Certain matters discussed in this Management's Discussion and Analysis of Results of Operations and Financial Condition 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 on our occupancy and room rates from the relative industry supply of available rooms at comparable lodging facilities in our markets; (6) the effects of competitive conditions in our markets; (7) our ability to identify properties to acquire, develop and/or manage and 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 2009 is a 52-week year, as was fiscal 2008. 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 2009 and 2008 (in millions, except for per share and variance percentage data):

--------------------------------------------------------------------------------
                                                        First Quarter
                                            -------------------------------------
                                                                    Variance
                                                                -----------------
                                              F2009     F2008     Amt.     Pct.
                                            --------- --------- -------- --------
Revenues                                    $ 120.4   $ 112.1   $  8.3      7.3 %
Operating income                               23.9      23.5      0.4      1.8 %
Other income (expense)                         (3.6 )    (3.8 )    0.2      4.8 %
Net earnings                                   12.4      11.7      0.7      6.0 %
Net earnings per common share - diluted     $  0.42   $  0.38   $ 0.04     10.5 %

Revenues increased in our theatre division during the first quarter of fiscal 2009 compared to the same period last year, offsetting a small decrease in revenues from our hotels and resorts division. Our total operating income (earnings before other income/expense and income taxes) increased during this same period due to improved operating results from our theatre division. The theatre division operating results were favorably impacted by new screens acquired during the fourth quarter of fiscal 2008. Our hotels and resorts division reported decreased fiscal 2009 first quarter revenues and operating income compared to the same quarter last year due in large part to the impact of reduced group business at a couple of our larger properties that rely most heavily on that particular customer segment. A reduction in our interest expense contributed to an overall increase in our fiscal 2009 first quarter net earnings compared to the same period last year.

We recognized investment income of $361,000 during the first quarter of fiscal 2009, representing a decrease of only $6,000, or 1.6%, compared to investment income of approximately $367,000 during the prior year same period. For the remainder of fiscal 2009, our investment income will likely remain slightly lower than last year's comparative quarters due to expected reduced interest income from our declining balance of timeshare notes receivable.

Our interest expense totaled $3.8 million for the first quarter of fiscal 2009 compared to $4.1 million during the same period last year, a decrease of approximately $300,000, or 7.9%. The decrease in interest expense during fiscal 2009 was the result of a lower average interest rate, as our total borrowings were actually higher than last year due to the recent theatre acquisition. Due to the strong 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. We currently anticipate increased borrowing levels later in our fiscal year as we increase our planned capital spending and operating cash flows decline during our slower operating months. As a result, we expect that our interest expense will likely increase during subsequent quarters of fiscal 2009 compared to the same periods last year.

We did not recognize any significant gains or losses on the disposition of property, equipment and other assets during the first quarters of fiscal 2009 or 2008. The timing of periodic sales of our property and equipment may vary 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 from time to time during the remainder of fiscal 2009.

We reported net equity losses from unconsolidated joint ventures of $84,000 during the first quarter of fiscal 2009 compared to losses of approximately $69,000 during the first quarter of fiscal 2008. Net losses during both years included our share of results from our remaining Baymont 50% joint venture and two hotel joint ventures in which we have a 15% ownership interest. We currently do not expect significant variations in net equity gains or losses from unconsolidated joint ventures during the remaining quarters of fiscal 2009 compared to the same periods last year.

Theatres

    The following table sets forth revenues, operating income and operating
margin for our theatre division for the first quarters of fiscal 2009 and 2008
(in millions, except for variance percentage and operating margin):

                                               First Quarter
                                     ----------------------------------
                                                           Variance
                                                       ----------------
                                      F2009    F2008    Amt.     Pct.
                                     -------- -------- ------- --------
Revenues                             $ 66.9   $ 57.9   $ 9.0     15.5 %
Operating income                       16.9     15.4     1.5      9.7 %
Operating margin (% of revenues)       25.2 %   26.6 %

Consistent with the seasonal nature of the motion picture exhibition industry, the first quarter of our fiscal year is typically the strongest period for our theatre division due to the traditionally strong summer movie season. Our theatre division recognized increased operating results for our fiscal 2009 first quarter compared to last year's first quarter, primarily due to the incremental results from the seven theatres comprised of 83 screens in Omaha and Lincoln, Nebraska acquired from Douglas Theatre Company ("Douglas") and related parties during our fiscal 2008 fourth quarter. Our operating margin during the first quarter of fiscal 2009 decreased slightly from the prior year due to higher fixed costs related to the new theatres and the impact of reduced revenues at our comparable theatres.

The following table breaks down the components of revenues for the theatre division for the first quarters of fiscal 2009 and 2008 (in millions, except for variance percentage):

                                  First Quarter
                        ----------------------------------
                                              Variance
                                          ----------------
                         F2009    F2008    Amt.     Pct.
                        -------- -------- ------- --------
Box office receipts     $ 42.5   $ 37.1   $ 5.4     14.7 %
Concession revenues       21.2     18.2     3.0     16.2 %
Other revenues             3.2      2.6     0.6     23.0 %
                        ------   ------   -----   ------
   Total revenues       $ 66.9   $ 57.9   $ 9.0     15.5 %

Total theatre attendance increased 10.9% during the first quarter of fiscal 2009 compared to the same period last year. Excluding the Douglas theatres, theatre attendance decreased 5.6% during the quarter. The entire comparable theatre decrease in revenues and virtually all of the fiscal 2009 first quarter decline in comparable attendance occurred in August, offsetting very strong year-over-year revenue increases during the first two months of the quarter. The film slate for August this year did not perform as well as last year's August films, which included two of our highest grossing films last year, The Bourne Ultimatum and The Simpsons Movie. Television viewership of the Olympics and the Democratic National Convention in August 2008 also negatively impacted our results. Our highest grossing films during the fiscal 2009 first quarter included the outstanding performance of The Dark Knight, as well as Wall-E, Hancock, Kung Fu Panda and Indiana Jones and the Kingdom of the Crystal Skull.

September is typically our slowest month of the year and film product for the second quarter of fiscal 2009 has thus far produced box office results similar to or slightly worse than the same period last year on a comparable theatre basis. The quantity of films scheduled for release during the upcoming fall and holiday season appears strong. Films scheduled to be released this fall and Thanksgiving holiday period that may generate substantial box office interest include: Eagle Eye, Body of Lies, High School Musical 3: Senior Year, Madagascar: Escape 2 Africa, Quantum of Solace (the latest 007 Bond entry), Disney's animated film Bolt (shown in both 2D and 3D) and Twilight. The final week of our fiscal 2008 second quarter included the traditionally strong Thanksgiving weekend, which benefited our second quarter operating results last year. This year, the Thanksgiving weekend will be included in our fiscal 2009 third quarter. As a result, our comparative fiscal 2009 second quarter theatre division results to last year's second quarter results will likely be adversely impacted, although our comparative third quarter results should benefit from the inclusion of the Thanksgiving weekend. 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 continued to execute on several previously described strategies during the first quarter of fiscal 2009. We purchased and installed 12 digital 3D projectors during the fiscal 2009 first quarter in time for the latest 3D release, Journey to the Center of the Earth, bringing our total digital 3D installations to 14 screens. In addition, 23 of our theatres are currently equipped to present alternate programming such as concerts and sporting events through our affiliation with a national digital broadcast network, including the new and expanded season of The Metropolitan Opera: Live in HD. We recently introduced our successful ice cream and coffee brands initially rolled out at our flagship Majestic Cinema into our theatre in Sturtevant (Racine), Wisconsin and a new food court "hot zone" with pizza, ice cream, coffee and additional menu items is currently under construction at our theatre in Oakdale, Minnesota. We also recently announced plans to open another of our successful Zaffiro's pizza restaurants at an existing theatre in Mequon, Wisconsin.

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 2009
and 2008 (in millions, except for variance percentage and operating margin):

                                                First Quarter
                                     -----------------------------------
                                                           Variance
                                                       -----------------
                                      F2009    F2008     Amt.     Pct.
                                     -------- -------- -------- --------
Revenues                             $ 53.2   $ 53.9   $ (0.7 )   -1.4 %
Operating income                        9.5     10.2     (0.7 )   -7.0 %
Operating margin (% of revenues)       17.9 %   19.0 %

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. Division revenues and operating income decreased slightly during our fiscal 2009 first quarter compared to the prior year due to a decline in performance from our properties that rely most heavily on group business.

The following table sets forth certain operating statistics for the first quarters of fiscal 2009 and 2008, 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
                                               ----------------------
                           F2009      F2008        Amt.        Pct.
                         ---------- ---------- ------------- --------
Occupancy percentage         77.7 %     78.5 %    (0.8 ) pts   -1.1 %
ADR                      $ 158.57   $ 158.45   $  0.12          0.1 %
RevPAR                   $ 123.15   $ 124.45   $ (1.30 )       -1.0 %

(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 increased at five of our eight company-owned properties during the first quarter of fiscal 2009 compared to the same period last year, with our newest hotels reporting double-digit increases. Declines in occupancy at our remaining properties due to reduced group business travel resulted in an overall decrease in RevPAR for the quarter compared to the first quarter last year. Our overall ADR increased at six of our company-owned properties, but in general the increases were modest, as the current economic environment has put some pressure on our ability to raise rates.

Continued improved operating results from our newest hotels, including our revenue share arrangement at the Platinum Hotel & Spa, partially offset the declines in operating income at the aforementioned "group business" hotels. In addition, the largest year-over-year increase in operating income occurred at our Pfister Hotel and was due in part to the fact that our parking garage and meeting and banquet space were closed during the entire fiscal 2008 first quarter for an extensive renovation. Our meeting and banquet space was reopened early in our second quarter last year, but our parking garage did not reopen until our third quarter, so we expect continued favorable comparisons at that hotel for the next two quarters. Conversely, planned guest room renovations at our Grand Geneva Resort & Spa and Hilton Milwaukee City Center properties may have a slight negative impact on operating results during the remainder of the fiscal year as rooms are taken out of service during the renovation.

The current near-term outlook for the future performance of this division continues to be very dependent upon the economic environment of the respective geographic markets in which we operate. Overall, our group business booking pace continues to lag behind last year's pace, so we expect the same properties that struggled in our first quarter to have difficult comparisons to the prior year over the next few quarters. The corporate transient and leisure customer segments have performed better than the group business segment, but the lead time for reservations from these customers is relatively short (often only one to two weeks), so our ability to project future occupancies from these customers is limited. We will continue to monitor the situation and adjust our sales focus and operating costs as needed. As a result, we currently do not expect this division to report significantly improved operating results during the remaining quarters of fiscal 2009 and, if economic conditions do not improve, it is possible that our overall hotels and resorts operating results could decline in one or more of our upcoming quarters compared to the same periods last year.

We have been providing technical development and preopening services to the owners of three previously described hotel projects currently under development. We expect one of these properties, the Venturella Resort & Spa in Orlando, Florida, to open later in fiscal 2009 after completion of a significant renovation. We will manage this hotel upon its scheduled opening. We continue to pursue several new growth opportunities as well, with a focus on expanding our hotel management business. A number of the projects that we are currently exploring may also include small equity investments.

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 $127 million of unused credit lines as of the end of our fiscal 2009 first quarter, should be adequate to support the ongoing operational liquidity needs of our businesses during the remainder of fiscal 2009.

Net cash provided by operating activities increased by $15.1 million during the first quarter of fiscal 2009 to $34.2 million, compared to $19.1 million during the prior year's first quarter. The increase was due primarily to favorable timing in the collection of accounts and notes receivable and the payment of accounts payable and other accrued liabilities.

Net cash used in investing activities during the fiscal 2009 first quarter totaled $9.4 million, compared to only $1,000 during the fiscal 2008 first quarter. The increase in net cash used in investing activities was primarily the result of increased capital expenditures and a decrease in cash received that was previously held by intermediaries.

Capital expenditures totaled $9.3 million during the first quarter of fiscal 2009 compared to $3.8 million during the prior year's first quarter. Fiscal 2009 first quarter capital expenditures included approximately $7.4 million incurred in our theatre division, including costs associated with the previously described land purchase in Omaha, Nebraska, the UltraScreen currently under construction in Orland Park, Illinois and the digital 3D projectors purchased during the quarter. Fiscal 2008 first quarter capital expenditures included approximately $2.7 million incurred in our hotels and resorts division, including costs associated with the previously described renovations at our Pfister Hotel.

Net cash used in financing activities during the first quarter of fiscal 2009 totaled $25.4 million compared to $18.5 million during the first quarter of fiscal 2008. Our principal payments on notes payable and long-term debt totaled approximately $23.1 million during the first quarter of fiscal 2009 compared to approximately $20.2 million during the same period last year, accounting for a portion of the increase in net cash used in financing activities. Excess cash during the period was used to reduce our commercial paper borrowings and borrowings under our revolving credit agreement. As a result, no new debt was required during our fiscal 2009 first quarter compared to new debt of $5.1 million related to commercial paper borrowings added during the first quarter of fiscal 2008. Our debt-capitalization ratio was 0.44 at August 28, 2008 compared to 0.47 at our fiscal 2008 year-end.

During our fiscal 2009 first quarter, we repurchased approximately 1,700 of our common shares for approximately $25,000 in conjunction with the exercise of stock options, compared to 66,000 of common shares repurchased for approximately $1.4 million in conjunction with the exercise of stock options and open market purchases during the first quarter of fiscal 2008. As of August 28, 2008, approximately 2.3 million shares remained available under prior Board of Directors repurchase authorizations. Any additional 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.