Company Quick10K Filing
Marcus
Price36.95 EPS1
Shares31 P/E27
MCap1,159 P/FCF13
Net Debt233 EBIT63
TEV1,392 TEV/EBIT22
TTM 2019-09-26, in MM, except price, ratios
10-Q 2020-03-26 Filed 2020-05-12
10-K 2019-12-26 Filed 2020-02-24
10-Q 2019-09-26 Filed 2019-11-05
10-Q 2019-06-27 Filed 2019-08-06
10-Q 2019-03-28 Filed 2019-05-07
10-K 2018-12-27 Filed 2019-03-12
10-Q 2018-09-27 Filed 2018-11-06
10-Q 2018-06-28 Filed 2018-08-07
10-Q 2018-03-29 Filed 2018-05-08
10-K 2017-12-28 Filed 2018-03-13
10-Q 2017-09-28 Filed 2017-11-07
10-Q 2017-06-29 Filed 2017-08-08
10-Q 2017-03-30 Filed 2017-05-09
10-K 2016-12-29 Filed 2017-03-14
10-Q 2016-09-29 Filed 2016-11-08
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-10
10-Q 2015-11-26 Filed 2016-01-05
10-Q 2015-08-27 Filed 2015-10-06
10-K 2015-05-28 Filed 2015-08-11
10-Q 2015-02-26 Filed 2015-04-07
10-Q 2014-11-27 Filed 2015-01-06
10-Q 2014-08-28 Filed 2014-10-07
10-K 2014-05-29 Filed 2014-08-12
10-Q 2014-02-27 Filed 2014-04-08
10-Q 2013-11-28 Filed 2014-01-07
10-Q 2013-08-29 Filed 2013-10-08
10-K 2013-05-30 Filed 2013-08-13
10-Q 2013-02-28 Filed 2013-04-09
10-Q 2012-11-29 Filed 2013-01-08
10-Q 2012-08-30 Filed 2012-10-09
10-K 2012-05-31 Filed 2012-08-14
10-Q 2012-02-23 Filed 2012-04-03
10-Q 2011-11-24 Filed 2012-01-03
10-Q 2011-08-25 Filed 2011-10-04
10-K 2011-05-26 Filed 2011-08-09
10-Q 2011-02-24 Filed 2011-04-05
10-Q 2010-11-25 Filed 2011-01-04
10-Q 2010-08-26 Filed 2010-10-05
10-K 2010-05-27 Filed 2010-08-10
10-Q 2010-02-25 Filed 2010-04-06
10-Q 2009-11-26 Filed 2010-01-05
8-K 2020-05-06
8-K 2020-05-05
8-K 2020-04-29
8-K 2020-04-09
8-K 2020-02-20
8-K 2020-01-09
8-K 2019-10-24
8-K 2019-07-25
8-K 2019-05-07
8-K 2019-04-25
8-K 2019-02-21
8-K 2019-02-04
8-K 2019-02-01
8-K 2018-11-01
8-K 2018-10-25
8-K 2018-07-26
8-K 2018-05-08
8-K 2018-04-26
8-K 2018-02-22

MCS 10Q Quarterly Report

Part I - Financial Information
Item 1. Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 4. Mine Safety Disclosures
Item 6. Exhibits
EX-3.1 mcs-20200326xex3d1.htm
EX-31.1 mcs-20200326xex31d1.htm
EX-31.2 mcs-20200326xex31d2.htm
EX-32 mcs-20200326xex32.htm

Marcus Earnings 2020-03-26

Balance SheetIncome StatementCash Flow
1.41.10.80.60.30.02012201420172020
Assets, Equity
0.30.20.20.10.10.02012201420172020
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12012201420172020
Ops, Inv, Fin

Large Accelerated Filer792525479357690000062234--12-312020Q1falseMARCUS CORP0000062234us-gaap:FairValueInputsLevel1Member2020-03-260000062234us-gaap:FairValueInputsLevel1Member2019-12-260000062234us-gaap:TreasuryStockMember2020-03-260000062234us-gaap:RetainedEarningsMember2020-03-260000062234us-gaap:ParentMember2020-03-260000062234us-gaap:NoncontrollingInterestMember2020-03-260000062234us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-03-260000062234us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-260000062234us-gaap:TreasuryStockMember2019-12-260000062234us-gaap:RetainedEarningsMember2019-12-260000062234us-gaap:ParentMember2019-12-260000062234us-gaap:NoncontrollingInterestMember2019-12-260000062234us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2019-12-260000062234us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-260000062234us-gaap:TreasuryStockMember2019-03-280000062234us-gaap:RetainedEarningsMember2019-03-280000062234us-gaap:ParentMember2019-03-280000062234us-gaap:NoncontrollingInterestMember2019-03-280000062234us-gaap:CommonStockMember2019-03-280000062234us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2019-03-280000062234us-gaap:CommonClassBMember2019-03-280000062234us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-280000062234us-gaap:TreasuryStockMember2018-12-270000062234us-gaap:RetainedEarningsMember2018-12-270000062234us-gaap:ParentMember2018-12-270000062234us-gaap:NoncontrollingInterestMember2018-12-270000062234us-gaap:CommonStockMember2018-12-270000062234us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2018-12-270000062234us-gaap:CommonClassBMember2018-12-270000062234us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-270000062234mcs:NotePurchaseAgreementMember2020-04-170000062234us-gaap:CorporateMember2019-12-272020-03-260000062234us-gaap:CorporateMember2018-12-282019-03-280000062234us-gaap:ProductAndServiceOtherMemberus-gaap:CorporateMember2019-12-272020-03-260000062234us-gaap:ProductAndServiceOtherMembermcs:TheatresSegmentMember2019-12-272020-03-260000062234us-gaap:ProductAndServiceOtherMembermcs:HotelsOrResortsMember2019-12-272020-03-260000062234us-gaap:OccupancyMembermcs:HotelsOrResortsMember2019-12-272020-03-260000062234us-gaap:FoodAndBeverageMembermcs:HotelsOrResortsMember2019-12-272020-03-260000062234us-gaap:ConcessionsMembermcs:TheatresSegmentMember2019-12-272020-03-260000062234us-gaap:AdmissionMembermcs:TheatresSegmentMember2019-12-272020-03-260000062234us-gaap:ProductAndServiceOtherMember2019-12-272020-03-260000062234us-gaap:AdmissionMember2019-12-272020-03-260000062234us-gaap:ProductAndServiceOtherMemberus-gaap:CorporateMember2018-12-282019-03-280000062234us-gaap:ProductAndServiceOtherMembermcs:TheatresSegmentMember2018-12-282019-03-280000062234us-gaap:ProductAndServiceOtherMembermcs:HotelsOrResortsMember2018-12-282019-03-280000062234us-gaap:OccupancyMembermcs:HotelsOrResortsMember2018-12-282019-03-280000062234us-gaap:FoodAndBeverageMembermcs:HotelsOrResortsMember2018-12-282019-03-280000062234us-gaap:ConcessionsMembermcs:TheatresSegmentMember2018-12-282019-03-280000062234us-gaap:AdmissionMembermcs:TheatresSegmentMember2018-12-282019-03-280000062234us-gaap:ProductAndServiceOtherMember2018-12-282019-03-280000062234us-gaap:AdmissionMember2018-12-282019-03-280000062234mcs:CreditAgreementMembermcs:SeniorTermLoanMember2020-03-260000062234mcs:CreditAgreementMember2019-12-272020-03-260000062234mcs:SeniorTermLoanMember2020-04-292020-04-290000062234srt:MinimumMember2020-03-260000062234srt:MaximumMember2020-03-260000062234us-gaap:AccruedLiabilitiesMembermcs:InterestRateSwapAgreementsTwoMember2020-03-260000062234mcs:DeferredCompensationAndOtherMembermcs:InterestRateSwapAgreementsTwoMember2020-03-260000062234us-gaap:FairValueInputsLevel2Member2020-03-260000062234us-gaap:FairValueInputsLevel2Member2019-12-260000062234mcs:InterestRateSwapAgreementsTwoMember2019-12-260000062234srt:MinimumMember2020-03-260000062234srt:MaximumMember2020-03-260000062234us-gaap:FairValueInputsLevel3Member2019-12-272020-03-260000062234us-gaap:FairValueInputsLevel3Memberus-gaap:TradeNamesMember2019-12-272020-03-2600000622342019-09-260000062234us-gaap:CommonStockMemberus-gaap:RetainedEarningsMember2019-12-272020-03-260000062234us-gaap:CommonStockMemberus-gaap:ParentMember2019-12-272020-03-260000062234us-gaap:CommonClassBMemberus-gaap:RetainedEarningsMember2019-12-272020-03-260000062234us-gaap:CommonClassBMemberus-gaap:ParentMember2019-12-272020-03-260000062234us-gaap:CommonStockMemberus-gaap:RetainedEarningsMember2018-12-282019-03-280000062234us-gaap:CommonStockMemberus-gaap:ParentMember2018-12-282019-03-280000062234us-gaap:CommonClassBMemberus-gaap:RetainedEarningsMember2018-12-282019-03-280000062234us-gaap:CommonClassBMemberus-gaap:ParentMember2018-12-282019-03-280000062234us-gaap:InterestRateSwapMember2020-03-260000062234mcs:InterestRateSwapAgreementsTwoMember2020-03-260000062234mcs:InterestRateSwapAgreementsOneMember2020-03-2600000622342018-03-010000062234mcs:TheatresMember2019-12-272020-03-260000062234mcs:HotelsResortsMember2019-12-272020-03-260000062234mcs:CorporateItemsMember2019-12-272020-03-260000062234mcs:TheatresMember2018-12-282019-03-280000062234mcs:HotelsResortsMember2018-12-282019-03-280000062234mcs:CorporateItemsMember2018-12-282019-03-280000062234srt:MinimumMembermcs:NotePurchaseAgreementMember2020-04-170000062234srt:MaximumMembermcs:NotePurchaseAgreementMember2020-04-170000062234mcs:CreditAgreementMember2020-03-260000062234mcs:SeniorTermLoanMember2020-01-090000062234us-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-04-292020-04-290000062234us-gaap:RevolvingCreditFacilityMembermcs:AlternateBaseRateBRMember2020-04-292020-04-290000062234mcs:SeniorTermLoanMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-04-292020-04-290000062234mcs:SeniorTermLoanMembermcs:AlternateBaseRateBRMember2020-04-292020-04-290000062234us-gaap:OccupancyMember2019-12-272020-03-260000062234us-gaap:ManagementServiceMember2019-12-272020-03-260000062234us-gaap:FoodAndBeverageMember2019-12-272020-03-260000062234us-gaap:ConcessionsMember2019-12-272020-03-260000062234us-gaap:OccupancyMember2018-12-282019-03-280000062234us-gaap:ManagementServiceMember2018-12-282019-03-280000062234us-gaap:FoodAndBeverageMember2018-12-282019-03-280000062234us-gaap:ConcessionsMember2018-12-282019-03-280000062234us-gaap:RetainedEarningsMember2019-12-272020-03-260000062234us-gaap:NoncontrollingInterestMember2019-12-272020-03-260000062234us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-272020-03-260000062234us-gaap:RetainedEarningsMember2018-12-282019-03-280000062234us-gaap:NoncontrollingInterestMember2018-12-282019-03-280000062234us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-282019-03-280000062234us-gaap:CommonStockMember2020-03-260000062234us-gaap:CommonClassBMember2020-03-260000062234us-gaap:CommonStockMember2019-12-260000062234us-gaap:CommonClassBMember2019-12-260000062234us-gaap:CommonStockMember2019-12-272020-03-260000062234us-gaap:CommonClassBMember2019-12-272020-03-260000062234us-gaap:CommonStockMember2018-12-282019-03-280000062234us-gaap:CommonClassBMember2018-12-282019-03-2800000622342019-03-2800000622342018-12-270000062234mcs:VSSSouthernTheatresLLCMember2019-02-012019-02-010000062234mcs:VSSSouthernTheatresLLCMember2019-02-010000062234mcs:VSSSouthernTheatresLLCMemberus-gaap:GeneralAndAdministrativeExpenseMember2019-03-280000062234us-gaap:ParentMember2019-12-272020-03-260000062234us-gaap:ParentMember2018-12-282019-03-280000062234mcs:FinanceLeasedAssetsMember2020-03-260000062234us-gaap:TreasuryStockMember2019-12-272020-03-260000062234us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2019-12-272020-03-260000062234us-gaap:TreasuryStockMember2018-12-282019-03-280000062234us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2018-12-282019-03-280000062234mcs:TheatresSegmentMember2019-12-272020-03-260000062234mcs:HotelsOrResortsMember2019-12-272020-03-260000062234mcs:TheatresSegmentMember2018-12-282019-03-280000062234mcs:HotelsOrResortsMember2018-12-282019-03-2800000622342020-03-272020-06-2500000622342020-04-302020-04-300000062234mcs:NotePurchaseAgreementMember2020-04-172020-04-1700000622342020-04-0800000622342020-03-240000062234mcs:CreditAgreementMember2020-01-092020-01-0900000622342018-12-282019-12-260000062234us-gaap:TradeNamesMember2019-12-272020-03-260000062234us-gaap:TradeNamesMember2020-03-2600000622342021-07-0100000622342021-04-0100000622342020-12-3100000622342020-09-2400000622342020-06-2500000622342021-07-012021-07-0100000622342021-04-012021-04-0100000622342020-12-312020-12-3100000622342020-09-242020-09-2400000622342020-06-252020-06-2500000622342021-12-302021-12-3000000622342020-04-012020-12-3100000622342018-12-282019-03-2800000622342020-03-2600000622342019-12-260000062234us-gaap:CommonStockMember2020-05-010000062234us-gaap:CommonClassBMember2020-05-0100000622342019-12-272020-03-26xbrli:sharesiso4217:USDxbrli:puremcs:restaurantmcs:agreementiso4217:USDxbrli:shares

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 26, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-12604

THE MARCUS CORPORATION

(Exact name of registrant as specified in its charter)

Wisconsin

 

39-1139844

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

100 East Wisconsin Avenue, Suite 1900
Milwaukee, Wisconsin

 

53202-4125

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (414) 905-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.

Yes

 

No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

 

No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check One).

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

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. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

 

No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

COMMON STOCK OUTSTANDING AT MAY 1, 2020 – 23,131,830

CLASS B COMMON STOCK OUTSTANDING AT MAY 1, 2020 – 7,925,254

EXPLANATORY NOTE

As previously disclosed in the Current Report on Form 8-K filed by The Marcus Corporation (the “Company”) with the Securities and Exchange Commission (the “SEC”) on May 5, 2020, the filing of the Company’s Quarterly Report on Form 10-Q for the period ended March 26, 2020 (the “Form 10-Q”), was delayed due to circumstances related to novel coronavirus outbreak (the “COVID-19 pandemic”). Due to the COVID-19 pandemic and measures taken to limit the spread of the COVID-19 pandemic, the Company’s operations and business have experienced significant disruptions. The Company has been following the recommendations of local government and health authorities to minimize exposure risk for its employees, including the temporary closure of its corporate headquarters, and having employees work remotely, which slowed the Company’s routine quarterly financial statement close process. At the same time, the COVID-19 pandemic has resulted in unprecedented operational challenges for the exhibition industry and the hospitality industry generally and the Company in particular. These operational challenges have increased the required disclosures for the Form 10-Q, which in turn increased the difficulty of the Company’s implementation of inline eXtensible Business Reporting Language requirements. The Company was therefore unable to file the Form 10-Q on its customary schedule. The Company relied on the SEC’s Order Under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies, SEC Release No. 34-88465, dated March 25, 2020, to delay the filing of this Form 10-Q.

2

THE MARCUS CORPORATION

INDEX

Page

PART I – FINANCIAL INFORMATION

    

Item 1.

Consolidated Financial Statements:

Consolidated Balance Sheets
(March 26, 2020 and December 26, 2019)

4

Consolidated Statements of Earnings (Loss)
(13 weeks ended March 26, 2020 and March 28, 2019)

6

Consolidated Statements of Comprehensive Income (Loss)
(13 weeks ended March 26, 2020 and March 28, 2019)

7

Consolidated Statements of Cash Flows
(13 weeks ended March 26, 2020 and March 28, 2019)

8

Condensed Notes to Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

38

PART II – OTHER INFORMATION

Item 1A.

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

41

Item 4.

Mine Safety Disclosures

41

Item 6.

Exhibits

42

Signatures

1

3

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

THE MARCUS CORPORATION

Consolidated Balance Sheets

March 26,

December 26,

(in thousands, except share and per share data)

    

2020

    

2019

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

126,472

$

20,862

Restricted cash

 

4,795

 

4,756

Accounts receivable, net of reserves of $998 and $762, respectively

 

14,765

 

29,465

Refundable income taxes

 

10,438

 

5,916

Other current assets

 

16,857

 

18,265

Total current assets

 

173,327

 

79,264

 

  

 

  

Property and equipment:

 

  

 

  

Land and improvements

 

152,692

 

152,434

Buildings and improvements

 

761,991

 

761,511

Leasehold improvements

 

164,873

 

164,083

Furniture, fixtures and equipment

 

379,759

 

377,404

Finance lease right-of-use assets

 

74,382

 

74,357

Construction in progress

 

8,061

 

4,043

Total property and equipment

 

1,541,758

 

1,533,832

Less accumulated depreciation and amortization

 

629,490

 

610,578

Net property and equipment

 

912,268

 

923,254

 

  

 

  

Operating lease right-of-use assets

 

244,468

 

243,855

 

  

 

  

Other assets:

 

  

 

  

Investments in joint ventures

 

3,538

 

3,595

Goodwill

 

75,258

 

75,282

Other

 

32,527

 

33,936

Total other assets

 

111,323

 

112,813

 

  

 

  

TOTAL ASSETS

$

1,441,386

$

1,359,186

See accompanying condensed notes to consolidated financial statements.

4

THE MARCUS CORPORATION

Consolidated Balance Sheets

    

March 26,

    

December 26,

(in thousands, except share and per share data)

 

2020

 

2019

LIABILITIES AND SHAREHOLDERS' EQUITY

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

27,178

$

49,370

Taxes other than income taxes

 

15,844

 

20,613

Accrued compensation

 

17,098

 

18,055

Other accrued liabilities

 

50,507

 

61,134

Current portion of finance lease obligations

 

2,438

 

2,571

Current portion of operating lease obligations

 

15,386

 

13,335

Current maturities of long-term debt

 

9,977

 

9,910

Total current liabilities

 

138,428

 

174,988

 

  

 

  

Finance lease obligations

 

20,302

 

20,802

 

  

 

  

Operating lease obligations

 

238,010

 

232,111

 

  

 

  

Long-term debt

 

345,206

 

206,432

 

  

 

Deferred income taxes

 

45,771

 

48,262

 

  

 

  

Deferred compensation and other

 

55,281

 

55,133

 

  

 

  

Equity:

 

  

 

  

Shareholders’ equity attributable to The Marcus Corporation

Preferred Stock, $1 par; authorized 1,000,000 shares; none issued

 

 

Common Stock, $1 par; authorized 50,000,000 shares; issued 23,264,259 shares at March 26, 2020 and 23,253,744 shares at December 26, 2019

 

23,264

 

23,254

Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,925,254 shares at March 26, 2020 and 7,935,769 shares at December 26, 2019

 

7,926

 

7,936

Capital in excess of par

 

146,694

 

145,549

Retained earnings

 

437,387

 

461,884

Accumulated other comprehensive loss

 

(13,195)

 

(12,648)

 

602,076

 

625,975

Less cost of Common Stock in treasury (133,363 shares at March 26, 2020 and 242,853 shares at December 26, 2019)

 

(3,563)

 

(4,540)

Total shareholders' equity attributable to The Marcus Corporation

 

598,513

 

621,435

Noncontrolling interest

 

(125)

 

23

Total equity

 

598,388

 

621,458

 

  

 

  

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,441,386

$

1,359,186

See accompanying condensed notes to consolidated financial statements.

5

THE MARCUS CORPORATION

Consolidated Statements of Earnings (Loss)

13 Weeks Ended

(in thousands, except per share data)

    

March 26, 2020

    

March 28, 2019

Revenues:

 

  

Theatre admissions

$

55,395

$

58,969

Rooms

 

16,989

 

18,938

Theatre concessions

 

45,930

 

47,155

Food and beverage

 

13,614

 

15,783

Other revenues

 

18,776

 

20,829

 

150,704

 

161,674

Cost reimbursements

 

8,756

 

8,365

Total revenues

 

159,460

 

170,039

 

  

 

  

Costs and expenses:

 

  

 

  

Theatre operations

 

54,016

 

56,378

Rooms

 

9,655

 

9,035

Theatre concessions

 

22,211

 

17,269

Food and beverage

 

14,465

 

13,609

Advertising and marketing

 

5,390

 

4,910

Administrative

 

17,732

 

17,859

Depreciation and amortization

 

19,033

 

15,985

Rent

 

6,954

 

5,403

Property taxes

 

6,029

 

5,393

Other operating expenses

 

8,707

 

10,883

Impairment charges

8,712

Reimbursed costs

 

8,756

 

8,365

Total costs and expenses

 

181,660

 

165,089

 

  

 

  

Operating income (loss)

 

(22,200)

 

4,950

 

  

 

  

Other income (expense):

 

  

 

  

Investment income (loss)

 

(695)

 

473

Interest expense

 

(2,516)

 

(3,059)

Other expense

 

(590)

 

(480)

Gain (loss) on disposition of property, equipment and other assets

 

(12)

 

7

Equity losses from unconsolidated joint ventures, net

 

(57)

 

(84)

 

(3,870)

 

(3,143)

 

  

 

Earnings (loss) before income taxes

 

(26,070)

 

1,807

Income taxes

 

(6,570)

 

13

Net earnings (loss)

 

(19,500)

 

1,794

Net loss attributable to noncontrolling interests

 

(148)

 

(66)

Net earnings (loss) attributable to The Marcus Corporation

$

(19,352)

$

1,860

 

  

 

  

Net earnings (loss) per share - basic:

 

  

 

  

Common Stock

$

(0.64)

$

0.06

Class B Common Stock

$

(0.58)

$

0.06

 

  

 

  

Net earnings (loss) per share - diluted:

 

  

 

  

Common Stock

$

(0.64)

$

0.06

Class B Common Stock

$

(0.58)

$

0.06

See accompanying condensed notes to consolidated financial statements.

6

THE MARCUS CORPORATION

Consolidated Statements of Comprehensive Income (Loss)

13 Weeks Ended

(in thousands)

    

March 26, 2020

    

March 28, 2019

Net earnings (loss)

$

(19,500)

$

1,794

 

  

 

  

Other comprehensive income (loss), net of tax:

 

  

 

  

 

  

 

  

Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $65 and $30, respectively

 

183

 

79

 

  

 

  

Fair market value adjustment of interest rate swaps, net of tax benefit of $288 and $142, respectively

 

(814)

 

(386)

 

  

 

  

Reclassification adjustment on interest rate swaps included in interest expense, net of tax effect of $31 and $4, respectively

 

84

 

10

 

  

 

  

Other comprehensive loss

 

(547)

 

(297)

 

  

 

  

Comprehensive income (loss)

 

(20,047)

 

1,497

 

  

 

Comprehensive loss attributable to noncontrolling interests

 

(148)

 

(66)

 

  

 

Comprehensive income (loss) attributable to The Marcus Corporation

$

(19,899)

$

1,563

See accompanying condensed notes to consolidated financial statements.

7

THE MARCUS CORPORATION

Consolidated Statements of Cash Flows

13 Weeks Ended

(in thousands)

    

March 26, 2020

    

March 28, 2019

OPERATING ACTIVITIES:

 

  

 

  

Net earnings (loss)

$

(19,500)

$

1,794

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

  

 

  

Losses on investments in joint ventures

 

57

 

84

Distributions from joint ventures

 

 

200

(Gain) loss on disposition of property, equipment and other assets

 

12

 

(7)

Impairment charges

 

8,712

 

Depreciation and amortization

 

19,033

 

15,985

Amortization of debt issuance costs

 

49

 

71

Share-based compensation

 

988

 

777

Deferred income taxes

 

(2,275)

 

(1)

Deferred compensation and other

 

(348)

 

(16)

Contribution of the Company’s stock to savings and profit-sharing plan

 

1,315

 

1,181

Changes in operating assets and liabilities:

 

  

 

  

Accounts receivable

 

14,700

 

5,355

Other assets

 

1,408

 

(970)

Operating leases

2,342

(281)

Accounts payable

 

(22,047)

 

(3,354)

Income taxes

 

(4,522)

 

101

Taxes other than income taxes

 

(4,769)

 

(1,703)

Accrued compensation

 

(957)

 

(2,816)

Other accrued liabilities

 

(10,816)

 

(8,380)

Total adjustments

 

2,882

 

6,226

Net cash provided by (used in) operating activities

 

(16,618)

 

8,020

 

  

 

  

INVESTING ACTIVITIES:

 

  

 

  

Capital expenditures

 

(9,978)

 

(13,724)

Purchase of theatres, net of cash acquired and working capital assumed

 

 

(29,626)

Proceeds from disposals of property, equipment and other assets

 

3

 

9

Other investing activities

 

(206)

 

(2,745)

Net cash used in investing activities

 

(10,181)

 

(46,086)

 

  

 

  

FINANCING ACTIVITIES:

 

  

 

  

Debt transactions:

 

  

 

  

Proceeds from borrowings on revolving credit facility

 

188,000

 

73,000

Repayment of borrowings on revolving credit facility

 

(49,000)

 

(38,000)

Principal payments on long-term debt

 

(177)

 

(217)

Debt issuance costs

(414)

Principal payments on finance lease obligations

 

(635)

 

(587)

Equity transactions:

 

 

  

Treasury stock transactions, except for stock options

 

(226)

 

(381)

Exercise of stock options

 

45

 

454

Dividends paid

 

(5,145)

 

(4,816)

Distributions to noncontrolling interest

 

 

(60)

Net cash provided by financing activities

 

132,448

 

29,393

 

  

 

  

Net increase (decrease) in cash, cash equivalents and restricted cash

 

105,649

 

(8,673)

Cash, cash equivalents and restricted cash at beginning of period

 

25,618

 

21,927

Cash, cash equivalents and restricted cash at end of period

$

131,267

$

13,254

 

  

 

  

Supplemental Information:

 

  

 

  

Interest paid, net of amounts capitalized

$

2,970

$

3,754

Income taxes (paid) refunded

 

(226)

 

88

Change in accounts payable for additions to property, equipment and other assets

 

(145)

 

1,165

See accompanying condensed notes to consolidated financial statements.

8

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 26, 2020

1. General

Basis of Presentation - The unaudited consolidated financial statements for the 13 weeks ended March 26, 2020 and March 28, 2019 have been prepared by the Company. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the unaudited interim financial information at March 26, 2020, and for all periods presented, have been made. The results of operations during the interim periods are not necessarily indicative of the results of operations for the entire year or other interim periods. However, the unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 26, 2019.

Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended December 26, 2019, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.

Depreciation and Amortization - Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the estimated useful lives of the assets or any related lease terms. Depreciation expense totaled $19,034,000 and $15,955,000 for the 13 weeks ended March 26, 2020 and March 28, 2019, respectively.

Long-Lived Assets – The Company periodically considers whether indicators of impairment of long-lived assets held for use are present. This includes quantitative and qualitative factors, including evaluating the historical actual operating performance of the long-lived assets and assessing the potential impact of recent events and transactions impacting the long-lived assets. If such indicators are present, the Company determines if the long-lived assets are recoverable by assessing whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than their carrying amounts. If the long-lived assets are not recoverable, the Company recognizes any impairment losses based on the excess of the carrying amount of the assets over their fair value. During the 13 weeks ended March 26, 2020, the Company determined that indicators of impairment were present. As such the Company evaluated the value of its property and equipment and the value of its operating lease right-of-use assets and recorded an impairment charge as discussed in Note 3.

Goodwill – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the last day of its fiscal year. Goodwill is tested for impairment at a reporting unit level, determined to be at an operating segment level. When reviewing goodwill for impairment, the Company considers the amount of excess fair value over the carrying value of the reporting unit, the period of time since its last quantitative test, and other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, the Company assesses numerous factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying value. Examples of qualitative factors that the Company assesses include its share price, its financial performance, market and competitive factors in its industry, and other events specific to the reporting unit. If the Company concludes that it is more likely than not that the fair value of its reporting unit is less than it carrying value, the Company performs a quantitative impairment test by comparing the carrying value of the reporting unit to the estimated fair value.

During the 13 weeks ended March 26, 2020, the Company determined that indicators of impairment were present and performed a quantitative test. In order to determine fair value, the Company used assumptions based on information available to it as of March 26, 2020, including both market data and forecasted future cash flows. The Company then used this information to determine fair value. The Company determined that the fair value of the Company's goodwill was greater than its carrying value. As such, no impairment was identified.

9

Trade Name Intangible Asset – The Company recorded a trade name intangible asset in conjunction with the Movie Tavern acquisition (See Note 4) that was determined to have an indefinite life. The Company reviews its trade name intangible asset for impairment at least annually or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. During the 13 weeks ended March 26, 2020, indicators of impairment were present and the Company recorded an impairment charge of $2,200,000 (see Note 3 for further detail).

Earnings (Loss) Per Share - Net earnings (loss) per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Diluted net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options using the treasury method. Convertible Class B Common Stock is reflected on an if-converted basis. The computation of the diluted net earnings (loss) per share of Common Stock assumes the conversion of Class B Common Stock, while the diluted net earnings (loss) per share of Class B Common Stock does not assume the conversion of those shares.

Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of Class B Common Stock. As such, the undistributed earnings (losses) for each period are allocated based on the proportionate share of entitled cash dividends. The computation of diluted net earnings (loss) per share of Common Stock assumes the conversion of Class B Common Stock and, as such, the undistributed earnings (losses) are equal to net earnings (loss) for that computation.

The following table illustrates the computation of Common Stock and Class B Common Stock basic and diluted net earnings (loss) per share for net earnings (loss) and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:

13 Weeks Ended

    

March 26, 2020

    

March 28, 2019

(in thousands, except per share data)

Numerator:

 

  

 

  

Net earnings (loss) attributable to The Marcus Corporation

$

(19,352)

$

1,860

Denominator:

 

  

 

  

Denominator for basic EPS

 

30,975

 

29,883

Effect of dilutive employee stock options

 

 

616

Denominator for diluted EPS

 

30,975

 

30,499

Net earnings (loss) per share - basic:

 

  

 

  

Common Stock

$

(0.64)

$

0.06

Class B Common Stock

$

(0.58)

$

0.06

Net earnings (loss) per share - diluted:

 

  

 

  

Common Stock

$

(0.64)

$

0.06

Class B Common Stock

$

(0.58)

$

0.06

For the periods when the Company reports a net loss, the computation of diluted loss per share equals the computation of basic loss per share since common stock equivalents are dilutive due to the net loss.

10

Shareholders’ Equity - Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interests for the 13 weeks ended March 26, 2020 and March 28, 2019 was as follows (in thousands, except per share data):

    

    

    

    

    

    

    

Shareholders’ 

    

    

Equity 

Accumulated 

Attributable 

Class B 

Capital 

Other 

to The 

Non- 

Common

Common 

in Excess 

Retained 

Comprehensive 

Treasury 

Marcus 

controlling 

Total 

Stock

Stock

of Par

Earnings

Loss

Stock

Corporation

Interests

Equity

BALANCES AT DECEMBER 26, 2019

$

23,254

$

7,936

$

145,549

$

461,884

$

(12,648)

$

(4,540)

$

621,435

$

23

$

621,458

Cash Dividends:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

$.15 Class B Common Stock

 

 

 

 

(1,224)

 

 

 

(1,224)

 

 

(1,224)

$.17 Common Stock

 

 

 

 

(3,921)

 

 

 

(3,921)

 

 

(3,921)

Exercise of stock options

 

 

 

5

 

 

 

40

 

45

 

 

45

Purchase of treasury stock

 

 

 

 

 

 

(274)

 

(274)

 

 

(274)

Savings and profit-sharing contribution

 

 

 

299

 

 

 

1,016

 

1,315

 

 

1,315

Reissuance of treasury stock

 

 

 

2

 

 

 

46

 

48

 

 

48

Issuance of non-vested stock

 

 

 

(149)

 

 

 

149

 

 

 

Shared-based compensation

 

 

 

988

 

 

 

 

988

 

 

988

Conversions of Class B Common Stock

 

10

 

(10)

 

 

 

 

 

 

 

Comprehensive loss

 

 

 

 

(19,352)

 

(547)

 

 

(19,899)

 

(148)

 

(20,047)

BALANCES AT MARCH 26, 2020

$

23,264

$

7,926

$

146,694

$

437,387

$

(13,195)

$

(3,563)

$

598,513

$

(125)

$

598,388

    

    

    

    

    

    

    

Shareholders’ 

    

    

Equity 

Accumulated 

Attributable 

Class B 

Capital 

Other 

to The 

Non- 

Common 

Common 

in Excess 

Retained 

Comprehensive 

Treasury 

Marcus 

controlling 

Total 

Stock

Stock

of Par

Earnings

Loss

Stock

Corporation

Interests

Equity

BALANCES AT DECEMBER 27, 2018

$

22,843

$

8,347

$

63,830

$

439,178

$

(6,758)

$

(37,431)

$

490,009

$

110

$

490,119

Cash Dividends:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

$.15 Class B Common Stock

 

 

 

 

(1,183)

 

 

 

(1,183)

 

 

(1,183)

$.16 Common Stock

 

 

 

 

(3,633)

 

 

 

(3,633)

 

 

(3,633)

Exercise of stock options

 

 

 

(78)

 

 

 

532

 

454

 

 

454

Purchase of treasury stock

 

 

 

 

 

 

(428)

 

(428)

 

 

(428)

Savings and profit-sharing contribution

 

 

 

810

 

 

 

371

 

1,181

 

 

1,181

Reissuance of treasury stock

 

 

 

31

 

 

 

16

 

47

 

 

47

Issuance of non-vested stock