NOTE 1 – Description of Business and Segment Reporting

Reading International, Inc., a Nevada corporation (“RDI” and collectively with our consolidated subsidiaries and corporate predecessors, the “Company,” “Reading” and “we,” “us,” or “our”), was incorporated in 1999, and, following the consummation of a consolidation transaction on December 31, 2001, is now the owner of the consolidated businesses and assets of Reading Entertainment, Inc. (“RDGE”), Craig Corporation (“CRG”), and Citadel Holding Corporation (“CDL”). Our businesses consist primarily of:

Development, ownership and operation of multiplex cinemas in the United States, Australia, and New Zealand; and

Development, ownership, and operation of retail and commercial real estate in Australia, New Zealand, and the United States

Reported below are the operating segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the Chief Executive Officer. In addition to the cinema exhibition and real estate activities, we have acquired, and continue to hold, raw land in urban and suburban centers in Australia, New Zealand, and the United States as part of our real estate activities.

The tables below summarize the results of operations for each of our business segments. Operating expense includes costs associated with the day-to-day operations of the cinemas and the management of rental properties, including our live theater assets.


	2015						2014						2013
(Dollars in thousands)	Cinema		Real Estate		Total		Cinema		Real Estate		Total		Cinema		Real Estate		Total
Revenue	$	242,281	$	21,579	$	263,860	$	237,861	$	24,348	$	262,209	$	239,418	$	26,456	$	265,874
Inter-segment elimination(1)		--		-		(6,537)		--		-		(7,461)		--		--		(7,653)
Total revenue		242,281		21,579		257,323		237,861		24,348		254,748		239,418		26,456		258,221
Operating expense
Cost of services and products (excluding depreciation and amortization)		(196,544)		(10,948)		(207,492)		(195,896)		(9,770)		(205,666)		(200,859)		(10,830)		(211,689)
Inter-segment elimination(1)		-		--		6,537		-		--		7,461		-		--		7,653
Total cost of services and products		(196,544)		(10,948)		(200,955)		(195,896)		(9,770)		(198,205)		(200,859)		(10,830)		(204,036)
Depreciation and amortization		(11,161)		(3,107)		(14,268)		(11,047)		(4,061)		(15,108)		(10,741)		(4,023)		(14,764)
General and administrative expense		(3,000)		(728)		(3,728)		(3,575)		(1,042)		(4,617)		(3,273)		(644)		(3,917)
Total operating expense		(210,705)		(14,783)		(218,951)		(210,518)		(14,873)		(217,930)		(214,873)		(15,497)		(222,717)
Segment operating income	$	31,576	$	6,796	$	38,372	$	27,343	$	9,475	$	36,818	$	24,545	$	10,959	$	35,504

(1) Inter-segment eliminations relates to the internal charge between the two segments where the cinema operates within real estate owned within the group.

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


(Dollars in thousands)	2015		2014		2013
Segment operating income	$	38,372	$	36,818	$	35,504
Unallocated corporate expense:
Depreciation and amortization expense		(294)		(360)		(433)
General and administrative expense		(14,924)		(14,285)		(14,136)
Interest expense, net		(7,304)		(9,000)		(10,037)
Equity earnings of unconsolidated joint ventures and entities		1,204		1,015		1,369
Gain (loss) on sale of assets		11,023		25		(56)
Other income (expense)		(440)		1,646		1,876
Income before income taxes	$	27,637	$	15,859	$	14,087

Assuming cash and cash equivalents are accounted for as corporate assets, total assets by business segment and by country are presented as follows:


(Dollars in thousands)	December 31, 2015		December 31, 2014		December 31, 2013
By segment:
Cinema	$	107,808	$	107,695	$	120,709
Real estate		219,813		219,737		226,926
Corporate (1)		47,470		74,154		39,172
Total assets	$	375,091	$	401,586	$	386,807
By country:
United States	$	131,965	$	141,768	$	110,677
Australia		173,227		178,202		196,050
New Zealand		69,899		81,616		80,080
Total assets	$	375,091	$	401,586	$	386,807

(1) Includes cash and cash equivalents of $19.7million, $50.2 million, and $37.7 million for the years ended December 31, 2015, 2014, and 2013, respectively.

The following table sets forth our operating properties by country:


(Dollars in thousands)	December 31, 2015		December 31, 2014		December 31, 2013
Australia	$	106,985	$	87,536	$	97,240
New Zealand		36,526		39,800		36,319
United States		66,787		59,553		58,101
Total operating property	$	210,298	$	186,889	$	191,660

The table below summarizes capital expenditures for the three years ended December 31, 2015:


(Dollars in thousands)	2015		2014		2013
Segment capital expenditures	$	52,989	$	14,310	$	19,910
Corporate capital expenditures		130		604		172
Total capital expenditures	$	53,119	$	14,914	$	20,082