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Press Release: The Marcus Corporation
March 22, 2006
MILWAUKEE, WI -- The Marcus Corporation (NYSE:MCS) yesterday reported increased revenues and earnings from continuing
operations for the third quarter ended February 23, 2006.
Third Quarter Fiscal 2006 Highlights
First Three Quarters of Fiscal 2006 Highlights
"We continued to make good progress in the third quarter, reporting our third straight quarter with increased
earnings from continuing operations. Marcus Theatres® achieved increases in both revenues and operating income
for the quarter due to a solid holiday season. Marcus Hotels and Resorts reported a 24.2% increase in revenues,
driven by improved performance at our five existing company-owned properties and results from our two new properties,"
said Stephen H. Marcus, chairman and chief executive officer of The Marcus Corporation.
Marcus Theatres®
"The improvement in Marcus Theatres' results reflected the strong audience appeal of holiday-season movies
including Harry Potter and the Goblet of Fire, Chronicles of Narnia: The Lion, The Witch and The Wardrobe and King
Kong. Each of these films grossed over $200 million at the box office nationally - the first time in history that
three films performed at that level during the holiday period. And this was in spite of the fact that Christmas
Eve and Christmas Day, as well as News Year's Eve and News Year's Day, fell on a Saturday and Sunday this year,"
said Marcus.
"We are encouraged by the improving trends in film product and the extended outlook also appears promising.
Projected hit motion pictures for early spring include Ice Age 2: The Meltdown and Scary Movie 4. May, the last
month of our fiscal year, has the potential for four blockbusters, with Mission: Impossible III, Poseidon, Over
the Hedge and The Da Vinci Code all opening that month, compared with just one blockbuster movie - Star Wars: Episode
III - Revenge of the Sith, opening during this period last year.
Looking ahead to the summer, potential hits include three computer-generated animated features with Pixar's newest
film Cars, along with Monster House and Ant Bully. Comedies include Disney's Pirates of the Caribbean: Dead Man's
Chest, Adam Sandler in Click and Jennifer Aniston and Vince Vaughn in The Break-Up. Familiar titles like Superman
Returns and Miami Vice also have good box-office potential. Two films that may prove to be controversial are M.
Night Shyamalan's Lady in the Water and Oliver Stone's World Trade Center," said Marcus.
Marcus said the division continues to move forward with its expansion plans. "Construction will begin in a
matter of weeks on two new theatres - a 13-screen theatre in Sturtevant, Wis., that will include an UltraScreen(TM),
and a new 12-screen theatre in Green Bay, Wis. We are also finalizing the plans for our new flagship theatre in
Brookfield, Wis., with construction scheduled to begin by summer," said Marcus.
Marcus Hotels and Resorts
Marcus said revenue per available room (RevPAR) for comparable Marcus Hotels and Resorts properties increased 15.6%
in the third quarter and 8.8% for the nine months. "RevPAR was up for all five of our existing properties,
which is a noteworthy achievement given that the winter season is typically a challenging time for hotels in the
Midwest," said Marcus.
Marcus noted that the division's operating loss was flat during the third quarter compared to the same quarter
last year as a result of start-up losses and expenses for new properties. These include the June 2005 purchase
of the Wyndham Milwaukee Center hotel and the opening of the Four Points by Sheraton Chicago Downtown/Magnificent
Mile, as well as two new properties under development.
"Last week, we announced plans to purchase The Westin Columbus hotel in downtown Columbus, Ohio. This is a
beautiful, 186-room historic hotel that leverages our experience in restoring and operating landmark hotels and
further expands our presence in the Midwest. This property will be an exciting addition to our portfolio of full-service
hotels and resorts," said Marcus.
"Construction continues on the Platinum Hotel & Spa, our hotel condominium project in Las Vegas that is
scheduled to open in late June 2006. If the project stays on its current course, we anticipate that we will report
a significant development profit on the Platinum project in the first quarter of fiscal 2007," said Marcus.
He noted that construction is also underway on the restoration of the Skirvin Hotel in Oklahoma City, which is
expected to open in 2007 as the Hilton Skirvin.
"The near-term outlook for our existing hotels is very encouraging. We believe the investments we are making
today, both in capital and in start-up expenses, in our two newest hotels, the two hotels under development and
the purchase of The Westin Columbus, will contribute to increased revenues and operating income for this division
over the long term," said Marcus.
Special Cash Dividend
The Marcus Corporation paid a special cash dividend of $7.00 per share on February 24, 2006, returning to shareholders
approximately $214 million in proceeds resulting from the sale of the limited-service lodging division. "This
significant event confirmed the underlying value of our real estate and our philosophy of managing for the long
term and we were pleased to be able to return a portion of this value to our loyal long-term shareholders,"
said Marcus.
"We remain committed to growing both Marcus Theatres and Marcus Hotels and Resorts, as evidenced by our investments
in the new theatre and hotel projects. We believe we are well positioned to pursue opportunities to grow both of
our divisions," he added.
Conference Call and Webcast
Marcus Corporation management will host a conference call today, March 21, 2006, at 3:00 p.m. Central/4:00 p.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 Web site: www.marcuscorp.com, or by dialing 1-913-981-5542.
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 telephone replay through Tuesday, March 28, 2006 by dialing 1-888-203-1112 and entering
the passcode 4162217. The Webcast of the conference call will be archived on the company's Web site until the next
earnings release.
About The Marcus Corporation
Headquartered in Milwaukee, Wis., The Marcus Corporation is a leader in the lodging and entertainment industries.
The Marcus Corporation's movie theatre division, Marcus Theatres®, owns or manages 504 screens at 45 locations
in Wisconsin, Illinois, Minnesota and Ohio, and one family entertainment center in Wisconsin. The company's lodging
division, Marcus Hotels and Resorts, owns or manages 12 hotels and resorts in Wisconsin, California, Minnesota,
Missouri, Texas and Illinois 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 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 could 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 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 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 from 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 continuing availability
of funds for such development; (8) the adverse impact on business and consumer spending on travel, leisure and
entertainment resulting from terrorist attacks in the United States, the United States' responses thereto and subsequent
hostilities; and (9) our decisions regarding the use of the remaining proceeds received from the sale of our limited-service
lodging division. 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
--------------------- ---------------------
Feb. 23, Feb. 24, Feb. 23, Feb. 24,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Revenues:
Rooms and telephone $13,154 $9,226 $56,761 $42,612
Theatre admissions 25,368 24,976 73,234 76,549
Theatre concessions 12,641 11,740 35,292 36,092
Food and beverage 9,859 8,213 31,360 27,863
Other revenues 8,564 8,317 29,518 28,830
---------- ---------- ---------- ----------
Total revenues 69,586 62,472 226,165 211,946
Costs and expenses:
Rooms and telephone 6,251 5,085 20,723 16,861
Theatre operations 19,898 19,622 57,212 59,572
Theatre concessions 2,587 2,482 7,483 7,781
Food and beverage 7,972 7,002 24,006 21,491
Advertising and
marketing 4,310 3,529 14,277 11,748
Administrative 7,717 6,635 22,900 19,552
Depreciation and
amortization 6,504 6,181 19,602 18,370
Rent 893 518 2,731 1,482
Property taxes 2,567 1,671 7,771 5,723
Pre-opening expenses 42 221 406 396
Other operating
expenses 5,697 4,811 17,743 15,443
---------- ---------- ---------- ----------
Total costs and expenses 64,438 57,757 194,854 178,419
---------- ---------- ---------- ----------
Operating income 5,148 4,715 31,311 33,527
Other income (expense):
Investment income 2,565 1,982 6,326 3,801
Interest expense (3,677) (3,722) (11,008) (11,381)
Gain on disposition of
property, equipment
and investments in
joint ventures 109 19 3,331 2,251
---------- ---------- ---------- ----------
(1,003) (1,721) (1,351) (5,329)
---------- ---------- ---------- ----------
Earnings from continuing
operations before
income taxes 4,145 2,994 29,960 28,198
Income taxes 983 1,208 9,960 10,809
---------- ---------- ---------- ----------
Earnings from continuing
operations 3,162 1,786 20,000 17,389
Discontinued operations:
Income (loss) from
discontinued
operations,
net of income taxes (171) (835) (765) 2,338
Gain on sale of
discontinued
operations,
net of income taxes 1,732 5,644 6,021 76,601
---------- ---------- ---------- ----------
1,561 4,809 5,256 78,939
---------- ---------- ---------- ----------
Net earnings $4,723 $6,595 $25,256 $96,328
========== ========== ========== ==========
Earnings per share -
basic:
Continuing operations $0.10 $0.06 $0.66 $0.58
Discontinued
operations 0.05 0.16 0.17 2.62
---------- ---------- ---------- ----------
Net earnings per share $0.15 $0.22 $0.83 $3.20
========== ========== ========== ==========
Earnings per share -
diluted:
Continuing operations $0.10 $0.06 $0.65 $0.57
Discontinued
operations 0.05 0.15 0.17 2.59
---------- ---------- ---------- ----------
Net earnings per share $0.15 $0.21 $0.82 $3.16
========== ========== ========== ==========
Weighted average shares
outstanding:
Basic 30,509 30,224 30,381 30,061
Diluted 30,877 30,770 30,756 30,508
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited) (Audited)
February 23, 2006 May 26, 2005
------------------ ------------------
Assets:
Cash and cash equivalents $292,684 $259,057
Cash held by intermediaries 1,578 28,552
Accounts and notes receivable 16,081 11,615
Refundable income taxes - 871
Deferred income taxes 6,139 5,464
Real estate and development
costs 3,961 4,985
Other current assets 11,220 4,856
Assets of discontinued
operations 3,622 16,700
Property and equipment - net 431,681 399,923
Other assets 52,626 55,476
------------------ ------------------
Total Assets $819,592 $787,499
================== ==================
Liabilities and Shareholders'
Equity:
Accounts and notes payable $12,654 $17,785
Income taxes 1,706 -
Taxes other than income taxes 9,480 8,507
Other current liabilities 25,563 18,116
Current maturities of long-
term debt 50,234 25,765
Liabilities of discontinued
operations 7,684 9,514
Long-term debt 142,216 170,888
Deferred income taxes 26,516 26,614
Deferred compensation and
other 26,689 16,649
Shareholders' equity 516,850 493,661
------------------ ------------------
Total Liabilities and
Shareholders' Equity $819,592 $787,499
================== ==================
THE MARCUS CORPORATION
Business Segment Information (Unaudited)
(in thousands)
Continuing Dis-
Operat- continued
Hotels/ Corporate ions Operat-
Theatres Resorts Items Total ions Total
-------- ------- ----- ----- ---- -----
13 Weeks Ended
Feb. 23, 2006
Revenues $39,841 $29,429 $316 $69,586 $(191) $69,395
Operating
income (loss) 9,355 (2,160) (2,047) 5,148 (312) 4,836
Depreciation
and
amortization 3,087 3,144 273 6,504 0 6,504
13 Weeks Ended
Feb. 24, 2005
Revenues $38,470 $23,696 $306 $62,472 $28 $62,500
Operating
income (loss) 9,113 (2,100) (2,298) 4,715 (1,339) 3,376
Depreciation
and
amortization 3,050 2,729 402 6,181 39 6,220
39 Weeks Ended
Feb. 23, 2006
Revenues $113,809 $111,354 $1,002 $226,165 $591 $226,756
Operating
income (loss) 26,181 11,400 (6,270) 31,311 (1,278) 30,033
Depreciation
and
amortization 9,354 9,403 845 19,602 69 19,671
39 Weeks Ended
Feb. 24, 2005
Revenues $117,809 $93,074 $1,063 $211,946 $46,172 $258,118
Operating
income (loss) 29,018 10,451 (5,942) 33,527 4,039 37,566
Depreciation
and
amortization 8,906 8,267 1,197 18,370 3,770 22,140
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
Source: The Marcus Corporation