Reading International, Inc. (NASDAQ: RDI) (the “Company”), an
internationally diversified cinema and real estate company with
operations and assets in the United States, Australia, and New
Zealand, today announced its results for the first quarter ended
March 31, 2023.
President and Chief Executive Officer, Ellen
Cotter said, “During the first quarter of 2023, our global revenue
grew 14%, negative EBITDA improved by 60% and our operating loss
reduced by 33%. The strong box office performance of movies like
Avatar: The Way of Water, which is currently the third highest
grossing film of all time, as well as Ant Man and the Wasp:
Quantumania, Creed III, Puss in Boots: The Last Wish, and John
Wick: Chapter 4 reinforced our view that audiences in the U.S.,
Australia and New Zealand will continue to embrace the magic of
great movies in a shared big screen environment. Our momentum
continued into the early second quarter with The Super Mario Bros.
Movie, which, broke the record for the biggest global debut for any
animated film and has grossed over $1 billion to date. We are
pleased that the remainder of 2023 looks promising with movies like
Indiana Jones and the Dial of Destiny, The Flash, Mission
Impossible – Dead Reckoning Part One, Barbie, The Marvels and
Aquaman and the Lost Kingdom.”
Ms. Cotter continued, “With over $5.1 million in
revenue and $1 million in income, our global real estate division
delivered the highest quarterly operating revenue and income since
December 2019 driven primarily by the commencement of rent from
Petco, which is leasing approximately 42% of our 44 Union Square
property in NYC, and the strong performance of our 75 third party
tenant real estate portfolio in Australia and New Zealand. And,
more recently, the new show, The Empire Strips Back, which started
public performances at our Orpheum Theatre in NYC on May 10, 2023,
looks like it will be a worthy successor to the long running show,
Stomp, based on advance ticket sales.”
Ms. Cotter concluded, “These positive first
quarter results come despite headwinds from unfavorable foreign
exchange rates, inflationary cost pressure, labor shortages and
material increases in interest expense. While we recognize the
global cinema industry will take a few years to achieve
pre-pandemic levels, our ‘two business/three country’ diversified
business structure and high-quality real estate assets, together
with our dedicated global team, continue to drive improvement
across our portfolio.”
Key Financial Results – First Three
Months of 2023
- Global revenue of $45.8 million
increased by 14% from $40.2 million in Q1 2022.
- Operating loss was reduced by
approximately 33% to a loss of $7.9 million, compared to an
operating loss of $11.8 million for Q1 2022.
- Adjusted EBITDA improved by 60%
with negative Adjusted EBITDA reducing to negative $2.8
million.
- Basic loss per share of $0.50
improved by approximately 29% compared to a basic loss per share of
$0.70 for Q1 2022.
- Net loss attributable to Reading
International, Inc. was $11.1 million, compared to a net loss of
$15.4 million for Q1 2022.
- The Australian dollar and New
Zealand dollar average exchange rates weakened against the U.S.
dollar by 5.5% and 6.9%, respectively, compared to the same period
in the prior year, which contributed to our loss for the period,
and negatively impacted our overall international financial
results.
Key Cinema Business
Highlights
At $42.0 million, our Q1 2023 cinema segment
revenue improved by 12% compared to Q1 2022. Our Q1 2023 cinema
segment operating loss of $4.6 million improved by 36% compared to
Q1 2022. Specifically, compared to the Q1 2022, our Q1 2023, (i)
U.S. Cinemas revenues grew by 25%, (ii) in local currency, our
Australian Cinemas revenues grew by 7% and (iii) in local currency,
our New Zealand Cinema revenues grew by 11%. And, compared to Q1
2022, our Q1 2023 (i) U.S. Cinemas operating loss improved by
32%, (ii) in local currency, our Australian Cinemas’
operating income improved by 77% and (iii) in local currency,
our New Zealand Cinemas’ operating income improved by 110%. The Q1
2023 U.S. industry box office performed proportionately better
quarter over quarter vs. the Australian industry box office. Movies
such as Creed III, Scream VI, Cocaine Bear and Jesus Revolution
supported the U.S. box office to a greater degree than in
Australia.
The operating performance improvement in the
first quarter of 2023 compared to 2022 was due to a higher quantity
and quality of film slate which drove audiences back to the big
screens. Our variable operating costs increased in line with the
changes in the operational landscape. Although attendance is still
below pre-pandemic levels, the improving Q1 2023 box office
demonstrates our continuing recovery and supports our confidence in
audiences returning to the movie-going experience.
Over the last few years we have continued to
focus on the implementation of our cinema business plan: the
enhancement of our food and beverage offerings, procuring
additional cinema liquor licenses, and refurbishing our older
cinemas with luxury seating (and/or larger screen formats). During
Q1 2023, we began operating an existing six screen cinema in
Armadale, a suburb of Perth in Western Australia. In the second
half of 2023, we anticipate adding an eight-screen boutique cinema
at South City Square, Brisbane QLD that will operate under the
Angelika Film Center brand, as well as adding a five-screen Reading
Cinemas with TITAN LUXE in Busselton, Western Australia. Both new
cinemas will be state-of-the-art facilities with recliner seating
and elevated food and beverage offerings (including alcoholic
beverages). In the U.S., we recently achieved liquor licenses for
100% of the U.S. cinemas that we intend to operate for the
foreseeable future.
Key Real Estate Business
Highlights
Real estate segment revenue for Q1 2023,
increased by 22% to $5.1 million, compared to the same period in
2022. Real estate segment operating income for Q1 2023 increased by
over 100%, to $1.0 million compared to the same period in 2022.
The changes between the first quarter of 2023
and the first quarter of 2022 were primarily attributable to the
rent recognized in Q1 2023 from our Petco tenancy at our 44 Union
Square property that did not occur in the same period of the prior
year. Petco is now on a full rent paying basis and we expect an
opening in mid-2023 following a marketing push over the next few
months.
Key Balance Sheet, Cash, and Liquidity
Highlights
As of March 31, 2023, our cash and cash
equivalents were $14.6 million. As of March 31, 2023, we had
total gross debt of $213.4 million against total book value assets
of $560.2 million, compared to $215.6 million and $587.1 million,
as of December 31, 2022.
On March 30, 2023, we modified our Bank of
America facility which, among other things, extended the maturity
date to September 4, 2024 and set monthly repayments of $725,000
commencing in May 2023, with a balloon payment upon maturity.
For more information about our borrowings,
please refer to Part I – Financial Information, Item 1 – Notes to
Consolidated Financial Statements-- Note 12 – Borrowings.
Conference Call and Webcast
We plan to post our pre-recorded conference call
and audio webcast on our corporate website on Wednesday, May 17,
2023, which will feature prepared remarks from Ellen Cotter,
President and Chief Executive Officer; Gilbert Avanes, Executive
Vice President, Chief Financial Officer and Treasurer; and Andrzej
Matyczynski, Executive Vice President - Global Operations.
A pre-recorded question and answer session will
follow our formal remarks. Questions and topics for consideration
should be submitted to InvestorRelations@readingrdi.com by 5:00
p.m. Eastern Time on May 16, 2023. The audio webcast can be
accessed by visiting https://investor.readingrdi.com/financials on
May 17, 2023.
About Reading International,
Inc.
Reading International, Inc. (NASDAQ: RDI), an
internationally diversified cinema and real estate company
operating through various domestic and international subsidiaries,
is a leading entertainment and real estate company, engaging in the
development, ownership, and operation of cinemas and retail and
commercial real estate in the United States, Australia, and New
Zealand.
Reading’s cinema subsidiaries operate under
multiple cinema brands: Reading Cinemas, Angelika Film Centers,
Consolidated Theatres, and the State Cinema by Angelika. Its live
theatres are owned and operated by its Liberty Theaters subsidiary,
under the Orpheum and Minetta Lane names. Its signature property
developments are maintained in special purpose entities and
operated under the names Newmarket Village, Cannon Park, and The
Belmont Common in Australia, Courtenay Central in New Zealand, and
44 Union Square in New York City.
Additional information about Reading can be
obtained from our Company's website: http://www.readingrdi.com.
Cautionary Note Regarding
Forward-Looking Statements
This earnings release contains forward-looking
statements within the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as: "may," "will,"
"expect," "believe," "intend," "future," and "anticipate" and
similar references to future periods. Examples of forward-looking
statements include, among others, statements we make regarding our
expected operating results; our expectations regarding the success
of movies released in the second quarter and for the remainder of
2023; our expectations regarding the future of the cinema
exhibition industry; our confidence about the new production
at our Orpheum Theater; our belief regarding our diversified
business/country diversification strategy; and our expectations
regarding the leasing and performance of our various real estate
assets, including 44 Union Square. For more detailed information on
our Forward-looking statements, see the factors discussed under the
caption CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
in our Annual Report on Form 10-K for the year ended December 31,
2022, and of our quarterly report on Form 10-Q for the quarter
ended March 31, 2023.
Forward-looking statements are neither
historical facts nor assurances of future performance. Instead,
they are based only on our current beliefs, expectations, and
assumptions regarding the future of our business, future plans and
strategies, projections, anticipated events and trends, the
economy, and other future conditions. Because forward-looking
statements relate to the future, they are subject to inherent
uncertainties, risks, and changes in circumstances that are
difficult to predict and many of which are outside of our control.
Our actual results and financial condition may differ materially
from those indicated in the forward-looking statements. Therefore,
you should not rely on any of these forward-looking statements.
Important factors that could cause our actual results and financial
condition to differ materially from those indicated in the
forward-looking statements include, among others, the adverse
impact of the COVID-19 pandemic and any variant thereof on
short-term and/or long-term entertainment, leisure and
discretionary spending habits and practices of our patrons and on
our results from operations, liquidity, cash flows, financial
condition, any factors adversely impacting cinema patrons attending
our cinemas, factors adversely impacting our ability to lease and
drive revenues from our real estate assets, macroeconomic
conditions in the United States, Australia, New Zealand and
internationally, access to credit markets, and those factors
discussed throughout Part I, Item 1A – Risk Factors and Part II,
Item 7 – Management's Discussion and Analysis of Financial
Condition and Results of Operations of our Annual Report on Form
10-K for the year ended December 31, 2022, as well as the risk
factors set forth in any other filings made under the Securities
Act of 1934, as amended, including any of our Quarterly Reports on
Form 10-Q, for more information.
Any forward-looking statement made by us in this
Earnings Release is based only on information currently available
to us and speaks only as of the date on which it is made. We
undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
Reading International, Inc. and
SubsidiariesUnaudited Consolidated Statements of
Operations(Unaudited; U.S. dollars in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2023 |
|
|
2022 |
|
Revenue |
|
|
|
|
|
|
Cinema |
|
$ |
41,987 |
|
|
$ |
37,347 |
|
Real
estate |
|
|
3,820 |
|
|
|
2,853 |
|
Total revenue |
|
|
45,807 |
|
|
|
40,200 |
|
Costs and expenses |
|
|
|
|
|
|
Cinema |
|
|
(41,654 |
) |
|
|
(38,503 |
) |
Real estate |
|
|
(2,215 |
) |
|
|
(2,157 |
) |
Depreciation and
amortization |
|
|
(4,639 |
) |
|
|
(5,524 |
) |
General and
administrative |
|
|
(5,179 |
) |
|
|
(5,796 |
) |
Total costs and expenses |
|
|
(53,687 |
) |
|
|
(51,980 |
) |
Operating income (loss) |
|
|
(7,880 |
) |
|
|
(11,780 |
) |
Interest expense, net |
|
|
(4,117 |
) |
|
|
(3,205 |
) |
Other
income (expense) |
|
|
174 |
|
|
|
(781 |
) |
Income (loss) before income tax expense and equity earnings
of unconsolidated joint ventures |
|
|
(11,823 |
) |
|
|
(15,766 |
) |
Equity
earnings of unconsolidated joint ventures |
|
|
19 |
|
|
|
(65 |
) |
Income (loss) before income taxes |
|
|
(11,804 |
) |
|
|
(15,831 |
) |
Income
tax benefit (expense) |
|
|
480 |
|
|
|
378 |
|
Net income (loss) |
|
$ |
(11,324 |
) |
|
$ |
(15,453 |
) |
|
|
|
|
|
|
|
|
|
Less:
net income (loss) attributable to noncontrolling interests |
|
|
(213 |
) |
|
|
(99 |
) |
Net income (loss) attributable to Reading International,
Inc. |
|
$ |
(11,111 |
) |
|
$ |
(15,354 |
) |
Basic earnings (loss) per share |
|
$ |
(0.50 |
) |
|
$ |
(0.70 |
) |
Diluted earnings (loss) per share |
|
$ |
(0.50 |
) |
|
$ |
(0.70 |
) |
Weighted average number of shares outstanding–basic |
|
|
22,114,927 |
|
|
|
21,955,985 |
|
Weighted average number of shares outstanding–diluted |
|
|
22,897,990 |
|
|
|
22,500,658 |
|
Reading International, Inc. and
SubsidiariesConsolidated Balance
Sheets(U.S. dollars in thousands, except share
information)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2023 |
|
2022 |
ASSETS |
|
(unaudited) |
|
|
|
Current
Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
14,628 |
|
|
$ |
29,947 |
|
Restricted cash |
|
|
5,749 |
|
|
|
5,032 |
|
Receivables |
|
|
4,858 |
|
|
|
6,206 |
|
Inventories |
|
|
1,417 |
|
|
|
1,616 |
|
Derivative financial
instruments - current portion |
|
|
293 |
|
|
|
907 |
|
Prepaid and other current
assets |
|
|
5,905 |
|
|
|
3,804 |
|
Total current assets |
|
|
32,850 |
|
|
|
47,512 |
|
Operating property, net |
|
|
281,886 |
|
|
|
286,952 |
|
Operating lease right-of-use
assets |
|
|
193,655 |
|
|
|
200,417 |
|
Investment and development
property, net |
|
|
8,694 |
|
|
|
8,792 |
|
Investment in unconsolidated
joint ventures |
|
|
4,707 |
|
|
|
4,756 |
|
Goodwill |
|
|
25,272 |
|
|
|
25,504 |
|
Intangible assets, net |
|
|
2,292 |
|
|
|
2,391 |
|
Deferred tax asset, net |
|
|
420 |
|
|
|
447 |
|
Other
assets |
|
|
10,422 |
|
|
|
10,284 |
|
Total assets |
|
$ |
560,198 |
|
|
$ |
587,055 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
40,418 |
|
|
$ |
42,590 |
|
Film rent payable |
|
|
3,944 |
|
|
|
5,678 |
|
Debt - current portion |
|
|
47,345 |
|
|
|
37,279 |
|
Subordinated debt - current
portion |
|
|
756 |
|
|
|
747 |
|
Taxes payable - current |
|
|
649 |
|
|
|
300 |
|
Deferred revenue |
|
|
9,093 |
|
|
|
10,286 |
|
Operating lease liabilities -
current portion |
|
|
24,016 |
|
|
|
23,971 |
|
Other
current liabilities |
|
|
824 |
|
|
|
813 |
|
Total current liabilities |
|
|
127,045 |
|
|
|
121,664 |
|
Debt - long-term portion |
|
|
136,473 |
|
|
|
148,688 |
|
Subordinated debt, net |
|
|
27,005 |
|
|
|
26,950 |
|
Noncurrent tax
liabilities |
|
|
6,797 |
|
|
|
7,117 |
|
Operating lease liabilities -
non-current portion |
|
|
192,787 |
|
|
|
200,037 |
|
Other
liabilities |
|
|
19,119 |
|
|
|
19,320 |
|
Total liabilities |
|
$ |
509,226 |
|
|
$ |
523,776 |
|
Commitments and contingencies (Note 14) |
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
Class A non-voting common
shares, par value $0.01, 100,000,000 shares authorized, 33,437,260
issued and 20,501,150 outstanding at March 31, 2023 and 33,348,295
issued and 20,412,185 outstanding at December 31, 2022 |
|
|
235 |
|
|
|
235 |
|
Class B voting common shares,
par value $0.01, 20,000,000 shares authorized and 1,680,590 issued
and outstanding at March 31, 2023 and December 31, 2022 |
|
|
17 |
|
|
|
17 |
|
Nonvoting preferred shares,
par value $0.01, 12,000 shares authorized and no issued or
outstanding shares at March 31, 2023 and December 31, 2022 |
|
|
— |
|
|
|
— |
|
Additional paid-in
capital |
|
|
154,095 |
|
|
|
153,784 |
|
Retained
earnings/(deficits) |
|
|
(59,927 |
) |
|
|
(48,816 |
) |
Treasury shares |
|
|
(40,407 |
) |
|
|
(40,407 |
) |
Accumulated other comprehensive income |
|
|
(3,250 |
) |
|
|
(1,957 |
) |
Total Reading International, Inc. stockholders’
equity |
|
|
50,763 |
|
|
|
62,856 |
|
Noncontrolling interests |
|
|
209 |
|
|
|
423 |
|
Total stockholders’ equity |
|
|
50,972 |
|
|
|
63,279 |
|
Total liabilities and stockholders’ equity |
|
$ |
560,198 |
|
|
$ |
587,055 |
|
Reading International, Inc. and
SubsidiariesSegment Results(Unaudited;
U.S. dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
% ChangeFavorable/ |
(Dollars in thousands) |
|
2023 |
|
2022 |
|
(Unfavorable) |
Segment revenue |
|
|
|
|
|
|
|
|
|
Cinema |
|
|
|
|
|
|
|
|
|
United States |
|
$ |
21,811 |
|
|
$ |
17,517 |
|
|
25 |
% |
Australia |
|
|
17,212 |
|
|
|
16,981 |
|
|
1 |
% |
New Zealand |
|
|
2,964 |
|
|
|
2,849 |
|
|
4 |
% |
Total |
|
$ |
41,987 |
|
|
$ |
37,347 |
|
|
12 |
% |
Real estate |
|
|
|
|
|
|
|
|
|
United States |
|
$ |
1,554 |
|
|
$ |
676 |
|
|
>100 |
% |
Australia |
|
|
3,137 |
|
|
|
3,130 |
|
|
— |
% |
New Zealand |
|
|
374 |
|
|
|
356 |
|
|
5 |
% |
Total |
|
$ |
5,065 |
|
|
$ |
4,162 |
|
|
22 |
% |
Inter-segment elimination |
|
|
(1,245 |
) |
|
|
(1,309 |
) |
|
5 |
% |
Total segment
revenue |
|
$ |
45,807 |
|
|
$ |
40,200 |
|
|
14 |
% |
Segment operating
income (loss) |
|
|
|
|
|
|
|
|
|
Cinema |
|
|
|
|
|
|
|
|
|
United States |
|
$ |
(4,326 |
) |
|
$ |
(6,320 |
) |
|
32 |
% |
Australia |
|
|
(125 |
) |
|
|
(572 |
) |
|
78 |
% |
New Zealand |
|
|
(161 |
) |
|
|
(325 |
) |
|
50 |
% |
Total |
|
$ |
(4,612 |
) |
|
$ |
(7,217 |
) |
|
36 |
% |
Real estate |
|
|
|
|
|
|
|
|
|
United States |
|
$ |
(217 |
) |
|
$ |
(1,063 |
) |
|
80 |
% |
Australia |
|
|
1,413 |
|
|
|
1,444 |
|
|
(2 |
)% |
New Zealand |
|
|
(190 |
) |
|
|
(277 |
) |
|
31 |
% |
Total |
|
$ |
1,006 |
|
|
$ |
104 |
|
|
>100 |
% |
Total segment
operating income (loss) (1) |
|
$ |
(3,606 |
) |
|
$ |
(7,113 |
) |
|
49 |
% |
(1) Total
segment operating income is a non-GAAP financial measure. See the
discussion of non-GAAP financial measures that follows.
Reading International, Inc. and
SubsidiariesReconciliation of EBITDA and Adjusted
EBITDA to Net Income (Loss)(Unaudited; U.S. dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
(Dollars in thousands) |
|
2023 |
|
2022 |
Net Income (loss) attributable to Reading International, Inc. |
|
$ |
(11,111 |
) |
|
$ |
(15,354 |
) |
Add: Interest expense, net |
|
|
4,117 |
|
|
|
3,205 |
|
Add: Income tax expense (benefit) |
|
|
(480 |
) |
|
|
(378 |
) |
Add: Depreciation and amortization |
|
|
4,639 |
|
|
|
5,524 |
|
EBITDA |
|
$ |
(2,835 |
) |
|
$ |
(7,003 |
) |
Adjustments for: |
|
|
|
|
|
|
Legal expenses relating to the Derivative litigation, the James J.
Cotter Jr. employment arbitration and other Cotter litigation
matters |
|
|
— |
|
|
|
— |
|
Adjusted
EBITDA |
|
$ |
(2,835 |
) |
|
$ |
(7,003 |
) |
Reading International, Inc. and
SubsidiariesReconciliation of Total Segment
Operating Income (Loss) to Income (Loss) before Income
Taxes(Unaudited; U.S. dollars in thousands)
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
(Dollars in thousands) |
|
2023 |
|
2022 |
Segment operating income (loss) |
|
$ |
(3,606 |
) |
|
$ |
(7,112 |
) |
Unallocated corporate
expense |
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
(179 |
) |
|
|
(277 |
) |
General and administrative expense |
|
|
(4,095 |
) |
|
|
(4,391 |
) |
Interest expense, net |
|
|
(4,117 |
) |
|
|
(3,205 |
) |
Equity earnings of
unconsolidated joint ventures |
|
|
19 |
|
|
|
(65 |
) |
Gain (loss) on sale of
assets |
|
|
— |
|
|
|
— |
|
Other income (expense) |
|
|
174 |
|
|
|
(781 |
) |
Income (loss) before
income tax expense |
|
$ |
(11,804 |
) |
|
$ |
(15,831 |
) |
Non-GAAP Financial Measures
This Earnings Release presents total segment
operating income (loss), EBITDA, and Adjusted EBITDA, which are
important financial measures for our Company, but are not financial
measures defined by U.S. GAAP.
These measures should be reviewed in conjunction
with the relevant U.S. GAAP financial measures and are not
presented as alternative measures of earnings (loss) per share,
cash flows or net income (loss) as determined in accordance with
U.S. GAAP. Total segment operating income (loss) and EBITDA, as we
have calculated them, may not be comparable to similarly titled
measures reported by other companies.
Total segment
operating income (loss) – we evaluate the performance of
our business segments based on segment operating income (loss), and
management uses total segment operating income (loss) as a measure
of the performance of operating businesses separate from
non-operating factors. We believe that information about total
segment operating income (loss) assists investors by allowing them
to evaluate changes in the operating results of our Company’s
business separate from non-operational factors that affect net
income (loss), thus providing separate insight into both operations
and the other factors that affect reported results.
EBITDA – We use EBITDA in the evaluation of our
Company’s performance since we believe that EBITDA provides a
useful measure of financial performance and value. We believe this
principally for the following reasons:
We believe that
EBITDA is an accepted industry-wide comparative measure of
financial performance. It is, in our experience, a measure commonly
adopted by analysts and financial commentators who report upon the
cinema exhibition and real estate industries, and it is also a
measure used by financial institutions in underwriting the
creditworthiness of companies in these industries. Accordingly, our
management monitors this calculation as a method of judging our
performance against our peers, market expectations, and our
creditworthiness. It is widely accepted that analysts, financial
commentators, and persons active in the cinema exhibition and real
estate industries typically value enterprises engaged in these
businesses at various multiples of EBITDA. Accordingly, we find
EBITDA valuable as an indicator of the underlying value of our
businesses. We expect that investors may use EBITDA to judge our
ability to generate cash, as a basis of comparison to other
companies engaged in the cinema exhibition and real estate
businesses and as a basis to value our company against such other
companies.
EBITDA is not a
measurement of financial performance under generally accepted
accounting principles in the United States of America and it should
not be considered in isolation or construed as a substitute for net
income (loss) or other operations data or cash flow data prepared
in accordance with generally accepted accounting principles in the
United States for purposes of analyzing our profitability. The
exclusion of various components, such as interest, taxes,
depreciation, and amortization, limits the usefulness of these
measures when assessing our financial performance, as not all funds
depicted by EBITDA are available for management’s discretionary
use. For example, a substantial portion of such funds may be
subject to contractual restrictions and functional requirements to
service debt, to fund necessary capital expenditures, and to meet
other commitments from time to time.
EBITDA also fails to
take into account the cost of interest and taxes. Interest is
clearly a real cost that for us is paid periodically as accrued.
Taxes may or may not be a current cash item but are nevertheless
real costs that, in most situations, must eventually be paid. A
company that realizes taxable earnings in high tax jurisdictions
may, ultimately, be less valuable than a company that realizes the
same amount of taxable earnings in a low tax jurisdiction. EBITDA
fails to take into account the cost of depreciation and
amortization and the fact that assets will eventually wear out and
have to be replaced.
Adjusted
EBITDA – using the principles we consistently apply to
determine our EBITDA, we further adjusted the EBITDA for certain
items we believe to be external to our core business and not
reflective of our costs of doing business or results of operation.
Specifically, we have adjusted for (i) legal expenses relating to
extraordinary litigation, and (ii) any other items that can be
considered non-recurring in accordance with the two-year SEC
requirement for determining an item is non-recurring, infrequent or
unusual in nature.
For more information, contact:
Gilbert Avanes – EVP, CFO, and Treasurer
Andrzej Matyczynski – EVP Global Operations
(213) 235-2240
Reading (NASDAQ:RDI)
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Reading (NASDAQ:RDI)
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