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The Marcus Corporation (NYSE:MCS)

Q2 2010 Earnings Call

July 22, 2010 11:30 am ET

Executives

Doug Neis - CFO and Treasurer

Greg Marcus - President and CEO

Analysts

Marla Backer - Hudson Square

David Loeb - Baird

Herb Buchbinder - Wells Fargo Advisors

Operator

At this time I would like to turn the program over to Mr. Neis for his opening remarks. Please go ahead, sir.

Douglas Neis

Well thank you and welcome to our fiscal 2010 fourth quarter and yearend conference call. As usual I need to begin by staying to the plan making a number of forward-looking statements on our call today. Forward-looking statements 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, some product expected to be made available to us in the future, expectations about the future trends in the business group in 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 lines on earning 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 and including the risk factors section of our 10-K and 10-Q filings which can be obtained from the SEC or the Company. We also post our Regulation G disclosure when applicable on our website at www.marcuscorp.com.

So with that behind let us talk about our fiscal 2010 fourth quarter and yearend results. We are certainly pleased with the results we reported this morning. The positive trends in our hotels and resorts business continued resulting in substantial year-over-year improvement in that division and even though our theatre business was essentially even with last year during the fourth quarter. Fiscal 2010 still represented our second straight year of record revenues and operating income from this division.

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

I do want to remind you that for the full year, however that we have a significant variation in the investment income line because of a one time investment loss recorded last year that we've described in detail before. Meanwhile our interest expense was down another $258,000 during our fiscal 2010 fourth quarter compared to the prior year, at the end of the year down over $2.7 million due to reduced filings and lower short-term interest rates.

We were able to fund our fiscal 2010 capital expenditures out of operating cash flow eliminating a need for additional incremental debt during the year. Filing an event that would require significantly more borrowings during fiscal 2011 and currently plan such further acquisitions or significant share repurchase. We currently believe our interest expense will likely be at a similar level during fiscal 2011, assuming short term interest rates don't change dramatically.

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

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

Our effective income tax rate for fiscal 2010 ended up at a slightly lower 36.1%, compared to 37.1% last year with our quarterly rates lower still due to adjustment to our full year rates that is primarily to a decrease in our liability for unrecognized tax benefits as a result of overlaps of the applicable statute of limitations during fiscal 2010.

And finally, our fourth quarter results were not impacted by these unusual items, they all occurred in earlier quarters. I do want to remind you of the three unusual items that impacted our full year fiscal 2010 operating income and net earnings as we referenced in our press release, approximately $4 million or $0.08 of share of negative items related to the one-time theatre pension withdrawal liability and the impairment related to Platinum condominium units partially offset by approximately $2.4 million or about $0.05 of share of gift-card breakage income that we reported during fiscal 2010, but actually it related to fiscal 2009 and earlier.

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

As we look towards capital expenditures for fiscal 2011. We are currently estimating that our fiscal '11 capital expenditures maybe in the $40 million to $60 million range, with approximately $20 million to $30 million estimated in our theatre division and another $20 million to $30 million estimated for our hotels and resorts division.

With only about $20 million currently committed the carry over projects in normal annual maintenance capital; a substantial portion of this capital budget is either yet to be approved by investor committee or is for unidentified projects. So our actual fiscal '11 capital expenditures certainly could vary from this preliminary estimate, just as we did this past year. In addition, both divisions and acquisition strategies could impact our actual capital expenditures if the right opportunity arose during the year.

Now, before I turn the call over to Greg let me provide a few additional financial comments on our operations for the fourth quarter and fiscal year beginning with the theatres. Fourth quarter box office concession revenues were down slightly compared to last year but was still end of year with record revenues with box office revenues of 3.9% and concession revenues even with last year. Comparisons in the prior year are fairly clean from a number of screens perspective we did close released theatres with 16 screens last year, one of which was a budget theatre.

But closing these theatres had minimal impact on our comparable operating results. Total attendance at our comparable theatres decreased 5.8% for our fourth quarter despite a very strong March. For the full fiscal year 2010 our comparable total attendance was down 3% compared to the prior year the majority of which can be attributed to two particular periods. The summer weeks, when we are going up against the Dark Knight last year at the beginning of this fiscal year and the last two months of our fourth quarter when the comparable film product did not perform as well as the prior year.

And in fact our overall box office revenues still increased for the year. We attributed to the increase in our average admission price. We were up 6.2% for the quarter and ended the year up 7.7%. Premium pricing on our digital 3D effects and UltraScreens contributes a higher average admission prices once again.

Our average concession food and beverage revenues per person increased 1.9% during the fourth quarter and 3.6% for the full fiscal year. Our expanded food and beverage offerings at several of our theatres were the primary contributor to our increased average concessions per capitas. Our operating margins in this division during the fourth quarter improved slightly 17% this year compared to 16.9% last year. But we ended the year with an overall decrease in our theatre division operating margins.

We exclude the prior period gift-card income in the pension withdrawal liability that we've discussed previously. Our operating margins for this division for fiscal 2010 were 19.7% compared to 20.3% last year. The decrease can be attributed in large part to the impact of higher film costs which Greg will discuss further during his remarks.

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

As we eluded to in our press release these results were significantly better and those reported by other comparable upper upscale hotels throughout the United States during the same three months. As our comp relation with Smith Travel data for the same time period indicated nationwide increase of just under 7% for this particular hotel category. Our fiscal 2010 fourth quarter overall RevPAR increase was a result of an overall adequacy increase of 15.5 percentage points and an average daily rate decrease of 6.2%.

For all fiscal 2010, our occupancy ended the year approximately 2.5 percentage points better than last year and our average daily rate decreased 10.7%. And while this division did benefit by gift-card breakage income of approximately $400,000 during fiscal 2010, that related to prior years. I do want to remind you that our fiscal 2010 results from this division were negatively impacted by $2.6 million pretax impairment charge last quarter that actually is booked in the second quarter related to our remaining 16 owned condominium units at the Platinum Hotel and Spa in Las Vegas.

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

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

Greg Marcus

Thanks Doug. I will begin my remarks today with our theatre division. On our last call I was telling you about the great start we had to our fiscal 2010 fourth quarter, based primarily to the performance of Alice in Wonderland 3D. As we noted then we were happy to see the studios release the quality, big budget film done, what has historically been a softer box office period.

We hope they took note of the success of this film and we will show a willingness to release films of this quality during these shoulder periods of the film release calendar. Unfortunately, as it turns out in outstanding March, was followed by two months of generally underperforming film product at least compared to last year.

Resulting on a quarter it's ended up even with the prior year, the fact is in hindsight. There was not a lot of original film product those last two months as the studios relied on hundreds of sequels. Sometimes that works, sometimes not. Regardless fiscal 2010 will still go down as a record year for us, so we are certainly thankful for that.

Having said that, while we certainly are pleased, we are reporting these overall results the yield was not about challenges that would share our operating margin numbers with you and after adjusting for the unusual items our fiscal 2010 margins were down over 1.5 of percentage point. During the year we played the number one movie of all time and reported an increase in our average ticket price at nearly 8%. We would have like to bring more of that revenue increase down to our bottom line.

As I discussed last quarter, effective margins went down can be attributed primarily to what has always been one of our primary challenges in this business, our film costs. We have seen our film costs creep up in past year or so, and we have expressed our concern regarding this development to our studio partners. We have made and continue to make a significant investment in our movie theatres for the propose of exhibiting their product, and they must allow us to make a fair return in investment.

Now as I touched on briefly last quarter, the mix of films this year contributed significantly to this rising cost. As the larger blockbuster films historically have a higher percentage film cost the middle market or lower market films. During fiscal 2010, our top 15 films accounted for 42% of our total box office compared to the 32% that our top 15 films from last year represented of our total.

This dramatically top heavy film line is not conducive to lower film costs. Our goal for fiscal 2011 is to reverse this trend in margins primarily by reducing our film costs, increasing our ancillary revenues and continuing to increase our per capital revenues as well as our continued visual in focus on all our operating expenses.

As Doug shared with you we saw a sizable increase in our per capital admission revenues during fiscal 2010 doing March part to the impact of digital 3D films. We played 15 3D films on our screens during fiscal 2010 compared to eight 3D films during the prior year. And with nearly 30 3D films currently scheduled for release during fiscal 2011 including such potential hits; as Megamind, Tangled, Yogi Bear, Tron and the next, Harry Potter and The Chronicle or Narnia films. The potential for additional per capital revenues certainly exist. As our press release notes, we will also have more 3D screens available to us to play these films in fiscal 2011. As we made additional investments in this technology during our first quarter, these investments included adding 3D to eight of our UltraScreens further enhancing this top performing large street format for us.

And I love to take this opportunity in the call to make my plug for this new format. We call it Excel 3D and it's spectacular, I have to make Toy Story on the Excel, the theater I go to and on that 70 foot screen you get presentation is unbelievable. You have to go see it if you get a chance, it's bigger than IMAX, the brightness is great, it is absolutely the best way to see a movie. So please, come and visit us.

Shifting gears, there is always past to be something in this business to keep from the up and right. And recently it has been the often talk about separated windows of windows. In editorial I penned for the Hollywood reporter that was published on Tuesday.

I related my story of a recent trip to the grocery store, where I saw Johnny Depp. He was dressed as the Mad Hatter and there he was in the red box machine available for a dollar, just three months or so after the release of this film in our theatres. And all I could think of it at that time was, what a shame it was, that this wonderful movie in the theatres 90 days ago. But the big premium for 3D was now being so horribly devalued. That can't be what the studious really want. Alice in Wonderland for a block during 90 days later, it doesn't make a lot of sense to me. And now there's talk of shortening the theatrical release window to a total of 30 to 60 days for a new premium video on demand platform. And our humble opinion, this makes no sense and is not the best long term interest of the distributors.

Surprise it to say that I could probably devote the rest of this conference call on this topic as I am very passionate about the issue. I won't take up anymore of your time but as I mentioned that how a reporter just this week published the opinion letter I wrote. In the letter I layout my reasons for why I believe the car windows need to be maintained and you can see it if you go to their website www.thr.com.

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

Looking ahead, our capital plan for this division include continued review of opportunities to build additional new locations including the recently announced plans to replace our existing Eastgate theatre in Madison, Wisconsin with the new state of the art theatre and an entertainment complex nearby Sun Prairie. We are always looking to acquire potential theatre sites to facilitate our long-term growth and we will also continue to consider additional potential acquisitions as opportunities arise.

Finally, let me give you a brief update on digital cinema. Anticipated broad roll out of digital cinema in 12 theatres as well as the rest of the industry was delayed during fiscal 2010 due to the increased difficulties of proposed third party implementers to obtain the necessary financing during the current economic climate.

During the latter half of fiscal 2010, progress was made regarding financing and system pricing and an expected industry wide roll out is now expected to occur over the course of several years. We currently expect to begin a broader roll out of digital projection technology in our circuit beginning in fiscal 2011. If everything comes together as we hope, the actual cost that we may incur when such a roll out begins, I get to be determined. But it is our expectation that the majority of the cost of the digital cinema roll-out will be paid-for by the film studios, through the payment of virtual print fees to us or a selected digital cinema implementation partner. Our goals include delivering an improved film presentation to our guests, increasing schedule and flexibility as well as maximizing the opportunities for alternate programming that maybe available with this technology.

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

Now it's not surprising that as we continue to lap the time period when revenues were declining last year. We would see our RevPAR trends continue to improve. But what I found most encouraging was the improvement in our trends compared to fiscal 2008, two years ago. During our first three quarters of fiscal 2010, our RevPAR was down 22%, 21% and 19% respectively compared to the same quarter two years prior. But in our recently completed fourth quarter, our RevPAR was down single digits compared to fiscal 2008, 8.2% to be exact.

No one in our industry has suggested that we are going to get all the way back to fiscal 2008 numbers in the very near future but this is the first quarter where we have made measurable progress towards that end. And as I feel back, giving you a little bit more on our fourth quarter results something else jumps out of me. We have often pointed the strength of our balance sheet as one of our competitive advantages. It allows us to make investments during a time when others may have been unable or afraid to do so.

This is clearly paid off for us, as we are seeing benefit we are seeing positive results in the hotels where we have made capital investments over the last few years. As you've heard some of the occupancy linearity that Doug shared with you, the improvements we are now experiencing and need the company increased occupancy at expense of average rate.

As we talked about last quarter, this is very typical for the hotel business as this is a recovery period. At this point the industry is buying demand with lower rates and the cycle won't complete itself until ADR margins return to prior levels. Of course right know no one really knows how long that will take. Our challenges operators, they try to control costs while we were in this upward portion of the cycle. As occupancy recovers first it becomes increasingly difficult to not add some level of cost, take care of the increased number of debt. So as said more plainly, we have more guests paying less. Obviously this challenges our margins. That is why operating margins don't recover until they begin to recover. In the short-term however, we believe they trade office worth it. Particularly of properties like the Grand Geneva where the ancillary spend by a typical guest more than makes up for the decreased average rate.

I am also pleased to tell you the deposit trends that we've been seeing and continued it into the first-half of our summer. We don't necessarily think that we will be reporting double-digit RevPAR increases every month but we continue to be up over last year. And our group booking pace is being running ahead of last year, another encouraging sign. If I include June in my comments we have now had four consecutive months of RevPAR increases and five consecutive months where we have seen our overall RevPAR index, the sign of relative market share increase as well.

Having shared all this positive news, it still goes without saying the hotel business remains joint at the hip of the overall economic environment. While these current trends continue we will depend largely upon whether the economy continues to show signs of gradual improvement. I suspect that we'll still have our share challenges ahead of us, but I am glad to have the chance to share some good news regarding our hotels and resorts business today after seven consecutive quarters that reviews results in this division.

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

As I wrap up our prepared comments, I will be remissive, I didn't know that as our press release indicated, our great balance sheet allow us to repurchase some share last month pursuing to an existing board authorization whereas still leaving us plenty of room to consider growth opportunities in both of our businesses. We will continue to manage our balance sheet very carefully in the future. But we are committed to executing the strategies necessary to provide value to our shareholders over the long-term.

We're celebrating our 75th anniversary on November 1st something we share with the selected few companies and we don't believe this is an accident. We built the solid track record by emphasizing the defining stream incurred as highlight before. Thank you for your continued support and we have navigated to these unprecedented times and we are confident that we are well positioned to continue to deliver our commitment to shareholder value with the years ahead.

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

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of [David Loeb], please proceed.

Unidentified Analyst

Good morning I promise I only have two and an unlimited number of follow-ups for this round. It was actually very thorough presentation, I appreciate that and I won't get you going on the release window. On the theatre side of the business given the movie line up and how tough the comps are at least through the first three quarters of the year. Do you see any likelihood of being able to have record earnings again this year? The number of screens hasn't really changed, that's in an acquisition. Do you think you can match last year's results?

Unidentified Company Representative

I am sorry David, I left my crystal ball over in my office, I mean Doug's office right now. This is the nature of this business; we don't apply lots of leverage in this business because you just don't know who is going to show up. You never know when you get a surprise, you never know, Avatar was great but it was great, obviously a very expensive film for us we talked about that. So I don't know I can't tell you I wish I could.

Unidentified Analyst

But it's got to be tough. You are comparing it from really huge films, huge but expensive?

Unidentified Company Representative

Well yeah, and that's so at sometime again, as we pointed out, it was a very top heavy lineup this past year and that was a pretty dramatic change and then again the top 15 being 10 points more I think I looked the numbers were. So we are certainly shown in the past and that there the record year-to-year before, when we didn't have a top heavy line up so the fact is that you just need with a lower film cost as Avatar was a very expensive film with a decent quantity of good pictures, you don't have to have a number one picture of all time, as you will never know.

Unidentified Analyst

True. That makes sense, on the hotel side the numbers where really quite impressive. I am wondering if you can give us a little color on a couple of areas when the geographic diversity that you've got three hotels in downtown Milwaukee, more or like I guess the exurbs of Milwaukee. The other markets performing as well as Milwaukee and what do you see as the prospect and when I am going on the prospects part is, does this looks like a breakout above kind of two year comparison line for your hotels?

Doug Neis

We don't have a specific detail but I know it s a pretty broad based recovery, it's across the portfolio. I wouldn't tell you that we have an imbalance in any one market such as say Milwaukee is causing the cleanup of (inaudible) that's not the case. The thing that I am careful about at this point, the reason I don't want to make a lot of judgments as to where we are going as the macro economic piece of what's going to happen in the economy. If the economy slows down, that's going to be a challenge to our business. If the employment doesn't pickup, because that sort of the employment is the next thing that has sort of pickup for us to get another booster rocket they had.

But it's hard right now because we are in our busy season, so we are getting better compression right now, I don't know what happens when the air comes out of the market. We were in a very deep lake and then as the water got drained out, we saw that we are swimming naked well. There is water but I can't go for a kitty pool right now or really get back to the big pool. So let's see what happens as we move from the year and then we get to acquire period. And the other thing I would add David I would just echo what Greg had said earlier in his prepared remarks was just that, certainly in general if you look at our full year results for fiscal 2010, we pretty much tracked the market. We tracked Smith Travel data et cetera.

This quarter we exceeded and I don't know if that will hold or not but I will echo what Greg said earlier is that what did set up the part from mother it was continuing to make investments in some cases and the customers love what we've done at couple of these spaces where we put the significant dollars and if we have any chance to breakout certainly that's going to help us.

Unidentified Analyst

And I guess kind of on that score as you are looking in your business, are you seeing a pick up in group in this last quarter or is it more transient?

Douglas Neis

The transient, it's still been the strongest no question about it. I think since travel chart that showed the last three years and I think transient demand that rooms were up compared to these last couple of years. It goes back two years ago but at a price as you know, the average rate on that transient business is significantly lower than it was in two years ago. But to answer your question, group was up. So the group business was definite and booking space continues to be up.

Unidentified Analyst

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

Douglas Neis

Maybe I could give you David is that, it's a little negative encouragement or is that starting to see a couple of the groups that haven't done a lot of traveling starting to show some signs of willingness to give that offer again.

Greg Marcus

And even the pharma is back.

Douglas Neis

The pharmaceutical and even maybe just slightly the financial's old debt. So we've seen a couple of times as there are groups that were really laying starting to maybe be out there with the comp. But otherwise it's been kind of consistent with the other ones.

Unidentified Analyst

Okay that makes sense, hopefully its some of my dear colleagues as well.

Greg Marcus

(Inaudible)

Unidentified Analyst

Okay. That's it for this round and I deserve the right to come back in.

Operator

(Operator Instructions) Our next question comes from the line of Marla Backer of Hudson Square, please proceed.

Marla Backer - Hudson Square

Thank you, hi guys.

Douglas Neis

How are you doing?

Marla Backer - Hudson Square

Good thanks, so on the theatre side you talked a little bit about the pending digital upgrade, do you think that there is a risk that as theatre operators including markets continue to wait to select which equipment and which integrator. Do you think there is a risk that the VPF the studious will decline?

Greg Marcus

I think there is a risk, but on the other hand I don't see that making a lot of sense, I mean we don't have a lot at this point. We don't have a lot of financial incentive to do digital; the alternative content is not huge. At this point maybe one day we will be better. But mostly on the comp the real beneficiaries of the studios in getting rid of 1100 bucks of a copy that they unroll when they stopped doing friends and we got a relatively concentrative basis of theatres and I actually making a bad back but it would seem to be very counter intuitive and counter productive to say we are markets. If you don't convert over and take a big financial lift, we are not going to serve you. That doesn't make a lot of sense to me. So were three the pressure on the VPS? Sure there will be pressure but I like to think that (inaudible) we are working on it now we are not far off from it. The only day the real beneficiaries of the studios we may get to benefit but we don't get costs, who knows I mean the maintenance costs and that you can show me a trial, you had over 10 years now I would love to see it because there aren't too many that people are still using, and the projector that we've been using there are 50-60 years old. The irony is as I said before is, the consumer when movies use to play 6, 8, 12, 14 weeks they come see scratched films now the great benefit of digital of the pristine copy, please play off so quickly now after a month they are gone and you don't even have that problem.

Marla Backer - Hudson Square

Well you have said in the past like that you do see the economic benefit to the exhibitor of 3D so that's still consistent with what you are thinking now, is it not?

Douglas Neis

Yeah, we just have evidenced by the investments we just made in the past quarter. We certainly have been able to making those numbers works and just slightly what great said I mean we are actively working with the ultimate solution as we are going to follow out and so there could be and we did. There could be come pressure on VPS at some days in the future. Now we anticipate having a solution as we indicated, instead of having a solution now we will be talking about in this fiscal year.

Operator

Our next question comes from the line David Loeb of Baird. Please proceed.

David Loeb - Baird

I just wanted to ask my perennial acquisition market question. It seems like it's a little more timely now on both sides of the business. I am curious as your view of what that market is like and what's the trend, I know that in the theatre side it tends to be more family succession kind of motivations that determine the timing but when things are good like they are now does that make the elder's statement of the families want to hang on a little longer because its fun?

Unidentified Company Representative

I think they probably showed whether it's less, people who feel there is a pressure. I think the important thing for us though just always is the point I always like to make is we'd here discipline when we look at the numbers. This is the business that as you said (inaudible) we need to remember that. What I do know that overtime it sort of have a reasonable expectation. In the short term, it's a voting machine in the long run. It's a weighing machine and if the weight is good over the long term and the short term it fluctuates. So don't buy some thing of the last year's numbers. And you have to set the highest year in the history of the business, that doesn't make any sense.

David Loeb - Baird

That makes sense.

Unidentified Company Representative

We continue to look at our opportunities there continues to be things happening in the market is there and we'll just I can never say what's going to happen.

Unidentified Company Representative

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

Unidentified Company Representative

The height of these things are the timing can be this is and its not as easy just can't tell what happened there. As you said, its family that's not an institutional investors, it's a predictable pattern.

David Loeb - Baird

And I know how tough that it is institutional investors, it seems like there is a lot of money chasing only if transactions right now. What's your view of what's going on and when do you think that changes and how does that look for you guys?

Unidentified Company Representative

I think we dream it what the things that you have pointed out and you have been saying its right. Now there is not a lot out there and whether there are going to be some inflations. Soon its going to solve all the bank's problems. There is going to have to be some (inaudible) has got to have these loans are going to have to be doubled eventually.

David Loeb - Baird

That's a good answer. Any metrics that you are seeing in terms of when you are bidding what kind of pricing and how you feel about that kind of thing?

Greg Marcus

Yes, you can say it now, I won't be a bit.

Douglas Neis

I don't think if there is any single metric that we can summarize and say no. The answer would be no.

David Loeb - Baird

Okay. Great, that is really all I have thank you very much for all of this.

Operator

Our next question comes from the line of Herb Buchbinder of Wells Fargo Advisors, please proceed.

Herb Buchbinder - Wells Fargo Advisors

Hi, guys can you give me just a little status report of the Vegas property and if there is much risk of additional impairment charges?

Douglas Neis

Operationally Vegas, the old Vegas was better this year. We think we've got the operations in better shape; the market itself still is nothing to write home about. The market still is so very challenging. As you know a lot of additional rooms came into that market about half a way through the year as well. So and the remaining condominium units that we have, we've taken ahead, we are not even marketing those right now. We are just sitting on those. We don't see any need to hold the fire a sale for those units and frankly that's all the only transactional stuff that's going with those units for the most part right now tends to be some foreclosure type sales and things on those lines. So again I don't have a crystal ball either, but the fact is that working chances just so write that out. This is always going to look like it has the last two years. The other specific property is the [Electric Media Property], to put some money into that and I think you imply which is starting to get a return on it. Just give us a little status of that property and bookings and how it looks going forward.

Greg Marcus

Herb, I will just say that we got that the customer response to what we've done has been very positive. What we don't do is, with only eight properties from a competitive standpoint we are not going to talk about individual hotels, numbers or metrics, because it doesn't make sense for us to do that. But we are very happy with what we've done down there and the customer response is early. We just finished it this past year but the customer response has been very positive and so the groups that are coming and seeing and are liking what we did that so we are just happy with what we have done so far.

Herb Buchbinder - Wells Fargo Advisors

Okay the last thing, in terms of many sleeper movies come out but the kids who arrive probably not a big money maker but it looks like to be pretty good and any other sleepers out there that you might comment on for the rest of the summer?

Douglas Neis

Well I think we highlighted in the press release, the ones that everyone expects to do the bigger amount, larger amount of business including Salt this weekend and Other Guys with Will Ferrell picturing in August and Julia Roberts picturing in August as well Eat, Pray & Love, they seem to be the industry consensus on maybe the bigger ones but you look got a couple of 3D pictures still coming out as well and with Cats and Dogs and Step Up and we will see.

Greg Marcus

Think about sleepers here, yes? By definition we won't know it's over there, yeah.

Operator

Thank you. At this time it appears there are no other questions. I'd like to turn the call back to Mr. Neis for additional and closing comments, please proceed.

Doug Neis

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

Operator

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

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Source: The Marcus Corporation Q2 2010 Earnings Call Transcript
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