We consider ourselves to be principally a cinema exhibition and real estate company. We currently own, operate, or have an interest in 286 screens in 44 cinema complexes. Calculated based on book value, nearly 70% of our assets relates to our real estate activities. Nearly 75% of our assets, again measured by book value, are located in Australia and New Zealand, including undeveloped land.

As at September 15, 2006, we operate

• a chain of multiplex cinemas in Australia and New Zealand operating under the "Reading" name, currently comprising 187 screens in 28 cinemas and featuring primarily conventional film product. In addition we have joint venture interests in 6 additional cinemas with 27 screens in Australia and New Zealand;



• a chain of principally art and urban cinemas in the United States including the City Cinemas chain in Manhattan and the Angelika Film Center & Café complexes in Manhattan, Dallas, Houston and Plano, currently comprising a total of 56 screens in 9 cinemas; and



• 7 "off Broadway" style live theaters, located in 4 fee-owned complexes; 3 in Manhattan and 1 in Chicago.

In Australia and New Zealand, we also develop, own and operate entertainment-themed retail centers, or "ETRC's." Our ETRC's typically consist of a multiplex cinema, complementary restaurant and retail uses, and convenient parking, all located on land owned or controlled by us. At the present time, we own and manage on a worldwide basis approximately 330,000 square feet of ancillary retail and commercial space in our various entertainment properties.

We will continue to focus on our real estate. Currently, either directly or through joint venture interests, we own the fee interest in nine of our cinemas. We have long-term leases on another three cinemas that permit a change of use of the property. In addition, we own:

• three ETRC's comprising 337,309 square feet of developed space in Auburn (a suburb of Sydney, Australia), Belmont (a suburb of Perth, Australia), and Wellington, New Zealand.
  
  
• An approximately 100,000 square foot shopping center in Newmarket (a suburb of Brisbane, Australia), which we anticipate will be expanded into an ETRC through the addition of a cinema component.
  
  
• the fee interest in all of our live theater complexes (three of which are located in Manhattan and one of which is located in Chicago );



• two in-fill suburban development sites in Australia (including a 50-acre parcel in suburban Melbourne );



• additional land for development contiguous to our Auburn and Wellington ETRC's (93,323 and 37,674-square feet, respectively); and



• various miscellaneous land holdings related to our historic railroad activities, comprising approximately 318 acres.

We own a 25% membership interest in the limited liability company that is developing an approximately 100,000 square foot mixed use condominium project on 57th Street just below 3rd Avenue, known as Place 57. We have, in essence, a right of first refusal to convert our membership interest into the ownership of the retail component of that project.

We believe that we can build stockholder value not only through the operation and controlled growth of our cinema businesses, but also through the appreciation of our real estate holdings and the sale or development of our properties as dictated by their best economic use. In 2003, we sold our interest in a four screen cinema in Manhattan to permit the redevelopment of that property. In 2004, we sold our interest in the Sutton Cinema, but, as mentioned in the preceding paragraph, are participating in the redevelopment of that property as the holder of a 25% membership interest in the limited liability company formed to develop the property. In the second quarter of 2005, we sold an office building in Glendale, California, and reinvested the proceeds of that sale into the real property underlying our Cinemas 1, 2 & 3 on 3rd Avenue in Manhattan in a so called “Section 1031 Exchange.”

On November 28, 2005, we completed construction and opened for operations some of the retail components of our fourth ETRC, located in Newmarket (a suburb of Brisbane). The cinema portion of our Newmarket ETRC is still in the development stage, but we anticipate that construction will begin on this remaining component during the fourth quarter of 2007.

We anticipate that, in addition to the cost effective management of our cinema and other operating assets, the major focus of our efforts in 2006 will be as follows:

• the completion of planning for a mixed use ETRC/residential development on our 124,754 square foot parcel in Moonee Ponds, a suburb of Melbourne, in Victoria, Australia;
  
  
• the commencement and advancement of the master plan development phase with respect to the development of our 50-acre site in Burwood, a suburb of Melbourne, in Victoria, Australia as a mixed-use development, including entertainment, retail, office and residential components; and
  
  
• the finalization of a plan for the redevelopment or other disposition of one or more of our remaining domestic real estate assets.

Burwood will be a major project for us, and it is likely that master planning will take some period of time. Earlier this year, we successfully completed the re-zoning of the property from an essentially industrial use zone to a zone allowing a mixture of retail, entertainment, commercial and residential uses. We believe that this has significantly enhanced the economic value of our Burwood Property. At the present time there are 430,000 people resident within five miles of the site, and approximately 70,000 people pass by the site every day. The site is well serviced both by fixed rail public transit and by arterial surface streets.