The Marcus Corporation Reports Third Quarter Results Results impacted by weaker film slate and one-time legal expenses Business Wire MILWAUKEE -- March 21, 2013 The Marcus Corporation (NYSE: MCS) today reported results for the third quarter ended February 28, 2013. The company’s results were impacted by a weaker overall film slate for Marcus Theatres® compared to the prior year and one-time lawsuit settlement costs for Marcus® Hotels & Resorts. Third Quarter Fiscal 2013 Highlights *Total revenues for the third quarter of fiscal 2013 were $93,674,000, a 1.7% increase from revenues of $92,077,000 for the third quarter of fiscal 2012. *The company reported an operating loss of $(224,000) for the third quarter of fiscal 2013, compared to operating income of $4,075,000 for the third quarter of fiscal 2012. *The company reported a net loss attributable to The Marcus Corporation of $(1,372,000), or $(0.05) per diluted common share, for the third quarter of fiscal 2013, compared to net earnings attributable to The Marcus Corporation of $734,000, or $0.03 per diluted common share, for the third quarter of fiscal 2012. *Results for the third quarter of fiscal 2013 were unfavorably impacted by unusual items totaling approximately $2.0 million, or $0.04 per diluted common share, consisting of approximately $1.4 million of costs related to the settlement of lawsuits concerning the company’s Las Vegas property and a $618,000 impairment charge in the theatre division. *Results for the third quarter of fiscal 2013 include $6,008,000 of income from the extinguishment of debt related to debt refinancing at the Skirvin Hilton hotel. The income had no impact on net earnings attributable to The Marcus Corporation, however, due to the company’s determination that the entire amount was attributable to non-controlling interests. First Three Quarters Fiscal 2013 Highlights *Total revenues for the first three quarters of fiscal 2013 were $312,246,000, a 2.0% increase from revenues of $306,053,000 for the same period in fiscal 2012. *Operating income was $29,948,000 for the first three quarters of fiscal 2013, an 11.1% decrease from operating income of $33,684,000 for the first three quarters of fiscal 2012. *Net earnings attributable to The Marcus Corporation were $14,031,000 for the first three quarters of fiscal 2013, a 12.5% decrease from net earnings attributable to The Marcus Corporation of $16,035,000 for the same period in fiscal 2012. *Earnings per diluted common share attributable to The Marcus Corporation were $0.50 for the first three quarters of fiscal 2013, a 9.1% decrease from earnings per diluted common share attributable to The Marcus Corporation of $0.55 for the first three quarters of fiscal 2012. *Results for the first three quarters of fiscal 2013 were unfavorably impacted by unusual items totaling approximately $4.0 million, or $0.09 per diluted common share, consisting of $3.0 million of costs related to the settlement of lawsuits concerning the company’s Las Vegas property and $1.0 million of impairment charges in the theatre division. “The overall depth of the third-quarter film product was weaker than during last year’s third quarter, highlighting the fact that this business is heavily dependent on the films produced in Hollywood. The results of our comparable company-owned hotels continued to improve, despite the fact that the third quarter is typically our weakest quarter due to reduced travel during the winter season in our predominantly Midwestern locations. Our hotel division results were negatively impacted by the fact that all material lawsuits related to The Platinum Hotel & Spa in Las Vegas, Nev., were recently resolved, resulting in significant settlement expenses in the third quarter. We are pleased to have this issue behind us and may now move forward without the impact these litigation costs have had on our reported results during the past four years,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation. Marcus Theatres^® “Operating results for Marcus Theatres were lower compared to last year’s third quarter, which had a very deep line-up of hit films. This year’s third quarter, which included the busy holiday season, started strong, but January and February were weaker compared to a year ago. The top films during the third quarter this year included The Hobbit: An Unexpected Journey, Les Misérables, Lincoln and Django Unchained,” said Marcus. “Oz: The Great and Powerful (3D) has opened strongly in early March and other films with box-office potential opening in the coming weeks include The Croods (3D), G.I. Joe: Retaliation (3D) and Oblivion. Overall, we are likely to have difficult comparisons in March and April due to the tremendous success of The Hunger Games last year,” said Bruce J. Olson, senior vice president of The Marcus Corporation and president of Marcus Theatres. “Our fourth quarter ends in May with a stronger line-up of films including Iron Man 3 (3D), Star Trek Into Darkness (3D), Epic (3D), Fast & Furious 6 and The Hangover Part III. For comparison purposes, last year’s May results included our top-performing film of the year, The Avengers (3D), as well as an extra week of operations due to our 53-week fiscal year. Looking ahead to the summer season and the beginning of our next fiscal year, the film schedule has a number of potentially strong performers including After Earth, Man of Steel (3D), Monsters University (3D), World War Z (3D), White House Down, The Lone Ranger, Despicable Me 2 (3D), 300: Rise of an Empire (3D) and The Smurfs 2 (3D),” said Olson. Olson noted that the company’s 15^th UltraScreen® auditorium is currently under construction at the Gurnee Cinema in Gurnee, Ill. The 72-foot-wide, three-stories-tall large format UltraScreen will feature the latest MDX™ (Marcus Digital Xperience™) digital projection technology, a state-of-the-art digital audio system and plush high-back memory-foam chairs. The new UltraScreen is scheduled to open this fall. “The major renovation of the Point Cinema in Madison, Wis. is nearing completion. The renovation includes extensive updates to the theatre’s interior and exterior, as well as the addition of a Take Five Lounge opening in late May. The new lounge will further enhance the moviegoing experience, with a full-service bar, chef-inspired menu including our Thincredible® Zaffiro’s pizza and a 20-foot-wide television screen,” said Olson. Marcus^® Hotels & Resorts “Marcus Hotels & Resorts achieved a 12.3% increase in revenues in the third quarter. Revenue per available room (RevPAR) for comparable hotels was up 10.7% for the third quarter and 4.2% for the year to date, due in large part to a nice increase in occupancy in what is traditionally our weakest season,” said Marcus. “In addition to the legal settlement expenses, our third quarter results were also impacted by winter-season losses at our newest hotel, The Cornhusker, A Marriott Hotel, in Lincoln, Neb., where a multi-million-dollar renovation is currently underway. The extensive renovations include all guest rooms and meeting space, as well as the hotel lobby, restaurant and bars. We will also bring our successful restaurant and bar concept, Miller Time Pub & Grill, developed in association with MillerCoors, to the The Cornhusker. The renovations are expected to be completed in the fall, with Miller Time Pub & Grill opening in early September,” said Kirk A. Rose, president of Marcus Hotels & Resorts. Rose said renovations to the 23^rd floor of the historic Pfister Hotel in Milwaukee, Wis. will be completed in early April. The renovation features the creation of an exclusive Pfister Club Lounge for overnight guests and also includes the addition of a high-tech executive boardroom incorporating the latest presentation technology. “The Pfister Club Lounge has a library-den feel with expansive views of the city, and features comfortable seating, workstations, Wi-Fi Internet access, televisions, and beverages and snacks throughout the day, along with the services of a Club Concierge. A similar club lounge is being added to the Grand Geneva Resort & Spa in Lake Geneva, Wis., and is scheduled to open Memorial Day weekend,” said Rose. Summary “During the third quarter, we returned capital to shareholders through a special cash dividend of $1.00 per common share. We also accelerated our February and May 2013 cash dividend payments totaling $0.17 per common share due to potential tax law changes that were being discussed prior to the end of 2012. We repurchased 82,000 shares of our common stock during the third quarter, and have repurchased a total of 1.8 million shares through the first three quarters of the fiscal year. In January, our Board of Directors authorized the repurchase of up to 3,000,000 additional shares of our common stock,” said Marcus. “With a debt-to-total-capitalization ratio of 45% at the end of the third quarter and a new $225 million credit facility completed in January, we are well positioned to continue to grow our two businesses as well as enhance shareholder value through dividends and share repurchases when timing and market conditions are appropriate,” added Marcus. Conference Call and Webcast Marcus Corporation management will host a conference call today, March 21, 2013, at 10:00 a.m. Central/11:00 a.m. Eastern time to discuss the third quarter results. Interested parties can listen to the call live on the Internet through the investor relations section of the company’s website: www.marcuscorp.com, or by dialing 1-617-597-5447 and entering the passcode 14680694. Listeners should dial in to the call at least 5 - 10 minutes prior to the start of the call or should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for telephone replay through Thursday, March 28, 2013, by dialing 1-888-286-8010 and entering the passcode 33814954. The Webcast of the conference call will be archived on the company’s website until its next earnings release. About The Marcus Corporation Headquartered in Milwaukee, Wisconsin, The Marcus Corporation is a leader in the lodging and entertainment industries, with significant company-owned real estate assets. The Marcus Corporation’s theatre division, Marcus Theatres^®, currently owns or manages 687 screens at 55 locations in Wisconsin, Illinois, Iowa, Minnesota, Nebraska, North Dakota and Ohio. The company’s lodging division, Marcus^® Hotels & Resorts, owns and/or manages 20 hotels, resorts and other properties in 11 states. For more information, please visit the company’s website at www.marcuscorp.com. Certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division, as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (2) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, and preopening and start-up costs due to the capital intensive nature of our businesses; (3) the effects of adverse economic conditions in our markets, particularly with respect to our hotels and resorts division; (4) the effects of adverse weather conditions, particularly during the winter in the Midwest and in our other markets; (5) the effects on our occupancy and room rates of the relative industry supply of available rooms at comparable lodging facilities in our markets; (6) the effects of competitive conditions in our markets; (7) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; and (8) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or incidents such as the recent tragedy in a movie theatre in Colorado. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. THE MARCUS CORPORATION Consolidated Statements of Earnings (Unaudited) (In thousands, except per share data) 13 Weeks Ended 39 Weeks Ended February 28, February 23, February 28, February 23, 2013 2012 2013 2012 Revenues: Theatre $ 32,961 $ 35,003 $ 102,099 $ 104,516 admissions Rooms 18,581 15,918 75,125 70,237 Theatre 17,496 18,524 55,017 54,636 concessions Food and 12,699 11,569 42,358 40,915 beverage Other revenues 11,937 11,063 37,647 35,749 Total revenues 93,674 92,077 312,246 306,053 Costs and expenses: Theatre 28,543 29,037 86,807 87,676 operations Rooms 9,057 8,011 28,204 26,416 Theatre 4,972 4,565 14,932 13,654 concessions Food and 10,951 9,832 32,236 30,620 beverage Advertising and 5,583 5,068 18,090 16,715 marketing Administrative 11,825 10,530 34,888 32,086 Depreciation and 8,591 8,279 25,490 26,109 amortization Rent 2,077 2,051 6,308 6,182 Property taxes 3,860 3,003 11,015 9,759 Other operating 7,821 7,626 23,293 23,152 expenses Impairment 618 - 1,035 - charge Total costs and 93,898 88,002 282,298 272,369 expenses Operating income (224 ) 4,075 29,948 33,684 Other income (expense): Investment 258 88 301 257 income Interest expense (2,464 ) (2,323 ) (6,855 ) (6,974 ) Extinguishment 6,008 - 6,008 - of debt Loss on disposition of property, (315 ) (741 ) (289 ) (920 ) equipment and other assets Equity losses from unconsolidated (295 ) (173 ) (318 ) (210 ) joint ventures, net 3,192 (3,149 ) (1,153 ) (7,847 ) Earnings before 2,968 926 28,795 25,837 income taxes Income taxes (1,310 ) 192 9,051 9,802 (benefit) Net earnings 4,278 734 19,744 16,035 Net earnings attributable to 5,650 - 5,713 - noncontrolling interests Net earnings (loss) attributable to $ (1,372 ) $ 734 $ 14,031 $ 16,035 The Marcus Corporation Net earnings (loss) per common share attributable to The Marcus Corporation - $ (0.05 ) $ 0.03 $ 0.50 $ 0.55 diluted Weighted-average shares outstanding 27,274 29,209 28,124 29,362 - diluted THE MARCUS CORPORATION Condensed Consolidated Balance Sheets (In thousands) (Unaudited) (Audited) February 28, May 31, 2013 2012 Assets: Cash and cash equivalents $ 15,724 $ 12,402 Accounts and notes receivable 8,192 8,467 Refundable income taxes 3,022 2,950 Deferred income taxes 2,918 2,797 Other current assets 6,289 7,020 Property and equipment, net 629,091 614,645 Other assets 83,427 84,730 Total Assets $ 748,663 $ 733,011 Liabilities and Shareholders' Equity: Accounts and notes payable $ 16,651 $ 18,945 Taxes other than income taxes 12,759 13,110 Other current liabilities 36,756 37,102 Current portion of capital lease obligation 4,481 4,189 Current maturities of long-term debt 14,677 97,918 Capital lease obligation 29,434 31,489 Long-term debt 238,598 106,276 Deferred income taxes 44,683 44,372 Deferred compensation and other 35,565 35,821 Equity 315,059 343,789 Total Liabilities and Shareholders' Equity $ 748,663 $ 733,011 THE MARCUS CORPORATION Business Segment Information (Unaudited) (In thousands) Hotels/ Corporate Theatres Resorts Items Total 13 Weeks Ended February 28, 2013 Revenues $ 53,466 $ 40,064 $ 144 $ 93,674 Operating income 9,028 (5,948 ) (3,304 ) (224 ) (loss) Depreciation and 4,162 4,277 152 8,591 amortization 13 Weeks Ended February 23, 2012 Revenues $ 56,193 $ 35,665 $ 219 $ 92,077 Operating income 11,915 (4,390 ) (3,450 ) 4,075 (loss) Depreciation and 4,178 3,983 118 8,279 amortization 39 Weeks Ended February 28, 2013 Revenues $ 165,831 $ 145,950 $ 465 $ 312,246 Operating income 31,026 9,104 (10,182 ) 29,948 (loss) Depreciation and 12,650 12,433 407 25,490 amortization 39 Weeks Ended February 23, 2012 Revenues $ 167,147 $ 138,343 $ 563 $ 306,053 Operating income 33,440 9,979 (9,735 ) 33,684 (loss) Depreciation and 13,920 11,816 373 26,109 amortization Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses. Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues. Contact: The Marcus Corporation Douglas A. Neis (414) 905-1100
The Marcus Corporation Reports Third Quarter Results
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