The Marcus Corporation Reports Third Quarter Results

  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
 
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