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

Thank you. Welcome everybody to fiscal 2012 fourth quarter and year end conference call. As usual I do need to begin by stating we plan of making a number of forward-looking statements on our call. Forward-looking statements could include but not be limited to statements about our future revenue and earnings expectations. Our future RevPAR occupancy rates and room rates expectations for our hotels and resorts and division, expectations about the quality and quantity and audience appeal of film product expected to be made available to us in the future. Expectations about the future trends in the business group and leisure, travel industry in our markets, expectations and plans regarding growth in a number and type of our properties and facilities. Expectations regarding various non-operating line items on our earnings statement and expectations regarding future capital expenditures. Of course our actual results could differ materially from those projected or suggest by our forward-looking statements. Factors, risks and uncertainties which could impact our ability to achieve our expectations are included in the risk factor section of our 10K and 10Q filings which we can be obtained in the SEC or the company. We will also post our Regulation G disclosures when applicable on our website at www.marcuscorp.com. So with that let’s begin, by talking about our fiscal 2012 fourth quarter and year end results as you can see we ended the year very strong, certainly pleased of your reporting and other significantly improved quarter compared to last year thanks to much stronger results from your Theater division and continued positive trends in our hotels and resorts division. I am going to take you through some of the detail behind the numbers and then turn the call over to Greg for his comments. Before I get into the operating results let me…

Thanks Doug, I will begin my remarks today with our theatre division, we are here to talk about the excellent results we reported today and we will do that but first I would like to make couple of comments about the events of the past week. As they certainly put everything we do in perspective we like everyone else were terribly saddened by the horrible tragedy that occurred in Aurora, Colorado in the early morning hours last Friday. Our thoughts and prayers continue to go out to the victims and their families as well as the larger Aurora community. In addition, the movie theatre business is a tightknit group, the owners of the theater involve our friends, so also want to express our concern for the associates of the Century Theater and its owners during this very difficult time. I know that we all search for words to explain these senseless random acts of violence by disturbed individual, if they don't seem to be and they are adequate. We know intellectually that something like this can happen anywhere but the U.S. movie theater industry has never had something like this occurred in its 110 year history and that approximately 1.3 billion guests go to the movies every year without incident, yet an event like this is obviously very painful. Interesting could be that the American people try to make a statement this weekend when they made the Dark Knight Rises opening the highest grossing 2D weekend opening ever. If they won't let a single disturbed individual take away their freedom to enjoy one of our favorite pastimes. The collective experience seeing the latest movie in their local theater. Having said that we don't take what happened in Colorado lightly, far from it in fact. We have a deep sense of…

(Operator Instructions). We'll first go to David Loeb with Baird. Please proceed.

I wanted to start with some big picture questions Greg. It sounds like from your remarks about Dark Knight and the strong opening that you don't see any structural change in the way audiences are viewing the movie going experience following or, is that fair?

David to get a little more in detail, I prefer to say the answers I don't know. It's too early to determine if there is a structural change. I think if we follow past patterns that probably won't be but I don't know. We did see that the Dark Knight actually performed very well, some of the family and the more adult pictures had a drops a little more than might have expected but it wasn’t anything significant. So given our business, there is no knowing what might have driven that. This is not a business that's predictable.

And then to switch to the hotel side. Clearly your hotel performance has been very strong with excellent ADR growth. A lot of that is clearly the three downtown Milwaukee hotels. Can you give us an update on the new supply environment, the two hotels under construction. When do you expect them to open and how long do you think it will be before the market absorbs that. Presumably that will make it harder for you to get rate increases in the face of that. So, where are you in that process?

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

But as you look at the current demand environment, it does seem like there is some compression in to the suburbs maybe some of that reverses, but are you yet seen along booking groups starting to sharpen their pencils in anticipation of playing you off of other hotels?

Now we haven't seen that. We haven't seen that yet. Because they're not able to really, they were not open to taking reservations yet. So we have not seen that impact as of yet.

Okay and then just to zoom in a little bit on real estate. You talked a little bit about continuing to explore acquisition opportunities. Two parts of this and then I'll stop. One is, are you looking at new markets and if so, how far afield from your core mid-western focus today. And two, this is for Doug, was there some G&A cost in the quarter that related to on-going acquisition related expenses and can you quantify that. I guess the same question on Brookfield, was there something there that helps us understand the G&A.

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

On the first one in the acquisitions for hotel real estate fund, are you looking at markets that are still in your core mid-west or are you looking beyond there? Are you really looking nationally for those acquisitions.

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

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

Your next question comes from the line of Brian Rafn with Morgan Dempsey Capital. Please proceed.

Can we get a sense on the cinema theater side. You guys look at the mix of ticket sales in maybe 3D, dinner theater. Maybe without breaking up percentages, is that percentage of penetration rising incrementally over the last few years?

As the proportional ticket sales usually like 3D?

Yes, I am just wondering what that as a proportionate to total gross, those kind of extra not just the guy coming in for a regular theater.

In fact if you want to go back when it was first introduced, 3D was a higher percentage. As I shared on one particular movie The Avengers, it was about 40% and at one point in time it was 50 plus or more and from our perspective it seems to have found its equilibrium to a certain extent now. And it depends on the picture and some pictures are going to be a little higher and some are going to be a little lower. Family films are lower and then just not even our numbers are no, the national numbers you can see, family films performing lower on 3D probably because of family of four or five going to the movies with 3D added in can be very expensive and so that's impacting its performance.

Okay if you just broke out, I mean you certainly qualified as 3D, how about the dinner theater side? And then what is specific to you guys is that found its equilibrium too?

That's a very small piece of what we have right now Brian. We've got a managed property that has five auditorium have hurt places like that and that's not even in our results if you look at them. Then we have three screens at our Majestic Theater in Brookfield and we opened only as one. When we added a three, it became a better dynamic, we were able to leverage our cost better, became financially a better arrangement than what it was before. And there's a clear audience that loves the dinner and the movie concept. So it's found a good audience in that regard, but it's such a small piece Brian that it's really and thus far we haven't expanded it elsewhere, certainly we'll look at that. But right now, it's just too small to matter a lot.

That piece Greg, does that also levers to the content of the types of films coming out. In other words is that better for a romantic, love movie versus say Die Hard 5?

Yes. Absolutely. It does make a difference. But its broad content over time. So…

You were sitting here in the corn country Wisconsin, the commodity inflation that I'd right away go to high fruit toast corn syrup, you guys get a sense if there is certainly some significant damage on a commodity basis that you're going to see some costs on the concession side, Candy and what not rising and have incremental pricing over that?

Are you talking about the drought condition?

Yes, because we are seeing, in package foods you are seeing some whether its bread or candy or soda, you're seeing some real pressures building in the pipeline.

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

And by the way, while Greg was answering that, I was just looking up a couple of things and if that's your question about the in-theater dining, I will tell you that while today isn't a pretty small piece for us, nationally it is a growing trend and growing revenues per screen. So I don't want to minimize the fact that we think that it is something that has growth potential and we're seeing it nationally.

Right and that's something for the most part that given a theater footprint you guys can convert one auditorium to that. Is there anything specific about that that requires a specific type of construction or is that something you could just roll out pretty much anywhere in your chain.

Well first of all there is different flavor so to speak. Something like the ridge there is a field we are about to open. We took out an auditorium and converted it to a restaurant and it was a very complicated project. What we do the Majestic for example where we have the in-theater dining, it's also significant but you take, you're basically reconfiguring the seating. Now putting in the kitchen is what matters. They decide that, they can do it from one screen. The scale you need the, scale of multiple screens to support the cost of the kitchen and a labor that can work multiple screens. So you need, you can't just do it at one. So it’s a capital commitment. And then each one has a different impact. If you think about it, if you put a restaurant in an auditorium that everyone can use, that's for everybody in the movie theater. If you do in-theater dining, well that's only for the people going to see that movie. But on the other hand it’s the benefit of being able to eat in a theater and combine you're eating experience with your movie going experience to a lot of people is very attractive. So I think what you'll see is a combination of different experiences.

Your comment certainly and everybody is always configuring this, what the theater of violence in rural Colorado. Obviously if you're going to have terrorist shoot up a military base, the theater chain, grocery store, it makes it very, very hard and you can't really lock it down and again turn a theater into a military base. Let me ask you like here in Wisconsin Greg, we've gone to a cancel and carry, one of the concerns might be to take that event and have other people in their packing where you turn it into an okay corral. What's kind of Marcus Corps. gun policy in the theaters?

Our policy is that we as you to believe there guns, put weapons in their cars.

Okay, let me ask from the standpoint. How would you guys look at if you got 165 to 170 to 190-95 movies here. How would you describe your fiscal 2012 product from the studies?

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

Okay, but would you classify just say, fiscal 2012 you guys close. Was that a pretty decent year relative to years in the past or would you say that's a year that we did better at Marcus on a weaker product mix.

It was a good year Brian. Fiscal 2011 was a difficult year and so I indicated that our tenants was up 2.3% on a comparable theater basis and excluding the extra week. So it was a good year. It wasn’t an all-time year either direction.

Okay and then just a final question relative to, Greg, so talking about the 30% increase in room supply in Milwaukee, talk a little bit about and I have heard it in the past obviously being a novice in the travel site, Milwaukee being kind of a second tier city. You couldn’t have a super bowl at (inaudible) field because where would all the people stay. Does the 30% increase in supply bring in any larger conventions that now see oh gee, Milwaukee, Wisconsin is not on the map, because they've got that much capacity increase.

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

Yes Greg is that the buzzed on it replacing putting in a high rise down by the old first start center, the US bank center on that parking garage. That doesn't have any hotel in that, does it? I prefer retail mix, occupancy…

Yes, most of it.

It does?

Oh yes.

Okay, all right, so the problem really gets worse as far as dispersion then it sounds like. All right, thanks guys.

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

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

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

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

No.

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

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

There is nobody more optimistic than a thumb booker.

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

Your next question comes from the line of Brian Rafn. Please proceed.

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

Pretty minimal.

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

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

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

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

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