Greetings, and welcome to the AMC Entertainment First Quarter 2014 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). It is now my pleasure to introduce your conference host [Mike Zwonitzer] Senior Vice President of Finance for AMC Entertainment.

Good afternoon and welcome to AMC’s first quarter 2014 conference call. After our prepared remarks there will be a brief question-and-answer session. Joining me today on the call are Gerry Lopez, President and Chief Executive Officer; and Craig Ramsey, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that some of the comments made by management during the conference call contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to vary which are discussed in our public releases including our most recent 10-K. We caution you not to put undue reliance on forward-looking statements. Forward-looking statements made during this call speak only as of the date of this call. In addition, some of the comments made on this call may refer to certain measures such as EBITDA and adjusted EBITDA that are not in accordance with GAAP. Management believes these results more clearly reflect comparative operating performance. For a full reconciliation of EBITDA and adjusted EBITDA to GAAP results in accordance with regulation G, please see our press release furnished as exhibit to our Form 8-K dated April 29, 2014, which may be located under the Investor Relations area in our website at www.amctheatres.com. I'd like to introduce Gerry Lopez. Gerry?

Thank you, Mike. And thanks everyone for joining us this afternoon. The first quarter of 2014 was an extremely strong quarter as measured by almost any metric. Our revenues totaled approximately $622 million, up 7.8% versus 2013 while adjusted EBITDA totaled $102 million, up 24.2% versus prior year. We saw growth in every major revenue category, certainly impressed with our Box Office where admissions revenue grew 6.8% in total, but an even better 7.3% per screen, a significant outperformance versus an industry that is while good only saw 5.4% per screen. This marked by the way the ninth quarter in a row AMC has outperformed the industry in this key comparable store metric and reinforces our focus on driving productivity from the existing asset base. Shifting to food and beverage for a moment, revenue growth here was an even more impressive 8.2% versus 2013. This was no doubt driven in part by our strategic initiatives in this critical as we gained traction with Dine-In Theatres, now 13 up and running; our MacGuffins lounges, now 66 of them across the fleet; and even our rebound confession stands altogether driving per patron spending of $4.05, our highest quarter ever. Perhaps nothing captures the underlying health of our business better than our loyalty program AMC Stubs, which saw revenue growth an impressive 21.1% versus last year indicative of attraction and engagement we are building with our most loyal, critical, core customers. When looking at the quarter, it is clear reinvestment in our business and the strategic action fronts we’ve detailed for you in the past are helping create meaningful competitive advantages, more details in a moment. But with average comps above 7%, which is a pretty good quarter we’re better than the industry by two-full percentage points, I can tell you we remain…

Thank you, Gerry. For the next few minutes I’ll provide a brief analysis of our first quarter results and an update on our balance sheet and asset base. For our first quarter, we generated total revenues of $622.8 million including $409 million of admissions revenues, $181.8 million of food and beverage revenues and $32 million of other theatre revenue with across the board increases over prior year in all major categories. Adjusted EBITDA for the quarter was $102 million, up 24.2% quarter-over-quarter which was aided by higher attendance, lower G&A expenses excluding $6.4 million of non-cash stock-based compensation and a relatively small increase in rent. Total attendance increased by 5.1% to $44.8 million and average ticket price increased by 1.7%, primarily due to increases in core ticket pricing and increases at the recliner re-seat locations somewhat offset by the impact of lower IMAX and 3D attendance during the quarter. On a per screen basis, admissions revenues increased at an annualized rate of 7.3% in an industry that increased 5.4% during the same period. Food and beverage revenues increased 8.2% driven by the increase in attendance and a 2.8% increase in food and beverage revenues per patron. Our enhanced food and beverage initiatives continue to drive our industry leading results in this area. As Gerry noted, these initiatives are about driving higher spend per patron and improving profitability. Our 86.2% food and beverage margin was essentially flat with last year, resulting in a 2.9% increase in food and beverage gross margin dollars per patron during the period. Other theater revenues increased by $5 million or 18.5% as compared to the same period last year, due primarily to increases in internet ticketing fees, AMC Stubs membership revenue and gift card and advertising revenues. Our film exhibition cost up $212.1 million represented 51.9%…

Thanks you, Craig. As you can tell we are extremely excited about our future at AMC. We are seen the tangible benefits of our previous investments and we have an enormous amount of potential upside. We believe continued investment in our core portfolio will drive outside returns when compared to our peers in industry. We are and will continue to be the industry leaders in customer driven experiences and we have so far touched only a small portion of our fleet. Another key is to determining our improvement is a metric, we track very closely. When we measure ourselves against competition in a 20 mile radius of our building, we are seeing about 6 percentage points of Box Office per-screen out-performance versus that competition. We view this as proved and focusing on our customer experience is the right thing to do for them and for our shareholders long-term. I would now like to turn the call over to the operator for questions. Operator?

Thank you. At this time, we will be conducting a question-and-answer session. (Operator Instructions). Our first question comes from Brian Goldberg from Bank of America Merrill Lynch

Hi, thanks. Just a couple of quick ones, with respect to your admissions revenue per-screen or box office out-performance this quarter. Is there anything specific drive any out-performance you can actually point to, are you finding it's a multitude of contributing factors.

Brian, it's really a multitude of the different factors. The truth is that the buildings in which we've gone after the remodels are clearly outperforming the industry by tremendous numbers and even the balance of our circuit. So, it's really the capital expenditure kicking in with the remodels, is really the AMC stops loyalty program kicking in, in the buildings where we haven’t had the remodel, even in the buildings where haven’t had the remodels we are taking steps with the concession program, whether it is the MacGuffins lounges where we have 66 of them up and running, whether it is the refresh our concession stand, where we have 122, 124 of them up and running. It’s really kind of the accumulation of all of those things, that’s why we look at that kind of metric where we pin point out buildings and then those that are in 20 mile radius because it’s really very difficult to try and on a building by building basis attribute the outperformance to any one factor in any one location clearly one over the other. But overall we are finding that it’s really the combination, it’s a total package that people are reacting very positively to it and we see it in their feedback and we see it in their overall satisfaction top box scores that I have mentioned. That’s the pay off for us when we see that kind of behavior change.

And actually if I could drill on a little bit more to a comment that you had in your script about your reseat screens the 410 you have now, 63% growth in admissions revenue per screen, I guess a couple of things, one you cited data on the last call that suggested that half of the uplift in attendance is coming from share shift the other half from behavioral change movie going.

Correct.

Are you seeing a similar data trend and then also do you have a same store number I mean for the screens that have been reseated for a year plus now, where the trends look like in those theaters and then finally any updates on competitive response if there really is a share shift going on?

I will answer the question on kind of same screen or same-store. The 63% that was quoted I think Gerry was including in his remarks is kind of across the entire portfolio of reseats and we kind of break it down further into the two groups, those that have been opened over one year which I guess Brian would be your same group or same store group in the first year for that group and I think we talked about this in the last call we saw an 85% attendance increased from the pre-construction period to the post after open period. In their second year, they continued to grow attendance on kind of the aggregate for that group in their second year is about a 7% attendance growth. So we are still seeing acceptance in the marketplace and driving additional attendance in the second year as well, average ticket price is up about 17% on that group. We have talked about our strategy being one to wait for a year after we reseat and reopen and allow local guests to trial, given a try and experience it before we take any pricing and in this second year we are now feel comfortable given the high level of customer satisfaction that we experienced and that we have the room to move prices up. So thus the fairly start increase in APP and in combination that’s about a 25% admissions revenue growth in that second year. The new groups that are kind of the second group that are in their first year, again this latest group is up about 77% on attendants from their preconstruction, pre-remodel and their ticket prices are up about 10%. So, I think the point is that we're just continuing to see very good, very strong results not only in the first year, but also continuing into the second year.

Yes. It's a two phase kind of execution that we put behind it Brain where in year one after the remodel what we’d want to do is get that trial, see the behavior, get the bus going in the local marketplace that we're serving with that asset. It works pretty good that’s why you see the huge attendants increase, we’d then moderate the price change on for year two. And then in year two the price, the ATP goes up, the average ticket price then moves up more aggressively. And then of course now we're reaching capacity utilization of some of those buildings, the attendants doesn't go out fast. So, get the attendance first, get the behavior change, get the trial out there and then comeback with the pricing move later on where is in the nor ones, we're going to wait as we said along to do the pricing. So far it seems to be working pretty well.

That's really helpful. And just one last quick one on the balance sheet, I mean I think if my math is correct your leverage is around, net leverage little over 3.6 times. Could you just remind us where you comfort currently lies with respect to target leverage and as you grow cash in excess of the dividend and also grow EBITDA, the ratio is going to come down. And so, how are you thinking about incremental capital allocation right now and where the stuff like special dividends fit into the equation?

Sure. The 36 I may have browned it down, I had it at 3.5. But that's…

To the end of middle.

It’s pretty close to our comfort range. I think we've talked about 3 to 3.5 times really being as we think about this business, we feel comfortable at that level. And the other piece of that that I think is important to again mention is that the nature of the capital projects that we are involved in certainly we do some new bills for your capital is in essence tied up to your lease commitment or certainly the new bill commitment, I mean you’re tied up for a couple of years and sometimes depending upon the project three years and you don’t have the lot of flexibility, we’ve got a couple of three theaters in the queue each of the next several years. The majority of our capital deployment goals is in these remodel projects that are six burns in duration. And the point is we have more financial flexibility if something were to happen, we don’t expected, but if something were to happen we needed to contract and maybe reduce our capital deployment. We feel comfortable being able to do that given again the short duration. So, in terms of the future and excess cash flows, look, we did instituted dividend, we think that’s sort of at a good rate, a nice yield, excuse me. We are not committing for any increases to the dividend. What we are committing to do however is as we develop excess or additional free cash flow over and above our capital deployment and our dividends, we will look at that excess and deploy it in the way we think is going to generate the greatest returns. And if we’re getting the, continuing to get large over threshold returns on capital projects that will certainly bear, I think heavily in our decision on how to deploy capital and I mean we will generate returns to shareholders through going to EBITDA from these good strong returns from these capital projects. So, no commitment yet I think diligence and putting it to good uses is kind of how we're thinking about the future.

Yes. Brian if I could adjust dealt into it what Craig was saying, I think the two words that I think about when we think of our capital deployment are really balance and flexibility. We had much debate during the road show three four months ago regarding how much capital to allocate, it would be returning any capital at all in the form of dividend et cetera, given the performance that we've seen from this project, from the re-seats particularly and in some of the food and beverage projects. So to us, it's really all about the flexibility and that we can maintain in a capital structure because of the nature of the project. You mentioned in one of your questions that that I think we might have failed to address was regarding the competitive response. So yes, we've heard that some of the competitors are beginning to react. I don't know from the numbers that I have heard in CapEx, the numbers that I have heard in terms of number of buildings and number of screens that the level of commitment and the depth of commitment to the customer experience is there when you compare what they're doing to what we're doing, to when you compare where they are to where we are. The truth is, the opportunity to drive this kind of returns in our fleet is still very much in front of us. We think that we are perhaps 25% to 30% done. So, that's gone -- the ability to achieve this kind of numbers and have this kind of returns and improves the experience for our guests, it's going to be front and center. While also maintaining our balance and staying flexible regarding the dividends and et cetera, but there is point in time here that we're capitalizing upon and we're going to go chase it and chase it hard so that we can maintain growth in that portion of the fleet to the level that we’ve seen. So, hopefully that answers that part of the question that you have there that I think we might have neglected to address before?

That was great, it’s all very helpful. Thank you very much.

You bet. Thank you for calling in.

Thank you. Our next question comes from Barton Crockett from FBR Capital.

Okay, great. Thanks for taking the question. Now I wanted to drill down a little bit more on the concession per cap. The per cap growth there like I think you said 2.8% was kind of slower than I would have thought with all of the initiatives underway with the dine-in theatres driving up concession per cap so wide and the bars and the freshen initiatives, it was a little bit slower than what you did in the fourth quarter which was like I think 3.5% or so. Could you kind of talk about what’s going on there and where we see concession per cap growth kind of accelerate as the stuff gets more traction?

I’ll give it a try Barton. Look, we did see it kind of parse it out, we did see about $0.04 year-over-year growth in the core circuit and we really didn’t take much pricing, nominal pricing it may have impacted the quarter by $400,000. And so, this is probably the first time in a while that we haven’t taken pricing on the traditional core, concession products or very much pricing, I guess I should say. And I think it’s being cautious on our side. And we’ll look at it going forward and take pricing as we see fit. But I think the point being fairly conservative on core concession in terms of pricing. The food and beverage initiatives drove about $0.10 in the aggregate when you look at dine-in theatres, MacGuffins and in the Free Style. So that was I think met our expectations for the quarter. We did have a little bit of a negative impact I think as we disclosed in our 10-Q we kind of set forth how the AMC Stubs rewards program does have can have some impact on our per-head food and beverage and they cost by about a couple cents and that’s because we had some growth in the attendance and usually when that happens we will have rewards that might exceed redemptions as the memberships grow and that costs us about a couple of cents. So, I think it’s a combination of no pricing on the core product line or the traditional product lines and a little bit of a negative impact from the AMC Stubs rewards.

Let me just add Barton. We are trying to be very thoughtful on our pricing moves both at the Box Office and with the concession stand. The truth is that although the year-over-year growth for the quarter on a per patron basis came in at a little below 3.28. We have that’s the $4.05 is the highest level we’ve ever had. Our ATP at above $9 is the highest level we’ve ever had. Yet our scores on value from our guests are also at the highest level that they have ever been. So it’s been very delicate equation that we are trying to work where how quickly do you advance the ATP, how quickly do you advance the Box Office price, how quickly do you advance a concession price, while also maintaining a great value presentation in front of the guest. So, we’re not going to get too far ahead of our skies and one or the other. And then as a result of that as we are deploying all this capital and improving the experience, destroy the value image. That's the tick, that’s why the pricing we kept the powder dry frankly on pricing and confessions as we're trying to move all the variables at the same time and together not take advantage of one over the other.

Okay. Just to follow-up a little bit. I mean as Dine-In Theatre grows as a percentage of the mix, should we expect to see an acceleration in the per cap just the way you report it or is this just kind of not enough kind of expansion in Dine-In Theatre really to change the needle there very much?

We, stop to move the needle across the entire circle when you're only doing of a couple of them a year. So we have 13 Dine-In Theatres out of fleet of 343. So we see great numbers in those buildings with Dine-In Theatres, what we deploy to Dine-In Theatres in fact. The Dine-In Theatre per cap in food and beverage is typically 2X, 3X what you will see on the regular theatre whether it's a partial conversion or a full conversion into the Dine-In Theatre concept, you literally will see between 2X and 3X. So the $4 becomes 8 and change or in some cases as high as $12 plus on a per cap. So you'll see it in those billings. Unfortunately that does not move the needle across the entire (inaudible) it's just not enough of them.

Yes. To Jerry's point, I mean Dine-In Theatres contributed about as a group, food and beverage spend was up 6% year-over-year, re-seat was up 8%. It’s just number of units working against the core that's growing at a lower rate. So absolutely, we would expect as we do more re-seat and in particularly as we more Dine-In Theatres that will have a leveraging impact on the overall circuits but the numbers aren’t just quite as big enough to move the needle quickly at this point in time.

Okay. That’s great, helpful. Thank you very much.

You bet. Thank you, Barton.

Thank you. Our next question comes from James Marsh from Piper Jaffray.

Hey guys, this is Stan for James, thanks for the question. Just I wanted to dig in a little bit into competitive reaction here, so Regal announced those theaters. So I just wanted to understand if you guys are aware of the re-seating is happening in your markets, in other words, the competitive response in very same markets or they targeting different markets, they wouldn’t compete necessarily with your re-seat theatres? And I have a follow-up?

So we know what you know which is what was disclosed in the call few days ago, and that’s what we know. It’s news, 25 buildings out of 570 some odd. They are doing what they are doing. I will tell you that our plan -- I cannot for one second even begin to guess what’s driving their plan other than okay, they’ve seen our results and on a rent track basis and they must, they feel compel to take some action I suppose indications from (inaudible) and all those other good things. Our plans however remain unchanged. Our deployment strategy what we are attempting to do, we are going to stay on, we are stay on course. The pacing, the cadence of these remodels is driven by the capacity of our teams, both on the development side and on the training side and on the operation side to absorb the new buildings as we transform them and open them. The cadence is going to be driven by the lease expiration, the cadence is going to be driven by our capital capacity and we are going to continue on that path which has worked well for us and kind of pay attention to what is happening in the marketplace of course but try to remain true to what we know to what we know works. Potentially, it's the best answer that I can give you. The re-seats work, we got there through innovation. I can tell you that we've already begun to deploy in three buildings already. Generation two, all about the recliners, one where instead of losing on average two-thirds of the seats, we only lose about half of the seats. You're always going to lose some, it's never going to be zero, but we've already moved on to level two, where we now have a solution that can go deeper into the fleet by losing only half of the seats instead of two-thirds of the seats. That's the path that we're going to continue on. That's the path that got us here and we think it's going to work. And Craig, I don't know if you want to add any other perspective there, but…

No, the only thing I'd suggest is, this is an industry, think globally for the industry as a whole that has a lot of excess capacity. I think there is room for a number of circuits to copy, what we've been doing and solve some of this overcapacity problem that the industry suffers from and make -- and enjoy the 50% creation of new business, if the increase if the attendance, half of this from creating new business, our industry will be much stronger. So, it could be helpful in the long run for all of us. But to Gerry's point earlier, this is more than just a seat, we're doing more than just a seat in these remodels. And it's an envelope for us that we think all the elements working together create the kind of improvement in numbers that we've been seeing, whether it's our social media program, our AMC Stubs program, our expanded food and beverage program or the seating program, clearly the seats are big element. But all that working together is what makes it worth for us.

All right, thanks. And then just a follow-up on ticket pricing, if you guys can help us understand your sort of pricing strategy, if you can break out your core theatres to get pricing versus receipts versus dine-in, how they’ve been tracking year-over-year?

Just to give you a general sense, our core theatre ticket pricing is just above $9, our average ticket price, it’s $9.07. When you move over to the re-seats across all of the buildings that would not re-seated, it’s closer to $9.20, $9.19 to be more exact for the Dine-In Theatres, it’s somewhat higher, it’s $10.12 that was for the quarter. So you see that $9, 9 and nickel becomes, 9 and 20 becomes 10 and a quarter, 10.15 in rough terms. That’s driven by the number of show times, that’s driven by the mix of patrons or the Dine-In Theatres for example, not all of the Din-In Theatre auditoriums, so we have set minors, particularly in the State of California, you can’t because of local laws et cetera. So there is a lot noise that affect the numbers but by and large what you are seeing is ATPs that are very healthy beginning in the $9 range and moving up to the $10.12 range that growth in that average ticket price, it’s just under a point for the core circuit, it’s 10 point for the re-seat component of the circuit and it is 7 points, year-over-year for the Din-In Theatre. Does that help you get some context?

Yes, that’s great thank you. I appreciate it.

You bet.

Thank you. Our next question comes from James Kopelman from Barclays.

Okay, thanks. I have one question on the initiatives roadmap and second one on theatrical wins. First is your royalty initiatives, I am wondering if you are still fairly close to the roadmap laid out in the S1 last fall? Are you seeing a response in the marketplace positive or negative that might cause you shift CapEx dollars from one initiative to another? For example, is it possible that you could substantially increase the number of Dine-Ins that you had built within the five year timeframe? And then I have a follow-up.

I will start this and Craig will keep me honest. The short answer is no, the path as I indicated a couple of questions ago is really set by the parameters in our lease expiration dates, it’s really set by our capital capacity, is really set by our team’s capacity to get these things up and running to get them funded, to get them design et cetera, et cetera. At the moment subject to change and what may happen in the marketplace, the competitive reactions have not steered us away from the path that we chose and the path that we outlined back in the S1. We’re flatter that people are imitating; we wish them luck. We didn’t come up with these things six weeks before the IPO and then decided to go out and deploy them. In fact some of these concepts we’ve been tweaking and working and learning from for the better part of our four years, five years. It’s good to have that four or five year head start. I wish some of these guys that are thinking they can just turn it around in a couple of weeks or a couple of months, good luck. That’s not going to work, that’s not going to result in the kind of behavior changes that we have seen from our guests. Mr. Ramsey?

Yes. I would echo Gerry’s comments kind of in the overall the five year horizon that you are referencing in the S1 really in terms of where we think it works in our circuit and kind of the order of magnitude of deployment hasn’t really changed. I will tell you though that on a more near-term basis, it has probably changed a little bit and by that I mean I think last time we spoke on conference call we talked about net CapEx or let me start with gross CapEx of about $245 million for the full 2014 year was kind of the guidance we gave. We said we get about $45 million of landlord money to net that down to about $200 million of net CapEx. Our number remains $200 million of net CapEx. But what happened since the last time we spoke is we've got landlords that stepped up with another $10 million and which will enable us to accelerate and deploy probably four or five more reseats than we thought we would do this year and another of our Red Kitchen which is the best casual Dine-In Theatres concepts that Gerry referenced in his remarks will accelerate one of those. So same net number, but because of some landlord made this become available to us, we have been able to accelerate and hopefully will be able to add five more new unit this year than what we had originally planned.

The only other thing that I would add James is as we continue to innovate, I made the reference a moment ago to this second generation of the (inaudible) reseats. Craig just mentioned and I did my in the prepared remarks the Red Kitchen. As we continue to innovate on some of these ideas, over the long-term not in the near-term that's a solid, but over the long-term, we think that that innovations will allow us to reach deeper into the circuit than otherwise we might have anticipated. In another words of more buildings than we thought become eligible in the Red Kitchen concept it is not as expensive as the kitchen in the dine-in theatre with the labor load, and the Red Kitchen concept is not as heavy as the labor load in the full dine-in theatre. That allows you to look at a broader set of buildings than you otherwise would, you have just had the one tool, the one concept, the one idea. That is very much in play and that starts to predict, innovation is not something that you can easily forecast but that’s something that we are going to continue to do.

Okay, thanks. Then just a follow up Gerry. I am curious what you think about Jeffrey Katzenberg’s comments yesterday that overtime I think you had a long time rising like a decade at theatrical windows would be structured such a way you would be able to watch a movie at any platform, I think you said 18 days after lease, but you would pay for it based on the size the device you viewed on, any thoughts there would be helpful thanks?

So I have not had a chance to talk to Jeffery since he made those comments and obviously prior to 45 minutes ago or so I couldn’t share with him some of our own results. Movie going on is a growth business for us when I can look at a collection of 37 somewhat, 37 buildings 100 plus screens which is all by the way a medium sized circuit these days, I think that we would have stocked it up, it may even be a top 10 circuit and I can see 63% growth in that top ten circuit. I hear from Jeffery saying now that he’s put up his numbers, I guess he was out but his numbers this afternoon as well, I can see where it’s coming from, I can see where his analysis and what’s been happening will lead him to that conclusions, our numbers, our facts and figures point in a different direction. So Jeffery is a great friend, I cannot wait to compare note with him now that we are both out in the public and can, cannot stack the numbers next one and other, and trust me when I tell you that we will endeavor to do just that. But that's all I can and I haven't really talked to him and I frankly only saw the headline, I know he was in some panel that's all I know.

Okay, great. Thanks a lot guys. :

You bet. :

Thank you. (Operator Instructions). Our next question comes from Ben Mogil from Stifel. :

Hi guys, good afternoon. So, don't want sort of the beat the issues there but just more curious on one specific new answer on the competitive side. Are you seeing at all studios sort of on the margin give you some of the better films in competitive zones where you have upgraded have you seen studios follow where the customer dollars are going?

Well, they will do that and they will do that historically. It's tough to say Ben at this stage of the game, that they have engaged in any different behavior than in the path. What I would tell you is that the whole re-seat concept which two years ago, when we had only a handful of buildings up and running was met with skepticism. And today on the heels of CinemaCon, which was right now a month ago already that skepticism completely evaporated. The studios by and large are all very supportive they are chasing the consumer dollars. As you know, this is no secret, the business arrangement, the revenue share model between us and the studios is based on the percentage. When our average ticket price is higher than anyone else's in the industry, when the capacity utilization in our peer is higher than anybody else's in the industry, when the re-seats are droving in, sure some of it is sure shift, but the other half of it is not. It becomes a little bit easier call for a studio in terms of where they're going to allocate the movie. The truth is that, we're not deciding to re-seat buildings, probably because they're maybe in a competitive zone or not. The decision factors for the scheduling and sequencing of the re-seat, the fact that we may get a movie that otherwise we wouldn’t doesn’t really enter into the equation at any kind of significant level. It’s more about, the return on investment is more about the return on capital that is going to be require, it’s more about the teams capacity to observe, it is more about the landlord’s contribution and those kind of metrics than it is about getting anyone movie or not. We have seen some very positive feedback from studios particularly of late since we had the time together at the convention and everybody is very enthusiastic. Frankly not just about what they are seeing in the numbers from their re-seats, but in all candor from when they are seeing at a data mining and some of the things that we can do on the marketing front with AMC Stubs, some of the in depth knowledge that we now have in this 2.5, 2.6 million households that are members of the program, our ability to market to them very, very tight, very narrowly is pressure by the studios is valued. So, we are seeing our relationship with those guys build on all those fronts not just because of the one factor. I don’t want to dance around the question, but I, that’s the best answer I can give you.

No, that’s fair enough, that’s great. Thank you, Gerry. I appreciate it.

You bet.

Thank you. Our next question comes from Jim Goss from Barrington Research.

Thanks, I’ve got a couple too. First is the reserve seating initiative, one of the instruments you can use to build habits and create a little bit of a competitive mode as you go forward here?

Indeed it is. Our reserve seating however, I will tell you it’s two edge; it’s a (inaudible) two edge sword. I don’t seem to like it in fact I don’t seem to love it certainly for sell out shows when we can anticipate it on a particularly on our rated title and a movie that is more towards an adult audience, absolutely. Teenagers on the other hand hate the thing. So, we have to be very careful about where, when behind which movies and in which auditoriums sometimes it’s not the entire theater sometimes it’s just specific auditoriums, specific show times that we deploy the reserve seating into. Teenagers have told us in no uncertain terms in social media in direct contacts they love theater management teams all the time, reserve seating is not for us. Adults on the other hand love the thing. So, as we deploy it into the circuit more and more and you will see us doing that more and more. We are not going to cookie cutter the thing, we’re not going to cookie cutter our approach, we are going to try to be a little bit more thoughtful, pay a little bit more attention to our guest and which audience specifically we’re attracting to other specific show time before we make that call.

Okay. Couple of other things; one, are you finding that your concession spending per patron is significantly higher in the reseated auditoriums or do you have anything you can say in that regard?

It is significantly higher in the reseated auditoriums. Just to give you some context, we’re looking -- yes, it’s about 12%, 14% higher in the reseated auditoriums on a per patron basis than it is in the core circuit. Nowhere is the food and beverage per patron higher of course than in the dine-in theaters because you have just a much broader menu to choose from, but the menu in the reseat and the menu in the core circuit is very comparable. What the reseat have is that in that group of 37, there is a greater penetration of the MacGuffins lounge than there is in the core circuit. So that does help the group of reseat theatres to show somewhat better numbers. But yes, people are more comfortable, people spend happily and some of that spending comes in a form of a glass of wine or a glass of bear. Yes that absolutely works for us.

And the last question I have is with regard to Stubs. I know it's -- you get a high percentage for return customer from the Stubs holders. Is there any effort to or any strategies for increasing the Stubs membership either by having a special on the membership periodically or doing something like that since once you have them in the program you think you might be able to leverage that membership much more?

Yes. It’s a question of degree. So, the answer -- the answer to your question is yes, there is. What there is not however is any effort on the book stores making a membership half price, we’ve done some of these things in the past as we needed to get the program seated. The membership base has been relatively stable; 2.5 million households give or take a 100,000 either way for the last few months. The behavior of that 2.5 million household continues to improve, the renewal rates continue to get better, their frequency of this continue to get better, the spend at the concession continues to get better. So, we’re seeing improved behavior from those guys all the time. But in terms of having an internal goal that says, oh yes, we will like to see that 2.6 become 5.2, not really. This is a program that works well for the most core and most loyal user and is not necessarily program that is in its current form, not necessarily a program that applies and works for everybody. Now there are variances that we may deploy, there are things that we can do, there are tweaks that we can put in place, the future holds any number of possibilities. But at the moment, we are quite happy with this current membership level and the traction that the offer that not only the basic offer, but some of the other enhancement that we put in place the way that those had driving behavior from our guest. Craig?

Just to punctuate a couple of Gerry’s comments you know the frequency of this group is over six times so there is certainly much more at it. The average ticket goes across all premium formats and everything blended kind of the average ticket is about $0.75 premium to the average ticket price versus the circuit as a whole. In a concession spend they are two leaderships there is about a 22% premium for an AMC Stubs member versus the traditional food and beverage per head across the circuit. So it’s in average group and it’s a group that enjoys eating our products from the concession stand, so we do love them.

All right, thanks both of you.

You bet.

Thank you. Our last question comes from Eric Wold from B. Riley.

Thank you. A couple of follow-up questions kind of comments made before. Just first of all Gerry on the kind of a phase 2 or I guess level 2 of the reseats. Is the new seat model that eliminates half the seats versus the two-thirds, is that the new norm or there will be a combination of kind of the old version and the new version depending on the market?

Combination depending on the individual theatre.

Okay. And is that…

It’s not a market base decision, Eric. It's individual theater base decision.

We’re still thinking about the same level of kind of cost and ROI per theatre depending on either one..?

Absolutely, I mean the two criteria that drive our decision making at the end of the day. It's kind of a stereo, I call it a stereo decision making. On the one hand, it's all about the financial metrics. What kind of return can we achieve, driven largely not only by the cost of construction et cetera but by the landlord contribution all those sort of factors. And we have had as always at AMC very strict financial, very good financial discipline around making sure that all of the hurdles are met and not just that all of the hurdles are met in a case like these re-seats that the new theatres are coming online meet their returns that their peers that have already generated. So, that's kind of like the right channel, the one channel. The other channel, it's all about what is that we're doing for our guest, for our customer? What is the customer facing, the guest facing improvement? What is the total package, not just a seat? I think Craig made that point couple of questions or three ago. It's not just about the seat, I mean you can go to any other suppliers and buy a bunch of seats and rip them out, rip the older out and put the new ones in, good, how about it, good luck. It's really about much more than that. It's about the internet ticketing, the internet ticketing engine and the ease with which you can buy the ticket as we serve seating, if indeed you're on the older set and the movie you're coming to see, it's Kevin Costner as opposed to something for the younger set, it's about the food being right, it's about having not just, the traditional coke and popcorn, but glass of wine and a beer, it’s about that total package. What is it that capital deployment that comes from the one channel allows us to do in this other, in the left channel in terms of what is it, what experience are we putting in front of the guest, is when those two things go hand-in-hand that magic happens. Do the one, it’s going kind of interesting; do the other, it’s going to all right. It’s when you do both that it really works.

Yes. The other point I’d make on theatre by theatre decision, there is certain level of productivity in our existing circuit that the version 1.0 recliner re-seat, it was productive enough that it wouldn’t generate the financial return. With less seat loss that we raised that bar, there is a group of theatres that wouldn’t qualify, wouldn’t meet the financial metrics that Gerry referenced with the version 1.0 C, they do become feasible because of less seat loss with the 2.0. So that’s a group that would be unique to this new chair as well.

Perfect. And then just lastly a follow-up on the price increases. I know you mentioned you’re kind of taking it carefully, when you take in price in the re-seat and not trying to push it all at once. I guess two part question. One, have you test kind of a range of prices to kind of get a sense of the elasticity on consumers and then I guess the end of the day for looking out couple of years from now, what do you think the difference is in pricing maybe on a percentage basis in re-seat theater kind of pre-reseat to after re-seat after you kind of take maybe multiple steps kind of above norm?

A couple of years out, I wouldn’t be surprised if the price movement, the average ticket price is moved 15-20 points, couple or three years out. I am saying that because we are already seeing 10%, 15% movement, so you stretch that out a couple of years -- I don’t know that stuff to predict because we are still leaning exactly what the elasticity points are. But it’s not hard to imagine that 20% ATP advance as some of these remodeled theaters, it’s I don’t know that it will happen entirely across the fleet or across the part of the fleet that has been remodeled. But I can see some very specific, so that will indeed be the case, Eric. It’s a couple of things that are happening. The normal $0.25 or $0.50 annual or every 18 month price increase, now we have the ability to take a buck or a buck and a quarter, particularly if the theater -- if we take that first buck, buck and a quarter, and the capacity utilizations are big times continue to be very high. So that gives us the ability to then come back another 9 or 12 months later and perhaps take another $0.75 or another $1. We haven’t been there yet across enough buildings to know but it’s not hard to imagine that that possibility is in front us. It allows us to drive a value equation with a guest in a way that we’ve not had the opportunity to do before. So it’s exciting because not only are you driving economics but you also are driving in balance guest satisfaction. That’s the trick here, otherwise and we fall back in the same old routine and I don’t know that that’s a game that we want to necessarily play.

Perfect, thank you guys.

Does that help.

Yes, it's perfect.

Thank you. At this time, I will turn the call back over to management for closing comments.

Well, thank you everyone for joining us this afternoon. As you can tell from the commentary and some of the answers, pretty excited about the quarter that we just had, looking boldly towards future. We are going to on the path that we shared with you in December during the IPO and that you’ve seen us now execute against certainly for this first quarter. Thank you again and make sure that you go to a movie this weekend.

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.