Certain matters discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we "believe," "anticipate," "expect" or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division, as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (2) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, and preopening and start-up costs due to the capital intensive nature of our businesses; (3) the effects of adverse economic conditions in our markets, particularly with respect to our hotels and resorts division; (4) the effects of adverse weather conditions, particularly during the winter in the Midwest and in our other markets; (5) the effects of the relative industry supply of available rooms at comparable lodging facilities in our markets on our occupancy and room rates;
(6) the effects of competitive conditions in our markets; (7) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; and (8) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States, the United States' responses thereto and subsequent hostilities. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this Form 10-Q and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

RESULTS OF OPERATIONS

General

We report our consolidated and individual segment results of operations on a 52-or-53-week fiscal year ending on the last Thursday in May. Fiscal 2010 is a 52-week year, as was fiscal 2009. We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Our primary operations are reported in the following two business segments: movie theatres and hotels and resorts.

The following table sets forth revenues, operating income, other income (expense), net earnings and earnings per common share for the comparable first quarters of fiscal 2010 and 2009 (in millions, except for per share and variance percentage data):

                                                             First Quarter
                                                                            Variance
                                              F2010        F2009        Amt.         Pct.

   Revenues                                  $ 110.2      $ 120.4      $ (10.2 )     -8.5%
   Operating income                             19.0         23.9         (4.9 )    -20.8%
   Other income (expense)                       (2.9 )       (3.6 )        0.7       19.4%
   Net earnings                                 10.2         12.4         (2.2 )    -17.8%

   Net earnings per common share - diluted   $  0.34      $  0.42      $ (0.08 )    -19.0%

Revenues, operating income (earnings before other income/expense and income taxes) and net earnings decreased during the first quarter of fiscal 2010 compared to the same period last year due almost entirely to reduced operating results from our hotels and resorts division. Fiscal 2010 first quarter revenues in our theatre division were even with last year's same period and theatre division operating income was down slightly due in part to a small decrease in attendance. Operating results from our hotels and resorts division continued to be negatively impacted by reduced occupancy rates and average daily rates resulting primarily from reduced business spending on travel due to the current economic environment. A reduction in our interest expense and a reduced effective income tax rate partially offset our decreased operating income during the fiscal 2010 first quarter compared to the same period last year.

We recognized investment income of $104,000 during the first quarter of fiscal 2010, representing a decrease of $257,000, or 71.2%, compared to investment income of approximately $361,000 during the prior year same period. This decrease was the result of reduced interest rates on short-term investments and reduced interest income from our declining balance of timeshare notes receivable. For the remainder of fiscal 2010, our investment income will likely remain slightly lower than last year's comparative quarters for the same reason, with one exception. Last year during our second quarter, we reported two unusual investment losses totaling approximately $2.0 million. As a result, we will likely report a very favorable year-over-year comparison for this line item during our fiscal 2010 second quarter.

Our interest expense totaled $3.0 million for the first quarter of fiscal 2010 compared to $3.8 million during the same period last year, a decrease of approximately $800,000, or 21.7%. The decrease in interest expense during fiscal 2010 was the result of reduced borrowings and lower short-term interest rates during fiscal 2010. Due to the stronger cash flow from our operating divisions during the summer months, our borrowing levels are typically at their lowest point at the end of our fiscal first quarter. It is likely that our borrowing levels will increase later this fiscal year as we increase our capital spending and our operating cash flows decline during our slower operating months. As a result, although our interest expense in future periods may still decline compared to the prior year's same period due to lower short-term interest rates, any future decreases may be partially offset by our expected increased debt levels.

We did not recognize any significant gains or losses on the disposition of property, equipment and other assets during the first quarters of fiscal 2010 or 2009. The timing of periodic sales of our property and equipment varies from quarter to quarter, resulting in variations in our reported gains or losses on disposition of property and equipment. We anticipate periodic additional sales of non-core property and equipment with the potential for additional disposition gains or losses from time to time during future periods, but the current economic environment will likely limit our sales activity during the near-term. We reported a $1.1 million loss on disposition related to our condominium units at our Las Vegas Platinum Hotel & Spa during our fiscal 2009 second quarter, so we may have a favorable comparison to the prior year for this line item during the second quarter of fiscal 2010.

We reported net equity losses from unconsolidated joint ventures of $31,000 during the first quarter of fiscal 2010 compared to losses of approximately $84,000 during the first quarter of fiscal 2009. Net losses during both years included our share of results from our remaining Baymont joint venture and two hotel joint ventures. We currently do not expect significant variations in net equity gains or losses from unconsolidated joint ventures during the remaining quarters of fiscal 2010 compared to the same periods last year.

We reported income tax expense for the first quarter of fiscal 2010 of $5.9 million, a decrease of approximately $2.0 million, or 26.0%, compared to the same period of fiscal 2009. Our fiscal 2010 first quarter effective income tax rate was 36.5%, slightly lower than our fiscal 2009 first quarter effective rate of 38.9%. This decrease in our effective tax rate was primarily due to a decrease in our liability for unrecognized tax benefits as a result of a lapse of the applicable statute of limitations during the fiscal 2010 first quarter. We currently expect our effective tax rate for the remaining quarters of fiscal 2010 to be in our historical 38-40% range, pending any further lapses of statutes of limitations during the year or the completion of tax examinations by taxing authorities. Our actual fiscal 2010 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

Theatres

The following table sets forth revenues, operating income and operating margin
for our theatre division for the first quarters of fiscal 2010 and 2009 (in
millions, except for variance percentage and operating margin):



                                                          First Quarter
                                                                        Variance
                                            F2010       F2009        Amt.       Pct.

         Revenues                           $ 66.9      $ 66.9      $    -          -
         Operating income                     16.3        16.9        (0.6 )    -3.2%
         Operating margin (% of revenues)     24.4 %      25.2 %

Consistent with the seasonal nature of the motion picture exhibition industry, the first quarter is typically the strongest period of our fiscal year for our theatre division due to the traditionally strong summer movie season. Our theatre division revenues were even with the prior year's same period despite reduced overall attendance, due primarily to an increase in our average ticket price. Our fiscal 2010 first quarter operating income and operating margin for this division were slightly lower than our first quarter fiscal 2009 results due primarily to higher film costs and the negative impact the reduced attendance had on our total concession revenues.

The following table breaks down the components of revenues for the theatre division for the first quarters of fiscal 2010 and 2009 (in millions, except for variance percentage):

                                                  First Quarter
                                                              Variance
                                      F2010     F2009      Amt.       Pct.

                Box office receipts   $ 43.1    $ 42.5    $  0.6       1.4%
                Concession revenues     20.8      21.2      (0.4 )    -1.9%
                Other revenues           3.0       3.2      (0.2 )    -6.4%

                Total revenues        $ 66.9    $ 66.9    $    -         -%

The increase in our box office receipts for the first quarter of fiscal 2010 compared to the same period last year was due to a 7.2% increase in our average ticket price during the fiscal 2010 first quarter compared to the same period last year, partially offset by a decrease in attendance. The significant increase in our average ticket price was attributable primarily to selected price increases and premium pricing for our digital 3D and UltraScreenŽ attractions. Our fiscal 2010 first quarter concession revenues decreased compared to the same period last year as a result of the decreased attendance. Our average concession revenues per person for the fiscal 2010 first quarter increased 3.7% compared to the same period last year, due in large part to increased sales from higher priced non-traditional food and beverage items in our theatres. Other revenues decreased slightly during our fiscal 2010 first quarter due in part to decreases in lobby advertising income and other miscellaneous revenues.

Comparable theatre attendance decreased 4.9% during the first quarter of fiscal 2010 compared to the same period last year. The comparable theatre decrease in attendance occurred primarily during a three-week period from mid-July to early August corresponding with the first three weeks of last year's top film, The Dark Knight. This sequel to the popular Batman franchise was not only our top performing film for all of fiscal 2009 - it ended its run as the second highest grossing film of all time after Titanic. The film slate for the remaining weeks of our fiscal 2010 first quarter was very strong. In fact, our box office receipts for 8 of the remaining 10 weeks of our summer quarter reflected double-digit percentage increases over the corresponding weeks last year. Our highest grossing films during the fiscal 2010 first quarter included Transformers: Revenge of the Fallen, Harry Potter and the Half-Blood Prince, Up (in both 3D and 2D), The Hangover and The Proposal. In addition to Up, we had two other digital 3D films make our top ten list of films for the first quarter
- Ice Age: Dawn of the Dinosaurs and G-Force.

As noted above, our fiscal 2010 first quarter operating results benefited from several recent investments related to previously described strategies. With digital 3D technology now available in over half of our theatres, we are benefitting from the increased number of digital 3D films being released and from the fact that the 3D versions of the related films have generally outperformed the corresponding 2D version of the same film by a factor of two to three times. In addition, our recently renovated theatre in Mequon, Wisconsin incorporates two other strategies noted in our recent annual report - expanding our UltraScreen concept and enhancing our food and beverage opportunities within our existing theatres. We are pleased with the initial customer response to our renovations at this theatre and the new UltraScreen with reserved seating, "hot zone" with expanded food offerings and the adjacent Zaffiro's Pizzeria and Bar all contributed positively to our fiscal 2010 first quarter results. We are continuing to evaluate additional opportunities to expand these strategies to more locations.

September is typically our slowest month of the year, but film product for the second quarter of fiscal 2010 has thus far produced box office results better than the same period last year due in part to the performance of two more digital 3D films, The Final Destination and Cloudy with a Chance of Meatballs. With four additional 3D films scheduled to be released during the fiscal 2010 second quarter, including the re-release of Toy Story 1&2 and The Nightmare Before Christmas, as well as a re-make of A Christmas Carol starring Jim Carrey, we expect our average ticket price to again increase significantly over the prior year's same period. Other films scheduled to be released this fall and during the upcoming Thanksgiving holiday period that may generate substantial box office interest include: Couples Retreat, Where the Wild Things Are, Michael Jackson: This Is It, 2012 and The Twilight Saga: New Moon, the second film in this popular series. Looking ahead to the holiday season and our early fiscal third quarter, films with significant box office potential include Old Dogs, Sherlock Holmes, Invictus, Alvin and the Chipmunks: The Squeakquel and Avatar, another 3D release that is one of the most highly anticipated pictures of the year. Revenues for the theatre business and the motion picture industry in general are heavily dependent on the general audience appeal of available films, together with studio marketing, advertising and support campaigns and the maintenance of the current "windows" between the date a film is released in theatres and the date a motion picture is released to other channels, including video on-demand and DVD. These are factors over which we have no control.

We ended the first quarter of fiscal 2010 with a total of 657 company-owned screens in 53 theatres and 6 managed screens in one theatre compared to 672 company-owned screens in 55 theatres and 6 managed screens in one theatre at the end of the same period last year. We closed three leased theatres with 16 screens, including one budget theatre, during fiscal 2009 with minimal impact on our operating results. In November 2009, we will open the new Marcus Midtown Cinema at Midtown Crossing in Omaha, Nebraska. We designed and will manage this unique upscale four-level, five-screen entertainment destination owned by Mutual of Omaha. We will be offering our exclusive CineDineSM in-theatre dining concept in all five auditoriums, another first for us, and we will once again feature Zaffiro's pizza at this theatre.

Hotels and Resorts

The following table sets forth revenues, operating income and operating margin
for our hotels and resorts division for the first quarters of fiscal 2010 and
2009 (in millions, except for variance percentage and operating margin):



                                                          First Quarter
                                                                        Variance
                                           F2010       F2009        Amt.         Pct.

        Revenues                           $ 43.0      $ 53.2      $ (10.2 )    -19.2%
        Operating income                      5.0         9.5         (4.5 )    -47.1%
        Operating margin (% of revenues)     11.7 %      17.9 %

Our first quarter is historically the strongest quarter of the year for our hotels and resorts division due to increased travel during the summer months at our predominantly Midwestern properties. Having said that, division revenues and operating income decreased significantly during our fiscal 2010 first quarter compared to the prior year same period due to the continued negative impact the current recessionary environment has had on all customer segments - group business, corporate transient and leisure.

The following table sets forth certain operating statistics for the first quarters of fiscal 2010 and 2009, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for company-owned properties:

                                                First Quarter(1)
                                                                 Variance
                                   F2010        F2009         Amt.        Pct.

          Occupancy percentage       68.9%        77.7%      (8.8) pts   -11.3%
          ADR                    $ 140.90     $ 158.57     $(17.67)      -11.1%
          RevPAR                 $  97.12     $ 123.15     $(26.03)      -21.1%

(1) These operating statistics represent averages of our eight distinct company-owned hotels and resorts, branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort.

RevPAR decreased at all eight of our company-owned properties during the first quarter of fiscal 2010 compared to the same period last year. According to information available to us from Smith Travel Research, our RevPAR declines during our fiscal 2010 first quarter were not significantly different than those reported nationally for the upper upscale segment of the industry in which the majority of our properties operate. In general, industry data indicates that owned and managed properties in major destination markets, properties that are perceived to operate closer to the luxury end of the hotel spectrum or properties with a greater reliance on group business, have seen the largest declines in RevPAR during this recession.

During our fiscal 2010 first quarter, industry data indicates that those properties that were able to attract the leisure customer, albeit at a lower ADR, were able to perform relatively better than others, as the leisure market has shown the most resiliency during this challenging time. Due to the impact of the leisure customer segment, our year-over-year occupancy and RevPAR declines during our fiscal 2010 first quarter were slightly better than the comparable declines during our fiscal 2009 fourth quarter. Our overall year-over-year ADR decreased more this period than it did during the preceding quarter in part because of our offering value-priced packages in order to attract that leisure customer.

Division operating income and operating margins declined during our fiscal 2010 first quarter compared to the prior year same period due to the decline in revenues described above. We have implemented numerous strategies to reduce costs during this difficult period in the hotel industry. Our cost containment measures resulted in approximately 44% of our overall fiscal 2010 first quarter revenue decline flowing through to our operating income - a flow-through percentage that generally compares favorably with others in our industry.

The current near-term outlook for this division's performance continues to be very uncertain, as we continue to face significant economic headwinds. There appears to be some growing optimism in the marketplace that the industry will see some improvement as we head into calendar 2010, but because the lead time for reservations from both the corporate transient and leisure customer is relatively short (often only one to two weeks) compared to historic norms, our ability to project future occupancies from these customers is very limited. Our group business booking pace continues to lag behind last year's pace, and our ongoing group business is often resulting in lower overall revenues than in the past as group sizes shrink and on-site ancillary spending decreases. We will likely continue to see lower ADR's than in prior periods until group demand begins to improve, as larger quantities of occupied group rooms tend to then allow the individual properties to charge more for corporate and leisure travelers due to less room availability. If a future recovery unfolds like others have in prior down cycles, it will likely take group business longer to return to "normal" levels, as companies typically take a very cautious approach on these expenditures before restoring their pre-recessionary budgets. As a result, even though comparisons to last year will begin to get easier in future periods, we expect to report reduced operating income from this division during at least the upcoming second quarter of fiscal 2010, compared to the prior year same period.

During our fiscal 2010 first quarter, we completed the first phase of a major guest room renovation at our Grand Geneva Resort & Spa and began a major guest room renovation at our Hilton Milwaukee City Center. When completed, the total re-investment in both of these properties is expected to be approximately $30 million. We also continue to pursue several new growth opportunities as well. With an increasing number of hotels across the country experiencing financial difficulties due to reduced operating results and high debt service costs, we believe the opportunities to acquire high quality hotels or management contracts at attractive valuations will likely increase in the future for well-capitalized companies such as ours.

FINANCIAL CONDITION

Liquidity and Capital Resources

Our movie theatre and hotels and resorts businesses each generate significant and consistent daily amounts of cash, subject to previously noted seasonality, because each segment's revenue is derived predominantly from consumer cash purchases. We believe that these relatively consistent and predictable cash sources, as well as the availability of approximately $112 million of unused credit lines as of the end of our fiscal 2010 first quarter, should be adequate to support the ongoing operational liquidity needs of our businesses during the remainder of fiscal 2010.

Net cash provided by operating activities decreased by $14.0 million during the first quarter of fiscal 2010 to $20.2 million, compared to $34.2 million during the prior year's first quarter. The decrease was due primarily to reduced net earnings and unfavorable timing in the collection of accounts and notes receivable and the payment of accounts payable and income taxes.

Net cash used in investing activities during the fiscal 2010 first quarter totaled $6.7 million, compared to $9.4 million during the fiscal 2009 first quarter. The decrease in net cash used in investing activities was primarily the result of decreased capital expenditures. Capital expenditures totaled $6.7 million during the first quarter of fiscal 2010 compared to $9.3 million during the prior year's first quarter. Fiscal 2010 first quarter capital expenditures included approximately $5.4 million incurred in our hotels and resorts division, including costs associated with the previously described renovations at our Grand Geneva and Hilton Milwaukee properties. Fiscal 2009 first quarter capital expenditures included approximately $7.4 million incurred in our theatre division, including costs associated with a land purchase in Omaha, Nebraska, an UltraScreen in Orland Park, Illinois and digital 3D projectors purchased during the quarter.

Net cash used in financing activities during the first quarter of fiscal 2010 totaled $12.0 million compared to $25.4 million during the first quarter of fiscal 2009. Our principal payments on notes payable and long-term debt totaled approximately $15.1 million during the first quarter of fiscal 2010 compared to approximately $23.1 million during the same period last year, accounting for a portion of the decrease in net cash used in financing activities. Excess cash during both periods was used to reduce our commercial paper borrowings and borrowings under our revolving credit agreement. As a result, only $5.4 million of new debt was added during our fiscal 2010 first quarter and no new debt was required during our fiscal 2009 first quarter. Our debt-capitalization ratio was 0.42 at August 27, 2009 compared to 0.44 at our fiscal 2009 year-end.

We did not repurchase any significant amount of our common shares during the first quarters of fiscal 2010 and 2009. As of August 27, 2009, approximately 2.3 million shares remained available under prior Board of Directors repurchase authorizations. Any repurchases are expected to be executed on the open market or in privately negotiated transactions depending upon a number of factors, including prevailing market conditions.

We previously indicated that we expected our fiscal 2010 capital expenditures, including potential purchases of interests in joint ventures (but excluding any potential acquisitions) to be in the $50-$70 million range. We are still finalizing the scope and timing of the various projects requested by our two divisions and several additional projects would need to be approved in order for us to end up at the higher end of that range. The actual timing and extent of . . .