8-K
MARCUS CORP (MCS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
| Date of Report | |
|---|---|
| (Date of earliest | |
| event reported): | February 20, 2020 |
The Marcus Corporation
(Exact name of registrant as specified in its charter)
| Wisconsin | 1-12604 | 39-1139844 |
|---|---|---|
| (State or other<br><br> <br>jurisdiction of<br><br> <br>incorporation) | (Commission File<br><br> <br>Number) | (IRS Employer<br><br> <br>Identification No.) |
100 East Wisconsin Avenue, Suite 1900, Milwaukee, Wisconsin 53202-4125
(Address of principal executive offices, including zip code)
(414) 905-1000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the<br>Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the<br>Exchange Act (17 CFR 240.14a-12) |
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| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b)<br>under the Exchange Act (17-CFR 240.14d-2(b)) |
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| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c)<br>under the Exchange Act (17-CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $1.00 par value | MCS | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02. | Results of Operations and Financial Condition. |
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On February 20, 2020, The Marcus Corporation issued a press release announcing its financial results for its fourth quarter and fiscal year ended December 26, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| (a) | Not applicable. |
| --- | --- |
| (b) | Not applicable. |
| --- | --- |
| (c) | Not applicable. |
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| (d) | Exhibits. The following exhibit is being furnished herewith: |
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Exhibit
Number
| (99.1) | Press Release of The Marcus Corporation, dated February 20, 2020, regarding its financial results for its fourth quarter and fiscal year ended December 26, 2019. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE MARCUS CORPORATION | ||
|---|---|---|
| Date: February 20, 2020 | By: | /s/ Douglas A. Neis |
| Douglas A. Neis | ||
| Executive Vice President, Chief Financial Officer and Treasurer |
2
Exhibit 99.1
THE MARCUS CORPORATION REPORTS FOURTHQUARTER AND FULL YEAR
FISCAL 2019 RESULTS
Both Marcus Theatres^®^and Marcus^®^ Hotels & Resorts report record revenues and outperform the industry for fiscal 2019; reports recordAdjusted EBITDA
Milwaukee, February 20, 2020… The Marcus Corporation (NYSE: MCS) today reported results for the fourth quarter and full year fiscal 2019 ended December 26, 2019.
Fourth Quarter Fiscal 2019 Highlights
| · | Total<br> revenues for the fourth quarter of fiscal 2019 were a record $206,862,000, an 18.2% increase<br> from revenues of $175,032,000 for the fourth quarter of fiscal 2018. |
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| · | Operating<br> income for the fourth quarter of fiscal 2019 was $13,379,000, an 8.7% decrease from operating<br> income of $14,653,000 for the fourth quarter of fiscal 2018. |
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| · | Net<br> earnings attributable to The Marcus Corporation were $7,802,000 for the fourth quarter<br> of fiscal 2019, a 10.5% decrease from net earnings attributable to The Marcus Corporation<br> of $8,720,000 for the fourth quarter of fiscal 2018. |
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| · | Net<br> earnings per diluted common share attributable to The Marcus Corporation were $0.25 for<br> the fourth quarter of fiscal 2019, a 16.7% decrease from net earnings per diluted common<br> share attributable to The Marcus Corporation of $0.30 for the fourth quarter of fiscal<br> 2018. |
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| · | Adjusted<br> net earnings attributable to The Marcus Corporation were $10,469,000 for the fourth quarter<br> of fiscal 2019, an 11.6% decrease from Adjusted net earnings attributable to The Marcus<br> Corporation of $11,848,000 for the fourth quarter of fiscal 2018. |
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| · | Adjusted<br> net earnings per diluted common share attributable to The Marcus Corporation were $0.33<br> for the fourth quarter of fiscal 2019, a 19.5% decrease from Adjusted net earnings per<br> diluted common share attributable to The Marcus Corporation of $0.41 for the prior year<br> fourth quarter. |
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| --- | | · | Adjusted<br> EBITDA was $36,710,000 for the fourth quarter of fiscal 2019, a 1.9% increase from Adjusted<br> EBITDA of $36,035,000 for the fourth quarter of 2018. | | --- | --- | | · | Adjusted<br> net earnings attributable to The Marcus Corporation, Adjusted net earnings per diluted<br> common share attributable to The Marcus Corporation and Adjusted EBITDA reflect adjustments<br> made by the company in the fourth quarter of fiscal 2019 to eliminate the unfavorable<br> impact of new theatre preopening expenses, an impairment charge and certain nonrecurring<br> preopening expenses and initial startup losses related to the conversion of the former<br> InterContinental Milwaukee hotel into Saint Kate^®^ – The Arts Hotel. <br> These same measures in the fourth quarter of fiscal 2018 reflect adjustments made by<br> the company to eliminate the favorable impact of certain nonrecurring reductions in deferred<br> income taxes and to eliminate the negative impact of nonrecurring acquisition and preopening<br> expenses related to the Movie Tavern^®^ acquisition, as well as certain<br> nonrecurring preopening expenses and accelerated depreciation expense related to the<br> InterContinental Milwaukee hotel conversion. | | --- | --- |
Full Year Fiscal 2019 Highlights
| · | Total<br> revenues for fiscal 2019 were a record $820,863,000, a 16.1% increase from revenues<br> of $707,120,000 for fiscal 2018. |
|---|---|
| · | Operating<br> income was $68,191,000 for fiscal 2019, an 18.0% decrease from operating income of $83,189,000<br> for fiscal 2018. |
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| · | Net<br> earnings attributable to The Marcus Corporation were $42,017,000 for fiscal<br> 2019, a 21.3% decrease from net earnings attributable to The Marcus Corporation<br> of $53,391,000 for fiscal 2018. |
| --- | --- |
| · | Net<br> earnings per diluted common share attributable to The Marcus Corporation were<br> $1.35 for fiscal 2019, a 27.4% decrease from net earnings per diluted common share attributable<br> to The Marcus Corporation of $1.86 for fiscal 2018. |
| --- | --- |
| · | Adjusted<br> net earnings attributable to The Marcus Corporation were $50,278,000 for fiscal 2019,<br> a 9.9% decrease from Adjusted net earnings attributable to The Marcus Corporation of<br> $55,781,000 for fiscal 2018. |
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| · | Adjusted<br> net earnings per diluted common share attributable to The Marcus Corporation were $1.61<br> for fiscal 2019, a 17.0% decrease from Adjusted net earnings per diluted common share<br> attributable to The Marcus Corporation of $1.94 for fiscal 2018. |
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| --- | | · | Adjusted<br> EBITDA was $155,170,000 for fiscal 2019, a 3.8% increase from Adjusted EBITDA of $149,420,000<br> for fiscal 2018. | | --- | --- | | · | Adjusted<br> net earnings attributable to The Marcus Corporation, Adjusted net earnings per diluted<br> common share attributable to The Marcus Corporation and Adjusted EBITDA reflect adjustments<br> made by the company in fiscal 2019 to eliminate the unfavorable impact of new theatre<br> preopening expenses and nonrecurring acquisition and preopening expenses related to the<br> Movie Tavern acquisition, an impairment charge and certain nonrecurring preopening expenses<br> and initial startup losses related to the conversion of the former InterContinental Milwaukee<br> hotel into Saint Kate – The Arts Hotel. These same measures in fiscal 2018<br> reflect adjustments made by the company to eliminate the favorable impact of certain<br> nonrecurring reductions in deferred income taxes and to eliminate the negative impact<br> of nonrecurring acquisition and preopening expenses related to the Movie Tavern acquisition,<br> as well as certain nonrecurring preopening expenses and accelerated depreciation expense<br> related to the InterContinental Milwaukee hotel conversion. | | --- | --- |
“In a year in which both divisions had exciting new opportunities, as well as new challenges, we achieved record revenues for The Marcus Corporation and both divisions for the fourth quarter and full year,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation.
“Our new Movie Tavern theatres contributed to our record revenues, but overall results for Marcus Theatres^®^were primarily impacted by a weaker film slate than in the prior year. The weaker film slate was also reflected in the 2019 national box office, which was down from 2018, but was still the second highest on record. Marcus^®^Hotels & Resorts would have reported increased operating income for the year, if not for additional preopening expenses and anticipated initial startup losses associated with the introduction of Saint Kate – The Arts Hotel, our new experiential boutique hotel in Milwaukee,” said Marcus.
Marcus noted that The Marcus Corporation also reported record Adjusted EBITDA during both the fourth quarter and full year fiscal 2019, despite the weaker film slate.
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Marcus Theatres^®^
Revenues for Marcus Theatres increased 26.1% in the fourth quarter of 2019 and 24.7% for the full year, driven by the continued contributions of the Movie Tavern by Marcus locations. On a comparable theatre basis, fourth quarter revenues were lower than in the prior year quarter due to a weaker film slate in October and early November that was not fully offset by stronger December film product. Operating income was down for the fourth quarter and full year due to decreased attendance, partially offset by higher concession revenues per person and a higher average ticket price.
On a comparable theatre basis, the division’s box office outperformed the industry by 0.4 percentage points in the fourth quarter and 0.5 percentage points for fiscal 2019, according to data received from Rentrak. Marcus Theatres has now outperformed the industry during 19 of the last 24 quarters. The outperformance comparisons do not include the Movie Tavern theatres, which were acquired in February 2019, because Marcus Theatres did not own them in the 2018 comparison year. However, based upon data available from the previous owner, the company believes its Movie Tavern theatres outperformed the industry by approximately seven percentage points during the 11 months it owned them in fiscal 2019.
Marcus Theatres continued to invest in its circuit during the year, expanding its signature features and amenities to both existing and new locations. The division added its signature DreamLounger^SM^recliner seating to five theatres, including four Movie Tavern locations. UltraScreen DLX^®^ auditoriums were added to two theatres, including one Movie Tavern theatre, and 28 existing screens were converted to SuperScreen DLX^®^auditoriums, including 26 screens at 13 Movie Tavern locations. In addition, Marcus Theatres opened its first newly built Movie Tavern by Marcus theatre during fiscal 2019 in Brookfield, Wis. The new theatre includes eight auditoriums with DreamLounger recliner seating, one SuperScreen DLX auditorium and many of the company’s successful food and beverage concepts.
The division ended fiscal 2019 with DreamLounger recliner seating in approximately 77% of its first-run, company-owned screens and offered at least one PLF screen in approximately 72% of its first-run, company-owned theatres. Both percentages are believed to be the highest among the largest theatre chains in the U.S.
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The five top-performing films for Marcus Theatres in the fourth quarter of fiscal 2019 were Frozen 2, Star Wars: The Rise of Skywalker, Joker,Jumanji: The Next Level and Knives Out. For the full year, the top performing movies were Avengers: Endgame, TheLion King, Frozen 2, Toy Story 4 and Captain Marvel.
“The first quarter of 2020 is off to a solid start, with higher admission revenues at comparable theatres compared to the same time last year. This is due to a strong week between December 27 and New Year’s Day and an improved January and February film slate, with strong holdover movies from 2019 and new movies including 1917, Bad Boys For Life and Sonic the Hedgehog contributing to the early first quarter results. The remainder of 2020 is expected to include a larger number of films than in fiscal 2019 and will likely be less dependent on blockbusters,” said Rolando Rodriguez, chairman, president and chief executive officer of Marcus Theatres.
“We believe our significant investments in extending our popular features and amenities across the circuit and implementation of our innovative operating and marketing strategies, such as our $5 Tuesday promotion and customer loyalty program, are key drivers behind our continued industry outperformance. Our plans for 2020 include additional investments in our existing theatres, including the Movie Tavern locations, where the improvements have been well received by guests. We will also extend our footprint into the state of Washington with a new nine-screen theatre currently under construction in Tacoma that is expected to open in the fourth quarter of the year,” added Rodriguez.
Fiscal 2020 will be a 53-week year for The Marcus Corporation, and the theatre division in particular is expected to benefit from the extra week of operations.
Marcus^®^ Hotels & Resorts
Revenue per available room (RevPAR) for Marcus Hotels & Resorts, excluding Saint Kate, increased 1.3% in the fourth quarter and 1.0% for the full year. Excluding Saint Kate and the Hilton Madison Monona Terrace in Madison, Wis., which underwent extensive renovations during the first half of the year, RevPAR for comparable company-owned properties increased 2.4% for the full year, exceeding the national averages. The division outperformed its competitive set in the fourth quarter and was in line with its competitive set for the full year.
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The operating loss from this division improved in the fourth quarter due entirely to preopening expenses and accelerated depreciation expense included in the fiscal 2018 fourth quarter results related to the conversion of the former InterContinental Milwaukee hotel into Saint Kate. Operating income for the fiscal 2019 year declined compared to the prior year as a result of preopening expenses and initial startup losses related to this same property. Excluding Saint Kate, fiscal 2019 operating income would have improved by 7.6%, despite the negative impact of the Hilton Madison hotel renovation. The improvement was due to increased revenues and a continuing focus on cost controls and operating efficiency.
“The initial guest and community response to Saint Kate has been fantastic as the hotel continues to ramp up. The hotel is achieving a higher average daily room rate than the hotel it replaced and its food and beverage revenues are exceeding the former hotel as well. As a one-of-a-kind new boutique arts-focused hotel, Saint Kate has already received much local, regional and national attention. We were especially pleased that the hotel was named one of the country’s best new hotels by USA Today 10Best Readers’ Choice travel awards. Saint Kate was the only hotel in the Midwest to receive this coveted recognition,” said Marcus.
Marcus Hotels & Resorts added a new management contract for the Hyatt Regency Schaumburg hotel in Schaumburg, Ill. during fiscal 2019 and ceased management of two other properties. The company continues to pursue additional management contract opportunities.
In 2019, numerous Marcus Hotels & Resorts hotels and restaurants were recognized by prestigious organizations for their commitment to excellence. Three properties received the coveted CondéNast Traveler 2019 Readers’ Choice Award, four hotels earned the AAA Four Diamond Award and the majority of the company’s hotels and restaurants received the Trip Advisor^®^ 2019 Certificate of Excellence.
Return of Capital to Shareholders
“Yesterday, we announced a 6.3% increase in the cash dividend rate. Our extremely strong balance sheet gives us the ability to return capital to shareholders, while at the same time continuing to invest in our two businesses and pursue additional growth opportunities,” said Douglas A. Neis, executive vice president, chief financial officer and treasurer of The Marcus Corporation.
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Conference Call and Webcast
Marcus Corporation management will hold a conference call today, Thursday, February 20, 2020, at 10:00 a.m. Central/11:00 a.m. Eastern time to discuss the fourth quarter and fiscal 2019 results. Interested parties may listen to the call live on the internet through the investor relations section of the company's website: www.marcuscorp.com, or by dialing 1-574-990-3059 and entering the passcode 2895609.
A telephone replay of the conference call will be available through Thursday, February 27, 2020, by dialing 1-855-859-2056 and entering passcode 2895609. The webcast will be archived on the company’s website until its next earnings release.
Non-GAAP Financial Measures
Adjusted net earnings attributable to The Marcus Corporation, Adjusted net earnings per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA have been presented in this press release as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. The company defines Adjusted net earnings attributable to The Marcus Corporation as net earnings attributable to The Marcus Corporation adjusted to eliminate the impact of certain items that the company does not consider indicative of its core operating performance and the tax effect related to those items. The company defines Adjusted net earnings per diluted common share attributable to The Marcus Corporation as Adjusted net earnings attributable to The Marcus Corporation divided by diluted weighted average shares outstanding. The company defines Adjusted EBITDA as net earnings attributable to The Marcus Corporation before investment income, interest expense, other expense, gain or loss on disposition of property, equipment and other assets, equity earnings or losses from unconsolidated joint ventures, net earnings or losses attributable to noncontrolling interests, income taxes and depreciation and amortization, adjusted to eliminate the impact of certain items that the company does not consider indicative of its core operating performance. Reconciliations of these measures to the equivalent measures under GAAP are set forth in the attached tables.
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Adjusted net earnings attributable to The Marcus Corporation, Adjusted net earnings per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA are key measures used by management and the company’s board of directors to assess the company’s financial performance and enterprise value. The company believes that Adjusted net earnings attributable to The Marcus Corporation, Adjusted net earnings per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA are useful measures, as they eliminate certain expenses that are not indicative of the company’s core operating performance and facilitate a comparison of the company’s core operating performance on a consistent basis from period to period. The company also uses Adjusted EBITDA as a basis to determine certain annual cash bonuses and long-term incentive awards, to supplement GAAP measures of performance to evaluate the effectiveness of its business strategies, to make budgeting decisions, and to compare its performance against that of other peer companies using similar measures. Adjusted net earnings, Adjusted diluted earnings per share and Adjusted EBITDA are also used by analysts, investors and other interested parties as performance measures to evaluate industry competitors.
Adjusted net earnings attributable to The Marcus Corporation, Adjusted net earnings per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA are non-GAAP measures of the company’s financial performance and should not be considered as alternatives to net earnings or diluted earnings per share as a measure of financial performance, or any other performance measure derived in accordance with GAAP and they should not be construed as an inference that the company’s future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted net earnings attributable to The Marcus Corporation and Adjusted EBITDA are not intended to be measures of liquidity or free cash flow for management’s discretionary use. In addition, these non-GAAP measures exclude certain non-recurring and other charges. Each of these non-GAAP measures has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the company’s results as reported under GAAP. In evaluating Adjusted net earnings attributable to The Marcus Corporation, Adjusted net earnings per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same as or similar to some of the items eliminated in the adjustments made to determine Adjusted net earnings attributable to The Marcus Corporation, Adjusted net earnings per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA, such as acquisition expenses, preopening expenses, accelerated depreciation and other adjustments. The company’s presentation of Adjusted net earnings attributable to The Marcus Corporation, Adjusted net earnings per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA should not be construed to imply that the company’s future results will be unaffected by any such adjustments. Definitions and calculations of Adjusted net earnings, Adjusted diluted earnings per share and Adjusted EBITDA differ among companies in our industries, and therefore Adjusted net earnings, Adjusted diluted earnings per share and Adjusted EBITDA disclosed by the company may not be comparable to the measures disclosed by other companies.
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About The Marcus Corporation
Headquartered in Milwaukee, The Marcus Corporation is a leader in the lodging and entertainment industries, with significant company-owned real estate assets. The Marcus Corporation’s theatre division, Marcus Theatres^®^, is the fourth largest theatre circuit in the U.S. and currently owns or operates 1,110 screens at 91 locations in 17 states under the Marcus Theatres, Movie Tavern^®^ by Marcus and Bistro*Plex^®^*brands. The company’s lodging division, Marcus^®^ Hotels & Resorts, owns and/or manages 20 hotels, resorts and other properties in eight states. For more information, please visit the company’s website at www.marcuscorp.com.
Certain matters discussed in this press release are “forward-lookingstatements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation ReformAct of 1995. These forward-looking statements may generally be identified as such because the context of such statements includewords 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 statementsare subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, butnot limited to, the following: (1) the availability, in terms of both quantity and audience appeal, of motion pictures for ourtheatre division, as well as other industry dynamics such as the maintenance of a suitable window between the date such motionpictures are released in theatres and the date they are released to other distribution channels; (2) the effects of adverse economicconditions in our markets, particularly with respect to our hotels and resorts division; (3) the effects on our occupancyand room rates of the relative industry supply of available rooms at comparable lodging facilities in our markets; (4) the effectsof competitive conditions in our markets; (5) our ability to achieve expected benefits and performance from our strategic initiativesand acquisitions; (6) the effects of increasing depreciation expenses, reduced operating profits during major property renovations,impairment losses, and preopening and start-up costs due to the capital intensive nature of our businesses; (7) the effectsof weather conditions, particularly during the winter in the Midwest and in our other markets; (8) our ability to identifyproperties to acquire, develop and/or manage and the continuing availability of funds for such development; (9) the adverse impacton business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States orother incidents of violence in public venues such as hotels and movie theatres; (10) a disruption in our business and reputationaland economic risks associated with civil securities claims brought by shareholders; and (11) our ability to timely and successfullyintegrate the Movie Tavern operations into our own circuit. Shareholders, potential investors and other readers are urged to considerthese factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-lookingstatements. The forward-looking statements made herein are made only as of the date of this press release and we undertake noobligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
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| Consolidated Statements of Earnings | ||||||||||||
| (Unaudited) | ||||||||||||
| (in<br> thousands, except per share data) | ||||||||||||
| 13<br> Weeks Ended | 52<br> Weeks Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 26, | December 27, | December 26, | December 27, | |||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Revenues: | ||||||||||||
| Theatre admissions | $ | 72,364 | $ | 61,350 | $ | 284,141 | $ | 246,385 | ||||
| Rooms | 24,540 | 24,530 | 105,857 | 108,786 | ||||||||
| Theatre concessions | 59,111 | 42,877 | 231,237 | 166,564 | ||||||||
| Food and beverage | 20,097 | 18,799 | 74,665 | 72,771 | ||||||||
| Other revenues | 21,571 | 18,967 | 87,805 | 78,329 | ||||||||
| 197,683 | 166,523 | 783,705 | 672,835 | |||||||||
| Cost reimbursements | 9,179 | 8,509 | 37,158 | 34,285 | ||||||||
| Total revenues | 206,862 | 175,032 | 820,863 | 707,120 | ||||||||
| Costs and expenses: | ||||||||||||
| Theatre operations | 68,199 | 53,399 | 267,741 | 217,851 | ||||||||
| Rooms | 10,208 | 10,155 | 40,381 | 41,181 | ||||||||
| Theatre concessions | 21,500 | 12,417 | 85,289 | 47,522 | ||||||||
| Food and beverage | 16,459 | 14,732 | 60,812 | 58,662 | ||||||||
| Advertising and marketing | 6,919 | 6,458 | 24,583 | 23,775 | ||||||||
| Administrative | 18,660 | 19,463 | 73,522 | 72,116 | ||||||||
| Depreciation and amortization | 18,793 | 18,443 | 72,277 | 61,342 | ||||||||
| Rent | 7,012 | 2,916 | 26,099 | 11,267 | ||||||||
| Property taxes | 5,344 | 4,385 | 21,871 | 19,396 | ||||||||
| Other operating expenses | 9,336 | 9,502 | 41,065 | 36,534 | ||||||||
| Impairment charge | 1,874 | - | 1,874 | - | ||||||||
| Reimbursed<br> costs | 9,179 | 8,509 | 37,158 | 34,285 | ||||||||
| Total<br> costs and expenses | 193,483 | 160,379 | 752,672 | 623,931 | ||||||||
| Operating income | 13,379 | 14,653 | 68,191 | 83,189 | ||||||||
| Other income (expense): | ||||||||||||
| Investment income (loss) | 544 | (225 | ) | 1,379 | 208 | |||||||
| Interest expense | (2,832 | ) | (3,079 | ) | (11,791 | ) | (13,079 | ) | ||||
| Other expense | (480 | ) | (496 | ) | (1,921 | ) | (1,985 | ) | ||||
| Loss on disposition of property,<br> equipment and other assets | (880 | ) | (575 | ) | (1,149 | ) | (1,342 | ) | ||||
| Equity<br> losses from unconsolidated joint ventures, net | (22 | ) | (681 | ) | (274 | ) | (399 | ) | ||||
| (3,670 | ) | (5,056 | ) | (13,756 | ) | (16,597 | ) | |||||
| Earnings before income taxes | 9,709 | 9,597 | 54,435 | 66,592 | ||||||||
| Income<br> taxes | 1,855 | 873 | 12,320 | 13,127 | ||||||||
| Net earnings | 7,854 | 8,724 | 42,115 | 53,465 | ||||||||
| Net earnings<br> attributable to noncontrolling interests | 52 | 4 | 98 | 74 | ||||||||
| Net<br> earnings attributable to The Marcus Corporation | $ | 7,802 | $ | 8,720 | $ | 42,017 | $ | 53,391 | ||||
| Net earnings per common share attributable to The Marcus Corporation - diluted | $ | 0.25 | $ | 0.30 | $ | 1.35 | $ | 1.86 | ||||
| Weighted ave. shares outstanding - diluted | 31,363 | 28,949 | 31,152 | 28,713 |
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| Condensed Consolidated Balance Sheets | ||||
| (In<br> thousands) | ||||
| (Unaudited) | (Audited) | |||
| --- | --- | --- | --- | --- |
| December 26, | December 27, | |||
| 2019 | 2018 | |||
| Assets: | ||||
| Cash, cash equivalents<br> and restricted cash | $ | 25,618 | $ | 21,927 |
| Accounts and notes receivable | 29,465 | 25,684 | ||
| Refundable income taxes | 5,916 | 5,983 | ||
| Other current assets | 18,265 | 15,355 | ||
| Property and equipment, net | 923,254 | 840,043 | ||
| Operating lease right-of-use<br> assets | 243,855 | - | ||
| Other assets | 112,813 | 80,339 | ||
| Total Assets | $ | 1,359,186 | $ | 989,331 |
| Liabilities and Shareholders' Equity: | ||||
| Accounts payable | $ | 49,370 | $ | 37,452 |
| Taxes other than income taxes | 20,613 | 18,743 | ||
| Other current liabilities | 79,189 | 77,192 | ||
| Current portion of finance lease<br> obligations | 2,571 | 5,912 | ||
| Current portion of operating<br> lease obligations | 13,335 | - | ||
| Current maturities of long-term<br> debt | 9,910 | 9,957 | ||
| Finance lease obligations | 20,802 | 22,208 | ||
| Operating lease obligations | 232,111 | - | ||
| Long-term debt | 206,432 | 228,863 | ||
| Deferred income taxes | 48,262 | 41,977 | ||
| Deferred compensation and other | 55,133 | 56,908 | ||
| Equity | 621,458 | 490,119 | ||
| Total Liabilities and Shareholders'<br> Equity | $ | 1,359,186 | $ | 989,331 |
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| Business Segment Information | ||||||||||
| (Unaudited) | ||||||||||
| (In<br> thousands) | ||||||||||
| Theatres | Hotels/<br> <br>Resorts | Corporate<br> <br>Items | Total | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 13 Weeks Ended Dec. 26, 2019 | ||||||||||
| Revenues | $ | 143,006 | $ | 63,746 | $ | 110 | $ | 206,862 | ||
| Operating income (loss) | 19,247 | (1,393 | ) | (4,475 | ) | 13,379 | ||||
| Depreciation and amortization | 13,284 | 5,380 | 129 | 18,793 | ||||||
| 13 Weeks Ended Dec. 27, 2018 | ||||||||||
| Revenues | $ | 113,407 | $ | 61,519 | $ | 106 | $ | 175,032 | ||
| Operating income (loss) | 22,473 | (3,257 | ) | (4,563 | ) | 14,653 | ||||
| Depreciation and amortization | 10,009 | 8,339 | 95 | 18,443 | ||||||
| 52 Weeks Ended Dec. 26, 2019 | ||||||||||
| Revenues | $ | 557,080 | $ | 263,350 | $ | 433 | $ | 820,863 | ||
| Operating income (loss) | 76,903 | 10,050 | (18,762 | ) | 68,191 | |||||
| Depreciation and amortization | 51,202 | 20,430 | 645 | 72,277 | ||||||
| 52 Weeks Ended Dec. 27, 2018 | ||||||||||
| Revenues | $ | 446,804 | $ | 259,892 | $ | 424 | $ | 707,120 | ||
| Operating income (loss) | 88,790 | 12,480 | (18,081 | ) | 83,189 | |||||
| Depreciation and amortization | 38,760 | 22,229 | 353 | 61,342 |
Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses. Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues.
| 12 |
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| Reconciliation of Adjusted net earnings and Adjusted net earnings per diluted common share | ||||||||||||
| (Unaudited) | ||||||||||||
| (In<br> thousands, except per share data) | ||||||||||||
| 13<br> Weeks Ended | 52<br> Weeks Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 26, | December 27, | December 26, | December 27, | |||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net earnings attributable to The Marcus<br> Corporation | $ | 7,802 | $ | 8,720 | $ | 42,017 | $ | 53,391 | ||||
| Add (deduct): | ||||||||||||
| Reduction in deferred income<br> taxes (a) | - | (1,209 | ) | - | (1,947 | ) | ||||||
| Acquisition/preopening expenses<br> - theatres (b) | 439 | 1,674 | 2,475 | 1,674 | ||||||||
| Preopening expenses and initial<br> start-up losses - hotels (c) | 1,296 | 524 | 6,830 | 524 | ||||||||
| Accelerated depreciation (d) | - | 3,735 | - | 3,735 | ||||||||
| Impairment charge (e) | 1,874 | - | 1,874 | - | ||||||||
| Tax impact<br> of adjustments to net earnings (f) | (942 | ) | (1,596 | ) | (2,918 | ) | (1,596 | ) | ||||
| Adjusted net earnings attributable<br> to The Marcus Corporation | $ | 10,469 | $ | 11,848 | $ | 50,278 | $ | 55,781 | ||||
| Weighted ave. shares outstanding - diluted | 31,363 | 28,949 | 31,152 | 28,713 | ||||||||
| Net earnings per diluted common<br> share attributable to The Marcus Corporation | $ | 0.25 | $ | 0.30 | $ | 1.35 | $ | 1.86 | ||||
| Adjusted net earnings per diluted<br> common share attributable to The Marcus Corporation | $ | 0.33 | $ | 0.41 | $ | 1.61 | $ | 1.94 | ||||
| (a) | Reflects<br> nonrecurring reductions in deferred income taxes related to a tax accounting method change<br> made as a result of the Tax Cuts and Job Acts of 2017. | |||||||||||
| --- | --- | |||||||||||
| (b) | Acquisition<br> and preopening costs incurred related to the Movie Tavern acquisition and newly opened<br> Movie Tavern in Brookfield, Wisconsin. | |||||||||||
| --- | --- | |||||||||||
| (c) | Preopening<br> costs incurred related to the 5+ month closure and conversion of the InterContinental<br> Milwaukee into Saint Kate - The Arts Hotel plus initial start-up losses of a new<br> hotel compared to a stabilized hotel. | |||||||||||
| --- | --- | |||||||||||
| (d) | Reflects<br> nonrecurring accelerated depreciation expense on InterContinental Milwaukee assets to<br> be disposed of in connection with the conversion of this hotel into Saint Kate<br> - The Arts Hotel. | |||||||||||
| --- | --- | |||||||||||
| (e) | Impairment<br> charge related to a specific theatre location. | |||||||||||
| --- | --- | |||||||||||
| (f) | Represents<br> the tax effect related to adjustments (b), (c), (d) and (e) to net earnings, calculated<br> using statutory tax rate of 26.1% for the fiscal 2019 periods and 26.9% for the<br> fiscal 2018 periods. | |||||||||||
| --- | --- | |||||||||||
| Reconciliation of Net earnings to Adjusted EBITDA | ||||||||||||
| --- | ||||||||||||
| (Unaudited) | ||||||||||||
| (In<br> thousands) | ||||||||||||
| 13<br> Weeks Ended | 52<br> Weeks Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| December 26, | December 27, | December 26, | December 27, | |||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net earnings attributable to The Marcus<br> Corporation | $ | 7,802 | $ | 8,720 | $ | 42,017 | $ | 53,391 | ||||
| Add (deduct): | ||||||||||||
| Investment (income) loss | (544 | ) | 225 | (1,379 | ) | (208 | ) | |||||
| Interest expense | 2,832 | 3,079 | 11,791 | 13,079 | ||||||||
| Other expense | 480 | 496 | 1,921 | 1,985 | ||||||||
| Loss on disposition of property,<br> equipment and other assets | 880 | 575 | 1,149 | 1,342 | ||||||||
| Equity losses from unconsolidated<br> joint ventures, net | 22 | 681 | 274 | 399 | ||||||||
| Net earnings attributable to<br> noncontrolling interests | 52 | 4 | 98 | 74 | ||||||||
| Income tax expense | 1,855 | 873 | 12,320 | 13,127 | ||||||||
| Depreciation and amortization | 18,793 | 18,443 | 72,277 | 61,342 | ||||||||
| Share-based compensation expenses<br> (a) | 929 | 741 | 3,523 | 2,691 | ||||||||
| Acquisition/preopening expenses<br> - theatres (b) | 439 | 1,674 | 2,475 | 1,674 | ||||||||
| Preopening expenses and initial<br> start-up losses - hotels (c) | 1,296 | 524 | 6,830 | 524 | ||||||||
| Impairment<br> charge (d) | 1,874 | - | 1,874 | - | ||||||||
| Adjusted EBITDA | $ | 36,710 | $ | 36,035 | $ | 155,170 | $ | 149,420 | ||||
| (a) | Non-cash<br> charges related to share-based compensation programs. | |||||||||||
| --- | --- | |||||||||||
| (b) | Acquisition<br> and preopening costs incurred related to the Movie Tavern acquisition and newly opened<br> Movie Tavern in Brookfield, Wisconsin. | |||||||||||
| --- | --- | |||||||||||
| (c) | Preopening<br> costs incurred related to the 5+ month closure and conversion of the InterContinental<br> Milwaukee into Saint Kate - The Arts Hotel plus initial start-up losses of a new<br> hotel compared to a stabilized hotel. | |||||||||||
| --- | --- | |||||||||||
| (d) | Impairment<br> charge related to a specific theatre location. | |||||||||||
| --- | --- |
| 13 |
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