READING INTERNATIONAL INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) (Form 10-K)


This MD&A should be read in conjunction with the accompanying consolidated financial statements included in Part II, Section 8 (Financial Statements and Supplementary Data). The foregoing discussions and analyzes contain certain forward-looking statements. Please see the “Caution Regarding Forward-Looking Statements” included as a preface in Part I, Item 1A – Risk Factors of this 2021 Form 10-K.

         INDEX                                                      Page
           Our Business                                              34
           Recent Developments                                       35
           Results of Operations                                     39
           Business Segment Results - 2021 vs. 2020                  40
           Non-Segment Results - 2021 vs. 2020                       46
           Liquidity and Capital Resources                           48
           Contractual Obligations, Commitments and Contingencies    50
           Financial Risk Management                                 51
           Critical Accounting Estimates                             51


OUR BUSINESS
Impact of the COVID-19 Pandemic
The COVID-19 pandemic has caused considerable economic instability all over the
world, affecting our operations in the United States, Australia, and New
Zealand. The pandemic has caused patrons to lessen their exposure to others by
avoiding our cinemas and retail centers and, in the United States, our live
theatres or other public places where large crowds would be in attendance. In
March of 2020, we temporarily closed all of our Company's cinemas in the United
States, Australia, and New Zealand in accordance with the directions and
recommendations of the relevant local, state and federal authorities. In the
U.S., we also temporarily closed our live theatres.
Although cinema attendances are still below pre-pandemic levels, the industry
has experienced a positive shift in box office results in 2021. The releases of
blockbuster films, such as Spider-Man: No Way Home, Venom: There Will Be
Carnage, and No Time To Die have provided optimism for the cinema industry.
Since the onset of the pandemic, we experienced our first quarter of positive
operating results from our cinema operations in the fourth quarter of 2021.
However, with the emergence of the Delta and Omicron variants, the uncertainty
with the cinema industry has continued.
No cinemas are currently closed due to the Delta or Omicron variant of COVID-19.
As of the date of this 2021 Annual Report, one cinema in the United States and
one cinema in New Zealand are closed due to reasons unrelated to the pandemic.
At the start of the spread of the COVID-19 pandemic, various trading
restrictions, some enforced by the government, affected many of our unrelated
third-party tenants at our ETC's in Australia and New Zealand. Although there
were varied trading restrictions, most of these properties remained open for
business through the COVID-19 crisis. As of the date of this 2021 Annual Report,
all of our tenants are currently open for business at our Australian and New
Zealand properties with continued health and safety measures in place (with the
exception of two tenants in Australia completing new fit outs). Most of the
rentable retail portions of our Courtenay Central location in New Zealand
continue to be closed due to seismic concerns, however, three tenants remain
open and are trading as of the date of this 2021 Annual Report.
We have and will continue to experience into 2022 significant impacts on our
cinema exhibition and real estate businesses. We have and may continue to
experience the negative influence of (i) delayed releases of certain major
motion pictures and (ii) recent announcements from certain major exhibitors
collaborating with certain major studios in agreements to shorten and/or
eliminate the theatrical window.
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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 2021 Form
10-K.
Cinema Exhibition
Key Performance Indicators
A key performance indicator utilized by management is food and beverage Spend
Per Patron ("SPP").
One of our strategic priorities is upgrading the food and beverage menu at a
number of our global cinemas. We use SPP as a measure of our performance as
compared to the performance of our competitors, as well as a measure of the
performance of our food and beverage operations. While ultimately, the
profitability of our food and beverage operations depends on a variety of
factors, including labor cost and cost of goods sold, we think that this
calculation is important to show how well we are doing on a top line basis.
Due to the lower attendances resulting from social distancing requirements,
competition from other entertainment sources, the lack of new and compelling
film product, and the reticence of customers to participate in social gatherings
with third parties, management does not currently believe that a discussion of
Reading's key performance indicators will serve as a useful metric for
stockholders. management intends to resume providing a discussion of our key
performance indicators in future filings.
Cinema Additions
The latest additions to our cinema portfolio over the past three years ended
December 31, 2021 are as follows:
Australia and New Zealand

?Traralgon, Victoria, Australia: At December 15, 2021we opened a new state-of-the-art five-screen reading cinema in Traralgon, Victoria.

?Millers Junction, Victoria, Australia: On June 16, 2021, we opened a new
state-of-the-art six screen Reading Cinemas at the expanded Millers Junction
Village featuring two TITAN LUXE auditoriums with DOLBY ATMOS immersive sound,
luxury recliner seating in all auditoriums, and an enhanced F&B offering.

?Jindalee, Queensland, Australia: On December 22, 2020, we opened a new
state-of-the-art six-screen Reading Cinemas at Jindalee featuring a TITAN LUXE
with DOLBY ATMOS immersive sound, luxury recliner seating in all auditoriums,
and newly curated enhanced food and beverage offering.

?Burwood, Melbourne, Victoria, Australia: On December 5, 2019, we opened a new
state-of-the-art six-screen Reading Cinemas in the Burwood Brickworks shopping
center offering a TITAN LUXE with DOLBY ATMOS immersive sound, enhanced food and
beverage offerings, and full recliner seating in all auditoriums.

?State Cinema, Hobart, Tasmania, Australia: On December 4, 2019, we acquired the
leasehold interest and other operating assets of the iconic State Cinema for
$6.2 million (AU$9.0 million). This leasehold interest features 10 screens, a
roof top cinema and bar, a large café, and a bookstore.

?Lower Hutt, Wellington, New Zealand: To mitigate the ongoing temporary closure
of Reading Cinemas at Courtenay Central, we opened a three-screen cinema that
trades as The Hutt Pop Up by Reading Cinemas in June 2019.

?Devonport, Tasmania, Australia: On January 30, 2019, we purchased the tenant's
interest and other operating assets of a well-established four-screen cinema in
Devonport, Tasmania, Australia, for $1.4 million (AU$1.95 million). We commenced
trading from this new cinema site on January 30, 2019.
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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, 2021, all of
the upgrades to our theater circuits' film exhibition technology and amenities
over the years are as summarized in the following table:
                                                         Location  Screen
                                                          ?Count   ?Count
           Screen Format
           Digital (all cinemas in our theater circuit)     63      515
           IMAX                                             1        1
           TITAN XC and LUXE                                26       32
           Dine-in Service
           Gold Lounge (AU/NZ)(1)                           9        24
           Premium (AU/NZ)(2)                               16       42
           Spotlight (U.S.)(3)                              1        6
           Upgraded Food & Beverage menu (U.S.)(4)          17      n/a
           Premium Seating (features recliner seating)      29      181
           Liquor Licenses in Use(5)                        37      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: "Spotlight" is our first dine-in cinema concept in the
U.S. at Reading Cinemas in Murrieta, California. Six of our 17 auditoriums at
this theater feature waiter service before the movie begins with a full F&B
menu, luxury recliner seating, and laser focus on customer service.
(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 theater auditorium. For accounting purposes, we capitalize the cost of
successfully purchasing or applying for liquor licenses meeting certain
thresholds as an intangible asset due to long-term economic benefits derived on
future sales of alcoholic beverages. As of December 31, 2021, we have pending
applications for additional liquor licenses for eleven theaters in the U.S. and
one in Australia.
United States

?Kahala Mall renovation: In late 2019, we commenced the renovation of our
Consolidated Theatre at the Kahala Mall in Honolulu. The renovation work was
suspended at the end of the first quarter in 2020 as a result of the initial
COVID-19 shutdown. This cinema reopened on November 5, 2021, with the opening of
the Hawaii International Film Festival. The theatre features recliner seating
throughout along with a state-of-the-art kitchen and an elevated F&B menu.

?Kapolei renovation: During the fourth quarter of 2021, we started the renovation of our Consolidated Theater in Kapoleiin West Oahu, Hawaiiwho relaunched the March 3, 2022with eight screens with reclining seats and a renovation of the lobby areas.

As of the date of this Report, we have converted 110 of our 238 U.S. auditoriums
to luxury recliner seating.
Australia and New Zealand

?AU and NZ Renovations: From 2019 to 2021, we improved eight theaters: Harbour
Town, Waurn Ponds, Maitland, West Lakes, Rhodes, Chirnside, and Dandenong in
Australia, and The Palms in New Zealand.
Plans for 2022 and Our Cinema Business
By the end of 2022, we anticipate adding two new cinemas, totaling 13 screens,
to our Australian cinema circuit. South City Square in Brisbane, QLD is an
eight-screen complex, which will operate under the Angelika Film Center brand,
and Busselton in Western Australia is a five-screen Reading Cinema. Both new
cinema complexes are part of broader shopping center developments currently
under construction.
Our focus with respect to new cinemas includes state-of-the-art projection and
sound, luxury recliner seating, enhanced F&B (typically including alcohol
service), and typically at least one major TITAN-type presentation screen. Our
focus is on providing best-in-class services and amenities that will
differentiate us from in-home and mobile viewing options. We believe that a
night at the
                                     - 37 -
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movies should be a special and premium experience and, indeed, that it must be
able to compete with the variety of options being offered to consumers through
other platforms.
During 2022, we will continue to focus on the enhancement of our proprietary
online ticketing capabilities and social media interfaces. These are intended to
enhance the convenience of our offerings and to promote guest affinity with the
experiences and products that we are offering. We will also be focusing on
post-COVID-19 technology improvements and contactless experiences.
Expanding our online capabilities, in the third quarter of 2020 and fourth
quarter of 2021, respectively, we launched the online ordering of a full F&B
menu for our Angelika brand in the U.S. and launched a full F&B menu for our
Reading Cinemas in Australia and New Zealand. In December 2020 and December
2021, respectively, we launched our very own streaming service, Angelika
Anywhere, in the U.S. and Australia, which is curated for film lovers of
independent and foreign film, documentaries, and the more specialized movies
from the major studios.
Real Estate
Strategic Acquisitions

?Exercise of Option to Acquire Ground Lessee's interest in Ground Lease and
Improvements Constituting the Village East Cinema - On August 28, 2019, we
exercised our option to acquire the ground lessee's interest in the ground lease
underlying and the real property assets constituting our Village East Cinema in
Manhattan. The purchase price under the option is $5.9 million. The transaction
is currently scheduled to close on January 1, 2023. See Part II, Item 8 -
Financial Statements and Supplementary Data-Notes to Consolidated Financial
Statements-- Note 12 - Pension and Other Liabilities and Note 21 - Related
Parties for further information.
Strategic Asset Monetizations
United States:
?On March 5, 2021, we monetized our approximately 202-acre raw land holdings in
Coachella, California for $11.0 million (recognizing a gain on sale after costs
to sell of $6.3 million over our $4.4 million net book value). As a 50% member
of Shadow View Land and Farming LLC, the entity that owned the property, our
Company received 50% of the sale proceeds, being $5.3 million. As raw land, this
asset produced no operating income while continuing to generate carrying costs,
such as taxes, insurance, and maintenance.

?On June 30, 2021, we monetized our Royal George Theatre property in Chicago for
$7.1 million. We realized a gain on sale after costs to sell of $5.0 million
over our $1.8 million net book value.

Australia:

?On June 9, 2021, we monetized our Auburn/Redyard Center (including 114,000
square feet of undeveloped land) located in Auburn, New South Wales for $69.6
million (AU$90.0 million). We recognized a gain on sale after costs to sell of
$38.7 million (AU$50.1 million) over our $30.2 million (AU$39.1 million) net
book value. As part of the transaction, we entered into a lease with the
purchaser to continue to operate the cinema at that location.
New Zealand:

?On March 4, 2021, we monetized our two industrial properties adjacent to the
Auckland Airport in Manukau/Wiri in New Zealand, representing 70.4 acres, for
$56.1 million (NZ $77.2 million). We recognized a gain on sale after costs to
sell of $41.0 million (NZ$56.3 million) over our $13.6 million (NZ$18.7 million)
net book value. As raw land, this asset produced no operating income while
continuing to generate carrying costs, such as property taxes, insurance, and
maintenance.

?On August 30, 2021, we monetized our cinema building and land in Invercargill
for $3.8 million (NZ$5.4 million) to the owner of the adjacent shopping center,
which is currently undergoing a major redevelopment. As part of the transaction,
we entered into a lease with the purchaser to continue to operate the cinema at
that location and integrate the existing cinema within that newly redeveloped
shopping center.
                                     - 38 -
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Value-creating Opportunities
The implementation of most of our real estate development plans has been delayed
due to COVID-19 and the need to conserve capital. However, we continue to
believe that our Company's strong real estate asset base will provide (i)
increased financial security through the potential sale of certain non-core real
estate assets or (ii) provide collateral for strategic re-financing, in each
case to meet liquidity demands. We intend to continue to emphasize the prudent
development of our real estate assets.
United States:

?44 Union Square Redevelopment (New York, N.Y.) - Initially, during the COVID-19
pandemic, New York City shut down non-essential construction and businesses,
including construction work at our site. The shutdown has since been lifted. On
August 31, 2020, we received a temporary certificate of occupancy for the core
and shell of the building, which has been continuously renewed pending
construction of tenant improvements.

On January 27, 2022, we entered into a long-term lease with a national retailer
for the lower level, ground floor and second floor of the building. We expect
the tenant to take occupancy in 2022, following the completion of certain work
for which we are responsible. We have retained CBRE as our leasing agent for the
upper floors of the building. Our leasing team continues to pursue potential
tenants to fill the remainder of the space, although no assurances can be given
that we will be able to lease the space on acceptable terms in the near term.

?Sepulveda Office Building (Culver City, C.A.) - On May 27, 2020, we leased on a
multi-year basis the entire second floor of our office building in Culver City,
California (approximately 12,000 usable square feet) to WWP Beauty (wwpinc.com),
a global company with over 35 years of experience providing the cosmetics and
personal care industries with a range of packaging needs. On the date of the
lease, possession of the space was turned over to WWP Beauty, which was
responsible for building out its space. This work was completed in October 2021.

?Minetta Lane Theatre (New York, N.Y.) - Prior to COVID-19, our theatre was used
by Audible, to present plays featuring a limited cast of one or two characters
and special live performance engagements on the Audible streaming service. Due
to COVID-19, no shows were presented between March 2020 and October 8, 2021, the
date on which public performances resumed. In late 2019, we completed an initial
feasibility study for the potential redevelopment of this asset. We will refocus
our efforts on this project at a later date as New York City continues to show
signs of recovery from the impacts of the COVID-19 pandemic. In the interim, we
renewed our license arrangement with Audible which extends through March 15,
2023, with a one-year option to extend held by Audible.

?Cinemas 1,2,3 Redevelopment (New York, N.Y.) - We have received the consent of
the 25% minority member of the ownership entity for the redevelopment of the
property. We continue to evaluate the potential to redevelop the property as a
mixed-use property. As our negotiations with our neighbor for a joint
development did not bear fruit and given the closure of our two cinemas in New
York City's Upper East Side, we have determined to continue to operate this
location as a cinema for at least the near term. All other redevelopment
activity related to this location has been suspended, until we are able to
develop a better understanding of the ongoing effects of COVID-19 on our assets
and the market.
Australia:

?Newmarket Village ETC, (Brisbane, Australia) - We continue to work on the
expansion and upgrading of our Newmarket Village ETC. The site includes a 23,000
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 center is currently 96% leased.

?Cannon Park ETC, (Queensland, Australia) - we acquired two adjoining properties
in Townsville, Queensland, Australia comprising of approximately 9.4-acres in
2015. The total gross leasable area of the Cannon Park City Center and the
Cannon Park Discount Center is 105,000 square feet. Our multiplex cinema is the
anchor tenant at the Cannon Park City Center, which we continue to work on and
improve. This site is currently 87% leased.
                                     - 39 -

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New Zealand:

?Courtenay Central Redevelopment (Wellington, New Zealand) - Damage from the
2016 Kaikoura earthquake necessitated demolition of our nine-story parking
garage at the site, and unrelated seismic issues caused us to close major
portions of the existing cinema and retail structure in early 2019. Prior to the
COVID-19 pandemic, our real estate team had developed a comprehensive plan
featuring a variety of uses to complement and build upon the "destination
quality" of the Courtenay Central location. Notwithstanding the COVID-19
pandemic, our real estate team is continuing to work with our consultants,
tenants, potential tenants, and city representatives to advance our
redevelopment plans for this property. Given the uncertainty surrounding the
COVID-19 pandemic, we have no fixed time frame for the commencement of the
redevelopment of this property. Relatively recent developments, including the
near completion of the future Takina Wellington Convention and Exhibition Center
(wcec.co.nz), the capital's first premium conference and exhibition space, the
loosening of certain height and density restrictions, and the lack of comparable
building sites, have enhanced the value of the assemblage.

For a complete list of our principal properties, see Part I, Item 2 – Properties under the heading “Investment and Development Properties”.

Corporate Affairs

?Stock Repurchase Program - On March 10, 2020, our Board of Directors authorized
a $25.0 million increase to our 2017 stock repurchase program, bringing our
total authorized repurchase amount remaining to $26.0 million, and extended the
program to March 2, 2022. Through December 31, 2021, we had repurchased
1,792,819 shares of Class A Non-Voting Common Stock at an average price of
$13.39 per share (excluding transaction costs). No shares were purchased during
the year ended December 31, 2021. Due to the COVID-19 pandemic and its impact on
our overall liquidity, our stock repurchase program has and will likely continue
to take a lower capital allocation priority for the foreseeable future.

?Board Compensation and Stock Options Committee - Refer to Part II, Item 8 -
Financial Statements and Supplementary Data-Notes to Consolidated Financial
Statements-- Note 15 - 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, 2021 compared to the year ended December 31, 2020. For a discussion
of the year ended December 31, 2020 compared to the year ended December 31,
2019, 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, 2020.
?
                                     - 40 -

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The following table presents the overall operating results for the three years ended December 31, 2021:

                                                                                                         % Change -
                                                                                                         ?Favorable/
                                                                                                       ?(Unfavorable)
                                         % of                     % of                     % of      2021 vs.   2020 vs.

(in thousands of dollars) 2021?Revenue 2020?Revenue

    2019      ?Revenue      2020       2019
SEGMENT RESULTS
Cinema exhibition
operating income (loss)   $ (18,637)      (13) %   $ (45,056)      (58) %   $  23,329         8  %       59 %   (>100) %
Real estate operating
income (loss)                (5,355)       (4) %      (2,463)       (3) %       5,141         2  %   (>100) %   (>100) %
NON-SEGMENT RESULTS
Depreciation and
amortization expense         (1,232)       (1) %        (970)       (1) %        (414)         - %     (27) %   (>100) %
General and
administrative expense      (16,569)      (12) %     (12,824)      (16) %     (18,933)       (7) %     (29) %      32  %
Interest expense, net       (13,688)      (10) %      (9,354)      (12) %      (7,904)       (3) %     (46) %     (18) %
Equity earnings of
unconsolidated joint
ventures                        258          - %        (449)       (1) %         792          - %     >100 %   (>100) %
Gain (loss) on sale of
assets                        92,219       66  %          (1)       (0) %          (2)         - %     >100 %      50  %
Other income (expense)         3,762         3 %         293          - %         325          - %     >100 %     (10) %
Income (loss) before
income taxes                  40,758        29 %     (70,824)      (91) %       2,334         1  %     >100 %   (>100) %
Income tax benefit
(expense)                    (5,944)       (4) %       4,967         6  %     (28,837)      (10) %   (>100) %     >100 %
Net income (loss)             34,814        25 %     (65,857)      (85) %     (26,503)      (10) %     >100 %   (>100) %
Less: Net income (loss)
attributable to
noncontrolling
interests                     2,893         2  %        (657)       (1) %         (74)         - %     >100 %   (>100) %
Net income (loss)
attributable to Reading
International, Inc.       $   31,921        23 %   $ (65,200)      (84) %   $ (26,429)      (10) %     >100 %   (>100) %
Basic earnings (loss)
per share                 $     1.46               $   (3.00)               $   (1.17)                 >100 %   (>100) %


CONSOLIDATED RESULTS
2021 vs. 2020
Net income attributable to Reading International, Inc. increased by
$97.1 million to $31.9 million. This increase was due to (i) $92.2 million of
gains on sales of assets related to the strategic monetization of our Coachella
and Manukau landholdings, Royal George property, Auburn/Redyard Center, and
Invercargill property in 2021 in response to the liquidity needs resulting
primarily from closure of our cinemas due to the COVID-19 pandemic, (ii) an
improvement by $26.4 million in our cinema segment operation results
attributable to lower COVID-19 cases and better film product in 2021, and (iii)
the resolution of an insurance claim related to damage done by the Kaikoura
earthquake.
The increase was offset by a (i) $10.9 million increase in income tax expense to
$5.9 million, due to income tax from the monetization of certain real estate
assets, (ii) $4.3 million increase in interest expense to $13.7 million related
to the completion of our 44 Union Square development, interest prior to
completion having been capitalized, (iii) $3.7 million increase in general and
administrative expense to $16.6 million related to the payment of bonuses in
2021 (no senior management officer bonuses were paid related to years 2019 or
2020), (iv) the establishment of a $4.0 million accrual of the settlement of
certain wage and hour claims, and (v) the non-recurring legal settlement of $0.8
million entered in favor of our Company in the James Cotter Jr. derivative
litigation by the Nevada Supreme Court during the third quarter of 2020.
BUSINESS SEGMENT RESULTS -2021 vs. 2020
Presented below is the comparison of the segment operating income of our two
business segments for the years ended December 31, 2021 and 2020, respectively:
                                                                                                        % Change
                                                                                                       ?Favorable/
                                                2021                          2020                   ?(Unfavorable)
(Dollars in thousands)                 Cinema       Real Estate      Cinema       Real Estate     Cinema    Real Estate
Segment Revenues                     $   126,812   $      12,763   $   67,014    $     12,963       89  %          (2) %
Segment Operating Expenses
Operating Expense                      (123,416)        (10,106)     

(93,180) (8,578) (32)% (18)% Amortization and impairment

           (14,422)         (7,092)      

(15,246) (6,101) 5% (16)% General and administrative expenses (7,611)

           (920)       (3,427)           (747)   (>100) %         (23) %
Impairment of long-lived assets                -               -         (217)               -      100 %            - %
Total segment expenses                 (145,449)        (18,118)     (112,070)        (15,426)     (30) %         (17) %
Segment operating income (loss)      $  (18,637)   $     (5,355)   $  (45,056)   $     (2,463)       59 %       (>100) %
Breakdown by country:
United States                        $  (21,145)   $     (5,083)   $  (39,371)   $     (3,399)       46 %         (50) %
Australia                                  2,054           1,645       (4,267)          2,336      >100 %         (30) %
New Zealand                                 454          (1,917)       (1,418)         (1,400)     >100 %         (37) %
                                     $  (18,637)   $     (5,355)   $  (45,056)   $     (2,463)       59 %       (>100) %



?
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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, 2021 and 2020, respectively:
                                                                                                           2021 vs. 2020
                                                                                                            ?Favorable/
(Dollars in thousands)                           2021       % of Revenue       2020       % of Revenue    ?(Unfavorable)
REVENUE
  United States     Admission revenue         $    33,173           55 %    $    15,593           57 %            >100 %
                    Food & beverage revenue        20,832           35 %          8,245           30 %            >100 %
                    Advertising and other
                    revenue                         5,882           10 %          3,584           13 %              64 %
                                              $    59,887          100 %    $    27,422          100 %            >100 %
  Australia         Admission revenue         $    33,485           61 %    $    20,137           62 %              66 %
                    Food & beverage revenue        17,900           32 %          9,590           29 %              87 %
                    Advertising and other
                    revenue                         3,932            7 %          2,788            9 %              41 %
                                              $    55,317          100 %    $    32,515          100 %              70 %
  New Zealand       Admission revenue         $     7,281           63 %    $     4,569           65 %              59 %
                    Food & beverage revenue         3,641           31 %          2,066           29 %              76 %
                    Advertising and other
                    revenue                           686            6 %            442            6 %              55 %
                                              $    11,608          100 %    $     7,077          100 %              64 %

  Total revenue                               $   126,812          100 %    $    67,014          100 %              89 %

EXPLOITATION CHARGES

                    Film rent and
  United States     advertising cost          $  (17,299)         (29) %    $   (8,183)         (30) %          (>100) %
                    Food & beverage cost          (4,930)          (8) %        (2,519)          (9) %            (96) %
                    Occupancy expense            (21,546)         (36) %       (26,697)         (97) %              19 %
                    Other operating expense      (23,636)         (39) %       (18,631)         (69) %            (27) %
                                              $  (67,411)        (113) %    $  (56,030)        (204) %            (20) %
                    Film rent and
  Australia         advertising cost          $  (14,568)         (26) %    $   (8,605)         (26) %            (69) %
                    Food & beverage cost          (3,989)          (7) %        (2,276)          (7) %            (75) %
                    Occupancy expense            (10,036)         (18) %        (8,484)         (26) %            (18) %
                    Other operating expense      (17,437)         (32) %       (10,705)         (33) %            (63) %
                                              $  (46,030)         (82) %    $  (30,070)         (93) %            (53) %
                    Film rent and
  New Zealand       advertising cost          $   (3,220)         (28) %    $   (1,991)         (28) %            (62) %
                    Food & beverage cost            (737)          (6) %          (432)          (6) %            (71) %
                    Occupancy expense             (1,957)         (17) %        (1,692)         (24) %            (16) %
                    Other operating expense       (4,061)         (35) %        (2,966)         (42) %            (37) %
                                              $   (9,975)         (86) %    $   (7,081)         (99) %            (41) %

  Total operating expense                     $ (123,416)         (97) %    $  (93,181)        (139) %            (32) %
DEPRECIATION, AMORTIZATION, GENERAL AND
ADMINISTRATIVE EXPENSE
                    Depreciation and
  United States     amortization              $   (7,300)         (12) %    $   (8,060)         (29) %               9 %
                    Impairment of
                    long-lived assets                   -            - %          (217)          (1) %          (>100) %
                    General and
                    administrative expense        (6,321)         (11) %        (2,486)          (9) %          (>100) %
                                              $  (13,621)         (23) %    $  (10,763)         (39) %            (27) %
                    Depreciation and
  Australia         amortization              $   (5,943)         (11) %    $   (5,762)         (18) %             (3) %
                    General and
                    administrative expense        (1,290)          (2) %          (950)          (3) %            (36) %
                                              $   (7,233)         (13) %    $   (6,712)         (21) %             (8) %
                    Depreciation and
  New Zealand       amortization              $   (1,179)         (10) %    $   (1,423)         (20) %              17 %
                    General and
                    administrative expense              -            - %              9            - %             100 %
                                              $   (1,179)         (10) %    $   (1,414)         (20) %              17 %

Total depreciation, amortization and

  general and administrative expense          $  (22,033)         (17) %    $  (18,889)         (28) %            (17) %

  Total expenses                              $ (145,449)        (115) %    $ (112,070)        (167) %            (30) %
OPERATING INCOME (LOSS)
  United States                               $  (21,145)         (35) %    $  (39,371)        (144) %              46 %
  Australia                                         2,054            4 %        (4,267)         (13) %            >100 %
  New Zealand                                         454            4 %        (1,418)         (20) %            >100 %
  Total operating income (loss)               $  (18,637)         (15) %    $  (45,056)         (67) %              59 %



?

                                     - 42 -

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Cinema Exhibition - The following table details our Cinema Exhibition segment
operating results for the quarters ended December 31, 2021 and 2020,
respectively:
                                                                                                     2021 vs. 2020
                                                                                                      ?Favorable/
(Dollars in thousands)                      2021       % of Revenue       2020      % of Revenue    ?(Unfavorable)
REVENUE
  United States Admission revenue        $   14,846           57 %     $    1,349           48 %            >100 %
                Food & beverage
                revenue                       8,949           34 %            923           33 %            >100 %
                Advertising and other
                revenue                       2,234            9 %            568           20 %            >100 %
                                         $   26,029          100 %     $    2,840          100 %            >100 %
  Australia     Admission revenue        $   10,605           60 %     $    4,512           60 %            >100 %
                Food & beverage                               32                            30
                revenue                       5,837              %          2,304              %            >100 %
                Advertising and other                          7                            10
                revenue                       1,255              %            757              %              66 %
                                         $   17,697          100 %     $    7,573          100 %            >100 %
  New Zealand   Admission revenue        $    2,173           62 %     $    1,114           64 %              95 %
                Food & beverage                               31                            29
                revenue                       1,102              %            503              %            >100 %
                Advertising and other                          7                             7
                revenue                         231              %            118              %              96 %
                                         $    3,506          100 %     $    1,735          100 %            >100 %

  Total revenue                          $   47,232          100 %     $   12,148          100 %            >100 %
OPERATING EXPENSE
                Film rent and
  United States advertising cost         $  (8,118)         (31) %     $    (727)         (26) %          (>100) %
                Food & beverage cost        (2,086)          (9) %          (339)         (12) %          (>100) %
                Occupancy expense           (5,171)         (20) %        (6,486)        (228) %              20 %
                Other operating
                expense                     (7,721)         (30) %        (3,434)        (121) %          (>100) %
                                         $ (23,096)         (89) %     $ (10,986)        (387) %          (>100) %
                Film rent and
  Australia     advertising cost         $  (5,120)         (29) %     $  (1,877)         (25) %          (>100) %
                Food & beverage cost        (1,316)          (7) %          (601)          (8) %          (>100) %
                Occupancy expense           (2,532)         (14) %        (1,865)         (25) %            (36) %
                Other operating
                expense                     (5,352)         (29) %        (2,436)         (33) %          (>100) %
                                         $ (14,320)         (81) %     $  (6,779)         (90) %          (>100) %
                Film rent and
  New Zealand   advertising cost         $  (1,033)         (29) %     $    (463)         (27) %          (>100) %
                Food & beverage cost          (226)          (6) %          (104)          (6) %          (>100) %
                Occupancy expense             (581)         (17) %          (256)         (15) %          (>100) %
                Other operating
                expense                     (1,289)         (37) %          (872)         (50) %            (48) %
                                         $  (3,129)         (90) %     $  (1,695)         (98) %            (85) %

  Total operating expense                $ (40,545)         (86) %     $ (19,460)        (160) %          (>100) %
DEPRECIATION, AMORTIZATION, IMPAIRMENT
AND GENERAL AND ADMINISTRATIVE EXPENSE
                Depreciation and
  United States amortization             $  (1,862)          (7) %     $  (2,110)         (74) %              12 %
                Impairment of
                long-lived assets                 -            - %          (217)          (5) %             100 %
                General and
                administrative expense        (634)          (2) %          (258)         (10) %          (>100) %
                                         $  (2,496)         (10) %     $  (2,585)         (91) %               3 %
                Depreciation and                                                          (19)
  Australia     amortization             $  (1,500)          (8) %     $  (1,413)              %             (6) %
                General and                                                                (1)
                administrative expense        (389)          (2) %           (96)              %          (>100) %
                                         $  (1,889)         (11) %     $  (1,509)         (20) %            (25) %
                Depreciation and                                                          (19)
  New Zealand   amortization             $    (260)          (7) %     $    (333)              %              22 %
                General and                                                                  -
                administrative expense            -            - %              1              %             100 %
                                         $    (260)          (7) %     $    (332)         (19) %              22 %

Total depreciation, amortization,

  impairment and general and
  administrative expense                 $  (4,645)         (10) %     $  (4,426)         (36) %             (5) %

  Total
  expenses                               $ (45,190)         (96) %     $ (23,886)        (197) %            (89) %
OPERATING INCOME (LOSS)
  United States                          $      437            2 %     $ (10,731)        (378) %            >100 %
  Australia                                   1,488            8 %          (715)          (9) %            >100 %
  New Zealand                                   117            3 %          (292)         (17) %            >100 %
  Total operating income (loss)          $    2,042            4 %     $ (11,738)         (97) %            >100 %


Cinema Exhibition Segment Operating Income
Cinema exhibition segment operating loss decreased by $26.4 million, to a loss
of $18.6 million for the year ended December 31, 2021, compared to December 31,
2020, primarily driven by a significant increase in total revenue. Our cinema
operations experienced fewer mandated closures in 2021 due to the wide
distribution of vaccines. As vaccination rates increased and certain government
imposed restrictions decreased, major movie studios began to release blockbuster
movies, like Spider-Man: No Way Home, Venom: There Will Be Carnage, and Not Time
to Die.
Since the onset of the pandemic, we experienced our first quarter of positive
operating results for our cinema segment. Thanks to the major blockbuster films,
like Spider-Man: No Way Home and Eternals, cinema exhibition segment operating
income improved from a loss of $11.7 million to income of $2.0 million for the
quarter ended December 31, 2021, compared to December 31, 2020. Due to the
mandatory closures related to COVID-19 during the fourth quarter of 2020, our
cinemas experienced a reduction in the number of operational days, which
impacted our admissions revenue significantly in 2020.
                                     - 43 -

————————————————– ——————————

Income

Cinema revenue increased by $59.8 million, to $126.8 million for the year ended
December 31, 2021, compared to 2020. Our cinema circuit experienced a higher
number of days in operation in 2021 when compared to the same period in the
prior year. Higher vaccination rates led to fewer mandated closures despite the
presence of the Delta and Omicron variants. As a result, major studios began to
release more film product.
The table below is the revenue breakdown, by country, for the years ended
December 31, 2021 and 2020, respectively:
                                                                     2021 vs. 2020
                                     % of                  % of       ?Favorable/
(Dollars in thousands)    2021     ?Revenue     2020     ?Revenue    ?(Unfavorable)
United States           $  59,887     47  %   $ 27,422       41  %          >100 %
Australia                  55,317     44  %     32,515       49  %           70  %
New Zealand                11,608       9 %      7,077       11  %           64  %
Total Segment Revenues  $ 126,812     100 %   $ 67,014      100  %           89  %

Here is the evolution of our cinema revenues by market:

?In United Statescinema revenues increased by $32.5 millionfor $59.9 million for the year ended December 31, 2021compared to 2020. At December 31, 202192% of our we cinemas were open compared to 38% in 2020.

?In Australiacinema revenues increased by $22.8 millionfor $55.3 million for the year ended December 31, 2021compared to 2020.

?In New Zealand, cinema revenues increased by $4.5 million, to $11.6 million for
the year ended December 31, 2021, compared to 2020.
For the quarter ended December 31, 2021, Cinema segment revenue increased
against the fourth quarter of 2020 by $35.1 million, to $47.2 million. This
increase was due to (i) the majority of our global cinemas being in operation
for more days in the fourth quarter of 2021 than in 2020, (ii) the releases of
more tentpole films by major studios, such as Spider-Man: No Way Home, and (iii)
the easing of local government restrictions in 2021 due to increased vaccination
rates.
Operating Expense
Operating expense for the full year 2021 increased by $30.2 million, to
$123.4 million when compared to 2020 due to increased ticket sales and higher
film rent associated with the releases of more major tentpole films.
For the quarter ended December 31, 2021, operating expenses increased by $21.1
million, to $40.5 million when compared to the fourth quarter of 2020 due to
increased ticket sales and higher film rent associated with the release of more
major tentpole films.
Depreciation, Amortization, General and Administrative Expense
Depreciation, amortization, general and administrative expense for the
year-ended December 31, 2021 increased by $3.1 million, to $22.0 million
compared to 2020 primarily driven by legal costs, a $4.0 million accrual of the
settlement of certain wage and hour claims, and the depreciation charge on our
new cinemas in Australia.
Depreciation, amortization, general and administrative expense for the quarter
ended December 31, 2021, increased by $0.2 million, to $4.6 million primarily
due to increased cinema general and administrative expenses in Australia.
?
                                     - 44 -

————————————————– ——————————

Real Estate – The following table details the operating results of our Real Estate segment for the years ended December 31, 2021 and 2020, respectively:

                                                                                                    2021 vs. 2020
                                                                                                     ?Favorable/
(Dollars in thousands)                      2021      % of Revenue       2020      % of Revenue    ?(Unfavorable)
REVENUE

United Live theater rental and

  States       ancillary income          $    1,349           70 %    $      988           69 %              37 %
               Property rental income           577           30 %           434           31 %              33 %
                                              1,926          100 %         1,422          100 %              35 %

Australia Property rental income 9,855 100% 10,576 100%

             (7) %
  New Zealand  Property rental income           982          100 %           965          100 %               2 %
  Total revenue                          $   12,763          100 %    $   12,963          100 %             (2) %
OPERATING EXPENSE
  United
  States       Live theatre cost         $    (541)         (28) %    $    (698)         (49) %              22 %
               Property cost                (1,282)         (67) %    $  (1,184)         (83) %             (8) %
               Occupancy expense            (1,415)         (73) %         (930)         (65) %            (52) %
                                         $  (3,238)        (168) %    $  (2,812)        (198) %            (15) %
  Australia    Property cost             $  (2,699)         (27) %    $  (2,457)         (23) %            (10) %
               Occupancy expense            (2,251)         (23) %       (1,874)         (18) %            (20) %
                                         $  (4,950)         (50) %    $  (4,331)         (41) %            (14) %
  New Zealand  Property cost             $  (1,470)        (150) %    $  (1,002)        (104) %            (47) %
               Occupancy expense              (448)         (46) %         (432)         (45) %             (4) %
                                         $  (1,918)        (195) %    $  (1,434)        (149) %            (34) %

  Total operating expense                $ (10,106)         (79) %    $  (8,577)         (66) %            (18) %
DEPRECIATION, AMORTIZATION, GENERAL
AND ADMINISTRATIVE EXPENSE
  United       Depreciation and
  States       amortization              $  (3,059)        (159) %    $  (1,522)        (107) %          (>100) %
               General and
               administrative expense         (712)         (37) %         (487)         (34) %            (46) %
                                         $  (3,771)        (196) %    $  (2,009)        (141) %            (88) %
               Depreciation and
  Australia    amortization              $  (3,054)         (31) %    $  (3,634)         (34) %              16 %
               General and
               administrative expense         (206)          (2) %         (275)          (3) %              25 %
                                         $  (3,260)         (33) %    $  (3,909)         (37) %              17 %
  New          Depreciation and
  Zealand      amortization              $    (979)        (100) %    $    (945)         (98) %             (4) %
               General and
               administrative expense           (2)          (1) %            14            1 %          (>100) %
                                         $    (981)        (100) %    $    (931)         (96) %             (5) %

Total depreciation, amortization,

and general and administrative

  expense                                $  (8,012)         (63) %    $  (6,849)         (53) %            (17) %

  Total
  expenses                               $ (18,118)        (142) %    $ (15,426)        (119) %            (17) %
OPERATING INCOME (LOSS)
  United States                          $  (5,083)        (264) %    $  (3,399)        (239) %            (50) %
  Australia                                   1,645           17 %         2,336           22 %            (30) %
  New Zealand                               (1,917)        (195) %       (1,400)        (145) %            (37) %

Total operating profit (loss) ($5,355) (42)% ($2,463) (19)% (>100)%


?

                                     - 45 -

————————————————– ——————————

Real Estate – The following table details the operating results of our Real Estate segment for the quarters ended December 31, 2021 and 2020, respectively:

                                                                                                  2021 vs. 2020
                                                                                                   ?Favorable/
(Dollars in thousands)                     2021      % of Revenue      2020      % of Revenue    ?(Unfavorable)
REVENUE
  United       Live theatre rental and
  States       ancillary income          $     567           81 %    $     100           39 %            >100 %
               Property rental income          130           19 %          157           61 %            (17) %
                                               697          100 %          257          100 %            >100 %
  Australia    Property rental income        1,855          100 %        2,526          100 %            (27) %
  New Zealand  Property rental income          264          100 %          252          100 %               5 %
  Total revenue                          $   2,816          100 %    $   3,035          100 %             (7) %
OPERATING EXPENSE
  United
  States       Live theatre cost         $   (167)         (24) %    $    (86)         (33) %            (94) %
               Property cost                 (275)         (39) %    $   (240)         (93) %            (15) %
               Occupancy expense              (39)          (6) %        (369)        (144) %              89 %
                                         $   (481)         (69) %    $   (695)        (270) %              31 %
  Australia    Property cost             $   (658)         (35) %    $   (724)         (29) %               9 %
               Occupancy expense             (548)         (30) %        (521)         (21) %             (5) %
                                         $ (1,206)         (65) %    $ (1,245)         (49) %               3 %
  New Zealand  Property cost             $   (402)        (152) %    $   (264)        (105) %            (52) %
               Occupancy expense             (115)         (44) %        (115)         (46) %               - %
                                         $   (517)        (196) %    $   (379)        (150) %            (36) %

  Total operating expense                $ (2,204)         (78) %    $ (2,319)         (76) %               5 %
DEPRECIATION, AMORTIZATION, GENERAL
AND ADMINISTRATIVE EXPENSE
  United       Depreciation and
  States       amortization              $   (822)        (119) %    $   (731)        (284) %            (12) %
               General and
               administrative expense        (217)         (31) %          114           43 %          (>100) %
                                         $ (1,039)        (150) %    $   (617)        (240) %            (68) %
               Depreciation and
  Australia    amortization              $   (744)         (40) %    $ (1,001)         (40) %              26 %
               General and
               administrative expense         (42)          (2) %          154            6 %          (>100) %
                                         $   (786)         (42) %    $   (847)         (34) %               7 %
               Depreciation and
  New Zealand  amortization              $   (232)         (88) %    $   (242)         (96) %               4 %
               General and
               administrative expense          (2)          (1) %          (9)          (4) %              78 %
                                         $   (234)         (89) %    $   (251)        (100) %               7 %

Total depreciation, amortization,

and general and administrative

  expense                                $ (2,059)         (73) %    $ (1,715)         (57) %            (20) %

  Total
  expenses                               $ (4,263)        (151) %    $ (4,034)        (133) %             (6) %
OPERATING INCOME (LOSS)
  United States                          $   (823)        (118) %    $ (1,055)        (411) %              22 %
  Australia                                  (137)          (7) %          434           17 %          (>100) %
  New Zealand                                (487)        (184) %        (378)        (150) %            (29) %

Total operating profit (loss) $(1,447) (51)% ($999) (33)%

            (45) %


Real Estate Segment Operating Income
Real estate segment operating loss increased by $2.9 million, to a loss of
$5.4 million for the year ended December 31, 2021, compared to 2020. These
results reflect (i) increased property carrying costs related to our 44 Union
Square property, which had been capitalized in the past, as well as the
commencement of depreciation for this property and (ii) a decrease in property
rental income in Australia due to the monetization of our Auburn/Redyard center
during the second quarter of 2021. This loss was offset by our Live Theatres in
New York City which reported increased operating income during the fourth
quarter 2021 as both the Orpheum and Minetta Lane theatres were open and holding
public performances for most of the fourth quarter 2021.
Real estate segment operating loss increased by $0.4 million, to a loss of $1.4
million for the quarter ended December 31, 2021, compared to 2020. A decrease in
property rental income in Australia due to the monetization of our
Auburn/Redyard center during the second quarter of 2021 negatively impacted our
annual results. This loss was offset by the operating income of our Live
Theatres in New York City which increased compared to 2020, when the theaters
closed in mid-March 2020 due to the pandemic.
                                     - 46 -

————————————————– ——————————

Income

The table below shows the breakdown of revenue by country for each year:

                                                                    2021 

compared to 2020

                                    % of                  % of       

?Favorable/

(Dollars in thousands)    2021    ?Revenue     2020     ?Revenue    ?(Unfavorable)
United States           $ 1,926        15 %  $  1,422       11  %          35  %
Australia                  9,855       77 %    10,576       82  %          (7) %
New Zealand                 982         8 %       965        7  %          

2% of total segment revenue $12,763 100% $12,963 100% (2)%


Real estate revenues for the year ended December 31, 2021, decreased by $0.2
million, to $12.8 million compared to 2020. This decrease is attributable to a
decrease in property rental income in Australia related to the monetization of
our Auburn/Redyard shopping center during the second quarter of 2021, partially
offset by the re-opening of our live theatres as well as rent received from our
Culver City tenant.
For the quarter ended December 31, 2021, real estate revenue decreased by $0.2
million, to $2.8 million compared to 2020. This decrease is primarily due to a
decrease in property rental income in Australia related to the monetization of
our Auburn/Redyard shopping center during the second quarter of 2021.
Operating Expense
Operating expense for the year ended December 31, 2021, increased by $1.5
million, to $10.1 million when compared to the same period in 2020 due to the
increased operating costs related to our 44 Union Square property. In addition,
the State Revenue Offices (SRO) in Australia implemented support measures for
commercial landlords whereby land tax relief was provided in 2020 that did not
recur in 2021. This result was partially offset by the reduction of costs
related to the monetization of our Auburn/Redyard ETC during the second quarter
of 2021.
For the quarter ended December 31, 2021, operating expenses remained relatively
flat with a slight decrease of $0.1 million, to $2.2 million when compared to
the same period in 2020 due to a decrease in occupancy expenses related to the
monetization of our Coachella property.
Depreciation, Amortization, General and Administrative Expense
Depreciation, amortization, general and administrative expenses for 2021
increased by $1.2 million, to $8.0 million when compared to the same period in
2020 driven by the commencement of depreciation of our 44 Union Square property,
partially offset by savings in depreciation related to the sale of our
Auburn/Redyard shopping center, Royal George, and Invercargill properties.
For the quarter ended December 31, 2021, depreciation, amortization, and
general, and administrative expenses increased by $0.3 million, to $2.1 million
compared to the quarter ended December 31, 2020, due to which is attributable to
the commencement of depreciation of our 44 Union Square property, offset by
savings in depreciation related to the sale of our Auburn/Redyard shopping
center, Royal George, and Invercargill properties.
NON-SEGMENT RESULTS -2021 vs. 2020
General and Administrative Expense
Non-segment general and administrative expense for the year ended December 31,
2021, increased by $3.7 million, to $16.6 million compared to the same period in
the prior year. This increase in expense is due principally to (i) a return to
the payment of executive bonuses in 2021 (no senior management officer bonuses
were paid related to years 2019 or 2020) and (ii) the non-recurring income in
2020 related to the $0.8 million judgment in our favor in the James Cotter Jr.
derivative litigation.
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 13 - Commitments and Contingencies.
Income Tax Expense
Income tax expense increased by $10.9 million, to $5.9 million, when compared to
2020, mainly due to income tax as a result of the monetization of certain of our
real estate assets. Please refer to Part II, Item 8 - Financial Statements and
Supplementary Data-Notes to Consolidated Financial Statements-- Note 10 - Income
Taxes for further information.
                                     - 47 -

————————————————– ——————————

Interest expense, net

Interest expense (net of interest income) increased by $4.3 million, to $13.7
million, mainly due to the termination of the capitalization of interest on 44
Union Square due to the completion of this development.

?

                                     - 48 -
--------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Our Financing Strategy
Prior to the interruption to our revenues caused by the COVID-19 pandemic, we
had used cash generated from operations and other excess cash to the extent not
needed to fund capital investments contemplated by our business plan, to pay
down our loans and credit facilities. This provided us with availability under
our loan facilities for future use and thereby, reduced interest charges. On a
periodic basis, we have reviewed the maturities of our borrowing arrangements
and negotiated renewals and extensions where necessary. In 2020, we completed
amending and extending various financing arrangements less than two weeks prior
to the COVID-19 government mandated shutdowns, which we believe has helped
provide the necessary liquidity to see us through the COVID-19 crisis.
In response to the COVID-19 pandemic, the temporary closure of our cinemas, and
the trading restrictions placed on many of our real estate tenants, we had fully
drawn-down on all our available operating lines-of-credit by the end of the
first quarter of 2020, to provide additional liquidity. In 2021, the
monetization of certain real estate assets funded our ability to pay down debt
thereby increasing our future availability and, in some places, permanently
reducing our loan funding amounts:
?During the second quarter of 2021, we refinanced our 44 Union Square loan with
a new $55.0 million mortgage facility secured by the property with Emerald Creek
Capital;
?In November 2021, we repaid and retired our $5.0 million line of credit with
Bank of America;
?In June 2021, we repaid $15.7 million (AU$20.0 million) of our Revolving
Corporate Markets Loan facility with NAB, using a portion of the proceeds of our
monetization of Auburn/Redyard to permanently reduce the availability under the
line;
?Throughout 2021, we repaid $11.7 million on our Bank of America revolving
credit facility, bringing the outstanding balance to $39.5 million. In November
2021, we also restructured this facility into a term loan;
?Throughout 2021, we repaid $12.5 million (NZ$18.2 million) of our Westpac
revolving facility, permanently reducing the funding available; and
?On March 3, 2022, we exercised the first of two six month options to extend the
Cinemas 1,2,3 Term Loan, taking the maturity to October 1, 2022.
Our bank loans with Bank of America, NAB, and Westpac require that our Company
comply with certain covenants. Furthermore, our Company's use of these loan
funds is limited due to limitations on the expatriation of funds from Australia
and New Zealand to the United States. We believe that our lenders understand
that the current situation, relating to the COVID-19 pandemic, is not of our
making, that we are doing everything that can reasonably be done, and that,
generally speaking, our relationship with our lenders is good.
Our Company remains focused on the various economic factors affecting us as the
markets in which we operate emerge from the worst effects of the COVID-19
pandemic, including financial, economic, competitive, regulatory, and other
factors, many of which are beyond our control. If our Company is unable to
generate sufficient cash flow in the upcoming months or if its cash needs exceed
our Company's borrowing capacity under its available facilities, we could be
required to adopt one or more alternatives, such as reducing, delaying or
eliminating planned capital expenditures, selling additional assets, or
restructuring debt.
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 11 - Borrowings.
                                     - 49 -

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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:
($ in thousands)                      2021         2020         2019       2018(2)      2017(2)
Net Cash from Operating
Activities                         $ (13,498)   $ (30,201)   $   24,607   $   32,644   $   23,851
Total Resources (cash and
borrowings)
Cash and cash equivalents
(unrestricted)                     $   83,251   $   26,826   $   12,135   $   13,127   $   13,668
Unused borrowing facility              12,000       15,490       73,920       85,886      137,231
Restricted for capital
projects(1)                            12,000        9,377       13,952       30,318       62,280
Unrestricted capacity                       0        6,113       59,968       55,568       74,951
Total resources at 12/31               95,251       42,316       86,055       99,013      150,899
Total unrestricted resources at
12/31                                  83,251       32,939       72,103       68,695       88,619
Debt-to-Equity Ratio
Total contractual facility         $  248,948   $  300,449   $  283,138   $  252,929   $  271,732
Total debt (gross of deferred
financing costs)                      236,948      284,959      209,218      167,043      134,501
Current                                12,060       42,299       37,380       30,393        8,109
Non-current                           224,888      242,660      171,838      136,650      126,392
Finance lease liabilities                  68          118          209            -            -
Total book equity                     105,060       81,173      139,616      179,979      181,382
Debt-to-equity ratio                     2.26         3.51         1.50         0.93         0.74
Changes in Working Capital
Working capital (deficit)(3)       $  (6,673)   $ (64,140)   $ (84,138)   $ (56,047)   $ (47,294)
Current ratio                            0.94         0.47         0.24         0.35         0.41
Capital Expenditures (including
acquisitions)                      $   14,428   $   16,759   $   47,722   $ 

56,827 $76,708


(1)This relates to the construction facilities specifically negotiated for 44
Union Square redevelopment project.
(2)Certain 2018 and 2017 balances included the restatement impact as a result of
a prior period financial statement correction of immaterial errors (see Item 8 -
Financial Statements and Supplementary Data-Notes to Consolidated Financial
Statements-- Note 2 - Summary of Significant Accounting Policies - Prior Period
Financial Statement Correction of Immaterial Errors).
(3)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 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. Before the COVID-19 pandemic, our treasury management has been focused
on aggressive cash management using cash balances to reduce debt and minimize
interest expense. In the past, we used cash generated from operations and other
excess cash to the extent not needed for any capital expenditures, 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. As a
result of the COVID-19 pandemic, we chose to fully draw down on most of our
lines of credit in order to provide liquidity for the Company during a time of
minimal revenues. Our current financial position, forecasts and cash flow
estimates based on our current expectations of industry performance and
recovery, mean that our Company has sufficient resources to meet its obligations
as they become due within one year after the issuance of this report on Form
10-K.
Refer to Part II, Item 8 - Financial Statements and Supplementary Data-Notes to
Consolidated Financial Statements-- Note 11 - Borrowings for further details on
our various borrowing arrangements.
At December 31, 2021, our consolidated cash and cash equivalents totaled
$83.3 million. Of this amount, $10.9 million, $49.5 million and $22.8 million
were held by our U.S., Australian and New Zealand operations, respectively. Due
to the impact of the COVID-19 pandemic, 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 2021 and into
2022 the need for such funding, apart from working capital, has been and will be
substantially reduced, due to the COVID-19 pandemic. The funding that has been
required, has been funded predominantly from cost reductions, debt and strategic
asset sales. As noted in the preceding table, we had no unused available
corporate credit facilities at December 31, 2021.
                                     - 50 -

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The change in cash and cash equivalents for the three years ended December 31,
2021 is as follows:
                                                                                   % Change
                                                                              2021 vs.   2020 vs.
(Dollars in thousands)                    2021         2020         2019        2020       2019
Net cash provided by (used in)
operating activities                   $ (13,498)   $ (30,200)   $   24,607       55 %   (>100) %
Net cash provided by (used in)
investing activities                      129,610     (18,771)     (53,263)     >100 %       65 %
Net cash provided by (used in)
financing activities                     (50,280)       59,330       26,008   (>100) %     >100 %
Impact of exchange rate on cash           (4,095)        4,333          322   (>100) %     >100 %
Net increase (decrease) in cash and
cash equivalents                       $   61,737   $   14,692   $  (2,326)     >100 %     >100 %


Operating Activities
2021 vs. 2020
Cash used in operating activities for 2021 decreased by $16.7 million, to cash
used of $13.5 million, due to improved trading performance.
Investing Activities
2021 vs. 2020
The $129.6 million of cash provided by investing activities increased
significantly primarily due to the 2021 asset monetizations described herein.
Financing Activities
2021 vs. 2020
The cash used in financing activities of $50.3 million is primarily due to
developments in our debt portfolio as discussed above.
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, 2021:
(Dollars in thousands)      2022       2023        2024       2025       2026      Thereafter      Total
Debt(1)                   $ 32,776   $ 122,815   $ 43,287   $    300   $    313   $      7,500   $ 206,991
Operating leases,
including imputed
interest                    34,325      34,281     32,838     30,855     28,608        158,713     319,620
Finance leases,
including imputed
interest                        43          28          -          -          -              -          71
Subordinated debt(1)           711         747        586          -          -        27,913       29,957
Pension liability             684         684        684        684        684             869       4,289
Village East purchase
option(2)                        -       5,900          -          -          -              -      5,900
Estimated interest on
debt(3)                      9,929       7,763      2,592      1,511      1,497            601      23,893
Total                     $ 78,468   $ 172,218   $ 79,987   $ 33,350   $ 31,102   $    195,596   $ 590,721


(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 13 - 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.
Where we are the plaintiffs, we expense all legal fees on an ongoing basis and
make no provision for any potential settlement amounts until received. In
Australia, the prevailing party is usually entitled to recover its attorneys'
fees, which typically work out to be approximately 60% of the amounts actually
spent where first-class legal counsel is engaged at customary rates. Where we
are a plaintiff, we have likewise made no provision for the liability for the
defendant's attorneys' fees in the event we are determined not to be the
prevailing party.
Where we are the defendants, we accrue for probable damages that insurance may
not cover as they become known and can be reasonably estimated. In our opinion,
any claims and litigation in which we are currently involved are not reasonably
likely to have a
                                     - 51 -
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material adverse effect on our business, results of operations, financial
position, or liquidity. It is possible, however, that future results of the
operations for any particular quarterly or annual period could be materially
affected by the ultimate outcome of the legal proceedings.
Please refer to Part I, Item 3 - Legal Proceedings for more information. There
have been no material changes to our litigation, except as set forth in Part II,
Item 8 - Financial Statements and Supplementary Data-Notes to Consolidated
Financial Statements-- Note 13 - Commitments and Contingencies.
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.
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 fluctuations of the
Australian and New Zealand currencies, however, may impact 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 certain floating-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.
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. The effects of inflation have not had a material impact on our
operations and the resulting financial position or liquidity, but the current
uptrend in inflation could impact us in the future
CRITICAL ACCOUNTING ESTIMATES
We believe that the application of the following accounting policies requires
significant judgments and estimates in the preparation of our Consolidated
Financial Statements and hence, are critical to our business operations and the
understanding 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.
                                     - 52 -
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No impairment losses were recorded for long-lived and finite-lived intangible
assets for the year ended December 31, 2021. $217,000 of impairment losses were
recorded for long-lived and finite-lived intangible assets for the year ended
December 31, 2020, based on historical information and projected cash flow. No
impairment losses were recorded for the year ended December 31, 2019.
(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, 2021, 2020, or 2019.
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, 2021, we had recorded approximately
$43.1 million of deferred tax assets (net of $64.7 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
$40.9 million resulting in a net deferred tax asset of $2.2 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 2 - 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.
                                     - 53 -
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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 13 - 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 2.
Click or tap here to enter text.
Item 7A - Quantitative and Qualitative Disclosure about Market Risk
The SEC requires that registrants include information about potential effects of
changes in currency exchange and interest rates in their Form 10-K filings.
Several alternatives, all with some limitations, have been offered. The
following discussion is based on a sensitivity analysis, which models the
effects of fluctuations in currency exchange rates and interest rates. This
analysis is constrained by several factors, including the following:

? it is based on a single point in time; and

?it does not include the effects of other complex market reactions that would
arise from the changes modeled.
Although the results of such an analysis may be useful as a benchmark, they
should not be viewed as forecasts.
At December 31, 2021, approximately 40% and 8% of our assets were invested in
assets denominated in Australian dollars (Reading Australia) and New Zealand
dollars (Reading New Zealand), respectively, including approximately
$51.8 million in cash and cash equivalents. At December 31, 2020, approximately
39% and 12% of our assets were invested in assets denominated in Australian and
New Zealand dollars, respectively, including approximately $19.1 million in cash
and cash equivalents.
Our policy in Australia and New Zealand is to match revenues and expenses,
whenever possible, in local currencies. As a result, we have procured in local
currencies a majority of our expenses in Australia and New Zealand. Despite this
natural hedge, recent movements in foreign currencies have had an effect on our
current earnings. The effect of the translation adjustment on our assets and
liabilities noted in our other comprehensive income was an increase of $8.1
million for the year ended December 31, 2021. As we continue to progress our
acquisition and development activities in Australia and New Zealand, no
assurances can be given that the foreign currency effect on our earnings will
not be material in the future.
Historically, our policy has been to borrow in local currencies to finance the
development and construction of our long-term assets in Australia, and New
Zealand. As a result, the borrowings in local currencies have provided somewhat
of a natural hedge against the foreign currency exchange exposure. Even so, and
as a result of our issuance of fully subordinated Trust Preferred Securities in
2007, and their subsequent partial repayment, approximately 24% and 37% of our
Australian and New Zealand assets, respectively, remain subject to such
exposure, unless we elect to hedge our foreign currency exchange between the
U.S. and Australian and New Zealand dollars. If the foreign currency rates were
to fluctuate by 10%, the resulting change in Australian and New Zealand assets
would result in an increase or decrease of $6.7 million and $2.1 million,
respectively, and the change in our net income for the year would be
$2.5 million and $3.4 million, respectively. Presently, we have no plans to
hedge such exposure.
With changes in the tax landscape caused by the Tax Cuts and Jobs Act of 2017,
we may reconsider our strategy for financing operations and redevelopment
projects in the three countries we are invested in, which may include increased
borrowings from banks in higher-tax countries, and dividends to the U.S. from
foreign subsidiaries, being mindful of withholding taxes on interest, and thin
capitalization limitations on interest deduction in Australia and New Zealand.
We record unrealized foreign currency translation gains or losses that could
materially affect our financial position. We have accumulated unrealized foreign
currency translation gains of approximately $6.8 million and $15.0 million as of
December 31, 2021 and 2020, respectively.
Historically, we maintained most of our cash and cash equivalent balances in
short-term money market instruments with original maturities of three months or
less. Due to the short-term nature of such investments, a change of 1% in
short-term interest rates would not have a material effect on our financial
condition. The negative spread between our borrowing costs and earned interest
will exacerbate as we hold cash to provide a safety net to meet our expenses
while some of our cinema operations remain closed and some of our tenant income
curtailed.
We have a combination of fixed and variable interest rate loans. In connection
with our variable interest rate loans, a change of approximately 1% in
short-term interest rates would have resulted in approximately $1.6 million
increase or decrease in our 2021 interest expense.
For further discussion on market risks, please refer to International Business
Risks included in Item 1A - Risk Factors.


?
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