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The Marcus Corporation (NYSE:MCS)

Shareholder Analyst Call

October 11, 2011 11:00 ET

Executives

Steve Marcus – Chairman

Tom Kissinger – Vice President, General Counsel and Secretary

Greg Marcus – President and Chief Executive Officer

Bud Selig – Commissioner, Major League Baseball

Bruce Olson – Senior Vice President, Marcus Corporation and President, Marcus Theatres

Bill Otto – President, Marcus Hotels and Resorts

Doug Neis – Chief Financial Officer and Treasurer

Steve Marcus – Chairman

Good morning everybody. It seems I have a piano accompanying us here this morning. I am Steve Marcus, Chairman of the Marcus Corporation and I’d like to welcome you all to our 2011 Annual Shareholders’ Meeting. Welcome also to our shareholders who are listening to the live webcast of today’s meeting on the Internet.

I’d like to begin the meeting by introducing our Executive Management team. They are Greg Marcus, President and Chief Executive Officer. Serving with Greg on our Executive Committee are Tom Kissinger, Vice President, General Counsel and Secretary; Bruce Olson, Senior Vice President of the Marcus Corporation and President of Marcus Theatres; Bill Otto, President of Marcus Hotels and Resorts; Doug Neis, Chief Financial Officer and Treasurer; and Jane Durment, Chief Information Officer. Karen Spindler who is our Director of Corporate Human Resources is out of town on business today and as a result could not be with us. I would also like to introduce the newest member of our Executive Committee, Bill Reynolds, Senior Managing Director of our new hotel investment business. Bill?

As you will hear later, our outstanding management team has done an excellent job of guiding us through the challenges and the opportunities of the past year while at the same time positioning us for the future. That now brings us to the business portions of the meeting. All shareholders present should have submitted their proxies prior to entering the meeting. If there are any shareholders present who have not yet voted or who have previously submitted a proxy and not want to revoke the proxy, please go to the registration desk where you may either vote and/or revoke your proxy.

I’ll now call on Tom Kissinger to report on the mailing of meeting notices, the presence of a quorum and other necessary legalities.

Tom Kissinger – Vice President, General Counsel and Secretary

Notices of this Annual Meeting together with proxy statements, proxy cards and annual report were mailed on September 2, 2011 to all holders of record of our common and class B common shares as of August 5, 2011. Based on proxies we see prior to the meeting, a quorum is present for all purposes at this meeting and is represented by 90.6% of the common shares and 99.5% of the class B common shares for combined total of 97.8% of all eligible votes.

Before we move ahead Steve, I’d like to also remind our shareholders and guests that as we share information with you today, we will be talking about our plans and expectations for the future. The Securities and Exchange Commission defines these plans as forward-looking statements that means I am obligated to inform you that our actual results could differ materially from those projected and then additional information about our plans as well as factors, risks, and other uncertainties which may impact our expectations, future results of operations, or financial conditions are included in the Risk Factors section of our 10-K and 10-Q filings. Back to you, Steve.

Steve Marcus – Chairman

Thank you very much, Tom. We have five items on the agenda today. First is the election of our Board of Directors. I’d like to introduce the Board to you now. And I will ask the board members to spend during their introduction.

They are Greg Marcus, our President and Chief Executive Officer. Diane Marcus Gershowitz, an Investor and Real Estate Manager who lives in Chicago, and as many of you know, Diana is my sister and that she serves also on the Finance Committee and gives me a lot of valuable advice as we go along. Jack McKeithan Jr., Chairman and Chief Executive Officer of Tamarack Petroleum Company; Jack serves the Audit Committee. He also serves on the Compensation Committee. Bud Selig, Commissioner of Major League Baseball; Bud serves on the Corporate Governance and Nominating Committee as well as the Finance Committee and I think Bud has not yet arrived, but I am sure will be here soon.

Tim Hoeksema, retired Chairman, President and CEO of Midwest Air Group Incorporated. Tim chairs the Compensation Committee and also serves on the Corporate Governance and Nominating Committee. Philip Milstein, Principal of Ogden CAP Properties, LLC in New York City. Phil serves on three committees, the Audit Committee, the Compensation Committee, and the Finance Committee. Bronson Haase, retired President of Pabst Farms Equity Ventures. Bronson chairs our Corporate Governance and Nominating Committee and also serves on the Compensation Committee.

Jim Ericson retired Chairman, President and CEO of Northwestern Mutual Life Insurance Company. Jim serves on two committees Audit and Finance. Bruce Olson, Senior Vice President of the Marcus Corporation and President of Marcus Theatres. And I am the final Board nominee.

I’d like to take this opportunity to thank our board for the valuable insight that they provide to me and to our management team throughout the year. And everything that they do, our board is committed to representing you our shareholders through high standards and good corporate governance. As a part of those high standards are audit, compensation, and corporate governance and nominating committees are comprised entirely of outside directors.

Our board members are highly respected leaders with a broad range of experience in diverse businesses. We are very, very fortunate to have such an outstanding board. And I believe that as we’ve all watched the last few years unfold, you can appreciate the valuable guidance that they have been providing as we have been going along, so that we by and large of sidestep, lots of the problems that many other companies have encountered. So, on behalf of all of our shareholders, I want to extend this sincere thank you to our directors for their commitment and for their support.

The second item is to consider an advisory vote on the compensation of our named executive officers. The details of our executive compensation program are included in the proxy statement. This program is designed to foster an ownership mentality and entrepreneurial spirit in our management team. This is an advisory vote that will not be finding on our board. However, the compensation committee will consider the outcome of the vote when evaluating our compensation program.

The third item of business is to consider an advisory vote on the frequency of the vote on executive compensation. In essence, we are asking how often we should submit to your shareholders the non-binding advisory vote on executive compensation. The options are every year, every two years, or every three years.

The board is recommending one year, because we believe that an annual vote will promote the best governance practices and will present the views of the shareholders to the compensation committee each and every year. This is also a non-binding vote that will be considered by the board in determining the frequency of future advisory votes on executive compensation.

The next item of business is approval of the amendment and restatement of the Marcus Corporation 2004 Equity Incentive Plan. The details of the proposed, amended, and restated plan are included in the proxy statement. To summarize, the changes include increasing the number of shares authorized for grant and other changes related to the terms of the plan.

That brings us to the final item that we are considering today, which is to ratify the selection of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm for fiscal fiscal 2012.

I’ll now ask the Secretary to announce the results of the voting on these five items.

Tom Kissinger – Vice President, General Counsel and Secretary

Mr. Chairman regarding the election of the Board of Directors based on the proxies delivered by the company’s shareholders prior to the meeting, each director on the nominated slate receive no less than 100 million, 132,000 or 144 votes. This means that at least 93.7% of the votes cast was in favor of the reelection of each of the directors that the entire slate of directors has been elected to serve until the next annual meeting.

On an advisory vote to approve the compensation of our named executive officers, 98.8% of the votes were cast in favor of the executive compensation program. And on the desired frequency of the advisory shareholder vote on executive compensation, 97.5% of the votes were cast in favor of the annual advisory votes. On the (indiscernible) amendment and restatement of the Marcus Corporation 2004 Equity Incentive Plan, 98.6% of the votes cast were cast in favor of the amendment and restatement. And finally on the ratification of the selection of Deloitte & Touche as our Independent Registered Public Accounting Firm for fiscal 2012, 99.96% of the votes were cast in favor of the ratification.

Steve Marcus – Chairman

Thank you very much, Tom. That completes the business portion of the meeting and I will now join the official business meeting, so that we can continue with an update on our operations. The theme of today’s presentation is the Marcus experience. We selected this title for the annual report and for today’s meeting, because it says a lot about how we got to where we are today, how we are going to grow the company going forward.

In both our movie theater and hotel divisions, the overriding focus of our managers and our associates is the guest experience. This is very important because when you come right down to it, all our guests take with them when they leave our properties is the memory of their visit. We are dedicated to making that memory the best that can be. But there is another type of experience it’s also one of our strength. And that’s the experience of our management team.

Together, our executive team averages more than 20 years with the Marcus Corporation. This strong team is one of the competitive strength of our company. Our team has solid experience in our industries and in their respective operating areas plus they have had a role in shaping our growth strategies and managing our business through both good and bad economic times. To see what that means for both of our divisions and for our company as a whole, I am going to turn the program now over the Greg Marcus. Greg?

Greg Marcus – President and Chief Executive Officer

Some idea, I get this job back. Take me out. Actually before I do start, I want to take a minute, but you missed your round of applause, so we’d like to introduce our board member, Bud Selig who is here. Let’s give him a round of applause. In spite of last night’s game, you got a round of applause.

Bud Selig – Commissioner, Major League Baseball

How did you let that happen?

Greg Marcus – President and Chief Executive Officer

Well, thank you, thanks Bug. As latter pointed out, the Marcus experience is critical to our success and when it comes to our guests, it is our associates who create those memorable experiences everyday in every property. I am really proud of our associates and the way they connect with our guests and their fellow associates on a personal level. In today’s hi-tech world, the care and concern we have for our guests and for each other sets us apart. It’s a differentiating factor that resonates with our guests and keeps them coming back time and time again.

I like to explain the opportunity in the obligation. We have to make every guest feel special with the phrase, what maybe your ordinary day can be someone’s extraordinary day. For us, it’s routine to sell movie tickets and refreshments to thousands of people every night or set a bank with tables and serve meals for hundreds of guests, but our third wedding in a weekend or even in a single night is a memory that lasts the lifetime for the bride and groom.

One of the 10 tables having breakfast in the dining room could be a sales person’s most important client. The couple on a first day buying popcorn and soda on a busy day might end up getting married, you never know, we never know. That’s why taking care of our guests can have a tremendous impact on their lives and on our company.

My grandfather always said, our associates, our greatest asset. These are wise words and I couldn’t agree more. Today you will see how the guest experience and the experience of our management team come together and how they are shaping our future.

We are going to begin with the report from each of our divisions. We will start with Bruce Olson, Senior Vice President of the Marcus Corporation and President of Marcus Theatres. He will be followed by Bill Otto, President of Marcus Hotels and Resorts. Mr. Bruce.

Bruce Olson – Senior Vice President, Marcus Corporation and President, Marcus Theatres

Thank you, Mr. Greg. Good morning everyone. In our division, the extraordinary Marcus experience that Greg spoke about was embodied nice slogan creating Magical Movie Memories for our guests and while Ben Marcus didn’t use those exact words. He did introduce this concept at his first theater in Wisconsin 76 years ago. When he said, ours is a mission to make people happy. What a pleasure to be so engaged. Ben, we have been so proud that we have become the sixth largest motion picture circuit in the United States with 684 screens, in 55 locations, in seven states. That’s an average of 12.4 screens per location.

We are leader in our industry in many ways. One, our concession sales per person and the revenues as a percent of box office receipts are the best in the United States. We have an industry leading cash flow margin 27% and the highest percentage of stadium seating among our peers. Plus we are still creating Magical Movie Memories. We are competitively niche by any of the core front of the industry trends in both amenities and technology.

Let’s start with amenities. Last year we expanded our in-theater dining concept and renamed it Big Screen Bistro. This is a full-service restaurant in a movie theater setting, where your selections from expensive menu are delivered hot and fresh right to your seat by our experienced wait staff.

In May, we converted two additional auditoriums at the Majestic Theater in Brookfield to the Big Screen Bistro concept, giving us a total of three options for in-theater dining in this location. The customer response has been very, very good. We are also expanding our successful Zaffiro's Pizzeria and Bar restaurants with our second full-service location under construction right now at our Parkwood Cinema in suburban St. Cloud, Minnesota. And today, we have an announcement to make about our third full-service Zaffiro's location right in New Berlin at the Ridge Cinema. The anticipated opening date of that Zaffiro's at the Ridge is next spring.

Last year many of you enjoyed the incredible Zaffiro’s pizza at our Annual Meeting at North Shore Cinema in Mequon. And now we are very excited about two more Zaffiro’s locations coming in the very near future. We also served Zaffiro’s pizza at the Hollywood Café in Oakdale, Minnesota as well as at the Majestic in Brookfield, where we first tested the concept.

We are also going to be expanding our hot food quick service counters like the Zaffiro’s Express, where guests can pickup pizza, tasty burgers, sandwiches of concession stand and end at our Take Five concession lounges, our cocktail lounges. We are adding these features to selected theaters as we do our remodelings.

The big news on the technology front is the rollout of digital cinema across our circuit. This was completed at the end of September and now virtually all of our first-run screens across our circuit use this phenomenal new technology. There are a lot of benefits to digital cinema for both the customers and our company. First, the benefits include sharper, brighter images, greater flexibility in programming, lower operating cost for us and the ability to add more 3D screens and alternate programming events at ease.

Digital cinema will also enable us to easily add new technology enhancements as they are developed. And yesterday, you may have seen the announcement that we are branding our digital technology as MDX which stands for the Marcus Digital Xperience. The Marcus Xperience will provide not only the most per scene visual presentation, but also the very finest digital sound and acoustically perfect auditoriums.

In addition, we are offering 4K digital projection technology in 93 of our very largest auditoriums with the biggest, widest screens. And while the standard 2K digital technology is outstanding, 4K allows for even greater resolution, better definition, and superb depth in the picture. We have also expanded our number of 3D screens since last we met. Last May, we added 37 additional 3D systems to our circuit giving us a total of 103 screens with 3D capability at 44 locations in 7 states, including 85% of our ultra screens that also have XD capability and we have branded those UltraScreen XL3D.

We were among the first in the industry to offer large screen 3D, which attracted big crowds for 3D films like Rio, Transformers 3, and the wizardry of Harry Potter. Many of our guests are also enjoying alternate programming. These include concerts and sporting events and other live and pre-recorded programs that we obtain through digital networks.

A good example is the prestigious and highly popular series live at the Metropolitan Opera. Last week, we had a very special presentation when we played the 25th anniversary of Phantom of the Opera presented live from the Royal Albert Hall in London. Together with the enhanced food and beverage concepts and alternate programming achieved several important goals for us.

First, they capture additional revenues. They leverage the investment that we have in our theatre complexes and obviously they broaden our audience base with a greater degree of programming flexibility and variety. But of course the main reason people come is the CMO. Key here is to have a steady stream of good films that appeal to a wide variety of audiences.

The top pictures from Marcus Theatres in fiscal 2011 were Toy Story 3, Harry Potter and the Deathly Hallows, Twilight Saga, Eclipse, Inception, and Despicable Me. Those were all great blockbusters and good performers for us. But in total, where Marcus Theatres and the industry, there just weren’t as many quality pictures produced during fiscal 2011 as there were in the prior year, which included Avatar, I might add, which is the high grossing movie of all-time, a tough comparison.

A bright spot was the fact that we ended the fourth quarter of fiscal 2011 on a high note with increased revenues and operating income. And we continue that momentum with a record first quarter that launched the new fiscal year summer period. Our key strategies are to one, expand our geographic presence as opportunities arrive both through organic growth or acquisitions. We want to add more ultra screens at select existing locations. We want to continue to expand food and beverage concepts, including Big Screen Bistro and Zaffiro’s. We want to attract new audiences beyond traditional moviegoers through alternate programming and other technology enhancements. And last, but certainly not least is to increase our ancillary revenues such as advertising, meetings, and events.

As I mentioned, we had a great first quarter. Holiday season is also looking quite promising with the number of potential hits in the pipeline. As usual, we are going to give you a sneak peak of those highly anticipated pictures opening in November and December. Let’s run some trailers for you.

[Video Presentation]

[Inaudible] well-established film release windows reducing the time between screenings on first-run movies in motion picture theatres and the availability for video rental or purchase. While this is a concern, we remain optimistic about the future of the motion picture industry and the continued growth of our theatre division.

Marcus Theatres has never had a stronger foundation for the future growth. We are a market leader and industry leader and a strong operational and financial performer. With 76 years of growth and success behind us, we are looking forward to the opportunities ahead of us.

Thank you very much. Now I’ll turn the program over to Bill Otto, President of Marcus Hotels and Resorts. Bill?

Bill Otto – President, Marcus Hotels and Resorts

Thank you, Bruce. And on behalf of our managers and associates welcome to the InterContinental Milwaukee. Our team here about has greatest vision to make our ordinary day an extraordinary day for all of our guests and hopefully you experience that as you enter the hotel today and met many of our associates. It’s been several years since we had our last annual meeting at this hotel and we are delighted to welcome everyone back.

Fiscal 2011 was the year of improvement for Marcus Hotels and Resorts. We improved our financial performance, enhanced the Marcus Hotels experience and put pieces in place to step up our growth. I will start with where we are today and then discuss where we want to go and how we are going to get there.

Our hotel portfolio is comprised of 18 distinct and unique properties, eight are company owned and operated and we managed another 10 properties for other owners. In total, we manage approximately 4,700 rooms in nine different states and our properties range from historic downtown hotels to convention center properties and full service resorts. And we manage both independent hotels like the Pfister Hotel in Milwaukee and the Grand Geneva Resort in Lake Geneva and branded hotels that include hotels carrying the InterContinental Hilton and Starwood place.

The lodging industry and Marcus Hotels are both continuing to rebound from the downturn in the economy. The good news is that occupancy is stronger, but our average daily rate is not yet back to pre-recession levels. Leisure travel is robust and business travel and group meetings are starting to recover. We can see these trends in our fiscal 2011 results, our revenues increased 9.6% and our operating income was up whopping 370% for the year.

The key metric for us is revenue for available room or RevPAR and for Marcus Hotels we are up over 10% in 2011. We continue to outperform our peer group, which is the upper upscale segment of the lodging industry. In our peer group just putting in prospective for you includes this well-known brand name such as Westin, Hilton, Hyatt, and Marriott. Another performance measures the average daily rate, which increased thankfully in the last two quarters of the fiscal year after two years of decline.

Well, we like all of these upward trends I need to point out that we are still note factor where we were few years ago, but we are making good progress. And as I indicated we had pieces – have the pieces in place to new Marcus Hotels in the next level. One of our strategies is to grow by adding new management contracts and thanks to our strong financial position we have the ability to make equity investments or necessary and then hotels we manage.

And this is just the beginning. We have many other advantages and pursuing new management contracts. We have lots of intellectual capital that we’ve gained in the 50 years of operating hotels and investing in our own hotels and also for managing hotels for others plus we have made significant investments in building the infrastructure for our hotel business. We have a comprehensive portfolio of services that hotel owners and developers need and what to achieve their goals of increasing revenues and improving their profitability.

Our portfolio of services includes the new reservation and customer care center, direct sales and marketing programs in branded food and beverage concepts, such as our Mason Street Grill at the Pfister Hotel, our four ChopHouse Restaurants and our well spas. We also have in-house services such as accounting legal information technology and human resources that many owners do not have and we can offer to them. After that our experienced management team and I hope you can see where we are well-positioned to pursue potential growth opportunities across the United States.

At the same time, we are continuing to reinvest in our existing properties to keep them fresh and new. As part of this commitment right now, we are putting the finishing touches on a renovation at our Hotel Phillips in Kansas City. Looking ahead, we are encouraged by the increase in occupancy and the average daily rate. However, we need a positive economic environment to sustain these trends and we are watching the industry and our future bookings very closely.

One element that is also working in our favor is supply growth, which has been limited by the more stringent lending practices of banks following the downturn in the economy. Double-digit increases and occupancy on a slowly growing business is good news for those of us operating existing hotels.

In summary, Marcus Hotels is an established hotel management company. Our performance is steadily improving and we are actively pursuing growth opportunities through our management contracts. We think we are well-positioned for growth and we look forward to expanding our market share in the lodging industry. Most importantly, we continue to strive everyday to ensure that each guests’ experience in one of our hotels is extraordinary. Thank you very much.

And now, I will turn the program back to Greg Marcus.

Greg Marcus – President and Chief Executive Officer

Okay, thank you Bruce and Bill. I’d like to continue where Bill left off in discussing the growth strategies for our lodging business. Adding new management contracts is one we were planning to grow the business and other is to expand our portfolio by acquiring new hotel properties.

To facilitate this strategy, in August, we formed a new hotel investment business. The goal of this business is to acquire new properties as an investment fund sponsor, joint venture partner, or sole investor. Whenever possible, these properties will be managed by Marcus Hotels.

The new investment business is led by Bill Reynolds who you just met. Bill is a well-known hotel industry executive with many years of experience on the investment side of the industry. Bill has been on board for just two months. So, we are still in the early stages of this initiative, but we are excited about the potential this new endeavor has to help us grow our lodging business.

Another new initiative currently underway is The Corners of Brookfield. A mixed use, open-air fashion mall we are developing on the side of our former West Point theatre at I-94 and Barker Road otherwise known as Goerkes Corners. The project includes the former theatre site and an adjacent strip mall as well as the former (indiscernible) property to the east. The project that’s currently contemplated is a $100 million plus, 460,000 square foot development that is a public-private partnership between the town of Brookfield and the Marcus Corporation.

It is to be anchored by a Von Maur department store. This chain is often referred to as the Nordstrom of the Midwest. In vision to Von Maur, the project is expected to include other high-end retail stores, restaurants, and office space. As you can imagine, there are thousands of details involved in the project of this size and scope. We are continuing to move forward, but there still is a lot of work to be done before this becomes a reality. As the corners in the new hotel investment business illustrate, even though the Marcus Corporation is nearly 76 years old, we still take an entrepreneurial approach to grow.

We are continually looking at new ideas that can strengthen our position in our markets and in our industries as well as build value for our shareholders, coupling this to the financial report which will be presented by Doug Neis, our Chief Financial Officer. By the way, while you are there Doug, I will take just a moment to introduce Doug as your voted CFO of the year this year and we recognize that last week. So we will applaud the Doug for that great honor.

Doug Neis – Chief Financial Officer and Treasurer

Thank you Greg and good morning everybody. Before I begin my report, I’d also like to introduce special guest there here with us today, Professor Richard Marcus from the University of Wisconsin-Milwaukee is joining us again this year along with students from his Business Scholars finance class to study in the Marcus Corporation and I will be visiting their class this week. And while Dick is not a member of the Marcus family, he has become a very good friend. So, welcome and he is sitting, I think, back over in the corner.

In fact I just learned right before the meeting here Bruce, you may want to know that two of the classmates are here today actually work at our Ridge theatre out in Brookfield. So, I think they are pretty excited about the (indiscernible) and little round of applaud for couple of our associates that are milking that to the memory.

So with that, I am going to begin with some financial highlights in fiscal 2011 and then review our results for the first quarter of fiscal 2012. Overall, with all the gains at Marcus Hotels were simply not enough to compensate to the impact of the weak film slate for Marcus Theatres that Bruce talked about.

Total revenues for fiscal 2011 were $377 million, down slightly from $379.1 million in the prior year. And our operating income was $33.5 million for the year. Net earnings were $13.6 million, or $0.46 per diluted common share.

Our next slide shows revenue and operating income by division. For fiscal 2011 Marcus Theatres contributed about 55% of our revenues and nearly 85% of our operating income. In a more typical year, revenues would have been about 50:50 between the two divisions with Marcus Theatres contributing about 60% to 65% of our operating income.

The chart next shows our capital expenditures including acquisition over the past five years. Our capital expenditures of $25 million last year were about the same the year before and this is relatively low, but reflects the economic environment and the need to maintain a strong balance sheet. We are anticipating our capital expenditures maybe in the $50 million to $90 million range this coming year, although the amount is always subject to change based on timing of various projects and other factors.

Our debt-to-total-capitalization ratio was continued to decline reaching 39% at the end of fiscal 2011 and 36% at the end of the first quarter. And our debt-to-total-capitalization ratio is one of the lowest, if not the lowest among our peers, which illustrates the strength of our balance sheet.

Now listen to our low debt, our credit facilities are also well positioned, along with cash in our balance sheet we had a $130 million of available credit lines at the end of the first quarter. Now we also have a $150 million universal shelf registration and file with the SEC, which can give us access if needed to additional capital. The strong capital position gives us the financial capability to act on potential growth and value creation opportunities in both of our divisions.

And as shareholders, I am sure many of you also appreciate that in spite of the economy and challenges in our businesses, we continue to maintain our regular cash dividend at the same level. This provides the current yield of approximately just over 3% right now. Now through the years, we turned capital to our shareholders through two additional methods. Many of you remember the $7 per shares special dividend we paid in 2006 the return to our shareholder and the portion of the proceeds and the sale of our former limited-service lodging division.

The sale of this division demonstrated our ability when appropriate to capture that hidden value often associated with our real estate. The second method through share repurchases. During fiscal 2011 we have repurchased 389,000 shares of a common stock under existing Board authorization. And in our first quarter loan at the current fiscal year, we have repurchased an additional 442,000 shares. But even with these investments, we still have plenty of room considered potential growth opportunities, which is really a great position to be in.

Now take a look at some of the other highlights in the first quarter of fiscal 2012 was ended on August 25th. Our total revenues increased 8.7%, our operating income was up over 20% and net earnings rose nearly 25%. Both divisions made solid contribution to the increases with Marcus Theatres having a record first quarter and continued positive momentum from our Marcus Hotels and Resorts division. Revenues from Marcus Theatres increased 8% and operating income was up 16% in the quarter and from Marcus Hotels and Resorts revenues increased nearly 10% and operating income was up over 25%.

To summarize, the Marcus Corporation is in very good shape with the strong financial position and improved performance in both of our division for the first quarter.

I conclude the financial report, and I’ll turn the program back over to Greg.

Greg Marcus – President and Chief Executive Officer

Thanks Doug. To wrap things up, I would like to circle back to the theme of today’s meeting, the Marcus experience. You heard what we are doing in each of our divisions to leverage the Marcus experience into future growth. In Theatre division, it’s creating entertainment destinations and expanding our food and beverage brands such as Zaffiro’s, Big Screen Bistro and others. In the hotel division, it’s taking our 50 years the hotel industry experience and packaging it to provide the variety of services, hotel owners look for in selecting a management partner.

For the Marcus Corporation, it’s putting our experience to work on new initiatives like the hotel investment business and the Corners of Brookfield development.

As you’ve seen throughout the presentation, our financial strength is a significant asset and it enables us to invest in our existing properties as well as to pursue growth opportunities in both divisions. But of course, the Marcus experience would not happen without the hard work of our associates, who are the face of the Marcus Corporation to our desk each and everyday, it’s a pleasure to work with this outstanding team.

When you put it all together, our guest-focused culture, senior management team, strong balance sheet, dedicated associates and defined growth strategies. We have it to take to achieve our overriding goal of creating long-term value for our shareholders. I am optimistic about the year ahead and although we can accomplish by making our ordinary day and extraordinary day for all of our guests.

On the high note, let’s move on to the final item in our agenda, the Q&A session. If you are a shareholder and have a question, please raise your hand and we will get a microphone to use, so that everyone can hear the question. Please state your name and try to limit your comment two minutes, so everyone can have a chance to speak. Does anybody have any questions?

Question-and-Answer Session

Unidentified Company Speaker

Well, going once, going twice, going three times, done. Thank you.

Greg Marcus – President and Chief Executive Officer

Thank you, Marilyn Vollrath for such a well-written and crafted presentation. You guys answered all the questions.

Are there any other questions or comments; if not, there are few more items I need to cover. First if you parked in the InterContinental ramp today, please be sure you get a parking pass at the registration desk, if you don’t have one already. At the end if you parked at one of the nearby parking lots in the area, we have forms available at our registration desk, so you can be reimbursed for your parking. We also have our traditional Annual Meeting thank you gift that you can pickup at the registration desk as you leave.

Today, you will be receiving a $10 gift card that you can use at any Marcus Theatres or Marcus Hotels property. And today only as a Marcus Corporation shareholder, you will receive 20% off launch or dinner at any of our downtown Milwaukee hotel restaurants, that’s Kil@Wat, here at the InterCon, Mason Street Grill, or the Café at the Pfister and the Miller Time Pub at the Hilton, Milwaukee. The discount is also if you go to ChopHouse at the Hilton, Milwaukee which is only open for dinner. So, you’ll have to stick around.

Simply tell your server that you are a shareholder and you receive the 20% discount of your bill. What a deal? If you take advantage of the shareholder discount and use your $10 gift card, we might actually have the use of money. Yeah, I mean, I think about that. We were talking about this today think about, if you just bought one share of stock today, you got breakfast and a $10 and you had a 100% return. You are esteem investor, the kind of people are on our team.

On behalf of our board, management team and associates, thank you for attending today’s Annual Meeting. We hope to see you again next year. I will makeup myself (indiscernible) and extraordinary rest of your day. Thank you everybody.

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Source: The Marcus' CEO Presents at 2011 Annual Shareholders Meeting - Conference Call Transcript
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