Australia / New Zealand: The film exhibition industry in Australia and New Zealand is highly concentrated in that Village,Event, and Hoyts (the “Major Exhibitors”) control approximately 76% of the cinema box office in Australia, while Event andHoyts control approximately 53% of New Zealand’s cinema box office. The industry is also somewhat vertically integrated in thatone of the Major Exhibitors, Roadshow Film Distributors (part of Village), also serves as a distributor of film in Australia and NewZealand for Warner Bros. Films produced or distributed by the majority of the local international independent producers are alsodistributed by Roadshow. Typically, the Major Exhibitors own the newer multiplex and megaplex cinemas, while the independentexhibitors typically have older and smaller cinemas. In addition, the Major Exhibitors have in recent periods built a number ofnew multiplexes as joint venture partners or under shared facility arrangements, and have historically not engaged in head-to-headcompetition. Real EstateA summary discussion of the competitive aspects of the markets where we own real estate properties is as follows:·North America: We believe that U.S. retail real estate owners will continue to reuse the space vacated by anchor retailers to offer avariety of entertainment options and ultimately enhance the customer experience. Online marketplaces will offer a platform tobrands, designers, and artists to find physical retail space for a short duration. This will likely spur a broader subleasingphenomenon. Subleasing will likely be bigger than leasing, however physical stores will remain, although their form andfunctionality will continue to evolve. Credit availability may be a concern going forward, due to the continued low CMBSissuances and banks tightening the lending standards across all commercial real estate loan categories due to increased federalscrutiny.Demand for office space is likely to reduce as corporations adapt to employees’ “live, work, and play” behavior and leveragetechnology to automate tasks. The leasing of large office spaces and sub-leasing them on demand for a wide variety of short-termrentals, ranging from day offices, hourly use of office space or meeting rooms, to virtual offices and other uses, will be a continuinggrowth trend. In essence, office space demand will tilt in favor of open, flexible, co-sharing spaces and the per-employee officespace requirement is likely to shrink. As a result there will be a higher demand for dynamically configurable spaces.Our U.S. business plan is aligned with these real estate trends – to expand our U.S. cinema offering, offer premium retail locationsand versatile office product.·Australia and New Zealand: Over the past few years, there has been a noted stabilization in real estate market activity resulting insome increases to commercial and retail property values in Australia and to a lesser extent in New Zealand. Both countries haverelatively stable economies with varying degrees of economic growth that are mostly influenced by global trends. Also, we havenoted that our Australian and New Zealand developed properties have had consistent growth in rentals and values, and we have anumber of projects commencing. Once developed, we remain optimistic that our Australian and New Zealand holdings willcontinue to provide value and cash flows to our operations.RECENT DEVELOPMENTSRecent developments in our two business segments are discussed below:Cinema ExhibitionOur cinema revenue consists primarily of admissions, F&B, advertising and theater rentals. Cinema operating expense consists of the costsdirectly attributable to the operation of the cinemas, including film rent expense, operating costs, and occupancy costs. Cinema revenueand expense fluctuate with the availability of quality first run films and the numbers of weeks such first run films stay in the market. For abreakdown of our current cinema assets that we own and/or manage, please see Part I, Item 1 – Our Business of this 2017 Annual Report.While our capital projects in recent years have been focused in growing our real estate segment, we have also achieved some considerableimprovements in our cinema exhibition portfolio, as discussed below:Cinema Additions (including re-openings)Here are the latest additions to our cinema portfolio since 2015:·Opening a new state-of-the-art eight-screen in Newmarket, Brisbane, Australia On December 14, 2017, at the completion of ouradditional work at our Newmarket Village, Brisbane location, we opened an eight screen Reading Cinemas offering one TITANLUXE with DOLBY ATMOS sound and recliner seating, and three Gold Lounge auditoriums featuring recliner seating, as well asoffering an expanded F&B menu.·U.S. Refurbishments In 2017, we continued to expend capital expenditure on refurbishment as detailed in our strategic plan.Significant renovation through the U.S. circuit resulted in seven locations having refurbishment work performed: the Cal Oaks,Valley Plaza and Grossmont locations in California; the Ward and Pearlridge locations in Hawaii; the Paris location in New Yorkand the Manville location in New Jersey. Further, at Cal Oaks, we additionally determined to create and implement our new dine-in concept, Spotlight.39 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.·AU and NZ Refurbishments In 2017, we partially renovated six theaters: Belmont, Rouse Hill, West Lakes, Harbourtown,Courtenay Central and Napier.·Opening a new state-of-the-art eight-screen cinema (Olino by Consolidated Theatres) in West Oahu, Hawaii. On October 21,2016, we opened our ninth theater and our first to break ground since 2001 in the state of Hawaii. The cinema is located at KaMakana Ali’i, a 1.4 million square foot regional mall in West Oahu, anchored by Macy’s. Each of Olino’s well-appointedauditoriums feature luxurious electric recliner seats, expansive wall-to-wall screens and pristine digital projection by Barco, theleader in digital cinema technology. Expanding on the cutting edge technology from the iconic premium large format TITAN XC(Extreme Cinema) at Ward Theatres, Olino introduced a new premium TITAN XC experience, TITAN LUXE.·Opening of Reading Cinemas LynnMall. In November 2015, we opened the new state-of-the-art eight-screen Reading CinemasLynnMall, our first Reading branded Auckland cinema complex, in New Lynn, New Zealand. The cinema is located in LynnMallShopping Centre, anchored by Farmers Department Store, Countdown Supermarket and our own Reading Cinemas.·Re-opening of refurbished cinemas. In September 2015, we reopened a completely refurbished state-of-the-art cinema complex inHarbourtown, Australia. In October 2015, we reopened the twelve-screen Angelika Film Center & Cafe, a state-of-the-art luxurycinema, located at Carmel Mountain Plaza in San Diego, California.Cinema ClosuresWe evaluate the performance of each of our cinemas and in some instances, we may decide to close an operation when it is noteconomically viable to continue operate from the location. Here are the recent closures in our cinema business:·Gaslamp Cinema in San Diego, California. This location was closed on January 31, 2016 and we paid the landlord a $1.0 millionnegotiated termination fee, which was less expensive than continuing to operate an unprofitable theater at this location.·Redbank Cinema in Queensland Australia. In October 2015, at the end of our lease period, we closed our under preformingRedbank cinema.Upgrades to our Film Exhibition Technology and Theatre AmenitiesAs discussed previously, we continue to focus in areas of the matured cinema business where we believe we have growth potential andultimately, provide long-term value to our stockholders. These are the (i) upgrading of our existing cinemas and (ii) developing newcinemas to provide our customers with premium offerings, including state-of-the-art presentation (including sound, lounges and bar service)and luxury seating. As of December 31, 2017, the upgrades to our theater circuits’ film exhibition technology and amenities aresummarized in the following table (excluding our managed cinema):Location CountScreen CountScreen FormatDigital (all cinemas in our theatre circuit)58473IMAX11Titan XC and LUXE, with Dolby ATMOS sound system1215Dine-in Service (for international operations)Gold Lounge(1)922Premium(2)814Upgraded Food & Beverage menu (for U.S. operations)(3)13n/aPremium Seating (recliner seating features)20112Liquor Licenses Obtained(4)26n/a(1) Gold Lounge: This is our "First Class Full Dine-in Service" in our Australian and New Zealand cinemas, which includes upgraded F&B menu (with alcoholic beverages), luxury recliner seatingfeatures (intimate 30-40 seat cinemas) and waiter service.(2) Premium Service: This is our "Business Class Dine-in Service" in our Australian and New Zealand cinemas, which includes upgraded F&B menu (with alcoholic beverages) and luxury reclinerseating features (less intimate 80-seat cinemas), but no waiter service.(3) Upgraded Food & Beverage Menu: Contrary to our offerings in Australia and New Zealand, our upgraded F&B offerings in the U.S. cinemas are available in a common counter in each of ourcinema locations rather than a dine-in service at each screen room. We have worked with renowned former Food Network executives and chefs to curate a menu of locally inspired and freshlyprepared items.(4) Liquor Licenses: Licenses are applicable at each cinema location, rather than each theatre room (except for our Hawaii licenses, where we are licensed for particular auditoriums). In March 2017,we were awarded the liquor license for our Cal Oaks Cinema in California, as well as obtaining a license for the newly opened Cinema at Newmarket making it to a total of 26 cinema locationswith liquor licenses in our global circuit. For accounting purposes, we have capitalized the costs of successfully purchasing or applying for liquor licenses meeting certain thresholds as anintangible asset due to long-term economic benefits derived on future sales of alcoholic beverages. Real EstateFor 2017, our operating property consisted of the following:·our Newmarket, Queensland ETC, our Belmont, Western Australia ETC, our Auburn, New South Wales ETC, our Townsville,Queensland ETC and our Wellington, New Zealand ETC;·two (2) single-auditorium live theaters in Manhattan (Minetta Lane and Orpheum) and a four-auditorium live theater complex(including the accompanying ancillary retail and commercial tenants) in Chicago (The Royal George); and,40 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.·the ancillary retail and commercial tenants at some of our non-ETC cinema properties.At the beginning of January 2016, we ceased our live theatre business at our Union Square property in New York, terminated all tenantleases and prepared the property for redevelopment. Accordingly, this property is no longer treated as an operating property.In addition, we had various parcels of unimproved real estate held for development in Australia and New Zealand and certain unimprovedland in the United States including some that was used in our legacy activities. We also own an 8,300 square foot commercial building inMelbourne, which serves as our administrative headquarters for Australia and New Zealand, approximately 36% of which is leased to anunrelated third party. During 2016, we bought a new property in Culver City, California which became our new Corporate Headquarters inLos Angeles (refer to “Strategic Acquisitions” section below for more details).The key real estate transactions in recent years are as follows:Strategic Acquisitions·Purchase of New Corporate Headquarters Building in Los Angeles. On April 11, 2016, we purchased a 24,000 square foot officebuilding with 72 parking spaces located at 5995 Sepulveda Boulevard in Culver City, California (a Los Angeles suburb) for$11.2 million cash and financed the property with a $9.9 million 10-year, fixed-rate mortgage loan. We currently useapproximately 50% of the leasable area for our headquarters offices and we plan to lease the remainder to unaffiliated third parties.·Purchase of Cannon Park properties in Queensland, Australia. In December 2015, we acquired two adjoining properties inTownsville, Queensland, Australia for a total of $24.1 million (AU$33.4 million). The total gross leasable area of the two adjoiningproperties, the Cannon Park City Centre and the Cannon Park Discount Centre, is 133,000 square feet. The Cannon Park CityCentre is anchored by a Reading Cinema, which is owned by our 75% owned subsidiary, Australia Country Cinemas, and hadthree mini-major tenants and ten specialty family oriented restaurant tenants at the time of the acquisition. The Cannon ParkDiscount Centre is anchored by Kingpin Bowling and supported by four other retailers. The properties are located approximately0.6 miles from downtown Townsville, the fourth largest city in Queensland, Australia. This acquisition is consistent with ourbusiness plan to own, where practical, the land underlying our entertainment assets. We are now operating these properties as asingle ETC.·Purchase of Property in Newmarket, Australia. In November 2015, we acquired a commercial building in Newmarket adjacent toour Newmarket shopping complex currently improved with an office building. The total cost of the acquisition was $5.5 million(AU$7.6 million). Our intention is that this parcel will ultimately be integrated into our Newmarket Shopping Center. Opportunistic Sales·Sale of Landholding in Burwood, Australia. On December 14, 2017, we received the final payment for Burwood of $28.1 million(AU$36.6 million), on June 19, 2017 we received $16.6 million (AU$21.8 million) as a partial payment and on May 23, 2014 wereceived $5.9 million (AU$6.5 million) as the initial deposit. The total sales price of $50.6 million (AU$64.9 million) was $57,000(AU$75,000) less than the original contract price due to an earlier settlement being negotiated with the purchaser. We originallyentered into a contract to sell our undeveloped 50.6-acre parcel in Burwood, Victoria, Australia, to an affiliate of AustralandHoldings Limited for a purchase price of $50.7 million (AU$65.0 million) in May 2014.·Sale of Properties in Taupo, New Zealand. On March 31, 2015, we entered into sale agreements to sell both of our Lake Taupoproperties to the same purchaser. The first sale agreement for 138 Lake Terrace, an improved 20 unit motor inn, was settled onMay 6, 2015 for $1.6 million (NZ$2.2 million). Settlement of $831,000 (NZ$1.2 million) was received on March 31, 2016 inregards the second sale agreement for 142 Lake Terrace, an unimproved vacant parcel of land.·Sale of Doheny Condominium in Los Angeles. On February 25, 2015, we sold our Los Angeles condominium for $3.0 millionresulting in a $2.8 million gain on sale.·Sale of Landholding in Moonee Ponds, Australia. In 2013, we entered into a purchase and sale agreement to sell our 3.3-acreproperties in Moonee Ponds for $17.5 million (AU$23.0 million) which closed on April 16, 2015.41 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Value-creating OpportunitiesWe are engaged in several real estate development projects to take our properties to their highest and best use. The most notable of thesevalue-creating projects are as follows:·Redevelopment of Union Square Property in New York, USA. We secured construction financing for our Union Square property inDecember 2016 and have entered into a guaranteed maximum price construction management agreement with an affiliate of CNY.Construction is now more than 50% complete on this re-development project. We anticipate that the project will be ready fortenant fit-out in the third quarter of this year. Retail and office leasing interest to date has been strong and we are currently indiscussions with quality tenants. This redevelopment will add approximately 23,000 square footage of rentable space to thecurrent square footage of the building for an approximate total of 73,322 square feet of rentable space, inclusive of anticipatedBOMA (Building Owners and Managers Association) adjustments and subject to lease negotiations and the final tenant mix.During the year ended December 31, 2017 we have invested $17.8 million in new capital expenditures relating to the UnionSquare re-development project, bringing our total investment in the project to $32.5 million (including direct costs incurred inobtaining the related construction financing) out of a total projected investment of $74.5 million.·Expansion Project for our Newmarket Shopping Center at an affluent suburb of Brisbane, Australia. In December 2017 weopened our eight-screen Reading Cinema, 10,150 square feet of additional retail space and 124 parking spaces. ·Courtenay Central Redesign/Expansion/Temporary Closure and the related demolition of adjacent parking building for ourCourtenay Central ETC in Wellington, New Zealand. We continue to make progress on our supermarket development project atour Courtenay Central ETC in Wellington, New Zealand. On November 14, 2016, Wellington experienced a severe 7.8 magnitudeearthquake. That earthquake rendered our Tory Street parking building unsafe and ultimately led to the demolition of thatbuilding and the temporary closure of our adjacent ETC, which reopened on March 29, 2017. Our supermarket tenant remainscommitted to the site but has delayed construction in order to upgrade to a “premium” offering. Under the agreement to lease, ourtenant is responsible for any increase in our costs resulting from those design changes. In light of the demolition of the existingparking building (a major portion of the cost of which is covered by insurance), we are undertaking a comprehensive redesignanalysis, intended to increase the amount of retail leasable space at the center and to better coordinate the interface between theparking building and the remainder of the center. While we work on a redesign of the property, we have activated the buildingwith several temporary “pop-up” retail offerings. We are currently working on plans and in discussions with tenants regarding theconstruction of additional retail space at the site.In April 2017, our Insurer completed the examination of our insurance claim with respect to the parking building and shoppingcenter earthquake damage and related business interruption. We received a final settlement of US$20.0 million in May 2017,reaching the policy maximum of US$25.0 million for the loss event. As a result, we recorded a gain of $9.2 million(NZ$12.7 million) representing excess insurance recoveries over the recorded property value during the second quarter endedJune 30, 2017. This amount is recorded net of demolition costs incurred and an allocation to lost profits, covered within the sameinsurance policy.During the quarter ended June 30, 2017, we recorded a gain on business interruption recoveries of $1.5 million (NZ$2.1 million),presented as part of the relevant segment revenue lines in our Consolidated Statement of Operations for that quarter. While theearthquake has opened up possibilities to reconfigure our Courtenay Central property, the gains recorded during the quarter endedJune 30, 2017 do not compensate for the lost time value of the delay of our development plan.Refer to Note 19 – Insurance Recoveries on Impairment and Related Losses due to Earthquake for further details on the impact of theearthquake incident.·Cinema 1,2,3 Redevelopment – in June 2017, we entered into an exclusive dealing and pre-development agreement with ouradjoining neighbors, 260-264 LLC, to jointly develop the properties, currently home to Cinemas 1,2,3 and Anassa Taverna. Underthe terms of the agreement, Reading and 260-264 LLC will work together on a comprehensive mixed-use plan to co-develop theproperties located on 3rd Avenue, between 59th Street and 60th Streets, in New York City. The parties have completed an initialfeasibility study, analyzing various retail, entertainment and residential uses for the site and are working on the terms of a finalagreement for the development of the combined property.·Manukau Land Rezoning – in August 2016, the Auckland City Council re-zoned 64.0 acres of our 70.4 acre property in Manukaufrom agricultural to light industrial use. The remaining 6.4 acres were already zoned for heavy industrial use. Now that our zoningenhancement goal is achieved, we are reviewing our options with respect to the value realization opportunities and commercialexploitation of this asset. We see this property as a future value realization opportunity for us. This tract is adjacent to theAuckland Airport which has recently been expanding towards our property.42 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Corporate Matters·$25-million Stock Repurchase Program. The prior repurchase program was completed at the end of 2016. The new repurchaseprogram approved on March 2, 2017 allows Reading to repurchase its Class A Stock from time to time in accordance with therequirements of the Securities and Exchange Commission on the open market, in block trades and in privately negotiatedtransactions, depending on market conditions and other factors. The Board’s authorization is for a two-year period, expiringMarch 1, 2019, or earlier should the full repurchase authorization be used. Our Financing StrategyOur treasury management is focused on concerted cash management using cash balances to reduce debt. We have used cash generatedfrom operations and other excess cash, to the extent not needed for any capital expenditures, to pay down our loans and credit facilitiesproviding us some flexibility on our available loan facilities for future use and thereby, reducing interest charges. On a periodic basis,we review the maturities of our borrowing arrangements and negotiate for renewals and extensions where necessary in the currentcircumstances.Over the past twelve months, we extended the maturity, in April 2017 of the NZ$35.0 million (US$24.9 million) general/non-construction credit line and the NZ$18.0 million (US$12.8 million) construction credit line of our Westpac Corporate Credit Facility toDecember 31, 2018, from March 31, 2018. Subsequently, in June 2017, we fully paid our loan balance using the cash received frominsurance settlement relating to Courtenay Central property damage; we then further extended the maturity, in December 2017 of theNZ$35.0 million (US$24.9 million) general/non-construction credit line of our Westpac Corporate Credit Facility to December 31,2019.For a complete list and further details of our value creation projects, see Part I, Item 2 – Properties under the heading “Investment andDevelopment Property”.OVERALL RESULTS OF OPERATIONSAt December 31, 2017, we wholly owned and operated 55 cinemas with 444 screens, had interests in certain unconsolidated joint venturesand entities that own an additional 3 cinemas with 29 screens and managed 1 cinema with 4 screens. During the period, we also (i) ownedand operated five ETCs in Australia and New Zealand, (ii) owned the fee interests in three developed commercial properties in Manhattanand Chicago improved with live theaters, which have six stages and, in Chicago, an ancillary retail and commercial space, (iii) owned thefee interests in the Union Square building in Manhattan that we are redeveloping, which had, until the end of 2015, operated as a livetheater and rental property, (iv) owned through a 75% owned limited liability company the fee interests underlying one of our Manhattancinemas, (v) held for development approximately 70.4 acres located in New Zealand, and (vi) owned through a 50% owned and controlledlimited liability company of a 202-acre property that is zoned for the development of approximately 150 acres for single-family residentialuse (550 homes) and approximately 50 acres for high density mixed use in the U.S. and (vii) owned approximately 200 acres inPennsylvania and New Jersey from our legacy business.The Company transacts business in Australia and New Zealand and is subject to risks associated with changing foreign currency exchangerates. During the current year, compared to the prior year, the Australian dollar and New Zealand dollar weakened against the U.S. dollars by3.1% and 2.0%, respectively.43 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following table sets forth the overall results of operations for the three years ended December 31, 2017: % Change - Favorable / (Unfavorable)(Dollars in thousands) 2017 % ofRevenue 2016 % ofRevenue 2015 % ofRevenue 2017 vs.2016 2016 vs.2015SEGMENT RESULTS Cinema exhibition operating income $32,970 12 % $35,498 13 % $32,118 12 % (7)% 11 %Real estate operating income 8,011 3 % 6,929 3 % 6,796 3 % 16 % 2 %NON-SEGMENT RESULTS Depreciation and amortization expense (473) (0)% (395) (0)% (294) (0)% (20)% (34)%General and administrative expense (19,947) (7)% (21,721) (8)% (14,924) (6)% 8 % (46)%Interest expense, net (6,194) (2)% (6,782) (3)% (7,304) (3)% 9 % 7 %Equity earnings of unconsolidated jointventures 815 0 % 999 0 % 1,204 0 % (18)% (17)%Gain on sale of assets 9,360 3 % 393 0 % 11,023 4 % > 100% (96)%Casualty gain (loss) 9,217 3 % (1,421) --% -- --% (> 100)% -- Other income (expense) 588 0 % (63) (0)% (440) (0)% nm (86)%Income before income taxes 34,347 12 % 13,437 5 % 28,179 11 % > 100% (52)%Income tax benefit (expense) (3,337) (1)% (4,020) (1)% (5,148) (2)% 17 % 22 %Net income 31,010 11 % 9,417 3 % 23,031 9 % > 100% (59)%Less: Net income (loss) attributable tononcontrolling interests 11 0 % 14 0 % (79) (0)% nm nm Net income attributable to RDI commonstockholders $30,999 11 % $9,403 3 % $23,110 9 % > 100% (59)%Basic EPS $1.35 $0.40 $0.99 > 100% (60)%“nm” – not meaningful for further analysisCONSOLIDATED RESULTS2017 vs. 2016Net income attributable to RDI common stockholders increased by $21.6 million, or 229.7%, to $31.0 million. This increase was mainlydue to: (i) a non-recurring increase of $10.6 million in casualty gain due to the recognition of the insurance settlement on the CourtenayCentral parking structure earthquake damage in Wellington New Zealand (ii) $9.0 million higher gain on property sales in 2017 comparedto 2016, (iii) $1.8 million decrease in non-segment general and administrative expenses (iv) $651,000 of other income mainly consisting ofa gain on FX of $563,000 relating to short term intercompany loan balances held in foreign operations (v) a $1,082,000, increase in RealEstate segment operating income and (vi) an decrease in income tax expense of $683,000. These were offset by a decrease in CinemaExhibition segment operating income of $2.5 million mainly relating to lower admissions in the United States and higher occupancy costs. 2016 vs. 2015Net income attributable to RDI common stockholders was lower by $13.7 million, or 59%, to $9.4 million. This reduction was mainly dueto: (i) a $10.6 million higher gain on property sales in 2015 compared to 2016, (ii) a $6.8 million increase in non-segment general andadministrative expenses, and (iii) a $1.4 million casualty loss relating to the 2016 Courtenay Central parking structure earthquake damagein Wellington, New Zealand. These were offset by (i) an increases in both Cinema Exhibition and Real Estate segment operating incomeamounting to $3.4 million and $133,000, respectively, and (ii) a decrease in income tax expense amounting to $1.1 million. Each of these factors affecting our consolidated results for the three years ended December 31, 2017 are discussed in more detail in thesucceeding sections.44 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.BUSINESS SEGMENT RESULTS – 2017 vs 2016Presented below is the comparison of the segment operating income of our two business segments for the years ended December 31, 2017and 2016: 2017 2016 % Change Favorable/(Unfavorable)(Dollars in thousands) Cinema Real Estate Cinema Real Estate Cinema Real EstateSegment Revenues $263,464 $23,844 $256,922 $20,917 3 % 14 %Segment Operating Expenses Cost of services and products (excludingdepreciation and amortization) (215,020) (9,437) (205,889) (9,044) (4)% (4)%Depreciation and amortization (12,213) (4,256) (11,772) (3,522) (4)% (21)%General and administrative expense (3,261) (2,140) (3,763) (1,422) 13 % (50)%Total segment expenses (230,494) (15,833) (221,424) (13,988) (4)% (13)%Segment operating income $32,970 $8,011 $35,498 $6,929 (7)% 16 %Breakdown by country: United States $7,207 $1,196 $12,351 $690 (42)% 73 %Australia 21,358 5,479 18,101 5,252 18 % 4 %New Zealand 4,405 1,336 5,046 987 (13)% 35 % $32,970 $8,011 $35,498 $6,929 (7)% 16 %The discussion for each segment follows:Cinema Exhibition – 2017 vs. 2016 (Dollars in thousands) 2017 % ofRevenue 2016 % of Revenue 2017 vs. 2016Favorable /(Unfavorable) Revenues Admission revenue $165,877 63 % $164,727 64 % 1 % Food & beverage revenue 78,346 30 % 75,229 29 % 4 % Advertising and other revenue 19,241 7 % 16,966 7 % 13 % Total Segment Revenues $263,464 100 % $256,922 100 % 3 % Operating Expenses Cost of services and products (excl.depreciation and amortization) Film rent and advertising cost $(83,009) (32)% $(82,873) (32)% - % Food & beverage cost (16,060) (6)% (14,734) (6)% (9) % Occupancy expense (48,952) (19)% (44,914) (17)% (9) % Other expense (66,999) (25)% (63,367) (25)% (6) % Depreciation, amortization, and general andadministrative expense Depreciation and amortization (12,212) (5)% (11,772) (5)% (4) % General and administrative expense (3,262) (1)% (3,764) (1)% 13 % Total Segment Expenses $(230,494) (87)% $(221,424) (86)% (4) % Segment Operating Income $32,970 13 % $35,498 14 % (7) % Cinema Exhibition segment operating incomeCinema Exhibition segment operating income decreased by 7%, or $2.5 million, to $33.0 million for the year ended December 31, 2017compared to December 31, 2016, primarily driven by lower admissions for our US and New Zealand operations partially offset by improvedF&B revenues. The higher revenues of our Australia cinemas and favorable foreign currency movements of our foreign operations helped tooffset lower revenues in the U.S. Refer below for further explanations.45 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.RevenueCinema revenue increased by 3%, or $6.5 million, to $263.5 million for the year ended December 31, 2017 compared to 2016. This wasprimarily driven by higher admissions in our Australian circuit resulting in higher box office and F&B revenue. F&B revenues were also upin both the United States and New Zealand driven by increased spend per patron due to our expanded F&B offering. These increases werefurther enhanced as a result of the appreciation of the AU and NZ dollars compared to the US dollar. These items were partially offset bylower admits in the U.S. due in part to industry-wide box office softening in 2017 and the cinema closure resulting from our cinemarenovation program. Comparing the current and prior year, the Australian dollar and New Zealand dollar increased against the U.S. dollarby 3.1% and 2.0% (on average rates), respectively. Shown below is the revenue breakdown by country:(Dollars in thousands) 2017 % of Revenue 2016 % of Revenue 2017 vs. 2016Favorable /(Unfavorable)United States$139,078 52 %$139,820 54 %(1)%Australia96,606 37 %89,053 35 %8 %New Zealand27,780 11 %28,049 11 %(1)%Total Segment Revenues$263,464 100 %$256,922 100 %3 %·In the United States, 2017 revenues decreased by 1%, or $742,000, primarily driven by lower attendance partially due to the temporaryclosure of certain sites for renovations along with lower industry-wide box office attendance. This was partially offset by, improvedaverage ticket prices, improved F&B revenues and increased web sale revenues. ·Australia’s cinema revenue, stated in U.S. dollars, increased by 8%, or $7.6 million, primarily due to increase in attendance, as well as afavorable movement in foreign exchange movements, offset by a reduction in average ticket prices. ·In New Zealand, cinema revenue decreased by 1%, or $269,000, mainly due to the temporary closure of our Courtenay Central ETC(which re-opened in late March 2017). Cost of services and products (excluding depreciation and amortization)Cost of services and products for 2017 increased by 4%, or $9.1 million, to $215.0 million mainly attributable to higher film rent andadvertising costs in Australia due to higher box office revenue, higher concession costs due to increased concession sales, additionaloperating costs amounting to $3.3 million associated with Olino, including an additional $1.8 million in occupancy cost compared to2016. Further movements were driven by an increase in occupancy of $765,000 as a result of lease options exercised, increased staff costsdue to minimum wage increases and a move towards enhanced food & beverage offerings, and increased costs associated with the openingof our new Newmarket cinema in Brisbane, Australia. In addition, the impact of the strengthening Australian and New Zealand dollarsrelative to the U.S. dollar further contributed to the cost increase. These were partially offset by lower film rent and advertising costs in theUnited States and New Zealand due to lower box office revenue.Certain costs incurred in quarters one to three of 2017 have, in quarter four, crystallized as rent liabilities to be paid, and as such have beenreclassified from ‘other operating expenses’ to ‘occupancy costs’. These costs have no material impact on our financial results for theperiods concerned.Cost of services and products as a percentage of gross revenue increased by 2% in 2017 to 82% from 80% in 2016.Depreciation, amortization, general and administrative expenseDepreciation, amortization, general and administrative expense for 2017 remained unchanged compared to 2016 primarily driven by theincrease in depreciation resulting from improvements in several of our cinema facilities being offset by savings in general andadministrative expenses that have reduced.46 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Real Estate – 2017 vs. 2016(Dollars in thousands) 2017 % of Revenue 2016 % of Revenue 2017 vs. 2016Favorable /(Unfavorable)RevenuesLive theater rental and ancillary income$4,417 19 %$2,840 14 %56 %Property rental income19,427 81 %18,077 86 %7 %Total Segment Revenues$23,844 100 %$20,917 100 %14 %Operating ExpensesCost of services and products (excl. depreciationand amortization)Live theater cost$(1,106)(5)%$(1,371)(7)%19 %Property cost(4,714)(20)%(4,401)(21)%(7) %Occupancy expense(3,617)(15)%(3,270)(16)%(11) %Depreciation, amortization, and general andadministrative expenseDepreciation and amortization(4,255)(18)%(3,522)(17)%(21) %General and administrative expenses(2,141)(9)%(1,424)(7)%(50) %Total Segment Expenses$(15,833)(66)%$(13,988)(67)%(13) %Segment Operating Income$8,011 34 %$6,929 33 %16 %Real Estate segment operating incomeReal Estate segment operating income increased by 16%, or $1.1 million, to $8.0 million for the year ended December 31, 2017 comparedto 2016, primarily attributable to: an additional $1.4 million in fees recovered as part of the Stomp settlement ($1.8 million of feesrecovered revenue in 2017, including the final settlement received in March 2018, less $415,000 in legal fee cost recovery recorded in2016). For more information about the legal expense, please refer to Note 12 – Commitments and Contingencies to the ConsolidatedFinancial Statements included herein in Part II, Item 8 (Financial Statements and Supplementary Data) on this report. This was offset by anincrease in general and administrative costs. Please refer below for further explanation.RevenueReal estate revenue for the year ended December 31, 2017 increased by 14% or $2.9 million, mainly driven by fees recovered of$1.8 million in relation to the Stomp settlement, increased rental income as part of the expansion of our Newmarket site in BrisbaneAustralia, as well as additional rental income from the Newmarket office building purchased in November 2016, the recognition of businessinterruption insurance on our Courtenay Central property and parking structure, as well as the impact of the favorable foreign exchangerates on our Australia and New Zealand operations. This was partially offset by the decrease in property rental income attributable toCourtenay Central that was closed for most of Q1 and a reduction in revenue from our live theater operations and our Courtenay Centralproperty and parking structure. Shown below is the revenue breakdown by country:(Dollars in thousands)2017% of Revenue2016% of Revenue2017 vs. 2016Favorable /(Unfavorable)United States$4,739 20 %$3,271 16 %45 %Australia14,945 63 %13,334 63 %12 %New Zealand4,160 17 %4,312 21 %(4)%Total Segment Revenues$23,844 100 %$20,917 100 %14 %Cost of services and products (excluding depreciation and amortization)Operating expense for 2017 increased by 4%, or $394,000, as a result of a number of pre-opening costs associated with our recentlydeveloped Newmarket Village site. This was partially offset by a reduction in costs relating to our live theaters and Courtenay Centralduring the period it was closed. Depreciation, amortization, general and administrative expenseDepreciation, amortization, general and administrative expense for 2017 increased by 29%, or $1.5 million, primarily driven by theincreased salary costs due to staff expansion as we continue to develop our Real Estate capacity, including costs that had previously beenincurred by our Cinema segment, as well as an increase in depreciation expense due to recent acquisitions and property enhancements. Thishas been partially offset by the reduction in doubtful debt expense.47 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NON-SEGMENT RESULTS – 2017 vs. 2016Gain on sale of assetsNet gain on sale of assets for 2017 increased by $9.0 million, primarily due to the gain on sale realized in 2017 on the settlement of theBurwood land of $9.3 million (AU$12.4 million), compared to the gain from the final closing of the second sale agreement of the Taupoproperty in New Zealand in the amount of $393,000 (NZ$585,000) realized in Q1 2016.General and administrative expenseNon-segment general and administrative expense for 2017 decreased by $1.8 million or 8%, to $19.9 million. This primarily relates to areduction in professional services mainly relating to non-recurring one-off items incurred in 2016 including additional expenses incurred inconnection with the 2015 year-end audit ($960,000) and expenses incurred in connection with the change in status of certain executives($400,000) as well as 2017 savings in legal fees, and reduced occupancy costs due to the purchase of our new company headquarters. Thesewere offset by additional costs incurred in our Australian and New Zealand corporate offices due to additional staff costs and the effects offoreign exchange movements. Higher legal expenses in 2016 mainly relate to the defense of the derivative litigation, the arbitration of certain claims related to thetermination of James J. Cotter, Jr. as our President and Chief Executive Officer and on a more limited basis, for the work undergone toimprove corporate governance matters. While the legal costs incurred by the Company were undoubtedly high, we believe that themajority of these costs were thrust upon the Company as it became necessary to vigorously defend the Company’s position in thederivative litigation and to resolve Mr. Cotter, Jr.’s claims relating to his termination. As such, these costs should be treated as non-recurring in nature.For more information about the legal expense, please refer to Note 12 – Commitments and Contingencies to the Consolidated FinancialStatements included herein in Part II, Item 8 (Financial Statements and Supplementary Data) on this report.Casualty GainThe $9.2 million represents the gain recognized on final insurance settlement relating to the earthquake damage on our Courtenay Centralparking structure (excluding business interruption insurance recoveries). Our parking structure at Courtenay Central in Wellington, NewZealand was significantly damaged by the earthquake on November 14, 2016 and was subsequently demolished due to safety reasons. Wefiled an insurance claim to recover the impairment loss on the parking structure and the ancillary demolition costs. Refer to Note 19 –Insurance Recoveries on Impairment and Related Losses due to Earthquake for further details.Income tax expenseOn December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. The Tax Act significantly changed theU.S. corporate income tax law by lowering the statutory corporate tax rate from 35% to 21%, imposing a one-time mandatory repatriationtax on deferred earnings of foreign subsidiaries, and changing how foreign earnings are subject to U.S. tax. We have not completed ourdetermination of the implications of the Tax Act. However, we have reasonably estimated the impact of the Tax Act and recordedprovisional amounts in our financial statements as of December 31, 2017, pursuant to the guidance of the U.S. Securities and ExchangeCommission Staff Accounting Bulletin No. 118. We recorded income tax expense for the impact of the Tax Act of approximately$13.0 million. This net amount is primarily comprised of $8.3 million from re-measurement of federal net deferred tax assets resulting fromthe reduction in the U.S. statutory corporate tax rate and a provisional amount of $4.7 million fom the one-time mandatory repatriation taxon deferred earnings of our foreign subsidiaries. As we complete our analysis of the Tax Act, collect and prepare necessary data, andinterpret any additional guidance issued by the U.S. Treasury Department and the IRS, we may make adjustments to the provisionalamounts. Those adjustments may materially impact our provision for income taxes in the period in which the adjustments are made. Theaccounting for the tax effects of the Tax Act will be completed in 2018.Income tax expense decreased by $683,000 or 17%, compared to 2016, mainly due to benefits recognized as the result of the dissolution ofa non-operating overseas subsidiary, partially offset by an increase in pre-tax income and the provisional unfavorable effect of the TaxAct. Please refer to Note 9 of the Notes to Consolidated Financial Statements in Part II of this Annual Report for further information.Interest expense, netInterest expense (net of interest income) decreased by $593,000, or 9%, mainly due to a reduction in the average balance outstanding. Thiswas achieved due to the receipt of the insurance proceeds from the Courtenay Central parking structure of $20.0 million in May 2017,allowing us to fully pay down our Westpac loan in New Zealand. Interest income also includes the $115,000 of interest levied on the StompSettlement. 48 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.BUSINESS SEGMENT RESULTS – 2016 vs. 2015Presented below is the comparison of the segment operating income for our two business segments for the years ended December 31, 2016and 2015: 2016 2015 % Change Favorable/(Unfavorable)(Dollars in thousands) Cinema Real Estate Cinema Real Estate Cinema Real EstateSegments Revenues $256,922 $20,917 $242,823 $21,579 6 % (3)%Segment Operating Expenses Cost of services and products (excludingdepreciation and amortization) (205,889) (9,044) (196,544) (10,948) (5)% 17 %Depreciation and amortization (11,772) (3,522) (11,161) (3,107) (5)% (13)%General and administrative expense (3,763) (1,422) (3,000) (728) (25)% (95)%Total segment expenses (221,424) (13,988) (210,705) (14,783) (5)% 5 %Segment operating income $35,498 $6,929 $32,118 $6,796 11 % 2 %Breakdown by country: United States 12,351 690 10,190 (450) 21 % (254)%Australia 18,101 5,252 17,988 5,400 1 % (3)%New Zealand 5,046 987 3,942 1,846 28 % (47)% $35,498 $6,929 $32,120 $6,796 11 % 2 %The discussion for each segment follows:Cinema Exhibition – 2016 vs. 2015 (Dollars in thousands) 2016 % of Revenue 2015 % of Revenue 2016 vs. 2015Favorable /(Unfavorable)Revenues Admission revenue $164,727 64 % $156,680 65 % 5 %Food & beverage revenue 75,229 29 % 69,184 28 % 9 %Advertising and other revenue 16,966 7 % 16,959 7 % - %Total Segment Revenues $256,922 100 % $242,823 100 % 6 %Operating Expenses Cost of services and products (excl. depreciationand amortization) Film rent and advertising cost $(82,873) (32)% $(78,827) (32)% (5) %Food & beverage cost (14,734) (6)% (12,856) (5)% (15) %Occupancy expense (44,914) (17)% (45,376) (19)% 1 %Other operating expense (63,367) (25)% (59,483) (24)% (7) %Depreciation, amortization, and general andadministrative expense Depreciation and amortization (11,772) (5)% (11,160) (5)% (5) %General and administrative expense (3,764) (1)% (3,001) (1)% (25) %Total Segment Expenses $(221,424) (86)% $(210,703) (87)% 5 %Segment Operating Income $35,498 14 % $32,120 13 % 11 %Cinema segment operating incomeCinema Exhibition segment operating income increased by 11%, or $3.4 million, to $35.5 million for the year ended December 31, 2016compared to December 31, 2015, primarily driven by higher admissions and F&B revenues and the impact of new and re-opening ofcinemas mostly during the last quarter of 2015 and the closure of our money-losing Gaslamp Cinema in January 2016, partially offset byminor unfavorable foreign currency movements. Refer below for further explanations.RevenueCinema revenue increased by 6%, or $14.1 million, to $256.9 million for the year ended December 31, 2016 compared to 2015, primarilydriven by higher admissions and F&B revenues and the impact of new and re-opening of cinemas during the last quarter of 2015, partiallyoffset by slightly weaker foreign currency movements. Comparing the current and prior years, Australian dollars and New Zealand dollarsslightly declined against U.S. dollars by 1% and 0.4% (on average rates), respectively. Shown below is the revenue breakdown by country:(Dollars in thousands)2016% of Revenue2015% of Revenue2016 vs. 2015Favorable /(Unfavorable)United States$139,820 54 %$133,423 55 %5 %Australia89,053 35 %86,235 36 %3 %New Zealand28,049 11 %23,165 10 %21 %Total Segment Revenues$256,922 100 %$242,823 100 %6 %49 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.·In the United States, 2016 revenues increased by 5%, or $6.4 million, primarily driven by higher average ticket prices, improved F&Brevenues and the impact of the refurbishment and rebranding of our Carmel Mountain cinema in San Diego, California to an AngelikaFilm Center in October 2015, and offset by the impact of the closure of our Gaslamp Cinema in San Diego, California and the slightdecline (1%) in attendance. ·Australia’s cinema revenue, stated in U.S. dollars, increased by 3%, or $2.8 million, primarily due to increase in attendance (includingthe impact of the refurbishment of our cinema in Harbourtown, Australia in September 2015), offset by minor unfavorable foreigncurrency movements and reduction in average ticket prices. ·In New Zealand, cinema revenue increased by 21%, or $4.9 million, mainly due to increase in attendance, including the impact of theopening of our LynnMall cinema in November 2015. The New Zealand exhibition market benefited from the most successful local filmrelease of all time, “Hunt for the Wilderpeople”. Cost of services and products (excluding depreciation and amortization)Cost of services and products for 2016 increased by 5%, or $9.3 million, to $205.9 million mainly attributable to higher film rent andadvertising costs, higher F&B costs and the impact of the opening of the new LynnMall cinema in New Zealand, partially offset by theimpact of slight decline in foreign currency movements. This was reduced by the closure of Gaslamp Cinema in San Diego, California onJanuary 31, 2016 and the closure of our Redbank Cinema in Australia on October 7, 2015.Cost of services and products as a percentage of gross revenue remained stable for 2016 and 2015, in the 80-81% range.Depreciation, amortization, general and administrative expenseDepreciation, amortization, general and administrative expense for 2016 increased by 10%, or $1.4 million, to $15.5 million primarilydriven by the increase in depreciation resulting from improvements in several of our cinema facilities, the opening of our new LynnMallcinema in New Zealand and the re-opening of our Carmel Mountain cinema in San Diego, California.Real Estate – 2016 vs. 2015 (Dollars in thousands) 2016 % of Revenue 2015 % of Revenue 2016 vs. 2015Favorable /(Unfavorable)Revenues Live theater rental and ancillary income $2,840 14 % $3,844 18 % (26) %Property rental income 18,077 86 % 17,735 82 % 2 %Total Segment Revenues $20,917 100 % $21,579 100 % (3) %Operating Expenses Cost of services and products (excl. depreciationand amortization) Live theater cost $(1,371) (7)% $(4,264) (20)% 68 %Property cost (4,401) (21)% (3,243) (15)% (36) %Occupancy expense (3,270) (16)% (3,442) (16)% 5 %Depreciation, amortization, and general andadministrative expense Depreciation and amortization (3,522) (17)% (3,107) (14)% (13) %General and administrative expense (1,424) (7)% (727) (3)% (96) %Total Segment Expenses $(13,988) (67)% $(14,783) (69)% 5 %Segment Operating Income $6,929 33 % $6,796 31 % 2 %Real Estate segment operating incomeReal Estate segment operating income increased by 2%, or $133,000, to $6.9 million for the year ended December 31, 2016 compared to2015, primarily attributable to: (i) $2.2 million less legal fees incurred in relation to the “STOMP” arbitration process compared to 2015(For more information about the legal expense, please refer to Note 12 – Commitments and Contingencies to the Consolidated FinancialStatements included herein in Part II, Item 8 (Financial Statements and Supplementary Data) on this report), (ii) the STOMP settlement,$415,000 was collected in 2016 which was recorded as a recovery against legal expenses allocated to this segment in 2016, and (iii) anincrease in property rental income in Australia of $2.0 million of which $2.7 million was attributed to Cannon Park in Australia purchasedin December 2015 (offset by a reduction of $706,000 relating to the existing sites), offset by the closure of the Union Square property inNew York for redevelopment and a reduction in revenue due to the earthquake and redevelopment of our Courtenay Central assets inWellington, New Zealand. Please refer below for further explanation.50 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.RevenueReal estate revenue for the year ended December 31, 2016 decreased by 3% or $662,000, mainly driven by lower property rental incomefrom the U.S. and New Zealand due to the closure of our Union Square property in New York currently being redeveloped and the sale ofTaupo property in New Zealand along with reduced revenue due to the earthquake and redevelopment of our Courtenay Central assets inWellington, New Zealand, in addition to the impact of unfavorable foreign exchange rates on our Australia and New Zealandoperations. This was offset by the increase in property rental income attributable to Cannon Park in Australia, which was purchased inDecember 2015. Shown below is the revenue breakdown by country:(Dollars in thousands) 2016 % of Revenue 2015 % of Revenue 2016 vs. 2015Favorable /(Unfavorable)United States$3,271 16 %$5,342 25 %(39)%Australia13,334 63 %11,374 52 %17 %New Zealand4,312 21 %4,863 23 %(11)%Total Segment Revenues$20,917 100 %$21,579 100 %(3)%Cost of services and products (excluding depreciation and amortization)Operating expense for 2016 decreased by 17%, or $1.9 million, as a result of the closure of the Union Square property in New York at thebeginning of 2016 and the sale of the Taupo property in New Zealand, offset by the purchase of Cannon Park in Australia. Also, the initialsettlement received in 2016 from STOMP in the amount of $415,000 was recorded as a recovery against legal expenses incurred in 2016. Depreciation, amortization, general and administrative expenseDepreciation, amortization, general and administrative expense for 2016 increased by 29%, or $1.1 million, primarily driven by increaseddepreciation expense due to recent acquisitions and property enhancements, as well as increased salary costs due to staff expansion as wecontinue to develop our Real Estate capacity.NON-SEGMENT RESULTS – 2016 vs. 2015Gain on sale of assetsNet gain on sale of assets for 2016 decreased by $10.6 million, primarily due to the following sale transactions resulting in gains realized in2015: (i) the sale of our Doheny condominium in Los Angeles resulting in a $2.8 million gain during Q1 2015, (ii) the closing of the sale ofMoonee Ponds in Australia for a gain of $8.0 million (AU$10.3 million) during Q2 2015 and (iii) the gain on the first of the two saleagreements for our Taupo Property in New Zealand in the amount of $246,000 (NZ$353,000) during Q2 2015, compared to the gain fromthe final closing of the second sale agreement of the Taupo property in New Zealand in the amount of $393,000 (NZ$585,000) realized inFirst Quarter 2016.Non-segment general and administrative expense for 2016 increased by $6.8 million or 46%, to $21.7 million. Significant elements of thisincrease were as follows: (i) higher legal expenses ($3.2 million), (ii) release of overaccrual in prior years’ bonus accruals during 2015resulting in lower general & administrative expenses in 2015 ($1.6 million), (iii) additional expenses incurred in connection with the 2015year-end audit ($960,000), (iv) expenses incurred in connection with the change in status of certain executives ($400,000), and (v) highercompensation expense relating to equity-based performance awards as a result of the introduction of restricted stock units ($419,000). Theadditional expenses incurred for the 2015 audit (not accrued in 2015) related to the further review of the Company’s tax matters for prioryears. We do not expect expenses incurred in connection with the year-end audit and the expenses connected with the change in status ofcertain executives to recur. The increase in legal expenses in 2016 mainly relate to the defense of the derivative litigation, the arbitration of certain claims related tothe termination of James J. Cotter, Jr. as our President and Chief Executive Officer and on a more limited basis, for the work undergone toimprove corporate governance matters. While the legal costs incurred by the Company were undoubtedly high, we believe that themajority of these costs were thrust upon the Company as it became necessary to vigorously defend the Company’s position in thederivative litigation and to resolve Mr. Cotter, Jr.’s claims relating to his termination. As such, these costs should also be treated as non-recurring in nature.For more information about the legal expense, please refer to Note 12 – Commitments and Contingencies to the Consolidated FinancialStatements included herein in Part II, Item 8 (Financial Statements and Supplementary Data) on this report.Casualty lossOur parking structure at Courtenay Central in Wellington, New Zealand was significantly damaged by the earthquake on November 14,2016 and was subsequently slated for demolition due to safety reasons. We filed an insurance claim to recover the impairment loss on theparking structure and the ancillary demolition costs. The $1.4 million casualty loss relates to the 5% deductible portion calculated basedon the estimated value of the insured parking structure and the portion of demolition costs that may not be recoverable under our insurancepolicy. Refer to Note 19 – Insurance Recoveries on Impairment and Related Losses due to Earthquake for further details.51 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Income tax expenseIncome tax expense decreased by $1.1 million, or 22%, compared to 2015, mainly due to a reduction in pre-tax income.Interest expense, netInterest expense (net of interest income) decreased by $522,000, or 7%, mainly due to a reduction in interest rates as a result of ourrenegotiation of loan arrangements, offset by an increase in loan balance necessitated by our capital project needs. LIQUIDITY AND CAPITAL RESOURCESOur cinema exhibition business plan is to enhance our current cinemas where it is financially reasonable to do so; develop our specialtycinemas in select markets; expand our food and beverage offering, and continue on an opportunistic basis, to identify, develop, and acquirecinema properties that allow us to leverage our cinema expertise over a larger operating base. Our real estate business plan, given thesubstantial increase in Manhattan rents and commercial real estate values in recent periods, is to progress the redevelopment of our UnionSquare and Cinemas 1,2,3 properties in the U.S.; to continue the build-out of our Newmarket and Auburn sites in Australia as well as ourCourtenay Central site in New Zealand; and to continue to be sensitive to opportunities to convert our entertainment assets to higher andbetter uses, or, where appropriate, to dispose of such assets. We will also continue to explore potential synergistic acquisitions that may notreadily fall into either our cinema or real estate segment.The success of our Company is dependent on our ability to execute these business plans effectively through our available resources (bothcash and available borrowing facilities) while still timely addressing our liquidity risk. Liquidity risk is the risk relating to our ability tomeet our financial obligations when they come due. At the present, our financial obligations arise mainly from capital expenditure needs, working capital requirements, and debt servicing requirements. We manage the liquidity risk by ensuring our ability to generate sufficientcash flows from operating activities and to obtain adequate, reasonable financing or extension of maturity dates under reasonablearrangements, and/or to convert non-performing or non-strategic assets into cash. The table below presents the changes in our total available resources (cash and borrowings), debt-to-equity ratio, working capital and otherrelevant information addressing our liquidity for the last five years:($ in thousands)201720162015(2)2014(2)2013(3)Net Cash from Operating Activities$23,851 $30,188 $28,574 $28,343 $25,183 Total Resources (cash and borrowings)Cash and cash equivalents (unrestricted)$13,668 $19,017 $19,702 $50,248 $37,696 Unused borrowing facility137,231 117,599 70,134 45,700 19,400 Restricted for capital projects(1)62,280 62,024 10,263 ----Unrestricted capacity74,951 55,575 59,871 45,700 19,400 Total resources at 12/31150,899 136,616 89,836 95,948 57,096 Total unrestricted resources at 12/3188,619 74,592 79,573 95,948 57,096 Debt-to-Equity RatioTotal contractual facility$271,732 $266,134 $207,075 $201,318 $187,860 Total debt (gross of deferred financing costs)134,501 148,535 130,941 164,036 168,460 Current8,109 567 15,000 38,104 75,538 Non-current126,392 147,968 115,941 125,932 92,922 Total book equity181,241 146,615 138,951 133,716 123,531 Debt-to-equity ratio0.74 1.01 0.94 1.23 1.36 Changes in Working CapitalWorking capital (deficit)(4)$(46,971)$6,655 $(35,581)$(15,119)$(75,067)Current ratio0.42 1.10 0.51 0.84 0.43 Capital Expenditures (including acquisitions)$76,708 $49,166 $53,119 $14,914 $20,082 (1) This relates to the construction facilities specifically negotiated for: (i) Union Square redevelopment project, obtained in December 2016, and (ii) New Zealand construction projects,obtained in May 2015.(2) Certain 2015 balances included the restatement impact as a result of a change in accounting principle (see Note 2 – Summary of Significant Accounting Policies – Accounting Changes). For2014, no changes made, except for the Stockholders’ Equity balance as of 12/31/2014, as we were not required to present the restatement numbers as of December 31, 2014 for Balance Sheet.(3) 2013 is not covered by the restatement as a result of a change in accounting principle. Except for the Stockholders’ Equity balance as of 12/31/2013, no other changes made.(4) Typically our working capital (deficit) is negative as we receive revenue from our cinema business ahead of the time that we have to pay our associated liabilities. We use the money we receiveto pay down our borrowings in the first instance.On March 2, 2017, the Board of Directors authorized a stock repurchase program to repurchase up to $25.0 million of Reading’s Class AStock.52 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We manage our cash, investments and capital structure so we are able to meet the short-term and long-term obligations of our business,while maintaining financial flexibility and liquidity. We forecast, analyze and monitor our cash flows to enable investment and financingwithin the overall constraints of our financial strategy. In recent years, our treasury management has been focused on more aggressive cashmanagement using cash balances to reduce debt. In earlier years, we maintained significant cash balances in our bank accounts. We haveused cash generated from operations and other excess cash, to the extent not needed for any capital expenditures, to pay down our loansand credit facilities providing us some flexibility on our available loan facilities for future use and thereby, reducing interest charges.For the year ended December 31, 2017, we extended the maturity of our primary corporate credit facility from March 2018 to December2019, pending a longer term credit facility to be negotiated in conjunction with any further redevelopment work on our Courtenay centralproperty.Refer to Note 10 – Borrowings in the Consolidated Financial Statements for further details on our various borrowing arrangements.At December 31, 2017, our consolidated cash and cash equivalents totaled $13.7 million. Of this amount, $9.1 million, $2.9 million and$1.7 million were held by our U.S., Australian and New Zealand operations, respectively. Our current intention is to reinvest indefinitelyAustralian earnings but do not have the same plan for New Zealand earnings. If the Australian earnings were used to fund U.S. operations,they could be subject to additional income taxes upon repatriation.We have historically funded our working capital requirements, capital expenditures and investments in individual properties primarily froma combination of internally generated cash flows and debt. As noted in the preceding table, we have $75.0 million unused capacity ofavailable corporate credit facilities at December 31, 2017. In addition, we have $49.5 million and $12.8 unused capacity for Union Squaredevelopment uses and construction funding for New Zealand, respectively. The change in cash and cash equivalents for the three years ended December 31, 2017 is as follows:% Change(Dollars in thousands)2017201620152017 vs. 20162016 vs. 2015Net cash provided by operating activities$23,851 $30,188 $28,574 (21)%6 %Net cash used in investing activities(6,786)(42,861)(29,710)84 %(44)%Net cash provided by (used in) financing activities(22,055)11,246 (27,961)(> 100)%> 100%Impact of exchange rate on cash(359)742 (1,449)(> 100)%> 100%Net increase (decrease) in cash and cash equivalents$(5,349)$(685)$(30,546)(> 100)%98 %Operating activities2017 vs. 2016: Cash provided by operating activities for 2017 decreased by $6.3 million or 21%, to $23.9 million, primarily driven by a$16.4 million reduction in net working capital assets, partially offset by a $10.1 million increase in operational cash flows as a result of thedecrease in corporate General and Administrative expenses.2016 vs. 2015: Cash provided by operating activities for 2016 increased by $1.6 million or 6%, to $30.2 million, primarily driven by a$1.3 million increase in operational cash flows as a result of the increase in segment operating income.Investing activities2017: In 2017, the $6.8 million of cash used in investing activities was mainly related to the $65.9 million capital expenditures, whichincludes the redevelopment and expansion of our Newmarket Village ETC in Brisbane, Australia, the on-going development of our UnionSquare project, and as well as the upgrade of a number of our existing cinemas. We also used $3.7 million towards the demolition of theCourtenay Central car parking structure in Wellington, New Zealand. These are offset by the $44.7 million received from the sale of ourBurwood property as well as the $18.4 million final insurance settlement on our Courtenay Central parking structure.2016: In 2016, the $42.9 million of cash used in investing activities was mainly related to the $49.2 million capital expenditures, whichincluded the following: (i) $11.2 million acquisition of the new Corporate Headquarters office in Los Angeles, (ii) expenditures relating tothe fit-out and opening of Olino and enhancement to our existing cinemas, and (iii) expenditures relating to our various value creationprojects, notably the Union Square redevelopment project and expansion projects for our Newmarket and Courtenay centers. These areoffset by the $5.0 million advanced insurance settlement on our Courtenay Central parking structure earthquake damage and $831,000proceeds from the sale closing of the Lake Taupo undeveloped land.Financing activities2017: The $22.0 million of cash used in financing activities was primarily due to the $15.4 million in loan repayments (net of$91.0 million new loan advances), and $6.5 million used as part of the 2017 $25.0 million stock buyback program.53 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.2016: The $11.2 million of cash provided by financing activities was primarily due to the $17.9 million new loan advances (net of$63.7 million repayments), offset by expenditures relating to the following: (i) $4.0 million capitalized borrowing costs to negotiate newloan arrangements, specifically the new Union Square construction financing and the U.S. Corporate Headquarters term loan, and (ii)$2.9 million cash outlays to complete our $10.0 million stock buyback program.CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIESThe following table provides information with respect to the maturities and scheduled principal repayments of our recorded contractualobligations as of December 31, 2017:(Dollars in thousands)20182019202020212022ThereafterTotalDebt - current and non-current portion(1)$8,139 $89,190 $248 $258 $270 $8,487 $106,592 Subordinated debt(1)----------27,913 27,913 Pension liability2,907 684 684 684 684 2,492 8,135 Village East purchase option(2)5,900 ----------5,900 Lease obligations31,609 31,554 26,675 26,407 7,840 206,733 330,818 Estimated interest on debt(3)6,319 5,023 1,910 1,898 1,886 8,184 25,220 Total$54,874 $126,451 $29,517 $29,247 $10,680 $253,809 $504,578 (1)Information is presented gross of deferred financing costs.(2)Represents the lease liability of the option associated with the ground lease purchase of the Village East Cinema.(3)Estimated interest on debt is based on the anticipated loan balances for future periods and current applicable interest rates.LitigationWe are currently involved in certain legal proceedings and, as required, have accrued estimates of probable and estimable losses for theresolution of these claims. Where we are the plaintiffs, we expense all legal fees on an on-going basis and make no provision for any potential settlement amountsuntil received. In Australia, the prevailing party is usually entitled to recover its attorneys’ fees, which recoveries typically work out to beapproximately 60% of the amounts actually spent where first-class legal counsel is engaged at customary rates. Where we are a plaintiff, wehave likewise made no provision for the liability for the defendant’s attorneys' fees in the event we are determined not to be the prevailingparty.Where we are the defendants, we accrue for probable damages that insurance may not cover as they become known and can be reasonablyestimated. In our opinion, any claims and litigation in which we are currently involved are not reasonably likely to have a material adverseeffect on our business, results of operations, financial position, or liquidity. It is possible, however, that future results of the operations forany particular quarterly or annual period could be materially affected by the ultimate outcome of the legal proceedings. Please refer to Note 12 – Commitments and Contingencies to the Consolidated Financial Statements included herein in Part II, Item 8(Financial Statements and Supplementary Data) on this report for more information.Off-Balance Sheet ArrangementsOther than the operating lease arrangements detailed in Note 12 – Commitments and Contingencies to the Consolidated FinancialStatements included herein in Part II, Item 8 (Financial Statements and Supplementary Data) on this report, there are no off-balance sheetarrangements or obligations (including contingent obligations) that have, or are reasonably likely to have, a current or future material effecton our financial condition, changes in the financial condition, revenue or expense, results of operations, liquidity, capital expenditures orcapital resources.FINANCIAL RISK MANAGEMENTCurrency and interest rate riskOur Company’s objective in managing exposure to foreign currency and interest rate fluctuations is to reduce volatility of earnings andcash flows in order to allow management to focus on core business issues and challenges.We currently manage our currency exposure by creating, whenever possible, natural hedges in Australia and New Zealand. This involveslocal country sourcing of goods and services, as well as borrowing in local currencies to match revenues and expenses. Since we intend toconduct business on a self-funding basis (except for funds used to pay an appropriate share of our U.S. corporate overhead), we do notbelieve the currency fluctuations present a material risk to the Company. As such, we do not use derivative financial instruments to hedgeagainst the risk of foreign currency exposure. 54 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Our exposure to interest rate risk arises out of our long-term floating-rate borrowings. To manage the risk, we utilize interest rate derivativecontracts to convert certain floating-rate borrowings into fixed-rate borrowings. It is our Company’s policy to enter into interest ratederivative transactions only to the extent considered necessary to meet its objectives as stated above. Our Company does not enter intothese transactions or any other hedging transactions for speculative purposes.InflationWe continually monitor inflation and the effects of changing prices. Inflation increases the cost of goods and services used. Competitiveconditions in many of our markets restrict our ability to recover fully the higher costs of acquired goods and services through priceincreases. We attempt to mitigate the impact of inflation by implementing continuous process improvement solutions to enhanceproductivity and efficiency and, as a result, lower costs and operating expenses. In our opinion, we have managed the effects of inflationappropriately, and, as a result, it has not had a material impact on our operations and the resulting financial position or liquidity.CRITICAL ACCOUNTING ESTIMATESWe believe that the application of the following accounting policies requires significant judgments and estimates in the preparation of ourConsolidated Financial Statements and hence, are critical to our business operations and the understanding of our financial results:Impairment of long-lived assets, including goodwill and intangible assetsWe review long-lived assets, including goodwill and intangibles, for impairment as part of our annual budgeting process, at the beginningof the fourth quarter, and whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fullyrecoverable. (i)Impairment of Long-lived Assets (other than Goodwill and Intangible Assets with indefinite lives) – we evaluate our long-lived assetsand finite-lived intangible assets using historical and projected data of cash flows as our primary indicator of potential impairment andwe take into consideration the seasonality of our business. If the sum of the estimated, undiscounted future cash flows is less than thecarrying amount of the asset, then an impairment is recognized for the amount by which the carrying value of the asset exceeds itsestimated fair value based on an appraisal or a discounted cash flow calculation. For certain non-income producing properties or forthose assets with no consistent historical or projected cash flows, we obtain appraisals or other evidence to evaluate whether there areimpairment indicators for these assets.Besides the write-down of the carrying amount of our parking structure adjacent to our Courtenay Central ETC in Wellington, NewZealand due to earthquake damage during the 4th quarter of 2016, no other impairment losses were recorded for long-lived and finite-lived intangible assets for the three years ended December 31, 2017. Refer to Note 19 – Insurance Recoveries on Impairment andRelated Losses due to Earthquake for further details.(ii)Impairment of Goodwill and Intangible Assets with indefinite lives – goodwill and intangible assets with indefinite useful lives are notamortized, but instead, tested for impairment at least annually on a reporting unit basis. The impairment evaluation is based on thepresent value of estimated future cash flows of each reporting unit plus the expected terminal value. There are significant assumptionsand estimates used in determining the future cash flows and terminal value. The most significant assumptions include our cost of debtand cost of equity assumptions that comprise the weighted average cost of capital for each reporting unit. Accordingly, actual resultscould vary materially from such estimates. No impairment losses were recorded for goodwill and indefinite-lived intangible assets for the three years ended December 31, 2017.Business CombinationIn recent years, our business acquisition efforts have been focused on our real estate segment. For real estate acquisitions meeting thedefinition of a “business” in accordance with ASC 805, Business Combinations, the assets acquired and the liabilities assumed are recordedat their fair values as of the acquisition date. To accomplish this, we typically obtain third party valuations to allocate the purchase price tothe assets acquired and liabilities assumed, including both tangible and intangible components. The determination of the fair values of theacquisition components and its related determination of the estimated lives of depreciable tangible assets and amortizing intangibleassets/liabilities require significant judgment and several considerations, as described in more detail in the section “Business AcquisitionValuation and Purchase Price Allocation” in Note 2 – Summary of Significant Accounting Policies to the Consolidated FinancialStatements.Recognition of Gift Card Breakage IncomeGenerally, our revenue recognition is not assessed as an area requiring significant judgment and estimation in that our revenues from ticketand food and beverage sales are recognized when collected principally in cash or credit card at our theatre locations and through our onlineselling channels. In regards our real estate business, we execute lease contracts for existing tenancies, but revenue is recognized on astraight-line basis over the lease term. 55 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Prior to 2014, we recognized revenue for our gift cards and gift certificates issued in the U.S., which do not expire and have no dormancyfees, only when they were redeemed. At the end of fourth quarter of 2016, we determined that we have sufficient historical information torecognize breakage income on them. Based on our review of our own historical redemption patterns using company-wide data accumulatedover many years, we considered it preferable to estimate a certain percentage of our gift card and gift certificate sales to be recorded asbreakage income as it better reflects of our historical redemption patterns and our earnings process. Effectively, we concluded that aportion of these sales may have a remote likelihood of redemption based on our own historical redemption patterns and thus the liability isderecognized for them. We will continue to review historical gift card redemption information at each reporting period to assess thecontinued appropriateness of the gift card breakage rates and pattern of redemption. Please refer to Note 2 – Summary of SignificantAccounting Policies – Accounting Changes for the impact of this accounting change. Tax valuation allowance and deferred taxes We record our estimated future tax benefits and liabilities arising from the temporarydifferences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well asoperating loss carry-forwards. We estimate the recoverability of any tax assets recorded on the balance sheet and provide any necessaryallowances as required. As of December 31, 2017, we had recorded approximately $31.8 million of deferred tax assets (net of $1.6 milliondeferred tax liabilities) related to the temporary differences between the tax bases of assets and liabilities and amounts reported in theaccompanying consolidated balance sheets, as well as operating loss carry-forwards and tax credit carry-forwards. These deferred tax assetswere offset by a valuation allowance of $6.9 million resulting in a net deferred tax asset of $24.9 million. The recoverability of deferred taxassets is dependent upon our ability to generate future taxable income.Income taxes In the fourth quarter of calendar 2017, we recorded the impact of the change in the U.S. enacted federal income tax rate from35% to 21% which reduced our deferred tax assets. During the fourth quarter and in connection with the preparation of our 2017 financialstatements, we also determined that realization of our deferred tax assets in the tax jurisdictions was not more likely than not, primarily as aresult of cumulative net losses recorded for three years and we recorded certain valuation allowance for our deferred tax assets in these taxjurisdictions. As a result of the change in enacted tax rate and recording changes in valuation allowance for our deferred tax assets varioustax jurisdictions, we recorded a charge to income tax provision in the fourth quarter of approximately $8.3 million. See Note 9 – IncomeTaxes in the Notes to Consolidated Financial Statements for further information.Contingencies (including the insurance recoverability of losses incurred as a result of the recent earthquake in New Zealand)For loss contingencies, we record any loss contingencies when there is a “probable” likelihood that the liability had been incurred and theamount of the loss can be reasonably estimated. For other contingencies, (i)for recoveries through an insurance claim, we record a recoverable asset (not to exceed the amount of the total losses incurred) onlywhen the collectability of such claim is considered probable. To evaluate the probable collectability of an insurance claim, we considercommunications with our insurance company.(ii)for gain contingencies resulting from legal settlements, we record those settlements in our consolidated statements of operations whencash or other forms of payments are received.In regards to our significant contingencies during 2017:Legal contingenciesFrom time-to-time, we are involved with claims and lawsuits arising in the ordinary course of our business that may include contractualobligations, insurance claims, tax claims, employment matters, and anti-trust issues, among other matters. We provide accruals for mattersthat have probable likelihood of occurrence and can be properly estimated as to their expected negative outcome. We do not recordexpected gains until the proceeds (either in cash or other forms of payments) are received by us. Please refer to Note 12 – Commitments andContingencies to the Consolidated Financial Statements included herein in Part II, Item 8 (Financial Statements and Supplementary Data)on this report for more information on legal matters.Contingencies arising from earthquake damage on our Courtenay Central parking garageWe filed an insurance claim with our Insurer shortly after the earthquake incident. Our policy allows us to record a recoverable asset (to theextent of incurred losses) only when the collectability is probable. We have recorded certain incurred losses, consisting of the (i) writtendown carrying value of the damaged parking structure and (ii) certain losses related to the demolition activities, net of any expectedinsurance recovery, as discussed more fully in Note 19 – Insurance Recoveries on Impairment and Related Losses due to Earthquake to theConsolidated Financial Statements.For a summary of our significant accounting policies, including the critical accounting estimates discussed above, see Note 2 to theConsolidated Financial Statements included herein in Part II, Item 8 (Financial Statements and Supplementary Data) on this report.56 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 7A – Quantitative and Qualitative Disclosure about Market RiskThe Securities and Exchange Commission requires that registrants include information about potential effects of changes in currencyexchange and interest rates in their Form 10-K filings. Several alternatives, all with some limitations, have been offered. The followingdiscussion is based on a sensitivity analysis, which models the effects of fluctuations in currency exchange rates and interest rates. Thisanalysis is constrained by several factors, including the following:·it is based on a single point in time; and,·it does not include the effects of other complex market reactions that would arise from the changes modeled.Although the results of such an analysis may be useful as a benchmark, they should not be viewed as forecasts. At December 31, 2017, approximately 40% and 15% of our assets were invested in assets denominated in Australian dollars (ReadingAustralia) and New Zealand dollars (Reading New Zealand), respectively, including approximately $4.5 million in cash and cashequivalents. At December 31, 2016, approximately 42% and 18% of our assets were invested in assets denominated in Australian and NewZealand dollars, respectively, including approximately $10.4 million in cash and cash equivalents. Our policy in Australia and New Zealand is to match revenues and expenses, whenever possible, in local currencies. As a result, we haveprocured in local currencies a majority of our expenses in Australia and New Zealand. Despite this natural hedge, recent movements inforeign currencies have had an effect on our current earnings. Although foreign currency has had an effect on our current earnings, theeffect of the translation adjustment on our assets and liabilities noted in our other comprehensive income was an increase of $8,810,000 forthe year ended December 31, 2017. As we continue to progress our acquisition and development activities in Australia and New Zealand,that the foreign currency effect on our earnings may be significant in the future.Historically, our policy has been to borrow in local currencies to finance the development and construction of our long-term assets inAustralia and New Zealand whenever possible. As a result, the borrowings in local currencies have provided somewhat of a natural hedgeagainst the foreign currency exchange exposure. Even so, and as a result of our issuance of fully subordinated Trust Preferred Securities in2007, and their subsequent partial repayment, approximately 73% and 75% of our Australian and New Zealand assets, respectively, remainsubject to such exposure, unless we elect to hedge our foreign currency exchange between the U.S. and Australian and New Zealanddollars. If the foreign currency rates were to fluctuate by 10%, the resulting change in Australian and New Zealand assets would result in anincrease or decrease of $12.4 million and $4.9 million, respectively, and the change in our net income for the year would be $2.2 millionand $883,000, respectively. Presently, we have no plan to hedge such exposure.We record unrealized foreign currency translation gains or losses that could materially affect our financial position. We have accumulatedunrealized foreign currency translation gains of approximately $23.6 million and $14.8 million as of December 31, 2017 and 2016,respectively.Historically, we maintained most of our cash and cash equivalent balances in short-term money market instruments with original maturitiesof six months or less. Some of our money market investments may decline in value if interest rates increase. Due to the short-term nature ofsuch investments, a change of 1% in short-term interest rates would not have a material effect on our financial condition.We have a combination of fixed and variable interest rate loans. In connection with our variable interest rate loans, a change ofapproximately 1% in short-term interest rates would have resulted in approximately $1.1 million increase or decrease in our 2017 interestexpense.57 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 8 – Financial Statements and Supplementary DataREADING INTERNATIONAL, INC.TABLE OF CONTENTSPage​Management’s Report on Internal Control over Financial Reporting59​Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements)60​Report of Independent Registered Public Accounting Firm (Internal Control over Financial Reporting)61​Consolidated Balance Sheets as of December 31, 2017 and 201662​Consolidated Statements of Income for the Three Years Ended December 31, 201763​Consolidated Statements of Comprehensive Income for the Three Years Ended December 31, 201764​Consolidated Statements of Stockholders’ Equity for the Three Years Ended December 31, 201765​Consolidated Statements of Cash Flows for the Three Years Ended December 31, 201766​Notes to Consolidated Financial Statements67​Note 1 – Description of Business and Segment Reporting67​Note 2 – Summary of Significant Accounting Policies68​Note 3 – Earnings Per Share79​Note 4 – Real Estate Transactions79​Note 5 – Properties and Equipments81​Note 6 – Investments in Unconsolidated Joint Ventures82​Note 7 – Goodwill and Intangible Assets83​Note 8 – Prepaid and Other Assets84​Note 9 – Income Taxes84​Note 10 – Borrowings87​Note 11 – Pension and Other Liabilities90​Note 12 – Commitments and Contingencies92​Note 13 – Noncontrolling Interests99​Note 14 – Share-based Compensation and Repurchase Plans100​Note 15 – Accumulated Other Comprehensive Income102​Note 16 – Fair Value Measurements102​Note 17 – Leases103​Note 18 – Related Party Transactions105​Note 19 – Insurance Recoveries on Impairment and Related Losses due to Earthquake107​Note 20 – Unaudited Quarterly Financial Information108​Note 21 – Subsequent Events108​Schedule II – Valuation and Qualifying Accounts10958 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGBoard of Directors and StockholdersReading International, Inc.Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined inSecurities Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to providereasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes inaccordance with U.S. GAAP. Because of inherent limitations, internal control over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may becomeinadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of ourinternal control over financial reporting based on the criteria established in 2013 Internal Control—Integrated Framework issued by theCommittee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, our management believes that theCompany’s internal control over financial reporting is effective as of December 31, 2017.The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by Grant Thornton LLP, anindependent registered public accounting firm, as stated in their report, which is included herein.By: /s/ Ellen M. CotterEllen M. CotterChief Executive Officer March 15, 2018 By: /s/ Devasis GhoseDevasis GhoseChief Financial Officer March 15, 2018 59 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONSOLIDATED FINANCIAL STATEMENTS)Board of Directors and StockholdersReading International, Inc.Opinion on the financial statementsWe have audited the accompanying consolidated balance sheets of Reading International, Inc. and subsidiaries (the “Company”) as ofDecember 31, 2017 and 2016, the related consolidated statements of comprehensive income, changes in shareholders’ equity, and cashflows for each of the three years in the period ended December 31, 2017, and the related notes and schedules (collectively referred to as the“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of theCompany as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the periodended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our reportdated March 15, 2018 expressed an unqualified opinion.Basis for opinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theCompany’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to beindependent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Ouraudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our auditsprovide a reasonable basis for our opinion./s/ GRANT THORNTON LLPWe have served as the Company’s auditor since 2011.Los Angeles, CAMarch 15, 201860 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM(INTERNAL CONTROL OVER FINANCIAL REPORTING)Board of Directors and StockholdersReading International, Inc.Opinion on internal control over financial reportingWe have audited the internal control over financial reporting of Reading International, Inc. and subsidiaries (the “Company”) as ofDecember 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects,effective internal control over financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),the consolidated financial statements of the Company as of and for the year ended December 31, 2017, and our report dated March 15th,2018 expressed unqualified opinion on those financial statements.Basis for opinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying Management Discussion and Analysis Report ofReading International Inc. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based onour audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company inaccordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission andthe PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Ouraudit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such otherprocedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and limitations of internal control over financial reportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenanceof records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizationsof management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections ofany evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate./s/ GRANT THORNTON LLPLos Angeles, CaliforniaMarch 15, 201861 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.READING INTERNATIONAL, INC. and SUBSIDIARIESConsolidated Balance Sheets as of December 31, 2017 and 2016(U.S. dollars in thousands, except share information)December 31,December 31,20172016(1)ASSETSCurrent Assets:Cash and cash equivalents$13,668 $19,017 Receivables13,050 8,772 Inventories1,432 1,391 Prepaid and other current assets5,325 5,787 Land held for sale--37,674 Total Current Assets33,475 72,641 Operating properties, net264,724 211,886 Investment and development properties, net61,254 43,687 Investment in unconsolidated joint ventures5,304 5,071 Goodwill20,276 19,828 Intangible assets, net8,542 10,037 Deferred tax assets, net24,908 28,667 Other assets4,543 13,949 Total Assets$423,026 $405,766 LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities:Accounts payable and accrued liabilities$34,359 $26,479 Film rent payable13,511 10,528 Debt – current portion8,109 567 Taxes payable2,938 3,523 Deferred current revenue9,850 10,758 Other current liabilities11,679 14,131 Total Current Liabilities80,446 65,986 Debt – long-term portion94,862 115,707 Subordinated debt27,554 27,340 Noncurrent tax liabilities12,274 19,953 Other liabilities26,649 30,165 Total Liabilities$241,785 $259,151 Commitments and ContingenciesStockholders’ Equity:Class A non-voting common shares, par value $0.01, 100,000,000 shares authorized,33,019,565 issued and 21,251,291 outstanding at December 31, 2017 and 32,856,267issued and 21,497,717 outstanding at December 31, 2016$231 $230 Class B voting common shares, par value $0.01, 20,000,000 shares authorized and1,680,590 issued and outstanding at December 31, 2017 and 201617 17 Nonvoting preferred shares, par value $0.01, 12,000 shares authorized and no issuedor outstanding shares at December 31, 2017 and 2016----Additional paid-in capital145,898 144,569 Retained earnings32,679 1,680 Treasury shares, at cost(22,906)(16,374)Accumulated other comprehensive income20,991 12,075 Total Reading International, Inc. ("RDI") Stockholders’ Equity176,910 142,197 Noncontrolling Interests4,331 4,418 Total Stockholders’ Equity$181,241 $146,615 Total Liabilities and Stockholders’ Equity$423,026 $405,766 The accompanying Notes are integral part of the Consolidated Financial Statements.(1) Certain prior year balances have been reclassified to conform to the 2017 presentation (see Note 2 – Summary of Significant Accounting Policies –Reclassifications).62 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.READING INTERNATIONAL, INC. and SUBSIDIARIESConsolidated Statements of Operations for the Three Years Ended December 31, 2017(U.S. dollars in thousands, except share and per share data)20172016(1)2015(1)RevenuesCinema$263,464 $256,922 $242,823 Real estate16,270 13,551 15,042 Total Revenues279,734 270,473 257,865 Costs and ExpensesCinema(207,447)(198,523)(190,007)Real estate(9,437)(9,044)(10,948)Depreciation and amortization(16,942)(15,689)(14,562)General and administrative(25,347)(26,906)(18,652)Total Costs and Expenses(259,173)(250,162)(234,169)Operating Income20,561 20,311 23,696 Interest expense, net(6,194)(6,782)(7,304)Casualty gain (loss)9,217 (1,421)--Net gain on sale of assets9,360 393 11,023 Other income (expense)588 (63)(440)Income before taxes and earnings of unconsolidated joint ventures33,532 12,438 26,975 Equity earnings of unconsolidated joint ventures815 999 1,204 Income before income taxes34,347 13,437 28,179 Income tax expense(3,337)(4,020)(5,148)Net Income$31,010 $9,417 $23,031 Less: Net income (loss) attributable to noncontrolling interests11 14 (79)Net Income attributable to RDI controlling interests$30,999 $9,403 $23,110 Basic income per share attributable to RDI controlling interests$1.35 $0.40 $0.99 Diluted income per share attributable to RDI controlling interests$1.33 $0.40 $0.98 Weighted average number of shares outstanding–basic23,041,190 23,320,048 23,293,696 Weighted average number of shares outstanding–diluted23,247,969 23,521,157 23,495,618 The accompanying Notes are integral part of the Consolidated Financial Statements.(1) Certain prior year balances have been reclassified to conform to the 2017 presentation (see Note 2 – Summary of Significant Accounting Policies –Reclassifications). 63 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.READING INTERNATIONAL, INC. and SUBSIDIARIESConsolidated Statements of Comprehensive Income for the Three Years Ended December 31, 2017(U.S. dollars in thousands)20172016(1)2015(1)Net income$31,010 $9,417 $23,031 Foreign currency translation gain (loss)8,810 142 (16,488)Others125 127 209 Total Comprehensive Income$39,945 $9,686 $6,752 Less: Net income (loss) attributable to noncontrolling interests11 14 (79)Less: Comprehensive income (loss) attributable to noncontrolling interests19 (1)(46)Comprehensive income attributable to Reading International, Inc.$39,915 $9,673 $6,877 The accompanying Notes are integral part of the Consolidated Financial Statements.(1) Certain prior year balances have been reclassified to conform to the 2017 presentation (see Note 2 – Summary of Significant Accounting Policies –Reclassifications).​ 64 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.READING INTERNATIONAL, INC. and SUBSIDIARIESConsolidated Statements of Stockholders’ Equity for the Three Years Ended December 31, 2017(In thousands)Common SharesRetainedAccumulatedReading​Class AClass AClass BClass BAdditionalEarningsOtherInternationalInc.Total​VotingParNon-VotingParPaid-In(AccumulatedTreasuryComprehensiveStockholders’NoncontrollingStockholders’​SharesValueSharesValueCapitalDeficit)SharesIncome/(Loss)EquityInterestsEquityAt January 1, 201521,741 $228 1,495 $15 $140,237 $(30,833)$(8,582)$28,039 $129,104 $4,612 $133,716 Net income (loss)----------23,110 ----23,110 (79)23,031 Other comprehensive loss, net--------------(16,233)(16,233)(46)(16,279)Share-based compensation expense7 ------1,458 ------1,458 --1,458 Share repurchase plan(240)----------(3,110)--(3,110)--(3,110)Class A common stock issued for share-based bonuses and options exercised235 2 ----490 ------492 --492 In-kind exchange of shares for the exerciseof options, net issued(89)(1)--2 1,630 --(1,832)--(201)--(201)Contributions from noncontrollingshareholders----185 ------------17 17 Distributions to noncontrollingshareholders------------------(173)(173)At December 31, 201521,654 $229 1,680 $17 $143,815 $(7,723)$(13,524)$11,806 $134,620 $4,331 $138,951 Net income----------9,403 ----9,403 14 9,417 Other comprehensive income (loss), net--------------269 269 (1)268 Share-based compensation expense--------609 ------609 --609 Share repurchase plan(181)----------(2,850)--(2,850)--(2,850)Class A common stock issued for share-based bonuses and options exercised13 2 ----145 ------147 --147 In-kind exchange of shares for the exerciseof options, net issued12 (1)------------(1)--(1)Contributions from noncontrollingshareholders------------------268 268 Distributions to noncontrollingshareholders------------------(194)(194)At December 31, 201621,498 $230 1,680 $17 $144,569 $1,680 $(16,374)$12,075 $142,197 $4,418 $146,615 Net income----------30,999 ----30,999 11 31,010 Other comprehensive income, net--------------8,916 8,916 19 8,935 Share-based compensation expense--------1,000 ------1,000 --1,000 Share repurchase plan(410)----------(6,532)--(6,532)--(6,532)Class A common stock issued for share-based bonuses and options exercised90 1 ----329 ------330 --330 In-kind exchange of share for the exerciseof options, net issued23 --------------------Restricted Stock Units50 --------------------Contributions from noncontrollingshareholders------------------193 193 Distributions to noncontrollingshareholders------------------(310)(310)At December 31, 201721,251 $231 1,680 $17 $145,898 $32,679 $(22,906)$20,991 $176,910 $4,331 $181,241 The accompanying Notes are integral part of the Consolidated Financial Statements.65 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. XREADING INTERNATIONAL, INC. and SUBSIDIARIESConsolidated Statements of Cash Flows for the Three Years Ended December 31, 2017(U.S. dollars in thousands)201720162015Operating ActivitiesNet income$31,010 $9,417 $23,031 Adjustments to reconcile net income to net cash flows from operating activities:Equity earnings of unconsolidated joint ventures(815)(999)(1,204)Distributions of earnings from unconsolidated joint ventures798 1,004 1,074 Gain recognized on foreign currency transactions(563)----Net gain on sale of assets(9,360)(393)(11,023)Change in net deferred tax assets4,073 (5,060)(4,067)Depreciation and amortization16,942 15,689 14,562 Other amortization1,406 1,797 919 Casualty (gain) loss(9,217)1,421 --Share-based compensation expense1,000 609 1,458 Net changes in operating assets and liabilities:Receivables(3,093)1,296 620 Prepaid and other assets496 (599)(2,386)Accounts payable and accrued expenses(3,740)2,843 6,479 Film rent payable2,764 1,244 282 Taxes payable(839)(1,707)(426)Deferred revenue and other liabilities(7,011)3,626 (745)Net cash provided by operating activities23,851 30,188 28,574 Investing ActivitiesPurchases of and additions to operating and investment properties(65,903)(49,166)(53,119)Change in restricted cash33 178 1,292 Demolition costs of operating property(3,700)----Disposal of investment in unconsolidated joint ventures(432)----Distributions from unconsolidated joint ventures124 296 228 Cash settlement on insurance claim18,415 5,000 --Proceeds from sale of properties44,677 831 21,889 Net cash used in investing activities(6,786)(42,861)(29,710)Financing ActivitiesRepayment of long-term borrowings(106,449)(63,748)(35,239)Proceeds from borrowings91,030 81,616 10,500 Capitalized borrowing costs(39)(3,992)(248)Repurchase of Class A nonvoting common stock(6,532)(2,850)(3,310)Proceeds from stock option exercises52 146 492 Noncontrolling interest contributions193 268 17 Noncontrolling interest distributions(310)(194)(173)Net cash provided by/ (used in) financing activities(22,055)11,246 (27,961)Effect of exchange rate on cash(359)742 (1,449)Net increase (decrease) in cash and cash equivalents(5,349)(685)(30,546)Cash and cash equivalents at the beginning of the year19,017 19,702 50,248 Cash and cash equivalents at the end of the year$13,668 $19,017 $19,702 Supplemental DisclosuresInterest paid$4,880 $5,948 $9,023 Income taxes paid, net9,245 6,607 8,553 Non-Cash TransactionsLease make-good accrual$--$35 $1,314 In-kind exchange of stock for the exercise of options, net788 --1,833 Additions to operating and investing properties through accrued expenses10,804 ----The accompanying Notes are integral part of the Consolidated Financial Statements. 66 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. READING INTERNATIONAL, INC. and SUBSIDIARIESNotes to Consolidated Financial StatementsAs of and for Three Years Ended December 31, 2017_____________________________________________________________________________________________________________________________________________________NOTE 1 – DESCRIPTION OF BUSINESS AND SEGMENT REPORTINGThe CompanyReading International, Inc., a Nevada corporation (“RDI” and collectively with our consolidated subsidiaries and corporatepredecessors, the “Company,” “Reading” and “we,” “us,” or “our”), was incorporated in 1999. Our businesses consist primarily of:·the development, ownership and operation of multiplex cinemas in the United States, Australia, and New Zealand; and,·the development, ownership, and operation of retail and commercial real estate in the United States, Australia, and New Zealand.Business SegmentsOur business is comprised of two operating segments, as follows: (i) cinema exhibition and (ii) real estate. Each of these segments hasdiscrete and separate financial information and for which operating results are evaluated regularly by our Chief Executive Officer, thechief operating decision-maker of the Company. As part of our real estate segment, we have acquired, and continue to hold, raw land inurban and suburban centers in New Zealand and the United States.The tables below summarize the results of operations for each of our business segments. Operating expense includes costs associatedwith the day-to-day operations of the cinemas and the management of rental properties, including our live theater assets.201720162015(Dollars in thousands)CinemaReal EstateTotalCinemaReal EstateTotalCinemaReal EstateTotalRevenue - Third party$263,464 $16,270 $279,734 $256,922 $13,551 $270,473 $242,823 $15,042 $257,865 Inter-segment Revenue (1)--7,573 7,573 --7,366 7,366 --6,537 6,537 Total Segment Revenue263,464 23,843 287,307 256,922 20,917 277,839 242,823 21,579 264,402 Operating expenseCost of services and products - Thirdparty(207,447)(9,436)(216,883)(198,523)(9,044)(207,567)(190,007)(10,948)(200,955)Inter-segment Cost of services (1)(7,573)--(7,573)(7,366)--(7,366)(6,537)--(6,537)Total of services and products(excluding depreciation andamortization)(215,020)(9,436)(224,456)(205,889)(9,044)(214,933)(196,544)(10,948)(207,492)Depreciation and amortization(12,213)(4,256)(16,469)(11,772)(3,522)(15,294)(11,161)(3,107)(14,268)General and administrative expense(3,261)(2,140)(5,401)(3,763)(1,422)(5,185)(3,000)(728)(3,728)Total operating expense(230,494)(15,832)(246,326)(221,424)(13,988)(235,412)(210,705)(14,783)(225,488)Segment operating income$32,970 $8,011 $40,981 $35,498 $6,929 $42,427 $32,118 $6,796 $38,914 (1) Inter-segment Revenues and Cost of services relates to the internal charge between the two segments where the cinema operates within real estate owned within the group.A reconciliation of segment operating income to income before income taxes is as follows:(Dollars in thousands)201720162015Segment operating income$40,981 $42,427 $38,914 Unallocated corporate expense:Depreciation and amortization expense(473)(395)(294)General and administrative expense(19,947)(21,721)(14,924)Interest expense, net(6,194)(6,782)(7,304)Equity earnings of unconsolidated joint ventures815 999 1,204 Gain on sale of assets9,360 393 11,023 Casualty gain (loss)9,217 (1,421)--Other income (expense)588 (63)(440)Income before income taxes$34,347 $13,437 $28,179 67 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Assuming cash and cash equivalents are accounted for as corporate assets, total assets by business segment and by country arepresented as follows:(Dollars in thousands)December 31, 2017December 31, 2016By segment:Cinema$135,184 $133,057 Real estate249,245 240,362 Corporate (1)38,597 32,347 Total assets$423,026 $405,766 By country:United States$188,639 $161,922 Australia169,035 170,556 New Zealand65,352 73,288 Total assets$423,026 $405,766 (1) Corporate Assets includes cash and cash equivalents of $13.7 million and $19.0 million as of December 31, 2017 and 2016, respectively.The following table sets forth our operating properties by country:(Dollars in thousands)December 31, 2017December 31, 2016United States$89,183 $75,845 Australia143,200 103,430 New Zealand32,341 32,611 Total operating property$264,724 $211,886 The table below summarizes capital expenditures for the three years ended December 31, 2017:(Dollars in thousands)201720162015Segment capital expenditures$76,300 $49,023 $52,989 Corporate capital expenditures408 143 130 Total capital expenditures$76,708 $49,166 $53,119 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESSignificant Accounting PoliciesBasis of ConsolidationOur consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the UnitedStates of America (“US GAAP”). These consolidated financial statements include the accounts of our wholly-owned subsidiaries,which are RDGE, CRG, and CDL. We have also consolidated the following entities that are not wholly-owned for which we havecontrol:·Australia Country Cinemas Pty, Limited, a company in which we own a 75% interest and whose only assets are our leaseholdcinemas in Townsville and Dubbo, Australia;·Sutton Hill Properties, LLC (“SHP”), a company based in New York in which we own a 75% interest and whose only asset is the feeinterest in the Cinemas 1,2,3; and,·Shadow View Land and Farming, LLC in which we own a 50% controlling membership interest and whose only asset is a 202-acreland parcel in Coachella, California.Our investment interests in certain joint venture arrangements, for which we own between 20% to 50% and for which we have nocontrol over the operations, are accounted for as unconsolidated joint ventures, and hence, recorded in the consolidated financialstatements under the equity method. These investment interests include our:·33.3% undivided interest in the unincorporated joint venture that owns the Mt. Gravatt cinema in a suburb of Brisbane, Australia;·50% undivided interest in the unincorporated joint venture that owns Rialto Cinemas.68 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We consider that we have control over our partially-owned subsidiaries and joint venture interests (collectively “investee”) when theseconditions exist:(i)we own a majority of the voting rights or interests of the investee (typically above 50%), or(ii)in the case when we own less than the majority voting rights or interests, we have the power over the investee when the votingrights or interests are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not our voting rights in the investee are sufficientto give it power, including:(i)the size of our voting rights and interests relative to the size and dispersion of holdings of other vote holders;(ii)potential voting rights and interests held by us;(iii)rights and interests arising from other contractual arrangements; and,(iv)any additional other relevant facts.All significant intercompany balances and transactions have been eliminated in the consolidation.Use of EstimatesThe preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates andassumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Hence, actual results maydiffer from those estimates. Significant estimates and assumptions include, but not limited to:(i)projections we make regarding the recoverability and impairment of our assets (including goodwill and intangibles);(ii)allocation of insurance proceeds to various recoverable components;(iii)recoverability of our deferred tax assets as well as liabilities for transition tax under the Tax Reform Act in 2017; and,(iv)estimation of gift card and gift certificate breakage where we have concluded that the likelihood of redemption is remote. ReclassificationsCertain reclassifications have been made in the 2016 and 2015 comparative information in our consolidated financial statements andaccompanying notes to conform to the 2017 presentation. These reclassifications relate to the following immaterial balances:(i)reclassification of Investment in Reading International Trust I to “Other assets” line in our consolidated balance sheets;(ii)net-off of interest income against interest expense in our consolidated statements of income; and,(iii)combination of certain components in our consolidated statements of comprehensive income into one line, “Others”.Revenue Recognition (i)Cinema Exhibition Segment (all net of related taxes):·Sales of Cinema ticket (excluding bulk and advanced ticket sales) and food and beverage (“F&B”) sales – recognized whensold and collected, either in cash or credit card at our theatre locations and through our online selling channels; ·Sales of Bulk and Advanced Cinema Ticket Sales – deferred and recognized as revenue when the promised performance ormovie that the ticket has been purchased for is shown;·Gift Cards and Gift Certificate Sales – deferred and recognized as revenue when redeemed, except for the breakage portion, asdescribed below;·Breakage Income – represents the balance of gift cards and gift certificates for which we believe the likelihood of redemptionby the customer is remote and determined based upon our historical redemption patterns; and,·Advertising Revenues – recognized based on contractual arrangements or relevant admissions information, as appropriate.(ii)Real Estate Segment: ·Property Rentals –we contractually retain substantially all of the risks and benefits of ownership of our real estate propertiesand therefore, we account for our tenant leases as operating leases. Accordingly, rental revenue is recognized on a straight-linebasis over the lease term; and, ·Live Theatre License Fees – determined based on fixed and variable fees (percentage of ticket sales) pursuant to our licenseagreement with the production companies and is recorded on a weekly basis after performance of a show occurs.Cash and Cash EquivalentsWe consider all highly liquid investments with original maturities of three months or less at the time of purchase as cash equivalentsfor which cost approximates fair value.69 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ReceivablesOur receivables balance is composed primarily of credit card receivables, representing the purchase price of tickets, food & beverageitems, or coupon books sold at our various businesses. Sales charged on customer credit cards are collected when the credit cardtransactions are processed. The remaining receivables balance is primarily made up of the sales tax refund receivable from ourAustralian taxing authorities and the management fee receivable from the managed cinemas and property damage insurance recoveryproceeds. We have no history of significant bad debt losses and we have established an allowance for accounts that we deemuncollectible. InventoryInventory is composed of food and beverage items in our theater operations and is stated at the lower of cost (first-in, first-out method)or net realizable value.Restricted CashRestricted cash includes those cash accounts for which the use of funds is restricted by any contract or bank covenant. AtDecember 31, 2017 and 2016, our restricted cash balance, included as part of prepaid and other current assets, was $17,000 and$17,000, respectively. Derivative Financial InstrumentsFrom time-to-time, we purchase interest rate derivative instruments to hedge the interest rate risk that results from the variability of ourfloating-rate borrowings. Our use of derivative transactions is intended to reduce long-term fluctuations in cash flows caused by marketmovements. All derivative instruments are recorded on the balance sheet at fair value with changes in fair value through interestexpense in the Consolidated Statement of Operations. As of December 31, 2017 and 2016, we do not have material derivative positionsnor have designated any of these derivatives as accounting hedges.Operating Properties, netOur Operating Properties consists of land, buildings and improvements, leasehold improvements, fixtures and equipment which we useto derive operating income associated with our two business segments, cinema exhibition and real estate. Buildings andimprovements, leasehold improvements, fixtures and equipment are initially recorded at the lower of cost or fair market value anddepreciated over the useful lives of the related assets. Land is not depreciated. Expenditures relating to renovations, betterments orimprovements to existing assets are capitalized if it improves or extends the lives of the respective assets and/or provide long-termfuture net cash inflows, including the potential for cost savings.Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets. The estimateduseful lives are generally as follows:Building and improvements15 – 60 yearsLeasehold improvementsShorter of the lease term or useful life of theimprovementTheater equipment7 yearsFurniture and fixtures5 – 10 yearsInvestment and Development Properties, netInvestment and Development Properties consists of land, buildings and improvements under development, and their associatedcapitalized interest and other development costs that we are either holding for development, currently developing, or holding forinvestment appreciation purposes. These properties are initially recorded at the lower of cost or fair market value. Within this categoryare building and improvement costs directly associated with the development of potential cinemas (whether for sale or lease), thedevelopment of entertainment-themed centers (“ETCs”), or other improvements to real property. As incurred, we expense start-up costs(such as pre-opening cinema advertising and training expense) and other costs not directly related to the acquisition and developmentof long-term assets. We cease cost capitalization (including interest) on a development property when the property is complete andready for its intended use, or if activities necessary to get the property ready for its intended use have been substantiallycurtailed. However, we do not suspend cost capitalization for brief interruptions and interruptions that are externally imposed, such asmandates from governmental authorities. Impairment of Long-Lived AssetsWe review long-lived assets, including goodwill and intangibles, for impairment as part of our annual budgeting process, at thebeginning of the fourth quarter, and whenever events or changes in circumstances indicate that the carrying amount of the asset maynot be fully recoverable. 70 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We review internal management reports on a monthly basis as well as monitor current and potential future competition in film marketsfor indications of potential impairment. (i)Impairment of Long-lived Assets (other than Goodwill and Intangible Assets with indefinite lives) – we evaluate our long-livedassets and finite-lived intangible assets using historical and projected data of cash flows as our primary indicator of potentialimpairment and we take into consideration the seasonality of our business. If the sum of the estimated, undiscounted future cashflows is less than the carrying amount of the asset, then an impairment is recognized for the amount by which the carrying value ofthe asset exceeds its estimated fair value based on an appraisal or a discounted cash flow calculation. For certain non-incomeproducing properties or for those assets with no consistent historical or projected cash flows, we obtain appraisals or otherevidence to evaluate whether there are impairment indicators for these assets.No impairment losses were recorded for long-lived and finite-lived intangible assets for the three years ended December 31, 2017,based on historical information and projected cash flow. We recorded a write-down of the carrying amount of our parking structureadjacent to our Courtenay Central ETC in Wellington, New Zealand due to earthquake damage during the Fourth Quarter of 2016,which was subsequently fully recovered through the final insurance settlement in May 2017. Refer to Note 19 – InsuranceRecoveries on Impairment and Related Losses due to Earthquake for further details.(ii)Impairment of Goodwill and Intangible Assets with indefinite lives – goodwill and intangible assets with indefinite useful lives arenot amortized, but instead, tested for impairment at least annually on a reporting unit basis. The impairment evaluation is basedon the present value of estimated future cash flows of the segment plus the expected terminal value. There are significantassumptions and estimates used in determining the future cash flows and terminal value. The most significant assumptions includeour cost of debt and cost of equity assumptions that comprise the weighted average cost of capital for each reporting unit.Accordingly, actual results could vary materially from such estimates. No impairment losses were recorded for goodwill and indefinite-lived intangible assets for the three years ended December 31,2017.Variable Interest Entity The Company enters into relationships or investments with other entities that may be a variable interest entity (“VIE”). A VIE isconsolidated in the financial statements if the Company has the power to direct activities that most significantly impact the economicperformance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially besignificant to the VIE.Reading International Trust I is a VIE. It is not consolidated in our financial statements but instead accounted for under the equitymethod of accounting because we are not the primary beneficiary. We carry our investment in the Reading International Trust I,recorded under “Other Assets”, using the equity method of accounting because we have the ability to exercise significant influence(but not control) over operating and financial policies of the entity. We eliminate transactions with an equity method entity to theextent of our ownership in such an entity. Accordingly, our share of net income/(loss) of this equity method entity is included inconsolidated net income/(loss). We have no implicit or explicit obligation to further fund our investment in Reading InternationalTrust I.Property Held for SaleWhen a property is classified as held for sale, we present the respective assets and liabilities related to the property held for saleseparately on the balance sheet and cease to record depreciation and amortization expense. Properties held for sale are reported at thelower of their carrying value or their estimated fair value less the estimated costs to sell. As of December 31, 2016, we classified ourlandholding in Burwood, Australia as land held for sale as a result of a sale transaction on May 12, 2014, this transaction closed duringDecember 2017. Refer to Note 4 – Real Estate Transactions for details.Deferred Leasing/Financing CostsDirect costs incurred in connection with obtaining tenants and or financing are amortized over the respective term of the loan utilizingthe effective interest method, or straight-line method if the result is not materially different. In addition, interest on loans withincreasing interest rates and scheduled principal pre-payments are also recognized on the effective interest method. Net deferredfinancing costs are presented as a reduction in the associated Debt account (see Note 10 – Borrowings) in line with our adoption ofASU 2015-03 which became effective since January 1, 2016.Film Rental CostsFilm rental costs are accrued based on the applicable box office receipts and estimates of the final settlement to the film licensees.Advertising ExpenseWe expense our advertising as incurred. The amount of our advertising expense was $2.3 million, $2.3 million, and $2.3 million 2017,2016, and 2015, respectively.71 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Operating LeasesA majority of our cinema operations are conducted in premises under non-cancellable lease arrangements with initial base termsgenerally ranging between 5 to 15 years, with certain leases containing renewal options to extend the lease term to an additional termof up to 20 years. We evaluated the classification of our leases and concluded all of these arrangements as operating leases. Leaseexpense is recorded on a straight-line basis over the initial base terms, taking into effect any rate change clauses. Any subsequentincreases or decreases in rental payments that result from factors not anticipated during lease inception or factors that are based onmeeting future targets, other than indexation factors, represent contingent rentals and are fully accruable at the period the trigger eventoccurs.Share-based CompensationThe determination of the compensation cost for our share-based awards (primarily in the form of stock options or restricted stock units)is made at the grant date based on the estimated fair value of the award, and such cost is recognized over the grantee’s requisite serviceperiod (which typically equates to our vesting term). Previously recognized compensation cost shall be reversed for any forfeitedaward to the extent unvested at the time of forfeiture. Refer to Note 14 – Share-based Compensation and Repurchase Plans for furtherdetails.Treasury SharesIn recent years, we repurchased our own Class A common shares as part of a publicly announced stock repurchase plan with no currentintent for retiring those reacquired shares. We account for these repurchases using the cost method and present as a separate line withinthe Stockholders’ Equity section in our consolidated balance sheets. Refer to Note 14 – Share-based Compensation and RepurchasePlans for further details of our stock buyback plan.Insurance Recoveries and Other Contingency Matters(i)Loss contingencies – we record any loss contingencies if there is a “probable” likelihood that the liability had been incurred, andthe amount of the loss can be reasonably estimated. (ii)Gain contingencies:·Insurance recoveries – in the event we incur a loss attributable to an impairment of an asset or incurrence of a liability that isrecoverable, in whole or in part, through an insurance claim, we record an insurance recoverable (not to exceed the amount ofthe total losses incurred) only when the collectability of such claim is probable. To evaluate the probable collectability of aninsurance claim, we consider communications with third parties (such as with our insurance company), in addition to advicefrom legal counsel.·Others – other gain contingencies typically result from legal settlements and we record those settlements in income when cashor other forms of payments are received.Legal costs relating to our litigation matters, whether we are the plaintiff or the defendant, are recorded when incurred. For the yearsended December 31, 2017, 2016, and 2015, we recorded gains/(losses) relating to litigation settlement of $1.8 million, $415,000, and($495,000), respectively.Translation PolicyThe financial statements and transactions of our Australian and New Zealand cinema and real estate operations are recorded in theirfunctional currencies, namely Australian and New Zealand dollars, respectively, and are then translated into U.S. dollars. Assets andliabilities of these operations are denominated in their functional currencies and are then translated at exchange rates in effect at thebalance sheet date. Revenue and expenses are translated at the average exchange rate for the reporting period. Translation adjustmentsare reported in “Accumulated Other Comprehensive Income,” a component of Stockholders’ Equity.The carrying values of our Australian and New Zealand assets fluctuate due to changes in the exchange rate between the U.S. dollar andthe Australian and New Zealand dollars. Presented in the table below are the currency exchange rates for Australia and New Zealand asof and for the three years ended December 31, 2017:As of and for theyear endedDecember 31, 2017As of and for theyear endedDecember 31, 2016As of and for theyear endedDecember 31, 2015Spot RateAustralian Dollar0.78150.72300.7286New Zealand Dollar0.71000.69580.6842Average RateAustralian Dollar0.76700.74400.7524New Zealand Dollar0.71110.69730.700472 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Income TaxesWe account for income taxes under an asset and liability approach. Under the asset and liability method, deferred tax assets andliabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carryingamounts of existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted taxrates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, andare classified as noncurrent on the balance sheets in accordance with current US GAAP. Valuation allowances are established, whennecessary, to reduce deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable(refundable) for the period and the change during the period in deferred tax assets and liabilities. The effect of a change in tax rates orlaw on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In evaluating ourability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negativeevidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recentfinancial operations.A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained uponexamination, including resolutions of any related appeals or litigation processes, based on the technical merits.We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgment changes as a result of theevaluation of new information not previously available. We record interest and penalties related to income tax matters as part ofincome tax expense and in income tax related balance sheet accounts. Due to the complexity of some of these uncertainties, theultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differenceswill be reflected as increases or decreases to income tax expense in the period in which it is determined a change in recognition ormeasurement is appropriate.The Tax Act creates a new requirement for U.S. corporations to include in U.S. taxable income certain earnings of their foreignsubsidiaries, effective beginning tax year 2018. The Global Intangible Low Taxed Income (“GILTI”) framework effectively introducesa minimum tax on foreign earnings of U.S. based consolidated groups. Because of the complexity of the new tax rules related to GILTI,we are continuing to evaluate this provision of the Tax Act and the application of ASC 740, Income Taxes. As of December 31, 2017,we have not made a policy decision on whether to record deferred tax on GILTI or account for it as a current period expense whenincurred. Earnings Per ShareThe Company presents both basic and diluted earnings per share amounts. Basic EPS is calculated by dividing net income attributableto the Company by the weighted average number of common shares outstanding during the year. Diluted EPS is based upon theweighted average number of common and common equivalent shares outstanding during the year, which is calculated using thetreasury-stock method for equity-based awards. Common equivalent shares are excluded from the computation of diluted EPS inperiods for which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over theperiod are anti-dilutive and, accordingly, are excluded from the calculation.Business Acquisition Valuation and Purchase Price AllocationIn recent years, our business acquisition efforts have been focused on our real estate segment. For real estate acquisitions meeting thedefinition of a “business” in accordance with ASC 805, Business Combinations, the assets acquired and the liabilities assumed arerecorded at their fair values as of the acquisition date. To accomplish this, we typically obtain third party valuations to allocate thepurchase price to the assets acquired and liabilities assumed, including both tangible and intangible components. The determinationof the fair values of the acquisition components and its related determination of the estimated lives of depreciable tangible assets andamortizing intangible assets/liabilities require significant judgment and several considerations, described as follows:(i)Tangible assets – we allocate the purchase price to the tangible assets of an acquired property (which typically includes land,building and site/tenant improvements) based on the estimated fair values of those tangible assets assuming the building wasvacant. Estimates of fair value for land are based on factors such as comparisons to other properties sold in the same geographicarea adjusted for unique characteristics. Estimates of fair values of buildings and site/tenant improvements are based on presentvalues determined based upon the application of hypothetical leases with market rates and terms. Building and site improvementsare depreciated over their remaining economic lives, while tenant improvements are depreciated over the remaining non-cancelable terms of the respective leases.(ii)Intangible assets and liabilities – the valuation of the intangible assets and liabilities in a typical real estate acquisition isdescribed below:73 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Above-market and below-market leases – we record above-market and below-market in-place lease values for acquiredproperties based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of thedifference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fairmarket lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term ofthe lease. We amortize any capitalized above-market lease values (an intangible asset) and capitalized below-market leasevalues (an intangible liability) over the remaining non-cancelable terms of the respective leases.·Benefit of avoided costs due to existing tenancies – this typically includes (i) in-place leases (the value of avoided lease-upcosts) and (ii) leasing commissions and legal/marketing costs avoided with the leases in place. We measure the fair values of thein-place leases based on the difference between (i) the property valued with existing in-place leases adjusted to market rentalrates and (ii) the property valued as if vacant. Factors considered in the fair value determination include an estimate of carryingcosts during hypothetical expected lease-up periods considering current market conditions, and costs to execute similarleases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing,and leasing activities in estimating the fair value of the intangible assets acquired. In estimating carrying costs, managementincludes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during theexpected lease-up periods. Management also estimates costs to execute similar leases including leasing commissions, legal, andother related expenses to the extent that such costs are not already incurred in connection with a new lease origination as part ofthe transaction.We amortize the value of in-place leases and unamortized leasing origination costs to expense over the remaining term of therespective leases. Should a tenant terminate its lease, the unamortized portion of the in-place lease values and leasingorigination costs will be charged to expense.These assessments have a direct impact on revenue and net income, particularly on the depreciable base of the allocated assets whichwill impact the timing of expense allocation. In accordance with our adoption of ASU 2015-16, we record the changes in depreciationand amortization in the period we finalized our purchase price allocation.Accounting Changes Change in Accounting Principle during the fourth quarter of fiscal year 2016Prior to 2014, we recognized revenue for our gift cards and gift certificates issued in the U.S., which do not expire and have nodormancy fees, only when they were redeemed. At the end of fourth quarter of 2016, we determined that we have sufficient historicalinformation to recognize breakage income on them. Based on our review of our own historical redemption patterns using company-wide data accumulated over many years, we considered it preferable to estimate a certain percentage of our gift card and gift certificatesales to be recorded as breakage income as it better reflects of our historical redemption patterns and our earnings process. Effectively,we concluded that a portion of these sales may have a remote likelihood of redemption based on our own historical redemptionpatterns and thus the liability is derecognized for them. We will continue to review historical gift card redemption information at eachreporting period to assess the continued appropriateness of the gift card breakage rates and pattern of redemption. In accordance withASC 250, Accounting Changes and Error Corrections, the Company adjusted its comparative financial statements as of and for theyears ended December 31, 2015 and 2014 to apply this new accounting policy.74 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The impact of this change in accounting principle to our current and prior years’ financial statements is presented in the followingtables (in condensed format):Consolidated Statements of Operations 2017 2016 2015(Dollars in thousands) Withbreakagerevenue Withoutbreakagerevenue Effect ofchange Withbreakagerevenue Withoutbreakagerevenue Effect ofchange As restated Aspreviouslyreported Effect ofchangeRevenues$279,734 $279,126 $608 $270,473 $269,855 $618 $257,865 $257,323 $542 Costs and expenses (259,173) (259,173) -- (250,162) (250,162) -- (234,169) (234,169) --Operating income 20,561 19,953 608 20,311 19,693 618 23,696 23,154 542 Interest expense (net), casualty loss andothers 12,971 12,971 -- (7,873) (7,873) -- 3,279 3,279 --Income before income taxes and equityearnings of unconsolidated jointventures 33,532 32,924 608 12,438 11,820 618 26,975 26,433 542 Equity earnings of unconsolidated jointventures 815 815 -- 999 999 -- 1,204 1,204 --Income before income taxes 34,347 33,739 608 13,437 12,819 618 28,179 27,637 542 Income tax expense (3,337) (3,098) (239) (4,020) (3,787) (233) (5,148) (4,943) (205)Net income$31,010 $30,641 $369 $9,417 $9,032 $385 $23,031 $22,694 $337 Basic EPS$1.35 $1.33 $0.02 $0.40 $0.39 $0.01 $0.99 $0.98 $0.01 Diluted EPS$1.33 $1.32 $0.02 $0.40 $0.38 $0.02 $0.98 $0.97 $0.01 Consolidated Balance Sheets 2017 2016(Dollars in thousands) Withbreakagerevenue Withoutbreakagerevenue Effect ofchange Withbreakagerevenue Withoutbreakagerevenue Effect ofchangeAssets Current assets$33,475 $33,475 $ - $72,641 $72,641 $--Non-current assets Deferred tax asset, net 24,908 25,147 (239) 28,667 28,900 (233)Other non-current assets 364,643 364,643 - 304,458 304,458 --Total Assets 423,026 423,265 (239) 405,766 405,999 (233)Liabilities and Stockholders' Equity Current liabilities Deferred current revenue 9,850 10,458 (608) 10,758 11,376 (618)Other current liabilities 70,596 70,596 - 55,228 55,228 --Non-current liabilities 161,339 161,339 - 193,165 193,165 --Total Liabilities 241,785 242,393 (608) 259,151 259,769 (618)Stockholders' Equity Retained earnings (accumulated deficit) 32,679 32,310 369 1,680 1,295 385 Other equity components 148,562 148,562 - 144,935 144,935 --Total Stockholders' Equity 181,241 180,872 369 146,615 146,230 385 Total Liabilities and Stockholders' Equity$423,026 $423,265 $(239) $405,766 $405,999 $(233)75 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Consolidated Statements of Cash Flows 2017 2016 2015(Dollars in thousands) Withbreakagerevenue Withoutbreakagerevenue Effect ofchange Withbreakagerevenue Withoutbreakagerevenue Effect ofchange As restated Aspreviouslyreported Effect ofchangeOperating Activities Net income$31,010 $30,641 $369 $9,417 $9,032 $385 $23,031 $22,694 $337 Adjustments to reconcile net income tonet cash provided by operating activities Change in net deferred tax assets 4,073 3,834 239 (5,060) (5,293) 233 (4,067) (4,272) 205 Other reconciling adjustments 191 191 19,128 19,128 5,786 5,786 Net changes in operating assets andliabilities Deferred revenue and other liabilities (7,011) (6,403) (608) 3,626 4,244 (618) (745) (203) (542)Other operating assets and liabilities (4,412) (4,412) - 3,077 3,077 - 4,569 4,569 -Net cash provided by operating activities 23,851 23,851 - 30,188 30,188 - 28,574 28,574 -Investing Activities Net cash used in investing activities (6,786) (6,786) - (42,861) (42,861) - (29,710) (29,710) -Financing Activities Net cash provided by/(used in) financingactivities (22,055) (22,055) - 11,246 11,246 - (27,961) (27,961) -Effect of exchange rate on cash (359) (359) - 742 742 - (1,449) (1,449) -Net increase (decrease) in cash and cashequivalents (5,349) (5,349) - (685) (685) - (30,546) (30,546) -Cash and cash equivalents at thebeginning of the year 19,017 19,017 - 19,702 19,702 - 50,248 50,248 -Cash and cash equivalents at the end ofthe year$13,668 $13,668 $ - $19,017 $19,017 $ - $19,702 $19,702 $ -Out-of-Period Adjustment during the fourth quarter of fiscal year 2017:In the fourth quarter of fiscal year 2017, we recorded out-of-period adjustments of $544,000 to increase our occupancy cost expense inour consolidated statements of operations. The adjustments were made to correct our rent expense account under the straight linemethod of expense recognition. We determined that the adjustments did not have a material impact to our current or prior periodconsolidated financial statements.Out-of-Period Adjustment during the fourth quarter of fiscal year 2016In the fourth quarter of fiscal year 2016, we recorded out-of-period adjustments of $611,000 to decrease our income tax expenses in ourconsolidated statements of operations. The adjustments, which increased deferred tax asset by $611,000, were made to correct ourincome tax and related deferred tax asset accounts. We determined that the adjustments did not have a material impact to our current orprior period consolidated financial statements.Out-of-Period Adjustment during the fourth quarter of fiscal year 2015In the fourth quarter of fiscal year 2015, we recorded out-of-period adjustments of $514,000 to decrease our income tax expense in ourconsolidated statements of operations. The adjustments, which increased deferred tax assets by $2,116,000, increasedadditional paid in capital by $793,000, increased other comprehensive income by $1,859,000 and decreased other non-currentliabilities by $1,050,000, were made to correct our income tax and related equity and liability accounts. Of the $514,000 adjustmentto decrease the income tax expense in 2015, $1,286,000 relates to the adjustment that should have been recorded in 2014, thusreducing our income tax benefit by this amount. The remaining $1,800,000 relates to income taxes pertaining to years prior to 2014cumulatively, that would have increased our deferred tax asset by such amount. We determined that the adjustments did not have amaterial impact to our prior period consolidated financial statements.76 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Recently Adopted and Issued Accounting PronouncementsAdopted:On January 1, 2017, the Company adopted ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements toEmployee Share-Based Payment Accounting. This new guidance, which became effective for fiscal years beginning after December 15,2016, provides for the simplification of several aspects of the accounting for share-based payment transactions, including (i)accounting for tax benefits in excess of compensation cost and tax deficiencies, (ii) accounting for forfeitures, and (iii) classification onthe statement of cash flows. The only significant impact of the adoption of this new guidance to us is the immediate recognition ofexcess tax benefits (or “windfalls”) and tax deficiencies (or “shortfalls”) in the consolidated statement of operations. Previously, (i) taxwindfalls were recorded in additional paid-in capital (“APIC”) in the consolidated statement of stockholders’ equity and (ii) taxshortfalls were recorded in APIC to the extent of previous windfalls and then to the consolidated statement of operations. The adoptionof ASU 2016-09 did not have a material impact on the consolidated financial statements and related disclosures.Further, in March 2016, the FASB issued ASU 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying theTransition to the Equity Method of Accounting. This new guidance effectively removes the retroactive application imposed in currentguidance when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest ordegree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in theinvestee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date theinvestment becomes qualified for equity method accounting. The new standard becomes effective for the Company on January 1,2017. Early adoption is permissible. The adoption of ASU 2016-07 did not have a material impact on the consolidated financialstatements and related disclosures.In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties that are underCommon Control. This new guidance alters how a decision maker needs to consider interests in a variable interest entity (“VIE”) heldthrough an entity under common control and amends the previously issued ASU 2015-02. Under the new ASU, if a decision maker isrequired to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in theVIE held through a common control party. The new standard becomes effective for the Company on January 1, 2017. Early adoption ispermissible. The adoption of ASU 2016-17 did not have a material impact on the consolidated financial statements and relateddisclosures.Issued:vASUs Effective 2018·New Revenue Recognition Model (ASU 2014-09, Revenue from Contracts with Customers, codified as Topic 606)In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC 606”), which requires anentity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.ASC 606 will replace most existing revenue recognition guidance in US GAAP when it becomes effective. In addition, the standardrequires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from the contracts with customers.The new standard is effective for the Company on January 1, 2018. The standard permits the use of either a retrospective or modifiedretrospective transition method. The Company is adopting the guidance on January 1, 2018 and has selected the modifiedretrospective transition method. The Company continues to evaluate and quantify the effect that ASC 606 will have on itsconsolidated financial statements. While the Company does not believe the adoption of ASC 606 will have a material impact to itsresults of operations or cash flows, the Company currently expects the following impacts:·Through December 31, 2017, the Company recognized revenue associated with gift cards and gift certificates when redeemed,or when the likelihood of redemption became remote (known as "breakage" in our industry) based on historical experience.Under ASU 2014-09 and effective January 1, 2018, the Company will recognize revenue from unredeemed gift cards andcertificates as redeemed and will recognize breakage following the proportional method where revenue is recognized inproportion to the pattern of rights exercised by the customer when the Company expects that it is probable that a significantrevenue reversal would not occur for any estimated breakage amounts. Currently, the Company expects to reduce its deferredrevenue up to $1.3 million, before taxes with related impact in retained earnings to be increased net of taxes on January 1,2018 to give effect to this change in breakage accounting.77 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·We have a loyalty program in every country. For our loyalty programs, we do not expect those accounting changes to have amaterial impact on cash flows from operations. Through December 31, 2017, the Company recorded the estimated incrementalcost of providing awards under our loyalty program at the time the awards are redeemed. Effective January 1, 2018, theCompany will estimate the fair value of providing such loyalty program awards at the time the related awards are earned.Currently, the Company expects to increase its deferred revenues up to $1.0 million before taxes with related impact inretained earnings to be decreased net of taxes on January 1, 2018 to give effect to the loyalty program accounting.·Pension Cost Presentation (ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of NetPeriodic Pension Cost and Net Periodic Postretirement Benefit Cost)Issued by FASB in March 2017, amendments in this Update (i) require that an employer disaggregate the service cost componentfrom the other components of net benefit cost, and (ii) provide explicit guidance on how to present the service cost componentand the other components of net benefit cost in the income statement and allow only the service cost component of net benefitcost to be eligible for capitalization. The new guidance is effective for the Company on January 1, 2018. Early adoption ispermitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued ormade available for issuance. We do not anticipate the adoption of ASU 2017-07 to have a material impact on our consolidatedfinancial statements.·Restricted Cash Presentation as part of Cash and Cash Equivalents (ASU 2016-18, Statement of Cash Flows, Topic 230:Restricted Cash, a consensus of the FASB Emerging Issues Task Force)Issued by FASB in November 2016, this new guidance requires that amounts generally described as restricted cash and cashequivalents should be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of periodbalances on the statement of cash flows. The new standard becomes effective for the Company on January 1, 2018. Earlyadoption is permissible. The Company does not anticipate the adoption of ASU 2016-18 to have a material impact on theconsolidated financial statements and related disclosures.·Cash Flow Presentation (ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts andCash Payments)Issued by FASB in August 2016, the amendments covered in this ASU are improvements to current GAAP, as it will provideguidance to eight (8) specific cash flow classification issues, thereby reducing the current and potential future diversity inpractice. The new standard becomes effective for the Company on January 1, 2018. Early adoption is permissible. TheCompany does not anticipate the adoption of ASU 2016-15 to have a material impact on the consolidated financial statementsand related disclosures.·Business Combination Streamlining (ASU 2017-01, Business Combinations Topic 805: Clarifying the Definition of a Business)Issued by FASB in January 2017, this ASU provides that when substantially all of the fair value of the gross assets acquired (ordisposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the asset is not a“business”, thus reducing the number of transactions that need further evaluation for business combination. This becomeseffective for the Company on January 1, 2018. We do not expect the ASU 2017-01 to have a material impact to us currently.78 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. vASUs Effective 2019 and Beyond·New Lease Accounting Model (ASU 2016-02, Leases: Topic 842)This new guidance, which becomes effective for us by January 1, 2019, establishes a right-of-use ("ROU") model that requires alessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leaseswill be classified as either finance or operating, with classification affecting the pattern of expense recognition in the incomestatement. A modified retrospective transition approach is required for lessees with capital and operating leases existing at, orentered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practicalexpedients available. While we are still evaluating the impact of our pending adoption of this new standard on our consolidatedfinancial statements, we expect that upon adoption we will recognize ROU assets and lease liabilities and that the amountscould be material since a majority of our operating cinemas are leased. We have developed an implementation plan. Significantimplementation matters that we are addressing includes (i) assessment of lease population, (ii) determination of appropriatediscount rate to use and (ii) assessment of renewal options to include in the initial lease term. While the Company is continuingto assess the effect of adoption, the Company currently believes the most significant changes relate to the recognition of newROU assets and lease liabilities on its balance sheet for cinemas currently subject to operating leases.·Goodwill Impairment Simplification (ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test forGoodwill Impairment)Issued by FASB in January 2017, this new guidance removes the second step of the two-step impairment test for measuringgoodwill and is to be applied on a prospective basis only. The new guidance is effective for the Company on January 1, 2020,including interim periods within the year of adoption. Early adoption is permitted for interim or annual goodwill impairmenttests performed on testing dates after January 1, 2017. We do not anticipate the adoption of ASU 2017-04 to have a materialimpact on our consolidated financial statements.NOTE 3 – EARNINGS PER SHAREThe following table sets forth the computation of basic and diluted EPS and a reconciliation of the weighted average number ofcommon and common equivalent shares outstanding for the three years ended December 31, 2017:(Dollars in thousands, except share and per share data)201720162015Numerator:Net income attributable to RDI common stockholders$30,999 $9,403 $23,110 Denominator:Weighted average shares of common stock – basic23,041,190 23,320,048 23,293,696 Weighted average dilutive impact of stock-based awards206,779 201,109 201,922 Weighted average shares of common stock – diluted23,247,969 23,521,157 23,495,618 Basic EPS attributable to RDI common stockholders$1.35 $0.40 $0.99 Diluted EPS attributable to RDI common stockholders$1.33 $0.40 $0.98 Awards excluded from diluted EPS149,841 92,500 -- NOTE 4 – REAL ESTATE TRANSACTIONSDiscussed below are the real estate transactions impacting the presentation in our consolidated balance sheets as of December 31, 2017and 2016, and the profitability determination in our consolidated statements of income for the three years ended December 31, 2017:Real Estate SalesLandholding in Burwood, Australia (Initiated 2015, Settled 2017)On May 12, 2014, we entered into a contract to sell our undeveloped 50.6 acre parcel in Burwood, Victoria, Australia, to AustralandHoldings Limited (now known as Frasers Property Australia, “Frasers”) for a purchase price of $50.6 million (AU$65.0 million). Wereceived $5.9 million (AU$6.5 million) on May 23, 2014, $16.6 million (AU$ 21.8 million) on June 19, 2017 and final settlement onDecember 14, 2017 of $28.1 million (AU$36.6 million).79 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The final sale price was adjusted by $56,000 (AU$75,000) due to an early settlement agreed between both parties. The final transactiongain is determined as follows:(Dollars in thousands)In AU$Selling price$64,925 Less: Property book value(52,108)Total transaction gain, gross12,817 Less: Direct costs incurred(1)(439)Total transaction gain, net$12,378 (1) Represents commissions and legal expenses incurred in connection with this transaction. Landholding in Moonee Ponds, Australia (Initiated 2013, Settled 2015)On October 15, 2013, we entered into a definitive purchase and sale agreement to sell this property for a sales price of $17.5 million(AU$23.0 million) payable in full upon closing of the transaction on April 16, 2015. In accordance with the requirements under USGAAP, we recognized a gain of $8.0 million (AU$10.3 million) in the second quarter of 2015 upon the receipt of sale proceeds onApril 16, 2015.Doheny Condo, Los Angeles (Initiated and Settled 2015)On February 25, 2015, we sold our Los Angeles Condo for $3.0 million resulting in a $2.8 million gain on sale.Properties in Taupo, New Zealand (Initiated 2015, Settled 2016)On April 1, 2015, we entered into two definitive purchase and sale agreements to sell our properties in Taupo, New Zealand for acombined sales price of $2.4 million (NZ$3.4 million). The first agreement relates to a property with a sales price of $1.6 million(NZ$2.2 million) and a book value of $1.3 million (NZ$1.8 million), which closed on April 30, 2015 when we received the sales pricein full. The other agreement related to a property with a sales price of $831,000 (NZ$1.2 million) and a book value of $426,000(NZ$615,000) which was completed and for which we received cash settlement representing the full sales price on March 31, 2016. The first transaction qualified as a sale under both U.S. GAAP and tax purposes during the year-ended December 31, 2015. The secondtransaction was recorded as a sale during the quarter ended March 31, 2016.Real Estate AcquisitionsNew Corporate Headquarters Building, Los Angeles (Asset Acquisition, 2016)On April 11, 2016, we purchased a 24,000 square foot office building with 72 parking spaces located at 5995 Sepulveda Boulevard inCulver City, California (a Los Angeles suburb) for $11.2 million. The terms and circumstances of this acquisition were not consideredto meet the definition of a business combination in accordance with US GAAP. We intend to use approximately 50% of the leasablearea for our headquarters offices and to lease the remainder overtime to unaffiliated third parties.Building & Landholding in Newmarket, Australia (Asset Acquisition, 2015)On November 30, 2015, we completed the purchase of an approximately 23,000 square foot parcel adjacent to our existing Newmarketshopping center in Brisbane, Australia for a total consideration of $5.5 million (AU$7.6 million). The acquired land has an existingoffice building which was vacant at the time of purchase completion. We intend, over time, to integrate this property into ourNewmarket development thereby increasing our footprint from approximately 204,000 to 227,000 square feet. The terms andcircumstances of this acquisition were not considered to meet the definition of a business combination in accordance with US GAAP.Cannon Park ETC in Queensland, Australia (Business Combination, 2015)On December 23, 2015, we completed a 100% acquisition of two adjoining properties in Townsville, Australia for a total of$24.1 million (AU$33.4 million) in cash. The properties are located approximately 6 miles from downtown Townsville, the fourthlargest city in Queensland, Australia. The total gross leasable area of the two adjoining properties, the Cannon Park City Centre and theCannon Park Discount Centre, is 133,000 square feet. The Cannon Park City Centre is anchored by Reading Cinemas, which isoperated by Reading International’s 75% owned subsidiary, Australia Country Cinemas, and has three mini-major tenants and tenspecialty family oriented restaurant tenants. The Cannon Park Discount Centre is anchored by Kingpin Bowling and supported by fourother retailers. This acquisition is consistent with our business plan to own, where practical, the land underlying our entertainmentassets.The acquired assets consist primarily of the land and buildings, which, at the time of acquisition, was approximately 98% leased toexisting tenants. Tenancies ranged from having 9 months to 8 years left to run on their leases at the time of purchase.80 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We have concluded the acquired assets constitute a “business” and we accounted this as a business combination. During the quarterended September 30, 2016, the Company finalized the allocation of the purchase price to the identifiable assets acquired and liabilitiesassumed based on its estimates of their fair values on the acquisition date. The acquired value components of this real estateacquisition included both tangible and intangible assets. The determination of the fair values of the acquired assets and assumedliabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requiressignificant judgment. The estimates and assumptions include projected timing and amount of future cash flows and discount ratesreflecting the risk inherent in the future cash flows. Typical of a real estate acquisition, there was no goodwill recorded as the purchaseprice did not exceed the fair value estimates of the net acquired assets.The following table summarizes the final allocation of the purchase price to the estimated fair values of assets acquired and liabilitiesassumed at the date of acquisition, as well as adjustments made during the measurement period:MeasurementPreliminary Purchase PricePeriodFinal Purchase PriceAllocationAdjustments(2)Allocation(Dollars in thousands)US Dollars(1)AU dollarsAU dollarsUS Dollars(1)AU dollarsTangible AssetsOperating property:Land$7,525 $10,421 $721 $8,046 $11,142 Building and improvements16,588 22,971 (6,453)11,928 16,518 Site improvements----2,321 1,676 2,321 Tenant improvements----957 691 957 Intangible AssetsAbove-market leases----61 44 61 In-place leases----2,135 1,542 2,135 Unamortized leasing commissions----333 240 333 Unamortized legal fees----55 40 55 Total assets acquired24,113 33,392 130 24,207 33,522 LiabilitiesBelow-market leases----(130)(94)(130)Net assets acquired$24,113 $33,392 $--$24,113 $33,392 (1) The balances were translated into U.S. Dollars based on the applicable exchange rate as of the date of acquisition, December 23, 2015.(2) The measurement period adjustments were mainly due to the finalization of the valuations of the tangible land, building and improvements, site improvements and tenant improvements,as well as valuations of intangible assets and liabilities typically present in an acquisition of a regional mall with existing tenancies. This resulted in a reallocation of the purchaseprice from Building to other tangible assets (site and tenant improvements), as well as to intangible assets, including above and below market leases, in-place leases and unamortizedlease origination costs. The revenue and earnings from this acquisition, since the acquisition date as included in the consolidated statement of operations forthe year ended December 31, 2015, were not significant. Based on the available information provided to us and after exhaustingsignificant efforts to satisfy the pro-forma disclosure requirements assuming the business acquisition happened at the beginning of theyear, the Company concluded it to be impracticable to determine and disclose the full-year pro forma combined revenue and earningsfor 2015.NOTE 5 – PROPERTIES AND EQUIPMENTSOperating Property, Net Property associated with our operating activities is summarized as follows:(Dollars in thousands)December 31, 2017December 31, 2016Land$76,457 $73,803 Building and improvements153,232 122,863 Leasehold improvements48,481 46,902 Fixtures and equipment145,033 118,180 Construction-in-progress26,000 11,517 Total cost449,203 373,265 Less: accumulated depreciation(184,479)(161,379)Operating Properties, net$264,724 $211,886 81 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Of our total operating properties as disclosed above, the gross and carrying amounts of the portion of our properties currently on leaseor held for leasing as of December 31, 2017 and 2016 are as follows:(Dollars in thousands)December 31, 2017December 31, 2016Building and improvementsGross balance$71,749 $33,879 Accumulated depreciation17,585 9,982 Net Book Value$54,164 $23,897 Depreciation expense for operating property was $14.0 million, $15.1 million, and $13.6 million for the year ended December 31,2017, 2016 and 2015, respectively.Investment and Development PropertyInvestment and development property is summarized as follows:(Dollars in thousands)December 31, 2017December 31, 2016Land$25,025 $24,616 Building1,900 1,900 Construction-in-progress (including capitalized interest)34,329 17,171 Investment and development property, net$61,254 $43,687 For the year ended December 31, 2017 and 2016, we capitalized interest charges of $1.2 million and $297,000 pertaining to our on-going development projects. NOTE 6 – INVESTMENTS IN UNCONSOLIDATED JOINT VENTURESOur investments in unconsolidated joint ventures are accounted for under the equity method of accounting. The table belowsummarizes our active investment holdings in two unconsolidated joint ventures:(Dollars in thousands)InterestDecember 31, 2017December 31, 2016Mt. Gravatt33.3%$4,118 $3,874 Rialto Cinemas50.0%1,186 1,197 Total Joint Ventures$5,304 $5,071 Our recorded share of equity earnings from our investments in unconsolidated joint ventures are as follows:(Dollars in thousands)201720162015Mt. Gravatt$726 $805 $1,046 Rialto Cinemas89 194 136 Rialto Distribution----22 Total equity earnings$815 $999 $1,204 Mt. GravattWe own an undivided 33.3% interest in Mt. Gravatt, an unincorporated joint venture that owns and operates a sixteen-screen multiplexcinema in Australia.Rialto CinemasWe own an undivided 50.0% interest in the assets and liabilities of the Rialto Entertainment joint venture that owns and operates two(2) movie theaters, with 13 screens in New Zealand.Rialto DistributionDuring 2017, this investment was transferred to our previous business partners. We paid an amount lower than the accrual we hadtaken for our debt obligation in the joint venture. Consequently, we recognized a gain of $15,000 (NZ$21,000) during the quarterended June 30, 2017.82 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 7 – GOODWILL AND INTANGIBLE ASSETSThe table below summarizes goodwill by business segment:(Dollars in thousands)CinemaReal EstateTotalBalance at January 1, 2016$14,491 $5,224 $19,715 Foreign currency translation adjustment113 --113 Balance at December 31, 2016$14,604 $5,224 $19,828 Foreign currency translation adjustment448 --448 Balance at December 31, 2017$15,052 $5,224 $20,276 The Company is required to test goodwill and other intangible assets for impairment on an annual basis and, if current events orcircumstances require, on an interim basis. To test the impairment of goodwill, the Company compares the fair value of each reportingunit to its carrying amount, including the goodwill, to determine if there is potential goodwill impairment. A reporting unit is generallyone level below the operating segment. The most recent annual assessment occurred in the fourth quarter of 2017. The assessmentresults indicated that there is no impairment to our goodwill as of December 31, 2017.The tables below summarize intangible assets other than goodwill:December 31, 2017(Dollars in thousands)Beneficial LeasesTrade NameOther IntangibleAssetsTotalGross carrying amount$28,860 $7,254 $1,139 $37,253 Less: Accumulated amortization(23,292)(4,936)(483)(28,711)Net intangible assets other than goodwill$5,568 $2,318 $656 $8,542 December 31, 2016(Dollars in thousands)Beneficial LeasesTrade NameOther IntangibleAssetsTotalGross carrying amount$28,671 $7,254 $1,084 $37,009 Less: Accumulated amortization(21,870)(4,634)(468)(26,972)Net intangible assets other than goodwill$6,801 $2,620 $616 $10,037 We amortize our beneficial leases over the lease period, the longest of which is approximately 30 years; our trade name using anaccelerated amortization method over its estimated useful life of 45 years; and other intangible assets over its estimated useful life ofup to 30 years (except for transferrable liquor licenses, which are indefinite-lived assets, with a balance of $421,000 and $389,000 as ofDecember 31, 2017 and 2016). For the years ended December 31, 2017, 2016, and 2015, our amortization expense was $1.7 million,$1.9 million, and $1.7 million, respectively.As of December 31, 2017, the estimated amortization expense for our amortizable intangibles, in the five succeeding years andthereafter is as follows:(Dollars in thousands)Estimated Future Amortization Expense2018$1,691 20191,270 2020809 2021802 2022802 Thereafter2,747 Total future amortization expense$8,121 83 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 8 – PREPAID AND OTHER ASSETSPrepaid and other assets are summarized as follows:(Dollars in thousands)December 31, 2017December 31, 2016Prepaid and other current assetsPrepaid expenses$1,625 $981 Prepaid taxes653 1,622 Income taxes receivable1,686 1,476 Prepaid rent1,055 1,237 Deposits243 404 Restricted cash17 17 Investments in marketable securities46 50 Total prepaid and other current assets$5,325 $5,787 Other non-current assetsRecoverable asset(1)$--$9,480 Other non-cinema and non-rental real estate assets1,134 1,134 Investment in Reading International Trust I838 838 Interest rate cap at fair value--1 Straight-line rent asset2,564 2,457 Long-term deposits7 39 Total non-current assets$4,543 $13,949 (1)Refer to Note 19 – Insurance Recoveries on Impairment and Related Losses due to Earthquake for further discussion on this item. NOTE 9 - INCOME TAXESOn December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. The Tax Act significantlychanged the U.S. corporate income tax law by lowering the statutory corporate tax rate from 35% to 21%, imposing a one-timemandatory repatriation tax on earnings of foreign subsidiaries, and changing how foreign earnings are subject to U.S. tax. We have notcompleted our determination of the implications of the Tax Act. However, we have reasonably estimated the impact of the Tax Act andrecorded provisional amounts in our financial statements as of December 31, 2017, pursuant to the guidance of the U.S. Securities andExchange Commission Staff Accounting Bulletin No. 118. We recorded income tax expense for the impact of the Tax Act ofapproximately $13.0 million. This net amount is primarily comprised of $8.3 million from re-measurement of federal net deferred taxassets resulting from the reduction in the U.S. statutory corporate tax rate and a provisional amount of $4.7 million from the one-timemandatory repatriation tax on deferred earnings of our foreign subsidiaries. As we complete our analysis of the Tax Act, collect andprepare necessary data, and interpret any additional guidance issued by the U.S. Treasury Department and the IRS, we may makeadjustments to the provisional amount. Those adjustments may materially impact our provision for income taxes in the period in whichthe adjustments are made. The accounting for the tax effects of the Tax Act will be completed in 2018.Income before income taxes includes the following:(Dollars in thousands)201720162015United States$(5,143)$(1,886)$3,826 Foreign38,675 14,324 23,149 Income before income taxes and equity earnings of unconsolidated jointventures$33,532 $12,438 $26,975 Equity earnings of unconsolidated joint ventures:United States------Foreign815 999 1,204 Income before income taxes$34,347 $13,437 $28,179 84 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Significant components of the provision for income taxes are as follows:(Dollars in thousands)201720162015Current income tax expense (benefit)Federal (1)$(7,846)$2,982 $481 State775 675 516 Foreign7,079 4,685 3,120 Total8 8,342 4,117 Deferred income tax expense (benefit)Federal3,654 (4,197)612 State(2,351)(422)(940)Foreign2,026 297 1,359 Total3,329 (4,322)1,031 Total income tax expense$3,337 $4,020 $5,148 (1)The 2017 amount includes a federal tax benefit of $7,785 related to changes in unrecognized tax benefits and related interest.Deferred income taxes reflect the “temporary differences” between the financial statement carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes, adjusted by the relevant tax rate. The components of thedeferred tax assets and liabilities are as follows:(Dollars in thousands)December 31, 2017(1)December 31, 2016Deferred Tax Assets:Net operating loss carry-forwards$8,579 $11,940 Alternative minimum tax credit carry-forwards939 1,690 Compensation and employee benefits4,146 6,221 Deferred revenue 2,500 5,486 Accrued expenses6,178 7,134 Accrued taxes2,440 3,381 Land and property8,457 12,857 Other107 995 Total Deferred Tax Assets33,346 49,704 Deferred Tax Liabilities:Intangibles(1,087)(1,482)Cancellation of indebtedness(481)(1,559)Notes receivable--(7,403)Total Deferred Tax Liabilities(1,568)(10,444)Net deferred tax assets before valuation allowance31,778 39,260 Valuation allowance(6,870)(10,593)Net deferred tax asset$24,908 $28,667 (1)We recorded an adjustment to our federal deferred income tax assets and liabilities as of December 31, 2017 to reflect the reduction in the U.S. statutoryfederal corporate income tax rate from 35% to 21% resulting from the Tax Act.We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making suchdetermination, we considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities,projected future taxable income, tax planning strategies and recent financial performance. Because there are more negative evidencesfor New Zealand and certain U.S. state carryforwards as of December 31, 2017, we recorded a valuation allowance of $6.9 million.As of December 31, 2017, we had the following carry-forwards:·approximately $939,000 in U.S. alternative minimum tax credit carry-forwards with no expiration date and are refundablebeginning tax year 2018;·approximately $8.4 million in available New Zealand loss carry-forwards with no expiration date;·approximately $43.7 million in New York state loss carryforwards expiring in 2034; and,·approximately $43.8 million in New York city loss carryforwards expiring in 2034.In 2017 we liquidated a non-operating foreign subsidiary resulting in a reversal of approximately $7.6 million in deferred tax liabilityand $7.8 million in withholding tax reserves. 85 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We expect no substantial limitations on the future use of U.S. or foreign loss carry-forwards.The provision for income taxes is different from amounts computed by applying U.S. statutory rates to consolidated losses before taxes.The significant reason for these differences is as follows:(Dollars in thousands)201720162015Expected tax provision$12,022 $4,566 $9,581 Increase (decrease) in tax expense resulting from:Foreign tax rate differential(2,153)(648)(654)Change in valuation allowance(905)129 1,531 State and local tax provision(541)307 1,133 Prior year adjustments(79)(954)(514)Unrecognized tax benefits(8,498)262 946 Advance to Overseas Subsidiary(7,620)----Impact of Tax Act13,018 ----Non-taxable insurance proceeds(1,871)----Indefinite reinvestment assertion----(3,089)State rate and law change----(3,635)Other(36)358 (151)Actual tax provision$3,337 $4,020 $5,148 The undistributed earnings of the Company's Australian subsidiaries are considered to be indefinitely reinvested. Accordingly, noprovision for state income taxes or foreign withholding taxes has been provided on such undistributed earnings. Due to the enactmentof the Tax Act, future repatriations of foreign earnings will generally not be subject to U.S. federal taxation but may incur statetaxes. At December 31, 2017, we have not changed our indefinite reinvestment decision as a result of the Tax Act but will reassess thisdecision during the course of 2018 as we continue to consider the impact of the Tax Act.The following table is a summary of the activity related to unrecognized tax benefits, excluding interest and penalties, for the yearsended December 31, 2017, 2016, and 2015:(Dollars in thousands)201720162015Unrecognized tax benefits – gross beginning balance$11,480 $11,022 $3,760 Gross increase (decrease) - prior year tax positions(7,905)133 6,679 Gross increase (decrease) - current period tax positions--325 583 Settlements(452)----Unrecognized tax benefits – gross ending balance$3,123 $11,480 $11,022 As of December 31, 2017 and 2016, if recognized, $3.1 million and $9.9 million respectively, of the unrecognized tax benefits wouldimpact the Company’s effective tax rate.We record interest and penalties related to income tax matters as part of income tax expense. During the year ended December 31,2016, we recorded an increase to tax interest of $0.4 million, resulting in a total $8.9 million in interest. During the year endedDecember 31, 2017, we recorded an increase to tax interest of $203,000, resulting in a total $9.1 million in interest.It is difficult to predict the timing and resolution of uncertain tax positions. Based upon the Company’s assessment of many factors,including past experience and judgments about future events, it is probable that within the next 12 months the reserve for uncertain taxpositions will increase within a range of $500,000 to $1.5 million. The reasons for such change include but are not limited to taxpositions expected to be taken during 2017, revaluation of current uncertain tax positions, and expiring statutes of limitations.Generally, changes to our federal and most state income tax returns for the calendar year 2013 and earlier are barred by statutes oflimitations. Certain U.S. subsidiaries filed federal and state tax returns for periods before these entities became consolidated with us.These subsidiaries were examined by IRS for the years 1996 to 1999 and significant tax deficiencies were assessed for those years.Those deficiencies have been settled, as discussed in “Tax Audit/Litigation,” Note 12 – Commitments and Contingencies. 86 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As of December 31, 2017, federal income tax returns for 2014 and after are open for examination, with the 2015 return being currentlyunder examination. California worldwide unitary income tax returns for 2013 and after are open for examination, but an examination of2013 through 2015 has been completed, awaiting a final assessment notice. Income tax returns filed in Puerto Rico for 2013 and afterare open for examination. Australia income tax returns for calendar years 2012 and after are open for examination, with 2014 and 2015currently under risk review. New Zealand income tax returns for calendar year 2009 and after were under examination as ofDecember 31, 2017, with no other New Zealand returns being open for examination.NOTE 10 – BORROWINGSThe Company’s borrowings at December 31, 2017 and 2016, net of deferred financing costs and incorporating the impact of interestrate swaps on our effective interest rates, are summarized below:​As of December 31, 2017(Dollars in thousands)Maturity DateContractualFacilityBalance,GrossBalance,Net(3)StatedInterest RateEffectiveInterest Rate (1)Denominated in USDTrust Preferred Securities (USA)April 30, 2027$27,913 $27,913 $27,554 5.38%5.38%Bank of America Credit Facility (USA)November 28, 201955,000 31,000 31,000 4.57%4.57%Bank of America Line of Credit (USA)October 31, 20195,000 ---4.57%4.57%Cinema 1, 2, 3 Term Loan (USA)September 1, 201919,500 19,500 19,105 3.25%3.25%Minetta & Orpheum Theatres Loan (USA)June 1, 20187,500 7,500 7,470 4.13%4.13%U.S. Corporate Office Term Loan (USA)(4)January 1, 20279,719 9,719 9,582 4.64% / 4.44%4.61%Union Square Construction Financing(USA)December 29, 201957,500 8,000 5,033 5.81%5.81%Denominated in foreign currency ("FC")(2)NAB Corporate Loan Facility (AU)June 30, 201951,970 30,869 30,781 3.66%3.66%Westpac Bank Corporate (general/non-construction) Credit Facility (NZ)December 31, 201924,850 ----3.70%3.70%Westpac Bank Corporate (construction)Credit Facility (NZ)December 31, 201912,780 ----3.70%3.70%Total$271,732 $134,501 $130,525 (1) Both interest rate derivatives associated with the Trust Preferred Securities and Bank of America Credit Facility expired in October 2017 so the effective interest rate no longer applies as ofDecember 31, 2017.(2) The contractual facilities and outstanding balances of the FC-denominated borrowings were translated into U.S. dollars based on exchange rates as of December 31, 2017.(3) Net of deferred financing costs amounting to $4.0 million.(4) In June 2017 we received $1.5M in additional financing on our new U.S. Corporate Headquarters with Citizens Asset Finance, Inc. due to the reappraisal of the property. As of December 31, 2016(Dollars in thousands)Maturity DateContractualFacilityBalance,GrossBalance,Net(3)StatedInterest RateEffectiveInterest Rate (1)Denominated in USDTrust Preferred Securities (USA)April 30, 2027$27,913 $27,913 $27,340 4.89%5.20%Bank of America Credit Facility (USA)November 28, 201955,000 39,950 39,759 3.27%3.90%Bank of America Line of Credit (USA)October 31, 20175,000 ----3.77%3.77%Cinema 1, 2, 3 Term Loan (USA)(4)September 1, 201919,901 19,901 19,356 3.25%3.25%Minetta & Orpheum Theatres Loan (USA)(4)June 1, 20187,500 7,500 7,398 3.38%3.38%U.S. Corporate Office Term Loan (USA)(4)January 1, 20278,363 8,363 8,239 4.64%4.64%Union Square Construction Financing (USA)(4)December 29, 201957,500 8,000 4,751 4.52%4.52%Denominated in FC (2)NAB Corporate Loan Facility (AU)June 30, 201948,080 28,558 28,421 2.64%2.64%Westpac Bank Corporate Credit Facility (NZ)March 31, 201836,877 8,350 8,350 3.80%3.80%Total$266,134 $148,535 $143,614 (1) Effective interest rate includes the impact of interest rate derivatives hedging the interest rate risk associated with Trust Preferred Securities and Bank of America Credit Facility that wereoutstanding as of December 31, 2016.(2) The contractual facilities and outstanding balances of the FC-denominated borrowings were translated into U.S. dollar based on exchange rates as of December 31, 2016.(3) Net of deferred financing costs amounting to $4.9 million.(4) The loan for our Minetta & Orpheum Theatres was obtained from Santander Bank. The term loan for our Cinema 1,2,3 Theatre was refinanced during the third quarter of 2016 with ValleyNational Bank. The term loan, which is collateralized by our new U.S Corporate Headquarters office building, was obtained with Citizens Asset Finance, Inc. In December 2016, wesuccessfully negotiated the construction financing for our Union Square redevelopment project, $8.0 million of which was advanced from the total construction loan limit of$57.5 million.87 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our loan arrangements are presented, net of the deferred financing costs, on the face of our consolidated balance sheet as follows:Dollars in thousandsBalance Sheet CaptionDecember 31, 2017December 31, 2016Debt - current portion$8,109 $567 Debt - long-term portion94,862 115,707 Subordinated debt27,554 27,340 Total borrowings$130,525 $143,614 Debt denominated in USDTrust Preferred Securities (“TPS”)On February 5, 2007, we issued $51.5 million in 20-year fully subordinated notes to a trust over which we have significant influence,which in turn issued $51.5 million in securities. Of the $51.5 million, $50.0 million in TPS were issued to unrelated investors in aprivate placement and $1.5 million of common trust securities were issued by the trust to Reading called “Investment in ReadingInternational Trust I” on our balance sheets. Effective May 1, 2012, the interest rate on our Trust Preferred Securities changed from afixed rate of 9.22%, which was in effect for five years, to a variable rate of three month LIBOR plus 4.00%, which will reset each quarterthrough the end of the loan unless we exercise our right to re-fix the rate at the current market rate at that time. There are no principalpayments due until maturity in 2027 when the notes and the trust securities are scheduled to be paid in full. We may pay off the debtafter the first five years at 100% of the principal amount without any penalty. The trust is essentially a pass through, and the transactionis accounted for on our books as the issuance of fully subordinated notes. The credit facility includes a number of affirmative andnegative covenants designed to monitor our ability to service the debt. The most restrictive covenant of the facility requires that wemust maintain a fixed charge coverage ratio at a certain level. However, on December 31, 2008, we secured a waiver of all financialcovenants with respect to our TPS for a period of nine years (through December 31, 2017), in consideration of the payment of$1.6 million, consisting of an initial payment of $1.1 million, a payment of $270,000 made in December 2011, and a payment of$270,000 in December 2014. The covenant wavier expired January 1, 2018 so covenant compliance will begin starting with Q1 2018.During the first quarter of 2009, we took advantage of the then current market illiquidity for securities such as our TPS to repurchase$22.9 million in face value of those securities through an exchange of $11.5 million worth of marketable securities purchased duringthe period for the express purpose of executing this exchange transaction with the third party holder of these TPS. During the twelvemonths ended 2009, we amortized $106,000 of discount to interest income associated with the holding of these securities prior to theirextinguishment. On April 30, 2009, we extinguished $22.9 million of these TPS, which resulted in a gain on retirement of subordinateddebt (TPS) of $10.7 million net of loss on the associated write-off of deferred loan costs of $749,000 and a reduction in our Investmentin Reading International Trust I from $1.5 million to $838,000.During the three years ended December 31, 2017, we paid $1.4 million in each year in preferred dividends to unrelated investors thatare included in interest expense. At December 31, 2017 and 2016, we had preferred dividends payable of $250,000 and $184,000,respectively. Interest payments for this loan are required every three months.Bank of America Credit FacilityOn March 3, 2016, we amended our $55.0 million credit facility with Bank of America to permit real property acquisition loans. Thisamendment was subject to the provision that the consolidated leverage ratio would be reduced by 0.25% from the established levels inthe credit facility during the period of such borrowing subject further to a repayment of such borrowings on the earlier of the eighteenmonths from the date of such borrowing or the maturity date of the credit agreement. Such modification was not considered substantialunder US GAAP.Bank of America Line of CreditIn October 2016, the term of this line of credit was extended for another two (2) years until October 31, 2019. Such modification wasnot considered to be substantial under US GAAP.Cinemas 1,2,3 Term Loan and Line of CreditOn August 31, 2016, Sutton Hill Properties LLC (“SHP”), a 75% subsidiary of RDI, refinanced its $15 million Santander Bank termloan with a new lender, Valley National Bank. This new $20 million loan is collateralized by our Cinema 1,2,3 property and bears aninterest rate of 3.25% per annum, with principal installments and accruing interest paid monthly. The new loan matures onSeptember 1, 2019, with a one-time option to extend maturity date for another year.88 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Minetta and Orpheum Theatres Term LoanIn May 2013, we refinanced our Liberty Theaters loan with a $7.5 million loan, secured by our Minetta and Orpheum theatres, thusreleasing the Royal George Theatre from the security and leaving it unencumbered. This new loan has a maturity date of June 1, 2018,and an interest rate of 2.75% above LIBOR. We are currently working on a long term renewal with the current lender Santander.Union Square Construction FinancingOn December 29, 2016, we closed our new construction finance facilities totaling $57.5 million to fund the non-equity portion of theanticipated construction costs of the redevelopment of our property at 44 Union Square in New York City. The combined facilitiesconsist of $50 million in aggregate loans (comprised of three loan tranches) from Bank of the Ozarks (“BOTO”), and a $7.5 millionmezzanine loan from Tammany Mezz Investor, LLC, an affiliate of Fisher Brothers. As of December 31, 2016, Bank of the Ozarksadvanced $8.0 million to repay the existing $8.0 million loan with East West Bank.Presented in the table below is the breakdown of the Union Square construction financing as of December 31, 2017: (Dollars in thousands) Facility Limits and Advances Financing ComponentLender Facility Limit Advanced-to-Date RemainingFacility Interest Rate(1) Maturity Date(2)Mezzanine loanTammany Mezz InvestorLLC $7,500 $-- $7,500 Greater of (i) 10.50% and (ii)Adjusted LIBOR + 10% December 29, 2019Senior loanBank of the Ozarks 8,000 8,000 -- Greater of (i) 4.75% and (ii)Adjusted LIBOR + 4.25% December 29, 2019Building loanBank of the Ozarks 31,130 -- 31,130 Greater of (i) 4.75% and (ii)Adjusted LIBOR + 4.25% December 29, 2019Project loanBank of the Ozarks 10,870 -- 10,870 Greater of (i) 4.75% and (ii)Adjusted LIBOR + 4.25% December 29, 2019Total Union Square Financing $57,500 $8,000 $49,500 (1) Not to exceed the New York State maximum lawful borrowing rate, which typically is 16%.(2) Allowable for up to two (2) extension request options, one (1) year for each extension request.U.S. Corporate Office Term LoanOn December 13, 2016, we obtained a ten-year $8.4 million mortgage loan on our new Los Angeles Corporate Headquarters at a fixedannual interest rate of 4.64%. This loan provided for a second loan upon completion of certain improvements. On June 26, 2017, weobtained a further $1.5 million under this provision at a fixed annual interest rate of 4.44%.Debt denominated in foreign currenciesAustralian NAB Corporate Loan FacilityOn December 23, 2015, we amended our Reading Entertainment Australia Term Loan and Corporate Credit Facility with NationalAustralia Bank (“NAB”), from a three-tiered facility comprised of (1) the Bank Bill Discount Facility with a limit of AU$61.3 million,an interest rate of 2.35% above the Bank Bill Swap Bid Rate (BBSY), and amortization at AU$2.0 million per year; (2) the BillDiscount Facility – Revolving with a limit of AU$10.0 million and an interest rate of 1.50% above the BBSY on any undrawn portion;and (3) the Bank Guarantee Facility with a facility limit of AU$5.0 million, into a $48.1 million (AU$66.5 million) RevolvingCorporate Markets Loan facility. The new facility has an interest rate of 0.95% above BBSY on any outstanding borrowings and anunchanged maturity date of June 30, 2019. In addition, we will incur a facility fee of 0.95% per annum. We also have a $3.6 million(AU$5.0 million) Bank Guarantee facility at a rate of 1.90% per annum. The modifications of this particular term loan were notconsidered to be substantial under US GAAP.New Zealand Westpac Bank Corporate Credit FacilityOn December 15, 2017, we extended the maturity of the 1st tranche (general/non-construction credit line) of our Westpac CorporateCredit Facility to December 31, 2019. Prior to this on April 26, 2017, we extended the maturity of our entire Westpac Corporate CreditFacility, $37.6 million (NZ$53.0 million) to December 31, 2018, from March 31, 2018. We are currently working on a longer-termrenewal of our Westpac Corporate Credit Facility which will replace the existing facility.In October 2016, we amended our $34.8 million (NZ$50.0 million) credit facility with Westpac Bank to provide a $2.1 million(NZ$3.0 million) increase, thereby amending the total credit facility to $36.9 million (NZ$53.0 million). The increase in the creditfacility was specific to the second tranche of our credit facility which is a dedicated construction facility, now of $12.5 million(NZ$18.0 million) from the original limit of $10.4 million (NZ$15.0 million). No drawdowns have been made against the secondtranche to date. This modification was not considered substantial under U.S. GAAP.89 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Previously, on May 21, 2015, we refinanced our existing New Zealand Corporate Credit Facility with a $34.2 million(NZ$50.0 million) facility with the same bank (Westpac Bank), bearing an interest rate of 1.75% above Bank Bill Bid Rate andmaturing on March 31, 2018. The facility is broken into two tranches, one a $23.9 million (NZ$35.0 million) credit facility and thesecond tranche for a $10.3 million (NZ$15.0 million) facility to be used for construction funding.As of December 31, 2017, our aggregate amount of future principal debt payments is estimated as follows:(Dollars in thousands)Future Principal Debt Payments2018$8,139 201989,190 2020248 2021258 2022270 Thereafter36,400 Total future principal debt payments$134,505 The estimated amount of future principal payments in U.S. dollars is subject to change because the payments in U.S. dollars on the debtdenominated in foreign currencies, which represents a significant portion of our total outstanding debt balance, will fluctuate based onthe applicable foreign currency exchange rates.NOTE 11 – PENSION AND OTHER LIABILITIESOther liabilities including pension are summarized as follows:(Dollars in thousands)December 31, 2017December 31, 2016Current liabilitiesLiability for demolition and remediation costs(1)$2,781 $5,914 Lease liability(2)5,900 5,900 Accrued pension(3)2,907 2,223 Security deposit payable91 77 Other--17 Other current liabilities$11,679 $14,131 Other liabilities Straight-line rent liability$13,444 $12,413 Accrued pension(3)5,228 5,732 Lease make-good provision5,648 5,146 Environmental reserve1,656 1,656 Interest rate swap--58 Deferred Revenue - Real Estate18 4,398 Acquired leases186 267 Other469 495 Other liabilities$26,649 $30,165 (1) Refer to Note 19 – Insurance Recoveries on Impairment and Related Losses due to Earthquake for details on the estimation of the demolition costs for our Courtenay Central parkingstructure. (2) Represents the lease liability of the option associated with the ground lease purchase of the Village East Cinema. See below for more information.(3) Represents the pension liability associated with the Supplemental Executive Retirement Plan explained below.Lease Liability - Village East Purchase OptionOur Village East lease includes a call option pursuant to which we may purchase the cinema ground lease for $5.9 million at the end ofthe lease term in June 2020. Additionally, our lease has a put option pursuant to which SHC may require our Company to purchase allor a portion of SHC’s interest in the existing cinema lease and the cinema ground lease at any time between July 1, 2013 andDecember 4, 2019. SHC’s put option may be exercised on one or more occasions in increments of not less than $100,000 each.Because our late Chairman, Chief Executive Officer, and controlling shareholder, Mr. James J. Cotter, Sr. was also the managingmember of SHC, RDI and SHC are considered entities under common control. As a result, we have recorded the Village East Cinemabuilding as a property asset of $4.7 million on our balance sheet based on the cost carry-over basis from an entity under commoncontrol with a corresponding lease liability of $5.9 million presented under other liabilities which accreted up to the $5.9 millionliability through July 1, 2013 (see Note 18 – Related Parties). As the put option has been exercisable by SHC since July 1, 2013, thelease liability has been classified as part of other current liabilities.90 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Pension Liability - Supplemental Executive Retirement PlanOn August 29, 2014, the Supplemental Executive Retirement Plan (“SERP”) that was effective since March 1, 2007, was ended andreplaced with a new pension annuity. As a result of the termination of the SERP program, the accrued pension liability of $7.6 millionwas reversed and replaced with a new pension annuity liability of $7.5 million. The valuation of the liability is based on the presentvalue of $10.2 million discounted at 4.25% over a 15-year term, resulting in a monthly payment of $56,944 payable to the estate of Mr.James J. Cotter, Sr. The discount rate of 4.25% has been applied since 2014 to determine the net periodic benefit cost and plan benefitobligation and is expected to be used in future years. The discounted value of $2.7 million (which is the difference between theestimated payout of $10.2 million and the present value of $7.5 million) will be amortized and expensed based on the 15-year term. Inaddition, the accumulated actuarial loss of $3.1 million recorded, as part of other comprehensive income, will also be amortized basedon the 15-year term.As a result of the above, included in our other current and non-current liabilities are accrued pension costs of $8.1 million and$8.0 million as of December 31, 2017 and 2016, respectively. The benefits of our pension plans are fully vested and therefore noservice costs were recognized 2016 and 2015. Our pension plans are unfunded. The change in the SERP pension benefit obligation and the funded status are as follows:(Dollars in thousands)December 31, 2017December 31, 2016Benefit obligation at January 1$7,955 $7,775 Interest cost180 180 Actuarial gain----Benefit obligation at December 31$8,135 $7,955 Funded status at December 31$(8,135)$(7,955)Amounts recognized in the balance sheet consists of: (Dollars in thousands) December 31, 2017 December 31, 2016Current liabilities $2,907 $2,223 Other liabilities - Non current 5,228 5,732 Total pension liability $8,135 $7,955 The components of the net periodic benefit cost and other amounts recognized in other comprehensive income are as follows: (Dollars in thousands) December 31, 2017 December 31, 2016Net periodic benefit cost Interest cost $180 $180 Amortization of prior service costs -- --Amortization of net actuarial gain 127 129 Net periodic benefit cost $307 $309 Items recognized in other comprehensive income Net loss $-- $--Amortization of prior service cost -- --Amortization of net loss (127) (129)Total recognized in other comprehensive income $(127) $(129)Total recognized in net periodic benefit cost and other comprehensive income $180 $180 Items not yet recognized as a component of net periodic pension cost consist of the following:(Dollars in thousands)December 31, 2017December 31, 2016Unamortized actuarial loss$2,592 $2,719 Accumulated other comprehensive loss$2,592 $2,719 The estimated unamortized actuarial loss for the defined benefit pension plan that will be amortized from accumulated othercomprehensive income into net periodic benefit cost over the next fiscal year will be $207,000 (gross of any tax effects).91 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following table presents estimated future benefit payments for the next five years and thereafter as of December 31, 2017:(Dollars in thousands)Estimated FuturePension Payments2018$2,907 2019684 2020684 2021684 2022684 Thereafter2,492 Total pension payments$8,135 Lease Make-Good ProvisionWe recognize obligations for future leasehold restoration costs relating to properties that we use mostly on our cinema operationsunder operating lease arrangements. Each lease is unique to the negotiated conditions with the lessor, but in general most leases requirefor the removal of cinema-related assets and improvements. There are no assets specifically restricted to settle this obligation.A reconciliation of the beginning and ending carrying amounts of the lease make-good provision is presented in the following table:(Dollars in thousands) As of and for the yearended December 31, 2017 As of and for the year endedDecember 31, 2016Lease make-good provision, at January 1$5,146 $5,228 Liabilities incurred during the year--35 Liabilities settled during the year--(365)Accretion expense282 262 Effect of changes in foreign currency220 (14)Lease make-good provision, at December 31$5,648 $5,146 NOTE 12 - COMMITMENTS AND CONTINGENCIESThe foregoing table identifies our known commitments and contingencies as of December 31, 2017: CategoriesNature; Company Policy on Recognition and/or Disclosure(2)Discussion ReferenceCOMMITMENTS · Lease commitments(1)Off-balance sheet disclosures relating to future minimum leasepayments, mostly related to our operating cinemas on leased-facility model.Refer to Note 17 - LeasesCONTINGENCIES · Insurance gain contingencies andderivative loss contingencies ondemolition costs relating to recentearthquake incidentGain contingencies relating to an insurance claim is recognizedonce collectability is probable; related loss contingencies isrecognized when there is probable likelihood of incurrence andamount is reasonably estimable.Refer to Note 19 – InsuranceRecoveries on Impairment andRelated Losses Recoverable dueto Earthquake.· Other Litigation matters, notablyDerivative Litigation involving James J.Cotter Jr.Similar policies for gain and loss contingencies as noted above.Refer below for furtherdiscussion.(1) Starting January 1, 2019, lease commitments relating to our operating cinema leases will be brought forward to our Consolidated Balance Sheet, as requiredby the new lease accounting model. (2) Consistent with our accounting policy for loss and gain contingencies discussed in Note 2 – Summary of Significant Accounting Policies and furtherdiscussed in more details below.92 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Litigation MattersWe are currently involved in certain legal proceedings and, as required, have accrued estimates of probable and estimable losses for theresolution 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 potentialsettlement amounts until received. In Australia, the prevailing party is usually entitled to recover its attorneys’ fees, whichrecoveries typically work out to be approximately 60% of the amounts actually spent where first-class legal counsel is engaged atcustomary rates. Where we are a plaintiff, we have likewise made no provision for the liability for the defendant’s attorneys' fees inthe 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 bereasonably estimated. In our opinion, any claims and litigation in which we are currently involved are not reasonably likely to havea material adverse effect on our business, results of operations, financial position, or liquidity. It is possible, however, that futureresults of the operations for any particular quarterly or annual period could be materially affected by the ultimate outcome of thelegal proceedings. From time-to-time, we are involved with claims and lawsuits arising in the ordinary course of our business thatmay include contractual obligations, insurance claims, tax claims, employment matters, and anti-trust issues, among other matters.All of these matters require significant judgments based on the facts known to us. These judgments are inherently uncertain and canchange significantly when additional facts become known. We provide accruals for matters that have probable likelihood ofoccurrence and can be properly estimated as to their expected negative outcome. We do not record expected gains until the proceedsare received by us. However, we typically make no accruals for potential costs of defense, as such amounts are inherently uncertain anddependent upon the scope, extent and aggressiveness of the activities of the applicable plaintiff.Environmental and Asbestos Claims on Reading Legacy OperationsCertain of our subsidiaries were historically involved in railroad operations, coal mining, and manufacturing. Also, certain of thesesubsidiaries 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 unanticipated environmental conditions atproperties that we have acquired for development. These environmental conditions can increase the cost of such projects andadversely affect the value and potential for profit of such projects. We do not currently believe that our exposure under applicableenvironmental laws is material in amount.From time-to-time, there are claims brought against us relating to the exposure of former employees of our railroad operations toasbestos and coal dust. These are generally covered by an insurance settlement reached in September 1990 with our insuranceproviders. However, this insurance settlement does not cover litigation by people who were not our employees and who may claimsecond-hand exposure to asbestos, coal dust and/or other chemicals or elements now recognized as potentially causing cancer inhumans. Our known exposure to these types of claims, asserted or probable of being asserted, is not material.Tax Audit/LitigationThe Internal Revenue Service (the “IRS”) examined the tax return of Craig Corporation (“CRG”) for its tax year ended June 30, 1997.CRG was a stand-alone entity in the year of audit but is now a wholly-owned subsidiary of the Company. In Tax Court, CRG and theIRS agreed to compromise the claims made by the IRS against CRG, and the court order was entered on January 6, 2011. As ofDecember 31, 2017, the remaining federal tax obligation was $2.8 million. For additional information, see Note 9 – Income Taxes.Cotter Jr. Related Litigation Matters (including legal costs coverage)The following table provides a list of legal matters and current status relating to James J. Cotter, Jr’s (“Cotter, Jr.”) employmenttermination, Mr. Cotter, Jr.’s subsequent derivative action brought against the Company and all of our Directors alleging, among otherthings, that such termination violated the fiduciary duties of such Directors, and Mr. Cotter, Jr.’s efforts to cause a change of control ofthe Company, with detailed discussions follow: DescriptionPlaintiffFiled withCurrent StatusJames J. Cotter, Jr. Legal Cases (collectively “Cotter, Jr. Derivative Actions”) 93 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. · Cotter, Jr. DerivativeLitigation against all Directors onmatters other than the handling bythe Directors of the Patton VisionUnsolicited Indication of InterestCotter, Jr.Nevada District CourtClaims against Directors Judy Codding, William Gould, EdwardL. Kane, Douglas McEachern and Michael Wrotniak weredismissed on December 29, 2017; court trial for the remainingclaim (Cotter vs. Cotter) was postponed at Cotter, Jr.’srequest. No new trial date has been set, and it is anticipated thatvarious summary judgment motions being brought by theCompany and the Defendant Directors will be heard before thecase is tried.· Cotter, Jr. Derivative Litigationagainst all Directors re handling bythe Directors of unsolicitedindication of interest by PattonVision, LLC.Cotter, Jr.Nevada District CourtDismissed as to all Directors on December 29, 2017.· Direct Case against the Companyseeking reimbursement andadvancement of attorney’s feesincurred with respect to theEmployment ArbitrationCotter, Jr.Nevada District CourtSummary judgment entered in favor of the Company onOctober 3, 2016.· Employment ArbitrationCotter, Jr.American ArbitrationAssociationIn Discovery Phase: hearing anticipated in October, 2018.· T2 Partners Derivative ComplaintT2PartnersManagementNevada District CourtSettled on October 6, 2016, without the payment of anymonetary consideration or any reimbursement of attorneys fees.James J. Cotter, Jr., Litigation Matters.The James J. Cotter, Jr. Derivative Litigation: On June 12, 2015, the Board of Directors terminated James J. Cotter, Jr. as the Presidentand Chief Executive Officer of our Company. That same day, Mr. Cotter, Jr. filed a lawsuit, styled as both an individual and aderivative action, and titled “James J. Cotter, Jr., individually and derivatively on behalf of Reading International, Inc. vs. MargaretCotter, et al.” Case No,: A-15-719860-V, Dept. XI, against our Company and each of our then sitting Directors (Ellen Cotter, MargaretCotter, Guy Adams, William Gould, Edward Kane, Douglas McEachern, and Tim Storey) in the Eighth Judicial District Court of theState of Nevada for Clark County (the “Nevada District Court”). Since that date, our Company has been engaged in ongoing litigationwith Mr. Cotter, Jr. with respect to his claims against our Directors. Mr. Cotter, Jr. has over this period of time twice amended hiscomplaint, removing his individual claims and withdrawing his claims against Tim Storey (but reserving the right to reinstitute suchclaims), adding claims relating to actions taken by our Board since the filing of his original complaint and adding as defendants two ofour directors who were not on our Board at the time of his termination: Judy Codding and Michael Wrotniak. Mr. Cotter, Jr.’s lawsuit,as amended from time to time, is referred to herein as the “Cotter Jr. Derivative Action” and his complaint, as amended from time totime, is referred to herein as the “Cotter Jr. Derivative Complaint.” The defendant directors named in the Cotter Jr. DerivativeComplaint, from time to time, are referred to herein as the “Defendant Directors.”The Cotter Jr. Derivative Complaint alleges among other things, that the Defendant Directors breached their fiduciary duties to theCompany by terminating Mr. Cotter, Jr. as President and Chief Executive Officer, continuing to make use of the Executive Committeethat has been in place for more than the past ten years (but which no longer includes Mr. Cotter, Jr. as a member), making allegedlypotentially misleading statements in our Company’s press releases and filings with the SEC, paying certain compensation to EllenCotter, allowing the Cotter Estate to make use of Class A Stock to pay for the exercise of certain long outstanding stock options toacquire 100,000 shares of Class B Stock (the “Cotter Estate Stock Options”) held of record by the Cotter Estate and determined by theNevada District Court to be assets of the Cotter Estate, and allowing Ellen Cotter and Margaret Cotter to vote the 100,000 shares ofClass B Stock issued upon the exercise of such options, appointing Ellen Cotter as President and Chief Executive Officer, appointingMargaret Cotter as Executive Vice President-Real Estate Management and Development-NYC, and the way in which the Boardhandled an unsolicited indication of interest made by a third party to acquire all of the stock of our Company. In the lawsuit, Mr.Cotter, Jr. seeks reinstatement as President and Chief Executive Officer, a declaration that Ellen Cotter and Margaret Cotter may notvote the above referenced 100,000 shares of Class B Stock, and alleges as damages fluctuations in the price for our Company’s sharesafter the announcement of his termination as President and Chief Executive Officer and certain unspecified damages to our Company’sreputation.94 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. On December 29, 2017, the Nevada District Court entered its final order memorializing its determination on December 11, 2017 thatMr. Cotter, Jr., had failed to raise any genuine issue of material fact relating to the disinterestedness and/or independence of DirectorsCodding, Gould, Kane, McEachern and Wrotniak (the “Dismissed Directors”), and dismissing with prejudice all claims against them.Mr. Cotter, Jr., has appealed this final order to the Nevada Supreme Court. In that same final order, the Nevada District Court alsomemorialized its dismissal of all claims based upon what the Defendant’ Directors action in regard to what Mr. Cotter, Jr., characterizeas an “offer” by Patton Vision, LLC (“Patton Vision”), to purchase all of the outstanding stock of our Company. The Nevada DistrictCourt ruled that Mr. Cotter, Jr., had failed “to show damages relating to an unenforceable, unsolicited, nonbinding offer.” Mr. Cotter,Jr., has appealed to the Nevada Supreme Court the dismissal with prejudice of the Dismissed Directors. The Defendant Directors havetaken advantage of the appeal by Mr. Cotter, Jr., to appeal certain other ruling by the Nevada District Court pertaining to other motionsfor summary judgement brought by the Defendant Directors.Also on December 29, 2017, the Board of Directors, by votes of 5 to 1 with 3 directors abstaining, voted to ratify the decision made bythe Board of Directors on June 12, 2017, to terminate Mr. Cotter, Jr., as our Company’s President and Chief Executive Officer and toratify the decision made by the Board’s Compensation and Stock Options Committee on September 21, 2015, to permit the Estate ofJames J. Cotter, Sr., to use shares of Class A Common Stock to exercise the Cotter Estate Stock Options. Voting in favor of theratification motions were directors Codding, Gould, Kane, McEachern and Wrotniak. Voting against ratification was Mr. Cotter,Jr. Abstaining were directors Guy Adams, Ellen Cotter and Margaret Cotter. The trial of the remaining issues in the case against the remaining defendants in that case, which was scheduled to begin on January 8,2018, has been continued by the Nevada District Court at the request of Mr. Cotter, Jr. Mr. Cotter, Jr.’s request for a continuance wasbrought before the Nevada District Court on Monday, January 8, 2018, and came as a surprise to our Company and the DefendantDirectors since Plaintiff counsel had advised the Nevada District Court as late as the afternoon of Friday, January 5, 2018, that Mr.Cotter, Jr. was prepared to begin jury selection that following Monday. Mr. Cotter, Jr.’s motion request for a continuance was basedon an asserted medical condition (the nature of which has not been disclosed to our Company or the Defendant Directors). No new trialdate has been set. In the meantime, the Nevada District Court has granted the Defendant Directors and the Company leave to file renewed motions forsummary judgment arising out of the Nevada District Court’s dismissal of the Dismissed Directors, including a motion based on the factthat Mr. Cotter, Jr.’s claims regarding his termination and the exercise of the Cotter Estate Stock Options have since been ratified by theDismissed Directors. The Nevada District Court has granted limited discovery regarding the summary judgment motion based uponratification. The Company expects that these renewed motions for summary judgment will be filed in April 2018, and the next statusconference with the Nevada District Court has been set for April 6, 2018.The James J. Cotter, Jr., Employment Arbitration: In addition, our Company is in arbitration with Mr. Cotter, Jr. (ReadingInternational, Inc. v. James J. Cotter, AAA Case No. 01-15-0004-2384, filed July 2015) (the “Cotter Jr. Employment Arbitration”)seeking declaratory relief and defending claims asserted by Mr. Cotter, Jr. On January 20, 2017, Mr. Cotter Jr. filed a First AmendedCounter-Complaint which includes claims of breach of contract, contractual indemnification, retaliation, wrongful termination inviolation of California Labor Code § 1102.5, wrongful discharge, and violations of California Code of Procedure § 1060 based onallegations of unlawful and unfair conduct. Mr. Cotter, Jr. seeks compensatory damages estimated by his counsel at more than$1.2 million, plus unquantified special and punitive damages, penalties, interest and attorney’s fees. On April 9, 2017, the Arbitratorgranted without leave to amend the Company’s motion to dismiss Mr. Cotter, Jr.’s claims for retaliation, violation of labor code§1102.5 and wrongful discharge in violation of public policy. The Cotter Jr. Employment Arbitration is in the discovery phase. The James J. Cotter, Jr., Fee Reimbursement Litigation: Mr. Cotter, Jr. also brought a direct action in the Nevada District Court (JamesJ. Cotter, Jr. v. Reading International, Inc., a Nevada corporation; Does 1-100 and Roe Entities, 1-100, inclusive, Case No. A-16-735305-B) seeking advancement of attorney’s fees incurred in the Cotter Jr. Employment Arbitration. Summary judgment was enteredagainst Mr. Cotter, Jr. with respect to that direct action on October 3, 2016. 95 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The T2 Derivative Litigation: For a period of approximately 12 months, between August 6, 2015 and August 4, 2016, our Companyand our directors other than Mr. Cotter, Jr. were subject to a derivative lawsuit filed in the Nevada District Court captioned T2 PartnersManagement, LP, a Delaware limited partnership, doing business as Kase Capital Management; T2 Accredited Fund, LP, a Delawarelimited partnership, doing business as Kase Fund; T2 Qualified Fund, LP, a Delaware limited partnership, doing business as KaseQualified Fund; Tilson Offshore Fund, Ltd, a Cayman Islands exempted company; T2 Partners Management I, LLC, a Delaware limitedliability company, doing business as Kase Management; T2 Partners Management Group, LLC, a Delaware limited liability company,doing business as Kase Group; JMG Capital Management, LLC, a Delaware limited liability company, Pacific Capital Management,LLC, a Delaware limited liability company (the “T2 Plaintiffs”), derivatively on behalf of Reading International, Inc. vs. MargaretCotter, Ellen Cotter, Guy Adams, Edward Kane, Douglas McEachern, Timothy Storey, William Gould and Does 1 through 100,inclusive, as defendants, and, Reading International, Inc., a Nevada corporation, as Nominal Defendant. That complaint wassubsequently amended (as amended the “T2 Derivative Complaint”) to add as defendants Directors Judy Codding and MichaelWrotniak (collectively with the directors initially named the “T2 Defendant Directors”) and S. Craig Tompkins, our Company’s legalcounsel (collectively with the T2 Defendant Directors, the “T2 Defendants”). The T2 Derivative Action was settled pursuant to aSettlement Agreement between the parties dated August 4, 2016, which as modified was approved by the Nevada District Court onOctober 6, 2016. The District Court’s Order provided for the dismissal with prejudice of all claims contained in the T2 Plaintiffs’ FirstAmended Complaint and provide that each side would be responsible for its own attorneys’ fees. In the joint press release issued by our Company and the T2 Plaintiffs on July 13, 2016, representatives of the T2 Plaintiffs stated asfollows: "We are pleased with the conclusions reached by our investigations as Plaintiff Stockholders and now firmly believe that theReading Board of Directors has and will continue to protect stockholder interests and will continue to work to maximize shareholdervalue over the long-term. We appreciate the Company's willingness to engage in open dialogue and are excited about the Company'sprospects. Our questions about the termination of James Cotter, Jr., and various transactions between Reading and members of theCotter family-or entities they control-have been definitively addressed and put to rest. We are impressed by measures the ReadingBoard has made over the past year to further strengthen corporate governance. We fully support the Reading Board and managementteam and their strategy to create stockholder value.”The T2 Plaintiffs alleged in their T2 Derivative Complaint various violations of fiduciary duty, abuse of control, gross mismanagementand corporate waste by the T2 Defendant Directors. More specifically the T2 Derivative Complaint sought the reinstatement of JamesJ. Cotter, Jr. as President and Chief Executive Officer, an order setting aside the election results from the 2015 Annual Meeting ofStockholders, based on an allegation that Ellen Cotter and Margaret Cotter were not entitled to vote the shares of Class B CommonStock held by the Cotter Estate and the Cotter Trust, and certain monetary damages, as well as equitable injunctive relief, attorney feesand costs of suit. In May 2016, the T2 Plaintiffs unsuccessfully sought a preliminary injunction (1) enjoining the Inspector ofElections from counting at our 2016 Annual Meeting of Stockholders any proxies purporting to vote either the 327,808 Class B sharesheld of record by the Cotter Estate or the 696,080 Class B shares held of record by the Cotter Trust, and (2) enjoining Ellen Cotter,Margaret Cotter and James J. Cotter, Jr. from voting the above referenced shares at the 2016 Annual Meeting of Stockholders. Thisrequest for preliminary injunctive relief was denied by the Nevada District Court after a hearing on May 26, 2016.The Cotter Trust Litigation: Up until his death on September 13, 2014, James J. Cotter, Sr., the father of Ellen Cotter, James J. Cotter, Jr. and Margaret Cotter, wasour controlling stockholder, having the sole power to vote approximately 66.9% of the outstanding voting stock of theCompany. Under applicable Nevada Law, a stockholder holding more than 2/3rds of the Company’s voting stock has the power at anytime, with or without cause, to remove any one or more directors (up to and including the entire board of directors) by written consenttaken without a meeting of the stockholders.Since the death of Mr. Cotter, Sr., disputes have arisen among Ellen Cotter, James J. Cotter, Jr. and Margaret Cotter concerning thevoting control and disposition of those shares. At the present time, Mr. Cotter, Jr., is seeking the in the Superior Court of the State ofCalifornia, County of Los Angeles (the “California Superior Court”), in the case captioned In re James J. Cotter Living Trust datedAugust 1, 2000 (Case No. BP159755) (the “Trust Case”) the appointment of a trustee ad litem to market and potentially sell acontrolling interest in our Company. In light of our Board’s determination that it would be in the best interests of our Company andour stockholders generally to continue to pursue our Company’s business plan, and not to sell the Company at this time, the potentialdisruption to the achievement of that business plan and to the business and affairs of our Company generally if there were to be achange of control transaction at this time, the commitment of Ellen Cotter and Margaret Cotter to the pursuit and fulfilment of thatbusiness plan, our Company has made filings in the California Superior Court opposing such an appointment of a trustee ad litem.96 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As of December 31, 2017, according to the books of the Company, the Living Trust established by Declaration of Trust dated June 5,2013, by James J. Cotter, Sr. (the “Cotter Trust”), held of record 696,080 shares of our Class B Stock constituting approximately 41.4%of the voting power of our outstanding capital stock. According to the books of the Company, the Cotter Estate as of that date held ofrecord an additional 427,808 shares of Cass B Stock, constituting approximately 25.5% of the voting power of our outstanding capitalstock. We are advised, based upon public filings made by one or more of Ellen Cotter, Margaret Cotter and James J. Cotter, Jr. (the“Cotter Filings”) that the Cass B Stock currently held of record by the Cotter Estate will eventually pour over into the Cotter Trust. Weare further advised from the Cotter Filings that the Cotter Trust also provides for the establishment of a voting trust (the “Cotter VotingTrust”) which will eventually hold the Cass B Stock currently held by the Cotter Estate and the Cotter Trust. At the present time,however, such Cass B Stock is held of record by the Cotter Trust and the Cotter Estate, respectively.On December 22, 2014, the District Court of Clark County, Nevada, (the “Nevada District Court”) appointed Ellen Cotter and MargaretCotter as co-executors of the Cotter Estate. While no final ruling has been issued, the California Superior Court has, through theissuance of a Statement of Determination, in effect determined (subject to appeal) that Ellen Cotter and Margaret Cotter are the Co-Trustees of the Cotter Trust and that Margaret Cotter is the sole Trustee of the Voting Trust. Accordingly, the Company believes thatEllen Cotter and Margaret Cotter as the Co-Trustees of the Cotter Trust have voting control over the shares held by the Cotter Trust andas the Co-Executors of the Cotter Estate have voting control over the shares held by the Cotter Estate (including the 100,000 shares ofCass B Stock acquired by the Cotter Estate through the exercise of the Cotter Estate Stock Options) and which collectively represent66.9% of our Company’s Cass B Stock. Taking into account Ellen Cotter and Margaret Cotter’s personal holdings of voting stockEllen Cotter and Margaret Cotter have the power to vote Cass B Stock representing 71.9% of our Company’s outstanding votingpower. However, the California Superior Court’s ruling is subject to appeal, and no assurances can be given that Mr. Cotter, Jr., will notappeal the determination of the California Superior Court as to voting control over the Cass B Stock held by the Cotter Trust and/or theVoting Trust.We understand from public filings made by Ellen Cotter and Margaret Cotter and public filings made by James J. Cotter, that James J.Cotter, Jr. is the first alternate trustee of the Voting Trust, in the event that Margaret Cotter is unable or unwilling to serve as trustee.On February 8, 2017, James Cotter, Jr. filed in the Trust Case an Ex Parte Petition for Appointment of a trustee ad litem and of aguardian ad litem for the benefit of Cotter, Sr.’s, minor grandchildren (two of whom are the children of Margaret Cotter and three ofwhom are the children of James Cotter, Jr., and who are referred to herein as the “Cotter Grandchildren”). Mr. Cotter, Jr., seeks theappointment of a trustee ad litem, to evaluate the non-binding indication of interest sent by Patton Vision, to the Trustees of the CotterTrust to acquire the RDI shares held by the Cotter Trust at $18.50 per share (referred to in Mr. Cotter, Jr’s pleadings as the “Offer”) andto take reasonable steps to act on the “Offer” in the trustee’s sole discretion. Specifically, Mr. Cotter Jr. sought an order “granting thetrustee ad litem with full power, authority, and protections under the Cotter Trust and California trust law, as any other named trusteewould have, to evaluate the Offer, conduct due diligence, negotiate with Patton Vision or any other potential offerors, and take allactions necessary or appropriate to consummate the sale of the Cotter Trust’s RDI shares, including but not limited to:a.communicate solely with Patton Vision regarding their Offer to purchase the Cotter Trust’s RDI shares;b.receive solely and exclusively all offers for the purchase of the Cotter Trust’s RDI shares;c.enter into purchase and sale agreements with respect to the Cotter Trust’s RDI shares;d.take all actions necessary to carry out the terms, conditions, and obligations of any purchase and sale agreement with respect to theCotter Trust’s RDI shares, including negotiating any modifications thereto;e.receive all proceeds of sale from the Cotter Trust’s RDI shares;f.return to the co-trustees of the Cotter Trust, namely Margaret Cotter, Ellen Cotter, and James J. Cotter, Jr., net proceeds of the sale ofthe Cotter Trust’s RDI shares to be invested, managed and distributed in accordance with the terms of the Cotter Trust;g.hire investment advisors, tax advisors, accountants, attorneys , or any other advisors the trustee ad litem deems necessary andreasonable, in his or her sole discretion, to carry out his powers; and,h.temporarily suspending James J. Cotter, Jr., Margaret and Ellen’s powers with respect to all of the foregoing matters until furtherorder of this Court.” 97 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. On February 14, 2018, the California Superior Court issued its Statement of Decision announcing its determination to appoint atemporary trustee ad litem (the “TTAL”) “with the narrow and specific authority to obtain offers to purchase the RDI stock in thevoting trust, but not to exercise any other powers without court approval, specifically the sale of the company or any other powerspossessed by the trustees.” No TTAL has been appointed. The California Superior Court has directed the parties to either agree upona TTAL, or in the alternative to submit to the court three acceptable names. No time line is specified in the Statement of Decision forthe appointment of a TTAL or for the execution of such person’s charge to “obtain offers to purchase RDI stock in the voting trust.” Inso far as we are aware, based upon public filings and our internal records, at the present time the voting trust does not own any shares ofRDI stock. The shares which are anticipated to flow into the voting trust are, insofar as our Company is aware, currently owned by theCotter Estate and the Cotter Trust.The California Superior Court, in the Trust Case, has jurisdiction over the Cotter Trust, which as described in more detail above,currently owns 41.4% of our Class B Stock, and, at such time as the Cotter Estate is probated, may receive up to an additional 25.5% ofour Class B Stock, has jurisdiction over a potentially controlling block of our voting power. Should the California Superior Courtorder the sale of the Trusts’ Class B Stock and such sale be completed, then there may be a change of control of our Company,depending on, among other things, who the ultimate purchaser(s) of such shares might be, the number of shares of Class B Stockdistributed by the Cotter Estate to the Cotter Trust, and whether the California Superior Court orders a sale of all or only some portionto the Class B Stock held by the Cotter Trust. Costs of Litigation/Arbitration: Our Company is and was legally obligated to cover the costs and expenses incurred by our DefendantDirectors in defending the Cotter Jr. Derivative Action and the T2 Derivative Action. Furthermore, although in a derivative action thestockholder plaintiff seeks only damages or other relief for the benefit of our Company, and not for the stockholder plaintiff’sindividual benefit and, accordingly, although we are, at least in theory, only a nominal defendant, as a practical matter our Companyhas a direct interest in defending against Mr. Cotter’s claims and opposing the remedies he is seeking. Mr. Cotter, Jr. is, among otherthings, (a) seeking an order that our Board’s termination of Mr. Cotter, Jr. was ineffective and demanding, as a remedy, that he bereinstated as the President and Chief Executive Officer of our Company, (b) seeking an order limiting the use of our Board’s ExecutiveCommittee, and (c) asserting that our Company made has materially misleading statements in certain press releases and filings with theSEC. Accordingly, our Company is also incurring, on its own account, significant cost and expense defending the decision toterminate Mr. Cotter, Jr. as President and Chief Executive Officer, its board committee structure, and the adequacy of those pressreleases and filings, in addition to its costs incurred in responding to discovery demands and satisfying indemnity obligations to theDefendant Directors. Likewise, in connection with the T2 Derivative Action, our Company incurred substantial costs defending claimsrelated to the defense of claims relating to the termination of Mr. Cotter, Jr., opposing his reinstatement, and defending the conduct ofits annual meetings. Cost incurred in the Cotter Jr. Employment Arbitration and in the defense of the Cotter Jr. Attorney’s fees casewere direct costs of our Company.The Directors and Officer’s Insurance Policy, in the amount of $10 million, being used to cover a portion of the costs of defending theCotter Jr. Derivative Action, has been exhausted. We are now covering the defense costs of the Defendant Directors, in addition to ourown costs incurred in connection with the Cotter Jr. Derivative Action. In 2017, these out-of-pocket costs totaled approximately$4.0 million. We believe that approximately $1.7 million of this amount was spent in the months of November and December, inanticipation that the case would in fact go to trial on or about January 8, 2018, and accordingly will have only marginal salvage value.We have also incurred legal expense representing the interests of our Company in the Cotter Trust Litigation, opposing Mr. Cotter, Jr.’sEx Parte Motion to seek a guardian ad litem to market stock potentially representing a controlling interest in our Company without theinvolvement of our Board of Directors and without any safeguards to protect the interests of non-controlling stockholders.The Special Independent Committee. On August 7, 2017, our Board appointed a Special Independent Committee to, among otherthings, review, consider, deliberate, investigate, analyze, explore, evaluate, monitor and exercise general oversight of any and allactivities of the Company directly or indirectly involving, responding to or relating to the Cotter Jr. Derivative Action, the Cotter Jr.Employment Arbitration, the Cotter Trust Litigation, and any other litigation or arbitration matters involving any one or more of EllenCotter, Margaret Cotter, James J. Cotter, Jr., the Cotter Estate and/or the Cotter Trust.The STOMP Arbitration 98 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In April 2015, Liberty Theatres, LLC (“Liberty”), a wholly owned subsidiary of the Company, commenced an American ArbitrationAssociation arbitration proceeding against The Stomp Company Limited Partnership (“Stomp”), the producer of the show STOMP, inresponse to Stomp’s purported termination of their license agreement with Liberty relating to such show. STOMP has been playing atour Orpheum Theatre in New York City for 23 years and still continues to play to date. Liberty sought specific performance, injunctiveand declaratory relief and damages. Stomp counterclaimed for unspecified damages, alleging that Liberty has interfered with theStomp’s endeavors to move the show to another Off-Broadway theater. Stomp based its purported termination of the license agreementupon the alleged deficient condition of the Orpheum Theater.On December 18, 2015, the Arbitrator issued his Partial Final Award of Arbitration, providing for, among other things (i) the issuance ofa permanent injunction prohibiting Stomp from “transferring or taking actions to market, promote, or otherwise facilitate any transferof, STOMP to another theatre in New York City having fewer than 500 seats without Liberty’s prior written consent”, (ii) the Stomp’sNotice of Termination purportedly terminating the parties’ license agreement was invalid, null and void and the License Agreementremains in full force and effect, and (iii) the award to Liberty of its reasonable attorneys’ fees in an amount to be determined by theArbitrator. In explaining his decision to award Liberty its reasonable attorneys’ fees, the Arbitrator stated as follows: “Liberty is entitled to suchan award [of attorneys’ fees] not only because it is the prevailing party in this proceeding, but because [the Producer] unfairlydisparaged the Orpheum and caused Liberty to incur attorneys’ fees in order to address and resolve [the Producer’s] groundless andfrivolous allegations with respect to the Orpheum’s condition, Liberty’s performance under the License Agreement, and Stomp’sreasons for seeking to transfer STOMP to a larger theatre.”In April 2016, we received a Final Award in our arbitration with Stomp. The Final Award awards us $2.3 million in attorney’s fees andcosts. In September 2016, the parties agreed on the payment terms of the Final Award (“Payment Agreement”), on a basis that isintended to allow recovery by Liberty of the entire Final Award (plus interest at 4%), while at the same time allowing the show tocontinue playing at our Orpheum Theater. The total of $2.3 million plus interest has now been paid in full, final payment beingreceived on March 5, 2018. STOMP continues to play at our Orpheum Theater. NOTE 13 – NON-CONTROLLING INTERESTSAs of December 31, 2017, the non-controlling interests in our consolidated subsidiaries are comprised of the following:·Australia Country Cinemas Pty Ltd. -- 25% non-controlling interest owned by Panorama Cinemas for the 21st Century PtyLtd.;·Shadow View Land and Farming, LLC -- 50% non-controlling membership interest owned by either the estate of Mr. James J.Cotter, Sr. (the “Cotter Estate”) or the James J. Cotter Sr. Living Trust (the “Cotter Trust”); and,·Sutton Hill Properties, LLC -- 25% non-controlling interest owned by Sutton Hill Capital, LLC (which in turn is 50% ownedby the Cotter Estate and/or the Cotter Trust).The components of non-controlling interest are as follows:(Dollars in thousands)December 31, 2017December 31, 2016Australian Country Cinemas, Pty Ltd$138 $264 Shadow View Land and Farming, LLC2,127 1,980 Sutton Hill Properties, LLC2,066 2,174 Non-controlling interests in consolidated subsidiaries$4,331 $4,418 The components of income/(loss) attributable to non-controlling interests are as follows:(Dollars in thousands)201720162015Australian Country Cinemas, Pty Ltd$164 $140 $126 Shadow View Land and Farming, LLC(45)(58)(77)Sutton Hill Properties, LLC(108)(68)(128)Net income (loss) attributable to non-controlling interests inconsolidated subsidiaries $11 $14 $(79)Shadow View Land and Farming, LLCThis land is held in Shadow View Land and Farming, LLC, in which the Cotter Estate or the Cotter Trust now owns a 50% interest. Weare the managing member of Shadow View Land and Farming, LLC. We consolidate the Cotter Estate’s and/or the Cotter Trust’sinterest in the property and its expenses with that of our interest and show their interest as a non-controlling interest.99 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 14 – SHARE-BASED COMPENSATION AND SHARE REPURCHASE PLANS2010 Stock Incentive PlanThe Company may grant stock options and other share-based payment awards of our Class A Stock to eligible employees, directors,and consultants under the 2010 Stock Incentive Plan (the “2010 Plan”), which originally allows for an aggregate total number of1,250,000 shares of Class A Nonvoting Common Stock authorized for issuance under the 2010 Plan. As of September 30, 2017, therewere 302,540 shares authorized for issuance under the 2010 Plan and available for future grants or awards. During the Company’s 2017 Annual Stockholders’ Meeting held on November 7, 2017, the Company's stockholders, uponrecommendation of the Board of Directors, approved an amendment to the Company's 2010 Plan to increase the number of shares ofcommon stock issuable under such plan by an additional 947,460 shares. The effect of the increase is to restore the amount of shares ofClass A Common Stock available under the 2010 Stock Incentive Plan from the 302,540 shares available as of September 30, 2017,back up to its original reserve of 1,250,000 shares. There were no new grants during the 4th quarter of 2017. Accordingly, as ofDecember 31, 2017, we had 1,250,000 shares remaining for future issuances. Since the adoption of the 2010 Plan, the Company has granted awards primarily in the form of stock options or stock grants. In the firstquarter of 2016, the Company started to award restricted stock units (“RSUs”) to directors and certain members of management. Stockoptions are generally granted at exercise prices equal to the grant-date market prices and typically expire no later than five years fromthe grant date. In contrast to a stock option where the grantee buys the Company’s share at an exercise price determined on grant date,an RSU entitles the grantee to receive one share for every RSU based on a vesting plan. At the discretion of our Compensation andStock Options Committee, the vesting period of stock options and RSUs ranges from zero to four years. At the time the options areexercised or RSUs vest, at the discretion of management, we will issue treasury shares or make a new issuance of shares to the option orRSU holder. Stock OptionsWe estimate the grant-date fair value of our stock options using the Black-Scholes option-valuation model, which takes into accountassumptions such as the dividend yield, the risk-free interest rate, the expected stock price volatility, and the expected life of theoptions. We expense the estimated grant-date fair values of options over the vesting period on a straight-line basis. Based on ourhistorical experience and the relative market price to strike price of the options, we have not hereto estimated any forfeitures of vestedor unvested options.The weighted average assumptions used in the option-valuation model for the years 2017, 2016 and 2015 were as follows:201720162015Stock option exercise price$$15.94 $11.87 $13.30 Risk-free interest rate1.66% 1.20% 2.23% Expected dividend yield------Expected option life in years3.75 3.75 4.00 Expected volatility24.95% 25.01% 31.86% Weighted average fair value$3.45 $2.49 $3.82 We recorded compensation expense of $310,000, $284,000, and $282,000 for 2017, 2016, and 2015, respectively. At December 31,2017, the total unrecognized estimated compensation cost related to non-vested stock options was $878,000 which is expected to berecognized over a weighted average vesting period of 1.91 years. Cash and other consideration received from option exercises during2017, 2016, and 2015 totaled $574,000, $146,000 and $3.0 million respectively. 100 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following is a summary of the status of RDI’s outstanding stock options for the three years ended December 31, 2017:Outstanding Stock OptionsNumber of Options Weighted Average ExercisePrice Weighted AverageRemaining Years ofContractual Life AggregateIntrinsic ValueClass AClass BClass AClass BClass A&BClass A&BOutstanding - January 1, 2015568,250 185,100 $6.88 $9.90 2.40 $4,197,000 Granted112,000 --13.30 --Exercised(185,685)(185,100)6.09 9.90327,170 Expired(8,000)--6.23 --Outstanding - December 31, 2015486,565 --$8.68 $--2.89 $2,188,011 Granted169,327 --11.87 --Exercised(46,815)--9.50 --220,002 Expired(74,000)--7.02 --Outstanding - December 31, 2016535,077 --$9.84 $ --2.61 $3,615,191 Granted169,762 --15.94 --Exercised(177,750)--7.85 --702,840 Expired(2,500)--6.23 --Outstanding - December 31, 2017524,589 --$12.50 $ --3.15 $3,054,325 The following is a summary of the status of RDI’s vested and unvested stock options as of December 31, 2017, 2016 and 2015:Vested and Unvested Stock OptionsNumber of Options Weighted Average Exercise Price Weighted AverageRemaining Years ofContractual Life AggregateIntrinsic ValueClass AClass BClass AClass BClass A&BClass A&BVestedDecember 31, 2017186,832 --$9.84 $--2.30 $2,202,772 December 31, 2016296,500 --7.88 --1.59 2,584,500 December 31, 2015256,065 --7.64 --2.14 1,401,321 UnvestedDecember 31, 2017337,757 --$13.86 $--3.62 $851,552 December 31, 2016238,577 --12.28 --3.87 1,030,691 December 31, 2015230,500 --9.83 --3.72 786,690 Termination of Previous President’s Unvested Stock OptionsMr. James Cotter, Jr. has asserted in past communications with the Company that options to acquire 50,000 shares of Class A Stock,issued to him in connection with his retention as the President of our Company, survived his termination as President. On August 3,2016, our Compensation and Stock Options Committee met, reviewed the issue and determined that such 50,000 options had in factterminated with the termination of Mr. Cotter, Jr.’s employment as President. Accordingly, these options are not, and have not beenoutstanding since the effective date of Mr. Cotter, Jr’s termination. This was recorded as a forfeiture during the quarter endedSeptember 30, 2016. Restricted Stock UnitsWe estimate the grant-date fair values of our RSUs using the Company’s stock price at grant-date and record such fair values ascompensation expense over the vesting period on a straight-line basis. During 2017 and 2016, RSU awards were granted to both ourdirectors and certain members of management. These RSU awards vest 25% at the end of each year for 4 years (in the case of membersof management) and vest 100% at the end of one year (in the case of directors). During the years ended December 31, 2017 andDecember 31, 2016, we recognized compensation expense of $668,000 and $396,000 respectively. The total unrecognizedcompensation expense related to these unvested RSUs was $852,000 as of December 31, 2017.101 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Below is a table that shows the restricted stock units that have been issued and vested during the years ending December 31, 2017along with the dollar value of these awards:Number of options$ value of optionsGrantedVestingUnvestedGrantedVestingUnvested2016 68,153 38,062 30,091 815,160 454,966 360,193 2017 70,538 949 69,589 1,124,348 14,880 1,109,467 Total138,691 39,011 99,680 1,939,507 469,846 1,469,661 2017 Stock Repurchase PlanOn March 2, 2017, the Company's Board of Directors authorized management, at its discretion, to spend up to an aggregate of$25.0 million to acquire shares of the Company’s common stock. As of December 31, 2017, we have spent $6.5 million at an averageshare price of $15.92, leaving $18.5 million available to repurchase under this plan.2014 Stock Repurchase PlanOn May 16, 2014, the Company's Board of Directors authorized management, at its discretion, to spend up to an aggregate of$10.0 million to acquire shares of the Company’s common stock. This approved stock repurchase plan supersedes and effectivelycancels the program that was approved by the Board of Directors on May 14, 2004, which allowed management to purchase up to350,000 shares of the Company’s common stock. As of December 31, 2016, we have fully spent the $10.0 million budget at an averageprice of $11.74. NOTE 15 – ACCUMULATED OTHER COMPREHENSIVE INCOMEThe following table summarizes the changes in each component of accumulated other comprehensive income attributable to RDI:(Dollars in thousands)Foreign CurrencyItems(1)Unrealized Gain(Losses) on Available-for-Sale InvestmentsAccrued PensionService Costs(2)TotalBalance at January 1, 2017$14,784 $10 $(2,719)$12,075 Net current-period other comprehensiveincome8,791 (2)127 8,916 Balance at December 31, 2017$23,575 $8 $(2,592)$20,991 (1)Net of income tax expense of $659,152.(2)Net of income tax expense of $79,572. NOTE 16 – FAIR VALUE MEASUREMENTSFair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date. If quoted prices in an active market are available, fair value is determined by reference tothese prices. If quoted prices are not available, fair value is determined by valuation models that primarily use, as inputs, market-basedor independently sourced parameters, including but not limited to interest rates, volatilities, and credit curves. Additionally, we mayreference prices for similar instruments, quoted prices or recent transactions in less active markets. We use prices and inputs that arecurrent as of the measurement date. Assets and liabilities that are carried at fair value (either recurring or non-recurring basis) areclassified and disclosed in one of the following categories:·Level 1: Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assets orliabilities. This consist primarily of investments in marketable securities which are our investments associated with the ownership ofmarketable securities in U.S. and New Zealand. These investments are valued based on observable market quotes on the last tradingdate of the reporting period.102 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Level 2: Quoted prices in active markets for similar assets and liabilities, or inputs that are observable, either directly or indirectly,for substantially the full term of the asset or liability. This category includes our derivative financial instruments which are valuedbased on discounted cash flow models that incorporate observable inputs such as interest rates and yield curves from the derivativecounterparties. The credit valuation adjustments associated with our non-performance risk and counterparty credit risk areincorporated in the fair value estimates of our derivatives. As of December 31, 2017 and 2016, we concluded that the creditvaluation adjustments were not significant to the overall valuation of our derivatives.·Level 3: Unobservable inputs that are supported by little or no market activity may require significant judgment in order todetermine the fair value of the assets and liabilities. This category includes:i.Debt – includes secured and unsecured notes payable, trust preferred securities and other debt instruments. The borrowings arevalued based on discounted cash flow models that incorporate appropriate market discount rates. We calculated the marketdiscount rate by obtaining period-end treasury rates for fixed-rate debt, or LIBOR for variable-rate debt, for maturities thatcorrespond to the maturities of our debt, adding appropriate credit spreads derived from information obtained from third-partyfinancial 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.ii.Goodwill, Other Intangibles and Other Long-lived Assets - refer to the “Impairment of Long-Lived Assets” section in Note 2 –Summary of Significant Accounting Policies for a description of valuation methodology used for fair value measurements ofgoodwill, intangible assets and long-lived assets. Given this category represents several lines in our Consolidated Balance Sheetand since the recorded values agree to fair values, we did not include this in the subsequent tables presented.Also, our Level 1 financial instruments include cash and cash equivalents, receivables, and accounts payable and accruedliabilities. The carrying values of these financial instruments approximate the fair values due to their short maturities. There have beenno changes in the methodologies used at December 31, 2017 and 2016. Additionally, there were no transfers of assets and liabilitiesbetween Levels 1, 2, or 3 during the three years ended December 31, 2017.Recurring Fair Value MeasurementsAs of December 31, 2017 and 2016, we do not have material financial assets and liabilities carried and measured at fair value on arecurring basis.Nonrecurring Fair Value Measurements The following tables provide information about financial assets and liabilities not carried at fair value on a nonrecurring basis in ourconsolidated balance sheets:CarryingFair Value Measurements at December 31, 2017(Dollars in thousands)Balance Sheet LocationValue(1)Level 1Level 2Level 3TotalFinancial liabilities Notes payableDebt - current and long-term portion$106,588 $--$--$106,894 $106,894 Subordinated debtSubordinated debt27,913 ----16,088 16,088 Total$134,501 $--$--$122,982 $122,982 CarryingFair Value Measurements at December 31, 2016(Dollars in thousands)Balance Sheet LocationValue(1)Level 1Level 2Level 3TotalFinancial liabilities Notes payableDebt - current and long-term portion$120,622 $--$--$121,204 $121,204 Subordinated debtSubordinated debt27,913 ----15,247 15,247 Total$148,535 $--$--$136,451 $136,451 (1) These balances are presented gross of deferred financing costs. NOTE 17 – LEASESOur leasing business consists of various arrangements, where we act either (i) as the lessor (for our owned properties rented to thirdparties), or (ii) as the lessee (mostly our cinema locations on leased-facility model). Below are the rental commitments for these variouslease arrangements:103 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As Lessor – Future Rental Commitments from our TenantsReal estate revenue amounted to $16.3 million, $13.6 million, and $15.0 million, for the fiscal years ended December 31, 2017, 2016,and 2015, respectively. Also, there were no material contingent rentals recognized for the three years then ended December 31,2017. As of December 31, 2017, the minimum future rentals on our real estate properties currently leased to third parties under non-cancellable operating lease arrangements for the next five years are summarized as follows:(Dollars in thousands)Future MinimumRentals2018$9,583 20198,692 20207,200 20216,599 20225,807 Thereafter16,986 Total$54,867 As Lessee – Future Lease Commitments to our LandlordsThe Company has entered into various leases for our cinema exhibition segment. We also lease office space and equipment under non-cancelable operating leases. As of December 31, 2017, the remaining terms of these leases, inclusive of renewal options, range from 1to 35 years. All of our leases are accounted for as operating leases and we do not have any capital leases as of December 31, 2017.We determine the annual base rent expense of our cinemas by amortizing total minimum lease obligations on a straight-line basis overthe lease terms. Certain of our cinema leases provide for both base and in addition contingent rentals based upon a specifiedpercentage of cinema revenue with a guaranteed minimum. Substantially all of our leases require the payment of property taxes,insurance, and other costs applicable to the property. The base rent and contingent rental expenses are summarized as follows:(Dollars in thousands)201720162015Base rent expense$31,630 $29,824 $30,565 Contingent rental expense2,505 1,484 1,848 Total cinema rent expense$34,135 $31,308 $32,413 Future minimum lease payments by year and, in the aggregate, under non-cancelable operating leases consisted of the following:Minimum Lease Payments at December 31, 2017(Dollars in thousands)Ground LeasePremises LeaseEquipment LeaseTotal2018$3,629 $27,980 $--$31,609 20193,717 27,837 --31,554 20202,792 23,883 --26,675 20212,730 23,677 --26,407 20222,771 5,069 --7,840 Thereafter20,823 185,910 --206,733 Total$36,462 $294,356 $--$330,818 We expect the amount of minimum lease payments will fluctuate depending on the foreign currency exchange rates of the Australiandollar to the U.S. dollar and the New Zealand dollar to the U.S. dollar, mainly because a significant portion of our cinema exhibitionbusiness is conducted in Australia and New Zealand. See Note 18 – Related Parties for the amount of leases associated with any relatedparty leases.Debt GuaranteeAs of December 31, 2017 we no longer have any guarantee in place relating to our unconsolidated joint ventures. The total estimateddebt of unconsolidated joint ventures and entities, consisting solely of Rialto Distribution (see Note 6 – Investments in UnconsolidatedJoint Ventures), was $1.0 million (NZ$1.5 million) as of December 31, 2016. Our share of the unconsolidated debt, based on ourownership percentage, was NZ$500,000 as of December 31, 2016. This debt was guaranteed by one of our subsidiaries to the extent ofour ownership percentage up until the point that this was transferred to one of our business partners. Based on the financial position ofRialto Distribution and in consideration of this debt guarantee, we accrued $348,000 (NZ$500,000) as of December 31, 2016, recordedas part of Accounts payable and accrued liabilities.104 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 18 – RELATED PARTIESThe following table identifies our related parties as of December 31, 2017, in accordance with ASC 850, Related Party Transactions: CategoriesRelated PartiesDiscussion Notes· Principal Owners and immediatefamilies· Cotter Family’s Estate and Living Trust(controlling family)· Mark Cuban (above 10% votingownership)The Cotter Family is involved in certain litigationmatters. Refer to Note 12 – Commitments and Contingenciesfor further details.· Key Executive Officers andimmediate families· Ellen M. Cotter· Margaret Cotter· Devasis Ghose· Andrzej J. Matyczynski· Robert F. Smerling· Wayne D. SmithRefer to Part I, Item 1 – Our Business – Key ExecutiveOfficers of the Registrant for their profile.· Investments in Joint Venturesaccounted for under equity method· Rialto Cinemas· Mt. GravattRefer to Note 6 – Investment in Joint Ventures· Other Affiliates· Entities under common control· All subsidiaries of RDIRefer to Exhibit 21 of this 2017 Form 10-K filing for thecomplete list of subsidiaries. Refer below for furtherdiscussions on certain key transactions with related parties,including those with minority interests.Sutton Hill CapitalIn 2001, we entered into a transaction with Sutton Hill Capital, LLC (“SHC”) regarding the master leasing, with an option to purchase,of certain cinemas located in Manhattan including our Village East and Cinemas 1,2,3 theaters. In connection with that transaction, wealso agreed (i) to lend certain amounts to SHC, to provide liquidity in its investment, pending our determination whether or not toexercise our option to purchase and (ii) to manage the 86th Street Cinema on a fee basis. SHC is a limited liability company owned inequal shares by the Cotter Estate or the Cotter Trust and a third party.As previously reported, over the years, two of the cinemas subject to the master leasing agreement have been redeveloped and one (theCinemas 1,2,3 discussed below) has been acquired. The Village East is the only cinema that remains subject to this master lease. Wepaid an annual rent of $590,000 for this cinema to SHC in each of 2017, 2016 and 2015. During this same period, we receivedmanagement fees from the 86th Street Cinema of $141,000, $150,000 and $151,000 during the years ended December 31, 2017, 2016and 2015, respectively.In 2005, we acquired (i) from a third party the fee interest underlying the Cinemas 1,2,3 and (ii) from SHC its interest in the groundlease estate underlying and the improvements constituting the Cinemas 1,2,3. The ground lease estate and the improvements acquiredfrom SHC were originally a part of the master lease transaction, discussed above. In connection with that transaction, we granted toSHC an option to acquire at cost a 25% interest in the special purpose entity (Sutton Hill Properties, LLC) formed to acquire these fee,leasehold and improvements interests. On June 28, 2007, SHC exercised this option, paying $3.0 million and assuming a proportionateshare of SHP’s liabilities. At the time of the option exercise and the closing of the acquisition of the 25% interest, SHP had debt of$26.9 million, including a $2.9 million, non-interest bearing intercompany loan from the Company. Since the acquisition by SHC ofits 25% interest, SHP has covered its operating costs and debt service through cash flow from the Cinema 1,2,3, (ii) borrowings fromthird parties, and (iii) pro-rata contributions from the members. We receive an annual management fee equal to 5% of SHP’s grossincome for managing the cinema and the property, amounting to $177,000 during 2015. This management fee was modified in 2015,as discussed below, retroactive to December 1, 2014.On June 29, 2010, we agreed to extend our existing lease from SHC of the Village East Cinema by 10 years, with a new terminationdate of June 30, 2020. This amendment was reviewed and approved by our Audit and Conflicts Committee. The Village East leaseincludes a sub-lease of the ground underlying the cinema that is subject to a longer-term ground lease between SHC and an unrelatedthird party that expires in June 2031 (the “cinema ground lease”). The extended lease provides for a call option pursuant to whichReading may purchase the cinema ground lease for $5.9 million at the end of the lease term. Additionally, the lease has a put optionpursuant to which SHC may require Reading to purchase all or a portion of SHC’s interest in the existing cinema lease and the cinemaground lease at any time between July 1, 2013 and December 4, 2019. SHC’s put option may be exercised on one or more occasions inincrements of not less than $100,000 each. We recorded the Village East Cinema building as a property asset of $4.7 million on ourbalance sheet based on the cost carry-over basis from an entity under common control with a corresponding capital lease liability of$5.9 million presented under other liabilities (see Note 11 – Pension and Other Liabilities).105 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In February 2015, we and SHP entered into an amendment to the management agreement dated as of June 27, 2007 between us andSHP. The amendment, which was retroactive to December 1, 2014, memorialized our undertaking to SHP with respect to $750,000 (the“Renovation Funding Amount”) of renovations to Cinemas 1,2,3 funded or to be funded by us. In consideration of our funding of therenovations, our annual management fee under the management agreement was increased commencing January 1, 2015 by an amountequivalent to 100% of any incremental positive cash flow of Cinemas 1,2,3 over the average annual positive cash flow of the Cinemas1,2,3 over the three-year period ended December 31, 2014 (not to exceed a cumulative aggregate amount equal to the RenovationFunding Amount), plus a 15% annual cash-on-cash return on the balance outstanding from time to time of the Renovation FundingAmount, payable at the time of the payment of the annual management fee (the “Improvements Fee”). Under the amended managementagreement, we are entitled to retain ownership of (and any right to depreciate) any furniture, fixtures and equipment purchased by us inconnection with such renovation and have the right (but not the obligation) to remove all such furniture, fixtures and equipment (at ourown cost and expense) from the Cinemas upon the termination of the management agreement. The amendment also provides that,during the term of the management agreement, SHP will be responsible for the cost of repair and maintenance of the renovations. In2017, 2016 and 2015, we received no Improvements Fee. This amendment was approved by SHC and by the Audit and ConflictsCommittee of our Board of Directors.On August 31, 2016, we refinanced the debt of Cinemas 1, 2, 3, pursuant to a $20.0 million loan from Valley National Bank. Refer toNote 10 – Borrowings for further details on this loan transaction. The proceeds from the loan were used to retire an existing$15.0 million first mortgage loan and the above referenced $2.9 million intercompany loan, with the remainder to be used for workingcapital and to cover cash flow shortfalls. Since the cash flow from the Cinemas 1, 2, 3 is not sufficient to service this loan, it isanticipated that the members of SHP (our Company and SHC) will ultimately need to make periodic contributions to the capital of SHPin order to avoid dilution of their respective interests in SHP. In 2016, our Company and SHC funded capital calls of $506,000 and$169,000, respectively. No contributions were called on in 2017.The Valley National Loan has been guaranteed by our Company and an environmental indemnity has been provided by ourCompany. SHC has agreed to indemnify our Company to the extent of 25% of any loss incurred by our Company with respect to anysuch guarantee and/or indemnity (a percentage reflecting SHC’s membership interest in SHP). The refinancing transaction, includingthe guarantee and indemnity, were review and approved by the Audit and Conflicts Committee of our Board of Directors. OBI Management AgreementPursuant to a Theater Management Agreement (the “Management Agreement”), our live theater operations were, until March 2016,managed by Off-Broadway Investments, LLC (“OBI Management”), which is wholly owned by Ms. Margaret Cotter who is thedaughter of the late Mr. James J. Cotter, Sr., the sister of Ellen Cotter and James Cotter, Jr., and a member of our Board of Directors.That Management Agreement was terminated effective March 10, 2016 in connection with the retention by our Company of MargaretCotter as a full time employee.The Theater Management Agreement generally provided for the payment of a combination of fixed and incentive fees for themanagement of our four live theaters that were operating during this time. Historically, these fees have equated to approximately 21%of the net cash flow generated by these properties. The fees to be paid to OBI for 2016 and 2015 were 79,000 and 589,000,respectively. We also reimbursed OBI for certain travel expenses, shared the cost of an administrative assistant and provided officespace at our New York offices. The increase in the payment to OBI for 2015 was attributable to work done by Margaret Cotter, workingthrough OBI, with respect to the development of our Union Square and Cinemas 1,2,3 properties.OBI Management historically conducted its operations from our office facilities on a rent-free basis, and we shared the cost of oneadministrative employee of OBI Management. We reimbursed travel related expenses for OBI Management personnel with respect totravel between New York City and Chicago in connection with the management of the Royal George complex. Other than theseexpenses, OBI Management was responsible for all of its costs and expenses related to the performance of its managementfunctions. The Management Agreement renewed automatically each year unless either party gives at least six months’ prior notice ofits determination to allow the Management Agreement to expire. In addition, we could terminate the Management Agreement at anytime for cause.Effective March 10, 2016, Margaret Cotter became a full time employee of the Company and the Management Agreement wasterminated. As Executive Vice-President Real Estate Management and Development - NYC, Ms. Cotter continues to be responsible forthe management of our live theater assets, continues her role heading up the pre-redevelopment of our New York properties and is oursenior executive responsible for the redevelopment of our New York properties. Pursuant to the termination agreement, Ms. Cottergave up any right she might otherwise have, through OBI, to income from STOMP.Ms. Cotter's compensation as Executive Vice-President was recommended by the Compensation Committee as part of an extensivereview of our Company’s overall executive compensation and approved by the Board. 106 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Live Theater Play InvestmentFrom time to time, our officers and Directors may invest in plays that lease our live theaters. The play STOMP has been playing in ourOrpheum Theatre since prior to the time we acquired the theatre in 2001. The Cotter Estate or the Cotter Trust and a third party own anapproximately 5% interest in that play, an interest that they have held since prior to our acquisition of the theater. Refer to Note 12 –Commitments and Contingencies for more information about the show STOMP.Shadow View Land and Farming LLCDuring 2012, Mr. James J. Cotter, Sr., our then Chairman, Chief Executive Officer and controlling stockholder, contributed$2.5 million cash and $255,000 of his 2011 bonus as his 50% share of the purchase price of a land parcel in Coachella, California andto cover his 50% share of certain costs associated with that acquisition. This land is held in Shadow View Land and Farming, LLC, inwhich the Cotter Estate or the Cotter Trust owns a 50% interest. We are the managing member of Shadow View Land and Farming, LLC(See Note 13 – Non-Controlling Interests). The property is held debt free, and operating and holding costs are covered by membercontributions. The Audit and Conflicts Committee of the Board of Directors is charged with responsibility for oversight of ourmanagement of Shadow View.NOTE 19 – INSURANCE RECOVERIES ON IMPAIRMENT AND RELATED LOSSES DUE TO EARTHQUAKEOn November 14, 2016, we filed an initial insurance claim with our Insurer with respect to earthquake damage to our parking buildingadjacent to our Courtenay Central entertainment-themed center (“ETC”) in Wellington, New Zealand and to the ETC itself. Also, wefiled a separate business interruption claim to recover lost profits as a result of the earthquake. As of December 31, 2016, we recorded arecoverable asset to the extent of our incurred losses that we deemed probable of recoverability under our insurance claim, consistingof the (i) written down carrying value of the damaged parking building and (ii) a significant portion of the derivative losscontingencies on demolition activities. We received an initial settlement from our Insurer in December 2016 amounting to $5.0 million(NZ$7.1 million). In April 2017, our insurance company concluded that our losses exceeded the earthquake coverage policy limit of$25.0 million (NZ$36.0 million) and thus paid a final settlement of US$20.0 million (NZ$28.9 million) in May 2017, taking us to thepolicy limit. Over the course of assessing the total magnitude of earthquake damage up to the point of final insurance settlement, we determined ourincurred losses and lost profits as follows: Covered Risks Basis for Allocation(Dollars in thousands) Commentary % Allocation Allocation ofInsurance Proceeds(Dollars in thousands)Property damage NZ$44,808 Estimated replacement cost for CourtenayCentral parking building, as determined by anindependent construction cost consultant. 81% NZ$29,093 Demolition costs 7,276 Actual costs incurred and best estimates ofremaining costs to complete the demolitionactivities of Courtenay Central parking building 13% 4,724 Business interruption 3,415 Estimated lost profits during the closure periodrelating to our various revenue-generatingcomponents within Courtenay Central ETC(including our cinema and property operations) 6% 2,217 Total NZ$55,499 100% NZ$36,034 107 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As a result of the final settlement, we recorded total insurance gain of $10.7 million (NZ$14.8 million) during the quarter endedJune 30, 2017, determined as follows: Recoverable Components Non-Operating Income OperatingIncome (mainly in New Zealand Dollars in thousands, unless otherwisestated) f PropertyDamage(1) DemolitionCosts(1) Total BusinessInterruption(2) Grand TotalInsurance Proceed Allocation A $29,093 $4,724 $33,817 $2,217 $36,034 Movements in Recoverable Components Total expected incurred losses, November 30, 2016 B 14,246 8,500 22,746 -- 22,746 Less: Casualty Losses recorded in 2016 Earnings(3) - in NZ$ C (795) (1,224) (2,019) -- (2,019)- in US$ D US$(560) US$(861) US$(1,421) US$-- US$(1,421)Recoverable Assets, December 31, 2016(4) E=B-C $13,451 $7,276 $20,727 $-- $20,727 Add: Upward changes in estimates and others F 347 -- 347 111 458 Net recoverable balances charged against proceeds G=E+F 13,798 7,276 21,074 111 21,185 Casualty gain, recorded in 2017 Earnings- in NZ$ H=A-G $15,295 $(2,552) $12,743 $2,106 $14,849 Casualty gain, recorded in 2017 Earnings - in US$ I US$11,063 US$(1,846) US$9,217 US$1,523 US$10,740 Net Casualty gain for 2016 and 2017 Earnings - in US$ ∑(D+I) US$10,503 US$(2,707) US$7,796 US$1,523 US$9,319 (1) The net impact to 2017 earnings of $9.2 million (NZ$12.7 million) is recorded as “Casualty gain” in our Consolidated Statement of Operations.(2) The impact to 2017 operating earnings of $1.5 million (NZ$2.1 million) is recorded as part of the applicable segment revenues in our Consolidated Statement of Operations.(3) The casualty losses recorded in 2016 as a separate line in our Consolidated Statement of Operations is made up the following: (i) 5% deductible of $795,000 (NZ$560,000) calculatedbased on the estimated value of the insured damaged parking structure for insurance purposes, and (ii) $862,000 (NZ$1.2 million) of total estimated demolition costs was preliminarilyassessed as expenses not reimbursable under our insurance policy and hence, we recorded in profit and loss.(4) The recoverable asset of $9.5 million (NZ$13.6 million), net of advance payment of $5.0 million (NZ$7.1 million), as of December 31, 2016 was presented as part of “Other non-currentassets” as the timing of the insurance claim receipt was not fixed nor reliably determinable as of the time of our initial assessment. NOTE 20 – UNAUDITED QUARTERLY FINANCIAL INFORMATION(Dollars in thousands, except per share data)FirstQuarterSecondQuarterThirdQuarterFourthQuarter(1)2017 Revenue$69,454 $72,413 $66,087 $71,780 Net income3,041 19,052 1,458 7,459 Net income attributable to RDI shareholders3,029 19,032 1,556 7,382 Basic earnings per share0.13 0.82 0.07 0.33 Diluted earnings per share0.13 0.81 0.07 0.32 2016 Revenue$64,789 $66,918 $71,315 $67,451 Net income2,224 2,922 3,917 354 Net income attributable to RDI shareholders2,226 2,970 3,855 352 Basic earnings per share0.09 0.13 0.17 0.01 Diluted earnings per share0.09 0.13 0.16 0.02 (1) Net income for the 4th quarter of 2017 includes approximately $2.5 million net tax benefit from non-recurring items of tax benefit and expense related to the Tax Cuts and Jobs Act enactedDecember 2017 and dissolution of a non-operating foreign subsidiary. NOTE 21 – SUBSEQUENT EVENTSOn March 5, 2018, we received the remaining proceeds on our Stomp arbitration matter (as discussed in Note 12 - Commitments andContingencies), including interest, totaling $720,000 which has been recorded in our 2017 results of operation.108 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Schedule II – Valuation and Qualifying AccountsBalance atJanuary 1AdditionsDeductionsBalance atDecember 31Allowance for doubtful accounts2017$828 $320 $60 $1,088 2016$426 $1,010 $608 $828 2015$586 $786 $946 $426 Tax valuation allowance2017$10,593 $--$3,723 $6,870 2016$11,530 $--$937 $10,593 2015$15,936 $--$4,406 $11,530 109 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 9 – Change in and Disagreements with Accountants on Accounting and Financial DisclosureNone. Item 9A – Controls and ProceduresManagement’s Report on Internal Control Over Financial Reporting and Attestation of Registered Public Accounting FirmOur management’s report on internal control over financial reporting and our registered public accounting firm’s audit report on theeffectiveness of our internal control over financial reporting are included in Part II, Item 8 (Financial Statements and SupplementaryData) of this Form 10-K.Evaluation of Disclosure Controls and ProceduresWe have formally adopted a policy for disclosure controls and procedures that provides guidance on the evaluation of disclosurecontrols and procedures and is designed to ensure that all corporate disclosure is complete and accurate in all material respects and thatall information required to be disclosed in the periodic reports submitted by us under the Securities Exchange Act of 1934 is recorded,processed, summarized and reported within the time periods and in the manner specified in the Securities and Exchange Commission’srules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure thatinformation required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicatedto the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions,as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried outan evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of theeffectiveness of our disclosure controls and procedures. A disclosure committee consisting of the principal accounting officer, andsenior officers of each significant business line and other select employees assisted the Chief Executive Officer and the Chief FinancialOfficer in this evaluation. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that ourdisclosure controls and procedures were effective as required by the Securities Exchange Act Rule 13a-15(e) and 15d – 15(e) as of theend of the period covered by this report.Changes in Internal Controls Over Financial ReportingThere were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the ExchangeAct) that occurred since September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internalcontrol over financial reporting. Limitations on the Effectiveness of ControlsManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is definedin Securities Exchange Act Rules 13a-15(f) and 15d-15(f), including maintenance of (i) records that in reasonable detail accurately andfairly reflect the transactions and dispositions of our assets, and (ii) policies and procedures that provide reasonable assurance that (a)transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generallyaccepted in the United States of America, (b) our receipts and expenditures are being made only in accordance with authorizations ofmanagement and our Board of Directors and (c) we will prevent or timely detect unauthorized acquisition, use, or disposition of ourassets that could have a material effect on the financial statements.Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of theinherent limitations of any system of internal control. Internal control over financial reporting is a process that involves humandiligence and compliance and is subject to lapses of judgment and breakdowns resulting from human failures. Internal control overfinancial reporting also can be circumvented by collusion or improper overriding of controls. As a result of such limitations, there isrisk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into theprocess safeguards to reduce, though not eliminate, this risk.110 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART III Item 10, 11, 12, 13 and 14Information required by Part III (Items 10, 11, 12, 13 and 14) of this Form 10-K is hereby incorporated by reference from ReadingInternational, Inc.’s definitive Proxy Statement for its 2018 Annual Meeting of Stockholders, which the company intends to be filedwith the Securities and Exchange Commission, pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year.111 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART IV Item 15 – Exhibits, Financial Statement Schedules(a) The following documents are filed as a part of this report:1. Financial StatementsThe following financial statements are filed as part of Part II, Item 8 – Financial Statements and Supplementary Data in thisAnnual Report on Form 10-K, as summarized below:DescriptionPage​Management’s Report on Internal Control over Financial Reporting59​Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements)60​Report of Independent Registered Public Accounting Firm (Internal Control over Financial Reporting)61​Consolidated Balance Sheets as of December 31, 2017 and 201662​Consolidated Statements of Income for the Three Years Ended December 31, 201763​Consolidated Statements of Comprehensive Income for the Three Years Ended December 31, 201764​Consolidated Statements of Stockholders’ Equity for the Three Years Ended December 31, 201765​Consolidated Statements of Cash Flows for the Three Years Ended December 31, 201766​Notes to Consolidated Financial Statements672. Financial Statements and Schedules for the years ended December 31, 2017, 2016, and 2015DescriptionPage​Schedule II – Valuation and Qualifying Accounts1093. Exhibits(b) ExhibitsSee Item (a) 3. above.(c) Financial Statement ScheduleSee Item (a) 2. above.112 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBITS*These exhibits constitute the executive compensation plans and arrangements of the Company.+These exhibits are filed as part of this Form 10-K Filing. Links are included within the “Description” column. Included is the amended and restated version of this exhibit, redlined to show the amendment adopted on November 7, 2017ExhibitNo.DescriptionLinks for Exhibits Incorporated by Reference3.1Amended and Restated Articles of Incorporation of ReadingInternational, Inc., a Nevada corporation, effective as ofAugust 6, 2014Filed as Exhibit 3.1 to the Company’s Annual Report on Form10-K for the year ended December 31, 2015, filed on April 29,2016 and incorporated herein by reference.3.2+Amended and Restated Bylaws of Reading International,Inc., a Nevada corporation, effective as of November 7,2017(1)N/A4.1Form of Preferred Securities Certificate evidencing thepreferred securities of Reading International Trust IFiled as Exhibit 4.1 to the Company’s report on Form 8-K filedon February 9, 2007, and incorporated herein by reference.4.2Form of Common Securities Certificate evidencing commonsecurities of Reading International Trust IFiled as Exhibit 4.2 to the Company’s report on Form 8-K filedon February 9, 2007, and incorporated herein by reference.4.3Form of Reading International, Inc. and Reading New Zealand,Limited, Junior Subordinated Note due 2027Filed as Exhibit 4.3 to the Company’s report on Form 8-K filedon February 9, 2007, and incorporated herein by reference.4.4Indenture among Reading International, Inc., Reading NewZealand Limited, and Wells Fargo Bank, N.A., as indenturetrustee.Filed as Exhibit 10.4 to the Company’s report on Form 8-Kdated February 5, 2007, and incorporated herein by reference.4.5Form of IndentureFiled as Exhibit 4.4 to the Company’s report on Form S-3 onOctober 20, 2009, and incorporated herein by reference.10.1*+Restated 2010 Stock Incentive Plan, as of November 7,2017N/A10.2*1999 Stock Option Plan of Reading International, Inc., asamended on December 31, 2001Filed as Exhibit 4.1 to the Company’s Registration Statement onForm S-8, filed on January 21, 2004, and incorporated herein byreference.10.3*+Form of Restricted Stock Unit Agreement (Non-EmployeeDirector) under the 2010 Stock Incentive PlanN/A10.4*+Form of Restricted Stock Unit Agreement (Non-Directors)under the 2010 Stock Incentive PlanN/A10.5*Award forms under the 2010 Stock Incentive Plan (i) StockOption Agreement, (ii) Stock Bonus Agreement,(iii) Restricted Stock Unit Agreement, and (iv) StockAppreciation Right AgreementFiled as Exhibits 4.2, 4.3, 4.4 and 4.5, respectively, to theCompany’s report on Form S-8 on May 26, 2010, and incorporatedherein by reference.10.6Amended and Restated Lease Agreement, dated as of July 28,2000, as amended and restated as of January 29, 2002,between Sutton Hill Capital, L.L.C. and Citadel Cinemas, Inc.Filed as Exhibit 10.40 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2002 and incorporatedherein by reference.10.7Second Amendment to Amended and Restated MasterOperating Lease dated as of September 1, 2005Filed as Exhibit 10.58 to the Company’s report on Form 8-Kfiled on September 21, 2005, and incorporated herein by reference.10.8Assignment and Assumption of Lease between Sutton HillCapital L.L.C. and Sutton Hill Properties, LLC dated as ofSeptember 19, 2005Filed as Exhibit 10.56 to the Company’s report on Form 8-Kfiled on September 21, 2005, and incorporated herein by reference.10.9Third Amendment to Amended and Restated Master OperatingLease Agreement, dated June 29, 2010, between Sutton HillCapital, L.L.C. and Citadel Cinemas, Inc.Filed as Exhibit 10.21 to the Company’s report on Form 10-Kfor the year ended December 31, 2010, and incorporated herein byreference.10.10Omnibus Amendment Agreement, dated as of October 22,2003, between Citadel Cinemas, Inc., Sutton Hill Capital,L.L.C., Nationwide Theatres Corp., Sutton Hill Associates,and Reading International, Inc.Filed as Exhibit 10.49 to the Company’s report on Form 10-Qfor the period ended September 30, 2003, and incorporated hereinby reference.10.11Theater Management Agreement, effective as January 1, 2002,between Liberty Theaters, Inc. and OBI LLCFiled as Exhibit 10.47 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2002 andincorporated herein by reference.113 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 10.12Amended and Restated Declaration of Trust, dated February 5,2007, among Reading International Inc., as sponsor, theAdministrators named therein, and Wells Fargo Bank, N.A., asproperty trustee, and Wells Fargo Delaware Trust Company asDelaware trusteeFiled as Exhibit 10.2 to the Company’s report on Form 8-Kdated February 5, 2007, and incorporated herein by reference.10.13Amended and Restated Corporate Markets Loan & BankGuarantee Facility Agreement dated December 23, 2015,among Reading Entertainment Australia Pty Ltd and NationalAustralia Bank LimitedFiled as Exhibit 10.9 to the Company’s Annual Report on Form10-K for the year ended December 31, 2015, filed on April 29,2016 and incorporated herein by reference. 10.14Wholesale Term Loan Facility dated May 21, 2015, amongReading Courtenay Central Limited and Westpac New ZealandLimitedFiled as Exhibit 10.10 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2015, filed onApril 29, 2016 and incorporated herein by reference.10.15Master Lease Agreement dated October 26, 2012, betweenConsolidated Cinema Services LLC and Banc of AmericaLeasing & Capital, LLCFiled as Exhibit 10.31 to the Company’s report on Form 10-Kfor the year ended December 31, 2013, and incorporated herein byreference.10.16Amendment dated October 31, 2012 to the Master LeaseAgreement dated October 26, 2012, between ConsolidatedCinema Services LLC and Banc of America Leasing & Capital,LLCFiled as Exhibit 10.32 to the Company’s report on Form 10-Kfor the year ended December 31, 2013, and incorporated herein byreference.10.17*Form of Indemnification Agreement, as routinely granted to theCompany’s Officers and DirectorsFiled as Exhibit 10.77 to the Company’s report on Form 10-Qfor the period ended September 30, 2008, and incorporated hereinby reference.10.18*Employment Agreement between Reading International, Inc.and Devasis Ghose, Chief Financial OfficerFiled as Exhibit 10.1 to the Company’s report on Form 10-Q forthe period ended March 31, 2015, and incorporated herein byreference.10.19*Separation and Release Agreement dated May 30, 2014between Reading International, Inc. and Andrzej MatyczynskiFiled as Exhibit 10.19 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2015, filed onApril 29, 2016 and incorporated herein by reference.10.20*First Amendment to the Separation and Release Agreementbetween Reading International, Inc. and Andrzej Matyczynski,effective as of August 6, 2014Filed as Exhibit 10.20 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2015, filed onApril 29, 2016 and incorporated herein by reference.10.21*Second Amendment to the Separation and Release Agreementbetween Reading International, Inc. and Andrzej Matyczynski,effective as of November 26, 2014Filed as Exhibit 10.21 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2015, filed onApril 29, 2016 and incorporated herein by reference.10.22*Third Amendment to the Separation and Release Agreementbetween Reading International, Inc. and Andrzej Matyczynski,effective as of May 1, 2015Filed as Exhibit 10.22 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2015, filed onApril 29, 2016 and incorporated herein by reference.10.23*Amended and Restated Compensatory Arrangements forExecutive and Management Employees dated as of March 28,2016Filed as Exhibit 10.23 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2015, filed onApril 29, 2016 and incorporated herein by reference.10.24OBI Termination Agreement and ReleaseFiled as Exhibit 10.24 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2015, filed onApril 29, 2016 and incorporated herein by reference.18Preferability Letter from Independent Registered PublicAccounting Firm, Grant Thornton LLP.Filed as Exhibit 18 to the Company’s Annual Report on Form10-K for the year ended December 31, 2016 filed on March 13,2017 and incorporated herein by reference21+List of Subsidiaries, N/A23.1+Consent of Independent Registered Public AccountingFirm, Grant Thornton LLP.N/A31.1+Certification of Principal Executive Officer pursuant toSection 302 of the Sarbanes-Oxley Act of 2002, N/A31.2+Certification of Principal Financial Officer pursuant toSection 302 of the Sarbanes-Oxley Act of 2002, N/A32.1+Certification of Principal Executive Officer pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002.N/A32.2+Certification of Principal Financial Officer pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002.N/A101.INS+XBRL Instance DocumentN/A101.SCH+XBRL Taxonomy Extension SchemaN/A101.CAL+XBRL Taxonomy Extension CalculationN/A114 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 101.DEF+XBRL Taxonomy Extension DefinitionN/A101.LAB+XBRL Taxonomy Extension LabelsN/A101.PRE+XBRL Taxonomy Extension PresentationN/A115 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.READING INTERNATIONAL, INC.(Registrant)Date:March 15, 2018By:/s/ Devasis GhoseDevasis GhoseChief Financial Officer and Treasurer(Principal Financial Officer)Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the followingpersons on behalf of Registrant and in capacities and on dates indicated.SignatureTitle(s)Date/s/ Ellen M. CotterPresident, Chief Executive Officer and Chairman of the Board and DirectorMarch 15, 2018Ellen M. Cotter(Principal Executive Officer)/s/ Devasis GhoseChief Financial Officer and TreasurerMarch 15, 2018Devasis Ghose(Principal Financial Officer)/s/ Steve LucasVice President, Controller and Chief Accounting OfficerMarch 15, 2018Steve Lucas(Principal Accounting Officer)/s/ Margaret CotterVice Chairman of the Board and DirectorMarch 15, 2018Margaret Cotter/s/ James J. CotterDirectorMarch 15, 2018James J. Cotter/s/ Guy W. AdamsDirectorMarch 15, 2018Guy W. Adams/s/ William D. GouldDirectorMarch 15, 2018William D. Gould/s/ Edward L. KaneDirectorMarch 15, 2018Edward L Kane/s/ Douglas J. McEachernDirectorMarch 15, 2018Douglas J. McEachern/s/ Dr. Judy CoddingDirectorMarch 15, 2018Dr. Judy Codding/s/ Michael WrotniakDirectorMarch 15, 2018Michael Wrotniak116Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.AMENDED AND RESTATEDBYLAWSOFREADING INTERNATIONAL, INC.A Nevada Corporation(Amended as of November 7, 2017) Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.TABLE OF CONTENTSPage Article I STOCKHOLDERS1 Section 1 Annual Meeting1 Section 2 Special Meetings1 Section 3 Notice of Meetings1 Section 4 Place of Meetings1 Section 5 Stockholder Lists2 Section 6 Quorum; Adjourned Meetings2 Section 7 Voting2 Section 8 Proxies3 Section 9 Action Without Meeting3 Section 10 Certain Limitations3 Article II DIRECTORS3 Section 1 Management of Corporation3 Section 2 Number, Tenure, and Qualifications3 Section 3 Chairman and Vice Chairman of the Board4 Section 4 Vacancies; Removal4 Section 5 Annual and Regular Meetings4 Section 6 First Meeting5 Section 7 Special Meetings5 Section 8 Business of Meetings5 Section 9 Quorum; Adjourned Meetings5 Section 10 Committees6 Section 11 Action Without Meeting; Telephone Meetings6 Section 12 Special Compensation6 Article III NOTICES7 Section 1 Notice of Meetings7 Section 2 Effect of Irregularly Called Meetings7 Section 3 Waiver of Notice7 Article IV OFFICERS8 Section 1 Election8 Section 2 Chairman and Vice Chairman of the Board8 Section 3 President8 Section 4 Vice-President8 Section 5 Secretary8 Section 6 Assistant Secretaries9 Section 7 Treasurer9 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Section 8 Assistant Treasurers9 Section 9 Compensation9 Section 10 Removal; Resignation9 Article V CAPITAL STOCK10 Section 1 Certificates10 Section 2 Surrendered; Lost or Destroyed Certificates10 Section 3 Regulations11 Section 4 Record Date11 Section 5 Registered Owner11 Article VI GENERAL PROVISIONS11 Section 1 Registered Office11 Section 2 Checks; Notes12 Section 3 Fiscal Year12 Section 4 Stock of Other Corporations or Other Interests12 Section 5 Corporate Seal12 Section 6 Annual Statement12 Section 7 Dividends12 Section 8 Conflicts of Interest13 Article VII INDEMNIFICATION13 Section 1 Indemnification of Officers and Directors, Employees and Agents13 Section 2 Insurance14 Section 3 Further Bylaws14 Article VIII AMENDMENTS14 Section 1 Amendments by Stockholders14 Section 2 Amendments by Board of Directors14 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.BYLAWS1OFREADING INTERNATIONAL, INC.A Nevada CorporationArticle ISTOCKHOLDERSSection 1 Annual MeetingAnnual meetings of the stockholders, commencing with the year 2000, shall be held each yearwithin 150 days of the end of the fiscal year on the third Thursday in May if not a legal holiday, and if alegal holiday, then on the next secular day following at ten o’clocka.m., or such other date and time as may be set by the Board of Directors2 from time to time and stated inthe notice of the meeting, at which the stockholders shall elect by a plurality vote a Board of Directorsand transact such other business as may properly be brought before the meeting.Section 2 Special MeetingsSpecial meetings of the stockholders, for any purpose or purposes, unless otherwise prescribedby statute or by the Articles of Incorporation, may be called by the Chairman or Vice Chairman of theBoard or the President, and shall be called by the Chairman, Vice Chairman or President at the writtenrequest of a majority of the Board of Directors or at the written request of stockholders owningoutstanding shares representing a majority of the voting power of the Corporation. Such request shallstate the purpose or purposes of such meeting.Section 3 Notice of MeetingsWritten notice of stockholders meetings, stating the place, date and hour thereof, and, in the caseof a special meeting, the purpose or purposes for which the meeting is called, shall be given to eachstockholder entitled to vote thereat at least ten days but not more than sixty days before the date of themeeting, unless a different period is prescribed by statute. Business transacted any special meeting ofthe stockholders shall be limited to the purpose or purposes stated in the notice.__________________________1 These Amended and Restated Bylaws are hereinafter referred to as the Bylaws.2 The “Board” and “Board of Directors” are hereinafter used in reference to the Board of Directors of Reading International, Inc. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Section 4 PLACE OF MEETINGSAll annual meetings of the stockholders shall be held in the County of Los Angeles, State ofCalifornia, at such place as may be fixed from time to time by the Board of Directors, or at such otherplace within or without the State of Nevada as the directors shall determine. Special meetings of thestockholders may be held at such time and place within or without the State of Nevada as shall be statedin the notice of the meeting, or in a duly executed waiver of notice thereof. Business transacted at anyspecial meeting of stockholders shall be limited to the purposes stated in the notice.Section 5 Stockholder ListsThe officer who has charge of the stock ledger of the Corporation shall prepare and make, notless than ten nor more than sixty days before every meeting of stockholders, a complete list of thestockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address ofeach stockholder and the number of shares registered in the name of each stockholder. Such list shall beopen to the examination of any stockholder, for any proper purpose germane to the meeting, duringordinary business hours for a period not less than ten days prior to the meeting, either at a place withinthe city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, ifnot so specified, at the place where the meeting is to be held. The list shall also be produced and kept atthe time and place of the meeting during the whole time thereof, and may be inspected by anystockholder who is present.Section 6 Quorum; Adjourned MeetingsThe holders of a majority of the stock issued and outstanding and entitled to vote thereat, presentin person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for thetransaction of business except as otherwise provided by statute or by the Articles of Incorporation. If,however, such quorum shall not be present or represented at any meeting of the stockholders, thestockholders entitled to vote thereat, present in person or represented by proxy, shall have the power toadjourn the meeting from time to time, without notice other than announcement at the meeting, until aquorum shall be present or represented. At such adjourned meeting at which a quorum shall be presentor represented, any business may be transacted which might have been transacted at the meeting asoriginally noticed. If the adjournment is for more than thirty days, or if after the adjournment a newrecord date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to eachstockholder of record entitled to vote at the meeting.Section 7 VotingExcept as otherwise provided by statute or the Articles of Incorporation or these Bylaws, andexcept for the election of directors, at any meeting duly called and held at which a quorum is present, amajority of the votes cast at such meeting upon a given matter by the holders of outstanding shares ofstock of all classes of stock of the Corporation entitled to vote thereon who are present in person or byproxy shall decide such matter. At any meeting duly called and held for the election of directors atwhich a quorum is present, directors shall be elected by a plurality of the votes cast by the holders(acting as such) of shares of stock of the Corporation entitled to elect such directors. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Section 8 ProxiesAt any meeting of the stockholders any stockholder may be represented and vote by a proxy orproxies appointed by an instrument in writing. In the event that any such instrument in writing shalldesignate two or more persons to act as proxies, a majority of such persons present at the meeting, or, ifonly one shall be present, then that one shall have and may exercise all of the powers conferred by suchwritten instrument upon all of the persons so designated unless the instrument shall otherwiseprovide. No proxy, proxy revocation or power of attorney to vote shall be used at a meeting of thestockholders unless it shall have been filed with the secretary of the meeting; provided, however,nothing contained herein shall prevent any stockholder from attending any meeting and voting inperson. All questions regarding the qualification of voters, the validity of proxies and the acceptance orrejection of votes shall be decided by the inspectors of election who shall be appointed by the Board ofDirectors, or if not so appointed, then by the presiding officer of the meeting.Section 9 Action Without MeetingAny action which may be taken by the vote of the stockholders at a meeting may be takenwithout a meeting if authorized by the written consent of stockholders holding at least a majority of thevoting power, unless the provisions of the statutes governing the Corporation or of the Articles ofIncorporation require a different proportion of voting power to authorize such action in which case suchproportion of written consents shall be required. Prompt notice of the taking of the corporate actionwithout a meeting by less than unanimous written consent shall be given to those stockholders who havenot consented in writing.Section 10 Certain LimitationsThe Board of Directors shall not, without the prior approval of the stockholders, adopt anyprocedures, rules or requirements which restrict a stockholders right to (i) vote, whether in person, byproxy or by written consent; (ii) elect, nominate or remove directors; (iii) call a special meeting; or (iv) tobring new business before the stockholders, except as may be required by applicable law.Article IIDIRECTORSSection 1 Management of CorporationThe business of the Corporation shall be managed by its Board of Directors, which may exerciseall such powers of the Corporation and do all such lawful acts and things as are not by statute or by theArticles of Incorporation or by these Bylaws directed or required to be exercised or done by thestockholders.Section 2 Number, Tenure, and QualificationsThe number of directors, which shall constitute the whole board, shall be nine (9). ThereafterAfter the completion of the Annual Meeting of Stockholders on November 7, 2017, thenumber of directors may from time to time be increased or decreased to not less than one nor more thanten by action of the Board of Directors. The directors shall be elected by the holders of shares entitled tovote thereon at the annual meeting of the stockholders, and, Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.except as provided in Section 4 of this Article, each director elected shall hold office until his successoris elected and qualified. Directors need not be stockholders. Section 3 Chairman and Vice Chairman of the BoardThe directors may elect one of their members to be Chairman of the Board of Directors and oneof their members to be Vice Chairman of the Board of Directors. The Chairman and Vice Chairmanshall be subject to the control of and may be removed by the Board of Directors. The Chairman andVice Chairman shall perform such duties as may from time to time be assigned to them by the Board ofDirectors.Section 4 Vacancies; RemovalVacancies in the Board of Directors, including those caused by an increase in the number ofdirectors, may be filled by a majority of the remaining directors, though less than a quorum, or by a soleremaining director, and each director so elected shall hold office until his successor is elected at anannual or a special meeting of the stockholders. The holders of no less than two-thirds of theoutstanding shares of stock entitled to vote may at any time peremptorily terminate the term of office ofall or any of the directors by vote at a meeting called for such purpose or by written consent filed withthe Secretary or, in his absence, with any other officer. Such removal shall be effective immediately,even if successors are not elected simultaneously.A vacancy or vacancies in the Board of Directors shall be deemed to exist in case of the death,resignation or removal of any directors, or if the authorized number of directors be increased, or if thestockholders fail at any annual or special meeting of stockholders at which any director or directors areelected to elect the full authorized number of directors to be voted for at that meeting.If the Board of Directors accepts the resignation of a director tendered to take effect at a futuretime, the Board or the stockholders shall have power to elect a successor to take office when theresignation is to become effective.No reduction of the authorized number of directors shall have the effect of removing any directorprior to the expiration of his term of office.Section 5 Annual and Regular MeetingsAnnual and regular meetings of the Board of Directors shall be held at any place within orwithout the State of Nevada that has been designated from time to time by resolution of the Board ofDirectors or by written consent of all members of the Board of Directors. In the absence of suchdesignation, annual and regular meetings shall be held at the registered office of theCorporation. Regular meetings of the Board of Directors may be held without call or notice at such timeand at such place as shall from time to time be fixed and determined by the Board of Directors.Section 6 First MeetingThe first meeting of each newly elected Board of Directors shall be held at such time and placeas shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meetingshall be necessary to the directors in order legally to constitute the meeting, provided a quorum ispresent. In the event of the failure of the stockholders to fix the time Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.and place of such first meeting, or in the event such meeting is not so held, the meeting may be held atsuch time and place as shall be specified in a notice given as hereinafter provided for special meetings ofthe Board of Directors, or as shall be specified in a written waiver signed by all of the directors.Section 7 Special MeetingsSpecial meetings of the Board of Directors may be called by the Chairman or Vice Chairman ofthe Board or the President upon notice to each director, either personally or by mail or bytelegram. Upon the written request of a majority of the directors, the Chairman or Vice Chairman of theBoard or the President shall call a special meeting of the Board to be held within two days of the receiptof such request and shall provide notice thereof to each director, either personally or by mail or bytelegram.Section 8 Business of MeetingsThe transactions of any meeting of the Board of Directors, however called and noticed orwherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if aquorum be present, and if, either before or after the meeting, each of the directors not present signs awritten waiver of notice, or a consent to holding such meeting, or an approval of the minutesthereof. All such waivers, consents or approvals shall be filed with the corporate records or made a partof the minutes of the meeting.Section 9 Quorum; Adjourned MeetingsA majority of the authorized number of directors shall constitute a quorum for the transaction ofbusiness, except to adjourn as hereinafter provided. Every act or decision done or made by a majority ofthe directors present at a meeting duly held at which a quorum is present shall be regarded as the act ofthe Board of Directors, unless a greater number is required by law or by the Articles ofIncorporation. Any action of a majority, although not at a regularly called meeting, and the recordthereof, if assented to in writing by all of the other members of the Board shall be as valid and effectivein all respects as if passed by the Board of Directors in a regular meeting.A quorum of the directors may adjourn any directors meeting to meet again at a stated day andhour; provided, however, that in the absence of a quorum, a majority of the directors present at anydirectors’ meeting, either regular or special, may adjourn from time to time, without notice other thanannouncement at the meeting, until a quorum is present.Notice of the time and place of holding an adjourned meeting need not be given to the absentdirectors if the time and place are fixed at the meeting adjourned.Section 10 CommitteesThe Board of Directors may, by resolution adopted by a majority of the whole Board, designateone or more committees of the Board of Directors, each committee to consist of at least one or moredirectors of the Corporation which, to the extent provided in the resolution, shall have and may exercisethe power of the Board of Directors in the management of the business and affairs of the Corporationand may have power to authorize the seal of the Corporation to be affixed to all papers which mayrequire it; but no such committee shall have the power to amend the Articles of Incorporation, to adoptan agreement or plan of Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.merger or consolidation, to recommend to the stockholders a sale, lease or exchange of all orsubstantially all of the Corporation’s assets, to recommend to the stockholders dissolution or revocationof dissolution, or to amend these Bylaws, and, unless the resolution or the Articles of Incorporationexpressly so provide, no such committee shall have the power or authority to declare a dividend or toauthorize the issuance of stock. Such committee or committees shall have such name or names as maybe determined from time to time by the Board of Directors. The Board may designate one or moredirectors as alternate members of any committee, who may replace any absent or disqualified member atany meeting of the committee. The members of any such committee present at any meeting and notdisqualified from voting may, whether or not they constitute a quorum, unanimously appoint anothermember of the Board of Directors to act at the meeting in the place of any absent or disqualifiedmember. At meetings of such committees, a majority of the members or alternate members shallconstitute a quorum for the transaction of business, and the act of a majority of the members or alternatemembers at any meeting at which there is a quorum shall be the act of the committee.The committees, if required by the Board, shall keep regular minutes of their proceedings andreport the same to the Board of Directors.Section 11 Action Without Meeting; Telephone MeetingsAny action required or permitted to be taken at any meeting of the Board of Directors or of anycommittee thereof may be taken without a meeting if a written consent thereto is signed by all membersof the Board of Directors or of such committee, as the case may be, and such written consent is filedwith the minutes of proceedings of the Board or committee.Nothing contained in these Bylaws shall be deemed to restrict the powers of members of theBoard of Directors, or any committee thereof, to participate in a meeting of the Board or committee bymeans of telephone conference or similar communications equipment whereby all persons participatingin the meeting can hear each other.Section 12 Special CompensationThe directors may be paid their expenses of attendance at each meeting of the Board of Directorsand may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salaryas director as fixed by the Board of Directors. No such payment shall preclude any director fromserving the Corporation in any other capacity and receiving compensation therefor. Members ofcommittees may be allowed like reimbursement and compensation for attending committee meetings.Article IIINOTICESSection 1 Notice of MeetingsWhenever, under the provisions of the Articles of Incorporation or applicable law or theseBylaws, notice is required to be given to any director or stockholder, it shall not be construed to meanpersonal notice, but such notice may be given in writing, by mail, addressed to such director orstockholders, at his address as it appears on the records of the Corporation, postage prepaid, and suchnotice shall be deemed to be given at the time when Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.the same shall be deposited in the United States mail. Notice to directors may also be given by telegram.Notices of meetings of stockholders shall be in writing and signed by the President or a Vice-President or the Secretary or an Assistant Secretary or by such other person or persons as the directorsshall designate. Such notice shall state the purpose or purposes for which the meeting is called and thetime and the place, which may be within or without this State, where it is to be held. Personal deliveryof any notice to any officer of a corporation or association, or to any member of a partnership, shallconstitute delivery of such notice to such corporation, association or partnership. In the event of thetransfer of stock after delivery of such notice of and prior to the holding of the meeting it shall not benecessary to deliver or mail notice of the meeting to the transferee.Section 2 Effect of Irregularly Called MeetingsWhenever all parties entitled to vote at any meeting, whether of directors or stockholders,consent, either by a writing on the records of the meeting or filed with the secretary, or by presence atsuch meeting and oral consent entered on the minutes, or by taking part in the deliberations at suchmeeting without objection, the doings of such meeting shall be as valid as if had at a meeting regularlycalled and noticed, and at such meeting any business may be transacted which is not excepted from thewritten consent or to the consideration of which no objection for want of notice is made at the time, andif any meeting be irregular for want of notice or of such consent, provided a quorum was present at suchmeeting, the proceedings of said meeting may be ratified and approved and rendered likewise valid andthe irregularity or defect therein waived by a writing signed by all parties having the right to vote at suchmeeting; and such consent or approval of stockholders may be by proxy or attorney, but all such proxiesand powers of attorney must be in writing.Section 3 Waiver of NoticeWhenever any notice whatever is required to be given under the provisions of the statutes, theArticles of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or personsentitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.Article IVOFFICERSSection 1 ElectionThe officers of the Corporation shall be elected annually at the first meeting by the Board ofDirectors held after each annual meeting of the stockholders and shall be a President, one or more VicePresidents, a Treasurer and a Secretary, and such other officers with such titles and duties as the Boardof Directors may determine, none of whom need be directors. The President shall be the ChiefExecutive Officer, unless the Board designates the Chairman of the Board as Chief ExecutiveOfficer. Any person may hold one or more offices and each officer shall hold office until his successorshall have been duly elected and qualified or until his death or until he shall resign or is removed in themanner as hereinafter provided for such term as may be prescribed by the Board of Directors from timeto time. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Section 2 Chairman and Vice Chairman of the BoardThe Board of Directors at its first annual meeting after each annual meeting of the stockholdersmay choose a Chairman and Vice Chairman of the Board from among the directors of theCorporation. The Chairman of the Board, and in his absence the Vice Chairman, shall preside atmeetings of the stockholders and the Board of Directors and shall see that all orders and resolutions ofthe Board of Directors are carried into effect.Section 3 PresidentThe President shall be the chief operating officer of the Corporation, shall also be a director andshall have active management of the business of the Corporation. The President shall execute on behalfof the Corporation all instruments requiring such execution except to the extent the signing andexecution thereof shall be expressly designated by the Board of Directors to some other officer or agentof the Corporation.Section 4 Vice-PresidentThe Vice-President shall act under the direction of the President and in the absence or disabilityof the President shall perform the duties and exercise the powers of the President. The Vice-Presidentshall perform such other duties and have such other powers as the President or the Board of Directorsmay from time to time prescribe. The Board of Directors may designate one or more Executive Vice-Presidents or may otherwise specify the order of seniority of the Vice- Presidents. The duties andpowers of the President shall descend to the Vice-Presidents in such specified order of seniority.Section 5 SecretaryThe Secretary shall act under the direction of the President. Subject to the direction of thePresident, the Secretary shall attend all meetings of the Board of Directors and all meetings of thestockholders and record the proceedings. The Secretary shall perform like duties for the standingcommittees when required. The Secretary shall give, or cause to be given, notice of all meetings of thestockholders and special meetings of the Board of Directors, and shall perform such other duties as maybe prescribed by the President or the Board of Directors.Section 6 Assistant SecretariesThe Assistant Secretaries shall act under the direction of the President. In order of their seniority,unless otherwise determined by the President or the Board of Directors, they shall, in the absence ordisability of the Secretary, perform the duties and exercise the powers of the Secretary. They shallperform such other duties and have such other powers as the President or the Board of Directors mayfrom time to time prescribe.Section 7 TreasurerThe Treasurer shall act under the direction of the President. Subject to the direction of thePresident, the Treasurer shall have custody of the corporate funds and securities and shall keep full andaccurate accounts of receipts and disbursements in books belonging to the Corporation and shall depositall monies and other valuable effects in the name and to the credit of the Corporation in suchdepositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds ofthe Corporation as may be ordered by the President Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.or the Board of Directors, taking proper vouchers for such disbursements, and shall render to thePresident and the Board of Directors, at its regular meetings, or when the Board of Directors so requires,an account of all transactions as Treasurer and of the financial condition of the Corporation.If required by the Board of Directors, the Treasurer shall give the Corporation a bond in suchsum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithfulperformance of the duties of such person’s office and for the restoration to the Corporation, in case ofsuch person’s death, resignation, retirement or removal from office, of all books, papers, vouchers,money and other property of whatever kind in such person’s possession or under such person’s controlbelonging to the Corporation.Section 8 Assistant TreasurersThe Assistant Treasurers in the order of their seniority, unless otherwise determined by thePresident or the Board of Directors, shall, in the absence or disability of the Treasurer, perform the dutiesand exercise the powers of the Treasurer. They shall perform such other duties and have such otherpowers as the President or the Board of Directors may from time to time prescribe.Section 9 CompensationThe Board of Directors shall fix the salaries and compensation of all officers of the Corporation.Section 10 Removal; ResignationThe officers of the Corporation shall hold office at the pleasure of the Board of Directors. Anyofficer elected or appointed by the Board of Directors, or any member of a committee, may be removedat any time, with or without cause, by the Board of Directors by a vote of not less than a majority of theentire Board at any meeting thereof or by written consent. Any vacancy occurring in any office of theCorporation by death, resignation, removal or otherwise shall be filled by the Board of Directors for theunexpired portion of the term.Any director or officer of the Corporation, or any member of any committee, may resign at anytime by giving written notice to the Board of Directors, the Chairman of the Board, the President, or theSecretary of the Corporation. Any such resignation shall take effect at the time specified therein or, ifthe time is not specified, then upon receipt thereof. The acceptance of such resignation shall not benecessary to make it effective.Article VCAPITAL STOCKSection 1Certficated and Uncertificated Shares of StockSection 1 Shares of stock in the Corporation shall be represented by certificates, or shall beuncertificated, as determined by the Board of Directors in its discretion. As to any shares represented bycertificates, every stockholder shall be entitled to have a certificate signed by the Chairman or ViceChairman of the Board of Directors, the President or a Vice-President and the Treasurer or an AssistantTreasurer, or the Secretary or an Assistant Secretary of the Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Corporation, certifying the number of shares owned by such person in the Corporation. If theCorporation shall be authorized to issue more than one class of stock or more than one series of anyclass, the designations, preferences and relative, participating, optional or other special rights of thevarious classes of stock or series thereof and the qualifications, limitations or restrictions of such rights,shall be set forth in full or summarized on the face or back of anythe certificate which the Corporationshall issue to represent such stock; provided, however, that except as otherwise provided in NRS78.242, in lieu of the foregoing requirements, there may be set forth on the face or back of any certificatewhich the Corporation shall issue to represent such class or series of stock, a statement that theCorporation will furnish without charge to each stockholder who so requests, the designations,preferences and relative, participating, optional or other special rights of the various classes or seriesthereof and the qualifications, limitations or restrictions of such preferences and/or rights.If a certificate representing stock is signed (1) by a transfer agent other than the Corporation or itsemployees or (2) by a registrar other than the Corporation or its employees, the signatures of the officersof the Corporation may be facsimiles. In case any officer who has signed or whose facsimile signaturehas been placed upon a certificate shall cease to be such officer before such certificate is issued, suchcertificate may be issued with the same effect as though the person had not ceased to be suchofficer. The seal of the Corporation, or a facsimile thereof, may, but need not be, affixed to anycertificates representing stock.Section 2 Surrendered; Lost or Destroyed CertificatesThe Board of Directors or any transfer agent of the Corporation may direct a new certificate orcertificates to be issued, or, if such stock is no longer certificated, a registration of such stock, in place ofany certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyedupon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost ordestroyed. When authorizing such issue of a new certificate or certificates, or new registration ofuncertificated stock, the Board of Directors (or any transfer agent of the Corporation authorized to do soby a resolution of the Board of Directors) may, in its discretion and as a condition precedent to theissuance or registration thereof, require the owner, of such lost or destroyed certificate or certificates, orthe owner’s legal representative, to advertise the same in such manner as it shall require and/or give theCorporation a bond in such sum as it may direct as indemnity against any claim that may be madeagainst the Corporation with respect to the certificate alleged to have been lost or destroyed.Section 3 RegulationsThe Board of Directors shall have the power and authority to make all such rules and regulationsand procedures as it may deem expedient concerning the issue, transfer and cancellation of stock of theCorporation and replacement of any stock certificates representing stock and registration and re-registration of any uncertificated stock.Section 4 Record DateThe Board of Directors may fix in advance a date not more than sixty days nor less than ten dayspreceding the date of any meeting of stockholders, or the date for the payment of any distribution, or thedate for the allotment of rights, or the date when any change or conversion or exchange of capital stockshall go into effect, or a date in connection with Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.obtaining the consent of stockholders for any purpose, as a record date for the determination of thestockholders entitled to notice of and to vote at any such meeting, and any adjournment thereof, orentitled to receive payment of any such distribution, or to give such consent, and in such case, suchstockholders, and only such stockholders as shall be stockholders of record on the date so fixed, shall beentitled to notice of and to vote at such meeting, or any adjournment thereof, or to receive payment ofsuch dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent,as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after anysuch record date fixed as aforesaid.Section 5 Registered OwnerThe Corporation shall be entitled to recognize the person registered on its books as the owner ofthe shares to be the exclusive owner for all purposes, including voting and distribution, and theCorporation shall not be bound to recognize any equitable or other claim to or interest in such share orshares on the part of any other person, whether or not it shall have express or other notice thereof, exceptas otherwise provided by the laws of Nevada.Article VIGENERAL PROVISIONSSection 1 Registered OfficeThe registered office of the Corporation shall be in the County of Clark, State of Nevada. Theprincipal office of the Corporation shall be located in the County of Los Angeles, State of California.The Corporation may also have offices at such other places both within and without the State ofNevada as the Board of Directors may from time to time determine or the business of the Corporationmay require.Section 2 Checks; NotesAll checks or demands for money and notes of the Corporation shall be signed by such officer orofficers or such other person or persons as the Board of Directors may from time to time designate.Section 3 Fiscal YearThe fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.Section 4 Stock of Other Corporations or Other InterestsUnless otherwise ordered by the Board of Directors, the President, the Secretary, and such otherattorneys or agents of the Corporation as may be from time to time authorized by the Board of Directorsor the President, shall have full power and authority on behalf of the Corporation to attend and to act anvote in person or by proxy at any meeting of the holders of securities of any corporation or other entityin which the Corporation may own or hold shares or other securities, and at such meetings shall possessand may exercise all the rights and powers incident to the ownership of such shares or other securitieswhich the Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Corporation, as the owner or holder thereof, might have possessed and exercised if present. ThePresident, the Secretary or other such attorneys or agents may also execute and deliver on behalf of theCorporation, powers of attorney, proxies, consents, waivers and other instruments relating to the sharesor securities owned or held by the Corporation.Section 5 Corporate SealThe corporation will have a corporate seal, as may from time to time be determined by resolutionof the Board of Directors. If a corporate seal is adopted, it shall have inscribed thereon the name of thecorporation and the words “Corporate Seal” and “Nevada.” The seal may be used by causing it or afacsimile thereof to be impressed or affixed or in any manner reproduced.Section 6 Annual StatementThe Board of Directors shall present at each annual meeting, and at any special meeting of thestockholders when called for by a vote of the stockholders, a full and clear statement of the business andcondition of the Corporation.Section 7 DividendsDividends upon the capital stock of the Corporation, subject to the provision of the Articles ofIncorporation, if any, may be declared by the Board of Directors at any regular or special meetingpursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock of theCorporation, subject to the provisions of the Articles of Incorporation.Before payment of any dividend, there may be set aside out of any funds of the Corporationavailable for dividends such sum or sums as the directors from time to time, in their absolute and solediscretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or forrepairing or maintaining any property or the Corporation, or for such other purpose or purposes as thedirectors believe to be in the interest of the Corporation, and the directors may modify or abolish anysuch reserve in the manner in which it was created.Section 8 Conflicts of InterestIn the event of any proposed transaction which would result in the merger of the Corporationwith or into any other company or entity, or the sale, dividend, spin-off or transfer of all or substantiallyall of the assets of the Corporation, whether in one or more related transactions (a “CoveredTransaction”), such Covered Transaction shall require the approval of a two-thirds majority of the Boardof Directors after a review and written report of the terms and fairness of such transaction have beenconducted and prepared by a special committee of the Board appointed to conduct such review. Suchspecial committee shall consist of not less than two directors and shall be composed entirely of directorswho are neither employees, directors, officers, agents or appointees or representatives of any companyor entity affiliated with any party to the Covered Transaction, other than the Corporation. Such specialcommittee is authorized to retain such professional advisors, including investment bankers, attorneys,and accountants as it may determine, in its sole discretion, to be appropriate under the circumstances. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Article VIIINDEMNIFICATIONSection 1 Indemnification of Officers and Directors, Employees and AgentsEvery person who was or is a party or is threatened to be made a party to or is involved in anyaction, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the factthat such person or a person of whom that person is the legal representative is or was a director, officer,employee or agent of the Corporation or is or was serving at the request of the Corporation or for itsbenefit as a director, officer, employee or agent of another corporation, or as its representative in apartnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullestextent legally permissible under the NRS from time to time against all expenses, liability and loss(including attorneys’ fees, judgments, fines and amounts paid or to be paid in settlement) reasonablyincurred or suffered by such person in connection therewith. The expenses of officers, directors,employee or agents incurred in defending a civil or criminal action, suit or proceeding must be paid bythe Corporation as they are incurred and in advance of the final disposition of the action, suit orproceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent torepay the amount if it is ultimately determined by a court of competent jurisdiction that such person isnot entitled to be indemnified by the Corporation. Such right of indemnification shall be a contract right,which may be enforced in any manner desired by such person. Such right of indemnification shall notbe exclusive of any other right which such directors, officers, employees or agents may have or hereafteracquire and, without limiting the generality of such statement, they shall be entitled to their respectiverights of indemnification under any bylaw, agreement, vote of stockholders, provision of law orotherwise, as well as their rights under this Article VII.Section 2 InsuranceThe Board of Directors may cause the Corporation to purchase and maintain insurance on behalfof any person who is or was a director, officer, employee or agent of the Corporation, or is or wasserving at the request of the Corporation as a director, officer, employee or agent of another corporation,or as its representative in a partnership, joint venture, trust or other enterprise against any liabilityasserted against such person and incurred in any such capacity or arising out of such status, whether ornot the Corporation would have the power to indemnify such person.Section 3 Further BylawsThe Board of Directors may from time to time adopt further Bylaws with respect toindemnification and may amend these and such Bylaws to provide at all times the fullest indemnificationpermitted by the laws of the State of Nevada. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Article VIIIAMENDMENTSSection 1 Amendments by StockholdersThe Bylaws may be amended by the stockholders at any annual or special meeting of thestockholders by a majority vote, provided notice of intention to amend or repeal shall have beencontained in the notice of such meeting.Section 2 Amendments by Board of DirectorsThe Board of Directors at any regular or special meeting by a majority vote may amend theseBylaws, including Bylaws adopted by the stockholders, but the stockholders may from time to timespecify particular provisions of the Bylaws, which shall not be amended by the Board of Directors.Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.READING INTERNATIONAL, INC.RESTATED 2010 STOCK INCENTIVE PLAN11.PURPOSE.(a)The purpose of the Plan is to provide to eligible recipients an opportunity to benefit fromincreases in value of the Common Stock through Stock Awards.(b)The Company, by means of the Plan, seeks to attract and retain the services of personseligible to receive Stock Awards, to bind the interests of eligible recipients more closelyto the Company’s own interests by offering them opportunities to acquire Common Stockand/or cash and to afford eligible recipients stock-based compensation opportunities thatare competitive with those afforded by similar businesses.(c)The persons eligible to receive Stock Awards are the Directors, Employees andConsultants of the Company and of its Affiliates.2.DEFINITIONS.(a)“Affiliate” means any “parent corporation” or “subsidiary corporation” of the Company,whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f),respectively, of the Code.(b)“Approved Cashless Exercises” for purposes of Section 6(a)(iv) shall include, withoutlimitation to the authority of the Board or Committee, including to approve other methodsof exercise, the following:(i)The written election of the holder of Nonstatutory Stock Options awarded after thedate of the Second Amendment to the Plan2 to receive, instead of shares, cash inan amount equal to the aggregate Fair Market Value of shares of such CommonStock on the date of exercise of such Options, less the aggregate exercise price ofthe shares to be issued upon exercise of such Options and the aggregateapplicable withholding taxes, if any; or(ii)The written election of the holder of Options to surrender in payment (in whole orin part) of the exercise price of such Options of shares of the same class ofCommon Stock as the shares to be issued upon exercise of such Options, valuedat the same value as the shares to be issued upon exercise of such Options.(c)“Board” means the Board of Directors of the Company.(d)“Code” means the Internal Revenue Code of 1986, as amended.(e)“Committee” means a committee of one or more members of the Board appointed by theBoard in accordance with subsection 3(c).__________________________1 Restates the 2010 Stock Incentive Plan as originally adopted by the Board on March 11, 2010, and as approved by thestockholders of May 13, 2010 (the "2010 Plan") to incorporate the following amendments: (i) Amendment to the 2010Plan effective May 19, 2011; (ii) First Amendment to the 2010 Plan effective March 10, 2016; (iii) Second Amendment tothe 2010 Plan effective as of April 26, 2017; and (iv) amendment to the 2010 Plan effective as of November 7, 2017.2 See footnote 1. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(f)“Common Stock” means the Class A Non-voting Common Stock, $0.01 par value pershare (“Class A Stock”), and the Class B Voting Common Stock, $0.01 par value pershare (“Class B Stock”), of the Company.(g)“Company” means Reading International, Inc., a Nevada corporation.(h)“Consultant” means any individual engaged by the Company or by an Affiliate to renderconsulting or advisory services, and who is compensated for such services, or who is amember of the Board of Directors of an Affiliate. For clarity, the term “Consultant” shallnot include a Director who is not compensated by the Company other than by way offees and other compensation for his or her service as a Director.(i)“Corporate Transaction” means (i) a sale, lease or other disposition of all or substantiallyall of the capital stock or assets of the Company, (ii) a merger or consolidation of theCompany, or (iii) a reverse merger in which the Company is the surviving corporationbut the shares of Common Stock outstanding immediately preceding the merger areconverted by virtue of the merger into other property, whether in the form of securities,cash or otherwise.(j)“Covered Employee” means the chief executive officer and the four other highestcompensated officers of the Company for whom total compensation is required to bereported to stockholders under the Exchange Act, as determined for purposes of Section162(m) of the Code.(k)“Director” means a member of the Board of Directors of the Company.(l)“Disability” means the permanent and total disability of a person within the meaning ofSection 22(e)(3) of the Code.(m)“Employee” means any “employee” of the Company or of an Affiliate within themeaning of the Code.(n)“Exchange Act” means the Securities Exchange Act of 1934, as amended.(o)“Fair Market Value” means the value of the Common Stock determined as follows:(i)If the Common Stock is listed on any established stock exchange, including theNasdaq Stock Market, the Fair Market Value of a share of Common Stock shall bethe average of the high sales price and the low sales price for such stock (or theclosing bid, if no sales were reported) as quoted on such exchange (or theexchange with the greatest volume of trading in the Common Stock) on the day ofdetermination, as reported in The Wall Street Journal or such other source as theBoard deems reliable; or(ii)In the absence of such listing of the Common Stock, the Fair Market Value shallbe determined in good faith by the Board.(p)“Incentive Stock Option” means an Option intended to qualify as an “incentive stockoption” within the meaning of Section 422 of the Code and the regulations promulgatedthereunder.(q)“Net Exercise” means the settlement of Options, upon the written election of the holder,by delivery of a number of shares, rounding up to the nearest whole share, of CommonStock of the class for which such Option is exercisable equal to (i) the aggregate FairMarket Value, on the date of exercise, of the shares of Common Stock Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.to be issued upon exercise of such Options, less the aggregate exercise price for suchCommon Stock and the aggregate applicable withholding taxes, divided by (ii) the FairMarket Value per share of such Common Stock on the same date; provided that theholder shall pay, in cash or other method approved by the Board, the proportionalexercise price for any fractional share issued pursuant to the foregoing as a result of therounding up the number of shares to be delivered.(r)“Non-Employee Director” means a Director who is considered a “non-employeedirector” within the meaning of Rule 16b-3.(s)“Nonstatutory Stock Option” means an Option not intended to qualify as an IncentiveStock Option.(t)“Officer” means a person who is an “officer” of the Company within the meaning ofSection 16 of the Exchange Act and the rules and regulations promulgated thereunder.(u)“Option” means an Incentive Stock Option or a Nonstatutory Stock Option grantedpursuant to the Plan.(v)“Option Agreement” means a written agreement between the Company and anOptionholder evidencing the terms and conditions of an individual Option grant. EachOption Agreement shall be subject to the terms and conditions of the Plan.(w)“Optionholder” means a person to whom an Option is granted pursuant to the Plan or, ifapplicable, such other person who holds an outstanding Option.(x)“Outside Director” means a Director who is considered an “outside director” within themeaning of Section 162(m) of the Code.(y)“Participant” means a person to whom a Stock Award is granted pursuant to the Plan or,if applicable, such other person who holds an outstanding Stock Award.(z)“Plan” means this Reading International, Inc. 2010 Stock Incentive Plan as originallyadopted by the Board on March 11, 2010, and as it may be amended from time to time.(aa)“Restricted Stock Units” means a Stock Award which may be earned in whole or in partupon the passage of time or the attainment of performance criteria established by theBoard and which may be settled for Common Stock, other securities or cash or acombination of Common Stock, other securities or cash as established by the Board.(bb)“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successorto Rule 16b-3, as in effect from time to time.(cc)“Securities Act” means the Securities Act of 1933, as amended.(dd)“Stock Award” means any right granted under the Plan, including an Option, a stockbonus, a right to acquire restricted stock, a restricted stock unit and a stock appreciationright granted under the Plan, whether singly, in combination or in tandem, to a Participantby the Board pursuant to such terms, conditions, restrictions and/or limitations, if any, asthe Board may establish.(ee)“Service” means a Participant’s service with the Company or with an Affiliate, whether asa Director, Employee or Consultant. For purposes of the Plan, a Participant’s Service shallnot be deemed to have terminated solely because of a change in the capacity in which theParticipant renders services to the Company or an Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Affiliate or a change in the entity for which the Participant renders such Service. By wayof example, a change in status from an Employee of the Company to a Consultant or aDirector, by itself, will not constitute a termination of Service. The Board or the ChiefExecutive Officer of the Company, in that party’s sole discretion, may determine whethera Participant’s Service shall be considered interrupted in the case of the Participant’sleave of absence approved by that party, including sick leave, military leave or any otherpersonal leave.(ff)“Stock Award Agreement” means a written agreement between the Company and aholder of a Stock Award evidencing the terms and conditions of an individual StockAward grant. Each Stock Award Agreement shall be subject to the terms and conditionsof the Plan.(gg)“Ten Percent Stockholder” means a person who owns (or is deemed to own pursuant toSection 424(d) of the Code) stock possessing more than ten percent of the total combinedvoting power of all classes of stock of the Company or of any Affiliate.3.ADMINISTRATION.(a)Administration by Board. The Board shall administer the Plan unless and to the extentthe Board delegates administration to a Committee as provided in subsection 3(c).(b)Powers of Board. The Board shall have the power, subject to, and within the limitationsof, the express provisions of the Plan:(i)To determine from time to time who, among the persons eligible under the Plan,shall be granted Stock Awards; when and how each Stock Award shall begranted; what type or combination of types of Stock Award shall be granted; thenumber of shares of Common Stock with respect to which a Stock Award shallbe granted; and the other terms and provisions of each Stock Award granted(which need not be identical).(ii)To reprice any outstanding Stock Awards under the Plan, cancel and re-grant anyoutstanding Stock Awards under the Plan and effect any other action that istreated as a repricing for financial accounting purposes.(iii)To construe and interpret the Plan and all Stock Awards, and to establish, amendand revoke rules and regulations for the Plan’s administration. The Board, in theexercise of this power, may correct any defect, omission or inconsistency in thePlan or in any Stock Award Agreement, in a manner and to the extent it shalldeem necessary or expedient to make the Plan fully effective.(iv)To amend the Plan or a Stock Award as provided in Section 12.(v)To terminate or suspend the Plan as provided in Section 13.(vi)Generally, to exercise such powers and to perform such acts as the Board deemsnecessary or expedient to promote the best interests of the Company.(c)Delegation to Committee.(i)General. The Board may delegate administration of the Plan to a Committee ofone or more Directors, and the term “Committee” shall apply to any Director orDirectors to whom such authority has been delegated. If administration isdelegated to a Committee, the Committee shall have, in Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.connection with the administration of the Plan, all of the powers theretoforepossessed by the Board, including the power to delegate nondiscretionaryadministrative duties to such employees of the Company as the Committee deemsproper (and references in this Plan to the Board shall thereafter be to theCommittee), subject, however, to such resolutions, not inconsistent with theprovisions of the Plan, as may be adopted from time to time by the Board. TheBoard may abolish the Committee at any time and restore to the Board theadministration of the Plan.(ii)Committee Composition. In the discretion of the Board, the Committee mayconsist solely of two or more Outside Directors or two or more Non-EmployeeDirectors. Within the scope of the Committee’s delegated authority, theCommittee may delegate to the Chairman of the Board the authority to grantStock Awards to eligible persons who are not (a) then Covered Employees andare not expected to be Covered Employees at the time of recognition of incomeresulting from such Stock Award or (b) persons with respect to whom theCompany wishes to comply with Section 162(m) of the Code or (c) persons whoare then subject to Section 16 of the Exchange Act.(d)Effect of Board’s Decision. All determinations, interpretations and constructions madeby the Board in good faith shall not be subject to review by any person and shall befinal, binding and conclusive on all persons.4.SHARES SUBJECT TO THE PLAN.(a)Share Reserve. Subject to the provisions of subsection 11(a) relating to adjustmentsupon changes in Common Stock, the shares of Common Stock that may be issuedpursuant to Stock Awards shall not exceed in the aggregate 2,197,460 shares of Class AStock and 200,000 shares of Class B Stock. Subject to subsection 4(b), the number ofshares available for issuance under the Plan shall be reduced by (i) one share for eachshare of Common Stock issued pursuant to a Stock Award granted under Section 6 orSection 7 and (ii) one share for each Common Stock equivalent subject to a stockappreciation right granted under subsection 7(c). Each Stock Award shall bedenominated in either Class A Stock or Class B Stock as the Board shall determine at thetime of grant.(b)Reversion of Shares to the Share Reserve.(i)Shares Available For Subsequent Issuance. If any (i) Stock Award shall forany reason expire or otherwise terminate, in whole or in part, without havingbeen exercised or paid in full or (ii) shares of Common Stock issued to aParticipant pursuant to a Stock Award are forfeited to or repurchased by theCompany, including any repurchase or forfeiture caused by the failure to meeta contingency or condition required for the vesting of such shares, then theshares of Common Stock not issued under such Stock Award, or forfeited to orrepurchased by the Company, shall revert to and again become available forissuance under the Plan.(ii)Shares Not Available For Subsequent Issuance. If any shares subject to aStock Award are not delivered to a Participant because the Stock Award isexercised through a reduction of shares subject to the Stock Award (i.e., a NetExercise or an Approved Cashless Exercise), the number of shares that are notdelivered to the Participant shall no longer be available for issuance under thePlan. If any shares subject to a Stock Award are not delivered to a Participantbecause such shares are withheld in satisfaction of the Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.withholding of taxes incurred in connection with the exercise of an Option or aSAR, or the issuance of shares under a stock bonus award or restricted stockaward, the number of shares that are not delivered to the Participant shall nolonger be available for subsequent issuance under the Plan.(c)Source of Shares. The shares of Common Stock subject to the Planmay be unissued shares or treasury shares.5.ELIGIBILITY.(a)Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only toEmployees. Stock Awards other than Incentive Stock Options may be granted toEmployees, Directors and Consultants.(b)Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted anIncentive Stock Option unless the exercise price of such Option is at least 110% of theFair Market Value of the Common Stock at the date of grant and the Option is notexercisable after the expiration of five years from the date of grant.(c)Section 162(m) Limitation. Subject to the provisions of Section 11 relating toadjustments upon changes in the shares of Common Stock, no Employee shall beeligible to be granted Options covering more than 1,000,000 shares of Common Stockduring any twelvemonth period.(d)Consultants. A Consultant shall not be eligible for the grant of a Stock Award if, at thetime of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”)is not available to register either the offer or the sale of the Company’s securities tosuch Consultant because of the nature of the services that the Consultant is providing tothe Company, or because the Consultant is not a natural person, or as otherwiseprovided by the rules governing the use of Form S-8, unless the Company determinesboth (i) that such grant (A) shall be registered in another manner under the SecuritiesAct (e.g., on a Form S-3 Registration Statement) or (B) does not require registrationunder the Securities Act in order to comply with the requirements of the Securities Act,if applicable, and (ii) that such grant complies with the securities laws of all otherrelevant jurisdictions.6.OPTION PROVISIONS.(a)General. Each Option shall be in such form and shall contain such terms and conditionsas the Board shall deem appropriate. All Options shall be designated as Incentive StockOptions or Nonstatutory Stock Options at the time of grant, and, if certificates are issued,a separate certificate or certificates will be issued for shares of Common Stock purchasedon exercise of each type of Option. The provisions of separate Options need not beidentical, but each Option shall include (through inclusion or incorporation by referencein the Option or otherwise) the substance of each of the following provisions:(i)Term. Subject to the provisions of subsection 5(b) regarding Ten PercentStockholders, no Option shall be exercisable after the expiration of ten years fromthe date it was granted.(ii)Exercise Price of an Incentive Stock Option. Subject to the provisions ofsubsection 5(b) regarding Ten Percent Stockholders, the exercise price of eachIncentive Stock Option shall be not less than the Fair Market Value of theCommon Stock subject to the Option on the date the Option is granted. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(iii)Exercise Price of a Nonstatutory Stock Option. The exercise price of eachNonstatutory Stock Option shall be not less than the Fair Market Value of theCommon Stock subject to the Option on the date the Option is granted.(iv)Consideration. The purchase price of Common Stock acquired pursuant to anOption shall be paid, at the election of the Optionholder, and to the extentpermitted by applicable statutes and regulations, including applicable rules andregulations of the Securities and Exchange Commission and the Federal ReserveBoard, either (1) in cash at the time the Option is exercised; (2) by delivery to theCompany of other Common Stock; (3) by a Net Exercise; (4) by means of so-called cashless exercises, including without limitation Approved CashlessExercises; or (5) through the surrender of such other form of legal considerationthat may be acceptable to the Board; provided, however, that shares of CommonStock will no longer be outstanding under an Option to the extent that (i) sharesare used to pay the exercise price pursuant to a Net Exercise or an ApprovedCashless Exercise, (ii) shares are delivered to the Participant as a result of suchexercise, or (iii) shares are withheld to satisfy tax withholding obligations.Payment of the Common Stock’s par value, if any, shall not be made by deferredpayment.(v)Transferability of an Incentive Stock Option. An Incentive Stock Option shallnot be transferable except by will or by the laws of descent and distribution andshall be exercisable during the lifetime of the Optionholder only by theOptionholder. Notwithstanding the foregoing, the Optionholder may, bydelivering written notice to the Company, in a form satisfactory to the Company,designate a third party who, in the event of the death of the Optionholder, shallthereafter be entitled to exercise the Option.(vi)Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Optionshall be transferable to the extent provided in the Option Agreement. If theNonstatutory Stock Option does not provide for transferability, then theNonstatutory Stock Option shall not be transferable except by will or by the lawsof descent and distribution and shall be exercisable during the lifetime of theOptionholder only by the Optionholder. Notwithstanding the foregoing, theOptionholder may, by delivering written notice to the Company, in a formsatisfactory to the Company, designate a third party who, in the event of the deathof the Optionholder, shall thereafter be entitled to exercise the Option.(vii)Vesting Generally. The total number of shares of Common Stock subject to anOption may, but need not, vest and become exercisable in periodic installmentsthat may, but need not, be equal. The Option may be subject to such other termsand conditions on the time or times when it may be exercised (which may bebased on performance or other criteria) as the Board may deem appropriate. Thevesting provisions of individual Options may vary. The provisions of thissubsection 6(a)(vii) are subject to any Option provisions governing the minimumnumber of shares of Common Stock as to which an Option may be exercised.(viii)Termination of Service. In the event an Optionholder’s Service terminates (otherthan upon the Optionholder’s death or Disability), the Optionholder may exercisehis or her Option (to the extent that the Optionholder was entitled to exercise suchOption as of the date of termination) but only within such period of time endingon the earlier of (i) the date three months following the termination of theOptionholder’s Service (or such longer or shorter period specified in the OptionAgreement), or (ii) the expiration of the term of the Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Option as set forth in the Option Agreement. If, after termination, theOptionholder does not exercise his or her Option within the time specified hereinor in the Option Agreement (as applicable), the Option shall terminate.(ix)Extension of Termination Date. An Optionholder’s Option Agreement mayprovide that, if the exercise of the Option following the termination of theOptionholder’s Service (other than upon the Optionholder’s death or Disability)would be prohibited at any time solely because the issuance of shares of CommonStock would violate the registration requirements under the Securities Act, thenthe Option shall terminate on the earlier of (i) the expiration of the term of theOption set forth in the Option Agreement or (ii) the expiration of a period of threemonths after the termination of the Optionholder’s Service during which theexercise of the Option would not be in violation of such registration requirements.(x)Disability of Optionholder. In the event that an Optionholder’s Service terminatesas a result of the Optionholder’s Disability, the Optionholder may exercise his orher Option (to the extent that the Optionholder was entitled to exercise suchOption as of the date of termination), but only within such period of time endingon the earlier of (i) the date twelve months following such termination (or suchlonger or shorter period specified in the Option Agreement) or (ii) the expirationof the term of the Option as set forth in the Option Agreement. If, aftertermination, the Optionholder does not exercise his or her Option within the timespecified herein, the Option shall terminate.(xi)Death of Optionholder. In the event (i) an Optionholder’s Service terminates as aresult of the Optionholder’s death or (ii) the Optionholder dies within the period(if any) specified in the Option Agreement after the termination of theOptionholder’s Service for a reason other than death, then the Option may beexercised (to the extent the Optionholder was entitled to exercise such Option asof the date of death) by the Optionholder’s estate, by a person who acquired theright to exercise the Option by bequest or inheritance or by a person designated toexercise the Option upon the Optionholder’s death pursuant to subsection 6(a)(v)or 6(a)(vi), but only within the period ending on the earlier of (1) the date twelvemonths following the date of death (or such longer or shorter period specified inthe Option Agreement) or (2) the expiration of the term of such Option as set forthin the Option Agreement. If, after death, the Option is not exercised within thetime specified herein, the Option shall terminate.(xii)Automatic Exercise. Unless otherwise specified in the relevant OptionAgreement, any outstanding Option to the extent it remains unexercised and thathas an exercise price (as set forth in the relevant Option Agreement) less than theFair Market Value of the Common Stock, determined on the last day of the termof such Option, provided that if such last day is not a trading day, then on the lasttrading day immediately prior to the last day of the term of such Option (as setforth in the relevant Option Agreement), shall be automatically exercised on suchlast day of such term, without regard to any requirement in the relevant OptionAgreement that the holder of such Option give written notice of such exercise.Except as may be otherwise elected by the Option holder and approved by theCommittee prior to the expiration of the term of the Option, such exercise shall besettled as a Net Exercise and tax withholding obligations shall be satisfied bywithholding of shares of Common Stock otherwise deliverable upon exercise ofthe Option pursuant to Section 10(f) hereof. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.7.PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.(a)Stock Bonus Awards. Each stock bonus agreement shall be in such form and shallcontain such terms and conditions as the Board shall deem appropriate. The terms andconditions of stock bonus agreements may change from time to time, and the terms andconditions of separate stock bonus agreements need not be identical, but each stockbonus agreement shall include (through incorporation of provisions hereof by referencein the agreement or otherwise) the substance of each of the following provisions: (i)Consideration. A stock bonus may be awarded in consideration for pastservices actually rendered to or for the benefit of the Company or an Affiliate.(ii)Vesting Generally. Shares of Common Stock awarded under the stock bonusagreement may, but need not, be subject to a share repurchase option in favorof the Company in accordance with a vesting schedule to be determined by theBoard. Notwithstanding the foregoing, unless the stock bonus agreementotherwise provides, all shares subject to the agreement shall become fullyvested upon the occurrence of a Corporate Transaction.(iii)Termination of Service. In the event a Participant’s Service terminates, theCompany may reacquire any or all of the shares of Common Stock held by theParticipant which have not vested as of the date of termination under the termsof the stock bonus agreement. The Company will not exercise its repurchaseoption until at least six months (or such longer or shorter period of timerequired to avoid a change to earnings for financial accounting purposes) haveelapsed following receipt of the stock bonus unless otherwise specificallyprovided in the stock bonus agreement.(iv)Transferability. Rights to acquire shares of Common Stock under the stockbonus agreement shall be transferable by the Participant only upon such termsand conditions as are set forth in the stock bonus agreement, as the Board shalldetermine in its discretion, so long as Common Stock awarded under the stockbonus agreement remains subject to the terms of the stock bonus agreement.(b)Restricted Stock Awards. Each restricted stock purchase agreement shall be in such formand shall contain such terms and conditions as the Board shall deem appropriate. Theterms and conditions of the restricted stock purchase agreements may change from timeto time, and the terms and conditions of separate restricted stock purchase agreementsneed not be identical, but each restricted stock purchase agreement shall include (throughinclusion or incorporation by reference in the agreement or otherwise) the substance ofeach of the following provisions:(i)Purchase Price. The purchase price under each restricted stock purchaseagreement shall be such amount as the Board shall determine and designate insuch restricted stock purchase agreement. The purchase price shall not be lessthan the par value, if any, of the Common Stock on the date such award ismade or at the time the purchase is consummated.(ii)Consideration. The purchase price of Common Stock acquired pursuant to therestricted stock purchase agreement shall be paid either: (i) in cash at the timeof purchase; (ii) at the discretion of the Board, according to a deferred paymentor other similar arrangement with the Participant; or (iii) in any other form oflegal consideration that may be acceptable to the Board in its Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.discretion; provided, however, that payment of the Common Stock’s par value,if any, shall not be made by deferred payment.(iii)Vesting Generally. Shares of Common Stock acquired under the restrictedstock purchase agreement may, but need not, be subject to forfeiture to theCompany or other restrictions that will lapse in accordance with a vestingschedule to be determined by the Board.(iv)Termination of Participant’s Service. In the event a Participant’s Serviceterminates, any or all of the shares of Common Stock held by the Participantthat have not vested as of the date of termination under the terms of therestricted stock purchase agreement shall be forfeited to the Company inaccordance with the restricted stock purchase agreement.(v)Transferability. Rights to acquire shares of Common Stock under the restrictedstock purchase agreement shall be transferable by the Participant only uponsuch terms and conditions as are set forth in the restricted stock purchaseagreement, as the Board shall determine in its discretion, so long as CommonStock awarded under the restricted stock purchase agreement remains subject tothe terms of the restricted stock purchase agreement.(c)Stock Appreciation Rights. Each stock appreciation right agreement shall be in suchform and shall contain such terms and conditions as the Board shall deem appropriate.The terms and conditions of stock appreciation right agreements may be changed fromtime to time, and the terms and conditions of separate stock appreciation right agreementsneed not be identical; provided, however, that each stock appreciation right agreementshall include (through incorporation of the provisions hereof by reference in theagreement or otherwise) the substance of each of the following provisions:(i)Strike Price and Calculation of Appreciation. Each stock appreciation rightwill be denominated in shares of Common Stock equivalents. The appreciationdistribution payable on the exercise of a stock appreciation right will not begreater than an amount equal to the excess of (i) the aggregate Fair MarketValue on the date of the exercise of the stock appreciation right of a number ofshares of Common Stock equal to the number of shares of Common Stockequivalents in which the Participant is vested under such stock appreciationright and with respect to which the Participant is exercising the stockappreciation right on such date over (ii) an amount (the “strike price”) that willbe determined by the Board at the time of grant of the stock appreciation right;provided, however, that the strike price of a stock appreciation right granted toa Director or Employee shall be not less than the Fair Market Value of theCommon Stock equivalents subject to the stock appreciation right on the datethe stock appreciation right is granted.(ii)Vesting. At the time of the grant of a stock appreciation right, the Board mayimpose such restrictions or conditions to vesting of such stock appreciationright as it, in its sole discretion, deems appropriate.(iii)Exercise. To exercise any outstanding stock appreciation right, the Participantmust provide written notice to exercise to the Company in compliance with theprovisions of the stock appreciation right agreement evidencing such stockappreciation right. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(iv)Payment. The appreciation distribution in respect to a stock appreciation rightmay be paid in shares of Common Stock, in cash, in any combination of sharesof Common Stock and cash, or in any other form of consideration, asdetermined by the Board and contained in the stock appreciation rightagreement evidencing such stock appreciation right.(v)Termination of Service. In the event that a Participant’s Service terminates, theParticipant may exercise his or her stock appreciation right (to the extent thatthe Participant was entitled to exercise such stock appreciation right as of thedate of termination) but only within such period of time ending on the earlier of(i) the date three months following the termination of the Participant’s Service(or such longer or shorter period specified in the stock appreciation rightagreement), or (ii) the expiration of the term of the stock appreciation right asset forth in the stock appreciation right agreement. If, after termination, theParticipant does not exercise his or her stock appreciation right within the timespecified herein or in the stock appreciation right agreement (as applicable), thestock appreciation right shall terminate.(d)Restricted Stock Units. Each restricted stock unit agreement shall be in such form andshall contain such terms and conditions as the Board shall deem appropriate. The termsand conditions of the restricted stock unit agreements may change from time to time, andthe terms and conditions of separate restricted stock unit agreements need not beidentical, but each restricted stock unit agreement shall include (through inclusion orincorporation of provisions hereof by reference in the agreement or otherwise) thesubstance of each of the following provisions:(i)Consideration. A restricted stock unit may be awarded upon the passage oftime, the attainment of performance criteria or the satisfaction or occurrence ofsuch other events as established by the Board.(ii)Vesting Generally. At the time of the grant of a restricted stock unit, the Boardmay impose such restrictions or conditions to vesting, and/or the acceleration ofthe vesting, of such restricted stock unit as it, in its sole discretion, deemsappropriate. Vesting provisions of individual restricted stock units may vary.(iii)Termination of Service. In the event that a Participant’s Service terminates, anyor all of the restricted stock units held by the Participant that have not vested asof the date of termination under the terms of the restricted stock unit agreementshall be forfeited to the Company in accordance with the restricted stock unitagreement, except as otherwise provided in the applicable restricted stock unitagreement.(iv)Transferability. A restricted stock unit shall be subject to similar transferrestrictions as awards of restricted stock, except that no shares are actuallyawarded to a Participant who is granted restricted stock units on the date ofgrant, and such Participant shall have no rights of a stockholder with respect tosuch restricted stock units until the restrictions set forth in the restricted stockunit agreement have lapsed. Restricted stock units may be transferred to anytrust established by a Participant for the benefit of the Participant, his or herspouse, and/or any one or more lineal descendants.(v)Voting, Dividend & Other Right. Holders of restricted stock units will not beentitled to vote or to receive the dividend equivalent rights in respect of therestricted stock units at the time of any payment of dividends to stockholders on Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Common Stock until they become owners of the Common Stock pursuant totheir restricted stock unit agreement. If the applicable restricted stock unitagreement specifies that a Participant will be entitled to dividend equivalentrights, (i) the amount of any such dividend equivalent right shall equal theamount that would be payable to the Participant as a stockholder in respect of anumber of shares equal to the number of vested restricted stock units thencredited to the Participant, and (ii) any such dividend equivalent right shall bepaid in accordance with the Company’s payment practices as may beestablished from time to time and as of the date on which such dividend wouldhave been payable in respect of outstanding shares of Common Stock (and inaccordance with Section 409A of the Code with regard to awards subjectthereto); provided that no dividend equivalents shall be currently paid onrestricted share units that are not yet vested.8.COVENANTS OF THE COMPANY.(a)Availability of Shares. During the terms of the Stock Awards, the Company shall keepavailable at all times the number of shares of Common Stock required to satisfy suchStock Awards.(b)Securities Law Compliance. The Company shall seek to obtain from each regulatorycommission or agency having jurisdiction over the Plan such authority as may berequired to grant Stock Awards and to issue and sell shares of Common Stock uponexercise of the Stock Awards; provided, however, that this undertaking shall not requirethe Company to register under the Securities Act the Plan, any Stock Award or anyCommon Stock issued or issuable pursuant to any such Stock Award. If, after reasonableefforts, the Company is unable to obtain from any such regulatory commission or agencythe authority which counsel for the Company deems necessary for the lawful issuanceand sale of Common Stock under the Plan, the Company shall be relieved from anyliability for failure to issue and sell Common Stock upon exercise of such Stock Awardsunless and until such authority is obtained.9.USE OF PROCEEDS FROM STOCK.Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute general fundsof the Company.10.MISCELLANEOUS.(a)Acceleration of Exercisability and Vesting. The Board shall have the power toaccelerate the time at which a Stock Award may first be exercised or the time duringwhich a Stock Award or any part thereof will vest in accordance with the Plan,notwithstanding the provisions in the Stock Award stating the time at which it may first beexercised or the time during which it will vest.(b)Stockholder Rights. No Participant shall be deemed to have dividend rights or otherrights as a stockholder with respect to any shares of Common Stock subject to an Optionor stock appreciation right unless and until such Participant has properly exercised theOption or stock appreciation right. A Participant will have all of the rights of astockholder as to any stock bonuses and shares of Common Stock acquired under arestricted stock purchase agreement as of the date of such Stock Awards, whether or notthen vested, except as otherwise provided in the Stock Award Agreement, and unless anduntil the stock bonus or restricted stock is forfeited to the Company in accordance withapplicable vesting requirements, if any. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(c)No Employment or other Service Rights. Nothing in the Plan or any instrumentexecuted or Stock Award granted pursuant hereto shall confer upon any Participant anyright to continue to serve the Company or an Affiliate in the capacity in effect at the timethe Stock Award was granted or shall affect the right of the Company or an Affiliate toterminate (i) the employment of an Employee with or without notice and with or withoutcause, (ii) the service of a Consultant pursuant to the terms of such Consultant’sagreement with the Company or an Affiliate or (iii) the service of a Director pursuant tothe Bylaws of the Company or an Affiliate, and any applicable provisions of the corporatelaw of the state in which the Company or the Affiliate is incorporated, as the case may be.(d)Incentive Stock Option Dollar Limitation. To the extent that the aggregate Fair MarketValue (determined at the time of grant) of Common Stock with respect to which IncentiveStock Options are exercisable for the first time by any Optionholder during any calendaryear (under all plans of the Company and its Affiliates) exceeds $100,000, the Options orportions thereof which exceed such limit (according to the order in which they weregranted) shall be treated as Nonstatutory Stock Options.(e)Investment Assurances. The Company may require a Participant, as a condition ofexercising or acquiring Common Stock under any Stock Award, (i) to give writtenassurances satisfactory to the Company as to the Participant’s knowledge and experiencein financial and business matters and/or to employ a purchaser representative reasonablysatisfactory to the Company who is knowledgeable and experienced in financial andbusiness matters and that he or she is capable of evaluating, alone or together with thepurchaser representative, the merits and risks of exercising the Stock Award; and (ii) togive written assurances satisfactory to the Company stating that the Participant isacquiring Common Stock subject to the Stock Award for the Participant’s own accountand not with any present intention of selling or otherwise distributing the Common Stock.The foregoing requirements, and any assurances given pursuant to such requirements,shall be inoperative if (1) the issuance of the shares of Common Stock upon the exerciseor acquisition of Common Stock under the Stock Award has been registered under a thencurrently effective registration statement under the Securities Act or (2) as to anyparticular requirement, a determination is made by counsel for the Company that suchrequirement need not be met in the circumstances under the then applicable securitieslaws. The Company may, upon advice of counsel to the Company, place legends onstock certificates issued under the Plan as such counsel deems necessary or appropriate inorder to comply with applicable securities laws, including, but not limited to, legendsrestricting the transfer of the Common Stock.(f)Applicable Withholding Taxes. Each Participant shall agree, as a condition of receivinga Stock Award, to pay to the Company or any Affiliate, or make arrangementssatisfactory to the Company or any Affiliate regarding the payment of, all applicablefederal, state, local and foreign taxes (including the Participant’s FICA obligation oremployment tax obligation) required by law to be withheld with respect to any grant,exercise, or payment made under or as a result of the Plan. Until the applicablewithholding or income taxes have been paid or arrangements satisfactory to the Companyhave been made, no stock certificates (or, in the case of restricted stock, no stockcertificates free of a restrictive legend) shall be issued to the Participant and no issuance inbook-entry or electronic form (or, in the case of restricted stock, no issuance in book-entry or electronic form free of a restrictive legend or notation) shall be made for theParticipant. As an alternative to making a cash payment to the Company to satisfyapplicable withholding or income tax obligations, Participants may elect to satisfy thewithholding requirement, in whole or in part, by having the Company withhold shares (orallow the surrender of shares) of Common Stock having a Fair Market Value equal to theamount of taxes to be paid, or by delivering to the Company shares of Common Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Stock having a Fair Market Value equal to the amount of taxes to be paid. The amount ofwithholding tax to be paid with respect to a Stock Award by the withholding of shares ofCommon Stock otherwise deliverable pursuant to the Stock Award or by deliveringshares of Common Stock already owned shall be determined by the Company inaccordance with applicable laws and regulations, but shall not exceed the maximumstatutory tax rates in the Participant’s applicable jurisdictions with respect to that StockAward. For this purpose, the maximum statutory tax rates are based on the applicablerates of the relevant tax authorities (for example, federal, state, and local), including theParticipant’s share of payroll or similar taxes, as provided in tax law, regulations, or theauthority’s administrative practices, not to exceed the highest statutory rate in thatjurisdiction. Notwithstanding the foregoing, the amount of withholding tax paid withrespect to a Stock Award that has been granted to a Participant that is not an Employee bythe withholding of shares of Common Stock otherwise deliverable pursuant to such StockAward or by delivering shares of Common Stock already owned shall not exceed theminimum statutory amount, if any, required to be withheld for federal, state, local and/orforeign tax purposes that are applicable to the Stock Award then subject to tax. (Foravoidance of doubt, it is acknowledged that as of the date hereof there is no minimumstatutory amount to be withheld from exercise or vesting of Stock Awards to non-Employees and therefore shares of Common Stock will not be withheld for taxes withrespect to such events except to the extent of future changes of law.) The value of anyshares so withheld or delivered shall be based on the Fair Market Value of the shares onthe date that the amount of tax to be withheld is to be determined. All elections byParticipants shall be irrevocable and be made in writing and in such manner asdetermined by the Committee (or its delegee) in advance of the day that the transactionbecomes taxable.11.ADJUSTMENTS UPON CHANGES IN STOCK.(a)Capitalization Adjustments. If any change is made in the Common Stock subject tothe Plan, or subject to any Stock Award, without the receipt of consideration by theCompany (through merger, consolidation, reorganization, recapitalization,reincorporation, stock dividend, dividend in property other than cash, stock split,liquidating dividend, combination of shares, exchange of shares, change in corporatestructure or other transaction not involving the receipt of consideration by theCompany), the Plan will be appropriately adjusted in the class and maximum number ofshares subject to the Plan pursuant to subsection 4(a) and the maximum number ofshares subject to award to any person pursuant to subsection 5(c), and the outstandingStock Awards will be appropriately adjusted in the class and number of shares andprice per share of Common Stock subject to such outstanding Stock Awards. The Boardshall make such adjustments, and its determination shall be final, binding andconclusive. For clarity, the conversion of any convertible securities of the Companyshall not be treated as a transaction “without receipt of consideration” by the Company.(b)Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company,all outstanding Stock Awards shall terminate immediately prior to such event, andshares of bonus stock and restricted stock subject to the Company’s repurchase optionor to forfeiture under subsections 7(a)(iii) and 7(b)(iii) may be repurchased by theCompany or forfeited notwithstanding the fact that the holder of such stock is still inService.(c)Corporate Transaction. In the event of a Corporate Transaction, any survivingcorporation or acquiring corporation may assume any Stock Awards outstanding underthe Plan or may substitute similar stock awards (including an award to acquire the sameconsideration paid to the stockholders in the transaction described in this subsection11(c)) for those outstanding under the Plan. Unless the Stock Award Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Agreement otherwise provides, in the event any surviving corporation or acquiringcorporation does not assume such Stock Awards or substitute similar stock awards forthose outstanding under the Plan, then the Stock Awards shall terminate if not exercisedat or prior to such event.12.AMENDMENT OF THE PLAN AND STOCK AWARDS.(a)Amendment of Plan. The Board at any time, and from time to time, may amend the Plan.However, except as provided in Section 11 relating to adjustments upon changes inCommon Stock, no amendment shall be effective unless approved by the stockholders ofthe Company to the extent stockholder approval is necessary to satisfy the requirementsof Section 422 of the Code, Rule 16b-3 or any securities exchange listing requirements. (b)Stockholder Approval. The Board may, in its sole discretion, submit any otheramendment to the Plan for stockholder approval, including, but not limited to,amendments to the Plan intended to satisfy the requirements of Section 162(m) of theCode and the regulations thereunder regarding the exclusion of performance-basedcompensation from the limit on corporate deductibility of compensation paid to certainexecutive officers.(c)Contemplated Amendments. It is expressly contemplated that the Board may amend thePlan in any respect the Board deems necessary or advisable to provide eligible Employeeswith the maximum benefits provided or to be provided under the provisions of the Codeand the regulations promulgated thereunder relating to Incentive Stock Options or tobring the Plan or Incentive Stock Options granted under it into compliance therewith.(d)No Impairment of Rights. Rights under any Stock Award granted before amendment ofthe Plan shall not be impaired by any amendment of the Plan unless the Participantconsents thereto in writing.(e)Amendment of Stock Awards. The Board at any time, and from time to time, may amendthe terms of any one or more Stock Awards; provided, however, that the rights under anyStock Award shall not be impaired by any such amendment unless the Participantconsents thereto in writing.13.TERMINATION OR SUSPENSION OF THE PLAN.(a)Plan Term. Unless sooner terminated by the Board pursuant to Section 3, the Plan shallautomatically terminate on the day before the tenth anniversary of the date the Plan isadopted by the Board. No Stock Awards may be granted under the Plan while the Plan issuspended or after it is terminated.(b)No Impairment of Rights. Suspension or termination of the Plan shall not impair rightsand obligations under any Stock Award granted while the Plan is in effect except with thewritten consent of the Participant.14.EFFECTIVE DATE OF PLAN. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Plan shall become effective upon approval of the stockholders of the Company, providedthat such approval is received before the expiration of one year from the date the Plan is approved bythe Board of Directors, and provided further that the Board of Directors may grant Options (but notaward bonus stock, restricted stock, or stock appreciation rights) pursuant to the Plan prior tostockholder approval if the exercise of such Options by its terms is contingent upon stockholderapproval of the Plan as provided above.15.CHOICE OF LAW.The law of the State of Nevada shall govern all questions concerning the construction,validity and interpretation of this Plan, without regard to the choice of law rules.Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.READING INTERNATIONAL, INC.RESTRICTED STOCK UNIT AGREEMENT[Non-Employee Directors]This Restricted Stock Unit Agreement (this "Agreement") is made and entered into as of this______ day of _________, 2018 ("Grant Date") by and between Reading International, Inc., a Nevadacorporation (the "Company") and ______________ (the "Recipient"). Capitalized terms not definedherein shall have the meaning ascribed to them the in the Company’s 2010 Stock Incentive Plan, asamended (the “Plan”).Grant of Restricted Stock Units. The Company hereby grants to the Recipient _______ share units(such units, the “Restricted Stock Units”), subject to all of the terms and conditions of this RestrictedStock Unit Agreement and the Plan.Vesting and Payment.Vesting Schedule. Subject to the limitations set forth in this Section 2, Restricted Stock Unitswill vest, if at all, in accordance with the vesting schedule set forth in the Grant Notice.Forfeiture upon Termination. Subject to the provisions of Sections 2.3, upon termination of the Recipient’sServices, whether by the Company or by the Recipient, any unvested Restricted Stock Unitsshall be immediately forfeited and neither the Recipient nor any of the Recipient’s successors,heirs, assigns or personal representatives shall thereafter have any further rights or interests insuch Restricted Stock Units. Acceleration of Vesting.In the event that of Recipient’s death or Disability (as defined in the Plan), allunvested Restricted Stock Units shall immediately vest as of the date of death or Disability. In the event of a Change of Control, and the Recipient is not a Participant in suchChange in Control, all unvested Restricted Stock Units shall immediately vest as of the dateof such Change of Control. In the event of a Corporate Transaction in which the Restricted Stock Units are not tobe Appropriately Replaced at or prior to the effective time of such Corporate Transaction, thevesting of all Restricted Stock Units which are not otherwise fully vested shall automaticallyaccelerate so that all such Restricted Stock Units shall, immediately prior to the effective timeof the Corporate Transaction, become fully vested, free of all restrictions.For purposes of this Section 2.3:Restricted Stock Units shall be considered “Appropriately Replaced” if, at orprior to the Corporate Transaction, in the judgment of the Committee Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.as constituted at the time the Corporate Transaction is proposed or announced to theCompany (the “Evaluating Committee”), the Restricted Stock Units or a substitutedaward will confer the right to receive, for each share of Common Stock that may bereceived pursuant to the Restricted Stock Units existing immediately prior to theCorporate Transaction, on substantially the same vesting and other terms andconditions as were applicable to the Restricted Stock Units immediately prior to theCorporate Transaction, the consideration (whether stock, cash or other securities orproperty) to be received in the Corporate Transaction by holders of Common Stockfor each such share held on the effective date of such transaction (and if holders wereoffered a choice of consideration, the type of consideration chosen by the holders of amajority of the outstanding shares of Common Stock); provided, however, that ifsuch consideration to be received in the transaction constituting a CorporateTransaction is not solely cash and/or common stock of the successor company or itsparent or subsidiary, the Evaluating Committee may, if the obligations are to beassumed by the successor company, or its parent or subsidiary, approve that theconsideration to be received upon the exercise or vesting of the Restricted Stock Units(or the substituted award) will be common stock of the successor company or itsparent or subsidiary substantially equal in fair market value to the per-shareconsideration received by holders of Common Stock in the transaction constituting aCorporate Transaction. The determination of such substantial equality of value ofconsideration shall be made by the Evaluating Committee in its sole discretion and itsdetermination shall be conclusive and binding.The term “Change in Control” shall mean:a change, after the Grant Date, in the composition of the Board suchthat the Incumbent Board ceases for any reason to constitute at least a majorityof the Board; orafter the Grant Date a Person (as defined below) other than a PermittedHolder (as defined below) becomes the “Beneficial Owner” (as defined inRules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, ofsecurities of the Company representing in the aggregate thirty percent (30%)or more of the then outstanding Voting Securities of the Company; provided, however, that a Change in Control shall not be deemed to have occurred forpurposes of this clause (B) solely as the result of:(1) any acquisition directly from the Company, other than anacquisition by virtue of the exercise of a conversion privilege unlessthe security being so converted itself was acquired directly from theCompany,(2) any repurchase of securities by the Company,(3) any acquisition by any employee benefit plan (or related trust)sponsored or maintained by the Company or any entity controlled bythe Company, and Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(4) any acquisition pursuant to a transaction that is excluded from thedefinition of Corporate Transaction pursuant to approval by theIncumbent Board.The term “Corporate Transaction” shall mean:the consummation of a reorganization, merger or consolidation or saleor other disposition of all or substantially all of the assets of the Company,whether directly or indirectly through the sale of any one or more of theCompany’s subsidiaries or the assets of such one or more subsidiaries;excluding, however, any such transaction approved by the Incumbent Board(as defined below); orthe liquidation or dissolution of the Company.The term “Incumbent Board” shall mean the individuals who, as of the GrantDate, constitute the entire Board together with any individual(s) who becomes amember of the Board subsequent to the Grant Date, whose election, or nomination forelection by the Company’s stockholders, was approved by a vote of at least a majorityof those individuals who are members of the Board and who were also members ofthe then-Incumbent Board (or deemed to be such pursuant to this proviso); provided, however, that any such individual whose initial assumption of office occurs as aresult of either an actual or threatened election contest (as such terms are used in Rule14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual orthreatened solicitation of proxies or consents by or on behalf of a Person other thanthe Board shall not be so considered as a member of the Incumbent Board.The term “Participant” in a Change in Control or a Corporate Transactionshall mean any Person who, after such Change in Control or Corporate Transactioneither (a) is or controls any Person whose acquisition or control of securities of theCompany gives rise to the Change in Control pursuant to Section 2.3(d)(ii)(B) above,or (b) is or controls any Permitted Holder as of the effective date of such Change inControl or Corporate Transaction but was not or did not control such PermittedHolder as of the date hereof.The term “Permitted Holder” shall mean (i) the Company or any trustee orother fiduciary holding securities under an employee benefit plan of the Company, (ii)any Person who, since the Grant Date, has continuously been the Beneficial Owner ofnot less than thirty percent (30%) of the Voting Securities, or (iii) any Personcontrolled, directly or indirectly, by one or more of the foregoing Persons referred toin the immediately preceding clause (ii).The term “Person” shall mean any individual (whether acting in an individualcapacity or in a representative capacity so as to have sole or shared voting power ofVoting Securities), entity (including, without limitation, any corporation, charitable ornot-for profit corporation, private foundation, partnership, limited liability company,trust (including, without limitation, Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.any private, charitable or split-interest trust), joint venture, association or governmentalbody) or group (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act andthe rules and regulations thereunder.Services shall mean Recipient’s services as a Director of the Company or anysuccessor.The term “Voting Securities” shall mean all securities of a corporation havingthe right under ordinary circumstances to vote in an election of the board of directorsof such corporation, or other interests having comparable rights to elect managers orfiduciary persons or boards in non-corporate entities. As of the date hereof, theVoting Securities of the Company includes the shares of Class B common stock of theCompany.Payment. If Restricted Stock Units vest, then within thirty (30) days after the applicablevesting date (or, if the Recipient has, prior to vesting, delivered a written request to defer delivery ina form specified by the Board or the Committee, but in no event later than March 15 of the nextcalendar year after the year in which such vesting occurs), the Company shall deliver to theRecipient, or if applicable the Recipient’s estate, that number of shares of Common Stock equal tothe number of Restricted Stock Units which vested on such vesting date as set forth above.Taxes. Unless delivery of the shares of Common Stock is delayed after the applicable vestingdate pursuant to Section 2.4 above, on the vesting date, the Recipient shall recognize taxableincome in respect of the Common Stock deliverable and the Company shall report such taxableincome to the appropriate taxing authorities in respect thereof as it determines to be necessary andappropriate. Certificate. Subject to Sections 2.4 and 2.4 above, as soon as practicable after the vesting ofthe Restricted Stock Units, the Company shall deliver or cause to be delivered one or morecertificates issued in the Recipient’s name representing shares of Common Stock equal to thenumber of vested Restricted Stock Units. If a valid SEC Form S-8 Registration Statement is not ineffect at the time, the Certificate shall set forth restrictive legends advising the Recipient that theshares of Common Stock have not been registered under the securities laws of the United States orthe laws of any state and that the sale or other disposition of such shares is prohibited unless suchsale or other disposition is made in compliance with all such laws.Adjustments. Pursuant to Section 11 of the Plan, in the event of a change in capitalization, theBoard shall make such equitable changes or adjustments to the number and kind of securities or otherproperty (including cash) issued or issuable in respect of outstanding Restricted Stock Units.Notices. All notices and other communications under this Restricted Stock Unit Agreement shall bein writing and shall be given by e-mail, first class mail, certified or registered with return receipt requests,and shall be deemed to have been duly given three days after mailing (or one-day in case of delivery bye-mail) to the respective parties, as follows: (i) if to the Company, (a) if by mail, addressed to theCompany in care of its Corporate Secretary at the principal executive office of the Company, or (b) if bye-mail, addressed to the care of the Corporate Secretary at corporatesecretary@readingrdi.com and (ii) ifto the Recipient, Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.using the contact information on file with the Company. Either party hereto may change such party’saddress for notices by notice duly given pursuant hereto.Protections against Violations of Agreement. No purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge,encumbrance, gift, transfer in trust (voting or other) or other disposition or creation of a securityinterest in or lien on, any of the Restricted Stock Units or any agreement or commitment to do anyof the foregoing (each a “Transfer”) by any holder thereof in violation of the provisions of thisRestricted Stock Unit Agreement will be valid, except (i) a transfer for estate planning purposes, or(ii) with the prior written consent of the Board (such consent shall be granted or withheld in the solediscretion of the Board).Any purported Transfer of Restricted Stock Units or any economic benefit or interest thereinin violation of this Restricted Stock Unit Agreement shall be null and void ab initio, and shall notcreate any obligation or liability of the Company, and any person purportedly acquiring anyRestricted Stock Units or any economic benefit or interest therein transferred in violation of thisRestricted Stock Unit Agreement shall not be entitled to receive any Common Stock.Taxes. BY SIGNING THIS RESTRICTED STOCK UNIT AGREEMENT, THE RECIPIENTREPRESENTS THAT HE OR SHE HAS REVIEWED WITH HIS OR HER OWN TAXADVISORS THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OFTHE TRANSACTIONS CONTEMPLATED BY THIS RESTRICTED STOCK UNITAGREEMENT AND THAT HE OR SHE IS RELYING SOLELY ON SUCH ADVISORS ANDNOT ON ANY STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY OFITS AGENTS. THE RECIPIENT UNDERSTANDS AND AGREES THAT HE OR SHE (ANDNOT THE COMPANY) SHALL BE RESPONSIBLE FOR ANY TAX LIABILITY THAT MAYARISE AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS RESTRICTEDSTOCK UNIT AGREEMENT.Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provisionof this Restricted Stock Unit Agreement shall in no way be construed to be a waiver of such provisionor of any other provision hereof.Governing Law. This Restricted Stock Unit Agreement shall be governed by and construed andenforced in accordance with the laws of the State of Nevada applicable to contracts made and to beperformed herein. Any suit, action or proceeding with respect to this Restricted Stock Unit Agreement,or any judgment entered by any court in respect of any thereof, shall be brought in any court ofcompetent jurisdiction in the State of Nevada, and the Company and the Recipient hereby submit to theexclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding orjudgment. The Recipient and the Company hereby irrevocably waive (i) any objections which it maynow or hereafter have to the laying of the venue of any suit, action or proceeding arising out of orrelating to this Restricted stock Unit Agreement brought in any court of competent jurisdiction in theState of Nevada, (ii) any claim that any such suit, action or proceeding brought in any such court hasbeen brought in any inconvenient forum and (iii) any right to a jury trial. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof, and theRestricted Stock Units and this Restricted Stock Unit Agreement shall be subject to all terms andconditions of the Plan and this Restricted Stock Unit Agreement.Amendments / Construction. The Board may amend the terms of this Restricted Stock UnitAgreement prospectively or retroactively at any time, but no such amendment shall impair the rights ofthe Recipient hereunder without Recipient’s consent. Headings to Sections of this Restricted Stock UnitAgreement are intended for convenience of reference only, are not part of this Restricted Stock UnitAgreement and shall have no effect on the interpretation hereof.Survival of Terms. This Restricted Stock Unit Agreement shall apply to and bind the Recipient andthe Company and their respective permitted assignees and transferees, heirs, legatees, executors,administrators and legal successors.Rights as a Stockholder. The Recipient shall have no rights of a stockholder (including the right tovote and the right to receive distributions or dividends) until the Recipient has received the shares ofCommon Stock equal to the number of Restricted Stock Units which vested. On the date that theRecipient receives Common Stock with respect to Restricted Stock Units, the Recipient shall receivedistributions or dividends that would have been paid to or made with respect to the number of shares ofCommon Stock that relate to this Restricted Stock Unit Award from the date of vesting until such date ofdelivery of the Common Stock. The Recipient shall be able to exercise voting rights upon receipt of theshares of Common Stock.Agreement Not a Contract for Continued Service. Neither the Plan, the granting of the RestrictedStock Units, this Restricted Stock Unit Agreement nor any other action taken pursuant to the Plan shallconstitute or be evidence of any agreement or understanding, express or implied, that the Recipient has aright to continue to serve as a director of the Company for any period of time or at any specific rate ofcompensation. Authority of the Board; Disputes. The Board, directly or through its delegation of authority to theCommittee, shall have full authority to interpret and construe the terms of the Plan and this RestrictedStock Unit Agreement. Notwithstanding the above, nothing within this provision shall restrict theCompany or the Recipient from seeking to enforce the terms of this Restricted Stock Unit Agreementunder and as provided in Section 8, above.Severability. Should any provision of this Restricted Stock Unit Agreement be held by a court ofcompetent jurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affectthe validity of the remainder of this Restricted Stock Unit Agreement, the balance of which shallcontinue to be binding upon the parties hereto with any such modification (if any) to become a parthereof and treated as though contained in this original Recipient Restricted Stock Unit Agreement.Amendment. The Board, directly or through its delegation of authority to the Committee, has theright to amend, alter, suspend, discontinue or cancel the Restricted Stock Unit, prospectively orretroactively; provided, that, no such amendment shall adversely affect the Recipient’s material rightsunder this Agreement without the Recipient’s consent.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed anoriginal but all of which together will constitute one and the same instrument. Counterpart signaturepages to this Agreement transmitted by facsimile transmission, by electronic mail in portable documentformat (.pdf), or by any other electronic means intended Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.to preserve the original graphic and pictorial appearance of a document, will have the same effect asphysical delivery of the paper document bearing an original signature.Acceptance. The Recipient hereby acknowledges receipt of a copy of the Plan and this Agreement.The Recipient has read and understands the terms and provisions thereof, and accepts the RestrictedStock Units subject to all of the terms and conditions of the Plan and this Agreement. The Recipientacknowledges that there may be adverse tax consequences upon vesting of the Restricted Stock Unit ordisposition of the underlying shares and that the Recipient should consult a tax advisor prior to suchexercise or disposition.[SIGNATURE PAGE FOLLOWS] Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date firstabove written.READING INTERNATIONAL, INC.By_____________________Name: Ellen CotterTitle: President and Chief Executive Officer RECIPIENTBy_____________________Name: Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.RESTRICTED STOCK UNIT GRANT NOTICE UNDER THE READING INTERNATIONAL, INC. 2010 STOCK INCENTIVE PLANReading International, Inc. (the “Company”), pursuant to its 2010 Stock Incentive Plan,as amended (the “Plan”), hereby grants to the Recipient set forth below the number of Restricted StockUnits set forth below. The Restricted Stock Units are subject to all of the terms and conditions as setforth herein, in the Restricted Stock Unit Agreement (attached hereto), and in the Plan, all of which areincorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have themeaning set forth in the Plan.Recipient: Number of Restricted Stock Units: Grant Date:__________, 20__Vesting Schedule:100% of the Restricted Stock Units granted hereunder shall veston the fifth business day of the year following the Grant Date (the“Vesting Date”); provided that the Recipient has not undergone atermination of his or her services as a Director at the time of theVesting Date (or an earlier accelerating event).THE UNDERSIGNED RECIPIENT ACKNOWLEDGES RECEIPT OF THIS RESTRICTEDSTOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT ANDTHE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTEDSTOCK UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THISRESTRICTED STOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNITAGREEMENT AND THE PLAN. The Restricted Stock Unit Grant Notice is dated as of __________, 20__.Reading International, Inc. “Recipient”By: ________________________________ By:Name: Ellen Cotter Name:Title: President and Chief Executive OfficerSource: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.READING INTERNATIONAL, INC.RESTRICTED STOCK UNIT AGREEMENT[Non-Directors]This Restricted Stock Unit Agreement (this "Agreement") is made and entered into as of this______ day of _________, 2017 ("Grant Date") by and between Reading International, Inc., a Nevadacorporation (the "Company") and ______________ (the "Recipient"). Capitalized terms not definedherein shall have the meaning ascribed to them the in the Company’s 2010 Stock Incentive Plan, asamended (the “Plan”).Grant of Restricted Stock Units. The Company hereby grants to the Recipient _______ share units(such units, the “Restricted Stock Units”), subject to all of the terms and conditions of this RestrictedStock Unit Agreement and the Plan.Vesting and Payment.Vesting Schedule. Subject to the limitations set forth in this Section 2, Restricted Stock Unitswill vest, if at all, in accordance with the vesting schedule set forth in the Grant Notice.Forfeiture upon Termination. Subject to the provisions of Sections 2.3, upon termination of the Recipient’sServices, whether by the Company or by the Recipient, any unvested Restricted Stock Unitsshall be immediately forfeited and neither the Recipient nor any of the Recipient’s successors,heirs, assigns or personal representatives shall thereafter have any further rights or interests insuch Restricted Stock Units.Acceleration of Vesting.In the event that of Recipient’s death or Disability (as defined in the Plan), allunvested Restricted Stock Units shall immediately vest as of the date of death or Disability. In the event that, within twenty-four months after a Change in Control, Recipient isTerminated Without Cause by the Company or any successor Person, or Resigns For GoodReason, and the Recipient is not a Participant in such Change in Control, the vesting of allRestricted Stock Units which are not otherwise fully vested shall automatically accelerate sothat all such Restricted Stock Units shall, immediately when the Recipient is TerminatedWithout Cause or Resigns for Good Reason, become fully vested, free of all restrictions.In the event of a Corporate Transaction in which the Restricted Stock Units are not tobe Appropriately Replaced at or prior to the effective time of such Corporate Transaction, thevesting of all Restricted Stock Units which are not otherwise fully vested shall automaticallyaccelerate so that all such Restricted Stock Units shall, immediately prior to the effective timeof the Corporate Transaction, become fully vested, free of all restrictions. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In the event that, within twenty-four months after a Corporate Transaction at or priorto which the Restricted Stock Units have been Appropriately Replaced, Recipient isTerminated Without Cause by the Company or any successor Person, or Resigns For GoodReason, and the Recipient is not a Participant in such Corporate Transaction, the vesting of allRestricted Stock Units (or the substitute awards by which the Restricted Stock Units areAppropriately Replaced) which are not otherwise fully vested shall automatically accelerateso that all such Restricted Stock Units (or such substitute awards) shall, immediately when theRecipient is Terminated Without Cause or Resigns For Good Reason, become fully vested,free of all restrictions.For purposes of this Section 2.3:Restricted Stock Units shall be considered “Appropriately Replaced” if, inaddition to providing for acceleration as provided in clause (d) of this Section 2.3, ator prior to the Corporate Transaction, in the judgment of the Committee as constitutedat the time the Corporate Transaction is proposed or announced to the Company (the“Evaluating Committee”), the Restricted Stock Units or a substituted award willconfer the right to receive, for each share of Common Stock that may be receivedpursuant to the Restricted Stock Units existing immediately prior to the CorporateTransaction, on substantially the same vesting and other terms and conditions(including acceleration if the Recipient is Terminated Without Cause or Resigns ForGood Reason) as were applicable to the Restricted Stock Units immediately prior tothe Corporate Transaction, the consideration (whether stock, cash or other securitiesor property) to be received in the Corporate Transaction by holders of Common Stockfor each such share held on the effective date of such transaction (and if holders wereoffered a choice of consideration, the type of consideration chosen by the holders of amajority of the outstanding shares of Common Stock); provided, however, that if suchconsideration to be received in the transaction constituting a Corporate Transaction isnot solely cash and/or common stock of the successor company or its parent orsubsidiary, the Evaluating Committee may, if the obligations are to be assumed by thesuccessor company, or its parent or subsidiary, approve that the consideration to bereceived upon the exercise or vesting of the Restricted Stock Units (or the substitutedaward) will be common stock of the successor company or its parent or subsidiarysubstantially equal in fair market value to the per-share consideration received byholders of Common Stock in the transaction constituting a CorporateTransaction. The determination of such substantial equality of value of considerationshall be made by the Evaluating Committee in its sole discretion and its determinationshall be conclusive and binding.The term “Change in Control” shall mean:a change, after the Grant Date, in the composition of the Board suchthat the Incumbent Board ceases for any reason to constitute at least a majorityof the Board; orafter the Grant Date a Person (as defined below) other than a PermittedHolder (as defined below) becomes the “Beneficial Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),directly or indirectly, of securities of the Company representing in theaggregate thirty percent (30%) or more of the then outstanding VotingSecurities of the Company; provided, however, that a Change in Control shallnot be deemed to have occurred for purposes of this clause (B) solely as theresult of:(1)any acquisition directly from the Company, other than anacquisition by virtue of the exercise of a conversion privilege unlessthe security being so converted itself was acquired directly from theCompany,(2)any repurchase of securities by the Company,(3)any acquisition by any employee benefit plan (or relatedtrust) sponsored or maintained by the Company or any entitycontrolled by the Company, an(4)any acquisition pursuant to a transaction that is excludedfrom the definition of Corporate Transaction pursuant to approval bythe Incumbent Board.The term “Corporate Transaction” shall mean:the consummation of a reorganization, merger or consolidation or saleor other disposition of all or substantially all of the assets of the Company,whether directly or indirectly through the sale of any one or more of theCompany’s subsidiaries or the assets of such one or more subsidiaries;excluding, however, any such transaction approved by the Incumbent Board(as defined below); orthe liquidation or dissolution of the Company.The term “Incumbent Board” shall mean the individuals who, as of the GrantDate, constitute the entire Board together with any individual(s) who becomes amember of the Board subsequent to the Grant Date, whose election, or nomination forelection by the Company’s stockholders, was approved by a vote of at least a majorityof those individuals who are members of the Board and who were also members ofthe then-Incumbent Board (or deemed to be such pursuant to this proviso); provided, however, that any such individual whose initial assumption of office occurs as aresult of either an actual or threatened election contest (as such terms are used in Rule14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual orthreatened solicitation of proxies or consents by or on behalf of a Person other thanthe Board shall not be so considered as a member of the Incumbent Board.The term “Participant” in a Change in Control or a Corporate Transactionshall mean any Person who, after such Change in Control or Corporate Transactioneither (a) is or controls any Person whose acquisition or control of securities of theCompany gives rise to the Change in Control Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.pursuant to Section 2.3(c)(ii)(B) above, or (b) is or controls any Permitted Holder asof the effective date of such Change in Control or Corporate Transaction but was notor did not control such Permitted Holder as of the date hereof.The term “Permitted Holder” shall mean (i) the Company or any trustee orother fiduciary holding securities under an employee benefit plan of the Company, (ii)any Person who, since the Grant Date, has continuously been the Beneficial Owner ofnot less than thirty percent (30%) of the Voting Securities, or (iii) any Personcontrolled, directly or indirectly, by one or more of the foregoing Persons referred toin the immediately preceding clause (ii).The term “Person” shall mean any individual (whether acting in an individualcapacity or in a representative capacity so as to have sole or shared voting power ofVoting Securities), entity (including, without limitation, any corporation, charitable ornot-for profit corporation, private foundation, partnership, limited liability company,trust (including, without limitation, any private, charitable or split-interest trust), jointventure, association or governmental body) or group (as defined in Section 13(d)(3) or14(d)(2) of the Exchange Act and the rules and regulations thereunder.The term “Resigns For Good Reason” shall mean the termination by Recipientof Recipient’s Services or election not to continue to provide such Services for GoodReason. The term “Good Reason” shall mean: [in the case of an employee, (A) amaterial, adverse change in the Recipient’s authority, duties or responsibilities; (B) amaterial, adverse change in the authority, duties or responsibilities of the Recipient'ssupervisor (including, for example, requiring the Recipient to report to another officer,instead of the Board); (C) a material reduction in the Recipient's base salary or amaterial reduction in the Recipient’s bonus opportunity, equity compensation or othermaterial component of overall compensation; (D) a material reduction in Recipient’sindemnification rights, directors and officers insurance coverage, (E) a relocation ofthe Recipient's principal place of employment by more than ten (10) miles; or (F) theemployer's material breach of the Recipient’s employment agreement;][in the case of aconsultant: (A) any material, adverse change in the Recipient’s compensation or workarrangements, (B) any reduction in Recipient’s indemnification rights and/or insurancecoverage, or (C) any material, adverse change in the manner or location required forthe performance of Recipient’s Services; provided, however, that Recipient shall givewritten notice to the Company or the successor entity of any events giving that wouldconstitute Good Reason within ninety (90) days of date on which such facts or eventsarise, the Company or such successor shall have not less than thirty (30) days’opportunity to cure, and Recipient shall terminate his or her[employment/consultancy] not later than thirty (30) days of the failure of the Companyor such successor to timely cure.Services shall mean Recipient’s [services as a consultant to/services as anemployee of] the Company or any successor. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The term “Terminated without Cause” shall mean the termination of theRecipient’s [services as a consultant to/employment with] the Company or anysuccessor Person (including the failure to renew, extend or continue, as applicable) forany reason other than Cause. The term “Cause” shall mean: (A) the repeated failureor refusal of Recipient to perform the duties or render the services consistent withRecipient’s title and position, which failure is not cured within thirty (30) days afterwritten notice is delivered to Recipient; (B) fraud, embezzlement or other theft; (C)conviction of, or plea of guilty or nolo contendere to, a felony or gross misdemeanorinvolving moral turpitude; (D) intentional or gross misconduct or neglect that causesharm to the Company or its successor; or (E) substance abuse that affects theRecipient’s performance.The term “Voting Securities” shall mean all securities of a corporation havingthe right under ordinary circumstances to vote in an election of the board of directorsof such corporation, or other interests having comparable rights to elect managers orfiduciary persons or boards in non-corporate entities. As of the date hereof, theVoting Securities of the Company includes the shares of Class B common stock of theCompany.Payment. If Restricted Stock Units vest, then within thirty (30) days after the applicablevesting date (or, if the Recipient has, prior to vesting, delivered a written request to defer delivery ina form specified by the Board or the Committee, but in no event later than March 15 of the nextcalendar year after the year in which such vesting occurs), the Company shall deliver to theRecipient, or if applicable the Recipient’s estate, that number of shares of Common Stock equal tothe number of Restricted Stock Units which vested on such vesting date as set forth above.Taxes. Unless delivery of the shares of Common Stock is delayed after the applicable vestingdate pursuant to Section 2.4 above, on the vesting date, the Recipient shall recognize taxableincome in respect of the Common Stock deliverable and the Company shall report such taxableincome to the appropriate taxing authorities in respect thereof as it determines to be necessary andappropriate. The Recipient, if an employee, shall pay to the Company promptly upon request andin any event at the time the Recipient recognizes taxable income an amount equal to the taxes, ifany, the Company determines it is required or permitted to withhold under the applicable taxlaws. Such payment may be made in the form of cash. The Recipient also may satisfy, in whole orin part, the foregoing withholding liability, and the Company may withhold amounts as allowed bythe Plan, by having the Company withhold from the number of shares of Common Stock otherwiseissuable pursuant to the vesting of the Restricted Stock Units with a fair market value equal to suchwithholding.Certificate. Subject to Sections 2.4 and 2.4 above, as soon as practicable after the vesting ofthe Restricted Stock Units, the Company shall deliver or cause to be delivered one or morecertificates issued in the Recipient’s name representing shares of Common Stock equal to thenumber of vested Restricted Stock Units. If a valid SEC Form S-8 Registration Statement is not ineffect at the time, the Certificate shall set forth restrictive legends advising the Recipient that theshares of Common Stock have not been registered under the securities laws of the United States orthe laws of any state and that the sale or Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.other disposition of such shares is prohibited unless such sale or other disposition is made incompliance with all such laws.Adjustments. Pursuant to Section 11 of the Plan, in the event of a change in capitalization, theBoard shall make such equitable changes or adjustments to the number and kind of securities or otherproperty (including cash) issued or issuable in respect of outstanding Restricted Stock Units.Notices. All notices and other communications under this Restricted Stock Unit Agreement shall bein writing and shall be given by e-mail, first class mail, certified or registered with return receipt requests,and shall be deemed to have been duly given three days after mailing (or one-day in case of delivery bye-mail) to the respective parties, as follows: (i) if to the Company, (a) if by mail, addressed to theCompany in care of its Corporate Secretary at the principal executive office of the Company, or (b) if bye-mail, addressed to the care of the Corporate Secretary at corporatesecretary@readingrdi.com and (ii) ifto the Recipient, using the contact information on file with the Company. Either party hereto maychange such party’s address for notices by notice duly given pursuant heretoProtections against Violations of Agreement. No purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge,encumbrance, gift, transfer in trust (voting or other) or other disposition or creation of a securityinterest in or lien on, any of the Restricted Stock Units or any agreement or commitment to do anyof the foregoing (each a “Transfer”) by any holder thereof in violation of the provisions of thisRestricted Stock Unit Agreement will be valid, except (i) a transfer for estate planning purposes, or(ii) with the prior written consent of the Board (such consent shall be granted or withheld in the solediscretion of the BoardAny purported Transfer of Restricted Stock Units or any economic benefit or interest thereinin violation of this Restricted Stock Unit Agreement shall be null and void ab initio, and shall notcreate any obligation or liability of the Company, and any person purportedly acquiring anyRestricted Stock Units or any economic benefit or interest therein transferred in violation of thisRestricted Stock Unit Agreement shall not be entitled to receive any Common StockTaxes. BY SIGNING THIS RESTRICTED STOCK UNIT AGREEMENT, THE RECIPIENTREPRESENTS THAT HE OR SHE HAS REVIEWED WITH HIS OR HER OWN TAXADVISORS THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OFTHE TRANSACTIONS CONTEMPLATED BY THIS RESTRICTED STOCK UNITAGREEMENT AND THAT HE OR SHE IS RELYING SOLELY ON SUCH ADVISORS ANDNOT ON ANY STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY OFITS AGENTS. THE RECIPIENT UNDERSTANDS AND AGREES THAT HE OR SHE (ANDNOT THE COMPANY) SHALL BE RESPONSIBLE FOR ANY TAX LIABILITY THAT MAYARISE AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS RESTRICTEDSTOCK UNIT AGREEMENTFailure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provisionof this Restricted Stock Unit Agreement shall in no way be construed to be a waiver of such provisionor of any other provision hereof. Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Governing Law. This Restricted Stock Unit Agreement shall be governed by and construed andenforced in accordance with the laws of the State of Nevada applicable to contracts made and to beperformed herein. Any suit, action or proceeding with respect to this Restricted Stock Unit Agreement,or any judgment entered by any court in respect of any thereof, shall be brought in any court ofcompetent jurisdiction in the State of Nevada, and the Company and the Recipient hereby submit to theexclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding orjudgment. The Recipient and the Company hereby irrevocably waive (i) any objections which it maynow or hereafter have to the laying of the venue of any suit, action or proceeding arising out of orrelating to this Restricted stock Unit Agreement brought in any court of competent jurisdiction in theState of Nevada, (ii) any claim that any such suit, action or proceeding brought in any such court hasbeen brought in any inconvenient forum and (iii) any right to a jury trial.Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof, and theRestricted Stock Units and this Restricted Stock Unit Agreement shall be subject to all terms andconditions of the Plan and this Restricted Stock Unit Agreement.Amendments / Construction. The Board may amend the terms of this Restricted Stock UnitAgreement prospectively or retroactively at any time, but no such amendment shall impair the rights ofthe Recipient hereunder without Recipient’s consent. Headings to Sections of this Restricted Stock UnitAgreement are intended for convenience of reference only, are not part of this Restricted Stock UnitAgreement and shall have no effect on the interpretation hereof.Survival of Terms. This Restricted Stock Unit Agreement shall apply to and bind the Recipient andthe Company and their respective permitted assignees and transferees, heirs, legatees, executors,administrators and legal successors.Rights as a Stockholder. The Recipient shall have no rights of a stockholder (including the right tovote and the right to receive distributions or dividends) until the Recipient has received the shares ofCommon Stock equal to the number of Restricted Stock Units which vested. On the date that theRecipient receives Common Stock with respect to Restricted Stock Units, the Recipient shall receivedistributions or dividends that would have been paid to or made with respect to the number of shares ofCommon Stock that relate to this Restricted Stock Unit Award from the date of vesting until such date ofdelivery of the Common Stock. The Recipient shall be able to exercise voting rights upon receipt of theshares of Common Stock.Agreement Not a Contract for Employment. Neither the Plan, the granting of the Restricted StockUnits, this Restricted Stock Unit Agreement nor any other action taken pursuant to the Plan shallconstitute or be evidence of any agreement or understanding, express or implied, that the Recipient has aright to continue to provide employment as an officer, director, employee, consultant or advisor of theCompany or any Subsidiary or Affiliate for any period of time or at any specific rate of compensation. Authority of the Board; Disputes. The Board, directly or through its delegation of authority to theCommittee, shall have full authority to interpret and construe the terms of the Plan and this RestrictedStock Unit Agreement. Notwithstanding the above, nothing within this provision shall restrict theCompany or the Recipient from seeking to enforce the terms of this Restricted Stock Unit Agreementunder and as provided in Section 8, above.Severability. Should any provision of this Restricted Stock Unit Agreement be held by a court ofcompetent jurisdiction to be unenforceable, or enforceable only if modified, such Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.holding shall not affect the validity of the remainder of this Restricted Stock Unit Agreement, thebalance of which shall continue to be binding upon the parties hereto with any such modification (if any)to become a part hereof and treated as though contained in this original Recipient Restricted Stock UnitAgreement..Amendment. The Board, directly or through its delegation of authority to the Committee, has theright to amend, alter, suspend, discontinue or cancel the Restricted Stock Unit, prospectively orretroactively; provided, that, no such amendment shall adversely affect the Recipient’s material rightsunder this Agreement without the Recipient’s consentCounterparts. This Agreement may be executed in counterparts, each of which shall be deemed anoriginal but all of which together will constitute one and the same instrument. Counterpart signaturepages to this Agreement transmitted by facsimile transmission, by electronic mail in portable documentformat (.pdf), or by any other electronic means intended to preserve the original graphic and pictorialappearance of a document, will have the same effect as physical delivery of the paper document bearingan original signature.Acceptance. The Recipient hereby acknowledges receipt of a copy of the Plan and this Agreement.The Recipient has read and understands the terms and provisions thereof, and accepts the RestrictedStock Units subject to all of the terms and conditions of the Plan and this Agreement. The Recipientacknowledges that there may be adverse tax consequences upon vesting of the Restricted Stock Unit ordisposition of the underlying shares and that the Recipient should consult a tax advisor prior to suchexercise or disposition.[SIGNATURE PAGE FOLLOWS] Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date firstabove written.READING INTERNATIONAL, INC.By_____________________Name: Ellen CotterTitle: President and Chief Executive Officer RECIPIENTBy_____________________Name: Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.RESTRICTED STOCK UNIT GRANT NOTICE UNDER THE READING INTERNATIONAL, INC. 2010 STOCK INCENTIVE PLANReading International, Inc. (the “Company”), pursuant to its 2010 Stock Incentive Plan,as amended (the “Plan”), hereby grants to the Recipient set forth below the number of Restricted StockUnits set forth below. The Restricted Stock Units are subject to all of the terms and conditions as setforth herein, in the Restricted Stock Unit Agreement (attached hereto), and in the Plan, all of which areincorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have themeaning set forth in the Plan.Recipient: Number of Restricted Stock Units: Grant Date:__________, 20__Vesting Schedule:Describe Vesting Schedule; provided that the Recipient has notundergone a termination of his or her services as [anemployee/consultant] at the time of the Vesting Date (or an earlieraccelerating event)THE UNDERSIGNED RECIPIENT ACKNOWLEDGES RECEIPT OF THIS RESTRICTEDSTOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT ANDTHE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTEDSTOCK UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THISRESTRICTED STOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNITAGREEMENT AND THE PLAN. The Restricted Stock Unit Grant Notice is dated as of __________, 20__.Reading International, Inc. “Recipient”By: ________________________________ By:Name: Ellen Cotter Name:Title: President and Chief Executive OfficerSource: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.READING INTERNATIONAL, INC. –LIST OF SUBSIDIARIESSubsidiaryJurisdiction of IncorporationA.C.N. 143 633 096 Pty LtdAustraliaAHGP, Inc.DelawareAHLP, Inc.DelawareAngelika Film Centers, LLCDelawareAngelika Film Center Mosaic, LLCNevadaAngelika Film Centers (Dallas), Inc.TexasAngelika Film Center Union Market, LLCNevadaAngelika Film Centers (Plano) LPNevadaAngelika Plano Beverage LLCTexasAngelika Plano Holdings, LLCNevadaAustralia Country Cinemas Pty LtdAustraliaAustralian Equipment Supply Pty LtdAustraliaBayou Cinemas LPDelawareBogart Holdings LtdNew ZealandBurwood Developments Pty LtdAustraliaCarmel Theatres, LLCNevadaCitadel Agriculture, Inc.CaliforniaCitadel Cinemas, Inc.NevadaCitadel Realty, Inc.NevadaCity Cinemas, LLCNevadaConsolidated Amusement Holdings, LLCNevadaConsolidated Cinema Services, LLCNevadaConsolidated Cinemas Kapolei, LLCNevadaConsolidated Entertainment, LLCNevadaCourtenay Car Park LtdNew ZealandCraig CorporationNevadaDarnelle Enterprises LtdNew ZealandDimension Specialty, Inc.DelawareEpping Cinemas Pty LtdAustraliaGaslamp Theatres, LLCNevadaHope Street Hospitality, LLCDelawareHotel Newmarket Pty LtdAustraliaKaahumanu Cinemas, LLCNevadaKahala Cinema Company, LLCNevadaKMA Cinemas, LLCNevadaLiberty Live, LLCNevadaLiberty Theaters, LLCNevadaLiberty Theatricals, LLCNevadaLiberty Theatres Properties, LLCNevadaMinetta Live, LLCNevadaMovieland Cinemas (NZ) LtdNew ZealandNew Zealand Equipment Supply LimitedNew ZealandNewmarket Properties #3 Pty LtdAustralia Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Newmarket Properties No. 2 Pty LtdAustraliaNewmarket Properties Pty LtdAustraliaOrpheum Live, LLCNevadaQueenstown Land Holdings LtdNew ZealandRCPA LLC (fka Reading Company)PennsylvaniaRDI Employee Investment Fund LLCCaliforniaReading Arthouse LtdNew ZealandReading Auburn Pty LtdAustraliaReading Australia Leasing (E&R) Pty LtdAustraliaReading Belmont Pty LtdAustraliaReading Beverages (California) LLCNevadaAustraliaReading Burwood Pty LtdAustraliaReading Cannon Park Pty LtdAustraliaReading Capital CorporationDelawareReading Center Development CorporationPennsylvaniaReading Charlestown Pty LtdAustraliaReading Cinemas Courtenay Central LtdNew ZealandReading Cinemas Management Pty LtdAustraliaReading Cinemas NJ, Inc.DelawareReading Cinemas Pty LtdAustraliaReading Cinemas Puerto Rico LLCNevadaReading Cinemas USA LLCNevadaReading Colac Pty LtdAustraliaReading Consolidated Holdings, Inc.NevadaReading Consolidated Holdings (Hawaii), Inc.HawaiiReading Courtenay Central LtdNew ZealandReading Dandenong Pty LtdAustraliaReading Dunedin LimitedNew ZealandReading Elizabeth Pty LtdAustraliaReading Entertainment Australia Pty LtdAustraliaReading Exhibition Pty LtdAustraliaReading Foundation, LTDNevadaReading Holdings, Inc.NevadaReading International, LLCNevadaReading International Cinemas LLCDelawareReading International Services CompanyCaliforniaReading IP, LLCNevadaReading Licenses Pty LtdAustraliaReading Maitland Pty LtdAustraliaReading Malulani, LLCNevadaReading Management NZ LimitedNew ZealandReading Melton Pty LtdAustraliaReading Murrieta Theater, LLCNevadaReading New Lynn LimitedNew ZealandReading New Zealand LtdNew Zealand Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Reading Pacific LLCNevadaReading Productions, LLCNevadaReading Properties LLC (fka - GardenWalk Cinemas, LLC)NevadaReading Properties Indooroopilly Pty LtdAustraliaReading Properties Lake Taupo LtdNew ZealandReading Properties Manukau LtdNew ZealandReading Properties New Zealand LtdNew ZealandReading Properties Pty LtdAustraliaReading Properties Taringa Pty LtdAustraliaReading Property Holdings Pty LtdAustraliaReading Queenstown LtdNew ZealandRREC LLC (Reading Real Estate Company)PennsylvaniaReading Restaurants NZ LimitedNew ZealandReading Rouse Hill Pty LtdAustraliaReading Royal George, LLCDelawareReading South City Square Pty Ltd.AustraliaReading Sunbury Pty LtdAustraliaReading Theaters, Inc.DelawareReading Traralgon Pty Ltd.AustraliaReading Wellington Properties LtdNew ZealandRhodes Peninsula Cinema Pty LtdAustraliaRialto Cinemas LtdNew ZealandRialto Entertainment LtdNew ZealandRonwood Investments LtdNew ZealandRydal Equipment Co.PennsylvaniaS Note Liquidation Company, LLCNevadaSails Apartments Management LtdNew ZealandShadow View Land and Farming, LLCNevadaSutton Hill Properties, LLCNevadaThe Theatre At Legacy L.P.TexasTobrooke Holdings LtdNew ZealandTrans-Pacific Finance Fund I, LLCDelawareTrenton-Princeton Traction CompanyNew JerseyTwin Cities Cinemas, Inc.DelawareUS Agricultural Investors, LLCDelawareUS Development, LLCNevadaUS International Property Finance Pty LtdAustraliaWashington and Franklin Railway CompanyPennsylvaniaWestlakes Cinema Pty LtdAustraliaWilmington and Northern Railroad CompanyPennsylvaniaSource: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe have issued our reports dated March 15, 2018 with respect to the consolidated financial statementsand internal control over financial reporting in the Annual Report of Reading International, Inc. on Form10-K for the year ended December 31, 2017. We consent to the incorporation by reference of the saidreports in the Registration Statements of Reading International, Inc. on Forms S-8 (File No. 333-36277,File No. 333-53684, File No. 333-112069, and File No. 333-167101)./s/ GRANT THORNTON LLPLos Angeles, CAMarch 15, 2018Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 31.1CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Ellen M. Cotter, certify that:1)I have reviewed this Form 10-K of Reading International, Inc.;2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this report;3)Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this report;4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles;c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period coveredby this report based on such evaluation; andd)disclosed in this report any change in the registrant’s internal control over financial reporting that occurredduring the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controlover financial reporting; and5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (orpersons performing the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize andreport financial information; andb)any fraud, whether or not material, that involves management or other employees who have a significant role inthe registrant’s internal control over financial reporting./s/ Ellen M. CotterEllen M. CotterPresident and Chief Executive Officer(Principal Executive Officer) March 15, 2018 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 31.2CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Devasis Ghose, certify that:1)I have reviewed this Form 10-K of Reading International, Inc.;2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this report;3)Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this report;4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles;c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period coveredby this report based on such evaluation; andd)disclosed in this report any change in the registrant’s internal control over financial reporting that occurredduring the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controlover financial reporting; and5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (orpersons performing the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize andreport financial information; andb)any fraud, whether or not material, that involves management or other employees who have a significant role inthe registrant’s internal control over financial reporting./s/ Devasis GhoseDevasis GhoseExecutive Vice President & Chief Financial Officer(Principal Financial Officer)March 15, 2018 Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 32.1CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002(18 U.S.C. SECTION 1350)In connection with the accompanying Annual Report of Reading International, Inc. (the “Company”) on Form10-K for the fiscal year ended December 31, 2017 (the “Report”), I, Ellen M. Cotter, Chief Executive Officer of theCompany, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company./s/ Ellen M. CotterEllen M. CotterPresident and Chief Executive Officer(Principal Executive Officer) March 15, 2018Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 32.2CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002(18 U.S.C. SECTION 1350)In connection with the accompanying Annual Report of Reading International, Inc. (the “Company”) on Form10-K for the fiscal year ended December 31, 2017 (the “Report”), I, Devasis Ghose, Chief Financial Officer of theCompany, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company./s/ Devasis Ghose Devasis GhoseExecutive Vice President & Chief Financial Officer(Principal Financial Officer)March 15, 2018Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: READING INTERNATIONAL INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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