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Reading International Announces 1st Quarter 2013 Results

Full release: http://www.businesswire.com/news/home/20130509005307/en/

May 09, 2013 09:00 AM Eastern Daylight Time

Reading International Announces 1st Quarter 2013 Results

LOS ANGELES--(BUSINESS WIRE)--Reading International, Inc. (NASDAQ: RDI) announced today the results for its quarter ended March 31, 2013.

First Quarter 2013 Discussion

Revenue from operations decreased from $62.4 million in the 2012 Quarter to $59.6 million in the same Quarter in 2013, a $2.9 million or a 4.6% decrease.

Cinema segment revenue decreased by $2.6 million or 4.6% primarily due to a decrease in the U.S. and Australian box office admissions of 299,000 related to the quality of film product in 2013 compared to the same period in 2012. This decrease in revenue was offset in part by a 50,000 increase in our New Zealand box office admissions resulting in an increase in revenue of $689,000 primarily related to the reopening of an earthquake damaged New Zealand multiplex in early January 2012. Both the Australian and New Zealand results were affected by changes in the value of the Australian and New Zealand dollars compared to the U.S. dollar.

The top three grossing films for the 2013 Quarter in our worldwide cinema circuit were “Silver Linings Playbook” “Oz Great and Powerful” and “Hobbit: An Unexpected Journey.” These three films accounted for approximately 18.0% of our cinema box office revenue. The comparative top three grossing films for the 2012 Quarter were “The Artist,” “The Hunger Games,” and “Sherlock Holmes: Game of Shadows,” which accounted for approximately 15.4% of our cinema box office revenue.

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Our real estate segment revenue decreased for the 2013 Quarter by $232,000 compared to the same period in 2012 primarily related to a decrease in rental income from our live theatre venues in the U.S. Similar to our cinema revenue, both the Australian and New Zealand real estate revenue results were also affected by changes in the value of the Australian and New Zealand dollars compared to the U.S. dollar in the 2013 period compared to the same period in 2012.

As a percentage of revenue, operating expense was 81.8% of revenue in the 2013 Quarter compared to 78.6% in the 2012 Quarter, primarily related to our revenues decreasing while rent and labor costs remained fixed. Operating expense also increased by $129,000 as a result of the net cost of our digital projection lease in the U.S.

Depreciation expense decreased for the 2013 Quarter by $114,000 or 2.8% compared to the same period in 2012 due to Australian and New Zealand cinema assets coming to the end of their depreciable lives.

For our statement of operations, the Australian quarterly average exchange rates decreased by 1.6% and the New Zealand quarterly average exchange rates increased by 1.9% since the 2012 Quarter both of which had an impact on the individual components of our income statement.

Driven by the above factors, our operating income for the 2013 Quarter decreased by $2.3 million to an operating income of $2.5 million compared to an operating income of $4.8 million in the same quarter last year.

Net interest expense decreased by $1.1 million for the 2013 Quarter compared to the 2012 Quarter. The decrease in interest expense was primarily due to a larger decrease in the fair value of our interest rate swap liabilities in 2013 than that noted for the same period in 2012 and to a decrease in interest rates specifically from our Trust Preferred Securities whose interest rate changed from a fixed rate of 9.22% to a variable rate of 3-month LIBOR plus 4.00% effective May 1, 2012.

For the 2013 Quarter, we recorded $356,000 of other income which consisted primarily of $347,000 in income from unconsolidated entities. For the 2012 Quarter, we recorded $368,000 of other income which consisted primarily of $413,000 in equity earnings from unconsolidated entities and a gain on sale of marketable securities; offset by, a litigation loss associated with one of our former cinema leases.

For the 2013 Quarter, our income tax expense decreased by $736,000 compared to the 2012 Quarter primarily associated with changes to the estimate of the likelihood of realizing our deferred tax assets in our Reading Australia operations.

Net (income) loss attributable to noncontrolling interests changed from an income of $130,000 for the 2012 Quarter to a loss of $4,000 for the 2013 Quarter primarily related to a decrease in the net income from the associated cinemas.

As a result of the above, we reported a net loss of $668,000 for the 2013 Quarter compared to a net loss of $239,000 in the 2012 Quarter.

Our EBITDA(1) at $6.9 million for the 2013 Quarter was $2.5 million or 26.3% lower than the EBITDA(1) for the 2012 Quarter of $9.3 million, driven primarily by the $2.9 million decrease in operating revenues noted above. There were no significant adjustments to EBITDA(1) in either the 2013 Quarter or the 2012 Quarter.

Balance Sheet and Liquidity

Our total assets at March 31, 2013 were $427.4 million compared to $428.6 million at December 31, 2012. The currency exchange rates for Australia and New Zealand as of March 31, 2013 were $1.0409 and $0.8360, respectively, and as of December 31, 2012, these rates were $1.0393 and $0.8267, respectively. As a result, currency had a positive effect on the balance sheet at March 31, 2013 when compared to December 31, 2012.

On March 20, 2013, pursuant to the loan agreement, we extended the term of our US Cinema 1, 2, 3 Term Loan by one year to June 28, 2014 for a renewal fee of $150,000.

As our Liberty Theater Term Loan was due to mature on April 1, 2013, the March 31, 2013 outstanding balance of this debt of $6.4 million is classified as current on our balance sheet. On March 25, 2013, we borrowed an additional $5.0 million on our Bank of America Revolver. On April 1, 2013, we used a portion of the revolver proceeds to partially repay the Liberty Theater Term Loan and we received a forbearance letter from the bank extending the remaining loan’s term date to June 1, 2013 in exchange for a forbearance payment of $20,000. We intend to refinance the remaining balance with similar financing.

Our cash position at March 31, 2013 was $50.8 million. Of the $50.8 million, $27.7 million was in Australia, $16.3 million was in the U.S., and $6.8 million was in New Zealand. As part of our main credit facilities in Australia, New Zealand, and the U.S., we are subject to certain debt covenants which limit the transfer or use of cash outside of the various regional subsidiaries in which the cash is held. As such, at March 31, 2013, we had approximately $15.0 million of cash worldwide that was not restricted by loan covenants.

At March 31, 2013, we had undrawn funds of $10.4 million (AUS$10.0 million) available under our NAB line of credit in Australia, $10.0 million (NZ$12.0 million) available under our New Zealand Corporate Credit facility, and $3.0 million available under our Bank of America revolving loan credit facility in the U.S. Accordingly, we believe that we have sufficient borrowing capacity under our various credit facilities, together with our $50.8 million cash balance, to meet our anticipated short-term working capital requirements.

Our working capital at March 31, 2013 was a negative $16.1 million compared to a negative $21.4 million at December 31, 2012. This decrease in negative working capital resulted primarily from having more cash on hand as a result of current period long-term borrowings.

Stockholders’ equity was $129.7 million at March 31, 2013 compared to $131.0 million at December 31, 2012, primarily related distributions to noncontrolling interests.

Subsequent Events

US Liberty Theaters Term Loans

On March 25, 2013, we borrowed an additional $5.0 million on our Bank of America Revolver. On April 1, 2013, we used $2.3 million of the revolver proceeds to partially repay the Liberty Theater Term Loan and we received a forbearance letter from the bank extending the loan’s term date to June 1, 2013 in exchange for a forbearance payment of $20,000. We intend to refinance the remaining balance with similar financing.

Courtenay Central Shopping Center Expansion

On February 7, 2013, we entered into an agreement with General Distributors Limited, a subsidiary of the publicly listed Australian company Woolworths Limited (ASX: WOW), providing for the construction of a Countdown branded supermarket in our Courtenay Central Shopping Center in Wellington, New Zealand. The Board approval conditions to that agreement were satisfied on April 10, 2013. The agreement contemplates the construction of an approximately 42,000 square foot expansion to be leased to General Distributors Limited and an approximately 10,000 square foot reconfiguring of the existing shopping center. The lease to General Distributors Limited is for an initial term of 20 years, and provides for an initial rent currently projected at approximately $1.4 million (NZ$1.7 million) per annum. The obligations of the parties are subject to a number of conditions, including obtaining various land use approvals and the finalization of plans and construction cost estimates.

About Reading International, Inc.

Reading International (http://www.readingrdi.com) is in the business of owning and operating cinemas and developing, owning and operating real estate assets. Our business consists primarily of:

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

• the development, ownership, and operation of retail and commercial real estate in Australia, New Zealand, and the United States, including entertainment-themed retail centers (“ETRC”) in Australia and New Zealand and live theater assets in Manhattan and Chicago in the United States.


Reading manages its worldwide cinema business under various different brands:

• in the United States, under the

o Reading brand (http://www.readingcinemasus.com),

o Angelika Film Center brand (http://www.angelikafilmcenter.com),

o Consolidated Theatres brand (http://www.consolidatedtheatres.com),

o City Cinemas brand (http://www.citycinemas.com),

o Beekman Theatre brand (http://www.beekmantheatre.com),

o The Paris Theatre brand (http://www.theparistheatre.com), and

o Liberty Theatres brand (http://libertytheatresusa.com/);

• in Australia, under the Reading brand (http://www.readingcinemas.com.au); and

• in New Zealand, under the

o Reading (http://www.readingcinemas.co.nz) and

o Rialto (http://www.rialto.co.nz) brands.

ENDS

© Scoop Media

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