10-Q 1 mcs-20220630.htm 10-Q mcs-20220630
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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 June 30, 2022
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 AUGUST 1, 2022 – 24,395,412
CLASS B COMMON STOCK OUTSTANDING AT AUGUST 1, 2022 –7,110,875

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)
June 30,
2022		December 30,
2021
ASSETS
Current assets:
Cash and cash equivalents$57,741 $17,658 
Restricted cash5,677 6,396 
Accounts receivable, net of reserves of $169 and $1,001, respectively
26,273 28,902 
Government grants receivable— 4,335 
Refundable income taxes— 22,435 
Assets held for sale521 4,856 
Other current assets19,683 15,364 
Total current assets109,895 99,946 
Property and equipment:
Land and improvements129,802 129,642 
Buildings and improvements766,057 756,974 
Leasehold improvements167,316 166,060 
Furniture, fixtures and equipment383,997 375,650 
Finance lease right-of-use assets75,262 75,124 
Construction in progress3,652 6,000 
Total property and equipment1,526,086 1,509,450 
Less accumulated depreciation and amortization770,460 738,258 
Net property and equipment755,626 771,192 
Operating lease right-of-use assets209,264 217,072 
Other assets:
Investments in joint ventures2,202 2,335 
Goodwill75,052 75,095 
Deferred incomes taxes10,198 10,032 
Other12,398 12,689 
Total other assets99,850 100,151 
TOTAL ASSETS$1,174,635 $1,188,361 
See accompanying condensed notes to consolidated financial statements.
3
THE MARCUS CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share data)
June 30,
2022		December 30,
2021
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$38,335 $35,781 
Income taxes283 — 
Taxes other than income taxes19,219 19,566 
Accrued compensation18,879 20,474 
Other accrued liabilities59,334 59,678 
Short-term borrowings46,628 47,346 
Current portion of finance lease obligations2,489 2,561 
Current portion of operating lease obligations16,291 16,795 
Current maturities of long-term debt11,077 10,967 
Total current liabilities212,535 213,168 
Finance lease obligations16,116 17,192 
Operating lease obligations207,713 216,064 
Long-term debt203,720 204,177 
Deferred income taxes25,125 26,183 
Other long-term obligations56,693 57,963 
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 24,498,243 shares at June 30, 2022 and 24,345,356 shares at December 30, 2021
24,498 24,345 
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,110,875 shares at June 30, 2022 and 7,130,125 shares at December 30, 2021
7,111 7,130 
Capital in excess of par150,565 145,656 
Retained earnings283,364 289,306 
Accumulated other comprehensive loss(10,529)(11,444)
455,009 454,993 
Less cost of Common Stock in treasury (112,282 shares at June 30, 2022 and 48,111 shares at December 30, 2021)
(2,276)(1,379)
Total shareholders’ equity attributable to The Marcus Corporation452,733 453,614 
Noncontrolling interest— — 
Total equity452,733 453,614 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,174,635 $1,188,361 
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 Ended26 Weeks Ended
June 30,
2022		July 1,
2021		June 30,
2022		July 1,
2021
Revenues:
Theatre admissions$63,087 $24,915 $101,504 $35,600 
Rooms28,865 17,332 46,295 26,376 
Theatre concessions58,147 23,061 93,611 32,980 
Food and beverage19,014 9,591 33,525 15,503 
Other revenues21,192 14,231 39,999 26,125 
190,305 89,130 314,934 136,584 
Cost reimbursements8,250 3,417 15,863 6,750 
Total revenues198,555 92,547 330,797 143,334 
Costs and expenses:
Theatre operations61,737 28,877 106,165 47,147 
Rooms10,471 7,072 18,674 12,337 
Theatre concessions22,993 10,037 38,186 14,533 
Food and beverage15,035 7,806 27,175 13,176 
Advertising and marketing5,978 3,819 10,459 6,368 
Administrative17,627 15,963 36,708 29,279 
Depreciation and amortization16,752 18,494 33,983 36,473 
Rent6,578 6,344 12,828 12,685 
Property taxes4,980 4,468 9,725 9,207 
Other operating expenses9,261 8,628 18,935 13,418 
Impairment charges— 3,732 — 3,732 
Reimbursed costs8,250 3,417 15,863 6,750 
Total costs and expenses179,662 118,657 328,701 205,105 
Operating income (loss)18,893 (26,110)2,096 (61,771)
Other income (expense):
Investment income (loss)(459)120 (727)160 
Interest expense(4,063)(4,907)(8,155)(9,750)
Other expense(584)(628)(1,161)(1,256)
Gain (loss) on disposition of property, equipment and other assets(69)(164)355 2,040 
Equity earnings ( losses) from unconsolidated joint ventures7 — (134)— 
(5,168)(5,579)(9,822)(8,806)
Earnings (loss) before income taxes13,725 (31,689)(7,726)(70,577)
Income tax expense ( benefit)4,765 (8,323)(1,784)(19,081)
Net earnings (loss)8,960 (23,366)(5,942)(51,496)
Net earnings (loss) attributable to noncontrolling interests— — — — 
Net earnings (loss) attributable to The Marcus Corporation$8,960 (23,366)$(5,942)$(51,496)
Net earnings (loss) per share - basic:
Common Stock$0.29 $(0.76)$(0.19)$(1.71)
Class B Common Stock$0.26 $(0.68)$(0.18)$(1.44)
Net earnings (loss) per share - diluted:
Common Stock$0.24 $(0.76)$(0.19)$(1.71)
Class B Common Stock$0.23 $(0.68)$(0.18)$(1.44)
See accompanying condensed notes to consolidated financial statements.
5
THE MARCUS CORPORATION
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
13 Weeks Ended26 Weeks Ended
June 30,
2022		July 1,
2021		June 30,
2022		July 1,
2021
Net earnings (loss)$8,960 $(23,366)$(5,942)$(51,496)
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 $67, $86, $134 and $172 , respectively
190 242 380 484 
Fair market value adjustment of interest rate swap, net of tax effect (benefit) of $37, $(2), $116 and $4, respectively
106 (7)329 10 
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect of $31, $43, $72 and $111, respectively
88 121 206 314 
Other comprehensive income384 356 915 808 
Comprehensive income (loss)9,344 (23,010)(5,027)(50,688)
Comprehensive earnings (loss) attributable to noncontrolling interests— — — — 
Comprehensive income (loss) attributable to The Marcus Corporation$9,344 $(23,010)$(5,027)$(50,688)













See accompanying condensed notes to consolidated financial statements.
6
THE MARCUS CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
26 Weeks Ended
June 30, 2022July 1, 2021
OPERATING ACTIVITIES:
Net loss$(5,942)$(51,496)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Losses on investments in joint ventures134 — 
Gain on disposition of property, equipment and other assets(355)(2,040)
Impairment charges— 3,732 
Depreciation and amortization33,983 36,473 
Amortization of debt issuance costs826 1,244 
Share-based compensation4,572 4,152 
Deferred income taxes(1,505)(19,181)
Other long-term obligations(49)1,180 
Contribution of the Company’s stock to savings and profit-sharing plan956 1,012 
Changes in operating assets and liabilities:
Accounts receivable2,629 (4,944)
Government grants receivable4,335 4,913 
Other assets(4,294)(1,712)
Operating leases (1,047)(2,484)
Accounts payable551 6,369 
Income taxes22,720 6,003 
Taxes other than income taxes(347)(654)
Accrued compensation(1,595)6,650 
Other accrued liabilities(344)1,102 
Total adjustments61,170 41,815 
Net cash provided by (used in) operating activities55,228 (9,681)
INVESTING ACTIVITIES:
Capital expenditures(16,341)(6,195)
Proceeds from disposals of property, equipment and other assets4,821 4,297 
Purchase of trading securities— (1,906)
Other investing activities45 59 
Net cash used in investing activities(11,475)(3,745)
FINANCING ACTIVITIES:
Debt transactions:
Proceeds from borrowings on revolving credit facility22,000 66,500 
Repayment of borrowings on revolving credit facility(22,000)(46,500)
Repayments on short-term borrowings(820)(4,150)
Principal payments on long-term debt(851)(187)
Debt issuance costs— (4)
Principal payments on finance lease obligations(1,336)(1,329)
Equity transactions:
Treasury stock transactions, except for stock options(1,461)(1,236)
Exercise of stock options79 1,374 
Net cash (used in) provided by financing activities(4,389)14,468 
Net increase in cash, cash equivalents and restricted cash39,364 1,042 
Cash, cash equivalents and restricted cash at beginning of period24,054 14,088 
Cash, cash equivalents and restricted cash at end of period$63,418 $15,130 
Supplemental Information:
Interest paid, net of amounts capitalized$7,054 $7,719 
Income taxes refunded, including interest earned22,998 5,910 
Change in accounts payable for additions to property, equipment and other assets2,003 400 
See accompanying condensed notes to consolidated financial statements.
7
THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 26 WEEKS ENDED JUNE 30, 2022
(in thousands, except share and per share data)


1. General
Basis of Presentation - The unaudited consolidated financial statements for the 13 and 26 weeks ended June 30, 2022 and July 1, 2021 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 June 30, 2022, 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 30, 2021.
Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended December 30, 2021, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.
Noncontrolling Interests - 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 equity interest of outside owners in consolidated entities is recorded as noncontrolling interests in the consolidated balance sheets, and their share of earnings is recorded as net earnings (loss) attributable to noncontrolling interests in the consolidated statements of earnings (loss) in accordance with the partnership agreement. Due to the cumulative losses of the entity, the noncontrolling interest balance is $0 as of June 30, 2022 and December 30, 2021. The Company will not record earnings or losses from noncontrolling interest until the entity returns to profitability.
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 $16,744 and $33,967 for the 13 and 26 weeks ended June 30, 2022, respectively, and $18,475 and $36,433 for the 13 and 26 weeks ended July 1, 2021, 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 June 30, 2022, assets held for sale consists primarily of excess land.
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. There were no indicators of impairment identified during the 26 weeks ended June 30, 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 26 weeks ended June 30, 2022 or July 1, 2021.
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 Ended26 Weeks Ended
June 30, 2022July 1, 2021June 30, 2022July 1, 2021
Numerator:
Net earnings (loss) attributable to The Marcus Corporation$8,960 $(23,366)$(5,942)$(51,496)
Denominator:
Denominator for basic EPS31,492 31,404 31,469 31,300 
Effect of dilutive employee stock options40 — — — 
Effect of convertible notes9,085 — — — 
Denominator for diluted EPS40,617 31,404 31,469 31,300 
Net earnings (loss) per share - basic:
Common Stock$0.29 $(0.76)$(0.19)$(1.71)
Class B Common Stock$0.26 $(0.68)$(0.18)$(1.44)
Net earnings (loss) per share - diluted:
Common Stock$0.24 $(0.76)$(0.19)$(1.71)
Class B Common Stock$0.23 $(0.68)$(0.18)$(1.44)
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 26 weeks ended June 30, 2022, and the 13 and 26 weeks ended July 1, 2021, approximately 61,791, 165,439 and 142,746 common stock equivalents, respectively, were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 26 weeks ended June 30, 2022, and the 13 and 26 weeks ended July 1, 2021, 9,084,924 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 26 weeks ended June 30, 2022 and July 1, 2021 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 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 
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 31, 2020$23,264 $7,926 $153,529 $331,897 $(14,933)$(2,960)$498,723 $— $498,723 
Adoption of ASU No. 2020-06
— — (16,511)702 — — (15,809)— (15,809)
Exercise of stock options— — (659)— — 1,951 1,292 — 1,292 
Purchase of treasury stock— — — — — (1,181)(1,181)— (1,181)
Savings and profit-sharing contribution44 — 968 — — — 1,012 — 1,012 
Reissuance of treasury stock— — 2 — — 10 12 — 12 
Issuance of non-vested stock221 — (367)— — 146 — — — 
Shared-based compensation— — 1,484 — — — 1,484 — 1,484 
Other— — — (1)— 1 — — — 
Conversions of Class B Common Stock520 (520)— — — — — — — 
Comprehensive income (loss)— — — (28,130)452 — (27,678)— (27,678)
BALANCES AT APRIL 1, 2021$24,049 $7,406 $138,446 $304,468 $(14,481)$(2,033)$457,855 $— $457,855 
Exercise of stock options— — (40)— — 122 82 — 82 
Purchase of treasury stock— — — — — (73)(73)— (73)
Reissuance of treasury stock— — (1)— — 7 6 — 6 
Issuance of non-vested stock18 — (157)— — 139 — — — 
Shared-based compensation— — 2,668 — — — 2,668 — 2,668 
Conversions of Class B Common Stock275 (275)— — — — — — — 
Comprehensive income (loss)— — — (23,366)356 — (23,010)— (23,010)
BALANCES AT JULY 1, 2021$24,342 $7,131 $140,916 $281,102 $(14,125)$(1,838)$437,528 $— $437,528 
Accumulated Other Comprehensive Loss – Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:
June 30,
2022		December 30,
2021
Unrecognized gain (loss) on interest rate swap agreements$26 $(509)
Net unrecognized actuarial loss for pension obligation(10,555)$(10,935)
$(10,529)$(11,444)
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 June 30, 2022 and December 30, 2021, respectively, the Company’s $3,789 and $4,617 of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets. At June