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Executives

Amy E. Miles - Chief Executive Officer and Director

David H. Ownby - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Analysts

Aaron Watts - Deutsche Bank AG, Research Division

Regal Entertainment Group (RGC) Deutsche Bank's DbAccess 21st Annual Media and Telecom Conference March 4, 2013 3:00 PM ET

Aaron Watts - Deutsche Bank AG, Research Division

Okay. Are we good? Okay. So we'll get started with our next presentation. I don't want to waste any time, we'll let people file in, but happy to have Regal with us on the cinema side. We have Amy Miles, Chief Executive Officer; and David Ownby, Chief Financial Officer. And maybe, what I will do is just ask you to talk a little bit about current events because there has been a lot going on, and maybe you can put that on the M&A side and then also, what you've been doing performance-wise. Let's do this.

Amy E. Miles

Sure. Welcome, everyone, and as we're starting 2013, I'll spend a little bit of our time on 2012. 2012 was a record year for the industry, and it was a record year for Regal Entertainment Group. So we ended the last fiscal year with cash flow of, give or take, $580 million, and again, that's a record for Regal. And if you want to put that into perspective, that number in 2011 was right around $490 million, so a lot of growth in fiscal 2012.

And one of the things that we have been forecasting or a change that we saw that would happen in the industry is as the industry converted to digital cinema over the past couple of years, we have believed that, that would provide Regal with additional M&A opportunity. So that was a good backdrop to spur some M&A activity. And we were very pleased that over the past, let's say, give or take 4 months, in the end of 2012, the first quarter, we announced the acquisition of Great Escape. And that was, give or take, 300 screens. And then just recently, we announced the acquisition of Hollywood Theaters, which was right over 500 screens. So we've been very successful in the M&A market over the past couple of months. And out of the -- I don't know the exact number, but 17,000 -- I mean, I'm sorry, 1,700-or-so screens that were available to M&A opportunity, Regal has been successful in acquiring about half of those. So if you think about our market share normally being about 20%, we've been very successful in the M&A market over the past couple of months. And we believe that there's a lot of opportunity for us in the future in that environment. Since the company was public, we've executed right around 38 acquisitions, and we've grown the company 70% through M&A activity. So it's in our skill set, it's part of our core competency. And we believe we have a lot of opportunity in the future in that area.

Question-and-Answer Session

Aaron Watts - Deutsche Bank AG, Research Division

Okay. Maybe 2012 turned out to be a great year for the industry, right, attendance growth, revenue growth. Can you maybe talk a little bit about what we're seeing so far in the first couple of months of this year? I think there was a good carryover from the holiday slate that propped up the industry. And we've seen, I think, 6 weeks in a row now, where it's been a little soft. Maybe you can talk about what are the trends underlying that are.

Amy E. Miles

Well, if you look at the box office, always we think about it over a yearly period. You're going to see a lot of variability. If you look quarter-to-quarter, this quarter is no exception. And again, we ended the year last year at call it about $10.8 billion to-date, so the industry is down. If you were to reset that bar and look at the last 12 months starting, let's say, today, that number is still about $10.6 billion, so still healthy growth over the past 12 months. But again, as you thought about the first quarter, we were starting out with very difficult comps. And the fact that the industry is down from a short-term perspective really does not surprise us that within our forecast of what we were expecting. But I think the key there is to remember how strong the box office still is when you're looking at it on a trailing 12-months basis. And January was really strong. I mean, it's -- from that perspective, we had great carryover from the holidays. Some of the pictures that were nominated for Oscars had great performance in the first quarter, so that helped. And again, we look forward to a strong summer season.

Aaron Watts - Deutsche Bank AG, Research Division

As you think about the film slate for the rest of the year, you mentioned summer to be very positive. Is it unfair to try and think about 2013 living up to 2012's lofty levels or is that an attainable goal?

Amy E. Miles

I think it's attainable. I mean, off -- we're off to a slower start, obviously, through the first quarter, and again, that's not unexpected. But a lot of our business is cyclical. And when we get to that strong summer season and you look at all the lineup with the key blockbusters, the second quarter, the third quarter, the fourth quarter, the film slate looks really strong.

David H. Ownby

But the comps get a little easier as well. If you remember the summer period in Q2 and Q3 combined last year, we're down about 3% or 4% at the box office. So as you get past -- I'll call it maybe as you get past the first week of May, which is when The Avengers came out last year, the comps get much easier after that period.

Aaron Watts - Deutsche Bank AG, Research Division

And a lot of other media platforms being talked about here at this conference, many questions on kind of fragmenting viewership or distractions that are taking younger audiences away. Are you seeing any of those kind of underlying trends or concerns with your audience breakdowns, the young male demographic, for instance? Any notable kind of concerns there with that demographic kind of being a little softer or not? Just maybe some comments there.

Amy E. Miles

Every year, obviously, we're a content-driven business. So you -- I think one of the great things about 2012 and one of the reasons why you saw the box office performance that you did, it is a great example of a year where you have a lot of film product that appeals to many different moviegoers. It was a wide array of films. So if you think about the fourth quarter, which is a great example, if you're a young girl, you can see Twilight. If you're -- there's plenty of kids pictures in the fourth quarter. And this year, from a -- which was also unique, there was a lot of films for adults, Lincoln, Argo. And again, a year where you saw a strong performance in the box, it wasn't heavily weighted to one demographic or one segment of the audience. And as such, you saw a great performance for the year. So the good thing about our business going forward is Hollywood can invest and create content for a lot of different moviegoers. And when you have a good movie, people come out, and they go to the theaters.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. So aside from things that are out of your control, like the content that is coming your way to a large extent, can you maybe talk about some of the things that Regal can do to grow your revenue base that are in your control?

Amy E. Miles

I'll talk a little bit more about -- obviously, the main driver here is the acquisition strategy. And to the extent we think about the domestic market as our primary field of opportunity, one way that we would like to see us grow our top line, our revenue growth in the future is exactly what we have just done over the past couple of months, and that's execute on acquisition opportunities. We're also investing in our own asset base, building about 8 to 10 new theaters a year, so the real estate pipeline has rebounded. So in addition to an acquisition strategy, we're also investing a lot of money in our theater base. We have a lot of premium opportunities that we're pursuing today. We're adding incremental IMAXs. We are adding our own incremental or our own large-format screens, Regal Premium Experience, that are, again, trying to provide a better moviegoing experience. And then I'll let David talk a little bit about what we're doing in the concession area to expand there as well.

David H. Ownby

Yes, this is another great revenue driver for us. In 2012, we rolled out and just really we had in place, for most of the year, at about 50 theaters, our expanded food menu. So in addition to the normal theater concession, you might think of Coke, popcorn, nachos and candy. We've also taken another step further and just really try to entice some of our customers who haven't traditionally come to the concession stand to come in and maybe even have a something like a dinner at the theater. We -- a few years ago, we started offering pizza. More recently, we've added some more I'll call them finger foods, but cheese sticks, jalapeño poppers, even hamburgers and french fries. And even though we only have that menu at a small number of locations today, it's provided some meaningful benefit to our concession per cap. Just at those 50 theaters, it added about $0.01 to our concession per cap for the whole circuit in 2012, and we're -- we've been so pleased with the results at those 50 locations that we're going to add that expanded menu at another 100 locations this year. And Aaron, one of the things we were in luck about that strategy is it's not particularly capital-intensive. We really -- as we rolled out the pizza ovens a few years ago and saw a good return on that investment, we went back to some of the food manufacturers and said, "Okay, what else can we make in these same ovens that we use to cook the pizzas?" And so we've been able to roll out that really expanded menu without an investment in a full kitchen at the theater.

Aaron Watts - Deutsche Bank AG, Research Division

It makes sense. And how about -- maybe this is a somewhat selfish question, but how about reserved seating? I know one of the banes of my theater-going experience are having to get there an hour early, especially for a new film, and wait in line to get a decent seat. Now is that somewhere you see having some upside, extra dollar a ticket, something like that? Or is that not realistic?

Amy E. Miles

I think in certain markets, it's very realistic. You see, as we tested reserved seating throughout the United States, you can see in certain pockets, Los Angeles is a good example where you have a lot of the theaters in the L.A. market that have converted to reserved seating. And it's become kind of a standard for theaters that are in that marketplace. And so we have seen some good returns on that investment where we go in. And more from a market share perspective, you want to make sure you're protecting or growing your market share when you add the reserved seating. But there are other pockets of the United States, and sometimes, it's driven a little bit by the audience base, and once again, I'll use one of my children as an example. But for a lot of times for me as a consumer, reserved seating is great. But think about a lot of our moviegoers or those 12- to 25-year-olds, and my son who shows at a movie expecting 5 more of his friends, doesn't want to buy their tickets, doesn't want to try to pick the seats for all 5 of them. So what we try to do there is make sure that we are bringing that consumer amenity to the right market and sometimes to the right film because we want to make sure that we always make that going to the box office as experience, a great experience, just like seeing the movie. So we're a little bit mindful of the audience in the market when we do that. But in certain markets, I think reserved seating makes a lot of sense and brings some upside for the industry.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. And then maybe on the cost side, just one question there. Should we expect any big push or pull on the cost materials for the concession side? Anything else notable? You've done a great job, I think, over the last year or 2 really bring your cost base down. So what to expect from the upcoming year for Regal?

David H. Ownby

Yes, we did spend a lot of time in 2011 and 2012 just trying to go through and really take a fresh look at our costs at the theater, in particular, our theater-level payroll costs. And as a result, 2011 was the big mover year there, I guess, but we took about $40 million out of the other operating expense line item on our P&L. And the good news is in 2012, even though attendance was up for the industry and for Regal, we were able to actually sustain those cost reductions. And I think the way we feel about it now is that we've really built our cost structure in such a way that we can be successful and generate cash flow in any box office environment. I'll be honest and say that there's probably not a lot of low-hanging fruit there for us to take any further, but at the same time, we're very pleased with the changes to our cost structure. Some of the changes we've put in place, particularly around how we model and schedule payroll week to week, and maybe most importantly, in how we compensate our managers, that we had always used, I think, the appropriate drivers to determine their compensation. But we actually made our manager bonus program a little bit more competitive by allowing managers at similar-sized theaters to compete with each other. And I think that incentive combined with a clear communication to the field about our expectations for costs maintenance have really provided huge benefits for us. That's probably the biggest area. And then obviously, on the film and concession side, those costs have been very consistent for us for a large -- several years, many, many years now. In fact, those are just costs that don't move a lot, and that we really benefit there from our size and scale.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. And maybe I can shift back to M&A a little bit. And even just starting with competitively, you've made a couple acquisitions. Your peers have made a couple acquisitions. Does that impact the competitive environment market to market? Any drastic changes you're seeing? And maybe I'd even include the fact that one of your -- or AMC was bought by a foreign entity, so does that -- have you noticed any change or do you expect any change from this consolidation that's going on?

Amy E. Miles

One of the great things with respect to our industry that happened several years ago when we came together and created National CineMedia is we found a way for a lot of the players in the industry to -- even though we're competitors day in and day out for film and patrons, where we've worked together to seize the lot of opportunities as a group where that has made sense. Open Road is a great example, and National CineMedia is a great example. DCIP is a great example. So from that perspective, I think we're -- we've played very well together as an industry. Now as it relates to competitive acquisitions, Hollywood is a great example. It was probably just a better fit for Regal from a geography perspective than some of our other larger competitors, so we didn't sense, even though it was an auction process, as much competition in the process because of the geography of Hollywood. So I think the good news is, is when you look at the transactions that have happened not just for Regal but across the industry over the past couple of months, they've been very accretive from a cash flow perspective. And I think that speaks a little bit to the competitive environment, that we were all able to execute acquisitions at accretive multiples. Now with -- and that gives me comfort that going into the future, we'll be able to continue that strategy. I think with respect to Wanda and AMC, again, they're great partners for us. We've worked a lot with AMC. But at this point, I think it will be a little premature to -- for us to speculate any changes that they would be facing.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. And as you thought about your acquisition strategy, you said before you've been pretty much exclusively domestic-focused on that front. Why not look internationally a little bit? Is there anything keeping you from doing that? Or maybe just your thoughts there.

Amy E. Miles

Yes, I think it's more that as we look over the next couple years, we have operated a 100% domestic circuit since we were formed, so that's our skill set, that's our competency. And if we feel like as we look at accretive acquisitions and where we believe those will happen, we just see more opportunity for us here in the United States. We see plenty of opportunity left, and so we would never say never with respect to any opportunities outside of the U.S. But realistically, as we look at the horizon, we would just forecast more opportunities for us domestically.

Aaron Watts - Deutsche Bank AG, Research Division

And with the acquisitions you've made, should we expect -- does that give you a little more leverage in terms of costs or negotiating on points with the studios? Are you seeing the benefit of that? Are you expecting to see the benefit of that?

Amy E. Miles

I think we already have the benefit of size and scale today. So the great thing about acquisitions is being able to bring our size and scale to that acquisition target today.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. And David, with where your leverage is at today, you've been able to make these acquisitions, as you said, at a level that didn't increase that leverage materially. Are you happy where you live? Do you want to see that go lower? How are you thinking about that?

David H. Ownby

Well, we've historically been very comfortable operating in that 3x to 4x net debt-to-EBITDA range. And we were there as of the end of 2012. And even with the impact of the Hollywood acquisition in -- going forward to 2013, we'd expect to still be at that level. So yes, we're right in our comfort zone today.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. Maybe a question on theatrical windows. It seems to have quieted down a little at least in the mainstream press from what we had maybe a year or 2 ago. But can you maybe talk about where we're at today and whether that pressure on those windows has quieted down or that's just media attention and where you see that going?

Amy E. Miles

From the perspective if you want to compare it to a couple of years ago, yes, it's quieted down substantially from that time period. I think if we just look at recent changes, the window has been relatively consistent from a -- just compared to theatricals, to the first time a content hits the home over the past several years, it has condensed some but not materially if you look at, say, 2012 as compared to 2009. So if you look over a 4- or 5-year time period, it's relatively unchanged. That being said, we are seeing the studios continue to look for opportunities inside the home window, seeing more studios today have an electronic sell-through window, that's ahead of the rental window and ahead of the DVD or physical good window. And we're seeing some change there. Again, those are all changes inside the home window for the most part, not really impacting the theatrical. I think the good news is when we look at the numbers for what was happening from content inside the home last year, you saw a stabilization to slightly up number as compared to the past several years, where we've seen decline in the home. So for the ecosystem perspective, which we participate, we want the studios to have a healthy home environment because from the production cycle, the advertising cycle, that benefits us ultimately, so we want to see that happen. And I think the good news last year was more of that stabilization inside the home revenues.

Aaron Watts - Deutsche Bank AG, Research Division

So of course, I'll pick probably the best example of success with day-and-date releasing and to arbitrage [indiscernible] last year, do you expect to see more day-and-date releases? Do you think it's more of a niche product? And maybe you can even talk about arbitrage. Do think that the fact that it did I think almost twice as much at home on VOD as it did in the theaters, is that a concern for you?

Amy E. Miles

I would also have the perspective that it did more in the home because they left money on the table from having a wider theatrical release. That's always going to be my perspective. When movies are shown day and date, they're not shown on Regal screens. So other exhibitors take that same approach. And so from that perspective, a day-and-date release is going to have limited access and limited exposure from a theatrical perspective. So my perspective is always going to be while that movie you could argue was successful with those financial numbers, I think they would've done better to have -- if the movie was good, to have a wider theatrical release. So success is relative.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. Anybody want to jump in with a question or I can keep going? Right up hear in front.

Unknown Analyst

Yes, I think I heard you say you're pursuing both expansion of your own large-screen format and IMAX. Can you say under which circumstances you would do which?

David H. Ownby

Sure. If you -- just at a high level, I think given the choice in that right-sized market, we would always prefer to have an IMAX screen. But let's be clear that the IMAX economics rely heavily on incremental attendees to produce a good return, and so you need an appropriately sized market to make an IMAX screen work. A lot of those markets are already covered by IMAX screens. And remember, IMAX operates with the geographic exclusivity model. So sometimes when we go into those markets, we're -- we don't have access to an IMAX screen because someone else always has the right to that screen there, already has the right to that screen. So again, given the choice in the right-sized market, we would always choose IMAX. But there are lots of situations where either we don't have that choice or the market is not the right size, and those are great opportunities for us to use our RPX brand. And the RPX brand doesn't necessarily rely on incremental attendees to generate the return. It relies much more simply on taking an existing customer and moving them up to a higher price point.

Aaron Watts - Deutsche Bank AG, Research Division

And David, can you just remind us where you're at on a percent of screens that are digital now, percent of screens that are 3D?

David H. Ownby

We're essentially fully digital. There's a few theaters that have short lease terms left that we've elected not to convert. There's just a handful of Great Escape's theaters that we need to get converted here early this year. But for all practical purposes, we're fully digital. And we just kind of stayed around that 40% of our screen count, give or take, 2,700 screens or so are 3D-capable.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. And do you feel that the 3D product has kind of stabilized now after an initial spike then have come down off that? Where are we at in kind of the trajectory for 3D?

David H. Ownby

The numbers will continue to -- you'll see quarterly numbers a lot to fluctuate somewhere between maybe 12% or 13% of the box office. Up to as high as 25% of the box office is in a premium format. I'm including IMAX and RPX and 3D altogether there. But if you look on an annual basis in the post-Avatar period, so post 2009, what you've seen is that the premium formats have evolved into a very stable part of our business. In each one of those years since 2009, the box office has been plus or minus 20% premium ticket sales. And that's really how we view that world going forward. We don't see any drivers in the near term that's going to drive that number up to 35% of box office, but nor do we see any drivers that are going to drive it down to 10% either.

Aaron Watts - Deutsche Bank AG, Research Division

Anybody else who want to -- okay.

Unknown Analyst

We've talked about this before, but just an update with so many of the big-budget films and how they will be made based on extending franchises, has that changed at all the relationship when you're negotiating when the film is Avatar 3, Avatar 4 versus just a new start?

Amy E. Miles

No, over time, we have evolved to where we -- a model where we were negotiating with studios more on an annual expectation of box office with pay per performance-type scales. And the industry has just moved in that direction over these past couple years. So I wouldn't anticipate any changes to that over the next couple years.

Unknown Analyst

And that's across all studios or just the major studios?

Amy E. Miles

Substantially all.

Aaron Watts - Deutsche Bank AG, Research Division

Maybe just as a follow-up on the studio line. How about the number of films, can you talk about actual production number coming out of the studios and the ebbs and flows of what that means for you?

Amy E. Miles

I mean, you hear a lot of different points in time about the studios cutting back production. Some of that, remember, we took advantage of the model when we formed Open Road, and that wasn't necessarily that the studios were cutting back production. But when they were deciding where to allocate their resources, both with personnel and marketing support, they were gearing those resources more to these high-dollar -- high-grossing franchise and blockbuster films. And what that did is that left a gap in the marketplace, where some of the smaller budget films were getting made, they were pretty produced, getting financed, they just weren't finding theatrical distribution because, again, the studios were putting their resources where it made the most sense for their respective companies. So that allowed Regal and AMC to form a partnership, where we could take advantage of that what I'm just going to call distribution gap in the marketplace. We could use our marketing resources to help support those films. We could use the access to our screens, which we have a lot of between the 2 of us, to help support Open Road. So part of that change in the studio environment gave us the opportunity, again, to capitalize with respect to Open Road. Now for your direct question about number of films, every year, the box office is generated by, give or take, 100 to 125 films. That generates the majority of the box office dollars, and that's really not changed that much over the past 5 or 6 years. And again, when you think about a landscape where 400-or-so films are made, and then how many actually find their way to theatrical, some of that production downsizing doesn't really impact the theatrical side of the business.

Aaron Watts - Deutsche Bank AG, Research Division

And you mentioned the Open Road in that answer. Can you maybe give us your thoughts on the track record thus far and maybe refresh on what your investment was and where you see that kind of feeling after that and, going forward, the number films you might see produced out of that entity distributed?

David H. Ownby

Sure. As Amy mentioned, Open Road is a joint venture between AMC and Regal, and we initially invested $20 million in the venture. We have made a commitment for an additional $10 million, if they need it. Certainly seems like at this point they may not need it, but we have made that commitment, if necessary. To date, Open Road has released 9 films. Those 9 films have collectively generated about $250 million in box office revenue. And as a group, those films will be largely -- will be nicely profitable for Open Road. They do follow this film accounting rules, so the -- that's one of the rare instances where the accounting profit shown is not -- it doesn't necessarily match the economic profit, but it will over time, it just doesn't at this particular point in time. But those films will be nicely profitable for Open Road. We've been extremely pleased with their eye for content. They're certainly -- like any studio, they're not batting a thousand, but they have seemed to have a good eye for content. And they have a very good sense of what deal to make for which film, which has helped them be nicely profitable to this point. We would expect -- Open Road released 6 films in 2012. We're expecting them to release approximately 8 to 10 on a -- per year on a go-forward basis.

Aaron Watts - Deutsche Bank AG, Research Division

And as you said, self-sufficient individual [ph]?

David H. Ownby

Yes, that's correct.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. I have one more question, and I'll shift gears over to ticket prices, where you're talking about the premium formats. Can you just talk about what you're feeling now in terms of sensitivity to that? And do you think that the kind of historical average, 3%, 4% increases in the core 2D price is sustainable?

David H. Ownby

Yes, we've -- as you mentioned, we've been able to, historically, over a long period of time, kind of raise our ticket prices more or less in line with inflation kind of in that 3% to 4% range. And certainly, we feel good. And to be fair, we didn't get a benefit in the past few years from the kind of the ramp-up of the premium format. So it was a little bit higher than that for a couple years, particularly 2010, 2011 there -- I'm sorry, 2009 and 2010. But going forward, we feel very good about our ability to continue to raise prices kind of in line with inflation without impacting attendance. To be fair, we don't think we can run out tomorrow and raise the price of our tickets by 10% or 12% without impacting attendance. On the flip side, we're not certain that if we lower the price by 10% or 12% that we would have a meaningful impact on attendance at a positive fashion. But we do think we can continue to stay within those normal historical ranges without impacting attendance at our locations. And then one thing I always like to point out about our ticket prices, and this many of you who live in large cities, but we believe fundamentally that moviegoing remains a very cheap form of out-of-home entertainment. In 2012, about 2/3 of the tickets that we sold at our theaters cost $10 or less.

Amy E. Miles

And we like the business model, too, today that we've created where, again, customer experience is why we're here. And what we've been able to do as a company, as an industry, is to offer a myriad of options to our consumer. And I think that's going to help us maintain and protect and as we go forward, raise our ticket prices going forward. If you want to see the movie in 3D or 2D, IMAX, RPX, we will provide those options for you as a consumer. We're giving the customer a lot more choice today. And that's with the backdrop of a lot of convenient show times that 5 or 6 years ago would not be possible. So that's great for us from an industry and a customer experience perspective. And again, if you're a customer that's more from a discount perspective, we have matinée pricing, we have discount days. So what we are trying to do is provide a wide range of experiences and appropriate price points for those experiences to attract all our customers going forward.

Aaron Watts - Deutsche Bank AG, Research Division

As I think about even through when we saw larger spikes in ticket prices because of the premium introduction of 3D, for instance, you still had nice growth on the concession side, concession per patron, which obviously is very important for your bottom line. Do you think it can continue to grow that category over the next couple years?

David H. Ownby

Yes, virtually [ph] really the same math. Again, I don't think we can do anything outrageous, but I do think we can continue to raise our concession per patron in that normal historical range of 2% to 3%. Fortunately, over the last year, 1.5 years, we've been able to do that really without raising prices. We've actually seen over the last couple of years an increase in both our volume on both our popcorn and our beverage, our 2 key categories, in addition to the impact that we've had from our expanded food menu.

Aaron Watts - Deutsche Bank AG, Research Division

All right. Okay. Anybody want to finish off?

Unknown Analyst

In the market I'm in, there's 3 what I'd call full-service theaters that you can get a meal, and alcoholic beverages are sold. Are you guys looking at anything like that?

Amy E. Miles

We operate 6 today. They're branded Cinebarre. So we'll look for which a lot of times are very successful at niche market places. So we'll continue to expand in the Cinebarre areas, that we're marrying that strategy with our expanded menu strategy that we have in a lot of our I'll just call them core traditional theaters. But you will continue to see us pursue opportunities in both. But we operate 6 of those today pretty spread throughout the United States.

Aaron Watts - Deutsche Bank AG, Research Division

Is the liquor license a big issue?

Amy E. Miles

In a lot of jurisdictions, it is.

Aaron Watts - Deutsche Bank AG, Research Division

Okay. All right, we're about out of time, but thank you guys. That was great.

Amy E. Miles

Thank you.

David H. Ownby

Thanks, Aaron.

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