Note 1 – Description of Business and Segment Reporting

The Company

Reading International, Inc., a Nevada corporation (“RDI” and collectively with our consolidated subsidiaries and corporate predecessors, the “Company”, “Reading” and “we”, “us”, or “our”), was incorporated in 1999. Our businesses 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, New Zealand, and the United States.

Business Segments

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

The table below summarizes the results of operations for each of our business segments for the quarter and nine months ended September 30, 2018 and 2017, respectively. 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.



	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2018		2017		2018		2017
Revenue:
Cinema exhibition	$	70,671	$	62,059	$	223,109	$	196,062
Real estate		5,771		6,065		18,204		17,550
Inter-segment elimination		(2,181)		(2,008)		(6,918)		(5,575)
	$	74,261	$	66,116	$	234,395	$	208,037
Segment operating income:
Cinema exhibition	$	8,202	$	6,703	$	30,983	$	25,581
Real estate		1,260		1,578		4,896		5,683
	$	9,462	$	8,281	$	35,879	$	31,264

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



	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2018		2017		2018		2017
Segment operating income	$	9,462	$	8,281	$	35,879	$	31,264
Unallocated corporate expense
Depreciation and amortization expense		(92)		(108)		(313)		(321)
General and administrative expense		(4,831)		(4,506)		(16,717)		(13,931)
Interest expense, net		(1,748)		(1,663)		(5,132)		(5,310)
Equity earnings of unconsolidated joint ventures		80		136		667		654
Gain on sale of assets		—		—		—		9,417
Gain on insurance recoveries		—		—		—		9,217
Other income (expense)		(130)		89		(273)		937
Income before income tax expense	$	2,741	$	2,229	$	14,111	$	31,927