10-Q 1 mcs-20230928.htm 10-Q mcs-20230928
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2023
oTRANSITION 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)
Wisconsin39-1139844
(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 classTrading symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par valueMCSNew 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.
Yesx Noo
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).
YesxNoo
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 fileroAccelerated filerx
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YesoNox
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 OCTOBER 30, 2023 – 24,617,344
CLASS B COMMON STOCK OUTSTANDING AT OCTOBER 30, 2023 –7,078,410

THE MARCUS CORPORATION
INDEX
2
PART I – FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
THE MARCUS CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share data)
September 28,
2023		December 29,
2022
ASSETS
Current assets:
Cash and cash equivalents$36,036 $21,704 
Restricted cash4,046 2,802 
Accounts receivable, net of reserves of $161 and $172, respectively
21,426 21,455 
Assets held for sale1,831 460 
Other current assets22,793 17,474 
Total current assets86,132 63,895 
Property and equipment:
Land and improvements131,718 132,285 
Buildings and improvements724,289 729,177 
Leasehold improvements166,300 167,516 
Furniture, fixtures and equipment397,257 386,197 
Finance lease right-of-use assets30,066 29,885 
Construction in progress9,636 10,305 
Total property and equipment1,459,266 1,455,365 
Less accumulated depreciation and amortization771,882 739,600 
Net property and equipment687,384 715,765 
Operating lease right-of-use assets183,674 194,965 
Other assets:
Investments in joint ventures1,740 2,067 
Goodwill74,996 75,015 
Other20,007 12,891 
Total other assets96,743 89,973 
TOTAL ASSETS$1,053,933 $1,064,598 
See accompanying condensed notes to consolidated financial statements.
3
THE MARCUS CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share data)
September 28,
2023		December 29,
2022
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$29,360 $32,187 
Taxes other than income taxes19,009 17,948 
Accrued compensation16,340 22,512 
Other accrued liabilities54,006 56,275 
Current portion of finance lease obligations2,561 2,488 
Current portion of operating lease obligations15,054 14,553 
Current maturities of long-term debt10,411 10,432 
Total current liabilities146,741 156,395 
Finance lease obligations13,354 15,014 
Operating lease obligations182,826 195,281 
Long-term debt159,681 170,005 
Deferred income taxes33,093 26,567 
Other long-term obligations45,340 44,415 
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 24,691,548 shares at September 28, 2023 and 24,498,243 shares at December 29, 2022
24,692 24,498 
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,078,410 shares at September 28, 2023 and 7,110,875 shares at December 29, 2022
7,078 7,111 
Capital in excess of par159,304 153,794 
Retained earnings285,215 274,254 
Accumulated other comprehensive loss(1,809)(1,694)
474,480 457,963 
Less cost of Common Stock in treasury (74,392 shares at September 28, 2023 and 78,882 shares at December 29, 2022)
(1,582)(1,866)
Total shareholders’ equity attributable to The Marcus Corporation472,898 456,097 
Noncontrolling interest— 824 
Total equity472,898 456,921 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,053,933 $1,064,598 
See accompanying condensed notes to consolidated financial statements.
4
THE MARCUS CORPORATION
Consolidated Statements of Earnings (Loss)
(in thousands, except per share data)
13 Weeks Ended39 Weeks Ended
September 28,
2023		September 29,
2022		September 28,
2023		September 29,
2022
Revenues:
Theatre admissions$63,652 $49,424 $180,274 $150,928 
Rooms36,456 36,924 82,959 83,219 
Theatre concessions54,551 44,715 156,633 138,326 
Food and beverage20,214 21,444 53,980 54,969 
Other revenues23,908 22,174 65,024 62,173 
198,781 174,681 538,870 489,615 
Cost reimbursements9,985 8,969 29,179 24,832 
Total revenues208,766 183,650 568,049 514,447 
Costs and expenses:
Theatre operations62,742 54,756 180,716 160,921 
Rooms11,594 11,856 31,232 30,530 
Theatre concessions20,738 17,868 59,069 56,054 
Food and beverage15,266 16,150 43,285 43,325 
Advertising and marketing6,025 6,544 16,703 17,003 
Administrative19,854 19,995 59,171 56,703 
Depreciation and amortization19,158 16,452 51,028 50,435 
Rent6,592 6,672 19,679 19,500 
Property taxes4,663 4,911 13,952 14,636 
Other operating expenses10,532 10,528 30,596 29,463 
Impairment charges684 — 684 — 
Reimbursed costs9,985 8,969 29,179 24,832 
Total costs and expenses187,833 174,701 535,294 503,402 
Operating income20,933 8,949 32,755 11,045 
Other income (expense):
Investment income (loss)445 (35)1,064 (762)
Interest expense(2,869)(3,688)(8,970)(11,843)
Other income (expense)(477)(472)(1,355)(1,278)
Equity earnings (losses) from unconsolidated joint ventures75 30 (127)(104)
(2,826)(4,165)(9,388)(13,987)
Earnings (loss) before income taxes18,107 4,784 23,367 (2,942)
Income tax expense (benefit)5,873 1,495 7,133 (289)
Net earnings (loss)$12,234 $3,289 $16,234 $(2,653)
Net earnings (loss) per share - basic:
Common Stock$0.39 $0.11 $0.52 $(0.09)
Class B Common Stock$0.36 $0.10 $0.48 $(0.08)
Net earnings (loss) per share - diluted:
Common Stock$0.32 $0.10 $0.46 $(0.09)
Class B Common Stock$0.31 $0.10 $0.46 $(0.08)
See accompanying condensed notes to consolidated financial statements.
5
THE MARCUS CORPORATION
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
13 Weeks Ended39 Weeks Ended
September 28,
2023		September 29,
2022		September 28,
2023		September 29,
2022
Net earnings (loss)$12,234 $3,289 $16,234 $(2,653)
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 (benefit) of $(4), $68, $(13) and $202, respectively
(12)190 (35)570 
Fair market value adjustment of interest rate swap, net of tax effect (benefit) of $0, $17, $(8) and $133, respectively
— 48 (22)377 
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect (benefit) of $0, $9, $(20) and $81, respectively
— 22 (58)228 
Other comprehensive income (loss)(12)260 (115)1,175 
Comprehensive income (loss)$12,222 $3,549 $16,119 $(1,478)













See accompanying condensed notes to consolidated financial statements.
6
THE MARCUS CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
39 Weeks Ended
September 28, 2023September 29, 2022
OPERATING ACTIVITIES:
Net income (loss)$16,234 $(2,653)
Adjustments to reconcile net loss to net cash provided by operating activities:
Losses on investments in joint ventures127 104 
Distribution from joint venture200 — 
(Gain) loss on disposition of property, equipment and other assets1,019 (267)
Impairment charges684 — 
Depreciation and amortization51,028 50,435 
Amortization of debt issuance costs1,109 1,242 
Share-based compensation5,000 7,036 
Deferred income taxes6,586 (2)
Other long-term obligations904 791 
Contribution of the Company’s stock to savings and profit-sharing plan1,259 956 
Changes in operating assets and liabilities:
Accounts receivable59 2,775 
Government grants receivable— 4,335 
Other assets(3,043)(3,341)
Operating leases (663)(1,596)
Accounts payable(4,389)(11,641)
Income taxes(241)22,653 
Taxes other than income taxes1,061 (1,222)
Accrued compensation(6,195)(4,719)
Other accrued liabilities(2,097)(4,524)
Total adjustments52,408 63,015 
Net cash provided by operating activities68,642 60,362 
INVESTING ACTIVITIES:
Capital expenditures(25,836)(27,483)
Proceeds from disposals of property, equipment and other assets67 4,850 
Proceeds from sale of trading securities17 — 
Purchase of trading securities(839)— 
Other investing activities(291)(230)
Net cash used in investing activities(26,882)(22,863)
FINANCING ACTIVITIES:
Debt transactions:
Proceeds from borrowings on revolving credit facility38,000 62,000 
Repayment of borrowings on revolving credit facility(38,000)(43,000)
Repayments on short-term borrowings— (47,499)
Principal payments on long-term debt(11,097)(11,275)
Repayment of borrowing on insurance policy(6,700)— 
Debt issuance costs(82)(37)
Principal payments on finance lease obligations(1,904)(2,047)
Equity transactions:
Treasury stock transactions, except for stock options(526)(1,486)
Exercise of stock options222 126 
Dividends paid(5,273)(1,540)
Distributions to noncontrolling interest(824)— 
Net cash used in financing activities(26,184)(44,758)
Net increase (decrease) in cash, cash equivalents and restricted cash15,576 (7,259)
Cash, cash equivalents and restricted cash at beginning of period24,506 24,054 
Cash, cash equivalents and restricted cash at end of period$40,082 $16,795 
Supplemental Information:
Interest paid, net of amounts capitalized$9,542 $12,391 
Income taxes refunded (paid), including interest earned(788)22,940 
Change in accounts payable for additions to property, equipment and other assets1,550 469 
See accompanying condensed notes to consolidated financial statements.
7
THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 39 WEEKS ENDED SEPTEMBER 28, 2023
(in thousands, except share and per share data)


1. General
Basis of Presentation - The unaudited consolidated financial statements for the 13 and 39 weeks ended September 28, 2023 and September 29, 2022 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 September 28, 2023, 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 29, 2022.
Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended December 29, 2022, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.
Noncontrolling Interest - The Company has an ownership interest greater than 50% in one joint venture that is considered a Variable Interest Entity (VIE) that is included in the accounts of the Company. The Company is the primary beneficiary of the VIE and the Company’s interest is considered a majority voting interest. The primary asset of this VIE, The Skirvin Hilton, was sold on December 16, 2022. The equity interest of outside owners in consolidated entities is recorded as noncontrolling interest in the consolidated balance sheets.
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 $19,150 and $51,004 for the 13 and 39 weeks ended September 28, 2023, respectively, and $16,444 and $50,411 for the 13 and 39 weeks ended September 29, 2022, respectively.
Assets Held for Sale – Long-lived assets that are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria are classified as assets held for sale and included within current assets on the consolidated balance sheet. Assets held for sale are measured at the lower of their carrying value or their fair value less costs to sell the asset. As of September 28, 2023, assets held for sale consists of excess land and one closed theatre.
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 September 28, 2023, the Company determined that indicators of impairment were present at one theatre asset group. As such, the Company evaluated the fair value of these assets, consisting primarily of land, building and furniture, fixtures and equipment, and determined that the fair value, measured using Level 3 pricing inputs (using estimated discounted cash flows over the life of the primary asset, including estimated sales proceeds) was less than their carrying values and recorded a $684 impairment loss, reducing certain property and equipment assets. The remaining net book value of the impaired assets as of the date of the asset write-down (September 28, 2023) was $3,040. There were no indicators of impairment identified during the 39 weeks ended September 29, 2022.
Goodwill – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the first day of the fiscal fourth quarter. There were no indicators of impairment identified during the 39 weeks ended September 28, 2023 or September 29, 2022.
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 and convertible debt instruments using the if-converted method. Convertible Class B Common Stock and convertible debt instruments are reflected on an if-converted basis when dilutive to Common Stock. The computation of the diluted net earnings (loss) per share of Common Stock assumes the conversion of Class B Common Stock in periods that have net earnings since it would be dilutive to Common Stock earnings per share, 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 following table illustrates the computation of Common Stock basic and diluted net earnings (loss) per share and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:
13 Weeks Ended39 Weeks Ended
September 28, 2023September 29, 2022September 28, 2023September 29, 2022
Numerator:
Net earnings (loss) $12,234 $3,289 $16,234 $(2,653)
Denominator (in thousands):
Denominator for basic EPS31,691 31,506 31,645 31,481 
Effect of dilutive employee stock options41 84 48 — 
Effect of convertible notes9,242 9,112 9,242 — 
Denominator for diluted EPS40,974 40,702 40,935 31,481 
Net earnings (loss) per share - basic:
Common Stock$0.39 $0.11 $0.52 $(0.09)
Class B Common Stock$0.36 $0.10 $0.48 $(0.08)
Net earnings (loss) per share - diluted:
Common Stock$0.32 $0.10 $0.46 $(0.09)
Class B Common Stock$0.31 $0.10 $0.46 $(0.08)
For the periods when the Company reports a net loss, common stock equivalents are excluded from the computation of diluted loss per share as their inclusion would have an antidilutive effect. During the 39 weeks ended September 29, 2022, approximately 76,714 common stock equivalents were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 39 weeks ended September 29, 2022, 9,111,846 shares related to the convertible notes were excluded from the computation of diluted loss per share as the effect would have been anti-dilutive.
Shareholders’ Equity - Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interest for the 13 and 39 weeks ended September 28, 2023 and September 29, 2022 was as follows:
Common
Stock		Class B
Common
Stock		Capital
in Excess
of Par		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Shareholders’
Equity
Attributable
to The
Marcus
Corporation		Non-
controlling
Interest		Total
Equity
BALANCES AT DECEMBER 29, 2022
$24,498 $7,111 $153,794 $274,254 $(1,694)$(1,866)$456,097 $824 $456,921 
Cash dividends:
$0.045 per share Class B Common Stock
— — — (319)— — (319)— (319)
$0.05 per share Common Stock
— — — (1,229)— — (1,229)— (1,229)
Exercise of stock options— — (1)— — 3 2 — 2 
Purchase of treasury stock— — — — — (313)(313)— (313)
Savings and profit-sharing contribution79 — 1,180 — — — 1,259 — 1,259 
Reissuance of treasury stock— — (3)— — 24 21 — 21 
Issuance of non-vested stock82 — (143)— — 61 — — — 
Shared-based compensation— — 2,172 — — — 2,172 — 2,172 
Other— — 1 (1)— — — — — 
Conversions of Class B Common Stock33 (33)— — — — — — — 
Distribution to noncontrolling interest— — — — — — — (550)(550)
Comprehensive loss— — — (9,466)(91)— (9,557)— (9,557)
BALANCES AT MARCH 30, 2023$24,692 $7,078 $157,000 $263,239 $(1,785)$(2,091)$448,133 $274 $448,407 
Cash dividends:
$0.045 per share Class B Common Stock
— — — (319)— — (319)— (319)
$0.05 per share Common Stock
— — — (1,230)— — (1,230)— (1,230)
Exercise of stock options— — (25)— — 121 96 — 96 
Purchase of treasury stock— — — — — (226)(226)— (226)
Reissuance of treasury stock— — (204)— — 223 19 — 19 
Issuance of non-vested stock— — (55)— — 55 — — — 
Shared-based compensation— — 1,515 — — — 1,515 — 1,515 
Other— — — 1 — (1)— — — 
Distribution to noncontrolling interest— — — — — — — (274)(274)
Comprehensive income (loss)— — — 13,466 (12)— 13,454 — 13,454 
BALANCES AT JUNE 29, 2023$24,692 $7,078 $158,231 $275,157 $(1,797)$(1,919)$461,442 $— $461,442 
Cash dividends:
$0.064 per share Class B Common Stock
— — — (453)— — (453)— (453)
$0.07 per share Common Stock
— — — (1,723)— — (1,723)— (1,723)
Exercise of stock options— — (184)— — 1,171 987 — 987 
Purchase of treasury stock— — — — — (914)(914)— (914)
Reissuance of treasury stock— — (3)— — 27 24 — 24 
Issuance of non-vested stock— — (53)— — 53 — — — 
Shared-based compensation— — 1,313 — — — 1,313 — 1,313 
Comprehensive income — — — 12,234 (12)— 12,222 — 12,222 
BALANCES AT SEPTEMBER 28, 2023
$24,692 $7,078 $159,304 $285,215 $(1,809)$(1,582)$472,898 $— $472,898 
Common
Stock		Class B
Common
Stock		Capital
in Excess
of Par		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Shareholders’
Equity
Attributable
to The
Marcus
Corporation		Non-
controlling
Interest		Total
Equity
BALANCES AT DECEMBER 30, 2021$24,345 $7,130 $145,656 $289,306 $(11,444)$(1,379)$453,614 $— $453,614 
Exercise of stock options— — (5)— — 31 26 — 26 
Purchase of treasury stock— — — — — (1,373)(1,373)— (1,373)
Savings and profit-sharing contribution56 — 900 — — — 956 — 956 
Reissuance of treasury stock— — 1 — — 8 9 — 9 
Issuance of non-vested stock78 — (236)— — 158 — — — 
Shared-based compensation— — 2,917 — — — 2,917 — 2,917 
Other— — 1 (1)— — — — — 
Conversions of Class B Common Stock19 (19)— — — — — — — 
Comprehensive income (loss)— — — (14,902)531 — (14,371)— (14,371)
BALANCES AT MARCH 31, 2022$24,498 $7,111 $149,234 $274,403 $(10,913)$(2,555)$441,778 $— $441,778 
Exercise of stock options— — (16)— — 69 53 — 53 
Purchase of treasury stock— — — — — (104)(104)— (104)
Reissuance of treasury stock— — (2)— — 9 7 — 7 
Issuance of non-vested stock— — (305)— — 305 — — — 
Shared-based compensation— — 1,655 — — — 1,655 — 1,655 
Other— — (1)1 — — — — — 
Comprehensive income— — — 8,960 384 — 9,344 — 9,344 
BALANCES AT JUNE 30, 2022$24,498 $7,111 $150,565 $283,364 $(10,529)$(2,276)$452,733 $— $452,733 
Cash dividends:
$0.045 per share Class B Common Stock
— — — (320)— — (320)— (320)
$0.05 per share Common Stock
— — — (1,220)— — (1,220)— (1,220)
Exercise of stock options— — (175)— — 988 813 — 813 
Purchase of treasury stock— — — — — (809)(809)— (809)
Reissuance of treasury stock— — (2)— — 20 18 — 18 
Issuance of non-vested stock— — (131)— — 131 — — — 
Shared-based compensation— — 2,464 — — — 2,464 — 2,464 
Comprehensive income — — — 3,289 260 — 3,549 — 3,549 
BALANCES AT SEPTEMBER 29, 2022$24,498 $7,111 $152,721 $285,113 $(10,269)$(1,946)$457,228 $— $457,228 
Accumulated Other Comprehensive Loss – Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:
September 28,
2023		December 29,
2022
Unrecognized gain on interest rate swap agreements$— $80 
Net unrecognized actuarial loss for pension obligation(1,809)$(1,774)
$(1,809)$(1,694)
Fair Value Measurements - Certain financial assets and liabilities are recorded at fair value in the consolidated financial statements. Some are measured on a recurring basis while others are measured on a non-recurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. A fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in
the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.
The Company’s assets and liabilities measured at fair value are classified in one of the following categories:
Level 1 - Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At September 28, 2023 and December 29, 2022, respectively, the Company’s $4,964 and $3,932 of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets. At September 28, 2023 and December 29, 2022, respectively, the Company’s $27,003 and $6,000 of investments in money market funds were valued using Level 1 pricing inputs and were included in cash and cash equivalents.
Level 2 - Assets or liabilities for which fair value is based on pricing inputs that were either directly or indirectly observable as of the reporting date. At December 29, 2022, the Company’s $108 asset related to the Company’s interest rate swap contract was valued using Level 2 pricing inputs. This contract terminated on March 1, 2023.
Level 3 - Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At September 28, 2023 and December 29, 2022, none of the Company’s recorded assets or liabilities that are measured on a recurring basis at fair market value were valued using Level 3 pricing inputs. Assets that are measured on a non-recurring basis are discussed above under Long-Lived Assets.
The carrying value of the Company’s financial instruments (including cash and cash equivalents, restricted cash, accounts receivable and accounts payable) approximates fair value. The fair value of the Company’s $70,000 of senior notes, valued using Level 2 pricing inputs, is approximately $62,406 at September 28, 2023, determined based upon discounted cash flows using current market interest rates for financial instruments with a similar average remaining life. The fair value of the Company's $100,050 of convertible senior notes, valued using Level 2 pricing inputs, is approximately $154,936 at September 28, 2023, determined based on market rates and the closing trading price of the convertible senior notes as of September 28, 2023. The carrying amounts of the Company’s remaining long-term debt approximate their fair values, determined using current rates for similar instruments, or Level 2 pricing inputs.
Defined Benefit Plan - The components of the net periodic pension cost of the Company’s unfunded nonqualified, defined-benefit plan are as follows:
13 Weeks Ended39 Weeks Ended
September 28, 2023September 29, 2022September 28, 2023September 29, 2022
Service cost$122 $263 $366 $791 
Interest cost453 335 1,358 1,005 
Net amortization of prior service cost and actuarial loss(16)258 (48)772 
Net periodic pension cost$559 $856 $1,676 $2,568 
Service cost is included in Administrative expense while all other components are recorded within Other expense outside of operating income in the consolidated statements of earnings.
Revenue Recognition – The disaggregation of revenues by business segment for the 13 and 39 weeks ended September 28, 2023 is as follows:
13 Weeks Ended September 28, 2023
TheatresHotels/Resorts CorporateTotal
Theatre admissions$63,652 $— $— $63,652 
Rooms— 36,456 — 36,456 
Theatre concessions54,551 — — 54,551 
Food and beverage— 20,214 — 20,214 
Other revenues(1)
8,382 15,443 83 23,908 
Cost reimbursements— 9,985 — 9,985 
Total revenues$126,585 $82,098 $83 $208,766 
39 Weeks Ended September 28, 2023
TheatresHotels/Resorts CorporateTotal
Theatre admissions$180,274 $— $— $180,274 
Rooms— 82,959 — $82,959 
Theatre concessions156,633 — — $156,633 
Food and beverage— 53,980 — $53,980 
Other revenues(1)
22,904 41,857 263 $65,024 
Cost reimbursements— 29,179 — $29,179 
Total revenues$359,811 $207,975 $263 $568,049 
(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.
The disaggregation of revenues by business segment for the 13 and 39 weeks ended September 29, 2022 is as follows:
13 Weeks Ended September 29, 2022
TheatresHotels/ResortsCorporateTotal
Theatre admissions$49,424 $— $— $49,424 
Rooms— 36,924 — 36,924 
Theatre concessions44,715 — — 44,715 
Food and beverage— 21,444 — 21,444 
Other revenues(1)
7,119 14,963 92 22,174 
Cost reimbursements— 8,969 — 8,969 
Total revenues$101,258 $82,300 $92 $183,650 
39 Weeks Ended September 29, 2022
TheatresHotels/ResortsCorporateTotal
Theatre admissions$150,928 $— $— $150,928 
Rooms— 83,219 — 83,219 
Theatre concessions138,326 — — 138,326 
Food and beverage— 54,969 — 54,969 
Other revenues(1)
20,932 40,938 303 62,173 
Cost reimbursements— 24,832 — 24,832 
Total revenues$310,186 $203,958 $303 $514,447 
(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.
The Company had deferred revenue from contracts with customers of $36,934 and $37,046 as of September 28, 2023 and December 29, 2022, respectively. The Company had no contract assets as of September 28, 2023 and December 29, 2022. During the 39 weeks ended September 28, 2023, the Company recognized revenue of $14,545 that was included in deferred revenues as of December 29, 2022. During the 39 weeks ended September 29, 2022, the Company recognized revenue of $9,448 that was included in deferred revenues as of December 30, 2021. The majority of the Company’s deferred revenue relates to non-redeemed gift cards, advanced ticket sales and the Company’s loyalty program.
As of September 28, 2023, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was $1,882 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. As of September 28, 2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Theatres non-redeemed gift cards was $15,317 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the tickets and gift cards are redeemed, which is expected to occur within the next two years.
As of September 28, 2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Hotels and Resorts non-redeemed gift cards was $3,707 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the gift cards are redeemed, which is expected to occur within the next two years.
The majority of the Company’s revenue is recognized in less than one year from the original contract.
8
THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 39 WEEKS ENDED SEPTEMBER 28, 2023
(in thousands, except share and per share data)

2. Long-Term Debt
Long-term debt is summarized as follows:
September 28, 2023December 29, 2022
Senior notes$70,000 $80,000 
Unsecured term note due February 2025, with monthly principal and interest payments of $39, bearing interest at 5.75%
637 954 
Convertible senior notes100,050 100,050 
Payroll Protection Program loans1,460 2,240 
Revolving credit agreement— — 
Debt issuance costs(2,055)(2,807)
Total debt, net of debt issuance costs170,092 180,437 
Less current maturities, net of issuance costs10,411 10,432 
Long-term debt$159,681 $170,005 
Credit Agreement
On January 9, 2020, the Company replaced its then-existing credit agreement with several banks. On April 29, 2020, the Company entered into the First Amendment, on September 15, 2020, the Company entered into the Second Amendment, on July 13, 2021, the Company entered into the Third Amendment, on July 29, 2022, the Company entered into the Fourth Amendment and on February 10, 2023, the Company entered into the Fifth Amendment (the Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment, hereinafter referred to as the “Credit Agreement”).
The Credit Agreement provides for a revolving credit facility that matures on January 9, 2025 with an initial maximum aggregate amount of availability of $225,000. At September 28, 2023, there were borrowings of $0 outstanding on the revolving credit facility, which when borrowed, bear interest at the secured overnight financing rate (“SOFR”) plus a margin, effectively 6.41% at September 28, 2023. Availability under the line at September 28, 2023, was $220,623, after taking into consideration outstanding letters of credit that reduce revolver availability.
Effective with the Fifth Amendment on February 10, 2023, the variable rate LIBOR benchmark in the Credit Agreement was replaced with SOFR. Borrowings under the Credit Agreement now generally bear interest at a variable rate equal to: (i) SOFR plus a credit spread adjustment of 0.10%, subject to a 0% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month SOFR plus a credit spread adjustment of 0.10%), subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement generally requires the Company to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on our consolidated debt to capitalization ratio, as defined in the Credit Agreement.
The Credit Agreement contains various restrictions and covenants. Among other requirements, the Credit Agreement (a) limits the amount of priority debt (as defined in the Credit Agreement) held by the Company’s restricted subsidiaries to no more than 20% of the Company’s consolidated total capitalization (as defined in the Credit Agreement), (b) limits the Company’s permissible consolidated debt to capitalization ratio to a maximum of 0.55 to 1.0, (c) requires the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0 as of the end of the fiscal quarter ending March 30, 2023 and each fiscal quarter thereafter, and (d) restricts the Company’s ability to incur additional indebtedness and make voluntary prepayments on or defeasance of the Company’s 4.02% Senior Notes due August 2025, 4.32% Senior Notes due February 2027, the notes or certain other convertible securities. Beginning with the first quarter of fiscal 2023, the Company returned to compliance with prior financial covenants under the Credit Agreement that were temporarily waived
9
THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 39 WEEKS ENDED SEPTEMBER 28, 2023
(in thousands, except share and per share data)

(specifically, the consolidated fixed charge coverage ratio), removing any limitations on the total amount of quarterly dividends or share repurchases. During fiscal 2022, the Credit Agreement limited the total amount of quarterly dividend payments or share repurchases to no more than $1,550 per quarter.
In connection with the Credit Agreement: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of its respective personal property assets and (b) certain of its respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the Credit Agreement.
The Credit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.
Subsequent to the end of the third quarter of fiscal 2023, on October 16, 2023 the Company amended the Credit Agreement. See Note 6 - Subsequent Event for further discussion.
Note Purchase Agreements
At September 28, 2023 and December 29, 2022, the Company’s $70,000 of senior notes consist of two Note Purchase Agreements maturing in 2025 through 2027, require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 4.02% to 4.32%.
Subsequent to the end of the third quarter of fiscal 2023, on October 16, 2023 the Company amended the Note Purchase Agreements. See Note 6 - Subsequent Event for further discussion.
Convertible Senior Notes
On September 17, 2020, the Company entered into a purchase agreement to issue and sell $100,050 aggregate principal amount of its 5.00% Convertible Senior Notes due 2025 (the “Convertible Notes.”) The Convertible Notes were issued pursuant to an indenture (the “Indenture”), dated September 22, 2020, between the Company and U.S. Bank National Association, as trustee.
The Convertible Notes bear interest from September 22, 2020 at a rate of 5.00% per year. Interest will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021. The Convertible Notes may bear additional interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the Indenture or if the Convertible Notes are not freely tradeable as required by the Indenture. The Convertible Notes will mature on September 15, 2025, unless earlier repurchased or converted. Prior to March 15, 2025, the Convertible Notes will be convertible at the option of the holders only under the following circumstances: (i) during any fiscal quarter commencing after the fiscal quarter ending on December 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period immediately after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after March 15, 2025, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
Upon conversion, the Convertible Notes may be settled, at the Company’s election, in cash, shares of Common Stock or a combination thereof. The initial conversion rate was 90.8038 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $