Marcus Corp (MCS) 2010 Q4 法說會逐字稿

Good morning everyone and welcome to the Marcus Corporation fourth-quarter earnings conference call. My name is Chris and I will be your operator for today. At this time all participants are in listen-only mode. We will conduct a question and answer session towards the end of this conference. (Operator Instructions).

As a reminder, this conference is being recorded. 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.

Well, thank you and welcome to our fiscal 2010 fourth-quarter and year-end conference call. As usual I need to begin by stating we plan on making a number of forward-looking statements on our call today.

Forward-looking statements would include but not be limited to statements about our future revenues and earnings expectations; our future RevPar occupancy rates and room rate expectations for our hotels and resorts division; our expectations about the quality, quantity and the audience appeal of film products 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 of and type of our properties and facilities; expectations regarding various nonoperating line items in our earnings statement; and our 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 10-K and 10-Q filings, which can be obtained from the SEC or the Company. We'll 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 2010 fourth-quarter and year-end results. We're certainly pleased with the results we reported this morning with positive trends in our hotels and resorts business continued, resulting in substantial year-over-year improvement from that division. Even though our theater business was essentially even with last year during the fourth quarter, fiscal 2010 still represented our second straight year of record revenues and operating income from this division.

Before I get into the operating results, let me first briefly address our variations on the line items below operating income versus last year as well as the unusual items that impacted our fiscal 2010 results. Investment income was down slightly during the fourth quarter due to a couple of unusual items last year, but this year's amount was consistent with the amount we have reported in each of the last three quarters.

I do want to remind you that for the full year, however, we have a significant variation in the investment income line because of a one-time investment loss recorded last year that we have described in detail before.

Meanwhile, our interest expense was down another $258,000 during our fiscal 2010 fourth-quarter compared to the prior year, and ended the quarter down over $2.7 million due to reduced borrowings and lower short-term interest rate. We were able to fund our fiscal 2010 capital expenditures out of operating cash flow, eliminating the need for additional incremental debt during the year. Barring an event that would require significantly more borrowings during fiscal 2011 than currently planned, such as an acquisition or a significant share repurchase, we currently believe our interest expense will likely be at a similar level during fiscal 2011 assuming short-term interest rates don't change dramatically.

As we noted in our release, our overall debt to capitalization ratio at the end of the quarter was a very strong 41% down, from 44% at last May year-end. And with limited senior debt senior note maturities over the next couple of years, strong covenant ratios and approximately $124 million in available credit lines and currently available, we also remain in an enviable liquidity position as well.

Continuing down the earnings page, we've had relatively little activity this particular quarter or the year, for that matter, related to gains from disposition and equity earnings and losses. Again, as a reminder, our fiscal 2010 gains and losses from disposition show a sizable variation compared to fiscal 2009 due to the fact that last year we reported a $1.1 million loss related to our investment and in condominium units at our Las Vegas property.

Our effective income tax rate for fiscal 2010 ended up at a slightly lower 36.1% compared to 37.1% last year. [We have] a quarterly rate lower still due to adjustment for our full year rate, thanks primarily to a decrease in our liability for unrecognized tax benefits as a result of a lapse of the applicable statute of limitations during fiscal 2010.

Finally, while our fourth-quarter results were not impacted by these unusual items -- they all occurred in earlier quarters -- I do want to remind you of the three unusual items that impacted our full-year fiscal 2010 operating income and net earnings that we referenced in our press release.

Approximately $4 million or $0.08 per share of negative items related to the one-time theater pension withdrawal liability and the impairment related to the platinum condominium units, partially offset by approximately $2.4 million or about $0.05 per share of gift card breakage income that we reported during fiscal 2010, that actually related to fiscal 2009 and earlier.

Shifting gears, our total capital expenditures during fiscal 2010 totaled approximately $25 million compared to approximately $36 million last year. Nearly $16 million of this year's amount incurred in our hotel division and relates primarily to our previously described renovations on our Grand Geneva and Hilton Milwaukee properties. Of the remaining $9 million plus that we incurred in our theater division during fiscal 2010, nearly half of that amount related to our purchase of land for our future theater in Sun Prairie, Wisconsin during our fourth quarter.

As we look towards capital expenditures for fiscal 2011, we're currently estimating that our fiscal 2011 capital expenditures may be in the $40 million to $60 million range, with approximately $20 million to $30 million estimated in our theater division and another $20 million to $30 million estimated for our hotels and resorts division.

With only about $20 million currently committed to carry over projects and normal annual maintenance capital, a substantial portion of this capital budget has either yet to be approved by our investment committee, or is for unidentified projects. Our actual fiscal 2011 capital expenditures certainly could vary from this preliminary estimate, just as they did this past year. In addition, both divisions had acquisition strategies that could impact our actual capital expenditures if the right opportunity arose during the year.

Now before I turn the call over to Greg, let me provide a few additional financial comments on our operations for the fourth quarter and fiscal year, beginning with theaters. Fourth-quarter box office concession revenues were down slightly compared to last year, but we still ended the year with record revenues with box office revenues of 3.9% and concession revenues even with last year. Comparisons to the prior year are fairly clean from a number of screens perspective.

We did close three leased theaters with 16 screens last year, one of which was a budget theater, but closing these theaters had minimal impact on our comparable operating results.

Total attendance at our comparable theaters decreased 5.8% for our fourth quarter despite a very strong March. For the full fiscal year 2010 our comparable total attendance was down 3% compared to the prior year, the majority of which could be attributed to two particular periods. The summer weeks, when we were going up against The Dark Knight last year; at the beginning of this fiscal year; and the last two months of our fourth quarter, when the comparable film product did not perform as well as the prior year.

The fact that our overall box office revenues still increased for the year can be attributed to the increase in our average admission price. We were up 6.2% for the quarter and ended the year up 7.7%. Premium pricing on our digital 3-D attractions and Ultra Screens contributed to higher average admission prices once again.

Our average concession, food and beverage revenues per person increased 1.9% during the fourth quarter and 3.6% for the full fiscal year. Our expanded food and beverage offerings at several of our theaters were the primary contributor to our increase average concessions per capita.

Our operating margins in this division during the fourth quarter improved slightly at 17% this year compared to 16.9% last year, but we ended the year with an overall decrease in our theater division operating margin. If you exclude the prior period gift card income and the pension growth withdrawal liability we discussed previously, our operating margins in this division fiscal 2010 were 19.7% compared to 20.3% last year. The decrease can be attributed in large part to the impact of higher film costs, which Greg will discuss further during his remarks.

Shifting to our hotels and resorts division, our overall hotel revenues were up 14.3% and total RevPar was up a dramatic 19.3% during the fourth quarter compared to the same period last year. For the full fiscal year 2010, our RevPar ended the year 8.5% lower than it was during fiscal 2009. Consistent with prior quarters, our fourth-quarter RevPar performance did vary by market and type of property.

As we alluded to in our press release, these results were significantly better than those reported by other comparable upper upscale hotels throughout the United States during these same three months. In fact, our compilation of Smith Travel data for the same time period indicated a nationwide increase of just under 7% for this particular hotel category.

Our fiscal 2010 fourth-quarter overall RevPar increase was the result of an overall occupancy increase of 15.5 percentage points and an average daily rate decrease of 6.2%. For all of fiscal 2010, our occupancy ended the year approximately 2.5 percentage points better than last year and our average daily rate decreased 10.7%.

And while this division did benefit by gift card breakage income of approximately $400,000 during fiscal 2010 that related to prior years, I do want to remind you that our fiscal 2010 results from this division were negatively impacted by a $2.6 million pretax impairment charge last quarter that -- actually it was booked in the second quarter related to our remaining 16 owned condominium units at the Platinum Hotel & Spa in Las Vegas.

In addition, as we've been reporting quarterly, we've been involved in several legal proceedings during fiscal 2010 related to the Platinum. As result we have incurred approximately $1.7 million in legal fees this year that have negatively impacted our results. A couple of these cases have now been settled or are near conclusion, but it is still possible to incur up to another $1 million of legal fees in fiscal 2011 related to the remaining proceedings.

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

Thanks Doug. I will begin my remarks today with our theater division. On our last call I was telling you about the great start we had to our fiscal 2010 fourth quarter, thanks primarily to the performance of Alice in Wonderland 3-D. As we noted that, we were happy to see the studios release a quality big-budget film during what has historically been a softer box office period. We hope they take note of the success of this film and will show a willingness to release films of this quality during these shoulder periods in the film release calendar.

Unfortunately as it turns out, an outstanding March was followed by two months of generally underperforming film products at least compared to last year, resulting in a quarter that ended up even with the prior year. The fact is, with hindsight, there wasn't a lot of original film product over the last two months as the studios relied on a preponderance of sequels. Sometimes that works and sometimes not.

Regardless, fiscal 2010 will still go down as a record year for us, so we're certainly thankful for that. Having said that, while we certainly are pleased to be reporting these overall results, the year was not without its challenges. Doug shared our operating margins with you, and after adjusting for the unusual items our fiscal 2010 margins were down over 0.5 percentage points.

During the year when we played the number one movie of all time, and reported an increase in our average ticket price of nearly 8%, we would have liked to bring more of that revenue increase down to our bottom line. As I discussed last quarter, the fact that margins went down can be attributed primarily to what has always been one of our primary challenges in this business -- our film costs. We've seen our film costs creep up in the past year or so and we've expressed our concern regarding this development to our studio partners.

We've made and continue to make a significant investment in our movie theaters for the purpose of exhibiting sending their product and they allow us to make a fair return on that investment. Now, as I touched on briefly last quarter the mix of films this year contributed significantly to this rising cost, as the larger blockbuster films historically have a higher percentage film cost than middle-market or art market films.

During fiscal 2010 our top 15 films accounted for 42% of our total box office compared to the 32% our top 15 films from last year represented of our total. This dramatically top-heavy film lineup is not conducive to lower film costs. Our goal for fiscal 2011 is to reverse this trend in margins, primarily by reducing our film costs, increasing our ancillary revenues and continuing to increase our per capita revenues, as well as our continued vigilant focus on all our operating expenses.

As Doug shared with you, we saw a sizable increases in our per capital admission revenues during fiscal 2010 due in large part to the impact of digital 3-D films. We played fifteen 3-D films on our screens during fiscal 2010 compared to eight 3-D films during the prior-year. With nearly thirty 3-D films currently scheduled for release during fiscal 2011, including such potential hits us as Megamind, Tangled, Yogi Bear, Tron and the next Harry Potter and the Chronicle of Narnia films, the potential for additional per capital revenues certainly exists.

As our press release notes, we will also have more 3-D screens available to us to play these films in fiscal 2011, as we made additional investments in this technology during our [fourth] quarter. These investments included adding 3-D to eight of our Ultra Screens, further enhancing this top performing large screen format for us. And I would like to take this opportunity on the call to make my plug for this new format.

We call it XL 3-D and it is spectacular. I happened to catch Toy Story on XL at the theater I go to, and on that 70 foot screen you get a presentation that is unbelievable. You have to go see it if you get a chance. It's bigger than an IMAX. The brightness is great. It really is -- it's absolutely the best way to see a movie. So, please go and visit us.

Shifting gears, there always has to be something in this business that keeps me up at night. And the recently is has been the often talked about subject of windows.

In an editorial I penned for the Hollywood Reporter that was published on Tuesday, I related my story of a recent trip to the grocery store where I saw Johnny Depp. He was dressed as the Mad Hatter and there he was in the RedBox machine available for $1.00 just three months or so after the release of this film in our theaters. And all I could think of at that time is what a shame it was that this wonderful movie, in the theaters 90 days ago, with the big premium for 3-D, was now being so horribly devalued. That can't be what the studios really want.

Alice and Wonderland for $1.00, 90 days later; it doesn't make a lot of sense to me. Now there's talk of shortening the theatrical release window to as little as 30 to 60 days for a new premium video on demand platform. In our humble opinion, this makes no sense and is not in the best long-term interest of the distributors.

Suffice it to say up to probably devote the rest of this conference call to this topic, as I'm very passionate about the issue. I won't take up any more of your time, but as I mentioned the Hollywood Reporter just this week published the opinion letter I wrote. In the letter I lay out my reasons for why I believe the current windows need to be maintained, and you can see it if you go to their website www.THR.com.

Getting off of my soapbox, I will tell you that our fiscal 2011 first quarter has been up and down with our overall results tracking slightly below last year's pace at this time. But as our press release notes, there are several quality films yet to be released this summer so we will have to see where we end up, but as usual we will -- we are, like every exhibitor, optimistic.

Looking ahead, our capital plans for this division include continue review of opportunities to build additional new locations including the recently announced plans to replace our (inaudible) Eastgate theater in Madison, Wisconsin with a new state-of-the-art theater and entertainment complex in nearby Sun Prairie. We're always looking to acquire to acquire potential theater sites to facilitate our long-term growth and we'll also continue to consider additional potential acquisitions as opportunities arise.

Finally let me give you a brief update on digital cinema. An anticipated broad rollout of digital cinema into our theaters, as well as the rest of the industry, was delayed during fiscal 2010 due to the increased difficulties of proposed third-party implementers to obtain the necessary financing during the current economic climate.

During the latter half of fiscal 2010 progress was made regarding financing and system pricing, and an expected industrywide rollout is now expected to occur over the course of several years. We currently expect to begin a broader rollout of digital projection technology in our circuit beginning in fiscal 2011. If everything comes together as we hope, the actual cost that we may incur when such a rollout begins are yet to be determined. But it is our expectation that the majority of the cost a digital cinema rollup of the paid for by the film studios through the payment of virtual [print] fees to us or a selected digital implementation partner.

Our goals include delivering an improved film presentation to our guests, increasing scheduling flexibility, as well as maximizing the opportunities for alternate programming that may be available with this technology. With that, let's move on to our other division, hotels and resorts.

You've seen the segment numbers and Doug gave you some additional detail. Certainly we were very pleased with the year-over-year improvement. This division has been through a very difficult couple of years now and our overall fiscal 2010 hotel operating results were not good. So with that backdrop, while I surely don't want to get ahead of myself yet, we are encouraged by the trend we're seeing.

Now, it is not surprising that we as we continue to lap the time period when revenues were declining last year we would see our RevPar trends continue to improve. But what I found most encouraging was the improvement in our trends compared to fiscal 2008, two years ago. During our first two quarters of fiscal 2010 our RevPar was down 22%, 21% and 19% respectively compared to the same quarter two years prior.

But in our recently completed fourth quarter, our RevPar was down single digits compared to fiscal 2008, 8.2% to be exact. No one in our industry is suggesting we're going to get all the way back to fiscal 2008 numbers in the very near future, but this is a first quarter where we've made measurable progress towards that end.

And, as I peel back the onion a little bit more in our fourth-quarter results, something else jumps out at me. We have often pointed to the strength of our balance sheet as one of our competitive advantages. It allows us to make investments during a time when others may have been unable or afraid to do so.

This has clearly paid off for us as we are seeing benefit; we are seeing positive results in the hotels where we have made capital investments over the last few years. As you have heard in some of the occupancy and ADR details Doug shared with you, the improvements we made are -- the improvements we're now experiencing continue to come from the increased occupancy at the expense of average rate.

As we talked about last quarter this is very typical for the hotel business as it enters a recovery period. At this point the industry is buying demand with lower rates and the cycle will not complete itself until ADR margins return to prior levels. Of course right now no one really knows how long that will take.

Our challenge as operators continues to be to try to control costs while we are in this upward portion of the cycle. Since occupancy recovers first, it becomes increasingly difficult to not at some level of cost to take care of the increased number of guests.

So, said more plainly, we have more guests paying less. Obviously this challenges our margins. That is why operating margins don't recover until rates begin to recover. In the short term, however, we believe the trade-off is worth it particularly at properties like the Grand Geneva where the ancillary spend by the typical guest more than makes up for the decreased average rate.

I'm also pleased to tell you that these positive trends we've been seeing have continued into the first half of our summer. We don't necessarily think that we will be reporting double-digit RevPar increases every month, but we continue to be up over last year and our group booking pace has been running ahead of last year, another encouraging sign.

If I include June in my comments, we have now had four consecutive months of RevPar increases and five consecutive months where we have seen our overall RevPar index, a sign of relative market share, increase as well. Having shared all of this positive news, it still goes without saying that the hotel business remains joined at the hip with the overall economic environment. Whether these current trends continue will depend largely upon whether the economy continues to show signs of gradual improvement.

I suspect that we will still have our share of challenges ahead of us, but I'm glad to have the chance to share some good news regarding our hotels and resorts business today after seven consecutive quarters of reduced results from this division.

Finally, as we look to our future capital plans, approximately one-half of the proposed capital dollars in this division relate to maintenance and renovation capital as we continue to maintain and enhance our assets and add long-term value. The remainder of the possible capital is earmarked for equity investments and growth opportunities as they arise. While transaction activity remains very limited at this point, with a strong balance sheet and credit availability we remain poised to explore and follow through on potential growth opportunities that may arise during these difficult times.

As I wrap up our prepared comments I would be remiss if I didn't note that as our press release indicated, our great balance sheet allowed us to repurchase some shares last month pursuant an existing board authorization, while still leaving us plenty of room to consider growth opportunities in both of our businesses. We will continue to manage our balance sheet very carefully in the future, but we are committed to executing the strategies necessary to provide value to our shareholders over the long-term.

We're celebrating our 75th anniversary on November 1, something we share with a select few companies, and we don't believe this is an accident. We have built this solid track record by emphasizing the defining [strength] you've heard us highlight before. Thank you for your continued support as we have navigated through these unprecedented times and we're confident that we're well-positioned to continue to deliver on our commitment to shareholder value in the years ahead.

With that, at this time that Doug and I would be happy to open the call up for any questions you may have.

(Operator Instructions) David Loeb, Robert W. Baird.

Good morning. I promise I only have two and an unlimited number of follow-ups for this round. That was actually a very thorough presentation. I appreciate that. I will not get you going on the release window.

On the theater side of the business, given the movie lineup and how tough the comps are, at least through the first three quarters of the year, do you see any likelihood of being able to have record earnings again this year? The number of screens hasn't really changed. And absent an acquisition, do you think you can match last year's results?

I'm sorry, David; I left my crystal ball at my office and I'm in Doug's office right now. You know, this is the nature of this business. It goes (inaudible) lots of leverage in this business because you just don't know who is going to show up; you never know when you are going to catch a surprise. You never know. Avatar was great, but it was a very expensive film for us. We've talked about that. I don't know. I can't tell you. I wish I could.

But it's got to be tough. You're comparing against some really huge films; huge but expensive.

And so sometimes, again, as we pointed out, it was a very top-heavy lineup this past year and that's a pretty dramatic change, the top 15 being ten points more I think is what the numbers were. So we have certainly shown in the past -- the fact is, it was a record year the year before when we did not have a top-heavy lineup. So the fact is, you just need -- with a lower film cost, as Avatar and a very expensive film, with a decent quantity of good pictures you don't have to have the number one picture of all time. You never know.

That makes sense. On the hotel side the numbers were really quite impressive. I'm wondering if you can give us a little color on a couple of areas. One, the geographic diversity; you've got three hotels in downtown Milwaukee, one in the exurbs of Milwaukee. Are the other markets performing as well as Milwaukee? And what do you see as the prospects?

I guess where I'm going on the prospects part is, this looks like a breakout of both the kind of two-year comparison line for your hotels.

Doug will look into the specific detail, but I know it's a pretty broad based recovery. It's across the portfolio. So it's not just -- it's not like we don't have -- I wouldn't tell you we have an imbalance in any one market, such as say Milwaukee is causing us to clean up everywhere else. That is not the case.

The -- it's -- look at it -- you know, the thing that honestly I'm careful about at this point, the reason I want to make a lot of judgments as to where we're going is the macroeconomic piece of what is going to happen in the economy. If the economy slows down that's going to be a challenge to our business. If employment doesn't pick up, that's -- because I sort of view the employment as the next thing that has to sort of pick up for us to get another boost, for that booster rocket to hit.

But it's hard right now because we're in our busy season where we're getting better compression right now. I don't know what happens when the air comes out of the market. We're finally -- we were at a very deep lake and the water got drained out, we saw who was swimming naked. Well, there's water but I can't tell if we're in a kiddie pool right now that we can swim in, or really got back to the big pool. So let's see what happens in the year and when we get to a quieter period.

The only thing I would add, David, is just echo what Greg has said earlier in his prepared remarks, was just that while certainly in general -- and in fact if you look at our full-year results for fiscal 2010, we pretty much tracked the market (inaudible) all the Smith Travel data, etc. This quarter we exceeded and I don't know if that will hold or not.

But I will echo what Greg said earlier is that what did set us apart from others was continuing to make investments in some cases, and the customers love what we have done at a couple of these places where we put some significant dollars in. If we have any chance to breakout it -- certainly that is going to help us.

Okay and I guess kind of on that score as you're looking at your business, are you seeing a pickup in group in this last quarter or is it more transient?

Transient has still been the strongest, no question about it. Transient numbers are actually -- I think I a Smith Travel chart that showed the last three years and I think transient demand -- rooms were up compared to these last couple of years and going back to two years ago, but at a price as you know.

The average rate on that transient business is significantly lower than it was two years ago. But to answer your question, group was up. Group business was up and the booking pace continues to be up.

And how about in terms of the kind of industry mix? Is this -- the transient coming from your financial services customers, business service customers, industrial or is it really across the board?

The only added color maybe I could give to you with that, David, is that it's -- another little nugget of encouragement was that we're starting to see a couple of the groups that haven't done a lot of traveling starting to show some signs of willingness to be back out there again. The pharmaceutical -- (multiple speakers)

Someone did say, even pharma is back.

Pharmaceutical and even maybe just slightly the financial a little bit. So we've seen a couple of signs of those groups that were really lagging starting to maybe be out there little bit more. But otherwise, it's been consistent with the other ones.

That makes sense. So hopefully it's some of my Baird colleagues as well.

That'd be nice.

That's it for this round. I reserve the right to come back in.

(Operator Instructions) Marla Backer, Hudson Square.

Thank you. Hi, guys. So on the theater side, you talked a little bit about the pending digital upgrade. Do you think there is a risk that as theater operators including [markets] continue to wait to select which equipment and which integrator, do you think there is a risk that the VPF that studios will offer will decline?

I think there is a risk, but on the other hand I don't see that making a lot of sense. We don't have a lot of -- at this point we don't have a lot of financial incentive to do digital. There's not -- the alternative content is not huge. At this point maybe one day it will be. But anything [real is] mostly on the come.

The real beneficiaries of this are the studios in getting rid of the [arguable] $1100 a copy that they unload when they stop doing prints. And we've got a relatively concentrated base of theaters, and I (inaudible) be making a bad bet. But it would seem to be very counterintuitive and counterproductive to say, well, we're Marcus. If you don't convert over and take a big financial hit we're not going to serve you. That doesn't make a lot of sense to me.

Will there be pressure on the VPF? Sure there'll be pressure. But I'd like to think that -- and look, we're working on it now. We're not far off from it. But don't be -- at the end of the day the beneficiary is the studios. We may get some benefit.

But we don't -- the costs, who knows? The maintenance costs -- and if you can show me in -- you had over 10 years (inaudible) I would love to see it, because there are not too many that people are still using it. The projectors that we've been using are 50, 60 years old.

So I don't -- and the consumer -- the ultimate irony, as I said before, is the consumer -- when movies used to play six, eight, twelve, fourteen weeks they would come see scratched films. Now the great benefit of digital is the pristine copy. Well, movies play off so quickly now that after one month they're gone and you don't even have that problem.

But you have said in the past that you do see the economic benefit to you, to the exhibitor, of 3-D. So that is still consistent with what you're thinking now, is it not?

Yes, well, we just said evidenced by the investments we've just made this last quarter around -- we certainly still have been able to make those numbers work. And just echoing what Greg said, the -- we are actively working on what the ultimate solution is for the full rollout. So while there could be some pressure on the VPFs at some date in the future, we anticipate having a solution. As we indicated, we hope that -- we anticipate having a solution that we'll be talking about in this fiscal year.

All right, thank you very much.

David Loeb, Baird.

I just wanted to ask my perennial acquisition market question. It seems like it's a little more timely now. On both sides of the business, I'm curious as to your view of what that market is like. And what is the trend?

I know in the theater side it tends to be more family succession kind of motivations that determine the timing. But when things are good like they are now, does that make the elder statesmen of the families want to hang on a little bit longer because it's fun?

You know, I think probably, sure, there's less people who feel the pressure. I think the important thing for us, though, is just to always -- the point I always like to make is we need to remain disciplined when we look at the numbers. This is a business that, as you said, are you going to be (inaudible) and I said I don't know; well, we need to remember that -- but I do know that over time they sort of have a reasonable expectation.

I can't tell you -- it's sort of like the -- actually Warren Buffet (inaudible) but in the short term it's a weighing -- it's a [voting] machine, in the long run it's a weighing machine. And the weight is good over the long-term; in the short term it fluctuates. So don't buy something off of last year's numbers if you just had the highest year in the history of the business. That doesn't make any sense.

That makes sense.

We continue to look at opportunities. There continues to be things happening. The market is there. We will just -- I could never tell you what is going to happen.

So you are still looking even though last year's numbers were really good, but it doesn't necessarily mean you're going to immediately find a lot of interesting stuff.

These things are -- the timing can be -- there is no -- it's not as easy. You can't tell what is going to happen. As you said it is families, not institutional investors who follow a more predictable pattern.

Right. And on the hotel side it is institutional investors. It seems like there's a lot of money chasing only a few transactions right now. Are you -- what is your view of what is going on and when do you think that changes? How does that look for you guys?

(inaudible) [should] try] to find that out, David.

I know a little about it.

I think it's -- we agree with some things you pointed out and you have been saying. You're right; there is not a lot out there. Unless there's going to be some inflation soon that is going to solve all of the bank's problems, there's going to have to be some days of reckoning coming. These loans are going to have to be dealt with eventually. When that happens we will be there.

That's a good answer. Any metrics that you're seeing in terms of when you are bidding, what kind of pricing and how you feel about that, that kind of thing? You can say no. I won't be offended.

I don't think I have any single metric that we can summarize and say -- so, the answer would be no.

Great. That's really all I have. Thank you very much for all of this.

Absolutely.

Herb Buchbinder, Wells Fargo.

Hi guys. Can you give me just a little status report of the Vegas property and if there is -- how much risk there are of additional impairment charges?

Well, okay, operationally Vegas was better this year. We think we've got the operations in better shape. The market itself still is nothing to write home about. The market is still very challenging, as you know; a lot of additional rooms came into that market about halfway through the year as well.

So we're not -- on the remaining condominium units that we have, we've taken a hit. We're not even marketing those right now. We're sitting on those. We don't see any need to hold a fire sale for those units, and frankly, that's all -- the only transactional stuff that is going with those units for the most part right now tends to be some foreclosure type sales and things along those lines.

So, again, I don't have a crystal ball either. But the fact is we're content to ride that out and wait, because this is -- we don't think Vegas is always going to look like it has the last two years.

The other specific property is the Lake Geneva property. You put some money into that and I think you implied you're starting to get a return on it. Just give us a little status of that property and the bookings and how it looks going forward.

Herb we don't -- I'll just say that we are -- the customers' response to what we've done has been very positive. What we don't do is we're not going to -- with only eight properties, from a competitive standpoint, we're not going to talk about individual hotel numbers or metrics because it's just not -- it doesn't make sense for us to do that. But we're very happy with what was done down there and the customer response.

It's early. We just -- they finished it this past year. But the customer response has been very positive. And so -- and the groups that are coming in and seeing it are liking what we did. So we're just happy with what we have done so far.

Last thing in terms of any sleeper movies coming up, The Kids Are All Right probably not a big money maker, but it looks like could be pretty good. Any other sleepers out there that you might comment on for the rest of the summer?

I think we highlighted in the press release the ones that are kind of -- the ones that everyone expects to do the larger amount of business, including Salt this weekend and Other Guys, the Will Ferrell picture in August, and Julia Roberts picture in August as well -- Eat, Pray, Love. They seem to be the industry consensus of maybe the bigger ones, but look, you've got a couple of 3-D pictures still coming out as well. And with Cats and Dogs and Step Up and so, we'll see. And then you head into --

Think about sleepers; by definition we won't know until we're there.

Thanks for your comments.

Thank you. At this time it appears there no further questions. I would like to turn the call back to Mr. Neis for additional and closing comments.

Well, thank you. We certainly want to thank all of you for joining us again today. We look forward to talking to you once again; actually only in about two months, in September, when we release our fiscal 2011 first quarter results. Until then, hope you have a great day and thanks again.

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