Company Press Release
July 21, 2000
MILWAUKEE, WI -- The Marcus Corporation (NYSE:MCS) yesterday reported increased revenues and earnings from continuing
operations for the fourth quarter and fiscal year ended May 25, 2000.
During the fourth quarter of fiscal 2000, total revenues were $86,718,000, a 5.9% increase from revenues of $81,861,000
for the same period in the prior year. Earnings from continuing operations were $2,918,000 or $0.10 per diluted
share for the fourth quarter of fiscal 2000, up 38.0% from earnings from continuing operations of $2,115,000 or
$0.07 per diluted share for the comparable prior period. Net earnings were $2,983,000 or $0.10 per diluted share
for the fourth quarter of 2000, compared to net earnings of $2,551,000 or $0.09 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 company has announced plans to sell its KFC restaurant operation, which has
been classified as a discontinued business in accordance with current accounting pronouncements.
For fiscal 2000, total revenues rose 4.8% to $352,118,000 from revenues of $335,999,000 in the prior year. Earnings
from continuing operations were $21,238,000 or $0.71 per diluted share in fiscal 2000, up 1.3% from earnings from
continuing operations of $20,958,000 or $0.70 per diluted share in fiscal 1999. Net earnings for fiscal 2000, which
include discontinued operations, were $22,622,000 or $0.76 per diluted share, compared to net earnings of $23,144,000
or $0.77 per diluted share in fiscal 1999.
Operating income before depreciation and amortization (EBITDA) for the fourth quarter of fiscal 2000 was $19,173,000,
a 17.7% increase from EBITDA of $16,290,000 for the prior year. During fiscal 2000, EBITDA rose 3.3% to $88,546,000
from EBITDA of $85,710,000 in fiscal 1999.
``We are pleased with the progress we made during the fourth quarter, with revenues and operating income increasing
in all three divisions. Baymont Inns & Suites achieved its second straight quarter of increased earnings. Marcus
Hotels and Resorts had a very strong performance. Results for Marcus Theatres improved even though the movies during
the quarter were not exceptional,'' said Stephen H. Marcus, chairman and chief executive officer of The Marcus
Corporation.
``We are also gratified with the increase in earnings from continuing operations during fiscal 2000. After two
consecutive years of lower earnings, we are very encouraged by the improvements made this year. Baymont's results
are trending upward, our hotels and resorts division continues to excel, and our theatre division continues to
outperform its peer group in a challenging industry environment,'' said Marcus.
Marcus said Baymont Inns & Suites' 7% increase in revenue per available room (RevPAR) exceeded the industry
average for the fourth quarter of fiscal 2000, compared to the same quarter a year ago. ``The biggest driver behind
the improvement of Baymont is an increase in the average daily rate as we move from the economy lodging segment
into the mid-price segment. The highly popular lobby breakfast and the re-imaging of our exteriors are two key
components of the success of the Baymont brand. We will continue to re-position Baymont during the coming year
as we work to build a brand that is the best in its class,'' said Marcus.
Baymont ended the fiscal year with 171 properties, 95 company-owned and 76 franchised, compared to 164 properties
at the end of fiscal 1999. A total of 27 properties are currently in development or under construction, 26 franchised
and one company-owned.
Marcus Hotels and Resorts had an excellent fourth quarter and year, led by significantly improved performance at
the Miramonte Resort in Indian Wells, Calif. Marcus also said the 175 guest room addition to the Hilton Milwaukee
City Center opened shortly after the end of the fiscal year and the new indoor water park is scheduled to open
prior to Labor Day. ``In fiscal 2001, we will begin to see a return on this major investment,'' said Marcus.
Marcus said the first 18 vacation ownership units at the Grand Geneva Resort & Spa are now open and sales are
going well. Construction continues on the Hilton Madison at Monona Terrace in Madison, Wis., which is scheduled
to open in Spring 2001. ``In late May 2000, we purchased the Hotel Phillips in Kansas City, Mo. This landmark property
will soon close for an extensive renovation and restoration,'' he said.
Marcus Theatres reported increased operating income for the fourth quarter in spite of lower box office and concession
revenues. ``The improvement in profitability reflects our continuing focus on controlling costs and the fact that
in the fourth quarter of the year we did not have the high film costs and additional operating expenses of Star
Wars that we had in the fourth quarter last year,'' said Marcus.
``We are pleased that we outperformed the industry for the year, but overall, motion picture exhibitors continue
to suffer from a lack of popular broad-appeal movies from Hollywood. We are encouraged by the recent performance
of movies such as The Perfect Storm, The Patriot, Scary Movie, and X-Men, although they have not performed as well
as the strong slate last summer,'' Marcus said.
He noted that Marcus Theatres added 42 screens in fiscal 2000 to bring its total to 470, a 9.8% increase. ``Currently,
77% of our first-run auditoriums have been converted to stadium seating and digital sound, which is the highest
percentage in the industry,'' Marcus added.
Marcus said the company repurchased 271,000 shares of its common stock in the fourth quarter, increasing the total
shares purchased in fiscal 2000 to 528,000. An authorization to repurchase an additional 2,000,000 shares was announced
in late June 2000. ``We continue to believe that our stock is undervalued by the market and that repurchasing our
shares is a good investment for the company,'' said Marcus.
Headquartered in Milwaukee, Wis., The Marcus Corporation is comprised of four divisions: limited-service lodging,
movie theatres, hotels/resorts and restaurants. The company currently operates or franchises 171 Baymont Inns &
Suites in 30 states, and a total of seven Woodfield Suites in Illinois, Wisconsin, Colorado, Ohio and Texas; 487
movie screens in Wisconsin, Ohio, Illinois and Minnesota, and one family entertainment center in Wisconsin; three
hotels and a resort in Wisconsin, one hotel and a resort in California, one hotel in Minnesota and one hotel in
Missouri; and 27 KFC and 3 KFC/Taco Bell 2-in-1 restaurants in Wisconsin. For more information, 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 will include words such as
the Company ``believes,'' ``anticipates,'' ``expects'' or words of similar import. Similarly, statements that describe
the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements
are subject to certain risks and uncertainties, including, but not limited to, the following: (i) the Company's
ability to identify properties to acquire, develop and/or manage and continuing availability of funds for such
development; (ii) the Company's ability to attract potential partners to assist in the acquisition and/or development
of properties; (iii) the limited-service lodging division's ability to attract and retain quality franchise operators
and to effectively execute its Baymont repositioning strategy; (iv) continuing consumer demand as a result of general
economic conditions with respect to the hotels and resorts and limited-service lodging divisions; (v) continuing
availability, in terms of both quality and quantity, of films for the theatre division; and (vi) competitive conditions
in the markets served by the Company. 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 the Company undertakes 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 52 Weeks Ended
-------------- --------------
May 25, 2000 May 27, 1999 May 25, 2000 May 27, 1999
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
Revenues:
Rooms and
telephone.........$ 43,727 $ 43,098 $ 170,597 $ 173,305
Theatre
admissions........ 16,900 17,044 81,637 74,011
Theatre
concessions....... 7,281 7,678 36,482 33,413
Food and
beverage.......... 6,428 6,211 26,614 25,075
Other income...... 12,382 7,830 36,788 30,195
------------ ------------ ------------ ------------
Total revenues..... 86,718 81,861 352,118 335,999
Costs and expenses:
Rooms and
telephone......... 18,582 17,980 71,238 70,117
Theatre
operations........ 13,332 14,213 63,999 58,150
Theatre
concessions....... 1,894 2,062 8,887 8,419
Food and beverage. 4,990 4,896 20,363 19,446
Advertising and
marketing......... 7,767 7,216 25,969 24,535
Administrative.... 10,361 10,094 39,654 37,134
Depreciation and
amortization...... 10,636 9,290 40,458 37,205
Rent.............. 844 883 2,954 2,853
Property taxes.... 3,735 3,611 14,066 13,498
Pre-opening
expenses.......... 316 318 1,004 1,769
Other operating
expenses.......... 5,724 4,298 15,438 14,368
------------ ------------ ------------ ------------
Total costs and
expenses........... 78,181 74,861 304,030 287,494
------------ ------------ ------------ ------------
Operating income... 8,537 7,000 48,088 48,505
Other income
(expense):
Investment income. 520 235 1,453 783
Interest expense.. (4,516) (4,611) (17,975) (16,846)
Gain on
disposition of
property and
equipment......... 387 1,136 4,266 2,754
------------ ------------ ------------ -----------
(3,609) (3,240) (12,256) (13,309)
Earnings from
continuing
operations
before income
taxes.............. 4,928 3,760 35,832 35,196
Income taxes....... 2,010 1,645 14,594 14,238
------------ ------------ ------------ ------------
Earnings from
continuing
operations......... 2,918 2,115 21,238 20,958
Discontinued
operations:
Income from
discontinued
operations, net of
applicable income
taxes............. 65 433 1,384 1,982
Gain on disposal
of discontinued
operations, net of
applicable income
taxes............. -- 3 -- 204
------------ ------------ ------------ ------------
Net earnings.......$ 2,983 $ 2,551 $ 22,622 $ 23,144
============ ============ ============ ============
Earnings per share
- Basic and Diluted:
Continuing
operations........$ 0.10 $ 0.07 $ 0.71 $ 0.70
Discontinued
operations........$ 0.00 $ 0.02 $ 0.05 $ 0.07
------------ ------------ ------------ ------------
Net earnings per
share.............$ 0.10 $ 0.09 $ 0.76 $ 0.77
============ ============ ============ ============
Weighted Ave.
Shares Outstanding:
Basic............. 29,550 29,919 29,796 30,005
Diluted........... 29,567 29,960 29,828 30,105
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
May 25, 2000 May 27, 1999
------------ ------------
Assets:
Cash and cash
equivalents................... $ 2,935 $ 3,499
Accounts and notes
receivables................... 14,376 12,798
Refundable income
taxes......................... 3,020 6,041
Other current
assets........................ 8,064 4,400
Property and
equipment - net............... 658,317 611,213
Other assets.................. 37,064 38,165
------------ ------------
Total Assets................... $ 723,776 $ 676,116
============ ============
Liabilities and Shareholders'
Equity:
Accounts and notes payable.... $ 28,691 $ 27,437
Taxes other than income taxes. 11,219 9,575
Other current liabilities..... 14,333 11,904
Current maturities of
long-term debt................ 16,228 10,470
Long-term debt................ 286,344 264,270
Deferred income taxes......... 32,602 31,405
Deferred compensation and
other......................... 9,112 7,481
Shareholders' equity.......... 325,247 313,574
------------ ------------
Total Liabilities and
Shareholders' Equity........... $ 723,776 $ 676,116
============ ============
THE MARCUS CORPORATION
Business Segment Information
(in thousands)
Limited-
Service Hotels/ Corporate
Lodging Theatres Resorts Items Total
2000 (Unaudited)
Revenues $ 138,183 $ 122,254 $ 89,854 $ 1,827 $ 352,118
Operating
income (loss) 20,993 22,007 10,806 (5,718) 48,088
Depreciation &
amortization 19,041 11,696 7,962 1,759 40,458
1999
Revenues $ 141,577 $ 111,249 $ 81,169 $ 2,004 $ 335,999
Operating
income (loss) 25,509 20,395 8,103 (5,502) 48,505
Depreciation &
amortization 18,922 9,505 7,369 1,409 37,205
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:
Marcus Corporation
Douglas A. Neis, 414/905-1100