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 second quarter and first half of fiscal 2009 and 2008 (in millions, except for per share and variance percentage data):

--------------------------------------------------------------------------------
                                       Second Quarter                           First Half
                            ------------------------------------- ---------------------------------------
                                                   Variance                                Variance
                                              -------------------                     -------------------
                             F2009    F2008     Amt.      Pct.      F2009     F2008     Amt.      Pct.
                            -------- -------- --------- --------- --------- --------- --------- ---------
Revenues                    $ 87.9   $ 83.4   $   4.5       5.4 % $ 208.3   $ 195.6   $  12.7       6.5 %
Operating income               8.3      8.6      (0.3 )    -3.4 %    32.3      32.2       0.1       0.4 %
Other income (expense)        (6.8 )   (3.7 )    (3.1 )   -82.7 %   (10.4 )    (7.5 )    (2.9 )   -38.6 %
Net earnings                $  0.9   $  2.9   $  (2.0 )   -69.5 % $  13.3   $  14.7   $  (1.4 )    -9.1 %
Net earnings per common
 share - diluted:           $ 0.03   $ 0.10   $ (0.07 )   -70.0 % $  0.45   $  0.48   $ (0.03 )    -6.3 %

Revenues increased in our theatre division during the second quarter and first half of fiscal 2009 compared to the same periods last year, offsetting decreases in revenues from our hotels and resorts division. Our total operating income (earnings before other income/expense and income taxes) decreased slightly during the second quarter and was essentially even through the first half of fiscal 2009 compared to the same periods last year due to reduced operating results from our hotels and resorts division, offsetting significantly improved operating results from our theatre division. The theatre division operating results during both periods in fiscal 2009 were favorably impacted by new screens acquired during the fourth quarter of fiscal 2008 and an overall stronger slate of film product. Our hotels and resorts division reported decreased fiscal 2009 second quarter and first half revenues and operating income compared to the same periods last year due primarily to the impact of reduced occupancy rates resulting from reduced business and consumer spending on travel and leisure due to the current economic environment. Significant unusual investment losses and losses on property, equipment and other assets during the fiscal 2009 second quarter resulted in an overall decrease in our fiscal 2009 second quarter and first half net earnings compared to the same periods last year.

We recognized investment losses of $2.0 million and $1.7 million during the second quarter and first half of fiscal 2009, respectively, compared to approximately $340,000 and $700,000 of investment income during the same periods last year. The significant decrease in investment income during the fiscal 2009 periods was primarily the result of two unusual investment losses reported during our second quarter. We recognized a $1.4 million pre-tax investment loss on securities held whose decline in fair value we deemed to be other than temporary. Prior to the fiscal 2009 second quarter, losses on these "available for sale" investments had previously been included in "other comprehensive loss" in shareholders' equity. In addition, we reported an $800,000 pre-tax investment loss during the fiscal 2009 second quarter related to loans to and investments in a former Baymont Inns & Suites joint venture that currently owns real estate that has declined in value because of current commercial real estate market conditions. We have a very limited amount of these types of investments and our exposure to additional losses related to securities and joint ventures is not significant. 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 $3.6 million and $7.4 million for the second quarter and first half of fiscal 2009, respectively, compared to $3.8 million and $7.9 million during the same periods last year. The decrease in interest expense during our fiscal 2009 periods was the result of a lower average interest rate, as our total borrowings in fiscal 2009 were actually higher than last year due to our recent theatre acquisition. Our borrowing levels typically increase later in our fiscal year as our operating cash flows decline during our slower operating months. That may result in a slight increase in our interest expense during subsequent quarters of fiscal 2009 compared to the first two quarters of this year, depending upon our capital expenditure levels during this same time period.

We reported net equity losses from unconsolidated joint ventures of $15,000 and $99,000 during the second quarter and first half of fiscal 2009, respectively, compared to losses of $69,000 and $138,000 during the same periods of fiscal 2008. Net losses during both years included our share of results from our one remaining operating 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.

We reported income tax expense for the second quarter and first half of fiscal 2009 of $670,000 and $8.6 million, respectively, compared to $2.0 million and $10.0 million during the same periods of fiscal 2008. Our fiscal 2009 second quarter and first half effective income tax rates were 42.8% and 39.2%, respectively, compared to our fiscal 2008 second quarter and first half effective rate of 40.4% and 40.6%, respectively. The decrease in our year-to-date 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 2009 first quarter. We currently expect our effective tax rate for the remaining quarters of fiscal 2009 to be closer to 40%. Our actual fiscal 2009 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 second quarter and first half of fiscal
2009 and 2008 (in millions, except for variance percentage and operating
margin):

                                       14

--------------------------------------------------------------------------------
                               Second Quarter                        First Half
                     ---------------------------------- ------------------------------------
                                           Variance                            Variance
                                       ----------------                    -----------------
                      F2009    F2008    Amt.     Pct.     F2009    F2008     Amt.     Pct.
                     -------- -------- ------- -------- --------- -------- -------- --------
Revenues             $ 41.7   $ 33.3   $ 8.4     25.3 % $ 108.6   $ 91.2   $ 17.4     19.1 %
Operating income        5.9      4.3     1.6     36.6 %    22.7     19.7      3.0     15.5 %
Operating margin       14.1 %   12.9 %                     20.9 %   21.6 %
 (% of revenues)

Consistent with the seasonal nature of the motion picture exhibition industry, the second quarter of our fiscal year is typically the slowest period for our theatre division. Our theatre division recognized increased operating results for our fiscal 2009 second quarter and first half compared to last year's same periods, 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 and a strong fiscal 2009 second quarter film slate. Our operating margin during the second quarter of fiscal 2009 increased due to the impact of increased revenues at our comparable theatres and decreased slightly during the fiscal 2009 first half compared to the prior year due to higher fixed costs related to the new theatres.

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

                                  Second Quarter                        First Half
                        ---------------------------------- ------------------------------------
                                              Variance                            Variance
                                          ----------------                    -----------------
                         F2009    F2008    Amt.     Pct.     F2009    F2008     Amt.     Pct.
                        -------- -------- ------- -------- --------- -------- -------- --------
Box office receipts     $ 26.3   $ 20.9   $ 5.4     26.0 % $  68.8   $ 57.9   $ 10.9     18.8 %
Concession revenues       13.1     10.3     2.8     27.9 %    34.3     28.5      5.8     20.4 %
Other revenues             2.3      2.1     0.2      5.3 %     5.5      4.8      0.7     15.0 %
                        ------   ------   -----   ------   -------   ------   ------   ------
 Total revenues         $ 41.7   $ 33.3   $ 8.4     25.3 % $ 108.6   $ 91.2   $ 17.4     19.1 %

The increase in our box office receipts and concession revenues for the second quarter and first half of fiscal 2009 compared to the same periods last year was primarily due to the impact of the Douglas theatres acquired during our fiscal 2008 fourth quarter and strong second quarter film product. Excluding the Douglas theatres, box office receipts and concession revenues increased 8.6% and 9.2%, respectively. For the first half of fiscal 2009, excluding the Douglas theatres, box office receipts increased 1.8% and concession revenues increased 2.4% compared to the first half of fiscal 2008. A 5.1% and 4.5% increase in our average ticket price for these comparable theatres during the fiscal 2009 second quarter and first half, respectively, compared to the same periods last year, contributed to our increased overall box office receipts. The increases in our average ticket price were attributable primarily to selected price increases and premium pricing for our digital 3D and UltraScreen® attractions. Our average concession revenues per person for the fiscal 2009 second quarter and first half increased 5.8% and 4.9%, respectively, compared to the same periods last year, due primarily to selected price increases and an increase in the variety of food and beverage items offered at selected theatres. Other revenues increased during our fiscal 2009 second quarter and first half due in part to increases in pre-show and lobby advertising income and film booking fees.

The inclusion of the Thanksgiving weekend during the fiscal 2009 third quarter will favorably impact our comparisons to last year's operating results from comparable theatres during the upcoming quarter. Conversely, adverse December weather conditions in our Midwestern markets likely had some negative impact on attendance. Nonetheless, in addition to strong November holdovers, several new films performed quite well during the holiday season, including Four Christmases, Yes Man, Seven Pounds, Bedtime Stories, Marley & Me, The Curious Case of Benjamin Button and Valkyrie. Films scheduled to be released during the remainder of our fiscal 2009 third quarter that may also generate box office interest include Bride Wars, Revolutionary Road, My Bloody Valentine 3D, He's Just Not That Into You, Pink Panther 2 and Friday the 13th. 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.

During the second quarter and first half of fiscal 2009, we continued to execute on several previously described strategies. Our 14 digital 3D screens, installed during our fiscal 2009 first quarter, benefitted during the second quarter from the latest 3D release, Disney's Bolt, with the 3D presentations of this film outperforming the corresponding 2D versions of the same film. More than a dozen 3D films are currently scheduled for release during calendar 2009. A broader roll-out of digital cinema in our theatres, originally thought likely to begin in calendar 2009, remains tied to the ability of third-party implementers to obtain the necessary financing, which could be difficult in the current credit market. 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, which included a new and expanded season ofThe Metropolitan Opera: Live in HD. Our successful ice cream and coffee brands, which were initially rolled out at our flagship Majestic Cinema, were introduced into our theatre in Sturtevant (Racine), Wisconsin during our fiscal 2009 first quarter. Late in our second quarter, we opened a new food court concept named the "Hollywood Café" with pizza, ice cream, coffee and additional menu items at our theatre in Oakdale, Minnesota. We also recently began construction on a Zaffiro's pizza restaurant that will be connected to an existing theatre in Mequon, Wisconsin.

We ended the first half of fiscal 2009 with a total of 673 company-owned screens in 55 theatres and 6 managed screens in one theatre compared to 588 company-owned screens in 48 theatres and 6 managed screens in one theatre at the end of the same period last year. We opened a new UltraScreen addition to our 14-screen theatre in Orland Park, Illinois at the end of our fiscal 2009 second quarter and we recently began construction on our circuit's 13th UltraScreen at our Mequon, Wisconsin theatre, with hopes to open this screen by May 2009.

Hotels and Resorts

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

                                Second Quarter                         First Half
                     ------------------------------------ -------------------------------------
                                            Variance                              Variance
                                       ------------------                    ------------------
                      F2009    F2008     Amt.     Pct.     F2009     F2008     Amt.     Pct.
                     -------- -------- -------- --------- -------- --------- -------- ---------
Revenues             $ 45.9   $ 49.8   $ (3.9 )    -7.7 % $ 99.1   $ 103.7   $ (4.6 )    -4.4 %
Operating income        5.1      6.8     (1.7 )   -25.4 %   14.6      17.1     (2.5 )   -14.4 %
Operating margin       11.1 %   13.7 %                      14.7 %    16.5 %
(% of revenues)

Division revenues and operating income decreased during our fiscal 2009 second quarter and first half compared to the prior year same periods. A rapidly deteriorating economic environment, which primarily impacted our properties that rely most heavily on group business during our fiscal 2009 first quarter, began to negatively impact our corporate transient and leisure customer segments during our second quarter. Food and beverage revenues at our hotels declined at a slightly higher pace than room revenues during the fiscal 2009 second quarter compared to the same period last year as customers also reduced the amount they spent during their stay.

The following table sets forth certain operating statistics for the second quarter and first half 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:

                                       Second Quarter(1)                              First Half(1)
                          -------------------------------------------- --------------------------------------------
                                                       Variance                                     Variance
                                                ----------------------                       ----------------------
                            F2009      F2008        Amt.        Pct.     F2009      F2008        Amt.        Pct.
                          ---------- ---------- ------------- -------- ---------- ---------- ------------- --------
Occupancy pct.                66.3 %     71.7 %    (5.4 ) pts   -7.5 %     72.0 %     75.1 %    (3.1 ) pts   -4.1 %
ADR                       $ 153.83   $ 152.77   $  1.06          0.7 % $ 156.39   $ 155.74   $  0.65          0.4 %
RevPAR                    $ 102.05   $ 109.48   $ (7.43 )       -6.8 % $ 112.60   $ 116.96   $ (4.36 )       -3.7 %

RevPAR increased at three of our eight company-owned properties during the second quarter of fiscal 2009 compared to the same period last year. Five of our company-owned properties recognized increased RevPAR during the first half of fiscal 2009 compared to the first half of fiscal 2008, with our newest hotels reporting the largest increases. Declines in occupancy at our remaining properties resulted in an overall decrease in RevPAR for the fiscal 2009 second quarter and first half compared to the same periods last year. Our overall ADR increased slightly during the reported periods, but in general the increases were modest, as the current economic environment limited our ability to raise rates.

The current near-term outlook for the future performance of this division continues to be very uncertain, as we continue to face significant economic headwinds. Historically, hotel revenues have generally tracked very closely with traditional macroeconomic statistics such as the Gross Domestic Product (GDP), and the current outlook for calendar 2009 does not look encouraging. Our group business booking pace continues to lag behind last year's pace, and our ongoing group business is often resulting in less overall revenues than in the past as group sizes shrink and on-site ancillary spending decreases. The corporate transient and leisure customer segments worsened significantly during the fiscal 2009 second quarter. Because the lead time for reservations from these customers is relatively short (often only one to two weeks), our ability to project future occupancies from these customers is very limited. On a positive note, we believe that we benefit from the location of our properties, which tend to be in slightly less volatile markets, so our overall RevPAR declines have generally been slightly less than others in our industry segment. We will continue to monitor the situation and continue to adjust our sales focus and operating costs as needed. Barring a faster economic improvement than is currently forecast, we expect this division to report reduced comparative year-over-year operating results during the remaining quarters of fiscal 2009.

We have been providing technical development and preopening services to the owners of three previously described hotel projects currently under development. We continue to 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. Currently, the largest hindrance to new growth in the hotel industry is the lack of available financing. A potentially positive aspect of this circumstance is the likelihood that supply growth may decline in the near term, which can have a favorable impact on owners of existing hotels like us. Credit difficulties for struggling existing hotels may also create acquisition opportunities for well-capitalized companies like ours at some point in the future as well.

FINANCIAL CONDITION
Liquidity and Capital Resources

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