Marcus Corp (MCS) 2008 Q1 法說會逐字稿

Good afternoon everyone, and welcome to the Marcus Corporation first quarter earnings release conference call. Today's call is being recorded. Joining us today are Steve Marcus, Chairman and CEO, and Doug Neis, Chief Financial Officer. At this time, I would like to turn the program over to Mr. Neis. Please go ahead sir.

Thank you very much, and welcome everybody to our fiscal 2008 first quarter conference call.

As usual, I do need to begin by stating that we plan on making a number of forward-looking statements in our call today. Our forward-looking statements could include but not be limited, to statements about our future revenues and earnings expectations, our future RevPAR, occupancy rates, and room rate rate expectations for our hotels and resorts division, expectations about the quality, quantity and audience appeal of film product expected to be made available to us in the future, our expectations about the future trends in the business group and leisure travel industry and in our markets, our expectations and plans regarding growth in the number and type of our properties and facilities, expectations regarding various nonoperating line items on our earnings statements, and expectations regarding future capital expenditures.

Of course, our actual results could differ materially from those projected or suggested by our forward-looking statements. Factors, risks and uncertainties which could impact our ability to achieve our expectations are included in the Risk Factors section of our 10-K and 10-Q filings, which can be obtained from the SEC or the Company. We will also post all Regulation G disclosures when applicable on our website at www.marcuscorp.com.

So with that behind us, let's talk about our fiscal 2008 first quarter results. As Steve notes in our press release, this was actually a pretty good quarter for us on many levels, despite what the headline writers may be tempted to say, given that our net earnings were down compared to last year. Our operating income was up 11% for the quarter, despite an unfriendly calendar and couple of specific circumstances in our hotel division that we will address. But before I get into the operating results, let me first address the variations in the line items below operating income versus last year, as they as expected had a significant impact on our results.

Now the obvious place to start would be income taxes. As you have seen by now in our earnings statement, our net earnings declined compared to last year, entirely due to a significantly larger income tax charge. This of course was not unexpected, and has everything to do with last year and very little to do with this year. As you know, last year's effective income tax rate was significantly reduced by the one-time historic tax credits, that were generated by our Skirvin Hilton Hotel project in Oklahoma City. With those credits behind us, our effective rate is now back to normal, or actually slightly higher than our former run rate.

Our first quarter effective tax rate of 40.6% represents our current best estimate of what our full year fiscal 2008 rate might be. Based upon our estimate of all of the usual factors that go into calculating such rates. This rate is slightly higher than we might have run in earlier years, due primarily to the impact of the recently adopted Accounting Standard, that requires companies to expense stock options. Incentive stock options are not deductible for tax purposes, which unfortunately by our estimation is adding approximately 0.7% to our effective rate. We will have to deal with this unfavorable comparison to last year in income taxes for the remaining three quarters of our fiscal 2008.

Moving back up the earnings statement for a moment. We also had unfavorable comparisons in the last year on the investment income and interest expense lines. The variations in these two lines can be traced directly to our purchase of the 11 CEC theaters in late April. Prior to that purchase, we had been carrying some remaining excess cash that was actually originally generated from our Baymont sale a couple of years earlier, and that cash was generating some modest investment income for us. We of course believe the cash is now providing even greater returns in our operating income, but we will expect to show declines on the investment income lines all year as a result.

Meanwhile as expected, our interest expense is up over last year, again due to the fact that we have added to our borrowings in order to finance the theater acquisitions. For at least the next two quarters, we would expect to see similar increases in interest expense. Our overall debt to capitalization ratio at the end the quarter was still a very strong 42.4%, down from 44.5% in our recent May year end, due to another strong cash flow summer for us.

Continuing down the earnings page, we had relatively little activity this particular quarter this year, and last year as a matter of fact, on our gains from disposition line. We will likely report some level of gains from sales during the remainder of fiscal 2008, but as always, the timing of such gains is always difficult to pinpoint. I will warn you ahead of time we will likely have significant unfavorable comparisons in this line item during the next two quarters, as last year during that timeframe, we reported large gains for the sale of a former theater located on a prime piece of land, and we reported gains from the sale of a condo unit at the Platinum Las Vegas property.

Conversely we had a small favorable comparison to last year's first quarter on the equity losses from the unconsolidated joint ventures line this quarter, and we will likely have an even larger favorable comparison next quarter, due to the fact that last year at this time, the Platinum Hotel was a joint venture, and was beginning to incur significant preopening expenses.

Shifting gears, our total capital expenditures during the first quarter of fiscal 2008 totaled a little under $4 million, compared to just over $12 million last year. Now at this early stage of our fiscal year, I have no reason to adjust our previous estimate for capital expenditures for fiscal 2008 of an amount in the 60 to $80 million range, other than the note that only about $30 million is committed and/or approved at this point in time. Barring an acquisition, that leads me to believe right now that we may end up closer to the lower end of that original range, but that could change. The actual timing of the various projects currently underway or proposed, will certainly impact our final capital expenditure number, as will any currently unidentified projects that could develop during the fiscal year.

Now before I turn the call over to Steve, let me provide a few additional financial comments in our operations for the first quarter beginning with theaters. Our box office revenues were up 23.8% during the first quarter, with concession revenues up 22.4%. Of course, these numbers were impacted significantly by the 11 new acquired theaters. If you exclude the 11 CEC theaters, as well as two theaters that opened, two theaters that were opened last year that were subsequently closed and not replaced, our box office and concession revenues were up approximately 2.5% and 3.3% respectively during the quarter.

Given the well documented fact that last year's first quarter included the very strong movie-going Memorial Day holiday weekend, and this year's results did not, we were pretty pleased with these results. Total attendance increased 20.2% for the first quarter, but again that includes the CEC theaters. Excluding those acquired theaters and the two closed theaters, our attendance was actually down 1.9% for the quarter, again entirely due to the calendar and the lack of the Memorial Day weekend.

Box office and concession revenues for these comparable theaters increased however, because our average admission price for these theaters increased 4.4% for the quarter, and our average concession revenues per person were up 5.2%. While just one theater in the overall mix, our new Majestic Cinema contributed to the increases, due to the popular UltraScreens with VIP seating, and premium pricing that goes with that, and our expanded food and beverage offerings. Our operating margins from this division increased 26.6%, compared to 26.4% last year.

Shifting to our Hotel and Resort division, our overall hotel revenues were up 15.7% during the quarter, compared to the same period last year. Total revenues of course benefited from new revenues from the Skirvin Hilton and the Platinum Hotel and Spa, neither of which were open last year during the first quarter. Conversely, the Columbus Westin was a company-owned hotel last year at this time, and now that it is a joint venture, its revenues are no longer in our consolidated total.

Our press release noted that total RevPAR for comparable properties increased a solid 5.5% for the period. I want to point out that we excluded the Intercontinental Milwaukee from that calculation, due to the fact that last year at this time, this hotel was still operating as a Windham, and was about to undergo a significant renovation. If we were include the Intercon as a comparable property, our RevPAR was actually up 7.1% for the quarter compared to last year.

Our fiscal 2008 first quarter RevPAR increase for comparable properties was once again driven primarily by an increase in our average daily rate, or ADR, of 4.5%. Although our overall occupancy rate was also up nearly 1 percentage point.

The increase in overall revenues during the quarter did not translate to higher operating income and operating margins during our fiscal 2008 first quarter, primarily due to the results from two properties, both of which suffered from one-time negative comparisons to last year, as a result of circumstances that are not reflective of future performance. In fact, excluding these two properties and the Columbus Westin which was consolidated last year but not in this year, as I mentioned earlier, division and operating income was actually, would have been up approximately 17% for the quarter.

As you know, we don't and won't disclose individual hotel performance, but as we have noted in our release, the two properties I am referring to, are the Pfister and Platinum Las Vegas. The largest year-over-year decrease came from the Pfister, which as we had noted in previous communications, operated throughout the summer without a parking garage and meeting and banquet space, while we performed an extensive renovation of both.

Meanwhile, the operating loss incurred in our revenue share arrangement at our Las Vegas Condo Hotel, occurred during what is essentially Las Vegas' slow off-season and has no comparison to last year, because the property was not consolidated last year nor was it open for that matter.

With that, I will now turn the call over to Steve.

Thanks very much, Doug. I will begin my remarks where Doug left off, which was discussing our hotels and resorts division. I hope you glean from some of the numbers that Doug shared with you, this actually was a pretty good quarter for this division, which may not have been your initial conclusion when reviewing our results.

Let me briefly take you through some of the highlights starting with the Pfister. Yes, the Pfister results were the single biggest reason why we reported a decrease in operating income in the Hotel division, but the investments we have been making in our oldest and historically one of our most profitable hotels should position this Milwaukee institution for continued market leadership in the years to come.

Our new restaurant the Mason Street Grill continues to perform very well, and our new Spa business continues to build. It was not easy to give up a summer of parking revenues and meeting and banquet business, but it was absolutely necessary. With the seventh floor meeting space now open and looking spectacular, with the parking garage nearing completion, and of partial rooms renovation scheduled for this winter, we will have completely updated this landmark hotel by the end of this fiscal year. I believe we have a reasonable chance of making up a good portion of what we lost this quarter on a year-over-year basis by the end of the fiscal year.

Another positive story to tell this quarter was the fact that despite a continued decline in city-wide conventions, group business was solid this quarter, which helped several of our more group-oriented hotels. Another positive contributor to our first quarter results that will only get better, is the new Skirvin Hilton Hotel in Oklahoma City. Open for only six months now, this hotel is ramping up even faster than we had expected. There is still an upside as this property continues to mature, and our comparisons to last year will be particularly strong during the second half of this fiscal year, as we go up against significant pre-opening expenses of last year.

We will also likely benefit from favorable comparisons in the coming quarters from our repositioned Intercontinental Milwaukee Hotel. As implied by some of the numbers that Doug shared with you earlier, we are experiencing very strong RevPAR growth at this hotel, and beginning in our second quarter we will be going up against numbers last year that included significant preopening and startup costs associated with last year's renovation rebranding.

Finally, we are beginning to see some of the benefits of our increase in managed properties through increased outside manager fees. We added six new management contracts during fiscal 2007, and as noted in our release, we continue to seek additional opportunities to expand this portion of our business. Recently we announced a new contract to manage a luxury boutique hotel in Carmel, Indiana, and the new Bloomington Minnesota Hilton Hotel currently under construction, appears to be on schedule to open in January. We are very pleased with the momentum we have gained in our efforts to grow our management business.

With that, I would like to make a couple of comments about our theater business before we open the call for questions. As you know, there is a portion of this business that we can control and a portion that we can't. The part that we can't control, the quantity and quality of the movies made available to us was actually pretty good this quarter. Doug shared some of the key numbers with you, and given the importance of the Memorial Day weekend, given the importance that the Memorial Day weekend usually plays in our first quarter results, we were very pleased to end up where we did on a comparable theater basis.

We have listed some the upcoming films in our press release. While it is always difficult to predict how they will perform, we are pleased with the continued strong quantity of films that are being released in the coming months. Having new films open each week is very important to our continued success.

And on the areas that we can control, I think we had several positive developments this quarter. First of course was the positive impact our newly acquired theaters had on our operating results. Our people did a great job of rapidly assimilating these theaters and new markets into our organization, and from my perspective the theaters haven't missed a beat. They performed exactly as we expected them to, when we expected them to do so.

Our new flagship, the Marcus Majestic Cinema in Brookfield, Wisconsin had a great first summer as well. We have only been open for four months so far, but we have already learned a good deal about the various components we have put together, in an attempt to create a neighborhood entertainment destination.

For example, our decision to build two UltraScreens with VIP seating appears to have been a very good one, as was our decision to offer a strong local brand of pizza. We have an opportunity to experiment with, we had an opportunity to experiment with different types of programming and our cabaret-style multipurpose entertainment venue that we call the AT&T Palladium, and we have learned a lot about providing food and beverage offerings in just such a setting. As we have indicated previously, we are actively reviewing plans and opportunities to duplicate some elements of our expanded food and beverage offerings to other existing theaters.

As evidenced by a couple of recent press releases, we also taken additional steps this quarter to build on our strategy to offer our guests additional reasons to come to our theaters besides seeing a movie. We have had a very successful first few weeks of showing Green Bay football games in high definition at the AT&T Palladium, and are very excited about our recent announcement that we are partnering with the National CineMedia's FATHOM division, to provide additional alternate programming in 21 of our theaters. Showing the latest hip films certainly will continue to be our bread and butter, but we believe that increasing the variety of content available, particularly during times when our auditoriums may not be busy exhibiting motion pictures, is one more step in the evolution of the traditional movie theatres to that entertainment destination I referred to earlier.

And lastly we have continued to prepare ourselves for the eventual widespread introduction of visual cinema. We will be conducting additional tests of hardware and software shortly with the markets of Majestic Cinema being one of those test sites. As the press release noted, our upcoming tests will include digital 3-D technology, which could be a very significant factor in our business in the future.

So as you can see, it has been a very busy but exciting period for both our Theater division and our Hotel and Resorts division, and we look forward to the weeks and months ahead as we continue to grow this business.

With that, at this time Doug and I would be happy to entertain any questions you may have.

Thank you. (OPERATOR INSTRUCTIONS) The first question comes from the line of Rob Damron.

Good afternoon, guys.

Hi, Rob.

Just a couple of questions. Doug, I know you don't give too much guidance on this. But in terms of the properties that are up for sale, that could impact the income statement over the next several quarters, could you go kind of go through those? Then also from a preopening expense line, are there any hotels slated that would result in some incremental pre-opening expense over the next several quarters as well?

Sure. First question as it relates to any properties that would be for sale. There are a variety of outlots and former restaurant properties, or pieces of land that we have, that are actively being marketed, and in some cases, we are working on some, we may be under due diligence on projects. For example, we have one of the two remaining Baymonts, that we still operate, they are both joint ventures, but one of those is currently under contract, and so we have a variety of the miscellaneous things that we always have.

In general, those types of things account for year after year. You see somewhere in the neighborhood of 500,000 to $1 million of gains, that are kind of associated with those miscellaneous kind of things. What is always harder to predict is anything on a larger scale, and of course you know the largest scale item that we probably have out there right now, is that second valuable theater property that we have out in Brookfield that was replaced by the Majestic.

The only update I can give you on that, and again once that one would sell, we would expect a report of a fairly sizable gain, is that in literally in today's Milwaukee paper, there is an article about the town of Brookfield's proposed plan for that area. We have been under a moratorium by the town, as they take a look at that particular quadrant, and kind of plan out from a development perspective, and they have just now put their thoughts out there and will get some reaction. So we are looking forward to the moratorium being lifted, and having a chance to sell that. The hard part for me is telling you when the sale could happen. We don't obviously have a deal right now, because we haven't been able to put it on the market, because no one knew what the town was going to do.

As it relates to your second question, from a pre-opening expense perspective, I would really reiterate what I said previously, which is we don't anticipate significant expense for the remainder of the year on that line item that we call pre-opening expenses. Now as we indicated this past quarter, we were impacted somewhat significantly by something that was not pre-opening expense, but it was just the fact that we had renovation going on at the Pfister, and those are just, that is now a pre-opening expense line item. I will point out that the seven floor space just opened up in the last few weeks. Certainly our second quarter we will still have a little bit of a negative impact. No where near as much as the first quarter did.

Second quarter will at that particular property, will still have a little bit of a negative impact. A few hundred thousand dollars possibly, of what I would call lost business and lost profits, as a result of not having the parking garage, which is also a problem piece for us, or that meeting space and banquet space. Beyond that, I can't really point to anything that I am aware of at the moment that would suggest that we would have anything else significant. And I will just point out that last year, as you know, we had a lot of that. In fact, we reported in our 10-K MD&A that we had about $7 million of what we call pre-opening expenses and startup operating losses last year.

I will tell you that all $7 million of that basically happened in the second, third, and fourth quarters last year. There was really none of it occurred to speak of in the first quarter. So we will have some pretty significant favorable comparisons, particularly in the second half of the year. Related to the stuff that went on last year. Probably gave you more than you asked.

That is helpful. And then a question for Steve, maybe you will talk a little bit about the hotel supply new proposed properties around the country, but I guess more specifically in your markets, you know, what does that look like? Are we expected to get a flood of new properties? What does the overall market look like from that perspective?

We are seeing a fair number of projects proposed, but our sense is that many of them will not happen. And right at this stage, because they are all pretty fresh out of the box. It is a little difficult to assess just what the quantity of those might be. When they come out, most of them when they come out of the box, they are predicated on getting significant city subsidies to help them along. And at least in the Milwaukee market, the city has taken a pretty firm position that it just does not provide any subsidies to those.

In any case, so some of them will not be financeable. Those that get built will not at least have an unfair pricing advantage as they come into the marketplace. They have to compete on a level playing field.

Okay, that is fair. Thank you.

Your next question comes from Herb Buchbinder with Wachovia Securities.

Doug, can you comment on, I don't know the number of unsold units in the Las Vegas Condo property, how many of the people that have bought units are trying to sell them, and what impact that has on you? Do you try to help them, and there is a chance some of these people could walk away from this if the economic situation deteriorates?

Well, I think I have the number right, I believe there are 16 units that are currently on our balance sheet that are not sold yet. Herb, the market is pretty soft right now, as you know. As I understand it, and I do not have a number for you that I can tell you exactly how many of existing holders might be trying to market as well. Certainly what I can tell you is that basically most, there is not a lot of major price cutting going on. People are pretty holding firm in their price, and they are being patient. When we are as well.

As we look at the numbers, we are more than happy to be patient and let this play out a little bit here, and we certainly wouldn't want to be helping them. We wouldn't be helping them if we went out and slashed our prices just to get rid of our 16 units. We don't see the carrying costs as being overly significant versus the upside as the market settles down a little bit out there.

So I don't have it at my fingertips a number to tell you how many people are looking to flip their units. A certain number of people flipped them before we even opened. It is part of why some of these people bought these units. It is a pretty soft market right now, and we will have to be patient.

Do you help them sell units? Or is that not your job at all?

Generally not. They can use whoever they want to use. In that marketplace there are several people who have a pretty good handle on this, and so it could be that some of the same people that are helping us might be helping some of the other people. They can use whoever they want to use.

One question on the theater side, just comment on your attitude towards 3-D, and if you will see more and more use of it in your theaters?

We are going to see more and more use of it. It all depends of course on how much production comes out of Hollywood. We can't manufacture a 3-D picture ourselves, but we see more of it coming with the major focus being in 2009.

And as a matter of fact, I was at a National Association of Theater Owners Board meeting last week, where we learned that there were two pictures scheduled to come out in 2009 on the same weekend. Well, there aren't enough 3-D screens around the country to accommodate more than one release at a time. And as a result one of the pictures moved to an earlier date into a latter part of March.

Well, for us to have a very strong picture coming out in the latter part of March, as opposed to the early part of May, is a tremendous accomplishment, because it moves us closer to the idea of being able to get releases of strong product on a 12-month basis week after week, rather than just during the summer and at Christmas time.

And so we are bullish on the idea of 3-D because it is a concept that people can't now get and accomplish in their homes. So it is a big differentiating factor. My understanding is for all of the talk about technology being available to show 3-D on home TV units, that is a 10 to 20 year timeframe down the line.

One last thing. I guess in relationship to NCMI, are there any specific programs that you expect to show, other than Green Bay Packer games on some of your theater screens, that could be significant events that you could talk about? Or is that something --?

The major one we know about is the Metropolitan Opera. And we will have that in most of those screens. I don't know that we have fully assessed which ones may be good markets for it, and others which may not be appropriate to it. And I believe that is a series of I think of eight operas, which according, now they ran that last year for the first time, and we understood it was very, very successful.

If the Brewers make the playoffs, will you show some Brewers games in the theater, or not a big enough market?

Oh, no, you can bet we will.

Okay. Good luck!

And as a matter of fact, on the days when we show the Green Bay games in the Palladium, in our lobbies we have the Brewers games on that TV.

Good. Thanks for your help.

Thanks, Herb.

Ladies and gentlemen, (OPERATOR INSTRUCTIONS) Your next question comes from Beth Lilly with Gabelli.

Good afternoon, Doug and Steve.

Hey, Beth.

I wanted to follow up on the Hotel and Resorts division, and Doug, I just want to get clarity in terms of, you said if you took out two properties, the operating profits were up 17% for the quarter, is that correct?

Yes, I said if I took out the two properties I referred to, the Pfister which had the renovation, and the Las Vegas property which was not comparable, and pretty hard to get our hands around. Last year we didn't even have it consolidated nor was it open. Then I mentioned in including my total was the fact that last year we had the Columbus Westin, and now it's, we still have it but it is not a consolidated hotel any more. That was less significant.

It is really the first two that were the most significant. If I took the results of those properties out of this year's and last year's numbers, and then just had comparable properties, we were up 17% in operating income for the remaining properties.

So the interesting thing is that the Pfister problem, the Pfister results, poor results or not poor but lagging results will take care of themselves as the renovation gets finished, correct?

I have got to tell you Beth of all the properties and all the things businesses that keep Steve up at nights, or keeps us up at night, Pfister is pretty low on the list. It has been around for a long time, and exactly, you feel pretty good about that property.

So then the issue seems to be then the Las Vegas property, right? In the sense of that is where the results are probably the most concerning?

Sure. Comparing the rest of them and you look at where we are with the properties, because the Skirvin has come out of the gate very quickly, I don't know that the Las Vegas property is necessarily performing significantly different from how a lot of new hotels do. Still talking about almost essentially the winter season, the slow season for this particular property, and our first time through.

And I would frankly tell you, yes, where our area of attention is, because this is a unique management contract. Unlike other management contracts where we just get a fee, and all of the costs are basically borne by the owner. This is a revenue share, where we get half of the revenue for the rooms essentially, and then bear all of the variable costs ourselves. Cost control becomes a big issue with this property, and we are still working on that. We are probably spending a little too much right now on advertising, but you need to do that in your first year of property.

And so there is a certain level of it that is really about, has to do with a first year property. Is it getting a lot of attention? Absolutely. Because it is the one that was the hardest for us not going through a summer before. It was the hardest one for us to get our arms around, in terms of where we might be in this particular quarter, for example.

So should the operating margins on the Hotels and Resorts division get back to historical levels? Drop down in this quarter, and a year ago they were 23.6. Do you expect to move forward as those margins should ramp up?

Absolutely. One ever the main things being was some with the numbers that I shared earlier, Beth, which is that last year all of the noise was in the second, third, and fourth quarters, in particular the third and fourth quarters.

That $7 million of noise that we had last year in pre-opening and startup losses on those properties, 6 million of it occurred in the third and fourth quarters. And you can assume again, I am not going to talk about individual properties and say we expect to make X or Y, but you can certainly understand that we will not expect to incur those at the same level of losses in the third and fourth quarter this year.

As we exit this year, operating margins in this division will be back to historical levels?

Or better as we slowly make the evolution, so a little greater dependency on management income as well.

Right, okay. That is great. Thank you very much.

Your next question comes from David Loeb with Robert W. Baird.

Hi, this is Andy for David. The 16 rooms at Platinum, can you sell those rooms? Or are you trying to keep them for when you do sell them?

No. We are selling them.

Okay, just wondering. At the Pfister, just in terms of the timing of the renovations, why the spring/summer season versus maybe something in the early spring or winter?

That was mainly because the nature of the work we had to do in the parking structure just couldn't be done very well during the winter time. And in addition to that, summertime from a standpoint of hotel guest rooms in the Milwaukee market is pretty strong. And we made a bet that it would not impact our guest room business. Which is exactly what happened. Our guest room business actually was up a little bit at the Pfister this summer.

So in spite of the fact that we didn't have our parking structure and the banquet space, and the banquet space and the guest rooms tend to go hand-in-hand most of the time. So we wanted to make sure that we did that work at a time when we wouldn't need that public space to support guest room revenues. Now that we are coming in the fall, we have got our banquet space back and available, and we are operating now with somewhat kind of an inconvenience. We don't have the parking revenue right now, but we are beginning to ramp up the banquet revenue again, it is supporting the guest room revenue at the same time.

To tie it together. The seven floor, the meeting and banquet spaces was directly tied to the parking garage, because it literally sits right above the parking garage. And the work that was going to be done on the parking garage was very noisy at times. And so again, they really had to be done at the same time to minimize the disruption.

That makes sense. And then just on CEC integration, and I guess maybe G&A overall, is the first quarter number, does that reflect some integration costs? Or do you think that might be a run rate reflective for the rest of the year?

I would say it is pretty representative, Andy, of where we are. The handful of things that we had to do to absorb those 11 theaters, and it was not significant. We had an accountant here doing a couple of things like that, have been pretty have been pretty much taken care of. As I think about a couple of them, they could have been as they came on during the quarter, it may not quite be the run rate, but it has got to be pretty doggone close.

Okay, thanks a lot.

At this time it appears there are no other questions. I would like to turn the call back over to Mr. Doug Neis for any additional or closing comments.

All right, we certainly would like to thank you once again for joining us. We hope to see some of you at our Annual Meeting on Tuesday October 16th at the aforementioned Marcus Majestic Cinema in Brookfield, Wisconsin. For those of you who cannot attend, we will be webcasting the meeting as well.

We also look forward to talking to you once again in December, when we release our second quarter fiscal 2008 results. Thank you. And have a very good day!

That concludes today's call. You may disconnect your line at any time.