Reading International Inc.
Annual Report 2018

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KREADING INTERNATIONAL INC - RDIFiled: March 18, 2019 (period: December 31, 2018)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, 2018 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 every Interactive Data File required to be submitted and posted pursuant to Rule 405of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit post suchfiles). 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 June 29, 2018 (the lastbusiness day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the registrant's voting and non-voting commonequity held by non-affiliates based on the closing price on that date as reported by the Nasdaq Stock Market was $383,954,817. As of March 15, 2019, therewere 21,240,044 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 $0.01per share, outstanding. Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.Documents Incorporated by ReferencePortion of the registrant’s definitive Proxy Statement for the 2019 annual meeting of the stockholders to be filed with the Securities and Exchange Commissionwithin 120 days after the end of the fiscal year ended December 31, 2018 are incorporated by reference into Part III of this Annual Report on Form 10-K.- 2 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018INDEXPage​PART I11​Item 1 – Our Business11​Item 1A – Risk Factors24- 3 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 1B – Unresolved Staff Comments34​Item 2 – Properties35​Item 3 – Legal Proceedings38​Item 4 – Mine Safety Disclosures39- 4 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 II39​Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities39​Item 6 – Selected Financial Data42​Item 7 – Management’s Discussions and Analysis of Financial Condition and Results of Operations44- 5 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Risk73​Item 8 – Financial Statements and Supplementary Data75​Management’s Report on Internal Control over Financial Reporting82​Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements)83- 6 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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)84​Consolidated Balance Sheets as of December 31, 2018 and 201785​Consolidated Statements of Income for the Three Years Ended December 31, 201886​Consolidated Statements of Comprehensive Income for the Three Years Ended December 31, 201887- 7 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Stockholders’ Equity for the Three Years Ended December 31, 201888​Consolidated Statements of Cash Flows for the Three Years Ended December 31, 201889​Notes to Consolidated Financial Statements90​Schedule II – Valuation and Qualifying Accounts127- 8 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Disclosure128​Item 9A – Controls and Procedures128​PART III129​PART IV130- 9 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 15 – Exhibits, Financial Statement Schedules130​SIGNATURES138 - 10 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018 ("2018 Form 10-K" or “2018 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 2018 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 in the Silicon Beach area of LosAngeles County, at 5995 Sepulveda Blvd, Suite 300, Culver City, 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 focused on the development, ownership and operation of entertainment and real property assets in threejurisdictions: (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 as of December 31, 2018, and, ·Real Estate, including real estate development and the rental or licensing of retail, commercial and live theater assets comprisingsome 22,101,800 square feet of land and approximately 879,000 square feet of net rentable area.- 11 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.Set forth below is a brief description of the various brands under which we organize our business operations: BusinessSegment / UnitOur Commercial BrandsCountryDescriptionWebsite LinkCinemaExhibition/ All CountriesUnited States,Australia, NewZealandOur Reading Cinemas tradename is derived from ourover 180 year history as the “Reading Railroad”featured on the Monopoly game board. Under thisbrand, we deliver beyond-the-home entertainment(principally mainstream movies and alternative contentand attendant food and beverage) across our threeoperating jurisdictions. All our cinemas are equippedwith the latest state-of-the-art digital equipment, and 19Reading Cinemas feature at least one TITAN LUXE,TITAN XC or IMAX premium auditorium.Reading Cinemas US Reading Cinemas AU Reading Cinemas NZ United StatesSince its opening in 1989, our New York City AngelikaFilm Center has and consistently continues to be one ofthe most popular and influential arthouse cinemas in theU.S., featuring principally independent and foreignfilms. To date, we have expanded our Angelika FilmCenter Group to include 5 other Angelikas: two in theDallas area, two in the Washington DC area and one inSan Diego, CA. We are actively looking for morelocations. Angelika Film Center United StatesIn 2017, our Consolidated Theatres celebrated 100years of providing cinematic entertainment in the stateof Hawaii. We are the oldest and largest circuit inHawaii with 9 cinemas on the islands of Oahu and Maui,including our new state-of-the-art 8-screen conceptcinema: Olino by Consolidated Theatres in West Oahu. Consolidated Theatres - 12 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 the Manhattan area of New YorkCity features an eclectic mix of programming, frommainstream blockbusters to independent films.City Cinemas Real Estate /LeasingUnited StatesOur 44 Union Square property – the historicTammany Hall, located overlooking Union Square inNew York City -- is currently in the final stages of acomplete re-development. We are currently inexclusive lease negotiations for long term leases withrespect to approximately 90% of the net rentable areaof the building and, while no assurances can be given,it is currently anticipated that our base building will beready for tenant improvement work before the end ofthe second quarter of this year.44 Union Square AustraliaLocated on 203,287 square feet of land in suburbanBrisbane, the center is currently comprised ofapproximately 146,905 square feet of net rentable areaand is 98% leased. At the end of 2017, we completeda major expansion that added a new 8-screen ReadingCinemas with TITAN LUXE, an additional 10,150square feet (943m2) of restaurant tenant space and 124parking spaces.Newmarket Village AustraliaAnchored by a 10-screen Reading Cinemas,Auburn/Redyard is an outdoor retail center located ina suburb of Sydney. The center is currently comprisedof approximately 519,992 square feet of land and75,492 square feet of net rentable area, serviced by a727 space subterranean parking garage, and is 83%leased. In 2018, we added to the center approximately20,870 square foot of land currently improved with a16,830 square foot office building, rented to Telstrathrough July 2022, and over the past two years haveadded an additional 15,000 rentable square feet offully leased restaurant and retail space.Auburn/Redyard AustraliaAnchored by a six-screen Reading Cinemas, CannonPark is located in Townsville, Australia, and iscurrently comprised of 245,266 square feet of landand 104,744 square feet of net rentable area, which iscurrently 85% leased. We are working on plans toadd approximately 13,100 square feet of net rentablearea to the center.Cannon Park Townsville AustraliaAnchored by a 10-screen Reading Cinema and fourF&B or retail tenancies, the Belmont Common islocated in Perth, Australia, and is currently comprisedof 103,204 square feet of land and 59,395 square feetof net rentable area, which is currently 96% leased. The Belmont Common- 13 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. . New ZealandLocated in the heart of Wellington – New Zealand’scapital city – this center is comprised of 161,071 squarefeet of land situated proximate to the Te PapaTongarewa Museum (attracting over 1.5 million visitorsannually), across the street from the site of Wellington’snewly announced convention center (estimated to openits doors in 2022) and at a major public transit hub. Damage from the 2016 earthquake necessitateddemolition of our nine-story parking garage at the site,and unrelated seismic issues have caused us to closeportions of the existing cinema and retail structurewhile we reevaluate the center for redevelopment as anentertainment themed urban center with a major foodand grocery component. Wellington continues to be rated as one of the top citiesin the world in which to live, and we continue tobelieve that the Courtenay Central site is located in oneof the most vibrant and growing commercial andentertainment sections of Wellington. Courtenay Central Real Estate /Live TheatreUnited StatesWe continue to operate three (3) off-Broadway livetheatres, one (1) in Chicago and two (2) in Manhattan,New York, under the Liberty Theatres tradename. In2018, we entered into a license with Audible, asubsidiary of Amazon, pursuant to which our MinettaLane Theatre serves as Audible’s live theatre home inNew York City.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 providing financial leverage. More specifically,the combination of these two segments provides a variety of business advantages including the following:·Cinema Anchor Tenancy. Cinemas can be used as anchors for larger retail developments (referred to as entertainment-themedcenters, or “ETCs”), and our involvement in the cinema business can give us an advantage over other real estate developers orredevelopers who must identify and negotiate with third party anchor tenants. We have used cinemas to create our own anchors atour five (5) ETCs.·Reduced Pressure to Deliver Cinema Business Growth. Pure cinema operators can encounter financial difficulty as demands uponthem to produce cinema-based earnings growth tempt them into reinvesting their cash flow into increasingly marginal cinemasites, overpaying for existing cinemas or entering into high-rent leases. While we believe that there will continue to be attractiveopportunities to acquire cinema assets and/or to develop upper-end specialty type theaters in the future, we do not feel pressure tobuild or acquire cinemas for the sake of adding units or building gross cinema revenues. This strategy has, over the years, allowedus to acquire cinemas at multiples of trailing theater cash flow below those paid by third parties in recent acquisitions. We intendto focus our use of cash flow on our real estate development and operating activities, to the extent that attractive cinemaopportunities are not available to us or that such funds are not needed for reinvestment to maintain our cinemas in a competitiveposition. In 2018, we invested approximately $24.0 million in the upgrading and repositioning of our historic cinema assets oradding new cinemas, and approximately $30.7 million in the acquisition or development of our non-cinema real estate assets.·Flexibility in Property Use. We are always open to the idea of converting an entertainment property to another use, if there is ahigher and better use for the property, or to sell individual assets if an attractive opportunity presents itself. Our Union Squareproperty, which is in the final stages of redevelopment was initially acquired 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.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 2018, we invested approximately $40.6 million in our U.S. assets: $23.4 million for the development of our real estateassets (principally construction of our Union Square property) and $17.2 million for the improvements of our cinema assets (principallyupgrading our offerings at our existing cinemas). We invested approximately $12.3 million in our Australian assets: $6.4 million for thedevelopment of our real estate assets (principally at our Auburn (Sydney) shopping centers), and $6.0 million for the development of ourcinema assets (principally renovations of our cinemas at Auburn, Elizabeth, and Charlestown and the upgrade of certain other cinemas). Weinvested approximately $1.8 million in our New Zealand assets: $1.0 million for the development of- 14 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 assets (principally towards the redevelopment of our Courtenay Central assets), and approximately $817,000 for thedevelopment of cinema assets (principally upgrades). As shown in the chart set forth 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, we continue to believe that, over the long term, operating in Australia and New Zealand is a prudentdiversification of risk. Australia has been identified by the United Nations as among the Top 10 countries in the World in terms of naturalresources per person. Deutsche Bank has twice named Wellington the best place in the world to live. In 2013, the Organization forEconomic Co-operation and Development rated Australia as the best place to live and work in the world. In our view, the economies ofAustralian and New Zealand are stable economies and their lifestyles support our entertainment/lifestyle focus.At December 31, 2018, the book value of our assets was $439.0 million, and, as of that same date, we had a consolidated stockholders’ bookequity of $180.5 million. Calculated based on book value, $138.9 million, or 32% of our assets, relate to our cinema exhibition activitiesand $263.8 million, or 60%, of our assets, relate to our real estate activities. For additional segment financial information, please see Note 1 – Description of Business and Segment Reporting to our 2018 consolidatedfinancial statements. We have diversified our assets among three countries: the United States, Australia, and New Zealand. Based on book value, at December 31,2018, we had approximately 50% of our assets in the United States, 36% in Australia and 14% in New Zealand compared to 45%, 40%, and15% respectively, at the end of 2017. This increase in U.S. assets is principally due to our investments in the redevelopment of UnionSquare and the upgrades to our domestic cinema assets, as well as the continued strengthening of the U.S. dollar compared to the Australianand the New Zealand dollar.At December 31, 2018, we had cash and cash equivalents of $13.1 million, which are treated as a corporate assets. Our cash included$7.6 million denominated in U.S. dollars, $3.5 million (AU $4.9 million) in Australian dollars, and $2.0 million (NZ$3.0 million) in NewZealand dollars. We had total worldwide non-current assets of $408.7 million, distributed as follows: $203.8 million in the United States,$147.4 million (AU$209.2 million) in Australia and $57.5 million (NZ$85.7 million) in New Zealand. We had $55.6 unused capacity ofavailable and unrestricted corporate credit facilities at December 31, 2018.For 2018, our gross revenues in the United States, Australia, and New Zealand were $165.8 million, $111.7 million, and $31.9 million,respectively, compared to $143.8 million, $106.5 million, and $29.7 million for 2017. All three countries posted revenue increases in 2018as a result of higher cinema attendance in all three of our circuits. - 15 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 EXHIBITIONOverallWe are dedicated to creating engaging 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. 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, 2018: State / Territory / Location Screen Interest in AssetUnderlying the Cinema Country Region Count Count Leased Owned Operating BrandsUnited States Hawaii 9 98 9 Consolidated Theatres California 7 88 7 Reading Cinemas, Angelika Film Center New York(3) 6 23 5 1 Angelika Film Center, City Cinemas Texas 2 13 2 Angelika Film Center New Jersey 1 12 1 Reading Cinemas Virginia 1 8 1 Angelika Film Center Washington DC 1 3 1 Angelika Film Center U.S. Total 27 245 26 1 Australia New South Wales 6 44 4 2 Reading Cinemas Victoria 6 43 6 Reading Cinemas Queensland 5 48 2 3 Reading Cinemas, Event Cinemas(1) Western Australia 2 16 1 1 Reading Cinemas South Australia 2 15 2 Reading Cinemas Australia Total 21 166 15 6 New Zealand Wellington 2 15 1 1 Reading Cinemas Otago 3 15 2 1 Reading Cinemas Auckland 2 15 2 Reading Cinemas, Rialto Cinemas(2) Canterbury 1 8 1 Reading Cinemas Southland 1 5 1 Reading Cinemas Bay of Plenty 1 5 1 Reading Cinemas Hawke's Bay 1 4 1 Reading Cinemas New Zealand Total 11 67 6 5 GRAND TOTAL 59 478 47 12 (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 jointventure partner, Event Cinemas, manages their day-to-day operations.(3)Our New York statistics include one (1) managed cinema.In January of 2019, we acquired our first cinema in Tasmania, a well-established 4 screen cinema (with liquor license) in Devonport,bringing our current cinema count up to 60. In addition, as of today, we have entered into four lease agreements, providing for thedevelopment of an additional 25 state-of-the-art screens. While no assurances can be given, the completion of these four new complexes isanticipated to increase our cinema count to 64 before the end of 2021.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. Since2017 and continuing through 2018, we increased the number of auditoriums featuring recliner seating from 58 to 136. In addition, weadded large format TITAN XC or LUXE screen offerings to 18 of our cinemas. Our circuit has been completely converted to digitalprojection and sound systems. In 2018, we upgraded two of our auditoriums to feature Dolby ATMOS sound which we consider to be thebest in the industry at this time.Attendance and gross box office was significantly higher for the exhibition industry in the U.S., Australia and New Zealand for 2018,compared to 2017. We believe that the cinema exhibition business will continue to generate increasing cash flows in the years ahead, evenin recessionary or inflationary environments, because people will continue to spend a reasonable portion of their entertainment dollars onentertainment outside of the home. When compared to other forms of outside-the-home entertainment, movies continue to be a popular andcompetitively priced option. We believe that the advent of an array of streaming and mobile video services is a threat to traditional in-home forms of entertainment (such as traditional cable and satellite providers), the creation of new sources of program production willultimately be beneficial to our industry, as cinema exhibition becomes an increasingly important point of differentiation for the marketingof such product.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 mainstream cinemas in selected markets. While we continue to consider possible opportunities in- 16 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.third party developments, we prefer, where possible, to put our capital to work in properties that we own rather than take on potentiallyburdensome lease obligations with their built-in rent increases and pass-throughs and their dependence on third party shopping centeroperators.We continue to expand and upgrade our circuits 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. During 2018, we continued working on the refurbishment of several of our cinema locations including Manville andMililani in the U.S., and Charlestown, Elizabeth, and Auburn in the Australia and New Zealand circuits. At the end of 2017, we opened anew cinema at our Newmarket Village Shopping Center in Brisbane, Australia, and re-opened our Cal Oaks cinema, located in Murrieta,California which now features our new “Spotlight” level of service in 6 out of the 17 auditoriums. “Spotlight” puts focus directly on ourcustomers by providing an in-auditorium, waitered, enhanced F&B experience for their enjoyment. We also upgraded 54 of our screens toluxury seating and extended our enhanced food offerings to 25 of our cinemas in 2017. In 2016, we opened an eight-screen, state-of-the-artcinema, branded Olino by Consolidated Theatres, our ninth theatre and first to break ground since 2001 in the state of Hawaii. In 2015, weopened 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 our conventional cinema at the Carmel Mountain Plaza in San Diego, California, completely renovated our fourteen-screen Harbourtown cinema in Queensland, Australia, and added the first IMAX screen to our circuit.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 continuing to upgrade ourfood and beverage offerings. During 2017, we created our “Spotlight” service concept, which we implemented at our Cal Oaks cinemaduring 2018. At year-end 2018, we currently have beer and wine, and in some cases liquor, licenses for 14 of our venues in the U.S. and arein the application process for an additional 5 venues. As a result we are currently offering alcoholic beverages at 12 of our U.S. cinemas andtwo of our live theatres. In our international cinema operations, we offer alcoholic beverages for 11 of our cinemas in Australia and five ofour cinemas in New Zealand (which includes the joint ventures).Operating InformationAt December 31, 2018, our principal tangible assets included:·interests in 59 cinemas comprising some 478 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 now inthe final stages of redevelopment for retail and office uses;·our ETCs in Sydney (Redyard Center), Brisbane (Newmarket Village Center), Townsville (Cannon Park), Perth (Belmont) andWellington (Courtenay Central), each of which includes a Reading Cinema;·fee interest in 70.4 acres of developable land located between Auckland and the airport, zoned for light industrial and heavyindustrial purposes;·a 50% interest in a special purpose entity holding the fee interest in 202 acres of developable land located in Coachella, Californiazoned 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 20.7million square feet of developedand undeveloped real estate in the United States, Australia and New Zealand; and·cash and cash equivalents, aggregating $13.1 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 64% of their 2018 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.- 17 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.We are increasing our presence in social media, thereby, reducing our dependency on print advertising. Film distributors may alsoadvertise certain feature films in various print, radio and television media, as well as on the internet, and distributors generally pay thosecosts.F&B sales accounted for approximately 29% of our total 2018 cinema revenue. Although certain cinemas have licenses for the sale and on-premises consumption of alcoholic beverages, historically F&B products have been primarily popcorn, candy, and soda. This is changing,as more of our theaters are offering expanded food and beverage offerings. One of our strategic focuses is to upgrade our existing cinemaswith expanded F&B offerings.Screen advertising and other revenue contribute approximately 7% of our total 2018 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 passive one-third interest in a 16-screen Brisbane cinema managedby Event Cinemas.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. Film payment terms are generally based upon an agreed-upon percentage of box officereceipts that will vary from film-to-film.Competition Film is allocated by the applicable distributor among competitive cinemas. Accordingly, from time-to-time, we may be unable to licenseevery film that we desire to play. In the Australian and New Zealand markets, we generally have access to all film product in the market.Competition for films may be intense, depending upon the number of cinemas in a particular competitive 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, because of the dramatic consolidation of screens into the hands of a few very large andpowerful exhibitors such as Cineworld (the new owners of Regal), AMC (including the newly acquired Carmike), Cinemark, and GalaxyCinemas, who control 64% of the North American market, these mega-exhibition companies are in a position to offer distributors access tomany more screens in major markets than we can. Also, the majors have a significant number of markets where they operate withoutmaterial competition, meaning that the distributors have no alternative exhibitor for their films in these markets. Accordingly, distributorsmay decide to give preference to these mega-exhibitors when it comes to licensing top-grossing films, rather than deal with independentssuch as ourselves. The situation is different in Australia and New Zealand, where typically every major multiplex cinema has access to all ofthe film currently in distribution, regardless of the ownership of that multiplex cinema. However, on the reverse side, we have sufferedsomewhat in these markets from competition from boutique operators, who are able to book top grossing commercial films for limited runs,thus increasing competition for customers wishing to view such top grossing films.The availability of state-of-the-art technology and/or luxury seating can also be a factor in the preference of one cinema over another. Inrecent periods, a number of cinemas have opened or re-opened featuring luxury seating and/or expanded food and beverage service,including the sale of alcoholic beverages and food served to the seat. We have, for a number of years, offered alcoholic beverages in certainof our Australia and New Zealand cinemas and at certain of our Angelika Film Centers in the U.S. We are currently working to upgrade theseating and food and beverage offerings (including the offering of alcoholic beverages) at a number of our existing cinemas. We now offeralcoholic beverages at 28 of our worldwide 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- 18 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.Group, the U.K.’s largest cinema operator, and Cinemark (with 4,561 screens in 339 cinemas). As of December 31, 2018, we were the 11thlargest exhibitor with 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 78%of the total cinema box office: Event 43%, 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.The principal exhibitors in New Zealand are Event Cinemas with 116 screens nationally and Hoyts with 70 screens. Reading has 54 screens(excluding its interest in unconsolidated joint ventures). The major exhibitors in New Zealand control approximately 52% of the total boxoffice: Event 31% and Hoyts 21%. Reading has 16% of the market (Event and Reading market share figures exclude any partnershiptheaters) and we were the third largest exhibitor in New Zealand.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.Many of our competitors have substantial financial resources which could allow them to operate in a more competitive manner than us.In-Home, Streaming and Mobile Device CompetitionThe “in-home,” streaming and mobile device entertainment industry has experienced significant leaps in recent periods in both the qualityand affordability of in-home and mobile device entertainment systems and in the accessibility to, and quality of, entertainmentprogramming through cable, satellite, internet distribution channels, and Blu-ray/DVD. The success of these alternative distributionchannels and the entrance of new sources of product (like Netflix and Amazon) who are producing product competitive with films producedfor theatrical release puts additional pressure on film distributors to reduce and/or eliminate the time period between theatrical andsecondary release dates. With the acquisition of Fox, Disney is now poised to enter this market.To a certain extent, it appears that consumers are willing to choose convenience over presentation quality. We are responding to thischallenge generally by increasing the comfort and service levels available at our cinemas, by offering convenient on-line ticketreservations services with guaranteed seating, by investing in larger screens and enhanced audio, by offering more specialized andalternative product to our audiences and by providing value for the movie goer’s dollar. We are focusing on the fact that going to themovies is a social experience, and we are working to make that experience the best that it can be. Also, that we must differentiate ourselvesfrom other forms of video entertainment by emphasizing the special nature of seeing video presentations in a cinema environment and bydeveloping ways to position ourselves to take advantage in the increased output of film and feature product. These are issues common toboth our U.S. and international cinema operations. Competitive issues are discussed in 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- 19 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 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 feet of newly constructed net rentable space to our existing ETCs (calculated exclusive ofcinema space), of which 24,924 square feet 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 7 full time employees over the last 3 years.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. While no assurances can be given, wecurrently anticipate that the building will be ready for the commencement of the construction of tenant improvements during the secondquarter of 2019. We are currently negotiating, on an exclusive basis, leases representing approximately 90% of the net leasable area of thebuilding. A short video on this project can be seen at www.44unionsquare.com.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 property. While we are stilltalking with the owner of the adjacent property about a possible joint venture development, we have not been able to come to an agreementas to the terms of that joint venture. Accordingly, we have shifted our strategic plan with respect to that property and have commenced themaster-planning for a go-it-alone development. The Cinemas 1,2,3, is a cash flowing contributor to our domestic cinema operations. OnAugust 31, 2016, we secured a new three-year mortgage loan ($20.0 million) with Valley National Bank, with a one year option to extendthrough August 31, 2020, the proceeds of which were used to repay the then existing mortgage on the property, and to repay certain inter-company indebtedness, and for working capital purposes. 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.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. This acquisition was funded internally. For additional information, see Note 4 – RealEstate Transactions. We continue to work on the expansion and upgrading of our Auburn/Redyard in Sydney, Australia and Newmarket Village in Brisbane,Australia and to master-plan the expansion and enhancement of our Cannon Park ETC in Townsville, Australia through the expansion orimprovement of our Reading Cinemas at each of these centres and additional food and beverage focused space.At Auburn/RedYard, since the beginning of 2016, we have constructed and entered into leases representing approximately 15,000 squarefeet of additional retail space, which increased the square footage of that center from approximately 117,000 to approximately 132,000square feet. Of this 15,000 square feet, 9,600 square feet was completed in 2016, and the remaining 5,900 square feet was completed in Q42017. In 2018, we acquired a 20,870 square foot in-fill property, currently improved with a 16,830 square foot office building, leased toTelstra through July 2022. This increased our frontage on Parramatta Road to 1,620 of uninterrupted square feet. The center is nowcomprised of 519,992 square feet of land, 75,492 square feet of retail improvements, surface parking for 367 vehicles and subterraneanparking for 727 vehicles and is 83% leased. The center also has approximately 10,586 square foot of additional land available fordevelopment. This expansion was funded internally.At Newmarket Village, we added a state-of-the art eight-screen Reading Cinema, 10,150 square feet of additional retail space and 124additional parking 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 Newmarket Village. This will increase our Newmarket- 20 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.Village footprint from approximately 204,000 square feet to approximately 227,000 square feet. Our Newmarket Village project wasfunded internally and is currently approximately 98% leased.Located in the heart of Wellington – New Zealand’s capital city – this center is comprised of 161,071 square feet of land situated proximateto the Te Papa Tongarewa Museum (attracting over 1.5 million visitors annually), across the street from the site of Wellington’s newlyannounced convention center (estimated to open its doors in 2022) and at a major public transit hub. Damage from the 2016 earthquakenecessitated demolition of our nine-story parking garage at the site, and unrelated seismic issues have caused us to close portions of theexisting cinema and retail structure while we reevaluate the center for redevelopment as an entertainment themed urban center with a majorfood and grocery component. Wellington continues to be rated as one of the top cities in the world in which to live, and we continue to believe that the CourtenayCentral site is located in one of the most vibrant and growing commercial and entertainment sections of Wellington.In addition to certain historic railroad properties (such as our 6.8 acre Viaduct Property in downtown Philadelphia and certain adjacentcommercial properties) and certain expansion space associated with our existing ETCs, we have two unimproved properties that weacquired for, and are currently being held for, development: (i) our 50% interest in a 202-acre parcel in Coachella, California (near thegrounds where the Coachella Music Festival is held), currently zoned for residential and mixed-use uses, and (ii) our 70.4–acre parcel inManukau, a suburb of Auckland, New Zealand (located adjacent to the Auckland Airport) currently zoned for a mixture of light and heavyindustrial uses.Our Coachella property was acquired as a long term land hold in a foreclosure auction by the Resolution Trust Corporation as the liquidatorof the lender with the first mortgage on the property. The zoning has been established and the property freed of a burdensomedevelopment agreement. We are monitoring developments in the area, and believe that this property is likely a candidate forsale. Development activity in the vicinity appears to be strengthening. In 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 heavy industrial use. Light industrialuses include certain manufacturing, production, logistic, transportation, warehouse and wholesale distribution activities and, on anancillary basis, certain office, retail and educational uses. Now that our zoning enhancement goal has been achieved, we are working withother major landowners in the area 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.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, 2018, we had 104 full-time executive and administrative employees, 113 live theatre employees, 8 Real Estateemployees and 2,719 cinema employees. A small number of our cinema employees in New Zealand are union members, as are ourprojectionists in Hawaii. None of our Australian-based employees or other employees are subject to union contracts. Overall, we are of theview that the existence of these collective-bargaining agreements does not materially increase our costs of labor or our ability to compete.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 reflect our expectation after having considered a variety of risks and uncertainties. However, they arenecessarily the product of internal discussion and do not necessarily completely reflect the views of individual members of our Board ofDirectors or of our management team. Individual Board members and individual members of our management team may have a differentview as to the risks and uncertainties involved, and may have different views as to future events or our operating performance. - 21 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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:·the number and attractiveness to movie goers of the films released in future periods;·the amount of money spent by film distributors to promote their motion pictures;·the licensing fees and terms required by film distributors from motion picture exhibitors in order to exhibit their films;·the 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;·the 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;”·the cost and impact of improvements to our cinemas, such as improved seating, enhanced food and beverage offerings andother improvements;·disruption from theater improvements; and·the 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:·the rental rates and capitalization rates applicable to the markets in which we operate and the quality of properties that weown;·the extent to which we can obtain on a timely basis the various land use approvals and entitlements needed to develop ourproperties;·the risks and uncertainties associated with real estate development;·the availability and cost of labor and materials;·the ability to obtain all permits to construct improvements;·the ability to finance improvements;·the disruptions from construction;·the possibility of construction delays, work stoppage and material shortage;·competition for development sites and tenants;·environmental remediation issues;·the extent to which our cinemas can continue to serve as an anchor tenant that will, in turn, be influenced by the same factorsas will influence generally the results of our cinema operations;·the ability to negotiate and execute joint venture opportunities and relationships; and·certain of our activities are in geologically active areas, creating a risk of damage and/or disruption of real estate and/orcinema businesses from earthquakes and related seismic conditions.·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:·our ability to renew, extend or renegotiate our loans that mature in 2019;·our ability to grow our Company and provide value to our stockholders;·our ongoing access to borrowed funds and capital and the interest that must be paid on that debt and the returns that must bepaid on such capital;·expenses, management and Board distraction and other effects of the litigation efforts mounted by James Cotter, Jr. against theCompany, including his efforts to cause a sale of voting control of the Company;·the relative values of the currency used in the countries in which we operate;·changes in government regulation, including by way of example, the costs resulting from the implementation of therequirements of Sarbanes-Oxley;·our labor relations and costs of labor (including future government requirements with respect to pension liabilities, disabilityinsurance and health coverage, and vacations and leave);·our 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;·our exposure to cyber-security risks, including misappropriation of customer information or other breaches of informationsecurity;·changes in future effective tax rates and the results of currently ongoing and future potential audits by taxing authoritieshaving jurisdiction over our various companies; and·changes 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,- 22 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.technological innovation, changes in consumer taste, the weather, and the extent to which consumers in our markets have the economicwherewithal to spend 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. - 23 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, the terms of exhibition as a practical matter limited the competitors who couldexhibit the film. This competitive disadvantage has been, in our view, exacerbated in recent periods with the further concentration of thecinema exhibition industry, for example, Cineworld Group Plc’s acquisition of Regal Entertainment Group and Dalian Wanda’sacquisition of AMC Entertainment, which has now 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 incident to our redevelopment of that property.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. The competitive pressure from streaming video may increase as a result of the acquisition of Fox byDisney.In order to compete with these in-home and mobile forms of distribution, it is likely that we will make material capital improvements to ourcinemas to increase the amenities and quality of presentation delivered. It may also be necessary to reduce admission prices.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- 24 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.were released on a simultaneous 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. Thiscan require substantial capital outlays and increased labor expense, which exhibitors may not be able to fully pass on to theircustomers. Also, the amount of programming (including without limitation, the live streaming of sporting, theatrical and political events)available on an “in-home” and mobile basis continues to increase.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.Distribution of film is in the discretion of the film distribution companies. Accordingly, we are at risk that the distributors may not give usall of the film we request.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.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- 25 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.compete with these new cinemas, the Company has begun to materially increase its capital expenditures to add such features to many ofour cinemas and to take on additional and more highly trained (and, consequently, compensated) staff. Also, the conversion to luxuryseating typically requires a material reduction in the number of seats that an auditorium can accommodate which may translate into fewermovie tickets being sold.Our failure to obtain and maintain liquor licenses at any of our cinemas could adversely affect our business, results of operations orfinancial condition. Each of our cinemas offering beer and wine, and in some cases liquor, is subject to licensing and regulation by thealcoholic beverage control agency in the state, county and municipality in which the cinema is located. Each cinema is required to obtain alicense to sell alcoholic beverages on the premises from a state authority and, in certain locations, county and municipal authorities.Typically, licenses must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage controlregulations relate to numerous aspects of the daily operations of each store, including minimum age of patrons and employees, hours ofoperation, advertising, wholesale purchasing, inventory control and handling and storage and dispensing of alcoholic beverages. Thefailure to receive or retain a liquor license, or any other required permit or license, in a particular location, or to continue to qualify for, orrenew licenses, could have a material adverse effect on our profitability, our ability to attract patrons, and our ability to obtain such a liquorlicense in other locations.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- 26 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 properties could result in the imposition of fines or an award of damages to private litigants. The cost of addressing these issues couldbe substantial. 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 affiliatesare considered to be “foreign owned” for purposes of certain Australian and New Zealand statutes, we have been in the past, andmay in the 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 thebuilding being replaced. If they are unsuccessful at the local governmental level, they may seek recourse to the courts or othertribunals. This can 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 potentialfor labor-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 tenantwill be influenced by the same factors as will influence generally the results of our cinema operations. Leasing or sale can beinfluenced by economic factors that are neither known nor knowable at the commencement of the development process and bylocal, 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 ofthe project, it may be necessary to find replacement financing for these loans. This process involves risk as to the availability ofsuch permanent or other take-out financing, the interest rates, and the payment terms applicable to such financing, which may beadversely influenced 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- 27 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.original disposal. Environmental conditions relating to our properties or operations could have an adverse effect on our business and resultsof operations and cash flows.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.Changes in interest rates may increase our interest expense. Because a portion of our debt bears interest at variable rates, increases ininterest rates could materially increase our interest expense. In each of March, June, September and December 2018, the U.S. FederalReserve raised its benchmark interest rate by a quarter of a percentage point, with additional increases expected to come over the next year.If interest rates continue increasing, our debt service obligations on the variable rate indebtedness would increase even though the amountborrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, willcorrespondingly decrease. Based on our debt outstanding as of December 31, 2018, if interest rates were to increase by 1%, thecorresponding increase in interest expense on our variable rate debt would decrease future earnings and cash flows by approximately $1.4million per year. Potential future increases in interest rates may therefore negatively affect our financial condition and results of operations,and reduce our access to the debt or equity capital markets.In addition, some of our variable rate indebtedness uses LIBOR as a benchmark for establishing the rate. LIBOR is the subject of recentnational, international and other regulatory guidance and proposals for reform. On July 27, 2017, the United Kingdom’s Financial ConductAuthority announced that it intends to phase out LIBOR by the end of 2021. These reforms and other pressures may cause LIBOR todisappear entirely or to perform differently than in the past. The consequences of these developments cannot be entirely predicted, butcould include an increase in the cost of our variable rate indebtedness.- 28 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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. ·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).- 29 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.Trade disputes and geopolitical instability outside of the U.S. may adversely impact the U.S. and global economies. In 2018, globalgrowth weakened, trade tensions heightened, and several emerging markets experienced significant downturns as macroeconomic andgeopolitical developments weighed on market sentiments. Governmental policies of developed economies, such as the U.S., have asubstantial effect on emerging markets, and the consequences of a trade war between two developed countries, like that of the U.S. andChina, could further contribute to the adverse economic and political conditions of emerging and other developed economies.Additionally, North Korea’s nuclear weapons capabilities continue to be an ongoing security concern and worsening relations between theU.S. and North Korea continue to create a global security issue that may adversely affect international business and economic conditions.While it is difficult for us to predict the effect of such trade wars and heightened geopolitical and economic instability on our business, theycould lead to currency devaluation, economic and political turmoil, market volatility, and a loss of consumer confidence in the broader U.S.economy.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 differentforms of 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.Changes in U.S. accounting standards may adversely impact our business. In February 2016, the Financial Accounting Standard Board(FASB) issued Accounting Standards Update (ASU) 2016-02 Leases (ASC 842). This ASU was a joint effort by FASB and the InternationalAccounting Standards Board (IASB) to improve the financial reporting of leasing transactions by requiring companies to recognize leaseassets and lease liabilities on their balance sheet. ASU 2016-02 could require significant changes to our balance sheet relating to therecognition of operating leases as assets or liabilities based on existing lease terms and whether we are the lessor or lessee. Although thesestandards become effective in 2019, these changes in accounting standards could have a material effect on our financial condition or resultsof operations which, ultimately, could materially impact the price of our stock.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.Our stock is thinly traded. Our stock is thinly traded, with an average daily volume in 2018 of only approximately 45,123 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 three 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- 30 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 time and attention of our officers and directors from our business and operations and may ultimately interfere with the effectivemanagement of the Company. Up until his death on September 13, 2014, James J. Cotter, Sr., the father of Ellen Cotter, James J. Cotter, Jr.and Margaret Cotter, was our controlling stockholder, having the sole power to vote approximately 66.9% of the outstanding voting stockof the Company. Under applicable Nevada Law, a stockholder holding more than 2/3rds of the Company’s voting stock has the power atany time, 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 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. Margaret Cotter is the Vice-Chair of our Company, Executive Vice-President – Real Estate Management and Development,NYC and the President of Liberty Theaters, LLC, the company through which we own and operate our live theaters. She heads up themanagement and redevelopment of our New York properties. James J. Cotter, Jr., from June 2013 until June 12, 2015 was the President andfrom August 7, 2014 until June 12, 2015 was the Chief Executive Officer of our Company, having been removed from those positions byBoard action on June 12, 2015. From 2002 until November 7, 2018, Mr. Cotter, Jr., was also a director of our Company.As of December 31, 2018, 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. On March 23, 2018, the Superior Court of the State of California, County of Los Angeles (the“California Superior Court”), issued its judgement in the case captioned In re James J. Cotter Living Trust dated August 1, 2000 (Case No.BP159755) (the “Trust Case”), to the effect that Ellen Cotter and Margaret Cotter are the Co-Trustees of the Cotter Trust and that MargaretCotter is the sole Trustee of the Voting Trust. As the appeal period for that judgment has expired, the California Superior Court’sdetermination in this regard is now final and not subject to review. Accordingly, in the view of the Company, Ellen Cotter and MargaretCotter have voting control over the shares held by the Cotter Trust and the Cotter Estate, collectively representing 66.9% of our Company’sClass B Stock. Taking into account Ellen Cotter and Margaret Cotter’s personal holdings of voting stock, Ellen Cotter and Margaret Cotterhave the power to vote 71.9% of our Company’s voting stock. 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 Directorscurrently comprised of directors Doug McEachern and Judy Codding.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;- 31 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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 saleof the 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.” Notwithstanding its determination that Mr. Cotter, Jr. was not a trustee of either the Cotter Trust or the Voting Trust, 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 andspecific authority to obtain offers to purchase the RDI stock in the voting trust, but not to exercise any other powers without court approval,specifically the sale of the company or any other powers possessed by the trustees.” The California Superior Court’s order based on thatStatement of Decision was entered on March 23, 2018. That order was appealed by Ellen Cotter and Margaret Cotter to the CaliforniaCourt of Appeals for the Second District (the “California Court of Appeals”), and on April 2, 2018, the California Court of Appeals enteredits order to show cause and a stay (the “Order to Show Cause and Stay”) as to why the court below “should not be compelled to vacate yourorder of March 23, 2018 directing that trustee ad litem be appointed to obtain offers to purchase the voting-stock trust’s interest in ReadingInternational, Inc., and issue a new and different order denying the ex parte petition seeking a trustee ad litem. . . . All trial courtproceedings are stayed pending disposition of this proceeding or further order of this court.” Briefs have been submitted by all parties, anda hearing is set for April 5, 2019. Accordingly, no temporary trustee ad litem has been appointed and no solicitation of offers is ongoing. 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 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.We continue to believe that, whether or not a final determination is made to sell the voting shares, the appointment of a TTAL would poserisks to our Company and our stockholders for a variety of reasons, including the resultant potential for: (i) distraction of management andkey employees from focusing on the conduct of our business, including the implementation of our three year business strategy, (ii)incurrence of additional general and administrative costs due to the need to implement employee retention programs and to incur legalexpenses of the type and at levels not typically required in the ordinary conduct of our Company’s business, (iii) interference withcontractual relationships, negotiations and potential negotiations with third parties important to our Company’s business, including,without limitation, current and future lenders, tenants, landlords, suppliers and co-developers, (iv) increased difficulty in hiring andretaining high quality employees, and (v) exposure of our Company to potential litigation claims of the type which often accompany anyextraordinary corporate transactions together with the expense, distraction and time loss that typically results from any such litigation. Ifthe California Superior Court’s order is not reversed by the California Court of Appeals and if a decision to sell a controlling interest ismade by the California Superior Court, then there would be the additional risk that control might be sold to an unqualified purchaser whomight exploit such control position in a manner not consistent with the best interests of our Company or stockholders generally.Since May 2016, Patton Vision has sent various non-binding indications of interest to us to purchase all of our Company’s outstandingshares. In each case our Board of Directors has determined 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. We have been advised by Ellen Cotter and Margaret Cotter that, acting in their capacities asthe Co-Executors of the Cotter Estate and as the Co-Trustees of the Cotter Trust and by Margaret Cotter, acting in her capacity as theTrustee of the to-be-formed Voting Trust, that they do not have any current plans to sell voting control of our Company.Most recently, on November 6, 2018, we received a non-binding indication of interest from Patton Vision dated November 5, 2018, statingan indicated purchase price of $444.0 million, allocated $17.22 per share for our Class A Common Stock and $37.38 per share for our ClassB Common Stock. In a further letter dated January 17, 2019, Patton Vision clarified that “the value per Class A and Class B shares reflected[in the November 5, 2018 non-binding indication of interest] were exemplary and intended to reflect that the proposal represented asubstantial equity value premium across Reading classes of common stock” and extended the term of its non-binding indication of interestto March 29, 2019. On March 14, 2019, our Board of Directors, following consideration and adoption of our three year business strategy,once again confirmed its determination that our Company and our stockholders would be best served by our continued independence andby our pursuit of our business strategy. Our Board of Directors instructed our management to inform Patton Vision once again that ourBoard had no present interest in engaging in discussions regarding our possible sale.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 is- 32 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.probated, 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 or as stockholdersacting in their own right), should the California Superior Court make such an order. We do note, however, that Ellen Cotter and MargaretCotter have publicly stated that, if there is to be a sale of controlling shares, they intend to be the purchaser of such shares. We also cannotpredict what action our Board of Directors would take in response, if any. However, our Board of Directors has an obligation to act in thebest interest of our Company, and in the event the California Superior Court were to order a sale of the Class B Stock held by the CotterTrust, our Board of Directors would be obligated to 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 has now dismissed on summary judgment all of Mr. Cotter, Jr.’s claims in that action,including his claims relating to the handling of the Patton Vision non-binding indications of interest. The Nevada District Court has alsoentered a cost order against Mr. Cotter, Jr., in the amount of $1.55 million. However, Mr. Cotter, Jr., has appealed those decisions so theycontinue as an overhang over our Company. See Notes to Consolidated Financial Statements—Note 12—Commitments and Contingencies—Cotter Jr. Related Litigation Matters (including legal costs coverage). 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, 2018, 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 19 – 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- 33 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.Directors is nevertheless currently comprised of independent Directors. As a practical matter, subject to their fiduciary duties, Ellen Cotterand Margaret Cotter control the composition of our Board of Directors.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. - 34 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 continue to look for an unaffiliated third partytenant to lease the remainder. 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 feet of office spaces located in our WellingtonCourtenay Central ETC. We also occupy approximately 3,500 square feet at our Village East leasehold property in New York foradministrative purposes.ENTERTAINMENT PROPERTIESEntertainment Use Leasehold InterestsAs of December 31, 2018, we lease approximately 1,800,000 square feet of completed cinema space in the United States, Australia, and NewZealand as follows: AggregateSquare Footage Approximate Rangeof RemainingLease Terms(including renewals)United States 962,000 2019 – 2052Australia 659,000 2019 – 2039New Zealand 191,000 2019 – 2050In December 2014, we entered into a lease for a new luxury cinema, Olino by Consolidated Theatres, which opened on October 21, 2016 atthe new Ka Makana Ali'i Shopping Center developed in Kapolei, Hawaii by an affiliate of DeBartolo Development.REAL ESTATE INTERESTSFee InterestsIn Australia, as of December 31, 2018, 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 Village ETC and that, accordingly, is not included in theabove table. In 2018, we acquired a building of 16,830 square feet which borders on three sides of our Auburn ETC for $3.5 million (AU$4.5 million) This building has a lease in place, which expires in July 2022, after which we intend to integrate the property with our ETC.In New Zealand, as of December 31, 2018, 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, 2018, 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) and (through a limited liability company [Shadow View Land and Farming, LLC] in which we have a 50%managing member interest) 202 acres of developable land in Coachella, California, zoned for residential and mixed use purposes. We alsoown various properties relating to our historic railroad business, including the Reading Viaduct in central Philadelphia. - 35 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 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·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, office space, and parking.Liberty Theaters is primarily in the business of licensing theatre 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. OPERATING PROPERTYAs of December 31, 2018, we own fee interests on approximately 879,000 square feet of income-producing properties (including certainproperties principally occupied by our cinemas) as follows: Property Square Feet ofImprovements(rental/entertainment)(1) PercentageLeased(2) Net BookValue(3) (US Dollarsin thousands) ReportingSegment AddressUnited States 1 Cinemas 1, 2, 3(4) 0 / 21,000 n/a $24,267 Cinema Exhibition 1003 Third Avenue, Manhattan, NY2 LA Office Building, Culver City 12,000 / 14,000 0% 13,004 Real Estate 5995 Sepulveda Blvd, Culver City, CA3 Minetta Lane Theatre 0 / 9,000 100% 2,477 Real Estate 18-22 Minetta Lane, Manhattan, NY4 Orpheum Theatre 1,000 / 5,000 100% 1,324 Real Estate 126 2nd Street, Manhattan, NY5 Royal George 37,000 / 23,000 91% 2,227 Real Estate 1633 N. Halsted Street, Chicago, IL plus a 55-spaceparking structure Australia 1 Newmarket 102,000 / 42,000 98% 52,453 Real Estate 400 Newmarket Road, Newmarket, QLD plus a 574-spaceparking structure 2 Auburn(5) 92,000 / 57,000 83% 23,498 Cinema Exhibition / 99 Parramatta Road, Auburn, NSW plus a 727-spaceparking structure Real Estate 3 Cannon Park(6) 105,000 / 44,000 91% 21,579 Cinema Exhibition /Real Estate High Range Drive, Thuringowa, QLD4 Belmont 15,000 / 45,000 92% 6,104 Cinema Exhibition Knutsford Avenue and Fulham Street,Belmont, WA5 York Street Office 8,000 / 0 37% 1,769 Real Estate 98 York Street, South Melbourne, VIC6 Maitland Cinema 0 / 22,000 n/a 955 Cinema Exhibition Ken Tubman Drive, Maitland, NSW7 Bundaberg Cinema 0 / 14,000 n/a 1,118 Cinema Exhibition 1 Johanna Boulevard, Bundaberg, QLDNew Zealand 1 Courtenay Central(5) 29,000 / 76,000 54% 12,344 Cinema Exhibition / 100 Courtenay Place, WellingtonPlus an additional 37,000 feet of land currentlyused as car parking where our car parkingstructure once was. Real Estate 24 Tory Street, Wellington (Parking)2 Dunedin Cinema 0 / 25,000 n/a 5,994 Cinema Exhibition 33 The Octagon, Dunedin3 Napier Cinema 12,000 / 18,000 100% 1,878 Cinema Exhibition 154 Station Street, Napier4 Invercargill Cinema 8,000 / 24,000 61% 1,493 Cinema Exhibition 29 Dee Street, Invercargill5 Rotorua Cinema 0 / 19,000 n/a 1,673 Cinema Exhibition 1281 Eruera Street, RotoruaTOTAL(7) $174,157 (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 entertainmentcomponents rented to one or more of our subsidiaries at fair market rent. The rental area to such subsidiaries is noted under the entertainment squarefootage.(2)Represents the percentage of rental square footage currently leased or licensed to third parties.- 36 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.(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 ofDecember 31, 2018 (net of any impairments recorded).(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 parts by 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-goingdevelopment 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 for administrative purposes, and (iii) our assets on our legacy business principally in Pennsylvania.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, 2018,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 Feetof Improvements(rental/entertainment)(1)PercentageLeased(2)Net Book Value(3) (US Dollars inthousands)In United States1 Manville0 / 46,000n/a4,898 In Australia1 Waurn Ponds6,000 / 38,000100%963 TOTAL$5,861 (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 entertainmentcomponents rented to one or more of our subsidiaries at fair market rent. The rental area to such subsidiaries is noted under the entertainment squarefootage.(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, 2018(net of any impairments recorded).- 37 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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, 2018: Property(1) Acreage Net BookValue(2)(US Dollarsin thousands) StatusUnited States 1 44 Union Square 0.27 $62,423 We are currently in exclusive lease negotiations for long term leaseswith respect to approximately 90% of the net rentable area of thebuilding and, while no assurances can be given, it is currentlyanticipated that our base building will be ready for tenant improvementwork before the end of the second quarter of this year.2 Coachella, CA 202.39 4,351 We hold this property for the potential long-term developmentbenefit. During 2018, we cleared and secured the property. Theproperty is zoned for residential and mixed-use uses.Australia 1 Auburn/RedYard, Sydney, New SouthWales 2.62 1,428 We continue our expansion of this center. During 2018, we acquiredan approximately 20,870 square foot infill property, improved with anapproximately 16,830 square foot office building rented to Telstrathrough July 2022. This acquisition has increased the square footage ofthe center to approximately 519,982 square feet and the rentable area toapproximately 149,020 square feet. The property includesapproximately 118,000 square feet of developable land, which will bean area of focus in 2019. The net book value referenced for thisproperty references only the above referenced 118,000 square feet ofdevelopable land.New Zealand 1 Manukau, Auckland 64.0 acres zonedlight industrial useand 6.4 acres zonedheavy industrial use 11,867 In August 2016, the agricultural portion of our property in Manukau(approximately 64.0 acres) was rezoned to light industrial uses. Theremainder of this property (6.4 acres) is zoned for heavy industrialuse. In 2018, we worked with adjoining landholders to jointly advancenecessary infrastructure improvement issues. We estimate that ourproperty will support approximately 1.6 million square feet ofimprovements.2 Courtenay Central, Wellington 1.08 6,735 Damage from the 2016 earthquake necessitated demolition of our nine-story parking garage at the site, and unrelated seismic issues havecaused us to close portions of the existing cinema and retail structurewhile we reevaluate the center for redevelopment as an entertainmentthemed urban center with a major food and grocery component.TOTAL $86,804 (1)A number of our real estate holdings include additional land held for development. In addition, we have acquired certain parcels for futuredevelopment.(2)Refers to the recorded values of our non-operating and currently in-development stage properties, which are comprised of land, building, developmentcosts and capitalized interest, and presented as “Investment and Development Property” in our Consolidated Balance Sheet as of December 31,2018. Not included in this number is the book value of those portions of such properties which have already been developed. For example, in the caseof our Auburn/Redyard shopping center, only the 118,000 square foot of developable land (out of the total 519,982 square foot of land comprising theentire center) is included in this calculation.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 2018 consolidated financial statements.OTHER PROPERTY INTERESTS AND INVESTMENTSWe own the fee interests in various parcels comprising 197 acres in principally in Pennsylvania. 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 theReading Viaduct), the properties are principally located in rural areas of Pennsylvania. These properties are unencumbered by any 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. - 38 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 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 INFORMATIONOur common stock is traded on the NASDAQ under the symbols RDI (Class A Stock) and RDIB (Class B Stock). As of December 31, 2018, the approximate number of common stockholders of record was 2,300 for Class A Stock and 375, for Class BStock. On March 15, 2019, the closing prices per share of our Class A Stock and Class B Stock were $16.15 and $25.70, respectively. We have never declared a cash dividend on our common stock and we have no current plans to declare a dividend.Securities Authorized for Issuance Under Equity Compensation PlansOur Definitive Proxy Statement to be filed in connection with our 2019 Annual Meeting of Stockholders incorporated herein by reference,contains information concerning securities authorized for issuance under equity compensation plans within the caption: Ownership ofCertain Beneficial Owners and Management and Equity Compensation Plan Information.The following table summarizes the securities authorized for issuance under our equity compensation plans: Number of securities to beissued upon exercise ofoutstanding options,warrants, and rights Weighted-averageexercise price ofoutstanding options,warrants, and rights Number of securitiesremaining available forfuture issuance underequity compensation plansEquity compensation plans approved by security holders Stock options 586,469 $14.01 Restricted stock units 236,291 14.80 Total 822,760 1,031,970 - 39 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018 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, 2018. The graph assumes that $100 was investedon December 31, 2013 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.The following performance graph shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, nor shall thisinformation be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that wespecifically incorporate it by reference into a filing.- 40 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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 the fourth quarter of 2018: Refer toNote 14 - Share-Based Compensation and Share Repurchase Plans in the 2018 Consolidated Financial Statements for further details.Period Total Number of SharesPurchased Average PricePaid per Share Total Number of SharesPurchased as part of our StockBuy-Back Program Approximate DollarValue of Shares thatmay yet be Purchasedunder the Stock Buy-Back ProgramDecember 2018 125,700 15.24 125,700 16,162,529 On March 14, 2019, the Board of Directors extended our Company's stock buy-back program for two years, through March 2, 2021. TheBoard did not increase the authorized amount, which was initially fixed at $25 million. At the present time, $16.2 million of thatauthorization remains available to repurchase Class A Common Stock. Refer to Note 14 - Share-Based Compensation and ShareRepurchase Plans in the 2018 Consolidated Financial Statements for further details.- 41 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 6 – Selected Financial DataThe table below sets forth certain historical financial data regarding our Company. This information is derived in part from, and should beread in conjunction with, our consolidated financial statements included in Item 8 of this 2018, and the related notes to the consolidatedfinancial statements.($ in thousands, except per share data)20182017(2)2016(2)2015(2)2014Statement of operationsRevenue$309,385 $279,879 $270,866 $257,865 $255,242 Operating income24,078 20,706 20,704 23,696 22,667 Net income attributable to RDI14,366 31,101 9,678 23,110 25,335 Per common share Net income/ attributed to RDI Basic EPS$0.62 $1.35 $0.42 $0.99 $1.08 Diluted EPS0.62 1.34 0.41 0.98 1.07 Balance sheetTotal assets$439,028 $423,403 $406,041 $372,198 $401,586 Total debt (gross of deferred financing costs)167,043 134,501 148,535 130,941 164,036 Working capital (deficit)(3)(55,270)(46,971)6,655 (35,581)(15,119)Stockholders’ equity180,547 181,618 146,890 138,951 133,716 Statement of cash flowsCash provided by / (used in): Operating activities$32,645 $23,851 $30,188 $28,574 $28,343 Investing activities(64,855)(6,786)(42,861)(29,710)(9,898) Financing activities33,210 (22,055)11,246 (27,961)(3,275)Other InformationEBIT$24,623 $40,675 $20,598 $35,562 $25,410 EBITDA$46,898 $57,617 (1)$36,287 $50,124 (1)$40,878 Debt to EBITDA Ratio3.56 2.33 4.09 2.61 4.01 Capital expenditure (including acquisitions)$56,827 $76,708 $49,166 $53,119 $14,914 Shares outstanding22,920,634 22,931,881 23,178,307 23,334,892 23,237,076 Weighted average - basic22,991,277 23,041,190 23,320,048 23,293,696 23,431,855 Weighted average - diluted23,208,991 23,247,969 23,521,157 23,495,618 23,749,221 Number of employees at 12/312,944 2,585 2,793 2,712 2,596 (1)2017 includes gain on sale of assets amounting to $9.4 million and casualty loss recovery of $9.2 million. 2015 includes gain on sale of assetsamounting to $11.0 million.(2)Certain 2015 balances included the restatement impact of a change in accounting principle (see Note 2 – Summary of Significant Accounting Policies –Accounting Changes). Certain 2017 and 2016 balances included the restatement impact of a prior period financial statement correction of immaterialerrors (see Note 2 – Summary of Significant Accounting Policies – Prior Period Financial Statement Correction of Immaterial Errors).(3)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 receive to 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.- 42 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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) 2018 2017 2016 2015 2014Net income attributable to RDI $14,366 $31,101 $9,678 $23,110 $25,335 Add: Interest expense, net 6,837 6,194 6,782 7,304 9,000 Add: Income tax (benefit) expense 3,420 3,380 4,138 5,148 (8,925)EBIT $24,623 $40,675 $20,598 $35,562 $25,410 Add: Depreciation and amortization 22,275 16,942 15,689 14,562 15,468 EBITDA $46,898 $57,617 $36,287 $50,124 $40,878 - 43 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 2018 Form 10-K. INDEXPage​Business Overview37​Recent Developments39​Results of Operations44- 44 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 – 2018 vs 201745​Non-Segment Results – 2018 vs 201751​Business Segment Results – 2017 vs 201652- 45 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 201658​Liquidity and Capital Resources59​Contractual Obligations, Commitments and Contingencies61- 46 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.​Financial Risk Management62​Critical Accounting Estimates63BUSINESS 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.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- 47 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.existing entertainment and real estate businesses. We continue to focus on the development and redevelopment of our existing assets(particularly our real estate assets in (i) New York, (ii) Brisbane and Sydney in Australia, and (iii) Wellington, New Zealand, and ourAngelika Film Center chain), as well as to continue to be opportunistic in identifying and endeavoring to acquire undervalued assets,particularly assets with proven cash flow and that we believe 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 length of time 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. For some years, we have 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 Cinemark, Regal and AMC, who are able to offer distributorsaccess to screens on a truly nationwide basis, or, on the other hand, to limit access if their desires with respect to film supply are notsatisfied. AMC in 2017 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, Cineworld, a majorEuropean cinema circuit operator, has acquired Regal. The restructuring and consolidation undertaken in the industry isdecreasing 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. ·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 78% of the cinema box office in Australia, while Event andHoyts control approximately 52% 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. - 48 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 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, among other things, thecontinued low CMBS issuances and banks tightening the lending standards across all commercial real estate loan categories dueto increased federal scrutiny.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 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 in the near to medium term. Once developed, we remain optimistic that our Australian and NewZealand holdings will continue 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 2018 Form 10-K.While our capital projects in recent years have been focused on growing our real estate segment, we have also maintained our focus onimproving and enhancing in our cinema exhibition portfolio, as discussed below:Cinema Additions and Enhancements Here are the additions to our cinema portfolio in 2017 and 2018:·Opened a new state-of-the-art eight-screen in Newmarket, Brisbane, Australia On December 14, 2017, at the completion of ourexpansion of our Newmarket Village, Brisbane shopping center, 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.·Opened our first dine-in concept, “Spotlight” in the United States: On March 30, 2018 we finished the conversion of one wing(six auditoriums) at our Reading Cinema in Murrieta, California (Cal Oaks) to our dine-in concept brand, “Spotlight·U.S. Refurbishments In 2017 and 2018, we continued to invest in the refurbishment and enhancements of our existing cinemas, ascontemplated by our strategic plan. During this period, seven locations had significant refurbishment work performed: our CalOaks, Valley Plaza and Grossmont locations in California; our Ward, Pearlridge and Mililani locations in Hawaii; and ourManville location in New Jersey. During this period, we converted (or are in the process of conversion), 63 of our 245 U.S.auditoriums to luxury recliner seating.·AU and NZ Refurbishments In 2017 and 2018, we improved eight theaters: Belmont, Rouse Hill, Courtenay Central, Napier,Charlestown, Elizabeth, Auburn and Rotorua.- 49 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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. We have invested both in (i) upgrading of our existing cinemas and (ii)developing new cinemas, in each case to provide our customers with premium offerings, including state-of-the-art presentation and sound,luxury seating and enhanced food and beverage amenities (such as lounges and bar service). As of December 31, 2018, the upgrades to ourtheater circuits’ film exhibition technology and amenities are as summarized in the following table: LocationCount ScreenCountScreen Format Digital (all cinemas in our theatre circuit) 59 478IMAX 1 1Titan LUXE and TITAN XC 18 20Dine-in Service Gold Lounge(1) 10 25Premium(2) 11 21Spotlight 1 6Upgraded Food & Beverage menu (for U.S. operations)(3) 14 n/aPremium Seating (recliner seating features) 21 136Liquor Licenses Obtained(4) 25 n/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 (withalcoholic beverages), luxury recliner seating features (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 (withalcoholic beverages) and may include luxury recliner seating 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 areavailable in a common counter in each of our cinema locations rather than a dine-in service at each screen room. We have worked with renownedformer Food Network executives and chefs to curate a menu of locally inspired and freshly prepared items.(4)Liquor Licenses: Licenses are applicable at each cinema location, rather than each theatre auditorium. For accounting purposes, we capitalize the cost ofpurchasing or obtaining for liquor licenses meeting certain thresholds as an intangible asset due to long-term economic benefits derived on future salesof alcoholic beverages. As of December 31, 2018, we have five pending applications for additional liquor licenses in the U.S.During January 2019, we acquired a proven four-screen cinema in Tasmania.Plans for 2019 and Our Cinema PipelineWe currently plan to upgrade or begin the upgrade of various cinemas in the U.S., Australia, and New Zealand in 2019. We have entered into lease agreements for four new cinemas in Australia (25 screens), which we anticipate will come on line in 2019 -2021. Our focus with respect to new cinemas featuring state-of-the-art projection and sound, luxury recliner seating, enhanced F&B (typicallyincluding alcohol service) and typically at least one major TITAN type presentation screen. Our focus is on providing best in class servicesand amenities that will differentiate us from in-home and mobile viewing options. We believe that a night at the movies should be aspecial and premium experience and, indeed, that it must be in order to compete with the variety of options being offered to consumersthrough other platforms.During 2019, we will also be focusing on the rollout and enhancement of our proprietary on-line ticketing capabilities and social mediainterfaces. These are intended to enhance the convenience of our offering and to promote customer affinity with the experience andproduct that we are offering. Real EstateAs of December 31, 2018, our operating properties 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,·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.- 50 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 2018, we entered into a one-year license agreement with Audible, Inc., a subsidiary of Amazon, at the Minetta Lane Theatre,which allows Audible to produce its one and two person voice shows at our Minetta Lane Theatre. While no assurances can be given, weare currently finalizing with Audible an amendment extending this agreement through 2020, with an additional one year option. In addition, we have various parcels of unimproved real estate held for development in Australia and New Zealand and certain unimprovedland in the United States including properties 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 37% which is leased to anunrelated third party. During 2016, we bought a 24,000 square foot office building in Culver City, California to serve as our CorporateHeadquarters in Los Angeles (refer to “Strategic Acquisitions” section below for more details).Our key real estate transactions over the 2016-2018 period are as follows:Strategic Acquisitions·Purchase of Infill Property in Auburn, Australia – On June 29, 2018, we purchased a property for $3.5 million (AU$ 4.5 million)in Auburn (Sydney area), Australia. The property which borders our Redyard ETC in Auburn on three sides to the east, west andsouth and consists of an approximately 16,830 square foot building located on an estimated 20,870 square foot lot, is subject to alease to Telstra Corporation through July 2022. This will allow us time to plan for its efficient integration into ourETC. Including this acquisition, our Redyard ETC represents approximately 519,992 square feet (48,309 square meters) of land,with approximately 1,620 feet (498 meters) of uninterrupted frontage to Parramatta Road, a major Sydney arterial motorway. Thefinal settlement payment was made in early October 2018·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 Land at Cannon Park, Australia. On June 13, 2018, we acquired a 163,000 square foot (15,150 square meter) parcel atour Cannon Park ETC, in connection with the restructuring of our relationship with the adjacent land owner. Prior to therestructuring, this parcel was commonly owned by us and the adjoining land owner. In the restructuring, the adjoining land ownerconveyed to us its interest in the parcel for AU$1. We granted the adjoining land owner certain access rights.- 51 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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.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 44 Union Square Property in New York, USA. We secured construction financing for our Union Square propertyin December 2016 and entered into a guaranteed maximum price construction management agreement with an affiliate of CNY.We anticipate that the project will be ready for tenant fit-out activities in the second quarter of 2019. Retail and office leasinginterest to date has been strong and, while no assurances can be given, we are currently in exclusive negotiations with respect tolong-term leases covering approximately 90% of the net rentable area of the building. This redevelopment will add approximately23,000 square footage of rentable space to the current square footage of the building for an approximate total of 73,322 square feetof rentable space, inclusive of anticipated BOMA (Building Owners and Managers Association) adjustments and subject to leasenegotiations and the final tenant mix.·Expansion Project for our Newmarket Shopping Center located in an affluent suburb of Brisbane, Australia. In December 2017we opened our eight-screen Reading Cinema, 10,150 square feet of additional retail space and 124 parking spaces. As ofDecember 31, 2018, this center was approximately 98% leased.·Master-planning for our Courtenay Central ETC in Wellington, New Zealand. Located in the heart of Wellington – NewZealand’s capital city – this center is comprised of 161,071 square feet of land situated proximate to the Te Papa TongarewaMuseum (attracting over 1.5 million visitors annually), across the street from the site of Wellington’s newly announcedconvention center (estimated to open its doors in 2022) and at a major public transit hub. Damage from the 2016 earthquakenecessitated demolition of our nine-story parking garage at the site, and unrelated seismic issues have caused us to close portionsof the existing cinema and retail structure while we reevaluate the center for redevelopment as an entertainment themed urbancenter with a major food and grocery component. Wellington continues to be rated as one of the top cities in the world in which tolive, and we continue to believe that the Courtenay Central site is located in one of the most vibrant and growing commercial andentertainment sections of Wellington.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. This gain was a non-recurring item for the year 2018. 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. This gain was a non-recurring itemfor the year 2018.- 52 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.Refer to Note 20 – 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 worked 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 completed an initialfeasibility study, analyzing various retail, entertainment and residential uses for the site and during 2018 continued to work on theterms of a final agreement for the development of the combined property. We do not presently believe that we will be able to cometo agreement with our neighbors for a joint development of our properties and, have, accordingly, begun developing plans for anapproximately 96,000 square foot mixed use stand-alone development. Our Cinemas 1,2,3, property is located on Third Avenue inNew York City, between 59th and 60th Streets across from Bloomingdales.·Manukau Land Rezoning – In August 2016, the Auckland City Council up-zoned 64.0 acres of our property in Manukau fromagricultural to light industrial use. The remaining 6.4 acres were already zoned for heavy industrial use. Our zoning enhancementgoal has been achieved, in 2018, we worked with adjoining landholders to jointly advance necessary infrastructure improvementissues. We estimate that our property will support approximately 1.6 million square feet of improvements. We see this property asa future value realization opportunity for us. This tract is adjacent to the Auckland Airport, which is currently undergoing a majorimprovement and expansion project.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, and extended on March 14, 2019, allows Reading to repurchase its Class A Stock from timeto time in accordance with the requirements of the Securities and Exchange Commission on the open market, in block trades andin privately negotiated transactions, depending on market conditions and other factors. The new authorization continues throughMarch 2, 2020. Our Financing Strategy Our 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.In March 2019, we amended our Revolving Corporate Markets Loan Facility with National Australia Bank (“NAB) from a facilitycomprised of (i) a AU$66.5 million loan facility with an interest rate of 0.95% above the Bank Bill Swap Bid Rate (“BBSY) and amaturity date of June 30, 2019 and (ii) a bank guarantee of AUD$5.0 million at a rate of 1.90% per annum into a (i) AU$120.0 millionCorporate Loan facility at a rate of 0.85% - 1.3% above BBSY, depending on certain ratios, with a due date of December 31, 2023, ofwhich AU$80.0 million is revolving and AU$40.0 million is core and (ii) a Bank Guarantee Facility of AU$5.0 million at a rate of1.85% per annum. Such modifications of this particular term loan were not considered to be substantial under US GAAP. On December 20, 2018, we then restructured our Westpac Corporate Credit Facilities. The maturity of the 1st tranche (general/non-construction credit line) was extended to December 31, 2023, with the available facility being reduced from NZ$35.0 million toNZ$32.0 million. The facility bears an interest rate of 1.75% above the Bank Bill Bid Rate on the loan balance and a 1.1% line ofcredit charge on the full amount of the facility. The 2nd tranche (construction line) with a facility of NZ$18.0 million matured onDecember 31, 2018, and was not renewed. On March 5, 2019, we extended our current Bank of America credit facilities until May 1, 2020 (the $55 million credit line). Weanticipate refinancing this credit line during the second quarter of 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”. - 53 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.OVERALL RESULTS OF OPERATIONS At December 31, 2018, we leased or owned and operated 59 cinemas with 478 screens, which includes (i) one managed cinema with 4screens and (ii) our interests in certain unconsolidated joint ventures that total 3 cinemas with 29 screens. In the first quarter of 2019, weacquired a proven 4-screen cinema in Tasmania, increasing our cinema count to 60 and our screen count to 488. We also (i) owned andoperated five ETCs located in Newmarket Village (a suburb of Brisbane), Belmont (a suburb of Perth), Auburn (a suburb of Sydney) andTownsville in Australia and Wellington in New Zealand, (ii) owned and operated our headquarters office buildings in Culver City (anemerging high-tech and communications hub in Los Angeles County) and Melbourne, Australia, (iii) owned and operated the fee interestsin three developed commercial properties in Manhattan and Chicago improved with live theaters comprising six stages and ancillary retailand commercial space (our fourth live theatre was closed at the end of 2015 as part of the Union Square property redevelopment), (iv)owned a 75% managing member interest in a limited liability company which in turn owns the fee interest in Cinemas 1,2,3, (v) held fordevelopment approximately 70.4 acres of developable industrial land located next to the Auckland Airport in New Zealand, (vi) owned a50% managing member interest in a limited liability company, which in turn owns a 202-acre property in Coachella, California that iszoned approximately 150 acres for single-family residential use (maximum 550 homes) and approximately 50 acres for high density mixeduse in the U.S., that is held for development, and (vii) owned 197 acres principally in Pennsylvania from our legacy railroad business,including the Reading Viaduct in downtown Philadelphia.Our 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. dollar by2.5% in each country.The following table sets forth the overall results of operations for the three years ended December 31, 2016, 2017, and 2018: % Change - Favorable/(Unfavorable)(Dollars in thousands) 2018 % ofRevenue 2017 % ofRevenue 2016 % ofRevenue 2018 vs.2017 2017 vs.2016SEGMENT RESULTS Cinema exhibition operating income $39,321 13 % $32,970 12 % $35,498 13 % 19 % (7)%Real estate operating income (1) 6,438 2 % 8,156 3 % 7,322 3 % (21)% 11 %NON-SEGMENT RESULTS Depreciation and amortization expense (394) —% (473) —% (395) —% 17 % (20)%General and administrative expense (21,287) (7)% (19,947) (7)% (21,721) (8)% (7)% 8 %Interest expense, net (6,837) (2)% (6,194) (2)% (6,782) (3)% (10)% 9 %Equity earnings of unconsolidated jointventures 974 —% 815 —% 999 —% 20 % (18)%Gain (loss) on sale of assets (41) —% 9,360 3 % 393 —% (> 100)% > 100%Casualty gain (loss) — —% 9,217 3 % (1,421) (1)% (100)% > 100%Other income (expense) (256) —% 588 —% (63) —% (> 100)% > 100%Income before income taxes 17,918 6 % 34,492 12 % 13,830 5 % (48)% > 100%Income tax benefit (expense) (3,420) (1)% (3,380) (1)% (4,138) (2)% (1)% 18 %Net income 14,498 5 % 31,112 11 % 9,692 4 % (53)% > 100%Less: Net income (loss) attributable tononcontrolling interests 132 —% 11 —% 14 —% nm nm Net income attributable to RDI commonstockholders $14,366 5 % $31,101 11 % $9,678 4 % (54)% > 100%Basic EPS $0.62 $1.35 $0.42 (54)% > 100%(1)See Note 2 of the 2018 10-K for the prior period adjustments for accounting of straight line rent receivable deemed not material.“nm” – not meaningful for further analysisCONSOLIDATED RESULTS2018 vs. 2017Net income attributable to RDI common stockholders decreased by $16.7 million, or 54%, to $14.4 million. This decrease was mainly dueto: (i) the 2017 recognition of a non-recurring $9.2 million casualty gain attributable the insurance settlement on our Courtenay Centralearthquake damage claim, (ii) a $9.4 million gain on property sales in 2017 (attributable to the sale of our Burwood Property) not repeatedin 2018, (iii) an increase in non-segment general and administrative expenses of $1.3 million in 2018 iv) 844,000 decrease in other incomein 2018 mainly due to a non-recurring 2017 gain on foreign exchange (FX) of $563,000 relating to short term intercompany loan balancesheld in foreign operations, (v) a $1.7 million decrease in Real Estate segment operating income due to non-recurring receipt in 2017 oflegal fee reimbursement related to the STOMP arbitration award settlement and (vi) a $40,000 increase in income tax expense for 2018. These were offset by increased Cinema Exhibition segment operating income of $4.6.4 million mainly relating to higher admissions in allthree jurisdictions, predominantly in the United States. - 54 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.2017 vs. 2016Net income attributable to RDI common stockholders increased 221% to $31.1 million for the year ended December 31, 2017. Thisincrease was mainly due to: (i) a non-recurring increase of $9.2 million attributable to the receipt of insurance settlement proceeds withrespect to our Courtenay Central earthquake damage claim, (ii) a $9.4 million gain on the sale of our Burwood Property, (iii) $1.8 milliondecrease in non-segment general and administrative expenses, (iv) a $651,000 increase in other income mainly consisting of a gain on FXof $563,000 relating to short term intercompany loan balances held in foreign operations, and (v) offset by a decrease in Cinema Exhibitsegment operating income of $ 2.5 million mainly relating to lower admissions in the United States and higher occupancy costs. BUSINESS SEGMENT RESULTS – 2018 vs 2017Presented below is the comparison of the segment operating income of our two business segments for the years ended December 31, 2018and 2017: 2018 2017 % Change Favorable/(Unfavorable)(Dollars in thousands) Cinema Real Estate (1) Cinema Real Estate (1) Cinema Real EstateSegment Revenues $294,177 $24,235 $263,464 $23,988 12 % 1 %Segment Operating Expenses Cost of services and products (excluding depreciation andamortization) (234,818) (9,904) (215,020) (9,436) (9)% (5)%Depreciation and amortization (16,314) (5,567) (12,213) (4,256) (34)% (31)%General and administrative expense (3,724) (2,326) (3,261) (2,140) (14)% (9)%Total segment expenses (254,856) (17,797) (230,494) (15,832) (11)% (12)%Segment operating income $39,321 $6,438 $32,970 $8,156 19 % (21)%Breakdown by country: United States $12,683 $(362) $7,207 $1,198 76 % (>100)%Australia 21,295 5,002 21,358 5,623 —% (11)%New Zealand 5,343 1,798 4,405 1,335 21 % 35 % $39,321 $6,438 $32,970 $8,156 19 % (21)%(1)See Note 2 of the 2018 10-K for the prior period adjustments for accounting of straight line rent receivable deemed not material.- 55 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 discussion for each segments follows:Cinema Exhibition – 2018 vs. 2017(Dollars in thousands) 2018 % of Revenue 2017 % of Revenue 2018 vs. 2017Favorable /(Unfavorable)REVENUE United StatesAdmission revenue $103,421 63 % $87,646 63 % 18 % Food & beverage revenue 48,110 30 % 41,911 30 % 15 % Advertising and other revenue 10,720 7 % 9,521 7 % 13 % $162,251 100 % $139,078 100 % 17 %AustraliaAdmission revenue $65,263 64 % $60,736 63 % 7 % Food & beverage revenue 29,722 29 % 28,746 30 % 3 % Advertising and other revenue 7,011 7 % 7,124 7 % (2) % $101,996 100 % $96,606 100 % 6 %New ZealandAdmission revenue $19,708 66 % $17,495 63 % 13 % Food & beverage revenue 8,683 29 % 7,689 28 % 13 % Advertising and other revenue 1,539 5 % 2,596 9 % (41) % $29,930 100 % $27,780 100 % 8 % Total revenue $294,177 100 % $263,464 100 % 12 %OPERATING EXPENSE United StatesFilm rent and advertising cost $(55,269) (35)% $(46,520) (33)% (19) % Food & beverage cost (10,457) (6)% (8,325) (6)% (26) % Occupancy expense (28,963) (18)% (28,903) (21)% — % Other operating expense (42,515) (26)% (39,920) (29)% (7) % $(137,204) (85)% $(123,668) (89)% (11) %AustraliaFilm rent and advertising cost $(30,151) (29)% $(28,286) (29)% (7) % Food & beverage cost (5,967) (6)% (5,964) (6)% — % Occupancy expense (15,995) (16)% (14,921) (16)% (7) % Other operating expense (22,520) (22)% (20,620) (21)% (9) % $(74,633) (73)% $(69,791) (72)% (7) %New ZealandFilm rent and advertising cost $(9,259) (32)% $(8,203) (30)% (13) % Food & beverage cost (1,915) (6)% (1,771) (6)% (8) % Occupancy expense (5,153) (17)% (5,128) (19)% — % Other operating expense (6,654) (22)% (6,459) (23)% (3) % $(22,981) (77)% $(21,561) (78)% (7) % Total operating expense $(234,818) (80)% $(215,020) (82)% (9) %DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVEEXPENSE United StatesDepreciation and amortization $(9,957) (7)% $(6,092) (4)% (63) % General and administrative expense (2,407) (1)% (2,111) (2)% (14) % $(12,364) (8)% $(8,203) (6)% (51) %AustraliaDepreciation and amortization $(4,763) (5)% $(4,357) (5)% (9) % General and administrative expense (1,305) (1)% (1,100) (1)% (19) % $(6,068) (6)% $(5,457) (6)% (11) %New ZealandDepreciation and amortization $(1,595) (5)% $(1,763) (6)% 10 % General and administrative expense (11) —% (51) —% 78 % $(1,606) (5)% $(1,814) (6)% 11 % Total depreciation, amortization, and general and administrativeexpense $(20,038) (7)% $(15,474) (6)% (29) % Total expenses $(254,856) (87)% $(230,494) (87)% (11) %OPERATING INCOME United States $12,683 8 % $7,207 5 % 76 %Australia 21,295 21 % 21,358 22 % — %New Zealand 5,343 18 % 4,405 16 % 21 %Total operating income $39,321 13 % $32,970 13 % 19 %- 56 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Exhibition – The following table details our cinema segment operating results for the quarter ended December 31, 2018 andDecember 31, 2017, respectively.(Dollars in thousands) 2018 % of Revenue 2017 % of Revenue 2018 vs. 2017Favorable /(Unfavorable)REVENUE United StatesAdmission revenue $24,915 63 % $23,916 64 % 4 % Food & beverage revenue 12,081 30 % 10,852 29 % 11 % Advertising and other revenue 2,818 7 % 2,452 7 % 15 % $39,814 100 % $37,220 100 % 7 %AustraliaAdmission revenue $15,605 64 % $14,475 62 % 8 % Food & beverage revenue 6,853 28 % 6,957 30 % (1) % Advertising and other revenue 2,025 8 % 1,890 8 % 7 % $24,483 100 % $23,322 100 % 5 %New ZealandAdmission revenue $4,599 68 % $4,331 63 % 6 % Food & beverage revenue 1,891 28 % 2,012 29 % (6) % Advertising and other revenue 281 4 % 516 8 % (46) % $6,771 100 % $6,859 100 % (1) % Total revenue $71,068 100 % $67,401 100 % 5 %OPERATING EXPENSE United StatesFilm rent and advertising cost $(13,311) (33)% $(12,882) (34)% (3) % Food & beverage cost (2,640) (7)% (2,181) (6)% (21) % Occupancy expense (7,186) (18)% (8,150) (22)% 12 % Other operating expense (10,876) (27)% (9,322) (25)% (17) % $(34,013) (85)% $(32,535) (87)% (5) %AustraliaFilm rent and advertising cost $(7,216) (29)% $(7,010) (30)% (3) % Food & beverage cost (1,404) (6)% (1,345) (6)% (4) % Occupancy expense (3,779) (15)% (3,773) (16)% — % Other operating expense (5,909) (25)% (5,307) (23)% (11) % $(18,308) (75)% $(17,435) (75)% (5) %New ZealandFilm rent and advertising cost $(2,157) (32)% $(2,082) (31)% (4) % Food & beverage cost (402) (6)% (442) (6)% 9 % Occupancy expense (1,230) (18)% (1,781) (26)% 31 % Other operating expense (1,607) (24)% (1,658) (24)% 3 % $(5,396) (80)% $(5,963) (87)% 10 % Total operating expense $(57,717) (81)% $(55,933) (83)% (3) %DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE United StatesDepreciation and amortization $(2,569) (7)% $(1,831) (5)% (40) % General and administrative expense (557) (1)% (437) (1)% (27) % $(3,126) (8)% $(2,268) (6)% (38) %AustraliaDepreciation and amortization $(1,191) (5)% $(1,073) (5)% (11) % General and administrative expense (331) (1)% (268) (1)% (24) % $(1,522) (6)% $(1,341) (6)% (13) %New ZealandDepreciation and amortization $(356) (5)% $(441) (7)% 19 % General and administrative expense (9) —% (29) —% 69 % $(365) (5)% $(470) (7)% 22 % Total depreciation, amortization, and general and administrativeexpense $(5,013) (7)% $(4,079) (6)% (23) % Total expenses $(62,730) (88)% $(60,012) (89)% (5) %OPERATING INCOME United States $2,675 7 % $2,417 6 % 11 %Australia 4,652 19 % 4,546 19 % 2 %New Zealand 1,010 15 % 426 6 % >100 %Total operating income $8,337 12 % $7,389 11 % 13 %Cinema Exhibition segment operating incomeCinema Exhibition segment operating income increased by 19%, or $6.4 million, to $39.3 million for the year ended December 31, 2018compared to December 31, 2017, primarily driven by higher admissions for our US, Australia, and New Zealand operations coupled withimproved F&B revenues in all three circuits. Cinema Exhibition segment operating income for the quarter ended December 31, 2018 increased by 13% or $948,000, to $8.3 millioncompared to quarter ended December 31, 2017, primarily driven by higher F&B revenue in the U.S. and an overall increase in attendancefor the three circuits.Measured in local currencies these increases were somewhat greater as reported results were dampened by the strengthening of the U.S.dollar in 2018.- 57 -Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 18, 2019Powered 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 12%, or $30.7 million, to $294.2 million for the year ended December 31, 2018 compared to 2017. This wasprimarily driven by higher admissions in all three of our geographies, resulting in higher box office and F&B revenue. These increases wereoffset by the weakened AU and NZ dollars compared to the US dollar. Additionally, the increase in cinema revenue for 2018 was due to theindustry-wide box office soft year for product in 2017 and the closure of some of our cinemas and auditoriums for renovation in 2017.Comparing the current and prior year, the Australian dollar and New Zealand dollar decreased against the U.S. dollar by 2.5% and 2.5% (onaverage rates), respectively. For the quarter ended December 31, 2018, Cinema segment revenues increased 5%, or $3.7 million, to $71.1 million compared to the samequarter in 2017. This increase is primarily due to U.S. Circuit including the positive results from Cal Oaks, Manville, and Ward which allhad improved revenue results over the same quarter in the previous year.Our Cinemas in Australia and New Zealand also enjoyed increased revenues in local currency, offset by the strengthening of the U.S. dollarduring the same two periods.The table below is the revenue breakdown by country for each year:(Dollars in thousands)2018% ofRevenue2017% ofRevenue2018 vs. 2017Favorable/(Unfavorable)United States$162,251 55 %$139,078 53 %17 %Australia101,996 35 %96,606 37 %6 %New Zealand29,930 10 %27,780 10 %8 %Total Segment Revenues$294,177 100 %$263,464 100 %12 %·In the United States, revenues increased by 17%, or $23.2 million, primarily driven by a 9% increase in attendance, an 8% increasein average ticket price (ATP), and an increase of 5% in spend per patron (SPP). ·Australia’s cinema revenue, stated in U.S. dollars, increased by 6%, or $5.4 million, primarily due to a 4% increase in ATP, a 3%increase in attendance, as well as a slight favorable increase in SPP. Additionally, the Newmarket ETC was fully operational forthe entire year of 2018 which contributed to the overall positive results. ·In New Zealand, cinema revenue increased by 8%, or $2.2 million, mainly due to an 11% increase in attendance, coupled with a2% increase in ATP and SPP. Cost of services and products (excluding depreciation and amortization)Cost of services and products for 2018 increased by 9%, or $19.8 million, to $234.8 million mainly attributable to higher film rent andadvertising costs in the U.S. due to higher box office revenue and higher concession costs due to increased concession sales. Increases weredriven by operations in Australia at our Newmarket Cinema location related to costs associated with the full year of operations.For the quarter ended December 31, 2018 costs of services remained relatively flat compared to December 31, 2017. Cost of services and products as a percentage of gross revenue increased to 82% in 2018 from 80% in 2017.Depreciation, amortization, general and administrative expenseDepreciation, amortization, general and administrative expense for 2018 cinema operations increased by 29% or $4.6 million, to $20.0million compared to 2017 primarily driven by the increase in depreciation resulting from improvements in several of our cinema facilities.Depreciation, amortization, general and administrative expenses for the quarter ended December 31, 2018 increased by 23%, or $934,000,to $5.0 million primarily from the refurbishments and capital investments in the U.S. circuit.- 58 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 – 2018 vs. 2017(Dollars in thousands) 2018 % of Revenue 2017 % of Revenue 2018 vs. 2017Favorable /(Unfavorable)REVENUE United StatesLive theater rental and ancillary income $3,163 91 % $4,418 93 % (28) % Property rental income 317 9 % 322 7 % (2) % 3,480 100 % 4,740 100 % (27) %AustraliaProperty rental income 16,122 100 % 15,089 100 % 7 %New ZealandProperty rental income 4,633 100 % 4,159 100 % 11 %Total revenue $24,235 100 % $23,988 100 % 1 %OPERATING EXPENSE United StatesLive theater cost $(1,222) (35)% $(1,105) (23)% (11) % Property cost (520) (15)% $(388) (8)% (34) % Occupancy expense (696) (20)% (660) (14)% (5) % $(2,438) (70)% $(2,153) (45)% (13) %AustraliaProperty cost $(3,138) (19)% $(3,031) (20)% (4) % Occupancy expense (2,531) (16)% (2,375) (16)% (7) % $(5,669) (35)% $(5,406) (36)% (5) %New ZealandProperty cost $(1,199) (26)% $(1,295) (31)% 7 % Occupancy expense (598) (13)% (582) (14)% (3) % $(1,797) (39)% $(1,877) (45)% 4 %Total operating expense $(9,904) (41)% $(9,436) (39)% (5) %DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVEEXPENSE UnitedStates Depreciation and amortization $(777) (22)% $(615) (13)% (26) % General and administrative expense (627) (18)% (774) (16)% 19 % $(1,404) (40)% $(1,389) (29)% (1) %Australia Depreciation and amortization $(3,752) (23)% $(2,693) (18)% (39) % General and administrative expense (1,699) (11)% (1,367) (9)% (24) % $(5,451) (34)% $(4,060) (27)% (34) %NewZealand Depreciation and amortization $(1,038) (22)% $(947) (23)% (10) % $(1,038) (22)% $(947) (23)% (10) % Total depreciation, amortization, and general and administrative expense $(7,893) (33)% $(6,396) (27)% (23) % Totalexpenses $(17,797) (73)% $(15,832) (66)% (12) %OPERATING INCOME United States $(362) (10)% $1,198 25 % (>100) %Australia 5,002 31 % 5,623 37 % (11) %New Zealand 1,798 39 % 1,335 32 % 35 %Total operating income $6,438 27 % $8,156 34 % (21) %- 59 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 - The following table details our real estate segment operating results for the quarter ended December 31, 2018 andDecember 31, 2017, respectively(Dollars in thousands)2018% of Revenue2017% of Revenue2018 vs. 2017Favorable /(Unfavorable)REVENUEUnited StatesLive theater rental and ancillary income$906 85 %$1,492 98 %(39) %Property rental income164 15 %25 2 %>100 %1,070 100 %1,517 100 %(29) %AustraliaProperty rental income3,816 100 %3,777 100 %1 %New ZealandProperty rental income1,144 100 %1,143 100 % — %Total revenue$6,030 100 %$6,437 100 %(6) %OPERATING EXPENSEUnited StatesLive theater cost$(271)(25)%$(271)(18)% — %Property cost(128)(12)%$105 7 %(>100) %Occupancy expense(170)(16)%(173)(11)%2 %$(569)(53)%$(339)(22)%(68) %AustraliaProperty cost$(838)(22)%$(870)(23)%4 %Occupancy expense(660)(17)%(642)(17)%(3) %$(1,498)(39)%$(1,512)(40)%1 %New ZealandProperty cost$(279)(24)%$(184)(16)%(52) %Occupancy expense(149)(13)%(143)(13)%(4) %$(428)(37)%$(327)(29)%(31) %Total operating expense$(2,495)(41)%$(2,178)(34)%(15) %DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSEUnited StatesDepreciation and amortization$(195)(19)%$(232)(15)%16 %General and administrative expense(154)(14)%(98)(7)%(57) %$(349)(33)%$(330)(22)%(6) %AustraliaDepreciation and amortization$(922)(24)%$(757)(20)%(22) %General and administrative expense(466)(12)%(372)(10)%(25) %$(1,388)(36)%$(1,129)(30)%(23) %New ZealandDepreciation and amortization$(257)(22)%$(331)(29)%22 %General and administrative expense — —%3 —%100 %$(257)(22)%$(328)(29)%22 %Total depreciation, amortization, and general and administrativeexpense$(1,994)(33)%$(1,787)(28)%(12) %Total expenses$(4,489)(74)%$(3,965)(62)%(13) %OPERATING INCOMEUnited States$152 14 %$848 56 %(82) %Australia930 24 %1,136 30 %(18) %New Zealand459 40 %488 43 %(6) %Total operating income$1,541 26 %$2,472 38 %(38) %Real Estate segment operating incomeReal Estate segment operating income decreased by 21%, or $1.7 million, to $6.4 million for the year ended December 31, 2018 comparedto 2017, primarily due to the one-time recognition of payments in fees recovered as part of the STOMP arbitration award settlementrecognized in 2017, offset by an increase in revenue in 2018 from the Newmarket and Auburn centers. Please refer below for furtherexplanation.Real Estate segment operating income for the quarter ended December 31, 2018 decreased by 38%, or $931,000 primarily related to theSTOMP arbitration award settlement payments in fees recovered in the Live Theatre business unit.RevenueThe table below is the revenue breakdown by country for each year:(Dollars in thousands)2018% ofRevenue2017% ofRevenue2018 vs. 2017Favorable/(Unfavorable)United States$3,480 14 %$4,740 20 %(27)%Australia16,122 67 %15,089 63 %7 %New Zealand4,633 19 %4,159 17 %11 %Total Segment Revenues$24,235 100 %$23,988 100 %1 %Real estate revenue for the year ended December 31, 2018 increased slightly by 1% or $247,000 mainly driven by increased rental incomeas part of the expansion of our Newmarket Village site in Brisbane, Australia.For the quarter ended December 31, 2018, Real Estate revenue decreased by 6%, or $407,000, to $6.0 million primarily related to the LiveTheatre circuit.- 60 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.Cost of services and products (excluding depreciation and amortization)Operating expense for the Real Estate segment for 2018 increased by 5%, or $468,000, to $9.9 million mainly driven by the full year ofoperations at our Newmarket ETC and increased operations at our Auburn ETC, which include additional expansion tenancies. Depreciation, amortization, general and administrative expenseDepreciation, amortization, general and administrative expenses for 2018 increased by 23%, or $1.5 million, to $7.9 million, compared tothe same period in 2017, primarily driven by capital improvements at the Newmarket ETC and Auburn ETC locations.For the quarter ended December 31, 2018 depreciation, amortization, and general and administrative expenses increased by 12%, or$207,000 primarily related to a full quarter of depreciation expense for Newmarket in 2018 compared to 15 days of depreciation forNewmarket during the same quarter 2017.NON-SEGMENT RESULTS – 2018 vs. 2017Gain on sale of assetsNet gain on sale of assets for 2018 decreased by $9.4 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) not being repeated in 2018.General and administrative expenseNon-segment general and administrative expense for 2018 increased by $1.3 million or 7%, to $21.3 million. This primarily relates tohigher payroll and bonus related expenses (attributable to reversal in 2017 for prior year incentive compensation accruals not deemednecessary), offset by a reduction in professional services and legal fees of $209,000. 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.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%, imposed a one-time mandatory repatriation taxon deferred earnings of foreign subsidiaries, and changed how foreign earnings are subject to U.S. tax.As the result of the Tax Act and under the guidance of the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118, werecorded a provisional tax expense of approximately $13.0 million for the impact of the Tax Act in the fourth quarter of 2017. During thefourth quarter of 2018, upon finalizing the analysis of the impact from the Tax Act, we recorded a tax benefit of $2.3 million as anadjustment to the provisional estimate, for a net tax impact of $10.7 million. The $2.3 million is comprised of an adjustment of $1.2million to the impact of the one-time mandatory repatriation tax on previously undistributed earnings of our foreign subsidiaries and $1.1million from the re-measurement of federal net deferred tax liabilities resulting from the reduction in the U.S. statutory corporate tax rate.Income tax expense decreased by $40,000, or 1%, compared to 2017, mainly due to benefits recognized in 2017 as the result of thedissolution of a non-operating overseas subsidiary, partially offset by the provisional unfavorable effect of the Tax Act. Please refer to Note9 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) increased by $643,000, or 10%, mainly due to an increase in the average balance outstanding tofund our capital projects. - 61 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 for 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 EstateSegments Revenues $263,464 $23,988 $256,922 $21,310 3 % 13 %Segment Operating Expenses Cost of services and products (excluding depreciation andamortization) (215,020) (9,436) (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) (15,832) (221,424) (13,988) (4)% (13)%Segment operating income $32,970 $8,156 $35,498 $7,322 (7)% 11 %Breakdown by country: United States 7,207 1,198 12,351 689 (42)% 74 %Australia 21,358 5,623 18,101 5,646 18 % —%New Zealand 4,405 1,335 5,046 987 (13)% 35 % $32,970 $8,156 $35,498 $7,322 (7)% 11 %- 62 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 discussion for each segment follows:Cinema Exhibition – 2017 vs. 2016(Dollars in thousands) 2017 % of Revenue 2016 % of Revenue 2017 vs. 2016Favorable /(Unfavorable)REVENUE United StatesAdmission revenue $87,646 63 % $89,053 64 % (2) % Food & beverage revenue 41,911 30 % 41,642 30 % 1 % Advertising and other revenue 9,521 7 % 9,125 6 % 4 % $139,078 100 % $139,820 100 % (1) %AustraliaAdmission revenue $60,736 63 % $56,804 64 % 7 % Food & beverage revenue 28,746 30 % 25,916 29 % 11 % Advertising and other revenue 7,124 7 % 6,333 7 % 12 % $96,606 100 % $89,053 100 % 8 %New ZealandAdmission revenue $17,495 63 % $18,870 67 % (7) % Food & beverage revenue 7,689 28 % 7,671 28 % — % Advertising and other revenue 2,596 9 % 1,508 5 % 72 % $27,780 100 % $28,049 100 % (1) % Total revenue $263,464 100 % $256,922 100 % 3 %OPERATING EXPENSE United StatesFilm rent and advertising cost $(46,520) (33)% $(47,507) (34)% 2 % Food & beverage cost (8,325) (6)% (7,467) (5)% (11) % Occupancy expense (28,903) (21)% (26,260) (19)% (10) % Other operating expense (39,920) (29)% (37,649) (27)% (6) % $(123,668) (89)% $(118,883) (85)% (4) %AustraliaFilm rent and advertising cost $(28,286) (29)% $(26,658) (30)% (6) % Food & beverage cost (5,964) (6)% (5,444) (6)% (10) % Occupancy expense (14,921) (16)% (13,905) (16)% (7) % Other operating expense (20,620) (21)% (19,689) (22)% (5) % $(69,791) (72)% $(65,696) (74)% (6) %New ZealandFilm rent and advertising cost $(8,203) (30)% $(8,708) (31)% 6 % Food & beverage cost (1,771) (6)% (1,823) (6)% 3 % Occupancy expense (5,128) (19)% (4,749) (17)% (8) % Other operating expense (6,459) (23)% (6,029) (22)% (7) % $(21,561) (78)% $(21,309) (76)% (1) % Total operating expenses $(215,020) (82)% $(205,888) (80)% (4) %DEPRECIATION, AMORTIZATION, GENERAL ANDADMINISTRATIVE EXPENSE United StatesDepreciation and amortization $(6,092) (4)% $(5,820) (4)% (5) % General and administrative expense (2,111) (2)% (2,766) (2)% 24 % $(8,203) (6)% $(8,586) (6)% 4 %AustraliaDepreciation and amortization $(4,357) (5)% $(4,238) (5)% (3) % General and administrative expense (1,100) (1)% (1,018) (1)% (8) % $(5,457) (6)% $(5,256) (6)% (4) %New ZealandDepreciation and amortization $(1,763) (6)% $(1,714) (6)% (3) % General and administrative expense (51) —% 20 0 % (>100) % $(1,814) (6)% $(1,694) (6)% (7) % Total depreciation, amortization, and general and administrativeexpense $(15,474) (6)% $(15,536) (6)% — % Total expenses $(230,494) (87)% $(221,424) (86)% (4) %OPERATING INCOME United States $7,207 5 % $12,351 9 % (42) %Australia 21,358 22 % 18,101 20 % 18 %New Zealand 4,405 16 % 5,046 18 % (13) %Total operating income $32,970 13 % $35,498 14 % (7) %- 63 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Exhibition - The following table details our cinema segment operating results for the quarter ended December 31, 2017 andDecember 31, 2016, respectively.(Dollars in thousands) 2017 % of Revenue 2016 % of Revenue 2017 vs. 2016Favorable /(Unfavorable)REVENUE United StatesAdmission revenue $23,916 64 % $24,349 63 % (2) % Food & beverage revenue 10,852 29 % 11,201 29 % (3) % Advertising and other revenue 2,452 7 % 2,995 8 % (18) % $37,220 100 % $38,545 100 % (3) %AustraliaAdmission revenue $14,475 62 % $12,701 63 % 14 % Food & beverage revenue 6,957 30 % 5,898 29 % 18 % Advertising and other revenue 1,890 8 % 1,486 8 % 27 % $23,322 100 % $20,085 100 % 16 %New ZealandAdmission revenue $4,331 63 % $3,805 66 % 14 % Food & beverage revenue 2,012 29 % 1,573 28 % 28 % Advertising and other revenue 516 8 % 335 6 % 54 % $6,859 100 % $5,713 100 % 20 % Total revenue $67,401 100 % $64,343 100 % 5 %OPERATING EXPENSE United StatesFilm rent and advertising cost $(12,882) (34)% $(12,870) (33)% — % Food & beverage cost (2,181) (6)% (2,095) (6)% (4) % Occupancy expense (8,150) (22)% (6,491) (17)% (26) % Other operating expense (9,322) (25)% (9,746) (25)% 4 % $(32,535) (87)% $(31,202) (81)% (4) %AustraliaFilm rent and advertising cost $(7,010) (30)% $(5,835) (29)% (20) % Food & beverage cost (1,345) (6)% (1,272) (6)% (6) % Occupancy expense (3,773) (16)% (3,493) (18)% (8) % Other operating expense (5,307) (23)% (4,867) (24)% (9) % $(17,435) (75)% $(15,467) (77)% (13) %New ZealandFilm rent and advertising cost $(2,082) (31)% $(1,779) (31)% (17) % Food & beverage cost (442) (6)% (370) (6)% (19) % Occupancy expense (1,781) (26)% (1,174) (21)% (52) % Other operating expense (1,658) (24)% (1,513) (27)% (10) % $(5,963) (87)% $(4,836) (85)% (23) % Total operating expense $(55,933) (83)% $(51,505) (80)% (9) %DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE United StatesDepreciation and amortization $(1,831) (5)% $(1,348) (3)% (36) % General and administrative expense (437) (1)% (707) (2)% 38 % $(2,268) (6)% $(2,055) (5)% (10) %AustraliaDepreciation and amortization $(1,073) (5)% $(1,085) (6)% 1 % General and administrative expense (268) (1)% (270) (1)% 1 % $(1,341) (6)% $(1,355) (7)% 1 %New ZealandDepreciation and amortization $(441) (7)% $(465) (8)% 5 % General and administrative expense (29) —% (1) —% (>100) % $(470) (7)% $(466) (8)% (1) % Total depreciation, amortization, and general and administrativeexpense $(4,079) (6)% $(3,876) (6)% (5) % Total expenses $(60,012) (89)% $(55,381) (86)% (8) %OPERATING INCOME United States $2,417 6 % $5,288 14 % (54) %Australia 4,546 19 % 3,263 16 % 39 %New Zealand 426 6 % 411 7 % 4 %Total operating income $7,389 11 % $8,962 14 % (18) %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.For the quarter ended December 31, 2017 compared to December 31, 2016, Cinema Exhibition operating income decreased by 18%, or $1.6million primarily resulting from four of our stronger cinemas either being closed, or partially closed, for significant renovations, whichincluded the installation of recliner seats and conversion to TITAN LUXE during the fourth quarter.- 64 -Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 18, 2019Powered 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 year ended 2016.This was primarily driven by higher admissions in our Australian circuit resulting in higher box office and F&B revenue. F&B revenueswere also up in both the United States and New Zealand driven by increased spend per patron due to our expanded F&B offering. Theseincreases were further enhanced as a result of the appreciation of the AU and NZ dollars compared to the US dollar. These items werepartially offset by lower admits in the U.S. due in part to industry-wide box office softening in 2017 and the cinema closure resulting fromour cinema renovation program. Comparing the current and prior year, the Australian dollar and New Zealand dollar increased against theU.S. dollar by 3.1% and 2.0% (on average rates), respectively. Shown below is the revenue breakdown by country:(Dollars in thousands) 2017 % ofRevenue 2016 % ofRevenue 2017 vs. 2016Favorable/(Unfavorable)United States $139,078 53 % $139,820 54 % (1)%Australia 96,606 37 % 89,053 35 % 8 %New Zealand 27,780 10 % 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 thetemporary closure of certain sites for renovations along with lower industry-wide box office attendance. This was partially offsetby, improved average 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 wellas a favorable 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 closure of our Courtenay Central ETC for aportion of the period.Cinema Revenue for the quarter ended December 31, 2017 increased by 5%, or $3.1 million, to $67.4 million compared to the same quarterended December 31, 2016, despite the fact that some Pearlridge auditoriums were closed during the quarter, generating a decrease inrevenue $1.5 million, Australia generated a 16% increase in revenue and New Zealand generated a 20% increase in revenue.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 expenses of $765,000 as a result of increases in rents associated with theexercise of certain lease options, increased staff costs due to minimum wage increases and a move towards enhanced food & beverageofferings, and costs associated with the opening of our new Newmarket cinema in Brisbane, Australia. In addition, the impact of thestrengthening Australian and New Zealand dollars relative to the U.S. dollar further contributed to the cost increase. These were partiallyoffset by lower film rent and advertising costs in the United 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 in 2017 to 82% from 80% in 2016.Cost of services and products for the quarter ended December 31, 2017 compared to the quarter ended December 31, 2016 increased by 9%,or $4.4 million, to $55.9 million. The increase is primarily due to higher occupancy costs in the U.S. coupled with higher film rents andadvertising in Australia and New Zealand.Cost of services and products as a percentage of gross revenue increased in for the fourth quarter 2017 to 83% from 80% in 2016.Depreciation, amortization, general and administrative expenseDepreciation, amortization, general and administrative expense for 2017 remained relatively unchanged compared to 2016. The increase indepreciation resulting from improvements in several of our cinema facilities was offset by savings in general and administrative expenses.- 65 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Revenue2016% of Revenue2017 vs. 2016Favorable /(Unfavorable)REVENUEUnited StatesLive theater rental and ancillary income$4,418 93 %$2,840 87 %56 %Property rental income322 7 %431 13 %(25) %$4,740 100 %$3,271 100 %45 %AustraliaProperty rental income15,089 100 %13,728 100 %10 %New ZealandProperty rental income4,159 100 %4,311 100 %(4) %Total revenue$23,988 100 %$21,310 100 %13 %OPERATING EXPENSEUnited StatesLive theater cost$(1,105)(23)%$(1,371)(42)%19 %Property cost(388)(8)%(317)(10)%(22) %Occupancy expense(660)(14)%(557)(17)%(18) %$(2,153)(45)%$(2,245)(69)%4 %AustraliaProperty cost$(3,031)(20)%$(2,672)(20)%(13) %Occupancy expense(2,375)(16)%(2,081)(15)%(14) %$(5,406)(36)%$(4,753)(35)%(14) %New ZealandProperty cost$(1,295)(31)%$(1,412)(33)%8 %Occupancy expense(582)(14)%(632)(14)%8 %$(1,877)(45)%$(2,044)(47)%8 %Total operating expense$(9,436)(39)%$(9,042)(42)%(4) %DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSEUnited StatesDepreciation and amortization$(615)(13)%$(343)(10)%(79) %General and administrative expense(774)(16)%6 —%(>100) %$(1,389)(29)%$(337)(10)%(>100) %AustraliaDepreciation and amortization$(2,693)(18)%$(2,221)(16)%(21) %General and administrative expense(1,367)(9)%(1,108)(8)%(23) %$(4,060)(27)%$(3,329)(24)%(22) %New ZealandDepreciation and amortization$(947)(23)%$(958)(22)%1 %General and administrative expense — —%(322)(8)%>100 %$(947)(23)%$(1,280)(30)%26 %Totaldepreciation,amortization,and generalandadministrativeexpense$(6,396)(27)%$(4,946)(23)%(29) %Total expenses$(15,832)(66)%$(13,988)(66)%(13) %OPERATING INCOMEUnited States$1,198 25 %$689 21 %74 %Australia5,623 37 %5,646 41 % — %New Zealand1,335 32 %987 23 %35 %Total operating income$8,156 34 %$7,322 34 %11 %- 66 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 -For the quarter ending December 31, 2017 v 2016, the following results of operations for the Real Estate segment are asfollows:(Dollars in thousands) 2017 % of Revenue 2016 % of Revenue 2017 vs. 2016Favorable /(Unfavorable)REVENUE United StatesLive theater rental and ancillary income $1,492 98 % $721 85 % 107 % Property rental income 25 2 % 127 15 % (80) % $1,517 100 % $848 100 % 79 %AustraliaProperty rental income 3,778 100 % 3,383 100 % 12 %New ZealandProperty rental income 1,143 100 % 883 100 % 29 %Total revenue $6,438 100 % $5,114 100 % 26 %OPERATING EXPENSE United StatesLive theater cost $(271) (18)% $(204) (24)% (33) % Property cost 105 7 % (154) (18)% 168 % Occupancy expense (173) (11)% (84) (10)% (106) % $(339) (22)% $(442) (52)% 23 %Australia Property cost $(870) (23)% $(727) (22)% (20) % Occupancy expense (642) (17)% (482) (14)% (33) % $(1,512) (40)% $(1,209) (36)% (25) %NewZealand Property cost $(184) (16)% $(603) (68)% 69 % Occupancy expense (143) (13)% (160) (18)% 11 % $(327) (29)% $(763) (86)% 57 % Total operating expense $(2,178) (34)% $(2,414) (47)% 10 %DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE United StatesDepreciation and amortization $(232) (15)% $(91) (11)% (155) % General and administrative expense (98) (7)% 75 9 % (>100) % $(330) (22)% $(16) (2)% (>100) %AustraliaDepreciation and amortization $(757) (20)% $(604) (18)% (25) % General and administrative expense (372) (10)% (334) (10)% (11) % $(1,129) (30)% $(938) (28)% (20) %New ZealandDepreciation and amortization $(331) (29)% $(231) (26)% (43) % General and administrative expense 3 —% (271) (31)% 101 % $(328) (29)% $(502) (57)% 35 % Total depreciation, amortization, and general and administrative expense $(1,787) (28)% $(1,456) (28)% (23) % Total expenses $(3,965) (62)% $(3,870) (76)% (2) %OPERATING INCOME United States $848 56 % $390 46 % >100 %Australia 1,136 30 % 1,236 37 % (8) %New Zealand 488 43 % (382) (43)% >100 %Total operating income $2,472 38 % $1,244 24 % 99 %Real Estate segment operating incomeReal Estate segment operating income increased by 11%, or $834,000, to $8.2 million for the year ended December 31, 2017 compared to2016, primarily attributable to: (i) $1.4 million in fees recovered as part of the STOMP arbitration award settlement ($1.8 million of feesrecovered revenue in 2017, including the final settlement payment received in March 2018, less $415,000 in legal fee cost recoveryrecorded in 2016). This was offset by an increase in general and administrative costs. Please refer below for further explanation.For the quarter ended December 31, 2017 real estate operating income increased 99% to $2.5 million compared to the same period in2016. In the fourth quarter of 2017, we recognized STOMP arbitration award settlement for approximately $700,000 for proceeds receivedin the first quarter in 2018. Additionally, for the fourth quarter 2017, the receipt of property rental for a full quarter at Courtenay were notreceived in 2016 due to the Wellington earthquake.- 67 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2017 increased by 13% or $2.7 million, mainly driven by fees recovered of$1.8 million in relation to the STOMP arbitration award settlement, increased rental income as part of the expansion of our Newmarket sitein Brisbane Australia, as well as additional rental income from the Newmarket office building purchased in November 2016, the recognitionof business interruption insurance on our Courtenay Central property and parking structure, as well as the impact of the favorable foreignexchange rates on our Australia and New Zealand operations. This was partially offset by the decrease in revenue from our CourtenayCentral ETC due to damage suffered in the Wellington earthquake and result in closure of the center, and a reduction in revenue from ourlive theatre operations. Shown below is the revenue breakdown by country:(Dollars in thousands) 2017 % ofRevenue 2016 % ofRevenue 2017 vs. 2016Favorable/(Unfavorable)United States $4,740 20 % $3,271 15 % 45 %Australia 15,089 63 % 13,728 65 % 10 %New Zealand 4,159 17 % 4,311 20 % (4)%Total Segment Revenues $23,988 100 % $21,310 100 % 13 %Revenues for the quarter to date ended December 31, 2017 increased by 26%, or $1.3 million to $6.4 million compared to the same periodin 2016. This is primary due to a 29% increase in the New Zealand circuit, offset by reduced real estate revenues in the U.S. circuit due toredevelopment expansion projects of several of our properties. 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.Depreciation, amortization, general and administrative expenses for the quarter ended December 31, 2017 compared to the same periodincreased $331,000 primarily due to increased general and administrative expenses in the U.S.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 forced 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.- 68 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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 for safety reasons. Wefiled an insurance claim to recover the impairment loss on the parking structure and the ancillary demolition costs. Refer to Note 20 –Insurance Recoveries on Impairment and Related Losses due to Earthquake for further details.Income tax expenseIncome tax expense decreased by $758,000 or 18%, 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 $588,000, or 9%, compared to 2016, mainly due to a reduction in the average balanceoutstanding. This was achieved due to the receipt of the insurance proceeds from the Courtenay Central parking structure of $20.0 millionin May 2017, allowing us to fully pay down our Westpac loan in New Zealand. Interest income also includes the $115,000 of interestlevied on the STOMP arbitration award settlement. 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 is to complete the redevelopment of our Union Square property; to reassess and master-plan the Cinemas 1,2,3property for redevelopment as a stand-alone 96,000 square foot mixed use property and in the interim to continue to use it as a cinema; tocontinue the build-out of our Newmarket Village and Auburn ETCs and the master planning of the expansion of our Townsville ETC inAustralia; to master plan and consider the redevelopment of our Courtenay Central site in New Zealand into an urban entertainment centerwith a focus on cinema exhibition, food and beverage, and grocery store uses; and in Manukau, New Zealand, to develop in concert withother major land owners, of plans for the development of the infrastructure needed to support the construction of income-producingimprovements; and to continue to be sensitive to opportunities to convert our entertainment assets to higher and better uses, or, whereappropriate, to dispose of such assets. We will also continue to explore potential synergistic acquisitions that may not readily fall intoeither 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. - 69 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 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) 2018 2017 2016(2) 2015(2) 2014(2)Net Cash from Operating Activities $32,645 $23,851 $30,188 $28,574 $28,343 Total Resources (cash and borrowings) Cash and cash equivalents (unrestricted) $13,127 $13,668 $19,017 $19,702 $50,248 Unused borrowing facility 85,886 137,231 117,599 70,134 45,700 Restricted for capital projects(1) 30,318 62,280 62,024 10,263 —Unrestricted capacity 55,568 74,951 55,575 59,871 45,700 Total resources at 12/31 99,013 150,899 136,616 89,836 95,948 Total unrestricted resources at 12/31 68,695 88,619 74,592 79,573 95,948 Debt-to-Equity Ratio Total contractual facility $252,929 $271,732 $266,134 $207,075 $201,318 Total debt (gross of deferred financing costs) 167,043 134,501 148,535 130,941 164,036 Current 30,393 8,109 567 15,000 38,104 Non-current 136,650 126,392 147,968 115,941 125,932 Total book equity 180,547 181,618 146,890 138,951 133,716 Debt-to-equity ratio 0.93 0.74 1.01 0.94 1.23 Changes in Working Capital Working capital (deficit)(3) $(55,270) $(46,971) $6,655 $(35,581) $(15,119)Current ratio 0.35 0.42 1.10 0.51 0.84 Capital Expenditures (including acquisitions) $56,827 $76,708 $49,166 $53,119 $14,914 (1)This relates to the construction facilities specifically negotiated for: (i) Union Square redevelopment project, obtained in December 2016, and (ii) NewZealand construction projects, obtained in May 2015. The New Zealand construction loan expired December 31, 2018.(2)Certain 2015 balances included the restatement impact as a result of a change in accounting principle (see Note 2 – Summary of Significant AccountingPolicies – Accounting Changes). For 2014, no changes made, except for the Stockholders’ Equity balance as of 12/31/2014, as we were not required topresent the restatement numbers as of December 31, 2014 for the Balance Sheet. Certain 2017 and 2016 balances included the restatement impact as aresult of a prior period financial statement correction of immaterial errors (see Note 2 – Summary of Significant Accounting Policies – Prior PeriodFinancial Statement Correction of Immaterial Errors).(3)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 associatedliabilities. We use the money we receive to 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. The Board on March 14, 2019, extended that program to March 2, 2021. There is currently $16.2 million of capacity remaining inthat authorization. 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.Refer to Note 10 – Borrowings in the Consolidated Financial Statements for further details on our various borrowing arrangements.At December 31, 2018, our consolidated cash and cash equivalents totaled $13.1 million. Of this amount, $7.6 million, $3.5 million and$2.0 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 state 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 $55.6 million unused capacity ofavailable corporate credit facilities at December 31, 2018. In addition, we have $30.3 million unused capacity for Union Squaredevelopment uses and construction funding. - 70 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 change in cash and cash equivalents for the three years ended December 31, 2018 is as follows: % Change(Dollars in thousands) 2018 2017 2016 2018 vs.2017 2017 vs.2016Net cash provided by operating activities $32,645 $23,851 $30,188 37 % (21)%Net cash used in investing activities (64,855) (6,786) (42,861) (> 100)% (> 84)%Net cash provided by (used in) financing activities 33,210 (22,055) 11,246 > 100% (> 100)%Impact of exchange rate on cash (1,541) (359) 742 (> 100)% (> 100)%Net increase (decrease) in cash and cash equivalents $(541) $(5,349) $(685) 90 % (> 100)%Operating activities2018 vs. 2017Cash provided by operating activities for 2018 increased by $8.8 million, or 37%, to $32.6 million, primarily driven by $6.6 millionincrease in net operating assets and $1.8 million increase in cash inflows from operating activities.2017 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 expense. Investing activities2018: In 2018, the $64.9 million used in investing activities was mainly related to $63.5 million in capital expenditures, primarily forexpenditures in the U.S. for $45.9 million (Comprised mainly of Union Square, Mililani, Manville, and Digital Projector purchase) and$15.9 million in Australia (Comprised mainly of Newmarket, Auburn, Elizabeth and Charlestown). 2017: 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.Financing activities2018: The cash provided by financing activities of $33.2 million in 2018 was primarily related to loan proceeds of $36.5 million; offset byrepurchase of stock of $2.3 million as part of the 2017 $25.0 million stock buyback program.2017: 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. 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, 2018:(Dollars in thousands) 2019 2020 2021 2022 2023 Thereafter TotalDebt - current and non-current portion(1) $30,393 $43,960 $258 $270 $56,045 $8,204 $139,130 Subordinated debt(1) — — — — — 27,913 27,913 Pension liability 684 684 684 684 684 1,934 5,354 Village East purchase option(2) 5,900 — — — — — 5,900 Lease obligations 30,921 25,792 25,228 23,802 20,642 89,239 215,624 Estimated interest on debt(3) 9,584 6,146 5,281 5,282 5,261 7,417 38,971 Total $77,482 $76,582 $31,451 $30,038 $82,632 $134,707 $432,892 (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. - 71 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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. 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.- 72 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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-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.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 andfinite-lived intangible assets for the three years ended December 31, 2018. Refer to Note 20 – Insurance Recoveries on Impairmentand 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 each reporting unit 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 31,2018.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 or estimation. Revenues from ticket and foodand beverage sales are recognized when the service is provided – that is when the show has commenced, or the food provided. Transactionfees from online sales are recorded at the time of the online transaction. In regards our real estate business, we execute lease contracts forexisting tenancies, but revenue is recognized on a straight-line basis over the lease term. 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. Subsequent to this, on January 1, 2018, we adopted the new accounting standard ASC 606 Revenue from Contracts with Customers usingthe modified retrospective method. This adoption changed our revenue recognition policies for gift card breakage revenue to conform tothe requirements of the new accounting standard. This adoption is described in detail in the section Note 2 – Summary of SignificantAccounting Policies – Accounting Changes.- 73 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.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, 2018, we had recorded approximately $32.9 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 $6.7 million resulting in a net deferred tax asset of $26.2 million. The recoverability of deferred taxassets is dependent upon our ability to generate future taxable income.ContingenciesFor 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, weconsider communications with our insurance company.(ii)for gain contingencies resulting from legal settlements, we record those settlements in our consolidated statements of operationswhen cash or other forms of payments are received.In regards to our significant contingencies during 2018: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.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. 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, 2018, approximately 36% and 14% of our assets were invested in assets denominated in Australian dollars (ReadingAustralia) and New Zealand dollars (Reading New Zealand), respectively, including approximately $5.5 million in cash and cashequivalents. At December 31, 2017, approximately 40% and 15% of our assets were invested in assets denominated in Australian and NewZealand dollars, respectively, including approximately $4.5 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 decrease of $14.9 millionfor the year ended December 31, 2018. As we continue to progress our acquisition and development activities in Australia and NewZealand, that the foreign currency effect on our earnings may be significant in the future.- 74 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.Historically, our policy has been to borrow in local currencies to finance the development and construction of our long-term assets in theU.S., Australia and New Zealand whenever possible. As a result, the borrowings in local currencies have provided somewhat of a naturalhedge against the foreign currency exchange exposure. Even so, and as a result of our issuance of fully subordinated Trust PreferredSecurities in 2007, and their subsequent partial repayment, approximately 63% and 73% of our Australian and New Zealand assets,respectively, remain subject to such exposure, unless we elect to hedge our foreign currency exchange between the U.S. and Australian andNew Zealand dollars. If the foreign currency rates were to fluctuate by 10%, the resulting change in Australian and New Zealand assetswould result in an increase or decrease of $9.9 million and $4.5 million, respectively, and the change in our net income for the year wouldbe $1.4 million and $43,000, respectively. Presently, we have no plan to hedge such exposure.With changes in the tax landscape caused by the Tax Cuts and Jobs Act of 2017, we may reconsider our strategy for financing operationsand redevelopment projects in the three countries we are invested in, which may include increased borrowings from banks in higher-taxcountries, and dividends to the U.S. from foreign subsidiaries, being mindful of withholding taxes on interest, and thin capitalizationlimitations on interest deduction in Australia and New Zealand.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 $8.7 million and $23.6 million as of December 31, 2018 and 2017,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 $1.4 million increase or decrease in our 2018 interestexpense. - 75 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Data READING INTERNATIONAL, INC.TABLE OF CONTENTS Page​Management’s Report on Internal Control over Financial Reporting67 ​Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements)68 ​Report of Independent Registered Public Accounting Firm (Internal Control over Financial Reporting)69 - 76 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Balance Sheets as of December 31, 2018 and 201770 ​Consolidated Statements of Income for the Three Years Ended December 31, 201871 ​Consolidated Statements of Comprehensive Income for the Three Years Ended December 31, 201872 - 77 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Stockholders’ Equity for the Three Years Ended December 31, 201873 ​Consolidated Statements of Cash Flows for the Three Years Ended December 31, 201874 ​Notes to Consolidated Financial Statements75 ​Note 1 – Description of Business and Segment Reporting75 - 78 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 2 – Summary of Significant Accounting Policies76 ​Note 3 – Earnings Per Share87 ​Note 4 – Real Estate Transactions87 ​Note 5 – Properties and Equipments88 ​Note 6 – Investments in Unconsolidated Joint Ventures88 - 79 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Assets89 ​Note 8 – Prepaid and Other Assets90 ​Note 9 – Income Taxes90 ​Note 10 – Borrowings93 ​Note 11 – Pension and Other Liabilities96 - 80 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 12 – Commitments and Contingencies98 ​Note 13 – Noncontrolling Interests102 ​Note 14 – Share-based Compensation and Repurchase Plans102 ​Note 15 – Accumulated Other Comprehensive Income105 ​Note 16 – Fair Value Measurements105 ​Note 17 – Hedge Accounting - 81 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 – Leases106 ​Note 19 – Related Party Transactions107 ​Note 20 – Insurance Recoveries on Impairment and Related Losses due to Earthquake108 ​Note 21 – Unaudited Quarterly Financial Information110 ​Note 22 – Subsequent Events111 - 82 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Accounts112 - 83 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018.The effectiveness of our internal control over financial reporting as of December 31, 2018 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 OfficerMarch 18, 2019By: /s/Gilbert AvanesGilbert AvanesInterim Chief Financial OfficerMarch 18, 2019 - 84 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018 and 2017, 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, 2018, 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, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the periodended December 31, 2018, 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, 2018, 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 18, 2019 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 18, 2019- 85 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018, 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, 2018, 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, 2018, and our report dated March 18, 2019 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 18, 2019- 86 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018 and 2017(U.S. dollars in thousands, except share information)December 31,20182017ASSETSCurrent Assets:Cash and cash equivalents$13,127 $13,668 Receivables8,045 13,050 Inventories1,419 1,432 Prepaid and other current assets7,667 5,325 Total Current Assets30,258 33,475 Operating properties, net257,667 264,724 Investment and development properties, net86,804 61,254 Investment in unconsolidated joint ventures5,121 5,304 Goodwill19,445 20,276 Intangible assets, net7,369 8,542 Deferred tax assets, net26,235 24,746 Other assets6,129 5,082 Total Assets$439,028 $423,403 LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities:Accounts payable and accrued liabilities$26,154 $34,359 Film rent payable8,661 13,511 Debt – current portion30,393 8,109 Derivative financial instruments - current portion41 —Taxes payable1,710 2,938 Deferred current revenue9,264 9,850 Other current liabilities9,305 11,679 Total Current Liabilities85,528 80,446 Debt – long-term portion106,286 94,862 Derivative financial instruments - non-current portion145 —Subordinated debt26,061 27,554 Noncurrent tax liabilities11,530 12,274 Other liabilities28,931 26,649 Total Liabilities$258,481 $241,785 Commitments and ContingenciesStockholders’ Equity:Class A non-voting common shares, par value $0.01, 100,000,000 shares authorized,33,112,337 issued and 21,194,748 outstanding at December 31, 2018 and 33,019,565issued and 21,251,291 outstanding at December 31, 2017$232 $231 Class B voting common shares, par value $0.01, 20,000,000 shares authorized and1,680,590 issued and outstanding at December 31, 2018 and 201717 17 Nonvoting preferred shares, par value $0.01, 12,000 shares authorized and no issuedor outstanding shares at December 31, 2018 and 2017 — —Additional paid-in capital147,452 145,898 Retained earnings47,616 33,056 Treasury shares, at cost(25,222)(22,906)Accumulated other comprehensive income6,115 20,991 Total Reading International, Inc. ("RDI") Stockholders’ Equity176,210 177,287 Noncontrolling Interests4,337 4,331 Total Stockholders’ Equity$180,547 $181,618 Total Liabilities and Stockholders’ Equity$439,028 $423,403 The accompanying Notes are an integral part of the Consolidated Financial Statements. - 87 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018(U.S. dollars in thousands, except share and per share data) 2018 2017 2016(1)Revenues Cinema $294,177 $263,464 $256,922 Real estate 15,208 16,415 13,944 Total Revenues 309,385 279,879 270,866 Costs and Expenses Cinema (225,791) (207,447) (198,523)Real estate (9,904) (9,437) (9,044)Depreciation and amortization (22,275) (16,942) (15,689)General and administrative (27,337) (25,347) (26,906)Total Costs and Expenses (285,307) (259,173) (250,162)Operating Income 24,078 20,706 20,704 Interest expense, net (6,837) (6,194) (6,782)Casualty gain (loss) — 9,217 (1,421)Net (loss) / gain on sale of assets (41) 9,360 393 Other income (expense) (256) 588 (63)Income before taxes and earnings of unconsolidated joint ventures 16,944 33,677 12,831 Equity earnings of unconsolidated joint ventures 974 815 999 Income before income taxes 17,918 34,492 13,830 Income tax expense (3,420) (3,380) (4,138)Net Income $14,498 $31,112 $9,692 Less: Net income attributable to noncontrolling interests 132 11 14 Net Income attributable to RDI controlling interests $14,366 $31,101 $9,678 Basic income per share attributable to RDI controlling interests $0.62 $1.35 $0.42 Diluted income per share attributable to RDI controlling interests $0.62 $1.34 $0.41 Weighted average number of shares outstanding–basic 22,991,277 23,041,190 23,320,048 Weighted average number of shares outstanding–diluted 23,208,991 23,247,969 23,521,157 The accompanying Notes are an 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). - 88 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018(U.S. dollars in thousands)201820172016(1)Net income$14,498 $31,112 $9,692 Foreign currency translation gain (loss)(14,903)8,810 142 (Loss) on cash flow hedges(137) — —Others149 125 127 Total Comprehensive Income (loss)$(393)$40,047 $9,961 Less: Net income attributable to noncontrolling interests132 11 14 Less: Comprehensive income (loss) attributable to noncontrolling interests(15)19 (1)Comprehensive (loss) income attributable to Reading International, Inc.$(510)$40,017 $9,948 The accompanying Notes are an 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). - 89 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018(In thousands) Common Shares Retained Accumulated Reading Class A Class AClass BClass B AdditionalEarnings Other International Inc. TotalNon-Voting Par VotingParPaid-In(Accumulated TreasuryComprehensive Stockholders’ Noncontrolling Stockholders’SharesValue Shares Value CapitalDeficit) SharesIncome/(Loss)EquityInterests EquityAt January 1, 201621,654 $229 1,680 $17 $143,815 $(7,723)$(13,524)$11,806 $134,620 $4,331 $138,951 Net income — — — — — 9,678 — — 9,678 14 9,692 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 theexercise of 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 $1,955 $(16,374)$12,075 $142,472 $4,418 $146,890 Net income — — — — — 31,101 — — 31,101 11 31,112 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 theexercise of 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 $33,056 $(22,906)$20,991 $177,287 $4,331 $181,618 Net income — — — — — 14,366 — — 14,366 132 14,498 Adjustments to opening retainedearnings on adoption of ASC 606 — — — — — 194 194 (2) 192 Other comprehensive income, net — — — — — — — (14,876) (14,876) (15) (14,891)Share-based compensation expense — — — — 1,458 — — — 1,458 — 1,458 Share repurchase plan(149) — — — — — (2,316) — (2,316) — (2,316)Class A common stock issued for share-based bonuses and options exercised35 — — — 219 — — — 219 — 219 In-kind exchange of share for theexercise of options, net issued13 1 — — (74) — — — (73) — (73)Restricted Stock Units45 — — — (49) — — — (49) — (49)Contributions from noncontrollingshareholders — — — — — — — — — 82 82 Distributions to noncontrollingshareholders — — — — — — — — — (191) (191)At December 31, 201821,195 $232 1,680 $17 $147,452 $47,616 $(25,222)$6,115 $176,210 $4,337 $180,547 The accompanying Notes are an integral part of the Consolidated Financial Statements. - 90 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Cash Flows for the Three Years Ended December 31, 2018(U.S. dollars in thousands) 2018 2017 2016Operating Activities Net income $14,498 $31,112 $9,692 Adjustments to reconcile net income to net cash flows from operating activities: Equity earnings of unconsolidated joint ventures (974) (815) (999)Distributions of earnings from unconsolidated joint ventures 670 798 1,004 Gain recognized on foreign currency transactions — (563) —Net loss (gain) on sale of assets 41 (9,360) (393)Interest on hedged derivatives 5 — —Change in net deferred tax assets (1,719) 4,117 (4,942)Depreciation and amortization 22,275 16,942 15,689 Other amortization 1,161 1,406 1,797 Casualty (gain) loss — (9,217) 1,421 Share-based compensation expense 1,458 1,000 609 Net changes in operating assets and liabilities: Receivables 2,868 (3,093) 1,296 Prepaid and other assets (2,761) 350 (992)Payments for accrued pension (2,961) — —Accounts payable and accrued expenses 2,107 (3,740) 2,843 Film rent payable (4,525) 2,764 1,244 Taxes payable (994) (839) (1,707)Deferred revenue and other liabilities 1,496 (7,011) 3,626 Net cash provided by operating activities 32,645 23,851 30,188 Investing Activities Purchases of and additions to operating and investment properties (63,529) (65,903) (49,166)Change in restricted cash (1,326) 33 178 Demolition costs of operating property — (3,700) —Disposal of investment in unconsolidated joint ventures — (432) —Distributions from unconsolidated joint ventures — 124 296 Cash settlement on insurance claim — 18,415 5,000 Proceeds from sale of properties — 44,677 831 Net cash used in investing activities (64,855) (6,786) (42,861)Financing Activities Repayment of long-term borrowings (54,374) (106,449) (63,748)Proceeds from borrowings 90,895 91,030 81,616 Capitalized borrowing costs (1,230) (39) (3,992)Repurchase of Class A nonvoting common stock (2,316) (6,532) (2,850)Proceeds from stock option exercises 344 52 146 Noncontrolling interest contributions 82 193 268 Noncontrolling interest distributions (191) (310) (194)Net cash provided by/ (used in) financing activities 33,210 (22,055) 11,246 Effect of exchange rate on cash (1,541) (359) 742 Net (decrease) in cash and cash equivalents (541) (5,349) (685)Cash and cash equivalents at the beginning of the year 13,668 19,017 19,702 Cash and cash equivalents at the end of the year $13,127 $13,668 $19,017 Supplemental Disclosures Interest paid $8,035 $4,880 $5,948 Income taxes paid, net 8,941 9,245 6,607 Non-Cash Transactions Lease make-good accrual $ — $ — $35 In-kind exchange of stock for the exercise of options, net — 788 —Additions to operating and investing properties through accrued expenses 3,969 10,804 —The accompanying Notes are an integral part of the Consolidated Financial Statements. - 91 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018________________________________________________________________________________________________________NOTE 1 – DESCRIPTION OF BUSINESS AND SEGMENT REPORTINGThe CompanyReading International, Inc., a Nevada corporation (“RDI” and collectively with our consolidated subsidiaries and corporate predecessors,the “Company”, “Reading” and “we”, “us”, or “our”), was incorporated in 1999. Our businesses consist primarily of:·the operation, development and ownership of multiplex cinemas in the United States, Australia, and New Zealand; and,·the development, ownership, operation and/or rental of retail, commercial and live venue real estate assets in Australia, NewZealand, and the United States.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, the chiefoperating decision-maker of the Company. As part of our real estate segment, we have acquired, and continue to hold, raw land in urbanand suburban centers in New Zealand, Australia and the United States.The tables below summarize the results of operations for each of our business segments. Operating expense includes costs associated withthe day-to-day operations of the cinemas and the management of rental properties, including our live theater assets. 2018 2017 2016(Dollars in thousands) Cinema RealEstate Total Cinema RealEstate Total Cinema RealEstate TotalRevenue - Third party $294,177 $15,208 $309,385 $263,464 $16,415 $279,879 $256,922 $13,944 $270,866 Inter-segment Revenue (1) — 9,027 9,027 — 7,573 7,573 — 7,366 7,366 Total Segment Revenue 294,177 24,235 318,412 263,464 23,988 287,452 256,922 21,310 278,232 Operating expense Cost of services and products - Third party (225,791) (9,904) (235,695) (207,447) (9,436) (216,883) (198,523) (9,044) (207,567)Inter-segment Cost of services (1) (9,027) — (9,027) (7,573) — (7,573) (7,366) — (7,366)Total of services and products(excluding depreciation andamortization) (234,818) (9,904) (244,722) (215,020) (9,436) (224,456) (205,889) (9,044) (214,933)Depreciation and amortization (16,314) (5,567) (21,881) (12,213) (4,256) (16,469) (11,772) (3,522) (15,294)General and administrative expense (3,724) (2,326) (6,050) (3,261) (2,140) (5,401) (3,763) (1,422) (5,185)Total operating expense (254,856) (17,797) (272,653) (230,494) (15,832) (246,326) (221,424) (13,988) (235,412)Segment operating income $39,321 $6,438 $45,759 $32,970 $8,156 $41,126 $35,498 $7,322 $42,820 (1)Inter-segment Revenues and Cost of services relates to the internal charge between the two segments where the cinema operates within real estate ownedwithin the group.A reconciliation of segment operating income to income before income taxes is as follows: (Dollars in thousands) 2018 2017 2016Segment operating income $45,759 $41,126 $42,820 Unallocated corporate expense: Depreciation and amortization expense (394) (473) (395)General and administrative expense (21,287) (19,947) (21,721)Interest expense, net (6,837) (6,194) (6,782)Equity earnings of unconsolidated joint ventures 974 815 999 (Loss) gain on sale of assets (41) 9,360 393 Casualty gain (loss) — 9,217 (1,421)Other (expense) income (256) 588 (63)Income before income taxes $17,918 $34,492 $13,830 - 92 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 are presented asfollows: December 31,(Dollars in thousands) 2018 2017By segment: Cinema $138,850 $135,184 Real estate 263,783 249,622 Corporate (1) 36,395 38,597 Total assets $439,028 $423,403 By country: United States $220,777 $188,639 Australia 156,768 169,412 New Zealand 61,483 65,352 Total assets $439,028 $423,403 (1)Corporate Assets includes cash and cash equivalents of $13.1 million and $13.7 million as of December 31, 2018 and 2017, respectively.The following table sets forth our operating properties by country: December 31,(Dollars in thousands) 2018 2017United States $95,710 $89,183 Australia 132,624 143,200 New Zealand 29,333 32,341 Total operating property $257,667 $264,724 The table below summarizes capital expenditures for the three years ended December 31, 2018: (Dollars in thousands) 2018 2017 2016Segment capital expenditures $56,795 $76,300 $49,023 Corporate capital expenditures 32 408 143 Total capital expenditures $56,827 $76,708 $49,166 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 United Statesof America (“US GAAP”). These consolidated financial statements include the accounts of our wholly-owned subsidiaries, which areRDGE, CRG, and CDL. We have also consolidated the following entities that are not wholly-owned for which we have control:·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 no controlover the operations, are accounted for as unconsolidated joint ventures, and hence, recorded in the consolidated financial statements underthe 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.- 93 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 sufficient togive 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 and assumptionsthat affect the amounts reported in the consolidated financial statements and footnotes thereto. Hence, actual results may differ from thoseestimates. Significant estimates and assumptions include, but are not limited to:(i)projections we make regarding the recoverability and impairment of our assets (including goodwill and intangibles);(ii)valuations of our derivative instruments;(iii)allocation of insurance proceeds to various recoverable components;(iv)recoverability of our deferred tax; and,(v)estimation of gift card and gift certificate breakage where we have concluded that the likelihood of redemption is remote. 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 when soldand 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 or moviethat 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 – recognized for unredeemed cards and certificates using the proportional method, whereby breakage revenue isrecognized in proportion to the pattern of rights exercised by the customer when the Company expects that it is probable that asignificant revenue reversal would not occur for any estimated breakage amounts. This is based on a breakage ‘experience rate’which is determined by historical redemption data;·Loyalty Income - a component of revenue from members of our loyalty programs relating to the earning of loyalty rewards isdeferred until such a time as members redeem rewards, or until we believe the likelihood of redemption by the member is remote.Deferral is based on the progress made toward the next reward, the fair value of that reward, and the likelihood of redemption,determined by historical redemption data, and;·Advertising Revenues – recognized based on contractual arrangements or relevant admissions information, as appropriate, whenthe related performance obligation is satisfied.(ii)Real Estate Segment: ·Property Rentals –we contractually retain substantially all of the risks and benefits of ownership of our real estate properties andtherefore, we account for our tenant leases as operating leases. Accordingly, rental revenue is recognized on a straight-line basisover the lease term; and, ·Live Theatre License Fees – we have real property interest in and license theatre space to third parties for the presentation oftheatrical productions. Revenue is recognized in accordance with the license agreement, and is typically recorded on a weeklybasis after the performance of a show has occurred.- 94 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. Cash and Cash EquivalentsWe consider all highly liquid investments with original maturities of three months or less at the time of purchase as cash equivalents forwhich cost approximates fair value.ReceivablesOur receivables balance is composed primarily of credit card receivables, representing the purchase price of tickets, food & beverage items,or coupon books sold at our various businesses. Sales charged on customer credit cards are collected when the credit card transactions areprocessed. The remaining receivables balance is primarily made up of the sales tax refund receivable from our Australian taxing authoritiesand the management fee receivable from the managed cinemas and property damage insurance recovery proceeds. We have no history ofsignificant bad debt losses and we have established an allowance for accounts that we deem uncollectible.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) ornet realizable value.Restricted CashRestricted cash includes those cash accounts for which the use of funds is restricted by any contract or bank covenant. At December 31,2018 and 2017, our restricted cash balance, included as part of prepaid and other current assets, was $1.3 million 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. Derivative instruments are recorded on the balance sheet at fair value with changes in fair value through interest expense in theConsolidated Statement of Operations or, in the case of accounting hedges, in Other Comprehensive Income and then reclassified intointerest expense in the same period(s) during which the hedged transactions affect earnings. The cash flows from interest rate derivatives areclassified as cashflows provided by operating activities in the Consolidated Cashflow Statement, as are the hedged transactions. As ofDecember 31, 2018 and 2017 we have unfavorable derivative positions designated as accounting hedges of $186,000 and $nil,respectively.Operating Properties, netOur Operating Properties consist of land, buildings and improvements, leasehold improvements, fixtures and equipment, which we use toderive operating income associated with our two business segments, cinema exhibition and real estate. Buildings and improvements,leasehold improvements, fixtures and equipment are initially recorded at the lower of cost or fair market value and depreciated over theuseful lives of the related assets. Land is not depreciated. Expenditures relating to renovations, betterments or improvements to existingassets are capitalized if it improves or extends the lives of the respective assets and/or provides long-term future net cash inflows, includingthe 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 the improvementTheater equipment7 yearsFurniture and fixtures3 – 10 yearsInvestment and Development Properties, netInvestment and Development Properties consist of land, buildings and improvements under development, and their associated capitalizedinterest and other development costs that we are either holding for development, currently developing, or holding for investmentappreciation purposes. These properties are initially recorded at the lower of cost or fair market value. Within this category are buildingand improvement costs directly associated with the development of potential cinemas (whether for sale or lease), the development ofentertainment-themed centers (“ETCs”), or other improvements to real property. As incurred, we expense start-up costs (such as pre-openingcinema advertising and training expense) and other costs not directly related to the acquisition and development of long-term assets. Wecease cost capitalization (including interest) on a development property when the property is complete and ready for its intended use, or ifactivities necessary to get the property ready for its intended use have been substantially- 95 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. curtailed. 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 the beginningof the fourth quarter, and whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fullyrecoverable. We review internal management reports on a monthly basis as well as monitor current and potential future competition in film markets forindications 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, 2018,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 20 – 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 31,2018.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 because we are not the primary beneficiary. Wecarry our investment in the Reading International Trust I, recorded under “Other Assets”, using the equity method of accounting becausewe have the ability to exercise significant influence (but not control) over operating and financial policies of the entity. We eliminatetransactions with an equity method entity to the extent of our ownership in such an entity. Accordingly, our share of net income/(loss) ofthis equity method entity is included in consolidated net income/(loss). We have no implicit or explicit obligation to further fund ourinvestment in Reading International Trust 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 sale separatelyon the balance sheet and cease to record depreciation and amortization expense. Properties held for sale are reported at the lower of theircarrying value or their estimated fair value less the estimated costs to sell. As of December 31, 2016, we classified our landholding inBurwood, Australia as land held for sale as a result of a sale transaction on May 12, 2014, this transaction closed during December2017. Refer to Note 4 – Real Estate Transactions for details.- 96 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. Deferred Leasing/Financing CostsDirect costs incurred in connection with obtaining tenants and or financing are amortized over the respective term of the loan utilizing theeffective interest method, or straight-line method if the result is not materially different. In addition, interest on loans with increasinginterest rates and scheduled principal pre-payments are also recognized on the effective interest method. Net deferred financing costs arepresented as a reduction in the associated debt account (see Note 10 – Borrowings) in line with our adoption of ASU 2015-03, whichbecame 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 licensors.Advertising ExpenseWe expense our advertising as incurred. The amount of our advertising expense was $2.4 million, $2.3 million, and $2.3 million 2018, 2017, and 2016, respectively.Operating LeasesA majority of our cinema operations are conducted in premises under non-cancellable lease arrangements with initial base terms generallyranging between 5 to 15 years, with certain leases containing renewal options to extend the lease term to an additional term of up to 20years. We evaluated the classification of our leases and concluded all of these arrangements as operating leases. Lease expense is recordedon a straight-line basis over the initial base terms, taking into effect any rate change clauses. Any subsequent increases or decreases inrental payments that result from factors not anticipated during lease inception or factors that are based on meeting future targets, other thanindexation factors, represent contingent rentals and are fully accruable at the period the trigger event occurs.Share-based CompensationThe determination of the compensation cost for our share-based awards (primarily in the form of stock options or restricted stock units) ismade at the grant date based on the estimated fair value of the award, and such cost is recognized over the grantee’s requisite service period(which typically equates to our vesting term). Previously recognized compensation cost shall be reversed for any forfeited award to theextent unvested at the time of forfeiture. Refer to Note 14 – Share-based Compensation and Repurchase Plans for further details.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 these as a separate linewithin the Stockholders’ Equity section in our consolidated balance sheets. Refer to Note 14 – Share-based Compensation andRepurchase Plans 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 of thetotal 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 advice fromlegal counsel.·Others – other gain contingencies typically result from legal settlements and we record those settlements in income when cash orother 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 years endedDecember 31, 2018, 2017, and 2016, we recorded gains/(losses) relating to litigation settlement of $nil, $1.8 million, and $415,000,respectively.- 97 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. 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 adjustments arereported 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 and theAustralian and New Zealand dollars. Presented in the table below are the currency exchange rates for Australia and New Zealand as of andfor the three years ended December 31, 2018: As of andfor the year endedDecember 31, 2018 As of andfor the year endedDecember 31, 2017 As of andfor the year endedDecember 31, 2016Spot Rate Australian Dollar 0.7046 0.7815 0.7230New Zealand Dollar 0.6711 0.7100 0.6958Average Rate Australian Dollar 0.7479 0.7670 0.7440New Zealand Dollar 0.6930 0.7111 0.6973Income TaxesWe account for income taxes under an asset and liability approach. Under the asset and liability method, deferred tax assets and liabilitiesare recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts ofexisting assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expectedto apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, and are classified asnoncurrent on the balance sheets in accordance with current US GAAP. Valuation allowances are established, when necessary, to reducedeferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable (refundable) for the period and thechange during the period in deferred tax assets and liabilities. The effect of a change in tax rates or law on deferred tax assets and liabilitiesis 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 the evaluationof new information not previously available. We record interest and penalties related to income tax matters as part of income tax expenseand in income tax related balance sheet accounts. Due to the complexity of some of these uncertainties, the ultimate resolution may resultin a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases ordecreases to income tax expense in the period in which it is determined a change in recognition or measurement is appropriate.The Tax Act creates a new requirement for U.S. corporations to include in U.S. taxable income certain earnings of their foreign subsidiaries,effective beginning tax year 2018. The Global Intangible Low Taxed Income (“GILTI”) framework introduces a new tax on foreign earningsof U.S. based consolidated groups. We record taxes related to GILTI as a current-period expense when incurred. Earnings Per ShareThe Company presents both basic and diluted earnings per share amounts. Basic EPS is calculated by dividing net income attributable tothe Company by the weighted average number of common shares outstanding during the year. Diluted EPS is based upon the weightedaverage number of common and common equivalent shares outstanding during the year, which is calculated using the treasury-stockmethod for equity-based awards. Common equivalent shares are excluded from the computation of diluted EPS in periods for which theyhave an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the period are anti-dilutiveand, accordingly, are excluded from the calculation.- 98 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 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 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, 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:·Above-market and below-market leases – we record above-market and below-market in-place lease values for acquired propertiesbased on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the differencebetween (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market leaserates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. Weamortize any capitalized above-market lease values (an intangible asset) and capitalized below-market lease values (an intangibleliability) 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-up costs)and (ii) leasing commissions and legal/marketing costs avoided with the leases in place. We measure the fair values of the in-placeleases based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii)the property valued as if vacant. Factors considered in the fair value determination include an estimate of carrying costs duringhypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. We alsoconsider information obtained about each property as a result of our pre-acquisition due diligence, marketing, and leasingactivities in estimating the fair value of the intangible assets acquired. In estimating carrying costs, management includes realestate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-upperiods. Management also estimates costs to execute similar leases including leasing commissions, legal, and other relatedexpenses to the extent that such costs are not already incurred in connection with a new lease origination as part of the 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 leasing originationcosts 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 which willimpact the timing of expense allocation. In accordance with our adoption of ASU 2015-16, we record the changes in depreciation andamortization in the period we finalized our purchase price allocation.Accounting Changes Recently Adopted and Issued Accounting PronouncementsAdopted:On January 1, 2018, we adopted the new accounting standard ASC 606 Revenue from Contracts with Customers using the modifiedretrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the openingbalance of retained earnings. The comparative information has not been restated and continues to be reported under the accountingstandards in effect for those periods. We expect the impact of the adoption of the new standard to be immaterial to our net income and cashflows from operations on an ongoing basis.Our cinema and food and beverage revenue continues to be recognized upon sale and completion of the provision of the movie orperformance, or delivery of food and beverage items. Where necessary, revenue is deferred until these obligations are discharged. Propertyrentals continue to be recognized on a straight line basis, and live theatre license fees continue to be based on a percentage of weekly ticketsales. Under the new standard, rewards owed to and points accrued by members of our customer loyalty programs are held as deferredrevenue. Revenue from unredeemed gift cards and certificates (known as “breakage” in our industry) is recognized in- 99 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. proportion to the pattern of rights exercised by the customer, when the Company expects that it is probable that a significant revenuereversal would not occur for any estimated breakage amounts.The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 Revenuefrom Contracts with Customers were as follows: (Dollars in thousands) Balance atDecember 31,2017 Adjustmentsdue to ASU2014-09 Balance atJanuary 1,2018Assets Deferred income taxes $24,746 $(161) $24,585 Liabilities Deferred current revenue $9,850 $(355) $9,495 Stockholders' Equity Retained earnings $33,056 $194 $33,250 In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated income statementand balance sheet was as follows: Year Ended December 31, 2018(Dollars in thousands) As Reported,December 31, 2018 BalancesWithoutAdoption ofASC 606 Effect ofchangeHigher /(Lower)Revenues Cinema $294,177 $293,970 $207 Income tax expense (3,420) (3,356) 64 Net income $14,498 $14,641 $143 (Dollars in thousands) As Reported,December 31,2018 BalancesWithoutAdoption ofASC 606 Effect ofchangeHigher /(Lower)Assets Deferred income taxes $26,235 $26,299 $(64)Liabilities Deferred current revenue $9,264 $9,471 $(207)Stockholders' Equity Retained earnings $47,616 $47,473 $143 Refer to Note 2 – Summary of Significant Accounting Policies for a description of our new revenue recognition policies, and to Note 1-Description of Business and Segment Reporting for a disaggregation of our revenue sources.On January 1, 2018, the Company adopted ASU 2016-18, Statement of Cash Flows, Topic 230: Restricted Cash, a consensus of the FASBEmerging Issues Task Force. This standard requires that amounts generally described as restricted cash and cash equivalents should becombined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cashflows. The adoption of ASU 2016-18 did not have a material effect on our consolidated statement of cash flows.On January 1, 2018, the Company adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receiptsand Cash Payments. The standard applies to eight (8) specific cash flow classification issues, reducing the current and potential futurediversity in the presentation of certain cash flows. The adoption of ASU 2016-15 did not have a material effect on our consolidatedstatement of cash flows.On January 1, 2018, the Company adopted ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation ofNet Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This standard (i) requires that an employer disaggregate theservice cost component from the other components of net benefit cost, and (ii) specifies how to present the service cost component and theother components of net benefit cost in the income statement and (iii) allows only the service cost component of net benefit cost to beeligible for capitalization. The adoption of ASU 2017-07 did not have a material effect on our consolidated financial statements.- 100 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 January 1, 2018, the Company adopted ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU provides that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a singleidentifiable asset or a group of similar identifiable assets, the asset is not a “business”, thus reducing the number of transactions that needfurther evaluation for business combination. The adoption of ASU 2017-01 did not have a material effect on our current consolidatedfinancial statements, and we do not expect it to be applicable to our consolidated financial statements in the near term unless we enter intoa definitive business acquisition transaction.On January 1, 2017, the Company adopted ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to EmployeeShare-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 taxbenefits in excess of compensation cost and tax deficiencies, (ii) accounting for forfeitures, and (iii) classification on the statement of cashflows. The only significant impact of the adoption of this new guidance to us is the immediate recognition of excess tax benefits (or“windfalls”) and tax deficiencies (or “shortfalls”) in the consolidated statement of operations. Previously, (i) tax windfalls were recorded inadditional paid-in capital (“APIC”) in the consolidated statement of stockholders’ equity and (ii) tax shortfalls were recorded in APIC to theextent of previous windfalls and then to the consolidated statement of operations. The adoption of ASU 2016-09 did not have a materialimpact 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 or degree ofinfluence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to thecurrent basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomesqualified for equity method accounting. The new standard became effective for the Company on January 1, 2017. The adoption of ASU2016-07 did not have a material impact on the consolidated financial statements 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 the VIEheld through a common control party. The new standard became effective for the Company on January 1, 2017. The adoption of ASU2016-17 did not have a material impact on the consolidated financial statements and related disclosures.Issued:vASUs Effective 2019 and Beyond·New Lease Accounting Model (ASU 2016-02, Leases: Topic 842)In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability amongorganizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Mostprominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leasesclassified as operating leases under current U.S. GAAP. Under the standard, disclosures are required to meet the objective ofenabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We will berequired to recognize and measure leases existing at, or entered into after, the beginning of the earliest comparative periodpresented using a modified retrospective approach, with certain practical expedients available.The standard is effective for us beginning January 1, 2019, with early adoption permitted. We have not elected to early adopt thisstandard, and instead are adopting this standard on its effective date. Our implementation project is substantially complete. Inpreparation for adoption of the standard, we have implemented internal controls and key system functionality to enable thepreparation of financial information. We are electing all available practical expedients, and transitioning using the modifiedretrospective approach.The standard will have a material impact on our consolidated balance sheets, but will not have a material impact on ourconsolidated income statements. The most significant impact will be the recognition of ROU assets and lease liabilities foroperating leases, while our accounting for capital leases remains substantially unchanged. Adoption of the standard will result inthe recognition of additional ROU assets and lease liabilities for operating leases of approximately $250.0 million as of January 1,2019.- 101 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. ·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 impairment testsperformed on testing dates after January 1, 2017. We do not anticipate the adoption of ASU 2017-04 will have a material impacton our consolidated financial statements.Prior period financial statement correction of immaterial errorsDuring the third quarter of 2018, we identified immaterial errors related to the accounting for straight line rent receivable from tenants inour real estate operations dating back to 2015. These errors resulted in an understatement of real estate revenue for certain prior periods.We assessed the materiality of these errors on our financial statements for prior periods in accordance with the SEC Staff AccountingBulletin (SAB) No. 99, Materiality, codified in Accounting Standards Codification (ASC) 250, Presentation of Financial Statements, andconcluded that they were not material to any prior annual or interim periods. However, the aggregate amount of $440,000 related to theprior period immaterial errors through June 30, 2018, would have been material to the quarterly accounts within our three months toSeptember 30, 2018, Consolidated Statements of Income. Consequently, in accordance with ASC 250 (specifically SAB No. 108,Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), we havecorrected these errors for all prior periods presented by revising the consolidated financial statements and other financial informationincluded herein.The following is a summary of the previously issued financial statement line items for all periods and statements included in this Form 10-Kreport.Consolidated Statements of Income: Year Ended December 31, 2017 Year Ended December 31, 2016(Dollars in thousands) As Reported Adjustment As Revised As Reported Adjustment As RevisedReal estate revenue $16,270 145 16,415 $13,551 393 13,944 Total revenue 279,734 145 279,879 270,473 393 270,866 Operating income 20,561 145 20,706 20,311 393 20,704 Income before income taxes 34,347 145 34,492 13,437 393 13,830 Income tax expense (3,337) (43) (3,380) (4,020) (118) (4,138)Net income 31,010 102 31,112 9,417 275 9,692 Net income attributable to Reading International,Inc. common shareholders 30,999 102 31,101 9,403 275 9,678 Basic earnings per share $1.35 — 1.35 $0.40 0.02 0.42 Diluted earnings per share 1.33 0.01 1.34 0.40 0.01 0.41 Consolidated Balance Sheets:Summary of Equity(Dollars in thousands)As ReportedAdjustmentAs RevisedEquity at January 1, 2016$138,951 —138,951 Net income9,403 275 9,678 Equity at December 31, 2016146,615 275 146,890 Equity at January 1, 2017146,615 275 146,890 Net income30,999 102 31,101 Equity at December 31, 2017181,241 377 181,618 - 102 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 at December 31, 2017(Dollars in thousands) As Reported Adjustment As RevisedDeferred tax assets $24,908 (162) 24,746 Other assets 4,543 539 5,082 Total assets 423,026 377 423,403 Retained earnings $32,679 377 33,056 Total stockholders' equity 181,241 377 181,618 Consolidated Statements of Cash Flows: Year Ended December 31, 2017 Year Ended December 31, 2016(Dollars in thousands) As Reported Adjustment As Revised As Reported Adjustment As RevisedNet income $31,010 102 31,112 $9,417 275 9,692 Change in net deferred tax assets 4,073 44 4,117 (5,060) 118 (4,942)Prepaid and other assets 496 (146) 350 (599) (393) (992)Net cash provided by operating activities 23,851 — 23,851 30,188 — 30,188 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 no dormancyfees, only when they were redeemed. At the end of the fourth quarter of 2016, we determined that we have sufficient historical informationto recognize breakage income on them. Based on our review of our own historical redemption patterns using company-wide dataaccumulated over many years, we considered it preferable to estimate and record a certain percentage of our gift card and gift certificatesales as breakage income as it better reflects of our historical redemption patterns and our earnings process. Effectively, we concluded thata portion of these sales may have a remote likelihood of redemption based on our own historical redemption patterns and thus de-recognized the liability associated with them. The adoption of ASC 606 in 2018, as described in “Recently Adopted and IssuedAccounting Pronouncements,” has superseded this change. 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 in ourconsolidated statements of operations. The adjustments were made to correct our rent expense account under the straight line method ofexpense recognition. We determined that the adjustments did not have a material impact to our current or prior period consolidatedfinancial 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 our incometax and related deferred tax asset accounts. We determined that the adjustments did not have a material impact to our current or prior periodconsolidated financial statements.- 103 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 3 – EARNINGS PER SHAREThe following table sets forth the computation of basic and diluted EPS and a reconciliation of the weighted average number of commonand common equivalent shares outstanding for the three years ended December 31, 2018: (Dollars in thousands, except share and per share data) 2018 2017 2016Numerator: Net income attributable to RDI common stockholders $14,366 $31,101 $9,678 Denominator: Weighted average shares of common stock – basic 22,991,277 23,041,190 23,320,048 Weighted average dilutive impact of stock-based awards 217,714 206,779 201,109 Weighted average shares of common stock – diluted 23,208,991 23,247,969 23,521,157 Basic EPS attributable to RDI common stockholders $0.62 $1.35 $0.42 Diluted EPS attributable to RDI common stockholders $0.62 $1.34 $0.41 Awards excluded from diluted EPS 276,681 149,841 92,500 NOTE 4 – REAL ESTATE TRANSACTIONSDiscussed below are the real estate transactions affecting the presentation in our consolidated balance sheets as of December 31, 2018 and2017, and the profitability determination in our consolidated statements of income for the three years ended December 31, 2018: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).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, gross 12,817 Less: Direct costs incurred(1) (439)Total transaction gain, net $12,378 (1)Represents commissions and legal expenses incurred in connection with this transaction. Real Estate AcquisitionsBuilding & Landholding in Auburn, Australia (Asset Acquisition, 2018)On June 29, 2018, we purchased a property for $3.5 million (AU$4.5 million) in Auburn (Sydney area), Australia. Final settlement was madeon October 11, 2018. The property which borders our Redyard ETC in Auburn on three sides and consists of an approximately 16,830square foot building located on an estimated 20,870 square foot lot, is subject to a lease to Telstra Corporation through July 2022. Thiswill allow us time to plan for its efficient integration into our ETC. Including this acquisition, our Redyard ETC represents approximately519,992 square feet (48,309 square meters) of land, with approximately 1,620 feet (498 meters) of uninterrupted frontage to ParramattaRoad, a major Sydney arterial motorway and approximately 147,000 square feet of net rentable area.Landholding Acquisition in Townsville, Australia (Asset Acquisition, 2018)On June 13, 2018, we acquired a 163,000 square foot (15,150 square meter) parcel of land at our Cannon Park ETC, in connection with therestructuring of our relationship with the adjacent landowner. Prior to the restructuring, this parcel was commonly owned by us and theadjoining landowner. In the restructuring, the adjoining landowner conveyed to us its interest in the parcel for AU$1. Incident to thattransaction, we granted the adjoining landowner certain access rights with respect to that parcel. - 104 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 5 – PROPERTIES AND EQUIPMENTSOperating Property, Net Property associated with our operating activities is summarized as follows: December 31,(Dollars in thousands) 2018 2017Land $75,689 $76,457 Building and improvements 149,734 153,232 Leasehold improvements 55,299 48,481 Fixtures and equipment 167,943 145,033 Construction-in-progress 3,478 26,000 Total cost 452,143 449,203 Less: accumulated depreciation (194,476) (184,479)Operating Properties, net $257,667 $264,724 Of our total operating properties as disclosed above, the gross and carrying amounts of the portion of our properties currently on lease orheld for leasing as of December 31, 2018 and 2017 are as follows: December 31,(Dollars in thousands) 2018 2017Building and improvements Gross balance $67,887 $71,749 Accumulated depreciation 17,709 17,585 Net Book Value $50,178 $54,164 Depreciation expense for operating property was $19.5 million, $14.0 million, and $15.1 million for the year ended December 31, 2018, 2017 and 2016, respectively.Investment and Development PropertyInvestment and development property is summarized as follows: December 31,(Dollars in thousands) 2018 2017Land $24,371 $25,025 Building 1,900 1,900 Construction-in-progress (including capitalized interest) 60,533 34,329 Investment and development property, net $86,804 $61,254 For the year ended December 31, 2018 and 2017, we capitalized interest charges of $3.3 million and $1.2 million 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 below summarizesour active investment holdings in two unconsolidated joint ventures: December 31,(Dollars in thousands) Interest 2018 2017Mt. Gravatt 33.3% $3,861 $4,118 Rialto Cinemas 50.0% 1,260 1,186 Total Joint Ventures $5,121 $5,304 - 105 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 recorded share of equity earnings from our investments in unconsolidated joint ventures are as follows:(Dollars in thousands) 2018 2017 2016Mt. Gravatt $690 $726 $805 Rialto Cinemas 284 89 194 Rialto Distribution — — —Total equity earnings $974 $815 $999 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 had taken forour debt obligation in the joint venture. Consequently, we recognized a gain of $15,000 (NZ$21,000) during the quarter ended June 30,2017. NOTE 7 – GOODWILL AND INTANGIBLE ASSETSThe table below summarizes goodwill by business segment:(Dollars in thousands) Cinema Real Estate TotalBalance at January 1, 2017 $14,604 $5,224 $19,828 Foreign currency translation adjustment 448 — 448 Balance at December 31, 2017 $15,052 $5,224 $20,276 Foreign currency translation adjustment (831) — (831)Balance at December 31, 2018 $14,221 $5,224 $19,445 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 reporting unitto its carrying amount, including the goodwill, to determine if there is potential goodwill impairment. A reporting unit is generally onelevel below the operating segment. The most recent annual assessment occurred in the fourth quarter of 2018. The assessment resultsindicated that there is no impairment to our goodwill as of December 31, 2018.The tables below summarize intangible assets other than goodwill: December 31, 2018(Dollars in thousands) BeneficialLeases TradeName OtherIntangibleAssets TotalGross carrying amount $28,592 $7,254 $1,951 $37,797 Less: Accumulated amortization (24,145) (5,207) (1,076) (30,428)Net intangible assets other than goodwill $4,447 $2,047 $875 $7,369 December 31, 2017(Dollars in thousands) BeneficialLeases TradeName OtherIntangibleAssets TotalGross 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 We amortize our beneficial leases over the lease period, the longest of which is approximately 30 years; our trade name using an acceleratedamortization method over its estimated useful life of 30 years; and other intangible assets over their estimated useful life of up to 30 years(except for transferrable liquor licenses, which are indefinite-lived assets, with a balance of $496,000 and $421,000 as- 106 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 December 31, 2018 and 2017). For the years ended December 31, 2018, 2017, and 2016, our amortization expense was $1.9 million,$1.7 million, and $1.9 million, respectively.As of December 31, 2018, the estimated amortization expense for our amortizable intangibles, in the five succeeding years and thereafter isas follows: (Dollars in thousands) EstimatedFutureAmortizationExpense2019 $1,342 2020 979 2021 840 2022 750 2023 729 Thereafter 2,233 Total future amortization expense $6,873 NOTE 8 – PREPAID AND OTHER ASSETSPrepaid and other assets are summarized as follows:December 31,(Dollars in thousands)20182017Prepaid and other current assetsPrepaid expenses$1,761 $1,625 Prepaid taxes646 653 Income taxes receivable2,704 1,686 Prepaid rent930 1,055 Deposits242 243 Restricted cash1,342 17 Investments in marketable securities42 46 Total prepaid and other current assets$7,667 $5,325 Other non-current assetsOther non-cinema and non-rental real estate assets1,134 1,134 Investment in Reading International Trust I838 838 Straight-line rent asset4,150 3,103 Long-term deposits7 7 Total non-current assets$6,129 $5,082 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 significantly changed theU.S. corporate income tax law by lowering the statutory corporate tax rate from 35% to 21%, imposed a one-time mandatory repatriation taxon deferred earnings of foreign subsidiaries, and changed how foreign earnings are subject to U.S. tax. As the result of the Tax Act andunder the guidance of the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118, we recorded a provisional taxexpense of approximately $13.0 million for the impact of the Tax Act in the fourth quarter of 2017. During the fourth quarter of 2018, uponfinalizing the analysis of the impact from the Tax Act, we recorded a tax benefit of $2.3 million as an adjustment to the provisionalestimate, for a net tax impact of $10.7 million. The $2.3 million is comprised of an adjustment of $1.2 million to the impact of the one-timemandatory repatriation tax on previously undistributed earnings of our foreign subsidiaries and $1.1 million from the re-measurement offederal net deferred tax liabilities resulting from the reduction in the U.S. statutory corporate tax rate.- 107 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 before income taxes includes the following: (Dollars in thousands) 2018 2017 2016United States $(3,039) $(5,143) $(1,886)Foreign 19,983 38,820 14,717 Income before income taxes and equity earnings of unconsolidated jointventures $16,944 $33,677 $12,831 Equity earnings of unconsolidated joint ventures: United States — — —Foreign 974 815 999 Income before income taxes $17,918 $34,492 $13,830 Significant components of the provision for income taxes are as follows:(Dollars in thousands) 2018 2017 2016Current income tax expense (benefit) Federal (1) $297 $(7,846) $2,982 State 382 775 675 Foreign 6,158 7,079 4,685 Total 6,837 8 8,342 Deferred income tax expense (benefit) Federal (3,869) 3,654 (4,197)State 22 (2,351) (422)Foreign 430 2,069 415 Total (3,417) 3,372 (4,204)Total income tax expense $3,420 $3,380 $4,138 (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:December 31,(Dollars in thousands)20182017Deferred Tax Assets:Net operating loss carry-forwards$8,199 $8,579 Alternative minimum tax credit carry-forwards1,117 939 Foreign Tax Credit2,715 —Compensation and employee benefits3,906 4,146 Deferred revenue 2,266 2,500 Accrued expenses6,916 6,017 Accrued taxes2,086 2,440 Land and property7,373 8,457 Other —106 Total Deferred Tax Assets34,578 33,184 Deferred Tax Liabilities:Intangibles(1,256)(1,087)Cancellation of indebtedness —(481)Other(367) —Total Deferred Tax Liabilities(1,623)(1,568)Net deferred tax assets before valuation allowance32,955 31,616 Valuation allowance(6,720)(6,870)Net deferred tax asset$26,235 $24,746 We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination,we considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected futuretaxable income, tax planning strategies and recent financial performance. We believe the evidence connected with- 108 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. New Zealand loss carryforwards and certain US state loss carryforwards do not support a conclusion of being more-likely-than-not to berealized. Accordingly as of December 31, 2018, we recorded a valuation allowance of $6.7 million.As of December 31, 2018, we had the following carry-forwards:·approximately $2.2 million in U.S. alternative minimum tax credit carry-forwards with no expiration date and $1.1 million isrefundable beginning tax year 2018;·approximately $11.7 million in Federal loss carryforwards expiring in 2037;·approximately $4.9 million in California loss carryforwards expiring in 2037;·approximately $1.8 million in Hawaii loss carryforwards expiring in 2037;·approximately $43.3 million in New York state loss carryforwards expiring in 2034;·approximately $43.3 million in New York city loss carryforwards expiring in 2034; and,·approximately $8.1 million in available New Zealand loss carry-forwards with no expiration date.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. Thesignificant reason for these differences is as follows:(Dollars in thousands) 2018 2017 2016Expected tax provision $3,763 $12,073 $4,704 Increase (decrease) in tax expense resulting from: Foreign tax rate differential 1,874 (2,160) (668)Change in valuation allowance (451) (905) 129 State and local tax provision 405 (541) 307 Prior year adjustments 41 (79) (954)Unrecognized tax benefits 438 (8,498) 262 Advance to Overseas Subsidiary — (7,620) —Impact of Tax Act (2,265) 13,018 —Non-taxable insurance proceeds — (1,871) —GILTI 193 — —Foreign Tax Credit (846) — —Other 268 (37) 358 Total income tax expense $3,420 $3,380 $4,138 The undistributed earnings of the Company's Australian subsidiaries are considered to be indefinitely reinvested. Accordingly, noprovision for state income taxes has been provided on such undistributed earnings. Due to the 2017 enactment of the Tax Act, futurerepatriations of foreign earnings will generally not be subject to U.S. federal taxation but may incur minimal state taxes.The following table is a summary of the activity related to unrecognized tax benefits, excluding interest and penalties, for the years endedDecember 31, 2018, 2017, and 2016:(Dollars in thousands) 2018 2017 2016Unrecognized tax benefits – gross beginning balance $3,123 $11,480 $11,022 Gross increase (decrease) - prior year tax positions 2,304 (7,905) 133 Gross increase (decrease) - current period tax positions — — 325 Settlements (718) (452) —Unrecognized tax benefits – gross ending balance $4,709 $3,123 $11,480 As of December 31, 2018 and 2017, if recognized, $4.7 million and $3.1 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, 2017, werecorded an increase to tax interest of $203,000, resulting in a total $9.1 million in interest. During the year ended December 31, 2018, werecorded an increase to tax interest of $430,000, resulting in a total $9.5 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 tax- 109 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. positions will increase within a range of $500,000 to $1.5 million. The reasons for such change include but are not limited to tax positionsexpected to be taken during 2018, 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 2014 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. Thesesubsidiaries were examined by IRS for the years 1996 to 1999 and significant tax deficiencies were assessed for those years. Thosedeficiencies have been settled, as discussed in “Tax Audit/Litigation,” Note 12 – Commitments and Contingencies. As of December 31, 2018, federal income tax returns for 2015 and after are open for examination, with the 2015 return being currentlyunder examination. California worldwide unitary income tax returns for 2014 and after are open for examination, but an examination of2013 through 2015 has been completed. Income tax returns filed in Puerto Rico for 2014 and after are open for examination. Australiaincome tax returns for calendar years 2013 and after are open for examination. A review of returns for 2014 and 2015 has been completedwith final terms under negotiation. Generally, New Zealand returns for 2015 and after remain open for examination. An examination ofNew Zealand income tax returns for calendar year 2009 and after have been completed with one issue remaining unsettled, for which alitigation claim has been filed. NOTE 10 – BORROWINGSThe Company’s borrowings at December 31, 2018 and 2017, net of deferred financing costs and incorporating the impact of interest rateswaps on our effective interest rates, are summarized below: As of December 31, 2018(Dollars in thousands) Maturity Date ContractualFacility Balance,Gross Balance,Net(3) StatedInterestRate EffectiveInterestRate (1)Denominated in USD Trust Preferred Securities (USA) April 30, 2027 $27,913 $27,913 $26,061 6.52% 6.52%Bank of America Credit Facility (USA) May 1, 2020 55,000 25,000 25,000 5.02% 5.02%Bank of America Line of Credit (USA) October 31, 2019 5,000 — — 5.48% 5.48%Banc of America digital projector loan(USA) December 28, 2019 2,604 2,604 2,604 5.00% 5.00%Cinema 1, 2, 3 Term Loan (USA) September 1, 2019 19,086 19,086 18,838 3.25% 3.25%Minetta & Orpheum Theatres Loan(USA) November 1, 2023 8,000 8,000 7,857 4.88% 4.88%U.S. Corporate Office Term Loan (USA) January 1, 2027 9,495 9,495 9,373 4.64% / 4.44% 4.61%Union Square Construction Financing(USA) December 29, 2019 57,500 27,182 25,280 6.76% / 12.51% 8.35%Denominated in foreign currency ("FC")(2) NAB Corporate Loan Facility (AU) December 31, 2023 46,856 37,696 37,660 3.05% 3.05%Westpac Corporate Credit Facility (NZ) December 31, 2023 21,475 10,067 10,067 3.80% 3.80%Total $252,929 $167,043 $162,740 (1)Both interest rate derivatives associated with the Trust Preferred Securities and Bank of America Credit Facility expired in October 2017 so the effectiveinterest rate no longer applies as of December 31, 2018.(2)The contractual facilities and outstanding balances of the FC-denominated borrowings were translated into U.S. dollars based on exchange rates as ofDecember 31, 2018.(3)Net of deferred financing costs amounting to $4.3 million.- 110 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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(Dollars in thousands) Maturity Date ContractualFacility Balance,Gross Balance,Net(3) StatedInterestRate EffectiveInterestRate (1)Denominated in USD Trust Preferred Securities (USA) April 30, 2027 $27,913 $27,913 $27,554 5.38% 5.38%Bank of America Credit Facility (USA) November 28, 2019 55,000 31,000 31,000 4.57% 4.57%Bank of America Line of Credit (USA) October 31, 2019 5,000 — — 4.57% 4.57%Cinema 1, 2, 3 Term Loan (USA) September 1, 2019 19,500 19,500 19,105 3.25% 3.25%Minetta & Orpheum Theatres Loan(USA) June 1, 2018 7,500 7,500 7,470 4.13% 4.13%U.S. Corporate Office Term Loan (USA) January 1, 2027 9,719 9,719 9,582 4.64%/4.44% 4.61%Union Square Construction Financing(USA) December 29, 2019 57,500 8,000 5,033 5.81% 5.81%Denominated in FC (2) NAB Corporate Loan Facility (AU) June 30, 2019 51,970 30,869 30,781 3.66% 3.66%Westpac Bank Corporate (general/non-construction) Credit Facility (NZ) December 31, 2019 24,850 — — 3.70% 3.70%Westpac Bank Corporate (-construction)Credit Facility (NZ) December 31, 2019 12,780 — — 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 effectiveinterest rate no longer applies as of December 31, 2017.(2)The contractual facilities and outstanding balances of the FC-denominated borrowings were translated into U.S. dollar based on exchange rates as ofDecember 31, 2017.(3)Net of deferred financing costs amounting to $4.0 million.Our loan arrangements are presented, net of the deferred financing costs, on the face of our consolidated balance sheet as follows:(Dollars in thousands) December 31,Balance Sheet Caption 2018 2017Debt - current portion $30,393 $8,109 Debt - long-term portion 106,286 94,862 Subordinated debt 26,061 27,554 Total borrowings $162,740 $130,525 Debt denominated in USDMinetta and Orpheum Theatres LoanOn October 12, 2018, we refinanced our $7.5 million loan with Santander Bank, which is secured by our Minetta and Orpheum Theaters,with a loan for a five year term of $8.0 million. Such modification was not considered to be substantial under US GAAP.Banc of America Digital Projector LoanOn February 5, 2018, we purchased our U.S. digital cinema projectors, which had previously been held on operating leases, using a$4.6 million loan from Banc of America. We made further U.S. digital cinema projector purchases, of projectors similarly held on otheroperating leases, in March and April 2018, increasing this loan to $4.9 million. This loan carries an interest rate of 5% and is due andpayable on December 28, 2019.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 facilities consistof $50.0 million in aggregate loans (comprised of three loan tranches) from Bank of the Ozarks (“BOTO”), and a $7.5 million mezzanineloan from Tammany Mezz Investor, LLC, an affiliate of Fisher Brothers. As of December 31, 2016, Bank of the Ozarks advanced$8.0 million to repay the existing $8.0 million loan with East West Bank.- 111 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. Presented in the table below is the breakdown of the Union Square construction financing as of December 31, 2018: (Dollars in thousands) Facility Limits and Advances Financing Component Lender FacilityLimit Advanced-to-Date RemainingFacility Interest Rate(1) Maturity Date(2)Mezzanine loan Tammany MezzInvestor LLC $7,500 $7,500 $ — Greater of (i) 10.50% and(ii) Adjusted LIBOR + 10% December 29, 2019Senior loan Bank of the Ozarks 8,000 8,000 — Greater of (i) 4.75% and(ii) Adjusted LIBOR + 4.25% December 29, 2019Building loan Bank of the Ozarks 31,130 10,603 20,527 Greater of (i) 4.75% and(ii) Adjusted LIBOR + 4.25% December 29, 2019Project loan Bank of the Ozarks 10,870 1,079 9,791 Greater of (i) 4.75% and(ii) Adjusted LIBOR + 4.25% December 29, 2019Total Union SquareFinancing $57,500 $27,182 $30,318 (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%.Bank of America Line of CreditIn October 2016, the term of this $5.0 million line of credit was extended for another two (2) years until October 31, 2019. Suchmodification was not 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 term loanwith a new lender, Valley National Bank. This new $20.0 million loan is collateralized by our Cinema 1,2,3 property and bears an interestrate of 3.25% per annum, with principal installments and accruing interest paid monthly. The new loan matures on September 1, 2019, witha one-time option to extend maturity date for another year. The Company presently intends to exercise that option and to extend thematurity date until September 1, 2020.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 reduces the applicable consolidated leverage ratio covenant by 0.25% and modifies the term of the facility based on the earlierof the eighteen months from the date of such borrowing or the maturity date of the credit agreement. Such modification was not consideredsubstantial in accordance with U.S. GAAP. On March 5, 2019, this Credit Facility was extended for six (6) months to May 1, 2020. Trust 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, whichin turn issued $51.5 million in securities. Of the $51.5 million, $50.0 million in TPS were issued to unrelated investors in a privateplacement and $1.5 million of common trust securities were issued by the trust to Reading called “Investment in Reading InternationalTrust I” on our balance sheets. Effective May 1, 2012, the interest rate on our Trust Preferred Securities changed from a fixed 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 quarter through the end of theloan unless we exercise our right to re-fix the rate at the current market rate at that time. There are no principal payments due until maturityin 2027 when the notes and the trust securities are scheduled to be paid in full. We may pay off the debt after the first five years at 100% ofthe principal amount without any penalty. The trust is essentially a pass through, and the transaction is accounted for on our books as theissuance of fully subordinated notes. The credit facility includes a number of affirmative and negative covenants designed to monitor ourability to service the debt. The most restrictive covenant of the facility requires that we must maintain a fixed charge coverage ratio at acertain level. However, on December 31, 2008, we secured a waiver of all financial covenants with respect to our TPS for a period of nineyears (through December 31, 2017), in consideration of the payment of $1.6 million, consisting of an initial payment of $1.1 million, apayment of $270,000 made in December 2011, and a payment of $270,000 in December 2014. The covenant waiver expired January 1,2018, after which a further covenant waiver was secured on October 11, 2018 for the remaining term of the loan, in consideration ofpayments totaling $1.6 million, consisting of an- 112 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. initial payment of $1.1 million paid on October 31, 2018, and a further contractual obligation to pay $270,000 in October 2021 and$225,000 in October 2025. 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 during theperiod for the express purpose of executing this exchange transaction with the third party holder of these TPS. During the twelve monthsended 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 Investment inReading International Trust I from $1.5 million to $838,000.During the three years ended December 31, 2018, we paid $1.4 million in 2016 and 2017 and $1.6 million in 2018 in preferred dividends tounrelated investors that are included in interest expense. At December 31, 2018 and 2017, we had preferred dividends payable of $299,000and $250,000, respectively. Interest payments for this loan are required every three months.Debt denominated in foreign currenciesAustralian NAB Corporate Loan FacilityOn March 15, 2019, we amended our Revolving Corporate Markets Loan Facility with National Australia Bank (“NAB) from a facilitycomprised of (i) a AU$66.5 million loan facility with an interest rate of 0.95% above the Bank Bill Swap Bid Rate (“BBSY) and a maturitydate of June 30, 2019 and (ii) a bank guarantee of AU$5.0 million at a rate of 1.90% per annum into a (i) AU$120.0 million Corporate Loanfacility at rates of 0.85%-1.3% above BBSY depending on certain ratios with a due date of December 31, 2023, of which AU$80.0 millionis revolving and AU$40.0 million is core and (ii) a Bank Guarantee Facility of AU$5.0 million at a rate of 1.85% per annum. Prior to this,on June 12, 2018, we had extended the maturity of these facilities from June 30, 2019, to December 31, 2019. Such modifications of thisparticular term loan were not considered to be substantial under US GAAP.New Zealand Westpac Bank Corporate Credit FacilityOn December 20, 2018, we restructured our Westpac Corporate Credit Facilities. The maturity of the 1st tranche (general/non-constructioncredit line) was extended to December 31, 2023, with the available facility being reduced from NZ$35.0 million to NZ$32.0 million. Thefacility bears an interest rate of 1.75% above the Bank Bill Bid Rate on the drawn down balance and a 1.1% line of credit charge on theentire facility. The 2nd tranche (construction line) with a facility of NZ$18.0 million was removed. As of December 31, 2018, our aggregate amount of future principal debt payments is estimated as follows:(Dollars in thousands) FuturePrincipalDebt Payments2019 $30,393 2020 43,960 2021 258 2022 270 2023 56,045 Thereafter 36,117 Total future principal debt payments $167,043 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 on theapplicable foreign currency exchange rates. - 113 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 11 – PENSION AND OTHER LIABILITIESOther liabilities including pension are summarized as follows: December 31,(Dollars in thousands) 2018 2017Current liabilities Liability for demolition and remediation costs(1) $2,630 $2,781 Lease liability(2) 5,900 5,900 Accrued pension(3) 684 2,907 Security deposit payable 84 91 Other 7 —Other current liabilities $9,305 $11,679 Other liabilities Straight-line rent liability $16,362 $13,444 Accrued pension(3) 4,670 5,228 Lease make-good provision 5,614 5,648 Environmental reserve 1,656 1,656 Deferred Revenue - Real Estate 32 18 Acquired leases 91 186 Other 506 469 Other liabilities $28,931 $26,649 (1)Refer to Note 20 – Insurance Recoveries on Impairment and Related Losses due to Earthquake for details on the estimation of the demolition costs forour Courtenay Central parking structure. (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 of thelease term in June 2020. Additionally, our lease has a put option pursuant to which SHC may require our Company to purchase all or aportion of SHC’s interest in the existing cinema lease and the cinema ground lease at any time between July 1, 2013 and December 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 lateChairman, Chief Executive Officer, and controlling shareholder, Mr. James J. Cotter, Sr. was also the managing member of SHC, RDI andSHC are considered entities under common control. As a result, we have recorded the Village East Cinema building as a property asset of$4.7 million on our balance sheet based on the cost carry-over basis from an entity under common control with a corresponding leaseliability of $5.9 million presented under other liabilities which accreted up to the $5.9 million liability through July 1, 2013 (see Note 19 –Related Parties). As the put option has been exercisable by SHC since July 1, 2013, the lease liability has been classified as part of othercurrent liabilities.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 million wasreversed and replaced with a new pension annuity liability of $7.5 million. The valuation of the liability is based on the present value 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 benefit obligationand is expected to be used in future years. The discounted value of $2.7 million (which is the difference between the estimated payout of$10.2 million and the present value of $7.5 million) will be amortized and expensed based on the 15-year term. In addition, theaccumulated actuarial loss of $3.1 million recorded, as part of other comprehensive income, will also be amortized based on the 15-yearterm.As a result of the above, included in our other current and non-current liabilities are accrued pension costs of $5.4 million and $8.1 millionas of December 31, 2018 and 2017, respectively. The benefits of our pension plans are fully vested and therefore no service costs wererecognized 2018 and 2017. Our pension plans are unfunded. - 114 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 change in the SERP pension benefit obligation and the funded status are as follows:December 31,(Dollars in thousands)20182017Benefit obligation at January 1$8,135 $7,955 Interest cost180 180 Payments made(2,961) —Actuarial gain — —Benefit obligation at December 31$5,354 $8,135 Funded status at December 31$(5,354)$(8,135)Amounts recognized in the balance sheet consists of: December 31,(Dollars in thousands) 2018 2017Current liabilities $684 $2,907 Other liabilities - Non current 4,670 5,228 Total pension liability $5,354 $8,135 The components of the net periodic benefit cost and other amounts recognized in other comprehensive income are as follows:December 31,(Dollars in thousands)20182017Net periodic benefit costInterest cost$180 $180 Amortization of prior service costs — —Amortization of net actuarial gain154 127 Net periodic benefit cost$334 $307 Items recognized in other comprehensive incomeAmortization of net loss(154)(127)Total recognized in other comprehensive income$(154)$(127)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: December 31,(Dollars in thousands) 2018 2017Unamortized actuarial loss $2,438 $2,592 Accumulated other comprehensive loss $2,438 $2,592 The estimated unamortized actuarial loss for the defined benefit pension plan that will be amortized from accumulated other comprehensiveincome into net periodic benefit cost over the next fiscal year will be $207,000 (gross of any tax effects).The following table presents estimated future benefit payments for the next five years and thereafter as of December 31, 2018:(Dollars in thousands) EstimatedFuturePensionPayments2019 $684 2020 684 2021 684 2022 684 2023 684 Thereafter 1,934 Total pension payments $5,354 - 115 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. Lease Make-Good ProvisionWe recognize obligations for future leasehold restoration costs relating to properties that we use mostly on our cinema operations underoperating lease arrangements. Each lease is unique to the negotiated conditions with the lessor, but in general most leases require for theremoval 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 forthe year endedDecember 31,2018 As of and forthe year endedDecember 31,2017Lease make-good provision, at January 1 $5,648 $5,146 Liabilities incurred during the year — —Liabilities settled during the year — —Accretion expense 292 282 Effect of changes in foreign currency (326) 220 Lease make-good provision, at December 31 $5,614 $5,648 NOTE 12 - COMMITMENTS AND CONTINGENCIESInsofar as our Company is aware, there are no claims, arbitration proceedings, or litigation proceedings that constitute potentially materialcontingent liabilities of our Company. Discussed below are certain matters which, however, have been significant to our Company and/orwhich may, depending upon the outcome of certain appeals, be significant to our Company.The following table identifies our known commitments and contingencies as of December 31, 2018: 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-facilitymodels.Refer to Note 18 - LeasesCONTINGENCIES · Insurance gain contingencies andderivative loss contingencies ondemolition costs relating to recentearthquake incidentGain contingencies relating to an insurance claim are recognized oncecollectability is probable; related loss contingencies is recognizedwhen there are probable likelihood of incurrence and amount isreasonably estimable.Refer to Note 20 – InsuranceRecoveries on Impairment andRelated Losses Recoverable due toEarthquake.· Other Litigation matters, notablyDerivative Litigation involving James J.Cotter Jr.Similar policies for gain and loss contingencies as noted above.Refer below for further discussion.(1)Starting January 1, 2019, lease commitments relating to our operating cinema leases will be brought forward to our Consolidated Balance Sheet, asrequired by 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.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 tohave a material adverse effect on our business, results of operations, financial position, or liquidity. It is possible, however, thatfuture results of the operations for any particular quarterly or annual period could be materially affected by the ultimate outcomeof the legal proceedings. From time-to-time, we are involved with claims and lawsuits arising in the ordinary course of ourbusiness that may include contractual obligations, insurance claims, tax claims, employment matters, and anti-trust issues, amongother matters.- 116 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. All of these matters require significant judgments based on the facts known to us. These judgments are inherently uncertain and can changesignificantly when additional facts become known. We provide accruals for matters that have probable likelihood of occurrence and can beproperly estimated as to their expected negative outcome. We do not record expected gains until the proceeds are received by us. However,we typically make no accruals for potential costs of defense, as such amounts are inherently uncertain and dependent upon the scope,extent and aggressiveness of the activities of the applicable plaintiff.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, fromtime-to-time, been named in and may in the future be named in various actions brought under applicable environmental laws. Also, we arein the real estate development business and may encounter from time-to-time unanticipated environmental conditions at properties that wehave acquired for development. These environmental conditions can increase the cost of such projects and adversely affect the value andpotential for profit of such projects. We do not currently believe that our exposure under applicable environmental laws is material inamount.From time-to-time, there are claims brought against us relating to the exposure of former employees of our railroad operations to asbestosand coal dust. These are generally covered by an insurance settlement reached in September 1990 with our insurance providers. However,this insurance settlement does not cover litigation by people who were not our employees and who may claim second-hand exposure toasbestos, coal dust and/or other chemicals or elements now recognized as potentially causing cancer in humans. Our known exposure tothese 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. CRGwas a stand-alone entity in the year of audit but is now a wholly-owned subsidiary of the Company. In Tax Court, CRG and the IRS agreedto compromise the claims made by the IRS against CRG, and the court order was entered on January 6, 2011. As of December 31, 2018, theremaining federal tax obligation was $3.0 million. For additional information, see Note 9 – Income Taxes.Cotter Jr. Related Litigation MattersThe following table provides a list of legal matters and current status relating to the termination of James J. Cotter, Jr.’s (“Cotter, Jr.”) as ourCompany’s president and chief executive officer, to Cotter, Jr.’s subsequent derivative action brought against the Company and ourdirectors alleging, among other things, that such termination violated the fiduciary duties of such directors, and to Cotter, Jr.’s efforts tocause a change of control of the Company.- 117 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. DescriptionPlaintiffFiled withCurrent Status· Cotter, Jr. Derivative Litigationagainst all Director: James J. Cotter,Jr., individually and derivatively onbehalf of Reading International, Inc.vs. Margaret Cotter, et al.” CaseNo,: A-15-719860-VCotter, Jr.Nevada District CourtSummary judgment has been entered against Cotter, Jr., and infavor of all defendants and a $1.55 million cost judgment has beenentered against Cotter, Jr., and in favor of our Company. Cotter,Jr. has appealed both judgements. Our application for $5.9 millionin attorneys fees was denied, and we have appealed thatdetermination. The issues on appeal are currently beingbriefed. No date for oral argument has been set. It is unlikely thatany hearing will be held this year. · Employment Agreement Arbitration: Reading International, Inc. v. JamesJ. Cotter, AAA Case No. 01-15-0004-2384, filed July 2015RDIAmericanArbitrationAssociationWhile our Company is the named claimant, this matter relatesessentially to Cotter, Jr.’s claims for compensation and damagesrelated to his termination as our Company’s president and chiefexecutive officer. The Arbitrator has determined that, while Cotter,Jr. had breached his obligations under his Employment Agreementwith our Company, Cotter, Jr’s failure to resign as an officerand/director of our Company was not sufficiently material to allowour Company relief from its obligations under the EmploymentAgreement to pay certain specified separation amounts, totaling$313,000 (the “Separation Payment Amount”) plus interest at therate of 10% from June 12, 2016, until the award was paid in full onMarch 6, 2019. The Arbitrator denied on substantive grounds Cotter, Jr’s claimsfor consequential damages and for damages based on various torttheories and/or upon wrongful termination claims and, denied onjurisdictional grounds, Cotter Jr’s claims that the unvested stockoptions granted to him under his Employment Agreement did notexpire upon his termination and continued to be exercisable by himso long as he continued as a director of our Company. Determining that Cotter, Jr. was the prevailing party, the Arbitratorhas awarded Cotter, Jr. $443,000 of his requested $787,769 inattorney’s fees and costs. The Arbitrator also assessed the costs ofthe arbitration against our Company and ordered a reimbursementof such costs paid to date by Cotter Jr. in the amount of $19,250. The determinations of the Arbitrator are final and binding on theparties, and not subject to appeal. The interest and any cost reimbursements awarded to Cotter, Jr.,was approximately $86,000. · Direct Case against the Companyseeking reimbursement andadvancement of attorney’s feesincurred with respect to theEmployment Agreement Arbitration: James J. Cotter, Jr. v. ReadingInternational, Inc., a Nevadacorporation; Does 1-100 and RoeEntities, 1-100, inclusive, Case No. A-16-735305-B Cotter, Jr.Nevada District CourtSummary judgment entered in favor of the Company on October 3,2016. The period for appeal of this judgment has now lapsed.- 118 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Trust Litigation: Determinationof Status of Cotter, Jr., as Trustee: Inre James J. Cotter Living Trust datedAugust 1, 2000 (Case No.BP159755)Ellen Cotterand MargaretCotter, asTrusteesCalifornia SuperiorCourtThe California Superior Court has ruled that Cotter, Jr., is not atrustee of either the James J. Cotter Living Trust (the “Cotter LivingTrust”) or of the voting trust established under the Living Trust (the“Cotter Voting Trust”) to eventually hold the Class B VotingCommon Stock beneficially owned by Mr. Cotter, Sr., at the timeof his passing. The California Superior Court further determinedthat Ellen Cotter and Margaret Cotter are the sole trustees of theCotter Living Trust and that Margaret Cotter is the sole trustee ofthe Cotter Voting Trust. Accordingly, Cotter, Jr., has neitherdispositive power nor voting power over any of the Class B VotingCommon Stock currently held by the Cotter Estate or the CotterLiving Trust, or which it is anticipated will be held by the CotterVoting Trust. The time to appeal that ruling has now lapsed. At December 31, 2018, the Cotter Estate held 427,808 shares ofClass B Voting Stock, representing 25.5% of the voting power ofsuch class. The Cotter Living Trust held 696,080 shares of Class BVoting Stock at such date, representing 41.4% of the voting powerof such class. It is anticipated that, when funded, the Cotter VotingTrust will own 1,123,888 shares of Class B Voting Stock,representing 66.9% of the voting power of such class (the “CotterVoting Stock”). · Cotter Trust Litigation: Ex Partemotion seeking appointment of aTrustee Ad Litem to Solicit Offers toPurchase Cotter Voting Stock: In reJames J. Cotter Living Trust datedAugust 1, 2000 (Case No.BP159755)Cotter, Jr.California SuperiorCourtIn response to the ex parte petition of Cotter, Jr. filed on March 23,2016, the California Superior Court on March 23, 2018 directedthat an unnamed temporary trustee ad litem be appointed to solicitoffers to purchase the Cotter Voting Stock. Ellen Cotter andMargaret Cotter appealed that March 23, 2018 order of theCalifornia Superior Court with a writ application filed as Trusteesof the Cotter Living Trust, and Margaret Cotter, as Trustee of theCotter Voting Trust. In response to their writ application, theCalifornia Court of Appeals on April 12, 2018 stayed the CaliforniaSuperior Court’s order and issued its own order to show causewhy the Superior Court’s direction should not be vacated and anew and different order denying the appointment of such a trusteead litem be issued. The positions of the parties have been briefed, but no hearing datehas been set. Our Company is not a party to this matter, and noremedy or relief is sought against our Company in this matter. As the Directors and Officers Liability Insurance Policy covering Cotter, Jr.’s claims in the Derivative Case ($10.0 million) has beenexhausted, the financial burden of defending our Directors against these claims, as required by applicable Nevada Law, has fallen upon ourCompany. During 2018, out-of-pocket third party costs in the amount of approximately $3.5 million were incurred by our Company indefending against these claims.The STOMP Arbitration In April 2015, Liberty Theatres, LLC (“Liberty”), a wholly owned subsidiary of our 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. Later that year, the Arbitratorissued his Partial Final Award of Arbitration, providing for, among other things (i) the issuance of a permanent injunction prohibitingStomp from “transferring or taking actions to market, promote, or otherwise facilitate any transfer of, STOMP to another theatre in New YorkCity having fewer than 500 seats without Liberty’s prior written consent”, (ii) the Stomp’s Notice of Termination purportedly terminatingthe parties’ license agreement was invalid, null and void and the License Agreement remains in full force and effect, and (iii) the award toLiberty of its reasonable attorneys’ fees in an amount to be determined by the Arbitrator. In April 2016, we were awarded $2.3 million inattorney’s fees and costs and thereafter entered into a settlement agreement with the defendants providing, among other things, for thepayment of the award over time and the continued performance of STOMP at our Orpheum Theatre. - 119 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 13 – NON-CONTROLLING INTERESTSAs of December 31, 2018, 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 Pty Ltd.;·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% owned bythe Cotter Estate and/or the Cotter Trust).The components of non-controlling interest are as follows: December 31,(Dollars in thousands) 2018 2017Australian Country Cinemas, Pty Ltd $89 $138 Shadow View Land and Farming, LLC 2,153 2,127 Sutton Hill Properties, LLC 2,095 2,066 Non-controlling interests in consolidated subsidiaries $4,337 $4,331 The components of income/(loss) attributable to non-controlling interests are as follows: (Dollars in thousands) 2018 2017 2016Australian Country Cinemas, Pty Ltd $157 $164 $140 Shadow View Land and Farming, LLC (56) (45) (58)Sutton Hill Properties, LLC 31 (108) (68)Net income attributable to non-controlling interests in consolidatedsubsidiaries $132 $11 $14 Shadow View Land and Farming, LLCOur Coachella Valley land is held in Shadow View Land and Farming, LLC, in which the Cotter Estate or the Cotter Trust now owns a 50%interest. We are the managing member of Shadow View Land and Farming, LLC. We consolidate the Cotter Estate’s and/or the CotterTrust’s interest in the property and its expenses with that of our interest and show their interest as a non-controlling interest. 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, andconsultants under the 2010 Stock Incentive Plan (the “2010 Plan”), which originally allows for an aggregate total number of 1,250,000shares of Class A Nonvoting Common Stock authorized for issuance under the 2010 Plan. As of September 30, 2017, there were 302,540shares 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 upto its original reserve of 1,250,000 shares. There were no new grants during the 4th quarter of 2017. During 2018 option grants of 126,840were issued, and restricted stock units of 97,600 issued. Accordingly, as of December 31, 2018, we had 1,031,970 shares remaining forfuture 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 from thegrant date. In contrast to a stock option where the grantee buys the Company’s share at an exercise price determined on grant date, an RSUentitles the grantee to receive one share for every RSU based on a vesting plan. At the discretion of our Compensation and Stock OptionsCommittee, the vesting period of stock options and RSUs ranges from zero to four years. At the time the options are exercised or RSUs vest,at the discretion of management, we will issue treasury shares or make a new issuance of shares to the option or RSU holder. - 120 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 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 our historicalexperience and the relative market price to strike price of the options, we have not hereto estimated any forfeitures of vested or unvestedoptions.The weighted average assumptions used in the option-valuation model for the years 2018, 2017 and 2016 were as follows: 2018 2017 2016Stock option exercise price $16.40 $15.94 $11.87 Risk-free interest rate 2.56% 1.66% 1.20% Expected dividend yield — — —Expected option life in years 3.75 3.75 3.75 Expected volatility 24.99% 24.95% 25.01% Weighted average fair value $3.80 $3.45 $2.49 We recorded compensation expense of $425,000, $310,000, and $284,000 for 2018, 2017, and 2016, respectively. At December 31, 2018,the total unrecognized estimated compensation cost related to non-vested stock options was $881,000 which is expected to be recognizedover a weighted average vesting period of 1.81 years. Cash and other consideration received from option exercises during 2018, 2017, and2016 totaled $361,000, $574,000 and $146,000 respectively. The following is a summary of the status of RDI’s outstanding stock options for the three years ended December 31, 2018: Outstanding Stock Options Number ofOptions Weighted AverageExercise Price Weighted AverageRemaining Years ofContractual Life AggregateIntrinsicValue Class A Class B Class A Class B Class A&B Class A&BOutstanding - January 1, 2016 486,565 — $8.68 $ — 2.89 $2,188,011 Granted 169,327 — 11.87 — Exercised (46,815) — 9.50 — 220,002 Expired (74,000) — 7.02 — Outstanding - December 31, 2016 535,077 — $9.84 $ — 2.61 $3,615,191 Granted 169,762 — 15.94 — Exercised (177,750) — 7.85 — 702,840 Expired (2,500) — 6.23 — Outstanding - December 31, 2017 524,589 — $12.50 $ — 3.15 $3,054,325 Granted 126,840 — 16.40 — Exercised (60,000) — 6.02 — 610,249 Expired (4,960) — 12.08 — Outstanding - December 31, 2018 586,469 — $14.01 $ — 2.88 $1,530,528 The following is a summary of the status of RDI’s vested and unvested stock options as of December 31, 2018, 2017 and 2016: Vested and Unvested Stock Options Number ofOptions Weighted AverageExercise Price Weighted AverageRemaining Years ofContractual Life AggregateIntrinsicValue Class A Class B Class A Class B Class A&B Class A&BVested December 31, 2018 231,124 — $12.38 $ — 2.28 $1,306,643 December 31, 2017 186,832 — 9.84 — 2.30 2,202,772 December 31, 2016 296,500 — 7.88 — 1.59 2,584,500 Unvested December 31, 2018 355,345 — $15.07 $ — 3.27 $223,885 December 31, 2017 337,757 — 13.86 — 3.62 851,552 December 31, 2016 238,577 — 12.28 — 3.87 1,030,691 - 121 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. 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, issuedto him in connection with his retention as the President of our Company, survived his termination as President. On August 3, 2016, ourCompensation and Stock Options Committee met, reviewed the issue and determined that such 50,000 options had in fact terminated withthe termination of Mr. Cotter, Jr.’s employment as President. Accordingly, these options are not, and have not been outstanding since theeffective date of Mr. Cotter, Jr’s termination. This was recorded as a forfeiture during the quarter ended September 30, 2016. Mr. Cotter, Jr.,attempted to assert his claims with respect to such shares in the arbitration related to the payment of his severance benefits. The arbitratordetermined that such claims were beyond the scope of the arbitration, and made no substantive determination with respect to Mr. Cotter,Jr’s claims.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 2018 and 2017, 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 members ofmanagement) and vest 100% at the end of one year (in the case of directors). During the years ended December 31, 2018 and December 31,2017, we recognized compensation expense of $1.0 million and $668,000 respectively. The total unrecognized compensation expenserelated to these unvested RSUs was $1.4 million as of December 31, 2018.Below is a table that shows the restricted stock units that have been issued and vested during the years ending December 31, 2018 alongwith the dollar value of these awards:​Number of RSUs$ value of RSUs​GrantedVestingUnvestedGrantedVestingUnvested201668,153 51,650 16,503 $815,160 $613,208 $201,952 201770,538 40,645 29,893 1,124,348 648,569 475,779 201897,600 —97,600 1,567,171 —1,567,171 Total236,291 92,295 143,996 $3,506,679 $1,261,777 $2,244,902 2017 Stock Repurchase PlanOn March 14, 2019, the Board of Directors extended our Company’s stock buy-back program for two years, through March 2, 2021. TheBoard did not increase the authorized amount, which was initially fixed at $25.0 million. At the present time, $16.2 million of thatauthorization remains available to repurchase Class A Common Stock.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 millionto acquire shares of the Company’s common stock. This approved stock repurchase plan supersedes and effectively cancels the programthat was approved by the Board of Directors on May 14, 2004, which allowed management to purchase up to 350,000 shares of theCompany’s common stock. As of December 31, 2016, we have fully spent the $10.0 million budget at an average price of $11.74. - 122 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 15 – ACCUMULATED OTHER COMPREHENSIVE INCOMEThe following table summarizes the changes in each component of accumulated other comprehensive income attributable to RDI: (Dollars in thousands) ForeignCurrencyItems(1) UnrealizedGain (Losses)on Available-for-SaleInvestments AccruedPensionServiceCosts(2) HedgeAccountingReserve(3) TotalBalance at January 1, 2018 $23,575 $8 $(2,592) $ — $20,991 Change related to derivatives Total change in hedge fair value recorded in OtherComprehensive Income — — — (151) (151)Amounts reclassified from accumulated othercomprehensive income — — — 14 14 Net change related to derivatives — — — (137) (137) Net current-period other comprehensive income (14,888) (5) 154 (137) (14,876)Balance at December 31, 2018 $8,687 $3 $(2,438) $(137) $6,115 (1)Net of income tax expense of $389,000.(2)Net of income tax expense of $54,000.(3)Net of income tax benefit of $48,000 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 to theseprices. If quoted prices are not available, fair value is determined by valuation models that primarily use, as inputs, market-based orindependently sourced parameters, including but not limited to interest rates, volatilities, and credit curves. Additionally, we may referenceprices for similar instruments, quoted prices or recent transactions in less active markets. We use prices and inputs that are current as of themeasurement date. Assets and liabilities that are carried at fair value (either recurring or non-recurring basis) are classified and disclosed inone of the following categories:·Level 1: Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assetsor liabilities. This consist primarily of investments in marketable securities which are our investments associated with theownership of marketable securities in U.S. and New Zealand. These investments are valued based on observable market quotes onthe last trading date of the reporting period.·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, 2018 and 2017, 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 BalanceSheet and 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 accrued liabilities. Thecarrying values of these financial instruments approximate the fair values due to their short maturities. There have been no- 123 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. changes in the methodologies used at December 31, 2018 and 2017. Additionally, there were no transfers of assets and liabilities betweenLevels 1, 2, or 3 during the three years ended December 31, 2018.Recurring Fair Value MeasurementsAs of December 31, 2018 and 2017, we do not have material financial assets and liabilities carried and measured at fair value on a recurringbasis.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: Carrying Fair Value Measurements at December 31, 2018(Dollars in thousands) Balance Sheet Location Value(1) Level 1 Level 2 Level 3 TotalFinancial liabilities Notes payable Debt - current and long-term portion $139,130 $ — $ — $143,564 $143,564 Subordinated debt Subordinated debt 27,913 — — 18,895 18,895 Total $167,043 $ — $ — $162,459 $162,459 Carrying Fair Value Measurements at December 31, 2017(Dollars in thousands) Balance Sheet Location Value(1) Level 1 Level 2 Level 3 TotalFinancial liabilities Notes payable Debt - current and long-term portion $106,588 $ — $ — $106,894 $106,894 Subordinated debt Subordinated debt 27,913 — — 16,088 16,088 Total $134,501 $ — $ — $122,982 $122,982 (1)These balances are presented gross of deferred financing costs. NOTE 17 – HEDGE ACCOUNTINGAs of December 31, 2018 and 2017, the Company held interest rate derivatives in the total notional amount of $8.0 million and $nil,respectively.The derivatives are recorded on the balance sheet at fair value and are included in the following line items: Liability Derivatives December 31, 2018 2017(Dollars in thousands) Balance sheet location Fair value Balance sheet location Fair valueInterest rate contracts Derivative financial instruments - currentportion $41 — $ — Derivative financial instruments - non-current portion 145 — —Total derivatives designated as hedginginstruments $186 $ —Total derivatives $186 $ —We have no derivatives designated as hedging instruments which are in asset positions.The changes in fair value are recorded in Other Comprehensive Income and released into interest expense in the same period(s) in which thehedged transactions affect earnings. In 2018 and 2017, the derivative instruments affected Comprehensive Income as follows:(Dollars in thousands)Location of Loss Recognized in Income on DerivativesAmount of Loss Recognized inIncome on Derivatives20182017Interest rate contractsInterest expense, net14 —Total$14 $ —- 124 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. Loss Recognized inOCI on Derivatives(Effective Portion) Loss Reclassified from OCI into Income (EffectivePortion) Loss Recognized in Income on Derivatives(Ineffective Portion and Amount Excluded fromEffectiveness Testing)(Dollars in thousands) Amount Line Item Amount Line Item Amount 2018 2017 2018 2017 2018 2017Interest rate contracts $200 $ — Interest expense, net $14 $ — Interest expense, net $ — $ —Total $200 $ — $14 $ — $ — $ —In 2019, the Company expects to release $45,000 to earnings.NOTE 18 – LEASES Our leasing business consists of various arrangements, where we act either (i) as the lessor (for our owned properties rented to third parties),or (ii) as the lessee (mostly our cinema locations on leased-facility models). Below are the rental commitments for these various leasearrangements:As Lessor – Future Rental Commitments from our TenantsReal estate revenue amounted to $15.2 million, $16.4 million, and $13.9 million, for the fiscal years ended December 31, 2018, 2017, and2016, respectively. Also, there were no material contingent rentals recognized for the three years then ended December 31, 2018. As ofDecember 31, 2018, the minimum future rentals on our real estate properties currently leased to third parties under non-cancellableoperating lease arrangements for the next five years are summarized as follows:(Dollars in thousands) FutureMinimumRentals2019 $7,964 2020 6,807 2021 6,190 2022 5,337 2023 4,714 Thereafter 9,632 Total $40,644 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, 2018, the remaining terms of these leases, inclusive of renewal options, range from 1 to 35years. All of our leases are accounted for as operating leases and we do not have any capital leases as of December 31, 2018.We determine the annual base rent expense of our cinemas by amortizing total minimum lease obligations on a straight-line basis over thelease terms. Certain of our cinema leases provide for both base and in addition contingent rentals based upon a specified percentage ofcinema revenue with a guaranteed minimum. Substantially all of our leases require the payment of property taxes, insurance, and othercosts applicable to the property. The base rent and contingent rental expenses are summarized as follows:(Dollars in thousands) 2018 2017 2016Base rent expense $32,281 $31,630 $29,824 Contingent rental expense 1,774 2,505 1,484 Total cinema rent expense $34,055 $34,135 $31,308 - 125 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. 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, 2018(Dollars in thousands) GroundLease PremisesLease Total2019 $3,717 $27,204 $30,921 2020 1,922 23,870 25,792 2021 1,860 23,368 25,228 2022 1,901 21,901 23,802 2023 1,905 18,737 20,642 Thereafter 10,498 78,741 89,239 Total $21,803 $193,821 $215,624 We expect the amount of minimum lease payments will fluctuate depending on the foreign currency exchange rates of the Australian dollarto the U.S. dollar and the New Zealand dollar to the U.S. dollar, mainly because a significant portion of our cinema exhibition business isconducted in Australia and New Zealand. See Note 19 – Related Parties for the amount of leases associated with any related party leases.NOTE 19 – RELATED PARTIESThe following table identifies our related parties as of December 31, 2018, in accordance with ASC 850, Related Party Transactions: CategoriesRelated PartiesDiscussion Notes· Principal Owners and immediatefamilies· Cotter Family’s Estate and LivingTrust (controlling family)· Mark Cuban (above 10% votingownership)The Cotter Family is involved in certain litigation matters. Refer toNote 12 – Commitments and Contingencies for further details.· Key Executive Officers and immediatefamilies· Ellen M. Cotter· Margaret Cotter· Gilbert Avanes· Andrzej J. Matyczynski· S Craig Tompkins· Robert F. Smerling· Mark Douglas· Matthew Bourke ·Chief Executive Officer & President·EVP Real Estate Development & Management (NY)·Interim Chief Financial Officer & Treasurer·EVP Global Operations·EVP General Counsel·President - U.S. Cinemas·Managing Director, Cinemas, Australia & New Zealand·Managing Director, Real Estate, Australia & New Zealand · 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 2018 Form 10-K filing for the complete listof subsidiaries. Refer below for further discussions on certain keytransactions with related parties, including those with minorityinterests.Sutton Hill CapitalIn 2001, we entered into a transaction with Sutton Hill Capital, LLC (“SHC”) regarding the master leasing, with an option to purchase, ofcertain cinemas located in Manhattan including our Village East and Cinemas 1,2,3 theaters. In connection with that transaction, we alsoagreed (i) to lend certain amounts to SHC, to provide liquidity in its investment, pending our determination whether or not to exercise ouroption to purchase and (ii) to manage the 86th Street Cinema on a fee basis. SHC is a limited liability company owned in equal shares bythe 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. We paidan annual rent of $590,000 for this cinema to SHC in each of 2018, 2017 and 2016. During this same period, we received management feesfrom the 86th Street Cinema of $172,000, $141,000 and $150,000 during the years ended December 31, 2018, 2017 and 2016,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 ground leaseestate underlying and the improvements constituting the Cinemas 1,2,3. The ground lease estate and the improvements acquired from SHCwere originally a part of the master lease transaction, discussed above. In connection with that transaction, we granted to- 126 -Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 18, 2019Powered 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. SHC 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 of its25% interest, SHP has covered its operating costs and debt service through cash flow from the Cinema 1,2,3, (ii) borrowings from thirdparties, and (iii) pro-rata contributions from the members. We receive an annual management fee equal to 5% of SHP’s gross income formanaging the cinema and the property, amounting to $177,000 during 2015. This management fee was modified in 2015, as discussedbelow, 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 termination date ofJune 30, 2020. This amendment was reviewed and approved by our Audit and Conflicts Committee. The Village East lease includes a sub-lease of the ground underlying the cinema that is subject to a longer-term ground lease between SHC and an unrelated third party thatexpires in June 2031 (the “cinema ground lease”). The extended lease provides for a call option pursuant to which Reading may purchasethe cinema ground lease for $5.9 million at the end of the lease term. Additionally, the lease has a put option pursuant to which SHC mayrequire 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. SHC’s put option may be exercised on one or more occasions in increments of not less than $100,000each. We recorded the Village East Cinema building as a property asset of $4.7 million on our balance sheet based on the cost carry-overbasis from an entity under common control with a corresponding capital lease liability of $5.9 million presented under other liabilities (seeNote 11 – Pension and Other Liabilities).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 Cinemas 1,2,3over the three-year period ended December 31, 2014 (not to exceed a cumulative aggregate amount equal to the Renovation FundingAmount), plus a 15% annual cash-on-cash return on the balance outstanding from time to time of the Renovation Funding Amount, payableat the time of the payment of the annual management fee (the “Improvements Fee”). Under the amended management agreement, we areentitled to retain ownership of (and any right to depreciate) any furniture, fixtures and equipment purchased by us in connection with suchrenovation and have the right (but not the obligation) to remove all such furniture, fixtures and equipment (at our own cost and expense)from the Cinemas upon the termination of the management agreement. The amendment also provides that, during the term of themanagement agreement, SHP will be responsible for the cost of repair and maintenance of the renovations. In 2018 we charged anImprovements Fee of $528,000. In 2017 and 2016, we received no Improvements Fee. This amendment was approved by SHC and by theAudit and Conflicts Committee 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 to Note10 – Borrowings for further details on this loan transaction. The proceeds from the loan were used to retire an existing $15.0 million firstmortgage loan and the above referenced $2.9 million intercompany loan, with the remainder to be used for working capital and to covercash flow shortfalls. Since the cash flow from the Cinemas 1, 2, 3 is not sufficient to service this loan, it is anticipated that the members ofSHP (our Company and SHC) will ultimately need to make periodic contributions to the capital of SHP in order to avoid dilution of theirrespective interests in SHP. In 2016, our Company and SHC funded capital calls of $506,000 and $169,000, respectively. No capitalcontributions were called or made in 2017 or 2018.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 any suchguarantee and/or indemnity (a percentage reflecting SHC’s membership interest in SHP). The refinancing transaction, including theguarantee and indemnity, were review and approved by the Audit and Conflicts Committee of our Board of Directors. The Valley Nationalloan matures on September 1, 2019, however the loan includes an option to extend the maturity date to September 1, 2020, which wecurrently intend to exercise.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 the daughter ofthe late Mr. James J. Cotter, Sr., the sister of Ellen Cotter and James Cotter, Jr., and a member of our Board of Directors. That ManagementAgreement was terminated effective March 10, 2016 in connection with the retention by our Company of Margaret Cotter as a full timeemployee.The Theater Management Agreement generally provided for the payment of a combination of fixed and incentive fees for the managementof our four live theaters that were operating during this time. Historically, these fees have equated to approximately 21% of the net cashflow generated by these properties. The fee to be paid to OBI for 2016 was $79,000. We also reimbursed OBI for certain travel expenses,shared the cost of an administrative assistant and provided office space at our New York offices.- 127 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. 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 to travelbetween New York City and Chicago in connection with the management of the Royal George complex. Other than these expenses, OBIManagement was responsible for all of its costs and expenses related to the performance of its management functions. 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 millioncash and $255,000 of his 2011 bonus as his 50% share of the purchase price of a land parcel in Coachella, California and to cover his 50%share of certain costs associated with that acquisition. This land is held in Shadow View Land and Farming, LLC, in which the CotterEstate 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 member contributions. The Auditand Conflicts Committee of the Board of Directors is charged with responsibility for oversight of our management of Shadow View. NOTE 20 – 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, we filed aseparate business interruption claim to recover lost profits as a result of the earthquake. As of December 31, 2016, we recorded a recoverableasset to the extent of our incurred losses that we deemed probable of recoverability under our insurance claim, consisting of the (i) writtendown carrying value of the damaged parking building and (ii) a significant portion of the derivative loss contingencies on demolitionactivities. 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) andthus paid a final settlement of US$20.0 million (NZ$28.9 million) in May 2017, taking us to the policy limit. We are currently litigating our claim against QBE Insurance (Australia) Limited (“QBE”) for an additional NZ$5.0million in recoveries with respect to earthquake damage to our car park under an insurance policy acquired for ourbenefit by the general contractor working on the seismic strengthening of our car park at the time of the earthquake. Noassurances can be given as to the outcome of that litigation. 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 forAllocation(Dollars inthousands) Commentary % Allocation Allocation ofInsuranceProceeds(Dollars inthousands)Property damage NZ$44,808 Estimated replacement cost for Courtenay Central parkingbuilding, as determined by an independent construction costconsultant. 81% NZ$29,093 Demolition costs 7,276 Actual costs incurred and best estimates of remaining costs tocomplete the demolition activities of Courtenay Centralparking building 13% 4,724 Business interruption 3,415 Estimated lost profits during the closure period relating to ourvarious revenue-generating components within CourtenayCentral ETC (including our cinema and property operations) 6% 2,217 Total NZ$55,499 100% NZ$36,034 - 128 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 ended June 30,2017, determined as follows: Recoverable Components Non-OperatingIncome OperatingIncome (mainly in New Zealand Dollars in thousands,unless otherwise stated) 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$10,740 Net Casualty gain for 2016 and 2017 Earnings - inUS$ ∑(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 ConsolidatedStatement 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) calculated based 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 preliminarily assessed as expenses not reimbursable under our insurance policy and hence, werecorded 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 waspresented as part of “Other non-current assets” as the timing of the insurance claim receipt was not fixed nor reliably determinable as of the time of ourinitial assessment. NOTE 21 – UNAUDITED QUARTERLY FINANCIAL INFORMATION(Dollars in thousands, except per share data) FirstQuarter SecondQuarter ThirdQuarter FourthQuarter(1)2018 Revenue $75,872 84,262 74,261 $74,990 Net income 3,104 4,129 1,259 6,006 Net income attributable to RDI shareholders 3,082 5,027 1,297 4,960 Basic earnings per share 0.13 0.22 0.06 0.21 Diluted earnings per share 0.13 0.22 0.06 0.21 2017 Revenue $69,481 $72,440 $66,116 $71,841 Net income 3,060 19,071 1,478 7,503 Net income attributable to RDI shareholders 3,048 19,051 1,576 7,426 Basic earnings per share 0.13 0.82 0.07 0.33 Diluted earnings per share 0.13 0.81 0.07 0.32 (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 relatedto the Tax Cuts and Jobs Act enacted December 2017 and dissolution of a non-operating foreign subsidiary. NOTE 22 – SUBSEQUENT EVENTSNew cinema location, Devonport, AustraliaOn January 30, 2019, we purchased the tenant’s interest and other operating assets of an established four-screen cinema in Devonport,Australia, for $1.4 million (AU$2.0 million). We commenced trading from this new cinema site on January 30, 2019.The purchase will be accounted for as a business combination in the first quarter of 2019 under ASC 805, Business Combinations. As of thedate of issue of these Consolidated Financial Statements, we are in the process of engaging third party advisors to complete the fair valueassessments required to be able to account for this transaction under ASC 805. Temporary Closure of Courtenay Central CinemaIn light of recently discovered seismic issues pertaining to the cinema structure at our Courtenay Central ETC, in January 2019 we closedthe cinema portion and certain interior retail spaces at that center while we reevaluate the center for redevelopment as an entertainmentthemed urban center with a major food and grocery component. - 129 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Accounts Balance atJanuary 1 Additions Deductions Balance atDecember 31Allowance for doubtful accounts 2018 $1,088 $658 $698 $1,048 2017 $828 $320 60 $1,088 2016 $426 $1,010 608 $828 Tax valuation allowance 2018 $6,870 $ — 150 $6,720 2017 $10,593 $ — 3,723 $6,870 2016 $11,530 $— 937 $10,593 - 130 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Supplementary Data)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 disclosure controlsand procedures and is designed to ensure that all corporate disclosure is complete and accurate in all material respects and that allinformation 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’s rulesand forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that informationrequired to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer'smanagement, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate toallow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, underthe supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosurecontrols and procedures. A disclosure committee consisting of the principal accounting officer, and senior officers of each significantbusiness line and other select employees assisted the Chief Executive Officer and the Chief Financial Officer in this evaluation. Based uponour evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures wereeffective as required by the Securities Exchange Act Rule 13a-15(e) and 15d – 15(e) as of the end 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 December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal controlover financial reporting. Limitations on the Effectiveness of ControlsManagement 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), including maintenance of (i) records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of our assets, and (ii) policies and procedures that provide reasonable assurance that (a) transactionsare recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in theUnited States of America, (b) our receipts and expenditures are being made only in accordance with authorizations of management and ourBoard of Directors and (c) we will prevent or timely detect unauthorized acquisition, use, or disposition of our assets that could have amaterial 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 human diligenceand compliance and is subject to lapses of judgment and breakdowns resulting from human failures. Internal control over financialreporting also can be circumvented by collusion or improper overriding of controls. As a result of such limitations, there is risk that materialmisstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherentlimitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce,though not eliminate, this risk. - 131 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 2019 Annual Meeting of Stockholders, which the company intends to be filed withthe Securities and Exchange Commission, pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year. The Boardof Directors has set the 2019 Annual Meeting of Stockholders for May 7, 2019, and fixed the record date as April 12, 2019. - 132 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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:- 133 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. 1. Financial StatementsThe following financial statements are filed as part of Part II, Item 8 – Financial Statements and Supplementary Data in this AnnualReport on Form 10-K, as summarized below:- 134 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. DescriptionPage​Management’s Report on Internal Control over Financial Reporting67​Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements)68​Report of Independent Registered Public Accounting Firm (Internal Control over Financial Reporting)69​Consolidated Balance Sheets as of December 31, 2018 and 201770​Consolidated Statements of Income for the Three Years Ended December 31, 201871- 135 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Comprehensive Income for the Three Years Ended December 31, 201872​Consolidated Statements of Stockholders’ Equity for the Three Years Ended December 31, 201873​Consolidated Statements of Cash Flows for the Three Years Ended December 31, 201874​Notes to Consolidated Financial Statements752. Financial Statements and Schedules for the years ended December 31, 2018, 2017, and 2016DescriptionPage​Schedule II – Valuation and Qualifying Accounts1123. Exhibits(b) ExhibitsSee Item (a) 3. above.(c) Financial Statement ScheduleSee Item (a) 2. above. - 136 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. - 137 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.1 Included is the amended and restated version of this exhibit, redlined to show the amendment adopted on November 7, 2017 ExhibitNo.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 Form 10-K for the year ended December 31, 2015, filed on April 29, 2016 andincorporated herein by reference.3.2+Amended and Restated Bylaws of Reading International, Inc., aNevada corporation, effective as of November 7, 2017(1)Filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed on March 16, 2018and incorporated herein by reference.4.1Form of Preferred Securities Certificate evidencing the preferredsecurities of Reading International Trust IFiled as Exhibit 4.1 to the Company’s report on Form 8-K filed onFebruary 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 filed onFebruary 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 filed onFebruary 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-K datedFebruary 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, 2017Filed as Exhibit 10.1 to the Company’s Annual Report on Form10-K for the year ended December 31, 2017, filed on March 16,2018 and incorporated herein by reference.10.2*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/A10.5*Award forms under the 2010 Stock Incentive Plan (i) StockOption Agreement, (ii) Stock Bonus Agreement, (iii) RestrictedStock Unit Agreement, and (iv) Stock Appreciation RightAgreementFiled as Exhibits 4.2, 4.3, 4.4 and 4.5, respectively, to the Company’sreport on Form S-8 on May 26, 2010, and incorporated herein byreference.10.6Amended and Restated Lease Agreement, dated as of July 28,2000, as amended and restated as of January 29, 2002, betweenSutton Hill Capital, L.L.C. and Citadel Cinemas, Inc.Filed as Exhibit 10.40 to the Company’s Annual Report on Form10-K for the year ended December 31, 2002 and incorporated herein byreference.10.7Second Amendment to Amended and Restated Master OperatingLease dated as of September 1, 2005Filed as Exhibit 10.58 to the Company’s report on Form 8-K filedon 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-K filedon 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-K forthe year ended December 31, 2010, and incorporated herein byreference.- 138 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. 10.10Omnibus 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 ReadingInternational, Inc.Filed as Exhibit 10.49 to the Company’s report on Form 10-Q forthe period ended September 30, 2003, and incorporated herein byreference.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 on Form10-K for the year ended December 31, 2002 and incorporated hereinby reference.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-K datedFebruary 5, 2007, and incorporated herein by reference.10.13Amended and Restated Corporate Markets Loan & BankGuarantee Facility Agreement dated December 23, 2015, amongReading Entertainment Australia Pty Ltd and National AustraliaBank 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, 2016and 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 on Form10-K for the year ended December 31, 2015, filed on April 29, 2016and 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-K forthe 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-K forthe 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-Q forthe period ended September 30, 2008, and incorporated herein byreference.10.18*Employment Agreement between Reading International, Inc. andDevasis 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, 2014 betweenReading International, Inc. and Andrzej MatyczynskiFiled as Exhibit 10.19 to the Company’s Annual Report on Form10-K for the year ended December 31, 2015, filed on April 29, 2016and 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 on Form10-K for the year ended December 31, 2015, filed on April 29, 2016and 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 on Form10-K for the year ended December 31, 2015, filed on April 29, 2016and 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 on Form10-K for the year ended December 31, 2015, filed on April 29, 2016and 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 on Form10-K for the year ended December 31, 2015, filed on April 29, 2016and incorporated herein by reference.10.24OBI Termination Agreement and ReleaseFiled as Exhibit 10.24 to the Company’s Annual Report on Form10-K for the year ended December 31, 2015, filed on April 29, 2016and incorporated herein by reference.10.25Form of Stock Option Agreement (Non-Director)Filed as Exhibit 10.25 to the Company’s Annual Report on Form10-K/A for the year ended December 31, 2016, filed on May 5, 2017and 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 Form 10-K for the year ended December 31, 2016 filed on March 13, 2017and incorporated herein by reference- 139 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. 21+List of Subsidiaries, N/A23.1+Consent of Independent Registered Public Accounting Firm,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 906 ofthe 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 906 ofthe Sarbanes-Oxley Act of 2002.N/A101.INS+XBRL Instance DocumentN/A101.SCH+XBRL Taxonomy Extension SchemaN/A101.CAL+XBRL Taxonomy Extension CalculationN/A101.DEF+XBRL Taxonomy Extension DefinitionN/A101.LAB+XBRL Taxonomy Extension LabelsN/A101.PRE+XBRL Taxonomy Extension PresentationN/A- 140 - Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 this report tobe signed on its behalf by the undersigned thereunto duly authorized.READING INTERNATIONAL, INC.(Registrant)Date:March 18, 2019By:/s/ Gilbert Avanes Gilbert Avanes Interim Chief 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 following persons onbehalf 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 18, 2019Ellen M. Cotter(Principal Executive Officer)/s/ Gilbert AvanesInterim Chief Financial Officer and TreasurerMarch 18, 2019Gilbert Avanes(Principal Financial Officer)/s/ Steve LucasVice President, Controller and Chief Accounting OfficerMarch 18, 2019Steve Lucas(Principal Accounting Officer)/s/ Margaret CotterVice Chairman of the Board and DirectorMarch 18, 2019Margaret Cotter/s/ Guy W. AdamsDirectorMarch 18, 2019Guy W. Adams/s/ Edward L. KaneDirectorMarch 18, 2019Edward L Kane/s/ Douglas J. McEachernDirectorMarch 18, 2019Douglas J. McEachern/s/ Dr. Judy CoddingDirectorMarch 18, 2019Dr. Judy Codding/s/ Michael WrotniakDirectorMarch 18, 2019Michael Wrotniak- 141 -Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 10.3 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”).1. 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 thisRestricted Stock Unit Agreement and the Plan.2. Vesting and Payment.2.1 Vesting Date. Subject to the limitations set forth in this Section 2, Restricted StockUnits will vest on the first to occur of (i) 5:00 pm, Los Angeles, CA time on the last business dayprior to the one-year anniversary of the Grant Date or (ii) the date on which Recipient’s term as aDirector shall end and the Recipient, or as the case may be, the Recipient’s successor is elected tothe board of directors at the next occurring annual meeting or special meeting of stockholders calledfor such purpose (the "Vesting Date").2.2 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. 2.3 Acceleration of Vesting.(a) 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. (b) In the event of a Change of Control, and the Recipient is not a Participant insuch Change in Control, all unvested Restricted Stock Units shall immediately vest as of thedate of such Change of Control. (c) In the event of a Corporate Transaction in which the Restricted Stock Unitsare not to be Appropriately Replaced at or prior to the effective time of such CorporateTransaction, the vesting of all Restricted Stock Units which are not otherwise fully vestedshall automatically accelerate so that all such Restricted Stock Units shall, Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.immediately prior to the effective time of the Corporate Transaction, become fully vested, freeof all restrictions.(d) For purposes of this Section 2.3:(i) Restricted Stock Units shall be considered “Appropriately Replaced”if, at or prior to the Corporate Transaction, in the judgment of the Committee asconstituted 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.(ii) The term “Change in Control” shall mean:(A) a change, after the Grant Date, in the composition of theBoard such that the Incumbent Board ceases for any reason to constitute atleast a majority of the Board; or(B) after the Grant Date a Person (as defined below) other than aPermitted Holder (as defined below) becomes the “Beneficial Owner” (asdefined in Rules 13d-3 and 13d-5 under the Exchange Act), directly orindirectly, of securities of the Company representing in the aggregate thirtypercent (30%) or more of the then outstanding Voting Securities of theCompany; provided, however, that a Change in Control shall not be deemedto have occurred for purposes of this clause (B) solely as the result of: Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.(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(4) any acquisition pursuant to a transaction that is excluded from thedefinition of Corporate Transaction pursuant to approval by theIncumbent Board.(iii) The term “Corporate Transaction” shall mean: (A) the consummation of a reorganization, merger or consolidationor sale or other disposition of all or substantially all of the assets of theCompany, whether directly or indirectly through the sale of any one or moreof the Company’s subsidiaries or the assets of such one or more subsidiaries;excluding, however, any such transaction approved by the Incumbent Board(as defined below); or(B) the liquidation or dissolution of the Company.(iv) The term “Incumbent Board” shall mean the individuals who, as ofthe Grant Date, constitute the entire Board together with any individual(s) whobecomes a member of the Board subsequent to the Grant Date, whose election, ornomination for election by the Company’s stockholders, was approved by a vote of atleast a majority of those individuals who are members of the Board and who were alsomembers of the then-Incumbent Board (or deemed to be such pursuant to thisproviso); provided, however, that any such individual whose initial assumption ofoffice occurs as a result of either an actual or threatened election contest (as such termsare used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) orother actual or threatened solicitation of proxies or consents by or on behalf of aPerson other than the Board shall not be so considered as a member of the IncumbentBoard.(v) The term “Participant” in a Change in Control or a CorporateTransaction shall mean any Person who, after such Change in Control or CorporateTransaction either (a) is or controls any Person whose acquisition or control ofsecurities of the Company gives rise to the Change in Control pursuant to Section2.3(d)(ii)(B) above, or (b) is or controls any Permitted Holder as of the effective dateof such Change in Control or Corporate Transaction but was not or did not controlsuch Permitted Holder as of the date hereof. Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.(vi) The term “Permitted Holder” shall mean (i) the Company or anytrustee or other fiduciary holding securities under an employee benefit plan of theCompany, (ii) any Person who, since the Grant Date, has continuously been theBeneficial Owner of not less than thirty percent (30%) of the Voting Securities, or (iii)any Person controlled, directly or indirectly, by one or more of the foregoing Personsreferred to in the immediately preceding clause (ii).(vii) The term “Person” shall mean any individual (whether acting in anindividual capacity or in a representative capacity so as to have sole or shared votingpower of Voting Securities), entity (including, without limitation, any corporation,charitable or not-for profit corporation, private foundation, partnership, limited liabilitycompany, trust (including, without limitation, any private, charitable or split-interesttrust), joint venture, association or governmental body) or group (as defined in Section13(d)(3) or 14(d)(2) of the Exchange Act and the rules and regulations thereunder.(viii) Services shall mean Recipient’s services as a Director of theCompany or any successor.(ix) The term “Voting Securities” shall mean all securities of a corporationhaving the right under ordinary circumstances to vote in an election of the board ofdirectors of such corporation, or other interests having comparable rights to electmanagers or fiduciary persons or boards in non-corporate entities. As of the datehereof, the Voting Securities of the Company includes the shares of Class B commonstock of the Company.2.4 Settlement. If Restricted Stock Units vest, then within thirty (30) days after the lastday of the calendar year in which the Restricted Stock Units become vested pursuant to Section 2hereof, the Company shall settle the Restricted Stock Units by delivering to the Recipient, or ifapplicable the Recipient’s estate, that number of shares of Common Stock equal to the number ofRestricted Stock Units which vested on such vesting date as set forth above.2.5 Taxes. On the date on which the Restricted Stock Units are settled pursuant toSection 2.4 hereof, the Recipient shall recognize taxable income in respect of the Common Stockdeliverable and the Company shall report such taxable income to the appropriate taxing authoritiesin respect thereof as it determines to be necessary and appropriate. 2.6 Certificate. Upon settlement of the Restricted Stock Units pursuant to Section 2.4hereof (or as soon as practicable thereafter), the Company shall deliver or cause to be delivered oneor more certificates issued in the Recipient’s name representing shares of Common Stock equal tothe number of vested Restricted Stock Units. If a valid SEC Form S-8 Registration Statement is notin effect 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. Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.3. 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.4. Notices. All notices and other communications under this Restricted Stock Unit Agreementshall be in writing and shall be given by e-mail, first class mail, certified or registered with return receiptrequests, and shall be deemed to have been duly given three days after mailing (or one-day in case ofdelivery by e-mail) to the respective parties, as follows: (i) if to the Company, (a) if by mail, addressed tothe Company in care of its Corporate Secretary at the principal executive office of the Company, or (b)if by e-mail, addressed to the care of the Corporate Secretary at corporatesecretary@readingrdi.com and(ii) if to 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 hereto.5. Protections against Violations of Agreement. 5.1 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).5.2 Any purported Transfer of Restricted Stock Units or any economic benefit or interesttherein in violation of this Restricted Stock Unit Agreement shall be null and void ab initio, andshall not create any obligation or liability of the Company, and any person purportedly acquiringany Restricted 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.6. Taxes. BY SIGNING THIS RESTRICTED STOCK UNIT AGREEMENT, THERECIPIENT REPRESENTS THAT HE OR SHE HAS REVIEWED WITH HIS OR HER OWNTAX ADVISORS THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCESOF THE 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.7. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time anyprovision of this Restricted Stock Unit Agreement shall in no way be construed to be a waiver of suchprovision or of any other provision hereof. Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.8. Governing Law. This Restricted Stock Unit Agreement shall be governed by and construedand enforced 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.9. Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof,and the Restricted Stock Units and this Restricted Stock Unit Agreement shall be subject to all terms andconditions of the Plan and this Restricted Stock Unit Agreement.10. 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.11. Survival of Terms. This Restricted Stock Unit Agreement shall apply to and bind theRecipient and the Company and their respective permitted assignees and transferees, heirs, legatees,executors, administrators and legal successors.12. Rights as a Stockholder. The Recipient shall have no rights of a stockholder (including theright to vote and the right to receive distributions or dividends) until the Recipient has received theshares of Common Stock equal to the number of Restricted Stock Units which vested. On the date thatthe Recipient 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.13. Agreement Not a Contract for Continued Service. Neither the Plan, the granting of theRestricted Stock Units, this Restricted Stock Unit Agreement nor any other action taken pursuant to thePlan shall constitute or be evidence of any agreement or understanding, express or implied, that theRecipient has a right to continue to serve as a director of the Company for any period of time or at anyspecific rate of compensation. 14. Authority of the Board; Disputes. The Board, directly or through its delegation of authorityto the Committee, shall have full authority to interpret and construe the terms of the Plan and thisRestricted Stock Unit Agreement. Notwithstanding the above, nothing within this provision shall restrictthe Company or the Recipient from seeking to enforce the terms of this Restricted Stock UnitAgreement under and as provided in Section 8, above. Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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.15. Severability. Should any provision of this Restricted Stock Unit Agreement be held by acourt of competent jurisdiction to be unenforceable, or enforceable only if modified, such holding shallnot affect the validity of the remainder of this Restricted Stock Unit Agreement, the balance of whichshall continue 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.16. Amendment. The Board, directly or through its delegation of authority to theCommittee, has the right to amend, alter, suspend, discontinue or cancel the Restricted Stock Unit,prospectively or retroactively; provided, that, no such amendment shall adversely affect the Recipient’smaterial rights under this Agreement without the Recipient’s consent.17. Counterparts. This Agreement may be executed in counterparts, each of which shall bedeemed an original but all of which together will constitute one and the same instrument. Counterpartsignature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portabledocument format (.pdf), or by any other electronic means intended to preserve the original graphic andpictorial appearance of a document, will have the same effect as physical delivery of the paper documentbearing an original signature.18. Acceptance. The Recipient hereby acknowledges receipt of a copy of the Plan and thisAgreement. The Recipient has read and understands the terms and provisions thereof, and accepts theRestricted Stock Units subject to all of the terms and conditions of the Plan and this Agreement. TheRecipient acknowledges that there may be adverse tax consequences upon vesting and/or settlement ofthe Restricted Stock Unit or disposition of the underlying shares and that the Recipient should consult atax advisor prior to such vesting, settlement or disposition.[SIGNATURE PAGE FOLLOWS] Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 OfficerRECIPIENTBy:Name: Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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. “Recipient” By: By: Name:Ellen Cotter Name: Title:President and Chief Executive Officer 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 first to occur of (i) 5:00 pm, Los Angeles, CA time onthe last business day prior to the one-year anniversary of theGrant Date or (ii) the date on which Recipient’s term as aDirector shall end and the Recipient, or as the case may be, theRecipient’s successor is elected at the next occurring annualmeeting or special meeting of stockholders called for theelection of Directors (the “Vesting Date”); provided that theRecipient has not undergone a termination of his or her servicesas a Director 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__.Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 18, 2019Powered 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 18, 2019Powered 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 18, 2019Powered 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 18, 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, 2018. 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 18, 2019Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 Annual Report on 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 18, 2019 Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, Gilbert Avanes, certify that:1)I have reviewed this Annual Report on 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/ Gilbert AvanesGilbert AvanesInterim Chief Financial Officer(Principal Financial Officer)March 18, 2019 Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018 (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 tothe best of my knowledge: 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 18, 2019Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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, 2018 (the “Report”), I, Gilbert Avanes, Interim 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 tothe best of my knowledge: 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/ Gilbert Avanes Gilbert AvanesInterim Chief Financial Officer(Principal Financial Officer)March 14, 2019Source: READING INTERNATIONAL INC, 10-K, March 18, 2019Powered 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 18, 2019Powered 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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