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

Our business is comprised of two operating segments, as follows: (i) cinema exhibition and (ii) real estate. Each of these segments has discrete and separate financial information and for which operating results are evaluated regularly by our Chief Executive Officer, the chief operating decision-maker of the Company. As part of our real estate segment, we have acquired, and continue to hold, raw land in urban and 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 with the day-to-day operations of the cinemas and the management of rental properties, including our live theatre assets.



	2019						2018						2017
(Dollars in thousands)	Cinema		Real Estate		Total		Cinema		Real Estate		Total		Cinema		Real Estate		Total
Revenue - third party	$	262,189	$	14,579	$	276,768	$	293,723	$	15,208	$	308,931	$	263,141	$	16,415	$	279,556
Inter-segment revenue (1)		—		7,326		7,326		—		9,027		9,027		—		7,573		7,573
Total segment revenue		262,189		21,905		284,094		293,723		24,235		317,958		263,141		23,988		287,129
Operating expense
Operating Expense - Third Party		(210,050)		(9,453)		(219,503)		(225,791)		(9,904)		(235,695)		(207,447)		(9,436)		(216,883)
Inter-Segment Operating Expenses (1)		(7,326)		—		(7,326)		(9,027)		—		(9,027)		(7,573)		—		(7,573)
Total of services and products (excluding depreciation and amortization)		(217,376)		(9,453)		(226,829)		(234,818)		(9,904)		(244,722)		(215,020)		(9,436)		(224,456)
Depreciation and amortization		(16,940)		(5,393)		(22,333)		(16,314)		(5,567)		(21,881)		(12,213)		(4,256)		(16,469)
General and administrative expense		(4,544)		(1,918)		(6,462)		(3,724)		(2,326)		(6,050)		(3,261)		(2,140)		(5,401)
Total operating expense		(238,860)		(16,764)		(255,624)		(254,856)		(17,797)		(272,653)		(230,494)		(15,832)		(246,326)
Segment operating income (loss)	$	23,329	$	5,141	$	28,470	$	38,867	$	6,438	$	45,305	$	32,647	$	8,156	$	40,803

(1)

Inter-segment Revenues and Operating Expense 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)	2019		2018		2017
Segment operating income (loss)	$	28,470	$	45,305	$	40,803
Unallocated corporate expense:
Depreciation and amortization expense		(414)		(394)		(473)
General and administrative expense		(18,933)		(21,287)		(19,947)
Interest expense, net		(7,904)		(6,837)		(6,194)
Equity earnings of unconsolidated joint ventures		792		974		815
(Loss) gain on sale of assets		(2)		(41)		9,360
Casualty gain (loss)		—		—		9,217
Other (expense) income		325		(256)		588
Income (loss) before income taxes	$	2,334	$	17,464	$	34,169

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



	December 31,
(Dollars in thousands)	2019		2018
By segment:
Cinema	$	364,905	$	138,850
Real estate		295,213		263,782
Corporate (1)		14,871		36,605
Total assets	$	674,989	$	439,237
By country:
United States	$	356,191	$	220,986
Australia		248,031		156,768
New Zealand		70,767		61,483
Total assets	$	674,989	$	439,237

(1)

Corporate Assets includes cash and cash equivalents of $12.1 million and $13.1 million as of December 31, 2019 and 2018, respectively.

The following table sets forth our operating properties by country:



	December 31,
(Dollars in thousands)	2019		2018
United States	$	91,704	$	95,710
Australia		137,677		132,624
New Zealand		28,757		29,333
Total operating property	$	258,138	$	257,667

The table below summarizes capital expenditures for the three years ended December 31, 2019:



(Dollars in thousands)	2019		2018		2017
Segment capital expenditures	$	47,555	$	56,795	$	76,300
Corporate capital expenditures		167		32		408
Total capital expenditures	$	47,722	$	56,827	$	76,708