Reading International Announces Tenth Consecutive Quarter of
Positive EBITDA(1) * Revenue was Up 7.6% for the 2004 Quarter
Versus 2003 LOS ANGELES, Aug. 9 /PRNewswire-FirstCall/ -- Reading
International, Inc. (AMEX:RDI) announced today results for the
second quarter ended June 30, 2004. (Logo:
http://www.newscom.com/cgi-bin/prnh/20030403/LATH058LOGO) Second
Quarter 2004 Highlights * Revenue at $25.1 million increased 7.6%
compared to Q2 2003. * Total revenue per screen at $106,125,
increased 6.3% compared to Q2 2003. * Tenth consecutive quarter of
positive EBITDA(1), at $3.3 million for the quarter. Second Quarter
2004 Discussion Revenue rose 7.6% to $25.1 million from $23.3
million in the 2003 quarter, assisted by currency effects and
despite a lackluster performance in the US, primarily driven by our
inability to show several first-line movies, as a result of our
on-going antitrust dispute with several major distributors. The
quarter's strong box office performers were led by "Shrek 2,"
followed by "Harry Potter 3," "Troy" and "The Day After Tomorrow."
Revenue per screen of $106,125 increased from $99,842 in the 2003
quarter, driven by strong per-screen attendance increases in
Australia, New Zealand and Puerto Rico. In Australia and Puerto
Rico, the per-screen attendance increase was primarily driven by an
overall increase in attendance. In New Zealand, currency was the
primary driver. In the US, attendance was down, primarily as a
result of the above-mentioned on-going antitrust dispute, which
resulted in our inability to show such movies as "The Day After
Tomorrow." We achieved our tenth consecutive quarter of positive
EBITDA(1), since the close of our consolidation transaction at the
end of 2001. At $3.3 million, it was lower than the $5.1 million
generated in the second quarter of 2003. This decrease was
principally due to the fact that we recorded a one-time income of
$2.8 million in the second quarter of 2003 reflecting a
non-recurring gain realized on the settlement of certain Australian
litigation and the recovery of related litigation expenses.
Adjusting for these non-recurring items, EBITDA would have been
$2.3 million. In the 2004 quarter, we recorded a realized currency
gain of $0.9 million, which, had it not occurred, would have
resulted in an EBITDA(1) of $2.4 million, 4% higher than 2003,
assuming no one-time income. As a percent of revenue, operating
expense remained relatively constant at 78% in the 2004 quarter
compared to 77% in the 2003 quarter. Ongoing focus on individual
cinema expense levels was the primary driver for this. Depreciation
and amortization expense grew $0.4 million or 18.5%, from $2.5
million to $2.9 million for the 2004 quarter. This increase was
primarily due to the effect of currency fluctuations and due to the
depreciation of assets acquired following the 2003 quarter. General
and administrative expense grew $0.5 million or 15.8%, primarily
due to a one-time credit in the 2003 quarter for reimbursed
litigation expenses, ongoing litigation costs associated with our
antitrust litigation as previously discussed and increasing costs
due to the implementation of the requirements of the Sarbanes-Oxley
Act. The other significant driver for the 2004 quarter, included in
"other income," was a $0.9 million realized currency translation
gain. In the 2003 quarter, $2.8 million in litigation settlement
and option release income was the driver, as previously discussed.
As a result of the above, we reported a $0.6 million net loss for
the 2004 quarter compared to a $1.4 million gain in the 2003
quarter. Once again, the continued strength of our EBITDA was the
significant achievement for the quarter. First Half 2004 Summary *
Revenue increased by 7.0% to $48.4 million compared to $45.3 in the
2003 first half, as compared to an increase in operating expenses
of 8.3%. * Total revenue per screen increased to $204,158 from
$192,246 in the 2003 first half. * Depreciation and amortization
grew to $6.0 million from $5.0 in the 2003 first half, driven by
currency fluctuations and depreciation on newly acquired assets. *
General and administrative expense increased to $7.2 million from
$6.7 million in the 2003 first half, driven by the same issues that
drove the quarter. * Other income at $2.8 million was flat compared
to the 2003 first half. A realized currency gain in 2004 was the
primary driver, as opposed to litigation settlement and option
release income being the driver for the 2003 first half. * Net loss
increased to $1.9 million, or $0.09 per share, from a loss of $0.5
million, or $0.02 per share in the first half of 2003. * EBITDA for
the first half of 2004 at $6.0 million was flat compared to $6.3
million for the first half of 2003. Total assets at June 30, 2004
were $210.6 million compared to $222.9 million at December 31,
2003. The currency exchange rates for Australia and New Zealand as
of June 30, 2004 were $0.6952 and $0.6322, respectively, and as of
December 31, 2003, these rates were $0.7520 and $0.6557,
respectively. As a result, currency negatively affected the balance
sheet at June 30, 2004 compared to December 31, 2003. Cash and cash
equivalents were down approximately $7.4 million at $14.4 million
compared to $21.7 million at December 31, 2003. The decrease in
cash was primarily driven by: * Cash deposits for new equipment and
to support bank guarantees made in connection with the acquisition
of the Anderson Cinemas circuit (see Subsequent Event discussion,
below). * The negative currency effect from December 31, 2003; *
Lower revenue receipts in the US; and * Increases in our prepaid
assets, representing primarily workers' compensation and general
liability insurances purchased in the 2004 first half; As a result
of the above, our working capital has become negative at $4.6
million compared to a positive $0.8 million at December 31, 2003.
Negative working capital is typical in the cinema industry, due to
the lag time between the collection of box office and concession
receipts and the payment of film distributors and vendors. The
resulting stockholders' equity was $98.8 million at June 30, 2004.
Management Changes As a part of our continued process to upgrade
our management capabilities and with a view to bolstering out real
estate capabilities, we have made the following appointments in
Australia during the first half of the year: * Wayne Smith was
appointed as Executive Director of Australia and New Zealand to
head our operations in that geographic area. Wayne brings to
Reading 20 years of experience in cinema operations and property
management gained at Hoyts Cinema Limited, his last position there
being General Manager Property. * Ian Sands was appointed
Operations Director for Australia and New Zealand, responsible for
the Company's day-to-day cinema operations. Ian has 30 years of
exhibition and distribution experience in the cinema industry with
Village Roadshow, his last position there being Managing Director
and Chairman of Village Roadshow Distribution. * John Willey was
appointed Development Director, responsible for future development
opportunities in Australia and New Zealand, as well as oversight of
the day-to-day administration and management of all our leasehold
and freehold property. John brings with him a wealth of experience
in property development and architectural experience plus
first-hand exposure to the cinema and shopping center industries. *
Jeremy Marsden was appointed Operations Manager Property, primarily
responsible for all property and asset management, facility
management, property leasing and administering our leasehold cinema
portfolio. Jeremy has property valuation management and project
delivery experience gained in both Australia and the UK. Subsequent
Events During the second quarter 2004, the Company contracted with
the principal stockholders of Australia-based Anderson Cinemas to
acquire, subject to due diligence and the satisfaction of certain
other conditions to closing, their interest in that circuit. As
ownership of the various cinemas in the circuit was divided amongst
a variety of entities and subject to the claims of a variety of
creditors, the acquisitions, which closed subsequent to the end of
the second quarter, were ultimately structured as the acquisition
of (i) the shares of one company, which owns as its sole asset the
10-screen leasehold cinema at Epping (a suburb of Melbourne), (ii)
agreements to lease with respect to two leasehold cinemas currently
under construction at Rhodes Peninsula (8 screens) (a suburb of
Sydney) and Westlakes (7 screens) (a suburb of Adelaide), and (iii)
three existing leasehold cinemas at Colac (2 screens), Melton (5
screens) and Sunbury (5 screens) (all suburbs of Melbourne). In
total, the Company paid approximately AUD$6.0 million and assumed
liabilities estimated at approximately AUD$10.0 million (including
approximately AUD$7.0 million in connection with the fit out of the
Rhodes Peninsula and Westlakes cinemas). The Rhodes Peninsula and
Westlakes cinemas are currently scheduled to open in the fourth
quarter 2004. During the second quarter of 2004, we entered into
four separate agreements which, together, provide for the
acquisition of six existing New Zealand cinemas, representing 27
screens, and in the case of three of these cinemas, the fee
interests underlying such cinemas. The cinemas are being acquired
for an aggregate purchase price of NZ$10.4 million, representing a
multiple of approximately 5 times projected cash flow. The fee
interests are being acquired for an aggregate purchase price of
NZ$11.0 million, representing a cap rate of approximately 9%. The
agreements are subject to a number of conditions, including
satisfactory completion of due diligence. The Due Diligence period
is scheduled to expire on August 10, and we currently anticipate
that the transactions will close prior to the end of August. The
acquisitions are consistent with our plan to expand our cinema
operations in Australia and New Zealand. Upon the closing of the
acquisitions, we will own directly 7 cinemas representing 37
screens and own indirectly through our Berkeley joint venture an
additional 21 screens in 4 cinemas in New Zealand. Two of the newly
acquired cinemas have the capacity for 4 additional screens, and
our Berkeley joint venture will open this December an additional
8-screen state-of-the-art multiplex in the Auckland area.
Completion of these expansion screens and this additional cinema
will increase our New Zealand screen count to 70 screens in 12
cinemas. It is anticipated that substantially all of the
acquisition costs of these cinemas and fee interests will be
financed through New Zealand based bank financing. During the
second quarter of 2004, the Company entered into a letter of intent
with a possible purchaser of the Company's cinemas in Puerto Rico
specifying a sale price of approximately $6.5 million. These assets
are currently carried on our books at $2.2 million. On August 4,
2004, we agreed to an extension of the due diligence period through
August 25, 2004, in order to provide the Buyer with additional time
to negotiate lease assignment terms with one of the Company's
landlords. The sale of these cinemas remains subject to due
diligence and the negotiation and execution of definitive
transactional documents. Accordingly, no assurances can be given
that the letter of intent will eventually result in a sale of the
Company's cinemas in Puerto Rico. On August 4, 2004, we entered
into an agreement to purchase for $12 million the approximately
7,840 square-foot fee interest underlying our current leasehold
estate in the Cinemas 1, 2 & 3 property located in Manhattan on
3rd Avenue between 58th Street and 59th Street. The ownership of
the Cinemas 1, 2 & 3 property is currently divided into three
ownerships: the fee interest (which we now have under contract to
purchase), the ground lease and improvements, (which are owned by
Sutton Hill Capital LLC but which we, as described in our Annual
Report on Form 10-K, have an option to purchase as a part of a pool
of assets in 2010), and our current space lease which also runs
until 2010. This fee interest is being acquired consistent with our
business philosophy of owning, where feasible, the fee interests
underlying our various cinema and theater properties. In
consideration of Sutton Hill Capital's agreement to sell its
interest in the ground lease and improvements to us outside of the
aforementioned option to purchase, we will grant them an option to
acquire a 25% membership interest in the LLC set up to acquire the
fee interest in the Cinemas property. On June 10, 2004, we were
advised by the purchaser of our Sutton Cinema complex on 57th
Street in Manhattan that they intend to pre-pay the $13 million
purchase money promissory note issued to us in connection with our
sale of our interest in that property last year. On August 2, 2004,
we received a notice from the purchaser triggering a 30-day review
period with regards to our potential investment in the
redevelopment of that property. We are currently reviewing whether
or not to exercise our option to acquire at cost up to a 25%
interest in the mixed use retail and residential condominium
redevelopment currently planned for that property, or to accept, in
lieu of that option, $650,000. Exercise of the option to acquire a
25% interest would require an investment of approximately $2.2
million. Russell 3000(R) Index On July 1, 2003 Reading
International, Inc. joined the Russell 3000(R) Index. Annual
reconstitution of the Russell indexes captures the 3,000 largest
U.S. stocks as of the end of May, ranking them by total market
capitalization to create the Russell 3000(R). The largest 1,000
companies in the ranking comprise the Russell 1000(R) Index while
the remaining 2,000 companies become the widely used Russell
2000(R) Index. On July 1, 2004, Reading International, Inc. was
reaffirmed as a member of the Russell 2000(R) Index for the 2004/5
year. About Reading International, Inc. Reading International is in
the business of owning and operating cinemas and live theaters and
developing, owning and operating real estate assets. Our business
consists primarily of: * the development, ownership and operation
of cinemas in the United States, Australia, New Zealand, and Puerto
Rico; * the ownership and operation of "Off Broadway" style live
theaters in Manhattan and Chicago; and * the development, ownership
and operation of commercial real estate in Australia, New Zealand
and the United States, including entertainment themed retail
centers ("ETRC") in Australia and New Zealand. Reading manages its
worldwide cinema business under various different brands: * in the
United States, under the -- Reading brand, -- Angelika Film Center
brand (http://angelikafilmcenter.com/), and -- City Cinemas brand
(http://citycinemas.moviefone.com/); * in Australia, under the
Reading brand 1 (http://www.readingcinemas.com.au/), * in New
Zealand, under the -- Reading (http://www.readingcinemas.co.nz/)
and -- Berkeley Cinemas (http://www.berkeleycinemas.co.nz/) brands,
-- and in Puerto Rico, under the CineVista brand. Statements in
this release about the Company's future financial performance,
customer relationships, initiatives to develop new ETRC's and
cinemas and the market potential for entertainment services are
forward-looking statements and are subject to risks and
uncertainties that could cause actual results to differ materially
from expectations. Factors that could impact Reading
International's future results include changes in demand and market
growth rates, the availability of film and live theater product,
the effect of competition, pricing pressures, exchange rate
fluctuations and the viability and market acceptance of new
developments. Although the Company believes the expectations
reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its
expectations will be attained. The Company undertakes no obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. More
information about Reading International's risks is available in the
Company's annual report on Form 10-K and other filings made from
time to time with the Securities and Exchange Commission. For more
information, contact: Andrzej Matyczynski, Chief Financial Officer
Reading International, Inc. (213) 235 2240 (1) The Company defines
EBITDA as net income (loss) before net interest expense, income tax
benefit, depreciation, and amortization. EBITDA is presented solely
as a supplemental disclosure as management believes it to be a
relevant and useful measure to compare operating results among its
properties and competitors, as well as a measurement tool for
evaluation of operating personnel. EBITDA is not a measure of
financial performance under the promulgations of generally accepted
accounting principles ('GAAP'). EBITDA should not be considered in
isolation from, or as a substitute for, net loss, operating loss or
cash flows from operations determined in accordance with GAAP.
Finally, EBITDA is not calculated in the same manner by all
companies and accordingly, may not be an appropriate measure for
comparing performance amongst different companies. See the
'Supplemental Data' table attached for a reconciliation of EBITDA
to net income (loss). Reading International, Inc. and Subsidiaries
Supplemental Data Reconciliation of EBITDA to Net Loss (Unaudited)
(dollars in thousands, except per share amounts) Statements of
Three Months Ended Six Months Ended Operations June 30, June 30,
2004 2003 2004 2003 Revenue $25,066 $23,285 $48,404 $45,255
Operating expense Cinema/live theater /real estate 19,563 17,950
37,916 35,012 Depreciation and amortization 2,916 2,460 5,957 4,957
General and administrative 3,662 3,162 7,171 6,650 Operating loss
(1,075) (287) (2,640) (1,364) Interest expense, net 812 807 1,505
1,587 Other income (1,562) (3,037) (2,753) (2,905) Income tax
provision 134 456 435 285 Minority interest 125 69 110 196 Net
(loss) income $(584) $1,418 $(1,937) $(527) Basic and diluted
(loss) earnings per share $(0.03) $0.06 $(0.09) $(0.02) EBITDA*
3,278 5,141 5,960 6,302 EBITDA change (1,863) (342) * EBITDA
presented above is net (loss) income adjusted for interest expense
(net of interest income), income tax benefit, and depreciation and
amortization expense. Reconciliation of EBITDA to the net (loss)
income is presented below: Three Months Ended Six Months Ended June
30, June 30, 2004 2003 2004 2003 Net (loss) income $(584) $1,418
$(1,937) $(527) Less: Interest expense, net 812 807 1,505 1,587
Add: Income tax provision 134 456 435 285 Less: Depreciation and
amortization 2,916 2,460 5,957 4,957 EBITDA $3,278 $5,141 $5,960
$6,302 Reading International, Inc. and Subsidiaries Condensed
Consolidated Statements of Operations (Unaudited) (dollars in
thousands, except per share amounts) Three Months Ended Six Months
Ended June 30, June 30, 2004 2003 2004 2003 Revenue Cinema $21,336
$20,042 $41,012 $39,077 Live Theater 1,053 1,281 1,878 2,359
Rental/real estate 2,677 1,962 5,514 3,819 25,066 23,285 48,404
45,255 Operating expense Cinema 17,558 15,958 34,117 31,283 Live
Theater 640 681 1,167 1,294 Rental/real estate 1,365 1,311 2,632
2,435 Depreciation and amortization 2,916 2,460 5,957 4,957 General
and administrative 3,662 3,162 7,171 6,650 26,141 23,572 51,044
46,619 Operating loss (1,075) (287) (2,640) (1,364) Non-operating
(income) expense Interest income (259) (290) (595) (429) Interest
expense 1,071 1,097 2,100 2,016 Other income (1,562) (3,037)
(2,753) (2,905) (Loss) income before income taxes and minority
interest (325) 1,943 (1,392) (46) Income tax provision 134 456 435
285 (Loss) income before minority interest (459) 1,487 (1,827)
(331) Minority interest expense 125 69 110 196 Net (loss) income
(584) 1,418 (1,937) (527) Basic (loss) earnings per share $(0.03)
$0.06 $(0.09) $(0.02) Weighted average number of shares outstanding
-- basic 21,899,290 21,821,142 21,899,290 21,821,142 Diluted (loss)
earnings per share $(0.03) $0.06 $(0.09) $(0.02) Weighted average
number of shares outstanding -- diluted 21,899,290 22,192,569
21,899,290 21,821,142 Reading International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (dollars in thousands)
(Unaudited) June 30, December 31, 2004 2003 ASSETS Cash and cash
equivalents $14,346 $21,735 Note receivable 13,000 -- Investment in
marketable securities 35 85 Receivables 5,331 4,787 Inventory 633
518 Restricted cash 1,325 456 Prepaid and other current assets
3,491 2,612 Total current assets 38,161 30,193 Rental property, net
7,656 7,916 Property and equipment, net 114,839 119,439 Property
held for development 24,403 26,396 Investment in joint ventures
4,834 4,482 Note receivable -- 13,000 Capitalized leasing costs,
net 366 411 Intangible assets, net 11,687 12,248 Goodwill, net
5,070 5,090 Other noncurrent assets 3,582 3,691 Total assets
$210,598 $222,866 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities
Accounts payable $14,119 $13,222 Film rent payable 4,111 4,489
Notes payable -- current portion 15,185 1,930 Income taxes payable
6,885 7,046 Deferred revenue 1,294 1,561 Other current liabilities
1,215 1,148 Total current liabilities 42,809 29,396 Notes payable
-- long-term portion 53,691 69,215 Deferred real estate revenue 760
1,143 Other noncurrent liabilities 10,416 10,133 Total liabilities
107,676 109,887 Commitments and contingencies -- -- Minority
interest in consolidated affiliates 4,167 4,488 Stockholders'
equity Class A Nonvoting Common Stock, par value $0.01, 100,000,000
shares authorized, 33,908,310 issued and 19,916,876 shares
outstanding at June 30, 2004 and December 31, 2003, respectively
199 199 Class B Voting Common Stock, par value $0.01, 20,000,000
shares authorized, 1,982,414 shares issued and outstanding at June
30, 2004 and December 31, 2003, respectively 20 20 Nonvoting
Preferred Stock, par value $0.01, 12,000 shares authorized -- --
Additional paid-in capital 123,516 123,516 Accumulated deficit
(48,377) (46,440) Accumulated other comprehensive income 23,397
31,196 Total stockholders' equity 98,755 108,491 Total liabilities
and stockholders' equity $210,598 $222,866
http://www.newscom.com/cgi-bin/prnh/20030403/LATH058LOGO
http://photoarchive.ap.org/ DATASOURCE: Reading International Inc.
CONTACT: Andrzej Matyczynski, Chief Financial Officer of Reading
International, Inc., +1-213-235-2240 Web site:
http://http//angelikafilmcenter.com Web site:
http://http//citycinemas.moviefone.com Web site:
http://http//www.readingcinemas.com.au Web site:
http://http//www.readingcinemas.co.nz Web site:
http://http//www.berkeleycinemas.co.nz
Copyright