The MD&A should be read in conjunction with our condensed consolidated financial statements and related notes in this Report.
Business Overview & Updates
Cinema Exhibition Segment
We are encouraged by the improved performance of our cinema business in the second quarter of 2026 While macroeconomic challenges remain, our second quarter results reflect improving global cinema industry momentum and support our confidence in the continued growth of our cinema business. Q2 2026 benefited from theatrical successes including The Super Mario Galaxy Movie, The Devil Wears Prada 2, Michael, Backrooms, Obsession, and Toy Story 5. These releases continued the momentum that was set in Q1 2026 by releases such as Project Hail Mary, Wuthering Heights, and Hoppers.
Certain current macroeconomic conditions continued to present challenges for our cinema operations during the relevant periods, which are listed below:
Cinema attendance levels have not returned to pre-pandemic levels;
Inflationary pressures, ongoing supply chain issues, increases in labor costs, fuel costs, and operating expenses in general continue to push up our variable costs while we encounter consumer resistance to higher ticket prices;
Higher fixed third-party cinema rent, including base rent escalations and cost-of-living adjustments, together with deferred rent obligations; and
General market and economic conditions.
We believe that our ongoing focus on operational efficiency and strategic initiatives has improved our operational results, and we continue to respond to the prevailing macroeconomic challenges by:
Driving guest attendance and engagement levels through:
oOur expanded Food and Beverage program. Beer and wine, and liquor service is available at nearly every one of our U.S. cinema locations. We are working towards mirroring these enhancements in our Australian and New Zealand markets, ensuring a consistent and premium experience for audiences across all regions.
30
oExpanding our loyalty and membership ecosystem. In late 2024, we replaced our former loyalty program, Reel Club with Reading Rewards and Angelika Rewards in Australia and New Zealand, with a paid Boost tier available for each. In the United States, we replaced our former loyalty program, Cinema Extras at Consolidated Theatres at the end of 2025 with both a free to join and membership. In early 2026 we launched a new free and paid membership loyalty program at Reading Cinemas. Our Angelika U.S. free membership program continues to grow, and we plan to launch a paid subscription tier in Q3 2026.
Applying a laser focus to cost control, with particular emphasis on cinema labor and utilities; and
Renegotiating our cinema leases and aligning our occupancy costs more effectively with current attendance levels, through abatements, revised lease terms, and where necessary, the closure of certain underperforming venues.
These initiatives have contributed to improved revenue generation and enhanced cost management, while highlighting our focus on delivering a compelling and differentiated cinema experience that supports repeat visitation.
Looking ahead, we believe that the rest of the 2026 film slate presents a major opportunity to continue the positive momentum that we are seeing. As of today, Q3 2026 titles such as The Odyssey, Minions & Monsters, and Spider Man: Brand New Day, and other compelling releases later in 2026, including The Hunger Games: Sunrise on the Reaping, Avengers: Doomsday, Dune: Part Three and Jumanji 3. These 2026 future releases are positioned to appeal to a wide variety of audiences. They cover a wide range of genres, from family animation to science fiction, and each have the potential to produce significant box office results. Supported by our strategic operational initiatives and continued audience engagement efforts, we believe that this diverse slate positions us well for a robust second half of the year.
Real Estate Segment
In the United States, we now own 100% of our Cinemas 1,2,3 property and as of February 2026 we have classified this property as held for sale. Our sales efforts are progressing, and we expect to complete the sale by the end of 2026. We continue to work to secure tenant(s) for the remaining space at our 44 Union Square property in New York, and we believe demand for space in the Union Square submarket is improving. Additionally, we continue to hold our Newberry Yard property in Williamsport, Pennsylvania for sale.
In Australia, our real estate revenues continue to have steady, strong performance, especially when measured in local currency.
Our monetization of our property in Napier, New Zealand, which we signed a purchase and sale agreement for on March 4, 2026, is on hold while we work with the buyer to resolve certain unforeseen issues with the owner of the car park, which the cinema leases.
To align with our liquidity priorities, we have largely deferred new real estate development. Capital spending in 2025 and to date in 2026 has been primarily focused on upgrades to our existing cinemas.
Company Overview
We are an internationally diversified company principally focused on the development, ownership, and operation of entertainment and real estate assets in the United States, Australia, and New Zealand. Currently, we operate in two business segments:
Cinema exhibition, through our 57 cinemas.
Real estate, including real estate development and the rental of retail, commercial, and Live Theatre assets.
Despite having monetized nine property assets since the pandemic, we believe our cinema and real estate segments remain complementary and central to our long-term growth strategy. Prior to the pandemic, cinema generated cash flows supported the capital requirements of our real estate development activities. During this period, we relied more heavily on income from our real estate assets and selectively monetized assets with embedded value to support the Company. With the effects of COVID-19 and the 2023 Hollywood strikes now largely behind us, we expect improved film quality and consistency to drive increased attendance and restore cinema generated cash flows as a key source of capital to expand and enhance our existing cinema and real estate portfolios. Currently, to address anticipated liquidity needs, Newberry Yard and Cinemas 1,2,3 are held for sale. Despite these planned dispositions, we expect to retain assets in Pennsylvania, Manhattan, and Australia that we believe offer meaningful long term value creation opportunities as capital resources permit.
Cinema Key Performance Indicators (“KPIs”)
(Unaudited; U.S. Dollars and functional currency thousands, except per patron data)
31
Food and Beverage Spend Per Patron
A key performance indicator utilized by management in our cinema exhibition segment is Food and Beverage (“F&B”) Spend Per Patron (“SPP”), which is calculated based on our total Food & Beverage Revenues on a post-tax basis divided by our attendance during a specific period.
One of our key strategic priorities is the continued enhancement of F&B offerings across several of our global cinema locations and is particularly important because F&B revenue is not shared with film distributors. We have a total of 37 theater locations globally that offer elevated food and beverage menus with options beyond traditional concessions like popcorn, soda, and candy. We use F&B SPP to assess top-line performance, benchmark against competitors, and evaluate pricing, promotions, and menu strategies at both global and individual location levels. While cinema profitability depends on factors such as labor and cost of goods, F&B SPP helps management optimize revenue.
Our F&B SPP in functional currency for the quarter and six months ended June 30, 2026, and June 30, 2025, are as follows:
Quarter Ended % Change Six Months Ended % Change
Country June 30, 2026 June 30, 2025 Fav/ (Unfav) June 30, 2026 June 30, 2025 Fav/ (Unfav)
United States $8.97 $9.13 (1.8)% $8.73 $8.68 0.6%
Australia $8.37 $8.26 1.3% $8.25 $8.08 2.1%
New Zealand $7.22 $7.14 1.1% $7.02 $6.99 0.4%
Average Ticket Price per Patron
Average Ticket Price (“ATP”) Per Patron is an important key performance indicator utilized by management in our cinema exhibition segment. It is calculated based on our total Box Office Revenues on a post-tax basis divided by our attendance during a specific period. ATP serves to measure our operational cinema performance when compared to that of our competitors. ATP is a useful metric for evaluating our ability to achieve a strong top line performance, gauging the effectiveness of our cinemas’ pricing strategies and our ability to draw audiences back to our theaters. Management uses ATP to adjust and inform ticket pricing schemes for our individual theaters, measure the effectiveness of our content programming, and ensure that price barriers are not created for core guests.
Our ATP in functional currency for the quarter and six months ended June 30, 2026, and June 30, 2025, are as follows:
Quarter Ended % Change Six Months Ended % Change
Country June 30, 2026 June 30, 2025 Fav/ (Unfav) June 30, 2026 June 30, 2025 Fav/ (Unfav)
United States $13.77 $13.44 2.5% $13.75 $13.46 2.1%
Australia $16.89 $16.34 3.4% $16.61 $16.00 3.8%
New Zealand $15.58 $14.70 6.0% $15.29 $14.30 6.9%
Real Estate Key Performance Indicators
The key performance indicators used by management in our real estate segment vary according to jurisdiction. At the current time, in the United States, we assess our real estate division (including 44 Union Square and our historical railroad assets, but excluding our Live Theatres), solely on a net operating income basis. We have no specific key performance standards to compare performance from period to period. Rather we analyze operating budgets and projections and compare actual results to budgeted or projected results from time to time.
In Australia and New Zealand, we assess our properties held for rent using net operating income, occupancy factor (the percentage of the net rentable area of our properties that are leased) and average lease duration. We believe our chosen indicators help us effectively assess the return on investment on our real estate assets.
Our real estate key performance indicator results for the quarter and six months ended June 30, 2026, and June 30, 2025, measured in functional currencies, are as follows:
Quarter Ended % Change Six Months Ended % Change
32
Country KPI June 30, 2026 June 30, 2025 Fav/ (Unfav) June 30, 2026 June 30, 2025 Fav/ (Unfav)
United States Net Operating Income (Loss) $ (371) $ (275) (34.9) % $ (680) $ (421) (61.5) %
Australia Net Operating Income (Loss) $ 808 $ 718 12.5 % $ 1,405 $ 1,740 (19.3) %
Occupancy Factor 98.3% 98.8% (0.5) %age points 98.3% 98.8% (0.5) %age points
Average Lease Duration 2.58 years 3.79 Years (1.2) yrs 2.58 years 3.79 Years (1.2) yrs
New Zealand Net Operating Income (Loss) $ (217) $ (209) (3.8) % $ (409) $ (684) 40.2 %
Occupancy Factor 100% 100% 0.0 %age points 100% 100% 0.0 %age points
Average Lease Duration 0.17 years 0.58 Years (0.4) yrs 0.17 years 0.58 Years (0.4) yrs
In the case of our Live Theatres, with respect to key performance indicators, we primarily look to the Live Theatre rental revenue and ancillary income from the theatres. This key performance indicator represents box office revenues less amounts paid to producers for license fee settlements, plus ancillary income earned by us from certain theatre operations.
Cinema Exhibition Segment Overview
We operate our worldwide cinema businesses through various subsidiaries under various brands:
in the U.S., under the Reading Cinemas, Angelika Film Centers, and Consolidated Theatres brands.
in Australia, under the Reading Cinemas, Angelika Cinemas, and the State Cinema by Angelika brands, and for our one unconsolidated joint venture theatre, Event Cinemas.
in New Zealand, under the Reading Cinemas brand and for our two unconsolidated joint venture theatres, Rialto Cinemas.
Shown in the following table are the number of locations and screens in our cinema circuit in each country, by state/territory/region, our cinema brands, and our interest in the underlying assets as of June 30, 2026.
State / Territory / Location Screen Interest in Asset Underlying the Cinema
Country Region Count(3) Count Leased Owned Operating Brands
United States Hawaii 6 74 6 0 Consolidated Theatres
California 4 48 4 0 Angelika Film Center, Reading Cinemas
New York 3 16 2 1 Angelika Film Center
Texas 1 8 1 0 Angelika Film Center
New Jersey 1 12 1 0 Reading Cinemas
Virginia 1 8 1 0 Angelika Film Center
Washington, D.C. 1 3 1 0 Angelika Film Center
U.S. Total 17 169 16 1
Australia Victoria 9 62 9 0 Reading Cinemas
New South Wales 6 42 6 0 Reading Cinemas
Queensland 7 63 5 2 Reading Cinemas, Angelika Film Center, Event Cinemas
Western Australia 4 27 3 1 Reading Cinemas
South Australia 2 15 2 0 Reading Cinemas
Tasmania 2 14 2 0 Reading Cinemas, State Cinema by Angelika
Australia Total 30 223 27 3
New Zealand Wellington 2 15 2 0 Reading Cinemas
Otago 2 12 1 1 Reading Cinemas, Rialto Cinemas
Auckland 2 15 2 0 Reading Cinemas, Rialto Cinemas
Canterbury 1 8 1 0 Reading Cinemas
Southland 1 5 1 0 Reading Cinemas
Bay of Plenty 1 5 0 1 Reading Cinemas
Hawke's Bay 1 4 0 1 Reading Cinemas
New Zealand Total 10 64 7 3
GRAND TOTAL 57 456 50 7
(1)Our Company has a 33.3% unincorporated joint venture interest in a 16-screen cinema located in Mt. Gravatt, Queensland managed by Event Cinemas.
(2)Our Company is a 50% joint venture partner in two New Zealand Rialto Cinemas, with a total of 13 screens. We are responsible for the booking of these cinemas and our joint venture partner, Event Cinemas, manages their day-to-day operations.
33
Our cinema revenues are primarily generated from ticket sales and rentals, food and beverage sales, screen advertising, gift cards and certificates, and booking fees from certain online and app purchases. Cinema operating expenses consist of the costs directly attributable to the operation of the cinemas, including (i) film rent expense, (ii) cost of goods sold, (iii) operating costs, such as labor costs and utilities, and (iv) occupancy costs. Cinema revenues and certain expenses fluctuate with the availability of quality content and the number of weeks such content stays on screen.
For a breakdown of our current cinema assets that we own and/or manage, please refer to Part I, Item 1 – Our Business of the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2025 (the “2025 Form 10-K”).
Cinema Pipeline and Closures
We continue to actively evaluate multiple cinema opportunities, where we believe that they will provide an appropriate commercial return.
On April 15, 2025, we closed our underperforming cinema located in San Diego, California, and a second underperforming cinema in La Mesa, California, on May 31, 2026.
On February 9, 2025, we closed our underperforming cinema located in Queenstown.
Our Board has authorized management to proceed with the negotiation of a lease for a new state-of-the-art cinema, located in Noosa, Queensland, Australia.
On January 31, 2025, we sold our Wellington, New Zealand properties, including the Courtenay Central building, to Prime Property Group Limited (“Prime”) for $21.5 million (NZ$38.0 million). In connection with the sale, we entered into an Agreement to Lease with Prime for the cinema component of the to-be-redeveloped Courtenay Central building, under which Prime is obligated to redevelop the property and complete seismic upgrades to meet current earthquake standards. We intend to fit out and operate the existing 10-screen cinema under a long-term lease and renovate it to a “best-in-class” standard.
Cinema Upgrades
The upgrades to our cinema circuit’s film exhibition technology and amenities over the years are as summarized in the following table as of June 30, 2026:
Location Count Screen Count
Screen Format
IMAX 1 1
TITAN LUXE and TITAN XC 26 32
70mm and/or 35mm projection 13 20
Dine-in Service
Gold Lounge (AU/NZ)(1) 11 29
Premium (AU/NZ)(2) 18 47
Upgraded Food & Beverage menu (U.S.)(3) 14 n/a
Premium Seating (features recliner seating) 35 210
Liquor Licenses (4) 48 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, but no waiter service.
(3)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.
(4)Liquor Licenses: Licenses are applicable at each cinema location, rather than each cinema auditorium. As of today, we have beer and wine licenses in 100% of our cinemas and liquor licenses in all but three of our cinemas operating in the U.S. In Australia, 87% of our cinemas are licensed and we have no liquor licenses pending. In New Zealand, 3 of our cinemas are licensed.
34
Real Estate Segment Overview
Through our various subsidiaries, we engage in the real estate business through the development, ownership, rental or licensing to third parties of retail, commercial, and Live Theatre assets. Our real estate business creates long-term value for our stockholders through the continuous improvement and development of our investment and operating properties, including our Entertainment Themed Centers (“ETCs”). In addition to owning the fee interests in 7 of our cinemas (as presented in the table under Cinema Exhibition Overview), as of June 30, 2026, we:
own our 44 Union Square property in Manhattan comprised of retail and office space, which is partially leased to Petco;
own and operate two ETCs known as Newmarket Village (in a suburb of Brisbane), and the Belmont Common (in a suburb of Perth), the cinema components of which are included in the fee owned screen count above;
own and operate our administrative office building in South Melbourne, Australia;
own and operate the fee interests in two developed commercial properties in Manhattan improved with Live Theatres comprised of a single stage in each location;
own a 100% interest in Sutton Hill Properties LLC, which in turn owns the fee interest in and improvements constituting our Cinemas 1,2,3 located in Manhattan. In addition, in the fourth quarter of 2025, we wound up our long-term relationship with Sutton Hill Associates pursuant to a transaction whereby we purchased the 25% non-controlling minority interest in our Cinemas 1,2,3, property (also identified above as an “owned” cinema property) that we did not already own and the ground-lessee’s interest in the land and improvements constituting our Village East property. In February 2026, we classified our Cinemas 1,2,3 property as held for sale;
own the approximately 23.9-acre Newberry Yard property in Williamsport, Pennsylvania, which is currently held for sale; and
own approximately 201-acres principally in Pennsylvania from our legacy railroad business, including the Reading Viaduct in downtown Philadelphia.
For a breakdown of our real estate assets, made current by our discussion below, please refer to Part I, Item 1 – Our Business of our 2025 Form 10-K.
35
The combination of the COVID-19 pandemic, the lack of any U.S. public pandemic financial assistance due to our public company status, the 2023 Hollywood Strikes, increased interest rates, inflation, increased labor costs, and decreases in the value of the Australian Dollar and New Zealand Dollar vis-a-vis the U.S. Dollar over the past five years, have significantly impacted our cinema operations and necessitated capital conservation to sustain our cinema operations and service our debt. This has required us to rethink our real estate business plan and to monetize a number of properties that had pre-COVID been slated for long-term development.
Since 2021, we have monetized the following property assets:
(i)Our non-income producing land holding in Manukau, New Zealand (March 4, 2021);
(ii)Our non-income producing land holding in Coachella, California (March 5, 2021);
(iii)Our Redyard ETC in Auburn, Australia (June 9, 2021);
(iv)Our Royal George Live Theatre complex in Chicago (June 30, 2021, slated for redevelopment, and now being redeveloped for residential purposes by the new owner);
(v)The land underlying our cinema in Invercargill, New Zealand (August 30, 2021);
(vi)Our non-competitive four-screen cinema in Maitland, Australia (October 25, 2023);
(vii)Our administrative office building in Culver City, California (February 23, 2024);
(viii)On January 31, 2025, our Wellington properties, which included the Courtenay Central building; and
(ix)Most recently, on May 21, 2025, our Cannon Park property in Townsville, Queensland, Australia.
These properties were identified for sale and sold for various reasons, including:
(i)previously discussed liquidity needs,
(ii)the amount of capital required to materially increase their value in the immediate to mid-term,
(iii)with respect to certain assets, their immaterial or non-income producing nature, or
(iv)with respect to our Culver City office building, remote working making the property surplus to requirements.
United States:
44 Union Square Redevelopment (New York, N.Y.) – On January 27, 2022, we entered a long-term lease with Petco for the lower level, ground floor, and second floor of the building. We continue to explore a variety of possible office and non-office types of uses for the remainder of the building.
Minetta Lane Theatre (New York, N.Y.) – Audible has a license agreement with us through March 15, 2027. Audible presents productions and special live performance engagements on the Audible streaming service. During the second quarter of 2026, Audible presented a number of original productions, including the critically acclaimed play Sexual Misconduct of the Middle Class with Hugh Jackman (which opened in March 2026 and ran through April 2026, and which played previously during the second quarter of 2025), Tom Noonan’s What Happened Was, and Ella Hickson’s New Born.
Orpheum Theatre (New York, N.Y.) – STOMP closed (after 30 years at our theatre) on January 8, 2023. Under our termination agreement with the producers of STOMP, we have certain rights to provide the New York City venue for any future production of that show. Following STOMP’s historic run at the Orpheum, the theatre has hosted a variety of productions including Rachel Bloom’s Death, Let Me Do My Show, Hamlet starring Eddie Izzard, The Big Gay Jamboree, The Jonathon Larson Project, Ginger Twinsies, and 11 to Midnight.
36
Cinemas 1,2,3 (New York, N.Y.) – Currently operated as the Cinemas 1,2,3, and classified as held for sale from February 2026.
The Reading Viaduct and Adjacent Properties (Philadelphia, Pennsylvania) – We continue work to realize the value of our real estate holdings in the City of Philadelphia. Our properties include the 0.7-mile-long Reading Viaduct – a raised railbed with bridges spanning the Callowhill and Poplar neighborhoods of Philadelphia and reaching Vine Street in the City’s Central Business District. The Reading Viaduct comprises over 6.0 acres of land, calculated inclusive of our contiguous properties and bridges arching over various public streets and sidewalks that connect our multiple parcels into one continuous land-holding, unimpaired by public thoroughfares. Representatives of the City of Philadelphia and the City Center District have expressed interest in acquiring the Reading Viaduct for park purposes as an extension to the existing Rail Park. According to its website, the City Center District is “a private-sector organization dedicated to making Center City Philadelphia clean, safe, and attractive, is committed to maintaining Center City’s competitive edge as a regional employment center, a quality place to live, and a premier regional destination for dining, shopping, and cultural attractions.” For more information, go to www.CenterCityPhila.org. In December 2023, the City adopted an ordinance enabling the condemnation of the Reading Viaduct, and the transfer of the property to the City Center District for use as a public park. Furthering these initiatives, since railroad property (such as the Reading Viaduct) is exempt from condemnation by state governments so long as such property is subject to the jurisdiction and oversight of the Federal Surface Transportation Board (the “STB”), the City has petitioned the STB for a determination that the Reading Viaduct is no longer railroad property subject to STB jurisdiction and oversight (the “STB Proceeding”). On September 24, 2025 the STB ruled in the City’s favor, which determination we have appealed. We continue to believe that Reading Viaduct offers a substantial long-term opportunity for our Company through a potential sale, lease or joint venture of part or all of the property. Our properties adjoining our Reading Viaduct include various free-standing legal parcels that could be monetized separately and/or apart from the main body of our Reading Viaduct.
Australia:
Newmarket Village ETC (Brisbane, Australia) – We will continue to operate our Newmarket Village ETC, which includes Reading Cinemas as an anchor tenant. Our site includes a 23,218 square foot parcel adjacent to the center, improved with an office building. Over the next few years, we will be evaluating different development options for this space. The combined center and office building is 98% leased.
The Belmont Common, (Belmont, Perth, Australia) – The total gross leasable area of the Belmont Common is 60,117 square feet of net rentable land. Our multiplex cinema is the anchor tenant with six third-party tenants. The site is currently 100% leased.
Cannon Park ETC (Queensland, Australia) - On May 21, 2025, we sold our Cannon Park ETC, comprising approximately 9.4-acres, for a purchase price of $20.7 million (AU$32.0 million). We have retained a long-term lease of the cinema component of that property.
New Zealand:
On January 31, 2025, we sold all of our properties in Wellington, New Zealand. As discussed above, once the new landlord completes certain seismic upgrades we intend to fit out and operate the existing 10-screen cinema under a long-term lease and renovate it to a “best-in-class” standard.
Our monetization of our property in Napier, New Zealand, which we signed a purchase and sale agreement for on March 4, 2026, is on hold while we work with the buyer to resolve certain unforeseen issues with the owner of the car park, which the cinema leases.
For a complete list of our principal properties, see Part I, Item 2 – Properties under the heading “Investment and Development Property” in our 2025 Form 10-K.
Corporate Matters
Refer to Part I – Financial Information, Item 1 – Notes to Condensed Consolidated Financial Statements - Note 18 – Stock-Based Compensation and Stock Repurchases for details regarding our stock repurchase program and Board, Executive and Employee stock-based remuneration programs.
Please refer to our 2025 Form 10-K for more details on our cinema and real estate segments.
37
RESULTS OF OPERATIONS
The table below summarizes the results of operations for each of our principal business segments along with the non-segment information for the quarter and six months ended June 30, 2026, and June 30, 2025, respectively:
Quarter Ended % Change Six Months Ended % Change
(Dollars in thousands) June 30, 2026 June 30, 2025 Fav/ (Unfav) June 30, 2026 June 30, 2025 Fav/ (Unfav)
SEGMENT RESULTS
Revenue
Cinema exhibition $ 62,990 56,782 11 % $ 104,451 $ 93,186 12 %
Real estate 4,853 4,653 4 % 9,449 9,498 (1) %
Inter-segment elimination (947) (1,057) 10 % (1,880) (2,137) 12 %
Total revenue 66,896 60,378 11 % 112,020 100,547 11 %
Operating expense
Cinema exhibition (50,857) (47,940) (6) % (90,683) (85,597) (6) %
Real estate (1,936) (1,840) (5) % (3,822) (3,795) (1) %
Inter-segment elimination 947 1,057 (10) % 1,880 2,137 (12) %
Total operating expense (51,846) (48,723) (6) % (92,625) (87,255) (6) %
Depreciation and amortization
Cinema exhibition (1,953) (2,172) 10 % (3,946) (4,312) 8 %
Real estate (1,136) (1,125) (1) % (2,278) (2,226) (2) %
Total depreciation and amortization (3,089) (3,297) 6 % (6,224) (6,538) 5 %
General and administrative expense
Cinema exhibition (1,022) (1,217) 16 % (2,005) (2,298) 13 %
Real estate (203) (209) 3 % (382) (403) 5 %
Total general and administrative expense (1,225) (1,426) 14 % (2,387) (2,701) 12 %
Segment operating income
Cinema exhibition 9,158 5,453 68 % 7,817 979 >100 %
Real estate 1,578 1,479 7 % 2,967 3,074 (3) %
Total segment operating income (loss) $ 10,736 $ 6,932 55 % $ 10,784 $ 4,053 >100 %
NON-SEGMENT RESULTS
Depreciation and amortization expense (83) (84) 1 % (178) (219) 19 %
General and administrative expense (3,175) (3,957) 20 % (6,760) (7,835) 14 %
Interest expense, net (4,321) (4,354) 1 % (8,549) (9,096) 6 %
Equity earnings of unconsolidated joint ventures 360 285 26 % 431 308 40 %
Gain (loss) on sale of assets — 1,872 (>100) % — 8,398 (>100) %
Other income (expense) 294 (2,273) >100 % (194) (2,607) 93 %
Income before income taxes 3,811 (1,579) >100 % (4,466) (6,998) 36 %
Income tax benefit (expense) (1,497) (1,225) (22) % (1,354) (753) (80) %
Net income (loss) 2,314 (2,804) >100 % (5,820) (7,751) 25 %
Less: net income (loss) attributable to noncontrolling interests 44 (137) >100 % 57 (328) >100 %
Net income (loss) attributable to Reading International, Inc. $ 2,270 $ (2,667) >100 % $ (5,877) $ (7,423) 21 %
Basic earnings (loss) per share $ 0.10 $ (0.12) >100 % $ (0.26) $ (0.33) 21 %
Consolidated and Non-Segment Results:
Second Quarter Net Results
Revenue
Global revenue for the quarter ended June 30, 2026 increased by 11% from $60.4 million to $66.9 million compared to the equivalent prior-year period. This was driven by increased cinema revenues, primarily in Australia due to an improved movie slate led by movies
38
such Michael, The Super Mario Galaxy Movie, The Devil Wears Prada 2, and Toy Story 5. Such movies led to higher total circuit attendance volumes and higher ATP when compared to the second quarter of 2025. Our cinema revenues also benefited from an increase in 11% in the value of the Australian dollar against the comparative period. Real estate revenues held steady despite the impact of the sale of Cannon Park in May 2025 being offset by favorable exchange rate movements.
Global revenue for the six months ended June 30, 2026 increased by 11% from $100.5 million to $112.0 million compared to the equivalent prior-year period. This was driven by increased cinema revenues and an increase in 11% in the value of the Australian dollar across the comparative six month period. In addition to Q2’s movies, the six months to June 30, 2026 also benefited from the success of Project Hail Mary and Avatar: Fire and Ash in the first quarter. Real estate revenues held steady, with the impact of the sale of Cannon Park in May 2025 being offset by favorable exchange rate movements.
Segment Operating Income/(Loss)
Our total global segment operating income for the quarter ended June 30, 2026, increased by 55%, from net operating income of $6.9 million to net operating income of $10.7 million compared to the equivalent prior-year period. Our segment operating income benefited from increased attendance volumes due to an improved movie slate, and our major variable costs, being film rent, F&B and labor, while increasing, remained relatively consistent as a percentage of cinema revenue when compared to the prior period. Our reduced depreciation expense is a reflection of deferred capital investment in certain of our cinemas.
Our total global segment operating income for the six months ended June 30, 2026, increased by 166%, from net operating income of $4.1 million to net operating income of $10.8 million compared to the equivalent prior-year period. This was due to our second quarter performance, which resulted in a 52% increase in cinema revenues when compared to the quarter ended March 31, 2026.
During the second quarter of 2026, and indeed for the six months ended June 30, 2026, the Australia dollar strengthened against the U.S. dollar. The average Australia dollar exchange rate against the U.S. dollar for the second quarter of 2026 increased by 10.8% compared to the same period in 2025. The New Zealand dollar value has remained stable, with this exchange rate against the U.S. dollar weakened by only 1.5% in the second quarter of 2026 compared to the same period in 2025, but strengthened against the U.S. dollar by 1.1% in the six months to June 30, 2025.
Income Tax Expense
Income tax benefit for the quarter ended June 30, 2026, increased by 22% from $1.2 million to $1.5 million compared to the equivalent prior-year period. The change between 2026 and 2025 is primarily related to an increase in consolidated income in 2026.
Income tax expense for the six months ended June 30, 2026, increased by 80% from $0.8 million to $1.4 million compared to the equivalent prior-year period. The change between 2026 and 2025 is primarily related to a decrease in year-to-date consolidated losses in 2026.
Net Income/(Loss)
Our net income/(loss) for the quarter ended June 30, 2026, increased by 183%, from a net loss of $2.8 million to net income of $2.3 million. This was primarily due to our increased segment operating income and $794,000 of salary and bonus costs savings in general and administrative expenses, offset by a $1.9 million gain on sale of our property assets in Cannon Park, Australia and $2.3 million of foreign exchange losses not repeated in the current quarter.
Our net income/(loss) for the six months ended June 30, 2026, decreased by 25%, from a net loss of $7.8 million to a net loss of $5.8 million compared to the equivalent prior-year period. This was due to our improved segment operating income and a reduction of general and administrative expenses of $1.0 million. Such reductions were largely attributable to lower corporate salary and bonus costs, and were offset by a combined $8.4 million gain on sale on our Wellington, New Zealand and Cannon Park, Australia, properties. Income attributable to such sales was not replicated in the first six months of 2026. Additionally, a total of $2.6 million in exchange losses from the six months to June 30, 2025 were not repeated in the current period. Our interest expense reduced by $547,000 due to the pay down of debt from prior periods.
39
Business Segment Results
Cinema Exhibition
The following table details our cinema exhibition segment operating results for the quarter and six months ended June 30, 2026, and June 30, 2025, respectively:
% Change
Quarter Ended Six Months Ended Fav/(Unfav)
(Dollars in thousands) June 30, 2026 % of Revenue June 30, 2025 % of Revenue June 30, 2026 % of Revenue June 30, 2025 % of Revenue Quarter Ended Six Months Ended
REVENUE
United States Admissions revenue $ 15,650 25% $ 16,099 28% $ 26,396 25% $ 26,344 28% (3) % - %
Food & beverage revenue 10,678 17% 11,274 20% 17,386 17% 17,382 19% (5) % - %
Advertising and other revenue 3,150 5% 2,885 5% 5,159 5% 4,827 5% 9 % 7 %
$ 29,478 47% $ 30,258 53% $ 48,941 47% $ 48,553 52% (3) % 1 %
Australia Admissions revenue $ 18,829 30% $ 14,275 25% $ 31,005 30% $ 23,905 26% 32 % 30 %
Food & beverage revenue 9,323 15% 7,213 13% 15,410 15% 12,069 13% 29 % 28 %
Advertising and other revenue 1,829 3% 1,421 3% 3,272 3% 2,617 3% 29 % 25 %
$ 29,981 48% $ 22,909 40% $ 49,687 48% $ 38,591 41% 31 % 29 %
New Zealand Admissions revenue $ 2,310 4% $ 2,338 4% $ 3,809 4% $ 3,884 4% (1) % (2) %
Food & beverage revenue 1,070 2% 1,135 2% 1,749 2% 1,901 2% (6) % (8) %
Advertising and other revenue 151 0% 142 0% 265 0% 257 0% 6 % 3 %
$ 3,531 6% $ 3,615 6% $ 5,823 6% $ 6,042 6% (2) % (4) %
Total revenue $ 62,990 100% $ 56,782 100% $ 104,451 100% $ 93,186 100% 11 % 12 %
OPERATING EXPENSE
United States Film rent and advertising cost $ (8,891) 14% $ (9,108) 16% $ (14,530) 14% $ (14,166) 15% 2 % (3) %
Food & beverage cost (2,661) 4% (2,931) 5% (4,288) 4% (4,514) 5% 9 % 5 %
Occupancy expense (3,968) 6% (4,420) 8% (7,996) 8% (8,387) 9% 10 % 5 %
Labor cost (4,343) 7% (4,212) 7% (8,003) 8% (8,293) 9% (3) % 3 %
Utilities (1,445) 2% (1,332) 2% (2,648) 3% (2,551) 3% (8) % (4) %
Cleaning and maintenance (1,509) 2% (1,754) 3% (2,797) 3% (3,295) 4% 14 % 15 %
Other operating expenses (1,906) 3% (2,321) 4% (3,865) 4% (4,468) 5% 18 % 13 %
$ (24,723) 39% $ (26,078) 46% $ (44,127) 42% $ (45,674) 49% 5 % 3 %
Australia Film rent and advertising cost $ (8,515) 14% $ (6,586) 12% $ (13,590) 13% $ (10,542) 11% (29) % (29) %
Food & beverage cost (2,024) 3% (1,531) 3% (3,391) 3% (2,606) 3% (32) % (30) %
Occupancy expense (4,952) 8% (4,511) 8% (9,736) 9% (8,805) 9% (10) (11) %
Labor cost (4,242) 7% (3,425) 6% (7,941) 8% (6,732) 7% (24) (18) %
Utilities (880) 1% (651) 1% (1,960) 2% (1,493) 2% (35) (31) %
Cleaning and maintenance (1,438) 2% (1,154) 2% (2,569) 2% (2,304) 2% (25) (12) %
Other operating expenses (1,044) 2% (799) 1% (1,937) 2% (1,574) 2% (31) (23) %
$ (23,095) 37% $ (18,657) 33% $ (41,124) 39% $ (34,056) 37% (24) % (21) %
New Zealand Film rent and advertising cost $ (1,056) 2% $ (1,141) 2% $ (1,637) 2% $ (1,789) 2% 7 % 8 %
Food & beverage cost (223) 0% (269) 0% (362) 0% (416) 0% 17 13 %
Occupancy expense (709) 1% (737) 1% (1,453) 1% (1,471) 2% 4 1 %
Labor cost (545) 1% (579) 1% (1,028) 1% (1,113) 1% 6 8 %
Utilities (132) 0% (136) 0% (231) 0% (234) 0% 3 1 %
Cleaning and maintenance (182) 0% (196) 0% (327) 0% (390) 0% 7 % 16 %
Other operating expenses (192) 0% (147) 0% (394) 0% (454) 0% (31) % 13 %
$ (3,039) 5% $ (3,205) 6% $ (5,432) 5% $ (5,867) 6% 5 % 7 %
Total operating expense $ (50,857) 81% $ (47,940) 84% $ (90,683) 87% $ (85,597) 92% (6) % (6) %
DEPRECIATION, AMORTIZATION, IMPAIRMENT AND GENERAL AND ADMINISTRATIVE EXPENSE
United States Depreciation and amortization $ (944) 1% $ (1,157) 2% $ (1,912) 2% $ (2,278) 2% 18 % 16 %
General and administrative expense (606) 1% (731) 1% (1,253) 1% (1,456) 2% 17 % 14 %
$ (1,550) 2% $ (1,888) 3% $ (3,165) 3% $ (3,734) 4% 18 % 15 %
Australia Depreciation and amortization $ (900) 1% $ (905) 2% $ (1,814) 2% $ (1,819) 2% 1 % - %
General and administrative expense (420) 1% (427) 1% (756) 1% (772) 1% 2 % 2 %
$ (1,320) 2% $ (1,332) 2% $ (2,570) 2% $ (2,591) 3% 1 % 1 %
New Zealand Depreciation and amortization $ (109) 0% $ (111) 0% $ (219) 0% $ (214) 0% 2 % (2) %
General and administrative expense 4 (0)% (58) 0% 3 (0)% (71) 0% >100 % >100 %
$ (105) 0% $ (169) 0% $ (216) 0% $ (285) 0% 38 % 24 %
Total depreciation, amortization, general and administrative expense $ (2,975) 5% $ (3,389) 6% $ (5,951) 6% $ (6,610) 7% 12 % 10 %
OPERATING INCOME (LOSS) – CINEMA
United States $ 3,205 5% $ 2,292 4% $ 1,649 2% $ (855) (1)% 40 % >100 %
Australia 5,566 9% 2,920 5% 5,993 6% 1,944 2% 91 % >100 %
New Zealand 387 1% 241 0% 175 0% (110) (0)% 61 % >100 %
Total Cinema operating income (loss) $ 9,158 15% $ 5,453 10% $ 7,817 7% $ 979 1% 68 % >100 %
40
Second Quarter Results
Revenue
Global cinema revenue for the quarter ended June 30, 2026, increased by 11% from $56.8 million to $63.0 million compared to the equivalent prior-year period. Mainstream movies such as Michael, The Super Mario Galaxy Movie, The Devil Wears Prada 2 and Toy Story 5 made for a mainstream slate that resonated with guests more strongly than the quarter ended June 30, 2025. Australia was the primary beneficiary of the increased cinema revenue with 15% higher attendance than the second quarter of 2025 and a 3.4% increased ATP. Australian cinema revenues benefited further from an increase in 11% in the value of the Australian dollar against the comparative period. The US saw a 2.4% increase in ATP, but overall attendance was down due to the May 2026 closure of our cinema 10-screen La Mesa cinema, the closure of our San Diego cinema in April 2025 and a weaker specialty slate compared to the comparative period. This quarter’s movie slate was not as well received in Hawaii as the same prior-year period, which further impacted our results. Our F&B revenue improvements in Australia were driven by attendance and foreign exchange benefits.
Global cinema revenue for the six months ended June 30, 2026, increased by 12% from $93.2 million to $104.5 million compared to the equivalent prior-year period. Movies such as Michael, The Super Mario Galaxy Movie, The Devil Wears Prada 2, Project Hail Mary and Toy Story 5 made for a mainstream movie slate which was stronger than the six months ended June 30, 2025. ATP increased for all three countries, while attendance reduced for the US due to the closure of our cinema in La Mesa in May 2026 and the closure of our San Diego cinema in April 2025, and a slightly weaker specialty movie slate.
Operating Expenses
Global cinema operating expenses for the quarter ended June 30, 2026, increased by 6% from $47.9 million to $50.9 million compared to the equivalent prior-year period. Operating expenses in Australia increased due to increased attendance and the impact of foreign exchange rates, but film rent costs as a proportion of box office attendance remained broadly similar. Our Australian occupancy cost increased due to scheduled rent increases and foreign exchange impacts, but our increases in revenue meant that occupancy cost as a proportion of revenue decreased. US expenses decreased 5% due to the overall reduced attendance caused by the closure of our La Mesa cinema, the closure of which also decreased our rent expense, but film rent patterns followed those of Australia.
Global cinema operating expenses for the six months ended June 30, 2026, increased by 6% from $85.6 million to $90.7 million compared to the equivalent prior-year period. This was driven by increased attendance in Australia, which increased cinema operating expenses while broadly holding our film rent, F&B and labor margins. US expenses decreased due to the impacts of increased attendance being offset by the closure of our La Mesa and San Diego cinemas, the impact of negotiated rent abatements, and savings in cleaning and maintenance and other operating expenses.
Depreciation, amortization, impairment, general and administrative expense
Depreciation, amortization, impairment, and general and administrative expenses for the quarter ended June 30, 2026, decreased by 12% from $3.4 million to $3.0 million, compared to the equivalent prior-year period.
Depreciation, amortization, impairment, and general and administrative expenses for the six months ended June 30, 2026, decreased by 10% from $6.6 million to $6.0 million, compared to the equivalent prior-year period.
Cinema Segment Operating Income/(Loss)
Our global cinema segment operating income/(loss) for the quarter ended June 30, 2026, increased by 68% from a net operating income of $5.5 million to net operating income of $9.2 million compared to the equivalent prior-year period. The improvement in segment operating income is due to increased cinema revenues in Australia offset by decreases in cinema revenues in the US and New Zealand, and decreases in operating expenses in the US and New Zealand offset by attendance-driven increases in Australia.
Our global cinema segment operating income/(loss) for the six ended June 30, 2026, increased by 698% from net operating income of $1.0 million to net operating income of $7.8 million compared to the equivalent prior-year period. The improvement in segment operating income is due to increased cinema revenues in Australia and the US offset by higher operating expenses in Australia.
41
Real Estate
The following table details our real estate segment operating results for the quarter ended June 30, 2026 and June 30, 2025, respectively:
% Change
Quarter Ended Six Months Ended Fav/(Unfav)
(Dollars in thousands) June 30, 2026 % of Revenue June 30, 2025 % of Revenue June 30, 2026 % of Revenue June 30, 2025 % of Revenue Quarter Ended Fav/ (Unfav)
REVENUE
United States Live theatre rental and ancillary income $ 824 17% $ 630 14% $ 1,572 17% $ 1,173 12% 31 % 34 %
Property rental income 1,055 22% 1,070 23% 2,107 22% 2,114 22% (1) % - %
1,879 39% 1,700 37% 3,679 39% 3,287 35% 11 % 12 %
Australia Property rental income 2,762 57% 2,741 59% 5,343 57% 5,756 61% 1 % (7) %
New Zealand Property rental income 212 4% 212 5% 427 5% 455 5% - % (6) %
Total revenue $ 4,853 100% $ 4,653 100% $ 9,449 100% $ 9,498 100% 4 % (1) %
OPERATING EXPENSE
United States Live theatre cost $ (259) 5% $ (255) 5% $ (532) 6% $ (492) 5% (2) % (8) %
Occupancy expense (220) 5% (174) 4% (445) 5% (352) 4% (26) % (26) %
Utilities (34) 1% 16 (0)% (103) 1% (28) 0% (>100) % (>100) %
Cleaning and maintenance (141) 3% (75) 2% (177) 2% (106) 1% (88) % (67) %
Other operating expenses (217) 4% (264) 6% (430) 5% (430) 5% 18 % - %
(871) 18% (752) 16% $ (1,687) 18% $ (1,408) 15% (16) % (20) %
Australia Occupancy expense (474) 10% (479) 10% $ (925) 10% $ (967) 10% 1 % 4 %
Labor cost (5) 0% (76) 2% (8) 0% (119) 1% 93 % 93 %
Utilities (18) 0% (20) 0% (49) 1% (34) 0% 10 % (44) %
Cleaning and maintenance (281) 6% (215) 5% (532) 6% (435) 5% (31) % (22) %
Other operating expenses (211) 4% (198) 4% (458) 5% (456) 5% (7) % - %
(989) 20% (988) 21% $ (1,972) 21% $ (2,011) 21% - % 2 %
New Zealand Occupancy expense (35) 1% (31) 1% $ (69) 1% $ (89) 1% (13) % 22 %
Labor cost — 0% — 0% — 0% (2) 0% - % 100 %
Utilities — 0% — 0% — 0% (5) 0% - % 100 %
Cleaning and maintenance — 0% — 0% — 0% (4) 0% - % 100 %
Other operating expenses (41) 1% (69) 1% (94) 1% (276) 3% 41 % 66 %
(76) 2% (100) 2% $ (163) 2% $ (376) 4% 24 % 57 %
Total operating expense $ (1,936) 40% $ (1,840) 40% $ (3,822) 40% $ (3,795) 40% (5) % (1) %
DEPRECIATION, AMORTIZATION, GENERAL AND ADMINISTRATIVE EXPENSE
United States Depreciation and amortization $ (651) 13% $ (674) 14% $ (1,309) 14% $ (1,333) 14% 3 % 2 %
General and administrative expense (174) 4% (185) 4% (345) 4% (315) 3% 6 % (10) %
(825) 17% (859) 18% (1,654) 18% (1,648) 17% 4 % - %
Australia Depreciation and amortization $ (426) 9% $ (391) 8% $ (850) 9% $ (776) 8% (9) % (10) %
General and administrative expense (5) 0% (24) 1% (13) 0% (87) 1% 79 % 85 %
(431) 9% (415) 9% (863) 9% (863) 9% (4) % - %
New Zealand Depreciation and amortization (59) 1% (60) 1% (119) 1% (117) 1% 2 % (2) %
General and administrative expense (24) 0% — 0% (24) 0% (1) 0% - % (>100) %
(83) 2% (60) 1% (143) 2% (118) 1% (38) % (21) %
— — -
Total depreciation, amortization, general and administrative expense $ (1,339) 28% $ (1,334) 29% $ (2,660) 28% $ (2,629) 28% - % (1) %
OPERATING INCOME (LOSS) - REAL ESTATE
United States $ 183 4% $ 89 2% $ 338 4% $ 231 2% >100 % 46 %
Australia 1,342 28% 1,338 29% 2,508 27% 2,882 30% - % (13) %
New Zealand 53 1% 52 1% 121 1% (39) (0)% 2 % >100 %
Total real estate operating income (loss) $ 1,578 33% $ 1,479 32% $ 2,967 31% $ 3,074 32% 7 % (3) %
Second Quarter Results
Revenue
Real estate revenue for the quarter ended June 30, 2026, remained broadly consistent with the equivalent prior-year period. This was due to the loss of property rental income from the monetization of Cannon Park in May 2025, offset by strengthening Australian dollar exchange rates and higher Live Theatre rental and ancillary income.
Real estate revenue for the six months ended June 30, 2026, remained broadly consistent with the equivalent prior-year period, reflective of the loss of rental revenue from the monetization of Cannon Park.
42
Real Estate Segment Income/(Loss)
Real estate segment operating income/(loss) for the quarter ended June 30, 2026, increased by 7% from net operating income of $1.5 million to net operating income of $1.6 million compared to the equivalent prior-year period. This was driven by movements in revenue, as costs remain broadly similar to the comparative period.
Real estate segment operating income/(loss) for the six months ended June 30, 2026, decreased by 3% from net operating income of $3.1 million to net operating income of $3.0 million compared to the equivalent prior-year period.
LIQUIDITY AND CAPITAL RESOURCES
Our Financing Position
As of June 30, 2026, we had $5.7 million in unrestricted cash and cash equivalents compared to $10.5 million on December 31, 2025. The changes in cash and cash equivalents for the quarter ended June 30, 2026, and June 30, 2025, respectively, are discussed as follows:
Six Months Ended
June 30,
(Dollars in thousands) 2026 2025 % Change
Net cash provided by (used in) operating activities $ 682 $ (6,151) >100 %
Net cash provided by (used in) investing activities (1,418) 37,806 (>100) %
Net cash provided by (used in) financing activities (4,426) (34,883) 87 %
Effect of exchange rate on cash and restricted cash 263 101 >100 %
Increase (decrease) in cash and cash equivalents and restricted cash $ (4,899) $ (3,127) (57) %
Operating activities
Cash used in operating activities for the six months ended June 30, 2026, increased from cash used of $6.2 million, to $0.7 million provided by operating activities compared to the same period in the prior year. This was due to increases in attendance driving improved operating results.
Investing activities
Cash used in investing activities during the six months ended June 30, 2026 was $1.4 million, compared to cash provided in the same prior year period of $37.8 million. This was due to the proceeds on sale of our Wellington and Cannon Park properties in the prior year period. In the current period, we continued to complete strategic upgrades and renovations of certain theaters.
Financing activities
Cash used in financing activities for the six months ended June 30, 2026, decreased from $34.9 million to $4.4 million compared to the same prior year period. In the six months to June 30, 2025, we repaid our $10.5 million Westpac loan and $6.1 million of our Bank of America loan following the monetization of our Wellington properties and Cannon Park. In the six months to June 30, 2026, we made scheduled repayments on certain loans, rather than larger pay downs triggered by maturities or asset monetizations.
43
On June 30, 2026, our total outstanding borrowings gross of direct financing costs were $183.1 million compared to $185.1 million on December 31, 2025. 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 six months ended June 30, 2026, and preceding four years:
As of and for the 6-Months Ended Year Ended December 31
(Dollars in thousands) June 30, 2026 2025 2024 2023 2022
Total Resources (cash and borrowings)
Cash and cash equivalents (unrestricted) $ 5,680 $ 10,531 $ 12,347 $ 12,906 $ 29,947
Unused borrowing facility 2,859 2,359 7,859 7,859 12,000
Restricted for capital projects 2,859 2,359 7,859 7,859 12,000
Unrestricted capacity — — — — —
Total resources at period end 8,539 12,890 20,206 20,765 41,947
Total unrestricted resources at period end 5,680 10,531 12,347 12,906 29,947
Debt-to-Equity Ratio
Total contractual facility $ 185,916 $ 187,450 $ 210,572 $ 218,159 $ 227,633
Total debt (gross of deferred financing costs) 183,057 185,091 202,713 210,300 215,633
Current 107,956 35,999 69,193 35,070 38,026
Non-current 75,101 149,092 133,520 175,230 177,607
Finance lease liabilities — — 43 83 28
Total book equity (23,141) (18,098) (4,790) 32,996 63,279
Debt-to-equity ratio (7.91) (10.23) (42.32) 6.37 3.41
Changes in Working Capital
Working capital (deficit) $ (157,379) $ (106,765) $ (104,584) $ (88,373) $ (74,152)
Current ratio 0.23 0.17 0.35 0.30 0.39
Capital Expenditures (including acquisitions) $ 1,389 $ 1,498 $ 2,028 $ 4,711 $ 9,780
(1)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.
Our working capital deficit increased at June 30, 2026, because of the loans due in twelve months as discussed in Note 13 - Borrowings and further below.
Our Financing Strategy
Responding to a rapidly evolving operating environment
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.
Prior to the COVID-19 pandemic, we used cash generated from operations and other excess cash, to the extent not needed, to fund capital investments contemplated by our business plan, in order 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 reviewed the maturities of our borrowing arrangements and negotiated renewals and extensions where necessary.
The COVID-19 pandemic, the 2023 Hollywood Strikes and periods of weak theatrical releases, augmented by changing consumer habits due to each of the foregoing, and continuing macroeconomic headwinds such as high interest rates, inflation, supply chain issues and increased film rent (particularly on popular releases), labor, and operating costs, have necessitated a change in strategy while the global cinema business recovers. We have taken a variety of steps across our various operating jurisdictions to reduce our spending, including, without limitation, deferring non-essential capital expenditures, deferring certain operational expenses, renegotiating occupancy arrangements, closing certain unprofitable cinemas, deferring compensation expenses, and eliminating certain travel and entertainment expenses.
Actively managing our debt
As of June 30, 2026, we have debt of $108.0 million (being our current debt and our current subordinated debt) coming due in the next 12 months. Although central banks in the three countries in which we operate have reduced interest rates from recent highs, rates remain elevated compared with pre-pandemic levels (that being said, our New Zealand operations are unencumbered by debt). We continue to monitor debt maturities and, where appropriate, seek extensions or other modifications. We believe that our bank lenders understand that the continuing effects of the factors discussed in the preceding paragraph, and various economic factors, are not of our own making,
44
that we are taking aggressive steps to manage these industry headwinds, and that, generally speaking, our relationships with our lenders are positive.
In the U.S., we have recently modified our 44 Union Square and Bank of America loans to defer scheduled repayments with no changes to interest rates or maturity dates. We continue to make principal payments on this facility.
In Australia, our NAB financing requires that our Company comply with certain covenants. Furthermore, our Company’s use of loan funds from NAB is limited due to restrictions on the expatriation of funds from Australia to the United States. We have recently extended this facility by five years on November 12, 2025, to a current maturity date of July 31, 2030, and obtained temporary reductions to our minimum liquidity requirement for a defined period in 2026. We used a portion of the proceeds raised from the sale of Cannon Park in May 2025 to reduce our NAB facility by $12.9 million (AU$20.0 million). The U.S. dollar value of our Australian borrowings is subject to changes in foreign exchange rates, which may or may not be material depending on currency fluctuations. However, since we intend to repay this debt using Australian revenues, we do not consider such fluctuations material to our overall strategy.
For more information about our borrowings, please refer to Part I – Financial Information, Item 1 – Notes to Condensed Consolidated Financial Statements - Note 13 – Borrowings. For more information about our efforts to manage our liquidity issues, see Part I - Financial Information, Item 1 – Notes to Condensed Consolidated Financial Statements – Note 2 – Liquidity and Impairment Assessment.
Pursuing further asset monetizations where appropriate
As discussed elsewhere in this Report, we have monetized a number of assets and used the proceeds to support our ongoing liquidity, and are working towards two further monetizations.
Our Newberry Yard property in Williamsport, Pennsylvania continues to be listed as an asset held for sale. This property was historically used as a rail yard, and, accordingly, improved with tracks and switches and has direct access to the area’s rail system. Certain issues as to the location of various railroad rights of way have now been resolved on what we believe to be favorable terms and terms which enhanced the value of the property.
In December 2025 we wound up our relationship with Sutton Hill Associates (“SHA”) to among other things, obtain complete legal ownership of our Cinemas 1,2,3 property. Our 2025 Form 10-K discusses the mechanics of this transaction. In February 2026 we retained Newmark & Company Real Estate, Inc. to monetize the property. While no assurances can be given, we believe it reasonable to assume that these assets can be monetized before the end of the year. We assume that any buyer will be contemplating the redevelopment of the property for residential purposes (which we believe to be the highest and best use of the property and which we do not currently have the capital to pursue) and have advised our brokers that we are prepared to remain in occupancy during the development period. The only debt on our Cinemas 1,2,3 property is a $19.7 million first mortgage.
Liquidity expectations
We believe that cinema cash flow for 2026 will be stronger than in recent periods, but we continue to face significant macroeconomic challenges. While we are taking a variety of steps, as discussed above, to address these challenges, we may be required to adopt one or more alternatives to raise further liquidity if our Company is unable to generate sufficient cash flow in the upcoming months. Such alternatives may include, but are not limited to, further reducing, delaying or eliminating planning capital expenditures, monetizing additional assets, restructuring our debt and/or our lease obligations, or finding additional sources of liquidity. See also Note 2 – Liquidity and Impairment Assessment for discussion of our going concern assessment.
CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES
The following table provides information with respect to the 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 June 30, 2026:
(Dollars in thousands) 2026 2027 2028 2029 2030 Thereafter Total
Debt(1) $ 81,337 $ 3,043 $ 3,043 $ 3,043 $ 51,033 $ 13,645 $ 155,144
Subordinated debt(1) — 27,913 — — — — 27,913
Estimated interest on debt (2) 6,031 5,738 4,454 4,282 2,745 3,079 26,329
Operating leases, including imputed interest 29,496 26,722 25,440 23,442 21,699 106,979 233,778
Pension liability 292 607 640 442 — — 1,981
Interest on pension liability 50 77 44 11 — — 182
Total $ 117,206 $ 64,100 $ 33,621 $ 31,220 $ 75,477 $ 123,703 $ 445,327
(1)Information is presented gross of deferred financing costs.
45
(2)Estimated interest on debt is based on the anticipated loan balances for future periods and current applicable interest rates.
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.
Please refer to Part I, Item 3 – Legal Proceedings in our 2025 Form 10-K for more information. There have been no material changes to our litigation since our 2025 Form 10-K, except as set forth in Notes to Condensed Consolidated Financial Statements - Note 16 – Commitments and Contingencies included herein in Part I – Financial Information, Item 1 – Financial Statements on this Quarterly Report on Form 10-Q. This note sets out our litigation accounting policies.
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.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We believe that the application of the following accounting policies requires significant judgments and estimates in the preparation of our Condensed Consolidated Financial Statements and hence, are critical to our business operations and the understanding of our financial results:
(i) Impairment of Long-lived Assets (other than Goodwill and Intangible Assets with indefinite lives) – we evaluate our long-lived assets and finite-lived intangible assets using historical and projected data of cash flows as our primary indicator of potential impairment and we take into consideration the seasonality of our business. If the sum of the estimated, undiscounted future cash flows is less than the carrying amount of the asset, then an impairment is recognized for the amount by which the carrying value of the asset exceeds its estimated fair value based on an appraisal or a discounted cash flow calculation. For certain non-income producing properties or for those assets with no consistent historical or projected cash flows, we obtain appraisals or other evidence to evaluate whether there are impairment indicators for these assets.
No impairment losses were recorded for long-lived and finite-lived intangible assets for the quarter ended June 30, 2026.
(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 quarter ended June 30, 2026.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Our statements in this quarterly report, including the documents incorporated herein by reference, contain a variety of forward-looking statements as defined by the Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "may," "will," "expect," "believe," "intend," "future," and "anticipate" and similar references to future periods. Examples of forward-looking statements include, among others, our beliefs regarding the impact of the 2023 Hollywood Strikes on the cinema business; our expected operating results, including our ultimate return to pre-pandemic type results; our expectations regarding the recovery and future of the cinema exhibition industry, including the strength of movies anticipated for release in the future; our expectations regarding patrons returning to our theatres and continuing to use discretionary funds on entertainment outside of the home; our beliefs regarding the impact of our cinema-anchored real estate developments; our beliefs regarding the success of our diversified business strategy; our belief regarding the attractiveness of 44 Union Square to potential tenants and ability to lease space on acceptable terms; our ability to complete the sale of our Cinemas 1,2,3 property and our ability to remain at the property during the development period; our expectations regarding the effects of our enhanced F&B offerings and loyalty program changes on our operating results; our expectations regarding our ability to monetize our assets on terms acceptable to us; our expectations regarding credit facility covenant compliance and our ability to continue to obtain necessary covenant waivers and loan extensions on terms acceptable to us; our expectations regarding interest rate and currency exchange rate fluctuations; impacts of recent cinema closures on cinema revenue going forward; and our expectations of our liquidity and capital requirements and the allocation of funds.
46
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
With respect to our cinema and Live Theatre operations:
reduced consumer demand due to inflationary pressures and other macroeconomic pressures;
the adverse continuing effects of external events of the past pandemic and the 2023 Hollywood strikes on our Company’s results from operations, liquidity, cash flows, financial condition, and access to credit markets;
a change in consumer behavior in favor of alternative forms or mediums of entertainment, and limited availability of wide motion picture release content;
reduction in operating margins (or negative operating margins) due to (i) decreased attendance, (ii) limited availability of wide release content, and (iii) increased operating expenses;
competition from cinema operators who have successfully used debtor laws to reduce their debt and/or rent exposure;
the uncertainty as to the scope and extent of our government’s potential responses to future outbreak of infectious diseases;
the number and attractiveness to moviegoers of the films released in future periods, and potential changes in release dates for motion pictures;
the lack of availability of films in the short- or long-term as a result of (i) major film distributors releasing scheduled theatrical films on alternative channels; (ii) disruptions of film production;
the amount of money spent by film distributors to promote their motion pictures;
the licensing fees and terms required by film distributors from motion picture exhibitors in order to exhibit their films;
the comparative attractiveness of motion pictures as a source of entertainment and willingness and/or ability of consumers (i) to spend their dollars on entertainment and (ii) to spend their entertainment dollars on movies in an outside-the-home environment;
the extent to which we encounter competition from other cinema exhibitors, from other sources of outside-the-home entertainment, and from inside-the-home entertainment options, such as “home cinemas” and competitive film product distribution technology, such as, streaming, cable, satellite broadcast, and video on demand platforms;
our ability to continue to obtain, to the extent needed, waivers or other financial accommodations from our lenders and landlords;
the impact of major movies being released directly to one of the multitudes of streaming services available;
the impact of certain competitors’ subscription or advance pay programs;
the failure of our new initiatives to gain significant customer acceptance and use or to generate meaningful profits;
the cost and impact of improvements to our cinemas, such as improved seating, enhanced F&B offerings, and other improvements;
the ability to negotiate favorable rent abatement, deferral and repayment terms with our landlords (which may include lenders who have foreclosed on the collateral held by our prior landlords);
disruptions during cinema improvements;
in the U.S., the impact of the termination and phase-out of the so called “Paramount Decree”;
the risk of damage and/or disruption of cinema businesses from earthquakes as certain of our operations are in geologically active areas;
the impact of protests, demonstrations, and civil unrest on, among other things, government policy, consumer willingness to go to the movies;
labor shortages and increased labor costs related to such shortages and to increasingly costly labor laws and regulations applicable to part time non-exempt workers;
disruptions in film supply and film marketing due to the 2023 Hollywood Strikes; and
competition from a newly restructured Regal, which may have lower occupancy costs than our cinemas.
With respect to our real estate development and operation activities:
the increased costs of wages, supplies, services and other development expenses from inflation;
the impact on tenants from inflationary pressures;
uncertainty as to governmental responses to infectious diseases;
the rental rates and capitalization rates applicable to the markets in which we operate and the quality of properties that we own;
the ability to negotiate and execute lease agreements with material tenants;
the extent to which we can obtain on a timely basis the various land use approvals and entitlements needed to develop our properties;
the risks and uncertainties associated with real estate development;
47
the availability and cost of labor and materials;
the ability to obtain all permits to construct improvements;
the ability to finance improvements, including, but not limited to increased cost of borrowing and tightened lender credit policies;
the disruptions to our business from construction and/or renovations;
the possibility of construction delays, work stoppage, and material shortage;
competition for development sites and tenants;
environmental remediation issues;
the extent to which our cinemas can continue to serve as an anchor tenant that will, in turn, be influenced by the same factors as will influence generally the results of our cinema operations;
the increased depreciation and amortization expense as construction projects transition to leased real property;
the ability to negotiate and execute joint venture opportunities and relationships;
the risk of damage and/or disruption of real estate businesses from earthquakes as certain of our operations are in geologically active areas;
the disruptions or reductions in the utilization of entertainment, shopping and hospitality venues, as well as in our operations, due to pandemics, epidemics, widespread health emergencies, or outbreaks of infectious diseases, or to changing consumer tastes and habits; and
the impact of protests, demonstrations, civil unrest on government policy, consumer willingness to visit shopping centers.
With respect to our operations generally as an international company involved in both the development and operation of cinemas and the development and operation of real estate and previously engaged for many years in the railroad business in the United States:
our ability to renew, extend, renegotiate or replace our loans that mature in 2026 and beyond, and the impact of increasing interest rates;
our ability to grow our Company and provide value to our stockholders;
our ongoing access to borrowed funds and capital and the interest that must be paid on that debt and the returns that must be paid on such capital, and our ability to borrow funds to help cover the cessation of cash flows we experienced during and following the COVID-19 pandemic;
our ability to reallocate funds among jurisdictions to meet short-term liquidity needs;
the relative values of the currency used in the countries in which we operate;
changes in government regulation, including by way of example, the costs resulting from the requirements of Sarbanes-Oxley and other increased regulatory requirements;
our labor relations and costs of labor (including future government requirements with respect to minimum wages, shift scheduling, the use of consultants, pension liabilities, disability insurance and health coverage, and vacations and leave);
our exposure from time to time to legal claims and to uninsurable risks, such as those related to our historic railroad operations, including potential environmental claims and health-related claims relating to alleged exposure to asbestos or other substances now or in the future recognized as being possible causes of cancer or other health related problems, and class actions and private attorney general wage and hour and/or safe workplace-based claims;
our exposure to cybersecurity risks, including misappropriation of customer information or other breaches of information security;
the impact of future major outbreaks of contagious diseases;
the availability of employees and/or their ability or willingness to conduct work under any revised work environment protocols;
the increased risks related to employee matters, including increased employment litigation and claims relating to terminations or furloughs caused by cinema and ETC closures;
our ability to generate significant cash flow from operations if our cinemas and/or ETCs continue to experience demand at levels significantly lower than historical levels, which could lead to a substantial increase in indebtedness and negatively impact our ability to comply with the financial covenants, if applicable, in our debt agreements;
our ability to comply with credit facility covenants and our ability to obtain necessary covenant waivers and necessary credit facility amendments;
changes in interest rates, which could increase borrowing costs, reduce cash flow, impair profitability, and limit our ability to refinance or obtain additional capital on favorable terms;
fluctuations in foreign currency exchange rates and related impacts to overall financial performance;
changes in future effective tax rates and the results of currently ongoing and future potential audits by taxing authorities having jurisdiction over our various companies;
inflationary pressures on labor and supplies, and supply chain disruptions;
changes in applicable accounting policies and practices;
changes in future effective tax rates and the results of currently ongoing and future potential audits by taxing authorities having jurisdiction over our various companies;
48
the impact of the conflict events occurring in Eastern Europe and the threats of potential conflicts in the Asia-Pacific region;
the impact of the conflict events occurring in Israel and the threats of other potential conflicts in the Middle East, and
the impact of tariff regulations enforced by the U.S. against various nations.
The above list is not necessarily exhaustive, as business is by definition unpredictable and risky, and subject to influence by numerous factors outside of our control, such as changes in government regulation or policy, competition, interest rates, supply, technological innovation, changes in consumer taste, weather, earthquakes, pandemics, and the extent to which consumers in our markets have the economic wherewithal to spend money on beyond-the-home entertainment. Refer to Item 1A - Risk Factors, as well as the risk factors set forth in any other filings made under the Securities Act of 1934, as amended, including any of our Quarterly Reports on Form 10-Q, for more information.
Given the variety and unpredictability of the factors that will ultimately influence our businesses and our results of operation, no guarantees can be given that any of our forward-looking statements will ultimately prove to be correct. Actual results will undoubtedly vary and there is no guarantee as to how our securities will perform either when considered in isolation or when compared to other securities or investment opportunities.
Forward-looking statements made by us in this quarter report are based only on information currently available to us and are current only as of the date of this Quarterly Report on Form 10-Q for the period ended June 30, 2026. We undertake no obligation to publicly update or to revise any of our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. Accordingly, you should always note the date to which our forward-looking statements speak.
49