Reading International (NASDAQ: RDI) Q1 2026 revenue rises 12%
Rhea-AI Filing Summary
Reading International, Inc. reported Q1 2026 revenue of $45.1 million, up from $40.2 million, led by a 14% increase in cinema revenue to $41.5 million and aided by stronger Australian and New Zealand currencies. Real estate segment revenue declined 5% to $4.6 million following prior-year asset sales.
Despite achieving its strongest first quarter operating income since 2019, the company posted a net loss attributable to Reading of $8.1 million versus a $4.8 million loss, and EBITDA fell to $(0.8) million from $2.9 million, partly due to the absence of a prior-year gain on asset sales. Cash and cash equivalents were $5.5 million, asset groups held for sale rose to $24.5 million, and total stockholders’ equity remained negative at $(25.4) million as of March 31, 2026.
Positive
- None.
Negative
- None.
Insights
Revenue and cinema trends improved, but losses, negative equity and weaker EBITDA highlight ongoing financial pressure.
Reading International grew Q1 2026 total revenue to $45.1M, up 12% year over year, with cinema revenue rising 14% to $41.5M. Stronger Australian and New Zealand currencies and higher attendance, including record first-quarter food and beverage spend per head in the U.S. and Australia, supported results.
However, net loss attributable to the company widened to $8.1M, and EBITDA turned to a loss of $0.8M from positive $2.9M, as Q1 2025 had benefited from a $6.5M gain on asset sales. Total stockholders’ equity was negative $25.4M as of March 31, 2026, reflecting a leveraged balance sheet.
Management is pursuing liquidity through asset monetization, with asset groups held for sale increasing to $24.5M and plans to sell properties such as the Cinemas 1,2,3 building in New York and the Napier property in New Zealand. Future filings may show how these initiatives affect debt levels, interest costs, and profitability over subsequent quarters.
8-K Event Classification
Key Figures
Key Terms
EBITDA financial
Adjusted EBITDA financial
total segment operating income (loss) financial
asset groups held for sale financial
noncontrolling interests financial
operating lease liabilities financial
Earnings Snapshot
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
(Exact Name of Registrant as Specified in its Charter)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On May 15, 2026, Reading International, Inc. issued a press release announcing information regarding its results of operations and financial condition for the quarter ended March 31, 2026, a copy of which is attached as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
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99.1 | Press release issued by Reading International, Inc. dated May 15, 2026 |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| READING INTERNATIONAL, INC. | |
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Date: May 15, 2026 | By: | /s/ Gilbert Avanes |
| Name: | Gilbert Avanes |
| Title: | Executive Vice President, Chief Financial Officer and Treasurer |
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For more information, contact: Gilbert Avanes – EVP, CFO, and Treasurer (213) 235-2240
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Reading International Reports First Quarter 2026 Results
Earnings Call Webcast to Discuss First Quarter Financial Results
Scheduled to Post to Corporate Website on Tuesday, May 19, 2026
NEW YORK - May 15, 2026 - Reading International, Inc. (NASDAQ: RDI) (“Reading” or our “Company”), an internationally diversified cinema and real estate company with operations and assets in the United States, Australia, and New Zealand, today announced its results for the First Quarter ended March 31, 2026.
Key Financial Summary Results –First Quarter 2026
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Total Revenues of $45.1 million increased by 12% from $40.2 million in Q1 2025. |
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Representing the best result for this metric since Q1 2019, a reported Operating Loss of $3.6 million marks a 47% improvement from a $6.9 million Operating Loss reported in Q1 2025. |
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EBITDA decreased to a negative EBITDA of $0.8 million compared to a positive EBITDA of $2.9 million in Q1 2025, which 2025 quarter reflected a gain on sale of $6.6 million from the sale of our real estate assets in Wellington, New Zealand. |
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Taking into account that Q1 2025 gain on sale, our Basic Loss per Share of $0.36 declined by 69% compared to a Basic Loss per Share of $0.21 in Q1 2025. |
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Taking into account that Q1 2025 gain on sale, our Net Loss Attributable to Reading of $8.1 million weakened by 71% compared to a loss of $4.8 million in Q1 2025. |
In Q1 2026, both the Australian and New Zealand dollar average exchange rates strengthened against the U.S. dollar by 10.8% and 3.9%, respectively, compared to Q1 2025. With 53% of our Total Revenues being generated by our Australian and New Zealand businesses this quarter, the stronger currency positively impacted our U.S. reported operating results. This exchange ratio improvement trend has continued since the end of the quarter.
President and Chief Executive Officer, Ellen Cotter said, “We’re pleased to report that the Company achieved its strongest first quarter Operating Income result since 2019 pre-pandemic. This strong performance was powered by a 14% increase in our global cinema revenue, attributable to a stronger movie line-up from movies like Project Hail Mary, Wuthering Heights, GOAT, and Hoppers, along with solid Q4 2025 holdovers like Avatar: Fire and Ash and Zootopia 2. Also, reflective of the successful execution of our key strategic initiatives, each of our cinema divisions delivered improved operating income results, with our Australian cinemas delivering a much improved first quarter. In addition to our U.S. and Australian cinema divisions reporting the highest ever first quarter Food & Beverage spend per head, all cinema divisions continued to add members to their loyalty programs through creative initiatives. We expect our positive momentum to continue through 2026 as the remaining movie slate looks extremely promising with titles like Toy Story 5, Moana, Minions & Monsters, The Odyssey, Spider-Man: Brand New Day, Avengers: Doomsday and Dune: Part Three.
Our Q1 2026 global Real Estate division segment revenues and operating income decreased against Q1 2025. The performance reflects the execution of our strategy to raise liquidity through select asset monetization, most notably the 2025 sales of our real estate assets in Wellington, New Zealand and Townsville, Australia. Our U.S. Real Estate business supported the global Real Estate division by reporting its highest ever first quarter U.S. Real Estate revenue, led by strengthening in our Live Theatre revenue.
Lastly, our improved Q1 2026 Operating Loss also reflects an 8% reduction in our global General & Administrative costs.”
Cotter continued, “During the first quarter 2026, in an effort to bolster our liquidity, our Board directed Management to begin efforts to sell the Cinemas 1,2,3 building in NYC. And, as of the date of this Release, we are under contract to sell our Napier property in New Zealand with an expected cinema lease back.
With a solid first quarter operational start, a balance sheet which continues to be anchored by a strong real estate portfolio, and our global cinemas poised to capitalize on an exciting and robust movie slate through the remainder of the year, while no assurances can be given, we believe our Company is well-positioned to deliver a strong 2026.”
Cinema Business
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With respect to Q1 2026, and compared to Q1 2025, our global cinemas reported (i) $41.5 million in cinema revenue, representing a 14% increase, and (ii) an operating loss of $1.3 million, representing a 70% improvement. |
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These positive results were driven by: |
(i) Increased attendance at our U.S. cinemas as a result of an improved Q1 2026 movie slate, despite a 7.3% reduction in our U.S. screen count due to the 2025 closure of an underperforming cinema;
(ii) Increased attendance in our Australian cinemas as a result of an improved Q1 2026 movie slate, coupled with creative and compelling loyalty program initiatives;
(iii) Improved F&B sales per person (“SPP”) for Q1 2026: (a) at AU$8.09, our Australian Cinema F&B SPP, represented the highest first quarter ever for our Australian Cinemas, and (b) at $8.38, our U.S. Cinema F&B SPP also ranked the highest first quarter during which our U.S. circuit was fully operating (i.e. excluding pandemic closure periods); and
(iv) The strengthening of the Australian and New Zealand currencies during the first quarter 2026.
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We continue to work with our global cinema landlords to align our occupancy costs with current operating conditions to help manage inflationary pressures and rising labor and operating costs, especially in the State of Hawaii, where we have experienced a significantly higher increase in operating expenses compared to the U.S. Mainland. |
Real Estate Business
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With respect to Q1 2026, and compared to Q1 2025, our global Real Estate business reported (i) $4.6 million of Real Estate revenue representing a decrease of 5%, and (ii) operating income of $1.4 million representing a 13% decrease. |
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Our Q1 2026 U.S. Real Estate revenues of $1.8 million represented a 13% increase from Q1 2025 primarily due to the improved performance of our Live Theatre assets in NYC, including our Minetta Lane Theatre, which generated its best first quarter in the Company’s history. |
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As of December 2025, we own 100% of our Cinemas 1,2,3 property. In order to improve our liquidity conditions, during the first quarter of 2026, our Board directed management to begin efforts to sell this property. |
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In New Zealand, we signed a purchase and sale agreement on March 4, 2026, to monetize our Napier property. The transaction has proceeded to the due diligence period. The transaction contemplates a lease back to us of the cinema at that location. |
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As of March 31, 2026, our combined Australian and New Zealand property portfolio has 58 third-party tenants, with a portfolio occupancy rate of 98% and total leased gross lettable area of 156,171 SF. |
Balance Sheet and Liquidity
As of March 31, 2026:
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Our cash and cash equivalents were $5.5 million. |
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Our assets had a total book value of $431.5 million, compared to a book value of $434.9 million as of December 31, 2025. |
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Our total gross debt of $184.6 million decreased by $0.5 million from December 31, 2025. |
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With respect to our debt position: |
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Continuing our efforts to reduce our overall interest expense, our Q1 2026 interest expense decreased by 11% compared to Q1 2025. |
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On February 6, 2026, we executed an amendment to defer a principal payment related to our 44 Union Square loan, which we paid on March 13, 2026. |
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On February 27, 2026, we executed an amendment to modify the principal repayment schedule of our Bank of America/Bank of Hawaii facility. |
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On March 31, 2026, we executed an amendment to reduce our NAB loan’s minimum liquidity requirement for a limited defined period in 2026. |
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We are currently working to refinance the loan on our live theatre buildings in New York City. |
Conference Call and Webcast
We plan to post our pre-recorded conference call and audio webcast on our corporate website on Tuesday, May 19, 2026, which will feature prepared remarks from Ellen Cotter, President and Chief Executive Officer; and Gilbert Avanes, Executive Vice President, Chief Financial Officer and Treasurer.
A pre-recorded question and answer session will follow our formal remarks. Questions and topics for consideration should be submitted to InvestorRelations@readingrdi.com by Monday, May 18, 2026, by 5:00 p.m. Eastern Time. The audio webcast will be able to be accessed by visiting https://investor.readingrdi.com/financial-information/quarterly-results.
About Reading International, Inc.
Reading International, Inc. (NASDAQ: RDI), an internationally diversified cinema and real estate company operating through various domestic and international subsidiaries, is a leading entertainment and real estate company, engaging in the development, ownership, and operation of cinemas and retail and commercial real estate in the United States, Australia, and New Zealand.
Reading’s cinema subsidiaries operate under multiple cinema brands: Reading Cinemas, Consolidated Theatres and the Angelika brand. Its live theatres are owned and operated by its Liberty Theaters subsidiary, under the Orpheum and Minetta Lane names. Its signature property developments, including Newmarket Village in Brisbane, Australia, and 44 Union Square in New York City, are maintained in special purpose entities.
Additional information about Reading can be obtained from our Company's website: http://www.readingrdi.com.
2
Cautionary Note Regarding Forward-Looking Statements
This earnings release contains a variety of forward-looking statements as defined by the Securities Litigation Reform Act of 1995, including those related to our expected operating results; our belief regarding the quality, the quantity and the appeal of upcoming movie releases in the remainder of 2026 and our revenue expectations relating to such movie releases; our positioning for future periods; our expectations regarding the sale and lease back of our Napier property in New Zealand; our expectations regarding our ability to refinance the loan on our live theater buildings in New York City; and our ability to successfully market and sell our Cinemas 1,2,3 property. You can recognize these statements by our use of words, such as “may,” “will,” “expect,” “believe,” and “anticipate” or other similar terminology.
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 earnings release are based only on information currently available to us and speak only as of the date on which they are made. 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.
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. 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, those factors discussed throughout Part I, Item 1A – Risk Factors and Part II Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the most recently ended fiscal year, 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.
3
Reading International, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(Unaudited; U.S. dollars in thousands, except per share data)
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Three Months Ended |
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March 31, |
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2026 |
2025 |
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Revenue |
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Cinema |
$ |
41,461 |
$ |
36,404 | ||
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Real estate |
3,663 | 3,765 | ||||
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Total revenue |
45,124 | 40,169 | ||||
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Costs and expenses |
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Cinema |
(38,894) | (36,577) | ||||
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Real estate |
(1,886) | (1,955) | ||||
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Depreciation and amortization |
(3,230) | (3,375) | ||||
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General and administrative |
(4,746) | (5,153) | ||||
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Total costs and expenses |
(48,756) | (47,060) | ||||
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Operating income (loss) |
(3,632) | (6,891) | ||||
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Interest expense, net |
(4,228) | (4,742) | ||||
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Gain (loss) on sale of assets |
— |
6,526 | ||||
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Other income (expense) |
(488) | (331) | ||||
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Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures |
(8,348) | (5,438) | ||||
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Equity earnings of unconsolidated joint ventures |
71 | 23 | ||||
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Income (loss) before income taxes |
(8,277) | (5,415) | ||||
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Income tax benefit (expense) |
143 | 472 | ||||
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Net income (loss) |
$ |
(8,134) |
$ |
(4,943) | ||
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Less: net income (loss) attributable to noncontrolling interests |
13 | (191) | ||||
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Net income (loss) attributable to Reading International, Inc. |
$ |
(8,147) |
$ |
(4,752) | ||
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Basic earnings (loss) per share |
$ |
(0.36) |
$ |
(0.21) | ||
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Diluted earnings (loss) per share |
$ |
(0.36) |
$ |
(0.21) | ||
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Weighted average number of shares outstanding–basic |
22,717,260 | 22,426,184 | ||||
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Weighted average number of shares outstanding–diluted |
22,717,260 | 22,426,184 | ||||
4
Reading International, Inc. and Subsidiaries
Consolidated Balance Sheets
(U.S. dollars in thousands, except share information)
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March 31, |
December 31, |
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2026 |
2025 |
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ASSETS |
(Unaudited) |
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Current Assets: |
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Cash and cash equivalents |
$ |
5,524 |
$ |
10,531 | ||
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Restricted cash |
2,342 | 2,327 | ||||
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Receivables |
4,270 | 4,553 | ||||
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Inventories |
1,629 | 1,664 | ||||
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Prepaid and other current assets |
6,610 | 2,281 | ||||
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Asset groups held for sale |
24,451 | 460 | ||||
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Total current assets |
44,826 | 21,816 | ||||
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Operating properties, net |
182,957 | 207,974 | ||||
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Operating lease right-of-use assets |
161,932 | 159,659 | ||||
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Investment in unconsolidated joint ventures |
3,320 | 3,264 | ||||
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Goodwill |
24,818 | 24,603 | ||||
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Intangible assets, net |
1,551 | 1,576 | ||||
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Deferred tax asset, net |
2,499 | 2,619 | ||||
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Other assets |
9,577 | 13,418 | ||||
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Total assets |
$ |
431,480 |
$ |
434,929 | ||
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts payable and accrued liabilities |
$ |
59,535 |
$ |
52,826 | ||
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Film rent payable |
3,280 | 6,973 | ||||
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Debt - current portion |
35,513 | 35,999 | ||||
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Derivative financial instruments - current portion |
16 | 56 | ||||
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Taxes payable - current |
211 | 545 | ||||
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Deferred current revenue |
11,220 | 11,327 | ||||
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Operating lease liabilities - current portion |
20,392 | 20,081 | ||||
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Other current liabilities |
782 | 774 | ||||
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Total current liabilities |
130,949 | 128,581 | ||||
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Debt - long-term portion |
114,548 | 114,350 | ||||
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Subordinated debt, non-current portion |
27,672 | 27,617 | ||||
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Noncurrent tax liabilities |
6,384 | 6,434 | ||||
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Operating lease liabilities - non-current portion |
164,128 | 162,919 | ||||
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Other liabilities |
13,186 | 13,126 | ||||
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Total liabilities |
$ |
456,867 |
$ |
453,027 | ||
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Commitments and contingencies (Note 16) |
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Stockholders’ equity: |
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Class A non-voting common shares, par value $0.01, 100,000,000 shares authorized, |
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33,972,781 issued and 21,036,670 outstanding at March 31, 2026 and |
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33,972,781 issued and 21,036,670 outstanding at December 31, 2025 |
241 | 241 | ||||
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Class B voting common shares, par value $0.01, 20,000,000 shares authorized and |
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1,680,590 issued and outstanding at March 31, 2026 and December 31, 2025 |
17 | 17 | ||||
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Nonvoting preferred shares, par value $0.01, 12,000 shares authorized and no issued |
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or outstanding shares at March 31, 2026 and December 31, 2025 |
— |
— |
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Additional paid-in capital |
155,822 | 155,454 | ||||
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Retained earnings (accumulated deficit) |
(137,077) | (128,930) | ||||
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Treasury shares, at cost |
(40,407) | (40,407) | ||||
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Accumulated other comprehensive income |
(4,141) | (4,614) | ||||
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Total Reading International, Inc. stockholders’ equity |
(25,545) | (18,239) | ||||
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Noncontrolling interests |
158 | 141 | ||||
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Total stockholders’ equity |
(25,387) | (18,098) | ||||
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Total liabilities and stockholders’ equity |
$ |
431,480 |
$ |
434,929 | ||
Reading International, Inc. and Subsidiaries
Segment Results
(Unaudited; U.S. dollars in thousands)
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Three Months Ended |
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March 31, |
% Change |
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(Dollars in thousands) |
2026 |
2025 |
(Unfavorable) |
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Segment revenue |
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Cinema |
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United States |
$ |
19,463 |
$ |
18,295 | 6 |
% |
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Australia |
19,706 | 15,682 | 26 |
% |
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New Zealand |
2,292 | 2,427 | (6) |
% |
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Total |
$ |
41,461 |
$ |
36,404 | 14 |
% |
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Real estate |
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United States |
$ |
1,800 |
$ |
1,587 | 13 |
% |
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Australia |
2,582 | 3,015 | (14) |
% |
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New Zealand |
214 | 243 | (12) |
% |
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Total |
$ |
4,596 |
$ |
4,845 | (5) |
% |
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Inter-segment elimination |
(933) | (1,080) | 14 |
% |
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Total segment revenue |
$ |
45,124 |
$ |
40,169 | 12 |
% |
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Segment operating income (loss) |
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Cinema |
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United States |
$ |
(1,555) |
$ |
(3,146) | 51 |
% |
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Australia |
426 | (974) |
>100 |
% |
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New Zealand |
(213) | (355) | 40 |
% |
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Total |
$ |
(1,342) |
$ |
(4,475) | 70 |
% |
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Real estate |
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United States |
$ |
155 |
$ |
143 | 8 |
% |
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Australia |
1,166 | 1,545 | (25) |
% |
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New Zealand |
69 | (94) |
>100 |
% |
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Total |
$ |
1,390 |
$ |
1,594 | (13) |
% |
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Total segment operating income (loss) (1) |
$ |
48 |
$ |
(2,881) |
>100 |
% |
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(1) |
Total segment operating income is a non-GAAP financial measure. See the discussion of non-GAAP financial measures that follows. |
5
Reading International, Inc. and Subsidiaries
Reconciliation of EBITDA and Adjusted EBITDA to Net Income (Loss)
(Unaudited; U.S. dollars in thousands)
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Three Months Ended |
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March 31, |
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(Dollars in thousands) |
2026 |
2025 |
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Net Income (loss) attributable to Reading International, Inc. |
$ |
(8,147) |
$ |
(4,752) | ||
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Add: Interest expense, net |
4,228 | 4,742 | ||||
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Add: Income tax expense (benefit) |
(143) | (472) | ||||
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Add: Depreciation and amortization |
3,230 | 3,375 | ||||
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EBITDA |
$ |
(832) |
$ |
2,893 | ||
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Adjustments for: |
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None |
— |
— |
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Adjusted EBITDA |
$ |
(832) |
$ |
2,893 | ||
6
Reading International, Inc. and Subsidiaries
Reconciliation of Total Segment Operating Income (Loss) to Income (Loss) before Income Taxes
(Unaudited; U.S. dollars in thousands)
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Three Months Ended |
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(Dollars in thousands) |
March 31, 2026 |
March 31, 2025 |
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Segment operating income (loss) |
$ |
48 |
$ |
(2,881) | |
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Unallocated corporate expense: |
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Depreciation and amortization expense |
(96) | (133) | |||
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General and administrative expense |
(3,584) | (3,877) | |||
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Interest expense, net |
(4,228) | (4,742) | |||
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Equity earnings (loss) of unconsolidated joint ventures |
71 | 23 | |||
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Gain (loss) on sale of assets |
— |
6,526 | |||
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Other (expense) income |
(488) | (331) | |||
|
Income (loss) before income taxes |
$ |
(8,277) |
$ |
(5,415) | |
7
Non-GAAP Financial Measures
This Earnings Release presents total segment operating income (loss), EBITDA, and Adjusted EBITDA, which are important financial measures for our Company, but are not financial measures defined by U.S. GAAP.
These measures should be reviewed in conjunction with the relevant U.S. GAAP financial measures and are not presented as alternative measures of earnings (loss) per share, cash flows or net income (loss) as determined in accordance with U.S. GAAP. Total segment operating income (loss) and EBITDA, as we have calculated them, may not be comparable to similarly titled measures reported by other companies.
Total segment operating income (loss) – We evaluate the performance of our business segments based on segment operating income (loss), and management uses total segment operating income (loss) as a measure of the performance of operating businesses separate from non-operating factors. We believe that information about total segment operating income (loss) assists investors by allowing them to evaluate changes in the operating results of our Company’s business separate from non-operational factors that affect net income (loss), thus providing separate insight into both operations and the other factors that affect reported results.
EBITDA – We use EBITDA in the evaluation of our Company’s performance since we believe that EBITDA provides a useful measure of financial performance and value. We believe this principally for the following reasons:
We believe that EBITDA is an accepted industry-wide comparative measure of financial performance. It is, in our experience, a measure commonly adopted by analysts and financial commentators who report upon the cinema exhibition and real estate industries, and it is also a measure used by financial institutions in underwriting the creditworthiness of companies in these industries. Accordingly, our management monitors this calculation as a method of judging our performance against our peers, market expectations, and our creditworthiness. It is widely accepted that analysts, financial commentators, and persons active in the cinema exhibition and real estate industries typically value enterprises engaged in these businesses at various multiples of EBITDA. Accordingly, we find EBITDA valuable as an indicator of the underlying value of our businesses. We expect that investors may use EBITDA to judge our ability to generate cash, as a basis of comparison to other companies engaged in the cinema exhibition and real estate businesses and as a basis to value our company against such other companies.
EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States of America and it should not be considered in isolation or construed as a substitute for net income (loss) or other operations data or cash flow data prepared in accordance with generally accepted accounting principles in the United States for purposes of analyzing our profitability. The exclusion of various components, such as interest, taxes, depreciation, and amortization, limits the usefulness of these measures when assessing our financial performance, as not all funds depicted by EBITDA are available for management’s discretionary use. For example, a substantial portion of such funds may be subject to contractual restrictions and functional requirements to service debt, to fund necessary capital expenditures, and to meet other commitments from time to time.
EBITDA also fails to take into account the cost of interest and taxes. Interest is clearly a real cost that for us is paid periodically as accrued. Taxes may or may not be a current cash item but are nevertheless real costs that, in most situations, must eventually be paid. A company that realizes taxable earnings in high tax jurisdictions may, ultimately, be less valuable than a company that realizes the same amount of taxable earnings in a low tax jurisdiction. EBITDA fails to take into account the cost of depreciation and amortization and the fact that assets will eventually wear out and have to be replaced.
Adjusted EBITDA – using the principles we consistently apply to determine our EBITDA, we further adjusted the EBITDA for certain items we believe to be external to our core business and not reflective of our costs of doing business or results of operation. Specifically, we have adjusted for (i) legal expenses relating to extraordinary litigation, and (ii) any other items that can be considered non-recurring in accordance with the two-year SEC requirement for determining an item is non-recurring, infrequent or unusual in nature.
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