Press Release: The Marcus Corporation
September 20, 2002
MILWAUKEE, WI -- The Marcus Corporation (NYSE: MCS) yesterday reported increased revenues and operating income
for the first quarter ended August 29, 2002.
Total revenues for the first quarter of fiscal 2003 increased 2.9% to $119,577,000 from revenues of $116,168,000
for the first quarter of the prior year. Operating income increased 1.4% to $25,155,000 for the first quarter of
fiscal 2003, compared to operating income of $24,799,000 for the comparable prior period.
Earnings from continuing operations were $12,371,000 or $0.42 per diluted share and net earnings were $13,587,000
or $0.46 per diluted share for the first quarter of fiscal 2003, compared to earnings from continuing operations
and net earnings of $14,723,000 or $0.50 per diluted share for the same period in the prior year. Continuing operations
include The Marcus Corporation's limited-service lodging, theatre and hotels and resorts divisions.
"The increases in revenues and operating income were generated by the record first quarter performance of
Marcus Hotels and Resorts and Marcus Theatres. This solid performance is especially significant in view of the
continued slowdown in business travel and the soft economic climate," said Stephen H. Marcus, chairman and
chief executive officer of The Marcus Corporation. "Although performance of our Baymont Inns & Suites
was down from the same period a year ago, we are encouraged by industry data indicating that we actually realized
some improvement in our market share during this challenging time period."
Marcus noted that the entire decrease in earnings from continuing operations and net earnings was due to the impact
of capital gains and historic tax credits in the prior year's first quarter, partially offset by an additional
gain on the sale of the company's former KFC restaurant operation in the first quarter of fiscal 2003.
A strong summer season enabled Marcus Theatres to achieve record results for its fifth consecutive quarter. Hit
movies during the quarter included Austin Powers in Goldmember, Signs, Men in Black II and My Big Fat Greek Wedding.
"The film product for fall and the busy holiday season is also very promising, with anticipated hits including
Red Dragon, Die Another Day, Harry Potter and the Chamber of Secrets and Lord of the Rings: The Two Towers,"
said Marcus.
Marcus said the division will open three new screens in time for the holiday season, including the company's third
75-foot-wide UltraScreen(TM) in Appleton, Wis. "We are considering additional new screens in selected markets,"
he added.
"The record performance of Marcus Hotels and Resorts is a significant achievement, given the economic environment
and the continued soft market for business travel and group bookings. The division's Milwaukee properties had a
strong quarter due to a steady stream of summer events in the area, including baseball's All-Star Game. The division
also benefited from improved performance at its newer properties and its vacation ownership development,"
said Marcus.
He said Marcus Hotels and Resorts continued to outperform its segment of the lodging industry, with revenue per
available room (RevPAR) for comparable properties down only 1.4% for the quarter. Marcus noted that a new parking
structure opened at the Hilton Milwaukee City Center in July, completing a four-year capital program to expand
and enhance this major convention-center property.
Baymont Inns & Suites reported decreased revenues and operating income in the first quarter. "Baymont's
RevPAR continues to track fairly consistently with the majority of properties in the mid-price segment of the limited-service
lodging industry and was down 4.1% for the quarter. Although RevPAR trends have improved in the year since the
September 11 tragedy, Baymont's results continue to be impacted by the overall reduction in business travel,"
said Marcus.
He said the customer response to the division's new Ovations Rooms has been positive. "This new feature is
a key part of our strategy to differentiate the Baymont brand in the marketplace. With the new rooms, our frequent
stay program, 110% Satisfaction Guarantee, new prototype design and enhanced sales and marketing activities, the
division continues to focus on building the Baymont brand," said Marcus.
Additionally, Marcus noted that the May 2001 asset purchase agreement with the buyers of the company's former KFC
restaurants provided for a potential additional purchase price payment if certain performance conditions were met.
During the first quarter of fiscal 2003, the buyer elected to terminate this provision of the agreement by making
an additional payment of $2,050,000 to the company. As a result, the company reported an additional after-tax gain
of $1,216,000 or $0.04 per share in the first quarter.
"We are off to a solid start for the fiscal year. Although our lodging businesses continue to be affected
by reduced business travel, we believe we are positioned for further improvement over the long term," said
Marcus.
Marcus Corporation management will host a conference call today, September 19, 2002, at 3:00 p.m. Central/4:00
p.m. Eastern time to discuss the first quarter results. Interested parties can listen to the call live on the Internet
through the investor relations section of the company's Web site: www.marcuscorp.com, or by dialing 1-913-981-5568.
Listeners should dial in to the call at least 5-10 minutes prior to the start of the call or should go to the Web
site at least 15 minutes prior to the call to download and install any necessary audio software. The call will
be available for replay through Thursday, September 26, 2002 on the company's Web site or by dialing 1-888-203-1112
and entering the passcode 224255.
Headquartered in Milwaukee, Wis., The Marcus Corporation is a leader in the lodging and entertainment industries.
The company's limited-service lodging division operates or franchises 182 Baymont Inns & Suites in 31 states,
seven Woodfield Suites in Illinois, Wisconsin, Colorado, Ohio and Texas and one Budgetel Inn in Wisconsin. Marcus
Theatres owns or manages 490 screens at 47 locations in Wisconsin, Ohio, Illinois and Minnesota, and one family
entertainment center in Wisconsin. Marcus Hotels and Resorts owns or manages 11 hotels and resorts in Wisconsin,
California, Minnesota, Missouri and Texas, and one vacation club in Wisconsin. For more information, visit the
company's Web site 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 will 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: (i) our ability to successfully define and build the Baymont
brand within the "limited-service, mid-price without food and beverage" segment of the lodging industry;(ii)
the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division; (iii)
the effects of increasing depreciation expenses and pre-opening and start-up costs due to the capital intensive
nature of our businesses; (iv) the effects of adverse economic conditions in our markets, particularly with respect
to our limited-service lodging and hotels and resorts divisions; (v) the effects of adverse weather conditions,
particularly during the winter in the Midwest and in our other markets; (vi) the effects on our occupancy and room
rates from the relative industry supply of available rooms at comparable lodging facilities in our markets; (vii)
the effects of competitive conditions in the markets served by us; (viii) our ability to identify properties to
acquire, develop and/or manage and continuing availability of funds for such development; (ix) the adverse impact
on business and consumer spending on travel, leisure and entertainment resulting from the September 11, 2001 terrorist
attacks on the United States, the United States' responses thereto and subsequent related hostilities; and (x)
our lack of comprehensive terrorist attack insurance. 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
(in thousands, except per share data)
(Unaudited)
13 Weeks Ended
August 29, 2002 August 30, 2001
--------------- ---------------
Revenues:
Rooms and telephone $ 52,796 $ 53,588
Theatre admissions 29,211 27,611
Theatre concessions 13,692 12,475
Food and beverage 9,257 8,479
Other income 14,621 14,015
-------- --------
Total revenues 119,577 116,168
Costs and expenses:
Rooms and telephone 20,986 21,627
Theatre operations 22,387 20,564
Theatre concessions 3,190 3,027
Food and beverage 6,927 6,582
Advertising and marketing 7,731 6,972
Administrative 10,330 10,224
Depreciation and amortization 11,438 10,978
Rent 602 731
Property taxes 4,344 3,969
Pre-opening expenses 3 576
Other operating expenses 6,484 6,119
-------- --------
Total costs and expenses 94,422 91,369
-------- --------
Operating income 25,155 24,799
Other income (expense):
Investment income 622 571
Interest expense (5,324) (4,971)
Gain on disposition of property, equipment
and investments in joint ventures 409 2,264
-------- --------
(4,293) (2,136)
Earnings from continuing operations
before income taxes 20,862 22,663
Income taxes 8,491 7,940
-------- --------
Earnings from continuing operations 12,371 14,723
Discontinued operations:
Gain on sale of discontinued operations,
net of applicable income taxes 1,216 --
-------- --------
Net earnings $ 13,587 $ 14,723
======== ========
Earnings per share - basic and diluted:
Continuing operations $ 0.42 $ 0.50
Discontinued operations $ 0.04 $ 0.00
-------- --------
Net earnings per share $ 0.46 $ 0.50
======== ========
Weighted Ave. Shares Outstanding:
Basic 29,333 29,198
Diluted 29,560 29,416
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
August 29, 2002 May 30, 2002
--------------- ------------
(Unaudited) (Audited)
Assets:
Cash and cash equivalents $ 4,975 $ 5,614
Accounts and notes receivables 22,015 19,804
Refundable income taxes - 4,947
Real estate and development costs 1,594 2,532
Other current assets 4,602 4,512
Property and equipment - net 677,939 683,639
Other assets 57,705 53,738
------- -------
Total Assets $ 768,830 $ 774,786
======= =======
Liabilities and Shareholders' Equity:
Accounts and notes payable $ 16,926 $ 20,708
Income taxes 3,588 -
Taxes other than income taxes 15,132 13,947
Other current liabilities 19,981 17,820
Current maturities of long-term debt 20,389 20,777
Long-term debt 277,949 299,761
Deferred income taxes 36,884 36,529
Deferred compensation and other 11,549 11,176
Shareholders' equity 366,432 354,068
------- -------
Total Liabilities and Shareholders'
Equity $ 768,830 $ 774,786
======= =======
THE MARCUS CORPORATION
Business Segment Information (Unaudited)
(in thousands)
Limited-
Service Hotels/ Corporate
Lodging Theatres Resorts Items Total
------- -------- ------- ----- -----
13 Weeks Ended August 29,
2002
Revenues $ 37,449 $ 44,262 $ 37,458 $ 408 $119,577
Operating income (loss) 8,558 11,341 7,137 (1,881) 25,155
13 Weeks Ended August 30,
2001
Revenues $ 39,342 $ 41,165 $ 35,299 $ 362 $116,168
Operating income (loss) 9,989 10,075 6,430 (1,695) 24,799
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.
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Contact:
The Marcus Corporation
Douglas A. Neis, 414/905-1100
Source: The Marcus Corporation