Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)
INDEX Page
Our Business 32
Results of Operations 37
Liquidity and Capital Resources 45
Contractual Obligations, Commitments and Contingencies 47
Financial Risk Management 48
Critical Accounting Estimates 48
OUR BUSINESS
Where have we been, and where we are going.
We have discussed in some detail under the heading “Business Description” in Part I of this Report our views as to the historic impact of the COVID-19 pandemic, the 2023 Hollywood strikes, spiking and then sustained increases in interest rates and certain labor laws on our business and, while not repeating that disclosure here, we incorporate that more detailed discussion by reference to provide context and background. Our discussion below is intended to be more summary in nature.
Rising Interest Rates and Operating Costs
Between March 2022 and July 2023, the Federal Reserve raised the Federal Funds interest rates from 0.25% to 5.5%, the fastest hike in U.S. modern history. This significantly increased our interest expenses, further straining our liquidity. Although subsequent rate cuts from late 2024 through end of 2025 provided some relief, the higher interest rates continue to impact our business. Our average cost of borrowing has increased from 4.0% in 2019 to 7.8% in 2025.
Legislative changes following the pandemic have contributed to higher labor related costs, including wages, leave requirements, and compliance obligations, while increases in the cost of goods, utilities, and insurance have added further expense pressure. In response, we continue to emphasize operating efficiency and make measured adjustments to ticket and food and beverage pricing intended to manage costs without materially affecting customer demand. In addition, an increasingly active litigation environment in the United States, including class action claims related to internet privacy and business practice regulations, has created additional pressure on earnings and cash flow, with certain claims asserting interpretations of these laws that we believe extend beyond their original legislative intent.
Strategic Measures and Financial Adjustments
To mitigate financial pressures and enhance liquidity, we have undertaken several initiatives:
1.Asset Monetization: Between 2021 and 2025, we sold nine real estate assets, generating $197.5 million in net proceeds. These proceeds helped pay down $99.9 million in debt, and fund $32.4 million capital improvements, while also helping us sustain our operations.
2.Cinema Closures and Lease Adjustments: We have closed underperforming cinemas, where possible, including one in the U.S. in 2022, four in 2023 (three in the U.S. and one in New Zealand), one in the U.S. in 2024 and two in 2025 (one in the U.S. and one in New Zealand). Additionally, we have renegotiated leases to reduce occupancy costs, received deferrals or abatements, or shift to percentage-based rent agreements.
3.Administrative Cost-Saving Measures: We streamlined operations by selling our administrative office in Culver City, California, freeing up $1.3 million in cash and saving an estimated $2 million in operating costs for year 2025. We have reduced our non-segment administrative expense from $15.5 million in 2024 to $14.4 million in 2025.
4.Food & Beverage Innovations: In 2024, our global cinema divisions achieved record-high F&B sales per capita. In 2025, beer and wine are available in all U.S. locations, with liquor licenses secured at most locations in Australia and New Zealand. The introduction of mobile ticketing and F&B apps has assisted in generating additional revenue while reducing staffing needs.
5.Deferrals of Capital Improvements: We have generally constrained capital investment in the refurbishment of our cinemas and have only built out 5 cinemas over the past 5 years. This has, however, likely adversely impacted revenues at some of our cinemas to the extent that they are in competition with more recently updated or renovated offerings.
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6.Ongoing Liquidity Management: We continue to evaluate our assets for any future monetization that may be needed, focusing on non-core real estate assets that would not, without material capital commitments, in our view offer long-term growth opportunities for our stockholders, and we will continue to close underperforming cinemas at the end of their lease terms or by negotiation. While the exact proceeds from future asset dispositions and the extent that they will ultimately be needed are uncertain, we remain confident in our ability to meet liquidity needs for 2026 and 2027.
Real Estate Operations
Since the beginning of the pandemic, we have monetized many of our Australia and New Zealand real estate assets using the net proceeds principally to paydown debt and to support our operations and materially reduced our real estate activities. As of the end of 2025, we had two ETCs (Newmarket Village and The Belmont Common) and two office buildings in Australia. These properties are, in essence, fully leased. While one of our properties in New Zealand has a third-party tenant occupying a portion of the property (the remainder being occupied by a Reading Cinema), the remaining two properties have Reading Cinemas as their sole tenants. With regard to the United States, the first floor, second floor and cellar of our architectural award winning 44 Union Square redevelopment project in New York City, are leased on a long term basis to Petco Health and Wellness Company (“Petco”). We believe that the commercial leasing market in the Midtown South sub-market has improved, and we have retained Newmark Retail LLC, as our exclusive leasing broker for that property. Our other improved NYC fee properties are tenanted by us.
Historically we have held our Cinemas 1,2,3 property for long term redevelopment. However, in light of market conditions and our need to pay down debt and enhance our liquidity, in Q1 2026, we have retained Newmark & Company Real Estate, Inc. to monetize that property. In the fourth quarter of 2025, we acquired as a part of a larger transaction the 25% interest in that property that we did not previously own. We have also listed for sale our Newbury Yard rail yard property in Williamsport, Pennsylvania. We are not currently involved in any real estate development activity other than the lease up of those portions of our 44 Union Square property not leased by Petco and our work with respect to the Reading Viaduct and associated properties.
In those cases where we have sold real estate in Australia and New Zealand that is improved (in whole or in part) with a cinema, we have retained a lease of that cinema, the terms of which have varied from site to site. Those cinemas all continue to operate profitably.
Looking Ahead
We anticipate continued improvements in cinema operations as audience levels continue to rebound. Looking ahead, anticipated releases such as The Super Mario Galaxy Movie, Michael, The Devil Wears Prada 2, Toy Story 5, Supergirl, Minions 3, Moana, The Odyssey, Spider Man: Brand New Day, The Cat in the Hat, Avengers: Doomsday, and Dune: Part Three, which are expected to contribute to overall increased theatrical activity.
At the same time, we remain focused on adjusting our operating approach in response to changing market conditions. This includes disciplined capital allocation, ongoing cost management efforts, and initiatives designed to strengthen audience engagement. Together, these actions are intended to support our Company’s ability to operate effectively within an evolving entertainment landscape over the longer term.
Additional details regarding expectations and initiatives for 2026 and subsequent periods are provided below.
RECENT DEVELOPMENTS
Recent developments in our two business segments are discussed below. For an overview of our two business segments, including a breakdown of assets that we own and/or manage, please see Part I, Item 1 – Our Business of this 2025 Form 10-K.
Cinema Exhibition
Key Performance Indicators
Food and Beverage Spend Per Patron
A key performance indicator utilized by management in our cinema segment is food and beverage (“F&B”) Spend Per Patron (“SPP”), which is calculated based on our total F&B Revenues on a post-tax basis divided by our attendance during a specific period.
One of our strategic priorities has been to continue upgrading the food and beverage menu at several of our global cinemas. As of December 31, 2025, we have a total of 37 theater locations with upgraded food and beverage menus (i.e. menus that are beyond traditional popcorn, soda, and candy).
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We use F&B SPP as a measure of our F&B operational performance as compared to that of our competitors. Although the profitability of our F&B operations is influenced by numerous factors, including labor and cost of goods, F&B SPP serves as an indicator of our ability to achieve consistent strong top-line performance. In addition, F&B SPP highlights our ability to optimize revenue by effectively promoting and selling supplementary products to our customers during each visit. Moreover, this metric assists in evaluating how well we can differentiate our F&B offerings from our competitors. Management in turn uses F&B SPP to adjust food and beverage pricing strategies at our individual theaters, measure the effectiveness of promotional marketing initiatives, optimize menu offerings, and to ensure price barriers are not created for our attendance.
Three Months Ended Twelve Months Ended
December 31, December 31,
Average Ticket Price Per Patron
An additional key performance indicator utilized by management in our cinema segment is Average Ticket Price (“ATP”) per patron, which is calculated based on our total box office revenues on a post-tax basis divided by our attendance during a specific period. ATP serves to measure our operational cinema performance when compared to that of our competitors. ATP is a useful metric for evaluating our ability to achieve a strong top line performance. In addition, ATP gauges the effectiveness of our cinemas’ pricing strategies and our ability to draw back audiences to our theaters. Management uses ATP to adjust and inform ticket pricing schemes for our individual theaters, measure the effectiveness of our content programming, and ensure that price barriers are not created for core guests.
Three Months Ended Twelve Months Ended
December 31, December 31,
The key performance indicators used by management in our real estate segment with respect to our properties held for rent (other than our Live Theatres) are net operating income, occupancy factor (the percentage of the net rentable area of our properties that is leased) and average lease duration. Set forth in the table below is a comparison of these indicators for the fourth quarter and twelve months ended December 31, 2025 compared to the corresponding periods in 2024.
Real Estate Key Performance Indicators
Three Months Ended Twelve Months Ended
December 31, December 31,
Occupancy Factor 100% 100% - %age points 100% 100% - %age points
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In the case of our Live Theatres, with respect to key performance indicators, we primarily look to the live theater licensing revenue and ancillary income from the theatres. This is the fixed fee income paid to us as a license fee, plus variable fees for various services (like box office and concessions). The licensee takes all risks of the success or failure of the production. However, due to our ancillary variable revenue, we do better with a well performing show than a poorly performing show or no show at all.
Historically, in the case of our development properties (such as 44 Union Square in New York City) and our various international properties such as Newmarket Village in Australia, we have no specific key performance standards to compare performance from period to period. Rather we continue to analyze budgets and projections and compare actual results to budgeted or projected results from time to time.
Cinema Additions
The additions to our cinema portfolio during 2023-2025 were as follows:
Australia and New Zealand
Busselton, Western Australia, Australia: On September 22, 2023, we opened a five-screen complex in the newly expanded Busselton Central Shopping Centre precinct of Busselton, Western Australia. The state-of-the-art complex features a TITAN LUXE screen, elevated F&B offerings, and recliner seating.
South City Square, Queensland, Australia: On August 24, 2023, we launched our first-ever Angelika Cinemas outside of the United States at South City Square in Woolloongabba, Brisbane. The location currently operates as an eight-screen complex, featuring elevated food and beverage offerings (including alcoholic beverages) and recliner seating.
Armadale, Western Australia, Australia: On January 13, 2023, we took over an existing six-screen cinema in Armadale, Australia, a suburb of Perth in Western Australia.
In addition, in the fourth quarter of 2025, we wound up our long term relationship with Sutton Hill Associates pursuant to a transaction whereby we purchased the 25% non-controlling minority interest in our Cinemas 1,2,3, property that we did not already own and the ground-lessee’s interest in the land and improvements constituting our Village East property, in consideration of our assumption of certain long term (10 years) fixed rate (4.75% per annum) debt owed by Sutton Hill Associates to a third party. That debt has been fair valued by our independent valuation consultant at $7.7 million. This transaction is sometimes referred to in this Report as the “SHA Windup Transaction.”
Cinema Pipeline
On January 31, 2025, we entered into an agreement to lease to fit out and operate under a long term lease our existing 10 screen cinema at the to be redeveloped Courtenay Central in Wellington, New Zealand (the “ATL”). That same day we sold all our Wellington properties, including the existing Courtenay Central to Prime. Under the ATL, Prime is obligated to redevelop Courtenay Central and upgrade it to meet current earthquake standards. We intend to renovate the existing cinema to a “best-in-class” standard.
Our Board has also authorized management to proceed with the negotiation of a lease for a new state-of-the-art cinema, located in Noosa, Queensland, Australia.
On February 9, 2025, we closed one under-performing cinema located in Queenstown, New Zealand upon expiration of that lease.
On April 15, 2025, we closed our underperforming cinema located in San Diego, California, upon termination of that lease.
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Upgrades to our Film Exhibition Technology and Theater Amenities
Prior to COVID-19, we invested in both (i) the upgrading of our existing cinemas and (ii) the development of new cinemas to provide our customers with premium offerings, including state-of-the-art presentation (including sound, lounges, and bar service) and luxury recliner seating. As of December 31, 2025, all of the upgrades to our theater circuits’ film exhibition technology and amenities over the years are as summarized in the following table:
LocationCount ScreenCount
Screen Format
Digital (all cinemas in our theater circuit) 58 469
TITAN XC and LUXE 27 33
Dine-in Service
Gold Lounge (AU/NZ)(1) 11 29
Spotlight (U.S.)(3) 1 6
Upgraded Food & Beverage menu (U.S.)(4) 15 n/a
Premium Seating (features recliner seating) 35 205
Liquor Licenses in Use(5) 49 n/a
(1)Gold Lounge: This is our "First Class Full Dine-in Service" in our Australian and New Zealand cinemas, which includes an upgraded F&B menu (with alcoholic beverages), luxury recliner seating features (intimate 25-50 seat cinemas) and waiter service.
(2)Premium Service: This is our "Business Class Dine-in Service" in our Australian and New Zealand cinemas, which typically includes upgraded F&B menu (some with alcoholic beverages) and may include luxury recliner seating features (less intimate 80-seat cinemas), but no waiter service.
(3)Spotlight Service: Our first dine-in cinema concept in the U.S. at Reading Cinemas in Murrieta, California. Six of our 17 auditoriums at this cinema feature waiter service before the movie begins with a full F&B menu, luxury recliner seating, and laser focus on customer service. Our Spotlight service has been temporarily suspended since the initial COVID-19 shutdown.
(4)Upgraded Food & Beverage Menu: Features an elevated F&B menu including a menu of locally inspired and freshly prepared items that go beyond traditional concessions, which we have worked with former Food Network executives to create. The elevated menu also includes beer, wine and/or spirits at most of our locations.
(5)Liquor Licenses:Licenses are applicable at each cinema location, rather than each cinema auditorium. As of December 31, 2025, 76% of our AU/NZ cinemas are licensed to sell alcohol, no liquor licenses pending in Australia and two liquor licenses pending in New Zealand. All U.S. Cinemas are licensed to sell beer and wine and all, but three, can sell spirits/liquor.
Global Real Estate Developments
44 Union Square Redevelopment (New York, N.Y.) – We have made significant progress in the development of our 44 Union Square property in Manhattan. On January 27, 2022, we entered a long-term lease with Petco for the cellar, ground, and second floors of the building, who is on a full rent cash paying basis.We continue our efforts to find a tenant for the remaining four floors of the building.
Minetta Lane Theatre (New York, N.Y.) – Audible holds its license agreement with us through March 15, 2027 having exercised its a one-year renewal option. Under the agreement, Audible presents plays featuring a limited cast of one or two characters and special live performance engagements on the Audible streaming service. During 2025, we saw a great deal of shows including “The Energy Curfew Music Hour with Chris Thile & Punch Brother”, “Sexual Misconduct of the Middle Classes”, “Creditors”, “Pansy Craze”, “Patton Oswalt: Black Coffee and Ice Water”, “Devon Franklin: Be True”, and “Mexodus”. The wide range of productions exemplify the diversity of programming and ongoing demand for live, high quality theatrical content.
Orpheum Theatre (New York, N.Y.)STOMP closed (after 30 years at our theatre) on January 8, 2023. Under our termination agreement with the producers of STOMP, we have certain rights to provide the New York City venue for any future production of that show. Following STOMP’s historic run at the Orpheum, 2025 saw plays such as “The Jonathan Larson Project” and “Ginger Twinsies”.
Cinemas 1,2,3 Redevelopment (New York, N.Y.) – Currently operated as the Cinemas 123, we have historically treated this property as an asset held for long term development. However, in light of a variety of factors, such as market conditions in Manhattan for real estate assets, cost of capital and demands on our liquidity, subsequent to balance sheet date, we have retained Newmark & Company Real Estate, Inc. to sell that property. We now own 100% of this asset, as we acquired in the fourth quarter of 2025, as a part of the SHA Windup Transaction, the 25% interest that we did not own.
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Australia:
Newmarket Village ETC, (Brisbane, Australia) – We continue to improve our Newmarket Village ETC by adding new tenancies and focused marketing efforts. The site includes a 23,218 square foot parcel adjacent to the center, improved with an office building. Over the next few years, we will be evaluating development options for this space. The combined center and office building is currently 98% leased.
The Belmont Common, (Belmont, Perth, Australia): The total gross leasable area of the Belmont Common is 60,117 Sq ft. Our multiplex cinema is the anchor tenant with six third-party tenants and our Reading Cinemas, the site is currently 100%leased.
Corporate Matters
Board Compensation and Stock Options Committee – Refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements--Note 17 – Share-Based Compensation and Repurchase Plans for details regarding our Board, Executive and Employee stock-based remuneration programs.
OVERALL RESULTS OF OPERATIONS
In this section, we discuss the results of our operations for the year ended December 31, 2025, compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024, compared to the year ended December 31, 2023, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024.
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The following table sets forth the overall results of operations for the three years ended December 31, 2025:
% Change - Favorable/(Unfavorable)
SEGMENT RESULTS
NON-SEGMENT RESULTS
Depreciation and amortization expense (427) — % (387) — % (711) — % (10) % 46 %
Basic earnings (loss) per share $ (0.62) $ (1.58) $ (1.38) 61 % (14) %
CONSOLIDATED RESULTS
2025 vs. 2024
Net Loss attributed to Reading International, Inc. was $14.1 million for the year ended December 31, 2025, an improvement of $21.2 million from a Net Loss of $35.3 million for the year ended December 31, 2024. This improvement was primarily due to (i) an increase in cinema segment operating income and real estate segment operating income (ii) a $3.2 million decrease in interest expense partly due to principal pay down, (iii) a $2.7 million gain on acquisition of noncontrolling interest of Sutton Hills Properties LLC (iv) $8.4 million gain on the sale of assets from the monetization of the Courtenay Central and Cannon Park properties, compared to a loss of $(1.1) million on sale of our Culver City office in the same period prior year and (v) a $1.1 million reduction in G&A expenses, partially offset by $3.7 million increase in other expense.
BUSINESS SEGMENT RESULTS –2025 vs. 2024
Presented below is the comparison of the segment operating income of our two business segments for the years ended December 31, 2025 and 2024, respectively:
2025 2024 % Change Favorable/(Unfavorable)
(Dollars in thousands) Cinema Real Estate Cinema Real Estate Cinema Real Estate
Segment Operating Expenses
Impairment of long-lived assets — — — — - % — %
Breakdown by country:
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A discussion for each segment follows:
Cinema Exhibition – The following table details our Cinema Exhibition segment operating results for the years ended
December 31, 2025 and 2024, respectively:
REVENUE
OPERATING EXPENSE
Cleaning and maintenance (6,670) (7) % (6,664) (7) % 6 — %
DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE
General and administrative expense (1,355) (2) % (1,325) (2) % 30 (2) %
New Zealand Depreciation and amortization $ (432) (4) % $ (458) (3) % (26) 6 %
General and administrative expense (189) (2) % (16) — % 173 (>100) %
OPERATING INCOME (LOSS)
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Cinema Exhibition – The following table details our Cinema Exhibition segment operating results for the quarters ended December 31, 2025 and 2024, respectively:
REVENUE
OPERATING EXPENSE
Other operating expenses (865) (5) % (851) (4) % 14 (2) %
DEPRECIATION, AMORTIZATION, IMPAIRMENT AND GENERAL AND ADMINISTRATIVE EXPENSE
General and administrative expense (464) (2) % (483) (2) % (19) 4 %
Australia Depreciation and amortization $ (909) (5) % $ (1,144) (5) % (235) 21 %
General and administrative expense (269) (1) % (238) (1) % 31 (13) %
New Zealand Depreciation and amortization $ (109) (5) % $ (108) (3) % 1 (1) %
General and administrative expense (47) (2) % (15) — % 32 (>100) %
OPERATING INCOME (LOSS)
Cinema Exhibition Segment Operating Income
Cinema exhibition segment operating income improved by $6.4 million to $3.6 million for the year ended December 31, 2025, compared to the same period in December 31, 2024, primarily driven by an improvement in cinema performance due to lower operating expense globally, lower depreciation, amortization, general and administrative expense in the U.S. and Australia, offset by lower box office revenue in all three countries due to an overall weaker movie slate in 2025, lower concession revenues in Australia and New Zealand, and lower advertising revenues in all three countries.
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Cinema exhibition segment operating income for the fourth quarter of 2025 was $0.9 million, a decrease of $2.9 million from an operating income of $3.8 million in the same time period of 2024 primarily attributable to a weaker movie releases in all three countries.
Revenue
Cinema revenue decreased by $6.5 million, to $188.6 million for the year ended December 31, 2025, compared to 2024 primarily due to a weaker movie slate and cinema closures in US and New Zealand.
The table below is the revenue breakdown, by country, for the years ended December 31, 2025, and 2024, respectively:
Below are the changes in our cinema revenue by market:
In the United States, cinema revenues decreased by $0.5 million, to $99.5 million for the year ended December 31, 2025, compared to 2024.
In Australia, cinema revenues decreased by $4.3 million, to $77.7 million for the year ended December 31, 2025, compared to 2024.
In New Zealand, cinema revenues decreased by $1.8 million, to $11.4 million for the year ended December 31, 2025, compared to 2024.
For the quarter ended December 31, 2025, Cinema segment revenue decreased by $7.7 million against the fourth quarter of 2024, to $46.9 million, which was primarily attributable to a weaker fourth quarter holiday blockbuster film slate in 2025 vs 2024 with the releases of Wicked: For Good, Zootopia 2, Avatar: Fire and Ash, and Frankensteincompared to Q4 2024 and cinema closures in US and New Zealand.
Operating Expense
Operating expense for the full year 2025 decreased by $11.6 million, to $172.4 million when compared to 2024 due to lower film rent in all three countries, lower F&B costs in Australia and New Zealand, along with decreased occupancy expenses in US and New Zealand.
For the quarter ended December 31, 2025, operating expenses decreased by $4.5 million, to $43.1 million when compared to the fourth quarter of 2024 primarily driven by cinema closures in the U.S. and New Zealand.
Depreciation, Amortization, Impairment, General and Administrative Expense
Depreciation, amortization, general and administrative expense for the year-ended December 31, 2025 decreased by $1.3 million, to $12.6 million compared to 2024 primarily driven by cinema closures in the U.S. and New Zealand, and delay in CAPEX spending.
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Real Estate – The following table details our Real Estate segment operating results for the years ended December 31, 2025 and 2024, respectively:
REVENUE
OPERATING EXPENSE
Cleaning and maintenance (198) (3) % (183) (3) % 15 (8) %
Cleaning and maintenance (4) (0) % (44) (3) % (40) 91 %
— — %
DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE
General and administrative expense (76) (1) % (58) (0) % 18 (31) %
General and administrative expense (1) (0) % — — % 1 — %
OPERATING INCOME (LOSS)
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Real Estate – The following table details our Real Estate segment operating results for the quarters ended December 31, 2025 and 2024, respectively:
REVENUE
OPERATING EXPENSE
United States Live theater cost $ (252) (15) % $ (316) (17) % (64) 20 %
Cleaning and maintenance (40) (2) % (68) (4) % (28) 41 %
New Zealand Occupancy expense $ (72) (35) % $ (124) (38) % (52) 42 %
Labor cost — — % (5) (2) % (5) 100 %
Cleaning and maintenance — — % (11) (3) % (11) 100 %
DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE
Australia Depreciation and amortization $ (407) (16) % $ (459) (15) % (52) 11 %
General and administrative expense 45 2 % (6) (0) % (51) >100 %
New Zealand Depreciation and amortization $ (58) (28) % $ (77) (23) % (19) 25 %
General and administrative expense (1) (0) % — — % 1 — %
OPERATING INCOME (LOSS)
Real Estate Segment Operating Income
Real estate segment operating income was $5.9 million for the year ended December 31, 2025, which was an increase of $1.2 million from an operating income of $4.7 million for the year ended December 31, 2024, primarily as a result of (i) increased revenue for the US properties including live theatres, (ii) lower operating expense in Australia and New Zealand from sale of Courtenay Central and Cannon Park properties, and (iii) lower depreciation and amortization expense in all three countries. Partially offset by the decrease of revenue from Australia and New Zealand from sale of Courtenay Central and Cannon Park properties.
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Revenue
The table below is the revenue breakdown by country for each year:
Real estate revenues for the year ended December 31, 2025, decreased by $1.6 million, to $18.4 million compared to 2024. This decrease is attributable to lower property rental income in Australia and New Zealand due to sale of Courtenay Central and Cannon Park properties, partially offset by higher US property revenue and Live Theater rental and ancillary income in the U.S.
NON-SEGMENT RESULTS –2025 vs. 2024
For more information about the legal expense, please refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements--Note 15 – Commitments and Contingencies.
Income Tax Expense
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant tax law changes, including the permanent extension of certain provisions from the Tax Cuts and Jobs Act, modifications to the international tax framework, and the reinstatement of favorable business tax provisions. These include 100% bonus depreciation, immediate expensing of Section 174 domestic research and experimental expenditures, and revised limitations under Section 163(j) on the deductibility of business interest expense. The legislation has multiple effective dates, with certain provisions effective beginning in 2025, and others implemented through 2027. The OBBBA does not have a material effect on the Company's consolidated financial statements for the year ending December 31, 2025.
Income tax expense increased by $0.4 million, to $0.9 million in 2025, when compared to 2024, primarily due to an increase in income tax expense from Australia in 2025.
Please refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements-- Note 12 – Income Taxes for further information.
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LIQUIDITY AND CAPITAL RESOURCES
Our Financing Strategy
In 2025, due primarily to the negative operating conditions caused by the 2023 Hollywood strikes and increased interest rates, as well as the lingering impacts from the COVID-19 pandemic, we (i) conserved our cash and chose to defer non-essential capital expenditures (such as cinema upgrades and refurbishments), (ii) refinanced our existing debt to provide longer maturity dates and eased financial covenants and/or obtained waivers of financial ratio tests, and (iii) monetized two real estate assets and identified certain other assets as candidates for potential monetization to raise additional liquidity. In January 2025, we sold our Courtenay Central properties in New Zealand at a gross sale price of $21.5 million. The proceeds were used to pay off the Westpac mortgage on the property, and to reduce our Bank of America debt. In May 2025, we sold our Cannon Park ETC in Australia at a gross sale price of $20.7 million. The proceeds were used principally to pay off our NAB bridging facility, and to reduce our Bank of America debt.
In May 2025, we extended the maturity of our loan on 44 Union Square to November 6, 2026, with an option to extend further to May 6, 2027. In July 2025, we extended the maturity of our Bank of America/Bank of Hawaii loan to May 18, 2026. We further extended the maturity of our Bank of America/Bank of Hawaii loan to September 18, 2026, in December 2025. In July 2025, we extended the maturity of our loan on our Live Theatre assets in NYC to June 1, 2026. In November 2025, we extended the maturity of our National Australia Bank (“NAB”) loan to July 31, 2030, and modified the principal repayment schedule and extended the maturity of our Valley National Bank Loan to October 1, 2026. In December 2025, we completed the purchase of Sutton Hill Associates, a California general partnership. As a result of that transaction, we acquired the 25% minority interest in our Cinemas 1,2,3 that we did not already own and the ground lessee’s interest in the land and improvements constituting our Village East Theatre, subject to certain indebtedness owed by Sutton Hill Associates to a third party. That indebtedness, at December 30, 2025, had a face amount of $13.6 million, interest payable quarterly at 4.75% per annum with all principals due and payable in a bullet on September 30, 2035. Due to the extended term of the debt and the below market interest rates, at December 30, 2025, we carried that debt at its fair value of $7.7 million. As a result of the transaction, approximately $7.1 million in short term obligations were eliminated in consolidation.
During 2025, our bank loans with Bank of America, and NAB required that our Company comply with certain covenants. We either complied with the underlying bank covenants or obtained waivers from compliance.
During 2024 and 2025, we also worked to restructure our rent payments under various cinema leases. As a result of these negotiations, we have been able to defer rent payments of approximately $11.5 million to be paid out in the next five years.
We have set as a goal for 2026 to substantially reduce our secured U.S. bank debt. Accordingly, we have classified as an asset held for sale our Newbury Yard rail yard in Williamsport, Pennsylvania and in February 2026, we retained Newmark & Company Real Estate, Inc to monetize our Cinemas 1,2,3 property in Manhattan. While no assurances can be given, we believe it reasonable to assume that these assets can be monetized before the end of the third quarter of this year.
Generally speaking, we believe our relationship with our landlords and lenders is good.
For more information about our borrowings, including loan modifications and modifications to waivers of certain covenants, please refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 2 – Liquidity, and Note 13 – Borrowings.
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The table below presents the changes in our total available resources (cash and borrowings), debt-to-equity ratio, working capital, and other relevant information addressing our liquidity for the last five years:
Total Resources (cash and borrowings)
Unrestricted capacity — — — — —
Debt-to-Equity Ratio
Changes in Working Capital
(1)This relates to the construction facilities specifically negotiated for 44 Union Square redevelopment project.
(2)Typically, our working capital is reported as a deficit, as we receive revenue from our cinema business ahead of the time that we have to pay our associated liabilities. We use the money we receive to pay down our borrowings in the first instance.
We endeavor to manage our cash, investments, and capital structure to meet the short-term and long-term obligations of our business, while maintaining financial flexibility and liquidity. We forecast, analyze, and monitor our cash flows to enable investment and financing within the overall constraints of our financial strategy. In the past, we used cash generated from operations and other excess cash to the extent not needed for any capital expenditure, to pay down our loans and credit facilities providing us some flexibility on our available loan facilities for future use and thereby, reducing interest charges. To meet our liquidity’s needs, in 2025, we have worked with our lenders to extend the maturity of various loans.
Refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements--Note 13 – Borrowings for further details on our various borrowing arrangements.
On December 31, 2025, our consolidated cash and cash equivalents totaled $10.5 million. Of this amount, $3.3 million, $6.8 million and $0.4 million were held by our U.S., Australian and New Zealand operations, respectively. The funds held in Australia and New Zealand are, under our applicable bank lending arrangement, subject to limitations on their use outside of Australia or New Zealand as applicable. Due to the impact of the COVID-19 pandemic, the lack of U.S. Federal assistance (including funds from the Payroll Protection and Shuttered Venue Programs), the 2023 Hollywood strikes and continuing funding needs in the U.S. we no longer intend to indefinitely reinvest offshore any earnings derived from our Australian and New Zealand operations.
We have historically funded our working capital requirements, capital expenditures and investments in individual properties primarily from a combination of internally generated cash flows and debt. During 2025, the need for such funding for capital expenditures and investments has decreased, as we have deferred to the fullest extent reasonable such expenditures. However, due primarily to the 2023 Hollywood strikes and the increase in interest rates, our operating income is still insufficient to cover our costs and expenses accordingly, our negative working capital has increased over the course of the year. The funding that has been required, has been funded predominantly from cost reductions, bridge facility debt and strategic asset sales and landlord concessions. As noted in the preceding table, we had no unused available unrestricted corporate credit facilities at December 31, 2025.
The change in cash and cash equivalents for the three years ended December 31, 2025 is as follows:
% Change
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Operating Activities
2025 vs. 2024
Cash used in operating activities for the twelve months ended December 31, 2025 decreased by $2.3 million, to cash used of $1.6 million compared to cash used in the same period of prior year of $3.8 million, driven by a decrease in Net operating Loss of $11.5 million, offset by a $9.3 million decrease in net payable primarily due to increase in receivables and a smaller increase in accounts payable and accrued expense plus deferred revenues and other liabilities.
Investing Activities
2025 vs. 2024
Cash provided in investing activities during the twelve months ended December 31, 2025, increased by $33.1 million, to cash provided of $37.1 million from a cash provided of $4.0 million in the same period of prior year. This was due to the proceeds from sale of our Cannon Park property assets in May 2025 and the Wellington property assets in January 2025, compared to the proceeds from the sale of our Culver City office in February 2024.
Financing Activities
2025 vs. 2024
Cash used in financing activities for the twelve months ended December 31, 2025, increased by $38.2 million, from a cash provided of $0.3 million to a cash used of $37.9 million. This was primarily due to the paydowns of our Westpac debt, Bank of America debt and NAB Bridge Facility in 2025 as discussed previously.
CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES
The following table provides information with respect to the future maturities and scheduled principal repayments of our recorded contractual obligations and certain of our commitments and contingencies, either recorded or off-balance sheet, as of December 31, 2025:
Finance leases, including imputed interest — — — — — — —
(1)Information is presented gross of deferred financing costs.
(2)Represents the lease liability of the option associated with the ground lease purchase of the Village East Cinema.
(3)Estimated interest on debt is based on the anticipated loan balances for future periods and current applicable interest rates.
Please refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements--Note 15 – Commitments and Contingencies for more information.
Litigation
We are currently involved in certain legal proceedings and, as required, have accrued estimates of probable and estimable losses for the resolution of these claims, as appropriate.
Please refer to Part I,Item 3 – Legal Proceedings for more information.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements or obligations (including contingent obligations) that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in the financial condition, revenue or expense, results of operations, liquidity, capital expenditures or capital resources.
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FINANCIAL RISK MANAGEMENT
Currency and Interest Rate Risk
Our Company’s objective in managing exposure to foreign currency and interest rate fluctuations is to reduce volatility of earnings and cash flows in order to allow management to focus on core business issues and challenges.
Historically, we have managed our currency exposure by creating, whenever possible, natural hedges in Australia and New Zealand. This involves local country sourcing of goods and services, as well as borrowing in local currencies to match revenues and expenses. We have also historically paid management fees to the U.S. to cover a portion of our domestic overhead. The decrease in the value of the Australian and New Zealand currencies as compared to the U.S. dollar combined with the limitations under our bank loans in Australia and New Zealand to move funds into the U.S., however, have negatively impacted our ability to rely on such funding for ongoing support of our domestic overhead.
Our exposure to interest rate risk arises out of our long-term floating-rate borrowings. To manage the risk, we utilize interest rate derivative contracts to convert certainfloating-rate borrowings into fixed-rate borrowings. It is our Company’s policy to enter into interest rate derivative transactions only to the extent considered necessary to meet its objectives as stated above. Our Company does not enter into these transactions or any other hedging transactions for speculative purposes. We are currently facing additional risk as approximately $114.1 million of our borrowings mature over the next 24 months. We believe it unlikely that we will be able to refinance this debt at their current interest rates in this environment.
Inflation
We continually monitor inflation and the effects of changing prices. Inflation increases the cost of goods and services used. Competitive conditions in many of our markets restrict our ability to recover fully the higher costs of acquired goods and services through price increases. We attempt to mitigate the impact of inflation by implementing continuous process improvement solutions to enhance productivity and efficiency and, as a result, lower costs and operating expenses. Inflation may also adversely impact the rent we pay for our leased cinemas, as many have cost of living adjustment features.
CRITICAL ACCOUNTING ESTIMATES
We believe that the application of the following accounting policies requires significant judgments and estimates in the preparation of our financial results:
Impairment of Long-Lived Assets, Including Goodwill and Intangible Assets
We review long-lived assets, including goodwill and intangibles, for impairment as part of our annual budgeting process, at the beginning of the fourth quarter, and whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable.
(i)Impairment of Long-lived Assets (other than Goodwill and Intangible Assets with indefinite lives) – we evaluate our long-lived assets and finite-lived intangible assets using historical and projected data of cash flows as our primary indicator of potential impairment and we take into consideration the seasonality of our business. If the sum of the estimated, undiscounted future cash flows is less than the carrying amount of the asset, then an impairment is recognized for the amount by which the carrying value of the asset exceeds its estimated fair value based on an appraisal or a discounted cash flow calculation. For certain non-income producing properties or for those assets with no consistent historical or projected cash flows, we obtain appraisals or other evidence to evaluate whether there are impairment indicators for these assets.
No impairment losses were recorded for long-lived assets for the year ended December 31, 2025, 2024 or 2023.
(ii)Impairment of Goodwill and Intangible Assets with indefinite lives –goodwill and intangible assets with indefinite useful lives are not amortized, but instead, tested for impairment at least annually on a reporting unit basis. The impairment evaluation is based on the present value of estimated future cash flows of each reporting unit plus the expected terminal value. There are significant assumptions and estimates used in determining the future cash flows and terminal value. The most significant assumptions include our cost of debt and cost of equity assumptions that comprise the weighted average cost of capital for each reporting unit. Accordingly, actual results could vary materially from such estimates.
No impairment losses were recorded for goodwill and indefinite-lived intangible assets for the years ended December 31, 2025, 2024, or 2023.
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Tax Valuation Allowance and Deferred Taxes
We record our estimated future tax benefits and liabilities arising from the temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss carryforwards. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions about the amount of future federal, state, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income (loss). As of December 31, 2025, we had recorded approximately $72.7 million of deferred tax assets (net of $47 million deferred tax liabilities) related to the temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss carryforwards and tax credit carryforwards. These deferred tax assets were offset by a valuation allowance of $70.1 million resulting in a net deferred tax asset of $2.6 million. The recoverability of deferred tax assets is dependent upon our ability to generate future taxable income.
Recognition of Gift Card Breakage Income
Generally, our revenue recognition is not assessed as an area requiring significant judgment or estimation. Revenues from ticket and food and beverage sales are recognized when the service is provided – that is when the show has commenced, or the food has been provided. Transaction fees from online sales are recorded at the time of the online transaction. In regard to our real estate business, we execute lease contracts for existing tenancies, but revenue is recognized on a straight-line basis over the lease term.
In contrast, recognition of gift card breakage income requires certain estimates and judgements to be made in regarding the pattern of customer behavior at our cinemas. This policy is described in detail in the section Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements-- Note 3 – Summary of Significant Accounting Policies – Accounting Changes.
Contingencies
For loss contingencies, we record any loss contingencies when there is a probable likelihood that the liability has been incurred and the amount of the loss can be reasonably estimated.
For other contingencies,
(i)for recoveries through an insurance claim, we record a recoverable asset (not to exceed the amount of the total losses incurred) only when the collectability of such claim is considered probable. To evaluate the probable collectability of an insurance claim, we consider communications with our insurance company.
(ii)for gain contingencies resulting from legal settlements, we record those settlements in our consolidated statements of operations when cash or other forms of payments are received.
Legal contingencies
From time to time, we are involved with claims and lawsuits arising in the ordinary course of our business that may include contractual obligations, insurance claims, tax claims, employment matters, and anti-trust issues, among other matters. We provide accruals for matters that have probable likelihood of occurrence and can be properly estimated as to their expected negative outcome. We do not record expected gains until the proceeds (either in cash or other forms of payments) are received by us. Please refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements--Note 15 – Commitments and Contingencies for more information on legal matters.
For a summary of our significant accounting policies, including the critical accounting estimates discussed above, see Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements--Note 3.
Item 7A – Quantitative and Qualitative Disclosure about Market Risk
Not Applicable.
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Item 8 – Financial Statements and Supplementary Data
READING INTERNATIONAL, INC.TABLE OF CONTENTS Page
Management’s Report on Internal Control over Financial Reporting 52
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248) 53
Consolidated Balance Sheets as of December 31, 2025 and 2024 55
Notes to Consolidated Financial Statements 60
Note 1 – Description of Business 60
Note 2 – Liquidity 60
Note 3 – Summary of Significant Accounting Policies 61
Note 4 - Segment Reporting 67
Note 5 – Earnings (Loss) Per Share 72
Note 6 – Real Estate Transactions 72
Note 7 – Properties and Equipment 74
Note 8 – Leases 74
Note 9 – Investments in Unconsolidated Joint Ventures 76
Note 10 – Goodwill and Intangible Assets 76
Note 11 – Prepaid and Other Assets 77
Note 12 – Income Taxes 78
Note 13 – Borrowings 81
Note 14 – Pension and Other Liabilities 84
Note 15 – Commitments and Contingencies 86
Note 16 – Noncontrolling Interests 87
Note 17 – Share-based Compensation and Repurchase Plans 88
Note 18 – Accumulated Other Comprehensive Income 90
Note 19 – Fair Value Measurements 91
Note 20 – Hedge Accounting 92
Note 21 – Related Parties 93
Note 22 – Subsequent Events 95
Schedule II – Valuation and Qualifying Accounts 96
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MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Board of Directors and Stockholders
Reading International, Inc.
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with U.S. GAAP. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, our management believes that the Company’s internal control over financial reporting is effective as of December 31, 2025.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Reading International, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Reading International, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Long-Lived Assets
As described further in Note 2 and Note 3 to the financial statements, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be fully recoverable. The impairment evaluation of long-lived assets is an assessment that begins with the Company’s monitoring of indicators of impairment on an asset group basis, which the Company believes is the lowest applicable level for which there are identifiable cash flows. Outside of a change in circumstances that indicate the carrying amount of the asset may not be fully recoverable, the Company reviews long-lived assets for impairment as part of their annual budgeting process, at the beginning of the fourth quarter. When performing the impairment assessments, the Company estimates undiscounted cash flows at the asset group level from continuing use through the remainder of the asset’s useful life. If the estimated undiscounted cash flows are not sufficient to recover the carrying value of the asset, the Company then compares the carrying value of the asset with its estimated fair value. The key uncertainties in the assumptions used in estimating the projected cash flows of the operating properties and operating lease right-of-use assets are those surrounding admissions revenue expectations, growth rates, and discount rates. We identified the impairment of operating properties and operating lease right-of-use assets as a critical audit matter.
The principal considerations for our determination that the valuation of operating properties and operating lease right-of-use assets is a critical audit matter is due to the uncertainties and significant management judgment used to estimate the related undiscounted cash flows. Evaluating management’s estimates required a high degree of auditor judgment and an increased level of effort when
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performing audit procedures to evaluate the reasonableness of management’s cash flow analysis in light of the sensitive nature of the significant assumptions utilized by management.
Our audit procedures related to the valuation considerations for operating properties and operating lease right-of-use assets included the following, among others.
We tested the design and implementation of internal controls relating to management’s identification of triggering events, measurement considerations for long-lived assets, and key inputs and assumptions used in relation to the projected undiscounted cash flows to be generated by asset groups.
The evaluation of assumptions within the impairment consideration models, including future cash flows, growth rates and terminal values were evaluated for management bias. We benchmarked the average historical cash flows generated at the specific theater location level during prior periods not impacted by pandemic concerns or other industry disruptions such as the Hollywood strikes.
On a scope basis we performed independent calculations to test the sensitivity of key assumptions used by management.
We utilized the assistance of our firm’s valuation services group to assist in testing certain scoped assets’ impairment consideration models and in evaluating the reasonableness of significant assumptions utilized within the models.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2011.
Newport Beach, California
March 31, 2026
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READING INTERNATIONAL, INC. and SUBSIDIARIES
Consolidated Balance Sheets as of December 31, 2025 and 2024
(U.S. dollars in thousands, except share information)
December 31,
ASSETS
Current Assets:
Prepaid and other current assets 2,281 2,668
Investment in unconsolidated joint ventures 3,264 3,138
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 52,826 $ 48,651
Derivative financial instruments - current portion 56 —
Operating lease liabilities - current portion 20,081 20,747
Derivative financial instruments - non-current portion — 137
Subordinated debt - non-current portion 27,617 27,394
Operating lease liabilities - non-current portion 162,919 161,702
Commitments and Contingencies
Stockholders’ Equity:
Class B voting common shares, par value $0.01, 20,000,000 shares authorized and
or outstanding shares at December 31, 2025 and 2024 — —
Accumulated other comprehensive income (4,614) (7,173)
Total Reading International, Inc. ("RDI") Stockholders’ Equity (18,239) (4,364)
Noncontrolling Interests 141 (426)
Total Stockholders’ Equity $ (18,098) $ (4,790)
Total Liabilities and Stockholders’ Equity $ 434,929 $ 471,011
The accompanying Notes are an integral part of the Consolidated Financial Statements.
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READING INTERNATIONAL, INC. and SUBSIDIARIES
Consolidated Statements of Operations for the Three Years Ended December 31, 2025
(U.S. dollars in thousands, except share and per share data)
Revenues
Costs and expenses
Gain (loss) on noncontrolling interest acquisition 2,691 — —
Equity earnings of unconsolidated joint ventures 560 (387) 456
Income tax benefit (expense) (853) (481) (590)
Basic earnings (loss) per share $ (0.62) $ (1.58) $ (1.38)
Diluted earnings (loss) per share $ (0.62) $ (1.58) $ (1.38)
The accompanying Notes are an integral part of the Consolidated Financial Statements.
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READING INTERNATIONAL, INC. and SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss) for the Three Years Ended December 31, 2025
(U.S. dollars in thousands)
Foreign currency translation gain (loss) 2,337 (4,544) (290)
Gain (loss) on cash flow hedges 81 (137) (580)
The accompanying Notes are an integral part of the Consolidated Financial Statements.
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READING INTERNATIONAL, INC. and SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity for the Three Years Ended December 31, 2025
(In thousands)
Common Shares Retained Accumulated Reading
Other comprehensive income, net — — — — — — — (716) (716) (1) (717)
Share-based compensation expense — — — — 1,864 — — — 1,864 — 1,864
Other comprehensive income, net — — — — — — — (4,500) (4,500) (9) (4,509)
Share-based compensation expense — — — — 2,356 — — — 2,356 — 2,356
Restricted Stock Units 79 1 — — (7) — — — (6) — (6)
Contributions from noncontrolling stockholders — — — — — — — — — 271 271
Share-based compensation expense — — — — 1,914 — — — 1,914 — 1,914
Distributions to noncontrolling stockholders — — — — — — — — — (56) (56)
The accompanying Notes are an integral part of the Consolidated Financial Statements.
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READING INTERNATIONAL, INC. and SUBSIDIARIES
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2025
(U.S. dollars in thousands)
Operating Activities
Adjustments to reconcile net income to net cash flows from operating activities:
Equity earnings of unconsolidated joint ventures (560) 387 (456)
Distributions of earnings from unconsolidated joint ventures 726 912 465
Gain recognized on foreign currency transactions 2,194 (1,754) 10
Net loss (gain) on acquisition of non-controlling interest (2,691) — —
Amortization of finance leases 41 41 25
Change in net deferred tax assets (1,497) (776) 149
Net changes in operating assets and liabilities:
Payments for accrued pension (683) (683) (683)
Deferred revenue and other liabilities 1,438 2,478 (930)
Net cash provided by (used in) operating activities (1,578) (3,833) (9,735)
Investing Activities
Contributions to unconsolidated joint ventures (58) (91) —
Net cash provided by (used in) investing activities 37,106 3,961 (2,699)
Financing Activities
Repayment of finance lease principal (43) (40) (28)
Proceeds (payments) from stock option exercises (185) (7) (244)
Noncontrolling interest contributions — 271 —
Noncontrolling interest distributions (56) — —
Noncontrolling interest acquisition 29 — —
Net cash provided by (used in) financing activities (37,886) 337 (6,667)
Effect of exchange rate on cash and restricted cash 134 (824) (437)
Cash and cash equivalents and restricted cash consists of:
Supplemental Disclosures
Non-Cash Transactions
Lease make-good accrual $ 32 $ 59 $ 21
Additions to long-term borrowings 13,648 — —
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The accompanying Notes are an integral part of the Consolidated Financial Statements.
READING INTERNATIONAL, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
As of and for Three Years Ended December 31, 2025
________________________________________________________________________________________________________
NOTE 1 – DESCRIPTION OF BUSINESS
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 development, ownership, and operation, of 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.
NOTE 2 – LIQUIDITY
We continue to evaluate the going concern assertion required by ASC 205-40 Going Concern as it relates to our Company. The evaluation of the going concern assertion involves considering whether it is probable that our Company has sufficient resources, as at the issue date of the financial statements, to meet its obligations as they fall due for twelve months following the issue date. Should it be probable that there are not sufficient resources, we must develop plans to overcome that shortfall. We must then determine whether it is probable that our plans will be effectively implemented and will mitigate the consequential going concern substantial doubt.
We have $36.0 million of debt due in twelve months, cash of $10.5 million and negative working capital of $106.8 million. As a result, we have developed a plan to address and overcome the going concern uncertainty. Our plan is informed by current liquidity positions, debt obligations, our beliefs about the marketability of certain real estate properties, our beliefs about the recovery of the global cinema industry, cash flow estimates, known capital and other expenditure requirements and commitments and our current business plan and strategies. Our Company’s business plan - two businesses (real estate and cinema) in three countries (Australia, New Zealand and the U.S.) - has served us well historically and is key to management’s overall evaluation of ASC 205-40 Going Concern.
While we believe that, with an increase in the quantity and quality of films being released to cinemas compared to pre-pandemic levels, patronage and operating revenue levels will improve, we have no control over attendance levels, and no assurances can be given as to the nature of the reception of future movies by the movie-going public.
We are continuing the process of refinancing and/or extending certain loans, as further discussed in Note 13 - Borrowings. On January 31, 2025, we sold our Courtenay Central real estate assets for $21.5 million and repaid our $10.5 million Westpac loan. On February 5, 2025, we repaid $6.1 million of our Bank of America facility, reducing the balance to $8.7 million. On July 3, 2025, we extended the maturity date of this loan to May 18, 2026. On February 26, 2025, we exercised our option to extend our Valley National debt to October 1, 2025. On May 2, 2025, we extended our Emerald Creek Capital loan to November 6, 2026. On May 21, 2025, we sold our Cannon Park property for $20.7 million, and repaid our $12.9 million NAB bridging facility, $970,000 on our NAB Core Facility and $1.5 million on our Bank of America facility. On July 18, 2025, we extended the maturity date of our Santander loan to June 1, 2026. On November 12, 2025, we extended our NAB facility by five years, and on November 13, 2025, we extended our Valley National debt of $19.8 million to October 1, 2026. On December 29, 2025, we extended the maturity date of our Bank of America loan to September 18, 2026.
On December 19, 2025, we purchased Sutton Hill Associates, a California general partnership. As a consequence of that transaction we took on $13.6 million in long term debt owed by Sutton Hill Associates to a third party, and short term payables in the amount of $7.1 million owed to Sutton Hill Capital, LLC, a wholly owned subsidiary of Sutton Hill Associates was eliminated on consolidation. The long term debt is carried on our balance sheet at fair value of $7.6 million, reflecting the fact that the debt has a term maturing on September 30, 2035, with no interim payments of principal, is unsecured and bears interest at 4.75% per annum payable quarterly in arrears.
Moreover, we intend to raise the liquidity necessary for the next twelve months from refinancings and real estate asset monetization. Management has been authorized to pursue such actions where necessary. We believe we have more than sufficient marketable real estate assets that can be monetized on a timely basis and at the values required to meet our funding needs over the next twelve months. After having sold nine property assets with combined net proceeds of $197.5 million since 2021, we have demonstrated our ability to complete real estate asset monetizations. We currently have one property (our Newbury Yard rail yard in Williamsport, Pennsylvania)
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held for sale and in February 2026 retained Newmark & Company Real Estate, Inc. to monetize our Cinemas 1,2,3 property. While no assurances can be given, we anticipate that these assets can be reasonably monetized before the end of our upcoming third quarter.
In conclusion, as of the date of issuance of these financial statements, based on our evaluation of ASC 205-40 Going Concern and the current conditions and events, considered in the aggregate, and our various plans for enhancing liquidity and the extent to which those plans are progressing, we conclude that our plan to raise sufficient liquidity primarily through certain real estate asset monetizations to the extent needed is probable of being implemented to the extent required such that this alleviates the substantial doubt about our Company’s ability to continue as a going concern.
Impairment Considerations
Our Company considers that the events and factors described above continue to constitute impairment indicators under ASC 360 Property, Plant and Equipment. At December 31, 2025, our Company performed a quantitative recoverability test of the carrying values of all its asset groups. Our Company estimated the undiscounted future cash flows expected to result from the use of these asset groups and found that no impairment charge in 2025 was necessary. No impairment charges were recorded in 2023 or 2024. Actual performance against our forecasts is dependent on several variables and conditions and as a result, actual results may materially differ from management’s estimates.
Our Company also considers that the events and factors described above continue to constitute impairment indicators under ASC 350 Intangibles – Goodwill and Other. Our Company performed a quantitative goodwill impairment test and determined that our goodwill was not impaired as of December 31, 2025. The test was performed at a reporting unit level by comparing each reporting unit’s carrying value, including goodwill, to its fair value. The fair value of each reporting unit was assessed using a discounted cash flow model based on the budgetary revisions performed by management. Actual performance against our forecasts is dependent on several variables and conditions and as a result, actual results may materially differ from management’s estimates.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant Accounting Policies
Basis of Consolidation
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).These consolidated financial statements include the accounts of our wholly owned subsidiaries. We have also consolidated the following entities that are not wholly owned for which we have control:
Australia Country Cinemas Pty, Limited, a company in which we own a 75% interest and whose only assets are our leasehold cinema at Dubbo, Australia and our owned cinema at Townsville, Australia; and,
Shadow View Land and Farming, LLC in which we own a 50% controlling membership interest and whose only asset was a 202-acre land parcel in Coachella, California which was sold in March 2021. The company is in the process of winding up.
Our investment interests in certain joint venture arrangements, for which we own between 20% to 50% and for which we have no control over the operations, are accounted for as unconsolidated joint ventures, and hence, recorded in the consolidated financial statements under the equity method. These investment interests include our:
33.3% undivided interest in the unincorporated joint venture that owns the Mt. Gravatt cinema in a suburb of Brisbane, Australia;
50% undivided interest in the unincorporated joint venture that owns Rialto Cinemas in New Zealand.
We consider that we have control over our partially owned subsidiaries and joint venture interests (collectively “investee”) when these conditions exist:
(i)we own a majority of the voting rights or interests of the investee (typically above 50%), or
(ii)in the case when we own less than the majority voting rights or interests, we have the power over the investee when the voting rights or interests are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.
The Company considers all relevant facts and circumstances in assessing whether or not our voting rights in the investee are sufficient to give it power, including:
(i)the size of our voting rights and interests relative to the size and dispersion of holdings of other vote holders;
(ii)potential voting rights and interests held by us;
(iii)rights and interests arising from other contractual arrangements; and,
(iv)any additional other relevant facts.
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All intercompany balances and transactions have been eliminated on the consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Hence, actual results may differ from those estimates. Significant estimates and assumptions include:
(i)projections we make regarding the recoverability and impairment of our assets (including goodwill and intangibles);
(ii)recoverability of our deferred tax asset;
(iii)estimation of our Incremental Borrowing Rate (“IBR”) as relates to the valuation of our right-of-use assets and lease liabilities;
(iv)valuations of our derivative instruments, and;
(v)estimation of gift card and gift certificate breakage where we have concluded that the likelihood of redemption is remote.
Revenue Recognition
(i)Cinema ExhibitionSegment (all net of related taxes):
Sales of Cinema tickets (excluding bulk and advanced ticket sales) and food and beverage (“F&B”) sales – recognized when sold and collected, either in cash or credit card at our theatre locations and through our online selling channels;
Sales of Bulk and Advanced Cinema Ticket Sales – deferred and recognized as revenue when the promised performance or movie that the ticket has been purchased for is shown;
Gift Cards and Gift Certificate Sales – deferred and recognized as revenue when redeemed, except for the breakage portion, as described below;
Breakage Income – recognized for unredeemed cards and certificates using the proportional method, whereby breakage revenue is recognized in proportion to the pattern of rights exercised by the customer when the Company expects that it is probable that a significant revenue reversal would not occur for any estimated breakage amounts. This is based on a breakage ‘experience rate’ which is determined by historical redemption data;
Loyalty Income - a component of revenue from members of our loyalty programs relating to the earning of loyalty rewards is deferred until such a time as members redeem rewards, or until we believe the likelihood of redemption by the member is remote. Deferral is based on the estimated fair value of a loyalty point, the number of member points accumulated, and the likelihood of redemption as determined by historical redemption data, and;
Advertising Revenues – recognized based on contractual arrangements or relevant admissions information, as appropriate, when the related performance obligation is satisfied.
(ii)Real EstateSegment:
Property Rentals –we contractually retain substantially all of the risks and benefits of ownership of our real estate properties and therefore, we account for our tenant leases as operating leases. Accordingly, rental revenue is recognized on a straight-line basis over the lease term; and,
Live Theatre License Fees – we have real property interest in, and license theatre space to third parties for, the presentation of theatrical productions. Revenue is recognized in accordance with the license agreement and is typically recorded on a weekly basis after the performance of a show has occurred.
Cash and Cash Equivalents
We consider all highly liquid investments with original maturities of three months or less at the time of purchase as cash equivalents for which cost approximates fair value. We maintain cash in certain financial institution bank accounts in the United States, Australia, and New Zealand. In the United States, the Federal Deposit Insurance Corporation insures accounts in the amount of $250,000 per depositor, per insured bank, for each account ownership category. At certain of our financial institutions, we have more than $250,000 in deposit and those amounts may not be insured in the event of a bank failure.
Receivables
Our receivables balance is composed primarily of credit card and booking agent receivables, representing the purchase price of tickets, food & beverage items, or coupon books sold at our various businesses. Sales charged on customer credit cards are collected when the credit card transactions are processed. The remaining receivables balance is primarily made up of the net Goods and Service Tax (“GST”) receivable from our Australian and New Zealand taxing authorities, rents receivable from our third-party tenants, and the management fee receivable from the managed cinemas. We have no history of significant bad debt losses but we have established an allowance for accounts that we deem uncollectible.
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Inventory
Inventory is composed of food and beverage items in our theater operations and books and associated stationery items at our State Cinema bookstore, and is stated at the lower of cost (first-in, first-out method) or net realizable value.
Restricted Cash
Restricted cash includes those cash accounts for which the use of funds is restricted by any contract or bank covenant. At December 31, 2025 and 2024, our restricted cash balance was $2.3 million and $2.7 million, respectively.
Derivative Financial Instruments
From time to time, we purchase interest rate derivative instruments to hedge the interest rate risk that results from the variability of certain of our floating-rate borrowings. Our use of derivative transactions is intended to reduce long-term fluctuations in cash flows caused by market movements. Derivative instruments are recorded on the balance sheet at fair value with changes in fair value through interest expense in the Consolidated Statements of Operations or, in the case of accounting hedges, in Other Comprehensive Income and then reclassified into interest expense in the same period(s) during which the hedged transactions affect earnings. The cash flows from interest rate derivatives are classified as cashflows provided by operating activities in the Consolidated Cashflow Statement, as are the hedged transactions. As of December 31, 2025 we had derivative positions designated as accounting hedges of ($56,000). As of December 31, 2024, we had derivative positions designated as accounting hedges of ($137,000).
Operating Properties, net
Our Operating Properties consist of land, buildings and improvements, leasehold improvements, fixtures and equipment, which we use to derive operating income associated with our two business segments, cinema exhibition and real estate. Buildings and improvements, leasehold improvements, fixtures and equipment are initially recorded at the lower of cost or fair market value and depreciated over the useful lives of the related assets. Land is not depreciated. Expenditures relating to renovations, betterments or improvements to existing assets are capitalized if they improve or extend the lives of the respective assets and/or provide long-term future net cash inflows, including the potential for cost savings.
Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are generally as follows:
Building and improvements 15 – 60 years
Theater equipment 7 years
Furniture and fixtures 3 – 10 years
Investment and Development Properties, net
Investment and Development Properties consist of land, buildings and improvements under development, and their associated capitalized interest and other development costs that we are either holding for development, currently developing, or holding for investment appreciation purposes. These properties are initially recorded at the lower of cost or fair market value. Within this category are building and improvement costs directly associated with the development of potential cinemas, or other improvements to real property. In the case of investments in land and the redevelopment of existing improvements, where we have a confirmed capital project we capitalize cost associated with title work, land use matters, and design, engineering and architectural work. As incurred, we expense start-up costs (such as pre-opening cinema advertising and training expense) and other costs not directly related to the acquisition and development of long-term assets. We cease cost capitalization (including interest) on a development property when the property is complete and ready for its intended use, or if activities necessary to get the property ready for its intended use have been substantially curtailed. However, we do not suspend cost capitalization for brief interruptions and interruptions that are externally imposed, such as mandates from governmental authorities.
Impairment of Long-Lived Assets
We review long-lived assets, including goodwill and intangibles, for impairment as part of our annual budgeting process, as of December 31 of each financial year, and whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable.
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We review internal management reports on a monthly basis as well as monitor current competition in film markets for indications of potential impairment.
(i)Impairment of Long-lived Assets (other than Goodwill and Intangible Assets with indefinite lives) – we evaluate our long-lived assets and finite-lived intangible assets using historical and projected data of cash flows as our primary indicator of potential impairment and we take into consideration the seasonality of our business. If the sum of the estimated, undiscounted future cash flows is less than the carrying amount of the asset, then an impairment is recognized for the amount by which the carrying value of the asset exceeds its estimated fair value based on an appraisal or a discounted cash flow calculation. We include all relevant right-of-use assets in our impairment assessments and exclude the related lease liabilities and payments. For certain non-income producing properties or for those assets with no consistent historical or projected cash flows, we obtain appraisals or other evidence to evaluate whether there are impairment indicators for these assets.
No impairment losses were recorded for long-lived and finite-lived intangible assets for the three years ended December 31, 2025, based on historical information and projected cash flow.
(ii)Impairment of Goodwill and Intangible Assets with indefinite lives – goodwill and intangible assets with indefinite useful lives are not amortized, but instead, tested for impairment at least annually on a reporting unit basis. The impairment evaluation is based on the present value of estimated future cash flows of the reporting unit plus the expected terminal value. There are significant assumptions and estimates used in determining the future cash flows and terminal value. The most significant assumptions include our cost of debt and cost of equity assumptions that comprise the weighted average cost of capital for each reporting unit. Accordingly, actual results could vary materially from such estimates.
No impairment losses were recorded for goodwill and indefinite-lived intangible assets for the three years ended December 31, 2025.
For a detailed discussion of our impairment assessments, refer to Note 2 – Liquidity, above.
Variable Interest Entity
The Company enters into relationships or investments with other entities that may be a variable interest entity (“VIE”). A VIE is consolidated in the financial statements if the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
On December 19, 2025, we acquired all of the general partnership interests in Sutton Hill Associates. Sutton Hill Associates is a VIE due to insufficient equity at risk and its reliance on financial support from the Company and the holder of debt owed to a third party, Nationwide Theaters Corp, of which we are the guarantor. As we now hold all of the partnership interests, and all voting rights, we consolidate Sutton Hill Associates and all of its subsidiaries in our financial statements as of December 19, 2025.
Reading International Trust I is a VIE. It is not consolidated in our financial statements because we are not the primary beneficiary. We carry our investment in the Reading International Trust I, recorded under “Other Assets”, using the equity method of accounting because we have the ability to exercise significant influence (but not control) over operating and financial policies of the entity. We eliminate transactions with an equity method entity to the extent of our ownership in such an entity. Accordingly, our share of net income/(loss) of this equity method entity is included in consolidated net income/(loss). We have no implicit or explicit obligation to further fund our investment in Reading International Trust I.
Property Held for Sale
When a property is classified as held for sale, we present the respective assets and liabilities related to the property held for sale separately on the balance sheet and cease to record depreciation and amortization expense. Properties held for sale are reported at the lower of their carrying value or their estimated fair value less the estimated costs to sell. A disposal group may represent a single asset, or multiple assets where a group of assets will be disposed of together as a group in a single transaction. Refer to Note 6 – Real Estate Transactions for details.
Deferred Leasing/Financing Costs
Direct costs incurred in connection with obtaining tenants and or financing are amortized over the respective term of the loan utilizing the effective interest method, or straight-line method if the result is not materially different. In addition, interest on loans with increasing interest rates and scheduled principal pre-payments are also recognized using the effective interest method. Net deferred financing costs are presented as a reduction in the associated debt account (see Note 13 – Borrowings).
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Film Rental Costs
Film rental costs are accrued based on the applicable box office receipts and estimates of the final settlement to the film licensors.
Advertising Expense
We expense our advertising as incurred. The amount of our advertising expense was $1.4 million, $1.7 million, and $1.6 million in 2025, 2024, and 2023, respectively.
Operating Leases
As Lessee
We determine if an arrangement is a lease at inception. Contracts are analyzed in accordance with the criteria set out in ASC 842 to determine if there is a lease present. For contracts that contain an operating lease, we account for the lease component and the non-lease component together as a single component. For contracts that contain a finance lease we account for the lease component and the non-lease component separately in accordance with ASC 842.
Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities, current and non-current, in our consolidated balance sheets. Finance leases are included in operating properties, other current liabilities, and other long-term liabilities in our consolidated balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease payments for our cinema operating leases consist of fixed base rent, and for certain leases, variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our country-specific incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any prepaid lease payments made and excludes lease incentives received. Our leases have remaining lease terms of 1 to 20 years, with certain leases having options to extend to up to a further 45 years. We include in our ROU assets and lease liabilities those options to extend or not to terminate where it is reasonably certain that we will exercise those options. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Subsequent amortization of the right of use asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the term of the lease. A finance lease right-of-use asset is depreciated on a straight-line basis over the lesser of the useful life of the leased asset or the lease term, and interest on each finance lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability.
We have lease agreements with lease and non-lease components, which we do not separate. Non-components, for example property taxes and insurances, are accounted for on an accrual basis. For certain equipment leases, such as cinema equipment, we account for the lease and non-lease components as a single lease component.
As Lessor
As part of our real estate operations, we own certain real estate property in the U.S., Australia and New Zealand which we lease to third parties. These leases vary in length between 1 and 20 years, with certain leases containing options to extend at the behest of the applicable tenants.
Lease revenue is substantially fixed rent. Certain leases include variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics. None of our leases grant any right to the tenant to purchase the underlying asset.
We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term. The lease term includes all non-cancellable periods contracted for within the lease and excludes any option periods which a tenant may hold.
Share-based Compensation
The determination of the compensation cost for our share-based awards (primarily in the form of stock options or restricted stock units) is made at the grant date based on the estimated fair value of the award, and such cost is recognized over the grantee’s requisite service period (which typically equates to our vesting term). Previously recognized compensation cost shall be reversed for any forfeited award to the extent unvested at the time of forfeiture. Refer to Note 17 – Share-based Compensation and Repurchase Plans for further details.
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Treasury Shares
Prior to March 2020, we repurchased our own Class A common shares as part of a publicly announced stock repurchase plan. We account for these repurchases using the cost method and present these as a separate line within the Stockholders’ Equity section in our consolidated balance sheets. Refer to Note 17 – Share-based Compensation and Repurchase Plans for further details of our stock repurchase plan.
Insurance Recoveries and Other Contingency Matters
(i)Loss contingencies – we record any loss contingencies if there is a “probable” likelihood that the liability had been incurred, and the amount of the loss can be reasonably estimated.
(ii)Gain contingencies:
Insurance recoveries – in the event we incur a loss attributable to an impairment of an asset or incurrence of a liability that is recoverable, in whole or in part, through an insurance claim, we record an insurance recoverable (not to exceed the amount of the total losses incurred) only when the collectability of such claim is probable. To evaluate the probable collectability of an insurance claim, we consider communications with third parties (such as with our insurance company), in addition to advice from legal counsel.
Others – other gain contingencies typically result from legal settlements and we record those settlements in income when cash or other forms of payments are received.
Legal costs relating to our litigation matters, whether we are the plaintiff or the defendant, are recorded when incurred. For the years ended December 31, 2025, 2024, and 2023, we recorded gains/(losses) relating to litigation settlements of $nil, $450,000 and ($265,000), respectively.
Currency Translation Policy
The financial statements and transactions of our Australian and New Zealand cinema and real estate operations are recorded in their functional currencies, namely Australian and New Zealand dollars, respectively, and are then translated into U.S. dollars. Assets and liabilities of these operations are denominated in their functional currencies and are then translated at exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rate for the reporting period. Translation adjustments are reported in “Accumulated Other Comprehensive Income,” a component of Stockholders’ Equity.
The carrying values of our Australian and New Zealand assets fluctuate due to changes in the exchange rate between the U.S. dollar and the Australian and New Zealand dollars. Presented in the table below are the currency exchange rates for Australia and New Zealand as of and for the three years ended December 31, 2025:
Spot Rate
Average Rate
Income Taxes
We account for income taxes under an asset and liability approach. Under the asset and liability method, deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled and are classified as noncurrent on the balance sheets in accordance with current U.S. GAAP. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable (refundable) for the period and the change during the period in deferred tax assets and liabilities. The effect of a change in tax rates or law on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative
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evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.
A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.
We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. We record interest and penalties related to income tax matters as part of income tax expense and record the related liabilities in income tax related balance sheet accounts. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which it is determined a change in recognition or measurement is appropriate.
Earnings (Loss) Per Share
The Company presents both basic and diluted earnings (loss) per share amounts. Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to the Company by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is based upon the weighted average number of common and common equivalent shares outstanding during the year, which is calculated using the treasury-stock method for equity-based awards. Common equivalent shares are excluded from the computation of diluted earnings (loss) per share in periods for which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the period are anti-dilutive and, accordingly, are excluded from the calculation.
New Accounting Standards and Accounting Changes
Recently Adopted and Issued Accounting Pronouncements
Adopted:
ASU 2023-07 Segment Reporting: Improvements to Reportable Segment Disclosures
On December 16, 2024, we adopted ASU 2023-07: Segment Reporting: Improvements to Reportable Segment Disclosures. This ASU expands the disclosures required by public entities for reportable segments. Adoption of the ASU has had no material effect on our consolidated financial statements from a recognition and measurement perspective, and has not altered our reportable segments, but has enhanced our disclosure of certain expenses and profitability measurement.
ASU 2023-09 Income Taxes: Improvements to Income Tax Disclosures
Effective year ended December 31, 2025, we adopted ASC 2023-09 Income Taxes: Improvements to Income Tax Disclosures (“ASU 2023-09”). The amendments in ASU 2023-09 require entities to disclose on an annual basis (i) specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold. The amendments also require that entities disclose various information about income taxes paid and (i) income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and (ii) foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. Adoption of the ASU has had no material effect on our consolidated financial statements from a recognition and measurement perspective, but has enhanced our disclosure of certain income tax matters.
Recently Announced:
ASU 2024-03 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures
In November 2024, the FASB issued ASC 2024-03, Income Statement (Subtopic 220-40)—Reporting Comprehensive Income-Expense Disaggregation Disclosures (“ASU 2024-03”). The amendments in ASU 2024-03 require that public business entities disclose additional information about specific expense categories in the notes to financial statements for interim and annual reporting periods. ASU 2024-03 is effective for the Company for the year ended December 31, 2027. The Company is currently evaluating the impact of this new standard on our consolidated financial statements upon adoption.
NOTE 4 – SEGMENT REPORTING
We report information about operating segments in accordance with ASC 280-10 Segment Reporting, which requires financial information to be reported based on the way management organizes segments with a company for making operating decisions and evaluating performance. We have organized our business into two reportable segments, being cinema exhibition and real estate.
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Our cinema exhibition segment aggregates all our cinemas, both leased and owned, across the United States, Australia and New Zealand. Each of our cinemas earns revenue through the sale of movie tickets, food and beverage, screen advertising, theatre rentals, merchandise, gift card and loyalty membership, and other ancillary sales. The segment also earns revenue through service fees related to online ticket sales. Expenses are incurred through film rent, wages and salaries, food and beverage costs, occupancy costs, utilities, and other ancillary costs. We further organize this segment by geography, as while all our cinemas are engaged in substantially the same business activities, each geography is subject to its own unique regulatory and business conditions.
Our real estate segment aggregates all our retail, commercial and live theatre real estate assets across Australia, New Zealand, and the United States. Our retail and commercial real estate assets earn revenue through the leasing or licensing of space to third party tenants.
Our live theatre assets in the United States earn revenue through leasing or licensing space to third party production companies, an activity we consider sufficiently similar to our broader real estate base to support inclusion in our real estate segment. Our live theatre operations also earn revenue by providing front of house and box office services and through concession sale of food and beverage. All of our real estate assets incur expenses from property maintenance, utilities, taxes, and other costs of maintaining real estate and in some cases third party property management.
Each of these segments has discrete and separate financial information and for which operating results are evaluated regularly by our President, Chief Executive Officer and Vice Chair of the Board of Directors, the chief operating decision-maker (“CODM”) of the Company. The CODM is responsible for the allocation of resources to, and the assessment of the performance of, our operating segments. The CODM determines, among other things:
-the execution, renewal or termination of cinema leases
-the execution, renewal or termination of third-party tenant leases
-significant capital expenditures
-internal resource allocation
-operational budgets.
Segment operating income is a key measure of profit or loss used by the CODM to assess segment performance and allocate resources. Segment operating income includes certain amounts charged by our real estate segment to our cinema exhibition segment where a cinema is a tenant of the real estate segment. These charges are eliminated for consolidated financial statement purposes in the consolidated income statement but are presented gross to the CODM.
The tables below summarize the results of operations for each of our business segments, presenting a reconciliation of segment revenue to operating segment income, and the impact of inter-segment transactions.
Operating expense
(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.