Greg Marcus - President & CEO Doug Neis - CFO

David Loeb - Baird Brian Rafn - Morgan Dempsey Capital

Good morning everyone and welcome to the Marcus Corporation Fourth Quarter Earnings Conference Call. My name is Breen, I will be your operator for today. At this time all participants are on listen-only mode. (Operator Instructions). Joining us today are Greg Marcus, President and Chief Executive Officer and Doug Neis, Chief Financial Officer of The Marcus Corporation. At this time I would like to turn the program over to Mr. Neis for his opening remarks. Please go ahead sir.

Thank you. Welcome everybody to fiscal 2012 fourth quarter and year end conference call. As usual I do need to begin by stating we plan of making a number of forward-looking statements on our call. Forward-looking statements could include but not be limited to statements about our future revenue and earnings expectations. Our future RevPAR occupancy rates and room rates expectations for our hotels and resorts and division, expectations about the quality and quantity and audience appeal of film product expected to be made available to us in the future. Expectations about the future trends in the business group and leisure, travel industry in our markets, expectations and plans regarding growth in a number and type of our properties and facilities. Expectations regarding various non-operating line items on our earnings statement and expectations regarding future capital expenditures. Of course our actual results could differ materially from those projected or suggest by our forward-looking statements. Factors, risks and uncertainties which could impact our ability to achieve our expectations are included in the risk factor section of our 10K and 10Q filings which we can be obtained in the SEC or the company. We will also post our Regulation G disclosures when applicable on our website at www.marcuscorp.com. So with that let’s begin, by talking about our fiscal 2012 fourth quarter and year end results as you can see we ended the year very strong, certainly pleased of your reporting and other significantly improved quarter compared to last year thanks to much stronger results from your Theater division and continued positive trends in our hotels and resorts division. I am going to take you through some of the detail behind the numbers and then turn the call over to Greg for his comments. Before I get into the operating results let me first briefly address any variations and line items below operating income versus last year. The first unusual item is right off the bat is on the investment income line, during our fourth quarter we recognized a one-time gain of nearly $800,000. On the sales securities that withheld it was investment for some time. Looking at the fiscal year results, this unusual amount becomes more pronounced due to an approximately $700,000 adjustment to investment income made last year, that was related to the change and estimate of interest income, earned data on the funds we invest several years ago in conjunction with the public portion of the Hilton Milwaukee parking garage. We view both gain recorded this year and the loss recorded last year as one time unusual items. Investment income is historically included interest earned on cash, cash equivalents and notes receivable including notes related to prior sales of time share units on hotels, resorts division and we currently expect return to reporting investment income on just those items during fiscal 2013. Moving on we reported another reduction on interest expense during the fourth quarter compared to the same period last year. Our interest expense was down approximately $240,000 during the fourth quarter and ended the year down nearly $1.1 million compared to the prior year same prior year due primarily to reduce borrowings, we are able to fund our fiscal 2012 capital expenditures, dividends and share repurchases out of operating cash flow eliminating the need for additional incremental debt during the year. Based upon on our current expectations for increased capital expenditures during fiscal 2013, we currently believe our interest expense will likely increase during fiscal 2013 compared to the year that was thus completed. Our total debt remains at historically low levels and our comparable debt to capitalization ratio at the end of the year was 37% down from 39% at the end of the year last year. I do want to point out that current maturities and long term debt on our balance sheet as of May 31, 2012 include a $15.1 million mortgage related to our Skirvin Hilton Hotel that has a maturity date in December of 2012 and 71 million in borrowings under our revolving credit agreement with a maturity date in April 2013. We fully expect to refinance both of these debt agreements during fiscal 2013 at which time these borrowings will be reclassified as long term debt. So from my point of view, our only true current maturities during fiscal 2013 are the approximately 11.8 million due on our senior notes and other debt. Looking at the next line, gains and losses from disposition of fixed assets, last year’s fourth quarter include some furniture and equipment write-offs related to hotel renovations and as a reminder the primary reason for the favorable comparison on this line for the full fiscal year was last year’s $750,000 loss that was related to an adverse legal judgment that was related our Las Vegas property. There were no significant variations in the last line and the other income expense section that equity gains and losses on investments line during the fourth quarter. For the fiscal year, just a reminder that comparisons of last year were negatively impacted by the fact that we benefited during fiscal 2011 last year from one of the two hotels that we have a 15% interest in, they reported a sizeable gain from refinancing of its debt accounting for the comparative decrease in that line this year compared to the prior year. Finally our effective income tax rate for fiscal 2012 was 39.3% compared to 37.8 last year and this higher rate was really primarily due to significantly increased pretax earnings that we had during the year compared to the prior year which has the effect of reducing the impact of any favorable decreases in our liability for unrecognized tax benefits on our effective rate. At this point I don’t expect our fiscal 2013 effective tax rate. It's very significantly from our historical average which has always been in the 38% to 40% range. Pending any further lapses and statues and limitations or potential changes in federal or state tax rates. Shifting gears, our total capital expenditures including acquisitions during fiscal 2012 totaled approximately 13 million compared to approximately $25 million last year. Theatre division capital expenditures totaled approximately 27 million of that total and included the acquisition of the theater in Franklin, Wisconsin out of receivership. Our upfront contribution to the digital cinema rollout, a lobby remodel at one theatre and expenditures related to the construction of our newest Zaffiro's Pizzeria and Bars in St. Cloud, Minnesota and New Berlin, Wisconsin in addition to normal maintenance capital. We incurred approximately $12 million of expenditures in our total division during the year all of which were primarily maintenance capital with the renovations that our Hotel Phillips and Hilton Madison Properties representing the largest pieces. Now as we look forward to capital expenditures for fiscal 2013, we are currently estimating that our fiscal 2013 capital expenditures may increase significantly and be in the $65 million to $95 million range for approximately 15 million to 30 million of that estimated for our theatre division and approximately $50 million to $60 million estimated for our hotel division. The range of potential capital spending was fairly large at this time because either the timing on several of our planned projects is not finalized yet or because some of the dollars are for several growth opportunities primarily in a hotel division that may or may not come to fruition. As a result our actual fiscal 2013 capital expenditures certainly could vary from this preliminary estimate just as they did this past year. In addition, both divisions have acquisitions strategy that could impact our actual expenditures if the right opportunity arose during the year. Greg will expand on some of our capital expenditures plans for each division as well as our proposed retail development Brookfield, Wisconsin during his prepared remarks. So now I would like to provide some financial comments on our operations for the fourth quarter and fiscal year. Overall, as you know thanks for the calendar year and our last Thursday and May year end, our fourth quarter and fiscal year had an extra week this year. This extra week particularly benefited our theatre division as it encompassed the traditionally strong Memorial Day weekend which is typically one of the biggest weekends of our year. The week that encompasses Memorial Day is actually not a particularly strong time for our hotel division but it still added revenues and operating income to our results. The margin on this extra week of revenues is higher than average, due to the fact that only incremental variable cost are added. Fixed costs are already annualized over 12 periods during the year. The result is a fairly sizeable, favorable impact to our fourth quarter results as a result of this extra week. While determining the impact of one week in our operating results is not an exact science. We estimate that this additional week added approximately $7.6 million to our consolidated revenues and 2.1 million to our consolidated operating income. After interest expense and income taxes we estimate that the extra week of operations contributed approximately $1.1 million to our fiscal 2012 net earnings or about $0.04 per diluted common share. Now talking about theatre division, our box office revenues increased 9.4% during the quarter and our concession in food and beverage revenues were up a very healthy 22.2% including the extra week. For the full year, box office revenues increased 7.2% compared to last year and our concession revenues were up a significant 15.9%. Now the fourth quarter box office increases is partially attributable to an increase in attendance at our comparable theatres of 3.1% including the extra week. For the full fiscal year comparable theatre attendance increased 4.4% including that extra week and even if you take the extra week out, our comparable theatre attendance increased 2.3% during fiscal 2012 compared to the prior year. The addition of the new acquired theatre in Franklin and an increase in our average admission price also contributed to our improved box office receipts. Our average admission price increased by 5.7% for the quarter and ended the year 1.5% higher than last year. The mix of films during any given quarter can impact our average admission price this time around the fact that our top film, The Avengers had over 40% of its box office receipts come from 3D presentations definitely contributed to the increase in our average admission price this quarter. In addition, our average concession in food, beverage revenues per person increased by 8% during the fourth quarter compared to the same quarter last year and increased by 9.7% for the full fiscal year. Pricing, concession product mix and film product mix are the three primary factors that impact our concession sales per person. Selective price increases changed during the second half of last fiscal year from sales tax inclusive pricing, the sales tax added pricing and operational change to more Grab and Go candy offerings and a change in concession product mix including increased sales of higher priced non-traditional food and beverage items in our theatres all contributed to our increase concession sales per person during the fourth quarter and fiscal year. Now as I noted earlier the 53rd week and a favorable impact in our theatre operations adding approximately $4.7 million of revenues and 1.6 million of operating income to our fiscal 2012 fourth quarter and year end theatre results. Primarily the result of the improved attendance and increased concession revenues, operating margins in this division have increased to 20.7% compared to 18% last year. As we pointed out previously our operating income and margin would have been even better year-to-date if not for approximately $1.4 million of accelerated depreciation that we reported in the first two quarters of the year related to 35 millimeter film projection systems that were replaced in the conjunction with our digital summer deployment. Now shifting to our hotels and resorts division, our overall hotel revenues were up 12.6% and our total RevPAR was up 9.3% during the fourth quarter compared to the same period last year. We ended the year with a 9.7% increase in total revenues and a 9.5% RevPAR increase. As we have known in the past, our RevPAR performance did vary by market and type of property but all eight company owned properties ended the year with increased RevPAR compared to the prior year. According to the data received from Smith Travel Research and compiled by us in order to match our fiscal year comparable upper upscale hotels throughout the United States experienced increase in RevPAR of 7.1% during the fourth quarter, our fourth quarter and 6.6% during fiscal 2012 full year. So we once again have outperformed the national average. Our fiscal 2012 fourth quarter overall RevPAR increase was a result of an overall occupancy rate increase of 3 percentage points and an average daily rate increase of 4.8%. For the full year, our occupancy rate ended up 2.9 percentage points higher than last year and our average daily rate increased 5.2%. The 53rd week added approximately $2.9 million to our fourth quarter and fiscal year end revenues and approximately $590,000 to our operating income during both periods. Now finally speaking about the 53rd week, I do want to explain the impact the extra weeks has on the following year in this case our fiscal 2013. If a week, was a week with a weak in our businesses then there would not be any unusual comparisons in the following year to be concerned about but unfortunately that’s not true in our case. As we have noted the extra week during fiscal 2012 included the traditionally busy Memorial Day holiday three day weekend, film studies usually target that weekend for one or more of their hopeful summer blockbusters. During our recently completed fiscal 2012 the 2011 Memorial Day weekend represented the first week of the fiscal year and the 2012 Memorial Day weekend represented the last week of the year. By definition that means that our fiscal 2013 first quarter will not have Memorial Day in it but the year that we compare it to will, in other words we start the new fiscal year with a quarter that has a built in challenge from a comparison perspective. Sometimes the films during the quarter make up for the negative comparison sometimes they don’t. As we noted in our release for our summer quarter so far excluding that week one comparison we are actually running slightly ahead of last year in our box receipts but including week one we are behind at this point in the quarter. In the long run let’s all work this stuff out and we will have a normal 52 week year in fiscal 2013 and there will be Memorial Day weekend including as usual just this time only in the fourth quarter. Thanks for your patience to explain that and I hope that helps and so now I will turn the call over to Greg.

Thanks Doug, I will begin my remarks today with our theatre division, we are here to talk about the excellent results we reported today and we will do that but first I would like to make couple of comments about the events of the past week. As they certainly put everything we do in perspective we like everyone else were terribly saddened by the horrible tragedy that occurred in Aurora, Colorado in the early morning hours last Friday. Our thoughts and prayers continue to go out to the victims and their families as well as the larger Aurora community. In addition, the movie theatre business is a tightknit group, the owners of the theater involve our friends, so also want to express our concern for the associates of the Century Theater and its owners during this very difficult time. I know that we all search for words to explain these senseless random acts of violence by disturbed individual, if they don't seem to be and they are adequate. We know intellectually that something like this can happen anywhere but the U.S. movie theater industry has never had something like this occurred in its 110 year history and that approximately 1.3 billion guests go to the movies every year without incident, yet an event like this is obviously very painful. Interesting could be that the American people try to make a statement this weekend when they made the Dark Knight Rises opening the highest grossing 2D weekend opening ever. If they won't let a single disturbed individual take away their freedom to enjoy one of our favorite pastimes. The collective experience seeing the latest movie in their local theater. Having said that we don't take what happened in Colorado lightly, far from it in fact. We have a deep sense of responsibility to provide a safe and secure environment for our guests and associates and this will always be a priority concern for us. We are constantly reinforcing our security procedures with our theaters and our guests can rest assured that we will take appropriate measures to have our security precautions in place today, tomorrow and every day we open for business. We would like to say thank you to our loyal guests, many of whom have offered us words of encouragement in the midst of this terrible tragedy. It is much appreciated, I will now try to make the difficult transition to the subject at hand, are fourth-quarter and fiscal year-end earnings announcement. We are obviously very pleased with the results we are reporting today, after a very challenging year last year it is very gratifying to follow that up with record revenues and operating income in our theatre division. In fact, we ended the year with two very strong quarters and the interesting thing is they were quite different in their composition. If you recall our last discussion regarding our third quarter results, you will remember that the strength of that quarter was not any one picture or two but rather the deep slated movies that were presented. I pointed out that our top 15 films during fiscal 2012 third quarter actually performed worse than our top 15 films from the year before. But thanks to a healthy middle tier films essentially our 16 through 40th best films, our box office receipts increased by over 9%. Well we saw the other end of the spectrum during our recently completed fiscal 2012 fourth-quarter. The strength of this quarter was essentially two blockbuster films the hunger games and the avengers. That not only topped our fourth quarter charts but ended up being our two best performing films for the full year, both the third and fourth quarters ended up being great quarters for us but we got to those outstanding results through two very different ways and while I will be honest I think a deep slated movies at all times of the year is best for the long-term health of the industry. It is also very important that the studios continue to develop new franchises, that the audience relates to and looks forward and they have clearly done that with these two films, so that is a very good thing. Our press release highlighted the summer films that have performed well so far and Doug has already explained the Memorial Day weekend challenge we will have from a comparison perspective. Having said that if the Dark Knight Rises has good legs and some of the films still to be released that we mentioned in the press release do well maybe we can make up for the difference of not having Memorial Day in our first-quarter numbers. The wild card maybe the Olympics, Live TV coverage of this event has the potential of having a negative impact on attendance. But conversely the time difference means that most of the primetime coverage will be taped so we will have to see what if any impact it has on us. Since Doug has already gone overall the fourth quarter and year end numbers with you I like to spend a few minutes updating on our capital plans for this division. As Doug noted we are currently estimating that we may incur capital expenditures a $15 million to $30 million during fiscal 2013, excluding any acquisitions that could arise to support our strategic plans for our theatre division. The majority of these dollars will likely be spent to enhance our existing theatres, although we are continually looking for opportunities to add new locations organically or by acquisition. For example, we have previously disclosed plans to build the new theater in Sun Prairie, Wisconsin and it is possible that we could begin working on this project later this fiscal year. Some of these capital dollars will support our plan to further enhance our food and beverage offerings within our existing theaters. We are nearing completion of our third Zaffiro's Pizzeria and Bars and will be opening this restaurant in our New Berlin, Wisconsin Theater in one week. The place looks great and we are excited to see our guests' reaction to it. We also recently opened another of our Take Five Cocktail Lounges Duluth Theater and we have plans to expand Wisconsin as well. We also have capital dollars set aside to selectively expand in our successful premium large-screen format, our UltraScreen’s. We recently opened our 14th such auditorium in Duluth and we have plans to add this important differentiator to at least one other theater during fiscal 2013. As always we will also continue to maintain and enhance the value of our existing theater assets by regularly upgrading and remodeling our theaters in order to keep them fresh and new. We have dollars in our fiscal 2013 capital budget to renovate several theaters and add the latest and state-of-the-art seating in many of our auditoriums. With that let’s move on to other division, hotels and resorts, you have seen the segment numbers and Doug gave you some additional detail certainly we were pleased with yet another quarter of year-over-year improvement. In fact, the consistency of our recovering this fiscal year has been remarkable. Our RevPAR increased between 9.3% and 9.8% each and every quarter this year compared to the same quarter during the prior year and as Doug shared with you it is also gratifying to see us continue to outperform the industry during this recovery. Particularly encouraging and the detail behind our numbers was the fact they were reporting overall increase in average daily rate again this quarter. Our 6th straight quarter of increasing ADR. All eight of our company-owned properties reported an increase in rate this year compared to the prior year and for the first time during this recovery our increase in ADR actually contributed a larger portion of our all-around RevPAR increase for the year than the increase in occupancy. That is not to say that occupancy hasn’t important part of our continued recovery, it has and that we aren’t still experiencing pressure in our rates in this current environment because we are, our overall our occupancy rates overall are very strong, with all segments of business travel including individual business customers, the volume corporate business customer and the group customer contributing to our improved results during fiscal 2012 but it is important to note that at the same time that our overall occupancy percentages approximately 5 points and 7% higher than our prerecession fiscal 2008 levels. Our fiscal 2012 ADR is still approximately 7% lower than it was during fiscal 2008 resulting in RevPAR about even with those pre-recessionary levels. Yet the mix is more skewed toward occupancy negatively impacting prerecession margin comparisons. So I know you've heard this before but one of the keys to a continued industry recovery is the need to continue to regain the ability to increase prices for our business travelers and continual customer mix shift away from lower-priced customer segments such as those using alternate internet booking channels. We made important progress toward this goal during fiscal 2012 and we hope to see those trends continue during our upcoming year. With an increasing portion of our revenues coming from ADR increases, we gained nearly 3 points in our operating margin this year increasing from 4% to 6.9%. Looking ahead we continue to be generally optimistic about the future although there are always challenges on the horizon. We remain concerned about fragility of the current economy as well as the uncertainty surrounding the current employment and political environment. We generally expect our favorable revenue trends to continue in the future periods, although our RevPAR increases are not likely to be as high as they have been in the past two years. We have talked previously about the expected increase in room supply and our important Milwaukee market and my belief that it will be important for the local community to invest in opportunities that will increase demand for the new supply that is being built over the next 12 to 24 months. The good news is there has been minimal lodging room supply growth in our other markets, a trend we expect may continue at least in the near-term. Shifting gears for a moment let me expand on Doug’s comments regarding our plan capital spending for this division during fiscal 2013. As he noted earlier we are currently estimating that we might incur capital expenditures of $50 million to $60 million in this division this year which would represent a significant increase over the past couple of years, this is always our hardest number to estimate as a significant portion of our potential spending in this division relates to growth opportunities that are very difficult to predict. Having said that as we discussed previously MCS Capital under the direction of the Bill Reynolds is actively exploring numerous opportunities that can provide long-term value to the Marcus Corporation and we fully expect some of these opportunities will come to fruition in the near future. We are continuing to look for opportunities to our hotels under management through a variety of different ways and a significant portion of our $50 million to $60 million estimated capital spending represents dollar set aside for those growth opportunities. Our plans for our hotels and resorts division also include continued reinvestment in our existing properties in order to maintain and increase their value. During the last two years, we completed renovations of the Hilton Milwaukee City Center, Grand Geneva Resort, Hilton Madison and Hotel Phillips. And I would like to call special attention to the Monarch Lounge at the Milwaukee Hilton. It was previously a meeting room located off the lobby. We have now converted to a lounge opening it to the lobby and I am not understating it when I say the impact of this work is dramatic. During fiscal 2013, renovations are planned for several additional properties including enhancements and new guest amenities at our Pfister Hotel in Milwaukee, Wisconsin as it prepares to celebrate 50 years of Marcus Corporation ownership. Before opening the call for questions there are two other topics I wanted to address briefly, first I want to give you a brief update on the corners of the Brookfield, our proposed open-air mixed-used retail development anchored by one of the most sought after department stores in the mid-west Von Maur. There has been a lot going on behind-the-scenes and we continue to make progress on this project on a number of different fronts. Our discussions with local community continue to progress and we remain confident that our discussions result in a mutually beneficial public-private partnership with the town. We continue to be pleased with leasing discussion to-date and we are particularly pleased with the mix of premier local, national and first to market tenants the prices attracted. We have many LOIs either signed or in advanced stages of negotiations. We intend to be the developer and sponsor of this project and given the substantial progress we have made, we have already begun the next step of seeking an equity partner for this development in a joint venture structure similar to what we have described for our hotel growth plans. We believe we remain on track to begin construction on this project early in calendar 2013 with the entire project scheduled to open in the fall of 2014. The actual timing and extent of our capital expenditure for this project may change depending upon the satisfactory and timely completion of the items noted above. Finally, as our press release notes, we repurchased over 500,000 shares of our common stock in the first quarter and a total of nearly 1.1 million shares over the fiscal year. Our average repurchase price for the 1.1 million shares was just over $10. In addition, our board recently authorized the repurchase of up to an additional 2 million shares. With the strong cash flow and our underleveraged balance sheet, we believe that when timing and market conditions are appropriate, we will be able to repurchase shares to enhance shareholder value while at the same time beginning to investment in our businesses to facilitate our growth. We do not view these as conflicting strategies but rather as complementary. With that, at this time, Doug and I would be happy to open up the call for any questions you may have.

(Operator Instructions). We'll first go to David Loeb with Baird. Please proceed. David Loeb - Baird: I wanted to start with some big picture questions Greg. It sounds like from your remarks about Dark Knight and the strong opening that you don't see any structural change in the way audiences are viewing the movie going experience following or, is that fair?

David to get a little more in detail, I prefer to say the answers I don't know. It's too early to determine if there is a structural change. I think if we follow past patterns that probably won't be but I don't know. We did see that the Dark Knight actually performed very well, some of the family and the more adult pictures had a drops a little more than might have expected but it wasn’t anything significant. So given our business, there is no knowing what might have driven that. This is not a business that's predictable. David Loeb - Baird: And then to switch to the hotel side. Clearly your hotel performance has been very strong with excellent ADR growth. A lot of that is clearly the three downtown Milwaukee hotels. Can you give us an update on the new supply environment, the two hotels under construction. When do you expect them to open and how long do you think it will be before the market absorbs that. Presumably that will make it harder for you to get rate increases in the face of that. So, where are you in that process?

The new supply comes online and the follow this year, the Hilton Garden didn’t up open up, we don't know exactly when. They don't actually check in with us. So they are not going to give us an exact date. I think that initially it was called September, I don't know the building's wrapped up. So I don't know when it will be done. But it's probably, I am sure not too far off. The Marriott is I think supposed to open, they say late next summer, but again I can't tell, they have not sent me a schedule and as you know also the (inaudible) Hotel just went under construction, I don't know how that's going to impact our properties. But obviously in a world with 1% growth, we're getting 30% in the Milwaukee market with no new demand on the horizon and frankly the airport going backwards with traffic count, I don't know how market's going to absorb this product. I don't have a good answer for you on that. I know what we're going to do. That is, we're going to compete vigorously. As you know we've always taken great care of our assets and I think that we do offer significant advantages by being, part of having all the products in the market. We can do things that other hotels can't do. David Loeb - Baird: But as you look at the current demand environment, it does seem like there is some compression in to the suburbs maybe some of that reverses, but are you yet seen along booking groups starting to sharpen their pencils in anticipation of playing you off of other hotels?

Now we haven't seen that. We haven't seen that yet. Because they're not able to really, they were not open to taking reservations yet. So we have not seen that impact as of yet. David Loeb - Baird: Okay and then just to zoom in a little bit on real estate. You talked a little bit about continuing to explore acquisition opportunities. Two parts of this and then I'll stop. One is, are you looking at new markets and if so, how far afield from your core mid-western focus today. And two, this is for Doug, was there some G&A cost in the quarter that related to on-going acquisition related expenses and can you quantify that. I guess the same question on Brookfield, was there something there that helps us understand the G&A.

I am sorry. Can you repeat the first part of the question David. I just want to go back to one thing that I was thinking about, I was thinking about the one thing on the hotel issue. I think it's important to note. The big fear that we have frankly is that these hotels, especially the Marriott have been subsidized into existence beyond your wildest imagination. And one of the concerns that we have is that if the market is not able to absorb all the product, that the advantage the Marriott for example has with its tremendous subsidiary, we figure is $15 to $20 a night minimum. And so they have the power to go low if they have to, if they are struggling. So I think everybody needs to be aware of that. That's the possibility and it’s a double problem. It’s the absorption just with the hotels, if someone actually thought that it made sensibility with their own money but when they are building with other people's money and taking subsidies on top of it, it makes for even more challenges. So I just wanted to be aware of that. That is also I think is important to note that. Every hotel has been building the subsidy here now. David Loeb - Baird: On the first one in the acquisitions for hotel real estate fund, are you looking at markets that are still in your core mid-west or are you looking beyond there? Are you really looking nationally for those acquisitions.

We're looking nationally. This is a business, our ability to have a broad footprint is fine and we operate this far west as California. So it's that, so we are looking nationally.

And then on the second half of the question, actually I am going to respond also to one of your first questions in this terms of the structural issuances here which I certainly echo what Greg said, there is no way to know. We certainly do have one thing to look at and if you look at the long-term effects after 9/11, airline travel has not dipped. And in fact there's as many people as ever in the air. So whether that's an indicator or not, I don't know, but it's certainly is something that you can look at from a long-term structural perspective. As it relates to the G&A and the corporate piece, no you're exactly right that there is a couple of things that make that a little bit unusual. Yes, throughout the year, there's an element in there that represents our conservative approach and some of the expenses related to the Brookfield development. So there are certain elements that we have just been expensing all the way along just because, we think that's a conservative thing to do. But certainly that has impacted our overall G&A a little bit. The fact that we have such a good year David is no question impacting that a well because just from a compensation expense perspective, bonuses etcetera, they are just going to be and as they should be, a lot better than what they were in the last year or two given the years that we had those years compared to this tremendous year that we had this year. So that certainly and probably just proportionately we answered this quarter a little bit, just because the quarter was so good and with those two pictures that did so well. So probably, certainly our estimates skewed up as the year went on because of that. Those are probably the two main things. There certainly is just the underlying cost of MCS capital a little bit. It's yet to do a project but we believe is imminent in terms of actually starting to have some of these things start to hit. But those underlying cots of that organization are also impacting just the overall G&A as well. So no question, there is some unusual things in there that today don't necessarily have any corresponding EBITDA to go with it. But we're certainly taking a long term will.

Your next question comes from the line of Brian Rafn with Morgan Dempsey Capital. Please proceed. Brian Rafn - Morgan Dempsey Capital: Can we get a sense on the cinema theater side. You guys look at the mix of ticket sales in maybe 3D, dinner theater. Maybe without breaking up percentages, is that percentage of penetration rising incrementally over the last few years?

As the proportional ticket sales usually like 3D? Brian Rafn - Morgan Dempsey Capital: Yes, I am just wondering what that as a proportionate to total gross, those kind of extra not just the guy coming in for a regular theater.

In fact if you want to go back when it was first introduced, 3D was a higher percentage. As I shared on one particular movie The Avengers, it was about 40% and at one point in time it was 50 plus or more and from our perspective it seems to have found its equilibrium to a certain extent now. And it depends on the picture and some pictures are going to be a little higher and some are going to be a little lower. Family films are lower and then just not even our numbers are no, the national numbers you can see, family films performing lower on 3D probably because of family of four or five going to the movies with 3D added in can be very expensive and so that's impacting its performance. Brian Rafn - Morgan Dempsey Capital: Okay if you just broke out, I mean you certainly qualified as 3D, how about the dinner theater side? And then what is specific to you guys is that found its equilibrium too?

That's a very small piece of what we have right now Brian. We've got a managed property that has five auditorium have hurt places like that and that's not even in our results if you look at them. Then we have three screens at our Majestic Theater in Brookfield and we opened only as one. When we added a three, it became a better dynamic, we were able to leverage our cost better, became financially a better arrangement than what it was before. And there's a clear audience that loves the dinner and the movie concept. So it's found a good audience in that regard, but it's such a small piece Brian that it's really and thus far we haven't expanded it elsewhere, certainly we'll look at that. But right now, it's just too small to matter a lot. Brian Rafn - Morgan Dempsey Capital: That piece Greg, does that also levers to the content of the types of films coming out. In other words is that better for a romantic, love movie versus say Die Hard 5?

Yes. Absolutely. It does make a difference. But its broad content over time. So… Brian Rafn - Morgan Dempsey Capital: You were sitting here in the corn country Wisconsin, the commodity inflation that I'd right away go to high fruit toast corn syrup, you guys get a sense if there is certainly some significant damage on a commodity basis that you're going to see some costs on the concession side, Candy and what not rising and have incremental pricing over that?

Are you talking about the drought condition? Brian Rafn - Morgan Dempsey Capital: Yes, because we are seeing, in package foods you are seeing some whether its bread or candy or soda, you're seeing some real pressures building in the pipeline.

I haven't gotten an email yet to tell me that but it wouldn’t surprise me if we start to see some of that obviously. But when you think about it as a percentage of our margins as you know are strongest in that area.

And by the way, while Greg was answering that, I was just looking up a couple of things and if that's your question about the in-theater dining, I will tell you that while today isn't a pretty small piece for us, nationally it is a growing trend and growing revenues per screen. So I don't want to minimize the fact that we think that it is something that has growth potential and we're seeing it nationally. Brian Rafn - Morgan Dempsey Capital: Right and that's something for the most part that given a theater footprint you guys can convert one auditorium to that. Is there anything specific about that that requires a specific type of construction or is that something you could just roll out pretty much anywhere in your chain.

Well first of all there is different flavor so to speak. Something like the ridge there is a field we are about to open. We took out an auditorium and converted it to a restaurant and it was a very complicated project. What we do the Majestic for example where we have the in-theater dining, it's also significant but you take, you're basically reconfiguring the seating. Now putting in the kitchen is what matters. They decide that, they can do it from one screen. The scale you need the, scale of multiple screens to support the cost of the kitchen and a labor that can work multiple screens. So you need, you can't just do it at one. So it’s a capital commitment. And then each one has a different impact. If you think about it, if you put a restaurant in an auditorium that everyone can use, that's for everybody in the movie theater. If you do in-theater dining, well that's only for the people going to see that movie. But on the other hand it’s the benefit of being able to eat in a theater and combine you're eating experience with your movie going experience to a lot of people is very attractive. So I think what you'll see is a combination of different experiences. Brian Rafn - Morgan Dempsey Capital: Your comment certainly and everybody is always configuring this, what the theater of violence in rural Colorado. Obviously if you're going to have terrorist shoot up a military base, the theater chain, grocery store, it makes it very, very hard and you can't really lock it down and again turn a theater into a military base. Let me ask you like here in Wisconsin Greg, we've gone to a cancel and carry, one of the concerns might be to take that event and have other people in their packing where you turn it into an okay corral. What's kind of Marcus Corps. gun policy in the theaters?

Our policy is that we as you to believe there guns, put weapons in their cars. Brian Rafn - Morgan Dempsey Capital: Okay, let me ask from the standpoint. How would you guys look at if you got 165 to 170 to 190-95 movies here. How would you describe your fiscal 2012 product from the studies?

Brian I tell you, if I could answer this one I'd be in a beach somewhere and not in this call but having said that, in general, quantity has been. We reported that actually last time and so it's hard to fit it into our fiscal year but we had reported in our last quarter that during calendar 2012, we could play as many as 15 to 20 more pictures than we played in calendar 2011 which is a good thing because you have a better chance to some of those being hit. The actual film schedule certain changes. We have visibility out right now to about the Christmas holiday season. There's other stuff on the calendar but as we look ahead, look there is certainly some big franchise pictures that are coming up such as for example in November you've got the next Bond picture, you have the next Twilight picture, in December you have much anticipate Hobbit Part One coming out from Peter Jackson. So that's expected to be a really big picture for the Christmas season. There is a variety of other pictures that have some big name directors and stars behind it that aren't parts of part two and part three type things. And so we're very hopeful that overall we have a very strong line up ahead of us. Our film guys always think that's the case. Ultimately they got to play and we got to see what happens. Brian Rafn - Morgan Dempsey Capital: Okay, but would you classify just say, fiscal 2012 you guys close. Was that a pretty decent year relative to years in the past or would you say that's a year that we did better at Marcus on a weaker product mix.

It was a good year Brian. Fiscal 2011 was a difficult year and so I indicated that our tenants was up 2.3% on a comparable theater basis and excluding the extra week. So it was a good year. It wasn’t an all-time year either direction. Brian Rafn - Morgan Dempsey Capital: Okay and then just a final question relative to, Greg, so talking about the 30% increase in room supply in Milwaukee, talk a little bit about and I have heard it in the past obviously being a novice in the travel site, Milwaukee being kind of a second tier city. You couldn’t have a super bowl at (inaudible) field because where would all the people stay. Does the 30% increase in supply bring in any larger conventions that now see oh gee, Milwaukee, Wisconsin is not on the map, because they've got that much capacity increase.

Well actually it would if it were anywhere near the convention center. But none of the supply was anywhere the convention center. That's not a fundamental problem with what's going on. The Marriott is blocks and blocks away and the other problem is that Milwaukee needs to have those rooms, because the problem is if you look at Milwaukee right now on the basis of and you prepare two things that would generate demand. Hotel rooms compare to office supply or if you look at hotel rooms compare to convention center space. Frankly, we're certainly adequately supplied when you compare, use those two metrics. The problem is that especially as it relates to convention is that the planners want the rooms to be consolidated into one or two convention center headquarters hotels, not spread amongst lots of different hotels. This is a problem that the community knew about before they got behind putting the hotels that are going up now in place. So unfortunately the vision there to see if there was going to be an increase in supply you need to be near the convention center not spread out around the downtown. Its exhabbaratting the problem that already exists. Too many small properties, not enough ones that are large and with a 30% supply, I don't know how the market would then absorb an increase of a big hotel. So it's actually counterproductive to be honest with you. Brian Rafn - Morgan Dempsey Capital: Yes Greg is that the buzzed on it replacing putting in a high rise down by the old first start center, the US bank center on that parking garage. That doesn't have any hotel in that, does it? I prefer retail mix, occupancy…

Yes, most of it. Brian Rafn - Morgan Dempsey Capital: It does?

Oh yes. Brian Rafn - Morgan Dempsey Capital: Okay, all right, so the problem really gets worse as far as dispersion then it sounds like. All right, thanks guys.

(Operator Instructions). Your next question comes from the line of (inaudible) with Wells Fargo Advisors. Please proceed.

On Dark Knight, can you sense how much business might have been lost from the tragedy and if you look at the first three days of the new week, you think there is some catch up here? Or do you think it's going to have a typical drop off in the second week. I think the industry has been looking something like 66 million in the second week. But I was wondering if you sense maybe it will do a little bit better than that.

I have no idea. I wish I could tell you but, this is not a business that you can know what it was going to do. You never know what's its going to do it for sure.

So when you look at the first three day line up, you watch the numbers that closely. You can't really draw much conclusions from Monday, Tuesday and Wednesday's attendance?

No.

I was going to ask you to assess the new product. You mentioned a couple of films but is there some other films that you think we should really pay attention for this year. Obviously when I look at the next fourth quarter the comparisons are going to get really tough with Hunger Games and Avengers both and I don't know if you can look out that far, but at least in terms of through Christmas, how do you think the comps might look at and what are the things that you are most excited about.

Well I'll answer your question but I am also going to tell you that I really think that's a very tough way to look at our business. Because you don't know what the product's going to do. You have to know it over time the product tends to have a certain consistency to it. I would tell you that we have had a relatively predicable growth pattern with a high standard deviation. So to try and pick at individual film is pretty challenging. The last one is going to be a great one. The Hobbit, that's a big one, 48 frames per second. Peter Jackson could be another, it’s a first of a trilogy that could be another Lord of the Rings. The final installment in Twilight coming out, we got some big product coming. But I would tell you, we could have the same conversation every single year.

There is nobody more optimistic than a thumb booker.

No, I realize that. Let me know, I want to see what Dark Knight does in the next couple of weeks as it's certainly going to affect your first quarter comparisons.

Your next question comes from the line of Brian Rafn. Please proceed. Brian Rafn - Morgan Dempsey Capital: Yes, I just had a couple of follow ups. One of the areas in retail where we're seeing some modest growth or the Factory Outlook Centers. Like your construction I think you mentioned the theater going out in some area, and I don't know if that's the expanding, if that's a new area or you're expanding out of building. Are there any real estate demographics like Factory Outlook Centers where you go out virtually in a field which historically wouldn’t be a destination other than a farmer, that's now a Factory Outlook Center and perhaps create some destination traffic where you guys could look. I am just wondering as you look across the US, how tight is your ability to do these kind of tuck-in constructions in areas that obviously are pretty dense already.

Pretty minimal. Brian Rafn - Morgan Dempsey Capital: And then on the construction of The Corners of Brookfield, you guys are kind of building it. You certainly had at one point you had Marcus Cinemas there, you want to cross i94 to the other side and you are kind of sitting over that. Is that project development result of having all that land or is this general contractor mixed retail constructions that like a third leg strategically for Marcus Corp.

There is no question Brian, this was opportunistic. We were out there trying to sell, we had two theaters that we had that we closed when we built the Majestic. As you know we own the underlying real estate of most of our theaters which is a real strength in this company and so we sold the first one for a significant gain to Gander Mountain and we were marketing this one when at the same time (inaudible) moved next door (inaudible) was out looking for a location in Wisconsin, fell in love with our location and it just kind of all came together from there. So it was very much opportunistic.

Thank you. At this time there appears to be no other questions. I'd like to turn the call back over to Mr. Neis for any additional closing comments.

Well thank you everybody for joining us today as we presented these great results to you. We look forward to you again once again in September couple of months from now when we release our fiscal 2013 first quarter results. Thanks and have a great day.

That concludes today's call. You may disconnect your line at any time. Have a great day.