The Marcus Corporation
Q2 2014 Earnings Call Transcript

Published: 19 Dec 2013

[Operator:]

Good morning, everyone. And welcome to The Marcus Corporation Second Quarter Earnings Conference Call. My name is Clinton. I’ll be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this call is being recorded. Joining us today are Greg Marcus, President and Chief Executive Officer; and Doug Neis, Chief Financial Officer of The Marcus Corporation. At this time, I’d like to turn the program over to Mr. Neis for his opening remarks. Please go ahead, sir.

[Doug Neis:]

Thank you and welcome everybody to fiscal 2014 second quarter conference call. As usual, I need to begin by stating that we plan on making a number of forward-looking statements on our call today. Our forward-looking statements could include, but not be limited to statements about our future revenues and earnings expectations, our future RevPAR, occupancy rates and room rates expectations for our Hotels & Resorts division, our expectations about the quality, quantity and audience appeal of film products expected to be made available to us in the future, expectations about the future trends in the business group and leisure travel industry and in our markets, expectations and plans regarding growth in the number and type of our properties and facilities, expectations regarding various non-operating line items on our earnings statement and expectations regarding future capital expenditures. Of course, our actual results could differ materially from those projected or suggested by our forward-looking statements. Factors, risks and uncertainties, which could impact our ability to achieve our expectations, are included in the risk factor section of our 10-K and 10-Q filings, which can be obtained from the SEC or the company. We’ll also post our Regulation G disclosures when applicable on our website at www.marcuscorp.com. So with that behind us, let’s talk about our fiscal 2014 second quarter and first half results. As you can see, despite a historically very good quarter for our Theater division comparisons to last year's record second quarter for our largest division were too much to overcome, despite what turned out to be a record quarter for our Hotels & Resorts division. I am going to take you through some of the detail behind the numbers and then turn the call over to Greg for his comments. Before I dig into each division, let me start with some of the general numbers. There are only two line items before operating, below operating income that are worth mentioning. First is interest expense which was up nearly $300,000 during our fiscal 2014 second quarter and nearly $600,000 for the first half of the year, compared to the prior year due in part to increased borrowings, primarily as a result of the assumed Cornhusker hotel mortgage during last year's second quarter and new borrowings necessary to fund the special dividend we paid during the third quarter of fiscal 2013. Our average interest rate also increased slightly during the second quarter due to our August closing on the $50 million of 4.02% senior notes that we previously talked about. I have gone through the math before but based on the assumption that the $50 million of long-term money replaced prior short-term borrowings under our revolving credit facility the simple math will suggest that if everything else was equal our interest expense will increase by about $300,000 in each of our remaining fiscal 2014 quarters compared to the prior year just due to the change in rate. Of course, changes in our borrowing levels due to variations in our operating results, capital expenditures, share repurchases, asset sales, among other items, may impact our actual reported interest expense in future periods. The second line item of note is the gain or loss in disposition of assets line, approximately $750,000 of the loss noted in this line item during our fiscal 2014 second quarter related to our recent sale of our minority 15% joint venture interest in the Columbus Westin Hotel in Columbus, Ohio. We sold that to the majority partner in that venture. They recently approached us about buying out our interest in the hotel and while we were under no obligation to do so after a much discussion we agreed that the buyout would be in everyone’s best interest at this time. The loss is reflective of some of the challenges this particular hotel has had in recent years and its resulting impact on valuation upon sale. Overall, debt-to-capitalization ratio at the end of the quarter was 42%, same as last quarter and down slightly from 44% at our last May year end. And our year-to-date effective income tax rate adjusted for losses from non-controlling interest was 39.9% generally right where we would expect it to be. Shifting gears, our total capital expenditures during the first half of fiscal 2014 totaled approximately $21 million, compared to $10.5 million last year. Approximately $12.6 million of this amount was incurred in our Theatre division, the majority of which related to the items noted in our press release, including the renovation of the renamed Majestic of Omaha theater, the addition of a Take Five Lounge in the Madison theatre, the new UltraScreen in Gurnee, Illinois, the expansion of our DreamLounger recliner seating program and general theater renovations and upgrades and décor and things like that. We’re laser focused right now on CapEx that we believe will produce additional attendance, revenues and ultimately EBITDA. In addition, we spent approximately $8.3 million in CapEx in our Hotel division during the first half with the renovation at the Cornhusker, Marriott accounting for the largest portion of this amount. At the halfway point of our fiscal year, I'm now estimating that our total cash capital expenditures for fiscal 2014 will be in the $60 million to $70 million range. We are still finalizing the scope and timing of many of the various requested projects by our two divisions and we anticipate proceeding with many of the projects as the year unfolds, with a particularly ambitious plan for our Theatre division that Greg will discuss in his remarks. Some of these projects could carry over to the next fiscal year. The actual timing of the various projects currently underway or proposed will certainly impact our final capital expenditure number as well any currently unidentified projects that could develop during our fiscal year. So now I would like to provide some financial comments on our operations for the second quarter and first half, beginning with theaters. As you can see the reported numbers, our box office revenues decreased 8.7% during the second quarter, with concession in food and beverage revenues down 4%. Year-to-date, however, box office revenues are still up 1.4% compared to last year and our concession in food and beverage revenues are up a very healthy 5.4%. The second quarter decrease is attributable to a decrease in attendance at our comparable theaters of 7.1% for the second quarter. Year-to-date, however, our comparable theater attendance is actually still up 1.3% due to our record first quarter results. Also I want to point out that our fiscal 2014 second quarter results were negatively impacted by the fact that Thanksgiving was very late this year. Last year’s, Thanksgiving weekend, which historically is a strong movie going weekend was included in our fiscal 2013 second quarter. This year that same weekend will be included in our fiscal 2014 third quarter results. As pointed out in our press release, this year’s slate of movies just could not match up to the slate that produced record results for this division last year. September started the quarter OpEx with stronger than last year. But once we hit October, we experienced decreased box office results for seven straight weeks until the Hunger Games sequel during the last week of the quarter finally turned the box office trends around. Our average admission price for our comparable theatres actually decreased by 1.2% for the quarter, due primarily to our recent introduction of a $5 Tuesday program for all movies. Greg will talk more about this program in his remarks. Year-to-date, our average admission price is still up 0.8% compared to the prior year. Our average concession in food and beverage revenues per person increased by 3.9% for the second quarter, and 4.8% for the first half of fiscal 2014 compared to the same period last year. Our continued focus on additional food and beverage concepts certainly contributed to this increase. But we also continued to experience increases in our core concession per capita as well. Shifting to our hotel and resort division, as we noted in our release, our overall hotel revenues were up 6.5% for the second quarter and 7.2% for the first half of the year. Our total RevPAR for comparable properties was up 3.8% during the quarter, and 4.2% for the first half, compared to the same period last year. As we've noted in the past, our RevPAR performance did vary by market and type of property and all but two of our eight comparable company-owned properties reported an increased RevPAR again this quarter. Our fiscal 2014 second quarter overall RevPAR increase was entirely due to a 3.8% increase in our average daily rate. Our fiscal 2014 first half overall RevPAR increase was a result of an overall occupancy rate increase of 0.6 percentage points and an average daily rate increase of 3.5%. And finally, I do want to point out that our comparisons to last year in this division benefit from the fact that last year's second quarter results included continuing legal expenses related to our Las Vegas property, including a specific $750,000 settlement reached on the number of the related lawsuits. We will see a similar benefit in our comparisons during our upcoming fiscal 2014 third quarter, as we reported another $1.4 million of legal and settlement costs related to this property during last year's third quarter. With that, I will now turn the call over to Greg.

[Greg Marcus:]

Thanks, Doug. I'll begin my remarks today with our theatre division. I know we mentioned this in the press release and Doug referenced it as well. But I do think it is important to put this quarter's reported results from this division in a little historical perspective. At first blush, it would be easy to conclude that we didn't have a very good quarter in our theatre division but that is just not the case. As we noted, we've only reported higher second quarter theatre revenues once before in our history. It just happened to be last year. And from an operating income perspective, we’ve only exceeded our reported second quarter theatre operating income of $5.3 million twice in the last nine years in this division, with once again the record by a longshot being last year. It was just a really great second quarter film slate last year that went well beyond the top three to five movies. The fact that the Hunger Games

[Operator:]

(Operator Instructions) We’ll go first to David Loeb of Baird.

[David Loeb:]

Good morning gentlemen.

[Doug Neis:]

Hey David.

[David Loeb:]

I want to start on the theatres, if you don’t mind 44 ounces seems like an awful lot of popcorn, at least to me. You do seem to be really beefing up your offering. Is there more competition in your markets or are you just trying to continue to make the movie going experience have appeal to your customers?

[Greg Marcus:]

It’s the latter David. It’s the realization and frankly this is something that with our new leadership there that there is -- and Rolando has experience with this. But there is a customer, there is a valued customer that we have -- that we think they we’re able to go out and capture now. And we create some excitement around doing it only once a week. And we’re seeing that is resonating with movie audiences. And yet we don’t seem to be cannibalizing and in fact, it seems to be addictive to our business because the Friday and Saturday night customers are different customers than the mid-week customers. And we’re seeing new people in the movie theaters, it’s really interesting.

[David Loeb:]

And you didn’t mention the Alvin and the Chipmunks movie, what was that called?

[Greg Marcus:]

Alvin and the Chipmunks movie.

[David Loeb:]

That was last year.

[Greg Marcus:]

Yeah, it’s been last year, yeah it was not this year.

[David Loeb:]

I was trying to get you to say the title again, Greg, that's all.

[Greg Marcus:]

Oh boy.

[David Loeb:]

Yeah, really. On a more serious note, you gave us a good update on the Corners and that’s great. I guess as you look more broadly, how does the likelihood of proceeding with the Corners impact your capital allocation decision in other areas?

[Doug Neis:]

David, it really doesn't because as the developer we've been making the investments so again as we’re currently envisioning the final structure in our minority interest, I think, certainly being close enough for government work here I think we basically have most of our dollars in already. And of course part of our contribution is going to be a piece of land that we already own. And so from that perspective, I don't see it having a major impact on the rest of our capital deliberations.

[David Loeb:]

Okay. That's great. Will you get fees from the joint venture for the ongoing development process?

[Doug Neis:]

That’s what’s been contemplated.

[David Loeb:]

Okay, great, and on MCS Capital, you alluded to the fact that you're not resting on your laurels and you’ve got other stuff going. Can you give us any update on the kind of stuff you’re looking at or structure or timing -- potential timing of when you might have more to announce?

[Greg Marcus:]

David, it seem to be the same stuff we keep looking at with sliver equity deals. There is one way we recently, we’re looking at in Mid-western city. So I mean, there's a whole slew of things. There is no one thing I could tell you there’s a potential but there is a theme out there. I would tell you it tends to be more sliver equity stuff than we’re seeing right now than whole acquisition but you never know what might come our way. Recently, somebody -- there was a bigger project that came. So it will be opportunistic.

[David Loeb:]

And would the slivers be MCS Capital or would that be more about getting the management contract for the Hotel division itself?

[Greg Marcus:]

It’s kind of a yes answer meaning that today MCS Capital, as you know, David, is just part of the Marcus Corporation. As we've talked about the past, one of the things that we are exploring is potentially creating a separate fund. And so that's -- I’ll set that issue kind of aside that’s something that we are actively exploring and taking a look at. And so if ultimately that would come to fruition, then it could be investments kind of funnel through that and MCS would [cede] [ph] the fund and we’d go from there. But, certainly our goal is to increase our rooms under management as well for the Hotel division. So we would anticipate regardless of whether it's just us making a sliver equity or whether it’s a fund, we would anticipate that we would be managing most of those properties.

[David Loeb:]

Okay. And then onto to the hotel's themselves particularly in Milwaukee, we’ve talked about Milwaukee supply; as we get into the colder months, are your competitors beginning to discount a bit to fill their rooms?

[Doug Neis:]

We’re not able to see it just yet. I think that we are just -- I think we’ll wait for the holiday season to end. I think we are looking. I think if you look at the Milwaukee market, the Milwaukee market is not -- it is not robust, it has been flattish. So that’s the best way I can describe it, when you are seeing other markets stronger in our portfolio and in portfolios across the country. So we are already seeing a flat market. And if you look at what competitors are charging, you can start to see where rates are dropping. I think there was an article in the paper recently that talked about the Courtyard dropping its rates because the Marriott’s impacting that. And you can see it when you look at what's going on in our market. So, I think that the -- it’s going to be interesting as we look into the next few months, as we get into it, as we’ve talk about ROE this quarter.

[Greg Marcus:]

I think our sample size is still pretty small, David. Last quarter, we did indicate that our Milwaukee -- three Milwaukee hotel RevPAR for that quarter was slightly below our overall average. This particular quarter it actually was not, this particular quarter Milwaukee was a little – it was just the strength of our properties that our RevPAR actually in Milwaukee was little better than the company average. But, year-to-date, we are still trailing a little bit. So, I think the sample size is still pretty small.

[David Loeb:]

Okay. Interesting. And it sounds like -- it seems like you are getting a little more aggressive on group as well, just trying to keep group in the hotels where you can, is that a fair assessment?

[Greg Marcus:]

I think that we are -- I don’t think that we are being any -- we’ve been aggressive with group. I mean, we are maintaining the business relationships that we have and it’s been -- I’m not sure I’m qualified to say the word but many more aggressive than we are.

[Doug Neis:]

As we put in the script David, that’s the biggest dynamic that we are seeing is just the short lead time. I mean, it’s just -- I’m assuming you kind of hear in this for some of the other hotel clients as well is that -- as we said, we actually came in to the year a little bit behind the pace of where we wanted to be. But we’ve been able to generally make it up with a lot of this, as we refer to it as is in the year for the year kind of business. So it is just having to be nimble, having to be able to react quickly, so again, not sure aggressive is the term. But I think we are really good though in reacting quickly and we have the resources at our disposal to be able to try to win the day when that short term stuff comes up.

[David Loeb:]

Okay. Last question, just back on the Corners, what -- how much have you spent already, what's your basis today in that?

[Greg Marcus:]

Yeah. David, we haven't disclosed the number, so I’m not going to put it out there. It’s certainly in -- and we've also been -- I will tell you we've been fairly conservative in terms of what we've put on the balance sheet versus what we’ve expensed. So we have expensed well over a number that has seven digits in it over the course of this time period. And we have a number with seven digits in it on our balance sheet, but we haven't given the exact number

[David Loeb:]

Okay. Great. Thanks.

[Operator:]

Thank you. The next question comes from Eric Wold of B. Riley. Please proceed.

[Eric Wold:]

Thanks. Good morning. Doug, just a quick question real quickly for you first. I’m not sure I missed it. I got the CapEx for the year at $60 million to $70 million. What was it in Q2?

[Doug Neis:]

In ’12, year-to-date, we are at $21 million. And so I’m trying to remember where we were in the first quarter. I think we were in the $10 million range or something like that. So it is kind of equal. And I will tell you, I’ve got $60 to 70 million. It could be as much as $50 million, it could be occurring in our Theatre division. So we’re still working through the numbers, but that’s -- as that builds up to the $60 million or $70 million, on the high-end we could end up as high as in that kind of neighborhood for the theatres.

[Eric Wold:]

Okay. And just kind of on the theatre side, I know that it was a tough comp versus last year. But looking at the industry was down about 2.5% to 3% on a comparable period versus last year with markets down about $8 million and change. What do you think caused that delta? Was it the mix of product in your markets versus other, or is it something else that maybe we're not seeing there?

[Doug Neis:]

Did you match the weeks up exactly, Eric on that? Because I’m not so sure that that’s -- again, because of that nuance with the Thanksgiving and everything else, I don't know if you've got the exact match in the weeks or not. Because I don't think our indication is that we missed the national numbers quite that much.

[Eric Wold:]

Okay.

[Doug Neis:]

But I will tell you is that one dynamic we did have for circuit our size is that we had auditoriums out of commission during this particular time period that probably impacted us a little bit more than given our size compared to what you might notice for somebody else, given the -- we had the three more locations and pretty key locations that we went to the all all-Dream Lounger Recliner Seating and so that’s was going on during this time period. So there was a little bit of that dynamic going on as well.

[Eric Wold:]

Okay. And then kind of a larger picture, I know you're making some investments or planning to make some investments improvements in the theatre division. It seems like a lot of the opportunities you talk about in terms of new investments, new growth, tend to focus around the Hotel Resort division and mixed use property in Brookfield. Is there ever an opportunity that you think about to monetize the exhibition space to grow faster or more fully into the Hotel Resort segment, would you consider selling the exhibition space at some point, given the opportunities that are out there and the activity in the space or is that something you feel you need to kind of be a part of this company?

[Greg Marcus:]

You should see the look on Greg.

[Doug Neis:]

I think you will get my general counsel will turn out.

[Greg Marcus:]

I mean, I will go first and then, and I do not have the same last name as he does, so I will go first and say the look. We have been in for 78 years. So that’s my starting point and we think we are pretty, Doug, on good at it and we certainly think that, well, size can matter as it relates to the few costs that you could argue size doesn’t matter. We still have a pretty strong position in the markets that we are in, a very strong position in the market we are in. So we think we compete very well. So we certainly do not think that we have any sort of gun to our heads that would make us to do something like that and so I will …

[Doug Neis:]

I mean, I think that the standard answer is, we do not comment on strategies about stuff like that for divisions. That being said, I certainly would just add on Doug’s comment, which is we do not have any plans to put other division up for sales, that’s the answer.

[Eric Wold:]

No. That helps. I appreciate it guys.

[Greg Marcus:]

Thank you.

[Operator:]

Thank you. (Operator Instructions) The next question comes from the line of Brian Rafn of Morgan Dempsey Capital Management. Please proceed.

[Brian Rafn:]

Good morning, guys.

[Greg Marcus:]

Hi Brian.

[Brian Rafn:]

Give me a sense, you guys talked about your Tuesday night value rollout, is that that have a geographic or demographic profile to it or you are rolling that out all across the chain?

[Greg Marcus:]

Yeah. That’s now circuit-wide, Brian, we started off in a few, we tested in a few market initially, but on November 12th, I think with the first Tuesday being Thor, it became a circuit-wide promotion.

[Brian Rafn:]

Okay. And what -- when you look at the snack food concession, even the beverage component of that value guide, how does that compare to say your weekend tender?

[Greg Marcus:]

It will be less than the value customer will spend less on per capita basis at the concession stand.

[Brian Rafn:]

Okay. Okay. When you guys…

[Doug Neis:]

Let me, Brian, I am jumping in for a second, it’s just to say that right now the difficulty is that it gives us part of the promotion and as part of our partnership with our studio partners as well, we have been giving away some free popcorn as well at this point in order to get the initial awareness and get those program going. So we are going to have kind of watch this as it proceed.

[Greg Marcus:]

But I would tell you that, look we know from what we have heard from anecdotal experience from others is that the other day this customer will spend less than per capita basis. But the idea is that to make it a win-win for us and for the studios as that we are going to bring in so much more box office revenue and by having much more attendance. And even though on a per capita basis, the customer will spend less in the aggregate, we should all do better.

[Brian Rafn:]

Yes. Sure. Across the circuit is that Tuesday night attendance, I'm just asking, out of ignorance, is that for all of the cinema screens in the theatres or are you selectively picking movies for that Tuesday night?

[Doug Neis:]

All movies, all movies, Brian.

[Brian Rafn:]

Okay. Okay. And when the guide as anyone with kids would have, if you go up for your free 44 ounce popcorn, anyone with kids, once you get in the vicinity of that that snack food thing, usually should get some add-on? Are you seeing some additive food and beverage stuff with that 44 ounce free popcorn?

[Greg Marcus:]

[Inaudible].

[Brian Rafn:]

Okay. Okay. Okay. And the -- I noticed last year, you guys are certainly experts on this, you had Die Hard, I think five come out in the January or the February period, I think they co-branded with a Super Bowl? The January, February, correct me if I'm wrong, I mean, is -- are you seeing the studios put a little more emphasis on quality or quantity rollouts, because you get a little bit of a dead zone, you're kind of coming out of the holidays, long winters north of the Mason-Dixon line. How do you guys kind of look at that period, what do you see I think for 2014?

[Doug Neis:]

Yeah. It’s a good question, Brian. The -- because it has been, it has not been consistent over the years. And in fact, I will tell you that in generally -- general while we love, I mean, this time period that we are in right now is one of the biggest time periods of the year and that week between Christmas and New Years, can be the biggest week of the year literally. But what often makes the breaks to the third quarter is the January and February product. And so certainly our message to the study is exactly as you are saying is that, do not forget about that time period and so I am looking at the list right now. And I mean there is a -- they have actually pushed the Jack Ryan picture which is the reboot of the…

[Brian Rafn:]

Right.

[Doug Neis:]

Tom Clancy franchise, they pushed that back into January, so that’s coming out in January. There is another picture that’s going to be a full rollout, that’s already been getting some nominations called Her, iFrankenstein, there is something called the Lego movie coming out in early February that’s in 3D, that has some buzz about it, a RoboCop reboot is occurring in February, another big budget picture called Pompeii comes out in February. There is, I mean, it’s on paper, it looks like from a quantity perspective, its looks fairly close to the, to what it was the last couple -- last year and we will have to see how they do.

[Greg Marcus:]

Another determining fact there will be -- how films play really over the next week or two. There is a lot of product about to hit the screens, if it’s all good, you just can’t see it all and just given limited time frame and then that will bleed of into January and really -- basically January as people catch up. It will just depend on how those films resonate with the audiences and we will know shortly.

[Brian Rafn:]

Yeah, sure. As we see in retail guys, the whole gift card thing has been a real driver where the Christmas season now has a lot to the 26 and kind of that week flowing past Christmas in the New Year’s with people being off. How does that gift card for you guys -- free movie tick, how does that spill into that January-February period for you? Is that pretty steady or is that, you going to…

[Doug Neis:]

I think that’s our key time when people start using those. Our gift card business has become an important part of our business. We have seen increases pretty much every year in that and we have a major push going on right now and that has benefits that certainly carry into the -- into those early months. No question about it.

[Brian Rafn:]

Okay. When you guys talked about putting in the Zaffiro’s and the Take Five. Do you notice when you add on that incremental food and beverage restaurant that actually is additive to driving movie attendance traffic?

[Doug Neis:]

I am not sure if we can make that statement. But our goal is to get more of a share reward of the customer.

[Brian Rafn:]

Yeah. Okay. Okay. Haven’t seen it, the Dream Lounger, I assume these electric reclining recliners, is that a -- how sophisticated is that, that chair? Obviously it sounds nice, very expensive, but I am thinking of kids spilling popcorn and soda and standing on it. Is that a maintenance issue or is that a pretty bulletproof mechanism?

[Greg Marcus:]

It’s a very new dynamic, Brian. So I guess time is going to tell, I mean, frankly, you know, just from a peer accounting perspective we are assigning a shorter life to them then we would to traditional chairs because of the electronics and everything else. But it’s still very early in the process here. It’s a very well made chair with a very good fabric and the customers are loving it.

[Brian Rafn:]

Okay. Is that something size-wise, Doug, that you can install all across the circuit or, is there -- doest it have to have more size or is it specifically just for Ultra? What does that get installed across the circuit?

[Doug Neis:]

We are kind of evaluating that right now. It is not something you do everywhere. For one reason is that you lose a fair number of the actual seat count because of the size of the chair and so -- but the interesting dynamic is you lose seat count and overall attendance goes up. In other words, your occupancy increases significantly. And so again, it’s a very -- it is this -- there is a certainly an art and a science to this in terms of determining what locations might be candidates for this and we are going through that right now, but it’s not something that you do everywhere.

[Brian Rafn:]

Sure. Does that given what’s the UltraScreens and the Dolby Atmos and all of the immersive technologies on the sound side, all the things that you guys do, is that incremental seat installation, do you think that there is some pricing inflation and being able to raise ticket prices a little in that as you guys get the consumer and doctrinated to this new experience?

[Doug Neis:]

Too new in the process to even know yet. I mean right now, for the Dream Lounger themselves, we have not changed the pricing but there are -- as you mentioned, there are all these different elements and amenities and so it is still too early to see how the -- ultimately how final pricing might shake out, in terms of which elements are present and -- but right now as we put a light into -- we have got in four locations with just the Dream Loungers and I am not counting the UltraScreens but the -- in the regular auditoriums, it’s the same pricing.

[Brian Rafn:]

Okay. Okay. Doug, anything on cost pressures, inflation, food and beverage and anything across the circuit, I am just looking for kind of cost pressure?

[Doug Neis:]

Not specifically to that end. I mean, again, as we indicated in this particular quarter, as we have -- we had some increased expenses in our theatre business that are tied to rolling out this promotion and advertising and marketing and things along those lines, but no, nothing from an inflation perspective. That’s outside of what this kind of generally happening in the world.

[Brian Rafn:]

Okay. With kind of your forward vision into the 2014 as you look at the Hollywood, the cinema productions, the portfolio of movies I guess will be the best way, your thoughts 2014 -- I know it’s hard to pick blockbusters before they happen. What is kind of your early sense for ‘14?

[Doug Neis:]

You know what, it is very hard Brian, I mean, in all these -- there is a lot of pictures on paper and there is some of the recognizable franchise films and sequels that you see. What I would like to tell you, it’s not just a question but there is a lot of buzz about 2015, ton of buzz about 2015 because it’s just the way pictures are lining up right now. I don’t know if anyone is saying 2014 is good, bad or indifferent, I think it is but -- what I am hearing is more talk about, it’s in 2015.

[Brian Rafn:]

Okay. All right. Then in and -- just one more on the kind of your thoughts on CapEx going forward on the hotel side, any major projects, how do you see ‘14 shaking up?

[Doug Neis:]

Well, again, we are going to complete the -- the biggest project we have going on right now is the completion of the renovation of The Cornhusker. We did indicate that we have begun the renovation of the Tower building and the Pfister. And so that will be several million dollars. We’ve also indicated and that probably not a fiscal 2014 issue, but we have -- we are taking a hard look at our Chicago property and that one is going to be -- is going to be do for some capital dollars as well and that will be our fiscal 2015 issue probably.

[Brian Rafn:]

All right guys. Wish you guys a Merry Christmas. Thanks.

[Doug Neis:]

Thank you, Brian.

[Operator:]

Thank you. At this time, there appears to be no further questions. I would like to hand the call back to Mr. Neis for any additional and closing comments.

[Doug Neis:]

Well, we certainly want to thank you all for joining us again today. We look forward to taking to you once again in March when we release our third quarter fiscal 2014 results. So thanks, and we wish you all a very Merry Christmas and a Happy New Year.

[Operator:]

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