Good morning, everyone, and welcome to the Marcus Corporation Second Quarter Earnings Conference call. My name is Angela and I will be your operator for today. At this time all participants are in a 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.

Thank you very much. This is Doug Neis, and welcome all of you to our fiscal 2012 second quarter conference call. As usual, I need to begin by stating that we plan on making a number of forward-looking statements on our call today. 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 expectations for our hotels and resorts division, our expectations about the quality, quantity and 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, expectations and plans regarding growth in the number and type of our properties and facilities, expectations regarding various non-operating line items on 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-K and 10-Q filings which could 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 2012 second quarter results. Certainly pleased to be reporting the positive trends in our Hotels and Resorts division again. They’d continued into our second quarter resulting in significant year-over-year improvement from that division. Meanwhile although our Theatre division is reporting a small decrease in operating income this quarter, we would have in fact reported an increase again if not for the one time accelerated depreciation on our old 35 mm projection systems that we reported…

Thanks Doug. I will begin my remarks today with our Theatre division. After a record first quarter from this division, our second quarter results did not quite match last year. But we are still quite pleased with where we are halfway through this fiscal year. In fact, if not for the $1.4 million of accelerated depreciation described earlier, our operating income would be over $3 million or approximately 17% higher than where we were in this division last year at the same point. When all is said and done, this year’s second quarter film product, while not bad by any means, was probably one good film or so away from matching up with last year. The fact that we did not have quite as much depth of the film slate this time around is evidenced by noting that we had only seven films that produced at least $1 million of box office proceeds for our circuit during our second quarter, compared to eight films that reached that mark last year. That second tier of films can make the difference between the record revenues we reported during the first quarter and a good but not great quarter like we are reporting during our second quarter. I will tell you, while there weren’t necessarily any onetime -- while there wasn’t necessarily any one time period during the quarter where most of our box office decline occurred, October was the month that most underperformed. And even more specifically, our worse single week from a comparison perspective was the week that Jackass 3D was released last year. And I would like to note that it’s important just to know Doug put that into my section of the remarks, and somehow got me to say the name of that movie. Thanks, Doug. It certainly is…

(Operator Instructions) Your first question will come from the line of Mr. David Loeb with Baird. Please proceed.

Good morning, gentlemen. I wanted to ask you first about corporate. Corporate expense is usually a bit higher in the first quarter then the second quarter. This quarter was more like the first quarter. Does some of that have to do with management transition related issues or is there something else, is this a better run rate going forward. Can you just give us a little more color?

Yeah, you know what, it’s kind of all of the above. There’s several things there, there are some expenditures that we have chosen to conservatively expense related to the Corners project. Legal costs and some things along those lines. So that’s an unusual item that’s keeping that number a little higher. We are absorbing the cost associated with the MCS Capital and everything associated with that, right now. So that’s also driving some of that as well. And certainly there will be some transition costs as well involved in that, so.

So looking ahead, is the $3.5 million level, is that a better run rate then kind of the more like 2.8 or so?

Again, I wouldn’t call it, the number that’s in there currently as the run rate, because certainly there are some -- again, the timing of some of these expenditures at the Corners is distorting that. So I would not -- I would suggest the run rate will be a little less then what we are currently looking at.

Okay. That makes perfect sense. Can you give us a little update on the MCS Capital kind of where do you see that playing out and kind of what are the early thoughts. I know that’s another business where patience is required but what do you think about the direction that’s heading in, where do you think that will go?

You are right on, David. Patience is required. We are being -- we are making headway -- we are seeing -- the pipeline starts to get, start to see things fill into it. Whether that actualizes, I don’t know. But I like what we are seeing. But it’s going to take time. I think we have seen the transaction levels drop of nationally with the lease currency going away. And it’s just we are being picky and but we are looking around and as I said, I like what I am seeing but I can't’ or I don’t even there can tell you the way to do it at this second.

Great. Okay. One last one on the hotel business. This was clearly a very good quarter, I guess I am trying to understand if it was an exceptionally good quarter, how much do you think the Brewers playoff performance helped in this quarter. Was it material or do you think it was really just a hundred or a couple of hundred thousand dollars.

I would tell you that it was not material and in fact there were some times when we were trying to -- we were actually hoping for certain games to go certain ways because we were actually relatively busy in the market. And we are trying to figure out where everybody was going to go. So I don’t think it was material. I couldn’t tell you the exact numbers but I...

So there really is a testament to the strength of your markets and really it’s more about what you are doing at the hotel level and the markets rather than any kind of exogenous events like that.

Yeah, I think that what you’re saying is -- it’s maybe investment driven, you know all the investments that we made when things were really -- when things were really challenging. I think we are seeing some of that payoff. I think that the shift in mix from OX ADR, is you are starting to see that payoff and help. So it seems to be a number of factors coming together.

(Operator Instructions) Your next question comes from the line of Greg Macosko with Lord Abbett. Please proceed.

Hi, thanks. Good to talk. Yeah, just to talk a little bit about the, you’re talking about the pricing relative to the group business, that sounds -- you’re suggesting that it’s coming in better and people are willing to -- the group’s are willing to pay up a little more?

Yes. I mean it is -- I wouldn’t say that people are drunk with -- ready to revel and go nuts but it’s what we, I think it’s just a continuation of the measured improvement in the business that we have been seeing and as the patterns seems to be playing out relatively typically albeit on a measured -- again at a measured pace where you see -- I think we talked about this, we have been talking about it for a few years where occupancy comes first and then ADR should follow. And probably I think I would, probably, I would realize and say occupancy came faster than we thought and I don’t think ADRs coming in as fast as we would like.

With regard to the group business, what's the forward look? Are you able to look out as far today as you were two or three years ago, in December and see what you have for the spring and summer?

No. But I can tell you it’s a little choppy. It’s not -- I can't tell you that we have great stuff coming. I know Milwaukee’s convention calendar which benefits us a fair amount is weak next year. But we have worked around that before and we go out and find smaller stuff to fill in when that’s a problem I can't tell you what's going to happen this year. But you are right, you are underlying point which is the booking windows are a lot shorter.

So they are shorter then they have been historically is the point.

Yes.

Okay. But you are also suggesting that you are able to work and not be as dependent upon the websites that basically sell rooms at the last minute for a lower price.

That will be a halleluiah. Yes.

Again, You know, on different times of the year you make decisions, I mean we have guys who are making those decision on a daily and weekly basis in terms of how much inventory to provide to those sites and -- but, yes, overall we have been able to -- some of this shift and some of that 6% increase in ADR wasn’t that you just change the rates by 6%. It’s just they had mix change.

Right. And the occupancy you are saying, it’s never been higher in your eight owned hotels. I mean do you feel as if kind of going forward that you have a better handle on that occupancy and sort of look at on an ongoing basis on a higher level.

I am not sure I follow the question.

Well, you are saying right now that occupancy has never been higher and yet we haven’t -- we are still not relative to the economy etcetera, we haven’t come back to that yet and yet you are at a good occupancy level. So I guess it’s a reflection of the properties that you have that you expect that -- do you expect that to kind of maintain at a higher level?

I can't make a prediction as to where it will be. I know that I would trade some rate for occupancy, honestly. I mean it’s just better on the margin. Better, so the properties don’t get beat up so much when you do that as you know.

Okay. And then with....

And Greg, I would just add that while we are overall outperforming in our markets in national numbers, that particular trend is a national trend. I think I saw some statistic recently like 18 of the top 20 markets are all have, like some of the highest rooms sold ever right now. So it’s just that is a dynamic that’s being played out nationally.

Good, good. And then with regard to the theatre. Just talk a little bit about the restaurants that you have been working and you were reasonably optimistic last quarter or you talked about that. And I didn’t hear any comments there. Give us a, sort of an update on that.

Look we continue to -- I don’t think any of the -- the truth is at the end of the day right now, nothing that we are doing is material to the bottom line of the business, I don’t think. But we keep refining the process, we like the Zaffiro’s concept. We like what it imbues on a complex itself and people love the product. And we continue to refine what we are doing. The nice about -- and this is a mix of things that we do -- we can do in-theatre dining as good but you’re limited to what movie is playing in a theatre, when you do a standalone restaurant, the restaurant can serve everybody in the theatre, and that’s very nice. The challenge is typically the theatre locations are not always necessarily great restaurant locations. In night time they are very good. I mean one of the things we see is we can't put more people in the restaurant at dinner time. I mean we turn the thing a number of times and its jammed to the gills. It’s tougher on the, to build -- the true path, I think to profitability, and good profitability for these, will be building out the shoulder period on them. But it’s hard. You know like lunch time in a theatre complex is sort of an empty parking lot. So it’s not as inviting. But we continue to just work on the -- work on it and as I said we believe in the products sincerely and people love the product. That’s a great place to start.

With regard to the CapEx budget which you brought down just a little bit, is there any for the Franklin acquisition there? You have CapEx for that in there?

Yes. When I gave that 45 to 75 number, 45 to 70 number what I gave, it was a -- I have built into that the Franklin acquisition. It wasn’t in the $17 million that I had said we had spent for the first half of the year. But, yes, my estimate includes it.

Okay. And finally, I know I have asked all other questions, but finally what do you pay on the 119,000 buyback?

It was the low nines, Gregory. It was, I think, take my weighted average on all 560 now, it was like $8.70.

And low nines, what you were referring--

That last piece was in the low nine and a quarter, on average somewhere in that neck of the woods.

(Operator Instructions) Your next question will come from the line of Jonathan Pong with Robert W. Baird. Please proceed.

Hi, good morning Greg, good morning, Doug. I just wanted to push a little bit deeper on the hotel section and focusing particularly on rate. I know you guys, in the second quarter rollout, you guys have highlighted occupancy rate as being very high. How aggressive have you guys been in pushing ADR this quarter. How do -- you vision being in pushing that in the following quarters?

You know I would tell you that we are being as aggressive as we can be. What we have to watch for and what sometimes we are seeing is that, when we push it too hard it just starts to drop off faster than we would like and then you start to lose your RevPAR. But we will get and push as hard as we can to shift the mix, get out of the OTA guys and work to fill you up with business that’s going to more profitable to us and in addition driving beverage. We look at all those factors. And on top of it -- and sometimes we weigh the factor in other direction which is what's going to be the overall spend, we may drop the rate to get somebody in the hotel who is going to eat in our restaurants and shop at our store, whatever we have got, it depends on the property.

You know, I guess what I would add to it Jonathan is that if you start to bifurcate each of the customers segment, your negotiating that rate at different times. I mean some of them you are negotiating daily sort of with the transit traveler. But as we mentioned in our prepared remarks, this is the time of the year when we are out there negotiating our corporate volume business. RFPs and that number is set for a year at least. And so that was one of the comments we made is that may be the first time in two or three years, we are at least getting some ability to push that rate a little bit. And so -- but Greg used the word measured before and that’s the right word.

Okay, and then guys, a little bit into market specific performance, RevPAR wise, maybe look at the urban properties like the Four Points in Chicago versus some in the secondary markets, how those are doing in comparison to each other?

Yeah, you know, Jonathan, we just -- we only have the eight properties. We just refrain from getting too specific as that would in turn from a competitive perspective tell too much about any individual property. So in general as we mentioned, they are all up. Overall, we are up 9% and that range was -- boy, I don’t know, the lowest was, you know, probably in the mid-single digits, 5-6. And we certainly have several properties that were in double digit increases. And so, but we just don’t think that it’s appropriate for us to talk too specifically about individual properties.

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

Thank you very much, everybody, for joining us today. We look forward to talking to you again, once again in March when we release our third quarter fiscal 2012 results. Thanks. And we wish you all a very Merry Christmas, Happy Hanukkah, and Happy New Year.

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