<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Reading Entertainment, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
READING ENTERTAINMENT, INC.
____________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 15, 1998
____________
To the Stockholders of Reading Entertainment, Inc.:
The Annual Meeting of Stockholders of Reading Entertainment, Inc. (the
"Company") will be held on Tuesday, December 15, 1998 at 10:00 a.m., prevailing
time, at the Regal Biltmore Hotel, 506 South Grand Avenue, Los Angeles,
California for the following purposes:
1. To elect six directors to serve until the expiration of their terms
and until their successors are duly elected.
2. To transact such other business as may properly come before the Annual
Meeting and any adjournment thereof.
A complete list of stockholders entitled to vote at the Annual Meeting will
be available at the offices of Citadel Holding Corporation, 550 South Hope
Street, Suite 1825, Los Angeles, California, for examination by any stockholder,
during ordinary business hours, for a period of not less than ten days prior to
the Annual Meeting.
The Board of Directors has fixed the close of business on November 20, 1998
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting.
A copy of the Company's Annual Report for the year ended December 31, 1997
and a quarterly report for the three and nine month periods ending September 30,
1998 are enclosed.
Whether or not you expect to attend the Annual Meeting in person, please
fill in, sign and return the enclosed form of proxy in the envelope provided.
By Order of the Board of Directors,
Robert F. Smerling, President
Dated: November 24, 1998
<PAGE>
READING ENTERTAINMENT, INC.
One Penn Square West
30 South 15/th/ Street, Suite 1300
Philadelphia, Pennsylvania 19102
215-569-3344
____________
PROXY STATEMENT
____________
INTRODUCTION
This Proxy Statement is furnished to the stockholders of Reading
Entertainment, Inc., a Delaware corporation (the "Company"), in connection with
the solicitation of proxies by the Board of Directors for use at the annual
meeting of stockholders (the "Annual Meeting") of the Company to be held on
Tuesday, December 15, 1998, at 10:00 a.m., prevailing time, and any adjournment
or postponement thereof, at the Regal Biltmore Hotel, Los Angeles, California. A
copy of the notice of meeting accompanies this Proxy Statement. It is
anticipated that the mailing of this Proxy Statement will commence on or about
November 25, 1998.
VOTING AND PROXIES
Only stockholders of record at the close of business on November 20, 1998,
the record date for the Annual Meeting, will be entitled to notice of and to
vote at the Annual Meeting. On the record date, the Company had outstanding
7,449,364 shares of common stock ("Common Stock"), each of which is entitled to
one vote, and 70,000 shares of Series A Voting Cumulative Convertible Preferred
Stock (the "Series A Stock") and 550,000 shares of Series B Voting Cumulative
Convertible Preferred Stock (the "Series B Stock" and, together with the Series
A Stock, the "Convertible Preferred Stock"), each of which is entitled to 9.64
votes.
Execution of a proxy will not in any way affect a stockholder's right to
attend the Annual Meeting and vote in person. Any person giving a proxy has the
right to revoke it at any time before is is exercised by (i) filing with the
Corporate Secretary of the Company, prior to the commencement of the Annual
Meeting, a duly executed instrument dated subsequent to such proxy revoking the
same or a duly executed proxy bearing a later date or (ii) attending the Annual
Meeting and voting in person.
Directors of the Company will be elected by a plurality vote of the
outstanding shares of Common Stock and Convertible Preferred Stock present and
entitled to vote at the Annual Meeting. Management of the Company anticipates
that Craig Corporation and its wholly-owned subsidiary Craig Management, Inc.
(collectively "Craig"), which together own of record 5,165,516 shares of Common
Stock and 550,000 shares of Series B Stock, will vote all of such shares in
favor of the directors named herein, although Craig has not given the Company
notice of its intentions. If all such shares are so voted, such directors will
be elected.
The presence, in person or by proxy, of the holders of shares of stock
entitling them to cast a majority of the votes entitled to be cast at the Annual
Meeting will constitute a quorum. Abstentions and broker non-votes will be
counted for purposes of determining the presence of a quorum. Abstentions and
broker non-votes will not be counted either for or against the proposal when
determining whether a particular proposal has been approved.
1
<PAGE>
ELECTION OF DIRECTORS
BENEFICIAL OWNERSHIP OF COMMON STOCK AND VOTING STOCK
The following tables set forth certain information regarding the Common
Stock and total voting stock (including the Series A Stock and the Series B
Stock) of the Company owned on November 20, 1998 by (i) each person or group who
is known by the Company to own beneficially more than 5% of any class of the
Company's voting securities, (ii) each of the Company's directors and most
highly compensated executive officers and (iii) all directors and officers of
the Company as a group.
5% BENEFICIAL OWNERS
<TABLE>
<CAPTION>
---------------------------------------------------------
Convertible Preferred Stock
--------------------------------------------------------------------------------
Common Stock Series A Series B
- ------------------------------------------------------------------------------------------------------------------------
Amount Amount Amount Percent
and Nature and Nature and Nature of
of Percent of Percent of Percent Voting
Name and Address of Beneficial of Beneficial of Beneficial of Stock
Beneficial Owner Ownership Class Ownership Class Ownership Class (1)
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Craig Corporation (2) (3) 5,165,516 69.34 0 0 550,000 100 77.96
550 South Hope Street
Los Angeles, CA 90071
- ------------------------------------------------------------------------------------------------------------------------
Citadel Holding Corporation 0 0 70,000 100 0 0 5.03
550 South Hope Street
Los Angeles, CA 90071
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percentage of Percentage of
Name of Beneficial Owner Ownership (4) Common Stock (4) Voting Stock (1)
- ------------------------ --------- ------------ ------------
<S> <C> <C> <C>
James J. Cotter..................................... 298,732 (3)(5) 3.86 2.18
Gregory R. Brundage................................. 3,750 (6) 0 0
Edward L. Kane...................................... 10,875 (7) * *
B. John Rochester................................... 0 0 0
Robert F. Smerling.................................. 7,812 (8) * *
John W. Sullivan.................................... 167,316 (9) 2.24 1.25
S. Craig Tompkins................................... 6,400 (3)(10) * *
James A. Wunderle................................... 4,250 (11) * *
All Directors and Officers As a Group (11 Persons).. 502,885 (12) 6.46 3.65
</TABLE>
* Percentages of less than one percent have not been indicated.
(1) Gives effect to the voting rights of 70,000 shares of Series A Stock,
all of which are owned by a subsidiary of Citadel Holding Corporation
(together with its subsidiaries "Citadel") and 550,000 shares of Series
B Stock, all of which are owned by Craig. The holders of the Series A
Stock and Series B. Stock are entitled to cast 9.64 votes per share,
voting together with the holders of the Common Stock and the other
series of Convertible Preferred Stock, on any matters presented to
stockholders of the Company, except as required by law.
2
<PAGE>
(2) Includes amounts held by Craig Management, Inc., a wholly-owned
subsidiary of Craig Corporation.
(3) Share information is presented based upon a Form 4 filed with the SEC
dated February 4, 1997. James J. Cotter is Chairman of the Board of the
Company and Craig. S. Craig Tompkins is Vice Chairman of the Board of
the Company and a director and President of Craig. James J. Cotter is
also a principal shareholder of Craig. Messrs. Cotter and Tompkins
disclaim beneficial ownership of the Company's shares held by Craig.
(4) Includes outstanding shares of Common Stock and shares issuable within
60 days of November 20, 1998 upon the exercise of outstanding stock
options.
(5) Includes 6,000 shares held in a profit sharing plan. Includes 292,732
shares which may be acquired through the exercise of stock options.
(6) Includes 3,750 shares which may be acquired through the exercise of
stock options.
(7) Includes 9,375 shares which may be acquired through the exercise of
stock options and 1,500 shares held in a retirement account.
(8) Includes 7,812 shares which may be acquired through the exercise of
stock options.
(9) Includes 55,520 shares owned by a family trust for which Mr. Sullivan
serves as a trustee, 32,785 shares held in a trust for the benefit of
Mr. Sullivan's daughter for which Mr. Sullivan serves as a trustee,
29,636 shares held in custodial accounts for Mr. Sullivan's son for
which Mr. Sullivan serves as custodian and 9,375 shares which may be
acquired through the exercise of stock options. Excludes shares held in
a charitable foundation of which Mr. Sullivan serves as a director, as
well as shares held by other trusts (of which Mr. Sullivan is not a
trustee) for the benefit of Mr. Sullivan's children as to which Mr.
Sullivan disclaims beneficial ownership.
(10) Includes 5,000 shares which may be acquired through the exercise of
stock options. Excludes 200 shares held in Mr. Tompkins' wife's
retirement plan and 500 shares held in a trust for Mr. Tompkins' minor
child as to which Mr. Tompkins disclaims beneficial ownership.
(11) Includes 4,250 shares which may be acquired through the exercise of
stock options.
(12) Includes 336,044 shares which may be acquired through the exercise of
stock options.
NOMINEES FOR ELECTION
Albert J. Tahmoush, a director of the Company since 1981 died September 2,
1998. Mr. Tahmoush's wisdom, integrity, wise counsel and friendship are fondly
and gratefully remembered. Six directors are to be elected at the Annual
Meeting. Each director will serve for a term of one year or until his successor
has been elected. Unless otherwise instructed, proxy holders will vote the
proxies received by them for the election of the nominees named below, all of
whom are currently directors of the Company. If any nominee becomes unavailable
for any reason, it is intended that the proxies will be voted for a substitute
nominee designated by the Board of Directors. The Board of Directors has no
reason to believe the nominees named will be unable to serve if elected. Any
vacancy occurring on the Board of Directors for any reason may be filled by a
majority of the directors then in office until the next Annual Meeting of
Stockholders.
3
<PAGE>
The names of the nominees for director, together with certain information
regarding them, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
James J. Cotter (1) 60 Chairman of the Board, Chairman of the Executive
Committee of the Board and a Director
Gregory R. Brundage (2)(4) 55 Director
Edward L. Kane (1)(2)(3)(4) 60 Chairman of the Audit and Finance Committee and of the
Conflicts Committee of the Board and a Director
Robert F. Smerling 63 President and a Director
John W. Sullivan (1)(2)(3)(4) 64 Chairman of the Compensation Committee of the Board and
a Director
S. Craig Tompkins 47 Vice Chairman of the Board and a Director
</TABLE>
- --------------------------
(1) Member of the Executive Committee. The Executive Committee is appointed
annually by the Board of Directors and exercises the authority of the Board
of Directors in the management of the business and affairs of the Company
between meetings of the Board of Directors. The Executive Committee is
also responsible for recommending to the Board of Directors nominees to be
elected to the Board of Directors by the stockholders or by the Board of
Directors in the case of vacancies which occur between meetings of the
stockholders.
(2) Member of the Audit and Finance Committee. The Audit and Finance Committee
is appointed annually by the Board of Directors to recommend the selection
of independent auditors, review the scope and results of the annual audit,
review financial results and status, review and assess the adequacy of the
Company's accounting practices, financial controls and reporting systems
and assess the financial planning functions of the Company. During 1997
the Audit and Finance Committee held one meeting.
(3) Member of the Compensation Committee. The Compensation Committee is
responsible for recommending to the Board of Directors remuneration for
senior management and officers of the Company, recommending adoption of
compensation plans and the granting of options under the Company's stock
option plan. The Compensation Committee held six meetings during 1997.
(4) Member of the Conflicts Committee. The Conflicts Committee was formed in
October 1997 to evaluate and make recommendations to the Board of Directors
concerning matters in which the Board of Directors or management may have a
conflict of interest. The Conflicts Committee held one meeting in 1997.
During 1997, the Company's Board of Directors held five meetings. No
Director attended fewer than 80% of the total number of meetings of the Board of
Directors and of the committees of the Board of Directors on which such Director
served.
Mr. Cotter has been Chairman of the Board of Directors since December 1991,
Chairman of the Company's Executive Committee since March 1993 and a director
since September 1990. Mr. Cotter has been Chairman of the Board of Craig since
1988 and a director since 1985. Mr. Cotter has been a director of Citadel since
1991, became acting Chairman in October of 1991 and was named Chairman in 1992.
From October 1991 to June 1992, Mr. Cotter also served as the acting Chairman of
Citadel's wholly-owned subsidiary, Fidelity Federal Bank, FSB ("Fidelity"), and
served as a director of Fidelity until December 1993. Mr. Cotter is the
Chairman and a director of Citadel Agricultural,
4
<PAGE>
Inc. ("CAI"), a wholly-owned subsidiary of Citadel; the Chairman and a member of
the Management Committee of each of the agricultural partnerships which
constitute the principal assets of CAI (the "Agricultural Partnerships"); and
the Chairman and a member of the Management Committee of Big 4 Farming LLC
("Farming"), a farm management company, 80% owned by Citadel and formed to
manage the properties owned by the Agricultural Partnerships. From 1988 through
January 1993, Mr. Cotter also served as the President and a director of Cecelia
Packing Corporation ("Cecelia") (a citrus grower and packer), a company wholly-
owned by Mr. Cotter, and is the Managing Director of Visalia LLC ("Visalia"),
which holds a 20% interest in each of the Agricultural Partnerships and a 20%
interest in Big 4 Farming LLC. Mr. Cotter has been a director and Chief
Executive Officer of Townhouse Cinemas Corporation (motion picture exhibition)
since 1987, and was a director of Stater Bros. Holdings Inc. and its
predecessors from 1987 until September 1997.
Mr. Brundage has been a director of the Company since May 1996. Mr.
Brundage has been a Managing Director of Furman Selz Incorporated since May
1996. From June 1987 through May 1996, Mr. Brundage was a Managing Director in
the Investment Banking Division of PaineWebber Inc.
Mr. Kane has been a director of the Company since 1989 and has been
Chairman of the Company's Audit and Finance Committee since October 1995 and a
member and Chairman of the Company's Conflicts Committee since September 1998.
Mr. Kane is a law school instructor. Mr. Kane served as Vice President of
SunSurgery Corporation from February through November 1995. From February 1993
through its acquisition by Sun Healthcare Group, Inc. in February 1995, Mr. Kane
served as Chairman, Chief Executive Officer and a director of Altis Outpatient
Services, Inc., which owned and operated ambulatory surgical centers. Mr. Kane
served as President of the Company from December 1991 through January 1993 and
was President of Craig from January 1988 through January 1993. Mr. Kane is a
director of BDI Investment Corporation and until June 1996, served as a director
of Craig. Mr. Kane was the Chairman and President of Big 4 Ranch, Inc. ("BRI"),
which holds 40% interest in each of the Agricultural Partnerships, from December
29, 1997 to October 19, 1998.
Mr. Smerling was appointed a director in September 1997 to fill the vacancy
created by the Board of Director's resolution to increase the number of
directors from six to seven persons. Mr. Smerling has been President of Reading
Entertainment since January 1997 and has served as President of several
subsidiaries, including Reading Cinemas of Puerto Rico, Inc., since 1994. Mr.
Smerling served as President of Loews Theater Management Corporation, a
subsidiary of Sony Corporation, from May 1990 until November 1993. Mr. Smerling
also serves as President and Chief Executive Officer of City Cinemas, a motion
picture exhibitor located in New York City. City Cinemas is an affiliate of
James J. Cotter and has entered into an Executive Sharing Agreement with the
Company with respect to the services of Mr. Smerling.
Mr. Sullivan has been a director of the Company since January 1981. Mr.
Sullivan was Chairman of the Board of the Company from April 1986 through
December 1991. He was Chief Executive Officer of the Company from January 1981
to October 1986 and was President from January 1981 until April 1986. Mr.
Sullivan is engaged in real estate development.
Mr. Tompkins has been Vice Chairman since January 1997. Mr. Tompkins has
been a Director of the Company since March 1994 and was President of the Company
from March 1994 through December 1996. Mr. Tompkins is also President and
Director of Craig and has served in such positions since March 1, 1994. Prior
thereto, Mr. Tompkins was a partner in the law firm of Gibson, Dunn & Crutcher.
Mr. Tompkins has been a director of Citadel since May 1994 and a director of G&L
Realty Corp., a New York Stock Exchange listed REIT (Real Estate Investment
Trust), since December 1994 and currently serves as the Chairman of the Audit
Committee and Chairman of the Strategic Planning Committee of that company.
Since July 1995, Mr. Tompkins has been the Vice Chairman of Citadel, and
currently serves as that company's Secretary/Treasurer and Principal Accounting
Officer. Mr. Tompkins is also President and a Director of CAI, a member of the
Management Committee of each of the Agricultural Partnerships and of Big 4
Farming LLC, and serves as an Assistant Secretary of Visalia and Big 4 Ranch,
Inc.
5
<PAGE>
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive an annual retainer
of $24,000, except for the Chairman of the Audit and Finance Committee and the
Conflicts Committee, and the Chairman of the Compensation Committee, each of
whom receives an annual retainer of $26,000. The Chairman of the Board receives
an annual retainer of $150,000. No separate fees are paid for meetings of the
Board or committee meetings.
During 1997, the Compensation Committee authorized the payment of a
$475,000 bonus to James J. Cotter, Chairman of the Board of Directors, in
recognition of his contributions to the Company's 1996 restructuring and the
Company's cinema development strategy.-
THE BOARD RECOMMENDS A VOTE FOR THE NOMINEES.
6
<PAGE>
EXECUTIVE OFFICERS
The names of the executive officers of the Company, other than the nominees
for director, together with certain information regarding them, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David J. Brown 31 Controller
Ellen M. Cotter 32 Vice President, Business Affairs
Charles S. Groshon 45 Vice President, Finance
B. John Rochester 55 Chief Executive Officer, Australian Cinema Operations
and Reading Entertainment Australia Pty Limited
James A. Wunderle 46 Executive Vice President, Chief Financial Officer and
Treasurer
</TABLE>
Mr. Brown has been the Controller of the Company since July 1998. Prior to
joining the Company, he was a senior manager with Ernst & Young LLP for more
than five years.
Ms. Cotter has been the Vice President, Business Affairs of the Company
since March 1998. Ms. Cotter has held the same position with Craig since August
1996. From October 1992 through July 1996, Ms. Cotter was an attorney
specializing in corporate law with White & Case, a New York law firm. Ms.
Cotter is the daughter of Mr. James J. Cotter. Ms. Cotter is a member of
Visalia and a limited partner in James J. Cotter, Ltd. (Mr. Cotter is the
general partner), which is a general partner of Hecco Ventures I, a privately
held investment partnership.
Mr. Groshon has been a Vice President of the Company since December 1988.
Prior thereto he served the Company in various accounting positions.
Mr. Rochester has been the Chief Executive Officer of the Company's
Australian cinema operations since November 1995. From 1990 through 1995, Mr.
Rochester was the Managing Director of Television & Media Services Ltd.
(formerly Hoyts Entertainment Ltd.). He also served in several other executive
offices for that organization since 1987. Mr. Rochester has more than 21 years
of experience in the motion picture exhibition industry.
Mr. Wunderle has been Chief Financial Officer since January 1987 and
Executive Vice President, Treasurer, and Chief Financial Officer since December
1988. He has been Treasurer since March 1986.
The Company receives consulting services from Mr. Steve Wesson, President
and Chief Executive Officer of Citadel since August 1994. Prior to his
employment by Citadel as a consultant in 1993, Mr. Wesson was the Chief
Executive Officer of Burton Properties Trust Inc., the U.S. real estate
subsidiary of The Burton Group PLC, since 1989. Reading owns 31.7% of the
outstanding common stock of Citadel, and receives real estate consulting
services from Citadel pursuant to an agreement with that company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who own more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership
with the Securities Exchange Commission (the "SEC"). The SEC rules also require
such reporting persons to furnish the Company with a copy of all Section 16(a)
forms they file.
Based solely on a review of the copies of the forms which the Company
received and written representations from certain reporting persons, the Company
believes that, during the fiscal year ended December 31, 1997, all Section 16(a)
filing requirements applicable to its reporting persons were complied with
except as follows: each of the Company's directors (Messrs. Cotter, Smerling,
Tompkins, Brundage, Kane, Sullivan and Mr. Albert J. Tahmoush) and each of the
Company's officers (Messrs. Wunderle and Groshon, Mr. Jack Foley and Ms. Eileen
Mahady) who received options in 1997 did not file timely Form 5's disclosing the
resultant change in beneficial ownership. All of the directors and officers
have since filed the required reports with the SEC.
7
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
I. Summary Compensation Table
The following table shows, for the years ending December 31, 1997, 1996 and
1995, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to each of the most highly
compensated executive officers of the Company whose compensation exceeded
$100,000 in all capacities in which they served:
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION AWARDS
------------------------------------------- ---------
OTHER ANNUAL
SALARY BONUS COMPENSATION OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)
- ------------------------------------------------ ---------- ----------- --------------- ---------
<S> <C> <C> <C> <C> <C>
James J. Cotter /(1)(2)/ 1997 $475,000 $150,000 460,000
Chairman of the Board of Directors 1996 150,000
1995 150,000
S. Craig Tompkins /(2)(3)/ 1997 $180,000 20,000
Vice Chairman of the Board of 1996 180,000
Directors 1995 180,000
Robert F. Smerling /(4)/ 1997 175,000 35,000
President and Director 1996 175,000 60,000
1995 175,000
B. John Rochester/(5)/ 1997 130,000
President and Chief Executive Officer, 1996 156,620
Reading Entertainment Australia Pty 1995 39,155
Limited.
James A. Wunderle 1997 170,000 5,000 17,000
Executive Vice President, Chief 1996 130,000 70,000
Financial Officer and Treasurer 1995 130,000 52,500
</TABLE>
(1) Mr. Cotter receives a fee for his services as Chairman of the Board of
Directors of $150,000 per annum.
(2) Does not include fees of $45,000 paid to Mr. Cotter in both 1997 and 1996
or fees of $40,000 and $35,000 paid in 1997 and 1996, respectively, to
Mr. Tompkins by Citadel for services provided to Citadel.
(3) Mr. Tompkins was appointed Vice Chairman of the Board of Directors
effective January 17, 1997 and prior thereto served as President.
(4) Mr. Smerling was appointed President of the Company effective January 17,
1997 and a Director on September 16, 1997.
(5) Mr. Rochester's compensation is paid in Australian dollars and his base
salary is A$200,000. The amounts presented in the table are based on the
U.S. dollar / Australian dollar exchange rates at December 31 of the
respective years presented. Mr. Rochester was retained effective November
1995. Amount set forth reflects salary for 1995.
8
<PAGE>
Mr. Tompkins is entitled to a severance payment equal to his annual base
salary and continuation of medical and insurance benefits in the event that his
employment is involuntarily terminated and no change in control of the Company
has occurred. Mr. Tompkins is entitled to a severance payment equal to two
years annual salary in the event that a change in control of the Company occurs.
Mr. Rochester is employed under the terms of an employment contract with an
initial term of two years beginning January 1, 1996, with automatic renewal
terms of one year each. The agreement provides for an incentive payment to Mr.
Rochester after the fourth anniversary of the agreement, based on a multiple of
cash flow of the Company's Australian theater operations. Under the agreement,
in the event Mr. Rochester's employment is terminated by the Company without
cause, he will be entitled to receive such incentive payment plus 17 payments,
each equal to his monthly remuneration, if such termination is during the
initial term, or 11 such monthly payments if such termination is after the
initial term. Mr. Rochester is entitled to receive a lump sum distribution of
such amounts, as applicable, if the Company and Craig both withdraw from any
material investment or involvement in the Australian operations and he is not
granted employment under comparable terms.
Messrs. Smerling, Wunderle and Groshon are entitled to receive payment
equal to twelve, twelve and nine months, respectively, of annual base salary in
the event their individual employment with the Company is involuntarily
terminated.
II. Option Grant Table
As of December 31, 1997, the Company had options outstanding under two Stock
Option Plans, the 1992 Non-qualified Stock Option Plan (the "1992 Plan") and the
1997 Equity Incentive Plan (the "1997 Plan"). Each plan was approved by
shareholders in the year of adoption. The 1997 Plan reserved 200,000 shares for
grant and provides for one-fourth of the options granted to be exercisable on
the first anniversary of the date of grant, and an additional one-fourth on each
subsequent anniversary, unless the Compensation Committee of the Board of
Directors, in its discretion, decides otherwise.
The 1992 Plan reserved 500,000 shares for grant and provides for one-third of
options granted to be immediately exercisable, one-third exercisable on the
first anniversary of the date of grant, and the final one-third exercisable upon
the second anniversary date of the date of grant unless the Compensation
Committee, in its discretion, decides otherwise.
OPTION / SAR GRANTS IN LAST FISCAL YEAR
---------------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS * OPTION TERM
- ------------------------------------------------------------------------------------ -------------------------------
NO. OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($) DATE 5% ($) 10% ($)
- --------------------- ------------ -------------- ----------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James J. Cotter 110,000 17.61% 12.80 4/18/2007 652,551 1,873,084
James J. Cotter 260,000 41.63% 12.80 4/18/2007 1,542,395 4,427,290
James J. Cotter 90,000 14.41% 12.80 4/18/2007 533,906 1,532,523
Ellen M. Cotter 10,000 1.60% 12.80 4/18/2007 59,323 170,280
Robert F. Smerling 35,000 5.60% 12.80 4/18/2007 207,630 595,981
S. Craig Tompkins 20,000 3.20% 12.80 4/18/2007 118,646 340,561
James A. Wunderle 17,000 2.72% 12.80 4/18/2007 100,849 289,477
</TABLE>
* Does not include 20,000 options granted in October 1997 to Mr. Steve
Wesson, President of Citadel, as an officer of a wholly-owned subsidiary
of the Company. Such options provide for an exercise price of $12.875 per
share and are subject to a four year vesting schedule.
9
<PAGE>
Options granted under both the 1992 Plan and the 1997 Plan must have
exercise prices equal to or greater than 100% of the fair market value of the
underlying shares on the date of grant and expire ten years from the date of
grant and may contain certain other terms and conditions as determined by the
Compensation Committee. All of the options granted to executive officers other
than Mr. Cotter were from the 1997 Plan. Shareholders of the Company approved a
grant of options on September 16, 1997 to James J. Cotter, Chairman of the Board
of Directors of the Company (the "Cotter Options"). The Cotter Options are
divided into three groups: options (the "Basic Options") to purchase up to
110,000 shares of Common Stock, which become exercisable in four equal
installments commencing one year from the date of grant; options (the
"Convertible Preferred Options") to purchase up to 260,000 shares of Common
Stock, which become exercisable over a similar vesting schedule, but only in
proportion to the number of shares of Convertible Preferred Stock which are
converted into Common Stock; and options (the "Asset Put Options") to purchase
up to 90,000 shares of Common Stock which become exercisable over a similar
vesting schedule, but only in proportion to the number of shares of Common Stock
which are issued pursuant to an asset put option which permits Citadel to
require the Company to acquire substantially all of Citadel's assets in return
for Common Stock. All shares granted under the Cotter Options have an exercise
price of $12.80 per share.
III. Option Exercises and Year-End Table
The following sets forth information with respect to the options held by
the persons named in the Summary Compensation Table above as of December 31,
1997. No options were exercised by such persons during the fiscal year ended
December 31, 1997 and none of the options held by such persons at December 31,
1997 had exercise prices which were below the market price of the Common Stock
as of that date. All of such options had an exercise price of $12.80 per share
except for 265,232 held by Mr. Cotter which have an exercise price of $14.00 per
share.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED OPTIONS
AT 12/31/97
---------------------
# EXERCISABLE /
NAME UNEXERCISABLE
---------------------- ---------------------
<S> <C> <C>
James J. Cotter (1) 265,732 / 460,000
Ellen M. Cotter 0 / 10,000
S. Craig Tompkins 0 / 20,000
Robert F. Smerling 0 / 35,000
James A. Wunderle 0 / 17,000
</TABLE>
(1) Mr. Cotter's unexercisable options include all of the Convertible
Preferred Options, Asset Put Options and the Basic Options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Sullivan, Chairman of the Compensation Committee, served as the
President and Chief Executive Officer of the Company from 1981 through 1986.
Mr. Kane, also a member of the Compensation Committee, served as President of
the Company from December 1991 through January 1993.
Messrs. Cotter and Tompkins each have a 1.6% beneficial interest and the
Company a 26% beneficial interest in BRI. Edward L. Kane, a member of the
Compensation Committee served as Chairman and President of BRI from December 29,
1997 to October 19, 1998.
10
<PAGE>
CERTAIN TRANSACTIONS
In 1997 the Company's Board of Directors voted to waive the transfer
restrictions imposed by the provisions of the Company's capital stock to the
extent necessary to permit Craig to acquire additional shares of the Company's
capital stock. The transfer provisions prohibit a party from acquiring more
than 4.75% of the Company's outstanding capital stock without the permission of
the Company's Board of Directors and are intended to assure the continuing
availability of the Company's federal tax loss carryforwards by precluding a
change in control which could limit the value of the carryforwards. Prior to
granting the waiver of the restrictions, the Board of Directors had determined
that acquisition of the shares by Craig would not affect the continuing
availability of the Company's federal tax loss carryforwards.
The Company acquired the Angelika Film Center (the "AFC") in Manhattan in
1996. The theater is owned jointly by the Company and Sutton Hill, a
partnership affiliated with City Cinemas, a Manhattan-based theater operator
owned in equal parts by Mr. James J. Cotter, the Company's Chairman, and Mr.
Michael Forman. A company controlled by Mr. Forman and his family beneficially
own 12.5% of Craig's currently outstanding capital stock.
City Cinemas manages the AFC and two other domestic cinemas owned by the
Company pursuant to management agreements. The provisions of the AFC management
agreement were reviewed and approved by the Board of Directors in 1996 and the
provisions of the management agreements for the other domestic theaters were
reviewed and approved by the Conflicts Committee in 1997. Management fees paid
to City Cinemas pursuant to the management agreements totaled $370,000 in 1997.
Mr. Smerling serves as President of the Company and City Cinemas. The
Company and City Cinemas entered into an Executive Sharing Agreement pursuant to
which Mr. Smerling provides services to both the Company and City Cinemas and
the cost of such services is shared by the parties, if such costs cannot be
allocated directly to such parties. John Foley, Vice President-Marketing of the
Company during 1997 also served as Vice President of City Cinemas during such
period.
The Company utilizes the services of certain Citadel employees, including
the President and Chief Executive Officer of Citadel, for real estate advisory
services. The Company pays Citadel for such services at a rate which is
believed to approximate the fair market value of such services which amount
totaled $240,000 in 1997.
In 1996 and January 1997 the Company loaned Robert F. Smerling, President
of the Company, a total of $70,000 pursuant to a promissory note payable upon
demand. The note is interest free and all amounts borrowed remain outstanding.
On December 29, 1997, Citadel capitalized a wholly-owned subsidiary, BRI,
with a cash contribution of $1.2 million and then distributed 100% of the shares
of BRI to Citadel's common shareholders of record as of the close of business on
December 23, 1997, as a spin-off dividend. The Company received 1,564,473
shares or 23.4% of BRI. In 1998, the Company increased its ownership interest in
BRI to 33.4%. Also in 1998, Cecelia Packing, owned by Mr. Cotter and a trust of
which Mr. Tompkins is the trustee for the benefit of one of his children each
acquired from a single seller shares representing an additional 1.6% of the
outstanding shares of BRI or an aggregate total of 3.2% of the outstanding
shares of BRI. The Board of Directors and executive officers of BRI were
initially comprised of Edward L. Kane, a director of the Company and two Craig
directors. On October 19, 1998, Mr. Kane resigned his positions and was
replaced by a Craig director. Mr. Kane received a total of $8,330 for his
services to BRI in 1998.
Also in December 1997, BRI (owning 40%), Citadel (owning 40%) and Visalia
entered into three general partnerships in December 1997, which partnerships on
December 31, 1997 acquired certain agricultural property (purchase price
amounting to approximately $7.6 million). The acquisition was financed by a ten
year purchase money mortgage in the amount of $4.05 million, a line of credit
from Citadel and pro-rata contributions from the partners. Through its holdings
in BRI and Citadel, the Company owned approximately 18.8% of such partnerships
at December 31, 1997. During 1998, the Company increased its ownership of such
partnerships to approximately 26% as a result of the acquisition of additional
shares in Citadel and BRI. Visalia is a limited liability company controlled by
Mr. Cotter, the Chairman of the Board of the Company, and owned by Mr. Cotter
and certain members of his family including Ellen M. Cotter, an officer of the
Company.
11
<PAGE>
The Partnerships have each retained Big 4 Farming LLC (owned 80% by Citadel
and 20% by Visalia) to farm their properties. Certain officers and directors of
the Company are officers, directors or management committee members of Citadel,
BRI, Big 4 Farming and/or the Agricultural Partnerships. Mr. James J. Cotter is
the Chairman and a Director of the Company and is also Chairman of the
management committees of Big 4 Farming and each of the Agricultural
Partnerships. Mr. Tompkins is the Vice Chairman and a Director of Citadel and
the Company, the Principal Accounting Officer of Citadel, and a member of the
management committees of Big 4 Farming and of each of the Agricultural
Partnerships. As an administrative convenience, Mr. Tompkins also serves as an
assistant secretary of BRI and Visalia for which he receives no compensation.
12
<PAGE>
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
REPORT ON COMPENSATION
At the present time, the Compensation Committee of the Company is composed of
two directors, Mr. Edward L. Kane and Mr. John W. Sullivan. Under applicable
SEC rules, the Compensation Committee is required each year to report to the
stockholders concerning the Company's compensation policies.
GENERAL STATEMENT: The Company is in a transitional stage. It is
currently endeavoring to expand its operations in the Beyond-the-Home
segment of the entertainment industry principally through the acquisition
and/or development of multiplex cinemas and cinema based entertainment
centers and is moving away from its historic non-entertainment oriented
assets and operations. In October 1996, the Company substantially
increased its capital base, with the intention of ultimately deploying that
capital in the Beyond-The-Home Entertainment sector. It is anticipated
that a significant portion of this additional capital will ultimately be
deployed outside of the United States. In light of this expansion oriented
business plan, the Compensation Committee recognizes that compensation paid
to executives may be disproportionate to revenues pending full deployment
and leveraging of its cash assets.
The Compensation Committee recognizes that in order to successfully
implement and consummate this growth oriented business strategy, the
Company must attract and retain highly skilled executive employees capable
not only of effectively administering existing operations, but also of
building systems, developing opportunities and expanding operations on an
international basis. Since the Company's line of business is both changing
and expanding, the Compensation Committee views the scope of
responsibilities of the individuals occupying executive positions in the
Company and the success of these individuals in carrying out their
responsibilities to be the most relevant factor in determining compensation
rather than comparisons with businesses in similar historical lines of
business or which may currently be of a similar revenue size. Other
factors considered in establishing compensation of the Company's officers
include qualitative factors relating to the Company's progress in achieving
its business plan, personal performance and the amount which must be paid
in the market in order to attract management capable of achieving the
Company's business plan.
Generally speaking, for fiscal 1997, the Compensation Committee has
relied principally upon the recommendations of the Company's Chairman, Mr.
James J. Cotter, with respect to matters relating to the compensation of
the Company's employees, including its senior executives. While in past
years, when the Company's operations were less wide spread geographically
and its employees and executives less numerous, the Compensation Committee
(or predecessor committees performing similar functions) and the Board of
Directors were more involved in general compensation matters. In 1997, a
decision was made that the establishment of employee compensation levels
should, in the first instance, be the responsibility of management and that
the establishment of compensation arrangements with respect to senior
executives should, again in the first instance, be the responsibility of
the Chairman. Under this approach, the Compensation Committee, and the
Board of Directors serves principally as a sounding board for the Chairman
and focuses its independent attention on the job performance of the
Chairman and on the compensation to be paid to the Chairman.
In 1997, base salaries and bonuses for all senior executive officers
were reviewed by the Chairman with the members of the Compensation
Committee. The bonus paid to the Chairman was reviewed and approved by the
entire Board of Directors (with Mr. Cotter abstaining) after approval by
the Compensation Committee.
The Compensation Committee was advised by the Chairman that base
salary for 1997 was based on the Chairman's view of comparable compensation
for positions requiring similar skills and capabilities and reflects the
performance of the executive in fulfilling his or her duties. Base salary
for this period did not directly reflect the financial performance of the
Company. In addition, officers and other employees may be awarded bonuses
in the discretion of the Chairman, subject to the review of the
Compensation Committee in the case of bonuses paid to senior executive
officers. Such
13
<PAGE>
bonuses are typically totally discretionary, and not a part of any
employment agreement. The Compensation Committee is advised by the Chairman
that factors considered in the past have included the extent to which the
duties of particular officers have required time commitments materially
beyond those contemplated at the time the base compensation for such
officer was established, the identification and successful acquisition or
development, as the case may be, of new business opportunities, resolution
of significant litigation, and effectiveness in promoting the Company's
business plan.
DOMESTIC COMPENSATION PLANS: In 1997, the Company adopted an Incentive
Compensation Plan, with respect to its US based executives, which included
the grant of stock options and established a pool of funds for distribution
in the form of cash bonuses if certain goals were met. The stock options
were priced at $12.80 per share, which reflected the book value of the
Company's shares at the time of such grant. At the time of grant, the
Company's shares traded at approximately $11.50 per share. Since the
issuance of the options, the Company's shares have traded as high as $14.50
and as low as $7.00 on October 12, 1998. At the time of this report, the
Company's Common Stock is trading at approximately $9.00. The options are
described in greater detail in the Proxy Statement, of which this report is
a part.
The cash bonus portion of the Incentive Compensation Plan was tied to
the development of new domestic cinemas. If the maximum goal had been
achieved, $300,000 could have been distributed to the executives of the
Company. However, as none of the goals established for 1997 were
satisfied, no cash bonuses have been paid out under this program, and it is
unlikely that any cash bonuses will be paid out under the terms of the plan
adopted for 1997. This portion of the Incentive Compensation Plan has not
been renewed for 1998 or 1999.
Certain discretionary bonuses were paid to certain officers and
employees. The amounts paid to executive officers are detailed elsewhere
in the Proxy Statement which this report accompanies. These bonuses were
the product, with respect to all officers other than the Chairman, Vice
Chairman and President, of discussions between the, Chairman, Vice Chairman
and President, and were reviewed with the Compensation Committee. No
bonuses were paid in 1997 to the Vice Chairman or the President of the
Company. The Compensation of the Chairman is discussed in further detail
below. No increases in base compensation were approved or implemented in
or with respect to Fiscal 1997 for the Chairman, Vice Chairman or President
of the Company.
AUSTRALIAN COMPENSATION PLAN: The compensation of the Company's Australia
based executives is determined by the Board of Directors of Reading
Entertainment Australia, Pty. Limited, the Company's wholly-owned
Australian subsidiary ("Reading Australia"). At the present time, that
Board of Directors consists of Messrs James J. Cotter, S. Craig Tompkins,
Robert Smerling, James A. Wunderle and John Rochester. Currently, there is
no plan in place with respect to the bonuses to be paid to such
individuals, however, the Company has from time to time negotiated specific
bonuses with individual executives tied to the achievement of specific
goals on an ad hoc basis with such individual executives. Also, each of
the current key executives has, under his contract with Reading Australia,
an incentive compensation arrangement under which he is entitled to
receive, generally speaking, between 1% and 2.5% of the increased value of
Reading Australia, after deduction for equity contributed by the Company
and debt, over the term of his tenure with the Company. To date, interests
representing in the aggregate 4.5% of such increased value have been
awarded to Australia based executives.
As a practical matter, the Board of Directors of Reading Australia
places great weight upon the recommendations of Mr. Cotter, and has
historically deferred to his judgment in the matter of compensating
Australia based executives. Compensation and bonus levels for Australia
based executives were established by Mr. Cotter for Fiscal 1997.
COMPENSATION OF CHIEF EXECUTIVE OFFICER: Mr. Cotter is the principal
executive officer of the Company and has therefore served in a capacity
similar to the chief executive officer of the Company.
14
<PAGE>
At the time Mr. Cotter became the Chairman of the Board of Directors in
December 1991, the Board of Directors approved a resolution which provided
that the Chairman of the Board is to receive an annual retainer of
$150,000. In 1992, Mr. Cotter was granted options representing
approximately 5% of the outstanding common shares of the Company, priced at
$14.00 per share. The amount of the retainer and the stock options were
based upon the Board's belief that compensation in this amount was
appropriate for an executive of Mr. Cotter's experience and background and
his anticipated role in the redirection of the Company's operations.
Payment of such retainer is not dependent upon or related to the financial
performance of the Company. The base compensation paid to Mr. Cotter has
not been reviewed or revised since 1991, however, the shareholders of the
Company did approve a grant to Mr. Cotter of additional options in 1997,
such grant designed to maintain Mr. Cotter's interest in the Company at the
5% level and reflecting the issuance of additional shares and convertible
securities by the Company in 1996. In addition, a $475,000 bonus was paid
to Mr. Cotter in 1997 in recognition of his contributions to the Company's
1996 restructuring and the Company's cinema development strategy. It is not
unlikely that a review of Mr. Cotter's compensation package will be
forthcoming in the near term. No assurances can be given that the Company
will be able to continue to retain Mr. Cotter's services at his current
compensation levels.
John W. Sullivan, Chairman
Edward L. Kane
15
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the cumulative total stockholder return
on Reading Company's Class A Common Stock from December 31, 1992 through October
15, 1996 and Reading Entertainment, Inc.'s Common Stock from October 16, 1996
through December 31, 1997 against the cumulative total return of the Center for
Research in Securities Prices ("CRSP") Total Return Index for the Nasdaq
National Market (U.S. Companies), the cumulative total return of the Company's
current peer group, the CRSP Total Return Index for Nasdaq, New York Stock
Exchange (NYSE), and American Stock Exchange ("AMEX") Companies in the SIC Group
Code 7830-7839 (motion picture theaters and allied businesses), and the
cumulative total return of the Company's former peer group, the CRSP Total
Return Index for Nasdaq Companies in the SIC Group Code 6500-6599 (real estate)
over the same period. The graph assumes a one hundred dollar ($100) investment
on December 31, 1992 and reinvestment of all dividends on a daily basis.
The Company has in the past measured its performance against that of the
real estate industry in the compilation of this graph; that information is
presented here for continuity to prior periods. In light of recent developments
in the direction of the Company and its entry into the "Beyond-the-Home" segment
of the entertainment industry, management believes current performance is more
appropriately compared to the new peer group and has chosen to use results from
all the major markets in order to present as comprehensive a comparison as is
available.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reading Company \ Reading Entertainment, Inc. 100.00 113.20 117.10 96.10 107.90 134.20
- ------------------------------------------------------------------------------------------------
Nasdaq Stock Market (US Companies) 100.00 114.80 112.20 158.70 195.20 239.60
- ------------------------------------------------------------------------------------------------
Nasdaq SIC Codes 6500 - 6599 (Real Estate) 100.00 110.60 112.30 123.00 146.50 192.00
- ------------------------------------------------------------------------------------------------
NYSE/AMEX/Nasdaq Stock Markets (US Companies) 100.00 111.20 110.70 150.90 182.90 239.50
- ------------------------------------------------------------------------------------------------
NYSE/AMEX/Nasdaq SIC Codes 7830 - 7839 (Motion 100.00 118.30 118.00 148.30 169.50 193.00
Picture Theaters)
- ------------------------------------------------------------------------------------------------
Baseline 100.00 100.00 100.00 100.00 100.00 100.00
- ------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the year ended December 31, 1997
were examined by Ernst & Young LLP, certified public accountants. The Company
has been advised by Ernst & Young LLP that none of its members has any financial
interest in the Company. Ernst & Young LLP has served as the Company's
independent public accountants since the Company's fiscal year ended December
31, 1981. Representatives of Ernst & Young LLP are expected to be present at
the Annual Meeting and will have the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
In addition to performing customary audit services, Ernst & Young LLP
assisted the Company with the preparation of its federal tax return. Ernst &
Young LLP charged the Company for such services at its customary billing rates.
Material non-audit services are approved by the Audit and Finance Committee
after review of the nature of and amount of expense and the potential effect on
the independence of the accountants.
ANNUAL REPORT
Copies of the Company's Annual Report for its fiscal year ended December
31, 1997 (the "Annual Report") and quarterly report for the three and nine-month
periods ending September 30, 1998 are enclosed.
STOCKHOLDER PROPOSALS
Any stockholder who, in accordance with and subject to the provisions of
the proxy rules of the SEC, wishes to submit a proposal for inclusion in the
Company's proxy statement for its 1999 Annual Meeting of Stockholders, must
deliver such proposal in writing to the Secretary of the Company at the
Company's principal executive offices at One Penn Square West, Suite 1300,
Philadelphia, Pennsylvania 19102, no later than July 27, 1999.
The Board of Directors will consider written nominations for directors from
stockholders. Nominations for the election of directors made by the
stockholders of the Company must be made by written notice delivered to the
Secretary of the Company at the Company's principal executive offices not less
than 120 days prior to the first anniversary of the immediately preceding annual
meeting of stockholders at which directors are to be elected. Such written
notice must set forth, among other things, the name, age, address, principal
occupation or employment, the number of shares of the Company's Common Stock
owned by such nominee and such other information as is required by the proxy
rules of the SEC with respect to a nominee of the Board of Directors.
Nominations not made in accordance with the foregoing procedure will not be
valid.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the Notice of Annual Meeting,
but if any matters are properly presented, it is the intention of the persons
named in the accompanying proxy to vote on such matters in accordance with their
judgment.
By Order of the Board of Directors,
Robert F. Smerling, President
Dated: November 24, 1998
17
<PAGE>
PROMPTLY COMPLETE AND RETURN THE
PROXY/VOTING INSTRUCTION FORM BELOW
IN THE ENVELOPE PROVIDED
Carefully fold & detach along perforation
- --------------------------------------------------------------------------------
________________________________________________________________________________
PROXY/VOTING INSTRUCTION CARD
READING ENTERTAINMENT, INC.
The undersigned hereby appoints James J. Cotter, S. Craig Tompkins and Robert
F. Smerling and each or any of them, proxies of the undersigned, with full
power of substitution, to vote all of the shares of Reading Entertainment, Inc.
(the "Company") which the undersigned may be entitled to vote at the Annual
Meeting of Shareholders of the Company to be held at 10:00 a.m., prevailing
time, at the Regal Biltmore Hotel, 506 South Grand Avenue, Los Angeles,
California for the following purposes and any adjournment thereof, as follows:
1. Election of Directors (Mark only one box)
[_] Vote FOR all nominees listed below. [_] Vote WITHHELD from all
(except as marked to the contrary below). nominees.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE FOLLOWING
LIST:
James J. Cotter, Gregory R. Brundage, Edward L. Kane, Robert F.
Smerling, John W. Sullivan and S. Craig Tompkins.
2. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting and any adjournment
thereof.
(continued, and to be signed, on other side)
________________________________________________________________________________
<PAGE>
PROMPTLY COMPLETE AND RETURN THE
PROXY/VOTING INSTRUCTION FORM BELOW
IN THE ENVELOPE PROVIDED
Carefully fold & detach along perforation
- --------------------------------------------------------------------------------
________________________________________________________________________________
(continued from other side)
PLEASE SIGN, DATE,
DETACH AND RETURN
THIS PROXY, USING THE
ENCLOSED POSTAGE
PREPAID REPLY ENVELOPE.
Dated ______________ SIGN HERE ________________
When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If the signer is a
corporation, sign the full corporate name by
duly authorized officer.
________________________________________________________________________________
